1 00:00:00,120 --> 00:00:06,760 Speaker 1: Bloomberg Audio Studios, podcasts, radio News. 2 00:00:06,920 --> 00:00:09,159 Speaker 2: We begin this out with Trump's treasury pick still very 3 00:00:09,240 --> 00:00:11,440 Speaker 2: much up in the air, following meetings with Apollos, Mark 4 00:00:11,520 --> 00:00:14,720 Speaker 2: Rowan and former FED Governor Kevin Walsh. Investors still waiting 5 00:00:14,880 --> 00:00:17,320 Speaker 2: for President elect Donald Trump to make a final decision 6 00:00:17,600 --> 00:00:19,840 Speaker 2: on the individual who will go into twenty twenty five 7 00:00:19,880 --> 00:00:22,799 Speaker 2: facing down a huge to do list. Joining us around 8 00:00:22,840 --> 00:00:25,959 Speaker 2: a table, the IBM Vice chair, the former National Economic 9 00:00:26,000 --> 00:00:29,400 Speaker 2: Council Director Gary Cone. Gary, good morning, Good morning, Thanks 10 00:00:29,480 --> 00:00:31,040 Speaker 2: se Yah, thanks for being here. I think we need 11 00:00:31,080 --> 00:00:33,400 Speaker 2: to take a big step back. In fact, go several 12 00:00:33,479 --> 00:00:37,040 Speaker 2: years back to twenty sixteen, twenty seventeen. Just frame for 13 00:00:37,120 --> 00:00:39,800 Speaker 2: us what you had to face down in sixteen going 14 00:00:39,840 --> 00:00:41,839 Speaker 2: into seventeen and how long the to do list was 15 00:00:41,960 --> 00:00:42,360 Speaker 2: back then. 16 00:00:43,000 --> 00:00:44,880 Speaker 1: So I think we should take even a bigger step 17 00:00:44,920 --> 00:00:48,919 Speaker 1: back and remember what the environment was. If you go 18 00:00:49,080 --> 00:00:52,320 Speaker 1: back to the economic environment as we were going through 19 00:00:52,320 --> 00:00:57,800 Speaker 1: this exact period, we had a environment where we had 20 00:00:57,880 --> 00:01:01,200 Speaker 1: just started just barely started to come out of the 21 00:01:01,240 --> 00:01:07,200 Speaker 1: fed's zero interest rate policy, quantitative easing, and a decade 22 00:01:07,400 --> 00:01:12,360 Speaker 1: of Fed articles would ever be inflation again. We were 23 00:01:12,440 --> 00:01:15,360 Speaker 1: just starting to turn that corner. We had come through 24 00:01:15,600 --> 00:01:20,600 Speaker 1: an Obama four years or eight years of basically saying, 25 00:01:21,040 --> 00:01:24,920 Speaker 1: you know, there's been a very tough business environment, highly regulated. 26 00:01:26,880 --> 00:01:29,080 Speaker 1: You know, how do we get business re engaged in 27 00:01:29,160 --> 00:01:31,200 Speaker 1: Trump won this victory. It looks very similar where we 28 00:01:31,200 --> 00:01:34,600 Speaker 1: are today, except you know, FED funds were seventy six 29 00:01:34,600 --> 00:01:37,640 Speaker 1: basis points back then. They're four and a half percent today. 30 00:01:39,160 --> 00:01:43,400 Speaker 1: National debt was about twenty trillion. We're thirty five trillion 31 00:01:43,440 --> 00:01:47,600 Speaker 1: dollars right now. So we're in a pretty fundamentally different place. 32 00:01:47,680 --> 00:01:49,600 Speaker 1: And then as you look where we are today, not 33 00:01:49,640 --> 00:01:53,880 Speaker 1: only have we a pretty decisively different position in rates 34 00:01:53,920 --> 00:01:57,480 Speaker 1: and debt, I think the President elect is walking into 35 00:01:57,520 --> 00:02:01,160 Speaker 1: an environment with that high interest rate vironment where housing 36 00:02:01,200 --> 00:02:05,040 Speaker 1: prices have gotten really out of touch for most Americans 37 00:02:05,320 --> 00:02:08,120 Speaker 1: and there's a real push to try and make housing 38 00:02:08,160 --> 00:02:11,760 Speaker 1: more affordable. You look at the way Treasury has decided 39 00:02:11,840 --> 00:02:12,679 Speaker 1: to fund. 40 00:02:12,360 --> 00:02:13,280 Speaker 3: That additional debt. 41 00:02:13,360 --> 00:02:16,200 Speaker 1: They've been very short dated on the curve, which I 42 00:02:16,240 --> 00:02:19,200 Speaker 1: think provides an enormous amount of risk in refunding. And 43 00:02:19,240 --> 00:02:22,000 Speaker 1: we all worry about refunding of Treasury. So I think 44 00:02:22,040 --> 00:02:27,959 Speaker 1: we've got to have a a real refunding situation where 45 00:02:27,960 --> 00:02:31,600 Speaker 1: we roll out maturities. I remember talking to the president 46 00:02:31,680 --> 00:02:33,360 Speaker 1: like eight years ago by doing a fifty year and 47 00:02:33,360 --> 00:02:35,079 Speaker 1: one hundred year. I still think we should have done 48 00:02:35,080 --> 00:02:36,720 Speaker 1: a fift year one hundred year when rates were low. 49 00:02:37,600 --> 00:02:39,640 Speaker 1: And then you think about the situation with state and 50 00:02:39,639 --> 00:02:41,720 Speaker 1: local government. State and local governments were not in great 51 00:02:41,800 --> 00:02:45,640 Speaker 1: position eight years ago. Now, think of what's going on 52 00:02:45,720 --> 00:02:48,600 Speaker 1: with the migrant population. How much money some of these 53 00:02:48,639 --> 00:02:50,680 Speaker 1: cities and states have spent on immigrants. 54 00:02:51,080 --> 00:02:52,760 Speaker 3: Now, they didn't say anything. 55 00:02:52,440 --> 00:02:55,040 Speaker 1: Prior to the election, but I will be shocked if 56 00:02:55,040 --> 00:02:57,280 Speaker 1: there's not a huge outcry from some of the major 57 00:02:57,320 --> 00:03:00,960 Speaker 1: cities in this country about the of money they've spent 58 00:03:01,040 --> 00:03:03,079 Speaker 1: and how much help they're going to need from Washington 59 00:03:03,160 --> 00:03:06,440 Speaker 1: to make their budgets come together. So that's you know, 60 00:03:06,480 --> 00:03:10,360 Speaker 1: that's where you start. That's literally day one. That's January 61 00:03:10,400 --> 00:03:12,560 Speaker 1: twenty of twelve noon you walk into that. 62 00:03:12,919 --> 00:03:13,160 Speaker 3: Yep. 63 00:03:13,880 --> 00:03:16,919 Speaker 1: So there's a fundamental difference from where we are. But 64 00:03:17,360 --> 00:03:20,280 Speaker 1: there's a similarity to coming off of the Obama administration 65 00:03:20,360 --> 00:03:23,800 Speaker 1: versus the Biden administration. The excitement of business, the opportunity 66 00:03:23,800 --> 00:03:25,880 Speaker 1: going forward, those are the excitements. 67 00:03:26,040 --> 00:03:26,240 Speaker 3: You know. 68 00:03:26,280 --> 00:03:29,280 Speaker 1: Then you go back eight years ago and say Okay, 69 00:03:29,320 --> 00:03:29,880 Speaker 1: what did. 70 00:03:29,680 --> 00:03:30,880 Speaker 3: We walk into as well? 71 00:03:31,480 --> 00:03:35,240 Speaker 1: Well, Look, the number one policy that we really wanted 72 00:03:35,280 --> 00:03:37,800 Speaker 1: to get done initially was tax reform. Tax reforms are 73 00:03:37,920 --> 00:03:41,760 Speaker 1: number one objective. Unfortunately, you know, the House had sort 74 00:03:41,760 --> 00:03:46,400 Speaker 1: of gotten ahead of the White House during the last 75 00:03:46,480 --> 00:03:49,840 Speaker 1: few weeks of the prior administration. The House had gone 76 00:03:49,880 --> 00:03:53,880 Speaker 1: ahead with repeal of Obamacare, So we walked into repeal 77 00:03:53,960 --> 00:03:56,800 Speaker 1: and replace without really a replace. 78 00:03:56,400 --> 00:03:58,560 Speaker 2: Which I have to admit I totally forgot about. I 79 00:03:58,560 --> 00:04:01,560 Speaker 2: totally forgot about the McCain. Yeah, totally forgotten that you'd 80 00:04:01,600 --> 00:04:04,360 Speaker 2: walked into that back in seventeen. How did that complicate 81 00:04:04,440 --> 00:04:05,680 Speaker 2: things to get taxes done? 82 00:04:05,760 --> 00:04:07,640 Speaker 3: Well, a highly complicated thing. You know. 83 00:04:07,920 --> 00:04:10,000 Speaker 1: We all thought on the economic team that we were 84 00:04:10,000 --> 00:04:12,200 Speaker 1: walking in, we were going to, you know, January twentieth, 85 00:04:12,280 --> 00:04:14,000 Speaker 1: we were going to start on tax policy, tax policy, 86 00:04:14,040 --> 00:04:18,080 Speaker 1: tax policy. I think all of us got thrown into healthcare, healthcare, healthcare, 87 00:04:19,080 --> 00:04:21,760 Speaker 1: trying to figure out healthcare. None of us were really 88 00:04:21,760 --> 00:04:24,320 Speaker 1: healthcare experts, none of us had been doing work on 89 00:04:24,360 --> 00:04:26,800 Speaker 1: healthcare for the prior three months. Trying to get ready 90 00:04:26,920 --> 00:04:29,280 Speaker 1: to walk in, we'd all been working on tax policy 91 00:04:29,680 --> 00:04:33,680 Speaker 1: and trying to figure that out. So everyone got derailed for. 92 00:04:33,680 --> 00:04:35,560 Speaker 3: The better part of I would say. 93 00:04:35,360 --> 00:04:38,560 Speaker 1: Two months or three months, knowing that we wanted to 94 00:04:38,600 --> 00:04:41,080 Speaker 1: go through taxes in year one because we wanted to 95 00:04:41,160 --> 00:04:43,760 Speaker 1: use that budget that existed and we wanted to use 96 00:04:43,800 --> 00:04:47,440 Speaker 1: budget reconciliation to get taxes done that year. So every 97 00:04:47,520 --> 00:04:50,600 Speaker 1: day we were spending on healthcare, we were losing a 98 00:04:50,720 --> 00:04:54,440 Speaker 1: day of tax policy, which was you know, it was 99 00:04:54,480 --> 00:04:57,240 Speaker 1: anxiety creating, let's put it that way. So we were 100 00:04:57,360 --> 00:04:59,640 Speaker 1: trying to get rid of the healthcare issuess quickly as 101 00:04:59,640 --> 00:04:59,920 Speaker 1: we could. 102 00:05:00,000 --> 00:05:01,760 Speaker 4: It's going to be the priority when they walk in 103 00:05:01,839 --> 00:05:04,120 Speaker 4: January this time around. Is it going to be tariffs 104 00:05:04,240 --> 00:05:06,039 Speaker 4: or is it going to be cutting taxes? 105 00:05:06,040 --> 00:05:08,680 Speaker 1: So I think there's two priorities day one on the 106 00:05:08,720 --> 00:05:11,840 Speaker 1: economic side, and you'll argue there's both economics. I think 107 00:05:11,839 --> 00:05:15,560 Speaker 1: it's going to be taxes because again you've got a deadline. 108 00:05:15,800 --> 00:05:17,839 Speaker 3: Remember the personal side. 109 00:05:17,600 --> 00:05:22,120 Speaker 1: Of the tax policy ends at twelve midnight December thirty first, 110 00:05:23,000 --> 00:05:27,480 Speaker 1: twenty twenty five. So there is a forcing function, and 111 00:05:27,720 --> 00:05:29,839 Speaker 1: Washington operates really. 112 00:05:29,680 --> 00:05:32,240 Speaker 3: Well with a forcing function. They need deadline, they need deadlines, 113 00:05:32,279 --> 00:05:32,680 Speaker 3: they need that. 114 00:05:33,120 --> 00:05:35,240 Speaker 1: Journalists, well I don't know about journalists, but I know 115 00:05:35,279 --> 00:05:35,960 Speaker 1: about Washington. 116 00:05:36,560 --> 00:05:37,800 Speaker 3: They need a deadline. 117 00:05:37,839 --> 00:05:40,240 Speaker 1: There is a hard and fast deadline. Now, look, they 118 00:05:40,240 --> 00:05:43,520 Speaker 1: could extend it, but that would be another Act of 119 00:05:43,520 --> 00:05:45,880 Speaker 1: Congress to extend it. So they have a firm deadline 120 00:05:45,920 --> 00:05:48,159 Speaker 1: in play. So Number one thing on the I would 121 00:05:48,200 --> 00:05:50,640 Speaker 1: say the economic policy front is they're going to deal 122 00:05:50,640 --> 00:05:53,800 Speaker 1: with taxes. Number two is I think simultaneously we could 123 00:05:53,839 --> 00:05:56,320 Speaker 1: argue this is this is economics as well. 124 00:05:56,440 --> 00:05:58,080 Speaker 3: They need to deal with the immigration policy. 125 00:05:58,680 --> 00:06:01,839 Speaker 1: I think we will see Trump come back to many 126 00:06:02,000 --> 00:06:04,920 Speaker 1: of the executive orders and many of the policies that 127 00:06:05,000 --> 00:06:10,040 Speaker 1: he had going out on January twentieth. He will reinstate 128 00:06:10,200 --> 00:06:13,040 Speaker 1: all of those policies to shut the border and at 129 00:06:13,080 --> 00:06:16,520 Speaker 1: least stop the flow of illegal immigrants in the United States. 130 00:06:16,560 --> 00:06:19,799 Speaker 1: So I think they will work on both of those simultaneously. 131 00:06:20,440 --> 00:06:22,440 Speaker 3: I do think there will be some. 132 00:06:22,400 --> 00:06:25,560 Speaker 1: Tariff policy going in there as well, and I think 133 00:06:25,560 --> 00:06:28,480 Speaker 1: the tariff policy that will be relatively easy for them 134 00:06:28,520 --> 00:06:30,640 Speaker 1: to go on is to tear iff things that we 135 00:06:30,720 --> 00:06:34,360 Speaker 1: are currently manufacturing in the United States. Where you would 136 00:06:34,400 --> 00:06:38,240 Speaker 1: put tariffs in place to protect jobs and protect the 137 00:06:38,279 --> 00:06:40,640 Speaker 1: products that we are currently making for the United States. 138 00:06:40,680 --> 00:06:42,640 Speaker 4: Okay, so if personal's policy, we have two out of 139 00:06:42,640 --> 00:06:45,040 Speaker 4: the three, we have a borders are he's announced, and 140 00:06:45,080 --> 00:06:48,080 Speaker 4: we also have Howard Latnett going over as to commerce. 141 00:06:48,320 --> 00:06:50,240 Speaker 4: What is going on with the treasury pick. We have 142 00:06:50,360 --> 00:06:53,320 Speaker 4: three men who I've been told the President thinks of 143 00:06:53,320 --> 00:06:56,880 Speaker 4: a high caliber Scott Besson, Mark Rowan, Kevin Walsh in 144 00:06:57,000 --> 00:07:00,200 Speaker 4: Palm Beach yesterday, having these conversations with the president sident, 145 00:07:00,720 --> 00:07:03,640 Speaker 4: you know how he operates. Why is this pick taking 146 00:07:03,800 --> 00:07:07,160 Speaker 4: so long? If he ran an economic agenda campaign. 147 00:07:08,120 --> 00:07:10,440 Speaker 1: So I think you just answered a little bit. He 148 00:07:10,520 --> 00:07:13,800 Speaker 1: ran an economic agenda campaign. This is in his opinion, 149 00:07:13,800 --> 00:07:15,280 Speaker 1: this is one of the most important, if not the 150 00:07:15,280 --> 00:07:18,440 Speaker 1: most important pick he is going to make, so getting 151 00:07:18,440 --> 00:07:21,520 Speaker 1: it right is important. I'll also remind you something. We'll 152 00:07:21,560 --> 00:07:24,040 Speaker 1: go back to eight years ago. The economic picks were 153 00:07:24,040 --> 00:07:27,200 Speaker 1: made the week after Thanksgiving. I was hired the week 154 00:07:27,240 --> 00:07:30,240 Speaker 1: after Thanksgiving. When Neutrient was put into his job the 155 00:07:30,280 --> 00:07:35,400 Speaker 1: week after Thanksgiving. So the transition team is a couple 156 00:07:35,520 --> 00:07:38,960 Speaker 1: weeks and probably a month ahead on most of the picks. 157 00:07:39,280 --> 00:07:43,040 Speaker 1: So we've all got this anxiety because this is a 158 00:07:43,400 --> 00:07:46,280 Speaker 1: second term president, so he knows how to get stuff 159 00:07:46,280 --> 00:07:50,080 Speaker 1: done quickly. But if you think of what happened eight 160 00:07:50,120 --> 00:07:52,960 Speaker 1: years ago. Those picks were made in the last week 161 00:07:52,960 --> 00:07:56,000 Speaker 1: of November, first week in December, and we were all 162 00:07:56,240 --> 00:07:59,720 Speaker 1: ready to go in our chairs in place by twelve 163 00:07:59,800 --> 00:08:02,520 Speaker 1: years in January twenty. So there's plenty of time to 164 00:08:02,520 --> 00:08:05,040 Speaker 1: get it right. And I think the president knows. The 165 00:08:05,080 --> 00:08:08,560 Speaker 1: President like knows, getting the right person is more important 166 00:08:08,640 --> 00:08:11,400 Speaker 1: right now than getting the pick done today or tomorrow. 167 00:08:11,440 --> 00:08:12,920 Speaker 4: Do you think it's a name that I have not 168 00:08:12,960 --> 00:08:13,560 Speaker 4: reported on. 169 00:08:14,080 --> 00:08:16,280 Speaker 1: I look, I'm not involved in the process. I think 170 00:08:16,320 --> 00:08:19,080 Speaker 1: the President will put any in every name that he 171 00:08:19,240 --> 00:08:22,080 Speaker 1: thinks can do the job well on the list, and 172 00:08:22,120 --> 00:08:24,600 Speaker 1: he will choose what he thinks is the best person. 173 00:08:24,360 --> 00:08:25,000 Speaker 3: To do the job. 174 00:08:25,200 --> 00:08:28,080 Speaker 5: Do you think it's feasible for President elect Donald Trump 175 00:08:28,280 --> 00:08:31,440 Speaker 5: to achieve his goals of the tariffs that he's put 176 00:08:31,480 --> 00:08:36,120 Speaker 5: out there while acquiescing or creating some calm in the 177 00:08:36,160 --> 00:08:38,400 Speaker 5: bond market. 178 00:08:38,760 --> 00:08:42,120 Speaker 1: We will see what actually happens in policy. You know, 179 00:08:42,440 --> 00:08:45,559 Speaker 1: I always remind people what you say to get elected 180 00:08:46,440 --> 00:08:49,840 Speaker 1: and what you do in actual policy are two different things. 181 00:08:50,000 --> 00:08:52,800 Speaker 1: You know, Americans like to hear what your ultimate idea 182 00:08:52,880 --> 00:08:55,600 Speaker 1: is to get done. But we've got a very rigorous 183 00:08:56,280 --> 00:08:59,000 Speaker 1: policy process in the United States. We've got a House, 184 00:08:59,040 --> 00:09:01,719 Speaker 1: we've got a Senate, We've got lots of constituencies, and 185 00:09:01,760 --> 00:09:05,680 Speaker 1: when it comes down to actually executing implementing policy, it 186 00:09:05,800 --> 00:09:08,920 Speaker 1: is not exactly what the president wants. In fact, every 187 00:09:08,920 --> 00:09:11,960 Speaker 1: piece of legislation is a compromise. There's no perfect piece 188 00:09:12,000 --> 00:09:15,160 Speaker 1: of legislation in America because at some point people have 189 00:09:15,200 --> 00:09:19,160 Speaker 1: to compromise. So we'll see what the president can get done. 190 00:09:20,640 --> 00:09:23,120 Speaker 1: I think we're all confident there'll be something on taxes. 191 00:09:23,480 --> 00:09:25,920 Speaker 1: We're one hundred percent confident there'll be something on immigration, 192 00:09:26,400 --> 00:09:29,400 Speaker 1: and there'll be something on tariffs. But again, each of 193 00:09:29,440 --> 00:09:32,079 Speaker 1: these will be a compromise. No one is going to 194 00:09:32,120 --> 00:09:32,960 Speaker 1: get one hundred percent. 195 00:09:32,840 --> 00:09:33,320 Speaker 3: Of what they want. 196 00:09:33,360 --> 00:09:35,079 Speaker 5: I guess the reason why people are so interested in 197 00:09:35,120 --> 00:09:37,880 Speaker 5: the Treasury pick is because people want to understand what 198 00:09:37,880 --> 00:09:40,800 Speaker 5: that compromise might look like, and the individual might give 199 00:09:40,880 --> 00:09:43,880 Speaker 5: some insight into that. Do we have a sense and 200 00:09:44,040 --> 00:09:45,920 Speaker 5: will this sort of be the ultimate test for you 201 00:09:46,160 --> 00:09:48,800 Speaker 5: how much Congress pushes back on some of the picks 202 00:09:49,120 --> 00:09:53,400 Speaker 5: that have already been announced that are controversial even among Republicans. 203 00:09:53,400 --> 00:09:55,320 Speaker 5: Will that be sort of a test of just whether 204 00:09:55,360 --> 00:09:57,000 Speaker 5: the checks and balances will work. At the same time, 205 00:09:57,000 --> 00:09:58,480 Speaker 5: when a lot of people are saying this time is 206 00:09:58,480 --> 00:10:02,000 Speaker 5: different and that this president elect actually has something of 207 00:10:02,040 --> 00:10:04,840 Speaker 5: a mandate that is very different than in twenty sixteen. 208 00:10:05,520 --> 00:10:08,680 Speaker 1: I think every Congress and every president, when they come 209 00:10:08,720 --> 00:10:11,840 Speaker 1: in and they pick, they put their nominations through, and 210 00:10:11,880 --> 00:10:14,760 Speaker 1: they go through the consent process. It's different. Every four years. 211 00:10:15,160 --> 00:10:18,000 Speaker 1: Every president goes through a different process. You have a 212 00:10:18,000 --> 00:10:21,360 Speaker 1: different makeup of a Senate. You have a different sort 213 00:10:21,360 --> 00:10:22,480 Speaker 1: of body. 214 00:10:22,880 --> 00:10:24,320 Speaker 3: And by the way, the body will. 215 00:10:24,200 --> 00:10:26,480 Speaker 1: Be different at the end of this year, and then 216 00:10:26,520 --> 00:10:29,840 Speaker 1: it will transition. I think it's January third is the 217 00:10:29,960 --> 00:10:32,960 Speaker 1: swearing of the new Senate. It will change January third 218 00:10:33,000 --> 00:10:35,199 Speaker 1: in the middle of the process. So some of these 219 00:10:35,240 --> 00:10:38,520 Speaker 1: nominees could actually go through an approval process with this 220 00:10:38,640 --> 00:10:39,680 Speaker 1: current sitting. 221 00:10:39,320 --> 00:10:42,199 Speaker 3: Senate, some may go through with a new Senate. 222 00:10:42,000 --> 00:10:43,600 Speaker 1: That probably the vast majority will go through with the 223 00:10:43,640 --> 00:10:46,319 Speaker 1: new Senate, because it takes time to get the paperwork through, 224 00:10:46,320 --> 00:10:48,679 Speaker 1: it takes time to get the vetting through. But every 225 00:10:48,760 --> 00:10:51,600 Speaker 1: one of these events is unique, and it's uniquely different 226 00:10:51,640 --> 00:10:55,680 Speaker 1: because they're different personalities involved. There's different people went through 227 00:10:55,679 --> 00:11:01,679 Speaker 1: different elections. Certain states changed, they became redder, So the 228 00:11:01,720 --> 00:11:04,920 Speaker 1: center may may or may not be more comfortable taking 229 00:11:05,200 --> 00:11:07,040 Speaker 1: a certain point of view, so you literally have to 230 00:11:07,080 --> 00:11:07,800 Speaker 1: watch each. 231 00:11:07,600 --> 00:11:09,640 Speaker 3: Of these as an individual, unique event. 232 00:11:09,840 --> 00:11:12,440 Speaker 5: So you did mention the financing of the deficit, and 233 00:11:12,480 --> 00:11:15,120 Speaker 5: that's very interesting to me, especially at a time where 234 00:11:15,160 --> 00:11:17,079 Speaker 5: you talked about the short term nature of a lot 235 00:11:17,120 --> 00:11:20,280 Speaker 5: of the financing. Do you expect that to change, for 236 00:11:20,360 --> 00:11:22,680 Speaker 5: there to be a lot more longer dated issuance regardless 237 00:11:22,679 --> 00:11:25,240 Speaker 5: of where yields are at with the next Treasure Secretary, 238 00:11:25,280 --> 00:11:26,280 Speaker 5: whoever that might be. 239 00:11:26,360 --> 00:11:29,920 Speaker 1: But I think it's really prudent risk management to start 240 00:11:29,920 --> 00:11:33,280 Speaker 1: elongating the debt of the United States and not have 241 00:11:33,360 --> 00:11:37,200 Speaker 1: to live off very large short term auctions and not 242 00:11:37,280 --> 00:11:39,920 Speaker 1: have to live off a short term demand for treasuries. 243 00:11:40,360 --> 00:11:43,480 Speaker 1: Like we're always worried about financing the deficit and what 244 00:11:43,640 --> 00:11:46,679 Speaker 1: could happen. Like as a person that grew up as 245 00:11:46,720 --> 00:11:49,440 Speaker 1: a risk manager running a large balance sheet for a 246 00:11:49,520 --> 00:11:52,280 Speaker 1: large percentage of my life, you would want to de 247 00:11:52,440 --> 00:11:54,320 Speaker 1: risk that. How do you de risk that from a 248 00:11:54,320 --> 00:11:57,920 Speaker 1: treasury standpoint? You roll out maturities as long as you can, 249 00:11:58,360 --> 00:12:00,240 Speaker 1: so you cut down the amount that you have to 250 00:12:00,320 --> 00:12:03,199 Speaker 1: fund at each of these auctions. So I would think 251 00:12:03,280 --> 00:12:06,000 Speaker 1: that this administration would want to get that done and 252 00:12:06,080 --> 00:12:07,079 Speaker 1: roll out maturities. 253 00:12:07,320 --> 00:12:09,320 Speaker 2: You've been in the room with President elect Donald Trump 254 00:12:09,360 --> 00:12:13,120 Speaker 2: maney a time, including to interview. What's it like to interview. 255 00:12:12,720 --> 00:12:13,560 Speaker 3: With Donald Trump? 256 00:12:13,920 --> 00:12:17,280 Speaker 1: Well, look, look, it's always a stressful experience. You know, 257 00:12:17,320 --> 00:12:20,520 Speaker 1: you're sitting there with the President elect and a large 258 00:12:20,520 --> 00:12:21,280 Speaker 1: amount of his team. 259 00:12:21,800 --> 00:12:23,760 Speaker 3: Like usually when you're in the room. 260 00:12:23,600 --> 00:12:26,960 Speaker 1: With the President elect doing these interviews, there's multiple other 261 00:12:27,240 --> 00:12:28,439 Speaker 1: people in the room. 262 00:12:28,760 --> 00:12:28,920 Speaker 3: You know. 263 00:12:28,960 --> 00:12:31,560 Speaker 1: I always reminded myself, I'm speaking of the President elect. 264 00:12:31,640 --> 00:12:33,320 Speaker 1: I'm not speaking to other people in the room, so 265 00:12:33,360 --> 00:12:35,320 Speaker 1: you've got to sort of block out the other people 266 00:12:35,360 --> 00:12:40,120 Speaker 1: in the room. But he's rigorous in his questions, and 267 00:12:40,480 --> 00:12:45,040 Speaker 1: he tends to go multiple different directions, so you know, 268 00:12:45,080 --> 00:12:47,640 Speaker 1: he'll go from from topic A to topic B, to topic C, 269 00:12:47,880 --> 00:12:48,640 Speaker 1: back to topic A. 270 00:12:49,120 --> 00:12:49,760 Speaker 3: It's interesting. 271 00:12:50,320 --> 00:12:52,760 Speaker 1: You've got to be on your game when you're in there. 272 00:12:52,800 --> 00:12:54,880 Speaker 1: You've got to be on your game. And he's thinking, 273 00:12:55,600 --> 00:12:58,160 Speaker 1: you know, in multiple directions, and it's very interesting and 274 00:12:58,640 --> 00:13:01,000 Speaker 1: he's always got a interesting. 275 00:13:00,559 --> 00:13:01,600 Speaker 3: Spin on things. You know. 276 00:13:02,360 --> 00:13:04,480 Speaker 1: I think the president like Trump, is one of the 277 00:13:04,480 --> 00:13:08,680 Speaker 1: best marketers and branders there is I've ever seen. So 278 00:13:08,760 --> 00:13:11,440 Speaker 1: when I'm always talking about an answer and how I 279 00:13:11,440 --> 00:13:13,160 Speaker 1: would think of something from a policy standpoint. 280 00:13:13,160 --> 00:13:14,200 Speaker 3: He's talking about. 281 00:13:13,960 --> 00:13:16,120 Speaker 1: It, how is he going to sell this to America 282 00:13:16,120 --> 00:13:16,760 Speaker 1: and how's it going. 283 00:13:16,679 --> 00:13:17,360 Speaker 3: To affect people? 284 00:13:17,559 --> 00:13:20,520 Speaker 1: And how's it good for the country, And he's thinking 285 00:13:20,640 --> 00:13:23,480 Speaker 1: in that term. So we're always having an interesting conversation 286 00:13:23,480 --> 00:13:26,000 Speaker 1: where I'm thinking about it from an economic policy, markets 287 00:13:26,040 --> 00:13:28,240 Speaker 1: policy standpoint, and he's thinking about it from how do 288 00:13:28,320 --> 00:13:30,200 Speaker 1: I sell this and how do I get momentum for this. 289 00:13:30,760 --> 00:13:33,440 Speaker 2: Some space in the media are describing this process as 290 00:13:33,600 --> 00:13:35,719 Speaker 2: looking for a yes man, someone who would just say 291 00:13:35,800 --> 00:13:39,120 Speaker 2: yes to some of his policy proposals, including the trade. 292 00:13:39,200 --> 00:13:41,600 Speaker 2: You had disagreements with him on trade. You were very 293 00:13:41,679 --> 00:13:43,560 Speaker 2: open about that. We're all aware of it at the 294 00:13:43,600 --> 00:13:45,640 Speaker 2: time in the first term. How open is he to 295 00:13:45,679 --> 00:13:46,600 Speaker 2: those disagreements. 296 00:13:47,040 --> 00:13:48,679 Speaker 3: Look, I believe. 297 00:13:48,480 --> 00:13:51,079 Speaker 1: It's the job and an advisor in the White House 298 00:13:51,920 --> 00:13:55,600 Speaker 1: to tell the president the truth and tell them things 299 00:13:55,600 --> 00:13:55,920 Speaker 1: that he. 300 00:13:55,920 --> 00:13:56,640 Speaker 3: Doesn't want to hear. 301 00:13:56,800 --> 00:13:58,120 Speaker 1: Now you get to tell him plain of things he 302 00:13:58,160 --> 00:14:00,160 Speaker 1: does want to hear, you know, Like it was, it 303 00:14:00,200 --> 00:14:02,439 Speaker 1: was always fun to go in there with the economic data. 304 00:14:02,600 --> 00:14:04,320 Speaker 1: You know, you get the economic data of the night 305 00:14:04,360 --> 00:14:06,800 Speaker 1: before it's released, and there are many nice where I 306 00:14:06,800 --> 00:14:08,080 Speaker 1: got to go in there and talk to him about 307 00:14:08,080 --> 00:14:10,040 Speaker 1: the economic data, what it was, how good it was, 308 00:14:10,080 --> 00:14:12,839 Speaker 1: how the markets were going to react. Those are great conversations. 309 00:14:13,160 --> 00:14:16,040 Speaker 1: But along with those great conversations, you get to go 310 00:14:16,120 --> 00:14:18,600 Speaker 1: in there and have conversations that say, hey, look, if 311 00:14:18,640 --> 00:14:21,360 Speaker 1: we do X, I think I don't know, I think 312 00:14:21,440 --> 00:14:24,680 Speaker 1: the reaction is going to be this. Are we prepared 313 00:14:24,760 --> 00:14:27,400 Speaker 1: for this intended or unintended consequence? 314 00:14:27,560 --> 00:14:28,680 Speaker 3: And I think those are the. 315 00:14:28,760 --> 00:14:30,960 Speaker 1: Jobs of the people that sit in the White House's 316 00:14:31,040 --> 00:14:34,560 Speaker 1: advisors to make sure when the president does something they 317 00:14:34,680 --> 00:14:39,160 Speaker 1: understand the intended and unintended consequences. They should never a 318 00:14:39,160 --> 00:14:41,280 Speaker 1: president should never be blindsided by a. 319 00:14:41,240 --> 00:14:44,680 Speaker 4: Decision when it comes to the check and the pushback 320 00:14:44,920 --> 00:14:47,520 Speaker 4: on Trump two point zero, John talked about this his 321 00:14:47,600 --> 00:14:49,880 Speaker 4: first four years. All the time the Trump put it 322 00:14:49,880 --> 00:14:52,000 Speaker 4: was a stock market that he cared about. He would 323 00:14:52,080 --> 00:14:54,000 Speaker 4: reverse core some potentially something he want to do in 324 00:14:54,080 --> 00:14:56,360 Speaker 4: executive order, just because he saw the fallout of the 325 00:14:56,360 --> 00:14:59,040 Speaker 4: financial markets. What's going to be that check this time? 326 00:14:59,640 --> 00:15:01,800 Speaker 1: I think think Trump is going to care as much 327 00:15:01,840 --> 00:15:04,320 Speaker 1: about the stock market these next four years as he 328 00:15:04,320 --> 00:15:07,040 Speaker 1: did the first four years. That is a benchmark that 329 00:15:07,120 --> 00:15:10,720 Speaker 1: he will measure himself. It's a very public benchmark. It's 330 00:15:10,760 --> 00:15:13,840 Speaker 1: one that he uses. He talks about it in every speech. 331 00:15:13,880 --> 00:15:16,480 Speaker 1: He's already started talking about it in the transition. How 332 00:15:16,480 --> 00:15:20,120 Speaker 1: well the market's done since election night. I don't think 333 00:15:20,200 --> 00:15:22,240 Speaker 1: that will change over the next four years. 334 00:15:22,360 --> 00:15:24,920 Speaker 2: Do you think the bond market takes on additional importance? 335 00:15:25,040 --> 00:15:27,480 Speaker 2: We started this whole conversation about the difference between now 336 00:15:27,560 --> 00:15:30,480 Speaker 2: versus say, twenty sixteen to seventeen, certainly in fixed income 337 00:15:30,480 --> 00:15:31,480 Speaker 2: in a very different position. 338 00:15:32,080 --> 00:15:35,400 Speaker 1: I think the bond market deserves a long discussion here. 339 00:15:35,440 --> 00:15:37,600 Speaker 1: I think there's a lot going on. When I talked it, 340 00:15:37,920 --> 00:15:40,200 Speaker 1: when I talked a little bit ago. You know where 341 00:15:40,240 --> 00:15:42,320 Speaker 1: FED funds were at seventy six spaces points where they're 342 00:15:42,320 --> 00:15:45,600 Speaker 1: four and a half percent. Now, that's only half the story. 343 00:15:45,720 --> 00:15:48,320 Speaker 1: You know, we had a flat yield curve and then 344 00:15:48,360 --> 00:15:50,520 Speaker 1: we've gone through an inverted yield curve over the last 345 00:15:50,520 --> 00:15:53,400 Speaker 1: four years because everyone's worried about a recession. And now 346 00:15:53,400 --> 00:15:55,440 Speaker 1: we're going back to something that we forgot what it 347 00:15:55,480 --> 00:15:57,560 Speaker 1: is called a normal yield curve. 348 00:15:57,760 --> 00:15:58,840 Speaker 2: How stafe is a normal year? 349 00:15:59,000 --> 00:16:02,480 Speaker 1: Yeah, at least you've been around long enough to ask 350 00:16:02,520 --> 00:16:05,080 Speaker 1: a question, how steep is a normal yield curve, because 351 00:16:05,080 --> 00:16:07,280 Speaker 1: a lot of people don't even remember a normal yield 352 00:16:07,280 --> 00:16:08,080 Speaker 1: curve is steep. 353 00:16:08,520 --> 00:16:09,680 Speaker 3: You know, we've seen since. 354 00:16:09,520 --> 00:16:11,880 Speaker 1: The Fed started cutting interest rates, ten years have gone 355 00:16:11,960 --> 00:16:13,760 Speaker 1: up sixty to seventy basis points. 356 00:16:14,200 --> 00:16:15,520 Speaker 3: I'm not surprised by that. 357 00:16:15,600 --> 00:16:19,160 Speaker 1: I think we're renormalizing a yield curve. If we've taken 358 00:16:19,240 --> 00:16:22,000 Speaker 1: recession fears off the table, and the ten years is 359 00:16:22,040 --> 00:16:24,880 Speaker 1: going to go to a normalized rate of let's call 360 00:16:24,880 --> 00:16:27,040 Speaker 1: it three, three and a half percent, you know, there 361 00:16:27,080 --> 00:16:28,960 Speaker 1: has to be at least one hundred, one hundred and 362 00:16:29,000 --> 00:16:31,960 Speaker 1: twenty five basis points of steepness in FED funds ten years. 363 00:16:32,120 --> 00:16:33,640 Speaker 1: I think it's at least one hundred and twenty five. 364 00:16:33,680 --> 00:16:36,560 Speaker 1: If we're going to three, that's at least four and 365 00:16:36,560 --> 00:16:36,920 Speaker 1: a quarter. 366 00:16:36,920 --> 00:16:39,200 Speaker 3: If we're going to three and a half, you. 367 00:16:39,120 --> 00:16:41,000 Speaker 1: Know, we're talking four to seventy five, and we're going 368 00:16:41,080 --> 00:16:45,040 Speaker 1: to continue steepness out the curve. And that's before we 369 00:16:45,160 --> 00:16:48,920 Speaker 1: get to what I consider a pretty large refinancing wall 370 00:16:49,040 --> 00:16:51,720 Speaker 1: coming up in twenty five and beyond. You know, I 371 00:16:51,720 --> 00:16:54,320 Speaker 1: think many people forgot that. You know, twenty twenty, the 372 00:16:54,360 --> 00:16:57,000 Speaker 1: COVID year, we did a lot of refinancing in the market, 373 00:16:57,040 --> 00:16:59,920 Speaker 1: but they were all most of them were five year refinance, 374 00:17:00,360 --> 00:17:03,360 Speaker 1: so a lot of that COVID paper that was done. 375 00:17:03,160 --> 00:17:05,320 Speaker 3: At pretty favorable rates because. 376 00:17:05,080 --> 00:17:08,080 Speaker 1: The Fed again went into very accommodated policy. A lot 377 00:17:08,080 --> 00:17:11,080 Speaker 1: of that COVID paper comes as due next year, so 378 00:17:11,119 --> 00:17:14,200 Speaker 1: we've got a lot of refinancing coming due in twenty 379 00:17:14,240 --> 00:17:18,400 Speaker 1: twenty five. So I think the yieldker smartly and normally 380 00:17:18,480 --> 00:17:21,680 Speaker 1: starting to renticipate what's going to happen in the bond market. 381 00:17:21,800 --> 00:17:23,600 Speaker 2: We could sell cool morning, Let's do it for now. 382 00:17:23,640 --> 00:17:25,600 Speaker 2: Next time. It's going to see you, sir, great singing. 383 00:17:25,600 --> 00:17:28,639 Speaker 2: I appreciate it. Gary Cone, the IBM Vice chairman and 384 00:17:28,720 --> 00:17:32,159 Speaker 2: former Director of the National Economic Council under Donald Trump.