WEBVTT - Gary Cohn, former Chief Economic Advisor to Donald Trump

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio News.

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<v Speaker 2>We begin this out with Trump's treasury pick still very

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<v Speaker 2>much up in the air, following meetings with Apollos, Mark

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<v Speaker 2>Rowan and former FED Governor Kevin Walsh. Investors still waiting

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<v Speaker 2>for President elect Donald Trump to make a final decision

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<v Speaker 2>on the individual who will go into twenty twenty five

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<v Speaker 2>facing down a huge to do list. Joining us around

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<v Speaker 2>a table, the IBM Vice chair, the former National Economic

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<v Speaker 2>Council Director Gary Cone. Gary, good morning, Good morning, Thanks

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<v Speaker 2>se Yah, thanks for being here. I think we need

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<v Speaker 2>to take a big step back. In fact, go several

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<v Speaker 2>years back to twenty sixteen, twenty seventeen. Just frame for

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<v Speaker 2>us what you had to face down in sixteen going

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<v Speaker 2>into seventeen and how long the to do list was

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<v Speaker 2>back then.

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<v Speaker 1>So I think we should take even a bigger step

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<v Speaker 1>back and remember what the environment was. If you go

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<v Speaker 1>back to the economic environment as we were going through

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<v Speaker 1>this exact period, we had a environment where we had

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<v Speaker 1>just started just barely started to come out of the

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<v Speaker 1>fed's zero interest rate policy, quantitative easing, and a decade

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<v Speaker 1>of Fed articles would ever be inflation again. We were

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<v Speaker 1>just starting to turn that corner. We had come through

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<v Speaker 1>an Obama four years or eight years of basically saying,

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<v Speaker 1>you know, there's been a very tough business environment, highly regulated.

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<v Speaker 1>You know, how do we get business re engaged in

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<v Speaker 1>Trump won this victory. It looks very similar where we

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<v Speaker 1>are today, except you know, FED funds were seventy six

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<v Speaker 1>basis points back then. They're four and a half percent today.

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<v Speaker 1>National debt was about twenty trillion. We're thirty five trillion

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<v Speaker 1>dollars right now. So we're in a pretty fundamentally different place.

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<v Speaker 1>And then as you look where we are today, not

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<v Speaker 1>only have we a pretty decisively different position in rates

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<v Speaker 1>and debt, I think the President elect is walking into

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<v Speaker 1>an environment with that high interest rate vironment where housing

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<v Speaker 1>prices have gotten really out of touch for most Americans

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<v Speaker 1>and there's a real push to try and make housing

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<v Speaker 1>more affordable. You look at the way Treasury has decided

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<v Speaker 1>to fund.

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<v Speaker 3>That additional debt.

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<v Speaker 1>They've been very short dated on the curve, which I

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<v Speaker 1>think provides an enormous amount of risk in refunding. And

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<v Speaker 1>we all worry about refunding of Treasury. So I think

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<v Speaker 1>we've got to have a a real refunding situation where

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<v Speaker 1>we roll out maturities. I remember talking to the president

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<v Speaker 1>like eight years ago by doing a fifty year and

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<v Speaker 1>one hundred year. I still think we should have done

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<v Speaker 1>a fift year one hundred year when rates were low.

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<v Speaker 1>And then you think about the situation with state and

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<v Speaker 1>local government. State and local governments were not in great

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<v Speaker 1>position eight years ago. Now, think of what's going on

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<v Speaker 1>with the migrant population. How much money some of these

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<v Speaker 1>cities and states have spent on immigrants.

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<v Speaker 3>Now, they didn't say anything.

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<v Speaker 1>Prior to the election, but I will be shocked if

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<v Speaker 1>there's not a huge outcry from some of the major

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<v Speaker 1>cities in this country about the of money they've spent

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<v Speaker 1>and how much help they're going to need from Washington

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<v Speaker 1>to make their budgets come together. So that's you know,

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<v Speaker 1>that's where you start. That's literally day one. That's January

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<v Speaker 1>twenty of twelve noon you walk into that.

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<v Speaker 3>Yep.

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<v Speaker 1>So there's a fundamental difference from where we are. But

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<v Speaker 1>there's a similarity to coming off of the Obama administration

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<v Speaker 1>versus the Biden administration. The excitement of business, the opportunity

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<v Speaker 1>going forward, those are the excitements.

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<v Speaker 3>You know.

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<v Speaker 1>Then you go back eight years ago and say Okay,

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<v Speaker 1>what did.

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<v Speaker 3>We walk into as well?

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<v Speaker 1>Well, Look, the number one policy that we really wanted

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<v Speaker 1>to get done initially was tax reform. Tax reforms are

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<v Speaker 1>number one objective. Unfortunately, you know, the House had sort

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<v Speaker 1>of gotten ahead of the White House during the last

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<v Speaker 1>few weeks of the prior administration. The House had gone

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<v Speaker 1>ahead with repeal of Obamacare, So we walked into repeal

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<v Speaker 1>and replace without really a replace.

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<v Speaker 2>Which I have to admit I totally forgot about. I

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<v Speaker 2>totally forgot about the McCain. Yeah, totally forgotten that you'd

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<v Speaker 2>walked into that back in seventeen. How did that complicate

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<v Speaker 2>things to get taxes done?

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<v Speaker 3>Well, a highly complicated thing. You know.

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<v Speaker 1>We all thought on the economic team that we were

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<v Speaker 1>walking in, we were going to, you know, January twentieth,

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<v Speaker 1>we were going to start on tax policy, tax policy,

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<v Speaker 1>tax policy. I think all of us got thrown into healthcare, healthcare, healthcare,

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<v Speaker 1>trying to figure out healthcare. None of us were really

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<v Speaker 1>healthcare experts, none of us had been doing work on

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<v Speaker 1>healthcare for the prior three months. Trying to get ready

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<v Speaker 1>to walk in, we'd all been working on tax policy

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<v Speaker 1>and trying to figure that out. So everyone got derailed for.

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<v Speaker 3>The better part of I would say.

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<v Speaker 1>Two months or three months, knowing that we wanted to

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<v Speaker 1>go through taxes in year one because we wanted to

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<v Speaker 1>use that budget that existed and we wanted to use

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<v Speaker 1>budget reconciliation to get taxes done that year. So every

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<v Speaker 1>day we were spending on healthcare, we were losing a

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<v Speaker 1>day of tax policy, which was you know, it was

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<v Speaker 1>anxiety creating, let's put it that way. So we were

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<v Speaker 1>trying to get rid of the healthcare issuess quickly as

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<v Speaker 1>we could.

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<v Speaker 4>It's going to be the priority when they walk in

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<v Speaker 4>January this time around. Is it going to be tariffs

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<v Speaker 4>or is it going to be cutting taxes?

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<v Speaker 1>So I think there's two priorities day one on the

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<v Speaker 1>economic side, and you'll argue there's both economics. I think

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<v Speaker 1>it's going to be taxes because again you've got a deadline.

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<v Speaker 3>Remember the personal side.

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<v Speaker 1>Of the tax policy ends at twelve midnight December thirty first,

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<v Speaker 1>twenty twenty five. So there is a forcing function, and

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<v Speaker 1>Washington operates really.

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<v Speaker 3>Well with a forcing function. They need deadline, they need deadlines,

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<v Speaker 3>they need that.

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<v Speaker 1>Journalists, well I don't know about journalists, but I know

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<v Speaker 1>about Washington.

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<v Speaker 3>They need a deadline.

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<v Speaker 1>There is a hard and fast deadline. Now, look, they

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<v Speaker 1>could extend it, but that would be another Act of

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<v Speaker 1>Congress to extend it. So they have a firm deadline

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<v Speaker 1>in play. So Number one thing on the I would

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<v Speaker 1>say the economic policy front is they're going to deal

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<v Speaker 1>with taxes. Number two is I think simultaneously we could

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<v Speaker 1>argue this is this is economics as well.

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<v Speaker 3>They need to deal with the immigration policy.

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<v Speaker 1>I think we will see Trump come back to many

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<v Speaker 1>of the executive orders and many of the policies that

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<v Speaker 1>he had going out on January twentieth. He will reinstate

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<v Speaker 1>all of those policies to shut the border and at

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<v Speaker 1>least stop the flow of illegal immigrants in the United States.

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<v Speaker 1>So I think they will work on both of those simultaneously.

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<v Speaker 3>I do think there will be some.

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<v Speaker 1>Tariff policy going in there as well, and I think

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<v Speaker 1>the tariff policy that will be relatively easy for them

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<v Speaker 1>to go on is to tear iff things that we

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<v Speaker 1>are currently manufacturing in the United States. Where you would

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<v Speaker 1>put tariffs in place to protect jobs and protect the

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<v Speaker 1>products that we are currently making for the United States.

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<v Speaker 4>Okay, so if personal's policy, we have two out of

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<v Speaker 4>the three, we have a borders are he's announced, and

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<v Speaker 4>we also have Howard Latnett going over as to commerce.

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<v Speaker 4>What is going on with the treasury pick. We have

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<v Speaker 4>three men who I've been told the President thinks of

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<v Speaker 4>a high caliber Scott Besson, Mark Rowan, Kevin Walsh in

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<v Speaker 4>Palm Beach yesterday, having these conversations with the president sident,

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<v Speaker 4>you know how he operates. Why is this pick taking

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<v Speaker 4>so long? If he ran an economic agenda campaign.

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<v Speaker 1>So I think you just answered a little bit. He

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<v Speaker 1>ran an economic agenda campaign. This is in his opinion,

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<v Speaker 1>this is one of the most important, if not the

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<v Speaker 1>most important pick he is going to make, so getting

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<v Speaker 1>it right is important. I'll also remind you something. We'll

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<v Speaker 1>go back to eight years ago. The economic picks were

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<v Speaker 1>made the week after Thanksgiving. I was hired the week

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<v Speaker 1>after Thanksgiving. When Neutrient was put into his job the

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<v Speaker 1>week after Thanksgiving. So the transition team is a couple

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<v Speaker 1>weeks and probably a month ahead on most of the picks.

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<v Speaker 1>So we've all got this anxiety because this is a

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<v Speaker 1>second term president, so he knows how to get stuff

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<v Speaker 1>done quickly. But if you think of what happened eight

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<v Speaker 1>years ago. Those picks were made in the last week

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<v Speaker 1>of November, first week in December, and we were all

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<v Speaker 1>ready to go in our chairs in place by twelve

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<v Speaker 1>years in January twenty. So there's plenty of time to

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<v Speaker 1>get it right. And I think the president knows. The

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<v Speaker 1>President like knows, getting the right person is more important

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<v Speaker 1>right now than getting the pick done today or tomorrow.

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<v Speaker 4>Do you think it's a name that I have not

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<v Speaker 4>reported on.

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<v Speaker 1>I look, I'm not involved in the process. I think

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<v Speaker 1>the President will put any in every name that he

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<v Speaker 1>thinks can do the job well on the list, and

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<v Speaker 1>he will choose what he thinks is the best person.

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<v Speaker 3>To do the job.

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<v Speaker 5>Do you think it's feasible for President elect Donald Trump

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<v Speaker 5>to achieve his goals of the tariffs that he's put

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<v Speaker 5>out there while acquiescing or creating some calm in the

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<v Speaker 5>bond market.

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<v Speaker 1>We will see what actually happens in policy. You know,

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<v Speaker 1>I always remind people what you say to get elected

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<v Speaker 1>and what you do in actual policy are two different things.

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<v Speaker 1>You know, Americans like to hear what your ultimate idea

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<v Speaker 1>is to get done. But we've got a very rigorous

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<v Speaker 1>policy process in the United States. We've got a House,

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<v Speaker 1>we've got a Senate, We've got lots of constituencies, and

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<v Speaker 1>when it comes down to actually executing implementing policy, it

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<v Speaker 1>is not exactly what the president wants. In fact, every

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<v Speaker 1>piece of legislation is a compromise. There's no perfect piece

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<v Speaker 1>of legislation in America because at some point people have

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<v Speaker 1>to compromise. So we'll see what the president can get done.

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<v Speaker 1>I think we're all confident there'll be something on taxes.

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<v Speaker 1>We're one hundred percent confident there'll be something on immigration,

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<v Speaker 1>and there'll be something on tariffs. But again, each of

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<v Speaker 1>these will be a compromise. No one is going to

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<v Speaker 1>get one hundred percent.

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<v Speaker 3>Of what they want.

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<v Speaker 5>I guess the reason why people are so interested in

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<v Speaker 5>the Treasury pick is because people want to understand what

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<v Speaker 5>that compromise might look like, and the individual might give

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<v Speaker 5>some insight into that. Do we have a sense and

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<v Speaker 5>will this sort of be the ultimate test for you

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<v Speaker 5>how much Congress pushes back on some of the picks

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<v Speaker 5>that have already been announced that are controversial even among Republicans.

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<v Speaker 5>Will that be sort of a test of just whether

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<v Speaker 5>the checks and balances will work. At the same time,

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<v Speaker 5>when a lot of people are saying this time is

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<v Speaker 5>different and that this president elect actually has something of

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<v Speaker 5>a mandate that is very different than in twenty sixteen.

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<v Speaker 1>I think every Congress and every president, when they come

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<v Speaker 1>in and they pick, they put their nominations through, and

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<v Speaker 1>they go through the consent process. It's different. Every four years.

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<v Speaker 1>Every president goes through a different process. You have a

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<v Speaker 1>different makeup of a Senate. You have a different sort

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<v Speaker 1>of body.

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<v Speaker 3>And by the way, the body will.

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<v Speaker 1>Be different at the end of this year, and then

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<v Speaker 1>it will transition. I think it's January third is the

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<v Speaker 1>swearing of the new Senate. It will change January third

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<v Speaker 1>in the middle of the process. So some of these

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<v Speaker 1>nominees could actually go through an approval process with this

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<v Speaker 1>current sitting.

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<v Speaker 3>Senate, some may go through with a new Senate.

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<v Speaker 1>That probably the vast majority will go through with the

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<v Speaker 1>new Senate, because it takes time to get the paperwork through,

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<v Speaker 1>it takes time to get the vetting through. But every

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<v Speaker 1>one of these events is unique, and it's uniquely different

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<v Speaker 1>because they're different personalities involved. There's different people went through

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<v Speaker 1>different elections. Certain states changed, they became redder, So the

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<v Speaker 1>center may may or may not be more comfortable taking

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<v Speaker 1>a certain point of view, so you literally have to

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<v Speaker 1>watch each.

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<v Speaker 3>Of these as an individual, unique event.

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<v Speaker 5>So you did mention the financing of the deficit, and

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<v Speaker 5>that's very interesting to me, especially at a time where

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<v Speaker 5>you talked about the short term nature of a lot

0:11:17.120 --> 0:11:20.280
<v Speaker 5>of the financing. Do you expect that to change, for

0:11:20.360 --> 0:11:22.680
<v Speaker 5>there to be a lot more longer dated issuance regardless

0:11:22.679 --> 0:11:25.240
<v Speaker 5>of where yields are at with the next Treasure Secretary,

0:11:25.280 --> 0:11:26.280
<v Speaker 5>whoever that might be.

0:11:26.360 --> 0:11:29.920
<v Speaker 1>But I think it's really prudent risk management to start

0:11:29.920 --> 0:11:33.280
<v Speaker 1>elongating the debt of the United States and not have

0:11:33.360 --> 0:11:37.200
<v Speaker 1>to live off very large short term auctions and not

0:11:37.280 --> 0:11:39.920
<v Speaker 1>have to live off a short term demand for treasuries.

0:11:40.360 --> 0:11:43.480
<v Speaker 1>Like we're always worried about financing the deficit and what

0:11:43.640 --> 0:11:46.679
<v Speaker 1>could happen. Like as a person that grew up as

0:11:46.720 --> 0:11:49.440
<v Speaker 1>a risk manager running a large balance sheet for a

0:11:49.520 --> 0:11:52.280
<v Speaker 1>large percentage of my life, you would want to de

0:11:52.440 --> 0:11:54.320
<v Speaker 1>risk that. How do you de risk that from a

0:11:54.320 --> 0:11:57.920
<v Speaker 1>treasury standpoint? You roll out maturities as long as you can,

0:11:58.360 --> 0:12:00.240
<v Speaker 1>so you cut down the amount that you have to

0:12:00.320 --> 0:12:03.199
<v Speaker 1>fund at each of these auctions. So I would think

0:12:03.280 --> 0:12:06.000
<v Speaker 1>that this administration would want to get that done and

0:12:06.080 --> 0:12:07.079
<v Speaker 1>roll out maturities.

0:12:07.320 --> 0:12:09.320
<v Speaker 2>You've been in the room with President elect Donald Trump

0:12:09.360 --> 0:12:13.120
<v Speaker 2>maney a time, including to interview. What's it like to interview.

0:12:12.720 --> 0:12:13.560
<v Speaker 3>With Donald Trump?

0:12:13.920 --> 0:12:17.280
<v Speaker 1>Well, look, look, it's always a stressful experience. You know,

0:12:17.320 --> 0:12:20.520
<v Speaker 1>you're sitting there with the President elect and a large

0:12:20.520 --> 0:12:21.280
<v Speaker 1>amount of his team.

0:12:21.800 --> 0:12:23.760
<v Speaker 3>Like usually when you're in the room.

0:12:23.600 --> 0:12:26.960
<v Speaker 1>With the President elect doing these interviews, there's multiple other

0:12:27.240 --> 0:12:28.439
<v Speaker 1>people in the room.

0:12:28.760 --> 0:12:28.920
<v Speaker 3>You know.

0:12:28.960 --> 0:12:31.560
<v Speaker 1>I always reminded myself, I'm speaking of the President elect.

0:12:31.640 --> 0:12:33.320
<v Speaker 1>I'm not speaking to other people in the room, so

0:12:33.360 --> 0:12:35.320
<v Speaker 1>you've got to sort of block out the other people

0:12:35.360 --> 0:12:40.120
<v Speaker 1>in the room. But he's rigorous in his questions, and

0:12:40.480 --> 0:12:45.040
<v Speaker 1>he tends to go multiple different directions, so you know,

0:12:45.080 --> 0:12:47.640
<v Speaker 1>he'll go from from topic A to topic B, to topic C,

0:12:47.880 --> 0:12:48.640
<v Speaker 1>back to topic A.

0:12:49.120 --> 0:12:49.760
<v Speaker 3>It's interesting.

0:12:50.320 --> 0:12:52.760
<v Speaker 1>You've got to be on your game when you're in there.

0:12:52.800 --> 0:12:54.880
<v Speaker 1>You've got to be on your game. And he's thinking,

0:12:55.600 --> 0:12:58.160
<v Speaker 1>you know, in multiple directions, and it's very interesting and

0:12:58.640 --> 0:13:01.000
<v Speaker 1>he's always got a interesting.

0:13:00.559 --> 0:13:01.600
<v Speaker 3>Spin on things. You know.

0:13:02.360 --> 0:13:04.480
<v Speaker 1>I think the president like Trump, is one of the

0:13:04.480 --> 0:13:08.680
<v Speaker 1>best marketers and branders there is I've ever seen. So

0:13:08.760 --> 0:13:11.440
<v Speaker 1>when I'm always talking about an answer and how I

0:13:11.440 --> 0:13:13.160
<v Speaker 1>would think of something from a policy standpoint.

0:13:13.160 --> 0:13:14.200
<v Speaker 3>He's talking about.

0:13:13.960 --> 0:13:16.120
<v Speaker 1>It, how is he going to sell this to America

0:13:16.120 --> 0:13:16.760
<v Speaker 1>and how's it going.

0:13:16.679 --> 0:13:17.360
<v Speaker 3>To affect people?

0:13:17.559 --> 0:13:20.520
<v Speaker 1>And how's it good for the country, And he's thinking

0:13:20.640 --> 0:13:23.480
<v Speaker 1>in that term. So we're always having an interesting conversation

0:13:23.480 --> 0:13:26.000
<v Speaker 1>where I'm thinking about it from an economic policy, markets

0:13:26.040 --> 0:13:28.240
<v Speaker 1>policy standpoint, and he's thinking about it from how do

0:13:28.320 --> 0:13:30.200
<v Speaker 1>I sell this and how do I get momentum for this.

0:13:30.760 --> 0:13:33.440
<v Speaker 2>Some space in the media are describing this process as

0:13:33.600 --> 0:13:35.719
<v Speaker 2>looking for a yes man, someone who would just say

0:13:35.800 --> 0:13:39.120
<v Speaker 2>yes to some of his policy proposals, including the trade.

0:13:39.200 --> 0:13:41.600
<v Speaker 2>You had disagreements with him on trade. You were very

0:13:41.679 --> 0:13:43.560
<v Speaker 2>open about that. We're all aware of it at the

0:13:43.600 --> 0:13:45.640
<v Speaker 2>time in the first term. How open is he to

0:13:45.679 --> 0:13:46.600
<v Speaker 2>those disagreements.

0:13:47.040 --> 0:13:48.679
<v Speaker 3>Look, I believe.

0:13:48.480 --> 0:13:51.079
<v Speaker 1>It's the job and an advisor in the White House

0:13:51.920 --> 0:13:55.600
<v Speaker 1>to tell the president the truth and tell them things

0:13:55.600 --> 0:13:55.920
<v Speaker 1>that he.

0:13:55.920 --> 0:13:56.640
<v Speaker 3>Doesn't want to hear.

0:13:56.800 --> 0:13:58.120
<v Speaker 1>Now you get to tell him plain of things he

0:13:58.160 --> 0:14:00.160
<v Speaker 1>does want to hear, you know, Like it was, it

0:14:00.200 --> 0:14:02.439
<v Speaker 1>was always fun to go in there with the economic data.

0:14:02.600 --> 0:14:04.320
<v Speaker 1>You know, you get the economic data of the night

0:14:04.360 --> 0:14:06.800
<v Speaker 1>before it's released, and there are many nice where I

0:14:06.800 --> 0:14:08.080
<v Speaker 1>got to go in there and talk to him about

0:14:08.080 --> 0:14:10.040
<v Speaker 1>the economic data, what it was, how good it was,

0:14:10.080 --> 0:14:12.839
<v Speaker 1>how the markets were going to react. Those are great conversations.

0:14:13.160 --> 0:14:16.040
<v Speaker 1>But along with those great conversations, you get to go

0:14:16.120 --> 0:14:18.600
<v Speaker 1>in there and have conversations that say, hey, look, if

0:14:18.640 --> 0:14:21.360
<v Speaker 1>we do X, I think I don't know, I think

0:14:21.440 --> 0:14:24.680
<v Speaker 1>the reaction is going to be this. Are we prepared

0:14:24.760 --> 0:14:27.400
<v Speaker 1>for this intended or unintended consequence?

0:14:27.560 --> 0:14:28.680
<v Speaker 3>And I think those are the.

0:14:28.760 --> 0:14:30.960
<v Speaker 1>Jobs of the people that sit in the White House's

0:14:31.040 --> 0:14:34.560
<v Speaker 1>advisors to make sure when the president does something they

0:14:34.680 --> 0:14:39.160
<v Speaker 1>understand the intended and unintended consequences. They should never a

0:14:39.160 --> 0:14:41.280
<v Speaker 1>president should never be blindsided by a.

0:14:41.240 --> 0:14:44.680
<v Speaker 4>Decision when it comes to the check and the pushback

0:14:44.920 --> 0:14:47.520
<v Speaker 4>on Trump two point zero, John talked about this his

0:14:47.600 --> 0:14:49.880
<v Speaker 4>first four years. All the time the Trump put it

0:14:49.880 --> 0:14:52.000
<v Speaker 4>was a stock market that he cared about. He would

0:14:52.080 --> 0:14:54.000
<v Speaker 4>reverse core some potentially something he want to do in

0:14:54.080 --> 0:14:56.360
<v Speaker 4>executive order, just because he saw the fallout of the

0:14:56.360 --> 0:14:59.040
<v Speaker 4>financial markets. What's going to be that check this time?

0:14:59.640 --> 0:15:01.800
<v Speaker 1>I think think Trump is going to care as much

0:15:01.840 --> 0:15:04.320
<v Speaker 1>about the stock market these next four years as he

0:15:04.320 --> 0:15:07.040
<v Speaker 1>did the first four years. That is a benchmark that

0:15:07.120 --> 0:15:10.720
<v Speaker 1>he will measure himself. It's a very public benchmark. It's

0:15:10.760 --> 0:15:13.840
<v Speaker 1>one that he uses. He talks about it in every speech.

0:15:13.880 --> 0:15:16.480
<v Speaker 1>He's already started talking about it in the transition. How

0:15:16.480 --> 0:15:20.120
<v Speaker 1>well the market's done since election night. I don't think

0:15:20.200 --> 0:15:22.240
<v Speaker 1>that will change over the next four years.

0:15:22.360 --> 0:15:24.920
<v Speaker 2>Do you think the bond market takes on additional importance?

0:15:25.040 --> 0:15:27.480
<v Speaker 2>We started this whole conversation about the difference between now

0:15:27.560 --> 0:15:30.480
<v Speaker 2>versus say, twenty sixteen to seventeen, certainly in fixed income

0:15:30.480 --> 0:15:31.480
<v Speaker 2>in a very different position.

0:15:32.080 --> 0:15:35.400
<v Speaker 1>I think the bond market deserves a long discussion here.

0:15:35.440 --> 0:15:37.600
<v Speaker 1>I think there's a lot going on. When I talked it,

0:15:37.920 --> 0:15:40.200
<v Speaker 1>when I talked a little bit ago. You know where

0:15:40.240 --> 0:15:42.320
<v Speaker 1>FED funds were at seventy six spaces points where they're

0:15:42.320 --> 0:15:45.600
<v Speaker 1>four and a half percent. Now, that's only half the story.

0:15:45.720 --> 0:15:48.320
<v Speaker 1>You know, we had a flat yield curve and then

0:15:48.360 --> 0:15:50.520
<v Speaker 1>we've gone through an inverted yield curve over the last

0:15:50.520 --> 0:15:53.400
<v Speaker 1>four years because everyone's worried about a recession. And now

0:15:53.400 --> 0:15:55.440
<v Speaker 1>we're going back to something that we forgot what it

0:15:55.480 --> 0:15:57.560
<v Speaker 1>is called a normal yield curve.

0:15:57.760 --> 0:15:58.840
<v Speaker 2>How stafe is a normal year?

0:15:59.000 --> 0:16:02.480
<v Speaker 1>Yeah, at least you've been around long enough to ask

0:16:02.520 --> 0:16:05.080
<v Speaker 1>a question, how steep is a normal yield curve, because

0:16:05.080 --> 0:16:07.280
<v Speaker 1>a lot of people don't even remember a normal yield

0:16:07.280 --> 0:16:08.080
<v Speaker 1>curve is steep.

0:16:08.520 --> 0:16:09.680
<v Speaker 3>You know, we've seen since.

0:16:09.520 --> 0:16:11.880
<v Speaker 1>The Fed started cutting interest rates, ten years have gone

0:16:11.960 --> 0:16:13.760
<v Speaker 1>up sixty to seventy basis points.

0:16:14.200 --> 0:16:15.520
<v Speaker 3>I'm not surprised by that.

0:16:15.600 --> 0:16:19.160
<v Speaker 1>I think we're renormalizing a yield curve. If we've taken

0:16:19.240 --> 0:16:22.000
<v Speaker 1>recession fears off the table, and the ten years is

0:16:22.040 --> 0:16:24.880
<v Speaker 1>going to go to a normalized rate of let's call

0:16:24.880 --> 0:16:27.040
<v Speaker 1>it three, three and a half percent, you know, there

0:16:27.080 --> 0:16:28.960
<v Speaker 1>has to be at least one hundred, one hundred and

0:16:29.000 --> 0:16:31.960
<v Speaker 1>twenty five basis points of steepness in FED funds ten years.

0:16:32.120 --> 0:16:33.640
<v Speaker 1>I think it's at least one hundred and twenty five.

0:16:33.680 --> 0:16:36.560
<v Speaker 1>If we're going to three, that's at least four and

0:16:36.560 --> 0:16:36.920
<v Speaker 1>a quarter.

0:16:36.920 --> 0:16:39.200
<v Speaker 3>If we're going to three and a half, you.

0:16:39.120 --> 0:16:41.000
<v Speaker 1>Know, we're talking four to seventy five, and we're going

0:16:41.080 --> 0:16:45.040
<v Speaker 1>to continue steepness out the curve. And that's before we

0:16:45.160 --> 0:16:48.920
<v Speaker 1>get to what I consider a pretty large refinancing wall

0:16:49.040 --> 0:16:51.720
<v Speaker 1>coming up in twenty five and beyond. You know, I

0:16:51.720 --> 0:16:54.320
<v Speaker 1>think many people forgot that. You know, twenty twenty, the

0:16:54.360 --> 0:16:57.000
<v Speaker 1>COVID year, we did a lot of refinancing in the market,

0:16:57.040 --> 0:16:59.920
<v Speaker 1>but they were all most of them were five year refinance,

0:17:00.360 --> 0:17:03.360
<v Speaker 1>so a lot of that COVID paper that was done.

0:17:03.160 --> 0:17:05.320
<v Speaker 3>At pretty favorable rates because.

0:17:05.080 --> 0:17:08.080
<v Speaker 1>The Fed again went into very accommodated policy. A lot

0:17:08.080 --> 0:17:11.080
<v Speaker 1>of that COVID paper comes as due next year, so

0:17:11.119 --> 0:17:14.200
<v Speaker 1>we've got a lot of refinancing coming due in twenty

0:17:14.240 --> 0:17:18.400
<v Speaker 1>twenty five. So I think the yieldker smartly and normally

0:17:18.480 --> 0:17:21.680
<v Speaker 1>starting to renticipate what's going to happen in the bond market.

0:17:21.800 --> 0:17:23.600
<v Speaker 2>We could sell cool morning, Let's do it for now.

0:17:23.640 --> 0:17:25.600
<v Speaker 2>Next time. It's going to see you, sir, great singing.

0:17:25.600 --> 0:17:28.639
<v Speaker 2>I appreciate it. Gary Cone, the IBM Vice chairman and

0:17:28.720 --> 0:17:32.159
<v Speaker 2>former Director of the National Economic Council under Donald Trump.