WEBVTT - Vanguard’s Bogle Sees Pension Pain in Decade of 3% Bond Returns 0:00:05.800 --> 0:00:08.720 Welcome to the Bloomberg p m L Podcast. I'm pim Fox. 0:00:08.760 --> 0:00:11.520 Along with my co host Lisa Bramowitz. Each day we 0:00:11.640 --> 0:00:15.120 bring you the most important, noteworthy, and useful interviews for 0:00:15.200 --> 0:00:17.840 you and your money, whether you're at the grocery store 0:00:17.960 --> 0:00:20.720 or the trading floor. Find the Bloomberg p m L 0:00:20.840 --> 0:00:34.240 Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot com. Legendary 0:00:34.320 --> 0:00:37.240 Vanguard founder Jack Bogel sat down with us to discuss 0:00:37.280 --> 0:00:40.400 his thoughts on the geop plan, Bitcoin and his outlook 0:00:40.440 --> 0:00:42.680 for the bondom market. We kick things off by discussing 0:00:42.760 --> 0:00:45.720 Jack's thoughts on the e t F business. Where I 0:00:45.760 --> 0:00:48.560 began was asking him about the freight train that is 0:00:48.600 --> 0:00:50.839 destined to be a ten trillion dollar firm within the 0:00:50.840 --> 0:00:53.239 next few years Vanguard, and whether he was worried at 0:00:53.280 --> 0:00:55.320 all about how quickly the E t F industry was 0:00:55.360 --> 0:00:59.480 amassing assets. Take a listen, Well, those two things don't 0:00:59.520 --> 0:01:02.960 go to two together very well. Our strength at Vanguard 0:01:02.960 --> 0:01:05.440 has been the traditional index fund, the S and P 0:01:05.600 --> 0:01:08.400 five hundered total stock market, which I started way back 0:01:08.440 --> 0:01:13.880 in in and that has been our strength. Were that 0:01:14.040 --> 0:01:17.080 market and that traditional index fund market. I'll buy an 0:01:17.080 --> 0:01:20.720 old market broad market is about half of the index 0:01:20.760 --> 0:01:23.399 business and the E t F business is the other 0:01:23.440 --> 0:01:27.480 half of the business, and they are totally different. They 0:01:27.520 --> 0:01:32.200 both have passive investment policies, but the traditional index funds 0:01:32.520 --> 0:01:36.600 have passive investors, and that the e t f s 0:01:36.640 --> 0:01:39.920 have active investors. So e t fs have heavy trading 0:01:40.640 --> 0:01:43.960 and they have a lot more speculation. They have a 0:01:44.400 --> 0:01:48.040 product line so called that that has very speculative funds. 0:01:48.400 --> 0:01:52.920 So I'm I wouldn't I wouldn't. I wouldn't predict that 0:01:52.920 --> 0:01:55.600 that that would continue to flourish. You know, we have 0:01:55.720 --> 0:01:59.680 data here that shows that e t f have had 0:02:00.000 --> 0:02:03.400 as ten years is a four point seven annual return 0:02:04.080 --> 0:02:06.600 and the traditional index fund about a seven point one 0:02:06.640 --> 0:02:09.200 percent annual return. There was the e t f s 0:02:09.240 --> 0:02:11.519 have not worked out well for investors. I don't know 0:02:11.560 --> 0:02:16.480 why nobody knows this. So in a decade, the traditional 0:02:16.520 --> 0:02:19.919 index funds up about cumulatively and the E t F 0:02:21.480 --> 0:02:24.600 I mean, that's not that's not a strong record. This 0:02:24.680 --> 0:02:26.679 is this is a really compelling point you're making. E 0:02:26.800 --> 0:02:30.160 t f s have not worked out well for investors. 0:02:30.360 --> 0:02:33.400 Are you concerned that they're going to taint the record 0:02:33.560 --> 0:02:38.560 of indexed funds because they are being treated, uh, synonymously. Well, 0:02:38.720 --> 0:02:41.480 I think there's a different, for the want of a 0:02:41.520 --> 0:02:44.120 better word, a different ethic and e t s. It's 0:02:44.200 --> 0:02:49.280 by the factors. It's leverage. It's finding narrow niches in 0:02:49.320 --> 0:02:52.800 the market very quickly to see if you can bring 0:02:52.840 --> 0:02:55.120 a lot of the sheep in to share them. One 0:02:55.160 --> 0:02:59.240 of the most recent e t F was long electronic marketing, 0:02:59.720 --> 0:03:03.040 actually your retail marketing. I mean, that's an interesting idea, 0:03:03.040 --> 0:03:06.160 it might even work, but some entrepreneur jumps on that 0:03:06.240 --> 0:03:08.480 bandwagon and says, now he can package it for you. 0:03:09.160 --> 0:03:12.720 It's a very entrepreneurial business, or, to use a phrase 0:03:12.760 --> 0:03:15.880 that the great Henry Kaufman once used, is populated in 0:03:15.919 --> 0:03:20.120 many respects by financial buccaneers. So it's a different business. 0:03:20.560 --> 0:03:24.079 It's finding product to sell and because there's a great 0:03:24.120 --> 0:03:27.080 market among brokers and investment advisers who want to sell it. 0:03:27.720 --> 0:03:29.920 When they want something to sell every day, they have 0:03:30.000 --> 0:03:33.359 to sell something every day. And that seeks the sort 0:03:33.400 --> 0:03:38.520 of the rationale for the business trading, trading, trading, and 0:03:38.880 --> 0:03:41.560 you see it most clearly, and it's a little bit 0:03:41.560 --> 0:03:43.760 of an off beat et F to say the least. 0:03:44.040 --> 0:03:48.840 The spider, but it trades. They brag about it fifteen 0:03:49.360 --> 0:03:55.160 billion dollars an hour or something, and yeah, it turns 0:03:55.200 --> 0:03:57.920 over at about two or three thousand percent a year. 0:03:58.400 --> 0:04:01.360 And it's banks trading with one And that's that's a 0:04:01.440 --> 0:04:04.040 very different implication for the future of the E T 0:04:04.240 --> 0:04:06.800 F business than the than the more or less retail 0:04:06.880 --> 0:04:11.200 business that people are buying speculatives E T S. Mr Bogel, 0:04:11.320 --> 0:04:14.080 you talk about financial buccaneers. I'm gonna throw a couple 0:04:14.120 --> 0:04:19.760 of topics that you want your thoughts. Bitcoin and cryptocurrencies. Well, 0:04:20.440 --> 0:04:23.120 I'm not so good as crypto, but let's talk about bitcoin. 0:04:23.520 --> 0:04:28.279 Bitcoin is a speculation. Why is this speculation because there's 0:04:28.360 --> 0:04:32.240 no underlying rate of return. Just like gold, stocks have 0:04:32.520 --> 0:04:37.520 earnings and dividends, bonds have have interest coupons to hold 0:04:37.560 --> 0:04:42.880 their value up. But the bitcoin has nothing in its 0:04:42.960 --> 0:04:46.239 value except that you want to sell it to somebody 0:04:46.360 --> 0:04:49.040 more than you paid for it. Well, that's about as 0:04:49.080 --> 0:04:51.200 good a definition as you can get. It may be 0:04:51.320 --> 0:04:55.120 a great speculation, that's the funny part of it. But 0:04:55.200 --> 0:04:59.080 as I said the other day, um, and the bitcoin 0:04:59.160 --> 0:05:03.600 was then only about ten thousand, and you know, there's 0:05:03.640 --> 0:05:06.240 a speculation that I would have liked to plague, And 0:05:06.320 --> 0:05:09.080 I said, if it gets to twenty thousand, don't talk 0:05:09.080 --> 0:05:13.080 to me. Waitfil it gets back to a hundred, all right, 0:05:13.120 --> 0:05:15.560 they may not be buccaneers. Much of thoughts on the 0:05:15.640 --> 0:05:20.000 GOP's tax overhaul plan, as you know it. I think 0:05:20.040 --> 0:05:24.040 it's very unfortunate. I think it has a grave moral 0:05:24.080 --> 0:05:27.360 issues in favoring the wealthiest people in the country that 0:05:27.440 --> 0:05:29.320 compared to the people who are doing all the hard 0:05:29.320 --> 0:05:35.040 work just seems crazy. Uh. I think it's really bad 0:05:35.240 --> 0:05:37.520 some little pieces of policy. You know, this is a 0:05:37.520 --> 0:05:41.080 country that's supposed to be helping education, and they put 0:05:41.120 --> 0:05:45.320 some new some taxes on young men and women who 0:05:45.320 --> 0:05:50.160 are teachers and get fringe benefits. And then they've they've 0:05:50.160 --> 0:05:54.400 stopped the deductibility of interest on college loans, and those 0:05:54.400 --> 0:05:57.880 two things hurt education. Well. And what to what, avail 0:05:58.040 --> 0:06:03.000 I asked? The fusion of wealth, the gap in wealth 0:06:03.040 --> 0:06:06.280 between the rich and the poor is very upsetting to 0:06:06.560 --> 0:06:10.480 a good nation, a good society, and they made it worse. 0:06:10.920 --> 0:06:15.479 Rubs other than not, I love it real quick. Last question, 0:06:15.520 --> 0:06:17.679 I'm just wondering. You said in recent comments that stock 0:06:17.720 --> 0:06:21.120 returns are likely to be about four percent over the 0:06:21.160 --> 0:06:25.080 next decade. What about bonds and where do you think 0:06:25.160 --> 0:06:28.960 are the most promising assets at this point? Well, stock returns. 0:06:29.120 --> 0:06:31.080 I've been doing this for twenty five years and ten 0:06:31.160 --> 0:06:35.240 years in ten year in ten year intervals, and my 0:06:36.560 --> 0:06:41.520 prognostications for stocks have been about correlation with what happened, 0:06:41.760 --> 0:06:48.920 and my view bond views are about of what happened. Correlation. 0:06:49.600 --> 0:06:51.839 But the reason bonds are really easy. It should be 0:06:51.920 --> 0:06:54.159 a number of around three percent per year over the 0:06:54.200 --> 0:06:56.960 next decade because the only return you get on a 0:06:57.000 --> 0:07:00.200 bond is from the interest coupon. And so you have 0:07:00.240 --> 0:07:03.360 a portfolio half of corporate bonds and half of the 0:07:03.440 --> 0:07:07.320 ten year the ten year treasury, very conservative with a 0:07:07.440 --> 0:07:10.160 with a corporate half, and that gives you about three 0:07:10.200 --> 0:07:13.440 percent today and so that that's that's what you will 0:07:13.480 --> 0:07:16.720 get in the next ten years. Of interest rates go down, 0:07:16.760 --> 0:07:19.120 the prices will go up, but over ten years that's 0:07:19.160 --> 0:07:22.520 up to even out. That's a huge problem for pensions 0:07:22.960 --> 0:07:29.840 with an eight a huge problem. It's totally defeating. The 0:07:29.920 --> 0:07:31.960 pension funds are not going to be able to meet 0:07:32.000 --> 0:07:35.160 their seven and a half or eight percent obligation. And 0:07:35.200 --> 0:07:38.960 the curious thing is that back in the guess late eighties, 0:07:39.120 --> 0:07:42.560 don't hold me the exact date when then, when treasuries 0:07:43.080 --> 0:07:49.080 were yielding eight and the pension plans had about a 0:07:49.080 --> 0:07:53.280 five percent return projection eight percent for bonds, five percent 0:07:53.320 --> 0:07:57.280 projection for pensions. And now treasurers are yielding two and 0:07:57.280 --> 0:07:59.720 a half or three depending on whatever you take, and 0:08:00.000 --> 0:08:04.000 engines are yielding seven. And I think it is almost 0:08:04.040 --> 0:08:07.120 a given that it will end badly, Mr Boggle, Do 0:08:07.120 --> 0:08:10.640 you believe that artificial intelligence and robo advisors will do 0:08:10.720 --> 0:08:14.880 away with the human touch when it comes to investment advice, Well, 0:08:14.960 --> 0:08:17.960 they will do away with some of it. Uh but 0:08:17.960 --> 0:08:21.240 but but what's what's happening mostly in then the robo 0:08:21.360 --> 0:08:26.520 area is they're using conventional index funds like the S 0:08:26.560 --> 0:08:29.120 and P five hundred Bangardis and P five hundered. I 0:08:29.120 --> 0:08:33.520 think that's the largest investment at the betterment m or 0:08:33.880 --> 0:08:36.720 and maybe maybe some of the others. So they're they're 0:08:36.760 --> 0:08:39.920 just it's that they've been doing so far mostly asset allocation, 0:08:40.600 --> 0:08:43.800 and there's no harm done in that. Their asset allocation 0:08:43.840 --> 0:08:46.320 looks very much like you know, sort of a sixt 0:08:46.960 --> 0:08:49.360 thing generally up or down, maybe with a age or 0:08:49.640 --> 0:08:54.760 or aggressiveness of the investor. So maybe it's I think 0:08:54.760 --> 0:08:58.480 it's less art Artificial intelligence than asset allocation is a 0:08:58.559 --> 0:09:00.760 simple matter. You don't have to beat it to death 0:09:00.840 --> 0:09:05.040 with data. As for artificial intelligence out there, I read 0:09:05.080 --> 0:09:09.079 somewhere that people that are trained in artificial intelligence in college, 0:09:09.280 --> 0:09:10.880 after a couple of years gonna make a half million 0:09:10.920 --> 0:09:13.920 dollars a year, And I think that's wonderful. But I 0:09:14.040 --> 0:09:17.640 keep wondering how much people that have real intelligence will make. 0:09:18.240 --> 0:09:21.079 Now was Jack Bogel. He is the founder and retired 0:09:21.120 --> 0:09:23.920 chief executive of the Vanguard Group and the author of 0:09:24.000 --> 0:09:28.600 Common Sense on Mutual Funds, New Imperatives for the Intelligent Investor. 0:09:29.160 --> 0:09:32.479 I'm pim Fox along with Lisa Bramo wits This is Bloomberg. 0:09:48.800 --> 0:09:53.360 Protests are breaking out in Gaza, Turkey, Germany over President 0:09:53.360 --> 0:09:58.800 Trump's decision to move the US embassy in Israel to Jerusalem, 0:09:58.880 --> 0:10:02.480 recognizing that as the capital. This, of course the subject 0:10:02.559 --> 0:10:06.960 of a longstanding debate and controversy in the region, given 0:10:07.000 --> 0:10:09.880 the tensions between the Israelis and the Palestinians. Here to 0:10:09.920 --> 0:10:12.160 talk about it is Daniel Gordis. He is a Bloomberg 0:10:12.240 --> 0:10:14.960 View columnist as well as a senior vice president and 0:10:15.040 --> 0:10:18.439 court Distinguished Fellow at shell M College in Jerusalem, and 0:10:18.480 --> 0:10:21.880 he joins us now, Daniel, thank you so much. What 0:10:22.080 --> 0:10:24.040 is it? Just to start with, what's the mood like? 0:10:24.400 --> 0:10:28.319 There is there an increased kind of tension and expectation 0:10:28.559 --> 0:10:34.480 of violence around UH President Trump's decision. It's an interesting question. 0:10:34.480 --> 0:10:38.079 I think that yesterday, in the advance of the declaration 0:10:38.320 --> 0:10:41.480 and immediately after, there was a pretty widespread sense here 0:10:41.880 --> 0:10:43.599 that if there was any violence, it was going to 0:10:43.679 --> 0:10:46.200 be pretty sporadic and it would pretty much peter out 0:10:46.280 --> 0:10:49.680 relatively quickly. I think people are a little bit less 0:10:49.720 --> 0:10:52.120 confident about that right now. I don't think that anybody 0:10:52.200 --> 0:10:55.000 is quite panicking yet. But there have been there have 0:10:55.120 --> 0:10:58.120 been conflicts all along the border between Israel and the 0:10:58.120 --> 0:11:01.160 West Bank UM. According to the his reports, several dozen 0:11:01.200 --> 0:11:03.960 Palestinians have been injured. I haven't read of any deaths, 0:11:04.320 --> 0:11:05.960 and I haven't read of any injuries on the side 0:11:06.000 --> 0:11:09.280 of the israelis UM. But colleague of mine who was 0:11:09.320 --> 0:11:12.920 working from home today, who works in Maldumim, which is 0:11:13.160 --> 0:11:16.240 UH inside the West Bank. It's a city that's very 0:11:16.320 --> 0:11:19.160 much controversial because it's gone on an extension of Jerusalem 0:11:19.160 --> 0:11:21.319 into the West Bank. She told me that the city 0:11:21.400 --> 0:11:23.480 was ringed with security people, that they were just making 0:11:23.520 --> 0:11:25.800 sure that people did not get into the city. So 0:11:25.840 --> 0:11:27.959 I thought my senses and we heard, by the way, 0:11:28.120 --> 0:11:30.840 helicopter is all in the sky this afternoon. So it 0:11:30.880 --> 0:11:34.199 may be materializing into a little bit more violence than 0:11:34.280 --> 0:11:36.720 some people had expected. But there's certainly no panic on 0:11:36.760 --> 0:11:39.240 the streets and no panic. And as people are talking, 0:11:40.040 --> 0:11:43.360 Daniel Gordis, you know in your good book Israel, a 0:11:43.400 --> 0:11:48.520 Concise History of a Nation Reborn, you talk about the 0:11:48.640 --> 0:11:51.800 role that Jerusalem plays in the history of the region 0:11:51.880 --> 0:11:55.880 and specifically in the founding of the state of Israel. 0:11:55.920 --> 0:11:57.760 I'm wondering if you could just provide us with some 0:11:57.880 --> 0:12:04.440 context for Jerusalem, not only as a geographic location, but 0:12:04.640 --> 0:12:10.320 as a political location. Right. So, Jerusalem was not included 0:12:10.320 --> 0:12:13.520 actually in the borders that the United Nations gave to Israel, 0:12:13.559 --> 0:12:16.640 and that very famous photo of November nineteen seven, when 0:12:16.679 --> 0:12:19.400 the UN General Assembly created a Jewish state and an 0:12:19.400 --> 0:12:21.520 Arab state, Jerusalem is going to be a kind of 0:12:21.559 --> 0:12:25.880 an internationally monitored area. The Israelis were very unhappy with 0:12:25.920 --> 0:12:27.920 that because they wanted Jerusalem to be their capital, but 0:12:27.960 --> 0:12:30.880 they accepted the UN deal. Uh. The Arabs, of course 0:12:30.920 --> 0:12:32.760 did not accept the deal, launched the war, and in 0:12:32.840 --> 0:12:35.880 the course of that war, Israel captured West Jerusalem. It 0:12:35.880 --> 0:12:38.079 did not capture East Jerusalem, which it did not get 0:12:38.200 --> 0:12:41.959 until the nineteen sixty seven war when Jordan's despite pleas 0:12:42.000 --> 0:12:44.600 from the Israeli government, decided to enter that war as well. 0:12:45.440 --> 0:12:51.920 So Israel has always since nineteen forty nine recognized West 0:12:52.040 --> 0:12:54.160 Jerusalem as its capital and as one of the rest 0:12:54.200 --> 0:12:56.000 of the world to recognize it. It's the only country 0:12:56.000 --> 0:12:59.280 in the world that other countries don't recognize its capital 0:12:59.320 --> 0:13:01.640 as its capital. When Israelis are always scratching their heads 0:13:01.679 --> 0:13:04.520 saying West Jerusalem is clearly not going back. So why 0:13:04.559 --> 0:13:06.880 can't the west of the role just acknowledge West Jerusalem 0:13:06.920 --> 0:13:09.400 as the capital of Israel and Easter Rusalaman will get 0:13:09.640 --> 0:13:12.520 resolved when the result, when the situation where the Palestinians 0:13:12.559 --> 0:13:15.280 gets resolved. Um. And so I think that you know, 0:13:15.320 --> 0:13:18.080 from a from a religious standpoint, it's very important to Jews, 0:13:18.120 --> 0:13:20.560 it's very important to Moslims, it's very important to Christians. 0:13:21.040 --> 0:13:22.960 But this is what you correctly plant on there's nothing 0:13:23.000 --> 0:13:25.480 to do with the religious issus. It's all about politics. 0:13:25.800 --> 0:13:29.240 And I think what the President did yesterday was basically 0:13:29.280 --> 0:13:31.440 to say, and he said it himself, you just a 0:13:31.440 --> 0:13:33.880 matter of recognizing reality. I mean, as he pointed out, 0:13:33.920 --> 0:13:36.400 the Supreme Court is here, the Parliament is here, the 0:13:36.440 --> 0:13:39.360 President lives here, the Prime Minister lives here, the vast 0:13:39.400 --> 0:13:42.680 majority of government offices are here. Always basically saying is 0:13:42.679 --> 0:13:44.840 that what we're gonna do is stop capitulating to the 0:13:44.920 --> 0:13:47.880 fear of violence, and we're gonna call reality what it is, 0:13:47.920 --> 0:13:50.160 which is that West Jerusalem is the capital of Israel. 0:13:50.559 --> 0:13:53.200 Well here, here's just just to push back on that. 0:13:53.360 --> 0:13:54.959 I mean, a lot of people are saying that this 0:13:55.040 --> 0:13:59.000 move by President Trump has undermined a US role in 0:13:59.200 --> 0:14:03.880 the peace prod, says has inflamed tensions. Uh Hamas has 0:14:03.920 --> 0:14:07.360 called for an antifata against Israel this morning, and you 0:14:07.440 --> 0:14:09.720 have to wonder, at what point is it worth it, 0:14:09.800 --> 0:14:13.120 I mean, just for to make a political statement. Well, 0:14:13.400 --> 0:14:15.760 that's a great question. So first of all, obviously if 0:14:15.800 --> 0:14:19.320 this blows up into a major conflagration, uh, then one 0:14:19.600 --> 0:14:22.080 could very reasonably ask whether it was worth it or not. 0:14:22.120 --> 0:14:23.840 I think most people who are still banking on the 0:14:23.880 --> 0:14:26.920 idea because it doesn't actually change any reality on the ground. 0:14:27.280 --> 0:14:29.520 Most people are banking on the idea that it's not 0:14:29.600 --> 0:14:31.800 going to become a major conflagration. But you're right, if 0:14:31.800 --> 0:14:33.920 this gets out of hand, then the question of whether 0:14:33.960 --> 0:14:37.480 it's worth it is certainly a very good question. I 0:14:37.560 --> 0:14:39.840 think that in terms of, you know, the question of 0:14:39.840 --> 0:14:43.040 whether or not the president has really kind of moved 0:14:43.080 --> 0:14:45.800 the United States out of being a legitimate arbiter in 0:14:45.880 --> 0:14:48.760 the in the process. I mean, first, well, let's remember that, 0:14:49.240 --> 0:14:52.360 you know, countless presidents, Republicans and Democrats alike, have seen 0:14:52.400 --> 0:14:55.040 the United States as an important arbiter and has gotten 0:14:55.120 --> 0:14:57.080 us nowhere. And I'm speaking as someone who was in 0:14:57.120 --> 0:14:59.760 favor of the creation of a Palestinian state, as someone 0:14:59.800 --> 0:15:02.760 who's not a huge fan of the current president. But 0:15:02.840 --> 0:15:05.480 I think that what he said was, uh, you know, 0:15:05.640 --> 0:15:08.200 basically true. We haven't we have we as America have 0:15:08.280 --> 0:15:10.720 not been able to move this process forward and and 0:15:11.080 --> 0:15:14.240 sort of capitulating to this Palestinian demand that we not 0:15:14.480 --> 0:15:17.200 acknowledge West Jerusalem as the capital of Israel has gotten 0:15:17.280 --> 0:15:19.440 us nowhere. So since it has gotten us nowhere, let's 0:15:19.440 --> 0:15:21.240 at least call reality on the ground where it is. 0:15:21.280 --> 0:15:24.240 That's my sense, but obviously reasonable minds cannon do differ, 0:15:24.560 --> 0:15:26.640 and there are both Disraeli leaders and as well as 0:15:26.680 --> 0:15:29.800 American Jewige leaders on both sides of this divide. Daniel, 0:15:29.880 --> 0:15:34.880 what has been the reaction, if any, in Arab capitals 0:15:34.960 --> 0:15:38.800 around the region, and is the status of Jerusalem as 0:15:38.840 --> 0:15:42.720 important to them now as it once was. Perhaps the 0:15:42.800 --> 0:15:45.360 reaction is exactly what you'd expect. They're all decrying it 0:15:45.400 --> 0:15:47.360 and saying it's a terrible idea, and so farth that's 0:15:47.400 --> 0:15:49.560 part of the sort of the ritual that has to 0:15:49.560 --> 0:15:52.040 get played here. I think the much deeper issue, and 0:15:52.120 --> 0:15:55.040 it's a sad one for the Palestinians, quite frankly, is 0:15:55.080 --> 0:15:58.000 that the Palestinian issue was simply not nearly as important 0:15:58.040 --> 0:16:01.040 to the Arab world as the palest Indians wish it 0:16:01.080 --> 0:16:03.240 would be, and it's not as important to the Arab 0:16:03.280 --> 0:16:05.920 world as it once was. I mean, take Saudi Arabia 0:16:05.960 --> 0:16:08.280 for example, which did speak out because that's what it 0:16:08.320 --> 0:16:11.320 has to do, but Suni Arabia doesn't care one little bit. 0:16:11.360 --> 0:16:14.320 Sni Arab was worried about Iran and it needs American 0:16:14.440 --> 0:16:18.160 and Israeli cooperation on the Iranian on the Irmanian issues. 0:16:18.200 --> 0:16:20.320 So they'll speak out today, they make sure that they can, 0:16:20.480 --> 0:16:21.960 you know, sort of make a check mark next do 0:16:22.080 --> 0:16:25.080 we spoke out against it. But Saudi Arabia couldn't care less. 0:16:25.160 --> 0:16:29.480 Egypt has completely suppressed Palestinian protests in the streets over 0:16:29.480 --> 0:16:32.320 the last few years under LCC. So Egypt's not a 0:16:32.320 --> 0:16:34.520 big help over the course of the years. Even when 0:16:34.600 --> 0:16:37.640 Saidat and Manacha began negotiated the return of the Sinai, 0:16:38.280 --> 0:16:40.720 said Dot insisted that if he was going to get 0:16:40.760 --> 0:16:42.480 the sign I back and sign a deal with Israel, 0:16:42.560 --> 0:16:44.760 Israel also not to create a Palestinian state, and began 0:16:44.800 --> 0:16:49.040 said no, And so that's where we are. Daniel gordis 0:16:49.080 --> 0:16:51.400 Bloomberg View, Colamus, thank you very much. He's also the 0:16:51.400 --> 0:16:54.600 author of Israel, A Concise History of a Nation. Reborn 0:17:10.880 --> 0:17:13.360 the founder, one of the co founders and the head 0:17:13.400 --> 0:17:17.120 of a Carlisle Group, the private equity firm. David Rubinstein 0:17:17.440 --> 0:17:20.880 was talking about infrastructure yesterday. He said that he hoped 0:17:20.920 --> 0:17:24.640 Congress would have passed an infrastructure bill by now. Well, 0:17:24.680 --> 0:17:28.000 let's find out about why that hasn't happened. Perhaps and 0:17:28.119 --> 0:17:30.080 what could be done to move this along. We have 0:17:30.160 --> 0:17:33.480 an expert when it comes to infrastructure. Bill Sandbrook is 0:17:33.520 --> 0:17:36.800 the chief executive of the US Concrete and he joins 0:17:36.880 --> 0:17:39.240 us here in our leven three oh studios. Bill, thank 0:17:39.280 --> 0:17:41.840 you very much for it coming in. So what would 0:17:41.840 --> 0:17:44.040 you say to someone like David Rubinstein? He says, Look, 0:17:44.320 --> 0:17:47.400 he says, you've got low rates, But most of the 0:17:47.520 --> 0:17:51.720 US infrastructure is state and local, it is not federal. 0:17:52.080 --> 0:17:55.760 Why can't we get infrastructure done? No, it's a very 0:17:55.800 --> 0:17:58.920 good question. We were very hopeful people in our industry, 0:17:59.119 --> 0:18:03.119 and obviously both parties had platforms that advocated a trillion 0:18:03.119 --> 0:18:07.760 dollar spend before either winner was announced, and in fact, 0:18:08.040 --> 0:18:11.399 at President Trump's inauguration, the second thing he mentioned was 0:18:11.480 --> 0:18:14.359 one of his top was his top priority was infrastructure spent. 0:18:14.760 --> 0:18:18.120 And we have been disappointed that it hasn't been more forthcoming. However, 0:18:18.160 --> 0:18:21.800 having said that, there were priorities that need to be chosen, 0:18:21.880 --> 0:18:26.879 and the priorities were health regulatory reform, healthcare reform, taxes, 0:18:26.960 --> 0:18:29.879 and then infrastructure came forth, and there were fourth because 0:18:29.960 --> 0:18:32.920 and there were reasons for that sequence. So I'm patient 0:18:33.320 --> 0:18:36.159 this problem has not developed overnight. This problem is not 0:18:36.200 --> 0:18:39.240 going to be fixed overnight. So if it's pushed a 0:18:39.320 --> 0:18:41.080 year or a number of months, as it looks like 0:18:41.080 --> 0:18:43.320 it's going to be pushed into next year, I'm not 0:18:43.560 --> 0:18:46.520 despondent about that. The needs continue to grow and I 0:18:46.560 --> 0:18:48.399 think the federal government's going to have to address it 0:18:48.400 --> 0:18:49.960 one way or another. And there is by parts and 0:18:50.040 --> 0:18:53.920 support for it bill. Do you have a sense of 0:18:54.040 --> 0:18:56.080 how it would take place, how big it would be, 0:18:56.119 --> 0:18:58.480 as well as where the money would go. Would it 0:18:58.520 --> 0:19:01.720 go to projects that would apply uh for funding? Would 0:19:01.720 --> 0:19:04.520 it go to public private kind of partnerships that we 0:19:04.640 --> 0:19:06.959 then invest in. What's your sense it's gonna be a 0:19:06.960 --> 0:19:10.280 combination of of all the above. The public private partnerships 0:19:10.320 --> 0:19:13.480 are one piece of it. And if you remember is 0:19:13.560 --> 0:19:16.320 this has transpired, the administration was really hanging the hat 0:19:16.400 --> 0:19:18.879 on that that would be the lynchpin of any further 0:19:19.520 --> 0:19:23.639 any additional spend or increased spending. That has moderated to 0:19:23.680 --> 0:19:27.320 some extent, there is talk about gas tax increases. At 0:19:27.400 --> 0:19:30.040 least the administration doesn't have them dead on arrival. It 0:19:30.080 --> 0:19:34.200 does come down to funding eventually, funding and priorities. There 0:19:34.280 --> 0:19:37.840 is a list of fifty top priority infrastructure projects in 0:19:37.880 --> 0:19:40.280 the country that the governors developed and has been put 0:19:40.320 --> 0:19:44.040 to the Secretary of Transportation. One critical one. It's the 0:19:44.040 --> 0:19:47.040 Gateway project that links new work in New York City 0:19:47.080 --> 0:19:50.240 with a new tunnel, a new rail tunnel and whatnot. UM. 0:19:50.280 --> 0:19:52.920 I think over time these things are going to happen. 0:19:53.040 --> 0:19:55.600 The devil's in the details of funding. And it's been 0:19:55.680 --> 0:19:59.480 like that since, so no change there. You know, you've 0:19:59.480 --> 0:20:02.080 been on a little bit of an acquisition trail, and 0:20:02.119 --> 0:20:05.400 I'm wondering if you could describe what you've done, particularly 0:20:05.440 --> 0:20:11.800 in California, but also why why acquire rather than building? 0:20:11.840 --> 0:20:13.920 That kind of highlights this idea of trying to get 0:20:13.960 --> 0:20:16.240 the permits and trying to deal with local and you know, 0:20:16.400 --> 0:20:20.040 state municipalace on in order to make you business. You know, 0:20:20.200 --> 0:20:24.240 it's a very insightful question. Both coasts California particularly, it's 0:20:24.320 --> 0:20:27.879 very difficult to get through any environmental permitting process for 0:20:28.000 --> 0:20:31.360 whether it be an infrastructure project like a road, an airport, 0:20:31.680 --> 0:20:36.240 or an industrial manufacturing facility. We operate in heavily urbanized 0:20:36.320 --> 0:20:43.400 environments where permitting is extremely difficult UM. And to that end, 0:20:43.440 --> 0:20:46.520 we just made an acquisition on November seventeenth, Polaris Material 0:20:46.560 --> 0:20:50.800 is a big quarry in Canada. Because California arrogates are 0:20:50.840 --> 0:20:54.840 being depleted rapidly and there are no new quarries coming online. Therefore, 0:20:54.840 --> 0:20:57.600 the cost of arrogates are becoming ever expensive. We had 0:20:57.600 --> 0:21:01.800 an opportunity to buy this quarry and ship arrogates down 0:21:01.800 --> 0:21:04.399 into our facilities in San Francisco so we can be 0:21:04.440 --> 0:21:08.440 self sufficient. It helps our profitability. Uh and and as well, 0:21:08.440 --> 0:21:11.240 we got a terminal in in Los Angeles because we 0:21:11.280 --> 0:21:14.159 are growing through acquisition and expansion, which now gives us 0:21:14.160 --> 0:21:17.560 a beachhead into consolidate in the Los Angeles market. Considering 0:21:17.680 --> 0:21:20.680 that you made a purchase in Canada, it's important to 0:21:20.760 --> 0:21:23.679 look at what the trade relationship will be with the 0:21:23.760 --> 0:21:27.800 US and Canada and elsewhere. And I'm just wondering, have 0:21:28.200 --> 0:21:31.520 the increased tensions around trade affected you at all? Do 0:21:31.560 --> 0:21:33.480 you expect them to affect you? Do you think that 0:21:33.520 --> 0:21:37.240 they have been overblown? Now? I think they're they're valid. 0:21:37.400 --> 0:21:40.719 I don't expect them to impact arrogance. Arrogates have been 0:21:40.720 --> 0:21:44.719 shipped on both coasts from Canada because of the the 0:21:44.760 --> 0:21:47.240 inability to get new permits in the New York area, 0:21:47.280 --> 0:21:49.560 for instance, or in California. The arrogates have to come 0:21:49.600 --> 0:21:53.399 from somewhere. Um, they're very expensive to travel by truck, 0:21:53.520 --> 0:21:56.840 long distances from inland, so that sheer economics of it 0:21:56.880 --> 0:22:01.439 will underpin the ability of it long term. I'm not 0:22:01.520 --> 0:22:06.360 overly word about free trade, the Canadian Trade Pact as 0:22:06.359 --> 0:22:10.480 it relates to arrogance. Talk about the raising money, whether 0:22:10.520 --> 0:22:12.040 it's in the debt markets, you don't have a lot 0:22:12.040 --> 0:22:15.720 of that. I think about six million in total. Uh, 0:22:15.920 --> 0:22:18.639 easy to access money right now, I mean people throwing 0:22:18.680 --> 0:22:20.600 money at you to say, g you know, we're looking 0:22:20.640 --> 0:22:22.640 for yields, so why don't you borrow someone go out 0:22:22.640 --> 0:22:25.760 and buy a bunch of Yeah, that's that's very interesting. Uh. 0:22:26.280 --> 0:22:28.720 We've been very successful over the last six years with 0:22:28.760 --> 0:22:35.719 our strategy. With success comes the the benefits of having 0:22:35.880 --> 0:22:38.680 people want to loan your money so you can continue 0:22:38.680 --> 0:22:41.080 to be successful. So I think it would be easy 0:22:41.119 --> 0:22:43.040 to access at this time. Whether we would take that 0:22:43.119 --> 0:22:45.399 on as debt or equity would depend on the amount 0:22:45.400 --> 0:22:47.640 of money we need. And we are a cyclical business though, 0:22:47.880 --> 0:22:50.360 so we have to be very cognizant that the good 0:22:50.359 --> 0:22:52.920 times that we have now, you know, they won't last forever. 0:22:53.040 --> 0:22:58.359 Despite any governmental policy. Despite our hope, construction is a 0:22:58.359 --> 0:23:00.880