Speaker 1: Bloomberg Audio Studios, Podcasts, radio News.
Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along
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Speaker 2: Terminal and the Bloomberg Business app. Electoral College votes to
Speaker 2: steal a return to the White House. Ja Ploski of
Speaker 2: TPW Advisory is bank with us. He was with us
Speaker 2: what six hours ago? Ja, to see everybody glad to
Speaker 2: start with this, But you made a really bad call
Speaker 2: on this selection, Harris land slide. What went wrong?
Speaker 3: Oh?
Speaker 4: Thank you, John. I appreciate that, the conversation. I always
Speaker 4: love that. Well, look right, I mean, my dad is
Speaker 4: It's a good thing we're not paid to be political prognosticators.
Speaker 4: Because we were of the view that the Democrats would
Speaker 4: win women vote, abortion, youth vote, et cetera. None of
Speaker 4: that really materialized. What's really interesting after a few hours
Speaker 4: of sleep, is the idea of good economics has turned
Speaker 4: into bad politics for the Democrats right the Biden Harris
Speaker 4: administration best economic outcome in generations, the US is the
Speaker 4: envy of the world, best growth, lowest inflation, and the
Speaker 4: Trump policy mix, which I think economically speaking is going
Speaker 4: to prove to be not very good but was clearly
Speaker 4: good politics. And so as an investor here we are sitting,
Speaker 4: we need to think about exactly what we just discussed.
Speaker 4: You know, is it going to be a sweep, because
Speaker 4: that means the policy mix, more of it is likely
Speaker 4: to materialize. If it's not a sweep, then we'll see
Speaker 4: how it all plays out. But I think for US
Speaker 4: at TPW, we're focused on a long cycle opportunity, good
Speaker 4: global growth, good risk asset O tunity, and a lot
Speaker 4: of that depends on policy continuity. And I think what
Speaker 4: we're going to have in the US is clearly policy discontinuity.
Speaker 4: And the question is going to be how does that
Speaker 4: play out? And the setup I'm thinking about, like right
Speaker 4: now this morning on the way in here, was you
Speaker 4: have the US, which is an over owned expensive asset.
Speaker 4: Foreigners have never owned more of US financial assets at
Speaker 4: a time when the policy mix is deteriorating versus, for example, China,
Speaker 4: which is a cheap asset under owned just to finish
Speaker 4: cheap under owned, and arguably the policy mix is improving.
Speaker 4: City Economic Surprise Index turning up. Pmis above fifty, and
Speaker 4: I think we're going to see at the end of
Speaker 4: this week a further policy response by China because they
Speaker 4: understand that their growth right now is export driven and
Speaker 4: with tariffs that could be a big problem.
Speaker 1: I wasn't trying to interrupt you, but before we get
Speaker 1: to it, don't interrupt you.
Speaker 3: Criticizement.
Speaker 2: It's okay, it's a third.
Speaker 4: Down or fourth time.
Speaker 3: Vote.
Speaker 1: There's a question here about whether you than fade this
Speaker 1: move if you believe that actually this is not the
Speaker 1: right policy. To put your mouth the money where your
Speaker 1: mouth is.
Speaker 4: Well, that's a great question, and I thought about that,
Speaker 4: and tactically, I think you have to enjoy the bounce, right,
Speaker 4: and the reasons are multifold. First, seasonality, this is the
Speaker 4: best three months of the year for stocks. Positioning is
Speaker 4: pretty light, right you're seeing that play out. You don't
Speaker 4: have five percent moves, two percent moves in the S
Speaker 4: and P if everybody's already long, so people de risked.
Speaker 4: Now they have to re risk. Technicals are supportive, and importantly,
Speaker 4: most importantly, fundamentals are supportive. Right, we're just coming out
Speaker 4: of Q three earnings. They were double what the expectation
Speaker 4: was going into the earning season. The projection was four percent,
Speaker 4: ended up being around nine percent. And most important, I
Speaker 4: think we've seen a complete collapse in the VIX. That's
Speaker 4: what needs to be up on these charts here for Bloomberg. Right,
Speaker 4: the VIX has gone from twenty five to fifteen in
Speaker 4: a matter of hours.
Speaker 2: I was on TV last night. He's producing.
Speaker 3: Now I need a new job on the screen.
Speaker 2: Let's go, I need a new job.
Speaker 4: Yes, exactly, something's gonna work.
Speaker 2: I think you just take over.
Speaker 3: So your tripolar world.
Speaker 5: Even though your political conviction was wrong, your market conviction
Speaker 5: in a sense was accurate.
Speaker 4: Yeah, exactly. Which is It goes back to what I
Speaker 4: said last night. Remember my miakup but I think it
Speaker 4: was twelve to fifty last night was look, do you
Speaker 4: want to be the old market saying do you want
Speaker 4: to be right or do you want to make money right?
Speaker 4: And I struggle with that for years because I was
Speaker 4: my background as a cell size strategist, and so you
Speaker 4: want to be right, really important as a seal size strategist,
Speaker 4: As an investor and an advisor, we want to make money,
Speaker 4: and so we're fully invested, we're long equities, we are
Speaker 4: completely out of treasury. So this asymove is not affecting
Speaker 4: us in any way, shape or form other than helping
Speaker 4: us beat our benchmark.
Speaker 2: Well, but it's tight to get back in.
Speaker 4: Yeah, you know, that's good. That's again the question to
Speaker 4: be asked, I think, and you know, it's a little
Speaker 4: tempting tactically again because as I said last night, going
Speaker 4: into this week, the long end of the treasury market
Speaker 4: is represented by ETFs, was massively oversold.
Speaker 3: Right.
Speaker 4: The RSI Relative strength Index for the seven to ten
Speaker 4: year etf I e F was fifteen. They don't really
Speaker 4: get down around fifteen very often. So tactically, I think
Speaker 4: you're probably I wouldn't be a seller if I were
Speaker 4: as an owner of treasuries right here the long end.
Speaker 4: But I think the bigger question is the deficit and
Speaker 4: clearly again the Trump policy mix. It's not just my
Speaker 4: point of view. Pretty much every independent person who looked
Speaker 4: at it or a Group, Moody's, Goldman, Peterson.
Speaker 3: Et cetera.
Speaker 4: It's bad for inflation, it's bad for the deficit, it's
Speaker 4: bad for rates, and theoretically should be bad for growth.
Speaker 4: But I think there's an idea that this is going
Speaker 4: to be a hothouse effect, which is what you guys
Speaker 4: have been talking about.
Speaker 1: So what are you looking for to decide whether or
Speaker 1: not to bite the bullet sell stocks by bonds.
Speaker 4: Part of it is to see the makeup of the
Speaker 4: houses it a trifecta. Part of it is to kind
Speaker 4: of like see what China does right, because there's going
Speaker 4: to be a response. Well, you know, we're global, we're
Speaker 4: multi asset, so we have the whole world is our oyster,
Speaker 4: and there are going to be opportunities to play. I
Speaker 4: think for now, as I said, we enjoy the bounce,
Speaker 4: We enjoy the ride, and we think about, you know,
Speaker 4: at some point, maybe lightening up. I think for the US,
Speaker 4: I mean, I think the call for US is going
Speaker 4: to be if we really do believe in the tripolar
Speaker 4: world competition between China, the US, and Europe. China has
Speaker 4: taken the high ground in the clean energy space. You know,
Speaker 4: Trump wants to and EVS et cetera. The real fight
Speaker 4: now is AI. Uh and I don't see that. This is,
Speaker 4: you know, where the two countries are separating their tech stacks.
Speaker 4: That's our whole thesis with China tech. And you know,
Speaker 4: I think the issue right now is do you want
Speaker 4: to press that bet right so you reduce the US
Speaker 4: and you go further into Asia, which has been down
Speaker 4: five weeks in a row, is cheap and under owned.
Speaker 4: I mean, those are the things you want to play.
Speaker 5: As you said, you want to end EVS. Tesla is
Speaker 5: absolutely soaring today.
Speaker 3: Well that's the must. Well do you think is the biggest.
Speaker 5: Loser in terms of your tripolar world with this composition
Speaker 5: we see in Washington.
Speaker 4: The US clearly because Europe has got to respond. They
Speaker 4: know that the whole Drogy report on competitiveness was we
Speaker 4: got to do more of the things that China and
Speaker 4: the US are doing. And to us, there's a new
Speaker 4: industrial policy mix that is being implemented around the world.
Speaker 4: To compete in AI, to compete with climate mitigation, to
Speaker 4: compete in conflict, you need public private partnership because it's
Speaker 4: too much money for the private sector alone, and the
Speaker 4: public sector doesn't have the expertise. So who can marry
Speaker 4: that best is going to be the winner. And I
Speaker 4: think you also have to think about immigration. Who can
Speaker 4: leverage the immigration to improve their growth profile is also
Speaker 4: going to be a winner. And in the policy mix
Speaker 4: that the Trump team has laid out to date, it's
Speaker 4: anti pretty much all of that. And so you know, strategically,
Speaker 4: as I said, the US de hallor is the most
Speaker 4: over owned, it's expensive, and the policy mix, in our view,
Speaker 4: is deteriorating.
Speaker 2: There's a lot to unpack there. I just want to
Speaker 2: pick out a few things. The former president now president
Speaker 2: atlect has been quite clear that he wants national champions,
Speaker 2: which is why there's the proposal on the campaign to
Speaker 2: drop the corporate tax rate to fifteen percent with conditions
Speaker 2: for domestic manufacturing. Now, you said, when asked who's the
Speaker 2: biggest loser, you said the US, and then you said,
Speaker 2: clearly it's a clearly piece of it. I'm going to
Speaker 2: push back on because it's not so clear to a
Speaker 2: lot of people watching the program right now acknowledge that.
Speaker 2: At the moment, I think you called it a hot
Speaker 2: house theory. Right now in America, that's what it feels like.
Speaker 2: It feels like, if you're investing in America, you'll do well.
Speaker 2: If you're trying to export to America you might have
Speaker 2: a problem. That house theory. What's the biggest hole in
Speaker 2: the window right now?
Speaker 4: Well, I mean, I think it's JP Morgan who laid
Speaker 4: out the case that if Trump implements the sixty percent
Speaker 4: tariff on all China imports, that will lead to almost
Speaker 4: a halving of the earnings growth that's expected for twenty
Speaker 4: twenty five. In other words, the earnings are expected to
Speaker 4: grow by about thirty five bucks next year from this
Speaker 4: year twenty five five to twenty four, the tariff effect
Speaker 4: will carve out fifteen dollars. This is JP Morgan's estimates.
Speaker 4: They got, you know, reams of economists thinking about this stuff.
Speaker 4: And so you're basically talking about taking your earnings growth
Speaker 4: and having it at a time when you know you're
Speaker 4: not going to get multiple expansion. So it's all about
Speaker 4: the earnings growth. Your three in a bull market tends
Speaker 4: to be the year of rest. We are going into
Speaker 4: year three, that's historically the case, typically single digit returns.
Speaker 4: And so I think that the idea of national champions Sure,
Speaker 4: that's why Tess was probably a Rocking Musk is going
Speaker 4: to be one of the national champions. But I think
Speaker 4: overall the whole thrust of the US policy mix has
Speaker 4: been reshoring right and reshoring with a dollar getting more expensive.
Speaker 4: Those two things don't compute. So that's a big hole
Speaker 4: in my view.
Speaker 2: I'm going to suggest those JP Morgan economists sounds too
Speaker 2: unhappy this morning. The stock is up by six point
Speaker 2: five in the pre market. Jay, It's good to see
Speaker 2: you and seriously appreciate your time night and this morning.
Speaker 3: Thanks be great.
Speaker 4: I mean, one of the things that's great about this
Speaker 4: is that you have to think in real time, right,
Speaker 4: So by coming on and engaging in this debate and dialogue,
Speaker 4: you know, it makes our process better. And so we
Speaker 4: appreciate it. And good luck to everybody, and hopefully the
Speaker 4: next time we see each other we'll all have had
Speaker 4: a little bit more rest.
Speaker 2: We'll see us soon, Thank you, Sir j Filoski. There
Speaker 2: TPW advisory attention. Turning to the FED rate decision, Torston
Speaker 2: slock of Apollo expanding a twenty five basis point rate
Speaker 2: cut add in quote. We don't expect the FED will
Speaker 2: cut interest rates in December. Torston joint US for more Torston,
Speaker 2: Good morning, running. I'm not sure if you've been to bed,
Speaker 2: so let's start with the election. Good night, good evening,
Speaker 2: wherever you want to go. I want to understand whether
Speaker 2: this has changed anything for you or just cemented what
Speaker 2: you were already thinking.
Speaker 6: Well, I think, of course what always comes with elections
Speaker 6: is and now we need to figure out what policies
Speaker 6: are actually.
Speaker 3: Going to be implemented.
Speaker 6: It's clear that yesterday, at around just before nine pm,
Speaker 6: we found out what the Trump trade really was, namely
Speaker 6: that rates were going higher, the dollar was going up,
Speaker 6: and starks were going up. So from that, of course
Speaker 6: we could derive that, well, if this continues, it does,
Speaker 6: on the one hand, mean easier financial conditions because as
Speaker 6: a stark mike going up, but it also means tighter
Speaker 6: financial conditions because long rates are going up. So now
Speaker 6: they challenge for markets is to figure out why are
Speaker 6: long rates going up. Are they going up because of
Speaker 6: the economy expected to even better, or are long rates
Speaker 6: going up because of worries.
Speaker 3: About fiscal sustainability?
Speaker 6: And this becomes a very important debate, namely, what would
Speaker 6: the term premium meaning what will happen to the part
Speaker 6: of rates that in long rates that have nothing to
Speaker 6: do with FED expectations. So therefore the conclusion is that
Speaker 6: we still need to wait and see what policies actually
Speaker 6: will come.
Speaker 2: Which one do you think it is and why? What's
Speaker 2: it sout?
Speaker 6: If I look at my Bloomberg screen and the term
Speaker 6: premium coming both from the San Francisco FED and the
Speaker 6: New York FED, they both say that the term premium
Speaker 6: in the last six seven weeks has been going up
Speaker 6: more than fifty basis points.
Speaker 3: So that's telling you that.
Speaker 6: Rates in the long end are going up for reasons
Speaker 6: that have nothing to do with FED expectations. So now
Speaker 6: it becomes therefore a little question about okay, so if
Speaker 6: rates are going up for reasons that have nothing to
Speaker 6: do with FED expectations, what could those other reasons then be?
Speaker 6: And traditionally one interpretation has been that markets do focus
Speaker 6: on fiscal sustainability, and given that both candidates have been
Speaker 6: scored by the Penwarden Budget Model and the Committee for
Speaker 6: a Fair Responsible Budget, that we will have more deficits
Speaker 6: both under Harris.
Speaker 3: And the Trump.
Speaker 6: One interpretation has been that rates have generally been going
Speaker 6: up in the last month or a little bit more
Speaker 6: because of renewed worries about the fiscal situation.
Speaker 2: That's that said.
Speaker 1: This morning, what we're seeing is small caps ripping. What
Speaker 1: we're seeing is some of the consumer cyclical stocks ripping,
Speaker 1: some of the lower rated credits actually doing very well,
Speaker 1: which absolutely flies against this idea that it's going to
Speaker 1: be tighter financial conditions that constrains the economy. Instead, it
Speaker 1: suggests something about growth reaccelerating. Are you saying that this
Speaker 1: is an inconsistent response for the market or can you
Speaker 1: take that as sort of a signal here?
Speaker 6: Well for small cap in particular, absolutely, rates higher for
Speaker 6: longer is negative because let's remember that forty percent of
Speaker 6: the Russell two thousand have no earnings on negative earnings,
Speaker 6: so that means that Russell two thousand companies are characterized
Speaker 6: by having no covers ratios, meaning very little earnings to
Speaker 6: pay for the interest payment. So that's of course negative
Speaker 6: for small caps. What's positive for small caps is likely,
Speaker 6: first of all, we may get now go more growth,
Speaker 6: but also from a regulatory perspective, if we now have
Speaker 6: that the Republicans are going to at least as the
Speaker 6: market textbook would say, create an environment that is in
Speaker 6: the market's language more business friendly. Well, that would also
Speaker 6: be a reason then why small caps should now benefiting.
Speaker 6: So there's a talk of walk going on between tier
Speaker 6: financial conditions meaning higher interest expenses and at the same
Speaker 6: time what could be characterized more tailwinds to the business environment.
Speaker 1: I'm trying to get my head around this because i
Speaker 1: want to understand how the Fed's going to grapple with
Speaker 1: this tomorrow and how FED share Jpowell is going to
Speaker 1: signal about yields going higher on the long end that
Speaker 1: extensibly should be tightening financial conditions. But aren't it if
Speaker 1: you see ism services like what we saw yesterday, But
Speaker 1: aren't if you see what we're seeing in the employment market,
Speaker 1: at what point does it become a concern?
Speaker 2: What are the red flags to you?
Speaker 3: Exactly?
Speaker 6: So that's why tomorrow is easy for the FIT. December
Speaker 6: is really difficult, because now we get to the very
Speaker 6: difficult situation that we already even before the election, had
Speaker 6: ISM services going up really significantly, including the employment component.
Speaker 6: We've all been assuming now for several quarters. Oh employment
Speaker 6: is slowing down, non farm payables will gradually weaken. But
Speaker 6: then so certainly we began to see of course in
Speaker 6: September none five payers went up. October was distorted by
Speaker 6: the weather, but if we get a payback from the
Speaker 6: weather in here the day data for November, and on
Speaker 6: top of that we're already seeing ism services for employment
Speaker 6: also going up. The challenge for the FIT is that
Speaker 6: both organically, if you will, the economy is actually still
Speaker 6: in a good spot, and now you have some questions about, well,
Speaker 6: what type of policy will come. We will have more
Speaker 6: fiscal policy, will we have there for more support to
Speaker 6: the economy. That will then become the challenge for them
Speaker 6: in terms of what they should be doing in December.
Speaker 5: Well, Torston, the highly regarded Cook Political Report, just put
Speaker 5: on notes saying the most likely outcome now is a
Speaker 5: GOP trifector. Former Speaker of the House Kevin McCarthy just
Speaker 5: texted me saying the Republicans will keep the House. This
Speaker 5: is someone that knows the House very well and also
Speaker 5: knows those California districts very well. So there is this
Speaker 5: trifecta what policy can actually get done?
Speaker 3: Well?
Speaker 6: So now we go all back and look at the
Speaker 6: Penwaton budget model, which had a quantification of what would
Speaker 6: be the implications for GDP of the potential here of
Speaker 6: red sweep, And the answer to that is that we
Speaker 6: will generally see a boost to the economy. We will
Speaker 6: probably also see some boost to inflation, which will certainly.
Speaker 3: Complicate the feeds job.
Speaker 6: So that's why it remains to be seen what of
Speaker 6: the things that the Trump has talked about he will
Speaker 6: be implementing. But if we do get a rid sweep,
Speaker 6: then certainly we should be going back and studying hard
Speaker 6: what has the quantified models been showing in terms of
Speaker 6: the implications for the economy.
Speaker 5: How does j Powell talk about this tomorrow?
Speaker 6: Well, it's a very difficult challenge for him here because obviously,
Speaker 6: if we agree that tomorrow is easy with twenty five
Speaker 6: basis points cut, then how do you start to talk
Speaker 6: about including this in your forecast. I think that one
Speaker 6: way that he might begin to talk about it is
Speaker 6: to say, well, we just don't know what exactly will happen.
Speaker 6: We don't know which of these policy will be implemented.
Speaker 6: So we have a list of things that Trump has
Speaker 6: talked about, and they have all been quantified by a
Speaker 6: number of different institutions.
Speaker 3: But what of these things will actually come.
Speaker 6: Through and in what aut of magnitude becomes a very
Speaker 6: important issue.
Speaker 2: Of course, for the FIT we can play around with
Speaker 2: this a little bit. Does anyone start auditioning to say
Speaker 2: chair and POW's job.
Speaker 6: Well, as we all know, his term will run out
Speaker 6: in May of twenty twenty six So now we're already
Speaker 6: begin to have in the second half of next year
Speaker 6: a debate about who should be the next fit Chuere
Speaker 6: And of course this will also become a very important
Speaker 6: part of these gossion in markets.
Speaker 2: We're going to have it right now. Wait doesn't that
Speaker 2: debate start right now?
Speaker 1: One hundred percent, especially because what we were talking about
Speaker 1: with Thomas Hoenig. I think we cannot emphasize enough the
Speaker 1: tools that the FED has are not just cutting rates.
Speaker 1: They also are quantitative easing. They also are bond purchases
Speaker 1: at a time where there's a real question about the
Speaker 1: long end. And I wonder how long before we start
Speaker 1: talking about.
Speaker 2: That, Tolson? Just one final question, how similar is this
Speaker 2: to twenty sixteen when we were waiting for the tax
Speaker 2: cuts to come from the Trump administration and we having
Speaker 2: similar conversations with FED officials. I remember the news conferences,
Speaker 2: I remember the FED speakers at the time. It was
Speaker 2: at what point do you start to bake this into
Speaker 2: projections and they had to wait until it became reality.
Speaker 2: Is it much worse than that? Is it the same?
Speaker 2: Do you see some parallels here?
Speaker 6: This is very different because at the time we had
Speaker 6: two policies. We had lower taxes, the TCG traump text cuts,
Speaker 6: and then we had the same time tarriffs. Now we
Speaker 6: don't have significant text cuts, at least of the same magnitude.
Speaker 6: So if the terrorists are now going to be even
Speaker 6: bigger than what we had in twenty seventeen, then you
Speaker 6: can begin to wonder, well, if we don't have the
Speaker 6: offsetting effect that terriffs will generally speaking lead to higher
Speaker 6: prices and generally.
Speaker 3: Speaking the risk of lower sales.
Speaker 6: There was an offsetting positive effect to the lower sales
Speaker 6: part by the tax cuts, and we don't have that
Speaker 6: magnitude of tax cut. Potentially, there are some suggestions that
Speaker 6: he has talked about lowering corporate tax rates to fifteen
Speaker 6: percent for domestic manufacturers, so that could maybe offset.
Speaker 3: Some of it.
Speaker 6: But given what we're talking about on the terriff side
Speaker 6: is so much bigger than what we had with sixty
Speaker 6: percent on China than what we had in twenty sixteen.
Speaker 6: That means that the risks are more tilted towards terrorists,
Speaker 6: potentially playing a bigger roule.
Speaker 2: This is the beginning of a much longer conversation, but
Speaker 2: just the final word twenty twenty five rate hikes. You
Speaker 2: ready to go there?
Speaker 6: Well, if we now get a tailwind to growth from
Speaker 6: a better business environment, from easier fiscal policy, and we
Speaker 6: might also have a little bit high inflation because of terrorists,
Speaker 6: if we deport illegal immigrants that might also be lifting
Speaker 6: weage inflation, that would all be argue for the fit.
Speaker 6: Definitely not cutting as much as the dot plot is
Speaker 6: telling us.
Speaker 3: At the moment.
Speaker 2: Tosson Stock of the Polo, one of the very best,
Speaker 2: Isaac Botansky Btig joined us. Now, Isaac, welcome to the program.
Speaker 2: We've got some time to work through some of what
Speaker 2: we've learned overnight, what went right for Trump and what
Speaker 2: went wrong for Harris.
Speaker 7: I think it's going to take a lot of time
Speaker 7: for us, and I think that they're going to be
Speaker 7: a number of post mortems on this, you know, and
Speaker 7: talking to Democrats, I've already heard a fair amount of
Speaker 7: focus on on uh, the economy. Obviously, that's the number
Speaker 7: one issue that's what they're starting to see from the
Speaker 7: exit polls. But they're also claims and concerns of misogyny
Speaker 7: and and other issues that are in plain So I
Speaker 7: think Democrats are going to have a lot of soul
Speaker 7: searching to do. John. This was this was a resounding
Speaker 7: slack that they received last night. I mean, when you
Speaker 7: go through some of these numbers, it's pretty staggering. Trump
Speaker 7: expanded on his previous margin in twenty three hundred counties.
Speaker 7: He only decrease his margin in two hundred and forty counties.
Speaker 7: That's absolutely astounding. Just the fact that he won the
Speaker 7: popular vote is something that I don't think many of
Speaker 7: us had anywhere near our Bengo cards. So I think
Speaker 7: for Democrats, they're in the wilderness right now, and I
Speaker 7: think it's going to be a long few years before
Speaker 7: they figure out who their new standard bearer is and
Speaker 7: what their message is.
Speaker 5: Well, when it comes to the standard bed of the
Speaker 5: Democratic Party, the sitting incumbent president, do you think the
Speaker 5: fingers are really going to be pointed at him right now?
Speaker 2: Or is it the VP?
Speaker 7: I think that we're going to have a circular firing
Speaker 7: squad and the Democratic Party for the next few days.
Speaker 7: I think that everybody is going to have to eat
Speaker 7: a little bit of blame for the strategy here and
Speaker 7: realizing also that there was a tough hill to climb here,
Speaker 7: right and I think that we're going to have a
Speaker 7: lot of revisionist history in terms of when we should
Speaker 7: have had exit by an exit, if we should have
Speaker 7: had a full primary. All of those things are going
Speaker 7: to take up a fair amount of time and air
Speaker 7: within the Democratic community. The question to me is are
Speaker 7: they going to be able to govern from the House
Speaker 7: or are they going to be in a minority there
Speaker 7: as well? That's the biggest question for me and I
Speaker 7: think everyone else at this moment.
Speaker 5: What are the tea leaves telling you about those house races?
Speaker 5: Right now? There's some dozen or two dozen we're still
Speaker 5: waiting to hear from.
Speaker 7: Look, all of my Republican contacts are optimistic, but that
Speaker 7: might be just the broader euphoria that they're feeling this morning.
Speaker 7: It's going to take two or three days. We're going
Speaker 7: to have to buckle in for this. Ultimately. I think
Speaker 7: what I've tried to highlight the clients over the past
Speaker 7: few months is, no matter who's in control of the House.
Speaker 7: It's going to be a very slim margin from the
Speaker 7: looks of it, and you're going to have the same
Speaker 7: dysfunction that we saw with the speaker fight just last year.
Speaker 7: And I think that's going to be a theme that
Speaker 7: that markets are going to have to deal with, especially
Speaker 7: as we get to some of these big tickets spending
Speaker 7: efforts that I think we all care about.
Speaker 1: Isa sak just to build on that, I think is
Speaker 1: one of the big questions in Marcus this morning. We
Speaker 1: were just speaking with Marvin Low, for example, who was
Speaker 1: saying he thinks right now the bond market and broader
Speaker 1: markets in general are pricing in just Donald Trump at
Speaker 1: the top of the ticket and the Senate turning red, not.
Speaker 2: A red sweep.
Speaker 1: What are you hearing from clients about how much you
Speaker 1: could get a very much accelerated move on the idea
Speaker 1: that those nineteen still undecided Vosa could flip the House,
Speaker 1: do go the way of the Republicans.
Speaker 7: Yeah, Look, it's a huge procedural issue, right if you
Speaker 7: have Republicans in charge of the House, you're able to
Speaker 7: use budget reconciliation, which is an incredibly powerful tool, as
Speaker 7: we all know, and I think we would have to
Speaker 7: change some of our assumptions at that point regarding what
Speaker 7: will be spent over the next two years. And so
Speaker 7: to me, if you have that red sweep and that's
Speaker 7: confirmed over the next few days, then I think our
Speaker 7: deficit assumptions are going to have to be He ticked
Speaker 7: up a bit because of the budget reconciliation process, and
Speaker 7: so to me, that's the ballgame at this point when
Speaker 7: we think about a lot of what we're going to
Speaker 7: do over the next few days, is separating rhetoric from reality, right,
Speaker 7: how much of his immigration proposals or is he going
Speaker 7: to advance? How much of his terror proposals is he
Speaker 7: going to actually advance? But on the spending side, the
Speaker 7: most important issue here is do Republicans have control of
Speaker 7: the House, because that unlicklocks budget reconciliation, and that's incredibly
Speaker 7: powerful means of advancing your agenda.
Speaker 1: There's been a lot of discussion around who Donald Trump
Speaker 1: would surround himself in the White House, who is cabinet
Speaker 1: would be, what kind of tenor.
Speaker 2: It would be, whether it would be hawkish, whether it.
Speaker 1: Would be dubish when it comes to foreign policy, when
Speaker 1: it would be more expansionary or hardline or not. Do
Speaker 1: we have any early indications based on who was with
Speaker 1: Donald Trump last night, who is surrounding himself with early
Speaker 1: this morning.
Speaker 7: I found it interesting that we saw the return of
Speaker 7: his daughter and son in law to the stage. I
Speaker 7: think that that's not something that we've seen recently on
Speaker 7: the political side, So I think that's noteworthy and is
Speaker 7: something that we can should continue to track. I think
Speaker 7: you're also going to see the return of other folks
Speaker 7: who have maintained their place in the orbit, whether that's
Speaker 7: Stephen Minuchin, where you're going to hear a lot more
Speaker 7: from Robert Liteheiser, who I think we're going to have
Speaker 7: to keep our eyes on for Treasury secretary. Those are
Speaker 7: some of the names. I think that there also is
Speaker 7: going to be a pronounced focus on Wall Street. Look,
Speaker 7: John Paulson is part of this conversation, for example, You've
Speaker 7: seen a number of other hedge fund managers who I
Speaker 7: think are going to have the year of the President.
Speaker 7: I don't have the answers at this point, but I
Speaker 7: know that those are some of the names that you're
Speaker 7: hearing mentioned most frequently.
Speaker 2: I can appreciate your time, sir, as always, no doubt
Speaker 2: we'll be talking against soon Isaac Boltanski there of BTIG.
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Speaker 1: Mhm