Speaker 1: Yeah, Welcome to the Bloomberg Surveillance podcast named Tom Keene
Speaker 1: Jay Leye. We bring you insight from the best in economics, finance, investment,
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Speaker 1: our top story about day for some of the President's men,
Speaker 1: His former personal lawyer Michael Cohen pleaded guilty to a
Speaker 1: legal campaign finance charges, all but naming Trump as having
Speaker 1: ordered him to do it. Moments later, the president's former
Speaker 1: campaign chairman, Paul Manifold was convicted on eight counts of
Speaker 1: tax and bank fraud charges. Joining us from Capitol Hill
Speaker 1: is bloombergs Kevin so really our chief Washington correspondent. Good
Speaker 1: morning to you, Kevin. On a busy day for Washington
Speaker 1: d see what has changed for the president. Well, there's
Speaker 1: an increasing pressure, Jonathan from Democrats to avoid the abuse
Speaker 1: of pardoning power as it's being described. There's a legislation
Speaker 1: in the Democratic controlled Attorney General's Office in New York
Speaker 1: that would close what they argue is a loophole for
Speaker 1: the president's to pardon someone like Paul Manaport. Democrats up
Speaker 1: on Capitol Hill in the House and the Senate, urging
Speaker 1: Republicans to avoid the issue by by also joining them
Speaker 1: and avoiding having the President part of them. Books for
Speaker 1: the President's next twenty four hours, he's said to have
Speaker 1: lunch with the Secretary of Defense and then have an
Speaker 1: awarding of the Medal of Honor later this afternoon. The President,
Speaker 1: while speaking last night in West Virginia, UH prior to
Speaker 1: that speech, criticized Paul Manafort. UH criticized UH Paul Manaford
Speaker 1: UH in saying I'm sorry defendant Paul Manaport, but made
Speaker 1: no mention of Michael Cohen. So far, we haven't had
Speaker 1: really a fitial response from the President of the United
Speaker 1: States apart from that rally and heading to that rally, Kevin,
Speaker 1: what's expected in Washington, d C. What comes next? Well,
Speaker 1: when I seek the Republicans, they they have echoed the
Speaker 1: President in the sense that they've said that there is
Speaker 1: no evidence of collusion. Polls suggests that the base of
Speaker 1: the Republican Party is still very much behind the President
Speaker 1: in terms of UH agreeing and echoing him when they
Speaker 1: say that the investigation of the witch hunt. In terms
Speaker 1: of what comes next, really it becomes whenever Bob Mueller
Speaker 1: wraps up his investigation. And I spoke with several sources yesterday, Jonathan,
Speaker 1: who said to me that this is a win for
Speaker 1: the for the Special Council's investigation because of the court
Speaker 1: documents that you've got In the intro, which is essentially
Speaker 1: Michael Cohen says he was instructed by the only candidate
Speaker 1: he was working for at the time, Donald Trump, to
Speaker 1: provide those touch money payments. Kevin Si really great to
Speaker 1: cant show me this morning on a busy morning for
Speaker 1: Kevin Sirillian everyone in Washington, d C. Joining us now
Speaker 1: from New York and place to say that. Kim Wallace
Speaker 1: joins us now. You're as your group managing Die Rector.
Speaker 1: He served in President Obama's administration as Assistant Secretary for
Speaker 1: Legislative Affairs at the Treasury Department. Kim, it's always great
Speaker 1: to get your insights. So let's begin with an extreme question.
Speaker 1: Does any of this as it stands incrementally impact the
Speaker 1: odds of the president staying in the White House. Good morning, Jonathan.
Speaker 1: I think it's premature to take these disparate acts, although
Speaker 1: they are coming fast and furious, and extrapolate out that far.
Speaker 1: I would say this that the president is under pressure.
Speaker 1: That's unique for presidency. Is not only multitasking on an
Speaker 1: array of transformative policy agendas, he's also now got to
Speaker 1: worry about a few different legal processes under way that's
Speaker 1: going to tax this staff. That will tax obviously his
Speaker 1: legal staff, but it will more importantly make more reticent
Speaker 1: to partisans on Capitol Hill to venture out on any
Speaker 1: other policy excursion. So it's it's less whether or not,
Speaker 1: in my view, whether or not impeachment is around the
Speaker 1: corner more or whether or not Washington has become a
Speaker 1: risk to market. Kim, do you just assume that Republicans,
Speaker 1: you know, is in a general statement, will do nothing
Speaker 1: until the election. We're seventy six days away, and even
Speaker 1: with the historic moment that we saw yesterday afternoon, and folks,
Speaker 1: for those of uliciting worldwide in Radio London, was extraordinary
Speaker 1: to see John Farrell the split screen on on television
Speaker 1: of the two trials going on at the same time,
Speaker 1: just extraordinary. But within this, Kim, do the Republicans just
Speaker 1: keep doing what they're doing, which is maybe living in
Speaker 1: silence while they support the president? You know, time that
Speaker 1: had been my working assumption up until yesterday. Seventy six
Speaker 1: days is a long time, and it depends, in my view,
Speaker 1: GOP behavior going into the election depends on public opinion.
Speaker 1: If the polls that we start getting in you know,
Speaker 1: five days, add on to the polls we've already seen
Speaker 1: where the issue of correct option the president is in
Speaker 1: double digit negatives net negatives. If that grows and worsens,
Speaker 1: it's going to make some of these thirty forty competitive races.
Speaker 1: And the Republicans and am very nervous and likely they're
Speaker 1: going to seek some distance from the White House. That
Speaker 1: was Greg Valier's legally thought was this is about public opinion,
Speaker 1: less about all the nuances and the Bellway stuff. Mr.
Speaker 1: Really so, so let me ask you another question, Kim.
Speaker 1: Does any of this incrementally damaged Republicans mid term election prospects?
Speaker 1: You know, Jonathan, they weren't right going into this, and
Speaker 1: certainly this issue of corruption and the president's legal problems
Speaker 1: have been long enough. It hasn't effected the basis support
Speaker 1: for him. What will What will note retrospectively is whether
Speaker 1: or not it hurt turnout in the base, whether that
Speaker 1: is what they're telling posters about their support for the
Speaker 1: president doesn't show up on November seven when they actually
Speaker 1: have to go to the polls and vote for establishment
Speaker 1: Republicans who are different from the president. Can you brought
Speaker 1: up the market? So I want to talk about them markets.
Speaker 1: We caught up with Bob Dollar new VNSA Management a
Speaker 1: little bit earlier, and he brought up two extremely imperfect parallels,
Speaker 1: Nixon and Clinton, and both of those issues. And the
Speaker 1: way those episodes unfolded for the financial markets is that
Speaker 1: with Nixon, markets went down and with Clinson markets went up.
Speaker 1: And it was nothing really to do with any of
Speaker 1: the individuals or any of the episodes specifically. It was
Speaker 1: about earnings and it was about growth and earnings and
Speaker 1: growth weren't good in the seven season, they were good
Speaker 1: in the nineties. Isn't that really the story here, Kim?
Speaker 1: How insulated markets will be is dependent on something else,
Speaker 1: completely separate from Washington d C. I think that's true
Speaker 1: a large part. The fundamentals always matter most to the markets.
Speaker 1: But going back to Bob's nineteen seventy three point, in
Speaker 1: January of seventy three, the SMP cracked, that didn't regain
Speaker 1: its nominal value of one or two for seven and
Speaker 1: a half years, and that's because wars, energy embargoes, other
Speaker 1: supplied to problems and hyperinflation. So the problem with confidence
Speaker 1: in the White House being cracked is that the funder
Speaker 1: mentals have to go well for a long time to
Speaker 1: restore confidence in the markets. Kim Wellas to your expertise
Speaker 1: with Treasury, where does Secretary Minution fit into this? He's been,
Speaker 1: I'm going to suggest, relatively quiet recently. Is he an
Speaker 1: important player in the next seventies six days? The Secretary
Speaker 1: might be tested in ways over the next seventy six
Speaker 1: days that he hasn't been in the previous seven quarters. Tom,
Speaker 1: I would it would seem to me that he would
Speaker 1: want to remain quiet so as not to change his
Speaker 1: behavior and therefore have markets notice that he's acting differently.
Speaker 1: But he's certainly going to be more circumspect than what
Speaker 1: he's willing to say, whether it's about the dollar or
Speaker 1: whether it's about markets. Kim Wells, thank you so much
Speaker 1: with your raiser group this morning. Truly timely as as
Speaker 1: we all adjust what we saw to that question on
Speaker 1: Washington and the events of the last twenty four hours.
Speaker 1: Our interview of the day Robert ray is with us,
Speaker 1: which barely describes his work on any number of cases.
Speaker 1: The attraction of Robert Ray Uh is the former Uh
Speaker 1: the head of the Office of Independent Council. This after
Speaker 1: Ken of Star and with Ken Starr is a number
Speaker 1: of cases he's been involved with. And all of this, Bob,
Speaker 1: came out of your work at Washington in Lee Law School,
Speaker 1: which to me is the most interesting law school in America.
Speaker 1: You went from Princeton down the Shenandoah Valley until this
Speaker 1: little little school, which is a jewel of law. What
Speaker 1: is Washington Lee. The history there in that law school
Speaker 1: there tell you about the moment we witnessed yesterday. Well uniquely,
Speaker 1: Washington and Lee, of course came largely into existence and
Speaker 1: was furthered as the result of a gift by President Washington.
Speaker 1: It steeped in our history, so it travels all the
Speaker 1: way back to the Revolution and before, and of course
Speaker 1: it um It is the place what was then Washington
Speaker 1: College where Robert E. Lee went and became president of
Speaker 1: the college after the Appomattox and the end of the
Speaker 1: Civil War. So last night, near twelve midnight, Lawfare published
Speaker 1: their long article and then they clear what happened yesterday
Speaker 1: has never happened in the Washington and Lee Republic. Was
Speaker 1: it that original what happened yesterday? It certainly was, um
Speaker 1: a significant moment. I'm not sure I would quite compare
Speaker 1: it to um that date in nineteen seventy four when
Speaker 1: a slew of the president's men, meaning Presidents Nixon's men
Speaker 1: were Archibald Cox, you know, subject to to indictment. Um.
Speaker 1: But having said that, I mean, obviously you can certainly criticize,
Speaker 1: and fair criticism, and the fact that the president during
Speaker 1: the campaign and thereafter surrounded himself with at least in
Speaker 1: this instance, two very questionable figures, and it creates legal
Speaker 1: problems obviously for the president as a result, at least
Speaker 1: in part of the but particularly the Michael Cohen play,
Speaker 1: and whether or not, you know, as has been now reported,
Speaker 1: whether there's more to come with regard to further implicating
Speaker 1: the president in connection with an alleged campaign finance violation.
Speaker 1: So let's talk about Michael Cummin. He's effectively all but
Speaker 1: named the president as having ordered him to commit a crime. Well,
Speaker 1: I'd be careful about effectively. I mean he he was
Speaker 1: directed by the candidate UH to make a payment. Whether
Speaker 1: you can turn that into the president knowingly and willfully
Speaker 1: violated the campaign finance laws is at least in my judgment,
Speaker 1: altogether another question. And you know, to put it in
Speaker 1: layman's terms that you know, the jury is still out
Speaker 1: on that question. So the jury is still out Covins law.
Speaker 1: As you say, there could be some escalation risk embedded
Speaker 1: into this episode because he's gone on MSNBC and said
Speaker 1: that Covin has knowledge of Russian conspiracy. Let's talk about
Speaker 1: best practice. Then, how would you advise the president to
Speaker 1: conduct himself over the coming months with this going on? Well,
Speaker 1: I I think I have said previously that I think
Speaker 1: the president's best strategy at this point is to ride
Speaker 1: this thing out to a conclusion. I think it does
Speaker 1: raise the specter and the prospect of the significance of
Speaker 1: the midterm elections and whether or not the president would
Speaker 1: face impeachment in the event that the House of Representatives
Speaker 1: went to the Democrats, because they would have subpoena power,
Speaker 1: and there's already some indication that leading figures in the
Speaker 1: Democratic Party seemed to be hell bent and determined to
Speaker 1: turn this into an impeachment proceeding query whether that really
Speaker 1: is where they want to go and whether or not
Speaker 1: campaign finance violations really if there's nothing more, and I
Speaker 1: guess we still don't know yet because Bob Muller has
Speaker 1: not concluded his instigation. But you know where this goes, obviously,
Speaker 1: is the sixty four thousand dollar questions. That basic question
Speaker 1: on violations of campaign finance rules before you are the
Speaker 1: president of the United States. Is that grants for impeachment? Well,
Speaker 1: it's obviously, at the end of the day, a political
Speaker 1: judgment rather than a legal judgment. And it it is
Speaker 1: whatever the Congress of the United States decides. I mean,
Speaker 1: they get to decide whether or not under the Constitution
Speaker 1: that would constitute high crimes and misdemeanors. If some people
Speaker 1: would argue yes and some people would argue no, at
Speaker 1: the end of the day, what is it. It's whatever
Speaker 1: Congress decides it is. But remember also, and this is
Speaker 1: I think that the lesson of history. If we go
Speaker 1: back to the beginning, there have only been impeachment proceedings
Speaker 1: twice against a president, the first Andrew Johnson and the
Speaker 1: second Bill Clinton, neither of which were successful. What people
Speaker 1: need to understand and remember is it is a partisan
Speaker 1: and political proceeding, but it requires under the constitution because
Speaker 1: it's a very high bar. The only way a president
Speaker 1: can be removed and the result of an election overturned
Speaker 1: is if there is a conviction in the Senate, and
Speaker 1: because it is required under the Constitution, that would be
Speaker 1: a two thirds majority. The only way that's ever going
Speaker 1: to happen is if the party in power deserts the
Speaker 1: president and as a result of that, as was the
Speaker 1: case with Richard niction Um since although he was never
Speaker 1: impeached Um and removed from office, obviously he resigned before
Speaker 1: that happened. But the reason he resigned is because it
Speaker 1: was a foregone conclusion that the Republican Party had abandoned him,
Speaker 1: and you know, facts being stubbornd stubborn things, Um, they
Speaker 1: came to the conclusion that, in fact, he was involved
Speaker 1: in a conspiracy to obstruct justice. You're just joining us
Speaker 1: vert ray with this prosecutor? Is what is Wikipedia as
Speaker 1: which barely describes as public service, including writing the actual
Speaker 1: reports on Lewinsky, Madison, Guarantee, on Mrs Clinton, Bernard Um
Speaker 1: and others over the years. What does the media get
Speaker 1: wrong in their coverage? You are like Mr Mueller total business,
Speaker 1: total grizzled legal. It's a Now I assume it's a
Speaker 1: word processor, but you've got a quill in your hand
Speaker 1: and you're writing it out these actual documents. What's the
Speaker 1: media get wrong in its coverage? Well, there seems to
Speaker 1: be largely an overreaction to every single thing that comes out.
Speaker 1: I mean, we have to do that. Well, I guess
Speaker 1: that's I mean, I guess that's right. But I mean,
Speaker 1: you know, a dispassionate prosecutor asked the question just be caused.
Speaker 1: For example, Michael Cohen says that Donald Trump directed him
Speaker 1: to make a campaign contribution, begs the question about whether
Speaker 1: or not Donald Trump was knowingly in violation of the
Speaker 1: campaign finance laws. I mean, one you'd think about some
Speaker 1: very relevant considerations, not the least of which is, Hello,
Speaker 1: Michael Cohen was Donald Trump's lawyer. Donald Trump has an
Speaker 1: advice of counsel defense. I mean, you know, I assume
Speaker 1: his defense is going to be Listen, I asked Michael
Speaker 1: Cohen to take care of this, but I never told
Speaker 1: Michael Cohen to violate the law. In any event, I'm
Speaker 1: not a lawyer. He is. I depend on his legal advice,
Speaker 1: and I depend and relied on the fact that he
Speaker 1: wouldn't be engaged in a campaign finance violence points out
Speaker 1: is his farm on nuanced and complex, And I think
Speaker 1: people appreciate just because Michael Cohen has committed a crime
Speaker 1: and it admitted he's committed a crime and said the
Speaker 1: president was the person that ordered him to do whatever
Speaker 1: he has done, does not mean necessarily the president has
Speaker 1: committed not the same thing as ordering him to commit
Speaker 1: a federal felony. So look, I don't know what the
Speaker 1: conversations were. I think I would be surprised if the
Speaker 1: conversations are what I guess the media seems to speculate automatically. Well,
Speaker 1: she's not means he has the keys to the kingdom
Speaker 1: and he knows that Donald Grump is a felon that
Speaker 1: Bob Mower's office would already have known that. And if
Speaker 1: they already knew that and had that was surprising to
Speaker 1: me that they would have a let go of the
Speaker 1: prosecution by giving it to the Southern District of New
Speaker 1: York and be um if if they had that information,
Speaker 1: then why didn't they sign them up to a cooperation agreement?
Speaker 1: Which is not what happened yesterday in court so again,
Speaker 1: I mean I don't need to you know, spread uh,
Speaker 1: you know, a big blanket of cold water over all
Speaker 1: of this. But I guess my point is is that
Speaker 1: there's a bit of an overreaction to its significance. I'm
Speaker 1: not saying it's insignificant. It is significant. When two members
Speaker 1: of the president's inner circle have now been found guilty
Speaker 1: or by a jury and or pleaded guilty to federal felonies.
Speaker 1: That's not an insignificant development. One final question in your experience,
Speaker 1: how do these discussions change when it's about you're not
Speaker 1: going to be with your kids or your kids are
Speaker 1: going to get involved? When families are drawn into this, Well,
Speaker 1: that's the other missing piece to all of this, in
Speaker 1: addition to the overreaction. You know, there's a human story
Speaker 1: here that gets completely lost. Tell us about that. Let
Speaker 1: me tell let me tell you how it feels to
Speaker 1: be on the receiving end of the full weight and
Speaker 1: authority of the United States government and the United State
Speaker 1: It's Justice Department zeroed in and targeted on your head
Speaker 1: to have you brought to justice. That is a a
Speaker 1: harrowing moment. I used to say, I would never wish
Speaker 1: a special counsel or independent Council investigation on my worst
Speaker 1: enemy because of the frightening power that is exercised in
Speaker 1: order to hold people to justice. Now, you know, that's
Speaker 1: the beauty of this country is that we do hold
Speaker 1: people accountable. But you know, taking a just a pause
Speaker 1: and a deep breath to reflect on how difficult that
Speaker 1: must be. The one thing that will be that will
Speaker 1: be true here that both Michael Cohen and Paul man
Speaker 1: Offort will face now quickly over the next several weeks,
Speaker 1: will be whether or not they've got anything further to give,
Speaker 1: because if there's something there to give, it will be
Speaker 1: gotten as the result of this pressure. You gotta leave
Speaker 1: it there, Robert Ray, thank you so much. Former Prosecutor John.
Speaker 1: I want you to bring in our next esteem guests,
Speaker 1: but I just want to say that he and many
Speaker 1: others need a massive and subtle victory lap for not
Speaker 1: one saying stay in the market, have courage, but in
Speaker 1: this great bull market, just time after time after time,
Speaker 1: it's been extraordinary run, staying long and strong. Bubb Doll
Speaker 1: moving asset management portfolio manager. He joins us. Now, well,
Speaker 1: great to catch up. It's a record run for the
Speaker 1: bull market, depending on how you measure it. It's a
Speaker 1: record high and yesterday's session and it's still the most
Speaker 1: unloved bull market in history. Why Bob, Yes, there are
Speaker 1: so many skeptics on things, as you well know, and
Speaker 1: bull markets love to climb those walls of worry. And
Speaker 1: the list of reasons to worry it is long and
Speaker 1: seems to be increasing. Oh, you knows the economy running
Speaker 1: out of eam, Is the bullmarket too old? Is the
Speaker 1: president not going to be able to govern? And the
Speaker 1: list goes on and on and on and in the meantime,
Speaker 1: the economy's left I checked really good and earnings are
Speaker 1: even better, and that's what move stocks. Last year, the
Speaker 1: most often question, the question I got was with Washington
Speaker 1: d C such a mess? How can the stock market
Speaker 1: be so good? And my response, as you answered your
Speaker 1: own question, Washington d C does not move stocks. Earnings
Speaker 1: move stocks. Yes, DC does things from a policy standpoint
Speaker 1: that can affect earnings over the long term. But but
Speaker 1: you know that earning story, the earning story right now
Speaker 1: is pretty good, and it's juced by a tax cut,
Speaker 1: juice by a tax cut, and you just wonder how
Speaker 1: sustainable it is do you take some optimism by how
Speaker 1: good top line growth is being Bob. Yes, we estimate
Speaker 1: of the call it earnings growth from the first half
Speaker 1: of the year, about a third of it has come
Speaker 1: from extraordinarily top top line growth, which means the US
Speaker 1: economy is doing well in most pockets and outside the
Speaker 1: U s well, It's fraid a little bit on the
Speaker 1: edges is pretty good as well. And so the multinationals
Speaker 1: have some revenue growth. Revenue growth is awesome. And you
Speaker 1: mentioned the tax bill. Thank goodness, all this political noises
Speaker 1: coming after that tax bill is an effect, and that's
Speaker 1: the stimulus that we will enjoy no matter how these
Speaker 1: proceedings go. Where's your favorite sector? I mean, if if
Speaker 1: we're if we're rich, I got to get in the market.
Speaker 1: I'm a sector generator. What's the sector I want to
Speaker 1: be in? Right now? I will answer your question, but
Speaker 1: let me put a theme on the table, Tom, if
Speaker 1: I might, that I think is even more important owning companies.
Speaker 1: As a US investor, they get most their earnings from
Speaker 1: inside the US. Therefore, de emphasizing multinational earnings has had
Speaker 1: major tales tail winds the text bill, relative economic and
Speaker 1: earnest growth, the trade issue currency. All of them have
Speaker 1: been supportive of that theme. So question where do you
Speaker 1: find those names? A lot of healthcare names, insurers, etcetera,
Speaker 1: tend to be more domestic. The retailers here's target with
Speaker 1: another wonderful earnings report. The retailers mostly domestic industry. They're
Speaker 1: the kind of places I would partner money. Where are
Speaker 1: you seeing with use of money right now? I mean,
Speaker 1: you know, we came out of this and there were
Speaker 1: some real skeptics about investment and what was this going
Speaker 1: to be? A share buy back and dividend growth? What's
Speaker 1: the actual numbers that you calculate with Nvine every day?
Speaker 1: So so we're looking at h We're looking at earnings
Speaker 1: growth peaking, but earnings still being strong. I mean a
Speaker 1: lot of people earnings growth peaked. There for the stock
Speaker 1: market's got to have trouble. No, no, no, no no.
Speaker 1: If we go from plus twenty five to minus two, yeah,
Speaker 1: the stock market have trouble. We're going from plus twenty
Speaker 1: five to plus eight team plus twenty. What are they
Speaker 1: doing with the cash. They're taking the cash and reinvest
Speaker 1: in their business. Capital expenditures up fifteen depending what's hereies
Speaker 1: you look at and yes they're buying backstock, and yes
Speaker 1: they're raising dividends. Because cash flow is so strong they
Speaker 1: can do all the above, and M and A buying
Speaker 1: the company down the street. There are lots of great
Speaker 1: usay cash when this is strong. And if we go
Speaker 1: to William Priest and free cash flow in use of cash,
Speaker 1: shareholder yield, what's my yield on the market January one?
Speaker 1: I mean, if you look at use of cash plus
Speaker 1: cash dividends, what is it? Four or five in one?
Speaker 1: Four to five is our guests um. But dividends are
Speaker 1: moving up because of the cash flow. Share buy backs
Speaker 1: have increased, but as the percentage of the capitalization not
Speaker 1: as much. Thank goodness, corporate CEOs are more optimistic on
Speaker 1: their business and more willing to reinvest. So we'll take
Speaker 1: a dividend increase or a share buy back in a
Speaker 1: company that's net free cash flow positive, but we much
Speaker 1: prefer reinvest in your business. Show me you're investing, your
Speaker 1: improve your return on equity, where turn on assets, returning investment,
Speaker 1: and your growthery. Bob, you and I talked about this before.
Speaker 1: Let's talk about the yield curve. Two stands is just
Speaker 1: broken down today two new cycle tights. So the spread
Speaker 1: between the two you and the tenure and the treasury
Speaker 1: market around about twenty two basis points. We dropped below
Speaker 1: that very briefly in today's session. How do you communicate
Speaker 1: to clients that they shouldn't worry yet, because historically, when
Speaker 1: the yield curve narrows, it is because the economy is
Speaker 1: doing well, earnings are doing the well, and the fit
Speaker 1: is normalizing. Right, it's usually a period when stocks do
Speaker 1: extraordinarily well. The yield curve began to narrow, of note
Speaker 1: about a year ago, and if I sold stocks based
Speaker 1: on that, I've been made a mistake. The yellow light
Speaker 1: doesn't go on for me until the yield curve actually inverts.
Speaker 1: And yellow doesn't mean I run, It just SEMs I
Speaker 1: have a bunch of green flags, and I would add
Speaker 1: one yellow flag in the mix of all the good
Speaker 1: things I look at. So watch it carefully. It's it's
Speaker 1: not a positive for the stock market, but not yet.
Speaker 1: An if you know Bob, you know what I've known
Speaker 1: each other for years, explained to those younger how original
Speaker 1: this cycle is and how you can stay invested because
Speaker 1: John Farrell and I are positive. On Friday, there will
Speaker 1: be gloom, essays Galore. Yes, there will be um. I
Speaker 1: guess to keep it simple, Tom, if you told if
Speaker 1: you dropped me on the planet and told me that
Speaker 1: real GDP in the US was three, the nominal GDP
Speaker 1: in the US was five, the unemployment rate was below four,
Speaker 1: and wager rate inflation was two points something, I'd say, Wow,
Speaker 1: either you're lying to me or this is an unbelievable
Speaker 1: city circus. What I gotta stop the show, folks. What
Speaker 1: Mr Doll just said there is so important, John just
Speaker 1: it's incredibly important to take all the noise away that
Speaker 1: we all live with. Like A C. Mullon and Juventus.
Speaker 1: You take the noise away, the noise and Bob Bob
Speaker 1: nails it, Bob Dove. We've also got to say thank
Speaker 1: you to you, Bob, thank you for joining the show today.
Speaker 1: Call us when you go negative, portfolio manager, We'll be
Speaker 1: talking to Bob long before it turns negative. John, We've
Speaker 1: got to do a surveilling's correction. Phil saves the day
Speaker 1: with Mark McCormick of TD Securities looking for Capital's maple leafs.
Speaker 1: In January. Uh, it's the Scotia Arena. Scotia wait a
Speaker 1: second way, Scotia Bank is you is you pulled me
Speaker 1: out on air about calling at the stadium the garden.
Speaker 1: It's the garden, garden. But is it the garden or not?
Speaker 1: It will always be the maple leaf it is. It
Speaker 1: is the Montreal Forum, right, the maple leaf garden. Maple
Speaker 1: leaf garden. But it's sponsored now by Scotia. Bas is
Speaker 1: the most complex correction it is. This is what that's
Speaker 1: millions of dollars are involved. It's not even a correction.
Speaker 1: They don't they do this in Chicago. They don't. They don't.
Speaker 1: You know, it's it's it's the house of Stanma. Someone
Speaker 1: email you annoyed? Phil was annoyed? Yeah, Phil, something an
Speaker 1: email also annoyed? Is Diane Swank Chicago. No, no, come on,
Speaker 1: Diane Swank knows how sad I am. And we covered
Speaker 1: it a few weeks ago on the passing Diane of
Speaker 1: the giant of a Chicago black Hawk, Stan Makeita. He
Speaker 1: meant a lot to the city of Chicago, didn't he?
Speaker 1: He absolutely did. In fact, you know, I'm not a
Speaker 1: huge hockey fanel though I come from Detroit originally, as
Speaker 1: they can imagine the hockey there as well. But one
Speaker 1: of my colleagues a very long time ago, and all
Speaker 1: my Mac equipment played a hockey puck and I called
Speaker 1: him up and I said, you know it's still there
Speaker 1: as my screen saver is the hockey stick with the
Speaker 1: hockey puck. And he laughed and he said, that's just
Speaker 1: because you just don't know how to remove it. Because
Speaker 1: I'm in Chicago. Particularly Stanmakeita with his contribute to the
Speaker 1: deaf community across Illinois in America, Diane Swark, we're looking
Speaker 1: at an economy that is buoyant. John and Ivor to
Speaker 1: interview after interview today, saying it is about the economy.
Speaker 1: Where are we migrating to a three percent run rate
Speaker 1: or will it be lower? Well, we'll see I think
Speaker 1: close to three percent in the second half the year.
Speaker 1: We'll move down a bit as we move into one
Speaker 1: of the big hurdles out there is some of the
Speaker 1: data that's coming out today and to see what's going
Speaker 1: on with housing. Housing has been a disappointment. We don't
Speaker 1: want it to be the coal the canary in the
Speaker 1: coal mine. It has been a laggered We've seen a
Speaker 1: lot of foreign investment pull out of some of the
Speaker 1: major cities, which may be an opportunity for millennials trying
Speaker 1: to buy and unable to get to some of the
Speaker 1: price points that we've been seeing out there. But it
Speaker 1: is something that's been a rocky road is the housing market.
Speaker 1: That said, we still have momentum going into The other
Speaker 1: question is what's going to happen on the trade front.
Speaker 1: We've seen some cooling of heads on the escalation of
Speaker 1: trade traiffs. We hope that continues. That's very, very important
Speaker 1: because uncertainty regarding terrorists has already taken a toll on
Speaker 1: some plants and retailers, warehouses, and transportation industry plans in
Speaker 1: terms of their twenty nineteen spend budgets on what they
Speaker 1: want to invest in the U. S. Economy. And at
Speaker 1: the moment, as you point out that the fundamentals of
Speaker 1: the U. S. Economy are really rather strong, and they're
Speaker 1: set to say strong at least through the end of
Speaker 1: this year, the politics is becoming much more complex. And
Speaker 1: I'm just wondering how you think about the politics right now.
Speaker 1: What is the channel that the politics can feed through
Speaker 1: and infect the strength of this U. S. Economy? Do
Speaker 1: you think there is one? Certainly there is. I mean,
Speaker 1: politics is policy, the politics of uncertainty. That's one of
Speaker 1: the things that we're grappling with right now. I think
Speaker 1: the economy um is very robust. We're getting an extra
Speaker 1: boost from fiscal steamers. We may have to pay for
Speaker 1: that later on, in fact, they think we will. But
Speaker 1: I never begrudge us a great economy or a better economy,
Speaker 1: and that's something that we have to embrace. What I
Speaker 1: worry about is the uncertainty surrounding what comes next, un
Speaker 1: certainty about where policy will go, who will make the
Speaker 1: decisions about policy, how those decisions will be executed. All
Speaker 1: of those things do play into long term plans by companies.
Speaker 1: And we're also short term oriented in terms of what
Speaker 1: happens quarter to quarter. But over the longer term, we
Speaker 1: have a world in which we've seen many populist leaders rise.
Speaker 1: People look at Venezuela today, a true mass with a
Speaker 1: populist leader, and those leaders tend to think the invisible
Speaker 1: hand in the market belongs to them, and they choose
Speaker 1: winners and losers. And the more that we see leaders,
Speaker 1: whether it be in the developed or the developing world,
Speaker 1: pick winners and losers in an economy, it undermines efficiency
Speaker 1: and undermines those bets we have to make going forward, right, Diane,
Speaker 1: to get to our next section is Jackson All will
Speaker 1: have value this year. Jackson All always has value. I
Speaker 1: love Jackson Hall. I don't have to regoing there this year, um,
Speaker 1: but I think it's an amazing place. It's one of
Speaker 1: the few places where you see academics, you see policymakers
Speaker 1: and the press altogether, and the opinions that go around
Speaker 1: and the thought that comes out of that kind of
Speaker 1: unique sort of mingling of thought is really important, just
Speaker 1: on the trails and things like that. This year, I
Speaker 1: think the most important thing is actually to make less
Speaker 1: news than more news. J Powell, as we know, is
Speaker 1: sort of feeling little pressure right now, and now we
Speaker 1: have to get him. He's gonna he's going to justify
Speaker 1: a rate high in September and later for one in December.
Speaker 1: This is classic. We're gonna come back with Diane Swank
Speaker 1: of Grant Thornton John. I love it. Now. It's live
Speaker 1: or dead checks at all. Are you upset you're not
Speaker 1: going this year? I'm always upset. Is exactly as Dr
Speaker 1: Swank said. The idea, the idea that you just calm
Speaker 1: down and mingle is, I've had some treasured moments, Michael.
Speaker 1: We're going to catch out with mine. I believe we will. Dan,
Speaker 1: thank you so much. Dan swank with us today with
Speaker 1: Grant Thornton and fiery discussion there on too many themes
Speaker 1: at the moment. What's some wonderful folks about what Mr
Speaker 1: Rubinstein is doing with peer to peer. It's not just
Speaker 1: easy lay up conversations right now anything. For example with
Speaker 1: Tim Cook of Apple, well, you know what, it's one
Speaker 1: big victory lap and that is not the case of
Speaker 1: your guests this week. I was amazed, David looking at
Speaker 1: United Airlines stock the terrific performance over the last decade.
Speaker 1: And yet for Mr Muni has Oscar mullions. This has
Speaker 1: been a fractious era, hasn't it. It's been difficult for
Speaker 1: him for a couple of reasons. When he first took
Speaker 1: over the job, within a month he had a heart attack.
Speaker 1: He then had a heart transplant at the age of
Speaker 1: fifty two. So he's a vegan, a marathon runner, and
Speaker 1: all of a sudden he has a heart attack, and
Speaker 1: not only a heart attack, a heart transplant. A week
Speaker 1: after the transplant he's back at work and uh, so
Speaker 1: he had to overcome that, but he also had the
Speaker 1: challenges of of of people being dragged off. Someone being
Speaker 1: dragged off the airline. You'll probably remember that, and that
Speaker 1: was a very unfortunate incident that they now apologized for
Speaker 1: and corrected your procedures. And also they had some animals
Speaker 1: die on on board and they corrected procedures for that.
Speaker 1: So um, he's but the stock has done well, and
Speaker 1: as you know, all airlines have done reasonable, but United's
Speaker 1: done particularly now. And I think Oscar is a really,
Speaker 1: really good manager. He came from a complicated environment. He
Speaker 1: was one of eight children, grew up in southern California,
Speaker 1: was a long haired hippie um surfer by his own description,
Speaker 1: got into Harvard but didn't think he would fit in
Speaker 1: there in state at USC and the Pepperdine Law School eventually,
Speaker 1: and then worked his way up at CSX and other places.
Speaker 1: But then when an emergency of arose at United Airlines,
Speaker 1: say came in as a board member to be the CEO,
Speaker 1: and he had his health challenges. David, I can't wait
Speaker 1: to hear this interview. I'm particularly interested, uh in what
Speaker 1: Mr Mineo's view on support animals is sort of this
Speaker 1: trend where everybody and their mom is bringing a peacock
Speaker 1: on board to sit next to them and provide them comfort.
Speaker 1: What do you say about that? Yes, he describes what
Speaker 1: he describes how um many people are used to the
Speaker 1: idea of bring a support animal on who might be
Speaker 1: a dog, and some have brought on other animals, and
Speaker 1: one person brought on a peacock, which is hard to
Speaker 1: see how that supports you. But the one that he
Speaker 1: describes is probably the stroller brook. The camel's back is
Speaker 1: an emotional support animal had to have its own emotional
Speaker 1: support animal on the plane. So the person brought on
Speaker 1: it an emotional support animal, and that animal had its
Speaker 1: own emotional support animal. At that point they realized they
Speaker 1: had a change of rule. This is amazing, you know,
Speaker 1: And just so everybody knows, I've never done this stunt.
Speaker 1: That Bill loves to travel. But the problem is Bloomberg
Speaker 1: has me back Lisa in deep economy on United Airlines
Speaker 1: and that Bill will only go up with Rubinstein in
Speaker 1: first class. Well, I love that. I love the idea
Speaker 1: of that. I mean, I guess, David, I haven't you know,
Speaker 1: I've never actually seen an emotional support animal need its
Speaker 1: own emotional support animal. But I guess it's in a
Speaker 1: growing problem in our country. Yeah, well, I mean I've
Speaker 1: heard of actually animals being put on prozac. Actually, Um,
Speaker 1: I knew of a couple who's dog was somewhat depressed
Speaker 1: and they put the dog on prozac. So it's a
Speaker 1: logical stuff to have Sie here to something. You're Maine,
Speaker 1: all right, David, I'm really curious to know, I mean,
Speaker 1: going forward, what the big challenges are for him? And uh,
Speaker 1: did he talk at all about what he's doing going
Speaker 1: forward or has he done? Is he just enjoying the
Speaker 1: sweet life? Well, the challenges that all airlines have is
Speaker 1: that they they really depend on the price of oil
Speaker 1: being a big factor. And airlines have made a lot
Speaker 1: of money in recent years because of oil sent them
Speaker 1: low and therefore gas prices and low. As oil prices
Speaker 1: come up, it's going to be more challenging. It's interesting
Speaker 1: to think about this, all the things that airlines do
Speaker 1: to get you to go on their planes. Um, you know,
Speaker 1: Miles the bologist that you give you a mologe, clubs
Speaker 1: of nice lounges, they might give you better food. In
Speaker 1: the end. The only thing that really matters, he says,
Speaker 1: is price and availability of time or which. All the
Speaker 1: other things are nice, but in the end, price is
Speaker 1: the most important thing, and then you your availability. So
Speaker 1: price is going to be a factor for all these
Speaker 1: airlines because the soil prices go up, they don't have
Speaker 1: the ability to really cost that much. It's a bit
Speaker 1: of a challenge, David. I've got to ask this question
Speaker 1: of historic import and I say this folks with exceptional
Speaker 1: interests in the fact that Mr Rubinstein one in two
Speaker 1: years beyond Watergate, served as Chief council for the United
Speaker 1: States Senate Judiciary Committees Subcommittee on Constitutional Amendments. David, that
Speaker 1: means you and I have a collective memory of other
Speaker 1: challenges for the nations. Simply, Attorney Rubinstein, your thoughts on
Speaker 1: what this nation observed yesterday afternoon. Well, it was a
Speaker 1: surprise to many people that both of these events happen
Speaker 1: at the same time. Um as we learned from Watergate
Speaker 1: other complicated things in our country's history. It's hard to
Speaker 1: make a judgment on day one if that's what you
Speaker 1: think is going to happen on day one doesn't actually
Speaker 1: happen on you know, through thirty days out or sixty
Speaker 1: days out, so I wouldn't pre judge what's going to happen,
Speaker 1: but it's clearly uh an episode of a teaching moment
Speaker 1: for younger people who haven't lived through these kind of things.
Speaker 1: And I just wouldn't rush the judgment about what's going
Speaker 1: to happen, but it's clearly something that will have an
Speaker 1: impact on the way our government operates. I just don't
Speaker 1: know what the outcome will be, and I hope it
Speaker 1: will be the best for everybody. Well, David, can you
Speaker 1: connect the dots from Washington, d C? To Wall Street?
Speaker 1: Given your experience in Carlisle and and as as a
Speaker 1: long time investor, you know, how when does it sort
Speaker 1: to filter down to the economics of this country? Well,
Speaker 1: why does this become more than just Washington d C. Noise?
Speaker 1: As long as the stock market isn't pretty good shape,
Speaker 1: As long as the economy is growing at the pace
Speaker 1: it is, I don't think you're going to see big
Speaker 1: political problems in Washington, d C. Um if the stock
Speaker 1: market would go down, the economy goes into a slower
Speaker 1: growth or even low growth no growth mode, then you'll
Speaker 1: see the politicians in Washington, I think doing different things
Speaker 1: but right now, the economy is pretty good and we're
Speaker 1: growing in a bigger clip than people expected. So I
Speaker 1: just don't think you see it right now. But you know,
Speaker 1: think things will change if if the economy falls before
Speaker 1: the let's say, the November elections, they don't have some
Speaker 1: impact and elections, but the economy is as good as
Speaker 1: it is now, I'm not sure they'll have the impact
Speaker 1: the events of Yes, you have the impact that that
Speaker 1: a weak economy would have. David, then bring us forward
Speaker 1: to what that generation would be doing in Washington now,
Speaker 1: And I think of the Great ab of Connecticut. I mean,
Speaker 1: they were. It was a different Capitol Hill during Watergate
Speaker 1: and after Watergate, wasn't it. Yes? And then when I
Speaker 1: worked in Capitol Hill in the late mid seventies, Democrats
Speaker 1: and Republicans did talk to each other, and Democrats and
Speaker 1: Republicans did work to get legislation together. Um, there have
Speaker 1: been some signs of progress in that regard, though lately,
Speaker 1: as you probably know, the appropriations process seems to be working.
Speaker 1: We haven't had a full set of appropriations bills passed
Speaker 1: in the regular order for about fifteen years or so.
Speaker 1: Now it looks as if Congress might actually pass all
Speaker 1: the appropriation bills on time. That would be good. I
Speaker 1: started a program a few years ago, very modest and
Speaker 1: impact probably on what I'm talking about. Democrats and Republicans together.
Speaker 1: I host a dinner on Capitol Hill once a month
Speaker 1: and bringing in a great American story and like Darris
Speaker 1: Karrent's Goodwinner, David McCullough interviewed them in front of members
Speaker 1: of Congress, and members of Congress used that as a
Speaker 1: way to socialize people from the opposite party. And they
Speaker 1: tell me that today they are they never get a
Speaker 1: chance to talk to you from the opposite party because
Speaker 1: this situation is not very good for that now. And
Speaker 1: this has no press there and no media, there's no fundraising.
Speaker 1: So a lot of different things are being done in Washington,
Speaker 1: kind of thing the parties together. Hopefully we'll be able
Speaker 1: to have a more bipartisan approach in future years. David Rubinstein,
Speaker 1: thank you so much for joining us today from his
Speaker 1: travels in Switzerland. Thanks for listening to the Bloomberg Surveillance podcast.
Speaker 1: Subscribe and listen to interviews on Apple Podcasts, SoundCloud, or
Speaker 1: whichever podcast platform you prefer. I'm on Twitter at Tom
Speaker 1: Keene before the podcast. You can always catch us worldwide.
Speaker 1: I'm Bloomberg Radio.