Warsh’s confirmation, Trump-Xi meeting, Cisco earnings and more in Morning Squawk

The Senate confirmed Kevin Warsh as the next chair of the Federal Reserve yesterday in the closest vote in modern history. As CNBC’s Matt Peterson writes, the slim margin could be a precursor of the challenges Warsh will face at the central bank’s helm.

Here’s what to know:

• The former Fed governor was confirmed with just 54 votes, the weakest support for any Fed chair since the position began requiring Senate approval in 1977.
• Sen. John Fetterman, D-Pa., was the only Democrat to vote for Warsh’s confirmation.
• A well-known critic of U.S. monetary policy, Warsh has called for a “regime change” at the Fed.
• And while President Donald Trump pushes for lower interest rates, Warsh will still need to get enough voting members behind cuts — what could prove a tall order as inflation revs up.
• The 56-year-old will succeed Jerome Powell, who plans to break with tradition and stay on as a governor at the central bank even after his term as chair ends.

Trump’s Beijing summit with Chinese President Xi Jinping is underway, and readouts from their meeting overnight reveal the two leaders discussed the Iran war, economic cooperation and Taiwan. A White House official said Trump and Xi agreed on the need to open the Strait of Hormuz, while Beijing’s readout showed Xi called Taiwan “the most important issue in U.S.-China relations.”

In remarks Thursday, Xi said a key question for this week’s summit is whether China and the U.S. can avoid the “Thucydides Trap,” a theory that tensions between a rising power and an established one historically lead to war.

Speaking to CNBC’s Joe Kernen from Beijing this morning, Treasury Secretary Scott Bessent said the U.S. is winning the artificial intelligence race against China but that talks between the two countries are an opportunity to develop guardrails. “We’re gonna set up a protocol in terms of how do we go forward with best practices for AI to make sure non-state actors don’t get a hold of these models,” he said.

Cisco exceeded Wall Street’s third-quarter expectations on both lines yesterday, sending shares surging more than 15% in extended trading. The networking company also said it would cut nearly 4,000 jobs this quarter.

Cisco said it has brought in $5.3 billion in AI orders so far this year and gave better-than-anticipated guidance for the current quarter. As CNBC’s Jordan Novet notes, Wall Street is warming up to the company after it lagged other data center stocks. Cisco shares are up 33% year to date, outpacing the Nasdaq.

Don’t miss Cisco CEO Chuck Robbins on CNBC’s “Squawk on the Street” at 9 a.m. ET. Watch on CNBC or CNBC+.

Consumers are cutting back on beer. Data shows U.S. volumes for beer, flavored malt beverages and cider fell more than 6% year over year in the week ending May 2. As CNBC’s Brandon Gomez reports, the pullback is most prominent at convenience store chains.

Analysts said the slide could be driven by rising gas prices amid the Iran war. Just look at California, which has the most expensive average fuel prices in the U.S: The Golden State has seen a 16% volume deceleration over a four-week period.

Hantavirus is testing the U.S.’ pandemic preparedness, but experts say it isn’t another Covid. CNBC’s Annika Kim Constantino has the information you need to know:

— CNBC’s Leslie Josephs, Jeff Cox, Matt Peterson, Sean Conlon, Lisa Kailai Han, Jordan Novet, Brandon Gomez, Annika Kim Constantino, Anniek Bao and Evelyn Cheng contributed to this report.

Davis Giangiulio assisted in the production of this newsletter. Josephine Rozzelle edited this edition.