WEBVTT - Scott Bessent Talks Fed Rate Cuts, Nvidia Chips, Russia, BLS 0:00:02.520 --> 0:00:07.040 Bloomberg Audio Studios, podcasts, radio news. 0:00:07.880 --> 0:00:09.080 We've got a lot to discuss. 0:00:09.119 --> 0:00:12.280 President Trump extending trade talks with China for another sixty 0:00:12.360 --> 0:00:15.120 days so as both countries continue to wine out key differences. 0:00:15.400 --> 0:00:17.320 Joining us now to discuss that and a whole lot more. 0:00:17.400 --> 0:00:20.480 The seventy nine Secretary of the Treasury sculp Lesson, miss 0:00:20.520 --> 0:00:21.880 the Secretary, good morning, good to see it. 0:00:21.920 --> 0:00:24.760 Warning Johan, you're a cover model. Now you're famous. 0:00:24.920 --> 0:00:26.880 Can we get that front cover up for Business Week 0:00:27.040 --> 0:00:29.880 this month? Mister Secretary? I remember when you were just 0:00:29.880 --> 0:00:31.800 scult beston and we could go for breakfast together, the 0:00:31.840 --> 0:00:32.479 three of us, and no. 0:00:32.440 --> 0:00:33.640 One would bother you. What happened? 0:00:33.800 --> 0:00:35.720 I don't know, but I hope it's not the curse 0:00:35.760 --> 0:00:36.400 of the cover. 0:00:38.280 --> 0:00:43.720 There the top. Historically the being on the cover is 0:00:43.720 --> 0:00:44.120 a curse. 0:00:44.640 --> 0:00:47.080 Well, this secreity market is not curse that keeps grinding 0:00:47.120 --> 0:00:49.440 out all time highs. There is some confidence that we're 0:00:49.960 --> 0:00:52.480 setlling some issues on the trade front. There's one issue 0:00:52.479 --> 0:00:54.200 that came up this week that we'd love to hear 0:00:54.200 --> 0:00:56.680 from you about, and that's in video. Where did this 0:00:56.800 --> 0:01:01.520 agreement come from? You've been quite innovative industriction on tray issues. 0:01:01.640 --> 0:01:03.560 Where did this come from? Who came up with it? 0:01:04.200 --> 0:01:04.800 The president? 0:01:05.319 --> 0:01:09.520 The president, as I tell everyone, the President is one 0:01:09.560 --> 0:01:11.959 of the most open minded people I know. He does 0:01:12.000 --> 0:01:15.080 everything at first principles. Why do we do things this way? 0:01:15.120 --> 0:01:17.880 Why shouldn't we do it the other way? And you know, 0:01:18.160 --> 0:01:21.480 I think that this is a very unique solution allows 0:01:21.640 --> 0:01:25.920 Nvidia to expand into China. It can make in Nvidia 0:01:26.120 --> 0:01:32.600 chips the bellweather for Chinese technology, and then the US 0:01:32.640 --> 0:01:34.039 taxpayer gets a share of that. 0:01:34.360 --> 0:01:37.480 Key words unique, Is it unique to Invidia, an empty 0:01:37.680 --> 0:01:39.600 or is this a model for other companies? 0:01:39.959 --> 0:01:43.080 I think we could see it in other industries over time. 0:01:43.120 --> 0:01:46.840 I think, you know, right now this is unique. But 0:01:47.560 --> 0:01:50.320 now that we have the model and the beta test, 0:01:50.680 --> 0:01:51.680 why not expand it. 0:01:51.840 --> 0:01:53.480 What do you say to people who think we're putting 0:01:53.520 --> 0:01:58.160 a price on national security concerns by basically selling export licenses. 0:01:59.080 --> 0:02:01.680 There are no national security concerns here. We would not 0:02:02.520 --> 0:02:05.920 sell any of the advanced chips, so the H twenties. 0:02:06.200 --> 0:02:07.840 I don't know whether you'd say there are four or 0:02:07.840 --> 0:02:11.520 five six levels down the chip stack. What we do 0:02:11.600 --> 0:02:15.880 not want here, Ane Marie, is for Huawei to have 0:02:15.960 --> 0:02:20.400 a digital Belton Road so we do not want the 0:02:20.520 --> 0:02:24.480 standard to become Chinese across the world or even in China. 0:02:24.600 --> 0:02:27.320 We have exclusive reporting that Beijing is now sending out 0:02:27.400 --> 0:02:30.440 letters to firms saying, actually, shrug off those H twenty 0:02:30.560 --> 0:02:33.880 and use our domestic champions. Is this something you might 0:02:33.960 --> 0:02:35.240 discuss with your counterpart. 0:02:35.800 --> 0:02:39.360 Sure, we can discuss that, But it also tells me 0:02:40.000 --> 0:02:43.000 that they are worried about the Nvidia chips becoming the 0:02:43.040 --> 0:02:48.280 standard in China. Look, Nvidia is an incredible product. A 0:02:48.320 --> 0:02:52.760 lot of the technology in China is they're piggybacking. And 0:02:52.840 --> 0:02:59.200 I'll use piggybacking as a kind word for acquiring our technology. 0:02:59.200 --> 0:03:03.040 Do you mean stealing your words? And yes, that's what 0:03:03.080 --> 0:03:03.399 I mean. 0:03:03.800 --> 0:03:09.400 And the in Vidio Jensen Wong just days years. 0:03:09.160 --> 0:03:09.920 Ahead of them. 0:03:10.160 --> 0:03:12.799 Criticism came from the Wall Street Journal editorial board though 0:03:12.919 --> 0:03:16.080 about this new unique policy. They say it's a step 0:03:16.080 --> 0:03:18.359 toward government control of private business. 0:03:19.080 --> 0:03:20.680 Are you concerned some of these. 0:03:20.600 --> 0:03:23.000 Polies are starting to look like the country you're actually 0:03:23.080 --> 0:03:26.679 trying to de risk from central planning basically out of 0:03:26.680 --> 0:03:27.600 the old No, no. 0:03:27.440 --> 0:03:31.320 No, not not at all, because where we got was 0:03:32.200 --> 0:03:37.000 with this unfettered trade. We did not have secure trade 0:03:37.120 --> 0:03:39.840 or fair trade, and so now we are trying to 0:03:39.920 --> 0:03:43.800 make it secure, so you don't want to We're not 0:03:44.000 --> 0:03:47.800 sending out the highest level chips, and you know, we 0:03:47.840 --> 0:03:51.839 don't want to sell everything to everybody, so that there 0:03:51.960 --> 0:03:55.920 is a need for intervention. And you know, the Wall 0:03:55.960 --> 0:03:59.160 Street Journal just let let her rip. Kind of a 0:03:59.280 --> 0:04:01.520 bunch of grumpy old men over there. I was with 0:04:01.600 --> 0:04:02.280 them yesterday. 0:04:03.320 --> 0:04:05.120 This is going to raise some revenue. What do you 0:04:05.120 --> 0:04:05.920 plan to do with it? 0:04:06.360 --> 0:04:07.240 Paid on the debt. 0:04:07.600 --> 0:04:09.080 It's all going to go to play down the debt. 0:04:09.120 --> 0:04:11.400 Because we have heard some stories about the money going 0:04:11.440 --> 0:04:14.400 back to consumers, going back to citizens of the United 0:04:14.400 --> 0:04:15.360 States taxpayers. 0:04:15.560 --> 0:04:19.080 Well, President Trump's talked about that, and look at the 0:04:21.600 --> 0:04:24.479 bottom fifty percent of wage journers in the One Big 0:04:24.520 --> 0:04:27.200 Beautiful Bill are getting a lot of money back. No 0:04:27.279 --> 0:04:30.279 tax on tips, no tax over time, no tax on 0:04:30.360 --> 0:04:34.320 Social Security. Auto loans are going to be tax deductible. 0:04:34.640 --> 0:04:37.880 So I think if we could make a substantial debt 0:04:38.000 --> 0:04:40.760 in the debt repayment, then we could talk about a 0:04:40.800 --> 0:04:41.520 program like that. 0:04:41.600 --> 0:04:43.080 Could you share with us the kind of numbers you're 0:04:43.120 --> 0:04:45.159 thinking about at the moment, just in terms of revenue 0:04:45.240 --> 0:04:47.200 raising and not just the Nvidia deal. I'm talking about 0:04:47.240 --> 0:04:48.839 the tarifs on top of that. What are we raising 0:04:48.839 --> 0:04:51.320 at the moment month on months, Well, Johnson. 0:04:51.200 --> 0:04:53.839 I've been saying that we could hit three hundred billion 0:04:53.920 --> 0:04:56.240 this year, and I think that number is going to 0:04:56.279 --> 0:04:59.159 be low. I think I'm gonna I always like to 0:05:00.120 --> 0:05:02.640 come in low and then surprise on the upside. But 0:05:02.880 --> 0:05:05.320 I think in the next days or weeks I may 0:05:05.360 --> 0:05:08.640 have to move that number up substantially. 0:05:08.880 --> 0:05:10.720 You've heard the debate playing out on Wall Street now 0:05:10.760 --> 0:05:12.719 for a number of months. Who's going to pay the teriffs? 0:05:12.760 --> 0:05:14.760 By definition, the important will pay the tariff. The more 0:05:14.760 --> 0:05:17.520 important question here is who absorbs the costs, whether it's 0:05:17.560 --> 0:05:19.800 the foreign supplier, whether it's the domestic company here in 0:05:19.800 --> 0:05:21.880 the United States, or the end consumer. We've got some 0:05:21.960 --> 0:05:24.840 data yesterday. You've seen it. We've all looked at it. 0:05:25.120 --> 0:05:29.400 Limited tariff pass through relative to what was expected. Because 0:05:29.400 --> 0:05:31.320 of that, a lot of people are suggesting that maybe 0:05:31.440 --> 0:05:33.960 companies are absorbing costs in a way we didn't anticipate. 0:05:34.120 --> 0:05:36.359 Perhaps the pass through will be more muted in the future. 0:05:36.560 --> 0:05:39.560 Are you comfortable with where things are now or do 0:05:39.600 --> 0:05:41.599 you think things might rebalance in the months to come. 0:05:41.960 --> 0:05:45.800 Jonathan, I think your framing there is exactly right, exactly right, 0:05:45.920 --> 0:05:50.960 because that obviously the tariff itself is paid at the port, 0:05:51.240 --> 0:05:55.120 but what if the producer in the other country has 0:05:55.240 --> 0:05:58.960 lowered their price, they're ten fifteen to twenty percent, so 0:05:59.000 --> 0:06:02.160 that there is no race change with the tariff. And 0:06:03.080 --> 0:06:07.320 obviously our largest trade deficit is with China, and China 0:06:07.720 --> 0:06:11.000 does not have the same profit objective that other Western 0:06:11.279 --> 0:06:15.400 democracies do, so that is an employment agency, and my 0:06:15.560 --> 0:06:19.479 view has been that they would continue to eat the teriffs. 0:06:19.839 --> 0:06:23.479 They are doing that, so I think what we've seen 0:06:24.160 --> 0:06:26.800 is likely to continue happening. I also think there are 0:06:26.839 --> 0:06:29.680 probably a lot of corporate margins that got very fat 0:06:29.800 --> 0:06:34.760 during COVID and now we're seeing a return to normal 0:06:34.839 --> 0:06:35.920 pre COVID margins. 0:06:36.040 --> 0:06:38.919 You see this as some kind of redistribution between corporate America, 0:06:39.040 --> 0:06:41.720 maybe the consumer main Street and Wall Street. 0:06:42.440 --> 0:06:46.479 I think disadministration is all about Main Street, but Wall 0:06:46.480 --> 0:06:51.240 Street's at a new high, so it's its false equivalency. 0:06:51.360 --> 0:06:54.560 It's not either or I tell everyone, I call it 0:06:54.600 --> 0:06:58.880 parallel prosperity. Wall Street's done great, Main Street can now 0:06:58.960 --> 0:06:59.960 do great Wall Street. 0:07:00.120 --> 0:07:02.599 I do even better if the Federal serve cuts interest rates. 0:07:02.600 --> 0:07:04.960 The President was pretty clear yesterday put out this comment 0:07:05.200 --> 0:07:08.400 Jerome too late, Pale must now lower the interest rate. 0:07:08.760 --> 0:07:10.560 Is it reasonable to give them a bit more time 0:07:10.600 --> 0:07:13.400 to draw conclusions about what's happening care Well. 0:07:13.600 --> 0:07:16.440 I think what we could see is that, let's first 0:07:16.480 --> 0:07:20.160 of all, what if the BLS data had been the 0:07:20.440 --> 0:07:24.840 higher quality and we'd had those numbers, Jonathan, So if 0:07:24.880 --> 0:07:29.840 we'd seen those numbers in May in June, I suspect 0:07:29.920 --> 0:07:32.800 we could have had rate cuts in June and July. 0:07:33.080 --> 0:07:36.280 So that tells me that there's a very. 0:07:36.080 --> 0:07:39.360 Good chance of a fifty basis point rate cut. And 0:07:40.120 --> 0:07:43.920 I think President Trump is very good at giving these nicknames. 0:07:43.920 --> 0:07:48.800 And I think the reason that the Jay Powell gets 0:07:48.800 --> 0:07:51.320 a nickname too late is because he wants to go 0:07:51.400 --> 0:07:54.520 into a series of rate hikes. He's not willing. He's 0:07:54.520 --> 0:07:57.560 not Alan Greenspan, who was very forward thinking. 0:07:57.680 --> 0:07:59.720 They try to be more data driven. 0:07:59.400 --> 0:08:02.000 Which I think a mistake because I think we are 0:08:02.040 --> 0:08:05.520 going back into an economy like we had in the nineties, 0:08:05.960 --> 0:08:09.880 so you know, it's just very old fashioned thinking. But 0:08:10.120 --> 0:08:13.280 I do think we could go into a series of 0:08:13.360 --> 0:08:16.920 rate cuts here starting with a fifty basis point rate 0:08:16.960 --> 0:08:17.840 cut in September. 0:08:17.920 --> 0:08:21.080 A fifty basis rate cut in September, does that signal 0:08:21.080 --> 0:08:23.320 that the economy, though, is not doing well. 0:08:23.720 --> 0:08:28.720 That signals that there's an adjustment and that the rates 0:08:28.760 --> 0:08:30.160 are too constrictive. 0:08:30.920 --> 0:08:33.920 If you look at any model that the you. 0:08:35.720 --> 0:08:38.199 We should probably be one hundred and fifty one hundred 0:08:38.200 --> 0:08:42.600 and seventy five basis points lower. So I think the 0:08:42.640 --> 0:08:48.120 committee needs to step back. I think probably one of 0:08:48.200 --> 0:08:52.839 the most politicized governors just went off the board and 0:08:53.360 --> 0:08:59.440 that she was very, very political, I believe, and I. 0:08:59.320 --> 0:09:02.400 Think that that what does she do that gave you 0:09:02.440 --> 0:09:05.120 that impression? I'd love to know? Sorry, I mentioned you're 0:09:05.120 --> 0:09:07.000 referring to Governor Coogler. What does she do that gave me? 0:09:07.480 --> 0:09:10.040 I think there's a lot of insight baseball, and look, 0:09:10.480 --> 0:09:13.600 Governor Couglor, you read what she was saying with Kamala 0:09:13.679 --> 0:09:17.400 Harris was running that we needed rape cuts, we needed this, 0:09:17.600 --> 0:09:20.319 we got to phone the runway. And then all of 0:09:20.360 --> 0:09:24.680 a sudden it was hard to know whether we know TDS. 0:09:24.760 --> 0:09:25.680 Was it Trump that the. 0:09:27.240 --> 0:09:31.520 Dimension syndrome or Trump derangement syndrome or tariff derangement syndrome. 0:09:31.920 --> 0:09:34.400 You get the opportunity to remake the Federal Reserve. The 0:09:34.440 --> 0:09:37.560 president gets the opportunity to remodel reshape the Federal Reserve. 0:09:37.840 --> 0:09:40.200 And I'm not talking about the remodeling that maybe the 0:09:40.240 --> 0:09:42.280 current chairman's going through. We'll talk about that another time. 0:09:42.360 --> 0:09:44.400 I want to talk about the complexion and character of 0:09:44.440 --> 0:09:46.840 the committee, the changes that you're making at the moment. 0:09:46.920 --> 0:09:49.480 Stephen Maron, let's start with Stephen. How quickly can you 0:09:49.520 --> 0:09:50.400 get more and confirmed? 0:09:50.720 --> 0:09:56.480 We'll see. The President has great sway with Leader thim. 0:09:56.600 --> 0:09:59.480 Leader has been a great partner during the tax deal, 0:09:59.559 --> 0:10:03.160 and I I think that he would like to see Steven, 0:10:03.200 --> 0:10:05.880 who I've known for a long time, get on there 0:10:06.000 --> 0:10:09.800 as soon as possible. So I'm hopeful about the September meeting. 0:10:10.240 --> 0:10:14.600 And Jonathan, the President's concerned about the building and those 0:10:14.720 --> 0:10:18.800 massive costs overrun, which just tell you that there is 0:10:18.840 --> 0:10:23.120 no accountability at that organization. There's no oversight in terms 0:10:23.120 --> 0:10:25.520 of the spending. But the President and I are both 0:10:25.559 --> 0:10:29.280 concerned about the foundations of the FED, the foundations of 0:10:29.320 --> 0:10:32.920 the FED, and how did this happen and why did 0:10:32.960 --> 0:10:35.960 it happen, and how did the leadership let it happen. 0:10:36.000 --> 0:10:38.160 When it comes to Director Myron, do you expect him 0:10:38.200 --> 0:10:41.559 to stay on past the January term that expires from 0:10:41.640 --> 0:10:42.320 Coogler seat. 0:10:42.640 --> 0:10:43.600 I wouldn't expect that. 0:10:44.160 --> 0:10:46.720 So, who are some names you're thinking of the Cooglar seat? 0:10:46.720 --> 0:10:48.880 Because everyone has been focused on who is going to 0:10:48.920 --> 0:10:51.840 fill the chairmanship role? Who are you thinking to fill 0:10:51.840 --> 0:10:52.559 that extra seat? 0:10:52.600 --> 0:10:56.800 Well, e Marie, I'm going to We're working on the 0:10:56.800 --> 0:10:59.320 big list right now. I think they're going to be 0:10:59.320 --> 0:11:02.160 a couple more names revealed today. 0:11:02.160 --> 0:11:03.840 They're going to be private sector names. 0:11:04.120 --> 0:11:09.120 So we had a series or a list of. 0:11:08.720 --> 0:11:09.800 Current FED members. 0:11:09.840 --> 0:11:12.760 We're going to have some private sector, very well respected, 0:11:13.240 --> 0:11:18.680 very well respected people, and then we will get to 0:11:18.800 --> 0:11:19.720 the second seat. 0:11:20.240 --> 0:11:21.760 Can you give us some names, a little bit of 0:11:21.800 --> 0:11:24.200 a tease, maybe people that have been on this program. 0:11:24.520 --> 0:11:26.440 Well, I just did tease telling you there'll be some 0:11:26.520 --> 0:11:27.600 private sector names. 0:11:27.640 --> 0:11:27.920 Okay. 0:11:27.960 --> 0:11:30.440 When it comes to the FED chair though, can you 0:11:30.440 --> 0:11:32.640 give us a sense of how many names you're actually 0:11:32.679 --> 0:11:33.439 thinking about. 0:11:33.520 --> 0:11:36.120 Well, I'm going to interview I'm going to cast a 0:11:36.120 --> 0:11:40.880 wide net ten to eleven people, and then there'll be 0:11:40.920 --> 0:11:43.040 a group of us who are meeting with them and 0:11:43.360 --> 0:11:46.240 we want to talk about monetary policy. We want to 0:11:46.240 --> 0:11:50.640 talk about regulatory policy, which is very very important because 0:11:51.000 --> 0:11:54.840 the FED step I think bigfoot of the other regulators. 0:11:54.920 --> 0:11:59.559 The Fed's one of three regulators, Federal Reserve, OCC and FDIC, 0:12:00.320 --> 0:12:04.959 and I think that they need to understand that they 0:12:04.960 --> 0:12:07.760 are one of three, and then the third is the 0:12:07.800 --> 0:12:11.280 institution itself, which I think is what President Trump has 0:12:11.280 --> 0:12:12.800 been focused on quite a bit too. 0:12:13.120 --> 0:12:15.480 After you do this process, how many names are going 0:12:15.520 --> 0:12:17.280 to give to the President and when does he start 0:12:17.320 --> 0:12:18.360 those in person interviews? 0:12:19.000 --> 0:12:20.120 We don't have a timeline. 0:12:20.480 --> 0:12:24.800 By putting Stephen Myern in that gives us more time, 0:12:25.160 --> 0:12:27.840 and again, I want to cast a wide net. The 0:12:27.880 --> 0:12:34.760 President's very open minded. Before he chose j Powell, Janet 0:12:34.840 --> 0:12:38.600 Yellen was interviewed, John Taylor was interviewed. Two of them 0:12:38.679 --> 0:12:42.280 couldn't have been more different, so they were under consideration. 0:12:42.880 --> 0:12:44.320 I give you credit for coming up with a really 0:12:44.360 --> 0:12:47.040 credible list to replace the Federal Reserve Chair Jake pab 0:12:47.040 --> 0:12:48.400 without it down. I think most people that come on 0:12:48.400 --> 0:12:50.320 this program agree with that. What I want to talk 0:12:50.360 --> 0:12:52.600 about is the BLS NOW because there's some controversy around 0:12:52.600 --> 0:12:54.679 this pick. I'm sure you've heard some of the concerns each. 0:12:54.800 --> 0:12:57.400 Anthony had said the following early this week before getting 0:12:57.640 --> 0:13:00.320 the pick from the President. Until this issue with ros 0:13:00.360 --> 0:13:02.320 is corrected, he said, quote, the bil I should suspend 0:13:02.400 --> 0:13:05.760 issuing the monthly jobs report. They keep publishing the more accurate, 0:13:05.800 --> 0:13:08.000 though less timely, quarterly data. 0:13:08.120 --> 0:13:10.720 We'd love your thoughts on this. Is that something you support, 0:13:11.280 --> 0:13:12.120 not at all? 0:13:12.160 --> 0:13:14.880 And look what somebody says when. 0:13:14.720 --> 0:13:19.200 There are are private citizens is very very different. You know, 0:13:19.320 --> 0:13:23.000 I called for a shadow fedshair and you know now 0:13:23.000 --> 0:13:26.680 that I'm in the seat, I don't think we need 0:13:26.679 --> 0:13:31.000 to do that. And I was there when EJ was interviewed, 0:13:31.080 --> 0:13:34.800 and he is incredibly qualified. And I think the most 0:13:34.840 --> 0:13:37.200 important thing here is that we get back to the 0:13:37.200 --> 0:13:41.640 integrity of the numbers, because it just became okay, just 0:13:41.720 --> 0:13:44.640 like so many things in our government, for it to 0:13:44.679 --> 0:13:45.400 get sloppy. 0:13:45.800 --> 0:13:48.319 And EJ is precise. 0:13:48.640 --> 0:13:53.600 He has a doctorate in economics. I think President Trump 0:13:53.760 --> 0:13:57.440 put a lot of thought into this. He was very 0:13:57.520 --> 0:14:01.080 thorough in his questioning of him. What we want is 0:14:01.160 --> 0:14:04.719 good data, because you can't make good decisions without good data. 0:14:04.840 --> 0:14:07.880 As I just said, is very likely that the FED 0:14:08.000 --> 0:14:12.800 would have been doing something else. In June in July 0:14:13.320 --> 0:14:14.640 if they had had this data. 0:14:14.720 --> 0:14:16.760 Well, let's talk about the data we've got and the 0:14:16.800 --> 0:14:19.520 process we have and how we might improve that process. 0:14:19.920 --> 0:14:21.960 As you know that data is prone to big revisions 0:14:21.960 --> 0:14:23.880 in your career on Wall Street, we've all been dealing 0:14:23.880 --> 0:14:25.760 with this for a long long time because of the 0:14:25.800 --> 0:14:27.640 process and the lack of time, and the response is 0:14:27.840 --> 0:14:30.640 it is constantly reviewed month and month. As you get 0:14:30.640 --> 0:14:33.920 more responses from Corporate America. How can we improve that 0:14:34.040 --> 0:14:37.800 process so this data is less prone to these big revisions. 0:14:37.960 --> 0:14:41.440 Well, I've been in government now for seven months and 0:14:41.680 --> 0:14:44.840 I can tell you that if we take the irs, 0:14:44.920 --> 0:14:47.840 which I'm now the head of, they've been working on 0:14:47.880 --> 0:14:51.640 a tech upgrade since nineteen ninety. Nineteen ninety we brought 0:14:51.920 --> 0:14:57.040 in a young person to fix that. The tech upgrade 0:14:57.080 --> 0:15:01.520 has been underway for longer than he is old. So 0:15:01.640 --> 0:15:04.800 he wasn't born when the tech upgrade started. So you know, 0:15:04.880 --> 0:15:07.280 I just think like this idea that we're accepting this 0:15:07.440 --> 0:15:12.080 mediocrity and government, Why don't we bring things into the 0:15:12.160 --> 0:15:13.040 twenty first century? 0:15:13.080 --> 0:15:15.120 Why don't we bring it into the digital age. 0:15:15.440 --> 0:15:20.280 Because I don't know about political bias one way or 0:15:20.280 --> 0:15:23.640 the other, but what I can tell you is that 0:15:23.840 --> 0:15:27.760 the sample response size kept getting smaller and smaller, and 0:15:27.800 --> 0:15:32.600 then they filled in the cells. And anytime you get 0:15:32.760 --> 0:15:37.440 judgment versus data, then things become qualitative and not quantitative. 0:15:37.480 --> 0:15:39.320 And I think EJ is going to do a great 0:15:39.440 --> 0:15:43.800 job of bringing back quantitative standards. I think he like 0:15:43.880 --> 0:15:47.240 these attacks in the press. I think they're all wrong 0:15:47.280 --> 0:15:47.560 with him. 0:15:47.720 --> 0:15:50.960 It's not in the press, it's even within conservative economic 0:15:51.040 --> 0:15:53.920 circles that don't think that he is credible to run 0:15:54.040 --> 0:15:57.200 the commission. Is the Trump administration open to putting more 0:15:57.240 --> 0:15:59.359 resources than to BLS, maybe lifting. 0:15:59.160 --> 0:16:01.640 Hiring free, you know, and Marie, that's more of a 0:16:01.680 --> 0:16:04.920 democratic idea that you know, we need more. It's always money. 0:16:05.080 --> 0:16:08.760 It's always money. It's where it's New York City schools, 0:16:08.840 --> 0:16:12.840 Chicago schools, DC schools, you get terrible outcomes. I think 0:16:12.920 --> 0:16:15.359 that he's going to sit back, look at the process 0:16:15.480 --> 0:16:18.920 and how can we use technology to do this better? 0:16:19.320 --> 0:16:22.000 You know, I got the Treasury and it was shocking. 0:16:22.160 --> 0:16:26.400 We processed one point five billion payments a year, and 0:16:26.840 --> 0:16:29.760 five hundred million of them, one third of them did 0:16:29.800 --> 0:16:34.280 not have what's known as a task Treasury accounting symbol 0:16:34.400 --> 0:16:37.600 on them. And people were just hitting sin sin sin, 0:16:38.080 --> 0:16:41.840 and it wasn't a gigantic leap, just to try to 0:16:41.840 --> 0:16:43.280 get people to do their jobs. 0:16:43.520 --> 0:16:47.080 This has big implications for how people view credible economic data, 0:16:47.200 --> 0:16:49.040 but also the markets as well. So let's talk about 0:16:49.080 --> 0:16:51.560 financial markets. In the bomb market, you've always been a 0:16:51.560 --> 0:16:53.920 ten year man. The spread between the two year and 0:16:53.920 --> 0:16:56.200 the ten year, I think has been really stable over 0:16:56.200 --> 0:16:58.040 the last several months, where we start to see some 0:16:58.160 --> 0:17:01.640 leakages between tens out to thirty. That thirty year bond 0:17:01.840 --> 0:17:03.680 as a tracy second chary, I remember you refering to 0:17:03.720 --> 0:17:07.000 yourself as the nation's top bond salesman. What's the usefulness 0:17:07.000 --> 0:17:09.600 of issuing a thirty year bond when it feels like 0:17:09.640 --> 0:17:13.159 at the moment we're outsourcing borrowing cost to what happens 0:17:13.160 --> 0:17:15.959 in Japan, what might happen in the UK, what happens 0:17:15.960 --> 0:17:18.800 in Europe. What's the value of issuing that. 0:17:18.800 --> 0:17:22.360 That's a great question, Jonathan, And look, we are committed 0:17:22.400 --> 0:17:27.440 to keeping inflation expectations low, and this is a global phenomenon, 0:17:28.119 --> 0:17:31.080 whether it's the ten or the thirty that the US 0:17:31.200 --> 0:17:33.760 tenure is one of the few ten years where the 0:17:33.840 --> 0:17:35.240 yield is down on the year. 0:17:35.480 --> 0:17:36.840 So that tells me. 0:17:37.440 --> 0:17:42.920 That there's credibility from Treasury, credibility from FED, that the 0:17:42.960 --> 0:17:47.800 inflation expectations are well anchored. But there's definitely leakage from 0:17:48.320 --> 0:17:51.600 the Japanese have an inflation problem that I've spoken to 0:17:51.600 --> 0:17:52.359 Governor u Wada. 0:17:53.040 --> 0:17:54.280 My opinion not his. 0:17:54.440 --> 0:17:57.360 They're behind the curve, so they're going to be hiking 0:17:58.000 --> 0:18:02.680 and they need to get there problem under control. In Germany, 0:18:03.320 --> 0:18:08.080 we saw a substantial spike in German rates in the past. 0:18:07.800 --> 0:18:10.400 Week also, so you know our thirty year. 0:18:10.400 --> 0:18:14.919 Is getting dragged along with that, we've been refilling the 0:18:15.119 --> 0:18:20.520 treasury general account, which during the debt ceiling standoff got 0:18:20.640 --> 0:18:23.280 run down, and we're doing that with short term bills. 0:18:23.600 --> 0:18:25.720 Do you see more reason then to pair back on 0:18:25.800 --> 0:18:28.119 thirty ier issuants? With all this in mind, and this 0:18:28.240 --> 0:18:29.760 is a change again for you now and to see 0:18:29.800 --> 0:18:32.480 as you look at these developments and rethink things, how 0:18:32.480 --> 0:18:34.040 are your thoughts on that matter evolving? 0:18:34.480 --> 0:18:38.560 Yeah, they are evolving, and we'll see where things go. 0:18:39.200 --> 0:18:44.040 I do think as we bring down this big deficit 0:18:44.119 --> 0:18:48.320 that we inherited, I think that the US, that the 0:18:48.480 --> 0:18:52.520 entire US curve can have a parallel shift down relative 0:18:52.560 --> 0:18:53.480 to the rest of the world. 0:18:53.520 --> 0:18:55.080 Do you think you can work with the Federal Reserve 0:18:55.080 --> 0:18:57.520 on this matter? So if we take the weighted average 0:18:57.560 --> 0:18:59.800 maturity of FED hooldings at the moment, I believe that's 0:18:59.840 --> 0:19:02.800 right at about nine years. The issuance of the average 0:19:02.800 --> 0:19:06.320 maturity about standing bills notes baws that's closer to six. 0:19:06.560 --> 0:19:08.520 Do you need to narrow that gap a little bit? 0:19:09.359 --> 0:19:11.800 Yeah. Look, I don't think. 0:19:11.680 --> 0:19:13.840 The FED needs to get back into the large scale 0:19:13.880 --> 0:19:18.880 asset purchase business, and they know we've had very good demand, 0:19:19.800 --> 0:19:23.439 especially in the belly of the curb, which is where 0:19:23.680 --> 0:19:25.760 asset managers seem most interested. 0:19:25.840 --> 0:19:28.159 Now when it comes to other things you're working on 0:19:28.200 --> 0:19:31.800 in Washington, DC, there's still this stock band legislation that 0:19:31.840 --> 0:19:34.840 has been circulating around Congress. Is a president prepared to 0:19:34.880 --> 0:19:35.520 sign that bill? 0:19:37.119 --> 0:19:40.840 I don't think we have the perfect bill yet, but 0:19:41.119 --> 0:19:45.200 I am going to start pushing for it's single stock 0:19:45.320 --> 0:19:50.280 trading ban because it is the credibility of the House 0:19:50.359 --> 0:19:53.200 and the Senate that you look at some of these 0:19:53.240 --> 0:20:00.399 eye popping returns, whether it's Representative Pelosi, Senator Widen, every 0:20:00.440 --> 0:20:03.600 hedge fund would be jealous of them, and the American 0:20:03.640 --> 0:20:07.919 people deserve better than this. People shouldn't come to Washington 0:20:07.960 --> 0:20:10.560 to get rich, they should come to serve the American people. 0:20:11.000 --> 0:20:14.679 And it brings down trust in the system because I 0:20:14.720 --> 0:20:18.720 can tell you that if any private citizen traded this way, 0:20:18.880 --> 0:20:20.320 the sec would be knocking. 0:20:20.119 --> 0:20:20.520 On their door. 0:20:20.600 --> 0:20:22.880 Do you think it needs to extend they'll beyond single stocks. 0:20:22.960 --> 0:20:27.199 These individuals can still have ets and other products. 0:20:27.320 --> 0:20:30.240 Well, what I used to do my old firm was 0:20:30.280 --> 0:20:33.639 you could buy ETFs. They had to be widely held ETFs, 0:20:33.680 --> 0:20:38.200 so they couldn't be of a small size and there 0:20:38.240 --> 0:20:41.560 was a long holding period. The House and the Senate, 0:20:41.640 --> 0:20:44.560 they're supposed to be working for the American people, their constituents. 0:20:44.560 --> 0:20:47.080 They're supposed to be. 0:20:46.920 --> 0:20:52.320