WEBVTT - China Sell-Off Is Buying Opportunity: KraneShares CIO 0:00:02.640 --> 0:00:05.320 Welcome to the Bloomberg Penl podcast. I'm Paul swing you. 0:00:05.360 --> 0:00:07.680 Along with my co host Lisa Brahma wits. Each day 0:00:07.720 --> 0:00:10.240 we bring you the most noteworthy and useful interviews for 0:00:10.280 --> 0:00:12.520 you and your money, whether at the grocery store or 0:00:12.560 --> 0:00:15.480 the trading floor. Find a Bloomberg Penl podcast on Apple 0:00:15.520 --> 0:00:17.959 podcast or wherever you listen to podcasts, as well as 0:00:17.960 --> 0:00:22.279 at Bloomberg dot com. Well, Chinese markets are open for 0:00:22.440 --> 0:00:25.440 trading once against Shanghai, which hadn't traded since the holidays 0:00:25.480 --> 0:00:29.639 began in January, UH tumbled seven point seven percent, the 0:00:29.680 --> 0:00:33.959 most since two thousand and fifteen, as the economy virtually 0:00:34.159 --> 0:00:36.680 is shut down because of the coronavirus. To give us 0:00:36.680 --> 0:00:39.479 a sense of kind of how to navigate UH those waters, 0:00:39.520 --> 0:00:42.160 we welcome Brendan A. Hearn, chief investment officer for Crane 0:00:42.200 --> 0:00:44.440 Scharity's based in New York City. Brandan, thanks so much 0:00:44.479 --> 0:00:47.440 for joining us. What do you tell clients here as 0:00:47.479 --> 0:00:51.400 it relates to China to Asia in terms of allocating 0:00:51.440 --> 0:00:54.280 capital there? We saw again a virus, a violent turned 0:00:54.320 --> 0:00:59.880 down in the Asian markets today, certainly for long term investors, 0:01:00.080 --> 0:01:02.960 we believe obviously the coronavirus is having a very tragic 0:01:03.000 --> 0:01:07.080 toll from our human on claiming lives. Um. It's going 0:01:07.120 --> 0:01:10.920 to have a economic impact. UM. That could be in 0:01:10.959 --> 0:01:14.200 the know over the next quarter or so. But but 0:01:14.720 --> 0:01:17.640 we believe it is an opportunity UM that for long 0:01:17.760 --> 0:01:20.840 term investors, there is an opportunity today. I think they 0:01:20.840 --> 0:01:22.720 need to be a little careful and where they allocate 0:01:22.880 --> 0:01:25.320 those investments. But again I think it is an opportunity 0:01:25.360 --> 0:01:27.920 for those long run investors. All right, So it's an 0:01:27.959 --> 0:01:31.160 opportunity for long run investors. Is this a bed on 0:01:31.480 --> 0:01:35.160 central bank stimulus by the PBOC? No, I mean, I 0:01:35.240 --> 0:01:38.440 mean certainly the you know, like as we saw during 0:01:38.480 --> 0:01:41.520 the trade war, Uh, China policymakers are going to do 0:01:41.520 --> 0:01:45.920 whatever they can to support the economy. Increasingly, China's economy 0:01:45.959 --> 0:01:49.880 is a um, a consumer driven economy. So I think, 0:01:49.920 --> 0:01:52.360 as we saw last year around the trade war, we're 0:01:52.360 --> 0:01:54.720 going to see a lot of stimulus to help that 0:01:54.720 --> 0:01:57.600 that side of the economy during this this kind of 0:01:57.640 --> 0:02:01.280 economic shutdown due to the coronavirus so Brendan, we had 0:02:01.320 --> 0:02:04.639 some news today on that front. Chinese officials are hoping 0:02:05.280 --> 0:02:08.560 that the US will agree to some flexibility on pledges 0:02:08.600 --> 0:02:10.919 in their Phase one trade deal. Does that suggest to 0:02:10.960 --> 0:02:15.280 you that the virus may be worse than maybe currently 0:02:15.280 --> 0:02:19.920 being discussed by the government. I think you know, certainly, UM, 0:02:20.040 --> 0:02:22.760 the the virus, I mean, I mean people are scared. 0:02:22.840 --> 0:02:26.280 I mean from talking to brokers and and even colleagues 0:02:26.320 --> 0:02:29.240 in both China and Hong Kong, people are are very scared, 0:02:29.680 --> 0:02:32.520 UM and and so there there there is going to 0:02:32.560 --> 0:02:35.040 be an impact. You're just going to limit you know, 0:02:35.160 --> 0:02:36.920 say you know, we saw it, you know leading up 0:02:36.960 --> 0:02:39.200 to the Chinese New Year around tourism. You know that 0:02:39.400 --> 0:02:42.480 big big sites or even movie theaters, you know, if 0:02:42.480 --> 0:02:45.960 it's Disneyland in Shanghai, you know, people don't want to 0:02:46.000 --> 0:02:49.000 congregate in big groups. And and that that is going 0:02:49.080 --> 0:02:54.720 to have a downstream effects because of the China's role 0:02:54.960 --> 0:02:59.600 in in in the global supply chain. Brendan I asked 0:02:59.600 --> 0:03:03.640 this question of Damian Sasaur earlier. There is suspicion that 0:03:03.840 --> 0:03:08.880 the UH, the the government of China basically encouraged national 0:03:08.960 --> 0:03:12.640 investors UH, particularly those that are beholden to their wishes 0:03:13.160 --> 0:03:16.320 UM to go in and buy stocks to perhaps save 0:03:16.480 --> 0:03:18.240 some of the declines that we saw on the initial 0:03:18.280 --> 0:03:20.920 day of trading. After reopening, uh, in the wake of 0:03:20.960 --> 0:03:23.920 a closure due to the coronavirus? Is that true? How 0:03:24.000 --> 0:03:29.400 much state sponsored encouraged buying was there? It's difficult to know, 0:03:29.520 --> 0:03:32.840 you know, you know, the the Chinese regulator takes almost 0:03:32.840 --> 0:03:36.080 a paternalistic role in the mainland market due to the 0:03:36.200 --> 0:03:41.119 high participation rate from individual investors. UM. I do think 0:03:41.160 --> 0:03:45.440 there was activity uh from the quote unquote national team. 0:03:45.800 --> 0:03:50.000 These are you know, big social security pension plans. The 0:03:50.120 --> 0:03:52.920 end reality is when the last time we saw the 0:03:53.000 --> 0:03:57.040 national field basically come come into the market was in 0:03:57.080 --> 0:04:02.119 the summer of when when everything everyone was selling, they 0:04:02.200 --> 0:04:05.360 bought and that ended up being a very profitable trade. 0:04:05.520 --> 0:04:07.640 And I think, you know, I don't know. I don't 0:04:07.680 --> 0:04:10.760 think it's gonna happen tomorrow or in a week, but 0:04:10.880 --> 0:04:12.760 in the it could be in the next month or 0:04:12.800 --> 0:04:15.800 the next quarter. I think those purchases done today and 0:04:15.880 --> 0:04:18.440 we'll probably see it again tomorrow. I think there's a 0:04:18.560 --> 0:04:22.159 very profitable trade. This is you know, bylow cell high 0:04:22.320 --> 0:04:25.320 so Brendan what you know, what do you think the 0:04:25.440 --> 0:04:30.279 impact the coronavirus will be on GDP for China this 0:04:30.360 --> 0:04:32.720 year and maybe even into next How does this how 0:04:32.720 --> 0:04:36.440 do you think this will play out. So Hobey providence 0:04:36.600 --> 0:04:40.159 plays a very minor role. Uh but but China is 0:04:40.279 --> 0:04:44.440 is taking a very very serious approach. So so it 0:04:44.520 --> 0:04:46.719 is going to affect it. You know, the cell side 0:04:46.920 --> 0:04:50.280 analysts are going to start dialing down expectations. It's it's 0:04:50.279 --> 0:04:52.920 even hard for them because we don't know when the 0:04:52.920 --> 0:04:56.320 coronavirus will take it, when things will start to peter out. 0:04:56.720 --> 0:04:58.679 You know. You know, the markets tended to come back 0:04:58.800 --> 0:05:05.080 during stars uh once once the number of people infected stopped. Um, 0:05:05.120 --> 0:05:08.120 And we're not there yet, so so it's hard to know. 0:05:08.320 --> 0:05:11.000 You know, I think things stay in a lockdown mode 0:05:11.520 --> 0:05:14.760 until we see the virus contain and as that becomes 0:05:14.839 --> 0:05:18.960 stays become potentially weeks, the feasibility of that being months. 0:05:19.640 --> 0:05:22.520 It's going to have an economic impact, without question, Brendan, 0:05:22.600 --> 0:05:24.520 Does it worry you at all that we're seeing the 0:05:24.560 --> 0:05:28.080 U N lose value versus the dollar now exceeding seven 0:05:28.440 --> 0:05:32.280 u N per dollar? No? Not not. I mean, you know, 0:05:32.360 --> 0:05:35.320 the U one you know, post trade deal came down 0:05:35.400 --> 0:05:39.760 from six twenty down into the six eighties. So um, 0:05:39.920 --> 0:05:42.359 you know, I think you know, certainly to me, I 0:05:42.480 --> 0:05:46.680 personally believe uh interest rate differentials as well as economic 0:05:46.680 --> 0:05:51.640 conditions determined effects rates. Um. You know, certainly Chinese bond market, 0:05:51.680 --> 0:05:54.720 what a rally yet that had overnight, I mean mass 0:05:54.800 --> 0:05:58.440 effensive as much as equities were down huge rally in 0:05:58.680 --> 0:06:01.640 the onshore bond market. And then then combine that with 0:06:01.839 --> 0:06:04.080 we're gonna have a weakening in the short run in 0:06:04.160 --> 0:06:07.000 China's common That explains the weaker you on. Thank you 0:06:07.040 --> 0:06:08.640 so much being with us Brendan and her and chief 0:06:08.640 --> 0:06:21.480 investment officer of Crane Shares in New York. Well, there 0:06:21.560 --> 0:06:24.719 is increasing focus on Amazon dot Com as the dominant 0:06:24.800 --> 0:06:28.720 commerce site, and there's a question about their crackdown or 0:06:28.800 --> 0:06:32.839 lack thereof on counterfeit items. Joining us now, as Ronnie 0:06:32.880 --> 0:06:35.200 I said Home, managing partner at sat Home Law Group 0:06:35.680 --> 0:06:38.840 in our Interactive Broker Studios, Ronnie, let's just talk first 0:06:38.880 --> 0:06:41.279 about why you decided to look at this in particular, 0:06:41.360 --> 0:06:44.679 how big of a problem is it for counterfeit goods 0:06:44.720 --> 0:06:47.120 to be sold on the Amazon dot com platform. First 0:06:47.120 --> 0:06:49.479 of all, thank you for having me here. I'm looking 0:06:49.520 --> 0:06:52.719 at it because it's an endemic issue on Amazon dot 0:06:52.760 --> 0:06:57.440 Com and it's sometimes it's quite subtle because the the 0:06:57.520 --> 0:07:00.400 dollar amount that you're paying for this counterfeit merchandise is 0:07:00.960 --> 0:07:04.240 similar by maybe five to what you would pay for 0:07:04.680 --> 0:07:09.039 the genuine merchandise. Other times it's not so subtle, but 0:07:09.160 --> 0:07:12.560 either way, most people are being duped. So is this 0:07:13.320 --> 0:07:16.680 all products on online market places or is it primarily 0:07:16.760 --> 0:07:19.360 luxury the high price luxury items. What kind of products 0:07:19.400 --> 0:07:23.160 are typically susceptible to counterfeiting? Well, I'm very sorry to 0:07:23.240 --> 0:07:25.160 have to announce this on the radio, but it's all 0:07:25.200 --> 0:07:30.360 products at all price points, from toothpaste to rames items. 0:07:31.280 --> 0:07:35.280 What's Amazon dot COM's role in policing this, because ultimately, 0:07:36.200 --> 0:07:40.640 is it their responsibility? Is it the perpetrators responsibility On 0:07:40.680 --> 0:07:44.640 the other side, I think that's a great, great question. 0:07:44.840 --> 0:07:48.360 If you buy something that ends up being counterfeit from Sacks, 0:07:48.400 --> 0:07:50.880 Fifth Avenue or CBS, you can go back into that 0:07:51.000 --> 0:07:53.400 store and return it and have a conversation with someone 0:07:53.760 --> 0:07:56.560 who may be able to assess the product um when 0:07:56.600 --> 0:08:00.120 you return it and give you a refund. Here, no 0:08:00.200 --> 0:08:03.360 one is really there to help you, and some sellers 0:08:03.360 --> 0:08:06.000 do not allow you to return items. But in fairness, 0:08:06.040 --> 0:08:08.560 Amazon dot Com is not trying to be a curator 0:08:09.160 --> 0:08:12.360 of retail items. They're trying to be or they aspire. 0:08:13.160 --> 0:08:15.160 The sense that I get is they aspire to be 0:08:15.880 --> 0:08:19.480 UH an online marketplace for many different retailers and sort 0:08:19.520 --> 0:08:24.160 of a common h a common area. So does that 0:08:24.280 --> 0:08:27.680 change their role? Kind of? Does it make it not 0:08:27.840 --> 0:08:31.560 a good analogy necessarily to say sex with having no 0:08:31.680 --> 0:08:33.880 I don't think it really changes my position because if 0:08:33.880 --> 0:08:35.439 you're in a mall, we have them all right, we 0:08:35.480 --> 0:08:37.160 have them all on Hudson Yards, we have them on 0:08:37.840 --> 0:08:43.720 Manhattan Mall's great and New Jersey too. There are malls everywhere. 0:08:44.000 --> 0:08:47.240 But by analogy, when you want to rent space to 0:08:47.320 --> 0:08:51.200 sell your merchandise, there's some kind of vetting process. Provide 0:08:51.240 --> 0:08:52.840 me with your p n L. Let me see if 0:08:52.840 --> 0:08:57.199 you're incorporated. Someone is caring about who that merchant is. 0:08:57.800 --> 0:09:01.079 Online it's very anonymous. I have no idea who you are. 0:09:01.400 --> 0:09:04.160 Sometimes I can't tell where things are being shipped from 0:09:04.160 --> 0:09:09.280 where they're being manufactured. And Amazon is extremely convenient. You 0:09:09.400 --> 0:09:13.240 just sit or stand, press a button, and voila. Your 0:09:13.520 --> 0:09:17.120 item is here within a day, sometimes even less. Okay, 0:09:17.120 --> 0:09:19.880 so I'm a consumer. I realized that the package that 0:09:20.000 --> 0:09:22.600 was just delivered to me is a counterfeit. What are 0:09:22.640 --> 0:09:26.680 my legal rights. Amazon doesn't have a program that allows 0:09:26.720 --> 0:09:32.200 you to return merchandise, but sometimes those refunds don't come 0:09:32.240 --> 0:09:36.000 for a very long time. Sometimes people get lazy. I mean, 0:09:36.040 --> 0:09:39.280 if you're buying lipstick for twelve dollars, you may not, 0:09:40.000 --> 0:09:42.280 you know, make an attempt to return it. You'll say, oh, 0:09:42.360 --> 0:09:45.760 it's not worth it. And that happens all the time. 0:09:45.960 --> 0:09:48.440 So Amazon, though, they will if you say it's a 0:09:48.480 --> 0:09:51.120 counterfeit and they agree with you, they will refund your money, right. 0:09:51.160 --> 0:09:53.880 I mean, it's not like Amazon's out there to to 0:09:54.040 --> 0:09:56.720 screw their users, are they. I mean, I can't speak 0:09:56.720 --> 0:09:59.280 for Jeff Bezos. However, I can tell you that their 0:09:59.280 --> 0:10:04.440 algorithm that uses Amazon's Choice does lead consumers to buy 0:10:04.600 --> 0:10:09.000 counterfeit goods. Try it at home today, type in I 0:10:09.040 --> 0:10:14.079 don't know, uh luxury iPhone case and see what pops up. 0:10:14.559 --> 0:10:17.920 There's a sort of a bigger question underlying a lot 0:10:17.960 --> 0:10:20.520 of what you're saying, which is what is the role 0:10:20.840 --> 0:10:23.600 of Amazon dot Com and are they absconding it in 0:10:23.760 --> 0:10:28.240 terms of being responsible stewards of the modern marketplace? And 0:10:28.360 --> 0:10:30.439 this has been an issue with respect to how they 0:10:30.480 --> 0:10:34.280 do their own product placement versus others their algorithm that way, 0:10:34.520 --> 0:10:37.040 it's been an issue in terms of how they have 0:10:37.320 --> 0:10:40.640 pushed some competitors out of the market. How does this 0:10:40.760 --> 0:10:44.080 piece fit into that larger debate. I think it's all 0:10:44.480 --> 0:10:48.720 part and parcel, uh the same. Amazon is trying to 0:10:48.800 --> 0:10:51.439 maximize its profits. No one can blame them for that. 0:10:51.440 --> 0:10:55.319 That's the purpose of a for profit company. However, there 0:10:55.320 --> 0:10:57.920 are many ways you can do so, and one way 0:10:58.000 --> 0:11:01.839 is educating the consumer. There is consumer loyalty. People may 0:11:01.880 --> 0:11:05.840 think it's disappeared, but it's there. Amazon is a great, 0:11:06.280 --> 0:11:09.160 you know, example of that. I want to go shopping. 0:11:09.200 --> 0:11:12.079 I think of Amazon consumer loyalty. Get more of it. 0:11:12.600 --> 0:11:15.600 Educate your consumers. Tell them this is the usual m 0:11:15.640 --> 0:11:17.720 s r P of your item. So if you're paying, 0:11:17.880 --> 0:11:20.520 we'll just go back to you know, cosmetics. If you 0:11:20.559 --> 0:11:22.880 know that that Armani lipstick is supposed to be thirty 0:11:22.880 --> 0:11:26.320 eight dollars, don't buy it for twenty dollars here it 0:11:26.360 --> 0:11:28.760 may not be real. If you want to buy it, 0:11:28.800 --> 0:11:31.360 then you may, but you should at least know what 0:11:31.440 --> 0:11:34.880 you're getting into when you're purchasing the product. Also tell 0:11:34.960 --> 0:11:38.719 us has this color been discontinued? Perhaps that's why it's 0:11:38.720 --> 0:11:41.160 on sale. I don't know if it would get to twenty. 0:11:41.440 --> 0:11:46.199 It might actually go up to However, educate consumers. Not 0:11:46.360 --> 0:11:50.400 everybody knows how much every single item is supposed to cost. 0:11:50.600 --> 0:11:52.560 Ronnie has set Home, Thanks so much for joining us. 0:11:52.600 --> 0:11:55.000 We really appreciate your thoughts there. Ronnie is a managing 0:11:55.040 --> 0:11:57.840 partner set Home Law Group, joining us here in our 0:11:57.880 --> 0:12:02.120 Bloomberg Interactive Broker studio giving us something. It's about buying onlines, 0:12:02.200 --> 0:12:04.560 not just Amazon dot Com buying a line in general. 0:12:14.320 --> 0:12:16.679 Time to check in with Bloomberg Opinion. We're joined by 0:12:16.679 --> 0:12:20.120 opinion columnist Noah Feldman was a professor of law at 0:12:20.160 --> 0:12:24.120 Harvard University and also a Bloomberg Opinion columnists based in Boston. 0:12:24.520 --> 0:12:27.280 No thanks so much for joining us. You know, it 0:12:27.320 --> 0:12:29.719 looks like again, as Lisa was suggesting earlier, that this thing, 0:12:30.000 --> 0:12:32.600 this impeaching trial, is pretty much done and dusted. Here, 0:12:32.920 --> 0:12:35.360 let's take the step back and take a thirty thousand 0:12:35.400 --> 0:12:37.400 foot view. What do you think are some of the 0:12:37.559 --> 0:12:43.000 bigger picture takeaways from this whole process. There's a kind 0:12:43.040 --> 0:12:46.120 of glass half full, glass half empty, set of ways 0:12:46.160 --> 0:12:48.000 of looking at it. You know, the glass half full 0:12:48.040 --> 0:12:51.760 side is that the president engaged in conduct that's certainly 0:12:51.800 --> 0:12:55.360 the majority of Democrats in the House of Representatives thought 0:12:55.559 --> 0:12:57.280 rose to the the level of impeachment, and they did what 0:12:57.320 --> 0:13:00.320 they were supposed to do. They exercised their constitutional already, 0:13:00.559 --> 0:13:03.720 they impeached him. So that's the good news. The system 0:13:03.760 --> 0:13:07.600 worked in that in that way. The glass have full side, though, 0:13:07.760 --> 0:13:09.640 is a little bit outweighed at the moment by the 0:13:09.679 --> 0:13:12.880 glass half empty perception, which is that many Republicans in 0:13:12.880 --> 0:13:15.760 the Senate seemed to be taking the view that even 0:13:15.800 --> 0:13:19.520 if Trump did these things, it nevertheless doesn't count as 0:13:19.559 --> 0:13:22.000 impeachable under the Constitution. And you know, it's hard to 0:13:22.040 --> 0:13:24.480 say if they really believe that or if they're just 0:13:24.520 --> 0:13:26.440 saying that to cover up their desire to, you know, 0:13:26.480 --> 0:13:29.320 not to do anything politically bad to Trump. But either way, 0:13:29.360 --> 0:13:31.400 it's not a great thing for them to be saying, 0:13:31.400 --> 0:13:33.599 because it implies that this kind of conduct, you know, 0:13:33.679 --> 0:13:37.240 cheating in an election, is just okay under our constitutional system, 0:13:37.240 --> 0:13:38.760 and that's not going to bode well for the future. 0:13:39.120 --> 0:13:42.760 Professor Veldman, given your work at Harvard when you are 0:13:42.840 --> 0:13:47.040 clerking for a Supreme Court Justice David's suitor, and beyond 0:13:47.360 --> 0:13:50.679 how much of a precedent, does this said for future 0:13:50.760 --> 0:13:53.839 proceedings in terms of what is or in this case 0:13:54.080 --> 0:13:58.160 is not a truly impeachable offense. There's two kinds of president. 0:13:58.240 --> 0:14:01.200 When you talk about impeachment. There's not a court that 0:14:01.280 --> 0:14:03.280 can be bound by an earlier decision. So when we 0:14:03.280 --> 0:14:05.800 talk about president, we're talking about two things. One, we're 0:14:05.800 --> 0:14:08.840 talking about the kinds of legal arguments that will be 0:14:08.920 --> 0:14:12.160 made in any future impeachment proceeding. And for sure, if 0:14:12.160 --> 0:14:15.480 Trump is cleared, whoever's defending a president in future impeachment 0:14:15.520 --> 0:14:18.600 proceedings will say, look, the Trump impeachment stands for the 0:14:18.679 --> 0:14:22.360 idea that you can't impeach someone unless there's some kind 0:14:22.360 --> 0:14:25.240 of an actual statutory crime. And then other people who 0:14:25.240 --> 0:14:27.000 will be able to say, well, says you, but that's 0:14:27.040 --> 0:14:30.160 not really what happened. The other kind of president is 0:14:30.520 --> 0:14:34.280 will any future House of Representatives even bother to impeach 0:14:34.320 --> 0:14:37.160 a president who's done something that really breaks the constitutional 0:14:37.200 --> 0:14:40.080 system but doesn't count as a statutory crime. That's the 0:14:40.120 --> 0:14:43.480 kind of real world political calculus type of precedent. And 0:14:43.520 --> 0:14:45.280 there it's you know, it's too soon to say, but 0:14:45.360 --> 0:14:48.040 I certainly think that any future House of representatives is 0:14:48.080 --> 0:14:51.920 going to be very, very very cautious about entering into 0:14:51.920 --> 0:14:54.720 an impeachment under those conditions unless they're prepared to lose, 0:14:55.080 --> 0:14:57.640 which I suppose the Democrats were in this case. So 0:14:58.160 --> 0:15:01.280 were you surprised at all of that at the Republicans 0:15:01.320 --> 0:15:05.000 stood so uniformally behind the president or it was this 0:15:05.480 --> 0:15:10.000 like many people were concerned, kind of preordained. I'm sorry 0:15:10.000 --> 0:15:13.440 to say that I'm not surprised by it. Um that said, 0:15:13.480 --> 0:15:16.840 I am surprised to see senators saying that this conduct 0:15:17.360 --> 0:15:19.640 just doesn't rise to the the level of impeachment. That seems 0:15:19.640 --> 0:15:22.120 to me to be one of the more doubtful things 0:15:22.160 --> 0:15:25.520 that they're saying. I actually expected them to say, well, 0:15:25.560 --> 0:15:28.760 on the evidence, you know, maybe we just can't prove this, 0:15:28.960 --> 0:15:31.600 and anyway, the president denies that. I expected a more 0:15:31.680 --> 0:15:35.080 fact based defense. Even even again, even if it was hypocritical, 0:15:35.320 --> 0:15:38.720 that just sounded more plausible to me than saying, well, 0:15:38.760 --> 0:15:40.680 it doesn't rise the level of impeachment. And it also, 0:15:41.120 --> 0:15:42.760 you know, the saying that it doesn't rise to the 0:15:42.840 --> 0:15:45.200 level of impeachment has a much worse effect in the 0:15:45.240 --> 0:15:47.360 long run, because it implies that they think this kind 0:15:47.400 --> 0:15:50.200 of conduct is fine. Can you de grade Justice roberts 0:15:50.200 --> 0:15:54.520 performance in this I think he did excellently. Um. You know, 0:15:54.640 --> 0:15:59.080 his predecessor, Chief Justice Rank Whist, who actually, interestingly Roberts 0:15:59.120 --> 0:16:01.840 also was a law clerk for many years ago, famously 0:16:01.880 --> 0:16:05.200 said after the Continent impeachment trial, I did nothing in particular, 0:16:05.280 --> 0:16:07.800 and I did it very well. And I think that's 0:16:07.800 --> 0:16:09.880 what Roberts was aiming for. And I would give him 0:16:09.920 --> 0:16:12.040 an a for doing nothing in particular and doing it 0:16:12.120 --> 0:16:17.280 very well. So very well. Um. So the Constitution as 0:16:17.280 --> 0:16:21.120 it relates to impeachment, has that been kind of neutered 0:16:21.160 --> 0:16:24.520 it to some extent? I would say yes, you know, 0:16:24.680 --> 0:16:26.360 I mean I think if the vote goes the way 0:16:26.360 --> 0:16:30.080 we expected to, that really weakens the idea that the 0:16:30.160 --> 0:16:34.880 impeachment is there to help protect us against the president 0:16:35.280 --> 0:16:37.880 who does things to cheat in an election that don't 0:16:37.880 --> 0:16:41.000 necessarily count a statutory crimes. And I would expect that 0:16:41.080 --> 0:16:43.560 future presidents are likely to be willing to take that risk. 0:16:43.680 --> 0:16:45.400 I mean, I hope it's not that way. I hope 0:16:45.400 --> 0:16:48.440 future presidents say, well, you know, look, I mean Donald 0:16:48.440 --> 0:16:50.680 Trump got impeached and that goes on his historical record, 0:16:50.680 --> 0:16:52.680 and it looked bad and a lot of that, to 0:16:52.760 --> 0:16:54.680 be blunt, is going to depend on what happens in 0:16:54.760 --> 0:16:57.800 the next election. If Trump is re elected, people I 0:16:57.800 --> 0:16:59.880 think will feel very few qualms in the future about 0:17:00.000 --> 0:17:02.280 and what he did. If he's not re elected, there 0:17:02.320 --> 0:17:05.320 might be some second thoughts. Professor Feldman, thank you so 0:17:05.400 --> 0:17:07.719 much for being with us. Noah Feldman, Professor of Law 0:17:07.760 --> 0:17:11.920 at Harvard University, also a Bloomberg Opinion columnist. Uh tons 0:17:11.960 --> 0:17:15.200 of experience both in the legal and beyond worlds, having 0:17:15.440 --> 0:17:30.240 clerked for Justice suitor joining us from Boston, Massachusetts. Well 0:17:30.240 --> 0:17:33.160 coming into if you can rewind all the way back 0:17:33.200 --> 0:17:35.560 to January nine, it was going to be the year 0:17:35.560 --> 0:17:39.320 of the Big Unicorn I p O lift Uber we 0:17:39.480 --> 0:17:43.960 work it didn't quite turn out that successfully for public 0:17:44.000 --> 0:17:45.800 equity investors. To get a sense of kind of what 0:17:45.840 --> 0:17:47.600 we should be learning from some of those lessons, we 0:17:47.680 --> 0:17:51.000 welcome Vincent w R. He has a global macro strategist 0:17:51.040 --> 0:17:54.240 for I N T l F C Stone based in 0:17:54.280 --> 0:17:56.080 San Francisco, but joining us here on a Bloomberg and 0:17:56.080 --> 0:17:58.640 Director Brooker Studio. So Vincent, thanks so much for joining 0:17:58.760 --> 0:18:01.360 us again. As we think back, put our rear view mirror, 0:18:01.480 --> 0:18:03.320 take look at the rear view mirror. We see uber, 0:18:03.359 --> 0:18:06.159 we see lift, we see smile direct. A lot of 0:18:06.200 --> 0:18:09.399 these companies raised a lot of money at a certain valuation. 0:18:09.520 --> 0:18:13.280 They come to the public markets, they don't get that valuation. 0:18:13.480 --> 0:18:15.600 What are some of the takeaways that that that you've 0:18:15.840 --> 0:18:20.520 seen in your work? Well, I mean it's almost a 0:18:20.560 --> 0:18:23.639 mirror opposite of what happened in two thousand when you 0:18:23.680 --> 0:18:26.960 know you had these exuberant public markets. Today it seems 0:18:27.000 --> 0:18:29.960 to me that the the exuberances on the private markets 0:18:30.000 --> 0:18:34.320 and the public markets are bringing some form of discipline. 0:18:34.320 --> 0:18:36.640 I mean, I was reading about Gasper trying to ip 0:18:36.760 --> 0:18:39.240 you and a lot of these companies cannot get the 0:18:39.320 --> 0:18:43.119 valuations that they got in in private markets. And the 0:18:43.160 --> 0:18:49.240 effect that this has had is that, um, there's no exit. Um. 0:18:49.359 --> 0:18:52.040 So now you you have this backlog of unicorns that 0:18:52.119 --> 0:18:56.000 are burning gachet of the high rates, and the big exit, 0:18:56.359 --> 0:19:01.399 whether it's you know, a big stuff bank cash infusion 0:19:01.720 --> 0:19:03.360 or a big I p O is is no longer 0:19:03.400 --> 0:19:07.600 going going to happen. So you have this idea that 0:19:07.880 --> 0:19:11.760 actually the bust of these unicorns, the myth of the unicorns, 0:19:12.280 --> 0:19:16.440 is going to be reflationary. Can you explain the connection there, 0:19:16.520 --> 0:19:18.920 especially on a day what I should just know, we 0:19:19.000 --> 0:19:21.360 just gotta headline on the w t I prices fell 0:19:21.400 --> 0:19:26.000 below fifty barrel UH for the first time in more 0:19:26.040 --> 0:19:28.280 than a year, so we have that kind of pressure 0:19:28.320 --> 0:19:32.000 as well, right, Um, So I think first we need 0:19:32.040 --> 0:19:36.000 to understand how it was deflationary in the first place. 0:19:37.040 --> 0:19:39.479 I mean, following the away crisis you had, this UH 0:19:40.040 --> 0:19:46.000 two thousand was a genuinely deflationary shock yelks flattened rates 0:19:46.000 --> 0:19:48.199 when negative or the world. And what it did is 0:19:48.240 --> 0:19:51.680 that it directed a flood of money into venture capital 0:19:51.680 --> 0:19:54.840 and private equity, which certainly became seen as a silver 0:19:54.880 --> 0:19:58.720 bullet that would allow endowment institutions to achieve the return targets. 0:19:59.359 --> 0:20:02.080 And it was a very small asset class with not 0:20:02.160 --> 0:20:05.280 that many great ideas, but the money got invested with 0:20:05.320 --> 0:20:08.359 the mandate to achieve growth at any cost, kind of 0:20:08.440 --> 0:20:10.879 the Amazon model. Right. Amazon never turned the profit in 0:20:10.920 --> 0:20:13.480 the first nine years of its existence. So the way 0:20:13.520 --> 0:20:15.879 most of these many of these companies did that was 0:20:15.960 --> 0:20:19.159 by by sending your dollar for ninety cents um and 0:20:19.240 --> 0:20:22.679 a lot of the consumer oriented unicorns were built on 0:20:22.720 --> 0:20:26.440 that model. Let me achieve scale and then I'll worry 0:20:26.440 --> 0:20:30.280 about profits later. So effectively, all these companies were subsidizing customers. 0:20:31.040 --> 0:20:33.480 That's the example, of course, is we work lift uber 0:20:34.119 --> 0:20:37.800 and UM. The more they grew, the more money they lost. 0:20:38.320 --> 0:20:40.920 UM and as long as the money kept going in 0:20:41.480 --> 0:20:45.320 the loop would keep going. But without this constant in 0:20:45.320 --> 0:20:47.280 flats of money, I mean, you will have to raise prices. 0:20:47.280 --> 0:20:48.879 I don't know if you've taken an uber lately, but 0:20:48.960 --> 0:20:52.040 you'll notice that the prices have gone up significantly from 0:20:52.119 --> 0:20:54.760 last year. And you've seen certainly a lot of a 0:20:54.760 --> 0:20:56.560 lot of these unicorns come back and say, well it 0:20:56.560 --> 0:21:00.159 will be profitable at will be profitable, while how A 0:21:00.160 --> 0:21:03.880 You're going to achieve that by raising prices. So the 0:21:03.920 --> 0:21:06.240 reflation trade, which is one of the trades we certainly 0:21:06.240 --> 0:21:09.399 heard about when people strategies are talking about opportunities and 0:21:09.359 --> 0:21:12.760 emerging markets, reflation trade small caps, we're obviously we're not 0:21:12.760 --> 0:21:15.240 saying Lisa mentioned you know you've got oil uh w 0:21:15.280 --> 0:21:17.240 t I dip below fifty dollars or barrel just a 0:21:17.280 --> 0:21:19.440 few minutes ago. First time in a year, we've got 0:21:19.400 --> 0:21:21.560 an inverted yield curve. What do you think are the 0:21:21.600 --> 0:21:24.720 conditions that need to develop for that reflation trade to 0:21:24.800 --> 0:21:28.560 really start to develop. What I think it was trying 0:21:28.600 --> 0:21:32.400 to happen between you know, November December, you had a 0:21:32.440 --> 0:21:35.200 good strength and copper prices you so value do well 0:21:35.280 --> 0:21:37.479 emerging markets. It was all the trade, he hoped. I 0:21:37.480 --> 0:21:39.880 think we had this perfect setup for it, and then 0:21:39.920 --> 0:21:42.600 of course the coronavirus has thrown a big wrench into it. 0:21:42.680 --> 0:21:46.520 But again, obviously I'm not a I can't really talking 0:21:46.520 --> 0:21:49.720 too intently about the coronavirus. But maybe let's let's step 0:21:49.720 --> 0:21:51.440 back a little bit and think of what it means. 0:21:51.480 --> 0:21:54.800 I mean, either if it's really I think if if 0:21:54.840 --> 0:21:57.280 it turns off, we'll go back to where we were before, 0:21:57.400 --> 0:22:01.000 where you know, kind of global synchronized, we cover trade peace. 0:22:01.320 --> 0:22:04.000 And if it's bad, I mean, you end up basically, 0:22:04.520 --> 0:22:06.720 you know, shutting down the factory of the world. I mean, 0:22:06.840 --> 0:22:10.679 to me down the line, that will be an inflationary event. Uh. 0:22:11.640 --> 0:22:13.280 And and the last part I would say that people 0:22:13.359 --> 0:22:16.119 probably should think about is how is that going to 0:22:16.200 --> 0:22:18.879 change a policy response in China. In part of the 0:22:19.160 --> 0:22:21.800