Danny Moses: How Scott Bessent Just Tied the Fed's Hands

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**Dan Nathan** (1:08)
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Welcome to a very special edition of the Risk Reversal Podcast. I am Danny Nathan. That is Danny Moses. Danny, how you doing, man?

**Danny Moses** (1:42)
Dan, I've never heard you call yourself Danny. I like it. Now I'm feeling very comfortable.

**Dan Nathan** (1:47)
I just recorded a podcast with Dick Costello. He just launched a new pod that we're helping out with the Dick and Paul show. And he referred, he was telling a great story. I mean, he's got so many great stories, but he was saying, he said some guy's name, he was a founder, he was like, Mike such and such. And he goes, well, I think he goes by Mikey now, now that he's rich, which I really thought. So I want to be like, when I'm rich, I'm going to go back to Danny, because I dropped Danny in like seventh grade or something like that. All right, you and I got a lot to talk about. Guy is parts unknown, but we're going to look ahead. Big week, and we got to look back first at what happened with the treasury and some of the knockout moves that we saw in some major risk assets, some that you know and love very well. Then we're going to look forward to Fed Chair Warsh as his first Jackson Hole comp fab, and what he might not say, I guess, is more important than what he might say one way or another. And there's some really important tech earnings in the middle of the week. And I think as we are on, there's probably like 5% of S&P 500 earnings left to go, and Nvidia, CrowdStrike, Salesforce and Wednesday. I think they're all unique and interesting in their own light, and we're going to talk about those. So let's look back.
Treasury Secretary Bessent, I guess he was on CNBC Thursday morning. I did not see it, but I was in a group, on a call with a bunch of people that you know. I'm not doxing anybody. It was outrage, basically the reaction to what he had to say. Did you see that interview on CNBC? And then give me the 411 of what your takeaway was of this treasury intervention into the long dated, the 30 year treasury.

**Danny Moses** (3:23)
Yeah, so I did not see it. I was doing something, but I know what he said.

**Dan Nathan** (3:28)
Wait, you were golfing?

**Danny Moses** (3:29)
No, I was not golfing.
I was recording the Friday night dirty for our sub stack. More importantly. But I know he was on and he pulled the draggy again, which people should have known already in the press release from the treasury. It would say at least double the two billion, so four billion. But let me put this in context. So let's go back two weeks ago when they intervened with the Bank of Japan. And let's go back a week before that. So we didn't raise rates at the end of July. We're like, oh, you should have. Well, because we knew Bank of Japan, which was the next day, wasn't going to either. If we did that and Bank of Japan didn't, the yen would get even worse. So the yen weakening, we all know is bad. We won't go into that. So the yen went to 156 and strengthened from that when they came in a couple of weeks ago. And lo and behold, it's started creeping its way back to kind of the 160 level, weakening to that level. So we knew they had to do something. Here's what's crazy. So this does nothing, but let's just say, so let's assume that they go to $4 billion on these parts. So they're going to buy back longer dated treasuries. Okay.