What President Trump's Treasury nominee Scott Bessent might be asked today

Tests for President Trump's cabinet selection

Perhaps the most important hearing for companies and markets on the incoming Trump administration's cabinet picks begins Thursday at 10:30 a.m. ET.

President-elect Donald Trump's pick for Treasury secretary, Scott Bessent, is likely to be confirmed by the Senate. But the billionaire hedge fund manager is still expected to face tough questions about his boss' economic policies, which have the potential to dramatically disrupt the global economy and trade.

“We can usher in a new era of more balanced prosperity and rebuild communities and families across America,” Bessent said in prepared remarks before the Senate Finance Committee. .

Critics are skeptical. “Mr. Bessent has spent his life making the rich get richer,” Sen. Elizabeth Warren, D-Mass., told the Times. (Democrats plan to pursue him over matters including how he collected hedge fund proceeds that allowed him to avoid paying more than $900,000 in payroll taxes.)

But he has already won support from both Wall Street and fervent Trump supporters. And even Warren calls him “smart” and “thoughtful.”

Mr. Bessent will be asked about two major parts of Mr. Trump's economic vision. One is to impose across-the-board tariffs on allies and rivals alike as a way to extract trade concessions, which could significantly increase consumer prices. He is expected to say it is desirable to introduce such a levy gradually to avoid sticker shock.

Bessent also plans to ask for an extension of the 2017 tax cuts signed into law by President Trump, arguing that failing to do so would result in “the largest tax increase in history.” But implementing it and adding other breaks would cost trillions of dollars and add to America's $36 trillion national debt burden.

Both could reignite inflation and likely persuade the Fed to slow its pace of rate cuts. It could also spook global bond markets, which some economists believe could be the final brake on Trump's policies.

DealBook has more questions:

How will he approach the Fed, which has historically been politically independent? (And, as Jay Powell noted at last month's Dealbook Summit, will he maintain the 75-year tradition of regularly having breakfast or lunch with the central bank chairman?)

What does he think about Trump's proposal to create a Bitcoin Strategic Reserve?

what's happening here

Will the Israeli Cabinet ratify the ceasefire agreement with Hamas? Key ministers were scheduled to vote on Thursday on the deal, which begins with a 42-day ceasefire and the release of hostages. However, Prime Minister Benjamin Netanyahu's office accused Hamas of violating unspecified parts of the agreement. Hamas said it was committed to the agreement.

Jeff Bezos' Blue Origin is finally launching a large rocket. The 320-foot-long Newglen took off from Cape Canaveral early this morning, finally delivering its second stage into orbit. The result, which has been hit by delays, strengthens Blue Origin's hopes of competing with Elon Musk's SpaceX in the increasingly important business of getting things into space.

More farewells from regulators in the Biden administration. The Department of Transportation sued Southwest Airlines in 2022 for chronic delays that harmed passengers on two routes. It is seeking civil penalties of more than $2.1 million. And the FTC sued John Deere, alleging that the tractor maker illegally forced farmers to rely only on authorized dealers for repairs and inflated profits.

Latest information on TikTok

With three days left until a law requiring TikTok to sell in the US or face a ban takes effect, the Supreme Court has yet to rule on the video app's challenge. As the clock ticks, here's what we know.

The Times first reported that the TikTok CEO will take the stage at President Donald Trump's inauguration on Monday. Shou Chu's prominent position alongside other VIP technology leaders, including Elon Musk and Mark Zuckerberg, is a sign of the company's growing relationship with Trump.

According to The Information, TikTok plans to shut down its U.S. operations if it loses in court. If that happens, the expected movement of the ban will change. Many expected the app to disappear from app stores, but expected it to continue working on phones that had already downloaded it.

TikTok is changing the tone on its potential loss at the Supreme Court. The app told its U.S. employees on Tuesday that they would still have their jobs next week if the high court upholds the law, implicitly acknowledging that the legal challenge could be defeated.

President Trump is reportedly considering ways to circumvent the law. According to the Washington Post, one option is to issue an executive order halting law enforcement, but legal experts doubt that would work.

The paper also floated the possibility that “some people under Mr. Trump's influence” could sell parts of TikTok to U.S. investors, assuming that would meet the law's “qualified sale” requirements. Reportedly claiming.

Some analysts believe that the longer the Supreme Court takes, the less likely a ban will be. Analysts at TD Cowen wrote, “If the court intends to continue the ban, we want to do so as soon as possible to ensure a short time frame for Biden/Trump/China to potentially find a solution to save TikTok. “I think it may be the case,” he wrote.

“However, if we learn that the court intends to overrule the ban and allow TikTok to survive, it could be as late as Saturday before a ruling is issued.”

Behind the market rebound

This morning's stock futures market is signaling another period of solid trading. The announcement came a day after the S&P 500 rose to a two-month high on strong earnings from Wall Street giants and encouraging inflation data, putting the benchmark index back on track for 2025. .

More importantly, bond market jitters eased, with yields on 10-year Treasuries falling sharply on Wednesday.

This will be reassuring for the incoming Trump administration. It is expected to push ahead with policies that some economists warn could accelerate inflation and ultimately force the Fed into a pattern of holding interest rates steady.

Still, investors face additional challenges. Tune in to retail sales this morning for new information on inflation and what Bank of America and Morgan Stanley have to say about economic strength, dealmaking and trading activity in their earnings calls .

On Wednesday, JPMorgan Chase & Co., Wells Fargo & Co. and Goldman Sachs & Co. reported year-end results that beat analysts' expectations.

The latest Consumer Price Index report also buoyed the market. While concerns remain about overall inflation, the data showed that the “core” CPI, which excludes volatile food and fuel prices, fell slightly month-on-month.

This could prompt the Fed to continue cutting rates this year, with futures markets pricing in as many as two cuts this morning. LPL Research economist Jeffrey Roach said in a letter to investors Wednesday that he does not expect any cuts by the second quarter.

“Today, an oligarchy with extreme wealth, power, and influence is taking shape in the United States that literally threatens our entire democracy.”

— President Biden in a sharply worded farewell speech Wednesday. He warned of a growing “high-tech industrial complex” and the erosion of truth through unchecked social media and AI, potentially enabling “abuses of power”.

Short sellers head for the exit

Over the past eight years, Hindenburg Research's Nate Anderson has accused numerous giants of fraud and defrauding shareholders, including India's Adani Group, Icahn Enterprises and electric car maker Nikola.

His reporting helped destroy billions of dollars in market value and in some cases led to someone going to prison.

Now he's wearing a hat.

“I have decided to dissolve Hindenburg Research,” Anderson wrote in a note on the company's website Wednesday. “The plan was to close once we completed the pipeline of ideas we were working on. And for the last Ponzi case that we have completed and are sharing with regulators, that day is today.”

Fellow short sellers have praised Mr. Anderson's work, and Jim Kanos, who helped bring down Enron, wrote, “Sadly, the Golden Age of Fraud has only grown brighter.'' But critics… They wondered if something else was going on.

Mr. Anderson told the Wall Street Journal that the stress of waging these battles was increasing. (Hindenburg has published more than 100 reports over the years.)

He expressed similar concerns to Dealbook's Bernhard Werner last month, but noted there was unfinished business. A few weeks later, he dropped a bombshell on Carvana, calling it a “longstanding stigma.” The company disputes the charges, and its stock price has since rebounded.

Short selling involves risk. These investors typically bet that the price of a particular stock will fall by: That is, they borrow stock from other investors, sell it on the open market, and expect to buy the stock back at a lower price to repay the lender. The potential upside is huge, but the downside is also huge.

So-called activist short investors like Mr. Hindenburg take the additional step of publishing critical research reports on their targets in hopes of persuading other investors to bet on the company.

This has led to criticism and regulatory scrutiny. Targets often accuse short sellers of damaging their reputations for financial gain. Anderson previously told Dealbook that Hindenburg has been sued or threatened with lawsuits numerous times.

The SEC and the Department of Justice began investigating Hindenburg and others' conduct in 2022.

Others have advocated similar exits, including Chanos, who closed his hedge fund two years ago. Anderson previously told DealBook that the market's significant rally over the past three years has made it more difficult to win big money. But that wasn't his only motivation, he added.

“There’s still a lot of fraud out there,” he told Dealbook in 2022. , etc. ”

He told the Journal he plans to travel and focus on investing through index funds. But he added that he also intends to publish a guide to “open source every aspect of our model and how we conduct our research.”

speed reading

Great deals

politics and policy

“Ramaswami has a lot of high-profile positions and potential conflicts” (NYT)

Major defense contractor L3Harris Technologies has told Elon Musk's cost-cutting committee, the Department of Government Efficiency, that the U.S. government's procurement system is too slow to respond to threats from China and Iran. (Reuters)

the best of the rest

Huge insurance liability for wildfires in Los Angeles could be extended to homeowners in the state thanks to a rule change that received little attention last year. (WSJ)

Washington Post employees have called for a summit with the paper's owner, Jeff Bezos, citing alarm over “recent leadership decisions.” (NYT) We welcome your feedback. Please email your comments and suggestions to dealbook@nytimes.com.