Bloomberg's Nicholson on Trump and Treasury (Correct)(Audio)

for today's afternoon call. Here he is Bill Maloney. Good afternoon, Charlie. Manual savages are climbing today, with DAL currently up hundred and seventeen points. STPs Game ten in NAZAC is higher by twenty five, the small cap six hundred games four points in the U S ten yield at one point five seven per cent night out of tennesse B sectors are higher, live by games and Energy, Consumer Discretionary, and the industrials only Utilities felt doubt, Transports jump fifty eight

and as a bi Tex rise thirty one. Utilities fall a point, and the Vicks drops two point seven percent down leaders to the upside including Nike, Chevron, and Mark, while Disney, Walmart and Ge were a little changed. It was a huge day for the retailers after Macy Swart as much as nineteen percent That's Emotions two thousand and eight, while Coles jump seventeen percent after its earnings After about tonight, look for earnings from Nordstrom and Navidio Live from the

first Breaking news desk on Bill Maloney. Charlie, all right, we thank you very much, Bill Maloney, and to hear live breaking news over your Bloomberg Time Squawk SQ you a w K on your terminal. I'm Charlie Pellett, and that's a Bloomberg business flash you're listening to Taking Stock with Kathleen on Bluebird Radio. The United States is nearly twenty trillion dollars in debt now that number has almost

doubled under President Barack Obama. Republican contend for the White House Donald Trump hasn't said anything about the debt that has swelled during Obama's administration, and he's also said that it is time to borrow and borrow long term is for infrastructure projects such as the military, as well as

rebuilding airports and bridges. Jonathan Nicholson are a Capitol Hill budget reporter for Bloomberg b N, a wholly owned subsidiary of Bloomberg, the leading source of legal, regulatory and business information for professionals. Joins us now, Jonathan, tell us your thoughts on this idea of borrowing big and borrowing long term as espoused by the Republican contender Donald Trump. Well,

it's it's. Uh, there's kind of two things here at play. Um, one of which is probably arguably more of a Trumpian kind of thing, and the other which actually has some bipartisan support to it. Um. On the bipartisan side, there actually is some thought running from some economists that as long as long term, as long as long term rates are gonna be low, um, why shouldn't the US borrow um to to make needed investments? Um. Some some economists has said that it's likely we're gonna have low rates

for for a long time. Uh, so why not go ahead and trying to fix the fix the hole in the roof while the fixing is cheap, John, listen to me. Is is a very important question because the Obama administration several years ago in the financial crisis, decided that they thought it was necessary to have aquidity and issue a lot of short term a lot of treasury bills. They really shifted the duration and where the government is selling

its its bills and notes and bonds. But when you have thirty year paper at two and a half percent, when you have ten year paper at one and a half percent, that would be like saying, Gee, I'm not gonna buy a house and take advantage of a very

low mortgage race. I think a lot of people have scratched their heads and say, why does the Treasury not look at this and ship and and that's that's what That's what Trump and his adviser David Maul passed yesterday on Cspanders start talking about, um, why not lock in those those those low rates UM. Historically that is kind of not the way the Treasury has approached debt management UM, even going back under both the George W. Bush UH Reuben in the Clinton administration and UH and the Treasury

secretaries under Obama. They're thinking is that you need to have They're often phrase thing is regular and predictable debt issues. But as long as the markets know that there always be some supply of treasury debt and that it will change,

but it will change in relatively predictable ways. UM. That that will keep overall borrowing costs down by being regular and predictable rather than fearing, rather than have market participants worry that the Treasury is trying to time the market by issuing more debt, you know, or longer term debt when rates are low, and less when those conditions reverse. So that's sort of the thinking there, and it's been ingrained for for quite a long time. Actually, does that

thinking makes sense? Um I there's probably someone who can do the math um on that UM and say what the premium is that they're trying to avoid by by not doing this. Um. I think that it's not like they don't make any adjustments. Is in my story today that they're the the weighted average maturity basically the UH the maturities of the debt, of the debt weighted for how much is outstanding in each you know, bills, bonds, and notes UM has increased over the last couple of years.

It's up to about seventy months now, UM, so a little bit more than about you know, five years and ten months UM, where is the whereas the historical average for the last thirty or forty years is like fifty nine months. So it has crept up a little bit, but is by no means, you know, anywhere anywhere near what what what sounds like they're trying to talk about with the Trump with the Trump people. Well, Jonathan is part of a team. I know you also follow taxes

in the budget. Do you have any even the thumbnail figure right or since so report reporting on this, how much difference it would make if suddenly the Treasury issued a lot more tangiers and tenure in thirty years over time, how that would affect our estimate of the budget deficit,

which is such an important issue for this country. Uh No, no one that I know of has put pen to paper on that, um and and and and you do have to remember the here that that given the short term nature of bills, you know, we're still you know,

you still can get you know, bill build. The sellout rates, the stop out rates are called, still are so relatively small now, especially with you know, Brexit and every other kind of thing that puts the flight to quality to the uh to the market, that we're still able to sell build at such a small rate that the you know, the savings versus you know, the one point five percent

for ten years. You know, it's it's I really would wouldn't the only hazard guess at this point to be hofest with you, Well, that's because that's why you worked for Bloomberg B and A. Jonathan, because I don't guess you give us the real deal. Well, I don't do that good of math though, unfortunately, so you know that that's the downside, I guess, Jonathan Nicholson, Thank you so very much for joining This is an important and very

interesting story. Bloomberg DNA. That's where he's Capitol Hill Budget Reporter. That's a holy own subsidiary of Bloomberg and it's a leading source of legal, regulatory and business information for professionals. Check it out on your Bloomberg. I'm Kathleen Hayes along with pim Fox. This is taking Stock and this is Bloomberg. Bloomberg. Taking Stock is brought to by cash Pro, the cash

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