A steady hand
Stocks and bonds are rising on Monday, and the dollar is down. On the first trading day since Donald Trump chose the billionaire financier Scott Bessent as his pick for Treasury secretary, investors seem to be signaling they like the choice.
The hedge fund mogul is seen as a steady hand to enact the president-elect’s economic vision — and, just as important, oversee the $28 trillion Treasuries market. “Investors prefer orthodoxy, predictability, and coherence from economic policy; there were fears that some of the candidates may not possess those attributes. Bessent does,” Paul Donovan, chief economist of UBS Global Wealth Management, wrote in a research note on Monday.
The Key Square Group founder overcame serious opposition from some in Trump’s inner circle. Elon Musk derided Bessent as a “business-as-usual choice” and threw his weight behind Howard Lutnick, the C.E.O. of Cantor Fitzgerald. When Trump tapped Lutnick to lead the Commerce Department instead, Bessent was left to fight it out against the likes of Mark Rowan, the boss of Apollo Global Management, the private equity giant.
Bessent won a “knife fight” to get the nod. On Wall Street, a document was circulated suggesting that his Key Square hedge fund had underperformed the booming markets. Bessent’s ascent is notable in that he doesn’t appear to have been on Trump’s radar during his first administration.
His background as a former Democratic donor who worked with George Soros, a villain for the right, has also been scrutinized. (Interesting fact: Bessent furnished the progressive billionaire financier with key data that prompted Soros to make one of his most famous trades: shorting the British pound.) Some Trump backers, including Palmer Luckey, the defense tech entrepreneur, worried about Bessent’s commitment to the president-elect’s America-first agenda.
Investors appear to have fewer qualms. Bessent gets high marks as a fiscal conservative and a champion of growth — at Key Square, he told clients that Trumponomics would usher in an “economic lollapalooza” — through deregulation and lower taxes.
Bessent pitched Trump on a “3-3-3” policy approach that appears to have earned him points. It involves:
cutting the budget deficit to 3 percent by 2028, from roughly 6 percent today;
boosting G.D.P. growth to 3 percent;
and encouraging Big Oil to produce an additional 3 million barrels of crude (or energy equivalents) per day.
But markets are worried about the potential inflationary effects of Trump’s agenda. The Republican’s plans for widespread tariffs and his promise to crack down on immigration could push up the value of the dollar, scramble the bond market and force the new administration to dial back its economic stimulus efforts.
Also worth watching: Whether Bessent’s more moderate views on tariffs conflict with Lutnick’s, and how he approaches the Fed if he is confirmed. Bessent has spelled out a plan to appoint a shadow chair of the central bank, and may be a hugely influential adviser to Trump on whether to replace Jay Powell when his term expires in 2026.
HERE’S WHAT’S HAPPENING
Intel’s shares fall in premarket trading as the White House is set to cut its CHIPS funding. The Biden Administration is expected to announce this week that it will reduce a federal grant to the struggling chipmaker to less than $8 billion, from the $8.5 billion previously earmarked, The Times reports. Intel is the biggest recipient of money under the CHIPS and Science Act but the company has been beset by problems, forcing it to delay investment in chipmaking facilities.
Huawei is set to unveil a new smartphone with a Chinese-made operating system. The telecom giant is expected to launch its first such device that uses entirely homegrown software, potentially challenging Apple and Google’s dominance in mobile operating systems, The Financial Times reports. The advancement comes despite American sanctions that cut the company’s access to Google’s Android platform in 2019.
“Wicked” and “Gladiator II” score big at the box office. The big-budget films brought in a combined $384 million this weekend, giving Hollywood a boost after a lean stretch this year that has seen ticket sales tumble 11 percent in the United States and Canada. The next few weeks’ performance will be crucial as Paramount (“Gladiator II”) and Universal Studios (“Wicked”) spent lavishly on production and marketing to help arrest a downturn in moviegoing.
Musk races to cut, cut, cut
Elon Musk is fast at work turning his ambition to slash government spending into reality.
But first, he and Vivek Ramaswamy, his co-leader at the Department of Government Efficiency, are making additions. They are said to be interviewing potential hires, and leaning on Silicon Valley allies to flesh out their plans.
Musk is turning to tech industry allies and Trump backers, The Washington Post reports. They include:
Antonio Gracias, C.E.O. of Valor, a private equity firm, and a former Tesla board member;
Steve Davis, president of the Boring Company, Musk’s tunneling business;
Marc Andreessen, the venture capital investor, who is working as a key recruiter;
The financier Bill Ackman and Travis Kalanick, the Uber co-founder, are also said to be involved.
It’s another sign that Trump-supporting tech executives will have a say in shaping the new administration. Mick Mulvaney, the president-elect’s second chief of staff, has marveled to clients of Actum, the lobbying firm where he works, how much influence they have in the transition.
Bringing Musk’s cost-cutting playbook to the government is part of the agenda. Musk and Ramaswamy haven’t laid out how will they slash a promised $2 trillion in federal spending. But in an opinion piece in The Wall Street Journal last week, they signaled they would scythe through regulation and make sweeping layoffs. Gracias and Davis were both instrumental in doing precisely that when Musk bought Twitter, The Post reports.
Can Musk and Ramaswamy pull it off? The duo have already scored one personnel win: They lobbied Trump to pick Russell Vought, a central figure in shaping the Project 2025 agenda, to run the Office of Management and Budget.
One idea: that compelling government workers to return to the office full time might force them to quit instead (about half of employees work remotely).
But budget and legal experts are skeptical. Federal law requires a rigorous process to repeal regulations and streamline operations. Mulvaney, who once headed the O.M.B., has said “going to Mars is easier” than achieving the cuts Musk wants.
Given Musk’s track record, don’t expect that to put him off.
In related news: Reid Hoffman, the LinkedIn co-founder and a Democratic megadonor, warned in an opinion piece for The Financial Times that Musk’s ownership of xAI posed a serious conflict of interest for both regulating the technology and the new administration’s dealings with Silicon Valley.
A former oil executive sees A.I.’s green potential
In recent months, Amazon, Microsoft and Google have cut major deals with utilities seeking more abundant and greener electricity to turbocharge the data centers crucial to their artificial intelligence ambitions.
And now Bernard Looney, BP’s former C.E.O., is staking his comeback on Big Tech’s A.I. power grab.
Looney on Monday will join the board of Prometheus Hyperscale, a data center start-up. The appointment removes some mystery around the veteran oilman, who stepped down from BP last year after admitting that he had failed to disclose personal relationships he’d had with colleagues.
Prometheus is building a massive $10 billion data center in Wyoming on a one-square-mile plot near the ranch of its founder, Trenton Thornock. The company said the facility will offer tech companies about one gigawatt of capacity to run their power-hungry hardware.
The start-up is a known entity to the sector. In May, it signed a 20-year power-purchasing agreement with Oklo, a nuclear start-up backed by Sam Altman, the C.E.O. of OpenAI. That said, the facility will initially be powered by wind and gas. The company said it has advanced a low-carbon method to cool data centers with liquids.
Looney will use his vast contacts to help Prometheus woo the tech giants. “I’ll be helping them with customers,” he told The Times. “I’ll be helping them with investors. I’ll be helping them with strategy.”
The former BP chief was a somewhat unusual oil executive. Looney forged extensive business ties in the Gulf region while also winning over some climate-focused investors for unveiling one of the industry’s most ambitious net-zero initiatives. (BP has since dialed much of those green targets back.)
A.I. is a power hog. A single query conducted by OpenAI’s ChatGPT requires roughly 10 times the amount of energy of a Google search, according to the International Energy Agency. And a number of tech executives, including Rene Haas, the C.E.O. of Arm, the chip designer, have warned that A.I. could soon overwhelm the developed world’s power grids.
“By the end of the decade, A.I. data centers could consume as much as 20 percent to 25 percent of U.S. power requirements. Today that’s probably 4 percent or less,” he told The Wall Street Journal in April.
The week ahead
Inflation and earnings loom large in this holiday-shortened week in the United States. Here’s what to watch:
Tomorrow: The Fed is set to release the minutes from its November rate-setting meeting, with markets looking for clues on the central bank’s next move on interest rates. On the earnings calendar, Dell Technologies, CrowdStrike, and Best Buy report results.
Wednesday: Set for release is the October Personal Consumption Expenditures price index, the Fed’s preferred inflation measure. Progress on inflation has stalled recently, giving the report added importance as traders dial back the odds of a December Fed rate cut.
Friday: It’s Black Friday, the unofficial start to the holiday shopping season. Wall Street will be closely watching the size of retailers’ discounts as lower-income consumers continue to pull back on spending.
THE SPEED READ
Deals
The Italian lender UniCredit has agreed to an $11 billion deal to buy a domestic rival, while a separate bid to combine forces with Germany’s Commerzbank faces stiff opposition. (Bloomberg, Reuters)
Anglo American has agreed to sell its remaining coal assets to Peabody Energy for roughly $3.8 billion, as the mining giant seeks to fend off a larger takeover effort by BHP. (WSJ)
Politics and policy
British regulators fined Barclays $51 million for failing to disclose payment to Qatari entities in 2008 as the bank looked for a lifeline during the financial crisis. (Retuers)
“Fate of Adani alleged bribery case could hang on Trump presidency” (FT)
Best of the rest
How the car industry would be hit if the Trump administration scraps a $7,500 electric-vehicle tax credit. (NYT)
“Do Coding Boot Camps Make Sense in an A.I. World?” (NYT)
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The post The Bessent Bounce — Markets Cheer Trump’s Treasury Pick appeared first on New York Times.
