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Speaker 1: Bloomberg Audio Studios, podcasts, radio news. You're listening to the

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Speaker 1: Bloomberg Intelligence podcast. Catch us live weekdays at ten am

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Speaker 1: Eastern on Apple card playing Android Auto with the Bloomberg

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Speaker 1: Business App. Listen on demand wherever you get your podcasts,

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Speaker 1: or watch us live on YouTube.

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Speaker 2: Yesterday, I'm coming out of the ocean, get back to

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Speaker 2: my little group of people. Buddy looks up and says,

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Speaker 2: Biden's out. They're like, oh boy, here we go.

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Speaker 3: I have a better one for you. Yes, we were

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Speaker 3: at the Bloomberg event at the Botanical Gardens and you

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Speaker 3: could just see like all the media people were like

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Speaker 3: on their phones and my daughter's like, Mommy, don't worry

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Speaker 3: about it. It's Sunday. And I'm like that, I don't know.

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Speaker 2: We're all working now, so the real question is and

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Speaker 2: we're all just trying to start to figure out what

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Speaker 2: could all this mean. Fortunately, we have a person that

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Speaker 2: we pay to do this, Nathan Dean. He's a senior

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Speaker 2: policy analyst at Bloomberg Intelligence.

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Speaker 4: He's in DC.

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Speaker 2: He's really good.

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Speaker 5: Nathan.

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Speaker 2: And what's in your sourcing and the people you talk

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Speaker 2: to down in DC? What's the feeling today about what

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Speaker 2: happened to the Democratic ticket over the last twenty four hours.

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Speaker 6: Well, I mean, look, there's been a lot of pressure

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Speaker 6: on President Biden over the last couple of weeks to

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Speaker 6: drop out, and you know, I think this just culminated

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Speaker 6: with this effort that you know, Vice President Kamala Harris

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Speaker 6: has filled that void. Now, look, she's not the nominee.

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Speaker 6: You know, that doesn't happen until either there's a virtual

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Speaker 6: roll call or to the convention. But we've seen so

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Speaker 6: many endorsements over the last few hours, and you know,

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Speaker 6: just so forth that you know, we're presuming that she

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Speaker 6: is the nominee in our research, in our notes, and

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Speaker 6: so we put out actually a big note on the

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Speaker 6: terminal this morning talking about what would life be like

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Speaker 6: under a Harris presidency. And it's a lot of status

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Speaker 6: quo for banks, evs, big tech and so forth like that.

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Speaker 4: The one caveat is on taxes.

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Speaker 6: We've often said that this election is rally the two

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Speaker 6: major things about this election are tariffs and taxes, and

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Speaker 6: Kamala Harris's record in her tax you know, aspect of

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Speaker 6: it has been a little bit more you know, i'd

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Speaker 6: say progressive than what President Biden has said, but ultimately

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Speaker 6: we viewed President.

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Speaker 4: Or as Kamala Harris.

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Speaker 6: I'm sorry, we viewed President Biden as moving more towards

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Speaker 6: Kamala Harris's policies when he became president, rather than Kamala

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Speaker 6: Harris moving towards Biden's policies. So a lot of this

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Speaker 6: if she becomes president will be status quo.

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Speaker 3: Oh that's really interesting. So I was going to ask,

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Speaker 3: where is Vice President Harris farther left than President Biden?

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Speaker 3: Where is that biggest daylight?

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Speaker 6: So the one thing that we actually hung down on

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Speaker 6: was her record as Attorney General, And you know, just

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Speaker 6: indicative of one of her actions is she joined about

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Speaker 6: forty seven other states, including the District of Columbia, on

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Speaker 6: a twenty five billion dollar settlement on home foreclosure practices.

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Speaker 6: And a lot of her campaign speeches when she was

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Speaker 6: running president in twenty twenty was talking about how she

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Speaker 6: took on big banks. Now, you know, to us, that

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Speaker 6: means there's a lot more consumer protection coming in the cards,

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Speaker 6: whether it's the Consumer for Financial Protection Bureau, or whether

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Speaker 6: it comes through acts of Congress, or maybe it's even

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Speaker 6: executive orders like continuing President Biden DoD debt relief pans.

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Speaker 6: But I think there's going to be a lot of

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Speaker 6: focus on this idea of load to middle income consumers,

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Speaker 6: protections against big corporations, and a lot more in terms

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Speaker 6: of disclosures and so forth like that. Now, is this

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Speaker 6: a material impact on big tech or on the big banks.

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Speaker 4: Probably not.

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Speaker 6: A lot of it has to get pass through Congress,

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Speaker 6: but ultimately it's certainly a headline risk that I would

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Speaker 6: keep in mind for those sectors in particular, is just

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Speaker 6: to keep in mind, you know that if she were

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Speaker 6: to focus on this, and specifically it was just pick

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Speaker 6: on anti trust, If she were to focus on anti trust,

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Speaker 6: there's a lot of you know, intense scrutiny, more scrutiny

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Speaker 6: than she could put there than a Biden administration could.

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Speaker 2: All Right, a lot of my M and A banker

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Speaker 2: buddies are wondering what would a Harris administration mean for antitrust?

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Speaker 2: Because Biden's been nobody into the M and A world.

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Speaker 2: What's the is a feeling status quo there as well?

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Speaker 6: You know, this is one of those situations where I think,

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Speaker 6: whoever wins as president's probably not going to be helpful

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Speaker 6: to your M and A banker buddies. Because on one

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Speaker 6: hand you have the continuation of the Biden presidency with

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Speaker 6: Lena Khan at the FTC and taking a very skeptical,

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Speaker 6: skeptical look at mergers. I mean just in the financial

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Speaker 6: space alone. You know, some of these merger reviews go

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Speaker 6: over a year, if not longer, and you know we

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Speaker 6: saw it certainly with the TD Financial merger. They pulled

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Speaker 6: out as a result of this. But then on the

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Speaker 6: flip side, you have Senator Advance and President Trump. And

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Speaker 6: remember this idea of economic popularism is ramped through that.

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Speaker 6: You know that RNC agenda at the moment. So you know,

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Speaker 6: Senator Vance even came down to a Bloomberg event here

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Speaker 6: in Washington and called Lena Kahan, the FTC chairwoman Biden's

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Speaker 6: best picked and insinuated that President Biden would even probably

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Speaker 6: are President Trump should even keep around. Now, I don't

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Speaker 6: think this is going to happen, but for unfortunately Paul,

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Speaker 6: for your M and A banker buddies, I don't think

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Speaker 6: any other way this gets around, whether it's Harris or Trump,

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Speaker 6: it's going to be a very skeptical world for anti

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Speaker 6: trust in M and A.

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Speaker 3: So Paul's talking to his ma buddies. I'm thinking about

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Speaker 3: my energy buddies, because one area where it feels like

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Speaker 3: President President Harris could be farther left, of course his energy.

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Speaker 3: I was telling Paul earlier that she's been kind of

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Speaker 3: anti fracking, she's been anti offshore. California is notoriously not

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Speaker 3: loving any fossil fuels. How much of that do you

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Speaker 3: think we have to really start considering.

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Speaker 4: I think it's important to consider it.

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Speaker 6: In fact, our colleague Rob Barnett just put out a

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Speaker 6: note about forty minutes ago talking about this in the

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Speaker 6: importance it has on the renewable sector. So, you know,

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Speaker 6: a Senator sorry, I was going to say Senator Harris.

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Speaker 6: Vice President Harris, you know, certainly has pursued a clean

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Speaker 6: energy agenda. And one of the things we see in

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Speaker 6: you know, her presidency is a boosting of the Inflation

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Speaker 6: Reduction Act. I don't want to say going back to

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Speaker 6: the build back better three point zero, you know, some

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Speaker 6: of the ideas that were floating around. She'll have her

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Speaker 6: own ideas here, but this idea of the Inflation Reduction

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Speaker 6: Act needs to be protected and enhanced. So if you're

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Speaker 6: in the renewable sector or solar sector, it certainly could

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Speaker 6: be a boon idea if you know, Vice President Harris wins,

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Speaker 6: but I would also just recommend it, or you know,

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Speaker 6: I would also just offer this that A lot of

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Speaker 6: it also depends on who takes up Congress, because if

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Speaker 6: Vice President Harris wins and the Republicans take one, if

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Speaker 6: not two members chambers of the House, then a lot

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Speaker 6: of those initiatives are going to be scaled down and

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Speaker 6: actually dramatically lowered and so forth like that.

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Speaker 2: All right, we know Elon Musk is a big supporter

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Speaker 2: of Trump, but it sounds like, what's what would a

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Speaker 2: democratic Harris administration mean for the Elon muscle of the

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Speaker 2: world and the evs.

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Speaker 6: So, you know, for the EV side, I think it's

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Speaker 6: actually a continuation of the Inflation Reduction Act tax credit,

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Speaker 6: if not an enhancement of that. You know, Look, tax

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Speaker 6: reform is going to have to happen next year no

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Speaker 6: matter what, because the Trump era tax cuts for individuals

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Speaker 6: expires at the tail end of twenty twenty five. And

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Speaker 6: whether it's Vice President Harris or a President Trump, neither

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Speaker 6: of them are going to want to increase taxes for

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Speaker 6: low and middle and income you know, Americans.

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Speaker 4: So for the EV's of the world.

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Speaker 6: I would say, under a Harris presidency, you'll certainly have

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Speaker 6: protection from that tax credit in the IRA, You potentially

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Speaker 6: could have an enhancement of that. You certainly will have

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Speaker 6: regulatory policies.

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Speaker 4: Trying to boost EV usage and so forth like that.

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Speaker 6: Comparing it against the President Trump presidency, where you know,

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Speaker 6: he said that he doesn't like electric vehicles. Obviously he

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Speaker 6: has Elon Musk whispering in his ear and providing forty

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Speaker 6: five million dollars a month in PAC funding. But ultimately

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Speaker 6: I think the Republicans you probably would see a scaling

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Speaker 6: back of those tax credits, maybe you know, just additional

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Speaker 6: you know, restrictions on EV's and so forth like that.

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Speaker 6: But you know, with the Trump presidency, we'll have to

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Speaker 6: see if he wins and also if the Elon Musk

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Speaker 6: is whispering in his ear in come January and February taxes.

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Speaker 2: If former President Trump were to get a second term,

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Speaker 2: is there any consensus in Washington given the makeup of Congress.

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Speaker 2: I guess we have to see how Congress shakes out.

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Speaker 2: But what, if anything could Trump administration get done on taxes?

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Speaker 6: Yeah, So, you know, the way I think about the

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Speaker 6: tax debate with my colleague Andrew Silverman is really print

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Speaker 6: some timing.

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Speaker 4: So the first thing you'll note is the election.

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Speaker 6: If the Republicans take the House and the Senate and

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Speaker 6: the Presidency, then they have this opportunity for reconciliation. This

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Speaker 6: is how they got the Trump era tax cuts through

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Speaker 6: in twenty seventeen. It allows them to actually move forth

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Speaker 6: and enhance or you know, essentially conduct reform, and they

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Speaker 6: can bypass the Democrats. So if the Republicans win the

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Speaker 6: House of the Senate and the Presidency, then this President

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Speaker 6: Trump's idea of lowering corporate tax rates is certainly in

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Speaker 6: the carts.

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Speaker 4: Now. I have seen statements from House Republicans saying.

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Speaker 6: Maybe we don't want to do that so much, but

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Speaker 6: I do think that this would be President Trump driving this. Now,

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Speaker 6: if you get more of a gridlock Congress, well, then

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Speaker 6: the power of Congress, the power of Congress is going

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Speaker 6: to come out and the House in ways and means committee,

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Speaker 6: whoever controls it, is certainly going to want to play

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Speaker 6: here and tell the Presidency this is what we think.

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Speaker 4: And so if you get a.

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Speaker 6: Gridlock Congress, a lot of the tax reform or tax

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Speaker 6: relief ideas that are out there are going to be

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Speaker 6: scaled down or narrowed, but with one objective not to

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Speaker 6: increase the individual tax relief or tax cuts.

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Speaker 4: For that individual.

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Speaker 6: If you get President Harris, you may see tax increases

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Speaker 6: for individuals who make greater than four hundred thousand dollars,

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Speaker 6: but I think most individuals in the United States at

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Speaker 6: the end of twenty twenty five probably won't have their

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Speaker 6: taxes altered all that much.

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Speaker 3: Literally, my head hurts from all the different possibilities. I

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Speaker 3: do not know how you do this, naythan on a

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Speaker 3: daily base of all the individ sectors. Okay, before I

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Speaker 3: let you go, now what like now are you paying

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Speaker 3: attention for what is most on your radar? Now as

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Speaker 3: you go talk to clients, so you.

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Speaker 6: Know, the most important thing for us is obviously say,

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Speaker 6: you know, does Kamala Harris become the vice president or

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Speaker 6: presidential nominee.

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Speaker 4: I think she will.

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Speaker 6: Just remember the Democrats have to have a virtual roll

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Speaker 6: call to get their person on the ballot for the

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Speaker 6: state of Ohio. I would anticipate that starting in August.

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Speaker 6: First next thing would be, you know, Kamala Harris's vice

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Speaker 6: presidential pick. We're cautioning clients. Look, she has plenty of time.

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Speaker 6: She's going to do this in a way that it's

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Speaker 6: politically advantageous to her, and she doesn't have to name

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Speaker 6: somebody until the convention in Chicago in mid to late August.

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Speaker 6: So you know, those are the probably the two most

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Speaker 6: important things. But also just remember, on the flip side,

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Speaker 6: the tariff argument for President Trump is real, and it's

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Speaker 6: certainly a risk that I think investors should pay attention to.

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Speaker 3: All Right, Nathan, thank you so much. We appreciate you

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Speaker 3: really really great stuff. Nathan Dean Bloomberg Intelligence Senior Policy Research.

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Speaker 3: I cannot recommend his research enough because it can go

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Speaker 3: into all the different sectors as well as kind of

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Speaker 3: game out the different possibilities and where we kind of

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Speaker 3: go up from here.

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Speaker 2: So I guess that virtual role call thing or the

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Speaker 2: virtual that's a key date, right.

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Speaker 3: Yeah, apparently that happens between August first and August seventh.

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Speaker 3: That's what I was reading about yesterday, And I'm just

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Speaker 3: my mind is also spinning as to what winds up

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Speaker 3: going to the courts in terms of where the money

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Speaker 3: is accessed and who was able to get control of

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Speaker 3: all that fundraising money also in terms of getting the

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Speaker 3: ticket on the ballot in all the states.

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Speaker 7: I don't know.

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Speaker 2: I feel like these snap elections that the UK and

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Speaker 2: your holds, it just gets it done really quickly.

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Speaker 3: You know what I like about the UK is that

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Speaker 3: you're not allowed to campaign for a long period of time.

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Speaker 3: You have like very strict campaign today.

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Speaker 2: How about the signs on the lawn thing? Is there

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Speaker 2: any rules on that? Guess that's a big issue for

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Speaker 2: us at in suburbia.

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Speaker 3: I don't think you can do that. I mean, I'm

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Speaker 3: kind of making that up, but I mean they have

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Speaker 3: some strong restrictions. Anyway.

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Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live

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Speaker 1: weekdays at ten am Eastern on Apple card Play and

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Speaker 1: Android Auto with a Bloomberg Business Act. You can also

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Speaker 1: listen live on Amazon Alexa from our flagship New York

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Speaker 1: station Just Say Alexa playing Bloomberg eleven thirty.

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Speaker 3: Let's continue the conversation of what President Biden dropping out

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Speaker 3: of the presidential race for twenty twenty four means. Wendy Schiller,

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Speaker 3: professor at Brown University and interim director of the Watson Institute,

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Speaker 3: is standing by. She joins us from Providence Rhode Island. Professor,

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Speaker 3: I have so many questions, but one basic one is

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Speaker 3: will whoever becomes the next presidential nominee and VP make

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Speaker 3: it on all the ballots in all the states? Is

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Speaker 3: that a foregone conclusion.

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Speaker 5: No, Alex, it's a great question, and good morning to you,

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Speaker 5: to Paul, because Republicans are already gearing up to try

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Speaker 5: to block access to these ballots in particular states. Now,

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Speaker 5: some of the largest states we have maylen blue, like California,

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Speaker 5: New York, Illinois, and you know they're democratic. Legislators will

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Speaker 5: take care of this. But the Freme Court a long

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Speaker 5: time ago your two thousand rules that parties essentially have

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Speaker 5: control over their own nominating processes, that even though states

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Speaker 5: controlled ballot access, parties can really do whatever they need

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Speaker 5: to do to change primaries or nominate people. So it's

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Speaker 5: I think it's going to be a tough call if

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Speaker 5: it actually got all the way up to the Supreme

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Speaker 5: Court and exped out of review for them to go

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Speaker 5: back on that and all of a sudden say that

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Speaker 5: state legislators can actually determine what political parties do. So

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Speaker 5: this is going to be the legal wrangling Republicans have

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Speaker 5: to decide whether it's worth it to spend the money

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Speaker 5: on this, given that the likelihood of prevailing and enough

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Speaker 5: states to make a difference right now doesn't look all

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Speaker 5: that great.

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Speaker 2: All right, Wendy. We are all in uncharted territory here

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Speaker 2: in terms of this process, the campaign here for the Democrats.

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Speaker 2: Can you leg out how it might plug out? Ie?

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Speaker 2: When will the Democratic Party decide whether they are fully

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Speaker 2: behind Vice President Harris or they may open it up

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Speaker 2: to a grit wider competition. How does that work? Do

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Speaker 2: you think?

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Speaker 5: Well, you know, a long time ago, or even twenty

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Speaker 5: years ago, it was a hierarchy that ran the Democratic Party,

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Speaker 5: but just doesn't exist anymore, mostly due to the fact

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Speaker 5: that the donor class is now independent of party leaders.

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Speaker 5: People can give as much money independent of a party,

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Speaker 5: so it really is weakened centralizing forces in the party.

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Speaker 5: You can have a Trump campaign and Trump himself centralizes

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Speaker 5: the party, but otherwise systematically very difficult to do. I

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Speaker 5: think you've got some loan voices, particularly President Obama formed

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Speaker 5: President Obama's loud voice sort of saying wait a minute,

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Speaker 5: but a lot of the people who are in an

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Speaker 5: elected office right now around the States are now gearing

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Speaker 5: towards Harris, and delegates themselves who are already pledged to

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Speaker 5: Biden they're saying at the convention they'll vote for Harris.

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Speaker 5: So I think they'll be somewhat of an organic kind

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Speaker 5: of organization of a party at the state level. And

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Speaker 5: the more elected leaders, especially those running for House and Senate,

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Speaker 5: saying they're buying Harris really pushes the party at the

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Speaker 5: convention towards Harris. But they want to stay open to

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Speaker 5: voices and engage people who have felt disengaged by Biden's refusal.

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Speaker 3: To step aside planned tightrope to be walked. To be sure, now,

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Speaker 3: before we get to the DNC, there's apparently this virtual

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Speaker 3: role called vote between August first and August seventh. What

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Speaker 3: is that and if there isn't a consensus behind Harris

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Speaker 3: at that point, what happens?

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Speaker 5: Well, Alex, this was really pushed by Ohio, the state

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Speaker 5: of Ohio that said, you know, you're not going to

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Speaker 5: meet our deadline. We're not putting Biden on the ballot

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Speaker 5: for president. So they you know, they tried to fix it.

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Speaker 5: Mike Dewayne, Republican governors tried to fix it, but nonetheless

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Speaker 5: they're up against a very tight deadline that state set

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Speaker 5: for determining the ballot. So I think that is the problem,

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Speaker 5: and I think this is going to be where Harris

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Speaker 5: and whoever she appoints to run her campaign has to

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Speaker 5: really literally get on the phone with state party chairs

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Speaker 5: who typically know most of the delegates, and the DNC

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Speaker 5: has the list of all those names, and you've got

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Speaker 5: to get surrogates and yourself to be on the phone

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Speaker 5: literally or virtually and talking to people saying, vote for

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Speaker 5: me on the first ballot. It's possible she doesn't win

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Speaker 5: the nomination on the first ballot, but if it looks

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Speaker 5: quite likely and she's almost there, you can see that

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Speaker 5: how depending on the second ballot. So it's unclear who

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Speaker 5: steps forward to be an alternative. You know who's really

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Speaker 5: going to launch a challenge against her? And let's not

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Speaker 5: forget core constituency for the Democratic Party, black voters, particularly

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Speaker 5: in swing states, and suburban female voters, and you know

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Speaker 5: who else fits the bill other than Kamala Harris. And

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Speaker 5: that's what the people who don't want to launch support

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Speaker 5: for her now have to say to themselves if they

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Speaker 5: want to really be viable going against Donald Trump and

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Speaker 5: dat events.

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Speaker 2: Are you surprised that we've not heard an endorsement from

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Speaker 2: President Obama?

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Speaker 5: You know, the generous interpretation I like to say is

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Speaker 5: that you know, he liked to make sure that disaffected

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Speaker 5: voices we saw almost what one hundred thousand uncommitted or

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Speaker 5: something in Michigan for Biden in the primary, that those

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Speaker 5: voices feel that they're being heard in the platform, and

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Speaker 5: who the VP pick might be, I think he's what

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Speaker 5: he's trying to do is make sure that people feel engaged.

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Speaker 5: And if it just looks like the elites in Washington

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Speaker 5: picked Kama Harris, which is not what's happening right now.

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Speaker 5: The elites in Washington are not doing that. It's the

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Speaker 5: great roots in state level that are doing that. But

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Speaker 5: if that's what it looks like, he's worried. I think

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Speaker 5: that people won't feel as consulted as he needs them

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Speaker 5: to be. If he's a Democrat and he wants to

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Speaker 5: make sure he is a Democrat, wants to make sure

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Speaker 5: to elect Kamala Harris. But it increasingly looks right now

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Speaker 5: that he is out of step with where the party

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Speaker 5: is moving quite quickly publicly to support and rally around Harris.

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Speaker 3: But that would make sense of why not only Obama,

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Speaker 3: but PELUSI is also not setting mum on all of this.

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Speaker 3: Before we let you go, we know you got a

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Speaker 3: heart out in just about a minute. What kind of

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Speaker 3: lawsuits do you think we're going to see to prevent

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Speaker 3: whatever ticket we do have for the Democrats lack of

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Speaker 3: access to the campaign funds. What do you think is

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Speaker 3: going to play out there?

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Speaker 5: I mean, I think Republicans will launch every and any

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Speaker 5: lawsuit that they can to gum up the system, make

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Speaker 5: Democrats spend money to defend what they're doing, even transferring

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Speaker 5: the money. It was a Biden Harris ticket, there shouldn't

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Speaker 5: be any issue there. They're going to do a lot

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Speaker 5: of that because mechanically on the ground, the Democrats are

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Speaker 5: much better organized with their infrastructure then the Republicans that

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Speaker 5: have relied on the Trump sort of charisma to get

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Speaker 5: people out the door. So whatever they can do to

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Speaker 5: com it up, they will, and that could hurt some

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Speaker 5: of the states. But in terms of re engaging the party,

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Speaker 5: it seems as if the Democrats see an opportunity to

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Speaker 5: get back on the road, be viable and generate the

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Speaker 5: kind of enthusiasm that they've been unable to generate for

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Speaker 5: the last six months.

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Speaker 3: Wendy, thank you so much. We very much appreciate you.

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Speaker 3: When you Schiller, Professor, Brown University and interim Director of

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Speaker 3: the Watston Institute.

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Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live

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Speaker 1: weekdays at ten am Eastern on Apple card Play and

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Speaker 1: then Broud Auto with the Bloomberg Business App. Listen on

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Speaker 1: on YouTube.

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Speaker 3: This is Bloomberg Intelligence Radio. We bring you all the

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Speaker 3: top news in business and finance and economics. There are

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Speaker 3: a lens of Bloomberg Intelligence folks. They cover two thousand

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Speaker 3: companies and one hundred and thirty industries all around the world.

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Speaker 3: And we also tap our resource is outside of Bloomberg Intelligence.

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Speaker 3: And for now we go to Christopher Smart. He's a

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Speaker 3: managing partner at Ubroth Capital sorry Aubroath Group, and former

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Speaker 3: Special Assistant to the President for International economics and he

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Speaker 3: joins us from Boston, Massachusetts. Christopher is great to get

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Speaker 3: your perspective. So we looked at last week as the

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Speaker 3: Trump trade. At least some people did right. Steeper curve

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Speaker 3: bid into crypto tech was selling off. You had to

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Speaker 3: move into small caps. Is that trade now said to

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Speaker 3: reverse with the change on the ticket from the Democratic Party.

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Speaker 8: I would say it looks like it might be getting

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Speaker 8: a little bit push of pushback this morning and maybe

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Speaker 8: over the next couple of days. But I would side

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Speaker 8: with that clip you just played from Jim Bianco that

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Speaker 8: the Trump trade, as it has been pushed out or

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Speaker 8: talked about over the last week or so has probably

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Speaker 8: been overblown. A lot of the moves you've seen in

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Speaker 8: the market, whether it's the yields curve, the Heald curve steepening,

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Speaker 8: the move in the dollar, the move in the equity markets,

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Speaker 8: I think even without any of this background noise from

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Speaker 8: the political world, it's not really background noise, it's very

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Speaker 8: important noise. But had we not had any of that,

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Speaker 8: the fundamentals of interest rates being cut, maybe some disappointing earnings,

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Speaker 8: maybe a little hiccup over at CrowdStrike, that does a

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Speaker 8: lot more to explain the recent dynamics that we've seen

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Speaker 8: in the markets, and maybe other than the bitcoin price,

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Speaker 8: there really are very few pure plays on the election outcome.

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Speaker 2: Right now, Hey, Chris, before we get the president Biden

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Speaker 2: stepping back here, what did you take away from the

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Speaker 2: Republican Convention last week.

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Speaker 8: Well, my takeaway is this is not the Republican Party

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Speaker 8: that I grew up with or that maybe most of

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Speaker 8: us have come to know over the last twenty thirty

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Speaker 8: forty years since President Reagan. This is a party that

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Speaker 8: has very much shifted its focus towards tariffs over free trade,

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Speaker 8: towards workers over big corporations, and towards pulling back. Frankly,

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Speaker 8: a lot of our or international commitments abroad are now

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Speaker 8: under question, whether it's in Europe, whether it's defending Taiwan.

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Speaker 8: The Republican Party wants to put more money into defense,

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Speaker 8: but it's not clear really when and how it intends

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Speaker 8: to use that in some of these key hotspots around

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Speaker 8: the world. So I think it's a big shift in

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Speaker 8: the debate, and no matter who wins the election in

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Speaker 8: the fall, that debate is shifted to new sets of

440
00:20:23,720 --> 00:20:26,320
Speaker 8: questions that the candidates will be will.

441
00:20:26,160 --> 00:20:28,320
Speaker 3: Be arguing, which kind of brings us to the broader

442
00:20:28,359 --> 00:20:30,879
Speaker 3: economic landscape, like this is a very different economy than

443
00:20:30,920 --> 00:20:33,560
Speaker 3: we saw back in twenty sixteen when President Trump was

444
00:20:33,600 --> 00:20:35,800
Speaker 3: elected the first time, Right, I mean, we're sort of

445
00:20:35,840 --> 00:20:39,479
Speaker 3: at the end cycle of the economic cycle. You have

446
00:20:40,240 --> 00:20:43,200
Speaker 3: fed funds rates are high. Yes they'll be cut, but

447
00:20:43,240 --> 00:20:47,399
Speaker 3: they're still relatively high. The deficit is so much larger,

448
00:20:47,440 --> 00:20:50,160
Speaker 3: and the massive amount of stimulus that we've had. What

449
00:20:50,200 --> 00:20:52,439
Speaker 3: does this wind up meaning on an economic front to

450
00:20:52,480 --> 00:20:53,840
Speaker 3: whomever is in the White House.

451
00:20:55,200 --> 00:20:57,639
Speaker 8: Well, and it's interesting that the Republican Party and indeed,

452
00:20:57,680 --> 00:20:59,760
Speaker 8: you know some extent the Democratic Party are bringing the

453
00:20:59,760 --> 00:21:02,480
Speaker 8: same proposals to the table that they brought us four

454
00:21:02,560 --> 00:21:06,480
Speaker 8: years ago. So I think that or eight years ago.

455
00:21:06,760 --> 00:21:09,080
Speaker 8: So I think that says something about where our political

456
00:21:09,119 --> 00:21:11,480
Speaker 8: leaders are taking us. But having said that, I think

457
00:21:11,560 --> 00:21:14,600
Speaker 8: the real issue is, as you point out, that there

458
00:21:14,640 --> 00:21:16,960
Speaker 8: isn't a lot of room for maneuver whoever wins this election.

459
00:21:18,080 --> 00:21:20,320
Speaker 8: You know, President Trump, at least in one interview last

460
00:21:20,320 --> 00:21:23,680
Speaker 8: week with Business Week, started walking back or talking a

461
00:21:23,680 --> 00:21:25,760
Speaker 8: little bit about how big tax cuts might be more

462
00:21:25,800 --> 00:21:31,760
Speaker 8: difficult this time around. And I think regardless of who

463
00:21:31,800 --> 00:21:34,240
Speaker 8: wins the White House, the deficit next year is more

464
00:21:34,359 --> 00:21:35,040
Speaker 8: or less going to.

465
00:21:34,960 --> 00:21:35,440
Speaker 2: Be the same.

466
00:21:35,720 --> 00:21:37,199
Speaker 8: There's not a lot of app there's not a lot

467
00:21:37,240 --> 00:21:41,480
Speaker 8: of appetite to cut either spending or to raise taxes significantly.

468
00:21:42,119 --> 00:21:44,520
Speaker 8: So I think that's again why the market right now

469
00:21:44,680 --> 00:21:50,560
Speaker 8: now is not reacting too much to the potential election

470
00:21:50,600 --> 00:21:54,160
Speaker 8: outcome as much as it's reacting to the current macro news,

471
00:21:54,240 --> 00:21:57,320
Speaker 8: the prospect of inflation coming down, rate cuts next year,

472
00:21:57,320 --> 00:22:00,320
Speaker 8: and earnings that have been weaker this time around, but

473
00:22:00,400 --> 00:22:02,800
Speaker 8: certainly not anything that would signal that we're headed into

474
00:22:02,840 --> 00:22:03,520
Speaker 8: a big recession.

475
00:22:04,560 --> 00:22:06,760
Speaker 2: So, Chris Rhy, you mentioned that debt deficits in the

476
00:22:06,880 --> 00:22:10,080
Speaker 2: national debt. Those have been issues that have been with

477
00:22:10,160 --> 00:22:15,120
Speaker 2: us for decades. When when does the market care? When

478
00:22:15,119 --> 00:22:16,560
Speaker 2: do politicians care?

479
00:22:20,080 --> 00:22:25,760
Speaker 8: You know, you've stumped me there, that guy. I wish

480
00:22:25,840 --> 00:22:28,199
Speaker 8: I had a great answer for you. I mean, politicians

481
00:22:28,240 --> 00:22:30,960
Speaker 8: will care when markets care. You know, when when when

482
00:22:31,119 --> 00:22:35,360
Speaker 8: the interest rate starts really biting and hurting and crowding

483
00:22:35,359 --> 00:22:37,840
Speaker 8: out a lot of other spending priorities, then politicians will

484
00:22:37,880 --> 00:22:41,879
Speaker 8: care markets. It's really not clear because the US, you know,

485
00:22:41,960 --> 00:22:44,920
Speaker 8: for all of its drama, for all of its debt,

486
00:22:45,119 --> 00:22:50,400
Speaker 8: for all of its deficit laxness or weakness, and approaching

487
00:22:50,440 --> 00:22:53,719
Speaker 8: the deficit, for all of that, it remains the largest,

488
00:22:54,400 --> 00:22:57,879
Speaker 8: most creative, most innovative economy in the world, and the

489
00:22:57,880 --> 00:23:01,240
Speaker 8: most likely to grow in any given year, you know, cycles,

490
00:23:01,280 --> 00:23:05,920
Speaker 8: notwithstanding so you know, this is still your best bet

491
00:23:06,080 --> 00:23:11,600
Speaker 8: for putting money to work. And certainly these days, when

492
00:23:11,840 --> 00:23:14,919
Speaker 8: a riskless bet gets you four and a half percent,

493
00:23:16,760 --> 00:23:20,800
Speaker 8: you know, why would you go howling out into unknown

494
00:23:20,840 --> 00:23:22,679
Speaker 8: and risk your risk your.

495
00:23:22,520 --> 00:23:25,920
Speaker 3: Shores When we take a look at and I appreciate

496
00:23:26,200 --> 00:23:28,440
Speaker 3: that you're saying that the markets doesn't really mean anything

497
00:23:28,440 --> 00:23:31,000
Speaker 3: when it comes to the candidates right now, But are

498
00:23:31,040 --> 00:23:35,119
Speaker 3: there where are the areas that have the biggest binary reactions,

499
00:23:35,160 --> 00:23:38,480
Speaker 3: Like I'm thinking of crypto, I'm thinking of energy when

500
00:23:38,520 --> 00:23:40,359
Speaker 3: it comes to Harris Trump debate.

501
00:23:42,400 --> 00:23:44,399
Speaker 8: No, I think within the stock market there are clearly

502
00:23:44,440 --> 00:23:46,520
Speaker 8: some plays that are reflective of some of this. So

503
00:23:46,560 --> 00:23:54,000
Speaker 8: as you say, defense, crypto, energy, to some extent, bank stocks,

504
00:23:54,000 --> 00:23:56,399
Speaker 8: but the way the way of Republicans were talking about

505
00:23:56,440 --> 00:23:58,720
Speaker 8: Wall Street bankers last week, I'm not sure that that's

506
00:23:58,760 --> 00:24:02,680
Speaker 8: a clean play from from my perspective. So I think

507
00:24:02,720 --> 00:24:05,199
Speaker 8: there are clear there are there are and then and

508
00:24:05,200 --> 00:24:08,880
Speaker 8: then on the flip side, you know, maybe clean energy stocks,

509
00:24:08,920 --> 00:24:13,720
Speaker 8: clean energy companies get fewer subsidies, less attention from the government,

510
00:24:14,000 --> 00:24:16,320
Speaker 8: and so that's where you would sort of see things

511
00:24:16,359 --> 00:24:17,920
Speaker 8: playing out one way or the other. But again, I

512
00:24:17,920 --> 00:24:19,439
Speaker 8: think at the macro level. I'll go back to what

513
00:24:19,440 --> 00:24:23,040
Speaker 8: I said before, the fundamentals of interest rates and inflation

514
00:24:23,119 --> 00:24:25,080
Speaker 8: or what's driving things all.

515
00:24:25,080 --> 00:24:27,040
Speaker 2: Right, Christopher, thank you so much. We really appreciate it.

516
00:24:27,119 --> 00:24:29,920
Speaker 2: Christopher Smart. He's a managing partner to our Growth Group

517
00:24:29,960 --> 00:24:33,040
Speaker 2: and a former Special Assistant to the President for International economics.

518
00:24:33,080 --> 00:24:34,919
Speaker 2: Joining us from this little town up there. They have

519
00:24:34,920 --> 00:24:37,520
Speaker 2: a baseball team. I think it's Red Sox up there

520
00:24:37,520 --> 00:24:37,959
Speaker 2: in Boston.

521
00:24:38,000 --> 00:24:43,240
Speaker 1: So we appreciate that you're listening to the Bloomberg Intelligence Podcast.

522
00:24:43,520 --> 00:24:46,720
Speaker 1: Catch us live weekdays at ten am Eastern on applecar

523
00:24:46,880 --> 00:24:49,840
Speaker 1: Play and Android Auto with the Bloomberg Business App. You

524
00:24:49,880 --> 00:24:53,160
Speaker 1: can also listen live on Amazon Alexa from our flagship

525
00:24:53,200 --> 00:24:58,000
Speaker 1: New York station, Just say Alexa play Bloomberg eleven thirty.

526
00:24:59,000 --> 00:25:00,600
Speaker 2: What a lot of folks are trying to do today

527
00:25:00,600 --> 00:25:03,280
Speaker 2: in the aftermath of President Biden pulling out, is trying

528
00:25:03,320 --> 00:25:06,119
Speaker 2: to get a sense of, you know, the other differences

529
00:25:06,320 --> 00:25:08,840
Speaker 2: or to what extent are the differences between President Biden

530
00:25:08,880 --> 00:25:13,760
Speaker 2: and Vice President Harris's key policy issues and positions. So

531
00:25:14,040 --> 00:25:15,760
Speaker 2: one of the folks we're really concerned are one of

532
00:25:15,800 --> 00:25:18,000
Speaker 2: the areas a lot of folks are concerned about his taxes.

533
00:25:18,240 --> 00:25:21,680
Speaker 2: Andrew Silverman, senior policy analyst for Bloomberg Intelligence. He looks

534
00:25:21,720 --> 00:25:23,800
Speaker 2: at this tax stuff. He joins us here on our

535
00:25:23,800 --> 00:25:26,240
Speaker 2: Bloomberg Interactive Broker studio. So we got Nathan Dean for

536
00:25:26,280 --> 00:25:28,639
Speaker 2: all the crazy policy stuff don on Washington. We got

537
00:25:28,640 --> 00:25:30,919
Speaker 2: Andrew Silverman, who looks at the taxes because that is

538
00:25:30,960 --> 00:25:34,400
Speaker 2: a huge issue here. Andrew, thanks so much for joining us.

539
00:25:34,600 --> 00:25:38,920
Speaker 2: What do we know about Vice President Harris's thoughts about

540
00:25:38,920 --> 00:25:42,439
Speaker 2: taxes and how that may differ from President Biden?

541
00:25:43,440 --> 00:25:43,640
Speaker 5: Right?

542
00:25:43,720 --> 00:25:46,560
Speaker 7: So I think at least initially, there's a sense that

543
00:25:47,000 --> 00:25:50,400
Speaker 7: Kambala is excuse me, is Joe Biden two point out,

544
00:25:50,440 --> 00:25:53,400
Speaker 7: and that she's just taking over his tax policies where

545
00:25:53,440 --> 00:25:56,200
Speaker 7: he left off. But I think it's important to note

546
00:25:56,200 --> 00:26:01,000
Speaker 7: two things. First that when vice presidents become president, they

547
00:26:01,040 --> 00:26:04,119
Speaker 7: tend to have much different tax policies than their predecessor.

548
00:26:04,160 --> 00:26:07,639
Speaker 7: For example, Lyndon Johnson enacted one of the largest tax

549
00:26:07,640 --> 00:26:10,880
Speaker 7: increases in US history during his presidency, but Kennedy had

550
00:26:10,920 --> 00:26:15,360
Speaker 7: cut taxes drastically, and Reagan famously cut taxes twice from

551
00:26:15,480 --> 00:26:18,280
Speaker 7: seventy percent that was the top tax rate in nineteen

552
00:26:18,320 --> 00:26:20,239
Speaker 7: eighty two, seventy percent he cut it all the way

553
00:26:20,280 --> 00:26:23,119
Speaker 7: down to twenty eight percent. And then when George H. W.

554
00:26:23,320 --> 00:26:26,400
Speaker 7: Bush became president, if you remember, he said, read my lips,

555
00:26:26,440 --> 00:26:29,760
Speaker 7: no new taxes, and then he enacted a tax increase.

556
00:26:30,080 --> 00:26:34,320
Speaker 7: So and you know, people change. Obviously, the Nixon of

557
00:26:34,400 --> 00:26:37,159
Speaker 7: nineteen sixty had different tax policies in the Nixon of

558
00:26:37,240 --> 00:26:41,080
Speaker 7: nineteen sixty eight, but when Kamalo was in the Senate,

559
00:26:41,160 --> 00:26:45,359
Speaker 7: she was significantly to the left of Biden. Certainly in

560
00:26:45,400 --> 00:26:48,600
Speaker 7: the Senate, she proposed a refundable tax credit for home

561
00:26:48,640 --> 00:26:52,880
Speaker 7: rental payments. She wondered if provide systems the tax assistance

562
00:26:52,960 --> 00:26:57,800
Speaker 7: to low income tax payers small businesses as well in

563
00:26:57,880 --> 00:27:01,960
Speaker 7: lower income communities. She proposed an excess profits tax on

564
00:27:01,960 --> 00:27:05,840
Speaker 7: pharmaceutical companies, a banking tax. And I'd also note that

565
00:27:05,880 --> 00:27:09,720
Speaker 7: the two Senators with whom she sponsored bills most frequently

566
00:27:09,800 --> 00:27:11,960
Speaker 7: were Elizabeth Warren and Bernie Sanders.

567
00:27:12,600 --> 00:27:15,520
Speaker 3: So for a lot of votes, that feels like enough said.

568
00:27:15,560 --> 00:27:17,360
Speaker 3: But at the same time, a lot of companies are

569
00:27:17,359 --> 00:27:21,040
Speaker 3: going to be investing in the US through programs like

570
00:27:21,080 --> 00:27:23,439
Speaker 3: the Chips Act or the Infrastructure Act or the IRA.

571
00:27:24,000 --> 00:27:27,840
Speaker 3: Wouldn't high taxes like mess that up? Like wouldn't that

572
00:27:27,920 --> 00:27:32,000
Speaker 3: counter and be encounterintuitive then to them actually spending money?

573
00:27:32,240 --> 00:27:32,440
Speaker 4: Right?

574
00:27:32,560 --> 00:27:36,440
Speaker 7: And you know, I think a lot of the way

575
00:27:36,520 --> 00:27:40,159
Speaker 7: that the tax policy will progress after the election is

576
00:27:40,240 --> 00:27:44,560
Speaker 7: going to be dictated by who wins in Congress. So certainly,

577
00:27:44,600 --> 00:27:47,960
Speaker 7: you know, Congress is not going to repeal the Inflation

578
00:27:48,040 --> 00:27:52,600
Speaker 7: Reduction Act if we have a majority Democratic House. They're

579
00:27:52,680 --> 00:27:55,920
Speaker 7: not going to let the Tax Cuts and Jobs Act

580
00:27:57,320 --> 00:27:59,280
Speaker 7: fade out at the end of twenty twenty five if

581
00:27:59,320 --> 00:28:03,000
Speaker 7: we have majority Republicans and the Senate in the House.

582
00:28:03,040 --> 00:28:07,720
Speaker 7: So you know, if we have a President Trump next

583
00:28:07,840 --> 00:28:11,719
Speaker 7: year in twenty twenty five, but we have you know,

584
00:28:12,280 --> 00:28:15,639
Speaker 7: Democrats in the in the House and Republicans you know,

585
00:28:15,680 --> 00:28:18,840
Speaker 7: in control of the Senate, chances are we're going to

586
00:28:18,840 --> 00:28:20,760
Speaker 7: have pretty much the same tax policy that we have

587
00:28:20,800 --> 00:28:24,080
Speaker 7: today because we're going to have gridlock certainly, And and

588
00:28:24,359 --> 00:28:28,840
Speaker 7: Harrison is Harrison as well, you know, if she's if

589
00:28:28,840 --> 00:28:32,399
Speaker 7: she's president, but we have just you know, Democrats barely

590
00:28:32,400 --> 00:28:35,639
Speaker 7: in control of the House and maybe even Republicans in

591
00:28:35,640 --> 00:28:38,120
Speaker 7: control of the Senate. She's even if she wanted to

592
00:28:38,200 --> 00:28:41,080
Speaker 7: raise taxes on corporations, that's not something she'd be able

593
00:28:41,120 --> 00:28:41,400
Speaker 7: to do.

594
00:28:41,680 --> 00:28:43,920
Speaker 2: How about on the other side of the aisle. What

595
00:28:43,960 --> 00:28:46,680
Speaker 2: did we learn from the Republican convention last week about

596
00:28:46,960 --> 00:28:49,800
Speaker 2: what President Trump and the Republicans might try to do

597
00:28:49,880 --> 00:28:52,600
Speaker 2: from a tax policy. Again, in mister Trump's first term,

598
00:28:52,720 --> 00:28:56,840
Speaker 2: big tax cut was enacted. How about if you were

599
00:28:56,840 --> 00:28:57,760
Speaker 2: to have a second term.

600
00:28:58,600 --> 00:29:01,440
Speaker 7: Well, I you know, again, to depends on what kind

601
00:29:01,480 --> 00:29:04,360
Speaker 7: of cotails he has if he wins. But certainly I

602
00:29:04,400 --> 00:29:08,280
Speaker 7: think priority number one, absolutely without a doubt, is that

603
00:29:08,400 --> 00:29:11,040
Speaker 7: Tax Cuts and Jobs Act. If he has enough of

604
00:29:11,080 --> 00:29:13,960
Speaker 7: a majority, he would like to make it permanent. If

605
00:29:13,960 --> 00:29:16,160
Speaker 7: he doesn't have enough of a majority, he'd like to

606
00:29:16,200 --> 00:29:20,160
Speaker 7: at least extend it. And if he doesn't even have that,

607
00:29:20,320 --> 00:29:24,480
Speaker 7: he'd like to extend certain portions of the Tax Cuts

608
00:29:24,520 --> 00:29:26,560
Speaker 7: and Jobs Act. I think number one on that list

609
00:29:26,600 --> 00:29:31,840
Speaker 7: would be corporate expensing, permanent expensing. So and I've even

610
00:29:31,880 --> 00:29:35,160
Speaker 7: heard some Republicans say that if they can get capital

611
00:29:35,160 --> 00:29:37,680
Speaker 7: expensing made permanent, that they would even be willing to

612
00:29:37,720 --> 00:29:39,080
Speaker 7: increase the corporate tax rate.

613
00:29:39,880 --> 00:29:42,160
Speaker 3: Well, that's interesting. We are keeping our eye on what's

614
00:29:42,160 --> 00:29:44,480
Speaker 3: happing at the White House in the South lawne Remember

615
00:29:44,480 --> 00:29:46,680
Speaker 3: that a VP Kamala Harris is going to be delivering

616
00:29:46,680 --> 00:29:51,320
Speaker 3: some remarks. They're celebrating the National Collegiate Athletic Association Championships teams.

617
00:29:51,360 --> 00:29:53,560
Speaker 3: We are currently looking at the teams coming out in

618
00:29:53,600 --> 00:29:56,680
Speaker 3: the individuals. We will bring a part of that to

619
00:29:57,000 --> 00:30:01,600
Speaker 3: you live. Hey, Andrew, when you're looking at what's next,

620
00:30:01,760 --> 00:30:04,240
Speaker 3: what are some key words phrases like what are you

621
00:30:04,280 --> 00:30:06,120
Speaker 3: going to be king in on to like help you

622
00:30:06,200 --> 00:30:08,240
Speaker 3: guide and sort of where we should be looking at

623
00:30:08,240 --> 00:30:14,920
Speaker 3: in terms of direction? Yeah, I mean I certainly, as

624
00:30:14,960 --> 00:30:17,880
Speaker 3: in like, if there's a VP pick potentially for Kamala

625
00:30:18,000 --> 00:30:21,280
Speaker 3: Harris that is more moderate or more left or like,

626
00:30:21,280 --> 00:30:22,240
Speaker 3: what are the key things?

627
00:30:23,040 --> 00:30:23,160
Speaker 8: Oh?

628
00:30:23,240 --> 00:30:27,880
Speaker 7: Yeah, absolutely, I think her VP pick is going to

629
00:30:27,920 --> 00:30:31,040
Speaker 7: indicate which direction she's going. And if she picks somebody,

630
00:30:31,400 --> 00:30:36,120
Speaker 7: you know, as progressive as she was in the Senate,

631
00:30:36,200 --> 00:30:40,479
Speaker 7: certainly that's going to that's going to indicate that she

632
00:30:40,520 --> 00:30:43,480
Speaker 7: wants to move a little bit leftward. But if she

633
00:30:43,800 --> 00:30:47,320
Speaker 7: picks somebody more moderate, then certainly she would tack back

634
00:30:47,360 --> 00:30:48,440
Speaker 7: to the positions of Biden.

635
00:30:48,480 --> 00:30:50,400
Speaker 2: All Right, We're looking right now at this south long

636
00:30:50,480 --> 00:30:53,360
Speaker 2: of the White House, and I believe Vice President Kamala

637
00:30:53,440 --> 00:30:55,400
Speaker 2: Harris is walking towards the stage with a group of

638
00:30:55,440 --> 00:30:58,720
Speaker 2: other folks and a get in the backdrop are all

639
00:30:58,920 --> 00:31:02,880
Speaker 2: many of the athletes who won titles in twenty twenty three,

640
00:31:02,920 --> 00:31:05,800
Speaker 2: in twenty twenty four. So keeping an eye on that.

641
00:31:05,880 --> 00:31:09,480
Speaker 2: So when the Vice President does take a podium and delivererates,

642
00:31:09,520 --> 00:31:11,760
Speaker 2: marks will certainly dip into that.

643
00:31:12,120 --> 00:31:16,120
Speaker 3: We will bring that to live Andrew. Okay, what else

644
00:31:16,120 --> 00:31:19,560
Speaker 3: are you looking at? So you were looking at VP pick,

645
00:31:19,640 --> 00:31:22,120
Speaker 3: We're obviously looking at taxes. What else is on your radar?

646
00:31:22,880 --> 00:31:27,480
Speaker 7: So so I'm writing a note right now actually on JD. Vance.

647
00:31:27,880 --> 00:31:32,080
Speaker 7: And I think just as the Vice President is being

648
00:31:32,080 --> 00:31:35,000
Speaker 7: mischaracterized in terms of what her tax policies might be,

649
00:31:35,080 --> 00:31:38,880
Speaker 7: I think that Jadvance's tax policies are being mischaracterized. I

650
00:31:38,960 --> 00:31:42,560
Speaker 7: think for to a great extent, he's being portrayed as

651
00:31:42,600 --> 00:31:46,200
Speaker 7: an arch conservative, but he's very much a populist. And

652
00:31:46,760 --> 00:31:49,680
Speaker 7: a great example of that is him co sponsoring a

653
00:31:49,720 --> 00:31:55,680
Speaker 7: bill with Sheldon Whitehouse on corporate acquisitions and mergers, saying

654
00:31:55,680 --> 00:32:01,280
Speaker 7: that corporations that earn enough profits would be barred from

655
00:32:01,360 --> 00:32:03,760
Speaker 7: being able to do tax free acquisitions. So, I mean,

656
00:32:03,800 --> 00:32:09,040
Speaker 7: that's an extraordinarily progressive position for tax purposes, and you

657
00:32:09,040 --> 00:32:10,800
Speaker 7: know he's totally on board.

658
00:32:10,800 --> 00:32:11,080
Speaker 1: For that.

659
00:32:11,240 --> 00:32:15,040
Speaker 7: He wants to tax college endowments and use that to

660
00:32:15,880 --> 00:32:22,200
Speaker 7: find Yeah, and you said to fund non college training programs.

661
00:32:22,360 --> 00:32:28,480
Speaker 7: So so you know, not exactly a conservative tax policy

662
00:32:28,640 --> 00:32:32,240
Speaker 7: he wants to He wouldn't join the rest of the

663
00:32:32,680 --> 00:32:35,760
Speaker 7: conservatives in trying to get rid of a gun tax.

664
00:32:35,800 --> 00:32:38,600
Speaker 7: He actually only wants to repeal a portion of that

665
00:32:38,640 --> 00:32:39,200
Speaker 7: gun tax.

666
00:32:39,240 --> 00:32:44,040
Speaker 2: So all right, attention too, So we appreciate that. Andrew Silverman,

667
00:32:44,120 --> 00:32:46,800
Speaker 2: Senior Policy anlyst for Bloomberg Intelligence, really looking at the

668
00:32:46,840 --> 00:32:49,440
Speaker 2: tax implications of different administrations.

669
00:32:51,160 --> 00:32:55,080
Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live

670
00:32:55,160 --> 00:32:58,040
Speaker 1: weekdays at ten am Eastern on Apple card Play and

671
00:32:58,440 --> 00:33:01,480
Speaker 1: right OUTO with the Bloomberg Missus. You can also listen

672
00:33:01,560 --> 00:33:04,680
Speaker 1: live on Amazon Alexa from our flagship New York station

673
00:33:05,040 --> 00:33:08,720
Speaker 1: Just Say Alexa playing Bloomberg eleven thirty.

674
00:33:09,200 --> 00:33:11,000
Speaker 2: A little bit of it, YEA, a little bit of

675
00:33:11,120 --> 00:33:13,840
Speaker 2: unwinding of that Trump trade a little bit. Perhaps we'll

676
00:33:13,840 --> 00:33:16,000
Speaker 2: have to see how that plays out. Brian Jacobson, he

677
00:33:16,120 --> 00:33:19,120
Speaker 2: joined a series of Chief economist for Annex Wealth Management,

678
00:33:19,200 --> 00:33:22,880
Speaker 2: joins us from Brookfield, Wisconsin via zoom.

679
00:33:23,200 --> 00:33:23,880
Speaker 4: Brian love to.

680
00:33:23,800 --> 00:33:27,480
Speaker 2: Get just from your perspective, like from an economic perspective,

681
00:33:27,600 --> 00:33:30,440
Speaker 2: has anything changed or if at all, over the past

682
00:33:30,440 --> 00:33:32,840
Speaker 2: twenty four to thirty six hours with the change in

683
00:33:32,840 --> 00:33:35,360
Speaker 2: the Democratic Party in terms of this upcoming.

684
00:33:35,040 --> 00:33:38,040
Speaker 9: Election, Yeah, thanks for having me. I think that it

685
00:33:38,080 --> 00:33:40,200
Speaker 9: really has changed quite a bit as far as just

686
00:33:40,200 --> 00:33:42,960
Speaker 9: the probabilities of the different outcomes. If you look at

687
00:33:43,000 --> 00:33:46,240
Speaker 9: some of the prediction markets, you know, Trump's probability of

688
00:33:46,280 --> 00:33:49,280
Speaker 9: winning the election went from about sixty five to sixty

689
00:33:49,320 --> 00:33:51,640
Speaker 9: six percent down to sixty percent. And still you know,

690
00:33:51,720 --> 00:33:54,680
Speaker 9: I guess better than even odds that he's going to win,

691
00:33:54,760 --> 00:33:56,800
Speaker 9: but that has come down, and so now it's a

692
00:33:56,840 --> 00:34:00,080
Speaker 9: matter of what is the policy environment likely going to

693
00:33:59,880 --> 00:34:01,880
Speaker 9: be for the next four years?

694
00:34:02,080 --> 00:34:02,880
Speaker 4: A little bit more.

695
00:34:02,840 --> 00:34:06,360
Speaker 9: Uncertain here at annex, we think that it's still quite

696
00:34:06,560 --> 00:34:09,839
Speaker 9: likely that we do see some sort of extension of

697
00:34:09,880 --> 00:34:13,439
Speaker 9: those Trump era tax cuts. Really, what's kind of on

698
00:34:13,480 --> 00:34:17,880
Speaker 9: the chopping block, perhaps if Harris wins, is that the

699
00:34:18,160 --> 00:34:20,800
Speaker 9: tax cuts for those making four hundred thousand dollars or more.

700
00:34:21,120 --> 00:34:22,719
Speaker 9: And then also as far as what's going on with

701
00:34:22,760 --> 00:34:25,759
Speaker 9: the corporate tax rate, there's a state tax issues as well,

702
00:34:25,760 --> 00:34:28,279
Speaker 9: and then the regulatory environment, we're seeing a bit of

703
00:34:28,320 --> 00:34:32,760
Speaker 9: the reversal of that rotation towards small caps and value,

704
00:34:32,920 --> 00:34:35,560
Speaker 9: but we think that this might be an opportunity to

705
00:34:35,640 --> 00:34:39,000
Speaker 9: continue to add to those types of positions, not necessarily

706
00:34:39,040 --> 00:34:42,279
Speaker 9: based upon the election outcome, but more based upon just

707
00:34:42,480 --> 00:34:44,520
Speaker 9: that's where in the market we think there's a little

708
00:34:44,520 --> 00:34:46,200
Speaker 9: bit more value to be had.

709
00:34:46,480 --> 00:34:50,240
Speaker 3: So based on that, I wonder, though, if the curve

710
00:34:50,440 --> 00:34:52,239
Speaker 3: is the one where we're really going to wind up

711
00:34:52,239 --> 00:34:54,960
Speaker 3: seeing more of the action based on whether it's a

712
00:34:55,000 --> 00:34:57,520
Speaker 3: President Harris or a President Trump. And this is even

713
00:34:57,560 --> 00:35:00,600
Speaker 3: assuming that Vice President Harris is the nomine because it

714
00:35:00,600 --> 00:35:04,160
Speaker 3: feels like the steeper curve is what we're going to get,

715
00:35:04,200 --> 00:35:07,480
Speaker 3: but the why we're getting it steeper maybe different depending

716
00:35:07,480 --> 00:35:08,560
Speaker 3: on who's in the White House.

717
00:35:09,880 --> 00:35:12,520
Speaker 9: That's absolutely right, and I think it's actually a little

718
00:35:12,520 --> 00:35:17,400
Speaker 9: bit maybe wrong to think that either one cares that

719
00:35:17,640 --> 00:35:22,640
Speaker 9: much about the debt or deficit, mainly because that's not

720
00:35:22,719 --> 00:35:25,439
Speaker 9: really part of their platforms. It really seems like it's

721
00:35:25,480 --> 00:35:29,840
Speaker 9: about revenues as far as you know, with Trump wanting

722
00:35:29,920 --> 00:35:33,920
Speaker 9: to increase revenues through tax cuts and more growth, perhaps

723
00:35:33,960 --> 00:35:37,160
Speaker 9: Harris or whoever's on the Democrats side, to increase revenue

724
00:35:37,200 --> 00:35:40,799
Speaker 9: through taxing those making four hundred thousand dollars or more

725
00:35:40,920 --> 00:35:44,480
Speaker 9: year corporate taxes, And really what seems to be lacking

726
00:35:44,760 --> 00:35:47,400
Speaker 9: is a discussion around what the government can actually control,

727
00:35:47,719 --> 00:35:50,799
Speaker 9: which is the spending side of things. Right, revenue is

728
00:35:50,840 --> 00:35:54,960
Speaker 9: really driven by economic activity, which isn't completely under the

729
00:35:55,000 --> 00:35:59,360
Speaker 9: government's control. So I think that in either scenario, the

730
00:35:59,400 --> 00:36:02,000
Speaker 9: moves in the yield curve are just as uncertain.

731
00:36:03,640 --> 00:36:07,160
Speaker 2: So, Brian, given what we know about the politics, which

732
00:36:07,200 --> 00:36:09,640
Speaker 2: is a lot of things are unknown here, what's your

733
00:36:09,680 --> 00:36:11,920
Speaker 2: economic call here? How do you think this economy is

734
00:36:11,960 --> 00:36:13,880
Speaker 2: faring and how do you think the next six or

735
00:36:13,880 --> 00:36:15,760
Speaker 2: twelve months are looking for this US economy.

736
00:36:16,880 --> 00:36:18,680
Speaker 9: I think things are looking pretty good. You know, on

737
00:36:18,719 --> 00:36:21,640
Speaker 9: our Investment committee we discuss about all the incoming data

738
00:36:21,719 --> 00:36:24,319
Speaker 9: that we get from Bloomberg, and it really does look

739
00:36:24,400 --> 00:36:28,160
Speaker 9: like we had a decent recovery with manufacturing and retail

740
00:36:28,200 --> 00:36:30,279
Speaker 9: sales over the last two months. We have to see

741
00:36:30,280 --> 00:36:32,400
Speaker 9: if there's a little bit of carry through. We do

742
00:36:32,520 --> 00:36:35,640
Speaker 9: know that lower end consumers are feeling the pinch. They're

743
00:36:35,680 --> 00:36:38,759
Speaker 9: beginning to be a little bit more prudent as far

744
00:36:38,800 --> 00:36:42,920
Speaker 9: as instead of the yolo you only live once attitude

745
00:36:42,920 --> 00:36:46,200
Speaker 9: towards spending they're becoming a little bit more price sensitive,

746
00:36:46,600 --> 00:36:49,239
Speaker 9: but we think that there's enough economic momentum to keep

747
00:36:49,280 --> 00:36:52,400
Speaker 9: the consumer plowing things forward here, and we think the

748
00:36:52,560 --> 00:36:55,400
Speaker 9: recession risk is fairly low. A lot does hinge on

749
00:36:55,440 --> 00:36:58,400
Speaker 9: whether or not the FED will cut rates in time

750
00:36:58,520 --> 00:37:01,560
Speaker 9: or not, and for us that does mean a September ratecut.

751
00:37:01,760 --> 00:37:04,920
Speaker 9: We think the data will dictate that they can cut,

752
00:37:05,200 --> 00:37:08,200
Speaker 9: and so if they end up not, then we'll have

753
00:37:08,239 --> 00:37:09,600
Speaker 9: to revise our estimates.

754
00:37:10,080 --> 00:37:12,160
Speaker 3: So based on that, do you like small caps here?

755
00:37:13,360 --> 00:37:16,279
Speaker 9: Yeah, we do. We've actually been overweight small caps and

756
00:37:16,400 --> 00:37:18,919
Speaker 9: mid caps more on the quality side, so we prefer

757
00:37:19,000 --> 00:37:21,880
Speaker 9: those that are more profitable because as you probably know,

758
00:37:21,920 --> 00:37:25,240
Speaker 9: forty percent of small caps aren't profitable, so we prefer

759
00:37:25,600 --> 00:37:29,360
Speaker 9: sort of having that profitability along with that valuation lens.

760
00:37:29,400 --> 00:37:32,400
Speaker 9: That has led us towards small and mid caps. But

761
00:37:32,440 --> 00:37:36,799
Speaker 9: then also like industrials, energy, and we're warming up to financials.

762
00:37:37,080 --> 00:37:39,239
Speaker 9: It's an area that we've been very underweight for a

763
00:37:39,280 --> 00:37:42,479
Speaker 9: long time, and that's an area where if we get

764
00:37:43,080 --> 00:37:47,000
Speaker 9: the credit conditions continuing as they are as opposed to deteriorating,

765
00:37:47,160 --> 00:37:49,919
Speaker 9: we think financials could stand to benefit from this.

766
00:37:50,600 --> 00:37:55,080
Speaker 2: What do you guys make about these concentration risk Brian,

767
00:37:55,160 --> 00:37:57,279
Speaker 2: in the marketplace that we've seen in these magnificent seven,

768
00:37:57,320 --> 00:37:59,719
Speaker 2: How concerning is that to you? Do you fade that,

769
00:38:00,040 --> 00:38:01,759
Speaker 2: you try to find value outside of that? How do

770
00:38:01,800 --> 00:38:02,719
Speaker 2: you guys deal with that?

771
00:38:03,680 --> 00:38:06,640
Speaker 9: Yeah, we've been really focused on concentration risk for a while,

772
00:38:06,680 --> 00:38:09,640
Speaker 9: and to an extent, it's led us to underweight those

773
00:38:09,760 --> 00:38:12,960
Speaker 9: names just because we don't necessarily want to put all

774
00:38:13,000 --> 00:38:15,200
Speaker 9: of our or most of our eggs in that one

775
00:38:15,280 --> 00:38:19,759
Speaker 9: particular basket, especially when that basket isn't particularly diverse in

776
00:38:19,840 --> 00:38:24,359
Speaker 9: terms of sector exposures or thematic exposures. And we think

777
00:38:24,360 --> 00:38:26,440
Speaker 9: that this is a period of time in which that

778
00:38:26,560 --> 00:38:30,759
Speaker 9: rotation trade can come back in it broadens out. A

779
00:38:30,800 --> 00:38:33,600
Speaker 9: lot is going to hinge on the fundamentals. We do

780
00:38:33,680 --> 00:38:36,120
Speaker 9: need to see that improvement in the small cap and

781
00:38:36,200 --> 00:38:40,520
Speaker 9: mid cap earnings. They have gone through periods of recession

782
00:38:40,880 --> 00:38:44,120
Speaker 9: earnings recessions over the last three years. It's almost like

783
00:38:44,160 --> 00:38:46,160
Speaker 9: they kind of get above water and then they have

784
00:38:46,239 --> 00:38:49,080
Speaker 9: a quarter on quarter decline in earnings once again. So

785
00:38:49,120 --> 00:38:50,760
Speaker 9: we do want to see a little bit more traction.

786
00:38:50,840 --> 00:38:54,120
Speaker 9: But a lot of those companies have right sized for

787
00:38:54,840 --> 00:38:59,520
Speaker 9: economic slowing, not an economic stop, but we're economic slowing,

788
00:38:59,520 --> 00:39:02,720
Speaker 9: and so we think that they can actually move higher.

789
00:39:02,840 --> 00:39:08,080
Speaker 9: Have those fundamentals support those valuations to actually have a

790
00:39:08,120 --> 00:39:11,200
Speaker 9: pretty decent end of the year and twenty twenty five

791
00:39:11,239 --> 00:39:11,760
Speaker 9: and beyond.

792
00:39:12,000 --> 00:39:14,719
Speaker 3: What's weird though, is that the reason why the FED

793
00:39:14,760 --> 00:39:16,840
Speaker 3: is going to cut is because the economy is slowing,

794
00:39:16,840 --> 00:39:19,200
Speaker 3: which in theory shouldn't that be bad for small caps?

795
00:39:19,200 --> 00:39:21,200
Speaker 3: But where's the nuance there that I'm clearly missing.

796
00:39:21,760 --> 00:39:24,960
Speaker 9: No, you're absolutely right. Historically the FED has cut mainly

797
00:39:25,000 --> 00:39:27,920
Speaker 9: because they held rates too high for too long and

798
00:39:28,239 --> 00:39:31,399
Speaker 9: they were late to respond to economic slowing. Now there's

799
00:39:31,400 --> 00:39:34,800
Speaker 9: a difference in going from great growth to good growth

800
00:39:34,840 --> 00:39:38,480
Speaker 9: as opposed to going from good growth to horrible growth, right,

801
00:39:38,520 --> 00:39:40,840
Speaker 9: and so we went from great growth in twenty twenty

802
00:39:40,840 --> 00:39:44,320
Speaker 9: three to more sustainable and that will be the key

803
00:39:44,320 --> 00:39:46,760
Speaker 9: thing is whether or not we do tip into a recession.

804
00:39:47,080 --> 00:39:50,040
Speaker 9: So if the FED is cutting because the inflation data

805
00:39:50,120 --> 00:39:53,360
Speaker 9: allows them to, as opposed to the growth data telling

806
00:39:53,400 --> 00:39:55,719
Speaker 9: them that they have to, I think that's going to

807
00:39:55,719 --> 00:39:58,120
Speaker 9: make all the difference in the world. It also will

808
00:39:58,160 --> 00:40:00,680
Speaker 9: make a huge difference in say the fixed income space,

809
00:40:00,719 --> 00:40:02,479
Speaker 9: with credit spreads how tight they are.

810
00:40:02,680 --> 00:40:03,600
Speaker 8: We can have those.

811
00:40:03,480 --> 00:40:07,600
Speaker 9: Spreads widen, but mainly because not that corporate yields are

812
00:40:07,600 --> 00:40:10,080
Speaker 9: moving higher, but treasure yields are moving lower.

813
00:40:10,880 --> 00:40:12,319
Speaker 2: What do you need to see out of earnings here?

814
00:40:12,400 --> 00:40:13,879
Speaker 2: What do you think the market needs to see out

815
00:40:13,880 --> 00:40:15,400
Speaker 2: of earnings here? Brian? Do we need to have a

816
00:40:15,400 --> 00:40:18,400
Speaker 2: big beat to continue to support this market?

817
00:40:19,280 --> 00:40:21,120
Speaker 9: You know, I don't think we need to see a

818
00:40:21,120 --> 00:40:23,200
Speaker 9: big beat. I think it really is about they just

819
00:40:23,280 --> 00:40:27,000
Speaker 9: need to have a more pleasant tune or attitude towards

820
00:40:27,040 --> 00:40:29,480
Speaker 9: the future. It's more about the guidance that they give.

821
00:40:30,120 --> 00:40:33,439
Speaker 9: You know, last week we saw asml TSMC report, those

822
00:40:33,480 --> 00:40:36,960
Speaker 9: fundamentals were fine, but then people had to reassess what

823
00:40:37,000 --> 00:40:39,400
Speaker 9: that outlook looked like when it was announced that the

824
00:40:39,480 --> 00:40:41,840
Speaker 9: US government was going to crack down on the ability

825
00:40:41,880 --> 00:40:45,920
Speaker 9: to export that technology to China, or with Candidate Trump's

826
00:40:45,920 --> 00:40:48,880
Speaker 9: comments about the relationship between the US and Taiwan. So

827
00:40:48,920 --> 00:40:51,040
Speaker 9: it's really more about that longer term future. It's not

828
00:40:51,080 --> 00:40:53,759
Speaker 9: about what have you done for me lately with the

829
00:40:53,800 --> 00:40:57,359
Speaker 9: earnings numbers, But it's more about that guidance. Are there

830
00:40:57,400 --> 00:41:00,879
Speaker 9: signs that the new orders are gaining to pick up,

831
00:41:01,120 --> 00:41:03,719
Speaker 9: are they actually going to be able to meet in

832
00:41:03,800 --> 00:41:09,040
Speaker 9: some areas what seemed like perhaps unrealistically lofty growth expectations

833
00:41:09,080 --> 00:41:11,840
Speaker 9: in the tech area. That's why we prefer more MidCap

834
00:41:11,920 --> 00:41:15,840
Speaker 9: and small cap tech just seems like those growth expectations

835
00:41:16,280 --> 00:41:19,160
Speaker 9: are a little bit more modest and there's less risk

836
00:41:19,640 --> 00:41:22,360
Speaker 9: with some sort of negative guidance going forward.

837
00:41:23,200 --> 00:41:25,200
Speaker 3: Just one more point on that, when you talk about

838
00:41:25,200 --> 00:41:27,759
Speaker 3: small caps and mid caps, is it value or is

839
00:41:27,760 --> 00:41:30,360
Speaker 3: it growth? Within those areas.

840
00:41:31,280 --> 00:41:34,360
Speaker 9: You know, we've been overweight small cap more on the

841
00:41:34,480 --> 00:41:37,560
Speaker 9: value side of things. On the growth side, you do

842
00:41:37,640 --> 00:41:40,520
Speaker 9: tend to get it more dominated by like biotech and

843
00:41:40,560 --> 00:41:42,200
Speaker 9: some of the areas where it might be a little

844
00:41:42,200 --> 00:41:43,080
Speaker 9: bit more speculative.

845
00:41:43,280 --> 00:41:44,359
Speaker 4: We do believe.

846
00:41:44,200 --> 00:41:47,920
Speaker 9: Firmly in balance having the exposure there, but in terms

847
00:41:48,000 --> 00:41:51,240
Speaker 9: of if you put on that profitability filter, that would

848
00:41:51,360 --> 00:41:54,480
Speaker 9: lead you more towards the value side of things. But

849
00:41:54,760 --> 00:41:58,040
Speaker 9: you don't necessarily want to only look at that profitability.

850
00:41:58,120 --> 00:42:01,680
Speaker 9: You also want to incorporate other dimensions of quality, like

851
00:42:01,760 --> 00:42:05,080
Speaker 9: the leverage that those companies have. Now, I guess that

852
00:42:05,200 --> 00:42:08,239
Speaker 9: is one of the dangers is if you are in

853
00:42:08,760 --> 00:42:12,640
Speaker 9: let's say small MidCap quality where they have pristine balance sheets,

854
00:42:12,880 --> 00:42:15,520
Speaker 9: then you don't necessarily get these rip roar and runs

855
00:42:15,640 --> 00:42:18,279
Speaker 9: higher in the stock price when it looks like the

856
00:42:18,320 --> 00:42:21,920
Speaker 9: FED is getting closer to cutting, because that then tends

857
00:42:21,920 --> 00:42:25,480
Speaker 9: to favor those areas that have more of the highly

858
00:42:25,600 --> 00:42:29,399
Speaker 9: levered balance sheets. But when we're constructing portfolios looking more

859
00:42:29,480 --> 00:42:34,040
Speaker 9: for that longer term holding, putting those two together, the profitability, valuation,

860
00:42:34,360 --> 00:42:37,200
Speaker 9: reasonable leverage, it does tend to move us a little

861
00:42:37,200 --> 00:42:39,560
Speaker 9: bit more towards the value side as opposed to the

862
00:42:39,560 --> 00:42:40,880
Speaker 9: growth side of the spectrum.

863
00:42:41,120 --> 00:42:43,120
Speaker 3: All right, we really appreciate it, Brian, Thank you so much.

864
00:42:43,120 --> 00:42:45,680
Speaker 3: Brian Jacobson to me chief economists and NEX Wealth Management,

865
00:42:45,920 --> 00:42:48,600
Speaker 3: a really great perspective. Joining us from Wisconsin.

866
00:42:48,880 --> 00:42:53,400
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867
00:42:53,600 --> 00:42:56,799
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868
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869
00:43:00,320 --> 00:43:03,720
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870
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871
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