WEBVTT - Surveillance: Fed's Bostic Doesn't Foresee Rate Hike 0:00:00.080 --> 0:00:12.960 Yeah, Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane 0:00:13.480 --> 0:00:17.560 Jay Ley. We bring you insight from the best in economics, finance, investment, 0:00:18.000 --> 0:00:23.480 and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, 0:00:23.600 --> 0:00:30.560 Bloomberg dot Com, and of course on the Bloomberg. Jonathan 0:00:30.600 --> 0:00:33.920 Gollub was the Credit Squeeze. Of course, as great notoriety 0:00:33.960 --> 0:00:38.520 as I've never heard him say, go to cash. John 0:00:38.560 --> 0:00:41.199 Gollub joins, us are we are? How distant are we 0:00:41.280 --> 0:00:44.600 from go to cash? Well, Tom, don't They will be 0:00:44.640 --> 0:00:46.279 a time when I get on hair and say that, 0:00:46.320 --> 0:00:51.000 And it's not. Let's listen to the likelihood of having 0:00:51.479 --> 0:00:56.120 a recession unless something catastrophic shows up tomorrow is super 0:00:56.200 --> 0:00:58.760 low that the financial risk is is weeks and no, 0:00:58.880 --> 0:01:00.720 I think I think everything's great. Go back with credit 0:01:00.720 --> 0:01:02.720 Swiss research. This is off d l J and the 0:01:02.720 --> 0:01:06.320 merger with credit years ago. Tom Gelvan's great research price 0:01:06.400 --> 0:01:09.440 to sales. I think of Mark Flannery, who was iconic 0:01:09.480 --> 0:01:14.120 in oil, the Excel spreadsheety of your shop. How do 0:01:14.160 --> 0:01:17.320 you fold the business data that you see now in 0:01:17.360 --> 0:01:20.640 America into what we just heard on the trade war? 0:01:22.040 --> 0:01:25.000 You know, I don't think they reconcile. And what I 0:01:25.000 --> 0:01:27.399 mean by that is is it when, when, if, if 0:01:27.440 --> 0:01:30.120 this trade stuff gets sloppy, it's going to hit the 0:01:30.160 --> 0:01:33.480 PE multiple the valuations we put on stocks, not on 0:01:33.520 --> 0:01:36.440 the underlying earnings, or if it's gonna hit earnings, take that. 0:01:37.120 --> 0:01:39.800 How do you you tell me it's all numerator based. 0:01:40.720 --> 0:01:43.200 If the PE modiple comes in, it's all numerator based 0:01:43.400 --> 0:01:46.319 and on the dominator earnings, on on the stuff related 0:01:46.319 --> 0:01:49.200 to trade. Absolutely this right, right this minute. This is 0:01:49.240 --> 0:01:52.600 a sentiment issue that this is going to create. I mean, 0:01:52.640 --> 0:01:54.200 what is a concern that all of a sudden the 0:01:54.240 --> 0:01:57.440 consumer sees this, they stop spending because they get concerned 0:01:57.440 --> 0:02:01.280 about the economy and their jobs. Businesses get concerned because 0:02:01.320 --> 0:02:03.040 they don't know how to spend money, and they don't 0:02:03.040 --> 0:02:05.400 know whether they deal with the future. And and mind 0:02:05.440 --> 0:02:09.040 you those might be there, but right now, in terms 0:02:09.040 --> 0:02:12.359 of actual basis points of earnings, very very little, John, 0:02:12.440 --> 0:02:14.000 You came out with a note you and the same 0:02:14.040 --> 0:02:16.840 I've a credit swats very recently and understanding got a 0:02:16.840 --> 0:02:18.760 bit of pushback, So won't me through it? The case 0:02:19.240 --> 0:02:25.360 for much higher valuations, make the case for much higher valuations, well, funny. 0:02:25.400 --> 0:02:27.640 It's a funny thing is is the second you put 0:02:27.639 --> 0:02:29.680 a piece like like that, you get pushed back from 0:02:29.680 --> 0:02:32.240 all the time this. Yeah, I mean, here's here's the 0:02:32.240 --> 0:02:35.639 bottom line. Businesses in the United States have gone what 0:02:35.680 --> 0:02:39.600 I call capital light. They've gone towards services, they've outsourced 0:02:39.639 --> 0:02:43.720 production overseas, They've are they're running their businesses with much 0:02:43.840 --> 0:02:47.440 less capital and the result is that they are returning 0:02:47.560 --> 0:02:51.000 more of their cash flows back to shareholders in the 0:02:51.040 --> 0:02:54.239 form of dividends and buy backs. When we think about 0:02:54.320 --> 0:02:58.320 a piece multiple on stocks, the reason we use earnings 0:02:58.360 --> 0:03:01.880 is because it's a proxy for the cash flows of 0:03:01.880 --> 0:03:05.200 the company over time. But if the businesses are generating 0:03:05.200 --> 0:03:08.640 more cash flow per dollar earnings, then the stock is 0:03:08.680 --> 0:03:11.880 worth more than it has historically. UM. Just to put 0:03:11.919 --> 0:03:18.040 in perspective, UM, right now PSU are about fift above 0:03:18.280 --> 0:03:22.160 long term averages, but the price to cash flow is 0:03:23.360 --> 0:03:26.240 below its long term averages. That's a huge difference. So 0:03:26.280 --> 0:03:29.000 the immediate question you'll get asked, I'm sure, is that, okay, 0:03:29.000 --> 0:03:31.320 this is the index level. Stories it won't sect the 0:03:31.400 --> 0:03:33.359 scuming get or is it across the board? Lift the 0:03:33.400 --> 0:03:35.760 lid on the index floor us, what's happening beneath the 0:03:35.800 --> 0:03:37.840 su Yeah, and that's that's a that's a great question. 0:03:37.920 --> 0:03:39.840 And I think that there's two stories here. The first 0:03:39.960 --> 0:03:44.320 is that tech companies are so much more cash flow rich, 0:03:44.400 --> 0:03:48.360 their margins are so much higher that as the market 0:03:48.600 --> 0:03:52.120 becomes more tech dominated, the cash flow generation for the 0:03:52.160 --> 0:03:56.520 whole market is lifted up about fifty five of the 0:03:56.680 --> 0:03:59.400 of the benefit is the fact that the SMP today 0:03:59.440 --> 0:04:03.040 does not look d SMP of a decade ago. Is 0:04:03.200 --> 0:04:06.480 individual companies literally doing something different today than they did 0:04:06.480 --> 0:04:09.200 ten years ago, And so it's it's a mix of both. 0:04:09.360 --> 0:04:11.680 You're you're very Mathew. Today is this because there was 0:04:11.720 --> 0:04:14.120 no English football this weekend the walls there was the 0:04:14.160 --> 0:04:18.120 f A Cup final. While we're pivoting to small because 0:04:20.279 --> 0:04:24.880 Jonathan this, Mathew, the SMP is not what it was 0:04:25.000 --> 0:04:27.520 ten years ago. I mean, we get that with Amazon 0:04:27.680 --> 0:04:31.000 and Apple and the others expand on that. Well, just 0:04:31.160 --> 0:04:32.719 just say, Tom, you and I on on the TV 0:04:32.800 --> 0:04:36.080 show before this, we're talking about the consumer discretionary space. 0:04:36.200 --> 0:04:39.240 Just think about what a retailer is today and how 0:04:39.360 --> 0:04:42.840 we purchase things. Think about the margins that we go 0:04:43.000 --> 0:04:46.440 to Amazon, right, and the and the margin potential there, 0:04:46.480 --> 0:04:50.000 The growth potential there is just much great. The efficiencies 0:04:50.360 --> 0:04:53.600 of the business models are are greater there, and that's 0:04:53.640 --> 0:04:57.279 really what's changing. And frankly, even companies you're talking about before, 0:04:57.440 --> 0:05:00.760 even businesses in old sect or is the you know 0:05:00.960 --> 0:05:06.039 in airlines and autos are using technology better. They're outsourcing 0:05:06.320 --> 0:05:10.080 to oversee suppliers um in ways that that allow them 0:05:10.120 --> 0:05:12.239 to generate more cash well for a dollar or sale. 0:05:12.480 --> 0:05:14.440 Jonathan Golla, Great to have you with us, is monic. 0:05:14.600 --> 0:05:30.440 Appreciate your time. Shan Ali bask with us now on finance. 0:05:30.520 --> 0:05:33.160 But there's only one finance story that matters, and that's 0:05:33.240 --> 0:05:36.440 Deutsche Bank. Has been an ongoing story of Bloomberg reporting 0:05:36.480 --> 0:05:39.480 and many other shops. The New York Times this weekend 0:05:39.600 --> 0:05:42.640 crushes Deutsche Bank, where they sort of knew what was 0:05:42.720 --> 0:05:46.560 going on and they didn't do it with an updation. 0:05:47.480 --> 0:05:50.440 How will the regulators in the United States, How will 0:05:50.480 --> 0:05:53.520 the regulators in Germany react to what The New York 0:05:53.560 --> 0:05:56.040 Times reported this weekend? What's a big deal about the 0:05:56.040 --> 0:05:58.000 New York Times story? As they said, yes, they saw 0:05:58.040 --> 0:06:01.920 suspicious activity, but they did not file suspicious activity reports 0:06:02.000 --> 0:06:04.560 to the Treasury depart what's the history of regulators in 0:06:04.640 --> 0:06:08.360 America on that kind of printed journalism, if you will. 0:06:08.520 --> 0:06:12.120 They're they're tough on it, right, I mean, and they 0:06:12.200 --> 0:06:14.480 also I mean it's not even just people familiar. They 0:06:14.520 --> 0:06:17.040 had somebody on the record exactly the division over the 0:06:17.120 --> 0:06:20.200 weekend that was pretty staggerant. So what happens today? I mean, 0:06:20.240 --> 0:06:22.640 if somebody die, they go, okay, wait till Monday, they 0:06:22.680 --> 0:06:25.480 pick up the phone and they say that's it. Or 0:06:25.560 --> 0:06:28.240 do they lecture the German regulators? I mean, what's the 0:06:28.440 --> 0:06:33.000 history of our US regulators deal with what's in the 0:06:33.080 --> 0:06:37.279 New York Times when some Senator or some congressman sees it. Frankly, 0:06:37.360 --> 0:06:40.200 progress is very, very very slow, and you know, the 0:06:40.320 --> 0:06:42.160 U s could probably be better at working with their 0:06:42.200 --> 0:06:45.320 international counterparts. But you know, you've got to be sure 0:06:45.400 --> 0:06:46.920 that when it comes to a bank of the scale 0:06:46.960 --> 0:06:49.080 that they are talking to each other. The dons can 0:06:49.160 --> 0:06:51.240 matter that one of the biggest money laundering scanals of 0:06:51.320 --> 0:06:55.040 all separate from this report. From this report, that's another 0:06:55.080 --> 0:06:58.160 issue that our own reporting also showed that they also 0:06:58.200 --> 0:07:01.039 didn't file suspicious activity report. It's when it in regard 0:07:01.120 --> 0:07:04.560 to when they found it. Jackson did you see this 0:07:04.680 --> 0:07:07.160 this weekend, John, you were standing outside Glossier trying to 0:07:07.200 --> 0:07:10.640 get in. But um, but you know still you see that, 0:07:10.800 --> 0:07:13.720 I know you see this article. You see this article 0:07:13.840 --> 0:07:17.240 and you go, Okay, when is enough enough? What did 0:07:17.360 --> 0:07:20.400 you think is the story was advanced by the Times. 0:07:20.720 --> 0:07:23.080 The biggest piece of the story for me was, I mean, 0:07:23.120 --> 0:07:25.120 this comes in the middle of subpoenas by the House 0:07:25.160 --> 0:07:28.600 Financial Service Committee looking for more information about Donald Trump 0:07:28.640 --> 0:07:30.840 and its relationship to Deeutge Bank. And then on top 0:07:30.920 --> 0:07:34.400 of that, some of this was found as early as seventeen, 0:07:34.720 --> 0:07:37.080 which is definitely. Um. You know, there are a lot 0:07:37.120 --> 0:07:39.160 of the same people working at Deutsche Bank now that 0:07:39.240 --> 0:07:41.520 there were then, So you can't keep on blaming the 0:07:41.600 --> 0:07:44.280 past when when some of the stuff was happening so soon. 0:07:44.440 --> 0:07:47.560 The ubs kind in the stock this morning. Pretty aggressive 0:07:47.600 --> 0:07:50.400 price target. I guess that would have been aggressive many 0:07:50.480 --> 0:07:53.560 years ago at five seventy now seemingly set to bright 0:07:53.600 --> 0:07:56.200 six where it's six sixty five right now, So ups 0:07:56.480 --> 0:08:00.760 with the second lowest price target on the street, five seventy. 0:08:01.280 --> 0:08:03.560 Want me through the problems outside of the politics, Shinnale, 0:08:03.800 --> 0:08:05.760 It is not looking good right now. Right we were 0:08:05.800 --> 0:08:08.120 just talking about some of the regulatory issues. But let's 0:08:08.160 --> 0:08:10.240 talk about how they have an annual meeting coming up 0:08:10.640 --> 0:08:13.440 just on Thursday, and how some people are very much 0:08:13.440 --> 0:08:16.040 against the current management, very much against the board, and 0:08:16.120 --> 0:08:18.160 so it might get pretty contentious. We have a story 0:08:18.200 --> 0:08:21.120 out this morning saying black Rock has outsourced um its 0:08:21.160 --> 0:08:25.760 decision making to another firm. That it means that no 0:08:25.880 --> 0:08:28.280 matter what happens, black Rock wants to say put their 0:08:28.280 --> 0:08:30.160 hands back and say we did the best possible thing 0:08:30.200 --> 0:08:33.200 for our shareholders and got independent advice as well. Uh. 0:08:33.280 --> 0:08:35.800 The Deutsche Bank stories a complicated one, right, because there 0:08:36.000 --> 0:08:39.240 is not a really clear future ahead. Um, do you 0:08:39.320 --> 0:08:41.200 have the same people at the top of the helm 0:08:41.240 --> 0:08:43.240 who have been there forever, who know where all the 0:08:43.280 --> 0:08:45.640 bodies are buried, or do you have somebody else come 0:08:45.679 --> 0:08:48.280 in and carve a new, more aggressive future for this bank. 0:08:48.400 --> 0:08:51.520 So we're talking potentially a leadership change again at Deutsche Bank. 0:08:51.600 --> 0:08:53.199 Rage right, that that's a question if there was a 0:08:53.240 --> 0:08:56.640 leadership change again, that how do you create a new strategy? 0:08:56.720 --> 0:09:00.760 Takes the years to implementage new strategy. Also, You're favorite question, Tom, 0:09:00.840 --> 0:09:02.839 is anyone going to ever buy Deutsche Bank? If you 0:09:02.920 --> 0:09:04.840 buy Deutsche bank, you have to buy all their legal 0:09:04.920 --> 0:09:09.040 problems also, and so who's going to inherit firm? Where 0:09:09.240 --> 0:09:13.160 the trajectory is on the decline with mounting legal I 0:09:13.280 --> 0:09:15.960 took a long term trend study today from two thousand 0:09:16.080 --> 0:09:19.760 seven and two standard deviations, which is a hugely rare 0:09:19.800 --> 0:09:23.800 event for any bank, including Deutsche Bank. Is six point 0:09:23.960 --> 0:09:27.680 one zero euros per share? Where right now at six 0:09:27.800 --> 0:09:30.120 point six four. Folks, all you need to know is 0:09:30.160 --> 0:09:32.040 that's a lot closer than it was a week or 0:09:32.080 --> 0:09:35.240 two weeks ago. Is there a tip point in share 0:09:35.360 --> 0:09:38.920 price where all this dialogue changes. It's funny. I feel like, um, 0:09:39.000 --> 0:09:40.880 you know, we've talked about this every other week and 0:09:41.000 --> 0:09:48.320 it doesn't seem nine exactly. I'll keep going lower. You don't. 0:09:48.920 --> 0:09:52.079 You don't have any single point like the three digits. 0:09:52.800 --> 0:09:54.720 I have no crystal ball for you on that one. 0:09:54.760 --> 0:09:56.240 Where are we up? We're giving an update on the 0:09:56.280 --> 0:09:58.320 rest of the American banking I mean we're shaping up 0:09:58.360 --> 0:10:01.040 this may we get into on where everybody takes eight 0:10:01.080 --> 0:10:03.679 weeks of vacation, like John Farrell, we come back, we 0:10:03.760 --> 0:10:06.640 do the business plan for how are the American banks 0:10:06.679 --> 0:10:09.920 doing right now? You know, big question Mark right. I mean, 0:10:09.960 --> 0:10:11.720 there's some things that are kind of propping things up 0:10:11.800 --> 0:10:13.520 at the I p O market being one of them. 0:10:13.600 --> 0:10:16.400 But after Uber being so shaky last week, we're going 0:10:16.440 --> 0:10:18.240 to see how these next big ones come to market, 0:10:18.280 --> 0:10:20.280 and that's kind of propping up a lot of activity 0:10:20.720 --> 0:10:23.280 right now. Um, But the question is it village just 0:10:23.320 --> 0:10:25.680 depends on how the markets hold up and whether people 0:10:25.880 --> 0:10:29.400 want to trade or stand the sideline or with business 0:10:29.559 --> 0:10:32.560 in business loans like confidence was the theme last week? 0:10:32.640 --> 0:10:36.400 Do they the loans flat? We got to thank sal 0:10:38.080 --> 0:10:53.679 bloom Bag Investment Banking Report. And now, folks, someone we 0:10:53.760 --> 0:10:57.240 don't speak to nearly enough, one of our truly most 0:10:57.440 --> 0:11:02.360 pression viewers of American politics, William Schneider. You know Bill 0:11:02.400 --> 0:11:05.360 Schneider from CNN over the years now at George Mason 0:11:05.840 --> 0:11:13.120 and his exceptionally direct book standoff, How America Became Ungovernable 0:11:13.920 --> 0:11:17.000 was out a year ago, it was true, it was 0:11:17.080 --> 0:11:19.760 out now, it's true, and in a year from now 0:11:19.920 --> 0:11:22.719 it will still be true. Bill Schneider, How big is 0:11:22.760 --> 0:11:26.760 the standoff right now? May two thousand and nineteen. It's 0:11:26.800 --> 0:11:29.800 getting bigger and bigger. They're about to take legal action 0:11:29.840 --> 0:11:34.319 between the President and Congress. The president Trump essentially won't 0:11:34.360 --> 0:11:38.080 respond to Congress. Uh, he's attacked yet high, he's attacked 0:11:38.120 --> 0:11:41.640 the CIA. Nothing gets done. It's gridlock. What you were 0:11:41.720 --> 0:11:43.880 great at, the charm of you and Gurgen going at 0:11:43.920 --> 0:11:45.560 it and the others as well, and seen and years 0:11:45.600 --> 0:11:50.480 ago is parsing in always fractious Democratic Party. We had 0:11:50.559 --> 0:11:53.800 the royal years of the Clintons, maybe onto the Obamas, 0:11:54.080 --> 0:11:57.720 and we are back to the fractional tone of a Democrat. 0:11:57.880 --> 0:12:02.240 Synthesize that for us right now. Well, let me say this. 0:12:02.400 --> 0:12:05.760 I'm old enough to know when the Democrats was actually 0:12:05.840 --> 0:12:10.080 worse over civil rights, over the Vietnam War, started writing 0:12:10.120 --> 0:12:13.000 in the streets of a Democratic convention. It's not good 0:12:13.120 --> 0:12:15.880 now because look what have we got twenty four Democrats 0:12:16.000 --> 0:12:19.360 running from president. But they're not in open warfare against 0:12:19.440 --> 0:12:22.960 each other. There's a division between the front runner, Joe Biden, 0:12:23.040 --> 0:12:25.360 and a lot of the progressive Democrats. But that's something 0:12:25.440 --> 0:12:27.480 we've seen in the Democratic Party for a long time. 0:12:27.559 --> 0:12:30.720 And then hot civil rights are Vietnam. But how does 0:12:30.920 --> 0:12:34.800 that play out? The certitude of Biden out front? How 0:12:34.840 --> 0:12:38.840 does that play right now? Well, Biden is out front, 0:12:39.040 --> 0:12:41.199 He's a familiar figure, and I think there is a 0:12:41.320 --> 0:12:45.480 reason for it. Biden offers voters something they're longing for 0:12:45.760 --> 0:12:49.800 that they're not getting from President Trump. In one word, normalcy. 0:12:50.440 --> 0:12:53.360 Normalcy sounds kind of boring. It's not a very exciting thing. 0:12:53.679 --> 0:12:56.319 Democrats like to fall in love with John Kennedy and 0:12:56.400 --> 0:12:59.559 Bill Clinton and Barack Obama, someone who sweeped them off 0:12:59.559 --> 0:13:02.440 their feet. But I think after Donald Trump, what they 0:13:02.480 --> 0:13:04.960 may what they may want is not a great lover, 0:13:05.400 --> 0:13:07.880 but a good provider. And that's the way Joe Biden 0:13:08.000 --> 0:13:11.840 is running. Well, Bill, didn't the electorate tell us seen 0:13:11.880 --> 0:13:14.520 that that's not what the American people want, That they 0:13:14.600 --> 0:13:19.160 want something radically different, And doesn't that not play into 0:13:19.360 --> 0:13:23.559 Mr Biden's hands? Uh, Well, that was in sixteen, that 0:13:23.679 --> 0:13:26.880 was two years ago. Things change. I think what's happened 0:13:26.960 --> 0:13:30.000 is there's a lot of Trump fatigue setting in. Uh. 0:13:30.120 --> 0:13:35.560 He's chaotic, he's disruptive. Every day we hear new shocks, firings, 0:13:35.840 --> 0:13:41.600 sudden policy reversals, insulting tweets, blaydon lies, angry threats. People 0:13:41.640 --> 0:13:44.720 are really getting tired of that. And that's why Biden 0:13:44.760 --> 0:13:47.719 looks attractive. He looks you know, he is old. He 0:13:47.760 --> 0:13:51.080 would be the oldest president ever elected for the first time. Uh. 0:13:51.440 --> 0:13:53.800 But he looks like a return to normalcy, and to 0:13:53.880 --> 0:13:56.560 an awful lot of voters that's exactly what they want. 0:13:56.880 --> 0:13:59.400 We can talk to William Snyder about old. How do 0:13:59.480 --> 0:14:03.440 you think old will play in the campaign? Bill Schnyder, Well, 0:14:04.400 --> 0:14:07.560 it's going to be interesting because the top two Democrats 0:14:07.600 --> 0:14:09.320 in the field of what do we now have twenty 0:14:09.360 --> 0:14:13.199 four with the mayor di Blasio getting in Oh my god. Um, 0:14:13.960 --> 0:14:16.679 But age doesn't seem to be a big issue at 0:14:16.720 --> 0:14:20.720 this point. My guess is that in the primary process, 0:14:20.880 --> 0:14:23.120 when we see a lot of candidates drop out, the 0:14:23.240 --> 0:14:27.960 race could very well end up between two sep two Gendarians. 0:14:28.520 --> 0:14:30.960 There would be Joe Biden, who next year will be 0:14:31.280 --> 0:14:35.040 seventy seven and Bernie Sanders, who will be seventy eight 0:14:35.440 --> 0:14:40.760 and represents a constituency that wants revenge because they figured 0:14:41.160 --> 0:14:44.240 he was treated badly by the Democratic establishment. So we 0:14:44.280 --> 0:14:48.120 could see and I call it a steel cage deathmatch 0:14:48.960 --> 0:14:53.000 two dies in their late seventies. Interesting. He's joining US 0:14:53.040 --> 0:14:55.320 Coast Coast williams Center. Bill Snyder with us, you know 0:14:55.560 --> 0:14:59.760 for years with his excellence in driving the American discourse forward. 0:14:59.800 --> 0:15:02.560 It's see that his book is Standoff Paul, So Bill, 0:15:02.640 --> 0:15:05.080 how about some of the more progressive members of the 0:15:05.120 --> 0:15:07.360 Democratic Party that are in the race, whether it's Senator 0:15:07.440 --> 0:15:09.800 Warren or or someone else, how do you think they 0:15:09.840 --> 0:15:12.520 are going to fare during the primary season? And do 0:15:12.600 --> 0:15:15.560 you think any one of those types of candidates I 0:15:15.680 --> 0:15:18.600 eat not a centrist, could in fact go up against 0:15:18.880 --> 0:15:22.200 Mr Trump. Well, I think the likeliest candidate to do 0:15:22.320 --> 0:15:25.520 that would be Bernie Sanders. He's got a following. They're 0:15:25.560 --> 0:15:27.720 angry because they feel as if they were cheated out 0:15:27.720 --> 0:15:31.480 of the nomination and the Democratic establishment wasn't very nice 0:15:31.520 --> 0:15:35.200 to them. Uh, there were revelations of the emails from 0:15:35.200 --> 0:15:38.200 the Democratic National Committee. They want revenge and that's a 0:15:38.280 --> 0:15:41.560 powerful motive in politics. That's why I say it's going 0:15:41.640 --> 0:15:44.440 to be as a standoff at the end between Biden 0:15:44.600 --> 0:15:47.760 and Sanders. And my guess is that Biden will win, 0:15:47.920 --> 0:15:51.960 although it wouldn't surprise me if Sanders wont He Sanders 0:15:52.160 --> 0:15:54.840 look right now, he's running ahead of Trump. Uh, you 0:15:54.920 --> 0:15:57.360 can't say he's unelectable, but he would be a very 0:15:57.440 --> 0:16:00.480 unusual candidate for the Democrats to nominate. So Bill. Let's 0:16:00.520 --> 0:16:04.240 assume that former Vice President Biden does win the Democratic nomination. 0:16:04.680 --> 0:16:06.480 Can he close? How do you think he will run 0:16:06.480 --> 0:16:11.000 against President Trump? Well, he's already running against President Trump. 0:16:11.040 --> 0:16:13.520 And a lot of Democrats were scratching their heads. They're saying, 0:16:13.640 --> 0:16:16.800 what he already thinks he's the nominee. Well, that's his strategy. 0:16:17.080 --> 0:16:20.840 He wants to make the point he can beat Donald Trump. 0:16:21.360 --> 0:16:23.240 And there are lots of polls of the elector that 0:16:23.320 --> 0:16:26.160 suggests that might be possible. Because in the polls that 0:16:26.240 --> 0:16:28.920 I saw, something interesting is happening. People are saying what 0:16:29.040 --> 0:16:31.920 they want is political experience, what they want is a 0:16:32.000 --> 0:16:37.280 political insider. There was a Monmouth University poll that asked 0:16:37.600 --> 0:16:40.640 which candidate would you prefer as the party nominee? A 0:16:40.760 --> 0:16:43.320 Democrat you agree with on most issues but would have 0:16:43.400 --> 0:16:45.680 a hard time beating Trump, or a Democrat you do 0:16:45.840 --> 0:16:47.960 not agree with our most issues, but would be a 0:16:48.000 --> 0:16:53.280 stronger candidate against Donald Trump. Electability beat ideology hands down. 0:16:55.920 --> 0:16:58.280 One final question, because we have to go to some 0:16:58.400 --> 0:17:02.600 breaking news, but very simply, what does Vice President Biden 0:17:02.840 --> 0:17:06.280 have to do in a given state, Let's say Wisconsin, 0:17:06.800 --> 0:17:14.560 its Secretary Clinton didn't do. He has to get voters excited. Uh, 0:17:15.000 --> 0:17:17.680 he has to resist the urge. And this is I 0:17:17.760 --> 0:17:21.680 think not part of Biden's personality to be condescending. I 0:17:21.760 --> 0:17:25.120 think Clinton lost in large part because she seemed condescending 0:17:25.200 --> 0:17:28.159 to most voters. She was a charter member of the 0:17:28.200 --> 0:17:32.320 political establishment. I remember she called the Trump people a 0:17:32.440 --> 0:17:37.160 basket of deplorables, the world's most condescending statement. Biden isn't 0:17:37.240 --> 0:17:40.480 like that, Biden. When Biden campaigns, uh, he's one of you. 0:17:41.080 --> 0:17:45.639 He has has a connection with working class voters. Clinton, 0:17:45.960 --> 0:17:48.760 I think was a little remote from ordinary voters. Biden 0:17:48.880 --> 0:17:51.360 is making it clear that he's on the same wavelength. 0:17:51.520 --> 0:17:53.640 It is a premier The book is standoff, of course, 0:17:53.680 --> 0:17:56.280 from William Schneider at George Mason, of course for years 0:17:56.280 --> 0:17:58.320 at sen and Bill Snyder. Thank you so much. Really 0:17:58.359 --> 0:18:02.560 look forward to catching up you in the political months ahead. 0:18:03.160 --> 0:18:19.800 Is well. Our Michael McKee is in Florida, the Federal 0:18:19.840 --> 0:18:23.880 Reserve Bank Atlanta meeting here is Michael McKee. Well, thank 0:18:23.920 --> 0:18:26.040 you very much, and we'd like to thank our guests, 0:18:26.119 --> 0:18:29.199 the President of the Atlanta Federal Reserve Bank, Raphael Bostick, 0:18:29.240 --> 0:18:32.400 thanks for joining us on Bloomberg Television. And radio worldwide. 0:18:32.720 --> 0:18:35.720 I know you've been traveling around your district a lot lately, 0:18:35.920 --> 0:18:38.080 and I want to find out from you what the 0:18:38.160 --> 0:18:41.320 district is thinking about the economy these days. What are 0:18:41.400 --> 0:18:44.159 companies thinking about the economy and what they're going to 0:18:44.240 --> 0:18:46.840 do going forward. Well, first of all, it's good to 0:18:46.920 --> 0:18:49.000 have you here, thanks for coming down. And I would 0:18:49.000 --> 0:18:51.600 say that as I go around the sixth district, I 0:18:51.640 --> 0:18:55.959 talked to UNESS leaders. Um, they all pretty uniformly are 0:18:56.000 --> 0:18:59.000 pretty confident and please with how the economy is going 0:18:59.359 --> 0:19:02.920 right now. Um, they know that the economy's growth is 0:19:03.000 --> 0:19:04.240 not going to be at the pace that it was 0:19:04.359 --> 0:19:07.280 last year and there was so much extra stimulus, but 0:19:07.440 --> 0:19:10.520 they're not expecting and they're not seeing a significant drop 0:19:10.600 --> 0:19:12.840 off to suggest that the economy is going to be 0:19:13.000 --> 0:19:17.359 weaker for them. Their consumer demands is remain strong and 0:19:17.720 --> 0:19:20.400 they're pretty optimistic now. The one thing I would say, though, 0:19:20.720 --> 0:19:23.600 is that as you go across the district, there is variation. 0:19:23.720 --> 0:19:26.200 So if you go to the big cities, we definitely 0:19:26.240 --> 0:19:28.280 see a lot of robust growth, but there are many 0:19:28.359 --> 0:19:30.520 parts of the district where we're not seeing that same 0:19:30.560 --> 0:19:32.919 sort of robust and some of the smaller towns, places 0:19:32.920 --> 0:19:36.200 that are more rural. There's a lot of variation across 0:19:36.320 --> 0:19:39.560 the district, and I've been really trying to get my 0:19:39.720 --> 0:19:43.280 finger on that pulsive variation, UH, to really appreciate some 0:19:43.400 --> 0:19:46.119 of the challenges that some particular communities are having. Well, 0:19:46.160 --> 0:19:48.840 the company is reporting higher input costs, either from tariffs 0:19:48.920 --> 0:19:52.040 or because your capacity constrained in this ecatom, So they 0:19:52.080 --> 0:19:55.639 are reporting that to date. What they're telling me is that, 0:19:56.160 --> 0:19:58.760 um the increases haven't been so great that they can't 0:19:58.800 --> 0:20:01.560 manage it, so they have passing through most of those 0:20:01.680 --> 0:20:07.240 costs to the final product consumer. But they have expressed 0:20:07.560 --> 0:20:10.400 some concern that you know, there are limits to how 0:20:10.520 --> 0:20:14.159 far how long they can forbear, and we may be 0:20:14.240 --> 0:20:19.600 approaching those depending on how tariffs evolve and the negotiations. 0:20:19.880 --> 0:20:22.119 But what do they say about investment going forward? Are 0:20:22.160 --> 0:20:25.119 they going to be adding to capacity or is it 0:20:25.440 --> 0:20:27.879 tariffs holding them back, or is it uncertainty or is 0:20:27.920 --> 0:20:31.159 it just lack of enough demand to increasing enough. Well, 0:20:31.200 --> 0:20:33.680 there's some variation in this. Some say, you know, we 0:20:33.840 --> 0:20:36.520 have we're meeting we're meeting demand. We're doing fine, and 0:20:36.680 --> 0:20:41.080 so they really aren't investment opportunities. Most are telling us 0:20:41.359 --> 0:20:43.920 that you know, there are going to be opportunities, but 0:20:44.080 --> 0:20:47.880 the uncertainty definitely has affected them. Uh. And until they're 0:20:48.119 --> 0:20:51.080 confident about what the rules of tomorrow are going to be, 0:20:51.400 --> 0:20:53.440 they're gonna wait and see. And and that's an important 0:20:53.560 --> 0:20:56.800 thing for us to be mindful of, is is my 0:20:56.920 --> 0:20:59.680 team goes around and tries to understand what's going to 0:20:59.760 --> 0:21:02.600 happen moving forward. Uh. And then there are a whole 0:21:02.640 --> 0:21:05.840 host of others who are trying to figure out what 0:21:06.040 --> 0:21:10.159 opportunities might be. They're trying to incorporate new technologies to 0:21:10.680 --> 0:21:13.560 increase the productivity of their workers, and that's happening over 0:21:13.680 --> 0:21:16.920 a much longer arc, and so a lot of the 0:21:18.200 --> 0:21:20.840 the the resolution of that will just take time to 0:21:20.880 --> 0:21:23.680 play out. What about consumers. Earnings have been growing above 0:21:23.760 --> 0:21:25.680 three percent now, which has sort of been a rough 0:21:25.760 --> 0:21:28.600 target for the FIT. Uh do they notice that? And 0:21:28.800 --> 0:21:30.320 do you think we're going to see a ramp up 0:21:30.400 --> 0:21:33.399 in consumer spending or people kind of sated with everything 0:21:33.480 --> 0:21:36.960 they bought. So that's a very good question. Consumer spending 0:21:37.000 --> 0:21:39.480 has been strong, and it's been robust for for quite 0:21:39.560 --> 0:21:42.840 some time, and I've not really heard or seeing any 0:21:43.080 --> 0:21:46.600 signs to suggest that that's going to fall off considerably 0:21:46.920 --> 0:21:49.840 now certainly, Um, I'm also not seeing signs that is 0:21:49.880 --> 0:21:52.720 gonna go ramp up. So so I'm not expecting to 0:21:52.800 --> 0:21:56.399 see a big acceleration in consumer spending. But I'm not 0:21:56.520 --> 0:21:59.280 seeing anything that would suggest that we're gonna see any weakness. 0:21:59.560 --> 0:22:02.120 Are weak getting in the months to come. Well, when 0:22:02.160 --> 0:22:04.080 you put it together the businesses in the consumers in 0:22:04.160 --> 0:22:06.520 your district, do you get an impression that we're late cycle? 0:22:06.680 --> 0:22:09.200 Mid cycle? Where are we? So? I don't actually even 0:22:09.280 --> 0:22:11.560 like to talk about it like that. The economy is 0:22:11.640 --> 0:22:15.040 operating the way that is operated, and it's really operating 0:22:15.040 --> 0:22:18.200 in a sustained way. That growth is robust and it 0:22:18.359 --> 0:22:20.879 is there's something that looks like I can go on 0:22:21.000 --> 0:22:24.240 for quite some time for me. I think about the 0:22:24.359 --> 0:22:26.560 cycle if you want to talk about it, uh, in 0:22:26.640 --> 0:22:29.240 the context of risk taking and are we starting to 0:22:29.320 --> 0:22:32.720