Bessent Intervention and Economic D-Day

**SPEAKER_1** (0:02)
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**Tom Keene** (0:27)
We are so fortunate to join us down for an extensive conversation. It's Jason Trennert. He is intimately involved with some of the finance and indeed the politics of Mr. Bessent. And I would say tangentially, Mr. Druckenmiller as well. Jason, we are fortunate to have you here this morning, Mr. Tegas.

**Jason Trennert** (0:45)
I'm fortunate to be here.

**Tom Keene** (0:46)
Thank you. Just your thoughts when you saw the essay from Mr. Druckenmiller about the Treasury Secretary and yield management?

**Jason Trennert** (0:53)
Well, I have to say, just in purposeful disclosure, I know all these people pretty well. And so I'm probably going to pull some punches here. But to answer your question, I was quite surprised to see Mr. Druckenmiller write that essay. And that's simply that op-ed simply because he worked, obviously worked with Scott Bessent and Kevin Warsh and all the rest. And it's a direct hit on the administration.

**Tom Keene** (1:21)
You and I could go for two hours on this without taking a breath. Let me get this in here because Alexis has six questions.
As simple as I can, how does this constrain Chairman Warsh at Jackson Hole? And frankly, how does it constrain Chairman Warsh to the next, and the next, and the next Fed meeting at the end of the year?

**Jason Trennert** (1:40)
So if you're talking about the bond market intervention, it makes Kevin Warsh's job harder. There's just no two ways about it because the cost of capital is debt capital, risk-free capital is artificially low.
And I think what Mr. Druckenmiller was saying this morning, which I agree with, is that the price mechanism underlies just the bedrock of capitalism and regulating supply and demand. And so if you keep the price lower than it should be artificially-

**Tom Keene** (2:11)
This is why we love Evan Jason. He goes to the single sentence of the essay where I sat up and listened. I'll get to it in a moment. Alexis Christoffers with Jason Trennert across America.

**Alexis Christoforos** (2:23)
Let the bond market speak, right? That's what Druckenmiller basically said. But I want to switch gears for a minute. Still stick with Bessent though, because he talked yesterday about unleashing economic D-Day on Iran.
Your thoughts on the US's plan here, might it backfire? Are we on a collision course with China, as some analysts are saying?

**Jason Trennert** (2:43)
And Alexis, I'll just be very candid with you. This is not my lane, okay? So, but by the same token, it seems to me like it might have a better chance of success than what we've been doing, which is, I think unless you're going to put my, this is my own personal opinion, I have no expertise here, but I think unless you're going to put boots on the ground, it's very, very difficult to use some sort of, as they say, kinetic approach and have it be successful. So this may indeed help in that regard to get what we want in the United States, which is a non-nuclear Iran. It might have a better chance of doing it. I think, aside from that, we would have to have a more robust military intervention. And I don't think anyone really wants that, whether it's the president or the American people.

**Alexis Christoforos** (3:30)
I want to stick with the economy and what's happening right now with how the US is dealing with Canada.
And what that might mean for us here in the US. Because we're already dealing with elevated inflation. This could, as Canada now promising these retaliatory tariffs, could raise prices here for the US consumer. So what does this mean if it becomes this long dragged out trade war, as some are saying it might?

**Jason Trennert** (3:54)
Well, at the margin, clearly, it will prompt inflationary pressures in the United States. And again, as I started off the segment by saying, I think prices are the best way to regulate supply and demand. And if you start adding to prices, adding to costs, clearly, one would think that demand would go down. Now, I have to say, I'm more sympathetic to President Trump's tariffs than a lot of people in my business. And that's simply because I kind of know where he's coming from. And if you look at any of these so-called free trade agreements, they're a thousand pages long and have a million cutouts for various special interests and all the rest. So there's really no such thing. I think in a perfect world, free trade would be great. And the free trade agreement would be a paragraph long, right? Or a sentence long, right? And we don't really have that. So there's just a reality, I think, that the present administration is addressing.