Speaker 1: Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg
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Speaker 2: We're gonna do an audible right now. This is a joy.
Speaker 3: This could be a three hour interview. Monica Guerra is
Speaker 3: at Morgan Stanley. She's looking at bigger Washington policy, the
Speaker 3: election and all that. She comes out of the trenches
Speaker 3: of Fitch ratings and had a tour of duty. And
Speaker 3: I mean this is like the Marines coming out of
Speaker 3: the trenches. For the City of New York. As Director
Speaker 3: of Capital, Budget and Economic Development, I gotta go to
Speaker 3: an audible here.
Speaker 2: I don't want you to comment on the political mess
Speaker 2: in the City of New York.
Speaker 3: I do want you is by far and away the
Speaker 3: number one expert we have on the future fiscal integrity
Speaker 3: of this great city.
Speaker 2: How does it look to Monica.
Speaker 4: Aguera, Well, to me, I think that it does ultimately
Speaker 4: look good. One of the things that the city does
Speaker 4: they have this midnight budgeting move where they never have money.
Speaker 4: There's all this fighting in fighting within the city council
Speaker 4: and then at the last minute they'll come through with
Speaker 4: the finalized budget. As far as you know, handling the
Speaker 4: you know, addressing the bigger you know, sort of elephant
Speaker 4: in the room, I don't want to name any names,
Speaker 4: et cetera, but you know, we are looking out of
Speaker 4: potential for change, right and so the thing you got
Speaker 4: to remember is that politics are cyclical. They change.
Speaker 5: People move on.
Speaker 3: Okay, LaGuardia dump of America. Can no excuse me, Newark
Speaker 3: is dump.
Speaker 2: Of America, Thank you very much, Number tians dump of America.
Speaker 3: LaGuardia just rated best airport in the country. It costs
Speaker 3: eight billion. Whatever to do do we have the big
Speaker 3: city vision to maintain the growth rate, the little g
Speaker 3: to take care of our fiscal proclivities.
Speaker 4: Here in New York City, there is you know, a
Speaker 4: pendulum that swings right. So we went from you know,
Speaker 4: I guess to name check Bloomberg since we're here, from
Speaker 4: a very you know, pro business environment, something that was
Speaker 4: more socially focused. And we see that at the federal
Speaker 4: level as well, right where there are changes and trends,
Speaker 4: and so I don't think that this is you know,
Speaker 4: a dead end right where we can definitely continue to
Speaker 4: capitalize on everything that makes itst I got to do.
Speaker 3: His disclaimer here, of course. Michael Bloomberg, of course, signing
Speaker 3: the checks for me and Paul, not Lisa's check that's
Speaker 3: signed by someone else. Mister Bloomberg, of course, a part
Speaker 3: of what.
Speaker 2: We do each and every day. The former mayor of
Speaker 2: New York and future owner of the New York Yan.
Speaker 6: Case Monica, what are you telling your client's Morgan Stanley
Speaker 6: Wealth managtrain. I'm sure you get it a thousand times
Speaker 6: a day over the last several months. How do you
Speaker 6: game out this election? How do you position your portfolio?
Speaker 6: What are you telling your clients here? Because we're going
Speaker 6: to have an election next Tuesday, whether we like it
Speaker 6: or not.
Speaker 4: Right well, one of the things that I emphasize over
Speaker 4: and over and over again is that Congress is ultimately
Speaker 4: more important in those sector and industry outlooks. The President
Speaker 4: sets the tone essentially, you know, is a big part
Speaker 4: in those final deal making measures. But we have to
Speaker 4: see what happens in the House and Senate, and right
Speaker 4: now as we stand, obviously I'm not calling the election.
Speaker 4: Things could change the Senate looks like it's going to
Speaker 4: go to the GOP. The House looks like it's going
Speaker 4: to go to the Democrats. Now, the best sort of
Speaker 4: news around that is that markets love gridlock, and they
Speaker 4: outperform under both a split government scenario in Congress, but
Speaker 4: also when you have a unify to Congress and an
Speaker 4: opposition president. And so I really like to emphasize that
Speaker 4: we have to watch what happens there, especially around taxes
Speaker 4: and if we're going to position to really focus on
Speaker 4: those tax mitigation strategies, if we're looking at any potential
Speaker 4: changes that could you know, increase that number.
Speaker 6: So how do you think this is if we do
Speaker 6: have that kind of split government?
Speaker 2: Here?
Speaker 6: We are you telling them we're in Stanley clients to
Speaker 6: do here? Is it just like, don't worry about it,
Speaker 6: stick with your if your long equities or long bonds
Speaker 6: or whatever. What are you telling the clients there? What
Speaker 6: do you What are the advisors asking you?
Speaker 4: I guess yeah, in the in the near term, it
Speaker 4: stick to that long term strategy because around election day
Speaker 4: you're going to have increased volatility. We could have rolling
Speaker 4: volatility until the election is decided. And even though we
Speaker 4: have created both Democratic and Republican long baskets, and the
Speaker 4: Republican long baskets have been out performing the Democratic baskets
Speaker 4: by thirteen percent. We don't say pilot the Republican yes.
Speaker 6: And what's a Republican basket?
Speaker 4: So the Republican basket includes twelve different ETFs that cover
Speaker 4: every central sectors and industries, sectors and industries that would
Speaker 4: benefit right from policy proposes that come out of the GOP.
Speaker 4: So those would be things.
Speaker 2: What's a democratic basket look like.
Speaker 4: A Democratic basket?
Speaker 7: It would be you know, your clean energy, no like
Speaker 7: lead energy, things like you know, Medicare, managed care, beneficiaries,
Speaker 7: et cetera.
Speaker 4: And on the GOP side, you're looking at traditional energy.
Speaker 4: Sort of a real justice.
Speaker 2: I'm just gonna go to the zeitgeist right now. I
Speaker 2: got eight ways to go here.
Speaker 3: But Obamacare supposedly under some threat I see in the
Speaker 3: zeitgt Exios and others. David Gera telling me the Republicans
Speaker 3: begging the Trump campaign to stay away from Obamacare?
Speaker 2: Is Obamacare a sacred cow?
Speaker 4: I think it's symbolic the you know, there's not much
Speaker 4: more that can be done to undercut Obamacare in the ACA.
Speaker 3: What does Obamacare cost Lisa Mateo on her ten to
Speaker 3: forty text form. The belief is I'm paying for Obamacare.
Speaker 3: Am I is Lisa Matteo paying for Obamacare.
Speaker 4: You can opt in right through these state exchanges, and
Speaker 4: so that's the that's the important thing. You can opt
Speaker 4: in and so it's a broader exchange that you can
Speaker 4: participate in. Now, the you know what we are all
Speaker 4: paying for is the is the me Care, medicaids or tax.
Speaker 4: So that's a set a set number. Now, one of
Speaker 4: the things that I do want to highlight as far
Speaker 4: as broader risk is, you know, folks are looking or
Speaker 4: sort of signaling that there might be tides moving towards
Speaker 4: a Trump win. We see that in the betting markets.
Speaker 4: You see that with you know again the baskets that
Speaker 4: I just highlighted our ETF baskets. But I really want
Speaker 4: to caution when we're thinking about risk that, because of
Speaker 4: how tight this race is, if you pile in on that,
Speaker 4: that could also be your biggest loss. So right now
Speaker 4: and we're giving guidance, it's hold off, Let's wait and
Speaker 4: see what happens with Congress, and then we can position.
Speaker 6: I mean, how are you thinking about the timing of this.
Speaker 6: I mean we might not know for days or even weeks.
Speaker 6: Some people are suggesting about how this is. So that's
Speaker 6: just another level of risk for.
Speaker 4: Investors to deal with, right heightened volatility. But again it's
Speaker 4: just emphasizing from especially from wealth perspective. When we're talking
Speaker 4: to retail, point in time, stay focused and disciplined.
Speaker 2: You're like, you can just tell to choose glass. I
Speaker 2: mean she's in a meeting.
Speaker 8: There's no there's no zoom.
Speaker 3: Meetings with Monica girl. What are you gonna do with
Speaker 3: the New York Yankees? I mean you go down to
Speaker 3: Tampa here in spring training? What is the Monica Guera
Speaker 3: prescription for the dreaded.
Speaker 2: New York Yankees? I don't have one. I don't I
Speaker 2: don't follow baseball.
Speaker 7: Sorry, good here, all sorry.
Speaker 4: All right.
Speaker 6: Let me ask you this guy for our John Tucker
Speaker 6: congestion U correspondent. What happened to our congestion text? I mean,
Speaker 6: get all these cameras up on election tonight.
Speaker 2: Okay, you can have a mimosa.
Speaker 4: Yeah yeah, I mean when I when I've been smoking,
Speaker 4: so it will we'll see.
Speaker 6: Very good, Monica Guarer, Thank you so much for your
Speaker 6: ahead of US policy of Morgan Stanley Wolf Management.
Speaker 1: You're listening to the Bloomberg Surveillance podcast. Catch us Live
Speaker 1: weekday afternoons from seven to ten am. Easter Listen on
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Speaker 3: Dannice joins us now as a report from Yankee Stadium.
Speaker 2: How was that fifth inning, mister Rives?
Speaker 9: Ah, that was That was a brutal fifth inning as
Speaker 9: a Yankee fan, but it was Look, it was wild
Speaker 9: to watch. Congrats a Dodgers, but just an exciting, exciting
Speaker 9: night at the stadium.
Speaker 3: Spin the wheel of fortune right now for Amazon and
Speaker 3: Apple this afternoon after what you've seen in mag seven.
Speaker 2: What's the wheel of fortune look like for those two
Speaker 2: stocks this afternoon?
Speaker 9: I think wheel fortune's bullsh specifically for Amazon on the
Speaker 9: cloud side. I think that's gonna be the upside there
Speaker 9: as well as advertising.
Speaker 8: And for Apple. You know, as we've.
Speaker 9: Talked about, this will be a better than expected iPhone number,
Speaker 9: and I think optimistic in terms of cook going into
Speaker 9: what I believe is just going to be a monster
Speaker 9: December holiday season for iPhone sixteen AI driving that.
Speaker 6: Yeah, I upgraded so I gotta figure everybody else's too.
Speaker 6: It took me five years upgrade. How about let's go
Speaker 6: back to Microsoft. Last night, I thought this was the
Speaker 6: number of solid across the board. I mean, and I
Speaker 6: know people a little bit concerned about maybe the cloud business.
Speaker 6: Give us your read on our friends from Microsoft.
Speaker 9: Oh, I mean, I'm more bullish today than I was
Speaker 9: twenty four hours ago. I think it's a pound the
Speaker 9: table because asure you're seeing growth accerating from an AI perspective.
Speaker 9: I think Street will kind of try to pick hairs here,
Speaker 9: split hairs in terms of the numbers. This is when
Speaker 9: you walk away more bullish. I would be shocked if
Speaker 9: this is a stock that's not up twenty four hours
Speaker 9: from now, given what we see in terms of core numbers.
Speaker 6: So how do you think about the Microsoft story and
Speaker 6: specifically in the cloud. Just give us a sense of
Speaker 6: their competitive positioning versus Amazon, versus Google and some of
Speaker 6: the other players there.
Speaker 8: Sure to get perspective.
Speaker 9: Let's say a year ago, no growth essentially from AI
Speaker 9: that that's attributed to Azure.
Speaker 8: Maybe one percent.
Speaker 9: Today twelve percent of the growth is AI driven. So
Speaker 9: in terms of their backyard on the enterprise, thirty four
Speaker 9: percent growth. AI's driving that now. Now others are getting
Speaker 9: in on that party.
Speaker 8: Google. I see what we'll see from Amazon tonight. But
Speaker 8: it just speaks to the AI revolution. It's only the
Speaker 8: second inning. As it all plays on.
Speaker 9: You can meta look at that cap back to I mean,
Speaker 9: they're spending money like a nineteen eight is rock Star.
Speaker 8: But that's great for Nvidia and great for AI.
Speaker 3: I mean, Dan, foreigners are loving the growth, and I
Speaker 3: think American Wall Street said, well, look we took the CFA,
Speaker 3: we did this course, we did this course. This isn't good.
Speaker 3: I got a pe on Microsoft to thirty five. I
Speaker 3: got a forward p tod June of next year of
Speaker 3: thirty three. Ish to me, the issue which you're good at,
Speaker 3: and even people less optimistic than you are.
Speaker 2: Good at, is the X axis. How do we treat
Speaker 2: the terminal value of our analysis of the mag seven?
Speaker 9: What would happen if Dodgers didn't spend the last two
Speaker 9: years they do, they have a chip right now. The
Speaker 9: point is you look at what's happening in terms of
Speaker 9: where this is all going. I mean, in my opinion,
Speaker 9: some of the parts the AI piece could ultimately add.
Speaker 8: Thirty to forty dollars per share.
Speaker 9: You know, when as is all plays out in terms
Speaker 9: of the story, because I think the street is underestimating
Speaker 9: the next two three four years of free cashwa growth
Speaker 9: and what AI ultimately is going to do the story.
Speaker 3: I mean, help me with Call of Duty. They just
Speaker 3: came out with it here, I saw sixty one percent
Speaker 3: for that. Nobody talks about this, and I just think
Speaker 3: it's an absolute sleeper.
Speaker 2: The new Call of Duty's killing it right black Op six.
Speaker 6: Oh boy, Yeah, look if you look look at Activision,
Speaker 6: I mean what they've done there.
Speaker 9: I mean there's so many growth levers in the Microsoft story,
Speaker 9: more than we've ever seen leading AI. You got Activision
Speaker 9: in the back pocket, and now what you really they're
Speaker 9: seeing just a massive upgrade across enterprise, which is bullish
Speaker 9: for Google, bullish for Amazon, and of course very bullish
Speaker 9: for godfather of Ai.
Speaker 8: Jens and a video.
Speaker 9: And the last piece of that puzzle is the consumer
Speaker 9: AI revolution.
Speaker 8: We hear from Cooper Tino tonight in Cook I.
Speaker 3: Mean Paul, the zombies, the Liberty Falls zombies and the
Speaker 3: New Call of Duty.
Speaker 2: I was on there for like two hours less.
Speaker 6: Oh I'm sure you when you're not on the Gram
Speaker 6: or on Facebook meta platforms. Let's switch scars there, Dan,
Speaker 6: that's been kind of the best performing you know, a
Speaker 6: big cap stock here, up sixty seven percent year to date.
Speaker 6: Digital advertising it's still a thing, isn't it.
Speaker 9: I mean that that's the hearts and lungs of the story.
Speaker 9: And I think now you could criticize them for what
Speaker 9: they're gonna spend capex in terms of AI, but that's
Speaker 9: the next level of the growth story.
Speaker 8: So when you get meta, I think.
Speaker 9: We're only sort of still in the early days of
Speaker 9: this growth transformation. And that's very important as this all
Speaker 9: plays out. We see from that, we see from them,
Speaker 9: we see from Google, and we see from Amazon as well.
Speaker 3: So you got a paragraph like, you know, see if
Speaker 3: a one oh one risk factors?
Speaker 2: What's dan? I mean, wicked, bullish? I get it. People
Speaker 2: making fun of your opinion out of Dan.
Speaker 3: I mean, were people coming up with you last night
Speaker 3: asking for price targets on Microsoft like this?
Speaker 8: I will tell you when I was. I will tell
Speaker 8: you when I was.
Speaker 9: I was going to get a beverage of the Yankees
Speaker 9: game and someone said, hey, should I be worried about Apple?
Speaker 9: So there is some nervousness, But again, that just creates
Speaker 9: the opportunity.
Speaker 8: This is a techbole market that's gonna go on.
Speaker 3: Okay, what's your lead So we gotta go what's your
Speaker 3: lead risk factor? Here on Apple or Amazon today there's
Speaker 3: a paragraph Dan Ice major risk factor.
Speaker 9: Is lead risk factor is just good, But maybe conservative
Speaker 9: guidance will kind of read into that knee jerk.
Speaker 8: That just creates the golden buying opportunity. Hit pound the table.
Speaker 2: How do the Mets look next year? Dan, gotta go,
Speaker 2: how do the Mets look?
Speaker 8: I'm optimistic on Mets. Hopefully Mets. You know they'll be
Speaker 8: in the world.
Speaker 3: Come on, Steve Cohen won Sodo Matchmade in Heaven exactly.
Speaker 2: Thank you, dear that it's good.
Speaker 1: Good websh This is the Bloomberg Surveillance Podcast. Listen live
Speaker 1: each weekday starting at seven am Eastern on applecar Play
Speaker 1: and Android Auto with a Bloomberg Business app. You can
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Speaker 1: York station Just Say Alexa playing Bloomberg eleven thirty.
Speaker 2: Brian Love It with Us Now, Chief market strategist in Vesco.
Speaker 3: Good morning to you. You walked in and you said
Speaker 3: you're really not focused on the election. Get us beyond
Speaker 3: the election, frankly, get us beyond the inauguration. What does
Speaker 3: that do to give you confidence to participate in the
Speaker 3: equity markets?
Speaker 2: Yeah.
Speaker 5: I always tell people that the things I like to
Speaker 5: focus on is the direction of the economy and what
Speaker 5: the Federal Reserve is going to do, and so I
Speaker 5: try to avoid a lot of the other noise that
Speaker 5: enters unless the outcomes to certain things meaningfully change the
Speaker 5: direction of the economy or what the Fed's going to do.
Speaker 5: And I think the latest reports, the numbers that were
Speaker 5: just read are very consistent with what we're seeing, which
Speaker 5: is a resilient economy and inflation and the comfort zone,
Speaker 5: and so that's a nice backdrop for risk assets and
Speaker 5: very little to suggest that this is an economy that's
Speaker 5: losing steam. So you know, it's a backdrop in which
Speaker 5: equities are still likely to be favored.
Speaker 6: Earnings matter. As a former equity analyst, I like to
Speaker 6: think earnings matter. It's not just the Fed. What have
Speaker 6: you seen so far from this earning cycle? What do
Speaker 6: you think the market needs to see?
Speaker 5: Well, there's been a lot of focus on the megacaps,
Speaker 5: and it's been a little bit mixed with the megacaps,
Speaker 5: and yet the irony of it is you're seeing the
Speaker 5: numbers come in with double digit growth, just perhaps slightly
Speaker 5: below what the expectation was, or maybe a little bit
Speaker 5: of weaker guidance. The reality is those names which been
Speaker 5: driving the markets right now, our multi year stories, it's
Speaker 5: hard to look at them as a quarter over quarter story.
Speaker 8: There we do?
Speaker 2: Why do we? Is it just the industry? Yeah, it's
Speaker 2: just the industry, you do?
Speaker 5: Yeah, I mean, because you know, it's a sentiment gets
Speaker 5: out ahead of itself and we you know, we we
Speaker 5: either rare it back in or you know, take it further.
Speaker 5: But but the reality is those are companies you should
Speaker 5: be looking at over multi year periods. But in terms
Speaker 5: of thinking about it tactically, yeah, good, good economic backdrop.
Speaker 2: Let's go to Paul Sweeney on this. I'm going to
Speaker 2: ask right now if I can do the math. I'm
Speaker 2: waiting for the durbim to move, and I got to
Speaker 2: pay the terminal. I know I'm behind it.
Speaker 3: There's sixty nine opinions on Microsoft, Paul Sweeney, do we
Speaker 3: need sixty nine opinions on any given stock?
Speaker 4: No?
Speaker 6: That just goes to the inefficiencies of Wall Street. Here,
Speaker 6: do we need sixty nine voices on Microsoft? Probably not.
Speaker 6: Maybe ten of them are getting paid probably, Brian, uh,
Speaker 6: talk to us about kind of something.
Speaker 9: Whoo wha.
Speaker 2: It was a little bit of folks inside baseball. Yeah,
Speaker 2: exactly right.
Speaker 6: What have you seen here? What are some of the
Speaker 6: sectors that screen well for you guys? If the economy
Speaker 6: is generally in a pretty good space, rates are coming down,
Speaker 6: what sector screen well for you guys?
Speaker 5: Yeah, if you believe that we're going to get through
Speaker 5: this environment, you know, the with the economy intact and
Speaker 5: rates coming down, you want to be more cyclical in
Speaker 5: your exposure. And so you know, we've had a period
Speaker 5: of here where our tactical indicator said, you know, be
Speaker 5: a little bit more defensive in here. Things are going
Speaker 5: to be a little bit challenging the short term. But
Speaker 5: I think that looking out into twenty twenty five, more
Speaker 5: of a pickup in activity with rates coming down, and
Speaker 5: that that should favor the more cyclical parts of the economy.
Speaker 6: Financials what's it call in financials? Just because I saw
Speaker 6: some Jamie Dimond Brian mollinhan putting up some big numbers,
Speaker 6: big numbers, and we.
Speaker 5: Would expect M and A activity to pick up some
Speaker 5: animal spirits. And you know this normalization of the Yelk curve,
Speaker 5: which certainly helps helps the banks.
Speaker 2: Is cash an asset? It's really what it comes down to.
Speaker 3: I mean, people's let's assume most people are behind SPX
Speaker 3: this year.
Speaker 2: What do you do with cash? How do you deploy
Speaker 2: right now?
Speaker 5: The funny thing, Tom is we've been telling people to
Speaker 5: get out of cash now for a year and a half.
Speaker 5: So I guess at some point the well, look, I
Speaker 5: mean the S and P five hundred up twenty something
Speaker 5: percent this year, the cash looks good. The problem you
Speaker 5: have with it, of course, is the reinvestment risk. And
Speaker 5: you know, every time yields come down, you think investors
Speaker 5: lost their chance to lock in the four or five percent.
Speaker 5: And I guess this is the third bite at that apple.
Speaker 5: I do think that rates are going to moderate. I
Speaker 5: think you know, rates are probably a bye here, and
Speaker 5: so investors sitting in cash, well, at some point fine
Speaker 5: yields coming down significantly below the short rate, and you'll
Speaker 5: below the long rate, and you'll want to have been
Speaker 5: exposed to things like credit or things like longer duration treasuries.
Speaker 6: How about credit risk here? How much credit risk going?
Speaker 6: Do I want to take use and fix some space there?
Speaker 6: Spreads still like records, super tight?
Speaker 5: Right yea, spreads are tight, but yields are reasonably attractive
Speaker 5: and the fundamentals look quite good. I mean, usually when
Speaker 5: you look at you're going into a worrisome credit backdrop.
Speaker 5: Usually see double digit borrowing growth. We're nowhere near that
Speaker 5: right now.
Speaker 3: We got a metal bar folks around our desk here.
Speaker 3: We have the nicest radio studio in all of radio.
Speaker 3: Don fin screens up here and thanks, it's really And
Speaker 3: what what you don't know is the metal bar is
Speaker 3: here to take our heart rate. The average heart rate
Speaker 3: of Mateo, Levitt and Swingy is like a forty nine,
Speaker 3: you know, and it's it's Lisa helped me here. Peloton's
Speaker 3: up twenty five percent the.
Speaker 6: Yeah, and they just announced the new CEO.
Speaker 2: New CEO.
Speaker 3: They go from one hundred and sixty to three. You
Speaker 3: told me to buy I remember you told me to
Speaker 3: buy I did not. I mean, Brian Levitt, you're so cut?
Speaker 3: Do I need the bike plus from Peloton? Is that
Speaker 3: the new Peloton? The way to go?
Speaker 8: Here? Well?
Speaker 5: I mean I think is as long as you eat
Speaker 5: healthy and you and you move, that's that's my at least,
Speaker 5: regardless regardless of how we do.
Speaker 6: It sitting on barstool in an Irish pope.
Speaker 2: That's not the way.
Speaker 6: It doesn't seem like the best approach, but you know,
Speaker 6: that's how I'm going, Lisa.
Speaker 2: It seems like the fun approach is.
Speaker 3: The exuberance there to investco across a huge platform you have.
Speaker 3: Is there individual stock exuberance to pick on PTO N
Speaker 3: or to pick on Microsoft or Apple Amazon today? Are
Speaker 3: people engaged in the market or not? I don't see it.
Speaker 5: They're not. I mean, it's not the irrational exuberance that
Speaker 5: you usually see at the end of cycles. There's still
Speaker 5: a lot of money. I mean, you can look at
Speaker 5: seventeen trillion in deposits, you can look at six and
Speaker 5: a half trillion in money markets. That's a lot of
Speaker 5: money that's still sitting there. I talk to our portfolio
Speaker 5: managers every time I go and grab a cup of coffee.
Speaker 5: They seem pretty optimistic at what they're looking at. And
Speaker 5: I think a lot of it comes down to the
Speaker 5: fact that you're coming off of a year in which
Speaker 5: things were good but but concentrated in a handful of names,
Speaker 5: Versus if you bring rates down, the economy stays resilient.
Speaker 5: That broadens out to other parts of the market that
Speaker 5: have not participated. And you know, whether you look at
Speaker 5: things like mid cap or or more value oriented parts
Speaker 5: of the market, those portfolio managers are excited.
Speaker 2: And Brian, we don't care.
Speaker 3: The only reason we had you when we need an
Speaker 3: outside expert on Penn State, Ohio State Michigan. It is
Speaker 3: the line seven and zero, but against the heritage, a
Speaker 3: juggernaut of the buck Eyes.
Speaker 5: What do you think I think I'm going buck Eyes
Speaker 5: on this one.
Speaker 6: But probably pretty I don't know. I'm gonna stick with it.
Speaker 6: My pen stake State, Yeah, I mean, got a great
Speaker 6: coach is my producer will attest, and you know, we'll
Speaker 6: stick with it.
Speaker 10: We'll see.
Speaker 6: But they're always waiting for the for the Ohio State
Speaker 6: Michigan game. That's what even a whole year comes down.
Speaker 5: We are and we're going And if anyone has tickets,
Speaker 5: let me know, because the price on those things are still.
Speaker 6: As where It's like where we're playing shar Is.
Speaker 5: We're playing in Columbus, oh Okay. And when you're going,
Speaker 5: We're going, and we had a fly to Cincinnati and
Speaker 5: drive to Columbus because there's just it's impossible to get
Speaker 5: there and there's no tickets to be found right now.
Speaker 2: Wow, Well they could be found. You're just paying a pretty.
Speaker 6: Price for it in Michigan. That's what it's all about.
Speaker 2: Your Penn State, Ohio state, Michigan update. There everything for
Speaker 2: the surveillance we're rebuilding.
Speaker 3: Your correspondent, Brian Levitt Investco. Thank you so much.
Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday
Speaker 1: starting at seven am Eastern on applecar Play and Android
Speaker 1: Auto with the Bloomberg Business app. You can also watch
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Speaker 3: This is the conversation with someone with deep experience on trade.
Speaker 3: I want you to push aside every single pundit and expert.
Speaker 3: The path here is from my Michael Froman to Robert Leiittheiser,
Speaker 3: and these are the two individuals that have most studied
Speaker 3: and affected a trade policy for the United States of America.
Speaker 3: Mister Frohman has moved on from his public service to
Speaker 3: President Obama to the President of the Council on Foreign
Speaker 3: Relations and importantly has written a new report, a new
Speaker 3: essay I should say on the new Washington Consensus, Michael,
Speaker 3: it's a required read for any student. Going back to
Speaker 3: Smoot Hawley, Do we have a new Washington Consensus that
Speaker 3: you and mister Leittheiser could agree upon.
Speaker 11: Well, I think the old Washington Consensus, which was really
Speaker 11: about hyper globalization and all the benefits of global integration,
Speaker 11: I think that has very much been weekend. I think
Speaker 11: we have the beginnings of a new consensus, but there
Speaker 11: are a lot of unanswered questions still to address. And
Speaker 11: that's what that essay talks about, which is a lot
Speaker 11: of the actions that we're thinking about taking to reduce
Speaker 11: our dependence on China, whether it's export controls or constraints
Speaker 11: on foreign investment or protectionism, those also come with costs
Speaker 11: like raising inflation or raising the cost of living, and
Speaker 11: we need to address those trade offs and create some
Speaker 11: sort of framework going forward if we're going to pursue
Speaker 11: those kinds of tools.
Speaker 3: But the heart of it within the polarization of America,
Speaker 3: and we see this with the minted Nobel laureates Smoglar, Robinson,
Speaker 3: and Johnson. The heart of the matter is the separation
Speaker 3: of America into elites looking for some form of post
Speaker 3: world to benevolent, egalitarian trade policy, and everybody else saying
Speaker 3: we're getting killed. How do we bring that, how do
Speaker 3: we amend that together beside permanent polarization.
Speaker 11: Well, I think first we should recognize that, on one hand,
Speaker 11: globalization has achieved some of the most significant gains in
Speaker 11: human history in terms of reducing poverty, lifting hundreds of
Speaker 11: millions a billion or more people out out of poverty,
Speaker 11: increased a competitiveness, spread technology around the world. There have
Speaker 11: been a lot of positives to it. I think all
Speaker 11: along we knew that there are winners and losers in
Speaker 11: in globalization, and that hopefully the economy makes up for
Speaker 11: people who lose out from globalization by creating new jobs,
Speaker 11: new industries that they go into. But that's not been simultaneous.
Speaker 11: And we've seen the de industrialization of certain communities in
Speaker 11: the US and that has had a real negative impact
Speaker 11: on those workers, those communities and their families. I think,
Speaker 11: Tom I think the real issue is trade policy at
Speaker 11: Globalization itself is not enough. I think we always need
Speaker 11: to be accompanied by domestic policies that are designed to
Speaker 11: ensure that workers survive and thrive in a rapidly changing economy,
Speaker 11: whether that change comes from technology think about AI, or
Speaker 11: from trade or from immigration. And we have not had
Speaker 11: a domestic policy agenda. They're either democratic or republican administrations
Speaker 11: that have successfully dealt with that.
Speaker 6: So is globalization dead? I mean, there's probably a couple
Speaker 6: of generations of us that have grown up with the
Speaker 6: whole concept of globalization.
Speaker 5: Where are we?
Speaker 6: Is this a bump on the roads and something more fundamental?
Speaker 11: Well, first of all, it's certainly not dead. The trade
Speaker 11: is as at an all time high. It's not growing
Speaker 11: as much as it was before, used to outstrip global growth.
Speaker 11: Now it's somewhat behind global growth, but it is still growing.
Speaker 11: And what we're seeing are changing patterns of trade. And
Speaker 11: so rather than being overly dependent on China, we're seeing
Speaker 11: supply chains beginning to move. Not necessarily people pulling out
Speaker 11: of China, although there's been some of that, but more
Speaker 11: as companies think about where to put their next factory,
Speaker 11: they're either thinking about bringing it in the United States
Speaker 11: or in some other market Vietnam, Mexico, Malaysia, Thailand, elsewhere.
Speaker 11: And so that is still globalization, but it's reflecting that
Speaker 11: it's not just by efficiency anymore. You don't necessarily go
Speaker 11: to the most efficient place to produce because there are
Speaker 11: other issues that are important too, other values like redundancy, resilience, diversification,
Speaker 11: and national security. And we're now balancing efficiency against those
Speaker 11: other values. And that's another trade off again that I
Speaker 11: think the next administration is going to really have to
Speaker 11: wrestle with if we're going to have an enduring consensus.
Speaker 6: Uh terrifs. Boy, they're not just one party talking terrorists.
Speaker 6: It seems like everybody's talking tariffs these days, to varying degrees.
Speaker 6: How do you view tariffs?
Speaker 11: Well, Teriffs, first of all, are ultimately.
Speaker 10: Paid that whether it's the consumer consumer product, or whether
Speaker 10: it's the importer, perhaps a manufacturer in the US, who's
Speaker 10: paying a tariff on an input they.
Speaker 11: Need for their for their production, for their production process.
Speaker 11: So it makes things more expensive. And when it comes
Speaker 11: to the consumer income, consumers spend the disproportionate amount of
Speaker 11: their income on tradable goods like clothing and flipwear and
Speaker 11: things of that sort, and so it's really a regressive
Speaker 11: tax on them.
Speaker 3: Mike, I got time for one more question. Nick Burns
Speaker 3: is nailing diplomacy in China. His Twitter feed is a
Speaker 3: State Department mandate read. He's on the train.
Speaker 2: He's driving all over China on the train, going to
Speaker 2: see things, moving it forward. Is Nick Burns on.
Speaker 3: Your short list if we do get a President Harris
Speaker 3: as Secretary of State.
Speaker 11: Nobody's asking me for my list, but Nick Burns is
Speaker 11: an incredible diplomat, incredible public servant. So doing a fantastic
Speaker 11: job there as he's done in his previous jobs, and
Speaker 11: he would be a great asset to any administration.
Speaker 3: Is Michael Frohman on your short list for secreturs State?
Speaker 8: I'm busting. I'm very happy at the Council.
Speaker 11: I'm very happy at the Council on Formulations, and I'm
Speaker 11: honored to have served and governments and I'm alighted to
Speaker 11: be at the Council.
Speaker 3: Whoever, returning again to Bloomberg Surveillance, Michel froman with the
Speaker 3: Council on FORID Relations, I can't say enough about the
Speaker 3: essays and foreign affairs. Whatever your politics, folks, it's just
Speaker 3: absolutely fabulous.
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