1 00:00:00,120 --> 00:00:02,920 Speaker 1: Brought you by Bank of America, Mary Lynch. Investing in 2 00:00:03,000 --> 00:00:07,840 Speaker 1: local communities, economies and a sustainable future. That's a power 3 00:00:08,080 --> 00:00:12,360 Speaker 1: of global connections, Mary Lynch, Pierce Fenner and Smith Incorporated 4 00:00:12,760 --> 00:00:27,400 Speaker 1: Member s I p C. Welcome to the Bloomberg Surveillance Podcast. 5 00:00:27,840 --> 00:00:31,520 Speaker 1: I'm Tom Keene with David Gura. Daily we bring you 6 00:00:31,560 --> 00:00:36,600 Speaker 1: insight from the best in economics, finance, investment, and international relations. 7 00:00:37,040 --> 00:00:41,600 Speaker 1: Find Bloomberg Surveillance on iTunes, SoundCloud, Bloomberg dot Com, and 8 00:00:41,680 --> 00:00:49,680 Speaker 1: of course on the Bloomberg Sally craw Chuck is with us, 9 00:00:49,680 --> 00:00:52,160 Speaker 1: and she is of course an historic place on Wall 10 00:00:52,200 --> 00:00:56,280 Speaker 1: Street delivering first order securities analysis for Sanford Bernstein where 11 00:00:56,280 --> 00:00:59,320 Speaker 1: she broke original ground, and then her executive work in 12 00:00:59,440 --> 00:01:03,560 Speaker 1: financial management and now running Elvis is on. The book 13 00:01:04,160 --> 00:01:07,080 Speaker 1: is own it and it's not another touchy feely g 14 00:01:07,280 --> 00:01:11,000 Speaker 1: Gali book here. This is the real thing and it's 15 00:01:11,040 --> 00:01:13,960 Speaker 1: hard hitting. Let's start with diversity councils. You go right 16 00:01:14,040 --> 00:01:17,440 Speaker 1: after diversity councils say no, no, no, help me here. Well, 17 00:01:17,480 --> 00:01:19,280 Speaker 1: here's what I would say, Tom is and I think 18 00:01:19,319 --> 00:01:24,200 Speaker 1: we've seen it in diversity has stalled gender progress. We 19 00:01:24,240 --> 00:01:27,440 Speaker 1: certainly have seen it in politics, but in business as well. 20 00:01:27,520 --> 00:01:31,040 Speaker 1: For all the discussion and debate about the power of diversity, 21 00:01:31,200 --> 00:01:33,280 Speaker 1: it's stalled in on Wall Street. You know, it's gone 22 00:01:33,280 --> 00:01:35,679 Speaker 1: backwards over the past acts going backwards. And what is 23 00:01:35,720 --> 00:01:38,560 Speaker 1: your prescription to get away from the happy talk of 24 00:01:38,600 --> 00:01:42,000 Speaker 1: the recent decade. Well, for CEOs, start to just do 25 00:01:42,040 --> 00:01:46,000 Speaker 1: it because the impact of not doing it has been theoretical. 26 00:01:46,080 --> 00:01:48,720 Speaker 1: You won't get the higher return return on equities, you 27 00:01:48,760 --> 00:01:51,560 Speaker 1: won't get the greater innovation. But at some point it's 28 00:01:51,560 --> 00:01:54,280 Speaker 1: going to become actual because the number one reason millennial 29 00:01:54,360 --> 00:01:57,040 Speaker 1: women leave their jobs today is to make more money. 30 00:01:57,040 --> 00:01:58,640 Speaker 1: Can you look at a guy like Mark Benoff who 31 00:01:58,680 --> 00:02:02,000 Speaker 1: we interviewed Davos and he goes back starting with three 32 00:02:02,040 --> 00:02:04,280 Speaker 1: guys in an apartment and he's, I guess made a 33 00:02:04,360 --> 00:02:07,240 Speaker 1: success of himself. And Benoff says, come on, if you 34 00:02:07,280 --> 00:02:11,000 Speaker 1: actually do this livid day to day, it's not that hard. 35 00:02:11,440 --> 00:02:15,280 Speaker 1: What's holding up the rest of corporate America. Well, it's 36 00:02:15,520 --> 00:02:18,000 Speaker 1: because they think it is that hard. It is so 37 00:02:18,080 --> 00:02:21,960 Speaker 1: much easier to bring in diverse individuals and treat them 38 00:02:21,960 --> 00:02:26,160 Speaker 1: like middle aged white guys. Be confident, make your case, 39 00:02:26,400 --> 00:02:29,880 Speaker 1: raise your hand for the P and L responsibility as 40 00:02:29,919 --> 00:02:32,840 Speaker 1: supposed to really pulling out of everybody the different things 41 00:02:32,880 --> 00:02:37,240 Speaker 1: they bring to work to drive the power of diversity, right, 42 00:02:37,240 --> 00:02:40,040 Speaker 1: Sally do We just need more transparency. More transparency in 43 00:02:40,040 --> 00:02:42,760 Speaker 1: the workforce means that you know how much everyone is paid, 44 00:02:42,800 --> 00:02:45,519 Speaker 1: you know how many people are employed. And it's certainly 45 00:02:45,560 --> 00:02:48,520 Speaker 1: through transparency that people can actually fight for diversity. I 46 00:02:48,520 --> 00:02:51,480 Speaker 1: can want to fight for diversity, but it's very difficult 47 00:02:51,480 --> 00:02:54,160 Speaker 1: for me to see where I should be fighting. For example. Well, 48 00:02:54,320 --> 00:02:57,840 Speaker 1: I think that's a great point. And on today's trajectory, 49 00:02:58,000 --> 00:03:01,200 Speaker 1: we are either a hundred years, fifty years, a hundred 50 00:03:01,200 --> 00:03:04,320 Speaker 1: eighty years away from gender pay parity longer if you're 51 00:03:04,320 --> 00:03:07,079 Speaker 1: a woman of color, so way away. But all of 52 00:03:07,120 --> 00:03:10,760 Speaker 1: a sudden, they're these resources such as paste get get 53 00:03:10,840 --> 00:03:15,200 Speaker 1: raised comparably hired, where we can go in and see 54 00:03:15,320 --> 00:03:17,440 Speaker 1: about how much we should be paying. So back in 55 00:03:17,520 --> 00:03:20,480 Speaker 1: my day, a couple of years ago, when I would 56 00:03:20,480 --> 00:03:22,000 Speaker 1: go in for a raise, it was please give me 57 00:03:22,040 --> 00:03:24,919 Speaker 1: a raise. Today it's this is how much I should 58 00:03:24,919 --> 00:03:27,320 Speaker 1: be making, and I can see it, and so I'd 59 00:03:27,320 --> 00:03:30,880 Speaker 1: like that raise. The power is shifting, right, What is 60 00:03:30,880 --> 00:03:33,600 Speaker 1: the one thing, what is the one common misconception on 61 00:03:33,680 --> 00:03:37,120 Speaker 1: boards on how to treat diversity and actually how to 62 00:03:37,160 --> 00:03:40,320 Speaker 1: be more inclusive. Well, look, I think boards just haven't 63 00:03:40,360 --> 00:03:42,600 Speaker 1: really taken the bull by the horns. I mean, everybody 64 00:03:42,640 --> 00:03:45,520 Speaker 1: says this is an important to do, but when your 65 00:03:45,560 --> 00:03:48,360 Speaker 1: CEO shows up and says, yeah, I know, and I 66 00:03:48,360 --> 00:03:52,040 Speaker 1: would love to put Susie in that role, but Jim, 67 00:03:52,160 --> 00:03:54,640 Speaker 1: Jim is such as Jim, and gosh, she reminds me 68 00:03:54,720 --> 00:03:57,280 Speaker 1: so much of me. The board finds it difficult to 69 00:03:57,320 --> 00:04:01,600 Speaker 1: reach into the company and question those individuals decisions despite 70 00:04:01,600 --> 00:04:04,320 Speaker 1: what the research indicates. Okay, let's look here at the video. 71 00:04:04,640 --> 00:04:07,880 Speaker 1: We did a research project. Sally's gagging here this morning, 72 00:04:07,880 --> 00:04:10,640 Speaker 1: off the level, off the lousy savannas. Go bring up 73 00:04:10,640 --> 00:04:13,240 Speaker 1: the video this weekend. And this is extraordinary. But I 74 00:04:13,240 --> 00:04:15,360 Speaker 1: want to tie this into own it as well. You've 75 00:04:15,400 --> 00:04:18,280 Speaker 1: got four million women marching. I get it, it's a 76 00:04:18,360 --> 00:04:22,240 Speaker 1: huge deal, but how many of those women took triggonometry. 77 00:04:22,279 --> 00:04:24,680 Speaker 1: You go right to it on page one thirty two 78 00:04:24,720 --> 00:04:27,279 Speaker 1: of your book and you say, this carnard that women 79 00:04:27,360 --> 00:04:31,800 Speaker 1: can't do math is just belogning. And what people don't know, folks, 80 00:04:31,880 --> 00:04:34,960 Speaker 1: is Crawchuck invented this on Wall Street with your work 81 00:04:34,960 --> 00:04:38,880 Speaker 1: at Sanford Bernstein, are you seeing more women say screw 82 00:04:38,960 --> 00:04:42,760 Speaker 1: the stereotype. I'm doing trigg Well I did. I didn't 83 00:04:42,760 --> 00:04:46,000 Speaker 1: invent trigonometry, though I do appreciate the compliment. But here's 84 00:04:46,000 --> 00:04:48,000 Speaker 1: what I would say. We're now starting to talk about 85 00:04:48,000 --> 00:04:50,960 Speaker 1: the gender money gaps and women. There are several gender 86 00:04:50,960 --> 00:04:53,440 Speaker 1: money gaps we have which cost us millions over the 87 00:04:53,440 --> 00:04:56,000 Speaker 1: course of our lives. Women can go to the elivest 88 00:04:56,040 --> 00:04:58,080 Speaker 1: website and they can see we put together a whole 89 00:04:58,120 --> 00:05:01,120 Speaker 1: guide book on this. The one I'm very focused on 90 00:05:01,200 --> 00:05:04,479 Speaker 1: with eLabs is a gender investing gap which costs women 91 00:05:04,560 --> 00:05:08,040 Speaker 1: hundreds of thousands or millions, and we still buy the 92 00:05:08,080 --> 00:05:12,600 Speaker 1: Ozzie and Harriet math is for guys. Guys are better 93 00:05:12,640 --> 00:05:16,480 Speaker 1: investors than women. That is, neither of those things are true. 94 00:05:16,600 --> 00:05:19,000 Speaker 1: I'm trying to think of the percentage of our audience 95 00:05:19,000 --> 00:05:21,560 Speaker 1: that don't know who Azzi Harried is. They don't even 96 00:05:21,600 --> 00:05:24,919 Speaker 1: know that Rick Nelson went to a garden party and 97 00:05:24,960 --> 00:05:29,640 Speaker 1: Harriet it's way back Gillian's Island family. How do we 98 00:05:29,720 --> 00:05:32,600 Speaker 1: get away from the stereotype of Ginger and Tina whatever 99 00:05:32,600 --> 00:05:34,840 Speaker 1: her name was, Well, why not? We need to actively 100 00:05:34,880 --> 00:05:37,520 Speaker 1: move away but this is the place the stereotypes there, 101 00:05:37,760 --> 00:05:40,560 Speaker 1: here's one that drives me nuts. Women need more financial 102 00:05:40,680 --> 00:05:43,760 Speaker 1: education to invest, and we women, because we love getting 103 00:05:43,760 --> 00:05:46,800 Speaker 1: our eyes are like, you're right, I need more financial education, 104 00:05:47,200 --> 00:05:51,000 Speaker 1: except the guys need more to but we invest anyway, 105 00:05:51,120 --> 00:05:53,640 Speaker 1: they invest anyway. So here's the here's the final point 106 00:05:54,040 --> 00:05:57,360 Speaker 1: industry symbol, a bull. Not a lot of women are 107 00:05:57,400 --> 00:06:00,120 Speaker 1: looking at that and saying that's for me. So in 108 00:06:00,120 --> 00:06:02,760 Speaker 1: Sally project now she joins us here in the studio. 109 00:06:02,800 --> 00:06:04,719 Speaker 1: She's the author of a new book, own It, The 110 00:06:04,720 --> 00:06:06,480 Speaker 1: Power of Women at Work, of course, former CEO of 111 00:06:06,560 --> 00:06:09,120 Speaker 1: Smith Barney, now the c and co founder of Elvis. 112 00:06:09,120 --> 00:06:11,720 Speaker 1: Great to have you with us. Let's start at the 113 00:06:11,760 --> 00:06:14,520 Speaker 1: beginning of your book. A great first line here, Well 114 00:06:14,560 --> 00:06:16,360 Speaker 1: here we are you right, but the view looks a 115 00:06:16,360 --> 00:06:19,520 Speaker 1: little different than we expected. Were There a lot of 116 00:06:19,560 --> 00:06:22,120 Speaker 1: revisions here between between the events of November the eighth 117 00:06:22,160 --> 00:06:27,680 Speaker 1: and where we are today. Remarkably few, actually, because diversity 118 00:06:27,839 --> 00:06:30,960 Speaker 1: has stalled in corporate America and for those of your 119 00:06:31,000 --> 00:06:33,560 Speaker 1: listeners on Wall Street has gone backwards on Wall Street 120 00:06:33,800 --> 00:06:38,640 Speaker 1: before the shocking too many election results. So yes, three 121 00:06:38,720 --> 00:06:40,720 Speaker 1: days after the election, I did wake up and call 122 00:06:40,800 --> 00:06:42,800 Speaker 1: my public say, oh my gosh, well, you know, let's 123 00:06:42,920 --> 00:06:45,520 Speaker 1: can I change the first couple of lines, but remarkably 124 00:06:45,560 --> 00:06:48,480 Speaker 1: little because the stalling. There was a piece in Bloomberg 125 00:06:48,520 --> 00:06:51,400 Speaker 1: Business Week about all that Hillary Clinton promised to do 126 00:06:51,440 --> 00:06:53,200 Speaker 1: if she were to be elected for women who work 127 00:06:53,240 --> 00:06:55,960 Speaker 1: in government, particularly at the mid level, and there was 128 00:06:56,480 --> 00:06:58,799 Speaker 1: great despair in Washington that that was going to change 129 00:06:58,800 --> 00:07:01,080 Speaker 1: with the with the President Trump. Your background is in 130 00:07:01,120 --> 00:07:03,720 Speaker 1: Wall Street, not in government. But there are ramifications from 131 00:07:03,720 --> 00:07:05,600 Speaker 1: from the way the election turned out for women in business. 132 00:07:05,680 --> 00:07:08,840 Speaker 1: Absolutely there are Um you know, I was personally hoping 133 00:07:08,920 --> 00:07:11,760 Speaker 1: for mandated parental leave. We're the only developed country in 134 00:07:11,760 --> 00:07:14,679 Speaker 1: the world that doesn't have it, and there's new research 135 00:07:14,720 --> 00:07:16,800 Speaker 1: that shows it pays for itself in the first year 136 00:07:17,320 --> 00:07:19,640 Speaker 1: because women are more likely to come back if they 137 00:07:19,680 --> 00:07:22,160 Speaker 1: have maternal leave and you don't have to replace them 138 00:07:22,160 --> 00:07:25,160 Speaker 1: and train their replacement regardless. One of the points of 139 00:07:25,160 --> 00:07:29,520 Speaker 1: the book before the election is, hey, guys, you know, 140 00:07:29,920 --> 00:07:32,720 Speaker 1: what we've been doing has gotten us so far, but 141 00:07:32,840 --> 00:07:35,360 Speaker 1: no farther. So what are what's going to happen now? 142 00:07:35,680 --> 00:07:37,480 Speaker 1: And the points on the book is, first of all, 143 00:07:37,960 --> 00:07:41,200 Speaker 1: you know, there's so much freaking advice out there that 144 00:07:41,280 --> 00:07:43,960 Speaker 1: tells us to act like men, when in fact, we 145 00:07:44,000 --> 00:07:46,520 Speaker 1: bring so many great qualities to the workforce that are 146 00:07:46,520 --> 00:07:51,480 Speaker 1: becoming more important, such as risk awareness, such as relationship orientation, 147 00:07:51,920 --> 00:07:54,440 Speaker 1: such as long term perspective. I mean, things that are 148 00:07:54,480 --> 00:07:58,000 Speaker 1: important and are becoming more important and drive great results 149 00:07:58,000 --> 00:08:00,720 Speaker 1: in business. The issue is four. If there wasn't a 150 00:08:00,720 --> 00:08:02,760 Speaker 1: lot we could do about it, if company didn't appreciate it, 151 00:08:02,760 --> 00:08:05,200 Speaker 1: we could go work at another company. Now we have 152 00:08:05,560 --> 00:08:08,080 Speaker 1: much more information, we can figure out we can go 153 00:08:08,080 --> 00:08:10,440 Speaker 1: to websites to figure out our gender pay gap, and 154 00:08:10,480 --> 00:08:13,280 Speaker 1: we can go started on fraggan businesses. All of a sudden, 155 00:08:13,320 --> 00:08:15,320 Speaker 1: you know, the technology is changing things in a way. 156 00:08:15,320 --> 00:08:18,320 Speaker 1: We have so much more power. I'm so interesting that 157 00:08:18,320 --> 00:08:19,800 Speaker 1: you read about that in the book, that the role 158 00:08:19,840 --> 00:08:22,040 Speaker 1: of technology is playing here. Explain that a little bit more, 159 00:08:22,120 --> 00:08:24,760 Speaker 1: that the doors that changing technology is opening for women 160 00:08:24,760 --> 00:08:27,760 Speaker 1: in business. And it's not perfect, right. Venture capitalists don't 161 00:08:27,760 --> 00:08:29,960 Speaker 1: get it, But you know what do we get like 162 00:08:30,680 --> 00:08:33,520 Speaker 1: three or six or seven percent of venture capital dollars. 163 00:08:33,520 --> 00:08:37,240 Speaker 1: But most businesses are not venture capital funded. And today 164 00:08:37,360 --> 00:08:39,440 Speaker 1: the cost of technology is coming down. You don't have 165 00:08:39,520 --> 00:08:41,880 Speaker 1: to buy servers, you you rent space in the cloud. 166 00:08:42,280 --> 00:08:45,440 Speaker 1: But it's not just technology that's taking down the cost 167 00:08:45,480 --> 00:08:48,319 Speaker 1: of starting businesses. It's we works as opposed to long 168 00:08:48,440 --> 00:08:51,360 Speaker 1: term releases. It's benefits as opposed to an HR department. 169 00:08:51,840 --> 00:08:55,360 Speaker 1: You know, it's it's video conference as opposed to business travel. 170 00:08:55,840 --> 00:08:58,440 Speaker 1: That you're able now to start businesses to a degree 171 00:08:58,440 --> 00:09:00,920 Speaker 1: you couldn't before. And there's so many more role models. 172 00:09:00,960 --> 00:09:03,880 Speaker 1: I go through a hunking list of them there of 173 00:09:03,920 --> 00:09:06,480 Speaker 1: women who were starting their own businesses and in part, 174 00:09:07,400 --> 00:09:09,560 Speaker 1: in part, actually, the number one reason women get for 175 00:09:09,559 --> 00:09:11,800 Speaker 1: starting their own businesses is because they want to build 176 00:09:11,800 --> 00:09:14,400 Speaker 1: the business at which they want to work, and corporate 177 00:09:14,400 --> 00:09:17,160 Speaker 1: America isn't working for so many of them. So for 178 00:09:17,240 --> 00:09:20,480 Speaker 1: big companies that don't get it, there wasn't much penalty before, 179 00:09:21,200 --> 00:09:24,400 Speaker 1: I believe going forward as women recognize that these places 180 00:09:24,440 --> 00:09:27,000 Speaker 1: can be hollowed out. Talking with Sally Crotchick, the author 181 00:09:27,000 --> 00:09:30,439 Speaker 1: of Own It, The Power of Women at Work, picking 182 00:09:30,480 --> 00:09:32,360 Speaker 1: up on what you were just saying, how has mentorship 183 00:09:32,480 --> 00:09:34,880 Speaker 1: changed The notion of mentorship changed here since you've got 184 00:09:34,880 --> 00:09:38,080 Speaker 1: into the business. Well, mentorship it's it's very nice, it's 185 00:09:38,200 --> 00:09:40,439 Speaker 1: very good stuff. It's Hey, I have a question for you, Hey, 186 00:09:40,440 --> 00:09:42,960 Speaker 1: I've an answer for you. Women have and I'm gonna 187 00:09:42,960 --> 00:09:45,280 Speaker 1: get these numbers wrong, but three times as many mentors 188 00:09:45,280 --> 00:09:47,520 Speaker 1: as men, but we have about a third as many 189 00:09:47,559 --> 00:09:50,959 Speaker 1: sponsors as men. What's a sponsor? This person in the 190 00:09:51,080 --> 00:09:54,520 Speaker 1: room who says promote her or promote him or I'm 191 00:09:54,520 --> 00:09:56,800 Speaker 1: going to put my political capital on the line for 192 00:09:56,960 --> 00:10:00,520 Speaker 1: him or her and really pull you along, And we 193 00:10:00,600 --> 00:10:02,920 Speaker 1: just don't have as many of them. In fact, even 194 00:10:02,960 --> 00:10:04,679 Speaker 1: we think we have more than we do, and then 195 00:10:04,720 --> 00:10:07,079 Speaker 1: when we question about it, we're like, no, no, don't 196 00:10:07,120 --> 00:10:10,080 Speaker 1: have them. UM, So that's an important in fact what 197 00:10:10,120 --> 00:10:12,280 Speaker 1: I would say. You know, we talked about the book 198 00:10:12,320 --> 00:10:15,840 Speaker 1: in a geeky way, but there's a lot of action 199 00:10:16,040 --> 00:10:20,720 Speaker 1: oriented advice based on my almost thirty years in the 200 00:10:20,800 --> 00:10:24,400 Speaker 1: business UM as well as a lot of Wall Street anecdotes, 201 00:10:24,440 --> 00:10:25,880 Speaker 1: some of which I think, you know, you're gonna be 202 00:10:25,920 --> 00:10:29,280 Speaker 1: like what happened? I can't believe it? And I figure 203 00:10:29,280 --> 00:10:31,120 Speaker 1: if I can sort of give the advice on how 204 00:10:31,160 --> 00:10:34,760 Speaker 1: I navigated through this most mail of businesses, it should 205 00:10:34,760 --> 00:10:37,760 Speaker 1: be relevant for for other businesses as well. You write 206 00:10:37,760 --> 00:10:41,000 Speaker 1: about group think on Wall Street, especially among the executive ranks, 207 00:10:41,400 --> 00:10:43,760 Speaker 1: talk a bit about navigating that and how much that 208 00:10:43,760 --> 00:10:47,000 Speaker 1: continues to persist today. Well, I got fired because of it. Essentially, 209 00:10:47,200 --> 00:10:52,040 Speaker 1: so um Wall Street, the business I love, went into 210 00:10:52,120 --> 00:10:54,559 Speaker 1: the downturn white mail and middle aged, and it came 211 00:10:54,559 --> 00:10:57,280 Speaker 1: out whier mailer and middle aged her, which is really 212 00:10:57,280 --> 00:11:00,240 Speaker 1: sort of surprising. And one of the points I make 213 00:11:00,320 --> 00:11:02,240 Speaker 1: is that while we talk about greed as a driver 214 00:11:02,400 --> 00:11:07,160 Speaker 1: the downturn, okay, leverage, absolutely, but one thing we don't 215 00:11:07,200 --> 00:11:10,800 Speaker 1: talk about a group thinking. What I saw were individuals 216 00:11:10,800 --> 00:11:13,079 Speaker 1: who had the same types of backgrounds, the same type 217 00:11:13,080 --> 00:11:17,520 Speaker 1: of training, same training programs, all friends who fought the 218 00:11:17,600 --> 00:11:20,319 Speaker 1: same way. And so as we went into the downturn, 219 00:11:20,360 --> 00:11:23,000 Speaker 1: there was a it's going to be okay, remember we 220 00:11:23,040 --> 00:11:25,520 Speaker 1: saw this, Oh yeah, I remember the last time we 221 00:11:25,720 --> 00:11:27,880 Speaker 1: Oh remember that one felt and I'm like, what are 222 00:11:27,880 --> 00:11:31,640 Speaker 1: we talking about? You're finishing each other's sentences, And so 223 00:11:31,720 --> 00:11:35,520 Speaker 1: there wasn't that outside. Hey, guys, I have a vastly 224 00:11:35,559 --> 00:11:41,280 Speaker 1: different background, perspective, orientation, way of approaching problems. How about this? 225 00:11:41,880 --> 00:11:44,760 Speaker 1: And without more, without more of that, we drove straight 226 00:11:44,800 --> 00:11:47,200 Speaker 1: over the cliff. You had this career on Wall Street, 227 00:11:47,240 --> 00:11:49,720 Speaker 1: you leave to start this company. Are the regrets that 228 00:11:49,720 --> 00:11:51,480 Speaker 1: you didn't do that sooner. As women are weighing whether 229 00:11:51,559 --> 00:11:53,680 Speaker 1: or not to state the firms they're at or start 230 00:11:53,720 --> 00:11:56,720 Speaker 1: thrown businesses, what would you say about timing well, you know, 231 00:11:56,880 --> 00:12:01,720 Speaker 1: for l Vest, which is a digital investment platform for women. UM, 232 00:12:01,760 --> 00:12:03,760 Speaker 1: I'm not sure I could have started any sooner because 233 00:12:03,760 --> 00:12:06,520 Speaker 1: the technology had to catch up with the idea. I mean, 234 00:12:06,520 --> 00:12:10,640 Speaker 1: we're providing a to my mind, really sophisticated offering for women. 235 00:12:10,679 --> 00:12:13,920 Speaker 1: It's true goals based investing. It's not about beating the 236 00:12:13,960 --> 00:12:17,600 Speaker 1: market when the euro this versus the end, but investing 237 00:12:17,720 --> 00:12:21,920 Speaker 1: highly customized investment portfolios to reach your goals by house, 238 00:12:21,960 --> 00:12:25,000 Speaker 1: have a baby, start a business, retire well. Um. And 239 00:12:25,040 --> 00:12:28,840 Speaker 1: the technology UM had to come pretty far for for 240 00:12:28,920 --> 00:12:31,800 Speaker 1: it to be feasible for us to build the business. 241 00:12:31,840 --> 00:12:35,200 Speaker 1: So do I wish I'd skipped a few chapters. Oh yeah, 242 00:12:35,200 --> 00:12:37,480 Speaker 1: oh yeah, you know that that getting re orged out 243 00:12:37,480 --> 00:12:39,000 Speaker 1: of Bank of America. I could have actually had a 244 00:12:39,080 --> 00:12:42,120 Speaker 1: dream last week, Brian Mornahan wants to see you. I'm like, 245 00:12:42,200 --> 00:12:45,199 Speaker 1: not again. I'm gonna get re orged out again, even 246 00:12:45,240 --> 00:12:47,480 Speaker 1: though my results are better than you know, even though 247 00:12:47,480 --> 00:12:50,000 Speaker 1: we're beating Black No, and in my dream, I thought, 248 00:12:50,040 --> 00:12:52,600 Speaker 1: if I just escaped from the office, maybe they won't 249 00:12:52,600 --> 00:12:57,440 Speaker 1: find me. Yeah, But then I woke up. You equival 250 00:12:57,559 --> 00:12:59,599 Speaker 1: with you take issue with the term empowerment? What is 251 00:12:59,640 --> 00:13:01,400 Speaker 1: it about that, that word that you don't like? I've 252 00:13:01,600 --> 00:13:04,360 Speaker 1: always hated it, and I thought it was because it 253 00:13:04,400 --> 00:13:07,720 Speaker 1: was trite, and you know, let me. I've always hated 254 00:13:07,720 --> 00:13:11,240 Speaker 1: it because I thought it was overused. Um. I then 255 00:13:11,440 --> 00:13:14,680 Speaker 1: finally finally looked it up in the dictionary and empowerment 256 00:13:14,720 --> 00:13:19,160 Speaker 1: means to be given power. Wait a minute, we women 257 00:13:19,200 --> 00:13:22,840 Speaker 1: have got loads of power. We control five trillion dollars 258 00:13:22,840 --> 00:13:25,560 Speaker 1: of investable assets we jointly control with our partners another 259 00:13:25,720 --> 00:13:29,680 Speaker 1: six we direct of consumer spending. We're more than half 260 00:13:29,679 --> 00:13:33,840 Speaker 1: the workforce. That's power. We haven't had the means to 261 00:13:34,000 --> 00:13:37,000 Speaker 1: use it before. How would you know which company to 262 00:13:37,040 --> 00:13:39,000 Speaker 1: buy from? Well, all of a sudden, their startups that 263 00:13:39,040 --> 00:13:40,920 Speaker 1: will tell you, you know, when you go to the 264 00:13:40,920 --> 00:13:43,200 Speaker 1: grocery store, buy up index will tell you the gender 265 00:13:43,240 --> 00:13:46,280 Speaker 1: makeup the senior leadership team of the company you're buying from. 266 00:13:46,320 --> 00:13:48,640 Speaker 1: So all of us or you know we've done good, 267 00:13:48,640 --> 00:13:51,400 Speaker 1: will tell you about how companies are treating the environment. 268 00:13:51,800 --> 00:13:54,680 Speaker 1: So all of a sudden, we have, whether it's who 269 00:13:54,720 --> 00:13:58,040 Speaker 1: we buy from, who we invest in, asking for the raise. 270 00:13:58,360 --> 00:14:00,360 Speaker 1: Never knew how much to ask for before, but they're 271 00:14:00,400 --> 00:14:02,400 Speaker 1: all these sites that tell you how much money should 272 00:14:02,400 --> 00:14:07,280 Speaker 1: be making now, um pay scale, get raised, etcetera. So 273 00:14:07,320 --> 00:14:10,920 Speaker 1: we have this power and now we're beginning to have 274 00:14:11,040 --> 00:14:13,240 Speaker 1: the means to use it. So I think it's changing, 275 00:14:13,240 --> 00:14:15,160 Speaker 1: and I think it can change pretty rapidly. And I 276 00:14:15,200 --> 00:14:19,000 Speaker 1: think the timing is so fascinating. As we have women 277 00:14:19,040 --> 00:14:21,800 Speaker 1: take to the streets in Washington and New York and 278 00:14:21,960 --> 00:14:25,520 Speaker 1: all over the world. What we're hearing from women again 279 00:14:25,560 --> 00:14:28,400 Speaker 1: and again is I want to take some action. What 280 00:14:28,440 --> 00:14:31,760 Speaker 1: we were doing before stalled out. We need to do 281 00:14:31,840 --> 00:14:34,520 Speaker 1: something different. Sally, thank you very much for coming into 282 00:14:34,520 --> 00:14:36,360 Speaker 1: short a time to hope we can have you back again, 283 00:14:36,360 --> 00:14:38,840 Speaker 1: maybe during March madness. I don't know more fervent U 284 00:14:38,920 --> 00:14:41,520 Speaker 1: n c A fan than I here we have feltorio 285 00:14:41,600 --> 00:14:45,080 Speaker 1: any day Sally Project series this year. She's the CEO 286 00:14:45,080 --> 00:14:47,360 Speaker 1: and co founder LS, the author of Owned The Power 287 00:14:47,520 --> 00:15:02,080 Speaker 1: of Women. Edward David Garraty and New York Tom Keene 288 00:15:02,120 --> 00:15:04,000 Speaker 1: is off today. Kevin Logan joins US now. He's the 289 00:15:04,040 --> 00:15:07,080 Speaker 1: chief US Economists at HS at BC. Like many of us, 290 00:15:07,120 --> 00:15:08,560 Speaker 1: he lent an ear to what the president, like the 291 00:15:08,600 --> 00:15:11,080 Speaker 1: then president elect, had to say on Friday. And let's 292 00:15:11,080 --> 00:15:14,120 Speaker 1: start there, Kevin. We focus with an arcual address on 293 00:15:14,160 --> 00:15:17,360 Speaker 1: the sweeping rhetoric. It was sixteen minutes worth of that. 294 00:15:17,960 --> 00:15:21,120 Speaker 1: Did you expect much granular detail to be sprinkled over? 295 00:15:21,240 --> 00:15:23,080 Speaker 1: What did you hear when the president spoke, especially when 296 00:15:23,080 --> 00:15:26,680 Speaker 1: it came to trade. Well, he he had two main themes, 297 00:15:26,760 --> 00:15:30,280 Speaker 1: populism and protectionism. He talked about the people. He was 298 00:15:30,320 --> 00:15:33,640 Speaker 1: anti establishment. He says, there's a new sheriff in town. 299 00:15:33,720 --> 00:15:35,400 Speaker 1: Things are going to change. We're not going to do 300 00:15:35,560 --> 00:15:38,720 Speaker 1: things the way they were done before, and particularly on trade. 301 00:15:39,480 --> 00:15:43,520 Speaker 1: Previous administrations had been focused on multilateral deals, the rule 302 00:15:43,600 --> 00:15:46,080 Speaker 1: of law. Everyone abide him by the same agreement. And 303 00:15:46,240 --> 00:15:49,280 Speaker 1: Mr Trump has a completely different approach. He's going to 304 00:15:50,120 --> 00:15:53,640 Speaker 1: approach things on a unilateral basis, one on one trade 305 00:15:53,720 --> 00:15:57,000 Speaker 1: deals and as he put it, America first, not a 306 00:15:57,160 --> 00:16:00,560 Speaker 1: multilateral deal in which many countries benefit and there's even take, 307 00:16:00,880 --> 00:16:04,960 Speaker 1: but rather now things that clearly benefit in his view, UH, 308 00:16:05,080 --> 00:16:07,080 Speaker 1: deals that will benefit the United States. So that is 309 00:16:07,120 --> 00:16:09,720 Speaker 1: a complete break with the past, and it's a new direction. 310 00:16:10,000 --> 00:16:12,440 Speaker 1: What's your sense of the the effectiveness of the meetings 311 00:16:12,760 --> 00:16:14,760 Speaker 1: he has been holding at the White House thus far. 312 00:16:14,800 --> 00:16:17,120 Speaker 1: He's going to meet with auto executives this morning. Yesterday 313 00:16:17,160 --> 00:16:20,560 Speaker 1: he met with UH leaders of industrial companies, among others. 314 00:16:20,760 --> 00:16:24,240 Speaker 1: Elon Musk was there from Tesla and Solar City. UM. 315 00:16:24,760 --> 00:16:26,600 Speaker 1: How effective can a meeting like that be when he 316 00:16:26,680 --> 00:16:28,800 Speaker 1: tries to pursue this this new kind of trade policy, 317 00:16:28,800 --> 00:16:31,720 Speaker 1: I suppose well. I think image is very very important 318 00:16:31,880 --> 00:16:34,960 Speaker 1: for Trump, and it's very important for any administration. When 319 00:16:35,040 --> 00:16:38,600 Speaker 1: it first comes in. Everyone understands the auto industry. Everyone 320 00:16:38,680 --> 00:16:40,720 Speaker 1: knows that a lot of jobs have moved to Mexico, 321 00:16:40,800 --> 00:16:45,080 Speaker 1: for example, where a lot of parts are manufactured and 322 00:16:45,120 --> 00:16:47,440 Speaker 1: then ship back to the United States. And so going 323 00:16:47,600 --> 00:16:51,640 Speaker 1: straight to the automobile industry has a great optical appeal 324 00:16:51,800 --> 00:16:55,440 Speaker 1: to people throughout the country. And he may get some victories, 325 00:16:55,480 --> 00:16:58,320 Speaker 1: their small victories, some more production in the US, and 326 00:16:58,360 --> 00:17:01,400 Speaker 1: it might involve a few thousand jobs. More importantly, I think, 327 00:17:01,720 --> 00:17:03,440 Speaker 1: is what is the grand plan? What is the big 328 00:17:03,520 --> 00:17:07,159 Speaker 1: plan that's going to change incentives for US manufacturers or 329 00:17:07,520 --> 00:17:10,399 Speaker 1: any company UH to produce more in the United States 330 00:17:10,880 --> 00:17:15,679 Speaker 1: and to reverse the outflow of UH production. That's been 331 00:17:15,720 --> 00:17:18,040 Speaker 1: going on for several decades. The U S tax system 332 00:17:18,680 --> 00:17:22,879 Speaker 1: UH basically encourages UH firms to move production out of 333 00:17:22,880 --> 00:17:25,280 Speaker 1: the US. Not that it's just the U. S tax system, 334 00:17:25,640 --> 00:17:29,399 Speaker 1: it's also the tax system compared with other countries. If 335 00:17:29,480 --> 00:17:33,119 Speaker 1: other countries have value added tax system v a T 336 00:17:33,400 --> 00:17:37,760 Speaker 1: system that taxes consumption but not so much production, whereas 337 00:17:37,760 --> 00:17:41,359 Speaker 1: the US has a system of taxes production and not consumption, well, 338 00:17:41,400 --> 00:17:43,159 Speaker 1: of course production is going to move where is more 339 00:17:43,240 --> 00:17:45,600 Speaker 1: likely taxed, and that's been going on for some time. 340 00:17:45,920 --> 00:17:48,200 Speaker 1: The question now is what will the Trump administration do 341 00:17:48,800 --> 00:17:53,360 Speaker 1: to provide new incentives for corporations to locate their production 342 00:17:53,440 --> 00:17:55,840 Speaker 1: in the US rather than in other countries. That's what 343 00:17:55,960 --> 00:17:58,159 Speaker 1: we'll be watching for in coming months. There was a 344 00:17:58,240 --> 00:18:00,720 Speaker 1: moment of the press briefing yesterday Sean Spicer was talking 345 00:18:00,760 --> 00:18:03,360 Speaker 1: with reporters. One asked about the unemployment rate. She said, 346 00:18:03,359 --> 00:18:05,040 Speaker 1: what is the unemployment rate? And there was some hemming 347 00:18:05,040 --> 00:18:07,480 Speaker 1: and hawing about what he in the administration things it 348 00:18:07,600 --> 00:18:10,200 Speaker 1: is UH, and a line after that stood out to me. 349 00:18:10,280 --> 00:18:12,960 Speaker 1: He said that we've been focusing too much on statistics 350 00:18:13,000 --> 00:18:14,560 Speaker 1: and I want to just draw that more broadly to 351 00:18:14,600 --> 00:18:18,000 Speaker 1: talk about trade. You have the President signing an executive 352 00:18:18,080 --> 00:18:21,719 Speaker 1: order yesterday rejecting the TPP, the Transpacific Partnership. By all reports, 353 00:18:21,760 --> 00:18:23,240 Speaker 1: he's going to do the same thing with NAFTA. He's 354 00:18:23,240 --> 00:18:25,280 Speaker 1: going to call for a rewrite of that later in 355 00:18:25,320 --> 00:18:28,120 Speaker 1: the week. Are you convinced that there is enough attention 356 00:18:28,200 --> 00:18:31,080 Speaker 1: being paid to the economic case for for reevaluating these 357 00:18:31,119 --> 00:18:33,800 Speaker 1: trade deals or is this uh, you know, sort of 358 00:18:33,800 --> 00:18:37,880 Speaker 1: statistics be damned. We're looking at at policy exclusive of that. Well, yes, 359 00:18:38,280 --> 00:18:43,080 Speaker 1: it's not only statistics be damned, but conventional economic theory down. Uh. 360 00:18:43,400 --> 00:18:45,880 Speaker 1: Most trade theorist would say they are great benefits from trade. 361 00:18:45,920 --> 00:18:48,560 Speaker 1: Look at all the inexpensive goods that are important into 362 00:18:48,560 --> 00:18:52,000 Speaker 1: the United States. Its benefits everyone, It increases people's standard 363 00:18:52,040 --> 00:18:54,639 Speaker 1: of living. But that's not what the Trump administration is about. 364 00:18:54,880 --> 00:18:58,280 Speaker 1: So those general gains are dwarfed in their minds by 365 00:18:58,359 --> 00:19:00,920 Speaker 1: low losses that have occurred for people who are in 366 00:19:01,040 --> 00:19:04,960 Speaker 1: those sectors which a lost employment, lost production because of trade, 367 00:19:05,119 --> 00:19:07,800 Speaker 1: and that's what they want to reverse. So the overall 368 00:19:08,000 --> 00:19:11,560 Speaker 1: theory of their overall statistics, Yes, those statistics and theories 369 00:19:11,600 --> 00:19:14,840 Speaker 1: can be damned. Because the people who supported Donald Trump 370 00:19:14,960 --> 00:19:18,320 Speaker 1: to a large degree see themselves as being disadvantaged in 371 00:19:18,480 --> 00:19:21,879 Speaker 1: the by conventional trade theory, and that there should be 372 00:19:22,280 --> 00:19:25,119 Speaker 1: a reversal of that. So that's why we're headed in 373 00:19:25,200 --> 00:19:28,040 Speaker 1: this new direction. Let me ask you lastly here about 374 00:19:28,040 --> 00:19:30,399 Speaker 1: a different topic entirely. Steven Manuch in the pick T B. 375 00:19:30,440 --> 00:19:32,840 Speaker 1: Treasury Secretary, was testified Capital Hill, and he talked about 376 00:19:33,520 --> 00:19:36,320 Speaker 1: the strength of the dollar. The president tweeted about the 377 00:19:36,320 --> 00:19:39,040 Speaker 1: strength of the dollar, saying he hoped it would be weaker. 378 00:19:39,600 --> 00:19:42,359 Speaker 1: This is unprecedented to have a president doing that. Are 379 00:19:42,440 --> 00:19:44,359 Speaker 1: we seeing the end of the strong dollar policy? Was 380 00:19:44,440 --> 00:19:45,960 Speaker 1: that was that the pivot was at the turn there 381 00:19:46,000 --> 00:19:48,560 Speaker 1: When that tweet came out, it certainly sounded as if 382 00:19:48,600 --> 00:19:52,320 Speaker 1: it was a pivot and change. Back in the nineties 383 00:19:52,400 --> 00:19:55,879 Speaker 1: when Bill Clinton was president, the strong dollar policy was 384 00:19:55,880 --> 00:19:58,800 Speaker 1: adopted because there was concerned about capital flows into the 385 00:19:58,920 --> 00:20:02,120 Speaker 1: United States. Interest rates were higher. There was a concerned 386 00:20:02,119 --> 00:20:06,639 Speaker 1: that foreign investors were discouraged by the progress of the 387 00:20:06,680 --> 00:20:10,120 Speaker 1: American economy and if the capital wasn't invested in the US, 388 00:20:10,400 --> 00:20:12,879 Speaker 1: interest rates would remain high. It would be difficult for 389 00:20:13,720 --> 00:20:16,760 Speaker 1: uh the U S economy to grow. Adopting a strong 390 00:20:17,359 --> 00:20:20,800 Speaker 1: dollar policy sort of put a safety net underneath the 391 00:20:20,920 --> 00:20:24,840 Speaker 1: value of uh U S assets for foreign investors. By 392 00:20:24,880 --> 00:20:26,640 Speaker 1: the time we got to the end of that decade, 393 00:20:26,640 --> 00:20:29,000 Speaker 1: the economy was strong, the U S deficit was shrinking, 394 00:20:29,600 --> 00:20:33,000 Speaker 1: moved into a surplus. The rationale for a strong dollar 395 00:20:33,119 --> 00:20:36,720 Speaker 1: policy had gone, but the policy had its own inertia 396 00:20:36,760 --> 00:20:39,800 Speaker 1: and just continued not anymore. I think that's new era 397 00:20:40,280 --> 00:20:43,080 Speaker 1: and a new approach to the dollars that we're about 398 00:20:43,119 --> 00:20:44,760 Speaker 1: to see. Kevin Love and always right to speaking in 399 00:20:44,760 --> 00:20:46,920 Speaker 1: the chief us Ecnoms of HSBC, join us here in 400 00:20:46,960 --> 00:20:58,040 Speaker 1: New York. This is Bloomberg Surveillance on Bloomberg Radio, brought 401 00:20:58,080 --> 00:21:01,719 Speaker 1: you by Bank of America, Maryland and dedicated to bringing 402 00:21:01,760 --> 00:21:05,440 Speaker 1: our clients insights and solutions to meet the challenges of 403 00:21:05,520 --> 00:21:10,000 Speaker 1: a transforming world. That's the power of global connections. Marylynch, 404 00:21:10,160 --> 00:21:18,960 Speaker 1: Pierce federin Smith Incorporated, Member s I PC, David Gura 405 00:21:19,040 --> 00:21:21,320 Speaker 1: in New York. Tom Keene off Today's Scarlett Food joining 406 00:21:21,359 --> 00:21:23,639 Speaker 1: me in the studio Brunnan Hawk and he's an analyst 407 00:21:23,680 --> 00:21:26,480 Speaker 1: with UBS. We're here at the end of earning season, 408 00:21:26,520 --> 00:21:28,280 Speaker 1: of the fourth quarter earning season for the big banks, 409 00:21:28,320 --> 00:21:30,840 Speaker 1: the Big six banks. Brennan Hawkin, Great to have you 410 00:21:30,960 --> 00:21:33,280 Speaker 1: with us, and let's start, if we could, with this 411 00:21:33,440 --> 00:21:36,600 Speaker 1: prospect for regulatory change. We heard from Steve mcnut in 412 00:21:36,680 --> 00:21:38,760 Speaker 1: last week on Capitol Hill test to protestifying before the 413 00:21:38,800 --> 00:21:41,160 Speaker 1: Senate Finance Comming to He was asked about what could 414 00:21:41,240 --> 00:21:43,239 Speaker 1: change when it comes to regulation. How do you how 415 00:21:43,240 --> 00:21:45,480 Speaker 1: don analysts like you begin to process what that could 416 00:21:45,560 --> 00:21:49,160 Speaker 1: mean for banks bottom lines changes to the regulatory framework. Yeah, 417 00:21:49,280 --> 00:21:52,240 Speaker 1: hi David, thanks for having me on. UM. The great 418 00:21:52,320 --> 00:21:55,560 Speaker 1: question and probably the one that's most difficult to try 419 00:21:55,600 --> 00:21:58,159 Speaker 1: to figure out. Uh. It's something we've been wrestling with 420 00:21:59,359 --> 00:22:03,280 Speaker 1: ever since early November, right, Uh and UM. Of course 421 00:22:03,359 --> 00:22:06,359 Speaker 1: regulatory change is one factor. There's also the potential for 422 00:22:06,680 --> 00:22:10,560 Speaker 1: for tax reform uh and everything like that. But I'll 423 00:22:10,560 --> 00:22:13,719 Speaker 1: stick to the spirit of your question. UM and UM, 424 00:22:13,960 --> 00:22:16,720 Speaker 1: you know, the regulatory adjustments and how to think about it. 425 00:22:17,160 --> 00:22:20,520 Speaker 1: We have done some analysis looking at Goldman as an example, 426 00:22:20,640 --> 00:22:25,440 Speaker 1: because really they're probably the most likely to benefit and 427 00:22:25,560 --> 00:22:28,239 Speaker 1: we can we can get into why if you like. UM. 428 00:22:28,359 --> 00:22:31,280 Speaker 1: We took a look at what happened in in two 429 00:22:31,320 --> 00:22:34,440 Speaker 1: thousand and nine, UM, which was the last time we 430 00:22:34,560 --> 00:22:38,200 Speaker 1: had a nice solid growth of the fix revenue pool, 431 00:22:38,640 --> 00:22:41,440 Speaker 1: which is fixed income, currency and commodity trading amongst the 432 00:22:41,560 --> 00:22:45,600 Speaker 1: large bullish bracket investment banks, and Goldman took a ton 433 00:22:45,680 --> 00:22:52,159 Speaker 1: of share. Uh. They captured about of that revenue opportunity. UM, 434 00:22:52,480 --> 00:22:54,800 Speaker 1: there are a great franchise. They were able to be 435 00:22:54,920 --> 00:22:58,720 Speaker 1: committed to UM putting capital at work in the market, 436 00:22:58,840 --> 00:23:02,199 Speaker 1: and they hadn't fired rebody off of their trading desks 437 00:23:02,480 --> 00:23:04,760 Speaker 1: the way so many of their competitors had, which is 438 00:23:04,880 --> 00:23:09,639 Speaker 1: remarkably similar to today UM, when other firms have restructured 439 00:23:09,680 --> 00:23:13,280 Speaker 1: their thick business. It's it's been a really problematic line 440 00:23:13,320 --> 00:23:15,560 Speaker 1: of business for a lot of the bullish brackets UM, 441 00:23:15,720 --> 00:23:17,720 Speaker 1: but Goldman has stuck to it, and so we think 442 00:23:17,800 --> 00:23:19,920 Speaker 1: that they are in a very very good position to 443 00:23:20,040 --> 00:23:23,879 Speaker 1: benefit from thick expansion. If we just get back to uh, 444 00:23:24,000 --> 00:23:28,879 Speaker 1: you know the average for FICK, you know, we'd be 445 00:23:28,960 --> 00:23:33,119 Speaker 1: adding about fifteen billion to the global revenue pool. Is 446 00:23:33,160 --> 00:23:36,680 Speaker 1: this a case of Golden stealing share from his competitors 447 00:23:37,320 --> 00:23:40,399 Speaker 1: or is it growing? Is the market growing or starting 448 00:23:40,440 --> 00:23:45,399 Speaker 1: to grow again? So a little bit of both, probably Scarlett. UM. 449 00:23:45,600 --> 00:23:49,840 Speaker 1: What I would say is, Um, the Goldman has seeded 450 00:23:50,600 --> 00:23:54,800 Speaker 1: or have had market share stolen in your Partlan's Um 451 00:23:55,359 --> 00:23:59,880 Speaker 1: over the last three years in fick Um and that's 452 00:24:00,000 --> 00:24:04,480 Speaker 1: mostly because the macro businesses f X rates are not 453 00:24:04,960 --> 00:24:10,119 Speaker 1: really big strong as strong markets for Goldman as the 454 00:24:10,200 --> 00:24:14,320 Speaker 1: commercial banks. Commercial banks have huge stock piles of treasuries, 455 00:24:14,760 --> 00:24:18,280 Speaker 1: they deal in in currencies, uh, you know, gold Boy 456 00:24:18,359 --> 00:24:21,879 Speaker 1: through a banking footprint, and so they have competitive advantages 457 00:24:21,960 --> 00:24:27,680 Speaker 1: over a firm like Goldman Um and so they're Goldman 458 00:24:27,760 --> 00:24:30,119 Speaker 1: through its business bix alone is going to appear to 459 00:24:30,240 --> 00:24:34,040 Speaker 1: seed share in a time when macro businesses do much 460 00:24:34,080 --> 00:24:36,400 Speaker 1: better within sick Garlett Food and I talking with Brennan Hawk, 461 00:24:36,400 --> 00:24:39,600 Speaker 1: an analyst with UBS, just on the subject of Goldman 462 00:24:39,680 --> 00:24:41,400 Speaker 1: quickly if I could hear Brennan, we see so many 463 00:24:41,440 --> 00:24:45,000 Speaker 1: alumni of Goldman Sacks going into government here Goldman Sacks 464 00:24:45,040 --> 00:24:47,240 Speaker 1: once again being foisted into the spotlight as a result 465 00:24:47,280 --> 00:24:49,280 Speaker 1: of that. Is that something that's worrying to you as 466 00:24:49,320 --> 00:24:52,280 Speaker 1: an analyst. Does that bring new scrutiny to the bank, 467 00:24:52,280 --> 00:24:54,520 Speaker 1: maybe not new scrutiny, but renewed scrutiny to the bank, 468 00:24:54,560 --> 00:24:56,720 Speaker 1: And is that something that could affect how the bank 469 00:24:56,800 --> 00:25:01,040 Speaker 1: performs It certainly will bring a tension from the press. 470 00:25:01,280 --> 00:25:05,040 Speaker 1: I think that that's to be expected. Um, I'm not 471 00:25:05,160 --> 00:25:09,680 Speaker 1: so sure. I usually don't think that that has a 472 00:25:09,720 --> 00:25:12,960 Speaker 1: big impact. Normally, when someone goes into uh, you know, 473 00:25:13,119 --> 00:25:16,840 Speaker 1: public service after they've um, you know, done what they 474 00:25:16,880 --> 00:25:18,960 Speaker 1: want to do and made a good deal of wealth 475 00:25:19,040 --> 00:25:22,560 Speaker 1: in private sector, they usually do it because they feel 476 00:25:22,600 --> 00:25:25,000 Speaker 1: like they can have an impact. Now, what I think 477 00:25:25,160 --> 00:25:28,240 Speaker 1: is important and interesting is that, but you know, folks 478 00:25:28,520 --> 00:25:31,199 Speaker 1: like Gary Cohen and the like who go into um 479 00:25:31,400 --> 00:25:34,320 Speaker 1: Minuchan who you referenced before, David, They when they go 480 00:25:34,440 --> 00:25:39,160 Speaker 1: into public service, they tend to be more um understanding 481 00:25:39,400 --> 00:25:43,000 Speaker 1: of commercial interests, pro market understanding the benefits that market 482 00:25:43,080 --> 00:25:48,080 Speaker 1: can bring, whereas some of the previous folks in regulatory 483 00:25:48,240 --> 00:25:51,680 Speaker 1: and senior Washington positions, you know, folks like Dance while 484 00:25:51,720 --> 00:25:54,159 Speaker 1: he currently still is but we'll see how for how 485 00:25:54,240 --> 00:25:58,160 Speaker 1: long that Dance Rulo who comes out of academia and law. 486 00:25:58,600 --> 00:26:03,479 Speaker 1: They just have a different print approach, an understanding of um, 487 00:26:03,680 --> 00:26:06,240 Speaker 1: you know, the need to generate sufficient returns in the market, 488 00:26:06,560 --> 00:26:09,760 Speaker 1: the benefit that markets can provide to companies and allowing 489 00:26:09,800 --> 00:26:12,639 Speaker 1: for access to capital, the importance of aquidity. And so 490 00:26:13,240 --> 00:26:17,119 Speaker 1: to me, this is really we stumbled onto a key point. 491 00:26:17,359 --> 00:26:19,440 Speaker 1: And and you know maybe if Tom were here, I'd 492 00:26:19,480 --> 00:26:21,719 Speaker 1: get a rip up the script comments or something out 493 00:26:21,760 --> 00:26:25,280 Speaker 1: of him. Right, but uh, you know, to me, this 494 00:26:25,560 --> 00:26:28,119 Speaker 1: is where the rubber will hit the road, and we 495 00:26:28,320 --> 00:26:35,359 Speaker 1: can actually see regulatory tone change, right the idea that 496 00:26:35,880 --> 00:26:38,639 Speaker 1: you know, those on top are saying, listen, we we 497 00:26:38,760 --> 00:26:40,879 Speaker 1: need to have better functioning capital markets. We need to 498 00:26:40,920 --> 00:26:43,320 Speaker 1: have greater liquidity in some of these bond markets and 499 00:26:43,359 --> 00:26:45,480 Speaker 1: the like. And the best way to do it is 500 00:26:45,520 --> 00:26:48,160 Speaker 1: to not, you know, continue to apply pressure to these 501 00:26:48,200 --> 00:26:51,080 Speaker 1: businesses when they're really just trying to service customers. So 502 00:26:51,200 --> 00:26:54,400 Speaker 1: that being the case, what would Gary Cohne do as 503 00:26:54,520 --> 00:26:56,800 Speaker 1: his first initiative or what would he be pushing for 504 00:26:57,400 --> 00:27:01,720 Speaker 1: in his first initiative? The supporting president? Yeah, and and 505 00:27:02,600 --> 00:27:05,320 Speaker 1: we we we started on Gary, but but I I strayed, 506 00:27:05,480 --> 00:27:08,560 Speaker 1: of course, more more broadly than that, UM, I think 507 00:27:09,160 --> 00:27:11,760 Speaker 1: UM Gary is in a position where he would be 508 00:27:11,840 --> 00:27:16,680 Speaker 1: advising right on the Economic Council, which is more of 509 00:27:17,080 --> 00:27:21,320 Speaker 1: UM a tonal impact, right, UH, an adjustment to approach 510 00:27:21,680 --> 00:27:25,280 Speaker 1: perhaps if he can put input into UM assignments, UH 511 00:27:25,400 --> 00:27:29,000 Speaker 1: in key regulatory positions. To me, the key regulatory positions 512 00:27:29,160 --> 00:27:32,000 Speaker 1: are what are really important here. And so we took 513 00:27:32,080 --> 00:27:35,720 Speaker 1: I mentioned before about the TRUA role within the fed UM. 514 00:27:36,400 --> 00:27:38,520 Speaker 1: There is also the idea we're going to have a 515 00:27:38,560 --> 00:27:43,200 Speaker 1: new sec UH chairperson uh J Clayton here soon who 516 00:27:43,560 --> 00:27:47,199 Speaker 1: clearly has h an understanding and appreciation for commercial interests 517 00:27:47,760 --> 00:27:50,680 Speaker 1: in the markets. We've also got UM the potential for 518 00:27:50,720 --> 00:27:54,040 Speaker 1: a new head of cftc UM, which is going to 519 00:27:54,080 --> 00:27:55,800 Speaker 1: have a very very big impact on some of these 520 00:27:55,840 --> 00:27:59,119 Speaker 1: trading markets. Volker has had a huge impact on the 521 00:27:59,200 --> 00:28:03,920 Speaker 1: thick markets, mostly UM, because there's so much scrutiny of 522 00:28:04,040 --> 00:28:08,240 Speaker 1: any kind of principal transaction and the need to be 523 00:28:09,000 --> 00:28:14,119 Speaker 1: so cautious and so concerned about these entities trading on 524 00:28:14,200 --> 00:28:18,240 Speaker 1: their own account, whereas in reality they might just be facilitating, 525 00:28:18,680 --> 00:28:21,040 Speaker 1: you know, customer trade. So is it a matter of 526 00:28:21,200 --> 00:28:24,840 Speaker 1: perhaps not enforcing everything that's in the vocal rule and 527 00:28:25,160 --> 00:28:27,680 Speaker 1: everything that's in regulation right now as opposed to rewriting 528 00:28:27,680 --> 00:28:33,200 Speaker 1: it completely to me UM, the idea that we would 529 00:28:33,240 --> 00:28:36,520 Speaker 1: have repeal um of laws actually on the books is 530 00:28:36,560 --> 00:28:40,320 Speaker 1: a lot more difficult. UM. Bulker is an extremely subjective rule, 531 00:28:40,920 --> 00:28:44,880 Speaker 1: and if you have a regulatory approach that is hostile 532 00:28:44,960 --> 00:28:47,520 Speaker 1: in its tone, then you're there's going to be an 533 00:28:47,640 --> 00:28:52,840 Speaker 1: enthusiasm and a UM an approach that will limit the 534 00:28:52,920 --> 00:28:55,640 Speaker 1: ability of a lot of these firms to provide liquidity 535 00:28:55,680 --> 00:28:59,480 Speaker 1: the market, whereas if the approach is more pro market, 536 00:28:59,640 --> 00:29:03,680 Speaker 1: more more commercially oriented, UM, than we could easily see 537 00:29:03,760 --> 00:29:06,040 Speaker 1: a greater amount of liquidity provided. But in the time 538 00:29:06,040 --> 00:29:07,240 Speaker 1: that we have left, let me bring it back to 539 00:29:07,360 --> 00:29:09,600 Speaker 1: to the last earning season. UH. It was a fourth 540 00:29:09,680 --> 00:29:12,000 Speaker 1: quarter earning season. We saw a beat like we don't 541 00:29:12,080 --> 00:29:14,840 Speaker 1: usually see in the fourth quarter. Speak to the uniqueness 542 00:29:14,920 --> 00:29:16,880 Speaker 1: of of of what we saw there. We've mentioned that 543 00:29:16,960 --> 00:29:18,640 Speaker 1: it was a fixed story for a lot of these 544 00:29:19,080 --> 00:29:21,720 Speaker 1: big banks. Are there signs that's going to continue into 545 00:29:21,720 --> 00:29:24,080 Speaker 1: the next quarter or was this something really uniquely tied 546 00:29:24,120 --> 00:29:27,360 Speaker 1: to the president's victory? UM, So it was a probably 547 00:29:27,400 --> 00:29:30,840 Speaker 1: a mix of both. UM. There was the victory was 548 00:29:30,960 --> 00:29:36,080 Speaker 1: definitely very helpful in UM providing a catalyst for markets 549 00:29:36,160 --> 00:29:39,960 Speaker 1: and providing volumes. We saw a similar thing when bregsit occurred, 550 00:29:40,400 --> 00:29:42,640 Speaker 1: you know in the third quarter. UH, there was a 551 00:29:42,680 --> 00:29:45,160 Speaker 1: benefit Actually there's some degree to the second but also 552 00:29:45,240 --> 00:29:48,800 Speaker 1: to the third quarter from that event. UM. The election 553 00:29:48,920 --> 00:29:51,920 Speaker 1: also provided a great deal of reason to UH for 554 00:29:52,080 --> 00:29:55,040 Speaker 1: customers to trade in the fourth quarter. Fourth quarters normally 555 00:29:55,040 --> 00:29:57,800 Speaker 1: are not all that great because of the holidays and 556 00:29:57,880 --> 00:30:00,280 Speaker 1: the and the lower amount of trading volume into total. 557 00:30:00,520 --> 00:30:03,120 Speaker 1: One queue is typically where a great deal of money 558 00:30:03,200 --> 00:30:05,520 Speaker 1: is made, especially in fix. We're off to a very 559 00:30:05,600 --> 00:30:08,720 Speaker 1: very good start. There's been a very busy underwriting calendar 560 00:30:09,200 --> 00:30:11,080 Speaker 1: for a lot of these debt markets, which tends to 561 00:30:11,120 --> 00:30:15,040 Speaker 1: bode very very well for thick revenues. Comps are quite easy, 562 00:30:15,440 --> 00:30:17,720 Speaker 1: so I think we're going to see another really strong 563 00:30:17,920 --> 00:30:21,120 Speaker 1: revenue growth quarter here this quarter. And that's even before 564 00:30:21,680 --> 00:30:24,360 Speaker 1: a lot of these adjustments to the regulatory enforcement that 565 00:30:24,480 --> 00:30:26,840 Speaker 1: I've made reference to before to start to actually have 566 00:30:26,880 --> 00:30:30,000 Speaker 1: an impact. So to me, we're just getting started, all right, friend, 567 00:30:30,040 --> 00:30:31,239 Speaker 1: we'll have to have you back after some of those 568 00:30:31,240 --> 00:30:33,320 Speaker 1: adjustments starts to happen. Brennon Hawk in the analyst with 569 00:30:33,400 --> 00:30:47,360 Speaker 1: Ubs joining us. Michael Gapan joins us now he's chief 570 00:30:47,400 --> 00:30:49,920 Speaker 1: US economist by at Barclays. Join us here in the studio. 571 00:30:50,240 --> 00:30:52,520 Speaker 1: Let me start with a definitional question. Sure, there was 572 00:30:52,560 --> 00:30:54,720 Speaker 1: a lot of talk about tariffs during the campaign and 573 00:30:54,800 --> 00:30:57,520 Speaker 1: the transition. Now the talk seems to have shifted to 574 00:30:57,840 --> 00:31:02,120 Speaker 1: conversation about the border adjustment tax. Right, are they the 575 00:31:02,160 --> 00:31:03,959 Speaker 1: same thing. What what do you what do you make 576 00:31:04,000 --> 00:31:05,719 Speaker 1: of the rhetoric we've heard about that here? The way 577 00:31:05,760 --> 00:31:08,280 Speaker 1: the President speaks about it, it is a tariff. So 578 00:31:08,400 --> 00:31:10,800 Speaker 1: he says, if if you're a company and you relocate 579 00:31:10,920 --> 00:31:13,640 Speaker 1: overseas and you try and export back into the US, 580 00:31:14,240 --> 00:31:17,120 Speaker 1: you will face a thirty tax. Right, that's the simplified 581 00:31:17,200 --> 00:31:20,240 Speaker 1: version of what he said. That's a tariff. The way 582 00:31:20,760 --> 00:31:23,640 Speaker 1: how Speaker Ryan and some of the Senate plans talk 583 00:31:23,720 --> 00:31:27,600 Speaker 1: about the border adjustment tax is it's couched in broad 584 00:31:27,720 --> 00:31:31,560 Speaker 1: based corporate tax reform, so it's a tax on all imports, 585 00:31:31,600 --> 00:31:34,600 Speaker 1: and it's a reorientation of the tax code. So right now, 586 00:31:35,320 --> 00:31:37,760 Speaker 1: it's a point of origin system, so if you're a 587 00:31:37,840 --> 00:31:41,920 Speaker 1: US corporation, doesn't matter where the sale takes place, it's 588 00:31:41,920 --> 00:31:44,760 Speaker 1: subject to federal taxes. So if you export that sell 589 00:31:44,800 --> 00:31:48,240 Speaker 1: it abroad, your subject to federal taxes in the US. 590 00:31:48,560 --> 00:31:51,080 Speaker 1: You pay it when it's repatriated. That's why we have 591 00:31:51,160 --> 00:31:55,920 Speaker 1: the repatriation issue. But if you reorient the system in 592 00:31:56,040 --> 00:32:00,120 Speaker 1: tax all imports, you're refundamentally reshaping the full core pro 593 00:32:00,200 --> 00:32:02,760 Speaker 1: tax code. So I would say it depends on which 594 00:32:02,840 --> 00:32:05,680 Speaker 1: border tax you're you're talking about if it's House Ryan, 595 00:32:05,960 --> 00:32:10,040 Speaker 1: House Speaker Ryan's plan, it's comprehensive, couched and comprehensive tax reform. 596 00:32:10,120 --> 00:32:12,680 Speaker 1: It's part of a very broad based fiscal stimulus plan. 597 00:32:13,280 --> 00:32:15,280 Speaker 1: If you're looking out at the way President Trump is 598 00:32:15,320 --> 00:32:19,520 Speaker 1: talking about it, it's more bilateral tariffs against specific trading partners. 599 00:32:19,880 --> 00:32:22,360 Speaker 1: Is everyone trying to simplify this a little bit too much? 600 00:32:22,400 --> 00:32:24,800 Speaker 1: I mean, should there be the same tax, whether it's 601 00:32:24,840 --> 00:32:28,320 Speaker 1: border tax or a tariff on all industry, all types 602 00:32:28,360 --> 00:32:31,040 Speaker 1: of companies. But I think that there's probably a legal 603 00:32:31,120 --> 00:32:32,960 Speaker 1: issue on whether you can put this tax on an 604 00:32:33,000 --> 00:32:35,800 Speaker 1: individual firm, right, So I think if you know, he's 605 00:32:35,840 --> 00:32:39,040 Speaker 1: called out specific company correct. So I'm not a legal 606 00:32:39,120 --> 00:32:42,280 Speaker 1: scholar on this, but my my guess is where it 607 00:32:42,320 --> 00:32:45,000 Speaker 1: would go as you'd have to consider then tariffs on 608 00:32:45,080 --> 00:32:49,840 Speaker 1: a specific industry or an entire country. Um. So if 609 00:32:49,880 --> 00:32:52,240 Speaker 1: you go back to say, when um, when Reagan was 610 00:32:52,320 --> 00:32:55,520 Speaker 1: in was in office, we put a tariff on semiconductors. 611 00:32:55,560 --> 00:32:58,080 Speaker 1: You look at what President Obama did on steel imports 612 00:32:58,160 --> 00:32:59,760 Speaker 1: from from China. So I think you would have to 613 00:32:59,840 --> 00:33:04,000 Speaker 1: lead treat an entire segment and industry segment the same way. 614 00:33:04,200 --> 00:33:08,080 Speaker 1: Does that work? Better. Uh, not necessarily. I think it 615 00:33:08,360 --> 00:33:10,880 Speaker 1: depends on what what the goal is ultimately, and in 616 00:33:10,960 --> 00:33:12,800 Speaker 1: this case, what the President is trying to do is 617 00:33:12,880 --> 00:33:16,160 Speaker 1: reorient activity to the domestic economy. And in principle, if 618 00:33:16,200 --> 00:33:18,480 Speaker 1: you want to get less of something, in this case trade, 619 00:33:18,600 --> 00:33:21,600 Speaker 1: you have to make it more expensive or prohibited. So 620 00:33:21,720 --> 00:33:23,640 Speaker 1: I think what what the President would be saying is 621 00:33:23,880 --> 00:33:28,960 Speaker 1: there are specific bilateral trading partners that are not behaving well, 622 00:33:29,640 --> 00:33:33,640 Speaker 1: and we could perhaps remedy that that through tariff policy. 623 00:33:34,200 --> 00:33:36,440 Speaker 1: The House and Senate plans are more about we don't 624 00:33:36,480 --> 00:33:38,760 Speaker 1: like the way the corporate tax code is set up. 625 00:33:38,880 --> 00:33:42,040 Speaker 1: We think it creates too many distortions. UM, we'd like 626 00:33:42,160 --> 00:33:44,320 Speaker 1: to lower the rate, broaden the base, and in the 627 00:33:44,560 --> 00:33:47,520 Speaker 1: border adjustment tax provides a way to do that. So 628 00:33:47,640 --> 00:33:51,560 Speaker 1: one's about trade policy, the other one is about corporate taxation. 629 00:33:51,880 --> 00:33:54,160 Speaker 1: Make it more expensive. We're prohibited, you say, And I 630 00:33:54,280 --> 00:33:56,760 Speaker 1: wonder if you if you've modeled that out sort of 631 00:33:56,840 --> 00:33:58,520 Speaker 1: what that means, and if you think that the politicians 632 00:33:58,520 --> 00:34:00,959 Speaker 1: who are proposing these changes have reck with that as well, 633 00:34:01,000 --> 00:34:02,719 Speaker 1: what it could mean for the U. S economy. Well, 634 00:34:02,760 --> 00:34:06,120 Speaker 1: I think that so in the political political economy sense, 635 00:34:06,200 --> 00:34:08,400 Speaker 1: you I think you asked the question, did we just 636 00:34:08,680 --> 00:34:12,759 Speaker 1: vote as as a country to say we're comfortable with 637 00:34:12,960 --> 00:34:15,799 Speaker 1: paying a little more to get a little less if 638 00:34:15,880 --> 00:34:17,719 Speaker 1: that means we get to keep more jobs at home. 639 00:34:17,960 --> 00:34:21,239 Speaker 1: That's the kind of the anti globalization trade off. So 640 00:34:21,320 --> 00:34:24,600 Speaker 1: if you put tariffs on on products, you will get 641 00:34:24,680 --> 00:34:27,400 Speaker 1: less trade, that's true, but it will also mean what 642 00:34:27,520 --> 00:34:29,359 Speaker 1: you and I buy every day is generally a little 643 00:34:29,400 --> 00:34:32,839 Speaker 1: more expensive, so your dollar won't go as far. That's 644 00:34:32,840 --> 00:34:35,319 Speaker 1: a political economy trade off. We're in the short run. 645 00:34:35,840 --> 00:34:38,640 Speaker 1: It would likely hurt activity a bit and cause a 646 00:34:38,680 --> 00:34:41,399 Speaker 1: little more inflation, So you have to trade a short 647 00:34:41,560 --> 00:34:45,520 Speaker 1: term loss for an unknown medium term gain. Normally that's 648 00:34:45,560 --> 00:34:48,399 Speaker 1: not a good political trade off, but that's what we're 649 00:34:48,440 --> 00:34:50,759 Speaker 1: looking at. We're on chartered territory at the same time. 650 00:34:51,000 --> 00:34:53,879 Speaker 1: That's right. We don't have a tremendous amount of experience 651 00:34:54,000 --> 00:34:57,719 Speaker 1: with the imposition of very large tariffs. Um, you have 652 00:34:57,840 --> 00:35:01,200 Speaker 1: to go back many decades to do that. Generally, it's 653 00:35:01,280 --> 00:35:04,640 Speaker 1: not positive for activity in the short run. Yeah. I 654 00:35:04,719 --> 00:35:07,600 Speaker 1: heard Stephen Moore interviewed this morning of the Heritage Foundation, 655 00:35:07,680 --> 00:35:10,160 Speaker 1: former advisor to Donald Trump when he was running for president, 656 00:35:10,239 --> 00:35:12,240 Speaker 1: and one thing he acknowledged. Is you have the president 657 00:35:12,280 --> 00:35:15,839 Speaker 1: calling out, as Scarlett said, some of these companies by name. Uh, 658 00:35:16,239 --> 00:35:18,120 Speaker 1: this could all fall apart, The strategy could all fall 659 00:35:18,160 --> 00:35:20,000 Speaker 1: apart if one of them decided it makes more sense 660 00:35:20,040 --> 00:35:21,960 Speaker 1: to move overseas despite the fact that these terrorists are 661 00:35:22,160 --> 00:35:23,920 Speaker 1: in place. Do you agree with that that this is 662 00:35:24,000 --> 00:35:27,239 Speaker 1: a sort of a a loosely constructed house. Well, that's 663 00:35:27,280 --> 00:35:29,600 Speaker 1: when I would say push comes to shove and you 664 00:35:29,680 --> 00:35:31,880 Speaker 1: have to decide what you what you want to do. 665 00:35:32,280 --> 00:35:35,680 Speaker 1: In in our baseline, we do assume protectionist policies are 666 00:35:35,760 --> 00:35:38,520 Speaker 1: put into place. We felt like the main theme of 667 00:35:38,600 --> 00:35:43,560 Speaker 1: the Trump campaign was reorienting activity domestically, backing away from 668 00:35:43,640 --> 00:35:47,680 Speaker 1: globalized economy. So I do think you will get protectionist policy. 669 00:35:47,760 --> 00:35:49,840 Speaker 1: So yes, right now the messages don't do it. But 670 00:35:49,960 --> 00:35:52,719 Speaker 1: if somebody does it, then you've drawn a line, the 671 00:35:52,800 --> 00:35:55,279 Speaker 1: so called redline. And what what does the administration do 672 00:35:55,360 --> 00:35:57,560 Speaker 1: in response? And we think you will get some terroffs. 673 00:35:57,880 --> 00:36:00,160 Speaker 1: So what is the argument or the best argument the 674 00:36:00,200 --> 00:36:02,359 Speaker 1: heads of GM Ford and FIAT christ Or can make 675 00:36:02,400 --> 00:36:05,160 Speaker 1: when they go and speak with President Trump today when 676 00:36:05,239 --> 00:36:08,920 Speaker 1: it comes to how best to preserve their growth prospects, 677 00:36:08,960 --> 00:36:12,080 Speaker 1: but also protect US jobs. The auto market is a 678 00:36:12,120 --> 00:36:16,359 Speaker 1: global market. Are Detroit makes autos that they ship into 679 00:36:16,440 --> 00:36:20,040 Speaker 1: China as well, So growth for these companies is largely 680 00:36:20,239 --> 00:36:23,480 Speaker 1: outside the US. They also make products for sale here. 681 00:36:23,640 --> 00:36:27,200 Speaker 1: They have a global factory production process. Some of it 682 00:36:27,320 --> 00:36:29,680 Speaker 1: they source and produce domestically, some of it they source 683 00:36:29,719 --> 00:36:34,200 Speaker 1: and produce globally. They've allocated their capital in a way 684 00:36:34,320 --> 00:36:37,360 Speaker 1: that maximizes their efficiency under the current system. If you 685 00:36:37,520 --> 00:36:39,319 Speaker 1: change all that around, there's going to be a lot 686 00:36:39,400 --> 00:36:42,480 Speaker 1: of upheaval. Ask you how this factors into your GDP 687 00:36:42,600 --> 00:36:44,520 Speaker 1: forecast right now when you look at how the country 688 00:36:44,640 --> 00:36:48,040 Speaker 1: might the country's economy might grow, I imagine the trade 689 00:36:48,040 --> 00:36:49,759 Speaker 1: is still looming large is a variable that you really 690 00:36:49,800 --> 00:36:51,680 Speaker 1: don't have a handle on. Yeah, that of us have 691 00:36:51,719 --> 00:36:54,719 Speaker 1: a handle on on yet that's how how are you calculating? 692 00:36:55,320 --> 00:36:58,399 Speaker 1: What we're assuming is is that you get say seven 693 00:36:58,480 --> 00:37:02,399 Speaker 1: percent tariffs on imports from Mexico and on imports from China. 694 00:37:02,560 --> 00:37:06,120 Speaker 1: That covers about a third of all imports. So if 695 00:37:06,239 --> 00:37:09,439 Speaker 1: if that's correct, it would tend to reduce your growth 696 00:37:09,560 --> 00:37:12,279 Speaker 1: rate by about a half percent, and it would tend 697 00:37:12,320 --> 00:37:15,280 Speaker 1: to boost rates of inflation, say two to three tents, 698 00:37:15,440 --> 00:37:18,600 Speaker 1: so it wouldn't be a major drag, but it would 699 00:37:18,600 --> 00:37:21,520 Speaker 1: also depend on what these countries do in response, and 700 00:37:21,560 --> 00:37:24,520 Speaker 1: it would depend on what other trading partners do, And 701 00:37:24,640 --> 00:37:28,280 Speaker 1: it's important to consider do you get complementary fiscal stimulus 702 00:37:28,360 --> 00:37:31,120 Speaker 1: alongside that. So this is why I think you need 703 00:37:31,239 --> 00:37:34,239 Speaker 1: if if if I'm a say, a political operative, and 704 00:37:34,560 --> 00:37:37,880 Speaker 1: I want to do anti trade policies, I better do 705 00:37:38,040 --> 00:37:41,840 Speaker 1: those expansionary fiscal policies at the same time or close 706 00:37:41,920 --> 00:37:45,680 Speaker 1: to the same time, so the one would outweigh the other. 707 00:37:45,840 --> 00:37:48,640 Speaker 1: So if it's say modest anti trade, it's something that 708 00:37:48,719 --> 00:37:52,320 Speaker 1: I think a fiscal stimulus bill could over outweigh and 709 00:37:52,680 --> 00:37:54,480 Speaker 1: keep the economy on say a two to two and 710 00:37:54,480 --> 00:37:57,719 Speaker 1: a half percent growth path, and everything looks fine. If 711 00:37:57,800 --> 00:38:02,399 Speaker 1: it's if it's import tariffs on all imports and our 712 00:38:02,480 --> 00:38:05,520 Speaker 1: trading partners do the same, it's a very different story. 713 00:38:05,680 --> 00:38:07,480 Speaker 1: So I think it does depend on the reach of 714 00:38:07,560 --> 00:38:10,680 Speaker 1: those anti trade policies and whether you get expansion or 715 00:38:10,760 --> 00:38:14,480 Speaker 1: fiscal policy alongside. So as we await details of the 716 00:38:14,840 --> 00:38:17,719 Speaker 1: new administration's trade policy, and as they sort out how 717 00:38:17,760 --> 00:38:21,080 Speaker 1: they're going to approach infrastructure spending and other parts of 718 00:38:21,120 --> 00:38:24,799 Speaker 1: their fiscal stimulus. What kind of cost does that uncertainty 719 00:38:24,880 --> 00:38:30,040 Speaker 1: have on business activity? I think historically it would say 720 00:38:30,120 --> 00:38:33,040 Speaker 1: that investment waits, and we're going to get the advanced 721 00:38:33,120 --> 00:38:35,440 Speaker 1: estimate of Q four GDP on on Friday, and I 722 00:38:35,480 --> 00:38:39,240 Speaker 1: would expect within that business spending will be quite soft. 723 00:38:39,719 --> 00:38:42,680 Speaker 1: That whether it's spending on equipment and software or intellectual 724 00:38:42,760 --> 00:38:45,279 Speaker 1: property or structure as we expect those rates of growth 725 00:38:45,360 --> 00:38:47,480 Speaker 1: to be quite modest. So until you know the details, 726 00:38:47,960 --> 00:38:51,480 Speaker 1: the answer is typically you wait. So at least, let's say, 727 00:38:51,520 --> 00:38:53,960 Speaker 1: through the first half of the year, we would be 728 00:38:54,160 --> 00:38:58,360 Speaker 1: very surprised if businesses front run any policy decision or 729 00:38:58,400 --> 00:39:01,560 Speaker 1: consumers front run any any tax cut. I think until 730 00:39:01,600 --> 00:39:03,600 Speaker 1: you know the details were in a holding pattern. Let 731 00:39:03,640 --> 00:39:05,040 Speaker 1: me ask you about a moment in the press conference 732 00:39:05,080 --> 00:39:07,520 Speaker 1: yesterday with Spice to the White House press sectory question 733 00:39:07,719 --> 00:39:10,120 Speaker 1: was what's the unemployment rate? Is this going to be 734 00:39:10,200 --> 00:39:12,080 Speaker 1: something that's pretty hotly debated here in the new year. 735 00:39:12,120 --> 00:39:15,400 Speaker 1: What what unemployment actually is? I think it's it's about 736 00:39:16,239 --> 00:39:19,680 Speaker 1: facts and how you claim victory. And so if you 737 00:39:19,920 --> 00:39:23,279 Speaker 1: don't settle on a definition of what unemployment is, then 738 00:39:23,360 --> 00:39:26,280 Speaker 1: you can always claim that your policies are are benefiting 739 00:39:26,440 --> 00:39:29,880 Speaker 1: labor markets. There's an accepted unemployment rate. That's let's call 740 00:39:29,920 --> 00:39:32,000 Speaker 1: it mid to high force right now, because it's it's 741 00:39:32,040 --> 00:39:35,480 Speaker 1: oscillating around for seven, for eight, for nine, but we're 742 00:39:35,480 --> 00:39:39,399 Speaker 1: below five, and most of us in the economist world 743 00:39:39,440 --> 00:39:42,399 Speaker 1: have settled on Yeah, that's a reasonable measure of where 744 00:39:42,480 --> 00:39:45,360 Speaker 1: labor markets are, and by that measure, we're at full employment. 745 00:39:46,120 --> 00:39:48,200 Speaker 1: We are here with Michael Gabon, he is the chief 746 00:39:48,280 --> 00:39:50,960 Speaker 1: US economist at Barkleys and Michael, we were talking about 747 00:39:51,400 --> 00:39:54,959 Speaker 1: how to define unemployment in this new administration. The thorough 748 00:39:55,000 --> 00:39:57,640 Speaker 1: Reserve may have the opportunity to do just that because 749 00:39:57,719 --> 00:40:01,080 Speaker 1: next week we have the next f O MC meeting Wednesday. UM, 750 00:40:01,560 --> 00:40:03,520 Speaker 1: people are not expecting a rate increase. It's not a 751 00:40:03,600 --> 00:40:06,000 Speaker 1: live meeting. In fact, if you look at w I 752 00:40:06,120 --> 00:40:09,839 Speaker 1: r P on the Bloomberg, only a chance of rate 753 00:40:10,000 --> 00:40:13,239 Speaker 1: hike on February one. Yet we are likely to get 754 00:40:13,320 --> 00:40:16,600 Speaker 1: some language regarding where we are in the FEDS duty 755 00:40:16,719 --> 00:40:20,520 Speaker 1: to fulfill its two mandates of full employment and inflation 756 00:40:20,600 --> 00:40:24,560 Speaker 1: controlling inflation. That's right. So last week when Cherry Ellen spoke, 757 00:40:24,760 --> 00:40:27,440 Speaker 1: you've got a very clear message on the labor market, 758 00:40:27,960 --> 00:40:30,200 Speaker 1: the unemployment rate, the U three measure is near its 759 00:40:30,280 --> 00:40:34,640 Speaker 1: long term UM level, the underemployment rate has the U 760 00:40:34,760 --> 00:40:38,239 Speaker 1: six measure has fully retraced. All your cyclical components of 761 00:40:38,320 --> 00:40:42,520 Speaker 1: participation in the employment of population ratio have have been removed, 762 00:40:42,560 --> 00:40:46,360 Speaker 1: and it would be risky and unwise to pursue a 763 00:40:46,440 --> 00:40:50,319 Speaker 1: hot economy. And she concluded, I think we're basically there 764 00:40:50,920 --> 00:40:53,880 Speaker 1: on the employment side of of our dual mandate. So 765 00:40:53,920 --> 00:40:56,480 Speaker 1: I think that's the message you'll see in the statement. 766 00:40:56,520 --> 00:40:59,200 Speaker 1: There will be the normal discussion on the incoming data, 767 00:40:59,560 --> 00:41:02,520 Speaker 1: but I think you'll you'll see that conclusion that at 768 00:41:02,600 --> 00:41:06,200 Speaker 1: least as as it pertains to labor markets, under utilization 769 00:41:06,680 --> 00:41:09,080 Speaker 1: has been removed, and that will be an important signal 770 00:41:09,200 --> 00:41:13,480 Speaker 1: for markets because looking ahead it means further progress will 771 00:41:13,520 --> 00:41:16,280 Speaker 1: generate rate hikes. It's an important signal for the markets. 772 00:41:16,280 --> 00:41:18,640 Speaker 1: What kind of signal does it send to the Trump administration? 773 00:41:18,960 --> 00:41:20,799 Speaker 1: That's right. So I think that the FED is has 774 00:41:20,840 --> 00:41:25,360 Speaker 1: a statutory mandate, meaning Congress has given it um specific goals, 775 00:41:25,760 --> 00:41:28,960 Speaker 1: and the FED interprets its maximum employment goal through a 776 00:41:29,280 --> 00:41:32,279 Speaker 1: variety of measures, but the main one is the unemployment rate. 777 00:41:32,800 --> 00:41:35,640 Speaker 1: So the marker there from a political point of view 778 00:41:35,920 --> 00:41:38,719 Speaker 1: is that, well, we have to raise rates because we're 779 00:41:38,800 --> 00:41:41,239 Speaker 1: pretty close to our dual mandate. We're a little off 780 00:41:41,280 --> 00:41:44,520 Speaker 1: on inflation, but we're basically they're on unemployment. So further 781 00:41:44,600 --> 00:41:46,920 Speaker 1: progress means rate hikes. So it's a signal on a 782 00:41:47,000 --> 00:41:50,920 Speaker 1: political front that we're doing this because we're there, not 783 00:41:51,160 --> 00:41:53,879 Speaker 1: because we don't like the policies that that are coming. 784 00:41:53,960 --> 00:41:56,799 Speaker 1: But if you don't accept that unemployment rate, um, you're 785 00:41:57,400 --> 00:41:59,520 Speaker 1: from the other side, you're still likely to generate some 786 00:41:59,640 --> 00:42:02,560 Speaker 1: political goal criticism. We'll listen to the political argument that's 787 00:42:02,600 --> 00:42:05,200 Speaker 1: taking place on Capitol Hill about a more rules based approach. 788 00:42:05,400 --> 00:42:08,560 Speaker 1: The FILS should take a more rules based approach, Uh, 789 00:42:09,040 --> 00:42:11,200 Speaker 1: if one were in place, how that effect defends thinking 790 00:42:11,280 --> 00:42:14,319 Speaker 1: right now? Well, the rules based approach would would say 791 00:42:14,480 --> 00:42:17,560 Speaker 1: if if you assume the U three unemployment rate is 792 00:42:17,680 --> 00:42:21,000 Speaker 1: part of of of that rule, then yes, that rule 793 00:42:21,080 --> 00:42:24,680 Speaker 1: would say you should be normalizing policy um. Yelling went 794 00:42:24,760 --> 00:42:29,000 Speaker 1: through several different variations of the policy rule. All of 795 00:42:29,080 --> 00:42:32,120 Speaker 1: them suggested that rates should should go higher, some faster 796 00:42:32,280 --> 00:42:35,560 Speaker 1: than than others. But the critical decision would be, well, 797 00:42:35,640 --> 00:42:38,680 Speaker 1: what do you assume then, is the goal for maximum 798 00:42:39,160 --> 00:42:42,719 Speaker 1: employment and the inflation side is obviously easier to to 799 00:42:42,880 --> 00:42:46,520 Speaker 1: pin down UM. But from a rules based approach that says, 800 00:42:46,840 --> 00:42:49,560 Speaker 1: either some combination of U three and even U six 801 00:42:49,719 --> 00:42:53,960 Speaker 1: were there by by those measures, and moderate increases in 802 00:42:54,160 --> 00:42:57,040 Speaker 1: in front end rates are are in store. Does the 803 00:42:57,080 --> 00:43:00,960 Speaker 1: f that matter as much in this environment? Uh? While, 804 00:43:01,000 --> 00:43:03,120 Speaker 1: Since we talk about the FED as having an actual 805 00:43:03,400 --> 00:43:06,839 Speaker 1: impact on how companies decide what to do, that's right. 806 00:43:06,920 --> 00:43:09,840 Speaker 1: So I think the big shift in November was that 807 00:43:09,960 --> 00:43:12,040 Speaker 1: the FEDS no longer the only game in tone and 808 00:43:12,200 --> 00:43:15,120 Speaker 1: for for years our discussions have always been around what's 809 00:43:15,160 --> 00:43:18,440 Speaker 1: the central bank going to going to do? And and 810 00:43:18,560 --> 00:43:20,960 Speaker 1: now we're getting a little more balanced and the FED 811 00:43:21,080 --> 00:43:24,640 Speaker 1: will be following. So it depends on what fiscal policy. 812 00:43:24,680 --> 00:43:26,880 Speaker 1: Does you get a lot of anti anti trade, not 813 00:43:26,960 --> 00:43:29,560 Speaker 1: a lot of fiscal stimulus. The FED will be ignoring 814 00:43:29,640 --> 00:43:32,680 Speaker 1: that inflation impulse, looking where activity goes, and you make 815 00:43:32,719 --> 00:43:34,840 Speaker 1: it easy in that world. If you get a lot 816 00:43:34,920 --> 00:43:38,160 Speaker 1: of fiscal stimulus at a time when the FED sees 817 00:43:38,200 --> 00:43:40,880 Speaker 1: the economy as as being at full employment, and we 818 00:43:40,920 --> 00:43:43,200 Speaker 1: would agree with that, then you're going to get some offsets. 819 00:43:43,239 --> 00:43:45,680 Speaker 1: So they're important in the sense that they will be 820 00:43:45,800 --> 00:43:48,680 Speaker 1: pushing rates higher. The dollar will likely respond to that, 821 00:43:48,880 --> 00:43:52,880 Speaker 1: so you'll get a tightening and financial conditions alongside fiscal stimulus, 822 00:43:52,920 --> 00:43:55,000 Speaker 1: so there'll be some crowding out effects. Help us with 823 00:43:55,120 --> 00:43:58,239 Speaker 1: the potential seismic shift here in terms of personnel on 824 00:43:58,280 --> 00:44:00,800 Speaker 1: the FED Reserve. How big good deal is is that 825 00:44:00,840 --> 00:44:02,200 Speaker 1: going to be? We hear the report this week that 826 00:44:02,239 --> 00:44:04,520 Speaker 1: maybe a community banker might join the ranks of the 827 00:44:04,560 --> 00:44:07,680 Speaker 1: FIT Reserve Board. How big a shift is this going 828 00:44:07,719 --> 00:44:10,600 Speaker 1: to be? I think in the next by seen you'll 829 00:44:10,680 --> 00:44:12,600 Speaker 1: probably turn over a third and a half of the 830 00:44:12,840 --> 00:44:15,759 Speaker 1: entire FMC, at least from the board's point of view. 831 00:44:16,239 --> 00:44:20,920 Speaker 1: It's likely the chair and the vice chair Um Daniel Tarullo, 832 00:44:21,520 --> 00:44:25,920 Speaker 1: if not one or two more UM may maybe. So 833 00:44:26,000 --> 00:44:29,240 Speaker 1: you got the two new faces and then perhaps three changes. 834 00:44:29,320 --> 00:44:30,880 Speaker 1: So that's help us with the new faces? I mean, 835 00:44:30,880 --> 00:44:32,160 Speaker 1: do you haven't do you have a sense of who 836 00:44:32,320 --> 00:44:35,040 Speaker 1: this administration might put forward? Well, there's been as you mentioned, 837 00:44:35,120 --> 00:44:38,480 Speaker 1: there's the name of the community bankers that were put 838 00:44:38,560 --> 00:44:41,279 Speaker 1: out yesterday. I would say, we don't have a tremendous 839 00:44:41,280 --> 00:44:44,040 Speaker 1: amount of information. What I would say is I would 840 00:44:44,040 --> 00:44:49,000 Speaker 1: expect them to be more practitioners, actual bankers or those 841 00:44:49,040 --> 00:44:53,080 Speaker 1: who have worked in markets and generated good performance. Um So, 842 00:44:53,280 --> 00:44:55,600 Speaker 1: Kevin Walsh would be an example. If you reach back 843 00:44:55,920 --> 00:44:59,279 Speaker 1: and look at a previous board governor from a Republican administration, 844 00:44:59,360 --> 00:45:03,040 Speaker 1: little more more could practitioner oriented much less see pure 845 00:45:03,080 --> 00:45:06,240 Speaker 1: academic oriented. That's kind of the shift I would expect. 846 00:45:06,600 --> 00:45:09,279 Speaker 1: What it means for monetary policy, it's hard to say 847 00:45:09,360 --> 00:45:11,640 Speaker 1: until we know who the chair is. All right, Michael Gaban, 848 00:45:11,640 --> 00:45:13,520 Speaker 1: thank you very much as always for joining us. Michael Gaban, 849 00:45:13,560 --> 00:45:15,400 Speaker 1: Chief u S Ecconomist at Barclay's joining us here in 850 00:45:15,480 --> 00:45:26,239 Speaker 1: New York. Thanks for listening to the Bloomberg Surveillance podcast. 851 00:45:26,600 --> 00:45:31,680 Speaker 1: Subscribe and listen to interviews on iTunes, SoundCloud, or whichever 852 00:45:31,880 --> 00:45:36,279 Speaker 1: podcast platform you prefer. I'm out on Twitter at Tom Keene. 853 00:45:36,360 --> 00:45:40,120 Speaker 1: David Gura is at David Gura. Before the podcast, you 854 00:45:40,200 --> 00:45:56,400 Speaker 1: can always catch us worldwide. I'm Bloomberg Radio, brought you 855 00:45:56,560 --> 00:46:00,160 Speaker 1: by Bank of America Mary Lynch. Dedicated to bringing our 856 00:46:00,280 --> 00:46:03,800 Speaker 1: client's insights and solutions to meet the challenges of a 857 00:46:03,880 --> 00:46:08,720 Speaker 1: transforming world. That's the power of global connections. Mary Lynch, Pierce, 858 00:46:08,840 --> 00:46:12,719 Speaker 1: Fenner and Smith Incorporated Member s I p C