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Speaker 1: Bloomberg Audio Studios, Podcasts, radio News.

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Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along

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Speaker 2: with Lisa Bromwitz and Amrie Hordern. Join us each day

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Speaker 2: for insight from the best in markets, economics, and geopolitics

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Speaker 2: from our global headquarters in New York City. We are

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Speaker 2: live on Bloomberg Television weekday mornings from six to nine

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Speaker 2: am Eastern. Subscribe to the podcast on Apple, Spotify or

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Speaker 2: anywhere else you listen, and as always on the Bloomberg

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Speaker 2: Terminal and the Bloomberg Business app. Here's the latest, the

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Speaker 2: G seven finalizing a fifty billion dollar loan for Ukraine

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Speaker 2: using the profits generated by frozen Russian Central Bank assets.

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Speaker 2: Treasury Secretary Channel Yellen also announcing the US will en

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Speaker 2: vel strong new sanctions against Russia and nations supporting its

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Speaker 2: war effort as early as next week. Joining us now

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Speaker 2: around the table the US Deputy National Security Advisor for

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Speaker 2: International Economics, the leaf Sink Believe gradmoning it's born in

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Speaker 2: Johnathon Credit where it's due A lot of this work,

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Speaker 2: you had a lot to do with it. Walk us

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Speaker 2: through the objective of this plan of this loan.

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Speaker 3: So remember the context.

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Speaker 4: Two days after Russian invaded Ukraine in twenty twenty two,

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Speaker 4: the United States, the G seven, we collectively froze Russia's

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Speaker 4: central bank assets held in our countries, about three hundred

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Speaker 4: billion dollars.

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Speaker 3: Worth in total by all accounts.

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Speaker 4: This came as a surprise to putin the severity of

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Speaker 4: the action, the speed, the unity of the G seven.

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Speaker 4: So two years later, two plus years later, this June,

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Speaker 4: as you showed on your screen, the G seven committed

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Speaker 4: to lend fifty billion dollars of that value of the

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Speaker 4: Russian frozen assets to Ukraine, using the future interest flows

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Speaker 4: to pay us back. So yesterday President Biden said, We're

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Speaker 4: going to make good in our commitment. We're going to

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Speaker 4: leend twenty billion dollars to Ukraine. The rest of the

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Speaker 4: G seven will leend thirty billion dollars.

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Speaker 3: It's a big deal.

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Speaker 4: Never before in history has a multilateral coalition frozen the

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Speaker 4: assets of an aggressor country and then found a way

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Speaker 4: to unfreeze those assets for the benefit of the party,

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Speaker 4: all while maintaining the rule of law and our solidarity.

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Speaker 3: So that's where we are. Deep.

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Speaker 5: Are you concerned about the consequences though in the future

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Speaker 5: you have the bricks right now meeting talking about whether

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Speaker 5: or not they should move away from doing transactions in

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Speaker 5: the dollar because of.

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Speaker 3: Things like this.

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Speaker 4: Well, the important aspect of this deal, I would say

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Speaker 4: two aspects. Actually, One is we followed the rule of

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Speaker 4: law and every single jurisdiction we stuck to the letter

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Speaker 4: of the law. Second, we maintained our unity, our solidarity.

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Speaker 4: You know, there had been some calls to seize the

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Speaker 4: principle of these reserves. We have a legal pathway for

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Speaker 4: doing so. Europe does not. We're going to keep working

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Speaker 4: towards that. But at this stage, what we're doing is

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Speaker 4: harnessing the interest flows that will accrue from these assets,

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Speaker 4: and we're saying, let's let's transfer the value of those

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Speaker 4: interests flows to Ukraine so it can fight.

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Speaker 3: For its existence. I was at the G seven, so

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Speaker 3: were you with this?

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Speaker 5: Really got pushed over the finish line in terms of

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Speaker 5: the European saying okay, we agree with you, We're going

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Speaker 5: to come on board. How much does the US presidential election.

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Speaker 5: How much did the fact that in November potentially there

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Speaker 5: is going to be a change at the White House

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Speaker 5: impact of the Europeans wanting to get this done today.

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Speaker 4: Look, I would say part of the motivation for this

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Speaker 4: G seven deal was to prove to putin no matter

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Speaker 4: what happens in our election, time is not.

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Speaker 1: On this side.

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Speaker 4: I can give you three hundred billion reasons why time

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Speaker 4: is not on putent side. It was also meant to

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Speaker 4: demonstrate that multilateralism it's a force multiplier, and foreign policy

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Speaker 4: and that we're not out of options, We're not out

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Speaker 4: of creativity. So all of those were I would say,

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Speaker 4: underlying motivations for how this deal came together.

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Speaker 2: Some people might suggest, though, that America is losing influence

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Speaker 2: on the global stage. We haven't managed to persuade China

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Speaker 2: to come to our side of thinking on several issues

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Speaker 2: in international farm relations right now. Is there any evidence

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Speaker 2: that we've retained regained any kind of influence on the

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Speaker 2: global stage at all under this administration.

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Speaker 4: Well, you mentioned China, John, I mean, I know there's

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Speaker 4: been a lot of talk about protectionism at the IMF

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Speaker 4: this week and beyond.

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Speaker 3: In my sense, my.

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Speaker 4: Interpretation of what we're doing doing is that this is

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Speaker 4: a very positive sum view of the world, and we

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Speaker 4: hope China other countries come towards our way of thinking.

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Speaker 4: What we've said is, look, we're going to invest in

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Speaker 4: our productive capacity. Number one, we're going to strengthen it

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Speaker 4: and scale it up. Number Two, For countries that are

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Speaker 4: playing by the same rules, we're going to give access

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Speaker 4: to our productive capacity and are purchasing power.

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Speaker 3: We hope, we hope it's reciprocal.

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Speaker 4: But third, and this is where China comes in, for

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Speaker 4: countries that are not playing by the same rules, we

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Speaker 4: are going to use restrictive measures like tariffs to level

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Speaker 4: the playing field and to prevent hundreds of billions of

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Speaker 4: dollars in American tax payer money from getting undercut. That

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Speaker 4: is not a defensive approach, that's not a protectionist approach.

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Speaker 4: It's a positive sum view of the world. We're trying

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Speaker 4: to change the terms of the competition. You know, if

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Speaker 4: the terms of the competition are your capacity to innovate,

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Speaker 4: your ability to collaborate with a network of alliances and partners,

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Speaker 4: your ability to attract ideas and talent and investment, that's

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Speaker 4: a vision that every country can buy into, and I

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Speaker 4: very much like our chances if that's where the competition goes.

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Speaker 2: China included to Amory's point, there are some countries, some

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Speaker 2: account some groups of countries starting to think about trying

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Speaker 2: to move away from the US dollar. Mohammad al Aium

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Speaker 2: wrote in the Financial Times early this week. You might

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Speaker 2: have seen the column that you produced said a loss

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Speaker 2: of confidence in America's management of the global order may

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Speaker 2: have contributed to this run up, the whizzing and the

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Speaker 2: gold price. Do you see any evidence of that, a

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Speaker 2: breakdown of confidence in America's ability to manage the global order?

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Speaker 4: Look, I don't think we're going to see. If there

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Speaker 4: was a breakdown, we wouldn't see it in the data.

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Speaker 4: By the time it showed up in the data would

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Speaker 4: be too late. What matters is whether we continue to

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Speaker 4: be who we are, whether we continue to have the

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Speaker 4: rule of law, independent and credible institutions, fair and effective regulations,

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Speaker 4: trust in our stewardship of the global economy. That's what

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Speaker 4: gave US dollar primacy in the first place. If we

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Speaker 4: continue to invest in those competitive strengths, will be just fine.

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Speaker 3: The leave gold is just one example. Though.

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Speaker 5: What do you say to those that say sanctions don't work,

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Speaker 5: they just create new.

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Speaker 4: Market What I say is what is your alternative? We're

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Speaker 4: in an environment of very intense geopolitical competition. Both Russia

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Speaker 4: and China have expressed and revealed a desire to disrupt.

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Speaker 3: The US led order.

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Speaker 4: When there's conflict, we tend to have three options. Do

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Speaker 4: nothing and stand aside and watch international rules that underpin

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Speaker 4: peace and security get flouted, or go to war. But

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Speaker 4: the policy space in between.

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Speaker 5: Why do a price cap? Putin makes money every single

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Speaker 5: day exporting oil and gas.

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Speaker 3: Why not just sanction it.

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Speaker 5: That's how he funds this war.

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Speaker 4: Well, sanctions work if they're sustainable, and they're only sustainable

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Speaker 4: if they hurt our target more than they hurt ourselves

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Speaker 4: in the global economy. So take energy for example, coming

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Speaker 4: into the war, Russia was the third largest supplier of

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Speaker 4: oil and gas to the world when global supplies were

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Speaker 4: quite tight. We cut off Russian energy within a month

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Speaker 4: of the invasion, sort of other g seven countries. But

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Speaker 4: the idea of cutting Russian energy off from the world

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Speaker 4: that would have felt good. Believe me, it would have

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Speaker 4: felt good, But it would have meant a global shock

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Speaker 4: to global energy and food prices. It would have harm

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Speaker 4: millions of innocent people at home and abroad. It would

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Speaker 4: have flattered Putin's energy export revenues. That's a self defeating strategy.

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Speaker 4: So we took a much less sexy, less shokunnaw approach,

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Speaker 4: much more nuanced, harder to explain. But the global price

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Speaker 4: of oil is down a third since the invasion, his

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Speaker 4: revenues are down by a third. The global energy market's

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Speaker 4: coming into balance, We're moving away from Russian fossil fuels.

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Speaker 3: We're going to have a chance to hit him harder.

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Speaker 4: The time is coming, so chance to hit him harder.

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Speaker 4: How I'm not going to telegraph that here, but rest assured.

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Speaker 4: We have options and it's a.

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Speaker 3: Matter of time.

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Speaker 5: Let's go back to this idea of Jonathan brought up

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Speaker 5: with China and tariffs. China is a big player when

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Speaker 5: it comes to what they're doing in Russia. Russia is

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Speaker 5: able to get chips, say from refrigerators, and maybe use

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Speaker 5: it in their military base. When it comes to tariffs,

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Speaker 5: you're talking about the fact that you think they need

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Speaker 5: to be used on places like China. What do you

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Speaker 5: think separates the democratic position than what the former president

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Speaker 5: is saying on the campaign trail.

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Speaker 4: So I'm just going to speak hypothetically since I'm not

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Speaker 4: on the campaign. Across the board indiscriminate tariffs, they are

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Speaker 4: going to have four predictable consequences.

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Speaker 3: Number one global retaliation.

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Speaker 4: Number two, it's a regressive tax on the most vulnerable

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Speaker 4: segments of society. Number three it compresses profit margins for

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Speaker 4: any business that imports components. And number four would isolate

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Speaker 4: America on the world stage. It would alienate our allies

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Speaker 4: and play right into Putin's and Cheese hands. Our approach

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Speaker 4: has been there's a role for targeted tariffs, but tariffs

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Speaker 4: alte are not a path to prosperity. So we have

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Speaker 4: taken an approach which says, number one, we're going to

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Speaker 4: invest in our productive capacity, as I mentioned earlier, to

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Speaker 4: give access to a productive capacity if you're playing by

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Speaker 4: the same rules. But we will use tariffs if they're

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Speaker 4: necessary to rebuild our industrial base, especially in strategic sectors.

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Speaker 4: We put tariffs on eighteen billion dollars of Chinese products

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Speaker 4: over our term. The previous administration put them on hundreds

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Speaker 4: of billions of products in an indiscriminate fashion.

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Speaker 3: And now we're.

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Speaker 4: Hearing about proposals for an order of magnitude greater increase

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Speaker 4: in tariffs.

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Speaker 1: That's not where we are.

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Speaker 2: And then it wouldn't shock me in four years time,

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Speaker 2: the Democrats if they fall out a pack, get back

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Speaker 2: into power, and keep them. This is what's confused us.

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Speaker 2: All there were complaints after complaints about what Donald Trump

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Speaker 2: were doing, and then all of a sudden they were kept.

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Speaker 2: And not only that, it was a rebrand. We talked

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Speaker 2: about the rebrand on this program. I often hear Democrats

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Speaker 2: call it attacks, and then we hear really sophisticated things

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Speaker 2: about where the Democrats have done themselves, and they say

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Speaker 2: things like, well, no, this is about protecting national security.

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Speaker 2: These are national security objectives. It's that distinction without a difference.

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Speaker 4: No, it's an important distinction because whether it's tariffs or

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Speaker 4: export controls or sanctions, we need to have a limiting principle.

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Speaker 4: We need to have a strategic anchor. So for tariffs

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Speaker 4: or export controls, for example, if we can identify a

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Speaker 4: strategic objective, whether supply chain resilience, technological pre eminence, energy security,

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Speaker 4: and if we're competing with a trading partner that's playing

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Speaker 4: by a very different set of rules, and if that

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Speaker 4: competition threatens to undercut the investments we're making, then there

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Speaker 4: is a role to level the playing field, and tariffs.

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Speaker 3: And export controls can play that role.

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Speaker 4: But we have to be really cool, clear with ourselves

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Speaker 4: and the public and our counterparts, including in China. Why

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Speaker 4: why we're putting on these terms rather than slap them

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Speaker 4: on indiscriminately.

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Speaker 3: That's the difference.

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Speaker 2: Deleep, I could talk to you all day.

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Speaker 1: It's good to catch up.

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Speaker 2: It's good to see it. Thank you, sir, Thank you

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Speaker 2: very much to Leap seeing that the Deputy National Security

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Speaker 2: Advisor for International Economics. We begin this out with stocks higher.

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Speaker 2: Tesla kicking off Max seven earnings with better than expected

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Speaker 2: results Deutsche Bank's Spinky Charter with this to say on

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Speaker 2: earning season. It's still early, but the results so far

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Speaker 2: are slightly stronger than expected. Go again, especially for the

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Speaker 2: financials where investor positioning is our reading in our reading

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Speaker 2: was below neutral. Binkie joins us now for more banky.

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Speaker 3: Can monitor you.

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Speaker 2: Good morning, John, good to see you. We've got a

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Speaker 2: big week next week. All the major tach players, with

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Speaker 2: the exception of in Nvidio. How high is the bar

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Speaker 2: for those tech firms?

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Speaker 6: So, I'd say the bar has been fluctuating. It was

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Speaker 6: extremely high at the beginning of the year. It came

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Speaker 6: down a little bit as positioning came in. Positioning has

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Speaker 6: kind of been going sideways to slightly higher, And just

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Speaker 6: to be clear, positioning tends to align with earnings growth.

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Speaker 6: And if you think about earnings growth for the megacap

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Speaker 6: growth in tech companies, I think it's important to keep

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Speaker 6: in mind that basically this very very clear trend channel

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Speaker 6: over the last thirty years, and so if they deliver

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Speaker 6: as they have been the best possible earnings, they hug

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Speaker 6: the top of the channel. That's eleven percent growth. That's

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Speaker 6: down from forty percent that be printed in the fourth

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Speaker 6: quarter of last year and thirty eight percent in the

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Speaker 6: first quarter of this year.

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Speaker 1: So the slowing, we would argue, is inevitable.

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Speaker 6: It's happening, but it should not be confused with bad earning.

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Speaker 6: So you are absolutely right that it's all a question

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Speaker 6: about the bar and the expectations. And I would say,

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Speaker 6: you know, it's going to fluctuate as you go through

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Speaker 6: sort of this period. It's not all meant to happen

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Speaker 6: on one fine morning. It is going to take a

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Speaker 6: while because there is genuine uncertainty.

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Speaker 2: We don't often do single names with you, but there

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Speaker 2: is one single name which is basically a market, which

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Speaker 2: is in video. Tolson Slock man, you know, well now

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Speaker 2: at Apollo right this this morning, that it's now bigger

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Speaker 2: than the total market cap of five and the G

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Speaker 2: seven countries, the foreigner zone eighteen percent of the US

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Speaker 2: stock market. And the bottom line for him is the

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Speaker 2: global equity markets, including retirement allocations to equities, are basically

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Speaker 2: leverage to invidea What do you think will define earning season?

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Speaker 2: Does it come down to that one name, one theme?

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Speaker 1: Ai, No, I don't think so.

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Speaker 6: You know, the size means, they're definitely important, the size

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Speaker 6: and the growth rates. But no, I would say, you know,

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Speaker 6: the issue of the year has really been whether we

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Speaker 6: would broaden out. And I would say that is happening.

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Speaker 6: It's you know, for it to happen, you need the

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Speaker 6: fundamental underpinning of earnings growth also rotating, which is what

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Speaker 6: would drive you know, moves in positioning. You just spoke

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Speaker 6: about positioning in earnings growth. So it's all happening, I think.

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Speaker 6: Unfortunately it's happening rather slowly and pretty noisily. And the

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Speaker 6: noise mostly comes really from energy and materials, and that's

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Speaker 6: really oil and commodity prices. And you have to go

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Speaker 6: two years back to Russia, Ukraine. You know, but we

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Speaker 6: would argue it is happening. So for this quarter, for example,

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Speaker 6: you know, we're looking for sort of a modest deceleration

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Speaker 6: from twelve percent to nine percent in round numbers. About

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Speaker 6: half that slowing is just the year and year decline

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Speaker 6: in oil and commodity prices, So it's not really telling

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Speaker 6: you anything about where.

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Speaker 1: The economy or earnings are going. The other half's coming

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Speaker 1: from what.

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Speaker 6: We already spoke about, which is the well understood generally

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Speaker 6: at least among the analyst community, both bottom up and

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Speaker 6: top down, that you know, their earnings growth is basically

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Speaker 6: slowing from megga half growth in tech everybody else kind

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Speaker 6: of going sideways.

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Speaker 1: But you know, but the same token.

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Speaker 6: I mean, if you look at Q four right now,

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Speaker 6: you know we're looking for sort of year and young

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Speaker 6: growth in the mid teens.

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Speaker 2: Those take firms responsible for some massive buyback plans as well.

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Speaker 2: You often refer to what you call this robust demand

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Speaker 2: bank drop for US secuities. Can you walk us through

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Speaker 2: where things are aut with regards to that.

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Speaker 6: Yeah, So conceptually, basically, you know, I think one very

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Speaker 6: simple way to think about equity from demand supply point

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Speaker 6: of view is how existing equity money is positioned, so

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Speaker 6: that's our positioning measures. There's new money coming into equities,

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Speaker 6: that's equity inflows. And if you want, you could put

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Speaker 6: on the supply side, because it's not nice to put

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Speaker 6: everything on one side is buybacks and so you know,

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Speaker 6: if you think through where we are on each of

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Speaker 6: the three in terms of positioning, positioning is actually today

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Speaker 6: lower than it was at the July sixteenth peak. How

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Speaker 6: can that be when the market is a little bit higher.

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Speaker 6: Because we've had very robust inflows into equities, and that's

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Speaker 6: been going on for.

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Speaker 1: Quite a while.

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Speaker 6: It's not just equities that are getting robust inflows. Bonds

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Speaker 6: have been getting robust inflows too, So positioning has upside.

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Speaker 1: Even do the mid July peak.

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Speaker 6: We have very robust inflows, and the biggest driver is

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Speaker 6: really the buybacks. And buybacks basically move with earnings, so

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Speaker 6: we're looking for eleven percent earnings growth next year that

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Speaker 6: by itself are used for eleven percent upside in buybacks.

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Speaker 1: And then there is the matter of.

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Speaker 6: The buyback payout ratio, which tends to fluctuate between forty

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Speaker 6: and sixty percent. We are sitting in the middle and

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Speaker 6: at around fifty percent. So if the economic backdrop improves

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Speaker 6: and corporate confidence continues to improve, then you're going to see.

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Speaker 1: That buyback payout ratio also go up.

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Speaker 6: So there's so in short, all three cylinders from a

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Speaker 6: demand supply point of view look very, very robust.

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Speaker 5: So what could spoil the party? Because you talk about catalysts. Two,

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Speaker 5: you mentioned our geopolitical risk and the US election? How

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Speaker 5: do you take those into account with this pretty rosy

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Speaker 5: picture you have?

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Speaker 6: So what I would say is, you know, the election,

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Speaker 6: for example, I mean the traditional pattern is for the

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Speaker 6: equity market to pull back basically starting about a month earlier,

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Speaker 6: and it really sort of you know, the way to

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Speaker 6: think about that is the premium for volatility in that

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Speaker 6: first week basically.

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Speaker 1: After the election. As Jonathan already stole my punch.

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Speaker 6: Lune, which is it happens to coincide with all the

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Speaker 6: early month macro data that comes out at the same time,

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Speaker 6: and it is only a few weeks since the last

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Speaker 6: payrolls report, which had a huge impact.

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Speaker 1: So I would say today there's.

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Speaker 6: A whole whole bunch of catalysts having an impact. And

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Speaker 6: if you look basically across asset classes, just look at

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Speaker 6: the vix. I mean, so you know, a little bit

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Speaker 6: below twenties to many people seems very reasonable. But if

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Speaker 6: you compare that basically with what actual volatility is doing,

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Speaker 6: you've got almost a ten percentage point premium in the VIX.

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Speaker 6: That's just enormous by historical standards. And it's not just equities.

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Speaker 6: You can do the same for rates. Look at the

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Speaker 6: move relative to realize volatility. Look at currency, the c VEX.

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Speaker 6: The same is true in currency. So the market is

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Speaker 6: really all volved up, is the way I would put

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Speaker 6: it on these multiple catalysts or risks.

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Speaker 5: Definitely an angsty market when you have people coming on

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Speaker 5: talking about this idea of a Trump trade in equities

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Speaker 5: in the bond market, why don't we see in the

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Speaker 5: tech companies?

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Speaker 6: So you know, I would emphasize more the uncertainty basically

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Speaker 6: coming from the election and the market really buying protection

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Speaker 6: for potential volatility around the election.

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Speaker 1: I think it's a.

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Speaker 6: Little bit too early to start to factor in or

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Speaker 6: you know, the policies and the implications. There is a

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Speaker 6: natural tendency for all of us to focus on that.

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Speaker 6: But I mean, just take the last tax cut, I mean,

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Speaker 6: the tax reform package we have the twenty sixteen election.

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Speaker 6: By December, you know, proposals were being circulated, feedback was

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Speaker 6: being sought, and when did the tax reform come to pass?

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Speaker 6: It came to pass in late twenty seventeen, when I remember,

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Speaker 6: you know, me and my team running a piece called

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Speaker 6: we had nothing priced in for tax reform. So there's

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Speaker 6: a lot of water that flows out of the bridge

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Speaker 6: between now and when actual things happened.

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Speaker 5: I mean, you know, well, when it comes to when

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Speaker 5: it comes to corporate tax rate, there's a huge spread

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Speaker 5: though between both these candids fifteen percent twenty eight percent.

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Speaker 5: But to your point, that likely won't get finalized till

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Speaker 5: the end of twenty twenty five. So does that get

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Speaker 5: pushed out for twenty twenty six story for these companies?

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Speaker 6: Yeah, it's it's it's it will depend on if and

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Speaker 6: when it passes, And that's sort of a complicated route

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Speaker 6: to basically, you know, bet on right now. I mean,

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Speaker 6: what I would offer in terms of thinking about corporate

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Speaker 6: tax reform and earnings is there is no doubt that

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Speaker 6: there is an immediate impact, but over time, you know,

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Speaker 6: if you look at the S and P. Five hundred

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Speaker 6: from the nineteen thirties. Still today, there is a very

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Speaker 6: very very.

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Speaker 1: Clear trend line. And now you know on.

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Speaker 6: This chart you should overlay the corporate tax rate in

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Speaker 6: the US. It's done lots of things, and the trend

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Speaker 6: hasn't changed. And I'm not saying that equities are the

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Speaker 6: present value of really trend earnings, but if they were,

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Speaker 6: then you know the trend hasn't changed.

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Speaker 1: So short term impacts yes, but long term no.

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Speaker 2: This is a long term policy discussion. I'd love your

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Speaker 2: thoughts on the shorter term because I imagine a lot

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Speaker 2: of people will be down in one eight hundred binky

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Speaker 2: when we wake out November six with the real possibility

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Speaker 2: we don't have a result on November seventh, on November eighth,

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Speaker 2: on the ninth, or tenth, and maybe even longer. We're

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Speaker 2: talked about that Federal Reserve decision a million times. Two

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Speaker 2: days after the election, they might not know the results.

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Speaker 2: What are you going to tell people that week if

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Speaker 2: we don't have results to this election when it could

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Speaker 2: have a pretty profound impact on policy years out. Is

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Speaker 2: that what you're going to say? You're just going to say,

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Speaker 2: oh to me, look at the trend line. King Bundstocks

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Speaker 2: it's not be okay, you tell them.

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Speaker 6: No, It's it's about basically, you know, what's happening in

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Speaker 6: short term to positioning and of course perceptions of what's

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Speaker 6: going on.

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Speaker 1: So I think.

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Speaker 6: Basically, you know, a result that takes time really doesn't.

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Speaker 1: You know, to resolve itself.

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Speaker 6: Assuming that it does resolve itself, does it really changed

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Speaker 6: the story? I mean, it's it's it's you know, instead

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Speaker 6: of one day event ball, it's about a few days

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Speaker 6: of event bol.

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Speaker 1: But the point is, really, you know, does it pass?

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Speaker 2: Is that a dip you'd buy?

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Speaker 1: I'm sorry, is that a dip that you would buy?

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Speaker 3: Yeah?

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Speaker 6: We think of it as a temporary pullback basically. And

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Speaker 6: so going back to your question, you know, is the

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Speaker 6: election or risk? I mean, historically presidential elections haven't really

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Speaker 6: changed the business cycle. That the biggest, highest, big picture

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Speaker 6: level equities.

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Speaker 1: Are about the business cycle.

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Speaker 6: So and I would remind that, you know, once anybody

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Speaker 6: comes into power, they have a strong incentive not to

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Speaker 6: destroy the business cycle. So you know, there is a

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Speaker 6: built in check there is that.

441
00:21:25,920 --> 00:21:28,639
Speaker 2: How you see in Republican administration that they will be

442
00:21:28,680 --> 00:21:30,960
Speaker 2: constrained by where the equity market is, that will be

443
00:21:31,000 --> 00:21:34,360
Speaker 2: regulated by responsive sensitive to it in our experience, based

444
00:21:34,400 --> 00:21:36,560
Speaker 2: on what happened first time around with Donald Trump.

445
00:21:37,520 --> 00:21:39,840
Speaker 6: So I think the evidence formed the last time around

446
00:21:40,040 --> 00:21:41,240
Speaker 6: is very very clear.

447
00:21:41,280 --> 00:21:42,800
Speaker 1: I have a piece on it, and I can dig

448
00:21:42,840 --> 00:21:43,159
Speaker 1: it up.

449
00:21:45,160 --> 00:21:49,000
Speaker 6: You know, every time the trade war, you know, sort

450
00:21:49,040 --> 00:21:52,040
Speaker 6: of fired up. Let's put it that way, equity market

451
00:21:52,160 --> 00:21:56,120
Speaker 6: went down by ten percent. I called it Trump relenting,

452
00:21:56,280 --> 00:22:00,280
Speaker 6: but he would basically argue we have a deal, and

453
00:22:00,359 --> 00:22:02,600
Speaker 6: the market would bounce, and then he would say, no,

454
00:22:02,640 --> 00:22:04,480
Speaker 6: we don't actually have a deal. We're going to escalate.

455
00:22:04,520 --> 00:22:06,920
Speaker 6: The market will go down. So yeah, so are we

456
00:22:06,960 --> 00:22:08,080
Speaker 6: going to get more pullbacks?

457
00:22:08,160 --> 00:22:10,639
Speaker 1: Yes? But did it change the trajectory completely?

458
00:22:10,880 --> 00:22:10,920
Speaker 7: No.

459
00:22:11,520 --> 00:22:14,000
Speaker 2: I called it the presidential put which is basically the

460
00:22:14,040 --> 00:22:16,160
Speaker 2: same thing. And we were talking about this earlier this week.

461
00:22:16,200 --> 00:22:18,520
Speaker 2: We all remember that time when the equity market was

462
00:22:18,520 --> 00:22:21,280
Speaker 2: camping lower and the president ultimately pretended to have a

463
00:22:21,320 --> 00:22:24,160
Speaker 2: call with China and suggested that things were better than.

464
00:22:24,040 --> 00:22:26,960
Speaker 5: They were, because that would mean that, okay, the equities

465
00:22:26,960 --> 00:22:29,600
Speaker 5: can then start to rally again. Basically, puts out a tweet,

466
00:22:29,600 --> 00:22:33,000
Speaker 5: puts out a statement, saisling to a reporter, and equities fall.

467
00:22:33,240 --> 00:22:35,200
Speaker 5: I mean this happened as well with him wanting to

468
00:22:35,240 --> 00:22:37,640
Speaker 5: rip up NAFTA, and then sort of had to massage

469
00:22:37,680 --> 00:22:40,840
Speaker 5: the message because the Dow Jones was doing so bad.

470
00:22:40,880 --> 00:22:43,119
Speaker 5: And ultimately I think, Jonathan, you've called it. That's what

471
00:22:43,200 --> 00:22:44,000
Speaker 5: he's regulated by.

472
00:22:44,280 --> 00:22:45,960
Speaker 1: Thank you, it's good to see you. It's good. So

473
00:22:46,119 --> 00:22:47,960
Speaker 1: it's good to catch up. Thank you, sir. Send over

474
00:22:48,040 --> 00:22:48,440
Speaker 1: that pace.

475
00:22:48,880 --> 00:22:51,120
Speaker 3: I wasn't rate that. How old is that perce fgs.

476
00:22:51,640 --> 00:22:55,680
Speaker 1: It's from the last administration to take at least four

477
00:22:55,760 --> 00:22:56,160
Speaker 1: years old.

478
00:22:56,200 --> 00:22:58,240
Speaker 2: Thank you, appreciate it and tested the catch up. Thank

479
00:22:58,280 --> 00:22:59,880
Speaker 2: you may get shout of that. If don't you think,

480
00:23:09,960 --> 00:23:11,800
Speaker 2: don't I guess now form a speake for the House

481
00:23:12,080 --> 00:23:13,879
Speaker 2: Kevin McCoy speak of mccouthe good to.

482
00:23:13,840 --> 00:23:15,800
Speaker 3: Say, yeah, good to be here. It's a tight one.

483
00:23:16,000 --> 00:23:17,480
Speaker 2: And if I could offer you the outcome of any

484
00:23:17,520 --> 00:23:19,600
Speaker 2: one race right now, which one would you want to know?

485
00:23:19,920 --> 00:23:24,640
Speaker 7: I would watch Pennsylvania. Why's that because we elect presidents

486
00:23:25,040 --> 00:23:29,520
Speaker 7: not by popular vote, by electoral college. So you assume,

487
00:23:29,560 --> 00:23:31,640
Speaker 7: if you look at the last election, which was only

488
00:23:31,720 --> 00:23:36,560
Speaker 7: won by forty and eighteen votes, that Donald Trump would

489
00:23:36,600 --> 00:23:40,240
Speaker 7: get pretty much the same electoral states that he got before.

490
00:23:40,480 --> 00:23:43,120
Speaker 7: And I believe he'd pick up Georgia. If he picks

491
00:23:43,200 --> 00:23:46,760
Speaker 7: up Pennsylvania, it's over. He's gotten to his two seventy.

492
00:23:47,000 --> 00:23:50,480
Speaker 7: He wouldn't need Arizona, he wouldn't need Nevada. And when

493
00:23:50,520 --> 00:23:53,399
Speaker 7: you look at where the play is, even the Union

494
00:23:53,480 --> 00:23:59,920
Speaker 7: voters in Pennsylvania overwhelmingly support Trump over Kamala and Kamala

495
00:24:00,320 --> 00:24:02,399
Speaker 7: at the end of the day, if she loses this race,

496
00:24:02,800 --> 00:24:06,280
Speaker 7: it's going to be her listening to Pelosi when Pelosi

497
00:24:06,320 --> 00:24:11,520
Speaker 7: pushed her to pick Waltz. Not because Shapiro's too ambitious.

498
00:24:12,000 --> 00:24:14,719
Speaker 7: I like leaders who want people who are ambitious around them,

499
00:24:14,720 --> 00:24:16,960
Speaker 7: not people who say I won't compete.

500
00:24:17,080 --> 00:24:20,240
Speaker 5: He's beloved in Pennsylvania, and he's out there still campaigning

501
00:24:20,240 --> 00:24:22,080
Speaker 5: for whether or not he's on the ticket or not.

502
00:24:22,320 --> 00:24:26,040
Speaker 5: Do you think in Pennsylvania they would reject the Democratic

503
00:24:26,119 --> 00:24:29,240
Speaker 5: Party even though they love their Democratic governor.

504
00:24:30,359 --> 00:24:32,439
Speaker 3: They're not rejecting the Democratic Party.

505
00:24:32,600 --> 00:24:35,960
Speaker 7: They're tired of high inflation prices, They're tired of the

506
00:24:36,000 --> 00:24:39,040
Speaker 7: border being wide open. They want someone to do with

507
00:24:39,160 --> 00:24:42,679
Speaker 7: something that they'll actually say. You watch President Trump go

508
00:24:42,760 --> 00:24:46,720
Speaker 7: into a Steeler game and people start chanting USA. What

509
00:24:46,760 --> 00:24:49,040
Speaker 7: do you think they would chant if Kamala was sitting there.

510
00:24:49,160 --> 00:24:52,000
Speaker 7: They probably wouldn't say anything. And listen, if I asked,

511
00:24:52,040 --> 00:24:55,720
Speaker 7: you are America, tell me the three things Kamala Harris

512
00:24:55,760 --> 00:24:58,640
Speaker 7: will do if she gets elected president. She has spent

513
00:24:58,680 --> 00:25:01,400
Speaker 7: a billion dollars. The only thing I know is she's

514
00:25:01,440 --> 00:25:03,560
Speaker 7: going to give people twenty five thousand dollars for the

515
00:25:03,600 --> 00:25:05,560
Speaker 7: first House and bring inflation.

516
00:25:05,160 --> 00:25:08,080
Speaker 3: To home prices. That's the only thing I know.

517
00:25:08,400 --> 00:25:10,280
Speaker 1: You can't sweep.

518
00:25:10,600 --> 00:25:13,400
Speaker 7: Okay, it's going to be a very tight race. Republicans

519
00:25:13,480 --> 00:25:15,560
Speaker 7: will win the Senate. We're in a good place, and

520
00:25:15,600 --> 00:25:16,800
Speaker 7: that's purely map.

521
00:25:18,240 --> 00:25:19,080
Speaker 3: The presidency.

522
00:25:19,520 --> 00:25:22,320
Speaker 7: I give a sixty percent chance that President Trump's going

523
00:25:22,400 --> 00:25:22,840
Speaker 7: to win there.

524
00:25:22,920 --> 00:25:25,680
Speaker 3: I just watch. It's a tight race in the House.

525
00:25:25,920 --> 00:25:30,320
Speaker 7: It's actually easier for Republicans to win seats this cycle.

526
00:25:30,400 --> 00:25:34,080
Speaker 7: But Republicans now are behind on money. I just came

527
00:25:34,119 --> 00:25:37,600
Speaker 7: back and saw four races that were tied. The Democrats

528
00:25:37,640 --> 00:25:39,240
Speaker 7: had but they don't have the money to go play.

529
00:25:39,240 --> 00:25:41,760
Speaker 7: They've made a mistake in this process. We always had more.

530
00:25:41,960 --> 00:25:44,520
Speaker 7: I don't see the strategy in the House where you're

531
00:25:44,560 --> 00:25:46,760
Speaker 7: on offense. I would go out. We beat the D

532
00:25:46,840 --> 00:25:49,959
Speaker 7: triple C chair last time. Remember the last two cycles, leaders,

533
00:25:50,080 --> 00:25:53,600
Speaker 7: I only won. When Biden won the presidency, it was

534
00:25:53,640 --> 00:25:57,919
Speaker 7: the first time since nineteen ninety four no Republican incumbent lost,

535
00:25:58,440 --> 00:25:59,040
Speaker 7: but speaker.

536
00:25:59,240 --> 00:26:02,600
Speaker 5: The Republicans are feeling really good this time two years ago.

537
00:26:03,040 --> 00:26:05,399
Speaker 5: Remember Kerry Lake was supposed to be the governor of Arizona.

538
00:26:05,480 --> 00:26:07,760
Speaker 5: It wasn't the red Wave, no, but.

539
00:26:07,720 --> 00:26:09,960
Speaker 7: There was one place that still won where everybody else lost.

540
00:26:10,080 --> 00:26:12,679
Speaker 7: Same thing as the election before in the House, and

541
00:26:12,720 --> 00:26:16,719
Speaker 7: we elected the most Republican women, most Republican minorities. We

542
00:26:16,760 --> 00:26:19,720
Speaker 7: won five seats in California, five in New York. We

543
00:26:19,760 --> 00:26:23,200
Speaker 7: won Oregon, we won Arizona. We won where Republicans were losing.

544
00:26:23,480 --> 00:26:26,399
Speaker 7: And if they keep the problem is they're not keeping

545
00:26:26,400 --> 00:26:27,520
Speaker 7: with that same strategy.

546
00:26:27,840 --> 00:26:30,080
Speaker 3: President Trump, though, this is the thing you want to

547
00:26:30,080 --> 00:26:31,280
Speaker 3: look at it. Who's going to win?

548
00:26:31,560 --> 00:26:36,280
Speaker 7: Okay, First of all, the campaigns in Wisconsin and Pennsylvania,

549
00:26:36,359 --> 00:26:40,680
Speaker 7: the incumbent Democrat senators are using Trump and their campaigns

550
00:26:41,119 --> 00:26:44,080
Speaker 7: not against them but hugging them. So tell me how

551
00:26:44,080 --> 00:26:46,960
Speaker 7: that's going to turn out. That's a good sign for

552
00:26:46,960 --> 00:26:49,959
Speaker 7: a puppet. Then you're looking at articles where there's infighting

553
00:26:50,040 --> 00:26:52,040
Speaker 7: in the Democratic Party because they want to know who

554
00:26:52,119 --> 00:26:54,960
Speaker 7: to blame when they lose, and now they're literally talking

555
00:26:54,960 --> 00:26:57,560
Speaker 7: about would it have been better to keep Biden on

556
00:26:57,600 --> 00:27:00,359
Speaker 7: the ticket. And now you have people really going after

557
00:27:00,440 --> 00:27:04,440
Speaker 7: Pelosi because not only did she and Obama push Biden off,

558
00:27:04,800 --> 00:27:07,840
Speaker 7: she's the one who selected the VP candidate that put

559
00:27:07,880 --> 00:27:08,760
Speaker 7: him in this problem.

560
00:27:08,960 --> 00:27:11,920
Speaker 5: You're very well versed in the House races.

561
00:27:12,080 --> 00:27:13,720
Speaker 3: You want to walk through them. Well no, no, no,

562
00:27:13,920 --> 00:27:15,160
Speaker 3: not all of them. There's too many.

563
00:27:15,320 --> 00:27:17,800
Speaker 5: But well, no, there's some Cubans prolific. You were a

564
00:27:17,800 --> 00:27:20,560
Speaker 5: prolific fundraiser. You saying they don't have money? Now, whose

565
00:27:20,600 --> 00:27:22,560
Speaker 5: fault is that? That Speaker Johnson's problem?

566
00:27:22,800 --> 00:27:23,879
Speaker 3: Well, look he just came in.

567
00:27:23,960 --> 00:27:24,000
Speaker 1: No.

568
00:27:24,359 --> 00:27:25,679
Speaker 3: Look I wouldn't put that on Johnson.

569
00:27:25,680 --> 00:27:27,479
Speaker 7: I put that on the Age who partnered with all

570
00:27:27,480 --> 00:27:31,399
Speaker 7: the Democrats who are helping Why would the Democrats partner

571
00:27:31,440 --> 00:27:34,040
Speaker 7: with these eight Republicans because they knew it would give

572
00:27:34,080 --> 00:27:37,840
Speaker 7: them an advantage in an election that they couldn't just

573
00:27:38,040 --> 00:27:40,800
Speaker 7: our super pac last cycle had more money than the

574
00:27:40,840 --> 00:27:43,360
Speaker 7: D tripleC and their super pack. Now, if you want

575
00:27:43,359 --> 00:27:45,600
Speaker 7: to look at the makeup of the environment, and this

576
00:27:45,640 --> 00:27:48,439
Speaker 7: is where you want to you want to see Timing

577
00:27:48,560 --> 00:27:51,880
Speaker 7: is everything in politics. Gallup does an interesting poll where

578
00:27:51,880 --> 00:27:55,439
Speaker 7: they don't ask you if you'll vote for Harris or Trump.

579
00:27:55,480 --> 00:27:57,960
Speaker 7: They ask you which party do you identify with? And

580
00:27:58,000 --> 00:28:01,479
Speaker 7: they've done this for decades. Republicans are leading forty eight

581
00:28:01,520 --> 00:28:05,080
Speaker 7: to forty five. Now is that important? Yes, Republicans have

582
00:28:05,320 --> 00:28:08,800
Speaker 7: never led and they ask a second question, who's best

583
00:28:08,840 --> 00:28:09,840
Speaker 7: to solve the problems?

584
00:28:09,960 --> 00:28:10,960
Speaker 3: Republican leading that.

585
00:28:11,160 --> 00:28:15,160
Speaker 7: So it's a good environment in the House North Carolina redistrict,

586
00:28:15,200 --> 00:28:18,360
Speaker 7: so you automatically start with three new seats you can

587
00:28:18,400 --> 00:28:21,720
Speaker 7: pick up. You've got a race in Colorado that last

588
00:28:21,720 --> 00:28:24,000
Speaker 7: time was a new seat that we had a libertarian

589
00:28:24,040 --> 00:28:25,920
Speaker 7: in that picked up four percent of the vote. They're

590
00:28:25,920 --> 00:28:28,720
Speaker 7: not and Gabe Evans could pick up there. Alaska a

591
00:28:28,840 --> 00:28:32,040
Speaker 7: ranked system, we don't have the second Republican running there.

592
00:28:32,200 --> 00:28:35,240
Speaker 3: We'll pick that seat up. Then if you go to Pennsylvania, we.

593
00:28:35,200 --> 00:28:38,000
Speaker 7: Had a bad top of the ticket last time for Governor.

594
00:28:38,400 --> 00:28:41,880
Speaker 7: Dave McCormick is fantastic. Donald Trump is fantastic. So one

595
00:28:41,960 --> 00:28:44,360
Speaker 7: or two seats there. You got Michigan where you have

596
00:28:44,560 --> 00:28:46,560
Speaker 7: Slotkin who pulled out Tom.

597
00:28:46,400 --> 00:28:50,320
Speaker 5: Barrett's running to the Republicans were talking two years ago,

598
00:28:50,360 --> 00:28:51,480
Speaker 5: we only have a little bit of time left.

599
00:28:51,520 --> 00:28:52,440
Speaker 3: I have to ask about Eil.

600
00:28:52,440 --> 00:28:54,480
Speaker 7: I'm telling you there's opportunities if you had the resources.

601
00:28:54,600 --> 00:28:56,960
Speaker 5: You see the opportunities if there was resources, maybe if.

602
00:28:57,240 --> 00:29:00,560
Speaker 7: Okay, every cycle I was leader, we gained seats in California,

603
00:29:00,680 --> 00:29:03,000
Speaker 7: there's two other seats we can gain. The question is

604
00:29:03,200 --> 00:29:05,560
Speaker 7: are you putting the resources in to get the message out,

605
00:29:05,560 --> 00:29:07,440
Speaker 7: to get it The environment is there.

606
00:29:07,600 --> 00:29:09,200
Speaker 3: If you don't turn it out, there's a problem.

607
00:29:09,280 --> 00:29:11,920
Speaker 5: Let's talk about man with resources. Elon Musk. He's saying

608
00:29:11,960 --> 00:29:14,240
Speaker 5: that if you are a registered voter, you can get

609
00:29:14,240 --> 00:29:16,280
Speaker 5: one million dollars. There's some legal issues with that, But

610
00:29:16,280 --> 00:29:17,720
Speaker 5: that's not what I want to ask you. I want

611
00:29:17,760 --> 00:29:19,719
Speaker 5: to ask about this idea that he can become the

612
00:29:19,720 --> 00:29:21,840
Speaker 5: head of the Department of Government Efficiency.

613
00:29:22,600 --> 00:29:23,640
Speaker 3: Does that make sense?

614
00:29:23,680 --> 00:29:26,720
Speaker 5: Because now he's talking about if he does become that person,

615
00:29:26,960 --> 00:29:29,960
Speaker 5: maybe there's a pathway to approve autonomous vehicles that will

616
00:29:30,000 --> 00:29:33,720
Speaker 5: directly help his company that he's the chief executive officer of.

617
00:29:33,800 --> 00:29:34,600
Speaker 5: Can he do both?

618
00:29:34,680 --> 00:29:37,640
Speaker 3: Is that what now? Now I've known Elon for a

619
00:29:37,680 --> 00:29:38,160
Speaker 3: long time.

620
00:29:38,360 --> 00:29:40,440
Speaker 7: He's never said I want to go into government so

621
00:29:40,520 --> 00:29:42,360
Speaker 7: I can get autonomous vehicles approved.

622
00:29:42,720 --> 00:29:43,880
Speaker 3: That's not even on his mind.

623
00:29:44,000 --> 00:29:46,600
Speaker 7: But listen to the question you just asked, Oh, my god,

624
00:29:46,960 --> 00:29:49,880
Speaker 7: could we have Elon Musk go to government and make

625
00:29:49,880 --> 00:29:50,440
Speaker 7: it efficient?

626
00:29:50,800 --> 00:29:51,280
Speaker 3: I don't know.

627
00:29:51,320 --> 00:29:54,120
Speaker 7: We just had a hurricane in North Carolina and the

628
00:29:54,160 --> 00:29:56,680
Speaker 7: only way people can get the Internet is because of Elon.

629
00:29:56,960 --> 00:29:59,880
Speaker 7: We have astronauts stuck in space. The only way that

630
00:30:00,040 --> 00:30:03,160
Speaker 7: can come down is if we ask Elon. We just

631
00:30:03,240 --> 00:30:06,520
Speaker 7: watched a rocket that no government did, but Elon set

632
00:30:06,560 --> 00:30:11,440
Speaker 7: it up, created an engine only made in America, where

633
00:30:11,480 --> 00:30:15,040
Speaker 7: before him we paid putin for their rockets and he

634
00:30:15,280 --> 00:30:19,080
Speaker 7: lands it right on back. I would pray Elon would

635
00:30:19,160 --> 00:30:22,440
Speaker 7: come in and make our government efficient. My god, you

636
00:30:22,480 --> 00:30:25,920
Speaker 7: would have accountability. You would have a government that works

637
00:30:25,920 --> 00:30:28,840
Speaker 7: for the people. And does he want any money from it? No,

638
00:30:30,440 --> 00:30:33,320
Speaker 7: we want more people like that. I mean, there is

639
00:30:33,440 --> 00:30:36,320
Speaker 7: no other country in the world. Every single one would

640
00:30:36,400 --> 00:30:38,840
Speaker 7: beg for Elon to come and do it. And somehow

641
00:30:39,040 --> 00:30:40,920
Speaker 7: the Democrats want to think that's wrong.

642
00:30:41,160 --> 00:30:42,440
Speaker 3: That is what's wrong with them.

643
00:30:42,760 --> 00:30:44,840
Speaker 2: He's gonna be tweeting this clip a little bit later speaking,

644
00:30:44,920 --> 00:30:47,080
Speaker 2: mcconfie is going to see you. Thanks for having me back,

645
00:30:47,120 --> 00:30:50,440
Speaker 2: Thank you appreciate it. The Folmhouse speak of that. Kevin mccarthie.

646
00:30:51,040 --> 00:30:54,600
Speaker 2: This is the Bloomberg Sevenants podcast, bringing you the best

647
00:30:54,600 --> 00:30:57,920
Speaker 2: in markets, economics, antient politics. You can watch the show

648
00:30:58,000 --> 00:31:00,920
Speaker 2: live on Bloomberg TV weekday mornings from six am to

649
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650
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651
00:31:07,200 --> 00:31:09,600
Speaker 2: Bloomberg Terminal and the Bloomberg Business app

652
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Speaker 7: MHM