WEBVTT - Bloomberg's Nicholson on Trump and Treasury (Correct)(Audio) 0:00:02.960 --> 0:00:06.320 Global business news twenty four hours a day at Bloomberg 0:00:06.400 --> 0:00:09.440 dot com, the radio plus mobilat and on your radio. 0:00:09.720 --> 0:00:13.760 This is a Bloomberg Business flag BOM Bloomberg World Headquarters. 0:00:13.800 --> 0:00:17.960 I'm Charlie Pelotondal the SMP NEZDAC all advancing. This update 0:00:18.000 --> 0:00:21.920 brought to you by Marks Panneth l LP, ranked among 0:00:21.960 --> 0:00:25.400 the top three forensic accounting firms in New York by 0:00:25.400 --> 0:00:27.880 the New York Law Journal for the sixth year in 0:00:27.920 --> 0:00:30.800 a row. VI is that Marks Panneth dot Com. Now 0:00:30.960 --> 0:00:34.040 let's head right over the first Word Breaking news desk 0:00:34.120 --> 0:00:38.760 for today's afternoon call. Here he is Bill Maloney. Good afternoon, Charlie. 0:00:38.800 --> 0:00:42.320 Manual savages are climbing today, with DAL currently up hundred 0:00:42.320 --> 0:00:45.920 and seventeen points. STPs Game ten in NAZAC is higher 0:00:45.920 --> 0:00:48.680 by twenty five, the small cap six hundred games four 0:00:48.720 --> 0:00:50.800 points in the U S ten yield at one point 0:00:51.000 --> 0:00:54.000 five seven per cent night out of tennesse B sectors 0:00:54.000 --> 0:00:56.800 are higher, live by games and Energy, Consumer Discretionary, and 0:00:56.920 --> 0:01:01.720 the industrials only Utilities felt doubt, Transports jump fifty eight 0:01:01.760 --> 0:01:04.680 and as a bi Tex rise thirty one. Utilities fall 0:01:04.720 --> 0:01:07.920 a point, and the Vicks drops two point seven percent 0:01:08.400 --> 0:01:11.160 down leaders to the upside including Nike, Chevron, and Mark, 0:01:11.440 --> 0:01:14.840 while Disney, Walmart and Ge were a little changed. It 0:01:15.000 --> 0:01:17.759 was a huge day for the retailers after Macy Swart 0:01:17.800 --> 0:01:21.360 as much as nineteen percent That's Emotions two thousand and eight, 0:01:21.560 --> 0:01:26.000 while Coles jump seventeen percent after its earnings After about tonight, 0:01:26.080 --> 0:01:29.040 look for earnings from Nordstrom and Navidio Live from the 0:01:29.040 --> 0:01:31.640 first Breaking news desk on Bill Maloney. Charlie, all right, 0:01:31.640 --> 0:01:33.600 we thank you very much, Bill Maloney, and to hear 0:01:33.680 --> 0:01:37.240 live breaking news over your Bloomberg Time Squawk SQ you 0:01:37.400 --> 0:01:41.319 a w K on your terminal. I'm Charlie Pellett, and 0:01:41.440 --> 0:01:46.559 that's a Bloomberg business flash you're listening to Taking Stock 0:01:46.680 --> 0:01:51.760 with Kathleen on Bluebird Radio. The United States is nearly 0:01:51.800 --> 0:01:55.960 twenty trillion dollars in debt now that number has almost 0:01:56.000 --> 0:02:00.600 doubled under President Barack Obama. Republican contend for the White 0:02:00.640 --> 0:02:04.760 House Donald Trump hasn't said anything about the debt that 0:02:04.800 --> 0:02:10.320 has swelled during Obama's administration, and he's also said that 0:02:10.360 --> 0:02:14.480 it is time to borrow and borrow long term is 0:02:14.520 --> 0:02:18.359 for infrastructure projects such as the military, as well as 0:02:18.400 --> 0:02:22.280 rebuilding airports and bridges. Jonathan Nicholson are a Capitol Hill 0:02:22.320 --> 0:02:26.120 budget reporter for Bloomberg b N, a wholly owned subsidiary 0:02:26.120 --> 0:02:29.040 of Bloomberg, the leading source of legal, regulatory and business 0:02:29.080 --> 0:02:33.519 information for professionals. Joins us now, Jonathan, tell us your 0:02:33.560 --> 0:02:38.200 thoughts on this idea of borrowing big and borrowing long 0:02:38.320 --> 0:02:43.440 term as espoused by the Republican contender Donald Trump. Well, 0:02:43.600 --> 0:02:48.079 it's it's. Uh, there's kind of two things here at play. Um, 0:02:48.800 --> 0:02:51.519 one of which is probably arguably more of a Trumpian 0:02:51.639 --> 0:02:53.200 kind of thing, and the other which actually has some 0:02:53.280 --> 0:02:57.799 bipartisan support to it. Um. On the bipartisan side, there 0:02:57.800 --> 0:03:01.160 actually is some thought running from some economists that as 0:03:01.160 --> 0:03:03.280 long as long term, as long as long term rates 0:03:03.280 --> 0:03:07.200 are gonna be low, um, why shouldn't the US borrow 0:03:07.480 --> 0:03:11.720 um to to make needed investments? Um. Some some economists 0:03:11.840 --> 0:03:14.240 has said that it's likely we're gonna have low rates 0:03:14.280 --> 0:03:17.440 for for a long time. Uh, so why not go 0:03:17.480 --> 0:03:19.519 ahead and trying to fix the fix the hole in 0:03:19.560 --> 0:03:22.440 the roof while the fixing is cheap, John, listen to me. 0:03:22.480 --> 0:03:26.240 Is is a very important question because the Obama administration 0:03:26.320 --> 0:03:29.160 several years ago in the financial crisis, decided that they 0:03:29.160 --> 0:03:31.320 thought it was necessary to have aquidity and issue a 0:03:31.320 --> 0:03:33.840 lot of short term a lot of treasury bills. They 0:03:33.960 --> 0:03:38.440 really shifted the duration and where the government is selling 0:03:38.680 --> 0:03:41.960 its its bills and notes and bonds. But when you 0:03:42.040 --> 0:03:44.920 have thirty year paper at two and a half percent, 0:03:45.280 --> 0:03:47.200 when you have ten year paper at one and a 0:03:47.240 --> 0:03:49.760 half percent, that would be like saying, Gee, I'm not 0:03:49.800 --> 0:03:53.160 gonna buy a house and take advantage of a very 0:03:53.240 --> 0:03:55.360 low mortgage race. I think a lot of people have 0:03:55.440 --> 0:03:58.680 scratched their heads and say, why does the Treasury not 0:03:58.800 --> 0:04:01.840 look at this and ship and and that's that's what 0:04:02.160 --> 0:04:05.000 That's what Trump and his adviser David Maul passed yesterday 0:04:05.040 --> 0:04:08.320 on Cspanders start talking about, um, why not lock in 0:04:08.560 --> 0:04:12.480 those those those low rates UM. Historically that is kind 0:04:12.480 --> 0:04:16.680 of not the way the Treasury has approached debt management UM, 0:04:16.760 --> 0:04:21.559 even going back under both the George W. Bush UH 0:04:22.560 --> 0:04:25.839 Reuben in the Clinton administration and UH and the Treasury 0:04:25.839 --> 0:04:30.240 secretaries under Obama. They're thinking is that you need to 0:04:30.279 --> 0:04:35.120 have They're often phrase thing is regular and predictable debt issues. 0:04:35.520 --> 0:04:37.719 But as long as the markets know that there always 0:04:37.720 --> 0:04:40.440 be some supply of treasury debt and that it will change, 0:04:40.480 --> 0:04:44.440 but it will change in relatively predictable ways. UM. That 0:04:44.240 --> 0:04:49.279 that will keep overall borrowing costs down by being regular 0:04:49.320 --> 0:04:53.120 and predictable rather than fearing, rather than have market participants 0:04:53.120 --> 0:04:55.160 worry that the Treasury is trying to time the market 0:04:55.440 --> 0:04:57.960 by issuing more debt, you know, or longer term debt 0:04:58.000 --> 0:05:00.560 when rates are low, and less when those conditions reverse. 0:05:00.960 --> 0:05:02.640 So that's sort of the thinking there, and it's been 0:05:02.800 --> 0:05:05.680 ingrained for for quite a long time. Actually, does that 0:05:05.800 --> 0:05:10.920 thinking makes sense? Um I there's probably someone who can 0:05:10.960 --> 0:05:14.960 do the math um on that UM and say what 0:05:15.120 --> 0:05:18.400 the premium is that they're trying to avoid by by 0:05:18.440 --> 0:05:22.400 not doing this. Um. I think that it's not like 0:05:22.400 --> 0:05:25.200 they don't make any adjustments. Is in my story today 0:05:25.240 --> 0:05:29.120 that they're the the weighted average maturity basically the UH 0:05:30.080 --> 0:05:32.240 the maturities of the debt, of the debt weighted for 0:05:32.279 --> 0:05:34.440 how much is outstanding in each you know, bills, bonds, 0:05:34.440 --> 0:05:37.720 and notes UM has increased over the last couple of years. 0:05:38.080 --> 0:05:40.480 It's up to about seventy months now, UM, so a 0:05:40.520 --> 0:05:42.359 little bit more than about you know, five years and 0:05:42.360 --> 0:05:45.960 ten months UM, where is the whereas the historical average 0:05:46.000 --> 0:05:48.320 for the last thirty or forty years is like fifty 0:05:48.400 --> 0:05:50.800 nine months. So it has crept up a little bit, 0:05:50.839 --> 0:05:54.240 but is by no means, you know, anywhere anywhere near 0:05:54.279 --> 0:05:56.000 what what what sounds like they're trying to talk about 0:05:56.040 --> 0:05:58.480 with the Trump with the Trump people. Well, Jonathan is 0:05:58.520 --> 0:06:01.160 part of a team. I know you also follow taxes 0:06:01.320 --> 0:06:04.599 in the budget. Do you have any even the thumbnail 0:06:05.000 --> 0:06:08.320 figure right or since so report reporting on this, how 0:06:08.400 --> 0:06:11.440 much difference it would make if suddenly the Treasury issued 0:06:11.520 --> 0:06:15.240 a lot more tangiers and tenure in thirty years over time, 0:06:15.360 --> 0:06:18.440 how that would affect our estimate of the budget deficit, 0:06:18.520 --> 0:06:23.279 which is such an important issue for this country. Uh No, 0:06:23.279 --> 0:06:24.880 no one that I know of has put pen to 0:06:24.960 --> 0:06:29.359 paper on that, um and and and and you do 0:06:29.440 --> 0:06:31.479 have to remember the here that that given the short 0:06:31.600 --> 0:06:34.520 term nature of bills, you know, we're still you know, 0:06:35.040 --> 0:06:39.520 you still can get you know, bill build. The sellout rates, 0:06:39.600 --> 0:06:43.080 the stop out rates are called, still are so relatively 0:06:43.200 --> 0:06:46.200 small now, especially with you know, Brexit and every other 0:06:46.360 --> 0:06:48.120 kind of thing that puts the flight to quality to 0:06:48.200 --> 0:06:50.880 the uh to the market, that we're still able to 0:06:50.920 --> 0:06:54.480 sell build at such a small rate that the you know, 0:06:54.600 --> 0:06:57.919 the savings versus you know, the one point five percent 0:06:58.040 --> 0:07:01.360 for ten years. You know, it's it's I really would 0:07:01.480 --> 0:07:03.240 wouldn't the only hazard guess at this point to be 0:07:03.279 --> 0:07:05.479 hofest with you, Well, that's because that's why you worked 0:07:05.480 --> 0:07:07.560 for Bloomberg B and A. Jonathan, because I don't guess 0:07:07.640 --> 0:07:11.000 you give us the real deal. Well, I don't do 0:07:11.160 --> 0:07:13.920 that good of math though, unfortunately, so you know that 0:07:14.240 --> 0:07:16.480 that's the downside, I guess, Jonathan Nicholson, Thank you so 0:07:16.640 --> 0:07:18.600 very much for joining This is an important and very 0:07:18.760 --> 0:07:23.160 interesting story. Bloomberg DNA. That's where he's Capitol Hill Budget Reporter. 0:07:23.240 --> 0:07:25.360 That's a holy own subsidiary of Bloomberg and it's a 0:07:25.440 --> 0:07:29.600 leading source of legal, regulatory and business information for professionals. 0:07:29.680 --> 0:07:33.240 Check it out on your Bloomberg. I'm Kathleen Hayes along 0:07:33.320 --> 0:07:46.280 with pim Fox. This is taking Stock and this is Bloomberg. Bloomberg. 0:07:46.280 --> 0:07:48.480 Taking Stock is brought to by cash Pro, the cash 0:07:48.560 --> 0:07:51.480 management platform from Bank of America Merrill Lynch. 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