WEBVTT - The Real Move Is From High to Low Cost Funds, Kapoor Says 0:00:05.800 --> 0:00:08.720 Welcome to the Bloomberg p m L Podcast. I'm pim Fox. 0:00:08.760 --> 0:00:11.520 Along with my co host Lisa Bramowitz. Each day we 0:00:11.640 --> 0:00:15.120 bring you the most important, noteworthy, and useful interviews for 0:00:15.200 --> 0:00:17.840 you and your money, whether you're at the grocery store 0:00:17.960 --> 0:00:20.720 or the trading floor. Find the Bloomberg p m L 0:00:20.840 --> 0:00:31.320 Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot com. Now, however, 0:00:31.320 --> 0:00:33.760 I'd like to go to Canal Kapoor, who is chief 0:00:33.760 --> 0:00:37.319 executive officer of morning Star, which oversees more than two 0:00:37.680 --> 0:00:40.280 billion dollars of assets and is well known for the 0:00:40.360 --> 0:00:45.920 analytics that it provides surrounding asset managers and two investors. Kunal, 0:00:46.000 --> 0:00:48.519 thank you so much for joining us. I feel like 0:00:48.600 --> 0:00:52.640 you're uniquely positioned to have a good perspective on the 0:00:52.840 --> 0:00:56.760 shift in asset management from active to passive. Can you 0:00:56.760 --> 0:00:59.560 give me a sense from morning Stars perspective, how has 0:00:59.640 --> 0:01:03.000 this changed your business? Yeah, well, good morning, first of all, 0:01:03.120 --> 0:01:07.160 and thanks for having me join you. You're right, obviously 0:01:07.200 --> 0:01:10.000 we're seeing some season like shifts in frum says or 0:01:10.200 --> 0:01:14.880 the move from active managers two passive managers. And you 0:01:14.880 --> 0:01:16.960 know my view on this, and I think this represents 0:01:17.000 --> 0:01:19.840 a lot of you two is that while it's been 0:01:19.920 --> 0:01:24.040 cost in that fashion, the real move is from high 0:01:24.080 --> 0:01:28.240 cost offerings to low cost offerings. And much of what 0:01:28.280 --> 0:01:32.320 you're seeing, at least in the active space today in 0:01:32.520 --> 0:01:36.000 in in what i'll call the retail area is UM 0:01:36.040 --> 0:01:38.280 you know, typical of what you saw in the institutional 0:01:38.280 --> 0:01:41.199 space over the past three decades. So at some level 0:01:41.280 --> 0:01:44.360 it was inevitable that he who were going to come down. 0:01:44.560 --> 0:01:47.280 And you know, the asset management business, if you look 0:01:47.280 --> 0:01:50.000 at the historical performance of a lot of the publicly 0:01:50.000 --> 0:01:52.840 traded asset managers, our life has been good. You know, 0:01:52.880 --> 0:01:56.720 you've been looking at over forty percent, which in any 0:01:56.720 --> 0:02:00.480 other industry is almost unthinkable. And I think, you know, 0:02:00.520 --> 0:02:03.240 margins are probably coming down, you know, more to sort 0:02:03.240 --> 0:02:06.640 of the twenty percentage level. Uh, it's kind of more typical. 0:02:07.080 --> 0:02:11.320 So still good businesses by far um as as opposed 0:02:11.320 --> 0:02:13.280 to be in great businesses. But what I will say is, 0:02:13.360 --> 0:02:17.280 you know, for Morning Starts perspective, UM, ultimately we are 0:02:17.400 --> 0:02:21.440 focused on serving investors and helping investors. And you know, 0:02:21.480 --> 0:02:26.280 today's investors asking for different things. They're asking more for 0:02:26.400 --> 0:02:31.600 Portola solutions, they're asking more for multi assets solutions, they're 0:02:31.639 --> 0:02:35.280 asking more for help navigating some of their regulatory challenges 0:02:35.320 --> 0:02:38.080 that they're seeing. And I would just also just add 0:02:38.160 --> 0:02:42.320 that finally, most investors are just in a better place 0:02:42.600 --> 0:02:46.240 than they were ten fifteen years ago, given that there's 0:02:46.280 --> 0:02:49.160 more choice, given that there's little fees, given that the 0:02:49.200 --> 0:02:51.760 quality of advice is going up. So as much as 0:02:51.840 --> 0:02:55.320 things are changing, there's always plenty opportunity to help investors 0:02:55.400 --> 0:02:57.880 and you know, get them to the outcomes. Were hoping 0:02:57.919 --> 0:03:01.079 for one thing that you said what I thought was compelling. 0:03:01.200 --> 0:03:04.880 There's a focus on low cost rather than high cost funds, 0:03:05.000 --> 0:03:09.239 and h some Bloomberg intelligence analyzes have shown that money 0:03:09.320 --> 0:03:12.960 is flowing to low cost fees UH low cost funds 0:03:12.960 --> 0:03:16.760 and out of high cost funds regardless of performance. So UH, 0:03:16.960 --> 0:03:20.480 in a period like that where there is the singular 0:03:20.520 --> 0:03:25.240 focus on low cost of funds, does morning Star find 0:03:25.360 --> 0:03:29.800 that people are less willing to pay to understand better 0:03:30.160 --> 0:03:33.480 the background of the asset manager that they're investing with 0:03:33.520 --> 0:03:34.800 because they're just going to go to an e t 0:03:34.960 --> 0:03:38.480 F for some kind of passive fund. Anyway, I wouldn't 0:03:38.560 --> 0:03:42.720 say that the reality is even in the passive arena, 0:03:43.080 --> 0:03:47.040 the platora of options today are pretty meaningful. UM. I 0:03:47.040 --> 0:03:50.440 think you know, if in fact you're compared the number 0:03:50.520 --> 0:03:54.760 of publicly created stocks to the number of indexes that 0:03:54.800 --> 0:03:58.600 have been created in this country, to tractors and things. UM, 0:03:58.640 --> 0:04:01.080 I think there are more than a million nexes and 0:04:01.320 --> 0:04:03.320 obviously you know, the number of public stocks is um 0:04:03.440 --> 0:04:05.920 in the thousands, and so that just kind of gives 0:04:06.000 --> 0:04:08.320 you a sense of the fact that the choices are 0:04:08.320 --> 0:04:12.880 still overwhelming, and the reality is that most investors still 0:04:13.560 --> 0:04:16.920 want help. Um, they just wanted at a lower cost. 0:04:17.120 --> 0:04:19.880 And you know, my view here is that lower costs 0:04:19.920 --> 0:04:25.240 actually should increase interest that you know, investors maybe who 0:04:25.279 --> 0:04:27.400 had less interest in the past, and we were inclined 0:04:27.440 --> 0:04:31.280 to invest in. So for us, it's meant UM, you know, 0:04:31.320 --> 0:04:34.800 doing even more as it pertains to what we call 0:04:34.920 --> 0:04:38.440 decision outsourcing, which is where people choose to outsource the 0:04:38.480 --> 0:04:42.479 money management, and particularly in the financial advisor space, Morning 0:04:42.520 --> 0:04:45.640 starts doing more and more UM to work and help 0:04:45.640 --> 0:04:48.919 advisors meet that need. You know, one thing you said 0:04:49.120 --> 0:04:51.120 really stands out to me at there are thousands of 0:04:51.320 --> 0:04:56.360 indexes and not as many stocks. This concerns me. Does 0:04:56.400 --> 0:04:59.840 it concern you? Yeah? I think it does I mean 0:05:00.040 --> 0:05:02.880 many ways. You know, some of us the explosion of products, 0:05:03.120 --> 0:05:08.240 leverage products, very narrow niche indexes. It's sort of reminiscent 0:05:08.240 --> 0:05:10.200 of what you saw when you have to tech media 0:05:10.240 --> 0:05:14.000 telecom bubble, where people were just trying to find slivers 0:05:14.000 --> 0:05:16.560 and a lot of what our term is, you know, 0:05:16.600 --> 0:05:19.440 the shenanigans that went on in the mutual fund industry 0:05:19.440 --> 0:05:21.760 in the late ninety nineties and the early part of 0:05:21.760 --> 0:05:24.560 the century and then kind of got fleshed out, I 0:05:24.600 --> 0:05:26.040 think have sort of shown up in the E t 0:05:26.200 --> 0:05:28.039 F world. So there's a lot of good ets, but 0:05:28.080 --> 0:05:31.000 there's a lot of dangerous cts as well, and I 0:05:31.000 --> 0:05:35.080 think investors obviously just need to be cautious. I also 0:05:35.160 --> 0:05:38.040 just kind of point out that m you know, inexpervitors 0:05:38.920 --> 0:05:45.200 continue to maybe on the pure data side, the prices 0:05:45.279 --> 0:05:47.839 indexing is probably so high then it needs to be intact. 0:05:47.920 --> 0:05:51.080 Morning Star has an initiative called the Open indextrog Initiatives 0:05:51.640 --> 0:05:55.840 where we've made are data indexes available at no cost 0:05:56.120 --> 0:06:00.800 and banking practises, um you know, to ask managers because 0:06:00.800 --> 0:06:03.279 we do feel like that that's an unnecessary cost that 0:06:03.320 --> 0:06:05.760 they have to take today. No real quickly do you 0:06:05.760 --> 0:06:09.279 think that the that the shift toward passive is slowing 0:06:09.279 --> 0:06:11.400 and that the pendulum is moving a little more to active. 0:06:12.800 --> 0:06:16.360 The data does not suggest that today. It certainly seems 0:06:16.400 --> 0:06:20.400 like the momentum in passive continues to be very strong. 0:06:21.279 --> 0:06:23.240 Um But what you're seeing that I think is more 0:06:23.320 --> 0:06:28.080 heartening is that active managers are I think, more aggressively 0:06:28.160 --> 0:06:30.640 luring their fees and really thinking through how they can 0:06:31.160 --> 0:06:35.359 more directly have a compelling offering to investors. So, at 0:06:35.400 --> 0:06:36.840 the end of the day, if you're an active fund, 0:06:36.880 --> 0:06:39.800 you do need to earn your keep, and I think 0:06:39.880 --> 0:06:41.920 what you're seeing is that more and more active funds 0:06:41.960 --> 0:06:45.479 are starting to really try to answer that question. I 0:06:45.520 --> 0:06:47.760 remember that, you know, people used to say that funds 0:06:47.800 --> 0:06:49.800 have sold and not thought. I think that that's not 0:06:49.880 --> 0:06:52.200 the case anymore. Thank you so much for joining us. 0:06:52.240 --> 0:06:55.640 Kuna Kapoor is chief executive officer of morning Star, which 0:06:55.680 --> 0:07:00.000 is based in Chicago and oversees two hundred billion dollars. 0:07:10.880 --> 0:07:13.200 I want to bring in Doug Barthwick, Managing director and 0:07:13.280 --> 0:07:17.120 head of ex at Chapeling and Company. Doug, I appreciate 0:07:17.120 --> 0:07:18.880 you coming on. You know, there's been a lot of 0:07:18.920 --> 0:07:22.200 focus on the dollar, which has fallen to the lowest 0:07:22.480 --> 0:07:26.760 against a comparable piers since November eighth, since the election, 0:07:26.960 --> 0:07:29.280 And there is a lot of discussion that this is 0:07:29.760 --> 0:07:32.560 the direct result, that this is basically a proxy of 0:07:32.600 --> 0:07:35.280 the U S is stock falling. I mean, if this 0:07:35.360 --> 0:07:37.800 is basically essentially the same thing and that the dollar 0:07:37.840 --> 0:07:39.960 could be treated that way, do you agree, is that 0:07:40.080 --> 0:07:43.160 is the political turmoil really what's driving the dollar today? No, 0:07:43.360 --> 0:07:46.360 I I dis tree completely, some poor a lot of 0:07:46.400 --> 0:07:49.200 cold water on that argument. Please go on. Ever since 0:07:49.400 --> 0:07:51.520 Trump came into power, he's talked about a week dollar, 0:07:51.680 --> 0:07:53.559 and he's talked about how he's wanted a week dollar 0:07:53.880 --> 0:07:58.680 to renegotiate trading vents. For example, today there is discussion 0:07:58.720 --> 0:08:03.120 coming out of the Department where they talked about linking 0:08:03.360 --> 0:08:07.200 currency manipulation and making a currency clause soon after. So, 0:08:07.360 --> 0:08:09.400 the president has been talking about making the US more 0:08:09.400 --> 0:08:11.680 competitive and one of the ways he wants to do 0:08:11.720 --> 0:08:13.920 that is by having a weaker dollar, and we've just 0:08:14.200 --> 0:08:17.040 seen that against surplus currencies really since he's come into 0:08:17.280 --> 0:08:20.080 into office. And so the move that we've seen today, 0:08:20.280 --> 0:08:22.520 people have talked about the shocking moves and the markets. 0:08:22.520 --> 0:08:24.880 So you know, the year, dollars up forty pits, so 0:08:24.920 --> 0:08:28.200 that's less than half a percent. Certainly, dollar ends come off, 0:08:28.200 --> 0:08:30.520 but I think that's because it's really been very well 0:08:30.600 --> 0:08:33.240 been the last few days, and now we're sort of, uh, 0:08:33.320 --> 0:08:35.520 it's happen a little bit of a more reaction because 0:08:35.559 --> 0:08:37.640 stock and the stocks are off. Even in the stock market, 0:08:37.640 --> 0:08:40.439 you're talking about one point three pullback. But a weaker 0:08:40.520 --> 0:08:43.480 dollar has been in this administration's interest for quite some time. 0:08:44.040 --> 0:08:47.760 He's discussed that number of times via tweets, are certainly 0:08:47.840 --> 0:08:50.920 in speeches, and so it makes sense you see the 0:08:50.920 --> 0:08:54.280 dollars start to weaken, certainly against surplus currencies, although the 0:08:54.360 --> 0:08:58.440 timing is uh, pretty uncanny. I mean, basically, as the 0:08:58.480 --> 0:09:01.480 turmoil has built, the dollar has sold off, and people 0:09:01.480 --> 0:09:03.400 are saying, and it's not just the dollar, right, You've 0:09:03.400 --> 0:09:06.120 seen yields fall and treasury prices increase, and you've seen 0:09:06.160 --> 0:09:10.480 stocks fallen. Basically, this is the deflation of the trumsflation trade. Basically, 0:09:10.520 --> 0:09:13.559 people thinking, well, perhaps President Trump can't get his agenda 0:09:13.600 --> 0:09:16.600 through as as well as possibly we believed a couple 0:09:16.600 --> 0:09:19.559 of months ago. Do you think that that's a valid argument. No, 0:09:19.720 --> 0:09:22.760 I think that's really fitting Trump News into what people 0:09:22.800 --> 0:09:25.359 already think about valuations. When you think of the valuations 0:09:25.400 --> 0:09:27.920 of the stock market, I think every single guest you've 0:09:27.920 --> 0:09:29.720 had on over the past two months has talked about 0:09:29.720 --> 0:09:31.760 how the U S. Stock market is very over bud 0:09:31.880 --> 0:09:35.200 against any metric. When it comes down to the pricing 0:09:35.240 --> 0:09:38.439 in of a June hike by the Fed, I think 0:09:38.679 --> 0:09:40.920 a good number of is we're arguing that that made 0:09:40.960 --> 0:09:43.320 little sense given that the growth trajectory in the U 0:09:43.360 --> 0:09:45.720 S ins have stalled in the first quarter, and also 0:09:45.760 --> 0:09:48.160 given the inflation in taking up as much as possible. 0:09:48.240 --> 0:09:51.640 So you know, we were pricing a chance of June 0:09:51.720 --> 0:09:54.160 hike just a couple of days ago. Certainly it's come 0:09:54.200 --> 0:09:57.160 off since then, but I think that there's been a 0:09:57.280 --> 0:10:00.520 supreme excitement or an exuberance in the fixing on market 0:10:00.640 --> 0:10:03.199 and in the equity market that is now being priced 0:10:03.200 --> 0:10:06.760 back to more of a realistic nature. Uh just want 0:10:06.760 --> 0:10:10.760 to remind listeners that we are awaiting comments from President Trump, 0:10:10.760 --> 0:10:14.040 who will be speaking to the U. S. Coastcard Academy 0:10:14.360 --> 0:10:17.360 at their commencement ceremony in New London, Connecticut, and he 0:10:17.440 --> 0:10:21.080 is currently receiving a salute end We will bring you 0:10:21.160 --> 0:10:25.320 his comments when they come, so, Doug, how far can 0:10:25.520 --> 0:10:28.120 this dollar sell off go? At what point will it 0:10:28.160 --> 0:10:30.679 have exhausted itself? Are we back to a more realistic 0:10:31.440 --> 0:10:34.559 view of the economy and how much it can possibly 0:10:34.600 --> 0:10:37.960 pick up? Well, I think that if we were to 0:10:37.960 --> 0:10:40.840 look at a repricing of the dollar for trade reasons, 0:10:40.880 --> 0:10:44.280 I think you're looking at move in the euro orcent 0:10:44.400 --> 0:10:46.320 move lower in the dollar now that you could see 0:10:46.320 --> 0:10:49.280 then the euro trading around at one thirty level. Remember 0:10:49.320 --> 0:10:51.600 we were at one six back and had a number 0:10:51.600 --> 0:10:53.560 of years ago. And if the Fed was to turn 0:10:53.600 --> 0:10:55.360 around and say, you know what, we've been wanting to 0:10:55.400 --> 0:10:58.280 aggressively raise rates, but now we realize that the economy 0:10:58.320 --> 0:11:00.480 is not growing as fast as as we would expect, 0:11:00.880 --> 0:11:04.319 then I'd expected you'll start to drop in the US 0:11:04.360 --> 0:11:05.959 at the same time as the e c D. It's 0:11:05.960 --> 0:11:11.160 talking about removing the um accommodation, its support from both sides. 0:11:11.320 --> 0:11:13.280 So in other words, you're saying that you could see 0:11:13.440 --> 0:11:18.040 the euro increase by twenty versus the dollar, or if 0:11:18.080 --> 0:11:19.440 you want to look at the flip side of the euro, 0:11:19.600 --> 0:11:23.360 the US dollar could uh decline or depreciate another twenty 0:11:23.440 --> 0:11:26.959 percent versus the euro in that situation, Yeah, I think 0:11:26.960 --> 0:11:30.040 that would make absolute time chap. That's that's pretty fascinating. Basically, 0:11:30.120 --> 0:11:33.600 you're saying that people ratchet back their expectations for growth 0:11:33.600 --> 0:11:37.000 in the US just as Europe continues to gain speed 0:11:37.040 --> 0:11:42.520 and possibly starts to extricate itself from its stimulus program. Certainly, 0:11:42.760 --> 0:11:45.440 but the number of international organizations that have also said 0:11:45.480 --> 0:11:47.320 that the US dollar right now has been training around, 0:11:48.720 --> 0:11:52.200 has been over valued. When you look at the Treasury 0:11:52.240 --> 0:11:54.719 Secretary comments, he's talked about certainly a strong dollars in 0:11:54.880 --> 0:11:57.680 US interest but that's in the long term and the 0:11:57.720 --> 0:12:00.040 short term. He said that it is not necessarily in 0:12:00.080 --> 0:12:03.080 the US interests, and and there's also been discusnment how 0:12:03.120 --> 0:12:05.240 it's not that the US dollars is strong, it's just 0:12:05.360 --> 0:12:08.000 other currencis of being a little bit too weak. And 0:12:08.080 --> 0:12:10.040 so we think that the tide is certainly on the 0:12:10.080 --> 0:12:12.760 move for a weaker dollar, and we think that that's 0:12:13.040 --> 0:12:15.319 what we're seeing right now. So how much can the 0:12:15.360 --> 0:12:19.360 weaker dollar lead to stronger emerging markets because we've been 0:12:19.400 --> 0:12:22.960 talking a lot about developing markets and whether the rally 0:12:23.080 --> 0:12:25.960 in both the currencies as well as the stocks and 0:12:26.360 --> 0:12:29.600 bonds have has gone too far, and I have to wonder, 0:12:29.760 --> 0:12:33.000 you know, if the US is slowing down or certainly 0:12:33.000 --> 0:12:35.800 not as robust as people had expected, then wouldn't that 0:12:35.920 --> 0:12:39.920 eventually be in negative for emerging markets? Well, well, there's 0:12:39.960 --> 0:12:42.480 the flip side there that then a strong dollar is 0:12:42.559 --> 0:12:45.240 negative for emerging markets because the emerging markets issue a 0:12:45.240 --> 0:12:47.320 lot of their debt and dollars. As the dollar gets 0:12:47.320 --> 0:12:49.880 too strong, emerging markets can't afford to pay back their 0:12:49.920 --> 0:12:52.520 debt and so they run into extreme difficulties that you 0:12:52.600 --> 0:12:55.240 saw in the agent crisis. Now on the other side, 0:12:55.280 --> 0:12:57.680 if the dollar starts to weaken, then the emerging markets 0:12:57.679 --> 0:13:00.920 actually start to strengthen versus the dollar, and that's actually 0:13:01.000 --> 0:13:03.199 quite positive for them because obviously the dollar debt becomes 0:13:03.200 --> 0:13:05.560 more manageable for them. And you're already seeing you know, 0:13:05.840 --> 0:13:08.120 you see witness in the US equity market today and 0:13:08.160 --> 0:13:11.040 you see dollar max move lower, the mexing pace was 0:13:11.160 --> 0:13:13.280 rallying today as opposed to weakening. Then that sort of 0:13:13.280 --> 0:13:16.920 tells us is more of a dollar move than anything else. So, Doug, 0:13:17.000 --> 0:13:19.400 do you think that we've seen full capitulation for all 0:13:19.520 --> 0:13:22.320 the dollar bowls that we're heading into this year full 0:13:22.360 --> 0:13:25.400 on expecting the dollar just to rally. You know, there's 0:13:25.400 --> 0:13:27.800 been i'd say over the last three months, you've seen 0:13:27.920 --> 0:13:30.040 people throw in the towel and their parity comments that 0:13:30.120 --> 0:13:32.920 they always expected that you're to go to parity. Uh so, 0:13:33.040 --> 0:13:35.240 certainly the twell has been thrown in there. You're seeing 0:13:35.240 --> 0:13:37.920 now a lot of funds that our momentum followers start 0:13:37.960 --> 0:13:39.880 to go along to euros, supposed to short the euro. 0:13:40.520 --> 0:13:42.280 And I think that if you look at the futures 0:13:42.320 --> 0:13:44.439 now you have guys going long euros and s puch 0:13:44.480 --> 0:13:46.800 a short year. So I think that's certainly the trade 0:13:46.960 --> 0:13:49.840 is now. It was very overcrowded to be short to euro. 0:13:49.960 --> 0:13:52.840 I think it's now starting the markets getting more comfortable 0:13:52.840 --> 0:13:55.160 being long euros and being short to dollar. And I 0:13:55.160 --> 0:13:57.600 think that's going to continue. You know. I gotta say, Doug, 0:13:57.720 --> 0:13:59.839 it's really interesting to me to watch these moves and 0:14:00.000 --> 0:14:02.760 people saying it's all because of the turmoil in Washington, 0:14:03.040 --> 0:14:04.960 and part of it is that we're not getting new data. 0:14:05.000 --> 0:14:07.520 We're just sort of, you know, facing the facts a 0:14:07.559 --> 0:14:09.720 little bit more. I understand what you're saying that basically 0:14:09.720 --> 0:14:12.439 this isn't uh, this isn't the turmoil in Washington bleeding 0:14:12.480 --> 0:14:15.160 into markets, but to some degree, Uh, it's sort of 0:14:15.160 --> 0:14:18.760 forcing people to at least face the data that's coming 0:14:18.760 --> 0:14:22.120 out that might not support the same kind of refleation. No, Look, 0:14:22.680 --> 0:14:25.600 the turmoil in Washington was really affecting the data that 0:14:25.680 --> 0:14:27.960 I don't think you see stock markets just off their 0:14:28.040 --> 0:14:31.160 highs and that that's really where we are right now. 0:14:31.200 --> 0:14:34.000 So I think there's turmoil in Washington and that creates 0:14:34.080 --> 0:14:37.680 a very full news cycle, but I'm not sure that 0:14:37.680 --> 0:14:40.920 that's been bleeding into equity markets or into think or 0:14:40.920 --> 0:14:43.560 eating currency markets quite as much as it's bleeding into 0:14:43.560 --> 0:14:46.320 the news cycle and taking up the newspapers. So which 0:14:46.320 --> 0:14:49.000 cross are you watching the most carefully? I'm looking at, Uh, 0:14:49.200 --> 0:14:51.400 I'm looking at the end that the new Haven right, 0:14:51.440 --> 0:14:54.720 which is up more than one and a half percent today. 0:14:54.800 --> 0:14:56.880 What are you looking at? Yeah? I think Dalian is 0:14:56.920 --> 0:14:58.760 very important one to look at. But really, any any 0:14:58.800 --> 0:15:01.560 currency that has a surf plus versus the US is 0:15:01.640 --> 0:15:04.080 one that I would expect to see more strengthened. And 0:15:04.160 --> 0:15:08.360 so Europe had the surplus for Germany for sure, Japan does, 0:15:08.440 --> 0:15:11.240 Canada does. In Mexico and you're seeing dollar mex continue 0:15:11.280 --> 0:15:13.760 to move lower. You're seeing dollar cat continue to move lower, 0:15:13.840 --> 0:15:16.240 do Euro move higher and Dolly move lower? And I 0:15:16.280 --> 0:15:19.160 think we're continuously moves like that. Thank you so much 0:15:19.200 --> 0:15:22.160 for joining us. Doug Barthwick, Managing Director and head of 0:15:22.320 --> 0:15:26.360 f X at Chack Delane and Company, commenting on the 0:15:26.480 --> 0:15:28.920 decline that we've seen in the dollar. It's been the 0:15:28.920 --> 0:15:31.760 biggest three day move in a couple of months, and 0:15:31.880 --> 0:15:35.520 you are seeing the lowest levels since the November election. 0:15:43.800 --> 0:15:45.320 We want to take a moment to let you know 0:15:45.360 --> 0:15:48.280 about something new from Bloomberg. Starting right now, you can 0:15:48.400 --> 0:15:51.280 use our io s app or our new Google Chrome 0:15:51.320 --> 0:15:54.920 extension to scan any news story on any website, instantly 0:15:54.920 --> 0:15:57.760 revealing relevant news and market data from Bloomberg and other 0:15:57.800 --> 0:16:00.440 sources related to the companies and people you read about. 0:16:00.680 --> 0:16:02.600 So no matter where you're reading the news, you can 0:16:02.640 --> 0:16:05.240 bring the power of Bloomberg's news and data with you. 0:16:05.400 --> 0:16:08.480 It's pretty amazing. Download our Io s app or search 0:16:08.520 --> 0:16:10.720 for the Bloomberg extension on the Chrome Store to try 0:16:10.720 --> 0:16:23.600 it out. Learn more at Bloomberg dot com slash lens. Well, 0:16:23.640 --> 0:16:26.280 there has been a lot of discussion since well, frankly 0:16:26.320 --> 0:16:30.440 over the past week about at what point the allegations 0:16:30.480 --> 0:16:35.320 against President Trump rise to an impeachable defense? With us 0:16:35.320 --> 0:16:38.080 to give us more perspective on what the standard is, 0:16:38.120 --> 0:16:40.240 I want to bring in Andrew Martin, who's legal editor 0:16:40.360 --> 0:16:43.240 for Bloomberg News, who joins us here in our Bloomberg 0:16:43.240 --> 0:16:45.960 eleven three oh studios. Andrew, thank you so much for 0:16:46.080 --> 0:16:50.320 joining us. So let's just first get in there with 0:16:50.720 --> 0:16:53.640 what is an impeachable offense? And at what point does 0:16:53.760 --> 0:16:58.080 anything that President Trump is has alleged has allegedly done 0:16:58.640 --> 0:17:01.239 rises at I mean, frankly, I've had so many competing 0:17:01.440 --> 0:17:04.480 essays by different legal scholars saying it does, it doesn't. 0:17:05.040 --> 0:17:07.840 Where do you where do you weigh in on this? Well? Um, 0:17:08.760 --> 0:17:11.879 there is widespread disagreement. Let's start with whether or not 0:17:11.920 --> 0:17:16.640 there was a crime committed. Um, and I think um, 0:17:17.080 --> 0:17:20.000 the issue there is to prove that there was an 0:17:20.000 --> 0:17:23.119 obstruction of justice charge. They have to prove that he 0:17:23.200 --> 0:17:26.520 had corrupt intent. Let's just let's just be clear obstruction 0:17:26.560 --> 0:17:31.040 of justice by trying to encourage trying to encourage former 0:17:31.119 --> 0:17:36.679 FBI director Jim Comey to not investigate uh, Michael Flynn 0:17:36.920 --> 0:17:39.679 or anything else related to rush correct exactly? You know, 0:17:39.720 --> 0:17:44.320 this this story that emerged yesterday that that Comy kept 0:17:44.359 --> 0:17:46.600 notes of his conversations and in those notes he said 0:17:46.640 --> 0:17:50.960 Trump asked him to stop the investigation of Flynn. UM, 0:17:51.200 --> 0:17:54.080 you know, to prove that that's actually abstruction, an obstruction 0:17:54.119 --> 0:17:58.119 of justice criminal charge, UM, prosecutors would have to show 0:17:58.280 --> 0:18:03.320 that that Trump had an intent to a corrupt intent. 0:18:03.359 --> 0:18:05.439 In other words, he was trying to protect himself. And 0:18:05.480 --> 0:18:08.000 that's a very high bar. UM. You know, you could 0:18:08.080 --> 0:18:13.280 argue some some have argued that his previous uh tweets, 0:18:13.320 --> 0:18:16.520 his firing of Comy, would would would add to that. 0:18:17.040 --> 0:18:19.159 But UM, it's a difficult thing. You basically have to 0:18:19.160 --> 0:18:22.000 get inside Trump's head. And while he's provided some of 0:18:22.000 --> 0:18:26.280 that through his tweets. UM. I think a number of 0:18:26.320 --> 0:18:29.760 legal scholars have said, what what's available now, UM isn't 0:18:29.880 --> 0:18:32.080 enough to rise to that level. Now. Impeachment is a 0:18:32.119 --> 0:18:37.160 different thing altogether. UM, there's a lesser standard for um. 0:18:37.240 --> 0:18:39.560 What it takes to impeach and presidents. Um, it's high 0:18:39.560 --> 0:18:42.560 crimes and misdemeanors. And ultimately what that means is whatever 0:18:42.600 --> 0:18:47.280 Congress decides it means. So UM, you know, UM, it's 0:18:47.400 --> 0:18:50.679 it's it's it's part judicial part political UM, and the 0:18:50.720 --> 0:18:54.520 fact that now there's a Republican Congress suggests, UM, the 0:18:54.520 --> 0:18:59.320 bar would be extremely high unless public opinion changes to 0:18:59.400 --> 0:19:02.240 such degree. Have to change a lot, have to change 0:19:02.240 --> 0:19:05.240 a lot. Now, you know, at the midterm elections, if 0:19:05.320 --> 0:19:09.000 the House of Representatives, uh, if the political makeup change, 0:19:09.080 --> 0:19:11.560 that would you know, you know the likelihood of an 0:19:11.600 --> 0:19:16.160 impeachment charge would would increase as well. But UM again UM, 0:19:16.200 --> 0:19:20.000 you know, high crimes and misdemeanors is vaguely worded. UM. 0:19:20.119 --> 0:19:23.760 So it ultimately, UM is up to Congress to decide 0:19:23.760 --> 0:19:26.439 what exactly that means. You know, the news cycle is 0:19:26.480 --> 0:19:29.680 moving so quickly that we've moved on to the memos 0:19:29.800 --> 0:19:33.320 that for me. FBI Director James Comey wrote before we 0:19:33.440 --> 0:19:38.840 fully hushed out the alleged league that President Trump right, 0:19:38.880 --> 0:19:41.919 it does that basically that there was the allegation that 0:19:42.000 --> 0:19:45.399 President Trump gave information to the Russian Foreign Ministry in 0:19:45.520 --> 0:19:50.320 his meeting with him. Uh that could potentially compromise a 0:19:50.520 --> 0:19:55.000 key person of intelligence that gives intelligence to the U 0:19:55.080 --> 0:19:58.439 S and a key cooperator which also was allegedly UH 0:19:58.640 --> 0:20:02.240 from Israel. It's hard to keep up with all of this. Um, 0:20:02.400 --> 0:20:07.080 could anything in there fall into an impeachable offense or 0:20:07.119 --> 0:20:11.399 something that could be criminal. Even if indeed President Trump 0:20:11.440 --> 0:20:15.560 compromised an intelligence that's certainly not criminal because as I 0:20:15.640 --> 0:20:19.639 understand that the president has the right to declassify information 0:20:19.880 --> 0:20:25.000 as he likes. Now, UM, you know, I think that 0:20:25.640 --> 0:20:29.240 the founders UM didn't sort of anticipate somebody doing it 0:20:29.280 --> 0:20:34.119 just by mistake or just sort of bragging about something. Um. 0:20:34.200 --> 0:20:36.560 Although we again we don't know what the president's intent 0:20:36.720 --> 0:20:40.080 was and divulging this information, but again he has the authority. 0:20:40.119 --> 0:20:43.240 Did he classified whatever he wants? So UM, definitely not 0:20:43.320 --> 0:20:46.040 a crime. But again in terms of impeachment, UM, if 0:20:46.040 --> 0:20:48.760 there was a decision that he endangered American interests, that 0:20:48.880 --> 0:20:52.480 he endangered a key source, UM, I would think that 0:20:52.520 --> 0:20:54.560 could be part of an impeachment. Again, it's up to 0:20:54.600 --> 0:20:57.840 Congress to decide how to how to frame those charges 0:20:57.880 --> 0:21:00.720 if they were to proceed. Is there anything that a 0:21:00.840 --> 0:21:05.679 president could do that would force impeachment on a faster 0:21:05.760 --> 0:21:11.760 timetable away from the political process, Well, UM, yes, UM, 0:21:11.800 --> 0:21:14.560 I think if there are clear evidence of crimes committed, 0:21:14.720 --> 0:21:17.760 as there was in Watergate, for instance, UM, I think 0:21:17.800 --> 0:21:22.240 that would definitely UM speed up any kind of impeachment process. 0:21:22.520 --> 0:21:24.480 You remember, I mean there has been all kinds of 0:21:24.680 --> 0:21:28.280 UM comparisons here to Watergate and and Nixon and the 0:21:28.320 --> 0:21:30.480 smoking Gun memo, which I wrote about yesterday, which is 0:21:30.640 --> 0:21:33.320 by the way, fascinating reading UM in the in the 0:21:33.359 --> 0:21:38.040 current context. You know, the distinction here is UM. By 0:21:38.040 --> 0:21:43.320 the time uh, you know, impeachment proceedings were begun against Nixon, 0:21:43.720 --> 0:21:46.320 you know, there are actual crimes that were covered up 0:21:46.320 --> 0:21:48.199 in the background, and and as of now, you know, 0:21:48.960 --> 0:21:52.840 you could argue that um, Trump has has his behavior 0:21:52.840 --> 0:21:55.000 has been a radic or or that he's made some 0:21:55.240 --> 0:21:59.160 you know, incredible mistakes or whatever. UM. But as far 0:21:59.200 --> 0:22:01.280 as we know, there hasn't a crime, even even in 0:22:01.320 --> 0:22:05.120 the Russian investigation. You know, UM, we have no idea 0:22:05.119 --> 0:22:08.399 if there's crimes committed and um as uh you know, again, 0:22:08.680 --> 0:22:10.240 as you point out early, I've read so much I 0:22:10.280 --> 0:22:13.040 forget where I read this. But even if UM, Michael 0:22:13.080 --> 0:22:17.080