The vigorous nods of Bessent

Summary

Unhedged Podcast Summary

Episode: The Vigorous Nods of Bessent
Date: October 28, 2025
Hosts: Katie Martin & Rob Armstrong (Financial Times)

Overview

This episode dives into the pivotal role Scott Bessent, US Treasury Secretary under President Trump, plays in shaping contemporary financial markets. The hosts dissect Bessent's combination of MAGA-aligned policy support and market-calming influence, questioning whether these two apparently contradictory approaches can coexist without causing turmoil. There’s also discussion of broader shifts in the balance of power between central banks and politicians in global finance.

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Key Discussion Points

1. The New Financial Power Players

• Katie Martin opens with the observation that while central bankers "were the rock stars of markets" for years, "today, they kind of play second fiddle to politicians—especially in the US" (01:00).
• She identifies Trump and, crucially, Scott Bessent as the real market movers.

2. Scott Bessent’s Approach: Stability vs. Orthodoxy

• Rob Armstrong admits to being "somewhat to my surprise, a bit of a Scott Bessent fanboy" (02:05).
• Armstrong and Martin agree the current calm in markets—especially lower Treasury yields—is a testament to Bessent’s stabilizing influence, even if policy is "unorthodox" (03:09).

Notable Quote:

Rob Armstrong (02:17): "He seems to have fit himself to the role. And nothing succeeds like success... what combination of skill and luck that is on Bessent's part we can debate, but it's kind of working."

3. Contradictions in Bessent’s Role

• Martin highlights the paradox of Bessent: once a hedge fund manager who would have bet against Trumpian policy, he is now "the biggest, arguably the biggest champion for it" (05:04).
• She details his support for Trump on tariffs, attempts to overhaul the Fed (notably targeting Lisa Cook), and more controversial activities such as threats to use the IRS against left-leaning groups.

Notable Quote:

Katie Martin (05:04): "On the one hand, he's like full MAGA... and on the other, he is this real kind of stabilizing factor."

4. “The Taco Trade” and Bessent’s Market Sensitivity

• Armstrong credits Bessent with being part of the "taco trade"—a pattern where the administration quietly backs down when markets push back against policy shifts (06:57).

Notable Quote:

Katie Martin (06:55): "Trump always chickens in."
Rob Armstrong: "Yeah, this is a good thing, the chickening out... Scott Bessent is a taco chef."

• They argue Bessent’s behind-the-scenes advice helps prevent market meltdowns.

5. Risk and the Illusion of Control

• Both hosts stress that smooth markets may embolden unorthodox policies, but warn that risk can "appear in spikes and crises and cycles"—you can’t always see it coming (10:36, 11:00).
• Armstrong emphasizes, "There is a kind of hubris to the 'where is the market risk?' line" (11:58).

Notable Quote:

Rob Armstrong (12:17): "Somebody sees some market risk somewhere... inflation is up under Trump, not down. And we’re cutting rates into inflation—that is not a riskless activity."

6. The Shifting Primacy: Fiscal Over Monetary Policy

• They discuss Chris Giles’s recent work on the waning influence of central banks over bond yields compared to government fiscal policy (14:46).
• Martin notes this is a significant regime shift: "Central banks are very important, but they're kind of on the backseat" (14:48).

Notable Quote:

Rob Armstrong (16:22): "We are in a fiscal first, monetary second world. And that is a major change."

7. International Actions: The Argentina Case

• Armstrong lauds Bessent’s role in supporting Argentina’s currency, arguing another Treasury Secretary might not have backed Argentine President Milei—"helped keep Milei alive" (16:22–17:39).
• Martin jokes about Armstrong’s "strong fanboy action" for both Milei and Bessent.

8. Bessent’s Persona & Media Moments

• Martin relays an amusing Bessent TV moment, where he claims to be a “soybean farmer” in response to struggling soybean farmers (17:59).
• Armstrong: "Someone who is that bad on television couldn’t survive in politics if he didn’t have something else going on" (18:33).

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Timestamps for Key Segments

• Opening Theme – Politicians vs. Central Bankers: 00:36–02:00
• Rob’s Bessent Admiration: 02:05–03:09
• Bessent and Market Calm: 03:09–05:04
• Contradictions in Bessent: 05:04–06:37
• The Taco Trade / Market Sensitivity: 06:37–09:32
• Is Market Calm Dangerous?: 09:42–12:40
• Bond Yields: Fiscal vs. Monetary Policy: 14:46–16:22
• Argentina Aid Example: 16:22–17:39
• Bessent’s Persona & Soybean Farmer Story: 17:59–18:33

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Memorable Quotes

• Scott Bessent about his critics:
  "Where the hell is the market risk? Critics have just been wrong." (paraphrased by Martin, 03:09)
• Rob Armstrong:
  "Live by the 10 year yield, die by the 10 year yield. So he better hope that keeps happening." (04:55)
• Katie Martin:
  "He is running the taqueria over there in the White House." (09:32)
• Rob Armstrong:
  "We are in a fiscal first, monetary second world. And that is a major change." (16:22)

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Long/Short Segment (20:00–22:57)

• Rob Armstrong goes "Long" depreciation expense among tech firms, predicting it will become a crucial topic as AI capital spending eventually filters into profits (20:04).
• He also shouts out the "Unhedged Chart of the Week" by Hakyung Kim.
• Katie Martin goes "Short" on "people saying stupid stuff about gold," critiquing over-intellectual analysis of gold's price movements (21:53).
• Both joke about how easily market commentary slides into over-analysis.

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Tone & Style

• The tone is analytic but with a trademark FT/Unhedged blend of wry humor and directness.
• Hosts frequently joke at each other’s expense and maintain a conversational, lively repartee (e.g. calling each other "fanboys" and “taco chefs”).
• The discussion is rich in current context with historical nods, accessible to non-experts without oversimplifying key debates.

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Takeaways

• Scott Bessent is an unusually complex figure whose market management skills have so far prevented accidents, but the panel questions if this balancing act can last.
• The role of central banks is receding, with fiscal policy taking center stage.
• Calm markets might signal stability— or merely the accumulating risk before a crisis.
• The importance of financial personalities and behind-the-scenes advisors in steering economies is greater now than ever.

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For Further Listening

• FT's Chris Giles newsletter on bond markets
• Prior Unhedged episode on Argentina
• BBC Market Coverage feat. Katie Martin

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End of summary.

Transcript

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[Katie Martin]

PUSHKIN for years and years, maybe a decade and a half, the most important people in financial markets were central bankers, the wise men and women who set interest rates and often also act as regulators. Today, though, they kind of play second fiddle to politicians, especially in the US and in the US there's two people who really matter. Three if you include Rob Armstrong, which I don't. The two men that matter. The two men that matter are first of all, of course Mr. Donald J. Trump, but also his right hand man in all things financial, Treasury Secretary Scott Besant. Now this one guy is a big reason why markets are so well behaved while policy has been so, let's say, unorthodox. And Besant knows it. Today on the show we're asking what the limits of that really are and whether in the long term you really can bring MAGA to markets without causing an accident. This is Unhedged, the Markets and Finance podcast from the Financial Times and Pushkin. I'm Katie Martin, a markets columnist at FT Towers in London. It's chilly out there and I'm joined by the big fella, Rob Armstrong off of the Unhedged newsletter on the other side of the pond over there in New York City. Rob, how do you feel about responsibility? Would you like to be like Scott Besant holding up the sky?

[Rob Armstrong]

I am turning in somewhat hesitantly and somewhat to my surprise, to a bit of a Scott Besant fanboy.

[Katie Martin]

Are you?

[Rob Armstrong]

I think the guy is in a very difficult position, as you just suggested, that requires what is the word I'm looking for here? Flexibility. And that he seems to have fit himself to the role. And I think that nothing succeeds like success. And on the big market thing, things I write about, it's all going okay and what combination of skill and luck that is on Bessant's part and how much policy from the administration does or does not have to do with it. We can debate, but it's kind of working and he's the guy whose job it is to make it work. So I'm tipping my hat. How do you like that?

[Katie Martin]

Katie, you stand for Scott. Now listen, our excellent colleague James Politi interviewed Bessemer for a piece in the FC the other day, great piece and there was loads of interesting stuff in there. But one line of it, which happened to be in the headline as well, really struck me between the eyes. So Besant was talking about, you know, his critics or critics of US policy writ large, and he said, where the hell is the market risk? And critics have, quote, just been wrong. Boom, mic drop. The guy's not wrong.

[Rob Armstrong]

No 10 year yield. The long ish end of the treasury curve. January 4.8 ish. Today 4% ish. Right.

[Katie Martin]

And yields go down when prices, listeners go what up? That's correct. To the regular. So like, lower yields are exactly what the administration wants, wanted.

[Rob Armstrong]

And most importantly because it means lower mortgage rates, which voters like and they've gotten some of that. Mortgage rates are not yet low, but they are lower. And of course, where he's crowing at his critics is one of the worries was you're going to run the economy hot, you're going to put tariffs on, there's going to be inflation and rates are going to go up and it's going to be awful. And it has not happened. There's various reasons for that. And we can talk about what's actually happening with inflation. But I would say Exhibit 1, In Defense of Scott Besant and in support of Scott besant is the 10 year yield.

[Katie Martin]

Yep.

[Rob Armstrong]

Yeah, of course. I mean live by the 10 year yield, die by the 10 year yield. So he better, he better hope that keeps happening. And I think there's risks to it.

[Katie Martin]

Yeah. So, you know, also in this interview with, with James, he, he was saying, I have a healthy regard for the market. You've got to respect the market. And I think it's reasonable to say that the administration's key measurement for that is exactly as you say, the, the ten year government bond yield. But Besant is such a kind of curious character. Right. I can't get my head around him. And that's not a reflection of our colleague James Politi doing a bad job on this interview. It's that there are so many contradictions packed in. This one guy like the President now in the states is running like an economic policy agenda that I think it's reasonable to say in a previous life, Scott Besant, as a hedge fund manager at Soros, you know, that the hedge fund group would have been betting against, whereas now he's like the biggest, arguably the biggest champion for it. So he has backed Trump on tariffs, he has backed Trump on trying to overhaul the Federal Reserve partly by kicking out Lisa Cook, who's one of the, one of the governors, she's clinging on, but she's had a very rough time. He's also done like other weird, like MAGA type stuff, like saying he will use the tax service in the states, the Internal Revenue Service to investigate left leaning organizations that he doesn't like. So on the one hand he's like full magger, and on the other, he is this real kind of stabilizing factor. So seeing as you have outed yourself as a big Scott fan, Rob, like, what is it he's done that you're so fond of?

[Rob Armstrong]

Let me think here for a second. How do I want to phrase this? Okay. We talk about the taco trade sometimes and one of the habits of this administration is that when markets really start to push back on policy, the administration backs off.

[Katie Martin]

Trump always chickens in.

[Rob Armstrong]

Yeah, this, this is a good thing, the chickening out. And it is my assumption, although I don't have positive evidence that Scott Besant is a taco chef, that he helps the President chicken out at crucial moments.

[Katie Martin]

Yeah.

[Rob Armstrong]

When the bond market or equity markets, whatever, you know, questions about liquidity arise. He's the guy who says to the President, you have to pay attention now. This is serious. We're getting a message we have to listen to. So a little bit my argument is a proof in the pudding kind of argument. Now Lisa Cook is an important example because the evidence seems to be that as I read it, and some listeners will disagree that Lisa Cook did not commit mortgage fraud as the President and Scott Besant have strongly suggested or even said that she has. It looks like a purely political effort to use law enforcement to get their way. And this is bad, this is a bad use of presidential power. But think about the situation Scott Besant is in and ask yourself if you would like him to be there or not.

[Katie Martin]

Oh, yeah.

[Rob Armstrong]

Because there is no way you are going to be Donald Trump's Treasury Secretary for an extended period if you are not a master flatterer and you don't get right behind the President's big pronouncements about the economy and the management of the economy. So he's gotta say certain things. Whatever he might think if he wants to keep that job. That's the kind of administration this is. There is no room for him to be saying, well, Lisa Cook will let the process play itself out and we just want to look into these things. But if her name is cleared, I'm sure she'll continue to serve or any, you know, that's not gonna get it done in The Trump administration. Right. So now you might say if you really hate the stuff that Trump is doing, you might be tempted to say the honorable thing to do is resign. But if you want what looks to be like a fairly reasonable man in this crucial job, or woman in this crucial job, you gotta recognize they have to toe the line. And he's doing it.

[Katie Martin]

Yeah, I think you're right. I think he is, you know, taco chef in chief. He is running the taqueria over there in the White House.

[Rob Armstrong]

And thank goodness.

[Katie Martin]

Yeah, yeah. But so the fact that markets are so calm in the face of all of the usual stuff that we always talk about, that I think in normal market conditions would be really quite destabilizing. Right. The fact that markets are calm. So I did a thing for the BBC the other day, Humblebrag. They said at the end of the conversation, this might be a silly question, but do you think that the fact that markets are calm emboldens the President to push ahead and do more? And I said, no, that's not a silly question at all. I think that's 100% what is going on here? And that is basically exactly what Besant was saying in this interview with James Politi. Right. It's like, where's the market risk? Where's the market freak out? It's clear that we can carry on doing this stuff and advancing this agenda without upsetting the markets.

[Rob Armstrong]

Well, there's. Well, you say your thing and then I'll say my thing. I've got strong.

[Katie Martin]

Well, I'm just not convinced that can last forever.

[Rob Armstrong]

I agree. Look, a couple of things you have to be really clear about here. One, the economy is not a bus that the President drives. Most things in the economy are affected in a very small way at the margin by the policies that are set by the administration. Right. So a lot of what Besant is talking about is good luck. There's a lot of things that will go on in stock markets and bond markets that has nothing to do with policy. That's point number one. Point number two. One thing we know about risk is that it does not appear in small little increments, right? In a kind of linear way where risk goes up 1% and market prices in risk at 1%, it appears in spikes and crises and cycles and eddies and all this stuff. It's not. So there is a kind of hubris to the where is the market risk line. And you might look at the market and say, okay, here's some places where it is. Let's look at the dollar, which weakened a lot. Now, that happens to fit with the administration's trade rebalancing agenda, having a weaker dollar. But the big move in the dollar does tell you that the world is watching what is going on with US Policy and responding to it. People are hedging the dollar. It seems pretty clear in a way, global investors did not hedge the dollar before.

[Katie Martin]

Yeah, right.

[Rob Armstrong]

So somebody sees some market risk somewhere. Yeah, that's, you know, inflation is up under Trump, not down. And we're cutting rates into inflation. That is up. That is not a riskless activity. As I have rattled on about at no end in the call, that is.

[Katie Martin]

Generally a bad idea.

[Rob Armstrong]

Well, it's. Or it like it's, you know, you're, you're rolling the dice. The Fed, you know, which probably will cut tomorrow and is expected to cut again by the end of the year, is betting that the increase in inflation and consumer inflation that we have seen so far this year is transitory. And the last time the Fed made that bet, the President of the United States got fired as a result. Yes, because it wasn't right, it wasn't.

[Katie Martin]

Transitory, and voters do not like inflation.

[Rob Armstrong]

Oh, boy.

[Katie Martin]

But I think you're right. I think the vast majority of people who manage money in markets would rather have besant there than not. You know, when I talk to investors, they generally don't have very nice things to say about other financial and economic heavy hitters in Trump's orbit. They would always much rather it was besant than not. He's a macro guy. He's been involved in hedge funds. He understands that you monkey about with the bond market at your peril. But I just think there is a lot of weight on his shoulders. So, again, not to harvest the organs of work from colleagues of ours, but Chris Giles wrote a really interesting newsletter today where he was pointing out that for a really long time after the big financial crisis of 08 09, government bond yields all kind of moved in lockstep. They all kind of went up together and they all, you know, mostly yields went down together. And there was a paper in, in 2023 that says, look, you can prove actually that really the only thing that matters for what treasury yields do is what the Fed is doing. So is the Federal Reserve raising interest rates or cutting interest rates? That's kind of the only thing that matters for Treasuries. But Chris, because he's much better at sums than me, took that analysis and took it further beyond the point where this 2023 paper came out and he can demonstrate that actually that massive influence of Fed policy over what government bonds do is falling away a bit.

[Rob Armstrong]

It's more about fiscal policy now.

[Katie Martin]

Yeah, it's much more about fiscal. So it's much more about tax and spend attentions from governments. And this is like quite a big regime shift that I don't think a lot of people have been articulating. It's like, you know, central banks are very important, but they're kind of on the backseat of that bus that Trump thinks that he's driving, you know, the economy along in. Whereas right up at the front you've got the politicians. Does that fill you with confidence or fill you with dread?

[Rob Armstrong]

Well, it means the Fed's role and central bank's role could suddenly become enormously important all at once if the politicians screw it up. I don't know how you want to work that into the bus metaphor, but, you know, I think maybe they might.

[Katie Martin]

Have to take the wheel back.

[Rob Armstrong]

In other words, the worry is that the politicians who always have an incentive to run the economy hot in the short to medium term, cause inflation and the inflation is bad enough that you need some monetary jiggery. Pokery, I think, is the technical term to get inflation under control and make the fiscal excesses bearable. But I agree with you. I think Chris Giles is exactly right. And I think this transition started with the great financial crisis and was reinforced by Covid and the government responses to Covid. And we are in a fiscal first, monetary second world. And that is a major change.

[Katie Martin]

Yeah.

[Rob Armstrong]

Can I slightly change the topic? I thought of something that I like. Another thing I like Scott Besant for, and that I think mentioning that is relevant to the show we did last week, which is it is easy to imagine a Trump administration in which America does not come to the defense of Argentina and the Argentine currency and that country has another one of its periodic monetary slash economic collapses with bad regional effects. But Scott Besant seems to have led the charge to say we will help Milei support the currency of his country. And that gamble seems to have worked for for Scott Besant because you've kept Milei alive. Milei won the election. And for all his ridiculous hair and his stupid chainsaw, I'm a Mileay guy. Those market reforms, he's got the ship pointed in the right direction. And Scott Bessant helped him. And with a different Treasury Secretary, it might have turned out very differently.

[Katie Martin]

Some strong fanboy action from Rob Armstrong here towards Javier Milei, President of Argentina and Scott Besant.

[Rob Armstrong]

I mean, you don't you know, you gotta pick from the menu of people you are given in the world who you're gonna like and not like. Mahatma Gandhi is out of business at this point, so I can't grab him off the menu. You know what I mean?

[Katie Martin]

One tiny last thing. I did enjoy the observation from Scott Besant the other day where he was on the telly box and he was asked about the struggle of soybean farmers who are really suffering from worsening trade relations between the US and and China. And he replied to ABC News, I'm actually a soybean farmer myself. I think there were different types of farmers. There are farmers who own own wellies and carry heavy things around and get really dirty. And there are people who happen to own farmland and I would say they are somewhat different things. Nonetheless, I did think that was quite an amusing little.

[Rob Armstrong]

I think part of the reason I think Scott Bessant is an intelligent man is that someone who is that bad on television couldn't survive in politics if he didn't have something else going on. He's so bad on TV it's almost reassuring. He like, must be a serious person because he's not there. Because he's a smooth talker.

[Katie Martin]

Yeah. Whereas you're all about the smooth talk.

[Rob Armstrong]

Yeah.

[Katie Martin]

And listeners can finish that sentence themselves. Right. Scott Bessant, we like him. We're glad he's there. I'm glad we've cleared that up. We are going to be back in just one little second with Long Short.

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[Katie Martin]

Okey doke. It's time for Long Short. That part of the show where we go long a thing we love or short a thing we hate. Rob, what you got?

[Rob Armstrong]

Well, as you know, Katie, it's tech reporting week. We're going to get Alphabet, Amazon, Apple, Meta and Microsoft this week. And in that context, I am going long. This is really nerdy and I apologize in advance. I am going long. Depreciation expense.

[Katie Martin]

Well, that's too nerdy.

[Rob Armstrong]

Yeah, I know, I know. Come on man, give me a second. Give me one second. So everybody's talking about how all these companies are investing so much money Billions and kajillions of dollars in AI data centers. Eventually that's called capital expenditure. That's that investment funding. Eventually that expenditure has to appear on the profit and loss statement of these companies on the income. And it hasn't very much yet. Because the whole point about depreciation expense, which is where this stuff happens on the income statement, is that it's smoothed. It like spreads the spending out over time. Right. And so my prediction is that pretty soon the conversation is going to go from capital expenditures, which is what we have now, to depreciation expense. And how are all these huge AI data centers being depreciated and how is that affecting profits of these companies? And it's just a matter of time before everybody has to learn what this word means.

[Katie Martin]

Mm. You heard it here first, Katie.

[Rob Armstrong]

While I have you and our listeners captive, let me belong one other thing, which is the Unhedged newsletter's chart of the week. My comrade Hakyung Kim is doing outstanding work churning out an excellent and insightful chart every week. And you can sign up at FT.com/forward/chart of the week.

[Katie Martin]

I mean, charts famously do not work on podcasts. So if you, if you want your charts hit, this is the place to go. I am short People saying stupid stuff about gold. There's, as you noted in your newsletter, like today or yesterday, whatever, there's been an outbreak of people saying immensely stupid stuff about gold. Gold's obviously had a terrific year, but it's fallen off its perch a bit recently. It's now like it's down 10% from the peak. Is it down 10% from the peak because fiat currencies are 10% less debased than they were this time last week. No, it was a line that was going up very fast. People bought it because it was a line going up and to the right and now it's run out of a bit of energy. People should stop over intellectualizing the gold thing.

[Rob Armstrong]

Well, as someone who is literally in the over intellectualizing the market business, Katie, I think you ought to be careful about what you're saying here. But I'm with you. I agree.

[Katie Martin]

People have been saying very silly things. Not us, of course. Other people have been silly. Silly things. Never have. No, never ever. Listeners. We probably will say something stupid on Thursday. So listen up then for the next show. And in the meantime, stay tuned. Stay golden. Unhedged is produced by Jake Harper and edited by Bryant Urstadt. Our executive producer is Jacob Goldstein. Topher ForHees is the FT's acting co head of audio. Special thanks to Laura Clark, Alistair Mackey, Greta Cohn and Natalie Sadler. FT Premium subscribers can get the Unhedged newsletter for free. A 30 day free trial is available to everyone else. Just go to ft.com unhedgedoffer I'm Katie Martin. Thanks for listening. And one more thing. I will be in Kilkenny in Ireland for the fabulous Kilkonomics Festival over the weekend of November 8th. Among other things, I'll be recording an unhedged PODC while I'm there. I think that event is sold out, so maybe see you there. But come and hang out anyway. I'm doing loads of things there and I'm up for a pint and a chat.