Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene. Along
Speaker 1: with Jonathan Ferrell and Lisa Brownwitz. Daily we bring you
Speaker 1: insight from the best and economics, finance, investment, and international relations.
Speaker 1: Find Bloomberg Surveillance on Apple Podcast, Suncloud, Bloomberg dot Com,
Speaker 1: and of course on the Bloomberg terminal. This is not
Speaker 1: only the Interview of the day, the Interview of the month,
Speaker 1: but indeed I would suggest this is the conversation of
Speaker 1: the summer. It was long ago and far away where
Speaker 1: a radiologist from Mount Sinai came into my studios through
Speaker 1: on the ground some X rays from Wuhan and said, Tom,
Speaker 1: this is serious. That is followed with medical people worldwide
Speaker 1: helping Bloomberg Surveillance to understand this horrific pandemic. Nowa it
Speaker 1: is time for education with leadership in the first founding
Speaker 1: partner at Verizon, Hans Westberg joins us, the chairman, the
Speaker 1: chief executive officer, and we're thrilled that the woman that's
Speaker 1: making this up, Lisa Sherman of the Acclaim ad Council
Speaker 1: joins us today. Hans. Let me go to you first. Simply,
Speaker 1: you got on board before Apple before Benny off its
Speaker 1: salesforce and said, this matters. Why is Verizon that communicates,
Speaker 1: Why is Verizon helping Lisa Sherman and messaging what we
Speaker 1: need to do on COVID And this says, well, well,
Speaker 1: no one. As you mentioned in the beginning, this is
Speaker 1: unheard of. Pandemic has hit so hard on this count
Speaker 1: and the rest of the world. And of course one
Speaker 1: thing that is important, of course the communication around it
Speaker 1: and and raising the awareness and the science around the
Speaker 1: vaccine coming up right now. And we thought that when
Speaker 1: vaccine is coming out, we have a very big responsibility
Speaker 1: as a huge employer and it's a big company to
Speaker 1: be part of that communication about their awareness and also
Speaker 1: about the science around it. This I sup in our
Speaker 1: society that as a government of the information and that
Speaker 1: has been heating most heatd by these pandemics. So for us,
Speaker 1: it was a national to be a founding bout Runce
Speaker 1: Lisa Sherman. My mother sold war bonds. This is a
Speaker 1: few wars ago, and that was started by the AD
Speaker 1: Council in the nineteen forties. I grew up with only
Speaker 1: you can prevent forest fires, and now it's only you
Speaker 1: can prevent COVID. The AD Council has been definitive and
Speaker 1: messaging America. How are you going to message education to
Speaker 1: get the courage to vaccinate in America? Well, first of all, Tom,
Speaker 1: thanks for having me. Uh. We're clearly dealing with the
Speaker 1: biggest public health crisis in our lifetime, and we fundamentally
Speaker 1: knew at the AD Council that we had to launched
Speaker 1: the largest public the public education effort in our history.
Speaker 1: Um So we've recently launched a massive, coordinated communications campaign
Speaker 1: that brings in every every sector in the economy, and
Speaker 1: our focus is really on trying to get people to
Speaker 1: have confidence in the COVID nineteen vaccines, which you know,
Speaker 1: the fact that we have them in such short order
Speaker 1: is is nothing short of of heroic. But at the
Speaker 1: same time, you know, what we're seeing is high levels
Speaker 1: of vaccine hesitancy. Just the data probably pretty current, about
Speaker 1: fifty cent of people right now have either begun the
Speaker 1: process of vaccination, have it at least one of the shots,
Speaker 1: or intend to get vaccinated. The other end of the spectrum,
Speaker 1: you've got about fifteen percent of the people who say
Speaker 1: they're never going to get it. So our focus is
Speaker 1: really to to talk to the thirty five percent of
Speaker 1: Americans who frankly are taking a weight and see attitude. Lisa,
Speaker 1: can you tell us about the nature of that thirty
Speaker 1: five percent? In other words, is there a unifying characteristic
Speaker 1: of individuals in the United States who don't want to
Speaker 1: get the vaccine? You know, we've done a lot of
Speaker 1: work and trying to understand hesitancy, and it's pretty complicated
Speaker 1: and it's very nuanced. You know, it ranges from everything.
Speaker 1: People have a lot of questions and they just want
Speaker 1: answers to their questions. Some of it could be you know,
Speaker 1: how did this happen so quickly? Did people trade off
Speaker 1: um efficacy for speed? Others have longstanding concerns because of inequities,
Speaker 1: and especially in the black and Hispanic communities where there
Speaker 1: have been long standing inequities in the healthcare community. So
Speaker 1: we see higher levels of hesitancy among Black and Hispanic communities.
Speaker 1: We also have begun to see more hesitancy among conservatives. UM.
Speaker 1: These are folks who also have a lot of questions UM.
Speaker 1: And really the common thread I would say, Lisa, is
Speaker 1: that people don't want to be told what to do.
Speaker 1: They want the information, They want to be able to
Speaker 1: ask their questions. They want to feel empowered to make
Speaker 1: decisions with themselves and for their families. So we go
Speaker 1: from the public health side to the business side, and Hans,
Speaker 1: there's a question of mobility and cities of traffic to
Speaker 1: retail stores. You see the nexus of all of this,
Speaker 1: both with mobile data as well as your retail stores.
Speaker 1: Are you seeing people materially increased mobility as vaccinations pick
Speaker 1: up or has it been slower than you would have
Speaker 1: otherwise expected. It was a time in the May last
Speaker 1: year and we measured this sometimes on how mobile people
Speaker 1: are is how the moving in between radio towers, and
Speaker 1: it was done in some of the most urban places
Speaker 1: sixty six, meaning people moved sixty percent less they were
Speaker 1: staying home. That mobility is slowly coming back, and we
Speaker 1: have seen a clear and improvement the loss of the
Speaker 1: months are where as the optimist not coming. But as
Speaker 1: we all know, and the optimism is in the end
Speaker 1: of the tunnel, so we just need to see that
Speaker 1: we get to this first. But clearly we see more
Speaker 1: food traffic in urban areas, more mobility in areas. Right now, Lisa,
Speaker 1: I want to go back to the branding of all
Speaker 1: this you did this advitacount for years. The idea of
Speaker 1: a mind is a terrible thing to waste. The crying
Speaker 1: Indian ad campaign, which I remember clear as a day
Speaker 1: from Earth Day, years and years ago. Can you just
Speaker 1: message now or do you need celebrities? Dolly Parton has
Speaker 1: had the biggest impact so far. Miss Parton was out
Speaker 1: there with her COVID confidence. Do you need celebrities? So
Speaker 1: Hans Vestberg is happy with your program. Well, what I
Speaker 1: will say that, and I mentioned it at the top.
Speaker 1: You know, trust is at the core of hesitancy, and
Speaker 1: and so I think what we have, what we know
Speaker 1: and believe, is that not only is the messaging important,
Speaker 1: but the messenger is also critically important. Who are those
Speaker 1: trusted messengers that each of these hesitant groups really believe
Speaker 1: and trust and feel comfortable with. And so for the
Speaker 1: common thread again, another common thread to Lisa's question is
Speaker 1: that medical experts are at the forefront. They're the number
Speaker 1: one people want to understand from their nurses, pharmacists, have
Speaker 1: they taken it? And then there are amplifiers, those people
Speaker 1: that can allow sort of helpful So I don't mean
Speaker 1: to interrupt because of time, I think your observation is
Speaker 1: so so important here. Franklin Graham set up a set
Speaker 1: of tents on Central Park outside Mount Sinai at the
Speaker 1: beginning of this What do you need from the evangelical
Speaker 1: leadership away from the medical community to get evangelicals and
Speaker 1: conservative Republicans on board? What does he add, Council need
Speaker 1: from Franklin Graham. Look, we've engaged broad based faith faith
Speaker 1: leaders who understand that this is not an either or decision.
Speaker 1: You can have deep faith and believe that the vaccine
Speaker 1: can help you and and free you to get back
Speaker 1: to life um and and and keep your family safe
Speaker 1: hunts hunts. There also a question about the faith in
Speaker 1: a better future, and we're looking at a way to
Speaker 1: track towards a modern era of tech prowess. And before
Speaker 1: we let you go, we have to ask about the
Speaker 1: infrastructure bill that Biden has put together and the five
Speaker 1: G build out in the United States. What's your impression
Speaker 1: of what's laid out in the proposal as it currently is.
Speaker 1: How much will it help get five G roll out
Speaker 1: in a smooth and consistent way across the United States?
Speaker 1: As I think that five years an important piece of it.
Speaker 1: But I think that when we understand where lead from
Speaker 1: five to seven years when it comes to digitalization in
Speaker 1: this country, Taylor Health, remote learning and all of that.
Speaker 1: I think it's important. And there's three pieces that's all
Speaker 1: of the the in front accessibility, a broad band, affordability
Speaker 1: and usability and all these three needs to play together
Speaker 1: in action, the close and the digular divine that when
Speaker 1: open with this leap from with one of the most
Speaker 1: sustainable technologies mobility broad by the clown. So I think
Speaker 1: that's what we what we are talking about and talking
Speaker 1: to the administration about that we need to think holistically
Speaker 1: in order to solve the problem. It's not only one thing,
Speaker 1: but clearly five D is an important piece of it.
Speaker 1: We're rolling out quick and we've ever done before, and
Speaker 1: more than we're ever done before, we have increased our
Speaker 1: called capis again. So this is an important piece for USS.
Speaker 1: Hans Vetsburg, thank you so much for joining us today
Speaker 1: with Verizon and their leadership on this program. And Lisa Sherman,
Speaker 1: good luck on your program. To me, it's absolutely definitive.
Speaker 1: As we go into the end of two thousand twenty one,
Speaker 1: Miss Sherman with the AD Council President and ce Oh
Speaker 1: Katherine Man here for a three hour conversation. She's City
Speaker 1: Group Global Chief Economy is Kathy Man. I really want
Speaker 1: to talk about the locomotive here, that is the US.
Speaker 1: Geta gop and Haff talks about the divergences that are real.
Speaker 1: Are there any trains behind the locomotive and what's the caboose? Well,
Speaker 1: you know, the US is a locomotive. It's the one
Speaker 1: country that's growing faster than everyone else relative to its
Speaker 1: historical experience. So it's the one that is going to
Speaker 1: be running a larger trade deficit over the next year
Speaker 1: or so um and virtually everyone else is either running
Speaker 1: a smaller deficit or running a bigger surplus. So, uh,
Speaker 1: the US is back back on track to be the locomotive.
Speaker 1: The problem is it's not quite as large as it
Speaker 1: used to be relative to the global economy. It's not
Speaker 1: quite as powerful locomotive as it used to be, So
Speaker 1: it's going to be a challenge to get up the hill.
Speaker 1: And there's also a question of how much this really
Speaker 1: brings the rest of the world along with it. And
Speaker 1: that's one of the big disagreements frankly on Wall Street
Speaker 1: that I'm hearing how much just continue to bet on
Speaker 1: the US versus the rest of the world, or to
Speaker 1: bet on other areas that will get carried along. What's
Speaker 1: your view on that? Based on a concept of a
Speaker 1: strengthening dollar given the amount of dollar denominated debt out there, well,
Speaker 1: so emerging markets are the ones who tend to be
Speaker 1: most at risk UM when we're talking about dollar denominated debt.
Speaker 1: But I think it's important to think about the two
Speaker 1: factors that are relevant when thinking about an appreciation of
Speaker 1: the dollar. The first role is that it does and
Speaker 1: and the stronger U s economy that's associated with the
Speaker 1: stronger dollar UM. That is the trade channel, which is
Speaker 1: an important channel bringing in imports, helping economies to grow
Speaker 1: through that channel, relative to the concerns about dollar denominated
Speaker 1: debt and the exposure that countries have when you have
Speaker 1: an appreciation of the dollars, So those two are in
Speaker 1: opposition to one another. What we have found in doing
Speaker 1: some work looking at the Taper tantrum period relative to
Speaker 1: where we are now, is that many more economies are
Speaker 1: in the position of gaining when the dollar appreciates, because
Speaker 1: not only do they have dollar denominated debt, but they
Speaker 1: also have dollar denominated reserves, and so you have to
Speaker 1: consider that as well when thinking about the exposure on
Speaker 1: the financial side. So this is an argument perhaps that
Speaker 1: the rest of the world can come along more than
Speaker 1: some people think. Is that your view here that we're
Speaker 1: going to see an acceleration that picks up speed in
Speaker 1: the emerging markets in perhaps Europe? Perhaps two is the
Speaker 1: U s slows down well, So I think we have
Speaker 1: to consider not you know, the US is not the
Speaker 1: only thing that's in is going to be positive for
Speaker 1: emerging markets. There are a lot of negatives or downside risks,
Speaker 1: and of course that has to do with the vaccination
Speaker 1: path um and how soon those economies can get vaccinated
Speaker 1: and how soon they can get back on track with
Speaker 1: their own internal domestic demand. I mean, that's an important
Speaker 1: ingredient in the growth process for any economy, is domestic demand.
Speaker 1: They can't entirely depend on export led growth. Again, we
Speaker 1: have to remember the US as a locomotive is not
Speaker 1: as strong a locomotive as it used to be, say
Speaker 1: twenty years or four years used to be. In part
Speaker 1: of this, Catherine Man, is whether we are a more
Speaker 1: open or less open economy. Where does the US stand
Speaker 1: right now is an open economy that dynamic to other nations. Well,
Speaker 1: you know, the globalization as as a general rule has
Speaker 1: been on the back foot for more than a decade
Speaker 1: um in terms of their slowing of integration into the
Speaker 1: global economy. There's basically been a generalized slowdown in terms
Speaker 1: of that integration, and the US is no exception from that.
Speaker 1: Uh And, of course, on the back of the last
Speaker 1: administration's approach to trade policy, which was to be very protectionists,
Speaker 1: that of course, uh made the US less open. The
Speaker 1: general tenor of the debate is not towards openness. So
Speaker 1: we have to be concerned about both the politics of
Speaker 1: of of an enlargening trade deficit that we that we
Speaker 1: will see in the data. We have to worry about
Speaker 1: the politics of it leading to potentially even more of
Speaker 1: a retrenchment in terms of globalization. Do we have to
Speaker 1: worry about debt sustainability? Uh So, debt sustainability, it's very
Speaker 1: much a question of whish economies are going to be
Speaker 1: able to grow fast enough to put them on put
Speaker 1: themselves on a sustainable path. Uh So, there's an intimate
Speaker 1: relationship between domestic demand led growth export orientation. For most
Speaker 1: of the world UH and debt sustainability. But in the
Speaker 1: longer term, of course, what really matters for debt sustainability
Speaker 1: is long term capacity or of what we call potential output,
Speaker 1: and that depends intimately on business investment. We've got to
Speaker 1: have business investment being catalyzed by the infrastructure programs that
Speaker 1: the US is talking about, that Europe is talking about,
Speaker 1: that a number of countries are talking about in the
Speaker 1: context of their net zero commitments. Something that is climate
Speaker 1: oriented is going to require private sector investment, and that's
Speaker 1: a critical ingredient, along with of course labor markets and
Speaker 1: UH and and productivity growth. Kiltainman, a few years ago
Speaker 1: at the Massachusetts Institute of Technology, you had the privilege
Speaker 1: of working with Rudy Dornbush. He handed you to the
Speaker 1: Bible as you graduated from m I T tell us
Speaker 1: about the Bible, that the great Rudy Dornbush, and did
Speaker 1: you right? So Rudy was one of my thesis advisors,
Speaker 1: Paul Grupman being the other. And what really gave me
Speaker 1: signed copy of the first edition of Robert Mundel's International
Speaker 1: Economics um and that really represents both both Rudy's his
Speaker 1: first edition, by the way, open economy macro economics which
Speaker 1: integrated goods and markets and asset markets in one place.
Speaker 1: You know that his bible and then of course his
Speaker 1: mentors bible, meaning Robert Mundel's international economics. Those are really
Speaker 1: my bible's today. The continuity of this doctor man is
Speaker 1: absolutely extraordinary. I can think of nowhere else where there's
Speaker 1: such a cadence as there is an international economics. What
Speaker 1: do we think today that Robert Mundel invented fifty years ago? Well,
Speaker 1: you know, the most famous thing that we have been
Speaker 1: working with in the open economy that has his name
Speaker 1: on it is the Mundell Fleming model, which put three
Speaker 1: different markets together, the sort of the I S curve
Speaker 1: meaning the the investment savings part of the economy, the
Speaker 1: monetary policy the so called LM curve, and then the
Speaker 1: open economy meaning balance of payments and how that change
Speaker 1: with regard to exchange rates and external demand. So um,
Speaker 1: those are the three markets that continue to be the
Speaker 1: important ones. How we measure them as different, how we
Speaker 1: think that they work together is different, But those still
Speaker 1: are the drivers of economic performance, and today taken for
Speaker 1: granted and at the time foundationally and revolutionary for Robert
Speaker 1: Mandel dr Man, thank you so much. With City Group,
Speaker 1: their global chief economists, Laureate of Columbia years old, who
Speaker 1: were to do here is really frame where this equity
Speaker 1: market is. And you can do that by looking back
Speaker 1: at decades long ago and far away. On a Friday evening,
Speaker 1: Martin's wide would sit across some LaRue Keiser and he
Speaker 1: would quietly whisper, don't fight the Fed. She was at
Speaker 1: zwag Avatar years ago, Liziene Saunders out of Delaware, and
Speaker 1: of course has become one of our most important equity
Speaker 1: stock market voices across this nation. Lizene Saunders joins us
Speaker 1: this morning from Charles schwab Boy. I'll tell you, Lizie,
Speaker 1: the money that's been lost by people don't fight this Fed.
Speaker 1: They've gotten crushed, haven't they. It really is quite extraordinary,
Speaker 1: and but a lot of people don't remember, since we're
Speaker 1: not all that past the when your anniversary at below
Speaker 1: is that it was actually on Latch twenty third, two
Speaker 1: thousand and twenty that the said announced many of the
Speaker 1: backstop learning facilities they were put in place specifically for
Speaker 1: the pandemic that kind of bridge over to help the
Speaker 1: main street side of the economy, and that just showed then,
Speaker 1: and I think we'll bill are watching the power of
Speaker 1: the Fed's words, even if it predates specific accents. The
Speaker 1: consensus launch of earnings off of grimness a year ago
Speaker 1: is up fifty earnings. What is the liz Ane Saunders
Speaker 1: run rate of actual earnings growth forward? Well, so fifty
Speaker 1: four is for the second quarter, which, of course the
Speaker 1: comp relative to the second quarter of last year is
Speaker 1: the easiest. First quarter consensus is up twenty four, and
Speaker 1: you've got big leadership areas in terms of contributions at
Speaker 1: the sector level consumer discretionary, financial material. So clearly the
Speaker 1: cyclical bias to what you're going to see the biggest
Speaker 1: pops um you know, longer term, we've seen earnings growth
Speaker 1: significantly above GDP growth obviously, but I think the story
Speaker 1: looking ahead will be one potentially about profit margins, and
Speaker 1: I think that's key to watch and list sent two
Speaker 1: in this quarters or first quarter orange season, which begins imminently,
Speaker 1: is what do we hear from companies um, not just
Speaker 1: about first quarter earnings but guidance for the out earnings.
Speaker 1: Do more companies step up their pace of guidance, because
Speaker 1: remember you had a record number of companies with drawing
Speaker 1: guidance altogether at the midpoint of last year. But also
Speaker 1: what many of the price increases that we're seeing in
Speaker 1: this gutting inflation, what that means for profit margins as
Speaker 1: we look to the next couple of quarters. And behind
Speaker 1: this uncertainty is a question of whether we're setting the
Speaker 1: bar too high or the bar too low. And just
Speaker 1: want to bring you this news from CNN that President
Speaker 1: Biden wants all adults vaccinated or at least eligible to
Speaker 1: be vaccinated by April nineteen, again bringing forward the deadline
Speaker 1: originally it was May one this idea of perhaps we
Speaker 1: set our expectations too low at the outset when it
Speaker 1: comes to earning lissans. Are we setting our expectations too
Speaker 1: low or too high? I don't think we know the
Speaker 1: answer to the yet. The latest trends in terms of
Speaker 1: revisions and ostensiblieve that's as as analysts get more guiding
Speaker 1: is for the first quarter we're up to sixty seven
Speaker 1: positive revisions versus negative revisions, So that trend is good.
Speaker 1: But we certainly may get to a point where you
Speaker 1: shift from last year's story of analysts when left basically
Speaker 1: to their own devices to try to gauge where UH
Speaker 1: numbers were going to fall. Ended up bearing on the
Speaker 1: side of setting the bar too low, and that's why
Speaker 1: we had a record beat rate in the second quarter,
Speaker 1: record beat rate in the third quarter, we had a
Speaker 1: strong beat rate in the fourth quarter. In the fourth
Speaker 1: quarter we actually went back into positive territory in year
Speaker 1: over year growth terms. The question is the enthusiasm associated
Speaker 1: with the reopening of the economy that strength were likely
Speaker 1: to see in GDP numbers. UH The analysts now been
Speaker 1: beholden enough that they're going to raise the bar, and
Speaker 1: there's just there's there's no precedent for the kind of
Speaker 1: environment and the nature of this crisis and the impact
Speaker 1: to earnings and visibility even at this stage, regardless of
Speaker 1: what we know about her immunity and vaccine. So I
Speaker 1: think it's it's still really really tricky to try to
Speaker 1: gauge where the bar is set relative to where companies
Speaker 1: are going to report LAS. And there's a wisdom of analysts,
Speaker 1: and then there's a wisdom of markets. And right now
Speaker 1: from the what you can see in markets are equity
Speaker 1: traders pricing in a greater proportion of beats than the
Speaker 1: equity analysts on Wall Street, the idea that they're actually
Speaker 1: foreseeing and pricing in something much more robust. Well, those
Speaker 1: companies that are providing guidance are are quite optimistic, and
Speaker 1: that's where you're seeing the upward revisions. I think analysts
Speaker 1: covering industries or companies where there's still that limited guidance
Speaker 1: and you can think about the obvious areas, whether it's
Speaker 1: in leisure, hospitality, the service society, the economy where they're
Speaker 1: still isn't that visibility or based knowledge yet of the
Speaker 1: reopening is going to look like that's still a prospective thing.
Speaker 1: I think on the good side of the economy, I
Speaker 1: do worry that estimate bar may have gotten up a
Speaker 1: little bit. I think the whole pent up demand story
Speaker 1: which has been driving optimism, I think is more valid
Speaker 1: on the services side of the economy than it is
Speaker 1: on the good side of the economy. Pretty much across
Speaker 1: the spectrum of durable goods, be it um, housing, autos,
Speaker 1: these cars, anything home improvement related electronics UM I actually
Speaker 1: think that there is a risk of pent down demand,
Speaker 1: not so much pent up demand, because we're well above
Speaker 1: pre pandemic levels in those segments. Of the the economy,
Speaker 1: and I think there's too much extrapolating of that strength
Speaker 1: in the past year out into the future. Is that
Speaker 1: one final question, what are we doing with our money?
Speaker 1: What does Schwab see that we're actually allocating out in
Speaker 1: four oh one case. You know, it's been interesting the
Speaker 1: flows lately. They've definitely taken on a little bit more
Speaker 1: of a defensive posture, at least at the subasset class level.
Speaker 1: So the flows into utility utilities are actually the strongest
Speaker 1: in the past months, which is quite extraordinary. And then
Speaker 1: prior hot areas like communications services and financials are on
Speaker 1: the lower end of the spectrum, but also at the
Speaker 1: broader asset class level, definitely seeing a pick up an
Speaker 1: interest outside the US, so positive flows in the map
Speaker 1: past month or so into parts of the rest of
Speaker 1: the world, particularly emerging markets, and actually a bit of
Speaker 1: outflows out of the domestic equity side. And we we've
Speaker 1: had an you know, and overweight on developed international um
Speaker 1: equities since the beginning of this year, and uh, we're
Speaker 1: seeing that in the flow data at least in the
Speaker 1: past month or two. It Sanders, thank you so much,
Speaker 1: Chief investment strategist of Charles Schwab Right now on our
Speaker 1: domestic politics in America. We look northeast of St. Louis
Speaker 1: to Cardinals Territory, moveing up southeast of Springfield, and then
Speaker 1: on up somewhere in the vicinity of Chicago. It is
Speaker 1: a narrow district, the thirteenth Congressional District of Illinois, and
Speaker 1: the Republican Rodney Davis joins us UH this morning, Congress
Speaker 1: from thank you so much for joining us. Do you
Speaker 1: need a six lane highway from Taylorville into Springfield? What
Speaker 1: are you gonna get out of the infrastructure bill? You
Speaker 1: know what, we already have four lanes between Taylorville and Springfield.
Speaker 1: It's great for for our community here in Grade, for
Speaker 1: central Illinois. UM. You know, I just hope we get
Speaker 1: some bipartisanship out of the infrastructure bill. That's what I'm
Speaker 1: hoping for. When we get by partisanship, we need to
Speaker 1: go to centrist Democrats who need to get reelected and
Speaker 1: centrist Republicans two cycles ago you barely won reelection this
Speaker 1: time around, granted you did better than ever. Are you
Speaker 1: a centrist Republican and what is the common ground you
Speaker 1: have with Senator Mansion of West Virginia. Well, I am
Speaker 1: listed as the thirteenth most bipartisan member of the House
Speaker 1: according to the Luger Center Senator Mansion. He's showed that
Speaker 1: he can be a force in the Senate. The problem
Speaker 1: we have right now with this infrastructure package and bipartisanship
Speaker 1: was the message that Ranking Member Sam Graves and I
Speaker 1: and a small group of Republicans sent directly to the President,
Speaker 1: to the Vice President, to Secretary BUDDA. Jedge in the
Speaker 1: Oval Office a few weeks ago, that we need by partisanship.
Speaker 1: I just don't think Speaker Pelosi and Leader Schumer are
Speaker 1: going to allow the administration to go that route. Though, Congressman,
Speaker 1: giving your experience on the Committee UH for Transportation Infrastructure,
Speaker 1: Roads and Bridges, this is your purview. What does a
Speaker 1: bipartisan bill, a true bipartisan pill that could pass look like?
Speaker 1: How big is it and what does it focus on? Well,
Speaker 1: I don't like to get into debates about how much
Speaker 1: something could cost. Let's actually dedicate a bill towards rebuilding
Speaker 1: our roads and our bridges, our waterways, our airports are
Speaker 1: locks and dams. If we can do that, you will
Speaker 1: have Republicans crawling all over each other to support a
Speaker 1: bill that The problem we're going to have, though, is,
Speaker 1: I believe this infrastructure proposal is going to be nothing
Speaker 1: more than the Green New Deal disguised under a convenient
Speaker 1: infrastructure title that will dedicate a small amount towards Rhodes bridges, waterways, etcetera.
Speaker 1: It's very frustrating. You see in the proposal the administration
Speaker 1: wants to spend fifty billion dollars to stand up another
Speaker 1: agency within the Department of Commerce and forty two billion
Speaker 1: for all of the locks and dams, all of the waterways,
Speaker 1: all of the ports and even airports in this country.
Speaker 1: That's not a proposal, the congressman putting aside this particular proposal.
Speaker 1: Let's say there was a bipartisan agreement on the infrastructure
Speaker 1: plans that you thought were necessary, and let's say it
Speaker 1: was a pretty expensive plan, would you support raising corporate
Speaker 1: taxes in order to pay for it? Not at all.
Speaker 1: I think opening up the income tax code UH to
Speaker 1: pay for infrastructure is the wrong way to go. UH.
Speaker 1: There's a lot of talk from Secretary Buddha Jedge and
Speaker 1: others who I had We've already enjoyed a good working
Speaker 1: relationship with the Secretary Um talking about jobs being created
Speaker 1: with this package, I want to know how many jobs
Speaker 1: are going to be cost in the small businesses that
Speaker 1: are going to have to pay more in taxes coming
Speaker 1: out of a pandemic. That's the last thing we should
Speaker 1: be doing. Corson Davis, I'm sure that you wanted the
Speaker 1: All Star Game to be held under the stadium there
Speaker 1: in the shadow of Stan Museal and St. Louis Cardinals
Speaker 1: that went to the Rockies. I understand that, but it's
Speaker 1: the why the move of the All Star Game. On
Speaker 1: this debate in Georgia over the Voting Rights Act and
Speaker 1: what Georgia will do about its elections, common please on
Speaker 1: what the Republican response should be to find fairer elections. Well,
Speaker 1: first of all, I just wish some in in corporate
Speaker 1: America would have read the bill in Georgia and would
Speaker 1: have seen the expansion of access to voting for all Georgians.
Speaker 1: We had problems in Fulton County run by Democrats where
Speaker 1: they had lines out the door. Um. This bill would
Speaker 1: open more precincts, and those are the types of issues
Speaker 1: that I certainly hope Corporate America stays off a Twitter
Speaker 1: and starts actually looking at legislation. My biggest fear is
Speaker 1: that Democrats are going to try and act like HR
Speaker 1: one that passed only with a partisan roll call, and
Speaker 1: the only bipartisan about it was the Democrat opposition joining
Speaker 1: all Republicans. I think they're going to try to turn
Speaker 1: that into the national version of George's reforms, and that
Speaker 1: bill would be a disaster Congress. From the Georgia distinction,
Speaker 1: as we're moving the decision process of elections from the
Speaker 1: Secretary of State of Georgia and the executive branch over
Speaker 1: to legislative control, legislative controls and ancient art form and
Speaker 1: your state of Illinois, is that the trap we have
Speaker 1: and that our voting processes become a legislative process and
Speaker 1: not that of the executive branch. Well, we need to
Speaker 1: make sure that our states and our localities have control
Speaker 1: over their elections as the Constitution puts forth. The Bocrats
Speaker 1: have tried now for two Congresses, and I've led the
Speaker 1: fight in introducing HR one, which would nuclear rise and
Speaker 1: expand expand procedures like ballot harvesting that have already been
Speaker 1: corrupted with fraud. We didn't seat an elected Republican in
Speaker 1: North Carolina's ninth district in because one of his operatives
Speaker 1: used a fraudulent process by trying to create a ballot
Speaker 1: harvesting process in that district. And the unfortunate thing is
Speaker 1: he'll likely go to jail because of that. But if
Speaker 1: he was in California, what he did would have been
Speaker 1: perfectly legal, and that's wrong. Those are the types of
Speaker 1: policies that Democrats in Washington are trying to push forth.
Speaker 1: Also there to add seven point two million dollars in
Speaker 1: public money to their own campaigns. And I don't want
Speaker 1: HR one to become the next rally and cry because
Speaker 1: it is not a voting rights bill at all. Congressman,
Speaker 1: part of what I'm caring for you has heard of
Speaker 1: this decrying of an attempted by partisanship that absolutely fizzles.
Speaker 1: Is now very much a democratic effort in the House
Speaker 1: and on the presidency. But a lot of people say
Speaker 1: that they just learned from prior administrations, including the Obama administration,
Speaker 1: that tried to do something on a bipartisanship level and
Speaker 1: didn't get anything done. Just quickly, what's your response to
Speaker 1: that on on infrastructure? Because they failed miserably and what
Speaker 1: they proposed. You can't come up with a piece of
Speaker 1: legislation that you know was only going to appease one
Speaker 1: side and say take it or leave it. Look at
Speaker 1: the last time we had a non reauthorization infrastructure package
Speaker 1: that was under the Obama administration with the Obama Era
Speaker 1: Area Era stimulus bill called ARA. That bill had about
Speaker 1: six percent of the funding dedicated towards infrastructure. Even the
Speaker 1: current Democrat Chair of the Transportation Infrastructure Committee, Peter Defacio,
Speaker 1: voted against that bill because it wasn't enough infrastructure. I
Speaker 1: see Democrats going down that exact same path. The proposal
Speaker 1: they laid for is woefully underfunded when it comes to
Speaker 1: rebuilding our roads and bridges, And if that's what's going
Speaker 1: to happen, they're going to negotiate with the far left
Speaker 1: of their party and it's only going to get worse
Speaker 1: for jobs. Rodney Davis, that is the largest backyard I've
Speaker 1: seen and I think thirty years. I hope the kid
Speaker 1: that's mowing that lawn is not using a push mower.
Speaker 1: They're out on the John Dere golf cart or whatever
Speaker 1: pushing it around. Rodney Davis, Thank you so much to
Speaker 1: Congressman from the thirteenth District in Illinois right now and
Speaker 1: to focus on China with Stephen Roach of Yale University,
Speaker 1: his book The Next Asia, years and years ago set
Speaker 1: the tone for essays on China. He followed it up
Speaker 1: with an important book on the dysfunction UH that we
Speaker 1: have with China. And right now, folks, it is a
Speaker 1: new UH dysfunction. Steven Stephen Roun tell me about the
Speaker 1: new codependency of China with China and AMERRAA Is it
Speaker 1: the same as the old codependency? Well, the thing we
Speaker 1: know about codependency tom UM, whether it's human relationships or
Speaker 1: economic relationships UH, is it's never constant. It reflects the
Speaker 1: tension that builds between interpersonal in this case bilateral UH
Speaker 1: partners in UH trade and economic commerce. And you know,
Speaker 1: China's changed its growth model. We're uncomfortable with that. We've
Speaker 1: raised a lot of other objections about China's behavior in
Speaker 1: areas like geostrategic strategy and human rights UH, and so
Speaker 1: we've taken a unilateral trade action against them and the
Speaker 1: Trump administration. And what my fear is, and I wrote
Speaker 1: about this recently, is that by not changing from Trump's
Speaker 1: policy UM President Biden's administration has been boxed in by
Speaker 1: UH really venomous politics and is afraid to break out
Speaker 1: and try a new approach. And we need a new
Speaker 1: approach or this relationship we're going to go from add
Speaker 1: to worst. Your US saying Project Syndicate was exceptionally important.
Speaker 1: I want to expand it from boxed in with China
Speaker 1: to take off your book of years ago, boxed in
Speaker 1: of the next Asia and the idea that it's not
Speaker 1: just about China, but it's about the Pacific room as well.
Speaker 1: To use a phrase from President Obama, what should be
Speaker 1: the pivot in strategy of the Biden administration. Well, the
Speaker 1: pivot was a part of the problem because it was
Speaker 1: clearly aimed back in the Biden ad excuse me, the
Speaker 1: Obama administration of putting a lot of pressure on China,
Speaker 1: excluding China from what then was called t P p
Speaker 1: UH and UM. That really pushed China to take a
Speaker 1: lot of I think destabilizing actions of its own UH
Speaker 1: in the South China see in the Belt and Road initiative,
Speaker 1: and that then culminated in the trade war that we're
Speaker 1: now trying to find a way out of after four
Speaker 1: years of disaster. And the Trump administration. Professor Roach, do
Speaker 1: you think that the infrastructure Plan as it's laid out
Speaker 1: as a way to increase some of the capacity of
Speaker 1: tech sectors and the five G willed out in the
Speaker 1: United States is an effective way to engage in this
Speaker 1: codependency that you talk about, perhaps get a little bit
Speaker 1: more independence for the United States. Well, we certainly need
Speaker 1: to upgrade our infrastructure. A lot of people have been
Speaker 1: talking about that that for a number of years. I
Speaker 1: have to give the the creative side of the Biden
Speaker 1: administration a lot of credit for expanding infrastructure into areas
Speaker 1: that we never considered it at all under the general
Speaker 1: elk of what is infrastructure? But you know, the question arises,
Speaker 1: and you've debated on the show, is as noble as
Speaker 1: the objectives are. Is anybody giving much consideration to how
Speaker 1: we pay for this? I mean, with interest rates at
Speaker 1: zero right now, you can do anything you want, including um, uh,
Speaker 1: not just infrastructure, but uh all sorts of massive social programs.
Speaker 1: But what happens if and when interest rates start to
Speaker 1: go back normal? And uh, that's the unanswered question right
Speaker 1: now and is to be Steve. All of our listeners
Speaker 1: and viewers want to know what you think about asset
Speaker 1: bubble inflation. You were definitive on this at Morgan Stanley
Speaker 1: years ago of saying there's mandates of the FED, and
Speaker 1: one is to monitor asset bubbles. Is the FED monitoring
Speaker 1: an asset bubble right now? Well, it's certainly monitoring it,
Speaker 1: but it's also doing a great job in creating it. Um.
Speaker 1: And so you've got uh, the combination of zero interest rates,
Speaker 1: massive liquidity injections uh spilling over into financial markets. And
Speaker 1: you know, you guys reported you know on your show
Speaker 1: every day from um you know, SPACs um to UM
Speaker 1: bitcoin uh two. And now we have I guess a
Speaker 1: lot of froth in housing markets. This has all the
Speaker 1: classic manifestations of a very frothy environment. And you know,
Speaker 1: the FED is basically um uh talking out of both
Speaker 1: sides of its mouth. It was worried about asset bubbles,
Speaker 1: yet it is responsible for creating the conditions that are
Speaker 1: creating these bubbles. At the same time, although you will
Speaker 1: some people have said that the FED policies and some
Speaker 1: of the fiscal spending that we've seen will lead to
Speaker 1: a very depreciated dollar, one that is highly below where
Speaker 1: it is currently. That leads to some sort of inflationary
Speaker 1: push that is really detrimental to the country. We have
Speaker 1: seen the opposite this year, as we've seen the growth
Speaker 1: that has stemmed from some of these policies. Do you
Speaker 1: think that this is short lived and that we will
Speaker 1: continue to see a tremendous dollar weakening or do you
Speaker 1: think that this highlights the potential success of some of
Speaker 1: these programs. Now, I've been one of the ones who
Speaker 1: have been outspoken about the downward pressures coming on a
Speaker 1: dollar at lisa UM. You know, it was a call
Speaker 1: that was out of consensus in the second half of
Speaker 1: last year, and it worked and it's not working uh
Speaker 1: so far in two thousand twenty one. But I think
Speaker 1: the combination of plunging domestics saving a massive current account
Speaker 1: deficit a fad that would normally respond to those um
Speaker 1: developments by tightening policy, but won't uh that that's going
Speaker 1: to continue to put further sharp downward pressure on the dollar.
Speaker 1: It's not working now, but I suspe will as we
Speaker 1: moved through the year. Stephen Rhodes, thank you so much
Speaker 1: with Yale University, and of course Steven wrote some would
Speaker 1: say in helping with that Hyman to invent modern market economics.
Speaker 1: Morgan Stanley. This is the Bloomberg Surveillance Podcast. Thanks for listening.
Speaker 1: Join us live weekdays from seven to ten am Eastern
Speaker 1: on Bloomberg Radio and on Bloomberg Television each day from
Speaker 1: six to nine am for insight from the best in economics, finance, investment,
Speaker 1: and international relations. And subscribe to the Surveillance podcast on
Speaker 1: Apple podcast, SoundCloud, Bloomberg dot com, and of course on
Speaker 1: the terminal. I'm Tom Keene and this is Bloomberg