WEBVTT - Bloomberg Wall Street Week - July 19th, 2024 0:00:00.280 --> 0:00:02.599 This is Bloomberg Wall Street Week. 0:00:02.680 --> 0:00:07.280 The global push into infrastructure, breaking the IPO logjam in text. 0:00:07.160 --> 0:00:09.200 The financial stories that shape. 0:00:08.920 --> 0:00:12.040 Our work, cutting inflation without losing jobs. Do we need 0:00:12.119 --> 0:00:14.560 rate cuts and if so, how many? Investing in the 0:00:14.560 --> 0:00:16.400 time of geopolitical. 0:00:15.680 --> 0:00:18.520 Turmoil Through the eyes of the most influential voices. 0:00:18.720 --> 0:00:22.480 Ten Rogueff Economists of Harvard, former FDIC had Shila Bert 0:00:22.640 --> 0:00:27.360 ge CEO, Larry Coulp, San Francisco FED President, Mary Daily Bloomberg. 0:00:26.840 --> 0:00:30.240 Wall Street Week with David Weston from Bloomberg Radio. 0:00:30.360 --> 0:00:33.839 A nation deals with the aftermath of an assassination attempt. 0:00:34.040 --> 0:00:36.960 Republicans gather in Milwaukee to nominate Donald Trump for what 0:00:37.120 --> 0:00:40.920 increasingly looks like may be his second term, and investors 0:00:41.000 --> 0:00:44.279 react to both. This is Bloomberg Wall Street Week. I'm 0:00:44.360 --> 0:00:48.040 David Weston. This week, Laura Tyson of Berkeley on what 0:00:48.120 --> 0:00:51.239 the coming Ai Revolution could mean for the US economy. 0:00:51.600 --> 0:00:56.600 All of the numbers say significant productivity growth. 0:00:56.880 --> 0:00:59.880 Dan Tarullo of Harvard on what's ahead in banking regula. 0:01:00.640 --> 0:01:04.080 There will be a kind of hold on regulation and 0:01:04.319 --> 0:01:07.160 it would await the Trump appointees. 0:01:07.680 --> 0:01:10.440 And Steve Rattner of Will and Advisors on investing in 0:01:10.520 --> 0:01:12.080 the Trump trade. 0:01:12.120 --> 0:01:15.240 Is probability of success is now too close to seventy percent, 0:01:15.680 --> 0:01:18.200 and that has made the market wake up and say, okay, 0:01:18.319 --> 0:01:28.840 so what are we looking at. 0:01:32.319 --> 0:01:35.080 We start with the banking industry and what effect Washington 0:01:35.160 --> 0:01:37.840 has on its future, with the Chair and CEO of 0:01:37.840 --> 0:01:40.600 Bank of America, Brian Winhan. Great to have you back, Brian. 0:01:40.840 --> 0:01:42.360 Let me ask you. You talk to a lot of 0:01:42.400 --> 0:01:45.080 clients across the country of all sorts, what do they 0:01:45.160 --> 0:01:48.040 tell you about Washington and how Washington may be affecting 0:01:48.080 --> 0:01:50.400 their business for good or not so much for good. 0:01:50.560 --> 0:01:53.360 Look, at the end of the day, banks reflect the economy. 0:01:53.560 --> 0:01:56.880 So it's our customers on the commercial side doing something, 0:01:56.880 --> 0:01:59.560 our customers and consumer side doing something, our institutional. 0:01:59.160 --> 0:02:00.240 Customers doing so. 0:02:00.280 --> 0:02:02.480 Our job is to transmit economy back and forth for 0:02:02.520 --> 0:02:04.680 our clients, and we are product of the success in them. 0:02:04.960 --> 0:02:08.320 When you talk to those clients today, they're saying, hey, 0:02:08.400 --> 0:02:10.959 they want they want to win. They are big clients 0:02:10.960 --> 0:02:12.720 that want to win on a global stage of little clients. 0:02:12.760 --> 0:02:14.480 I want to win on a local stage, and they 0:02:14.480 --> 0:02:17.240 want to win. And what they feel is as the 0:02:17.280 --> 0:02:24.040 burdens of the regulation and rules impinge upon that they 0:02:24.240 --> 0:02:26.120 get feedback and the feedback I get from this, they 0:02:26.160 --> 0:02:29.000 feel the balances need to be rebalanced. That's what they 0:02:29.000 --> 0:02:31.679 tell us. Meanwhile, they're still growing their business, they're still investing. 0:02:31.919 --> 0:02:33.520 So you got to a little careful what they say 0:02:33.560 --> 0:02:35.880 they want versus what they're doing. But the roality is 0:02:35.880 --> 0:02:37.800 is they're saying, hey, get we got to swing the 0:02:37.800 --> 0:02:39.359 penallum back a little bit because in the end of 0:02:39.400 --> 0:02:42.880 the day, they are what America thrives on. We have 0:02:43.040 --> 0:02:45.280 one hundred and a million people work in this country. 0:02:45.360 --> 0:02:48.519 The dominant part work for private enterprises. Our success, the 0:02:48.560 --> 0:02:52.520 ability to fund every governmental program, the defense, everything comes 0:02:52.520 --> 0:02:55.600 from the tax is paid by corporations and individuals who 0:02:55.600 --> 0:02:58.280 work for companies, honestly, so that's where the money comes from. 0:02:58.280 --> 0:03:00.240 So if we're going to have a successful country, and 0:03:00.280 --> 0:03:03.120 based on where we are in America in the world 0:03:03.160 --> 0:03:05.880 right now, we can dominate if we let the capital 0:03:05.960 --> 0:03:08.800 system run right, run with right guardrails run. 0:03:09.120 --> 0:03:12.519 How much of Brian is actual the impingement of regulations 0:03:12.520 --> 0:03:14.840 supposed to talk about it because I'll pick on some 0:03:14.840 --> 0:03:16.359 one right now, and I trust something I know about. 0:03:16.400 --> 0:03:17.639 I used to practice that trust law. 0:03:17.680 --> 0:03:20.000 There's a lot of talk about a trust enforcement from 0:03:20.080 --> 0:03:22.720 the current administration, when if we actually look what happened, 0:03:22.880 --> 0:03:24.360 they didn't get a lot of that through the courts. 0:03:24.360 --> 0:03:25.560 How much it was just the perception. 0:03:25.840 --> 0:03:28.359 We're talking about regulation as opposed to actual regulation. 0:03:28.480 --> 0:03:30.519 Well, in that case, if you think about what happened 0:03:30.560 --> 0:03:32.720 with deals over the last couple of years, any deal 0:03:32.760 --> 0:03:35.480 of size of US announced was purported to be challenged 0:03:35.520 --> 0:03:37.440 in a lot of more. And so therefore, if you're 0:03:37.440 --> 0:03:39.560 sitting in a boardroom saying I'm going to expose my 0:03:39.640 --> 0:03:43.720 company as seller to a transaction a public company, and 0:03:43.760 --> 0:03:45.400 I'm going to stabilize it for the period of time 0:03:45.440 --> 0:03:47.480 it takes to get it done, and I feel that 0:03:47.520 --> 0:03:49.640 it's going to have to go through multiple reviews and 0:03:49.640 --> 0:03:52.320 and ultimately a challenge in court, you know what, We'll wait. 0:03:52.640 --> 0:03:55.200 And that just slowed down deals because of all the 0:03:55.240 --> 0:03:57.520 businesses we have in the company that the thing is 0:03:57.560 --> 0:04:01.560 still there's great pipeline, but not coming through the system 0:04:01.680 --> 0:04:03.800 is still the deal, the m and a deal flow. 0:04:03.840 --> 0:04:05.840 We have a strong pipeline, it's ready to go, but 0:04:05.880 --> 0:04:08.320 the feeling has to be and there's no in our industry, 0:04:08.360 --> 0:04:11.000 we can't make an acquisition by law, we can't. But 0:04:11.000 --> 0:04:12.920 the ability to get bank deals done is something you 0:04:13.000 --> 0:04:15.800 here talked about a lot. Our colleagues want to emerge 0:04:15.800 --> 0:04:17.680 and get better so they can compete with us and 0:04:18.240 --> 0:04:20.680 in our the biggest banks and competitors compete on the 0:04:20.680 --> 0:04:22.920 worldwide stage and they're struggling because they can't get the 0:04:22.960 --> 0:04:23.400 deals done. 0:04:23.440 --> 0:04:25.880 It takes so long. So that's the decision. It's not 0:04:25.880 --> 0:04:27.160 necessarily the deal won't get done. 0:04:27.279 --> 0:04:28.440 Is if it takes a year a year and a 0:04:28.440 --> 0:04:30.719 half to get it through, that is just a very 0:04:30.720 --> 0:04:33.160 destabilizing for the cell side of a company, and on 0:04:33.160 --> 0:04:35.000 a buy side, they just want to grow their business 0:04:35.040 --> 0:04:37.800 and be heroken take the competition, and not everybody has 0:04:37.800 --> 0:04:40.080 a staying power to wait two years to say I'm 0:04:40.080 --> 0:04:41.960 going to put on hold everything I do in a 0:04:42.040 --> 0:04:43.560 unit because I'm going to buy a unit to make 0:04:43.600 --> 0:04:46.159 it grow faster and make it more successful and win 0:04:46.279 --> 0:04:48.640 and make my company the best of the world. 0:04:48.800 --> 0:04:51.000 And if it takes me, you know, two years to 0:04:51.040 --> 0:04:53.599 do that, that means I got to slow down the organic. 0:04:53.360 --> 0:04:55.440 Effort because I think it'll be waste of money if 0:04:55.440 --> 0:04:58.719 this comes in. If that took six months, you know, 0:04:58.760 --> 0:05:01.160 then that changes the calculus. It's more about deal flow 0:05:01.200 --> 0:05:05.119 and capabilities as opposed to what you might see actually 0:05:05.160 --> 0:05:07.400 get stopped or not go or inquiries. 0:05:07.800 --> 0:05:10.039 It's just a chill when it comes to regulation. This 0:05:10.120 --> 0:05:11.880 report had quite a term. In this last term. 0:05:11.880 --> 0:05:14.359 There are four different decisions that basically said we're not 0:05:14.360 --> 0:05:16.600 going to defer to the regulatory agencies nearly as much, 0:05:16.760 --> 0:05:19.400 so supposedly taking on the so called administrative state. At 0:05:19.400 --> 0:05:21.240 the same time, that probably means a lot more litigation. 0:05:21.320 --> 0:05:22.960 It's good for lawyers if you're a lawyer, and I 0:05:22.960 --> 0:05:25.080 have nothing against lawyers making money, that's okay. At the 0:05:25.120 --> 0:05:27.320 same time, do you think that's ultimately good for business 0:05:27.320 --> 0:05:29.200 if the courts get more involved in it and take 0:05:29.240 --> 0:05:30.960 some away from the regultary agencies. 0:05:31.200 --> 0:05:34.280 I know you and I both reform lawyers, and so 0:05:34.760 --> 0:05:36.440 you know, at the end of the day, we are 0:05:36.480 --> 0:05:39.840 for good, clear, fair regulation. That's what our industry, That's 0:05:39.839 --> 0:05:41.279 what I'm for, and that's what our industry is for. 0:05:41.480 --> 0:05:43.520 Give us a set of rules, let us go after. 0:05:43.760 --> 0:05:45.880 If you keep changing the rules back and forth based 0:05:45.920 --> 0:05:50.000 on political movements, based on swings, based on personalities, based 0:05:50.000 --> 0:05:52.560 on studies we may think are relevant not relevant, industry 0:05:52.960 --> 0:05:55.600 that just goes on. So something like Basel three has 0:05:55.640 --> 0:05:57.800 been going on for you know, years, and you're saying, 0:05:57.839 --> 0:05:59.479 please just get it done so we can get on 0:05:59.560 --> 0:06:02.520 with life. Figure out adjust the business model, but don't 0:06:02.520 --> 0:06:05.240 be overburdening in it. So I think that's what you're 0:06:05.240 --> 0:06:06.920 feeling with some of this, and I think the court 0:06:06.960 --> 0:06:09.320 system is saying, wait a second. Whether it was a 0:06:09.440 --> 0:06:11.080 you know, the Chevron doctor and all these, whether there 0:06:11.200 --> 0:06:14.160 was a statement that you know, look, we need regulatory 0:06:14.200 --> 0:06:15.719 agents to be able to go. 0:06:15.640 --> 0:06:16.480 And do what they're doing. 0:06:16.640 --> 0:06:19.520 Wait, maybe that's swung too far. There's too much activism 0:06:19.560 --> 0:06:21.760 in the in the regulatory side as opposed to the 0:06:21.760 --> 0:06:23.240 court side. And if you go back and read the 0:06:23.240 --> 0:06:26.840 great civil rights cases, there was extreme activism to right 0:06:26.960 --> 0:06:29.000 the wrongs of the past in the court side. 0:06:29.080 --> 0:06:30.960 Brian, it's always such a great treat to heavy on 0:06:30.960 --> 0:06:33.280 wills ruburgh, Thank you so much. That's Brian moynahan, and 0:06:33.320 --> 0:06:37.240 he's chair and CEO of Bank of America. Bank regulators 0:06:37.279 --> 0:06:39.800 went back to the drawing board on those proposed regulations 0:06:39.800 --> 0:06:42.799 to meet the Basel three requirements, and Terry Powell says 0:06:42.839 --> 0:06:44.760 that the new proposals we're going to see the later 0:06:44.880 --> 0:06:47.279 this year are likely to look somewhat different from what 0:06:47.279 --> 0:06:49.400 we saw the first time around. To take us through 0:06:49.440 --> 0:06:51.839 what we should expect, we welcome back now former Federal 0:06:51.880 --> 0:06:55.200 Reserve Board Governor Dan Trulo of Harvard. So, Dan, thank 0:06:55.200 --> 0:06:57.280 you so much for being back with us. There's a 0:06:57.320 --> 0:06:59.000 lot of speculations they're going to be cutting back. 0:06:58.880 --> 0:06:59.560 In these regulations. 0:06:59.600 --> 0:07:02.400 Let me ask basic question there to comply with Basil three, 0:07:02.520 --> 0:07:04.920 how much leeway is there to cut back and still 0:07:04.960 --> 0:07:06.680 be consistent with the commitments. 0:07:07.880 --> 0:07:11.160 So there's a fair amount of leeway, David, particularly in 0:07:11.200 --> 0:07:14.760 the proposals that the three agencies made last year. On 0:07:14.800 --> 0:07:19.720 the credit side, they went well beyond what Basil three 0:07:19.920 --> 0:07:24.280 had agreed to. There's a little bit less room in 0:07:24.320 --> 0:07:27.520 the other areas, that is operational risk and market risk. 0:07:28.320 --> 0:07:32.200 And actually I would not be surprised if on operational 0:07:32.320 --> 0:07:37.720 risk the agencies depart some from the Basle agreement, because, 0:07:37.840 --> 0:07:41.000 to be perfectly honest, the Basil Agreement on operational risk 0:07:41.160 --> 0:07:43.680 was not especially well done. 0:07:44.040 --> 0:07:46.680 So what do you expect, especially what we'll see when 0:07:46.680 --> 0:07:48.680 the next route of proposal go on. Will they be 0:07:48.680 --> 0:07:50.040 cutting back in the reserve requirements? 0:07:50.520 --> 0:07:50.720 Oh? 0:07:50.800 --> 0:07:53.080 Sure, no question about it. 0:07:53.280 --> 0:07:56.520 I think Chair Powell has made no secret of the 0:07:56.560 --> 0:08:01.240 fact that there'll be substantial changes, which means a significant 0:08:01.280 --> 0:08:05.280 reduction in the required increase in capital. But I do 0:08:05.440 --> 0:08:09.600 expect that the amount of increase will vary quite a 0:08:09.600 --> 0:08:11.280 bit depending on the business. 0:08:10.920 --> 0:08:11.800 Model of the bank. 0:08:12.280 --> 0:08:15.840 I think you can expect to see the banks with 0:08:16.400 --> 0:08:20.280 most market risk it is trading activity, capital markets and 0:08:20.320 --> 0:08:23.720 the like, I think you can expect that their requirements 0:08:23.800 --> 0:08:28.880 will go up more than banks that are straight traditional 0:08:28.960 --> 0:08:33.360 lenders where most of it's traditional loans and deposit taking. 0:08:34.559 --> 0:08:38.559 On the operational risk side, I still fear that we're 0:08:38.600 --> 0:08:41.079 going to have a little bit of a perverse outcome 0:08:41.440 --> 0:08:44.800 where some of the banks that have de risked get 0:08:44.880 --> 0:08:47.800 hit a little bit by the operational risk charges on 0:08:47.880 --> 0:08:51.120 things like wealth management. So I guess I would say, 0:08:51.160 --> 0:08:53.720 if you're a bank with a lot of trading and 0:08:54.120 --> 0:08:59.000 a fair degree of non credit operational risk, you're probably 0:08:59.040 --> 0:09:03.360 going to see your our capital requirements go up more 0:09:03.400 --> 0:09:07.360 than anybody else's. If you're a traditional regional bank, I 0:09:07.400 --> 0:09:10.600 suspect the increase will be very very modest. 0:09:11.400 --> 0:09:13.920 If Donald Trump is in fact elected, how might that 0:09:14.200 --> 0:09:15.200 change the calculus? 0:09:15.559 --> 0:09:19.679 Well, in the first place, David, given the intent to repropose, 0:09:20.280 --> 0:09:24.920 it's very unlikely that a final rule could be done 0:09:25.360 --> 0:09:27.760 before the end of the year, much less before election day. 0:09:28.360 --> 0:09:33.080 And so if past pattern patterns hold, there will be 0:09:33.200 --> 0:09:37.679 a kind of hold on regulation, and it would await 0:09:38.160 --> 0:09:43.120 the Trump appointees, certainly to the FDIIC and the OCC 0:09:44.240 --> 0:09:48.640 to make their own decisions. So that probably means that 0:09:49.720 --> 0:09:52.000 at the very least there'd be a further delay and 0:09:52.320 --> 0:09:55.600 you could quite possibly have additional changes. 0:09:56.480 --> 0:09:58.760 This week we learned who the nominee for Vice President 0:09:58.800 --> 0:10:00.880 of publican side will be as well. Jd Vance, the 0:10:00.880 --> 0:10:03.280 Senator from Ohio, And normally I would say, well, it's 0:10:03.280 --> 0:10:05.200 a vice president, let's not worry about it. But he, 0:10:05.280 --> 0:10:07.320 as I understand it from you, has had some things 0:10:07.320 --> 0:10:08.200 to say about banks. 0:10:09.080 --> 0:10:12.320 Oh sure, he's on the Senate Banking Committee and his 0:10:12.640 --> 0:10:15.920 you know, you can't you wouldn't. You would make a 0:10:15.960 --> 0:10:19.000 mistake if you try to just slot him as you know, 0:10:19.160 --> 0:10:24.240 bank or industry friendly or antagonistic. I think he has 0:10:24.240 --> 0:10:28.120 his own set of views. He's said some things and 0:10:28.720 --> 0:10:31.960 assigned onto some bills that are kind. 0:10:31.840 --> 0:10:32.959 Of pro regulatory. 0:10:33.080 --> 0:10:36.640 He eventd some skepticism about the growth of very large banks. 0:10:37.760 --> 0:10:39.960 On the other hand, obviously in a lot of areas 0:10:40.000 --> 0:10:42.600 he thinks there's been too much regulation, But I would 0:10:42.640 --> 0:10:46.800 say on banking there's at least a chance that that's 0:10:46.960 --> 0:10:49.200 one of the areas because of his service on the 0:10:49.240 --> 0:10:52.360 Banking Committee, in which he takes a real interest if 0:10:52.640 --> 0:10:55.280 they if the Trump Banks ticket should be elected. 0:10:55.760 --> 0:10:57.400 And finally, Dan, let me return to something you and 0:10:57.400 --> 0:10:59.560 I have talked about before, which is the so called 0:10:59.600 --> 0:11:03.280 non banks out there and the difference in the banks 0:11:03.320 --> 0:11:05.560 and the growth of the non banks and what they're doing. 0:11:05.840 --> 0:11:08.280 One of the things you've pointed out is perhaps a 0:11:08.400 --> 0:11:10.960 change is they're becoming frontemies, if I can put it 0:11:10.960 --> 0:11:13.760 that way. They're increasingly cooperating one with the other. And 0:11:13.800 --> 0:11:16.200 I wonder what rapplications that might have for the system, 0:11:16.320 --> 0:11:18.840 particularly not understanding the way you do, whether in fact 0:11:18.880 --> 0:11:20.840 systemic risks could come in through the back door. 0:11:21.679 --> 0:11:23.960 Yeah, I'm not sure I understand it either, David, which 0:11:24.000 --> 0:11:26.800 probably point I understand the scope of it, and I 0:11:26.800 --> 0:11:29.360 think that points to maybe the biggest issue right now, 0:11:29.360 --> 0:11:33.400 which is one of having the data, the information to 0:11:33.480 --> 0:11:37.199 make an evaluation on this. You do the agencies both 0:11:37.280 --> 0:11:42.120 domestically and internationally. Know the degree to which you know 0:11:42.360 --> 0:11:47.120 a hedge fund or a private credit fund has credit relationships, 0:11:47.200 --> 0:11:52.040 contingent funding relationships with banks, the degree to which asset 0:11:52.440 --> 0:11:56.120 funds may take some of the synthetic risk that's being 0:11:56.160 --> 0:12:01.280 transferred by the banks, the derivatives, counterparty real relationships. I 0:12:01.320 --> 0:12:05.560 don't think we've got the kind of information and the 0:12:05.600 --> 0:12:08.920 form that's needed in order to make an assessment there. 0:12:09.280 --> 0:12:11.400 And you know, one doesn't want to be alarmist, but 0:12:11.679 --> 0:12:16.840 obviously the trend towards more interaction between non banks and 0:12:16.920 --> 0:12:22.000 banks has continued, and you know, the Financial Stability Oversight 0:12:22.120 --> 0:12:25.800 Committee and the US the Financial Stability Board internationally, we're 0:12:25.840 --> 0:12:28.280 just going to have to do more to try to 0:12:28.320 --> 0:12:31.439 get their arms around exactly where the risks may arise. 0:12:32.040 --> 0:12:33.720 And it's always so helpful to have you with us. 0:12:33.760 --> 0:12:35.520 Thank you so much for your time. That is Professor 0:12:35.600 --> 0:12:40.560 Dan Tarulo of Harvard. Coming up at the end of 0:12:40.559 --> 0:12:44.120 a week, the odds of Donald Trump being re elected rise. 0:12:44.280 --> 0:12:47.520 We talk with investor Stephen Rattner Wilder Advisors about what 0:12:47.679 --> 0:12:52.000 it could mean for his portfolio. That's an Next Time 0:12:52.040 --> 0:12:53.640 Wall Street Week on Bloomberg. 0:12:54.920 --> 0:12:59.720 This is Bloomberg Wall Street Week with David Weston from Bloomberg. 0:13:00.120 --> 0:13:07.680 You this is Wall Street Week. 0:13:07.720 --> 0:13:08.520 I'm David Weston. 0:13:08.559 --> 0:13:11.880 The attempted assassination of former President Trump and the tragic 0:13:11.880 --> 0:13:15.040 shooting of innocent bystanders shook a nation already in the 0:13:15.080 --> 0:13:18.640 throes of a tumultuous presidential campaign and added to the 0:13:18.679 --> 0:13:21.520 momentum that mister Trump was already experiencing in the race 0:13:21.840 --> 0:13:24.240 to take us through the market reaction what a second 0:13:24.400 --> 0:13:28.000 term of a Trump presidency could mean for investors. Welcome now, 0:13:28.280 --> 0:13:31.760 Stephen Ratner, chairman of Willed Advisors, which invests the personal 0:13:31.800 --> 0:13:35.600 and philanthropic assets of Michael Bloomberg, our founder and majority shareholder. 0:13:35.960 --> 0:13:37.600 I always a treat to have you here, Steve. Thank 0:13:37.640 --> 0:13:38.280 you for going back. 0:13:38.320 --> 0:13:39.360 Thanks for having me, David. 0:13:39.520 --> 0:13:40.920 So, one of the themes of this week is, so 0:13:40.960 --> 0:13:43.720 this so called Trump trade, given what's going on, apparently 0:13:43.800 --> 0:13:45.400 we don't know about what's going on. Apparently in the 0:13:45.440 --> 0:13:49.120 campaign it seems like at least there's a substantial possibility 0:13:49.320 --> 0:13:51.960 that Donald Trump will be our next president. What is 0:13:52.040 --> 0:13:54.000 in the Trump trade? What are people reacting to in 0:13:54.040 --> 0:13:54.440 the market. 0:13:54.600 --> 0:13:55.160 Well, well, first of. 0:13:55.160 --> 0:13:56.560 All, there's a number of different things going on in 0:13:56.559 --> 0:13:57.800 the market at the moment. There are a lot of 0:13:57.800 --> 0:13:59.640 cross currents and so forth. But if we want to 0:13:59.679 --> 0:14:02.800 just focus on the Trump trade, his probability of success 0:14:02.880 --> 0:14:05.720 is now too close to seventy percent, and that has 0:14:06.080 --> 0:14:07.960 made the market wake up and say, okay, so what 0:14:08.000 --> 0:14:09.040 are we looking at? 0:14:09.080 --> 0:14:10.400 And so it really. 0:14:10.640 --> 0:14:14.079 Spans a huge gamut of things, everything from gun manufacturers, 0:14:14.600 --> 0:14:17.120 for profit education which thinks they're going to benefit if 0:14:17.120 --> 0:14:20.080 he stops us through the loan forgiveness, to the GSS 0:14:20.120 --> 0:14:23.560 Fanny and Freddy because maybe he won't, he won't take 0:14:23.560 --> 0:14:28.760 the dividends sweep anymore, energy stocks, manufacturing companies that might 0:14:28.800 --> 0:14:32.280 benefit from the tariffs, and so investors are rushing around 0:14:32.280 --> 0:14:34.640 looking for all the different places they think they would 0:14:34.680 --> 0:14:36.840 benefit from another Trump presidency. 0:14:37.040 --> 0:14:38.560 One of the things I think we've seen is in 0:14:38.600 --> 0:14:41.920 the bond curve, basically for treasuries, because there's a sense 0:14:41.960 --> 0:14:44.360 that actually there's going to be higher rates out there 0:14:44.400 --> 0:14:46.720 in the long end of the curve, which changes a 0:14:46.720 --> 0:14:49.960 fair number of things. What is the possibility of Trump 0:14:50.040 --> 0:14:53.440 presidency with these economic policies leading to more inflation, therefore 0:14:53.440 --> 0:14:55.040 the Fed babe having to raise rates again. 0:14:55.120 --> 0:14:57.280 Well, the bond trade's a little complicated because we did 0:14:57.320 --> 0:14:59.000 have that good in the sense of being a slightly 0:14:59.040 --> 0:15:01.760 soft jobs number, and the predicted number of FED rate 0:15:01.800 --> 0:15:04.560 cuts is now up to something over too, and therefore 0:15:04.640 --> 0:15:07.080 the ten years started to come down. And now you 0:15:07.160 --> 0:15:09.320 have the Trump piece layering on that, pushing it up 0:15:09.360 --> 0:15:11.680 a little bit, but not hugely. But I don't think 0:15:11.680 --> 0:15:14.880 there's a lot of doubt that his fiscal policies, as 0:15:14.920 --> 0:15:19.880 express would be, would be inflationary and therefore biased toward 0:15:19.960 --> 0:15:20.880 higher interest rates. 0:15:21.080 --> 0:15:23.440 So we talk about that tax Cutting Jobs Act. So 0:15:23.640 --> 0:15:25.840 we had Scott bessin on last week and he said, oh, no, 0:15:25.840 --> 0:15:26.480 don't worry about it. 0:15:26.480 --> 0:15:27.480 We're gonna save a lot of money. 0:15:27.560 --> 0:15:30.280 We're gonna save a trillion dollars a year from the 0:15:30.320 --> 0:15:33.720 basically undoing the Inflation Reduction Act. We're gonna save another 0:15:33.760 --> 0:15:36.800 trillion by redoing Medicare. And now I will note that 0:15:36.840 --> 0:15:38.600 when President Trump had came in the first time, he 0:15:38.600 --> 0:15:40.360 said they were going to get rid of Obamacare. That 0:15:40.400 --> 0:15:42.520 would save us low money. But one of the prospects 0:15:42.560 --> 0:15:44.800 that actually would cut back into of the spending under 0:15:44.800 --> 0:15:45.520 the Bid administration. 0:15:45.560 --> 0:15:47.760 Well, remember that we didn't get rid of Obamacare because 0:15:47.800 --> 0:15:51.320 John McCain and because while he had technically had control 0:15:51.360 --> 0:15:54.360 of both Houses of Congress, he lost a Republican that 0:15:54.440 --> 0:15:56.840 costs him that. So a lot of this is going 0:15:56.840 --> 0:15:59.560 to depend on what happens to Congress. If both Houses 0:15:59.560 --> 0:16:02.480 of Congress scoe Republican, then he's obviously got much more 0:16:02.480 --> 0:16:04.280 scope to do a bunch of stuff. 0:16:04.400 --> 0:16:06.400 Whether he really would do it or not, who knows. 0:16:06.680 --> 0:16:09.400 The record of the first Trump presidency was not good 0:16:09.640 --> 0:16:11.600 from a fiscal point of view. The deficit went up 0:16:11.600 --> 0:16:14.800 by hundreds of billions of dollars before COVID ever arrived, 0:16:15.120 --> 0:16:18.120 in large part because the TCJA never came close to 0:16:18.160 --> 0:16:20.280 paying for itself. It was close to two trillion dollar 0:16:20.360 --> 0:16:23.440 costs with no offsets in spending and no real revenues 0:16:23.440 --> 0:16:24.280 associated with it. 0:16:24.480 --> 0:16:26.760 So that's all on the text. The revenue side is 0:16:26.760 --> 0:16:28.800 that were What about tariffs? The one thing in Prisident 0:16:28.880 --> 0:16:31.760 Trouble has always seemed to enjoy is been imposing tariffs, 0:16:31.800 --> 0:16:34.200 particularly on China, but not only on China. Frankly, he 0:16:34.280 --> 0:16:36.560 likes tariffs. That does, of course increase the cost to 0:16:36.600 --> 0:16:38.800 the consumers, and therefore I guess inflation. 0:16:38.880 --> 0:16:41.640 Sure, And by the way, his last set of tariffs, 0:16:41.680 --> 0:16:44.040 which were far less robust than what he's talking about now. 0:16:44.280 --> 0:16:46.040 Hra he'sed something like thirty billion of revenue. I thought 0:16:46.080 --> 0:16:48.320 you were going to ask about revenue, very little contribution 0:16:48.400 --> 0:16:48.920 to revenue. 0:16:49.120 --> 0:16:50.520 The evidence is overwhelming. 0:16:51.040 --> 0:16:54.240 Many economists have studied this that essentially one hundred percent 0:16:54.360 --> 0:16:56.360 ninety five, one hundred and five percent something in that 0:16:56.400 --> 0:16:59.240 ballpark was paid for by consumers. None of it was 0:16:59.280 --> 0:17:01.440 paid for by child Maybe a little of it came 0:17:01.480 --> 0:17:03.800 out of the companies in terms of profit margins, but 0:17:03.920 --> 0:17:06.800 essentially it was paid for by consumers and was therefore inflationary. 0:17:06.800 --> 0:17:09.280 Now they were very limited tariffs. Start talking about ten 0:17:09.320 --> 0:17:11.600 percent across the board on all imports, you're in a 0:17:11.640 --> 0:17:12.639 different ballgame when we. 0:17:12.640 --> 0:17:14.639 Talk about inflation. One of the things we naturally think 0:17:14.680 --> 0:17:15.720 about is the feder Reserve. 0:17:15.760 --> 0:17:18.360 It's their job. Actually, it has price stability. Right. 0:17:19.040 --> 0:17:21.800 There's a lot of speculation, not necessarily coming from Donald 0:17:21.800 --> 0:17:25.600 Trump himself, it's from people around him like Peter Navarro, 0:17:25.760 --> 0:17:26.800 who's talked about firing J. 0:17:26.920 --> 0:17:27.200 Powell. 0:17:27.520 --> 0:17:30.040 But what are the prospects of really undermining to some 0:17:30.119 --> 0:17:31.600 extent the independence of the Fed. 0:17:32.040 --> 0:17:35.600 That's to me incredibly scary. I think the independence of 0:17:35.640 --> 0:17:38.400 the FED. They don't get everything right. They got inflation wrong. 0:17:38.440 --> 0:17:40.359 Will stipulate to that they got some stuff wrong in 0:17:40.400 --> 0:17:43.160 twenty nineteen. They may have gotten some stuff wrong coming 0:17:43.200 --> 0:17:45.120 out of the GFC, although they did a great job 0:17:45.160 --> 0:17:48.639 generally in the GFC. But let's just stipulate the independence 0:17:48.640 --> 0:17:52.000 of the FED is critical and central to our economic success. 0:17:52.080 --> 0:17:54.440 There's no if sands or butts about that. You would 0:17:54.440 --> 0:17:56.400 not want the Congress or the White House in charge 0:17:56.400 --> 0:17:59.280 of monetary policy. And so any step to undermine the 0:17:59.320 --> 0:18:02.399 FED by any president of either party should be something 0:18:02.440 --> 0:18:04.600 that we all push back as strongly as possible. 0:18:05.680 --> 0:18:08.240 So overall, why do we find so many investors who 0:18:08.240 --> 0:18:09.560 are backing President Trump. 0:18:09.680 --> 0:18:12.040 They have a variety of reasons that I understand their reasons. 0:18:12.280 --> 0:18:14.720 For example, one of the biggest reasons you hear is 0:18:14.760 --> 0:18:17.560 the regulatory stuff. There's no question, and now, in fairness 0:18:17.640 --> 0:18:19.959 to the President, although he appointed these people, they are 0:18:19.960 --> 0:18:23.159 independent regulatory agencies. But nonetheless a lot of what the 0:18:23.200 --> 0:18:25.240 FTC has been trying to do, a lot of what 0:18:25.320 --> 0:18:27.600 the SEC has been trying to do, even the FCC, 0:18:27.680 --> 0:18:31.800 the FDA really has upset business and they simply feel 0:18:31.840 --> 0:18:34.520 that this president is too progressive, and they feel that 0:18:34.560 --> 0:18:37.560 his vice president, should she become president, he's even more progressive, 0:18:37.920 --> 0:18:39.600