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Speaker 1: independent advisor dot com. Welcome to the Bloomberg Surveillance Podcast.
Speaker 1: I'm Tom Keene with David Gura. Daily we bring you
Speaker 1: insight from the best in economics, finance, investment, and international relations.
Speaker 1: Find Bloomberg Surveillance on iTunes, SoundCloud, Bloomberg dot Com, and
Speaker 1: of course, on the Bloomberg Good Morning David Gura with
Speaker 1: Tom Keene on Bloomberg Surveillance from Bloomberg Radio. It's Friday,
Speaker 1: Finally Friday, Veterans Day, eleventh of November, the day after
Speaker 1: Mr Trump went to Washington a meeting between the President
Speaker 1: and the President elect. A meeting that was scheduled to
Speaker 1: last ten minutes went on for ninety and the Dow
Speaker 1: hit records is. Donald Trump made his way down Pennsylvania
Speaker 1: Avenue up Capitol Hill, where lunch was served. Donald Trump
Speaker 1: and the next Vice president broke bread with Paul Ryan
Speaker 1: from the House Speaker's balcony. They surveyed the city and
Speaker 1: then they hammered out plans with Majority leader Mitch McConnell,
Speaker 1: and all the while the president elect transition team worked
Speaker 1: to allay uncertainty new reports of who's being considered for
Speaker 1: Treasury Secretary David Malpass reportedly heading up the search for
Speaker 1: the economic team, Tom Barrack reportedly handling plans for the
Speaker 1: next inauguration, and a post on Great Again dot gov
Speaker 1: the transition team's website. The closest closest thing to a
Speaker 1: policy pronouncement we've gotten since election day that's still to
Speaker 1: be named Financial Services Policy Implementation Team. Quote. We'll be
Speaker 1: working to dismantle the Dot Frank Act and replace it
Speaker 1: with new policies to encourage growth and job David, But
Speaker 1: I'm glad you did that introduction, and may we do
Speaker 1: a Friday shoutout to our team, please do that. We
Speaker 1: had both Mr mal Pass and Mr in this week
Speaker 1: to give perspective before they got that where they got
Speaker 1: that we don't do this. I mean, David does all
Speaker 1: the work. I just sort of show up and have
Speaker 1: a cup of coffeens. But our team just killed it
Speaker 1: this week. David absolutely just killed The guests affiliated with
Speaker 1: both campaigns and the outside perspective as well has just
Speaker 1: been tremendous all through the week term it is two
Speaker 1: thousand sixteen, the year of the improbable. According to our
Speaker 1: first guest, know Ferguson, renowned award winning historian, senior fellow
Speaker 1: at the Hoover Institution at Stanford, kind enough to join
Speaker 1: us today from London. Good to have you with us.
Speaker 1: Donald Trump saying that this was going to be Brexit
Speaker 1: times ten a couple of days out. Now give your
Speaker 1: reaction to what we've seen here, and if the context
Speaker 1: it give us, if that assessment was valid. Well, unlike
Speaker 1: the vast majority of of people who were writing and
Speaker 1: talking about the selection, I took that seriously and that
Speaker 1: that was I think because I was suffering from post
Speaker 1: Brexit traumatic stress disorder, having been on the wrong side
Speaker 1: of the Brexit campaign in the UK uh and having
Speaker 1: working up to the most almighty shock, I recognized very
Speaker 1: familiar symptoms in the United States in the run up
Speaker 1: to the election, and I said in my column and
Speaker 1: The Boston Globe on Monday that I thought Trump was
Speaker 1: likely to prove the pundits wrong by winning from very
Speaker 1: many of the same reasons that that breaks. It happened.
Speaker 1: It's it's an interesting thing populism because although it's quite
Speaker 1: nationalistic in its tone, it's kind of a global phenomenon
Speaker 1: that you see in multiple countries right now, and it's
Speaker 1: a backlash against globalization in some ways, because obviously Trump
Speaker 1: was playing the cards of protectionism, talking about tariffs, restricting immigration.
Speaker 1: He was beating up on the corrupt political establishment that
Speaker 1: he's clearly eager to distance himself from. But I think
Speaker 1: the other interesting thing about populism is it's cultural dimension.
Speaker 1: It is a backlash against political correctness, feminism, it's a
Speaker 1: back lash against affirmative action, black lives matter, it's a
Speaker 1: it's a backlash against the whole range of cultural and
Speaker 1: social things, which I think explains it's it's potency. It
Speaker 1: was a wonderful column which you alluded to Thomas Wolfe
Speaker 1: talking about the every four year confluence of the election
Speaker 1: in the World Series. You called Donald Trump the Maverick picture.
Speaker 1: How did he pitch a perfect game? Yeah? I love
Speaker 1: that passage. When I came across it. I'm a Thomas
Speaker 1: wolf enthusiast, and I remembered this passage where he says,
Speaker 1: there's something about the way Americans watched the World Series
Speaker 1: and watch the the presidential election. That's similar. They kind
Speaker 1: of love getting into the contest, but at the end
Speaker 1: of it, they kind of peacefully leave, as it were
Speaker 1: at the stadium. And I think on the whole, that
Speaker 1: is how Americans are reacting to Trump's victory, just as
Speaker 1: they reacted to the Chicago Cubs victory. It's only a
Speaker 1: tiny minority of people who are engaging in these ludicrous protests.
Speaker 1: So I think the analogy is a good one because
Speaker 1: what Trump did, apart from sticking at it. Remember, the
Speaker 1: stamina was the thing that gave the Cubs of the
Speaker 1: World Series. They just hung on in there to the
Speaker 1: very last inning. They never gave up, and Trump never
Speaker 1: gave up. I was impressed by his stamina. He always
Speaker 1: seemed relaxed on the stump. He never really lost his
Speaker 1: his self confidence in on the campaign trail. The only
Speaker 1: times I thought he really was losing it, we're in
Speaker 1: the three debates with Hillary Clinton, and I prematurely wrote
Speaker 1: him off after Debate three, and then realized that actually,
Speaker 1: two people in Middle America, these debates had had counted
Speaker 1: for almost nothing because they were much more interested in
Speaker 1: you guessed at the World Series. Ferguson with us and
Speaker 1: Villan Bouder to come on here in a moment, Professor Ferguson,
Speaker 1: I do want to move forward to the forming of
Speaker 1: a cabinet. We talked of this earlier. You're Wonderful one volume.
Speaker 1: Dr Kissinger, where he was, he was known, and he
Speaker 1: was a celebrity. But it was unimaginable that a Rockefeller
Speaker 1: republic and or adviser, I should say, would join the
Speaker 1: gentleman from Woodrior, California. Help me here with cabinet formation
Speaker 1: from Mr Trump in the lessons you learned in researching
Speaker 1: Henry Kissinger, Well, I think one lesson, certainly from night
Speaker 1: is that you don't get a job in the administration
Speaker 1: just because you were a faithful servant on the campaign trail.
Speaker 1: And many people are, i think, making the erroneous assumption
Speaker 1: that Donald Trump is simply going to hand out the
Speaker 1: big jobs to the people who were with him through
Speaker 1: thick and thin. I'm not sure that's necessarily the case,
Speaker 1: and indeed, I think it would be a mistake because
Speaker 1: he has the opportunity to do what Richard Nixon did
Speaker 1: in sixty eight, which is to reach out to his opponents.
Speaker 1: Kissinger had repeatedly criticized Nixon. He was a Rockefeller loyalist.
Speaker 1: He'd been on Rockefeller's side through three unsuccessful bids for
Speaker 1: the Republican nomination, and he was astonished when Nixon offered
Speaker 1: him the bob of National Security Advisor. In fact, he
Speaker 1: was so surprised he didn't realize he'd been offered the job.
Speaker 1: He went to Rockefeller and said, what should I do?
Speaker 1: And Rockefeller said, are you crazy? It's the President of
Speaker 1: the United States who's or the President elect of the
Speaker 1: United States who has just offered you this job. You
Speaker 1: have to serve. And I think Trump should play that
Speaker 1: card in order to make sure that he is the
Speaker 1: strongest possible team on national security and on economic policy.
Speaker 1: Those are the things by which he is going to
Speaker 1: be judged, and I think if he relies only on
Speaker 1: Rudy Giuliani, Chris Christie new ging Rich and so forth,
Speaker 1: then I don't think the team, with all due respect
Speaker 1: to those gentlemen, will be strong enough. Remember, it's a
Speaker 1: huge challenge if you're a political outsider who's antagonized large
Speaker 1: sections of the Republican Party to staff an administration. Trump's
Speaker 1: biggest challenge right now will be persuading people that he
Speaker 1: is going to be a respectable president, somebody that they
Speaker 1: will be proud to have worked for. I think he's
Speaker 1: going to be able to do it, but he should
Speaker 1: take full opportunity, busy of this chance to reach out
Speaker 1: to people who criticized him, and I've seen him do that.
Speaker 1: I've actually been very struck by his magnanimous tone, the
Speaker 1: almost humble way in which he interacted with President Obama.
Speaker 1: I'm I'm relatively optimistic that the administration that emerges in
Speaker 1: the coming days will be a lot more mainstream, uh
Speaker 1: than the critics of the Trump campaign were predicting. There
Speaker 1: was this never Trump letter. There were letters from emissions
Speaker 1: and foreign policy experts and did you signed it as well? How? How?
Speaker 1: How never is never here? When you talk to folks
Speaker 1: who have signed that letter, you talked about bringing opponents
Speaker 1: on on board? Here one one time opponents on board? Here?
Speaker 1: Are they willing to bend? Are they willing to to
Speaker 1: backtrack on that? Would they be willing to serve in
Speaker 1: a Donald Trump administration? Well? I can't speak for other
Speaker 1: signatories of that letter. UM. I do recollect a recent
Speaker 1: conversation I had with some eminence military n and they
Speaker 1: were men who had distanced themselves or at least declined
Speaker 1: to be involved in the Trump campaign, but their view
Speaker 1: was that if called upon to serve by our president
Speaker 1: elect Trump, that was a different thing. Because when the
Speaker 1: President of the United States calls on you to serve,
Speaker 1: you don't really have a choice. It's your duty. And
Speaker 1: I suspect that there will be people civilians with experience
Speaker 1: of government who will take the same view that the
Speaker 1: never Trump letter back in March reflected. I think grave
Speaker 1: concern on the part of many foreign policy experts that
Speaker 1: things that Trump was saying, we're just crazy, dangerous and response.
Speaker 1: So let's do this. Let's come back and continue with
Speaker 1: Professor Ferguson, Professor Powder will join us in a moment worldwide,
Speaker 1: this is Bloomberg, David gerin time, keen with us, Neil Ferguson,
Speaker 1: and we just can continue on here after the most
Speaker 1: historic week. But you know, I really think for our
Speaker 1: audience worldwide, we need to drive forward to the winter
Speaker 1: in the spring of Europe. We have seen Brexit. You
Speaker 1: have been remarkably open and naked about how you got
Speaker 1: it wrong. We have seen the history of this America
Speaker 1: and now thinkers staggered Italy, they staggered to France. I
Speaker 1: don't know where else they stagger. I can't get up
Speaker 1: with the Netherlands. Help us here, neil is free. Zakaria
Speaker 1: beautifully put in foreign affairs with a cultural revolution of
Speaker 1: our populism. Well, I'm not sure cultural revolutions quite the
Speaker 1: right analogy. That was Mao's attempt to turn China's society
Speaker 1: upside down by unleashing the youth against uh, the establishment.
Speaker 1: This is something different because, of course, young voters were
Speaker 1: decisively defeated in both breaks Is and the US election. Uh.
Speaker 1: You know that the trouble about most of the instant
Speaker 1: after game analysis is that it misses key points. By emphasizing,
Speaker 1: for example, the role of of race in the election,
Speaker 1: a lot of commentators are missing the importance of class.
Speaker 1: They're also missing the importance of age. The thing that
Speaker 1: didn't matter too much, by the way, was gender. It
Speaker 1: didn't really matter that Hillary Clinton was a woman, because
Speaker 1: in fact she didn't win a majority of white female votes,
Speaker 1: but age mattered. In Europe, you have similar phenomena where
Speaker 1: older voters, more working class voters, male voters are looking
Speaker 1: at the world of globalization and multiculturalism and saying enough already.
Speaker 1: They have had enough of large scale migration, they have
Speaker 1: had enough of free trade, they have had enough of
Speaker 1: very free capital flows so on economics. They are ready
Speaker 1: for a backlash against globalization. At the same time, all
Speaker 1: over the Northern hemisphere they have had enough with multiculturalism.
Speaker 1: They're actually rather sick of feminism. There's a backlash going
Speaker 1: on here that is also cultural, but it's not a
Speaker 1: cultural revolution of the sort we saw in China in
Speaker 1: the nineties, sixties and seventies. This is actually a cultural
Speaker 1: revolution by older demographics against the fashions that appeal to
Speaker 1: the young. The lunacies that you see on American campuses
Speaker 1: these days that trigger warnings and safe havens, strike the
Speaker 1: people in main street in Middle America and their equivalents
Speaker 1: in Europe, but simply bonkers. And I think that's a
Speaker 1: very important part of what's going on in the populist
Speaker 1: wave we're seeing. It's a it's a populist ties and
Speaker 1: in each country you have a different wave. Noticed I
Speaker 1: said Northern Hemisphere, didn't I that's because populism is a
Speaker 1: spent force in the Southern hemisphere, especially in Latin America,
Speaker 1: where it's been tried and found not to work. A
Speaker 1: few people I can think of have wrestled with, reckoned
Speaker 1: with globalization as much as you have. What does globalization
Speaker 1: look like after January seventeen? Is it? Is it notionally different?
Speaker 1: After what we've seen in the UK, what we've seen
Speaker 1: here in the U S. Well, globalization has been in
Speaker 1: measurable declined since the financial crisis. I mean, if you
Speaker 1: just look at volumes of trade, if you look at
Speaker 1: capital flows, it really is it's past, it's its peak.
Speaker 1: And the question I guess we have to ask is
Speaker 1: just how much deglobalization is they're going to be? In
Speaker 1: other words, are we going to see a return to protectionism?
Speaker 1: Is Trump serious about tariffs some Chinese imports? How much
Speaker 1: is immigration going to be restricted? Those are the questions
Speaker 1: we need to ask. And I think it's helpful here
Speaker 1: to know some history. The world is full of people
Speaker 1: who only seem to know one period of history, and
Speaker 1: it's the nineteen thirties. So whatever happens, it's the nineteen thirties.
Speaker 1: They see a dictator, it's the nineteen thirties. There's stock
Speaker 1: market crash, it's the nineteen thirties. And this is not
Speaker 1: the nineteen thirties. In the nineteen thirties, unemployment rates got
Speaker 1: up into the twenty percent to thirty percent range and
Speaker 1: stayed there for years. We have practically full employment in
Speaker 1: the United States, which makes it kind of odd to
Speaker 1: talk about massive infrastructure investment. But hey, European economies have
Speaker 1: recovered from the crisis much more slowly. But the only
Speaker 1: country that really had a great depression type experience was Greece.
Speaker 1: Ain't no great depression going on in Germany, I can
Speaker 1: assure you. So let's stop drawing silly analogies with the
Speaker 1: nineteen thirties. Let's stop comparing the populace to Hitler and Mussolini. Please,
Speaker 1: I beg you don't do it, because it's the wrong analogy.
Speaker 1: The right analogy is with the last time globalization. Here
Speaker 1: to speed bump, which was in the late nineteenth century
Speaker 1: after the seventy three financial crisis, when all over the
Speaker 1: Northern hemisphere, populist movements sprang up that were against free
Speaker 1: trade and were against free migration, and they achieved quite
Speaker 1: a lot. They raised tariffs in the United States, they
Speaker 1: restricted immigration pretty drastically. Think of the eight two Exclusion Act,
Speaker 1: which ended Chinese immigration to the United States, and the
Speaker 1: populist wave lasted for somewhere in the region of ten
Speaker 1: or twenty years, and then it gave way to a
Speaker 1: progressive wave. And I think that's a much more illuminating analogy.
Speaker 1: I've said this ad nauseum. I want to say it
Speaker 1: to your listeners. Donald Trump is not a fascist. He
Speaker 1: is a populist. Fascists invade countries, they do war. Populists
Speaker 1: do drug wars. They build walls, that's what they do.
Speaker 1: We are out of time, you know. Ferguson, thank you
Speaker 1: so much, most generous of you this morning to be
Speaker 1: with us from our London studios. David Gern, Tom Keane
Speaker 1: a Friday to regroup and get to the weekend into
Speaker 1: Monday morning. Stay with us worldwide. This is Bloomberg. Can
Speaker 1: we say, David, thank you to our guests led by
Speaker 1: Professor for repeated visits and lengthy visits. They have things
Speaker 1: to do during the more not really and we're who
Speaker 1: You're honored the villa here, David, why don't you start
Speaker 1: with the lan powder this morning? Well, let me get
Speaker 1: your reaction. First of all, we were talking a few
Speaker 1: days ago ahead of this election and the scenarios that
Speaker 1: most were predicting here were different from the one that
Speaker 1: we we saw coming to play on on Tuesday night.
Speaker 1: Your reaction here to to what we've seen, maybe not
Speaker 1: from the political perspective, but well, in addition to UH
Speaker 1: Trump as president, the Republicans have control of both so
Speaker 1: they will be able, they should be able to pass
Speaker 1: some kind of stimulus fiscal stimulus at some point, UH
Speaker 1: if you'll have the mind effects, ganging effects, and hopefully
Speaker 1: if it's targeted well, will help attential output a bit
Speaker 1: as well. This means higher interest rates uh uput sloping
Speaker 1: Yold curve effects on equity and principle and vegas because
Speaker 1: the fiscal stimulages in the future, so brates go up,
Speaker 1: but of course profits go up in the future as well,
Speaker 1: so the markets have decided that the stimulus outweighs the
Speaker 1: rate effects, so the stock market has gone whoop. See
Speaker 1: also partly driven by expectation of deregulation in key industries
Speaker 1: like energy, environmental angle here and financial sector and possibly
Speaker 1: some others. So all that seems to be drowning out
Speaker 1: the uncertainty that we're still feeling at the moment about
Speaker 1: both the the team and the politics which is negative
Speaker 1: for for demand, and of course the fear of protectionism,
Speaker 1: trade wars, and aggressive and immigrant policies which are all negatives.
Speaker 1: But no doubt that on balance the future looks higher
Speaker 1: interest uh so, higher inflationary pressures and most likely also
Speaker 1: higher levels of GP grows in the short run because
Speaker 1: of the anticipated fiscal stimulus if and when it happens.
Speaker 1: You're navigating that ambiguity. Investors are navigating at the Fed
Speaker 1: Reserve navigating as well as as as you said, what
Speaker 1: does this mean for for the rate hike timetable here
Speaker 1: as policymakers wait to see what in fact will come
Speaker 1: out of Capitol Hill, I don't think it make most difference. UM.
Speaker 1: Clearly UM. There is addition uncertainty, which is the only
Speaker 1: thing that we observe immediately. But there also is the
Speaker 1: expectation that this is not enough to send the economy
Speaker 1: into a downturn, and we can anticipate the fiscal stimulus
Speaker 1: coming online beginning with the tax cut sometime next year,
Speaker 1: followed by UM infrastructure spending. So I think the fact
Speaker 1: will just go ahead and do what it was planning
Speaker 1: to do and raising in December and a couple more
Speaker 1: times next year or more if the fiscal stimulus should
Speaker 1: be earlier and larger than expected. The scize matter, this
Speaker 1: composition matter when it comes to that infrastructure package. Absolutely um.
Speaker 1: The size of course matter because that's a demand effect immediately.
Speaker 1: Timing also matters. I mean that I don't know how
Speaker 1: many shop of any projects there are, and the composition
Speaker 1: was well, it's possible to select infrastructure project, especially in
Speaker 1: the country that has been staffed the infrastructure investment for
Speaker 1: the last forty years and has the worst infrastructure in
Speaker 1: the advanced economy. The returns can be enormous and they
Speaker 1: could pay for themselves unfortuately. In practice, a lot of
Speaker 1: infrastructure is wasted because it has to go through political filters.
Speaker 1: It's often done at the state and local level with
Speaker 1: federal files. There is another good news. I got a
Speaker 1: memo from John Tucker about two am this morning. He said,
Speaker 1: thrilled the villain powders on time. Can you be sure
Speaker 1: to expand further your Hicksie and SLM discussion of last week? Yeah,
Speaker 1: because I didn't think enough people were listening. One of
Speaker 1: the high points last week with Professor Powder was to
Speaker 1: look at the geometry. The professionals like Mr Bowder look
Speaker 1: at two try to describe the linkage of policy with
Speaker 1: his economics professor powder to and slate. President elect Trump
Speaker 1: is going to an effect the stimulus, some would, let say,
Speaker 1: much like what President elect Clinton would have done and
Speaker 1: shift the I S curve to the right in a
Speaker 1: desperate move for greater economic growth and greater output. When
Speaker 1: that occurs, the I S curve moves and the other curve,
Speaker 1: the money curve, the L M curve move and things happen.
Speaker 1: And as you know, there's a massive uncertainty and ambiguity
Speaker 1: to what will happen down the road. What does he
Speaker 1: need to do to do stimulus and get us to
Speaker 1: a better outcome to three and four years down the road?
Speaker 1: John Tucker nodding, well, from a capacitilization perspective, only a
Speaker 1: modest stimulus best is needed in the US. Unlike all
Speaker 1: the parts of the world, the US is very near
Speaker 1: full employment and uh for capacitilization, there's still some room.
Speaker 1: But a modest and intelligently designed fiscal stimulus with the
Speaker 1: tax cuts targeted and those actually like it is spended.
Speaker 1: It means low income groups, which is also distribution ly,
Speaker 1: I think more attractive, and then infrastructure spending in one
Speaker 1: of the many areas where the US needs its capacity
Speaker 1: to become stronger. But of course potential output grows labor
Speaker 1: fourth grows proactivity growth that is very unlikely to be
Speaker 1: affected in a material way unless in addition to much
Speaker 1: larger increase in infrastructure spending, which could even be uh
Speaker 1: tax finance. Because it's potential output we're looking at. Um,
Speaker 1: there has to be an improvement in the quality of
Speaker 1: labor and in in private cap First. Krugman, who has
Speaker 1: written numerous times on John Hicks in a model nine,
Speaker 1: would suggest go back to basic models. You and others
Speaker 1: have said the world's changed. If the world has changed,
Speaker 1: for President elect Trump, how does he take Washington policy
Speaker 1: and make for a better America When, as you mentioned,
Speaker 1: productivity is not there. Um the demand management it is
Speaker 1: not the primary concerns for the US economy. Right. Yes,
Speaker 1: we can do as a bit of a fiscal stimulus
Speaker 1: multi policy basically from a bit but from a demand perspective,
Speaker 1: From a supply perspective, we need a lot of infrastructure spending.
Speaker 1: We need intelligence, taxual structuring, we need intelligence design, de regulation,
Speaker 1: and we need an open immigration policy that brings the
Speaker 1: talent that America cannot produce in time domestically available. And
Speaker 1: we need of course great emphasis and education occasional training.
Speaker 1: These are also by side measures. They take time and
Speaker 1: they don't come out of you across the board. Price
Speaker 1: of this in FOLKUS has been a lot of great
Speaker 1: research on this recently. An Ambrose Evans Bridget as usual,
Speaker 1: summed it up beautifully yesterday in the Telegraph. The outcome
Speaker 1: of this has to be strong dollar. Right when you
Speaker 1: talk to Steve Englander, I'm sorry, it's a dollar up
Speaker 1: is a dollar big, which diminishes the advantages the Republicans
Speaker 1: could give us. Inevitably, when you have a fiscal stimulus
Speaker 1: which puts up for pressure on capacitalization and on inflation,
Speaker 1: if you also allow them for the likely response of
Speaker 1: the Fed to this, the higher rate, you're going to
Speaker 1: get stronger dollar out of that. And that is one
Speaker 1: of the ways in which actual demand is reconciled with
Speaker 1: limited potential output right, because it will discourage external demand
Speaker 1: through the through the stans of the dollar, which will
Speaker 1: offset a part of the fiscal statements. That's away economies
Speaker 1: equilibrate um. If there was massive unemployment in the US
Speaker 1: very low compaculilization, then you could have a serious stimulus
Speaker 1: without necessarily any any crowding because the FED would not respond,
Speaker 1: and effect on long term rates would also be momodels
Speaker 1: on the exchange trade. But we're not there. The US
Speaker 1: is not an economy that suffers from a big changent
Speaker 1: problem at the moment. It suffers from a lousy supply side.
Speaker 1: When you think about in forecast would effect a stimulus
Speaker 1: package like this might have. How do you weigh what
Speaker 1: Donald Trump has said about trade, what he might do
Speaker 1: with regard to trade, the risk here of trade wars
Speaker 1: with Mexico and China, how that might affect the economy overall.
Speaker 1: In other words, that could certainly dampen the effects of
Speaker 1: the stimulus. If the actual statements that he has made
Speaker 1: during the campaign for punitive tariffs on China, twenty five
Speaker 1: of Mexico, other ten to aggressively bring UH jobs back
Speaker 1: to the to the U S, that would be a
Speaker 1: huge US negative vert to materialized in terms of activity,
Speaker 1: because there would be foreign retaliation and we could have
Speaker 1: a review of the thirties. I don't see this is
Speaker 1: going to happen. I think this was a part of
Speaker 1: the electoral rhetoric which bears very relation to what actually
Speaker 1: will happened. But also both the Canadians and the Mexicans
Speaker 1: have already said yes, we're happy to talk, and this
Speaker 1: is just the opening of what will be long term
Speaker 1: trade and foreign direct investment. Enough that type negotiations that
Speaker 1: will no good last years, but that end that the
Speaker 1: result in some more protectionism, but very modest. Same for China.
Speaker 1: I don't think that either China or the US are
Speaker 1: really interested in having a major trade ding dong. They
Speaker 1: are the two largest nations in the world, uh, the
Speaker 1: two largest raiding nations in the world, so they have
Speaker 1: a lot to lose. For a long time, many months now,
Speaker 1: we've had conversations about the role of central banks. Now
Speaker 1: you have a Republican Congress, Republican House, Republican Senate that
Speaker 1: has not been shy about saying they intend to reign
Speaker 1: in the powers of the Federal Reserve tie inflation at
Speaker 1: sorry thie interest rate hikes to to the tailor rule,
Speaker 1: and etcetera. When you look at the role of the
Speaker 1: the Fed here under a Trump presidency, how constricted do
Speaker 1: you think it will be by Congress? Oh, it depends
Speaker 1: on whether Congress legislator the kind of insanity that they
Speaker 1: were proposing, like the constraint the FED to follow a
Speaker 1: numerical tailor rule of some kind or whatever other rule. Now,
Speaker 1: I think operational independence for monetary policy, narrowly defined interest rates,
Speaker 1: banastete expansion um. Now that has to remain there. If
Speaker 1: that goes, then be be brilliant trouble, and I think
Speaker 1: it would be usually market negative. And now we digress
Speaker 1: chair yelling. I would guess Professor Powder will serve a term.
Speaker 1: And of course the parlor game of who would be
Speaker 1: another FED chairman has come up, and of course the
Speaker 1: name of public service esteemed is John B. Taylor Stanford.
Speaker 1: He would bring in a regime of a more rules
Speaker 1: and stringent based approach. Give us an update on rules
Speaker 1: versus discretion right now. Chairman Greenspan the other day made
Speaker 1: it clear he still stands with discretion. Can President elect
Speaker 1: Trump shift US towards a rules based New Zealand like
Speaker 1: Fellow Reserve? The New Zealand Fellow Reserve is not rules
Speaker 1: based in any mechanical sense. Rules and discretion and all
Speaker 1: alternatives you cannot have a complete rule that allows for
Speaker 1: all contingency said tells you how you should respond with
Speaker 1: your instruments interest rates que e q que to all
Speaker 1: paeseeable circumstances. So that always has to be discretion in
Speaker 1: the sense that things will occur that we're not allowed
Speaker 1: for unexpected events and you still have to act. So
Speaker 1: but all you can do is try to give the
Speaker 1: most guidance information about your objectives. And that's a clear
Speaker 1: from um the peder Reserve Act and from the qualtitative
Speaker 1: implementationals that the two percent inflation target and how you
Speaker 1: view the transmission mechanism as a policy making and then
Speaker 1: the markets can sit back and figure out how you're
Speaker 1: likely to act. I just ask that question because I
Speaker 1: wanted to get the fired up into cold new garden.
Speaker 1: Villain Bowder, thank you so much, not only for today, professor,
Speaker 1: but for joining us over the recent weeks. Just extraordinary
Speaker 1: to have you in here and in coorse in this
Speaker 1: historical moment. I believe we got through that without talking
Speaker 1: about the Netherlands, the United Kingdom, that was root of us.
Speaker 1: Villain Bouder is a chief economist with City Group who
Speaker 1: you put your trust in matters. Investors have put their
Speaker 1: trust in independent registered investment advisors to the tune of
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Speaker 1: us Now Robert Sinch. We caught him in the backyard.
Speaker 1: He's out like on the back forty acres raking. And
Speaker 1: what's important, David Girl to understand. As you'd expect a
Speaker 1: guy like you know, since to have the Gardinia combas system,
Speaker 1: spring wire rake. You know, you'd think you'd be more
Speaker 1: like organic and quiet. He's out there manning it with
Speaker 1: a husk of viron, a tech flower. That's money. How
Speaker 1: are the leaves this year? Bob Sinch? You know, Tom,
Speaker 1: you do some great thinking when you're doing manual labor.
Speaker 1: That so some of my some of my better ideas
Speaker 1: over the years have come doing doing mine somewhat somewhat
Speaker 1: mindless tasks. Bob Sinch has on a kitchen wall. Folks,
Speaker 1: the list of things he's been wrong on and it's
Speaker 1: time for a victory lap. You got halfway to a
Speaker 1: one thirty sterling and I think like eight or nine
Speaker 1: or ten days one sixty six on sterling, Bob Sinch
Speaker 1: is extraordinary. How does that destabilize the political economic dialogue
Speaker 1: for Prime Minister may Well, I'll point out one other
Speaker 1: thing Tom, just in that in that context is that
Speaker 1: this is a stronger sterling against the dollar in the
Speaker 1: context of a much stronger dollar. So this really is
Speaker 1: a pretty significant rebound for sterling. Um. I guess, I
Speaker 1: guess part of it is, uh, you know, the court process,
Speaker 1: the UK dragging on a little bit longer on the
Speaker 1: Brexit process than people have expected. Um. I also think
Speaker 1: the markets have found a different whipping boy to uh
Speaker 1: to tick on in terms of the currency markets. Obviously,
Speaker 1: the the pay so now is the one that's uh,
Speaker 1: the most favorite trade. But I do think, uh, what's
Speaker 1: happening to sterling is a little bit instructive about the
Speaker 1: pay so right. When you get these discrete events that
Speaker 1: surprised the markets. Um, there's a big reversal of positions.
Speaker 1: That's the nature of surprises and markets because positions were upset,
Speaker 1: and there's an overshoot, and I think that's what happened
Speaker 1: in Sterling, and at some point that will happen in
Speaker 1: the pace three standard deviations on twelve months or so
Speaker 1: pay so chart right now, Bob Sinch, If I look
Speaker 1: at weaker pay so to a person, everyone's rationalizing the move.
Speaker 1: I don't buy it. Currency depreciation to a nation is
Speaker 1: just that a depreciation. What is the effect to the
Speaker 1: people of Mexico of a weaker pay so. You know,
Speaker 1: we've seen Mexican inflation higher than the global average UM. Now,
Speaker 1: fortunately it's only been about three and a half percent
Speaker 1: or so. Interestingly, we've seen wages increasing about four and
Speaker 1: a half percent or so in Mexico, so actually real
Speaker 1: wages have been holding relatively steady. It's not clear that
Speaker 1: will be the case going forward. It's not clear that
Speaker 1: wage rates can keep up with what's going to happen
Speaker 1: to higher prices, particularly for imported goods. But you know,
Speaker 1: but in general, a currency depreciation UM is pretty devastating
Speaker 1: for a population, particularly um uh in in developing economies
Speaker 1: where the investment in banking sectors maybe aren't as mature,
Speaker 1: and people in general don't have ways to protect themselves.
Speaker 1: And I think that's you know what we're going to
Speaker 1: see a little bit in in Mexico going forward. We
Speaker 1: were focused on the optics yesterday, Bob of the President
Speaker 1: elect meeting with the President, going to Capitol Hill talking
Speaker 1: about a legislative agenda with the Speaker of the House
Speaker 1: and the Senate Majority leader. What do we what do
Speaker 1: we watch and what are we listening for here in
Speaker 1: the coming days? As as you as you think about
Speaker 1: how far the pacer might fall, well, I think the
Speaker 1: first thing we're listening for is normalcy. Um. And I
Speaker 1: think that that you know, I think President Obama has
Speaker 1: has has told us that very well, this is an
Speaker 1: orderly transition of power. These things happen. Not everybody's happy. Um.
Speaker 1: The pace so I think in the short run has
Speaker 1: gotten caught in sort of a trifecta. Right. The FED
Speaker 1: now extremely likely to high grates in December. So that's
Speaker 1: a negative for the pay so positive for the dollar. Second,
Speaker 1: oil prices have begun to retreat. We just had to
Speaker 1: report from the i e. A that non Opec production
Speaker 1: is going to be probably a bit a bit stronger,
Speaker 1: like a half a million barrels a day stronger than
Speaker 1: than this year, UM, and that's put some downward pressure
Speaker 1: on oil prices UH. And third, all the uncertainties surrounding
Speaker 1: what the trade relationship will be between Mexico and UH
Speaker 1: in the US. So in a sense sort of the
Speaker 1: fundamental backdrop from Mexico is even more serious than it
Speaker 1: is for than it was for the UK. And I
Speaker 1: think we would have seen downward pressure on the Paso
Speaker 1: here because of oil prices and higher US rates UM,
Speaker 1: even if even if the election outcome had been different,
Speaker 1: probably not as serious, not record lows, but certainly that
Speaker 1: the fundamentals are not there too for anyone to step
Speaker 1: in and say, hey, these are great levels for me
Speaker 1: to buy the pace, Bob, thank you so much. We'll
Speaker 1: let you get back to your work on the lower
Speaker 1: forty with the Huska Varna e Tech CCS engine. John Tucker,
Speaker 1: that's like it's pretty good. Now, that's not gonna do it.
Speaker 1: I mean, that's like moving. That's that's for rookies, rookie stuff.
Speaker 1: Chris Folks, I'm so adept. When was the last time
Speaker 1: I picked up a garden to old John Tucker? Nixon? Ris, President,
Speaker 1: did you continue strong with our guests on Disney way
Speaker 1: out front with caution. The headline is a fourth quarter stumble.
Speaker 1: Rich Greenfield thinks it's more than a stumble used with
Speaker 1: B T, I G. I get ESPN, But Disney is Disney,
Speaker 1: or is it not? Give us an update? Look, ESPN
Speaker 1: is fort of Disney's operating earnings or the cable network
Speaker 1: division is fort of Disney's operating earnings, of which ESPN
Speaker 1: is by far the biggest part. And an ESPN is
Speaker 1: really struggling to grow. I mean that's the headline here,
Speaker 1: is that ESPN is facing growth challenges. It's got, you know,
Speaker 1: growing costs, and its revenue growth is slowing. Ratings are
Speaker 1: a disaster. I mean, no one's watching Sports Center. NFL
Speaker 1: ratings are down sharply. They've got challenges, real challenges when
Speaker 1: they look ahead to their business. And I don't think
Speaker 1: consumers are coming back to multi channel, live linear television.
Speaker 1: I think there's just a new world out there. Earned
Speaker 1: everything we see industry wise points to more and more
Speaker 1: people choosing actively not to pay for television. Rich, what
Speaker 1: have the comments that John Malone made yesterday at the
Speaker 1: deal Book conference here in Manhattan, saying he speculated that
Speaker 1: Disney may want to divest itself of ESPN. You know, look,
Speaker 1: you know we thought a lot about, you know, how
Speaker 1: would you fix Disney's problems, and you know, you could
Speaker 1: almost undo I remember when I went to Goldman Sachs
Speaker 1: for the first month I was there, Disney bought cap
Speaker 1: Citi's ABC, and they got this little hidden gem at
Speaker 1: the time called ESPN that ended up obviously being the
Speaker 1: juggernaut of that transaction that was obviously twenty two years ago.
Speaker 1: And you you look back and you go, you know,
Speaker 1: would it make sense to spin it off now and
Speaker 1: separate ESPN from Disney. It doesn't sound like the company
Speaker 1: has any desire to do that. You know, Disney last
Speaker 1: night basically said Bob Iger of Disney last night said
Speaker 1: he feels more confident in ESPN's future than investors. So
Speaker 1: that doesn't sound like someone was about to spin it off.
Speaker 1: That being said, you know, a strategic change that Disney
Speaker 1: probably would make a lot of sense given the chan
Speaker 1: lenges they're facing. Rich I eavesdrop on the subway heard
Speaker 1: a couple of guys talking about how saturated the football
Speaker 1: season has become, how many football games there are, how
Speaker 1: much of this has to do, just with the fact
Speaker 1: that the NFL is giving us too much to watch.
Speaker 1: You know, I don't know, it's it's one of those
Speaker 1: things where I can't really put my finger on why
Speaker 1: ratings are are as weak as they are. People complaining
Speaker 1: about the officiating, people complain about the amount of commercials.
Speaker 1: You know. Look, you look at epl over in Europe.
Speaker 1: You know Premier League, which is one of SIS favorite
Speaker 1: things in the whole world. Um, you know, Premier League
Speaker 1: ratings are down in the UK and there's no commercials.
Speaker 1: So I don't know if it's a commercial issue. I
Speaker 1: don't know if it's purely an election issue because you're
Speaker 1: dead TV. This is something, there's something going you know.
Speaker 1: It's not a tune in problem here. Here's the issue.
Speaker 1: Tune into its football is actually flat year over year.
Speaker 1: The problem is tune out as soon as something is boring.
Speaker 1: You have so many choices. Everyone that's listening to your show,
Speaker 1: they're not to just watch a boring game. They can
Speaker 1: go do Netflix, they can go watch video games on Twitch. Like.
Speaker 1: You have an infinite number of options. And I just
Speaker 1: think at some point there's a breaking or tipping point
Speaker 1: we gotta do Twitch Tom, that's what's Rich Greenfield, thank
Speaker 1: you so much. We'll get you in for a much
Speaker 1: longer time here, Rich Greenfield. Bat. I think one of
Speaker 1: the options is to watch Fox. Brett Bear scored special
Speaker 1: report with Brett Bear. Brett Dunwoodie, Georgia. You can go
Speaker 1: out to the kingswood United Methodist Church, the Kingsley Elementary School,
Speaker 1: you can go down Leon Wilmack Road to the Dunwoody
Speaker 1: Library and you can vote. My perception, Brett Bear, there's
Speaker 1: lots of people nodded politely or even paid lip service
Speaker 1: to the zeitgeist, and they went in the voting booth
Speaker 1: and they voted with a vengeance for Mr Trump. What
Speaker 1: have you learned in the last two days? Yeah, good morning.
Speaker 1: I think you're exactly right, Tom, I think and not
Speaker 1: only that, but they came out and they didn't tell
Speaker 1: the exit polers um, you know, they didn't talk to him,
Speaker 1: and when they said, you know, who would you vote before,
Speaker 1: they didn't say And that skewed the results in a
Speaker 1: number of states. And we realized midnight, you know, like
Speaker 1: during the night, about nine o'clock, the raw vote total
Speaker 1: was not lining up with the Asian pole numbers, and
Speaker 1: that's when we realized that you could have a president
Speaker 1: Donald J. Trump and just a surveillance. Shout out to
Speaker 1: Mr Bear's colleagu Chris Wallace, who actually allowed for a
Speaker 1: true debate to occur in the third debate. You wonder,
Speaker 1: as we look back at history, folks, how that changed
Speaker 1: the dialogue You went on George Will last night. I
Speaker 1: think as essay in the Washington Post is the single
Speaker 1: best thing so far. He talks about demographics against the Republicans.
Speaker 1: In two thousand and twenty six, Brett Berry, your Georgia
Speaker 1: will be minority dominant. Mr Wills writing about not the
Speaker 1: end of the Republican Party, but a Republican Party in
Speaker 1: ascendency that has to wake up. How urgent is it?
Speaker 1: It's urgent, But I'm hearing that there's going to be
Speaker 1: a President Trump that acknowledges that and deals with it.
Speaker 1: I'm hearing that, in addition to passing a slew of
Speaker 1: economic bill rolls through an anxious and happy, excited Paul
Speaker 1: Ryan Um that he may President Trump may travel to
Speaker 1: these inner cities, uh and and speak to the problems
Speaker 1: of African American communities that have been left behind and
Speaker 1: if that happens, and if that message seeps in and
Speaker 1: stuff starts to change, you could have the Republican Party
Speaker 1: fighting back to be a fly on the wall in
Speaker 1: the Oval Office. Yesterday when Donald Trump sat down with
Speaker 1: Barack Obama the first time the two men had met,
Speaker 1: a meeting schedules over tennis, David talks. Has the Oval
Speaker 1: Office wired? But you think of the history that these
Speaker 1: two men have, again, a history that that was something
Speaker 1: that played out, uh during in speeches during during debates,
Speaker 1: they hadn't met before. What did you make of of
Speaker 1: how they looked what they said yesterday in that pool
Speaker 1: spray following the meeting yesterday at the White House. Yeah,
Speaker 1: I mean the words were good. I thought the image
Speaker 1: was interesting. I thought, you know, Donald Trump, a humble
Speaker 1: Donald Trump as he kind of looked. Um, I think
Speaker 1: there's going to be a period here where, first of all,
Speaker 1: the job and the the import of the job is
Speaker 1: going to sink in and um, there's a lot to absorb.
Speaker 1: He has his first presidential daily brief this morning, Donald
Speaker 1: Trump does, and um, there's it's it's a huge job.
Speaker 1: And I think the enormity of it. I think he
Speaker 1: saw in his face and and for President Obama, I
Speaker 1: think it was magnanimous and gracious, and I think he's
Speaker 1: he's being accurate when he says he wants the transition
Speaker 1: to be smooth. I spoke with with former Congressman Eric
Speaker 1: Cantor the day after the election, and I said, this
Speaker 1: must be great for for the incoming president. He's got
Speaker 1: a Republican House, he's got a Republican Congress. And what
Speaker 1: Congressman Cantor said to me is, you've got a real
Speaker 1: tension within the House. Especially there's this Kansie and push
Speaker 1: here for for stimulus, a lot of Republicans going along
Speaker 1: with that, but then there are Republicans who are champions
Speaker 1: of fiscal responsibility, and he doesn't think that it's all
Speaker 1: said and done here. What's what's your sense of how
Speaker 1: cohesive the Republican Party is going to be in the
Speaker 1: in the House especially, Yeah, I think it's a great point.
Speaker 1: I mean, you've got the White House, you've got the House,
Speaker 1: you've got the Senate. You just don't have any excuses,
Speaker 1: there's no excuse to get what you want to get through,
Speaker 1: and there is a break. I do think that they're
Speaker 1: going to be going to be able to herd the
Speaker 1: cats because there has been this cloud over Republicans where
Speaker 1: they feel like they are just spinning awhee, Okay, many
Speaker 1: years then there's gonna be a cup of coffee between
Speaker 1: the gentleman from the Navy in Arizona, Mr McCain and
Speaker 1: President elect Trump or President Trump. UM, tell me about filibuster,
Speaker 1: Brett Berry, you're a lot more wired into filibuster dynamics
Speaker 1: than I am. Is Mr McCain and others going to
Speaker 1: enjoy the art of filibuster? I don't think so. I
Speaker 1: think they're going to try to get to the things
Speaker 1: that they can get through first, and then they're going
Speaker 1: to kind of deal with the others. Doff. Now, remember
Speaker 1: you have five Democrats up for red seat re election
Speaker 1: uh in two years. They're going to be a lot
Speaker 1: more willing to work with Republicans than than before. News
Speaker 1: broke yesterday that the White House is going to push
Speaker 1: for an element of Donn Frank to go through here.
Speaker 1: These are bonuses on financial service caps, on bonuses for
Speaker 1: financial services professionals. What else do you expect we'll see
Speaker 1: here during this lame duck session. If there's not a
Speaker 1: whole lot of movement in Congress. What do you think
Speaker 1: the White House is going to try to get done
Speaker 1: before January? Boy, I can't imagine anything of of significance
Speaker 1: getting through. Um I I really don't even think that
Speaker 1: there's going to be much at all. You know, obviously,
Speaker 1: if it was a President Clinton, it was going to
Speaker 1: they were going to try to move Marck Garlan. But uh,
Speaker 1: none of that is moving Red Bear, thank you so much.
Speaker 1: Special report with Red Bear, And of course we have
Speaker 1: our Sunday shows. We are thrilled to bree you the
Speaker 1: work of the morning Bloomberg Radio in the afternoon, all
Speaker 1: the different Sunday in the show's Fox News Sundays. For
Speaker 1: listening to the Bloomberg Surveillance podcasts, subscribe and listen to
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Speaker 1: I'm out on Twitter at Tom Keene. David Gura is
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