1 00:00:00,040 --> 00:00:02,640 Speaker 1: Who you put your trust in matters. Investors have put 2 00:00:02,680 --> 00:00:07,040 Speaker 1: their trust and independent registered investment advisors to the two 3 00:00:07,040 --> 00:00:10,680 Speaker 1: and four trillion dollars. Why learn more and find your 4 00:00:10,760 --> 00:00:26,360 Speaker 1: independent advisor dot com. Welcome to the Bloomberg Surveillance Podcast. 5 00:00:26,760 --> 00:00:30,480 Speaker 1: I'm Tom Keene with David Gura. Daily we bring you 6 00:00:30,520 --> 00:00:35,560 Speaker 1: insight from the best in economics, finance, investment and international relations. 7 00:00:35,960 --> 00:00:40,559 Speaker 1: Find Bloomberg Surveillance on iTunes, SoundCloud, Bloomberg dot com, and 8 00:00:40,640 --> 00:00:48,160 Speaker 1: of course on the Bloomberg. This is really a joy. 9 00:00:48,159 --> 00:00:50,440 Speaker 1: We're gonna talk markets here in the correlations that we 10 00:00:50,479 --> 00:00:54,320 Speaker 1: see right now. With two people totally unqualified to strategize 11 00:00:54,600 --> 00:00:56,800 Speaker 1: on the markets, that's always a good thing. On surveillance. 12 00:00:56,840 --> 00:00:59,400 Speaker 1: Michael Spence as a laureate from n y U. He 13 00:00:59,440 --> 00:01:03,360 Speaker 1: has more than qualified to talk about information within our 14 00:01:03,360 --> 00:01:07,160 Speaker 1: society and systems. And Richard Haas has a most interesting 15 00:01:07,560 --> 00:01:12,959 Speaker 1: uh CV and bio on political economics and international relations. 16 00:01:13,120 --> 00:01:15,479 Speaker 1: I want to begin with you, ambassador, if I could 17 00:01:15,480 --> 00:01:18,120 Speaker 1: you have a fabulous moment in your new book on 18 00:01:18,360 --> 00:01:21,160 Speaker 1: the World Order. You go from Henry Kissinger's World Order 19 00:01:21,200 --> 00:01:23,640 Speaker 1: onto whatever the new world order is, and you have 20 00:01:23,760 --> 00:01:28,080 Speaker 1: a phrase as if the tide goes out, we shift 21 00:01:28,160 --> 00:01:31,840 Speaker 1: from World War Two, and we're how our markets adapting 22 00:01:32,200 --> 00:01:36,080 Speaker 1: to this subtle chronic shift. You see as the tide 23 00:01:36,080 --> 00:01:39,000 Speaker 1: goes out, well, the short answers they're having trouble. You 24 00:01:39,080 --> 00:01:41,479 Speaker 1: used to have certain structures and rules in the world. 25 00:01:41,560 --> 00:01:43,480 Speaker 1: We had, for example, all the discipline of the of 26 00:01:43,480 --> 00:01:46,160 Speaker 1: the Cold War, and when that ended, we found ourselves 27 00:01:46,200 --> 00:01:49,160 Speaker 1: somewhat lacking and the other institutions really weren't quite up 28 00:01:49,160 --> 00:01:50,720 Speaker 1: to it. And I think we're at a moment in 29 00:01:50,840 --> 00:01:54,680 Speaker 1: history where globalization and virtually every one of its manifestations 30 00:01:54,760 --> 00:01:58,120 Speaker 1: or dimensions is moving at a faster, more robust pace 31 00:01:58,520 --> 00:02:01,200 Speaker 1: than politics can catch shops. So we see gaps of 32 00:02:02,120 --> 00:02:05,280 Speaker 1: for example, take one cyber that's probably the largest gap 33 00:02:05,280 --> 00:02:09,040 Speaker 1: where the technologies are at one end really really rapidly 34 00:02:08,400 --> 00:02:11,840 Speaker 1: and profound effects. And the rules it's like the wild West. 35 00:02:12,080 --> 00:02:14,440 Speaker 1: The world hasn't begun to set rules. Plus there's no 36 00:02:14,560 --> 00:02:17,720 Speaker 1: sheriff if in one various actors violate what rules there are. 37 00:02:17,760 --> 00:02:21,079 Speaker 1: In Professor spent, you have prodigious mathematical abilities here. And 38 00:02:21,120 --> 00:02:24,079 Speaker 1: when I hear Haws to talk about speed, I look 39 00:02:24,120 --> 00:02:26,840 Speaker 1: at from an electrical engineering standpoint to slew rates, the 40 00:02:26,880 --> 00:02:31,000 Speaker 1: abrupt changes within any system and circuitry. From where you sit, 41 00:02:31,200 --> 00:02:34,560 Speaker 1: our our markets able to keep up with the modern 42 00:02:34,720 --> 00:02:38,680 Speaker 1: slew rates of globalization. Yeah, the markets can keep up 43 00:02:38,720 --> 00:02:42,200 Speaker 1: with it, but the the economy can't. Uh. And so 44 00:02:42,440 --> 00:02:44,800 Speaker 1: I think what you're getting out of Trump is something 45 00:02:44,880 --> 00:02:48,680 Speaker 1: quite interesting. Basically, we have lived in the world in 46 00:02:48,760 --> 00:02:51,800 Speaker 1: which we in America were took the lead in creating 47 00:02:51,840 --> 00:02:54,320 Speaker 1: this sort of global system, and then we said, we 48 00:02:54,360 --> 00:02:57,560 Speaker 1: can't touch that system because it yields huge benefits. And 49 00:02:57,639 --> 00:03:01,960 Speaker 1: it does, and so we did. So take the labor markets, 50 00:03:02,040 --> 00:03:04,600 Speaker 1: you know, the demand side moves around because of technology 51 00:03:04,600 --> 00:03:08,480 Speaker 1: and globalization, and we're supposed to adapt. And Trump is saying, no, 52 00:03:08,600 --> 00:03:11,880 Speaker 1: I'm reversing those priorities. Right, We're gonna do what it 53 00:03:11,919 --> 00:03:14,519 Speaker 1: takes to make our economy function in a way that 54 00:03:14,600 --> 00:03:19,280 Speaker 1: satisfactory to the citizens. And then adults can negotiate mutually 55 00:03:19,320 --> 00:03:23,600 Speaker 1: beneficial arrangements. So he's going to interfere, you know, with 56 00:03:23,639 --> 00:03:26,440 Speaker 1: a whole lot of things that used to be untouchable before, 57 00:03:27,440 --> 00:03:31,000 Speaker 1: so that Donald Trump satisfies Americans. For how long I 58 00:03:31,040 --> 00:03:33,040 Speaker 1: was speaking to in the Rothschild and she was talking 59 00:03:33,040 --> 00:03:36,160 Speaker 1: about inclusive capitalism. It was on Friday in Rome, and 60 00:03:36,200 --> 00:03:40,000 Speaker 1: she reminded me there are three million truck drivers in America. 61 00:03:40,080 --> 00:03:42,880 Speaker 1: When we start having driverless cars, it could be three years, 62 00:03:42,920 --> 00:03:46,280 Speaker 1: four years, five years away. Then those people will lose 63 00:03:46,280 --> 00:03:48,880 Speaker 1: their jobs at the end of the day. So if 64 00:03:48,960 --> 00:03:52,800 Speaker 1: you refocus on manufacturing, how long can you how long 65 00:03:52,840 --> 00:03:57,240 Speaker 1: can you basically reflight the economy for and keep people happy? Well, 66 00:03:58,200 --> 00:04:01,760 Speaker 1: in fairness, I mean, I don't think um President elect 67 00:04:01,760 --> 00:04:06,200 Speaker 1: Trump is relying on manufacturing only to reflate the economy. 68 00:04:06,280 --> 00:04:10,360 Speaker 1: What he's concerned about is getting on with the process 69 00:04:10,440 --> 00:04:13,680 Speaker 1: of of having the economy and our labor force and 70 00:04:13,760 --> 00:04:17,400 Speaker 1: our human capital adapt to this new world. But what 71 00:04:17,440 --> 00:04:21,200 Speaker 1: he is saying in part is if we can't adapt 72 00:04:21,240 --> 00:04:23,599 Speaker 1: fast enough, we'll change the rate at which we have 73 00:04:23,720 --> 00:04:25,880 Speaker 1: to adapt. But can I pick up on some sequence 74 00:04:25,960 --> 00:04:28,839 Speaker 1: and said, there's a mismatch. The cause of most of 75 00:04:28,839 --> 00:04:32,560 Speaker 1: the job dislocation is technological innovation, and the essence of 76 00:04:32,600 --> 00:04:35,120 Speaker 1: the polar response is to pin the tail on the 77 00:04:35,200 --> 00:04:38,359 Speaker 1: donkey of either trade or offshoring. And there's a mismatch. 78 00:04:38,520 --> 00:04:41,200 Speaker 1: So even if the so called cures being put forward 79 00:04:41,520 --> 00:04:44,320 Speaker 1: now by the political process go forward, it won't cure 80 00:04:44,360 --> 00:04:47,080 Speaker 1: the problem, and millions of Americans will still face job 81 00:04:47,120 --> 00:04:49,599 Speaker 1: dis place But we haven't begun a serious debate in 82 00:04:49,600 --> 00:04:52,800 Speaker 1: this country about what to do about robotics and artificial 83 00:04:52,839 --> 00:04:55,760 Speaker 1: intelligence and driverless vehicles and how we're going to cope 84 00:04:55,760 --> 00:04:58,720 Speaker 1: With a spirited conversation with Michael Spence, the Lord from 85 00:04:58,720 --> 00:05:02,520 Speaker 1: New York University and Ambassador House of the Consul and formulations, 86 00:05:02,520 --> 00:05:04,000 Speaker 1: what an honor to have the two of you here 87 00:05:04,000 --> 00:05:06,880 Speaker 1: with all that's going on in the distill And really, folks, 88 00:05:06,920 --> 00:05:09,240 Speaker 1: we were talking about this on the break, about the 89 00:05:09,320 --> 00:05:12,520 Speaker 1: old in the new ambassador has, how Reagan has. There's 90 00:05:12,560 --> 00:05:14,560 Speaker 1: so many articles I want to be like Reagan. I'm 91 00:05:14,600 --> 00:05:17,599 Speaker 1: like Reagan, Come on, you can't mean it's not the 92 00:05:17,640 --> 00:05:21,240 Speaker 1: same world as President Reagan had. First of all, it's 93 00:05:21,279 --> 00:05:23,520 Speaker 1: not the same person as Ronald Reagan. Ronald Reagan came 94 00:05:23,520 --> 00:05:25,880 Speaker 1: into office with a really developed philosophy. He may have 95 00:05:25,880 --> 00:05:28,000 Speaker 1: been underestimated by a lot of the pundits, but they 96 00:05:28,040 --> 00:05:31,119 Speaker 1: missed it. He had written those letters and articles for years, 97 00:05:31,120 --> 00:05:34,440 Speaker 1: given hundreds and hundreds of policy speeches. Plus politics were 98 00:05:34,440 --> 00:05:38,560 Speaker 1: different when Reagan was there. Washington was a much more malleable, functional, 99 00:05:38,600 --> 00:05:41,960 Speaker 1: place now because the funding reforms and other reforms about 100 00:05:41,960 --> 00:05:45,160 Speaker 1: how politics are conducted, how the society has changed. It's 101 00:05:45,279 --> 00:05:49,520 Speaker 1: much harder to to garner concentrated political power, so that 102 00:05:49,720 --> 00:05:52,240 Speaker 1: the parallels to Reagan, I think are not going to 103 00:05:52,560 --> 00:05:55,279 Speaker 1: But there is something, and Michael called it animal spirits, 104 00:05:55,560 --> 00:05:59,520 Speaker 1: there is a sense of with with where we are economically, 105 00:05:59,560 --> 00:06:01,800 Speaker 1: that this is a moment where we're gonna go from 106 00:06:01,839 --> 00:06:04,800 Speaker 1: probably an under two percent pro long rate of growth 107 00:06:05,000 --> 00:06:07,960 Speaker 1: to something much higher with some sort of combination of 108 00:06:08,000 --> 00:06:12,200 Speaker 1: corporate tax reform, individual tax reform, and finally some fiscal spending. 109 00:06:12,400 --> 00:06:14,400 Speaker 1: It's almost as if we're saying the era in which 110 00:06:14,440 --> 00:06:16,960 Speaker 1: the only game in town was monetary power and what 111 00:06:17,000 --> 00:06:19,279 Speaker 1: the central bankers can do is over and now we 112 00:06:19,400 --> 00:06:23,280 Speaker 1: finally have something larger going on in Washington, right, Richard, 113 00:06:23,320 --> 00:06:26,600 Speaker 1: two questions on that, So recon reconomics, you you know, right, 114 00:06:26,640 --> 00:06:29,240 Speaker 1: we point out the differences, the differences, but actually he 115 00:06:29,279 --> 00:06:32,440 Speaker 1: did produce large fiscal deficits and the ultra strong dollar 116 00:06:32,560 --> 00:06:35,440 Speaker 1: if we do see the same thing from Donald Trump. 117 00:06:35,440 --> 00:06:37,839 Speaker 1: But also may mean that actually Europe it becomes a 118 00:06:37,880 --> 00:06:40,680 Speaker 1: lot more competitive because the euro goes down. So you 119 00:06:40,720 --> 00:06:42,839 Speaker 1: could argue that Donald Trump. At the end of the day, 120 00:06:43,080 --> 00:06:48,520 Speaker 1: we'll save the Eurozone. That you've now discovered the hidden 121 00:06:48,560 --> 00:06:51,599 Speaker 1: agenda of the of the Trump of presidency is to 122 00:06:51,680 --> 00:06:54,920 Speaker 1: save the ears. Well, I thought it was a secret 123 00:06:54,920 --> 00:06:57,279 Speaker 1: that was only between us. I think it'll take a 124 00:06:57,279 --> 00:07:00,560 Speaker 1: little bit more than that, but it could have some 125 00:07:00,600 --> 00:07:05,599 Speaker 1: effects that, yes, are advantageous for for European uh, for Europeans. 126 00:07:05,600 --> 00:07:08,159 Speaker 1: But let's not kid ourselves. What Europeans doing don't do 127 00:07:08,279 --> 00:07:10,560 Speaker 1: is gonna have a fight far greater impact on their 128 00:07:10,560 --> 00:07:12,760 Speaker 1: own future. No about Lauriate Michael Spence at the Stern 129 00:07:12,800 --> 00:07:14,880 Speaker 1: School of Business at n y U and Ambassador Richard Hass, 130 00:07:14,880 --> 00:07:17,280 Speaker 1: President of the Council and Form Relations, author of A 131 00:07:17,360 --> 00:07:20,720 Speaker 1: World in Disarray, American Foreign Policy and the Crisis of 132 00:07:20,800 --> 00:07:23,120 Speaker 1: the Old Order, out just in time for inauguration. Penguin 133 00:07:23,160 --> 00:07:26,000 Speaker 1: Press schedule to publish that book on January the tenth, 134 00:07:26,400 --> 00:07:28,160 Speaker 1: and Richard host let's start there. Let's start with the 135 00:07:28,160 --> 00:07:30,400 Speaker 1: Old Order and what comes next. We've heard Donald Trump 136 00:07:30,440 --> 00:07:34,040 Speaker 1: fulminating on his set his thank you tour across the 137 00:07:34,040 --> 00:07:36,600 Speaker 1: country in Faietville, North Carolina, last night. Are we any 138 00:07:36,600 --> 00:07:38,720 Speaker 1: closer here to getting a sense of what what his 139 00:07:38,800 --> 00:07:42,080 Speaker 1: brand of foreign policy is the short answer is no, 140 00:07:42,760 --> 00:07:45,000 Speaker 1: most of the team is not in place. We obviously 141 00:07:45,000 --> 00:07:48,120 Speaker 1: still don't have a Secretary of State. And even after 142 00:07:48,160 --> 00:07:50,560 Speaker 1: you staff up, usually the first few months of any 143 00:07:50,560 --> 00:07:55,480 Speaker 1: administrations are consumed by interagency reviews of pretty much everything 144 00:07:55,520 --> 00:07:59,800 Speaker 1: you've got, from crisis to standing UH situations. So my 145 00:07:59,800 --> 00:08:02,080 Speaker 1: my senses, we're not going to have a developed view 146 00:08:02,160 --> 00:08:04,920 Speaker 1: probably till late spring. But in the meantime we are 147 00:08:04,960 --> 00:08:08,360 Speaker 1: getting some specifics, the fact that t PP, the Transpacific 148 00:08:08,440 --> 00:08:12,520 Speaker 1: Trade Agreement is essentially no longer, the questioning of the 149 00:08:12,560 --> 00:08:18,080 Speaker 1: One China policy after several UH decades. We had certain 150 00:08:18,120 --> 00:08:21,080 Speaker 1: statements in the campaign made which again raise at least 151 00:08:21,120 --> 00:08:25,240 Speaker 1: the some questions about the long term standing of some 152 00:08:25,520 --> 00:08:29,360 Speaker 1: tradish traditional features of American foreign policy. So there will 153 00:08:29,400 --> 00:08:31,960 Speaker 1: be elements of change or disruption. I think the the 154 00:08:31,960 --> 00:08:34,720 Speaker 1: honest answer, though, is we don't quite know what the 155 00:08:34,760 --> 00:08:38,480 Speaker 1: balances between UH, the old order and the new, and 156 00:08:38,520 --> 00:08:40,920 Speaker 1: what exactly a new order or disorder might look like. 157 00:08:41,240 --> 00:08:43,600 Speaker 1: Prefensi respub struck by how much of foreign policy right 158 00:08:43,640 --> 00:08:46,360 Speaker 1: now is being driven by economics, and when when you 159 00:08:46,360 --> 00:08:48,880 Speaker 1: look at recent history, how new a thing is that, 160 00:08:48,920 --> 00:08:50,760 Speaker 1: How novel is that that we are seeing so much. 161 00:08:50,800 --> 00:08:53,240 Speaker 1: Be it the relationship with China and Taiwan, be what 162 00:08:53,320 --> 00:08:55,920 Speaker 1: we saw in Italy earlier this week. It's economics that's 163 00:08:55,920 --> 00:08:58,640 Speaker 1: the driving force. Well, it is because you know, for 164 00:08:58,679 --> 00:09:02,880 Speaker 1: a long time we had deteriorating uh, you know, distributional 165 00:09:02,920 --> 00:09:05,280 Speaker 1: aspects of growth patterns. But they have now burst on 166 00:09:05,320 --> 00:09:09,520 Speaker 1: the scene. So it's impossible to ignore it any longer politically, 167 00:09:09,520 --> 00:09:12,640 Speaker 1: and that is spilling over into you know, the way 168 00:09:12,679 --> 00:09:15,440 Speaker 1: we formulate how we deal with the rest of the world. Now, 169 00:09:15,440 --> 00:09:19,880 Speaker 1: we may over emphasize globalization and under emphasized technology as 170 00:09:19,920 --> 00:09:23,080 Speaker 1: part of the political process. But but the simple fact 171 00:09:23,200 --> 00:09:26,880 Speaker 1: is that that the what has come to be called 172 00:09:26,960 --> 00:09:30,000 Speaker 1: job and income polarization in the middle class element is 173 00:09:30,040 --> 00:09:33,800 Speaker 1: just too large to be set aside politically anymore in 174 00:09:33,880 --> 00:09:36,479 Speaker 1: any system. You and I last spoke before that referendum 175 00:09:36,640 --> 00:09:38,960 Speaker 1: in Italy, and you spend a lot of time in 176 00:09:39,000 --> 00:09:41,920 Speaker 1: that country. We talked about the referendum. Then looking at 177 00:09:41,960 --> 00:09:45,080 Speaker 1: what happened on Sunday, what's the best prism through which 178 00:09:45,120 --> 00:09:48,040 Speaker 1: to see what happened there? Can we draw a broader 179 00:09:48,080 --> 00:09:53,000 Speaker 1: conclusion about populace sentiment in Europe largely globally or was 180 00:09:53,000 --> 00:09:56,920 Speaker 1: this a domestic domestic vote. Yeah, it's a Sorry, it's 181 00:09:56,920 --> 00:09:59,440 Speaker 1: a mixed case. So you what you would not want 182 00:09:59,440 --> 00:10:04,160 Speaker 1: to mean. Popular sentiment is gaining ground in Europe uh 183 00:10:04,200 --> 00:10:07,360 Speaker 1: as well as here. So that's a general trend. Uh, 184 00:10:07,400 --> 00:10:10,239 Speaker 1: But that trend is not yet strong enough to have determined, 185 00:10:10,400 --> 00:10:14,160 Speaker 1: you know, a sixty forty loss for the So there's 186 00:10:14,200 --> 00:10:20,200 Speaker 1: idiosyncratic factors. Uh, there's a political system that people benefit 187 00:10:20,280 --> 00:10:23,200 Speaker 1: from that somewhat corrupted much of the country that was 188 00:10:23,280 --> 00:10:26,440 Speaker 1: going to be challenged if the referendum passed. So that 189 00:10:26,480 --> 00:10:29,640 Speaker 1: you've you've got a whole set of other people voting 190 00:10:29,640 --> 00:10:33,280 Speaker 1: no for different reasons, you know, not just the nationalist 191 00:10:33,320 --> 00:10:37,200 Speaker 1: populist ones. That's your hots going into that referendum. Uh. 192 00:10:37,320 --> 00:10:39,080 Speaker 1: Looking at the banks now, a lot of people said, 193 00:10:39,480 --> 00:10:42,600 Speaker 1: look to Greece as an example, uh, an illustrative example 194 00:10:42,600 --> 00:10:44,520 Speaker 1: of what might be happen in Italy. What countries are 195 00:10:44,520 --> 00:10:47,640 Speaker 1: watching what's unfolding Italy now in light of that referendum. Well, 196 00:10:47,679 --> 00:10:49,599 Speaker 1: the Germans are watching us. They're wondering how much of 197 00:10:49,640 --> 00:10:51,880 Speaker 1: their wallet is going to get back to UH to 198 00:10:52,000 --> 00:10:54,880 Speaker 1: pay for it. I think that's probably number one and 199 00:10:54,880 --> 00:10:56,600 Speaker 1: the Greece there also going to look at to see 200 00:10:56,640 --> 00:10:59,040 Speaker 1: what's the latest mood in Europe to to bail out 201 00:10:59,720 --> 00:11:03,000 Speaker 1: the who are who are weak. And I assume people 202 00:11:03,040 --> 00:11:06,160 Speaker 1: like Mr drag Or spending really fairly long hours at 203 00:11:06,160 --> 00:11:09,000 Speaker 1: the office figuring out exactly what they're gonna have to do. 204 00:11:09,040 --> 00:11:13,840 Speaker 1: And again it highlights the the precarious balance between national 205 00:11:13,880 --> 00:11:18,720 Speaker 1: economic performance and what Brussels and It is meant to do. 206 00:11:18,800 --> 00:11:21,440 Speaker 1: And the and the problem is you can't discipline national 207 00:11:21,440 --> 00:11:24,760 Speaker 1: economic performance in some ways because people are scared to 208 00:11:24,760 --> 00:11:26,719 Speaker 1: see that through its tent end because it might mean 209 00:11:26,760 --> 00:11:29,400 Speaker 1: certain countries have to exit. So you're always there a 210 00:11:29,400 --> 00:11:32,880 Speaker 1: little bit as the banker of last resort, which destroys 211 00:11:32,880 --> 00:11:35,079 Speaker 1: a lot of the discipline. So you've got the EU 212 00:11:35,240 --> 00:11:38,320 Speaker 1: on this. It's kind of addicted to a degree of 213 00:11:38,400 --> 00:11:41,720 Speaker 1: external help and a failure to really discipline things as 214 00:11:41,800 --> 00:11:45,160 Speaker 1: much as you might want to. Impurely economic Let's I 215 00:11:45,200 --> 00:11:47,400 Speaker 1: want to go there the proverbial can. How do you 216 00:11:47,440 --> 00:11:49,640 Speaker 1: say kick the can down the road in Italian? I 217 00:11:49,640 --> 00:11:54,920 Speaker 1: don't know, we won't make it up. But wait, that's 218 00:11:54,920 --> 00:11:58,520 Speaker 1: how I got through foreign language at school. Uh Richard 219 00:11:58,520 --> 00:12:01,400 Speaker 1: asked with this Michael Spence this morning. Good morning, It 220 00:12:01,440 --> 00:12:06,400 Speaker 1: has been an interesting morning of conversation here at Bloomberg Surveillance. 221 00:12:06,800 --> 00:12:12,080 Speaker 1: It has been Professor spends one considered and continuous can 222 00:12:12,120 --> 00:12:15,439 Speaker 1: down the road. How do you break that? And allahyak, 223 00:12:15,559 --> 00:12:19,240 Speaker 1: how do you clear markets? It's crisis every time, isn't No. 224 00:12:19,400 --> 00:12:23,040 Speaker 1: I actually think it's simple if you take the the 225 00:12:23,040 --> 00:12:27,600 Speaker 1: Europe or the Eurozone's entire capacity, uh, to sort of 226 00:12:27,840 --> 00:12:30,720 Speaker 1: do what Trump is saying he's going to do, admitting 227 00:12:30,760 --> 00:12:35,560 Speaker 1: there's uncertainty, use fiscal measures to make it easier to 228 00:12:35,600 --> 00:12:38,000 Speaker 1: do the structural reforms. They could change the growth pattern. 229 00:12:38,480 --> 00:12:41,079 Speaker 1: Now cynics will say that's not very likely, but it's not. 230 00:12:41,320 --> 00:12:45,080 Speaker 1: It's not very hard, uh to see what path. You know, 231 00:12:45,160 --> 00:12:47,480 Speaker 1: if you started going down that path, Roggy could raise 232 00:12:47,520 --> 00:12:50,560 Speaker 1: the interest rates. Then they'd start the restructuring that that 233 00:12:50,679 --> 00:12:53,920 Speaker 1: Richard talked about. You know, Italy couldn't sit there with 234 00:12:53,960 --> 00:12:56,440 Speaker 1: a sovereign debt, the GDP ratio of a D thirty 235 00:12:56,440 --> 00:12:58,840 Speaker 1: five per cent and a whole lot of good things 236 00:12:59,040 --> 00:13:02,240 Speaker 1: they're painful with start to happen. But right now it's 237 00:13:02,280 --> 00:13:06,280 Speaker 1: sort of locked in its current configuration. Lockton's current configuration 238 00:13:06,559 --> 00:13:08,280 Speaker 1: and Ambassador Hasse I wonder when you when you look 239 00:13:08,320 --> 00:13:13,319 Speaker 1: at Europe today, at the economic underpinnings and the security underpinnings, 240 00:13:13,880 --> 00:13:16,280 Speaker 1: which is stronger, What what's the most compelling case here 241 00:13:16,280 --> 00:13:19,360 Speaker 1: for the European project at this point, the security case 242 00:13:19,480 --> 00:13:22,760 Speaker 1: is the most compelling. People take for granted the extraordinary 243 00:13:22,800 --> 00:13:26,160 Speaker 1: contribution again of what's happened in Europe over the last 244 00:13:26,240 --> 00:13:30,240 Speaker 1: what seventy odd years the world. You had World War 245 00:13:30,280 --> 00:13:33,120 Speaker 1: One on World War Two in Europe, and the whole 246 00:13:33,120 --> 00:13:35,560 Speaker 1: idea of what began as the Coal and Steel community 247 00:13:36,040 --> 00:13:39,280 Speaker 1: was to knit together and integrate Europe so much the 248 00:13:39,280 --> 00:13:44,319 Speaker 1: war would become literally unthinkable and undoable, and it's succeeded. 249 00:13:44,480 --> 00:13:48,360 Speaker 1: The fact that Western Europe has been as geopolitically stable 250 00:13:48,440 --> 00:13:50,720 Speaker 1: as it's been now for three quarters of a century. 251 00:13:50,920 --> 00:13:53,560 Speaker 1: It's a little bit like oxygen. You take it for granted, 252 00:13:53,760 --> 00:13:55,800 Speaker 1: but when you look back and you compare the last 253 00:13:55,800 --> 00:13:58,160 Speaker 1: seventy five years but the fifty years that preceded it, 254 00:13:58,280 --> 00:14:01,120 Speaker 1: it is it is one of the world's great great accomplishments. 255 00:14:01,120 --> 00:14:03,559 Speaker 1: And what worries me is so many of these votes 256 00:14:03,600 --> 00:14:05,760 Speaker 1: and so many of these political decisions, from Gregxit to 257 00:14:05,840 --> 00:14:09,199 Speaker 1: what have you are being made on really narrow calculus 258 00:14:09,280 --> 00:14:12,920 Speaker 1: is of of the trading arrangement or the economics. How 259 00:14:13,000 --> 00:14:15,760 Speaker 1: much money is going back and forth between Brussels, and 260 00:14:15,800 --> 00:14:20,120 Speaker 1: no one seems to be considering this larger geopolitical historical thing. 261 00:14:20,920 --> 00:14:23,280 Speaker 1: It's at stake, but no one seems to be taking 262 00:14:23,280 --> 00:14:26,600 Speaker 1: it into account. It's the shortsightedness and narrowness of the 263 00:14:26,640 --> 00:14:31,480 Speaker 1: European political votes right now that frightened me. Looking Inbastador, 264 00:14:31,560 --> 00:14:33,800 Speaker 1: Springs have multi ladderism here, and I guess we could 265 00:14:33,800 --> 00:14:35,920 Speaker 1: say we are multi ladderism light of what we saw 266 00:14:35,960 --> 00:14:38,880 Speaker 1: here in the US and what we saw perhaps in 267 00:14:38,920 --> 00:14:42,040 Speaker 1: the United Kingdom before that. Are we at a point 268 00:14:42,040 --> 00:14:46,640 Speaker 1: where our trade policy investors Professor's fenses is, is going 269 00:14:46,680 --> 00:14:49,160 Speaker 1: to be purely bilateral. We're gonna have a patchwork quilt 270 00:14:49,160 --> 00:14:51,720 Speaker 1: here of trade deals. Well, it certainly sounds like we're 271 00:14:51,760 --> 00:14:53,520 Speaker 1: going in that direction. I mean, it doesn't have to 272 00:14:53,560 --> 00:14:56,400 Speaker 1: be all bilateral, but it's certainly not going to be 273 00:14:56,520 --> 00:14:59,960 Speaker 1: multi multilateral. I think that's stalled. And one of the 274 00:15:00,040 --> 00:15:03,840 Speaker 1: reason installed is that in in the in the framework 275 00:15:03,920 --> 00:15:07,200 Speaker 1: where you negotiate with adults, you know and find where 276 00:15:07,200 --> 00:15:11,920 Speaker 1: your mutual interests overlap. You can't do the multilateral thing 277 00:15:11,920 --> 00:15:15,360 Speaker 1: because the multilateral thing survived because America was willing to 278 00:15:15,400 --> 00:15:18,520 Speaker 1: absorb more of the burden of providing the public goods. 279 00:15:18,920 --> 00:15:22,760 Speaker 1: And if we find it impossible or we are unwilling 280 00:15:22,800 --> 00:15:26,200 Speaker 1: to do that anymore, I think that just kicks the 281 00:15:26,200 --> 00:15:29,880 Speaker 1: foundations out from underneath the multilateral system. Because Richard Hass 282 00:15:30,040 --> 00:15:33,760 Speaker 1: and Michael Spence h Professor Hass the Ambassador has a 283 00:15:33,800 --> 00:15:36,080 Speaker 1: book coming out, The World in Disarray, which I think 284 00:15:36,080 --> 00:15:38,880 Speaker 1: we can all agree with, and and part of that 285 00:15:39,440 --> 00:15:41,800 Speaker 1: is this shifting foreign policy, and let's call it from 286 00:15:41,840 --> 00:15:45,600 Speaker 1: a traditional world order maybe Dr Kissinger's world order of 287 00:15:45,600 --> 00:15:49,400 Speaker 1: a Westphalian system, to maybe for Red Zakaria's post American 288 00:15:49,480 --> 00:15:54,000 Speaker 1: world and maybe to a new isolationism. What you're so 289 00:15:54,040 --> 00:15:57,440 Speaker 1: good at is not what we observe, but what is 290 00:15:57,520 --> 00:16:00,960 Speaker 1: not there. What will be the that hume if we 291 00:16:01,040 --> 00:16:06,720 Speaker 1: don't participate in the world economy and in international relations. Well, 292 00:16:06,800 --> 00:16:09,360 Speaker 1: there's a whole set of what you might tom you 293 00:16:09,440 --> 00:16:12,600 Speaker 1: might call public goods. I mean, you know that range 294 00:16:12,640 --> 00:16:16,080 Speaker 1: from stability to providing the currency that supports the sort 295 00:16:16,080 --> 00:16:19,080 Speaker 1: of global system. And the United States has had an 296 00:16:19,120 --> 00:16:23,120 Speaker 1: absolutely central role in that in the entire post war period. 297 00:16:23,360 --> 00:16:27,200 Speaker 1: So I think the vacuum is the public goods that 298 00:16:27,240 --> 00:16:31,480 Speaker 1: support the international system, those public goods, Ambassador Hastening, And 299 00:16:31,560 --> 00:16:33,840 Speaker 1: this goes to the certitude. I mean, just on the 300 00:16:33,880 --> 00:16:38,240 Speaker 1: Boeing discussion yesterday from the President elect, how can the 301 00:16:38,320 --> 00:16:43,720 Speaker 1: president frame his popular certitude and keep us in the 302 00:16:43,800 --> 00:16:48,400 Speaker 1: consul and foreign relations game? Uh? Not going to be easy? 303 00:16:48,480 --> 00:16:51,720 Speaker 1: And Professor Spencers exactly right. You know, we have provided 304 00:16:51,760 --> 00:16:54,200 Speaker 1: a lot of public goods. Americans at times she more 305 00:16:54,280 --> 00:16:56,560 Speaker 1: aware of the costs than they do of the benefits, 306 00:16:56,920 --> 00:17:01,280 Speaker 1: partially extremined people of the benefits, the extraordinnary stability in 307 00:17:01,320 --> 00:17:05,560 Speaker 1: the world, the extraordinary economic growth that we have benefited 308 00:17:05,760 --> 00:17:08,800 Speaker 1: uh from it it, all things being equal, as as 309 00:17:08,840 --> 00:17:12,680 Speaker 1: as decades and most of centuries go, the post World 310 00:17:12,720 --> 00:17:17,080 Speaker 1: War two era has been extraordinarily generous and favorable, uh 311 00:17:17,200 --> 00:17:19,600 Speaker 1: to to the United States. And I think when people 312 00:17:19,640 --> 00:17:21,720 Speaker 1: look at it, they need to look at both sides 313 00:17:21,760 --> 00:17:24,240 Speaker 1: of the ledger. And sure we've made mistakes, and sure 314 00:17:24,320 --> 00:17:27,480 Speaker 1: some things have cost but actually the biggest mistakes were 315 00:17:27,520 --> 00:17:31,080 Speaker 1: nothing were what what we're Vietnam and the Iraq War, 316 00:17:31,320 --> 00:17:34,400 Speaker 1: those were bell Those were both self generated self inflicted. 317 00:17:34,600 --> 00:17:37,560 Speaker 1: But most of what we were done, the alliance systems 318 00:17:37,560 --> 00:17:40,640 Speaker 1: in Asia and Europe have kept stability the Great Trading 319 00:17:40,680 --> 00:17:44,600 Speaker 1: and other economic institutional arrangements. Yes, we've we've made them possible, 320 00:17:44,640 --> 00:17:46,680 Speaker 1: but we have in some ways been the greatest beneficiary. 321 00:17:47,760 --> 00:17:49,919 Speaker 1: I want to ask you about some some tweets in particular. 322 00:17:50,000 --> 00:17:52,440 Speaker 1: That's how we're talking about foreign policy these days. We 323 00:17:52,440 --> 00:17:54,879 Speaker 1: we saw the tweets about China. We heard about the 324 00:17:54,880 --> 00:17:59,600 Speaker 1: phone call with the president of Taiwan. You've recently returned 325 00:17:59,600 --> 00:18:01,720 Speaker 1: from China. Know what do what do the people that 326 00:18:01,760 --> 00:18:03,679 Speaker 1: you talk to their make of the the outcome of 327 00:18:03,680 --> 00:18:07,399 Speaker 1: that election and the prospects for this presidency going forward. 328 00:18:07,720 --> 00:18:10,959 Speaker 1: You see the adversarial nous in the nature of those tweets, 329 00:18:10,960 --> 00:18:13,240 Speaker 1: in the nature of the rhetoric. What's their sense of 330 00:18:13,240 --> 00:18:15,359 Speaker 1: what's to come? Well, when I was there, which was 331 00:18:15,440 --> 00:18:18,160 Speaker 1: just before all this hit the fan, the general view 332 00:18:18,240 --> 00:18:20,720 Speaker 1: was uncertainty of as to what to expect. Virtually all 333 00:18:20,720 --> 00:18:23,520 Speaker 1: my meetings with high ranking Chinese officials was to ask 334 00:18:23,560 --> 00:18:26,720 Speaker 1: me to basically translate Donald Trump into Mandarin. There was 335 00:18:26,760 --> 00:18:29,560 Speaker 1: a clear desire for the job in that I think 336 00:18:29,600 --> 00:18:34,360 Speaker 1: there was a clear desire for continued positive US Chinese relations, 337 00:18:34,359 --> 00:18:37,000 Speaker 1: which have been quite good over over the years, and 338 00:18:37,080 --> 00:18:38,679 Speaker 1: now this has come in. What I think this has 339 00:18:38,760 --> 00:18:42,399 Speaker 1: done is put into play uncertainty about the One China 340 00:18:42,480 --> 00:18:44,840 Speaker 1: policy and just more broadly, what will be the tenor 341 00:18:44,880 --> 00:18:48,000 Speaker 1: of US China relations under this new presidency. And the 342 00:18:48,080 --> 00:18:51,280 Speaker 1: Chinese haven't quite figured out how to react that. They 343 00:18:51,280 --> 00:18:53,680 Speaker 1: don't want this to escalate. They do want to still 344 00:18:53,720 --> 00:18:56,720 Speaker 1: have a stable relationship with stable regions, but they are 345 00:18:56,840 --> 00:18:59,720 Speaker 1: genuinely concerned. If you read it, the tenor of their 346 00:18:59,720 --> 00:19:03,640 Speaker 1: pub the comments has gotten successively tougher if you look 347 00:19:03,680 --> 00:19:05,359 Speaker 1: at their initial kind of let's we're not going to 348 00:19:05,440 --> 00:19:08,119 Speaker 1: overreact to the phone call, to what the People's Daily 349 00:19:08,160 --> 00:19:11,600 Speaker 1: has said in subsequent editorials. They are generally concerned about 350 00:19:11,600 --> 00:19:15,720 Speaker 1: the thrust of US policy. David notices Richard Hass Mr 351 00:19:15,720 --> 00:19:17,960 Speaker 1: Trump will up here with NBC's Today's Show. Here in 352 00:19:18,000 --> 00:19:20,359 Speaker 1: a bit, what is the question you would ask the 353 00:19:20,359 --> 00:19:22,919 Speaker 1: President elect right now? Well, I would get him to 354 00:19:22,960 --> 00:19:26,440 Speaker 1: specifically react to the One China policy and his view 355 00:19:26,920 --> 00:19:31,560 Speaker 1: about the importance of China and US Chinese relations to 356 00:19:31,560 --> 00:19:33,600 Speaker 1: to the world, to basically get him to take a 357 00:19:33,640 --> 00:19:36,560 Speaker 1: step back from some of the smallness of fuel relative 358 00:19:36,600 --> 00:19:39,199 Speaker 1: smallness of the Taiwan issue, to get a sense of 359 00:19:39,200 --> 00:19:43,840 Speaker 1: whether he buys into this larger structure that has has 360 00:19:43,880 --> 00:19:46,480 Speaker 1: been the status quo now for several decades. Professor Suspencer, 361 00:19:46,560 --> 00:19:50,400 Speaker 1: your question to the President elect, I would ask him 362 00:19:50,400 --> 00:19:54,560 Speaker 1: how he's going to negotiate with China. My view is that, um, 363 00:19:54,760 --> 00:19:58,159 Speaker 1: the relationship so much the same as Richard has no 364 00:19:58,400 --> 00:20:01,080 Speaker 1: I mean, I mean he's already asked quite why challenge 365 00:20:01,119 --> 00:20:03,400 Speaker 1: them on the one thing that's a non negotiable I mean, 366 00:20:03,480 --> 00:20:06,760 Speaker 1: it doesn't make any sense to me, uh, whereas all 367 00:20:06,800 --> 00:20:09,600 Speaker 1: the other things are negotiable. So I'd ask them, you know, well, 368 00:20:09,600 --> 00:20:11,359 Speaker 1: what about the rest of the agenda? How are we 369 00:20:11,359 --> 00:20:13,359 Speaker 1: going to deal with trade? How are we going to 370 00:20:13,440 --> 00:20:16,440 Speaker 1: deal with financial flows, etcetera. And the biggest issue could 371 00:20:16,480 --> 00:20:19,800 Speaker 1: be likely North Korea. The biggest geopolitical issue facing this 372 00:20:19,880 --> 00:20:22,520 Speaker 1: administration over the next four years is likely to be 373 00:20:22,560 --> 00:20:25,040 Speaker 1: the advance of North Korean missile in nuclear capability. I 374 00:20:25,040 --> 00:20:27,640 Speaker 1: was gonna say traffic on, but I guess that's why 375 00:20:27,920 --> 00:20:40,960 Speaker 1: that's that's beyond that's impossible. Who you put your trust 376 00:20:41,000 --> 00:20:45,240 Speaker 1: in matters. Investors have put their trust in independent registered 377 00:20:45,320 --> 00:20:49,160 Speaker 1: investment advisors to the tune of four trillion dollars. Why 378 00:20:49,359 --> 00:20:52,480 Speaker 1: they see their roles to serve, not sell. That's why 379 00:20:52,560 --> 00:20:56,360 Speaker 1: Charles Schwab is committed to the success over seven thousand 380 00:20:56,760 --> 00:21:02,600 Speaker 1: independent financial advisors who passionately dedicate themselves to helping people 381 00:21:02,720 --> 00:21:07,720 Speaker 1: achieve their financial goals. Learn more at find your independent 382 00:21:07,800 --> 00:21:17,240 Speaker 1: advisor dot com. It's another time of year, David Gura, 383 00:21:17,680 --> 00:21:20,840 Speaker 1: he would show up with to go from the Portland 384 00:21:20,960 --> 00:21:25,600 Speaker 1: lobster coming. Unfortunately it's the dead of December. They're not 385 00:21:25,640 --> 00:21:29,240 Speaker 1: even open, Jurd Cassidy are they know? They're not shut down. 386 00:21:29,320 --> 00:21:32,120 Speaker 1: They shut down because it's a strange thing called winter. 387 00:21:33,359 --> 00:21:37,280 Speaker 1: Showed up. Lobster taste is better in cold water, like 388 00:21:37,359 --> 00:21:40,360 Speaker 1: oysters do they Is lobster better now? I would say 389 00:21:41,480 --> 00:21:43,760 Speaker 1: not so much better, but the heart shells are more plentiful, 390 00:21:43,800 --> 00:21:45,760 Speaker 1: so they tend to be better than the soft shelves. 391 00:21:45,840 --> 00:21:48,159 Speaker 1: There we go our lobsters science and it must mean 392 00:21:48,200 --> 00:21:51,640 Speaker 1: Gerard Cassidy is dark in the door with OURBC Capital 393 00:21:51,680 --> 00:21:56,080 Speaker 1: Markets decades of experience and looking at our banks. Let 394 00:21:56,080 --> 00:21:58,119 Speaker 1: me start with a broader question before we kill you 395 00:21:58,119 --> 00:22:02,080 Speaker 1: with the mergers and acquisition ants. What drives you nuts 396 00:22:02,320 --> 00:22:06,199 Speaker 1: about the zeitgeist now on American banks? You're such an 397 00:22:06,240 --> 00:22:10,479 Speaker 1: observer of the certitude of people on our financial system. 398 00:22:10,760 --> 00:22:13,399 Speaker 1: What are we most getting wrong? I would say today, 399 00:22:13,560 --> 00:22:16,720 Speaker 1: I think the bank stock says, you know, since the election, 400 00:22:16,800 --> 00:22:18,919 Speaker 1: have been just a great place to be Tom, and 401 00:22:18,960 --> 00:22:22,080 Speaker 1: I think free standard deviation move off monthly Church, It's 402 00:22:22,160 --> 00:22:25,640 Speaker 1: it's incredible. And I think what people are now anticipating 403 00:22:25,840 --> 00:22:29,320 Speaker 1: is that there will be regulatory reform, higher interest rates 404 00:22:29,359 --> 00:22:32,679 Speaker 1: in a stronger economy. And what people are nervous about is, 405 00:22:32,720 --> 00:22:34,720 Speaker 1: because of the way the stocks have acted in the 406 00:22:34,840 --> 00:22:37,280 Speaker 1: last eighteen months, that this won't last. So what do 407 00:22:37,320 --> 00:22:40,280 Speaker 1: you do this morning? Are you buy? Are you hold? 408 00:22:40,640 --> 00:22:43,320 Speaker 1: Can you? I know you're not gonna say sell, but 409 00:22:43,600 --> 00:22:47,000 Speaker 1: are do you? What's the mood by hold? Cell? I 410 00:22:47,280 --> 00:22:50,119 Speaker 1: think the mood is many investors are waiting for a 411 00:22:50,160 --> 00:22:53,480 Speaker 1: pullback to buy, which suggests to us that they won't 412 00:22:53,480 --> 00:22:55,959 Speaker 1: be a pullback because people are buying the dips. So 413 00:22:56,040 --> 00:22:58,520 Speaker 1: you buy if you really believe that we're going to 414 00:22:58,520 --> 00:23:02,640 Speaker 1: see higher interest rates and regulatory reform, Earnings estimates over 415 00:23:02,680 --> 00:23:06,000 Speaker 1: the next two years will rise meaningfully, not five or 416 00:23:06,040 --> 00:23:09,120 Speaker 1: ten percent, but upwards the fifty percent over the next 417 00:23:09,160 --> 00:23:12,239 Speaker 1: two years because of these potential changes help us with 418 00:23:12,400 --> 00:23:15,800 Speaker 1: the the art of measuring interest rate sensitivity. You say 419 00:23:15,840 --> 00:23:17,560 Speaker 1: it is more art than than science. How do you 420 00:23:17,600 --> 00:23:20,040 Speaker 1: go about doing it, David? You put your thumb on it. 421 00:23:20,040 --> 00:23:23,280 Speaker 1: It is where artors art artists when it comes to 422 00:23:23,400 --> 00:23:26,560 Speaker 1: and just rate forecasts. And I would suggest that it's 423 00:23:26,600 --> 00:23:30,199 Speaker 1: not a perfect science. Generally speaking, the banks give us 424 00:23:30,240 --> 00:23:33,680 Speaker 1: some information in their public filings to suggest if they're 425 00:23:33,680 --> 00:23:36,960 Speaker 1: going to benefit from rising rates, but sometimes rates move 426 00:23:37,040 --> 00:23:39,200 Speaker 1: too fast and they don't benefit as much. So what 427 00:23:39,240 --> 00:23:41,200 Speaker 1: we look at it both to short and long rates. 428 00:23:41,320 --> 00:23:44,040 Speaker 1: Most importantly, too, is the steepness of the yield curve, 429 00:23:44,200 --> 00:23:46,320 Speaker 1: and right now all of that's moving in favor of 430 00:23:46,359 --> 00:23:48,280 Speaker 1: the banks. Tough to do, I imagine, just because the 431 00:23:48,320 --> 00:23:51,600 Speaker 1: information that you're getting is by no means standards standardized. 432 00:23:51,840 --> 00:23:54,040 Speaker 1: That's correct, and I would suggest to you that the 433 00:23:54,080 --> 00:23:57,920 Speaker 1: banks themselves, they have these very sophisticated models, but the 434 00:23:58,040 --> 00:24:00,960 Speaker 1: data they put in there is based on assumptions, and 435 00:24:00,960 --> 00:24:03,760 Speaker 1: if those assumptions don't come true, then the data is 436 00:24:03,800 --> 00:24:06,000 Speaker 1: not that good. Bank of America's on the edge of 437 00:24:06,000 --> 00:24:08,080 Speaker 1: a double I know you told me to buy it 438 00:24:08,160 --> 00:24:11,760 Speaker 1: at twelve. I didn't. I didn't load the boat. Gerard Cassidy, 439 00:24:11,800 --> 00:24:13,879 Speaker 1: is that still your single best too Big to Fail by? 440 00:24:14,080 --> 00:24:16,240 Speaker 1: I think it is time. I think that is the name. 441 00:24:16,520 --> 00:24:20,640 Speaker 1: This company is finally on a turnaround. The company presented 442 00:24:20,720 --> 00:24:22,680 Speaker 1: up at Boston. I happen to me, the president of 443 00:24:22,720 --> 00:24:26,399 Speaker 1: the Boston Distinct. Don't get that shameless. What was the 444 00:24:26,480 --> 00:24:31,320 Speaker 1: distinctive feature there? This is the feature. This company housed 445 00:24:31,440 --> 00:24:34,320 Speaker 1: a dinner and brought up twenty of its senior executives. 446 00:24:34,600 --> 00:24:37,600 Speaker 1: Brian Mornahan hit the ball out of the park in 447 00:24:37,680 --> 00:24:41,200 Speaker 1: connecting to investors. They are going on the offensive after 448 00:24:41,240 --> 00:24:44,119 Speaker 1: being in what governance? Did he clear your worries about 449 00:24:44,160 --> 00:24:47,800 Speaker 1: governance Bank of America? Absolutely? They have turned this company 450 00:24:47,800 --> 00:24:50,639 Speaker 1: around and now they're moving forward. Can I state and 451 00:24:50,720 --> 00:24:54,560 Speaker 1: with will you support me that everybody, including at Bloomberg 452 00:24:54,560 --> 00:24:57,480 Speaker 1: twelve and in Boston will cheer when they retire Mr 453 00:24:57,560 --> 00:25:01,480 Speaker 1: Jeter's jersey. I think that's the most deserving Yankee jersey 454 00:25:01,800 --> 00:25:05,120 Speaker 1: to be retired since the gentleman of many decades ago. 455 00:25:05,359 --> 00:25:09,560 Speaker 1: I think they will absolutely that they have an interesting 456 00:25:09,560 --> 00:25:12,760 Speaker 1: relationship with very quickly or so, Guru has got something 457 00:25:12,760 --> 00:25:14,720 Speaker 1: to talk about when come back. What's your single best buy? 458 00:25:14,760 --> 00:25:18,040 Speaker 1: A small banks right now? Small Western Alliance w A, 459 00:25:18,080 --> 00:25:23,240 Speaker 1: Western Alliance w A L w A L And they're 460 00:25:23,280 --> 00:25:28,160 Speaker 1: out of UH Phoenix slash Las Vegas. They cover the 461 00:25:28,200 --> 00:25:31,000 Speaker 1: southwestern part of the United States, and they've done a 462 00:25:31,000 --> 00:25:34,320 Speaker 1: moonshot like Fortress Point Anne as well. Oh, this company 463 00:25:34,600 --> 00:25:37,080 Speaker 1: of the sarber of the CEO has done a great 464 00:25:37,160 --> 00:25:39,840 Speaker 1: job in turning this company around. They're one of the 465 00:25:39,840 --> 00:25:43,320 Speaker 1: few companies that actually earns fifteen percent return on equity. Well, 466 00:25:43,359 --> 00:25:46,719 Speaker 1: that's enough to get our attention, fifteen undred employees. How 467 00:25:46,760 --> 00:25:49,080 Speaker 1: do you pronounce that? Phoenix? Is that? How you say that? 468 00:25:49,200 --> 00:25:53,840 Speaker 1: David Phoenix, Arizona? Good morning all of Western Alliance Bank Corps. 469 00:25:54,160 --> 00:25:57,640 Speaker 1: The headlines off the today's show interview with the President elect. UM, 470 00:25:57,680 --> 00:26:00,480 Speaker 1: I mean he goes after Alec Baldwin and Friday Night 471 00:26:00,480 --> 00:26:03,479 Speaker 1: Live and the usual I love Twitter is a quote 472 00:26:03,600 --> 00:26:07,320 Speaker 1: modern day form of communication. He is correct on that 473 00:26:07,960 --> 00:26:11,640 Speaker 1: it's changed the cadence. He says, also, the corporate world 474 00:26:11,720 --> 00:26:13,960 Speaker 1: is not, in his words, unnerved by what he's been doing. 475 00:26:14,000 --> 00:26:16,439 Speaker 1: The stock marketing points at an all time record, and 476 00:26:16,600 --> 00:26:18,600 Speaker 1: UH also says that he does not intend to order 477 00:26:18,640 --> 00:26:20,400 Speaker 1: any air Force ones if the price does not come 478 00:26:20,440 --> 00:26:22,360 Speaker 1: down from from what we Well, we have the same 479 00:26:22,400 --> 00:26:24,560 Speaker 1: problem with the surveillance golf stream and we sent that 480 00:26:24,600 --> 00:26:29,600 Speaker 1: budget back three times. Gerard Cassidy with us RBC Capital Markets, 481 00:26:29,640 --> 00:26:32,600 Speaker 1: and I didn't realize the profitability of w A L. 482 00:26:32,680 --> 00:26:35,879 Speaker 1: Western Alliance Corps. They take fifty two cents down to 483 00:26:35,920 --> 00:26:38,679 Speaker 1: the operating income line and then they dash down to 484 00:26:38,760 --> 00:26:42,639 Speaker 1: a thirty eight percent net income margin. That brings us 485 00:26:42,680 --> 00:26:45,480 Speaker 1: to the reason we're thrilled your on, which is to 486 00:26:45,560 --> 00:26:49,080 Speaker 1: explain M and A activity in the small banks. How 487 00:26:49,200 --> 00:26:53,000 Speaker 1: jackson Ian are we gonna be in two thousand seventeen? 488 00:26:53,160 --> 00:26:56,159 Speaker 1: Is there going to be a mergers and acquisition frenzy 489 00:26:56,240 --> 00:26:59,320 Speaker 1: for fifty two cents on the dollar operating income in 490 00:26:59,400 --> 00:27:03,040 Speaker 1: your world? Tom, Yes, I think the mergers and acquisitions 491 00:27:03,080 --> 00:27:05,560 Speaker 1: are going to pick up. I'm not convinced it will 492 00:27:05,600 --> 00:27:09,720 Speaker 1: accelerate in seventeen, but eighteen when all of the changes 493 00:27:09,760 --> 00:27:12,199 Speaker 1: by then will be in place, the you know, the 494 00:27:12,400 --> 00:27:15,480 Speaker 1: peel back of some of the Don Frank legislation, as 495 00:27:15,480 --> 00:27:18,480 Speaker 1: well as increased profitability. That's when we see M and A. 496 00:27:18,600 --> 00:27:20,879 Speaker 1: What will be the form of M N a Secretary 497 00:27:20,880 --> 00:27:25,280 Speaker 1: of Commerce Designate Wilburt Ross is very good at roll 498 00:27:25,440 --> 00:27:29,120 Speaker 1: ups and other fancy phrases. What will be the nature 499 00:27:29,280 --> 00:27:31,439 Speaker 1: of M and A and small banks? I think what 500 00:27:31,560 --> 00:27:35,159 Speaker 1: you'll see is just outright purchases of banks, both small 501 00:27:35,240 --> 00:27:38,080 Speaker 1: and large. And the reason being is that the cost 502 00:27:38,119 --> 00:27:42,120 Speaker 1: savings that can be achieved in an acquisition oftentimes run 503 00:27:42,200 --> 00:27:45,919 Speaker 1: up the fort of the target's expenses. The example I 504 00:27:45,920 --> 00:27:48,960 Speaker 1: can give you recently is Key Corps acquisition of First 505 00:27:49,119 --> 00:27:52,239 Speaker 1: Niagara up in Buffalo, New York, and they expect to 506 00:27:52,640 --> 00:27:56,040 Speaker 1: achieve at least cost savings in that deal. To what 507 00:27:56,160 --> 00:28:00,600 Speaker 1: extent has to what extent has has regular lation, has 508 00:28:00,640 --> 00:28:03,080 Speaker 1: Dodd Frank and all the rest been a hindrance to 509 00:28:03,080 --> 00:28:06,000 Speaker 1: this happening. In other words, if if Donald Trump makes 510 00:28:06,040 --> 00:28:08,600 Speaker 1: good on his promise here to rip up Dodd Frank, uh, 511 00:28:08,760 --> 00:28:12,600 Speaker 1: the floodgates open up. Absolutely. When you look back since 512 00:28:12,640 --> 00:28:16,760 Speaker 1: the crisis, we haven't seen a single big deal yet. 513 00:28:16,800 --> 00:28:20,520 Speaker 1: Prior to the crisis, we saw a big deal when 514 00:28:20,560 --> 00:28:22,760 Speaker 1: we were a bit younger, Tom and I. That's when 515 00:28:22,760 --> 00:28:25,399 Speaker 1: we saw a really the craziness in the M and 516 00:28:25,440 --> 00:28:28,480 Speaker 1: A market. That's when you might recall cities sold out, 517 00:28:28,520 --> 00:28:32,080 Speaker 1: the Travelers Bank America sold out the Nation's bank. We 518 00:28:32,160 --> 00:28:34,600 Speaker 1: could see that kind of frenzy again. Not next year, 519 00:28:34,760 --> 00:28:38,000 Speaker 1: but once everything is set in eighteen. Do we edge 520 00:28:38,160 --> 00:28:42,080 Speaker 1: on being Canadian if we do that, That's an interesting 521 00:28:42,160 --> 00:28:44,840 Speaker 1: question because currently now if you look at our top 522 00:28:44,960 --> 00:28:47,240 Speaker 1: ten banks and you look at the amount of assets 523 00:28:47,320 --> 00:28:51,040 Speaker 1: that they control relative to the entire banking system, it's 524 00:28:51,080 --> 00:28:54,280 Speaker 1: a very significant amount. So I don't think we head 525 00:28:54,360 --> 00:28:57,920 Speaker 1: the way the Canadians run their banking operations with essentially 526 00:28:57,960 --> 00:29:01,719 Speaker 1: five banks controlling the banking market up there will always 527 00:29:01,760 --> 00:29:04,200 Speaker 1: have a barbell in this country will have plenty of 528 00:29:04,240 --> 00:29:06,800 Speaker 1: community banks, but at the other end of the barbel 529 00:29:07,080 --> 00:29:09,760 Speaker 1: some very large banks. Uh. In all likelihood, they're not 530 00:29:09,760 --> 00:29:11,440 Speaker 1: going to rip up Dodd Frank. Some of this stuff 531 00:29:11,480 --> 00:29:14,560 Speaker 1: is going to stick around. What has worked. And when 532 00:29:14,600 --> 00:29:16,600 Speaker 1: you look at the President Elex plans, when you look 533 00:29:16,600 --> 00:29:19,280 Speaker 1: at the plans from Congress over the last however many 534 00:29:19,320 --> 00:29:21,240 Speaker 1: years since Dodd Frank was put into law, what do 535 00:29:21,280 --> 00:29:23,640 Speaker 1: you think we'll stick Yep, No, you're you're absolutely right. 536 00:29:23,680 --> 00:29:25,640 Speaker 1: There are some very good parts of Dodd Frank and 537 00:29:25,640 --> 00:29:28,520 Speaker 1: they should be congratulated on getting it done. The one 538 00:29:28,560 --> 00:29:31,400 Speaker 1: in probably the most important part is forcing the banks 539 00:29:31,400 --> 00:29:34,880 Speaker 1: to carry higher levels of capital and also higher levels 540 00:29:34,880 --> 00:29:37,800 Speaker 1: of liquidity. The second part of Dodd Frank that was 541 00:29:38,040 --> 00:29:41,240 Speaker 1: very effective are the so called stress tests. The stress 542 00:29:41,280 --> 00:29:43,880 Speaker 1: tests happened once a year is for the largest banks, 543 00:29:43,880 --> 00:29:46,440 Speaker 1: and the bank over fifty billions in assets goes through it. 544 00:29:46,640 --> 00:29:48,400 Speaker 1: But that's going to be one of the changes. The 545 00:29:48,560 --> 00:29:51,440 Speaker 1: banks under two hundred and fifty billion in assets will 546 00:29:51,480 --> 00:29:54,120 Speaker 1: see the most relief, in our opinion, from changes to 547 00:29:54,240 --> 00:29:56,880 Speaker 1: Dodd Frank. Our biggest banks will see the least amount 548 00:29:56,880 --> 00:29:59,720 Speaker 1: of changes. How do you forecast what this will mean 549 00:29:59,760 --> 00:30:01,720 Speaker 1: for performance going forward? Other ways, when you when you 550 00:30:01,800 --> 00:30:05,120 Speaker 1: look at the erosion of regulation, that changes to regulation, 551 00:30:05,200 --> 00:30:06,680 Speaker 1: how do you predict what that's going to mean for 552 00:30:06,680 --> 00:30:08,960 Speaker 1: the bottom line. I think what we have to do 553 00:30:09,080 --> 00:30:13,160 Speaker 1: is we're not expecting a significant reduction in costs. There 554 00:30:13,160 --> 00:30:17,600 Speaker 1: will be some reduction clients departments correct, but that we 555 00:30:17,960 --> 00:30:22,080 Speaker 1: anticipate those moneys will be moved over the revenue producing activities, 556 00:30:22,280 --> 00:30:25,200 Speaker 1: so they go from compliance to revenue producing. But where 557 00:30:25,200 --> 00:30:27,600 Speaker 1: we're going to see the benefit is from the fact 558 00:30:27,600 --> 00:30:30,520 Speaker 1: that the banks will start to be able to merge 559 00:30:30,680 --> 00:30:33,880 Speaker 1: one another more successfully, and that will bring down costs 560 00:30:33,880 --> 00:30:37,120 Speaker 1: to increase the bottom line. When you look at these 561 00:30:37,120 --> 00:30:39,320 Speaker 1: banks and how they're they're approaching the future, let's move 562 00:30:39,360 --> 00:30:41,920 Speaker 1: away from from regulation just to talk about fintech and 563 00:30:42,040 --> 00:30:44,720 Speaker 1: and where things are headed in that in that department, 564 00:30:45,160 --> 00:30:48,480 Speaker 1: Are you seeing more progressiveness at the smaller level than 565 00:30:48,480 --> 00:30:50,360 Speaker 1: you are seeing from the bigger banks? Are small banks 566 00:30:50,400 --> 00:30:53,520 Speaker 1: approaching that wisely? Yep? I would say small banks actually 567 00:30:53,720 --> 00:30:56,600 Speaker 1: lagging a little bit. The biggest banks are the ones 568 00:30:56,640 --> 00:30:58,960 Speaker 1: that are spending the most money. Now, you know, for 569 00:30:59,040 --> 00:31:01,480 Speaker 1: the folks like my self that have iPhones and we 570 00:31:01,560 --> 00:31:05,480 Speaker 1: do occasionally use our for banking, there is a new 571 00:31:05,520 --> 00:31:08,440 Speaker 1: app coming starting in January the banks and putting out 572 00:31:08,680 --> 00:31:12,160 Speaker 1: called Zell. I'm sorry Gazelle, and what it's gonna be. 573 00:31:12,400 --> 00:31:14,880 Speaker 1: It's going to be a P two P payment mechanism 574 00:31:15,000 --> 00:31:18,520 Speaker 1: that the banks don't have currently on a real time basis. 575 00:31:18,560 --> 00:31:21,640 Speaker 1: So if I need to transfer it to Tom fifty dollars, 576 00:31:22,080 --> 00:31:24,560 Speaker 1: I could get his cell phone number transferred over and 577 00:31:24,600 --> 00:31:25,800 Speaker 1: by the end of the day it will be in 578 00:31:25,840 --> 00:31:29,120 Speaker 1: his account. That's going right after Venmo, which is part 579 00:31:29,120 --> 00:31:32,520 Speaker 1: of PayPal. So the biggest banks are moving very aggressively 580 00:31:33,000 --> 00:31:35,200 Speaker 1: for the fintech space. Well, we talked about bricks and 581 00:31:35,240 --> 00:31:37,959 Speaker 1: mortar with the Amazon. Where's the bricks and mortar future? 582 00:31:38,000 --> 00:31:40,320 Speaker 1: I mean, David, I don't know about where David lives 583 00:31:40,400 --> 00:31:45,320 Speaker 1: east of New York, far east across Berg calls Brooklyn. 584 00:31:46,160 --> 00:31:49,160 Speaker 1: No one there goes into banks. It's all cyber. They 585 00:31:49,160 --> 00:31:53,000 Speaker 1: have kale juice shakes. Well, they do digital banking in 586 00:31:53,040 --> 00:31:56,400 Speaker 1: the real world, Mr Cassidy, like Portland, Maine. What will 587 00:31:56,440 --> 00:31:59,000 Speaker 1: happen to branch banks? Yes, I think what we're going 588 00:31:59,040 --> 00:32:01,760 Speaker 1: to see, Tom, And it really is quite interesting that 589 00:32:01,920 --> 00:32:05,760 Speaker 1: when the Apple iPhone was introduced, the number of branches 590 00:32:05,840 --> 00:32:09,160 Speaker 1: in the United States peaked, So we are actually seeing 591 00:32:09,160 --> 00:32:11,600 Speaker 1: a decline in a number of branches. So over the 592 00:32:11,640 --> 00:32:15,640 Speaker 1: next ten years, what we expect is fewer branches and 593 00:32:15,840 --> 00:32:19,320 Speaker 1: smaller branches, and the branches of the future will have 594 00:32:19,400 --> 00:32:22,000 Speaker 1: less people in them. It will be more machines. If 595 00:32:22,040 --> 00:32:24,480 Speaker 1: you get a chance on fifth and fifty third here 596 00:32:24,480 --> 00:32:27,400 Speaker 1: in the City, um City Bank, or fifth and fifty second, 597 00:32:27,440 --> 00:32:30,120 Speaker 1: I should say, City Bank has a wonderful, brand new 598 00:32:30,160 --> 00:32:32,640 Speaker 1: branch of the future, and it looks almost like an 599 00:32:32,680 --> 00:32:36,680 Speaker 1: Apple store, believe it or not. If I'm playing matchmaker here, 600 00:32:36,680 --> 00:32:40,520 Speaker 1: looking at what's complementary about two different small banks. What 601 00:32:40,600 --> 00:32:42,880 Speaker 1: am I looking for is it is it purely based 602 00:32:42,880 --> 00:32:44,840 Speaker 1: on geography or when you see these mere just what's 603 00:32:44,880 --> 00:32:48,520 Speaker 1: what's driving them? Two factors and you identified one of them, 604 00:32:48,560 --> 00:32:51,840 Speaker 1: which is geography. The second is the age of management, 605 00:32:52,000 --> 00:32:53,960 Speaker 1: And believe it or not, it goes back to that 606 00:32:54,400 --> 00:32:57,440 Speaker 1: issue of is the is the management team ready to 607 00:32:57,480 --> 00:33:01,080 Speaker 1: retire and do they control the decision on whether to 608 00:33:01,160 --> 00:33:03,680 Speaker 1: keep the bank independent or not? And so I think 609 00:33:03,680 --> 00:33:07,600 Speaker 1: what we'll see is managements reach peak or management's age, 610 00:33:07,760 --> 00:33:11,520 Speaker 1: but their banks reach peak profitability, that's when they're gonna 611 00:33:11,520 --> 00:33:13,880 Speaker 1: look to hit the bid. Maybe, Okay, walk me through 612 00:33:14,600 --> 00:33:19,320 Speaker 1: a merger. You mentioned synergy savings for First Niagara taken 613 00:33:19,320 --> 00:33:22,440 Speaker 1: out by Keycorps on a given merger. What's the normal 614 00:33:22,480 --> 00:33:25,400 Speaker 1: synergy take out to people benefit from when it's an 615 00:33:25,480 --> 00:33:29,440 Speaker 1: intra market deal where there's a lot of overlap. Thirty 616 00:33:30,080 --> 00:33:33,160 Speaker 1: is not uncommon and some have even gone as high 617 00:33:33,160 --> 00:33:35,560 Speaker 1: as forty five. What will it do for r o 618 00:33:35,760 --> 00:33:38,920 Speaker 1: E if two smart people decided to get together, the 619 00:33:39,120 --> 00:33:41,560 Speaker 1: r o E in this particular case was going to 620 00:33:41,800 --> 00:33:44,200 Speaker 1: increase by over two hundred basis points in this trus 621 00:33:44,680 --> 00:33:46,760 Speaker 1: they'll go from ten to twelve or eight to ten, 622 00:33:46,800 --> 00:33:51,680 Speaker 1: whatever the exactly. And that's really the underlying tone for mergers. 623 00:33:51,880 --> 00:33:55,280 Speaker 1: Does the government want mergers to occur? Even though they'll 624 00:33:55,320 --> 00:33:59,880 Speaker 1: never say it, I do believe at some assets sized 625 00:34:00,080 --> 00:34:03,680 Speaker 1: they are very supportive of consolidation because they believe there 626 00:34:03,720 --> 00:34:06,959 Speaker 1: will be a sturdier banking system. But they will not 627 00:34:07,040 --> 00:34:09,600 Speaker 1: allow the top banks to do deals because they don't 628 00:34:09,640 --> 00:34:12,200 Speaker 1: want another to make to fail bank. When David gern 629 00:34:12,280 --> 00:34:17,040 Speaker 1: I do our remote in Portland, Maine for Bloomberg Boston, 630 00:34:17,680 --> 00:34:20,480 Speaker 1: is there snow Memorial Day or can we go Memorial 631 00:34:20,560 --> 00:34:23,959 Speaker 1: Dare we have to for to be fifty degrees fourth 632 00:34:23,960 --> 00:34:26,160 Speaker 1: of July. You're gonna keep your LLL bean boots on 633 00:34:28,400 --> 00:34:30,960 Speaker 1: the lined version and it will be warm, but it 634 00:34:31,239 --> 00:34:33,080 Speaker 1: won't be a woman. So I can wear suit and 635 00:34:33,160 --> 00:34:36,280 Speaker 1: bow ties in the LLL being brown LLL bean boots 636 00:34:36,400 --> 00:34:39,279 Speaker 1: that go right up to just below your knee. Yeah, absolutely, 637 00:34:39,440 --> 00:34:44,479 Speaker 1: those are those are the keepers Stared Cassidy. What's sick 638 00:34:44,560 --> 00:34:50,960 Speaker 1: is Gura actually has you got TRD Cassidy, thank you 639 00:34:51,040 --> 00:34:54,680 Speaker 1: so much. With RBC Capital Markets and uh within that 640 00:34:54,840 --> 00:34:59,160 Speaker 1: some serious discussion, I will be restrained as I tweet 641 00:34:59,200 --> 00:35:03,520 Speaker 1: out on Twitter today about Gerard Cassidy, our president elect. 642 00:35:03,840 --> 00:35:07,879 Speaker 1: With NBC today, Mr Trump asked about tweets, quote, I 643 00:35:07,920 --> 00:35:12,960 Speaker 1: think I am very restrained. We'll let you interpret that 644 00:35:13,200 --> 00:35:28,080 Speaker 1: as you choose. He is the junior senator from the 645 00:35:28,120 --> 00:35:32,000 Speaker 1: state of Utah share of the Subcommittee on Antitrust, Competition Policy, 646 00:35:32,000 --> 00:35:35,120 Speaker 1: and Consumer Rights where all the action is going to 647 00:35:35,160 --> 00:35:37,920 Speaker 1: be today on Capitol Hill is Randall Stevenson, the CEO 648 00:35:37,920 --> 00:35:40,080 Speaker 1: of A T and T, joins Jeff Bucas, Mark Cuban 649 00:35:40,120 --> 00:35:42,320 Speaker 1: and others to testify on the A. T. And T 650 00:35:42,800 --> 00:35:45,319 Speaker 1: Time Warner deal proposed a couple of months ago. The 651 00:35:45,320 --> 00:35:48,239 Speaker 1: first public airing of that deal on Capitol Hill. Senator Lee, 652 00:35:48,239 --> 00:35:50,719 Speaker 1: great to have you with us. It's going to tell 653 00:35:50,800 --> 00:35:52,600 Speaker 1: us a bit about what you're hoping to to get 654 00:35:52,600 --> 00:35:54,920 Speaker 1: out of these executives today they've made their case on 655 00:35:54,960 --> 00:35:57,120 Speaker 1: television in public to investors. What do you want to 656 00:35:57,160 --> 00:35:59,719 Speaker 1: here today? Well, hard goal is to talk about the 657 00:36:00,000 --> 00:36:04,000 Speaker 1: svential benefits and downsides of the deal so that regulators 658 00:36:04,040 --> 00:36:06,359 Speaker 1: in the public are thinking about the issue the right 659 00:36:06,360 --> 00:36:10,600 Speaker 1: way are Our subcommittee doesn't make a formal ruling, uh, 660 00:36:11,280 --> 00:36:16,680 Speaker 1: It rather has a public airing of various discussion points 661 00:36:17,239 --> 00:36:19,319 Speaker 1: in order to find out more about the deal. And 662 00:36:19,640 --> 00:36:23,160 Speaker 1: you know there's some potential anti competitive concerns with the 663 00:36:23,200 --> 00:36:27,080 Speaker 1: deal and it will be investigating those as you prepared 664 00:36:27,120 --> 00:36:29,480 Speaker 1: for the hearing today. What did you look to for Preston, 665 00:36:29,560 --> 00:36:33,319 Speaker 1: how much are you looking back at the Comcast deal. Look, 666 00:36:33,880 --> 00:36:36,480 Speaker 1: this is a different kind of deal. This is um 667 00:36:37,160 --> 00:36:39,600 Speaker 1: uh not one that you can look to out of 668 00:36:39,640 --> 00:36:42,920 Speaker 1: the box for any ready precedent. But there are a 669 00:36:42,960 --> 00:36:45,799 Speaker 1: couple of potential concerns, you know. One involves whether the 670 00:36:45,800 --> 00:36:49,600 Speaker 1: merged company could raise prices for Time Warner content content 671 00:36:49,719 --> 00:36:54,680 Speaker 1: on HBO, t n T, TBS and so forth on 672 00:36:54,800 --> 00:36:58,920 Speaker 1: existing rival TV distributors. And another concern relates to whether 673 00:36:58,960 --> 00:37:02,759 Speaker 1: the merged company could withhold Time Warner content in order 674 00:37:02,800 --> 00:37:06,799 Speaker 1: to promote its new television livestream service, Direct tv Now, 675 00:37:06,840 --> 00:37:10,319 Speaker 1: at the expense of other new competitors like Sling and 676 00:37:10,320 --> 00:37:13,480 Speaker 1: PlayStation View. But on the other hand, you know that 677 00:37:14,040 --> 00:37:18,279 Speaker 1: I think we will hear um that Direct tv Now 678 00:37:18,360 --> 00:37:21,560 Speaker 1: could provide a real alternative to the traditional cable bundle 679 00:37:21,920 --> 00:37:25,560 Speaker 1: and make consumers less dependent on wired networks. Certainly, you 680 00:37:25,600 --> 00:37:30,280 Speaker 1: know extremely well you lived it. How Washington can change. 681 00:37:30,280 --> 00:37:33,479 Speaker 1: Your father served in the Attorney General's office a million 682 00:37:33,520 --> 00:37:36,040 Speaker 1: years ago, you grew up down the street from Uh. 683 00:37:36,160 --> 00:37:39,120 Speaker 1: Senator read of Nevada, and um, you know you were 684 00:37:39,120 --> 00:37:42,680 Speaker 1: in the Washington millieu as a kid. Things change. Is 685 00:37:42,680 --> 00:37:46,920 Speaker 1: the whole goal here of these corporations to delay until 686 00:37:46,920 --> 00:37:51,279 Speaker 1: they get a Trump Washington. Look, I don't know. I 687 00:37:51,280 --> 00:37:54,520 Speaker 1: don't speak for the companies. I don't think that, Uh, 688 00:37:56,320 --> 00:37:59,279 Speaker 1: I'm not aware of them having that as their end 689 00:37:59,280 --> 00:38:01,600 Speaker 1: goal is to just delay that until then, that that 690 00:38:01,760 --> 00:38:05,840 Speaker 1: is coming soon enough anyway, and that this proposed merger 691 00:38:06,239 --> 00:38:09,160 Speaker 1: won't be up for review until then anyway. But what 692 00:38:09,280 --> 00:38:11,279 Speaker 1: I do know is that we've got regulators that we're 693 00:38:11,280 --> 00:38:13,680 Speaker 1: going to take a close look at this and are 694 00:38:13,719 --> 00:38:15,640 Speaker 1: hearing today, is going to ask a bunch of questions 695 00:38:15,640 --> 00:38:17,759 Speaker 1: that I think will help frame that in the time 696 00:38:17,760 --> 00:38:20,120 Speaker 1: that we've got left to the Senator. I was really 697 00:38:20,160 --> 00:38:24,640 Speaker 1: taken by almost the domestic struggle of our unique Utah 698 00:38:25,320 --> 00:38:29,440 Speaker 1: is they faced this election. What did you learn about 699 00:38:29,480 --> 00:38:33,480 Speaker 1: the people of Utah? Is they chose between Secretary Clinton 700 00:38:33,960 --> 00:38:37,920 Speaker 1: and the President elect. Well, look, the first of all, 701 00:38:37,960 --> 00:38:40,160 Speaker 1: it's important to remember that Utah hasn't voted for a 702 00:38:40,239 --> 00:38:44,640 Speaker 1: Democrat in a presidential election since nineteen there's only like 703 00:38:44,640 --> 00:38:49,520 Speaker 1: twelve Democrats, right, Well, there are a few more than that, 704 00:38:49,760 --> 00:38:53,120 Speaker 1: they're they're generally not enough, at least they haven't been 705 00:38:53,239 --> 00:38:57,040 Speaker 1: enough since nineteen sixty four to vote for a Democrat. 706 00:38:57,440 --> 00:39:01,520 Speaker 1: So uh Utah's did break with that tradition this year. 707 00:39:01,640 --> 00:39:05,319 Speaker 1: That was not a surprise, and people throughout the country 708 00:39:05,719 --> 00:39:08,160 Speaker 1: were ready for a change and they wanted to see 709 00:39:08,200 --> 00:39:11,280 Speaker 1: a different kind of government. They were not prepared for 710 00:39:11,640 --> 00:39:15,480 Speaker 1: a third term of Barack Obama. When you when you 711 00:39:15,560 --> 00:39:18,879 Speaker 1: look ahead to January and beyond, how do you see 712 00:39:18,920 --> 00:39:23,480 Speaker 1: the relationship taking shape between the Congress and the White House? 713 00:39:23,640 --> 00:39:25,600 Speaker 1: That that stretch, that one and a half mile stretched 714 00:39:25,600 --> 00:39:28,040 Speaker 1: their Pennsylvania Avenue between the two institutions is not that 715 00:39:28,120 --> 00:39:31,000 Speaker 1: far geographically, but the divide has been vast. How are 716 00:39:31,000 --> 00:39:34,480 Speaker 1: you going to improve that relationship going forward? Well, I 717 00:39:34,800 --> 00:39:37,319 Speaker 1: wrote in an article that appeared about ten days ago 718 00:39:37,400 --> 00:39:40,799 Speaker 1: a National Review, talking about how you can tread a needle. 719 00:39:40,880 --> 00:39:43,160 Speaker 1: You can draw a strate line between many of the 720 00:39:43,200 --> 00:39:45,480 Speaker 1: things that Donald Trump said as a candidate and things 721 00:39:45,480 --> 00:39:49,200 Speaker 1: that he could do to govern as a constitutional conservative 722 00:39:49,280 --> 00:39:51,239 Speaker 1: as president. My hope is that they'll do that, And 723 00:39:51,280 --> 00:39:55,280 Speaker 1: in so far as he does that, he'll have no stronger, louder, 724 00:39:55,560 --> 00:39:59,800 Speaker 1: more vociferous cheerleader than me uh In in the U. S. Senate. 725 00:40:00,000 --> 00:40:02,600 Speaker 1: And I think there are a number of things he 726 00:40:02,640 --> 00:40:06,400 Speaker 1: could pursue to help restore constitutionally limited government. This has 727 00:40:06,440 --> 00:40:08,759 Speaker 1: been a focus of mine. It's been important to me, 728 00:40:08,840 --> 00:40:10,600 Speaker 1: and as I explained in a book I wrote called 729 00:40:10,640 --> 00:40:14,120 Speaker 1: Our Lost Constitution, we've lost some of our structural protections 730 00:40:14,120 --> 00:40:16,000 Speaker 1: in the Constitution. I think Donald Trump could do a 731 00:40:16,040 --> 00:40:18,439 Speaker 1: lot to help restore those. That would be a new 732 00:40:18,520 --> 00:40:21,120 Speaker 1: role for you to take on, to be a vociferous cheerleader. 733 00:40:21,160 --> 00:40:23,319 Speaker 1: As you said during the campaign, you called upon the 734 00:40:23,360 --> 00:40:26,279 Speaker 1: now present elected to step aside and allow someone else 735 00:40:26,320 --> 00:40:27,880 Speaker 1: to be the nominee for the party. You had some 736 00:40:27,920 --> 00:40:31,719 Speaker 1: serious concerns about the president elect's character. If you were 737 00:40:31,760 --> 00:40:32,839 Speaker 1: to talk to him, if you would have a one 738 00:40:32,840 --> 00:40:35,000 Speaker 1: on one conversation with him, what would you say about 739 00:40:35,440 --> 00:40:38,280 Speaker 1: how he comports himself now that he is the president elect, 740 00:40:38,280 --> 00:40:39,600 Speaker 1: now that he's going to be the president of the 741 00:40:39,640 --> 00:40:44,560 Speaker 1: United States. Well, look, he doesn't need advice for me 742 00:40:44,680 --> 00:40:47,040 Speaker 1: on that point. He is now the person who will 743 00:40:47,120 --> 00:40:49,960 Speaker 1: be in charge of that um uh and looked at 744 00:40:50,080 --> 00:40:53,920 Speaker 1: was then this is now. I had some doubts as 745 00:40:53,960 --> 00:40:57,040 Speaker 1: to his electability at the time, I was concerned that 746 00:40:57,080 --> 00:40:59,760 Speaker 1: he couldn't be elected. I was mistaken in that regard. 747 00:41:00,400 --> 00:41:03,759 Speaker 1: What's important now is that moving forward, um I think 748 00:41:03,840 --> 00:41:07,160 Speaker 1: we need to focus on restoring constitutional protections that have 749 00:41:07,200 --> 00:41:10,640 Speaker 1: been lost, and I hope and expect that he will 750 00:41:10,640 --> 00:41:15,440 Speaker 1: do precisely that. What does tim View High School, Provo, Utah? 751 00:41:15,560 --> 00:41:18,160 Speaker 1: What does Tim View High School, Provo, Utah need from 752 00:41:18,160 --> 00:41:21,200 Speaker 1: the new Secretary of Education? It will be a different 753 00:41:21,280 --> 00:41:27,360 Speaker 1: secretary of Education. How will that affect public schools in Utah? Well, 754 00:41:27,160 --> 00:41:31,359 Speaker 1: I hope and expect that the federal government will acknowledge 755 00:41:31,440 --> 00:41:36,800 Speaker 1: that its role in primary and secondary education should be 756 00:41:37,239 --> 00:41:41,360 Speaker 1: limited at at at at most, I mean, primary and 757 00:41:41,400 --> 00:41:44,160 Speaker 1: secondary education needs to be handled at the most local 758 00:41:44,239 --> 00:41:48,480 Speaker 1: level possible. It needs to be uh managed by teachers 759 00:41:48,719 --> 00:41:54,440 Speaker 1: and parents and consultation with local school officials, and certainly 760 00:41:54,440 --> 00:41:58,960 Speaker 1: shouldn't be run from Washington, d C. Educational needs differ 761 00:41:59,040 --> 00:42:01,560 Speaker 1: from one part of the country rate to another, and 762 00:42:01,680 --> 00:42:04,920 Speaker 1: the strategies that will be pursued in the public education 763 00:42:04,960 --> 00:42:08,680 Speaker 1: system will be different from one community is compared to another. 764 00:42:08,840 --> 00:42:13,640 Speaker 1: Last thing we need is a single national decision maker 765 00:42:13,640 --> 00:42:15,720 Speaker 1: when it comes to curriculum, when it comes to teaching 766 00:42:16,120 --> 00:42:19,400 Speaker 1: in the public primary and secondary education arena from Provo 767 00:42:19,520 --> 00:42:22,719 Speaker 1: Utah Senator Lee, the junior senator from the state of 768 00:42:22,800 --> 00:42:25,920 Speaker 1: You talk, Mike Lee, David, you know, just we we 769 00:42:25,960 --> 00:42:28,120 Speaker 1: don't do this enough. We gotta we gotta talk to 770 00:42:28,200 --> 00:42:32,759 Speaker 1: senators from across this great land. Yeah. And obviously the 771 00:42:33,120 --> 00:42:35,719 Speaker 1: point of focus for him today that hearing. But as 772 00:42:35,880 --> 00:42:38,120 Speaker 1: as I hope we we brought out there in that conversation, 773 00:42:38,160 --> 00:42:40,880 Speaker 1: he's been somebody who is really reckoning with with this 774 00:42:40,960 --> 00:42:43,160 Speaker 1: change administration, and I think very interesting to hear sort 775 00:42:43,160 --> 00:42:45,600 Speaker 1: of how he moves forward from the criticisms he had 776 00:42:45,600 --> 00:42:47,520 Speaker 1: on the campaign trail. Yeah. And you wonder where the 777 00:42:48,040 --> 00:42:50,399 Speaker 1: hearing will be in three months or six months or 778 00:42:50,880 --> 00:43:02,920 Speaker 1: such as we migrate to January. Uh and uh. Thanks 779 00:43:02,920 --> 00:43:07,360 Speaker 1: for listening to the Bloomberg Surveillance podcast. Subscribe and listen 780 00:43:07,440 --> 00:43:12,760 Speaker 1: to interviews on iTunes, SoundCloud, or whichever podcast platform you prefer. 781 00:43:13,520 --> 00:43:16,400 Speaker 1: I'm out on Twitter at Tom Keene. David Gura is 782 00:43:16,520 --> 00:43:20,279 Speaker 1: at David Gura. Before the podcast, you can always catch 783 00:43:20,360 --> 00:43:36,200 Speaker 1: us worldwide. I'm Bloomberg Radio. Who you put your trust 784 00:43:36,239 --> 00:43:40,120 Speaker 1: in matters. Investors have put their trust and independent registered 785 00:43:40,200 --> 00:43:43,879 Speaker 1: investment advisors to the two and four trillion dollars. Why 786 00:43:44,560 --> 00:43:48,600 Speaker 1: Learn more at find your Independent Advisor dot com