WEBVTT - America Changes Immigrants, Not the Opposite, Gutierrez Says 0:00:09.720 --> 0:00:12.880 Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene with 0:00:13.600 --> 0:00:16.520 David Gura. Daily we bring you insight from the best 0:00:16.560 --> 0:00:22.239 of economics, finance, investment, and international relations. Find Bloomberg Surveillance 0:00:22.320 --> 0:00:27.000 on Apple Podcasts, SoundCloud, Bloomberg dot Com, and of course 0:00:27.320 --> 0:00:34.760 on the Bloomberg. Good morning everyone, David Gurin, Tom Keene, 0:00:34.800 --> 0:00:39.000 Bloomberg Surveillance, Mr Gurrow off, Michael McKee and for Mr Gurrow, 0:00:39.040 --> 0:00:41.760 which is a good and beautiful thing. David Kotalk this 0:00:41.800 --> 0:00:45.199 morning mentioned a New Jersey bond and I got a 0:00:45.360 --> 0:00:49.479 lot of response negative response about New Jersey a good 0:00:49.479 --> 0:00:51.680 man to speak to on that. Peter Hayes a black 0:00:51.760 --> 0:00:54.040 rock Peter, let me rip up the script here, and 0:00:54.120 --> 0:00:57.279 that the tone of particularly New York, New Jersey, Connecticut 0:00:57.360 --> 0:01:01.240 listeners was hyper negative on the land of Chris Christie's 0:01:01.280 --> 0:01:07.120 New Jersey a good credit. Jersey has some structural problems, 0:01:07.240 --> 0:01:09.480 like some of the other states with big prinsion problems, 0:01:09.520 --> 0:01:12.200 and that's that's where they really revolve around. So this 0:01:12.280 --> 0:01:15.480 idea of tensions being able to pay the liabilities, it 0:01:15.520 --> 0:01:19.160 seems to be getting shorter and shorter that I think 0:01:19.200 --> 0:01:22.080 that they are reckoning if if you will, um, they 0:01:22.120 --> 0:01:24.319 have to be addressed. Some states have done better jobs 0:01:24.319 --> 0:01:26.360 in the states you mentioned have not done as good 0:01:26.400 --> 0:01:28.760 a job, and New Jersey is certainly one of those, 0:01:28.800 --> 0:01:31.520 and that's reflected in market spreads. They've spread it spread 0:01:31.520 --> 0:01:35.200 out dramatically wider. So I think the market sniffed that 0:01:35.280 --> 0:01:38.520 out and that will they default longer term? Unlikely? They 0:01:38.560 --> 0:01:41.520 are a state, they're a large economy, etcetera. But in 0:01:41.560 --> 0:01:43.760 the meantime you could see some volatility in the name. 0:01:44.040 --> 0:01:47.040 Do do the name the state? And let's not pick 0:01:47.040 --> 0:01:49.920 on New Jersey. There's X number of other states like that. 0:01:50.280 --> 0:01:53.920 Does a shop like black Rock avoid a given state 0:01:54.560 --> 0:01:58.520 or can you be choosy versus GEO general obligation and 0:01:58.640 --> 0:02:01.440 revenue paper can pick and choose? Or do you just 0:02:01.520 --> 0:02:05.760 walk away from some of these beleaguered states? Again, I 0:02:05.800 --> 0:02:08.919 think you have to believe in the long term efficacy 0:02:09.000 --> 0:02:11.079 of a of a state. Even Illinois, who has some 0:02:11.080 --> 0:02:14.560 pretty significant problems, actually taking some steps over the last 0:02:14.560 --> 0:02:17.560 couple of months to address the pension problem. They're a 0:02:17.560 --> 0:02:20.880 long way from from home. But you know, in the meantime, 0:02:21.040 --> 0:02:24.239 yields went up dramatically with prices going down and that's 0:02:24.280 --> 0:02:26.919 actually reversed now over the last couple of months. You 0:02:26.919 --> 0:02:28.360 can play it that way, but you're I think you're 0:02:28.360 --> 0:02:31.920 a question around g os and revenues that tosses is 0:02:31.960 --> 0:02:34.600 the bigger one revenue bond you can sort of identify 0:02:34.639 --> 0:02:37.080 a revenue stream to pay back the bond, and geos 0:02:37.600 --> 0:02:40.120 taking a bit of a political risk. Well, the Michael 0:02:40.160 --> 0:02:42.600 McKee's taking a huge risk because he's got those triple 0:02:42.680 --> 0:02:46.000 de rated ice rink bonds somewhere up by s part 0:02:46.000 --> 0:02:48.720 of New Jersey. What's your yield on that side? It's 0:02:48.760 --> 0:02:52.480 it's like tax free and you get New Jersey Devil 0:02:52.560 --> 0:02:55.680 tickets like. But is there it's sort of a psychological 0:02:55.720 --> 0:03:01.360 put in play here that uh yeah, Illinois or some 0:03:01.440 --> 0:03:03.720 of these other states are in a lot of trouble, 0:03:03.800 --> 0:03:07.320 but really they won't default, they won't go bankrupt, and 0:03:07.360 --> 0:03:11.560 so why not take the yield? I think there's definitely 0:03:11.639 --> 0:03:14.800 that mentality in the market, and it's a bit of 0:03:14.840 --> 0:03:16.680 a rating risk. You know, do you want to own 0:03:16.800 --> 0:03:20.040 the double D or the triple D name you get 0:03:20.080 --> 0:03:23.079 paid and compensated for it if that's what you're after, 0:03:23.919 --> 0:03:26.359 or other investors aren't comfortable with that. Type of risk, 0:03:26.400 --> 0:03:28.919 and they see a little bit more of a doomsday scenario. 0:03:28.960 --> 0:03:31.519 But states, states, first of all, don't have the ability 0:03:31.560 --> 0:03:34.640 to declare bankruptcy. So if you think about the state defaulting, 0:03:35.120 --> 0:03:38.000 I mean, that's just not in anybody's radar screen. So 0:03:38.040 --> 0:03:39.640 I think it's a matter of that you're willing to 0:03:39.640 --> 0:03:42.960 take the risk and see some volatility and your portfolio. 0:03:43.040 --> 0:03:44.840 There's plenty of people who want the yield and willing 0:03:44.880 --> 0:03:46.280 to take the rest. Mike, I want you ask the 0:03:46.280 --> 0:03:48.440 next question, but this is too important to pass up. 0:03:48.640 --> 0:03:52.840 Peter Haste. To be clear, a fifty states, they can't 0:03:52.960 --> 0:03:56.960 do a Puerto Rico. They're different, right, that's right, territory 0:03:57.120 --> 0:04:00.280 versus state. It's as a's part of the constitution. Now, 0:04:01.000 --> 0:04:05.480 can most portfolios or at least I mean, we'll talk 0:04:05.640 --> 0:04:08.640 black Rock, since we're talking to the man from black Rock, 0:04:08.680 --> 0:04:12.400 but can you hold triple teas or things like that? 0:04:12.520 --> 0:04:14.600 I mean, do your rules even allow you to have 0:04:14.720 --> 0:04:20.480 something that that is that close to default rating? They do, Obviously, 0:04:20.520 --> 0:04:24.760 reflating ratings are designed to reflect the fault risk of 0:04:24.880 --> 0:04:26.920 the long term ability of an issue to pay back 0:04:26.960 --> 0:04:30.240 their debt. But yes, we we can most institutional investors 0:04:30.279 --> 0:04:33.920 can hold everything on the credit spectrum from high yield 0:04:34.120 --> 0:04:37.120 to high quality and everything on the yield curve. SU's 0:04:37.160 --> 0:04:39.760 just a matter of where do you own those type 0:04:39.800 --> 0:04:42.320 of credits. I think you have to own them inappropriate 0:04:42.360 --> 0:04:46.200 mandates who are investors understand the risks. Let me switch 0:04:46.240 --> 0:04:50.680 from pension problems to hurricane problems. If you look at 0:04:50.680 --> 0:04:53.279 a place like Houston, or you look at a place 0:04:53.600 --> 0:04:56.880 like Miami, with the potential damage that we might see, 0:04:57.440 --> 0:05:00.480 is there a possibility, you know, do do you get 0:05:00.480 --> 0:05:04.280 a ratings change and impossibility that you might see either 0:05:04.320 --> 0:05:07.080 default or delayed payment on some bonds because the revenue 0:05:07.120 --> 0:05:09.600 is just not there if the economy is so badly damaged. 0:05:10.600 --> 0:05:15.479 I think that that could be in very small instances, 0:05:15.520 --> 0:05:19.680 with very small issuers, you could see an interruption of payments. 0:05:19.760 --> 0:05:22.000 We think they're very unlikely. In history tells us that 0:05:22.040 --> 0:05:23.400 you go back and look at some of the bigger 0:05:23.720 --> 0:05:28.080 hurricanes that have impacted in the Southwest Louisiana, etcetera, and 0:05:28.120 --> 0:05:30.640 you do see a bit of a downturn in economic 0:05:30.680 --> 0:05:34.080 activity for the short term, which obviously impacts revenues, but 0:05:34.160 --> 0:05:36.479 you don't see a big change in the market value 0:05:36.480 --> 0:05:39.359 of the bonds, you don't see a big change in ratings. 0:05:39.360 --> 0:05:42.880 If it's a single standalone project and for some reason, 0:05:43.040 --> 0:05:47.760 some catastrophic event um damages the property to the extent 0:05:47.800 --> 0:05:49.680 they can't continue to build it or build it out 0:05:49.720 --> 0:05:51.840 and can't collect revenues, then that might be a little 0:05:51.839 --> 0:05:55.200 bit differently different. But most of these revenue bonds have 0:05:55.520 --> 0:05:57.960 reserved funds they can draw on the pay debt service, 0:05:58.040 --> 0:06:01.440 and we we don't see a a big impact the bonds. 0:06:01.480 --> 0:06:04.320 That's what history has told us. Where are we positioning 0:06:04.320 --> 0:06:09.240 now on the relative yield and total return of a 0:06:09.279 --> 0:06:13.880 single double triple tax free state portfolio at Black Rock 0:06:14.560 --> 0:06:19.080 versus buying a national portfolio. That's always been a difficult 0:06:19.160 --> 0:06:22.960 concept for the public. Explain where we are now. Should 0:06:23.000 --> 0:06:25.680 I buy triple tax free whatever state or should I 0:06:25.680 --> 0:06:29.679 buy a broader national portfolio. It depends on your state. 0:06:29.720 --> 0:06:32.200 If you're in a state like California and New York 0:06:32.279 --> 0:06:35.960 where these state income tax local income tax rates are 0:06:36.040 --> 0:06:38.840 are very high, then the opportunity cost of going out 0:06:38.880 --> 0:06:41.600 of state are pretty high. You can also diversify your 0:06:41.640 --> 0:06:44.839 portfolio in those states. There's a lot of different issuers 0:06:44.880 --> 0:06:47.520 that you can mitigate the risk and fully diverse five 0:06:47.520 --> 0:06:51.000 portfolio into g O so particularly into revenue bonds, getting 0:06:51.040 --> 0:06:53.920 back to earlier question. But when you get down the 0:06:53.960 --> 0:06:56.800 spectrum a little bit into lower marginal tax brackets and 0:06:56.839 --> 0:06:59.280 you get into states like New Jersey getting back to that, 0:06:59.680 --> 0:07:02.720 if a little harder to fully diversify a portfolio and 0:07:02.800 --> 0:07:05.800 the opportunity cost of going national, So we advise some 0:07:05.880 --> 0:07:09.000 degree of diversification in the national and some of those 0:07:09.440 --> 0:07:11.640 other states. Vector Mike McKie, I don't know, Mike. If 0:07:11.680 --> 0:07:14.400 you see Greg Villiers note today, he devotes it entirely 0:07:14.960 --> 0:07:19.240 to Irma, Harvey and fiscal policy. UM. I guess, Peter 0:07:19.440 --> 0:07:21.360 is a question off of Luers note is if we 0:07:21.400 --> 0:07:24.960 go to four or five deficit to GDP, does that 0:07:25.000 --> 0:07:29.040 mean a lot more issuance of municipal bond paper? It could. 0:07:29.080 --> 0:07:31.000 I mean you might even see more issuance in the 0:07:31.040 --> 0:07:34.000 near term around Hurricane Harvey, and depending on how it 0:07:34.080 --> 0:07:37.480 happens with Hurricane Irma. But clearly, if you get more 0:07:37.520 --> 0:07:40.320 deficit tests, typically what we see is we see borrowing 0:07:40.400 --> 0:07:42.560 begins to ramp up in the last couple of years. 0:07:42.560 --> 0:07:44.520 I would say, for the last seven or eight years, 0:07:44.680 --> 0:07:47.520 we've actually seen less borrowing, less borrowing than they really 0:07:47.520 --> 0:07:50.240 should given how low rates are, but the fact that 0:07:50.320 --> 0:07:52.680 revenues are up, they've borrowed a bit less. So the 0:07:52.680 --> 0:07:57.640 the the inverse would hold true. When you look at 0:07:57.680 --> 0:08:01.280 the overall um uni market these days, how would you 0:08:01.920 --> 0:08:05.760 describe it as as as calm? I mean, it seems 0:08:05.760 --> 0:08:09.720 to be a calm portion of the market while everybody 0:08:09.720 --> 0:08:12.680 else is trying to figure out where we go from here. Yeah, 0:08:12.720 --> 0:08:15.760 it's it's it's a really interesting question, and it gets 0:08:15.760 --> 0:08:18.320 back a little bit to what Tom was touching on 0:08:18.360 --> 0:08:20.880 as well as the returns this year. It's kind of 0:08:20.920 --> 0:08:23.480 income versus price. And if you look at the breakdown 0:08:23.560 --> 0:08:27.000 so far returns, it's almost fifty fifty. You get a 0:08:27.040 --> 0:08:29.239 little bit more from income, a little less from price, 0:08:29.280 --> 0:08:32.160 but you get about forty five percent of the returns 0:08:32.200 --> 0:08:34.880 this year from price. And nobody was really expecting that 0:08:35.000 --> 0:08:38.320 rates have gone lower, and as a result, people have 0:08:38.400 --> 0:08:40.480 gotten more comfortable taking the race. You see a lot 0:08:40.520 --> 0:08:43.040 of money moving into long Duracian funds, a lot of 0:08:43.200 --> 0:08:46.960 money moving into high yield. People want more income when 0:08:47.040 --> 0:08:49.079 when yields are low, And I would say, yeah, the 0:08:49.120 --> 0:08:53.600 technical backdrop. We have very good demand issues remains. I 0:08:53.600 --> 0:08:56.199 would say on the low side, we're off on a 0:08:56.280 --> 0:09:00.680 year over year basis, so that dynamic does of the market. 0:09:01.280 --> 0:09:03.559 I don't want to say complacent, but certainly at least 0:09:03.559 --> 0:09:05.199 in a pretty good spot in near term and in 0:09:05.240 --> 0:09:07.840 the meantime tragy rates continue to move lower. We had 0:09:07.880 --> 0:09:10.599 a lowering two of six yesterday in the tenure to 0:09:10.760 --> 0:09:12.679 US seven right now, and that's a lower yel of 0:09:12.679 --> 0:09:15.240 the last tournament is Peter has a black rock driving 0:09:15.280 --> 0:09:17.600 the full faith and credit yield lower. We're gonna come 0:09:17.600 --> 0:09:20.240 back with. Peter has lots to talk about about taking 0:09:20.240 --> 0:09:23.320 advantage of tax free bounds, because I know Mike's got 0:09:23.320 --> 0:09:25.400 a lot of themes to talk about. Peter Hayes just 0:09:25.480 --> 0:09:29.680 quickly here the mechanics of a portfolio. Can you be 0:09:30.000 --> 0:09:35.960 too diversified in a municipal bond portfolio? I guess it 0:09:36.000 --> 0:09:38.880 depends what you're what your goals are. If they're total returns, 0:09:38.920 --> 0:09:41.880 there are income. I think our investment philosophy is the 0:09:41.920 --> 0:09:46.280 more diversification, the better take advantage of the you know, 0:09:46.280 --> 0:09:50.480 the audio syncrests syncratic nature of the market. That's how 0:09:50.480 --> 0:09:52.920 we find a lot of value finding that a rated 0:09:53.120 --> 0:09:56.400 hospital in the Midwest where we like the financials. So 0:09:56.559 --> 0:09:59.079 we think there's a huge benefit in diversification. And then 0:09:59.120 --> 0:10:01.040 sometimes you can get the is one off events that 0:10:01.960 --> 0:10:04.120 I can have a big impact in your portfolio if 0:10:04.120 --> 0:10:07.199 you're not diversified. So we we prefer diversification over not 0:10:07.360 --> 0:10:10.440 being diversified. You sort of went where I wanted to 0:10:10.440 --> 0:10:13.680 go there when you mentioned the hospital thing. I'm wondering 0:10:14.120 --> 0:10:19.840 how the whole Obama Care UH thing to describe it otherwise, 0:10:20.440 --> 0:10:25.160 uh is affects what you might want to invest in. 0:10:25.640 --> 0:10:29.920 I note that, um, the trend in hospitals has been 0:10:30.040 --> 0:10:36.040 to um, you know, to conglomerate and agglomerate whatever the 0:10:36.040 --> 0:10:38.960 word you want is roll up into one hospital. You 0:10:39.080 --> 0:10:42.160 said it exactly. That's the way that roll up. So 0:10:42.200 --> 0:10:45.600 I'm just wondering, you know, if if healthcare becomes something 0:10:46.080 --> 0:10:50.160 uh that is one way or the other more interesting. Yeah, 0:10:50.200 --> 0:10:53.800 that that's been the play really has been around consolidation. 0:10:53.880 --> 0:10:56.760 And we just saw in uh, we just saw in 0:10:56.840 --> 0:11:02.040 New Jersey merger announced yesterday between uh some health systems 0:11:02.120 --> 0:11:05.560 and going into these larger systems. Is the way that 0:11:05.760 --> 0:11:09.320 a lot of these hospitals are actually mitigating some of 0:11:09.360 --> 0:11:11.560 their risk. You know, these standalones that have a big 0:11:11.559 --> 0:11:15.360 dependence on Medicare and Medicaid obviously becomes very vulnerable, vulnerable 0:11:15.400 --> 0:11:18.199 to changes in what happens with with a c A 0:11:18.400 --> 0:11:20.079 or not happens with a c A. And a lot 0:11:20.080 --> 0:11:22.240 of it isn't only on the hospital level, it's also 0:11:22.320 --> 0:11:24.760 on the state levels. So for instance, for a state, 0:11:24.800 --> 0:11:28.120 they either opted in or opted out of a c A, 0:11:28.200 --> 0:11:31.120 depending on what they chose to do and what happens 0:11:31.160 --> 0:11:34.160 with ultimately with the health care law, that could mean 0:11:34.360 --> 0:11:37.679 that millions of unasured go back on their their roles 0:11:37.720 --> 0:11:39.360 and the question becomes what do they do with Then 0:11:39.400 --> 0:11:42.600 it usually puts additional budget pressure on the states, so 0:11:42.600 --> 0:11:45.360 there's sort of a double pronged impact. Potentially, you have 0:11:45.440 --> 0:11:48.280 to think about the impact to the hospital and healthcare 0:11:48.280 --> 0:11:50.520 sector and you think about the impact of the states 0:11:50.559 --> 0:11:52.760 as well. How do you get that knowledge? I mean, 0:11:52.800 --> 0:11:56.720 if there's u t X, Rockwellcollins, there's different government stuff 0:11:56.720 --> 0:11:58.320 and everybody has a lot of pre work. But in 0:11:58.360 --> 0:12:01.960 the Peter Hayes game of municipal bonds, how are you 0:12:02.080 --> 0:12:05.880 knowledgeable on a given hospital? Here, in a given hospital, 0:12:05.960 --> 0:12:10.079 forty miles away. It's the strength of our credit research staff, 0:12:10.120 --> 0:12:13.320 to be honest that we have a terrific team of analysts, 0:12:13.440 --> 0:12:18.000 uh that diversified by sectors. So we have healthcare analysts 0:12:18.040 --> 0:12:20.679 who's been doing it twenty plus years and and they 0:12:20.720 --> 0:12:24.880 know like four hundred hospitals. Like that healthcare analysts has 0:12:24.920 --> 0:12:30.440 tattooed to their brain the working knowledge of how many hospitals. Oh, 0:12:30.600 --> 0:12:33.640 I would say the good working knowledge of a hundred 0:12:33.679 --> 0:12:37.040 plus hospitals. And we have a staff you know that 0:12:37.160 --> 0:12:40.320 that works underneath them and helps give a lot of 0:12:40.320 --> 0:12:42.800 the financials and information so you can disseminate and make 0:12:42.840 --> 0:12:45.199 a informed decision. But we do that for each of 0:12:45.240 --> 0:12:47.559 our sectors, whether it be airports or tow orlds, or 0:12:47.600 --> 0:12:50.960 hospitals or higher ed universities, etcetera. And you know that's 0:12:51.040 --> 0:12:53.240 one of the strengths of our franchise. Michael, Should we 0:12:53.240 --> 0:13:00.520 ask about Legardi any day we're down like to a 0:13:00.559 --> 0:13:03.959 fifth World airport there right now while it's under construction, 0:13:04.160 --> 0:13:07.320 I would ask about with upside, with upside we're hoping 0:13:07.360 --> 0:13:13.600 so before tim and night before, but I would ask 0:13:14.440 --> 0:13:17.760 before we let you go about the impact of tax reform. 0:13:18.040 --> 0:13:22.520 You don't hear anything about UM changing the tax status 0:13:22.520 --> 0:13:24.920 of municipals for the most part, But I guess when 0:13:24.960 --> 0:13:28.679 you open the door, anything can happen. How concerned are 0:13:28.720 --> 0:13:33.000 you that this could impact one way or another, your uh, 0:13:33.400 --> 0:13:37.360 your portfolios. It's been radio silence. If you I'm just 0:13:37.360 --> 0:13:39.839 gonna go back a little bit. Post election, you think 0:13:39.840 --> 0:13:42.400 about the the reaction of the market, I me and 0:13:42.480 --> 0:13:44.000 you just sold off quite a bit, a lot of 0:13:44.040 --> 0:13:47.040 outflows because people thought, oh, you have a one party control, 0:13:47.040 --> 0:13:49.559 there's going to be tax re forming units could be impacted. 0:13:50.000 --> 0:13:53.120 Fast forward to now, and that seems very very unlikely. 0:13:53.160 --> 0:13:55.599 I mean when we've aside tax reformer tax cuts and 0:13:55.679 --> 0:13:58.400 that discussion for now. But when you think about the 0:13:58.480 --> 0:14:02.520 need to do infrastructure, and we've heard UM, we've heard 0:14:02.520 --> 0:14:06.439 the Secretary of Treasury UH and others, even the President 0:14:06.480 --> 0:14:09.080 himself talk about the need to push infrastructure to the 0:14:09.080 --> 0:14:11.520 states and cities actually in some respects to it more 0:14:11.559 --> 0:14:13.960 efficiently than the federal government. And what's the best place 0:14:14.000 --> 0:14:16.600 to do that the municipal bond market. So we feel 0:14:16.760 --> 0:14:19.640 very very strongly that tax retemption of municipals will not 0:14:19.680 --> 0:14:22.680 be harmed should there be any type of tax reform. 0:14:22.720 --> 0:14:24.520 Peter Harris, thank you so much of black Rock. Just 0:14:24.560 --> 0:14:39.040 a nice briefing there on that mun Buns. You know 0:14:39.120 --> 0:14:41.640 him from Kellogs, you know him as Secretary of Commerce. 0:14:42.040 --> 0:14:44.120 But what you don't know And I love how Wikipedia 0:14:44.160 --> 0:14:48.920 puts his secretary gaudierres quote, he and his family acquired 0:14:49.640 --> 0:14:55.080 United States citizenship? Could you acquire United States citizenship today? 0:14:55.400 --> 0:14:59.040 Given the move from Cuba to Mexico to the United States, 0:14:59.160 --> 0:15:01.440 could you get a could you become a US citizen? 0:15:01.680 --> 0:15:07.760 Today's secretary Goodier's? Uh? Well today, Actually with the new law, 0:15:08.480 --> 0:15:11.920 I suppose the right word should have been obtained. But 0:15:12.280 --> 0:15:15.640 with the new uh, the elimination of wet foot, dry 0:15:15.680 --> 0:15:23.280 foot uh, refugees from Cuba don't obtain instant UH rights 0:15:23.400 --> 0:15:26.240 to stay in the US. So no, I probably couldn't 0:15:26.240 --> 0:15:29.600 have come over. I mean the things that your thoughts. 0:15:29.640 --> 0:15:32.280 You and I had an historic interview X number of 0:15:32.360 --> 0:15:34.720 years ago when Ted Kennedy and Orange Hatch tried to 0:15:34.760 --> 0:15:38.120 do uh, tried to do something on immigration. Have we 0:15:38.200 --> 0:15:42.920 learned anything since Kennedy Hatch, boy, we you know, we've 0:15:43.000 --> 0:15:46.120 learned that there's nothing easy about this, that it is 0:15:46.200 --> 0:15:51.280 so easy to kill this bill. It is so Uh, 0:15:51.320 --> 0:15:54.840 it is so easy to make it more complex. Uh 0:15:54.960 --> 0:15:57.600 it is. You know, the bill we had in two 0:15:57.640 --> 0:16:01.320 thousand six was seven hundred pages long, and I was 0:16:01.360 --> 0:16:04.480 just hearing someone yesterday saying, look, you need a couple 0:16:04.520 --> 0:16:08.480 of sentences to put the DOCCA into law. No DOCCA 0:16:08.520 --> 0:16:12.520 will probably turn into, you know, a long document. So 0:16:13.120 --> 0:16:16.040 it is a complex process. I think we've learned a lot. 0:16:16.080 --> 0:16:17.800 I think one of the things we have learned is 0:16:17.840 --> 0:16:21.680 to focus, uh, not try to get everything done all 0:16:21.720 --> 0:16:26.120 at once. And that's why I'm optimistic about this process 0:16:26.160 --> 0:16:29.040 that immigration reform will be focused on one thing, and 0:16:29.080 --> 0:16:32.880 that's the Dream Act. Well, pushback against the argument that 0:16:32.920 --> 0:16:37.120 the administration makes that the United States is a nation 0:16:37.120 --> 0:16:41.720 of laws and you cannot make policy based on executive orders. 0:16:41.800 --> 0:16:45.840 You need Congress to pass the law. And certainly the 0:16:47.080 --> 0:16:51.520 right wing Republican argument that the Dreamers are breaking the 0:16:51.600 --> 0:16:56.920 law and letting them stay is amnesty. Yeah. I mean, 0:16:57.040 --> 0:17:00.760 I think that's a very very unfortunate point of view. Uh, 0:17:00.800 --> 0:17:03.560 you know, sort of time to step back and and 0:17:03.600 --> 0:17:06.800 look at the big picture. The reason we have so 0:17:07.040 --> 0:17:12.680 many undocumented people in the country is that our laws 0:17:13.000 --> 0:17:18.080 don't serve the economy. So our economy, our laws don't 0:17:18.119 --> 0:17:21.840 provide a legal way to bring in the workers we 0:17:21.920 --> 0:17:25.280 need to grow our businesses. So you have a couple 0:17:25.320 --> 0:17:30.520 of choices, go out of business or hire someone undocumented. Um. 0:17:30.560 --> 0:17:33.280 And that's very unfortunate that we put businesses in those 0:17:33.400 --> 0:17:35.840 in those positions. There are some some businesses that are 0:17:35.840 --> 0:17:38.480 actually farms that have gone to Mexico, and R and 0:17:38.560 --> 0:17:40.720 D centers that have gone to Canada. And that that's 0:17:40.760 --> 0:17:43.760 the one thing that is, that's the one insight that 0:17:43.800 --> 0:17:47.080 I don't hear enough of the problem with our immigration 0:17:47.160 --> 0:17:51.480 system is our laws. And until we fix them, until 0:17:51.560 --> 0:17:54.639 Congress does its job, we're going to continue to have 0:17:54.760 --> 0:17:58.800 this problem. No matter how tall and beautiful the wall is. 0:17:58.880 --> 0:18:02.080 It is the President in a way doing the right thing, 0:18:02.119 --> 0:18:05.159 demanding a vote from Congress. Well, you know, it's an 0:18:05.160 --> 0:18:08.439 interesting question because I think this is sort of the 0:18:08.480 --> 0:18:12.040 second best thing. Uh and and maybe this is the 0:18:12.119 --> 0:18:17.360 way to codify the Dream Act into law and uh 0:18:17.400 --> 0:18:21.120 and do it the right way. So actually the President 0:18:21.320 --> 0:18:26.200 has given this six months of life. Um and I 0:18:26.240 --> 0:18:29.119 think I think Congress can do it. You've got people 0:18:29.160 --> 0:18:32.640 like Lindsey Graham whore behind it. Paul Ryan. There are 0:18:32.760 --> 0:18:36.840 people who want this done. People want this done. Carlo's 0:18:36.840 --> 0:18:38.800 goodyear is if I go up to Battle Creek, Michigan, 0:18:38.840 --> 0:18:42.199 an important state in the election tally was Mr Trump 0:18:43.880 --> 0:18:48.720 Secretary Clinton. There's a lot of supporters of this president 0:18:48.960 --> 0:18:53.000 worried about the bad Carlos Goodiers instead of the good 0:18:53.000 --> 0:18:56.240 Carlos Goodiers that we all know. What do you say 0:18:56.240 --> 0:19:00.760 to the people of Battle Creek who genuinely there is 0:19:00.800 --> 0:19:05.119 a changed America and they don't like it. Yeah, you know, 0:19:05.160 --> 0:19:07.840 And I on the one hand, I understand that, and 0:19:08.760 --> 0:19:11.600 I think we need to understand each other's positions. But 0:19:12.200 --> 0:19:15.800 we have to realize that that that sense that people 0:19:15.800 --> 0:19:18.680 are coming in and they're changing the look of the country, 0:19:18.760 --> 0:19:20.719 and they're going to change our culture, and they're going 0:19:20.760 --> 0:19:24.040 to change our values. But we've been talking about that, 0:19:24.320 --> 0:19:29.080 uh for for centuries, and with each new immigrant group 0:19:29.119 --> 0:19:31.159 we get more and more nervous. We've had the N 0:19:31.840 --> 0:19:34.399 four we cut off immigration because it was you know, 0:19:35.000 --> 0:19:38.080 we were getting to or at least we reduced it dramatically. 0:19:38.160 --> 0:19:41.480 So what we're going through today we've gone through before. 0:19:42.000 --> 0:19:46.360 The one thing we have learned is that immigrants become Americans. 0:19:46.880 --> 0:19:51.280 America changes immigrants, it's not the opposite. That's why we're 0:19:51.320 --> 0:19:54.160 so great at this, and that's why we're the greatest 0:19:54.200 --> 0:19:58.120 country in the world. People come here and they become Americans. 0:19:58.160 --> 0:20:01.480 We shouldn't worry about that. We've had enough experience with it. 0:20:02.359 --> 0:20:05.960 What would you, uh, how would you want Congress to proceed? 0:20:05.960 --> 0:20:07.639 Should they just pass a law of say, the eight 0:20:07.680 --> 0:20:10.719 hundred people who are here can stay, we'll give them 0:20:10.720 --> 0:20:14.399 work permits and basically codify the Executive order. Or do 0:20:14.480 --> 0:20:19.560 we need a much broader reform of immigration laws? Well, 0:20:19.600 --> 0:20:22.400 eventually we do. Eventually we do need a much broader, 0:20:22.440 --> 0:20:26.240 broader reform. Um for right now, I would say focus 0:20:26.280 --> 0:20:30.800 on the Dream Act because the broader comprehensive reform is 0:20:30.880 --> 0:20:35.240 so complex and I'm not sure that can be done 0:20:35.240 --> 0:20:39.560 in six months. But the Dream Act, just that one 0:20:39.600 --> 0:20:41.879 piece of it I think can be done. So I 0:20:41.880 --> 0:20:44.440 would urge them to focus on Dream Act. But then 0:20:44.480 --> 0:20:47.480 eventually we've got to get to broader reform. If not, 0:20:47.600 --> 0:20:52.040 we're going to continue having illegal workers or we're going 0:20:52.080 --> 0:20:55.639 to have a declining economy. Let's do one question in business, 0:20:55.680 --> 0:20:57.800 if we could, Secretary Good of yours and this is 0:20:57.840 --> 0:21:01.440 the idea of Amazon with key News. They all established 0:21:01.440 --> 0:21:04.480 in Staten Island, New York, the first New York fulfillment 0:21:04.920 --> 0:21:09.160 center two thousand, two hundred and fifty quote Newcomma. Full 0:21:09.200 --> 0:21:14.080 time jobs for employees will be created. I guess Amazon's 0:21:14.160 --> 0:21:18.240 creative destruction. I guess I can buy corn flakes through Amazon. 0:21:19.000 --> 0:21:21.680 Where are we now in bricks and mortar America? Where 0:21:21.680 --> 0:21:26.520 are we in retail or conventional cereal eating America? It's 0:21:26.520 --> 0:21:30.520 all changing, isn't it. Yeah, they'll be retailing is going 0:21:30.520 --> 0:21:34.720 through a major transformation. Um. You know, speaking of Battle Creek, 0:21:35.400 --> 0:21:37.479 I was hearing about the mall and Battle Creek. It's 0:21:37.520 --> 0:21:40.560 just it's a very different place. Uh. You know for 0:21:40.720 --> 0:21:43.080 people that who are in the package goods industry, who 0:21:43.080 --> 0:21:46.760 are selling through grocery stores. Uh. This really comes down 0:21:46.800 --> 0:21:49.560 to the importance of the brand, because I would assume 0:21:49.600 --> 0:21:55.480 that whole Foods will be selling whole food cereal um. 0:21:55.520 --> 0:21:59.200 And then it comes down to brand versus brand. So 0:21:59.440 --> 0:22:05.600 if any thing, brands are more, uh are more important 0:22:05.640 --> 0:22:10.320 than ever. But you do have a totally new distribution 0:22:10.840 --> 0:22:13.679 um set up, and companies are going to have to 0:22:13.720 --> 0:22:16.880 adjust to that. There's there's no way around it, and 0:22:17.160 --> 0:22:20.600 I think every package food company in the country is 0:22:20.640 --> 0:22:25.680 looking at ways of digitizing their distribution and getting getting 0:22:25.680 --> 0:22:28.320 in line with where the trends are going. You have 0:22:28.359 --> 0:22:30.480 to go over in corn flax. Carlos Goodiers, thank you 0:22:30.560 --> 0:22:34.159 so much, particularly for your continued comments to us on 0:22:34.400 --> 0:22:38.600 America and immigration. He's a former Secretary of Commerce of 0:22:38.640 --> 0:22:41.760 the United States. Always good Michael to speak to Mr Goodyears. 0:22:41.800 --> 0:22:56.240 He clears the air. This is a joy. Keathy Fisher, 0:22:56.840 --> 0:22:59.640 is that a story career in Wall Street? Including that 0:23:00.040 --> 0:23:04.200 gonna have jobs doing security analysis on banks? She did 0:23:04.200 --> 0:23:06.879 that at Morgan Stanley a few years that aged you 0:23:06.920 --> 0:23:10.800 didn't it? Doing bank every every ninety days? Is uh? 0:23:11.000 --> 0:23:13.480 I mean Brad Hands at Bernstein knows that every ninety 0:23:13.520 --> 0:23:16.000 days is a miracle to see if you can even 0:23:16.000 --> 0:23:19.359 get close to right. Kathy, put the microphone somewhat nearer you. 0:23:19.440 --> 0:23:22.119 It's your first time on radio. I know. Um. I 0:23:22.160 --> 0:23:23.840 want to rip up the script here first. I want 0:23:23.840 --> 0:23:27.200