Bessent on AI, Hollywood Shaken by Tariff Threat | Bloomberg Technology
>> FROM THE HEART OF WHERE INNOVATION, MONEY, AND POWER COLLIDE IN SILICON VALLEY AND BEYOND, THIS IS BLOOMBERG TECHNOLOGY WITH CAROLINE HYDE AND ED LUDLOW. CAROLINE: LIVE FROM NEW YORK, IN CAROLINE HYDE. THIS IS BLOOMBERG TECHNOLOGY. MARKETS ARE ON EDGE AS TRADE CONCERNS FAULTY FOR DAY WINNING STREAK FOR TECH STOCKS AS PRESIDENT TRUMP ANNOUNCES PLANS TO IMPOSE 100% TARIFFS OF FILMS PRODUCED OVERSEAS. MICROSOFT SURPASSING APPLE BECOMING THE LARGEST U.S. COMPANY BY MARKET VALUE. IN JUST A FEW MINUTES, TREASURY
SECRETARY SCOTT BESSENT WILL BE SPEAKING FROM THE MILKEN CONFERENCE. WE ARE UNDER PRESSURE TO START THIS TRADING WEEK. IF YOU ARE LOOKING AT THE NASDAQ 100, WE ARE DOWN 0.4%.
THERE WAS WORRY ABOUT TRADE SURROUNDING THE MEDIA INDUSTRY. TAKE WHAT IS HAPPENING ON NETFLIX. PRESIDENT TRUMP IS ANNOUNCING PLANS TO IMPOSE 100% OF TARIFFS ON MOVIES PRODUCED OVERSEAS. HE ADDED, WE WANT MOVIES MADE IN AMERICA.
MOVIE MOGUL'S IN THE INDUSTRY WENT TO THE PRESIDENT SAYING WE WANT MOVIES MADE IN THE U.S. WITH TAX CREDITS. HE PROPOSES SOMETHING VERY DIFFERENT. >> PRESIDENT TRUMP HAS OFTEN TAKEN THE STICK VERSUS TARIFFS APPROACH. BLOOMBERG NEWS REPORTING JON VOIGHT AND HIS AGENTS MET WITH PRESIDENT TRUMP AT MAR-A-LAGO OVER THE WEEKEND AND ASKED HIM TO PUT FORWARD SOME TAX INCENTIVES INCLUDING EXPANDING A TAX CREDIT THAT WOULD BOOST PRODUCTION IN THE U.S., BUT HE IS PURSUING THIS TARIFF ROUTE. THERE ARE A LOT OF BIG
QUESTIONS. ONE FILM COULD BE PRODUCED IN MULTIPLE LOCATIONS. DOES THIS EXTEND TO FOREIGN-BASED PRODUCTION COMPANIES OR U.S.-BASED PRODUCTION COMPANIES THAT MAKE
THEIR MOVIES OVERSEAS? PRESIDENT TRUMP HAS INDICATED HE WOULD INVOKE IT ON THE BASIS OF NATIONAL SECURITY CONCERNS. THAT SIGNALS THAT IS LIKELY THE JUSTIFICATION THE WHITE HOUSE WILL TAKE, WHETHER OR NOT THAT MEANS THEY WILL INVOKE IEFA OR SECTION 232 WE DON'T KNOW. WE DO KNOW THE USTR AND COMMERCE DEPARTMENT ARE LOOKING INTO THIS. THE SECOND THING IT INDICATES IS THAT THESE TARIFFS WOULD FACE HEAVY LEGAL SCRUTINY IF THEY ARE PUT INTO EFFECT. THE MOVIE INDUSTRY WAS CAUGHT PRETTY OFF GUARD BY THE ANNOUNCEMENT. CAROLINE:
WE ARE SEEING CERTAIN ANALYSTS SAYING THIS WOULD WREAK DEVASTATION UPON THE U.S. DEVASTATION INDUSTRY. COSTS WOULD RISE FOR MANY. REMIND US OF WHAT THE ANXIETY HAS BEEN? USA AND CANADA HAVE MANAGED -- OTHER COUNTRIES HAVE MANAGED TO PULL AWAY U.S. PRODUCTION.
>> IT HAS TO DO WITH TAX INCENTIVES, LABOR COSTS, AND PRODUCTION COSTS. THERE ARE 2.3 2 MILLION PEOPLE EMPLOYED IN THE INDUSTRY ALONE IN THE U.S. U.S. SPENDING ON FILM AND TV
PRODUCTION FELL 28% BETWEEN 2021 AND 2024 ACCORDING TO DATA FROM A RESEARCH FIRM. IT IS COUNTRIES LIKE AUSTRALIA, NEW ZEALAND, THE U.K. CANADA HAVE PULLED AHEAD WHEN IT COMES TO LESSENING THESE HIGHER COSTS IN ORDER TO MAKE MOVIES. QUICKLY I WILL THROW ONE OTHER COUNTRY IN. THIS ISN'T THE FIRST TIME WE HAVE SEEN MOVIES COME INTO THIS TRADE WAR. THEY HAVE BEEN TAKING U.S. PRODUCTION, LAST MONTH THEY DID
SAY THEY WERE GOING TO RESTRICT U.S. FILMS ACCESS TO THEIR MARKET, SO IT IS CONTINUING HOW WE ARE SEEING THE TARIFFS GO BEYOND WHAT WE TRADITIONALLY THINK ABOUT. CAROLINE: CERTAINLY. TYLER KENDALL WITH ALL THE LATEST FROM THE WHITE HOUSE. LET'S GET MORE MARKET REACTION. MORE BROADLY. DANIEL MARKET IS WITH US. DANIEL, YOU FOCUS MAINLY ON THE MAGNIFICENT SEVEN, BIG TECH, AND CHIPS RATHER THAN MEDIA NAMES, BUT IT DOES FEEL ONCE AGAIN TARIFFS ARE THE EYE OF THE STORM. DANIEL:
IT KEEPS EXTENDING TO DIFFERENT GROUPS. IT IS GOING TO AFFECT A COMPANY LIKE NETFLIX WHICH USED TO BE IN THE TALK OF THOSE SAY MAGNIFICENT SEVEN. IF YOU LOOK AT THE TARIFFS IN TERMS OF THESE INDUSTRY GROUPS, IT SEEMS LIKE TECHNOLOGY IS THE HARDEST HIT. CHIPS IS ANOTHER SECTOR THAT IS HEAVILY HIT BY TARIFFS.
THAT HAS BEEN THE BLACK CLOUD OVER THE GROUP. IT IS STILL DOWN 15% TO 16%. IT IS A TOUGH SECTOR. CAROLINE: LET'S GET INTO INDIVIDUAL NAMES. APPLE HAS SWITCHED PLACE WITH MICROSOFT, NO LONGER THE HIGHEST VALUED COMPANY ON THE S&P. IS APPLE WHEN YOU CANNOT REBUY INTO RIGHT NOW? DANIEL: APPLE IS A TOUGH STOCK.
THEY DIDN'T HAVE THE SAME AI SIRI PERSONAL ASSISTANT EVERYBODY WAS HOPING FOR THAT WOULD BE UNVEILED. LOOKS LIKE IT WILL GO TO THE IPHONE 17 NOT COMING OUT TO THE FALL. IN THE RECENT QUARTER EVEN THOUGH THERE WERE NO DIRECT TARIFFS AT THE TIME, IPHONE REVENUES WERE ONLY UP ABOUT 2%.
THEY ARE SO HEAVILY ENTRENCHED IN THE PACIFIC RIM. FOR THEM TO MOVE THAT OUT OF THAT PART OF THE WORLD WILL BE CHALLENGING. CAROLINE: WE GOT SOME ADMISSION OF A LACK OF CLARITY FROM EXECUTIVES. WE STILL HAVE COMING. PELLETIER HAS BEEN A REAL WINNER.
WHAT DO YOU LOOK FOR IN SOME OF THESE EARNINGS STILL LEFT? DANIEL: THAT IS A WHOLE DIFFERENT GAME. DATA CENTER WAS UP 10%. CAROLINE: I'M AFRAID I HAVE TO LEAVE IT THERE FOR A MOMENT, SO KIND OF YOU TO JOIN US BUT WE HAVE TO GO OVER TO THE MILKEN CONFERENCE WITH TREASURY SECRETARY SCOTT BESSENT SPEAKING. >> WE HAD THE RARE ACCOMMODATION OF GUTS AND INTELLECT TO DEFY THE WALL STREET, HE PIONEERED A NEW ASSET CLASS MIKE OVERTURNS DECADES OF ECONOMIC ORTHODOXY HIS COLLEAGUES ON WALL STREET. PRESIDENT TRUMP IS NO SHORTAGE OF CRITICS AND ESTABLISHMENT CIRCLES BUT HE PROVED THEM WRONG IN HIS FIRST TERM AND HE IS PROVING THEM WRONG AGAIN TODAY.
HE VOWED TO OFFER -- USHER IN A GOLDEN AGE FOR AMERICA. A GOLDEN AGE AMERICA DESERVES A GOLDEN AGE ECONOMY. WE HAVE BEEN PREPARING THE SOIL. WE HAVE UPROOTED GOVERNMENT WASTE AND HARMFUL REGULATIONS. WE HAVE PLANTED THE SEEDS OF
PRIVATE INVESTMENT. WE HAVE FERTILIZE THE GROUND WITH FRESH TAX LEGISLATION. NEXT, WE HARVEST AND WE WANT YOU TO HARVEST WITH US. AMERICA IS THE SHOWING POINT OF GLOBAL FINANCE.
WE HAVE THE WORLD'S RESERVE CURRENCY, THE BEST CAPITAL MARKETS AND PROPERTY RIGHTS. FOR THIS REASON, THE UNITED STATES IS THE PREMIER DESTINATION FOR INTERNATIONAL CAPITAL. THE ADMINISTRATION'S GOAL IS TO MAKE IT EVEN MORE APPEALING FOR INVESTORS LIKE YOU. I WILL EXPLAIN -- EXPLAIN HOW WE PLAN HOW TO ACHIEVE THAT GOAL.
TRADE, TAX CUTS, AND DEREGULATION ARE NOT STANDALONE POLICIES, THEY ARE INTERLOCKING PARTS TO DRIVE LONG-TERM POLICY. OUR GOAL IS TO LEVERAGE THE PLAYING FIELD FOR GREAT AMERICAN WORKERS AND COMPANIES. AMERICAN INDUSTRY CAN OUTCOMPETE ALL COUNTRIES.
TARIFFS ARE TO ENCOURAGE YOU TO RECKON -- INVEST IN THE UNITED STATES. YOU WILL BE GLAD YOU DID NOT ONLY BECAUSE WE HAVE THE MOST PRODUCTIVE WORKFORCE IN THE WORLD BUT BECAUSE WE WILL SOON HAVE THE MOST FAVORABLE TAX AND REGULATORY ENVIRONMENT AS WELL. THIS IS WHERE TAX INCENTIVES AND DEREGULATION COME INTO PLAY. YOU MAY HAVE HEARD ONE BIG
BEAUTIFUL BILL FLOATING AROUND CONGRESS. THIS BILL IS BIG AND BEAUTIFUL FOR MAINSTREAM AMERICA. THE PRESIDENT'S SIGNATURE TAX LEGISLATION WILL PREVENT AN ENORMOUS TAX HIKE BY MAKING THE SMALL BUSINESS DEDUCTION PERMANENT. IT WILL ALSO STREAMLINE INVESTMENT IN HIGH-TECH OPERATIONS. IT WILL RESTORE 100% EXPENSING FOR EQUIPMENT WHILE EXPANDING THAT INCENTIVE TO NEW FACTORY CAN TRACTION THE OBJECTIVE, TO ACCELERATE INVESTMENT IN AMERICAN INDUSTRY, TO MAKE THAT INVESTMENT AS SEAMLESS AND REWARDING AS POSSIBLE. PRESIDENT TRUMP HAS EMBRACED AN AMBITIOUS DEREGULATION AGENDA.
THIS INCLUDES EXPANSIVE PERMITTING REFORM. THE PRESIDENT DOESN'T JUST WANT TO DRILL, BABY, DRILL, HE WANTS TO BUILD, BABY, BUILD. HE HAS SIGNED EXECUTIVE ORDERS TO REDUCE THE PERMITTING PROCESS TO JUST A FEW MONTHS. THIS SIMPLE REFORM WILL UNLEASH THE CREATIVE POTENTIAL OF AMERICA'S BUSINESSES. IT WILL ALLOW YOU TO PUT YOUR CAPITAL TO WORK AS QUICKLY AND EFFICIENTLY AS POSSIBLE. THE BUILDING RENAISSANCE WILL
BE FUELED BY THE PRESIDENT'S ENERGY DOMINANCE AGENDA. ENERGY IS THE BASE LAYER OF ALL ECONOMIC ACTIVITY. IT DRAGS DOWN THE COST OF DOING BUSINESS.
I HOPE YOU CAN SEE THE BIGGER PICTURE NOW. THE TRUMP ECONOMIC AGENDA IS MORE THAN THE SUM OF ITS PARTS, TRADE, TAX CUTS, AND DEREGULATION MAY BE THREE DISTINCT POLICIES, BUT EACH POLICY IS MUTUALLY REINFORCING AND ACTING IN CONCERT THEY PUSH TOWARD THE SAME GOAL. MORE JOBS, GROWTH, CRITICAL MANUFACTURING PLANTS, SEMI CONDUCTORS. THE PRESIDENT BELIEVES WE CAN ACHIEVE MORE TOGETHER. THOUSANDS OF COMPANIES HAVE CAUGHT THE PRESIDENTS VISION.
PRESIDENT TRUMP HAS SECURED MORE INVESTMENT FOR OUR COUNTRY IN 100 DAYS THEN PRESIDENT BIDEN DID DURING ALL FOUR YEARS. ENTREPRENEURS ARE STARTING TO UNDERSTAND WHAT THE PRESIDENT IS TRYING TO ACCOMPLISH. MARCH SOMEONE OF THE HIGHEST LEVELS EVER RECORDED FOR NEW BUSINESS APPLICATIONS. MANY OF THESE MEN AND WOMEN LIKE MANY OF YOU ARE GRASPING THAT AMERICA FIRST IS A BLUEPRINT FOR A MORE ABUNDANT WORLD. FOR NOW, A PARTING THOUGHT.
WHEN I ENTERED PUBLIC SERVICE, I SPENT MORE THAN 40 YEARS IN THE ASSET MANAGEMENT BUSINESS, THEIR ONE MANTRA GUIDES ONE OF THE WORLD'S MOST SUCCESSFUL INVESTORS, NEVER BET AGAINST AMERICA. WARREN BUFFETT COINED THE PHRASE AND IT HAS BEEN HIS LODESTAR AS LONG AS HE HAS BEEN IN THE GAME. THROW WHATEVER YOU CAN AT THE CAPITAL MARKETS, THE GREAT DEPRESSION, TWO WORLD WARS, 9/11, A COVID RECESSION OF THE LAST FEW YEARS, ARE SKY HIGH INFLATION, EACH TIME THE AMERICAN ECONOMY GETS KNOCKED DOWN IT GETS BACK UP AGAIN AND GETS UP EVEN STRONGER THAN WHAT IT WAS BEFORE. U.S. MARKETS ARE ANTI-FRAGILE. THE ENTIRE HISTORY CAN BE DISTILLED INTO FIVE WORDS. UP AND TO THE RIGHT.
ON A LONG-TERM HORIZON, IT IS NEVER A BAD TIME TO INVEST IN AMERICA BUT ESPECIALLY NOW. THE UNITED STATES IS ENTERING A NEW GOLDEN AGE OF ECONOMIC PROSPERITY FOR MAIN STREET AND WALL STREET AND WE DON'T WANT ANYONE TO GET LEFT BEHIND. COME WITH US SO WE CAN BUILD A MORE ABUNDANT AMERICA TOGETHER. THANK YOU ALL. [APPLAUSE] >> PLEASE WELCOME THE INSTITUTE CHAIRMAN, MICHAEL MILKEN. MICHAEL: SO, AS A SCHOLAR IN COLLEGE AT A LEADING UNIVERSITY, AND ACCOMPLISHED FUND MANAGER , YOUR RANGE OF LIFE OPTIONS IS UNLIMITED.
WHAT INSPIRED YOU TO CHOOSE THE FIELD OF PUBLIC SERVICE JOINING PRESIDENT TRUMP'S ADMINISTRATION IN A VERY HIGH-PROFILE AND I SHOULD SAY HIGH-PRESSURE ROLE? SEC. BESSENT: I WOULD AGREE ON ALL OF THE ABOVE. THERE WAS A LONG ARC DESIRE FOR PUBLIC SERVICE. I HAD CONSIDERED GOING TO THE NAVAL ACADEMY. DUE TO CENTRAL ORIENTATION I WAS UNABLE TO.
EVEN SINCE I WAS A TEENAGER I WANTED TO SERVE MY COUNTRY. I HAD A GREAT CAREER LIKE MANY PEOPLE IN THIS ROOM IN FINANCE. THE COUNTRY HAS BEEN GOOD TO ME. AS AN ECONOMIC HISTORY SCHOLAR I WAS SHOCKED AT WHAT WAS HAPPENING WITH THESE BUDGET DEFICITS. HIGHEST EVER WHEN WE WEREN'T AT WAR I WANTED TO COME OUT FROM MY DESK AND BE PART OF THE SOLUTION.
IT WAS A DEEPLY CYNICAL PLAN AND THEN HAVE TO RAISE TAXES. CAROLINE: --MICHAEL: ONCE AGAIN, WE ARE VERY HAPPY YOU TOOK OF THAT MISSION AND I CAN'T THINK OF A BETTER PERSON AT THIS TIME TO BE THE SECRETARY OF THE TREASURY. [APPLAUSE] OVER THE YEARS, WE HAVE HAD A NUMBER OF SECRETARIES OF THE TREASURY THAT WERE NOT REALLY INTO FINANCIAL MARKETS. YOU ARE THE RIGHT PERSON AT THE RIGHT TIME.
IT IS INTERESTING WHEN I THINK ABOUT IT, HOW DO YOU STRIKE THE BALANCE BETWEEN THE ADMINISTRATION'S GOAL OF RE-INDUSTRIALIZATION IN THE U.S. AND THE RISK OF ISOLATING THE U.S. ECONOMY? SEC. BESSENT: I THINK THAT THEY ARE NOT MUTUALLY EXCLUSIVE. I HAVE SAID MANY TIMES THAT IN THIS TRADE PUZZLE, CHINA IS THE BIGGEST PIECE. WHERE DO WE END UP WITH CHINA?
I SAID DURING IMF WEEK IN WASHINGTON, I SAID IT IS POSSIBLE THAT WE COULD, AS RAY DALIO MIGHT SAY, DO A BIG DEAL FOR REBALANCING. IF WE WANT MANUFACTURING, EVERYONE AGREES EXCEPT CHINESE LEADERSHIP THAT THEY NEED MORE CONSUMPTION, WE COULD DO THAT TOGETHER. ON THE OTHER SIDE, GETTING BETTER TERMS OF TRADE IS NOT ALWAYS A STRAIGHT LINE. IT IS NOT ALWAYS A PLEASANT PROCESS.
I THINK AT THE END, THE TRADING RELATIONSHIPS WILL BE STRONGER. OUR SECURITY AND VALUES TIES WILL STILL BE THERE. I LOOK BACK AND I THINK ABOUT THE EXAMPLE OF NATO AND GERMAN FISCAL SPENDING. WHETHER IT WAS THE FRENCH PRESIDENT, THE ITALIAN PRIME MINISTER, PEOPLE IN BRUSSELS WERE TRYING TO BREAK OPEN THE GERMAN PIGGY BANK. PRESIDENT TRUMP, NOT IN A STRAIGHT LINE, NOT IN WHAT WOULD BE WHAT ANYONE WOULD CALL A DIPLOMATIC MANNER, HAS GOTTEN NATO COUNTRIES TO STEP UP AND MEET THEIR SPENDING REQUIREMENTS. THESE NUMBERS ARE APPROXIMATE, BUT I THINK ONLY 25% WHEN HE CAME IN AND 2017, ONLY 25% OF NATO COUNTRIES WERE MEETING THEIR SPENDING REQUIREMENTS. NOW I THINK ONLY 25% AREN'T.
THE GERMANS FOR THE FIRST TIME ARE GOING TO ALLEGEDLY DO A BIG FISCAL SPEND WHICH WILL DRIVE EUROPEAN GROWTH. CAN WE DO THE SAME THING ON TRADE? I THINK SO. MICHAEL: LET'S TALK MAYBE ABOUT A SPECIFIC SITUATION. YOU RECENTLY SIGNED A HISTORIC ECONOMIC PARTNERSHIP WITH UKRAINE. YOU SAID THERE WERE A LITTLE
FEW BUMPS ALONG THE WAY. WHAT IS EXPECTED TO COME OUT OF THIS AGREEMENT? SEC. BESSENT: LET'S WALK BACKWARDS. I WAS BEMUSED, GRATIFIED TO SEE THAT ON SATURDAY, AS I WAS COMING OUT HERE, FRIDAY AS I WAS COMING OUT HERE, WASHINGTON POST LEAD HEADLINE WAS, RUSSIAN NOW NERVOUS AFTER U.S.-UKRAINE SIGNED DEAL.
AND I BELIEVED THAT THIS WOULD HAPPEN IN FEBRUARY, PRESIDENT TRUMP BELIEVED IT WOULD HAPPEN IN FEBRUARY. THIS WAS PRESIDENT TRUMP'S IDEA. HE LIKES NEGOTIATING, AS YOU KNOW. A LOT OF PEOPLE IN THIS ROOM PROBABLY KNOW. HE LIKES CREATING NEGOTIATING
LEVERAGE FOR HIMSELF. THE UKRAINE INVESTMENT PARTNERSHIP, THE ECONOMIC PARTNERSHIP WAS HIS IDEA AND HE BELIEVED IT WOULD DO SEVERAL THINGS. ONE, IT WOULD CREATE MORE LEVERAGE FOR HIM WITH THE RUSSIAN LEADERSHIP WHEN IT WAS TIME TO GO TO THEM, SO THE IDEA WAS START WITH UKRAINE, SIGN A DEAL THAT SHOWS THAT THERE IS NO DAYLIGHT BETWEEN THE U.S. AND THE UKRAINIAN PEOPLE. IT WOULD BE ASSEMBLED TO THE UKRAINIAN PEOPLE THAT THE U.S.
IS STILL THERE. IT WOULD BE A SYMBOL TO A TIRED AMERICAN PUBLIC, SKEPTICAL OF MORE FINANCIAL COMMITMENTS, THAT IT WAS POSSIBLE TO HAVE A SHARED PROSPERITY WITH UKRAINE. AND THEN IT WOULD IN ESSENCE BE A TACIT SECURITY GUARANTEE BECAUSE OF THE ECONOMIC PARTNERSHIP. JUST TO GIVE YOU THE TIMELINE, SO HE TASKED ME WITH DRAWING UP THE DOCUMENT, SPEAKING WITH THE UKRAINIANS.
I THOUGHT IT WAS A GOOD IDEA TO ACTUALLY GO TO KYIV. FOR ANYONE WHO HAS NOT BEEN, YOU FLY TO POLAND, YOU TAKE A TRAIN INTO KYIV AND YOU DO THAT TO KEEP FROM GETTING SHOT DOWN. WHICH IS GOOD. [LAUGHTER] EVERYONE WAS SAYING, THIS ISN'T A GOOD DEAL, THIS ISN'T A GOOD DEAL. IF IT IS NOT A GOOD DEAL, WHY DID THE RUSSIANS BOMB KYIV FOR THE FIRST TIME -- SO I WENT ON FEBRUARY 10, THE RUSSIANS BOMB TO KYIV AT 4:00 IN THE MORNING FOR AN HOUR FOR THE FIRST TIME SINCE NOVEMBER.
THEY KNEW THE TRAIN ARRIVED AT 8:00. SO BEFORE I GOT THERE. IF THE RUSSIANS -- IF WE WERE PRO-RUSSIAN AND THIS WAS A TERRIBLE DEAL FOR THE UKRAINIANS , WHY DIDN'T THE RUSSIANS WANT IT SIGNED? SO THEN PRESIDENT ZELENSKYY ELECTED NOT TO SIGN IT THAT DAY. HE ELECTED NOT TO SIGN IT AT THE MUNICH SECURITY CONFERENCE A FEW DAYS LATER.
THERE WAS A LITTLE INCIDENT AT THE WHITE HOUSE SOME OF YOU MAY HAVE SEEN. PRESIDENT TRUMP CALLED IT GREAT TV. WHEN THE DEAL WENT SOUTH THAT DAY -- AND I ACTUALLY THINK IN TERMS OF THE FINAL DEAL, I'M SURE YOU AND EVERYONE IN THE DEAL HAVE SEEN IT -- ROOM HAVE SEEN IT, SOMETIMES WITH THE BLOWUP YOU END UP WITH A BETTER DEAL. FEBRUARY 28 WAS A BLOW UP IN THE OVAL. WHAT WAS GOING TO BE SIGNED THAT DAY WAS A FOUR PAGE MEMORANDUM OF UNDERSTANDING. AFTER THAT BLOWUP, TREASURY
MADE THE DECISION TO TRY TO MAKE THE BLOWUP INTO AN OPPORTUNITY AND MY TEAM, I INSTRUCTED MY TEAM TO GO STRAIGHT TO WRITING THE FULL AGREEMENT. WHICH IS SIX DIFFERENT AGREEMENTS, VARYING LENGTHS, HUNDREDS OF PAGES. WE WORKED ON THAT DOCUMENT. WHEN THERE WAS THE RECOVERY IN TRUST BETWEEN PRESIDENT TRUMP AND PRESIDENT ZELENSKYY AFTER THE MEETING AT THE VATICAN, WE SIGNED THE DEAL A FEW DAYS LATER. I THINK IT IS WIN-WIN. IT IS NOT ONE OF THESE RAPACIOUS CHINESE DEALS. LOAN TO OWN. YOU ARE GOING TO DEFAULT ON THE DEBT. WE ARE GOING TO OWN ALL YOUR
MINERALS AND THAT IS LIFE. THIS IS ECONOMIC PARTNERSHIP. THEY PUT IN ASSETS, WE PUT IN CAPITAL FROM THE AMERICAN BEST PRACTICES AND IT IS 50/50. IT IS EQUITY, NOT THAT. SOME OF OUR EUROPEAN PARTNERS WERE CRITICIZING ME AT THE G7 AND I SAID, YOU KNOW, GUYS, IF YOU WANT TO DO A DEBT FOR EQUITY SWAP, WHY DON'T YOU WRITE OFF YOUR UKRAINE DEBT AND WE WILL LET YOU INTO OUR PARTNERSHIP? NO ONE HAS CALLED ME AT. MICHAEL: WHAT STRUCK ME, MR. SECRETARY, WAS THIS MAJOR AND VENEZUELA RATTLING THE SAVERS AND IT SENT A COUPLE OF MILITARY SHIPS. THE U.S.
ASKED THEM WHAT YOU ARE DOING BECAUSE THAT IS EXCELLENT AND THAT UNDERMINED PART OF THE STRENGTH OF THIS AGREEMENT. LET'S TALK ABOUT ONE ELEMENT THAT MANY PEOPLE HAVE BEEN CONCERNED ABOUT, WHAT ARE THE KEY COMPONENTS OF DEREGULATION? I KNOW IT IS PART OF YOUR ECONOMIC STRATEGY TO SPUR GROWTH? ARE THERE ANY REGULATIONS AT THE TOP OF YOUR LIST FOR REFORM? SEC. BESSENT: AT ONE OF THE SMALLER GROUP MEETINGS LAST NIGHT, MAYBE A FEW PEOPLE INTERESTED IN PRIVATE CREDIT.
TREASURY HAS TAKEN THE LEAD ON FINANCIAL DEREGULATION. I THINK PRIVATE CREDIT IS A VAULT IN TO THE BREADTH AND DEPTH OF THE WORLD'S DEEPEST CAPITAL MARKETS, BUT THE GROWTH OF PRIVATE CREDIT TELLS ME THAT THE REGULATED BANKING SYSTEM HAS BEEN TOO TIGHTLY CONSTRAINED. WE HAVE SET UP AT TREASURY. PRESIDENT TRUMP TASKED ME WITH HELPING HIM CHOOSE THE LEADERS FOR THE FINANCIAL REGULATORS.
WE HAVE INSTALLED A NEW VICE CHAIR FOR SUPERVISION. WE ARE GOING TO HAVE A NEW OCC HEAD. FBI SEE. PAUL ATKINS HAS TAKEN OVER. CFTC.
THE REGULATORS ARE ALIGNED. WE ARE GOING TO BE SAFE, SOUND, AND SMART IN REDOING REGULATED FINANCIAL ENTITIES. AS I MENTIONED IN MY TALK, ENERGY IS A PRETTY EASY PLAYBOOK. THE REAL IMPETUS IS GOING TO BE ON PERMITTING ACROSS ALL INDUSTRIES. THAT IS WHERE THE EPA COMES PUTTING PRESSURE ON STATE AND LOCAL GOVERNMENTS. THE PERMITTING PROCESS. WHAT IS THE USE IF IT IS 36 MONTHS TO BREAK GROUND? ONE CEO TOLD ME THE DIFFERENCE BETWEEN DOING BUSINESS IN TEXAS AND ILLINOIS IS WE STARTED A PROJECT IN TEXAS, THE DAY WE WENT TO THE CITY OF HOUSTON.
WE ARE STILL SEVEN YEARS INTO THE PLANNING PROCESS. MICHAEL: YOU ARE IN AN AREA HERE CALLED MALIBU WERE MAY BE IN 15 YEARS YOU CAN BUILD A HOUSE. WE ARE VERY ACCUSTOMED TO THIS LET ME TALK ABOUT ANOTHER. PART OF THAT WAS A REFLECTION ON THE DISRUPTIONS WE SAW ON ADVANCES AI. ROBOTICS, DIGITAL ADVANCES. THE WORLD WE THOUGHT WAS HEADING FOR SIGNIFICANT CHANGE AND WE SCHEDULED DOZENS OF SESSIONS AROUND THAT AREA.
EIGHT YEARS LATER, YOU ARE THE TREASURY SECRETARY. YOU ARE NAVIGATING THE NATION THROUGH THESE VARIOUS CHANGES. GIVE US A BROAD VIEW AS TO HOW YOU SEE THESE ISSUES TODAY. SEC. BESSENT: I SAID IN MY CONFIRMATION
HEARING THAT WE HAVE TO WIN IN AI AND QUANTUM. IF WE DON'T WIN, EVERYTHING ELSE DOESN'T MATTER. I THINK CHINA IS CATCHING UP, WHICH IS NATURAL. I THINK WE WILL MAINTAIN OUR LEADERSHIP ON THAT. WHAT WE ARE TRYING TO DO IS NOT PICK WINNERS AND LOSERS.
WE ARE TRYING TO SET UP THE BEST OPPORTUNITY FOR OUR ENTREPRENEURS TO SUCCEED, STOP INTELLECTUAL PROPERTY THEFT. IN TERMS OF MAKING IT ACCESSIBLE TO ALL AMERICANS, THAT WILL BE IMPORTANT. I WAS OUT ON THE CAMPAIGN TRAIL WITH PRESIDENT TRUMP. I WAS STRUCK BY THERE HAD BEEN A BIG MIGRATION BY THE VENTURE CAPITAL COMMUNITY.
ON ONE SIDE YOU HAVE THE VC'S, THE MOST INNOVATIVE PEOPLE IN THE WORLD, ELON MUSK, THE RICHEST PERSON IN THE WORLD AND THE PRESIDENT'S PENULTIMATE RALLY THAT I WENT TO WAS IN PITTSBURGH. THE STEELWORKERS SHOWED UP AND THEY HAVE THEIR VESTS ON, THEIR HARDHATS, THEIR FAMILIES. THE REAL IDEA IS TO MAKE SURE THAT INNOVATORS CAN INNOVATE AND STEELWORKERS CAN HAVE THE SAME QUALITY OF LIFE AND OPPORTUNITY. AND THEIR KIDS AND THEY CAN STAY AND HAVE THE SAME LIFE OR BETTER. MICHAEL:
THAT IS A GREAT GOAL AND WE HOPE WE ACHIEVE IT FROM THAT STANDPOINT. INTEREST RATES, YOU HAVE OFTEN TALKED ABOUT HOW IMPORTANT THAT IS. WHEN I LOOK AT FINANCIAL MARKETS I CAN SOMETIMES IDENTIFY WHEN THAT INDIVIDUAL HAD COME INTO FINANCIAL MARKETS. MANY OF THE PEOPLE THAT WERE
CFOS BECAME CEOS. BECAUSE HOW YOU FINANCED YOUR COMPANY ALLOWED IT TO EXIST. IN THE LAST FEW YEARS, WE HAVE LOST THREE AS INDEPENDENT COMPANIES HAVE LOST MAJOR FINANCIAL INSTITUTIONS DUE TO THE FACT THAT THEY HAVE BOUGHT A QUARTER OF A TRILLION OUT OF U.S. GOVERNMENT INTERMEDIATE SECURITIES AND BORROWED OVERNIGHT.
I GOT THIS APP ON MY PHONE THAT ANY TIME THE U.S. GOVERNMENT PRICES CHANGE BY MORE THAN 2% IN TWO HOURS, OFF MY PHONE GOES. SEC. BESSENT: PLEASE DON'T SHARE THAT WITH THE PRESIDENT. [LAUGHTER] MICHAEL: IN THE 1950'S, IT WAS LIKE WATCHING PAINT DRY. YOU COULD SEE AN ENTIRE VARIATION OF 2% IN PRICE AND AN ENTIRE DECADE. WE NOW HAVE SEEN A VARIATION OF
MORE THAN 2% OCCUR IN MORE THAN ONE DAY. HOW DO YOU SEE THE IMPORTANCE OF THE LEVEL OF INTEREST RATES IN OUR ECONOMY AND WHAT YOU WANT TO ACHIEVE? SEC. BESSENT: I'M NOT GOING TO TALK ABOUT THE FED. I SAID I WON'T TALK ABOUT THEIR FUTURE MISTAKES, I WILL ONLY TALK ABOUT THEIR PAST MISTAKES.
I THOUGHT IT WAS IMPORTANT TO FOCUS ON THE 10 YEAR. THE 10 YEAR HAS A LOT OF THINGS WRAPPED IN IT. IT IS THE SHORT-TERM RATES, THE TERM PREMIUM. WE ARE FOCUSED ON CREATING THE BEST ENVIRONMENT FOR STABLE RATES.
I THINK A LOT OF WHAT WE SAW IN APRIL WAS THIS PERIODIC UNWINDING THAT MOST PEOPLE HAVE EXPERIENCED IN THEIR CAREER. I AM A BIG BELIEVER INSTABILITY LEADS TO INSTABILITY, HYMAN MINSKY. I THINK WE PROBABLY HAD A VERY STABLE PERIOD, AND A LOT OF LEVERAGE PLAYERS.
THERE WAS UNCERTAINTY, SHOCK. BUT WHAT WE ARE TRYING TO DO NOW IS TO CREATE THE TRUMP 1.0 NON-INFLATIONARY GROWTH. I THINK IF WE CAN PUT NONINFLATIONARY GROWTH IN PLACE AND TAKE AWAY -- BACK TO YOUR INITIAL QUESTION, I'M SITTING HERE TO TAKE AWAY THE CREDIT RISK OF THE U.S. GOVERNMENT.
THEN I THINK RATES WILL NATURALLY COME DOWN. AS I HAVE SAID BEFORE, THERE IS AN OPPORTUNITY THAT IF WE CAN DO IT, THE GOAL ON ONE SIDE, ICE -- EYE COLOR RE-PRIVATIZING THE GOVERNMENT OR THE U.S. ECONOMY. ON ONE SIDE, WE WANT TO BRING DOWN GOVERNMENT BORROWING SLOWLY , MAY BE DECREASE THE DEFICIT BY 1% A YEAR BY THE TIME PRESIDENT TRUMP LEAVES OFFICE WE ARE BACK AT THE LONG-TERM AVERAGE OF 3% DEFICIT TO GDP AND THE DENOMINATOR OF GROWTH IS FASTER THAN THE NUMERATOR. DEBT TO GDP GOES DOWN. WE ARE DECREASING THE
GOVERNMENT IN THE ECONOMY AT THE SAME TIME WE ARE RIGHTSIZING GOVERNMENT SPENDING. AND GOVERNMENT EMPLOYMENT. ON THE OTHER SIDE THROUGH FINANCIAL DEREGULATION WE ARE RELY VERGING THE PRIVATE SECTOR AND THE ACCESS EMPLOYMENT SHED IN THE GOVERNMENT ECONOMY CAN GO TO THE PRIVATE SECTOR. I NEVER LIVED IN D.C. BEFORE, BUT ONE THING THAT REALLY STRUCK ME WAS WITHIN A 10 MILE RADIUS OF D.C., 25% OF THE NATION'S ECONOMY PULSES THROUGH THERE. THAT IS TOO MUCH. TRADITIONALLY, IT IS ABOUT 21%.
WE HAVE GOT TO MAKE SURE, WE HAVE A STEWARDSHIP OBLIGATION TO MAKE SURE THAT IS SPENT WISELY. MICHAEL: WE WERE MAKING A DECISION ABOUT WHERE TO HAVE THE MILKEN INSTITUTE SCHOOL OF PUBLIC HEALTH. BESIDE THE FACT THAT THE EXECUTIVE BUILDING IS ONE BLOCK AWAY FROM GW, BUT EVERY MAJOR DECISION ABOUT MEDICAL IS MADE WITHIN A MILE OR SO, SO THE DECISION ULTIMATELY WITH THE TALENT WE HAVE IS WE WOULD GO TO A GW BECAUSE THE DECISIONS WERE BEING MADE THERE. NOW, AS YOU KNOW, WE SPENT 12 YEARS BUILDING THIS BUILDING ACROSS THE STREET FROM YOUR NEW HOME AT THE TREASURY.
AND THE CENTER FOR THE AMERICAN DREAM AND WE THOUGHT IT WAS A FOUR YEAR PROJECT AND IT TURNED OUT TO BE A 12 YEAR PROJECT. BUT THIS PASSION FOR THE IDEAL OF THE AMERICAN DREAM IS SOMETHING YOU TRULY BELIEVE IN. WE HAVE BEEN ASKING 10,000 INDIVIDUALS AND MORE THAN 100 COUNTRIES AROUND THE WORLD THAT LIVE THERE OR HAVE COME HERE HOW THEY INTERPRET THAT PHRASE, WHAT DOES THAT MEAN? WHAT DOES THE AMERICAN DREAM THAT YOU ARE GOING TO PROTECT FOR SO MANY OF US, WHAT DOES IT MEAN TO YOU? SEC. BESSENT: IT MEANS A SHARED VISION. WE ARE GOING TO APPROACH THE 250TH ANNIVERSARY NEXT YEAR OR WE WILL HAVE THE 250TH ANNIVERSARY NEXT YEAR. WHAT DO THE NEXT 250 LOOK LIKE? TO ME, IT IS THE EQUAL OPPORTUNITY FOR GREAT OUTCOMES. LIKE I SAID, IT IS EQUAL OPPORTUNITY.
IF YOU WERE ONE OF THE CHILDREN OR DESTRUCT -- CONSTRUCTION WORKERS IN DUQUESNE ARENA ON NOVEMBER 4, THAT YOU MIGHT BE SITTING HERE BECAUSE HE FOUNDED A FINANCIAL SERVICES COMPANY OR BECAUSE YOU ARE A MEDICAL RESEARCHER OR BECAUSE IT IS THE OPPORTUNITY TO CONTINUE TO PROSPER. TO ME, IT IS TWO THINGS, THE FACT THAT THE SYSTEM WORKS AND THERE IS MOBILITY. THAT WE GET RID OF THESE DISCOURAGING SURVEYS OF FAMILIES AND CHILDREN WHO DON'T THINK THEY ARE GOING TO DO AS WELL AS THEIR PARENTS. SO THERE IS A BELIEF WE NEED IN THE SYSTEM AND WE NEED TO CONTINUE MAKING SURE THAT THE SYSTEM WORKS. TO ME, THAT IS THE AMERICAN DREAM. MICHAEL:
YOU HAVE WRAPPED THAT UP IN A BOW FOR US. WHAT WE HAVE FOUND IN EVERY SURVEY FOR 12 YEARS IS THE NUMBER ONE ESSENTIAL INGREDIENT, THE CONDITION THAT EXISTS FOR THE AMERICAN DREAM WAS FREEDOM TO LIVE YOUR LIFE, WHETHER YOU WANTED TO BE A STEELWORKER OR WHETHER YOU WANT TO DO WORK IN FINANCE OR WHEREVER YOU WANTED TO PURSUE OR WHETHER YOU WANTED TO BE THE SOCCER COACH OF YOUR DAUGHTER'S SOCCER TEAM. MR. SECRETARY, WE COULDN'T BE HAPPIER THAT YOU TOOK UP THE MANTLE OF PUBLIC SERVICE AND WE LOOK FORWARD TO YOUR STEWARDSHIP THE NEXT COUPLE YEARS. [APPLAUSE] SEC. BESSENT:
THANK YOU. CAROLINE: YOU WERE LISTENING TO U.S. TREASURY SECRETARY SCOTT BESSENT WITH MICHAEL MILKEN AT THE MILKEN CONFERENCE IN LOS ANGELES. TYING UP SOME OF THE STATEMENTS MADE MORE BROADLY.
TALKING ABOUT HOW THE UNITED STATES IS ANTI-FRAGILE AND THEY DWELT UPON THE 10 YEAR YIELD. LOTS OF COMPONENTS TO IT. THEY ARE TRYING TO CREATE THE BEST ENVIRONMENT FOR STABLE RATES. THEY WANT TO GO BACK TO TRUMP 1.0 NONINFLATIONARY GROWTH, TAKE CREDIT RISK OUT OF GOVERNMENT DEBT AND RATES CAN DROP.
THERE IS TOO MUCH OF THE U.S. ECONOMY PULSING AROUND WASHINGTON, D.C. IN PARTICULAR. TALKED ABOUT HIS VIEW ON THE AMERICAN DREAM. A LITTLE HINT ABOUT SECURITY MORE BROADLY. CHINA IS INDEED CATCHING UP.
LET'S CHECK OUT THE MARKETS POST-TREASURY SECRETARY'S CONFIDENCE. WE ARE DOWN. THIS IS MORE A SYMPTOM OF WHAT IS HAPPENING IN THE GRANDER SCHEME AND MACRO. PARTICULARLY FOCUSED ON THE WORLD OF HOLLYWOOD RIGHT NOW WHERE INDEED THE MILKEN CONFERENCE IS UPON US. CRYPTO HAS BEEN A RISK ASSETS SELLING OFF AS WELL. NETFLIX IN THE EYE OF THE STORM. WE WILL DIG INTO IT IN A MOMENT.
WE STILL HAVE A EARNINGS THIS WEEK. PELLETIER COMES AFTER IT. THIS HAS BEEN ON A TEAR UP MORE THAN 60% RIGHT NOW. LET'S DIG INTO IT BECAUSE BLOOMBERG'S MARK GURMAN IS STANDING BY. IN THIS WEEK'S NEWSLETTER, YOU
WRITE THAT APPLE FACES A MAKE OR BREAK MOMENT. A LAUNDRY LIST OF PROBLEMS HITTING AT THE SAME TIME. TERRACE FRONT AND CENTER, BUT SO MUCH MORE. >> I WOULD SAY APPLE HAS MORE THAN A LOT GOING ON.
THEY HAVE TARIFFS THAT COULD UPEND PRODUCT PRICING, DEVICE PLANNING. YOU HAD A JUDGE IN CALIFORNIA RULED LAST WEEK THAT APPLE MUST STOP CHARGING DEVELOPERS FOR IN APP PURCHASES COMPLETED OUTSIDE OF THE APP STORE. THE VAST MAJORITY OF THE REVENUE APPLE GETS FROM THE APP STORE IS IN APP PURCHASES, THAT IS WHY THEY TRIED TO PROTECT THAT 30% COMMISSION.
YOU HAVE THE THREAT OF USING -- LOSING THE SEARCH DEAL WITH GOOGLE. THE GOOGLE SEARCH ENGINE IS THE DEFAULT PROVIDER ON SAFARI IS THE DEFAULT PRODUCT ON APPLE'S IPHONE. YOU HAVE KOREA, JAPAN . CAROLINE: WE SAW THAT IN THEIR EARNINGS CASTED JUST LAST WEEK. MEDIA STOCKS UNDER PRESSURE AFTER PRESIDENT TRUMP ANNOUNCED HIS PLANS TO IMPOSE TARIFFS ON MOVIES PRODUCED OVERSEAS. LOOK, THIS FEELS, THIS TRUTH SOCIAL POST WHERE WE LEARNED ABOUT A POTENTIAL 100% TARIFF HAS MORE QUESTIONS THAN ANSWERS FOR THE INDUSTRY NOW.
>> WITHOUT QUESTION, AND A LOT OF PEOPLE WERE THROWN OFF GUARD, VERY CONFUSED ABOUT WHAT IT MEANT AND ALSO WHAT TRUMP'S REAL INTENTIONS ARE. DR. JON VOIGHT AND -- ACTOR JON VOIGHT SPENT TIME WITH TRUMP ALONG WITH HIS MANAGER. THERE IS STILL A LOT OF PRODUCTION THAT HAPPENS IN THE UNITED STATES BUT THERE HAS BEEN A LOT OF PRODUCTION THAT HAS MOVED TO PLACES LIKE THE U.K. AND CANADA. THEY TALKED ABOUT THINGS LIKE INCENTIVES, BUT TRUMP LOVES A TARIFF. HE IS TRYING TO TACKLE THAT WITH TARIFFS. CAROLINE:
MORE STICK THAN CARROT. BARCLAYS ALREADY COMING OUT WITH A NOTE SAYING WE EXPORT MORE THAN THREE TIMES THEN WE IMPORTANT TERMS OF MOVIEMAKING AND YOU ARE HURTING THE INDUSTRY YOU ARE TRYING TO HELP. LUCAS: THE MOTION PICTURE ASSOCIATION WHICH REPRESENTS THE STUDIOS HAS NOT SAID ANYTHING PUBLICLY, BUT THEY DO HAVE REPORTS THAT SHOW THE U.S. IS A NET EXPORTER. WE HAVE A POSITIVE TRADE BALANCE WITH EVERY OTHER COUNTRY.
THE HIGHEST GROSSING MOVIES OF THE YEAR EVERY YEAR TEND TO BE U.S. MOVIES. THE MOST WATCHED TV SHOWS AND MOST POPULAR STREAMING SERVICES, ALL OF THESE ARE AMERICAN PRODUCTS FOR THE MOST PART. IN TERMS OF THE IMPACT, IT IS HARD TO KNOW WITHOUT KNOWING HOW THE TARIFFS WILL BE APPLIED. A LOT OF PEOPLE HAVE ASKED, HOW DO YOU TARIFF A MOVIE? I DON'T EXACTLY KNOW WHAT TO TELL YOU. CAROLINE: EXACTLY. LUCAS, I'M SURE WE WILL HAVE MORE QUESTIONS COMING YOUR WAY. ELON MUSK SAYS AI SHOULD REPLACE FUNCTIONS CURRENTLY DONE BY PUBLIC WORKERS. SO MUCH MORE FROM THE MILKEN
CONFERENCE. A CONVERSATION WITH THE BNY CEO ROBIN VINCE. CAROLINE: LET'S GO BACK TO THE MILKEN CONFERENCE WITH A CONVERSATION WITH THE BNY CEO ROBIN VINCE. >> THANKS, CAROLINE. LIVE ON MILKEN STAGE. THE CEO OF BNY JOINS US NOW. ROBIN, YOU HAVE BEEN TRAVELING
THE WORLD. YOU HAVE $2 TRILLION IN ASSETS UNDER MANAGEMENT. 53 TRILLION DOLLARS UNDER YOUR CUSTODY. WHAT ARE YOUR CLIENTS ASKING YOU RIGHT NOW? ROBIN: THERE IS A LOT GOING ON. GREAT TO BE WITH YOU, GREAT TO BE HERE AT MILKEN. THIS IS ONE OF THOSE PLACES WHERE EVERYTHING COMES TOGETHER FROM AROUND THE WORLD. I HAVE BEEN TRAVELING AND YOU
JUST HEAR DIFFERENT THINGS FROM CLIENTS IN DIFFERENT PLACES. I HAVE BEEN IN EUROPE AND INDIA AND THE MIDDLE EAST. THAT IS ALL OVER THE COURSE OF THE PAST COUPLE OF WEEKS.
I WOULD SAY THE SENTIMENT VARIES A LITTLE BIT. THERE IS A SIGNAL, A NOISE PROBLEM, PEOPLE CAN'T TELL THE DIFFERENCE BETWEEN THE STRATEGY OF WHAT IS COMING OUT. WHAT IS THE DIFFERENCE BETWEEN TARIFFS AND TRADE POLICY? D REGULATION. WHY ARE THESE THINGS HAPPENING? WE WERE JOKING ABOUT THIS EARLIER ON, BUT WE HAVE TO BE A BIT EXPLAIN NURSE IN CHIEF FIRST AND FOREMOST. WHAT IS ACTUALLY GOING ON? THAT IS WHAT THEY ARE INTERESTED IN. THERE ARE DIFFERENT PERSPECTIVES AS WELL. IN INDIA, THERE WAS A LOT OF
CONVERSATION ABOUT WHAT ARE THE OPPORTUNITIES FOR INDIA? WHAT MIGHT A TRADE DEAL LOOK LIKE? HOW CAN INDIA BENEFIT FROM THE OPPORTUNITIES? ROMAINE: IT IS ONE THING TO BE CONFUSED BY WHAT IS GOING ON IN THE U.S., BUT ARE THOSE CLIENTS ACTIVELY OR SPECIFICALLY TALKING ABOUT WHAT IS --ABOUT PULLING AWAY FROM THE U.S.? ROBIN: SOME OF THEM ARE THINKING ABOUT IT. IN EUROPE, THERE IS A LITTLE BIT MORE OF THAT NARRATIVE. LESS SO IN THE MIDDLE EAST. IN THE MIDDLE EAST, THEY SIT IN THE MIDDLE OF THE WORLD.
THEY TAKE SOME REACTION TO IT. THEY ARE INTERESTED IN LONG-TERM RELATIONSHIPS. IN EUROPE, THERE IS A BIT MORE OF A REACTION AGAINST IT. THERE ARE CERTAINLY CONVERSATIONS ABOUT DE-RISK? THERE IS A REASON WHY THE U.S. CAPITAL MARKETS ARE THE WORLD'S
GREATEST. SONALI: BACK TO THE TREASURY MARKET WHERE BNY IS A HUGE PLAYER. IT IS A NATURAL INTERMEDIARY. ULTIMATELY IT IS NOT JUST THE LIQUIDITY CONCERNS IN THE TRADE WAR, IT IS WHAT WE ARE GOING TO SEE IN THE FUTURE AS WE GET CLOSER TO THE X DATE. DO YOU HAVE ANY CONCERNS AROUND
HOW COUNTRIES MIGHT VIEW THE TREASURY? ROBIN: WE HAVE TO BE REALISTIC ABOUT HOW THE TREASURY MARKET IS ONE OF THE WORLD'S MOST IMPORTANT MARKETS. YES, LIQUIDITY WAS REDUCED. THE DEPTH AT THE TOP OF THE ORDER BOOK WAS DOWN 80% OR SO AT ONE POINT TWO OR THREE WEEKS AGO. THAT DOESN'T MEAN THE MARKET WASN'T FUNCTIONING, IT WAS WORKING REALLY WELL.
WE WERE SETTLING $20 TRILLION, BUT IT WAS HARDER TO MOVE. IT IS A COMPLICATED PROBLEM. A 7% DEFICIT IS A SIGNIFICANT THING TO BE RUNNING. IT IS NOT A LONG-TERM SENEGAL -- TENABLE SITUATION.
PEOPLE WERE LOOKING AT THAT. COMPOUNDING ALL OF THAT IS TO PEOPLE STILL HAVE THE FAITH IN THE UNITED STATES AND THE TREASURY MARKET? PEOPLE ARE TALKING ABOUT IT. DOLLAR SUPREMACY, THE RULE OF LAW, LIQUIDITY. IT IS EASIER SAID THAN DONE TO PULL AWAY FROM SOMETHING LIKE THAT. SONALI:
THE TREASURY DEPARTMENT IS TALKING ABOUT THE SUPPLEMENTARY LEVERAGE RATIO TO MAKE TREASURY MARKETS FUNCTION MORE EASILY. DO YOU THINK THAT IS NECESSARY? DOES THERE NEED TO BE REGULATORY RELIEF MORE IMMEDIATELY? ROBIN: I THINK IT WILL BE HELPFUL AS THE PUNCHLINE ANSWER TO YOUR QUESTION. SECRETARY BESSON IS A SUPPORTER OF MAKING SURE THAT WE HAVE THE DEEPEST MOST LIQUID MARKET IN THE WORLD, IN THE TREASURY MARKET TO BENEFIT. WHAT ARE ALL OF THE THINGS THAT
CAN BE BROUGHT TO BEAR TO MAKE THAT TRUE? IT IS A THREE LEGGED STOOL. THEY HAVE AN OBJECTIVE AROUND TRADE AND TAXES AND THEY HAVE A DEREGULATORY AGENDA. WE NEED BANKS AND OTHER MARKET PARTICIPANTS TO FULLY ACCESS THE MARKET AND KEEP THEM LIQUID. I THINK SLR REFORM IS PART OF THAT PUSH. ROMAINE: IS THAT LIQUIDITY THERE RIGHT
NOW? I GO BACK TO THE START OF APRIL WHEN YOU HAVE THE SELLOFF IN FINANCIAL MARKETS WHICH A LOT OF PEOPLE SPECULATE WAS TIED TO A POTENTIAL GUM UP IN WHAT WAS GOING ON IN FIXED INCOME. ROBIN: I WOULDN'T SAY THERE WAS A GUM UP. THE INFRASTRUCTURE WAS FINE. BUT THERE WAS WAS A LACK OF BUYERS AND WE HAD A REDUCED LIQUIDITY IN THE MARKET FOR SURE. ROMAINE: I DON'T WANT TO GET INTO SEMANTICS, BUT ISN'T THAT THE GUM UP? ROBIN: I THINK THEY ARE TWO DIFFERENT THINGS. ONE IS ARE THINGS FUNCTIONING PROPERLY AND THE MARKET? IF YOU DO A BIG TRADE, WILL IT FLOW THROUGH. THIS WAS A QUESTION OF BUYERS AND SELLERS COMING TOGETHER IN THE MARKETPLACE. IT WAS DOWN A LOT.
THIS IS WHERE THINGS LIKE THIS CAN BE HELPFUL. WE WANT INTERMEDIARIES, BANKS HAVE TO PLAY AN IMPORTANT ROLE IN THE TREASURY MARKET. THEY HAVE BEEN MOVED OUT OF THE TREASURY MARKET BY RULES LIKE THE SLR AND WE ARE IN FAVOR OF THINKING ABOUT THAT LEVERAGE RATIO BEFORE AS THE REGULATORS ARE TALKING ABOUT IT. SONALI: ANOTHER PROBLEM YOU BROUGHT UP WAS THE DEFICIT. IF YOU DO SEE SOME OF THE PRESIDENTS MEASURES GETTING PAST, DO YOU HAVE FAITH THAT THE DEFICIT IS CLOSER TO BEING CLOSED? ROBIN: IT IS GOING TO BE IMPORTANT THAT IT HAPPENS.
WE NEED TO SEE EITHER ON THE TAX SIDE OR THE GROWTH OF THE ECONOMY SIDE. YOU CAN COLLECT MORE TAXES EVEN IF TAXES ARE THE SAME LEVEL OR REDUCED IF IT IS BIGGER. GROWTH ENABLES EVERYTHING ELSE. ROMAINE:
ROBIN, WE HAVE TO LEAVE IT THERE, REALLY APPRECIATE YOU TAKING THE TIME. ROBIN VENTS, THE CEO OF BNY. CAROLINE? CAROLINE: GREAT INTERVIEW. SONALI BASAK AND ROMAINE BOSTICK, COMING BACK TO YOU SHORTLY. THE NASDAQ STILL UNDER PRESSURE, OFF BY 0.5%.
WE ARE SEEING ANXIETY AROUND TARIFFS AND TRADE. IT WOULD HUNDRED PERCENT TARIFF ON FOREIGN REDUCED MOVIES.
2025-05-14 01:17
