1 00:00:00,160 --> 00:00:06,840 Speaker 1: Boo, Bloomberg Audio Studios, Podcasts, radio news. 2 00:00:11,680 --> 00:00:15,480 Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferroh, along 3 00:00:15,520 --> 00:00:18,759 Speaker 2: with Lisa Bromwitz and Amrie Hordern. Join us each day 4 00:00:18,760 --> 00:00:22,320 Speaker 2: for insight from the best in markets, economics, and geopolitics 5 00:00:22,480 --> 00:00:24,960 Speaker 2: from our global headquarters in New York City. We are 6 00:00:24,960 --> 00:00:27,720 Speaker 2: live on Bloomberg Television weekday mornings from six to nine 7 00:00:27,760 --> 00:00:31,280 Speaker 2: am Eastern. Subscribe to the podcast on Apple, Spotify, or 8 00:00:31,360 --> 00:00:34,000 Speaker 2: anywhere else you listen, and as always on the Bloomberg 9 00:00:34,080 --> 00:00:37,120 Speaker 2: Terminal and the Bloomberg Business app. We begin this out 10 00:00:37,200 --> 00:00:40,160 Speaker 2: with stocks falling after Nvidio delivered a disappointing fourth quarter 11 00:00:40,240 --> 00:00:43,320 Speaker 2: revenue forecast. Cameron Dawson of New Wedge Wealth looking ahead 12 00:00:43,360 --> 00:00:46,320 Speaker 2: to twenty twenty five, saying tech earnings estimates are too high. 13 00:00:46,479 --> 00:00:50,000 Speaker 2: Bloomberg Intelligence shows consensus forecast for tech going from plus 14 00:00:50,080 --> 00:00:52,840 Speaker 2: fourteen this year to plus twenty seven next year, even 15 00:00:52,880 --> 00:00:56,040 Speaker 2: within video going from one forty this year to fifteen 16 00:00:56,080 --> 00:00:58,400 Speaker 2: next year. We don't see the everything else in tech 17 00:00:58,520 --> 00:01:01,760 Speaker 2: able to deliver that kind of growth. Camra joins us 18 00:01:01,760 --> 00:01:03,520 Speaker 2: now for more camera good Mornic Coome running is the 19 00:01:03,560 --> 00:01:04,920 Speaker 2: bout too high for twenty five. 20 00:01:05,280 --> 00:01:07,839 Speaker 3: I think the bar is too high for that reacceleration 21 00:01:07,920 --> 00:01:09,960 Speaker 3: in tech because we don't get it from the other 22 00:01:10,080 --> 00:01:12,959 Speaker 3: big tech weights. You don't get an acceleration from Apple, 23 00:01:13,040 --> 00:01:15,560 Speaker 3: you don't necessarily get a big one from Microsoft. You 24 00:01:15,560 --> 00:01:18,959 Speaker 3: get a deceleration from Nvidia. So it means that the 25 00:01:19,000 --> 00:01:22,319 Speaker 3: market is pricing and effectively the everything else in tech 26 00:01:22,520 --> 00:01:26,280 Speaker 3: truly reaccelerating. We're not quite sure if you can get that. 27 00:01:26,400 --> 00:01:28,640 Speaker 3: So if you look at the two seventy two numbers 28 00:01:28,640 --> 00:01:31,360 Speaker 3: for twenty twenty five earnings, you look at tech, you 29 00:01:31,400 --> 00:01:33,680 Speaker 3: also have to look at healthcare, which is the other 30 00:01:33,720 --> 00:01:36,840 Speaker 3: area where there's a big acceleration that's priced in. It's 31 00:01:36,880 --> 00:01:40,160 Speaker 3: set to go from three percent to twenty percent next year. 32 00:01:40,360 --> 00:01:43,600 Speaker 3: But remember expectations were for twenty percent this year and 33 00:01:43,640 --> 00:01:44,479 Speaker 3: all we got was three. 34 00:01:44,680 --> 00:01:47,600 Speaker 2: Let's stay on tech. AI and Vidia doing really well 35 00:01:47,680 --> 00:01:50,520 Speaker 2: this year. The rest of the semi space nus a 36 00:01:50,600 --> 00:01:52,400 Speaker 2: good how'd you explain the difference between the two. 37 00:01:52,920 --> 00:01:55,680 Speaker 3: It truly is AI and everything else. If you look 38 00:01:55,720 --> 00:01:59,000 Speaker 3: at the equal weight Semiconductor Index, it's actually down three 39 00:01:59,080 --> 00:02:01,800 Speaker 3: percent this year, which tells you that there is still 40 00:02:01,880 --> 00:02:07,400 Speaker 3: a malaise in the old industrial Auto China, old manufacturing 41 00:02:07,440 --> 00:02:12,440 Speaker 3: part of semiconductors. That does reflect this weak manufacturing environment 42 00:02:12,440 --> 00:02:14,800 Speaker 3: where we've been in where we've had this historically long 43 00:02:14,840 --> 00:02:18,040 Speaker 3: stretch of a PMI sub fifty. So the question is 44 00:02:18,240 --> 00:02:21,320 Speaker 3: we do think that pmis will start to recover only 45 00:02:21,400 --> 00:02:23,919 Speaker 3: because of better sentiment we saw that post the election 46 00:02:24,000 --> 00:02:28,200 Speaker 3: in twenty sixteen. Does that translate to better manufacturing activity 47 00:02:28,240 --> 00:02:31,000 Speaker 3: on a global basis or do you get this offset 48 00:02:31,040 --> 00:02:33,720 Speaker 3: from tariffs where you still see this malayse take hold 49 00:02:34,040 --> 00:02:36,680 Speaker 3: and it truly stays this world where you only have 50 00:02:36,800 --> 00:02:38,840 Speaker 3: AI demand and everything else this week. 51 00:02:38,960 --> 00:02:42,000 Speaker 1: So basically what you're talking about is the AI side 52 00:02:42,000 --> 00:02:44,320 Speaker 1: of the story that's really powered this market. A lot 53 00:02:44,360 --> 00:02:46,480 Speaker 1: of people have come on the show and said they 54 00:02:46,520 --> 00:02:50,080 Speaker 1: agree with you that probably expectations are too high for 55 00:02:50,120 --> 00:02:52,839 Speaker 1: AI to keep leading, but that just gives everything else 56 00:02:52,840 --> 00:02:54,720 Speaker 1: a chance to catch up. Those semis are going to 57 00:02:54,720 --> 00:02:57,160 Speaker 1: actually have their turnaround day. You hear those sizes of 58 00:02:57,200 --> 00:03:01,120 Speaker 1: words from the likes of Micron, and tell why do 59 00:03:01,160 --> 00:03:03,200 Speaker 1: you think that's not the case that the rest of 60 00:03:03,240 --> 00:03:05,680 Speaker 1: the market will just play catch up, even as AI 61 00:03:06,160 --> 00:03:08,720 Speaker 1: maybe doesn't grow quite as much as some people hope 62 00:03:08,840 --> 00:03:10,280 Speaker 1: hope does spring eternal. 63 00:03:10,560 --> 00:03:12,919 Speaker 3: And we do know that if you look at these 64 00:03:13,120 --> 00:03:16,359 Speaker 3: at these very cyclical semiconductor industries, we know that it's 65 00:03:16,440 --> 00:03:19,359 Speaker 3: most cyclical industry in the world. That you have been 66 00:03:19,400 --> 00:03:21,680 Speaker 3: in this weaker environment for a couple of years, So 67 00:03:21,720 --> 00:03:25,399 Speaker 3: the bar is lower for a recovery. But the big 68 00:03:25,480 --> 00:03:28,799 Speaker 3: question still comes back to tariffs. Will you see companies 69 00:03:28,840 --> 00:03:32,079 Speaker 3: still want to invest in big manufacturing plants that would 70 00:03:32,160 --> 00:03:35,640 Speaker 3: support the demand for these semiconductors. If there's a questional 71 00:03:35,640 --> 00:03:38,200 Speaker 3: mark about where the terriffs will come from, where should 72 00:03:38,200 --> 00:03:41,480 Speaker 3: they be and so that's that offsetting factory. Yes, the 73 00:03:41,520 --> 00:03:44,160 Speaker 3: demand has been weak, but does it remain weak because 74 00:03:44,160 --> 00:03:45,240 Speaker 3: of tariff uncertainty? 75 00:03:45,360 --> 00:03:47,280 Speaker 1: So everyone has come on the show since the election 76 00:03:47,440 --> 00:03:49,960 Speaker 1: is basically said, are you bullish on the US or 77 00:03:49,960 --> 00:03:52,000 Speaker 1: are you really bullish on the US? And then I 78 00:03:52,040 --> 00:03:55,400 Speaker 1: saw your outlook for this upcoming year and basically your 79 00:03:55,440 --> 00:03:57,120 Speaker 1: cast to go a whole bunch of cold water on 80 00:03:57,160 --> 00:03:59,320 Speaker 1: this and you're saying that it's going to be choppy, 81 00:03:59,360 --> 00:04:02,040 Speaker 1: stap being so exciting. Either you get chopp that could 82 00:04:02,040 --> 00:04:04,720 Speaker 1: create some drawdowns, or you get a bubble which will 83 00:04:04,800 --> 00:04:05,320 Speaker 1: end badly. 84 00:04:05,680 --> 00:04:06,920 Speaker 4: Why aren't you more excited. 85 00:04:07,400 --> 00:04:10,480 Speaker 3: Well, look, we're excited, we're still bullish on the US 86 00:04:10,600 --> 00:04:13,840 Speaker 3: and we're still fully invested. The point is, though, is 87 00:04:13,840 --> 00:04:16,640 Speaker 3: that if you think about sixty four hundred sixty seven hundred, 88 00:04:16,920 --> 00:04:19,200 Speaker 3: all of that glosses over the path you take to 89 00:04:19,240 --> 00:04:21,840 Speaker 3: get there, and the path is going to be really important. 90 00:04:21,839 --> 00:04:23,719 Speaker 3: We think it's going to be different than twenty three 91 00:04:23,760 --> 00:04:26,279 Speaker 3: and twenty four. Twenty three and twenty four was broadly 92 00:04:26,400 --> 00:04:28,320 Speaker 3: up into the right. But what we see is that 93 00:04:28,400 --> 00:04:32,120 Speaker 3: because you're going in with high valuations, high sentiment, high positioning, 94 00:04:32,400 --> 00:04:35,840 Speaker 3: as well as stretched expectations for earnings growth, you have 95 00:04:36,000 --> 00:04:39,200 Speaker 3: this big high bar to jump over, which just suggests 96 00:04:39,279 --> 00:04:42,279 Speaker 3: to get used to more volatility. So what we're talking 97 00:04:42,279 --> 00:04:45,600 Speaker 3: to clients about is to say that if that volatility comes. 98 00:04:45,360 --> 00:04:47,560 Speaker 4: What will you do with it? The classic Walter. 99 00:04:47,400 --> 00:04:49,719 Speaker 3: Demer line of when it comes time to buy, you 100 00:04:49,839 --> 00:04:52,440 Speaker 3: won't want to. So we're trying to get our minds 101 00:04:52,480 --> 00:04:55,680 Speaker 3: in process of accepting this volatility, wanting to step into 102 00:04:55,800 --> 00:04:58,520 Speaker 3: it versus running away from it. But certainly we think 103 00:04:58,520 --> 00:05:02,040 Speaker 3: it's that wide choppy rain, not necessarily low fall up 104 00:05:02,040 --> 00:05:02,560 Speaker 3: into the right. 105 00:05:02,640 --> 00:05:06,400 Speaker 5: Is it choppy because of underlying economics or because of policy. 106 00:05:06,440 --> 00:05:09,920 Speaker 3: Probably policy and policy of course could drive and influence 107 00:05:09,960 --> 00:05:14,080 Speaker 3: the underlying economics. We think that big sweeping tariff policy 108 00:05:14,160 --> 00:05:16,679 Speaker 3: is certainly a dampener of growth. It raises the question 109 00:05:16,800 --> 00:05:21,560 Speaker 3: around at supply chain disruptions, which could be inflationary. But 110 00:05:21,680 --> 00:05:25,239 Speaker 3: those policy wild cards of do we get tax reform, 111 00:05:25,400 --> 00:05:28,760 Speaker 3: tax cuts or not, do we get higher tariffs. All 112 00:05:28,800 --> 00:05:32,440 Speaker 3: of these things are potential sources of volatility, and because 113 00:05:32,480 --> 00:05:35,600 Speaker 3: you're training at such high valuations today, there's not a 114 00:05:35,600 --> 00:05:39,800 Speaker 3: lot of wiggle room to absorb that higher uncertainty. 115 00:05:40,000 --> 00:05:42,360 Speaker 5: So terrorifts for you definitely are a tail risk. A 116 00:05:42,360 --> 00:05:44,000 Speaker 5: lot of individuals have come on and said that, but 117 00:05:44,640 --> 00:05:46,920 Speaker 5: a tax cut and a big tax plan that would 118 00:05:46,920 --> 00:05:49,360 Speaker 5: be a boost. How do you think about the sequencing 119 00:05:49,400 --> 00:05:50,920 Speaker 5: of all this, Well. 120 00:05:50,800 --> 00:05:52,839 Speaker 3: That's the thing that we think it could be inverse 121 00:05:52,880 --> 00:05:56,640 Speaker 3: from the twenty sixteen sequencing, where we got tax cuts 122 00:05:56,640 --> 00:05:59,000 Speaker 3: first and then we got tariffs, and that's one of 123 00:05:59,000 --> 00:06:01,040 Speaker 3: the reasons for the weak market that we had in 124 00:06:01,080 --> 00:06:04,600 Speaker 3: twenty eighteen. This time around, tariffs could happen first, and 125 00:06:04,640 --> 00:06:06,760 Speaker 3: we still have a big question mark as to whether 126 00:06:06,839 --> 00:06:10,040 Speaker 3: or not you even get that corporate tax cut simply 127 00:06:10,080 --> 00:06:13,240 Speaker 3: because you are negotiating four point seven trillion dollars of 128 00:06:13,360 --> 00:06:17,120 Speaker 3: existing taxes with a very slim majority in the House. 129 00:06:17,480 --> 00:06:20,200 Speaker 3: A big question mark if you can get us down 130 00:06:20,320 --> 00:06:23,760 Speaker 3: to eighteen percent on the corporate tax rate given everything 131 00:06:23,760 --> 00:06:25,479 Speaker 3: else you're negotiating. 132 00:06:25,080 --> 00:06:27,640 Speaker 2: Let's finish on bitcoin just to count ninety eight k 133 00:06:28,279 --> 00:06:31,800 Speaker 2: all time high multiple choice, A risk anset on steroids, 134 00:06:32,360 --> 00:06:36,039 Speaker 2: an important diversify for portfolios, or a proxy to play 135 00:06:36,040 --> 00:06:39,320 Speaker 2: some huge momentum societal shift over the next few years. 136 00:06:39,360 --> 00:06:40,200 Speaker 4: Which one is it. 137 00:06:40,480 --> 00:06:44,120 Speaker 3: DA and B meaning that you think it's It is 138 00:06:44,240 --> 00:06:47,280 Speaker 3: definitely a liquidity proxy. This is a proxy for how 139 00:06:47,360 --> 00:06:50,279 Speaker 3: much liquidity is slashing around in the market. We certainly 140 00:06:50,320 --> 00:06:52,560 Speaker 3: have seen that play out in other cycles that when 141 00:06:52,600 --> 00:06:56,280 Speaker 3: the FED is removing liquidity, Bitcoin is typically done poorly. 142 00:06:56,600 --> 00:06:58,839 Speaker 3: This is a world that given the FED is cutting 143 00:06:58,880 --> 00:07:01,919 Speaker 3: rates with financial can so easy. That is supportive of 144 00:07:01,960 --> 00:07:04,320 Speaker 3: this kind of asset. We think it is also a 145 00:07:04,360 --> 00:07:09,160 Speaker 3: psychological commodity that captures fears about dollar debasement, the fact 146 00:07:09,160 --> 00:07:11,240 Speaker 3: that you have high fiscal spinning, the fact that you're 147 00:07:11,280 --> 00:07:15,160 Speaker 3: talking about even more monetary spin or stimulus, which just 148 00:07:15,200 --> 00:07:18,000 Speaker 3: supports this notion that there are people who are afraid 149 00:07:18,160 --> 00:07:21,160 Speaker 3: of dollar debasement, and thus this is their way of 150 00:07:21,200 --> 00:07:23,080 Speaker 3: being able to get access to that risk. 151 00:07:23,120 --> 00:07:24,960 Speaker 2: So Lisa would like to know some form of inverse 152 00:07:25,000 --> 00:07:28,320 Speaker 2: correlation between the performance of a twenty year oaction and bigcoin. 153 00:07:28,520 --> 00:07:29,000 Speaker 4: Is that right? 154 00:07:29,200 --> 00:07:32,160 Speaker 1: All I can say is a psychological commodity tulips, where 155 00:07:32,160 --> 00:07:35,320 Speaker 1: a psychological commodity you can say pretty much anything. 156 00:07:35,040 --> 00:07:37,400 Speaker 4: Or haven't got to guess so much. Left Malpert, I'm not. 157 00:07:37,440 --> 00:07:39,840 Speaker 1: Just saying that the crypto is tulips, but I will 158 00:07:39,880 --> 00:07:44,320 Speaker 1: just say that a crypto platform founder of tron, Justin Sun, 159 00:07:44,560 --> 00:07:46,800 Speaker 1: bought a banana that was duct taped to a wall 160 00:07:46,840 --> 00:07:49,720 Speaker 1: for six million dollars. Yes, okay, So I'm just looking 161 00:07:49,760 --> 00:07:52,880 Speaker 1: at this and I'm like, is that psychological kind of 162 00:07:52,920 --> 00:07:55,160 Speaker 1: commodity is sort of to ease your fears? 163 00:07:55,480 --> 00:07:58,880 Speaker 3: I think that that is the bubble scenario into twenty five, 164 00:07:59,000 --> 00:08:02,200 Speaker 3: is that we get a bark of speculative fervor, and 165 00:08:02,240 --> 00:08:05,360 Speaker 3: that is the scenario where you could see runaway markets 166 00:08:05,400 --> 00:08:09,840 Speaker 3: because people start yoloing on bananas taped two walls, and 167 00:08:09,880 --> 00:08:11,920 Speaker 3: that could be something that would make its way into 168 00:08:11,920 --> 00:08:15,320 Speaker 3: broader equity markets where you see valuations push up into 169 00:08:15,440 --> 00:08:16,760 Speaker 3: even more rarefied air. 170 00:08:17,080 --> 00:08:19,880 Speaker 2: You don't sound like a crypto purist at all. A 171 00:08:19,960 --> 00:08:22,239 Speaker 2: lot of these conversations years ago when we were trading 172 00:08:22,280 --> 00:08:24,680 Speaker 2: down there, ten k, same conversations, and here we are 173 00:08:24,760 --> 00:08:26,240 Speaker 2: up by one hundred totally. 174 00:08:26,280 --> 00:08:28,600 Speaker 1: I think that anyone who's been barishing crypto has been 175 00:08:28,680 --> 00:08:31,720 Speaker 1: humbled massively. And there's a lot of questions around exactly 176 00:08:32,040 --> 00:08:34,640 Speaker 1: the idea of blockchain and how it could be used 177 00:08:34,640 --> 00:08:36,480 Speaker 1: in supply chains that have cost a whole host of 178 00:08:36,480 --> 00:08:37,440 Speaker 1: different asset classes. 179 00:08:37,520 --> 00:08:38,959 Speaker 4: So there is a lot of value here. 180 00:08:39,000 --> 00:08:40,920 Speaker 2: That's a good clean up effort. That one right there, 181 00:08:41,080 --> 00:08:43,880 Speaker 2: bigcoin right now ninety AK all time highs up this 182 00:08:43,920 --> 00:08:46,360 Speaker 2: morning by a round about four percent. Cameron, thank you, 183 00:08:46,440 --> 00:08:48,199 Speaker 2: Thanks going to see it. Thank you, Cameron Dawson of 184 00:08:48,280 --> 00:09:01,160 Speaker 2: New h Weel. The former Google CEO Eric Smith joins 185 00:09:01,240 --> 00:09:04,800 Speaker 2: us on his latest book, Genesis, Artificial Intelligence, Hope and 186 00:09:04,880 --> 00:09:07,360 Speaker 2: the Human Spirit. Eric joins us now for more. Eric, 187 00:09:07,400 --> 00:09:09,120 Speaker 2: Welcome to the program sir. I want to pick up 188 00:09:09,120 --> 00:09:11,600 Speaker 2: on that one word hope and ask you how much 189 00:09:11,600 --> 00:09:13,679 Speaker 2: hope I should have that this goes right, and start 190 00:09:13,679 --> 00:09:17,320 Speaker 2: with this quote from Foreign Affairs magazine. It read as follows. 191 00:09:17,960 --> 00:09:20,760 Speaker 2: In cases where some humans might face off militarily or 192 00:09:20,760 --> 00:09:25,280 Speaker 2: diplomatically against the highly AI enabled state, or against AI itself. 193 00:09:25,600 --> 00:09:29,360 Speaker 2: Humans could struggle to survive, much less compete. Such an 194 00:09:29,400 --> 00:09:34,400 Speaker 2: intermediate order could witness an internal implosion of societies and 195 00:09:34,440 --> 00:09:38,400 Speaker 2: an uncontrollable explosion of external conflicts. So you've got to 196 00:09:38,400 --> 00:09:40,600 Speaker 2: calm meet down, Eric. Should I have hope that this 197 00:09:40,679 --> 00:09:41,160 Speaker 2: plays out? 198 00:09:41,160 --> 00:09:43,439 Speaker 6: Well, Well, let's. 199 00:09:43,240 --> 00:09:46,479 Speaker 7: Start with a hope that either of your show is incredible. 200 00:09:48,080 --> 00:09:51,680 Speaker 7: Previous guests talked about two percent productivity. Imagine that productivity 201 00:09:51,720 --> 00:09:54,600 Speaker 7: goes to five percent a year because of this technology. 202 00:09:54,720 --> 00:09:56,040 Speaker 6: So there's every reason to think that. 203 00:09:56,000 --> 00:10:00,920 Speaker 7: There's enormous land businesses, inventions, science, health, and so forth 204 00:10:00,920 --> 00:10:03,400 Speaker 7: to get invented. But the same is also true for 205 00:10:03,440 --> 00:10:06,040 Speaker 7: the invention of conflict and war. And if you think 206 00:10:06,080 --> 00:10:08,400 Speaker 7: about it, it makes absolutely no sense to put somebody in 207 00:10:08,480 --> 00:10:10,480 Speaker 7: a fighter jet up in the air and have them 208 00:10:10,480 --> 00:10:13,160 Speaker 7: be shot at by another missile. It makes much more 209 00:10:13,200 --> 00:10:14,960 Speaker 7: sense for that fighter pilot to be sitting on the 210 00:10:14,960 --> 00:10:18,200 Speaker 7: ground and having a swarm of the equivalent. 211 00:10:17,760 --> 00:10:18,319 Speaker 6: Of those jets. 212 00:10:18,400 --> 00:10:21,920 Speaker 7: Let's just call them powerful robots, powerful drones that act 213 00:10:21,960 --> 00:10:26,320 Speaker 7: in synchrony to achieve the objective of this attacker or 214 00:10:26,360 --> 00:10:30,080 Speaker 7: to defend yourself, and the future of war is autonomous 215 00:10:30,160 --> 00:10:31,680 Speaker 7: and networked and AI driven. 216 00:10:32,600 --> 00:10:34,840 Speaker 1: This is something that a lot of people have focused on, 217 00:10:35,080 --> 00:10:38,040 Speaker 1: in particular how the US is going to evolve in 218 00:10:38,080 --> 00:10:39,880 Speaker 1: this manner, as well as how China is going to 219 00:10:39,880 --> 00:10:42,000 Speaker 1: evolve in this manner, how they're going to use some 220 00:10:42,040 --> 00:10:46,240 Speaker 1: of the space satellites to help coordinate that effort. Eric, 221 00:10:46,280 --> 00:10:50,000 Speaker 1: do you feel like right now one superpower is winning 222 00:10:50,080 --> 00:10:52,880 Speaker 1: versus the other? What is the best way to gain 223 00:10:52,920 --> 00:10:55,520 Speaker 1: preeminence in a military AI sphere. 224 00:10:56,440 --> 00:10:59,120 Speaker 7: Well, when doctor Kissinger and I went on his last 225 00:10:59,120 --> 00:11:02,480 Speaker 7: trip to China, I was convinced from that meeting that 226 00:11:02,559 --> 00:11:04,800 Speaker 7: China was two to two and a half years behind us, 227 00:11:05,320 --> 00:11:08,600 Speaker 7: But I am now wrong. It turns out that in 228 00:11:08,640 --> 00:11:11,480 Speaker 7: the last couple of weeks China has brought out software 229 00:11:11,520 --> 00:11:15,400 Speaker 7: models what are called language large language models that are 230 00:11:15,480 --> 00:11:18,040 Speaker 7: rivals of the best American ones, which I never thought 231 00:11:18,040 --> 00:11:20,360 Speaker 7: would be possible. One is called quinn An other words 232 00:11:20,400 --> 00:11:24,079 Speaker 7: called hong Yung. And it looks like they've caught up 233 00:11:24,640 --> 00:11:28,320 Speaker 7: or they're very close behind. And it looks like China 234 00:11:28,400 --> 00:11:31,120 Speaker 7: has decided that it's another part of its industrial policy, 235 00:11:31,160 --> 00:11:34,800 Speaker 7: along with its focus on cellular dominating the battery industry, 236 00:11:34,840 --> 00:11:37,000 Speaker 7: dominated in the car industry, et cetera. So they're willing 237 00:11:37,040 --> 00:11:39,800 Speaker 7: to spend the money. What's interesting is that it does 238 00:11:39,960 --> 00:11:42,680 Speaker 7: frame the narrative of China versus the US as the 239 00:11:42,720 --> 00:11:45,760 Speaker 7: defining narrative. And one of the more interesting questions, which 240 00:11:45,800 --> 00:11:47,880 Speaker 7: we discussed at some length in the book, is what 241 00:11:47,960 --> 00:11:49,840 Speaker 7: happens to the deterrence and what happens to all the 242 00:11:49,880 --> 00:11:52,120 Speaker 7: other one hundred and ninety five countries that are not 243 00:11:52,200 --> 00:11:55,680 Speaker 7: China and not the US. These questions are really important 244 00:11:55,720 --> 00:11:59,520 Speaker 7: because the power of this technology upends society in so 245 00:11:59,600 --> 00:12:02,920 Speaker 7: many ways, economically, the way we govern, the way we 246 00:12:03,000 --> 00:12:04,760 Speaker 7: reach language, and so forth and so on. 247 00:12:05,320 --> 00:12:06,960 Speaker 1: So there are a lot of questions within this, and 248 00:12:07,080 --> 00:12:09,560 Speaker 1: this could be a half an hour discussion, but one 249 00:12:09,600 --> 00:12:11,600 Speaker 1: of them is who should be financing and who should 250 00:12:11,600 --> 00:12:15,960 Speaker 1: be leading the national efforts to gain pre eminence in 251 00:12:16,000 --> 00:12:18,360 Speaker 1: this sphere. And you have to wonder, you talk about 252 00:12:18,440 --> 00:12:22,360 Speaker 1: China as a state organized, state funded type of effort 253 00:12:22,440 --> 00:12:25,280 Speaker 1: that is coordinated in that manner, how should it be 254 00:12:25,360 --> 00:12:28,520 Speaker 1: directed in a place that does consider itself capitalist, like 255 00:12:28,559 --> 00:12:29,360 Speaker 1: the United States. 256 00:12:30,600 --> 00:12:33,640 Speaker 7: Well, the Chinese model is what is called civil military fusion, 257 00:12:33,840 --> 00:12:37,480 Speaker 7: where they subsidize their biggest companies. No one in America, 258 00:12:37,640 --> 00:12:39,720 Speaker 7: not even in the companies, thinks that the thinks that 259 00:12:39,800 --> 00:12:43,360 Speaker 7: the largest American companies need to be subsidized. But let 260 00:12:43,360 --> 00:12:47,080 Speaker 7: me make an argument that if general intelligence, that is 261 00:12:47,200 --> 00:12:51,160 Speaker 7: human intelligence, is to be invented, it should be invented 262 00:12:51,320 --> 00:12:53,640 Speaker 7: in the United States and under control. 263 00:12:53,280 --> 00:12:54,959 Speaker 6: Of Americans and the American government. 264 00:12:55,440 --> 00:12:58,120 Speaker 7: And I don't mean managed, but I mean under the 265 00:12:58,200 --> 00:13:01,559 Speaker 7: legal control of our country, our citizens, at our democracy, 266 00:13:02,320 --> 00:13:04,200 Speaker 7: and getting there first is a big deal. 267 00:13:04,240 --> 00:13:06,199 Speaker 6: A number of us have talked for some time. 268 00:13:06,480 --> 00:13:10,040 Speaker 7: That there should be ANAI for America initiative where the 269 00:13:10,040 --> 00:13:13,719 Speaker 7: government works closely with the private companies and figures out 270 00:13:13,720 --> 00:13:15,839 Speaker 7: a way to make sure that we are ahead of 271 00:13:15,840 --> 00:13:19,760 Speaker 7: ahead of time. In truth, however, the financial industry that 272 00:13:19,840 --> 00:13:23,160 Speaker 7: you all invented, for which we are incredibly grateful, has 273 00:13:23,200 --> 00:13:24,600 Speaker 7: been incredibly. 274 00:13:24,040 --> 00:13:26,559 Speaker 6: Generous in terms of the ability to fundraise the billions 275 00:13:26,559 --> 00:13:27,760 Speaker 6: of dollars that are required. 276 00:13:28,200 --> 00:13:30,640 Speaker 7: And I should state, by the way that you guys 277 00:13:30,640 --> 00:13:32,320 Speaker 7: have done such a good job in raising money, and 278 00:13:32,320 --> 00:13:34,920 Speaker 7: we've done such a good job in actually getting the 279 00:13:34,920 --> 00:13:37,040 Speaker 7: computer scientists around the world and the data and so 280 00:13:37,080 --> 00:13:39,240 Speaker 7: on and so on. What we now need is energy. 281 00:13:40,080 --> 00:13:42,840 Speaker 7: We are prolific consumers or energy, and we're going to 282 00:13:42,920 --> 00:13:45,120 Speaker 7: run out. One estimate is that US will run out 283 00:13:45,160 --> 00:13:47,800 Speaker 7: of all sources of energy by twenty twenty eight at 284 00:13:47,800 --> 00:13:48,760 Speaker 7: our current growth rate. 285 00:13:49,280 --> 00:13:51,440 Speaker 5: There's another topic you discussed in this book, which is 286 00:13:51,520 --> 00:13:52,880 Speaker 5: AI to check AI. 287 00:13:53,480 --> 00:13:54,440 Speaker 4: How can that work? 288 00:13:56,800 --> 00:13:58,680 Speaker 6: When do you think about it? 289 00:13:58,760 --> 00:14:01,480 Speaker 7: One of the things that happens in AI systems is 290 00:14:01,520 --> 00:14:04,840 Speaker 7: you have compositional generations. What happens is you take one 291 00:14:04,880 --> 00:14:07,560 Speaker 7: piece and another piece and you interlick them and they've 292 00:14:07,559 --> 00:14:10,800 Speaker 7: never been linked together before, and it looks like when 293 00:14:10,880 --> 00:14:15,280 Speaker 7: you combine those two you get emergent properties. So that's 294 00:14:15,320 --> 00:14:17,800 Speaker 7: in and of itself interesting. So the question is what 295 00:14:17,920 --> 00:14:20,560 Speaker 7: is the limit of that? How far can that system 296 00:14:20,600 --> 00:14:22,680 Speaker 7: go up? I think it will get there, and I 297 00:14:22,680 --> 00:14:26,120 Speaker 7: think that it's probable that we can build systems that 298 00:14:26,160 --> 00:14:30,040 Speaker 7: are the technical term is super intelligent, where you have 299 00:14:30,080 --> 00:14:33,480 Speaker 7: a simple system, sorry, a single system that is at 300 00:14:33,480 --> 00:14:37,360 Speaker 7: the nineteth percentile of physics. 301 00:14:36,320 --> 00:14:40,120 Speaker 6: Math, chemistry, and arts and so forth. No human can 302 00:14:40,160 --> 00:14:40,480 Speaker 6: do that. 303 00:14:40,920 --> 00:14:43,760 Speaker 7: It looks like these systems will be not only available 304 00:14:43,760 --> 00:14:46,520 Speaker 7: in the next five years, because we already have examples 305 00:14:46,560 --> 00:14:49,280 Speaker 7: of passing these tests already, but also that they'll be 306 00:14:49,320 --> 00:14:51,280 Speaker 7: broadly available for all of society. 307 00:14:51,680 --> 00:14:53,400 Speaker 6: That has huge implications. 308 00:14:53,400 --> 00:14:56,320 Speaker 7: We've never had an experiment where each and every one 309 00:14:56,360 --> 00:14:59,240 Speaker 7: of us has a polymath, you know, the Einstein type 310 00:14:59,280 --> 00:15:01,760 Speaker 7: scientists at our back and call. 311 00:15:02,120 --> 00:15:06,280 Speaker 6: And furthermore, that scientist, whatever you want to call him 312 00:15:06,360 --> 00:15:06,840 Speaker 6: or her or. 313 00:15:06,880 --> 00:15:10,480 Speaker 7: Is, is capable of writing code, doing agents, and making 314 00:15:10,520 --> 00:15:11,080 Speaker 7: things happen. 315 00:15:11,440 --> 00:15:13,720 Speaker 5: How do you think the United States competes with China 316 00:15:13,920 --> 00:15:16,560 Speaker 5: when we have an incoming administration that wants to put 317 00:15:16,640 --> 00:15:19,280 Speaker 5: up tariff walls, and even this administration who's been putting 318 00:15:19,280 --> 00:15:22,440 Speaker 5: export controls on some of our high tech semiconductors. 319 00:15:23,720 --> 00:15:25,880 Speaker 6: I am not in favor of broad tariffs. I never 320 00:15:25,920 --> 00:15:26,280 Speaker 6: have been. 321 00:15:26,360 --> 00:15:28,920 Speaker 7: I'm the son of an economist and a grandson of 322 00:15:28,920 --> 00:15:32,560 Speaker 7: an economist, and tariffs are essentially taxes. What I am 323 00:15:32,600 --> 00:15:36,240 Speaker 7: in favor of is restrictions or limitations for strategic reasons. 324 00:15:36,640 --> 00:15:40,000 Speaker 7: It's really important that we win in this race against China. 325 00:15:40,520 --> 00:15:44,640 Speaker 7: And so the things that the Trump administration Biden administration 326 00:15:44,720 --> 00:15:47,640 Speaker 7: to limit, for example, hardware access, were really smart. And 327 00:15:47,680 --> 00:15:49,720 Speaker 7: I know because I was part of a commission that 328 00:15:49,880 --> 00:15:53,320 Speaker 7: recommended it way back when in fact was adopted. 329 00:15:53,400 --> 00:15:56,960 Speaker 6: Great job. So the question here is ignoring the tariff. 330 00:15:56,640 --> 00:15:58,160 Speaker 7: Question, which I just don't like and I think is 331 00:15:58,240 --> 00:16:01,360 Speaker 7: just another tax. How do you control how do you 332 00:16:01,400 --> 00:16:03,560 Speaker 7: control and limit what China does? And how do you 333 00:16:03,920 --> 00:16:05,720 Speaker 7: how do you amplify. 334 00:16:05,240 --> 00:16:06,040 Speaker 6: What America does? 335 00:16:06,880 --> 00:16:08,640 Speaker 7: And you sit there and you go, well, you're doing 336 00:16:08,680 --> 00:16:10,600 Speaker 7: pretty well, right, everybody's making a lot of money. 337 00:16:10,600 --> 00:16:12,680 Speaker 6: There's all this growth, and Dy's doing well. All the 338 00:16:12,720 --> 00:16:15,560 Speaker 6: tech companies are doing well. But let me explain what happens. 339 00:16:15,880 --> 00:16:18,120 Speaker 7: You have a slope that's like this, and it keeps 340 00:16:18,160 --> 00:16:20,320 Speaker 7: going up and up and up with humans. 341 00:16:20,760 --> 00:16:22,920 Speaker 6: At some point the industry. 342 00:16:22,480 --> 00:16:25,600 Speaker 7: Believes that there will be AI scientists, that is, non 343 00:16:25,680 --> 00:16:28,880 Speaker 7: human scientists, and he or she who gets there first 344 00:16:29,120 --> 00:16:31,320 Speaker 7: gets a slope like this and all of a sudden boom. 345 00:16:31,560 --> 00:16:34,160 Speaker 6: Yeah right, we're really really growing fast. 346 00:16:34,600 --> 00:16:37,200 Speaker 7: These network effect businesses are what we do in our 347 00:16:37,240 --> 00:16:40,800 Speaker 7: in our competitive environment against each other under US regulation. 348 00:16:41,000 --> 00:16:43,040 Speaker 6: I want that to be true globally for the US. 349 00:16:43,240 --> 00:16:45,040 Speaker 2: Eric, I can sell to you world and thin of 350 00:16:45,120 --> 00:16:47,800 Speaker 2: having your back students to continue the conversation. Congratulations on 351 00:16:47,800 --> 00:16:49,600 Speaker 2: the new books. So we pretty shake a time. The 352 00:16:49,640 --> 00:17:02,320 Speaker 2: full mcgogle CEO Eric Smith begin this out with Trump's 353 00:17:02,320 --> 00:17:04,560 Speaker 2: treasury pick still very much up in the air following 354 00:17:04,560 --> 00:17:07,680 Speaker 2: meetings with Apollos, Mark Rowan, and former FED Governor Kevin Walsh. 355 00:17:07,760 --> 00:17:10,600 Speaker 2: Investors still waiting for President elect Donald Trump to make 356 00:17:10,600 --> 00:17:13,200 Speaker 2: a final decision on the individual who will go into 357 00:17:13,240 --> 00:17:16,120 Speaker 2: twenty twenty five facing down a huge to do list. 358 00:17:16,320 --> 00:17:18,919 Speaker 2: Joining us around the table the IBM Vice chair the 359 00:17:19,000 --> 00:17:22,560 Speaker 2: former National Economic Council Director Gary Cone, Gary, good morning, 360 00:17:22,720 --> 00:17:24,400 Speaker 2: Good morning, Thank you, Seeyah, thanks. 361 00:17:24,200 --> 00:17:24,720 Speaker 4: For being here. 362 00:17:24,760 --> 00:17:26,520 Speaker 2: I think we need to take a big step back 363 00:17:26,720 --> 00:17:30,320 Speaker 2: in FANCO several years back to twenty sixteen, twenty seventeen. 364 00:17:30,720 --> 00:17:32,680 Speaker 2: Just frame for us what you had to face down 365 00:17:33,000 --> 00:17:35,399 Speaker 2: in sixteen going into seventeen and how long the to 366 00:17:35,400 --> 00:17:36,520 Speaker 2: do list was back then. 367 00:17:37,160 --> 00:17:39,080 Speaker 8: So I think we should take even a bigger step 368 00:17:39,080 --> 00:17:43,080 Speaker 8: back and remember what the environment was. If you go 369 00:17:43,280 --> 00:17:46,480 Speaker 8: back to the economic environment as we were going through 370 00:17:46,520 --> 00:17:51,960 Speaker 8: this exact period, we had a environment where we had 371 00:17:52,080 --> 00:17:55,159 Speaker 8: just started just barely started to come out of the 372 00:17:55,400 --> 00:18:01,400 Speaker 8: Fed's zero interest rate policy, quantitative easing and a decade 373 00:18:01,600 --> 00:18:06,560 Speaker 8: of Fed articles would ever be inflation again. We were 374 00:18:06,600 --> 00:18:09,600 Speaker 8: just starting to turn that corner. We had come through 375 00:18:10,000 --> 00:18:15,399 Speaker 8: obamaed four years or eight years of basically saying, you know, 376 00:18:15,400 --> 00:18:21,240 Speaker 8: there's been a very tough business environment, highly regulated. You know, 377 00:18:21,280 --> 00:18:23,800 Speaker 8: how do we get business re engaged in Trump won 378 00:18:23,840 --> 00:18:25,800 Speaker 8: this victory, it looks very similar where we are today, 379 00:18:25,840 --> 00:18:29,440 Speaker 8: except you know, FED funds were seventy six basis points 380 00:18:29,480 --> 00:18:33,679 Speaker 8: back then. They're four and a half percent today. National 381 00:18:33,720 --> 00:18:37,959 Speaker 8: debt was about twenty trillion. We're thirty five trillion dollars 382 00:18:38,040 --> 00:18:41,760 Speaker 8: right now. So we're in a pretty fundamentally different place. 383 00:18:41,840 --> 00:18:43,800 Speaker 8: And then as you look where we are today, not 384 00:18:43,840 --> 00:18:48,080 Speaker 8: only have we a pretty decisively different position in rates 385 00:18:48,119 --> 00:18:51,639 Speaker 8: and debt, I think the President elect is walking into 386 00:18:51,680 --> 00:18:55,360 Speaker 8: a environment, with that high interest rate environment where housing 387 00:18:55,400 --> 00:18:59,240 Speaker 8: prices have gotten really out of touch for most Americans 388 00:18:59,480 --> 00:19:02,320 Speaker 8: and there's a real push to try and make housing 389 00:19:02,359 --> 00:19:05,960 Speaker 8: more affordable. You look at the way Treasury has decided 390 00:19:06,000 --> 00:19:09,160 Speaker 8: to fund that additional debt. They've been very short dated 391 00:19:09,160 --> 00:19:11,800 Speaker 8: on the curve, which I think provides an enormous amount 392 00:19:11,840 --> 00:19:15,360 Speaker 8: of risk in refunding. And we all worry about refunding 393 00:19:15,359 --> 00:19:18,320 Speaker 8: of Treasury. So I think we've got to have a real, 394 00:19:19,680 --> 00:19:24,639 Speaker 8: a real refunding situation where we roll out maturities. I 395 00:19:24,680 --> 00:19:26,720 Speaker 8: remember talking to the President like eight years ago by 396 00:19:26,760 --> 00:19:28,320 Speaker 8: doing a fifty year and a one hundred year. I 397 00:19:28,320 --> 00:19:29,720 Speaker 8: still think we should have done a fifty year one 398 00:19:29,760 --> 00:19:30,440 Speaker 8: hundred year when. 399 00:19:30,400 --> 00:19:30,920 Speaker 4: Rates were low. 400 00:19:31,760 --> 00:19:33,800 Speaker 8: And then you think about the situation with state and 401 00:19:33,840 --> 00:19:35,920 Speaker 8: local government. State and local governments were not in great 402 00:19:36,000 --> 00:19:39,840 Speaker 8: position eight years ago. Now, think of what's going on 403 00:19:39,880 --> 00:19:42,800 Speaker 8: with the migrant population. How much money some of these 404 00:19:42,800 --> 00:19:45,840 Speaker 8: cities and states have spent on immigrants. Now, they didn't 405 00:19:45,840 --> 00:19:48,679 Speaker 8: say anything prior to the election, but I will be 406 00:19:48,760 --> 00:19:51,000 Speaker 8: shocked if there's not a huge outcry from some of 407 00:19:51,040 --> 00:19:54,399 Speaker 8: the major cities in this country about the amount of 408 00:19:54,440 --> 00:19:56,280 Speaker 8: money they've spent and how much help they're going to 409 00:19:56,359 --> 00:19:59,280 Speaker 8: need from Washington to make their budgets come together. 410 00:20:00,160 --> 00:20:01,560 Speaker 4: That's you know, that's where you start. 411 00:20:01,880 --> 00:20:05,640 Speaker 8: That's literally day one, that's January twentyth twelve noon. 412 00:20:05,680 --> 00:20:07,320 Speaker 4: You walk into that. Yep. 413 00:20:08,080 --> 00:20:11,040 Speaker 8: So there's a fundamental difference from where we are. But 414 00:20:11,520 --> 00:20:14,440 Speaker 8: there's a similarity to coming off of the Obama administration 415 00:20:14,560 --> 00:20:17,960 Speaker 8: versus the Biden administration. The excitement of business, the opportunity 416 00:20:18,000 --> 00:20:20,000 Speaker 8: going forward, those are the excitements. 417 00:20:20,240 --> 00:20:20,399 Speaker 4: You know. 418 00:20:20,440 --> 00:20:23,439 Speaker 8: Then you go back eight years ago and say, okay, 419 00:20:23,480 --> 00:20:24,040 Speaker 8: what did we. 420 00:20:24,040 --> 00:20:25,040 Speaker 4: Walk into as well? 421 00:20:25,680 --> 00:20:29,440 Speaker 8: Well, look, the number one policy that we really wanted 422 00:20:29,440 --> 00:20:32,000 Speaker 8: to get done initially was tax reform. Tax reforms are 423 00:20:32,080 --> 00:20:35,920 Speaker 8: number one objective. Unfortunately, you know, the House had sort 424 00:20:35,920 --> 00:20:40,600 Speaker 8: of gotten ahead of the White House during the last 425 00:20:40,680 --> 00:20:44,040 Speaker 8: few weeks of the prior administration. The House had gone 426 00:20:44,040 --> 00:20:48,080 Speaker 8: ahead with repeal of Obamacare, So we walked into repeal 427 00:20:48,160 --> 00:20:51,160 Speaker 8: and replace without really a replace, which I have to. 428 00:20:51,119 --> 00:20:53,639 Speaker 2: Admit I totally forgot about. I totally forgot about the 429 00:20:53,720 --> 00:20:56,280 Speaker 2: McCain vote. Yeah, I've totally forgotten that you'd walked into 430 00:20:56,320 --> 00:20:59,040 Speaker 2: that back in seventeen. How did that complicate things? To 431 00:20:59,040 --> 00:21:00,040 Speaker 2: get taxes done. 432 00:21:00,560 --> 00:21:01,560 Speaker 4: A highly complicated thing. 433 00:21:01,640 --> 00:21:03,879 Speaker 8: You know, we all thought on the economic team that 434 00:21:03,920 --> 00:21:05,639 Speaker 8: we were walking in, we were going to, you know, 435 00:21:05,720 --> 00:21:07,639 Speaker 8: January twenty, we were going to start on tax policy, 436 00:21:07,640 --> 00:21:09,720 Speaker 8: tax policy, tax policy. I think all of us got 437 00:21:09,760 --> 00:21:14,959 Speaker 8: thrown into healthcare, healthcare, healthcare, trying to figure out healthcare. 438 00:21:15,080 --> 00:21:17,199 Speaker 8: None of us were really healthcare experts, none of us 439 00:21:17,280 --> 00:21:19,720 Speaker 8: had been doing work on healthcare for the prior three 440 00:21:19,760 --> 00:21:21,520 Speaker 8: months trying to get ready to walk in. 441 00:21:21,600 --> 00:21:22,240 Speaker 4: We'd all been. 442 00:21:22,119 --> 00:21:25,320 Speaker 8: Working on tax policy and trying to figure that out. 443 00:21:25,920 --> 00:21:29,080 Speaker 8: So everyone got derailed for the better part of I 444 00:21:29,080 --> 00:21:32,200 Speaker 8: would say two months or three months, knowing that we 445 00:21:32,240 --> 00:21:34,800 Speaker 8: wanted to go through taxes in year one because we 446 00:21:34,840 --> 00:21:37,680 Speaker 8: wanted to use that budget that existed and we wanted 447 00:21:37,680 --> 00:21:40,760 Speaker 8: to use budget reconciliation to get taxes done that year. 448 00:21:40,840 --> 00:21:42,760 Speaker 4: So every day we were spending on. 449 00:21:43,119 --> 00:21:47,000 Speaker 8: Healthcare, we were losing a day of tax policy, which 450 00:21:47,160 --> 00:21:50,600 Speaker 8: was you know, it was anxiety creating, let's put it 451 00:21:50,640 --> 00:21:52,240 Speaker 8: that way. So we were trying to get rid of 452 00:21:52,560 --> 00:21:53,920 Speaker 8: the healthcare issues quickly as we do. 453 00:21:54,119 --> 00:21:55,919 Speaker 5: What's going to be the priority when they walk in 454 00:21:56,040 --> 00:21:58,360 Speaker 5: January this time around? Is it going to be tariffs 455 00:21:58,400 --> 00:22:00,600 Speaker 5: or is it going to be cutting tax So I. 456 00:22:00,600 --> 00:22:03,680 Speaker 8: Think there's two priorities day one on the economic side, 457 00:22:03,680 --> 00:22:06,280 Speaker 8: and you'll argue there's both economics. I think it's going 458 00:22:06,359 --> 00:22:10,400 Speaker 8: to be taxes, because again you've got a deadline. Remember 459 00:22:10,600 --> 00:22:14,719 Speaker 8: the personal side of the tax policy ends at twelve 460 00:22:14,800 --> 00:22:18,200 Speaker 8: midnight December thirty first, twenty twenty five. 461 00:22:18,760 --> 00:22:20,240 Speaker 4: So there is a. 462 00:22:20,080 --> 00:22:24,840 Speaker 8: Forcing function, and Washington operates really well with a forcing function. 463 00:22:25,040 --> 00:22:26,840 Speaker 4: They need deadline, they need deadlines. They need that. 464 00:22:27,280 --> 00:22:29,399 Speaker 8: Journalists well I don't know about journalists, but I know 465 00:22:29,440 --> 00:22:30,160 Speaker 8: about Washington. 466 00:22:30,320 --> 00:22:32,000 Speaker 4: They need a deadline. 467 00:22:32,040 --> 00:22:34,399 Speaker 8: There is a hard and fast deadline now, look, they 468 00:22:34,440 --> 00:22:37,680 Speaker 8: could extend it, but that would be another Act of 469 00:22:37,720 --> 00:22:40,080 Speaker 8: Congress to extend it, so they have a firm deadline 470 00:22:40,080 --> 00:22:42,359 Speaker 8: in place. So Number one thing on the I would 471 00:22:42,359 --> 00:22:44,840 Speaker 8: say the economic policy front is they're going to deal 472 00:22:44,840 --> 00:22:47,960 Speaker 8: with taxes. Number two is I think simultaneously we could 473 00:22:48,040 --> 00:22:50,520 Speaker 8: argue this is this is economics as well. 474 00:22:50,600 --> 00:22:52,680 Speaker 4: They need to deal with the immigration policy. You know. 475 00:22:52,840 --> 00:22:55,960 Speaker 8: I think we will see Trump come back to many 476 00:22:56,160 --> 00:22:59,119 Speaker 8: of the executive orders and many of the policies that 477 00:22:59,200 --> 00:23:01,360 Speaker 8: he had going out. 478 00:23:01,200 --> 00:23:04,760 Speaker 4: On January twentieth. He will reinstate all. 479 00:23:04,600 --> 00:23:07,440 Speaker 8: Of those policies to shut the border and at least 480 00:23:07,480 --> 00:23:10,720 Speaker 8: stop the flow of illegal immigrants in the United States. 481 00:23:10,720 --> 00:23:14,000 Speaker 8: So I think they will work on both of those simultaneously. 482 00:23:14,600 --> 00:23:18,440 Speaker 8: I do think there will be some tariff policy going 483 00:23:18,440 --> 00:23:20,720 Speaker 8: in there as well, and I think the tariff policy 484 00:23:20,760 --> 00:23:23,080 Speaker 8: that will be relatively easy for them to go on 485 00:23:23,440 --> 00:23:26,560 Speaker 8: is to tear iff things that we are currently manufacturing 486 00:23:26,600 --> 00:23:29,200 Speaker 8: in the United States, where you would put tariffs in 487 00:23:29,280 --> 00:23:33,119 Speaker 8: place to protect jobs and protect the products that we 488 00:23:33,160 --> 00:23:34,840 Speaker 8: are currently making the United States. 489 00:23:34,840 --> 00:23:36,840 Speaker 5: Okay, so if personal policy, we have two out of 490 00:23:36,840 --> 00:23:39,240 Speaker 5: the three we have a borders are he's announced and 491 00:23:39,280 --> 00:23:41,080 Speaker 5: we also have Howard Latnet going over. 492 00:23:40,960 --> 00:23:42,240 Speaker 4: As to commerce. 493 00:23:42,480 --> 00:23:44,439 Speaker 5: What is going on with the treasury pick. We have 494 00:23:44,520 --> 00:23:47,480 Speaker 5: three men who I've been told the President thinks of 495 00:23:47,480 --> 00:23:51,040 Speaker 5: a high caliber Scott Besson, Mark Rowan, Kevin Walsh in 496 00:23:51,200 --> 00:23:55,000 Speaker 5: Palm Beach yesterday having these conversations with the president. You 497 00:23:55,080 --> 00:23:58,520 Speaker 5: know how he operates. Why is this pick taking so long? 498 00:23:58,600 --> 00:24:01,400 Speaker 5: If he ran an echon agenda campaign. 499 00:24:02,320 --> 00:24:04,600 Speaker 8: So I think you just answered a little bit. He 500 00:24:04,680 --> 00:24:07,959 Speaker 8: ran an economic agenda campaign. This is in his opinion, 501 00:24:08,000 --> 00:24:09,439 Speaker 8: this is one of the most important, if not the 502 00:24:09,480 --> 00:24:12,600 Speaker 8: most important pick he is going to make, so getting 503 00:24:12,640 --> 00:24:13,600 Speaker 8: it right is important. 504 00:24:13,960 --> 00:24:16,159 Speaker 4: I'll also remind you something. We'll go back to eight 505 00:24:16,240 --> 00:24:16,600 Speaker 4: years ago. 506 00:24:17,160 --> 00:24:20,600 Speaker 8: The economic picks were made the week after Thanksgiving. I 507 00:24:20,720 --> 00:24:23,760 Speaker 8: was hired the week after Thanksgiving. Manutrient was put into 508 00:24:23,800 --> 00:24:28,600 Speaker 8: his job the week after Thanksgiving. So the transition team 509 00:24:29,000 --> 00:24:31,879 Speaker 8: is a couple weeks and probably a month ahead on 510 00:24:32,040 --> 00:24:33,000 Speaker 8: most of the picks. 511 00:24:33,480 --> 00:24:35,080 Speaker 4: So we've all got. 512 00:24:34,880 --> 00:24:39,080 Speaker 8: This anxiety because this is a second term president, so 513 00:24:39,359 --> 00:24:43,040 Speaker 8: he knows how to get stuff done quickly. But if 514 00:24:43,119 --> 00:24:45,240 Speaker 8: you think of what happened eight years ago, those picks 515 00:24:45,280 --> 00:24:48,160 Speaker 8: were made in the last week of November, first week 516 00:24:48,160 --> 00:24:51,600 Speaker 8: of December, and we were all ready to go in 517 00:24:51,680 --> 00:24:55,520 Speaker 8: our chairs in place by twelve noon January twenty, So 518 00:24:55,680 --> 00:24:57,520 Speaker 8: there's plenty of time to get it right. And I 519 00:24:57,520 --> 00:25:00,639 Speaker 8: think the president knows the president, like nos, getting the 520 00:25:00,720 --> 00:25:04,280 Speaker 8: right person is more important right now than getting the 521 00:25:04,320 --> 00:25:05,600 Speaker 8: pick done today or tomorrow. 522 00:25:05,600 --> 00:25:07,040 Speaker 5: Do you think it's a name that I have not 523 00:25:07,160 --> 00:25:07,760 Speaker 5: reported on. 524 00:25:08,280 --> 00:25:10,480 Speaker 8: I look, I'm not involved in the process. I think 525 00:25:10,480 --> 00:25:13,240 Speaker 8: the President will put any in every name that he 526 00:25:13,440 --> 00:25:16,280 Speaker 8: thinks can do the job well on the list, and 527 00:25:16,320 --> 00:25:18,520 Speaker 8: he will choose what he thinks is the best person 528 00:25:18,560 --> 00:25:19,200 Speaker 8: to do the job. 529 00:25:19,359 --> 00:25:21,880 Speaker 1: Do you think it is feasible for President elect Donald 530 00:25:21,920 --> 00:25:25,440 Speaker 1: Trump to achieve his goals of the tariffs that he's 531 00:25:25,440 --> 00:25:30,199 Speaker 1: put out there while acquiescing or creating some calm in 532 00:25:30,240 --> 00:25:31,040 Speaker 1: the bond market. 533 00:25:32,920 --> 00:25:35,720 Speaker 8: We will see what actually happens in policy. 534 00:25:36,119 --> 00:25:37,879 Speaker 4: You know, I always remind. 535 00:25:37,560 --> 00:25:41,080 Speaker 8: People what you say to get elected and what you 536 00:25:41,200 --> 00:25:44,399 Speaker 8: do in actual policy are two different things. You know, 537 00:25:44,680 --> 00:25:47,360 Speaker 8: Americans like to hear what your ultimate idea is to 538 00:25:47,359 --> 00:25:51,680 Speaker 8: get done. But we've got a very rigorous policy process 539 00:25:51,720 --> 00:25:53,560 Speaker 8: in the United States. We've got a House, we've got 540 00:25:53,560 --> 00:25:56,159 Speaker 8: a Senate, we've got lots of constituencies, and when it 541 00:25:56,200 --> 00:26:01,000 Speaker 8: comes down to actually executing implementing policy is not exactly 542 00:26:01,119 --> 00:26:04,040 Speaker 8: what the president wants. In fact, every piece of legislation 543 00:26:04,160 --> 00:26:06,960 Speaker 8: is a compromise. There's no perfect piece of legislation in 544 00:26:06,960 --> 00:26:10,439 Speaker 8: America because at some point people have to compromise. So 545 00:26:10,520 --> 00:26:15,080 Speaker 8: we'll see what the president can get done. I think 546 00:26:15,119 --> 00:26:17,919 Speaker 8: we're all confident there'll be something on taxes. We're one 547 00:26:17,960 --> 00:26:20,920 Speaker 8: hundred percent confident there'll be something on immigration, and there'll 548 00:26:20,960 --> 00:26:24,000 Speaker 8: be something on tariffs. But again, each of these will 549 00:26:24,000 --> 00:26:26,520 Speaker 8: be a compromise. No one is going to get one 550 00:26:26,560 --> 00:26:27,480 Speaker 8: hundred percent of what they want. 551 00:26:27,520 --> 00:26:29,280 Speaker 1: I guess the reason why people are so interested in 552 00:26:29,320 --> 00:26:32,040 Speaker 1: the Treasury pick is because people want to understand what 553 00:26:32,080 --> 00:26:35,000 Speaker 1: that compromise might look like, and the individual might give 554 00:26:35,040 --> 00:26:38,040 Speaker 1: some insight into that. Do we have a sense and 555 00:26:38,200 --> 00:26:40,120 Speaker 1: will this sort of be the ultimate test for you 556 00:26:40,359 --> 00:26:43,040 Speaker 1: how much Congress pushes back on some of the picks 557 00:26:43,280 --> 00:26:47,600 Speaker 1: that have already been announced that are controversial even among Republicans. 558 00:26:47,600 --> 00:26:49,520 Speaker 1: Will that be sort of a test of just whether 559 00:26:49,520 --> 00:26:51,160 Speaker 1: the texts and balances will work. At the same time, 560 00:26:51,160 --> 00:26:52,639 Speaker 1: when a lot of people are saying this time is 561 00:26:52,680 --> 00:26:56,159 Speaker 1: different and that this president elect actually has something of 562 00:26:56,200 --> 00:26:59,000 Speaker 1: a mandate. That is very different than in twenty sixteen. 563 00:27:00,359 --> 00:27:03,560 Speaker 8: Every Congress and every president when they come in and 564 00:27:03,600 --> 00:27:06,320 Speaker 8: they pick, they put their nominations through and they go 565 00:27:06,400 --> 00:27:07,439 Speaker 8: through the consent process. 566 00:27:07,560 --> 00:27:08,119 Speaker 4: It's different. 567 00:27:08,160 --> 00:27:11,560 Speaker 8: Every four years, every president goes through a different process. 568 00:27:11,800 --> 00:27:14,320 Speaker 8: You have a different makeup of a Senate. You have 569 00:27:14,680 --> 00:27:17,800 Speaker 8: a different sort of body. And by the way, the 570 00:27:17,840 --> 00:27:20,160 Speaker 8: body will be different at the end of this year, 571 00:27:20,440 --> 00:27:23,760 Speaker 8: and then it will transition. I think it's January third 572 00:27:23,840 --> 00:27:26,440 Speaker 8: is the swearing of the new Senate. It will change 573 00:27:26,520 --> 00:27:29,080 Speaker 8: January third in the middle of the process. So some 574 00:27:29,119 --> 00:27:32,080 Speaker 8: of these nominees could actually go through an approval process 575 00:27:32,280 --> 00:27:33,800 Speaker 8: with this current sitting. 576 00:27:33,520 --> 00:27:36,080 Speaker 4: Senate, some may go through with a new Senate. 577 00:27:36,160 --> 00:27:37,800 Speaker 8: The probably the vast majority will go through with the 578 00:27:37,800 --> 00:27:40,480 Speaker 8: new Senate because it takes time to get the paperwork through, 579 00:27:40,480 --> 00:27:42,840 Speaker 8: it takes time to get the vetting through. But every 580 00:27:42,960 --> 00:27:45,720 Speaker 8: one of these events is unique, and it's uniquely different 581 00:27:45,800 --> 00:27:49,840 Speaker 8: because they're different personalities involved. There's different people went through 582 00:27:49,880 --> 00:27:55,840 Speaker 8: different elections. Certain states changed, they became redder, so the 583 00:27:55,880 --> 00:27:59,399 Speaker 8: senery may or may not be more comfortable taking a 584 00:27:59,440 --> 00:28:01,560 Speaker 8: certain point of you. So you literally have to watch 585 00:28:01,600 --> 00:28:03,680 Speaker 8: each of these as an individual unique event. 586 00:28:04,040 --> 00:28:06,639 Speaker 1: So you did mention the financing of the deficit, and 587 00:28:06,680 --> 00:28:09,320 Speaker 1: that's very interesting to me, especially at a time where 588 00:28:09,320 --> 00:28:11,280 Speaker 1: you talked about the short term nature of a lot 589 00:28:11,280 --> 00:28:14,480 Speaker 1: of the financing. Do you expect that to change for 590 00:28:14,520 --> 00:28:16,840 Speaker 1: there to be a lot more longer dated issuance regardless 591 00:28:16,840 --> 00:28:19,440 Speaker 1: of where yields are at with the next Treasure Secretary, 592 00:28:19,440 --> 00:28:20,440 Speaker 1: whoever that might be. 593 00:28:20,560 --> 00:28:24,119 Speaker 8: But I think it's really prudent risk management to start 594 00:28:24,119 --> 00:28:27,359 Speaker 8: elongating the debt of the United States and not have 595 00:28:27,520 --> 00:28:31,359 Speaker 8: to live off very large short term auctions and not 596 00:28:31,480 --> 00:28:34,119 Speaker 8: have to live off a short term demand for treasuries. 597 00:28:34,560 --> 00:28:36,560 Speaker 4: Like we're always worried about. 598 00:28:36,240 --> 00:28:39,880 Speaker 8: Financing the deficit and what could happen Like as a 599 00:28:39,920 --> 00:28:42,360 Speaker 8: person that grew up as a risk manager running a 600 00:28:42,480 --> 00:28:45,040 Speaker 8: large balance sheet for a large percentage of my life, 601 00:28:45,440 --> 00:28:47,520 Speaker 8: you would want to de risk that. How do you 602 00:28:47,600 --> 00:28:50,360 Speaker 8: de risk that from a treasury standpoint, You roll out 603 00:28:50,400 --> 00:28:53,440 Speaker 8: maturities as long as you can, so you cut down 604 00:28:53,480 --> 00:28:55,280 Speaker 8: the amount that you have to fund at each of 605 00:28:55,280 --> 00:28:58,680 Speaker 8: these auctions. So I would think that this administration would 606 00:28:58,760 --> 00:29:01,280 Speaker 8: want to get that done and roll out maturities. 607 00:29:01,640 --> 00:29:03,640 Speaker 2: Gary, I want to pick up on a conversation we were 608 00:29:03,560 --> 00:29:06,120 Speaker 2: having earlier the race to be the next Treasury secretary. 609 00:29:06,160 --> 00:29:08,120 Speaker 2: You've been in the room with President elect Donald Trump 610 00:29:08,160 --> 00:29:10,840 Speaker 2: many a time, including to interview. What's it like to 611 00:29:10,880 --> 00:29:12,360 Speaker 2: interview with Donald Trump? 612 00:29:12,760 --> 00:29:16,120 Speaker 8: Well, look, look, it's always a stressful experience. You know, 613 00:29:16,120 --> 00:29:19,320 Speaker 8: you're sitting there with the President elect and a large 614 00:29:19,360 --> 00:29:20,120 Speaker 8: amount of his team. 615 00:29:20,640 --> 00:29:22,960 Speaker 4: Like usually when you're in the room with the President 616 00:29:22,960 --> 00:29:27,240 Speaker 4: elect doing these interviews, there's multiple other people in the room. 617 00:29:27,560 --> 00:29:27,720 Speaker 4: You know. 618 00:29:27,760 --> 00:29:30,440 Speaker 8: I always reminded myself, I'm speaking of the President elect. 619 00:29:30,440 --> 00:29:31,720 Speaker 4: I'm not speaking to other people in the. 620 00:29:31,760 --> 00:29:33,720 Speaker 9: Room, so you've got to sort of block out the 621 00:29:33,760 --> 00:29:38,560 Speaker 9: other people in the room. But he's rigorous in his questions, 622 00:29:38,760 --> 00:29:43,840 Speaker 9: and he tends to go multiple different directions, so you know, 623 00:29:43,880 --> 00:29:44,880 Speaker 9: he'll go from from. 624 00:29:44,720 --> 00:29:47,040 Speaker 8: Topic A to topic B, to topic C, back to 625 00:29:47,040 --> 00:29:47,440 Speaker 8: topic A. 626 00:29:47,920 --> 00:29:48,560 Speaker 4: It's interesting. 627 00:29:49,120 --> 00:29:51,560 Speaker 8: You've got to be on your game when you're in there. 628 00:29:51,600 --> 00:29:53,680 Speaker 8: You've got to be on your game. And he's thinking, 629 00:29:54,400 --> 00:29:56,960 Speaker 8: you know, in multiple directions, and it's very interesting and 630 00:29:57,480 --> 00:30:00,160 Speaker 8: he's always got a interesting spin on things. 631 00:30:00,200 --> 00:30:01,920 Speaker 4: You know. I think the. 632 00:30:01,880 --> 00:30:04,600 Speaker 8: President like Trump, is one of the best marketers and 633 00:30:04,760 --> 00:30:08,600 Speaker 8: branders there is I've ever seen. So when I'm always 634 00:30:08,640 --> 00:30:10,720 Speaker 8: talking about an answer and how I would think. 635 00:30:10,640 --> 00:30:11,920 Speaker 4: Of something from a policy standpoint. 636 00:30:11,960 --> 00:30:14,160 Speaker 8: He's talking about it, how is he going to sell 637 00:30:14,200 --> 00:30:16,160 Speaker 8: this to America and how's it going to affect people? 638 00:30:16,360 --> 00:30:19,360 Speaker 8: And how's it good for the country, And he's thinking 639 00:30:19,440 --> 00:30:22,280 Speaker 8: in that term. So we're always having an interesting conversation 640 00:30:22,320 --> 00:30:24,800 Speaker 8: where I'm thinking about it from an economic policy, markets 641 00:30:24,840 --> 00:30:27,040 Speaker 8: policy standpoint, and he's thinking about it from how do 642 00:30:27,120 --> 00:30:28,120 Speaker 8: I sell this and how do. 643 00:30:28,080 --> 00:30:29,080 Speaker 4: I get momentum for this. 644 00:30:29,560 --> 00:30:32,280 Speaker 2: Some space in the media are describing this process as 645 00:30:32,440 --> 00:30:34,520 Speaker 2: looking for a yes man, someone who would just say 646 00:30:34,600 --> 00:30:37,920 Speaker 2: yes to some of his policy proposals, including the trade. 647 00:30:38,040 --> 00:30:40,480 Speaker 2: You had disagreements with him on trade. You were very 648 00:30:40,480 --> 00:30:42,640 Speaker 2: open about that. We're all aware of it at the time. 649 00:30:42,640 --> 00:30:45,400 Speaker 2: In the first term, how open is he to those disagreements. 650 00:30:45,840 --> 00:30:47,480 Speaker 4: Look, I believe. 651 00:30:47,320 --> 00:30:49,880 Speaker 8: It's the job of an advisor in the White House 652 00:30:50,720 --> 00:30:54,400 Speaker 8: to tell the president the truth and tell them things 653 00:30:54,440 --> 00:30:56,160 Speaker 8: that he doesn't want to hear. Now you get to 654 00:30:56,160 --> 00:30:58,200 Speaker 8: tell him plain things he does want to hear. You know, 655 00:30:58,520 --> 00:31:00,440 Speaker 8: it was always fun to go in there with the 656 00:31:00,480 --> 00:31:02,920 Speaker 8: economic data. You know, you get the economic data the 657 00:31:03,000 --> 00:31:05,520 Speaker 8: night before it's released, and there are many nights where 658 00:31:05,520 --> 00:31:06,680 Speaker 8: I got to go in there and talk to him 659 00:31:06,680 --> 00:31:08,840 Speaker 8: about the economic data, what it was, how good it was, 660 00:31:08,880 --> 00:31:11,640 Speaker 8: how the markets were going to react. Those are great conversations. 661 00:31:11,960 --> 00:31:14,880 Speaker 8: But along with those great conversations, you get to go 662 00:31:14,960 --> 00:31:17,400 Speaker 8: in there and have conversations that say, hey, look, if 663 00:31:17,440 --> 00:31:20,240 Speaker 8: we do X, I think I don't know, I think 664 00:31:20,280 --> 00:31:23,480 Speaker 8: the reaction is going to be this. Are we prepared 665 00:31:23,560 --> 00:31:26,200 Speaker 8: for this intended or unintended consequence? 666 00:31:26,400 --> 00:31:28,440 Speaker 4: And I think those are the jobs. 667 00:31:28,040 --> 00:31:30,520 Speaker 8: Of the people that sit in the White House's advisors 668 00:31:30,680 --> 00:31:34,120 Speaker 8: to make sure when the president does something they understand 669 00:31:34,440 --> 00:31:38,280 Speaker 8: the intended and unintended consequences. They should never a president 670 00:31:38,320 --> 00:31:41,000 Speaker 8: should never be blindsided by a decision. 671 00:31:40,880 --> 00:31:43,800 Speaker 5: When it comes to the check and the pushback on 672 00:31:44,160 --> 00:31:46,640 Speaker 5: Trump two point zero, John talked about this his first 673 00:31:46,640 --> 00:31:48,760 Speaker 5: four years. All the time the Trump put it was 674 00:31:48,800 --> 00:31:50,320 Speaker 5: a stock market that he cared about. 675 00:31:50,480 --> 00:31:51,600 Speaker 4: He would reverse core. 676 00:31:51,520 --> 00:31:53,640 Speaker 5: Some potentially something he want to do in executive order, 677 00:31:53,760 --> 00:31:56,040 Speaker 5: just because he saw the fallout in the financial markets. 678 00:31:56,240 --> 00:31:57,840 Speaker 4: What's going to be that check this time? 679 00:31:58,520 --> 00:32:00,840 Speaker 8: I think Trump is going to care as much about 680 00:32:00,880 --> 00:32:03,320 Speaker 8: the stock market these next four years as he did 681 00:32:03,320 --> 00:32:06,040 Speaker 8: the first four years. That is a benchmark that he 682 00:32:06,120 --> 00:32:09,760 Speaker 8: will measure himself it's a very public benchmark. It's one 683 00:32:09,800 --> 00:32:12,600 Speaker 8: that he uses. He talks about it in every speech. 684 00:32:12,680 --> 00:32:15,280 Speaker 8: He's already started talking about it in the transition. How 685 00:32:15,280 --> 00:32:18,960 Speaker 8: well the market's done since election night. I don't think 686 00:32:19,040 --> 00:32:21,040 Speaker 8: that will change over the next four years. 687 00:32:21,200 --> 00:32:23,720 Speaker 2: Do you think the bond market takes on additional importance? 688 00:32:23,880 --> 00:32:26,280 Speaker 2: We started this whole conversation about the difference between now 689 00:32:26,400 --> 00:32:29,240 Speaker 2: versus say, twenty sixteen to seventeen, certainly in fixed income 690 00:32:29,280 --> 00:32:30,320 Speaker 2: in a very different position. 691 00:32:30,920 --> 00:32:34,200 Speaker 8: I think the bond market deserves a long discussion here. 692 00:32:34,280 --> 00:32:36,400 Speaker 8: I think there's a lot going on. When I talked it, 693 00:32:36,720 --> 00:32:39,000 Speaker 8: when I talked a little bit ago. You know where 694 00:32:39,040 --> 00:32:41,120 Speaker 8: FED funds were at seventy six faces points where they're 695 00:32:41,160 --> 00:32:44,440 Speaker 8: four and a half percent. Now, that's only half the story. 696 00:32:44,520 --> 00:32:47,160 Speaker 8: You know, we had a flat yield curve and then 697 00:32:47,160 --> 00:32:49,360 Speaker 8: we've gone through an inverted yield curve over the last 698 00:32:49,360 --> 00:32:51,959 Speaker 8: four years because everyone was worried about a recession. And 699 00:32:52,040 --> 00:32:54,040 Speaker 8: now we're going back to something that we forgot. What 700 00:32:54,120 --> 00:32:56,400 Speaker 8: it is called a normal yield curve. 701 00:32:56,560 --> 00:32:57,680 Speaker 2: How stafe is a normal year? 702 00:32:57,840 --> 00:33:01,040 Speaker 8: Yeah, Like, at least you've been around long enough to 703 00:33:01,080 --> 00:33:03,600 Speaker 8: ask a question, how steep is a normal yield curve, 704 00:33:03,640 --> 00:33:06,360 Speaker 8: because a lot of people don't even remember a normal yield. 705 00:33:06,120 --> 00:33:06,880 Speaker 4: Curve is steep. 706 00:33:07,320 --> 00:33:09,840 Speaker 8: You know, we've seen since the Fed started cutting interest rates, 707 00:33:09,920 --> 00:33:12,520 Speaker 8: ten years have gone up sixty to seventy basis points. 708 00:33:13,040 --> 00:33:16,520 Speaker 8: I'm not surprised by that. I think we're renormalizing a 709 00:33:16,640 --> 00:33:19,720 Speaker 8: yield curve. If we've taken recession fears off the table 710 00:33:20,080 --> 00:33:22,880 Speaker 8: and the ten years going to go to a normalized 711 00:33:23,000 --> 00:33:24,920 Speaker 8: rate of let's call it three three and a half percent, 712 00:33:25,440 --> 00:33:27,320 Speaker 8: you know, there has to be at least one hundred 713 00:33:27,320 --> 00:33:29,400 Speaker 8: to one hundred and twenty five basis points of steepness 714 00:33:29,400 --> 00:33:31,640 Speaker 8: in FED funds ten years. I think it's at least 715 00:33:31,640 --> 00:33:33,840 Speaker 8: one hundred and twenty five. If we're going to three, 716 00:33:34,200 --> 00:33:35,480 Speaker 8: that's at least four. 717 00:33:35,280 --> 00:33:35,720 Speaker 4: And a quarter. 718 00:33:35,720 --> 00:33:38,000 Speaker 8: If we're going to three and a half, you know, 719 00:33:38,000 --> 00:33:39,920 Speaker 8: we're talking four to seventy five, and we're going to 720 00:33:39,960 --> 00:33:44,240 Speaker 8: continue steepness out the curve. And that's before we get 721 00:33:44,280 --> 00:33:48,120 Speaker 8: to what I consider a pretty large refinancing wall coming 722 00:33:48,200 --> 00:33:50,760 Speaker 8: up in twenty five and beyond. You know, I think 723 00:33:50,880 --> 00:33:53,760 Speaker 8: many people forgot that. You know, twenty twenty, the COVID year, 724 00:33:54,040 --> 00:33:55,920 Speaker 8: we did a lot of refinancing in the market, but 725 00:33:55,960 --> 00:33:59,040 Speaker 8: they were all most of them were five year refinancing. 726 00:33:59,120 --> 00:34:01,960 Speaker 8: So a lot of that COVID paper that was done 727 00:34:02,000 --> 00:34:04,880 Speaker 8: at pretty favorable rates because the Fed again went into 728 00:34:05,040 --> 00:34:08,120 Speaker 8: very accommodated policy. A lot of that COVID paper comes 729 00:34:08,120 --> 00:34:10,880 Speaker 8: as due next year. So we've got a lot of 730 00:34:11,120 --> 00:34:14,239 Speaker 8: refinancing coming due in twenty twenty five. So I think 731 00:34:14,520 --> 00:34:19,080 Speaker 8: the yielder smartly and normally starting to re anticipate what's 732 00:34:19,120 --> 00:34:20,560 Speaker 8: going to happen in the bond market. 733 00:34:20,560 --> 00:34:22,440 Speaker 2: We could so called morning. Let's do it for now. 734 00:34:22,440 --> 00:34:24,399 Speaker 2: Next time, it's going to see it, sir, great singer, 735 00:34:24,480 --> 00:34:27,480 Speaker 2: appreciate it. Gary Cone there, the IBM Vice chairman and 736 00:34:27,560 --> 00:34:31,000 Speaker 2: former Director of the National Economic Council under Donald Trump. 737 00:34:31,640 --> 00:34:35,200 Speaker 2: This is the Bloomberg Sevenants podcast, bringing you the best 738 00:34:35,239 --> 00:34:38,799 Speaker 2: in markets, economics, angiopolitics. You can watch the show live 739 00:34:38,880 --> 00:34:41,879 Speaker 2: on Bloomberg TV weekday mornings from six am to nine 740 00:34:41,960 --> 00:34:45,680 Speaker 2: am Eastern. Subscribe to the podcast on Apple, Spotify or 741 00:34:45,719 --> 00:34:48,320 Speaker 2: anywhere else you listen, and as always on the Bloomberg 742 00:34:48,400 --> 00:34:50,279 Speaker 2: Terminal and the Bloomberg Business Amp.