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We've got a lot to discuss.
President Trump extending trade talks with China for another sixty days so as both countries continue to wine out key differences. Joining us now to discuss that and a whole lot more. The seventy nine Secretary of the Treasury sculp Lesson, miss the Secretary, good morning, good to see it.
Warning Johan, you're a cover model. Now you're famous.
Can we get that front cover up for Business Week this month? Mister Secretary? I remember when you were just scult beston and we could go for breakfast together, the three of us, and no.
One would bother you. What happened?
I don't know, but I hope it's not the curse of the cover.
There the top. Historically the being on the cover is a curse.
Well, this secreity market is not curse that keeps grinding out all time highs. There is some confidence that we're setlling some issues on the trade front. There's one issue that came up this week that we'd love to hear from you about, and that's in video. Where did this agreement come from? You've been quite innovative industriction on tray issues. Where did this come from? Who came up with it?
The president?
The president, as I tell everyone, the President is one of the most open minded people I know. He does everything at first principles. Why do we do things this way? Why shouldn't we do it the other way? And you know, I think that this is a very unique solution allows Nvidia to expand into China. It can make in Nvidia chips the bellweather for Chinese technology, and then the US taxpayer gets a share of that.
Key words unique, Is it unique to Invidia, an empty or is this a model for other companies?
I think we could see it in other industries over time. I think, you know, right now this is unique. But now that we have the model and the beta test, why not expand it.
What do you say to people who think we're putting a price on national security concerns by basically selling export licenses.
There are no national security concerns here. We would not sell any of the advanced chips, so the H twenties. I don't know whether you'd say there are four or five six levels down the chip stack. What we do not want here, Ane Marie, is for Huawei to have a digital Belton Road so we do not want the standard to become Chinese across the world or even in China.
We have exclusive reporting that Beijing is now sending out letters to firms saying, actually, shrug off those H twenty and use our domestic champions. Is this something you might discuss with your counterpart.
Sure, we can discuss that, But it also tells me that they are worried about the Nvidia chips becoming the standard in China. Look, Nvidia is an incredible product. A lot of the technology in China is they're piggybacking. And I'll use piggybacking as a kind word for acquiring our technology.
Do you mean stealing your words? And yes, that's what I mean.
And the in Vidio Jensen Wong just days years.
Ahead of them.
Criticism came from the Wall Street Journal editorial board though about this new unique policy. They say it's a step toward government control of private business.
Are you concerned some of these.
Polies are starting to look like the country you're actually trying to de risk from central planning basically out of the old No, no.
No, not not at all, because where we got was with this unfettered trade. We did not have secure trade or fair trade, and so now we are trying to make it secure, so you don't want to We're not sending out the highest level chips, and you know, we don't want to sell everything to everybody, so that there is a need for intervention. And you know, the Wall Street Journal just let let her rip. Kind of a bunch of grumpy old men over there. I was with them yesterday.
This is going to raise some revenue. What do you plan to do with it?
Paid on the debt.
It's all going to go to play down the debt. Because we have heard some stories about the money going back to consumers, going back to citizens of the United States taxpayers.
Well, President Trump's talked about that, and look at the bottom fifty percent of wage journers in the One Big Beautiful Bill are getting a lot of money back. No tax on tips, no tax over time, no tax on Social Security. Auto loans are going to be tax deductible. So I think if we could make a substantial debt in the debt repayment, then we could talk about a program like that.
Could you share with us the kind of numbers you're thinking about at the moment, just in terms of revenue raising and not just the Nvidia deal. I'm talking about the tarifs on top of that. What are we raising at the moment month on months, Well, Johnson.
I've been saying that we could hit three hundred billion this year, and I think that number is going to be low. I think I'm gonna I always like to come in low and then surprise on the upside. But I think in the next days or weeks I may have to move that number up substantially.
You've heard the debate playing out on Wall Street now for a number of months. Who's going to pay the teriffs? By definition, the important will pay the tariff. The more important question here is who absorbs the costs, whether it's the foreign supplier, whether it's the domestic company here in the United States, or the end consumer. We've got some data yesterday. You've seen it. We've all looked at it.
Limited tariff pass through relative to what was expected. Because of that, a lot of people are suggesting that maybe companies are absorbing costs in a way we didn't anticipate. Perhaps the pass through will be more muted in the future. Are you comfortable with where things are now or do you think things might rebalance in the months to come.
Jonathan, I think your framing there is exactly right, exactly right, because that obviously the tariff itself is paid at the port, but what if the producer in the other country has lowered their price, they're ten fifteen to twenty percent, so
that there is no race change with the tariff. And obviously our largest trade deficit is with China, and China does not have the same profit objective that other Western democracies do, so that is an employment agency, and my view has been that they would continue to eat the teriffs. They are doing that, so I think what we've seen
is likely to continue happening. I also think there are probably a lot of corporate margins that got very fat during COVID and now we're seeing a return to normal pre COVID margins.
You see this as some kind of redistribution between corporate America, maybe the consumer main Street and Wall Street.
I think disadministration is all about Main Street, but Wall Street's at a new high, so it's its false equivalency. It's not either or I tell everyone, I call it parallel prosperity. Wall Street's done great, Main Street can now do great Wall Street.
I do even better if the Federal serve cuts interest rates. The President was pretty clear yesterday put out this comment Jerome too late, Pale must now lower the interest rate. Is it reasonable to give them a bit more time to draw conclusions about what's happening care Well.
I think what we could see is that, let's first of all, what if the BLS data had been the higher quality and we'd had those numbers, Jonathan, So if we'd seen those numbers in May in June, I suspect we could have had rate cuts in June and July.
So that tells me that there's a very.
Good chance of a fifty basis point rate cut. And I think President Trump is very good at giving these nicknames. And I think the reason that the Jay Powell gets a nickname too late is because he wants to go into a series of rate hikes. He's not willing. He's not Alan Greenspan, who was very forward thinking.
They try to be more data driven.
Which I think a mistake because I think we are going back into an economy like we had in the nineties, so you know, it's just very old fashioned thinking. But I do think we could go into a series of rate cuts here starting with a fifty basis point rate cut in September.
A fifty basis rate cut in September, does that signal that the economy, though, is not doing well.
That signals that there's an adjustment and that the rates are too constrictive.
If you look at any model that the you.
We should probably be one hundred and fifty one hundred and seventy five basis points lower. So I think the committee needs to step back. I think probably one of the most politicized governors just went off the board and that she was very, very political, I believe, and I.
Think that that what does she do that gave you that impression? I'd love to know? Sorry, I mentioned you're referring to Governor Coogler. What does she do that gave me?
I think there's a lot of insight baseball, and look, Governor Couglor, you read what she was saying with Kamala Harris was running that we needed rape cuts, we needed this, we got to phone the runway. And then all of a sudden it was hard to know whether we know TDS.
Was it Trump that the.
Dimension syndrome or Trump derangement syndrome or tariff derangement syndrome.
You get the opportunity to remake the Federal Reserve. The president gets the opportunity to remodel reshape the Federal Reserve. And I'm not talking about the remodeling that maybe the current chairman's going through. We'll talk about that another time. I want to talk about the complexion and character of the committee, the changes that you're making at the moment. Stephen Maron, let's start with Stephen. How quickly can you get more and confirmed?
We'll see. The President has great sway with Leader thim. Leader has been a great partner during the tax deal, and I I think that he would like to see Steven, who I've known for a long time, get on there as soon as possible. So I'm hopeful about the September meeting. And Jonathan, the President's concerned about the building and those massive costs overrun, which just tell you that there is no accountability at that organization. There's no oversight in terms
of the spending. But the President and I are both concerned about the foundations of the FED, the foundations of the FED, and how did this happen and why did it happen, and how did the leadership let it happen.
When it comes to Director Myron, do you expect him to stay on past the January term that expires from Coogler seat.
I wouldn't expect that.
So, who are some names you're thinking of the Cooglar seat? Because everyone has been focused on who is going to fill the chairmanship role? Who are you thinking to fill that extra seat?
Well, e Marie, I'm going to We're working on the big list right now. I think they're going to be a couple more names revealed today.
They're going to be private sector names.
So we had a series or a list of.
Current FED members.
We're going to have some private sector, very well respected, very well respected people, and then we will get to the second seat.
Can you give us some names, a little bit of a tease, maybe people that have been on this program.
Well, I just did tease telling you there'll be some private sector names.
Okay.
When it comes to the FED chair though, can you give us a sense of how many names you're actually thinking about.
Well, I'm going to interview I'm going to cast a wide net ten to eleven people, and then there'll be a group of us who are meeting with them and we want to talk about monetary policy. We want to talk about regulatory policy, which is very very important because the FED step I think bigfoot of the other regulators.
The Fed's one of three regulators, Federal Reserve, OCC and FDIC, and I think that they need to understand that they are one of three, and then the third is the institution itself, which I think is what President Trump has been focused on quite a bit too.
After you do this process, how many names are going to give to the President and when does he start those in person interviews?
We don't have a timeline.
By putting Stephen Myern in that gives us more time, and again, I want to cast a wide net. The President's very open minded. Before he chose j Powell, Janet Yellen was interviewed, John Taylor was interviewed. Two of them couldn't have been more different, so they were under consideration.
I give you credit for coming up with a really credible list to replace the Federal Reserve Chair Jake pab without it down. I think most people that come on this program agree with that. What I want to talk about is the BLS NOW because there's some controversy around this pick. I'm sure you've heard some of the concerns each. Anthony had said the following early this week before getting the pick from the President. Until this issue with ros is corrected, he said, quote, the bil I should suspend
issuing the monthly jobs report. They keep publishing the more accurate, though less timely, quarterly data.
We'd love your thoughts on this. Is that something you support, not at all?
And look what somebody says when.
There are are private citizens is very very different. You know, I called for a shadow fedshair and you know now that I'm in the seat, I don't think we need to do that. And I was there when EJ was interviewed, and he is incredibly qualified. And I think the most important thing here is that we get back to the integrity of the numbers, because it just became okay, just like so many things in our government, for it to get sloppy.
And EJ is precise.
He has a doctorate in economics. I think President Trump put a lot of thought into this. He was very thorough in his questioning of him. What we want is good data, because you can't make good decisions without good data. As I just said, is very likely that the FED would have been doing something else. In June in July if they had had this data.
Well, let's talk about the data we've got and the process we have and how we might improve that process. As you know that data is prone to big revisions in your career on Wall Street, we've all been dealing with this for a long long time because of the process and the lack of time, and the response is it is constantly reviewed month and month. As you get more responses from Corporate America. How can we improve that process so this data is less prone to these big revisions.
Well, I've been in government now for seven months and I can tell you that if we take the irs, which I'm now the head of, they've been working on a tech upgrade since nineteen ninety. Nineteen ninety we brought in a young person to fix that. The tech upgrade has been underway for longer than he is old. So
he wasn't born when the tech upgrade started. So you know, I just think like this idea that we're accepting this mediocrity and government, Why don't we bring things into the twenty first century?
Why don't we bring it into the digital age.
Because I don't know about political bias one way or the other, but what I can tell you is that the sample response size kept getting smaller and smaller, and then they filled in the cells. And anytime you get judgment versus data, then things become qualitative and not quantitative. And I think EJ is going to do a great job of bringing back quantitative standards. I think he like these attacks in the press. I think they're all wrong with him.
It's not in the press, it's even within conservative economic circles that don't think that he is credible to run the commission. Is the Trump administration open to putting more resources than to BLS, maybe lifting.
Hiring free, you know, and Marie, that's more of a democratic idea that you know, we need more. It's always money. It's always money. It's where it's New York City schools, Chicago schools, DC schools, you get terrible outcomes. I think that he's going to sit back, look at the process and how can we use technology to do this better? You know, I got the Treasury and it was shocking.
We processed one point five billion payments a year, and five hundred million of them, one third of them did not have what's known as a task Treasury accounting symbol on them. And people were just hitting sin sin sin, and it wasn't a gigantic leap, just to try to get people to do their jobs.
This has big implications for how people view credible economic data, but also the markets as well. So let's talk about financial markets. In the bomb market, you've always been a ten year man. The spread between the two year and the ten year, I think has been really stable over the last several months, where we start to see some leakages between tens out to thirty. That thirty year bond as a tracy second chary, I remember you refering to
yourself as the nation's top bond salesman. What's the usefulness of issuing a thirty year bond when it feels like at the moment we're outsourcing borrowing cost to what happens in Japan, what might happen in the UK, what happens in Europe. What's the value of issuing that.
That's a great question, Jonathan, And look, we are committed to keeping inflation expectations low, and this is a global phenomenon, whether it's the ten or the thirty that the US tenure is one of the few ten years where the yield is down on the year.
So that tells me.
That there's credibility from Treasury, credibility from FED, that the inflation expectations are well anchored. But there's definitely leakage from the Japanese have an inflation problem that I've spoken to Governor u Wada.
My opinion not his.
They're behind the curve, so they're going to be hiking and they need to get there problem under control. In Germany, we saw a substantial spike in German rates in the past.
Week also, so you know our thirty year.
Is getting dragged along with that, we've been refilling the treasury general account, which during the debt ceiling standoff got run down, and we're doing that with short term bills.
Do you see more reason then to pair back on thirty ier issuants? With all this in mind, and this is a change again for you now and to see as you look at these developments and rethink things, how are your thoughts on that matter evolving?
Yeah, they are evolving, and we'll see where things go. I do think as we bring down this big deficit that we inherited, I think that the US, that the entire US curve can have a parallel shift down relative to the rest of the world.
Do you think you can work with the Federal Reserve on this matter? So if we take the weighted average maturity of FED hooldings at the moment, I believe that's right at about nine years. The issuance of the average maturity about standing bills notes baws that's closer to six. Do you need to narrow that gap a little bit?
Yeah. Look, I don't think.
The FED needs to get back into the large scale asset purchase business, and they know we've had very good demand, especially in the belly of the curb, which is where asset managers seem most interested.
Now when it comes to other things you're working on in Washington, DC, there's still this stock band legislation that has been circulating around Congress. Is a president prepared to sign that bill?
I don't think we have the perfect bill yet, but I am going to start pushing for it's single stock trading ban because it is the credibility of the House and the Senate that you look at some of these eye popping returns, whether it's Representative Pelosi, Senator Widen, every hedge fund would be jealous of them, and the American people deserve better than this. People shouldn't come to Washington to get rich, they should come to serve the American people.
And it brings down trust in the system because I can tell you that if any private citizen traded this way, the sec would be knocking.
On their door.
Do you think it needs to extend they'll beyond single stocks. These individuals can still have ets and other products.
Well, what I used to do my old firm was you could buy ETFs. They had to be widely held ETFs, so they couldn't be of a small size and there was a long holding period. The House and the Senate, they're supposed to be working for the American people, their constituents.
They're supposed to be.
Making law, and they shouldn't be trading every day. I'm not going to name names, but there was one person in Congress who had twelve or thirteen hundred trays two years ago and my hedge and didn't have that many trade Do you think it.
Needs to also extend to the executive branch and include the president and the vice president.
I think that they would be fine on the single stock and the holding period.
Maybe titus with the secretary. Do you not think they're just great tritus.
It is a statistical anomaly, you know.
Warren Warren Buffett wrote an essay once and he talked about the zoo and Graham and Doddville, and if all the orangutangs in that zoo kept typing the Bible, then there's something going on in that zoo. There is something going on on Capitol Hill in terms of information leakage that is statistically, they are not not sound.
Do you think those restrictions should extend to the executive branch? Sorry, do you think those restrictions should extend to the White House?
Well, I mean they already, they already extend the Treasury.
Is the President about this? Is he comfortable?
Well, the President's come out and favor of this, and King Jefferies is in favor of too. And I can tell you if I were Congress and I were looking at my ratings with the American people, I would be pushing this because again, it's an extractive class. You should not come to DC expecting to line your pocket.
You should come to d C to do the people's business.
We couldn't agree more.
And it's been greatly disappointing to see that there's tighter restrictions on how journalists trade than over some members of Congress in Washington.
Yeah, I mean again.
Is one of the things that I think we can do to get trust back into the system.
Just wanted to finish on the President's visits to Alaska going into the weekend. Emory is going to be that what do you think we can accomplish this weekend?
I think the President has been thinking about this a long time. He believes, as do I that this war never would have started if he had been president, and he is committed to ending the bloodshed, but not in any calls, not in any I think everyone has been frustrated with President Putin. We expected that he would come to the table in a more fulsome way. It looks
like he may be ready to negotiate. And we put secondary tariffs on an Indian on the Indians for buying Russian oil, and I could see if things don't go well, then sanctions or secondary tariffs could go up.
What about China, They're the main purchasers of Russian crude.
Again, I'm not going to get ahead of the president, but the president is the best at creating leverage for himself and he will make it clear to President Putin that all options are on the table.
So sanctions can go up, or they can also be loosened.
Sanctions can go up, they can be loosened.
They can have a definitive life, they can go on indefinitely. Know, there's this rush shadow fleet of ships around the world that I think we could crack down in them. But the a Marie and Jonathan is the one message I would leave you with. It's the President Trump is meeting with President Putin, and the Europeans are in the wings, carping about how he should do it, what he should do it. But the Europeans need to join us in these sanctions. They need to the Europeans need to be
willing to put on these secondary sanctions. I was at the G seven meeting in Canada with President Trump, and the Europeans kept talking about Senator Graham's bill to do the secondary tariffs. And I looked at all the leaders around the table and I said, is everyone at this table willing to put a two h secondary tariff on China?
And you know what, everybody wanted to see what kind of shoes they were wearing.
I imagine the Germans went very quiet and that's been a problem for a long time.
Yeah, it's put up her show enough time. The president is creating his own leverage. We need the Europeans to come in and help create more leverage.
Mister secretary, I appreciate your time. Good to see if you're enjoying this. I get the fill that you're enjoying this. It's good to see you. You seem happy.
I think things are going well.
The Treasury Secretary scope beston, mister Benson.
Thank you. We appreciate it so