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Speaker 1: Bloomberg Audio Studios, Podcasts, radio News.

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Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along

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Speaker 2: with Lisa Bromwitz and Amrie Hordern. Join us each day

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Speaker 2: for insight from the best in markets, economics, and geopolitics

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Speaker 2: from our global headquarters in New York City. We are

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Speaker 2: live on Bloomberg Television weekday mornings from six to nine

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Speaker 2: am Eastern. Subscribe to the podcast on Apple, Spotify or

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Speaker 2: anywhere else you listen, and as always on the Bloomberg

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Speaker 2: Terminal and the Bloomberg Business app. Electoral College votes to

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Speaker 2: steal a return to the White House. Ja Ploski of

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Speaker 2: TPW Advisory is bank with us. He was with us

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Speaker 2: what six hours ago? Ja, to see everybody glad to

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Speaker 2: start with this, But you made a really bad call

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Speaker 2: on this selection, Harris land slide. What went wrong?

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Speaker 3: Oh?

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Speaker 4: Thank you, John. I appreciate that, the conversation. I always

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Speaker 4: love that. Well, look right, I mean, my dad is

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Speaker 4: It's a good thing we're not paid to be political prognosticators.

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Speaker 4: Because we were of the view that the Democrats would

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Speaker 4: win women vote, abortion, youth vote, et cetera. None of

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Speaker 4: that really materialized. What's really interesting after a few hours

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Speaker 4: of sleep, is the idea of good economics has turned

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Speaker 4: into bad politics for the Democrats right the Biden Harris

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Speaker 4: administration best economic outcome in generations, the US is the

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Speaker 4: envy of the world, best growth, lowest inflation, and the

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Speaker 4: Trump policy mix, which I think economically speaking is going

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Speaker 4: to prove to be not very good but was clearly

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Speaker 4: good politics. And so as an investor here we are sitting,

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Speaker 4: we need to think about exactly what we just discussed.

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Speaker 4: You know, is it going to be a sweep, because

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Speaker 4: that means the policy mix, more of it is likely

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Speaker 4: to materialize. If it's not a sweep, then we'll see

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Speaker 4: how it all plays out. But I think for US

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Speaker 4: at TPW, we're focused on a long cycle opportunity, good

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Speaker 4: global growth, good risk asset O tunity, and a lot

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Speaker 4: of that depends on policy continuity. And I think what

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Speaker 4: we're going to have in the US is clearly policy discontinuity.

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Speaker 4: And the question is going to be how does that

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Speaker 4: play out? And the setup I'm thinking about, like right

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Speaker 4: now this morning on the way in here, was you

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Speaker 4: have the US, which is an over owned expensive asset.

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Speaker 4: Foreigners have never owned more of US financial assets at

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Speaker 4: a time when the policy mix is deteriorating versus, for example, China,

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Speaker 4: which is a cheap asset under owned just to finish

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Speaker 4: cheap under owned, and arguably the policy mix is improving.

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Speaker 4: City Economic Surprise Index turning up. Pmis above fifty, and

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Speaker 4: I think we're going to see at the end of

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Speaker 4: this week a further policy response by China because they

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Speaker 4: understand that their growth right now is export driven and

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Speaker 4: with tariffs that could be a big problem.

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Speaker 1: I wasn't trying to interrupt you, but before we get

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Speaker 1: to it, don't interrupt you.

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Speaker 3: Criticizement.

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Speaker 2: It's okay, it's a third.

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Speaker 4: Down or fourth time.

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Speaker 3: Vote.

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Speaker 1: There's a question here about whether you than fade this

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Speaker 1: move if you believe that actually this is not the

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Speaker 1: right policy. To put your mouth the money where your

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Speaker 1: mouth is.

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Speaker 4: Well, that's a great question, and I thought about that,

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Speaker 4: and tactically, I think you have to enjoy the bounce, right,

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Speaker 4: and the reasons are multifold. First, seasonality, this is the

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Speaker 4: best three months of the year for stocks. Positioning is

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Speaker 4: pretty light, right you're seeing that play out. You don't

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Speaker 4: have five percent moves, two percent moves in the S

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Speaker 4: and P if everybody's already long, so people de risked.

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Speaker 4: Now they have to re risk. Technicals are supportive, and importantly,

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Speaker 4: most importantly, fundamentals are supportive. Right, we're just coming out

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Speaker 4: of Q three earnings. They were double what the expectation

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Speaker 4: was going into the earning season. The projection was four percent,

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Speaker 4: ended up being around nine percent. And most important, I

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Speaker 4: think we've seen a complete collapse in the VIX. That's

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Speaker 4: what needs to be up on these charts here for Bloomberg. Right,

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Speaker 4: the VIX has gone from twenty five to fifteen in

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Speaker 4: a matter of hours.

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Speaker 2: I was on TV last night. He's producing.

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Speaker 3: Now I need a new job on the screen.

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Speaker 2: Let's go, I need a new job.

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Speaker 4: Yes, exactly, something's gonna work.

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Speaker 2: I think you just take over.

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Speaker 3: So your tripolar world.

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Speaker 5: Even though your political conviction was wrong, your market conviction

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Speaker 5: in a sense was accurate.

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Speaker 4: Yeah, exactly. Which is It goes back to what I

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Speaker 4: said last night. Remember my miakup but I think it

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Speaker 4: was twelve to fifty last night was look, do you

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Speaker 4: want to be the old market saying do you want

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Speaker 4: to be right or do you want to make money right?

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Speaker 4: And I struggle with that for years because I was

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Speaker 4: my background as a cell size strategist, and so you

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Speaker 4: want to be right, really important as a seal size strategist,

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Speaker 4: As an investor and an advisor, we want to make money,

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Speaker 4: and so we're fully invested, we're long equities, we are

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Speaker 4: completely out of treasury. So this asymove is not affecting

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Speaker 4: us in any way, shape or form other than helping

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Speaker 4: us beat our benchmark.

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Speaker 2: Well, but it's tight to get back in.

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Speaker 4: Yeah, you know, that's good. That's again the question to

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Speaker 4: be asked, I think, and you know, it's a little

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Speaker 4: tempting tactically again because as I said last night, going

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Speaker 4: into this week, the long end of the treasury market

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Speaker 4: is represented by ETFs, was massively oversold.

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Speaker 3: Right.

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Speaker 4: The RSI Relative strength Index for the seven to ten

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Speaker 4: year etf I e F was fifteen. They don't really

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Speaker 4: get down around fifteen very often. So tactically, I think

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Speaker 4: you're probably I wouldn't be a seller if I were

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Speaker 4: as an owner of treasuries right here the long end.

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Speaker 4: But I think the bigger question is the deficit and

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Speaker 4: clearly again the Trump policy mix. It's not just my

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Speaker 4: point of view. Pretty much every independent person who looked

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Speaker 4: at it or a Group, Moody's, Goldman, Peterson.

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Speaker 3: Et cetera.

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Speaker 4: It's bad for inflation, it's bad for the deficit, it's

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Speaker 4: bad for rates, and theoretically should be bad for growth.

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Speaker 4: But I think there's an idea that this is going

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Speaker 4: to be a hothouse effect, which is what you guys

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Speaker 4: have been talking about.

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Speaker 1: So what are you looking for to decide whether or

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Speaker 1: not to bite the bullet sell stocks by bonds.

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Speaker 4: Part of it is to see the makeup of the

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Speaker 4: houses it a trifecta. Part of it is to kind

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Speaker 4: of like see what China does right, because there's going

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Speaker 4: to be a response. Well, you know, we're global, we're

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Speaker 4: multi asset, so we have the whole world is our oyster,

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Speaker 4: and there are going to be opportunities to play. I

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Speaker 4: think for now, as I said, we enjoy the bounce,

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Speaker 4: We enjoy the ride, and we think about, you know,

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Speaker 4: at some point, maybe lightening up. I think for the US,

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Speaker 4: I mean, I think the call for US is going

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Speaker 4: to be if we really do believe in the tripolar

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Speaker 4: world competition between China, the US, and Europe. China has

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Speaker 4: taken the high ground in the clean energy space. You know,

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Speaker 4: Trump wants to and EVS et cetera. The real fight

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Speaker 4: now is AI. Uh and I don't see that. This is,

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Speaker 4: you know, where the two countries are separating their tech stacks.

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Speaker 4: That's our whole thesis with China tech. And you know,

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Speaker 4: I think the issue right now is do you want

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Speaker 4: to press that bet right so you reduce the US

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Speaker 4: and you go further into Asia, which has been down

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Speaker 4: five weeks in a row, is cheap and under owned.

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Speaker 4: I mean, those are the things you want to play.

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Speaker 5: As you said, you want to end EVS. Tesla is

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Speaker 5: absolutely soaring today.

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Speaker 3: Well that's the must. Well do you think is the biggest.

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Speaker 5: Loser in terms of your tripolar world with this composition

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Speaker 5: we see in Washington.

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Speaker 4: The US clearly because Europe has got to respond. They

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Speaker 4: know that the whole Drogy report on competitiveness was we

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Speaker 4: got to do more of the things that China and

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Speaker 4: the US are doing. And to us, there's a new

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Speaker 4: industrial policy mix that is being implemented around the world.

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Speaker 4: To compete in AI, to compete with climate mitigation, to

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Speaker 4: compete in conflict, you need public private partnership because it's

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Speaker 4: too much money for the private sector alone, and the

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Speaker 4: public sector doesn't have the expertise. So who can marry

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Speaker 4: that best is going to be the winner. And I

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Speaker 4: think you also have to think about immigration. Who can

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Speaker 4: leverage the immigration to improve their growth profile is also

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Speaker 4: going to be a winner. And in the policy mix

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Speaker 4: that the Trump team has laid out to date, it's

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Speaker 4: anti pretty much all of that. And so you know, strategically,

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Speaker 4: as I said, the US de hallor is the most

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Speaker 4: over owned, it's expensive, and the policy mix, in our view,

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Speaker 4: is deteriorating.

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Speaker 2: There's a lot to unpack there. I just want to

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Speaker 2: pick out a few things. The former president now president

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Speaker 2: atlect has been quite clear that he wants national champions,

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Speaker 2: which is why there's the proposal on the campaign to

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Speaker 2: drop the corporate tax rate to fifteen percent with conditions

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Speaker 2: for domestic manufacturing. Now, you said, when asked who's the

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Speaker 2: biggest loser, you said the US, and then you said,

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Speaker 2: clearly it's a clearly piece of it. I'm going to

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Speaker 2: push back on because it's not so clear to a

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Speaker 2: lot of people watching the program right now acknowledge that.

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Speaker 2: At the moment, I think you called it a hot

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Speaker 2: house theory. Right now in America, that's what it feels like.

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Speaker 2: It feels like, if you're investing in America, you'll do well.

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Speaker 2: If you're trying to export to America you might have

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Speaker 2: a problem. That house theory. What's the biggest hole in

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Speaker 2: the window right now?

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Speaker 4: Well, I mean, I think it's JP Morgan who laid

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Speaker 4: out the case that if Trump implements the sixty percent

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Speaker 4: tariff on all China imports, that will lead to almost

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Speaker 4: a halving of the earnings growth that's expected for twenty

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Speaker 4: twenty five. In other words, the earnings are expected to

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Speaker 4: grow by about thirty five bucks next year from this

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Speaker 4: year twenty five five to twenty four, the tariff effect

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Speaker 4: will carve out fifteen dollars. This is JP Morgan's estimates.

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Speaker 4: They got, you know, reams of economists thinking about this stuff.

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Speaker 4: And so you're basically talking about taking your earnings growth

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Speaker 4: and having it at a time when you know you're

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Speaker 4: not going to get multiple expansion. So it's all about

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Speaker 4: the earnings growth. Your three in a bull market tends

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Speaker 4: to be the year of rest. We are going into

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Speaker 4: year three, that's historically the case, typically single digit returns.

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Speaker 4: And so I think that the idea of national champions Sure,

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Speaker 4: that's why Tess was probably a Rocking Musk is going

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Speaker 4: to be one of the national champions. But I think

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Speaker 4: overall the whole thrust of the US policy mix has

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Speaker 4: been reshoring right and reshoring with a dollar getting more expensive.

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Speaker 4: Those two things don't compute. So that's a big hole

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Speaker 4: in my view.

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Speaker 2: I'm going to suggest those JP Morgan economists sounds too

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Speaker 2: unhappy this morning. The stock is up by six point

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Speaker 2: five in the pre market. Jay, It's good to see

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Speaker 2: you and seriously appreciate your time night and this morning.

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Speaker 3: Thanks be great.

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Speaker 4: I mean, one of the things that's great about this

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Speaker 4: is that you have to think in real time, right,

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Speaker 4: So by coming on and engaging in this debate and dialogue,

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Speaker 4: you know, it makes our process better. And so we

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Speaker 4: appreciate it. And good luck to everybody, and hopefully the

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Speaker 4: next time we see each other we'll all have had

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Speaker 4: a little bit more rest.

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Speaker 2: We'll see us soon, Thank you, Sir j Filoski. There

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Speaker 2: TPW advisory attention. Turning to the FED rate decision, Torston

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Speaker 2: slock of Apollo expanding a twenty five basis point rate

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Speaker 2: cut add in quote. We don't expect the FED will

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Speaker 2: cut interest rates in December. Torston joint US for more Torston,

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Speaker 2: Good morning, running. I'm not sure if you've been to bed,

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Speaker 2: so let's start with the election. Good night, good evening,

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Speaker 2: wherever you want to go. I want to understand whether

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Speaker 2: this has changed anything for you or just cemented what

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Speaker 2: you were already thinking.

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Speaker 6: Well, I think, of course what always comes with elections

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Speaker 6: is and now we need to figure out what policies

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Speaker 6: are actually.

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Speaker 3: Going to be implemented.

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Speaker 6: It's clear that yesterday, at around just before nine pm,

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Speaker 6: we found out what the Trump trade really was, namely

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Speaker 6: that rates were going higher, the dollar was going up,

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Speaker 6: and starks were going up. So from that, of course

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Speaker 6: we could derive that, well, if this continues, it does,

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Speaker 6: on the one hand, mean easier financial conditions because as

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Speaker 6: a stark mike going up, but it also means tighter

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Speaker 6: financial conditions because long rates are going up. So now

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Speaker 6: they challenge for markets is to figure out why are

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Speaker 6: long rates going up. Are they going up because of

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Speaker 6: the economy expected to even better, or are long rates

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Speaker 6: going up because of worries.

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Speaker 3: About fiscal sustainability?

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Speaker 6: And this becomes a very important debate, namely, what would

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Speaker 6: the term premium meaning what will happen to the part

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Speaker 6: of rates that in long rates that have nothing to

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Speaker 6: do with FED expectations. So therefore the conclusion is that

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Speaker 6: we still need to wait and see what policies actually

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Speaker 6: will come.

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Speaker 2: Which one do you think it is and why? What's

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Speaker 2: it sout?

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Speaker 6: If I look at my Bloomberg screen and the term

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Speaker 6: premium coming both from the San Francisco FED and the

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Speaker 6: New York FED, they both say that the term premium

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Speaker 6: in the last six seven weeks has been going up

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Speaker 6: more than fifty basis points.

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Speaker 3: So that's telling you that.

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Speaker 6: Rates in the long end are going up for reasons

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Speaker 6: that have nothing to do with FED expectations. So now

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Speaker 6: it becomes therefore a little question about okay, so if

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Speaker 6: rates are going up for reasons that have nothing to

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Speaker 6: do with FED expectations, what could those other reasons then be?

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Speaker 6: And traditionally one interpretation has been that markets do focus

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Speaker 6: on fiscal sustainability, and given that both candidates have been

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Speaker 6: scored by the Penwarden Budget Model and the Committee for

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Speaker 6: a Fair Responsible Budget, that we will have more deficits

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Speaker 6: both under Harris.

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Speaker 3: And the Trump.

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Speaker 6: One interpretation has been that rates have generally been going

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Speaker 6: up in the last month or a little bit more

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Speaker 6: because of renewed worries about the fiscal situation.

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Speaker 2: That's that said.

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Speaker 1: This morning, what we're seeing is small caps ripping. What

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Speaker 1: we're seeing is some of the consumer cyclical stocks ripping,

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Speaker 1: some of the lower rated credits actually doing very well,

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Speaker 1: which absolutely flies against this idea that it's going to

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Speaker 1: be tighter financial conditions that constrains the economy. Instead, it

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Speaker 1: suggests something about growth reaccelerating. Are you saying that this

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Speaker 1: is an inconsistent response for the market or can you

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Speaker 1: take that as sort of a signal here?

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Speaker 6: Well for small cap in particular, absolutely, rates higher for

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Speaker 6: longer is negative because let's remember that forty percent of

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Speaker 6: the Russell two thousand have no earnings on negative earnings,

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Speaker 6: so that means that Russell two thousand companies are characterized

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Speaker 6: by having no covers ratios, meaning very little earnings to

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Speaker 6: pay for the interest payment. So that's of course negative

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Speaker 6: for small caps. What's positive for small caps is likely,

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Speaker 6: first of all, we may get now go more growth,

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Speaker 6: but also from a regulatory perspective, if we now have

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Speaker 6: that the Republicans are going to at least as the

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Speaker 6: market textbook would say, create an environment that is in

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Speaker 6: the market's language more business friendly. Well, that would also

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Speaker 6: be a reason then why small caps should now benefiting.

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Speaker 6: So there's a talk of walk going on between tier

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Speaker 6: financial conditions meaning higher interest expenses and at the same

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Speaker 6: time what could be characterized more tailwinds to the business environment.

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Speaker 1: I'm trying to get my head around this because i

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Speaker 1: want to understand how the Fed's going to grapple with

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Speaker 1: this tomorrow and how FED share Jpowell is going to

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Speaker 1: signal about yields going higher on the long end that

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Speaker 1: extensibly should be tightening financial conditions. But aren't it if

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Speaker 1: you see ism services like what we saw yesterday, But

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Speaker 1: aren't if you see what we're seeing in the employment market,

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Speaker 1: at what point does it become a concern?

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Speaker 2: What are the red flags to you?

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Speaker 3: Exactly?

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Speaker 6: So that's why tomorrow is easy for the FIT. December

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Speaker 6: is really difficult, because now we get to the very

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Speaker 6: difficult situation that we already even before the election, had

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Speaker 6: ISM services going up really significantly, including the employment component.

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Speaker 6: We've all been assuming now for several quarters. Oh employment

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Speaker 6: is slowing down, non farm payables will gradually weaken. But

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Speaker 6: then so certainly we began to see of course in

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Speaker 6: September none five payers went up. October was distorted by

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Speaker 6: the weather, but if we get a payback from the

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Speaker 6: weather in here the day data for November, and on

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Speaker 6: top of that we're already seeing ism services for employment

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Speaker 6: also going up. The challenge for the FIT is that

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Speaker 6: both organically, if you will, the economy is actually still

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Speaker 6: in a good spot, and now you have some questions about, well,

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Speaker 6: what type of policy will come. We will have more

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Speaker 6: fiscal policy, will we have there for more support to

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Speaker 6: the economy. That will then become the challenge for them

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Speaker 6: in terms of what they should be doing in December.

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Speaker 5: Well, Torston, the highly regarded Cook Political Report, just put

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Speaker 5: on notes saying the most likely outcome now is a

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Speaker 5: GOP trifector. Former Speaker of the House Kevin McCarthy just

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Speaker 5: texted me saying the Republicans will keep the House. This

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Speaker 5: is someone that knows the House very well and also

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Speaker 5: knows those California districts very well. So there is this

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Speaker 5: trifecta what policy can actually get done?

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Speaker 3: Well?

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Speaker 6: So now we go all back and look at the

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Speaker 6: Penwaton budget model, which had a quantification of what would

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Speaker 6: be the implications for GDP of the potential here of

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Speaker 6: red sweep, And the answer to that is that we

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Speaker 6: will generally see a boost to the economy. We will

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Speaker 6: probably also see some boost to inflation, which will certainly.

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Speaker 3: Complicate the feeds job.

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Speaker 6: So that's why it remains to be seen what of

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Speaker 6: the things that the Trump has talked about he will

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Speaker 6: be implementing. But if we do get a rid sweep,

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Speaker 6: then certainly we should be going back and studying hard

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Speaker 6: what has the quantified models been showing in terms of

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Speaker 6: the implications for the economy.

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Speaker 5: How does j Powell talk about this tomorrow?

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Speaker 6: Well, it's a very difficult challenge for him here because obviously,

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Speaker 6: if we agree that tomorrow is easy with twenty five

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Speaker 6: basis points cut, then how do you start to talk

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Speaker 6: about including this in your forecast. I think that one

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Speaker 6: way that he might begin to talk about it is

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Speaker 6: to say, well, we just don't know what exactly will happen.

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Speaker 6: We don't know which of these policy will be implemented.

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Speaker 6: So we have a list of things that Trump has

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Speaker 6: talked about, and they have all been quantified by a

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Speaker 6: number of different institutions.

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Speaker 3: But what of these things will actually come.

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Speaker 6: Through and in what aut of magnitude becomes a very

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Speaker 6: important issue.

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Speaker 2: Of course, for the FIT we can play around with

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Speaker 2: this a little bit. Does anyone start auditioning to say

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Speaker 2: chair and POW's job.

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Speaker 6: Well, as we all know, his term will run out

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Speaker 6: in May of twenty twenty six So now we're already

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Speaker 6: begin to have in the second half of next year

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Speaker 6: a debate about who should be the next fit Chuere

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Speaker 6: And of course this will also become a very important

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Speaker 6: part of these gossion in markets.

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Speaker 2: We're going to have it right now. Wait doesn't that

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Speaker 2: debate start right now?

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Speaker 1: One hundred percent, especially because what we were talking about

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Speaker 1: with Thomas Hoenig. I think we cannot emphasize enough the

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Speaker 1: tools that the FED has are not just cutting rates.

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Speaker 1: They also are quantitative easing. They also are bond purchases

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Speaker 1: at a time where there's a real question about the

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Speaker 1: long end. And I wonder how long before we start

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Speaker 1: talking about.

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Speaker 2: That, Tolson? Just one final question, how similar is this

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Speaker 2: to twenty sixteen when we were waiting for the tax

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Speaker 2: cuts to come from the Trump administration and we having

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Speaker 2: similar conversations with FED officials. I remember the news conferences,

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Speaker 2: I remember the FED speakers at the time. It was

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Speaker 2: at what point do you start to bake this into

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Speaker 2: projections and they had to wait until it became reality.

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Speaker 2: Is it much worse than that? Is it the same?

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Speaker 2: Do you see some parallels here?

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Speaker 6: This is very different because at the time we had

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Speaker 6: two policies. We had lower taxes, the TCG traump text cuts,

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Speaker 6: and then we had the same time tarriffs. Now we

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Speaker 6: don't have significant text cuts, at least of the same magnitude.

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Speaker 6: So if the terrorists are now going to be even

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Speaker 6: bigger than what we had in twenty seventeen, then you

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Speaker 6: can begin to wonder, well, if we don't have the

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Speaker 6: offsetting effect that terriffs will generally speaking lead to higher

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Speaker 6: prices and generally.

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Speaker 3: Speaking the risk of lower sales.

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Speaker 6: There was an offsetting positive effect to the lower sales

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Speaker 6: part by the tax cuts, and we don't have that

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Speaker 6: magnitude of tax cut. Potentially, there are some suggestions that

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Speaker 6: he has talked about lowering corporate tax rates to fifteen

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Speaker 6: percent for domestic manufacturers, so that could maybe offset.

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Speaker 3: Some of it.

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Speaker 6: But given what we're talking about on the terriff side

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Speaker 6: is so much bigger than what we had with sixty

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Speaker 6: percent on China than what we had in twenty sixteen.

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Speaker 6: That means that the risks are more tilted towards terrorists,

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Speaker 6: potentially playing a bigger roule.

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Speaker 2: This is the beginning of a much longer conversation, but

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Speaker 2: just the final word twenty twenty five rate hikes. You

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Speaker 2: ready to go there?

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Speaker 6: Well, if we now get a tailwind to growth from

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Speaker 6: a better business environment, from easier fiscal policy, and we

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Speaker 6: might also have a little bit high inflation because of terrorists,

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Speaker 6: if we deport illegal immigrants that might also be lifting

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Speaker 6: weage inflation, that would all be argue for the fit.

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Speaker 6: Definitely not cutting as much as the dot plot is

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Speaker 6: telling us.

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Speaker 3: At the moment.

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Speaker 2: Tosson Stock of the Polo, one of the very best,

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Speaker 2: Isaac Botansky Btig joined us. Now, Isaac, welcome to the program.

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Speaker 2: We've got some time to work through some of what

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Speaker 2: we've learned overnight, what went right for Trump and what

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Speaker 2: went wrong for Harris.

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Speaker 7: I think it's going to take a lot of time

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Speaker 7: for us, and I think that they're going to be

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Speaker 7: a number of post mortems on this, you know, and

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Speaker 7: talking to Democrats, I've already heard a fair amount of

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Speaker 7: focus on on uh, the economy. Obviously, that's the number

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Speaker 7: one issue that's what they're starting to see from the

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Speaker 7: exit polls. But they're also claims and concerns of misogyny

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Speaker 7: and and other issues that are in plain So I

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Speaker 7: think Democrats are going to have a lot of soul

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Speaker 7: searching to do. John. This was this was a resounding

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Speaker 7: slack that they received last night. I mean, when you

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Speaker 7: go through some of these numbers, it's pretty staggering. Trump

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Speaker 7: expanded on his previous margin in twenty three hundred counties.

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Speaker 7: He only decrease his margin in two hundred and forty counties.

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Speaker 7: That's absolutely astounding. Just the fact that he won the

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Speaker 7: popular vote is something that I don't think many of

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Speaker 7: us had anywhere near our Bengo cards. So I think

441
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Speaker 7: for Democrats, they're in the wilderness right now, and I

442
00:20:26,680 --> 00:20:29,320
Speaker 7: think it's going to be a long few years before

443
00:20:29,359 --> 00:20:32,399
Speaker 7: they figure out who their new standard bearer is and

444
00:20:32,440 --> 00:20:33,320
Speaker 7: what their message is.

445
00:20:33,480 --> 00:20:35,359
Speaker 5: Well, when it comes to the standard bed of the

446
00:20:35,359 --> 00:20:38,480
Speaker 5: Democratic Party, the sitting incumbent president, do you think the

447
00:20:38,520 --> 00:20:40,760
Speaker 5: fingers are really going to be pointed at him right now?

448
00:20:40,880 --> 00:20:41,600
Speaker 2: Or is it the VP?

449
00:20:43,359 --> 00:20:45,840
Speaker 7: I think that we're going to have a circular firing

450
00:20:45,880 --> 00:20:48,399
Speaker 7: squad and the Democratic Party for the next few days.

451
00:20:48,520 --> 00:20:50,400
Speaker 7: I think that everybody is going to have to eat

452
00:20:50,440 --> 00:20:53,280
Speaker 7: a little bit of blame for the strategy here and

453
00:20:53,440 --> 00:20:57,440
Speaker 7: realizing also that there was a tough hill to climb here,

454
00:20:57,920 --> 00:20:59,800
Speaker 7: right and I think that we're going to have a

455
00:20:59,800 --> 00:21:03,520
Speaker 7: lot of revisionist history in terms of when we should

456
00:21:03,520 --> 00:21:06,520
Speaker 7: have had exit by an exit, if we should have

457
00:21:06,520 --> 00:21:08,919
Speaker 7: had a full primary. All of those things are going

458
00:21:08,960 --> 00:21:10,520
Speaker 7: to take up a fair amount of time and air

459
00:21:10,640 --> 00:21:14,120
Speaker 7: within the Democratic community. The question to me is are

460
00:21:14,119 --> 00:21:17,399
Speaker 7: they going to be able to govern from the House

461
00:21:17,960 --> 00:21:19,600
Speaker 7: or are they going to be in a minority there

462
00:21:19,640 --> 00:21:21,720
Speaker 7: as well? That's the biggest question for me and I

463
00:21:21,760 --> 00:21:23,200
Speaker 7: think everyone else at this moment.

464
00:21:23,400 --> 00:21:25,800
Speaker 5: What are the tea leaves telling you about those house races?

465
00:21:25,880 --> 00:21:28,880
Speaker 5: Right now? There's some dozen or two dozen we're still

466
00:21:28,920 --> 00:21:30,240
Speaker 5: waiting to hear from.

467
00:21:31,040 --> 00:21:34,080
Speaker 7: Look, all of my Republican contacts are optimistic, but that

468
00:21:34,160 --> 00:21:37,879
Speaker 7: might be just the broader euphoria that they're feeling this morning.

469
00:21:38,040 --> 00:21:40,000
Speaker 7: It's going to take two or three days. We're going

470
00:21:40,080 --> 00:21:43,320
Speaker 7: to have to buckle in for this. Ultimately. I think

471
00:21:43,359 --> 00:21:45,880
Speaker 7: what I've tried to highlight the clients over the past

472
00:21:45,920 --> 00:21:48,359
Speaker 7: few months is, no matter who's in control of the House.

473
00:21:48,680 --> 00:21:50,840
Speaker 7: It's going to be a very slim margin from the

474
00:21:50,840 --> 00:21:52,440
Speaker 7: looks of it, and you're going to have the same

475
00:21:52,520 --> 00:21:56,960
Speaker 7: dysfunction that we saw with the speaker fight just last year.

476
00:21:56,960 --> 00:21:58,600
Speaker 7: And I think that's going to be a theme that

477
00:21:58,600 --> 00:22:00,879
Speaker 7: that markets are going to have to deal with, especially

478
00:22:00,960 --> 00:22:03,160
Speaker 7: as we get to some of these big tickets spending

479
00:22:03,520 --> 00:22:05,240
Speaker 7: efforts that I think we all care about.

480
00:22:05,359 --> 00:22:06,840
Speaker 1: Isa sak just to build on that, I think is

481
00:22:06,880 --> 00:22:09,119
Speaker 1: one of the big questions in Marcus this morning. We

482
00:22:09,119 --> 00:22:11,240
Speaker 1: were just speaking with Marvin Low, for example, who was

483
00:22:11,280 --> 00:22:13,879
Speaker 1: saying he thinks right now the bond market and broader

484
00:22:13,880 --> 00:22:16,919
Speaker 1: markets in general are pricing in just Donald Trump at

485
00:22:16,960 --> 00:22:18,960
Speaker 1: the top of the ticket and the Senate turning red, not.

486
00:22:18,920 --> 00:22:19,719
Speaker 2: A red sweep.

487
00:22:20,119 --> 00:22:23,280
Speaker 1: What are you hearing from clients about how much you

488
00:22:23,359 --> 00:22:26,639
Speaker 1: could get a very much accelerated move on the idea

489
00:22:26,960 --> 00:22:30,159
Speaker 1: that those nineteen still undecided Vosa could flip the House,

490
00:22:30,600 --> 00:22:32,280
Speaker 1: do go the way of the Republicans.

491
00:22:33,520 --> 00:22:36,879
Speaker 7: Yeah, Look, it's a huge procedural issue, right if you

492
00:22:36,960 --> 00:22:39,280
Speaker 7: have Republicans in charge of the House, you're able to

493
00:22:39,359 --> 00:22:43,679
Speaker 7: use budget reconciliation, which is an incredibly powerful tool, as

494
00:22:43,720 --> 00:22:45,159
Speaker 7: we all know, and I think we would have to

495
00:22:45,280 --> 00:22:49,640
Speaker 7: change some of our assumptions at that point regarding what

496
00:22:49,760 --> 00:22:52,560
Speaker 7: will be spent over the next two years. And so

497
00:22:52,760 --> 00:22:55,280
Speaker 7: to me, if you have that red sweep and that's

498
00:22:55,320 --> 00:22:57,560
Speaker 7: confirmed over the next few days, then I think our

499
00:22:57,600 --> 00:23:01,359
Speaker 7: deficit assumptions are going to have to be He ticked

500
00:23:01,440 --> 00:23:05,159
Speaker 7: up a bit because of the budget reconciliation process, and

501
00:23:05,240 --> 00:23:07,720
Speaker 7: so to me, that's the ballgame at this point when

502
00:23:07,760 --> 00:23:09,560
Speaker 7: we think about a lot of what we're going to

503
00:23:09,640 --> 00:23:12,840
Speaker 7: do over the next few days, is separating rhetoric from reality, right,

504
00:23:13,200 --> 00:23:15,880
Speaker 7: how much of his immigration proposals or is he going

505
00:23:15,880 --> 00:23:18,960
Speaker 7: to advance? How much of his terror proposals is he

506
00:23:19,040 --> 00:23:22,159
Speaker 7: going to actually advance? But on the spending side, the

507
00:23:22,200 --> 00:23:25,399
Speaker 7: most important issue here is do Republicans have control of

508
00:23:25,400 --> 00:23:30,199
Speaker 7: the House, because that unlicklocks budget reconciliation, and that's incredibly

509
00:23:30,280 --> 00:23:32,360
Speaker 7: powerful means of advancing your agenda.

510
00:23:32,720 --> 00:23:34,920
Speaker 1: There's been a lot of discussion around who Donald Trump

511
00:23:34,920 --> 00:23:38,000
Speaker 1: would surround himself in the White House, who is cabinet

512
00:23:38,040 --> 00:23:40,040
Speaker 1: would be, what kind of tenor.

513
00:23:39,800 --> 00:23:41,320
Speaker 2: It would be, whether it would be hawkish, whether it.

514
00:23:41,280 --> 00:23:43,200
Speaker 1: Would be dubish when it comes to foreign policy, when

515
00:23:43,240 --> 00:23:47,000
Speaker 1: it would be more expansionary or hardline or not. Do

516
00:23:47,040 --> 00:23:49,800
Speaker 1: we have any early indications based on who was with

517
00:23:50,000 --> 00:23:53,160
Speaker 1: Donald Trump last night, who is surrounding himself with early

518
00:23:53,200 --> 00:23:53,800
Speaker 1: this morning.

519
00:23:55,480 --> 00:23:58,639
Speaker 7: I found it interesting that we saw the return of

520
00:23:58,800 --> 00:24:01,520
Speaker 7: his daughter and son in law to the stage. I

521
00:24:01,560 --> 00:24:06,159
Speaker 7: think that that's not something that we've seen recently on

522
00:24:06,200 --> 00:24:09,040
Speaker 7: the political side, So I think that's noteworthy and is

523
00:24:09,080 --> 00:24:11,880
Speaker 7: something that we can should continue to track. I think

524
00:24:11,880 --> 00:24:14,399
Speaker 7: you're also going to see the return of other folks

525
00:24:14,400 --> 00:24:17,400
Speaker 7: who have maintained their place in the orbit, whether that's

526
00:24:17,400 --> 00:24:19,720
Speaker 7: Stephen Minuchin, where you're going to hear a lot more

527
00:24:19,720 --> 00:24:21,720
Speaker 7: from Robert Liteheiser, who I think we're going to have

528
00:24:21,760 --> 00:24:24,920
Speaker 7: to keep our eyes on for Treasury secretary. Those are

529
00:24:24,960 --> 00:24:26,960
Speaker 7: some of the names. I think that there also is

530
00:24:27,000 --> 00:24:29,360
Speaker 7: going to be a pronounced focus on Wall Street. Look,

531
00:24:29,400 --> 00:24:34,760
Speaker 7: John Paulson is part of this conversation, for example, You've

532
00:24:34,800 --> 00:24:37,480
Speaker 7: seen a number of other hedge fund managers who I

533
00:24:37,480 --> 00:24:39,000
Speaker 7: think are going to have the year of the President.

534
00:24:39,200 --> 00:24:41,879
Speaker 7: I don't have the answers at this point, but I

535
00:24:41,920 --> 00:24:43,520
Speaker 7: know that those are some of the names that you're

536
00:24:43,520 --> 00:24:45,160
Speaker 7: hearing mentioned most frequently.

537
00:24:45,520 --> 00:24:47,640
Speaker 2: I can appreciate your time, sir, as always, no doubt

538
00:24:47,640 --> 00:24:50,200
Speaker 2: we'll be talking against soon Isaac Boltanski there of BTIG.

539
00:24:51,160 --> 00:24:54,680
Speaker 2: This is the Bloomberg Seventans podcast, bringing you the best

540
00:24:54,760 --> 00:24:57,840
Speaker 2: in markets, economics, an Giet politics. You can watch the

541
00:24:57,840 --> 00:25:00,879
Speaker 2: show live on Bloomberg TV weekday morning from six am

542
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Speaker 2: to nine am Eastern. Subscribe to the podcast on Apple, Spotify,

543
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544
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Speaker 2: Bloomberg Terminal and The Bloomberg Business ol

545
00:25:13,680 --> 00:25:14,080
Speaker 1: Mhm