Scott Bessent's Prominent Role at Davos: Defending Trump and Stabilizing Markets

Scott Bessent, the U.S. Treasury Secretary, maintained a prominent presence at the annual World Economic Forum in Davos, Switzerland. During the event, Bessent publicly defended President Donald Trump's policy demands, including the proposed acquisition of Greenland from Denmark and the use of tariffs. He also served as a private intermediary to Wall Street, aiming to prevent market overreactions to the administration's actions.

Key Activities and Statements at Davos

Greenland and Tariffs

Bessent openly addressed Trump's demand for Greenland's sale, dismissing Denmark as "irrelevant." He argued that controlling Greenland was crucial for U.S. national security. He also advised European officials and investors not to retaliate against Trump's tariff threats, emphasizing a "sit back, take a deep breath" approach.

Criticism of Jerome Powell

The Treasury Secretary accused Federal Reserve Chairman Jerome Powell of attempting to influence a Supreme Court argument concerning the firing of Fed Governor Lisa Cook.

Clash with Gavin Newsom

Bessent engaged in a public exchange with California Governor Gavin Newsom, who had called him smug. Bessent responded with personal insults.

Market Stabilization Role

Bessent's dual role involved publicly defending the president's impulsive policies while privately assuring markets of stability. Sources indicated his focus on preventing administration actions from disrupting financial markets.

Shift in Treasury's Role

Bessent presented the proposed Greenland acquisition as a strategic national emergency avoidance, moving the Treasury's role from a stabilizer to an enforcer of the "Trump Model."

Bessent's Influence and Profile

Bessent, a former hedge fund manager, has become a significant economic official in Trump's second term. He has adopted a persona described as a blend of investment strategist and a "MAGA firebrand," with a communication style that marks a departure from previous Treasury Secretaries. This approach aligns more with figures like Steve Bannon, whose show Bessent joined while in Davos.

President Trump frequently praised Bessent publicly, mentioning his name numerous times in speeches and expressing admiration for Bessent's commitment to his role.

Market Reaction and Resolution

Trump's tariff threat against Europe, related to the Greenland issue, initially caused instability in NATO countries and a 2% drop in the S&P 500 as he arrived in Davos. Bessent actively communicated the U.S. message, conducting interviews, podcasts, press conferences, and a fireside chat.

He reportedly met with his Chinese counterpart, He Lifeng, and was sought after by European business executives.

His private message to Europeans was to "take a deep breath" and disregard "hysteria."

By the end of the week, Trump called off the European tariffs and announced a framework for a Greenland deal after meeting with NATO chief Mark Rutte, leading to a market recovery. Bessent cited past instances where dire economic forecasts following Trump's tariff threats did not fully materialize, attributing this partly to Trump's willingness to walk back some actions and Bessent's own management of the US-China economic relationship.

Internal Administration Conflicts

Bessent has reportedly had disagreements with other administration officials:

• Elon Musk: A reported shouting match occurred in April over leadership of the IRS.
• Bill Pulte: An almost physical altercation took place in September with the director of the Federal Housing Finance Agency.
• Howard Lutnick: Friction exists between Bessent and Secretary of Commerce Howard Lutnick, stemming from Lutnick's prior attempt to become Treasury Secretary during the transition.

Leading the Fed Chair Selection

Bessent is currently overseeing the selection process for a new Federal Reserve chair, narrowing the candidates to four finalists while remaining neutral and avoiding personal preference. His approach is influenced by observing how his predecessor, Steven Mnuchin, received blame for Powell's policy decisions after recommending him.

The search was complicated by a Justice Department investigation into Powell and the Fed's headquarters renovation. Bessent reportedly expressed concern to the president that this probe had "made a mess" of the transition.

Reflecting on his time in the administration, Bessent commented on the intensity of the "Trump years."