WEBVTT - Dems Reverse Roles With GOP To Mobilize on SCOTUS: Dr. Zaino 0:00:01.360 --> 0:00:04.120 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney. Along 0:00:04.120 --> 0:00:06.200 with my co host of Bonnie Quinn. Every business day, 0:00:06.240 --> 0:00:10.320 we bring you interviews from CEO, market pros and Bloomberg experts, 0:00:10.400 --> 0:00:13.600 along with essential market moving news. Find the Bloomberg Markets 0:00:13.600 --> 0:00:17.000 Podcast on Apple Podcasts or wherever you listen to podcasts, 0:00:17.000 --> 0:00:20.919 and on Bloomberg dot com. On a time when there's 0:00:20.960 --> 0:00:23.799 just seemingly stunning news almost on a daily basis, this 0:00:23.840 --> 0:00:28.560 weekend we heard of the passing of Justice Ginsburg from 0:00:28.560 --> 0:00:32.960 the Supreme Court, raising and media questions about replacement of 0:00:33.440 --> 0:00:37.520 uh Justice Ginsburg, as well as the political ramifications heading 0:00:37.560 --> 0:00:40.440 into just the final weeks of the presidential election. Help 0:00:40.520 --> 0:00:43.080 us kind of parsed through that we are fortunate have. 0:00:43.479 --> 0:00:46.520 H Jennie is a no political science professor at I own, 0:00:46.520 --> 0:00:49.400 a college professor. Thanks so much for joining us here. 0:00:50.200 --> 0:00:53.040 Give us your sense of kind of the passing of 0:00:53.080 --> 0:00:57.000 Justice Ginsburg. How does that change the narrative here in 0:00:57.040 --> 0:01:00.840 the final weeks heading into the selection. Yeah, I mean, 0:01:00.920 --> 0:01:03.520 I couldn't agree with you more. Even news just breaking 0:01:03.560 --> 0:01:06.440 almost every moment, it seems, and to hear that news 0:01:06.520 --> 0:01:10.520 late on Friday, particularly on a Jewish holiday so important 0:01:10.560 --> 0:01:14.600 to so many Jewish Americans. She was the first woman, um, 0:01:14.640 --> 0:01:16.720 who was Jewish to sit on the Court, only the 0:01:16.800 --> 0:01:20.120 second woman on the court, and she served for so 0:01:20.160 --> 0:01:23.880 long and so nobly and so beloved by so many people, 0:01:23.959 --> 0:01:26.760 men and women that it was really just you know, 0:01:26.880 --> 0:01:30.000 stunning and sad to hear the news. And of course 0:01:30.120 --> 0:01:33.880 in the midst forty now forty three days to an election, 0:01:34.319 --> 0:01:38.240 and we understand that she had dictated to her granddaughter 0:01:38.360 --> 0:01:41.480 her wish that she not be replaced until the next 0:01:41.520 --> 0:01:45.959 president was inaugurated. Um, So, you know, just stunning all around, 0:01:46.080 --> 0:01:49.720 and an already really contentious election that seemed to be 0:01:49.760 --> 0:01:52.800 you know, decided by you know, the big issues. We're 0:01:52.840 --> 0:01:55.560 going to be COVID, they were going to be the economy, 0:01:55.640 --> 0:01:58.400 and now of course you put into the mix the 0:01:58.480 --> 0:02:01.040 future of the Supreme Court. And of course we are 0:02:01.120 --> 0:02:04.360 talking about the future of the Supreme Court because she 0:02:04.640 --> 0:02:07.559 was a solid liberal on the court that is increasingly 0:02:07.680 --> 0:02:10.920 conservative and hanging in the balance, as Democrats have been 0:02:10.960 --> 0:02:13.280 talking about for the last few days, or things like 0:02:13.600 --> 0:02:16.760 the future of the Affordable Care Act, and of course 0:02:16.960 --> 0:02:20.079 Roe v. Wade, abortion and so many other issues. So 0:02:20.120 --> 0:02:22.680 what does the justice is passing due to the odds 0:02:22.760 --> 0:02:26.880 of Democrats flipping the Senate. Does the passing mobilizer voting 0:02:26.919 --> 0:02:30.200 base that wouldn't have been mobilized anyway. It's such a 0:02:30.240 --> 0:02:35.080 good question because traditionally it's been conservatives Republicans who have 0:02:35.200 --> 0:02:38.680 cared so much and voted, you know, year after year, 0:02:38.760 --> 0:02:41.840 every four years on the future of the Supreme Court. 0:02:41.840 --> 0:02:44.679 And in fact, we look back at sixteen and one 0:02:44.680 --> 0:02:47.640 of the key reasons many Republicans who are in moderates, 0:02:47.639 --> 0:02:50.400 who are on the fence about Donald Trump, decided to 0:02:50.480 --> 0:02:53.880 vote for him was because he did something unprecedented. He 0:02:53.960 --> 0:02:57.080 released a list of conservatives he would name to the Court, 0:02:57.440 --> 0:03:00.800 and that really made them support him. And of he 0:03:01.000 --> 0:03:05.280 was able to nominate and confirm two justices. But now 0:03:05.440 --> 0:03:08.720 it seems like Democrats have suddenly caught up to the 0:03:08.760 --> 0:03:12.440 fact that they too have a real interest in the court. 0:03:12.520 --> 0:03:14.240 You know. Part of what has been going on is 0:03:14.240 --> 0:03:17.600 since the early seventies, the court has been largely liberal, 0:03:17.639 --> 0:03:22.280 but increasingly conservative. Now Democrats seem to be energized. We 0:03:22.360 --> 0:03:26.640 saw outrageous fundraising numbers, incredible on the Democratic side in 0:03:26.680 --> 0:03:30.079 the days since Ruth Bader Ginsburg passed to indicate there's 0:03:30.120 --> 0:03:32.799 a lot of energy there. So a long winded way 0:03:32.800 --> 0:03:36.320 of saying, I think that whereas Republicans usually vote on 0:03:36.360 --> 0:03:38.960 the Court in much larger numbers than Democrats, I think 0:03:39.040 --> 0:03:41.520 this year we may see for the first time a 0:03:41.640 --> 0:03:45.080 switch there. We don't know yet, but if Democrats are 0:03:45.120 --> 0:03:47.520 able to do that and able to take the Senate, 0:03:47.920 --> 0:03:50.880 that could really change the game, maybe not about this 0:03:51.120 --> 0:03:54.640 nomination to replace Ruth Bader Ginsburg, but the court going forward, 0:03:54.800 --> 0:03:58.240 because we've heard over the weekend Democrats talking about things 0:03:58.280 --> 0:04:02.440 like packing the court. So I guess just in the 0:04:02.480 --> 0:04:06.240 immediate term, professor, is it your sense that the Republicans 0:04:06.360 --> 0:04:08.560 will be able to get a nominee through in time? 0:04:09.280 --> 0:04:12.120 It's going to be very dicey. The Congressional Research Service 0:04:12.120 --> 0:04:15.680 says it's traditionally about average sixty nine days. We're looking 0:04:15.760 --> 0:04:19.200 at about forty three days until election day. But what 0:04:19.360 --> 0:04:21.720 I would caution is that, you know, we have forty 0:04:21.720 --> 0:04:25.000 three days until election day, but we have much longer 0:04:25.120 --> 0:04:28.720 until the inauguration. So whether we get a nomination before 0:04:28.800 --> 0:04:31.760 election day is I think a little bit tougher. But 0:04:31.880 --> 0:04:36.080 I think certainly Republicans could push through a nomination before 0:04:36.120 --> 0:04:40.160 inauguration day, and then depending on who won the presidency 0:04:40.200 --> 0:04:43.000 and took the Senate, you could be talking about a 0:04:43.080 --> 0:04:46.880 lame duck president's nomination going through and a lame duck 0:04:47.000 --> 0:04:50.760 Senate confirming. So that I think would really add to 0:04:50.800 --> 0:04:54.800 the firestorm and and really strong feelings out there. But 0:04:54.920 --> 0:04:58.360 I do think it's possible. One thing to watch is 0:04:58.480 --> 0:05:01.320 any of these Republicans that are on the fence. Of 0:05:01.360 --> 0:05:06.279 course we know Lisa Murkowski for instance, Susan collinst Romney. 0:05:06.320 --> 0:05:08.720 I think those are the people to watch right now. 0:05:09.160 --> 0:05:11.520 Do they put a stop to this? Because it would 0:05:11.560 --> 0:05:15.159 really take about four Republicans putting a stop to this. 0:05:15.560 --> 0:05:18.200 And let's not forget the senators all want to go 0:05:18.320 --> 0:05:21.679 home and campaign, many of them running in tight seats, 0:05:21.680 --> 0:05:24.800 so it is a very difficult time for the Republicans 0:05:24.800 --> 0:05:26.960 to push this through. It could be done, but I 0:05:26.960 --> 0:05:29.320 think it's going to be an uphill battle. Genie, what 0:05:29.440 --> 0:05:33.880 would be defectors motivations for not voting? So what would 0:05:33.880 --> 0:05:36.839 be in it? Let's say, for any Republican senator that 0:05:36.920 --> 0:05:41.680 decided they didn't want to back a nominee. I mean, 0:05:41.760 --> 0:05:44.159 some of the nominees are probably people that they would 0:05:44.160 --> 0:05:47.320 be quite happy to back in another year. Absolutely. I 0:05:47.320 --> 0:05:50.440 think number one would be this issue of hypocrisy. Say, 0:05:50.560 --> 0:05:53.719 they had publicly stated that they didn't want to vote 0:05:53.720 --> 0:05:57.120 on Merrick Garland four years ago when Obama named him, 0:05:57.160 --> 0:05:59.880 to now go back on that and to then half 0:06:00.040 --> 0:06:03.440 of face voters in their district. So I think there's that, 0:06:03.560 --> 0:06:06.880 you know, issue of quote unquote hypocrisy. But I also 0:06:06.960 --> 0:06:09.640 think importantly it's that they have to face voters in 0:06:09.680 --> 0:06:13.120 their district, many of whom are in purple states. They 0:06:13.120 --> 0:06:16.960 are facing tough reelection bids. So people like Susan Collins, 0:06:17.000 --> 0:06:20.240 she's already about twelve points down in her race. She 0:06:20.480 --> 0:06:23.680 has got a lot of flack for supporting Judge Kavanaugh, 0:06:23.800 --> 0:06:26.480 as we remember, and that's one of the reasons why 0:06:26.560 --> 0:06:28.880 she's not doing so well in her race now. So 0:06:29.160 --> 0:06:31.760 I think the combination of those two things makes it 0:06:31.880 --> 0:06:35.160 very difficult for Republicans to say we should wait on 0:06:35.240 --> 0:06:40.159 this professor. Is there since that the average American voter 0:06:40.480 --> 0:06:43.800 cares about the Supreme Court? Yeah, you know, as since 0:06:43.839 --> 0:06:46.040 I teach the court. I want to say, yes, yes, yes, 0:06:47.520 --> 0:06:49.880 you know, But that's just self interested. It's usually not 0:06:50.000 --> 0:06:52.880 the number one issue, but again for Republicans, it has 0:06:52.960 --> 0:06:56.200 been an issue of real importance. And I think, and 0:06:56.240 --> 0:06:57.919 this is something I think we're all going to have 0:06:58.000 --> 0:07:00.680 to watch. It looks like we may see the same 0:07:00.720 --> 0:07:03.839 thing happen with Democrats this time around. You know, the 0:07:03.920 --> 0:07:07.320 numbers we're hearing ninety million dollars raised in you know, 0:07:07.640 --> 0:07:10.560 forty eight hours or whatever that number was since Ruth 0:07:10.560 --> 0:07:13.720 Pader Ginsburg passed on the Democratic side. Those are huge 0:07:13.800 --> 0:07:17.200 numbers and indicate that Democrats do care. Now, do they 0:07:17.240 --> 0:07:19.480 care more than they care about the pandemic, more than 0:07:19.520 --> 0:07:22.200 they care about getting rid of Donald Trump or supporting 0:07:22.240 --> 0:07:24.880 Donald Trump, depending on their side. We don't know yet, 0:07:24.920 --> 0:07:27.600 but I do think that, you know, if there's any 0:07:27.680 --> 0:07:29.760 year where the court is important, it's going to be 0:07:29.800 --> 0:07:33.560 this year. Yeah, that's for sure. And President Trump saying 0:07:33.600 --> 0:07:35.880 this morning on Fox that we will have a name 0:07:35.880 --> 0:07:39.040 on Friday, so we shall see that may or may 0:07:39.120 --> 0:07:42.480 not happen, but that's at least his plan today anyway, Genie, 0:07:42.520 --> 0:07:45.040 thank you so much for jumping on with us. Really 0:07:45.080 --> 0:07:48.800 just wonderful perspective there from Jennie's political science professor at 0:07:48.880 --> 0:07:52.840 Iona College. And indeed, if we have a name on Friday. 0:07:53.360 --> 0:07:55.720 You know, we already have a short list, and obviously 0:07:55.720 --> 0:07:58.600 the President has already said he wants his pick confirmed 0:07:58.760 --> 0:08:02.320 by the November three elect and so whether the confirmation 0:08:02.360 --> 0:08:04.520 itself is possible or not, there would at least be 0:08:04.560 --> 0:08:07.480 a big effort in that direction. We know, of course 0:08:07.560 --> 0:08:11.680 that majority leader Mitch McConnell is all on board with 0:08:11.840 --> 0:08:17.200 that idea. Well, it's Charlie Fellert was just reporting markets 0:08:17.200 --> 0:08:19.320 are plumbing their lows right here, with the STP off 0:08:19.320 --> 0:08:22.040 about two and a quarter percent. Is this an entry 0:08:22.040 --> 0:08:23.720 point for Tom Keene to get out of his triple 0:08:23.800 --> 0:08:26.760 leverage all cash fun or is this signaling something new 0:08:26.840 --> 0:08:29.800 for the markets? We're fortunately Matt Maley joined us to 0:08:29.800 --> 0:08:32.200 answer some of those questions. Matt is a managing director 0:08:32.240 --> 0:08:35.440 and chief market strategist at Miller, tay Back and Company. Matt, 0:08:35.480 --> 0:08:37.280 let's just start off real quickly. What do you make 0:08:37.320 --> 0:08:41.440 it today's action and even that of the last several days. Well, 0:08:41.840 --> 0:08:45.120 you know, it's something I thought that uh uh, we 0:08:45.120 --> 0:08:47.400 were kind of right for anyway. I mean, obviously, we 0:08:47.400 --> 0:08:49.760 have some new news out here that has has raised 0:08:49.800 --> 0:08:52.400 concerns about what's going on in the marketplace. But you know, 0:08:52.440 --> 0:08:54.400 we have to remember that back in the beginning of September, 0:08:54.760 --> 0:08:56.760 I mean, we had the market, the market overall, and 0:08:56.880 --> 0:09:00.680 especially these mega cap tech names had become incredible. We overbought, 0:09:00.920 --> 0:09:04.599 incredibly over valued, and uh, usually when you get the 0:09:05.200 --> 0:09:07.360 huge extremes we had then, I mean, they weren't the 0:09:07.400 --> 0:09:10.920 extremes we saw, but they were still very, very big. 0:09:11.320 --> 0:09:13.680 And usually when you see a pullback like that, it 0:09:13.760 --> 0:09:16.000 comes in more than one wave. The first wave kind 0:09:16.000 --> 0:09:18.280 of makes people a little nervous, but it's usually not 0:09:18.400 --> 0:09:21.400 enough to u wash out the froth it's in the marketplace. 0:09:21.520 --> 0:09:23.280 It's usually a second wave, which we seem to be 0:09:23.280 --> 0:09:25.800 getting right now, that finally kind of washed the things out. 0:09:25.840 --> 0:09:28.080 So in many ways, this is scary, but but it 0:09:28.160 --> 0:09:31.280 was predictable, and uh, it's also normal and healthy. How 0:09:31.360 --> 0:09:33.719 much is this an election trade mat with all of 0:09:33.760 --> 0:09:39.560 the healthcare stocks released, the insurance component and healthcare lower, Well, 0:09:39.600 --> 0:09:42.000 it's it's certainly a big part of it because we 0:09:42.040 --> 0:09:45.520 now have even more uncertainty involved. I mean a lot 0:09:45.520 --> 0:09:49.240 of people have strong opinions about what, uh what the 0:09:49.840 --> 0:09:53.480 should happen here with with the passing of Ruth Bader Ginsburg, 0:09:53.760 --> 0:09:56.080 and what what should you know? Should we have somebody 0:09:56.120 --> 0:10:00.679 before should President Trump have to be able to nominate 0:10:00.760 --> 0:10:04.240 and and and get somebody installed before the election. We 0:10:04.280 --> 0:10:05.920 can talk about that all we want, but a lot 0:10:05.960 --> 0:10:08.400 of people are don't have strong opinions and are very 0:10:08.480 --> 0:10:11.640 unsure about what it will mean for the for the election. 0:10:11.880 --> 0:10:14.680 Will it be more positive for President Trump, will be 0:10:14.720 --> 0:10:17.480 more positive for Biden? We don't know. So there's already 0:10:17.480 --> 0:10:19.560 a lot of uncertainty of that. In that issue, it 0:10:19.920 --> 0:10:23.120 creates more uncertainty, and of course markets just don't like uncertainty, 0:10:23.240 --> 0:10:25.480 as we all know. All right, mat So, how are 0:10:25.520 --> 0:10:28.439 you approaching the market these days? Are you constructive here? 0:10:28.480 --> 0:10:30.600 And if so kind of are you still in that 0:10:30.920 --> 0:10:34.640 growth techie trade or you suggesting perhaps people think about 0:10:34.720 --> 0:10:37.080 rotating into some more cyclical names to the extent that 0:10:37.320 --> 0:10:40.320 we can look to the other side of this pandemic. Yeah, 0:10:40.360 --> 0:10:43.480 I think people should be looking to rotate a little bit. Now. Again, 0:10:43.760 --> 0:10:45.120 we had, you know, what, do you want to call 0:10:45.160 --> 0:10:48.240 it a bubble or not. We certainly had a huge 0:10:48.800 --> 0:10:52.320 overvaluation situation with the tech stocks, but again not like 0:10:52.360 --> 0:10:54.200 two thousands, so it's not like, oh my gosh, dump 0:10:54.240 --> 0:10:56.720 all your tech stocks. There's I mean, these may attact 0:10:56.880 --> 0:10:58.920 tech stocks that we're doing so well. We're doing well 0:10:58.960 --> 0:11:01.319 for a reason. They just went to far. So you 0:11:01.360 --> 0:11:03.679 don't want to dump the whole group. You still want 0:11:03.679 --> 0:11:07.560 to be uh invested in in these tech names, especially 0:11:07.559 --> 0:11:09.480 on any further weakness, so you can add to them. 0:11:09.880 --> 0:11:11.320 But I do you know, you look at what the 0:11:11.400 --> 0:11:14.360 what's happened, and some of these uh economically sense of group, 0:11:14.400 --> 0:11:16.920 like the railroad stocks and some of these material names, 0:11:17.040 --> 0:11:19.280 and of course housing has done very well all along. 0:11:19.840 --> 0:11:22.040 So these are typic groups you want to be rotating 0:11:22.040 --> 0:11:25.000 towards uh as as if the market comes back in 0:11:25.040 --> 0:11:27.000 a little bit more, which I think it will, and 0:11:27.040 --> 0:11:29.160 that will really bode well I think for a for 0:11:29.240 --> 0:11:31.760 the longer term. You've always been a specialist in bank 0:11:31.800 --> 0:11:34.880 stocks both sides of the Atlantic. I'm curious as to 0:11:35.040 --> 0:11:38.840 your thoughts on this report that banks might have been 0:11:38.880 --> 0:11:43.040 engaged more than normal in dodgy behavior, and particularly some 0:11:43.080 --> 0:11:44.599 of the European banks. And now we have the f 0:11:44.720 --> 0:11:47.480 c A, the Financial Conduct Authority in Britain, saying that 0:11:47.520 --> 0:11:50.480 it is launching a probe and that it will, you know, 0:11:50.520 --> 0:11:55.800 decide on on what to do with that probe later on. Yeah, 0:11:55.840 --> 0:11:58.720 I mean, it's the group has been such a tough 0:11:58.760 --> 0:12:00.600 one for for a long time. Know, it's it's it's 0:12:00.600 --> 0:12:02.800 funny that all the group certainly had a nice rally 0:12:02.840 --> 0:12:05.000 off the March lows, but it was, you know, except 0:12:05.040 --> 0:12:08.640 for one little period there in May, the it's have 0:12:08.760 --> 0:12:10.640 still continued to lag and it's been doing so for 0:12:10.720 --> 0:12:13.480 almost three years, three years now, And this just throws 0:12:13.559 --> 0:12:16.319 another rent of the works. If anybody has been bullish 0:12:16.320 --> 0:12:18.760 on the group, they say, well, jeez, the valuations look good, 0:12:18.800 --> 0:12:22.120 you know, trading sometimes below book value in some cases. 0:12:22.800 --> 0:12:25.000 But again, this is this also has something to do 0:12:25.040 --> 0:12:27.840 with confidence. I mean, we had this problem where you know, 0:12:27.840 --> 0:12:30.960 the same thing with this Nicola uh situation. It's like, oh, jeesus, 0:12:31.000 --> 0:12:33.199 something going on there. Every time we get a sneak 0:12:33.280 --> 0:12:35.839 and pull back on the stock market, it exposes something 0:12:36.200 --> 0:12:38.319 out there. And jeez, we bailed out all these banks 0:12:38.320 --> 0:12:40.680 and yet they were still doing uh, still doing these 0:12:41.320 --> 0:12:43.800 things they shouldn't have been doing. What's going on here, 0:12:43.800 --> 0:12:45.600 And it just takes away some of the not only 0:12:45.679 --> 0:12:48.559 confidence in the overall market, but certainly confidence in the group. 0:12:48.559 --> 0:12:50.599 And so it's still one I'm afraid I want to 0:12:50.640 --> 0:12:53.040 avoid right now. So Mat, I mean, when we think 0:12:53.080 --> 0:12:56.240 about the financials, I mean that net interest margin story, 0:12:56.800 --> 0:12:59.839 it just seems like a tough, tough story for that 0:13:00.000 --> 0:13:02.120 next several years, particularly if you're take into account, you know, 0:13:02.160 --> 0:13:04.520 some of the recent comments of that chairman Pal. It 0:13:04.720 --> 0:13:07.280 just doesn't that that revenue driver. It just doesn't seem 0:13:07.320 --> 0:13:10.120 to be there for the banks now. And it's it's 0:13:10.160 --> 0:13:12.520 it's funny because I look back to the well in 0:13:12.640 --> 0:13:14.840 several different cases in the past. But you can go 0:13:14.880 --> 0:13:16.880 all the way back to the early nineties when we 0:13:16.880 --> 0:13:19.240 had the after coming out of the SNL crisis back then, 0:13:19.480 --> 0:13:22.600 and of course uh the financial crisis of of ten 0:13:22.640 --> 0:13:27.000 to twelve years ago. Each time, uh, the kind of 0:13:27.040 --> 0:13:29.760 the core banking and like you said, Nishi margins were 0:13:29.840 --> 0:13:31.880 something that they relied on. I mean in back on 0:13:31.920 --> 0:13:34.880 the nineteen nineties, they was called right, they rode the 0:13:34.960 --> 0:13:38.760 yield curve back to uh to solvency and not they're 0:13:38.800 --> 0:13:40.800 not gonna be able to do that right now. I mean, again, 0:13:40.840 --> 0:13:43.200 I'm not worried about the banks like we were back 0:13:43.200 --> 0:13:45.679 in two thousand and nine, two thousand and eight, but 0:13:45.720 --> 0:13:49.120 it's still your question, where is the reward? At some 0:13:49.280 --> 0:13:51.200 point this is going to be a great group to buy. 0:13:51.240 --> 0:13:52.840 But I've been cautious on it for three years and 0:13:52.880 --> 0:13:55.120 I think it's, uh, it's still something that you want 0:13:55.160 --> 0:13:57.840 to avoid. And again it's it's not so much you're 0:13:57.840 --> 0:13:59.839 gonna lose money, but they're just other places that you're 0:13:59.840 --> 0:14:01.800 gonn I do much better, all right, Matt. It is 0:14:01.840 --> 0:14:04.520 always great to speak with you. Lots of insight into 0:14:04.640 --> 0:14:07.320 market movements, both day by day and sort of longer 0:14:07.440 --> 0:14:10.040 term Matt mainly as chief market strategist at Miller's hay Back, 0:14:10.280 --> 0:14:13.240 founder of the Maine Report. And we have a little 0:14:13.240 --> 0:14:15.560 bit of a deterioration again, the SMP down two point 0:14:15.600 --> 0:14:18.640 four percent, the Dow actually down two point eight percented 0:14:18.720 --> 0:14:21.560 is the NASDAC that is leading if you like, it's 0:14:21.600 --> 0:14:24.960 only quote unquote down one point eight percent. And again 0:14:25.240 --> 0:14:27.640 those headlines that I was speaking about the Financial Conduct 0:14:27.720 --> 0:14:30.960 Authority in Britain saying it has several probes open into 0:14:31.000 --> 0:14:33.360 money laundering and will make decisions by the end of 0:14:33.360 --> 0:14:37.240 the year on those probes. This after Buzzfeeds big article 0:14:37.240 --> 0:14:41.040 about the various banks that have been engaged in shady activity, 0:14:41.120 --> 0:14:46.320 to say the least. Shelley Banjo, senior writer for Bloomberg, 0:14:46.720 --> 0:14:49.200 giving us the latest on what's going on with TikTok, 0:14:49.240 --> 0:14:50.920 and Shelley, thanks so much for joining us here. But 0:14:51.240 --> 0:14:53.520 I have to be honest, I'm kind of confused here. 0:14:53.560 --> 0:14:58.280 I thought the initial expectation here was that President Trump 0:14:58.360 --> 0:15:01.280 was saying, Hey, you have to say l your US 0:15:01.400 --> 0:15:04.320 operations or we're going to close it. But that's not 0:15:04.360 --> 0:15:07.240 what's happening here, is it. No, And I don't think 0:15:07.280 --> 0:15:09.960 you're the only one confused. It's been a roller coaster 0:15:10.120 --> 0:15:13.440 a ride with TikTok and it's still going so definitely 0:15:13.880 --> 0:15:16.840 we don't have a done deal yet, but the Trump 0:15:16.840 --> 0:15:18.880 and Trump came out over the weekend and gave his 0:15:18.960 --> 0:15:23.040 blessing to a deal on the table. I'm what Trump 0:15:23.080 --> 0:15:26.280 had initially asked for is an outright sale of TikTok 0:15:26.360 --> 0:15:30.440 to a US, to an American company, and as well 0:15:30.480 --> 0:15:33.240 as a cut to the U. S. Treasury you know, 0:15:33.400 --> 0:15:36.560 key money as it's been referred to. So neither of 0:15:36.600 --> 0:15:40.360 those things happened. What deal we actually ended up getting 0:15:40.760 --> 0:15:43.880 so far on the table is one in which by Dance, 0:15:44.000 --> 0:15:47.800 the Chinese parent of TikTok. Uh maintains a majority stake 0:15:48.040 --> 0:15:52.760 UM in the company of TikTok and ument of this 0:15:52.800 --> 0:15:55.960 new company. Up to of the new company will be 0:15:56.080 --> 0:16:00.440 owned by UM, by Walmart, and by Oracle. The hope 0:16:00.640 --> 0:16:03.600 of doing a pre I p O fundraising round and 0:16:03.640 --> 0:16:06.520 then listing doing an I p O on an American 0:16:06.600 --> 0:16:10.680 exchange in about a year so complicated, and China hasn't 0:16:10.680 --> 0:16:12.760 even agreed. In fact, last I heard, well, we did 0:16:12.760 --> 0:16:15.040 get the headline this morning that the Global Times is 0:16:15.080 --> 0:16:17.280 reporting that China is not going to accept the deal 0:16:17.320 --> 0:16:19.480 the way it is. But previously, the last I had 0:16:19.480 --> 0:16:22.360 heard from China was that they'd rather kill off the 0:16:22.480 --> 0:16:26.280 US operations of TikTok then sell out. Yeah. I mean, 0:16:26.680 --> 0:16:29.160 just like everybody else there, it's gone up and down 0:16:29.160 --> 0:16:31.800 with China as well. You know, Global Times was an 0:16:31.800 --> 0:16:35.000 interesting example because over the weekend, the editor in chief 0:16:35.040 --> 0:16:37.280 came out and said, you know, this isn't great, but 0:16:37.520 --> 0:16:39.440 you know, I think it's just something China can stomach. 0:16:39.520 --> 0:16:43.400 And then over the UM over just the last hour, 0:16:44.000 --> 0:16:47.080 UM tweeted to say, um, you know, this is not 0:16:47.160 --> 0:16:50.560 actually something that that China can accept, and so you know, 0:16:50.600 --> 0:16:52.760 we are in the stage where the you know, the 0:16:52.800 --> 0:16:55.440 words are going back and forth like a tennis match. Um, 0:16:55.680 --> 0:16:59.320 and uh, you know right now the company is stuck 0:16:59.320 --> 0:17:03.000 in between all of this is, of course TikTok, So Shelley, 0:17:03.080 --> 0:17:06.080 I mean, clearly, there are reasonable arguments to be made 0:17:06.119 --> 0:17:09.520 as relates to national security and what data the Chinese 0:17:09.520 --> 0:17:13.400 may or may not be gathering about US consumers. Does 0:17:13.480 --> 0:17:18.240 this deal address that at all? So most of the 0:17:18.320 --> 0:17:21.919 national security and privacy experts that we've spoken to over 0:17:21.960 --> 0:17:25.240 the last few years, last few days I'm sorry, um, 0:17:25.720 --> 0:17:28.040 have said that this doesn't address that, but it was 0:17:28.080 --> 0:17:31.679 really about national security, then it really wouldn't matter that 0:17:31.800 --> 0:17:36.240 TikTok was creating twenty thousand jobs, as as Trump had 0:17:36.359 --> 0:17:38.680 head said over the weekend, and none of those things 0:17:38.720 --> 0:17:43.880 would really enter into the discussion. By including Oracle as 0:17:43.960 --> 0:17:47.080 a technology partner, what that does is it gives Oracle 0:17:47.200 --> 0:17:49.480 access to to look at the source code and to 0:17:49.560 --> 0:17:51.919 look at the algorithm. Um, but it doesn't give them 0:17:51.960 --> 0:17:54.840 ownership of it, and so they can kind of monitor it. 0:17:55.240 --> 0:17:59.240 And um, you know that too many national security experts 0:17:59.680 --> 0:18:02.440 is just not enough to really identify a threat if there, 0:18:02.480 --> 0:18:05.520 if there is one. It's so strange because it's effectively 0:18:05.560 --> 0:18:10.000 an administration picking the companies that are allowed access to 0:18:10.040 --> 0:18:13.360 this information. Right, So we know that other companies were interested, 0:18:13.440 --> 0:18:16.320 but it's Oregon and Walmart now that are the chosen 0:18:16.359 --> 0:18:20.960 to Shelley, have we ever seen this before? No. I 0:18:21.000 --> 0:18:25.080 mean the issue with other companies that were interested, like Microsoft, 0:18:25.160 --> 0:18:26.679 was that they got in them too the game. When 0:18:26.680 --> 0:18:28.280 they thought it was going to be an all out sail, 0:18:28.359 --> 0:18:30.520 they said, yeah, of course we want to own this asset, 0:18:30.960 --> 0:18:34.400 you know, own this this popular company. Um. But when 0:18:34.440 --> 0:18:36.800 it became clear that it would just become a partnership, 0:18:37.400 --> 0:18:40.320 Microsoft um, you know, didn't end up didn't end up 0:18:40.320 --> 0:18:43.000 actually wanting to go much further and invite Dance the 0:18:43.080 --> 0:18:45.560 same way. They couldn't reach an agreement. And so you know, 0:18:45.640 --> 0:18:48.520 all of this jarekicking of companies and banning them and 0:18:48.520 --> 0:18:53.679 things like that. It's just completely completely unprecedented, um in 0:18:53.720 --> 0:18:58.119 the US, particularly for social media company. So Shelly, just 0:18:58.160 --> 0:19:03.080 real quickly here is this expected to close? Was well, 0:19:03.119 --> 0:19:05.240 I think there's still a few hurdles that have to happen. 0:19:05.280 --> 0:19:07.560 I mean, Trump it was the biggest one and gave 0:19:07.680 --> 0:19:10.240 his you know to using his words, gave his blessings 0:19:10.280 --> 0:19:13.760 over the weekend. Um, but it's anything but done deal there. 0:19:13.800 --> 0:19:16.560 There's a lot of momentum within the administration to get 0:19:16.560 --> 0:19:19.800 this across the finish line. Um. But again, a lot 0:19:19.840 --> 0:19:22.119 of these things can be delayed. You know, Donald Trump 0:19:22.520 --> 0:19:24.240 put out it. This is all being done, you know, 0:19:24.320 --> 0:19:27.119 via executive order. So if you just put out another delay, 0:19:27.440 --> 0:19:29.840 he can delay it again. Um. You know, we can 0:19:29.920 --> 0:19:32.679 keep going with these delays until after the US presidential 0:19:32.720 --> 0:19:36.040 election and then who knows what happened. Okay, Shelley, thank 0:19:36.040 --> 0:19:38.080 you so much for joining us. We really appreciate you 0:19:38.160 --> 0:19:40.320 coming on and sharing your knowledge share of this ever 0:19:40.440 --> 0:19:46.359 changing issue. Here, Shelley Banjo, senior writer for Bloomberg TikTok Oracle. 0:19:46.680 --> 0:19:49.679 Will a deal happen? Will it really be material to 0:19:49.920 --> 0:19:55.120 national security? We will see. And we have a VIX 0:19:55.200 --> 0:19:58.720 that is above thirty today. That's a pretty big increase, 0:19:58.960 --> 0:20:01.399 but not to rising when you see the volatility in 0:20:01.440 --> 0:20:03.760 the Market's another down day for the in disease, and 0:20:03.840 --> 0:20:08.000 we are dipping further into down territory with the Dow 0:20:08.080 --> 0:20:11.359 back down below three percent three point three percent lower 0:20:11.400 --> 0:20:13.520 at this point, and it's picking up as well. The 0:20:13.600 --> 0:20:17.280 steam for the SMP and the NASDAC and of course 0:20:17.320 --> 0:20:19.680 a big move in the thirty year yield as well. 0:20:19.760 --> 0:20:22.800 Today Paul the third year yield now yielding just below 0:20:22.880 --> 0:20:26.639 one one. This presumably a little bit to do with 0:20:26.760 --> 0:20:29.879 Robert Camplan's commons to Bloomberg. Yeah. Absolutely, I think the 0:20:30.440 --> 0:20:32.920 you know, no matter how you slice it here, um, 0:20:33.080 --> 0:20:36.000 we are lower for longer as it relates to rates 0:20:36.000 --> 0:20:39.320 and uh um, you know you hear Chairman Pal talking 0:20:39.359 --> 0:20:43.880 about three maybe even beyond that in terms of being 0:20:43.920 --> 0:20:47.520 accommodated here and injecting liquidity into the marketplace, and we're 0:20:47.520 --> 0:20:50.160 seeing that in the in the yields. But I think 0:20:50.200 --> 0:20:54.040 the market today just a lot more uncertainly about political 0:20:54.040 --> 0:20:58.320