you can see some of the reaction in the in the two-year ten-year spread drifting downward over the last week let's bring in Beth hammock she's global treasurer at Goldman Sachs in the chair of the borrowing Advisory Committee at the Treasury also here is not just any markets commentator right yeah senior at CNBC senior markets commentary what do you walk my way up through all the rest of us using do you think I mentioned earlier Mike and and look at the second death but I mentioned earlier uh-oh we're back at new highs from PES has House
money to play with again on his negotiations with that we're back that you know in the pattern obviously but but on the other hand I think there have been you know 220 new highs during this bull market it's not as if as soon as we take there was a lot of question whether we're gonna get back there's tough day for the traders always a question by the way though we did 1.9 percent GDP in the quarter when they started the rate cuts it's not as if the rate cuts they've done three of them so far
in four months have had them have had any effect maybe they will people people think they're not have any effect maybe not pushing on a string what do you think we pushing on a string they still work listen I think they still work I think they need time to work you know three rate cuts over the since July is a really short period of time the economy takes a lot longer to work through it and to your point on why the stock market is so high I think this this issue between fed cutting and and
the trade war that's ongoing I think those two things are there's a lot of interplay between the two of them and I think the stock market wouldn't be quite as high unless you had confidence in the Fed that they were going to continue to do their jobs to support them so that is not confidence of this trade war is somehow working correct okay wanna be clear about that what do you mean that it's working I'm not the only thing that's working no one's saying it's working I'm saying that it hasn't had the deleterious effect on
the stock market that many people were hoping for I think that's only because you've seen the minute provide that accommodation yeah there's a lot of people but listen to about saying part of the reason is because the Fed has been so accommodating that's what's happening here they hadn't been at first okay if you think three cuts make a huge difference I think there's a lot my pal stands like compared to last December or when things really started to go haywire look at what the Fed has said since then and that calmed markets to it right
instead of a half-empty view of what's happening here we're confronting China not very well well you don't know that we're confronting China you don't know what the end results going to you just said that Rick Scott was right and then nothing right I'm not saying we don't try I'm not saying that really tickles you but look Andrew we're confronting China on a lot of issues long-running issues decimating the entire Midwest 70,000 factories of clothes stealing our intellectual property in fact most people think and even your friends in the Democratic Party Chuck Schumer thinks we need
these tariffs right now so we're correct and concerning all this and we're still at new highs in the stock market so at a time where you thought a trade war would have decimated the economy and decimated the stock market we're still at new highs so be happy that something might happen from this that's a half-full view am I wrong about that girl I think the view is that engaging in protecting the US economy at the trade word that we're engaging in with China I think there's a lot of good reasons behind it I think your
points are are very well taken that for a long time we've been possibly taken advantage of and there could be a payoff down the road because they cause the katak what is it the you can't unscramble an egg we are everybody its front and center that China is unfair and the WTO has not done enough to keep that may be the case I do think that it's definitely weighing on business investment and it's definitely waiting on corporate sentiment and so you haven't seen the level of investment by corporations into the economy that you would see
otherwise just because of the uncertainty and that that is where the Fed is pushing out a string a Fed can't fix that right but that can't fix that problem they can do as much as they can we got this mid-cycle adjustment three cuts look that will definitely help I think and but we need to give it time to wait and say no we're new hyzer we've also been impacted by the rest of the world is not helping us either in a given year or two or three years there's a lot of macro factors that can
swing growth expectations as much as the trade war did right if we got an oil spike that would have been the pressure that the Fed said oh guess what things have changed we have to adapt to that but I think is telling about the markets is that in July when the Fed laid out the idea that we're doing a mid cycle adjustment just a kind of temporary phase of rate cuts then we're gonna stop the market rebelled against it and it was not good news to their ears because they wanted the Fed to be have
a greater sense of urgency to be open-ended easing guess what three four months later that's exactly the the bullish scenario right now is we got three rate cuts everyone's talking about 1995 and 1998 when we got that so I think it's an attitude adjustment the lower yields have bridged us through this soft patch so far we'll see if it lasts hey guys whenever this real quick it's a great discussion on trade I just don't want to lose the opportunity Beth is one of the experts in the repo market she funds Goldman Sachs day-to-day and I
just need to ask Beth are we in good shape going into the end of the year as the Fed provided enough liquidity what about the idea that minuchin the Treasury secretary talked about about possibly changing the regulatory regime and now we hear it's not going to happen you give us your two cents on this critical issue sure the feds done an excellent job in terms of providing liquidity and accommodation into the system they've been buying bills to get rid the level of reserves up they've also been engaging in repo transactions to make sure that there's
liquidity flowing through the system but year-end could be messy every year in for the past several years since the regulations have been put in place we've seen repo spiked up pretty high right now the markets would tell you that repo is going to print somewhere around three three and a quarter at the end of the year relative to that one and a half percent Fed Funds rate does that relate to chaos in the equities market I don't know that I don't think it's gonna be chaos in the equities market it's it's really the bond market
that's paying attention to this and what it means is that you're not able to get the cash from where it is in money market hands into that the the funds you need to buy Treasuries some of who need to buy it on a levered basis and so this is a spate week we need to continue to watch you you
