Bessent Effect: Dow and S&P 500 Rally to Record Highs 11/25/24

Carl Quintanilla (0:00)

Market Moving Insight and Analysis join Jim Cramer, David Faber, and me, Carl Quintanilla, on the opening bell hour of CNBC Squawk on the Street. Good Monday morning. Welcome to Squawk on the Street. I'm Carl Quintanilla with Jim Cramer, David Faber at Post 9 of the New York Stock Exchange. Some calling it not the Trump rally, but the Bessent rally. Stocks up, yields down. On news of Scott Bessent being Trump's pick for treasury, 10-year yield about a two-week low. The curve briefly inverts on this holiday shortened week. Our roadmap begins with rally mode. Wall Street is coming off a winning week as the post-election rally does pick up steam once again.

David Faber (0:33)

Plus back to Trump's treasury pick is hedge fund manager Scott Bessent, what that choice could mean for global markets. Warren Buffett is speaking out against creating family wealth or dynastic wealth. He's giving away another 1.1 billion to four family foundations. A lot more in an interesting letter from Buffett this morning.

Carl Quintanilla (0:54)

Let's begin with the markets as we do enter this holiday shortened trading week for the Thanksgiving Day holiday. Jim, even you mentioned these yields at early hours of the morning today.

Jim Cramer (1:02)

Well, look, I think that we've been controlled by the 10 year. I think that there was a sense that every time we get near 4.5, it's time to sell stocks. Anytime we get back down to four and a quarter, it's time to buy stocks. It's such a simplistic thing that, David, you know that it's completely algo derived. People at home might think, well, isn't it silly that it could be such a big change? But I think it all it also do with the deficit. And the idea that if it goes 4.5, that's because we can't handle the bond load. We can't hear the sales. 4.3 says we can. So it's pretty weirdly cut and dried.

David Faber (1:39)

Well, you make two different points. One is you think a lot of it is is is algo. We talk sometimes or maybe not often as we should about how much money every day moves in this market based on algorithmic, wherever you want to call it, trading.

There are so many firms, obviously, that have that at the core of their strategy at this point. But then you're also talking about the deficit. I'm not explaining the two to me, like the relationship there that you're trying to elucidate.

Jim Cramer (2:05)

The treasury designate cares about the deficit, which is it could. I think there are a lot of people who felt maybe what we're going to get is the treasury designate who just frankly just cares about growth, or just cares about no taxes, just says, look, we don't need taxes. And Carl, we get someone who actually sounds like any previous treasury secretary, then we start thinking maybe it's going to be a little more business as usual, which by the way, we like. I mean, I know that there are a lot of people who criticize the Biden administration, but the stock market was really terrific under that period. And we got to remember that. I think people, they make a decision that, wow, Biden was bad for business, so therefore the stock market was bad. It's actually not true.

Carl Quintanilla (2:47)

Back to back 20% years, we'll see. It's been happened several times in the past. These three arrows that Bessent talks about, right? Reducing the deficit to 3% of GDP, 3% GDP growth, and then oil production of 3 million barrels a day.

Jim Cramer (3:04)

Well, there you go. I mean, I think that these are all good. The last one's going to be hard. It's going to be hard, particularly even if you do the so-called the drill, baby drill, because we did see oil go down under Trump because there was too much drilling. David, you know that drilling's got more expensive. We also don't know where to put all the oil, given the fact that China's not strong.

David Faber (3:24)

Not to mention, we're still in an environment, which we've been in for some time, where the investor base of any of these companies is not encouraging more drilling but encouraging capital return. And that's certainly been the case. And by the way, investors in that industry have benefited from that trend, namely, yes, of course you have to drill more and you want to be as efficient as possible, but return capital as well. That's been what? How many years has that been now the case? Last five, seven years at least, right?

Jim Cramer (3:55)

I think Scott Sheffield, the former CEO of Pioneer, was the first one. I remember speaking to him after a board meeting. He just said, we're done. We've been the most aggressive. We're not going to do that anymore. We're going to start returning capital. And then bingo, he gets a bid from Exxon. So, that was obviously the right thing to do. I do think, by the way, if you can make it so that we have good growth but we don't have an increase in the deficit, well, then I think we get to the Larry Fink world. And Larry Fink, the CEO of BlackRock, was talking about right here, was saying, listen, we can grow our way out of it. And because we have such reverence for Larry, which I think he's totally deserved, it doesn't sound like a Pollyanna plan. I think there are a lot of us who would just say, you know, we can grow out of this.