WEBVTT - Homebuilders Still Favorite Cyclical Sector Pick In 2018: Kudla 0:00:05.800 --> 0:00:08.720 Welcome to the Bloomberg p m L Podcast. I'm pim Fox. 0:00:08.760 --> 0:00:11.520 Along with my co host Lisa Abramowitz. Each day we 0:00:11.640 --> 0:00:15.120 bring you the most important, noteworthy, and useful interviews for 0:00:15.200 --> 0:00:17.840 you and your money, whether you're at the grocery store 0:00:17.960 --> 0:00:20.720 or the trading floor. Find the Bloomberg p m L 0:00:20.840 --> 0:00:33.000 Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot com. Home 0:00:33.040 --> 0:00:36.839 Builders they were one of his favorite sector in ten 0:00:36.960 --> 0:00:39.960 and he still favors the home builders. Let's find out 0:00:40.000 --> 0:00:42.600 what David Coudla has in mind when he's the founder 0:00:42.600 --> 0:00:45.839 and the chief executive officer and chief investment strategist for 0:00:45.960 --> 0:00:49.560 Mainstay Capital Management, helping to manage more than two billion 0:00:49.600 --> 0:00:53.280 dollars of assets. He can be followed on Twitter at 0:00:53.479 --> 0:00:58.800 David Underscore Kudla. That's k U d l A. All right, 0:00:58.960 --> 0:01:04.759 David Underscore. Let what's your thesis on home builders. Well, 0:01:04.800 --> 0:01:08.639 we still believe that there is the long term secular story, 0:01:08.959 --> 0:01:12.160 there's the cyclical story, and we're running through the event 0:01:12.280 --> 0:01:16.119 driven story that's driven up um some of the sales 0:01:16.120 --> 0:01:18.760 and home building here recently and with some of the 0:01:18.800 --> 0:01:23.720 suppliers home d polos that are facilitating the you know, 0:01:23.840 --> 0:01:28.160 the rebuild and so forth from the hurricanes. But if 0:01:28.200 --> 0:01:30.919 we look at where we are in the cycle and 0:01:31.400 --> 0:01:34.080 where we continue to set new records. You know, we 0:01:34.160 --> 0:01:37.320 had a tenure high in September on new home sales, 0:01:37.720 --> 0:01:40.800 continue to grow in October and November. We've got new 0:01:40.800 --> 0:01:44.520 housing starts for single family homes at an expansion high, 0:01:44.760 --> 0:01:48.760 existing home sales at an expansion high, the housing market 0:01:48.800 --> 0:01:53.600 index as an expansion high. Really, the home builders are 0:01:53.600 --> 0:01:57.360 firing on all eight cylinders, and we think that continues 0:01:57.440 --> 0:02:01.240 as we move into because we think we have a 0:02:01.240 --> 0:02:07.000 continuing a robust build cycle, economy that's doing well, and 0:02:07.040 --> 0:02:09.919 with tax reform economy that could even be doing a 0:02:09.919 --> 0:02:12.959 little bit better. All right. Having said that, if you've 0:02:13.000 --> 0:02:18.120 got an investment that has returned six a year to date, 0:02:18.919 --> 0:02:21.480 wouldn't you take some of that off the table and 0:02:21.520 --> 0:02:25.800 just wait in pim. This is you're always asking me 0:02:25.880 --> 0:02:29.079 this one because no one ever tells you went to sell. 0:02:29.200 --> 0:02:31.240 And I understand that you make your money when you 0:02:31.280 --> 0:02:35.040 actually buy the investment, just like you make your money 0:02:35.040 --> 0:02:37.400 in a house when you buy the house, although you 0:02:37.440 --> 0:02:41.120 don't think that way when you do sell. Mm hmm, Well, 0:02:41.520 --> 0:02:43.480 we see that, you know, When we look at where 0:02:43.480 --> 0:02:45.839 we are in the cycle, we're about just about through 0:02:45.840 --> 0:02:51.280 mid range the home builders, UH from peak to trough 0:02:51.600 --> 0:02:54.359 or maybe halfway through that expansion. And we're coming off 0:02:54.400 --> 0:02:59.640 a significant low from the Great Recession. So we see 0:02:59.639 --> 0:03:01.919 that there further to go as long as we still 0:03:01.919 --> 0:03:05.239 have a good economy. UH, there's pen up demand for 0:03:05.440 --> 0:03:11.920 new homes. We have UM the current supplies only three 0:03:11.960 --> 0:03:15.440 point four months of inventory, which you know it is 0:03:15.440 --> 0:03:17.919 still a strong seller's market. So we we want to 0:03:17.919 --> 0:03:20.400 continue to stay with this sector. Okay, So that if 0:03:20.440 --> 0:03:24.400 you're invested in the I shares construction, I believe it's 0:03:24.440 --> 0:03:28.640 the home construction E t F I t B. That's 0:03:28.720 --> 0:03:33.519 the calculation I was doing increase so far this year 0:03:33.520 --> 0:03:37.120 for for I t B Okay home builders that gets 0:03:37.120 --> 0:03:40.360 a gold start. Tell me about investment opportunities in places 0:03:40.400 --> 0:03:44.600 like Europe and Japan and emerging markets. Well, when we 0:03:45.040 --> 0:03:47.560 look at where we are in our cycle here in 0:03:47.600 --> 0:03:51.560 the US, UH, the economy doing what we think we'll 0:03:51.560 --> 0:03:53.520 do well until next year two and a half to 0:03:53.600 --> 0:03:57.280 three percent growth. We have very strong earnings, but we're 0:03:57.320 --> 0:04:01.040 at when we UH look at a a ratio that 0:04:01.080 --> 0:04:02.880 we use more and more in this industry. To KEPE 0:04:03.000 --> 0:04:07.520 ratio sickly cyclically adjusted price to earnings ratio UH, we'd 0:04:07.560 --> 0:04:12.080 about thirty one, which is about a sixteen year high 0:04:12.360 --> 0:04:17.120 versus when we look at emerging markets and Europe and 0:04:17.320 --> 0:04:19.920 some of the other areas of the world, we're at 0:04:19.960 --> 0:04:24.119 fifteen to twenty, so they're more attractively priced. But even 0:04:24.400 --> 0:04:29.440 more importantly, we're seeing UH robust growth in those areas 0:04:29.480 --> 0:04:33.880 now GDP improving economic data, improving earnings improving UH and 0:04:34.000 --> 0:04:37.000 unemployment coming down. You know a data point that just 0:04:37.080 --> 0:04:40.840 came out November, US exports were up ten point three 0:04:41.960 --> 0:04:45.040 that's the fastest pace in six years. And what that 0:04:45.160 --> 0:04:47.719 speaks to is what is going on around the rest 0:04:47.800 --> 0:04:51.159 of the world. We talk about synchronized global growth. That's 0:04:51.160 --> 0:04:54.480 compared to two years ago when our exports were down 0:04:54.480 --> 0:04:58.440 ten percent. So that's what's happening in emerging markets, in 0:04:58.520 --> 0:05:02.440 these developed markets, and how well those economies are moving 0:05:02.440 --> 0:05:05.279 along now and what they will translate into in terms 0:05:05.279 --> 0:05:08.680 of opportunities in their stock markets. Is it possible that 0:05:08.839 --> 0:05:11.919 some of that export strength could be the result of 0:05:11.960 --> 0:05:14.559 an eight percent decline in the value of the US 0:05:14.640 --> 0:05:19.040 dollar against the g ten partners. Absolutely, absolutely, that's part 0:05:19.080 --> 0:05:23.200 of it. Will that continue? Uh, I think that we 0:05:23.320 --> 0:05:26.000 continue with some dollar weakness. We don't see the dollar 0:05:26.080 --> 0:05:30.640 strengthening significantly against the dollar index against the Euro. We 0:05:30.680 --> 0:05:33.839 think we continue with dollar weakness. Okay, dollar weakness. I 0:05:33.839 --> 0:05:37.599 want to ask about one particular investment idea, the Colombia 0:05:37.839 --> 0:05:41.279 India small cap e t F. What is it that 0:05:41.360 --> 0:05:45.000 draws you to it? Uh? It is that we like 0:05:45.120 --> 0:05:50.159 emerging markets and that we like the opportunity of small 0:05:50.240 --> 0:05:54.640 cap companies in emerging markets. UH, the in India being 0:05:54.680 --> 0:05:58.120 one of those. And there's any specific reason. I mean, 0:05:58.200 --> 0:06:00.120 you know you like it. I understand that other as 0:06:00.120 --> 0:06:01.640 you wouldn't buy it, But I mean, is there some 0:06:01.680 --> 0:06:05.800 fundamental reason why this particular one or why you like 0:06:05.960 --> 0:06:10.200 small caps in India? That it's the transformation the economy 0:06:10.279 --> 0:06:13.279 what uh Prime Minister Modi has been doing there and 0:06:13.320 --> 0:06:17.960 transforming the economy. They're going through literally transformational change, and 0:06:18.000 --> 0:06:24.039 we've seen that translate into opportunity deregulation. Opportunity specifically in 0:06:24.120 --> 0:06:27.520 small companies is evidenced by the rise we've had in 0:06:27.600 --> 0:06:30.880 that e t F during our holding period. In certain 0:06:30.920 --> 0:06:35.120 over the past year, the arc web x point O 0:06:35.360 --> 0:06:41.000 e t F. It is uh, well a conglomeration of 0:06:41.000 --> 0:06:44.800 of tech companies. You've got Tesla, Netflix as well as 0:06:44.920 --> 0:06:51.400 Twitter and Bitcoin Investment Trust. Still like this. We do, 0:06:51.960 --> 0:06:55.799 in fact that when we look at the technology space, 0:06:55.960 --> 0:06:59.920 because you often hear people say they like technology across 0:06:59.920 --> 0:07:05.600 the board. But we've seen a peak in in chip sales, 0:07:05.640 --> 0:07:09.120 We've seen uh, some areas that aren't doing as well 0:07:09.120 --> 0:07:11.760 in technology. But when we look at e commerce in 0:07:11.800 --> 0:07:14.440 the Internet, that is an area where there's a second 0:07:14.520 --> 0:07:19.240 or growth story that continues, uh, not only domestically but abroad. 0:07:19.800 --> 0:07:22.080 And we think that's the real opportunity in the reason 0:07:22.120 --> 0:07:24.720 that we like specifically that E t F A r 0:07:24.800 --> 0:07:28.720 k W. Well, the shares of A r k W 0:07:28.880 --> 0:07:34.400 they're up nearly eighty eight percent uh this year. All right, David, 0:07:34.440 --> 0:07:38.080 here's your chance to fall on your sword. Was the 0:07:38.120 --> 0:07:43.160 one mistake you regret in investing over the last twelve months? Oh, 0:07:43.240 --> 0:07:45.560 that's easy. I wish I would have loaded up on 0:07:45.600 --> 0:07:50.280 bitcoin twelve months ago, really, or or ethereum or light 0:07:50.360 --> 0:07:54.720 coin or Ripple or the list goes on and and 0:07:54.920 --> 0:08:00.520 obviously that's an easy one in hindsight, but certainly there 0:08:00.680 --> 0:08:02.960 there was you know, in terms of an outsize gain, 0:08:03.000 --> 0:08:07.120 tremendous opportunity there. But um, if we bring it back 0:08:07.160 --> 0:08:11.320 to just the markets in general, uh, probably that we 0:08:11.400 --> 0:08:17.040 didn't uh significantly overweight large cap growth even more in 0:08:17.120 --> 0:08:20.200 terms of our portfolios from a tactical standpoint, because large 0:08:20.240 --> 0:08:24.040 cap growth dominated in We've got to leave it there. 0:08:24.160 --> 0:08:26.920 Thanks very much and happy New Year to David Kudla, 0:08:27.040 --> 0:08:47.199 Chief executive chief investment strategists at Mainstay Capital. A new 0:08:47.280 --> 0:08:50.959 question is what did you watch on Facebook last night? 0:08:51.040 --> 0:08:55.319 Shira Oviday is our Bloomberg Gadfly columnists. She covers technology 0:08:55.360 --> 0:08:58.360 and can be followed on Twitter at Shira Oviday s 0:08:58.559 --> 0:09:01.960 H I R A O V I D E S. Yeah. 0:09:01.960 --> 0:09:03.840 I tried to get through all the details because it's 0:09:03.920 --> 0:09:05.520 kind of tough, you know when you just say it. 0:09:05.920 --> 0:09:08.160 But maybe Facebook is going to take care of that 0:09:08.200 --> 0:09:10.880 because everyone can be the star of their own TV 0:09:11.000 --> 0:09:15.000 show with Facebook can't take yes and no. So Mark 0:09:15.440 --> 0:09:18.200 Mark Zuckerberg, sorry, the Facebook CEO, has said for a 0:09:18.200 --> 0:09:21.600 few years now that he believes web video is the 0:09:21.679 --> 0:09:25.000 future of Facebook and the Internet in general. And you 0:09:25.040 --> 0:09:27.400 can see that right if you look in your Facebook feed. Now, 0:09:27.760 --> 0:09:30.520 odds are there'll be a lot of web videos and there, 0:09:30.520 --> 0:09:33.480 whether you like it or not. And so a few 0:09:33.480 --> 0:09:37.000 months ago Facebook um basically change strategy a little bit, 0:09:37.120 --> 0:09:40.319 or added a strategy to its web video initiative. It 0:09:40.480 --> 0:09:44.120 started this new tab that's called Watch that is basically 0:09:44.160 --> 0:09:48.080 trying to be more of a TV like destination where 0:09:48.080 --> 0:09:51.800 it has longer form videos, things that are more like 0:09:51.920 --> 0:09:54.800 the kinds of shows you see on cable television. And 0:09:54.840 --> 0:09:57.480 Facebook hopes you go there, you hang out, you chat 0:09:57.520 --> 0:09:59.520 with your friends about Hey, it wasn't this a really 0:09:59.559 --> 0:10:04.840 cool video about some surfing program. And they're trying to 0:10:04.880 --> 0:10:08.480 build both community and grab more of our time. All right, 0:10:08.600 --> 0:10:10.440 they're trying to grab more of your time. They've got 0:10:10.440 --> 0:10:13.599 someone who's trying to well coller you, right, is a 0:10:13.960 --> 0:10:18.720 Fiji Simo. Who is Fiji Semo and maybe just describe 0:10:18.720 --> 0:10:22.600 what her challenges, right, So Fiji Simos profiled in our 0:10:22.679 --> 0:10:26.960 sort of gadfly Year in Review pieces. She is the 0:10:27.080 --> 0:10:29.920 vice president of product at Facebook. She's been there about 0:10:30.240 --> 0:10:32.959 eight years and she's responsible for some of the most 0:10:33.080 --> 0:10:36.199 high profile and issues at the company. She was hired 0:10:36.240 --> 0:10:39.400 at first to sort of help them expand their ads 0:10:39.440 --> 0:10:42.520 on smartphones, which is basically the most important innovation at 0:10:42.559 --> 0:10:45.880 Facebook in the last decade. And now she's responsible basically 0:10:45.920 --> 0:10:49.800 for all video in Facebook, including this new watch tab. 0:10:49.880 --> 0:10:52.680 And look, it's a big bet for Facebook that they're 0:10:52.720 --> 0:10:57.160 trying to become a little bit more like TV, get 0:10:57.200 --> 0:11:00.480 more of our attention, get more of advertisers money, And 0:11:00.520 --> 0:11:03.360 it's not going to be an easy thing to do. 0:11:03.480 --> 0:11:05.120 And she's kind of at the center of all this. 0:11:05.600 --> 0:11:10.720 But Facebook has tried this previously, right, with a different strategy. Right. So, 0:11:10.800 --> 0:11:13.559 if you listened to people like Mark Zuckerberg last year, 0:11:14.320 --> 0:11:17.520 the only thing they talked about was live video that 0:11:17.600 --> 0:11:21.560 they wanted people like you and me, pim uh, celebrities 0:11:21.600 --> 0:11:25.400 like the chef Gordon Ramsey, news organizations like CNN. They 0:11:25.440 --> 0:11:30.319 wanted everybody to broadcast videos live on Facebook. The famous 0:11:30.320 --> 0:11:33.120 example being there was a you know this mom, but 0:11:33.280 --> 0:11:36.839 Chewbacca mom she was called, who put on this kind 0:11:36.880 --> 0:11:41.560 of toy Facebook sorry toy Chewbacca Star Wars mask and 0:11:41.640 --> 0:11:45.240 basically posted a video of herself live, cackling hysterically as 0:11:45.240 --> 0:11:48.400 she wore this ridiculous mask, and it was this viral hit. 0:11:48.800 --> 0:11:51.040 And those were the kinds of things that Facebook couldn't 0:11:51.080 --> 0:11:53.960 shut up about last year, and this year nobody talks 0:11:53.960 --> 0:11:57.960 about live really. I mean I'm exaggerating slightly, but it 0:11:58.040 --> 0:12:02.240 does seem like, I don't know it can control it. Well. 0:12:02.280 --> 0:12:04.320 I think that is part of the issue. So in 0:12:04.360 --> 0:12:07.440 addition to things like Chewbacca Mom making the headlines last 0:12:07.520 --> 0:12:11.040 year for Facebook live video, the other things were people 0:12:11.160 --> 0:12:15.480 broadcasting live videos of violent acts, including this guy in 0:12:15.600 --> 0:12:21.520 Cleveland who murdered people and basically broadcast live his confession 0:12:21.960 --> 0:12:24.400 on Facebook. And these were the kinds of things that 0:12:24.480 --> 0:12:28.560 alarmed people, certainly outside of Facebook, that you've created this 0:12:28.679 --> 0:12:33.640 live video platform that gives people an incentive to broadcast 0:12:33.880 --> 0:12:37.240 the worst of humanity and get attention for it. Um 0:12:37.320 --> 0:12:40.560 And maybe they found that they couldn't control something like 0:12:40.679 --> 0:12:45.079 live video. Based on your reporting and speaking with your sources, 0:12:45.320 --> 0:12:50.600 do you believe that Facebook understands the responsibility that they 0:12:50.640 --> 0:12:55.400 would take on if indeed they could be held libel 0:12:55.760 --> 0:12:59.839 for these kinds of things being broadcast on their net 0:13:00.000 --> 0:13:04.880 are I think there has been a slow awakening inside 0:13:04.920 --> 0:13:09.800 of Facebook the last year or so, just understanding how 0:13:09.880 --> 0:13:15.280 powerful their platform is to shape what people think, what 0:13:15.360 --> 0:13:19.560 people read or don't read, the views that get sent 0:13:19.640 --> 0:13:25.120 out into the world. Um, I think Facebook initially didn't 0:13:25.200 --> 0:13:28.000 understand the ramifications of what they were doing and maybe 0:13:28.040 --> 0:13:32.000 didn't think about the potential downsides of things like Facebook 0:13:32.040 --> 0:13:36.080 Live in advance. And I think that's starting to change 0:13:36.400 --> 0:13:40.840 slowly and reluctantly. But there's also no easy solution for Facebook. 0:13:40.960 --> 0:13:43.560 What does it do? Does it ban certain kinds of posts? 0:13:43.880 --> 0:13:46.800 I don't know that we want Facebook being a sensor either, 0:13:47.400 --> 0:13:49.760 So they're really in a tough spot. But yes, they 0:13:49.760 --> 0:13:55.240 are recognizing that they have responsibility for this powerful platform 0:13:55.280 --> 0:13:58.120 that they created. Yeah, you're not allowed to shout fire 0:13:58.200 --> 0:14:00.880 in a crowded theater, right, I mean, there's got to 0:14:00.920 --> 0:14:05.559 be some kind of incentive or some kind of punishment 0:14:06.120 --> 0:14:08.599 if you do those kinds. And look right now, Facebook, 0:14:08.679 --> 0:14:11.199 and and this goes for Google and others too. They're 0:14:11.240 --> 0:14:14.120 mostly self policing. They're creating the rules of the road 0:14:14.200 --> 0:14:17.880 on their own Internet services. And the question is and 0:14:18.000 --> 0:14:20.200 changing them and when they want changing them at whim, 0:14:20.240 --> 0:14:21.960 when it feels like it needs when they feel like 0:14:21.960 --> 0:14:25.280 they need to absolutely, And the question is, will regulators 0:14:25.280 --> 0:14:27.920 in the US or Brussels or other countries around the 0:14:27.960 --> 0:14:32.440 world start to demand um start to basically impose more 0:14:32.560 --> 0:14:35.480 order from the top on these companies, and they certainly 0:14:35.680 --> 0:14:37.840 don't want that to happen. I would say, also, never 0:14:37.920 --> 0:14:42.480 mind governments, what about advertisers, because isn't that really the 0:14:42.520 --> 0:14:46.720 only way that Facebook makes money is selling ads. Y 0:14:47.320 --> 0:14:52.040 of Facebook's revenue sorry, comes from advertisements. So it is 0:14:52.080 --> 0:14:56.320 definitely true that advertisers collectively are a powerful voice on Facebook. 0:14:56.480 --> 0:15:00.680 And you've seen them both on Facebook and places YouTube 0:15:00.920 --> 0:15:04.600 basically revolt when it's become clear that those platforms have 0:15:04.760 --> 0:15:08.880 made bad decisions that you know, put their commercials next 0:15:08.880 --> 0:15:12.040 to terrorist videos and things like that. Um And and 0:15:12.080 --> 0:15:15.400 that does spur change at these companies because it affects 0:15:15.400 --> 0:15:17.720 them in their wallet. Yeah, well that would that would 0:15:17.720 --> 0:15:21.200 certainly get their attention. And Facebook has also run up 0:15:21.200 --> 0:15:24.840 against these kinds of issues when it comes to politicians 0:15:24.960 --> 0:15:30.240 political campaigns. They even send out people to teach those 0:15:30.680 --> 0:15:34.280 political operatives how to best use this platform to their 0:15:34.280 --> 0:15:37.040 own game. Yeah. And I think our colleagues at Bloomberg 0:15:37.040 --> 0:15:39.360 News have written some great stories in the last few 0:15:39.400 --> 0:15:43.240 months about Facebook's role in helping political campaigns, including in 0:15:43.280 --> 0:15:47.240 places like the Philippines, UM where maybe we don't want 0:15:47.600 --> 0:15:51.280 the government of the Philippines being smart about how to 0:15:51.440 --> 0:15:56.360 use Facebook to manipulate the electorate or to harass critics 0:15:56.360 --> 0:15:59.960 of the administration. Right, So, look, all these tech company 0:16:00.120 --> 0:16:03.840 is Twitter, Google, Facebook, They do help political campaigns and 0:16:03.920 --> 0:16:07.880 political leaders, um, understand how best to use their platforms, 0:16:07.880 --> 0:16:11.120 and that goes for journalists to write. Facebook has a 0:16:11.680 --> 0:16:15.120 large organization that helps journalists figure out how to disseminate 0:16:15.160 --> 0:16:19.560 their stories on Facebook and other places. Um. But yeah, 0:16:19.640 --> 0:16:24.480 there's a big difference between helping journalists circulates stories and 0:16:24.520 --> 0:16:28.640 helping candidates figure out how to tailor their messages and 0:16:28.680 --> 0:16:32.480 helping dictators in places like the Philippines. Indeed, thanks very much, 0:16:32.480 --> 0:16:35.440 Shira over Day, Thank you very much our Bloomberg Gadfly 0:16:35.960 --> 0:16:39.520 calumnist all things Technology. You can follow Shira on Twitter 0:16:39.600 --> 0:16:42.680 at Shira over Day and Happy New Year too. Always 0:16:42.680 --> 0:17:01.560 a pleasure. Small business is in the United States. They 0:17:01.600 --> 0:17:08.000 make up nearly ninety nine percent of US employer firms 0:17:08.040 --> 0:17:11.840 of net new private sector jobs nearly fifty percent of 0:17:11.920 --> 0:17:15.680 private sector employment. However you look at it, small business 0:17:16.000 --> 0:17:18.600 is important and crucial to the health of the U 0:17:18.680 --> 0:17:21.560 S economy. Karen Mills is a Senior Fellow at the 0:17:21.600 --> 0:17:26.439 Harvard Business School and former Small Business Administrator Small Business 0:17:26.480 --> 0:17:29.959 Administration for the SBA for under President Barack Obama from 0:17:30.000 --> 0:17:33.800 two thousand nine to two thousand thirteen. Karen Mills, thank 0:17:33.800 --> 0:17:35.960 you very much joining us from Boston. You can be 0:17:36.000 --> 0:17:41.000 followed on Twitter at Karen G. Mills. I am happy 0:17:41.080 --> 0:17:44.600 New year to you too. Let's talk about a small 0:17:44.680 --> 0:17:48.440 business and the tax overhaul plan. I wonder if maybe 0:17:48.440 --> 0:17:52.280 just start with one aspect of it that is related 0:17:52.320 --> 0:17:54.600 to the A C A Affordable Care Act, and this 0:17:54.680 --> 0:17:59.480 is the individual UH mandate. Is there anything in the 0:17:59.480 --> 0:18:03.320 bill that would change the way small businesses have to 0:18:03.960 --> 0:18:09.920 UM offer or provide for the health insurance of their employees. Well, 0:18:09.960 --> 0:18:13.359 I'm glad you started with the tax bill, but overall, 0:18:13.560 --> 0:18:16.200 so now that I'm a faculty member, I did end 0:18:16.200 --> 0:18:20.720 of year grading on the Trump administration and UM. The 0:18:20.840 --> 0:18:25.040 total report card is three season a D. But one 0:18:25.080 --> 0:18:29.639 of the seasons for taxes UM, the health care pieces, 0:18:29.680 --> 0:18:33.400 you know, was sort of tagged on there for political reasons. 0:18:33.960 --> 0:18:37.639 And it's really too bad because it turns out that 0:18:38.119 --> 0:18:43.520 about four million people in the Obama Care UM markets 0:18:44.280 --> 0:18:49.560 are small business owners who are buying individual coverage, and 0:18:50.000 --> 0:18:53.439 we don't know what's going to happen, UM, because we 0:18:53.480 --> 0:18:56.960 don't really understand the impact of the mandate taking away 0:18:57.000 --> 0:19:01.159 the mandate on pricing. But in the last two years 0:19:01.680 --> 0:19:03.960 there was a JP Morgan study that came out this 0:19:04.080 --> 0:19:07.239 year that said it has gone up very little for 0:19:07.320 --> 0:19:10.520 small business owners who are buying on the individual marketplace, 0:19:11.000 --> 0:19:15.680 So it is possible that that will go away. Very 0:19:15.720 --> 0:19:21.760 few small businesses, I think, will um choose not to 0:19:22.480 --> 0:19:27.800 buy coverage when they had before because their their employees 0:19:28.040 --> 0:19:30.280 are going to ask for it. And we're in tight 0:19:30.400 --> 0:19:34.560 labor markets now, and if employees aren't getting health care coverage, 0:19:34.600 --> 0:19:36.399 they're going to switch to a place that gives it 0:19:36.440 --> 0:19:40.720 to them. So I'm not sure that uh, this was 0:19:40.840 --> 0:19:44.360 worth doing and what it accomplished, Okay, And I don't 0:19:44.359 --> 0:19:47.560 want to get into too much about the mandate for 0:19:48.160 --> 0:19:50.119 individual health care, but a lot of it I know 0:19:50.240 --> 0:19:53.879 had to do with the cost, the premium cost and 0:19:53.920 --> 0:19:56.639 then the high deductible. So they had some cases in 0:19:56.680 --> 0:19:58.680 which people looked at how much it was going to 0:19:58.760 --> 0:20:00.800 cost them to get health and show earns and they said, 0:20:01.560 --> 0:20:03.639 you know what, if my deductible is going to be 0:20:03.720 --> 0:20:07.400 five thousand. Why am I going to buy health insurance 0:20:07.400 --> 0:20:10.040 for something that I don't believe that I'm necessarily going 0:20:10.080 --> 0:20:12.439 to use. I really just want a catastrophic care. Is that? 0:20:12.520 --> 0:20:14.280 I mean, that's at least the other side of the 0:20:14.359 --> 0:20:17.639 argument correct. Well, as long as you know, it's up 0:20:17.640 --> 0:20:20.240 to an individual what they're gonna buy. But if they 0:20:20.240 --> 0:20:24.000 don't buy any health insurance, that puts them and their 0:20:24.040 --> 0:20:27.800 employer at risk. Because an employer a small business like 0:20:27.880 --> 0:20:31.000 a family, and if one of your employees get sick. 0:20:31.400 --> 0:20:33.480 I had small business owners tell me they went out 0:20:33.480 --> 0:20:37.320 of pocket themselves to help them. So employers want to 0:20:37.400 --> 0:20:40.400 provide health insurance because if somebody gets sick and they're 0:20:40.400 --> 0:20:44.520 not covered, it's everybody else that pays. So I think 0:20:44.600 --> 0:20:47.560 what has happened is that people actually have gotten used 0:20:47.560 --> 0:20:51.400 to Obamacare. You saw in a very short enrollment period 0:20:52.040 --> 0:20:57.280 we had nine million people sign up, more than anybody expected. 0:20:57.840 --> 0:21:00.640 So I think what's going to happen is that we've 0:21:00.680 --> 0:21:03.840 got a solution. I think people are still going to 0:21:03.960 --> 0:21:07.240 use it. All right, let's focus now on another aspect 0:21:07.280 --> 0:21:10.439 of the tax over how you mentioned family businesses, and 0:21:10.480 --> 0:21:15.199 I'm wondering if the increase in the ceiling for estate 0:21:15.320 --> 0:21:18.960 taxes will have a positive effect for for those kinds 0:21:19.000 --> 0:21:23.120 of uh financial you know, organizations. I mean, if you're 0:21:23.200 --> 0:21:25.840 running a small business or have a business that has 0:21:25.880 --> 0:21:27.879 a high level of assets that are going to be 0:21:27.960 --> 0:21:31.959 valued upon death. Will won't this be beneficial? You know? 0:21:32.000 --> 0:21:34.520 I think it actually will be beneficial. I'm all for 0:21:34.600 --> 0:21:37.920 family businesses. I think that this is an important part 0:21:38.080 --> 0:21:42.440 of you know, the American heritage, and that people UM 0:21:42.640 --> 0:21:45.920 have said that they want to be able to pay 0:21:45.960 --> 0:21:50.600 the tax once not twice. And the state tax is 0:21:50.800 --> 0:21:54.159 UM is pretty tough tax. So I think this is 0:21:54.200 --> 0:21:58.720 going to um be helpful to small businesses. Another piece, 0:21:58.800 --> 0:22:04.080 by the way, that's helped fill is the accelerated depreciation UM. 0:22:04.119 --> 0:22:08.200 It's an unusual sort of technical bit, but we did 0:22:08.240 --> 0:22:11.520 it twice during the Obama administration, and we found that 0:22:11.640 --> 0:22:15.919 actually did encourage people to buy a truck, you know, 0:22:16.040 --> 0:22:19.679 to buy some equipment, and that creates more jobs. Right, 0:22:19.680 --> 0:22:21.720 do you get to write it off much more, much 0:22:21.760 --> 0:22:23.919 more quickly? Just a quick question to you, if you 0:22:23.960 --> 0:22:26.480 could redo any of the grades that you gave you 0:22:26.520 --> 0:22:29.320 said the three season a d anything you could do 0:22:29.400 --> 0:22:34.679 to increase the great average gives well D is for dealmaker. 0:22:35.040 --> 0:22:37.200 Trump has not proved to be a good deal maker. 0:22:37.359 --> 0:22:40.000 And there's so many deals on the table here in 0:22:40.119 --> 0:22:45.879 regulation reform, UH, in infrastructure, in giving tax breaks for 0:22:45.960 --> 0:22:49.639 training or having employers pay for college. He really missed 0:22:49.640 --> 0:22:54.960 a big opportunity, UM to do bipartisan deals and bring 0:22:55.040 --> 0:22:57.520 this big business to the table, to do things that 0:22:57.640 --> 0:23:01.240 fundamentally helped our economy. One of the season is for 0:23:01.520 --> 0:23:05.920 UM the economy as a whole. Nothing here structurally changed. 0:23:06.520 --> 0:23:09.360 What's going to happen going forward? So when you predict 0:23:09.560 --> 0:23:13.240 for how are we going to have an economy that 0:23:13.280 --> 0:23:16.240 really grows without some structural change, well maybe the grade 0:23:16.240 --> 0:23:20.960 will improve. In from Karen Mills, Senior Fellow, Harvard Business School, 0:23:21.000 --> 0:23:37.480 thanks for being with us. We know that millions of 0:23:37.480 --> 0:23:40.719 people are going to be gathering in a Times Square 0:23:40.760 --> 0:23:43.879 in New York City for the ball drop to US 0:23:43.920 --> 0:23:45.840 Shore in the new year, and also are all around 0:23:45.840 --> 0:23:48.800 the world. People will be gathering in groups to share 0:23:48.840 --> 0:23:52.000 the festivities. One thing that they will have in common 0:23:52.240 --> 0:23:57.680 in addition to looking to is security, and by some estimates, 0:23:57.720 --> 0:24:03.600 the physical security industry globally could end up being a 0:24:03.680 --> 0:24:07.159 two hundred billion dollar market. Here to tell us a 0:24:07.200 --> 0:24:10.760 little bit more about the security and the industry itself 0:24:10.920 --> 0:24:14.359 is Lou Palumbo. He is the director of Elite Intelligence 0:24:14.440 --> 0:24:18.360 and Protection. Lou, Happy New Year to you. You're going 0:24:18.400 --> 0:24:22.080 to be in Times Square. I understand, yes, this is 0:24:22.080 --> 0:24:27.560 about my consecutive year I've I've had the pleasure of 0:24:28.040 --> 0:24:32.560 supporting various clients in Time Square for the News Eve celebration. Okay, 0:24:32.600 --> 0:24:35.480 So over the course of your career, I'm sure you've 0:24:35.520 --> 0:24:39.679 seen some big changes to security. What are some of 0:24:39.720 --> 0:24:43.479 the ones that you can highlight for us? Well, clearly 0:24:43.520 --> 0:24:47.240 after nine eleven and on the heels of these UM, 0:24:47.280 --> 0:24:50.159 I would say, rather commonplace incidents throughout the world and 0:24:50.200 --> 0:24:53.840 now our country, we've seen seen an increased presence of 0:24:53.920 --> 0:24:58.520 law enforcement, especially in the form of practical units. Post 0:24:58.600 --> 0:25:01.120 nine eleven, they began to implement what we call high 0:25:01.200 --> 0:25:05.479 pointment and observers, which are snipers. I'm not divulging anything 0:25:05.480 --> 0:25:09.919 that the Police Commissioner O'Neill hasn't already spoken to UM. 0:25:09.960 --> 0:25:15.120 We've seen the perimeters pushed out, choke points hardened, UM, 0:25:15.200 --> 0:25:19.439 increase of overall deployment for this for this event, UH 0:25:19.640 --> 0:25:23.919 taking control of the subways, shutting down garages, and proximity 0:25:23.920 --> 0:25:32.040 of times square welding the caps for the streaked guests 0:25:32.160 --> 0:25:35.400 is to escape from corn ed. We've done everything, removal 0:25:35.440 --> 0:25:39.080 of garbage pails, post office boxes, everything you could possibly 0:25:39.119 --> 0:25:42.840 imagine that could represent some form of a delivery system 0:25:42.880 --> 0:25:45.879 for a device or even an individual. So we've seen 0:25:46.320 --> 0:25:51.320 consistently post nine eleven, a continuous hardening of target. Now, 0:25:51.359 --> 0:25:56.200 this hardening of targets, it comes with a cost, right absolutely, 0:25:56.320 --> 0:25:58.320 you know, and I know people ask me all the 0:25:58.359 --> 0:26:00.320