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Speaker 1: Who you put your trust in matters. Investors have put

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Speaker 1: their trust and independent registered investment advisors to the two

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Speaker 1: and four trillion dollars. Why learn more and find your

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Speaker 1: independent advisor dot com. Welcome to the Bloomberg Surveillance Podcast.

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Speaker 1: I'm Tom Keene with David Gura. Daily we bring you

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Speaker 1: insight from the best in economics, finance, investment, and international relations.

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Speaker 1: Find Bloomberg Surveillance on iTunes, SoundCloud, Bloomberg dot com, and

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Speaker 1: of course on the Bloomberg and Tom. We have with

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Speaker 1: us today our first guest, and he is, of course

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Speaker 1: Joseph Quinland with US Trust chief market strategist, and Joseph

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Speaker 1: has put together a note on what to watch out

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Speaker 1: for in and a lot of things to be cautious about. Joseph,

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Speaker 1: thank you for joining us today. My pleasure. You can

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Speaker 1: mention the Rangers if you like. They're like number one

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Speaker 1: or number two. They've had a good run. They're killing it.

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Speaker 1: They're killing it all right. Joe, you've written a note

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Speaker 1: Trump and nomics, the good, the bad, and the ugliest.

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Speaker 1: Seems like investors have really focused on the good the

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Speaker 1: last couple of weeks. When does the bad and the

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Speaker 1: ugliest start to emerge. UM. Good question, because you're right,

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Speaker 1: the markets have given the benefit of doubt that the

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Speaker 1: glass is half full. But we're watching very carefully. Not

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Speaker 1: not so much that deficits in the debt, interest rates,

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Speaker 1: trade policy, investment policy. That's gonna be hugely important, and

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Speaker 1: I think it's important for you know, we're a large economy,

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Speaker 1: but we're still only part of a broader global economy

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Speaker 1: when we have less than five percent in the world population.

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Speaker 1: So US companies needs foreign markets, resources, natural resources, capital,

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Speaker 1: and if we kind of pull back or turn our

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Speaker 1: back to that, we're gonna have some issues, I think.

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Speaker 1: But that I think that's a story for the second

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Speaker 1: half of two seventeen. Why second half, because everyone's focused

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Speaker 1: on infrastructure spending, they're all focus on tax reform, lighter

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Speaker 1: regulatory touch. That's the good news. That's the feel good

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Speaker 1: market that we're in right now. So I think earnings

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Speaker 1: are going to be good for the fourth quarters we

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Speaker 1: report going to January. But I do think if we

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Speaker 1: do go down this path, protectionist path, so to speak,

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Speaker 1: that will come back to haunt us. So this reflation

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Speaker 1: trade that we've been seeing, Um, it's certainly run a

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Speaker 1: huge amount since the election. Are we what one third

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Speaker 1: of the way through? Halfway through? I mean, what inning

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Speaker 1: are we And if you had to liken it to

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Speaker 1: basically reflation trade, I mean maybe a second or third inning,

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Speaker 1: I mean is just you know, late psycho reflation trade

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Speaker 1: because we still have if you really, the key will

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Speaker 1: be unlocking the capital expenditure side of the equation, so CEO.

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Speaker 1: So if they do step up, they hire, they get

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Speaker 1: back to share buybacks, they build more, bolt on, get

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Speaker 1: the infrastructure spending, whether it's internet, running US to ports.

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Speaker 1: It could go on. But they've had decades of decades

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Speaker 1: of cheap money and they could have done that. Apple

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Speaker 1: has billions of dollars of cash on its balance sheet, Um,

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Speaker 1: it just doesn't know what to do with it, doesn't Well,

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Speaker 1: there's a deficit demand as well. But it's also how

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Speaker 1: it's treated. So we've you know, our corporate tax rate

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Speaker 1: is effectively highest in the world, so we do keep

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Speaker 1: it off shore. Capital goes where it's treated best, and

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Speaker 1: it hasn't been the United States. If that's going to change,

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Speaker 1: then again you're gonna see a lot more capital inflows

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Speaker 1: from company US companies themselves. I'm glad we revisited this

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Speaker 1: because to me, it's the art issue for Mr Trump.

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Speaker 1: Do you see policy incentives to change corporate behavior? I

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Speaker 1: don't detect that. I detect locking in you know markets

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Speaker 1: and you know individual corporate behavior. There's no police to tell,

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Speaker 1: you know, Caterpillar what to do with their money? Is there? Well,

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Speaker 1: we we don't want to. We want to give the incentives. Tom,

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Speaker 1: You're right, we give them in What is an example

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Speaker 1: of an incentive that would work? To me, it's just

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Speaker 1: simply credits are just you gotta put this amount of

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Speaker 1: money in. Well, I think Tom, I'm in a favor

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Speaker 1: of like an infrastructure bank, and we should think more

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Speaker 1: like Japan or China, and Japan, particularly China when it

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Speaker 1: comes to buildings. So let's let's follow a hundred deer bond.

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Speaker 1: That's have the money there to really fix our ports,

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Speaker 1: the railroads. And then if we if we kind of

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Speaker 1: lay it out there, create the playing field such that

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Speaker 1: here's the incentives, here's the goals, global competitiveness. I think

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Speaker 1: these corporations Caterpillar deer, otherwise then they kind of take

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Speaker 1: all around with it just to switch gears. Here, the

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Speaker 1: inflation dynamic, the US trust sees part of this issue,

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Speaker 1: and we worry about in the United Kingdom with a

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Speaker 1: leg up on inflation or even nascent reflation in Japan.

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Speaker 1: What is your inflation call for next year away from

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Speaker 1: better GDP, we're looking for around two and a half percent,

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Speaker 1: so that's we're looking for two to three percent pick up.

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Speaker 1: We're gonna see run a little bit hotter than it has.

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Speaker 1: Is it gonna, you know wage pressure that we saw

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Speaker 1: in late seventy we don't see that. You know, automation,

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Speaker 1: you know, but we're doing more with less. That's not

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Speaker 1: gonna change. But I do think you're gonna have to

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Speaker 1: start pay up. We've heard it from our clients that

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Speaker 1: are big business owner, small busins owners, they're gonna have

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Speaker 1: to pay up to keep the labor. But it doesn't

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Speaker 1: run so hot that we're black in the night early seven.

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Speaker 1: These are ladies. Did you learn anything from Cherry Yelling

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Speaker 1: at the FLMC news conference when it came to inflation.

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Speaker 1: She was asked about her comments regarding a high pressure economy,

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Speaker 1: and she seemed to walk back some of the references

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Speaker 1: she made to a willingness to let the economy run

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Speaker 1: hotter than then. Perhaps people have realized and now saying

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Speaker 1: I didn't mean it like that. I didn't mean it

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Speaker 1: like that. Well, if if Hillary Clinton had won the presidency,

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Speaker 1: she wouldn't be talking. She would let the economy run

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Speaker 1: a little hotter. I think you know she's gonna be

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Speaker 1: very careful about Jenny Yellen about how quickly do we

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Speaker 1: get the fiscal stimulus and no one knows because it's

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Speaker 1: Congress as the White House. And then she's how much

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Speaker 1: is she going to lean into that with more Hawker's

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Speaker 1: views on the monetary policy. So we're very much kind

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Speaker 1: of skating here. It's not necessarily thin ice, but there's

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Speaker 1: a game going on. It's girl and I've talked about this.

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Speaker 1: The arch issue is can corporate and business America and

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Speaker 1: how it folds into equities and frankly into other markets,

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Speaker 1: can it remove itself from our political discourse and the

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Speaker 1: tensions that we see. No, I don't think so, Tom,

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Speaker 1: And I think we've got a you know, a president

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Speaker 1: elect that you know won't won't let that happen in

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Speaker 1: terms of being outspoken about insourcing, outsourcing and calling out companies.

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Speaker 1: So no, they cannot. They Because I bring this up, Scarlet,

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Speaker 1: because you know, Rachel Sclar just retweeted out that iconic moment,

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Speaker 1: the classic moment and the sound of music, where Christopher

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Speaker 1: Plummer walks out of his mansion and rips up the

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Speaker 1: Nazi flag. I mean, that's inflammatory towards any of our

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Speaker 1: domestic or frankly world politics, but that's the emotion corporate

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Speaker 1: officers deal. Do they just ignore that now? I mean

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Speaker 1: they won't be able to Tommy, particularly when remember it,

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Speaker 1: if we're gonna take on like Mexico, China, um, you know, Europe,

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Speaker 1: So they're not gonna stand still. So I think corporate

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Speaker 1: America also has to get ready for the retaliatory effect

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Speaker 1: of our policies. Does that prompt them to spur up

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Speaker 1: decision making or to back off completely and say, you

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Speaker 1: know what, we're not going to do anything until we

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Speaker 1: get clarity, how ever long that might take. No. I

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Speaker 1: I hopefully're gonna move forward. They've been sitting on their

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Speaker 1: hands for quite a while here. They've got the cash,

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Speaker 1: and I think they want to get going and they

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Speaker 1: want to work with the President this they want this

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Speaker 1: economy to run a little hotter, and they're ready to

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Speaker 1: step up and play. Speak of cash, how much cash

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Speaker 1: is sitting on the sidelines. Uh. During the rally before

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Speaker 1: the election, as things were kind of just holding study,

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Speaker 1: we were talking about how so many people are reluctant

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Speaker 1: to put positions down and they were just going to

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Speaker 1: kind of ride things out. Now that we have a

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Speaker 1: definitive results, you've got Republican control of Congress and the

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Speaker 1: White House. Is that cash being put to work or

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Speaker 1: is it still sitting on the sidelines slowly. I mean

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Speaker 1: a lot of people don't want to chase this rally.

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Speaker 1: We're seeing a lot of influence from the emerging markets,

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Speaker 1: but I've got some clients that are just still waiting

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Speaker 1: for that pullback. I think we'll get a pull back

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Speaker 1: in January and February. We always do, and then you're

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Speaker 1: gonna see a lot more cash come into the market.

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Speaker 1: Cudlin with US always with insight, within his US Trust Peace,

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Speaker 1: and he's been looking at global obesity. I was making

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Speaker 1: jokes about it about me and Scarlet the president elect.

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Speaker 1: But you're making jokes about global obesity. Not funny time, No,

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Speaker 1: not funny. We'll talk about diabetes and uh, seriously, what

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Speaker 1: it means for the global community. With Joe Quinlan of

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Speaker 1: US rust Christopher Whalen crushing us this morning out scarlet food,

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Speaker 1: suggesting that I stopped with a Rogue one hype Oh.

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Speaker 1: Various family members saw it and were bedazzled by the movie,

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Speaker 1: included in that I did not go, but I was

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Speaker 1: ordered to go at a later point. Okay, so on

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Speaker 1: a repeat viewing by the other family members, Yes, exactly,

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Speaker 1: But did you used to the food household crow. No,

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Speaker 1: we resisted. We resisted only because we couldn't get tickets

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Speaker 1: for the opening. We get you're stuck in hockey rinks,

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Speaker 1: and this is true. I was there for eight hours

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Speaker 1: in Mount Vernon in a hockey rink Vernon, like Virginia. No,

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Speaker 1: Mount Vernon, New York is not a rink out behind

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Speaker 1: President Washington's place. There might be, who knows, but unfortunately

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Speaker 1: I was not at that one. I don't know. Tweet

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Speaker 1: into us or email into us. Rogue one getting rape

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Speaker 1: rape family reviews. It's a dark movie, sort of Empire

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Speaker 1: strikes back was what we heard. Critics bag to disagree

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Speaker 1: with the middle child. Joe, you've you've this is what

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Speaker 1: you've done brilliantly for decades. You do you know economics

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Speaker 1: and all that, And then you drop in your parachute

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Speaker 1: in something really smart and removed from what we do,

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Speaker 1: and you use Brazil is the metaphor for rising global obesity.

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Speaker 1: And you know, I make jokes about it, but there's

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Speaker 1: nothing funny about this, is there? No, not at all, Tom.

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Speaker 1: And it's it's emblematic of you know, honestly, it's it's

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Speaker 1: emblematic of more convergence and lifestyles per higher per capita incomes.

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Speaker 1: And you where it's Brazil, whether it's China and other

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Speaker 1: parts of emerging markets, I mean, the more processed food

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Speaker 1: and more sedentary lifestyles instead of working in a factory

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Speaker 1: on Saturday, you've got people in malls. So it's very interesting.

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Speaker 1: But we just eat too much. I mean, you've got

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Speaker 1: a beautiful column on calories per day. They've got China, India,

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Speaker 1: US scarlet food off. Yeah, I have my own row here. No,

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Speaker 1: but certainly, if you look at the different lines here,

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Speaker 1: who leads the way. Well, certainly India is behind two

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Speaker 1: thousand for fifty nine calories per day, Tom, I'm looking

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Speaker 1: here at the US three thousand, six hundred thirty nine,

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Speaker 1: but not far behind is India? Excuse me? Is China

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Speaker 1: thirty one hundred calories per day. Uh, and then you've

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Speaker 1: got Brazil at three thousand, two hundred sixty three calories

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Speaker 1: per day, and rapidly the world is becoming outsize, it's supersized.

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Speaker 1: I mean, it's just it is remarkable to go to

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Speaker 1: China gunmen over the decades and when you see overweight

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Speaker 1: or beast children. Even so, you've got more diabetes, You've

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Speaker 1: got some serious issues car liver diseases. That's coming. And

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Speaker 1: it's it's very bullish, you know, right or wrong for

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Speaker 1: great US companies or medical equipment, imaging and so forth.

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Speaker 1: Healthcare giving. It's a it's a big deal. Lots of

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Speaker 1: money that's being played out. And you also note the

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Speaker 1: urbanization rate of these different countries. What's the correlation there, Well,

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Speaker 1: when you live in the rural areas, you're typically working,

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Speaker 1: you're gathering. Would give me, I have to interrupt, here's

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Speaker 1: the correlation, scarlet. If you live on Central Park, your

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Speaker 1: doctor yells at you more about losing weight. Okay, there's

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Speaker 1: there's you should have plenty. You're you're riding a bike,

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Speaker 1: you're working in the field. You know you're you're very

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Speaker 1: active when you're in the city. You're typically you know,

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Speaker 1: you're going to an office, maybe you're really in a

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Speaker 1: cab and so forth. So that's it's a huge change

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Speaker 1: and it's really being played out across Asia and also

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Speaker 1: in Africa as well. Can you can you not monetize this?

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Speaker 1: But is there a strategy to this US trust can

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Speaker 1: use to either make money or not lose money. To

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Speaker 1: make money, Tom, we're thinking longer term and we're looking

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Speaker 1: at some of these big pharma companies, whether it's US Europe,

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Speaker 1: and also the medically equipment and imaging that's gonna be huge,

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Speaker 1: and any corporations that are more caregiving taking care of

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Speaker 1: the elderly. You know, China has built a lot of things,

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Speaker 1: you know, they love the buildings, but they haven't built

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Speaker 1: a healthcare system and that's coming along and really turning

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Speaker 1: to US companies or the European leaders to help them

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Speaker 1: out because they're really behind in the eight ball when

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Speaker 1: it comes to their aging demographics and the obesity epidemic

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Speaker 1: that comes with it. But one area where there's where

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Speaker 1: they're catching up really quickly is their technological infrastructure. And

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Speaker 1: you you note that you say it's actually when it

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Speaker 1: comes to China and investing. It might be better to

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Speaker 1: think of it as a micro story than a macro story, right,

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Speaker 1: and Scarlett, this is you know, China slowing down. Everyone

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Speaker 1: knows at six seven pc growth, it's a micro story

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Speaker 1: related to healthcare, to consumerism in China, e commerce. I

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Speaker 1: mean there's a lot of undercurrents in China where they're

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Speaker 1: markets growing faster than GDP. So all Scarlett and I

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Speaker 1: want to know because we stand in the line where

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Speaker 1: like I can't see where the counter is. It's Joe

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Speaker 1: quintin longer short shape check, I'm along, Yes, we are

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Speaker 1: all along shape check, Joe, Thank you so much. It's

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Speaker 1: always I'm just wonderful talking about where we go with

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Speaker 1: a sustained reflation obviously led by President Trump's enthusiasm, and

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Speaker 1: also seriously on global obast and particularly it's effect upon

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Speaker 1: the health industry and the following from children's diabetes is well.

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Speaker 1: There we are, Christopher Santi with his Sassani Capital Management,

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Speaker 1: and you and I have gone through the morning and

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Speaker 1: I run a revisit this right now, which is that

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Speaker 1: angst of I'm in the market. I'm an active manager.

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Speaker 1: You've had a great value track record. How do you

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Speaker 1: catch up to a melt up. What's the You stick

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Speaker 1: with your plan or do you reallocate across sectors? What

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Speaker 1: do you do? You know, Tom, we talked about that

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Speaker 1: this morning, and I think the interesting answer is I

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Speaker 1: don't think you do stick to your plan. I think

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Speaker 1: that John Maynard Keynes quote is exactly right. When the

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Speaker 1: facts change, you change your So how do you change

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Speaker 1: your portfolio? Given Trump reflection? So there's some interesting things happening. First,

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Speaker 1: we're seeing interest rates go up a lot faster than

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Speaker 1: we ever thought they would two months ago. And so

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Speaker 1: that that means is banks can finally earn some money

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Speaker 1: in the lending game like they used to. So financials

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Speaker 1: are more attractive. Companies with high tax rates which may

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Speaker 1: actually get cut in half are attractive. Are the banks

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Speaker 1: more attractive because you're trying to figure out what the

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Speaker 1: income statement will do? Or the banks more attractive because

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Speaker 1: they're going to have the confidence to redeploy cash to Christmas? Yes,

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Speaker 1: So it's both of those plus add in lower regulation,

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Speaker 1: possible loosening we don't think repeal, but loosening of dot

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Speaker 1: frank and so you get a potent mix. Plus you

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Speaker 1: get some stocks that are pretty darn cheap because the

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Speaker 1: expectations are so low. Well speak of DoD Frank. A

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Speaker 1: lot of these banks spent millions of dollars retrofitting systems

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Speaker 1: and personnel to comply with regulations. Do we presume that

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Speaker 1: the banks's cost cutting drives starts to take a backseat

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Speaker 1: here as they prepare for an era of higher interest

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Speaker 1: rates and increased lending. I think that's a good point, Charlotte.

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Speaker 1: And the old joke now is that banks are just

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Speaker 1: law firms that also happen to lend money. And so

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Speaker 1: what we have here is the tailwind of decreased regulation,

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Speaker 1: a steeper yield curve, and as Tom says, increased consumer

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Speaker 1: confidence in folks wanting to borrow money for the first

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Speaker 1: time in a while. So which kind of bank is

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Speaker 1: better positioned for this? Are we talking the big multinational

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Speaker 1: city groups JP Morgan's Goldman Sacks, which is what the

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Speaker 1: best performer in the Taos since the election? Or are

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Speaker 1: you going to find better valuance on the smaller names

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Speaker 1: some of the financials in the Russell two thousand. You

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Speaker 1: know what we like? We would play it two ways.

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Speaker 1: One is the Wells Fargo, which has gotten beaten up,

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Speaker 1: and we think in a year or two that will

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Speaker 1: all be behind them and they'll they'll go back to

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Speaker 1: their premium valuation. And the second is the more value

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Speaker 1: way to play it, which is City Group, which is

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Speaker 1: still trading at tangible book value. We think in this

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Speaker 1: kind of environment, it audit trade well above book value.

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Speaker 1: For example, JP Morgan is approaching one point seven times.

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Speaker 1: So if you get even a return to a normal

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Speaker 1: multiple of a few years ago, you've got at increase

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Speaker 1: in the stock price. Huh. Well, in terms of moving

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Speaker 1: beyond the ancials that that has been a sector that

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Speaker 1: was long hated, how do you position yourself for the

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Speaker 1: other hated sectors? Um technology not obviously not in that category,

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Speaker 1: but you've got other names that people really couldn't get

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Speaker 1: behind Energy for instance, because no one could figure out

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Speaker 1: what OPEC was going to do. Yeah, energy is not

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Speaker 1: quite as hated as it as it was. Of course,

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Speaker 1: one of the hated sectors still is healthcare. And healthcare

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Speaker 1: has missed out on this rally, had that great one

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Speaker 1: day jump after the election, but has since really come

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Speaker 1: back on. And and your last guest, Joe, he was

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Speaker 1: talking about the obesity crisis. That's obviously one point where

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Speaker 1: the democraphics really point towards healthcare being a long term winner. Now,

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Speaker 1: of course it's in the penalty box right now because

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Speaker 1: no one knows what's going to happen with Obamacare, and

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Speaker 1: that's yet another example of hard to model stuff looking forward.

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Speaker 1: So you're going to write the scarlet food there. Yeah,

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Speaker 1: the guy from Dallas was in the penalty box for

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Speaker 1: reading Mr. Linquist. Big penalty box today, big. So you

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Speaker 1: know who wants who wants healthcare now? And that's the

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Speaker 1: kind of group we love because the expectations's. Bonnie Herzog

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Speaker 1: has been around since time begins. She is the esteemed

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Speaker 1: Wells Fargo analysts on consumer goods. Chris krossanti with us

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Speaker 1: and I was not up to speed on this Bonnie

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Speaker 1: Herzog thanks to Esa day Over at Bloomberg first word

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Speaker 1: suggesting that Philip Morris may buy Altria in the next

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Speaker 1: seventy months, but seventy seven seventy probability of a deal

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Speaker 1: six six to twelve months outperformed for both PM Philip

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Speaker 1: Morris International and m O Altria Domestic. But it's amazing

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Speaker 1: what that says, Chris about everything comes around because there

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Speaker 1: was a great deep party that's splitting years ago. It

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Speaker 1: sure is, Tom, I mean, and we remember when those

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Speaker 1: are great growth stocks, and now they have to combine

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Speaker 1: because they're looking for ways to stabilize a relatively quickly

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Speaker 1: declining revenue base. And they're terrific defensive stocks. But I

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Speaker 1: think I'm not sure that's the place you want to

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Speaker 1: Where do you want to be now? Do you want

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Speaker 1: the partial differential to be at the revenue line or

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Speaker 1: do you want to go down to cash flow? And

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Speaker 1: operating income is a determinant. With a Trump reflation, you've

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Speaker 1: got to begin to tilt more towards a revenue analysis, right,

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Speaker 1: you do that, plus in a in a kind of

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Speaker 1: funny way, for the first time a long time, we're

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Speaker 1: looking at the tax line. You've got great domestic companies

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Speaker 1: that don't have the opportunities that an Apple does to

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Speaker 1: lower their tax rate. So a CVS or a Wells

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Speaker 1: Fargo they're paying high thirty percent tax rates, and so

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Speaker 1: a cut there can add a dollar two dollars of

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Speaker 1: earnings per share to their bottom line without breaking a sweat.

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Speaker 1: So we're kind of looking there also. It would certainly

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Speaker 1: give those companies a boost in the bottom line. But

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Speaker 1: how long does that affect last for is it a

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Speaker 1: one off? Well, I don't think you get full value

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Speaker 1: for it, but but clearly it's it's a gift that

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Speaker 1: keeps on giving in the sense of that one dollar

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Speaker 1: will be there the next year and the next year.

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Speaker 1: So that's a billion or two or three billion extra

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Speaker 1: dollars that they can buy backstock, they can increase dividends with,

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Speaker 1: or they can invest to grow. So it's while it

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Speaker 1: only hap wance, it continues at a higher level for

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Speaker 1: you know, as far as the eye can see. So

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Speaker 1: it's nice. And which companies will benefit the most quickly

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Speaker 1: from the presumed tax cut that will be Well, our

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Speaker 1: favorite in that area is CVS because it's already down

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Speaker 1: because of what we think is a cyclical trough in

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Speaker 1: its earnings. And so what we see is a company

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Speaker 1: training at eleven times and when you have this tax

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Speaker 1: benefit in, it's trading at less than ten. So that's

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Speaker 1: that just gives us an extra tail. And it's not

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Speaker 1: the reason to invest, but it's a it's a nice

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Speaker 1: thing on the positive side of the ledger. Can you

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Speaker 1: quo it commodity turn No, Tom, We've been asking a

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Speaker 1: lot of different Yes, no, no, it's above my pay grade.

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Speaker 1: And I think there's two kinds of people, those that

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Speaker 1: can't call it and those that can't call it but

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Speaker 1: don't know they can't call it. So you know, I

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Speaker 1: would say it's very difficult. Now. What you can do

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Speaker 1: is buy oil a year ago because you think sooner

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Speaker 1: or later the supply and demand will turn it. But

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Speaker 1: I don't think you can call the particular point when

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Speaker 1: that will happen. So do you want to buy hydrocarbone

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Speaker 1: or do you want to buy big oil? It's hard,

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Speaker 1: I mean, is you know we've been on the show

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Speaker 1: almost a year ago. We were early but about a

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Speaker 1: year ago we were buying hydrocarbons, and they've turned out

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Speaker 1: to nobody loved them. They've been phenomenal. And and now

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Speaker 1: I'd say I would switch it around, and I'd say,

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Speaker 1: that's what pharmaceuticals are today, the hydrocarbons of the beginning

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Speaker 1: of next year. Let's do this, folks. It's sort of

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Speaker 1: it's like that Monday before the holidays healthcare three years ago,

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Speaker 1: four years ago, Speaker Pelosi sat there with the President

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Speaker 1: and everybody had the forty eight pens. They all signed pens.

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Speaker 1: They did the whole affordable carrect thing in the stocks

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Speaker 1: before that and during that, and after that went to

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Speaker 1: the moon, and then like maybe like the media stocks

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Speaker 1: now they pause. What do you do with that once

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Speaker 1: you get a cyclical burst three years down the road,

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Speaker 1: do you rebide your recommit to healthcare? Well, it's interesting.

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Speaker 1: Our opinion is that, yeah, Obamacare will be repealed, but

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Speaker 1: the only thing really be repealed. They will never call

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Speaker 1: it Obamacare again. But they're not going to take away

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Speaker 1: pre existing conditions. They're not going to take away healthcare

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Speaker 1: for kids on their their Parents program. Those things are

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Speaker 1: just too popular and it's really hard to imagine a

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Speaker 1: world in which you roll back uh protecting your citizens

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Speaker 1: against health calamities. So we think the healthcare stuff has

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Speaker 1: sold off too much. We think the price focus on

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Speaker 1: drugs is appropriate but is overdone, and so you can

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Speaker 1: buy bargains like Allergan and other things close to eleven

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Speaker 1: timess you think that's pretty good. Have you talked to

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Speaker 1: CEOs of these healthcare companies. I wonder what they think

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Speaker 1: about the prospect of reformulating Obamacare or the Affordable Careact

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Speaker 1: or healthcare insurance in our country, since we don't want

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Speaker 1: to call either of those things under this new administry. Yeah,

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Speaker 1: first of all, they're keeping a very low profile. Yes,

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Speaker 1: they are, so much of the focuses on drug pricing.

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Speaker 1: Second of all, I think they appropriately say, look, Donald

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Speaker 1: Trump is not the pro higher prices, pro business in

425
00:21:50,400 --> 00:21:53,880
Speaker 1: terms of healthcare. He's a populist, and so they're being

426
00:21:54,080 --> 00:21:56,800
Speaker 1: very cautious on price increases. We just think that'll be

427
00:21:56,840 --> 00:21:58,760
Speaker 1: a tougher game. We just think that's in the prices

428
00:21:58,760 --> 00:22:02,200
Speaker 1: already of the stock and going back to the drug pricing,

429
00:22:02,280 --> 00:22:05,040
Speaker 1: because that is something that Donald Trump has spoken out about.

430
00:22:05,200 --> 00:22:07,440
Speaker 1: I mean not in very specific terms, but in the

431
00:22:07,560 --> 00:22:09,879
Speaker 1: idea that prices are too high and something needs to

432
00:22:09,960 --> 00:22:13,879
Speaker 1: be done. What kind of action will likely be taken

433
00:22:14,040 --> 00:22:15,879
Speaker 1: or is it going to be jaw owning for the

434
00:22:16,040 --> 00:22:17,840
Speaker 1: for the time being, What we think at the end

435
00:22:17,880 --> 00:22:19,680
Speaker 1: of the day, it will only be job owning. That

436
00:22:19,760 --> 00:22:23,200
Speaker 1: job owning can cause disruptive headline. But we think with

437
00:22:23,320 --> 00:22:25,840
Speaker 1: a Republican Congress, it's going to be very difficult to

438
00:22:25,880 --> 00:22:29,159
Speaker 1: get in the real price controls or reimportation things that

439
00:22:29,200 --> 00:22:32,479
Speaker 1: would really seriously infect the top line of the drug companies.

440
00:22:33,000 --> 00:22:35,080
Speaker 1: Let me go back to a stock you and I've

441
00:22:35,080 --> 00:22:37,919
Speaker 1: talked about before. It's a small startup computer company out

442
00:22:37,960 --> 00:22:43,880
Speaker 1: in Cupertino. You mentioned eleven times earnings. Apple is breathtaking.

443
00:22:43,920 --> 00:22:45,639
Speaker 1: I mean, even if you go out a year from now,

444
00:22:46,040 --> 00:22:48,840
Speaker 1: do you do you rationalize buying Apple by saying, I'm

445
00:22:48,880 --> 00:22:52,720
Speaker 1: buying two thousand eighteen and that's one of our eighteen stocks.

446
00:22:53,119 --> 00:22:55,240
Speaker 1: I'm a big fan of Apple. Uh. The only thing

447
00:22:55,320 --> 00:22:57,639
Speaker 1: doesn't have going forward is it's got an awfully low

448
00:22:57,720 --> 00:22:59,840
Speaker 1: tax right already, So that's not gonna have that tail.

449
00:23:00,400 --> 00:23:03,160
Speaker 1: But you know, when you it's the go to place

450
00:23:03,280 --> 00:23:06,359
Speaker 1: for all of our kids in terms of their mobile communications,

451
00:23:06,400 --> 00:23:08,960
Speaker 1: and there the next generation, and they seem to be

452
00:23:09,160 --> 00:23:12,400
Speaker 1: forward thinking and the most essential thing for us. It's

453
00:23:12,480 --> 00:23:14,680
Speaker 1: eleven times. It's not an eighteen or twenty one times.

454
00:23:15,400 --> 00:23:18,000
Speaker 1: Isn't there a reliance on China? Kind of worrying though,

455
00:23:18,119 --> 00:23:21,520
Speaker 1: given that what they saw in the least well, no,

456
00:23:21,680 --> 00:23:24,719
Speaker 1: I mean, Chris points out that they he is concerned

457
00:23:24,720 --> 00:23:29,320
Speaker 1: about China, and Apple became a China story pretty readily,

458
00:23:29,720 --> 00:23:32,080
Speaker 1: no doubt about it, no doubt about it. And and

459
00:23:32,320 --> 00:23:34,879
Speaker 1: so getting back to to our our on TV before

460
00:23:35,240 --> 00:23:39,040
Speaker 1: the single toughest thing about the coming year. Is the

461
00:23:39,800 --> 00:23:42,280
Speaker 1: is the variety of outcomes that we could have. So

462
00:23:42,600 --> 00:23:45,840
Speaker 1: Apple maybe on the bad side, a victim of and

463
00:23:46,320 --> 00:23:48,440
Speaker 1: antipathy with China. On the other hand, it may be

464
00:23:48,520 --> 00:23:51,440
Speaker 1: the example of a warmer relationship that you know, the

465
00:23:51,960 --> 00:23:54,359
Speaker 1: Trump and in the head of China can shake hands

466
00:23:54,440 --> 00:23:56,879
Speaker 1: on and say, hey, look we're building a better tomorrow.

467
00:23:57,960 --> 00:24:00,040
Speaker 1: I'm glad you brought this up. I've been dying to

468
00:24:00,080 --> 00:24:01,680
Speaker 1: bring this up with Scarlett. Of course, I was thinking

469
00:24:01,680 --> 00:24:04,280
Speaker 1: about it through the weekending food would join us because gurls,

470
00:24:04,600 --> 00:24:08,160
Speaker 1: do you know what David's doing. He's off today spending

471
00:24:08,200 --> 00:24:11,520
Speaker 1: time with the children. No, he's visiting artisanal stores in Brooklyn,

472
00:24:11,960 --> 00:24:15,480
Speaker 1: trying to find tasteful things for his family, to think

473
00:24:15,520 --> 00:24:18,800
Speaker 1: a responsible family man. Cal pancakes was I think the

474
00:24:18,880 --> 00:24:21,160
Speaker 1: short on the I saw his list of Christmas stuff.

475
00:24:21,160 --> 00:24:25,120
Speaker 1: It's embarrassing. You know, how do you have an artisanal sausage?

476
00:24:25,280 --> 00:24:27,720
Speaker 1: He was figuring it out for breakfast. Scarlett, I want

477
00:24:27,720 --> 00:24:31,000
Speaker 1: to talk to you about Taiwan. Um we've I really

478
00:24:31,520 --> 00:24:36,520
Speaker 1: I really value your perspective on these interesting relationships. What

479
00:24:36,640 --> 00:24:40,040
Speaker 1: were you thinking and within your context in Taiwan, what

480
00:24:40,240 --> 00:24:43,159
Speaker 1: do you think that dynamic will be next year between

481
00:24:43,359 --> 00:24:47,280
Speaker 1: Mr Trump, Beijing and Taiwan. I think about the people

482
00:24:47,320 --> 00:24:50,440
Speaker 1: in Taiwan and how excited they were about the acknowledgement

483
00:24:50,800 --> 00:24:54,240
Speaker 1: that President Elect Trump gave to their country. At the

484
00:24:54,280 --> 00:24:57,440
Speaker 1: same time, they're very nervous about what could happen because, um,

485
00:24:57,920 --> 00:25:00,960
Speaker 1: nothing's going to change in China, but for them, the

486
00:25:01,040 --> 00:25:04,920
Speaker 1: positioning from China could get very, very violent, very quickly.

487
00:25:05,080 --> 00:25:07,880
Speaker 1: You could be careful what you wish for exactly exactly

488
00:25:08,080 --> 00:25:13,520
Speaker 1: is there scarlet within Taiwan? A nostalgia for the wisps

489
00:25:13,560 --> 00:25:17,680
Speaker 1: of memory we have of Shankai Check and maybe among

490
00:25:17,720 --> 00:25:20,920
Speaker 1: a certain cohort that's aged above seventy, sure, But I

491
00:25:20,960 --> 00:25:24,240
Speaker 1: don't think among the kids, they don't what is their

492
00:25:24,680 --> 00:25:27,200
Speaker 1: What are the young kids Taiwanese they were born there

493
00:25:27,359 --> 00:25:29,719
Speaker 1: that that's what they think of themselves at I mean,

494
00:25:29,800 --> 00:25:33,159
Speaker 1: there's a movement in Taiwan to rename the Changai Check Memorial,

495
00:25:33,200 --> 00:25:36,200
Speaker 1: maybe even to raise it. Because of the island's history,

496
00:25:36,680 --> 00:25:39,320
Speaker 1: it's something that they want to disassociate themselves with. Again,

497
00:25:39,600 --> 00:25:42,639
Speaker 1: that's among the younger generation, among a certain cohort of

498
00:25:42,720 --> 00:25:50,760
Speaker 1: people seventy and older. You started, you start up a

499
00:25:50,800 --> 00:25:53,199
Speaker 1: little taller. When I looked over David Gura would use

500
00:25:53,240 --> 00:25:57,239
Speaker 1: the word fossils. I'm a little bit more polite than

501
00:25:57,280 --> 00:25:59,720
Speaker 1: he is. Yes, scarlet food with us on Taiwan, and

502
00:26:00,200 --> 00:26:03,160
Speaker 1: of course an important discussion we think, particularly Richard Hats

503
00:26:03,200 --> 00:26:07,680
Speaker 1: of the Council on Formulations for a recent perspective on Taiwan.

504
00:26:15,760 --> 00:26:19,160
Speaker 1: Who you put your trust in matters. Investors have put

505
00:26:19,200 --> 00:26:23,080
Speaker 1: their trust in independent registered investment advisors to the two

506
00:26:23,119 --> 00:26:26,160
Speaker 1: and of four trillion dollars. Why they see their roles

507
00:26:26,280 --> 00:26:29,840
Speaker 1: to serve, not sell. That's why Charles Schwab is committed

508
00:26:30,119 --> 00:26:34,960
Speaker 1: to the success over seven thousand independent financial advisors who

509
00:26:35,119 --> 00:26:40,560
Speaker 1: passionately dedicate themselves to helping people achieve their financial goals.

510
00:26:40,960 --> 00:26:50,280
Speaker 1: Learn more and find your independent advisor dot com. Let's

511
00:26:50,320 --> 00:26:53,320
Speaker 1: bring in right now a CEO, somebody has actually met

512
00:26:53,359 --> 00:26:56,879
Speaker 1: a payroll and also gave great leadership to the Cato

513
00:26:57,080 --> 00:27:02,719
Speaker 1: Institute on Libertarian Theory. John Allison is a former president

514
00:27:02,800 --> 00:27:06,439
Speaker 1: chief Executive officer of BBT and UH darken the door

515
00:27:06,480 --> 00:27:09,960
Speaker 1: of Chapel Hill a few years ago. John, wonderful to

516
00:27:10,000 --> 00:27:12,800
Speaker 1: speak to you again. And we just talked to Greg Valier,

517
00:27:12,880 --> 00:27:16,119
Speaker 1: who says the true conservative is Michael Pence? How does

518
00:27:16,240 --> 00:27:20,880
Speaker 1: Kato judge the President elect? Is Donald Trump a conservative?

519
00:27:22,400 --> 00:27:25,840
Speaker 1: That's that's a fair question. I don't think. Remember Kato

520
00:27:25,960 --> 00:27:29,080
Speaker 1: is a libertarian, not conservative. That's what I was going.

521
00:27:29,160 --> 00:27:31,040
Speaker 1: Come on, I'm writing the script here. You're not Is

522
00:27:31,119 --> 00:27:35,600
Speaker 1: he a conservative? To start? Uh? No, No, I don't

523
00:27:35,640 --> 00:27:38,600
Speaker 1: think he would be considered concerned. Is he a libertarian allocate?

524
00:27:38,680 --> 00:27:43,200
Speaker 1: No institute? No, Oh, we're doing great here starting save

525
00:27:43,280 --> 00:27:45,480
Speaker 1: me here. I've got two notes. I got two notes

526
00:27:45,520 --> 00:27:48,919
Speaker 1: from John Allison. Okay, if that's a case. Is Michael

527
00:27:48,920 --> 00:27:54,240
Speaker 1: Pence an easy answer? Michael Pence is definitely a conservative

528
00:27:54,280 --> 00:27:56,560
Speaker 1: and pretty close to being a libertarian and a great

529
00:27:56,680 --> 00:28:00,600
Speaker 1: I think a great person still, Michael Pence tagger Well,

530
00:28:00,640 --> 00:28:03,760
Speaker 1: Michael Penn's turned Donald Trump into a conservative into a libertarian.

531
00:28:04,840 --> 00:28:08,480
Speaker 1: I think he will influence uh Donald Trump, whether he

532
00:28:08,520 --> 00:28:11,920
Speaker 1: can turn turning into conservative libertarian. I don't know. I

533
00:28:12,040 --> 00:28:16,280
Speaker 1: suspect Pans is influencing some of the selections of people. Uh.

534
00:28:16,560 --> 00:28:20,560
Speaker 1: McK milvaaney is a real conservative, and I my guess

535
00:28:21,000 --> 00:28:24,760
Speaker 1: is that Michael uh that my pants had some influence

536
00:28:24,840 --> 00:28:27,119
Speaker 1: on that selection. I don't know that. I'm just speculated

537
00:28:28,320 --> 00:28:31,240
Speaker 1: within that. And if I look at the CATO Journal

538
00:28:31,560 --> 00:28:34,680
Speaker 1: of two years ago, a guy named Alan Meltzer wrote

539
00:28:34,760 --> 00:28:38,400
Speaker 1: up a story starting out with nud vixel current lessons

540
00:28:38,440 --> 00:28:41,320
Speaker 1: from the past. What have you learned, John Allison from

541
00:28:41,360 --> 00:28:48,000
Speaker 1: the past at CATO about the actual application of libertarian

542
00:28:48,080 --> 00:28:51,000
Speaker 1: and even conservative theory? Can you do that in the

543
00:28:51,120 --> 00:28:57,000
Speaker 1: devil's den of your Washington And it's a really great question.

544
00:28:57,360 --> 00:29:01,720
Speaker 1: I think it takes powerful leaders because a lot of

545
00:29:01,800 --> 00:29:04,680
Speaker 1: times you're pushing against the political win. Let's make people

546
00:29:04,800 --> 00:29:07,000
Speaker 1: watching d C like to go out money to give

547
00:29:07,080 --> 00:29:12,200
Speaker 1: votes in both conservatives and liberals. Conservatives like the boat

548
00:29:12,240 --> 00:29:14,320
Speaker 1: out in the different groups, but they both like to

549
00:29:15,360 --> 00:29:19,200
Speaker 1: and it to really have conservatives what you're looking at,

550
00:29:19,320 --> 00:29:22,400
Speaker 1: I think physically and lower taxes and lower spending boat

551
00:29:22,920 --> 00:29:25,560
Speaker 1: and it's a lot easier to cut taxes in spending.

552
00:29:26,560 --> 00:29:31,120
Speaker 1: Let's get time keen with us John Allison, who has

553
00:29:31,160 --> 00:29:35,640
Speaker 1: provided leadership to the Cato Institute, among other endeavors, including

554
00:29:35,720 --> 00:29:38,240
Speaker 1: his Wake Forest and of course with the d NT

555
00:29:39,360 --> 00:29:43,600
Speaker 1: for years. We're talking Mr Allison about the President elect.

556
00:29:43,720 --> 00:29:46,880
Speaker 1: I believe you were quoted as saying he's not a conservative,

557
00:29:47,400 --> 00:29:50,400
Speaker 1: he's not a libertarian, which begs the question, I don't

558
00:29:50,400 --> 00:29:53,280
Speaker 1: know if Nelson Rockefeller ever wandered in the door of

559
00:29:53,360 --> 00:29:57,920
Speaker 1: the Cato Institute, what is Mr Trump? If he's neither.

560
00:29:59,400 --> 00:30:01,880
Speaker 1: I think he's a mixed bag. And I don't necessarily

561
00:30:01,880 --> 00:30:06,440
Speaker 1: mean that negatively. I think on in some areas, he's uh,

562
00:30:07,400 --> 00:30:09,680
Speaker 1: very interested in rolling back to the royal government. In

563
00:30:09,760 --> 00:30:12,720
Speaker 1: other areas, and he you know, he has a history

564
00:30:12,760 --> 00:30:17,560
Speaker 1: and of being a crony crony is what's called crony capitalism.

565
00:30:17,600 --> 00:30:20,000
Speaker 1: I always thought all his crony socialism. You know, in

566
00:30:20,000 --> 00:30:23,320
Speaker 1: the commercial real estate market, you are often are dealing

567
00:30:23,400 --> 00:30:26,480
Speaker 1: with government. Uh, he's used in the domain those are

568
00:30:26,520 --> 00:30:30,200
Speaker 1: not conservative or libertarian positions. So I think he's a

569
00:30:30,240 --> 00:30:34,160
Speaker 1: mixed bag. So how does that carry over into how

570
00:30:34,280 --> 00:30:38,200
Speaker 1: he sees, for instance, the Federal Reserve um regulating the

571
00:30:38,320 --> 00:30:44,120
Speaker 1: financial industry. Well, he I think he very much believes

572
00:30:44,240 --> 00:30:47,160
Speaker 1: that Dodd Frank and the overregulation by the Federal Reserve

573
00:30:47,200 --> 00:30:50,200
Speaker 1: has been a major factor in reducing the ghost growth

574
00:30:50,280 --> 00:30:53,680
Speaker 1: rates in the economy. So he genuinely wants to deregulate

575
00:30:54,600 --> 00:30:56,960
Speaker 1: kind of the banking industry, the financial industry, and I

576
00:30:57,040 --> 00:30:58,760
Speaker 1: think he's gonna try to do that in two ways,

577
00:30:58,880 --> 00:31:03,280
Speaker 1: hopefully either roll back or theoretically repeat I doubt repeal,

578
00:31:03,360 --> 00:31:06,600
Speaker 1: but roll back dot frank. And secondly, putting people in

579
00:31:06,800 --> 00:31:09,960
Speaker 1: leadership positions such as the fdi C and the o

580
00:31:10,080 --> 00:31:12,560
Speaker 1: c C and in the Federal Reserve who are for

581
00:31:12,960 --> 00:31:16,760
Speaker 1: much less regulations. You've got to remember that we don't

582
00:31:17,520 --> 00:31:19,200
Speaker 1: we don't really have ruler long you know, and say

583
00:31:19,280 --> 00:31:22,920
Speaker 1: we have rule regulators. Congress passes these sound good laws

584
00:31:22,960 --> 00:31:25,880
Speaker 1: and they have a huge range and how the regulators

585
00:31:25,960 --> 00:31:29,600
Speaker 1: interpret them. Uh, since the financial crisis, they've been very

586
00:31:29,720 --> 00:31:32,680
Speaker 1: tight in their regulation. I believe you're not on the

587
00:31:32,800 --> 00:31:35,120
Speaker 1: board anymore at BB and T. They threw you out

588
00:31:35,160 --> 00:31:37,680
Speaker 1: in the street in two thousand nine. Do you have

589
00:31:37,800 --> 00:31:42,720
Speaker 1: any direct Do you have any idea how many people

590
00:31:42,920 --> 00:31:45,760
Speaker 1: BB and T is a lesser than two big to

591
00:31:45,840 --> 00:31:49,920
Speaker 1: fail bank have hired because of new regulations. Do you

592
00:31:50,000 --> 00:31:55,800
Speaker 1: have that statistic in your thousands? Thousands? And in addition

593
00:31:56,200 --> 00:31:59,040
Speaker 1: nition to that, it impacts the work of every employee

594
00:31:59,080 --> 00:32:02,680
Speaker 1: in the bank. So you've reduced the productivity not just

595
00:32:02,880 --> 00:32:06,200
Speaker 1: by adding thousands of people who all they do send

596
00:32:06,280 --> 00:32:09,440
Speaker 1: forms of the government, but by having people misdirected and

597
00:32:09,560 --> 00:32:15,880
Speaker 1: what they do Scarlet, BB and T thousand employees some

598
00:32:16,000 --> 00:32:18,920
Speaker 1: of our bigger banks. So as these banks shed some

599
00:32:19,040 --> 00:32:22,920
Speaker 1: of the personnel that we're brought on to comply with regulations, um,

600
00:32:23,720 --> 00:32:27,360
Speaker 1: do they then move that head count towards businesses that

601
00:32:27,480 --> 00:32:31,720
Speaker 1: can generate revenue, that can generate income. Absolutely. I think

602
00:32:31,800 --> 00:32:35,080
Speaker 1: that what they did in many cases have to reduce

603
00:32:35,280 --> 00:32:38,040
Speaker 1: because of the pressure of low margins. They reduced the

604
00:32:38,120 --> 00:32:41,160
Speaker 1: stabbing they had in the production side making loans, uh,

605
00:32:41,640 --> 00:32:44,280
Speaker 1: which what banks are supposed to do. And and and

606
00:32:44,840 --> 00:32:47,400
Speaker 1: I think you'll see them and reduce the regulatory side

607
00:32:47,840 --> 00:32:50,440
Speaker 1: and add staff to to grow their businesses because banks

608
00:32:50,720 --> 00:32:52,960
Speaker 1: like to grow, and that grows the economy. And I

609
00:32:53,040 --> 00:32:56,840
Speaker 1: think you'll see a very healthy reallocation of resources if

610
00:32:57,400 --> 00:33:00,280
Speaker 1: President elect Trump gets done what he wants. Everything take

611
00:33:00,320 --> 00:33:03,840
Speaker 1: in Washington, folks has has a certain character, and there's

612
00:33:03,880 --> 00:33:06,400
Speaker 1: the ones that are perceived left and right and all that.

613
00:33:07,320 --> 00:33:10,440
Speaker 1: And John, I give Cato the highest marks for the

614
00:33:10,560 --> 00:33:14,360
Speaker 1: debates I have heard there. You always have a cross

615
00:33:14,440 --> 00:33:17,120
Speaker 1: section of guests. Yes, it may be the token progressive

616
00:33:17,200 --> 00:33:20,760
Speaker 1: or liberal, but you have real heated debates within the

617
00:33:20,880 --> 00:33:24,720
Speaker 1: debate that you know in Washington, how many months or

618
00:33:24,920 --> 00:33:29,760
Speaker 1: years does a president elect have to affect change before

619
00:33:29,840 --> 00:33:34,120
Speaker 1: we all start worrying about two thousand twenty. Yeah, I

620
00:33:34,280 --> 00:33:37,120
Speaker 1: really think you've got about six months at the bate.

621
00:33:37,520 --> 00:33:41,600
Speaker 1: You think six months, I would have gone eighteen months. Well,

622
00:33:42,480 --> 00:33:45,640
Speaker 1: maybe longer, maybe longer, I hope. And you know, I

623
00:33:45,720 --> 00:33:49,080
Speaker 1: think there's getting it moving and then actually consummating it.

624
00:33:49,480 --> 00:33:51,240
Speaker 1: So I think he can buy more time if he's

625
00:33:51,240 --> 00:33:56,480
Speaker 1: actually got Okay, okay, but come on the Senate. Nobody

626
00:33:56,520 --> 00:33:58,960
Speaker 1: in the Senate ever darken the door at the Cato Institute.

627
00:33:59,200 --> 00:34:01,800
Speaker 1: Our Republican is in the Senate going to be the

628
00:34:01,960 --> 00:34:05,520
Speaker 1: thing that blocks or checks or balances what we're going

629
00:34:05,560 --> 00:34:09,120
Speaker 1: to see from the Vice President Pence. I don't know

630
00:34:09,239 --> 00:34:11,319
Speaker 1: the answer that I would say that this is an

631
00:34:11,360 --> 00:34:14,080
Speaker 1: interesting this is what I would like to see. I

632
00:34:14,160 --> 00:34:18,480
Speaker 1: don't want the Senate to block what President Trump necessarily

633
00:34:18,520 --> 00:34:20,920
Speaker 1: wants to do, but I do want them to restore

634
00:34:21,440 --> 00:34:25,040
Speaker 1: the balance of the executive versus the legislature. The executive

635
00:34:25,080 --> 00:34:27,319
Speaker 1: isn't supposed to be making laws, and it has been,

636
00:34:27,840 --> 00:34:31,160
Speaker 1: and that's unhealthy because it takes away the debate process.

637
00:34:31,680 --> 00:34:35,000
Speaker 1: And maybe the Republicans will see what happened under President

638
00:34:35,080 --> 00:34:38,920
Speaker 1: Obama and the Democrats will see what's potential under President Trump,

639
00:34:39,000 --> 00:34:42,440
Speaker 1: and Congress will get back to legislative and and take

640
00:34:42,520 --> 00:34:44,440
Speaker 1: away some of the power of the executive and with

641
00:34:44,719 --> 00:34:46,719
Speaker 1: it a lot of the power of the bureaucracy, because

642
00:34:46,719 --> 00:34:50,200
Speaker 1: the bureaucracy actually runs pretty much independent of the legislation.

643
00:34:50,200 --> 00:34:52,440
Speaker 1: And I don't think that's good. So we'll have a

644
00:34:52,520 --> 00:34:56,000
Speaker 1: normally functioning Congress again, is that what you're saying? That

645
00:34:56,040 --> 00:34:59,920
Speaker 1: would be good? I think it's possible and not predict

646
00:35:00,560 --> 00:35:03,920
Speaker 1: although Tom the Democrats to get in the way, right,

647
00:35:03,960 --> 00:35:06,360
Speaker 1: I mean they'll they'll be using pages out of the

648
00:35:06,480 --> 00:35:10,800
Speaker 1: Republicans playbook. I think it will be possible. Mr Ellison,

649
00:35:10,840 --> 00:35:13,440
Speaker 1: are you kidding me? You actually think Congress is going

650
00:35:13,480 --> 00:35:16,440
Speaker 1: to get it to act together. I think it is

651
00:35:16,520 --> 00:35:19,200
Speaker 1: possible because I think that this is a unique moment

652
00:35:19,280 --> 00:35:21,680
Speaker 1: where they both sides having incentive because there's a lot

653
00:35:21,719 --> 00:35:25,160
Speaker 1: of Republicans that are still uncomfortable with President Trump. I

654
00:35:25,200 --> 00:35:28,240
Speaker 1: don't necessarily want to give him a card blank, particularly

655
00:35:28,280 --> 00:35:33,320
Speaker 1: to run man the daft John, the Democrats have the

656
00:35:33,400 --> 00:35:36,840
Speaker 1: bank probable, thank you so much. Johnyilison of Cato Institute,

657
00:35:36,960 --> 00:35:51,760
Speaker 1: of course, would be in team persons that Christine Leguard

658
00:35:51,800 --> 00:35:55,080
Speaker 1: of the International Monetary Fund found negligent. We'll get to

659
00:35:55,160 --> 00:35:58,279
Speaker 1: that in a moment. Her colleague Jerry Rice Dr Rice,

660
00:35:58,440 --> 00:36:00,719
Speaker 1: director of Communications that I am for years at the

661
00:36:00,760 --> 00:36:05,680
Speaker 1: World Bank, has this brief statement from the International Monetary Fund.

662
00:36:06,200 --> 00:36:08,840
Speaker 1: The Executive Board has a met on previous occasions to

663
00:36:09,000 --> 00:36:13,279
Speaker 1: consider developments related to the legal proceedings in France. Is

664
00:36:13,440 --> 00:36:17,000
Speaker 1: expected that the Board will meet again shortly to consider

665
00:36:17,239 --> 00:36:19,840
Speaker 1: the most recent developments. To give us a primer in

666
00:36:19,920 --> 00:36:24,280
Speaker 1: depth on this, Greg Vescuzzi from our Paris News bureau.

667
00:36:24,320 --> 00:36:28,200
Speaker 1: He has decades of linkage of France into the European

668
00:36:28,880 --> 00:36:34,360
Speaker 1: economic and legal system. Greg, the Court of Justice, I

669
00:36:34,440 --> 00:36:37,359
Speaker 1: don't think there is a US equivalent. It is three

670
00:36:37,520 --> 00:36:41,799
Speaker 1: judges and am I right? Twelve politicians, Yes, and it's

671
00:36:41,840 --> 00:36:44,560
Speaker 1: and it's only and it's only for crimes committed by

672
00:36:44,719 --> 00:36:47,239
Speaker 1: political figures. That's sort of a special court that that

673
00:36:48,000 --> 00:36:50,680
Speaker 1: is just just to try government officials. Do we do

674
00:36:50,800 --> 00:36:53,919
Speaker 1: we have an equivalent in the US in the United Kingdom? Don't?

675
00:36:54,000 --> 00:36:55,800
Speaker 1: I don't. I do not. I do not think so, no,

676
00:36:55,960 --> 00:36:59,439
Speaker 1: because I mean it's these would be because they would

677
00:36:59,440 --> 00:37:02,480
Speaker 1: be are just by regular criminal cases. These and these

678
00:37:02,520 --> 00:37:05,680
Speaker 1: are not necessarily criminal cases. It's it's it's sort of

679
00:37:05,760 --> 00:37:09,399
Speaker 1: crimes that would cry or wrongdoing committed in of doing

680
00:37:09,440 --> 00:37:12,480
Speaker 1: your job, which defines all of us, including me. I

681
00:37:12,520 --> 00:37:15,000
Speaker 1: would be in the court, but Greg helped me here

682
00:37:15,080 --> 00:37:17,680
Speaker 1: with how this will play in the Paris press, How

683
00:37:17,760 --> 00:37:20,400
Speaker 1: does Lamon take it in the other eight newspapers that

684
00:37:20,480 --> 00:37:23,719
Speaker 1: you know better than we do, less than you would think.

685
00:37:23,800 --> 00:37:25,680
Speaker 1: I mean, if this had happened five six years ago,

686
00:37:25,719 --> 00:37:27,239
Speaker 1: it would have been a big deal. Don't forget she

687
00:37:27,320 --> 00:37:31,800
Speaker 1: had been a minister in in Nikolas Sarkozy's government. Occasionally

688
00:37:31,840 --> 00:37:34,080
Speaker 1: her name would come up now and again, even as

689
00:37:34,120 --> 00:37:37,560
Speaker 1: a presidential candidate. They were various people pushing for her

690
00:37:37,600 --> 00:37:39,960
Speaker 1: to be a presidential candidate candidate when the when the

691
00:37:40,000 --> 00:37:43,000
Speaker 1: far right leaders were divided about who who's who they

692
00:37:43,040 --> 00:37:46,080
Speaker 1: should run. Ever since, she's going off to Washington, and

693
00:37:46,440 --> 00:37:49,040
Speaker 1: she's always made it very clear as actually wasn't interested

694
00:37:49,520 --> 00:37:52,560
Speaker 1: in in any further jobs in French politics. She's kind

695
00:37:52,600 --> 00:37:55,520
Speaker 1: of dropped out of the French scene. So um, and

696
00:37:55,640 --> 00:37:58,040
Speaker 1: then there there were there more than enough candidates the

697
00:37:58,160 --> 00:38:01,440
Speaker 1: next year's presidential election. Here there's no shortage. Um. So

698
00:38:01,600 --> 00:38:04,399
Speaker 1: the effect here is less than you'd imagine. There's more

699
00:38:04,600 --> 00:38:07,360
Speaker 1: just sort of just the luring, interting interest in, you know,

700
00:38:07,440 --> 00:38:11,440
Speaker 1: the huge sums of money. Umat although he too is

701
00:38:11,520 --> 00:38:13,759
Speaker 1: has dropped out of the scene greatly, still has a

702
00:38:13,840 --> 00:38:16,960
Speaker 1: certain fascination for people. So there's a morbid interest in this,

703
00:38:17,160 --> 00:38:19,640
Speaker 1: but it's not something that's going to unsettle or rock

704
00:38:19,680 --> 00:38:22,120
Speaker 1: French politics, not by any means. And also we should

705
00:38:22,160 --> 00:38:24,400
Speaker 1: mention that the judge, in announcing the verdicts said that

706
00:38:24,520 --> 00:38:27,799
Speaker 1: Christine Legarde will not face a fine or a prison term,

707
00:38:27,880 --> 00:38:29,759
Speaker 1: so well, even more than that, doesn't even have a

708
00:38:29,800 --> 00:38:33,600
Speaker 1: criminal record. She's basically she's basically been told you did wrong,

709
00:38:34,040 --> 00:38:36,720
Speaker 1: but there's absolutely no punishment. This is critical and Scott

710
00:38:36,760 --> 00:38:38,440
Speaker 1: and I were talking about this greg before we went

711
00:38:38,520 --> 00:38:42,160
Speaker 1: to what does negligence mean If this is just a

712
00:38:42,239 --> 00:38:45,920
Speaker 1: celebrity walk through as people look at big money, what

713
00:38:46,080 --> 00:38:48,960
Speaker 1: is negligence in this case? It means that that, you know,

714
00:38:49,000 --> 00:38:50,960
Speaker 1: according to the court, she should have seen the big

715
00:38:51,040 --> 00:38:53,640
Speaker 1: sum of money, that that that tappie was awarded by

716
00:38:53,719 --> 00:38:56,920
Speaker 1: this arbitration and should have stopped it, you know, should

717
00:38:56,920 --> 00:38:58,320
Speaker 1: have stepped in and said no, no, it's not in

718
00:38:58,400 --> 00:39:01,520
Speaker 1: the interest of the state. To the government to pay

719
00:39:01,560 --> 00:39:03,960
Speaker 1: out this sum of money and should have stopped it.

720
00:39:04,040 --> 00:39:06,319
Speaker 1: That that's I mean, her argument is that this thing

721
00:39:06,400 --> 00:39:08,800
Speaker 1: had been going on for years in courts. You know,

722
00:39:09,160 --> 00:39:11,040
Speaker 1: I want to just you know, get this is the

723
00:39:11,160 --> 00:39:13,719
Speaker 1: the actual facts go back to the nineteen eighties. The

724
00:39:13,719 --> 00:39:16,279
Speaker 1: actual events go back to the nineteen eighties, um of

725
00:39:16,400 --> 00:39:21,600
Speaker 1: of of when Tepee was theoretically defrauded by crazy leon A. So, um,

726
00:39:22,520 --> 00:39:24,880
Speaker 1: she just wanted to get it over with. That's her arguments. Um,

727
00:39:25,760 --> 00:39:27,520
Speaker 1: you know, the argument against it is that there's a

728
00:39:27,560 --> 00:39:29,080
Speaker 1: lot of money at stakes. She should have stepped in.

729
00:39:29,239 --> 00:39:32,000
Speaker 1: But Scarlett, can I point out that Madame Leguard was

730
00:39:32,040 --> 00:39:35,640
Speaker 1: twenty four years old when this happened. It feels that way.

731
00:39:35,719 --> 00:39:37,960
Speaker 1: I mean, it's less about what she did versus what

732
00:39:38,080 --> 00:39:40,839
Speaker 1: she didn't do it in this case, didn't seek more

733
00:39:40,880 --> 00:39:43,839
Speaker 1: information right exactly? Which which which is? Which is why

734
00:39:43,920 --> 00:39:45,680
Speaker 1: she gets to slap on the wrist. But told that

735
00:39:45,760 --> 00:39:48,279
Speaker 1: there's no that there's no punishment and not not even

736
00:39:48,280 --> 00:39:50,160
Speaker 1: a legal record to come out of it. So what

737
00:39:50,320 --> 00:39:53,520
Speaker 1: happens in terms of her her swordship of the I

738
00:39:53,680 --> 00:39:56,120
Speaker 1: m F. Does this have any bearing on that? That's

739
00:39:56,200 --> 00:39:58,760
Speaker 1: up to the I m f UM and and apparently

740
00:39:58,800 --> 00:40:01,200
Speaker 1: they are meeting today to decide what to make of it.

741
00:40:01,239 --> 00:40:02,640
Speaker 1: I don't know what they would do. I mean, on

742
00:40:02,680 --> 00:40:04,359
Speaker 1: the one hand, you've got to can you know your

743
00:40:04,400 --> 00:40:08,480
Speaker 1: your second your second French UM director general has been

744
00:40:08,760 --> 00:40:11,399
Speaker 1: has has been convicted of something on the other hand,

745
00:40:11,560 --> 00:40:14,200
Speaker 1: or twos to something on on the other hand, it's

746
00:40:14,320 --> 00:40:16,640
Speaker 1: it's not really the most serious thing. I mean, as

747
00:40:16,680 --> 00:40:19,320
Speaker 1: I said, there's no criminal record, there's no punishment. She

748
00:40:19,440 --> 00:40:21,640
Speaker 1: basically is told she should have stopped something that she

749
00:40:21,680 --> 00:40:25,280
Speaker 1: didn't have anything to do with. UM. So let's translate

750
00:40:25,400 --> 00:40:27,799
Speaker 1: this for the New York audience. Is this a misdemeanor?

751
00:40:28,200 --> 00:40:30,560
Speaker 1: I mean, Greg, you gotta understand, my entire knowledge of

752
00:40:30,640 --> 00:40:34,160
Speaker 1: law came from l A law. Is this a misdemeanor?

753
00:40:34,600 --> 00:40:37,279
Speaker 1: I don't know. I don't. I don't think it's a

754
00:40:37,440 --> 00:40:41,560
Speaker 1: very good question. It's a very yeah, we'll have to

755
00:40:41,760 --> 00:40:43,640
Speaker 1: we'll have to. I mean, it's a different legal system,

756
00:40:43,719 --> 00:40:47,080
Speaker 1: but it's it's it's it's I don't think it's a

757
00:40:47,120 --> 00:40:51,840
Speaker 1: misdemeanor because in theory it's punishable by by a prison

758
00:40:52,040 --> 00:40:57,200
Speaker 1: term and one year. She may have to give up

759
00:40:57,239 --> 00:40:59,920
Speaker 1: her whole sale or collection it's just it's just an

760
00:41:00,000 --> 00:41:02,359
Speaker 1: In this case, the judge decided not not to apply

761
00:41:02,440 --> 00:41:04,920
Speaker 1: any of that. So, UM, I I don't know what

762
00:41:05,040 --> 00:41:07,560
Speaker 1: that makes it in terms of American Uh, you know,

763
00:41:08,160 --> 00:41:09,600
Speaker 1: I think in the U. S would in the Statute

764
00:41:09,600 --> 00:41:11,840
Speaker 1: of limitations a long time ago, he wouldn't even be

765
00:41:11,920 --> 00:41:14,719
Speaker 1: talking about this, given you're given how long ago the

766
00:41:15,200 --> 00:41:17,880
Speaker 1: events took place. Does she or can she appeal this

767
00:41:17,960 --> 00:41:21,359
Speaker 1: if she wanted, Yeah, she can't appeal it. But bizarrely, UM,

768
00:41:21,600 --> 00:41:24,200
Speaker 1: in France, generally, when you appeal the case, the whole

769
00:41:24,360 --> 00:41:27,080
Speaker 1: case is retried a second time. None not just you know,

770
00:41:27,120 --> 00:41:29,080
Speaker 1: when you appeal in the States, and generally is on

771
00:41:29,560 --> 00:41:32,640
Speaker 1: questions of law. In France, the first after your your

772
00:41:32,680 --> 00:41:36,640
Speaker 1: first appeal, the whole trial is redone in this particular court,

773
00:41:36,840 --> 00:41:39,799
Speaker 1: that's not available. So she has to appeal to what's

774
00:41:39,800 --> 00:41:42,000
Speaker 1: called the Col de Casson, which is the top top

775
00:41:42,080 --> 00:41:45,560
Speaker 1: court in France, and they only rule on questions of law.

776
00:41:45,640 --> 00:41:47,440
Speaker 1: They don't rule on the on the fact. They just

777
00:41:47,560 --> 00:41:49,520
Speaker 1: rule on whether or not the law was properly applied.

778
00:41:50,080 --> 00:41:52,239
Speaker 1: She could apply, so she could appeal, and her her

779
00:41:52,320 --> 00:41:55,319
Speaker 1: lawyer was on was was interviewed earlier at coming out

780
00:41:55,360 --> 00:41:58,680
Speaker 1: out of the courtroom. She could appeal. Um, but you

781
00:41:58,760 --> 00:42:00,840
Speaker 1: know what, what's what's what's a game? She doesn't have

782
00:42:00,880 --> 00:42:04,719
Speaker 1: a criminal record. You know, she's not being punished or anything. Um,

783
00:42:05,120 --> 00:42:07,640
Speaker 1: they made this figure that you know, it's not it's

784
00:42:07,680 --> 00:42:11,920
Speaker 1: not worth it. Greg I was with Madame mcguard two

785
00:42:11,960 --> 00:42:15,080
Speaker 1: weeks ago with our John Nichols waited event here at

786
00:42:15,120 --> 00:42:18,440
Speaker 1: Bloomberg And of course you see the veneration for within

787
00:42:18,480 --> 00:42:21,480
Speaker 1: the United States and her celebrity and all that. How

788
00:42:21,560 --> 00:42:25,759
Speaker 1: did the French people perceive Christine Legard. She's always been

789
00:42:25,760 --> 00:42:28,000
Speaker 1: a much bigger deal amongst foreigners and the French. She's

790
00:42:28,040 --> 00:42:30,279
Speaker 1: never had a huge, huge following in France. She was

791
00:42:30,320 --> 00:42:33,120
Speaker 1: always the darling of of of the of the foreign

792
00:42:33,160 --> 00:42:37,200
Speaker 1: press corps in Paris. And whenever you heard about Christine Legard,

793
00:42:37,239 --> 00:42:39,600
Speaker 1: the Christine Leguard being suggested as sort of a possible

794
00:42:40,000 --> 00:42:42,760
Speaker 1: candidate in French politics intended to come from the English

795
00:42:42,760 --> 00:42:46,200
Speaker 1: speaking press, not from the French press. Um, how that

796
00:42:46,280 --> 00:42:49,400
Speaker 1: she disliked or anything, But she's always had this this this,

797
00:42:49,640 --> 00:42:52,759
Speaker 1: this is a near veneration in the English speaking world

798
00:42:52,800 --> 00:42:56,080
Speaker 1: that that doesn't I haven't really seen in France. This

799
00:42:56,200 --> 00:42:59,719
Speaker 1: has been hugely valuable. Greg vscuse, thank you so much,

800
00:42:59,800 --> 00:43:04,000
Speaker 1: just hugely valuable from Paris and briefing on AM I

801
00:43:04,160 --> 00:43:08,480
Speaker 1: right Scarlett to say negligence conviction. Well, I mean technically

802
00:43:08,600 --> 00:43:11,880
Speaker 1: that is what it is. Um, But I liked your

803
00:43:11,960 --> 00:43:15,240
Speaker 1: question to Greg about whether this is applicable or comparable

804
00:43:15,360 --> 00:43:18,279
Speaker 1: to a misdemeanor in the United States. We know that

805
00:43:18,480 --> 00:43:20,279
Speaker 1: she's not going to face any kind of jail time,

806
00:43:20,320 --> 00:43:23,160
Speaker 1: she's not going to pay any fine. Um. He called

807
00:43:23,200 --> 00:43:25,160
Speaker 1: it a slap on the wrist. Maybe that's all it

808
00:43:25,320 --> 00:43:27,040
Speaker 1: is at the end of the day. I mean, some

809
00:43:27,160 --> 00:43:30,799
Speaker 1: negative headlines perhaps, but it doesn't seem to affect her

810
00:43:30,800 --> 00:43:33,719
Speaker 1: ability to do the job because when she was appointed

811
00:43:33,760 --> 00:43:35,239
Speaker 1: to the I number, when she was elected to the

812
00:43:35,320 --> 00:43:44,880
Speaker 1: I m F, the member nations know about this. Thanks

813
00:43:44,960 --> 00:43:49,320
Speaker 1: for listening to the Bloomberg Surveillance podcast. Subscribe and listen

814
00:43:49,440 --> 00:43:54,760
Speaker 1: to interviews on iTunes, SoundCloud, or whichever podcast platform you prefer.

815
00:43:55,520 --> 00:43:58,360
Speaker 1: I'm out on Twitter at Tom Keene. David Gura is

816
00:43:58,520 --> 00:44:02,279
Speaker 1: at David Gura. Before the podcast, you can always catch

817
00:44:02,400 --> 00:44:18,160
Speaker 1: us worldwide. I'm Bloomberg Radio. Who you put your trust

818
00:44:18,239 --> 00:44:22,120
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819
00:44:22,200 --> 00:44:25,839
Speaker 1: investment advisors to the two and four trillion dollars. Why

820
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