the bessent and lutnick all in interviews were very good, worth a listen
Summary:
Scott Bessent All-In in DC!
https://www.youtube.com/watch?v=lSma9suyp24
5 minutes
My dad was a real estate developer, a boom-bust type, which probably sparked my passion for risk management. I went to Yale, unsure what I wanted to do, back when punch cards were still a thing. Then, I got an internship that changed everything.
Jim Rogers, George Soros's first partner, taught me the investment business. He’d just finished his around-the-world motorcycle trip. It clicked – quantitative skills mixed with narrative and human emotion. I started in equities, then moved to Soros Fund Management, working for Stan Druckenmiller, my mentor. He’s never had a down year in 40+ years. He's notorious for going all in—only when he’s right, of course! Invest, then investigate; it takes courage to be a pig. I was hooked on markets. It's real-time feedback, long-term views versus short-term gauges. For 35 years, I've been a macro investor, trading currencies, bonds, commodities, equities, and credit. I traveled the world, meeting leaders, figuring out the next policy move.
A big part of being a macro investor is knowing where central bank action is headed, really understanding how government bonds will move. It involves spending time with economists globally and learning about capital flows.
I recall Bruce Kovner saying he succeeded because he could imagine a different future and believe it could happen. Believing is key, but you must also manage the risks.
Speaking of pivotal moments, 1992 stands out, when we essentially broke the Bank of England. The UK had tied themselves to the exchange rate mechanism. Stan's brilliance lay in recognizing the asymmetry created by these bands. We pushed them against the band, forcing the Bank of England to buy unlimited pounds and raise interest rates. Eventually, the pressure became unsustainable, and they were forced to exit. We made over 20% in a day. Stan, ever the strategist, immediately asked, "Okay, now what?" because there's always the trade after the trade.
Part of the problem is whether you can even trust the GDP numbers or non-farm payrolls. Are they reliable enough to act on, given their revisions? One of the prior administration's big mistakes was ignoring what the American people were feeling, dismissing concerns as just a "vibe session." People *know* when things aren’t right.
We need to find levers the federal government can control to address this anxiety. We're trying to accomplish three things – the "three legs on the stool." First, we need to bring down the massive federal debt with controlled spending cuts. I remember walking into Mar-a-Lago and the President asking, "How are we going to get these debt and deficits down without causing a recession?" That's the key. We aim to get back to the long-term average deficit, about 3-3.5% of GDP, by 2028, deflating it slowly. The U.S. doesn't have a revenue problem; we have a spending problem.
Deflating government spending is key, but with over $30 trillion in debt and $1.2 trillion in annual interest payments, that consumes a huge chunk of the budget, forcing deeper cuts elsewhere. Deregulating the financial system allows the private sector to re-leverage, absorbing those who lost government jobs.
Addressing the affordability crisis involves lowering prices—eggs are an example. Equally important is raising real wages, necessitating a reordering of the international trading system to bring manufacturing jobs back. Tariffs are a tool, but beyond them, low and predictable taxes, substantial deregulation, and cheap energy are crucial. Regulations stifle private investment. Tax cuts, alongside deregulation, can shift GDP growth, and keeping expenses flat amplifies the effect. Having spent 35 years in the investment business, I can attest to how flawed and gameable the system really is.
Now, with Congress as a partner, understanding the stakes of the budget – failure means the biggest tax hike in history – "Doge," our cost-cutting initiative, becomes critical. This isn't another commission of academics; we're talking real CEOs: Lutnick, Burgum, Elon. Experienced operators identifying savings while maintaining results. This cabinet is full of these operators, finding opportunities to save taxpayers' money without sacrificing outcomes.
I align with Elon’s speed-first approach; vested interests will bog you down. D.C. is a pressure cooker, 25% of the U.S. GDP pulsing within a 10-mile radius. Everyone wants their piece. As I said to Elon, "People are mad because you're moving their cheese." His response? "It's not their cheese. It's the American people's cheese." Every dollar spent enriches someone who'll fight to keep it. There's no winning in this role, only downside. Cuts are visible immediately, while benefits take months. It’s about Government Efficiency, not Extinction. We want a better-run government, not a smaller one.
But even cutting waste is not enough if it means cutting revenue with the IRS. Technology, AI models, can revolutionize tax filing, ensuring accuracy, minimizing waste, fraud, and abuse. We also have over 200 Biden whistleblowers, here to shed light on IRS audit triggers and political witch hunts.
One thing to look at is what's being done successfully elsewhere. Take Greenwich, Connecticut, maybe the richest suburb in America. They have a lot of multifamily housing, very expensive and nice. The state has this law where every town has to allocate 10% of vacant land to multifamily. If the local zoning board doesn't cooperate, developers can go to Hartford, and the state can grant the authority. Towns negotiate to avoid state intervention.
On the insurance front, could the federal government provide another layer of private money for California, acting as the fifth risk tranche? If so, we could mandate changes in building codes and brush cutting to mitigate risks.
Affordability is key, and lowering energy costs is huge. It impacts not just direct energy bills, but also the cost of transporting food and everything made from petroleum. That’s why we're launching an affordability czar, someone with supply chain expertise, to find quick fixes. People are anxious about affordability.
We need to realize there's a low-carbon or carbon-free energy alternative that's actually cheaper than building new plants. Unlocking energy production will drive the transition. The current administration’s approach to EVs misses the mark. Cheap energy solves a lot of problems, including energy security. Europe's current situation demonstrates that. The key issue is AI, which is so energy-intensive. We need to drive the incremental cost of energy to zero. Without cheap energy, we can't compete in manufacturing, especially since we won't crush labor costs like China.
Summary made and received in real time with harkread.com
Scott Bessent All-In in DC!
https://www.youtube.com/watch?v=lSma9suyp24
5 minutes
My dad was a real estate developer, a boom-bust type, which probably sparked my passion for risk management. I went to Yale, unsure what I wanted to do, back when punch cards were still a thing. Then, I got an internship that changed everything.
Jim Rogers, George Soros's first partner, taught me the investment business. He’d just finished his around-the-world motorcycle trip. It clicked – quantitative skills mixed with narrative and human emotion. I started in equities, then moved to Soros Fund Management, working for Stan Druckenmiller, my mentor. He’s never had a down year in 40+ years. He's notorious for going all in—only when he’s right, of course! Invest, then investigate; it takes courage to be a pig. I was hooked on markets. It's real-time feedback, long-term views versus short-term gauges. For 35 years, I've been a macro investor, trading currencies, bonds, commodities, equities, and credit. I traveled the world, meeting leaders, figuring out the next policy move.
A big part of being a macro investor is knowing where central bank action is headed, really understanding how government bonds will move. It involves spending time with economists globally and learning about capital flows.
I recall Bruce Kovner saying he succeeded because he could imagine a different future and believe it could happen. Believing is key, but you must also manage the risks.
Speaking of pivotal moments, 1992 stands out, when we essentially broke the Bank of England. The UK had tied themselves to the exchange rate mechanism. Stan's brilliance lay in recognizing the asymmetry created by these bands. We pushed them against the band, forcing the Bank of England to buy unlimited pounds and raise interest rates. Eventually, the pressure became unsustainable, and they were forced to exit. We made over 20% in a day. Stan, ever the strategist, immediately asked, "Okay, now what?" because there's always the trade after the trade.
Part of the problem is whether you can even trust the GDP numbers or non-farm payrolls. Are they reliable enough to act on, given their revisions? One of the prior administration's big mistakes was ignoring what the American people were feeling, dismissing concerns as just a "vibe session." People *know* when things aren’t right.
We need to find levers the federal government can control to address this anxiety. We're trying to accomplish three things – the "three legs on the stool." First, we need to bring down the massive federal debt with controlled spending cuts. I remember walking into Mar-a-Lago and the President asking, "How are we going to get these debt and deficits down without causing a recession?" That's the key. We aim to get back to the long-term average deficit, about 3-3.5% of GDP, by 2028, deflating it slowly. The U.S. doesn't have a revenue problem; we have a spending problem.
Deflating government spending is key, but with over $30 trillion in debt and $1.2 trillion in annual interest payments, that consumes a huge chunk of the budget, forcing deeper cuts elsewhere. Deregulating the financial system allows the private sector to re-leverage, absorbing those who lost government jobs.
Addressing the affordability crisis involves lowering prices—eggs are an example. Equally important is raising real wages, necessitating a reordering of the international trading system to bring manufacturing jobs back. Tariffs are a tool, but beyond them, low and predictable taxes, substantial deregulation, and cheap energy are crucial. Regulations stifle private investment. Tax cuts, alongside deregulation, can shift GDP growth, and keeping expenses flat amplifies the effect. Having spent 35 years in the investment business, I can attest to how flawed and gameable the system really is.
Now, with Congress as a partner, understanding the stakes of the budget – failure means the biggest tax hike in history – "Doge," our cost-cutting initiative, becomes critical. This isn't another commission of academics; we're talking real CEOs: Lutnick, Burgum, Elon. Experienced operators identifying savings while maintaining results. This cabinet is full of these operators, finding opportunities to save taxpayers' money without sacrificing outcomes.
I align with Elon’s speed-first approach; vested interests will bog you down. D.C. is a pressure cooker, 25% of the U.S. GDP pulsing within a 10-mile radius. Everyone wants their piece. As I said to Elon, "People are mad because you're moving their cheese." His response? "It's not their cheese. It's the American people's cheese." Every dollar spent enriches someone who'll fight to keep it. There's no winning in this role, only downside. Cuts are visible immediately, while benefits take months. It’s about Government Efficiency, not Extinction. We want a better-run government, not a smaller one.
But even cutting waste is not enough if it means cutting revenue with the IRS. Technology, AI models, can revolutionize tax filing, ensuring accuracy, minimizing waste, fraud, and abuse. We also have over 200 Biden whistleblowers, here to shed light on IRS audit triggers and political witch hunts.
One thing to look at is what's being done successfully elsewhere. Take Greenwich, Connecticut, maybe the richest suburb in America. They have a lot of multifamily housing, very expensive and nice. The state has this law where every town has to allocate 10% of vacant land to multifamily. If the local zoning board doesn't cooperate, developers can go to Hartford, and the state can grant the authority. Towns negotiate to avoid state intervention.
On the insurance front, could the federal government provide another layer of private money for California, acting as the fifth risk tranche? If so, we could mandate changes in building codes and brush cutting to mitigate risks.
Affordability is key, and lowering energy costs is huge. It impacts not just direct energy bills, but also the cost of transporting food and everything made from petroleum. That’s why we're launching an affordability czar, someone with supply chain expertise, to find quick fixes. People are anxious about affordability.
We need to realize there's a low-carbon or carbon-free energy alternative that's actually cheaper than building new plants. Unlocking energy production will drive the transition. The current administration’s approach to EVs misses the mark. Cheap energy solves a lot of problems, including energy security. Europe's current situation demonstrates that. The key issue is AI, which is so energy-intensive. We need to drive the incremental cost of energy to zero. Without cheap energy, we can't compete in manufacturing, especially since we won't crush labor costs like China.
Summary made and received in real time with harkread.com