Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane. Along
Speaker 1: with Jonathan Ferrell and Lisa Brownwitz. Daily we bring you
Speaker 1: insight from the best and economics, finance, investment, and international relations.
Speaker 1: Find Bloomberg Surveillance on Apple Podcast, Suncloud, Bloomberg dot Com,
Speaker 1: and of course on the Bloomberg Terminal. The worlds attention
Speaker 1: on the President of the United States and a two
Speaker 1: point to five. You can really take your point there, John,
Speaker 1: about the world will be attention here because this is
Speaker 1: a sea change in terms of stimulus, and then as
Speaker 1: we see on infrastructure. What I like about this John,
Speaker 1: and particularly our next guest, is he is definitive as
Speaker 1: the experienced deputy. I don't know anyone John of this
Speaker 1: vintage who as deputy or special assistant has such an
Speaker 1: interesting cross section of experience ends in the executive process
Speaker 1: in Washington. That man is Brian da City joins us
Speaker 1: right now, the White House Director of the National Economic Council,
Speaker 1: Brian Good to catch up again. Let's just start right here.
Speaker 1: Big plan, a lot of detail we need to work through.
Speaker 1: I want to start with a simple one. Help me
Speaker 1: understand how you'll measure success beyond just big terms like
Speaker 1: closing the gap, closing the keg. How will you measure
Speaker 1: success specifically in the years to come. Well, look, it's
Speaker 1: good to be with you, guys. We have a major
Speaker 1: infrastructure problem in the United States were globally when it
Speaker 1: comes to our physical infrastructure, our roads are in bad
Speaker 1: need of a pair. The typical person pays a thousand
Speaker 1: dollars in extra cost in wasted time and fuel. And
Speaker 1: if you think about modern infrastructure like broadband, one in
Speaker 1: three households in rural areas of the country can't even
Speaker 1: access high speed internet. This is all holding our economy back.
Speaker 1: So as we think about coming out of this crisis
Speaker 1: and rebuilding and building back better, as the President said,
Speaker 1: we need to train our focus on a big, bold,
Speaker 1: but also practical in smen in America, and that's what
Speaker 1: the President is going to talk about today. The American
Speaker 1: Jobs Plan is a historic capital investment in America, and
Speaker 1: our metric of success will be can we make a
Speaker 1: generational investment improve these things that matter to people's lives, uh,
Speaker 1: the the way they commute, the way they interact with
Speaker 1: their loved ones, the way they work and do so
Speaker 1: in a way that actually creates millions of jobs in
Speaker 1: the process. So that's the goal. That's the that's where
Speaker 1: the President will be talking about today, and that's where
Speaker 1: we'll be kicking off the legislative process. This, of course
Speaker 1: is public sector investment. We need to talk about private
Speaker 1: sector investment as well. And many people will be asking
Speaker 1: Brian how writing the corporate tax right as we come
Speaker 1: out of a crisis actually helps develop private investment in America. Well, look,
Speaker 1: you talk about private investment, and I do want to
Speaker 1: just make an important point. These public investments are among
Speaker 1: the highest return investments in terms of spurring private investments.
Speaker 1: So we know public investments in airports return several dollars
Speaker 1: in private investments. Public investments in basic R and D
Speaker 1: provide the backbone for innovation off what private investment flows.
Speaker 1: So we know these are the kinds of high value
Speaker 1: investments that can spur the kind of private investment we need.
Speaker 1: We also think it's a reasonable thing to look at
Speaker 1: how to cover the cost of that capital investment over
Speaker 1: the long term. That's where the President's proposal comes in,
Speaker 1: corporate tax reform. Let's end the race to the bottom internationally.
Speaker 1: Let's have a competitive tax system that encourages domestic investment
Speaker 1: and do so in a way that over fifteen years,
Speaker 1: would raise sufficient revenue to cover this plan. Ryandece, you
Speaker 1: will be in Pittsburgh, that is in the vicinity of
Speaker 1: Connor Lambs sevente Congressional district. You need Connor Lamb's vote
Speaker 1: to get this done. How are you going to amend
Speaker 1: adjust establish the Texas to pay for this so that
Speaker 1: Mr Lamb can be reelected. Look in districts like that
Speaker 1: and all around the country, people see and feel why
Speaker 1: we need this investment. Bridges are crumbling, schools are crumbling.
Speaker 1: There are four thousand schools, including in that district, where
Speaker 1: kids are drinking water from lead. Okay, but how are
Speaker 1: you going to do the Texes? Brian, tell me how
Speaker 1: Connor lama is going to vote for this given the
Speaker 1: tax hesitancy from sea to shining Sea. Here's what I
Speaker 1: would say. You look at the seventeen tax cut that
Speaker 1: passed without a single Democratic vote. It was bad tax policy.
Speaker 1: It's encouraged more profits and production to actually move overseas,
Speaker 1: and it's deeply unpopular. What we're saying is we can
Speaker 1: do better than that. We can create a competitive tax code.
Speaker 1: We can raise revenue, and we can invest in things
Speaker 1: that really matter to the American people. And so that's
Speaker 1: the that's the basics of this. The corporate tax reforms
Speaker 1: that we're talking about here would still leave the corporate
Speaker 1: rate lower than any year since World War Two, other
Speaker 1: than the last couple of years in the wake of
Speaker 1: the Trump tax cut. So we're talking about a year
Speaker 1: is reasonable and practical, and the investments would really change
Speaker 1: the game for families in places like western Pennsylvania r
Speaker 1: And there's a radical economic sea change under what you're
Speaker 1: talking about. This idea that in the past there a
Speaker 1: popular belief that the private sector was way more efficient
Speaker 1: than the public sector. It was the way to generate growth.
Speaker 1: This proposal questions that, basically saying it needs to come
Speaker 1: from the government. Yes, it's infrastructure, but it's a lot
Speaker 1: of other programs as well. What evidence are you pointing
Speaker 1: to that public investing can be perhaps as efficient or
Speaker 1: more efficient in generating growth and pushing this economy ahead.
Speaker 1: Look at the end of the day, the private investment
Speaker 1: and what is what drives the economy forward. But at core,
Speaker 1: if we look back to great periods where America has
Speaker 1: done great things, whether it's the building of the interstate
Speaker 1: highway system or the space race in the nineteen sixties.
Speaker 1: Well designed public investment can spur innovation at could spur productivity,
Speaker 1: and it could spur job growth all around in America.
Speaker 1: We know that's true in things like basic research. We
Speaker 1: know it's true in things like physical infrastructure. And the
Speaker 1: issue is that for forty years we have undermined those
Speaker 1: basic drivers of economic growth. So this isn't about the
Speaker 1: public versa private sector. This is about public sector investments
Speaker 1: that we know will actually generate job growth, we know
Speaker 1: will help spur innovation across the economy, and we have
Speaker 1: done before as a country. This is not new. It's
Speaker 1: just that we haven't done it in quite some time,
Speaker 1: and we need to do it at historic scale, something
Speaker 1: we haven't discussed. I found this morning bron is staying
Speaker 1: local tax deductions. Can we sit on that just for
Speaker 1: a moment. There are three House Democrats basically saying we
Speaker 1: say no sell, no deal. What's your message for them
Speaker 1: this morning? Look, the President is gonna put out his
Speaker 1: plan today. He's going to talk about why we need
Speaker 1: these investments, and he can talk about some of his
Speaker 1: ideas on how to pay for it. He is eager
Speaker 1: and we are eager now to hear from everyone about
Speaker 1: their ideas. There's a lot of people who are going
Speaker 1: to have ideas about how to structure those investments, people
Speaker 1: who are gonna have ideas about how to pay for this.
Speaker 1: Some people may argue that we don't need to pay
Speaker 1: for portions of this. That's the conversation that we need
Speaker 1: to move forward here. What the President is going to
Speaker 1: be clear is that he wants input from Republicans and
Speaker 1: Democrats alife. We want to find practical ways to move
Speaker 1: this forward, but these are investments that we cannot afford
Speaker 1: not to make. That's the message you're here from the
Speaker 1: president and you want to stand from the Republican side.
Speaker 1: They don't feel like you want their input whatsoever. They
Speaker 1: were invited to the White House for the last one
Speaker 1: point nine trily in dollar bill. They didn't feel like
Speaker 1: they would listen to. Are you just saying that or
Speaker 1: do you actually hear something from the Republican side you'd
Speaker 1: like to include and if so, what is it. This
Speaker 1: issue of infrastructure having creates a unique opportunity for us
Speaker 1: to do work together and find common ground solutions. This
Speaker 1: is an issue that four years you all know you've
Speaker 1: been covering it. Democrats and Republicans, the business community, the
Speaker 1: labor community have all been saying, can't we come together
Speaker 1: and do something big on America's infrastructure. This has been
Speaker 1: happening for years. We've been saying this, but we haven't
Speaker 1: actually done it. We believe this is a unique opportunity.
Speaker 1: This is a moment and we are absolutely committed to
Speaker 1: the idea that we want to bring people together here
Speaker 1: their ideas and find a way forward. Brian, I want
Speaker 1: you to speak to the nation now, and frankly, Brian,
Speaker 1: I'm worried about those loudsy bridges on Roots seven up
Speaker 1: by Middlebury in Vermont, But Brian, I want you to
Speaker 1: speak about this. How far behind we are in internet
Speaker 1: and fast internet for our children learning across America. Is
Speaker 1: this bill today gonna solve that problem? Look, this crisis
Speaker 1: has exposed just how vulnerable we are as a country
Speaker 1: to the fact that we don't have the basic infrastructure
Speaker 1: backbone of the twenty century. We don't have high speed,
Speaker 1: reliable internet for everyone. You know, there are kids around
Speaker 1: the country who are sitting in McDonald's parking lots can
Speaker 1: get all mine to try to What are we going
Speaker 1: to do about in this bill today? It's gonna fix
Speaker 1: the McDonald's parking lot to take my kid to Starbucks
Speaker 1: reality we see in the island of Manhattan. Absolutely, this
Speaker 1: bill is going to commit a hundred billion dollars to
Speaker 1: get the goal of a pent access to affordable broadband
Speaker 1: in this decade. It'll do it by building out the
Speaker 1: physical the physical elements we need, particularly in rural and
Speaker 1: remote areas. And it will do it by providing carrots
Speaker 1: and sticks to carriers to make sure that there are
Speaker 1: affordable plans available in every part of the country. We
Speaker 1: can do this in this decade. We need a one
Speaker 1: time investment of public capital, which will spur enormous amounts
Speaker 1: of private capital and is also the right thing to
Speaker 1: do so that our kids, and our families and our
Speaker 1: businesses can actually get into the twenty one century economy. Brian,
Speaker 1: this two point to five trillion dollar plan is thought
Speaker 1: of as a wish list as much as it is
Speaker 1: an outline for Biden's plans. How negotiable is this at
Speaker 1: this point? Where can we see it going in terms
Speaker 1: of the main non negotiable points. Well, I think if
Speaker 1: you go through this plan. Every element of it reflects
Speaker 1: serious and thoughtful work that has been done over the
Speaker 1: course of years to identify where our gaps in our
Speaker 1: infrastructure exist and how we could actually invest to solve them,
Speaker 1: like the issue of broadband we were just talking about.
Speaker 1: So what we're gonna do is we're gonna sit down
Speaker 1: and ask people where do they see opportunity here and
Speaker 1: where can we move move the ball forward. But what
Speaker 1: the President is going to be uncompromising about is to say,
Speaker 1: this is a moment where we need to make a
Speaker 1: big capital investment in the country. Everybody recognizes that that's
Speaker 1: the case. The question is can we actually get it done.
Speaker 1: That's what the President is going to be saying, Brian,
Speaker 1: let's finish on this two point to five trillion. And
Speaker 1: in the White House statement the great challenges of our time,
Speaker 1: the climate crisis and the ambitions of an autocratic China.
Speaker 1: I found the last line there just absolutely fascinating. The
Speaker 1: ambitions of an autocratic China. Can you span out specifically
Speaker 1: to us how the challenge is posed by the Chinese
Speaker 1: Communist Party have shaped this bill in front of us,
Speaker 1: this plan. Well, one of the things the President is
Speaker 1: going to talk about today is that this moment is bigger.
Speaker 1: You've mentioned earlier that the world is watching that this
Speaker 1: is a moment where the question is can democracy succeed
Speaker 1: in delivering for for their people? And that's a question
Speaker 1: that a lot of people are asking all around the world.
Speaker 1: So part of what we're trying to do, your part
Speaker 1: with the President is trying to do here is to
Speaker 1: make clear what the stakes are. We are falling behind
Speaker 1: in R and D, We're falling behind an investment in
Speaker 1: supply chains and critical industries. But this is a moment
Speaker 1: where we can show that American actually invest domestically in
Speaker 1: our own domestic strength in a way that will provide
Speaker 1: benefits to the world. We've already seen it with the
Speaker 1: Rescue Plan. We passed the Rescue Plan. We've seen increases
Speaker 1: in our own growth rate, but also spillovers in terms
Speaker 1: of demand for the world. That is the essential role
Speaker 1: that the American economy can play and American democracy can
Speaker 1: play in the world. We just have to show that
Speaker 1: we're up to the task. Great to catch up with you.
Speaker 1: Let's talk again soon, specifically on China. We'd love to
Speaker 1: continue that conversation. BRYANTSA the white House, National Economic Council
Speaker 1: Director opening day used to be April ten. I don't
Speaker 1: know when it was Cincinnati, but I tell you, Lisa,
Speaker 1: it will be great to see all of sports get
Speaker 1: back in some way or form, as we see with
Speaker 1: the n C Double A right now. Yeah, My plans
Speaker 1: have definitely have been charted out to try to get
Speaker 1: everyone back, and not just for vaccinations. Where I know
Speaker 1: that city Field, for example in New York City has
Speaker 1: been in Yankee Citium for that matter, have been outfitted
Speaker 1: as inoculation stations. There is a question of how baseball,
Speaker 1: of how some of the other sports will look different
Speaker 1: in a post pandemic era, Tom or a almost post
Speaker 1: pandemic era, almost pandemic era. That is something we will
Speaker 1: address down. Lisa, Bramwots and Tom Kenyan. We welcome all
Speaker 1: of you, particularly Bloomberg eleven three oh in New York
Speaker 1: and I must say up on Boston are Bloomberg affiliate
Speaker 1: up in Boston as well joining us now. Derek Jeter
Speaker 1: of the Miami Marlins are chief executive officer. He launching
Speaker 1: himself into the stands a few years ago, the one
Speaker 1: Yankee that red Sox fans due respect and also with us.
Speaker 1: Anthony Shea with Loane Depot, the executive of the Marlins,
Speaker 1: and the gentleman from Loan Depot, celebrate their announcement that
Speaker 1: Loan Deepot will sponsor the stadium and will be very
Speaker 1: visible for the Miami Marlins in this season. Anthony say,
Speaker 1: from Sea to Shining Sea, you do loans for America,
Speaker 1: you do financing for America. What is your advantage to
Speaker 1: brand with Derek Jeter and the Miami Marlins. Well, good morning, Uh,
Speaker 1: it is such an exciting day as I'm sitting here
Speaker 1: at the new Loan People Park. I think our partnership
Speaker 1: between two organizations, particularly with Derek, is just a natural fit.
Speaker 1: We're just so enthusiastic about partnering up with Derek and
Speaker 1: the Marlins organization and that we just couldn't do more
Speaker 1: through Derek. It is the Miami Marlins, which you've worked
Speaker 1: four in five years on to improve and to really
Speaker 1: recast the franchise like you knew in New York. Where
Speaker 1: are you on the path right now? Well, look, you know,
Speaker 1: we we've made a lot of progress I think in
Speaker 1: the three and a half years that we've been here,
Speaker 1: but we still have a long way to go. You'll
Speaker 1: you'll always hear me say we have a long way
Speaker 1: to go, regardless of what happens during the course of
Speaker 1: the season, but we're taking some positive strides forward, you know,
Speaker 1: both on the baseball operations side and the business operation side,
Speaker 1: and day like today is is extremely important to our
Speaker 1: our organization and we could be happier with the partnership
Speaker 1: that we have with Anthony and little people. You start
Speaker 1: with the Citrus Series with Tampa, but then you've got
Speaker 1: to get on the road and all the rest of
Speaker 1: the grind of Major League Baseball. Derek Jeter, you were
Speaker 1: affected by COVID last year and frankly into this year.
Speaker 1: What precautions? What did you learn from that process that
Speaker 1: you can bring forward? Is this nation heels? Yeah, I'll
Speaker 1: tell you what you know, I said it at the time. Affected.
Speaker 1: I don't even know if that's the right word to use.
Speaker 1: I mean, we had, you know, eight team players as
Speaker 1: positive in the in the span of a week. And
Speaker 1: you know what I think we learned through it to
Speaker 1: the course of that ordeal was but you can't take
Speaker 1: anything for granted. I think there was a false sense
Speaker 1: of security with our players because we were in somewhat
Speaker 1: of a bubble, and it just takes one one case
Speaker 1: that can can end up spreading throughout an entire team.
Speaker 1: And and uh, you know, the health and safety of
Speaker 1: you know, our players are coaches, our staff are fans
Speaker 1: is extremely important to us. And uh, you know, you
Speaker 1: learn from past mistakes and you move on. So we're
Speaker 1: happy that. Uh, you know, I think baseball is an
Speaker 1: industry up until this point has has uh stayed pretty
Speaker 1: clear of COVID up into this point. What do you
Speaker 1: think it's harder, Derek being part of a team that
Speaker 1: won five World Series or running a baseball franchise as
Speaker 1: the owner. That's a good question. I don't even know
Speaker 1: how to answer that. They're both pretty difficult. I think
Speaker 1: you know, you mentioned it. When you're on a team,
Speaker 1: you're on a field and you have one goal and
Speaker 1: that's to win a championship each and every year, and
Speaker 1: nothing changes. It's the same thing here. I think the
Speaker 1: difference probably is, you know, you're when you when you're playing,
Speaker 1: it's that particular game, that particular day, and on the
Speaker 1: business side, you're looking three, four, five years down the road.
Speaker 1: So I think there's a lot of similarities. But at
Speaker 1: the same time, you gotta have a little bit more patients, alright,
Speaker 1: So more patients three or four or five years down
Speaker 1: the low down the road. At a time when baseball
Speaker 1: franchises across the nation have been really affected by the
Speaker 1: COVID pandemic just because of the revenues that have not
Speaker 1: come in, how will that affect the five year plan
Speaker 1: as you see it right now? I don't think it
Speaker 1: necessarily changes as much. I mean, you know, you look
Speaker 1: at partnerships like the one we have right now with
Speaker 1: with Anthony and Loan Depot. You know, you still have
Speaker 1: to look at the the overall plan, and we're not
Speaker 1: gonna change. You know, we said when we got here
Speaker 1: what we're gonna do, wanted to build sustainable success and
Speaker 1: that's on the field, it's off the field, and it's
Speaker 1: partnerships like this that help us out. And you know,
Speaker 1: on the field, I think we've done a pretty good
Speaker 1: job of building an organization that you know, we can
Speaker 1: be proud of. And it really made some strikes there
Speaker 1: with the minor league sistem system, which is the foundation
Speaker 1: of our success. So in that sense, you know, look,
Speaker 1: everyone was affected, every industry was affected, and uh, you know,
Speaker 1: moving forward, you just kinda have to bounce back from it.
Speaker 1: Derek Jeter with us on Bloomberg Radio. We're thrilled to
Speaker 1: let you know that the Miami Marlins Chief executive Officer,
Speaker 1: Derek Jeter is with us with anthonyche they celebrate Loan
Speaker 1: Depot's naming rights to the Miami Marlins franchise. Uh. To Anthony,
Speaker 1: I want to link this first to you, Anthony, and
Speaker 1: then to Mr Jeter, and that is the idea of
Speaker 1: the spirit of Miami is personified by Mr Jeter. Anthony.
Speaker 1: I don't know if you know this, but Jeter launched
Speaker 1: himself into the stands and a follow ball seven and
Speaker 1: a half games ahead of the Red Sox a million
Speaker 1: years ago. What's the spirit Anthony that Loan Depot season
Speaker 1: all of Florida in this building boom. Well, we as
Speaker 1: America's lender. Uh, you certainly have become part of supporting
Speaker 1: America's housing. Florida is a critically important state for not
Speaker 1: only America, but certainly for Loan Depot. Is one of
Speaker 1: our top customer base. In addition to the fact that, uh,
Speaker 1: you know, Florida is a great great yachting capital of
Speaker 1: the world which we personally and I personally enjoy and
Speaker 1: having the opportunity to pair up with winners here is
Speaker 1: just agree opportunity for us, Derek, to the kids today
Speaker 1: play like you. I mean, I know it's like in
Speaker 1: the ESPN question and I'm supposed to say that and
Speaker 1: all that, but come on, Derek, you know I see
Speaker 1: the nation and trying to get baseball front and center
Speaker 1: to the kids today. Would they go into the stands
Speaker 1: on a late night twelfth inning? Well, first of all,
Speaker 1: I want to say, I don't appreciate you saying that
Speaker 1: was a million years ago. It wasn't that long ago
Speaker 1: like that, but uh, you know, look, it's it's the
Speaker 1: game changes. It changes from every generation. I remember when
Speaker 1: you know, I was younger, and and you know, one
Speaker 1: great thing is you have access to a lot of
Speaker 1: the ex players and they come in and tell you
Speaker 1: how much the game change. So the game has changed,
Speaker 1: but the game is exciting with a lot of exciting
Speaker 1: young players that are in our organization and other organizations.
Speaker 1: So I I I kinda find it kind of hard
Speaker 1: to try to compare generations, but you know, there's a
Speaker 1: lot of exciting players to watch out there. So the
Speaker 1: players are exciting. Derek, there is a question of whether
Speaker 1: we can shorten the games and whether or not perhaps
Speaker 1: some of the breaks for commercials, for other things, some
Speaker 1: of the waiting and that people are perhaps don't have
Speaker 1: the attention span for should be eliminated. Do you support
Speaker 1: that shortening the games? Taking measures? And what measures do
Speaker 1: you think we should take? Well, I don't know if
Speaker 1: you'd necessarily say shorten the games. I just say increasing
Speaker 1: the action within the game. Look, I mean the games
Speaker 1: are what three hours? Three and a half hours, So yeah,
Speaker 1: there there are ways that you can shorten the games
Speaker 1: to some extent. But I think it's just increasing the
Speaker 1: action and get an opportunity to see how athletic baseball
Speaker 1: players are. And so I think there are some some
Speaker 1: minor rules changes tweaks that you'd be able to accomplish that. Derek,
Speaker 1: I blame Nomar Garcia part. He played with the team
Speaker 1: up to the northeast from where you were playing. He
Speaker 1: gets out of the box. Every kid in America is
Speaker 1: doing this with their hands, stretching out the beat. Do
Speaker 1: we need a clock in baseball? I don't know if
Speaker 1: you necessarily need a clock, you know what I mean?
Speaker 1: They're I think they're you know, they're they're discussing some
Speaker 1: pitch box and and but you know, one of the
Speaker 1: great things about baseball is you know the game ever
Speaker 1: know how long it's gonna be out there. It's a
Speaker 1: family sport. You bring your entire family out and uh
Speaker 1: be able to enjoy three hours with your family. But Derek,
Speaker 1: you know the problem here, and I understand the naming rights.
Speaker 1: You were struggling and you need to get a refight
Speaker 1: through loan Depot and Anthony sheay, but then you rented
Speaker 1: your house to Tom Brady. How is Tom Brady as
Speaker 1: a tenant? I mean, should you have gone to loan
Speaker 1: Depot or did it work out with Mr Brady as tenant?
Speaker 1: You know what, it worked out actually, and I think
Speaker 1: I deserve I deserve a Super Bowl ring for for
Speaker 1: him renting my house. So there's a lot of championships
Speaker 1: in that house. Yeah, Anthony, but Anthony, this is so important.
Speaker 1: I mean, you know we've talked to Derek, and Derek
Speaker 1: gets the FaceTime. Anthony. What you guys are efforting every
Speaker 1: day at loan Depot and with your other efforts, you
Speaker 1: sold the trade in that over the years. I why
Speaker 1: you would explain now the advantage of the financing of
Speaker 1: loan Depot that has brought you to these naming rights
Speaker 1: with Mr Jeter. Well, that isn't that a softball pitch? Right? Um?
Speaker 1: You know, we we are contemporary financial services company that
Speaker 1: is built a lot of digital tools that help many
Speaker 1: of our customers that are buying a home or refinancing
Speaker 1: right there to do it very very fast and very easy.
Speaker 1: Dot com will take care of you. Last word, do you, Anthony,
Speaker 1: do you see a boom economy out there day to
Speaker 1: day in the grind of loan depot? Do you witness
Speaker 1: the boom economy? This show is predicting Yes, Uh, you know,
Speaker 1: currently we are breaking records at our at our company,
Speaker 1: interest rates are very very attractive. Although they're you know,
Speaker 1: higher than they were three or four months ago, they're
Speaker 1: still his historically very low. The housing boom is we're
Speaker 1: in the middle of a now there's a very low inventory.
Speaker 1: I think as we go through COVID, many of us
Speaker 1: are realizing home is uh, home is everything. It's becoming
Speaker 1: where we where we learned, when we go to school,
Speaker 1: when we work out, So home I was lying, it's
Speaker 1: not the last question Derek very quickly, do you, Derek Jeter,
Speaker 1: how do we fix Red Sox pitching? Hey, we have
Speaker 1: our own things that we're dealing with down here. I'll
Speaker 1: let you guys deal with that one. Guys are right,
Speaker 1: Derek Eater, Thank you so much for being whether Mr Shay,
Speaker 1: Congratulations on your naming rights with the Miami Marls. Many
Speaker 1: important conversations today, but none more important. Here is Francine
Speaker 1: Liquoix in London with Christine Leguard of the e c B.
Speaker 1: I'm like, since the e CBS last policy meeting, many
Speaker 1: hero area countries have extended or even tightened lockdowns. Vaccinations
Speaker 1: are only making small progress. Is there a point when
Speaker 1: ever longer restrictions will actually harm in your area's ability
Speaker 1: to recover because businesses will just give up. I would
Speaker 1: observe that we have an economic situation overall, which in
Speaker 1: this part of the world Europe is really marked by uncertainty,
Speaker 1: and in that general macro economic situation that is marked
Speaker 1: by uncertainty. What monetary policy has to do, and what
Speaker 1: the e c B has to do is to provide
Speaker 1: as much certainty as possible. And this is really the
Speaker 1: aim of the most recent monetary policy decisions we have
Speaker 1: taken clearly in in the in the scope of our mandate,
Speaker 1: which is price stability. But I think that in the
Speaker 1: very exceptional circumstances that we are encountering, providing a degree
Speaker 1: of certainty is the best that we can do at
Speaker 1: the moment, given the lockdowns and what's going on with
Speaker 1: vaccines in Europe. And then got has the balance of
Speaker 1: risk actually shifted since the last policy meeting? Well, our
Speaker 1: balance of risk is still tilted to the downside in
Speaker 1: the short term because we are seeing a degree of uncertainty.
Speaker 1: We are seeing renewed lockdowns, We are seeing a vaccination
Speaker 1: rollerut that is short of what we had expected, but
Speaker 1: it is much more balanced in the medium in the
Speaker 1: media term, and we expect the vaccination rollout to proceed.
Speaker 1: We expect sufficient herd immunity to be reached at the
Speaker 1: point in time in the future, and that leads us
Speaker 1: to have rebalanced a bit our assessment of risks in
Speaker 1: the medium term. So still downward in the short term
Speaker 1: and more balanced in the medium term. Mario Drugging never
Speaker 1: got to high crates. Can you imagine being in the
Speaker 1: same position. We shall see. Future will tell as the
Speaker 1: song would go, I would certainly hope that the economy
Speaker 1: is going to pick up, that there will be a
Speaker 1: turnaround in in the in the months to come, and
Speaker 1: that we will be able to resume our sort of
Speaker 1: less exceptional monetary policy going forward. But I'm not I'm
Speaker 1: not seeing any kind of raise in the in the
Speaker 1: near future for sure. But then again, what are markets
Speaker 1: exactly playing out at the moment. They seem to be
Speaker 1: continuing testing central banks, like how steep of a yield
Speaker 1: curve is. Okay, they can test us as much as
Speaker 1: they want. We have a mandate, we have an aim.
Speaker 1: We're going to be rivetted to that, and we're going
Speaker 1: to do what is required in order to deliver on that.
Speaker 1: And we have exceptional circumstances to deal with at the moment,
Speaker 1: and we have exceptional tools to use at the moment,
Speaker 1: and a battery of those, and we will use them
Speaker 1: as as and when needed in order to, as I said,
Speaker 1: deliver on our mandate and deliver on our pledge to
Speaker 1: the economy. Christine mcguard of the European Central Bank there
Speaker 1: and the short in the medium term as well. For
Speaker 1: very busy, busy morning here in America, and also in
Speaker 1: London and across Europe. Francy laquad joins us right now,
Speaker 1: start stage and screen and thrills. She could be with
Speaker 1: us this morning. Francy. First of all, what is seventy
Speaker 1: three degrees in March like in London. That's fair enough,
Speaker 1: it's nice. This is when all the bridge actually come
Speaker 1: out in general. But imagine after three months of luck.
Speaker 1: I mean there was everyone in the parks. The rules
Speaker 1: have changed, so people together, you can have six people together.
Speaker 1: But I have to say it was a high. Yesterday
Speaker 1: was the warmest March day I think in lost twenty years.
Speaker 1: And everyone was out. And you take Eurostar underneath the channel,
Speaker 1: you come out, folks and if you haven't done it,
Speaker 1: the fields of France, the rural beauty as you go
Speaker 1: into Paris and whatever, the northern trades. You know what,
Speaker 1: I don't know what I'm like, Hey, it's French France
Speaker 1: in Francine. I was actually reading Lamond an hour ago
Speaker 1: in my fractured French. They're going to be in lockdown
Speaker 1: while you're swimming in the Thames. Well, so we're not
Speaker 1: allowed to go to France at the moment, right, Remember
Speaker 1: there's lockdown there's lockdown. So what we heard just a
Speaker 1: short while ago is that to the in France, both
Speaker 1: of them actually could be set to extend restrictions. And
Speaker 1: I think the French president is due to address the
Speaker 1: nation at eight pm local time. But if you're in London,
Speaker 1: we're coming out of lockdown. But again, the schools were
Speaker 1: closed for three months, tom and you're absolutely not allowed
Speaker 1: to leave, you know, for foreign leans unless absolutely necessary.
Speaker 1: So you know, unless I had a very pressing reason
Speaker 1: to go to Paris, I could not take that eurostart
Speaker 1: to end up in Gaudino. So, Francine. Here in the US,
Speaker 1: as you're probably well aware, we feel like we're emerging
Speaker 1: from the end of this and people are getting out
Speaker 1: and maybe it's just the weather, but the vaccines are
Speaker 1: going so well here, and I think a lot of
Speaker 1: folks here in the US were just shocked at the
Speaker 1: inability of Europe in particular to manage its vaccine program.
Speaker 1: What's the feeling on the ground, Well, you're right, Paul,
Speaker 1: it's actually a disgrace. But this for you know, I
Speaker 1: guess structural reasons. So if you look at what the
Speaker 1: US did, I think you guys have double the vaccine
Speaker 1: doses needed for the whole population, so you could vaccinate
Speaker 1: everyone twice. Over the UK, we're doing. Okay. What Europe
Speaker 1: decided to do is because you have the European Union
Speaker 1: to you know, basically decided to to choose it as
Speaker 1: a block. So they negotiate it as a block, and
Speaker 1: they were late to the game. They were about three
Speaker 1: months late. A lot of people don't want the vaccine,
Speaker 1: so they're very, very behind, and they're worried about variants,
Speaker 1: which is why we're in a third lockdown in Europe.
Speaker 1: And it seems like that there's this stop and start
Speaker 1: vaccine just because it's but you know, it's difficult. It's
Speaker 1: many countries together and they didn't directly negotiate, but took
Speaker 1: time and they probably negotiated badly. Franc La Clause, thank
Speaker 1: you so much. On conversation with Christine Legard. Look for
Speaker 1: that digitally across all of the Bloomberg platform. This is
Speaker 1: an interview, a conversation. We're going to talk about one story,
Speaker 1: but we've got to get to the general international boom
Speaker 1: that's out there. Europe off on that, which means David
Speaker 1: Harrold must have had a good year. He was in
Speaker 1: like the hundred and fourteen percentile something like that. He
Speaker 1: just did killer year. You know, it's like boom and
Speaker 1: then there's a couple of years and then boom again.
Speaker 1: David Harrow joining us with Harris Associates and of course
Speaker 1: ok Mark International. Fun. David, it's all great, and let's
Speaker 1: try to get to a general portfolio discussion in a moment.
Speaker 1: You are visible with BMP, Perry bat and other selected banks,
Speaker 1: including a small Zurich startup called Credit Swiss Group. Uh.
Speaker 1: What was it like when you heard once again your
Speaker 1: bank was really in trouble. Yeah, it's very frustrating. It's
Speaker 1: very frustrating Tom that it's almost two step forwards, one
Speaker 1: step backward, step forward, two step backwards because they make
Speaker 1: progress in some areas, and they've done a very good
Speaker 1: job in certain areas, and then you have these little
Speaker 1: blow ups, David, frustrating. I mean, you and I we
Speaker 1: eat at the same McDonald's. But before we go down
Speaker 1: to Credit Switz and Zurich, it's fourteen dollars for a
Speaker 1: number two value meal. David, you know this story, and
Speaker 1: you know Zurich better than most anyone we speak to.
Speaker 1: When did are they taken out of their misery. When
Speaker 1: do they mate? When did they buy somebody else? Or
Speaker 1: when does somebody buy them? Where does Credit Sweeze fit
Speaker 1: in five, in ten years out? Well, to be honest
Speaker 1: with you, I think it's quite obvious that the two
Speaker 1: Swiss investment banks have trouble competing with the big will
Speaker 1: call the Anglo banks, you know Morgan, Stanley, Goldman, Sachs,
Speaker 1: JP Morgan, and there has been talking, as you know,
Speaker 1: there has I mean, something I think can be done
Speaker 1: with ubs this investment bank Credit suits. I mean, there's
Speaker 1: just too much duplication there and I think there is
Speaker 1: potential for there to be a Swiss powerhouse, but there
Speaker 1: are technical difficulties to this. But I think one has to,
Speaker 1: especially in light of what's happened in the last few weeks,
Speaker 1: one has to really ask oneself whether there's something that
Speaker 1: can be done to add critical mass to these investment
Speaker 1: banks by putting them together. David I worked for Credit
Speaker 1: Else By the way, Yes, so David I worked for
Speaker 1: Credit Swiss for five years way back in the day.
Speaker 1: But so I followed this story very closely and like
Speaker 1: it just seems like the time and time again they
Speaker 1: find themselves in situations that no bank would want to
Speaker 1: find themselves, and they do it more frequently than others.
Speaker 1: What is it about their culture? Do you think that
Speaker 1: kind of puts them in positions where they're in, you know,
Speaker 1: situations they just don't want to be in. Yeah, I
Speaker 1: mean there have been periods of time, by the way,
Speaker 1: where they have done very well. Don't forget during the
Speaker 1: Global Financial Crisis they were one of the few banks
Speaker 1: to come out relatively unscathed. They did a good job there.
Speaker 1: But before that, if we go back into history, the
Speaker 1: tech bubble, they did not do well. This is the
Speaker 1: first time we actually made an investment credits after they
Speaker 1: kind of collapsed after the tech bubble, they had a
Speaker 1: change in management. We invested in it, actually did quite well,
Speaker 1: sold out most of the stock, probably should have sold
Speaker 1: it all out. And then, of course post the global
Speaker 1: financial crisis is where you saw these banana pels and
Speaker 1: what I think it's happened. You had Brady Dooyan a CEO, good,
Speaker 1: good person, but he didn't take risk off the table.
Speaker 1: He didn't change the culture like should have been done.
Speaker 1: And then Tejon came in started to ruffled a lot
Speaker 1: of feathers by the way. Don't forget when when t
Speaker 1: TM came in, he ruffled a lot of fun. Yes,
Speaker 1: and he should have ruffled a lot more, it looks like.
Speaker 1: But I have to say, and I've been very public
Speaker 1: about this. I mean, the chairman has been in place
Speaker 1: where over ten years. He comes from a law and
Speaker 1: entertainment experience, and all of this has happened under his watch.
Speaker 1: He was the wrong person to be the top of
Speaker 1: the organization. We argued vociferously for his removal last February
Speaker 1: and March, and it didn't happen. And it's finally, you know,
Speaker 1: we're onto his last month. There's a very very strong
Speaker 1: banker coming into Credit Suite starting May first, and I
Speaker 1: think it's it's literally like the Calvary, because you need
Speaker 1: someone from the outside to go through that organization and
Speaker 1: to change the culture, changing incentives um and so the
Speaker 1: inherent strength this bank has can't come to the surface
Speaker 1: instead of the weaknesses. Right now, the weaknesses are coming
Speaker 1: to the surface. What needs to happen is the strength
Speaker 1: needs to come to the surface. So David, you know,
Speaker 1: obviously the Credit Swiss has got this tremendous private banking
Speaker 1: franchise on a global scale. But I'll tell you the
Speaker 1: investment banking chops that they have are very very strong
Speaker 1: on a global scale. Are you of the opinion that
Speaker 1: they should try to be a global investment bank or
Speaker 1: do you kind of put them in the bucket of
Speaker 1: a Deutsche Bank, where, you know what, they really just
Speaker 1: focus on Europe. I think they should focus on the
Speaker 1: franchises where they could develop a competitive advantage, and whether
Speaker 1: that means certain segments in Europe or other certain segments
Speaker 1: around the world. I don't think being a universal investment
Speaker 1: bank um that. I don't believe they have the capability
Speaker 1: to do that. And maybe if they did, put together
Speaker 1: with with ubs would see that, but at this stage
Speaker 1: there's no demonstration that they are capable of being a
Speaker 1: full fledged global investment David, one more question on this,
Speaker 1: this huge uproar, this margin, calling the billions billions loss
Speaker 1: We still don't know all of it, folks. One thing
Speaker 1: I noticed, David Harrow is the sense of geography. Nomurs
Speaker 1: over there, credit suite is over there, and others who
Speaker 1: did better are over here. Did geography play into some
Speaker 1: of the allocation of these billions of losses? That's a
Speaker 1: good question. I don't really have a clear answer to that. Um.
Speaker 1: You know, the moral and credit suites are two very
Speaker 1: different companies by the way, UM, I mean the Japanese
Speaker 1: have always had this history of even the worst results
Speaker 1: the Swiss credit suite in terms of investment banks, and
Speaker 1: then you know what would happen is they would go
Speaker 1: somewhere new, blow it up, retreat, and then go back
Speaker 1: after a few years. You know, I think it might
Speaker 1: have something to do with um in the client relationship
Speaker 1: is something one could look at. We gotta switch at
Speaker 1: the time we got left David Herold. The international in investment,
Speaker 1: so much of it is predicated in a week dollar.
Speaker 1: Can you succeed without a week dollar? Oh? Yes, yes
Speaker 1: we can. We can't succeed without a week dollar. UM.
Speaker 1: In fact, a strong dollar with a week foreign currencies
Speaker 1: would would be would be good for my companies. You know,
Speaker 1: for a long time, for a long time, you know
Speaker 1: that we had this currency thing in our face. And
Speaker 1: now perhaps some of its turning, meaning we had a
Speaker 1: stronger dollar over the last four or five years. UM.
Speaker 1: This eventually benefits foreign companies. But I think more importantly
Speaker 1: is this notion of where the value place tend to be.
Speaker 1: If you look outside of the United States, the negative
Speaker 1: has been the weaker tech sector overseas and stronger what
Speaker 1: will call kind of value place. And I think this
Speaker 1: is what one of the things that will help UM
Speaker 1: you know, foreign investment returns, is that the bubble what's
Speaker 1: kind of blown from tech companies that don't make money.
Speaker 1: And I want to differentiate between two things. Cash flow
Speaker 1: streams are what make a company valuable, and some tech
Speaker 1: companies have huge market values with low um cash flow streams,
Speaker 1: and others have a cash flow stream that supports the
Speaker 1: market value. And I think the rotation that we will
Speaker 1: see the continue to come out of our those companies
Speaker 1: which have low cash flow streams and high market values.
Speaker 1: And what were we see the opposite high casual streams
Speaker 1: and low market values is in a lot of the
Speaker 1: European industrials and materials and financial companies. And this is
Speaker 1: why I feel very very good about European equities over
Speaker 1: the next twelve eighteen months. David Harrow, Thank yous from Positions.
Speaker 1: Gotta leave it there, ok, Mark David Harrow in Chicago,
Speaker 1: greatly appreciative. This is the Bloomberg Surveillance podcast. Thanks for listening.
Speaker 1: Join us live weekdays from seven to ten am Eastern
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Speaker 1: the terminal. I'm Tom Keene, and this is Bloomberg