00:00Well, I have to say, just in purpose of full disclosure, I know all these people pretty well,
00:05and so I'm probably going to pull some punches here.
00:08But to answer your question, I was quite surprised to see Mr. Druckenmiller write that essay,
00:15and that's simply that op-ed, simply because he worked, obviously worked with Scott Besson
00:21and Kevin Warsh and all the rest, and it's a direct hit on the administration.
00:27You and I could go for two hours on this without taking a breath.
00:30Let me get this in here because Alexis has six questions.
00:33As simple as I can, how does this constrain Chairman Warsh at Jackson Hole,
00:39and frankly, how does it constrain Chairman Warsh to the next and the next and the next Fed meeting at
00:46the end of the year?
00:47So if you're talking about the bond market intervention, it makes Kevin Warsh's job harder.
00:53There's just no two ways about it because the cost of capital is debt capital, risk-free capital is artificially
01:00low.
01:01And I think what Mr. Druckenmiller was saying this morning, which I agree with,
01:04is that the price mechanism underlies just the bedrock of capitalism and regulating supply and demand.
01:12And so if you keep the price lower than it should be artificially.
01:16Do you see how he does that?
01:17This is why we love Evan Jason.
01:19He goes to the single sentence of the essay where I sat up and listened.
01:25I'll get to it in a moment.
01:26Alexis Christopher is with Jason Trennan across America.
01:29Let the bond market speak, right?
01:31That's what Druckenmiller basically said.
01:32But I want to switch gears for a minute, still stick with Besant, though,
01:35because he talked yesterday about unleashing economic D-Day on Iran.
01:40Your thoughts on the U.S.'s plan here.
01:44Might it backfire?
01:45Are we on a collision course with China, as some analysts are saying?
01:49And, Alexis, I'll just be very candid with you.
01:51This is not my lane, okay?
01:53But by the same token, it seems to me like it might have a better chance of success than what
01:58we've been doing,
01:59which is, I think, unless you're going to put my – this is my own personal opinion.
02:03I have no expertise here.
02:04But I think unless you're going to put boots on the ground,
02:06it's very, very difficult to use some sort of, as they say, kinetic approach and have it be successful.
02:16So this may indeed help in that regard to get what we want in the United States,
02:20which is a non-nuclear Iran.
02:24It might have a better chance of doing it.
02:25And I think, aside from that, we would have to have a more robust military intervention,
02:31and I don't think anyone really wants that, whether it's the president or the American people.
02:35I want to stick with the economy and what's happening right now with how the U.S. is dealing with
02:43Canada
02:43and what that might mean for us here in the U.S.,
02:47because we're already dealing with elevated inflation.
02:50This could, as Canada now promising these retaliatory tariffs,
02:53could raise prices here for the U.S. consumers.
02:56So what does this mean if it becomes this long, dragged-out trade war, as some are saying it might?
03:00Well, at the margin, clearly, it will prompt inflationary pressures in the United States.
03:07And again, as I started off the segment by saying,
03:09I think prices are the best way to regulate supply and demand.
03:13And if you start adding to prices, adding to costs, clearly, one would think that demand would go down.
03:21Now, I have to say I'm more sympathetic to President Trump's tariffs than a lot of people in my business,
03:26and that's simply because I kind of know where he's coming from.
03:30If you look at any of these so-called free trade agreements,
03:33they're 1,000 pages long and have a million cutouts for various special interests and all the rest.
03:38So there's really no such thing.
03:40I think in a perfect world, free trade would be great,
03:43and the free trade agreement would be a paragraph long or a sentence long.
03:47And we don't really have that, so there's just a reality, I think,
03:52that the president of the administration is addressing.
03:54A nice lift to the market today.
03:56As Isabel Lee said, NVIDIA down 14, 20, 30 days straight.
03:59I'm kidding, folks.
04:01But anyways, a nice pop to the market.
04:03NASDAQ up eight-tenths of a percent.
04:05Jason Trinit here on the Drucker-Miller-Abesant moment that we're in.
04:09Buried in that essay is a nominal GDP statement,
04:12which is that where the 10-year yield is right now
04:17is somewhat accommodative given our boom economy.
04:22The bottom line is we've got a nominal GDP like a banana republic,
04:27you know, 5%, 5.5.
04:29John Reiting has consumption investment out at an 8% statistic here.
04:33We're not all that restrictive right now on our yields, are we?
04:37No.
04:37And I think, and again, to spread some of the blame around,
04:42I think Fed policy in many ways is responsible for that
04:45since the global financial crisis,
04:46and that's because they had a perpetuation of financial oppression
04:50and the use of QE,
04:51which, in my opinion, as Stan says in this article,
04:56it greatly encouraged congressmen to spend money they don't have,
05:02which they'll readily do.
05:03And that's both sides of the aisle,
05:05and that's happened over a long period.
05:06But equal opportunity.
05:07Equal opportunity.
05:08And I can tell you there's not a lot of people in Washington,
05:11just given my own wanderings down there,
05:14that really see this as a threat,
05:16our debt level, or really worry about it.
05:18I'm not even sure they know that the Fed has been bailing them out.
05:23But, Jason, the heart of their optimism,
05:25and the best in optimism,
05:27is we will continue to grow through innovation,
05:32the classic Stiglitz equation,
05:34that our growth rate will do better than our debt buildup.
05:37Yeah, well, that's, you know,
05:38there's Reinhardt and Rogoff talked about the ways you get out of it.
05:41I have Ken Rogoff and Jackson Hole folks.
05:44Last night, wandering through, this time is different.
05:47That's my first question to Rogoff and Jackson Hole.
05:50Yeah, right, because as they pointed out,
05:52there are a couple of ways to get out of this.
05:54You just default.
05:55Well, we don't have to do that because we have the reserve currency.
05:57You can do soft default of inflation.
06:00You can take over another country and take their resources.
06:03Rename like Ontario.
06:04Like Greenland or something, right?
06:08Or you could raise taxes and cut spending,
06:11which I think would be probably disadvantageous at this point.
06:17Or you can grow your way out.
06:18And I think growing your way out is always the best way.
06:21Right now, I think it's the only choice we have
06:23because you can't raise taxes, in my opinion,
06:25you can't raise taxes enough or cut spending enough
06:27to make a big difference.
06:28Alexis Christopoulos and Tom King,
06:30welcoming all of you across the nation,
06:32around the world, Jason Trenard with us
06:34with Stratigas Research Partners.
06:38Again, the way you choose to listen to us every morning,
06:40we thank you.
06:4199.1 FM, Nathan Hager Radio in Washington.
06:44Good morning, 92.9 FM in Boston,
06:47Sirius XM across all of America and Canada,
06:51including Alberta.
06:53Yes.
06:53Which is a joke I said is a 51st day.
06:56We'll talk about that in the 8 o'clock hour.
06:58But good morning, Alberta, on Sirius XM.
07:01Alexis Christopoulos with Jason Trenard.
07:05So, Jason, with the Treasury now intervening
07:08in the bond market, what does this do to our credibility
07:11on the world stage?
07:13Well, it certainly, I would say, doesn't help.
07:19I mean, I'd just be very candid.
07:20And I do think if I'm playing the markets,
07:23if I'm thinking as a speculator,
07:25I would be very careful in being short bonds here
07:28because the tool cut that Secretary Besson has talked about
07:32is large, and there are a lot of things he can do
07:35to hurt bond shorts.
07:37From a long-term perspective, you're treating the symptom
07:42rather than the disease.
07:43It's a band-aid, in essence.
07:45Yeah, you're not dealing with the underlying problem,
07:48and that's not Secretary Besson's fault
07:50or even President Trump's fault.
07:51It's a collective fault of Washington.
07:55So, if this is the landscape in which we're going to be navigating,
07:58and we're seeing now investors moving to other assets,
08:02to hedge, gold has been up lately,
08:04Bitcoin above $80,000 for the first time in three months,
08:08at least earlier today.
08:09I think it's pulled back a little bit now.
08:10Is that the way to move forward?
08:13I think, listen, I think that's probably going to continue
08:16until anyone gets any religion on spending,
08:19which is to say, you know,
08:20people talked about de-dollarization earlier this year.
08:22I think it's more de-fiatization
08:24because I don't see another fiat currency
08:28that will take the place of the U.S. dollar.
Comments