The tightrope walk will bring him to a confirmation hearing on Thursday, after which he is expected to be easily confirmed by the Republican-controlled Senate. And how Bessent, a pillar of President Trump’s “America First” agenda, will navigate his role at the Treasury Department at a time when investors are increasingly wary of its potential impact. It also provides a preview.
U.S. Treasury yields are testing 5% as traders see rising risks to what is considered the world’s safest asset. President Trump’s aggressive tariff plans and their potential to stimulate inflation are also sounding alarm bells across the stock and currency markets.
Additionally, President Trump has promised to extend tax cuts, which could increase the federal deficit to a whopping $4.6 trillion, according to a report released in May. This is more than double the cost of the 2017 tax cut. At the same time, the dollar’s reign as a global reserve asset is under threat, leaving countries wondering whether the dollar’s centrality is subject to the whims of the U.S. president at a time of national political instability. is increasing.
Mr. Bessent’s “profile is admired, but his challenges are quite deep-seated,” said Gregory Faranello, head of U.S. rates trading and strategy at Ameribet Securities. Mr. Bessent, a former aide to George Soros, said he would pursue policies that would boost economic output while cutting back on U.S. economic output. fiscal deficit. He has the support of key figures in the Trump world, many of whom he systematically cultivated as allies and who have come to see him as the wise incarnation of their vision. A populist, he’s a MAGA through and through,” said Steve Bannon, Trump’s former chief strategist who supported Bessent’s candidacy for the Treasury Department.
But not everyone sees Bessent that way.
“Mr. Scott has very conservative views, but he’s not necessarily orthodox or populist,” said the investment billionaire, who has known Mr. Bessent for 30 years and was his boss at Soros Fund Management. says Stanley Druckenmiller.
Mr. Bessent’s ability to rally supporters from all corners of the Republican spectrum, from mean-spirited populists to Wall Street luminaries, led to his nomination for Secretary of Commerce, Cantor Fitzgerald CEO Howard Lutnick, and Apollo. We were able to get the Treasury’s approval from Global CEO Mark Rowan. management.
His performance at the Treasury will test the strength of that support. Bessent will be at the center of a series of high-profile intraparty policy debates over Trump’s economic policies, while also trying to manage relations with the impulsive president and maintain calm in global markets.
A spokesperson for Bessent declined to comment.
Understanding Trumponomics
Bessent’s path into politics was not what many who knew him expected. But like others on Wall Street, he opposes President Joe Biden’s handling of the economy, a belief that led him down the path to the Trump administration.
He did not donate to Trump’s 2016 presidential campaign or make any other public declarations of support, but he did donate $1 million to Trump’s presidential inaugural committee in 2017, according to FEC records.
But behind the scenes, Mr. Bessent, who had recently co-founded a hedge fund, was eager to learn about the rebel president. Bannon said he first met Bessent at a Credit Lyonnais conference in Hong Kong shortly after leaving the Trump administration in 2017, and expressed Bessent’s strong interest in Trump and the impact of his policies. He recalls being shocked by how much he had given.
“Unlike most people, Scott wasn’t trying to gain access,” Bannon said. “As an investor, he wanted to learn all he could about President Trump’s populist policies and how they would affect global capital markets,” Bannon said. They spoke for four hours the next day and have remained in close contact ever since.
Bessent has long kept a low profile and sat out the 2020 presidential election. But Mr. Bannon said that soon after Mr. Biden took office, Mr. Bessent began seeking advice on how to position himself as Treasury secretary in a future administration.
Mr. Bannon said he closely followed Mr. Besent’s advice for resolving the economic issues that concern Mr. Trump most, particularly trade issues. He also developed relationships with Trump’s trade and economic advisers, including Kevin Hassett, Peter Navarro, Art Laffer, Larry Kudlow and Stephen Moore. Perhaps most surprising to the hedge fund manager, Mr. Bessent accepted Mr. Bannon’s offer to engage with the pro-MAGA media world, including right-wing radio programs such as Bannon’s War Room and Breitbart News Saturday on SiriusXM Radio. He made his name known by appearing on a podcast. Outside.
His campaign won new allies on the populist right. “He understands the economics of Trumponomics,” says Matthew Boyle, Breitbart’s Washington bureau chief and host of Saturday’s Breitbart News.
Mr. Bessent also developed a relationship with Mr. Trump, identifying himself as a major donor and Wall Street agent. He donated $1.5 million to support Trump’s third White House bid, split between his campaign, leadership political action committee, Republican Party and two allied super PACs. He became an outspoken public defender, often using Trump-like provocative language when criticizing Democrats.
“Hearing the Biden administration say America needs to balance its budget is like Hannibal Lecter saying he’s going vegan,” he told Bloomberg News in June. he said.
“Trump Rally”
In a January 2024 client note to investors at his hedge fund, Key Square Group, Bessent said the sharp rise in U.S. stocks was not due to Biden’s policies but was understood as a “Trump rally.” He declared that it was a good idea to do so.
The main reason for the market’s boom was that early polls showed Mr. Trump holding an “commanding lead” over Mr. Biden, and investors believed that “a Trump victory could lead to market-friendly policies.” He wrote that he was expecting “sexuality.”
A source close to Trump said the president-elect was pleased to learn about the memo. By the final weeks of the campaign, Mr. Bessent was flying on Trump’s planes, accompanying him to rallies across the country, and allying himself with Donald Trump Jr. and J.D. Vance. President Trump’s transition spokesperson did not respond to a request for comment.
All that maneuvering paid off as Mr. Bessent outlasted Mr. Lutnick and Mr. Rowan and emerged as Mr. Trump’s Treasury nominee after weeks of controversial investigations that included leaks and personal attacks. played.
Mr. Bessent’s selection was met with relief on Wall Street, with many taking comfort in his resume. Some market participants said they expected Mr. Bessent to return the Treasury to a department based on market expertise. A common criticism of Janet Yellen’s Treasury Department from both Republicans and Democrats is that the former Federal Reserve chair had a collection of economists with Ph.D.s in her building. This has limited access for large companies and raised concerns among traders about the Treasury’s ability to avoid potential problems in the plumbing of global markets.
“That’s a fair assessment,” Ameribet’s Faranello said. “They didn’t get inflation right, and Yellen has acknowledged that. But every few years, a problem arises in the market and someone with a market background needs the right experience to deal with it.” In combination, we will draw out the trust of the market.”
south carolina roots
On the outside, Mr. Bessent appears to be the furthest thing from an unruly populist.
Born in Conway, South Carolina, to a prominent family with Huguenot ancestry dating back to the 17th century, he attended Yale University and became chief investment officer at Soros’ hedge fund. He left in 2015 to start Key Square Group and returned to his home state. He and his husband, John Freeman, a former New York City assistant district attorney, purchased and restored a famous Greek Revival historic mansion on Charleston Harbor, known locally as the “Pink Palace.” In November, the house was listed for $22.25 million as Ms. Bessent prepared to move to Washington. He reported assets worth at least $521 million in his personal financial disclosures.
Despite the wealth and privileges that come with his lineage, his upbringing was one of financial hardship, and although he was friendly with Charles III, who hosted him at Buckingham Palace, his father He declared bankruptcy twice. By the age of nine, Bessent had his first job installing beach chairs and umbrellas at Osea Drive Beach in South Carolina.
Mr. Bessent, who owns more than 20,000 acres of land in North Dakota where soybeans and corn are grown, often describes himself as one of the state’s largest farmers.
Mnuchin comparison
As Treasury secretary, who oversees financial regulation, debt issuance, tax and monetary policy, and sanctions, Bessent will inevitably draw comparisons to Steven Mnuchin, who held the post during the Trump administration’s first term. Mr. Mnuchin has been an unstable president thanks to a combination of loyalty, reliance on his personal relationship with Mr. Trump, selective silence on media leaks about policy considerations, and maintaining faith in markets. I was able to survive the four years under the tutelage.
Mr. Bessent will need to find a way to exert influence in a different economic and political world than Mr. Mnuchin. Voters are exhausted by the shock of the pandemic and exploding inflation, and Mr. Trump is returning to the White House more comfortable with the levers of power.
“My understanding of the Treasury Department’s job is not to be a ‘yes man’ or a ‘yes woman,’ but to give the best advice and do the best thing in convincing the president that this is the right path. That’s the point,”’ Druckenmiller said. “But if he chooses a different path, your job as Treasury Secretary is to sell that path, whether you agree with it or not.”
