1 00:00:05,800 --> 00:00:08,720 Speaker 1: Welcome to the Bloomberg p m L Podcast. I'm pim Fox. 2 00:00:08,760 --> 00:00:11,520 Speaker 1: Along with my co host Lisa Bramowitz. Each day we 3 00:00:11,640 --> 00:00:15,120 Speaker 1: bring you the most important, noteworthy, and useful interviews for 4 00:00:15,200 --> 00:00:17,840 Speaker 1: you and your money, whether you're at the grocery store 5 00:00:17,960 --> 00:00:20,720 Speaker 1: or the trading floor. Find the Bloomberg p m L 6 00:00:20,840 --> 00:00:32,840 Speaker 1: Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot com. Today, 7 00:00:32,880 --> 00:00:37,400 Speaker 1: President Trump's administration unveiled its plans to dramatically weakened pollution 8 00:00:37,600 --> 00:00:41,440 Speaker 1: limits on coal fired power plants by shifting most of 9 00:00:41,440 --> 00:00:45,560 Speaker 1: the regulatory burden to states. This basically is another way 10 00:00:45,600 --> 00:00:49,519 Speaker 1: to basically foster the coal industry, as President Trump has 11 00:00:49,560 --> 00:00:51,680 Speaker 1: promised to do. Here to talk a little bit about that, 12 00:00:51,720 --> 00:00:54,640 Speaker 1: as Ethan Zindler ahead of America's for Bloomberg any f 13 00:00:55,000 --> 00:00:57,720 Speaker 1: coming to us from Washington, d c. Ethan, thank you 14 00:00:57,760 --> 00:00:59,800 Speaker 1: so much for joining us. So can we just start 15 00:00:59,800 --> 00:01:02,600 Speaker 1: with an overview of what exactly President Trump's administration is 16 00:01:02,640 --> 00:01:05,080 Speaker 1: trying to do here. So first and foremost, there was 17 00:01:05,120 --> 00:01:08,080 Speaker 1: an effort under the Obama administration called the Clean Power 18 00:01:08,160 --> 00:01:11,160 Speaker 1: Plan that would have set a national goal of reducing 19 00:01:11,200 --> 00:01:14,360 Speaker 1: CEO two missions from the power sector. The goal was 20 00:01:14,400 --> 00:01:19,319 Speaker 1: to cut CEO two emissions by twenty thirty. We're very 21 00:01:19,360 --> 00:01:23,360 Speaker 1: actually very far along towards that goal already. But the 22 00:01:23,360 --> 00:01:26,479 Speaker 1: new rule, which was essentially has now been rolled out 23 00:01:26,520 --> 00:01:30,520 Speaker 1: by the Trump administration UH sets no specific long term 24 00:01:30,560 --> 00:01:34,559 Speaker 1: goals for CEO two emissions and essentially says states, you guys, 25 00:01:34,600 --> 00:01:36,560 Speaker 1: go away and figure out how much you want to 26 00:01:36,600 --> 00:01:40,959 Speaker 1: do on your own to try to address CEO two reductions. Okay, 27 00:01:41,120 --> 00:01:44,080 Speaker 1: So just to give a sense, and this is something 28 00:01:44,080 --> 00:01:46,600 Speaker 1: that you noted that as of the end of last year, 29 00:01:46,640 --> 00:01:51,360 Speaker 1: the US already achieved pent UH CEO two reductions that 30 00:01:51,400 --> 00:01:53,560 Speaker 1: had aimed to reach by In other words, it was 31 00:01:53,600 --> 00:01:56,520 Speaker 1: really ahead of schedule. And I'm wondering how much does 32 00:01:56,600 --> 00:01:59,640 Speaker 1: President Trump's how much too, is President Trump's actions set 33 00:01:59,720 --> 00:02:03,040 Speaker 1: us back or do they have no impact whatsoever. Well, 34 00:02:03,040 --> 00:02:05,560 Speaker 1: this is one of those stories, and especially someone here 35 00:02:05,560 --> 00:02:08,240 Speaker 1: in Washington, which is I think you know, gets a 36 00:02:08,240 --> 00:02:12,200 Speaker 1: lot of attention, justifiably because it represents the perspective of 37 00:02:12,200 --> 00:02:15,200 Speaker 1: the administration and the way they view climate and frankly, 38 00:02:15,200 --> 00:02:17,720 Speaker 1: whether they care about climate at all, which is unclear. 39 00:02:18,680 --> 00:02:20,960 Speaker 1: But it's very important to put this in the larger 40 00:02:21,000 --> 00:02:23,400 Speaker 1: context of the trends that are going on in the 41 00:02:23,440 --> 00:02:26,639 Speaker 1: power sector anyway, And as I mentioned, you know, we've 42 00:02:26,680 --> 00:02:30,679 Speaker 1: reduced our missions from two thousand five levels already as 43 00:02:30,720 --> 00:02:34,000 Speaker 1: of your end two thousand seventeen. Our view is that 44 00:02:34,040 --> 00:02:38,040 Speaker 1: the US power sector will continue to de carbonize. Natural 45 00:02:38,080 --> 00:02:42,000 Speaker 1: gas is cheap, renewables are cheap, and essentially coal is 46 00:02:42,000 --> 00:02:46,200 Speaker 1: getting phased out, and frankly, this regulation probably won't change 47 00:02:46,240 --> 00:02:50,600 Speaker 1: that in any substantial way. So symbolically it's important, But 48 00:02:50,639 --> 00:02:53,400 Speaker 1: as far as the market's concerned, UH and as far 49 00:02:53,440 --> 00:02:56,400 Speaker 1: as the US emissions path is concerned, from the power sector, 50 00:02:57,160 --> 00:02:59,120 Speaker 1: at least an our view is not likely to make 51 00:02:59,160 --> 00:03:01,000 Speaker 1: a big difference. Can you give us any update on 52 00:03:01,040 --> 00:03:03,239 Speaker 1: the coal industry and whether there has been an increased 53 00:03:03,280 --> 00:03:07,000 Speaker 1: in UH in jobs there or an increase in profitability 54 00:03:07,080 --> 00:03:09,640 Speaker 1: since President Trump took office. I'm looking right now at Peabody, 55 00:03:09,680 --> 00:03:12,320 Speaker 1: for example, one of the big US coal companies. Their 56 00:03:12,360 --> 00:03:15,000 Speaker 1: shares are up more than this year, so they are 57 00:03:15,040 --> 00:03:18,920 Speaker 1: beating the broader large indexes. Well, it's all it's all 58 00:03:18,960 --> 00:03:20,919 Speaker 1: relative to I mean, take a look at where they were. 59 00:03:21,440 --> 00:03:25,680 Speaker 1: They were there fair enough and and I think generally speaking, 60 00:03:25,760 --> 00:03:27,760 Speaker 1: you know, I think there's been plenty of sort of 61 00:03:28,000 --> 00:03:31,680 Speaker 1: favorable publicity around the coal industry with this administration saying 62 00:03:31,720 --> 00:03:33,600 Speaker 1: they want to do more things, and they are taking 63 00:03:33,600 --> 00:03:36,600 Speaker 1: a number of regulatory steps to try to be supportive. 64 00:03:36,640 --> 00:03:40,080 Speaker 1: But but our general view is that the economics are 65 00:03:40,120 --> 00:03:42,760 Speaker 1: the economics, and gas is very cheap in the US, 66 00:03:43,080 --> 00:03:45,080 Speaker 1: and the consensus view is that it's going to stay 67 00:03:45,160 --> 00:03:47,720 Speaker 1: cheap for a very long time. Renewable prices have been 68 00:03:47,760 --> 00:03:51,320 Speaker 1: down substantially, and with the text credits to support them, 69 00:03:51,640 --> 00:03:54,760 Speaker 1: they also undercut coal. So it's hard to see the 70 00:03:54,880 --> 00:03:59,520 Speaker 1: US coal power sector making a major rebound regardless of 71 00:03:59,560 --> 00:04:01,400 Speaker 1: these very US efforts. You know, I want to put 72 00:04:01,440 --> 00:04:03,320 Speaker 1: you on the spot here and talk about the flip 73 00:04:03,360 --> 00:04:05,720 Speaker 1: side of of coal and what you're talking about, which 74 00:04:05,760 --> 00:04:09,800 Speaker 1: is the renewable side solar, uh when other types of 75 00:04:10,680 --> 00:04:14,680 Speaker 1: energy production that's considered to be more environmentally friendly. The 76 00:04:14,760 --> 00:04:17,680 Speaker 1: US had been accelerating the production of those types of 77 00:04:17,760 --> 00:04:21,440 Speaker 1: energy quite significantly under Obama. I'm wondering has that changed 78 00:04:21,480 --> 00:04:24,560 Speaker 1: at all, or has the pace of adoption continued to 79 00:04:24,680 --> 00:04:29,080 Speaker 1: gain steam under President Trump. I would say that, you know, 80 00:04:29,120 --> 00:04:31,359 Speaker 1: we have seen a bit of a slowing on the 81 00:04:31,400 --> 00:04:35,800 Speaker 1: renewables build side post Trump um. But I wouldn't directly 82 00:04:35,839 --> 00:04:38,440 Speaker 1: attribute that to any actions that he's taken. There have 83 00:04:38,600 --> 00:04:41,880 Speaker 1: been policies in place that essentially we're due to sunset 84 00:04:41,920 --> 00:04:43,960 Speaker 1: and we're coming up towards the end of some of those, 85 00:04:44,000 --> 00:04:46,680 Speaker 1: and that's part of what sort of frontloaded some of 86 00:04:46,720 --> 00:04:51,320 Speaker 1: the activity, uh, sort of coincidentally into Obama's term. But 87 00:04:51,640 --> 00:04:54,880 Speaker 1: generally speaking, you know, we continue to see projects get built. 88 00:04:55,240 --> 00:04:57,360 Speaker 1: There is support for renewables at the state level on 89 00:04:57,400 --> 00:05:00,240 Speaker 1: a policy basis, there are tax credits, but most importanly 90 00:05:00,279 --> 00:05:03,839 Speaker 1: for renewables, the price of the equipment has just come down, 91 00:05:03,839 --> 00:05:06,560 Speaker 1: particularly for solar, so enormously. I mean, by the end 92 00:05:06,560 --> 00:05:08,920 Speaker 1: of the year. To put this in context, a solar 93 00:05:09,000 --> 00:05:12,239 Speaker 1: module sold from a Chinese company will sell for about 94 00:05:12,800 --> 00:05:15,200 Speaker 1: cents a lot. I realized that means nothing to your listeners, 95 00:05:15,240 --> 00:05:17,880 Speaker 1: but ten years ago that number was about eight dollars 96 00:05:17,880 --> 00:05:22,760 Speaker 1: a lot, ten dollars a lot. So the technological advancements 97 00:05:22,760 --> 00:05:26,000 Speaker 1: and the cost declines have just been tremendous. Okay, So 98 00:05:26,080 --> 00:05:29,960 Speaker 1: I'm just wondering going forward, how much can one presidential 99 00:05:29,960 --> 00:05:33,120 Speaker 1: administration shift the policies and sort of shift the landscape 100 00:05:33,120 --> 00:05:35,240 Speaker 1: for energy consumption at this point, and how much really 101 00:05:35,320 --> 00:05:39,800 Speaker 1: is it just the market determining what people use. It's 102 00:05:39,920 --> 00:05:43,520 Speaker 1: mostly market. I think that the administration can sort of 103 00:05:43,560 --> 00:05:46,240 Speaker 1: try and steer a ship, but it takes years to 104 00:05:46,279 --> 00:05:48,679 Speaker 1: try and make real adjustments. And I would also argue 105 00:05:48,680 --> 00:05:51,400 Speaker 1: that some of the most important sort of policies that 106 00:05:51,440 --> 00:05:54,719 Speaker 1: can affect energy, that the course of direction for the 107 00:05:54,760 --> 00:05:59,480 Speaker 1: power sector, are not ones that an administration can do unilaterally. 108 00:05:59,560 --> 00:06:02,839 Speaker 1: You would be Congress um. So, for instance, if you 109 00:06:02,920 --> 00:06:04,880 Speaker 1: really wanted to help the coal industry, the best thing 110 00:06:04,920 --> 00:06:07,880 Speaker 1: you could do is probably create a new tax credit 111 00:06:08,000 --> 00:06:11,159 Speaker 1: or subsidy to support that. But that is not something 112 00:06:11,839 --> 00:06:14,200 Speaker 1: that the administration can do on its own. It's something 113 00:06:14,240 --> 00:06:17,120 Speaker 1: Congress needs to help it within um. Despite the fact 114 00:06:17,160 --> 00:06:19,640 Speaker 1: that Congress seems very inclined to help this administration in 115 00:06:19,680 --> 00:06:22,440 Speaker 1: a lot of ways, I think people would say that 116 00:06:22,440 --> 00:06:24,480 Speaker 1: that would be a tough thing to get through even 117 00:06:24,560 --> 00:06:27,080 Speaker 1: this Congress, and certainly the one that's coming would be 118 00:06:27,200 --> 00:06:30,200 Speaker 1: less would probably be less inclined to be supportive of 119 00:06:30,279 --> 00:06:33,760 Speaker 1: something like that, given the fact that the Republican part 120 00:06:33,839 --> 00:06:35,880 Speaker 1: of the government is expected to lose some seats in 121 00:06:35,920 --> 00:06:38,240 Speaker 1: the upcoming interm election. Is that what you're imply Yeah, 122 00:06:38,279 --> 00:06:39,920 Speaker 1: that does seem to be what people think is going 123 00:06:39,960 --> 00:06:42,320 Speaker 1: to happen so far. One thing I'm wondering is if 124 00:06:42,320 --> 00:06:46,200 Speaker 1: you stripped away all subsidies for solar and wind, would 125 00:06:46,400 --> 00:06:51,960 Speaker 1: those methods of energy production still be economically competitive with 126 00:06:52,080 --> 00:06:55,640 Speaker 1: the fossil fuels? Yes, in some places, know and others? 127 00:06:55,800 --> 00:06:57,800 Speaker 1: Is the long, long story short. If the winds are 128 00:06:57,800 --> 00:07:01,800 Speaker 1: strong enough and the sun shine bright enough, projects are 129 00:07:01,800 --> 00:07:05,040 Speaker 1: absolutely cost competitive. We're seeing that in places like Oklahoma 130 00:07:05,120 --> 00:07:07,720 Speaker 1: and Arizona and other parts of the California and other 131 00:07:07,760 --> 00:07:10,320 Speaker 1: parts of the world. The other question is how expensive 132 00:07:10,400 --> 00:07:14,960 Speaker 1: is the existing generation from those fossil sources. Uh. It 133 00:07:15,480 --> 00:07:18,239 Speaker 1: really varies from different parts of the country. But the 134 00:07:18,280 --> 00:07:21,360 Speaker 1: long story short is right now renewables are cost competitive 135 00:07:21,520 --> 00:07:24,600 Speaker 1: in a number of places around the world, including number 136 00:07:24,600 --> 00:07:27,080 Speaker 1: of prices in the United States, but not everywhere. And 137 00:07:27,160 --> 00:07:29,600 Speaker 1: coal with respect to that, is there anything that President 138 00:07:29,640 --> 00:07:31,400 Speaker 1: Trump can do or that you're watching that will have 139 00:07:31,520 --> 00:07:36,559 Speaker 1: material impact to support coal unilaterally? I think the Trump 140 00:07:36,560 --> 00:07:39,120 Speaker 1: administration is trying to do most of the things that 141 00:07:39,280 --> 00:07:43,080 Speaker 1: it has within its power to support the coal industry. Um, 142 00:07:43,080 --> 00:07:45,360 Speaker 1: but it is it is frankly just going to be 143 00:07:45,440 --> 00:07:49,560 Speaker 1: challenging so long as gas prices remain low um if 144 00:07:49,600 --> 00:07:52,040 Speaker 1: they frankly, if the administration wanted to do something to 145 00:07:52,120 --> 00:07:56,160 Speaker 1: sort of artificially raise the cost of um of gas production, 146 00:07:56,200 --> 00:07:58,440 Speaker 1: I don't know what that step would be, tax or whatever. 147 00:07:59,000 --> 00:08:02,280 Speaker 1: UM That would probably also helped Cole, but again that's 148 00:08:02,320 --> 00:08:04,600 Speaker 1: something that Congress would probably have to be involved in. 149 00:08:04,800 --> 00:08:07,320 Speaker 1: Ethan Zindler, thank you so much for that wonderful perspective. 150 00:08:07,440 --> 00:08:11,400 Speaker 1: Ethan Zindler's head of America's for Bloomberg based in Washington, 151 00:08:11,640 --> 00:08:15,040 Speaker 1: d C. That's Bloomberg and E f uh And definitely 152 00:08:15,040 --> 00:08:20,000 Speaker 1: an interesting time with some revocation of Obama era environmental rules. 153 00:08:20,160 --> 00:08:24,040 Speaker 1: How much effective they actually have that remains to be determined. 154 00:08:37,200 --> 00:08:40,120 Speaker 1: There are some companies that are the the intersection of 155 00:08:40,160 --> 00:08:42,839 Speaker 1: some of the trade tensions that have been ongoing, and 156 00:08:42,880 --> 00:08:46,640 Speaker 1: then there's some that face a changing landscape with respect 157 00:08:46,760 --> 00:08:51,439 Speaker 1: to new regulations or regulatory rollbacks. Our next guest potentially 158 00:08:51,600 --> 00:08:54,439 Speaker 1: is at the intersection of both, and that is Mark Vignano. 159 00:08:54,840 --> 00:08:58,680 Speaker 1: He is chief executive of Commoors, which is based in Wilmington, Delaware. 160 00:08:58,679 --> 00:09:01,200 Speaker 1: You might know Commors by some of its brands like 161 00:09:01,320 --> 00:09:05,640 Speaker 1: tef Line, which is sort of means so much to 162 00:09:05,679 --> 00:09:08,000 Speaker 1: so many people as well as free on Mark. Thank 163 00:09:08,040 --> 00:09:09,559 Speaker 1: you so much for being with us. So happy to 164 00:09:09,559 --> 00:09:12,240 Speaker 1: be here. So I want to start with the concept 165 00:09:12,240 --> 00:09:15,800 Speaker 1: of this company has its business the US and the 166 00:09:15,840 --> 00:09:18,079 Speaker 1: rest of its outside of the United States. And I'm wondering, 167 00:09:18,080 --> 00:09:20,720 Speaker 1: at a time when you do have escalating trade tensions, 168 00:09:21,280 --> 00:09:23,520 Speaker 1: how have you been affected. Yeah, so if you think 169 00:09:23,520 --> 00:09:26,440 Speaker 1: about trade, you know, and I know the administration today 170 00:09:26,520 --> 00:09:29,839 Speaker 1: is really trying to get this level playing field. Um. 171 00:09:29,840 --> 00:09:32,040 Speaker 1: From from our standpoint, there's lots of ways to deal 172 00:09:32,080 --> 00:09:35,280 Speaker 1: with that level playing field. One area is something that 173 00:09:35,400 --> 00:09:38,360 Speaker 1: we are very important to us as the key Galley Agreement. 174 00:09:38,360 --> 00:09:42,320 Speaker 1: That ke Galley Agreement is connected to the Montreal Protocol. Basically, 175 00:09:42,760 --> 00:09:45,640 Speaker 1: it's a business first, a US business first kind of 176 00:09:46,240 --> 00:09:49,880 Speaker 1: effective trade agreement where American can win. So it's it's 177 00:09:49,920 --> 00:09:53,559 Speaker 1: allows us to can just lay out when this went 178 00:09:53,600 --> 00:09:57,240 Speaker 1: into so what it is. We manufacture a refrigent called Optition, 179 00:09:57,320 --> 00:10:00,640 Speaker 1: which is low the lowest global warming potential refrigerant in 180 00:10:00,640 --> 00:10:05,320 Speaker 1: the world, lower global warming than any other refrigerants. Many 181 00:10:05,440 --> 00:10:09,199 Speaker 1: countries have adopted the Gali Agreement, which allows the use 182 00:10:09,240 --> 00:10:14,280 Speaker 1: of those in relationship to hfc's or there are traditional refrigerants, 183 00:10:14,480 --> 00:10:16,880 Speaker 1: and so here in the US, we want to see 184 00:10:16,880 --> 00:10:19,520 Speaker 1: that adoption happen as well, because it's going to benefit 185 00:10:19,920 --> 00:10:24,119 Speaker 1: companies like Commor's, companies like Honeywell that actually have developed 186 00:10:24,120 --> 00:10:26,640 Speaker 1: this molecule and be able to bring it in So 187 00:10:26,679 --> 00:10:29,640 Speaker 1: you can, jobs are created here in the US because 188 00:10:29,679 --> 00:10:32,480 Speaker 1: of it, Manufacturing facilities are being put in place here 189 00:10:32,480 --> 00:10:34,640 Speaker 1: in the US because of it, and so it's a 190 00:10:34,679 --> 00:10:37,439 Speaker 1: way for US to be able to utilize US based 191 00:10:37,440 --> 00:10:41,040 Speaker 1: technology versus Chinese based technology which is in our refrigerants today. 192 00:10:41,080 --> 00:10:43,480 Speaker 1: All right, So this is actually really interesting because what 193 00:10:43,559 --> 00:10:46,720 Speaker 1: it hints at is this idea that if the US 194 00:10:46,800 --> 00:10:48,840 Speaker 1: tries to go it alone and have a different set 195 00:10:48,840 --> 00:10:55,880 Speaker 1: of regulations with respect to curbing certain environmentally harmful gases, 196 00:10:57,040 --> 00:10:59,719 Speaker 1: that perhaps it won't be privy to agreements that will 197 00:10:59,720 --> 00:11:02,640 Speaker 1: actually foster jobs and opportunities in the US. Is that 198 00:11:02,679 --> 00:11:08,119 Speaker 1: basically what's it's effectively a business trade agreement that benefits 199 00:11:08,120 --> 00:11:11,760 Speaker 1: and creates a win for the US. So you're exactly right, 200 00:11:11,960 --> 00:11:14,319 Speaker 1: you know, we're going to manufacture that here in the US. 201 00:11:14,360 --> 00:11:17,160 Speaker 1: It's going to create thousands of jobs because of it, 202 00:11:17,559 --> 00:11:19,559 Speaker 1: and it's going to be exported to the whole world, 203 00:11:19,760 --> 00:11:21,720 Speaker 1: but also can be used here in the US at 204 00:11:21,720 --> 00:11:24,640 Speaker 1: the same time. So as we talk about trade, you know, 205 00:11:24,960 --> 00:11:27,199 Speaker 1: it's it's about how do you how do you create 206 00:11:27,240 --> 00:11:30,319 Speaker 1: free trade for companies like commors, And that's really what 207 00:11:30,320 --> 00:11:33,720 Speaker 1: we're looking for, Okay, But arguably, I mean, if you're 208 00:11:33,720 --> 00:11:35,720 Speaker 1: selling this, why does it matter whether the US is 209 00:11:35,720 --> 00:11:38,240 Speaker 1: involved in those agreements or not, Because the more it's 210 00:11:38,280 --> 00:11:41,960 Speaker 1: a huge market opportunity here in the US. So of 211 00:11:41,960 --> 00:11:46,760 Speaker 1: automobiles in Europe already used this refrigerant. About half of 212 00:11:46,800 --> 00:11:49,640 Speaker 1: the auto park here in the US uses it. But 213 00:11:50,000 --> 00:11:54,760 Speaker 1: stationary refrigeration, stationary air conditioning is really a driver for US, 214 00:11:54,920 --> 00:11:56,679 Speaker 1: and the growth is here in the US. This is 215 00:11:56,720 --> 00:11:59,959 Speaker 1: really interesting to me. It also makes raises a question 216 00:12:00,320 --> 00:12:03,120 Speaker 1: of whether a greater proportion of your business has actually 217 00:12:03,640 --> 00:12:06,320 Speaker 1: gone outside of the US as you've seen some of 218 00:12:06,320 --> 00:12:08,160 Speaker 1: these other countries adopted. Have you seen the mix of 219 00:12:08,200 --> 00:12:12,079 Speaker 1: business shift more to UH foreign countries rather than the 220 00:12:12,160 --> 00:12:14,440 Speaker 1: US over the bunch. Well, it's interesting because as a 221 00:12:14,440 --> 00:12:16,600 Speaker 1: as a global company, you know, we we're the world 222 00:12:16,679 --> 00:12:19,280 Speaker 1: leader in t O two or the world leader in refrigerants, 223 00:12:19,320 --> 00:12:22,560 Speaker 1: with the world leader in Flora polymers um. But this 224 00:12:22,920 --> 00:12:27,480 Speaker 1: specific product we're talking about, which is a refrigerant. You know, 225 00:12:27,600 --> 00:12:30,400 Speaker 1: we think of refrigerants as the old freon, right optition 226 00:12:30,559 --> 00:12:32,880 Speaker 1: is the new free on, if you will. Most of 227 00:12:32,920 --> 00:12:37,359 Speaker 1: our sales are outside the US because of adoption of 228 00:12:37,440 --> 00:12:40,240 Speaker 1: these regulations, and we think this could be a great 229 00:12:40,320 --> 00:12:44,160 Speaker 1: opportunity for the US for business purposes. It creates jobs here. 230 00:12:44,200 --> 00:12:47,040 Speaker 1: It's just not great for the environment. It creates jobs here, 231 00:12:47,080 --> 00:12:49,800 Speaker 1: and it really rewards the companies that have developed this. 232 00:12:50,160 --> 00:12:52,160 Speaker 1: So UM, I want to talk a little bit about 233 00:12:52,160 --> 00:12:55,440 Speaker 1: some other policies that are being implemented or at least 234 00:12:56,360 --> 00:13:01,800 Speaker 1: trying to be affected across the Trumpetitus straation. Antiregulation has 235 00:13:01,840 --> 00:13:05,440 Speaker 1: been a huge theme, and we've seen certain regulatory rollbacks, 236 00:13:05,440 --> 00:13:08,480 Speaker 1: in particular today with proposals to make it easier for 237 00:13:08,559 --> 00:13:11,920 Speaker 1: coal companies to exist and thrive. I'm just wondering, in 238 00:13:12,080 --> 00:13:16,040 Speaker 1: terms of your industry, have you seen a significant regulatory rollback. 239 00:13:16,800 --> 00:13:19,440 Speaker 1: We haven't. You know, we participate in the chemistry industry, 240 00:13:19,920 --> 00:13:22,680 Speaker 1: so from that standpoint, we haven't seen a significant rollback. 241 00:13:22,760 --> 00:13:24,920 Speaker 1: And you know, the way we look at it is, 242 00:13:25,160 --> 00:13:28,400 Speaker 1: you know, regulation isn't always bad for business. It could 243 00:13:28,440 --> 00:13:30,480 Speaker 1: be a positive for business. You know, I gave the 244 00:13:30,520 --> 00:13:33,000 Speaker 1: example of Cagali a second ago, where it could be 245 00:13:33,080 --> 00:13:35,400 Speaker 1: a positive. But at the same time, it can also 246 00:13:35,520 --> 00:13:38,600 Speaker 1: create clarity for a company in terms of how to operate, 247 00:13:38,920 --> 00:13:41,199 Speaker 1: so you don't have to operate differently state to state. 248 00:13:41,240 --> 00:13:43,960 Speaker 1: You can operate the same across So we haven't seen 249 00:13:44,160 --> 00:13:48,000 Speaker 1: significant rollbacks that are affecting us, But to us, regulation, 250 00:13:48,040 --> 00:13:51,400 Speaker 1: if it's based on science and if it's based on risk, 251 00:13:51,800 --> 00:13:54,160 Speaker 1: can be very helpful to a company. At the same time, Um, 252 00:13:54,320 --> 00:13:57,040 Speaker 1: I'm I was interested. I saw a couple of articles 253 00:13:57,040 --> 00:13:59,520 Speaker 1: about this pollution SADA. It's been going on with commors 254 00:14:00,080 --> 00:14:03,559 Speaker 1: and some North Carolina residents about a spill and how 255 00:14:03,640 --> 00:14:06,640 Speaker 1: much you're getting involved or not. And one thing that 256 00:14:06,679 --> 00:14:10,520 Speaker 1: I'm wondering is do regulations protect you in a way 257 00:14:11,080 --> 00:14:14,319 Speaker 1: or if they did roll back some of these regulations, 258 00:14:14,520 --> 00:14:17,280 Speaker 1: would you change anything about your business? Yeah? For us, 259 00:14:17,440 --> 00:14:20,680 Speaker 1: you know, um, so you you mentioned the situation that 260 00:14:20,720 --> 00:14:23,680 Speaker 1: we're dealing with. What would she take very seriously, Again, 261 00:14:23,720 --> 00:14:26,400 Speaker 1: we don't believe we have any health hazard, but the 262 00:14:26,440 --> 00:14:30,120 Speaker 1: community doesn't like things being put into the error into 263 00:14:30,160 --> 00:14:32,720 Speaker 1: the water, So I don't think it would change the 264 00:14:32,760 --> 00:14:35,320 Speaker 1: way we operate because We're going to try to operate 265 00:14:35,920 --> 00:14:38,280 Speaker 1: within the realm of the community and what they want 266 00:14:38,320 --> 00:14:42,200 Speaker 1: and what they need from that standpoint. But again, when 267 00:14:42,200 --> 00:14:44,800 Speaker 1: you're looking at a level playing field across the US, 268 00:14:44,880 --> 00:14:47,200 Speaker 1: it's hard to be able to navigate state to state. 269 00:14:47,280 --> 00:14:49,320 Speaker 1: You want to be able to have something that gives 270 00:14:49,360 --> 00:14:52,080 Speaker 1: you clarity across the whole US as you're operating. That's 271 00:14:52,080 --> 00:14:54,320 Speaker 1: a really good point and one that I hadn't thought 272 00:14:54,320 --> 00:14:55,840 Speaker 1: that much about. Thank you so much for being here. 273 00:14:56,000 --> 00:14:58,880 Speaker 1: It's always it's really a pleasure speaking with you. Mark Vicnano. 274 00:14:59,000 --> 00:15:02,960 Speaker 1: He is chief executive of Commore's UH, the leading I 275 00:15:03,000 --> 00:15:06,440 Speaker 1: Guess refrigerant company and UH and creator of Teflon and 276 00:15:06,520 --> 00:15:08,720 Speaker 1: free on and all of those things and the new 277 00:15:08,760 --> 00:15:11,200 Speaker 1: free On. It's based in Wilmington, Delaware, but he's here 278 00:15:11,240 --> 00:15:30,160 Speaker 1: in our eleven three oh studios. The Year of zero 279 00:15:30,920 --> 00:15:33,800 Speaker 1: investors do not want to pay anything, and investment firms 280 00:15:33,800 --> 00:15:36,600 Speaker 1: are realizing to keep said investors they need to offer 281 00:15:36,720 --> 00:15:40,440 Speaker 1: them free funds and free trading. Evidently here to talk 282 00:15:40,440 --> 00:15:44,800 Speaker 1: about that. Eric Balcuna, Senior et F analysts for Bloomberg Intelligence. 283 00:15:44,800 --> 00:15:47,480 Speaker 1: So Eric to this morning's news. JP Morgan is planning 284 00:15:47,520 --> 00:15:51,720 Speaker 1: to roll out a mobile brokerage platform next week, including 285 00:15:51,840 --> 00:15:57,400 Speaker 1: free research as well as some free trading discuss Yeah, 286 00:15:57,440 --> 00:15:59,120 Speaker 1: and you know, you just hit on one of the 287 00:15:59,160 --> 00:16:01,840 Speaker 1: things that was buried lead in my opinion, which is 288 00:16:01,880 --> 00:16:05,560 Speaker 1: free research. That's the department I'm in. So knowing that 289 00:16:05,600 --> 00:16:09,240 Speaker 1: it's going to start being becoming free hits home for me. 290 00:16:09,840 --> 00:16:12,120 Speaker 1: This is where we've been going for a while. There's 291 00:16:12,160 --> 00:16:16,120 Speaker 1: been a lot of startups like robin Hood or robo Advisors. 292 00:16:16,520 --> 00:16:18,760 Speaker 1: You know, on the streets you see people offering this 293 00:16:18,800 --> 00:16:21,920 Speaker 1: stuff already for free, and then you see Vanguard get 294 00:16:21,920 --> 00:16:24,760 Speaker 1: in and then of course, uh, you know, the big 295 00:16:24,800 --> 00:16:27,560 Speaker 1: guys are going to follow suit. And the reason is 296 00:16:27,640 --> 00:16:30,760 Speaker 1: because people want it that way, the customers speak with 297 00:16:30,800 --> 00:16:33,400 Speaker 1: their with their feet, and for JPM, we're going to 298 00:16:33,440 --> 00:16:35,720 Speaker 1: do it. It's especially huge. It reminds me of the 299 00:16:35,760 --> 00:16:39,640 Speaker 1: Fidelity zero thing, where when you heard Vanguard offering free 300 00:16:39,680 --> 00:16:42,000 Speaker 1: t F trading, it's like, well that's what they do, 301 00:16:42,040 --> 00:16:44,960 Speaker 1: they're you know, but you know when Fidelity went zero, 302 00:16:44,960 --> 00:16:47,000 Speaker 1: it's like, whoa, aren't they the big active shop. And 303 00:16:47,040 --> 00:16:49,680 Speaker 1: now here you have JP Morgan, who people just don't 304 00:16:49,720 --> 00:16:53,360 Speaker 1: associate with that kind of mentality offering free so I 305 00:16:53,400 --> 00:16:56,760 Speaker 1: think this is equal to the Fidelity announcement in terms 306 00:16:56,840 --> 00:17:01,120 Speaker 1: of just shaking people to their core in the financial industry. 307 00:17:01,240 --> 00:17:03,680 Speaker 1: So you said this is what customers want. I also 308 00:17:03,680 --> 00:17:06,680 Speaker 1: want free housing. I also want, you know, free incredible 309 00:17:06,800 --> 00:17:09,800 Speaker 1: dinners with my husband, and hey, it would be really 310 00:17:09,920 --> 00:17:13,080 Speaker 1: nice to have a free manicures. People want a lot 311 00:17:13,119 --> 00:17:15,600 Speaker 1: of things free. They don't get them. And my question 312 00:17:15,720 --> 00:17:19,119 Speaker 1: is how can these firms be offering zero fee funds 313 00:17:19,119 --> 00:17:21,640 Speaker 1: and zero fee trading? At what point do they make 314 00:17:21,640 --> 00:17:24,920 Speaker 1: no money as a result. Yeah, it's a good question, 315 00:17:25,080 --> 00:17:27,399 Speaker 1: and so for let's go for it, just JP Morgan. 316 00:17:28,080 --> 00:17:30,320 Speaker 1: One way they can do this is by free t 317 00:17:30,440 --> 00:17:34,760 Speaker 1: F trading. You can sell the order flow to market makers. Um, 318 00:17:34,840 --> 00:17:37,520 Speaker 1: and that is worth something. Last year Schwab made, according 319 00:17:37,560 --> 00:17:40,040 Speaker 1: to Dave rid Or, my colleague, a hundred and fourteen 320 00:17:40,080 --> 00:17:42,879 Speaker 1: million in selling that order flow of e t F 321 00:17:42,960 --> 00:17:44,720 Speaker 1: trading and stock trading. Wait, hold on a second, what 322 00:17:44,760 --> 00:17:47,280 Speaker 1: does that mean? So basically they can sell to a 323 00:17:47,280 --> 00:17:49,880 Speaker 1: market maker all of the orders that come in. They 324 00:17:49,920 --> 00:17:53,200 Speaker 1: can then offer that and sell that to a market 325 00:17:53,240 --> 00:17:55,440 Speaker 1: maker who will then get first DIBs on that order 326 00:17:55,440 --> 00:17:58,960 Speaker 1: flow for a very small fee. It might affect the 327 00:17:59,560 --> 00:18:02,800 Speaker 1: retail client in a basis point, so it's minimal, but 328 00:18:02,840 --> 00:18:05,600 Speaker 1: if you add all that up, you do get some revenue. 329 00:18:05,640 --> 00:18:08,600 Speaker 1: It's not a lot though. Some people overestimate this thing 330 00:18:09,000 --> 00:18:11,679 Speaker 1: of order flow. They all also on the fidelity side 331 00:18:12,160 --> 00:18:15,800 Speaker 1: with a free fund people overestimate securities lending that is 332 00:18:15,840 --> 00:18:19,040 Speaker 1: not worth that much either. Both of these cases, these 333 00:18:19,080 --> 00:18:21,920 Speaker 1: are lost leaders right. What they're really trying to sell 334 00:18:21,960 --> 00:18:24,520 Speaker 1: you is is loans, credit cards in chaping Works case, 335 00:18:24,600 --> 00:18:27,399 Speaker 1: or fidelities case, active mutual funds. They have plenty of 336 00:18:27,440 --> 00:18:29,879 Speaker 1: products that make a lot of revenue, and so I 337 00:18:29,880 --> 00:18:31,680 Speaker 1: think they're just reading the writing on the wall and 338 00:18:31,720 --> 00:18:34,280 Speaker 1: they're going, look, this is the way millennials wanted the 339 00:18:35,600 --> 00:18:38,040 Speaker 1: a lot of investors who are following them. Let's just 340 00:18:38,080 --> 00:18:40,280 Speaker 1: go there now, you know, rip the band aid off 341 00:18:40,720 --> 00:18:43,879 Speaker 1: and we'll work out how to make money in other ways. 342 00:18:44,000 --> 00:18:47,879 Speaker 1: But I don't really see any other direction this is 343 00:18:47,880 --> 00:18:51,160 Speaker 1: going to go, because again, this is what the people want. 344 00:18:51,600 --> 00:18:55,399 Speaker 1: So tdmre trade right now shares down more than five 345 00:18:56,520 --> 00:18:59,840 Speaker 1: Charles Schwab shares also sharply down. I'm just trying to 346 00:19:00,000 --> 00:19:01,879 Speaker 1: figure out, are we going to look at some kind 347 00:19:01,920 --> 00:19:05,560 Speaker 1: of massive consolidation in the brokerage industry similar to what 348 00:19:05,640 --> 00:19:08,119 Speaker 1: we have been seeing, or perhaps it needs to frankly 349 00:19:08,280 --> 00:19:11,920 Speaker 1: escalate to meet analysts expectations in the asset management industry. 350 00:19:12,040 --> 00:19:14,560 Speaker 1: I think you have to all signs point to consolidation 351 00:19:14,560 --> 00:19:19,720 Speaker 1: across the financial industry because of this intense cost obsession, 352 00:19:19,760 --> 00:19:23,480 Speaker 1: whether it's a cost obsession and expense ratios of funds 353 00:19:23,640 --> 00:19:27,199 Speaker 1: or for free trading um. You can't live on a 354 00:19:27,240 --> 00:19:29,560 Speaker 1: couple of basis points alone. Everybody knows that, right, so 355 00:19:29,640 --> 00:19:32,440 Speaker 1: scale is one way to get cheaper, obviously up selling 356 00:19:32,480 --> 00:19:35,359 Speaker 1: them on higher price products. The reason you're probably not 357 00:19:35,400 --> 00:19:38,920 Speaker 1: going to see this kind of mass consolidation right now 358 00:19:39,160 --> 00:19:41,560 Speaker 1: or in the near term is the market has been 359 00:19:41,600 --> 00:19:44,240 Speaker 1: so good to these companies. I just looked at you know, 360 00:19:44,280 --> 00:19:47,360 Speaker 1: active mutual funds alone have grown assets by seven trillion 361 00:19:47,520 --> 00:19:50,560 Speaker 1: just in the last ten years on market appreciation alone, 362 00:19:50,840 --> 00:19:54,560 Speaker 1: no flows. So the market has really helped the financial 363 00:19:54,560 --> 00:19:59,240 Speaker 1: industry not have to really face this challenge. So I 364 00:19:59,280 --> 00:20:02,119 Speaker 1: do think if the market gets choppy or goes down, 365 00:20:02,560 --> 00:20:05,399 Speaker 1: then I think you'll see people sort of looking to 366 00:20:05,480 --> 00:20:08,840 Speaker 1: partner up UM and get scale and go cheaper. You know, 367 00:20:08,880 --> 00:20:11,479 Speaker 1: I have to wonder there's really no free lunch, right, 368 00:20:11,560 --> 00:20:13,600 Speaker 1: And I have to wonder when you start seeing all 369 00:20:13,640 --> 00:20:18,000 Speaker 1: of these look no fee UH funds or offerings, there 370 00:20:18,000 --> 00:20:20,119 Speaker 1: are fees for somebody. Is someone going to bear the 371 00:20:20,119 --> 00:20:25,040 Speaker 1: brunt of this, either through inefficiencies or extra cars costs elsewhere. Yeah, 372 00:20:25,080 --> 00:20:27,080 Speaker 1: I think that's the big case here. You have with 373 00:20:27,280 --> 00:20:29,720 Speaker 1: UH you know this idea of selling order flow, which 374 00:20:30,000 --> 00:20:33,040 Speaker 1: you know your own money. But again, I don't look. 375 00:20:33,119 --> 00:20:35,200 Speaker 1: I know there's a lot of ways to look at this. 376 00:20:35,359 --> 00:20:37,800 Speaker 1: And what's the catch, right, That's that's what Vanguard that 377 00:20:38,160 --> 00:20:41,160 Speaker 1: their reaction to Fidelity going to zero fee. But in 378 00:20:41,200 --> 00:20:44,399 Speaker 1: this case, if you're a disciplined person, it's sort of 379 00:20:44,440 --> 00:20:46,240 Speaker 1: like your credit card. You know, my wife and I 380 00:20:46,359 --> 00:20:49,560 Speaker 1: use it a lot, but we pay it back like clockwork. 381 00:20:49,560 --> 00:20:51,600 Speaker 1: It's more my wife, I'm a little easier, but we 382 00:20:51,720 --> 00:20:55,119 Speaker 1: pay it back like clock was. Yeah, it's all her. 383 00:20:55,160 --> 00:20:57,320 Speaker 1: I get to give her credit. If you can really 384 00:20:57,720 --> 00:21:01,440 Speaker 1: discipline yourself and and not and resist temptation, I think 385 00:21:01,480 --> 00:21:04,480 Speaker 1: you can really get basically free exposure and all of 386 00:21:04,480 --> 00:21:07,760 Speaker 1: your investments and finances for almost nothing. I think they're 387 00:21:08,160 --> 00:21:11,240 Speaker 1: it's the people who can't control themselves. Maybe you trade 388 00:21:11,240 --> 00:21:13,080 Speaker 1: a lot and you get more involved in they're in 389 00:21:13,080 --> 00:21:15,840 Speaker 1: there sort of like universe than they upsell you. You 390 00:21:15,880 --> 00:21:18,560 Speaker 1: start using options. Next thing you know, they're making a 391 00:21:18,600 --> 00:21:20,280 Speaker 1: lot of money off you. So I think this is 392 00:21:20,320 --> 00:21:24,240 Speaker 1: sort of the same situation here. But discipline will help 393 00:21:24,280 --> 00:21:28,640 Speaker 1: investors who are looking to enter these free situations. Um, 394 00:21:28,680 --> 00:21:30,720 Speaker 1: and that's important. Yeah, It's sort of like free drinks 395 00:21:30,760 --> 00:21:33,160 Speaker 1: in Las Vegas. Right. It's fine for people who are disciplined, 396 00:21:33,200 --> 00:21:36,320 Speaker 1: but for those heavy gamblers might be tougher. Eric Felt, 397 00:21:36,880 --> 00:21:41,040 Speaker 1: Senior et F analyst for Bloomberg Intelligence, always with insightful 398 00:21:41,080 --> 00:21:53,080 Speaker 1: comments today on the race to zero throughout the financial industry. 399 00:22:00,080 --> 00:22:04,919 Speaker 1: President Trump is disappointed in Jerome Powell. He said in 400 00:22:05,000 --> 00:22:08,840 Speaker 1: comments to a number of different outlets that he thought 401 00:22:08,920 --> 00:22:11,760 Speaker 1: that his FED chair was going to be a cheap 402 00:22:11,960 --> 00:22:15,320 Speaker 1: money FED chairman, and he is disappointed that he's been 403 00:22:15,400 --> 00:22:17,560 Speaker 1: raising interest rates. Joining us now to talk about that 404 00:22:17,680 --> 00:22:20,760 Speaker 1: is Mark Spintel, founder and chief investment officer at Potomac 405 00:22:20,880 --> 00:22:24,080 Speaker 1: River Capital, as well as Craig Torres Federal Reserve, and 406 00:22:24,320 --> 00:22:27,720 Speaker 1: you as economy reporter for Bloomberg News. Thank you both 407 00:22:28,160 --> 00:22:32,000 Speaker 1: for joining me here from Washington, d C. Craig I 408 00:22:32,000 --> 00:22:33,920 Speaker 1: want to start with you and just get a sense 409 00:22:34,080 --> 00:22:36,560 Speaker 1: of what President Trump said and how out of the 410 00:22:36,680 --> 00:22:41,920 Speaker 1: ordinary it is. Uh. It was uh not that dissimilar 411 00:22:42,000 --> 00:22:46,680 Speaker 1: to previous remarks he made, which I think is why 412 00:22:46,840 --> 00:22:50,720 Speaker 1: people are kind of people are investors in particular paying attention, 413 00:22:50,760 --> 00:22:55,440 Speaker 1: but not really saying this is something new. He's been complaining, 414 00:22:56,119 --> 00:23:00,959 Speaker 1: it's on everybody's radar. Uh. The question is you know, 415 00:23:01,080 --> 00:23:03,760 Speaker 1: what does it do? Um? How does it shape the 416 00:23:03,800 --> 00:23:07,879 Speaker 1: Federal Reserve? So among the comments was a comment to 417 00:23:08,160 --> 00:23:10,760 Speaker 1: Reuters where he said, we're President Trump said during this 418 00:23:10,800 --> 00:23:12,880 Speaker 1: period of time, I should be given some help by 419 00:23:12,880 --> 00:23:17,080 Speaker 1: the Fed. The other countries are accommodated. Mark, come on 420 00:23:17,200 --> 00:23:19,760 Speaker 1: in here. I guess that there is a big existential 421 00:23:19,840 --> 00:23:22,800 Speaker 1: question that this raises about the independence of the Photo Reserve. 422 00:23:23,000 --> 00:23:26,439 Speaker 1: Jeroan Powell cannot be firement President Trump. Does this matter 423 00:23:26,480 --> 00:23:29,720 Speaker 1: at all from an independence angle? I think it does. 424 00:23:29,880 --> 00:23:33,240 Speaker 1: And uh, and thank you for for the invitation to talk. 425 00:23:33,359 --> 00:23:36,800 Speaker 1: I I would first point out that, uh, though extreme 426 00:23:37,160 --> 00:23:41,720 Speaker 1: Powell could be fired by Trump, though the parameters and 427 00:23:41,760 --> 00:23:45,600 Speaker 1: the reasons are are sort of very narrow. Um, but 428 00:23:45,720 --> 00:23:49,520 Speaker 1: he could so called Trump up some charges to find 429 00:23:49,600 --> 00:23:53,280 Speaker 1: cause in Powell's actions. Um, I think I would echo 430 00:23:53,880 --> 00:23:58,840 Speaker 1: Gregg's point that this is not necessarily unusual presidents going 431 00:23:58,840 --> 00:24:04,480 Speaker 1: back forty or fifty years, most spectacularly Nixon criticizing his 432 00:24:04,560 --> 00:24:08,280 Speaker 1: appointed FED chair Arthur Burns. But I think most presidents 433 00:24:08,320 --> 00:24:12,800 Speaker 1: have been upset with with FED chairs who are tightening 434 00:24:12,800 --> 00:24:16,760 Speaker 1: the reins on credit. What makes this somewhat unique is 435 00:24:16,840 --> 00:24:20,040 Speaker 1: that monetary policy is, by the FED zone measures quite 436 00:24:20,040 --> 00:24:22,960 Speaker 1: loose accommodative. They talk about that in their statements. So 437 00:24:23,080 --> 00:24:26,760 Speaker 1: the fact that he's unhappy with loose monetary policy and 438 00:24:26,800 --> 00:24:29,560 Speaker 1: that he's criticizing his hand picked FED chair is a 439 00:24:29,600 --> 00:24:32,439 Speaker 1: bit unusual. This this early into the game. Mark, you 440 00:24:32,480 --> 00:24:35,080 Speaker 1: co authored a book, The Myth of Independence, How Congress 441 00:24:35,119 --> 00:24:38,800 Speaker 1: Governs the Federal Reserve. Uh So, clearly your skeptical of 442 00:24:38,920 --> 00:24:41,679 Speaker 1: FED Federal Reserve independence to begin with. But I'm wondering 443 00:24:41,760 --> 00:24:45,920 Speaker 1: does this type of rhetoric push the FED further into 444 00:24:45,920 --> 00:24:51,600 Speaker 1: the domain of politics rather than policy. Indeed, and I 445 00:24:51,600 --> 00:24:54,639 Speaker 1: think you're talking about a century old institution that sits 446 00:24:55,040 --> 00:24:57,199 Speaker 1: right here in our town and is very much in 447 00:24:57,240 --> 00:25:00,080 Speaker 1: the political sphere. And the book that Sarah Binder and 448 00:25:00,160 --> 00:25:03,000 Speaker 1: I co author talked a lot about the FEDS relationship 449 00:25:03,040 --> 00:25:06,920 Speaker 1: with Congress. But I think the way presidents in particular 450 00:25:06,960 --> 00:25:11,520 Speaker 1: Trump this go around, are putting pressure on on the 451 00:25:11,520 --> 00:25:15,960 Speaker 1: Federal Reserve and on Chair Powell Powell directly will potentially 452 00:25:15,960 --> 00:25:19,600 Speaker 1: shape some of the contours and outlooks for interest rates. Again, 453 00:25:19,640 --> 00:25:21,880 Speaker 1: we're we're in a tightening cycle. The Fed is still 454 00:25:21,960 --> 00:25:25,920 Speaker 1: quite accommodative, but they're moving very gradually, uh, and as 455 00:25:25,960 --> 00:25:29,600 Speaker 1: they get closer to their own definition of neutral, I 456 00:25:29,640 --> 00:25:31,680 Speaker 1: think it's going to be very interesting to see if 457 00:25:31,680 --> 00:25:36,040 Speaker 1: they continue that gradual pace, which may be interpreted as 458 00:25:36,119 --> 00:25:39,760 Speaker 1: just uh, sort of bending a little bit to the 459 00:25:39,800 --> 00:25:42,960 Speaker 1: White House's demands. Greg come in here, because we're just 460 00:25:43,000 --> 00:25:45,320 Speaker 1: weeks away from the September meeting, where the Federal Reserve 461 00:25:45,359 --> 00:25:49,200 Speaker 1: is widely expected to hike interest rates yet again this year. 462 00:25:49,640 --> 00:25:51,959 Speaker 1: There is a question of how many more times they 463 00:25:51,960 --> 00:25:54,359 Speaker 1: would hike. What data points are they looking at, especially 464 00:25:54,400 --> 00:25:56,760 Speaker 1: given the fact that the U. S economy by some measures, 465 00:25:56,840 --> 00:26:00,280 Speaker 1: just growing at the fastest pace since two thive Well, 466 00:26:00,320 --> 00:26:03,760 Speaker 1: they'll be looking at that, but also that the jobs 467 00:26:03,840 --> 00:26:08,400 Speaker 1: market continues to be very robust, and perhaps most importantly, 468 00:26:08,520 --> 00:26:12,919 Speaker 1: that inflation is around their target slightly above actually so 469 00:26:13,760 --> 00:26:16,359 Speaker 1: you know, the Fed is letting the economy run, but 470 00:26:16,440 --> 00:26:20,359 Speaker 1: to keep inflation expectations nailed down, Uh, they need to 471 00:26:20,440 --> 00:26:24,240 Speaker 1: gradually raise interest rates. However, I would I would agree 472 00:26:24,320 --> 00:26:27,360 Speaker 1: with Mark that here's an interesting fact. Yes, I think 473 00:26:27,400 --> 00:26:32,800 Speaker 1: the debate about QUEI during the financial crisis, nobody thought 474 00:26:33,240 --> 00:26:35,720 Speaker 1: about the politics of it at the time. But if 475 00:26:35,760 --> 00:26:38,760 Speaker 1: you stand back now, you know and look at it. 476 00:26:39,440 --> 00:26:42,240 Speaker 1: I think even Bernanke would say there were constraints on 477 00:26:42,359 --> 00:26:47,760 Speaker 1: doing more than more than they actually did at the time, 478 00:26:47,920 --> 00:26:50,879 Speaker 1: and those constraints were political. So it's not like the 479 00:26:50,920 --> 00:26:55,200 Speaker 1: Fed responds to political pressure, but it does feel constrained 480 00:26:55,240 --> 00:26:57,680 Speaker 1: by it in terms of what they can do well. 481 00:26:57,720 --> 00:26:59,359 Speaker 1: And Mark, then I want to turn that back to 482 00:26:59,400 --> 00:27:01,840 Speaker 1: you because, I mean you could say, in the larger 483 00:27:01,920 --> 00:27:05,800 Speaker 1: scheme of things that Congress ultimately holds the strings when 484 00:27:05,800 --> 00:27:07,879 Speaker 1: it comes to the Federal Reserve with confirmation and a 485 00:27:07,920 --> 00:27:10,360 Speaker 1: number of other measures and sort of controls that it has. 486 00:27:10,440 --> 00:27:12,639 Speaker 1: But for all intents and purposes, it's not like J. 487 00:27:12,800 --> 00:27:14,840 Speaker 1: Powell and other committee members are going to go to 488 00:27:15,000 --> 00:27:17,280 Speaker 1: Congress people and say, what do you guys think do 489 00:27:17,280 --> 00:27:18,800 Speaker 1: you think we should raise interest rates? I mean, there 490 00:27:18,840 --> 00:27:22,160 Speaker 1: is a modicum of independence, and that's not going away correct. 491 00:27:22,200 --> 00:27:25,080 Speaker 1: And I think the term that Sarah and I adopted 492 00:27:25,080 --> 00:27:28,240 Speaker 1: in the book was interdependence. And you know, to your point, Lisa, 493 00:27:28,320 --> 00:27:32,480 Speaker 1: they're operating in this political sphere. I think the legislative 494 00:27:32,520 --> 00:27:37,119 Speaker 1: threat is probably a bit far even for President Trump 495 00:27:37,160 --> 00:27:41,280 Speaker 1: at this point. Um. There there probably isn't indeed in 496 00:27:41,320 --> 00:27:44,160 Speaker 1: the House as we speak, the Republican Conference is probably 497 00:27:44,200 --> 00:27:47,480 Speaker 1: more hawkish, uh, certainly more hawkish than the president. So 498 00:27:47,520 --> 00:27:51,000 Speaker 1: I don't think they would cow tow to the President's 499 00:27:51,040 --> 00:27:55,760 Speaker 1: demands for cheaper money. Um. But that could change in November. 500 00:27:55,880 --> 00:27:58,159 Speaker 1: We could see a Democratic conference in the House. We 501 00:27:58,200 --> 00:28:00,359 Speaker 1: could see Max Swheet, Maxine waters as ahead of the 502 00:28:00,359 --> 00:28:04,720 Speaker 1: House Financial Services Committee. But there's very unlikely to be 503 00:28:04,880 --> 00:28:08,920 Speaker 1: sixty votes in the Senate to reopen the Act. Uh. 504 00:28:09,040 --> 00:28:11,040 Speaker 1: Not to mention, what would they do? And that goes back, 505 00:28:11,119 --> 00:28:14,040 Speaker 1: Lisa to your point that I think some threats. He 506 00:28:14,040 --> 00:28:16,840 Speaker 1: could increase the heat on Powell himself. He could threaten 507 00:28:16,920 --> 00:28:19,840 Speaker 1: to fire the FED chair. He could stack some more 508 00:28:19,960 --> 00:28:24,760 Speaker 1: seats on the committee on the board with more Delvish members, um. 509 00:28:25,000 --> 00:28:28,320 Speaker 1: And I think the context in the environment is important. 510 00:28:28,720 --> 00:28:32,680 Speaker 1: We are growing quite quickly. UH. Inflation has ticked above 511 00:28:32,720 --> 00:28:35,560 Speaker 1: their target and UH and might continue to rise. The 512 00:28:36,119 --> 00:28:39,560 Speaker 1: capital markets, equities in particular, are very strong. Unemployment is 513 00:28:39,600 --> 00:28:42,240 Speaker 1: as low as it's been in a generation. And again, 514 00:28:42,320 --> 00:28:46,880 Speaker 1: monetary policy is still loose, and the president's upset with 515 00:28:46,880 --> 00:28:51,200 Speaker 1: with money that isn't cheap enough, Soraig. Given given that backdrop, 516 00:28:51,280 --> 00:28:54,040 Speaker 1: I was interested in what Atlanta Fed Raphael Bostic said 517 00:28:54,360 --> 00:28:56,960 Speaker 1: earlier this week or a couple of days ago, anyway 518 00:28:57,400 --> 00:28:59,480 Speaker 1: where he was speaking. He said, you know, he didn't 519 00:28:59,480 --> 00:29:02,160 Speaker 1: want to raise interest rates to a point where he 520 00:29:02,200 --> 00:29:04,680 Speaker 1: inverts the yield curve. Seems like that's very much on 521 00:29:05,360 --> 00:29:09,120 Speaker 1: Federal Reserve members minds. What do you expect how that 522 00:29:09,200 --> 00:29:14,720 Speaker 1: influence what they do? Not very much? All right? Then there. 523 00:29:15,960 --> 00:29:18,680 Speaker 1: I think the board staff has looked at this and 524 00:29:18,840 --> 00:29:22,280 Speaker 1: somewhat dismissed it. And I would add this, if Rafael 525 00:29:22,320 --> 00:29:25,360 Speaker 1: Bostic is so concerned about the yield curve, then he 526 00:29:25,360 --> 00:29:29,120 Speaker 1: should be arguing that they shorten the maturity of their 527 00:29:29,160 --> 00:29:34,160 Speaker 1: portfolio and sell those assets a little bit faster. That's 528 00:29:34,160 --> 00:29:36,280 Speaker 1: really interesting. That's a fascinating point. Other words, step in 529 00:29:36,280 --> 00:29:38,400 Speaker 1: the yield curve another way, don't just stop hiking interest 530 00:29:38,480 --> 00:29:41,800 Speaker 1: rates on the short end. Thank you both. Fascinating conversation. 531 00:29:42,280 --> 00:29:46,080 Speaker 1: Mark Spindel, founder and Chief investment officer of Potomac River Capital, 532 00:29:46,120 --> 00:29:48,760 Speaker 1: also the co author of the book The Myth of Independence, 533 00:29:48,800 --> 00:29:51,520 Speaker 1: How Congress Governs the Federal Reserve, And of course my 534 00:29:51,560 --> 00:29:54,840 Speaker 1: thanks to Craig Torah's Federal Reserve and US Economy reporter 535 00:29:55,160 --> 00:29:58,160 Speaker 1: from Bloomberg News who always has fantastic stories. I recommend 536 00:29:58,200 --> 00:30:04,800 Speaker 1: to read them. Thanks for listening to the Bloomberg P 537 00:30:04,920 --> 00:30:07,880 Speaker 1: and L podcast. You can subscribe and listen to interviews 538 00:30:07,920 --> 00:30:11,960 Speaker 1: at Apple Podcasts, SoundCloud, or whatever podcast platform you prefer. 539 00:30:12,360 --> 00:30:15,960 Speaker 1: I'm pim Fox. I'm on Twitter at pim Fox. I'm 540 00:30:15,960 --> 00:30:19,280 Speaker 1: on Twitter at Lisa Abramo. It's one before the podcast. 541 00:30:19,320 --> 00:30:21,920 Speaker 1: You can always catch us worldwide on Bloomberg Radio.