Palantir CEO Alex Karp & Treasury Secretary Scott Bessent 11/4/25

Summary

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Squawk Pod: Palantir CEO Alex Karp & Treasury Secretary Scott Bessent

Date: November 4, 2025
Hosts: Joe Kernen, Becky Quick, Andrew Ross Sorkin
Guests: Alex Karp (CEO, Palantir), Scott Bessent (U.S. Treasury Secretary)

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Episode Overview

On this Election Day episode, Squawk Pod dives into three critical topics shaping America’s economic and political landscape: the Supreme Court’s hearing on President Trump’s emergency tariff powers with Treasury Secretary Scott Bessent, the intensifying debate over Elon Musk’s massive Tesla pay package, and Palantir’s explosive growth—and the skepticism it faces—from the words of CEO Alex Karp himself. The episode’s conversations span major policy moves, investor psychology, the societal impact of AI, and the ongoing government shutdown.

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Key Discussion Points & Insights

1. Supreme Court Showdown: Emergency Tariffs & Executive Power

• Context: The Supreme Court is set to review President Trump’s invocation of the International Emergency Economic Powers Act (IEEPA) to impose emergency tariffs, with implications for executive vs. Congressional trade authority ([10:19]–[32:17]).

• Bessent’s Defense:

  • Bessent argues emergencies like the fentanyl crisis, the trade deficit with China, and threatened rare earth mineral export controls justified Trump’s broad use of tariff authority.
  • He draws parallels to the 2008 financial crisis, suggesting that foresight and swift executive action could prevent greater calamities:

    “What if someone had held up their hand like many people did before the great financial crisis and said, we're heading for a calamity...and if someone had exercised emergency powers, then we would not have had to go through 2008, 2009 and the aftermath.”
    — Scott Bessent [11:02], [18:19]

• Concerns Raised:

  • Andrew Ross Sorkin pushes back, questioning the longevity of the “emergency” and the risk of setting precedent, allowing future administrations (Democratic or Republican) to act unilaterally on other issues like climate change:

    “If the court blesses this unlimited presidential tariff power, future presidents… could use it as a climate emergency to tax imports... Does that concern you at all?”
    — Andrew Ross Sorkin [18:52]

  • Bessent expresses skepticism about using emergency powers for climate, labeling climate warnings as exaggerated.

2. Government Shutdown, Partisan Gridlock, and Health Care

• Government Shutdown Update:

  • Day 35 of the shutdown, highlighting severe impacts on travelers and food assistance programs ([02:35], [20:00]).
  • Bessent accuses Democrats of using the shutdown as a political weapon and invites “five brave Democrats” to cross the aisle and end the standoff.

• Healthcare Stalemate:

  • Bessent refuses to preview health care plans until the government reopens:

    “I'm not going to get into negotiations until the Democrats reopen the government.”
    — Scott Bessent [22:17]

3. Tesla’s $1 Trillion Pay Package: Global Dissent and Loyalty

• Norwegian Wealth Fund vs. Elon Musk:
  • Norway’s sovereign fund votes no on Musk’s pay, citing its scale and “key person risk;” Ron Baron’s Barron Capital votes yes, crediting Musk’s leadership for outsized returns ([03:21], [06:03], [13:03]).
  • Panelists joke about Norway’s “1%” ownership and the irony of their objections when Musk created so much value—nor their own GDP ([04:51], [12:43]).
  • Sorkin argues that the plan bakes in succession planning—a key point lost in the headlines:

    “If you really look… the plan... calls for, in fact, effectively creating a successor to Elon Musk as part of the actual plan itself…”
    — Andrew Ross Sorkin [05:21]

4. Alex Karp Unleashed: Palantir, AI, and War on Short Sellers

Palantir’s Growth and Analyst Skepticism

• Karp on Being “Misunderstood”:

  • Karp frames Palantir as a unique, “anti-playbook” company—built by iconoclasts and retail investors, not the establishment. He touts Palantir’s dominance, pragmatic innovation, and retail investor wins:

    “The more you actually know about building software, the more odd, unique and inexplicable our rise and success…looks and is.”
    — Alex Karp [34:45]

• On Analysts, Short Sellers, and Michael Burry:

  • Karp criticizes analysts, likening them to perpetual skeptics who have consistently been wrong on Palantir’s potential.

  • Specifically lambasts Michael Burry’s near-billion-dollar short position, framing it as both market manipulation and an attack on the sector driving America’s growth:

    “When I hear short sellers attacking what I believe is clearly the most important software company in America…simply to make money, and trying to call the AI revolution into question... it's super triggering.”
    — Alex Karp [37:03]

  • Karp’s memorable zinger to the shorts:

    “They're in the business of being skeptical and being wrong. And we're in the business of giving an unfair advantage to American workers, American war fighters and our investors.”
    — Alex Karp [32:44], [39:21]

  • On Palantir’s numbers:

    “We're just going to go do our things… If you want to short that, be my guest, you go ahead.”
    — Alex Karp [39:41]

Bigger Issues: Is AI a Bubble? And Who Benefits?

• AI Bubble Debate:

  • Karp argues there’s “a part of the market…printing cash”—and Palantir owns it. He welcomes the debate but says the numbers speak for themselves ([42:31]).
  • Key challenge: Making AI-driven GDP growth available to workers, not just the elite:

    “Most of GDP growth in this country is because of AI. The real question is: how do we grow that and expose workers? What is the worker available GDP?”
    — Alex Karp [41:37], [42:31]

• Societal Impact of AI and Safety:

  • Addresses national security, class divides, and AI’s dual-use in both lifting society and reinforcing inequalities.

  • Warns against relying on “experts” to solve existential problems (“the experts are not showing up, they’re scared, they’re drinking” [49:28]).

  • On personal and social safety:

    “How do you have maximum safety where you can still have a personal life?... Part of democracy is we get to keep that. And Palantir's architecture makes it possible to have heightened safety and reduce surveillance.”
    — Alex Karp [45:05]

  • On civil society and defending the underclass:

    “...we essentially have a class divide in this society where underclass people...absorb all the negative externalities of policies. The real question…is how can we make sure people participate in GDP? Which also means they can go home safely, they can go to school, they can come back from school, they can go to the border and not get shot.”
    — Alex Karp [45:05]

Signature Karp Moments

• On individuality:

  “I'm not the only one who's a freak show. I'm just more open about it.”
  — Alex Karp [49:28]

• On expert class and retail winners:

  “For the first time…average Americans got venture returns investing in Palantir.”
  — Alex Karp [34:45]

• On retail vs. the establishment:

  “We have these problems no other society has... But we should not screw it up. And the way we screw it up is we are all on the sidelines. We let experts tell us what we should think and we get screwed.”
  — Alex Karp [50:10]

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Important Segment Timestamps

• [01:04] – Episode topic overview: emergency tariffs, Tesla pay package, Palantir earns, and AI debate.
• [10:19]–[18:52] – Scott Bessent defends Trump’s tariff emergency powers and recounts their policy justification.
• [20:00]–[23:32] – Shutdown, health care, and threats to New York’s role as finance capital.
• [13:03]–[13:49] – Ron Baron and Tesla’s $8B profits, Musk's importance.
• [32:44]–[50:26] – Extended interview: Alex Karp on Palantir, AI, short sellers, societal transformation.

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Notable Quotes

• Scott Bessent:
  “If someone had exercised emergency powers, then we would not have had to go through 2008, 2009 and the aftermath.” [11:02]
  “The real discretion is people voting with their feet…more money should go to the states that people are moving to.” [26:58]

• Alex Karp:
  “They're in the business of being skeptical and being wrong. And we're in the business of giving an unfair advantage to American workers, American war fighters and our investors.” [32:44], [39:21]
  “Most of GDP growth in this country is because of AI. The real question is: how do we grow that and expose workers? What is the worker available GDP?” [41:37]
  “I'm not the only one who's a freak show. I'm just more open about it.” [49:28]

• Andrew Ross Sorkin:
  “If you really look… the [Tesla] plan…calls for, in fact, effectively creating a successor to Elon Musk as part of the actual plan itself…” [05:21]

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Conclusion

This episode captures a tumultuous moment in U.S. economic and technological policy: a government shutdown approaches record length, the boundaries of executive power face Supreme Court scrutiny, and American innovation is on trial in boardrooms and investment circles. Scott Bessent defends controversial emergency tariffs as a matter of national security, while Alex Karp of Palantir vigorously rebuts short sellers and urges America not to rely on “experts” alone as AI reshapes the GDP and society. Throughout, the hosts bring clarity, skepticism, and humor to the debate, making sense of seismic shifts in politics, markets, and technology.

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Transcript

[Alex Karp]

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[Joe Kernan]

Bring in show music, please.

[Cameron Costa]

This is Squawk Pod and I'm CNBC producer Cameron Costa. On today's episode, Treasury Secretary Scott Besant is ready for the Supreme Court hearing on President Trump's emergency tariffs.

[Joe Kernan]

There are lots of other authorities that can be used, but IAIPA is by far the cleanest and it gives the US and the President the most negotiating authority.

[Cameron Costa]

He says an economic tipping point merits emergency measures.

[Joe Kernan]

IPA is an emergency authority and we were in an emergency situation.

[Cameron Costa]

And Palantir CEO Alex Karp has a sharp message for critics.

[Alex Karp]

Most of GDP growth in this country is because of AI. The real question is how do we grow that and expose workers? What is the worker available gdp?

[Cameron Costa]

He's snapping back at short sellers and he's speaking colorfully, as he always does.

[Alex Karp]

I'm not the only one who's a freak show. I'm just more open about it.

[Cameron Costa]

Those big conversations. Plus the longest government shutdown in U.S. history and another opponent to Elon Musk's pay package.

[Andrew Ross Sorkin]

Okay, Norway, we gotcha.

[Cameron Costa]

It's Tuesday, November 4th, 2025, election day and Squawkpod begins right now.

[Joe Kernan]

Stand Becky by in three, two, one. Cuer, please.

[Becky Quick]

Good morning, everybody. Welcome to Squawk Box right here on cnbc. I'm Becky Quick, along with Joe Kernan and Andrew Ross Sorkin.

[Andrew Sorkin]

Meantime, it is now day 35 of the government shutdown. The Trump administration telling a federal judge it's going to use several billion dollars worth of contingency funds to pay for Americans snap food benefits. But that will only cover part of the total paid out each month. It's unclear when that money will begin flowing. And we get to speak in just a little bit with Treasury Secretary Scott Bess and right here on Squawk. In addition, the Wall Street Journal saying that hundreds of travel related businesses like hotels and casinos are asking Congress to pass a simple funding bill to end that shutdown. Also, an airline industry group saying more than 3 million US passengers have been impacted by delays or cancellations stemming from air traffic controller issues since the shutdown began.

[Becky Quick]

Tesla is going to be holding its annual shareholder meeting on Thursday. Norway's sovereign wealth fund says that it will vote against Elon Musk's proposed pay package. If it's approved, the plan could grant Musk stock worth $1 trillion over 10 years. The Norwegian fund holds about a 1.1% stake in Tesla. That's worth $17 billion. Fund leaders say that they're concerned about the size of the pay plan dilution and in their words, lack of mitigation of key person risk. We're also hearing from longtime shareholder Barron Capital. Ron Barron's firm says that it will vote in favor of that pay package. In a statement, Barron Capital says the plan ensures that shareholders win first and that continues to lead Tesla for many years to come. We commend the board for recognizing this and for working to retain Tesla's most valuable asset. You know, Ron Barron writes a very long letter on this. He goes on to say that that key man risk, this is the key man risk of all key man risks out there. He's very interested in making sure that Elon Musk stays on, guys. He's been here on set and talked with us about that in person too. But it's a huge position for Barron Capital. He lays out that, you know, they've already earned about $4 billion in profits just on SpaceX. But from Tesla alone they've earned. Where was it they purchased? They originally purchased 400 million, went on to buy more and more with that. But I think they've earned more than $40 billion from Tesla on that. It's a huge position in barren funds too.

[Andrew Ross Sorkin]

You know, I don't even, I don't even know where to go.

[Andrew Sorkin]

Becky, I'm surprised the argument Norway, I.

[Andrew Ross Sorkin]

Was going to ask their entire team.

[Andrew Sorkin]

Norway is saying because if you really.

[Andrew Ross Sorkin]

Look, this delay is no good. Their entire GDP is about $340 billion versus 20 and they don't have anything close to that in terms of a successful company. So, okay, it's nice that you're weighing, in Norway 20.5 trillion. This is a couple years ago. Those aren't even current numbers. Anyway, Andrew, the delay is tough. Were you on Wilf's show yet?

[Andrew Sorkin]

I did Wilf's show this morning. But on the Norway issue, the thing that surprised me was the truth is, if you really look through the Tesla plan, it actually calls for, in fact, effectively creating a successor to Elon Musk as part of the actual plan itself, meaning he can't be paid at least some of the amount of money unless his successor is ultimately picked. At least that's what the plan appears to suggest. So I was surprised to hear that that was the rationale. There are lots of other people with lots of other rationales, but that argument, at least to me, doesn't bear as much weight given that they specifically talk about finding a successor.

[Becky Quick]

Well, John Baron kind of hints at that, too. He says part of what Elon does is build and bring in these engineers, teach them and train them, and create this core of engineers who don't want to leave.

[Andrew Ross Sorkin]

I mean, it was hard. I almost laughed out loud. Okay, Norway, we got you at 1%. I don't even know if that. I don't know. We'll see what happens. It's Election Day here in the US Some key contests around the country involving governors races, big ones in New Jersey and Virginia. The main event could be New York City's mayoral race between Andrew Cuomo, Zoran Mamdani, and Curtis Sliwa. Polls are open from 6am to 9pm local time. And President Trump telling supporters on Trust Social to vote for Cuomo, threatening to send only the very minimum amount of federal money to New York if Mamdani wins. We'll get a live report from Midtown later this hour. I don't know. I was looking at what it's 90% plus, I think, on most of the prediction markets. And really the other stuff on the prediction markets is, you know, does he win by 10% is greater than 10%, less than 10 to Staten Island. Staten island is going to go for. Yeah, that line is good this morning.

[Andrew Sorkin]

Did you see Secede if you on Kalshee? Interestingly, the vote. The votes, the folks who are betting effectively in New York versus the folks who are betting outside of New York state are distinctly different. People in New York are actually thinking that Cuomo could win. It's outside of New York that the folks think that Mondami would win. And Again, this goes to your issue about manipulation. I don't know if it's manipulated, but it's just so interesting to see that distinction.

[Andrew Ross Sorkin]

Where does George Soros live, Andrew? You must know that.

[Andrew Sorkin]

Come on.

[Andrew Ross Sorkin]

This is just in to the newsroom here. Former Vice President Dick Cheney has died due to complications of pneumonia and cardiac and vascular disease. He was the 46th vice president serving under President George W. Bush. Before that, he served as White House chief of staff, Congressman from Wyoming and Secretary of Defense. You can see he was 84, one of the most powerful vice presidents, and was in charge of finding a vice president for President Bush and said, why not me? In fact, we've referenced it in terms of Scott Bessant, who's going to be on the show later, that sometimes the person looking or tasked with looking for a position ends up being taking that position himself. I was going to just look to see. He got a heart transplant, didn't he? I think, I mean, I don't remember everything. Cardiac disease, Cheney. Yeah, I think he did. Yeah. Back in March 24, 2012, he was 71 years old when he actually had the heart transplant. He had a history of heart disease. He had five heart attacks by 2010. And he actually in that year, I think, received an lvad, a left ventricular assist device to help the heart pump and then later transplant. So we send condolences to his family and the passing of, is he, would you call him an American icon? I guess he's, he's pretty darn close at this point, given all the, I don't know, people would say he was instrumental in deciding to go into Iraq, go forward with the Iraq war, which we're still talking about to this day. And maybe, guys, do you think neocon was sort of, that was something that word came about. Of course, he's got some famous family members obviously as well on the other side. But a true Wyoming person wore cowboy hats. And we all remember the unfortunate incident with the hunting incident as well.

[Becky Quick]

Yeah.

[Cameron Costa]

Next on Squawk Pod tomorrow, the Supreme Court hears the Trump administration's oral arguments for use of the International Emergency Economic Powers act, or iea. It's a test of executive powers and its implications will hit tariffs and far beyond that. Treasury Secretary Scott Besant will be there at the hearing and he stands by the president's emergency measures.

[Joe Kernan]

There's a concept of a tipping point. What if someone had held up their hand like many people did before the great financial crisis and said, we're heading for a calamity in the housing market. And if someone had exercised emergency powers, then we would not have had to go through 2008, 2009.

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[Joe Kernan]

This is Squawk Pod up and Andrew Q.

[Andrew Sorkin]

You're watching Squawk Box on CNBC. I'm Andrew Sorkin along with Joe Kernan and Becky Quick on this. We'll call it a special transatlantic version of Squawk Box.

[Becky Quick]

Yeah, that's we've been talking, Andrew, off camera a little bit Norway about Norway and what it's saying about Tesla right now.

[Andrew Ross Sorkin]

So. No, it's what it's okay. They own a little over 1%. They're like they're in the top 10 shareholders of Tesla. Their GDP in 2024, they're plugging away. I mean, it's $500 billion, which is 1/60 of the US at 30 trillion. But it is a third of Tesla's market cap, their GDP. So and they actually, in addition to crappy Netflix TV series, they, they do award the Nobel Peace Prize, while the other six prizes do come from Stockholm. So just just a little background. I'm coming from socialism land, which we're headed for.

[Andrew Sorkin]

What about on a per person basis?

[Andrew Ross Sorkin]

GDP is not bad. It's not the US it's I think 50,000 or thereabouts. And we're up at 60 or 70. It's supposedly great beautiful scenery. Some of the most beautiful scenery on the planet is in Norway. And I'm not far be it from me to disparage a European country.

[Becky Quick]

I think Elsa and Anna may be from there as well. What I will say is Barron Capital, I misspoke before. Barron Capital has earned about $8 billion in profits realized and unrealized from their Tesla shares. And in terms of the ownership. He goes on to say that musk entities now represent about 26% of the firm's 44 billion in assets under management. So about $11 billion worth of their assets under management. Ron Baron has been a longtime Tesla bull. He owned this. The only time I remember him selling any shares was when he said it was getting to be too big of a stake in their, in their funds because it had grown and appreciated so much. So he sold some at some point. But at this point, Musk entities make up 20, 26% of their 44 billion in assets.

[Andrew Ross Sorkin]

I mean, there are big firms, BlackRock, I think, and states there are bigger. They're bigger than nora. I don't know which way. I guess when we hear how they're going to.

[Becky Quick]

Those are always the biggest owners, right? The conglomerates that have all the funds.

[Andrew Ross Sorkin]

Okay, treasury secretary is joining us now. Scott Bessant. How are you? Good to see you.

[Joe Kernan]

Good morning, Joe. Good to see you.

[Andrew Ross Sorkin]

You, let's talk tariffs. And since it's front and center for everyone with this beginning now at scotus, you have said you're going and you want to be in the front row. I think you're, I think your chances are good if you say that's where you'd like to sit.

[Joe Kernan]

Look, Joe, I think it's a matter of national security. And this is one of the president's signature policies. And it'd be very unusual for the Supreme Court to overrule president's signature policy. Supreme Court gave President Obama a lot of room on Obamacare. And President Trump's two signature policies have been securing the border, which has been a credible success. And it has been the tariff policy, rebalancing US Trade and its economic security. And, and we've, we've had three emergencies here. First emergency has been the fentanyl crisis. And president was able to use IA to bring the Chinese to the table on the precursor chemicals. Second emergency was, I think we were at a tipping point in terms of our trade deficits. We are bringing those down. The deficit with China is down 25%. We could have had a looming financial crisis. And then number three, the president after the Chinese said that they were going to put export controls on rare earth minerals for the globe. On October 8th, President was able to use his IPA emergency powers to threaten 100% tariffs, bring the Chinese to the table in Kuala Lumpur and Korea and get the rare earths to flow. And if that hadn't happened, that manufacturing facilities not only in the US but around the world would shut down. So, you know, this is an emergency power that he has used during emergencies.

[Andrew Ross Sorkin]

There might be compelling arguments on the other side. Mr. Secretary. And I like the Journal kind of made me laugh today because in their lead op ed they said few conservatives are more deferential not to President Trump but to presidential overseas authority than we are. They've stood in the way of a lot of things I think that the President has tried to do, obviously. Although, you know, out of all the op ed pages, the friendliest probably has been the Wall Street Journal. But they point out that Article 1 vest Congress with authority, and that was the intent, because of what happened with taxation without representation, that it vests Congress with the authority to negotiate trade deals and to impose tariffs. And it was like that until smoot Hawley in 1930, when they thought the president needed to be able to have that authority. But up until then, it had always been the purview of Congress to regulate tariff policy.

[Joe Kernan]

Yeah, Joe, but there are lots of other authorities, too. President has 232s, 301s. Those are all from the executive branch. And again, you know, IPA is an emergency authority. And we were in an emergency situation. And this is crucial for the, for the US economy.

[Andrew Ross Sorkin]

Do you think, Mr. Secretary, that the Supreme Court is so up to date on these stories? This is, here's where I'm going with this. A lot of people would probably say the trade imbalance has been there for a long time and that all of a sudden it's an emergency. They would question that. I don't know what they'd say about fentanyl, but when you talk about rare earth metals and what that could do to the US Economy, that I think even scotus, even Supreme Court might say, you know what, in this case, the emergency power is absolutely, you know, you could actually use that in that case and be totally justified. Do you think that they could look at it that way?

[Joe Kernan]

Well, Joe, let's think about. And as you know, in economics, there's a concept of a tipping point. And you know, I think that there's a point where you get to an emergency. What if someone had held up their hand like many people did before the great financial crisis and said we're heading for a calamity in the housing market and if someone had exercised emergency powers, then we would not have had to go through 2008, 2009 and the aftermath and what it did to the American people.

[Andrew Ross Sorkin]

Let's just ask you one more thing, one more point the Journal makes. If the court blesses this unlimited presidential tariff power, future presidents, that is Democrats, were going to do the same thing. An all too likely example would be a climate emergency. I could see this happening. They call it that all the time, a client emergency to tax imports of countries with high CO2 commissions. You can fill in the blanks for something Democrats might do if this were upheld by the Supreme Court. Does that concern you at all about what the other party would do with, with this type of power?

[Joe Kernan]

Look, if the, the president does need emergency power, and I would question whether there is a climate emergency. I've been hearing for years that there's an emergency, the planet's going to be on Fire in five years, 10 years. And the only thing that's happened with that, it's an excuse for my children not to do their homework because there's not going to be a planet. So, you know, it's all been proven.

[Andrew Ross Sorkin]

Wrong or not to have kids. I know. It's crazy.

[Joe Kernan]

Beck.

[Becky Quick]

Mr. Secretary, thanks for being with us today. We're now in day 35 of this government shutdown, tied for the longest government shutdown ever. The Hill has just been reporting in the last couple of hours that some centrist Democrats are signaling to their Republican counterparts that they might be willing to cut a deal, that we could see an end to this coming soon. I think Susan Collins had kind of suggested maybe we see an end to this by the end of this week. But they're also saying, some of these centrist Democrats, that a red flag is that the president may not be serious about health care reform. Can you tell us what the administration's plan is on this front, what you're hearing about any of these talks, what.

[Joe Kernan]

You know, so, Becky, you know, I've called for five brave Democrats to come across the aisle. And, you know what's changed since we got the clean continuing resolution in the spring? Two things. One, Senator Schumer's poll numbers, you know, he's sinking like, like a stone. So we're being held hostage to his poll numbers. And, and then two, the Democrats have tried to stop President Trump in the courts, goes to scotus. They get overruled. They've tried to stop President Trump in the mainstream media. That hasn't worked. So now they've shut down the government and they're harming the economy. So I think it would be great if five moderate Democrats became heroes, reopened the government. And for the entire shutdown, the entire shutdown, whether it's President Trump, Speaker Johnson, or Leader Thune, they've said reopen the government and we can talk, we can have the conversation on health care, but we can't do it while the government's closed down.

[Andrew Ross Sorkin]

What should that conversation look like, Mr. Secretary? Because it's also been pointed out, yeah, the subsidies were pandemic era subsidies and you know, you need those to keep some premiums from doubling. But the Real thing is it's the Unaffordable Care Act. The premiums are going up because the cost is going up. And there's no way to provide Affordable Care act services without numbers like that. Is there a plan? Because the President has talked about a plan for a long time and here we are.

[Joe Kernan]

Joe, I'm not going to get into negotiations until the Democrats reopen the government. So, you know, I'm not going to preview it, that reopen the government and then the talks can start. And you know, the crazy thing is they kept talking about a November 21st deadline and we're getting there and they haven't reopened the government. So. And you know, we're starting to see this affect the economy. We're starting to see the airport delays and shutdowns. And I can tell you the American people are going to blame the Democrats if the busiest travel day of the year, the day after Thanksgiving is a disaster. People aren't able to be with their families. They should be ashamed.

[Andrew Ross Sorkin]

There's an election today in various places. Mr. Secretary is the highest economic official in our country. And we're sitting in the capitol capitalist center of the universe right here in New York City. And we might elect either a socialist if you talk to one person, or if you talk to the President himself, a communist. What is your take on what's happening in New York City, how it could affect the country writ large?

[Joe Kernan]

Well, Joe, that New York is losing its status as the capital capital. The United States is maintaining it. They're opening y' all street down in Texas and Wall street jobs have been fleeing New York. What we saw during the pandemic was the greatest transfer of wealth in history from Manhattan county to Palm Beach County. And I can tell you that, you know, if you get Caracas on the Hudson, which it looks like the polls are saying you're going to get, you're going to see more people, more capital fleeing. So it's good for Connecticut real estate, good for Florida real estate. And nothing says that New York has to remain the financial capital.

[Andrew Ross Sorkin]

Secretary. We always get to some of the interesting water cooler type stuff, I guess Tesla and shareholders are going to decide on a pay package. The latest I've seen, and I loved your answer that you gave, was there was some kind of kerfuffle you had not with Bill Pulte in this case, which we've asked you about in the past, this one involved Elon Musk, that you grabbed them by the collar or something. And your only response was, that can't be true because he didn't have a collar. I think he has a scruff of his neck. Was there any grabbing of anything in that general area?

[Joe Kernan]

Yeah, no, Joe, look, this is, this is old news. And Jesse Waters has a great, great sense of humor. And Elon and I were very passionate about what needed to be done with government. He did a fantastic job in setting a trajectory for downsizing government, which we've continued. Spending is down over the past two quarters. We're going to keep it down. And you know what's gone unnoticed during the government shutdown is we actually they had a smaller deficit for fiscal year 25 than we did for 24. It was small, but nonetheless the deficit was smaller. And because the GDP went up, deficit to GDP went from 6.4% to 5.9. And I think we can continue bringing that down.

[Andrew Ross Sorkin]

You okay with that compensation package? And then I know Andrew has a question.

[Joe Kernan]

Well, I think it's great that Elon's back in the private sector. He's one of the great entrepreneurs, the of the generation that that's up for the shareholders to decide. But the amount of value that he's created for his investors and for his shareholders is phenomenal, and it's across a range of industries.

[Andrew Sorkin]

Mr. Secretary, I wanted to actually go back to the issue of New York and the prospect that Zoran Mandami could be the next mayor. The President made a comment during the 60 Minutes interview on Sunday that potentially the administration would, or Washington writ large would send less money to New York as a result of that, in part because he said, you know, you don't want a communist effectively in charge that would then misspend such money. How much discretion does the administration have in terms of its ability to turn on the spigot or turn off the spigot to a particular state and in what areas?

[Joe Kernan]

Well, I think it's on a lot of the large infrastructure, a lot of the large infrastructure spending. And, and Andrew, I think we can see that the, we have some discretion here in D.C. but the real discretion is people voting with their feet. You see these Democratic states, New York has for years had net outbound migration, Illinois, net outbound migration, California, net outbound migration. So it seems like more money should go to the states that people are moving to.

[Andrew Ross Sorkin]

The Secretary, if the Supreme Court were to do, to go against the President on this, are you confident that another route can, can be found to continue with, with the policy and not get into the morass of trying to be. I don't even know how it would work if you had to, you know, start reversing some of the, what we've seen with the tariffs.

[Joe Kernan]

Yeah, Joe, there are lots of other authorities that can be used, but IAEIPA is by far the cleanest and it gives the US and the president the most negotiating authority. And again, when we get something like October 8th, where the entire manufacturing ecosystem in the US and the world was at threat of shutdown, then it's very important to be able to have these. The others are more cumbersome, but they can be effective less. It hinders the President's negotiating ability to be able to protect the American people and the American economy. So, you know, this is very important tomorrow. And SCOTUS is going to hear this. And again, this is a signature policy for the president. And traditionally SCOTUS has been loathe to interfere with these signature policies.

[Andrew Ross Sorkin]

Guess I'll just ask you one quick question on China. A lot, a lot of talk about what actually went on with, with Nvidia chips and the Blackwell tips. Are you among the people in the administration that think that the China should never get those highly advanced AI chips or is this saving something to negotiate the future with? Because it always seems like these are our stops along the way with these, these negotiations with China. They're evolving and we continue to, you know, to deal with things. And they continue to deal with things.

[Joe Kernan]

Well, you know, if we think about the Blackwell now that they're the crown jewel, that 1812, 18 months ago, the H20s were so good, were the crown jewels. So, Joe, I think what you're describing is actually the pace that the technology is moving, not the pace that the negotiations are moving. So there may be a case down the road. I don't know whether it's 12 or 24 months. You know, given the incredible innovation that goes on at Nvidia, where the Blackwell chips may be 2, 3, 4 down their chip stack in terms of efficacy and at that point they could be sold on.

[Andrew Ross Sorkin]

And it's your take, your contention that China had a plan with these rare earth materials, that this was in the works, and whether President Trump had poked the bear in the first place to try to reset global trade with China. Either way, that that would have been something that China was planning to use. So it's not like, you know, the president, you know, critics say starts fire and then puts a fire out and takes credit for, you know, for, for, for putting it out.

[Joe Kernan]

Absolutely not. This is something that they've been putting together for 35 years. The rare earth magnets company actually used to belong to General Motors. A Chinese company bought it. CFIUS, which is the Committee on Foreign Investment in the US said they had to keep it in the US for five years. Five years and a day. In 2000, they moved it over to China. They've been accumulating these rare earth assets for years. And Joe, it's important to know that they put this restriction on the entire world. So, you know, don't accuse President Trump of doing this. But what I can tell you is after the meeting in Korea, it was a very good meeting. Both sides approached it with great respect. I think President Trump is the only leader who President Xi respects. We had a very good meeting. The relationship is in a good place. I think we're going to have two state visits next year. President Trump will be going to Beijing and Xi will be coming to the US and they may also see each other at the G20 in Doral and then the APEC conference in Shenzhen in November. So I think the overall US China relationship is on a much more even keel now.

[Andrew Ross Sorkin]

Secretary Besson, thank you so much as always. We appreciate it.

[Joe Kernan]

Good to see you, Joe. Cheese will be next.

[Cameron Costa]

Still to come, software company and government contractor Palantir beat Wall street estimates and gave strong guidance in the third quarter. But investors may be growing wary of AI valuations. CEO Alex Karp has a message for the dubious and for the short sellers.

[Alex Karp]

They're in the business of being skeptical and being wrong. And we're in the business of giving an unfair advantage to American workers, American war fighters and our investors.

[Cameron Costa]

He's fired up about skeptics and many other things.

[Alex Karp]

Palantir is about pragmatic decisions that create unfair advantages for America and its allies. And on that, we've been right for almost 20 years on all major decisions.

[Cameron Costa]

Squawkpod will be right back.

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[Cameron Costa]

You're listening to Squawkpod. Here's Andrew Rossorkin.

[Andrew Sorkin]

Alex Karp is with us. Palantir CEO Alex, it is so good to see you. The earnings were a blowout, I think across the board. We can talk about maybe why that, why this stock market reacting the way it is. But you know, I was listening to the call yesterday and I wanted it just for those who didn't get an opportunity to hear it. I think you made some fascinating points about why you think this company and maybe even yourself are so misunderstood.

[Alex Karp]

Well, there are lots of easy ways to misunderstand me. I misunderstand myself. And you know, it's not like the super conventional playbook thing. Look, we're an anti playbook company. If you want to do the personal version, I'm like this dyslexic formerly and I believe currently still left of center who actually sticks up for progressive values which triggers, you know, tds loving people because I think the Democrats are no longer progressive. And then the company is built in a truly sewage generous, unique way which would only be possible in America and actually explodes every assumption of how an expert would build a software business. The more you actually know about building software, the more odd, unique and inexplicable our rise in success. And I would say domination on the enterprise software battlefield looks and is. And then I would say one of my main issues is Palantir because we are anti, we called, we called a lot of things that are kind of establishment views that often are viewed as kind of being super woke into question in every single assumption of Palantir. The people who piled in to Palantir were people investing their own money, often people who are not in the investor class, non experts. And even till today, the experts sit on the sideline and say hey, this can't be true. While the average American who invested in Palantir, and for the first time maybe arguably Since World War II, average Americans got venture returns investing in Palantir. So you have this massive divide between the average person who evaluated themselves and the expert class that still was working on assumptions that have historically not been true. That obviously if you look at the earnings, if you actually look at we grew the company. I mean I'll go through if you want to go through numbers. But extraordinary results in any expert classes we need. And the retail people are all in so. But in fairness.

[Andrew Sorkin]

But that's what I want to ask you about in terms of the Ms. Because there is a misunderstanding, clearly. You know, you look at the analysts, most analysts, you know, think that this stock is overpriced. You have people like Michael Burry out there shorting it. Everybody who shorted the stock thus far has been on the losing end of it. And I'm trying to understand just if you look at sort of the growth trajectory, the sales, how much of the sales, frankly I think actually are even coming. There was a huge part coming from even existing customers. And just what the scale of this thing ultimately looks like. It's in your mind.

[Alex Karp]

Okay, there are two parts. You know, of course, when I hear short sellers attacking what I believe is clearly the most important software company in America and therefore in the world, in terms of impact simply to make money, and calling, trying to call the AI revolution into question, where we have these, this anomalous numbers, 114, rule of 40, etc. It just is super triggering because these people, they could pick on any company in the world. They have to pick on the one that actually helps people, people that actually has made money. For the average person that is actually supporting our war fighters, why do they have to go after us? And I'll tell you what though, it's crazy motivating because I'll tell you why the short sellers are constantly getting screwed by Palantir, because every time they short us, we just are like tripling down on getting the better numbers and part honestly to make them poorer. But ok, so the question of like the actual power of the business and what is it worth? I mean, at the end of the day, one of the things that is actually in the book, the biography and that I actually think that you always have to ask to, to is the person persuasive or are they right? And across all sorts of movements, political, I mean, you see this on the regressive part of the Democratic Party, we're about to probably have a complete disaster. I was born in New York. Like, but if you actually said, do these things actually work? Everyone's like, of course I'm not going to vote for that. But instead they ask, does it work? In theory, the theoreticians, you have to ask, how often have you been right? And Palantir is about pragmatic decisions that create unfair advantages for America and its allies. And on that, we've been right. For almost 20 years on all major decisions. And I believe we'll be right going forward. Now, you could argue, I don't know, like, they're constantly, like. But they. They thought Palantir was overvalued at 10. They thought it was overvalued at 20. I'm not even here saying what the valuation is. I'm just saying find a company in the world that has a rule of 114 that has US commercial growing at 121%, that aggregate growth in the US is 77%, that is throwing off free cash flow in a way that's anonymous and that is fully aligned with our customers, and you figure out the value. But they're in the business of being skeptical and being wrong. And we're in the business of giving an unfair advantage to American workers, American war fighters, and our investors.

[Becky Quick]

Being short is. Is a very difficult place to be because you can lose everything, right? You can drive these people into the ground. Thank God Michael Burry put a really big bet on. It's almost $1 billion. It's $912 million. That's a big step for him to put into that. What, when you say you redouble your efforts, what do you do? What do you go back in?

[Alex Karp]

Well, first of all, he's. It's like he's actually putting a short on AI. So the way I read it was US and Nvidia, and it's like, he's okay, so. And then, by the way, with the shorts, it's very complex. It's not even clear that. Honestly, I think what is going on here is market manipulation. We delivered the best results, everyone anyone's ever seen. It's not even clear he's not doing this to get out of his position. I mean, these people, they claim to be ethical, but, you know, like, they're actually shorting one of the great businesses of the world. And I'm not against shorting as a matter of theory, but I'm just saying pick something that is not doing a noble task and, you know, it's us against them. And that's a good position for us. I mean, look, when you're printing a rule of 114, again, people who aren't technical, I think roughly an incredible score, like an Olympic grade score on rule of 14 is like 50. I mean, that's roughly like, if you're between 50 and 7, you're an Olympic athlete of unique implement athlete. This is like Michael Phelps, like, score like Michael Jordan. Like, there are no scores like this there and 121 growth off of almost a 1.5 run rate in US commercial and a 77,77% growth in the US and an aggregate, off of an aggregate base of four and a half billion dollars, by the way, I predicted we'd get here. So, you know, it's like, if you want to short that, be my guest, you go ahead. We're just going to go do our things. I mean, look, I'll tell you, there's a tale of two cities in our society. We need experts versus retail. And you see it like, you know, I don't know why these newspapers are running helping Mandani win. I don't know why we can't have honest discussions about our future. I don't know why we have to allow fentanyl attack. But it's almost always sympathy for the expert that doesn't need it, the short seller that has some ridiculous reason for doing something against. I mean, most of GDP growth in this country is because of AI. The real question is how do we grow that and expose workers? What is the worker available, GDP pay? That's the question for our society. Instead of aligning on that, we've got these completely. And again, if the numbers weren't there, great, be my guest. But then the numbers are there, so then you're not, it's not even clear he's actually shorting us. It's, it's probably just how do I get my position out and not look like a fool? I don't know. But I do think this behavior is egregious and I'm going to be dancing around when it, when it, when it proves it's proven wrong. Right.

[Andrew Sorkin]

Alex, We've heard a lot of talk from the likes of a Michael Burry, but more broadly about whether we're in an AI bubble, whether the economics make sense. Clearly, in the context of Palantir, they do make sense insofar as you're printing money over there. Not everybody in the AI space is printing money in the same way and they're spending an enormous amount on chips, data centers and the like. How do you see the broader space right now in terms of just how things are, are developing?

[Alex Karp]

There are two subtle issues in what is the addressable market and what is the addressable market for things that work? Meaning you make more money and you're, the quality of money is higher. So top line and bottom line grow talent Here we're in the business of a part of the addressable market where it works and it can be quantifiable. Either commercially or on the battlefield. So, yeah, that clearly. And over time, you're going to pray to optimality, meaning that every part of the stack is going to have to create more value than they charge. That's just obvious. And if that doesn't happen, it will be a bubble. And, you know, I mean, I'm sorry, short sellers can't tell the difference between products that work and products that don't. But these numbers should show you that there's a part of the market that, to quote you, is printing cash. And it looks like that part of the market is the park we own. There's a separate question, by the way, which I think is equally relevant. What part of the GDP growth is available for workers? What we call worker available gdp. And that's like one of the unique things about Palantir is whether it's on the battlefield, like the people writing the scripts for these very complicated operations or building batteries or doing things on the factory floor are being enhanced by our product. And those two, it's really. Those two questions are going to define arguably the future of what happens in this country. Does GDP grow because of AI, which only can happen if. If there's prey to optimality or in what? The way we see it, the cost the customer pays less than the value they create, which is abnormal, not exactly equal parade optimality, and that it's unknown. Honestly, you have this massive growth, but, you know, currently, as far as I can tell, the two companies he's shorting are the ones making all the money, which is super weird. Like, the idea that chips and ontology is what you want to short is batshit crazy. But leaving that aside, there's a bigger question, which is the average American believes AI is happening. They're just not sure if it's going to happen for them or it's just me getting rich. And that's the battle we have to fight. Because if you want a sane society, you can't just have GDP growth for us and no GDP growth for them. So, like, finding out what is available for the worker and proving it's available for the worker is going to be absolutely crucial, by the way, to be slightly political. You can't. If the revolution is real, it has downstream consequences. Like, how can you have an AI revolution and an open border?

[Becky Quick]

Are we safer as a society or less safe than we were five years ago because of AI?

[Andrew Ross Sorkin]

And I wanted to ask you, I talked to Lonsdale about, unfortunately, packed stadiums and drone attacks and things like that. And he said that's Something that we need to at some point face.

[Alex Karp]

Well, you know, there's a lot of complicated questions because there's like. I mean, it's so funny because, you know, like, I mean, in this book, which is. There's like a lot of. It's true, but then it's like the surveillance state. So, like, interestingly, I and Palantir have historically been on maximal safety and maximal data protection. And the product is actually built despite. You know, if you're being told Palantir is easy, is the product to use, to surveil you, you're the mark. Like, you know, we actually. So how do you have maximum safety where you can still have a personal life? You know, and so, like, personal life may mean you're just flirting with the person next to you. It may mean you're at the stadium with someone you shouldn't be. It may mean you're just there alone when you should be at work. We all have things we need and want to do in our private life, and part of democracy is we get to keep that. And Palantir's architecture makes it possible to have en heightened safety and reduce surveillance. Now you have this issue across, are Americans safer? You know, a lot of it comes down to, are we going to have a mandate that actually helps working women and men? Because the truth in our society is you're pretty safe if you have money. What happens to you if you're in an environment where you're poor or working class, black, white, Hispanic, anything is. You are then in an environment where people are espousing, they believe in what they're saying, while in fact letting you live in a war zone. Whether it's the inner cities or the border, we essentially have a class divide in this society where underclass people, white, black, Hispanic, everyone, they absorb all the negative externalities of policies. And those of us who can afford to sit here have a great life. And the real question for our society, in my view and for AI, is how can we make sure people participate in gdp? Which also means they can go home safely, they can go to school, they can come back from school, they can go to the border and not get shot. We don't have fentanyl coming in our society. And, you know, more people have died from fentanyl in the last year than all service members since World War II. And almost all those people are working class. And that's why no one cares. If they were Yale grads, you'd have a bomb being dropped on some South American country, it would stop. And we have that's. So there's a huge societal thing. Then you get to like, you know, mass events. And we've seen very destructive to our core assassinations of people who had heroic roles. We saw Abby in Japan. That's outside of America. We saw Charlie Kirk. We've seen the CEO of United. We saw people cheering these things. So in my view, there is the stadium issues, and these are very hard issues. How do you actually protect against drone? There are, are tech technologies which are not publicly available that need to be made available that can help. But there's always a risk of something happen because the only way to take the risk to zero is to eviscerate all our civil liberties. So that's why I'd say, you know, if you actually look at. It's like gun deaths. Guns are not a problem in society. Guns in the inner city create most of the deaths. So how do you protect the Second Amendment and change gun deaths in this country? I mean, of course there are other gun deaths that happen, but statistically. And so, and these are what we should do with technology is make sure the people who are living the worst lives live lives closer to ours and make sure our lives advance as well. But never with the idea that we're going to reduce crime to zero. Because the only way to do that is to reduce deviant behavior to zero. And none of us want that. Because I'm not the only one who's a freak show. I'm just more open about it and like. And you know every single person who's like. And I'll tell you something else before I get to you, there's a big lesson in probably the Madani disaster, the short seller, the fentanyl thing. If you think you can sit on the sidelines here, like in our generation, we thought we could outsource or like anti Jewish bias. Like, you cannot outsource it to the experts. If you think the experts are going to stop anti Jewish bias or the fentanyl or, or whatever. No, they're not. They're lame. They're scared. They're going to. They're going to listen to the short seller instead of reading the numbers. Like, this is a really big lesson. Listen to the short seller. Look at our numbers in all these things. Every single one, every single person that cares is going to have to stand up and say, you know what I mean? It's crazy that we all have to be advocates for ourselves. But the experts are not showing up. They're scared. They're drinking.

[Joe Kernan]

Huh?

[Becky Quick]

You're mad.

[Alex Karp]

Well, you should be mad. Like, it's like, I mean, it's, it's just like. And then. But of course, the positive side is we have these problems no other society has. Like, I spent half my life in Europe. Europe has no, I seen the GDP growth that, you know, is being besmirched by this wonderful, seemingly numerically illiterate short seller. Is, is a, is a planet a bounty of riches like Germany would cut off its proverbial beer garden to get this problem. And so. But we should not screw it up. And the way we screw it up is we are all on the sidelines. We let experts tell us what we should think and we get screwed.

[Andrew Sorkin]

Alex, it's a longer conversation. I know we're going to have another one, I'm sure very soon. I want to thank you so very much for, for jumping in impromptu this morning. After was a great earnings report. So congratulations on that and congratulations on your book.

[Alex Karp]

Everywhere I go, there's somebody. There's like, it's like behind them. I mean, it's there if everyone has it in their hand. I. Congratulations.

[Andrew Sorkin]

I thank you very, very much, Alex.

[Cameron Costa]

That's the podcast for today. Thank you for tuning in. Squawk Box is hosted by Joe Kernan, Becky Quick and Andrew Ross Sorkin on CNBC at 6am Eastern every weekday morning to get the smartest takes from that TV show right into your ears. Follow us on Squawk Pod wherever you get your podcasts. We'll meet you right back here tomorrow. Have a great day.

[Joe Kernan]

We are clear.

[Alex Karp]

Thanks, guys.

[Capella University Announcer]

Is it time to reimagine your future? The right business skills may make a difference in your career. At Capella University, we offer a relevant education that's designed to focus on what you need to know in the business world. We'll teach professional skills to help you pursue your goals like business management, strategic planning and effective communication. And you can apply these skills right away. A different future is closer than you think with Capella University. Learn more at Capella Eduardo.