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Speaker 1: Bloomberg Audio Studios, Podcasts, radio news.

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Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along

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Speaker 2: with Lisa Bromwitz and am Marie Hordern. Join us each

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Speaker 2: day for insight from the best in markets, economics, and

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Speaker 2: geopolitics from our global headquarters in New York City. We

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Speaker 2: are live on Bloomberg Television weekday mornings from six to

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Speaker 2: nine am Eastern. Subscribe to the podcast on Apple, Spotify

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Speaker 2: or anywhere else you listen, and as always on the

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Speaker 2: Bloomberg Terminal and the Bloomberg Business app. Joining us for

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Speaker 2: a conversation live on Bloomberg TV, the seventy ninth Secretary

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Speaker 2: of the Treasury, Scott Besson secondary best and it's good

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Speaker 2: to see you, sir. A warm congratulations from all of

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Speaker 2: us to you. Quite an arrival from what was it,

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Speaker 2: Little River, South Carolina.

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Speaker 3: Yes, it's an American success story or in America.

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Speaker 2: To the office of Alexander Hamildson with some unique experience.

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Speaker 2: How is that going to help you, sir, approach some

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Speaker 2: of the challenges in this economy?

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Speaker 3: Well, Jonathan, the way I look at it, for my

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Speaker 3: career for thirty five years, I've been sitting outside the

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Speaker 3: room with my ear up against the door, or trying

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Speaker 3: to look over the transum, trying to figure out what

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Speaker 3: policy makers should do or going to do, and how

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Speaker 3: that would affect the markets. Now I'm inside the room

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Speaker 3: trying to figure out what everybody outside the room expects

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Speaker 3: us to do, how the market's going to react, and

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Speaker 3: what the economic and market implications are a short term

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Speaker 3: but more importantly medium term, and how that's going to

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Speaker 3: affect the underlying economy.

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Speaker 2: We've got a lot to discuss, So let's start with

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Speaker 2: the debt market. What people expected you to do, maybe

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Speaker 2: was changed some of the issuance for treasury. Something that

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Speaker 2: you'd said back last summer about then Secretary Yellen was

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Speaker 2: that jellin had taken control of monetary policy through treasury issuance.

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Speaker 2: Then you're basically maintaining her plans. Can you help explain that,

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Speaker 2: help us understand where you're coming from.

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Speaker 4: Sure, So the.

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Speaker 3: Previous administration shorten some of the duration, and we haven't

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Speaker 3: shortened it further. We've just kept the policy in place,

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Speaker 3: and I believe over the medium term it's going to

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Speaker 3: play out as it becomes clear that everything the President

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Speaker 3: Trump's administration is doing will be disinflationary. We're going to

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Speaker 3: bring down energy costs, We're going to bring down regulation.

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Speaker 3: What DOSEE is doing in terms of cost cutting. And

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Speaker 3: I think once the tax cuts and jawbacks is made permanent,

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Speaker 3: then we can have a revenue increase cost decrease. And

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Speaker 3: as you said, is the nation's top bond salesman, I

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Speaker 3: got a pretty good story.

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Speaker 2: So what's the medium term? Help me understand that. What

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Speaker 2: is the medium term? And then once you see all

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Speaker 2: those things, let's say those ambitions become reality, then do

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Speaker 2: you start to think about term again?

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Speaker 4: The debt.

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Speaker 3: Sure, but that's that's a long way off, and we're

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Speaker 3: going to see what the market wants. As Lisa noted

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Speaker 3: this morning that the and it's fun to see someone

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Speaker 3: who believes that Fed minutes are exciting that the Fed

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Speaker 3: said that they may stop their balance sheet runoff. So

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Speaker 3: you know, easier for me to extend duration when I'm

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Speaker 3: not competing with another big seller.

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Speaker 5: So when do you think that time would be end

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Speaker 5: of the year or further down into the administration's term.

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Speaker 4: It's going to be it's going to be path dependent.

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Speaker 3: We're still seeing sort of the residual Biden inflation that's

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Speaker 3: still coming through. Uh, And I think as a the

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Speaker 3: market starts to realize what we're doing and inflation starts

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Speaker 3: to drop, then we will we will see. So it's

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Speaker 3: going to be path dependent. That's the eventual goal, but

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Speaker 3: you know, I'm not going to signal it now.

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Speaker 5: When you mentioned the FED minutes, participants indicated yesterday that

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Speaker 5: one of the problems they had was they were waiting

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Speaker 5: for Trump policies to come into place. Do you think

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Speaker 5: that those policies, when you think of tariffs, potentially deportations, immigration,

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Speaker 5: this can be inflationary. Is it going to hold back

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Speaker 5: the FED from cutting rates?

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Speaker 3: Well to the extent the team transitory at the FED

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Speaker 3: is still has any credibility.

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Speaker 4: I would say.

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Speaker 3: That tariffs, if they have any price adjustments, are the

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Speaker 3: most transitory thing there are, so I don't think that

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Speaker 3: should hold them back very long. And I would point

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Speaker 3: out that, depending on what number you want to use,

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Speaker 3: ten twenty million people who came across the border, we

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Speaker 3: had the worst inflation of forty years when we added

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Speaker 3: ten or twenty million people. So I'm not sure why

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Speaker 3: people are saying that it's inflationary to tell them to

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Speaker 3: go home So when.

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Speaker 5: You look at team Transitory, do you think the next

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Speaker 5: move for them would be a cut?

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Speaker 4: Amory.

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Speaker 3: I have said publicly that I will talk about what

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Speaker 3: the FED has done. When I was a market commentator

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Speaker 3: and investor, I would talk about what.

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Speaker 4: They should do.

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Speaker 3: Now I will leave it to them, and sure Powell

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Speaker 3: and I have a weekly breakfast. We saw each other yesterday,

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Speaker 3: and I will convey my thoughts there.

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Speaker 2: Well, let's talk about what they have done. We can

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Speaker 2: comment on that. You said you're willing to They cut

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Speaker 2: rights one hundred basis points going into the end of

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Speaker 2: last year, and I don't think happened yield to the

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Speaker 2: long end roads. They didn't decline. Do you think feder

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Speaker 2: reserve easing contributed to high long end yields?

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Speaker 3: Well, Jonathan, I would just say the point of cutting

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Speaker 3: rates is to cut rates. So if they cut rates

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Speaker 3: and rates went up, then there probably was something there.

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Speaker 3: I thought that the rate cut in September. I said

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Speaker 3: it maybe even on your show here, that it was oversized.

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Speaker 3: The market responded. But now we're seeing term premium come

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Speaker 3: back down, so we'll see what happens from here.

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Speaker 6: Do you think the current rate right now is enough

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Speaker 6: to bring down ten year yields over time just by

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Speaker 6: virtue of being restrictive.

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Speaker 4: Again, I'm not going to comment on current policies.

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Speaker 6: I am curious you talk about how you do look

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Speaker 6: at the tenure yield every single day.

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Speaker 1: I love that. I love that you're the top.

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Speaker 6: Bond salesman in the United States, and I'm wondering, are

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Speaker 6: you expecting it or hoping it to go down from here?

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Speaker 6: Is that necessary to reach to achieve your three percent

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Speaker 6: growth target?

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Speaker 3: Well, what's necessary are the underlying conditions. So the underlying

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Speaker 3: conditions that we need for yields to come down.

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Speaker 4: For growth to go back up.

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Speaker 3: We've got this affordability crisis in housing, We've got an

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Speaker 3: affordability crisis in the auto payments. So one thing that

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Speaker 3: would be very stimulative. And as Jonathan mentioned earlier, the

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Speaker 3: ten years come down or rates have come down every

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Speaker 3: week since Donald Trump's been president. So if we can

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Speaker 3: continue that for fifty two weeks, that'd be great, and

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Speaker 3: it'd be very it would be a win for the

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Speaker 3: American people, which at the end of the day, that

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Speaker 3: is our goal. So if we do what we say

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Speaker 3: we're going to do, if we can rein in the

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Speaker 3: budget deficit, if we have non inflationary growth, if we

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Speaker 3: bring down energy prices, and I think now that I

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Speaker 3: have the numbers on the inside, there was a big

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Speaker 3: contributor to this massive inflation was a regulation. I think

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Speaker 3: you said earlier this morning that the what if these

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Speaker 3: things cause inflation? As am Marie just said some of

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Speaker 3: the policies, Well, what really happened under the previous administration

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Speaker 3: was you created a demand shock with government spending, but

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Speaker 3: it was met by supply constraints as there was more regulation.

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Speaker 3: And Trump one point zero, we created demand shock with

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Speaker 3: tax cuts and it was met by supply side response

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Speaker 3: of less regulation. So you know, the Biden administration created

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Speaker 3: this inflation. That a demand shock and constraining supply is

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Speaker 3: the ultimate recipe for inflation.

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Speaker 2: And now you want to count spending the DOGE program,

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Speaker 2: let's talk about it. You've called it one of the

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Speaker 2: most important audits to government ever. You remember the Clinton

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Speaker 2: tried something similar, the National Partnership for Reinventing Government. How

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Speaker 2: different will this be and what kind of cost savings?

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Speaker 2: And even the team thinking about.

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Speaker 4: Yeah, and John, I can go all the way back.

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Speaker 3: Given my tenure in the business, I can go all

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Speaker 3: the way back to the eighties to the Grace Commission,

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Speaker 3: and they had some great the ideas, most of them

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Speaker 3: not implemented.

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Speaker 4: I think that the Clinton.

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Speaker 3: Gore initiative, I think a lot of that was academics.

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Speaker 4: So this is.

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Speaker 3: People on the ground all areas of government, and it's

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Speaker 3: moving quickly, and I really do think it's unfortunate, but

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Speaker 3: it's been lampooned and the attack the way it has.

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Speaker 3: But when it's being attacked like that, it tells me

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Speaker 3: that there are a lot of entrenched interest in terms.

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Speaker 3: When you're moving people's cheese, they don't like it, and

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Speaker 3: it's not their chase, it's the American people's chase.

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Speaker 5: Well, how about putting some of that cheese back into

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Speaker 5: American people's pocket. How inflation would those five thousand dollars

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Speaker 5: potential doge checks be that the President spoke about yesterday.

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Speaker 3: Well, I think again that if we are bringing down

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Speaker 3: energy prices, if we are cutting the regulation. So I

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Speaker 3: think that it's a to quote the Vice President during

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Speaker 3: the campaign, I think it's holistic and I think that.

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Speaker 4: It's all kind of one mosaic.

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Speaker 3: If you were to inject a lot of money into

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Speaker 3: the economy, because Amory think about this, that we are

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Speaker 3: at this massive deficit to GDP six point seven almost

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Speaker 3: seven percent, So what will be happening on one side,

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Speaker 3: You'll be bringing down that's spending in the economy. So

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Speaker 3: very easy mental model is every three hundred billion is

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Speaker 3: about one percent of GDP.

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Speaker 4: So every three.

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Speaker 3: Hundred billion that DOGE is able to save, could you

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Speaker 3: put that back in the economy into people's pockets.

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Speaker 5: One thing potentially that could happen and people are questioning

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Speaker 5: it is maybe remarking gold. Elon Musk, who's leading DOGE,

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Speaker 5: was talking about maybe going to Fort Knox to make

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Speaker 5: sure those gold reserves are there.

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Speaker 1: That comes under your purview. Do you have any plans

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Speaker 1: to visit Kentucky?

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Speaker 3: I don't have any plans. I can tell you that

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Speaker 3: we do an audit every year. I can tell the

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Speaker 3: American people on camera right now that there was a

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Speaker 3: report September thirtieth, twenty twenty four.

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Speaker 4: All the gold is there.

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Speaker 3: Any US Senator who wants to come and visit it

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Speaker 3: can arrange a visit through our office.

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Speaker 5: Gold was your biggest holding when you're a hedge fund

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Speaker 5: manager before you divested to become the Treasury Secretary, So

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Speaker 5: you know the value of where gold is right now

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Speaker 5: versus where it's marked on its balance sheet just north

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Speaker 5: of forty dollars an ounce, it's close to three thousand.

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Speaker 5: Is it under consideration for this administration to revalue gold?

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Speaker 3: I think that somehow when we were telling about the

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Speaker 3: Sovereign Wealth Fund and I said monetize the balance sheet,

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Speaker 3: I can promise you that's not what I had in mind.

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Speaker 5: So it's not under consideration, not on the table, that's

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Speaker 5: not what I had in mind.

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Speaker 6: When you look at the dose savings that you have

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Speaker 6: so far, how much is that going to go to

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Speaker 6: offset some of the tax extensions.

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Speaker 1: That we see.

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Speaker 6: What other savings are you looking at that potentially are crucial.

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Speaker 3: Well, again, they're just getting started. And one of the

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Speaker 3: shocking things to me has been when we talk about waste,

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Speaker 3: fraud and abuse, we all think of what comes out

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Speaker 3: of DC.

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Speaker 4: We think of some waste and fraud and friction costs.

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Speaker 3: Because one way to think about this is twenty five

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Speaker 3: percent of the US economy flows through Washington, DC. So

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Speaker 3: if we can cut the friction on that, that's a

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Speaker 3: lot of savings. What I we are discovering now and

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Speaker 3: wate fraud and abuse. There may be much more fraud

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Speaker 3: going on than we thought, and I think you're going

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Speaker 3: to be hearing about that.

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Speaker 4: Over the coming week.

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Speaker 2: Can we hear about it now?

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Speaker 4: I think you're going to be hearing about it on

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Speaker 4: the coming weeks.

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Speaker 2: What kind of fraud are you thinking about? What kind

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Speaker 2: of fraud have you identified?

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Speaker 3: Again, i'd refer you to so you're here now, so

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Speaker 3: I've refer it out of you. I'd refer you to

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Speaker 3: some of the statements by Lee Zelden at the EPA.

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Speaker 2: Okay, well, we can build on that in the weeks

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Speaker 2: to come. I can refer to you some comments from

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Speaker 2: the Washington Post on defense cuts. They're reporting the p Hexseth,

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Speaker 2: the Defense Secretary or the senior leaders of the Pentagon

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Speaker 2: and throughout the US military to develop plans for cutting

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Speaker 2: eight percent from the defense budget in each of the

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Speaker 2: next five years. You're aware of that plan.

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Speaker 3: I'm in contact with Secretary of HEXITS and we're working

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Speaker 3: very closely. And again, you're not going to jump the

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Speaker 3: gun here on TV, but I think everything's on the

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Speaker 3: table and can things work more efficiently.

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Speaker 1: When it comes to the defense budget.

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Speaker 5: We spent more last year on our interest payments than defense.

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Speaker 5: So are you hoping for twenty twenty five to spend

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Speaker 5: more on defense than the interest payments?

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Speaker 4: Well, it would depend how we got there too.

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Speaker 3: That does defense spending go down, does the interest bill

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Speaker 3: go down?

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Speaker 4: We'll see what that calculus is.

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Speaker 2: Got to focus on tariffs too. Revenue raising is part

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Speaker 2: of that story. Reciprocity, national security. You want fair trade.

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Speaker 2: That we all want fair trade. The President has discussed

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Speaker 2: reciprocal tariffs. He's mentioned the Europeans also offered to drop

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Speaker 2: auto tariffs. Could we start there? Have the Europeans actually

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Speaker 2: made that offer? Can you confirm that?

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Speaker 3: I haven't seen that, but it's possible. I think that

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Speaker 3: good thing about President Trump's negotiating style is people put

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Speaker 3: things that were or they not on.

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Speaker 4: The table before on the table very quickly.

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Speaker 5: So that would be reciprocity and maybe negotiating. But to

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Speaker 5: offset the tax cuts, where's the revenue raising?

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Speaker 3: So there could be Not everyone is going to give

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Speaker 3: on every point, right, So the Europeans seemingly put forward

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Speaker 3: very quickly auto terrafs, but not every country is going

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Speaker 3: to do that. My view, as I've said before, China

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Speaker 3: is the most imbalanced, unbalanced economy in the history of

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Speaker 3: the world, and they are trying to export their way

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Speaker 3: out of what is a very serious recepsion, and the

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Speaker 3: rest of the world can't do that. They can't dump

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Speaker 3: Chinese goods. They're going to have to rebalance their economy.

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Speaker 3: So tariffs on Chinese goods went up ten percent, and

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Speaker 3: a lot of that again Mexico, Canada, China. That was

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Speaker 3: in response to the fentanyl crisis.

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Speaker 5: China is the only one though, that those terrorfts have

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Speaker 5: actually stayed in place.

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Speaker 1: Is that the opening salvo?

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Speaker 5: How high do you think Trump wants to go when

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Speaker 5: it comes to Chinese terraffs Well, I'm.

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Speaker 3: Not going to give away as negotiating hand on TV.

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Speaker 3: I do have my first call with my Chinese counterpart

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Speaker 3: tomorrow morning, so I look forward to a very productive discussion.

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Speaker 1: What's the first point you want to bring up.

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Speaker 3: That we want to work together And as we said,

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Speaker 3: a lot of the precursor ingredients from fentanyl originate in China,

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Speaker 3: so we really want.

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Speaker 4: To put a stop to that very quickly.

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Speaker 2: Historically, there's been some currency concerns with regards to China

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Speaker 2: as well. In the conversations we had you. Before taking

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Speaker 2: up this post with you, you mentioned that some countries,

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Speaker 2: some currencies aren't undervalued. Is China one of them? Is

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Speaker 2: that something you'd like to remedy.

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Speaker 3: Yep, Well, Jonathan, what I've said is, make no mistake,

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Speaker 3: the US still has a strong dollar policy, but that

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Speaker 3: does not mean that by laterally other countries can weaken

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Speaker 3: their currencies versus the dollar or manipulate their currencies, but

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Speaker 3: specifically on China, China is a very difficult currency to

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Speaker 3: value because I really think that when we think about

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Speaker 3: the value of the R and B, it's in three

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Speaker 3: different equilibrium. On any academic model, say purchasing power parity,

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Speaker 3: it's cheap.

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Speaker 4: On the other side, you have one point four billion.

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Speaker 3: People who are subject to capital controls and they want

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Speaker 3: to get some of their money out of the country.

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Speaker 3: And then you have what I would call the X factor.

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Speaker 3: If you put money into China today, what's your belief

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Speaker 3: that you will get it out in two, three, four years.

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Speaker 3: So it's very difficult to come up with a point

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Speaker 3: value of the currency.

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Speaker 6: You've talked about the desire to have a strong dollar

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Speaker 6: policy for the United States, but is a strong dollar

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Speaker 6: at odds with the idea of bringing industrial production back

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Speaker 6: to the United States and sort of speaks to some

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Speaker 6: of the concerns about out other countries trying to devalue

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Speaker 6: their currencies.

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Speaker 3: Well, I think that we will necessarily have a strong

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Speaker 3: dollar if we run good policies, and I think we're

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Speaker 3: going to run good policies if we.

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Speaker 4: If we cut the trade deficits.

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Speaker 3: When you think about the trade deficit is a combination

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Speaker 3: of terms of trade, value of the dollar and our

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Speaker 3: own budget deficits. So if we bring down the budget deficit,

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Speaker 3: then I think everyone if we are deregulating, if we are,

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Speaker 3: if we make the tax cuts permanent, if we make

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Speaker 3: the US more business friendly, then the everyone, all the

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Speaker 3: reserve managers in the world, all the private investors are

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Speaker 3: going to want a piece of that, and the dollar

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Speaker 3: will be strong.

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Speaker 4: But we will be able.

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Speaker 3: To push back on that through good policies, through productivity,

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Speaker 3: the US productivity. I think that I've been meeting with

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Speaker 3: a lot of the tech leaders lately, and I think

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Speaker 3: we are very close to the cusp of this AI

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Speaker 3: finally coming into the productivity numbers.

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Speaker 6: Do you think that a strong dollar is necessary in

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Speaker 6: order to offset some of the costs that could be

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Speaker 6: otherwise associated with the tariffs.

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Speaker 3: Traditional economic theory would tell you that the dollar strengthens

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Speaker 3: on the tariffs, but who knows what we've already seen

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Speaker 3: since the dollar appreciation since November fifth. Markets live in

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Speaker 3: the future, so have we already priced in some of that?

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Speaker 3: And on the other side, what we are trying to

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Speaker 3: do is to get other economies to successfully rebalance.

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Speaker 4: My conversation tomorrow.

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Speaker 3: With my and this is really just an introductory conversation,

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Speaker 3: but as we go down the road, the Chinese need

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Speaker 3: to rebalance their economy in favor of consumption, that they

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Speaker 3: are suppressing the consumer in favor of the business community.

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Speaker 3: So as that happens, then they will increase their demand.

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Speaker 4: Same thing in Europe, you know Mario Drogy.

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Speaker 3: For any of your viewers who didn't see it, Mario

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Speaker 3: Drogy had a fantastic editorial this weekend in the Financial

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Speaker 3: Times where he said, look, we have put the equivalent

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Speaker 3: of more terrorists on ourselves, more terrorists on ourselves than

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Speaker 3: the US could ever contemplate. So could you get a

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Speaker 3: very strong euro Somehow they had an immaculate deregulation just quickly.

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Speaker 5: You're having this call with your Chinese counterpart. Will you

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Speaker 5: see him next week at the G twenty Finance Minister's meeting.

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Speaker 3: I'm not going to Cape Town due to some domestic considerations.

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Speaker 3: I actually think that he's not attending either.

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Speaker 2: So is that what he's told you?

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Speaker 4: This is the that we've gotten.

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Speaker 2: Okay?

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Speaker 3: So, and again I also believe several of my other

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Speaker 3: counterparts won't be there. I have been speaking and in

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Speaker 3: contact with them regularly, and then I will be seeing

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Speaker 3: them at the Spring IMF World Bank meetings in DC.

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Speaker 2: I wanted to talk to you about national security as well,

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Speaker 2: and the dollar has certainly got a role to plan

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Speaker 2: on that front. The sanctions policy of the United States

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Speaker 2: as we look back, do you think that's been misused abused?

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Speaker 4: Excellent question, Jonathan.

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Speaker 3: That when I came into Treasury, if you think about

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Speaker 3: sort of Treasury is five pieces. There's irs on one side,

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Speaker 3: the men on the other, but the main focus of

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Speaker 3: in the building at Treasury is domestic finance, international finance.

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Speaker 3: That's what I've been doing for my career for thirty

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Speaker 3: five years. I was able to hit the ground running

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Speaker 3: on that, what we call TFI. Terrorism finance is where

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Speaker 3: my biggest learning curve is. So I'm spending a lot

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Speaker 3: of time on that, and I'm reviewing the sanctions policies.

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Speaker 4: Why do we do what we do? Have they been effective?

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Speaker 3: Are we running a twenty first century program as opposed

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Speaker 3: to some outdated modalities.

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Speaker 5: Well, the current sanctions are in place in places like

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Speaker 5: Russia to try to get Puttin to negotiating table. You

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Speaker 5: are intricately involved in these in this deal. You were

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Speaker 5: justin Kiev, you met with President Zelenski. Trump yesterday called

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Speaker 5: Zelensky a dictator without these elections and said that he

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Speaker 5: better move fast or he's not going to have a

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Speaker 5: country left. Does this language make it harder for you

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Speaker 5: to get that minerals deal over the finish line?

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Speaker 3: Well, look, I think President Zolensky unfortunately escalated and has

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Speaker 3: put some daylight between.

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Speaker 4: Them, escalating that a lot of his remarks.

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Speaker 3: In Munich, I thought we're inappropriate. President Zelenski, when I

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Speaker 3: met with him, assured me that he'd be the signing

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Speaker 3: the minerals deal in Munich.

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Speaker 4: He has not.

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Speaker 3: And look the real purpose here and I think it's

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Speaker 3: turned into this media circus. The President Trump had a

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Speaker 3: very elegant plan and it was bring the Ukrainians closer

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Speaker 3: to the US.

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Speaker 4: Let's do this economic deal.

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Speaker 3: And the even Carl Rove in the Wall Street Journal

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Speaker 3: this morning approves of it that the US, with greater

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Speaker 3: economic interest in Ukraine, provides a security shield.

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Speaker 4: So the sequencing of.

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Speaker 3: What was going to happen was bring the Ukrainians closer

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Speaker 3: to the US through economic ties, convince the American people

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Speaker 3: and the American public, get them onside, and then tell

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Speaker 3: the Russians go to the negotiating table with a very

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Speaker 3: fulsome message that if we need to, we will take

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Speaker 3: sanctions up.

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Speaker 5: Well, what about tapping a Russian frozen assets and three

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Speaker 5: hundred billion dollars? Would you force your European counterparts to

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Speaker 5: not just have them frozen, but actually tap them. Trump

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Speaker 5: talks about repaying the American taxpayer.

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Speaker 1: Shouldn't Russia be a part of that.

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Speaker 3: Well, what's happening now is they are being tapped.

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Speaker 4: So the returns from interest, the returns.

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Speaker 3: From the freezed asset pile, is going to pay the Europeans.

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Speaker 3: You know, what's very important to understand here is everything

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Speaker 3: the US has done to date, the American people, the

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Speaker 3: American taxpayer, is grants the Europeans roughly half of what

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Speaker 3: they've done are loans, and the runoff from the frozen

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Speaker 3: assets is being used to repay European loans.

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Speaker 2: If you communicated that to the Europeans, the europe sent

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Speaker 2: with them. What's that If you communicate to the Europeans

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Speaker 2: that you're absent with.

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Speaker 4: Them, I think Vice President events that are a pretty

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Speaker 4: good job. In Unich.

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Speaker 2: Do you think they understand that the United States is

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Speaker 2: running a deficit of north of six percent close to say,

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Speaker 2: and that the budget for defense is north of eight

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Speaker 2: hundred billion dollars? Do they think? Do you think they

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Speaker 2: understand the gravity at the moment in the United States

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Speaker 2: the US perspective.

445
00:24:09,600 --> 00:24:15,400
Speaker 3: Look, I think that they understand that President Trump during

446
00:24:15,400 --> 00:24:21,200
Speaker 3: his first term this term, Vice President Vance and the

447
00:24:21,400 --> 00:24:25,480
Speaker 3: entire security apparatus had told them that many of the

448
00:24:25,480 --> 00:24:29,880
Speaker 3: countries are deficient in their NATO spending and they need

449
00:24:29,920 --> 00:24:33,680
Speaker 3: to come up. When I went to Ukraine, you fly

450
00:24:33,720 --> 00:24:37,880
Speaker 3: into Poland. Poland is spending almost five percent of GDP

451
00:24:38,320 --> 00:24:42,479
Speaker 3: on defense and look at Poland sitting next to Ukraine.

452
00:24:42,760 --> 00:24:46,000
Speaker 3: Poland is one of the great economics success stories of

453
00:24:46,080 --> 00:24:49,800
Speaker 3: the past thirty years. After China, they've had the fastest growth.

454
00:24:50,200 --> 00:24:56,720
Speaker 3: So why couldn't Ukraine, with some US capital ingenuity know

455
00:24:56,880 --> 00:24:59,840
Speaker 3: how and root out some of the corruption do as

456
00:25:00,040 --> 00:25:01,040
Speaker 3: well as their neighbors done.

457
00:25:01,040 --> 00:25:03,320
Speaker 2: If Europe spends more, will it allow Americans to come

458
00:25:03,359 --> 00:25:05,640
Speaker 2: back on defense spending? Is that the ultimate goal?

459
00:25:06,640 --> 00:25:11,240
Speaker 3: The ultimate goal is for the Europeans to come up

460
00:25:11,320 --> 00:25:14,720
Speaker 3: to where they've said that they are going to and

461
00:25:16,440 --> 00:25:19,880
Speaker 3: to provide their share of the NATO spending.

462
00:25:20,240 --> 00:25:23,159
Speaker 5: You mentioned sanctions, So do you have both on the

463
00:25:23,200 --> 00:25:26,439
Speaker 5: table ready to go a sanctions ramp up or wind

464
00:25:26,480 --> 00:25:28,760
Speaker 5: down on Russia depending how these talks go.

465
00:25:29,520 --> 00:25:31,440
Speaker 4: I think that'd be a very good characterization.

466
00:25:32,359 --> 00:25:34,400
Speaker 5: When it comes to the talks. Trump still thinks he's

467
00:25:34,440 --> 00:25:36,639
Speaker 5: going to meet with Putin. He said probably by the

468
00:25:36,720 --> 00:25:37,919
Speaker 5: end of the month. The end of the month is

469
00:25:37,960 --> 00:25:40,240
Speaker 5: next week. Are you preparing for that.

470
00:25:41,520 --> 00:25:45,440
Speaker 3: I'm not going to give away the timetable, but the

471
00:25:46,640 --> 00:25:50,760
Speaker 3: President is committed to ending this conflict very quickly.

472
00:25:51,000 --> 00:25:53,480
Speaker 4: And I will tell you your name, Kiev. I went to

473
00:25:53,560 --> 00:25:56,720
Speaker 4: a children's hospital that had been bombed. And this was

474
00:25:56,760 --> 00:25:57,880
Speaker 4: not a children's.

475
00:25:57,440 --> 00:25:59,879
Speaker 3: Hospital where you take your child if he or she

476
00:26:00,080 --> 00:26:02,399
Speaker 3: scrapes like this.

477
00:26:02,359 --> 00:26:04,520
Speaker 5: Was see you can imagine I did that trip that

478
00:26:04,560 --> 00:26:06,240
Speaker 5: you're talking about just a few months ago. You can

479
00:26:06,280 --> 00:26:08,680
Speaker 5: imagine why they haven't had elections in right, they're living

480
00:26:08,680 --> 00:26:09,800
Speaker 5: in this martial law.

481
00:26:10,880 --> 00:26:22,399
Speaker 3: They are, and it's probably a necessary, probably necessary to

482
00:26:22,440 --> 00:26:26,359
Speaker 3: move forward with the democratic process.

483
00:26:26,760 --> 00:26:28,520
Speaker 2: We've covered a lot of topics. One name that has

484
00:26:28,560 --> 00:26:31,400
Speaker 2: not come up very much is Elon Musk. Let's finish there.

485
00:26:31,680 --> 00:26:34,919
Speaker 2: You've had some tremendous colleagues in your experience over your career,

486
00:26:35,200 --> 00:26:38,320
Speaker 2: including the great investor Standing Drunken Miller. You've worked alongside

487
00:26:38,320 --> 00:26:40,480
Speaker 2: Donald Trump through the campaign. Can you just describe what

488
00:26:40,480 --> 00:26:42,400
Speaker 2: it's like to work with someone like Elon Musk, someone

489
00:26:42,440 --> 00:26:45,480
Speaker 2: as successful an American business Just what's that like day

490
00:26:45,520 --> 00:26:45,800
Speaker 2: to day?

491
00:26:46,320 --> 00:26:50,879
Speaker 3: Yeah, Look, Elon Musk, like stand drunk and Moller like

492
00:26:51,880 --> 00:26:55,080
Speaker 3: I always compare the great business people to great athletes.

493
00:26:55,119 --> 00:26:59,680
Speaker 3: They keep their eye on the prize, whether that whether

494
00:26:59,760 --> 00:27:06,240
Speaker 3: he's the Messy or Michael the Messy or Michael Jordan.

495
00:27:07,320 --> 00:27:12,000
Speaker 3: He is focused and his energy level is unbelievable and

496
00:27:12,720 --> 00:27:15,760
Speaker 3: he's gotten to where he has because everything's on the table.

497
00:27:16,840 --> 00:27:19,359
Speaker 3: There's always this examination of why are we doing it

498
00:27:19,400 --> 00:27:21,760
Speaker 3: this way? Why are we doing what we're doing? And

499
00:27:21,840 --> 00:27:25,479
Speaker 3: most of all, if something's not working, Let's fix it.

500
00:27:25,560 --> 00:27:28,560
Speaker 5: You know, Sam Oltman was on Bloomberg TV just two

501
00:27:28,560 --> 00:27:30,920
Speaker 5: weeks ago and called Elon Muss insecure.

502
00:27:31,640 --> 00:27:32,560
Speaker 1: Do you view him as much?

503
00:27:33,359 --> 00:27:38,199
Speaker 3: I'm not going to get into the tech magnet the.

504
00:27:40,080 --> 00:27:43,240
Speaker 2: Kind of slap best secondly best, and I would say

505
00:27:43,240 --> 00:27:46,280
Speaker 2: that's wise. He is drawing criticism, though, when you and

506
00:27:46,280 --> 00:27:48,760
Speaker 2: the administration come out and pick out the various things

507
00:27:48,760 --> 00:27:50,960
Speaker 2: where money is being wasted on, I think we can

508
00:27:51,000 --> 00:27:53,359
Speaker 2: all agree that that's a waste of money. When there

509
00:27:53,400 --> 00:27:55,640
Speaker 2: might be some concern is the way that some people

510
00:27:55,640 --> 00:27:58,080
Speaker 2: are being laid off in Washington that lacks some dignity?

511
00:27:58,320 --> 00:27:59,680
Speaker 2: Could you comment on that today?

512
00:28:00,160 --> 00:28:05,760
Speaker 3: Look, I think that, uh, there are many fine public servants,

513
00:28:06,320 --> 00:28:09,080
Speaker 3: and but I think that.

514
00:28:11,160 --> 00:28:12,399
Speaker 4: I've been in Washington.

515
00:28:12,400 --> 00:28:15,920
Speaker 3: It's three or four weeks now, and there's a real

516
00:28:16,440 --> 00:28:19,480
Speaker 3: bias towards the status quo. And if you don't move

517
00:28:19,560 --> 00:28:25,360
Speaker 3: quickly then they then the lobbyists get involved, the entrenched interest,

518
00:28:25,880 --> 00:28:30,320
Speaker 3: and it's impossible to get anything done. So you know,

519
00:28:30,680 --> 00:28:35,720
Speaker 3: any anyone who has experienced, uh in financial hardship, the

520
00:28:36,240 --> 00:28:40,520
Speaker 3: any kind of the mental duress, uh, you know, I'm

521
00:28:40,560 --> 00:28:44,120
Speaker 3: sorry for them, but that's also what the average American

522
00:28:44,200 --> 00:28:47,240
Speaker 3: experiences every day most of us. You know, you all

523
00:28:47,240 --> 00:28:50,239
Speaker 3: come to work, you want good readings, the you know

524
00:28:50,400 --> 00:28:54,080
Speaker 3: you uh, you get a performance readout.

525
00:28:54,240 --> 00:28:55,840
Speaker 4: You really push forward.

526
00:28:56,240 --> 00:28:59,840
Speaker 3: And I can tell you that in Treasury, I have

527
00:29:00,120 --> 00:29:04,680
Speaker 3: been so impressed with the quality of the permanent staff

528
00:29:05,240 --> 00:29:09,080
Speaker 3: and I want to get everybody back to the office

529
00:29:09,400 --> 00:29:11,280
Speaker 3: and a lot of people are on board with that.

530
00:29:11,800 --> 00:29:15,320
Speaker 5: When it comes to your prior life, you didn't have

531
00:29:15,360 --> 00:29:17,320
Speaker 5: a boss. You said it would be like atrophy if

532
00:29:17,360 --> 00:29:20,840
Speaker 5: you weren't trading financial markets every single day. What is

533
00:29:20,880 --> 00:29:24,040
Speaker 5: it like now to be in this position where you

534
00:29:24,120 --> 00:29:26,600
Speaker 5: make decisions that people can trade against what you're doing,

535
00:29:26,800 --> 00:29:29,160
Speaker 5: and you also have a boss that sits pretty close

536
00:29:29,200 --> 00:29:32,120
Speaker 5: to you. In terms of the Treasury Department and the

537
00:29:32,120 --> 00:29:32,600
Speaker 5: West Wing.

538
00:29:32,880 --> 00:29:37,200
Speaker 3: Well, look, I only had my own firm for eight years,

539
00:29:37,720 --> 00:29:41,560
Speaker 3: so I worked with mister Sours, with Stan Druck and

540
00:29:41,640 --> 00:29:47,800
Speaker 3: Mower and it's a great feedback mechanism. And I think

541
00:29:47,920 --> 00:29:51,840
Speaker 3: I have the best position in DC. I'm on the

542
00:29:51,840 --> 00:29:53,320
Speaker 3: White House campus.

543
00:29:54,080 --> 00:29:55,960
Speaker 4: We have a great staff. In Treasury.

544
00:29:56,080 --> 00:30:01,560
Speaker 3: I can be in the Oval in four minutes, so

545
00:30:02,000 --> 00:30:09,920
Speaker 3: there's proximity. And again, not like Elon Musk, President Trump

546
00:30:10,000 --> 00:30:12,960
Speaker 3: is committed to shaking up the status quo. He came

547
00:30:13,000 --> 00:30:16,520
Speaker 3: in with a mandate and he's moving on it very quickly.

548
00:30:16,920 --> 00:30:19,560
Speaker 2: You're a total gentleman, and you've been very gracious with

549
00:30:19,600 --> 00:30:21,000
Speaker 2: your time. Thanks for being a good friend to this

550
00:30:21,080 --> 00:30:24,480
Speaker 2: program over the last year, Secretary Besson there of the

551
00:30:24,520 --> 00:30:36,880
Speaker 2: Treasury Secretary, best and thank you, Sir Canardi Goldberg of

552
00:30:36,920 --> 00:30:40,800
Speaker 2: TD Writing markets retain a dual focus as the year

553
00:30:40,840 --> 00:30:45,120
Speaker 2: wears on, economic fundamentals and politics. Trade uncertainty is dominated headlines,

554
00:30:45,160 --> 00:30:49,520
Speaker 2: but immigration and fiscal policy also matters significantly to the market.

555
00:30:49,520 --> 00:30:51,400
Speaker 2: Gannardi joins us now for more. Cannardi, It's good to

556
00:30:51,400 --> 00:30:53,800
Speaker 2: see you. Let's talk about this bond market. You're to

557
00:30:53,840 --> 00:30:55,600
Speaker 2: drop in. They're not climbing. That was not the call

558
00:30:55,640 --> 00:30:58,640
Speaker 2: coming into twenty five from the consensus. Your call is

559
00:30:58,640 --> 00:31:00,160
Speaker 2: a bit different. What are you looking for, Well.

560
00:31:00,600 --> 00:31:02,640
Speaker 7: We're still looking for kind of a first half, second

561
00:31:02,680 --> 00:31:04,640
Speaker 7: half story. I think the first half is all about

562
00:31:04,760 --> 00:31:07,040
Speaker 7: trying to figure out Trump to some extent, and trying

563
00:31:07,040 --> 00:31:09,320
Speaker 7: to figure out the macro backdrop as well. We have

564
00:31:09,360 --> 00:31:12,320
Speaker 7: a fairly strong macroeconomy that is on its way to

565
00:31:12,400 --> 00:31:15,360
Speaker 7: gradually moderating, and then we've got a lot of the

566
00:31:15,440 --> 00:31:20,120
Speaker 7: uncertainty on trade, on tariffs, on immigration, on all these things,

567
00:31:20,160 --> 00:31:22,920
Speaker 7: and that's really going to push us towards kind of

568
00:31:22,920 --> 00:31:25,360
Speaker 7: a second half where we do think, we reassess and

569
00:31:25,480 --> 00:31:27,720
Speaker 7: rates slowly drift flower over the course of the year.

570
00:31:28,080 --> 00:31:30,760
Speaker 6: So right now range bound is people wigh these sort

571
00:31:30,800 --> 00:31:34,120
Speaker 6: of counterbalances and remain in a fog where do you

572
00:31:34,120 --> 00:31:34,880
Speaker 6: have clarity yet?

573
00:31:34,920 --> 00:31:35,840
Speaker 1: Do you understand Trump?

574
00:31:36,320 --> 00:31:37,320
Speaker 4: I'll put it to you this way.

575
00:31:37,360 --> 00:31:40,400
Speaker 7: With a lot of my conversations with clients, the conviction

576
00:31:40,560 --> 00:31:42,400
Speaker 7: level on a scale of one to ten is about

577
00:31:42,400 --> 00:31:45,880
Speaker 7: a negative two. You know, nobody has any clue as

578
00:31:45,880 --> 00:31:46,920
Speaker 7: to what's coming next.

579
00:31:46,960 --> 00:31:48,600
Speaker 2: And really what we're trying.

580
00:31:48,400 --> 00:31:50,840
Speaker 7: To understand is what is the end goal of a

581
00:31:50,840 --> 00:31:52,880
Speaker 7: lot of these policies. And we're still very much in

582
00:31:52,880 --> 00:31:54,200
Speaker 7: the thick of it. I mean, it's been a month

583
00:31:54,280 --> 00:31:57,000
Speaker 7: at this point. It's felt like much longer than that.

584
00:31:57,040 --> 00:31:59,200
Speaker 7: For the bond market, I can tell you it seems

585
00:31:59,240 --> 00:32:02,040
Speaker 7: like everything is calmed, but underneath the surface, there's a

586
00:32:02,040 --> 00:32:03,840
Speaker 7: lot of analysis going on, a lot of people trying

587
00:32:03,840 --> 00:32:06,800
Speaker 7: to understand what exactly is the angle of these policies.

588
00:32:07,120 --> 00:32:08,920
Speaker 7: I don't think the market has a good sense of

589
00:32:08,920 --> 00:32:09,880
Speaker 7: that yet right now.

590
00:32:09,840 --> 00:32:12,400
Speaker 6: Where you looked at the meeting minutes yesterday that came

591
00:32:12,440 --> 00:32:15,320
Speaker 6: out from the last FMC meeting, and they talked about

592
00:32:15,360 --> 00:32:18,920
Speaker 6: the uncertainty, the policy uncertainty, and said that generally it

593
00:32:19,000 --> 00:32:23,200
Speaker 6: pointed to upside risks to the inflation outlook. Do agree

594
00:32:23,240 --> 00:32:25,719
Speaker 6: that when you put the soup together, the risk is

595
00:32:25,760 --> 00:32:28,680
Speaker 6: to an upside bent and inflation rather than a downside

596
00:32:29,560 --> 00:32:30,640
Speaker 6: swing in growth.

597
00:32:30,960 --> 00:32:32,760
Speaker 7: I think if you look at the data you've seen

598
00:32:32,760 --> 00:32:34,400
Speaker 7: in the last couple of months, you know the FED

599
00:32:34,480 --> 00:32:36,480
Speaker 7: is very much painted by that. They do try to

600
00:32:36,480 --> 00:32:38,800
Speaker 7: look at longer term trends. The last couple of months

601
00:32:38,800 --> 00:32:40,760
Speaker 7: have been a little firm, although I will say less

602
00:32:40,760 --> 00:32:43,280
Speaker 7: firm than expected. And if you look at the translation

603
00:32:43,360 --> 00:32:46,200
Speaker 7: into core PCE, we're still looking for a point twenty

604
00:32:46,200 --> 00:32:49,000
Speaker 7: five on a month a month reading just next week,

605
00:32:49,040 --> 00:32:52,400
Speaker 7: so we're not really seeing this massive reacceleration of inflation

606
00:32:52,440 --> 00:32:54,640
Speaker 7: that folks were worried about. So I think we're still

607
00:32:54,640 --> 00:32:57,400
Speaker 7: on a downward trajectory. The issue is it's not downward

608
00:32:57,600 --> 00:33:00,800
Speaker 7: enough for the Fed. They wanted to be making more progress,

609
00:33:00,960 --> 00:33:02,480
Speaker 7: and I think that's what's got the body market a

610
00:33:02,520 --> 00:33:03,000
Speaker 7: little stuck.

611
00:33:03,160 --> 00:33:05,880
Speaker 6: It's not lower enough for the Fed, and it's not

612
00:33:05,960 --> 00:33:07,560
Speaker 6: lower enough for the Treasury Department.

613
00:33:07,600 --> 00:33:09,120
Speaker 1: And we're going to be speaking.

614
00:33:08,800 --> 00:33:11,280
Speaker 6: With Scott Bessett who talked about how he is focused

615
00:33:11,320 --> 00:33:14,160
Speaker 6: on the tenure yield. How much control do you think

616
00:33:14,200 --> 00:33:17,440
Speaker 6: the Treasury has over this? How much will their issuance

617
00:33:17,520 --> 00:33:20,360
Speaker 6: plans as well as just how they offset some of

618
00:33:20,400 --> 00:33:22,640
Speaker 6: the spending. How much is that going to really be

619
00:33:22,720 --> 00:33:24,680
Speaker 6: the main driver for where the tenure is.

620
00:33:25,120 --> 00:33:29,240
Speaker 7: I think the focus from this administration is well received

621
00:33:29,240 --> 00:33:29,920
Speaker 7: by modern markets.

622
00:33:29,920 --> 00:33:30,880
Speaker 4: I can tell you that much.

623
00:33:31,080 --> 00:33:34,120
Speaker 7: There's a lot of I would say, you know, like

624
00:33:34,280 --> 00:33:36,320
Speaker 7: of the fact that he is looking at the long

625
00:33:36,400 --> 00:33:38,160
Speaker 7: end of the Yeld curve and saying, what can we

626
00:33:38,280 --> 00:33:42,760
Speaker 7: do to ensure that there's ample supply demand. Maybe that

627
00:33:42,800 --> 00:33:45,200
Speaker 7: means once November comes around, which is when we expect

628
00:33:45,200 --> 00:33:46,040
Speaker 7: auction sizes.

629
00:33:45,800 --> 00:33:49,120
Speaker 4: To increase, maybe they moderate the increases in the long end.

630
00:33:49,120 --> 00:33:50,960
Speaker 4: Maybe they don't even increase.

631
00:33:50,600 --> 00:33:52,920
Speaker 7: Ten twenty and thirty or auction sizes. That's something that's

632
00:33:52,920 --> 00:33:55,400
Speaker 7: potentially on the table. I doubt that would have been

633
00:33:55,440 --> 00:33:57,520
Speaker 7: on the table with prior administrations. They would have tried

634
00:33:57,520 --> 00:34:00,360
Speaker 7: to raise it in all venues. Here, we're really looking

635
00:34:00,400 --> 00:34:03,760
Speaker 7: at where is the kind of the optimal issuance point

636
00:34:04,120 --> 00:34:06,920
Speaker 7: with the with the keen kind of point of let's

637
00:34:06,920 --> 00:34:09,759
Speaker 7: try not to increase rates further out the curve term

638
00:34:09,800 --> 00:34:12,440
Speaker 7: premium is already higher, so that's something that you know,

639
00:34:12,600 --> 00:34:14,879
Speaker 7: the US taxpayer has to be paying for, and they're

640
00:34:14,880 --> 00:34:16,600
Speaker 7: really trying to minimize constant taxpayers.

641
00:34:16,600 --> 00:34:18,000
Speaker 2: That's that's really the Treasury's goal.

642
00:34:18,080 --> 00:34:19,839
Speaker 5: What can they do in the short term though, if

643
00:34:19,840 --> 00:34:22,839
Speaker 5: they're laser focused on bringing down the tenure, I.

644
00:34:22,800 --> 00:34:24,600
Speaker 4: Mean, get the budget in order.

645
00:34:24,640 --> 00:34:26,839
Speaker 7: I mean, that's really the next big thing, and not.

646
00:34:26,880 --> 00:34:28,400
Speaker 1: Send out five thousand dollars checks.

647
00:34:29,200 --> 00:34:31,520
Speaker 7: It would be use five thousand dollars checks to pay

648
00:34:31,520 --> 00:34:33,680
Speaker 7: down the deficit, right, I mean, that would be kind

649
00:34:33,680 --> 00:34:36,000
Speaker 7: of the best thing that's received by the bond market

650
00:34:36,040 --> 00:34:37,799
Speaker 7: so far. I mean, if you really want to do this,

651
00:34:37,840 --> 00:34:40,080
Speaker 7: you know, we're running about a six percent deficit to GDP.

652
00:34:40,640 --> 00:34:41,400
Speaker 7: Bring that down.

653
00:34:41,600 --> 00:34:43,239
Speaker 4: I know there's a lot of efforts to do that.

654
00:34:43,280 --> 00:34:45,360
Speaker 7: At the moment. We'll have to see what the results

655
00:34:45,360 --> 00:34:47,440
Speaker 7: of that are. I don't know if the bond market

656
00:34:47,480 --> 00:34:51,640
Speaker 7: is fully convinced that lower deficits is the direction we're heading,

657
00:34:51,960 --> 00:34:54,200
Speaker 7: and to what extent they're going to be lower a.

658
00:34:54,280 --> 00:34:56,640
Speaker 2: Seventy dice, but you have. It's a folding rising and

659
00:34:56,680 --> 00:34:58,839
Speaker 2: that's the change that not many people expected coming into

660
00:34:58,880 --> 00:34:59,239
Speaker 2: the new Yea.

661
00:34:59,400 --> 00:35:01,440
Speaker 6: I love it is talking about in terms of the

662
00:35:01,480 --> 00:35:04,680
Speaker 6: analysis underneath the hood of all of these potential policies

663
00:35:04,680 --> 00:35:07,000
Speaker 6: and how they offset each other. And right now the

664
00:35:07,000 --> 00:35:09,279
Speaker 6: focus is more on what this could mean for a

665
00:35:09,320 --> 00:35:11,520
Speaker 6: growth head more than say inflation.

666
00:35:11,600 --> 00:35:13,680
Speaker 2: Canadia's good to see you as always, appreciate your time,

667
00:35:13,719 --> 00:35:15,279
Speaker 2: Thank you, sir, Cannada girl. But the i f TD

668
00:35:15,360 --> 00:35:27,719
Speaker 2: securities on this bond market, all the asym of New

669
00:35:27,760 --> 00:35:30,400
Speaker 2: Century Advisors joins us. Now for more, Claudia, welcome to

670
00:35:30,400 --> 00:35:32,600
Speaker 2: the program. I want to get straight to that economic data.

671
00:35:32,960 --> 00:35:35,239
Speaker 2: Jobless claims it doesn't look like there's a ton of

672
00:35:35,239 --> 00:35:38,280
Speaker 2: weakness here when you look at the labor market from above,

673
00:35:38,280 --> 00:35:41,040
Speaker 2: from thirty five thousand feet, any reason for concern at

674
00:35:41,040 --> 00:35:41,480
Speaker 2: the moment.

675
00:35:43,640 --> 00:35:46,800
Speaker 8: So thirty five thousand feet, the labor market still looks

676
00:35:46,880 --> 00:35:50,640
Speaker 8: really good. Now, clearly we have to pay attention to

677
00:35:50,880 --> 00:35:53,399
Speaker 8: the layoffs that are happening within the federal government and

678
00:35:53,480 --> 00:35:56,759
Speaker 8: how that might spread through contractors and other kinds of

679
00:35:56,840 --> 00:36:00,600
Speaker 8: grants that are held back. But that is at the

680
00:36:00,680 --> 00:36:03,640
Speaker 8: high level. That's just one corner of the labor market.

681
00:36:03,800 --> 00:36:06,799
Speaker 8: But I think back to the point chat about this uncertainty.

682
00:36:07,120 --> 00:36:10,919
Speaker 8: We came into this moment with hiring rates that look

683
00:36:11,280 --> 00:36:13,800
Speaker 8: kind of unusual for the amount of layoffs. Like layoffs

684
00:36:13,840 --> 00:36:16,520
Speaker 8: look really good, But we are an environment that isn't

685
00:36:16,560 --> 00:36:19,600
Speaker 8: absorbing the workers who are out there looking for jobs.

686
00:36:19,640 --> 00:36:21,840
Speaker 8: So if we do get into a place of layoffs,

687
00:36:21,840 --> 00:36:24,319
Speaker 8: then that can be a real problem. It can turn

688
00:36:24,360 --> 00:36:26,560
Speaker 8: into a problem very quickly. Not a problem now, but

689
00:36:26,640 --> 00:36:27,080
Speaker 8: it could be.

690
00:36:27,400 --> 00:36:30,320
Speaker 6: Claudia has ever been an analog a time and history

691
00:36:30,320 --> 00:36:32,359
Speaker 6: that you can point to where there was a lot

692
00:36:32,400 --> 00:36:36,200
Speaker 6: of policy uncertainty and a pretty ballad labor market. It's

693
00:36:36,239 --> 00:36:39,360
Speaker 6: someone that was kind of in stasis and not expanding

694
00:36:39,480 --> 00:36:40,360
Speaker 6: and not contracting.

695
00:36:44,320 --> 00:36:44,719
Speaker 2: That's tough.

696
00:36:44,880 --> 00:36:47,239
Speaker 8: I mean, it is true that when we start into

697
00:36:47,239 --> 00:36:49,840
Speaker 8: an administration there is going to be a lot of

698
00:36:50,080 --> 00:36:54,319
Speaker 8: a new administration uncertainty about where the economic policy is

699
00:36:54,360 --> 00:36:55,320
Speaker 8: going all together.

700
00:36:55,719 --> 00:36:56,680
Speaker 4: Right, So we have.

701
00:36:56,760 --> 00:37:00,239
Speaker 8: These moments and time and it doesn't have to, you know,

702
00:37:00,320 --> 00:37:02,919
Speaker 8: really cause a big upset in the labor market. It's

703
00:37:02,960 --> 00:37:06,640
Speaker 8: more what the policies turn into going forward. So we're

704
00:37:06,640 --> 00:37:09,760
Speaker 8: in kind of this like holding pattern at the moment,

705
00:37:09,800 --> 00:37:12,600
Speaker 8: but I wouldn't necessarily say.

706
00:37:12,440 --> 00:37:15,399
Speaker 4: This is out out of the.

707
00:37:15,440 --> 00:37:16,800
Speaker 1: Normal, Claudia.

708
00:37:17,080 --> 00:37:20,480
Speaker 6: I'm wondering as an economist how much you're increasingly looking

709
00:37:20,560 --> 00:37:23,480
Speaker 6: at the economic data put out by the government versus

710
00:37:23,960 --> 00:37:27,560
Speaker 6: the economic data put out by corporate executives. And I

711
00:37:27,600 --> 00:37:30,040
Speaker 6: say this because increasingly what you're seeing in the stock

712
00:37:30,120 --> 00:37:33,520
Speaker 6: market is corporate earnings are really the driver of pretty

713
00:37:33,600 --> 00:37:36,040
Speaker 6: much everything across the board. I wonder if that's increasingly

714
00:37:36,360 --> 00:37:41,360
Speaker 6: on the bond side, and from an economics perspective as well, well, I.

715
00:37:41,360 --> 00:37:43,759
Speaker 8: Think it's important to I mean, we need to be

716
00:37:43,840 --> 00:37:45,840
Speaker 8: looking at all pieces of data. A lot of the

717
00:37:45,880 --> 00:37:48,319
Speaker 8: government data do a much better job of rolling it

718
00:37:48,360 --> 00:37:51,120
Speaker 8: all up, giving us the big picture, the trends where

719
00:37:51,120 --> 00:37:54,080
Speaker 8: we're going as an economy overall. Clearly there are going

720
00:37:54,160 --> 00:37:58,000
Speaker 8: to be important idiosyncratic at the different the firm levels,

721
00:37:58,040 --> 00:38:01,279
Speaker 8: the earnings levels, that will drive I say, markets an

722
00:38:01,280 --> 00:38:03,719
Speaker 8: important way. So I don't think we should ever be

723
00:38:03,760 --> 00:38:06,799
Speaker 8: in an either or situation, And there can be times

724
00:38:06,800 --> 00:38:09,359
Speaker 8: where it's really difficult to match up the two, where

725
00:38:09,400 --> 00:38:11,399
Speaker 8: you have things going on in sectors that are very

726
00:38:11,440 --> 00:38:14,839
Speaker 8: different than the economy as a whole CAU.

727
00:38:14,880 --> 00:38:16,440
Speaker 5: We talk about what's going on in the job sector

728
00:38:16,480 --> 00:38:20,040
Speaker 5: at the federal level. If we're seeing a dogification of

729
00:38:20,080 --> 00:38:23,000
Speaker 5: the federal workforce, what kind of average numbers do you

730
00:38:23,040 --> 00:38:26,280
Speaker 5: expect to be added every month? Last year is about

731
00:38:26,320 --> 00:38:31,160
Speaker 5: thirty five thousand on average of federal workforce employees added

732
00:38:31,160 --> 00:38:33,160
Speaker 5: to the job report.

733
00:38:33,600 --> 00:38:36,480
Speaker 8: Right, So at this point it's really hard to get

734
00:38:36,520 --> 00:38:40,400
Speaker 8: a firm sense of numbers coming out of DOGE and

735
00:38:40,560 --> 00:38:43,160
Speaker 8: just the reporting. You know, we're getting things very much

736
00:38:43,160 --> 00:38:45,880
Speaker 8: in piecemeal in terms of the layoffs that have actually happened,

737
00:38:45,880 --> 00:38:48,719
Speaker 8: the layoffs that are likely to happen. So I think,

738
00:38:48,760 --> 00:38:51,480
Speaker 8: you know, keeping in perspective, federal government workforce less than

739
00:38:51,480 --> 00:38:55,839
Speaker 8: two percent of the full government if we had the

740
00:38:55,880 --> 00:38:58,719
Speaker 8: full probationary workers. So those two hundred thousand workers that

741
00:38:58,760 --> 00:39:02,080
Speaker 8: have been targeted, they were all laid off, Like that's

742
00:39:02,120 --> 00:39:04,480
Speaker 8: a tenth of a percentage point on the unemployment rate.

743
00:39:04,800 --> 00:39:08,480
Speaker 8: These are small numbers in that big picture. They're incredibly

744
00:39:08,520 --> 00:39:11,680
Speaker 8: disruptive in the federal government. That could be disruptive for services.

745
00:39:12,280 --> 00:39:16,280
Speaker 8: But we have to like these We're getting constant headlines

746
00:39:16,320 --> 00:39:18,920
Speaker 8: of layoffs and they will add up. It's just a

747
00:39:19,040 --> 00:39:22,480
Speaker 8: question of how big those really are in reality, and

748
00:39:22,880 --> 00:39:26,680
Speaker 8: that's just not a known yet and how it spreads, right,

749
00:39:26,680 --> 00:39:29,800
Speaker 8: this is not just about the federal workforce. It's being targeted.

750
00:39:29,880 --> 00:39:32,440
Speaker 8: So I think at this point it's it's clearly a negative.

751
00:39:32,440 --> 00:39:34,600
Speaker 8: I can tell you the direction that that looks like

752
00:39:34,680 --> 00:39:37,640
Speaker 8: on the jobs report, but whether it's the kind of

753
00:39:37,760 --> 00:39:41,080
Speaker 8: numbers that are portending of a recession or a major

754
00:39:41,120 --> 00:39:44,040
Speaker 8: contractional labor market like that would require a lot of

755
00:39:44,080 --> 00:39:46,640
Speaker 8: amplification outside of the federal government sector.

756
00:39:46,800 --> 00:39:49,600
Speaker 5: On the flip side, how are you taking into consideration

757
00:39:50,200 --> 00:39:52,479
Speaker 5: what we're seeing on the immigration side with the Trump

758
00:39:52,480 --> 00:39:57,960
Speaker 5: administration deportations and much stricter border control.

759
00:39:59,360 --> 00:40:02,000
Speaker 8: Right, So again this is one where the numbers are

760
00:40:02,000 --> 00:40:05,439
Speaker 8: going to really matter. I mean in terms of are

761
00:40:05,480 --> 00:40:08,480
Speaker 8: they really doing the deep are the deportations really adding

762
00:40:08,560 --> 00:40:11,239
Speaker 8: up in a way that the administration aspires to And

763
00:40:11,280 --> 00:40:13,200
Speaker 8: they may not be there now, maybe they'll get there,

764
00:40:13,520 --> 00:40:16,040
Speaker 8: but we you know that a lot of that is

765
00:40:16,400 --> 00:40:19,880
Speaker 8: going to be potentially destructive to supply side, right, Like

766
00:40:19,920 --> 00:40:24,520
Speaker 8: we're losing workers that you know that have been a

767
00:40:24,520 --> 00:40:28,080
Speaker 8: big booster growth coming into this could be a drag

768
00:40:28,160 --> 00:40:30,719
Speaker 8: on growth. But again, at this point, the numbers being

769
00:40:30,760 --> 00:40:34,040
Speaker 8: aspired to for exceed what it looks like are actually

770
00:40:34,040 --> 00:40:36,160
Speaker 8: the deportations that are happening. So I mean, at the

771
00:40:36,239 --> 00:40:37,960
Speaker 8: end of the day and the data and what's happened,

772
00:40:38,000 --> 00:40:40,480
Speaker 8: like the reality matters, and we don't know what the

773
00:40:40,520 --> 00:40:41,200
Speaker 8: reality is.

774
00:40:41,200 --> 00:40:43,960
Speaker 2: Right now, Laudia, I appreciate you re inside. As always, Cordia,

775
00:40:44,000 --> 00:40:48,000
Speaker 2: Sam that of New Century assizes. This is the Bloomberg

776
00:40:48,040 --> 00:40:52,680
Speaker 2: Seventans podcast, bringing you the best in markets, economics, antiopolitics.

777
00:40:53,000 --> 00:40:55,480
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778
00:40:55,520 --> 00:40:58,759
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779
00:40:58,760 --> 00:41:02,000
Speaker 2: the podcast on Apple, Spotify, or anywhere else you listen,

780
00:41:02,280 --> 00:41:04,880
Speaker 2: and as always on the Bloomberg Terminal and the Bloomberg

781
00:41:04,920 --> 00:41:05,480
Speaker 2: Business Out

782
00:41:09,440 --> 00:41:09,919
Speaker 1: Mm hmm