August twelfth, twenty twenty-five
《Special Edition; Bessent’s Playbook - Power, Choice, and the Inner Workings of Trump’s White House》
“Special Edition: Learning the art of maneuver from Bessent and viewing the Trump administration’s internal decision-making through Bessent’s eyes—power, choice, and maneuvering”
Here is a special edition…
Wall Street sees Bessent as one of its own, someone who will help financial markets. Yet in a recent lengthy interview, he repeatedly downplayed his role, casting himself as a humble adviser whose job is to help the president channel his populist impulses into policy, then explain those policies to the markets.
Some of the information in this article comes from Bloomberg interviews with Bessent and people in his circle; we selected, reorganized, and analyzed it.
The reason for sharing this is twofold: these snippets clearly reveal the logic of power within the Trump administration, and they also offer some lessons from Bessent’s path to success, including how to enter a new circle, how to serve as a deputy before a powerful superior, and how he made choices when facing pivotal decisions in life…
One. TACO is a strategy chosen proactively, not the result of passive pressure from the markets
Bessent said in an interview at the Treasury Department offices in late 7: “I think I could have made the market go up on Liberation Day… if we had said, ‘If you don’t retaliate, this is the highest tariff rate, but we’re willing to negotiate.’”
Bessent recalled that on that Sunday in April, aboard the plane, he had recommended immediately rolling back the tariffs to defuse the crisis, but Trump did not budge, He was determined to use intimidation to force America’s trading partners to the negotiating table. Trump told Bessent: “Let it go on for a few more days. Don’t say right away that we’re willing to negotiate.”
Trump finally relented only a few hours before the tariffs were due to take effect.
On Wednesday, 4 9, he announced a 90-day suspension of reciprocal tariffs and set a temporary rate of 10% for all countries except China. Speaking to reporters outside the White House, Bessent praised Trump’s great courage in sticking to his course. The stock market promptly rebounded sharply.
The story everyone on Wall Street wanted to believe was that Bessent, as one of their own, had persuaded a reluctant Trump to yield on tariffs amid complaints from friends with billions of dollars of exposure. That is the logic behind the now-infamous acronym TACO, coined by the Financial Times (Trump Always Chickens Out).
Bessent said that was not what happened: neither the markets nor he forced Trump to do it; Trump had planned it all along. He said Trump had a higher tolerance than he did for pressure from external risks.
Two. The extent of his real power depends on how firmly he follows Trump’s instructions
In a recent lengthy interview, Bessent repeatedly downplayed his role, portraying himself as a humble adviser whose job is to help the president channel his populist impulses into policy and then explain those policies to the markets.“My job is to provide options and outcomes, present them to him, and then manage the narrative from there.”
“Whether you’re negotiating at the G20 summit, negotiating a trade agreement, or dealing with Congress, you have to understand that you’re speaking for the president,” said Steven Mnuchin, who served as Treasury secretary in the Trump administration from 17 to 21. “If you can’t carry out the president’s wishes or represent him effectively, the position has no real power.”
Even on some issues that shocked former colleagues from the investment world, Bessent continued to stand firmly behind Trump.
Take the nonfarm payrolls report of 8 1. Trump was furious over a report showing a sharp slowdown in hiring, then promptly fired one of the United States’ top officials responsible for economic data and accused her of manipulating employment figures. The move immediately cast doubt on the credibility of future statistics, undermining not only the empirical basis for Federal Reserve rate decisions but also the entire 29-trillion-dollar U.S. Treasury market.
Bessent later said Trump’s decision was justified because major revisions to employment data were happening too often; such a change “was long overdue.”
Three. In the field where he could demonstrate his value, he took on the toughest tasks
When Trump’s “One Big Beautiful Bill” encountered resistance in Congress, Bessent played a key role in advancing the legislation: first, he reached a compromise with senators on tax cuts for high-cost-of-living areas, then persuaded skeptical House Republicans to accept a phaseout of clean-energy tax credits. In an interview, he rejected accusations that Republicans had used accounting “tricks” in the bill to exaggerate its economic benefits and seriously understate its impact on federal debt.
He resolved the international impasse over corporate taxes. Under an agreement reached with G-seven finance ministers, U.S. companies will be exempt from the global minimum tax that applies to multinational corporations.
In addition, although he has said he does not intend to replace Powell, Bessent is now leading the selection process for the next Federal Reserve chair.
“I’m impressed by how deftly he navigates the political environment,” said Druckenmiller, who spoke with him every day when he was running his hedge fund.
Four. How Bessent got here: his development and personal characteristics
1) focused more on fundamental changes at the level of mechanisms… Unlike his mentor Druckenmiller, whose instincts leaned more toward trading, Bessent devoted himself fully to the mechanics of policymaking.“He has a clear understanding of how central banks operate and make decisions. Other people in macro focus on events in the real world, while he sees opportunities in the collision between theory and practice.”
2) a view he had held for a long time… Serra, founder of London-based Algebris, stayed in touch with Bessent and made a point of seeing him whenever he visited New York.Although most of their conversations revolved around economic policy and investing, he recalled many views that, in hindsight, aligned with Trump’s positions.
Bessent had wanted to expel the East from the World Trade Organization, complained that Europe was spending too little on defense, and worried that America’s potential for social mobility had eroded so severely that young people who are now 18 years old no longer have the opportunities he had at their age.
3) his role at work… Working for Soros laid the groundwork for serving under Trump“Trump has an incredible tolerance for risk and an instinct for survival,” Bessent said. “Soros does too.”
4) views on using the media and reputation…
Unlike many powerful figures on Wall Street, including Soros, Bessent kept a low profile during his career in finance and rarely made headlines. Before emerging in early 24 as an outspoken Trump supporter, He said he had always followed WASP the white Anglo-Saxon Protestant creed: a gentleman’s name should appear in the newspaper no more than three times in his life—at birth, marriage, and death. If he had any political ambitions, he kept them deeply hidden.
After developing political ambitions in 24, he began appearing frequently on pro-MAGA radio shows and podcasts—for example, Bannon’s War Room and Breitbart News Saturday—to raise his profile and support Trump and his policies.
5) choices and tradeoffs, while laying groundwork for the future…
Bessent said that, in fact, he had considered joining Trump’s first presidential campaign in 2016. But he had just left Soros and set out on his own to found Key Square Group.
Bessent said, He felt it was not right to leave the team at that point. Many employees had followed him from SFM, and there were institutional clients such as the New York City Police Pension Fund. In the end, he donated 100 ten thousand dollars to Trump’s first-term inauguration and seemed to have faded from the political scene.
But that was not the case; he began reaching out to people in Trump’s circle—including Steve Bannon, whom he met at an investor forum in Hong Kong in 17. Bannon recalled: “I quickly realized he was the smartest person in the room.” By then, Trump had already removed Bannon from his position as chief strategist.
“He wanted to know everything about Trump’s economic ideas, how he viewed the world, and how those ideas would translate into practical policies affecting global capital markets.”Bannon said the two had another meal the next day that lasted four hours, which brought them closer. He added that they had stayed in regular contact by phone or text ever since.
Five. How an outsider successfully entered Trump’s circle of trust
It is not easy to persuade Trump’s MAGA loyalists to trust a wealthy hedge fund manager with close ties to Soros, portrayed as a villain in countless right-wing conspiracy theories.
On the eve of the 2024 election, Bessent sought Bannon’s advice on how to position himself as a candidate for Treasury secretary or another senior economic post in a second Trump administration.
Bannon gave him three instructions:First, learn the economic issues Trump cares about most, especially trade; second, get to know people around Trump, including gatekeepers in the right-wing pro-MAGA media world; third, build a relationship with Trump himself by becoming a major donor and a Wall Street spokesperson.Bessent was friends with Trump’s late brother Robert, and Robert’s widow is the godmother of Bessent’s daughter; this also opened doors for him.
Bessent took the advice to heart. He built ties with Trump’s key trade and economic advisers, including Kevin Hassett, Peter Navarro, and Stephen Moore. He hired Bannon’s well-connected personal publicist, Alexandra Preate, to make introductions and help him gain traction. He also began appearing frequently on pro-MAGA radio shows and podcasts, such as Bannon’s War Room and Breitbart News Saturday, to raise his profile and support Trump and his policies.
He can influence decision-making appropriately when dealing with powerful superiors, “not by being confrontational or pushing some hidden agenda, but by making suggestions Trump might not have thought of,” he said. “I saw that in him, and that’s why I recommended him to Trump.”
Six. The Treasury secretary’s choices, the meaning of alliances, and Bessent’s perspective while his future remained uncertain
By the week of 11 18, Bessent still did not know where he stood.That Wednesday evening, he and Trump’s eldest son, Donald Trump Jr.,and several close friends had dinner together at Carriage House, an exclusive members-only social club in Palm Beach, Florida.
Rowan was also there; earlier that day, he had finished a business trip in Hong Kong and flown straight to Mar-a-Lago to meet with Trump.In retrospect, Bessent said: “President Trump, he always keeps his options open。”
On 11 22, while Bessent was in Palm Beach, Trump called and formally offered him the job.Also on the call were Vice President-elect JD Vance and Trump campaign manager Susie Wiles. According to people familiar with the matter, both had backed Bessent in his contest with Lutnick.The source said Wiles, now Trump’s chief of staff, remains a key ally for Bessent in the many battles inside the Oval Office. Bessent does not bring problems to her, but when he voices concern about something, she listens carefully.
Trump also told reporters that he felt Bessent was a “reassuring presence” in the Cabinet.
Seven. Under Trump, use Trump’s playbook
Like anyone else, Bessent has experienced firsthand what it is like to execute the “Trump playbook.” In most administrations, trade negotiations are usually led by the U.S. Trade Representative. Although current U.S. Trade Representative Jamieson Greer was involved, Bessent led the negotiations that produced draft agreements with Japan, Indonesia, Singapore, and South Korea.
One reason Bessent was so involved was his deep knowledge of Asia, especially Japan—he said he had visited Japan more than 50 times.
Many of the agreements he helped finalize included novel terms designed to appeal to Trump’s taste for “spectacle.”For example, in addition to accepting 15% comprehensive tariffs on exports, Japan also agreed to establish a fund worth tens of billions of dollars to invest in the United States.
In a commemorative photo released by the White House, The U.S.-Japan trade delegations sat behind Trump, with a large card in front of them. The card’s original “4000 hundred million dollars” had been crossed out and handwritten over as “5000 hundred million dollars.” The final figure was even higher, reaching 5500 hundred million dollars.Under a separate agreement, South Korea agreed to invest 3500 hundred million dollars in the United States.
Eight. A staunch defense of Trump’s views: Musk and the Federal Reserve
Early in Bessent’s tenure, a controversial episode arose when he authorized employees of the Department of Government Efficiency, led by Musk, to have limited access to internal Treasury systems that process trillions of dollars in federal payments each year. Democrats sharply criticized the move, with Massachusetts Senator Elizabeth Warren calling it shocking mismanagement.Bessent, who admires Musk, stood his ground and ultimately received the support of a court ruling.
However, by mid-4, Bessent suddenly clashed with Musk over the choice of a commissioner for the Internal Revenue Service, which is part of the Treasury Department. The dispute reportedly became so heated that they shouted at each other and used profanity. Bannon told The Washington Post that it even turned physical. Weeks later, Musk entered the Oval Office with a black eye. When asked what exactly had happened between them, Bessent did not directly answer whether there had been a fight, but said with a touch of dry humor: “I can say with one hundred percent certainty that the black eye was not caused by me.”
Another challenge was defending Trump’s position on the U.S. central bank. For decades, the Federal Reserve has operated almost entirely independently, setting interest rates and carrying out its other statutory duties without interference from Congress or the president. Trump frequently criticized Powell for not cutting rates and only recently abandoned his threat to fire him.
While advising Trump’s campaign, Bessent had proposed a provocative idea: create a shadow Federal Reserve chair, a potential successor to Powell who could convey the president’s wishes and pressure Fed governors even before formally taking office.
Bessent has now abandoned that idea and is navigating a more delicate balance. On the one hand, he emphasizes that the Fed’s rate-setting function is a jewel box whose independence must remain sacrosanct; on the other, he believes the Fed is experiencing mission creep and that its other functions require an uncompromising review. “They have become too influential in the economy,” he said, accusing the Fed of overreaching in bank regulation and comparing its pandemic-era bond purchases to a virus’s gain-of-function mutation.
Chart: Notes250717 “From Currency to Politics”
Nine. The most important proxy asset… is still in foreign exchange markets
The third round of U.S.-China talks was held in Stockholm but produced no substantive results. On 8 11, Trump extended the tariff truce for another 90 days. Bessent told reporters: “We are now in a position to reach an agreement that benefits both countries.” A former trade official noted that, given the breadth and complexity of the issues involved, a final agreement could take years to take shape.
Ultimately, the foreign-exchange market may become the most powerful tool for countries seeking to weaken U.S. power and influence. As someone who has spent decades immersed in international affairs and financial markets, Bessent understands that the dollar’s central role in trade, cross-border payments, and central-bank reserves gives the United States unrivaled control over the global financial system.
For Bessent, “securing dollar dominance” is his top priority at the Treasury Department.“Why do Russia, China, and Iran want to get out of the dollar payment system? Because if they engage in misconduct, we can make things very difficult for them through sanctions,” he said,“The dollar gives us the power of extraterritorial jurisdiction.”
Ten. A broader ambition
Only a handful of U.S. Treasury secretaries have truly made their mark on history.
Hamilton is revered as a Founding Father and author of The Federalist Papers; Albert Gallatin financed the Louisiana Purchase in 1803, giving the United States control of New Orleans and nearly doubling the territory of the young nation; Salmon Chase introduced the first national currency, the “greenback,” during the Civil War; and Henry Morgenthau Jr. helped create the International Monetary Fund and the World Bank.
Bessent had already begun thinking about his political legacy. Before the Senate confirmed his appointment at the end of 1, he had drawn up a list of things he wanted to accomplish during his tenure.“In this position, it’s easy to be carried along by the system,” he said. “You can be a good steward here, hold successful Treasury auctions, get tax legislation passed; or you can set bigger goals and leave your mark.”
Bessent’s list includes restoring the dollar’s dominance, reforming U.S. banking regulation, and ensuring that economic policy does not benefit only the financial class while leaving American workers behind.
One final recommended read: if you haven’t read it, be sure to take a look—you won’t regret it:
https://mp.weixin.qq.com/s/6tdgUCySZDRLei2EysrsAQ
We ask the traders in our own trading room to put out a single-market note roughly every 2 days, covering U.S. stocks, A-shares and Hong Kong, and commodities. We select the better ones for the corresponding small groups (some of the commentary is ours, too, but we do anonymize certain details).
Those interested can subscribe as needed (only if you need it; don’t waste your money):
U.S. stocks:https://www.meridianresearch.app/home?product=us-strategies(Xingzhi)
A-shares and Hong Kong:https://www.meridianresearch.app/home?product=asia-strategies(Ganglong)
Commodities:https://www.meridianresearch.app/home?product=commodity-strategies(Dixin)
As for the level of detail, we will probably get down to the industry level. In mainland China, we will try to avoid crowding; if we write too specifically, some people may jump the gun. U.S. stocks may allow us to be a little more specific, but you will still need to think things through and fill in the gaps yourself, There are no trades that you can copy directly!。
The overall win rate has been pretty good lately.
We don’t know whether everyone likes this new format for Notes. If you think there’s a better one, give it a like to let us know. Based on the feedback we receive, we’ll decide whether to continue with this kind of content or return to the previous column format.
Wishing you all the best.
2025.08.12
Note: All content in this article is for reference only and does not constitute investment advice or serve as a basis for any laws, regulations, or regulatory policies. Investors should not make decisions or rely on the information provided here.