WSJ What’s News - Why Kevin Hassett Appears to Be Trump’s Pick for the Next Fed Chair

Episode Date: December 3, 2025

P.M. Edition for Dec. 3. President Trump is closing in on his pick to succeed Jerome Powell as the Federal Reserve chair. WSJ’s chief economics correspondent Nick Timiraos explains why longtime Trump adviser Kevin Hassett is winning the race. A Pentagon review found that Defense Secretary Pete Hegseth violated departmental regulations with Signalgate—but the findings suggest Hegseth didn’t break the law. And WSJ’s national security reporter Lara Seligman reports on why the Pentagon is deploying new drones copied from Iran’s Shahed drones to the Middle East. Sabrina Siddiqui hosts. Sign up for the WSJ's free What's News newsletter. Learn more about your ad choices. Visit megaphone.fm/adchoices

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Plus, a Pentagon watchdog finds that Defense Secretary Pete Hegset's use of the messaging app's signal violated department regulations. And, President Trump is rolling back the rule that requires cars to get 50 miles a gallon. It's Wednesday, December 3rd. I'm Sabrina Siddiqui for the Wall Street Journal, filling in for Alex Oslo. This is the PM edition of What's News, the top headlines and business stories that move the world today. As the question of who the next Federal Reserve Chair will be looms large, the White House abruptly canceled interviews that were scheduled for this week with a group of finalists being considered for the job. The interviews were part of the formal process for choosing who succeeds Jerome Powell, whose term expires in

mid-May. But President Trump has publicly said that he has already narrowed the list of potential Fed chairs down to a single pick. Nick Timrose, the Wall Street Journal's chief economics correspondent, has the story. Nick, what, if anything, do the cancellation of these interviews signal about the process and President Trump's thinking? Well, we don't know exactly why these interviews were canceled. It could be a scheduling conflict, but they were canceled on the same day that President Trump said, we were looking at a lot of candidates, but now it's down to one. And he was in a meeting yesterday that Kevin Hassett was at, and he said, oh, there's a potential Fed chair here. So he's sort of teasing this idea or allowing the public to run with it, that Kevin Hassett is going to be the next Fed chair.

and Hassett makes sense in the standpoint that he checks a number of boxes that are going to be important to Trump. One is that he's somebody that the president trusts. He picked Jay Powell eight years ago, and he's been furious with his decision ever since because he thinks Powell hasn't rewarded him with loyalty, and he doesn't want to make that mistake again. The second box that Hassett checks is that he's a conventional, credible, conservative economist. He's not going to spook bond markets that he's some kind of unqualified partisan. So that's why the betting markets believe that HACID is going to be this pick. Hassett is currently the director of the National Economic Council and also served as an economic

advisor during Trump's first administration. What else can you tell us about him and how Wall Street sees him? Well, I think the question is going to be, which Kevin do we get? Before he went to work for Donald Trump. And even through the first term, he said all the normal kind of predictable institutional establishment things. The Fed should be independent. You shouldn't try to fire the Fed chair. We should just let the Fed do its job. This year, he's taken, you could say, a more menacing tone towards the Fed, the institutional arrangement that we refer to as independence. He's attacked the Fed as being partisan. He says, we should have an independent Fed, but, you know, he's suggested that it's the Fed that's changed and that they've become more

partisan. And so I think the question investors have is, what will Kevin Hassett actually be like if he's in this job? That was the Wall Street Journal's Nick Tamerose. Nick, thank you. Thanks for having me. President Trump says he plans to lower fuel economy standards for cars in his latest push to relax regulations on the auto industry. The federal government will now require that cars average 34 and a half miles a gallon by model year 2013, down from the standard of just over 50 miles a gallon set by the Biden administration. As fuel economy standards have increased over the years, they pushed automakers to make more fuel-efficient cars and encourage the rise of electric vehicles.

The Trump administration says today's changes will make cars more affordable. This is the president speaking from the Oval Office. We're protecting our auto workers and we're making it easier for every family to afford high-quality cars. The auto and oil industries largely approve of the move, but environmental groups criticized it and argue that gas-guzzling vehicles are likely to increase demand for gas and drive up its price. The Dow-led market gains today, closing up almost 1%. In commodities trading, copper prices hit a record high of more than $11,400 a metric tonne,

in London over worries about tight global supply. And natural gas futures hit a three-year high on forecasts for a Chile-December. Macy's is lifting its forecast for the year after reporting its best quarter of comparable sales, a key sales measure, in more than three years. The department store chain has been closing some weaker stores while opening new Bloomingdale's and Blue Mercury stores, which focus more on luxury as part of its turnaround efforts. And Delta Airlines says the government shutdown took $200 million out of its fourth quarter profit. Delta says bookings fell by 5 to 10% during the 10 days that the shutdown's flight restrictions were in effect last month, but reservations have bounced back and demand is looking strong.

Coming up, what we learned from the Pentagon Inspector General's review of Signalgate. That's after the break. Isn't home where we all want to be? Reba here for Realtor.com, the pro's number one most trusted app. Finding a home is like dating. You're searching for the one. With over 500,000 new listings every month, you can find the one today. Download the realtor.com app because you're nearly home.

Make it real with Realtor.com. Pros number one most trusted app based on August 2025 proprietary survey. Over 500,000 new listings every month based on average new for sale and rental listings. July 24 to June 2025. A Pentagon watchdog has found that Defense Secretary Pete Hegeseth violated department regulations after sharing sensitive information on signal earlier this year, a situation known as Signalgate. That's according to Senator Mark Kelly, a Democrat of Arizona, who saw the report after it was sent to Congress. Hegsef used the encrypted messaging app to share details of a U.S. bombing campaign

in Yemen in chats that included top officials, a journalist, and his wife. People familiar with the matter say the watchdog's report found that the operational details Hegeseth shared on signal would have posed a risk to troops and the mission if it had been intercepted. According to a person familiar with the report, it says that Hegeseth declined to sit for an interview with the Inspector General. The defense secretary instead sent a written statement, saying he intentionally declassified information that wouldn't pose a threat to service members or the mission. The department's inspector general concluded that Hegsef has the authority to declassify information suggesting that no law was broken. The chief Pentagon spokesman said the

report was a, quote, total exoneration of Hexeth. A person familiar with the matter says an unclassified version of the report will be released tomorrow. And in other news from the Pentagon, it's deploying to the Middle East a new kamikaze drone. It's a copy of Iran's Shaheed drones that Iran and its proxies have used against U.S. troops and commercial ships in the region, and that Russia has used in Ukraine. The new drones are an early example of a Pentagon push known as drone dominance to buy cheap drones made by American companies that can quickly be moved to the field. We now find ourselves in a new era, an era of cheap, disposable battlefield drones. We cannot be left behind. We must invest in inexpensive, unmaned platforms that have proved

so effective. That was Defense Secretary Pete Hegeseth in a video the Defense Department posted this week. Lara Seligman, a national security reporter at the Wall Street Journal, joins us now to discuss. Lara, what is the incentive to copy the Iranian drone design? The Iranian Shahed, even though it's a cheap, rudimentary system, it has actually been used to great effect by Iran in the Middle East. Two years ago, Iran sent a Shahed drone to attack Tower 22, which is an outpost in Jordan, and it killed three American soldiers and injured dozens more. It's also been used by the Houthis against commercial vessels in the Red Sea and by the Russians to great effect in Ukraine, both targeting Ukrainian

infrastructure as well as Ukrainian troops on the battlefield. That's become a war in which both sides are using these cheap, attritable drones to cause major, major damage. So part of this initiative is to adapt to the changing face of warfare. And is this basically a cost-saving measure, or is there more to it? Well, it certainly is going to save money, since these drones only cost $35,000 compared to $16 million for, say, a MQ9 Reaper, which is sort of the cream of the crop of the drones that the U.S. currently uses. The idea is that they're one-way attack drones, which means we can buy a lot of them,

we can expend a lot of them, we can use them quickly. What else do we know about this drone and its capabilities? So the drone is built by SpectorWorks, which is an Arizona-based company. It's going to be the U.S. military's first one-way attack drone unit based in the Middle East that has a triangular wingspan measuring just over eight feet. It can be launched from different mechanisms, including catapults, rocket-assisted takeoff, mobile ground, and vehicle systems. It's also fully autonomous, which means that it can operate with little or no human interaction. And the goal really is to have each Army squad unit have one-way attack drones by September 2026. So they're trying to move out really quickly on this.

That was the Wall Street Journal's Laura Sellingman. Laura, thank you. Thank you. And that's what's news for this Wednesday afternoon. Today's show was produced by Pierre Viename with supervising producer Tali Arbell. I'm Sabrina Sidiki for the Wall Street. Street Journal. We'll be back with the new show tomorrow morning. Thanks for listening. The Deloitte expects the space economy to reach $2 trillion by 2035.

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