Speaker 1: Who you put your trust in matters. Investors have put
Speaker 1: their trust in independent registered investment advisors to the tune
Speaker 1: of four trillion dollars. Why learn more and find your
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 On Bloomberg Surveillance Today. Greg
Speaker 1: Valier from Horizon Investments, David Harrow of Harris Associates, Megan
Speaker 1: Green for Manual Life, and Stephen Roach, formerly Morgan Stanley's
Speaker 1: Chief Economists, former Chairman of Morgan Stanley Asia, now Senior
Speaker 1: Lecturer at the Jackson Institute of Global Affairs at Yale
Speaker 1: University and Senior lecturer at the School of Management. And Stephen,
Speaker 1: great to have you with us, Great to be here.
Speaker 1: Thank you. I wonder how you were going to be
Speaker 1: Uh want has Stephen Roach, renowned economist, is going to
Speaker 1: be watching the results come in? And I don't mean
Speaker 1: are you gonna get a spot on a couch? And
Speaker 1: the Schwartzman Center, Yale not to watch the votes rolling,
Speaker 1: But what are you gonna be looking for? How are
Speaker 1: you going to process what's happening here tonight and indeed
Speaker 1: maybe tomorrow. You know, I I, as I said on
Speaker 1: TV a few minutes ago, I have a sneaking suspicion
Speaker 1: this is not going to be close. That the poll
Speaker 1: showed a little bit of momentum post uh FBI twist
Speaker 1: and and and that that is now out of the
Speaker 1: the game. And I think that the American public, um,
Speaker 1: I think we have to give them credit for having
Speaker 1: more character than um uh Donald Trump does. And I
Speaker 1: think there's gonna be a strong reaction against uh everything
Speaker 1: that he stands for. And I think that, you know,
Speaker 1: the decency of the American people will ultimately prevail in
Speaker 1: choosing the next president. We've talked a lot about d
Speaker 1: we can continue to talk about here what effect the
Speaker 1: election could have on the economy going forward. But looking
Speaker 1: back on the campaign, that's incredibly long, nineteen month campaign,
Speaker 1: what measurably, what effects measurably have that had has that
Speaker 1: had on the on the economy. I don't think it's
Speaker 1: had much of anything. I think the economy is is
Speaker 1: really been operating um with the very little steam. Growth
Speaker 1: has faltered a lot in the last UM year from
Speaker 1: an already anemic trajectory that had been on since the crisis.
Speaker 1: I think the economy is struggling against a lot of
Speaker 1: tough headwinds. Some of the headwinds are global, but most
Speaker 1: of them are of our own making. The Federal Reserve
Speaker 1: is done everything and it's power to jump start the
Speaker 1: economy with zero interest rates and massive balance sheet expansion.
Speaker 1: That hasn't worked. Uh. We haven't gotten the fiscal kick
Speaker 1: that many believe would make a difference. I'm a little
Speaker 1: suspicious of that as well as if we can manufacture
Speaker 1: a recovery and aggregate consumer demand by infrastructure spending, as
Speaker 1: the secular stagnation crowd would want you to believe. Um.
Speaker 1: I think we need a deep rethink of of the
Speaker 1: dynamics or lack there of the American economy. And I
Speaker 1: think that's what um uh President Clinton is going to
Speaker 1: have to face in early on in her administration. This
Speaker 1: hasn't been a campaign of real serious thinking that There's
Speaker 1: been a lot of rhetoric and other possy is she's
Speaker 1: a are you at all optimistic that we will get
Speaker 1: that that period of introspection, that that will have a
Speaker 1: deep think about where the economy. I think that's a
Speaker 1: terrific question. And I think, um, uh, the one thing
Speaker 1: I do know about um Hillary Clinton as a you know,
Speaker 1: as a senator, actually as a first lady, as a
Speaker 1: Secretary of State, that she has got a spectacular her mind, uh,
Speaker 1: and she's had to put a lot of that intellectual
Speaker 1: firepower on old deal with very aggressive and a nasty campaign.
Speaker 1: And I hope she can go back to her strengths
Speaker 1: as somebody who really gets the the concepts and the
Speaker 1: issues uh that are at the heart of the challenge
Speaker 1: that she will face as president, not just in the
Speaker 1: economic arena, but in the foreign policy arena and in
Speaker 1: the social arena as well. And she's got, uh, I think,
Speaker 1: great skill sets to to grapple with all of those
Speaker 1: and then put them together. And let's hope that she
Speaker 1: can put together the team that can really address these challenges.
Speaker 1: Steven Roae Triville University with us today of course his
Speaker 1: book classic book, The Next Asia, as we talked to
Speaker 1: him about the Next America. Or you can also follow
Speaker 1: David Gura, who will be on radio for hours and
Speaker 1: then I believe John Tucker, they've given him away on
Speaker 1: television during the daylight hours. Will be Oh, parent teacher conference,
Speaker 1: let's go right, How do our surveillance expert on parent
Speaker 1: teacher conferences? He has nine daughters? Stephen, Steve, Sorry, how
Speaker 1: do you approach a parent teacher conference? Help younger? Coffee?
Speaker 1: Lots of coffee and um deference. Right, yeah, listen, be
Speaker 1: a be a good listener, and but draw the line,
Speaker 1: you know, if it goes a little too far, stand
Speaker 1: up for your kid. Understood. I love it. Uh. Let
Speaker 1: me ask you about I'm glad you brought up the
Speaker 1: specter of fiscal stimulus. Both these candidates have talked about
Speaker 1: spending billions on infrastructure here if if they're elected, what
Speaker 1: what are the what are the what could be the
Speaker 1: near term effects of that? What could be the long
Speaker 1: term effects of something like that? If indeed there are
Speaker 1: potential for long term effects. Look, America needs to repair
Speaker 1: its infrastructure. I mean, you know, on the car right
Speaker 1: in today from um Connecticut into Manhattan, you know, I
Speaker 1: think I had um whiplash multiple times from hitting innumerable
Speaker 1: potholes and us is you know, not even the pothole season,
Speaker 1: Yet the roads in the city, the airports in this
Speaker 1: city are pathetic. We all know we need infrastructure, but
Speaker 1: is this going to fix what ails the American economy?
Speaker 1: We need to look at that very carefully. Infrastructure can
Speaker 1: boost aggregate demands through public sector spending for a temporary
Speaker 1: period of time, but unless it catches on to drive
Speaker 1: consumers and businesses to really raise their sights on growth,
Speaker 1: aspirations and expectations, Uh, then it's again. It's it's sort
Speaker 1: of like pushing on a string, and we've been pushing
Speaker 1: on lots of strings in the last ten years. Let's
Speaker 1: take you back to Morgan Stanley. You and Dick burn
Speaker 1: are sitting around at a table twenty years ago, and
Speaker 1: somebody says, here's the aggregate economy two point whatever percent,
Speaker 1: But we really ought to take out inventories and take
Speaker 1: out exports. That parlor games going on right now. Do
Speaker 1: you disaggregate economic growth to make it a domestic statistic
Speaker 1: or do you take it all in and say the
Speaker 1: last quarter was actually pretty good? Look, Tom, I mean
Speaker 1: g d P is a broad construct that consists of
Speaker 1: lots of different pieces. Um I In in the last
Speaker 1: ten years um more so than my good friend Dick
Speaker 1: has focused on the American consumer, because I think that
Speaker 1: has really been uh uh the Achilles heel of the
Speaker 1: U s economy, as consumers binged out on spending by
Speaker 1: borrowing against a property bubble and using a credit bubble
Speaker 1: to do it. When the bubbles burst, the consumer was
Speaker 1: left holding the bag and they're still trying to climb out.
Speaker 1: Pulls her open to New Hampshire. David blanche Flower tweeting out,
Speaker 1: let me quote exactly the esteemed professor from Dartmouth College.
Speaker 1: I am in the great advocate of KWEI. I am
Speaker 1: an immigrant, and I am voting proudly for at Hillary Clinton.
Speaker 1: That from Professor blanch Flower, Uh, there's not alone in Hanover,
Speaker 1: Steve Roach, where's our immigration right now? The answer is
Speaker 1: there's less immigration, and that folds directly into less nominal GDP,
Speaker 1: doesn't it? Well? I think you know, the one distinguishing
Speaker 1: feature about the US economy compared to other developed economies
Speaker 1: is that we can continue to enjoy population growth both
Speaker 1: through up a positive uh net birth rate as well
Speaker 1: as their positive immigration tom and and although the rate
Speaker 1: of increases somewhat slower than it has been. Uh. We
Speaker 1: we continue to um uh, as I said, boost our workforce,
Speaker 1: and um we need to do that to overcome very
Speaker 1: tough productivity headwinds. David gerin time Keene thrilled you with
Speaker 1: us nationwide this election day. Good morning on Sirious an
Speaker 1: XM Channel one nineteen. Many of you, I'm sure going
Speaker 1: to the polls and waking up across Central Mountain and
Speaker 1: Pacific time as well. We begin our coverage this morning
Speaker 1: with Stephen Roach of Yale University. Stephen, I want to
Speaker 1: color the consumer here. You have provided immense leadership in
Speaker 1: the shortfall of our consumption. Is it just we build
Speaker 1: up so much debt coming out of World War Two,
Speaker 1: moving on and then even adding on more debt from there. Well, Tom,
Speaker 1: there's a secular uptrend in in debt to income for
Speaker 1: American households. But what happened is that, um, you know,
Speaker 1: in the late nineties in early two thousands, we we
Speaker 1: talked it up in a in a big way, and
Speaker 1: so in debt to income, which had been on an
Speaker 1: upward trend, uh, sword to about um I think a
Speaker 1: hundred thirty of disposable personal income versus an average of
Speaker 1: about seventy in the final three decades of the twentieth century,
Speaker 1: and that debt was levered against a massive, unprecedented property
Speaker 1: bubble UH and aiden and inbedded by your friend the Maestro,
Speaker 1: who believed that um uh rising debt to income was
Speaker 1: not a threat because America was not experiencing a nationwide
Speaker 1: housing bubble. When both bubbles burst, property and credit, UM,
Speaker 1: the consumers were in the biggest hole they'd been in,
Speaker 1: uh since the nineteen thirties. And digging out of that
Speaker 1: hole is what a balance sheet recession is all about.
Speaker 1: And we've made progress. But I'd say, you know, in
Speaker 1: a nine inning baseball game, which you're familiar with, Tom
Speaker 1: as a Red Sox fan, sadly, UM, we're probably in,
Speaker 1: you know, the fifth of the sixth inning, and uh.
Speaker 1: That means there's still a lot to be played, and
Speaker 1: we may even have to go into extra innings. Do
Speaker 1: you see David the hot stove League stove. I mean
Speaker 1: they have the coals upon the fire and Rouch has
Speaker 1: already killing me. I'm still in the therapy. May I
Speaker 1: use that as a segue? You would ask you a
Speaker 1: question about China and the degree to which the administration
Speaker 1: there is worried about, aware of and worried about the
Speaker 1: debt picture. There. We saw a rejiggering of the leadership,
Speaker 1: a new a new finance minister there. What does that
Speaker 1: portend for dealing with that debt in China. There's a
Speaker 1: big debate David, right now inside of China about dead
Speaker 1: intensive growth as a precursor to a Japanese like h
Speaker 1: L shaped economic outcome. That would be an unmitigated disaster
Speaker 1: for China. China doesn't need to go back to ten
Speaker 1: growth that enjoyed for thirty two years, but it's it's
Speaker 1: growing now, you know, around seven UH and most likely
Speaker 1: will slow further UH in the years ahead. But the
Speaker 1: downside UH is of of great concern if China repeats
Speaker 1: the Japanese like um UH debt crisis. The banks are
Speaker 1: play a hugely disproportionate role in China, and that's always
Speaker 1: the place to look for debt related issues. Loan quality
Speaker 1: has deteriorated, both in commercial banks as well as in
Speaker 1: the shadow banking sector, and so there's a lot of
Speaker 1: focus on what the government calls supply side policies. We
Speaker 1: don't know exactly what they are to deliver the Chinese
Speaker 1: economy and so far this is uh uh, you know,
Speaker 1: more talk uh than than reality and addressing this issue.
Speaker 1: If David Guraw I just made a chart, I'm gonna
Speaker 1: call it the roach chart of consumer uh consumption in
Speaker 1: America and the American consumer. If you could take it
Speaker 1: from nineteen sixty to two thousand, we're down fifty and
Speaker 1: consumption growth from the glory of what it used to
Speaker 1: be to what we've seen since August of O seven.
Speaker 1: That's it's halfed amazing statistic. Save that chart, tom I'm
Speaker 1: saving it right now. I'm gonna steal and use it
Speaker 1: on TV tomorrow. Well, you wouldn't be the first time
Speaker 1: you've done that. Thank you. Last question here, Stevid about
Speaker 1: the relationship between China US. Of course, you've written a
Speaker 1: book about this. Has has China been willfully deaf to
Speaker 1: to the rhetoric on this campaign trio? What's the legacy
Speaker 1: of what we've heard over these last nineteen months going
Speaker 1: to be with regard to our relationship with China. That's
Speaker 1: an interesting question, David. I mean, my take on the
Speaker 1: relationship is one of codependency, where China depends on us
Speaker 1: as consumers to buy um goods. That they produce that
Speaker 1: played in a very important part in driving UH their
Speaker 1: economic growth miracle. But we depend on them uh to
Speaker 1: give us the cheap goods and stock the shelves of Walmart,
Speaker 1: um to make ends meet and UM. You know, I
Speaker 1: think in a codependent relationship, usually what happens is one
Speaker 1: partners or of wakes up and changes, UH. And that
Speaker 1: change is going on in China right now. They're trying
Speaker 1: to stimulate their own consumption, which will draw down their
Speaker 1: surplus saving which we have counted on to fund our
Speaker 1: economy and and buy our treasuries and and support our
Speaker 1: deficit spending. So as China changes, and if we don't, UH,
Speaker 1: then there's gonna be a lot of pressure on us
Speaker 1: to figure out a new way to grow. Stephen Roach
Speaker 1: with us with Yale University. He has scheduled in about
Speaker 1: an hour to have a most interesting interview on Bloomberg Television.
Speaker 1: Stephen Roach with his support of the US and the
Speaker 1: support of China UH in discussion we hope with Peter Navarro,
Speaker 1: who has been a great supporter of Trump economics and
Speaker 1: is exceptionally cautious on our relationship with China. David Gerin
Speaker 1: Tom Keene this election day. This is Bloomberg. We hear
Speaker 1: his insights set from time to time as Tom reads
Speaker 1: from his notes. Of course, we talked to him by
Speaker 1: phone often as well as a pleasure to have in
Speaker 1: studio with us Greg Lure of Chief Global Strategy to
Speaker 1: Horizon Investments in New York on election day. Greg, nice sea,
Speaker 1: great to be with you. Let me ask you, in
Speaker 1: light of what's happened here the back and forth over
Speaker 1: this email scandal, are there any black Swan's left in
Speaker 1: the political ponder? Was that it? Well, you hear rumors,
Speaker 1: but hopefully that's it. Yes? Does does this continue to
Speaker 1: to to go on? I'lbeit not one here that the
Speaker 1: the election ends things today, but is this something that
Speaker 1: will continue to dog Secretary Clinton going forward? Absolutely? You know,
Speaker 1: this is Washington. It's a new climate. It's a very bitter, nasty,
Speaker 1: polarized environment. I think there's gonna be hearings and more
Speaker 1: investigations and more partisanship. Her honeymoon will be very short.
Speaker 1: What is the the the Horizon Investments base case at
Speaker 1: this point? How do you see things playing out today
Speaker 1: going into tomorrow? I think a pretty narrow win in
Speaker 1: the Electoral College. I think she wins by two three points,
Speaker 1: maybe four in the popular vote, but without Florida, this
Speaker 1: could only be like she might only get two seventy
Speaker 1: five votes, you need to seventy With Florida, we can
Speaker 1: all go to bed a little earlier. Just in this
Speaker 1: off Twitter, Howard Ward, who gives us wonderful perspective on
Speaker 1: equity markets, tweets out quote, biggest crowd ever seen it
Speaker 1: polls this morning. Mr Ward is of a certain vintage,
Speaker 1: and I'm not sure where his poll is, David, do
Speaker 1: you know where Howard Ward is? I don't know what
Speaker 1: state even But nevertheless, there's the first anecdotal of a
Speaker 1: big turn. Yeah. You hear that every four years, and
Speaker 1: sometimes the final statistics don't bear it out. But the
Speaker 1: early voting is impressive, especially among Hispanics. I think that's
Speaker 1: the major reason why I think Hillary Clinton's gonna win.
Speaker 1: I've had this question three times in the last three
Speaker 1: or four days. You nail it in your morning Note
Speaker 1: the place of Senator Warren within a Clinton presidency. I'm confused.
Speaker 1: Does she move over to the administration, does she stay
Speaker 1: in the Senate? And what's it mean for Global Wall
Speaker 1: Street I think Elizabeth Warren stays in the Senate and
Speaker 1: is a provocateur. I think she'll start sniping. She and
Speaker 1: Bernie Sanders and Paul Krugman will start snipe thing at
Speaker 1: Hillary Clinton by late winter. Does she control who becomes
Speaker 1: Treasury because she controlled as Does she have a veto power? Tom?
Speaker 1: I think yes. I think she does get a veto power.
Speaker 1: She gets to say and whether we move toward a
Speaker 1: single payer health insurance plan, she has a role in
Speaker 1: our troop level in the Middle East, and on and
Speaker 1: on and on. What does it? What does it say
Speaker 1: that we're talking about her as the head of the
Speaker 1: progressive branch of the Democratic Party here and not the
Speaker 1: gentleman who ran ran for the Democratic nomination? Is Bernie
Speaker 1: Sanders now in the in the backdrop and Elizabeth Warren
Speaker 1: in the front. Well, Bernie Sanders has turned seventy five,
Speaker 1: that's getting up there. And I think that Elizabeth Warren
Speaker 1: is going to inherit. His army is a very passionate army.
Speaker 1: And I think if this president elect, Hillary Clinton doesn't
Speaker 1: satisfy her, we'll start to hear speculation about a challenge
Speaker 1: from her. In has the relationship between those two between
Speaker 1: Senator Warren and Secretary Clinton warned. We've seen them both
Speaker 1: on the campaign trail. They weren't the fastest of friends. Yeah,
Speaker 1: but I do think Elizabeth Warren has been such a
Speaker 1: pit bull against Donald Trump that she certainly endeared herself,
Speaker 1: you know, just like the Obama's and the Clintons aren't
Speaker 1: that friendly. I think a campaign this arduous has bonded them.
Speaker 1: Is this the Congress that will do something in these
Speaker 1: next few months, and if so, what's it going to be.
Speaker 1: There's been a lot of talk about the prospects for
Speaker 1: tax reform, prospects of a vote here on on the TPP.
Speaker 1: Do you anticipate anything happening here in the lame duck
Speaker 1: session and then in the first few months of the
Speaker 1: next president's tenure. Lame duck the wild card by far,
Speaker 1: as Merrick Garland, the Supreme Court nomination. They'll keep the
Speaker 1: government open. Whether that will happen early next year. The
Speaker 1: big story by far is the debts sailing, and if
Speaker 1: Paul Ryan doesn't handle that adroitly, there'll be a rebellion
Speaker 1: among his troops. And Paul Ryan is on thin ice.
Speaker 1: Back to the horse race, which folds in all the
Speaker 1: campaigning we've seen, and I don't believe this show has
Speaker 1: talked about it, and I've been remissing that Senator Ruby
Speaker 1: O I believe was a layup. Yeah, that's not true, right,
Speaker 1: I think we got I think he'll win. But let's
Speaker 1: say Hillary Clinton wins Florida by two points. You know
Speaker 1: the Rubio margin is going to be really narrow. I
Speaker 1: I you're right, Tom, I thought a month ago Rubio
Speaker 1: would win by five sex points. Now I'm not quite assure.
Speaker 1: Does he pick up the Latino vote, the same vote
Speaker 1: that very quickly, you're the same vote that Secretary Clinton?
Speaker 1: Gets some of it and he becomes a big player.
Speaker 1: He's got six more years to get some gravity. Toss
Speaker 1: his election day, and we are really honored to have
Speaker 1: in our studio someone who lives the country, lives on airplanes,
Speaker 1: Greg of New Hampshire. On this election day, Greg, we
Speaker 1: try on surveillance to look forward, and by definition that
Speaker 1: means third parties. Anybody who's a student history knows there's
Speaker 1: Ross Perrow and John Anderson and others, But what there
Speaker 1: really is is nineteen twelve. The establishment didn't like that upstart.
Speaker 1: What was his name Risveldi yet bragging about his Philippine exhibition. Yeah,
Speaker 1: we win for another one to be I mean we
Speaker 1: got would Row Wilson out of that race. You had
Speaker 1: two Republicans running against one Democrat, so fearless forecast home.
Speaker 1: I think the Republican Party begins a civil war within weeks,
Speaker 1: maybe within days of this election, bitter bitter opposition to
Speaker 1: Paul Ryan by the Trump people who think Ryan is
Speaker 1: a trader. And I think you could see the Republican
Speaker 1: Party split into two, the Chamber of Commerce more moderate
Speaker 1: Republicans against the Sean Hannity rush Limbaugh Tea Party Republicans.
Speaker 1: If that happens, in that could be the pathway for
Speaker 1: a Democrat to win. Who controls three ten Fruit Street
Speaker 1: Southeast in d C. Now side of the Republican National Committee?
Speaker 1: Who has the case where? Who has the keys? In
Speaker 1: other words, if there is a third party, which which
Speaker 1: Branch is creating, it is the the old guard establishment
Speaker 1: Republican Party leaving where they gonna stay and we're gonna
Speaker 1: see an offshoot. Well I think they're they want to
Speaker 1: stay that We're talking about the chain or commerce, the uh,
Speaker 1: the pro free trade Republicans Mitch McConnell has been very crafty.
Speaker 1: He has endorsed Trump, but not too warmly, whereas again
Speaker 1: Ryan is viewed as a trader. But the core of
Speaker 1: that party I think is the is the more centrist party.
Speaker 1: I think the outcast, the outsiders, the insurgents who were
Speaker 1: so strong at the base around the country, those folks,
Speaker 1: the Sean Hannity wing. I think they're gonna have to
Speaker 1: form their own party, and they'll have a TV network,
Speaker 1: maybe headed by Donald Trump, to advance their narrative. An
Speaker 1: amazing line in your most recent note here, we think
Speaker 1: a Cask Rubio ticket would have won tonight's election, today's
Speaker 1: election by six to eight point margin. Sure, well, you
Speaker 1: look at Ohio eighteen votes, You look at Florida twenty
Speaker 1: nine votes, you look at it. You know so many
Speaker 1: people said, you know, we could accept Kasich, a lot
Speaker 1: of moderates. Would I think this huge defection of Hispanic
Speaker 1: votes that's gonna bury Trump tonight. Obvious Lee wouldn't have
Speaker 1: occurred had Rubio been on the ticket. So I think
Speaker 1: it would have been a vastly different race had have
Speaker 1: been a case of Rubio ticket. Absolutely, what's the consequence
Speaker 1: of the uncertainty that could come out of tonight if
Speaker 1: we don't get a concession speech tonight from from either
Speaker 1: Canada takes us back to two thousand when it dragged
Speaker 1: on and on and on. What does that mean for
Speaker 1: for investors that waiting game and everybody talks about what's
Speaker 1: the implication of she wins? What about if he wins?
Speaker 1: What if? What if we do not have a definitive
Speaker 1: result tonight, that we have hanging chads and recounts for days,
Speaker 1: if not weeks, without anybody being sure who actually won,
Speaker 1: that would be a really bad story. I mean, this
Speaker 1: is an important point, and I guess we're asking for
Speaker 1: your treatment. With decades of perspective on the word rigged,
Speaker 1: What does rigged mean? I think it's overhyped, like so
Speaker 1: much of what Trump says. Yeah, are there people who
Speaker 1: were dead to vote? Of course, are there you know,
Speaker 1: irregularities in Philadelphia, of course, But it rigged. I think
Speaker 1: that's that's a real stretch. Are there biases against Trump? Yes,
Speaker 1: but I think rigged is an explosive word. He's got
Speaker 1: to be careful playing with matches as Secretary Clinton. Of course,
Speaker 1: the pageantry last night in Philadelphia, it was a beautiful
Speaker 1: all the people in front of independence, all in the
Speaker 1: first ladies speaking in the president. When you when you
Speaker 1: look at all this greg it's a nation that has
Speaker 1: to move on the traditional path. Is the president moves
Speaker 1: to the center? Do you predict that for Secretary Clinton?
Speaker 1: Or is it just not going to happen this time.
Speaker 1: I think she'd like to. I think her instinct is
Speaker 1: to move to the center, but she has to deal
Speaker 1: with Elizabeth Warren and Bernie Sanders and a lot of
Speaker 1: Ronald Reagan had to deal with whoever in the South.
Speaker 1: But I think essentially she's a pragmatist. That's how she
Speaker 1: was as a senator, That's how Bill governed, and I
Speaker 1: think she will try to govern as a pragmatist. But
Speaker 1: Elizabeth Warren will start sniping by spring, guarantee. Steven Roach
Speaker 1: and I were joking about the lack of discussion about
Speaker 1: issues in this campaign, lack of discussion about politics. But
Speaker 1: but seriously, here are we ever going to get a
Speaker 1: campaign which issues are at the center? Well, this, sir,
Speaker 1: hasn't been one. I mean, you look at rural America,
Speaker 1: you ask people what their biggest concern is heroin, You
Speaker 1: look at people in the markets who look at ten
Speaker 1: years down the road, we can't necessarily pay for all
Speaker 1: the benefits we promise. I want to rip up the scripture.
Speaker 1: I remember the New Hampshire primary and we were thrilled
Speaker 1: to have you on then from your New Hampshire and
Speaker 1: it was amazing to see establishment the many candidates running,
Speaker 1: and all anybody in the audience wanted to talk about
Speaker 1: was drug addiction in New Hampshire. I mean, I mean
Speaker 1: that was maybe one of those initial points where we
Speaker 1: knew this time was different. You look at the heroin
Speaker 1: overdoses in Manchester, New Hampshire. It's like Baltimore and New
Speaker 1: York Chicago, maybe worse. So I do think there are
Speaker 1: a lot of really important issues, going back to David's
Speaker 1: question that have been ignored, maybe because the prescriptions are
Speaker 1: too better. Everyone's checking to talk about, you know, difficult
Speaker 1: solutions to problems. No one wants to hear this, but
Speaker 1: it's really been an abdication by the politicians. It's a
Speaker 1: good question. How does the agenda change when someone is elected.
Speaker 1: Do you see a President Clinton or President Trump remembering
Speaker 1: what that conversation was like in New Hampshire, maybe elevating
Speaker 1: that on on the agenda. Does that tend to happen
Speaker 1: in the past. It could, But it's a matter of
Speaker 1: what you can get done, and I just don't see
Speaker 1: a lot that she's going to get done. I think
Speaker 1: I see a Congress that will try to block her.
Speaker 1: She'll do a lot with regulations, that's for sure. She'll
Speaker 1: have a big role geo politically, that's for sure. Well,
Speaker 1: I guess one inside baseball and we'll let you go.
Speaker 1: You've ben more than generous with your time this morning.
Speaker 1: I think a week ago there was talk of Vice
Speaker 1: President Biden looking awfully good as a Secretary of State?
Speaker 1: Can he do it early? Too fragile? I don't see it.
Speaker 1: I think he's too prone to gaffs. I think he's
Speaker 1: he doesn't stick to the script enough. Um, he's well liked.
Speaker 1: But I think Joe Biden is secretary is date. That's
Speaker 1: just why that just doesn't add up for me. Who
Speaker 1: would be one, uh, maybe someone who has who has
Speaker 1: left Congress fairly recently. No one immediately comes to mind.
Speaker 1: I was thinking at John Tucker, Yeah, I'd be pressing
Speaker 1: the button, like within minutes. Greg one more thought as
Speaker 1: we go to tonight helped David gur out here with
Speaker 1: his coverage after seven pm tonight. What will David Girl
Speaker 1: need to focus on? Say at nine pm? Two stories
Speaker 1: dwarf everything else. Number One, the ground game, the the
Speaker 1: Clinton ground game is the greatest ground game in the
Speaker 1: history of American politics. It's worth a point or two
Speaker 1: in some states. Second point we don't talk about this
Speaker 1: enough is how dramatically this country has changed demographically. We're biracial,
Speaker 1: we're diverse, we're multicultural. I mean, the country has fundamentally shifted,
Speaker 1: and I think a lot of people still don't recognize it.
Speaker 1: Greatl you, thank you so much more. The generous of
Speaker 1: your time today with the Horizon invest is David, were
Speaker 1: you taking notes right here? Points one and two they're
Speaker 1: going in the question line who you put your trust
Speaker 1: in matters. Investors have put their trust in independent registered
Speaker 1: investment advisors to the tune of four trillion dollars. Why
Speaker 1: they see their role is to serve, not sell. That's
Speaker 1: why Charles Schwab is committed to the success of over
Speaker 1: seven thousand independent financial advisors who passionately dedicate themselves to
Speaker 1: helping people achieve their financial goals, learn more and find
Speaker 1: your independent advisor dot com. Let's bring in David Harrow.
Speaker 1: We usually speak investments and of course international investments, David
Speaker 1: Harrow of Chicago, but with his immense affinity for Wisconsin,
Speaker 1: where there is a key race tonight, the Senate race.
Speaker 1: David Harrow, you are quite vocally a Republican. Ron Johnson
Speaker 1: has done better than good against Mr Finegold. What does
Speaker 1: Mr Johnson need to do to win in your Wisconsin
Speaker 1: this morning? Well, you know, it's all about turnout and
Speaker 1: getting your supporters to the polls. And if I think
Speaker 1: Mr Johnson could do that, and if his supporters are
Speaker 1: more enthusiastic than Mr Finegold's, which I'm hoping to be
Speaker 1: the case, um, then I think he has a good
Speaker 1: chance of winning. Recall, he entered office six years ago.
Speaker 1: It was his first political run ever. He's a manufacturer,
Speaker 1: he's a businessman. He's not from the political class and
Speaker 1: Mr Finegold, of course, it's just the opposite. He's been
Speaker 1: in politics all his life. So I'm sure for Mr Johnson,
Speaker 1: I think he's a very strong candidate. I think he's
Speaker 1: been a good senator. He just isn't necessarily have strong
Speaker 1: political skills, because that's not what he is one of
Speaker 1: our themes this morning. Dave Harrold is how the states
Speaker 1: of our childhood has changed. My Western New York has changed.
Speaker 1: Many would say it's been carved out into a non
Speaker 1: economic wasteland. David Gurrow was talking about his North Carolina.
Speaker 1: How is your Wisconsin changed over the decades. Well, let's see,
Speaker 1: the packers aren't doing as well as they should be
Speaker 1: doing the same. You owe me an apology given the
Speaker 1: results of the World Series. He's got a great game anyway,
Speaker 1: that was a great game. Uh, you know, Wisconsin. Wisconsin
Speaker 1: has changed, but I don't think so radically. So you
Speaker 1: still have the manufacturing base in the southeast, and of
Speaker 1: course the central part of the state is very agricultural,
Speaker 1: lot of dairy farms and cheese factories. And then the
Speaker 1: north part of the state is woods and lakes, and
Speaker 1: that's kind of the rough, rough makeup of Wisconsin. There
Speaker 1: was a good article in the Wall Street Journal last
Speaker 1: week about immigration flows into places like western Wisconsin and
Speaker 1: all over, which has added little bit of diversity to
Speaker 1: the state. But it was a fairly diverse state anyway.
Speaker 1: The south east very very German, and as you moved
Speaker 1: to the north you get the Dutch, and then the
Speaker 1: Northwest you get the Scandinavians. So you know it's still
Speaker 1: to me, Um, it hasn't changed radically, and it is
Speaker 1: a place for good government. I mean, it's relatively clean
Speaker 1: and transparent, very different than where I'm sitting here in Chicago,
Speaker 1: where pay to play is the is the rule of
Speaker 1: the day. They let me ask you about allegiance to
Speaker 1: party in the in the context of this election, I
Speaker 1: imagine you and others have thought a lot about that.
Speaker 1: I think of of Paul Ryan campaigning with Mike Pence,
Speaker 1: but but not with Donald Trump. Has party played a
Speaker 1: less important role in this election? I I sensed it
Speaker 1: on the Democratic side. On the Republican side, there were
Speaker 1: those who might not be that enthusiastic about the Canada
Speaker 1: but still feel some tied to the party. Yeah. I mean,
Speaker 1: I personally believe that one should be, uh, have allegiance
Speaker 1: to your values and what you believe is important and
Speaker 1: important issues. And whether it's a Democratic, Republican or libertarian,
Speaker 1: whoever it is that has those issues character Um, whatever
Speaker 1: these characteristics are, that's who you should go for. I'm
Speaker 1: not someone who who advocates this blindly following a party.
Speaker 1: I I don't think it's a good thing. Um, you know.
Speaker 1: And as as someone who's usually votes Republican, I was,
Speaker 1: you know, this is a tough tough Here a quick note,
Speaker 1: David jump in here with David Hero but David Garral
Speaker 1: Dan Kennedy, Professor, New York, Northeastern University in Boston with
Speaker 1: a photograph and he guess this is the anecdote of turnout.
Speaker 1: Greg v. David Garrow warning is to be careful about
Speaker 1: the early take on turnout. But at the West Medford
Speaker 1: fire Station, West Medford, Massachusetts, Professor Kennedy as a photo
Speaker 1: stretching around the block. Is their enthusiasm for voting? Where
Speaker 1: you are in Illinois, where you're from in Wisconsin, is
Speaker 1: there's still enthusiasm for the the the active democracy? Yeah,
Speaker 1: I generally think so. Chicago doesn't seem to be is
Speaker 1: And I think this is by the way true everywhere.
Speaker 1: You don't see bumper stickers this year. You don't see
Speaker 1: a lot of yard signs as in the past. Today,
Speaker 1: driving in I almost didn't see anything in Chicago. Now
Speaker 1: in Wisconsin there was a little more. I was in
Speaker 1: Wisconsin over the weekend. There was a little bit more.
Speaker 1: But it used to be in the olden days, the
Speaker 1: daily machine whipped everyone up and there would be signs
Speaker 1: every two feet for someone going up and down, say
Speaker 1: Michigan Avenue or anywhere. It's very quiet here this year.
Speaker 1: In Illinois, there's some state wide races going on because
Speaker 1: the governor's fighting with the Speaker of the House, and
Speaker 1: there's been a lot of money flying around. But I
Speaker 1: think in a state like Illinois, which really isn't in
Speaker 1: play um, there's a lot of turnoff and there I
Speaker 1: think there will be a low turnout. It's just my guess.
Speaker 1: David her always saw a pop in the market yesterday.
Speaker 1: You are want to worry about a one day pop
Speaker 1: in the market. But it does show the linkage of
Speaker 1: our politics in the market emotion. If Secretary Clinton is
Speaker 1: voted president, is that good for the portfolios of Mr Harrow?
Speaker 1: I think this is just a guess and and and
Speaker 1: this is just a short term trading. I think in
Speaker 1: the medium and long term the differences is very small,
Speaker 1: depending But if if Secretary Clinton wins the presidency and
Speaker 1: the Republicans maintain both houses, I would imagine that is
Speaker 1: would be the most optimistic case for the markets and
Speaker 1: in the short term performance. Now, what ultimately matters, but
Speaker 1: ultimately matters is what policies of the politicians put forth
Speaker 1: that impact company's ability to earn money and to grow
Speaker 1: cash flow streams. And here's where there's often opportunity in
Speaker 1: the short term investors or traders, I should say, acting
Speaker 1: in very knee jerk fashion, reacting to every change gin
Speaker 1: poles or change in election outcome. And actually the changes
Speaker 1: in business value don't move in such a knee jerk way.
Speaker 1: Changes in business value happen over the medium and long term,
Speaker 1: and you know, business people could also react to these
Speaker 1: changes in legislation. So that's ultimately what happens and what
Speaker 1: we have to watch as long term investors as traders.
Speaker 1: I think definitely what markets want are Mrs Clinton to
Speaker 1: be elected in the Republicans control both houses. I'm not
Speaker 1: sure why that's either, but I think that's what markets want.
Speaker 1: David Harrow will continue with the Harris Associates in Chicago's
Speaker 1: perspective on his Wisconsin. As Mr Harrow mentioned, he has
Speaker 1: one in support of not always but usually Republican politics.
Speaker 1: David Gura, if you'd like to vote in Columbus, Ohio,
Speaker 1: which would be illegal since I'm registered in New York.
Speaker 1: We we we showed video earlier of the voting booth
Speaker 1: it hugh Y Honda out on seventy. I guess after
Speaker 1: you vote, you can look at the local latest two
Speaker 1: thousand seventeen HRV crossover. David Harrow with US in Chicago.
Speaker 1: But Harris Associates and David, the imagery of Americans voting
Speaker 1: in a Honda dealership in Columbus, Ohio speaks to your
Speaker 1: view on foreign investment in the multinational world we live in.
Speaker 1: Give us an update on the Japanese shares, the European
Speaker 1: shares you own of their investment in this America. Well,
Speaker 1: the Honda, of course is has a very big manufacturing
Speaker 1: footprint United States. In fact, I believe they produced more
Speaker 1: cars in the US than they do in Japan. Know
Speaker 1: that they were the first transplant maybe Volkswagen once you
Speaker 1: remember Volkswagan at that plant in Pennsylvania many many years
Speaker 1: ago that made rabbits um, but I think Honda preceded that.
Speaker 1: And so you know, a huge manufact in footprint for Honda,
Speaker 1: same with Toyota, even the German luxury makers. Now you
Speaker 1: know in in the Carolinas, and uh BMW makes trucks.
Speaker 1: All their X five, x four x three's are all
Speaker 1: made in the United States, I think almost eight hundred
Speaker 1: thousand plus units and X A lot of these are exported.
Speaker 1: So you know, we certainly have a very global economy.
Speaker 1: Not that manufacturers want to be near where their consumers are.
Speaker 1: So you've had foreign companies expanding their footprint in the
Speaker 1: United States and elsewhere. When I first came into this business,
Speaker 1: I remember this was in the mid eighties. You go
Speaker 1: to Sweden and everyone just exported from Sweden as an example,
Speaker 1: or from Italy or from Germany. And now these big
Speaker 1: multinationals and make plants where their customers are. So it's
Speaker 1: it's been this has been a widespread theme over the
Speaker 1: last couple of decades. David. Do you expect the conversation
Speaker 1: in light of that? Do you expect the conversation about
Speaker 1: trade and trade policy to continue here on the perch
Speaker 1: of of going down a path that would uh see
Speaker 1: the TPP withering away. Do you expect we're going to
Speaker 1: have a serious conversation about trade after this election is
Speaker 1: over with a are we done well? I would hope
Speaker 1: so because properly instituted trade policies are very conducive to
Speaker 1: economic growth. And you know it's remember David Ricardo and
Speaker 1: is there is a comparative and competitive advantage. I think
Speaker 1: these things still hold true today and there there is
Speaker 1: a massive benefit to trade. Now. I think people are
Speaker 1: concerned about some of the impacts of trade that have
Speaker 1: to be dealt with. And you also have to look
Speaker 1: at the fairness of the deals. Are are they really
Speaker 1: objectively negotiated, well negotiated deals, But the notion and the
Speaker 1: principle a free trade it's very important if you want
Speaker 1: to continue to keep a vibrant, growing global economy. You
Speaker 1: need the free flow of good services, of capital, people.
Speaker 1: You need these things in order to to enhance and
Speaker 1: encourage growth. We're about to talk to Megan green with
Speaker 1: with Manual Life, chief economist of Manual Life, and in
Speaker 1: her most recent notes she poses a rhetorical question here,
Speaker 1: that being what's the role of the president for you,
Speaker 1: David Harry, the investor, What do you look to the
Speaker 1: president to do? What what makes a good president? Well,
Speaker 1: I think the president should really kind of set the
Speaker 1: theme and if you look at what I believe is
Speaker 1: one of the best presidents we've had in our time,
Speaker 1: Ronald Reagan. He set his themes broad general themes, individual responsibility,
Speaker 1: government that governs the least, governs the best, you know,
Speaker 1: fair and easy to understand regulation. And notice how that
Speaker 1: was replicated throughout the world as he was fairly successful
Speaker 1: at it here in the United States. So that the
Speaker 1: president really it's it's kind of on the softer side,
Speaker 1: really has to take lead at these things. And I
Speaker 1: think one of the issues in the past has been,
Speaker 1: you know, we are one country and the president should
Speaker 1: act as a unifier, not as a divider. And I
Speaker 1: think in the past we've had, you know, very divisive,
Speaker 1: strong divisiveness, and this is hopefully the next president, whoever
Speaker 1: it may be, it's more of a unifier. And yes,
Speaker 1: we're we're many differences, but we have many similarities and
Speaker 1: common values and the president must highlight those from the
Speaker 1: Northwest as we were taught in school. David Harrow, this
Speaker 1: has been wonderful, David, thank you so much for the
Speaker 1: classy diversion from the world of international investment. David Harrow,
Speaker 1: of course, with Harris Associates with a stunning track record
Speaker 1: over the years and trying to buy value within international equities.
Speaker 1: And of course today we speak of the Northwest David
Speaker 1: as it was taught to us in the middle nineteenth century,
Speaker 1: early David Gura and Tom Keane. We're gonna flip this
Speaker 1: interview on its head. When you would usually start with
Speaker 1: Dennis Gartman about the markets, about commodities, about red wheat.
Speaker 1: But now on this selection day we speak of the nation. Dennis.
Speaker 1: Wonderful to have you on the back. Part of the
Speaker 1: Gartman letter is always exceptionally trenchant, and you, I must admit,
Speaker 1: you try like crazy to be nonpartisan. Help us here
Speaker 1: with what these two candidates mean for your many markets.
Speaker 1: What does it mean if we have a President Trump
Speaker 1: or a President Clinton. Well, I think if we have
Speaker 1: a President Clinton and I didn't vote for her, if
Speaker 1: we have a pleasant President Clinton and and a a
Speaker 1: Senate that is Republican, and a and a House that
Speaker 1: remains Republican, I think that's probably the best of all worlds,
Speaker 1: because I think it means gridlock. And I'm a big
Speaker 1: fan of gridlock, because as long as you can't do
Speaker 1: anything to me, you can't harm me. I think if
Speaker 1: we have a president um Trump, who I find to
Speaker 1: be a I did, in fact vote for him, but
Speaker 1: I did so with the nose held the tight uh
Speaker 1: and a Republican House and a Republican Senate. I fear
Speaker 1: that we may have an increase in trade protection, and
Speaker 1: I don't think that that could be possibly good for
Speaker 1: the stock market or for the capital markets generally. So
Speaker 1: I guess what I'm hoping for is is a is
Speaker 1: a presidency that moves to the Democrats side, and a
Speaker 1: House and Senate that stay in the Republican side. Give
Speaker 1: me gridlock or or as one of the great patriots
Speaker 1: here in Virginia might have said, give me gridlock or
Speaker 1: give me death. I think that's the best of all worlds.
Speaker 1: Reading the latest letter, I was struck by the degree
Speaker 1: to which the the FBI investigation to Hillary Clinton's emails
Speaker 1: touched every single commodity you wrote about you. You're not
Speaker 1: underestimating the size of the effect of that. No, I'm
Speaker 1: not underestimating the size of the effect of that. I
Speaker 1: think if if you get a Trump presidency, perhaps it's
Speaker 1: beneficial to the production of crude oil otherwise, and and
Speaker 1: but that that that therefore will be detrimental to the
Speaker 1: price of crude oil. Uh, it might not be drill, baby, drill,
Speaker 1: but it'll be drill, buddy, drill and drill a little
Speaker 1: bit and do fine. That can't be supportive of the
Speaker 1: crude oil market. And protection trade protection is always going
Speaker 1: to be deletarious to commodity prices generally. Again, give me gridlock,
Speaker 1: and then we can return to the fundamentals of each
Speaker 1: commodity individually. I can make the case that the worst
Speaker 1: possible news of great production here in the United States
Speaker 1: is already discounted in the grain market. I don't think
Speaker 1: that the price at forty four to forty five dollars
Speaker 1: per barrel for w T I is fully discounted, and
Speaker 1: I think that that can probably be another two to
Speaker 1: three dollars to the downside. But give me gridlock, and
Speaker 1: I can go back to fundamentals rather than psychologicals rather
Speaker 1: than technicals. Dennis, help help me understand that. I'm going
Speaker 1: back to your vote here. You you here hoping for
Speaker 1: a Democratic president, yet you voted for the Republican I
Speaker 1: mentioned there are some other people in your shift to
Speaker 1: walk us through the thinking there, Why not just vote
Speaker 1: for the person that you to be in the office. Um,
Speaker 1: Because my wife might have left me if I voted
Speaker 1: to the wrong person. I'll be But I had I
Speaker 1: have to vote for a Republican all all things being
Speaker 1: otherwise equal, I really didn't have. I make that that
Speaker 1: comment humorously, but quite honestly, I had really no choice.
Speaker 1: He is, at least in most instances regarding taxation, closer
Speaker 1: to what I think about. UM. He is in in
Speaker 1: most instances regarding the the corruption of the United States,
Speaker 1: and the demoralization of the of the psychology of the country,
Speaker 1: the demeaning of education, He's closer to what I believe in.
Speaker 1: So I had to vote for him. But but do
Speaker 1: I still wish that we that we get a gridlocked country? Yes?
Speaker 1: I do. Dennis. What do you see on turnout? What
Speaker 1: does it look like? You're in Virginia this morning? Right? Well, yeah,
Speaker 1: it was interesting. My wife and I went to vote
Speaker 1: to the other day. We voted early, and it was
Speaker 1: really quite crowded. I was really surprised how many people
Speaker 1: were there in in the voting booth. Uh. The young
Speaker 1: man Chip who works for US, went and voted this
Speaker 1: morning here in Virginia and he walked right through. So
Speaker 1: I was surprised. Given the given the nearly perfect weather
Speaker 1: prevailing that he was able to get in and get
Speaker 1: out with that with no problem. Are stocks moving from
Speaker 1: the lower left to the upper right? They still are
Speaker 1: after Yes, they still are moving from the lower left
Speaker 1: of the upper right. Depends on which which which country
Speaker 1: one looks at. I'm a little more bullish of the
Speaker 1: circumstances prevailing in Japan and in Europe than i am
Speaker 1: here in the United States. I'd rather be bullish of
Speaker 1: the of the stock markets, where they are continuously being
Speaker 1: expansionary as far as their monetary policies are concerned. And
Speaker 1: without question though, every time you try to get short
Speaker 1: of the stock market here in the United States, it
Speaker 1: does in fact blow up in your face, so you
Speaker 1: have to her upon the side of trying to be
Speaker 1: long of stocks, all things being otherwise equal. Do you
Speaker 1: see use of cash continuing the great theme of and
Speaker 1: Brian Belsky at BEMO Capital Markets was adamant today that
Speaker 1: this theme continues of dividend growth and share by back.
Speaker 1: Do you see any change in that? I'm really concerned
Speaker 1: that for many many years, you know, for one, the
Speaker 1: past decade, the the instead of capital moving into plant
Speaker 1: and equipment too much capital is moving into the buying
Speaker 1: back of equity, and that I find disconcerting. If things
Speaker 1: were really economically strong, if things were really doing well,
Speaker 1: if the tax rates in the United States and in
Speaker 1: business were reduced, we would see that money moving into
Speaker 1: new plant, new equipment, new labor. Instead, it's been moving
Speaker 1: into buying backstock, and that I think a dismaying event. Well, Dennis,
Speaker 1: I've got good news. North Carolina plays Duke before they
Speaker 1: get to North Carolina State, thank god. So the Tarios
Speaker 1: will be so worn out by Duke in the Citadel
Speaker 1: by the time they get to Friday November. I think
Speaker 1: on the nine yard line, cartment on the one yard line.
Speaker 1: It will be something. You know, they played football at
Speaker 1: North Carolina. They have they have a sizeable stadium. I
Speaker 1: think they're five and one this season. The wolf Pack
Speaker 1: record is not as good. Sorry, they're killing it. Five
Speaker 1: and one of the a SEC Dennis, you're watching the
Speaker 1: wolf Pack this season sadly? Yes, i am. I've watched
Speaker 1: this miss the field goal from the two yard line
Speaker 1: to lose to Clemson. I watched us throw an interception
Speaker 1: the other day against Florida State to lose to them. Yes, sadly,
Speaker 1: I am, I am I you should indict me for that.
Speaker 1: It's ring North Carolina's state football Dennis. It's there you go,
Speaker 1: Dennis Garbage, editor and publisher of The Garbage Letter. Onto
Speaker 1: matters of greater significance. Perhaps we had this earthquake outside
Speaker 1: there's nothing more significant than that. Yeah, we had this
Speaker 1: earthquake outside Cushing. What's the what's the effect been here
Speaker 1: on on oil since then? And get us up to
Speaker 1: speed on the ongoing back and forth and back and
Speaker 1: forth and back and forth on production cuts with OPEC. Yeah. Interestingly,
Speaker 1: well interestingly, one might have thought that that would be
Speaker 1: bullish of the cude oil market, but in reality it's
Speaker 1: really not. Maybe it is supportive for of w t I,
Speaker 1: but it and it might narrow the relationship between w
Speaker 1: t I and and Brent crude a bit. You will
Speaker 1: not see as much crude oil. The propensity for moving
Speaker 1: crude oil into storage and pushing probably has somewhat been
Speaker 1: somewhat reduced. And isn't all economics the study of people's
Speaker 1: propensities to do something. But but on balance, I think
Speaker 1: the impact of that is other than on the carrying charges,
Speaker 1: other than on the movement from contango to backwardation and
Speaker 1: back again. The impact upon crude oil prices generally is
Speaker 1: really quite small. What's really important is that, yes, there
Speaker 1: probably shall be some sort of an agreement, and the
Speaker 1: operative awards are some sort and the operator, the second
Speaker 1: of operative awards are will they be cheated on. There
Speaker 1: may be some sort of an agreement at the November
Speaker 1: OPEC meeting, but they will be cheated on by everybody.
Speaker 1: It is, if I've learned anything in forty years of
Speaker 1: watching the markets, you can count on OPEC cheating. The
Speaker 1: headline for me seems to be Russian indecision prevails. I mean,
Speaker 1: since that agreement was reached in principle, we've seen back
Speaker 1: back and forth from from the President of Russia the
Speaker 1: head of the largest gas company there. I mean, it's
Speaker 1: been a constant back and forth. I think perhaps the
Speaker 1: most important comments made were not made by anybody within OPEC,
Speaker 1: but were in fact by Mr Sechin as you as
Speaker 1: you just suggested, the president of Russneft, who when asked
Speaker 1: at that last meeting in Algiers if he intended to
Speaker 1: curtail production and he s he said, why should I?
Speaker 1: If everybody else is I shall continue to produce. That
Speaker 1: is his job. And as long as Russneft, the largest
Speaker 1: Russian oil producer in Russia, vas with with Saudi Arabia
Speaker 1: being the largest world's producer of crude oil. If the
Speaker 1: largest producer in Russia refuses to to curtail production, why
Speaker 1: would anybody else. It's it's one of those things. It's
Speaker 1: a race to the bottom as far as I'm concerned.
Speaker 1: So the odds of any material agreement coming out of
Speaker 1: the meeting, the OPEC meeting in Vanity at the end
Speaker 1: of this month that lasts are are negligible at best.
Speaker 1: We're talking with Carl Weinberg of High Frequency Economics yesterday
Speaker 1: about the situation in Canada, something so tightly tied to
Speaker 1: the energy picture there has it stabilized? Now when you
Speaker 1: look at the Canadian economy, how is it doing visa
Speaker 1: VI the the energy economy in Canada. Well, first of all,
Speaker 1: I'm surprised at how long the honeymoon has lasted for
Speaker 1: Mr Trudeau. Yes, he does have very nice hair, but
Speaker 1: he's not been I I can't imagine him being the
Speaker 1: greatest of all leaders, but he has done nothing untoward,
Speaker 1: nothing discouraging UH to to limit production or to increase production.
Speaker 1: He's basically stayed aside. He's let most of the discourage
Speaker 1: and most of these circumstances prevailing UH fall upon the
Speaker 1: shoulders of the provincial premiere. And I am a little
Speaker 1: dismayed that Ms Notley, the the Premiere of Alberta, is
Speaker 1: openly antagonistic towards crude oil production out of the Tar Sans.
Speaker 1: But I think she is not long for that position
Speaker 1: of authority in Alberta. She will probably be turned out
Speaker 1: of office and by the next election, I hope, Well,
Speaker 1: we'll see on that Canadian elections were not focused on today.
Speaker 1: There is a thing called Martingale probability theory. Made a
Speaker 1: joke about the new Las Vegas hockey team, Dennis that
Speaker 1: they ought to be called the Las Vegas Martin Gales,
Speaker 1: and nobody but ed Thorpe. Nobody but Ed Thorpe got
Speaker 1: my analysis. I'm a big believer in what's called anti
Speaker 1: Martin Gale theory, which is established a trade and add
Speaker 1: to that trade as your success and your gain improves.
Speaker 1: You have an exceptionally important final two sentences of your
Speaker 1: Monday note, which is you were stopped out in a
Speaker 1: modest loss of euro. You were hoping euro would go weak,
Speaker 1: and it went strong, and you got right back into
Speaker 1: the trade after the stop. Now, folks, a gardment lesson
Speaker 1: on being careful discussed this dentist. Well, yes, I did
Speaker 1: get stopped out. I I sold euro at one and
Speaker 1: went to one and actually went to eleven thirty five
Speaker 1: right at the very last trade on Friday. A little discouraging,
Speaker 1: but it wasn't that much of a loss. It was forty.
Speaker 1: But the hard part is to come back in and say, look,
Speaker 1: the market is telling me that i'm because the euro
Speaker 1: then got weak again yesterday. The trend has been downward
Speaker 1: for the past two years. Clearly, uh, it has obviously
Speaker 1: been lower the past several months and seems to be
Speaker 1: getting stronger to the downside. And and the the euro
Speaker 1: is losing on a consistent basis relative to the to
Speaker 1: the Swiss Frank, which I think is a thermometer of
Speaker 1: of of foreign exchange trading circumstances. As long as that continues,
Speaker 1: I'm going to be barish of of the euro. Was
Speaker 1: I wrong for forty pips? Yes, But that's the hardest
Speaker 1: thing to do, is to get stopped out and come
Speaker 1: back in. When the market tells you that you're right,
Speaker 1: you always want to try to do it at a
Speaker 1: higher price than orere you've got stopped out at but
Speaker 1: coming in and I had no choice, I had to
Speaker 1: come in and do it again. I think that the
Speaker 1: Euro trades under par sometime in the next year or two.
Speaker 1: I think that what we've seen for the past two
Speaker 1: years is a consolidation of what's been a long term
Speaker 1: bear market. The political circumstances in Europe are confusing, and
Speaker 1: the monetary authorities are remaining expansion there, and you carry
Speaker 1: that conviction forward with your gold in row terms. I
Speaker 1: did an inflation adjusted gold chart the other day, and
Speaker 1: again it is striking how gold is elevated when you
Speaker 1: adjust for inflation. Is gold of value now, Mr Gartman,
Speaker 1: I'm not sure that golden dollar terms is a value,
Speaker 1: but I see gold as being nothing more than than
Speaker 1: a safe haven currency it is. I'm not a gold bug.
Speaker 1: I don't think that gold is to be all an
Speaker 1: end all. I think it is simply another currency and
Speaker 1: currency traders. Having grown up as a currency trader, you
Speaker 1: are taught to trade one currency against another, to spread
Speaker 1: the old German mark against the Italian lira to spread
Speaker 1: the euro against the British pound sterling to spread again
Speaker 1: against the euro. And I want to own the currency
Speaker 1: that likely shell rally where the monetary authorities are being constrictive,
Speaker 1: and and I want to be short of the currency
Speaker 1: where the monetary authorities are being expansionary. Uh, there's not
Speaker 1: that much gold being mined that that monetary authority, if
Speaker 1: we can call it such, is somewhat restrictive. But the
Speaker 1: monetary authorities in Europe are being expansion a buy golden
Speaker 1: euro terms. It eliminates a great good deal of the
Speaker 1: daily random noise and coming in gold itself. Dennis Ryan
Speaker 1: Switzer wide receiver, guitar heels Charleston wins Virginia Senior. He's
Speaker 1: the one to watch, all right, I don't know. I hope, well, yes,
Speaker 1: we have to watch everybody. It did so, and actually
Speaker 1: nobody has to watch us much once we go within
Speaker 1: the twenty yard line here we apparently cannot score at all.
Speaker 1: Thank you for that football analysis, Dennis Garb and go
Speaker 1: North Carolina's day. We greatly appreciate it. On this election day.
Speaker 1: Thanks for listening to the Bloomberg Surveillance podcast. Subscribe and
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