WEBVTT - Bessent Intervention and Economic D-Day 0:00:02.520 --> 0:00:13.760 Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg 0:00:13.800 --> 0:00:17.880 Surveillance Podcast. Catch us live weekdays at seven am Eastern 0:00:18.200 --> 0:00:21.240 on Apple car Play or Android Auto with the Bloomberg 0:00:21.280 --> 0:00:24.840 Business app. Listen on demand wherever you get your podcasts, 0:00:25.280 --> 0:00:27.000 or watch us live on YouTube. 0:00:27.160 --> 0:00:29.400 We are so fortunate to join us now for an 0:00:29.400 --> 0:00:34.239 extensive conversation is Jason Trenner. He is intimately involved with 0:00:34.400 --> 0:00:38.920 some of the finance and indeed the politics of mister 0:00:38.960 --> 0:00:41.680 Besson and I would say tangentially mister drut and Miller 0:00:42.000 --> 0:00:44.159 as well. Jason, We are fortunate to have you here 0:00:44.240 --> 0:00:44.640 this morning. 0:00:44.640 --> 0:00:46.400 Mister Tigez, I'm fortunate to be here. 0:00:46.520 --> 0:00:49.120 Are you just your thoughts when you saw the essay 0:00:49.200 --> 0:00:52.600 from mister druck and Miller about the Treasury Secretary and 0:00:52.720 --> 0:00:53.840 yield management? 0:00:54.000 --> 0:00:56.280 Well, I have to say, just in purpose full disclosure, 0:00:56.640 --> 0:01:00.240 I know all these people pretty well, and so I'm 0:01:00.240 --> 0:01:03.560 probably gonna pull some punches here. But to answer your question, 0:01:03.680 --> 0:01:07.640 I was quite surprised, uh to see uh, mister Drucgonmiller 0:01:07.680 --> 0:01:11.160 write that essay. And that's simply that op ed simply 0:01:11.200 --> 0:01:15.960 because he worked obviously worked with Scott Besson and Kevin 0:01:16.000 --> 0:01:19.880 Walsh and all the rest. And it's a direct it's 0:01:19.880 --> 0:01:21.160 a direct hit on the administration. 0:01:21.200 --> 0:01:22.840 You and I could go for two hours on this 0:01:23.160 --> 0:01:25.319 without without taking a breath. Let me get this in here, 0:01:25.319 --> 0:01:28.880 because Alexis has six questions as simple as I can. 0:01:29.040 --> 0:01:34.160 How does this constrain Chairman Warsh at Jackson Hole? And frankly, 0:01:34.280 --> 0:01:38.319 how does it contain constrained Chairman Warsh to the next 0:01:38.600 --> 0:01:40.480 and the next and the next meetings? 0:01:40.640 --> 0:01:42.920 And so if you're talking about the bond market, uh 0:01:43.080 --> 0:01:47.760 bond market intervention, it makes Kevin Warsh's job harder. There's 0:01:47.840 --> 0:01:50.040 just no two ways about it. Because the cost of 0:01:50.120 --> 0:01:54.840 capital is is debt capital risk pree capital is artificially low. 0:01:55.440 --> 0:01:57.920 And I think what mister Druggonmiller was saying this morning, 0:01:57.920 --> 0:01:59.760 which I agree with, is that you know the price 0:01:59.800 --> 0:02:03.960 mech you know is a mondralize just the bedrock of 0:02:04.080 --> 0:02:06.840 capitalism and regulating supply and demand. 0:02:06.880 --> 0:02:08.760 And so if you keep, if you keep the price 0:02:08.880 --> 0:02:09.920 lower than it should be. 0:02:11.360 --> 0:02:14.160 This is why we love Ivan. Jason goes to the 0:02:14.400 --> 0:02:18.840 single sentence of the essay where I set up and listen. 0:02:18.919 --> 0:02:21.200 I'll get to it in a moment. Alexis Christophers with 0:02:21.400 --> 0:02:23.120 Jason trended across America. 0:02:23.280 --> 0:02:25.720 Let the bond market speak right, that's what drunk thro 0:02:25.760 --> 0:02:27.480 Miller basically, so, but I want to switch gears for 0:02:27.520 --> 0:02:30.240 him and still stick with Bessent though, because he talked 0:02:30.320 --> 0:02:34.959 yesterday yesterday about unleashing economic d day on Iran. Your 0:02:35.040 --> 0:02:39.560 thoughts on the US's plan here might a backfire? Are 0:02:39.600 --> 0:02:42.880 we on a collision course with China? S am analysts are. 0:02:42.720 --> 0:02:45.040 Saying, and Alexis, I'll just be here a Canady. 0:02:45.120 --> 0:02:48.120 This is not my lane, okay, so but by the 0:02:48.160 --> 0:02:49.960 same token, it seems to me like it might have 0:02:50.040 --> 0:02:52.600 a better chance of success than what we've been doing, 0:02:53.360 --> 0:02:55.760 which is I think unless you're going to put my 0:02:55.880 --> 0:02:58.600 this is my own personal opinion. I have no expertise here, 0:02:58.639 --> 0:03:00.720 but I think unless you're gonna put on the ground, 0:03:01.200 --> 0:03:02.840 is very very difficult. 0:03:02.360 --> 0:03:04.080 To use some sort of as they say. 0:03:03.919 --> 0:03:10.639 Kinetic kinetic approach and have it be successful. So this 0:03:10.720 --> 0:03:13.680 may indeed help in that regard to get what we 0:03:13.720 --> 0:03:17.920 want in the United States, which is a non nuclear Iran. 0:03:18.120 --> 0:03:19.840 It might have a better chance of doing it. 0:03:19.919 --> 0:03:22.480 I think aside from that, we would have to have 0:03:22.639 --> 0:03:26.200 a more robust military intervention, and I don't think anyone 0:03:26.680 --> 0:03:29.239 really wants that, whether it's the president or the American people. 0:03:29.960 --> 0:03:33.880 I want to stick with the economy and what's happening 0:03:34.000 --> 0:03:37.720 right now, with how the US is dealing with Canada, 0:03:38.520 --> 0:03:41.560 and what that might mean for us here in the US. 0:03:41.640 --> 0:03:45.320 Because we're already dealing with elevated inflation. This could, as 0:03:45.520 --> 0:03:48.960 canon now promising these retaliatory tariffs could raise prices here 0:03:49.040 --> 0:03:51.080 for the US consumer. So what does this mean if 0:03:51.080 --> 0:03:54.040 it becomes as long dragged out trade war as summer 0:03:54.040 --> 0:03:54.800 saying it might. 0:03:54.920 --> 0:04:00.200 Well, at the margin, clearly it will prompt inflationary. 0:03:59.600 --> 0:04:01.160 Pressure in the United States. 0:04:01.200 --> 0:04:03.440 And again, as I started off the segment by saying, 0:04:03.480 --> 0:04:06.640 I think prices are the best way to regulate supply 0:04:06.680 --> 0:04:11.160 and demand, and if you start adding to prices, adding costs, 0:04:11.560 --> 0:04:15.320 clearly one would think that demand would go down. Now, 0:04:15.360 --> 0:04:18.320 I have to say I'm more sympathetic to President Trump's 0:04:18.360 --> 0:04:20.919 tariffs and a lot of people in my business, and 0:04:20.920 --> 0:04:23.840 that's simply because I kind of know where he's coming from. 0:04:24.200 --> 0:04:26.120 If you look at any of these so called free 0:04:26.120 --> 0:04:29.520 trade agreements, they're a thousand pages long and have a 0:04:29.560 --> 0:04:32.760 million cutouts for various special interests and all the rest. 0:04:32.880 --> 0:04:34.800 So there's really no such thing. I think in a 0:04:34.800 --> 0:04:37.640 perfect world, free trade would be great, and the free 0:04:37.640 --> 0:04:41.120 trade agreement would be a paragraph law or go where 0:04:41.160 --> 0:04:44.200 sentns lawn right, And we don't really have that, So 0:04:44.360 --> 0:04:47.560 there's just a reality. I think that the president administration 0:04:47.680 --> 0:04:48.760 is addressing. 0:04:48.360 --> 0:04:51.560 A nice lift to the market today, Isabelle said Nvidia 0:04:51.720 --> 0:04:56.080 on fourteen, twenty thirty days straight. I'm kidding, folks, but anyways, 0:04:56.120 --> 0:04:57.919 a nice pop to the market and naasy cup eight 0:04:58.000 --> 0:05:00.720 tens of a percent. Jason Trentett here on the Druck 0:05:00.760 --> 0:05:04.359 and Miller absent moment that we're in. Buried in that 0:05:04.560 --> 0:05:08.360 essay is a nominal GDP statement, which is that where 0:05:08.400 --> 0:05:13.320 the ten year yield is right now is somewhat accommodative 0:05:14.080 --> 0:05:17.920 given our boom economy. The bottom line is we've got 0:05:17.920 --> 0:05:21.520 a nominal GDP like a banana republic, you know, five 0:05:21.560 --> 0:05:25.720 percent five and a half. John writings consumption investment out 0:05:25.720 --> 0:05:28.599 of an eight percent statistic. Here, we're not all that 0:05:28.720 --> 0:05:30.720 restrictive right now in our yields, are we? 0:05:31.000 --> 0:05:31.200 No? 0:05:31.480 --> 0:05:35.440 And I think I have to again to spread some 0:05:35.520 --> 0:05:37.599 of the blame around. I think FED policy in many 0:05:37.600 --> 0:05:40.840 ways is responsible to that since the global financial crisis, 0:05:40.839 --> 0:05:44.720 and that's because they had a perpetuation of financial oppression 0:05:44.720 --> 0:05:48.240 and the use of QE, which, in my opinion, as 0:05:49.160 --> 0:05:54.200 Stan says in this article, it greatly encouraged Congressman to 0:05:54.600 --> 0:05:57.240 spend money they don't have, which they'll they'll readily do. 0:05:57.360 --> 0:05:59.560 And that's both sides of the aisle. And that's happened 0:05:59.520 --> 0:06:03.719 to our long an equal opportunity, equal opportunity. And I 0:06:03.720 --> 0:06:05.719 can tell you there's not a lot of people in Washington, 0:06:05.800 --> 0:06:09.040 just given my own wanderings down there, that really see 0:06:09.600 --> 0:06:11.920 this is a threat that our debt level or. 0:06:11.880 --> 0:06:12.680 Really worry about it. 0:06:12.680 --> 0:06:15.800 And I'm not even sure they know that the FETE 0:06:15.800 --> 0:06:17.440 has been bailing them out jacks in. 0:06:17.400 --> 0:06:21.600 The heart of their optimism, and the best in optimism 0:06:22.080 --> 0:06:27.120 is we will continue to grow through innovation, the classic 0:06:27.200 --> 0:06:30.200 Stigletz equation that our growth rate will do better than 0:06:30.200 --> 0:06:31.160 our debt build up. 0:06:31.279 --> 0:06:34.000 Yeah, well that's you know, there's rein Hard and Rogueff 0:06:34.080 --> 0:06:35.240 talked about the ways you get out. 0:06:35.839 --> 0:06:38.920 I have Ken, Rogoff and Jackson, all folks last night 0:06:39.360 --> 0:06:42.920 wandering through this time is different that My first question 0:06:43.000 --> 0:06:44.080 to rogue Off and Jackson. 0:06:44.160 --> 0:06:46.720 Yeah, right, because, as they pointed out, there are a 0:06:46.720 --> 0:06:48.920 couple of ways to get out of this. You just default, Well, 0:06:48.960 --> 0:06:51.120 we don't have to do that because we're the reserve currency. 0:06:51.279 --> 0:06:54.600 You can do soft default of inflation. You could take 0:06:54.640 --> 0:06:57.640 over another country and take their resources, like rename like 0:06:57.760 --> 0:07:03.840 Ontario the Greenland or something right. Or you could erase 0:07:03.920 --> 0:07:06.440 taxes and at cut spending, which I think would be 0:07:07.080 --> 0:07:11.520 probably disadvantageous at this point. Or you can grow your 0:07:11.520 --> 0:07:14.120 way out, and I think grow your way out is 0:07:14.120 --> 0:07:16.280 always the best way right now. I think it's the 0:07:16.320 --> 0:07:18.960 only choice we have because you can't raise tack in 0:07:18.960 --> 0:07:20.880 my opinion, you can't raise tax is enough or cut 0:07:20.880 --> 0:07:21.440 spending enough. 0:07:21.480 --> 0:07:23.040 You could make a big difference. 0:07:22.760 --> 0:07:25.480 Alexis Custopers in time. Can you welcoming all of you 0:07:25.560 --> 0:07:28.720 across the nation, around the world. Jason Trinner with us 0:07:28.800 --> 0:07:33.160 with Statiga's research partners again the way you choose to 0:07:33.200 --> 0:07:35.840 listen to us every morning, We thank you. Ninety nine 0:07:35.840 --> 0:07:39.320 and one FM, Nathan Hager Radio in Washington, Good Morning, 0:07:39.640 --> 0:07:43.600 ninety two nine FM in Boston, Serious XM across all 0:07:43.640 --> 0:07:48.640 of America, in Canada including Alberta, Yes, which is a joke. 0:07:48.720 --> 0:07:50.800 I said is a fifty first date. We'll talk about 0:07:50.800 --> 0:07:54.400 that in an eight o'clock hour. But good morning, Alberta. 0:07:54.640 --> 0:07:58.360 On Serious xm Alexis Christophers with Jason Trinner. 0:07:59.120 --> 0:08:02.920 Jason, with the Treasury now intervening in the bond market, 0:08:02.960 --> 0:08:06.720 what does this do to our credibility when on the 0:08:06.720 --> 0:08:07.520 world stage. 0:08:08.000 --> 0:08:12.600 Well, it's certainly I would say, uh, it doesn't help. 0:08:12.800 --> 0:08:14.440 I mean, it would just be very candidate. 0:08:14.520 --> 0:08:17.760 It's and I do think if I'm I'm playing the markets, 0:08:17.800 --> 0:08:20.280 if I'm thinking as a speculator, I would be very 0:08:20.320 --> 0:08:23.840 careful in being short bonds here because the tool cut 0:08:23.920 --> 0:08:27.000 that Secretary Besset has talked about is large, and there 0:08:27.000 --> 0:08:29.680 are a lot of things he can do to hurt 0:08:29.920 --> 0:08:34.280 bond shorts. From a long term perspective, I you know, 0:08:34.360 --> 0:08:36.920 I don't. This is you're treating the symptom rather than 0:08:37.320 --> 0:08:38.040 it's aim. 0:08:39.200 --> 0:08:39.960 Yeah, you're you're not. 0:08:40.160 --> 0:08:42.880 You're not dealing with the underlying problem. And that's that's 0:08:42.920 --> 0:08:45.959 not Secretary Vestin's fault or even President Trump's fault. It's 0:08:46.000 --> 0:08:49.080 a collective fault of Washington. 0:08:49.320 --> 0:08:51.480 So if this is the landscape in which we're going 0:08:51.559 --> 0:08:54.760 to be navigating, and we're seeing now investors moving to 0:08:55.040 --> 0:08:59.120 other assets to hedge. Gold has been up lately. Bitcoin 0:08:59.440 --> 0:09:01.720 above a thousand dollars for the first time in three 0:09:01.720 --> 0:09:03.640 months at least earlier today. I think it's pulled back 0:09:03.640 --> 0:09:06.920 a little bit now. Is that the way to move forward? 0:09:07.320 --> 0:09:10.400 I think listen. I think that's probably going to continue 0:09:10.440 --> 0:09:13.800 until anyone gets any religion on spending, which is to say, 0:09:13.960 --> 0:09:16.800 you know, people talked about dedollarization earlier this year. I 0:09:16.880 --> 0:09:20.839 think it's more defeatization because I don't see another I 0:09:20.840 --> 0:09:22.360 don't see another fiat currency that. 0:09:22.280 --> 0:09:25.040 Will take the place of the US dollar. 0:09:25.400 --> 0:09:27.680 But I do think hard assets and I would put 0:09:27.760 --> 0:09:30.480 gold in that category much more than I would put bitcoin. 0:09:30.559 --> 0:09:32.720 But be that as it may, they're both going up, 0:09:32.760 --> 0:09:35.080 and I think you're absolutely right, Alexis that's where people 0:09:35.120 --> 0:09:35.680 are going the. 0:09:35.880 --> 0:09:39.160 Time that we've left. Can we ask g's normal question? 0:09:39.320 --> 0:09:40.360 Oh on normal? Would yes? 0:09:40.400 --> 0:09:40.800 Go ahead? 0:09:41.120 --> 0:09:47.520 Are you comfortable only large cap quality stocks Meg seven 0:09:47.800 --> 0:09:51.760 and others as well? That's a traditional question from. 0:09:51.600 --> 0:09:56.760 A FA and it it actually suggests that evaluation matters, 0:09:56.800 --> 0:10:00.199 which sometimes I wonder when I go into these meetings people, Well, 0:10:00.240 --> 0:10:02.760 you talk about Graham and Dodd and people look at 0:10:02.840 --> 0:10:05.520 you like they don't know what you're talking about. If 0:10:05.559 --> 0:10:09.400 you're if you're under forty, you know, that's a foreign concept. 0:10:10.000 --> 0:10:10.360 I think. 0:10:10.640 --> 0:10:13.959 I think for uh, I will say this, I am 0:10:14.440 --> 0:10:17.079 nervous about the hyperscalers in particular because it. 0:10:17.120 --> 0:10:18.520 Is discounting. 0:10:19.520 --> 0:10:23.320 Very rapid productivity and earning scrubs in the future, and 0:10:23.520 --> 0:10:26.679 that may very well happen, but it is there's no 0:10:26.800 --> 0:10:29.640 question about it that it's a bet that people are 0:10:29.679 --> 0:10:31.920 making and that if there's anything that's happened in the 0:10:32.000 --> 0:10:34.760 last thirty years for fifty years that would do it, it. 0:10:34.760 --> 0:10:35.400 Could be AI. 0:10:35.600 --> 0:10:38.400 But by the same token, Uh, there's not a lot 0:10:38.440 --> 0:10:41.200 of margin of safety, it seems to me there. 0:10:41.400 --> 0:10:44.640 I feel like George Burns. I got to ask Jason Trynner. 0:10:44.720 --> 0:10:47.959 Hey, look great, hey man, thanks, how you feeling. 0:10:48.000 --> 0:10:49.920 Everybody in Wall Street wants to know how you feel 0:10:50.120 --> 0:10:51.280 after battling an illness? 0:10:51.400 --> 0:10:55.080 Yeah, mercifully, everything's good, Thank you, yep. And you know, 0:10:55.200 --> 0:10:58.080 sunshine and being back in the office every day are 0:10:58.120 --> 0:10:59.200 the best medicines for me. 0:10:59.520 --> 0:11:04.360 Did your son survive Boulder? In his sink, I saw 0:11:04.400 --> 0:11:07.920 that he got a double major his academics at Boulder 0:11:07.960 --> 0:11:09.920 and a minor from the sink the bar. 0:11:10.040 --> 0:11:13.920 Yeah, exactly. Yeah, he's yeah, he's in New York. He's 0:11:14.000 --> 0:11:16.319 he's living with a couple of buddies downtown. Of course 0:11:16.640 --> 0:11:19.520 he's gonna find it. They are conditioning, they have air conditioning. 0:11:19.720 --> 0:11:23.800 But you know, it's it's all being in every case, 0:11:23.840 --> 0:11:26.640 it's being subsidized by the bank of Mom and Dad. Right, 0:11:26.720 --> 0:11:30.520 So all of his roommates familiar story, precisely. And so 0:11:30.600 --> 0:11:33.600 he's he's beating the bushes on Wall Street to follow 0:11:33.600 --> 0:11:37.440 in his dad's footsteps hopefully, And I'm thrilled about that. 0:11:37.679 --> 0:11:41.120 And he's anyway, he Bolder was what a great place 0:11:41.160 --> 0:11:43.640 that is. That's a pretty spris as you know, I. 0:11:43.640 --> 0:11:45.680 Enjoyed two years there before going to R A. T. 0:11:45.880 --> 0:11:50.120 And it's just as really really uh the fondest memories. 0:11:50.200 --> 0:11:51.560 Yeah, yeah, this was. 0:11:51.679 --> 0:11:55.680 This was right after they found gold, the Unsinkable Molly 0:11:55.760 --> 0:11:59.000 Brown found gold way back up in the mountains, way back. 0:11:59.360 --> 0:11:59.800 Jason T. 0:12:00.240 --> 0:12:05.520 Thank you so much, totigas Research Partners. Stay with us. 0:12:05.760 --> 0:12:09.000 More from Bloomberg Surveillance coming up after this. 0:12:16.240 --> 0:12:19.839 You're listening to the Bloomberg Surveillance podcast. Catch us live 0:12:19.880 --> 0:12:23.080 weekday afternoons from seven to ten am Eastern. Listen on 0:12:23.120 --> 0:12:26.800 Applecarplay and Android Otto with the Bloomberg Business app, or 0:12:26.960 --> 0:12:28.640 watch us live on YouTube. 0:12:29.000 --> 0:12:33.160 Will tanged to speak to Samonomakuda, chief economists at State Street. 0:12:33.240 --> 0:12:37.199 Here wrapped around my exit tomorrow for Jackson All we'll 0:12:37.240 --> 0:12:41.120 have all our special coverage for you Friday, Simona. I'm 0:12:41.120 --> 0:12:44.520 with Ethan Harris, who's out on LinkedIn with brilliant notes 0:12:44.559 --> 0:12:47.240 each and every day that mister Warrish is going to 0:12:47.280 --> 0:12:50.439 do everything to make this a non event. Do you agree? 0:12:52.840 --> 0:12:56.440 If he wants to make it an event, there's not 0:12:56.520 --> 0:12:58.480 a whole lot he can do. And I think right 0:12:58.520 --> 0:13:01.880 now you don't want an event because chances are it 0:13:02.000 --> 0:13:08.560 would be a destabilizing event, not a friend market market 0:13:08.600 --> 0:13:13.920 friendly event. So yes, better through not rock the boat here. 0:13:14.440 --> 0:13:17.280 I mean rocktor broad is the economists what economy do 0:13:17.360 --> 0:13:19.840 you see? I mean, we forget that all of us 0:13:19.960 --> 0:13:23.960 is wrapped around a guesstimate a Q four and in 0:13:23.960 --> 0:13:26.480 the twenty twenty seven is it just more of the 0:13:26.559 --> 0:13:31.000 same or the State Street seeing abruptness and change to 0:13:31.080 --> 0:13:32.559 the American economy? 0:13:33.880 --> 0:13:36.480 No, I don't think so. I think the reality is 0:13:36.520 --> 0:13:38.920 still the same reality. We had a few months ago. 0:13:39.120 --> 0:13:42.920 It's a two speed economy, not just here in the US, 0:13:43.040 --> 0:13:46.200 but you know, in many places around the world the 0:13:46.360 --> 0:13:50.240 US outperforms. But it's not all smooth sailing. I remember 0:13:50.320 --> 0:13:52.840 last time you and I talked, we were, you know, 0:13:53.000 --> 0:13:56.120 just before the last payrols report, and we had a 0:13:56.240 --> 0:13:58.920 nasty surprise there. And I think you live in this 0:13:59.040 --> 0:14:01.720 world where like you're watching to see what every data 0:14:01.760 --> 0:14:04.560 point tells you about what is the true state of 0:14:04.600 --> 0:14:09.640 affairs here? And in that kind of a world, you 0:14:09.720 --> 0:14:13.040 it's just keeping the balance. You cannot have a very 0:14:13.080 --> 0:14:17.480 strong view either way because you can be contradicted by 0:14:17.520 --> 0:14:21.640 the next release. Trying to figure it out. 0:14:22.440 --> 0:14:24.960 I know we all are. Are we just biting off 0:14:25.000 --> 0:14:27.680 more than we can chew when it comes to Canada 0:14:27.880 --> 0:14:32.800 and this now seemingly escalating trade war. Can things backfire, 0:14:32.920 --> 0:14:36.520 especially when you consider the backdrop which could be could 0:14:36.560 --> 0:14:38.920 be higher interest rates in the months ahead. 0:14:40.200 --> 0:14:42.360 You know, I don't know. Can I have a very 0:14:42.400 --> 0:14:46.120 big sigh here, because that's exactly how I feel about 0:14:46.120 --> 0:14:50.040 this situation. It's you know, there are negotiations and there 0:14:50.120 --> 0:14:51.960 is a process here, and there is a back and 0:14:52.000 --> 0:14:54.880 forth and a tug of war to some extent. But 0:14:55.360 --> 0:14:58.080 you know, truly, I hope that we resolve this because 0:14:58.240 --> 0:15:01.320 of all the countries in the world, right in Mexico 0:15:01.360 --> 0:15:05.240 and Canada are here, right here, and they are the 0:15:05.280 --> 0:15:07.960 ones that we want to work with, because even some 0:15:08.040 --> 0:15:14.280 of the domestic ambitions, industrial reemergence ambitions of the US 0:15:14.320 --> 0:15:18.000 cannot truly work without these two neighbors. So you have 0:15:18.080 --> 0:15:20.400 to find a way forward that works for all three. 0:15:20.560 --> 0:15:23.160 But one of the differences here, folks, is so many 0:15:23.200 --> 0:15:26.640 people have a prism of comfort of the United States. 0:15:26.640 --> 0:15:33.840 Samona Macat is different out of West University of Timosaura, Romania. 0:15:34.560 --> 0:15:38.480 I mean some one of the view you have from 0:15:38.640 --> 0:15:43.120 your Romania is just flat out different. How are we 0:15:43.360 --> 0:15:48.200 perceived in our daily chaos in America across all of 0:15:48.240 --> 0:15:52.080 Eastern Europe from call it Helsinki, I'm down to the 0:15:52.080 --> 0:15:53.720 Black Sea in Romania? 0:15:54.440 --> 0:15:58.520 You know, I think there there's a multitude of feelings 0:15:58.520 --> 0:16:02.360 because there is still very much an undertone of admiration 0:16:02.520 --> 0:16:06.120 and recognition of what the US is capable of what 0:16:06.160 --> 0:16:09.360 it stands for. And yet I think, you know, hearing 0:16:09.400 --> 0:16:11.920 it from a lot of people in my personal circles, 0:16:11.960 --> 0:16:14.880 there is also a lot of confusion and you know 0:16:14.960 --> 0:16:17.160 the sense of what's going on to going back to 0:16:17.200 --> 0:16:19.200 what I said earlier, we are all trying to figure 0:16:19.240 --> 0:16:21.920 it out. I think the people outside the US are 0:16:21.920 --> 0:16:24.040 also trying to figure out the US itself. 0:16:25.240 --> 0:16:25.520 You know what. 0:16:25.560 --> 0:16:27.120 I'm actually just going to go off script for a 0:16:27.120 --> 0:16:30.360 moment and stick with Eastern Europe because I've just been 0:16:30.400 --> 0:16:33.480 reading so much about Poland right and now it's becoming 0:16:33.520 --> 0:16:37.240 sort of this economic superpower within the EU. What can 0:16:37.280 --> 0:16:41.400 we Americans learn from how Poland is doing it right now? 0:16:41.400 --> 0:16:46.080 Simona, Well, I'm not sure there is truly a lot 0:16:46.080 --> 0:16:49.080 of direct relevance there there. You know, Poland has some 0:16:49.240 --> 0:16:54.000 very specific advantages. It's a large nation on Eastern Europe, 0:16:54.680 --> 0:16:59.200 it has lower labor costs there. Those are big advantages, 0:16:59.560 --> 0:17:03.000 and you know, they are capitalizing on them. So I'm 0:17:03.040 --> 0:17:06.280 not sure it's necessarily a lesson for the US here. 0:17:07.320 --> 0:17:08.560 But I think a. 0:17:08.560 --> 0:17:12.800 Very tight and not a lot of immigration going on 0:17:12.840 --> 0:17:14.880 in Poland. I don't know if that's something that maybe 0:17:14.880 --> 0:17:16.200 the Trump administration point to. 0:17:17.080 --> 0:17:20.200 Well, you know, I would say there are perhaps the 0:17:20.240 --> 0:17:27.400 broader work ethic, the you know, coalition sustaining the engagement 0:17:27.520 --> 0:17:31.120 with the you know, the broader European nations. I think 0:17:31.160 --> 0:17:34.000 those that's where the values and the lessons perhaps lie 0:17:34.000 --> 0:17:35.200 a little more in my view. 0:17:35.960 --> 0:17:39.520 Simona Timosaura sort of like folks in the middle left 0:17:39.600 --> 0:17:44.520 center of Romania. It's called the Little Vienna. The photographs 0:17:44.560 --> 0:17:45.200 are gorgeous. 0:17:46.840 --> 0:17:50.159 It's a beautiful city. Yes, many places, I would you know. 0:17:50.840 --> 0:17:53.040 Now we are pushing me. I have to talk about 0:17:53.040 --> 0:17:55.359 my hometown. It's not just Timi shran I went to 0:17:55.400 --> 0:17:59.680 school there, but you should visit Alordia. It's it's absolutely studying. 0:17:59.800 --> 0:18:01.440 There is a lot of art involved. 0:18:02.600 --> 0:18:02.840 You know. 0:18:02.960 --> 0:18:05.359 I always feel a little bit of sadness because I 0:18:05.400 --> 0:18:07.400 talk to people and say, oh have you visited? Oh 0:18:07.400 --> 0:18:09.480 we all went up to Beauty Pest and then it's 0:18:09.520 --> 0:18:12.040 like an invisible wall is still there. Nobody there is 0:18:12.080 --> 0:18:15.439 to crossover. It's safe and it's beautiful. You should go, 0:18:15.800 --> 0:18:16.080 is it? 0:18:16.880 --> 0:18:21.399 This is wonderful, Samona Makutter, thank you so much. Stay 0:18:21.440 --> 0:18:25.320 with us. More from Bloomberg Surveillance coming up after this. 0:18:32.560 --> 0:18:36.160 You're listening to the Bloomberg Surveillance podcast. Catch us live 0:18:36.200 --> 0:18:39.359 weekday afternoons from seven to ten am Eastern Listen on 0:18:39.480 --> 0:18:43.119 Applecarplay and Android Otto with the Bloomberg Business app or 0:18:43.280 --> 0:18:44.919 watch us live on YouTube. 0:18:45.840 --> 0:18:49.720 Steven Sastik here, who I can't say enough, is just 0:18:49.720 --> 0:18:53.000 just the perfect guy to talk to about this. What 0:18:53.320 --> 0:18:57.840 paragraph and the drug and miller essay got your attention. 0:18:58.200 --> 0:19:00.800 Oh he had me at the first sentence top. You know, 0:19:00.880 --> 0:19:04.040 it's funny because i'd been I wrote about this something 0:19:04.080 --> 0:19:06.520 similar after the En intervention, and to me it was 0:19:06.560 --> 0:19:09.280 always a bit odd. Now the EN intervention, I would 0:19:09.280 --> 0:19:13.240 say was probably a bit more necessary. But if anyone 0:19:14.040 --> 0:19:17.720 bess bessins, you know, bones were supposed to were supposed 0:19:17.760 --> 0:19:20.159 to be made working for sorows fighting you know, breaking 0:19:20.160 --> 0:19:23.600 the Bank of England, he should know as well as anybody. 0:19:23.600 --> 0:19:26.320 And this is where Druck and Miller started, was that 0:19:26.400 --> 0:19:29.119 you if the tides are moving in a certain direction, 0:19:29.200 --> 0:19:31.240 you can only fight them for so long if you're 0:19:31.720 --> 0:19:34.119 without something changing. And so in the case of the 0:19:34.840 --> 0:19:38.960 bond intervention, unless the unless the Fed, or the Treasure 0:19:39.160 --> 0:19:43.359 or or the fiscal authorities do something different, you're fighting 0:19:43.400 --> 0:19:46.640 this trend of people not wanting long bonds. And it's 0:19:46.640 --> 0:19:49.120 not because of credit quality. The credit to fault swaps 0:19:49.160 --> 0:19:53.760 on US treasuries are relatively unchanged. There's so much competition 0:19:53.920 --> 0:19:57.080 for long paper right now, you know, calling another one 0:19:57.119 --> 0:20:00.880 hundred trillion dollars from hyper scalers and the like. There's 0:20:00.920 --> 0:20:03.280 just too much. There's more paper coming on than than 0:20:03.440 --> 0:20:06.560 than than is available for the market, than the market conveyor. 0:20:06.880 --> 0:20:10.760 And you see three or three percent real rates on 0:20:10.840 --> 0:20:13.359 long treasuries. That's not a matter. That's just a matter 0:20:13.440 --> 0:20:16.439 of fighting the tide in the short term for for 0:20:16.720 --> 0:20:19.160 you know, for a very short term gain. Yeah. 0:20:19.600 --> 0:20:22.520 Well, when when you talk about long more, long more 0:20:22.600 --> 0:20:25.679 paper coming on, is that a threat to the stock rally? 0:20:26.320 --> 0:20:28.159 It can be the way the way I've been I 0:20:28.200 --> 0:20:29.960 wrote about this a couple of weeks ago and and 0:20:30.119 --> 0:20:33.879 basically said that, you know, for the basically fifteen years 0:20:34.000 --> 0:20:36.040 pretty much since the global financial crisis, we had low 0:20:36.119 --> 0:20:38.720 interest rates, we had very low inflation, and we also 0:20:38.840 --> 0:20:43.120 had companies doing massive buybacks reducing the flow of available 0:20:43.280 --> 0:20:46.440 the supply of available shares and private equity and other 0:20:46.600 --> 0:20:49.159 you know, m and A activity reducing the supply of 0:20:49.200 --> 0:20:50.000 available shares. 0:20:50.359 --> 0:20:51.240 Flip that on its head. 0:20:51.280 --> 0:20:54.600 Now, those companies that you have higher interest rates which 0:20:54.720 --> 0:20:57.520 kind of precludes a lot of private equity activity, and 0:20:57.520 --> 0:20:59.639 I think they would like to be sellers, considering some 0:20:59.680 --> 0:21:03.000 of them private credit woes that they're dealing with. Some 0:21:03.080 --> 0:21:06.080 of the biggest companies buying back shares are not aggressively 0:21:06.119 --> 0:21:08.959 doing it. They're basically now keeping their float stable and 0:21:09.000 --> 0:21:11.640 they have huge cash flow needs instead of spinning off 0:21:11.680 --> 0:21:15.639 tons of cash. So that tailwind has turned into a headwind. Well, 0:21:16.040 --> 0:21:18.880 is it strong enough to stop the market short term? 0:21:18.920 --> 0:21:22.359 Probably not, But you're now fighting this instead of having 0:21:22.359 --> 0:21:23.439 this pushing you forward. 0:21:24.560 --> 0:21:26.120 You know that we had one of the most read 0:21:26.200 --> 0:21:29.080