Oops!… He did it again.
U.S. Treasury Secretary Scott Bessent had been on a decent streak—until he spoke at the Milken Conference yesterday.
Barron's reports:
“In his conversation with Milken, who served about two years in prison for securities violations in the early 1990s and was pardoned by Trump in 2020 [Yes yes, now get over it], Bessent said Trump’s policies would ultimately bring down Treasury rates by reducing the ‘credit risk' of the U.S. government. He added that Trump’s tariff push was part of a broader strategy to grow the U.S. economy by shrinking government, cutting regulation, and ‘re-privatizing' the economy.”
It’s his off-script public comments that raise red flags. Given his record, it's hard to tell whether Bessent is being deliberate or simply clumsy in casting doubt on the creditworthiness of the issuer of the world’s reserve currency. Maybe he thinks he's was pitching a credit opportunities fund at a high-yield conference.
We’ll leave it to the reader to assess the significance of Bessent’s remarks—there are multiple interpretations—though a recording would certainly help provide fuller context.
Compared to other sectors, we may be nitpicking. If there were stock tickers for public health policy or nuclear safety, recent volatility in those areas would have eclipsed most news stories in finance and economics.
In normal times, when competent officials are in charge, an acknowledgment by the finance ministry that high borrowing costs stem from central government policy rather than central bank action would be welcomed by the latter. And that would suit Powell and the Fed just fine.
Phil Knight is a true marketing genius. Instead of offering top athletes multi-year, billion-dollar endorsement deals, he now has the billionaires doing the marketing for free…
