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um I want to switch over to Europe really quickly here because the European Central Bank meeting is on Thursday what might we expect to hear from Mario dragi on QE because if he doesn't extend the program it could be construed by investors as tightening I think so and and the the language will be important the press conference will be important it always is I I think ultimately investors have to expect uh because the ECB is running out of bonds to buy that you know the quantitative easing program will be reduced if not um eliminated at some point I mean uh the market to a certain extent has already beg to anticipate that instead of $15 trillion doll worth of negative yielding Bonds in uh Euro land we now have two or three trillion and so yields have gone up um you know in in the EU uh by 30 or 40 basis points almost as much as they've gone up in the United States so um you know the real world is is coming back uh to to bear in in in terms of these Central Bank policies that stressed negative interest rates that ultimately in my view and I think in central Bankers view maybe even in dy's view um you are delerious to economic growth as opposed to positive do you think the Italian referendum changes how Mario dragi moves forward with policy well I you know I think he he suggested uh beforehand that uh whatever it takes um in terms of a potential negative reaction in terms of Italian bonds that it uh you know it was a five or 10 basis point moment but not much I I think the most important thing obviously are are the uh situations with the Italian Banks and and the stance that the uh the EU and the ECB jointly take in terms of uh you know potentially bailing them out uh uh in any case it's not a a positive for the Italian eon it's merely a a smooth over paliative that uh you I think covers up lots of lots of problems in Italy and and perhaps in other countries as well that have non-performing loans that simply uh can't uh be dismissed and and swept under the road right now we mentioned earlier the supply of bonds out there in the European context let's bring it back to the United States Steve minuchin who is Donald Trump's pick for treasury secretary floated the idea of selling longer dated treasuries to cushion the effect of rising interest rates what do you think of this proposal well I think it's a good idea it was a better idea of for basis points ago but those are short-term considerations uh you know to the extent that a country tries to match its um liabilities those being the bonds with its assets that being the longevity of the country which uh in in United States is a 00 uh 200 centuries uh you know long uh type of proposition then then all the better U because it locks in a low rate of financing and gives investors perhaps uh you know a choice for a higher yielding treasury as opposed to a lower yielding Treasury and it um you know to a to a certain extent allows investors to to move out on a yield curve uh if they think that uh that interest rates aren't moving up very much I myself wouldn't be a a buyer of a 50 or 100e treasury unless it offered a an extreme uh reward in terms of a higher yield but um we'll have to see over the next six months right can you quantify what you mean by an extreme higher yield well uh you know what's the markup in terms of the the tens and 30s uh you know probably about 70 80 basis points what would be the markup uh between a 30 and a 50 or a 30 and a 100 we we get some type of idea in in terms of the foreign markets I I I would say that uh you know there should be at least a 40 to 50 basis point premium on a longer term issue it would you know carry a duration uh if 50 years or if a 100 Years of of uh you know significantly higher proportion relative to a 10 or even to a 30 so an investor would have to be cautious and therefore demand that type of reward for the uh maturity extension
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