WEBVTT - Surveillance: Earnings Move Stocks, Not Washington, Doll Says 0:00:00.080 --> 0:00:13.040 Yeah, Welcome to the Bloomberg Surveillance podcast named Tom Keene 0:00:13.480 --> 0:00:17.560 Jay Leye. We bring you insight from the best in economics, finance, investment, 0:00:18.000 --> 0:00:23.520 and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, 0:00:23.600 --> 0:00:28.080 Bloomberg dot Com, and of course, on the Bloomberg YEA 0:00:34.360 --> 0:00:37.440 our top story about day for some of the President's men, 0:00:37.800 --> 0:00:40.640 His former personal lawyer Michael Cohen pleaded guilty to a 0:00:40.720 --> 0:00:43.800 legal campaign finance charges, all but naming Trump as having 0:00:43.880 --> 0:00:46.600 ordered him to do it. Moments later, the president's former 0:00:46.640 --> 0:00:50.120 campaign chairman, Paul Manifold was convicted on eight counts of 0:00:50.200 --> 0:00:53.360 tax and bank fraud charges. Joining us from Capitol Hill 0:00:53.440 --> 0:00:57.000 is bloombergs Kevin so really our chief Washington correspondent. Good 0:00:57.000 --> 0:00:59.800 morning to you, Kevin. On a busy day for Washington 0:00:59.840 --> 0:01:03.320 d see what has changed for the president. Well, there's 0:01:03.320 --> 0:01:07.360 an increasing pressure, Jonathan from Democrats to avoid the abuse 0:01:07.400 --> 0:01:11.320 of pardoning power as it's being described. There's a legislation 0:01:11.400 --> 0:01:15.039 in the Democratic controlled Attorney General's Office in New York 0:01:15.080 --> 0:01:17.840 that would close what they argue is a loophole for 0:01:17.920 --> 0:01:21.200 the president's to pardon someone like Paul Manaport. Democrats up 0:01:21.200 --> 0:01:24.440 on Capitol Hill in the House and the Senate, urging 0:01:25.000 --> 0:01:29.319 Republicans to avoid the issue by by also joining them 0:01:29.319 --> 0:01:32.319 and avoiding having the President part of them. Books for 0:01:32.360 --> 0:01:34.480 the President's next twenty four hours, he's said to have 0:01:34.560 --> 0:01:36.480 lunch with the Secretary of Defense and then have an 0:01:36.520 --> 0:01:41.319 awarding of the Medal of Honor later this afternoon. The President, 0:01:41.480 --> 0:01:45.600 while speaking last night in West Virginia, UH prior to 0:01:45.680 --> 0:01:53.240 that speech, criticized Paul Manafort. UH criticized UH Paul Manaford 0:01:53.560 --> 0:01:56.560 UH in saying I'm sorry defendant Paul Manaport, but made 0:01:56.560 --> 0:01:59.400 no mention of Michael Cohen. So far, we haven't had 0:01:59.480 --> 0:02:01.720 really a fitial response from the President of the United 0:02:01.760 --> 0:02:05.080 States apart from that rally and heading to that rally, Kevin, 0:02:05.160 --> 0:02:09.280 what's expected in Washington, d C. What comes next? Well, 0:02:09.280 --> 0:02:11.640 when I seek the Republicans, they they have echoed the 0:02:11.639 --> 0:02:13.480 President in the sense that they've said that there is 0:02:13.520 --> 0:02:16.799 no evidence of collusion. Polls suggests that the base of 0:02:16.840 --> 0:02:20.040 the Republican Party is still very much behind the President 0:02:20.440 --> 0:02:24.040 in terms of UH agreeing and echoing him when they 0:02:24.040 --> 0:02:26.440 say that the investigation of the witch hunt. In terms 0:02:26.440 --> 0:02:29.880 of what comes next, really it becomes whenever Bob Mueller 0:02:29.919 --> 0:02:33.640 wraps up his investigation. And I spoke with several sources yesterday, Jonathan, 0:02:33.919 --> 0:02:36.040 who said to me that this is a win for 0:02:36.160 --> 0:02:39.120 the for the Special Council's investigation because of the court 0:02:39.160 --> 0:02:42.280 documents that you've got In the intro, which is essentially 0:02:42.400 --> 0:02:45.200 Michael Cohen says he was instructed by the only candidate 0:02:45.240 --> 0:02:47.519 he was working for at the time, Donald Trump, to 0:02:47.600 --> 0:02:50.000 provide those touch money payments. Kevin Si really great to 0:02:50.000 --> 0:02:51.840 cant show me this morning on a busy morning for 0:02:51.919 --> 0:02:55.000 Kevin Sirillian everyone in Washington, d C. Joining us now 0:02:55.480 --> 0:02:57.639 from New York and place to say that. Kim Wallace 0:02:57.680 --> 0:03:00.400 joins us now. You're as your group managing Die Rector. 0:03:00.480 --> 0:03:04.000 He served in President Obama's administration as Assistant Secretary for 0:03:04.080 --> 0:03:07.359 Legislative Affairs at the Treasury Department. Kim, it's always great 0:03:07.360 --> 0:03:09.840 to get your insights. So let's begin with an extreme question. 0:03:10.160 --> 0:03:13.200 Does any of this as it stands incrementally impact the 0:03:13.200 --> 0:03:17.760 odds of the president staying in the White House. Good morning, Jonathan. 0:03:17.960 --> 0:03:21.639 I think it's premature to take these disparate acts, although 0:03:21.680 --> 0:03:26.280 they are coming fast and furious, and extrapolate out that far. 0:03:26.639 --> 0:03:30.639 I would say this that the president is under pressure. 0:03:30.680 --> 0:03:33.640 That's unique for presidency. Is not only multitasking on an 0:03:34.120 --> 0:03:38.200 array of transformative policy agendas, he's also now got to 0:03:38.240 --> 0:03:42.960 worry about a few different legal processes under way that's 0:03:42.960 --> 0:03:45.680 going to tax this staff. That will tax obviously his 0:03:45.800 --> 0:03:49.560 legal staff, but it will more importantly make more reticent 0:03:49.880 --> 0:03:53.240 to partisans on Capitol Hill to venture out on any 0:03:53.280 --> 0:03:56.720 other policy excursion. So it's it's less whether or not, 0:03:56.840 --> 0:03:59.000 in my view, whether or not impeachment is around the 0:03:59.040 --> 0:04:01.920 corner more or whether or not Washington has become a 0:04:02.000 --> 0:04:06.400 risk to market. Kim, do you just assume that Republicans, 0:04:07.200 --> 0:04:10.000 you know, is in a general statement, will do nothing 0:04:11.040 --> 0:04:14.640 until the election. We're seventy six days away, and even 0:04:14.640 --> 0:04:17.840 with the historic moment that we saw yesterday afternoon, and folks, 0:04:18.080 --> 0:04:21.839 for those of uliciting worldwide in Radio London, was extraordinary 0:04:21.920 --> 0:04:25.440 to see John Farrell the split screen on on television 0:04:26.000 --> 0:04:28.320 of the two trials going on at the same time, 0:04:28.760 --> 0:04:32.680 just extraordinary. But within this, Kim, do the Republicans just 0:04:32.760 --> 0:04:36.320 keep doing what they're doing, which is maybe living in 0:04:36.400 --> 0:04:40.039 silence while they support the president? You know, time that 0:04:40.080 --> 0:04:44.200 had been my working assumption up until yesterday. Seventy six 0:04:44.279 --> 0:04:47.120 days is a long time, and it depends, in my view, 0:04:47.480 --> 0:04:52.040 GOP behavior going into the election depends on public opinion. 0:04:52.279 --> 0:04:55.400 If the polls that we start getting in you know, 0:04:55.520 --> 0:04:58.680 five days, add on to the polls we've already seen 0:04:58.720 --> 0:05:01.360 where the issue of correct option the president is in 0:05:01.480 --> 0:05:06.000 double digit negatives net negatives. If that grows and worsens, 0:05:06.240 --> 0:05:09.480 it's going to make some of these thirty forty competitive races. 0:05:09.480 --> 0:05:12.840 And the Republicans and am very nervous and likely they're 0:05:12.839 --> 0:05:15.320 going to seek some distance from the White House. That 0:05:15.360 --> 0:05:19.040 was Greg Valier's legally thought was this is about public opinion, 0:05:19.120 --> 0:05:21.599 less about all the nuances and the Bellway stuff. Mr. 0:05:21.920 --> 0:05:24.440 Really so, so let me ask you another question, Kim. 0:05:24.480 --> 0:05:27.839 Does any of this incrementally damaged Republicans mid term election prospects? 0:05:29.000 --> 0:05:32.680 You know, Jonathan, they weren't right going into this, and 0:05:32.760 --> 0:05:36.560 certainly this issue of corruption and the president's legal problems 0:05:36.600 --> 0:05:39.479 have been long enough. It hasn't effected the basis support 0:05:39.520 --> 0:05:43.320 for him. What will What will note retrospectively is whether 0:05:43.400 --> 0:05:46.159 or not it hurt turnout in the base, whether that 0:05:46.320 --> 0:05:48.960 is what they're telling posters about their support for the 0:05:49.000 --> 0:05:53.320 president doesn't show up on November seven when they actually 0:05:53.320 --> 0:05:55.800 have to go to the polls and vote for establishment 0:05:55.839 --> 0:05:58.320 Republicans who are different from the president. Can you brought 0:05:58.400 --> 0:06:00.400 up the market? So I want to talk about them markets. 0:06:00.640 --> 0:06:02.840 We caught up with Bob Dollar new VNSA Management a 0:06:02.880 --> 0:06:06.080 little bit earlier, and he brought up two extremely imperfect parallels, 0:06:06.680 --> 0:06:09.560 Nixon and Clinton, and both of those issues. And the 0:06:09.680 --> 0:06:12.440 way those episodes unfolded for the financial markets is that 0:06:12.520 --> 0:06:15.680 with Nixon, markets went down and with Clinson markets went up. 0:06:15.720 --> 0:06:17.760 And it was nothing really to do with any of 0:06:17.800 --> 0:06:20.120 the individuals or any of the episodes specifically. It was 0:06:20.160 --> 0:06:22.159 about earnings and it was about growth and earnings and 0:06:22.160 --> 0:06:24.120 growth weren't good in the seven season, they were good 0:06:24.440 --> 0:06:26.839 in the nineties. Isn't that really the story here, Kim? 0:06:26.920 --> 0:06:29.520 How insulated markets will be is dependent on something else, 0:06:29.560 --> 0:06:33.280 completely separate from Washington d C. I think that's true 0:06:33.320 --> 0:06:36.960 a large part. The fundamentals always matter most to the markets. 0:06:37.320 --> 0:06:41.400 But going back to Bob's nineteen seventy three point, in 0:06:41.520 --> 0:06:44.520 January of seventy three, the SMP cracked, that didn't regain 0:06:44.560 --> 0:06:46.960 its nominal value of one or two for seven and 0:06:46.960 --> 0:06:52.240 a half years, and that's because wars, energy embargoes, other 0:06:52.279 --> 0:06:57.440 supplied to problems and hyperinflation. So the problem with confidence 0:06:57.480 --> 0:06:59.960 in the White House being cracked is that the funder 0:07:00.000 --> 0:07:02.640 mentals have to go well for a long time to 0:07:02.760 --> 0:07:05.920 restore confidence in the markets. Kim Wellas to your expertise 0:07:06.000 --> 0:07:10.120 with Treasury, where does Secretary Minution fit into this? He's been, 0:07:10.560 --> 0:07:14.840 I'm going to suggest, relatively quiet recently. Is he an 0:07:14.920 --> 0:07:19.400 important player in the next seventies six days? The Secretary 0:07:19.480 --> 0:07:21.920 might be tested in ways over the next seventy six 0:07:22.000 --> 0:07:25.120 days that he hasn't been in the previous seven quarters. Tom, 0:07:25.320 --> 0:07:27.960 I would it would seem to me that he would 0:07:28.000 --> 0:07:31.000 want to remain quiet so as not to change his 0:07:31.120 --> 0:07:34.680 behavior and therefore have markets notice that he's acting differently. 0:07:34.960 --> 0:07:37.560 But he's certainly going to be more circumspect than what 0:07:37.600 --> 0:07:40.680 he's willing to say, whether it's about the dollar or 0:07:40.680 --> 0:07:43.400 whether it's about markets. Kim Wells, thank you so much 0:07:43.440 --> 0:07:47.920 with your raiser group this morning. Truly timely as as 0:07:47.960 --> 0:08:05.080 we all adjust what we saw to that question on 0:08:05.200 --> 0:08:08.080 Washington and the events of the last twenty four hours. 0:08:08.080 --> 0:08:10.880 Our interview of the day Robert ray is with us, 0:08:11.080 --> 0:08:16.120 which barely describes his work on any number of cases. 0:08:16.200 --> 0:08:20.560 The attraction of Robert Ray Uh is the former Uh 0:08:20.880 --> 0:08:23.120 the head of the Office of Independent Council. This after 0:08:23.200 --> 0:08:26.080 Ken of Star and with Ken Starr is a number 0:08:26.240 --> 0:08:29.600 of cases he's been involved with. And all of this, Bob, 0:08:29.760 --> 0:08:32.760 came out of your work at Washington in Lee Law School, 0:08:33.120 --> 0:08:36.439 which to me is the most interesting law school in America. 0:08:36.520 --> 0:08:40.480 You went from Princeton down the Shenandoah Valley until this 0:08:40.679 --> 0:08:44.120 little little school, which is a jewel of law. What 0:08:44.320 --> 0:08:48.080 is Washington Lee. The history there in that law school 0:08:48.080 --> 0:08:52.400 there tell you about the moment we witnessed yesterday. Well uniquely, 0:08:52.480 --> 0:08:58.080 Washington and Lee, of course came largely into existence and 0:08:58.280 --> 0:09:03.040 was furthered as the result of a gift by President Washington. 0:09:03.080 --> 0:09:07.439 It steeped in our history, so it travels all the 0:09:07.480 --> 0:09:11.160 way back to the Revolution and before, and of course 0:09:11.200 --> 0:09:14.400 it um It is the place what was then Washington 0:09:14.480 --> 0:09:18.880 College where Robert E. Lee went and became president of 0:09:18.920 --> 0:09:22.640 the college after the Appomattox and the end of the 0:09:22.679 --> 0:09:26.640 Civil War. So last night, near twelve midnight, Lawfare published 0:09:26.640 --> 0:09:29.560 their long article and then they clear what happened yesterday 0:09:29.600 --> 0:09:32.680 has never happened in the Washington and Lee Republic. Was 0:09:32.720 --> 0:09:38.199 it that original what happened yesterday? It certainly was, um 0:09:38.360 --> 0:09:41.640 a significant moment. I'm not sure I would quite compare 0:09:41.679 --> 0:09:46.200 it to um that date in nineteen seventy four when 0:09:46.240 --> 0:09:50.240 a slew of the president's men, meaning Presidents Nixon's men 0:09:50.280 --> 0:09:55.439 were Archibald Cox, you know, subject to to indictment. Um. 0:09:55.600 --> 0:09:59.680 But having said that, I mean, obviously you can certainly criticize, 0:09:59.679 --> 0:10:04.160 and fair criticism, and the fact that the president during 0:10:04.200 --> 0:10:08.320 the campaign and thereafter surrounded himself with at least in 0:10:08.320 --> 0:10:12.800 this instance, two very questionable figures, and it creates legal 0:10:12.840 --> 0:10:15.360 problems obviously for the president as a result, at least 0:10:15.400 --> 0:10:19.720 in part of the but particularly the Michael Cohen play, 0:10:19.840 --> 0:10:23.720 and whether or not, you know, as has been now reported, 0:10:24.200 --> 0:10:27.560 whether there's more to come with regard to further implicating 0:10:27.640 --> 0:10:31.600 the president in connection with an alleged campaign finance violation. 0:10:32.080 --> 0:10:34.760 So let's talk about Michael Cummin. He's effectively all but 0:10:34.840 --> 0:10:38.000 named the president as having ordered him to commit a crime. Well, 0:10:38.040 --> 0:10:40.600 I'd be careful about effectively. I mean he he was 0:10:40.679 --> 0:10:46.360 directed by the candidate UH to make a payment. Whether 0:10:46.400 --> 0:10:50.679 you can turn that into the president knowingly and willfully 0:10:50.800 --> 0:10:54.320 violated the campaign finance laws is at least in my judgment, 0:10:54.320 --> 0:10:57.480 altogether another question. And you know, to put it in 0:10:57.559 --> 0:10:59.760 layman's terms that you know, the jury is still out 0:10:59.760 --> 0:11:02.240 on that question. So the jury is still out Covins law. 0:11:02.320 --> 0:11:04.560 As you say, there could be some escalation risk embedded 0:11:04.600 --> 0:11:07.440 into this episode because he's gone on MSNBC and said 0:11:07.480 --> 0:11:10.920 that Covin has knowledge of Russian conspiracy. Let's talk about 0:11:10.960 --> 0:11:13.680 best practice. Then, how would you advise the president to 0:11:13.720 --> 0:11:16.800 conduct himself over the coming months with this going on? Well, 0:11:16.920 --> 0:11:19.440 I I think I have said previously that I think 0:11:19.440 --> 0:11:22.360 the president's best strategy at this point is to ride 0:11:22.400 --> 0:11:25.440 this thing out to a conclusion. I think it does 0:11:25.520 --> 0:11:28.800 raise the specter and the prospect of the significance of 0:11:28.840 --> 0:11:31.360 the midterm elections and whether or not the president would 0:11:31.360 --> 0:11:34.800 face impeachment in the event that the House of Representatives 0:11:34.800 --> 0:11:38.680 went to the Democrats, because they would have subpoena power, 0:11:38.679 --> 0:11:41.800 and there's already some indication that leading figures in the 0:11:41.840 --> 0:11:44.440 Democratic Party seemed to be hell bent and determined to 0:11:44.480 --> 0:11:49.080 turn this into an impeachment proceeding query whether that really 0:11:49.280 --> 0:11:51.960 is where they want to go and whether or not 0:11:53.000 --> 0:11:56.520 campaign finance violations really if there's nothing more, and I 0:11:56.520 --> 0:11:59.080 guess we still don't know yet because Bob Muller has 0:11:59.120 --> 0:12:03.480 not concluded his instigation. But you know where this goes, obviously, 0:12:03.640 --> 0:12:07.400 is the sixty four thousand dollar questions. That basic question 0:12:07.440 --> 0:12:11.920 on violations of campaign finance rules before you are the 0:12:11.960 --> 0:12:15.600 president of the United States. Is that grants for impeachment? Well, 0:12:15.640 --> 0:12:17.920 it's obviously, at the end of the day, a political 0:12:18.000 --> 0:12:20.120 judgment rather than a legal judgment. And it it is 0:12:20.160 --> 0:12:22.840 whatever the Congress of the United States decides. I mean, 0:12:22.880 --> 0:12:25.359 they get to decide whether or not under the Constitution 0:12:25.880 --> 0:12:29.240 that would constitute high crimes and misdemeanors. If some people 0:12:29.280 --> 0:12:32.000 would argue yes and some people would argue no, at 0:12:32.040 --> 0:12:34.959 the end of the day, what is it. It's whatever 0:12:35.080 --> 0:12:37.880 Congress decides it is. But remember also, and this is 0:12:37.920 --> 0:12:39.840 I think that the lesson of history. If we go 0:12:39.880 --> 0:12:42.920 back to the beginning, there have only been impeachment proceedings 0:12:43.000 --> 0:12:47.000 twice against a president, the first Andrew Johnson and the 0:12:47.040 --> 0:12:50.360 second Bill Clinton, neither of which were successful. What people 0:12:50.400 --> 0:12:54.200 need to understand and remember is it is a partisan 0:12:54.600 --> 0:13:00.240 and political proceeding, but it requires under the constitution because 0:13:00.240 --> 0:13:03.160 it's a very high bar. The only way a president 0:13:03.200 --> 0:13:06.640 can be removed and the result of an election overturned 0:13:07.160 --> 0:13:09.200 is if there is a conviction in the Senate, and 0:13:09.240 --> 0:13:12.199 because it is required under the Constitution, that would be 0:13:12.240 --> 0:13:15.520 a two thirds majority. The only way that's ever going 0:13:15.559 --> 0:13:19.400 to happen is if the party in power deserts the 0:13:19.480 --> 0:13:22.520 president and as a result of that, as was the 0:13:22.520 --> 0:13:26.120 case with Richard niction Um since although he was never 0:13:26.200 --> 0:13:30.200 impeached Um and removed from office, obviously he resigned before 0:13:30.200 --> 0:13:32.720 that happened. But the reason he resigned is because it 0:13:32.760 --> 0:13:36.520 was a foregone conclusion that the Republican Party had abandoned him, 0:13:36.920 --> 0:13:40.600 and you know, facts being stubbornd stubborn things, Um, they 0:13:40.600 --> 0:13:42.800 came to the conclusion that, in fact, he was involved 0:13:42.800 --> 0:13:45.280 in a conspiracy to obstruct justice. You're just joining us 0:13:45.520 --> 0:13:49.040 vert ray with this prosecutor? Is what is Wikipedia as 0:13:49.040 --> 0:13:53.439 which barely describes as public service, including writing the actual 0:13:53.520 --> 0:13:58.960 reports on Lewinsky, Madison, Guarantee, on Mrs Clinton, Bernard Um 0:13:59.000 --> 0:14:02.440 and others over the years. What does the media get 0:14:02.440 --> 0:14:07.360 wrong in their coverage? You are like Mr Mueller total business, 0:14:07.480 --> 0:14:11.920 total grizzled legal. It's a Now I assume it's a 0:14:11.920 --> 0:14:14.280 word processor, but you've got a quill in your hand 0:14:14.640 --> 0:14:17.800 and you're writing it out these actual documents. What's the 0:14:17.880 --> 0:14:21.120 media get wrong in its coverage? Well, there seems to 0:14:21.160 --> 0:14:25.920 be largely an overreaction to every single thing that comes out. 0:14:26.040 --> 0:14:28.160 I mean, we have to do that. Well, I guess 0:14:28.160 --> 0:14:30.520 that's I mean, I guess that's right. But I mean, 0:14:30.560 --> 0:14:35.160 you know, a dispassionate prosecutor asked the question just be caused. 0:14:35.160 --> 0:14:39.120 For example, Michael Cohen says that Donald Trump directed him 0:14:39.160 --> 0:14:42.800 to make a campaign contribution, begs the question about whether 0:14:42.880 --> 0:14:45.960 or not Donald Trump was knowingly in violation of the 0:14:46.000 --> 0:14:48.800 campaign finance laws. I mean, one you'd think about some 0:14:49.080 --> 0:14:52.360 very relevant considerations, not the least of which is, Hello, 0:14:52.760 --> 0:14:55.920 Michael Cohen was Donald Trump's lawyer. Donald Trump has an 0:14:55.920 --> 0:14:58.240 advice of counsel defense. I mean, you know, I assume 0:14:58.280 --> 0:15:00.560 his defense is going to be Listen, I asked Michael 0:15:00.560 --> 0:15:02.440 Cohen to take care of this, but I never told 0:15:02.480 --> 0:15:05.240 Michael Cohen to violate the law. In any event, I'm 0:15:05.240 --> 0:15:08.280 not a lawyer. He is. I depend on his legal advice, 0:15:08.280 --> 0:15:10.200 and I depend and relied on the fact that he 0:15:10.240 --> 0:15:14.000 wouldn't be engaged in a campaign finance violence points out 0:15:14.080 --> 0:15:15.920 is his farm on nuanced and complex, And I think 0:15:15.920 --> 0:15:19.480 people appreciate just because Michael Cohen has committed a crime 0:15:19.480 --> 0:15:21.400 and it admitted he's committed a crime and said the 0:15:21.440 --> 0:15:24.080 president was the person that ordered him to do whatever 0:15:24.080 --> 0:15:26.800 he has done, does not mean necessarily the president has 0:15:26.800 --> 0:15:29.280 committed not the same thing as ordering him to commit 0:15:29.320 --> 0:15:32.400 a federal felony. So look, I don't know what the 0:15:32.400 --> 0:15:37.240 conversations were. I think I would be surprised if the 0:15:37.280 --> 0:15:40.920 conversations are what I guess the media seems to speculate automatically. Well, 0:15:41.000 --> 0:15:42.760 she's not means he has the keys to the kingdom 0:15:42.800 --> 0:15:45.680 and he knows that Donald Grump is a felon that 0:15:46.000 --> 0:15:48.280 Bob Mower's office would already have known that. And if 0:15:48.280 --> 0:15:50.640 they already knew that and had that was surprising to 0:15:50.680 --> 0:15:52.440 me that they would have a let go of the 0:15:52.520 --> 0:15:55.240 prosecution by giving it to the Southern District of New 0:15:55.320 --> 0:15:59.080 York and be um if if they had that information, 0:15:59.120 --> 0:16:01.800 then why didn't they sign them up to a cooperation agreement? 0:16:01.800 --> 0:16:05.320 Which is not what happened yesterday in court so again, 0:16:05.360 --> 0:16:08.200 I mean I don't need to you know, spread uh, 0:16:08.240 --> 0:16:11.200 you know, a big blanket of cold water over all 0:16:11.200 --> 0:16:12.800 of this. But I guess my point is is that 0:16:12.800 --> 0:16:16.400 there's a bit of an overreaction to its significance. I'm 0:16:16.440 --> 0:16:21.200 not saying it's insignificant. It is significant. When two members 0:16:21.200 --> 0:16:24.640 of the president's inner circle have now been found guilty 0:16:24.760 --> 0:16:27.640 or by a jury and or pleaded guilty to federal felonies. 0:16:27.720 --> 0:16:31.760 That's not an insignificant development. One final question in your experience, 0:16:32.280 --> 0:16:36.240 how do these discussions change when it's about you're not 0:16:36.280 --> 0:16:38.680 going to be with your kids or your kids are 0:16:38.680 --> 0:16:43.320 going to get involved? When families are drawn into this, Well, 0:16:43.320 --> 0:16:45.760 that's the other missing piece to all of this, in 0:16:45.800 --> 0:16:49.520 addition to the overreaction. You know, there's a human story 0:16:49.600 --> 0:16:52.120 here that gets completely lost. Tell us about that. Let 0:16:52.120 --> 0:16:54.160 me tell let me tell you how it feels to 0:16:54.280 --> 0:16:57.080 be on the receiving end of the full weight and 0:16:57.160 --> 0:17:00.000 authority of the United States government and the United State 0:17:00.040 --> 0:17:03.440 It's Justice Department zeroed in and targeted on your head 0:17:03.880 --> 0:17:07.920 to have you brought to justice. That is a a 0:17:08.200 --> 0:17:12.040 harrowing moment. I used to say, I would never wish 0:17:12.080 --> 0:17:16.200 a special counsel or independent Council investigation on my worst 0:17:16.320 --> 0:17:21.280 enemy because of the frightening power that is exercised in 0:17:21.359 --> 0:17:23.600 order to hold people to justice. Now, you know, that's 0:17:23.640 --> 0:17:25.480 the beauty of this country is that we do hold 0:17:25.520 --> 0:17:29.840 people accountable. But you know, taking a just a pause 0:17:29.880 --> 0:17:33.719 and a deep breath to reflect on how difficult that 0:17:33.840 --> 0:17:36.400 must be. The one thing that will be that will 0:17:36.440 --> 0:17:39.040 be true here that both Michael Cohen and Paul man 0:17:39.119 --> 0:17:43.159 Offort will face now quickly over the next several weeks, 0:17:43.240 --> 0:17:46.359 will be whether or not they've got anything further to give, 0:17:46.840 --> 0:17:49.480 because if there's something there to give, it will be 0:17:49.560 --> 0:17:51.600 gotten as the result of this pressure. You gotta leave 0:17:51.640 --> 0:18:09.280 it there, Robert Ray, thank you so much. Former Prosecutor John. 0:18:09.280 --> 0:18:11.200 I want you to bring in our next esteem guests, 0:18:11.280 --> 0:18:14.000 but I just want to say that he and many 0:18:14.080 --> 0:18:19.520 others need a massive and subtle victory lap for not 0:18:19.760 --> 0:18:23.320 one saying stay in the market, have courage, but in 0:18:23.359 --> 0:18:28.480 this great bull market, just time after time after time, 0:18:28.520 --> 0:18:31.640 it's been extraordinary run, staying long and strong. Bubb Doll 0:18:31.840 --> 0:18:34.920 moving asset management portfolio manager. He joins us. Now, well, 0:18:35.000 --> 0:18:37.359 great to catch up. It's a record run for the 0:18:37.400 --> 0:18:39.960 bull market, depending on how you measure it. It's a 0:18:40.000 --> 0:18:43.440 record high and yesterday's session and it's still the most 0:18:43.560 --> 0:18:47.360 unloved bull market in history. Why Bob, Yes, there are 0:18:47.400 --> 0:18:50.000 so many skeptics on things, as you well know, and 0:18:50.400 --> 0:18:52.879 bull markets love to climb those walls of worry. And 0:18:52.920 --> 0:18:56.800 the list of reasons to worry it is long and 0:18:56.920 --> 0:18:59.600 seems to be increasing. Oh, you knows the economy running 0:18:59.600 --> 0:19:02.399 out of eam, Is the bullmarket too old? Is the 0:19:02.440 --> 0:19:04.840 president not going to be able to govern? And the 0:19:04.920 --> 0:19:08.080 list goes on and on and on and in the meantime, 0:19:08.119 --> 0:19:10.959 the economy's left I checked really good and earnings are 0:19:10.960 --> 0:19:14.280 even better, and that's what move stocks. Last year, the 0:19:14.320 --> 0:19:18.680 most often question, the question I got was with Washington 0:19:18.800 --> 0:19:21.240 d C such a mess? How can the stock market 0:19:21.280 --> 0:19:24.440 be so good? And my response, as you answered your 0:19:24.440 --> 0:19:28.760 own question, Washington d C does not move stocks. Earnings 0:19:28.840 --> 0:19:32.600 move stocks. Yes, DC does things from a policy standpoint 0:19:32.600 --> 0:19:35.240 that can affect earnings over the long term. But but 0:19:35.320 --> 0:19:37.880 you know that earning story, the earning story right now 0:19:37.960 --> 0:19:40.880 is pretty good, and it's juced by a tax cut, 0:19:41.119 --> 0:19:42.760 juice by a tax cut, and you just wonder how 0:19:42.840 --> 0:19:45.159 sustainable it is do you take some optimism by how 0:19:45.480 --> 0:19:48.720 good top line growth is being Bob. Yes, we estimate 0:19:48.840 --> 0:19:52.119 of the call it earnings growth from the first half 0:19:52.119 --> 0:19:54.440 of the year, about a third of it has come 0:19:54.520 --> 0:19:58.560 from extraordinarily top top line growth, which means the US 0:19:58.640 --> 0:20:02.639 economy is doing well in most pockets and outside the 0:20:02.720 --> 0:20:05.080 U s well, It's fraid a little bit on the 0:20:05.200 --> 0:20:08.360 edges is pretty good as well. And so the multinationals 0:20:08.359 --> 0:20:11.520 have some revenue growth. Revenue growth is awesome. And you 0:20:11.560 --> 0:20:14.640 mentioned the tax bill. Thank goodness, all this political noises 0:20:14.680 --> 0:20:17.960 coming after that tax bill is an effect, and that's 0:20:18.000 --> 0:20:20.400 the stimulus that we will enjoy no matter how these 0:20:20.800 --> 0:20:25.239 proceedings go. Where's your favorite sector? I mean, if if 0:20:25.520 --> 0:20:28.159 we're if we're rich, I got to get in the market. 0:20:28.200 --> 0:20:31.560 I'm a sector generator. What's the sector I want to 0:20:31.600 --> 0:20:34.399 be in? Right now? I will answer your question, but 0:20:34.520 --> 0:20:36.520 let me put a theme on the table, Tom, if 0:20:36.560 --> 0:20:40.360 I might, that I think is even more important owning companies. 0:20:40.720 --> 0:20:43.720 As a US investor, they get most their earnings from 0:20:43.760 --> 0:20:48.880 inside the US. Therefore, de emphasizing multinational earnings has had 0:20:49.040 --> 0:20:53.359 major tales tail winds the text bill, relative economic and 0:20:53.400 --> 0:20:57.560 earnest growth, the trade issue currency. All of them have 0:20:57.600 --> 0:21:01.199 been supportive of that theme. So question where do you 0:21:01.280 --> 0:21:06.199 find those names? A lot of healthcare names, insurers, etcetera, 0:21:06.520 --> 0:21:09.439 tend to be more domestic. The retailers here's target with 0:21:09.480 --> 0:21:15.320 another wonderful earnings report. The retailers mostly domestic industry. They're 0:21:15.320 --> 0:21:17.840 the kind of places I would partner money. Where are 0:21:17.880 --> 0:21:20.000 you seeing with use of money right now? I mean, 0:21:20.080 --> 0:21:22.080 you know, we came out of this and there were 0:21:22.119 --> 0:21:24.560 some real skeptics about investment and what was this going 0:21:24.600 --> 0:21:26.840 to be? A share buy back and dividend growth? What's 0:21:26.840 --> 0:21:30.359 the actual numbers that you calculate with Nvine every day? 0:21:31.440 --> 0:21:35.360 So so we're looking at h We're looking at earnings 0:21:35.480 --> 0:21:40.040 growth peaking, but earnings still being strong. I mean a 0:21:40.080 --> 0:21:42.320 lot of people earnings growth peaked. There for the stock 0:21:42.400 --> 0:21:44.440 market's got to have trouble. No, no, no, no no. 0:21:44.720 --> 0:21:47.440 If we go from plus twenty five to minus two, yeah, 0:21:47.480 --> 0:21:49.879 the stock market have trouble. We're going from plus twenty 0:21:49.920 --> 0:21:52.520 five to plus eight team plus twenty. What are they 0:21:52.520 --> 0:21:56.119 doing with the cash. They're taking the cash and reinvest 0:21:56.160 --> 0:22:00.960 in their business. Capital expenditures up fifteen depending what's hereies 0:22:01.000 --> 0:22:03.840 you look at and yes they're buying backstock, and yes 0:22:04.040 --> 0:22:07.399 they're raising dividends. Because cash flow is so strong they 0:22:07.400 --> 0:22:09.639 can do all the above, and M and A buying 0:22:09.640 --> 0:22:11.760 the company down the street. There are lots of great 0:22:11.840 --> 0:22:13.840 usay cash when this is strong. And if we go 0:22:13.920 --> 0:22:17.320 to William Priest and free cash flow in use of cash, 0:22:17.320 --> 0:22:21.680 shareholder yield, what's my yield on the market January one? 0:22:21.800 --> 0:22:24.320 I mean, if you look at use of cash plus 0:22:24.359 --> 0:22:28.680 cash dividends, what is it? Four or five in one? 0:22:29.240 --> 0:22:32.960 Four to five is our guests um. But dividends are 0:22:32.960 --> 0:22:35.920 moving up because of the cash flow. Share buy backs 0:22:36.760 --> 0:22:40.000 have increased, but as the percentage of the capitalization not 0:22:40.119 --> 0:22:44.639 as much. Thank goodness, corporate CEOs are more optimistic on 0:22:44.680 --> 0:22:48.200 their business and more willing to reinvest. So we'll take 0:22:48.240 --> 0:22:51.000 a dividend increase or a share buy back in a 0:22:51.040 --> 0:22:54.080 company that's net free cash flow positive, but we much 0:22:54.200 --> 0:22:58.199 prefer reinvest in your business. Show me you're investing, your 0:22:58.359 --> 0:23:01.640 improve your return on equity, where turn on assets, returning investment, 0:23:01.920 --> 0:23:04.359 and your growthery. Bob, you and I talked about this before. 0:23:04.480 --> 0:23:06.520 Let's talk about the yield curve. Two stands is just 0:23:06.560 --> 0:23:10.520 broken down today two new cycle tights. So the spread 0:23:10.560 --> 0:23:12.800 between the two you and the tenure and the treasury 0:23:12.800 --> 0:23:15.920 market around about twenty two basis points. We dropped below 0:23:15.960 --> 0:23:19.280