Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside
Speaker 1: my co host Matt Miller. Every business day we bring
Speaker 1: you interviews from CEOs, market pros, and Bloomberg experts, along
Speaker 1: with essential market moving news. Find the Bloomberg Markets Podcast
Speaker 1: on Apple Podcasts or wherever you listen to podcasts, and
Speaker 1: at Bloomberg dot com slash podcast. Election Day. Here, folks
Speaker 1: around the world are paying attention to this midterm elections.
Speaker 1: Uh here in the United States, We're gonna check in
Speaker 1: with one of those, Dr Julie Norman, co director of
Speaker 1: the u c L Center on US Politics at University
Speaker 1: College London. She's got a PhD from American University. That's
Speaker 1: kind of good, but the real claim to fame from
Speaker 1: my perspective is she is a graduate of Duke and
Speaker 1: we are one of our Katie. Yes, we won last
Speaker 1: night's for one Another. So here comes Duke and here
Speaker 1: comes Dr Julie Norman. Julie, So from your side of
Speaker 1: the pond, you guys have had a lot of going
Speaker 1: on political wise in the UK, but I'd love to
Speaker 1: get your sense of just kind of what are really
Speaker 1: focusing on here in these midterm elections. Well, yeah, I
Speaker 1: mean it's it's hard to have a distraction for US politics.
Speaker 1: But at UK, the UK politics did did take our
Speaker 1: attention for a while, That's all I must say. But
Speaker 1: but I mean we we really are focused on the
Speaker 1: U s. Of course this week everyone over here is
Speaker 1: watching the elections very closely as well. Um, you like
Speaker 1: everyone expecting Republicans to take back control but at least
Speaker 1: part of Congress, you know, if not all of it.
Speaker 1: And you a lot of people in Europe and Allies
Speaker 1: especially wondering what this means for US foreign policy and
Speaker 1: also just for democracy in America more broadly and by association,
Speaker 1: democracy for the whole world. So I think a lot
Speaker 1: of things are at at play here. I think most
Speaker 1: voters are, of course, focusing more on inflation, economy, the
Speaker 1: more day to day issues, but the world watching this
Speaker 1: election is seeing some of these, uh, these bigger issues
Speaker 1: play out as well. And I mean, if you had
Speaker 1: to rank them, you just ran through some of them.
Speaker 1: Obviously from the perspective of a markets journalist, inflation is
Speaker 1: a pretty big deal from my perspective. But what's on
Speaker 1: the ballot here? What is the most pressing issue from
Speaker 1: the perspective of the average American voter right now. Well,
Speaker 1: I think obviously disinflation and this rising cost of living.
Speaker 1: I mean, that's something that no one can escape, and
Speaker 1: people are just feeling at this day to day level.
Speaker 1: You know, Democrats have obviously tried to push the democracy message.
Speaker 1: I think abortion gave them a big bump in the summer.
Speaker 1: But in terms of what is actually going to get
Speaker 1: voters out to the polls and actually convince those swing voters,
Speaker 1: those who don't already know how they're voting, is going
Speaker 1: to be the economy and how people are feeling this
Speaker 1: on a day to day basis. So, Julie, you know,
Speaker 1: I guess we're gonna wake up tomorrow we'll know some stuff,
Speaker 1: but we've been told by a lot of folks that
Speaker 1: follow the stuff that we're not gonna know for several
Speaker 1: days on some of these races, but presumably a lot
Speaker 1: of the focus will switch tomorrow to election. How do
Speaker 1: you think, you know, what are something that takeaways from
Speaker 1: maybe what might be a Republican sweep here? Uh today?
Speaker 1: What does that mean for the Biden administration? Yeah, so
Speaker 1: I do think you know, this is obviously what happens
Speaker 1: today will lay the groundwork for four. Um. I think
Speaker 1: it will really be sort of a rough rundom on Biden,
Speaker 1: of course, and really start serious conversations about if he
Speaker 1: will run in twenty four and what that means for him,
Speaker 1: as we've heard today a likely announcement sooner rather than
Speaker 1: later from Trump, and what that with these midterms will
Speaker 1: mean for for his momentum perhaps going forward with the candidacy,
Speaker 1: and of course just the reality that there will be
Speaker 1: a lot of a lot of individuals who doubted or
Speaker 1: denied the elections in positions of power at the state
Speaker 1: and federal level going into four. For Biden personally, though,
Speaker 1: you know, he's going to be facing two more years
Speaker 1: of at best gridlock and at worst, you know, constant
Speaker 1: attacks likely from the House in terms of investigations into
Speaker 1: his son, Hunter Biden, his handling of Afghanistan, the handling
Speaker 1: of COVID, really anything that Republicans can use to keep
Speaker 1: the focus on what has gone wrong with the administer
Speaker 1: station leading up to four and trying to throw an
Speaker 1: agenda setting in place. So it's going to be an
Speaker 1: uphol battle for Biden, but one that I think they
Speaker 1: have to have been expecting to some degree, and there
Speaker 1: is so much to keep track of tonight. If you're
Speaker 1: a political ju junkie, this is your night. But I'd
Speaker 1: love to hear what race would you love to know
Speaker 1: the outcome right now? If you could know the outcome
Speaker 1: of any race at this moment, which would it be?
Speaker 1: I would probably say Pennsylvania and the Senate race in
Speaker 1: Pennsylvania especially, There's there's a lot of races to choose from,
Speaker 1: as you alluded to, but this showed on between Federman
Speaker 1: in Oz it is neck and neck. It's in a
Speaker 1: crucial swing state in one that I think is representative
Speaker 1: of a lot of the American population in general. And
Speaker 1: I think it's a test for Democrats to see, you
Speaker 1: if they have a different kind of candidate, can that
Speaker 1: work for him? Even if that candidate you lends towards
Speaker 1: more progressive policy views that that maybe some in the
Speaker 1: middle don't agree with. So I think that race especial
Speaker 1: Lee is going to be very important for swinging the
Speaker 1: Senate and it's very important for both parties to read
Speaker 1: what does this mean for the kind of candidates we
Speaker 1: put up in the future. Julie, You're in London University College, London,
Speaker 1: what are the folks on the street that you talked to,
Speaker 1: what do they think about our politics in this midterm
Speaker 1: election and kind of where we're going. Yeah, someone said
Speaker 1: to me today said, it's it's a bit farstical, isn't it?
Speaker 1: Just you a bit of a circus and stuff? And
Speaker 1: and again this is coming out of a rather rowdy
Speaker 1: fall here in the UK. So I think there is
Speaker 1: a lot of you know, there's a lot of I
Speaker 1: think confusion, if you will, about the potential for Trump
Speaker 1: to make this strong comeback and how he still has
Speaker 1: that hold of a grip on the party. I think
Speaker 1: there's some concern around Biden and what kind of leader
Speaker 1: he can or will be in the future. And again,
Speaker 1: you know, I think a lot of the world still
Speaker 1: looks to the US as this uh new kind of model,
Speaker 1: this pillar for democracy, and this kind of concern that
Speaker 1: if that even wobbles a little bit or appears a
Speaker 1: little bit shaky, what does that mean for everyone else?
Speaker 1: A great stuff. Dr Julie A. Norman, co director of
Speaker 1: the u c L Center on US Politics at the
Speaker 1: University College of London, and a Duke Blue Devil Top seven.
Speaker 1: Let's the United Nations Climate Change conference taking place in Egypt?
Speaker 1: Is that right, Katie? Egypt. That's so we've got some
Speaker 1: Bloomberg News Bloomberg Intelligence folks over. There's a lot going on.
Speaker 1: I want to check in with Rob Barnett. He's a
Speaker 1: senior analysts team lead for European Energy Research at Bloomberg Intelligence. Um. Rob,
Speaker 1: thanks so much for joining us. You're based in London here.
Speaker 1: What are you looking for? If anything out of COP
Speaker 1: twenty seven or is this is gonna be a lot
Speaker 1: of rhetoric coming out about climate change. I like the
Speaker 1: way you described it, rhetoric. At the end of the day,
Speaker 1: this kind of stuff maybe moves the needle, but what
Speaker 1: I really look at is a bottom up build out
Speaker 1: of policies that we're seeing. So in the US you've
Speaker 1: got the Inflation Reduction Act, that's the real deal. That's
Speaker 1: what matters. In Europe we've got the Repower you package.
Speaker 1: These kinds of things matter. Whether we get some kind
Speaker 1: of grand global Kumbaya kind of idea around reducing emissions
Speaker 1: out in you know, that's great, but the real stuff
Speaker 1: that matters is the near term policy push as opposed
Speaker 1: to these very long term emissions goals. So Rob when
Speaker 1: you think about the near term policy push, get specific.
Speaker 1: Give us some names here among the clean energy names
Speaker 1: that I know that you cover, which companies have the
Speaker 1: most at stake here or the most to gain. Well, look,
Speaker 1: I think the clean energy space doesn't need policy as
Speaker 1: much as the policy makers think they do. The win
Speaker 1: solar industry are generally growing very fast. If you look
Speaker 1: at SunPower, which reported this morning sixty growth in the
Speaker 1: top line in three Q solar edge just yesterday fifty
Speaker 1: pcent growth in phase at the end of last month growth.
Speaker 1: The solar industry is growing incredibly quickly. Now, the wind
Speaker 1: industry a bit more tepid here in the near term,
Speaker 1: but we think there's a lot of potential for a
Speaker 1: company like vestas there, the world's largest wind turbine manufacturer,
Speaker 1: to really pick up the pace and grow a lot
Speaker 1: more quickly. In fact, we think consensus is way too
Speaker 1: pessimistic about the growth opportunity that they have in front
Speaker 1: of them. Alright, So, Rob, I know you're esconsed over
Speaker 1: in London, but we do have some elections here today
Speaker 1: in the United States. Does the what's the energy industry?
Speaker 1: What are they hoping for here in this midterm election. Well,
Speaker 1: I think we're seeing a real divergence in the US
Speaker 1: in terms of the Republican and Democratic views on the
Speaker 1: right way forward. But I would say that it's very
Speaker 1: unlikely that I think the future Republican Congress would roll back,
Speaker 1: say the Inflation Reduction Act. That that's there, those subsidies
Speaker 1: are likely to stay in place. And you've got to
Speaker 1: keep in mind some of the sunniest and windiest places
Speaker 1: also happened to be Republican districts. So you know, I
Speaker 1: think it's the same kind of thing. You know, theoretically,
Speaker 1: do you do you need the policy to grow quickly?
Speaker 1: Maybe you actually don't, but you're not gonna turn it down.
Speaker 1: And in the places that have Republican lawmakers, they're certainly
Speaker 1: gonna want to have those dollars flowing into these big
Speaker 1: kind of solar and wind infrastructure projects. And Rob I'm
Speaker 1: going through the headlines ACTA COP seven one from this morning,
Speaker 1: Mark Arney sees a quote wall of opportunity UH in
Speaker 1: renewable energy assets. Mark Arney, I mean, many might know
Speaker 1: him as the former Bank of England governor, but he's
Speaker 1: not also the vice chair at Brooklyn Brookfield Asset Management
Speaker 1: He's also co chair of the Glasgow Financial Alliance for
Speaker 1: Net zero, so he's involved with the space. But the
Speaker 1: idea of a wall of opportunity in clean energy, what
Speaker 1: are the best parts of the wall. To get a
Speaker 1: little more specific from that comment, is it wind? Is
Speaker 1: it solar? Which looks better right now? Well, there's no
Speaker 1: doubt that the near term fastest growing segment of the
Speaker 1: energy space, no matter what way you cut it is
Speaker 1: solar demand is just growing so quickly. There when has
Speaker 1: a lot of potential. And you bring up Mark Arney.
Speaker 1: You know the great thing about COP twenty seven and
Speaker 1: everything that's being discussed, there's this idea about whether one
Speaker 1: point five degrees is still possible, And I would say,
Speaker 1: you know, maybe it is, maybe it isn't, and and
Speaker 1: maybe the discussion is really around two degrees. But either way,
Speaker 1: you're talking about billions now, excuse me, trillions of dollars
Speaker 1: worth of investment that's gonna occur over the next few
Speaker 1: decades in the energy space, and increasingly that allocation is
Speaker 1: gonna go towards solar for sure, but also when, and
Speaker 1: then I would also be looking at things like hydrogen.
Speaker 1: We know that wind and solar are in admitting they're
Speaker 1: not gonna be the only solution. There's gonna be other
Speaker 1: stuff in play. So keep an eye on this space.
Speaker 1: It's gonna grow so quickly, hey Robert. But you know,
Speaker 1: in the near term here again, you're in London, so
Speaker 1: you're you're closer to what's happening in terms of Russia
Speaker 1: and Ukraine and many fallouts from that conflict, most not
Speaker 1: or you know, notably the energy fallout and the disruption
Speaker 1: and energy supply. You know, we're moving to a greener
Speaker 1: energy grid, but boy, you still need the fossil fuel stuff.
Speaker 1: We're gonna need that for another couple of decades probably.
Speaker 1: How do you balance that? How are some of these
Speaker 1: energy policy makers trying to balance that? It's a great point,
Speaker 1: and I like to consider myself in the energy realist camp.
Speaker 1: Just the fact that you need all of this um
Speaker 1: new wind and solar does not preclude the fact that
Speaker 1: today we are in very precarious supply demand balanced situation
Speaker 1: for both oil and gas, and so we need more
Speaker 1: new supply that's ideally in friendly countries. And so I
Speaker 1: think you're right, and that might be a question for
Speaker 1: the US Congress to ultimately consider right. I know the
Speaker 1: Republicans have a very uh much more pro supply perspective
Speaker 1: on on some of the fossil fuels, and some of
Speaker 1: that could be really useful in the near term. We
Speaker 1: used to talk about natural gas as a bridge fuel.
Speaker 1: It's kind of the low carbon cousin of coal or oil,
Speaker 1: and right now it's got a bad rap, particularly because
Speaker 1: of the geopolitics around Russia and Ukraine. But the bottom
Speaker 1: line is that in the near term we are going
Speaker 1: to continue to use a tremendous amount of fossil fuels.
Speaker 1: And uh, you know, even if peak demand for those
Speaker 1: fuels is on the horizon, Uh, the decline rates aren't
Speaker 1: gonna sorry, excuse me, the demand is it going to
Speaker 1: roll off so fast that it will exceed the natural
Speaker 1: decline rates. So you've got to invest in the space
Speaker 1: even if demand is going down. All right, Rob, good stuff,
Speaker 1: as always Rob Barnett. He's a senior analyst, is a
Speaker 1: team lead for our European energy business over there a
Speaker 1: Bloomberg Intelligence. Uh, he's been covered into the energy business
Speaker 1: for a long time. It's got a great sense of
Speaker 1: the business, the economics of the energy business, as well
Speaker 1: as the policy and he has a haircut that I
Speaker 1: do not approve of. Katie. I mean, ever since I've
Speaker 1: known guys, you gotta get it cut. You know, you're
Speaker 1: pretty clean cut. I'm pretty clear cut. His is out there, folks,
Speaker 1: so um, but he knows what he's talking about when
Speaker 1: it comes to energy. So that's how we like chatting
Speaker 1: with him. Mandyep Seeing technology analyst with Bloomberg Intelligence. And
Speaker 1: Dan I've senior equity analyst with Wedbush Securities. Thanks gents
Speaker 1: for joining us here a little technology round table here. Hey,
Speaker 1: Dan'll start with you here. Um, Twitter, I mean, I'm sorry,
Speaker 1: lift uh, Uber, I don't know, how do you think
Speaker 1: about this business model in a in a time where
Speaker 1: we've got inflation all over the place? How do you
Speaker 1: think about those users? Those stories? Yeah? I mean, but
Speaker 1: I think Uber they're navigating well. I mean I think
Speaker 1: you saw that with earnings and this actually business model
Speaker 1: is starting to play out positively, improfitable with they're essentially
Speaker 1: the little brother Uber, and I think over their skis
Speaker 1: it was a disappointing quarter and there's some potential return around,
Speaker 1: but I think there's a queer deination now between the
Speaker 1: business models. Then you will burn with, But Dan, what's
Speaker 1: interesting to me if I look at the stocks that
Speaker 1: you cover, I see a by rating on Lift, I
Speaker 1: see a by rating on Uber, And I'm hoping you
Speaker 1: can square that circle for me because it seems like
Speaker 1: a pretty zero sum game from my seat. If you're
Speaker 1: bullish on one, maybe your barish on the other. But
Speaker 1: is that to binary? Yeah, Look, I think it's a
Speaker 1: little g binary because our view is to play ride
Speaker 1: sharing overall domestic and globally. They are the clearly the
Speaker 1: two best ways to play it. I think with I
Speaker 1: do think this is a bit of an overreaction terms
Speaker 1: of what we're seeing in the stock, but ultimately Uber
Speaker 1: is our best way to play the ride sharing globally,
Speaker 1: and I think it also on food delivery, and it's
Speaker 1: profitable and I don't necessarily viewed as a zero some game,
Speaker 1: but no doubt, I mean with this is a pivotal
Speaker 1: few quarters ahead for them, and I think last night
Speaker 1: was clearly a bit put in the penalty about Yeah,
Speaker 1: a man deep, you know, one of the key pillars
Speaker 1: to the economic model for you know a lot of
Speaker 1: these gig companies, most notably these ride sharing companies, is
Speaker 1: the classification of their drivers. Are they independent contractors or
Speaker 1: are they employees? Where are we as an industry there
Speaker 1: in that regards? Well, right now, you know, both Uber
Speaker 1: and Lift are treating their drivers as independent employees and
Speaker 1: they are paying them out a good take gread you know,
Speaker 1: you get and they get paident of the bookings that
Speaker 1: they these companies are generating from a ride. But look
Speaker 1: even then, you know, when you look at the cost
Speaker 1: structure of these companies, whether it's Lift or Uber, is
Speaker 1: much bigger, so they can spread it out. But in
Speaker 1: the case of Lift, you know, the fact that g
Speaker 1: n A intensity is still it makes you wonder, you know,
Speaker 1: why are there so many costs? And they talk about
Speaker 1: layoffs and you know, off setting it to generate. It's
Speaker 1: just a deepit dub positive um. But clearly there is
Speaker 1: something fundamentally wrong in the business model. It's because of
Speaker 1: the high variable cost. Maybe they are learing in a
Speaker 1: lot of drivers subsidies to boot supply on the platform.
Speaker 1: That's what it felt like last night that even though
Speaker 1: pricing was a tail, when they're able to raise prices,
Speaker 1: but then their gross margin is getting compressed and they
Speaker 1: have to lear and drivers subsidies to boot supply. So
Speaker 1: clearly variable costs continue to pressure their margins, and I
Speaker 1: don't know if they can get to the billion dollar
Speaker 1: and adjust a deepit da that they have laid out
Speaker 1: for well man deep. That's what I was going to ask,
Speaker 1: is what can Lift do? I'm looking through you know,
Speaker 1: the Bloomberg news right up of last night's earnings or
Speaker 1: this morning. It's been a long day already, but cutting
Speaker 1: of staff for example, Uh, is that the right sort
Speaker 1: of direction to go in or what would you suggest
Speaker 1: Lift do? At this point? Well, so this, uh, I
Speaker 1: guess the run way for Lift is not very clear.
Speaker 1: There seems to be a writer sat to Asian. They
Speaker 1: missed on their writer metric, which is a key metric,
Speaker 1: And at this point of time you have to ask yourselves,
Speaker 1: can they partner with somebody on the autonomous side that
Speaker 1: could really kind of generate this top line runway which
Speaker 1: everyone is looking for. But beyond that, you know, they
Speaker 1: had the best set up in terms of reopenings, you know,
Speaker 1: everybody traveling, and still they talked about top line decelebrating
Speaker 1: to almost whereas Uber, which is three times bigger, is
Speaker 1: talking about you know, growth. So they're clearly losing market
Speaker 1: share in the US, but I think any partnership on
Speaker 1: the autonomous side could be something that investors Matya, Kay,
Speaker 1: did you know that Dana Ives is a proud graduate
Speaker 1: of the Penn State University. I feel like I actually
Speaker 1: did know that from filling in on this show. They
Speaker 1: had a good win at Indiana last week, and now
Speaker 1: we hosted Maryland this weekend. Dan, how do you feel
Speaker 1: about it? I would I think I think we got three,
Speaker 1: you know, and then ultimately New Year six in terms
Speaker 1: of there, so I can you you lost to Michigan
Speaker 1: Ohio State, obviously to the best in the country, Dan, Tesla,
Speaker 1: I mean, if I'm a Tesla shareholders, I love the car,
Speaker 1: I love the story, But I got a CEO who
Speaker 1: just bangs me over the head every day, it seems like.
Speaker 1: And now he goes out and spends four billion dollars
Speaker 1: on Twitter. What are you telling your clients? You've been
Speaker 1: a strong, longtime supporter of the stock here, what are
Speaker 1: you telling your clients these days? Look, it's this Twitter
Speaker 1: circus show continues to be in albatross on Tesla stock,
Speaker 1: and I mean, obviously it's test of being down since
Speaker 1: the Twitter deal. Look, I think there's two things. I
Speaker 1: think one, there's worries that the brand of Musk is deteriorating,
Speaker 1: and we're seeing a globally not just what's happened on Twitter,
Speaker 1: but how that could impact Testsa in just a view
Speaker 1: in his arms race. And and the second thing is
Speaker 1: just the tension. You know, he's focused on the factory
Speaker 1: for he's not focused on Testa in terms of as
Speaker 1: a perception. Instead, it's more on Twitter and that's sort
Speaker 1: of celebrity billionaire and and it's not resonating well in
Speaker 1: a white narcle market. All right, Dan, good stuff, appreciate it. Um.
Speaker 1: Dan's got an over our perform rating on the stock,
Speaker 1: has been a strong supporter. He's been right. Uh. He's
Speaker 1: got some headwinds though for Tesla this year. Dan ives
Speaker 1: managing director, Senior equity analyst for what Bush Securities and
Speaker 1: man Deep singh Uh. He is our tech analyst at
Speaker 1: Bloomberg Intelligence, covers all things on the tech space along
Speaker 1: with h on a rock run and and their team
Speaker 1: there at Bloomberg Intelligence, we get y'all covered from a
Speaker 1: bi perspective. It is election day, uh in America. Policymakers
Speaker 1: obviously paying close attention to what happens here in these
Speaker 1: mid terms and what will mean for policy over the
Speaker 1: next couple of years heading into the presidential election. We
Speaker 1: check out with Nathan Dean. He's a senior policy analyst
Speaker 1: covering in the United States and Latin America for Bloomberg Intelligence.
Speaker 1: He's based for Better or Worse in Washington, d C.
Speaker 1: So he's close to all the stuff. Nathan, you talked
Speaker 1: to all these Beltway types. What's the thinking today and
Speaker 1: what's the thinking tomorrow. So the thinking today is is
Speaker 1: that the House is most likely going to go to
Speaker 1: the Republicans. Um on the Senate, you know, generally the
Speaker 1: feeling in the last week is that the GOP has
Speaker 1: done some in roads there. But I would just definitely
Speaker 1: say that today's not election day, it's election week. What mean.
Speaker 1: What I mean by that is, uh, we may know
Speaker 1: who's gonna have the House of Representatives by tonight, but
Speaker 1: I'd be really shocked if we wake up tomorrow morning
Speaker 1: and we know who's in control of the Senate. It
Speaker 1: could go to the end of this week, or in
Speaker 1: Georgia's case, it could go all the way to January.
Speaker 1: All the way to January. I mean how likely is that?
Speaker 1: What's your base case on what the timeline is here?
Speaker 1: So you know, I think we're you know, with the House,
Speaker 1: I think we'll know tonight. I think that the Republicans
Speaker 1: will get enough that will know tonight. For the Senate,
Speaker 1: you know, we'll have a good indication of where things
Speaker 1: are going. I mean, usually the House trends will incorporate
Speaker 1: into the Senate trends, and so I think you'll have
Speaker 1: like a general feeling this week of what likely is
Speaker 1: going to be the case scenario. And you know, I
Speaker 1: think if if most people were to be given truth
Speaker 1: cerm at the moment, they would say that they think
Speaker 1: that the Republicans are going to take the Senate. But
Speaker 1: what you know, these races are going to be extremely tight,
Speaker 1: and there's a lot of mail in ballots that have
Speaker 1: to be counted, and in some of these states they
Speaker 1: can't start counting until after the polls closed, so it
Speaker 1: may take a couple of days for U states like
Speaker 1: Pennsylvania to catch up and finally give us an idea.
Speaker 1: But you know, you definitely see the Republicans. I think
Speaker 1: the general consensus is around seats UH in control. All right,
Speaker 1: If that's the case, Uh, Nathan, what's again, what are
Speaker 1: the policy types down on Washington? What are they thinking
Speaker 1: can get done? Should get done? Needs to get done
Speaker 1: from a legislation of policy perspective over the next couple
Speaker 1: of years. If that's a fact the makeup, So you're
Speaker 1: gonna see increased good luck. But you know, increased good
Speaker 1: luck it's been around since two thousand and ten. You know,
Speaker 1: you think about the Tea Party and Nancy Pelosi coming
Speaker 1: in under the Trump administration. What changes is you no
Speaker 1: longer have these economic broad fiscally stimulus bills, you never
Speaker 1: you no longer have reconciliation types. But what happens is
Speaker 1: is that the legislation that gets debated gets pushed down
Speaker 1: to more sector levels least think marijuana's box or cryptocurrency, etcetera.
Speaker 1: And then what happens is it gets bunched up into
Speaker 1: these government resolutions. So every three to six months, the
Speaker 1: government faces a deadline and there's this huge debate and
Speaker 1: so forth like that. But I would say that the
Speaker 1: most important things that we are telling clients right now
Speaker 1: is to watch this dead ceiling fight. It's going to
Speaker 1: come likely in September or the third quarter of next year,
Speaker 1: you know the incoming or soon to be incoming. If
Speaker 1: you think the Republicans are gonna win Speaker the House,
Speaker 1: most likely will be Kevin McCarthy. He's already said that
Speaker 1: he wants to use this as leverage. Certainly a lot
Speaker 1: of political brickmanship. We've been here before, but both the
Speaker 1: fixed income and the equity side could be exposed. Nathan,
Speaker 1: I'm so grateful to have you on for so many reasons.
Speaker 1: One of them, though, is because I know that you
Speaker 1: can speak intelligently about the cryptocurrency verse. And we have
Speaker 1: some huge breaking news. Crypto exchanged Binance, that is the
Speaker 1: world leader. It's going to buy rival f t X
Speaker 1: dot Com. That is according to a tweet from f
Speaker 1: t X CEO Sam Bankman Free. They said that he
Speaker 1: said that the two exchanges reached an agreement on a
Speaker 1: strategic transition transaction with finance. Terms are undisclosed. I can
Speaker 1: hear just thousands of Bloomberg's reporters trying to find out
Speaker 1: what those terms are. But if I look at spfs tweet,
Speaker 1: as he's known, he says, this of course is pending.
Speaker 1: Do diligence, and Nathan, let me know if this is
Speaker 1: too far outside of your realm. But what does due
Speaker 1: diligence even look like here? You know that one is
Speaker 1: you know, these are two privately held companies, both not
Speaker 1: you know, you know, Bahamas and Asia based and so
Speaker 1: forth like that. So the due diligence, I don't think
Speaker 1: it is anything that you know, we are going to
Speaker 1: know right now. I mean, the Bloomberg reporters, as you speak,
Speaker 1: are going to go out there. What I can say though,
Speaker 1: is that this is a game changer when it comes
Speaker 1: to policy efforts in Washington because f t X, and
Speaker 1: specifically Sam Bankman Free was a big proponent of coming
Speaker 1: here to lobby. And so if you're looking at the
Speaker 1: stable coin bill that's over at the House Financial Services
Speaker 1: or the Digital Commodity Consumer Protection Act which is at
Speaker 1: the Senate ad Committee, we anticipate both of those bills
Speaker 1: coming back next year. The main question for us on
Speaker 1: the policy side is is ft X or binance or
Speaker 1: is somebody else going to take up the mantle? Are
Speaker 1: they going to be able to continue to push policymakers
Speaker 1: to do this, And so it will be really interesting
Speaker 1: to see what happens in the first quarter of next
Speaker 1: year here in Washington. Because f t X was such
Speaker 1: a big proponent of that bill. Do you think this
Speaker 1: puts more fire under Washington? I mean, the debate in
Speaker 1: the crypto market has been who actually oversees the crypto
Speaker 1: market in the U S. You just have a bunch
Speaker 1: of letters from the SEC to the CFTC, maybe Congress,
Speaker 1: no one really knows. Now you have this huge behemoth,
Speaker 1: like you said, one based in the Bahamas, one Asia
Speaker 1: based coming together creating this monster. I mean, do you
Speaker 1: think that this puts another fire under US policymakers to
Speaker 1: figure out who actually oversees this and can we get
Speaker 1: some legislation here? So I'm not sure if it puts
Speaker 1: new fire under policymakers, but it's certainly brings additional focus
Speaker 1: to it um because like you said, I look, I
Speaker 1: don't think cryptocurrency is going away. And if you look
Speaker 1: at the bills, the stable Coin Bill that hasn't been
Speaker 1: released but is under discussion over the House Financial Services
Speaker 1: Committee and the Senate agg bill, they do things like,
Speaker 1: you know, affirm bitcoin as a commodity, affirm etherorium as
Speaker 1: a commodity, give platforms like coin based or now bananced
Speaker 1: ft X the way to register with the SEC or
Speaker 1: the c FTC. None of this is really controversial from
Speaker 1: a bipartisan perspective. So as long as the crypto industry
Speaker 1: continues to push for this regulatory framework, I still remain
Speaker 1: confident that these bills can get done. The one thing, though,
Speaker 1: and when this comes back to the election, is that
Speaker 1: if the Republicans take the Senate, I think those bills
Speaker 1: speed up in terms of timing because as somebody like
Speaker 1: schre Brown, the chairman of the Senate Banking Committee, wouldn't
Speaker 1: be able to oppose it. All right, great stuff as
Speaker 1: always Nathan Dean, he's got that Washington DC policy stuff
Speaker 1: just nailed down. He's the senior policy analst for Bloomberg Intelligence.
Speaker 1: He is based in Washington. Election day, Uh, Katie, you
Speaker 1: know we learned a long time ago. It's the economy stupid.
Speaker 1: That's kind of the thing. And I've heard that as well. Um.
Speaker 1: Not a political junkie, but I have heard that. And
Speaker 1: if you look at President Biden's scorecard, it's probably better
Speaker 1: than most people would give it credit for. But you
Speaker 1: really need to look at the numbers. And we have
Speaker 1: somebody who does like to look at numbers. That's Matt Winkler.
Speaker 1: He's the founder of Bloomberg News. He joined us here
Speaker 1: on a Bloomberg Interactive broker studio. He's got a column
Speaker 1: out today saying the Biden economy is second only to
Speaker 1: one at the mid terms. So Matt talked to us
Speaker 1: about the Biden economy, how does it stack up? So
Speaker 1: thank you great to be with you. Uh, you know,
Speaker 1: we are Bloomberg and so uh, we are always looking
Speaker 1: at the data. And so given that, as you said,
Speaker 1: the election is if you like, a referendum the mid
Speaker 1: term on the economy, my colleague should pay. And I
Speaker 1: looked at more than a dozen measures of relative prosperity
Speaker 1: going all the way back to the seventies nineteen seventies,
Speaker 1: and on most of these, in fact, Biden is in
Speaker 1: fact outperforming UM the last six of the seven predecessors
Speaker 1: UM everything from GDP to non farm payrolls, for example,
Speaker 1: Biden is excelling. And uh, you know that's just the reality,
Speaker 1: if you like. And but does the average American feel that?
Speaker 1: Do you think, because as you make this point in
Speaker 1: your column, that inflation is so hot right now, it's
Speaker 1: basically shredded returns across stocks and bonds. If you think
Speaker 1: about what that has meant for retirement accounts. I mean,
Speaker 1: as inflation just so a big front and center issue
Speaker 1: that that's being overlooked by voters. Well, I think part
Speaker 1: of it is UM. Our profession journalism has focused NonStop
Speaker 1: on inflation, so you know, you hear it over and
Speaker 1: over again. But if you look at the reality, UM,
Speaker 1: many in our profession were saying, we were in a
Speaker 1: recession this year, very prominently. UM. But when you've got
Speaker 1: unemployment hovering at fifty year lows and not just a
Speaker 1: one month two month wonder people have jobs. And then
Speaker 1: you put together the if you like, all of the
Speaker 1: very generous social um benefits that came out of COVID nineteen. UM.
Speaker 1: You know, for example, UH, Americans are much better equipped
Speaker 1: today ever to weather this spike in prices. You've got UM,
Speaker 1: the as I said, COVID nineteen measures that allowed consumers
Speaker 1: to build up an enormously high cash cushion. Checkable deposits,
Speaker 1: for example, for households and nonprofit organizations rose to four
Speaker 1: point eight nine trillion dollars as the end of June,
Speaker 1: from one point one six billion a trillion at the
Speaker 1: end of two thousand nineteen. So that's a big if
Speaker 1: you like, difference, and that answers your question about are
Speaker 1: they better off? And the answer is yeah, inflation has
Speaker 1: been high, but again the cushion for that is also unprecedented.
Speaker 1: So yes, Americans have been better off. And if you
Speaker 1: take the media um out of it, uh, probably they
Speaker 1: would be saying they're better off. But the fact is
Speaker 1: we're not in a recession um and the economy is
Speaker 1: still robust, which is why the fittest is raising interest rates.
Speaker 1: And just on the inflation front, inflation kind of peaked,
Speaker 1: so it would seem with the June number of nine
Speaker 1: point one percent, it's now more than a percentage point
Speaker 1: below that. And if you ask every economist that you
Speaker 1: talked to every day, day in and day out, they're
Speaker 1: telling you that the inflation alarm else have softened significantly
Speaker 1: since the summer. And and one of your charts in
Speaker 1: your piece there you talk about the surplus or deficit
Speaker 1: as a percentage of the GDP, and that's where the
Speaker 1: Biden administration ranks first. No one's done it better in
Speaker 1: terms of reducing our deficit. And you know, I know
Speaker 1: the President talks about it, but that's just probably a
Speaker 1: financial and economic issue that most Americans probably can't really
Speaker 1: grasp it. It's more of that's something for years down there. Well,
Speaker 1: except for the fact that the Republicans persistently bring it up,
Speaker 1: and they have repeatedly, and as you say, the fact
Speaker 1: is the almost ten percentage point decline in the federal
Speaker 1: budget deficit is a percentage of GDP to five point
Speaker 1: four percent from fifteen point six per uh. That's unprecedented.
Speaker 1: And you have to go back to Clinton Presidents Clinton
Speaker 1: and Carter, who reduced the deficit two point four percentage
Speaker 1: points one point one percentage points, respectively. Having set all that,
Speaker 1: the deficit went up under Donald Trump, it went up
Speaker 1: under George H. W. Bush, it went up, you know,
Speaker 1: under Ronald Reagan, Um, it went up under Barack Obama,
Speaker 1: and it went up under George W. Bush. So this
Speaker 1: is an issue that Republicans persistently raised, and Biden has
Speaker 1: a very credible record after the mid terms if the
Speaker 1: Republicans have the edge saying well, don't look at me,
Speaker 1: I'm the one who did more on this issue than
Speaker 1: anyone has. Right. Interesting stuff, all right, Matt Winkler, great
Speaker 1: column talking about the President Biden here at the midterms
Speaker 1: and his economic policies pretty darn good when you're you know,
Speaker 1: you could compare him to recent presidents. That's Matt Winkler,
Speaker 1: editor in chief Emritus and Bloomberg News, joining us here
Speaker 1: in our Bloomberg Interactive Broker Studio. As always, he doesn't
Speaker 1: mail it in, Katie. We have some folks to mail
Speaker 1: it in, but Matt's not one of them. He tends
Speaker 1: to come in, uh and show up, so we appreciate that. Well.
Speaker 1: It is mid term election day in America. A number
Speaker 1: of key states have very very close races that will
Speaker 1: ultimately have an impact on Congress, the balance of power
Speaker 1: and Congress as well as certain state houses as well
Speaker 1: across the country. Let's round table this thing get kind
Speaker 1: of just get some perspective here. Liam Denning, he's an
Speaker 1: opinion columnists with Bloomberk. He's gonna join us to talk
Speaker 1: about It's got a recent column out there saying the
Speaker 1: five dollar gas is really affecting the midterms. Let's think
Speaker 1: think broadly defined inflation. And then calumnist John Author's also
Speaker 1: joins to get his sense of how this market may
Speaker 1: react going forward and what maybe a little bit of
Speaker 1: a shift towards the Republican Party. Liam Onna start with you.
Speaker 1: You've got your column out there. I think it kind
Speaker 1: of goes to that issue. You know, you can talk
Speaker 1: about reducing the federal depths, that all you want, if
Speaker 1: you're Joe Biden. But at the end of the day,
Speaker 1: it's what I'm paying at the pump, what I'm paying
Speaker 1: at the supermarket. That that's a tough challenge. Yeah, I mean,
Speaker 1: I think it's a fact of American politics that any
Speaker 1: incumbent policy takes the blame for where pump prices are,
Speaker 1: and you know, even though they generally lack any means
Speaker 1: of affecting them in the short term. Energy is definitely
Speaker 1: a high up on the agenda in this in this election.
Speaker 1: If you look at the the Pew Centers holding of
Speaker 1: of registered voters, it's it's interesting, actually energy is up
Speaker 1: there as as a as an issue. It's above violent crime,
Speaker 1: it's above immigration, it's above abortion. Um, it's also curiously
Speaker 1: the only one on which the same proportion of Republican
Speaker 1: and Democratic voters agree, it being a high profile issue.
Speaker 1: And what I was trying to do with this with
Speaker 1: this column was to say, you know, obviously we've seen
Speaker 1: high gasoline prices this year. They hit an all time
Speaker 1: peak of average average level of five bucks in the summer,
Speaker 1: And I was just trying to show that psychologically that
Speaker 1: is damaging for the Democrats. But actually when you show
Speaker 1: show in the context of average incomes, um, you know,
Speaker 1: the dad to the American wallet is quite significantly below
Speaker 1: what we've seen in prior price spikes. Yeah, I'm not
Speaker 1: going at that same number. You're looking at that five
Speaker 1: dollars back in June. We're now down at about three
Speaker 1: dollars and eighty cents. It's come down pretty substantially, but
Speaker 1: still maybe the damage was done. In terms of a
Speaker 1: narrative and John Arthur's you know, it appears that um,
Speaker 1: you know from some of the rhetoric and some of
Speaker 1: the reporting I've seen that you know, there's a chance
Speaker 1: that this election, this midterm wal till more towards the Republicans.
Speaker 1: If that is in fact the case, how do you
Speaker 1: think markets will react, Well, it would be a very
Speaker 1: big surprise if if the Republicans don't at the very
Speaker 1: least win the House. And if that isn't very clear
Speaker 1: by the time we go to bed tonight. Um, I
Speaker 1: therefore think that's that's largely in the price. We're probably
Speaker 1: not going to see that big a reaction to it.
Speaker 1: I think what would make for much more interesting outcomes
Speaker 1: would be exactly how policy towards Ukraine changes. I've heard
Speaker 1: various straws in the wind suggesting that if there is
Speaker 1: a Republican control of Congress, it becomes that much harder
Speaker 1: for the administration to support Ukraine all the way because
Speaker 1: there are these currents within the Republican Party that that
Speaker 1: that are opposed to that are opposed to conflict with Russia,
Speaker 1: and that that might mean that Zelinski in Ukraine comes
Speaker 1: under more pressure from the States to um to sue
Speaker 1: for peace. That would be market positive any number of
Speaker 1: We don't have time to go through the huge issue
Speaker 1: of whether that's actually good news, but in terms of
Speaker 1: the short medium term for markets, that would be very
Speaker 1: market positive. This leads to some meaningful resolution of the
Speaker 1: the Ukraine conflict sooner rather than later. I think that's
Speaker 1: the single biggest thing. The greatest concern plainly would be
Speaker 1: playing games with the debt scening. UM, So all third
Speaker 1: years of presidential cycles are great um. That's lots and
Speaker 1: lots of sell side people have pointed out one exception
Speaker 1: where it only just got positive right at the end
Speaker 1: of the year was twenty uh twenty eleven, and that
Speaker 1: was the year of the debt ceiling debacle when SMP
Speaker 1: actually downgrade the US Treasury debt. If if the Republicans
Speaker 1: are serious they're going to try doing that again, that
Speaker 1: would be a problem. I'm not sure they are, but
Speaker 1: they're talking, is that they're prepared to do that. Hey,
Speaker 1: Lia'm going back to you. I'm interest thinking about it again.
Speaker 1: Inflation broadly defined, it's it's a it's a headwind certainly
Speaker 1: for this administration, in for the Democratic Party here. But
Speaker 1: then when you think about just the energy and the
Speaker 1: five dollar guests, you know, you just wonder why President
Speaker 1: Biden and the Democrats continue to hammer on big energy,
Speaker 1: you know that whereas they presumably could be the solution
Speaker 1: here to the problem. Well, I think Biden is is
Speaker 1: caught between two competing objectives, right. One is one is
Speaker 1: this uh, this sweeping green agenda that was an integral
Speaker 1: part of his platform. And then the other is the
Speaker 1: reality that you know, in the meantime, while you're waiting
Speaker 1: for the energy transition to come along, you're going to
Speaker 1: face periodic energy crisis and you're still going to be
Speaker 1: relying on the incumbent energy system. And so we've seen,
Speaker 1: I think Biden, you know, swing between you know, trying
Speaker 1: to cajole the domestic exploration and production sector into producing
Speaker 1: more oil and then realizing that, um, you know, his
Speaker 1: tools for addressing pump prices are fairly limited them resourcing
Speaker 1: to the rhetoric of blaming the industry for not doing more.
Speaker 1: Um you know. I think part of the problem here is,
Speaker 1: as I said, you know, even five dollar gasoline is
Speaker 1: not as big of a bite out of disposable personal
Speaker 1: income as it used to be. I think the big
Speaker 1: problem the Democrats face is that this has been the
Speaker 1: single this year has seen the single biggest jump in
Speaker 1: terms of the proportion of disposable personal income taken by
Speaker 1: gasoline on record, and that's data going back to the
Speaker 1: late nineties fifties. I think it's the whiplash effect on
Speaker 1: consumers that Biden and the Democrats fear. Yeah, I think
Speaker 1: that's okay, a giant real quick thirty seconds. Are you
Speaker 1: in the camp that says grid luck is good for markets,
Speaker 1: It's almost always good for bonded markets because it tends
Speaker 1: to mean that you don't spend. That's why the critical
Speaker 1: question is whether the Republicans would really do brinkmanship over
Speaker 1: the debt scene. Again, I would be more cautious about
Speaker 1: whether it's really so good for stocks. Um. There are
Speaker 1: things that the federal government can do that will actually
Speaker 1: benefit some companies. Uh, And there are times when you
Speaker 1: do want clarity and harmonious government. But the bonds, yes, good.
Speaker 1: All right, We'll see how it plays out. We're not
Speaker 1: gonna probably won't know tomorrow morning, but certainly over the
Speaker 1: next several days and maybe even weeks. Liam Denning, he's
Speaker 1: a Bloomberg Opinion calms covers energy, amongst other things. Joining Us,
Speaker 1: as well as John Author's Bloomberg Opinion calumnist Join Us
Speaker 1: gives a sense kind of how this may play out
Speaker 1: from a market's perspective on this election date. Thanks for
Speaker 1: listening to the Bloomberg Markets podcast. You can subscribe and
Speaker 1: listen to interviews with Apple Podcasts or whatever podcast platform
Speaker 1: you prefer. I'm Matt Miller. I'm on Twitter at Matt
Speaker 1: Miller three. Pet On Ball Sweeney I'm on Twitter at
Speaker 1: pt Sweeney. Before the pod asked, you can always catch
Speaker 1: us worldwide at Bloomberg Radio m