1 00:00:00,080 --> 00:00:13,040 Speaker 1: Yeah, Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene 2 00:00:13,480 --> 00:00:17,560 Speaker 1: Jay Ley. We bring you insight from the best in economics, finance, investment, 3 00:00:18,000 --> 00:00:23,520 Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, 4 00:00:23,600 --> 00:00:31,720 Speaker 1: Bloomberg dot Com, and of course, on the Bloomberg Do 5 00:00:31,720 --> 00:00:33,160 Speaker 1: you want to stay? Hevery in New York on Police 6 00:00:33,159 --> 00:00:36,360 Speaker 1: to say is Howard Wards, c IO of Growth Equities 7 00:00:36,400 --> 00:00:39,440 Speaker 1: at Gabelly Funds. Good morning to Howard, Good morning John. 8 00:00:39,520 --> 00:00:41,159 Speaker 1: What are we looking for in about ninety minutes? What 9 00:00:41,200 --> 00:00:44,040 Speaker 1: are you looking for? Well, I think we're gonna have 10 00:00:44,040 --> 00:00:45,600 Speaker 1: a good number, and I know I can't tell you 11 00:00:45,600 --> 00:00:49,120 Speaker 1: whether it's going to be or two fifty, but probably 12 00:00:49,200 --> 00:00:51,440 Speaker 1: is going to be in there somewhere. And it just 13 00:00:51,479 --> 00:00:55,400 Speaker 1: would point out that, you know, we have to hold 14 00:00:55,400 --> 00:00:58,440 Speaker 1: back from putting too much weight on any one month's numbers. 15 00:00:58,440 --> 00:01:00,880 Speaker 1: You need to look at the trend line, three month average, 16 00:01:00,880 --> 00:01:03,000 Speaker 1: and not only that, but remember that these numbers tend 17 00:01:03,000 --> 00:01:06,319 Speaker 1: to get revised once or twice and so the headline 18 00:01:06,360 --> 00:01:08,559 Speaker 1: number we get today may not last well. The average 19 00:01:08,640 --> 00:01:10,680 Speaker 1: number through the years I've found is north of two k. 20 00:01:11,080 --> 00:01:13,600 Speaker 1: It's pretty stunning. How would we you set up. Did 21 00:01:13,680 --> 00:01:15,840 Speaker 1: you think the economy would go out to this highest 22 00:01:15,880 --> 00:01:18,400 Speaker 1: sort of high trajectory that it's reached over the last 23 00:01:18,680 --> 00:01:23,640 Speaker 1: complementso suck UH, I would tell you yes, because we're 24 00:01:23,680 --> 00:01:25,720 Speaker 1: having a terrific year. So we must have been doing 25 00:01:25,959 --> 00:01:29,640 Speaker 1: something right UH in our in our growth fund, which 26 00:01:29,680 --> 00:01:34,280 Speaker 1: is up about year to date and nine present plus 27 00:01:34,360 --> 00:01:36,520 Speaker 1: over the last twelve months. But that's been with a 28 00:01:36,600 --> 00:01:40,800 Speaker 1: focus on what I'm going to describe as defensive growth stocks, 29 00:01:41,200 --> 00:01:47,520 Speaker 1: which means zero weights to underweights in energy, UH, industrials, 30 00:01:48,000 --> 00:01:50,760 Speaker 1: producer durables. And we also don't happen to own any 31 00:01:50,840 --> 00:01:53,720 Speaker 1: consumer staples which are not experiencing much of any growth. 32 00:01:54,360 --> 00:01:57,760 Speaker 1: So we've been positioned properly for the market that we've had, 33 00:01:57,800 --> 00:02:00,400 Speaker 1: and I think that's really the way to go, because 34 00:02:00,520 --> 00:02:03,480 Speaker 1: the economy is starting to slow now, even though it's 35 00:02:03,520 --> 00:02:06,200 Speaker 1: doing very well. It's gonna slow from the four point 36 00:02:06,240 --> 00:02:09,320 Speaker 1: two percent pace in the second quarter to finish the 37 00:02:09,400 --> 00:02:13,079 Speaker 1: year probably with around a three percent growth UH in 38 00:02:13,160 --> 00:02:15,120 Speaker 1: the back half of the year between Q three and 39 00:02:15,200 --> 00:02:17,560 Speaker 1: Q four, and then it's probably gonna slow a little 40 00:02:17,600 --> 00:02:19,800 Speaker 1: bit below that for next year. So your argument at 41 00:02:19,800 --> 00:02:22,200 Speaker 1: the moment, the argument that you're pushing is stay invested, 42 00:02:22,280 --> 00:02:25,040 Speaker 1: but get a little bit more defensive. Yes, I think 43 00:02:25,360 --> 00:02:27,880 Speaker 1: defensive growth is the place to be as long as 44 00:02:27,919 --> 00:02:32,160 Speaker 1: the FEDS tightening rates are rising. When the Fed titans 45 00:02:32,280 --> 00:02:35,560 Speaker 1: pas go down, it happens virtually every single time, and 46 00:02:35,639 --> 00:02:37,639 Speaker 1: it's happened so far this year. We started the year 47 00:02:37,680 --> 00:02:40,440 Speaker 1: with an eighteen pe on four earnings. Now we're down 48 00:02:40,480 --> 00:02:44,320 Speaker 1: to sixteen. Uh. If the Fed were to stop tightening, 49 00:02:44,520 --> 00:02:49,240 Speaker 1: I would be a little bit more aggressive in terms 50 00:02:49,320 --> 00:02:52,760 Speaker 1: of unwinding my more defensive growth posture. And I think 51 00:02:52,800 --> 00:02:54,760 Speaker 1: that's the argument right now. It's home that with high ye, 52 00:02:54,840 --> 00:02:56,639 Speaker 1: it's in high rights. It's going to weigh on any 53 00:02:56,680 --> 00:03:01,160 Speaker 1: potential multiple expansion. Can the earnings deliver? I mean to me, Howard, 54 00:03:01,360 --> 00:03:04,359 Speaker 1: what's so important here within your linkage of the economy 55 00:03:04,400 --> 00:03:07,080 Speaker 1: into equities and your huge double digit success and how 56 00:03:07,160 --> 00:03:09,760 Speaker 1: performance of alpha. We could talk all day about the 57 00:03:09,840 --> 00:03:13,200 Speaker 1: under performance of the smart people acid allocating and such. 58 00:03:13,760 --> 00:03:17,160 Speaker 1: Our the bottom line is the linkage of animal spirit 59 00:03:17,200 --> 00:03:21,400 Speaker 1: phenomenal GDP over the revenue growth and it's had it's 60 00:03:21,440 --> 00:03:25,040 Speaker 1: at a tangible pop. What happens if the economy not 61 00:03:25,240 --> 00:03:28,519 Speaker 1: you know, gloom and doom, but if the economy ebbs. 62 00:03:29,200 --> 00:03:33,440 Speaker 1: Does the revenue growth EBB. Well, the revenue growth has 63 00:03:33,480 --> 00:03:38,280 Speaker 1: been surprisingly stable for the overall SMP five DRED anyway, 64 00:03:38,720 --> 00:03:42,080 Speaker 1: it tends to come in right around five and I 65 00:03:42,120 --> 00:03:44,240 Speaker 1: think that's going to continue. One thing that's I think 66 00:03:44,320 --> 00:03:46,960 Speaker 1: key for thinking about next year, because we do have 67 00:03:47,520 --> 00:03:51,960 Speaker 1: some headwinds. You know. I mentioned that rising rates, rising 68 00:03:52,040 --> 00:03:54,080 Speaker 1: dollar is there as well. That's the headwind, and rising 69 00:03:54,120 --> 00:03:56,120 Speaker 1: oil is all headwinds. But what I don't think is 70 00:03:56,160 --> 00:03:59,640 Speaker 1: fully appreciated is that there's another round of fiscal stimulus 71 00:03:59,720 --> 00:04:02,560 Speaker 1: that will hit the economy next year, not so much 72 00:04:02,600 --> 00:04:04,080 Speaker 1: in the form of the tax cut, but in the 73 00:04:04,160 --> 00:04:07,720 Speaker 1: form of increased government spending and so and and even 74 00:04:07,840 --> 00:04:11,400 Speaker 1: with some friction on the trade front, the fiscal boost 75 00:04:11,480 --> 00:04:13,840 Speaker 1: that that we get next year is going to overwhelm that. 76 00:04:14,160 --> 00:04:17,720 Speaker 1: So the economy is in pretty good shape. And I 77 00:04:17,839 --> 00:04:22,400 Speaker 1: don't see on the horizon a situation where you'd say, 78 00:04:22,520 --> 00:04:24,320 Speaker 1: let's worry about a receiption. John, I think this is 79 00:04:24,400 --> 00:04:27,640 Speaker 1: critical from Howard wards. Optimism is huge odd performance over 80 00:04:27,760 --> 00:04:32,800 Speaker 1: five even ten years. But the gloom that's out there 81 00:04:32,839 --> 00:04:35,640 Speaker 1: and we're all steeled for Friday doom and gloom equity letters. 82 00:04:36,320 --> 00:04:39,000 Speaker 1: Is not only that, but in the jobs report today 83 00:04:39,360 --> 00:04:42,000 Speaker 1: it hasn't slowed down much. I mean, the gloom story 84 00:04:42,080 --> 00:04:43,800 Speaker 1: is going to be sort of presented to straight off 85 00:04:43,800 --> 00:04:45,800 Speaker 1: than the numbers drop when you get better wage growth 86 00:04:45,839 --> 00:04:47,760 Speaker 1: at some point of the next several months. The one 87 00:04:48,120 --> 00:04:50,800 Speaker 1: you see the cost Prussia, the cost inflation is that Howard, 88 00:04:50,800 --> 00:04:52,640 Speaker 1: I want to get to this argument that actually we 89 00:04:52,680 --> 00:04:58,360 Speaker 1: could get EPs acceleration through as well. That's not can happen. 90 00:04:58,760 --> 00:05:00,600 Speaker 1: It's not gonna You don't think that can happen. No, 91 00:05:00,800 --> 00:05:03,720 Speaker 1: because you had the big boost this year from the 92 00:05:04,000 --> 00:05:07,360 Speaker 1: tax reform. Without the tax reform, we would have had 93 00:05:07,560 --> 00:05:09,920 Speaker 1: maybe twelve percent growth and earnings this year, and with 94 00:05:10,120 --> 00:05:15,080 Speaker 1: it it's over. And so the expectations for next year 95 00:05:15,240 --> 00:05:18,120 Speaker 1: is that we'll have and I'm talking SMP well, have 96 00:05:18,320 --> 00:05:22,800 Speaker 1: SMP five earnings growth of approximately ten next year, and 97 00:05:23,080 --> 00:05:25,800 Speaker 1: maybe just a hair less than that in two thousand twenty, 98 00:05:25,839 --> 00:05:27,520 Speaker 1: even though it's a little bit early to be focused 99 00:05:27,560 --> 00:05:32,000 Speaker 1: on that. So we can't we can't do better, uh 100 00:05:32,040 --> 00:05:34,680 Speaker 1: in two thousand and nineteen because we don't have the 101 00:05:34,760 --> 00:05:38,160 Speaker 1: big tax cut to hit earnings the way it has 102 00:05:38,240 --> 00:05:40,760 Speaker 1: this last year. And one thing that that tax cut 103 00:05:40,839 --> 00:05:44,919 Speaker 1: has done. In addition to having the good, good economy, 104 00:05:45,360 --> 00:05:48,960 Speaker 1: with the change in the repatriation of foreign cash, the 105 00:05:49,240 --> 00:05:51,680 Speaker 1: US companies have been able to not only continue to 106 00:05:51,720 --> 00:05:55,159 Speaker 1: buy back stock at a record rate about seven billion 107 00:05:55,200 --> 00:05:59,719 Speaker 1: dollars this on a trailing twelve month basis, that's almost 108 00:06:00,040 --> 00:06:02,800 Speaker 1: well what it was in the previous year. But they're 109 00:06:02,800 --> 00:06:05,840 Speaker 1: also able to boost capital spending by about eight percent. 110 00:06:06,480 --> 00:06:10,320 Speaker 1: Uh So we've got about about eight hundred billion dollars 111 00:06:10,480 --> 00:06:13,560 Speaker 1: of capital spending. Now that's that's projected for the next 112 00:06:13,600 --> 00:06:16,360 Speaker 1: twelve months. This is a big change, so you get 113 00:06:16,400 --> 00:06:18,680 Speaker 1: the fiscal stimulus for next year. And I should have 114 00:06:18,760 --> 00:06:22,320 Speaker 1: mentioned also a nice increase in capital spending that we've 115 00:06:22,320 --> 00:06:24,760 Speaker 1: been waiting for for a long time, you know. I 116 00:06:24,880 --> 00:06:28,279 Speaker 1: I look Howard at at what to buy, and we've 117 00:06:28,360 --> 00:06:32,200 Speaker 1: hardly touched on the financials today. Every conversation John and 118 00:06:32,279 --> 00:06:35,720 Speaker 1: I have is thumb up, thumb down on the financials. 119 00:06:35,760 --> 00:06:40,120 Speaker 1: Do they have the cash generation that's required for Gabelli? Yes, 120 00:06:40,200 --> 00:06:43,880 Speaker 1: they do. Tom. The financial sector, of course, has a 121 00:06:44,120 --> 00:06:46,800 Speaker 1: variety of names in it depending on which indices you 122 00:06:46,880 --> 00:06:49,640 Speaker 1: look at, because it can include the the visas and 123 00:06:49,760 --> 00:06:52,200 Speaker 1: the master cards and the pay pals and a number 124 00:06:52,240 --> 00:06:55,360 Speaker 1: of non bank financial service companies, but it also obviously 125 00:06:55,400 --> 00:06:57,560 Speaker 1: includes the bank, but the banks, but I would say 126 00:06:57,600 --> 00:07:00,920 Speaker 1: across the board. While of these companies are are in 127 00:07:01,040 --> 00:07:04,480 Speaker 1: a position where they're generating handsome free cash flowers, and 128 00:07:04,600 --> 00:07:08,280 Speaker 1: the banks, the banks are beneficiaries of higher rates. But 129 00:07:08,360 --> 00:07:10,960 Speaker 1: of course if the yield curve continues to flatten, that's 130 00:07:11,000 --> 00:07:12,320 Speaker 1: not going to help them so much. And of course 131 00:07:12,400 --> 00:07:15,000 Speaker 1: loan demands a factor. But generally speaking, this should be 132 00:07:15,000 --> 00:07:17,720 Speaker 1: a very good period for the bank's printing money, free 133 00:07:17,760 --> 00:07:21,520 Speaker 1: cash flow, buying backstock and increasing dividends. Howard, Um, this 134 00:07:21,640 --> 00:07:24,280 Speaker 1: is really important, and that that I've got to be 135 00:07:24,400 --> 00:07:27,840 Speaker 1: inflicted upon me weekend English football here in the next 136 00:07:27,880 --> 00:07:31,040 Speaker 1: coming three hours with John and his other pets. We 137 00:07:31,120 --> 00:07:35,560 Speaker 1: were about John, did you see the twenty four page 138 00:07:35,760 --> 00:07:40,840 Speaker 1: New York Post is sound the fold out Yankees? And 139 00:07:42,080 --> 00:07:44,240 Speaker 1: this is the fold out for those of you worldwide 140 00:07:44,480 --> 00:07:50,320 Speaker 1: and coast to coast Boston Monster. Yes, And Howard, would 141 00:07:50,360 --> 00:07:51,920 Speaker 1: you as a as a die in the world New 142 00:07:52,000 --> 00:07:56,240 Speaker 1: Yorker explain to Mr Farrell's specialists is to seven zip codes. 143 00:07:56,480 --> 00:07:59,000 Speaker 1: Doesn't get any better than Yankees, Red Sox come to 144 00:07:59,080 --> 00:08:03,080 Speaker 1: fall and it's layoffs. It is absolutely the the best 145 00:08:03,200 --> 00:08:06,080 Speaker 1: drama that baseball can produce. So I'm looking forward to 146 00:08:06,160 --> 00:08:09,600 Speaker 1: what's the equivalent in English football. I'm gonna send Manchester 147 00:08:09,680 --> 00:08:12,840 Speaker 1: United Liverpool as a league game. That would probably be 148 00:08:12,920 --> 00:08:16,240 Speaker 1: a big big league game traditionally speaking, but they don't 149 00:08:16,480 --> 00:08:20,080 Speaker 1: tie in baseball. And I should say, Mario, if you're listening, uh, 150 00:08:20,480 --> 00:08:21,920 Speaker 1: you can go ahead and invite me to come to 151 00:08:22,000 --> 00:08:25,840 Speaker 1: one of these games. Does does Mary I have a box? 152 00:08:26,400 --> 00:08:27,840 Speaker 1: What do you mean? Does Mary I'll have a box? 153 00:08:28,040 --> 00:08:30,240 Speaker 1: Is the Pope Catholic? Because you got a box? That 154 00:08:32,240 --> 00:08:36,160 Speaker 1: not one of those he has seat? You know, your 155 00:08:36,840 --> 00:08:42,120 Speaker 1: nice seats. It's not how many seats around the table. 156 00:08:42,600 --> 00:08:44,319 Speaker 1: Just that's why I'm asking hap. It's not one of those. 157 00:08:44,360 --> 00:08:48,319 Speaker 1: It's not one of those expensive sas that Mario Gabelli 158 00:08:48,400 --> 00:08:50,839 Speaker 1: just wants to be like the wonderful Michael Pricing the 159 00:08:50,920 --> 00:08:54,080 Speaker 1: Yankees rock on his finger. You know, when Michael Price 160 00:08:54,120 --> 00:08:57,040 Speaker 1: would show up, he'd always wear his Yankees ring just 161 00:08:57,240 --> 00:09:00,760 Speaker 1: to aggravate me. It's like, yeah's sick, it's blended. I 162 00:09:00,800 --> 00:09:03,560 Speaker 1: don't think it's too difficult to antrovate you. No, that's true. 163 00:09:03,920 --> 00:09:07,400 Speaker 1: That's day morning, to be honest with you worldwide, This 164 00:09:07,720 --> 00:09:20,439 Speaker 1: Yankees red sox, this is Bloomberg. We want to go 165 00:09:20,520 --> 00:09:22,840 Speaker 1: over now to the policy of driving the American labor 166 00:09:22,880 --> 00:09:26,640 Speaker 1: economy forward. We can do that with Betsy Stevenson at Michigan, 167 00:09:27,040 --> 00:09:30,280 Speaker 1: former chief economists for Department of Labor, among other things, 168 00:09:30,320 --> 00:09:33,680 Speaker 1: and one of our most thoughtful thinkers on the idea 169 00:09:33,760 --> 00:09:37,199 Speaker 1: of policy, on the idea of the broad spectrum of 170 00:09:37,240 --> 00:09:41,640 Speaker 1: the American labor economy, Betsy I mentioned earlier with Jim Blastman, 171 00:09:41,800 --> 00:09:46,040 Speaker 1: it is a gilded age. There is an inequality. Is 172 00:09:46,080 --> 00:09:49,200 Speaker 1: this better job economy is an Eisenhower like three point 173 00:09:49,320 --> 00:09:54,040 Speaker 1: seven unemployment rate bringing our inequalities to a lesser point 174 00:09:56,120 --> 00:10:00,560 Speaker 1: um So clear respect, it is because take a look 175 00:10:00,720 --> 00:10:05,080 Speaker 1: at um the unemployment rate to see that unemployment has 176 00:10:05,200 --> 00:10:10,280 Speaker 1: come down sharply for people with less education UM, and 177 00:10:10,400 --> 00:10:15,120 Speaker 1: that's created a reduction in inequality. There is a reduction 178 00:10:15,200 --> 00:10:19,280 Speaker 1: in inequality. But I'm getting so much mail arguing when 179 00:10:19,360 --> 00:10:22,959 Speaker 1: market economists, people like Dr Glassman say that we're a 180 00:10:23,040 --> 00:10:25,640 Speaker 1: fully employed America, there's a huge body of people that 181 00:10:25,720 --> 00:10:28,400 Speaker 1: don't agree with that, including there would suggest a lot 182 00:10:28,440 --> 00:10:31,800 Speaker 1: of people that support President Trump as well, we've got 183 00:10:31,880 --> 00:10:35,480 Speaker 1: wage growth, and let's say it's three round, But is 184 00:10:35,760 --> 00:10:38,680 Speaker 1: it a barbell wage growth where some are getting large 185 00:10:38,760 --> 00:10:43,000 Speaker 1: grade growth and many others are getting less than large. Yeah, 186 00:10:43,040 --> 00:10:44,679 Speaker 1: so that may be clear when I say that this 187 00:10:44,880 --> 00:10:48,440 Speaker 1: is helping with inequality and helping him one dimension, which 188 00:10:48,559 --> 00:10:52,440 Speaker 1: is that we're seeing people across the spectrum being able 189 00:10:52,520 --> 00:10:56,319 Speaker 1: to find work. Now, the the quality of that work, 190 00:10:56,400 --> 00:10:58,760 Speaker 1: the desirability of that work, and how much it pays 191 00:10:59,000 --> 00:11:02,959 Speaker 1: it's still varying enormously. Um, we're seeing wage gates that 192 00:11:03,080 --> 00:11:05,439 Speaker 1: continue to go primarily to the top end of the 193 00:11:05,520 --> 00:11:09,520 Speaker 1: income distribution. We have seen nominal wage growth pick up slightly, 194 00:11:09,559 --> 00:11:12,280 Speaker 1: but we've also seen inflation pick up slightly, and so 195 00:11:12,440 --> 00:11:16,000 Speaker 1: we're not really seeing any pickups in real wage growth. 196 00:11:16,559 --> 00:11:19,960 Speaker 1: And real wage growth is what matters for the bottom line. 197 00:11:20,040 --> 00:11:22,800 Speaker 1: We can't care about not how many dollars in your pocket, 198 00:11:22,880 --> 00:11:25,320 Speaker 1: but what you can fly with those dollars. Betsy Stevenson, 199 00:11:25,400 --> 00:11:28,680 Speaker 1: we'd like a longer conversation here in the coming days 200 00:11:28,800 --> 00:11:41,480 Speaker 1: and weeks at the University of Michigan. There are any 201 00:11:41,559 --> 00:11:44,000 Speaker 1: number of things to speak of with Timothy O'Brien of 202 00:11:44,040 --> 00:11:47,959 Speaker 1: Bloomberg Opinion, including his definitive work on the finances of 203 00:11:48,000 --> 00:11:51,240 Speaker 1: the president. Maybe we'll touch on that here in a moment. 204 00:11:51,520 --> 00:11:54,120 Speaker 1: What he is is a student of history, and Mr 205 00:11:54,200 --> 00:11:57,360 Speaker 1: O'Brien and I would agree given the belt Way up 206 00:11:57,520 --> 00:12:00,520 Speaker 1: or over Judge Kavana on all somehow of the number 207 00:12:00,559 --> 00:12:05,040 Speaker 1: of people, Tim that don't know their history, it's just breathtaking. 208 00:12:05,160 --> 00:12:09,440 Speaker 1: Noah Feldman with that fabulous Bloomberg opinion article today, going 209 00:12:09,520 --> 00:12:12,160 Speaker 1: back to the scorpions and going back to the court 210 00:12:12,240 --> 00:12:16,320 Speaker 1: of another time. In a resume, Tim, you always see 211 00:12:16,400 --> 00:12:20,719 Speaker 1: this the first in his family to attend college. His 212 00:12:20,880 --> 00:12:24,760 Speaker 1: father was a metal lather buried in the factories of Pittsburgh, 213 00:12:25,280 --> 00:12:29,040 Speaker 1: and Orange Hatch made it through academics, growing up in 214 00:12:29,160 --> 00:12:31,959 Speaker 1: poverty out to Utah and to be a force of 215 00:12:32,000 --> 00:12:35,120 Speaker 1: a Senate. The son of a metal latherer is going 216 00:12:35,200 --> 00:12:38,480 Speaker 1: after the guy living above Gucci on Fifth Avenue. What's 217 00:12:38,520 --> 00:12:42,320 Speaker 1: Orange Hatch want from President Trump? Well, this is interesting, 218 00:12:42,440 --> 00:12:45,439 Speaker 1: tom Or. This week, after New York Times dropped this 219 00:12:45,559 --> 00:12:50,240 Speaker 1: huge story on the Trump families tax maneuvers over decades, 220 00:12:51,320 --> 00:12:53,959 Speaker 1: Hatch said that he thought that the president should release 221 00:12:54,040 --> 00:12:57,720 Speaker 1: his tax returns, which is is an interesting thing given 222 00:12:57,840 --> 00:13:00,720 Speaker 1: that Hatch has largely been support sort of of most 223 00:13:00,760 --> 00:13:03,160 Speaker 1: of the president's policies. And as we know, the president 224 00:13:03,200 --> 00:13:06,080 Speaker 1: doesn't want to release his tax returns. So one wonders 225 00:13:06,160 --> 00:13:10,440 Speaker 1: why now, And perhaps it's that, uh, there's damage being 226 00:13:10,600 --> 00:13:15,560 Speaker 1: done by uh, this lack of disclosure around the president finances. 227 00:13:15,679 --> 00:13:18,080 Speaker 1: I've asked you this before. Let's get an update. What's 228 00:13:18,080 --> 00:13:21,360 Speaker 1: in the tax returns. The tax returns would show how 229 00:13:21,520 --> 00:13:25,840 Speaker 1: robust his businesses really are. He doesn't run a fortune empire. 230 00:13:25,960 --> 00:13:30,440 Speaker 1: It's a boutique family business that's largely about marketing. Um. 231 00:13:30,640 --> 00:13:33,079 Speaker 1: It would show what kind of money he's getting overseas. 232 00:13:33,200 --> 00:13:35,960 Speaker 1: That's obviously relevant in the context of the Muller investigation. 233 00:13:36,400 --> 00:13:38,640 Speaker 1: It's relevant in the context of just good government. I 234 00:13:38,679 --> 00:13:42,120 Speaker 1: think we should know what possible influences are coming to 235 00:13:42,200 --> 00:13:44,400 Speaker 1: bear on the person in the Oval office. George Worst, 236 00:13:44,480 --> 00:13:47,000 Speaker 1: Senor and maybe George Bush Jr. You know, they had 237 00:13:47,040 --> 00:13:49,959 Speaker 1: oil interests. I mean, they were transactional and they and 238 00:13:50,040 --> 00:13:53,959 Speaker 1: they release their taxes, and they created effective trusts to 239 00:13:54,720 --> 00:13:57,440 Speaker 1: insulate them from any decisions around those holdings once they 240 00:13:57,440 --> 00:14:00,280 Speaker 1: became president. President Trump has done neither of those, I 241 00:14:00,320 --> 00:14:02,400 Speaker 1: mean within that is, and I think it's a big 242 00:14:02,480 --> 00:14:04,880 Speaker 1: deal that four year old orange hatches saying, come on 243 00:14:05,080 --> 00:14:08,280 Speaker 1: now is the time or any interest in that? I 244 00:14:08,360 --> 00:14:10,880 Speaker 1: think there's gonna be ample interests after the midterms. Okay, 245 00:14:10,960 --> 00:14:13,679 Speaker 1: what happens in the mid terms, Let's say to two things. 246 00:14:13,920 --> 00:14:17,160 Speaker 1: Democrats take the House and just percolating now with Greg 247 00:14:17,320 --> 00:14:20,600 Speaker 1: Vla and Mike Allen and Axials and others. Democrats take 248 00:14:20,640 --> 00:14:23,480 Speaker 1: the Senate. Those are two different things, aren't there they are? 249 00:14:23,640 --> 00:14:28,120 Speaker 1: And if um, on the tax front, if if Democrats 250 00:14:28,160 --> 00:14:30,000 Speaker 1: don't have both houses, it would be hard for the 251 00:14:30,080 --> 00:14:33,120 Speaker 1: Congress to compel the return. But if they do, they 252 00:14:33,160 --> 00:14:36,240 Speaker 1: can literally, in conjunction with the I R S, force 253 00:14:36,280 --> 00:14:38,080 Speaker 1: a release of the president. Could that be the I 254 00:14:38,200 --> 00:14:40,800 Speaker 1: R S as an executive branch, isn't it? But the 255 00:14:41,200 --> 00:14:43,320 Speaker 1: the I R S has to be beholden to certain 256 00:14:43,360 --> 00:14:46,040 Speaker 1: mandates coming out of the Congress in certain situations, and 257 00:14:46,160 --> 00:14:48,080 Speaker 1: this is one of them. Just because of time. Let's 258 00:14:48,680 --> 00:14:50,680 Speaker 1: switch gears here the New York Times article and the 259 00:14:50,760 --> 00:14:55,080 Speaker 1: president's finances. Um, everyone agreed, whatever their party it was, 260 00:14:55,400 --> 00:14:59,200 Speaker 1: it was a profound investigative peace. What was the thing 261 00:14:59,280 --> 00:15:03,320 Speaker 1: in there that made Tim O'Brien sit up and read um? 262 00:15:03,440 --> 00:15:06,240 Speaker 1: I think the the the extensive detail they had on 263 00:15:06,360 --> 00:15:09,240 Speaker 1: the use of tax shelters by the Trump family over 264 00:15:09,400 --> 00:15:14,680 Speaker 1: decades to shelter everybody did it, but everybody did it, 265 00:15:14,760 --> 00:15:16,120 Speaker 1: and I think a big portion of what they did 266 00:15:16,240 --> 00:15:19,240 Speaker 1: was perfectly legal. There is a portion in there that smells, 267 00:15:19,480 --> 00:15:21,920 Speaker 1: that looks dubious, but it's a long time ago and 268 00:15:22,000 --> 00:15:23,840 Speaker 1: it's a debate. I I don't think there's gonna be 269 00:15:23,840 --> 00:15:25,960 Speaker 1: any criminal charges coming out of this. There may be 270 00:15:26,080 --> 00:15:28,600 Speaker 1: some civil fines. The one thing that really pops to 271 00:15:28,680 --> 00:15:31,200 Speaker 1: me the whole piece was that Donald Trump, while his 272 00:15:31,280 --> 00:15:35,000 Speaker 1: father slipped into Alzheimer's, attached to coddstle to his father's 273 00:15:35,040 --> 00:15:38,400 Speaker 1: will in order to try to get executive authority and 274 00:15:38,440 --> 00:15:41,680 Speaker 1: to become the executor over his father's entire business empire. 275 00:15:42,320 --> 00:15:45,000 Speaker 1: And Fred noticed this even though he was getting cloudy, 276 00:15:45,320 --> 00:15:47,200 Speaker 1: and he asked his daughter, the judge, to look at it. 277 00:15:47,320 --> 00:15:49,560 Speaker 1: She also thought it smelled. So they took the whole 278 00:15:49,600 --> 00:15:52,360 Speaker 1: process out of Donald's hands and hired a new state 279 00:15:52,440 --> 00:15:55,840 Speaker 1: attorney for themselves so they could redraft Fred's will so 280 00:15:56,120 --> 00:15:58,680 Speaker 1: his son couldn't get control of the empire. Is that 281 00:15:58,840 --> 00:16:04,200 Speaker 1: a state attorney of elible for various investigations now, uhily, 282 00:16:04,280 --> 00:16:06,960 Speaker 1: but again these are you know that there substantial limitations here. 283 00:16:07,000 --> 00:16:09,240 Speaker 1: A lot of this stuff is ancient. Let us talk 284 00:16:09,360 --> 00:16:13,440 Speaker 1: about uh Kavana again, Tim O'Brien with his Bloomberg opinion, 285 00:16:13,960 --> 00:16:17,240 Speaker 1: and and it is very much that in opinion, uh, 286 00:16:17,400 --> 00:16:19,520 Speaker 1: your team with David Shipley has written a number of 287 00:16:19,680 --> 00:16:23,400 Speaker 1: editorials about the nuances of this moment. What will you 288 00:16:23,520 --> 00:16:28,120 Speaker 1: watch today and then end the Saturday vote? Well, I 289 00:16:28,320 --> 00:16:32,160 Speaker 1: think clearly how um you know the key Republican senators 290 00:16:32,240 --> 00:16:35,920 Speaker 1: on this particular voter lining up Jeff Lake, Lisa Murkowski, 291 00:16:35,960 --> 00:16:38,000 Speaker 1: and Susan Collins that you know, we've known that for 292 00:16:38,040 --> 00:16:40,760 Speaker 1: a while, that that hasn't changed. I think what's interesting 293 00:16:40,920 --> 00:16:45,240 Speaker 1: is the debate around Kavanaugh himself has moved um off 294 00:16:45,520 --> 00:16:50,560 Speaker 1: of uh sexual harassment or sexual assaulted onto issues about 295 00:16:50,600 --> 00:16:54,040 Speaker 1: his credibility and his rascity. Yeah, but even you know, 296 00:16:54,120 --> 00:16:56,240 Speaker 1: the people making the argument about his temperament that that's 297 00:16:56,280 --> 00:16:58,760 Speaker 1: not an issue. They haven't taken on this core thing 298 00:16:59,040 --> 00:17:03,680 Speaker 1: about the fact that he lied demonstrably during his testimony. 299 00:17:03,720 --> 00:17:06,520 Speaker 1: I was thunderstruck by his op ed in the Wall 300 00:17:06,560 --> 00:17:08,760 Speaker 1: Street Journal today. I mean, I'm sure if he died one, 301 00:17:09,600 --> 00:17:11,560 Speaker 1: Tim O'Brien, you would have said, sure, we'll run that 302 00:17:11,640 --> 00:17:15,399 Speaker 1: op ed. I get that, but was that appropriate that 303 00:17:15,520 --> 00:17:18,760 Speaker 1: a nominee would would what, you're smarter than me on 304 00:17:18,840 --> 00:17:22,600 Speaker 1: a language? What's the right word? Advocate for himself. He's 305 00:17:22,600 --> 00:17:25,399 Speaker 1: been for quite a while. He was lobbying on the boats, 306 00:17:25,480 --> 00:17:28,400 Speaker 1: like in six hours. He's been doing that throughout. I'm saying, 307 00:17:28,440 --> 00:17:30,879 Speaker 1: I don't, I don't, I think, I don't think he can. 308 00:17:31,040 --> 00:17:34,560 Speaker 1: He's out of the box as a Supreme Court nominee. 309 00:17:34,640 --> 00:17:37,040 Speaker 1: He's doing things no nominee has done before. In that 310 00:17:37,119 --> 00:17:39,960 Speaker 1: op ed he said that he would hate to see 311 00:17:40,040 --> 00:17:45,760 Speaker 1: the Supreme Court broken apart by partisanship. But that's that's 312 00:17:45,760 --> 00:17:48,040 Speaker 1: said by the conductor of the train that has already 313 00:17:48,080 --> 00:17:50,560 Speaker 1: left the station. He's part and parcel of that problem. 314 00:17:50,760 --> 00:17:53,920 Speaker 1: Is he setting himself up with whatever events occur where 315 00:17:53,920 --> 00:17:55,600 Speaker 1: he says, you know, I've been through the process for 316 00:17:55,640 --> 00:17:58,040 Speaker 1: the good of the country, and Tim O'Brien, I'm gonna 317 00:17:58,080 --> 00:18:00,159 Speaker 1: pull my nomination. Is that what we're gonna in the 318 00:18:00,240 --> 00:18:02,040 Speaker 1: next eighteen I don't think he's going to do that 319 00:18:02,119 --> 00:18:05,760 Speaker 1: unless you see the Republicans turn against like within where 320 00:18:05,880 --> 00:18:07,800 Speaker 1: we go from here and you know, obviously we could 321 00:18:07,800 --> 00:18:10,240 Speaker 1: talk to Professor Felman or others, and and folks, I 322 00:18:10,240 --> 00:18:13,600 Speaker 1: should say, Bloomberg opinion and Bloomberg in general are legal 323 00:18:13,720 --> 00:18:18,160 Speaker 1: coverage has been fabulously balanced, I think, with different opinions, 324 00:18:18,200 --> 00:18:21,280 Speaker 1: whether it's John Coffee on Tesla or it's it's a 325 00:18:21,400 --> 00:18:25,359 Speaker 1: Noah Felman of Harvard on the history of the Supreme Court, 326 00:18:25,480 --> 00:18:29,880 Speaker 1: and some of these these emotional culture work resh preneurs 327 00:18:29,920 --> 00:18:33,480 Speaker 1: as well. Leading a conservative and a uniquely conservative charge 328 00:18:33,920 --> 00:18:37,000 Speaker 1: is well, let's go there. When this is done the 329 00:18:37,119 --> 00:18:41,919 Speaker 1: first Wednesday of November, what will be the new conservative thought? 330 00:18:42,560 --> 00:18:45,480 Speaker 1: Or is it still Trump? Is um even going into 331 00:18:46,680 --> 00:18:51,080 Speaker 1: on the right after the midterm? I I think, Um, Look, 332 00:18:51,160 --> 00:18:53,600 Speaker 1: I you know, I think all journalists have been chastened 333 00:18:53,600 --> 00:18:55,200 Speaker 1: about trying to predict where votes are going to go. 334 00:18:55,320 --> 00:18:58,480 Speaker 1: But if um, the polling is to be relied upon, 335 00:18:58,880 --> 00:19:01,320 Speaker 1: it looks like the Democrats of a very decisive advantage 336 00:19:01,320 --> 00:19:03,399 Speaker 1: in the House and the Senate is still up in 337 00:19:03,440 --> 00:19:06,120 Speaker 1: the air. I think even if the Democrats get the House, 338 00:19:06,240 --> 00:19:07,720 Speaker 1: a lot of what Trump has been able to do 339 00:19:07,840 --> 00:19:13,320 Speaker 1: thus far is going to get complex because committees like Judiciary, Oversight, 340 00:19:13,440 --> 00:19:17,719 Speaker 1: and Intelligence are going to start launching subpoena bombs at 341 00:19:17,760 --> 00:19:19,520 Speaker 1: the White House, and it's going to really tie the 342 00:19:19,560 --> 00:19:23,600 Speaker 1: White House up in knots. Let's talk journalism. Uh, you've 343 00:19:23,640 --> 00:19:25,800 Speaker 1: been a student of this with your with your work 344 00:19:25,880 --> 00:19:29,880 Speaker 1: with different vendors over the years. Mark benny Off wants 345 00:19:29,960 --> 00:19:34,200 Speaker 1: to buy Time magazine. What would you do with it? Well, 346 00:19:34,320 --> 00:19:35,840 Speaker 1: you know, I think we're in an era right now 347 00:19:35,880 --> 00:19:39,359 Speaker 1: where there are wealthy people who see media properties as 348 00:19:40,000 --> 00:19:43,920 Speaker 1: as entities that they can revive by simply flooding it 349 00:19:44,240 --> 00:19:47,520 Speaker 1: with resources, and as you know, it's much more complex 350 00:19:47,600 --> 00:19:50,760 Speaker 1: than that. I think Jeff Bezos taking over the Washington 351 00:19:50,840 --> 00:19:53,000 Speaker 1: Post was a happy event for journalism, and I hope 352 00:19:53,040 --> 00:19:55,639 Speaker 1: for him. Uh he's bringing some innovation to it, but 353 00:19:55,680 --> 00:19:58,200 Speaker 1: he's also he also got his hands on a legacy 354 00:19:58,280 --> 00:20:01,040 Speaker 1: newspaper that already had a loyal audience and brought in 355 00:20:01,119 --> 00:20:04,440 Speaker 1: a horse from Boston. I should point out Baron, and 356 00:20:04,520 --> 00:20:07,359 Speaker 1: he got the great Mighty Baron. But you know, he 357 00:20:08,119 --> 00:20:11,040 Speaker 1: he was able to bring resources to something that was 358 00:20:11,200 --> 00:20:16,240 Speaker 1: already a fairly enterprise. Time is time question, No, because 359 00:20:16,240 --> 00:20:19,600 Speaker 1: I think there's a different Time is making a contrast. 360 00:20:19,720 --> 00:20:21,399 Speaker 1: I don't think the Times probably, I don't think that. 361 00:20:21,400 --> 00:20:24,520 Speaker 1: I don't think the Time Inc. Properties are at the 362 00:20:24,640 --> 00:20:27,160 Speaker 1: top of their game in the same way the Washington Post. 363 00:20:27,720 --> 00:20:30,399 Speaker 1: And that matters if you're gonna have a successful media enterprise. 364 00:20:30,480 --> 00:20:32,760 Speaker 1: Timo Brian, thank you so much. Timothy O'Brien with Bloomberg 365 00:20:32,840 --> 00:20:34,399 Speaker 1: Opinion writing and I'll be writing or what do you 366 00:20:34,480 --> 00:20:36,760 Speaker 1: publish it today? I mean your's day starts at what 367 00:20:37,800 --> 00:20:44,639 Speaker 1: st five m every day? Are on my way to 368 00:20:44,720 --> 00:20:47,160 Speaker 1: the office. Very good, Timo Brian, thank you so much. 369 00:20:47,240 --> 00:20:50,040 Speaker 1: And look for his work, particularly on the finances of 370 00:20:50,080 --> 00:20:52,760 Speaker 1: the president. Of course, his important book of a few 371 00:20:53,480 --> 00:21:06,480 Speaker 1: years ago for New York City for our audience worldwide, 372 00:21:06,480 --> 00:21:08,879 Speaker 1: and please to welcome our listeners on Bloomberg Radio and 373 00:21:09,040 --> 00:21:12,159 Speaker 1: on Bloomberg TV for the Trump administration's view on what 374 00:21:12,359 --> 00:21:15,800 Speaker 1: is happening. Let's bring in Larry Carblo, National Economic Council Director, 375 00:21:15,880 --> 00:21:18,240 Speaker 1: who joins us now. Larry, good morning to you, sir, 376 00:21:18,960 --> 00:21:21,440 Speaker 1: Thank you, Jonathan, appreciate it very much. It's good to 377 00:21:21,480 --> 00:21:23,040 Speaker 1: see and we won't get wrapped up in that one 378 00:21:23,160 --> 00:21:25,440 Speaker 1: thirty four because the upward revision is pretty decent and 379 00:21:25,480 --> 00:21:29,320 Speaker 1: the overall picture for the labor markets. So let's start 380 00:21:29,400 --> 00:21:32,040 Speaker 1: just stick it in let's I just want to make 381 00:21:32,160 --> 00:21:34,520 Speaker 1: that point. I don't mean to interrupt, but that's a 382 00:21:34,600 --> 00:21:37,239 Speaker 1: really key point because you, of all people, know how 383 00:21:37,359 --> 00:21:40,280 Speaker 1: these numbers bump around. So you got a one thirty 384 00:21:40,359 --> 00:21:44,000 Speaker 1: something and you've got an eighty thousand plus revision, So 385 00:21:44,200 --> 00:21:46,800 Speaker 1: this is actually you know, the increase in the level 386 00:21:46,880 --> 00:21:51,919 Speaker 1: for September is uh what the two thousand? That's awful, 387 00:21:51,920 --> 00:21:53,840 Speaker 1: good number. I just want to make that point. It's 388 00:21:53,840 --> 00:21:55,480 Speaker 1: a point well made, Larry. So let's talk about the 389 00:21:55,560 --> 00:21:58,600 Speaker 1: unemployment rate for the eight year old for the administration. 390 00:21:58,920 --> 00:22:01,400 Speaker 1: What's your view on how low this can go? Because 391 00:22:01,440 --> 00:22:03,960 Speaker 1: many economists the same work full employment, this is kind 392 00:22:04,000 --> 00:22:05,560 Speaker 1: of it. We can't go much lower than this. You 393 00:22:05,600 --> 00:22:08,240 Speaker 1: have a different opinion, Lowry, Well, I don't want to 394 00:22:08,280 --> 00:22:11,320 Speaker 1: give a forecast, per se, but I do think it 395 00:22:11,440 --> 00:22:14,240 Speaker 1: can go lower. And I think people are moving back 396 00:22:14,280 --> 00:22:20,200 Speaker 1: into the labor force as wages and incentives increase, you know, 397 00:22:20,359 --> 00:22:23,560 Speaker 1: lower taxes and so forth, you've got fatter paychecks going. 398 00:22:24,160 --> 00:22:26,840 Speaker 1: I just did some calculations. I hope I get this right. 399 00:22:27,440 --> 00:22:31,840 Speaker 1: The average hourly earnings up two point eight percent year 400 00:22:31,880 --> 00:22:34,480 Speaker 1: on year in the report. But Jonathan, I like to 401 00:22:34,560 --> 00:22:37,520 Speaker 1: add the work hours. The increase in work hours for 402 00:22:37,600 --> 00:22:40,720 Speaker 1: the year is two point six So you put those 403 00:22:40,760 --> 00:22:44,280 Speaker 1: two together, you've got five point four per six, five 404 00:22:44,400 --> 00:22:48,520 Speaker 1: point six percent increase in wage income. And I'm gonna 405 00:22:48,560 --> 00:22:52,040 Speaker 1: take the PC data at two right, the inflation and two, 406 00:22:52,680 --> 00:22:54,959 Speaker 1: that's a three and a half three point six percent 407 00:22:55,600 --> 00:22:59,159 Speaker 1: real wage increase. That's huge. And all I'm saying is 408 00:22:59,680 --> 00:23:03,240 Speaker 1: after taxes, that's gonna bring more people into the workforce. 409 00:23:03,480 --> 00:23:06,920 Speaker 1: So we're growing in a capital goods boom. And I 410 00:23:07,080 --> 00:23:10,840 Speaker 1: think unemployment has some downside to go, but mostly it's 411 00:23:10,880 --> 00:23:12,760 Speaker 1: a very healthy story. And the days of this week 412 00:23:12,880 --> 00:23:14,960 Speaker 1: has been pretty style of the IDP report earlier this 413 00:23:15,000 --> 00:23:16,399 Speaker 1: week give us a pretty good sign of what was 414 00:23:16,440 --> 00:23:18,920 Speaker 1: happening in the non manufacturing guy Sam, all of this, 415 00:23:19,080 --> 00:23:21,960 Speaker 1: Larry is driving a pretty sustained bit back into the U. S. Dollar. 416 00:23:22,040 --> 00:23:23,560 Speaker 1: It was stable for a period of this year, is 417 00:23:23,600 --> 00:23:26,119 Speaker 1: starting to runny again. And I just wonder whether the 418 00:23:26,200 --> 00:23:28,679 Speaker 1: President thinks that what is happening in the FX market 419 00:23:29,160 --> 00:23:33,399 Speaker 1: is off setting some of the accomplishments. South swear well, no, 420 00:23:33,560 --> 00:23:36,159 Speaker 1: look that dollars actually been pretty steady. I have it 421 00:23:36,240 --> 00:23:41,359 Speaker 1: on my sheets from yesterday and three quarters caught. That's 422 00:23:41,400 --> 00:23:43,440 Speaker 1: pretty much in the mid range. I think in the 423 00:23:43,520 --> 00:23:45,720 Speaker 1: last ten or twelve years it's gone up and down. 424 00:23:46,320 --> 00:23:49,600 Speaker 1: A healthy dollar is a healthy economy. A healthy dollar 425 00:23:49,800 --> 00:23:52,320 Speaker 1: tracks invest in for all over the world, and we're 426 00:23:52,400 --> 00:23:56,320 Speaker 1: providing enough incentives and competitiveness again on low taxes and 427 00:23:56,440 --> 00:24:00,439 Speaker 1: regulations to bring money home. I think it's a terrific positive. Uh, 428 00:24:00,520 --> 00:24:02,480 Speaker 1: you know, I think it's a great read on the 429 00:24:02,600 --> 00:24:06,199 Speaker 1: success of the country. Our view, the Treasury view, Stephen, 430 00:24:06,200 --> 00:24:10,040 Speaker 1: the nutrition's view is we would like a stable, you know, stable, steady, 431 00:24:10,080 --> 00:24:12,560 Speaker 1: strong dollar as far as the eye can see, looks 432 00:24:12,600 --> 00:24:14,760 Speaker 1: like we're getting that. There's a lot of confidence here. 433 00:24:14,960 --> 00:24:18,840 Speaker 1: Is that the president's view too, Larry, I think generally 434 00:24:18,880 --> 00:24:22,520 Speaker 1: it is the president's view. President has a lot of opinions. Uh, 435 00:24:22,960 --> 00:24:27,480 Speaker 1: sometimes up, sometimes down. We're not trying to influence anybody's policy. 436 00:24:27,520 --> 00:24:30,040 Speaker 1: We're not trying to influence the Fed's policy. We're not 437 00:24:30,160 --> 00:24:34,560 Speaker 1: trying to influence the dollar policy. It's steady as you go. Actually, 438 00:24:35,119 --> 00:24:37,520 Speaker 1: um J. Powell, as you know, has made a lot 439 00:24:37,600 --> 00:24:40,840 Speaker 1: of interesting statements saying that better growth, which is what 440 00:24:41,000 --> 00:24:46,200 Speaker 1: we're getting, is not necessarily inflation. And I would say, Jonathan, 441 00:24:46,480 --> 00:24:50,080 Speaker 1: if you have a steady dollar, you gotta low steady 442 00:24:50,280 --> 00:24:54,800 Speaker 1: goal price. Uh, that's a big sign. There's no inflation 443 00:24:54,960 --> 00:24:58,440 Speaker 1: out there. We're just growing. And you were talking about 444 00:24:58,520 --> 00:25:01,159 Speaker 1: bond rates a few moments ago. I don't know what 445 00:25:01,280 --> 00:25:03,920 Speaker 1: your quote is this morning, about three two for the 446 00:25:04,000 --> 00:25:08,080 Speaker 1: ten year. I think that's up about thirty five basis points. 447 00:25:08,480 --> 00:25:10,159 Speaker 1: So it's the long end of the curve. It's not 448 00:25:10,320 --> 00:25:13,960 Speaker 1: the Fed funds rate, but most of that is the 449 00:25:14,440 --> 00:25:17,719 Speaker 1: real interest rate, the real tips rate, which is up 450 00:25:17,760 --> 00:25:20,680 Speaker 1: I think three quarters are you know, almost eight? What 451 00:25:20,720 --> 00:25:24,280 Speaker 1: does that tell you? I suggest people are expecting higher 452 00:25:24,400 --> 00:25:28,600 Speaker 1: capital returns and stronger US economic growth the head. That's 453 00:25:28,600 --> 00:25:31,199 Speaker 1: a very positive sign. Larry. I've got to say your 454 00:25:31,200 --> 00:25:32,840 Speaker 1: analysis in the bond market is spot on. It is 455 00:25:32,880 --> 00:25:34,920 Speaker 1: a pickup in real rates through the last week that's 456 00:25:34,920 --> 00:25:36,680 Speaker 1: really driven a ten year and a thirty year yield 457 00:25:36,720 --> 00:25:39,840 Speaker 1: out to highs. You said you don't want to influence 458 00:25:39,840 --> 00:25:43,120 Speaker 1: anyone's policy, maybe domestically, but internationally we know that's not true. 459 00:25:43,160 --> 00:25:45,199 Speaker 1: So let's talk about China. I wonder if you saw 460 00:25:45,240 --> 00:25:47,800 Speaker 1: the Bloomberg reporting over the last twenty four hours that 461 00:25:47,920 --> 00:25:51,119 Speaker 1: revealed how China used a tiny chip to hack into 462 00:25:51,200 --> 00:25:53,680 Speaker 1: an infiltrate some of the supply chains of some of 463 00:25:53,720 --> 00:25:56,359 Speaker 1: the biggest companies on the planet, including US companies. Larry, 464 00:25:56,440 --> 00:25:58,320 Speaker 1: have you read that story and is it something the 465 00:25:58,359 --> 00:26:01,960 Speaker 1: administration is looking into? Well, you know, I read every 466 00:26:02,119 --> 00:26:05,879 Speaker 1: Bloomberg story. I have no doubt, Larry, and I you know, 467 00:26:06,040 --> 00:26:08,480 Speaker 1: I look at all your tapes, Jonathan, and I try 468 00:26:08,560 --> 00:26:10,960 Speaker 1: to memorize all of them, so I'm up to speed. 469 00:26:11,400 --> 00:26:14,720 Speaker 1: I will only say that I have some uncertainty because 470 00:26:14,720 --> 00:26:17,520 Speaker 1: a lot of these companies, I believe Apple in the lead, 471 00:26:17,760 --> 00:26:21,680 Speaker 1: have denied the story. The story. I'm not smart enough 472 00:26:21,760 --> 00:26:24,480 Speaker 1: to know the answer to that, but I think it's 473 00:26:24,520 --> 00:26:28,040 Speaker 1: a good thing to be on guard because our Chinese 474 00:26:28,359 --> 00:26:31,680 Speaker 1: so called friends have done a lot of mischief in 475 00:26:31,840 --> 00:26:35,040 Speaker 1: that area, uh not least of which in addition to 476 00:26:35,200 --> 00:26:39,119 Speaker 1: these chips and stealing of technology cyber hacking. So I 477 00:26:39,240 --> 00:26:42,240 Speaker 1: don't know the bottom line. Maybe you'll help me clarify 478 00:26:42,280 --> 00:26:44,360 Speaker 1: it as the day goes on, but i'd sure keep 479 00:26:44,400 --> 00:26:46,320 Speaker 1: a watch on it. Well, Larry, they have to add 480 00:26:46,320 --> 00:26:48,359 Speaker 1: that story, but there's some pretty strong sourcing behind the 481 00:26:48,359 --> 00:26:51,000 Speaker 1: reporting here at Bloombergers. I'm sure you can imagine that 482 00:26:51,080 --> 00:26:52,760 Speaker 1: kind of backs it up pretty well, which is why 483 00:26:52,800 --> 00:26:54,480 Speaker 1: we published and I do think it takes us to 484 00:26:54,480 --> 00:26:58,320 Speaker 1: a bigger conversation about trade. Larry. Economists typically always talk 485 00:26:58,359 --> 00:27:02,000 Speaker 1: about trade through the allocation of scarce resources and the 486 00:27:02,080 --> 00:27:04,800 Speaker 1: most efficient allocation of scarce resources, and where should things 487 00:27:04,880 --> 00:27:09,080 Speaker 1: be produced, etcetera, etcetera. They typically ignor national security. Do 488 00:27:09,160 --> 00:27:11,320 Speaker 1: you think we have got a series of examples which 489 00:27:11,359 --> 00:27:14,879 Speaker 1: do justify why manufacturing, a lot of manufacturing does need 490 00:27:14,960 --> 00:27:21,480 Speaker 1: to be domestic? Well, look, um, our policy of President's 491 00:27:21,520 --> 00:27:25,720 Speaker 1: trade policy, you know, has put the Chinese unnoticed that 492 00:27:25,880 --> 00:27:31,240 Speaker 1: we cannot accept their unfair trading practices, THEFT DI I 493 00:27:31,440 --> 00:27:35,200 Speaker 1: P force transfer of technology. You've heard this and you've 494 00:27:35,240 --> 00:27:38,760 Speaker 1: heard it from me and others. High tariffs on industrial 495 00:27:38,800 --> 00:27:42,280 Speaker 1: and agriculture commodities, and non tariff barriers. They won't let 496 00:27:42,320 --> 00:27:47,320 Speaker 1: American companies own uh fifty one or fifty that's where 497 00:27:47,359 --> 00:27:51,360 Speaker 1: the tech is stolen. Um. Sometimes they say, yeah, we'll 498 00:27:51,400 --> 00:27:54,119 Speaker 1: give your ownership, but we won't give your license. So 499 00:27:54,280 --> 00:27:56,200 Speaker 1: what is that good? Good does that do? So? The 500 00:27:56,280 --> 00:27:59,280 Speaker 1: President has been on guard. Uh. He believes that the 501 00:27:59,440 --> 00:28:03,119 Speaker 1: whole trade relationships broken, and we have been, as you know, 502 00:28:03,359 --> 00:28:06,800 Speaker 1: negotiating on and off, it has been unsatisfactory thus far. 503 00:28:07,520 --> 00:28:11,000 Speaker 1: I think Secretary Manutin has said better to talk than 504 00:28:11,080 --> 00:28:13,920 Speaker 1: not talk. But the talks have to be serious, and 505 00:28:14,359 --> 00:28:17,800 Speaker 1: maybe I want to underscore, maybe Jonathan, there might be 506 00:28:17,880 --> 00:28:20,640 Speaker 1: a meeting with the two presidents, she and Trump down 507 00:28:20,720 --> 00:28:24,240 Speaker 1: in Buenos aireas UH in late November at the G twenty. 508 00:28:24,320 --> 00:28:28,240 Speaker 1: But that's a maybe. I can't confirm that. So possibly, 509 00:28:28,359 --> 00:28:31,800 Speaker 1: so far it's been unsatisfactory. We've done very well. We've 510 00:28:31,880 --> 00:28:34,240 Speaker 1: done very well as you know on the U S 511 00:28:34,720 --> 00:28:36,240 Speaker 1: m c A. I hope I got that right. I 512 00:28:36,320 --> 00:28:39,560 Speaker 1: got learned that new phrase. We're opening up trade discussions 513 00:28:39,600 --> 00:28:43,040 Speaker 1: with Europe. We're opening up trade discussions with Japan. They'll 514 00:28:43,120 --> 00:28:47,400 Speaker 1: send a signal to China. We signed a Tripartei Jonathan, EU, 515 00:28:47,880 --> 00:28:52,240 Speaker 1: USA A Japan against unfair trading practices and other illegal 516 00:28:52,360 --> 00:28:55,800 Speaker 1: trades that was aimed at China. So the Western allies 517 00:28:55,840 --> 00:28:58,520 Speaker 1: are very much united here. But so far we just 518 00:28:58,640 --> 00:29:01,280 Speaker 1: haven't got any results. China, you're making some really good 519 00:29:01,320 --> 00:29:03,640 Speaker 1: progress solving some of the trade disputes. Some you can't 520 00:29:03,680 --> 00:29:05,479 Speaker 1: tease me like that with a meeting of one of salaries, 521 00:29:05,480 --> 00:29:07,800 Speaker 1: so that talks about doing that right now? You haven't 522 00:29:07,840 --> 00:29:11,520 Speaker 1: talks about setting that up at the moment. I'm sorry 523 00:29:11,520 --> 00:29:13,720 Speaker 1: I missed that last one. Are you having talks about 524 00:29:13,760 --> 00:29:15,800 Speaker 1: setting up a meeting and one of salaries between the 525 00:29:15,840 --> 00:29:18,320 Speaker 1: two leaders of China at the United States? Are those 526 00:29:18,360 --> 00:29:22,120 Speaker 1: talks right now? There there is discussion about that. I 527 00:29:22,400 --> 00:29:25,040 Speaker 1: can't confirm it. I'm just saying there is discussion about 528 00:29:25,120 --> 00:29:28,280 Speaker 1: that before then, Jonathan, I don't. I don't think so. 529 00:29:28,440 --> 00:29:31,640 Speaker 1: I don't hear it. I'd love to be wrong again. Personally, 530 00:29:31,720 --> 00:29:33,720 Speaker 1: I think it's better to talk than not talk. But 531 00:29:33,880 --> 00:29:37,680 Speaker 1: the talk has to be serious and significant, no smoke blowing, 532 00:29:38,080 --> 00:29:42,000 Speaker 1: you know, come with concrete proposals. Say yes, there's something 533 00:29:42,120 --> 00:29:45,680 Speaker 1: we've offered because the relationship has got to change now. 534 00:29:45,800 --> 00:29:50,400 Speaker 1: President wants to protect American workers, farmers, ranchers, the whole economy. 535 00:29:50,920 --> 00:29:53,360 Speaker 1: We want to be on a level of playing field. Uh, 536 00:29:53,480 --> 00:29:57,920 Speaker 1: if they open their barriers, we will export sell a 537 00:29:58,040 --> 00:30:01,080 Speaker 1: million jillion goods and Service says we're the hottest, most 538 00:30:01,120 --> 00:30:04,120 Speaker 1: competitive economy in the world. And by the way, if 539 00:30:04,200 --> 00:30:07,960 Speaker 1: China really wants to help its consumers, then let Americans 540 00:30:08,000 --> 00:30:11,240 Speaker 1: supply our superior goods. But we just haven't had any 541 00:30:11,320 --> 00:30:14,560 Speaker 1: satisfaction on that yet, Larry look great to catch up 542 00:30:14,640 --> 00:30:16,520 Speaker 1: you from the White House already, appreciate your time so 543 00:30:16,680 --> 00:30:19,200 Speaker 1: as always and always a great sport following Pyrose fraud 544 00:30:19,240 --> 00:30:21,080 Speaker 1: and some great analysis of the bulkmark of that gens 545 00:30:21,120 --> 00:30:29,920 Speaker 1: as well. Thanks for listening to the Bloomberg Surveillance podcast. 546 00:30:30,320 --> 00:30:35,200 Speaker 1: Subscribe and listen to interviews on Apple Podcasts, SoundCloud, or 547 00:30:35,400 --> 00:30:39,680 Speaker 1: whichever podcast platform you prefer. I'm on Twitter at Tom 548 00:30:39,840 --> 00:30:43,640 Speaker 1: Keane before the podcast. You can always catch us worldwide. 549 00:30:44,160 --> 00:30:45,200 Speaker 1: I'm Bloomberg Radio