China’s Chip Supply & POTUS vs. Powell 4/17/25
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Bring in show music, please. This is SquawkPod from CNBC. On today's episode, two companies are in the spotlight. The first, Nvidia. CEO Jensen Huang is in Beijing just as the U.S. government is eyeing the company's supply of chips to AI competitors in Asia. We take a look at

just how thin the line is between competition and national security. We went to the Met when Russia launched Sputnik to make sure we got to the move. Where'd that get us? I mean, this really, man.

And the second company in focus, UnitedHealthcare. A bleak forecast and a sharp sell-off there. I mean, if it moves 5%, that's usually a big day, let alone 10%. Then, harsh words for Fed Chair Jay Powell from, who else? President Trump.

And finally, an investor playbook that's less about play and more about the bench. Aperture chairman and CEO Peter Kraus joins us. Markets don't react well to chaotic processes. I'm CNBC producer Cameron Costa. It's Thursday, April 17th, 2025, and SquawkPod begins right now. Stand and or buy in three, two, one, cue and or buy.

Good morning and welcome back to Squawk Box right here on CNBC. We're live at the Nasdaq Market Center in Times Square. I'm Andrew Osorkin with Joe Kernan and Kelly Evans. Becky is off today, but thank you for all week. I know it's four long days. It feels okay today. It's okay today? But then you started saying it felt okay earlier. Then after I sat down for hair and makeup, I was like, well, maybe it's nap time again.

UnitedHealth falling this morning after quarterly results. Earnings of $7.20 a share. That's nine cents below estimates. Revenue $109.6 billion, also below expectations. UNH lowering its earnings guidance for the full year. And that stock off close to 10% this morning. Yeah, that's seven times 55. Is that? 350, yeah. That's why I said we were...

When I sat down, we were gaining about half of what we lost yesterday. It's down almost 10% on the results. And then that happened and wiped out 350 points of Dow. I mean, if it moves 5%, that's usually a big day. Yeah, that's big. Let alone 10. Wow. Do you think that they are going to be paying out more? Is that what's happening here? Is it utilization? I don't know what you'd call that. I don't know what you'd call. I doubt it. And I'm not going to.

You know, I'm not going to say, wow, Tim Waltz, hey, I wake up in the morning, puts me in a good mood if United Health is down. Something like that. I'm not going to take any. I mean, some people probably would look at that with all the stuff still swirling around. This crazy controversy about Taylor Lorenz and all this stuff. It was Sean Hannity last night about Luigi, whatever his name is, Mangione. She went on the show to talk about it last night? She did. And she, you know, gave the normal excuse that, you know, I wasn't.

saying violence is good or that he was a good person. I was just saying that the overall view of how health care is with the insurance, you know, system is something that needs to be dealt with. And it causes a lot of anger. I wonder whether there's more pressure on the company. I would. I'm sure of utilization in terms of putting bills through. Well, by the way, I think we are all United Health. We are. Don't even. But also even. Right. And right in there. But that's the bit that it

By the way, we just had a... What are you saying? No, because it's true. I deal with the fours all the time. They don't even exist as a company. If you want to talk to them, you have to go call a third party. You can't get anybody on. This is UMR. It's a part... But the place where it is rife, too, is Medicare Advantage. Where they're supposedly going to give you a more holistic approach and find more things, but then the rap is that they're looking for everything. And they find things that are...

you know that you can charge for that you may or may not necessarily have i don't know is that where the crackdown is really going to happen on the fiscal side or not just looking through the results here yeah i mean that's a big market reaction um so they missed like you said top and bottom line that chair jay powell um but they're kind of getting tired my my take on this is going to be boring for people but a warning of fallout from president trump's imposition of tariffs on countries across the globe powell made those remarks

at the Economic Club of Chicago. The level of tariff increases announced so far is significantly larger than anticipated and the same is likely to be true of the economic effects, which will include higher inflation and slower growth.

Both survey and market-based measures of near-term inflation expectations have moved up significantly, with survey participants pointing to tariffs. The inflation numbers we've seen have been cool, and this may be coming. So thank you, Chair Powell, for warning us that could be coming. But as you were taking the coal back right after the pandemic, and we were shoveling the coal onto an already hot economy,

Not crickets from Powell. And then we get 40 year highs in inflation, which really were the second derivative, not just temporary pricing. Not a word, not a word from him back then. So now he's- I thought it was Biden's fault.

It is fine. It was both of them. They enabled. But that's why now, because of... But not a word from him back then? But now, because that happened, they're going to be so triggered. I think it's more that than a Republican Democrat. Don't you think? It's a, you know, we're not going to let this happen again. I told you you wouldn't like it. I told you you wouldn't like it. But by the way, you know, Waller is saying they...

they shouldn't repeat that mistake. You know, he's come out and maybe again. We all know there's a race for the next chair. Now we're for free speech. We shouldn't repeat those mistakes. Now we're for this. We shouldn't repeat those mistakes. Everything went for four years. Nothing happened. We didn't do anything. Didn't say anything. The media didn't say anything. You're saying there's all these mistakes and you think that they shouldn't be repeated. Why are you saying go repeat them now? Neither side is consistent on what they push. That's the problem. And the hypocrisy...

I don't know if it's this deep, my friend, but maybe, maybe. I think if there was more accountability about the last time. Just never say that hypocrisy applies to my family. That's all I'm going to tell you. It's from Godfather 2.

President Trump now blasting Fed Chairman Jay Powell on Truth Social. The gloves are off. He says that Powell has been, quote, too late and wrong on interest rates. And Powell's termination cannot come fast enough. We have not seen this kind of language from the president directly since he's been in office about Jay Powell. He's made some comments prior to the election.

prior to his election, but he is now officially the president of the United States and talking about trying to get rid of Powell. Of course, as you mentioned, Kelly, earlier, Powell is in this role until next May. Next May. The question is, when does he nominate somebody else? Right. There was always this idea, something that Scott Besant raised. This is Deja Vu all over again. He did this repeatedly in the first 2019 presidency.

2019, the president said almost the same thing. Lower rates. Yep. And then many, many people said no. And then they did. And then they did. People say he was right. Yeah. They ended up cutting. And then the question about jawboning Powell into doing something. I don't know if he's going to. I think the market worries about the opposite effect where the jawboning makes Powell want to dig his heels in and maybe not be as inclined or the Fed less inclined. But you remembered H.W. and I think

And when you actually look into it, it goes back much further than that. The president's just reaming. Look, the very famous example is Volcker going to see Reagan. Yeah, exactly. Having said that. Who got shoved against the wall? Was that someone? That's right. But the truth is, what I don't think we've ever seen is a sort of public condemnation of another official that is ostensibly in an independent role.

I mean, it's the Trump administration. People wake up and have this for breakfast. It was probably behind the scenes. I'm saying it's happened behind the scenes. Volcrox is going back to ratings. Him and Besson have a weekly breakfast, which Besson talked about the other day. So I think the market also knows that line of communication is there. It seems open. It seems like an amiable relationship.

I mean, do you think it's amiable? Between Besson and the Fed chair, a weekly breakfast? I mean, I think it's like working, you know, like forced working way. Like a hostage state. Like a hostage situation. Like we have, there's Mayor Adams and there's President Trump. What do you think that relationship's like? No, don't just start going off on all of that. You're bringing up all your hair on fire moments again. We don't need a reprise of all that. Go back to Greenspan. Go back to Greenspan. Right.

H.W. literally blamed him for losing to Bill Clinton. We would have never seen, I didn't have sex with that. We would have never seen that if Greenspan had lowered rates. The country would be a totally different place right now. He blamed him for that when? When he was the president? No, I guess afterwards. I'm just saying, have you ever seen a president... But it was really about read my lips, though.

I'm just suggesting the norms of what was normal is not normal anymore. Right. But I think by Trump standards, I don't want to say this was restrained, but, you know, I don't think it's unexpected. Didn't you live in Trump one? No, I'm. You barely survived. But I just know. I also think if we don't recognize and just identify to what's happening and pretend it's normal, then it becomes normal.

God, I don't want to go over the last four years again. I can't. I just can't do it every day. And again, is there a market? I mean, that's what I would look to. It's like, is it, are we going to see a, you know, is there, we saw the sell-off yesterday. The market's more concerned that Powell's not going to be quick to cut. Watch jobless claims, watch the labor market. I mean, that's kind of why he gets elected, because it's not business as usual in the political arena.

the feckless and spineless politics that we're used to. For some of this guy, just like a bull in a China closet, right? The disruption is sort of why he won all seven swing states and the popular vote.

That's what happened. And we'll see how people feel about things now. I think that there's a. Well, that was what we were going to do after the first presidency. And now he's now he's back. You know, now he's back with a vengeance even after all those trials and all that lawfare. Right. And the economy is doing spectacularly as a result of all of it. We don't know about the economy yet. Because we can't measure it. No, because it's it's only it's only a stock market phenomenon so far. OK.

I know you're hoping. I'm not hoping anything. I'm hoping for the best. I really am. I pray for the best. Don't they always say that? And then every time there's something bad, it's like, yeah. I think we all do that. Both sides. Every side. It's hard. Both sides. Okay, let's talk about this other story. And I know that everyone's got thoughts. So here we go. Report saying the IRS now considering... I have to go to the bathroom. I'll be back. Considering... I have to leave the set. Here we go.

Kelly and I can talk about it. We probably have a lot of... Kelly will take... Listen. I'm actually very curious where we're going to land. Elise, are you back there? Stefanik, can you... Let's just tell the audience, for those who are just waking up trying to figure out what's going on, let's explain what's going on. So the IRS...

is now considering revoking Harvard University's tax-exempt status. This follows a post on Truth Social from President Trump on Tuesday, who floated that idea. This after Harvard rejected what it called an unlawful demand from the White House to overhaul its academic programs or lose federal grants. So the Trump administration threatened the university and actually other universities as well with funding cuts

over pro-Palestine campus protests and threats to Jewish students that erupted following Hamas's 2023 attack on Israel and Israel's military response. As of now,

There's apparently been no formal request yet for the IRS to change Harvard's tax status. But late last night, the White House deputy press secretary said any forthcoming actions by the IRS will be conducted independently of the president and investigations into any institution's violations of its tax status were initiated prior to the president's Truth Social post.

Just for context, it is illegal. It is a criminal penalty with criminal penalties for the president or anybody in the administration to direct or indirectly suggest, not just suggest, but effectively create investigation or go after a company via the IRS. It is illegal.

There are laws on the books. Oh, my God. And you don't remember about this. You don't remember Obamagate. I understand your perspective on every single I know company that had Patriot in its name got audited by Louise Lass or whatever her name was. Nothing happened. I understand. I thought we're being consistent again. Now you have a problem with it. You've told me what if it's not explicitly directed into the point about what happens if they are.

if the IRS... Do you not think... Why was it okay back then? But what if it's not explicit? When it was Democrats doing it, why was it okay back then? Okay. Here's my... It's not okay. And my question... It's not okay. Okay. We are in agreement. It is not okay. Okay. But if you don't look at this in some semblance and say, this is what they call lawfare...

which I was told during the campaign repeatedly, this is the Trump campaign, that they were trying to get rid of lawfare. And you don't look at what's going on and think this is like lawfare on steroids. I don't know what to say.

It is. It's empirical. It's in front of your eyes. You can watch it. I thought yesterday you walked away from that conversation with Stefana totally converted because she seemed to just answer every one of your concerns. I thought you totally were on board with what was happening after yesterday because she was so effective in countering all of your arguments. By the way... A changed man.

I like her. I don't dislike her. By the way, I can have a great conversation with President Trump. I think he's charming. I thought you came around. Yesterday, I thought you came. I thought you were going, geez, I've been wrong. No, no, no, no. I didn't plan there. You basically said that at the end.

No, what I've said over and over, especially with the Harvard situation is that the anti-Semitism piece of this on Harvard campus is terrible. Violence is terrible. We need to get rid of that. We can't have disruptions of class. People can't feel intimidated. All of those things we need to we need to end. There's no question about that. And if the government wants to work with Harvard and press them on that specific slice of it,

They should be. And they should use their leverage in that way. I don't know if they should use the IRS leverage in that way. Should the IRS itself be able to consider the tax-exempt status? Well, unless you think that then we're going to have to do this to... You want to do this to every college and university in the country? The ones that have these issues? But here's the issue. In this case, what's happened is the government came to Harvard

and said, we have this five-page letter. You've seen the letter. You can go get it online. You can Google it right now. And you can see what the government is effectively requiring of Harvard. It goes far beyond simply the anti-Semitism issue.

And applies all the programming that it thinks are contributing to the anti-Semitism. But it gets into a free speech story. That's, to me, the issue. Is there free speech? It's all about the government funding piece of this, right? A private institution can do what it wants. It's only if they accept federal funding. No one's taking away their free speech. Well, no, the IRS now is going to take away their tax status as well. Right, but that's still not taking away the First Amendment.

It doesn't take away their First Amendment. But this is how... Can I ask you, with $55 billion in the endowment, why are you crying the blues when they... What do they spend that money on? $55 billion. There are people that say this is a hedge fund that has a college just so it can keep its tax-exempt status. That's all Harvard is. It's like a hedge fund that happens to have a school attached to it. Well, first of all, that's a terribly disparaging remark because...

I would suggest that that money is somehow... What do they use it for? No, is somehow they're profiteering off of this status. But your description was the influence peddling. Meaning whatever the mission of the enterprise is, whether it's selling influence or if they have a successful trading arm. When we keep giving all these grants, it just...

you get inflation suddenly the colleges don't need this money and student loans everyone gets those no one wants to pay them back that's why we have this horrible inflation look if you want to have a conversation about whether the government should be providing either student loans or you think the government should be providing grants to universities for science

for science, by the way, at MIT as well and all of these universities. If you think that we should be out of that business and maybe Doge thinks that, I don't know. They don't have to be. We can have that conversation. I don't think that's a great idea. Hire one conservative at Harvard. That's all you got to do. There was a letter from Ways and Means Chair Smith last year before the election where he says...

you know tax exempt status is a privilege and not a right in exchange organizations must operate for stated exempt purposes and they outline the same concerns that we've heard from the trump administration but meaning this this predates you know jan 20 there have been people raising concerns about whether they're using that status for stated purposes or for more nefarious ones that would violate the spirit of their tax-exempt status so it's

It's not just a Trump thing. I just think that then you, I mean, I'm just suggesting to you, there are organizations that have not-for-profit status all over this country, some of which, by the way, have a conservative bent.

and others that may have a liberal bent. There are theater organizations. There are enterprise, new enterprise organizations. There are all sorts of not-for-profits. And if you want to change not-for-profits across the country, go with God. I don't do it. But to target ones this way...

I think, again, goes to this sort of lawfare situation. Yeah, but when you said this is against a criminal charge, you once told me that the governor, Hochul, here, that they were going after a criminal indictment of her on fraud. That was absolutely not true at the time. They were going for a civil. It was civil, and it wasn't her. It was her administration writ large. All I'm suggesting to you... This is criminal if the Trump administration says to...

No one did any time when Obama did it. Nobody did, and maybe they should. Maybe they should. Okay, and you wish we looked at the laptop, and you wish we said Biden was Sino. You didn't. Cheese will be next.

Coming up on SquawkPod, a deep dive into deep tech. NVIDIA CEO Jensen Huang is in Beijing, and here at home, the administration is putting pressure on the company, attempting to limit its chip sales in Asia, and Congress, for its part, has launched a probe into how important NVIDIA chips are to OpenAI competitor DeepSeek. The question is, will it work?

This whole idea that you can get into a protectionist state and somehow prevent everybody from doing it. Still worth trying to slow it down. I'm not saying we shouldn't slow it down. The question is whether this really does slow it down. We'll be right back. Hello, I'm Ben Rizzuto, wealth strategist at Janus Henderson Investors. Is a brighter future possible? At Janus Henderson, we think it is. We've worked to help clients achieve superior financial outcomes and fulfill our purpose of investing in a brighter future together.

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NVIDIA CEO Jensen Wang is saying China is a very important market for his company and that he hopes to continue to cooperate with the country. This is according to China state broadcaster CCTV. He's in China just a day after NVIDIA shares plunged nearly 7%. The drop followed news the company will take more than a $5 billion charge related to canceled orders for the H20 chip.

NVIDIA says the government told it it would now have to get a license to export those chips to China. Additionally, Congress's Select Committee on the Chinese Communist Party is now calling for answers from NVIDIA about its sales of chips to China and to Southeast Asia. They want more information related to reports that Chinese AI model DeepSeq was developed with tens of thousands of NVIDIA chips

Even though the H20 was legal for export to China until last week under previous Biden administration rules, in a statement an NVIDIA rep said the U.S. government instructs American businesses on what they can sell and where, and the company follows the government's instructions to the letter. The Financial Times reported yesterday that NVIDIA was blindsided by the Trump White House's new export controls on its chip sales to China. I don't know if you remember, Alex Wong.

from Scale AI was on our broadcast from Davos. This was the week of the deep seek thing and everybody was

couldn't fathom how deep sea had done what he did and he said on our he said you know they had a lot more you know you all think it's so great but they really actually had a lot more nvidia chips than you then like this wasn't made right with but i think the thought is that they were still the ones that they were allowed to have access yeah we're top of the line but they still this you know

You know, and I had some thoughts about this, as I always do. The Trump administration wants to crush China's AI ambitions. Now, what is that worth to us here?

A lot. But I mean, I think that it's I think it's a right. But I think it's a legitimate. That's all we need is China way ahead in the air. I don't even know what the future would look like. But that's where TikTok is scary enough for humans. If China's the leader, then I'm even more scared. So how much how much should you pay and pressure on the Nasdaq? How much should we accept to try to crush China?

or not crush, but try to prevent them from being market leaders. Are you willing to give something? If we could do it, maybe you think we can't do it anyway. Right, so I'm in a different place, which is I think it's an almost impossible task. I think we can slow them down. I think we can slow them down. We can put them a year or two or three or five years behind, but it

The Huawei example is the story. We thought that Huawei was so far behind in terms of what they could do with their chips for their phone. And then what did they do? And this is, look,

This is a great phrase. You know, when you're put in a box, you try to figure out how to fix it. And that's what they did. Meaning, their mother all invention. Mother invention. Mother invention. Frank Zappa. Amazing. And by the way, I also think. You don't even know what I'm saying. Go ahead. You want competition. You do. You do. You ultimately want competition. But you see what I'm saying about China. China. China.

I'm just I'm just suggesting you I think it's a very hard thing to put that genie fully back in the box. And then look at how because of this, Huawei now has relationships all over the rest of the world. Right. Look at how we galvanize. And they become the low cost provider and everything else. So I think if you just totally chop off everybody, you're you're. We went to the Met when Russia launched Sputnik to make sure we got to the move. Where'd that get us? I mean, this really matters.

with AI, I would say. Right, but as you just said, where did that get us? Where did that get us? Another example. Found some rocks. Got the flag there. No cheese. It's probably worth trying to do what we can on the margin, slow it down a little.

Christina Parts Nevelis is here with all the latest. Good morning. Good morning, Kelly. Well, the United States is tightening tech restrictions on China, targeting Nvidia in the AI race. Just two months after Chinese startup DeepSeek's AI breakthroughs, Washington has responded. The Trump administration now requires special licenses for Nvidia's China-specific H20 chips, while Congress has launched its first investigation into the company.

I obtained the letter last night, most people can find it online. It asked Nvidia for a list of customers who've made over 499 AI chip purchases from countries like China and Malaysia. They want all correspondence between Nvidia as well as DeepSeek, which was built on Nvidia chips. The New York Times reports DeepSeek may have stronger ties to China's military than previously thought. And then in Nvidia's defense, late yesterday,

afternoon, they said, quote, "The United States government instructs American businesses on what they can sell and where. We follow those directions to the letter." They also stressed, this is NVIDIA, that reported Singapore revenue wasn't shipping to China, addressing fears that Singapore serves as a backdoor.

The impact, though, is substantial. NVIDIA faces a $5.5 billion quarterly charge. AMD is taking an $800 million hit with others preparing for similar effects. The latest is Intel being listed at that, possibly having a charge today. I reached out, but didn't get comment in time. And then without exemptions, though, this move would cut off vital computing power for Chinese firms, likely boosting demand for local alternatives like Huawei. So one analyst called it a shot in the arm for China's domestic market.

But did they, I mean, the Singapore numbers do look large relative to... $17 billion of fiscal 2025 revenue, which is 13%. And people are asking now, even with the tariffs and the restrictions they're trying, you know, can't they just kind of move the chips, they being whoever would want to smuggle them into China, move them through other countries, but... Malaysia would be a great example. Yeah, but the newest, newest, best-of-the-line chips are...

quite large, right? I mean, we're talking about, we're not talking about little wafers. They're positioned into racks. Okay. Not the exact, the chips are actually very tiny, but the actual rack for a Blackwell is quite large. Got it. Very, very heavy. Right. But they're still smuggling in the chips. The argument is then why are you just targeting the particular chips? Then you should go after all of the parts too so that China cannot move forward and build said supercomputers to maybe, you know,

How are their military? What do we know about Jensen Wang being in China and this effort? I mean, it comes right on the heels of these new export restrictions. The optics look bad. And he goes there immediately. Yeah. Well, it's from state media, and he was meeting with trade representatives of the Ministry of Commerce in China. NVIDIA's not commenting or declined to comment, I should say, but we could take state media, I guess. There's photos, too. Mm-hmm.

I just don't know how much we can really set the whole plan back. At this point, right? Especially with Huawei's progress in their chips, too. And this H20 chip is... Are they equal, Huawei chips? No, H20 is actually lower than the Huawei chips. So they've already progressed. And so if you block this lower chip, it's just going to hand more into Huawei's hands. Hmm.

mother of invention problem. And this is why this whole idea that you can get into a protectionist state and somehow prevent everybody from doing things. Still worth trying to slow it down. I'm not saying we shouldn't slow it down. The question is whether this really does slow it down. Right. Christina, thanks. Thank you. Christina Parts, The Nebulist.

Next on Squawk Pod, market uncertainty is just another day. Chairman and CEO of Aperture Investors, Peter Krause, is advising patience. I feel like people shouldn't sell their equities. They shouldn't sell their bonds. They should just sort of sit. The former chairman and CEO of Alliance Bernstein joins us next.

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This is SquawkPod.

You're watching Squawk Box on CNBC. I'm Andrew Osorkin, along with Joe Kernan and Kelly Evans, who's been hanging out all week with us. Becky's been off and we're going to see her next week. But we've got a whole bunch of big stories to tell you about this morning. Let's get to the markets now with Peter Krause, chairman and CEO of Aperture Investors. You've

last time we were on it you were actually pretty sanguine yeah are you have you totally flipped at this point because of of uh the last hundred days no actually i i feel like

People shouldn't sell their equities. They shouldn't sell their bonds. They should just sort of sit. Would I put more cash in the market today? Either one? Probably not. I think I'd wait to see a little clarity. But I think we're in a very volatile time period. And obviously, the administration's policies are, in some cases, unexpected. And it's making the markets move in unexpected ways. So I think investors have to basically...

sit with what they have. We as investors are carefully looking at what we own and we might be selling things and buying things to actually improve positions. But net-net, I think it's very tough to call right now. - Okay, the volatility or the nature of Donald Trump and President Trump in terms of some of his decisions and the way things happen and he says whatever he's thinking he says obviously on Too Social or wherever.

Yet some people you probably respect are either on board with some of this stuff or they want to keep, they like being secretary of whatever it is they're secretary of. But some of these guys are pretty smart and you respect and they at least on face value think we need, maybe we're negotiating, but they think we need to reset the global trade and shrink the government and all these things that are causing so much tumult. Do you think there's a,

a positive outcome that's possible absolutely there's a positive outcome as possible let's separate we want to rebalance trade from how we do it i don't think there's a lot of argument that we needed to rebalance trade there's probably a lot of argument on how you get it done and i don't think there's any argument on we want to cut government expense democratic

presidents have done that in large size. The question is, how do we do it? And markets don't react well to chaotic processes. Could we be higher in six months? New highs in the markets in a year? Sure. In a year? Yeah, we could. And could we have a better global crisis? We could also be lower. I think that's the point. You know, you asked me what would I do today. I think the point is that it's tough to see. You know, normally you would say,

gee i have a probability of going up and a probability of going down and i feel asymmetric about one of them today i think people are saying i'm not really sure do you think china is being isolated and will feel the heat or do you think that they're positioned

uh i mean she doesn't really care what happens i don't think that to those people as much as we do over here he could have a stronger hand theoretically if this is still a major looming problem in a year can we be higher at the markets or do we need china in the united states to actually come to some type of agreement i think it's a mistake for

us, meaning the Americans or the United States, to not view the world as being a place where if everybody does better, we do better. For 80 years,

Everybody did better and we did a lot better. Well, they actually did better. They did. I mean, we did better than anyone else, but they did. There were times that we were the big dog and they took advantage. I don't think there's any real logic to saying we should do more better or a greater amount better. I think the whole idea is if the world is better, we are better. And that has been true for 80 years. So what needed to be reset then, trade-wise?

Well, there definitely are trade imbalances and not trade deficits and surpluses. That's a poor measurement. I think that's reasonably well articulated. Like Japan. Japan should be, we should be, I mean, they import a fifth or a sixth of what? We have to include services in the calculation. You just can't look at goods.

At the end of the day, the only thing you look at is what you manufacture as opposed to what we sell in services. We are the largest exporter of services in the world in the most sophisticated ways. We've built a juggernaut on that point. We're not even measuring it. We're just assuming that the only thing that matters is goods, is physical goods. And that's not a reality. That's not a real reality in any case. Do you think...

I asked you off camera, do you think the Fed is too tight? And you said yes. Because of the uncertainty or because of, I mean, I am like, think about that. Gasoline prices are down 16%. Isn't it possible we offset the tariffs with the weakness in the economy? The Fed has been clear, whether the market likes it or not, the Fed has been clear that they're going to get inflation to go down. And as long as the labor market is reasonably sanguine, which it is,

they're going to be focused on inflation, and I think they should be. But you think they're too tight? The Fed was lowering rates before we started the trade discussion. Right. And I think the Fed would have continued to lower rates. But the tariff discussion...

whatever you want to call it, has put pressure on prices. And the Fed is going to be a policeman on price. So let me ask you about that. If Jay Powell gets fired or there's an attempt to oust him or eliminate him, remove him, what does the bond market do? I don't think it's a particularly good idea.

policy to fire someone to change policy. Okay, but then I ask a different question. And I think the market will look at it that way and say he had a policy

Someone else didn't like it. They fired him and changed the policy. I think the market would be very unhappy about that. OK, let me make it more complicated for you. Sure. He's out of the job next May anyway. Yeah. OK, so let's say sometime in the fall of this year, you start hearing names of people that Trump says he wants to put in place. Yeah. Who have a lower, you know, a policy ambition to effectively lower interest rates. And that's what they're going to do.

And I imagine whoever that person is, is going to be appear to be seen as if not a puppet of the president, but someone who's dovish, who's in line with the president of the White House. Yeah. Does the market look favorably upon that? It will depend, Andrew, on where longer term inflation expectations are. I think if if you have a if we're in exactly the situation we're in today, I actually think that could be challenging.

I think if longer term inflation expectations moderate, let's just say, for example, the tariffs actually continue to slow economic activity. Let's say the tariffs create a recession. Prices are going to come down and inflation expectations are going to come down. And if somebody then comes in with that attitude, I think the market will be happy about that.

I think if inflation expectations continue to rise and prices continue to rise, then some people are going to say, great, we're going to have interest rates down. That's going to grow the economy faster. But the long end of the bond market is going to say, I don't like that. And the government's going to be borrowing money at not 50 basis points wider, but 150 basis points wider.

And that's going to squeeze out the federal deficit. It's going to make the deficit go up. That's a whole process that you have to think about here. You can't just look at the short end of the curve. Well, for me, you're not...

headed for the hills and selling everything that's going to be what i take away from this no you're not that worried no for sure okay and look i i think that there were trade imbalances i think that they should be addressed i think it's a process question and i'm not the only person that's so we would have never done it ever probably

It's like we never did anything. The argument. You're happy about the border, at least. The argument is. Dems. I mean, are you happy about the border? If I didn't pound my fist, make a, you know, make a mess and get everybody upset. I couldn't get it to change that. That's a false. That's a false. OK. All right. Well, we couldn't close. We don't know the other side. We couldn't close the border either. Until we pass that bipartisan bill. We don't know the other side, Joe. Totally closed. We don't know the other side. Yeah.

of that. But if we did have the other side, you can't categorically say that that wouldn't work. I mean, Doge, too. And if Doge really would work, that would be great. I'm just not even sure it's working. You know the story of the Clinton administration. They cut a billion dollars out of it. You mean the Newt Gingrich-led Congress administration?

Let's call it a Republican-led expense reduction. It's fine with me. But he cut a billion dollars out of a smaller deficit, and there was no mess, no fuss. He also reformed welfare. Don't you think we need to start calling him a Republican at this point? I mean, he's not...

In hindsight, Bill Clinton. I mean, factually, was he not a Republican? Well, the last time I talked to him, which was maybe a couple months ago. But you weren't supporting him at the time. So what are we talking about? No, I wasn't. Okay, well, there you go. Bob Dole, just a man. He was a Republican with his peccadilloes. He was a Republican. Come on. No, Peter, thank you. I'm surprised you're not out there giving money to the foundation. Yeah.

Right. She's not going to be president. Kelly, you didn't jump into this. She's not going to be president. Why should I contribute to that? That was only a good idea when she was going to be president. When everyone, probably Krause, contributed. Given his Republican status, you would have been a great supporter. Peter, thank you. You're welcome, guys. In the meantime, a quick thank you to Kelly Evans for hanging out with us all week. All four days. We will see you on Monday. So have a great day off tomorrow.

You heard him. We're off tomorrow. It's a market holiday. But if you're working and you need a little SquawkPod boost for your commute or your lunch break, just scroll down in your feed on Spotify or Apple Podcasts. There's plenty to choose from. Plenty of episodes with big guests and big discussions. Our TV show SquawkBox is hosted by Joe Kernan, Becky Quick, and

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