Steve Mnuchin Talks Semiannual Reporting, AI and Fed Rates

Summary

Podcast Summary: Bloomberg Talks

Episode: Steve Mnuchin Talks Semiannual Reporting, AI and Fed Rates
Date: May 5, 2026
Host: Carol Massar & Joe Mattey (Bloomberg)
Guest: Steven Mnuchin, Former Treasury Secretary

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Episode Overview

In this episode, Bloomberg’s Carol Massar and Joe Mattey sit down with Steven Mnuchin, former Treasury Secretary and current founder/managing partner of Liberty Strategic Capital, for a wide-ranging conversation at the Milken Institute Global Conference in Beverly Hills. Mnuchin shares his perspectives on the SEC’s semiannual reporting proposal, the AI and data center boom, Fed interest rates and monetary policy, U.S. fiscal health, geopolitical risks, and the role of content in the movie industry through his involvement with Lionsgate.

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Key Discussion Points & Insights

1. SEC’s Semiannual Reporting Proposal

[00:40–02:19]

• Context: The SEC has proposed giving publicly-listed companies the option to report earnings semiannually instead of quarterly.

• Mnuchin’s View:

  • Supports the proposal, citing excessive focus on quarterly results:

    “I think there’s too many companies that are too focused on quarterly earnings and whether they miss or beat expectations…”
    — Steven Mnuchin [00:57]

  • Expects growth companies will still want quarterly updates, while more mature firms might benefit from less frequent reporting.
  • Believes the option will maintain U.S. markets’ transparency and gold-standard reputation.

• Notable Quote:

  “Giving companies the option is a very good idea… If you’re a growth company, you have every reason to want to show growth every quarter.”
  — Steven Mnuchin [01:55]

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2. Market Conditions, AI, and Data Center Boom

[02:51–06:00]

• Current Market Rally:

  • Driven by substantial capital expenditure and expansion in AI, data centers, and cloud innovations.
  • Mnuchin emphasizes we’re “still in the early innings” of the AI transformation across industries.

• AI’s Economic Impact:

  • Suggests AI will benefit many industries but also warns of job implications.

• Data Center Investment:

  • High demand for computing power is fueling rapid buildout.
  • Differentiates between companies building out vast networks (Microsoft, Google, Amazon, Meta) and those like OpenAI and Anthropic burning cash as they scale.
  • Warns of potential overspending, but notes the ability for quick spending cuts if needed.
  • Raises future limiting factors, chiefly power supply for such centers.

• Notable Quote:

  “If there’s overspending in the next few years, they’ll cut back… The other issue is going to be we’re going to run out of power for data centers.”
  — Steven Mnuchin [04:16]

• Longevity of Data Centers:

  • Dismisses the notion that technological advances will render current data centers obsolete quickly, citing old data centers still operating.
  • Distinguishes between the “training” centers for AI and the cloud-native centers.

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3. Geopolitical Risks & Middle East Tensions

[06:00–09:18]

• Market Discounting Risks:

  • Believes markets aren’t fully reflecting geopolitical uncertainties, particularly regarding Iran and oil markets.
  • Strongly supports President Trump’s tough stance on preventing Iran from obtaining nuclear weapons.

• Quote on Iran:

  “Iran getting a nuclear weapon is the biggest risk in our lifetime. And there’s no question from my experience… they intended to do that.”
  — Steven Mnuchin [06:00]

• On Israel & Region:

  • Praises Israeli air defense systems.
  • Expects U.S. administration to avoid war if possible, but prepared to act if required.

• Broader Geopolitics:

  • Briefly mentions ongoing war in Ukraine, but sees the Middle East as the primary risk focus.

• Quote:

  “I feel like we don’t see [Ukraine] on the press every day, but obviously the big issue right now… is the Middle East.”
  — Steven Mnuchin [09:01]

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4. U.S. Debt & Fiscal Sustainability

[09:18–11:08]

• Concern about Debt:

  • U.S. debt now exceeds 100% of GDP.
  • No easy “break-glass solution.” Mnuchin says COVID emergency measures normalized trillion-dollar annual deficits.
  • Urges bipartisan action, especially on mandatory spending.

• Defense Spending Pressure:

  • Recognizes the necessity of increased defense spending but questions how to afford it without major budget cuts elsewhere.

• Confidence in Trump:

  • Mnuchin expresses confidence that Trump could tackle fiscal challenges if re-elected.

• Notable Quote:

  “If there’s someone who can tackle the spending issues, I think he’s the one to do it.”
  — Steven Mnuchin [10:40]

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5. Fed Rates, Future Policy, and Kevin Wash

[11:08–13:32]

• Rates & Inflation:

  • Believes rates are near the “equilibrium” level (2.5–3.0%).
  • Notes that persistent deficits push up borrowing costs.

• Fed’s Balance Sheet:

  • Supports shrinking the Fed's portfolio—an alternative to lowering interest rates.

• No Sudden Debt Crisis:

  • Does not predict an abrupt moment when U.S. cannot finance its debt, but sees risk premiums inching up.

• Independence of Next Fed Chair (Kevin Wash):

  • Expects Wash to be independent, regardless of potential tension with the President.

• Quote:

  “If we continue to have a very strong economy, we’re not going to need to cut rates. If for whatever reason we go into a recession, we will have 1% rates.”
  — Steven Mnuchin [13:07]

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6. Entertainment Investments: Lionsgate

[13:32–14:39]

• Stake in Lionsgate:

  • Mnuchin is on the board and holds significant ownership.
  • Praises Lionsgate’s valuable film library and independent status.
  • Declines to comment on any potential full acquisition.

• Success of “Michael” (Michael Jackson Movie):

  • Attributes the film’s box office appeal to strong content, showing audiences will go to theaters for compelling stories.

• Quote:

  “When you have the right content, yeah, people still want to go to the movies.”
  — Steven Mnuchin [14:16] “Michael Jackson was just an incredible performer and his music was obviously pretty extraordinary on my playlist.”
  — Steven Mnuchin [14:16]

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7. Reflections on Government Service

[14:39–14:50]

• Mnuchin on serving in the administration:

  “It was an experience of a lifetime. I couldn’t be happier that I did it. I’m proud of what we did. I’m enjoying being on the outside and rooting for them.”
  — Steven Mnuchin [14:41]

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Notable Quotes & Memorable Moments

• On reporting flexibility:

  “Giving companies the option is a very good idea.”

• On AI:

  “No question that AI is going to impact almost every business that we touch.”

• On Middle East risk:

  “Iran getting a nuclear weapon is the biggest risk in our lifetime.”

• On debt and spending:

  “There’s not a break-glass solution… this needs bipartisan support.”

• On the movies:

  “When you have the right content, people still want to go to the movies.”

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Timestamps for Key Segments

| Segment | Timestamps | |---------------------------------------|------------------| | SEC’s reporting proposal | 00:40 – 02:19 | | AI, data centers, capital spending | 02:51 – 06:00 | | Geopolitics (Iran, Israel, Ukraine) | 06:00 – 09:18 | | U.S. debt, fiscal strategy | 09:18 – 11:08 | | Fed rates, balance sheet | 11:08 – 13:32 | | Lionsgate, Michael Jackson movie | 13:32 – 14:39 | | Reflections on government service | 14:39 – 14:50 |

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Summary

Steven Mnuchin provides a candid, measured look at shifting regulatory landscapes, surging AI-driven tech investment, fiscal headwinds, and global instability. Throughout the episode, he repeatedly calls for flexibility, prudence, and bipartisan action while highlighting confidence in American markets, technology, and institutions—even as he calls attention to the underappreciated risks lurking just below the surface.

Transcript

[Joe Mattey]

Indiana University strengthens tomorrow's workforce with practical real world experience. IU grads make a difference in your community, serving as teachers, nurses and engineers who rise to tomorrow's challenges and meet them. Learn more at iu.edu impact,

[Carol Massar]

Bloomberg Audio Studios Podcasts Radio News do you want to welcome everybody who is watching too on Bloomberg Television, Carol Massar, Joe Matthew live here at the Milken Institute Global Conferen in Beverly Hills with a very

[Joe Mattey]

special guest that we want to welcome here to our set at Milken, it's the former Treasury Secretary Steven Mnuchin. Thanks for being with us, sir.

[Steven Mnuchin]

Great to be here.

[Joe Mattey]

We've got a lot we'd love to talk to you about, but we've got breaking news that just went right on the terminal right before we began the broadcast and that is a proposal by the SEC to go to semiannual reporting or at least allow it. And you can look at two different sides of this coin. Do you think this is good for the markets? Is it good for investors?

[Steven Mnuchin]

Well, I support the proposal. I think there's too many companies that are too focused on quarterly earnings and whether they miss or beat expectations, analysts expectations. So I think the idea of giving companies the option of whether they want to do quarterly or semiannual is a good thing. I mean, I can imagine there are a number of companies, particularly companies that are growing, that are still going to be interested in showing quarterly earnings and showing their progress through the year. But I think giving companies the option is a very good idea.

[Carol Massar]

Does it do anything to kind of the global perspective from investors about how US Market is kind of the gold standard so transparent because of those quarter quarterly reports and so much more and some of the rules and regulations that really govern our country, our companies here.

[Steven Mnuchin]

Well, there's no question the US Is the gold standard for companies to be listed. It's the most liquid market in the world. It's the largest and the largest economy. And I think giving companies the options I think will continue to have transparency.

[Carol Massar]

Do you think most of them will still stick to quarterly reporting?

[Steven Mnuchin]

My guess is some will switch and some won't. I mean, as I said, if you're a growth company company, you have every reason to want to show the growth every quarter. If you're a company that's in turnaround and things are improving, you're going to want to show it. On the other hand, there are plenty of companies where, you know, they're focused on a long term transition and I think giving them an option is a

[Joe Mattey]

good thing to pretty Quickly see two classes of companies when it comes to reporting season a little bit. But that's okay. After our sessions are going to feel really different. Carol, I. But so I'd love to hear from you on this market as a whole and the psychology that's confounding a lot of us. As we mentioned already, it's rally time. Mr. Secretary, oil prices are lower again today after the Defense Secretary suggested that this effort in the strait would not go on forever. That's all you need. And we're back to buying on Wall Street. Is this getting a little toppy or can you rationalize what you're seeing?

[Steven Mnuchin]

I think there's two things that are going on in the market. One is that you have very large capex spending and very large growth around AI, around data centers, around the cloud. And that to me we are still in the early innings of this transition. There's no question that AI is going to impact almost every business that we touch. And that's something that's going to be a very positive way. But there's also going to be job issues and job implications on that. The second thing we have going on is the US is the destination of where people want to invest. You know, Europe's economy is, is underperforming. People are concerned about what's going on in Europe. So the flow of funds into the US dollar, in particular into US equities is still very strong. As I like to say, if you can take a 10 year horizon, there's no better place than buying S&P 500. You know, if you're day trading, that's a little bit of a different issue. Trying to predict the short term markets.

[Carol Massar]

How do we figure out whether or not the spend in terms of data centers is just too much, that there isn't some overspend? Ultimately, you know, we were talking panel, a real estate panel with folks who are all investing in data centers, talking maybe like do we need to have an exit strategy? You know, we talk about data centers in space, like this thing could evolve, chips get more efficient. So is, is it something that could be down the road but not to worry about now or do we need to think about the overspend?

[Steven Mnuchin]

Well, I'd say in the short term the demand for compute is very strong and you're seeing this across a number of companies. I'd say there's two different things. You have open air and anthropic on the one hand who are going to consume a lot of cash as they build out these businesses and then you Have Microsoft, Amazon, Google, Matta, that all are cash machines and are building out both high and are building out the cloud. I think the good news is if there's overspending in the next few years, they'll cut back. So I don't think you're going to see the same trajectory. I think the other issue is going to be we're going to run out of power for data centers. So I think it's people want to spend the money now, get the data centers operating and if they have to scale back over time, I mean some of these data centers, particularly the training centers that have 15 year leases, my guess is 15 years from now they're dark. Yeah, the cloud data centers will have tremendous growth and will be around for the next 50 years.

[Carol Massar]

Do you have exposure to the area

[Steven Mnuchin]

we spent a lot of time on the area where we're long term investors in what we believe are stabilized data centers.

[Joe Mattey]

Do you worry that just to add on to that, I think this might be where you're going a little bit, Carol, that efficiencies, whatever is going to be developing in the next couple of years will render these massive data centers useless. They could be the size of a phone booth at some point or just a completely different to Carol's point in space. Is this something that, that has a shorter timeline, knowing that technology will evolve?

[Steven Mnuchin]

You know, if you, if you look back at data centers from 20 years ago in Virginia, we're still using them.

[Joe Mattey]

Well, that's true.

[Steven Mnuchin]

So again, I separate training data centers. You're going to need to train these models, then you're going to. It's very different kind of the cloud native issues, but just going back to the market, you know, the market is discounting kind of the geopolitical risk in my opinion. So you know, we don't really see them. The market is expecting we're going to have a good outcome. I completely support President Trump and what he's doing in Iran. I always said Iran getting a nuclear weapon is the biggest risk in our lifetime. And there's no question from my experience in the government they intended to do that. You know, how we play out from here is a little bit more complicated. And as you said, we've seen a lot of volatility in the oil markets and the stock market is, is, is really not discounting this going on.

[Joe Mattey]

Sounds like we're missing something here.

[Steven Mnuchin]

I wouldn't say we're missing. What I'd say is hopefully we will have a good outcome. Iran will come to the negotiating table. I think the economic and the blockade, the sanctions work.

[Joe Mattey]

Even if the strait reopened tomorrow, though, we've heard that it could be more months before energy flows are back to where they were. Does the market have a reality check coming on that?

[Steven Mnuchin]

I think it will take a while. Having said that, there are such positive things going on in the economy that I think to the extent this trade can open up relatively soon, what the economy will absorb, those energy costs.

[Carol Massar]

I want to ask you, you obviously were in the first administration. You have a better, really probably great understanding. President Trump. And as we say, the markets can go from day to day. Based on the headlines, it looks like it's a 180. How should we be reading what the president is doing? What do we need to understand? Because do you feel like this is a different Donald Trump's the second term versus the first term?

[Steven Mnuchin]

No, I don't. I think there's. There's a lot of similarities in it. I think on this issue, and this is an issue he's been focused on since the first term, he's determined, and his legacy will be that he's going to prevent Iran from getting a nuclear weapon. And there's been other administrations that were, you know, understood the risk but were concerned. I also give Israel a lot of credit because one of the concerns was all the ballistic missiles and obviously the defense, the air defense systems in the region have been very powerful. But, no, I think this is a president that would prefer not to go to war with them again, but will if he needs to.

[Carol Massar]

But this could go. Could we be still talking about war at the end of the year?

[Steven Mnuchin]

I think we could. I mean, I think he's determined that he prevents this from happening, the nuclear situation. And I think that part of the issue is. And he said this, you know, he took out a lot of the leadership. So part of this is making sure that leadership develops in Iran that can negotiate a deal that they'll stick with.

[Carol Massar]

What's the other geopolitical. Because you say geopolitical. Is it just the Middle East? Are you thinking about China? Are you thinking about other parts of the world?

[Steven Mnuchin]

No, I think it's. It's. I mean, there is this war in Ukraine. I don't want to forget what's going on in Ukraine. Yeah, that's still an important issue. I feel like we don't see it on the press every day, but obviously the big issue right now in terms of risks for the economy and risk for the world is the Middle East.

[Joe Mattey]

You know, there's another cloud you could argue is hanging over this market that has nothing to do with the war in Iran. Although maybe there's a connection at some point when we start talking about the cost of this operation. But that's the debt now topping 100% of GDP. Mr. Secretary, how long can we sustain this? Hank Paulson mentioned to David Westin the need for a break glass solution. What should the treasury be preparing at this time for this?

[Steven Mnuchin]

Well, I unfortunately think there's not a break the glass solution. You know, I think there's no question that during COVID we had to spend massive amounts of money. We shut down the economy. I mean, anybody who ran a business never ran it thinking you'd have zero revenues. You know, I'm particularly proud of we saved the airline industry. So we have a very robust airline industry. Having said that. Well, no, but we saved the industry overall. And I think it was, I think it was the right thing to let Speed Spirit go through what they are. Having said that, it kind of normalized trillion dollar spending. And I think this is an issue that needs bipartisan support. You know, part of it is the mandatory spending. We have to deal with that part of the budget. And you know, you also what's being

[Carol Massar]

allocated for defense in this budget? It's a lot.

[Steven Mnuchin]

Look, there's no question, particularly in this day and age, we need to spend more money in defense. I think right now it's going to be hard to spend another $500 billion in defense without significantly cutting other things out of the budget. So I am concerned about deficits. I think this has to be dealt with. And I think the good thing is President Trump understands these issues. And if there's someone who can tackle the spending issues, I think he's the one to do it.

[Carol Massar]

Does this mean, I mean, what's the make or break moment? Because I'll go back 10, 15 years we were talking about concerns about the deficit or more, and then it kind of faded away. So what is the make or break moment? And I think about this in the context of Kevin Wash coming in as the next Fed chair, you know, in terms of servicing the debt and so on and so forth. Pressure that might be on him, kind of roll it all together. Do you think he, that he should be cutting rates in this environment?

[Steven Mnuchin]

Well, I think we're close to the equilibrium rate. So before the situation in the Mideast, we did have inflation coming down close to the Fed's 2% target. And I think you could say the equilibrium rate is probably between 2 and a half and 3%. So we're we're close to that level also. There's no question that the deficits push up our cost of funding so that there's a risk premium built in. And one of the things that Kevin is talking about, which I also support, is shrinking the Fed's portfolio. Well, if you shrink the Fed's portfolio, that's also another tool that you don't have to lower rates. Ultimately the Fed does short term set short term rates. If they're not doing quantitative easing, which they're not going to do now, they're not setting long term rates. I mean, and I don't think we're going to have a make or break moment where one day we wake up and we can't finance the debt. I do think you'll see an increase in risk premiums. I mean, you see the 30 year bond kind of approaching, you know, kind of 5%. Part of that is the volatility around inflation and what's going to happen with the war. But part of that is also just pushing up the cost of long term financing for us.

[Joe Mattey]

What's Kevin Washington for when he wakes up in the morning and looks at Truth Social? Is this contentious relationship with the chair, if he's not cutting going to continue?

[Steven Mnuchin]

I think Kevin will do terrific in his new job.

[Carol Massar]

Is that a yes or no?

[Steven Mnuchin]

I think he will be an independent Fed. That doesn't mean that he will or won't agree with the President. Now look, part of it is where interest rates are depend on the economy. If we continue to have a very strong economy, we're not going to need to cut rates. If for whatever reason we go into a recession, we will have 1% rates. So I mean we had zero rates in Covid. You know, there was a reason why they went down to zero.

[Carol Massar]

Hey, we can't leave without talking about Lionsgate. I think you guys have about a 13% position. What's your plan with Lionsgate? What do you want to do?

[Steven Mnuchin]

It's a great business. I've recently gone on the board. Yeah, Lionsgate is one of the few independent studios left. It has an incredible film library and Michael's been a great student success. So you want to own all Michael Jackson? I can't comment on that.

[Joe Mattey]

Well, so let's wrap with one. Some one fun question about the movies. Michael is an incredible debut. Looks like it's across the board when it comes to demographics and we're in a world where consumer sentiment is pointing lower. There are worries about consumer spending, the price of gas, but they're lining up for that movie. What does that tell us about that?

[Steven Mnuchin]

It shows you that when you have the right content, yeah, people still want to go to the movies. It's not just about sitting at home and watching it on tv. And, you know, Michael Jackson was just an incredible performer and his music was obviously pretty extraordinary on my playlist.

[Joe Mattey]

Got on the movie.

[Steven Mnuchin]

You know, we all remember growing up with MTV and Thriller.

[Joe Mattey]

It's not just old folks going, though.

[Steven Mnuchin]

You said exactly who's old? Not.

[Joe Mattey]

Not you.

[Carol Massar]

20 seconds. Do you miss the administration being inside?

[Steven Mnuchin]

It was an experience of a lifetime. I couldn't be happier that I did it. I'm proud of what we did. I'm enjoying being on the outside and rooting for them.

[Carol Massar]

Well, we certainly enjoyed having you here. Thank you so much. Really appreciate it. Steven Mnuchin, of course, former treasury secretary and of course he is Liberty Strategic Capital founder and managing partner.

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