WEBVTT - Surveillance: Workplace Is Changing Dramatically, Nobelist Says 0:00:00.320 --> 0:00:04.160 Who you put your trust in matters. Investors have put 0:00:04.200 --> 0:00:07.640 their trust in independent registered investment advisors to the tune 0:00:07.640 --> 0:00:12.240 of four trillion dollars. Why learn more and find your 0:00:12.240 --> 0:00:28.200 independent advisor dot com. Yeah, Welcome to the Bloomberg Surveillance Podcast. 0:00:28.600 --> 0:00:32.280 I'm Tom Keene with David Gura. Daily we bring you 0:00:32.360 --> 0:00:37.360 insight from the best in economics, finance, investment, and international relations. 0:00:37.800 --> 0:00:42.360 Find Bloomberg Surveillance on iTunes, SoundCloud, Bloomberg dot com, and 0:00:42.440 --> 0:00:48.960 of course on the Bloomberg. Um, we're gonna speak with 0:00:49.000 --> 0:00:52.080 the Nobel Prize winner we begin this hour. We're speaking 0:00:52.080 --> 0:00:56.200 to someone who um is a Nobel Prize winner in football. 0:00:56.240 --> 0:01:00.880 When the NC State Wolfpack do it to Trade Dome, 0:01:01.840 --> 0:01:06.400 that gets your attention. One Dennis Gartman joins us. He's 0:01:06.400 --> 0:01:09.720 footballed out with his NC State. Mr Gartman, good morning, 0:01:10.400 --> 0:01:13.080 Good morning, And we did indeed beat not tre Dome 0:01:13.080 --> 0:01:16.080 and we are two and now against the Golden Domers. 0:01:16.160 --> 0:01:17.720 And then let's let's hear it for the wolf Pack 0:01:17.880 --> 0:01:19.800 and it's four and one. Is this a better than 0:01:19.840 --> 0:01:22.840 good season or you know it's like easy games that 0:01:22.880 --> 0:01:25.679 you're gonna get crushed later on? Which is it's been 0:01:25.680 --> 0:01:27.600 easy games, and we're gonna get crushed later. We have 0:01:27.720 --> 0:01:30.480 we will and Clemson coming, so it's it's not pretty. 0:01:30.520 --> 0:01:32.640 So we're we're happy to be four and one, but 0:01:33.480 --> 0:01:37.960 logically we're at three. One of those one of those years, Dennis, 0:01:38.120 --> 0:01:42.559 speaking of crushed, Let's talk about trading in a range 0:01:42.600 --> 0:01:46.640 bound market. It is a contact sport, isn't it. Yeah, 0:01:46.640 --> 0:01:50.400 it really is. I mean, it's interesting whether one talks 0:01:50.440 --> 0:01:53.280 about the the the S and P, the NASDAC, whether 0:01:53.280 --> 0:01:55.480 one talks about the Russell, or whether one talks about 0:01:55.520 --> 0:01:59.480 the Dow Jones International Index itself. We have been in 0:01:59.520 --> 0:02:02.680 a trade range for the past months and one half. 0:02:02.720 --> 0:02:04.480 It looks like it breaks up to the upside, the 0:02:04.520 --> 0:02:07.080 next day it break it moves lower, and then one 0:02:07.120 --> 0:02:09.120 day it looks like it's breaking to the downside, and 0:02:09.160 --> 0:02:11.680 the next day it moves higher. You get stopped into 0:02:11.720 --> 0:02:14.120 long positions and taken out, You get stopped into short 0:02:14.120 --> 0:02:16.919 positions and taken out, and at the end of two 0:02:16.960 --> 0:02:18.840 weeks you've gone nowhere, and you've been stopped in and 0:02:18.840 --> 0:02:20.799 out four or five times. It's one of those periods 0:02:20.800 --> 0:02:23.000 that make it very difficult to be any kind of 0:02:23.000 --> 0:02:26.079 an investor or. A trader. This UH, This U n C. 0:02:26.240 --> 0:02:28.720 Tar Heel is looking forward to the day after Thanksgiving 0:02:28.720 --> 0:02:31.040 when my heels take on the wolf pack, but will 0:02:31.120 --> 0:02:37.839 leave it. It was it was very politely mute during 0:02:37.880 --> 0:02:40.640 that top of the UH. Dennis, let me ask you 0:02:40.639 --> 0:02:42.520 about oil. We have had all of this news out 0:02:42.560 --> 0:02:45.280 of oil as this congress is underway in Istanbul. It 0:02:45.280 --> 0:02:48.040 seems like there was there were signs here that that 0:02:48.280 --> 0:02:51.160 agreement in principle was going to become a real agreement. 0:02:51.160 --> 0:02:52.880 And then you have the CEO of Russia's biggest oil 0:02:52.919 --> 0:02:56.000 company saying he doesn't intend to cut production. So here 0:02:56.040 --> 0:02:58.320 we are a few weeks away from, yes, the the 0:02:58.320 --> 0:03:00.320 tar Heels versus wolf Pack game. But all so that 0:03:00.400 --> 0:03:02.760 meeting in Vienna, what are the odds here that that 0:03:02.919 --> 0:03:06.000 something goes on to scuttlet before then? I think there's 0:03:06.000 --> 0:03:08.920 a lot that to say for the this agreement to 0:03:08.960 --> 0:03:11.519 be scuttled, And I think that not enough importance is 0:03:11.560 --> 0:03:14.760 being put on Mr Secheon's comments this morning. Secon is 0:03:14.760 --> 0:03:17.280 a fellow that most Americans, I would say one in 0:03:17.360 --> 0:03:20.480 a thousand Americans know who he is. But born sechion 0:03:20.639 --> 0:03:23.320 Is is the head of ross Neft. He is a 0:03:23.360 --> 0:03:26.520 former KGB agent, has been a very close friend of 0:03:26.639 --> 0:03:30.440 Mr Putin's, and as I've always said, once KGB, always KGB. 0:03:30.639 --> 0:03:35.440 This is a very savvy but I think the disturbing gentleman. 0:03:35.880 --> 0:03:38.840 And when Mr Secheon said that he has no intention, 0:03:39.160 --> 0:03:43.640 why should he of cutting production? If Russia's largest producer 0:03:43.680 --> 0:03:46.240 of crude oil has no intention of cutting production, no 0:03:46.280 --> 0:03:48.560 one else shell either. I think that it's always been 0:03:49.240 --> 0:03:52.840 a tenuous idea to think that OPEC could put forth 0:03:52.920 --> 0:03:56.160 and agree upon and then follow through on an agreement 0:03:56.200 --> 0:03:58.800 to curtail production. Sechion has simply put a top to it. 0:03:59.040 --> 0:04:03.200 Given that closeness between him and Vladimir Putin, professional closeness, 0:04:03.480 --> 0:04:06.400 how do you explain the dissonance there between what he 0:04:06.400 --> 0:04:08.640 said today and what Vladimir Putin said in his stumblom 0:04:08.680 --> 0:04:10.840 yesterday saying that that he saw a freeze as as 0:04:10.840 --> 0:04:14.480 the only way forward here. It's been interesting because until 0:04:14.480 --> 0:04:17.640 about a year ago, what Suction said, Putin said, and 0:04:17.680 --> 0:04:20.840 what Putin said Section said, But for all of a 0:04:20.839 --> 0:04:23.040 sudden in the course of the past year, it's as 0:04:23.080 --> 0:04:27.320 if they have become demonstrably less friendly. Now one has 0:04:27.360 --> 0:04:29.440 to be a reader of Russian tea leaves to be 0:04:29.520 --> 0:04:32.600 certain that that's true. But no longer can one say 0:04:32.600 --> 0:04:35.360 that as goes such and so so goes Putin. There 0:04:35.360 --> 0:04:38.480 has been a seeming divorce between the two. Maybe I'm wrong, 0:04:38.520 --> 0:04:40.320 but that's what I have read, or that's what I 0:04:40.360 --> 0:04:43.880 read in the comments of following both these gentlemen over 0:04:43.920 --> 0:04:45.840 the course of the past year. So I think there 0:04:45.920 --> 0:04:48.719 is some sort of dichotomy, some sort of divorce that 0:04:49.000 --> 0:04:52.480 has occurred. And I put the credence in what suchtion 0:04:52.560 --> 0:04:55.680 has said. He has no intention as the president of 0:04:55.760 --> 0:04:58.520 ross Enuf to curtail production. Dennis, let me get the 0:04:58.560 --> 0:05:00.800 two trays. We'll come back and talk about gold. You've 0:05:00.839 --> 0:05:04.479 gone long corn. Corn has been ugly, ugly, ugly. I'm 0:05:04.520 --> 0:05:06.640 looking at the chart right now. Give me the y. 0:05:06.839 --> 0:05:09.760 How do you go stochastic on corn? You don't have 0:05:09.800 --> 0:05:12.840 a trend. It's ben down, it's been flat since July. 0:05:13.560 --> 0:05:17.520 How can you go long corn? What do you see if? 0:05:17.640 --> 0:05:20.680 If for no other reason, corn refuses or has at 0:05:20.720 --> 0:05:23.640 least not made a new low in the course of 0:05:23.640 --> 0:05:25.760 the past month and a half. Yes, the chart. If 0:05:25.760 --> 0:05:27.560 you put the chart on the wall, walk twenty five 0:05:27.600 --> 0:05:30.159 ft away from it and were asked what is that doing, 0:05:30.200 --> 0:05:32.280 you would say, my word, it's moving O my word, 0:05:32.640 --> 0:05:35.880 my strategy. Yeah, it's from the upper left to the 0:05:35.880 --> 0:05:38.640 lower right. But it has failed to go to new 0:05:38.680 --> 0:05:41.240 lows even as the size of the crop has gotten 0:05:41.360 --> 0:05:44.080 egregiously large. I mean, this is a record crop. Whether 0:05:44.120 --> 0:05:47.040 it's fifteen point one or fifteen point two or fifteen 0:05:47.040 --> 0:05:51.000 point three billion books. Everybody everywhere knows that fact, and 0:05:51.040 --> 0:05:52.960 I have to think that that's fairly well discounted in 0:05:53.000 --> 0:05:56.000 the market. Is that a structural record crop or is 0:05:56.040 --> 0:05:58.840 it a one off? That's a critical question. I think 0:05:59.040 --> 0:06:03.560 West listeners, well, I think it's a a structural record 0:06:03.600 --> 0:06:06.760 crop every year, every year year, except for except for that, 0:06:06.839 --> 0:06:09.760 you know, except for usually after outs. One of the 0:06:09.800 --> 0:06:11.400 things that you can count upon is that we are 0:06:11.400 --> 0:06:14.560 going to produce more and more corn, more and more soybeans, 0:06:14.600 --> 0:06:18.360 more and more cotton, more and more wheat on less acreage. 0:06:18.440 --> 0:06:20.240 We just are very good at what we do. Our 0:06:20.279 --> 0:06:23.360 con farmers are extraordinary. So yeah, I think it is structural. 0:06:23.440 --> 0:06:25.680 The Dennis Gartment, you're where I am, which is yeah, 0:06:25.720 --> 0:06:29.640 Sterling's down, folks. It's brutal. It's what on a curve 0:06:29.720 --> 0:06:34.160 basis is called log quadratic brutal electric says, and nobody's 0:06:34.200 --> 0:06:38.120 paying attention to Euro one tense seventy eight. Are you 0:06:38.200 --> 0:06:41.400 there yet, um Dennis, where you can short euro? And 0:06:41.520 --> 0:06:44.520 is it a short through parody? Oh? I think it's 0:06:44.520 --> 0:06:46.760 a short towards parody. As I said in my news 0:06:46.839 --> 0:06:49.160 letter this morning, we've broken through one eleven fifty, we've 0:06:49.200 --> 0:06:52.560 broken through one eleven. Now we're about to break through one. 0:06:52.560 --> 0:06:55.200 And as I said, under one O nine fifty there 0:06:55.240 --> 0:06:57.799 be monsters, as they used to say on the old 0:06:58.040 --> 0:07:03.600 Mariners maps, under one nine then that is critical. That 0:07:03.680 --> 0:07:06.800 leads to dollar strength. Is it at a dollar strength 0:07:07.200 --> 0:07:12.200 that impinges the American corporate system? It makes it we 0:07:12.520 --> 0:07:15.000 are going to continue to see a dollar strength. I 0:07:15.000 --> 0:07:17.320 don't think there's any question about that fact. And it 0:07:17.400 --> 0:07:19.520 does make it difficult, especially if you want to be 0:07:19.560 --> 0:07:22.000 bullish of corn, which I want to be to allow 0:07:22.120 --> 0:07:25.520 for exports of American agriculture. I mean, that does make 0:07:25.560 --> 0:07:28.240 the game that much more difficult. It also makes us 0:07:28.280 --> 0:07:31.360 that much more we we become more competitive because the 0:07:31.360 --> 0:07:33.680 dollar is getting stronger and it's likely to continue to 0:07:33.680 --> 0:07:36.440 get stronger. Can can the euro trade the parity, Well, 0:07:36.480 --> 0:07:38.320 I think it's over the course of the next year 0:07:38.400 --> 0:07:40.960 or two. I think that's a given the political circumstances, 0:07:41.000 --> 0:07:45.040 of the economic circumstances, the technical circumstances of the psychology 0:07:45.480 --> 0:07:48.560 mandate a stronger dollar a much weaker euro, And if 0:07:48.600 --> 0:07:50.680 you have to pick on one currency, I think that's 0:07:50.720 --> 0:07:52.760 the one to continue to pick on. Real quick, here 0:07:53.080 --> 0:07:55.440 you were talking fifteen point three billion bushels of corn. 0:07:55.440 --> 0:07:59.240 Where's that corn going? To have this conversation about about exports? 0:07:59.280 --> 0:08:04.240 Where where farmers sending that corn to? Uh tigs, cattle, livestock. 0:08:04.280 --> 0:08:07.320 Of course, ethanol, which I'm not, I've never been and 0:08:07.360 --> 0:08:09.480 never shall be a great proponent of ethanol, but it's 0:08:09.480 --> 0:08:12.320 bill in ethanol production and it goes into exports trade. 0:08:12.320 --> 0:08:14.760 I mean is that we are now at a point 0:08:14.760 --> 0:08:17.520 where the supply of of corn is not that is 0:08:17.560 --> 0:08:20.360 not the determining factor. It's the demand for corn which 0:08:20.400 --> 0:08:22.440 will be the determining factor. And the problem shall be 0:08:22.920 --> 0:08:25.680 A strong dollar makes the exports, of course, that much 0:08:25.680 --> 0:08:28.400 more difficult. One thing Dennis Gartment and I have talked about, 0:08:28.440 --> 0:08:32.000 folks and speaking engagements we've done is what I call 0:08:32.160 --> 0:08:36.400 position sizing. Actually Van Thorpe callset position sizing. I call 0:08:36.480 --> 0:08:40.240 it the how much idnus. Mr Gartman recently learned about 0:08:40.320 --> 0:08:43.880 the how much idness of being in gold. I know 0:08:43.920 --> 0:08:46.240 that Tom is very eager to ask about gold. That 0:08:46.320 --> 0:08:48.840 just indulge me a second before before we get to that. 0:08:48.880 --> 0:08:52.040 I wanted to ask you about the Sterling flash crash 0:08:52.120 --> 0:08:54.600 that we saw last week, and you said it's taking 0:08:54.640 --> 0:08:56.199 up far more of our time than we think it merits. 0:08:56.240 --> 0:08:58.160 But indulge me a bit here. And if you peg 0:08:58.200 --> 0:09:02.240 this to sort of temporal liquidity, are you worried it 0:09:02.240 --> 0:09:03.920 could happen again? I mean this this is something that 0:09:03.920 --> 0:09:06.960 would be recurring. Then well, I'm woray that can happen 0:09:07.000 --> 0:09:08.719 in the bond market. I'm woray that can happen in 0:09:08.840 --> 0:09:11.120 in the grain markets. I'm worried it can happen again 0:09:11.160 --> 0:09:14.720 in the equities markets. We have the markets seem not 0:09:14.760 --> 0:09:16.800 to be nearly as liquid as they used to be. 0:09:17.520 --> 0:09:20.160 Graham Dot I think has had a great impact taking 0:09:20.280 --> 0:09:22.440 any large number of banks out of the markets that 0:09:22.559 --> 0:09:24.680 used to be able to make markets on both sides. 0:09:25.080 --> 0:09:29.559 I fear flash crash is happening on a rather consistent 0:09:29.640 --> 0:09:33.480 basis in any number of commodities, uh, in any number 0:09:33.520 --> 0:09:36.480 of markets. So I was not surprised that it happened. 0:09:36.960 --> 0:09:39.200 I was surprised it happened in the forex market, however, 0:09:39.200 --> 0:09:42.120 where there usually is greater liquidity than any place. Out 0:09:42.280 --> 0:09:45.000 Come on, you're the next or ocean made a fortune? 0:09:45.360 --> 0:09:48.200 And now Dennis Gartman on the one way bet or 0:09:48.240 --> 0:09:51.640 the one trick bet. Dennis, You're in gold? And boy, 0:09:51.640 --> 0:09:54.600 who has it been an ugly number of weeks? How 0:09:54.640 --> 0:09:57.280 did you know? First of all, you know what's your 0:09:57.280 --> 0:10:02.920 biggest percentage exposure at any time? Uh? And I probably 0:10:02.960 --> 0:10:05.520 am there in gold and should not have been no question. 0:10:06.040 --> 0:10:09.520 How does one respond well after one stops throwing up? Uh? Well, 0:10:10.200 --> 0:10:14.240 one one gets smaller. One hasn't any choice. Thankfully, at 0:10:14.360 --> 0:10:16.920 least I was not long of gold solely in US 0:10:17.000 --> 0:10:19.720 dollar terms. In fact, I don't own any golden dollar terms, 0:10:20.080 --> 0:10:22.880 at least somewhat. The the loss was mitigated by the 0:10:22.880 --> 0:10:25.640 fact that I own golden euro terms, which is down 0:10:25.720 --> 0:10:28.959 the down, demonstrating less than golden dollars. Let's let's be honest, 0:10:29.000 --> 0:10:31.920 but was it Has it been fun? It was fun 0:10:31.960 --> 0:10:33.560 early in the year. Has it been fun in the 0:10:33.559 --> 0:10:36.400 past within a half. Oh lord, No. If it's range 0:10:36.440 --> 0:10:39.160 bound and you go down two point one or two 0:10:39.240 --> 0:10:44.320 point two standard deviations, do you rationalize regression to the mean? 0:10:44.960 --> 0:10:48.880 Do you go to cash? How do you reframe it 0:10:49.040 --> 0:10:53.240 down to standard deviations? You get smaller, you reduce the 0:10:53.280 --> 0:10:56.520 size of your trade. You have no choice. That's what 0:10:56.640 --> 0:10:59.480 pros do. That's how you have to respond. You may 0:10:59.840 --> 0:11:02.160 you may come back and and own it again later, 0:11:02.200 --> 0:11:04.840 But the first thing that one does is one gets smaller. 0:11:04.840 --> 0:11:07.600 And that's exactly what I did. I got smaller. Do 0:11:07.640 --> 0:11:10.800 I wish that I had gotten smaller before we had 0:11:10.840 --> 0:11:13.760 the the collapse in gold prices in dollar terms two 0:11:13.760 --> 0:11:16.920 weeks ago? Of course I do. Have I increased my 0:11:16.960 --> 0:11:19.480 position since then? No? I have not. I am I 0:11:19.559 --> 0:11:23.800 interested again? Yes, because suddenly golden in euro terms, I 0:11:23.800 --> 0:11:25.960 see the euro getting weaker and gold in the course 0:11:26.000 --> 0:11:27.959 of the past forty eight hours has begun to show 0:11:27.960 --> 0:11:31.480 signs of strength. But is my confidence level high enough 0:11:31.480 --> 0:11:33.080 to say let's go back and do it again? No? 0:11:33.200 --> 0:11:35.320 Not yet. So where do we go from here? We 0:11:35.320 --> 0:11:39.560 we broke that twelve fifty barrier, if fleetingly on on Friday, 0:11:39.559 --> 0:11:42.360 when you're looking at gold, what's what's your path forward 0:11:43.360 --> 0:11:45.400 in order for its turn for the better. And in gold, 0:11:45.400 --> 0:11:47.839 I think has become solely a technical circumstance, not a 0:11:47.880 --> 0:11:51.600 fundamental circumstance, because let's be honest, in dollar terms, it's 0:11:51.640 --> 0:11:54.800 still up for the year rather markedly. In Euro terms 0:11:54.800 --> 0:11:57.559 it's up for the year very markedly. But I need 0:11:57.600 --> 0:12:00.319 to see gold trading above twelve seventy to say that 0:12:00.320 --> 0:12:02.800 that the low has been seen. The fact that we 0:12:02.920 --> 0:12:06.640 broke under twelve fifty and saw no real new selling, 0:12:06.960 --> 0:12:09.160 uh there. And I think most of the selling that 0:12:09.160 --> 0:12:10.800 occurred a week and a half ago or two weeks 0:12:10.840 --> 0:12:14.400 ago was predicated on one, maybe two large funds being 0:12:14.440 --> 0:12:17.400 taken out by their own margin clerks. If we get 0:12:17.440 --> 0:12:19.480 about twelve seventy, I think you've started. I think you 0:12:19.480 --> 0:12:22.120 will have been able to say twelve forty eight was 0:12:22.200 --> 0:12:25.280 the low. Time shall tell. But this is this goes 0:12:25.440 --> 0:12:30.000 also separately to the idea of trying to be informed 0:12:30.000 --> 0:12:33.200 and in place in the markets. But you're in a range, 0:12:33.840 --> 0:12:37.679 is you know range dissipates capital? How does Dallas gartment 0:12:37.840 --> 0:12:43.040 adjust when it's an obvious dollar range, oil range, gold range. 0:12:43.920 --> 0:12:47.000 You get smaller, you get smaller, you get smaller and 0:12:47.040 --> 0:12:49.120 you get smaller. There's really I wish there were some 0:12:49.200 --> 0:12:52.480 secret that that I I could grant and say this 0:12:52.559 --> 0:12:54.040 is how one does it. But I think the only 0:12:54.040 --> 0:12:56.680 thing one knows how to do is get smaller and weight. 0:12:56.920 --> 0:12:59.960 That's that's what one does. And I can't emphasize enough 0:13:00.040 --> 0:13:07.120 folks of reading the literature on trend based mathematics dynamics 0:13:07.720 --> 0:13:10.640 to know what to do in critically, to know what 0:13:10.880 --> 0:13:14.480 not to do. That is half the battle. Dennis Gartman 0:13:14.480 --> 0:13:17.120 has always thank you so much, love having you on. 0:13:17.240 --> 0:13:19.959 I will remind people that, unlike most in the game, 0:13:20.480 --> 0:13:24.600 Mr Gartman on a daily basis puts the gold in 0:13:24.679 --> 0:13:27.840 the gore of his trades in the back of his newsletter. 0:13:28.559 --> 0:13:32.800 That's our point. A very few people do that. Dennis 0:13:32.800 --> 0:13:51.960 Gartment Gartman UH letter joining us and there's like eight 0:13:52.000 --> 0:13:55.679 ways to go here, including the Nobel Prize on contracts. 0:13:55.720 --> 0:13:58.400 Man holds them to join us. In the next hour 0:13:58.520 --> 0:14:02.840 from the Massachusetts Institute, Technology Professor Stephen Ratner joins us 0:14:03.280 --> 0:14:07.800 and will it uh advisors and professor, I've got to go. 0:14:08.920 --> 0:14:12.840 Your cards are and even your most largest critics would 0:14:12.920 --> 0:14:18.320 like you to be. Debates are or politicals are with 0:14:18.440 --> 0:14:22.360 your broad reaching skills. I'm trying to make it up 0:14:22.360 --> 0:14:25.840 as we go. What would you do to our broken 0:14:25.880 --> 0:14:29.960 political process? Do we just get beyond the first Tuesday 0:14:29.960 --> 0:14:33.720 of November? I think we at this point, certainly for 0:14:33.760 --> 0:14:36.160 this cycle, we get past the first Tuesday in November. 0:14:36.360 --> 0:14:39.680 There's uh, whatever momentary thoughts people might have had that 0:14:39.720 --> 0:14:42.800 there would be a different Republican nominee are certainly by 0:14:42.840 --> 0:14:45.200 the boards. Mr Trump is going to finish this race. 0:14:45.280 --> 0:14:49.040 Hillary Clinton is going to finish this race. Presumably Hillary 0:14:49.080 --> 0:14:50.840 Clinton is going to win. That's what all the polls 0:14:50.840 --> 0:14:54.040 seemed to say. And the Republican Party will have a 0:14:54.080 --> 0:14:58.200 lot of soul searching to do with within this is 0:14:58.720 --> 0:15:02.800 we just mentioned with the nf I report, the angst 0:15:03.000 --> 0:15:06.040 over a type of economy. Did you hear any policy 0:15:06.120 --> 0:15:10.960 and debate uno or debate dose about economic policy and 0:15:11.000 --> 0:15:15.640 placing the nation on a better track or vector? Shockingly 0:15:15.720 --> 0:15:18.360 little this has been. This has been like like a 0:15:18.360 --> 0:15:20.640 smoke free zone. This has been a policy free zone 0:15:20.800 --> 0:15:23.840 this campaign. There were two questions really in the in 0:15:23.880 --> 0:15:26.640 the second debate that we're pretty directly on policy and 0:15:26.680 --> 0:15:28.240 then a few others have touched on it. One was 0:15:28.280 --> 0:15:30.320 of course, about Obamba Acare and the debate they in, 0:15:30.360 --> 0:15:32.960 the discussion they had about whether to keep it uh 0:15:33.040 --> 0:15:36.160 and and and the second one was about taxes and 0:15:36.720 --> 0:15:39.120 what to do about taxes and the difference between their 0:15:39.120 --> 0:15:41.640 two approaches. And then there was some happy talk about 0:15:41.680 --> 0:15:43.560 how we have to get the country moving again. And 0:15:43.960 --> 0:15:47.160 Trump would talk about unleashing regulation and and and letting 0:15:47.160 --> 0:15:50.040 the free enterprise system work. Hillary Clinton will talk about 0:15:50.040 --> 0:15:52.440 programs to help those left behind and retrain them, to 0:15:52.440 --> 0:15:55.280 get them back in the workforce, to invest in infrastructures. 0:15:55.280 --> 0:15:57.480 A little bit of that around the edges. But for 0:15:57.520 --> 0:15:59.720 somebody as who's a policy guy as opposed to a 0:15:59.720 --> 0:16:03.480 polite local guy, these debates are are are not are 0:16:03.480 --> 0:16:06.120 not very satisfying. It was back in made that you wrote, 0:16:06.160 --> 0:16:08.960 I'll bet there's plenty to learn about Donald Trump's taxes. 0:16:09.000 --> 0:16:11.280 Since then, the New York Times obtained the first three 0:16:11.280 --> 0:16:14.760 pages of his return that came up at the debate. 0:16:15.160 --> 0:16:17.680 He commented on it, what have what have we learned since? 0:16:17.760 --> 0:16:21.400 And in that broader conversation about taxation where it might 0:16:21.400 --> 0:16:23.880 head under a president Trump for President Clinton, where do 0:16:23.920 --> 0:16:26.360 we stand? I think Trump has done a pretty good 0:16:26.440 --> 0:16:29.640 job I have to give him credit of of having 0:16:29.720 --> 0:16:32.320 a line of response on his tax returns, which is 0:16:32.360 --> 0:16:34.720 to simply say, of course, I used all my DIDI wouldn't, 0:16:34.760 --> 0:16:38.040 don't you. Does anybody in this room not use their deductions? 0:16:38.040 --> 0:16:40.760 I do. Then he goes on to say, but I'm 0:16:40.880 --> 0:16:43.080 so therefore I'm the only one who can fix it. 0:16:43.440 --> 0:16:45.600 But if you look at Trump's tax plan, it would 0:16:45.600 --> 0:16:48.479 not fix it. It would make it worse. He's proposing 0:16:48.600 --> 0:16:51.680 a five point a trillion dollar tax cut over ten years, 0:16:52.000 --> 0:16:56.200 which would vastly disproportionately go to the wealthy, including potentially, 0:16:56.200 --> 0:16:58.560 though they haven't really clarified it, giving the so called 0:16:58.560 --> 0:17:01.760 passed through the LLCs that many businessmen hedge funds, everybody 0:17:01.760 --> 0:17:06.399 operates through tax rate, and so, in fact, you make 0:17:06.440 --> 0:17:09.639 it worse. Now, what's interesting about the two candidates is 0:17:09.680 --> 0:17:13.080 that neither of them has actually proposed tax reform. Hillary 0:17:13.080 --> 0:17:15.520 Clinton has proposed raising taxes on the wealthiest to pay 0:17:15.520 --> 0:17:19.080 for her programs. Donald Trump has proposed this massive tax cut, 0:17:19.440 --> 0:17:22.480 but nobody's actually talking. With some small exceptions, Hillary Clinton's 0:17:22.520 --> 0:17:24.320 for the Buffett rule. They both want to get rid 0:17:24.320 --> 0:17:26.399 of the carried interests for private equity, which is kind 0:17:26.440 --> 0:17:29.000 of a small dollar amount, but in terms of fun 0:17:29.200 --> 0:17:32.240 the kind of in terms of fundamental reform to prevent 0:17:32.320 --> 0:17:34.520 people like Donald Trump from doing what they did, nobody's 0:17:34.520 --> 0:17:36.600 talking about it. Could I say that maybe giving them 0:17:36.600 --> 0:17:39.440 benefits doubt here that's because they have some awareness of 0:17:39.480 --> 0:17:41.520 the fact that Congress has not been working in concert 0:17:41.520 --> 0:17:44.160 with the administration for for some time. Here, I wanted 0:17:44.200 --> 0:17:47.840 looking ahead to to whomever is elected president, what's going 0:17:47.880 --> 0:17:50.120 to make that relationship between the White House and Congress 0:17:50.160 --> 0:17:53.680 measurably better? That is the absolutely most important question. Everybody 0:17:53.760 --> 0:17:56.760 is focused on this election, and not very many people 0:17:56.800 --> 0:17:59.080 are focused on what's going to happen after the election, 0:17:59.119 --> 0:18:01.200 which is at someone going to have to try to govern, 0:18:01.680 --> 0:18:04.879 and you're almost certainly going to have divided government regardless 0:18:04.920 --> 0:18:07.320 of which one wins. You're nobody's going to have sixty 0:18:07.359 --> 0:18:10.320 votes in the Senate, which means that filibusters can occur. 0:18:10.960 --> 0:18:13.120 Paul Ryan is still going to have his hard heart 0:18:13.240 --> 0:18:16.880 right caucus that won't pass anything. Uh, And it's going 0:18:16.920 --> 0:18:19.280 to be really, really tough for who's ever president. And 0:18:19.320 --> 0:18:21.240 that's the most scary part of this. How did you 0:18:21.280 --> 0:18:25.439 respond when Secretary Clinton cited Spielberg and Lincoln in uh, 0:18:26.520 --> 0:18:29.240 the the Amazing Congress at that time. I'm sure you 0:18:29.280 --> 0:18:31.399 saw what I saw the movie. And what she what 0:18:31.560 --> 0:18:34.880 she didn't say, is that the way that Lincoln got 0:18:34.920 --> 0:18:38.240 that amendment passed was by doing stuff that today is illegal. 0:18:38.800 --> 0:18:41.119 You cannot appoint your brother in law, whoever it was 0:18:41.200 --> 0:18:43.480 the friend of the brother in law, to be postmaster 0:18:43.600 --> 0:18:46.000 general in Ohio. You just can't. You can't hire two 0:18:46.040 --> 0:18:48.000 bag men from all mony to go around with bags 0:18:48.040 --> 0:18:52.960 of cash to persuade people who results. But but, but 0:18:53.040 --> 0:18:55.120 the important point here is there are many people who 0:18:55.160 --> 0:18:58.160 feel that changes in the procedure up there that were 0:18:58.200 --> 0:19:00.439 meant to cleanse it, like getting rid of your marks, 0:19:00.840 --> 0:19:03.080 actually may have made the problem worse because now the 0:19:03.200 --> 0:19:06.560 leadership has no way to reward people who actually do 0:19:06.640 --> 0:19:08.840 what they want them to do. And this is actually 0:19:08.880 --> 0:19:11.720 contributed to the gridlock. So what what Hillary Clinton was 0:19:11.720 --> 0:19:14.080 saying was interesting, But there's no way to go and 0:19:14.119 --> 0:19:17.199 be linked anymore. It doesn't work. Stephen Ratner with us 0:19:17.200 --> 0:19:20.040 with willowed advisors, as we look at any number of 0:19:20.080 --> 0:19:23.400 linkages here, Stephen, within the equity market, you've always made 0:19:23.440 --> 0:19:26.280 clear you want to find good companies and hold them 0:19:26.320 --> 0:19:29.840 if they're working with a new terminal value that's lower, 0:19:29.880 --> 0:19:33.280 if they're working with lower nominal GDP, if they're working 0:19:33.320 --> 0:19:36.840 with lower revenue growth. Is there loads of room to 0:19:36.880 --> 0:19:40.600 go down the income statement and cut costs to get 0:19:40.640 --> 0:19:43.560 to better margins even in a low single digit world. 0:19:44.640 --> 0:19:47.359 I'm not sure that there is. As you know, corporate 0:19:47.400 --> 0:19:49.879 profit margins peaked a year or two ago and then 0:19:49.920 --> 0:19:52.639 i've been coming down, obviously heavily driven by energy, but 0:19:52.760 --> 0:19:55.440 other sectors as well. And if you look at corporate 0:19:55.440 --> 0:19:57.560 profits as a share of GDP, if you look at 0:19:57.600 --> 0:20:00.959 corporate profit margins, none of it's suggests that there's a 0:20:00.960 --> 0:20:04.040 lot of room, a lot of room at this point. 0:20:04.119 --> 0:20:06.360 And so we think, we think our view has been 0:20:06.520 --> 0:20:09.480 and we've we've acted on this, that the equity markets 0:20:09.920 --> 0:20:12.720 are very fully valued, that what is mostly propelling the 0:20:12.800 --> 0:20:16.360 US equity market anyway has been lower interest rates. As 0:20:16.400 --> 0:20:19.800 and when that reverses itself, we think that the US 0:20:19.840 --> 0:20:22.560 equity markets are going to be challenged, and so we 0:20:22.640 --> 0:20:26.680 have been actually reducing our exposure to US equity markets. 0:20:26.720 --> 0:20:30.560 You mentioned energy, and we've had a whirl of interest 0:20:30.640 --> 0:20:32.520 here in a production freeze over the last couple of 0:20:32.520 --> 0:20:35.199 weeks from OPEC participants and and and talk that that 0:20:35.280 --> 0:20:37.119 might be formalized at the meeting in Vienna at the 0:20:37.200 --> 0:20:40.280 end of of November. What effect is that going to 0:20:40.320 --> 0:20:42.360 have on equities do you think here in the next 0:20:42.359 --> 0:20:45.639 couple quarters. Well, you can see already obviously in the 0:20:45.760 --> 0:20:47.879 in the energy markets that the price of crewed has 0:20:47.920 --> 0:20:50.520 now gone up above fifty uh I think for the 0:20:50.520 --> 0:20:52.840 first time at least certainly for the most sustained time 0:20:52.960 --> 0:20:56.000 since since the whole collapse and in prices, and it 0:20:56.080 --> 0:20:58.560 hasn't really had any delaterious effects so far on the 0:20:58.600 --> 0:21:01.240 equity markets. I think what would hurt the equity markets 0:21:01.320 --> 0:21:03.920 would be if it appeared that there was some dramatic 0:21:04.040 --> 0:21:07.520