Speaker 1: Yeah, Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene
Speaker 1: Jay Ley. We bring you insight from the best in economics, finance, investment,
Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud,
Speaker 1: Bloomberg dot Com, and of course, on the Bloomberg John
Speaker 1: nominal yield versus a rising five year five year break
Speaker 1: even gives you a substantial real yield at negative point nine.
Speaker 1: Even with that lift penomenal yields, we've still got a
Speaker 1: substantial negative real yield. Let's continue the conversation with Mona
Speaker 1: John Alliance Global Investors US investment strategist. She joins us. Now, Monor,
Speaker 1: if you disappeared from the market for the last ten
Speaker 1: years and heard us talk about a breakout in tray
Speaker 1: sury yields of eighty basis points, I think you'd wonder
Speaker 1: what planet you've just landed on? Minority basis poicte. When
Speaker 1: can we get a real move on? You know, interestingly,
Speaker 1: from a percentage perspective, this was a pretty real move.
Speaker 1: You know, we're now off the lows of forty six
Speaker 1: basis points from this crisis back up to eighty. What
Speaker 1: we're seeing the markets is pretty consistent here we talked
Speaker 1: about weaker dollar, higher treasury yields, higher gold crisis. This
Speaker 1: is a market that's thinking at some point stimulus is
Speaker 1: going to happen, and also perhaps starting to price in
Speaker 1: over the last few weeks this democratic sweep idea, where
Speaker 1: where in that scenario you do also get more stimulus
Speaker 1: but also more spending. So it does feel like we're
Speaker 1: on a trajectory. To Lisa's point earlier, how high can
Speaker 1: it go? We may not get much more movement from
Speaker 1: these levels until we see actual As Efen says, eyes
Speaker 1: of inflation MONA. Part of this is the glide path
Speaker 1: involved with your computer science background. It's real simple. At
Speaker 1: some point there's a kink, at some point, there's a
Speaker 1: jump condition. Where is that on a ten year yield?
Speaker 1: Is it near year or is it surprisingly much higher? Yeah,
Speaker 1: you know, we think over time, if if inflation is
Speaker 1: in the one and a half to two percent range, uh,
Speaker 1: real GDP growth in the US also probably at some
Speaker 1: point one and a half two percent, as the actual
Speaker 1: GDP growth yields should also at some point be in
Speaker 1: that one and a half to two percent range. Now,
Speaker 1: of course, we're now emerging from a very deep crisis. Uh,
Speaker 1: we don't think that type of level happens in the
Speaker 1: next twelve months or so. But recording the ingredients together
Speaker 1: certainly for an inflationary environment, or at least for pick
Speaker 1: up in inflation expectations. We're keeping rates low, We're adding
Speaker 1: Huey to the system. Growth may be accelerating next year,
Speaker 1: especially if we get those vaccines, especially if we continue
Speaker 1: to get stimulus and investment into the economy, and so
Speaker 1: we are certainly setting up for that pick up in inflation,
Speaker 1: which would lead to a pickup in those yields back
Speaker 1: to more normal levels. Okay, so pick up in those yields.
Speaker 1: In the meantime, there are a lot of people saying
Speaker 1: the reason why yields are rising is because of supply,
Speaker 1: because of the stimulus, because the US will have to
Speaker 1: sell trillions and trillions of additional treasuries. Is that the
Speaker 1: real story here? I'm looking at the total value of
Speaker 1: negative yielding debt globally. It is close to the all
Speaker 1: time high of seventeen trillion dollars. Where else are investors
Speaker 1: going to go for yield other than the United States? Yeah,
Speaker 1: I mean absolutely that that's part of the story. As well.
Speaker 1: And you know, keep in mind, our yield even here
Speaker 1: at eight basis points compared to Europe, Japan, across the globe,
Speaker 1: still relatively fairly attractive. And of course this year in particular,
Speaker 1: treasury bonds have been one of the best performing asset classes,
Speaker 1: not only within fixed income but really across the board,
Speaker 1: especially since that March twenty three low. So clearly there
Speaker 1: is this light to safety, but also this hunt for income.
Speaker 1: But to your other, you know, other point of your question,
Speaker 1: where do people go, Well, they're also looking beyond the
Speaker 1: fixed income market. Clearly there there's been this push for
Speaker 1: investors to to go out the risk spectrum. We're seeing
Speaker 1: that clearly in the US equity markets now more a
Speaker 1: little bit global em but also in parts of higher
Speaker 1: higher risk fixed income as well credit markets UH in
Speaker 1: high yield as well as parts of investment grade. This
Speaker 1: is a familiar conversation for money. The reflation story that
Speaker 1: you described just moments ago, folt that into the equity market,
Speaker 1: and the much talked about rotation that has really alluded
Speaker 1: us over the last couple of months. Yeah, you know,
Speaker 1: that's really the key question here. Will we get over
Speaker 1: the next twelve month period. This much anticipated and much
Speaker 1: alluded over the last ten years rotation into this value
Speaker 1: cyclical trade. Um clearly, and when we looked historically over
Speaker 1: the last ten years, there have been approximately four instances
Speaker 1: where value cyclicals have led in a more sustained way,
Speaker 1: and in that time period usually they're leading for six
Speaker 1: to twelve month period. Over that those four instances, UM,
Speaker 1: we think we could be set up over the next
Speaker 1: twelve month period for another leadership in value cyclicals. And
Speaker 1: of course, um that would be in the scenario where
Speaker 1: we get the vaccines in the latter half of this year.
Speaker 1: Of course, it takes some time to manufacture and distribute,
Speaker 1: but markets will start pricing that in sooner. Of course,
Speaker 1: we'll get that re acceleration hopefully in growth not only
Speaker 1: in the US but globally, and so in that backdrop,
Speaker 1: combined with ongoing low rates and ongoing stimulus, we do
Speaker 1: see a potential for that value cyclogal trade to re emerge,
Speaker 1: and so we think investors should layer that in over
Speaker 1: the next you know, when they get the opportunity over
Speaker 1: the next few weeks. There all these t las out here.
Speaker 1: There was Proctor and Gamble the other day and right
Speaker 1: now there's Nestle coming out and once again organic revenue growth.
Speaker 1: You know, it's not a big deal, but it's just
Speaker 1: simply better than the gloom that's out there. Is that
Speaker 1: the major call for the next two or three years
Speaker 1: that were you know, with the shock of the pandemic
Speaker 1: and the agony of the pandemic. Manchester shutdown is just
Speaker 1: one example. Are we completely misjudging the ability of these
Speaker 1: companies to adjust and to adapt. Yeah, you know, it's interesting.
Speaker 1: I think, uh, last quarter, our second quarter, we certainly
Speaker 1: got a lot of that as well. You know, the
Speaker 1: expectation was, you know, something for a negative decline and
Speaker 1: we came out you know, negative or so, so there
Speaker 1: was a huge lowering of the bar in terms of expectations,
Speaker 1: and there was a nice beat. You know, historically companies
Speaker 1: aren't known to do that keep the bar low, but
Speaker 1: that the percentage of beat was much more substantial than
Speaker 1: we've seen in the past. That could be the trend
Speaker 1: over the next couple of quarters, although we will say,
Speaker 1: you know, over time that probably goes back to more
Speaker 1: historic averages where it's a three to five percent beat
Speaker 1: on average. But to your point, I do think that
Speaker 1: that in many cases. You know, companies have performed much
Speaker 1: better in this crisis than we've seen in the past,
Speaker 1: and partly that's because we've become a more digital, more
Speaker 1: online economy. You know, this acceleration to a more stay
Speaker 1: at home world has really benefited certain companies and really
Speaker 1: has helped a lot of companies across the board. And
Speaker 1: so I do think, uh, the ability for consumers to
Speaker 1: buy online and to to show demand in that way
Speaker 1: has helped. And so we do think this quarter will
Speaker 1: certainly see a nice feed as well, and over time
Speaker 1: it will be more normalized, but we see the ability
Speaker 1: for companies to rebound nicely over the next twelve months. Mana,
Speaker 1: thank you. Always great to catch you up. Thank you
Speaker 1: very much, thank you. This is the interview of the day.
Speaker 1: Unfixed Income. Kevin get Us is with Raymond James and
Speaker 1: critically important. He comes off a trading platform where he
Speaker 1: understands suddenly the bid slips away in fixed income, Kevin
Speaker 1: get Us is the bids slipping away on price in
Speaker 1: full faith and credit. Well, you know, Tom, we're finally
Speaker 1: starting to see this. I you know, a week ago
Speaker 1: I would have said probably not, but we are starting
Speaker 1: to see this period, uh, closer and closer to the election,
Speaker 1: especially if we get this blue way where I talked about,
Speaker 1: because you know, I have these kind of nightmarish feelings
Speaker 1: of two thousands team after the elections. If you're a
Speaker 1: bond guy, you did not expect the outcome and you
Speaker 1: did not expect the price action after the election. So
Speaker 1: I think the bond market and the treasury market in
Speaker 1: particular is underestimating the fact that if you got this
Speaker 1: blue wave or a complete suite, what might occur after
Speaker 1: that and why interest rates are are likely to go
Speaker 1: higher not lower should that occur. So you know, higher spending,
Speaker 1: more taxes, um, increased growth, and growth tends to have
Speaker 1: a friend. Uh it's called inflation. And if all of
Speaker 1: those hit the mark, then yes, rate moves would be
Speaker 1: fairly significant, especially in the ten year and thirty year
Speaker 1: out for the balance of the year. So at one
Speaker 1: pm today, Tom Keene is going to be closely watching
Speaker 1: the twenty year auction of treasuries. I know he watches
Speaker 1: every auction very carefully. Is this a supplies story in
Speaker 1: terms of higher yields going forward or is it, as
Speaker 1: you said, a growth and inflation story. Well, I think
Speaker 1: from a rate movie would be a growth and inflation story.
Speaker 1: We really have a had a problem selling our debt,
Speaker 1: and you guys have mentioned it earlier in the show
Speaker 1: about negative yields in particular, and you look across the globe,
Speaker 1: where are the opportunities. There still is a great opportunity
Speaker 1: and treasuries, especially in the long end of the market,
Speaker 1: but that the door is starting to close. And the
Speaker 1: only way it does close is if we get a
Speaker 1: blue wave, if we get whatever they call it blue
Speaker 1: tied or whatever you want to call where you still
Speaker 1: Republicans control the Senate, and even if you got a
Speaker 1: Democrat or a Republican in the White House, the rates
Speaker 1: aren't going to move that much. I think we're gonna
Speaker 1: be you know, we know what red luck looks like.
Speaker 1: But if you get a kind of a clean suite um,
Speaker 1: I think the treasury market would have to catch up fast,
Speaker 1: which was you know, higher rates across the board. But
Speaker 1: I don't think it hurts financing right now, Kevin, you
Speaker 1: mentioned and it wasn't just the political event that was
Speaker 1: unexpected for money. It was the outcome of that political event.
Speaker 1: The people missed what the red wave would mean for markets,
Speaker 1: what do you think people are missing right now? Kevin
Speaker 1: be specific. We know the consensus people think of blue wave. Increasingly,
Speaker 1: the probability is lifted over the last couple of months.
Speaker 1: What is the I think people are missing about what
Speaker 1: that means. Yeah, the part that they're missing is the
Speaker 1: inflation part of the occurrence um two thousand and sixteen.
Speaker 1: If you remember, we went from a one eight ten
Speaker 1: year the day before the election to it almost a
Speaker 1: two fifty by the end of the year on the
Speaker 1: expectation of deregulation and tax cuts and growth, and that
Speaker 1: what was anticipated was that inflation component that really never came.
Speaker 1: We did see it when the when the GDP peaked
Speaker 1: in the first quarter of two thousand and eighteen, and
Speaker 1: then inflation reach its highest point in May of two
Speaker 1: thousand and eighteen. The point of this is now is
Speaker 1: they're not thinking about it in the ways that you
Speaker 1: would normally think about it. Is that growth will bring
Speaker 1: that inflation at some point in time. It may not
Speaker 1: be in the next few months, but the bond market
Speaker 1: tends to try to get out in front of any uncertainty,
Speaker 1: and I think we're starting to see that now. I
Speaker 1: think we'll see it for the next few months through
Speaker 1: the election. So, Kevin, how would you push this view?
Speaker 1: Three fixed income? Right now? What's the miss price? Do
Speaker 1: you want to take advantage of it? You know, Johnathon,
Speaker 1: it's really still hard to find. But one of the
Speaker 1: things that are really good in either way this goes
Speaker 1: the at tax free mini market is likely going to
Speaker 1: gain if if the prospect of higher taxes is going
Speaker 1: to support that market. Uh an uncertain or continued environment
Speaker 1: is probably gonna support that market. We're still at a
Speaker 1: hundred uh a tax free yields to the ten year
Speaker 1: versus where we were at seventy in the pre crisis period.
Speaker 1: So I still think um that even though a lot
Speaker 1: of state county Missibal credits are coming to market now,
Speaker 1: there is value in the mini market now, no matter
Speaker 1: who takes the White House and who actually owns the Congress. Kevin,
Speaker 1: long agoing far away, we had a Monroe trader where
Speaker 1: we could enjoy price declines. You and I have hallways
Speaker 1: of people that say the bond market never has a
Speaker 1: bear market. Can you model out a bear market to
Speaker 1: come price down and yield up off of my Monroe
Speaker 1: trader calculations? I always said that when my Monroe trader
Speaker 1: stopped working. It was the end of my career, so
Speaker 1: I still have a couple of around Kevin, that's when
Speaker 1: you bought a Bloomberg Thank you and Mike, thank you.
Speaker 1: This morning. Are we uping for a bear market in bonds?
Speaker 1: So we have a potential for it, tom But really
Speaker 1: the only way we're going to see a bear market
Speaker 1: in bonds is if we see this big blue wave
Speaker 1: occur at election time. In my opinion, and the rest
Speaker 1: of it looks like um, we will get increased stimulus
Speaker 1: at some point in time. We we think that maybe
Speaker 1: inflationary somewhere down the road. We're still making up a
Speaker 1: lot of ground from what's happened during the pandemic, and
Speaker 1: we still have the pandemic to deal with. So I
Speaker 1: don't think it's extremely bearish unless we get this scenario
Speaker 1: play out in a blue wave after the election. So
Speaker 1: the reflation trade that you're talking about, this idea of
Speaker 1: higher growth has lit a lot of people to feel
Speaker 1: safe or safer going into the riskiest bonds. And this
Speaker 1: morning I was looking at the spreads, the extra yields
Speaker 1: that investors demand to own the riskiest junk bonds over
Speaker 1: benchmark rates. It is contracted back to February levels. We
Speaker 1: are treating about the average of last year. It is
Speaker 1: as if the pandemic did not happen. Is this market
Speaker 1: right that we are not going to necessarily get an
Speaker 1: escalating default cycle? Is that what this market is saying
Speaker 1: or is it saying something else? Well, at least it's
Speaker 1: saying that, but I'm not sure it fully realizes that
Speaker 1: that may not occur. So I think, as you point out,
Speaker 1: I mean, we are almost to the to the pre
Speaker 1: crisis spread levels, and certainly high grade in I G
Speaker 1: corporate debt, and almost there again on high yield in particular,
Speaker 1: and that's a sector I would be very very careful
Speaker 1: with right now, because you know, to over the tens
Speaker 1: for high yield is not enough of a cushion for
Speaker 1: me based on where I think we're headed. So I think,
Speaker 1: even even so, let's say nothing happens or nothing changes,
Speaker 1: you know, less than three hundred for high yield is
Speaker 1: expensive purchase for a portfolio. From me, I still would
Speaker 1: favor uh I G debt, but realize you're gonna get
Speaker 1: it at less than a hundred basis points. You have
Speaker 1: to be happy with that. So even if we get
Speaker 1: higher yields, spreads would tend to contract even further, but
Speaker 1: you would get paid to high yield versus uh where
Speaker 1: the treasury is now. So I just think that that
Speaker 1: it's an expensive opportunity to take on that additional risk
Speaker 1: and fixed income. Kevin, you live and break this world.
Speaker 1: I just wanted from the conversations you've been having over
Speaker 1: the last few months, the senses a little bit too
Speaker 1: much confidence in credit because of the fedback stop. Yeah,
Speaker 1: there it really is. John. I think that there's a
Speaker 1: point here where, um, we're gonna see a lot more
Speaker 1: bankruptcies because they just have to occur. If especially if
Speaker 1: you don't get stimulus within this calendar year. Uh, that
Speaker 1: is going to have an effect on credits themselves. But
Speaker 1: the offsetting opportunity, and you're seeing this a lot, even
Speaker 1: high yield companies, even the state of Illinois are coming
Speaker 1: in and refinancing. They're debt at much lower yields, building
Speaker 1: cash positions, and they may you this, uh, they may
Speaker 1: be able to ride the storm out without seeing as
Speaker 1: many bankruptcy somewhere expecting. On Bloomberg Radio, on Bloomberg Television,
Speaker 1: Kevin get us with us, and for those of you
Speaker 1: on radio, one of the cool things that Kevin get
Speaker 1: us is the Cincinnati Reds memorabilia behind him, its shape
Speaker 1: get us, Kevin get us. We just lost Joe Morgan.
Speaker 1: Bill James says Joe Morrigan was better than the giant
Speaker 1: Rogers hornsby what did Joe Morrigan mean to your Cincinnati Reds? Well,
Speaker 1: if you remember, and it goes way back, we got him,
Speaker 1: got him from the Houston Astros at that time, and
Speaker 1: it really filled the void, especially hit on second base
Speaker 1: um for the Reds and the big Red machinet at
Speaker 1: that time. So the impact that Joe Morgan had on
Speaker 1: both the organization and afterwards was long lasting. And we
Speaker 1: we were fortunate that he associates to himself or he
Speaker 1: did associate himself with the Reds versus the Astros. Kevin,
Speaker 1: just the final question from me, just to end on
Speaker 1: a more positive note, can you give us a review
Speaker 1: of what you would think of apply like Mookie Batts
Speaker 1: and why a team like the Red Sox would would
Speaker 1: let him go. He's killing me, Kevin Well, I would
Speaker 1: become by default a bigger Dodgers fan that I would admit.
Speaker 1: And I'm just happy that they have Mooky Betts, like
Speaker 1: cut this guy back before the Reds won a title
Speaker 1: in ninety. The Dodgers haven't won one since eight, so
Speaker 1: they've actually been suffering along with us, even though so
Speaker 1: you're telling me, Mookie Bets, is that Joe Morgan of
Speaker 1: the Dodgers. That's what you're saying. Kevin, well for a
Speaker 1: very short period of time. It will let that play
Speaker 1: out over a number of years. Oh, we will thank you, Kevin.
Speaker 1: Get us the Ryman Jacks. Beautiful. This is a joy,
Speaker 1: particularly thirteen days out in the middle of this historic election.
Speaker 1: Wendy Schiller is at Brown University, and it's too modest
Speaker 1: to mention that she is part of the new fifth
Speaker 1: edition of the Great Definitive of Gateways to Democracy. It
Speaker 1: is without question the one volume seven under page thrown
Speaker 1: at the kids and say shut up and read a
Speaker 1: textbook on this American politics. And we're thrilled she could
Speaker 1: join us today from Brown in the fifth edition, Wendy,
Speaker 1: or maybe in the sixth edition to come. You have
Speaker 1: to write about mail in voting. What will you say? Well,
Speaker 1: the world changed for American elections, right, we have close
Speaker 1: to eighty three million people have asked for mail in ballots.
Speaker 1: It's about, you know, at least one third more than
Speaker 1: in previous elections. And they're returning them. And guess what
Speaker 1: they're getting to the boards of elections. They're getting registered,
Speaker 1: they're getting verified, and they're getting counted. So the big
Speaker 1: crisis of that has not yet emerged in what we're seeing.
Speaker 1: And at least thirty seven million of those votes have
Speaker 1: already been cast at both in person and by mail.
Speaker 1: This changes everything about how we vote. It will probably
Speaker 1: lead to a higher vote turnout this year and in
Speaker 1: subsequent years, and it makes for a more engaged public.
Speaker 1: From a business educational political standpoint, you want people to
Speaker 1: be engaged. If you don't want your tax dollars wasted.
Speaker 1: You want people to be engaged. If they can vote
Speaker 1: more easily, they'll be more engaged. So I think this
Speaker 1: is a big factor coming out of One of the
Speaker 1: problems is you had a Brown PhD student a couple
Speaker 1: of years ago who wrote four hundred pages on Mayor
Speaker 1: Daily JFK stealing the election. How do we get away
Speaker 1: from that thinking? Well, I mean the thinking that people
Speaker 1: will steal it. I think that's a hard thing, right,
Speaker 1: That's been ingrained, as you well know, because you know
Speaker 1: your history. Ever since we basically started with these sort
Speaker 1: of protected elections called the Australian ballot in about the
Speaker 1: eighteen eighties, everybody's been worried about that. But so far
Speaker 1: you have a lot of county boards, both Republican Democrat
Speaker 1: areas of the country that aren't counting votes and aren't
Speaker 1: losing them yet. So we have to go through that now.
Speaker 1: Whether you reject about because the signature isn't right or
Speaker 1: something's wrong with it, that's really locally controlled and that
Speaker 1: will be the point of contention if this turns out
Speaker 1: to be a close race, Wendy, given the success of
Speaker 1: mail in ballots, is there any talk about shifting to
Speaker 1: I don't know, an electronic method of voting. Considering that
Speaker 1: we are in and the world is digital, we said,
Speaker 1: that's a great question. But I think there's still some
Speaker 1: big distrust about hacking, particularly since that's made a big
Speaker 1: focal point in terms of the Russian hacking, the Chinese hacking,
Speaker 1: American hacking. You know, thinking about hacking and machines, people
Speaker 1: are still worried about that. I don't know if American
Speaker 1: voters are are interested in trusting that to the point
Speaker 1: of giving up this sort of ritual of filling out
Speaker 1: a ballot and and handing in and signing it and
Speaker 1: showing identification. I'm not sure anyone's willing to move there,
Speaker 1: you know, in the next decade. But I think that
Speaker 1: just the fact that we we get more engaged, just
Speaker 1: the fact that we realize it should be easy to vote,
Speaker 1: that's a huge difference. And I think that comes out
Speaker 1: of a lot of discontent with the system on all
Speaker 1: sides of the political spectrum. You just want to run
Speaker 1: through these headlines coming from White House Chief of Staff
Speaker 1: moth Met, speaking of Fox News in the last couple
Speaker 1: of minutes, plans to talk to the Senate Republicans and
Speaker 1: Pelosi staff members on relief talk. Still a number of
Speaker 1: issues to work on, and the main issue, the biggest
Speaker 1: issue remains still state, local and government aid and Tom
Speaker 1: that has paen the issue. Yeah, that's your I think
Speaker 1: the last three hunts totally agree on John. I think
Speaker 1: Mr meadows Is is dead on Wendy Schiller. There it is,
Speaker 1: but it's just not Democrats, cities and government is a
Speaker 1: president of others paying it. Isn't it true that there
Speaker 1: are so called Republicans states and cities and towns that
Speaker 1: will be effective if they don't act. Of course, places
Speaker 1: like Ohio, Michigan, Pennsylvania, North Carolina, everybody's experienced in search.
Speaker 1: Everybody's had to spend a lot more money. Even educational
Speaker 1: systems have spend more money to reconfigure their classrooms. There's
Speaker 1: a tremendous amount of need across the country. But the
Speaker 1: cynical view in me says that McConnell's looking at he's
Speaker 1: looking at his people, has got a good year look
Speaker 1: at two for the Republicans. If they lose the Senate
Speaker 1: this year barely, they'll get it back, or they'll try
Speaker 1: to in two. If you add two more trillion dollars
Speaker 1: to the deficit, then you've got Republicans running on a
Speaker 1: four trillion dollar deficit, which isn't a good look for them.
Speaker 1: So I suspect he feels like he can forego this
Speaker 1: and start looking at two pretty much the day after
Speaker 1: election day. And that's to me why he's holding out.
Speaker 1: It's not just that he can't get the votes. I
Speaker 1: think he could. I think they think this is something
Speaker 1: they don't want to have to defend going into another
Speaker 1: election cycle where they could do well in Wendy. If
Speaker 1: they were to pass a fiscal support bill ahead of
Speaker 1: the election, would that make President Trump look good? Of course,
Speaker 1: the only president look goodly, So that's a really good point.
Speaker 1: It also makes us Pelosi look good and make Man
Speaker 1: you can look good, and McConnell if he if he relents,
Speaker 1: looks good. But to me, the checks don't go out
Speaker 1: with Trump's name on it, quote unquote a lot of
Speaker 1: its direct deposit. But that's a metaphor so getting credit
Speaker 1: for it. When now, by the end of the weekend,
Speaker 1: fifty to sixty million votes have already been cast, the
Speaker 1: marginal utility of this bill to Trump shrinks every that
Speaker 1: they wait, which is why Pelosi kind of fanaggled and
Speaker 1: sat on it installed knowing that so many votes will
Speaker 1: already been cast. I think she realizes he may get
Speaker 1: a bomb, but it's not gonna be as big as
Speaker 1: they got this bill done a month ago, when he
Speaker 1: just quickly and finally on the Senate. You said everybody
Speaker 1: would look good. Are there any candidates in the Senate
Speaker 1: that are worried about passing this bill because being a
Speaker 1: fiscal hawk is still attractive to a certain part of
Speaker 1: this electorate. Yeah, I think the bulk of the Republican
Speaker 1: goop Senate caucus, all of them, they don't want to
Speaker 1: get primary. They're always worried about primary. Even if the
Speaker 1: Trump factor goes away, if he loses, there's still going
Speaker 1: to be a primary because people realize you can upbend
Speaker 1: incumbents and primaries. We've been seeing that for about four
Speaker 1: to six years now in an active way. They're worried
Speaker 1: about getting primary on deficit spending. And so if McConnell's
Speaker 1: looking ahead, this is what he's most concerned about. This
Speaker 1: is why he's taking the gamble that it won't pay
Speaker 1: off for them. Now. The ones that are gonna lose
Speaker 1: are already gonna lose. Let's look forward too, when Sheila,
Speaker 1: thank you. Brown University Chair of Political Science, John McKay
Speaker 1: is just understood. Yes, Soul Wholefoods to Mr Bezos for
Speaker 1: more than a jillion dollars. But what he really did
Speaker 1: was completely invent a culture from safer way a zillion
Speaker 1: years ago, literally a vegan co op and I believe
Speaker 1: it was Austin off of ut He built it into
Speaker 1: a juggernaut that changed everything in food in America, David
Speaker 1: Rubinstein Peer to Peer Conversations Fourth Carlisle Group had the
Speaker 1: privilege of talking to this truly original executive. David, What
Speaker 1: did you learn original from John McKay. Well, he's a
Speaker 1: very contented person. Um, he is not as wealthy as
Speaker 1: somebody might think he would be from having started this
Speaker 1: incredible company. But he's wealthy by any normal human standards.
Speaker 1: But he doesn't care about money. Pretty really, Uh, this
Speaker 1: is his life. He he he doesn't He's married, but no children,
Speaker 1: and this company is a child And he likes to
Speaker 1: say he sewed off his daughter to the wealthiest man
Speaker 1: in the world. Well, he sold him off to Amazon.
Speaker 1: And you know, we all see the changes those of
Speaker 1: us that darkened uh doors of whole paycheck. But David,
Speaker 1: what is so important here are the processes he put
Speaker 1: in place around a core strategic belief. How did he
Speaker 1: do that? Well, he's a person who really believed in
Speaker 1: the value of organic and healthy foods, and so it
Speaker 1: was easy for him to promote that because he really
Speaker 1: truly believed it, and ultimately it turned out a lot
Speaker 1: of other Americans did as well. What he's done with Amazon, though,
Speaker 1: is Amazon has improved the technology dramatically that he would admit.
Speaker 1: And also during the COVID period, online sales have been
Speaker 1: much higher than they would have otherwise been. Um. He
Speaker 1: has said he's going to do this for a couple
Speaker 1: more years, but he doesn't know how much longer. He's
Speaker 1: a content person. Uh, you know, sometimes you get CEOs
Speaker 1: and founders are still not happy with their life and
Speaker 1: so forth. He's a very happy person. I think he
Speaker 1: spoke for all of us though, and he said that
Speaker 1: is the weirdest year of my life. Why did he
Speaker 1: say that, Well, because he's had to retool the entire company.
Speaker 1: It used to be that people came in for the
Speaker 1: shopping experience and walked in the aisles, and now they
Speaker 1: have to focus more on getting people to have pick
Speaker 1: up there because people don't want to walk in the
Speaker 1: aisle so much because of COVID. So he had to
Speaker 1: reinvent a bit the business. But still and he has
Speaker 1: more competition he used to have when he had virtually
Speaker 1: no competition. He said for the first twenty five years.
Speaker 1: He's been the CEO for forty two years, and for
Speaker 1: twenty five of those there wasn't that much competition. Now
Speaker 1: the major supermarkets are all having whole food kind of
Speaker 1: aisles and other kinds of organic food displays, and he
Speaker 1: has more competition than he ever had. There's a question
Speaker 1: about his contentedness with the sale to Amazon, especially in
Speaker 1: light of the increasing scrutiny around big tech and monopolies consolidation.
Speaker 1: Did he give an alternate view that was believable to
Speaker 1: you of the possible benefits to consolidation at a time
Speaker 1: when people are to pomoneing the concentration of wealth and
Speaker 1: market share among the biggest companies in America. Look, when
Speaker 1: you marry off, your daughter always saying is this person
Speaker 1: going to be good enough for your daughter? And so
Speaker 1: he's always saying, well, did I make the right decision?
Speaker 1: But in the end, I think he's content with it
Speaker 1: because Amazon has helped him in many ways. On the
Speaker 1: other hand, they've imposed some constraints that he might not
Speaker 1: be completely happy with. He would say he's ninety eight
Speaker 1: percent happy, David. David, It's widely understood that the panels
Speaker 1: you and I have done in Davos, you've always wanted
Speaker 1: a mute button to shut me up. We're gonna have
Speaker 1: a debate tomorrow night with some mute buttons. What is
Speaker 1: your prescription for your candidate, Vice President Biden to survive
Speaker 1: Thursday to get to the election. I don't have a candidate.
Speaker 1: I'm an independent, and I don't give money to either candidate,
Speaker 1: just to be clear. But on the other hand, I
Speaker 1: would say, um, I don't think the debate can change
Speaker 1: that many votes at this point. I'd be very surprised.
Speaker 1: I've been involved in debates over the years and they
Speaker 1: have marginal impact act and so unless somebody does something outrageous,
Speaker 1: I don't think it will have a big impact. So
Speaker 1: the main thing I think Biden has to do is
Speaker 1: just not make a mistake. And the thing that Trump
Speaker 1: has to do is not do the kind of things
Speaker 1: he did before. Whether you can do that or not,
Speaker 1: I don't know. The mute button will have some impact.
Speaker 1: But you know, you can talk over a mute button too,
Speaker 1: Go ahead, that's news to you. You can talk over
Speaker 1: the mutant button. That will be helpful. Go on. You know.
Speaker 1: I look, David, at this moment that we're in in
Speaker 1: a country moving forward, and part of it for so
Speaker 1: many people is the inefficiencies or harm of capitalism. Defend
Speaker 1: the system. Well, capitalism is the as Churchill would have said,
Speaker 1: in effect, the worst system of all except for all
Speaker 1: the others. So capitalism has a lot of income inequality
Speaker 1: that's built into it because the people the bottom don't
Speaker 1: do as well. On the other hand, it's created more
Speaker 1: wealth for more people around the world than any other
Speaker 1: economic system, so very few people are rushing to leave
Speaker 1: capitalist systems to go to communist systems social systems. The
Speaker 1: immigration in the United States is pretty heavy, the immigration
Speaker 1: is very modest. How the outcome of this election affect
Speaker 1: your investments, if at all we make a long term investment,
Speaker 1: So it's hard to say. In the end, I suspect
Speaker 1: that the economy will probably have some uh slow down
Speaker 1: period of time in the next year or two. It
Speaker 1: it's probably due for that. In the end, I don't
Speaker 1: think the tax policies are going to change all that
Speaker 1: much no matter who's president, because Congress is probably not
Speaker 1: going to move dramatically on things. I do think the
Speaker 1: most important factor right now over the next six months
Speaker 1: is having an economic stimulus package. Because it's clear that
Speaker 1: the last stimulus package is wearing off. We don't have
Speaker 1: a stimulus package the next couple of months. I think
Speaker 1: you'll see much higher unemployment rates and much lower growth rates.
Speaker 1: David Reubintson, thank you so much. Greatly appreciated an interview
Speaker 1: with John Mackie, the founder inventor of what we call
Speaker 1: whole housing in the organic as well. Thanks for listening
Speaker 1: to the Bloomberg Surveillance podcast. Subscribe and listen to interviews
Speaker 1: on Apple Podcasts, Soundclouds, or whichever podcast platform you prefer.
Speaker 1: I'm on Twitter at Tom Keane before the podcast. You
Speaker 1: can always catch us worldwide. I'm Bloomberg Radio