1 00:00:00,040 --> 00:00:02,640 Speaker 1: Who you put your trust in matters. Investors have put 2 00:00:02,680 --> 00:00:07,000 Speaker 1: their trust and independent registered investment advisors to the two 3 00:00:07,040 --> 00:00:10,680 Speaker 1: and four trillion dollars. Why learn more and find your 4 00:00:10,760 --> 00:00:26,320 Speaker 1: independent advisor dot com. Welcome to the Bloomberg Surveillance Podcast. 5 00:00:26,720 --> 00:00:30,400 Speaker 1: I'm Tom Keene with David Gura. Daily we bring you 6 00:00:30,480 --> 00:00:35,480 Speaker 1: insight from the best in economics, finance, investment, and international relations. 7 00:00:35,920 --> 00:00:40,519 Speaker 1: Find Bloomberg Surveillance on iTunes, SoundCloud, Bloomberg dot com, and 8 00:00:40,560 --> 00:00:47,919 Speaker 1: of course, on the Bloomberg Kate Moore is kind enough 9 00:00:47,960 --> 00:00:50,239 Speaker 1: to join us here at the Park hid in middownahand 10 00:00:50,320 --> 00:00:52,639 Speaker 1: Chie's chief equity strategist at black Rock. Good morning, Thanks 11 00:00:52,680 --> 00:00:55,960 Speaker 1: for being here. Good Let's let's begin keeping in spirit, 12 00:00:56,080 --> 00:00:57,840 Speaker 1: by the spirit of the event here looking ahead to 13 00:00:57,840 --> 00:01:01,040 Speaker 1: two thousand seventeen forecast out a bit, what are you expecting? 14 00:01:01,040 --> 00:01:02,840 Speaker 1: I guess I should ask principally if a raid hike 15 00:01:03,080 --> 00:01:05,440 Speaker 1: will have happened by them. You know, our expectation is 16 00:01:05,480 --> 00:01:07,440 Speaker 1: the Fed will move in December and we'll get some 17 00:01:07,520 --> 00:01:10,480 Speaker 1: good signaling on that next week. You know, from the 18 00:01:10,480 --> 00:01:13,880 Speaker 1: perspective both the labor markets as well as inflation, we're 19 00:01:14,000 --> 00:01:17,680 Speaker 1: definitely in a in an environment where normalization is warranted. 20 00:01:17,760 --> 00:01:20,920 Speaker 1: And so I want to sort of distinguish between normalization 21 00:01:20,959 --> 00:01:23,280 Speaker 1: and hiking, right, because we think we're going to normalize 22 00:01:23,280 --> 00:01:26,399 Speaker 1: a little bit further next year. Um. But even with 23 00:01:26,440 --> 00:01:30,240 Speaker 1: a little bit of normalization and hopefully a small reduction 24 00:01:30,240 --> 00:01:33,600 Speaker 1: and uncertainty coming from the election, uh, we think this 25 00:01:33,640 --> 00:01:35,800 Speaker 1: is going to be a kind of a more low growth, 26 00:01:35,880 --> 00:01:39,600 Speaker 1: low return next twelve to eighteen months in across all 27 00:01:39,640 --> 00:01:42,840 Speaker 1: asset markets, but that equities will will provide better returns. 28 00:01:42,840 --> 00:01:45,280 Speaker 1: I'm not just saying that because I am an equity strategist, 29 00:01:45,440 --> 00:01:47,640 Speaker 1: but simply because the bond math is really challenged. We 30 00:01:47,680 --> 00:01:49,840 Speaker 1: think next year, when you talk about the uncertainty of 31 00:01:49,880 --> 00:01:52,560 Speaker 1: the election, how do you measure that? Uh? And how 32 00:01:52,640 --> 00:01:55,440 Speaker 1: uncertain is the uncertainty right now? So we look back 33 00:01:55,480 --> 00:01:58,600 Speaker 1: at all these previous presidential election cycles, and you know, 34 00:01:58,680 --> 00:02:01,080 Speaker 1: you have a similar pattern in the third quarter, a 35 00:02:01,160 --> 00:02:04,880 Speaker 1: slow down in terms of capex intentions from an investor's perspective, 36 00:02:05,440 --> 00:02:10,120 Speaker 1: raising cash balances. You also see, how you know, redemptions 37 00:02:10,120 --> 00:02:13,080 Speaker 1: from equity funds. This is all kind of a traditional pattern. 38 00:02:13,160 --> 00:02:15,960 Speaker 1: All that feels like it's accelerated in this cycle. The 39 00:02:16,040 --> 00:02:18,720 Speaker 1: uncertainty level is much higher, and in fact, we've seen 40 00:02:18,760 --> 00:02:21,960 Speaker 1: a pullback in terms of investment in UM guidance in 41 00:02:22,080 --> 00:02:24,800 Speaker 1: terms as we've been going through third quarter earning season, 42 00:02:25,240 --> 00:02:28,880 Speaker 1: and actually an increased number of people increasing their UH 43 00:02:29,040 --> 00:02:33,959 Speaker 1: cash levels across their both institutional and individual portfolios. So 44 00:02:34,000 --> 00:02:37,119 Speaker 1: this is this is a I think a tough time 45 00:02:37,160 --> 00:02:40,000 Speaker 1: for people to be taking risk because there's so much 46 00:02:40,040 --> 00:02:42,560 Speaker 1: uncertainty even with what policy will look like next year, 47 00:02:43,000 --> 00:02:45,880 Speaker 1: and uh, it's everyone's in a wait and see mode. 48 00:02:46,200 --> 00:02:48,880 Speaker 1: That might mean actually that the markets grind a little 49 00:02:48,880 --> 00:02:51,520 Speaker 1: bit higher. Talking with Kate more of black Rock, here, 50 00:02:51,560 --> 00:02:53,480 Speaker 1: we are in the middle of earning season, more than 51 00:02:53,480 --> 00:02:55,360 Speaker 1: in the middle I suppose fourfeits of the of the 52 00:02:55,360 --> 00:02:58,960 Speaker 1: way through. How catalytic has its earning season been so far? 53 00:02:59,000 --> 00:03:00,800 Speaker 1: We were looking for a cat list. There was some 54 00:03:00,840 --> 00:03:04,440 Speaker 1: talk of earning season being that catalyst. Uh not yet. 55 00:03:04,800 --> 00:03:06,880 Speaker 1: I don't think so. I don't think earnings themselves can 56 00:03:06,919 --> 00:03:09,200 Speaker 1: be the catalyst at this point. You know, we need 57 00:03:09,240 --> 00:03:12,160 Speaker 1: a solid set of beats. We're already on track to 58 00:03:12,200 --> 00:03:15,720 Speaker 1: get there, but off a very very lowered expectations, especially 59 00:03:15,800 --> 00:03:18,760 Speaker 1: since the beginning of this year. And you know, I 60 00:03:18,800 --> 00:03:21,560 Speaker 1: think we need not just earnings beats, but also actually 61 00:03:21,880 --> 00:03:24,360 Speaker 1: um sales beats. Revenues have to look a lot better, 62 00:03:24,760 --> 00:03:30,040 Speaker 1: but that's required. I think what really catalyzes the market, um, 63 00:03:30,080 --> 00:03:32,360 Speaker 1: you know, our market rally into your end and gets 64 00:03:32,360 --> 00:03:35,200 Speaker 1: more investors to participate, is going to be more certain 65 00:03:35,280 --> 00:03:38,560 Speaker 1: around the politics and around monetary policy and a better 66 00:03:38,560 --> 00:03:40,240 Speaker 1: picture of kind of what growth might look like in 67 00:03:40,240 --> 00:03:44,440 Speaker 1: two thousand seventeen. You know, um, no one's expecting it 68 00:03:44,560 --> 00:03:47,800 Speaker 1: a double digit earnings year or double digits earnings quarter. 69 00:03:47,960 --> 00:03:50,360 Speaker 1: That would be you know, positive surprise, but it has 70 00:03:50,400 --> 00:03:53,040 Speaker 1: to be sustainable, and we just put a very low 71 00:03:53,080 --> 00:03:55,840 Speaker 1: probability on that type of event. So earning is necessary, 72 00:03:55,880 --> 00:03:58,400 Speaker 1: but not sufficient to really you know, cause the next 73 00:03:58,440 --> 00:04:01,160 Speaker 1: big up leg in the market are seasons within within 74 00:04:01,200 --> 00:04:03,600 Speaker 1: the season. We had US banks reporting last week and 75 00:04:03,640 --> 00:04:06,800 Speaker 1: the week before that, many of them great news, surprising analysts. 76 00:04:07,040 --> 00:04:08,920 Speaker 1: What's your takeaway from that when you look at US 77 00:04:08,960 --> 00:04:11,640 Speaker 1: financials in particularly, Look, we've been doing a lot of 78 00:04:11,640 --> 00:04:15,120 Speaker 1: work actually on global banks and comparing US versus European, 79 00:04:15,360 --> 00:04:18,200 Speaker 1: versus Japanese versus Chinese banks, because banks, of course have 80 00:04:18,279 --> 00:04:21,440 Speaker 1: been the sector that everyone has loved to hate, whether 81 00:04:21,440 --> 00:04:25,520 Speaker 1: it's because of you know, rate expectations or because of regulation, 82 00:04:25,640 --> 00:04:27,840 Speaker 1: or because of changing capital requirements. You know, this has 83 00:04:27,920 --> 00:04:30,200 Speaker 1: just been a focal point for a lot of investors. 84 00:04:30,240 --> 00:04:34,000 Speaker 1: And we think really the sector that's funded overweights in 85 00:04:34,200 --> 00:04:38,440 Speaker 1: some um you know, either dividend paying or technology kind 86 00:04:38,440 --> 00:04:41,839 Speaker 1: of stocks. I think we're at an interesting inflection point 87 00:04:41,839 --> 00:04:44,240 Speaker 1: when it comes to US banks. Probably not quite so 88 00:04:44,320 --> 00:04:48,960 Speaker 1: in Europe and Japan or say China, where balance sheets 89 00:04:49,000 --> 00:04:53,440 Speaker 1: look really good. Uh, the restructuring is largely done. We 90 00:04:53,520 --> 00:04:56,599 Speaker 1: really think that we've passed peak regulation. Not that regulation 91 00:04:56,640 --> 00:04:59,080 Speaker 1: is going away that, but we've passed peak regulation and 92 00:04:59,120 --> 00:05:02,400 Speaker 1: the banks are being prudent about their business models, and 93 00:05:02,720 --> 00:05:04,799 Speaker 1: so you're not looking at it as an anomalous quarter. 94 00:05:05,400 --> 00:05:07,120 Speaker 1: Look at the cost cutting, you look at where things are, 95 00:05:07,120 --> 00:05:09,400 Speaker 1: and it's anticipate that's going to carry over in the future. Course. 96 00:05:09,560 --> 00:05:11,880 Speaker 1: It feels pretty good. And I would also say, you 97 00:05:11,920 --> 00:05:13,880 Speaker 1: know what, we may not have a huge amount of 98 00:05:13,920 --> 00:05:17,080 Speaker 1: additional cash return to shareholders from the sector, it will 99 00:05:17,120 --> 00:05:21,320 Speaker 1: increase somewhat, and I think that higher dividend payment will 100 00:05:21,440 --> 00:05:23,760 Speaker 1: will attract investors who are thinking about income in this 101 00:05:23,880 --> 00:05:27,960 Speaker 1: lower return environment. So, uh, it's a it's an interesting 102 00:05:27,960 --> 00:05:30,560 Speaker 1: place for people to reallocate. I would note that the 103 00:05:31,120 --> 00:05:34,160 Speaker 1: outperformance we've seen recently, and of course financials have been 104 00:05:34,160 --> 00:05:37,600 Speaker 1: the sector that have outperformed UM at least posted very 105 00:05:37,640 --> 00:05:41,120 Speaker 1: solid positive returns over the last month, has come on 106 00:05:41,160 --> 00:05:45,240 Speaker 1: the back of higher inflation expectations. So rising inflation expectations 107 00:05:45,279 --> 00:05:48,640 Speaker 1: I think are key to to sustainability. UM. This is 108 00:05:48,680 --> 00:05:50,880 Speaker 1: a lot about sentiment. Even if I said just a 109 00:05:50,880 --> 00:05:54,240 Speaker 1: moment ago, all the fundamentals already look pretty good. UM today, 110 00:05:54,279 --> 00:05:56,680 Speaker 1: Apple reports, later in the week, Alphabet reports what's the 111 00:05:57,600 --> 00:05:59,880 Speaker 1: role in the equity space as a whole of the 112 00:06:00,000 --> 00:06:02,800 Speaker 1: as companies today? Apple of course still it's still a 113 00:06:02,839 --> 00:06:04,720 Speaker 1: huge alphabet as well, But what what what do they 114 00:06:04,720 --> 00:06:06,840 Speaker 1: tell you about the health of the market when they report. 115 00:06:07,920 --> 00:06:10,240 Speaker 1: I would argue that in each of those cases, they 116 00:06:10,240 --> 00:06:14,440 Speaker 1: are special examples with very unique business models and you know, 117 00:06:14,440 --> 00:06:18,240 Speaker 1: a huge amount of market share, and I think that 118 00:06:18,279 --> 00:06:21,200 Speaker 1: they are important for people to feel comfortable about what's 119 00:06:21,200 --> 00:06:23,839 Speaker 1: happening in terms of consumption and whether or not these 120 00:06:23,839 --> 00:06:27,160 Speaker 1: companies are you know, really targeting the right types of 121 00:06:27,200 --> 00:06:32,280 Speaker 1: businesses to to capture UM what is a very competitive consumer. 122 00:06:32,800 --> 00:06:36,520 Speaker 1: But I think we need greater breadth in the tech 123 00:06:36,600 --> 00:06:39,760 Speaker 1: sector to to really say this is a sustainable trend 124 00:06:39,839 --> 00:06:42,080 Speaker 1: and not just a story of a couple of the 125 00:06:42,120 --> 00:06:46,400 Speaker 1: biggest companies who are already the behemoths. Um we'd also 126 00:06:46,400 --> 00:06:48,800 Speaker 1: be looking at Semis, for example, within tech. I think 127 00:06:48,839 --> 00:06:50,960 Speaker 1: that's going to be interesting, and I think I would 128 00:06:50,960 --> 00:06:54,000 Speaker 1: also be looking at some of the hardware companies UM 129 00:06:54,160 --> 00:06:55,880 Speaker 1: to to really give give us a sense if there's 130 00:06:55,880 --> 00:06:59,560 Speaker 1: an investment cycle. Your enthusiastic about tech right now? Yeah, tech, 131 00:06:59,680 --> 00:07:02,920 Speaker 1: tech muted enthusiasm. Everything is sort of muted right now, 132 00:07:03,000 --> 00:07:04,920 Speaker 1: isn't it. I mean, we all have to be sort 133 00:07:04,960 --> 00:07:08,400 Speaker 1: of under this cloud of uncertainty when it comes to 134 00:07:08,400 --> 00:07:11,679 Speaker 1: the politics and policy. But it certainly looks like tech 135 00:07:11,760 --> 00:07:14,360 Speaker 1: relative to other sectors, is it has a much stronger 136 00:07:14,360 --> 00:07:18,280 Speaker 1: secular growth trend. You mentioned you're looking at at banks globally. 137 00:07:19,440 --> 00:07:21,840 Speaker 1: How concerned are you about what's happening in Europe and 138 00:07:21,840 --> 00:07:24,680 Speaker 1: how confined to Europe do you think that situation is. 139 00:07:24,720 --> 00:07:26,760 Speaker 1: You mentioned that the state of regulation here in the 140 00:07:26,800 --> 00:07:29,320 Speaker 1: US it's not over, but perhaps more established than it 141 00:07:29,360 --> 00:07:34,000 Speaker 1: is in Europe. The European banks are a very specific situation. 142 00:07:34,200 --> 00:07:36,600 Speaker 1: Like we I mentioned when I was talking about US banks, 143 00:07:36,640 --> 00:07:38,960 Speaker 1: we think we're past peak regulation. We certainly don't think 144 00:07:38,960 --> 00:07:41,240 Speaker 1: that's a case with Europe, and Basil four is going 145 00:07:41,280 --> 00:07:44,120 Speaker 1: to change the game in terms of capital requirements for 146 00:07:44,120 --> 00:07:45,920 Speaker 1: a lot of these banks. But they also haven't done 147 00:07:45,960 --> 00:07:49,280 Speaker 1: something that the U S banks did, which was significantly 148 00:07:49,480 --> 00:07:52,280 Speaker 1: reformed their businesses. You know, we've been talking about this 149 00:07:52,320 --> 00:07:56,120 Speaker 1: for a while, selling assets, really thinking about, you know, 150 00:07:56,760 --> 00:07:59,320 Speaker 1: what is the right mix of businesses to have going forward, 151 00:07:59,680 --> 00:08:02,960 Speaker 1: and these big changes haven't happened. I think they're upcoming 152 00:08:03,400 --> 00:08:07,040 Speaker 1: and that will change the earnings prospects for these companies. Plus, 153 00:08:07,040 --> 00:08:10,800 Speaker 1: the profitability has been killed right from monetary policy. It's 154 00:08:10,840 --> 00:08:13,520 Speaker 1: not just keeping rates low, but negative interest rate policy 155 00:08:13,560 --> 00:08:17,000 Speaker 1: has made it really really difficult to earn money, and UH, 156 00:08:17,120 --> 00:08:19,640 Speaker 1: return on equity and return on assets in Europe looks 157 00:08:19,640 --> 00:08:23,440 Speaker 1: particularly weak. And so unless there's a change in monetary 158 00:08:23,480 --> 00:08:26,320 Speaker 1: policy stance and you get kind of like that pivot 159 00:08:26,360 --> 00:08:29,360 Speaker 1: from the ECB where we actually say we're gonna, you know, 160 00:08:29,520 --> 00:08:31,480 Speaker 1: be tweaking the policy because we understand the pain this 161 00:08:31,600 --> 00:08:33,400 Speaker 1: is inflicting on the system. Just at a time when 162 00:08:33,440 --> 00:08:36,880 Speaker 1: they need to restructure and raise capital, it's hard for 163 00:08:36,920 --> 00:08:39,360 Speaker 1: us to get excited and uh. Even there may be 164 00:08:39,440 --> 00:08:41,760 Speaker 1: sort of a rent opportunity here and there because it's 165 00:08:41,760 --> 00:08:45,160 Speaker 1: such an under owned sector or a trade, but in 166 00:08:45,520 --> 00:08:48,600 Speaker 1: terms of investment, the fundamentals just aren't there for us. 167 00:08:48,720 --> 00:08:50,240 Speaker 1: You're gonna stay with us for another block. But let 168 00:08:50,240 --> 00:08:52,679 Speaker 1: me ask you quickly about the role of the strong dollar. 169 00:08:53,080 --> 00:08:56,400 Speaker 1: All right now, I mentioned it's around uh seven dollar spot. 170 00:08:56,559 --> 00:08:58,280 Speaker 1: Um is that going to continue? How long do you 171 00:08:58,360 --> 00:08:59,960 Speaker 1: forecast the dollar being as strong as it has been 172 00:09:00,440 --> 00:09:03,880 Speaker 1: The dollars rallied you know, uh more recently, but you know, 173 00:09:03,920 --> 00:09:06,240 Speaker 1: our medium term view is that the dollar is going 174 00:09:06,280 --> 00:09:07,960 Speaker 1: to be kind of range bound. We're not looking for 175 00:09:08,000 --> 00:09:09,760 Speaker 1: the same kind of appreciation we saw in two thousand 176 00:09:09,800 --> 00:09:12,600 Speaker 1: fourteen and two thousand fifteen. And that's really good thing. 177 00:09:12,640 --> 00:09:14,960 Speaker 1: The dollar can grind hire a little bit on some 178 00:09:15,040 --> 00:09:18,800 Speaker 1: divergent monetary policy and slightly better US growth prospects. But 179 00:09:19,280 --> 00:09:23,040 Speaker 1: a hugely stronger dollar it's not good for earnings and 180 00:09:23,280 --> 00:09:26,600 Speaker 1: it is really not constructive for any country or any 181 00:09:26,600 --> 00:09:29,360 Speaker 1: market in the world. So I think there's an acknowledgement 182 00:09:29,920 --> 00:09:32,439 Speaker 1: by the Fed that this is an important consideration and 183 00:09:32,720 --> 00:09:36,440 Speaker 1: making their decision at this point. And uh, we don't 184 00:09:36,440 --> 00:09:39,520 Speaker 1: think that We're going to have such an explosive growth 185 00:09:39,520 --> 00:09:41,880 Speaker 1: in the US that there will be a huge rally. 186 00:09:42,040 --> 00:09:43,760 Speaker 1: This is David Grow with Tom Keene at the Park 187 00:09:43,840 --> 00:09:46,240 Speaker 1: Hyatt in Midtown Manhattan for the Bloomberg gear Ahead some 188 00:09:46,320 --> 00:09:48,960 Speaker 1: of Kate Moore joins us. She is chief equity strategist 189 00:09:49,400 --> 00:09:51,319 Speaker 1: at black Rup. We're talking a bit about the dollar. 190 00:09:51,880 --> 00:09:54,160 Speaker 1: I want to ask you about the FED UH and 191 00:09:54,240 --> 00:09:56,360 Speaker 1: how you game out what happens in the markets when 192 00:09:56,360 --> 00:09:58,840 Speaker 1: the FED raises rates, be that in November, December or 193 00:09:59,400 --> 00:10:01,760 Speaker 1: beyond that, will how's the market going to react? How 194 00:10:01,800 --> 00:10:03,880 Speaker 1: do you forecast? Then? Look if the market, and I 195 00:10:03,920 --> 00:10:07,520 Speaker 1: would say this in particular equities, you know, UM, act 196 00:10:07,559 --> 00:10:11,680 Speaker 1: like they're surprised, then something is terribly terribly wrong. We've 197 00:10:11,679 --> 00:10:14,760 Speaker 1: been waiting for this for you know sometime it will 198 00:10:14,800 --> 00:10:17,920 Speaker 1: be probably twelve months for the next step in normalization, 199 00:10:18,559 --> 00:10:20,080 Speaker 1: and that you know. One of the studies that we've 200 00:10:20,120 --> 00:10:23,000 Speaker 1: done is looked at the composition of corporate balance sheets 201 00:10:23,040 --> 00:10:26,480 Speaker 1: today versus where they wore ten years ago pre crisis, 202 00:10:26,920 --> 00:10:30,520 Speaker 1: and and looked at the composition in particular of UM 203 00:10:30,679 --> 00:10:35,679 Speaker 1: floating rate debt versus fixed rate and no surprise to anyone, 204 00:10:35,760 --> 00:10:38,400 Speaker 1: the percentage of fixed rate debt has gone up dramatically, 205 00:10:39,160 --> 00:10:43,080 Speaker 1: so companies should not really be terribly sensitive to slightly 206 00:10:43,160 --> 00:10:45,280 Speaker 1: higher rates. It's not like everything is going to reset. 207 00:10:45,559 --> 00:10:47,720 Speaker 1: In fact, they've termed out their debt. They've locked in 208 00:10:47,760 --> 00:10:49,840 Speaker 1: these rates, much as we all have done with our mortgages. 209 00:10:50,200 --> 00:10:53,040 Speaker 1: UH So slightly higher policy rates should not have an 210 00:10:53,080 --> 00:10:56,040 Speaker 1: impact on margins. And so you know, if equity market 211 00:10:56,440 --> 00:11:00,920 Speaker 1: behaves unfavorably, it would be somewhat confusing. There's no doubt 212 00:11:01,000 --> 00:11:03,440 Speaker 1: yesterday from torstens Lack at Deutsche Bank. He often looks 213 00:11:03,480 --> 00:11:06,720 Speaker 1: at the FED minutes and and literally counts words that 214 00:11:06,800 --> 00:11:09,280 Speaker 1: appear in them. So he looks for financial stability and 215 00:11:09,280 --> 00:11:12,000 Speaker 1: financial instability over the last many meetings, and in the 216 00:11:12,080 --> 00:11:16,200 Speaker 1: last minutes from the September meeting, neither phrase appeared in 217 00:11:16,200 --> 00:11:17,920 Speaker 1: the minutes. Is this a FED that is not concerned 218 00:11:17,960 --> 00:11:20,880 Speaker 1: about financial stability or is beyond the point of having 219 00:11:20,920 --> 00:11:23,440 Speaker 1: to be concerned about it? I saw Torsen's no yesterday, 220 00:11:23,440 --> 00:11:25,320 Speaker 1: so I know exactly what you're referring to. I think 221 00:11:25,320 --> 00:11:29,199 Speaker 1: it's it's interesting, and I just caution us from obsessing 222 00:11:29,280 --> 00:11:32,560 Speaker 1: too much about every single word that comes out of 223 00:11:32,600 --> 00:11:35,360 Speaker 1: a FED. Speaker's mouth. I mean that is the way 224 00:11:35,400 --> 00:11:37,319 Speaker 1: that we've been operating for the last couple of years, 225 00:11:37,360 --> 00:11:40,079 Speaker 1: the normal, And I will fully admit that in September 226 00:11:40,120 --> 00:11:43,480 Speaker 1: of two thousand fifteen, when Yelling at the press conference 227 00:11:43,520 --> 00:11:47,760 Speaker 1: started discussing the concerns around global financial conditions, I thought, 228 00:11:47,760 --> 00:11:49,559 Speaker 1: this is a bit of a game changer. This is 229 00:11:49,600 --> 00:11:53,760 Speaker 1: not just about employment or about inflation, but about what 230 00:11:53,760 --> 00:11:56,000 Speaker 1: could happen in every other market. So I understand why 231 00:11:56,040 --> 00:11:59,600 Speaker 1: we're looking at words and phrases. I think we all 232 00:11:59,600 --> 00:12:03,920 Speaker 1: know the financial conditions are part of the FEDS dashboard 233 00:12:04,000 --> 00:12:07,360 Speaker 1: at this point, and and uh, you know, it feels 234 00:12:07,400 --> 00:12:10,480 Speaker 1: to me like we're in a more stable backdrop than 235 00:12:10,600 --> 00:12:14,360 Speaker 1: we were twelve months ago in terms of global growth. 236 00:12:14,679 --> 00:12:17,040 Speaker 1: And it's not accelerating, but it's certainly I think that 237 00:12:17,200 --> 00:12:19,080 Speaker 1: the risks of the downside are a little bit lower. 238 00:12:19,400 --> 00:12:22,600 Speaker 1: Tom Keane, making his way here from Bloomberg World headquarters, 239 00:12:22,600 --> 00:12:25,560 Speaker 1: did you walk? I know I took this, took the 240 00:12:25,559 --> 00:12:32,240 Speaker 1: Sikorski counter all the place. Yes, they have they have 241 00:12:32,480 --> 00:12:36,080 Speaker 1: on the roof Foomer. We sound okay over there? Ye up, 242 00:12:36,760 --> 00:12:40,319 Speaker 1: Good morning everyone. David Gurr and Tom King with Kate Moore. 243 00:12:40,400 --> 00:12:43,280 Speaker 1: We're here at our Bloomberg Year Ahead, saw Kate. We 244 00:12:43,280 --> 00:12:45,920 Speaker 1: were talking earlier about the challenge down the income statement 245 00:12:45,960 --> 00:12:49,040 Speaker 1: for big multi nationals. Part of the challenge down the 246 00:12:49,040 --> 00:12:52,920 Speaker 1: income statement is obscure adjustments at the bottom for currency. 247 00:12:53,480 --> 00:12:56,000 Speaker 1: Is that going to be an issue for US multinationals. 248 00:12:56,480 --> 00:12:58,520 Speaker 1: I think if we think about this start of two 249 00:12:58,559 --> 00:13:01,080 Speaker 1: thousand sixteen, one of the eight hopes in terms of 250 00:13:01,160 --> 00:13:04,400 Speaker 1: earnings this year was that the dollar would no longer 251 00:13:04,640 --> 00:13:08,360 Speaker 1: be a significant headwind for the global multinationals. And you're 252 00:13:08,400 --> 00:13:10,400 Speaker 1: seeing a little bit of that in the third quarter 253 00:13:10,440 --> 00:13:12,920 Speaker 1: earnings reported so far, but I think the fourth quarter 254 00:13:12,960 --> 00:13:15,240 Speaker 1: will be really the tell you know, it takes a 255 00:13:15,280 --> 00:13:17,840 Speaker 1: few quarters for the for the currency change to really 256 00:13:17,840 --> 00:13:20,120 Speaker 1: play through. Look, I have to tell you, I mean 257 00:13:20,320 --> 00:13:22,920 Speaker 1: it's I mentioned before that our expectations of the dollar 258 00:13:23,000 --> 00:13:26,160 Speaker 1: will be somewhat range bound. But from the earnings perspective 259 00:13:26,200 --> 00:13:30,760 Speaker 1: of the global multinationals, you know, a significantly appreciating dollar 260 00:13:30,840 --> 00:13:34,040 Speaker 1: has been a challenge and would be a challenge. Um 261 00:13:34,080 --> 00:13:36,720 Speaker 1: it would cause them to rethink some of their businesses 262 00:13:36,720 --> 00:13:41,440 Speaker 1: and where they're investing. Cubs are Indians. I'm gonna go 263 00:13:41,520 --> 00:13:46,360 Speaker 1: with Cubs having done my grad's work in Chicago, you know, 264 00:13:46,520 --> 00:13:49,560 Speaker 1: albeit on the South side. Um, I nevertheless have an 265 00:13:49,600 --> 00:13:52,400 Speaker 1: affection for Chicago. I need to need to support. I 266 00:13:52,440 --> 00:13:54,640 Speaker 1: gotta go with Indians, you are. I mean, I'm in 267 00:13:54,720 --> 00:13:58,960 Speaker 1: therapy over the Red Sox, and my my psychiatrist said 268 00:13:59,040 --> 00:14:02,640 Speaker 1: go with the Indians and for Terry. But it's fast. 269 00:14:02,679 --> 00:14:06,040 Speaker 1: I thought the New York Post nailed today. I'd see it. Yeah, 270 00:14:06,360 --> 00:14:08,600 Speaker 1: one of these teams has to you know, that's the loser. 271 00:14:08,720 --> 00:14:10,840 Speaker 1: I can't remember exactly what they said about Historic. It 272 00:14:10,920 --> 00:14:15,560 Speaker 1: was that whole negativity that surrounds both franchises, that somebody 273 00:14:15,559 --> 00:14:20,320 Speaker 1: will lose. Check More it's a fin for the year ahead, 274 00:14:20,360 --> 00:14:35,240 Speaker 1: and Kate Moore with some enthusiasm an Equities. It's a 275 00:14:35,240 --> 00:14:37,360 Speaker 1: pleasure here to be joined a Muhammad l Area and 276 00:14:37,360 --> 00:14:39,800 Speaker 1: a columnist for Bloomberg View, of course, and chief economic 277 00:14:39,840 --> 00:14:43,760 Speaker 1: advisor with Alians. Mohammed. Great to speak with you. Good morning, David. 278 00:14:43,920 --> 00:14:45,520 Speaker 1: Great to catch you here before you catch a plane 279 00:14:45,600 --> 00:14:46,920 Speaker 1: up to New York for the summer. I know we'll 280 00:14:46,920 --> 00:14:49,760 Speaker 1: be speaking here this afternoon. Let me start with China, 281 00:14:49,800 --> 00:14:52,400 Speaker 1: the subject of your most recent piece for Bloomberg View. 282 00:14:52,400 --> 00:14:54,360 Speaker 1: Looking here at the off shore you when we see 283 00:14:54,360 --> 00:14:56,880 Speaker 1: it at six seventies, seven sixty seven, we've seen it 284 00:14:56,880 --> 00:14:59,440 Speaker 1: plumbing lows, six year lows. As a matter of fact, 285 00:14:59,440 --> 00:15:01,280 Speaker 1: give us your take on that, your your sense of 286 00:15:01,280 --> 00:15:03,760 Speaker 1: why that's happening, and uh, the degree to which the government, 287 00:15:03,760 --> 00:15:07,160 Speaker 1: the Chinese government is going to allow this to keep happening. So, 288 00:15:07,200 --> 00:15:09,560 Speaker 1: I think the Chinese government is tolerating it. It has 289 00:15:09,560 --> 00:15:13,600 Speaker 1: had a policy to encourage the depreciation of its currency 290 00:15:13,720 --> 00:15:18,239 Speaker 1: when financial markets are calm, and financial markets are relatively 291 00:15:18,280 --> 00:15:20,600 Speaker 1: calm right now, so they are taking advantage of it. 292 00:15:21,040 --> 00:15:25,720 Speaker 1: More generally, we're seeing a broad phenomena of dollar strengthening, 293 00:15:25,720 --> 00:15:28,360 Speaker 1: and I think the most striking thing is that this 294 00:15:28,400 --> 00:15:31,560 Speaker 1: time around, compared to nine months ago, this time around, 295 00:15:31,840 --> 00:15:35,160 Speaker 1: the US equity market is taking this way calmly. And 296 00:15:35,200 --> 00:15:37,440 Speaker 1: that's good news. Mom. Have We've been talking an awful 297 00:15:37,440 --> 00:15:40,800 Speaker 1: lot about the trade picture globally, and of course here 298 00:15:40,800 --> 00:15:43,800 Speaker 1: in the US, the conversation continues about whether or not 299 00:15:43,880 --> 00:15:46,240 Speaker 1: Congress will take up the Trans Pacific Partnership in a 300 00:15:46,320 --> 00:15:51,560 Speaker 1: lame duck session before the January inauguration. I was China 301 00:15:51,640 --> 00:15:54,040 Speaker 1: looking at that conversation. We hear a lot about the 302 00:15:54,040 --> 00:15:57,680 Speaker 1: geopolitical argument for passing the t p P. What what 303 00:15:57,800 --> 00:15:59,480 Speaker 1: is China doing? Is it as it looks at the 304 00:15:59,520 --> 00:16:02,080 Speaker 1: US is here wrestling over so much of this, wrestling 305 00:16:02,080 --> 00:16:05,680 Speaker 1: over that piece of legislation. I think whether it's China 306 00:16:05,840 --> 00:16:08,960 Speaker 1: or Europe or even here in the U S. Everybody 307 00:16:09,080 --> 00:16:11,720 Speaker 1: agreed to what you said a few minutes ago, which 308 00:16:11,760 --> 00:16:15,000 Speaker 1: is that politics is now driving economics, and it's very 309 00:16:15,080 --> 00:16:17,520 Speaker 1: different from what we've had in the past. In the past, 310 00:16:17,560 --> 00:16:21,920 Speaker 1: economics had a major influence on politics. These days around 311 00:16:22,080 --> 00:16:25,320 Speaker 1: is the is the other way around? Um. So, the 312 00:16:25,480 --> 00:16:30,680 Speaker 1: politics of globalization, the politics of trade agreements, has become 313 00:16:30,920 --> 00:16:34,880 Speaker 1: very complicated, and because of that we are in this 314 00:16:35,040 --> 00:16:39,760 Speaker 1: funny phase of anti globalization UM and it will continue 315 00:16:39,840 --> 00:16:44,720 Speaker 1: as long as populism is on the rise. He had 316 00:16:44,760 --> 00:16:47,560 Speaker 1: summit moment Larian with us, and he will of course 317 00:16:47,600 --> 00:16:51,360 Speaker 1: speak today at the summit. Dr Larian. When I look 318 00:16:51,360 --> 00:16:54,400 Speaker 1: at Stanley Fisher's speech the other day, which I thought 319 00:16:54,480 --> 00:16:56,720 Speaker 1: was arguably the best speech I've ever heard of the 320 00:16:56,760 --> 00:16:59,000 Speaker 1: Economic Club in New York, you really laid out this 321 00:16:59,160 --> 00:17:02,160 Speaker 1: mystery of the real economy is something you have spoken 322 00:17:02,200 --> 00:17:06,840 Speaker 1: about for years. The summation is we're exhausted with our 323 00:17:06,880 --> 00:17:10,560 Speaker 1: processes are strategies, and we need to find the courage 324 00:17:10,680 --> 00:17:14,159 Speaker 1: in the will to do other things. Where will that 325 00:17:14,320 --> 00:17:18,360 Speaker 1: courage come from? You? Like you, I've thought that vice 326 00:17:18,440 --> 00:17:22,080 Speaker 1: Chrarefisher's speech was was brilliant, um, and it spoke to 327 00:17:22,280 --> 00:17:25,159 Speaker 1: puzzles that have to do with investment, with productivity, and 328 00:17:25,200 --> 00:17:29,120 Speaker 1: this notion that we have to think differently. Um. Most 329 00:17:29,119 --> 00:17:33,159 Speaker 1: economists agree that a prerequisite for this is going beyond 330 00:17:33,200 --> 00:17:36,240 Speaker 1: central banks, is stopping to rely on central banks to 331 00:17:36,359 --> 00:17:41,720 Speaker 1: do it all, um, To provide employment, to provide financial stability. 332 00:17:41,800 --> 00:17:44,720 Speaker 1: They simply don't have the tools to carry such a 333 00:17:44,760 --> 00:17:49,120 Speaker 1: heavy burden. So the first, the first critical thing necessary, 334 00:17:49,280 --> 00:17:52,280 Speaker 1: if there's a question mark where it's sufficient but certainly necessary, 335 00:17:52,480 --> 00:17:56,040 Speaker 1: is to pivot away from prolonged over reliance on central 336 00:17:56,040 --> 00:17:59,560 Speaker 1: banks towards a much broader policy response. And the good 337 00:17:59,600 --> 00:18:02,640 Speaker 1: news is that most economists agree on what that more 338 00:18:02,800 --> 00:18:07,040 Speaker 1: more comprehensive policy response would look like. You've talked about 339 00:18:07,240 --> 00:18:09,520 Speaker 1: the need here then the messiness of politics and how 340 00:18:09,520 --> 00:18:12,240 Speaker 1: that's playing out in the international economy. When you look 341 00:18:12,280 --> 00:18:16,000 Speaker 1: ahead to November eighth, no matter who wins, how do 342 00:18:16,040 --> 00:18:18,040 Speaker 1: you clean up that mass? How do you begin to 343 00:18:18,040 --> 00:18:21,560 Speaker 1: to write the ship after this very long campaign. We've had, 344 00:18:21,680 --> 00:18:24,680 Speaker 1: very contentious campaign we've had. It's going to be hard 345 00:18:24,800 --> 00:18:28,760 Speaker 1: because whoever wins, and it increasingly looks like Secretary Clinton 346 00:18:28,800 --> 00:18:34,400 Speaker 1: will be the winner, has to acknowledge that there's anger um. 347 00:18:34,600 --> 00:18:37,280 Speaker 1: And it doesn't surprise me. David and Tom and I 348 00:18:37,320 --> 00:18:40,800 Speaker 1: have talked about this a lot. When you run sophisticated 349 00:18:41,320 --> 00:18:44,920 Speaker 1: market based economies at low speed, at low growth for 350 00:18:45,000 --> 00:18:48,000 Speaker 1: a long time, things start to break. And we're seeing 351 00:18:48,040 --> 00:18:51,720 Speaker 1: this on the economic front with productivity and corporate investment. 352 00:18:52,000 --> 00:18:54,640 Speaker 1: We're seeing it on the financial front with what ultra 353 00:18:54,800 --> 00:18:57,800 Speaker 1: low and negative industrates are doing to the financial system. 354 00:18:57,840 --> 00:19:00,960 Speaker 1: And we're seeing it in politics where the what I 355 00:19:01,040 --> 00:19:05,040 Speaker 1: call the politics of anger, where people are single issue 356 00:19:05,119 --> 00:19:08,280 Speaker 1: driven um and we saw it in Brexit as an example. 357 00:19:08,760 --> 00:19:13,880 Speaker 1: So whoever comes to the White House and whatever the 358 00:19:13,880 --> 00:19:16,919 Speaker 1: final configuration of Congress ends up to be, it's going 359 00:19:16,960 --> 00:19:19,840 Speaker 1: to be very important to recognize that we cannot continue 360 00:19:19,920 --> 00:19:25,760 Speaker 1: in this low growth equilibrium and not expect things to break. Wow. 361 00:19:25,960 --> 00:19:29,400 Speaker 1: I'm loving the New Foreign Affairs issue on populism, which 362 00:19:29,400 --> 00:19:33,040 Speaker 1: you just touched upon. Free Zakaria talks about the simple 363 00:19:33,400 --> 00:19:36,760 Speaker 1: idea that this is a culture war. Are the elections 364 00:19:36,800 --> 00:19:40,119 Speaker 1: of Europe like in the United States what Zakaria talks of. 365 00:19:40,520 --> 00:19:43,480 Speaker 1: Are they cultural in nature? And there's really not much 366 00:19:43,480 --> 00:19:46,760 Speaker 1: else to talk about. Yeah, I think the most interesting 367 00:19:46,800 --> 00:19:50,720 Speaker 1: thing in Europe is that the anti establishment movements don't 368 00:19:50,800 --> 00:19:54,679 Speaker 1: have to gain power in order to change the politics. 369 00:19:55,119 --> 00:19:59,920 Speaker 1: We would not have had Brexit had Camera're not PROMI 370 00:20:00,000 --> 00:20:02,720 Speaker 1: staturing the election. He wouldn't have promised the referendam in 371 00:20:02,720 --> 00:20:05,359 Speaker 1: the election, had he not been worried about his base 372 00:20:05,600 --> 00:20:08,560 Speaker 1: being taken by Ukip. So at the end of the day, 373 00:20:08,680 --> 00:20:12,400 Speaker 1: a tiny party that got one seat in Parliament defined 374 00:20:12,440 --> 00:20:15,280 Speaker 1: the overall agenda and defined it in a meaningful way. 375 00:20:15,480 --> 00:20:17,679 Speaker 1: So I think we have to pay attention to the 376 00:20:17,760 --> 00:20:20,520 Speaker 1: influence of the anti establishment parties, and you see them 377 00:20:20,600 --> 00:20:24,120 Speaker 1: throughout Europe. Dr Larian, thank you so much, Muhammad Larian, 378 00:20:24,160 --> 00:20:28,520 Speaker 1: of course writing often for Bloomberg View, and so he'll 379 00:20:28,520 --> 00:20:31,320 Speaker 1: be here shortly right, he's taken this. Of course you're 380 00:20:31,359 --> 00:20:43,240 Speaker 1: gonna let him use that's very good. Who you put 381 00:20:43,240 --> 00:20:46,720 Speaker 1: your trust in matters. Investors have put their trust in 382 00:20:46,720 --> 00:20:51,440 Speaker 1: independent registered investment advisors to the tune of four trillion dollars. 383 00:20:51,440 --> 00:20:55,040 Speaker 1: Why they see their roles to serve, not sell. That's 384 00:20:55,040 --> 00:20:58,600 Speaker 1: why Charles Schwab is committed to the success over seven 385 00:20:58,640 --> 00:21:04,960 Speaker 1: thousand independent financial advisors who passionately dedicate themselves to helping 386 00:21:05,040 --> 00:21:09,840 Speaker 1: people achieve their financial goals. Learn more and find your 387 00:21:09,920 --> 00:21:22,560 Speaker 1: independent advisor dot com. David grew here with Tom Keene 388 00:21:22,560 --> 00:21:24,439 Speaker 1: at the Bloomberg Year Ahead a summit at the Park 389 00:21:24,520 --> 00:21:28,480 Speaker 1: Hiat in Midtown, Manhattan. Hacking has been a big story here, 390 00:21:28,920 --> 00:21:30,879 Speaker 1: a very big story for these last few months. There 391 00:21:30,920 --> 00:21:33,720 Speaker 1: was the news, of course that five million users data 392 00:21:33,760 --> 00:21:36,440 Speaker 1: had been breached at Yahoo, and of course the involvement 393 00:21:36,440 --> 00:21:39,440 Speaker 1: of hackers in the U S presidential election. Great cause 394 00:21:39,480 --> 00:21:41,399 Speaker 1: to talk with Michael Chertok, former Secretary of the US 395 00:21:41,440 --> 00:21:44,160 Speaker 1: Department of Homeland Security, senior of Council at Comington and Berling, 396 00:21:44,200 --> 00:21:47,280 Speaker 1: and founder and executive chairman of the Church Off Group. 397 00:21:47,720 --> 00:21:50,680 Speaker 1: Let's start with the Yahoo breach. Good morning. First of all, uh, 398 00:21:51,000 --> 00:21:53,800 Speaker 1: what's your takeaway from a corporate perspective and from a 399 00:21:53,840 --> 00:21:56,480 Speaker 1: cybersecurity perspective when you look at that Yahoo breach again? 400 00:21:56,480 --> 00:21:59,159 Speaker 1: It happened many months ago, the company didn't acknowledge until 401 00:21:59,480 --> 00:22:01,439 Speaker 1: this deal was hatched with with Verizon. How is it 402 00:22:01,480 --> 00:22:03,560 Speaker 1: handled on the corporate side, How big a deal is 403 00:22:03,560 --> 00:22:05,800 Speaker 1: it on the cybersecurity side. Well, first of all, it's 404 00:22:05,840 --> 00:22:08,040 Speaker 1: not the first time we've seen a major hack on 405 00:22:08,119 --> 00:22:12,159 Speaker 1: a commercial company. UH. That reveals the importance of cybersecurity. 406 00:22:12,240 --> 00:22:14,760 Speaker 1: We start back and target. We've seen it with Anthem, 407 00:22:14,760 --> 00:22:18,080 Speaker 1: We've seen it with a whole host of other companies. Obviously, 408 00:22:18,160 --> 00:22:22,800 Speaker 1: the scale of five million accounts catches your attention, But 409 00:22:22,960 --> 00:22:26,240 Speaker 1: beyond that, I think the failure to disclose this UH 410 00:22:26,400 --> 00:22:28,280 Speaker 1: is going to have a real impact on the terms 411 00:22:28,280 --> 00:22:30,600 Speaker 1: and conditions of the acquisition. And I think it's a 412 00:22:30,640 --> 00:22:34,320 Speaker 1: wake up call for directors that this is as important 413 00:22:34,320 --> 00:22:37,000 Speaker 1: to you as the core financial reporting that you do. 414 00:22:37,520 --> 00:22:39,040 Speaker 1: You've heard from executives when you were the head of 415 00:22:39,040 --> 00:22:41,640 Speaker 1: Homeland Security, you work with executives now in your law 416 00:22:41,640 --> 00:22:44,760 Speaker 1: practice and your consulting practice. Do they need to talk 417 00:22:44,760 --> 00:22:46,760 Speaker 1: to each other more? In other words, if there's a 418 00:22:46,760 --> 00:22:49,119 Speaker 1: breach like this, would another company benefit not in a 419 00:22:49,119 --> 00:22:53,240 Speaker 1: competitive way, but would it benefit in knowing what hackers 420 00:22:53,240 --> 00:22:55,160 Speaker 1: are doing where they're headed by just talking more among 421 00:22:55,160 --> 00:22:57,719 Speaker 1: each other. Well, that's absolutely the right thing to do. 422 00:22:57,880 --> 00:23:00,119 Speaker 1: I mean, if you share information, what you're doing is 423 00:23:00,160 --> 00:23:03,040 Speaker 1: you're in effect immunizing other people against the very same 424 00:23:03,119 --> 00:23:05,560 Speaker 1: kind of attack, and in the end we all benefit 425 00:23:05,640 --> 00:23:08,440 Speaker 1: from that because you ought to be reciprocal. That's part 426 00:23:08,440 --> 00:23:10,439 Speaker 1: of the thing the government has tried to encourage, and 427 00:23:10,440 --> 00:23:13,199 Speaker 1: they've created some legal structures to make it easier at 428 00:23:13,200 --> 00:23:15,960 Speaker 1: a bill that was passed last year. For the most 429 00:23:16,000 --> 00:23:18,760 Speaker 1: important thing is for people to recognize it's like Lincoln said, 430 00:23:18,760 --> 00:23:20,879 Speaker 1: we all hang it or Franklin, we all hang together, 431 00:23:21,000 --> 00:23:24,080 Speaker 1: we hang separately, and it's important for us to work 432 00:23:24,119 --> 00:23:28,480 Speaker 1: together to fight this trade. Last week we had a 433 00:23:28,560 --> 00:23:34,240 Speaker 1: distributed denial of service. Your gift out of Harvard three 434 00:23:34,240 --> 00:23:36,919 Speaker 1: cups of coffee at London School of Economics and Harvard 435 00:23:37,000 --> 00:23:39,320 Speaker 1: Law is you're the guy that walks in and all 436 00:23:39,320 --> 00:23:42,399 Speaker 1: these smart guys on the internet and technology tell you 437 00:23:42,440 --> 00:23:46,000 Speaker 1: what to do when you translated. For for whoever's out there, 438 00:23:46,840 --> 00:23:50,920 Speaker 1: is the church off vector of these intrusions into our 439 00:23:50,960 --> 00:23:56,200 Speaker 1: digital space? Is it increasing rapidly enough where we really 440 00:23:56,240 --> 00:23:59,480 Speaker 1: need to begin to have a stronger dialogue with Russia, 441 00:24:00,080 --> 00:24:03,160 Speaker 1: with the Eastern European states. There are two separate things. 442 00:24:03,160 --> 00:24:05,840 Speaker 1: I mean, the denial of service attack, I don't I 443 00:24:05,840 --> 00:24:08,280 Speaker 1: don't think it's been attributed yet, and that's a truly 444 00:24:08,359 --> 00:24:10,600 Speaker 1: a little different than most of the hack and you're 445 00:24:10,640 --> 00:24:14,320 Speaker 1: hearing about. This is not a case where somebody directly 446 00:24:14,359 --> 00:24:17,359 Speaker 1: attacked and got into something and then put malware in 447 00:24:17,760 --> 00:24:20,320 Speaker 1: who was rather a case where someone went around to 448 00:24:20,640 --> 00:24:25,399 Speaker 1: weakly guarded UH items that were on the Internet, managed 449 00:24:25,440 --> 00:24:27,840 Speaker 1: to penetrate them and turn them into a giant botan 450 00:24:27,840 --> 00:24:30,720 Speaker 1: net and then overwhelm the server with a lot of 451 00:24:30,800 --> 00:24:33,879 Speaker 1: data coming in. That's a kind of a nuisance disruption, 452 00:24:34,000 --> 00:24:36,960 Speaker 1: it's not a destructive act. The issue with Russia is 453 00:24:36,960 --> 00:24:40,240 Speaker 1: really this, um we are concerned, I think about the 454 00:24:40,240 --> 00:24:44,119 Speaker 1: possibility of us getting into a cyber conflict. It could 455 00:24:44,119 --> 00:24:45,760 Speaker 1: be Uh, it's not going to be a matter of 456 00:24:45,760 --> 00:24:47,879 Speaker 1: stealing credit cards. It's going to be a matter of 457 00:24:47,920 --> 00:24:52,120 Speaker 1: maybe impacting critical infrastructure. And I do think it's important, 458 00:24:52,160 --> 00:24:55,000 Speaker 1: whatever our issues where the Russians are, to have a 459 00:24:55,040 --> 00:24:57,639 Speaker 1: dialogue within with them so that we don't have a 460 00:24:57,720 --> 00:25:01,560 Speaker 1: mistake that winds up escort wading into something much more serious. 461 00:25:01,720 --> 00:25:04,200 Speaker 1: Most of our audience listening to this would go, first 462 00:25:04,200 --> 00:25:07,280 Speaker 1: of all, what's the cyber event, etcetera, etcetera. We go 463 00:25:07,359 --> 00:25:09,800 Speaker 1: back to the basic idea of our childhood, which is 464 00:25:09,800 --> 00:25:12,639 Speaker 1: why could someone poison the water in wherever town we 465 00:25:12,720 --> 00:25:15,439 Speaker 1: grew up in. Help us with the poison the water. 466 00:25:15,640 --> 00:25:20,199 Speaker 1: Analogy to this modern digital security space, Well, you have 467 00:25:20,400 --> 00:25:23,520 Speaker 1: you can have a water plant, for example, and nowadays 468 00:25:23,520 --> 00:25:27,040 Speaker 1: the water plants control system which actually makes it operate 469 00:25:27,119 --> 00:25:30,200 Speaker 1: and closes and opens the valves is connected to the Internet. 470 00:25:30,400 --> 00:25:32,960 Speaker 1: If somebody hacks into that, they could open valves that 471 00:25:33,000 --> 00:25:35,639 Speaker 1: should be shut, or vice versa. You can have a 472 00:25:35,680 --> 00:25:40,000 Speaker 1: pipeline that monitors the flow of gasolines and you could 473 00:25:40,000 --> 00:25:42,960 Speaker 1: affect the way that monitoring takes. You realize that Secretary 474 00:25:43,040 --> 00:25:46,320 Speaker 1: church Off can bring a happy party to a complete stop, 475 00:25:46,880 --> 00:25:49,640 Speaker 1: like instant Are you kidding me? They're gonna go into 476 00:25:49,680 --> 00:25:53,040 Speaker 1: our water supply and through the computers controlling the water. 477 00:25:53,440 --> 00:25:55,400 Speaker 1: There was a case up in New York, I guess 478 00:25:55,440 --> 00:25:57,840 Speaker 1: a couple of years ago where people hacked into a 479 00:25:57,960 --> 00:25:59,879 Speaker 1: dam I think it was the Rainings were charged with 480 00:26:00,040 --> 00:26:03,280 Speaker 1: this and they tried to affect the operation of the dam. 481 00:26:03,359 --> 00:26:05,000 Speaker 1: Now it turned out it was a little damn and 482 00:26:05,000 --> 00:26:07,639 Speaker 1: it wouldn't have made a difference, but obviously there's a 483 00:26:07,640 --> 00:26:10,000 Speaker 1: concern about this. So bottom line is we have two 484 00:26:10,040 --> 00:26:11,840 Speaker 1: things to do. One is we've got to do a 485 00:26:11,880 --> 00:26:15,320 Speaker 1: better job of protecting that infrastructure. But I agree with you, 486 00:26:15,359 --> 00:26:17,600 Speaker 1: we do need to have a dialogue with the Russians, 487 00:26:17,640 --> 00:26:20,600 Speaker 1: and I've actually had a conversation with some senior Russians 488 00:26:20,680 --> 00:26:23,639 Speaker 1: a few months ago that whatever our other issues are, 489 00:26:23,720 --> 00:26:25,800 Speaker 1: we've got plenty of other issues. We ought to have 490 00:26:25,880 --> 00:26:29,639 Speaker 1: some mechanism, like a hotline that enables us to communicate 491 00:26:29,680 --> 00:26:33,359 Speaker 1: so we don't accidentally find ourselves in a situation where 492 00:26:33,520 --> 00:26:36,280 Speaker 1: we precipitate a more serious conflict. So there's a red 493 00:26:36,280 --> 00:26:38,560 Speaker 1: phone and musk or red phone in Washington and red 494 00:26:38,640 --> 00:26:42,400 Speaker 1: phone on Tim Cook's day. It works. We are, of course, 495 00:26:42,400 --> 00:26:44,160 Speaker 1: in the middle of the presidential election. You have weighed 496 00:26:44,160 --> 00:26:46,760 Speaker 1: in on that recently, saying that you're going to endorse 497 00:26:47,040 --> 00:26:49,359 Speaker 1: Hillary cletton every piece of coverage I've read about your 498 00:26:49,400 --> 00:26:53,440 Speaker 1: endorsement sites, your history in quotations with with the Clintons. 499 00:26:54,040 --> 00:26:56,040 Speaker 1: Should we look at it independent of that? How did 500 00:26:56,080 --> 00:26:58,080 Speaker 1: you come to the decision here to tebecclar. You know, 501 00:26:58,119 --> 00:27:00,119 Speaker 1: I think we're in one of the most danger his 502 00:27:00,240 --> 00:27:04,600 Speaker 1: periods from a security standpoint that I've lived during during 503 00:27:04,600 --> 00:27:06,879 Speaker 1: my lifetime. I mean, maybe the cold war was the 504 00:27:06,880 --> 00:27:09,800 Speaker 1: only thing that was more consequential. And I think the 505 00:27:09,880 --> 00:27:13,240 Speaker 1: issue of temperament, experience, and judgment is maybe more important 506 00:27:13,280 --> 00:27:17,560 Speaker 1: now than it's been in most presidential elections during my lifetime. 507 00:27:17,920 --> 00:27:20,560 Speaker 1: So to me, UH, you have a very dark choice, 508 00:27:21,160 --> 00:27:23,359 Speaker 1: and it's critically important to make sure that the person 509 00:27:23,400 --> 00:27:27,040 Speaker 1: who was dealing with the Russians, the Chinese problems in 510 00:27:27,080 --> 00:27:29,960 Speaker 1: the Middle East, and the whole host of other issues 511 00:27:30,400 --> 00:27:33,080 Speaker 1: is someone who first understands the issues and wants to 512 00:27:33,280 --> 00:27:35,960 Speaker 1: understand the issues, and second has the temperament and the 513 00:27:36,000 --> 00:27:39,879 Speaker 1: steadiness to make decisions. And I think from my standpoint, 514 00:27:39,920 --> 00:27:43,159 Speaker 1: having dealt with UH Secretary Clinton when she was a 515 00:27:43,200 --> 00:27:46,359 Speaker 1: senator UM and having seen her in action, having spoken 516 00:27:46,400 --> 00:27:48,639 Speaker 1: to her, I think she's got the temperament and experience. 517 00:27:49,040 --> 00:27:52,040 Speaker 1: And I think everything that Donald Trump has done publicly 518 00:27:52,440 --> 00:27:55,360 Speaker 1: since he declared for office indicates he doesn't have the temperament. 519 00:27:55,520 --> 00:27:58,000 Speaker 1: So for me, this is not about, you know, someone 520 00:27:58,040 --> 00:28:01,600 Speaker 1: disagrees with the way someone's organized their foundation. This is 521 00:28:01,640 --> 00:28:05,320 Speaker 1: about the core responsibility of president, which is protect the country. 522 00:28:05,400 --> 00:28:08,000 Speaker 1: One of our great themes here on Bloomberg Surveillance, Mr 523 00:28:08,000 --> 00:28:11,520 Speaker 1: Tchurtof has been the rise of populism. You worked with 524 00:28:11,600 --> 00:28:17,360 Speaker 1: Rudy Giuliani thirty five years ago, young prosecutor for Mr. Giuliani, 525 00:28:17,680 --> 00:28:20,359 Speaker 1: How do the Republicans heal Mr Julian has been a 526 00:28:20,480 --> 00:28:23,840 Speaker 1: huge and strong and visceral supporter of Mr. Trump, has 527 00:28:23,880 --> 00:28:26,800 Speaker 1: been hugely in the news. When where you sit, how 528 00:28:26,840 --> 00:28:31,240 Speaker 1: does the Republican Party move forward to a more cogent 529 00:28:31,359 --> 00:28:34,000 Speaker 1: debate four years from now? And if you look at 530 00:28:34,040 --> 00:28:36,719 Speaker 1: the history of the United States, and we've had periods 531 00:28:36,720 --> 00:28:40,320 Speaker 1: of time where populasing rose or there were serious divisions 532 00:28:40,320 --> 00:28:43,440 Speaker 1: within parties and we've recovered from those. I think that 533 00:28:43,520 --> 00:28:46,920 Speaker 1: there are some lessons learned from the message that was 534 00:28:46,960 --> 00:28:50,280 Speaker 1: sent by Republican voters in terms of making sure that 535 00:28:50,320 --> 00:28:53,120 Speaker 1: we raised the economy for everybody. You know, I was 536 00:28:53,160 --> 00:28:56,960 Speaker 1: a Jack kemp Um supporter and admirer, and I was 537 00:28:57,000 --> 00:28:59,840 Speaker 1: a friend, and I think that kind of Republican is 538 00:28:59,880 --> 00:29:04,200 Speaker 1: a is the future of the Republican Party, which is optimistic, inclusive, 539 00:29:04,720 --> 00:29:09,520 Speaker 1: raising everybody's uh economic well being, tough on security, but 540 00:29:09,600 --> 00:29:12,320 Speaker 1: not reckless on security. And I think if we get 541 00:29:12,360 --> 00:29:15,000 Speaker 1: by this and we take a look at the serious 542 00:29:15,000 --> 00:29:17,920 Speaker 1: issues that are embedded within what we've seen, there's a 543 00:29:18,000 --> 00:29:21,240 Speaker 1: way to restructure that at the state level. I mean, 544 00:29:21,240 --> 00:29:25,080 Speaker 1: if you look at Kansas, at Washington State with a 545 00:29:25,200 --> 00:29:30,880 Speaker 1: non Campian Republicanism, how do the Republican elite migrate them 546 00:29:30,920 --> 00:29:34,480 Speaker 1: back to a more moderate tone? Actually, you know, Mike's 547 00:29:34,880 --> 00:29:38,000 Speaker 1: you make a great point. My experiences, that's the it's 548 00:29:38,000 --> 00:29:41,560 Speaker 1: at the state level. You tend to see practical, real 549 00:29:41,640 --> 00:29:44,440 Speaker 1: solutions and problems because people are close to the voters 550 00:29:44,960 --> 00:29:47,000 Speaker 1: and you've got to actually deliver. And I think that 551 00:29:47,240 --> 00:29:50,560 Speaker 1: the rebuilding of the party is going to be largely 552 00:29:50,640 --> 00:29:53,560 Speaker 1: driven at the state level, and you're gonna have governors 553 00:29:53,560 --> 00:29:56,480 Speaker 1: out there who are going to be working on solutions 554 00:29:56,480 --> 00:29:58,720 Speaker 1: and those are gonna get picked up and taken forward. 555 00:29:58,920 --> 00:30:01,480 Speaker 1: The secretary hurt off with us, this is fascinating. You 556 00:30:01,520 --> 00:30:04,560 Speaker 1: were involved in the Whitewater investigation again of a few 557 00:30:04,640 --> 00:30:09,880 Speaker 1: years ago. It's it's remarkable the career path to get 558 00:30:09,880 --> 00:30:12,080 Speaker 1: the worries today. Yeah, I'll tell you, you know, I 559 00:30:12,080 --> 00:30:15,160 Speaker 1: will tell you there's a seminal moment that explains a 560 00:30:15,200 --> 00:30:17,840 Speaker 1: lot of this is called September eleven two Fasion one. David, 561 00:30:17,880 --> 00:30:19,960 Speaker 1: why don't you kick it off as we talk about 562 00:30:20,000 --> 00:30:23,760 Speaker 1: fifteen years on this coming September of September eleven, we're 563 00:30:23,760 --> 00:30:26,080 Speaker 1: talking about at nine eleven, the lessons you you learned 564 00:30:26,120 --> 00:30:29,840 Speaker 1: from that, Um, when you look at these two candidates. Uh, 565 00:30:30,040 --> 00:30:31,880 Speaker 1: you meant you mentioned that it was about national security, 566 00:30:31,880 --> 00:30:34,320 Speaker 1: it was about temperament. Was there a moment of clarity 567 00:30:34,360 --> 00:30:36,800 Speaker 1: for you watching the campaign when you decided to back 568 00:30:36,840 --> 00:30:38,360 Speaker 1: Trump or was it something that you were feeling from 569 00:30:38,440 --> 00:30:40,720 Speaker 1: from the get go not Backtroun. Yeah, I signed it. 570 00:30:41,400 --> 00:30:44,280 Speaker 1: I'm never in the background. Um. You know that the 571 00:30:44,280 --> 00:30:47,080 Speaker 1: the two things that came early on were first of all, 572 00:30:47,120 --> 00:30:49,280 Speaker 1: the build a wall to keep the Mexicans at which 573 00:30:49,440 --> 00:30:52,040 Speaker 1: was first of all totally impractical. And I say that 574 00:30:52,080 --> 00:30:54,520 Speaker 1: as somebody who personally was involved. This is import During 575 00:30:54,520 --> 00:30:57,000 Speaker 1: the Bush administration, you were greatly pushing for comference, and 576 00:30:57,000 --> 00:30:59,400 Speaker 1: I pushed for immigration before. But I also put six 577 00:30:59,560 --> 00:31:02,920 Speaker 1: US miles of fencing up in the most vulnerable parts 578 00:31:02,920 --> 00:31:05,640 Speaker 1: of the southern border, including some I actually personally welded. 579 00:31:06,360 --> 00:31:09,880 Speaker 1: But yeah, but there are other areas where it doesn't 580 00:31:09,920 --> 00:31:12,200 Speaker 1: make any sense. You've got a river, mountains, so that 581 00:31:12,320 --> 00:31:16,600 Speaker 1: struck me as impractical and demagogic. But also the thing 582 00:31:16,640 --> 00:31:19,840 Speaker 1: about keeping all Muslims out. Listen, I was overseas. I 583 00:31:19,880 --> 00:31:23,480 Speaker 1: went to Iraq and Afghanistan. I swore in American soldiers 584 00:31:23,800 --> 00:31:26,640 Speaker 1: who came from the region, who would become permanent residents 585 00:31:26,840 --> 00:31:29,200 Speaker 1: and went back to fight for their country. The idea 586 00:31:29,240 --> 00:31:33,160 Speaker 1: you're going to keep all Muslims out is counterproductive at least, 587 00:31:33,280 --> 00:31:36,840 Speaker 1: and really Unamerican at at best. So I listened to 588 00:31:36,840 --> 00:31:38,800 Speaker 1: this and I thought, this is somebody who's going to 589 00:31:38,880 --> 00:31:42,600 Speaker 1: alienate more people than he's going to bring into the fold. 590 00:31:43,040 --> 00:31:46,160 Speaker 1: Since then, i've heard him praise Vladimir Putin and denigrade 591 00:31:46,200 --> 00:31:49,120 Speaker 1: our own allies and NATO, and I think that's exactly 592 00:31:49,120 --> 00:31:51,280 Speaker 1: the reverse of what we need in this day and age. 593 00:31:51,720 --> 00:31:54,320 Speaker 1: Getting back to cybersecurity, quickly brought up Vladimir Putin. You 594 00:31:54,360 --> 00:31:57,080 Speaker 1: have a leader in Russia who is denying any involvement 595 00:31:57,200 --> 00:31:59,400 Speaker 1: in the hacking that we've seen thus far. It's very 596 00:31:59,440 --> 00:32:02,520 Speaker 1: easy to uh sleft that onto a lone wolf, the 597 00:32:02,520 --> 00:32:04,160 Speaker 1: lone wolf or some things. How do you how do 598 00:32:04,240 --> 00:32:06,560 Speaker 1: how does the U S fight something like that? You 599 00:32:06,600 --> 00:32:08,880 Speaker 1: talk about the risks of getting into a potentially dangerous 600 00:32:08,880 --> 00:32:12,600 Speaker 1: situation when it comes to cybersecurity and hacking. What's the 601 00:32:12,640 --> 00:32:15,000 Speaker 1: path forward, what's the offensive pa path forward here for you. Well, 602 00:32:15,040 --> 00:32:17,959 Speaker 1: that's a challenging area because we don't want to overreact, 603 00:32:18,000 --> 00:32:20,760 Speaker 1: but we can't ignore these things. Um. I think we 604 00:32:20,840 --> 00:32:23,760 Speaker 1: may be at the point at which adding additional sanctions 605 00:32:23,880 --> 00:32:26,560 Speaker 1: doesn't make a lot more sense. But it might be 606 00:32:26,600 --> 00:32:29,960 Speaker 1: the case that in addition to crawling out o the Russians, 607 00:32:30,000 --> 00:32:32,680 Speaker 1: as the Director of National Intelligence and Sector of Home 608 00:32:32,760 --> 00:32:35,960 Speaker 1: Insecurity did a week ago, maybe we need to do 609 00:32:36,000 --> 00:32:39,240 Speaker 1: a little bit of releasing of embarrassing things about the 610 00:32:39,320 --> 00:32:42,200 Speaker 1: Russians or about the Russian leadership. You know, the Panama 611 00:32:42,200 --> 00:32:46,040 Speaker 1: Papers thing apparently had a pretty strong impact in terms 612 00:32:46,080 --> 00:32:48,520 Speaker 1: of some of the stuff that was revealed. So again, 613 00:32:48,560 --> 00:32:51,800 Speaker 1: you want to calibrate your response so you don't escalate, 614 00:32:52,120 --> 00:32:54,080 Speaker 1: but you also can't turn your back. We equipped to 615 00:32:54,120 --> 00:32:55,719 Speaker 1: do that. It's the government equipped to do that kind 616 00:32:55,720 --> 00:32:59,080 Speaker 1: of information. I would say that the government, our government 617 00:32:59,120 --> 00:33:01,120 Speaker 1: is about is skill there's any in the world in 618 00:33:01,240 --> 00:33:04,000 Speaker 1: terms of getting information. One final question this came up 619 00:33:04,000 --> 00:33:06,880 Speaker 1: the other day, and I'll let the professional answer. When 620 00:33:06,960 --> 00:33:10,120 Speaker 1: somebody in New York sees three police officers with full 621 00:33:10,160 --> 00:33:15,520 Speaker 1: machine gun paraphernalia outside a grocery store in the Midtown 622 00:33:15,520 --> 00:33:19,680 Speaker 1: Manhattan area, why are we doing that? What? What? What 623 00:33:19,720 --> 00:33:23,560 Speaker 1: are they doing for our home lends security? I could 624 00:33:23,680 --> 00:33:26,560 Speaker 1: Joe grind and say they're there to get donuts, But look, 625 00:33:26,600 --> 00:33:28,840 Speaker 1: I mean sometimes there's been a view in New York 626 00:33:29,200 --> 00:33:32,040 Speaker 1: that just having a show of force like a surge 627 00:33:32,640 --> 00:33:34,680 Speaker 1: is a way of sending a message to people who 628 00:33:34,760 --> 00:33:37,800 Speaker 1: might be thinking of carrying out a terrorist act that 629 00:33:38,000 --> 00:33:41,240 Speaker 1: we're unpredictable and that therefore they can't be sure they 630 00:33:41,280 --> 00:33:43,880 Speaker 1: can plan in a way that would allow them to 631 00:33:43,920 --> 00:33:45,680 Speaker 1: carry out an attack and get away with it. So 632 00:33:45,720 --> 00:33:48,320 Speaker 1: I don't know the particular instance here, but I do 633 00:33:48,400 --> 00:33:52,240 Speaker 1: know they used to surge police activity under Ray Kelly, 634 00:33:52,320 --> 00:33:54,960 Speaker 1: and the idea again was to put just a certain 635 00:33:55,000 --> 00:33:58,680 Speaker 1: amount of randomness into the process as a deterrent against 636 00:33:58,680 --> 00:34:01,760 Speaker 1: people carrying out violent acts. It was your secretary, Thank you, 637 00:34:02,320 --> 00:34:04,520 Speaker 1: Michael Chertoff with the churchoff grew up a in former 638 00:34:05,160 --> 00:34:08,759 Speaker 1: secretary of Homeland Security. Wonderful to see you again. We'll 639 00:34:08,840 --> 00:34:11,239 Speaker 1: let you go off now to the Bloomberg. Adrian when 640 00:34:11,280 --> 00:34:14,719 Speaker 1: you drag the secretary, please away, office chair right now. 641 00:34:14,760 --> 00:34:18,200 Speaker 1: We need to get him to the Bloomberg. Year had vanta. 642 00:34:31,160 --> 00:34:34,440 Speaker 1: This was a guest I was most anticipated because if 643 00:34:34,480 --> 00:34:39,279 Speaker 1: I'm anybody to the pulse of center or right in America, 644 00:34:40,200 --> 00:34:42,880 Speaker 1: this is I grew up in the land of Barbara B. Cannibal, 645 00:34:43,200 --> 00:34:46,239 Speaker 1: was Western New York and was a Republican of another time. 646 00:34:46,280 --> 00:34:50,360 Speaker 1: And place to the western Blueberry Country was the Angler household. 647 00:34:50,400 --> 00:34:53,600 Speaker 1: It was a log cabin with if they had a 648 00:34:53,640 --> 00:34:56,320 Speaker 1: Gordy how Jersey up on the wall, the governor of 649 00:34:56,320 --> 00:34:59,920 Speaker 1: the former governor of Michigan, rather John Angler with us. Now, 650 00:35:00,320 --> 00:35:02,600 Speaker 1: there's always eight ways to go with you, but there's 651 00:35:02,640 --> 00:35:05,680 Speaker 1: only one way to go with you now, your Republican Party. 652 00:35:05,760 --> 00:35:11,280 Speaker 1: I mean, help me here and where you're where? Where 653 00:35:11,280 --> 00:35:14,040 Speaker 1: do you go from here? Well? I try to need 654 00:35:14,040 --> 00:35:16,120 Speaker 1: to put the disclaimer upfront. Even though I was elected 655 00:35:16,160 --> 00:35:18,040 Speaker 1: three times as a governor in Michigan. I'm at the 656 00:35:18,120 --> 00:35:23,040 Speaker 1: roundtable now in the business roundtable, very nonpartisan group. Uh, 657 00:35:23,080 --> 00:35:25,360 Speaker 1: but I've certainly got a little bit of history and 658 00:35:26,160 --> 00:35:28,080 Speaker 1: a lot of elections under my belt in the past. 659 00:35:28,600 --> 00:35:32,040 Speaker 1: There's no question that this year started out so promising 660 00:35:32,560 --> 00:35:37,600 Speaker 1: with sixteen seventeen candidates and uh, to quote Governor Christie 661 00:35:37,600 --> 00:35:40,160 Speaker 1: when he came to the roundtable back in September, he said, well, 662 00:35:40,200 --> 00:35:43,760 Speaker 1: Donald Trump wasn't my first choice. UH, stating the obvious, 663 00:35:43,880 --> 00:35:47,200 Speaker 1: but I I I think that those of us who've 664 00:35:47,239 --> 00:35:50,760 Speaker 1: been around really had a sense for a long time 665 00:35:50,840 --> 00:35:53,799 Speaker 1: that there's been this unrest and unhappiness out across the 666 00:35:53,880 --> 00:35:59,040 Speaker 1: land with government and with Washington. UH. There's no doubt 667 00:35:59,080 --> 00:36:02,000 Speaker 1: in this campaign though, that Trump in the early stages 668 00:36:02,080 --> 00:36:05,520 Speaker 1: bottled that better than anybody else. And UH, in the 669 00:36:05,560 --> 00:36:08,759 Speaker 1: process took out some outstanding candidates who I think would 670 00:36:08,800 --> 00:36:11,759 Speaker 1: be comfortably ahead today if they were the nominee of 671 00:36:11,800 --> 00:36:17,080 Speaker 1: the party. He became the nominee. And UH, I think 672 00:36:17,239 --> 00:36:21,640 Speaker 1: largely unvetted in the primary process, and the vetting and 673 00:36:21,680 --> 00:36:24,200 Speaker 1: the campaign has been pretty brutal, and you're going up 674 00:36:24,200 --> 00:36:28,000 Speaker 1: against a very tough foe in the Clinton machine. When 675 00:36:28,040 --> 00:36:31,640 Speaker 1: your membership gathers, how much are they talking about politics? 676 00:36:31,640 --> 00:36:34,160 Speaker 1: How much is this a concern for them? For executive saying, well, 677 00:36:34,200 --> 00:36:36,040 Speaker 1: I'll tell you what they're doing is they're all telling 678 00:36:36,080 --> 00:36:37,839 Speaker 1: about how much they have talked about politics when they 679 00:36:37,840 --> 00:36:40,920 Speaker 1: travel anywhere in the world. Because the first conversation you 680 00:36:41,000 --> 00:36:43,839 Speaker 1: have as a leader of a business it's headquartered here 681 00:36:43,920 --> 00:36:46,359 Speaker 1: is when you go anywhere, what the heck is going 682 00:36:46,400 --> 00:36:51,920 Speaker 1: on in America, and I think they're they're frustrated. I'm frustrating. 683 00:36:51,920 --> 00:36:56,080 Speaker 1: Our organization exists to be promoting economic growth in America. 684 00:36:56,200 --> 00:36:59,640 Speaker 1: We want to see this economy booming. And here we 685 00:36:59,719 --> 00:37:03,080 Speaker 1: are finishing eight years, first president since Hoover not to 686 00:37:03,120 --> 00:37:05,840 Speaker 1: have a year where GDP as three. We're saying we 687 00:37:05,880 --> 00:37:09,239 Speaker 1: can do a lot better. But to be better, we 688 00:37:09,360 --> 00:37:13,280 Speaker 1: have to make smarter decisions. And that means government, both sides, 689 00:37:13,480 --> 00:37:16,400 Speaker 1: has to work together to get the tax system fixed, 690 00:37:16,680 --> 00:37:20,560 Speaker 1: to resolve the immigration fight, to think about trade and 691 00:37:20,640 --> 00:37:24,480 Speaker 1: how we go forward there. Because fours of the world's population, 692 00:37:24,880 --> 00:37:27,120 Speaker 1: we make more than we can consume or eat, so 693 00:37:27,160 --> 00:37:29,839 Speaker 1: we need to sell it to somebody. Uh, we need 694 00:37:29,880 --> 00:37:32,320 Speaker 1: to think about the regulatory process. Is a whole agenda 695 00:37:33,040 --> 00:37:36,319 Speaker 1: of items which if we acted on, would be good 696 00:37:36,320 --> 00:37:40,800 Speaker 1: for American workers and families. You come off the central 697 00:37:40,960 --> 00:37:44,319 Speaker 1: territory of Michigan. I mean there's the gross Point crew, 698 00:37:44,360 --> 00:37:46,759 Speaker 1: and there's a Detroit crew and all that. And I 699 00:37:46,840 --> 00:37:49,759 Speaker 1: think in central Michigan hockey just as a starter. But 700 00:37:50,480 --> 00:37:56,640 Speaker 1: how do business people reattach to the people of Mount Pleasant, 701 00:37:56,880 --> 00:38:02,480 Speaker 1: Michigan who have given up on angler politics. Well, I 702 00:38:02,480 --> 00:38:06,920 Speaker 1: I think it's leadership. I actually am an optimist looking ahead, 703 00:38:06,960 --> 00:38:11,560 Speaker 1: despite how brutalist campaign has been and how offensive in 704 00:38:11,600 --> 00:38:15,520 Speaker 1: so many ways, in so many directions, because I do 705 00:38:15,600 --> 00:38:18,120 Speaker 1: think that the departure of Harry Read out of the U. S. 706 00:38:18,120 --> 00:38:21,759 Speaker 1: Senate means that Chuck Schumer from New York is going 707 00:38:21,800 --> 00:38:25,440 Speaker 1: to be much more Uh. I think transactional, willing to work. 708 00:38:25,480 --> 00:38:28,960 Speaker 1: He's he's interested in getting things done. He'll be the leader. 709 00:38:29,120 --> 00:38:31,160 Speaker 1: Whether he's a majority of an alority there, we don't know. 710 00:38:31,520 --> 00:38:34,640 Speaker 1: We'll know in two weeks. But he's gonna want to 711 00:38:34,680 --> 00:38:37,520 Speaker 1: have a record of accomplishment. He can work. I think 712 00:38:37,520 --> 00:38:42,719 Speaker 1: with Republican leaders, I think that the new next administration, Uh, 713 00:38:42,800 --> 00:38:46,399 Speaker 1: let's say it's Secretary Clinton. She did spend enough time 714 00:38:46,440 --> 00:38:48,759 Speaker 1: in the Senate. She built relations, and she worked on 715 00:38:48,800 --> 00:38:51,920 Speaker 1: building relations. President Obama only had a couple of minutes 716 00:38:51,920 --> 00:38:55,160 Speaker 1: in the Senate and didn't have these relationships. And as 717 00:38:55,200 --> 00:38:59,239 Speaker 1: a result, uh, there's never been the affection for him, 718 00:38:59,680 --> 00:39:01,600 Speaker 1: even among members of your own parties. Some of them 719 00:39:01,600 --> 00:39:04,520 Speaker 1: are as harsh as critics, and so I think trying 720 00:39:04,560 --> 00:39:09,239 Speaker 1: to make government work again, you've got such antagonism out there. 721 00:39:09,239 --> 00:39:11,480 Speaker 1: To the heart of your question, though, I think you 722 00:39:11,560 --> 00:39:15,439 Speaker 1: only build that trust back piece by piece, little by little. 723 00:39:15,440 --> 00:39:17,200 Speaker 1: You've got to start to find some things you can 724 00:39:17,239 --> 00:39:20,800 Speaker 1: work together on and show people that we can make decisions. 725 00:39:21,000 --> 00:39:22,520 Speaker 1: I'll give you one example. I think there's a lot 726 00:39:22,520 --> 00:39:25,440 Speaker 1: of opportunity together. We don't take care of people who 727 00:39:25,480 --> 00:39:29,480 Speaker 1: are displaced today, who lose their job most people four 728 00:39:29,480 --> 00:39:32,799 Speaker 1: out of five because of technology, the digital economy. We 729 00:39:32,840 --> 00:39:36,040 Speaker 1: don't have a way to retrain these people properly. We're not, 730 00:39:36,640 --> 00:39:39,160 Speaker 1: in fact communicating to their children what they're gonna need 731 00:39:39,200 --> 00:39:43,120 Speaker 1: to be growing up and ready to participate. Fixing education, 732 00:39:43,200 --> 00:39:46,359 Speaker 1: fixing training. We all can work together on that. Well, 733 00:39:46,400 --> 00:39:50,240 Speaker 1: forever identify you as three term Republican Governor John Angler. 734 00:39:50,760 --> 00:39:52,680 Speaker 1: What does party mean to you today in light of 735 00:39:52,719 --> 00:39:55,440 Speaker 1: what we've seen? What's your what's your loyalty to party? 736 00:39:55,480 --> 00:39:59,200 Speaker 1: And has that diminished at all? Well? I I have 737 00:39:59,440 --> 00:40:02,960 Speaker 1: my personal opinions which are different than my professional role 738 00:40:03,040 --> 00:40:06,480 Speaker 1: as the president of the Business Roundtable. In that role, UH, 739 00:40:06,719 --> 00:40:09,640 Speaker 1: We're willing to work with anybody who will work with 740 00:40:09,719 --> 00:40:14,799 Speaker 1: us on an agenda, as I said, is UH productive 741 00:40:14,800 --> 00:40:17,680 Speaker 1: in terms of seeing America grow more, create more jobs, 742 00:40:18,000 --> 00:40:22,759 Speaker 1: employ more people, offer more opportunities privately. Uh, you know, 743 00:40:22,840 --> 00:40:25,920 Speaker 1: I I do worry that we've got a lot of talent. 744 00:40:26,280 --> 00:40:29,040 Speaker 1: I think that talent needs to come forward long term. 745 00:40:29,480 --> 00:40:33,719 Speaker 1: The the relative youth of the emerging leadership of the 746 00:40:33,719 --> 00:40:36,880 Speaker 1: Republican Party dwarfs what's over the Democratic Party. One of 747 00:40:36,920 --> 00:40:39,479 Speaker 1: the legacies of President Obama will be that he didn't 748 00:40:39,480 --> 00:40:41,880 Speaker 1: he left the cupboard pretty empty. If you take Hillary 749 00:40:41,880 --> 00:40:44,839 Speaker 1: Clinton as she disappeared tomorrow, who would be the Democratic leader? 750 00:40:45,280 --> 00:40:49,200 Speaker 1: Tim Kane, I'm not sure, but well, Governor, this is 751 00:40:49,239 --> 00:40:52,400 Speaker 1: this is the most important question. You grew up with 752 00:40:52,480 --> 00:40:56,360 Speaker 1: a little AM radio. I'm sure listening to Ernie Harwell 753 00:40:56,400 --> 00:41:00,040 Speaker 1: and Paul Carey Detroit Tigers baseball, Cary from momp was 754 00:41:00,080 --> 00:41:03,080 Speaker 1: in Michigan, I was gonna say, and Lynn Casper is 755 00:41:03,160 --> 00:41:06,360 Speaker 1: the voice of the Chicago Cubs, also from Mount Pleasant. 756 00:41:07,080 --> 00:41:09,319 Speaker 1: This isn't Did you know why you that that that 757 00:41:09,520 --> 00:41:14,880 Speaker 1: Mount Pleasant is center tendency between Cleveland, Ohio in Chicago, Illinois. 758 00:41:14,920 --> 00:41:18,839 Speaker 1: It is the loadstone and divide when the Tigers don't win. 759 00:41:19,440 --> 00:41:22,640 Speaker 1: Cubs are Indians. Well, and none other than dick Enberg 760 00:41:22,920 --> 00:41:26,400 Speaker 1: went to Central Michigan University and has been very generous 761 00:41:26,400 --> 00:41:30,480 Speaker 1: to his alma mater. From our maid at Michigan. Uh. Uh, 762 00:41:30,920 --> 00:41:33,920 Speaker 1: you know I we bought they got the three term 763 00:41:33,960 --> 00:41:40,560 Speaker 1: politician Tigers fan, I do favor the American League, but 764 00:41:40,600 --> 00:41:42,680 Speaker 1: I must say I do My heart does go out 765 00:41:42,719 --> 00:41:45,480 Speaker 1: for those port Cubbies over a century of futility. So 766 00:41:46,080 --> 00:41:49,640 Speaker 1: this is gonna be an amazing series. Uh. I've stunned 767 00:41:49,640 --> 00:41:52,720 Speaker 1: at how well Cleveland's performed to date. So uh, Cubs 768 00:41:52,719 --> 00:41:54,840 Speaker 1: fans got their work cut out for him. Chuck Todd 769 00:41:54,880 --> 00:41:56,840 Speaker 1: was on with us from NBC earlier and he was 770 00:41:56,880 --> 00:41:59,000 Speaker 1: talking about the grid of the Indians. I'm going to 771 00:41:59,040 --> 00:42:01,480 Speaker 1: the Indians just because everybody thinks the Cups will do 772 00:42:01,520 --> 00:42:03,719 Speaker 1: it because they're so loaded. Well, I'm an American guys, 773 00:42:04,640 --> 00:42:07,239 Speaker 1: Come my governor, do something in your fourth term, get 774 00:42:07,320 --> 00:42:09,600 Speaker 1: rid of the d H. John Tagler with the Business 775 00:42:09,680 --> 00:42:20,920 Speaker 1: Roundtable here at our Bloomberg The Year Ahead event. Thanks 776 00:42:20,920 --> 00:42:25,360 Speaker 1: for listening to the Bloomberg Surveillance podcast. Subscribe and listen 777 00:42:25,440 --> 00:42:30,760 Speaker 1: to interviews on iTunes, SoundCloud, or whichever podcast platform you prefer. 778 00:42:31,520 --> 00:42:34,400 Speaker 1: I'm out on Twitter at Tom Keene. David Gura is 779 00:42:34,520 --> 00:42:38,279 Speaker 1: at David Gura. Before the podcast, you can always catch 780 00:42:38,360 --> 00:42:53,880 Speaker 1: us world wide. I'm Bloomberg radio. Who you put your 781 00:42:53,880 --> 00:42:57,520 Speaker 1: trust in matters. Investors have put their trust and independent 782 00:42:57,600 --> 00:43:01,560 Speaker 1: registered investment advisors to the two and four trillion dollars. 783 00:43:01,640 --> 00:43:06,920 Speaker 1: Why Learn more at find your Independent Adviser dot com