巴里·里茨尔兹：美债干预难改长期利率，科技债非无风险

We're joined now by Barry Ritholtz, Ritholtz Wealth Management, of course, host of the Masters in Business Podcast. Barry, great to see you, and and I wanna just get your perspective on the significance, of this move. Canada walking away from the table, The US walking away from the tariff. We were talking to Jonathan Levin, columnist for Bloomberg opinion in the last hour, and he said, you know, he's he's astounded at how markets seem to be shrugging this off that, you know, several years now into Trump term two.

After the first Trump term, this is kind of old hat. They've they've learned to operate kind of not paying as much attention to these tariff developments as they might have in the past. Well, especially in light of the fact that the IEPA tariffs, the prior set of tariffs, the administration lost literally at every level from the Court of Trade right up to the Supreme Court, There is absolutely no reason to believe the three thirty eight tariffs are gonna survive close scrutiny.

This is in the constitution. Duties, taxes, levies, including tariffs, are the province of congress, and congress has not delegated this authority. So when I when I look at what Canada's doing, the assumption is, hey. We're just gonna run out the clock until the supreme court gets around to striking these tariffs as well. And I think that's why the markets are looking at you're still still doing this tariff stuff. You already lost that.

I feel like this is the frustration I have with the markets and the Iran announcements every Friday when we go, we're gonna get a peace deal, the markets react. And then by the next week, it's falling apart again, but I digress. I would like you to explain to me what is going on with bonds. I hate bonds. They confuse me. I'm working on bonds. But you have David's been listening to me complain about this all week. But you have the treasury trying to buy back these bonds.

Essentially, US debt had an all time high. This is, my understanding, a short term solution for a longer term problem. Right? Is it going to work, and is it going to cause more inflationary issues for the Fed down the street to then try to have to solve? There's a couple of issues here. The deficit and long term debt, they're just part of the issue. The other issue, has been that we've had very persistent sticky inflation, primarily driven by the combination of a massive fiscal stimulus during the pandemic.

We're still suffering that overhang as well as a lot of snafus with the supply chain. And by the way, all of the mayhem around tariffs on, tariffs off, what country can send stuff without tariffs, what can, has very much interfered with the normal flow of goods. And so that's making inflation all the more stickier to say nothing about energy prices in the war. So the question becomes, what can the government, what can the central bank do about it?

And you guys got the answer on your own. Short term, sure, they can have some temporary effect, but the bond market is a $100,000,000,000,000 global market. There's only so much any one country can do to maintain yield prices bond prices over the long haul. The market sets the long term bond yield, not the Fed, not the treasury. Such a fascinating moment when the treasury sector was talking about this. Barry, I don't know if it caught your ear, but it caught mine.

I'm talking about he thinks the market's mispricing the fundamentals of of the bond market at at this time. And I wonder what you make of that and and just sort of what what you think the treasury secretary has up his sleeve. A lot of ink spilled this week about him being from the buy side. This is just a new approach to this job running the the world's largest economy. But maybe just a a broader question I'll throw to you first here is is what are the moves that we saw this week coupled with what we saw with the the end intervention say just about Scott Bessent's attitude toward The US economy going forward and the kind of muscular nature of of of his approach to to the job as treasury secretary?

Look. He's doing what his job is, which is to try and jawbone the market into submission to try and get people from recognizing that, hey. We're we're in a weird situation, but we'll get past it. The yen intervention and then the treasury intervention this this week is a way to show that he's in control. There's been this long history with the White House and the Fed begging for lower rates, and and the Fed has a dual mandate, and inflation is half that mandate.

So when you have higher than expected persistent inflation, they're not gonna drop short term rates, and the the bond market is gonna do what it's gonna do. So Bessent is doing his job. His job is to, you know, not only jawbone the market, but cheerlead the economy and say, we're doing fine overall. Here are all the positives, and everybody should just catch their breath. Eventually, rates come down. That'll help shrink the carrying cost of the debt, and everything will be fine.

And and he's not completely wrong when he says that. That's a legitimate argument. I am curious kind of how you dovetail this with the stock market. There's been so much focus on the bond market, of course, over the course of the week given where the intervention was. But but what does it mean for the stock market? And are you surprised that we didn't see more more reaction stocks to to what the treasury secretary did this week and and the way it kind of, I guess, equilibrated here by by Friday?

Look. Within a few percent of all time highs, the past ten, twelve quarters has been very consistently, showing increases in revenue, profits, and even more importantly, growth, the rate of profit. And it's not just limited to technology and AI. You're seeing it pretty broadly, across all sectors. We're seeing signs that the hangover is starting to come around and the cost of expensive credit is having an effect. You're never happy when you see a company like Walmart Mhmm.

Disappoint and and say they're not seeing the growth they expected. That's telling you, like you guys were discussing earlier, the the bottom half of the economic strata is having a hard time, and it's not just New York City. It's across the country. The the one area where I'll I'll disagree with the treasury secretary is that, no, the k isn't closing. If you're in the top half of the economic strata, you're doing pretty well.

If you're in the top third, you're doing great. And if you're in the bottom half, you're having trouble making ends meet. You know, putting food on the table, putting fuel in the car, it's just more and more expensive, and that economic demographic is having a harder and harder time finding discretionary money to spend. And that's having an impact at least in terms of the current, environment, which on the labor side has kinda been a no hire, no fire labor market.

We we see the negative aspect of that in sentiment. We we're now seeing it manifest in retail sales. Gray, before we let you wanna go let you go, I wanna ask, what your take is on the competition for US treasuries with these tech bonds. You know, the Building AI data centers, it's seen as a pretty secure investment, and it's it's giving some competition to treasury, especially in the shorter yields. Do you think this is gonna sustain even as AI skepticism grows a little bit, or do you think it's gonna taper out?

You know what? I always my my spidey sense always starts to tingle whenever anybody says, well, it's not backed by the federal government, but it's just as safe as treasuries. No. These aren't as safe as treasuries. Hold hold aside all the issues on the circular financing or whatever you don't like about AI. It's a corporate issuance. It's a complex set of structures, and it's very subject to technological disruption.

The whole history of of Moore's law tells us that the chips get smaller and smaller and smaller. You put more and more transistors on them. These massive d