♪ >> welcome to bloomberg markets. this hour we will not only be covering the news in this session but also bringing you the highlights from bloomberg's interview today with scott bessent. vonnie: the s&p is down about .9%, the nasdaq is down 1% and they're off to session lows but bear in mind, many of the stocks within these have had he's in run-ups. many of them have had nice run-ups. there are a few concerning things out there. wal-mart's outlook, for example, perhaps a little bit of trepidation about the consumer. but in general we're getting a lot of reassurance, including from scott bessent. if you look at the 10-year

yield, it is down about two basis, two to three basis points at 450. i did want to point to the optimism that we're seeing in some parts of the world as well. china's k-web, that's one of the biggest china exposed e.t.f.'s or at least internet company exposed e.t.f.'s up and that is partially thanks to alibaba and some of the other internet companies to. some of those individual equity movers, we're going to start with wal-mart because this is where we are seeing just a little bit of nervousness. shares sliding after the annual profit outlook fell short of estimates. the stock having its worst interday lost since november of 2023. despite this drop, bloomberg intelligence says this is nothing new, wal-mart historically starts the year with a cautious outlook. and lifts guidance later on. then on the other hand, alibaba shares surging to the highest since 2021 after posting its fastest pace of revenue growth in more than a year. it's all gains and ecommerce and count services and a c.e.o. says the company will spend more on a.i. infrastructure and that

artificial general intelligence, a.g.i., is the company's primary objective now. carnival shares, this is another one, tumbling today along with other cruise companies. the worst interday drop since june of 2023. this comes as u.s. commerce secretary said cruise lines could start to pay taxes outside the external revenue service program. this is unlikely to happen and this could be a buying opportunity. earlier today we also heard from another top trump administration official, treasury secretary scott bessent spoke with bloomberg surveillance about various topics from china and ukraine to inflation and tariffs. let's start with debt market and if he will maintain the level of treasury issuance. >> the previous administration shortened some of the duration and we haven't shortened it further. we've just kept the policy in place. and i believe over the medium term, it's going to play out as

it becomes clear that everything that president trump's administration is doing will be disinflationary. we're going to bring down energy costs, we're going to bring down regulation. what doge is doing in terms of cost cutting. and i think once tax cuts and jobs act is made permanent, then we can have a revenue increase, cost decrease and, as you said, as the nation's top bond salesman, i got a pretty good story. >> what's the medium term? help me understand that. what is the medium term and then once you see all of those things, let's say those ambitions become reality, then you start to think about turning down the debt? >> sure. but that's a long way off. and we're going to see what the market wants. as lisa noted this morning, and it's fun to see someone who believes that fed minutes are exciting -- [laughter]

-- the fed said that they may stop their balance sheet runoff. easier for me to extend duration when i'm not competing with flower big seller. >> when do you think that time would be? end of the year? or further down into the administration's term? >> it's going to be path dependent. we're still seeing sort of the residual bidenflation that's still coming through and i think as, a, the market starts to realize what we're doing, and inflation starts to drop, then we will see. so it's going to be path-dependent. that's the eventual goal. but i'm not going to signal it now. >> when you mention the fed minutes, participants indicated yesterday that one of the problems they had was they were waiting for trump policies to come into place. do you think that those policies, when you think of tariffs, potentially deportations, immigration, this

can be inflationary. is it going to hold back the fed from cutting rates? >> well, to the extent that team transitory at the fed is still -- has any credibility, i would say that tariffs, if they have any price adjustments, are the most transitory thing there are. so i don't think that should hold them back very long. and i would point out that depending on what number you want to use, 10, 20 million people who came across the border, we had the worst inflation in four years when we added 10 or 20 million people so i'm not sure why people are saying that it's inflationary to tell them to go home. >> when you look at team transitory, do you think the next move for them would be a cut? >> i have said publicly that i will talk about what the fed has done. when i was a market commentator and investor, i would talk about what they should do. now i will leave it to them and chair powell and i have a weekly

breakfast, we saw each other yesterday and i will convey my thoughts there. >> let's talk about what they have done. we can comment on that. you said you're willing to. they cut rates 100 basis points. going into the end of last year. and an odd thing happened. yield to the long end rose, they didn't decline. do you think federal reserve easing contributed to higher long-end yields? >> i would just say the point of cutting rates is to cut rates. so if they cut rates and rates went up, then there probably was something there. i thought that the rate cut in september, i said it maybe even on your show here, that it was oversized. the market responded but now we're seeing term premium come back down. so we'll see what happens from here. >> do you think the current rate right now is enough to bring down 10-year yields over time? just by virtue of being restrictive? >> again, i'm not going to comment on current policy. >> i am curious, you talk about how you do look at the 10-year yield every single day. i love that.

i love that you're the top bond salesman in the united states and i'm wondering, are you expecting it or hoping it to go down from here? is that necessary to reach, to achieve your 3% growth target? >> well, what's necessary are the underlying conditions. so the underlying conditions that we need for yields to come down, for growth to go back up, we've got this affordability crisis in housing. we've got an affordability crisis in the auto payments. so one thing that would be very stimulative and as jonathan mentioned earlier, 10 years come down or rates have come down every week since donald trump's been president. so if we can continue that for 52 weeks, that would be great. and it would be very -- it would be a win for the american people. which at the end of the day, that is our goal. so, if we do what we say we're going to do, if we can rein in the budget deficit, if we have noninflationary growth, if we bring down energy prices, and i

think now that i have the numbers on the inside, there was a big contributor to this massive inflation was regulation. i think you said earlier this morning that what if these things cause inflation? as anne marie just said, some of the policies. well, what really happened under the previous administration was you created a demand shock with government spending. but it was met by supply constraints as there was more regulation. and trump 1.0, we created demand shock with tax cuts and it was met by supply side response of less regulations. so the biden administration created this inflation that, a demand shock and constraining supply is the ultimate recipe for inflation. >> now you want to cut spending. the doge program, let's talk about it. you've called it one of the most important audits to government

ever. you remember the clinton tried something similar. the national partnership for reinvefnting government. how different will this be and what kind of cost savings are you thinking about? >> i can go all the way back. given my tenure in the business, i can go all the way back to the 1980's, to the grace commission. they had some great ideas. most of them not implemented. i think that the clinton-gore initiative, i think a lot of that was academics. so this is people on the ground, all areas of government, and it's moving quickly and i really do think it's unfortunate that it's been lampooned and attacked the way it has. but when it's being attacked like this, it tells me that there are a lot of entrenched interests in terms -- when you're moving people's cheese, they don't like it. and it's not their cheese, it's the american people's cheese. >> how about putting some of that cheese back into american peoples' pockets? how inflationary would those

$5,000 potential doge checks be that the president spoke about yesterday? >> i think again, if we are bringing down energy prices, if we are cutting the regulation. i think thatle, to quote the vice president during the campaign, i think it's holistic and i think that it's all kind of one mosaic. if you were to inject a lot of money into the economy -- because think about this. we are at this massive deficit to g.d.p. 6.7, almost 7%. so what we have happening on one side, you'll be bringing down that spending in the economy. so very easy mental model is every $300 billion is about 1% of g.d.p. so every $300 billion that doge is able to save, could you put

that back in the economy into people's pockets? >> one thing potentially that could happen and people are questioning it is maybe remarking gold. elon musk who is leading doge was talking about maybe going to fort knocks to make sure those gold reserves are there. that comes under your purview. do you have any plans to visit kentucky? >> i don't have any plans. i can tell you that we do an audit every year. i can tell the american people on camera right now that there's a report september 30, 2024, all the gold is there. any u.s. senator who wants to come and visit it, can arrange a visit through our office. >> gold was your biggest holding when you were hedge fund manager, before you divested to become the treasury secretary. so you know the value of where gold is right now versus where it's marked on its balance sheet. just north of $40 an ounce. it's close to $3,000. is it under consideration for this administration to revalue gold? >> i think that somehow when we were talking about the sovereign wealth fund, and i said monetize

the balance sheet, i can promise you that's not what i had in mind. vonnie: we will have more of this interview with treasury secretary scott bessent throughout the hour. but first we're going to turn to commercial real estate sector that's hoping for lower rates. morris chen runs a commercial real estate e.t.f. and joins us next. this is bleg. ♪ -- this is bloomberg. ♪

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i had no idea what i was doing. but godaddy airo does. using ai to build a logo, website and social content. so i can let the world know, if your goggles ain't goggins, they don't belong on your noggins! vonnie: welcome to bloomberg markets. we all know the story, covid crushed commercial real estate valuations and questions still remain about regional banks' exposure to these properties. we heard just last month that blackstone thinks the worst is

over for the u.s. global mark. let's get another perspective on the sector with morris chen. also with us is bloomberg's katie. katie: all right. great to have you with us on set, morris. and this e.t.f., i always bring this up when we talk. but this e.t.f. launched on march 31, 2023. in the wake of the blowup which just delights me, and since then the fund is up about 13.4% on a total return basis, obviously outperforming your benchmark there. from where you sit right now, where are you picking and choosing when it comes to the c.r.e. landscape? >> yeah. i think there's so much opportunities in the market right now as it relates to commercial real estate. for us right now in terms of investments, we do like the fund is very biased short duration. so we do like various seasoned commercial mortgage-backed bonds, just given the nature of the underlying refinance

pipeline. it's been improved in a meaningful manner. a lot of it has to do with increased debt availability. industrial still is very sort of unique space and we're thinking about property types as well as retail and multifamily. i think these are things that are, i would say, middle of the fairway for us as we think about positivity in terms of fundamentals. katie: let's talk about office. because even still when i talk to folks about commercial real estate, they talk about commercial real estate x office. it seems like to a lot of people, the office space is still scary. how are you approaching it? >> yeah. i think we're not very -- we're not shying away from that space. i think there's reasons to comprehend that the sentiment has improved. i think just even walking around new york city today, looking at the park avenue corridor and grand central, the sort of station area, you're seeing these buildings being highly

productive and used. so i think the sentiment from the office standpoint in itself, while there are, you know, still issues underlying certain class b, sort of older office property types, i think the return to office dynamics as well as this sentiment has really shifted for higher quality, newer vintage buildings. including this. vonnie: we are working in an environment where we're looking at extraordinary tight spreads. this environment is not without its risks. you were talking about one of them there. how difficult is it to pick up the debt of companies you think are opportunities and by the way, what happens if fannie mae comes out of conservatorship? >> as we're thinking about opportunities and tighter spreads, i think the benefit is on a relative value basis, commercial mortgage bonds, still trade cheap. i think from an index perspective, corporate index is around 47 over. you can pick up anywhere between 50 to 100 over cmbs for a comparable rating.

so think about opportunity lies for us as we're looking around the periphery. there are areas that are, you know, often overlooked as investors are thinking about commercial real estate space and i still think the benefit of having a smaller market relative to corporates, as well as the investor base just having to do more work and dig into these underlying collateral, you can pick and choose and you can find a lot of items. on the conservatorship side, i think that's to be determined. we'll see what happens and what comes you of that. that's not -- comes of that. that's not a trend setter in terms of prioritizations and concerns. katie: you'll have to come back when and if that happens. the ripple effects there would be fantastic. let's talk about data centers. when you and i last spoke in may, you made the point that data centers, cmbs issuance wasn't really a big part of the market. it feels like it has definitely

picked up since then. is that an opportunity for you? data centers obviously so hot right now when you think about a.i. demand. but are you buying in? >> you know, we are on the sidelines at this juncture. this kind of goes back to your comment about tight spreads. right? i think in the commercial mortgage-backed securities market when we see data center, it's not that the asset class in itself we don't like, we just think that the levels in terms of spread that commiserates with some of the unknown risks associated with a property type that's newer, and nontraditional to us, we just don't feel like we're being fairly compensated. so there's the unknown factors. you can kind of go on and on in terms of going through a rabbit hole of trying to ask the questions, whether it's what to happen if an asset goes into default, what do you actually own? you know, other than a shell

space with a lot of energy tied to the underlying property. but these are things that i myself can't really answer and so at these levels, in terms of spreads, there are traditional, other traditional commercial property types that we can get our heads around and invest in. >> we have less than a minute left. katie: but when you talk about risk, i'm wondering if the risks introduced by deepseek is one of the things you're thinking about. because the narrative that has emerged is that maybe actually we don't need as many of these data centers and we've seen definitely a big bailout. >> yeah. that is a risk that came out of nowhere. i wasn't thinking about it. again, i'm not an a.i. sort of expert in terms of this space. katie: i wasn't either. >> so these are things that as we look at the levels where some of these deals are trading relative to some of the risks that we don't fully comprehend, to me if the deals were -- if

these bonds were to be reprised in a meaningful manner, then it probably warrants us to review our sort of reason for being on the sidelines, right? but i think right now, just given that data center deal can trade similarly to a brand new office building per se, with traditional long-term leases on a reset value, i can understand the office building. i can't -- i don't fully grasp data center. so as a function of that in terms of the risks associated with it, there should be additional risk premium associated with some of these bonds. vonnie: fascinating stuff. morris, we are very looking forward to the next time you come on. katie, thank you so much. that is bloomberg open interest co-anchor and morris chen from doubleline. speaking of commercial real estate, the threat of tariffs looms over the entire industry. this week ross perot jr. spoke with bloomberg about his projects could be vulnerable.

have a listen. >> we have billions of projects lined up that we're going to build this year. and so we have to really bend over backwards and make sure we know the impact of steel and aluminum and what will the pricing be and if they go through, how are we going to handle it? and will the clients pay the extra price? because it will add costs to these buildings.

vonnie: time for our weekly segment that focuses on the big issues in the retirement industry. the acting commissioner of the social security administration and her top deputy have left their posts. this follows a confrontation with elon musk's doge. we're joined now by emily in washington. so what is happening at the social security administration? reporter: so over the weekend the acting administrator stepped down because doge tried to seek access to the social security administration's most sensitive data. so that includes birth dates, social security numbers, banking account information, you know, employment history.

she said it's not proper for doge to have access, most people at the agency don't even. so then she was forced to resign. now there's a new acting administrator who says it's ok for doge to have access. he's given them read-only access, he says, and they are tasked with finding waste, fraud and abuse within the agency. but they seem to potentially misunderstand some of the numbers. so there's a lot of anxiety within the agency about what comes next, after doge has begun its work there. vonnie: what are they seeking to access, these doge staffers? what do they want to see? reporter: they want to see if there's anything they can glean about fraud, social security fraud, specifically is what they say. and elon musk has been talking for about a week about, you know, this claim that millions of americans are receiving social security benefits but they are dead and we're giving money to people who don't -- who aren't alive anymore. but that is not what the data

bears out. less than .1% of payments go to people who are no longer alive. so it's unclear so far exactly what they are looking for, just the broad mandate. vonnie: briefly, is trump planning to cut social security benefits? reporter: right now he says no. he says he wants to combat the issue that musk has identified about overpayments, payments to people who are no longer alive. but he says no risk right now to your social security benefits. vonnie: fantastic briefing. thank you so much. that is emily birnbaum with bloomberg in washington, d.c. coming up, we heard about a new crypto e.t.f. that launched just today. david manziel from -- mann from franklin templeton will join. the markets as we head toward the lunch time hour, we're off our low, nevertheless it is a down day for the major indeces. the dow was down and the nasdaq down.

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vonnie: welcome to "bloomberg markets." the selloff is much more severe as we go toward the lunchtime hour. it is a down day. the s&p 500 down zero point 7%. the nasdaq down even more than that. i will point out that the vix is just about 16 so there is no panic. a lot of stocks that have had runoffs are seeing profit-taking today. there is trepidation may be about the consumer thanks to walmart earnings. we are seeing the 10 year yield below 4.50 after the scott bessent interview this morning. optimism in china. remember when all of the internet stocks sold off in china for fears of crack down

from president xi. that is being reversed for optimism over ai and a great earnings report from alibaba among others. that is what is going on right now in this part of the market. let's highlight individual equity movers. plenty of good stories. emily joins us. emily: we are looking at shares of a singapore-based food delivery and ride-hailing company down 10% after the company cited weakness in the south asian markets for food delivery and ride-hailing. they gave a revenue forecast that was below estimates. the guidance could be conservative but it could weigh in the near term and that is what we are to seeing today, down about 10%. shake shack is a different story, higher today after the company said that january sales rose 3.7% year-over-year despite headwinds from unfavorable weather and the l.a. wildfires. you can see the stock is up almost 10% right now.

the january commentary implies a better than feared start to the year for shake shack. i am looking at another shake company, herbalife. you might remember the historic feud that ultimately ended in bill ackman losing a lot of money on his short against this weight loss and shake company. i think he has moved on but today would not be good for him if he still had that position. the stock is up 43% right now. they named a new ceo and also posted eps that was better-than-expected. herbalife up 43%. vonnie: emily with a blast from the past. turning to the big interview making headlines today. treasury secretary scott bessent sat down with bloomberg surveillance earlier this morning repeating that the u.s. has a strong dollar policy. he discussed china under recent

administrations with the potential for tariffs. let's listen. >> not everyone is going to give on every point. the europeans seemingly put forward very quickly auto tariff s. not every country is going to do that. as i have said before, china is the most imbalanced economy in the history of the world and they are trying to export their way out of what is a very serious recession and the rest of the world cannot do that. they cannot dump chinese goods. they will have to rebalance their economy so the tariffs on chinese goods went up 10%. a lot of that, mexico, canada, china, that was in response to the fentanyl crisis. >> china is the only one where the ghost tariffs have stayed in

place. -- where those tariffs have stayed in place. is that the opening salvo? >> i will not give away trump's negotiating hand. i have a meeting with my counterpart tomorrow so i am looking forward to a productive discussion. >> what is the first point you want to bring up? >> that we want to work together. a lot of the precursor ingredients of fentanyl originate in china. we want to put a stop to that very quickly. >> historically there has been currency concerns with china. in the conversations before you, you mentioned that some currencies are undervalued. it is china one of them. is that something you would like to remedy? >> what i have said is make no mistake, the u.s. still has a strong dollar policy but that does not mean that bilaterally other countries can weaken their currencies versus the dollar or

manipulate their currency. specifically on china, china is a very difficult currency to value. i really think that when we think about the value of the rmb, it isn't different -- it is in different equilibrium. any different purchasing power parity is cheap. on the other side, you have 1.4 billion people subject to capital controls and they want their money out of the country. then you have what i would call the x factor. if you put money into china today, what is your belief that you will get it out in 2, 3, 4 years? it is difficult to come up with a point value of the currency. lisa: you have talked about the desire to have a strong dollar policy but is a strong dollar at odds with the idea of bringing production back to the united states? it speaks to concerns about other countries trying to devalue their currencies. >> i think that we will have a

strong policy -- a strong dollar if we run strong policies. if we cut the trade deficits. when you think about the trade deficit, it is a combination of terms of trade, the value of the dollar and our own budget deficit. if we bring down the budget deficit, then i think every one if we are de-regulating, if we make the tax cuts permanent, if we make the u.s. more business friendly, then all of the reserve managers in the world, all of the private investors will want a piece of that. the dollar will be strong but we will be able to push back on that for good policies, through productivity. the u.s. productivity, i think i have been meeting with a lot of

the tech leaders lately and i think we are very close to the cusp of this ai finally coming into the productivity numbers. vonnie: we will have more that interview throughout the hour. the trump administration is having an impact on the crypto world. today franklin templeton launched the franklin crypto index etf providing exposure to the price movements of the two most prominent cryptocurrencies, bitcoin and ether. let's discuss with the global head of etf products and capital markets, david mann. easy to z is the taker. -- ticker. i am curious to the reason for this launch. david: thank you for having me. we thought this was an elegant solution in terms of the future of crypto assets within the etf rapper which as you said last year, bitcoin was the first one that launched in january, widely successful. it proved it can work within the

construct. now there is speculation of what will be those next set of cryptocurrencies that will be admissible within the etf vehicle. what this index does is in current form it holds bitcoin and ethereum, as additional coins get added, it will grow and give exposure to the cryptocurrencies for investors at a very low cost. vonnie: do you do your own due diligence if you decide to include something else or is it just whatever gets approved by the authorities, gets included in this new etf? david: this is an index tracking fund. the fund will hold whatever the index mandates. but the rules of the index in terms of running exposure to cryptocurrencies is based off of their regulatory permissibility. as the regulators start allowing more spot cryptocurrencies, the index will include it as well

and easy peasy will hold thereafter. vonnie: what about if something happens like the administration decides to hold a stockpile of tether. david: like from a stablecoin perspective? vonnie: yes. david: this is not meant to be a stablecoin. this is meant to be cryptocurrencies within spot price. if all they start getting added into the index, then we will track the index after that. vonnie: the sponsor fee 19 basis points will be waived until the end of august i believe. why so high if it is tracking an index? david: that price is in line with our other bitcoin and ethereum funds. we launched those at 19 also with a waiver for six months. it is consistent with the price of the spot. bitcoin and ethereum, already

running. vonnie: if you want to get flows and you know it has been more difficult recently. we had the big launches last year of some of the big major etf's. they got a lot of flows and some of that is being reversed a little bit now. how do you go and get those flows? david: we are still very encouraged. if you look at the aggregate flows of bitcoin and ethereum, even so far in 2025 they are still positive. across the 10 or so bitcoin etf's, we posted 5 billion of net inflows. ethereum, another half billion. we are still seeing investors excited about this space. back to your original question, we think having an index fund even though it only owns bitcoin and ethereum, over time we think it will give investors a nice broad exposure to this growing asset class. vonnie: briefly, what is a viable amount of money that you would need to see in that fund?

david: whenever we are doing any product plans, we always have hundreds of millions that we anticipate will grow over time. we know there are real reasons why etf's take time for adoption. we are excited about it. we know that often times investors want to see some volume growing but we are very exciting about the prospects over time -- excited about the prospects over time. . vonnie: easy peasy is the ticker. walmart shares falling after forecasting lower-than-expected profit for the full year. also not including any potential impacts of tariffs. the company signals that risks in the broader economic environment is affecting its outlook. joining is karen short head of consumer and retail research at melius research. how much is this the outlook and how much is it the fact that walmart has not even decided it is going to deal with the

prospect of tariffs and it will just wait and see for now? karen: i definitely do not think they take the wait and see approach on tariffs. they are very deliberate on how they approach tariffs. keep in mind that 60% of their sales are domestic and that is food primarily. within the general merchandise, country of origin is not necessarily the easiest thing to decipher. it is not 50% of their sales are subjected to tariffs. they are definitely taking it very seriously but i think they have navigated through tariffs in the past and they think they can navigate through tariffs now. in terms of the macro, the expectations are very high going into this quarter and into the guidance, the numbers were too high.

we previewed that pretty vocally. consensus was just too high. i believe that ultimately we are having a conversation in a year and they will handily beat their guidance. as they have consistently said that profit will grow at a greater rate in sales but that it will not be linear and it will not necessarily happen every quarter. but by the time we are talking next year, they will have achieved that and the numbers will probably be consistently above their current target. vonnie: walmart did say that the growth in market share in the previous quarter primarily came from households over $100,000 in income. does that continue? do they lose some of those households? what is your outlook there? karen: i think the momentum with their higher income demographic will continue. i think part of that is price on

food, the gaps are so wide compared to the conventional and the quality has improved. consumers want to feel smart, not cheap. if you can be buying an identical item for 30% less than a conventional grocer, why would you go to a conventional grocer as opposed to going to walmart? that is important because it is a frequency trip. higher income consumers are looking to walmart with a much greater sense of frequency as in their weekly shop is supposed to a lower income demographic that might be doing a monthly shop. they are not losing the lower income. they are just gaining the higher income because their quality has improved so much and the experience has improved. and they have walmart plus and they have all of these services. vonnie: does walmart give us any read on target or home depot coming in the next few weeks?

karen: it is interesting because target had pre-released sales for november and december. walmart's total comps in the u.s. were slightly below what target had already preannounced. walmart did say january was their strongest months of the quarter and also said the momentum continued in february. data does not support that in terms of credit card data. we will see what target has to say because i think investors are bracing for a bad february and we could guidance for the first quarter based on data that shows that february is not great. vonnie: karen, thank you so much, karen short, head of consumer research at melius research. coming up, more of today's interview with u.s. treasury secretary scott bessent. we will hear his thoughts about ukraine and russia.

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vonnie: welcome to "bloomberg markets." more of u.s. treasury secretary scott bessent. he sat down with "bloomberg surveillance." mr. bessent: traditional economic theory will tell you that the dollar strengthens on the tariffs. but who knows what we have learned since november 5. markets will in the future so heavily price in so much of that. on the other side but we are trying to do is to get other economies to successfully rebalance. my conversation tomorrow -- and this is really just an introductory conversation but as we go down the road, the chinese need to rebalance their economy

in favor of consumption. they are suppressing the consumer in favor of the business community. as that happens, then they will increase their demand. the same thing in europe. mario draghi had a fantastic editorial this weekend in the financial times where he said look, we have put the equivalent of more tariffs on ourselves than the u.s. could ever contemplate. could you get a very strong euro and somehow they had an immaculate de-regulation. annmarie: you are having this call with your counterpart. will you see him next week? mr. bessent: i will not step down due to domestic considerations. he will not either. jonathan: is that what he has

told you? mr. bessent: this is the read that we have gotten. again, i also believe several of my other counterparts will be there. i have been speaking and in contact with them regularly. i will be seeing them at the spring imf world bank meetings in d.c. jonathan: i want to talk to you about national security. the dollar has a role on that front. do you think it has been misused and abused? mr. bessent: excellent question. when i came into treasury, if you think about it, treasury is five pieces. there is irs on one side, the mint on the other. the main focus, domestic finance, international finance, that is what i have been doing for 35 years. i was able to hit the ground running along that. what we call tfi, is where my

biggest learning curve is. i'm spending a lot of time with that. i am reviewing the sanctions policies. why do we do what we do. have they been effective? are we running a 21st century program as opposed to some outdated modalities? annmarie: current sanctions are in place to get putin to the negotiating table. you are involved in this deal. you met with president zelensky. president trump called zelensky a dictator and said he better move fast or he will not have a country left. does this language make it harder for you to get that minerals deal over the finish line? mr. bessent: i think president zelensky unfortunately escalated and has put some daylight -- annmarie: how did he escalate? mr. bessent: a lot of his remarks in munich i felt were inappropriate.

president zelensky assured me that he would be signing the minerals deal in munich. he has not. the real purpose here and i think it has turned into this media circus. president trump had a very elegant plan and it was bring the ukrainians closer to the u.s.. let's do this economic deal and even karl rove in the wall street journal this morning approves of it. the u.s. with greater economic interest in ukraine provides a security shield. the sequencing of what was going to happen was bring the ukrainians closer to the u.s. through economic ties, convince the american people and the american public, and then tell the russians, go to the negotiating table with a very full some message that if we need to, we will take sanctions up.

annmarie: what about tapping russian frozen assets? would you tap your counterparts to not just have them frozen but tap them? trump talks about paying the american taxpayer. should russia be part of that? mr. bessent: they are being tapped. the returns from the phrased asset pile is going to pay the europeans. what is very important to understand is everything the u.s. has done to date, the american taxpayer, is grants. europeans, roughly half of what they have done our loans and runoff from the frozen asset is being used to pay european loans. jonathan: have you communicated that to the europeans? mr. bessent: what's that? jonathan: have you communicated that you are upset with them? mr. bessent: i think vice president pence did a good job. jonathan: do you understand that

the united states is running a deficit close to 7% and the budget is north of $800 billion? do they understand the gravity at the moment from the u.s. perspective? mr. bessent: they understand that president trump during his first term, this term, vice president vance and the entire security apparatus told them that many of countries are deficient in their spending and they need to come up. when i went to ukraine, poland is spending almost 5% of gdp on defense. look at poland sitting next to ukraine. poland is one of the great economic success stories of the past 30 years. after china they have had the fastest growth. why couldn't ukraine with some u.s. capitol ingenuity, know-how, root out some of the corruption and do as well as the

neighbors? jonathan: will europe allow america to cut back on defense spending? mr. bessent: the ultimate goal is for the europeans to come up to where they have said that they are going to, to provide their share of nato spending. lisa: you mentioned sanctions. do you have both on the table ready to go? will sanctions ramp up or wind down? mr. bessent: that will be a very good characterization. annmarie: trump still thinks he will meet with putin by the end of the month which is next week. are you preparing for that? mr. bessent: i will not give away the timetable. the president is committed to ending this conflict very quickly. i will tell you, i went to a children's hospital that had been bombed. this was not a hospital where you take your child.

annmarie: i did that trip a few months ago. you can imagine why they have not had elections. they are living in martial law. mr. bessent: they are. it is probably a necessary, probably necessary to move forward with the democratic process. vonnie: you can catch the rest of that interview online at bloomberg.com and the terminal. let's check the markets as we head toward the 1:00 p.m. hour. the s&p 500 down three quarters of 1%. a bit of a selloff. some names have run up. you have crews liners like palantir lower. somebody is buying bitcoin. it is making a run for $98,000 per coin.

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♪ announcer: from the world of politics of the world of business, this is "balance of power." ♪ live from washington d.c.

joe: the treasury secretary says inflation is still too high to be leaning more on longer-term debt. welcome to the fastest show in politics. as scott bessent 6'8" market-moving interview today. i am joe mathieu alongside kailey leinz here in washington. welcome to the thursday edition of "balance of power." sounded like a bit of a hangover from the biden administration as we listened to scott bessent talk. kailey: he was asked about his previous criticism of his predecessor, janet yellen who increased the amount of bills and issuance and he is at least to this point, sticking with her issuance plans. he was pressed on other issues as well, taxes and tariffs, all of his coming into the conversation. ukraine in addition to that after the remarks we have seen and heard from donald trump about ukrainian president zelenskyy.