1 00:00:00,120 --> 00:00:02,920 Speaker 1: Brought you by Bank of America Mary Lynch. Investing in 2 00:00:03,000 --> 00:00:07,840 Speaker 1: local communities, economies and a sustainable future. That's the power 3 00:00:08,080 --> 00:00:12,360 Speaker 1: of global connections, Mary Lynch, Pierce Fenner and Smith Incorporated 4 00:00:12,760 --> 00:00:27,400 Speaker 1: Member s I p C. Welcome to the Bloomberg Surveillance Podcast. 5 00:00:27,840 --> 00:00:31,520 Speaker 1: I'm Tom Keene with David Gura. Daily we bring you 6 00:00:31,560 --> 00:00:36,600 Speaker 1: insight from the best in economics, finance, investment, and international relations. 7 00:00:37,000 --> 00:00:41,600 Speaker 1: Find Bloomberg Surveillance on iTunes, SoundCloud, Bloomberg dot Com, and 8 00:00:41,680 --> 00:00:49,519 Speaker 1: of course on the Bloomberg. John Gollub joins us now 9 00:00:49,520 --> 00:00:51,519 Speaker 1: in our Bloomberg eleven three studios here in New York. 10 00:00:51,600 --> 00:00:53,920 Speaker 1: John and Gollo the chief US market strate that RBC 11 00:00:54,080 --> 00:00:57,240 Speaker 1: Capital Markets. We're just reminiscing about the evening of number 12 00:00:57,320 --> 00:00:59,880 Speaker 1: November eight. You are here as we went through the results. 13 00:01:00,120 --> 00:01:03,240 Speaker 1: Even what's your sense of what's happened since market wise? 14 00:01:03,240 --> 00:01:05,440 Speaker 1: There was this swoon, there was this great enthusiasm in 15 00:01:05,480 --> 00:01:07,920 Speaker 1: the markets afterwards. Help us understand what's been through the 16 00:01:07,959 --> 00:01:10,520 Speaker 1: going through the dulations here leading up to today. Well, 17 00:01:10,600 --> 00:01:13,679 Speaker 1: you mean, I think there's two stories. The first thing 18 00:01:13,760 --> 00:01:17,959 Speaker 1: is there was this natural knee jerk reaction to to Trump. 19 00:01:17,959 --> 00:01:20,039 Speaker 1: But then I think the market realized that these pro 20 00:01:20,080 --> 00:01:24,280 Speaker 1: growth policies may actually um not you know, maybe maybe 21 00:01:24,360 --> 00:01:26,880 Speaker 1: much more important or positive than people think. But what 22 00:01:27,000 --> 00:01:29,480 Speaker 1: really has happened over the last four months is that 23 00:01:29,520 --> 00:01:32,680 Speaker 1: the economy has been really good. Expectations for corporate profits 24 00:01:32,680 --> 00:01:37,080 Speaker 1: have been good. UM. If you look at um market returns, 25 00:01:37,280 --> 00:01:39,160 Speaker 1: the day before the election, when people thought Hillary was 26 00:01:39,160 --> 00:01:40,920 Speaker 1: going to win, the market was up, and then after 27 00:01:41,319 --> 00:01:43,800 Speaker 1: the market was still up. So it appears the real 28 00:01:43,800 --> 00:01:45,959 Speaker 1: story here is this is way less about Donald Trump 29 00:01:45,959 --> 00:01:48,920 Speaker 1: and really more about an approving global economy and US 30 00:01:48,960 --> 00:01:51,640 Speaker 1: economy and the reflation trade. You've helped us with the 31 00:01:51,680 --> 00:01:53,720 Speaker 1: definition of that, and your most recent note you you 32 00:01:53,760 --> 00:01:55,880 Speaker 1: note that you know there are so many definitions spinning right, 33 00:01:55,920 --> 00:02:00,520 Speaker 1: how do you define those reflationary pressures? We we've been in, uh, 34 00:02:00,560 --> 00:02:05,280 Speaker 1: this ultra low inflation, ultra low interest rate environment, and 35 00:02:05,360 --> 00:02:08,480 Speaker 1: it's been really damaging. And it's been damaging, for example, 36 00:02:08,680 --> 00:02:11,960 Speaker 1: to people who are in retirement or planning for retirement, 37 00:02:12,240 --> 00:02:14,440 Speaker 1: and it causes them to do something really interesting, was 38 00:02:14,600 --> 00:02:17,320 Speaker 1: to save even more money because they can't get any 39 00:02:17,400 --> 00:02:20,160 Speaker 1: kind of return on their assets. UM. While you would 40 00:02:20,160 --> 00:02:22,920 Speaker 1: think that corporations would take advantage of these low interest 41 00:02:23,000 --> 00:02:25,320 Speaker 1: rates they look at as a sign of the world 42 00:02:25,400 --> 00:02:28,520 Speaker 1: being broken, and they do the opposite. They actually refused 43 00:02:28,560 --> 00:02:31,639 Speaker 1: to invest and so so there's actually a fair bit 44 00:02:31,639 --> 00:02:34,400 Speaker 1: of damage done by this this kind of environment. So 45 00:02:34,880 --> 00:02:38,240 Speaker 1: reflating and getting back to something which looks more normal, 46 00:02:38,320 --> 00:02:39,960 Speaker 1: where you can actually get a return on your bank 47 00:02:40,120 --> 00:02:42,639 Speaker 1: you know, on on a savings account, that's actually a 48 00:02:42,720 --> 00:02:46,040 Speaker 1: really positive thing and maybe the big surprise over the 49 00:02:46,040 --> 00:02:48,680 Speaker 1: next year or two if rates can get back towards 50 00:02:48,680 --> 00:02:51,120 Speaker 1: something that feels a bit more normal. Was there a 51 00:02:51,160 --> 00:02:53,120 Speaker 1: Trump trade, as as you look back at it now, 52 00:02:53,240 --> 00:02:54,640 Speaker 1: was there a Trump trade? If there was, when one 53 00:02:54,680 --> 00:02:56,520 Speaker 1: did lose its luster for you, I think that there 54 00:02:56,600 --> 00:02:58,440 Speaker 1: was probably Trump trade for about a week, you know, 55 00:02:58,639 --> 00:03:02,040 Speaker 1: if you look. Market had this vicious sell off and 56 00:03:02,120 --> 00:03:07,040 Speaker 1: stopped out really overnight, and then it bounced really hard. 57 00:03:07,080 --> 00:03:09,680 Speaker 1: But for the last three and a half months, most 58 00:03:09,720 --> 00:03:12,120 Speaker 1: of this has just been economics, and we can see 59 00:03:12,160 --> 00:03:15,800 Speaker 1: that by the kinds of companies that are are driving 60 00:03:15,800 --> 00:03:18,560 Speaker 1: the market. John's great to have David gur back. He 61 00:03:18,600 --> 00:03:21,760 Speaker 1: took his family to Antarctica and I've got an email 62 00:03:21,800 --> 00:03:24,720 Speaker 1: he was like a tour Tara del Fuego and he 63 00:03:24,800 --> 00:03:27,400 Speaker 1: got at the Buenos Areas for the fight back, and 64 00:03:27,480 --> 00:03:31,480 Speaker 1: it's long with that. Help us here with the idea 65 00:03:31,720 --> 00:03:36,000 Speaker 1: of foreign investment right now, if I want to invest seriously, 66 00:03:36,040 --> 00:03:40,240 Speaker 1: not in Antarctica, but in Argentina, is how do I 67 00:03:40,360 --> 00:03:43,560 Speaker 1: express it? Now? Do I do it through US multinationals 68 00:03:43,800 --> 00:03:46,920 Speaker 1: or do I buy abroad? You know, there's there's a 69 00:03:46,920 --> 00:03:49,800 Speaker 1: ton is a big difference between the companies that you 70 00:03:49,800 --> 00:03:53,120 Speaker 1: would invest in in the US compared to overseas. Um 71 00:03:53,280 --> 00:03:57,080 Speaker 1: non US portfolios tend to have a ton of banks 72 00:03:57,120 --> 00:04:00,560 Speaker 1: and old economy, and in the US, you you know, 73 00:04:00,680 --> 00:04:04,000 Speaker 1: if you think about innovative tech companies and biotech companies, 74 00:04:04,280 --> 00:04:06,680 Speaker 1: so the US kind of feels more like the Nasdaq 75 00:04:06,840 --> 00:04:09,760 Speaker 1: is a bit fresher. The interesting thing though, is if 76 00:04:09,800 --> 00:04:15,080 Speaker 1: the economy is bouncing, old economy, these old banks in 77 00:04:15,160 --> 00:04:19,679 Speaker 1: old industry tends to actually bounce harder, which could surprisingly 78 00:04:19,760 --> 00:04:22,560 Speaker 1: be good for some of these non US investments. What's 79 00:04:22,560 --> 00:04:25,920 Speaker 1: been going on with emerging markets surprising results since the 80 00:04:26,120 --> 00:04:29,280 Speaker 1: election you've versus Yeah, if you look at kind of 81 00:04:29,279 --> 00:04:32,200 Speaker 1: the orthodoxy or and the data proves us to be 82 00:04:32,200 --> 00:04:35,320 Speaker 1: the cases. When the dollar is strengthening, you don't want 83 00:04:35,320 --> 00:04:38,760 Speaker 1: to be in emerging markets, and emerging markets have been 84 00:04:38,839 --> 00:04:42,280 Speaker 1: on fire. Um, it's really about a re risking. I mean, 85 00:04:42,279 --> 00:04:44,640 Speaker 1: what do you have right now is small caps are 86 00:04:44,640 --> 00:04:48,280 Speaker 1: beating the markets. Riskier assets are beating the markets. Companies 87 00:04:48,320 --> 00:04:52,000 Speaker 1: that are more volatile and less stable and less have 88 00:04:52,080 --> 00:04:55,560 Speaker 1: less dependable earnings are beating the markets. And that environment 89 00:04:55,600 --> 00:05:00,200 Speaker 1: has just been great for emerging market companies. And and 90 00:05:00,480 --> 00:05:02,400 Speaker 1: it's it really has been the whole the big surprise 91 00:05:02,440 --> 00:05:04,200 Speaker 1: over last three or four months. I was talking with 92 00:05:04,240 --> 00:05:06,679 Speaker 1: our colleague Oliver Rennick, and he said that small caps 93 00:05:06,760 --> 00:05:08,320 Speaker 1: is really where it's at at this point. How do 94 00:05:08,360 --> 00:05:10,320 Speaker 1: you what's your advice on how to approach that space 95 00:05:10,880 --> 00:05:13,800 Speaker 1: right now? If we're seeing that looked upon so favorably well, 96 00:05:13,960 --> 00:05:16,239 Speaker 1: if you if you said, what are the real big wins, 97 00:05:16,240 --> 00:05:18,039 Speaker 1: and all of them I think are going to continue. 98 00:05:18,040 --> 00:05:20,640 Speaker 1: First of all, just betting on the banks as a 99 00:05:20,680 --> 00:05:23,840 Speaker 1: win has been If you did that, nothing else you've got, 100 00:05:24,120 --> 00:05:28,799 Speaker 1: you've done unbelievably well. I think that continues to ride. Um. 101 00:05:29,160 --> 00:05:34,080 Speaker 1: Value stocks, cheap companies have you know, have outperformed the market. 102 00:05:34,440 --> 00:05:37,080 Speaker 1: And then smaller companies. But the smaller company thing is 103 00:05:37,160 --> 00:05:40,520 Speaker 1: really about risk. It's the fact that they are risky 104 00:05:40,600 --> 00:05:43,360 Speaker 1: or more volatile, and that's what's really been driving it, 105 00:05:43,520 --> 00:05:46,800 Speaker 1: not the fact that they're small. How do I catch? 106 00:05:48,000 --> 00:05:50,159 Speaker 1: And I mean I heard this, it didn't buy the bank. 107 00:05:50,200 --> 00:05:53,400 Speaker 1: I didn't hear this eighteen times this weekend, but I'm sorry, folks, 108 00:05:53,720 --> 00:05:57,080 Speaker 1: I heard it like six times. The percentage of the 109 00:05:57,160 --> 00:06:01,560 Speaker 1: institutional and retail public that hasn't made the bogey is 110 00:06:01,640 --> 00:06:04,640 Speaker 1: I've never seen it. It's off the chart. Do you 111 00:06:04,720 --> 00:06:07,480 Speaker 1: catch up with you so leverage? Do you catch up 112 00:06:07,760 --> 00:06:11,960 Speaker 1: with going sexier, fancier higher? Beata to use a Greek letter, folks. 113 00:06:11,960 --> 00:06:15,240 Speaker 1: We have to use a Greek letter every day. Last night, 114 00:06:15,600 --> 00:06:17,600 Speaker 1: I mean, I mean they needed beta last night at 115 00:06:17,600 --> 00:06:20,239 Speaker 1: the end of the oscars. Help me, Actually they needed 116 00:06:20,240 --> 00:06:23,960 Speaker 1: a stiff drink. Help me here with how I catch up? 117 00:06:24,400 --> 00:06:26,440 Speaker 1: You know, Tom, I don't think you want to invest 118 00:06:26,640 --> 00:06:29,560 Speaker 1: thinking about how you catch. There's what you haven't done. 119 00:06:29,720 --> 00:06:31,360 Speaker 1: So what you want to do is just you know, 120 00:06:31,720 --> 00:06:35,000 Speaker 1: if you think that this thing has lags, I think 121 00:06:35,000 --> 00:06:36,760 Speaker 1: that you want to get in it in the kind 122 00:06:36,760 --> 00:06:38,760 Speaker 1: of in the and really what's been working the last 123 00:06:38,760 --> 00:06:42,320 Speaker 1: few months. It's value companies. It's companies are a little 124 00:06:42,320 --> 00:06:46,039 Speaker 1: bit riskier, it's banks, it's cyclical. The arch idea here, 125 00:06:46,200 --> 00:06:50,559 Speaker 1: and please you're the pro I'm not. You jump into 126 00:06:50,560 --> 00:06:53,719 Speaker 1: the market knowing you could enjoy a bear market of 127 00:06:53,920 --> 00:06:56,760 Speaker 1: x percent down and you still got to get in 128 00:06:56,760 --> 00:07:01,279 Speaker 1: the market psychologically ready to take that hit if it comes. 129 00:07:01,960 --> 00:07:05,960 Speaker 1: We've all gotten spoiled. I forget about whether you you 130 00:07:06,160 --> 00:07:08,640 Speaker 1: you have a pullback of two percent or five percent 131 00:07:08,720 --> 00:07:10,400 Speaker 1: or something like that, which is which is normal and that. 132 00:07:11,760 --> 00:07:15,920 Speaker 1: But but if you're talking about really big you know, pullbacks, 133 00:07:15,960 --> 00:07:20,239 Speaker 1: they almost only occur when you have recessions, and there's 134 00:07:20,280 --> 00:07:23,600 Speaker 1: just none of the indications that a recession is around 135 00:07:23,640 --> 00:07:26,760 Speaker 1: the corner are in place. So the likelihood of having 136 00:07:27,080 --> 00:07:31,320 Speaker 1: that walloping pull back's just extremely alone that you lower 137 00:07:31,360 --> 00:07:33,480 Speaker 1: right now. You have to have something really go badly 138 00:07:34,080 --> 00:07:37,880 Speaker 1: um and and right now from an economic and markets perspective, 139 00:07:37,880 --> 00:07:39,440 Speaker 1: it doesn't appear to be there. Could we be missing 140 00:07:39,440 --> 00:07:41,720 Speaker 1: something We talked about orthodoxy and how emerging markets should 141 00:07:41,720 --> 00:07:43,920 Speaker 1: be performing with the dollar ware it's at Could we 142 00:07:43,960 --> 00:07:46,080 Speaker 1: be missing something when it comes to forecasting for a 143 00:07:46,160 --> 00:07:52,400 Speaker 1: recession at this point if there can clearly be policy issues, 144 00:07:52,520 --> 00:07:55,480 Speaker 1: and you know, if you have these border just a 145 00:07:55,560 --> 00:07:57,600 Speaker 1: tax issues, or if we end up in a trade war, 146 00:07:58,000 --> 00:07:59,960 Speaker 1: or if to some type of a geopolitical event, they 147 00:08:00,040 --> 00:08:03,560 Speaker 1: could be really disruptive and in the market struggling with 148 00:08:03,600 --> 00:08:06,240 Speaker 1: a hand handicap that but if you look even at 149 00:08:06,280 --> 00:08:09,280 Speaker 1: the volatility in the market, the market's telling you that 150 00:08:09,280 --> 00:08:14,240 Speaker 1: that it thinks the likelihood of those things is reasonably low. So, yeah, 151 00:08:14,280 --> 00:08:16,320 Speaker 1: we could be missing We could always be missing something. 152 00:08:16,880 --> 00:08:19,280 Speaker 1: But the yield curve that you know, the difference between 153 00:08:19,280 --> 00:08:22,280 Speaker 1: a long dated bond and something that's near you know, 154 00:08:22,320 --> 00:08:25,240 Speaker 1: a short dated UM, it's steep. That's a sign that 155 00:08:25,320 --> 00:08:28,640 Speaker 1: you're not likely to have a recession. Um. You know, 156 00:08:28,880 --> 00:08:32,920 Speaker 1: the employment market, we're creating lots of jobs. That's not 157 00:08:33,000 --> 00:08:37,119 Speaker 1: something you have as you're moving towards a recession. Wages 158 00:08:37,160 --> 00:08:41,000 Speaker 1: arising steadily, that's not something that has housing activity. You know, 159 00:08:41,320 --> 00:08:43,000 Speaker 1: if you've made a list of the dozen things you 160 00:08:43,000 --> 00:08:45,200 Speaker 1: want to see to tell you that recessions aren't around 161 00:08:45,200 --> 00:08:48,120 Speaker 1: the corner, you know ten of the twelve or telling 162 00:08:48,160 --> 00:08:49,679 Speaker 1: you or twelve or the twelve we're telling you that 163 00:08:49,720 --> 00:08:52,160 Speaker 1: everything's gone. You and I mentioned the banks earlier. You 164 00:08:52,240 --> 00:08:54,920 Speaker 1: said me, in the banks, if you believe in higher rates, 165 00:08:54,960 --> 00:08:57,679 Speaker 1: what about the industrials. The President likes to trot these 166 00:08:57,720 --> 00:09:01,160 Speaker 1: people out a photo fest at the White House. Are 167 00:09:01,160 --> 00:09:04,600 Speaker 1: they happy? I mean Emerson Electric the CEO shows up. 168 00:09:05,040 --> 00:09:08,600 Speaker 1: Is the Emerson Electrics of the world happy. I think 169 00:09:08,640 --> 00:09:13,400 Speaker 1: it's a much murkier picture. The g D P ain't there. Well. 170 00:09:13,880 --> 00:09:15,640 Speaker 1: But if you think about if you're a company, one 171 00:09:15,640 --> 00:09:17,040 Speaker 1: of the things you want to know is where you're 172 00:09:17,040 --> 00:09:19,959 Speaker 1: gonna get your supplies from. And if you don't know 173 00:09:20,040 --> 00:09:23,120 Speaker 1: what the border adjusted taxes or trade agu is gonna be. 174 00:09:23,240 --> 00:09:24,640 Speaker 1: If you're a Ford and you don't know whether you're 175 00:09:24,640 --> 00:09:28,080 Speaker 1: making cars in Mexico or the United States, it affects decisions. 176 00:09:28,120 --> 00:09:29,880 Speaker 1: It's hard to me. I'm glad you mentioned this. We're 177 00:09:29,880 --> 00:09:31,880 Speaker 1: gonna come back with John Gallup. Here's gonna do, folks, 178 00:09:32,040 --> 00:09:34,200 Speaker 1: because you know my theme this week. And besides, I 179 00:09:34,200 --> 00:09:37,520 Speaker 1: missed David Girl so much like Antarcticle with the kids. 180 00:09:37,960 --> 00:09:40,480 Speaker 1: Are you kidding me? A sheet of ice is gonna 181 00:09:40,480 --> 00:09:44,240 Speaker 1: fall into the ocean anyways, I said, besides missing David Girl, 182 00:09:44,280 --> 00:09:46,280 Speaker 1: I said, I gotta read about the border tax I'm 183 00:09:46,280 --> 00:09:50,240 Speaker 1: gonna put out on Twitter two killer articles on the 184 00:09:50,280 --> 00:09:54,120 Speaker 1: border tacks that I looked at. Uh, this uh weekend, 185 00:09:54,120 --> 00:09:56,280 Speaker 1: We're gonna rip up the script big time right now. 186 00:09:56,320 --> 00:10:02,120 Speaker 1: Greg Villier just wrote a blistering note on Republican reality, 187 00:10:02,280 --> 00:10:05,040 Speaker 1: speaking about an epic war to come in the budget battle. 188 00:10:05,520 --> 00:10:08,880 Speaker 1: He takes it back John Gallop to the Budget Control 189 00:10:08,960 --> 00:10:13,480 Speaker 1: Act of two thousand eleven, which sets the question your 190 00:10:13,640 --> 00:10:16,760 Speaker 1: caps and you know all the rest of it. What 191 00:10:17,040 --> 00:10:21,080 Speaker 1: happens to your world And forget about the politics of this, folks, 192 00:10:21,160 --> 00:10:24,520 Speaker 1: pro Trump, anti Trump. If we just get delay, if 193 00:10:24,559 --> 00:10:29,240 Speaker 1: the X axis extends out where what we thought would 194 00:10:29,240 --> 00:10:32,600 Speaker 1: happen in April happens in November, where we thought what 195 00:10:32,640 --> 00:10:35,280 Speaker 1: would happen in November is pushed into the next year. 196 00:10:35,600 --> 00:10:39,280 Speaker 1: If two thousand eighteen is pushed to two thousand twenty, 197 00:10:39,320 --> 00:10:41,920 Speaker 1: how does your world respond to that? Well, first of all, 198 00:10:41,920 --> 00:10:43,920 Speaker 1: I think that's exactly what's going to happen. I mean, 199 00:10:44,120 --> 00:10:47,480 Speaker 1: you saw this with Minuchin who talked about hoping to 200 00:10:47,559 --> 00:10:52,160 Speaker 1: get something on taxes by August, which probably means that 201 00:10:52,240 --> 00:10:58,440 Speaker 1: getting something on taxes is a two thousand and eighteen events. Um, 202 00:10:58,480 --> 00:11:02,679 Speaker 1: as long as we are confident that there's something which 203 00:11:03,200 --> 00:11:07,600 Speaker 1: looks like pro growth somewhere in the attainable future. Six 204 00:11:07,679 --> 00:11:10,440 Speaker 1: months nine months twelve months out. I think the market 205 00:11:10,520 --> 00:11:13,240 Speaker 1: stays perfectly engaged. What we don't want to see is 206 00:11:13,280 --> 00:11:16,320 Speaker 1: the process breakdown in front of us to believe that 207 00:11:16,360 --> 00:11:18,400 Speaker 1: it can't happen as long as we have that promise 208 00:11:18,760 --> 00:11:20,360 Speaker 1: a year from now, six months from now. All the 209 00:11:20,400 --> 00:11:22,000 Speaker 1: same time, I look at the Bloomberg, I pick up 210 00:11:22,000 --> 00:11:23,800 Speaker 1: the FT, I see a lot of articles about how 211 00:11:23,880 --> 00:11:26,920 Speaker 1: investors are very hungry for detail in the speech tomorrow night. 212 00:11:26,960 --> 00:11:29,720 Speaker 1: And you look back at history State of Union addresses, 213 00:11:29,800 --> 00:11:32,800 Speaker 1: joint UH addresses to joint Sessions of Congress are usually 214 00:11:32,800 --> 00:11:35,040 Speaker 1: short on details. They're full of sweeping statements, and seems 215 00:11:35,040 --> 00:11:37,520 Speaker 1: like from Gregvlier's note, the tom I just mentioned, we're 216 00:11:37,520 --> 00:11:39,760 Speaker 1: going to get a big, sweeping rhetorical speech tomorrow night. 217 00:11:39,840 --> 00:11:41,839 Speaker 1: How important are the details to you? How important is 218 00:11:41,880 --> 00:11:44,160 Speaker 1: it that there be details in that speech tomorrow night? Okay, 219 00:11:44,160 --> 00:11:48,760 Speaker 1: so the details are really important, and I have zero expectations. 220 00:11:48,880 --> 00:11:51,400 Speaker 1: I mean, I mean, you're talking about, David that on 221 00:11:51,600 --> 00:11:54,480 Speaker 1: a president other than Donald Trump has been short on 222 00:11:54,520 --> 00:11:58,559 Speaker 1: giving details. What's the what's the incentive for Donald Trump 223 00:11:58,600 --> 00:12:01,240 Speaker 1: to give details at this very moment of time. David, 224 00:12:01,559 --> 00:12:05,120 Speaker 1: continue here, but I just had an incredible insight went 225 00:12:05,160 --> 00:12:08,760 Speaker 1: through my Monday morning brain. Forget about fake news. What 226 00:12:08,880 --> 00:12:13,160 Speaker 1: if he started going on fake strategy guys like John 227 00:12:13,240 --> 00:12:16,120 Speaker 1: fake strategy from John gollub, I mean, that could be 228 00:12:16,120 --> 00:12:18,840 Speaker 1: that that could be the next frontier for Bloomberg surveillance. 229 00:12:18,840 --> 00:12:21,120 Speaker 1: We can debate the fakeness of it. But listening to 230 00:12:21,160 --> 00:12:24,120 Speaker 1: the Sunday shows yesterday on on Bloombergradi yesterday afternoon, there 231 00:12:24,160 --> 00:12:25,880 Speaker 1: were a lot of conversations about here we are a 232 00:12:25,880 --> 00:12:28,199 Speaker 1: few weeks into the first hundred days, so there's still 233 00:12:28,200 --> 00:12:31,880 Speaker 1: time to go. But we haven't seen great movement in 234 00:12:31,920 --> 00:12:33,959 Speaker 1: the House or Senate when it comes to repealing the 235 00:12:33,960 --> 00:12:35,560 Speaker 1: Affordable Care Act. We haven't seen a lot when it 236 00:12:35,559 --> 00:12:38,360 Speaker 1: comes to tax reform. How worried about that? Are you? 237 00:12:38,440 --> 00:12:40,800 Speaker 1: That the that the great strategic promise there was a 238 00:12:40,840 --> 00:12:44,000 Speaker 1: lot of this stuff would happen early. You know, from 239 00:12:44,000 --> 00:12:47,200 Speaker 1: a market's perspective, what's most important is that he give 240 00:12:47,320 --> 00:12:49,920 Speaker 1: priority to the things that the market cares about most. 241 00:12:50,280 --> 00:12:54,800 Speaker 1: And so the market doesn't care about um immigration issues. 242 00:12:54,840 --> 00:12:56,880 Speaker 1: The market care is really about two things that care about. 243 00:12:56,920 --> 00:12:58,599 Speaker 1: It doesn't care about the New York Times. Yeah, and 244 00:12:58,679 --> 00:13:01,120 Speaker 1: the market doesn't care about but but the latest tweet 245 00:13:01,160 --> 00:13:02,679 Speaker 1: or whether he shows up to you know, to a 246 00:13:02,760 --> 00:13:05,679 Speaker 1: press event. What the market cares about is, um, are 247 00:13:05,720 --> 00:13:07,960 Speaker 1: we going to see something on taxes? And and frankly, 248 00:13:08,040 --> 00:13:10,360 Speaker 1: if it happens at the beginning of eighteen instead of 249 00:13:10,360 --> 00:13:12,400 Speaker 1: the middle of seventeen, as long as we believe that 250 00:13:12,440 --> 00:13:14,679 Speaker 1: in directly it's moving, so I think the market is 251 00:13:14,720 --> 00:13:16,320 Speaker 1: going to be comfortable with that. And the market wants 252 00:13:16,320 --> 00:13:19,360 Speaker 1: to see, you know, a pullback in regulation and all 253 00:13:19,440 --> 00:13:22,440 Speaker 1: these things. Taxes is really hard, but on the regulatory front, 254 00:13:22,440 --> 00:13:25,320 Speaker 1: there's a lot that it can do through executive order. UM. 255 00:13:25,480 --> 00:13:29,440 Speaker 1: There there is areas such as financial regulation. We're both 256 00:13:29,480 --> 00:13:32,680 Speaker 1: Democrats and Republicans believe that there are areas within Dodd 257 00:13:32,679 --> 00:13:35,520 Speaker 1: Prank Frank that can be improved upon. So even a 258 00:13:35,600 --> 00:13:38,720 Speaker 1: modest softening of things like that, UM would would really 259 00:13:38,760 --> 00:13:41,160 Speaker 1: be quite appealing. What the market doesn't want to see 260 00:13:41,640 --> 00:13:43,880 Speaker 1: is an obsession on things that don't matter to the economy. 261 00:13:44,160 --> 00:13:47,120 Speaker 1: As an investor, am I happy that executive from big 262 00:13:47,120 --> 00:13:49,400 Speaker 1: companies are now interfacing with the president in a new way, 263 00:13:49,400 --> 00:13:51,440 Speaker 1: that they're being called to the portico, that they're being 264 00:13:51,440 --> 00:13:53,160 Speaker 1: called to the cabinet room to meet with the president 265 00:13:53,360 --> 00:13:55,280 Speaker 1: to have these listening sessions. Is that a good thing, 266 00:13:55,360 --> 00:13:57,320 Speaker 1: that new kind of dynamic. You know, as as I'm 267 00:13:57,320 --> 00:14:00,839 Speaker 1: talking to institutional investors, they're frankly not spending as much 268 00:14:00,840 --> 00:14:03,719 Speaker 1: time worrying about the latest photo up with what they 269 00:14:03,840 --> 00:14:06,040 Speaker 1: what they're obsessing on which they're not getting to your 270 00:14:06,040 --> 00:14:09,120 Speaker 1: point is they want to see the actual details around 271 00:14:09,200 --> 00:14:11,760 Speaker 1: this tax plan more than anything else. In the extent 272 00:14:11,800 --> 00:14:15,000 Speaker 1: that they can get that on some regulatory issues as well. Great, Um, 273 00:14:15,080 --> 00:14:16,920 Speaker 1: but it appears as if this stuff is going to 274 00:14:16,960 --> 00:14:19,680 Speaker 1: be um, take a little time. And I think Manuchin 275 00:14:20,080 --> 00:14:23,800 Speaker 1: did a brilliant job of putting August out there by 276 00:14:23,880 --> 00:14:26,720 Speaker 1: basically saying, is I'm promising if something's on the come, 277 00:14:27,320 --> 00:14:29,320 Speaker 1: just be patient with me. And I think that that 278 00:14:29,360 --> 00:14:31,680 Speaker 1: was a really smart move. You must be happy now 279 00:14:31,760 --> 00:14:33,520 Speaker 1: to see Steven Manuchan in that job, to see Rex 280 00:14:33,560 --> 00:14:35,840 Speaker 1: de Lerson confirming in that job. It must provide some 281 00:14:35,880 --> 00:14:38,600 Speaker 1: stability for the market to have the heads of those 282 00:14:38,600 --> 00:14:41,520 Speaker 1: agencies in place. Yeah, And I think that there's a 283 00:14:41,560 --> 00:14:43,880 Speaker 1: wide belief that whether you agree with their politics or 284 00:14:43,920 --> 00:14:45,520 Speaker 1: this or that, that they're grown ups in the seats 285 00:14:45,520 --> 00:14:49,080 Speaker 1: their reasonable guys. Um. If you look at the when 286 00:14:49,280 --> 00:14:51,720 Speaker 1: when Tillerson was speaking to foreign leaders or when the 287 00:14:51,800 --> 00:14:54,360 Speaker 1: Vice president speaking to foreign leaders, they're speaking with with 288 00:14:54,400 --> 00:14:57,720 Speaker 1: the tone which is I think pretty comfortable for people. Lincoln, 289 00:14:57,960 --> 00:14:59,720 Speaker 1: we're gonna run out of time here, Lincoln, here in 290 00:14:59,760 --> 00:15:04,040 Speaker 1: thir seconds your view with Tom Purcelli's view, there are 291 00:15:04,080 --> 00:15:07,200 Speaker 1: we going to get the g d P the president 292 00:15:07,360 --> 00:15:10,480 Speaker 1: needs to make America great again. Let's call it three 293 00:15:10,520 --> 00:15:14,600 Speaker 1: point zero. Yeah, we have a shot at something between 294 00:15:14,640 --> 00:15:17,080 Speaker 1: two and a half and three percent this year. But 295 00:15:17,080 --> 00:15:19,040 Speaker 1: but the real I think that what you're gonna get 296 00:15:19,240 --> 00:15:24,560 Speaker 1: is nominal GDP will be substantially hired. That's GDP plus inflation. 297 00:15:24,600 --> 00:15:27,560 Speaker 1: What's that We can't talk real wages. You gotta come 298 00:15:27,560 --> 00:15:30,160 Speaker 1: back and we got to talk about real wages will 299 00:15:30,200 --> 00:15:33,080 Speaker 1: be out. That's that's what people will focus on. Okay, 300 00:15:33,160 --> 00:15:36,520 Speaker 1: John Golif RBC Capital Markets, thank you for the time commitment. 301 00:15:37,000 --> 00:15:42,680 Speaker 1: This Monday morning, David Gura and Tom Keen worldwide, coast 302 00:15:42,720 --> 00:15:58,040 Speaker 1: to coast. This is Bloomberg. David, I want you to 303 00:15:58,080 --> 00:16:00,200 Speaker 1: bring in the next guest here as we tell talk 304 00:16:00,200 --> 00:16:03,600 Speaker 1: about policy in the abstract issues of medicine. But I 305 00:16:03,640 --> 00:16:06,720 Speaker 1: just want to say, David that every parent has tattooed 306 00:16:07,000 --> 00:16:10,400 Speaker 1: to their brain the once a year, the once every 307 00:16:10,440 --> 00:16:14,080 Speaker 1: three years. Where you you go, where you go where 308 00:16:14,080 --> 00:16:19,360 Speaker 1: I live is five. He's that's where you go when 309 00:16:19,400 --> 00:16:22,320 Speaker 1: you need there's that moment where you need to go 310 00:16:22,920 --> 00:16:26,800 Speaker 1: with said child, and it's He's sixty Street, New York, 311 00:16:26,800 --> 00:16:28,760 Speaker 1: New York. A man very familiar with that addresses Dr 312 00:16:28,800 --> 00:16:30,400 Speaker 1: Steve core and he's the President and c of New 313 00:16:30,480 --> 00:16:33,480 Speaker 1: York Presbyterian Hospital. Joining us here in our studios in 314 00:16:33,480 --> 00:16:35,440 Speaker 1: New York as the President prepares to meet with health 315 00:16:35,440 --> 00:16:38,560 Speaker 1: insurance company CEOs. He's calling it a listening session. Today 316 00:16:38,600 --> 00:16:40,200 Speaker 1: he's had he's had a few of these. Were you 317 00:16:40,240 --> 00:16:41,800 Speaker 1: around the table or what would you say to him 318 00:16:41,800 --> 00:16:44,960 Speaker 1: about what needs to happen to Affordable Care Act, whether 319 00:16:45,000 --> 00:16:48,640 Speaker 1: it's repeal, replaced, repair? What does the government need to 320 00:16:48,680 --> 00:16:51,040 Speaker 1: do here to write the ship? Well, I think repeal 321 00:16:51,400 --> 00:16:54,920 Speaker 1: is UH an overreach. I think that the Medicaid expansion 322 00:16:54,960 --> 00:16:58,520 Speaker 1: has worked. I think a number of Republican governors have 323 00:16:58,640 --> 00:17:02,160 Speaker 1: told the President that I think the Medicaid expansion should 324 00:17:02,160 --> 00:17:06,240 Speaker 1: continue and not be rolled back. UH. The individual insurance 325 00:17:06,240 --> 00:17:09,800 Speaker 1: market needs to be repaired. We have many areas in 326 00:17:09,840 --> 00:17:12,320 Speaker 1: the country where there's only a single insurer. People are 327 00:17:12,320 --> 00:17:16,919 Speaker 1: concerned about deductibles and premiums, but that individual insurance market 328 00:17:16,960 --> 00:17:19,520 Speaker 1: cannot work in the absence, in my opinion, of an 329 00:17:19,560 --> 00:17:23,199 Speaker 1: individual mandate and subsidies for the insurance companies. And I 330 00:17:23,240 --> 00:17:26,040 Speaker 1: think the health insurance executives will tell the President that 331 00:17:26,080 --> 00:17:28,359 Speaker 1: today you've got a company like pulling out of a 332 00:17:28,400 --> 00:17:30,320 Speaker 1: number of these markets saying they're not eager to get 333 00:17:30,320 --> 00:17:32,040 Speaker 1: back into them at this point in time. What's it 334 00:17:32,080 --> 00:17:34,200 Speaker 1: going to take these insurers to get back into markets 335 00:17:34,200 --> 00:17:36,320 Speaker 1: that they well, I think first there needs to be stability. 336 00:17:36,960 --> 00:17:39,440 Speaker 1: You need to tell people this is where we're going. 337 00:17:40,160 --> 00:17:43,320 Speaker 1: I think it would be very unfortunate if with the 338 00:17:43,359 --> 00:17:47,800 Speaker 1: House Republican Reconciliation Bill, the individual mandate and the subsidies 339 00:17:47,800 --> 00:17:51,480 Speaker 1: were removed, because that that will just precipitate this happening. Doctor, 340 00:17:51,560 --> 00:17:55,160 Speaker 1: you're out of Northwestern and then Columbia p ands and 341 00:17:55,280 --> 00:17:58,400 Speaker 1: you've got this blending of being a practicing cardiologist with 342 00:17:58,960 --> 00:18:03,880 Speaker 1: the actual running of hospital. What do doctors and nurses 343 00:18:04,200 --> 00:18:08,760 Speaker 1: want or think of this silly debate in Washington. Basically, 344 00:18:08,800 --> 00:18:13,320 Speaker 1: we have non experts experting on the fact that if 345 00:18:13,400 --> 00:18:16,199 Speaker 1: David Gura's kids or my kids are sick. We need 346 00:18:16,280 --> 00:18:19,040 Speaker 1: them fixed by the best talent we can find. How 347 00:18:19,080 --> 00:18:23,639 Speaker 1: do you people respond to this debate? In Washington, we 348 00:18:23,680 --> 00:18:26,240 Speaker 1: have over thirty thousand employees, and I would tell you 349 00:18:26,320 --> 00:18:28,840 Speaker 1: that their response to this is, when somebody's sick, you've 350 00:18:28,880 --> 00:18:31,920 Speaker 1: got to take care of them. One out of every 351 00:18:31,960 --> 00:18:34,719 Speaker 1: four people in New York State is on Medicaid. One 352 00:18:34,760 --> 00:18:37,840 Speaker 1: out of every three New York City residence is on Medicaid, 353 00:18:37,880 --> 00:18:41,280 Speaker 1: and this is replicated throughout the country. UM. I think 354 00:18:41,280 --> 00:18:45,640 Speaker 1: it's important to recognize that Medicaid insures over seventy five 355 00:18:45,640 --> 00:18:49,200 Speaker 1: million Americans, and you have to have insurance in this country. 356 00:18:49,280 --> 00:18:51,960 Speaker 1: Access to care is not insurance. One of the great 357 00:18:52,000 --> 00:18:54,800 Speaker 1: things is that Logan in Boston are there's many other cities. 358 00:18:54,840 --> 00:18:59,639 Speaker 1: Here at JFK, foreign people come here when they're really sick. 359 00:19:00,080 --> 00:19:03,199 Speaker 1: I've seen it. They come through our airports, whether it's 360 00:19:03,240 --> 00:19:08,040 Speaker 1: Cleveland Clinic or Mgture You're wonderful hospital. How do we 361 00:19:08,240 --> 00:19:12,240 Speaker 1: repair and move forward away from six of gdp HE 362 00:19:12,280 --> 00:19:16,920 Speaker 1: or whatever we're spending to the proper balance of medicine. 363 00:19:17,720 --> 00:19:19,480 Speaker 1: I think in order to bend the cost curve, you've 364 00:19:19,480 --> 00:19:23,679 Speaker 1: got to deal more with preventive health, mental health. I 365 00:19:23,720 --> 00:19:26,680 Speaker 1: know this is unpopular in many areas, but UM, I 366 00:19:27,000 --> 00:19:30,040 Speaker 1: am in favor of attacks on sugary drinks. You've seen 367 00:19:30,040 --> 00:19:34,320 Speaker 1: in Mexico, the the reduction in soda consumption. Uh, if 368 00:19:34,359 --> 00:19:38,480 Speaker 1: you can't prevent illness, you're going to have UM six 369 00:19:38,520 --> 00:19:42,000 Speaker 1: substantial expenses associated with caring for people, and I think 370 00:19:42,080 --> 00:19:43,800 Speaker 1: that that is one of the things that should be 371 00:19:43,880 --> 00:19:46,399 Speaker 1: kept with the Affordable Care Act. Just about thirty seconds 372 00:19:46,480 --> 00:19:48,960 Speaker 1: left too short. I'm sorry to say it. Are you? 373 00:19:49,000 --> 00:19:50,480 Speaker 1: Are you convinced this is going to be a more 374 00:19:50,480 --> 00:19:52,919 Speaker 1: participatory process going forward. A lot of people have complained 375 00:19:52,920 --> 00:19:55,200 Speaker 1: that when the Portal CARECT came about, all the parties 376 00:19:55,200 --> 00:19:57,679 Speaker 1: were involved in crafting it. That needed to be when 377 00:19:57,760 --> 00:19:59,720 Speaker 1: it comes to changing the law. Do you think more 378 00:19:59,800 --> 00:20:01,040 Speaker 1: voy say we're going to be here, They're gonna be 379 00:20:01,040 --> 00:20:02,520 Speaker 1: more voices at the time. I would hope that we 380 00:20:02,520 --> 00:20:05,120 Speaker 1: can get bipartisan support on that. Right now, it looks 381 00:20:05,160 --> 00:20:07,520 Speaker 1: like it is just going to be one party doing it, 382 00:20:07,600 --> 00:20:10,119 Speaker 1: and I think that would be unfortunate. Do I have 383 00:20:10,160 --> 00:20:13,439 Speaker 1: to walk ten thousand steps today? I'd like for you 384 00:20:13,520 --> 00:20:19,879 Speaker 1: to go away the tall ten thousand step things you 385 00:20:19,920 --> 00:20:22,760 Speaker 1: think is A is A is an adequate measure of 386 00:20:23,119 --> 00:20:26,240 Speaker 1: good health. A path to good health. Exercise is great 387 00:20:26,280 --> 00:20:28,200 Speaker 1: for the brain, great for the heart, and I would 388 00:20:28,320 --> 00:20:31,439 Speaker 1: urge everybody to exercise. You are you are so done. 389 00:20:32,680 --> 00:20:36,680 Speaker 1: Dr Corwin, Thank you so much. Presbyterian. Please come by 390 00:20:36,720 --> 00:20:38,800 Speaker 1: in a weekly. Oh I just got in a message 391 00:20:38,840 --> 00:20:44,200 Speaker 1: here from Mrs Keane. Have Dr Carwin daily. Okay, thank you, 392 00:20:44,400 --> 00:20:55,760 Speaker 1: David Garrow Toime Keen. This is Bloomberg, brought you by 393 00:20:56,000 --> 00:20:59,680 Speaker 1: Bank of America. Mary Lynch. Dedicated to bringing our clients 394 00:20:59,800 --> 00:21:02,840 Speaker 1: in sites and solutions to meet the challenges of a 395 00:21:02,880 --> 00:21:07,760 Speaker 1: transforming world. That's the power of global connections, Marylynch, Pierce 396 00:21:07,880 --> 00:21:15,639 Speaker 1: Federin Smith Incorporated, Member s I p C. David Gura, 397 00:21:15,840 --> 00:21:21,879 Speaker 1: this is very, very smart work on our foreign policy 398 00:21:22,040 --> 00:21:26,680 Speaker 1: and the choices in the debates the new administration has 399 00:21:26,720 --> 00:21:30,560 Speaker 1: to do. I like Trump's team of rivals. It's very lincolness. 400 00:21:30,840 --> 00:21:33,560 Speaker 1: Thomas Wright is online director of the Project on International 401 00:21:33,640 --> 00:21:36,639 Speaker 1: Order and Strategy at the Brookings Institution, co author of 402 00:21:36,680 --> 00:21:40,280 Speaker 1: a new report Building Situations of Strength and National Security 403 00:21:40,280 --> 00:21:43,200 Speaker 1: Strategy for the United States and Thomas right, let me 404 00:21:43,200 --> 00:21:46,800 Speaker 1: ask you first of all about this president's national security strategy. 405 00:21:46,840 --> 00:21:49,960 Speaker 1: How different is it now that Michael Flynn. Lieutenant Michael 406 00:21:49,960 --> 00:21:52,760 Speaker 1: Flynn is out office, he's no longer the National Security Advisor. 407 00:21:52,800 --> 00:21:56,520 Speaker 1: Did we see Donald Trump's foreign policy change? I think 408 00:21:56,560 --> 00:22:00,760 Speaker 1: it's highly significant, actually is it's one of the most 409 00:22:00,800 --> 00:22:04,560 Speaker 1: significant developments or in his first month in office, and 410 00:22:04,760 --> 00:22:07,120 Speaker 1: not typically in the way people think, though, I think, 411 00:22:07,320 --> 00:22:09,640 Speaker 1: what what what? What? What's striking to me is that 412 00:22:10,280 --> 00:22:15,240 Speaker 1: this basically denies President Trump and Steve Bannon sort of 413 00:22:15,280 --> 00:22:19,200 Speaker 1: access in control of the bureaucracy to forward the America 414 00:22:19,280 --> 00:22:22,120 Speaker 1: First agenda. So you know, to the extent that they 415 00:22:22,160 --> 00:22:25,320 Speaker 1: have very radical ideas about American farm policy, it is 416 00:22:25,400 --> 00:22:29,919 Speaker 1: much harder now for them to use the interagency process 417 00:22:30,040 --> 00:22:32,639 Speaker 1: and sort of the flight as infrastructure to push that 418 00:22:32,760 --> 00:22:35,520 Speaker 1: throughout the different departments in a way they might have 419 00:22:35,520 --> 00:22:37,919 Speaker 1: been able to do so with Flynn. So you know, 420 00:22:38,040 --> 00:22:41,560 Speaker 1: President Trump still has its views, Bannon still has this views. 421 00:22:41,600 --> 00:22:44,879 Speaker 1: They'll do their thing, but there's a bit more of 422 00:22:44,960 --> 00:22:47,480 Speaker 1: a constraint there from the NSC than there was a 423 00:22:47,480 --> 00:22:50,000 Speaker 1: few weeks ago. What's your sense of who is crafting 424 00:22:50,000 --> 00:22:52,600 Speaker 1: and guiding foreign policy in this White House? Is it 425 00:22:53,320 --> 00:22:56,919 Speaker 1: hr McMaster, Michael Flynn's successor. Is it James Maddis the 426 00:22:56,920 --> 00:22:59,600 Speaker 1: Secretary Defense, Rex tillers in the Secretary of State, or 427 00:22:59,640 --> 00:23:02,800 Speaker 1: is it the as in himself. I think there's no 428 00:23:02,960 --> 00:23:06,600 Speaker 1: easy answer to that, because there is a structural incoherence 429 00:23:07,160 --> 00:23:11,320 Speaker 1: sort of built into this administration, like there's no um, 430 00:23:11,480 --> 00:23:14,399 Speaker 1: there's no sort of unified position, and there will not 431 00:23:14,480 --> 00:23:17,520 Speaker 1: be one because there the views of the President and 432 00:23:17,960 --> 00:23:20,879 Speaker 1: of Bannon and maybe two others around him are so 433 00:23:21,000 --> 00:23:25,000 Speaker 1: fundamentally different than those of the cabinets. So what we're 434 00:23:25,040 --> 00:23:27,840 Speaker 1: likely to see is a continuing sort of struggle and 435 00:23:28,240 --> 00:23:31,119 Speaker 1: wrestling maps to see who comes out on top on 436 00:23:31,200 --> 00:23:35,320 Speaker 1: different issues. But those looking for sort of the you know, 437 00:23:35,440 --> 00:23:38,760 Speaker 1: the voice of of coherence or who can sort of 438 00:23:38,800 --> 00:23:41,320 Speaker 1: sum it all up, I think they'll be looking for 439 00:23:41,359 --> 00:23:44,360 Speaker 1: a long time because that's that's not going to happen. Um. 440 00:23:44,760 --> 00:23:47,720 Speaker 1: I think in a Trump administration. We're talking to Jonathan 441 00:23:47,760 --> 00:23:50,320 Speaker 1: Galub with the OURBC Capital Markets and he spoke about 442 00:23:50,320 --> 00:23:52,320 Speaker 1: how he's listening to what the Vice president has to 443 00:23:52,359 --> 00:23:54,600 Speaker 1: say when he's traveling abroad, He's listening to the Secretary 444 00:23:54,640 --> 00:23:56,600 Speaker 1: of State when he goes to Europe and talks to 445 00:23:56,640 --> 00:24:00,240 Speaker 1: our our allies there. How much discord or distance, says 446 00:24:00,280 --> 00:24:02,680 Speaker 1: there between the message we're hearing from those underneath Donald 447 00:24:02,720 --> 00:24:04,560 Speaker 1: Trump and those the messages that we're hearing from the 448 00:24:04,560 --> 00:24:08,840 Speaker 1: president himself, Well, there's enormous difference, you know. But the 449 00:24:08,960 --> 00:24:11,960 Speaker 1: Vice president's comments and Munich are a great example, like 450 00:24:12,040 --> 00:24:14,919 Speaker 1: he went there and gave a speech as that that 451 00:24:14,960 --> 00:24:18,520 Speaker 1: George W. Bush could have given. Um, So that that 452 00:24:18,680 --> 00:24:20,480 Speaker 1: is reassuring to a lot of people who want to 453 00:24:20,520 --> 00:24:23,359 Speaker 1: see a strong story of US alliance in Europe. But 454 00:24:23,400 --> 00:24:25,640 Speaker 1: the fact of the matter is that if there's a crisis, 455 00:24:26,119 --> 00:24:29,320 Speaker 1: say there's a crisis of Russia in the politics or 456 00:24:29,359 --> 00:24:32,160 Speaker 1: somewhere else, the person who gets to make the decision 457 00:24:32,200 --> 00:24:35,040 Speaker 1: about what to do is the president, right. So, um, 458 00:24:35,080 --> 00:24:38,840 Speaker 1: I certainly understand those who point to Tillerson and Pence 459 00:24:38,880 --> 00:24:41,680 Speaker 1: and Madison say, oh, you should just listen to them, 460 00:24:41,760 --> 00:24:44,640 Speaker 1: that's really what's important. But at the end of the day, 461 00:24:44,880 --> 00:24:47,200 Speaker 1: you know, Trump is going to have a major say 462 00:24:47,440 --> 00:24:50,800 Speaker 1: and his personal views could determine whether or not the 463 00:24:50,880 --> 00:24:54,240 Speaker 1: US polled some of these commitments or not. So I'm 464 00:24:54,240 --> 00:24:56,679 Speaker 1: not bully reassured. I think it's a positive thing that 465 00:24:56,720 --> 00:24:58,600 Speaker 1: they're saying, that things are saying and I'm glad they're 466 00:24:58,600 --> 00:25:02,160 Speaker 1: doing it when they go tom when when matters Tillerson 467 00:25:02,240 --> 00:25:06,240 Speaker 1: offense goes to these places. But it's not as sufficient. Okay, 468 00:25:06,320 --> 00:25:12,040 Speaker 1: enough of the brookings feet stuff, doctor Wright. Tomorrow night. 469 00:25:12,359 --> 00:25:17,120 Speaker 1: If the president possibly goes off speech script and let's 470 00:25:17,119 --> 00:25:19,640 Speaker 1: say he goes after fake news, etcetera, all the other 471 00:25:19,800 --> 00:25:24,000 Speaker 1: themes of the moment, if he starts bashing name the 472 00:25:24,080 --> 00:25:27,840 Speaker 1: nation or you know, the Sweden idiocy of two weeks ago, 473 00:25:28,359 --> 00:25:31,120 Speaker 1: how do you respond to that? How how do our 474 00:25:31,320 --> 00:25:35,160 Speaker 1: allies what a quaint word, how do our allies respond 475 00:25:35,200 --> 00:25:37,840 Speaker 1: to that? Yeah, No, it's a great question. I mean 476 00:25:37,880 --> 00:25:41,159 Speaker 1: I think what they have two reactions. One is that 477 00:25:41,320 --> 00:25:45,320 Speaker 1: it will it will really um, it will really underscore 478 00:25:45,520 --> 00:25:48,760 Speaker 1: their concerned that they will be really worried basically that 479 00:25:48,800 --> 00:25:52,280 Speaker 1: they can't trust the president. Um. They'll essentially, you know, 480 00:25:52,400 --> 00:25:55,360 Speaker 1: think that if push comes to shove and there's a problem, 481 00:25:55,400 --> 00:25:58,119 Speaker 1: you know, this guy doesn't understand them and it's a 482 00:25:58,200 --> 00:26:00,960 Speaker 1: wild card. And the other thing is they look for 483 00:26:01,040 --> 00:26:04,280 Speaker 1: assurance from everyone else. Just as we were talking about 484 00:26:04,320 --> 00:26:07,040 Speaker 1: a second ago. The next day, all the other members 485 00:26:07,080 --> 00:26:08,760 Speaker 1: of the cabinet will come out and say that's not 486 00:26:08,800 --> 00:26:11,800 Speaker 1: what he really meant and you know, our alliance is strong, 487 00:26:12,320 --> 00:26:14,679 Speaker 1: as there will be some sort of assurance there. But 488 00:26:14,760 --> 00:26:19,160 Speaker 1: these episodes like Sweden or Australia or any one of 489 00:26:19,200 --> 00:26:23,359 Speaker 1: a number of examples over the last you know, month 490 00:26:23,480 --> 00:26:26,040 Speaker 1: or so, you know, they point to the fact that 491 00:26:26,080 --> 00:26:29,520 Speaker 1: the commander in chief is not exactly um, you know, 492 00:26:29,640 --> 00:26:34,119 Speaker 1: it's not exactly uh, you know, upholding the alliances and 493 00:26:34,200 --> 00:26:39,440 Speaker 1: commitments from your international relations per view. Why is trade down? 494 00:26:40,040 --> 00:26:45,480 Speaker 1: Why is world trade down down? Down down over like 495 00:26:45,640 --> 00:26:47,920 Speaker 1: over the last few years or less ten years last, 496 00:26:48,880 --> 00:26:51,719 Speaker 1: the growth of trade is down. I mean, we're not 497 00:26:51,880 --> 00:26:55,720 Speaker 1: getting it like we used to get it. Yeah, I 498 00:26:55,760 --> 00:26:58,199 Speaker 1: think it's you know, I think there are I do 499 00:26:58,320 --> 00:27:00,879 Speaker 1: think that they're you know, we're the important time we 500 00:27:00,920 --> 00:27:03,720 Speaker 1: say this in the report you mentioned to look at 501 00:27:03,840 --> 00:27:07,200 Speaker 1: free trade agreements and look at economic diplomacy and say, 502 00:27:07,680 --> 00:27:10,880 Speaker 1: you know, it's not just about market access anymore. It's 503 00:27:10,920 --> 00:27:13,760 Speaker 1: also about distortions in the market, whether it's Chinese use 504 00:27:13,840 --> 00:27:16,960 Speaker 1: of state owned enterprises or currency or many other issues, 505 00:27:17,520 --> 00:27:20,360 Speaker 1: and then to work with like minded countries to try 506 00:27:20,359 --> 00:27:23,920 Speaker 1: to address those, you know, problems. So I think there 507 00:27:23,920 --> 00:27:26,920 Speaker 1: are problems in you know, the global economy. Trump is 508 00:27:26,960 --> 00:27:30,199 Speaker 1: not sort of wrong about that, but it's really you know, 509 00:27:30,240 --> 00:27:32,800 Speaker 1: how he's responding and whether or not the appropriate way 510 00:27:32,840 --> 00:27:35,800 Speaker 1: to respond is by launching a trade war or general 511 00:27:35,840 --> 00:27:39,359 Speaker 1: economic war with China or Mexico, which could be catastrophic 512 00:27:39,440 --> 00:27:41,960 Speaker 1: and kind of productive, you know, or is it to 513 00:27:42,040 --> 00:27:46,680 Speaker 1: work you know, diplomatically and multilaterally with with other sort 514 00:27:46,720 --> 00:27:52,440 Speaker 1: of large industrialized democracy to try to address these these issues. 515 00:27:52,480 --> 00:27:54,440 Speaker 1: So I do think, you know, I do think there's 516 00:27:54,440 --> 00:27:58,840 Speaker 1: it's not that the concerns about the training system are unfounded. 517 00:27:58,880 --> 00:28:01,280 Speaker 1: I think there there is, um there is some reason 518 00:28:01,400 --> 00:28:03,520 Speaker 1: for concern, but it's not it's not in the sense 519 00:28:03,520 --> 00:28:05,399 Speaker 1: that he's saying that the US has lost out in 520 00:28:05,480 --> 00:28:09,280 Speaker 1: these deals and it's just been negotiating badly. I think 521 00:28:09,600 --> 00:28:11,400 Speaker 1: Thomas right. You have a book coming out All Measures 522 00:28:11,400 --> 00:28:13,600 Speaker 1: short of We're the Contest for the twenty Century in 523 00:28:13,600 --> 00:28:16,520 Speaker 1: the Future of American Power, due to be published in May, 524 00:28:16,560 --> 00:28:19,160 Speaker 1: and I can just picture you pouring over the galleys 525 00:28:19,800 --> 00:28:22,760 Speaker 1: in early November and the election was how much did 526 00:28:22,760 --> 00:28:24,920 Speaker 1: you have to revise in light of this election, in 527 00:28:25,000 --> 00:28:27,520 Speaker 1: light of what we're seeing with this new administration. Yeah, 528 00:28:27,520 --> 00:28:30,119 Speaker 1: and it's a great question. You know, the draft was 529 00:28:30,160 --> 00:28:32,880 Speaker 1: done before November eight, but I had you know, they 530 00:28:32,880 --> 00:28:34,720 Speaker 1: said that if the if Trump won, I'd have a 531 00:28:34,800 --> 00:28:37,879 Speaker 1: chance to make some revisions. Um, well, you know, the 532 00:28:37,920 --> 00:28:40,920 Speaker 1: book read is arguing that the you know, this age 533 00:28:40,920 --> 00:28:44,480 Speaker 1: is sort of great power cooperation and convergence towards the 534 00:28:44,560 --> 00:28:48,600 Speaker 1: liberal international order is is over and unraveling, and that 535 00:28:48,680 --> 00:28:52,240 Speaker 1: we're seeing the advent of a more nationalists and geopolitically 536 00:28:52,240 --> 00:28:55,680 Speaker 1: competitive world. And so prior to the election, I thought 537 00:28:55,720 --> 00:28:58,040 Speaker 1: the US to be pushing back against that, you know, 538 00:28:58,120 --> 00:29:00,560 Speaker 1: that the US to be trying to op that from 539 00:29:00,560 --> 00:29:03,400 Speaker 1: happening and trying to uphold the liberal order. And I 540 00:29:03,440 --> 00:29:05,880 Speaker 1: guess that what I sort of corrected for was that 541 00:29:05,960 --> 00:29:08,080 Speaker 1: actually the US is more caught up in it than 542 00:29:08,160 --> 00:29:11,040 Speaker 1: I might have, you know, than I had anticipated. But 543 00:29:11,360 --> 00:29:13,760 Speaker 1: the basic sort of gist of the of the argument 544 00:29:13,840 --> 00:29:16,400 Speaker 1: I think was was, I mean, in some ways Trump 545 00:29:16,960 --> 00:29:20,360 Speaker 1: just confirmed it, right, because it's just really underscored that 546 00:29:20,440 --> 00:29:23,560 Speaker 1: this was this force is even stronger than I pought, 547 00:29:23,600 --> 00:29:25,440 Speaker 1: and I thought it was sort of the driving force. 548 00:29:26,640 --> 00:29:28,880 Speaker 1: That's right. One more question if we can squeeze it 549 00:29:28,920 --> 00:29:32,280 Speaker 1: in here. You have the luxury of experience in Dublin, 550 00:29:32,960 --> 00:29:38,000 Speaker 1: Cambridge and over UH at Georgetown as well. Is there 551 00:29:38,040 --> 00:29:40,719 Speaker 1: a risk of the city in the financial part of 552 00:29:40,760 --> 00:29:44,160 Speaker 1: London could move part or all to Dublin. Do you 553 00:29:44,200 --> 00:29:47,200 Speaker 1: buy that idea? Well, I think that. I mean, I 554 00:29:47,240 --> 00:29:49,480 Speaker 1: think that they will definitely lose. The City of London 555 00:29:49,480 --> 00:29:52,480 Speaker 1: will definitely be diminished. I think there's very little dabt 556 00:29:52,520 --> 00:29:55,360 Speaker 1: about that, and the folks I speak to over there 557 00:29:55,400 --> 00:29:58,200 Speaker 1: when I when I go over to UH for events 558 00:29:58,200 --> 00:30:01,480 Speaker 1: in the City of London very much acknowledge it upfront. 559 00:30:01,520 --> 00:30:03,880 Speaker 1: If the question is the destination, I think it's not. 560 00:30:04,600 --> 00:30:06,840 Speaker 1: It's not at all clear will be Dublin, although Dublin 561 00:30:06,960 --> 00:30:11,360 Speaker 1: is picking up some business, but Frankfurt and Amsterdam I 562 00:30:11,400 --> 00:30:15,160 Speaker 1: think are strong competitors as well. But you know, the 563 00:30:15,840 --> 00:30:19,480 Speaker 1: folks in London hope that they will only lose business 564 00:30:19,560 --> 00:30:22,960 Speaker 1: that is specific to you know, the passporting issue, but 565 00:30:23,040 --> 00:30:25,520 Speaker 1: it could be more broad than that. I think we've 566 00:30:25,560 --> 00:30:27,560 Speaker 1: got to leave it there time right, Thank you so much. 567 00:30:27,640 --> 00:30:44,600 Speaker 1: Dr Wright is with Brookings Institution. What we're gonna do 568 00:30:44,720 --> 00:30:47,440 Speaker 1: years investment talk and we'll do the political talk in 569 00:30:47,480 --> 00:30:50,800 Speaker 1: our next section with one of our most popular guests, 570 00:30:50,800 --> 00:30:53,760 Speaker 1: one d Herrow David Harrold of Harris associates and the 571 00:30:53,800 --> 00:30:59,760 Speaker 1: oak Mark International Fund joins us. Now, David, you've had 572 00:31:00,080 --> 00:31:04,520 Speaker 1: mense repair to your track record, and this is typical 573 00:31:04,640 --> 00:31:08,080 Speaker 1: with international where you get a ginormous year and then 574 00:31:08,120 --> 00:31:10,520 Speaker 1: you get a bad year, and maybe you get two 575 00:31:10,560 --> 00:31:14,320 Speaker 1: good years and two off the marketers. What's the year 576 00:31:14,360 --> 00:31:18,600 Speaker 1: ahead or the two year ahead view? David Harrow on 577 00:31:18,880 --> 00:31:25,040 Speaker 1: international stocks versus US multinationals. Well, good morning, Tom, And 578 00:31:25,120 --> 00:31:28,760 Speaker 1: this view for me, anyways, always predicated on where we 579 00:31:28,840 --> 00:31:32,720 Speaker 1: sit in terms of the valuation spectrum, where stocks are trading, 580 00:31:32,760 --> 00:31:38,040 Speaker 1: in terms of you know, conventional conventional valuation uh in 581 00:31:38,160 --> 00:31:40,480 Speaker 1: dissees that I like to use, like cash flow yields 582 00:31:41,000 --> 00:31:44,240 Speaker 1: EV two EVA. I mean just looking at how businesses 583 00:31:44,280 --> 00:31:47,880 Speaker 1: are priced and given what business conditions are like and 584 00:31:47,880 --> 00:31:50,600 Speaker 1: what we see today's there about average price. We don't 585 00:31:50,960 --> 00:31:55,280 Speaker 1: see panic fire sales like we saw during certain periods 586 00:31:55,280 --> 00:31:58,400 Speaker 1: in the last year or two. Recalling the beginning of 587 00:31:59,760 --> 00:32:02,640 Speaker 1: we had a very very weak start, a bottomed in 588 00:32:02,720 --> 00:32:05,840 Speaker 1: February and then an international market's got really hit hard 589 00:32:05,920 --> 00:32:08,880 Speaker 1: right after Brexit. And to me, these were really really 590 00:32:08,960 --> 00:32:13,200 Speaker 1: good panic buying panic There was panic selling given a 591 00:32:13,240 --> 00:32:17,240 Speaker 1: good buying opportunity. UM, we don't see you four in 592 00:32:17,280 --> 00:32:20,000 Speaker 1: the markets because they're still there's still people scared of 593 00:32:20,040 --> 00:32:22,720 Speaker 1: what might happen in Europe with the elections, and we 594 00:32:22,800 --> 00:32:26,320 Speaker 1: always have this with the elections, um. But so what 595 00:32:26,400 --> 00:32:29,040 Speaker 1: we see is valuations are just about average. They're they're 596 00:32:29,040 --> 00:32:35,280 Speaker 1: not super attractive, and they're not over the humble. One 597 00:32:36,280 --> 00:32:40,440 Speaker 1: forgets to mention that thirty two days ago you were 598 00:32:40,520 --> 00:32:45,320 Speaker 1: named morning Stars International Stock Fund Manager of the Year. 599 00:32:46,240 --> 00:32:48,920 Speaker 1: And the issue here, David Girl, it's like the Oscars. 600 00:32:49,440 --> 00:32:51,840 Speaker 1: You just expect that Meryl Street will come up on 601 00:32:51,920 --> 00:32:55,480 Speaker 1: the stage, same thing with David Harrow. But David, to 602 00:32:55,600 --> 00:32:58,760 Speaker 1: the boom bust of your world and you've won every 603 00:32:58,800 --> 00:33:02,680 Speaker 1: award there is within is you just assume last year 604 00:33:02,760 --> 00:33:06,040 Speaker 1: was a great year, this year is a bad year. No, 605 00:33:06,240 --> 00:33:08,760 Speaker 1: not necessarily. What you do assume is that you can't 606 00:33:08,760 --> 00:33:11,280 Speaker 1: look in the past, and you have to keep looking 607 00:33:11,320 --> 00:33:15,320 Speaker 1: forward and you have to keep the portfolio forward positioned. 608 00:33:15,360 --> 00:33:17,720 Speaker 1: And you know, if I look at my history at 609 00:33:17,720 --> 00:33:21,120 Speaker 1: Harris Associates, it's almost twenty five years, there's been about 610 00:33:21,160 --> 00:33:23,840 Speaker 1: three or four big bust years and about twelve or 611 00:33:23,880 --> 00:33:27,400 Speaker 1: thirteen big boom years. And to me, that's that's livable, 612 00:33:27,480 --> 00:33:31,720 Speaker 1: because what we're ultimately trying to deliver is performance over 613 00:33:31,760 --> 00:33:35,440 Speaker 1: three fifteen years as opposed to just trying to match 614 00:33:35,560 --> 00:33:38,360 Speaker 1: the index over week to week, month to month, quarter 615 00:33:38,440 --> 00:33:40,480 Speaker 1: to quarter, half year and a half year. And I 616 00:33:40,520 --> 00:33:43,160 Speaker 1: think there is a trade off. There is a trade 617 00:33:43,160 --> 00:33:46,320 Speaker 1: off between, you know, trying to achieve short term performance 618 00:33:46,360 --> 00:33:48,520 Speaker 1: and trying to achieve medium and long term And we'll 619 00:33:48,520 --> 00:33:51,120 Speaker 1: take the medium and long term any day. So if 620 00:33:51,120 --> 00:33:54,600 Speaker 1: it means some short term under performance, I'll take that, 621 00:33:54,760 --> 00:33:57,040 Speaker 1: if it means we're going to get greater medium and 622 00:33:57,080 --> 00:34:00,120 Speaker 1: long term out performance. Ask you a bit about the 623 00:34:00,560 --> 00:34:02,840 Speaker 1: Italian banking sector. We've talked about that a bunch here 624 00:34:02,840 --> 00:34:04,760 Speaker 1: over these last last few months, and let me just 625 00:34:04,760 --> 00:34:06,840 Speaker 1: get a sense of where you see opportunity there. There 626 00:34:06,840 --> 00:34:10,799 Speaker 1: were reports here of Antessa generally merger happening, and we've 627 00:34:10,800 --> 00:34:13,640 Speaker 1: talked about the need perhaps for for more consolidation in 628 00:34:13,680 --> 00:34:16,200 Speaker 1: the banking sector in Italy and Europe more generally. Where 629 00:34:16,200 --> 00:34:19,800 Speaker 1: do you see things headed there? Yeah, there definitely needs 630 00:34:19,840 --> 00:34:23,360 Speaker 1: to be more consolidation in the Italian banking market, probably 631 00:34:23,440 --> 00:34:26,680 Speaker 1: even in the German the Lindest bunk in which the 632 00:34:26,719 --> 00:34:29,160 Speaker 1: setup there makes it very difficult for any bank to 633 00:34:29,200 --> 00:34:33,000 Speaker 1: make money doing local banking in Germany. But back to Italy. Yeah, 634 00:34:33,040 --> 00:34:36,640 Speaker 1: we're big shareholders of Intessa and we were watching this 635 00:34:36,760 --> 00:34:41,719 Speaker 1: quite closely because this generally, in our view, it made 636 00:34:41,800 --> 00:34:45,279 Speaker 1: limited sense. And management assured us they're going to stick 637 00:34:45,320 --> 00:34:47,600 Speaker 1: to the plan. They're going to stick to their capital 638 00:34:48,239 --> 00:34:52,520 Speaker 1: allocation policies Etter and so we trusted and we trusted 639 00:34:52,600 --> 00:34:55,280 Speaker 1: him as they have a very good track record. The 640 00:34:55,320 --> 00:35:00,640 Speaker 1: CEO of Antessa is very sound. Uh. They continue to form, 641 00:35:00,680 --> 00:35:03,200 Speaker 1: they're starting to grow their loan book, Loan losses are 642 00:35:03,239 --> 00:35:07,000 Speaker 1: going down, costs are going down, and they're distributing most 643 00:35:07,000 --> 00:35:09,160 Speaker 1: of their excess capital, which they have a bit of 644 00:35:09,480 --> 00:35:12,799 Speaker 1: and Testa sel Paul actually has excessive capital and they're 645 00:35:12,800 --> 00:35:15,759 Speaker 1: distributing it most of it back to owners. So this 646 00:35:15,840 --> 00:35:19,319 Speaker 1: is what we liked, and we were raise some doubts 647 00:35:19,360 --> 00:35:21,640 Speaker 1: on this generally, but they looked at it, they looked 648 00:35:21,640 --> 00:35:24,080 Speaker 1: at it closely, and they decided to pull back, which 649 00:35:24,840 --> 00:35:28,279 Speaker 1: um us was was a good sign unless you could 650 00:35:28,360 --> 00:35:32,120 Speaker 1: really really make a strong case for business combination because 651 00:35:32,560 --> 00:35:36,239 Speaker 1: these things are littered, littered with the laws of unintended 652 00:35:36,320 --> 00:35:39,600 Speaker 1: consequences when you merge to big entasis. There's so much 653 00:35:39,600 --> 00:35:43,000 Speaker 1: work that needs to be done in combining businesses, and 654 00:35:43,040 --> 00:35:44,920 Speaker 1: you just have to make sure you're really paying the 655 00:35:45,040 --> 00:35:48,680 Speaker 1: right price and you have the ability to integrate and 656 00:35:48,719 --> 00:35:52,879 Speaker 1: to manage. So that's it's fraught with risks, or we're 657 00:35:52,920 --> 00:35:55,799 Speaker 1: pretty happy that they backed away from that. Jonathan Donald 658 00:35:55,920 --> 00:35:58,279 Speaker 1: was here just a few minutes ago talking about how 659 00:35:58,320 --> 00:36:00,000 Speaker 1: well you would have done if you've gotten into America 660 00:36:00,000 --> 00:36:03,920 Speaker 1: and financials shortly before the election. Is there still room 661 00:36:03,960 --> 00:36:06,799 Speaker 1: to get into financials here in the US and indeed overseas. 662 00:36:07,480 --> 00:36:11,120 Speaker 1: Overseas in particular, there's been a little bounce, but if 663 00:36:11,120 --> 00:36:14,040 Speaker 1: you just look at the valuation spreads where they're trading 664 00:36:14,080 --> 00:36:17,759 Speaker 1: at versus historic on an absolute basis, for other sectors, 665 00:36:18,520 --> 00:36:21,359 Speaker 1: there's still a lot of room, and especially since we're 666 00:36:21,400 --> 00:36:25,120 Speaker 1: starting to finally see in Europe finally starting to see 667 00:36:25,239 --> 00:36:28,800 Speaker 1: lending growth, you know, three four or five six percent, 668 00:36:28,960 --> 00:36:31,839 Speaker 1: and that's better than not. And in the meantime, these 669 00:36:31,840 --> 00:36:35,839 Speaker 1: banks have been very proactive at cutting costs. The regulatory 670 00:36:35,880 --> 00:36:40,759 Speaker 1: burdens seems to have been the strictest regulatory burdens that 671 00:36:40,840 --> 00:36:43,320 Speaker 1: we saw in Bossil three seemed to kind of be 672 00:36:43,360 --> 00:36:45,719 Speaker 1: in the rear view mirror. Most of these big European 673 00:36:45,800 --> 00:36:49,719 Speaker 1: firms are at or above their desired capital positions. So 674 00:36:49,800 --> 00:36:52,200 Speaker 1: I think valuation is still saying for at least for 675 00:36:52,280 --> 00:36:55,719 Speaker 1: European banks like B and P and Tessa Lloyd's. It's 676 00:36:55,840 --> 00:36:58,600 Speaker 1: it's yes, you should be looking at these seriously. How 677 00:36:58,640 --> 00:37:05,760 Speaker 1: did you respond to the Craft Heinz Buffett private equity 678 00:37:06,200 --> 00:37:09,800 Speaker 1: tons of money going after Uni Leaver? Here? Did you 679 00:37:09,920 --> 00:37:13,239 Speaker 1: wan Unilever? We don't own Uni Leaver, but I and 680 00:37:13,280 --> 00:37:15,759 Speaker 1: I've looked at it, we've owned in the past, and 681 00:37:15,840 --> 00:37:19,240 Speaker 1: you know this, this company does not have a good pedigree. 682 00:37:19,600 --> 00:37:22,400 Speaker 1: I mean we recall it was an Anglo Dutch monstrosity. 683 00:37:22,440 --> 00:37:25,879 Speaker 1: Two chairman to ce CFOs do everything and I don't 684 00:37:25,920 --> 00:37:29,680 Speaker 1: even know if they've ever quite recovered from that. Um. 685 00:37:29,719 --> 00:37:32,799 Speaker 1: You know, these big companies with all these brands, they 686 00:37:32,840 --> 00:37:37,960 Speaker 1: just sometimes lack focus and they become huge bureaucracies. And 687 00:37:39,040 --> 00:37:41,560 Speaker 1: you know, to be honest, I think maybe you know 688 00:37:41,680 --> 00:37:45,200 Speaker 1: the three gene Heinscraft people would have had had good 689 00:37:45,280 --> 00:37:47,920 Speaker 1: run at would have had a good run at Unilevers. 690 00:37:48,120 --> 00:37:51,920 Speaker 1: I would guess there's a lot of fact that cut there. Um, 691 00:37:52,000 --> 00:37:54,400 Speaker 1: and they have some good brands and some good businesses, 692 00:37:54,520 --> 00:37:58,360 Speaker 1: especially in health and personal care and ice cream. We 693 00:37:58,440 --> 00:38:02,719 Speaker 1: all like ice cream. Um, But you know, I'm I'm 694 00:38:02,760 --> 00:38:05,560 Speaker 1: surprised that backed away so quickly. Maybe they're reloading or 695 00:38:05,760 --> 00:38:09,840 Speaker 1: because I think there's an opportunity there for someone. When 696 00:38:09,920 --> 00:38:12,440 Speaker 1: you look at the VIX hovering around twelve on the 697 00:38:12,480 --> 00:38:15,239 Speaker 1: issue of where does David Harris down the issue of complacency? 698 00:38:15,320 --> 00:38:16,840 Speaker 1: What do you make of the VIX being where it 699 00:38:16,920 --> 00:38:18,719 Speaker 1: is and and indeed where it's been here for these 700 00:38:18,800 --> 00:38:22,239 Speaker 1: last few months. Yeah, that's not something I give a 701 00:38:22,239 --> 00:38:24,880 Speaker 1: lot of thought about. But just looking at how quiet 702 00:38:24,920 --> 00:38:29,680 Speaker 1: things are and knowing that you know, for every period 703 00:38:29,680 --> 00:38:34,400 Speaker 1: of quiet, there's a period of disquiet. I would assume that, um, 704 00:38:35,000 --> 00:38:37,520 Speaker 1: it's not sustainable, but you know, you never know. If 705 00:38:37,560 --> 00:38:39,600 Speaker 1: you look at charts of the VIX, there's been periods 706 00:38:39,600 --> 00:38:41,440 Speaker 1: of time where it's been law for quite some time, 707 00:38:42,280 --> 00:38:44,160 Speaker 1: and I think, you know, the market's kind of in 708 00:38:44,160 --> 00:38:46,440 Speaker 1: a good place because you know, what they think is 709 00:38:46,440 --> 00:38:49,919 Speaker 1: going to be better more pro capitalist policy coming down 710 00:38:49,920 --> 00:38:52,440 Speaker 1: the road, David, let's talk about the politics. You've been 711 00:38:52,840 --> 00:38:56,640 Speaker 1: moderately active in Republican politics and in Wisconsin. How's a 712 00:38:56,719 --> 00:39:00,239 Speaker 1: state that the president uh, I took right now. How 713 00:39:00,400 --> 00:39:04,160 Speaker 1: intrusive is the Washington debate? What we're going to observe 714 00:39:04,200 --> 00:39:08,360 Speaker 1: tomorrow night, the present budget debate and with that any 715 00:39:08,400 --> 00:39:12,719 Speaker 1: delay in the hopes of Republicans. How intrusive is that 716 00:39:13,480 --> 00:39:16,400 Speaker 1: on our g d P and particularly on our investments. 717 00:39:17,680 --> 00:39:22,239 Speaker 1: I think market participants have grown used to this political 718 00:39:22,360 --> 00:39:26,960 Speaker 1: discourse for better or worse, and as a result, um 719 00:39:27,440 --> 00:39:31,920 Speaker 1: especially as as a result of various events happening and 720 00:39:32,200 --> 00:39:34,800 Speaker 1: the impacts of markets becoming less and less and less, 721 00:39:35,560 --> 00:39:38,560 Speaker 1: and so you're going to continue to see more noise 722 00:39:38,560 --> 00:39:41,719 Speaker 1: out of Washington. It is a constant flow. This is 723 00:39:41,760 --> 00:39:44,799 Speaker 1: an altunate, but it does seem to be amped up 724 00:39:44,800 --> 00:39:46,680 Speaker 1: a little bit. How I had to do is watch 725 00:39:46,760 --> 00:39:50,759 Speaker 1: the last night's programming on the OSCARS, and I mean, 726 00:39:52,000 --> 00:39:56,440 Speaker 1: people are just extremely excited about this whole presidency in 727 00:39:56,520 --> 00:39:58,920 Speaker 1: one direction or the next. But I think the markets 728 00:39:58,920 --> 00:40:03,080 Speaker 1: have grown, um what less responsive. I wouldn't say immune, 729 00:40:03,120 --> 00:40:06,000 Speaker 1: but less responsive to all this noise and chatter. And 730 00:40:06,040 --> 00:40:09,480 Speaker 1: I think that what really market participants need to do 731 00:40:09,520 --> 00:40:13,000 Speaker 1: is listen to the policy UH and look for things 732 00:40:13,080 --> 00:40:17,040 Speaker 1: that make it better for corporates to grow their profits 733 00:40:17,040 --> 00:40:19,680 Speaker 1: and cash flow. Streams. You know, if that happens, they 734 00:40:19,760 --> 00:40:22,400 Speaker 1: hire more workers. If that happens, they invest more. If 735 00:40:22,440 --> 00:40:26,200 Speaker 1: that happens, you know, it leads to better business conditions 736 00:40:26,200 --> 00:40:29,239 Speaker 1: and economic growth. It's the bottom up value investor. What 737 00:40:29,360 --> 00:40:33,319 Speaker 1: we really want is for our companies to be able to, 738 00:40:34,680 --> 00:40:36,880 Speaker 1: you know, grow, grow their cash flow streams in a 739 00:40:37,000 --> 00:40:40,080 Speaker 1: in a safetound environment. And I think that's what this 740 00:40:40,120 --> 00:40:43,240 Speaker 1: whole rally has kind of been about, is the belief 741 00:40:43,920 --> 00:40:47,880 Speaker 1: that the policies of the previous eight years been very 742 00:40:47,920 --> 00:40:53,160 Speaker 1: anti capitalist, very anti free market. And I think the policies, 743 00:40:53,280 --> 00:40:56,640 Speaker 1: even though they there's a little hair surrounding them, I 744 00:40:56,680 --> 00:41:00,319 Speaker 1: think there's an anticipation that the policies will be lot 745 00:41:00,320 --> 00:41:05,640 Speaker 1: more pro growth, pro free market capitalism. When you are 746 00:41:05,640 --> 00:41:08,319 Speaker 1: you listening now more to those I was chatting about 747 00:41:08,320 --> 00:41:10,439 Speaker 1: this a little bit earlier today. Do you listen less 748 00:41:10,440 --> 00:41:12,160 Speaker 1: to Donald Trump and more to say Steven Manuch and 749 00:41:12,200 --> 00:41:13,600 Speaker 1: he has been on the job now for for just 750 00:41:13,719 --> 00:41:16,480 Speaker 1: over a week. Are you when you're when you're trying 751 00:41:16,480 --> 00:41:18,840 Speaker 1: to understand what this administration is trying to do? Is 752 00:41:18,840 --> 00:41:21,239 Speaker 1: it more useful, last investor, to listen to those heading 753 00:41:21,280 --> 00:41:23,759 Speaker 1: the agencies and those beneath them. You know, it's a 754 00:41:23,800 --> 00:41:25,799 Speaker 1: really good question, is you know, where does the puck 755 00:41:25,880 --> 00:41:29,720 Speaker 1: really stop? Because you know, Trump was all his roaring. 756 00:41:29,800 --> 00:41:31,840 Speaker 1: He does listen to the people around him, and I 757 00:41:31,880 --> 00:41:34,400 Speaker 1: think that was evidence during the whole Remember the first 758 00:41:34,440 --> 00:41:40,640 Speaker 1: executive order, UM, the immigration restrictions, and you heard the 759 00:41:40,680 --> 00:41:43,080 Speaker 1: story of Madison whatever said well what about the green 760 00:41:43,080 --> 00:41:45,640 Speaker 1: card holders? And they very quickly got to Trump and 761 00:41:45,719 --> 00:41:48,560 Speaker 1: he wanted, you know, wanted that clarified. So he does 762 00:41:48,719 --> 00:41:51,640 Speaker 1: listen to people, um, and he does have very strong 763 00:41:51,719 --> 00:41:53,520 Speaker 1: people around him. That was one of the things that 764 00:41:53,600 --> 00:41:56,880 Speaker 1: surprised me. I thought someone was such a big ego 765 00:41:57,040 --> 00:41:59,320 Speaker 1: would put a bunch of weeklings around him. In fact, 766 00:41:59,400 --> 00:42:03,719 Speaker 1: he put some very very strong, highly opinionated people. And 767 00:42:03,760 --> 00:42:05,440 Speaker 1: so I think you have to really listen to both 768 00:42:05,440 --> 00:42:07,000 Speaker 1: and you have to see how to interact. And I 769 00:42:07,040 --> 00:42:09,960 Speaker 1: think really what one has to do is look to 770 00:42:10,000 --> 00:42:13,680 Speaker 1: see if Trump is listening, learning and reacting to his 771 00:42:13,800 --> 00:42:16,799 Speaker 1: skilled advisors. And I think it would be a very 772 00:42:16,800 --> 00:42:19,759 Speaker 1: good sign if he does, because he is new, he 773 00:42:19,840 --> 00:42:22,120 Speaker 1: is new to politics, and he has some very good 774 00:42:22,120 --> 00:42:25,680 Speaker 1: people around David Harrow, Thank you so much. Congratulations David 775 00:42:25,719 --> 00:42:29,279 Speaker 1: Harrow in your morning star acclaim it will be. It 776 00:42:29,320 --> 00:42:35,279 Speaker 1: goes on the Harrow mantle of the fireplace, crowd fireplace 777 00:42:35,360 --> 00:42:38,400 Speaker 1: in the west wing. That's where it goes. David Harrow 778 00:42:38,440 --> 00:42:43,160 Speaker 1: with the Market Harris Associates International Manager of the Year. 779 00:42:43,200 --> 00:42:46,040 Speaker 1: But that's how it is, David, I mean, David garraw Um, 780 00:42:46,560 --> 00:42:50,600 Speaker 1: I find it in the international you know, you wait, 781 00:42:50,680 --> 00:42:52,960 Speaker 1: you wait, you go. It's not working. It's not working 782 00:42:52,960 --> 00:42:56,480 Speaker 1: in a boom you get one year or two years too. 783 00:42:57,760 --> 00:43:00,759 Speaker 1: It's a it's a different cadence than domestic. Yeah no. 784 00:43:00,880 --> 00:43:02,440 Speaker 1: And I was again struck by what he had to 785 00:43:02,440 --> 00:43:04,880 Speaker 1: say there about the European banks. We talked about European 786 00:43:04,880 --> 00:43:06,960 Speaker 1: banks in terms of how they are structurally and in 787 00:43:07,000 --> 00:43:09,600 Speaker 1: the context of financial regulations. But interesting to hear that, 788 00:43:09,719 --> 00:43:12,680 Speaker 1: David Hare, they're talking about opportunity in the European banking 789 00:43:12,680 --> 00:43:24,000 Speaker 1: system right now. Thanks for listening to the Bloomberg Surveillance podcast. 790 00:43:24,360 --> 00:43:29,480 Speaker 1: Subscribe and listen to interviews on iTunes, SoundCloud, or whichever 791 00:43:29,600 --> 00:43:34,040 Speaker 1: podcast platform you prefer. I'm out on Twitter at Tom Keene. 792 00:43:34,120 --> 00:43:37,920 Speaker 1: David Gura is at David Gura. Before the podcast, you 793 00:43:37,960 --> 00:43:54,239 Speaker 1: can always catch us worldwide. I'm Bloomberg Radio brought you 794 00:43:54,280 --> 00:43:57,880 Speaker 1: by Bank of America. Mary Lynch dedicated to bringing our 795 00:43:58,000 --> 00:44:01,560 Speaker 1: clients insights and solutions to meet the challenges of a 796 00:44:01,600 --> 00:44:06,480 Speaker 1: transforming world. That's the power of global connections. Mary Lynch, Pierce, 797 00:44:06,600 --> 00:44:10,440 Speaker 1: Fenner and Smith Incorporated, Member s I p C