1 00:00:09,720 --> 00:00:12,880 Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene with 2 00:00:13,600 --> 00:00:16,560 Speaker 1: David Gura. Daily we bring you insight from the best 3 00:00:16,560 --> 00:00:22,239 Speaker 1: of economics, finance, investment, and international relations. Find Bloomberg Surveillance 4 00:00:22,320 --> 00:00:27,000 Speaker 1: on Apple Podcasts, SoundCloud, Bloomberg dot Com, and of course, 5 00:00:27,320 --> 00:00:34,000 Speaker 1: on the Bloomberg. This is a real privilege. He's out 6 00:00:34,000 --> 00:00:36,839 Speaker 1: of Louisiana State and the only reason he's on is 7 00:00:36,880 --> 00:00:40,600 Speaker 1: he's got great Columbus Blue Jackets, tickets for US GET 8 00:00:40,680 --> 00:00:45,279 Speaker 1: nationwide arena, the ap box. American Electric Power is one 9 00:00:45,280 --> 00:00:50,640 Speaker 1: of the great successful combinations in utility history. His fabric 10 00:00:50,720 --> 00:00:54,760 Speaker 1: and soul is Southwestern Electric Power and Nick Aikins is 11 00:00:54,800 --> 00:00:58,080 Speaker 1: an engineer out of Louisiana State. You know, bad things happen. 12 00:00:58,520 --> 00:01:01,000 Speaker 1: A couple of weeks ago. You law to high voltage 13 00:01:01,040 --> 00:01:05,640 Speaker 1: line near scenic New Boston, Texas. That's your everyday work. 14 00:01:06,280 --> 00:01:10,360 Speaker 1: It's a e p You've seen nothing like Houston. How 15 00:01:10,400 --> 00:01:16,720 Speaker 1: do you fix the voltage lines of a disaster like Harvey. Well, 16 00:01:16,760 --> 00:01:18,600 Speaker 1: certainly we have to. We have to start out with 17 00:01:19,120 --> 00:01:22,120 Speaker 1: reforming the grid because when you have a hurricane like 18 00:01:22,240 --> 00:01:25,520 Speaker 1: Harvey come through, it's one thing to have a thunderstorm 19 00:01:25,560 --> 00:01:28,399 Speaker 1: where you can, where you can actually go take care 20 00:01:28,400 --> 00:01:31,319 Speaker 1: of the work, get it done, get it back in service. 21 00:01:31,520 --> 00:01:35,720 Speaker 1: But with a hurricane substantial damage to both transmission and 22 00:01:35,840 --> 00:01:39,920 Speaker 1: distribution infrastructure, you have to really reform the system and 23 00:01:39,959 --> 00:01:43,960 Speaker 1: rebuild the system. And that really takes a lot more planning, execution, 24 00:01:44,319 --> 00:01:47,280 Speaker 1: and just the pure logistics of having so many resources 25 00:01:47,319 --> 00:01:48,800 Speaker 1: in place to get it done, to get it done 26 00:01:48,840 --> 00:01:51,440 Speaker 1: quickly within the resources. And I'm sure you had to 27 00:01:51,560 --> 00:01:56,480 Speaker 1: survive organic chemistry at Louisiana State years ago. Methyl propeene 28 00:01:56,600 --> 00:01:59,200 Speaker 1: is not a pretty thing, and that is the chemical 29 00:01:59,280 --> 00:02:03,240 Speaker 1: industry of Texas is, you know, ugly organic chemicals that 30 00:02:03,280 --> 00:02:07,240 Speaker 1: if they're not refrigerated with electricity, do bad things like 31 00:02:07,280 --> 00:02:10,680 Speaker 1: we saw this morning. How critical is getting a EP 32 00:02:10,880 --> 00:02:16,000 Speaker 1: voltage supply to those chemical factories. Yeah, absolutely critical. There's 33 00:02:16,000 --> 00:02:19,840 Speaker 1: no question that the refonderies and the chemical processing is 34 00:02:19,840 --> 00:02:22,200 Speaker 1: is incredibly important to get back and get back quickly 35 00:02:22,240 --> 00:02:26,120 Speaker 1: because timing is of the essence. And certainly even when 36 00:02:26,120 --> 00:02:29,040 Speaker 1: you get the electricity back, these facilities have to sort 37 00:02:29,080 --> 00:02:31,960 Speaker 1: of regroup themselves and make sure that all all the 38 00:02:31,960 --> 00:02:36,560 Speaker 1: conditions that are present and within the factory are working properly. So, uh, 39 00:02:36,800 --> 00:02:40,200 Speaker 1: it does take time, but it's absolutely critical for electric 40 00:02:40,240 --> 00:02:42,560 Speaker 1: power to be there. You're there in in Ohio where 41 00:02:42,560 --> 00:02:44,680 Speaker 1: you're based, and I wonder just how difficult it is 42 00:02:44,720 --> 00:02:46,560 Speaker 1: to get get the story on the ground, to to 43 00:02:46,639 --> 00:02:49,000 Speaker 1: understand what needs to to be fixed and sort of 44 00:02:49,000 --> 00:02:51,720 Speaker 1: what's damaged at this point. Yeah, so there's a lot 45 00:02:51,760 --> 00:02:55,160 Speaker 1: of a lot of the industry is working together with 46 00:02:55,240 --> 00:02:59,480 Speaker 1: the federal government and the state governments and really in 47 00:02:59,520 --> 00:03:04,400 Speaker 1: a coordinated fashion, and also our people on the ground there. 48 00:03:04,440 --> 00:03:08,600 Speaker 1: We actually have a regional response network that the industry 49 00:03:08,639 --> 00:03:11,720 Speaker 1: has that we call resources based upon our own needs 50 00:03:11,760 --> 00:03:15,040 Speaker 1: and then we and that's about five thousand resources are 51 00:03:15,080 --> 00:03:18,320 Speaker 1: there and now. And I was actually down there the 52 00:03:18,360 --> 00:03:22,440 Speaker 1: last two days reviewing cruise, reviewing and and and looking 53 00:03:22,480 --> 00:03:26,360 Speaker 1: at the assessing the damage myself, and and certainly that 54 00:03:26,480 --> 00:03:29,200 Speaker 1: damage is extensive. You have to have assessment's done and 55 00:03:29,240 --> 00:03:32,240 Speaker 1: then you have to execute around their recovery efforts. Mr 56 00:03:32,360 --> 00:03:35,480 Speaker 1: Akin's one financial question, which is maybe out of bounds, 57 00:03:35,480 --> 00:03:37,360 Speaker 1: but I'm gonna take a risk. Your General Council's not 58 00:03:37,360 --> 00:03:40,600 Speaker 1: gonna kill me today. Tell me about the idea of 59 00:03:40,680 --> 00:03:45,440 Speaker 1: dividend growth pressures on our American utilities in the old 60 00:03:45,560 --> 00:03:48,560 Speaker 1: days it was gospel, that was religion that would we 61 00:03:48,600 --> 00:03:52,600 Speaker 1: see dividend growth? Can a EP increase its rate of 62 00:03:52,680 --> 00:03:58,320 Speaker 1: dividend growth? Yes? Our we continue to UH based based 63 00:03:58,320 --> 00:04:00,880 Speaker 1: it on consistent earnings quality and earning strength, and then 64 00:04:00,880 --> 00:04:04,280 Speaker 1: our dividend grows with our earnings. And and that's something 65 00:04:04,320 --> 00:04:07,240 Speaker 1: that that we're very focused on. We have a hundred 66 00:04:07,320 --> 00:04:11,080 Speaker 1: and ten years of consecutive dividends being paid and and UH, 67 00:04:11,160 --> 00:04:13,680 Speaker 1: there's no question we want that to continue. And as 68 00:04:13,720 --> 00:04:17,159 Speaker 1: far as the utilities are concerned, there's an entire reformation 69 00:04:17,200 --> 00:04:20,320 Speaker 1: of the industry and transformation going on that we're able 70 00:04:20,360 --> 00:04:23,599 Speaker 1: to rehabilitate infrastructure and make sure we invest but also 71 00:04:23,920 --> 00:04:26,880 Speaker 1: invest in the growing economy as well. Okay, how important 72 00:04:26,920 --> 00:04:29,679 Speaker 1: the Columbus Blue Jackets spend it for your Columbus Ohio? 73 00:04:30,040 --> 00:04:33,720 Speaker 1: Was there turnaround last year? Phenomenal? It was. They did 74 00:04:33,760 --> 00:04:37,159 Speaker 1: a great job and they just sort of fizzled out 75 00:04:37,160 --> 00:04:39,680 Speaker 1: there at the end. But but they'll make it back. Yeah, 76 00:04:39,720 --> 00:04:42,159 Speaker 1: that's called doing the Yankees. Nick Akins, thank you so 77 00:04:42,240 --> 00:04:46,440 Speaker 1: much with American Electric Power, Columbus, Ohio. But most seriously 78 00:04:46,760 --> 00:04:50,279 Speaker 1: really all down to Mr. Aiken's Louisiana with that great 79 00:04:50,320 --> 00:04:53,120 Speaker 1: merger they did with Southwestern a number of years ago. 80 00:05:05,320 --> 00:05:08,880 Speaker 1: Beneath the headline data here and I credit I critique 81 00:05:09,000 --> 00:05:13,279 Speaker 1: the industry of not going enough David Gura. Under this 82 00:05:13,440 --> 00:05:18,839 Speaker 1: headline data, disposable income has been really moldy the last 83 00:05:18,960 --> 00:05:24,080 Speaker 1: four months, zero up, then zero again, and up slightly 84 00:05:24,160 --> 00:05:27,479 Speaker 1: this month, and it ends up showing in the agony 85 00:05:27,600 --> 00:05:29,920 Speaker 1: of the savings rate. Let me be sure I got 86 00:05:29,920 --> 00:05:33,080 Speaker 1: the white column here, going back to February of this year, 87 00:05:33,600 --> 00:05:37,039 Speaker 1: we've enjoyed a savings relate migrating from four point one, 88 00:05:37,560 --> 00:05:41,960 Speaker 1: three point nine, three point seven level, three point eight ish, 89 00:05:42,440 --> 00:05:47,600 Speaker 1: three point six and now three point five. And that's 90 00:05:47,640 --> 00:05:51,640 Speaker 1: when you got that income flow and that that spending flow, 91 00:05:52,160 --> 00:05:54,839 Speaker 1: and where you get on a diminished savings rate. It 92 00:05:55,000 --> 00:05:58,800 Speaker 1: is a really nuanced set of data. And as Carl 93 00:05:59,080 --> 00:06:00,880 Speaker 1: Danna mentioned just a few moments ago, we get that 94 00:06:00,960 --> 00:06:04,680 Speaker 1: Chicago Perchacon managers and exit five. He's indicating we could 95 00:06:04,720 --> 00:06:06,960 Speaker 1: see some cloudiness to the data over these next few 96 00:06:07,279 --> 00:06:10,080 Speaker 1: months as a result of both the hurricane down in 97 00:06:10,120 --> 00:06:13,480 Speaker 1: Texas and the tumult that we've seen in Washington. And 98 00:06:13,760 --> 00:06:16,279 Speaker 1: on that note, let's bring our next guess Mia Michael 99 00:06:16,279 --> 00:06:18,400 Speaker 1: Brown is an economist at Wells Fargo based in Charlotte. 100 00:06:18,400 --> 00:06:19,719 Speaker 1: He joins us on our phone line since in, Michael, 101 00:06:19,720 --> 00:06:21,880 Speaker 1: before we get into Washington specific, do you agree with 102 00:06:21,920 --> 00:06:23,560 Speaker 1: carl do you think that these next few months are 103 00:06:23,560 --> 00:06:26,679 Speaker 1: gonna give us some cloudy economic data as a result 104 00:06:26,720 --> 00:06:29,640 Speaker 1: of the news flow that we've seen. I think that's right. 105 00:06:29,680 --> 00:06:32,160 Speaker 1: I mean, when you take a step back, you're absolutely right. 106 00:06:32,200 --> 00:06:35,479 Speaker 1: There's certainly some uncertainty coming out of Washington that has 107 00:06:35,520 --> 00:06:39,039 Speaker 1: the potential to reduce both business and consumer confidence. And 108 00:06:39,240 --> 00:06:41,839 Speaker 1: uh so, yes, I think you know. Our our team's 109 00:06:41,880 --> 00:06:43,880 Speaker 1: view is that we will continue to see this two 110 00:06:43,920 --> 00:06:47,480 Speaker 1: and a half uh sort of percent annual GDP growth 111 00:06:47,480 --> 00:06:49,360 Speaker 1: each quarter. But at the end of the day, you're 112 00:06:49,400 --> 00:06:52,159 Speaker 1: absolutely right, there's certainly some downside risk and a fault 113 00:06:52,200 --> 00:06:54,880 Speaker 1: moving over the economy of this fault. Michael Brown. The 114 00:06:54,920 --> 00:06:57,240 Speaker 1: problem with working with you is I have to work 115 00:06:57,240 --> 00:07:01,080 Speaker 1: with John Sylvia and your wonderful research, which is incredibly 116 00:07:01,200 --> 00:07:05,919 Speaker 1: detailed research, always with killer charts. You have the mother 117 00:07:06,160 --> 00:07:12,120 Speaker 1: of all Washington charts, which is US discretionary spending, which 118 00:07:12,120 --> 00:07:16,800 Speaker 1: has been on an Obama Trump vector south for years. 119 00:07:17,320 --> 00:07:21,520 Speaker 1: Are we running out of discretionary spending. We're so overburdened 120 00:07:21,520 --> 00:07:25,560 Speaker 1: by our entitlements. You are absolutely right. At the end 121 00:07:25,600 --> 00:07:29,280 Speaker 1: of the day, more and more of federal spending, whether 122 00:07:29,280 --> 00:07:30,640 Speaker 1: you want to look at it as a share of 123 00:07:30,720 --> 00:07:34,160 Speaker 1: GDP or a share of the pie of federal allocation, 124 00:07:34,680 --> 00:07:39,200 Speaker 1: is shrinking for discretionary items. So when we typically think 125 00:07:39,240 --> 00:07:42,520 Speaker 1: of the role of government, things like schools, higher education, 126 00:07:42,960 --> 00:07:47,080 Speaker 1: public service, you know, firefighters, police officers, all of these 127 00:07:47,120 --> 00:07:51,120 Speaker 1: sorts of UH services are being crammed, cramped out, or 128 00:07:51,120 --> 00:07:54,320 Speaker 1: crowded out. I should say, um, at the cost of 129 00:07:54,360 --> 00:07:58,440 Speaker 1: these growing entitlement fabilities. I'm looking at your your latest 130 00:07:58,480 --> 00:08:00,120 Speaker 1: note here, and the number that stands out to me 131 00:08:00,160 --> 00:08:04,040 Speaker 1: as twelve twelve legislative working days that Congress has here 132 00:08:04,080 --> 00:08:07,000 Speaker 1: to raise the debt ceiling, deal with with funding. How 133 00:08:07,040 --> 00:08:10,200 Speaker 1: crowded those days going to be are? And what do 134 00:08:10,200 --> 00:08:12,920 Speaker 1: you expect we're going to see come out of that? Well, 135 00:08:12,920 --> 00:08:16,440 Speaker 1: you're absolutely right, twelve legislative days in the House of Representatives. 136 00:08:16,440 --> 00:08:19,400 Speaker 1: There's a few extra days on the Senate side, but 137 00:08:19,640 --> 00:08:21,960 Speaker 1: the first thing that needs to happen upon their return 138 00:08:22,040 --> 00:08:26,120 Speaker 1: next week is lifting the debt ceiling, the nation's borrowing limit. UH. 139 00:08:26,160 --> 00:08:29,000 Speaker 1: They then need to fund the government beyond the end 140 00:08:29,120 --> 00:08:33,960 Speaker 1: of September. They also need to authorize a number of programs. 141 00:08:34,640 --> 00:08:36,960 Speaker 1: One of the key among them in the wake of 142 00:08:37,640 --> 00:08:41,320 Speaker 1: the hurricane down in Houston is the National Flood Insurance Program. 143 00:08:41,440 --> 00:08:45,400 Speaker 1: So many of these items typically take weeks to work through, 144 00:08:45,760 --> 00:08:48,080 Speaker 1: and Congress will have a matter of days to try 145 00:08:48,080 --> 00:08:51,000 Speaker 1: to wrap some of these things up. How comfortable are 146 00:08:51,000 --> 00:08:53,400 Speaker 1: you with how things are being prioritized? In watch dild 147 00:08:53,400 --> 00:08:55,720 Speaker 1: we saw the reported unease between the President and the 148 00:08:55,720 --> 00:08:57,559 Speaker 1: Senate majority leader that was reported in the New York 149 00:08:57,600 --> 00:09:00,480 Speaker 1: Times among other outlets. But as this, as this congressional 150 00:09:00,480 --> 00:09:03,280 Speaker 1: recess began, who's going to be setting the agenda? I 151 00:09:03,320 --> 00:09:05,640 Speaker 1: guess this is my question, who's gonna be prioritizing what 152 00:09:05,720 --> 00:09:08,360 Speaker 1: needs to happen. Well, at the end of the day, 153 00:09:08,360 --> 00:09:10,440 Speaker 1: it's going to be Congress, whether it is on the 154 00:09:10,480 --> 00:09:13,680 Speaker 1: spending front or the tax policy front. Uh, it will 155 00:09:13,760 --> 00:09:17,959 Speaker 1: begin with Congress. And um, you know that as you've 156 00:09:18,000 --> 00:09:21,840 Speaker 1: seen reported by Politico as well as Bloomberg Politics, Um, 157 00:09:22,080 --> 00:09:26,679 Speaker 1: there is certainly much more involvement of the White House 158 00:09:26,720 --> 00:09:30,000 Speaker 1: in terms of back and forth in the background negotiations, 159 00:09:30,040 --> 00:09:32,880 Speaker 1: but in terms of the heavy lift of the details 160 00:09:32,920 --> 00:09:35,880 Speaker 1: of tax policy that will really be handled at the 161 00:09:35,920 --> 00:09:38,800 Speaker 1: Ways and Means Committee at the House of Representatives and 162 00:09:39,080 --> 00:09:42,720 Speaker 1: buying House and Center leadership. Then Mr Brady of Texas 163 00:09:43,320 --> 00:09:46,479 Speaker 1: and Mr Ryan of Wisconsin, are they on something approaching 164 00:09:46,800 --> 00:09:50,760 Speaker 1: the same page in the House? You know? It's that's 165 00:09:50,760 --> 00:09:53,319 Speaker 1: our read on the situation. We do think that they 166 00:09:53,360 --> 00:09:56,320 Speaker 1: are on the same page. This so called group of 167 00:09:56,400 --> 00:10:00,280 Speaker 1: six um they have been coordinating. Uh, and you when 168 00:10:00,320 --> 00:10:02,839 Speaker 1: you start looking at some of the details, whether it's 169 00:10:02,880 --> 00:10:06,240 Speaker 1: doubling the standard deduction or trying to reduce the corporate rate, 170 00:10:06,280 --> 00:10:08,240 Speaker 1: there's a little bit of back and forth in terms 171 00:10:08,280 --> 00:10:11,319 Speaker 1: of what rate will actually settle on. It does seem 172 00:10:11,360 --> 00:10:14,160 Speaker 1: to at least be moving in the same direction among 173 00:10:14,520 --> 00:10:17,160 Speaker 1: House and state leadership. This time, let's come back Michael 174 00:10:17,200 --> 00:10:19,520 Speaker 1: Brown with us, with Wells Fargo, with John Sylvia Wills 175 00:10:19,520 --> 00:10:23,240 Speaker 1: Fargo as well. On the American economy, don't forget jobs 176 00:10:23,320 --> 00:10:26,920 Speaker 1: day tomorrow. We'll do that at eight thirty. Beneath the 177 00:10:26,960 --> 00:10:30,600 Speaker 1: headline data We're becoming smarter, were the one m Brown, 178 00:10:30,640 --> 00:10:34,040 Speaker 1: Michael Brown and Wells Fargo looking at the American economy 179 00:10:34,040 --> 00:10:37,360 Speaker 1: and really looking as well at the fiscal space of 180 00:10:37,400 --> 00:10:40,880 Speaker 1: this September. How close are we to wear a deficit 181 00:10:40,960 --> 00:10:44,839 Speaker 1: to GDP is a concern to Michael Brown or to 182 00:10:44,920 --> 00:10:48,280 Speaker 1: a grizzled veteran like John Sylvia. Are we getting near there? 183 00:10:49,400 --> 00:10:51,400 Speaker 1: You know, this is a big question. There have been 184 00:10:51,880 --> 00:10:54,600 Speaker 1: a numerous academic studies to try to figure out what 185 00:10:54,720 --> 00:10:59,040 Speaker 1: exactly the tipping point four or five six whatever? You yeah, 186 00:10:59,080 --> 00:11:01,640 Speaker 1: exactly And so at the end of the day, um, 187 00:11:01,679 --> 00:11:05,600 Speaker 1: you know, yes, it is becoming concerning, and especially as 188 00:11:05,600 --> 00:11:07,960 Speaker 1: we sort of alluded to a little earlier in the conversation, 189 00:11:08,320 --> 00:11:12,920 Speaker 1: this allocation of everything going to the entitlement programs healthcare, 190 00:11:13,000 --> 00:11:17,439 Speaker 1: social Security, Medicare, Medicaid for example. Um, so it's not 191 00:11:17,559 --> 00:11:21,720 Speaker 1: necessarily the debt GDP ratio or the size of the deficit, 192 00:11:21,760 --> 00:11:25,280 Speaker 1: it's how it's allocated. We're now in this spiral of 193 00:11:25,559 --> 00:11:28,200 Speaker 1: needing to issue debt to order in order to pay 194 00:11:28,320 --> 00:11:31,840 Speaker 1: net interest costs as we start moving forward. So uh, 195 00:11:31,880 --> 00:11:33,880 Speaker 1: there there is going to need to be some reforms 196 00:11:34,080 --> 00:11:36,560 Speaker 1: down the line. Here. When when you look at the 197 00:11:36,559 --> 00:11:39,360 Speaker 1: conversation about the debt limit, how unified a voice is 198 00:11:39,360 --> 00:11:42,079 Speaker 1: this White House speaking with Do do you have everybody 199 00:11:42,080 --> 00:11:43,280 Speaker 1: on the same page that they want to do a 200 00:11:43,320 --> 00:11:45,559 Speaker 1: clean debt sealing increase or do you still have folks 201 00:11:45,559 --> 00:11:47,040 Speaker 1: like mc mulvaney, who when he was a member of 202 00:11:47,040 --> 00:11:48,920 Speaker 1: the House of Representatives was saying, I was singing a 203 00:11:48,920 --> 00:11:51,640 Speaker 1: different tune. Let's say that's all right. Well, you've sort 204 00:11:51,640 --> 00:11:54,000 Speaker 1: of seen a change in show in tone since the 205 00:11:54,000 --> 00:11:56,920 Speaker 1: new Chief of Staff, John Kelly took over, and h 206 00:11:56,960 --> 00:11:59,880 Speaker 1: it does appear that the messaging is much more consistent 207 00:12:00,040 --> 00:12:03,439 Speaker 1: this time around. UM and Uh, the last several weeks 208 00:12:03,440 --> 00:12:05,720 Speaker 1: we have heard consistent messaging out of the White House 209 00:12:05,840 --> 00:12:09,080 Speaker 1: in support of a clean debt ceiling bill. And that's 210 00:12:09,120 --> 00:12:11,640 Speaker 1: precisely what we expect to move now. I think the 211 00:12:12,120 --> 00:12:16,120 Speaker 1: key political challenge here is how well can speak Oriyan 212 00:12:16,320 --> 00:12:20,520 Speaker 1: sell this to his caucus, particularly those fiscal conservatives in 213 00:12:20,559 --> 00:12:23,880 Speaker 1: the House Freedom Caucus. Uh. And he's gonna need, well, 214 00:12:24,080 --> 00:12:26,240 Speaker 1: the Senate is going to need some Democratic supports. That right, 215 00:12:26,920 --> 00:12:30,800 Speaker 1: That's absolutely right. In our expectation is Democrats will, if 216 00:12:30,840 --> 00:12:33,560 Speaker 1: it's a clean debt ceiling bill, will support it in 217 00:12:33,720 --> 00:12:36,680 Speaker 1: both the House and the Senate, along with those moderate 218 00:12:36,720 --> 00:12:39,840 Speaker 1: Republicans in both chambers. Michael, what's your advice to clients 219 00:12:39,840 --> 00:12:42,040 Speaker 1: who wonder who they should be listening to at this 220 00:12:42,080 --> 00:12:43,840 Speaker 1: point when it comes to trade, for instance, of the 221 00:12:43,880 --> 00:12:47,679 Speaker 1: present talking now more regularly about the prospects for terminating 222 00:12:48,040 --> 00:12:49,800 Speaker 1: and after that's certainly not been the message from those 223 00:12:49,800 --> 00:12:53,000 Speaker 1: beneath him who have been involved in those that negotiation conversations. 224 00:12:53,320 --> 00:12:55,679 Speaker 1: We're seeing those kicking to gear again tomorrow. I think 225 00:12:55,720 --> 00:12:57,679 Speaker 1: in Mexico, a city of the latest stage of the 226 00:12:57,840 --> 00:13:01,800 Speaker 1: nafter renegotiation talks. How much credence do you give what 227 00:13:01,800 --> 00:13:05,080 Speaker 1: the president is saying? You know? This is this is 228 00:13:05,200 --> 00:13:09,040 Speaker 1: the challenge, right the the inconsistent messaging is really the 229 00:13:09,080 --> 00:13:12,800 Speaker 1: most difficult part of understanding where trade policy, for example, 230 00:13:12,840 --> 00:13:16,160 Speaker 1: will go going forward. UM. What I would say is, 231 00:13:16,280 --> 00:13:18,480 Speaker 1: if you you take a look at the details, the 232 00:13:18,640 --> 00:13:24,319 Speaker 1: president has the authority, without the advice or guidance of Congress, 233 00:13:24,360 --> 00:13:28,600 Speaker 1: to implement UH tariffs if he so chooses, UM, and 234 00:13:28,800 --> 00:13:31,360 Speaker 1: back out of NAFTA if he so chooses. This is 235 00:13:31,720 --> 00:13:35,080 Speaker 1: UH the Trade Promotion authority that was granted to then 236 00:13:35,120 --> 00:13:38,600 Speaker 1: President Obama to renegotiate the t p P or the 237 00:13:38,600 --> 00:13:42,880 Speaker 1: trans specific Partnership. So UM, all of this falls within 238 00:13:42,920 --> 00:13:46,080 Speaker 1: the purview of the White House. So UM, should Trump 239 00:13:46,200 --> 00:13:49,520 Speaker 1: choose to impose these tariffs. He certainly can. And uh, 240 00:13:49,600 --> 00:13:51,520 Speaker 1: you know, in my mind that means that we do 241 00:13:51,640 --> 00:13:54,160 Speaker 1: have to listen to the president on this one. Just 242 00:13:54,160 --> 00:13:57,840 Speaker 1: because it's your September one and early tomorrow the job's day. 243 00:13:57,960 --> 00:14:00,960 Speaker 1: Let's go back to the dynamics. And Sylvia has led 244 00:14:00,960 --> 00:14:04,400 Speaker 1: the nation with review of what we do when we 245 00:14:04,520 --> 00:14:07,760 Speaker 1: leave our job. Dr Sylvia has been great folks of 246 00:14:07,840 --> 00:14:10,440 Speaker 1: this idea that we migrate as so many over the 247 00:14:10,480 --> 00:14:14,600 Speaker 1: last twenty years have migrated to say Houston, Texas. Give 248 00:14:14,679 --> 00:14:17,720 Speaker 1: us an update. Are we leaving our jobs and leaving 249 00:14:17,760 --> 00:14:21,640 Speaker 1: our geography? You know, there's a lot of evidence to 250 00:14:22,280 --> 00:14:27,200 Speaker 1: suggest that there is much more mobility, particularly among younger 251 00:14:27,200 --> 00:14:31,080 Speaker 1: workers in the workforce. Um. There is less loyalty to 252 00:14:31,200 --> 00:14:35,520 Speaker 1: firms relative to historical patterns according to several studies, and 253 00:14:35,600 --> 00:14:38,640 Speaker 1: so yes, there is a lot more mobility. UM. One 254 00:14:38,640 --> 00:14:40,640 Speaker 1: of the interesting things, just to tie this to the 255 00:14:40,680 --> 00:14:43,360 Speaker 1: housing sector for a moment, is we've noticed over the 256 00:14:43,400 --> 00:14:47,640 Speaker 1: last several years the disproportional share of rent versus by Now. 257 00:14:47,680 --> 00:14:51,440 Speaker 1: Certainly there is an affordability aspect of difficulty of getting 258 00:14:51,560 --> 00:14:54,720 Speaker 1: home mortgages for these first time homebuyers, but there's also 259 00:14:54,760 --> 00:14:58,720 Speaker 1: a taste in preference shift among particularly millennials UH to 260 00:14:58,960 --> 00:15:02,040 Speaker 1: rent as opposed to I with the preference of being 261 00:15:02,160 --> 00:15:04,560 Speaker 1: a lot more mobile. Do we have a good sense 262 00:15:04,560 --> 00:15:06,760 Speaker 1: of housing policy under this administration at this point? You 263 00:15:06,800 --> 00:15:09,360 Speaker 1: must be looking for that what happens to Fanny Maine, 264 00:15:09,360 --> 00:15:11,240 Speaker 1: Freddie mac and all of that as well. But are 265 00:15:11,240 --> 00:15:13,000 Speaker 1: we getting are we getting a clear indication of how 266 00:15:13,000 --> 00:15:16,920 Speaker 1: how housing policy stands to change under this administration? Well, 267 00:15:16,960 --> 00:15:20,200 Speaker 1: you know, when you start talking about GSC reform, UH 268 00:15:20,240 --> 00:15:23,680 Speaker 1: and and housing policy overall, UM, you have five hundred 269 00:15:23,720 --> 00:15:25,880 Speaker 1: and thirty five members of Congress and five hundred and 270 00:15:25,920 --> 00:15:29,880 Speaker 1: thirty five different ways of approaching this. So our senses, 271 00:15:29,960 --> 00:15:31,640 Speaker 1: if you take a step back and look at the 272 00:15:31,640 --> 00:15:35,240 Speaker 1: objectives right now of the administration and Congress, they really 273 00:15:35,320 --> 00:15:39,000 Speaker 1: want to cut taxes or try to reform taxes, and 274 00:15:39,120 --> 00:15:42,760 Speaker 1: that may or may not be deficit neutral. The UH, 275 00:15:42,880 --> 00:15:45,520 Speaker 1: Freddy and Fanny are actually paying dividends into the U. S. 276 00:15:45,560 --> 00:15:49,480 Speaker 1: Treasury and that is helping to reduce that budget deficit 277 00:15:49,560 --> 00:15:52,160 Speaker 1: every year. So as long as they are providing that 278 00:15:52,640 --> 00:15:55,800 Speaker 1: dividend or that cash inflow, UH, it does reduce the 279 00:15:55,840 --> 00:15:59,760 Speaker 1: incentive to really move forward on Jesse. Before you let 280 00:15:59,760 --> 00:16:04,320 Speaker 1: you we've got the dynamic of spending an income of 281 00:16:04,360 --> 00:16:07,280 Speaker 1: the American economy. There's a number of research notes out 282 00:16:07,360 --> 00:16:10,160 Speaker 1: right now showing things are pretty uh, pretty good in 283 00:16:10,200 --> 00:16:13,280 Speaker 1: that regard, and that incomes are rising and spendings rising 284 00:16:13,720 --> 00:16:16,000 Speaker 1: as well. Would you explain a three and a half 285 00:16:16,000 --> 00:16:20,400 Speaker 1: percent savings rate that seems absurd? Is that something that 286 00:16:20,800 --> 00:16:24,080 Speaker 1: a pro like you makes note of or is is 287 00:16:24,120 --> 00:16:27,240 Speaker 1: it just noise? Well, Tom, I have to go with 288 00:16:27,560 --> 00:16:29,920 Speaker 1: it appears to be noise at this point. It was 289 00:16:30,080 --> 00:16:35,200 Speaker 1: very disconcerting to see the magnitude of the downward revision UH. 290 00:16:35,200 --> 00:16:38,000 Speaker 1: In the first release of GDP UH there was a 291 00:16:38,040 --> 00:16:41,040 Speaker 1: benchmark revision by the Bureau of Economic Analysis, and they 292 00:16:41,080 --> 00:16:45,640 Speaker 1: actually substantially downwardly revised that saving rate. So until we 293 00:16:45,720 --> 00:16:48,200 Speaker 1: get a few more data points down the road here, 294 00:16:48,440 --> 00:16:51,400 Speaker 1: I'm not convinsed of that saving rate trend. UH. It 295 00:16:51,520 --> 00:16:54,800 Speaker 1: was almost double UM in the prior releases if you 296 00:16:54,840 --> 00:16:57,440 Speaker 1: go back and look at the first release data, UH, 297 00:16:57,560 --> 00:17:01,360 Speaker 1: and it's certainly a very different story today. So I'm 298 00:17:02,080 --> 00:17:04,560 Speaker 1: holding judgment on that. Michael Brown, thank you so much, 299 00:17:04,640 --> 00:17:07,359 Speaker 1: very valuable he is with Wells Farget. We appreciate his 300 00:17:07,400 --> 00:17:21,840 Speaker 1: attendance uh this morning. This could be a three hour conversation. 301 00:17:21,960 --> 00:17:25,159 Speaker 1: It is a joy always to have Dennis Gartment with us. 302 00:17:25,200 --> 00:17:27,760 Speaker 1: The Gartment letter too much to talk about. But one 303 00:17:27,800 --> 00:17:29,960 Speaker 1: of the things you bring to us, Dennis, not that 304 00:17:30,040 --> 00:17:33,960 Speaker 1: you know North Carolina and Virginia modestly northeast of Texas. 305 00:17:34,560 --> 00:17:38,119 Speaker 1: You do bring a southern perspective, and the flat lands 306 00:17:38,200 --> 00:17:41,480 Speaker 1: north of Amarillo. We make jokes about the winter wheat 307 00:17:41,520 --> 00:17:43,480 Speaker 1: and the red wheat. But you're one of the few 308 00:17:43,560 --> 00:17:46,520 Speaker 1: people we talked to that actually is out of the 309 00:17:46,560 --> 00:17:49,879 Speaker 1: three zip codes David and I are familiar with. You 310 00:17:49,920 --> 00:17:52,320 Speaker 1: need you need to get more familiar with people outside. 311 00:17:53,720 --> 00:17:57,960 Speaker 1: What does this catastrophe mean? Is you go north in 312 00:17:58,000 --> 00:18:02,280 Speaker 1: the nineteen century, you down the Mississippi to New Orleans, 313 00:18:02,560 --> 00:18:06,480 Speaker 1: you moved over across the border Texarcana and moved down 314 00:18:06,480 --> 00:18:09,840 Speaker 1: to Houston. What does that mean for that lower central 315 00:18:09,840 --> 00:18:12,440 Speaker 1: midwest of the nation. People are not aware of how 316 00:18:12,480 --> 00:18:15,679 Speaker 1: serious the circumstances and how much worse it's going to 317 00:18:15,680 --> 00:18:17,679 Speaker 1: get over the course the next several days. I just 318 00:18:17,680 --> 00:18:19,720 Speaker 1: got an email from a friend in UH in the 319 00:18:19,720 --> 00:18:23,760 Speaker 1: oil business in Virginia of all places, who informs me 320 00:18:23,800 --> 00:18:26,160 Speaker 1: that the colonial one and two pipelines have been closed. 321 00:18:26,320 --> 00:18:27,880 Speaker 1: What does that mean? That means you're not gonna get 322 00:18:27,880 --> 00:18:30,480 Speaker 1: gasoline up from from the refineries at all for the 323 00:18:30,480 --> 00:18:33,720 Speaker 1: next several weeks, from Texas to to the Northeast, to 324 00:18:33,720 --> 00:18:37,320 Speaker 1: the Midwest, to Virginia to North Carolina. This might have 325 00:18:37,400 --> 00:18:40,000 Speaker 1: but Mr McCraw would love to fill up a tanker 326 00:18:40,000 --> 00:18:42,000 Speaker 1: and run it out of Merseilles. Not a question save 327 00:18:42,040 --> 00:18:44,679 Speaker 1: the United States. No, yes, somebody will have to do that. 328 00:18:44,720 --> 00:18:47,800 Speaker 1: But this, this is, this situation is far worse than 329 00:18:47,840 --> 00:18:49,480 Speaker 1: anybody might have dreamed. It was going to be a 330 00:18:49,520 --> 00:18:52,240 Speaker 1: mirror several days ago when the hurricane first hit. I 331 00:18:52,240 --> 00:18:54,720 Speaker 1: thought it would be a inconsequential. But the fact that 332 00:18:54,760 --> 00:18:57,080 Speaker 1: it's got us as strong as it did, the fact 333 00:18:57,119 --> 00:18:58,760 Speaker 1: that it's stayed where it's stayed, the fact that it 334 00:18:58,800 --> 00:19:03,280 Speaker 1: has now distended the pipeline situation. It's going to be 335 00:19:03,320 --> 00:19:05,879 Speaker 1: several weeks before we have all of the refineries back online, 336 00:19:05,920 --> 00:19:08,240 Speaker 1: if indeed we get them back in several weeks. One 337 00:19:08,280 --> 00:19:10,680 Speaker 1: would have thought that maybe gasoline prices on the East 338 00:19:10,720 --> 00:19:13,320 Speaker 1: Coast might have written might have risen three four or 339 00:19:13,320 --> 00:19:15,680 Speaker 1: five six cents per gallon. They may go twenty five 340 00:19:15,720 --> 00:19:17,840 Speaker 1: or thirty or even forty cents per gallon over the 341 00:19:17,880 --> 00:19:19,239 Speaker 1: course of the next month. And it happened to when 342 00:19:19,280 --> 00:19:21,760 Speaker 1: you look at that Brent w T I spread what 343 00:19:21,760 --> 00:19:24,640 Speaker 1: what what can you glean from looking at that comparison? Well, 344 00:19:24,680 --> 00:19:26,800 Speaker 1: first of all, it made eminent sense, and it's going 345 00:19:26,840 --> 00:19:28,960 Speaker 1: to continue to make eminence sense that you're going to 346 00:19:29,080 --> 00:19:31,679 Speaker 1: back up w T I crewed at that at the 347 00:19:31,680 --> 00:19:34,520 Speaker 1: gulf there, you can't. It's gonna be moving. It's been moving. 348 00:19:34,840 --> 00:19:37,399 Speaker 1: It's going to continue to back up. The The contango 349 00:19:37,760 --> 00:19:39,840 Speaker 1: for the front months is going to widen because CREWDE 350 00:19:39,920 --> 00:19:42,160 Speaker 1: is going to bid for storage. At the same time, 351 00:19:42,200 --> 00:19:44,240 Speaker 1: the demand for Brent is probably going to continue to 352 00:19:44,240 --> 00:19:47,040 Speaker 1: to expand Brent can be the only crew for all 353 00:19:47,080 --> 00:19:49,520 Speaker 1: intents and purposes that's moving around the world in quality 354 00:19:49,520 --> 00:19:52,200 Speaker 1: and in size. So you may widen that that spread 355 00:19:52,200 --> 00:19:54,000 Speaker 1: out to five six dollars. It would not surprise me 356 00:19:54,040 --> 00:19:58,200 Speaker 1: even slightly. What else is affected by this this room 357 00:19:58,200 --> 00:20:00,040 Speaker 1: when you look at other commodities. Of course, CA and 358 00:20:00,119 --> 00:20:02,359 Speaker 1: still a big crop in the south, and I wonder 359 00:20:02,359 --> 00:20:04,560 Speaker 1: if you're seeing there you're worried about it. That's what 360 00:20:04,560 --> 00:20:08,159 Speaker 1: I'm worried about cotton because through the delta. If this, 361 00:20:08,359 --> 00:20:10,760 Speaker 1: if this the remnants of this hurricane go where it 362 00:20:10,760 --> 00:20:13,000 Speaker 1: looks like it's going to go. The cotton crop, which 363 00:20:13,000 --> 00:20:14,680 Speaker 1: looked like it was in a very good condition, could 364 00:20:14,720 --> 00:20:18,879 Speaker 1: be damaged rather materially. You don't want water on the 365 00:20:18,880 --> 00:20:20,959 Speaker 1: cotton crop at this time of the year, and you 366 00:20:21,000 --> 00:20:22,840 Speaker 1: really don't want water on the cotton crop as we 367 00:20:22,840 --> 00:20:24,679 Speaker 1: get into middle September. You'd like to have it much 368 00:20:24,760 --> 00:20:26,960 Speaker 1: drier than this, so that that crop is is going 369 00:20:27,000 --> 00:20:29,600 Speaker 1: to be hurt. No question. Where are we in this? 370 00:20:29,600 --> 00:20:31,440 Speaker 1: I remember going to a cotton farm in North Carolina 371 00:20:31,760 --> 00:20:34,960 Speaker 1: gets pink. At some point in the stage, it gets beautiful, 372 00:20:34,960 --> 00:20:36,800 Speaker 1: its point beautiful. Yeah, it really is. It's one of 373 00:20:36,840 --> 00:20:39,080 Speaker 1: the prettiest crops in the world other than tobacco. Tobacco 374 00:20:39,119 --> 00:20:41,879 Speaker 1: is really the prettiest crop. What is this farm journal? 375 00:20:43,920 --> 00:20:46,320 Speaker 1: Only cotton? I know. I went down to Paul Stewart 376 00:20:46,400 --> 00:20:49,160 Speaker 1: once and looked at the cotton crop. There is rather 377 00:20:49,960 --> 00:20:53,480 Speaker 1: very white. Exactly Dennis at the bottom of your newsletter. 378 00:20:53,520 --> 00:20:55,840 Speaker 1: And I give you a major cred for showing your record. 379 00:20:56,240 --> 00:20:59,880 Speaker 1: I believe it's as good luck and good training comma 380 00:21:00,080 --> 00:21:04,360 Speaker 1: this garment. How tough is the equity market, the sport 381 00:21:04,480 --> 00:21:09,200 Speaker 1: of saying I want to place money long short inequities, 382 00:21:09,400 --> 00:21:11,680 Speaker 1: and I don't want to do it for my retirement account. 383 00:21:11,960 --> 00:21:14,240 Speaker 1: I just want to be in the market. It's a 384 00:21:14,320 --> 00:21:16,560 Speaker 1: contact sport, now is it's a it's a it's a 385 00:21:16,600 --> 00:21:19,199 Speaker 1: full battle going on out there. And as I as 386 00:21:19,240 --> 00:21:22,560 Speaker 1: I tried to get across this morning, let's understand maybe 387 00:21:22,560 --> 00:21:24,720 Speaker 1: the smartest thing I've heard is is what was written 388 00:21:24,720 --> 00:21:28,560 Speaker 1: in Reminiscences and Reminiscences of a stock operator a hundred 389 00:21:28,640 --> 00:21:31,280 Speaker 1: years ago, when old Turkey said, after all, let us 390 00:21:31,280 --> 00:21:33,399 Speaker 1: remember it as a bull market. We spend a lot 391 00:21:33,480 --> 00:21:35,639 Speaker 1: of time deciding do I want to own banks? Do 392 00:21:35,680 --> 00:21:37,480 Speaker 1: I want to own tech? Do I want to own steel? 393 00:21:37,520 --> 00:21:40,080 Speaker 1: Do I want to own cement? Sometimes it's just well, 394 00:21:40,240 --> 00:21:42,080 Speaker 1: just to get the direction. So you come out with 395 00:21:42,080 --> 00:21:44,880 Speaker 1: the direction, and you're so acclaimed. All the garment haters, 396 00:21:44,880 --> 00:21:48,440 Speaker 1: the garment lovers, they all come out, they look at it, etcetera. 397 00:21:48,560 --> 00:21:53,000 Speaker 1: How do you decide to exit a successful or a 398 00:21:53,160 --> 00:21:58,600 Speaker 1: failed trade? What what triggers that stops? Stops? Percentage stops 399 00:21:58,640 --> 00:22:00,480 Speaker 1: now the same as there were five ers six years 400 00:22:00,480 --> 00:22:03,000 Speaker 1: ago before the churn, the madness, the range that we 401 00:22:03,040 --> 00:22:04,480 Speaker 1: have and it's hard for me to get used to 402 00:22:04,560 --> 00:22:08,840 Speaker 1: it as as an old guy who's afraid of learning 403 00:22:08,880 --> 00:22:11,680 Speaker 1: new tricks. Anything that moves past three or four percent, 404 00:22:11,720 --> 00:22:14,919 Speaker 1: to me is is is egregious and probably should be 405 00:22:14,920 --> 00:22:17,480 Speaker 1: stopped out. But sometimes it seems like you have to 406 00:22:17,480 --> 00:22:19,320 Speaker 1: give it far more distance than you did in the past, 407 00:22:19,359 --> 00:22:21,800 Speaker 1: and that's that's made it difficult. What's really made it 408 00:22:21,800 --> 00:22:25,160 Speaker 1: difficult is I used to think that the machines, the algorithms, 409 00:22:25,160 --> 00:22:27,159 Speaker 1: really had very little impact, but they're having more and 410 00:22:27,200 --> 00:22:30,920 Speaker 1: more impact. The machines don't know history than for the 411 00:22:30,960 --> 00:22:32,840 Speaker 1: past several years. They don't know the history of the 412 00:22:32,920 --> 00:22:35,159 Speaker 1: last hundred or hundred and fifty years, so all they 413 00:22:35,200 --> 00:22:39,159 Speaker 1: know is buy it on any dip. We got a reader, 414 00:22:39,200 --> 00:22:41,359 Speaker 1: Evan Stepka, that sent in a letter and says, why 415 00:22:41,400 --> 00:22:44,399 Speaker 1: are you writing up Doug Cass? You wrote up Doug Cass. 416 00:22:44,600 --> 00:22:47,800 Speaker 1: Doug has been short the market, you know, he's been 417 00:22:47,840 --> 00:22:50,080 Speaker 1: a long wrong. It's like the Yankees. It's like there's 418 00:22:50,080 --> 00:22:53,399 Speaker 1: no hitting, no pass. What what do you say to 419 00:22:53,680 --> 00:22:56,360 Speaker 1: guys that say, and as we see it every Friday, 420 00:22:56,680 --> 00:22:59,639 Speaker 1: the world's coming to an end shortness market? What do 421 00:22:59,680 --> 00:23:04,000 Speaker 1: you say to that crew it's a bull market. And 422 00:23:04,080 --> 00:23:06,760 Speaker 1: despite the fact everything you've learned over the course of 423 00:23:06,760 --> 00:23:09,520 Speaker 1: the past several hundred years, we we we think we've 424 00:23:09,640 --> 00:23:12,639 Speaker 1: learned how to be contrarians, we think we've learned to 425 00:23:12,640 --> 00:23:15,600 Speaker 1: be skeptics. But yet at times you just have to 426 00:23:15,640 --> 00:23:18,399 Speaker 1: stand back and say, after all, it is a bull market. 427 00:23:19,000 --> 00:23:21,159 Speaker 1: It is astonishing to me that we've come as far 428 00:23:21,200 --> 00:23:23,560 Speaker 1: as we have. It's astonishing to me that we may 429 00:23:23,600 --> 00:23:26,720 Speaker 1: even go farther. Nonetheless, it is moving from the lower 430 00:23:26,840 --> 00:23:28,840 Speaker 1: left to the upper right, and sometimes that's the best 431 00:23:28,880 --> 00:23:30,800 Speaker 1: way to go about come back with Dennis Gartman, A 432 00:23:30,800 --> 00:23:32,760 Speaker 1: lots to talk about it. Yes, because you're man. We 433 00:23:32,800 --> 00:23:39,520 Speaker 1: will touch upon gold, euros, in rubles, golden slotties as well. 434 00:23:39,640 --> 00:23:42,920 Speaker 1: I have a chart among the thousands of Bloomberg charts 435 00:23:42,920 --> 00:23:47,080 Speaker 1: that I have which is called the Gartman chart. I 436 00:23:47,119 --> 00:23:49,880 Speaker 1: will put it out on Twitter, and it not only 437 00:23:49,960 --> 00:23:54,720 Speaker 1: shows gold back nine years, but shows gold in euro 438 00:23:55,160 --> 00:23:58,359 Speaker 1: is well, Dennis, basically on this hedge trade, you've been 439 00:23:58,400 --> 00:24:01,359 Speaker 1: a genius for three years. To review it again. Do 440 00:24:01,400 --> 00:24:03,720 Speaker 1: you own gold now in dollars or do you own 441 00:24:03,800 --> 00:24:06,160 Speaker 1: it in a beleaguered foreign currence? I own it in 442 00:24:06,160 --> 00:24:08,320 Speaker 1: in three forms. I own it in dollar terms via 443 00:24:08,359 --> 00:24:10,919 Speaker 1: gold mining shares, but I predominantly own it in euros 444 00:24:11,000 --> 00:24:13,160 Speaker 1: and in end terms. So yes, the answer is it's 445 00:24:13,160 --> 00:24:14,960 Speaker 1: in my retirement account. It's been there for quite some 446 00:24:15,000 --> 00:24:17,080 Speaker 1: period of time, it shall be there for some period 447 00:24:17,119 --> 00:24:19,119 Speaker 1: of time going forward. Where is going to mean gold 448 00:24:19,200 --> 00:24:22,720 Speaker 1: is the ultimate range bound going back for years? What 449 00:24:22,840 --> 00:24:26,120 Speaker 1: will be the catalyst to move the vector higher? Political 450 00:24:26,119 --> 00:24:29,600 Speaker 1: circumstances probably will be one of the motivating circumstances. The 451 00:24:29,640 --> 00:24:33,040 Speaker 1: fact that too many people believe, for whatever reason, that 452 00:24:33,119 --> 00:24:36,640 Speaker 1: the monetary authorities are going to curtail their their experiments 453 00:24:36,680 --> 00:24:39,160 Speaker 1: with quantitative easing. They're not going to do that anytime soon. 454 00:24:39,200 --> 00:24:42,440 Speaker 1: And in fact Dr drog made that abundantly clear last 455 00:24:42,480 --> 00:24:44,639 Speaker 1: week when he said it in those terms. I was 456 00:24:44,680 --> 00:24:47,119 Speaker 1: somewhat surprised that the euro actually rose on Friday, but 457 00:24:47,119 --> 00:24:49,760 Speaker 1: it's given back all of those gains. So you're probably 458 00:24:49,760 --> 00:24:53,480 Speaker 1: going to see political circumstances, central bank circumstances, and you 459 00:24:53,560 --> 00:24:55,919 Speaker 1: might well begin to see And this is something that 460 00:24:55,920 --> 00:24:57,680 Speaker 1: everybody has called for a long period of time, and 461 00:24:57,680 --> 00:25:01,520 Speaker 1: they all called it wrong. And and to the deflationary 462 00:25:01,680 --> 00:25:04,359 Speaker 1: impetus in the commodity markets and probably a turn for 463 00:25:04,359 --> 00:25:06,679 Speaker 1: for stronger prices sometime in the future. Did we have 464 00:25:06,760 --> 00:25:10,879 Speaker 1: a Vanilla Jackson whole conference last week too? Was? It 465 00:25:10,960 --> 00:25:13,359 Speaker 1: really was? And there was some speculation here that Mario 466 00:25:13,400 --> 00:25:15,080 Speaker 1: Draggy would come in and talk down the Euro a 467 00:25:15,080 --> 00:25:17,119 Speaker 1: little bit. He didn't do that. Do you expect he's 468 00:25:17,119 --> 00:25:19,400 Speaker 1: going to do that going forward? He's a he's crafty. 469 00:25:19,440 --> 00:25:21,040 Speaker 1: When you look at central bankers as a whole, he's 470 00:25:21,080 --> 00:25:23,160 Speaker 1: one of the crafty one. He's he's a smart duck, 471 00:25:23,200 --> 00:25:25,639 Speaker 1: isn't he? And And uh, first of all, Dr Yellen's 472 00:25:25,640 --> 00:25:28,879 Speaker 1: comments were as boring as any we've everseen. It was extraordinary. 473 00:25:28,880 --> 00:25:31,639 Speaker 1: We we'd all thought there was gonna be something Dina 474 00:25:31,760 --> 00:25:35,320 Speaker 1: might to be said. Nothing was said. Uh, Droggy, I 475 00:25:35,000 --> 00:25:37,399 Speaker 1: I thought reading his comments and as I said in 476 00:25:37,400 --> 00:25:40,159 Speaker 1: my News Ltd of this morning, I must have been 477 00:25:40,160 --> 00:25:42,119 Speaker 1: completely wrong. But what I heard him say was that 478 00:25:42,119 --> 00:25:44,560 Speaker 1: they were going to continue the expansion of quantitative easing, 479 00:25:44,880 --> 00:25:47,240 Speaker 1: that there was no intention of curtailing it. And yet 480 00:25:47,280 --> 00:25:51,320 Speaker 1: the euro soared on Friday afternoon. Caught me completely off guard. 481 00:25:51,640 --> 00:25:53,760 Speaker 1: And if you take a look at the spec position, 482 00:25:53,800 --> 00:25:55,520 Speaker 1: which I like to watch from the c FT or 483 00:25:55,560 --> 00:25:58,639 Speaker 1: from the cme. The spec longs are as long of 484 00:25:58,680 --> 00:26:00,080 Speaker 1: the of the Euro as they have been in the 485 00:26:00,119 --> 00:26:03,280 Speaker 1: past five years. That's always a point to say, you 486 00:26:03,280 --> 00:26:05,320 Speaker 1: know what, I give you some I sell you something, 487 00:26:05,400 --> 00:26:07,680 Speaker 1: let's review them. My whole theme, donis I don't know 488 00:26:07,680 --> 00:26:10,520 Speaker 1: if you're worthy of this because you never listen. The 489 00:26:11,560 --> 00:26:13,879 Speaker 1: September starting early, like you know it used to be. 490 00:26:13,920 --> 00:26:16,840 Speaker 1: September was after you got off the golf course Wednesday 491 00:26:16,880 --> 00:26:20,280 Speaker 1: after Labor Day. Well the answer is no, September starting 492 00:26:20,280 --> 00:26:23,679 Speaker 1: in August, and the great miscall of this summer was 493 00:26:23,720 --> 00:26:26,679 Speaker 1: as you say, spec longs. Everybody was long the dollar 494 00:26:27,440 --> 00:26:30,000 Speaker 1: X number of months ago. Yes, now, I plain to 495 00:26:30,040 --> 00:26:32,640 Speaker 1: our audience what you do when you see a one 496 00:26:32,680 --> 00:26:35,040 Speaker 1: way bet. Well, right now the bet has been on 497 00:26:35,119 --> 00:26:37,880 Speaker 1: the other side. The you do get those periods of time. 498 00:26:37,880 --> 00:26:40,280 Speaker 1: There's no question the spec longs and the dollar two 499 00:26:40,280 --> 00:26:42,680 Speaker 1: and three and four months ago were egregiously large. They've 500 00:26:42,680 --> 00:26:44,960 Speaker 1: shifted completely to the now, the point that the specs 501 00:26:45,000 --> 00:26:47,600 Speaker 1: are net long of the euro. When you see that 502 00:26:47,680 --> 00:26:50,760 Speaker 1: sort of circumstance, you probably should start saying yourself, as 503 00:26:50,800 --> 00:26:52,800 Speaker 1: as I just said a few minutes ago, the spec 504 00:26:52,880 --> 00:26:56,159 Speaker 1: longs are hugely long of the Euro. Your propensity is 505 00:26:56,200 --> 00:26:57,879 Speaker 1: to be a seller to it, but you have to 506 00:26:57,880 --> 00:27:01,000 Speaker 1: wait until you see some technical, some some chance signal 507 00:27:01,080 --> 00:27:03,359 Speaker 1: that says, you know what, now is the right time. 508 00:27:03,520 --> 00:27:05,520 Speaker 1: You probably saw that this way. Take it over to 509 00:27:05,520 --> 00:27:08,480 Speaker 1: the equity markets, where we all agree it's the most 510 00:27:08,520 --> 00:27:12,040 Speaker 1: unlovable market since time ago. How do you measure the 511 00:27:12,320 --> 00:27:17,840 Speaker 1: enthusiasm the exuberances? Professor Schuller would say of the equity market, 512 00:27:17,920 --> 00:27:19,920 Speaker 1: I don't see it out there. It's not out there. 513 00:27:20,359 --> 00:27:24,159 Speaker 1: There's there's a greater sense of distrust for the stock market. 514 00:27:24,480 --> 00:27:26,639 Speaker 1: You would think after nine years of a bull market 515 00:27:26,680 --> 00:27:30,040 Speaker 1: that would be exuberance everywhere, and there's not. And even 516 00:27:30,080 --> 00:27:32,400 Speaker 1: I find myself time to time saying it's gotten Oh 517 00:27:32,520 --> 00:27:35,159 Speaker 1: it's gotten too high. I'm trying to sell it and 518 00:27:35,200 --> 00:27:38,920 Speaker 1: I'm wrong. I have to repeat to myself every evening. 519 00:27:39,359 --> 00:27:42,080 Speaker 1: After all, this is still a bull market, and there 520 00:27:42,200 --> 00:27:44,640 Speaker 1: is real sense and wisdom in that to finally acknowledge 521 00:27:44,680 --> 00:27:47,760 Speaker 1: that fact it is still a bull market. Negotiators from Canada, 522 00:27:47,800 --> 00:27:49,520 Speaker 1: the US, and Mexico sit down at a table in 523 00:27:49,560 --> 00:27:51,720 Speaker 1: Mexico City tomorrow, I believe, for the second round of 524 00:27:51,720 --> 00:27:55,520 Speaker 1: renegotiation talks related to NAFTA. It seemed for a time 525 00:27:55,520 --> 00:27:57,000 Speaker 1: that we had some clarity and what was gonna happen. 526 00:27:57,000 --> 00:27:58,840 Speaker 1: These talks. We're gonna continue, We're gonna get some revised 527 00:27:58,920 --> 00:28:01,919 Speaker 1: version of that agreement. We've heard something different from the 528 00:28:01,920 --> 00:28:04,440 Speaker 1: President over these last few days. Yesterday in his speech 529 00:28:04,440 --> 00:28:06,760 Speaker 1: in Missouri on Twitter as well, he's talking about the 530 00:28:06,760 --> 00:28:10,760 Speaker 1: prospects for terminating NAFTA. What's the market impact of that? 531 00:28:10,760 --> 00:28:14,560 Speaker 1: That that disconnects seemingly between what's happening on the ground 532 00:28:14,600 --> 00:28:16,399 Speaker 1: with the President saying, lets let us hope that the 533 00:28:16,400 --> 00:28:19,119 Speaker 1: President comes to his senses and stop saying silly things 534 00:28:19,160 --> 00:28:22,919 Speaker 1: like he's going to deny the existence of NAFTA and 535 00:28:23,000 --> 00:28:26,320 Speaker 1: not continue to negotiate. The Canadians, and the and the 536 00:28:26,359 --> 00:28:30,480 Speaker 1: Mexicans have taken a far more positive and far more 537 00:28:30,480 --> 00:28:34,520 Speaker 1: proper perspective than has this president. I think his protectionist 538 00:28:34,520 --> 00:28:39,440 Speaker 1: attitudes are detrimental, deleterious, ugly, nasty and should be stopped immediately. 539 00:28:39,680 --> 00:28:44,080 Speaker 1: Dennis the fabrical We you know, we make jokes about 540 00:28:44,120 --> 00:28:47,000 Speaker 1: it the tennis, but one of your great charms, as 541 00:28:47,040 --> 00:28:49,080 Speaker 1: you come from an area of the nation that defends 542 00:28:49,600 --> 00:28:54,800 Speaker 1: this country, I would guess we have more retired generals, annals, 543 00:28:55,400 --> 00:28:59,200 Speaker 1: and lieutenant colonels with an x number of miles of 544 00:28:59,280 --> 00:29:02,360 Speaker 1: the garment workers anywhere in this nation. We have them 545 00:29:02,360 --> 00:29:05,680 Speaker 1: at our country club. You can see them exactly, you know. 546 00:29:06,560 --> 00:29:10,880 Speaker 1: To that point, how did they respond having generals running 547 00:29:10,920 --> 00:29:14,240 Speaker 1: the White House and better running the administration better? But 548 00:29:14,360 --> 00:29:16,040 Speaker 1: for the for the very simple reason that the one 549 00:29:16,080 --> 00:29:17,960 Speaker 1: person you really want to have at the controls of 550 00:29:17,960 --> 00:29:20,040 Speaker 1: the military as a military man, because the people who 551 00:29:20,040 --> 00:29:22,840 Speaker 1: are most fearful, no, the people who were most fearful 552 00:29:23,200 --> 00:29:25,760 Speaker 1: of going to war are people who have been to war. 553 00:29:26,120 --> 00:29:28,840 Speaker 1: The last person you want responsible for for waging war. 554 00:29:28,920 --> 00:29:31,920 Speaker 1: Somebody who has never been hasn't seen anybody's arm shut off, 555 00:29:31,960 --> 00:29:34,000 Speaker 1: hasn't seen Okay, I'll go with that, But you've gotta 556 00:29:34,080 --> 00:29:36,640 Speaker 1: have There's a whole school of thoughts saying this is great. 557 00:29:36,680 --> 00:29:40,160 Speaker 1: General Maddis is Phenomenal's phenomena. Everybody agrees with it. But 558 00:29:40,320 --> 00:29:42,840 Speaker 1: what about this effect of having a general sitting in 559 00:29:42,880 --> 00:29:45,720 Speaker 1: the Secretary of Defense chair. I think it's I I 560 00:29:45,760 --> 00:29:47,760 Speaker 1: think it's fine. I have no problem with it whatsoever, 561 00:29:47,840 --> 00:29:50,160 Speaker 1: especially given the fact that it's Mattis who is probably 562 00:29:50,200 --> 00:29:54,800 Speaker 1: the most sophisticated elegant, well read philosophical general that we've 563 00:29:54,800 --> 00:29:57,600 Speaker 1: had in the past fifteen or twenty years. Other than 564 00:29:57,680 --> 00:30:00,680 Speaker 1: my friend Pete Dawkins, I don't know anybody who's wiser, 565 00:30:01,080 --> 00:30:03,360 Speaker 1: better red than is he. We talk about the disconnect 566 00:30:03,360 --> 00:30:05,440 Speaker 1: on the issue of trade that we've seen things get 567 00:30:05,520 --> 00:30:07,880 Speaker 1: hotter still on the Korean Peninsula lately. Who are you 568 00:30:07,920 --> 00:30:10,239 Speaker 1: looking to for guidance on what's going to happen in 569 00:30:10,240 --> 00:30:11,720 Speaker 1: that part of the First of all, nothing is going 570 00:30:11,760 --> 00:30:16,080 Speaker 1: to happen there. I mean, he is he is irrational, 571 00:30:16,160 --> 00:30:19,400 Speaker 1: but he is rationally irrational. He understands that to do 572 00:30:19,480 --> 00:30:22,440 Speaker 1: anything ontoward, to attack any area of the United States 573 00:30:22,760 --> 00:30:26,920 Speaker 1: or any of our allies, ends his life immediately. And 574 00:30:26,960 --> 00:30:29,200 Speaker 1: we have we we forget the fact that here's an atheist. 575 00:30:29,240 --> 00:30:31,560 Speaker 1: He has nothing to look forward to other than this life. 576 00:30:31,640 --> 00:30:34,040 Speaker 1: That's the only thing he's got going for him. His 577 00:30:34,120 --> 00:30:37,440 Speaker 1: intention of doing anything untoward is I think borders upon 578 00:30:37,480 --> 00:30:42,680 Speaker 1: this upon zero. Now. Can something happen? Yes? But do 579 00:30:42,720 --> 00:30:44,520 Speaker 1: I think that's shell now? And I think that we 580 00:30:44,560 --> 00:30:46,280 Speaker 1: have the right people involved. Right, there's a certain kind 581 00:30:46,280 --> 00:30:48,280 Speaker 1: of democrat in your neck of the woods. Can the 582 00:30:48,320 --> 00:30:51,480 Speaker 1: Democratic Party find that democrat that they lost years ago. No, 583 00:30:51,600 --> 00:30:53,400 Speaker 1: I'm not sure that they can. I think the Democratic 584 00:30:53,440 --> 00:30:55,320 Speaker 1: Party is moving so far to the left it's going 585 00:30:55,360 --> 00:30:56,960 Speaker 1: to be very difficult for them to come back to 586 00:30:57,000 --> 00:31:00,400 Speaker 1: the scoop Jackson's in the past. Very final question and short, 587 00:31:00,440 --> 00:31:02,800 Speaker 1: where are you right now this morning? Longer short the 588 00:31:02,840 --> 00:31:05,480 Speaker 1: market you have to be along this period. I am okay, 589 00:31:05,520 --> 00:31:08,120 Speaker 1: Dennis Gartman, thank you so much the Garment letter, and 590 00:31:08,120 --> 00:31:10,120 Speaker 1: and really again for us, I put the charter looks 591 00:31:10,160 --> 00:31:13,360 Speaker 1: pretty good actually in gold, I mean Gartman, you know, 592 00:31:13,760 --> 00:31:17,560 Speaker 1: in euro terms, it's like a nice percentage difference in gold. 593 00:31:17,640 --> 00:31:20,040 Speaker 1: We thank Mr Garman for coming today and particularly bringing 594 00:31:20,040 --> 00:31:24,360 Speaker 1: along his entourage. The Garment entourage gets bigger is the 595 00:31:24,560 --> 00:31:28,640 Speaker 1: years go by. It's something about carrying the golf clubs 596 00:31:28,640 --> 00:31:40,640 Speaker 1: on a central park, something something like that. Thanks for 597 00:31:40,720 --> 00:31:44,840 Speaker 1: listening to the Bloomberg Surveillance podcast. Subscribe and listen to 598 00:31:44,920 --> 00:31:50,960 Speaker 1: interviews on Apple Podcasts, SoundCloud, or whichever podcast platform you prefer. 599 00:31:51,520 --> 00:31:54,600 Speaker 1: I'm on Twitter at Tom Keene. David Gura is at 600 00:31:54,680 --> 00:31:59,520 Speaker 1: David Gura. Before the podcast, you can always catch us worldwide. 601 00:31:59,720 --> 00:32:00,800 Speaker 1: I'm Bloomberg Radio