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Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene. Along

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Speaker 1: with Jonathan Ferrell and Lisa Brownwitz. Daily we bring you

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Speaker 1: insight from the best and economics, finance, investment, and international relations.

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Speaker 1: Find Bloomberg Surveillance on Apple Podcast, Suncloud, Bloomberg dot Com,

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Speaker 1: and of course on the Bloomberg terminal. This is not

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Speaker 1: only the Interview of the day, the Interview of the month,

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Speaker 1: but indeed I would suggest this is the conversation of

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Speaker 1: the summer. It was long ago and far away where

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Speaker 1: a radiologist from Mount Sinai came into my studios through

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Speaker 1: on the ground some X rays from Wuhan and said, Tom,

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Speaker 1: this is serious. That is followed with medical people worldwide

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Speaker 1: helping Bloomberg Surveillance to understand this horrific pandemic. Nowa it

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Speaker 1: is time for education with leadership in the first founding

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Speaker 1: partner at Verizon, Hans Westberg joins us, the chairman, the

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Speaker 1: chief executive officer, and we're thrilled that the woman that's

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Speaker 1: making this up, Lisa Sherman of the Acclaim ad Council

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Speaker 1: joins us today. Hans. Let me go to you first. Simply,

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Speaker 1: you got on board before Apple before Benny off its

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Speaker 1: salesforce and said, this matters. Why is Verizon that communicates,

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Speaker 1: Why is Verizon helping Lisa Sherman and messaging what we

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Speaker 1: need to do on COVID And this says, well, well,

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Speaker 1: no one. As you mentioned in the beginning, this is

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Speaker 1: unheard of. Pandemic has hit so hard on this count

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Speaker 1: and the rest of the world. And of course one

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Speaker 1: thing that is important, of course the communication around it

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Speaker 1: and and raising the awareness and the science around the

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Speaker 1: vaccine coming up right now. And we thought that when

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Speaker 1: vaccine is coming out, we have a very big responsibility

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Speaker 1: as a huge employer and it's a big company to

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Speaker 1: be part of that communication about their awareness and also

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Speaker 1: about the science around it. This I sup in our

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Speaker 1: society that as a government of the information and that

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Speaker 1: has been heating most heatd by these pandemics. So for us,

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Speaker 1: it was a national to be a founding bout Runce

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Speaker 1: Lisa Sherman. My mother sold war bonds. This is a

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Speaker 1: few wars ago, and that was started by the AD

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Speaker 1: Council in the nineteen forties. I grew up with only

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Speaker 1: you can prevent forest fires, and now it's only you

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Speaker 1: can prevent COVID. The AD Council has been definitive and

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Speaker 1: messaging America. How are you going to message education to

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Speaker 1: get the courage to vaccinate in America? Well, first of all, Tom,

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Speaker 1: thanks for having me. Uh. We're clearly dealing with the

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Speaker 1: biggest public health crisis in our lifetime, and we fundamentally

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Speaker 1: knew at the AD Council that we had to launched

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Speaker 1: the largest public the public education effort in our history.

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Speaker 1: Um So we've recently launched a massive, coordinated communications campaign

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Speaker 1: that brings in every every sector in the economy, and

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Speaker 1: our focus is really on trying to get people to

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Speaker 1: have confidence in the COVID nineteen vaccines, which you know,

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Speaker 1: the fact that we have them in such short order

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Speaker 1: is is nothing short of of heroic. But at the

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Speaker 1: same time, you know, what we're seeing is high levels

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Speaker 1: of vaccine hesitancy. Just the data probably pretty current, about

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Speaker 1: fifty cent of people right now have either begun the

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Speaker 1: process of vaccination, have it at least one of the shots,

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Speaker 1: or intend to get vaccinated. The other end of the spectrum,

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Speaker 1: you've got about fifteen percent of the people who say

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Speaker 1: they're never going to get it. So our focus is

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Speaker 1: really to to talk to the thirty five percent of

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Speaker 1: Americans who frankly are taking a weight and see attitude. Lisa,

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Speaker 1: can you tell us about the nature of that thirty

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Speaker 1: five percent? In other words, is there a unifying characteristic

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Speaker 1: of individuals in the United States who don't want to

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Speaker 1: get the vaccine? You know, we've done a lot of

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Speaker 1: work and trying to understand hesitancy, and it's pretty complicated

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Speaker 1: and it's very nuanced. You know, it ranges from everything.

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Speaker 1: People have a lot of questions and they just want

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Speaker 1: answers to their questions. Some of it could be you know,

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Speaker 1: how did this happen so quickly? Did people trade off

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Speaker 1: um efficacy for speed? Others have longstanding concerns because of inequities,

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Speaker 1: and especially in the black and Hispanic communities where there

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Speaker 1: have been long standing inequities in the healthcare community. So

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Speaker 1: we see higher levels of hesitancy among Black and Hispanic communities.

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Speaker 1: We also have begun to see more hesitancy among conservatives. UM.

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Speaker 1: These are folks who also have a lot of questions UM.

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Speaker 1: And really the common thread I would say, Lisa, is

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Speaker 1: that people don't want to be told what to do.

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Speaker 1: They want the information, They want to be able to

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Speaker 1: ask their questions. They want to feel empowered to make

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Speaker 1: decisions with themselves and for their families. So we go

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Speaker 1: from the public health side to the business side, and Hans,

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Speaker 1: there's a question of mobility and cities of traffic to

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Speaker 1: retail stores. You see the nexus of all of this,

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Speaker 1: both with mobile data as well as your retail stores.

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Speaker 1: Are you seeing people materially increased mobility as vaccinations pick

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Speaker 1: up or has it been slower than you would have

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Speaker 1: otherwise expected. It was a time in the May last

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Speaker 1: year and we measured this sometimes on how mobile people

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Speaker 1: are is how the moving in between radio towers, and

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Speaker 1: it was done in some of the most urban places

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Speaker 1: sixty six, meaning people moved sixty percent less they were

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Speaker 1: staying home. That mobility is slowly coming back, and we

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Speaker 1: have seen a clear and improvement the loss of the

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Speaker 1: months are where as the optimist not coming. But as

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Speaker 1: we all know, and the optimism is in the end

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Speaker 1: of the tunnel, so we just need to see that

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Speaker 1: we get to this first. But clearly we see more

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Speaker 1: food traffic in urban areas, more mobility in areas. Right now, Lisa,

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Speaker 1: I want to go back to the branding of all

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Speaker 1: this you did this advitacount for years. The idea of

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Speaker 1: a mind is a terrible thing to waste. The crying

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Speaker 1: Indian ad campaign, which I remember clear as a day

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Speaker 1: from Earth Day, years and years ago. Can you just

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Speaker 1: message now or do you need celebrities? Dolly Parton has

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Speaker 1: had the biggest impact so far. Miss Parton was out

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Speaker 1: there with her COVID confidence. Do you need celebrities? So

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Speaker 1: Hans Vestberg is happy with your program. Well, what I

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Speaker 1: will say that, and I mentioned it at the top.

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Speaker 1: You know, trust is at the core of hesitancy, and

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Speaker 1: and so I think what we have, what we know

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Speaker 1: and believe, is that not only is the messaging important,

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Speaker 1: but the messenger is also critically important. Who are those

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Speaker 1: trusted messengers that each of these hesitant groups really believe

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Speaker 1: and trust and feel comfortable with. And so for the

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Speaker 1: common thread again, another common thread to Lisa's question is

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Speaker 1: that medical experts are at the forefront. They're the number

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Speaker 1: one people want to understand from their nurses, pharmacists, have

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Speaker 1: they taken it? And then there are amplifiers, those people

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Speaker 1: that can allow sort of helpful So I don't mean

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Speaker 1: to interrupt because of time, I think your observation is

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Speaker 1: so so important here. Franklin Graham set up a set

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Speaker 1: of tents on Central Park outside Mount Sinai at the

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Speaker 1: beginning of this What do you need from the evangelical

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Speaker 1: leadership away from the medical community to get evangelicals and

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Speaker 1: conservative Republicans on board? What does he add, Council need

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Speaker 1: from Franklin Graham. Look, we've engaged broad based faith faith

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Speaker 1: leaders who understand that this is not an either or decision.

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Speaker 1: You can have deep faith and believe that the vaccine

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Speaker 1: can help you and and free you to get back

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Speaker 1: to life um and and and keep your family safe

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Speaker 1: hunts hunts. There also a question about the faith in

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Speaker 1: a better future, and we're looking at a way to

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Speaker 1: track towards a modern era of tech prowess. And before

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Speaker 1: we let you go, we have to ask about the

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Speaker 1: infrastructure bill that Biden has put together and the five

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Speaker 1: G build out in the United States. What's your impression

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Speaker 1: of what's laid out in the proposal as it currently is.

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Speaker 1: How much will it help get five G roll out

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Speaker 1: in a smooth and consistent way across the United States?

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Speaker 1: As I think that five years an important piece of it.

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Speaker 1: But I think that when we understand where lead from

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Speaker 1: five to seven years when it comes to digitalization in

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Speaker 1: this country, Taylor Health, remote learning and all of that.

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Speaker 1: I think it's important. And there's three pieces that's all

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Speaker 1: of the the in front accessibility, a broad band, affordability

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Speaker 1: and usability and all these three needs to play together

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Speaker 1: in action, the close and the digular divine that when

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Speaker 1: open with this leap from with one of the most

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Speaker 1: sustainable technologies mobility broad by the clown. So I think

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Speaker 1: that's what we what we are talking about and talking

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Speaker 1: to the administration about that we need to think holistically

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Speaker 1: in order to solve the problem. It's not only one thing,

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Speaker 1: but clearly five D is an important piece of it.

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Speaker 1: We're rolling out quick and we've ever done before, and

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Speaker 1: more than we're ever done before, we have increased our

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Speaker 1: called capis again. So this is an important piece for USS.

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Speaker 1: Hans Vetsburg, thank you so much for joining us today

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Speaker 1: with Verizon and their leadership on this program. And Lisa Sherman,

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Speaker 1: good luck on your program. To me, it's absolutely definitive.

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Speaker 1: As we go into the end of two thousand twenty one,

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Speaker 1: Miss Sherman with the AD Council President and ce Oh

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Speaker 1: Katherine Man here for a three hour conversation. She's City

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Speaker 1: Group Global Chief Economy is Kathy Man. I really want

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Speaker 1: to talk about the locomotive here, that is the US.

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Speaker 1: Geta gop and Haff talks about the divergences that are real.

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Speaker 1: Are there any trains behind the locomotive and what's the caboose? Well,

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Speaker 1: you know, the US is a locomotive. It's the one

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Speaker 1: country that's growing faster than everyone else relative to its

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Speaker 1: historical experience. So it's the one that is going to

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Speaker 1: be running a larger trade deficit over the next year

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Speaker 1: or so um and virtually everyone else is either running

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Speaker 1: a smaller deficit or running a bigger surplus. So, uh,

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Speaker 1: the US is back back on track to be the locomotive.

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Speaker 1: The problem is it's not quite as large as it

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Speaker 1: used to be relative to the global economy. It's not

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Speaker 1: quite as powerful locomotive as it used to be, So

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Speaker 1: it's going to be a challenge to get up the hill.

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Speaker 1: And there's also a question of how much this really

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Speaker 1: brings the rest of the world along with it. And

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Speaker 1: that's one of the big disagreements frankly on Wall Street

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Speaker 1: that I'm hearing how much just continue to bet on

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Speaker 1: the US versus the rest of the world, or to

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Speaker 1: bet on other areas that will get carried along. What's

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Speaker 1: your view on that? Based on a concept of a

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Speaker 1: strengthening dollar given the amount of dollar denominated debt out there, well,

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Speaker 1: so emerging markets are the ones who tend to be

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Speaker 1: most at risk UM when we're talking about dollar denominated debt.

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Speaker 1: But I think it's important to think about the two

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Speaker 1: factors that are relevant when thinking about an appreciation of

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Speaker 1: the dollar. The first role is that it does and

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Speaker 1: and the stronger U s economy that's associated with the

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Speaker 1: stronger dollar UM. That is the trade channel, which is

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Speaker 1: an important channel bringing in imports, helping economies to grow

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Speaker 1: through that channel, relative to the concerns about dollar denominated

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Speaker 1: debt and the exposure that countries have when you have

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Speaker 1: an appreciation of the dollars, So those two are in

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Speaker 1: opposition to one another. What we have found in doing

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Speaker 1: some work looking at the Taper tantrum period relative to

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Speaker 1: where we are now, is that many more economies are

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Speaker 1: in the position of gaining when the dollar appreciates, because

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Speaker 1: not only do they have dollar denominated debt, but they

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Speaker 1: also have dollar denominated reserves, and so you have to

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Speaker 1: consider that as well when thinking about the exposure on

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Speaker 1: the financial side. So this is an argument perhaps that

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Speaker 1: the rest of the world can come along more than

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Speaker 1: some people think. Is that your view here that we're

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Speaker 1: going to see an acceleration that picks up speed in

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Speaker 1: the emerging markets in perhaps Europe? Perhaps two is the

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Speaker 1: U s slows down well, So I think we have

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Speaker 1: to consider not you know, the US is not the

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Speaker 1: only thing that's in is going to be positive for

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Speaker 1: emerging markets. There are a lot of negatives or downside risks,

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Speaker 1: and of course that has to do with the vaccination

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Speaker 1: path um and how soon those economies can get vaccinated

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Speaker 1: and how soon they can get back on track with

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Speaker 1: their own internal domestic demand. I mean, that's an important

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Speaker 1: ingredient in the growth process for any economy, is domestic demand.

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Speaker 1: They can't entirely depend on export led growth. Again, we

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Speaker 1: have to remember the US as a locomotive is not

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Speaker 1: as strong a locomotive as it used to be, say

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Speaker 1: twenty years or four years used to be. In part

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Speaker 1: of this, Catherine Man, is whether we are a more

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Speaker 1: open or less open economy. Where does the US stand

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Speaker 1: right now is an open economy that dynamic to other nations. Well,

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Speaker 1: you know, the globalization as as a general rule has

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Speaker 1: um in terms of their slowing of integration into the

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Speaker 1: Uh And, of course, on the back of the last

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Speaker 1: administration's approach to trade policy, which was to be very protectionists,

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Speaker 1: that of course, uh made the US less open. The

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Speaker 1: general tenor of the debate is not towards openness. So

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Speaker 1: we have to be concerned about both the politics of

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Speaker 1: of of an enlargening trade deficit that we that we

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Speaker 1: the politics of it leading to potentially even more of

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Speaker 1: a retrenchment in terms of globalization. Do we have to

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Speaker 1: worry about debt sustainability? Uh So, debt sustainability, it's very

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Speaker 1: much a question of whish economies are going to be

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Speaker 1: themselves on a sustainable path. Uh So, there's an intimate

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Speaker 1: relationship between domestic demand led growth export orientation. For most

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Speaker 1: of the world UH and debt sustainability. But in the

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Speaker 1: longer term, of course, what really matters for debt sustainability

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Speaker 1: is long term capacity or of what we call potential output,

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Speaker 1: and that depends intimately on business investment. We've got to

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Speaker 1: have business investment being catalyzed by the infrastructure programs that

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Speaker 1: context of their net zero commitments. Something that is climate

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Speaker 1: oriented is going to require private sector investment, and that's

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Speaker 1: a critical ingredient, along with of course labor markets and

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Speaker 1: UH and and productivity growth. Kiltainman, a few years ago

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Speaker 1: at the Massachusetts Institute of Technology, you had the privilege

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Speaker 1: of working with Rudy Dornbush. He handed you to the

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Speaker 1: Bible as you graduated from m I T tell us

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Speaker 1: about the Bible, that the great Rudy Dornbush, and did

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Speaker 1: you right? So Rudy was one of my thesis advisors,

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Speaker 1: Paul Grupman being the other. And what really gave me

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Speaker 1: signed copy of the first edition of Robert Mundel's International

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Speaker 1: Economics um and that really represents both both Rudy's his

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Speaker 1: first edition, by the way, open economy macro economics which

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Speaker 1: integrated goods and markets and asset markets in one place.

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Speaker 1: You know that his bible and then of course his

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Speaker 1: mentors bible, meaning Robert Mundel's international economics. Those are really

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Speaker 1: my bible's today. The continuity of this doctor man is

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Speaker 1: absolutely extraordinary. I can think of nowhere else where there's

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Speaker 1: such a cadence as there is an international economics. What

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Speaker 1: do we think today that Robert Mundel invented fifty years ago? Well,

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Speaker 1: you know, the most famous thing that we have been

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Speaker 1: working with in the open economy that has his name

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Speaker 1: on it is the Mundell Fleming model, which put three

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Speaker 1: meaning the the investment savings part of the economy, the

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Speaker 1: monetary policy the so called LM curve, and then the

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Speaker 1: open economy meaning balance of payments and how that change

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Speaker 1: with regard to exchange rates and external demand. So um,

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Speaker 1: those are the three markets that continue to be the

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Speaker 1: important ones. How we measure them as different, how we

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Speaker 1: think that they work together is different, But those still

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Speaker 1: are the drivers of economic performance, and today taken for

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Speaker 1: granted and at the time foundationally and revolutionary for Robert

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Speaker 1: Mandel dr Man, thank you so much. With City Group,

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Speaker 1: their global chief economists, Laureate of Columbia years old, who

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Speaker 1: were to do here is really frame where this equity

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Speaker 1: market is. And you can do that by looking back

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Speaker 1: at decades long ago and far away. On a Friday evening,

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Speaker 1: Martin's wide would sit across some LaRue Keiser and he

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Speaker 1: would quietly whisper, don't fight the Fed. She was at

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Speaker 1: zwag Avatar years ago, Liziene Saunders out of Delaware, and

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Speaker 1: of course has become one of our most important equity

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Speaker 1: stock market voices across this nation. Lizene Saunders joins us

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Speaker 1: this morning from Charles schwab Boy. I'll tell you, Lizie,

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Speaker 1: the money that's been lost by people don't fight this Fed.

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Speaker 1: They've gotten crushed, haven't they. It really is quite extraordinary,

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Speaker 1: and but a lot of people don't remember, since we're

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Speaker 1: not all that past the when your anniversary at below

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Speaker 1: is that it was actually on Latch twenty third, two

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Speaker 1: thousand and twenty that the said announced many of the

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Speaker 1: backstop learning facilities they were put in place specifically for

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Speaker 1: the pandemic that kind of bridge over to help the

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Speaker 1: main street side of the economy, and that just showed then,

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Speaker 1: and I think we'll bill are watching the power of

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Speaker 1: the Fed's words, even if it predates specific accents. The

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Speaker 1: consensus launch of earnings off of grimness a year ago

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Speaker 1: is up fifty earnings. What is the liz Ane Saunders

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Speaker 1: run rate of actual earnings growth forward? Well, so fifty

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Speaker 1: four is for the second quarter, which, of course the

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Speaker 1: comp relative to the second quarter of last year is

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Speaker 1: the easiest. First quarter consensus is up twenty four, and

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Speaker 1: you've got big leadership areas in terms of contributions at

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Speaker 1: the sector level consumer discretionary, financial material. So clearly the

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Speaker 1: cyclical bias to what you're going to see the biggest

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Speaker 1: pops um you know, longer term, we've seen earnings growth

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Speaker 1: significantly above GDP growth obviously, but I think the story

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Speaker 1: looking ahead will be one potentially about profit margins, and

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Speaker 1: I think that's key to watch and list sent two

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Speaker 1: in this quarters or first quarter orange season, which begins imminently,

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Speaker 1: is what do we hear from companies um, not just

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Speaker 1: about first quarter earnings but guidance for the out earnings.

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Speaker 1: Do more companies step up their pace of guidance, because

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Speaker 1: remember you had a record number of companies with drawing

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Speaker 1: guidance altogether at the midpoint of last year. But also

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Speaker 1: what many of the price increases that we're seeing in

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Speaker 1: this gutting inflation, what that means for profit margins as

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Speaker 1: we look to the next couple of quarters. And behind

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Speaker 1: this uncertainty is a question of whether we're setting the

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Speaker 1: bar too high or the bar too low. And just

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Speaker 1: want to bring you this news from CNN that President

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Speaker 1: Biden wants all adults vaccinated or at least eligible to

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Speaker 1: be vaccinated by April nineteen, again bringing forward the deadline

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Speaker 1: originally it was May one this idea of perhaps we

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Speaker 1: set our expectations too low at the outset when it

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Speaker 1: comes to earning lissans. Are we setting our expectations too

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Speaker 1: low or too high? I don't think we know the

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Speaker 1: answer to the yet. The latest trends in terms of

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Speaker 1: revisions and ostensiblieve that's as as analysts get more guiding

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Speaker 1: is for the first quarter we're up to sixty seven

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Speaker 1: positive revisions versus negative revisions, So that trend is good.

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Speaker 1: But we certainly may get to a point where you

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Speaker 1: shift from last year's story of analysts when left basically

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Speaker 1: to their own devices to try to gauge where UH

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Speaker 1: numbers were going to fall. Ended up bearing on the

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Speaker 1: side of setting the bar too low, and that's why

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Speaker 1: we had a record beat rate in the second quarter,

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Speaker 1: record beat rate in the third quarter, we had a

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Speaker 1: strong beat rate in the fourth quarter. In the fourth

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Speaker 1: quarter we actually went back into positive territory in year

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Speaker 1: over year growth terms. The question is the enthusiasm associated

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Speaker 1: with the reopening of the economy that strength were likely

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Speaker 1: to see in GDP numbers. UH The analysts now been

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Speaker 1: beholden enough that they're going to raise the bar, and

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Speaker 1: there's just there's there's no precedent for the kind of

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Speaker 1: environment and the nature of this crisis and the impact

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Speaker 1: to earnings and visibility even at this stage, regardless of

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Speaker 1: what we know about her immunity and vaccine. So I

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Speaker 1: think it's it's still really really tricky to try to

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Speaker 1: gauge where the bar is set relative to where companies

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Speaker 1: are going to report LAS. And there's a wisdom of analysts,

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Speaker 1: and then there's a wisdom of markets. And right now

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Speaker 1: from the what you can see in markets are equity

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Speaker 1: traders pricing in a greater proportion of beats than the

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Speaker 1: equity analysts on Wall Street, the idea that they're actually

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Speaker 1: foreseeing and pricing in something much more robust. Well, those

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Speaker 1: companies that are providing guidance are are quite optimistic, and

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Speaker 1: that's where you're seeing the upward revisions. I think analysts

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Speaker 1: covering industries or companies where there's still that limited guidance

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Speaker 1: and you can think about the obvious areas, whether it's

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Speaker 1: in leisure, hospitality, the service society, the economy where they're

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Speaker 1: still isn't that visibility or based knowledge yet of the

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Speaker 1: reopening is going to look like that's still a prospective thing.

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Speaker 1: I think on the good side of the economy, I

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Speaker 1: do worry that estimate bar may have gotten up a

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Speaker 1: little bit. I think the whole pent up demand story

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Speaker 1: which has been driving optimism, I think is more valid

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Speaker 1: on the services side of the economy than it is

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Speaker 1: on the good side of the economy. Pretty much across

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Speaker 1: the spectrum of durable goods, be it um, housing, autos,

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Speaker 1: these cars, anything home improvement related electronics UM I actually

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Speaker 1: think that there is a risk of pent down demand,

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Speaker 1: not so much pent up demand, because we're well above

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Speaker 1: pre pandemic levels in those segments. Of the the economy,

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Speaker 1: and I think there's too much extrapolating of that strength

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Speaker 1: in the past year out into the future. Is that

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Speaker 1: one final question, what are we doing with our money?

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Speaker 1: What does Schwab see that we're actually allocating out in

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Speaker 1: four oh one case. You know, it's been interesting the

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Speaker 1: flows lately. They've definitely taken on a little bit more

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Speaker 1: of a defensive posture, at least at the subasset class level.

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Speaker 1: So the flows into utility utilities are actually the strongest

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Speaker 1: in the past months, which is quite extraordinary. And then

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Speaker 1: prior hot areas like communications services and financials are on

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Speaker 1: the lower end of the spectrum, but also at the

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Speaker 1: broader asset class level, definitely seeing a pick up an

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Speaker 1: interest outside the US, so positive flows in the map

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Speaker 1: past month or so into parts of the rest of

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Speaker 1: the world, particularly emerging markets, and actually a bit of

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Speaker 1: outflows out of the domestic equity side. And we we've

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Speaker 1: had an you know, and overweight on developed international um

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Speaker 1: equities since the beginning of this year, and uh, we're

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Speaker 1: seeing that in the flow data at least in the

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Speaker 1: past month or two. It Sanders, thank you so much,

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Speaker 1: Chief investment strategist of Charles Schwab Right now on our

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Speaker 1: domestic politics in America. We look northeast of St. Louis

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Speaker 1: to Cardinals Territory, moveing up southeast of Springfield, and then

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Speaker 1: on up somewhere in the vicinity of Chicago. It is

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Speaker 1: a narrow district, the thirteenth Congressional District of Illinois, and

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Speaker 1: the Republican Rodney Davis joins us UH this morning, Congress

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Speaker 1: from thank you so much for joining us. Do you

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Speaker 1: need a six lane highway from Taylorville into Springfield? What

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Speaker 1: are you gonna get out of the infrastructure bill? You

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Speaker 1: know what, we already have four lanes between Taylorville and Springfield.

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Speaker 1: It's great for for our community here in Grade, for

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Speaker 1: central Illinois. UM. You know, I just hope we get

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Speaker 1: some bipartisanship out of the infrastructure bill. That's what I'm

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Speaker 1: hoping for. When we get by partisanship, we need to

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Speaker 1: go to centrist Democrats who need to get reelected and

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Speaker 1: centrist Republicans two cycles ago you barely won reelection this

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Speaker 1: time around, granted you did better than ever. Are you

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Speaker 1: a centrist Republican and what is the common ground you

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Speaker 1: have with Senator Mansion of West Virginia. Well, I am

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Speaker 1: listed as the thirteenth most bipartisan member of the House

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Speaker 1: according to the Luger Center Senator Mansion. He's showed that

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Speaker 1: he can be a force in the Senate. The problem

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Speaker 1: we have right now with this infrastructure package and bipartisanship

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Speaker 1: was the message that Ranking Member Sam Graves and I

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Speaker 1: and a small group of Republicans sent directly to the President,

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Speaker 1: to the Vice President, to Secretary BUDDA. Jedge in the

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Speaker 1: Oval Office a few weeks ago, that we need by partisanship.

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Speaker 1: I just don't think Speaker Pelosi and Leader Schumer are

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00:25:24,200 --> 00:25:27,480
Speaker 1: going to allow the administration to go that route. Though, Congressman,

433
00:25:27,560 --> 00:25:31,840
Speaker 1: giving your experience on the Committee UH for Transportation Infrastructure,

434
00:25:31,960 --> 00:25:35,080
Speaker 1: Roads and Bridges, this is your purview. What does a

435
00:25:35,240 --> 00:25:38,959
Speaker 1: bipartisan bill, a true bipartisan pill that could pass look like?

436
00:25:39,040 --> 00:25:42,879
Speaker 1: How big is it and what does it focus on? Well,

437
00:25:43,080 --> 00:25:45,520
Speaker 1: I don't like to get into debates about how much

438
00:25:45,600 --> 00:25:49,920
Speaker 1: something could cost. Let's actually dedicate a bill towards rebuilding

439
00:25:49,920 --> 00:25:53,400
Speaker 1: our roads and our bridges, our waterways, our airports are

440
00:25:53,480 --> 00:25:55,920
Speaker 1: locks and dams. If we can do that, you will

441
00:25:55,960 --> 00:25:59,879
Speaker 1: have Republicans crawling all over each other to support a

442
00:26:00,000 --> 00:26:03,560
Speaker 1: bill that The problem we're going to have, though, is,

443
00:26:04,080 --> 00:26:07,760
Speaker 1: I believe this infrastructure proposal is going to be nothing

444
00:26:07,800 --> 00:26:10,840
Speaker 1: more than the Green New Deal disguised under a convenient

445
00:26:10,880 --> 00:26:17,160
Speaker 1: infrastructure title that will dedicate a small amount towards Rhodes bridges, waterways, etcetera.

446
00:26:17,440 --> 00:26:21,000
Speaker 1: It's very frustrating. You see in the proposal the administration

447
00:26:21,080 --> 00:26:24,080
Speaker 1: wants to spend fifty billion dollars to stand up another

448
00:26:24,119 --> 00:26:27,360
Speaker 1: agency within the Department of Commerce and forty two billion

449
00:26:27,600 --> 00:26:29,879
Speaker 1: for all of the locks and dams, all of the waterways,

450
00:26:29,920 --> 00:26:32,960
Speaker 1: all of the ports and even airports in this country.

451
00:26:33,119 --> 00:26:36,720
Speaker 1: That's not a proposal, the congressman putting aside this particular proposal.

452
00:26:36,800 --> 00:26:40,440
Speaker 1: Let's say there was a bipartisan agreement on the infrastructure

453
00:26:40,520 --> 00:26:42,800
Speaker 1: plans that you thought were necessary, and let's say it

454
00:26:42,840 --> 00:26:46,560
Speaker 1: was a pretty expensive plan, would you support raising corporate

455
00:26:46,560 --> 00:26:49,280
Speaker 1: taxes in order to pay for it? Not at all.

456
00:26:49,440 --> 00:26:52,359
Speaker 1: I think opening up the income tax code UH to

457
00:26:52,440 --> 00:26:55,360
Speaker 1: pay for infrastructure is the wrong way to go. UH.

458
00:26:55,359 --> 00:26:57,679
Speaker 1: There's a lot of talk from Secretary Buddha Jedge and

459
00:26:57,720 --> 00:27:01,359
Speaker 1: others who I had We've already enjoyed a good working

460
00:27:01,359 --> 00:27:05,440
Speaker 1: relationship with the Secretary Um talking about jobs being created

461
00:27:05,480 --> 00:27:07,440
Speaker 1: with this package, I want to know how many jobs

462
00:27:07,480 --> 00:27:09,480
Speaker 1: are going to be cost in the small businesses that

463
00:27:09,520 --> 00:27:11,560
Speaker 1: are going to have to pay more in taxes coming

464
00:27:11,600 --> 00:27:13,399
Speaker 1: out of a pandemic. That's the last thing we should

465
00:27:13,400 --> 00:27:16,359
Speaker 1: be doing. Corson Davis, I'm sure that you wanted the

466
00:27:16,400 --> 00:27:20,080
Speaker 1: All Star Game to be held under the stadium there

467
00:27:20,119 --> 00:27:22,960
Speaker 1: in the shadow of Stan Museal and St. Louis Cardinals

468
00:27:22,960 --> 00:27:26,000
Speaker 1: that went to the Rockies. I understand that, but it's

469
00:27:26,040 --> 00:27:28,719
Speaker 1: the why the move of the All Star Game. On

470
00:27:28,760 --> 00:27:31,840
Speaker 1: this debate in Georgia over the Voting Rights Act and

471
00:27:31,880 --> 00:27:36,000
Speaker 1: what Georgia will do about its elections, common please on

472
00:27:36,119 --> 00:27:41,880
Speaker 1: what the Republican response should be to find fairer elections. Well,

473
00:27:41,920 --> 00:27:44,880
Speaker 1: first of all, I just wish some in in corporate

474
00:27:44,880 --> 00:27:48,120
Speaker 1: America would have read the bill in Georgia and would

475
00:27:48,160 --> 00:27:51,880
Speaker 1: have seen the expansion of access to voting for all Georgians.

476
00:27:51,920 --> 00:27:55,320
Speaker 1: We had problems in Fulton County run by Democrats where

477
00:27:55,320 --> 00:27:58,560
Speaker 1: they had lines out the door. Um. This bill would

478
00:27:58,560 --> 00:28:01,679
Speaker 1: open more precincts, and those are the types of issues

479
00:28:01,720 --> 00:28:05,000
Speaker 1: that I certainly hope Corporate America stays off a Twitter

480
00:28:05,359 --> 00:28:09,399
Speaker 1: and starts actually looking at legislation. My biggest fear is

481
00:28:09,880 --> 00:28:12,399
Speaker 1: that Democrats are going to try and act like HR

482
00:28:12,520 --> 00:28:17,080
Speaker 1: one that passed only with a partisan roll call, and

483
00:28:17,080 --> 00:28:20,879
Speaker 1: the only bipartisan about it was the Democrat opposition joining

484
00:28:20,880 --> 00:28:23,240
Speaker 1: all Republicans. I think they're going to try to turn

485
00:28:23,280 --> 00:28:26,680
Speaker 1: that into the national version of George's reforms, and that

486
00:28:26,720 --> 00:28:30,320
Speaker 1: bill would be a disaster Congress. From the Georgia distinction,

487
00:28:30,400 --> 00:28:34,720
Speaker 1: as we're moving the decision process of elections from the

488
00:28:34,760 --> 00:28:38,200
Speaker 1: Secretary of State of Georgia and the executive branch over

489
00:28:38,240 --> 00:28:43,160
Speaker 1: to legislative control, legislative controls and ancient art form and

490
00:28:43,240 --> 00:28:46,320
Speaker 1: your state of Illinois, is that the trap we have

491
00:28:46,480 --> 00:28:50,920
Speaker 1: and that our voting processes become a legislative process and

492
00:28:51,000 --> 00:28:54,240
Speaker 1: not that of the executive branch. Well, we need to

493
00:28:54,240 --> 00:28:56,960
Speaker 1: make sure that our states and our localities have control

494
00:28:57,000 --> 00:29:00,360
Speaker 1: over their elections as the Constitution puts forth. The Bocrats

495
00:29:00,360 --> 00:29:02,840
Speaker 1: have tried now for two Congresses, and I've led the

496
00:29:02,880 --> 00:29:06,440
Speaker 1: fight in introducing HR one, which would nuclear rise and

497
00:29:06,520 --> 00:29:11,680
Speaker 1: expand expand procedures like ballot harvesting that have already been

498
00:29:11,720 --> 00:29:16,160
Speaker 1: corrupted with fraud. We didn't seat an elected Republican in

499
00:29:16,200 --> 00:29:20,440
Speaker 1: North Carolina's ninth district in because one of his operatives

500
00:29:20,920 --> 00:29:25,160
Speaker 1: used a fraudulent process by trying to create a ballot

501
00:29:25,160 --> 00:29:28,760
Speaker 1: harvesting process in that district. And the unfortunate thing is

502
00:29:29,120 --> 00:29:31,840
Speaker 1: he'll likely go to jail because of that. But if

503
00:29:31,840 --> 00:29:34,080
Speaker 1: he was in California, what he did would have been

504
00:29:34,080 --> 00:29:37,560
Speaker 1: perfectly legal, and that's wrong. Those are the types of

505
00:29:37,640 --> 00:29:40,840
Speaker 1: policies that Democrats in Washington are trying to push forth.

506
00:29:41,040 --> 00:29:45,120
Speaker 1: Also there to add seven point two million dollars in

507
00:29:45,200 --> 00:29:48,600
Speaker 1: public money to their own campaigns. And I don't want

508
00:29:48,720 --> 00:29:51,280
Speaker 1: HR one to become the next rally and cry because

509
00:29:51,280 --> 00:29:54,440
Speaker 1: it is not a voting rights bill at all. Congressman,

510
00:29:54,800 --> 00:29:56,360
Speaker 1: part of what I'm caring for you has heard of

511
00:29:56,360 --> 00:30:00,000
Speaker 1: this decrying of an attempted by partisanship that absolutely fizzles.

512
00:30:00,120 --> 00:30:03,480
Speaker 1: Is now very much a democratic effort in the House

513
00:30:03,560 --> 00:30:05,720
Speaker 1: and on the presidency. But a lot of people say

514
00:30:05,720 --> 00:30:09,680
Speaker 1: that they just learned from prior administrations, including the Obama administration,

515
00:30:09,680 --> 00:30:12,080
Speaker 1: that tried to do something on a bipartisanship level and

516
00:30:12,120 --> 00:30:15,000
Speaker 1: didn't get anything done. Just quickly, what's your response to

517
00:30:15,040 --> 00:30:20,600
Speaker 1: that on on infrastructure? Because they failed miserably and what

518
00:30:20,640 --> 00:30:23,880
Speaker 1: they proposed. You can't come up with a piece of

519
00:30:23,960 --> 00:30:27,720
Speaker 1: legislation that you know was only going to appease one

520
00:30:27,800 --> 00:30:30,600
Speaker 1: side and say take it or leave it. Look at

521
00:30:30,640 --> 00:30:35,360
Speaker 1: the last time we had a non reauthorization infrastructure package

522
00:30:35,760 --> 00:30:39,320
Speaker 1: that was under the Obama administration with the Obama Era

523
00:30:39,680 --> 00:30:43,880
Speaker 1: Area Era stimulus bill called ARA. That bill had about

524
00:30:44,000 --> 00:30:47,760
Speaker 1: six percent of the funding dedicated towards infrastructure. Even the

525
00:30:47,800 --> 00:30:52,240
Speaker 1: current Democrat Chair of the Transportation Infrastructure Committee, Peter Defacio,

526
00:30:52,440 --> 00:30:56,000
Speaker 1: voted against that bill because it wasn't enough infrastructure. I

527
00:30:56,080 --> 00:30:59,400
Speaker 1: see Democrats going down that exact same path. The proposal

528
00:30:59,400 --> 00:31:02,520
Speaker 1: they laid for is woefully underfunded when it comes to

529
00:31:02,600 --> 00:31:05,280
Speaker 1: rebuilding our roads and bridges, And if that's what's going

530
00:31:05,320 --> 00:31:08,160
Speaker 1: to happen, they're going to negotiate with the far left

531
00:31:08,200 --> 00:31:10,560
Speaker 1: of their party and it's only going to get worse

532
00:31:10,800 --> 00:31:15,480
Speaker 1: for jobs. Rodney Davis, that is the largest backyard I've

533
00:31:15,520 --> 00:31:18,000
Speaker 1: seen and I think thirty years. I hope the kid

534
00:31:18,080 --> 00:31:21,080
Speaker 1: that's mowing that lawn is not using a push mower.

535
00:31:21,520 --> 00:31:23,760
Speaker 1: They're out on the John Dere golf cart or whatever

536
00:31:23,880 --> 00:31:27,160
Speaker 1: pushing it around. Rodney Davis, Thank you so much to

537
00:31:27,240 --> 00:31:36,520
Speaker 1: Congressman from the thirteenth District in Illinois right now and

538
00:31:36,560 --> 00:31:40,120
Speaker 1: to focus on China with Stephen Roach of Yale University,

539
00:31:40,600 --> 00:31:44,240
Speaker 1: his book The Next Asia, years and years ago set

540
00:31:44,280 --> 00:31:47,800
Speaker 1: the tone for essays on China. He followed it up

541
00:31:47,800 --> 00:31:50,760
Speaker 1: with an important book on the dysfunction UH that we

542
00:31:50,840 --> 00:31:53,040
Speaker 1: have with China. And right now, folks, it is a

543
00:31:53,120 --> 00:31:57,120
Speaker 1: new UH dysfunction. Steven Stephen Roun tell me about the

544
00:31:57,200 --> 00:32:00,640
Speaker 1: new codependency of China with China and AMERRAA Is it

545
00:32:00,720 --> 00:32:04,560
Speaker 1: the same as the old codependency? Well, the thing we

546
00:32:04,600 --> 00:32:09,320
Speaker 1: know about codependency tom UM, whether it's human relationships or

547
00:32:09,360 --> 00:32:14,440
Speaker 1: economic relationships UH, is it's never constant. It reflects the

548
00:32:14,600 --> 00:32:20,320
Speaker 1: tension that builds between interpersonal in this case bilateral UH

549
00:32:20,480 --> 00:32:27,160
Speaker 1: partners in UH trade and economic commerce. And you know,

550
00:32:27,280 --> 00:32:31,280
Speaker 1: China's changed its growth model. We're uncomfortable with that. We've

551
00:32:31,360 --> 00:32:35,840
Speaker 1: raised a lot of other objections about China's behavior in

552
00:32:36,560 --> 00:32:41,360
Speaker 1: areas like geostrategic strategy and human rights UH, and so

553
00:32:41,480 --> 00:32:44,960
Speaker 1: we've taken a unilateral trade action against them and the

554
00:32:44,960 --> 00:32:48,600
Speaker 1: Trump administration. And what my fear is, and I wrote

555
00:32:48,600 --> 00:32:52,600
Speaker 1: about this recently, is that by not changing from Trump's

556
00:32:52,640 --> 00:32:57,960
Speaker 1: policy UM President Biden's administration has been boxed in by

557
00:32:58,080 --> 00:33:04,040
Speaker 1: UH really venomous politics and is afraid to break out

558
00:33:04,080 --> 00:33:05,880
Speaker 1: and try a new approach. And we need a new

559
00:33:05,920 --> 00:33:08,640
Speaker 1: approach or this relationship we're going to go from add

560
00:33:08,680 --> 00:33:11,680
Speaker 1: to worst. Your US saying Project Syndicate was exceptionally important.

561
00:33:11,680 --> 00:33:13,880
Speaker 1: I want to expand it from boxed in with China

562
00:33:14,240 --> 00:33:16,840
Speaker 1: to take off your book of years ago, boxed in

563
00:33:17,600 --> 00:33:20,320
Speaker 1: of the next Asia and the idea that it's not

564
00:33:20,440 --> 00:33:22,960
Speaker 1: just about China, but it's about the Pacific room as well.

565
00:33:23,400 --> 00:33:26,360
Speaker 1: To use a phrase from President Obama, what should be

566
00:33:26,400 --> 00:33:31,920
Speaker 1: the pivot in strategy of the Biden administration. Well, the

567
00:33:32,680 --> 00:33:35,880
Speaker 1: pivot was a part of the problem because it was

568
00:33:36,640 --> 00:33:40,000
Speaker 1: clearly aimed back in the Biden ad excuse me, the

569
00:33:40,040 --> 00:33:45,280
Speaker 1: Obama administration of putting a lot of pressure on China,

570
00:33:45,440 --> 00:33:49,240
Speaker 1: excluding China from what then was called t P p

571
00:33:50,240 --> 00:33:54,000
Speaker 1: UH and UM. That really pushed China to take a

572
00:33:54,040 --> 00:33:59,000
Speaker 1: lot of I think destabilizing actions of its own UH

573
00:33:59,040 --> 00:34:02,560
Speaker 1: in the South China see in the Belt and Road initiative,

574
00:34:02,640 --> 00:34:06,960
Speaker 1: and that then culminated in the trade war that we're

575
00:34:07,000 --> 00:34:10,279
Speaker 1: now trying to find a way out of after four

576
00:34:10,360 --> 00:34:14,200
Speaker 1: years of disaster. And the Trump administration. Professor Roach, do

577
00:34:14,200 --> 00:34:16,960
Speaker 1: you think that the infrastructure Plan as it's laid out

578
00:34:17,120 --> 00:34:19,839
Speaker 1: as a way to increase some of the capacity of

579
00:34:19,880 --> 00:34:22,880
Speaker 1: tech sectors and the five G willed out in the

580
00:34:22,960 --> 00:34:26,960
Speaker 1: United States is an effective way to engage in this

581
00:34:27,080 --> 00:34:29,640
Speaker 1: codependency that you talk about, perhaps get a little bit

582
00:34:29,640 --> 00:34:34,840
Speaker 1: more independence for the United States. Well, we certainly need

583
00:34:34,880 --> 00:34:37,560
Speaker 1: to upgrade our infrastructure. A lot of people have been

584
00:34:37,560 --> 00:34:40,440
Speaker 1: talking about that that for a number of years. I

585
00:34:40,480 --> 00:34:46,400
Speaker 1: have to give the the creative side of the Biden

586
00:34:46,400 --> 00:34:50,640
Speaker 1: administration a lot of credit for expanding infrastructure into areas

587
00:34:50,640 --> 00:34:55,040
Speaker 1: that we never considered it at all under the general

588
00:34:55,800 --> 00:35:01,200
Speaker 1: elk of what is infrastructure? But you know, the question arises,

589
00:35:01,239 --> 00:35:04,880
Speaker 1: and you've debated on the show, is as noble as

590
00:35:04,880 --> 00:35:08,640
Speaker 1: the objectives are. Is anybody giving much consideration to how

591
00:35:09,080 --> 00:35:11,839
Speaker 1: we pay for this? I mean, with interest rates at

592
00:35:11,960 --> 00:35:17,560
Speaker 1: zero right now, you can do anything you want, including um, uh,

593
00:35:17,760 --> 00:35:23,759
Speaker 1: not just infrastructure, but uh all sorts of massive social programs.

594
00:35:23,800 --> 00:35:27,239
Speaker 1: But what happens if and when interest rates start to

595
00:35:27,239 --> 00:35:31,000
Speaker 1: go back normal? And uh, that's the unanswered question right

596
00:35:31,000 --> 00:35:33,200
Speaker 1: now and is to be Steve. All of our listeners

597
00:35:33,200 --> 00:35:37,480
Speaker 1: and viewers want to know what you think about asset

598
00:35:37,760 --> 00:35:41,480
Speaker 1: bubble inflation. You were definitive on this at Morgan Stanley

599
00:35:41,560 --> 00:35:44,480
Speaker 1: years ago of saying there's mandates of the FED, and

600
00:35:44,520 --> 00:35:47,719
Speaker 1: one is to monitor asset bubbles. Is the FED monitoring

601
00:35:47,719 --> 00:35:52,600
Speaker 1: an asset bubble right now? Well, it's certainly monitoring it,

602
00:35:52,640 --> 00:35:55,640
Speaker 1: but it's also doing a great job in creating it. Um.

603
00:35:55,719 --> 00:35:59,879
Speaker 1: And so you've got uh, the combination of zero interest rates,

604
00:36:00,120 --> 00:36:06,600
Speaker 1: massive liquidity injections uh spilling over into financial markets. And

605
00:36:06,680 --> 00:36:09,840
Speaker 1: you know, you guys reported you know on your show

606
00:36:10,200 --> 00:36:15,920
Speaker 1: every day from um you know, SPACs um to UM

607
00:36:16,440 --> 00:36:19,920
Speaker 1: bitcoin uh two. And now we have I guess a

608
00:36:19,920 --> 00:36:22,920
Speaker 1: lot of froth in housing markets. This has all the

609
00:36:23,000 --> 00:36:29,200
Speaker 1: classic manifestations of a very frothy environment. And you know,

610
00:36:29,280 --> 00:36:34,680
Speaker 1: the FED is basically um uh talking out of both

611
00:36:34,680 --> 00:36:37,240
Speaker 1: sides of its mouth. It was worried about asset bubbles,

612
00:36:37,640 --> 00:36:41,239
Speaker 1: yet it is responsible for creating the conditions that are

613
00:36:41,280 --> 00:36:44,200
Speaker 1: creating these bubbles. At the same time, although you will

614
00:36:44,480 --> 00:36:46,560
Speaker 1: some people have said that the FED policies and some

615
00:36:46,600 --> 00:36:49,440
Speaker 1: of the fiscal spending that we've seen will lead to

616
00:36:49,800 --> 00:36:54,160
Speaker 1: a very depreciated dollar, one that is highly below where

617
00:36:54,200 --> 00:36:56,680
Speaker 1: it is currently. That leads to some sort of inflationary

618
00:36:56,719 --> 00:36:59,560
Speaker 1: push that is really detrimental to the country. We have

619
00:36:59,600 --> 00:37:02,880
Speaker 1: seen the opposite this year, as we've seen the growth

620
00:37:03,000 --> 00:37:05,319
Speaker 1: that has stemmed from some of these policies. Do you

621
00:37:05,320 --> 00:37:07,080
Speaker 1: think that this is short lived and that we will

622
00:37:07,120 --> 00:37:10,359
Speaker 1: continue to see a tremendous dollar weakening or do you

623
00:37:10,400 --> 00:37:13,080
Speaker 1: think that this highlights the potential success of some of

624
00:37:13,120 --> 00:37:17,439
Speaker 1: these programs. Now, I've been one of the ones who

625
00:37:17,480 --> 00:37:22,319
Speaker 1: have been outspoken about the downward pressures coming on a

626
00:37:22,400 --> 00:37:26,040
Speaker 1: dollar at lisa UM. You know, it was a call

627
00:37:26,440 --> 00:37:29,680
Speaker 1: that was out of consensus in the second half of

628
00:37:29,800 --> 00:37:32,920
Speaker 1: last year, and it worked and it's not working uh

629
00:37:33,080 --> 00:37:37,479
Speaker 1: so far in two thousand twenty one. But I think

630
00:37:37,520 --> 00:37:43,400
Speaker 1: the combination of plunging domestics saving a massive current account

631
00:37:43,440 --> 00:37:48,719
Speaker 1: deficit a fad that would normally respond to those um

632
00:37:49,200 --> 00:37:53,400
Speaker 1: developments by tightening policy, but won't uh that that's going

633
00:37:53,440 --> 00:37:57,600
Speaker 1: to continue to put further sharp downward pressure on the dollar.

634
00:37:58,320 --> 00:38:01,400
Speaker 1: It's not working now, but I suspe will as we

635
00:38:01,480 --> 00:38:03,759
Speaker 1: moved through the year. Stephen Rhodes, thank you so much

636
00:38:03,760 --> 00:38:07,080
Speaker 1: with Yale University, and of course Steven wrote some would

637
00:38:07,120 --> 00:38:11,200
Speaker 1: say in helping with that Hyman to invent modern market economics.

638
00:38:11,400 --> 00:38:15,840
Speaker 1: Morgan Stanley. This is the Bloomberg Surveillance Podcast. Thanks for listening.

639
00:38:16,160 --> 00:38:19,520
Speaker 1: Join us live weekdays from seven to ten am Eastern

640
00:38:19,760 --> 00:38:23,799
Speaker 1: on Bloomberg Radio and on Bloomberg Television each day from

641
00:38:23,880 --> 00:38:29,120
Speaker 1: six to nine am for insight from the best in economics, finance, investment,

642
00:38:29,280 --> 00:38:34,279
Speaker 1: and international relations. And subscribe to the Surveillance podcast on

643
00:38:34,360 --> 00:38:38,200
Speaker 1: Apple podcast, SoundCloud, Bloomberg dot com, and of course on

644
00:38:38,320 --> 00:38:42,440
Speaker 1: the terminal. I'm Tom Keene and this is Bloomberg