1 00:00:00,120 --> 00:00:02,920 Speaker 1: Brought you by Bank of America, Mary Lynch. Investing in 2 00:00:03,000 --> 00:00:07,840 Speaker 1: local communities, economies and a sustainable future. That's the power 3 00:00:08,080 --> 00:00:12,360 Speaker 1: of global connections, Mary Lynch, Pierce Fenner and Smith Incorporated 4 00:00:12,760 --> 00:00:26,400 Speaker 1: Member s I p C. Welcome to the Bloomberg Surveillance Podcast. 5 00:00:26,440 --> 00:00:29,920 Speaker 1: I'm Tom Keene with David Gura. Daily we bring you 6 00:00:29,960 --> 00:00:34,800 Speaker 1: insight from the best of economics, finance, investment, and international relations. 7 00:00:35,240 --> 00:00:40,760 Speaker 1: Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, Bloomberg dot Com, 8 00:00:40,800 --> 00:00:47,680 Speaker 1: and of course on the Bloomberg. Now let's begin with 9 00:00:47,720 --> 00:00:49,400 Speaker 1: Lord of Dair Turner. He's the former chairman of the 10 00:00:49,440 --> 00:00:52,320 Speaker 1: UK's Financial Services Authority, now the Chair of the Energy 11 00:00:52,520 --> 00:00:55,600 Speaker 1: Transitions Commission, out with a new report this morning called 12 00:00:55,640 --> 00:00:59,080 Speaker 1: Better Energy, Greater Prosperity, outlining how to have carbon emissions 13 00:00:59,120 --> 00:01:02,080 Speaker 1: here by the year twenty. Before we get into the 14 00:01:02,120 --> 00:01:04,480 Speaker 1: to the to the substance of the report, there has 15 00:01:04,520 --> 00:01:06,920 Speaker 1: been so much of a conversation coming out of Washington 16 00:01:07,000 --> 00:01:09,080 Speaker 1: about whether or not the present will uphold his end 17 00:01:09,120 --> 00:01:11,399 Speaker 1: of the Paris Climate Chord and and his end of 18 00:01:11,440 --> 00:01:13,720 Speaker 1: that that bargain, in particular, what power does he have? 19 00:01:13,800 --> 00:01:15,560 Speaker 1: How important is it for the US to sort of 20 00:01:15,600 --> 00:01:18,480 Speaker 1: stay with the promises its main well. I think it 21 00:01:18,480 --> 00:01:21,440 Speaker 1: would be very unfortunate if the US formally pulled out 22 00:01:21,600 --> 00:01:25,360 Speaker 1: of the Paris Climate Accord. But what is clear across 23 00:01:25,360 --> 00:01:28,280 Speaker 1: the world is there is a determination from many other countries, 24 00:01:28,319 --> 00:01:32,560 Speaker 1: from China, the European Union, UK, many emerging economies that 25 00:01:32,600 --> 00:01:35,160 Speaker 1: they're going to stick to the Climate Accord of Paris 26 00:01:35,200 --> 00:01:38,040 Speaker 1: and that they're going to take action because they believe 27 00:01:38,240 --> 00:01:40,959 Speaker 1: that the costs of getting to a low carbon economy 28 00:01:41,040 --> 00:01:43,800 Speaker 1: are relatively low. There are major benefits. There are huge 29 00:01:43,840 --> 00:01:48,480 Speaker 1: benefits in emerging countries which have terrible local air pollution, 30 00:01:48,560 --> 00:01:51,559 Speaker 1: want to move away from dirty cold towards clean forms 31 00:01:51,560 --> 00:01:55,960 Speaker 1: of electrification. All of that is going to occur whether 32 00:01:56,120 --> 00:01:59,600 Speaker 1: or not Donald Trump, you know, is going to support it. 33 00:01:59,640 --> 00:02:02,120 Speaker 1: So I hope he will continue to support the Paris 34 00:02:02,120 --> 00:02:04,560 Speaker 1: Climate Agreement. I think it would be seen as a 35 00:02:04,640 --> 00:02:08,400 Speaker 1: major negative move across the world and would be a 36 00:02:08,480 --> 00:02:11,720 Speaker 1: denial of the science which lies behind it. But the 37 00:02:11,800 --> 00:02:15,400 Speaker 1: momentum of change, I think is is there because it's 38 00:02:15,440 --> 00:02:19,240 Speaker 1: partly being technologically driven. It's being driven by these extraordinary 39 00:02:19,240 --> 00:02:23,680 Speaker 1: collapsing prices that we're seeing of wind, of solar, of batteries, 40 00:02:23,680 --> 00:02:26,480 Speaker 1: which is opening up the possibility of a sort of 41 00:02:26,520 --> 00:02:31,200 Speaker 1: new industrial revolution with lots of job opportunities, lots of 42 00:02:31,200 --> 00:02:35,200 Speaker 1: economic opportunities. And that's there. Whatever the policy of one 43 00:02:35,240 --> 00:02:38,800 Speaker 1: individual government, what's the role of business here? If there's 44 00:02:38,800 --> 00:02:41,040 Speaker 1: going to be diminished role by the US GO and 45 00:02:41,080 --> 00:02:44,480 Speaker 1: by the administration at least in promoting climate change at 46 00:02:44,480 --> 00:02:47,079 Speaker 1: research and policies, does business inherently have to play a 47 00:02:47,120 --> 00:02:51,399 Speaker 1: bigger role? Well, business has an absolutely crucial leadership role 48 00:02:52,080 --> 00:02:55,680 Speaker 1: on climate and on my Energy Transition Commission, we have 49 00:02:55,680 --> 00:02:59,600 Speaker 1: a whole series of major businesses, including fossil fuel companies 50 00:02:59,639 --> 00:03:03,160 Speaker 1: like Share and b HB bulletin, pure renewable energy players 51 00:03:03,200 --> 00:03:08,000 Speaker 1: like A major companies like Tata Steel, major finance guys 52 00:03:08,040 --> 00:03:10,840 Speaker 1: like black Rock and HSBC and all of those, and 53 00:03:11,120 --> 00:03:14,480 Speaker 1: in this forum and in another fora are coming together 54 00:03:14,560 --> 00:03:18,359 Speaker 1: and arguing that climate change is a serious issue and 55 00:03:18,440 --> 00:03:22,119 Speaker 1: that they have to responsibly engage in it. But they're 56 00:03:22,120 --> 00:03:25,240 Speaker 1: also business opportunities for the minute. So I think business 57 00:03:25,280 --> 00:03:28,160 Speaker 1: across the world is increasingly playing a leadership role. It 58 00:03:28,280 --> 00:03:30,800 Speaker 1: is still important to have government policies. Let's be clear 59 00:03:30,840 --> 00:03:35,200 Speaker 1: as well, good power market design, very clear structures of 60 00:03:35,240 --> 00:03:39,440 Speaker 1: the way that you create auctions for renewable energy. Those 61 00:03:39,480 --> 00:03:42,160 Speaker 1: are vitally important to drive further down the price of 62 00:03:42,200 --> 00:03:44,720 Speaker 1: renewable energy. Where we are in the learning curve of 63 00:03:44,760 --> 00:03:47,040 Speaker 1: the vogue of five or six years ago, which, to 64 00:03:47,040 --> 00:03:49,760 Speaker 1: be honest, Lord Turner, I never bought. Which is the 65 00:03:49,880 --> 00:03:53,880 Speaker 1: auction NG in Europe of carbon? You mentioned the auctioning 66 00:03:53,960 --> 00:03:56,120 Speaker 1: of renewable energy. I'll go with you there on it 67 00:03:56,160 --> 00:03:58,800 Speaker 1: because I'm going to believe it's more countable. Is a 68 00:03:58,880 --> 00:04:04,000 Speaker 1: statistical idea? Give us an update and the failure the 69 00:04:04,200 --> 00:04:07,760 Speaker 1: auction NG of use of carbon? Yeah, the UK that 70 00:04:08,040 --> 00:04:11,320 Speaker 1: Europe has this emissions trading scheme. The idea was to 71 00:04:12,200 --> 00:04:15,040 Speaker 1: limit the amount of carbon that could be traded. It 72 00:04:15,120 --> 00:04:17,320 Speaker 1: could be emitted in total, and you had to buy 73 00:04:17,360 --> 00:04:20,520 Speaker 1: permits to be blunt. The problem was that there were 74 00:04:20,560 --> 00:04:22,560 Speaker 1: too many permits in the system. If you have too 75 00:04:22,560 --> 00:04:26,760 Speaker 1: many permits exception the price, the price will fall to 76 00:04:26,880 --> 00:04:28,799 Speaker 1: such a low level that it didn't make a difference. 77 00:04:28,880 --> 00:04:32,320 Speaker 1: And in retrospect that emissions trading scheme has not been 78 00:04:32,360 --> 00:04:35,159 Speaker 1: the major driver of change in europe an enormous change, 79 00:04:35,360 --> 00:04:37,880 Speaker 1: but it's been other policies and more effective now I 80 00:04:37,920 --> 00:04:41,800 Speaker 1: wouldn't exclude the possibility of good emission trading schemes in future, 81 00:04:42,080 --> 00:04:44,680 Speaker 1: but they mustn't be undermined by just giving away so 82 00:04:44,760 --> 00:04:46,400 Speaker 1: many permits for free. I don't want to use in 83 00:04:46,440 --> 00:04:49,039 Speaker 1: trouble here with the household lords. But the basic idea 84 00:04:49,440 --> 00:04:52,839 Speaker 1: that that scheme that it was years ago was around 85 00:04:52,880 --> 00:04:56,240 Speaker 1: the verge of bitcoin. And I'm making a joke. I 86 00:04:56,360 --> 00:05:00,800 Speaker 1: understand that what are the institutions in place now to 87 00:05:00,880 --> 00:05:05,360 Speaker 1: get us to better schemes for the public, for the government, 88 00:05:05,720 --> 00:05:09,480 Speaker 1: but also for corporations as well, to incentivize them to 89 00:05:09,560 --> 00:05:12,479 Speaker 1: do the right thing for the public. Well, one of 90 00:05:12,520 --> 00:05:14,840 Speaker 1: the ways to do it is to actually set a 91 00:05:14,839 --> 00:05:18,480 Speaker 1: carbon price. The UK now has is now relying not 92 00:05:18,600 --> 00:05:21,360 Speaker 1: on the emissions trading scheme to set a price for carbon, 93 00:05:21,400 --> 00:05:24,520 Speaker 1: but essentially on a tax. And indeed, there have been 94 00:05:24,560 --> 00:05:27,720 Speaker 1: debates even among Republicans here about whether if you had 95 00:05:27,720 --> 00:05:30,760 Speaker 1: a carbon tax and then use that money to cut 96 00:05:30,839 --> 00:05:34,440 Speaker 1: income taxes or corporate taxes, that could be you know, 97 00:05:34,560 --> 00:05:37,560 Speaker 1: a good development. It would be taxing something that we 98 00:05:37,600 --> 00:05:41,240 Speaker 1: don't want, which is carbon emissions, and reducing taxes on 99 00:05:41,320 --> 00:05:44,360 Speaker 1: things that we do want, like employment creations. So I 100 00:05:44,400 --> 00:05:47,080 Speaker 1: think there's been a switch around in policy thinking that 101 00:05:47,400 --> 00:05:51,320 Speaker 1: the role of carbon pricing needs to have the government 102 00:05:51,360 --> 00:05:53,760 Speaker 1: more directly saying we're setting the price rather than just 103 00:05:53,880 --> 00:05:56,240 Speaker 1: relying on an auction mechanism. One of your heroes and 104 00:05:56,320 --> 00:05:59,000 Speaker 1: one of my heroes, is a guy named Ronald Coast 105 00:06:00,080 --> 00:06:02,720 Speaker 1: to be a hundred and three years old. He would 106 00:06:02,800 --> 00:06:05,919 Speaker 1: say within all of his writing that there's a limit 107 00:06:06,000 --> 00:06:09,120 Speaker 1: to the incentives that you can give to corporations. So 108 00:06:09,200 --> 00:06:11,800 Speaker 1: you tell me that SHELL and BP are part of 109 00:06:11,800 --> 00:06:16,680 Speaker 1: your energy. Shell is and BHI BP are also very committed. Okay, 110 00:06:16,720 --> 00:06:20,360 Speaker 1: but h find a BHP billet and of Australia and 111 00:06:20,760 --> 00:06:22,840 Speaker 1: this is broken health properties for those of you of 112 00:06:22,920 --> 00:06:26,440 Speaker 1: a certain age, and Shell as well. What are their 113 00:06:26,720 --> 00:06:30,280 Speaker 1: limits to doing good if they're in the business of 114 00:06:30,320 --> 00:06:32,760 Speaker 1: making call and carbon and the rest of it. Well, 115 00:06:32,920 --> 00:06:36,920 Speaker 1: they've obviously, you know, they've got their own business. Uh, 116 00:06:37,440 --> 00:06:39,919 Speaker 1: you'd have to ask them about that particular issue about 117 00:06:39,920 --> 00:06:42,240 Speaker 1: how they make the trade off. They've been members of 118 00:06:42,279 --> 00:06:46,080 Speaker 1: this commission. They have supported the conclusions that we've got 119 00:06:46,480 --> 00:06:49,200 Speaker 1: because they want to be part of a business community 120 00:06:49,240 --> 00:06:54,640 Speaker 1: which is committed to reducing emissions overall, and that may 121 00:06:54,680 --> 00:06:57,960 Speaker 1: require over time that they change the mix of their 122 00:06:57,960 --> 00:07:01,880 Speaker 1: business to be focused on first of all, those bits 123 00:07:01,880 --> 00:07:05,680 Speaker 1: of fossil fuels which we really need for the future, 124 00:07:05,800 --> 00:07:08,520 Speaker 1: rather than those which we don't. And for instance, with coal, 125 00:07:08,839 --> 00:07:11,960 Speaker 1: there's a big difference between metallurgical coal, which we're gonna 126 00:07:12,040 --> 00:07:14,240 Speaker 1: need for a long period of time to make steel, 127 00:07:14,600 --> 00:07:18,480 Speaker 1: and thermal coal for producing electricity, where bluntly, there are 128 00:07:18,560 --> 00:07:22,679 Speaker 1: lots of alternatives out there and better alternatives from renewable energy. 129 00:07:22,760 --> 00:07:25,480 Speaker 1: So all fossil fuel companies need to think about how 130 00:07:25,520 --> 00:07:29,600 Speaker 1: they migrate through these changing set of social needs but 131 00:07:29,680 --> 00:07:32,320 Speaker 1: also economic possibilities. We're talking with Lord of Deer Turner. 132 00:07:32,400 --> 00:07:34,840 Speaker 1: He's the chair of the Energy Transitions Commission, out with 133 00:07:34,840 --> 00:07:37,120 Speaker 1: a new report this morning here on Bloomberg Surveillance. Who's 134 00:07:37,160 --> 00:07:39,520 Speaker 1: the audience for this report? Is the effort here to 135 00:07:39,560 --> 00:07:42,360 Speaker 1: convincive businessmen in business women that this is an important 136 00:07:42,360 --> 00:07:43,880 Speaker 1: issue for them to take up. Who would you like 137 00:07:44,000 --> 00:07:45,720 Speaker 1: to see read this Well, we certainly want to see 138 00:07:46,040 --> 00:07:49,240 Speaker 1: business people read this report. We also want governments to 139 00:07:49,600 --> 00:07:52,880 Speaker 1: read this report, and in particular actually some major emerging 140 00:07:52,960 --> 00:07:58,840 Speaker 1: market a governments with whom we are in already significant discussion. 141 00:07:58,840 --> 00:08:02,520 Speaker 1: I mean, there's a very important argument in this report 142 00:08:03,080 --> 00:08:05,480 Speaker 1: that even if you look at a country like India, 143 00:08:05,840 --> 00:08:09,720 Speaker 1: India can drive a big increase of electricity demand from 144 00:08:09,720 --> 00:08:12,120 Speaker 1: a thousand terra what hours as they called to three 145 00:08:12,160 --> 00:08:16,160 Speaker 1: thousand terra or hours, three times as much electricity by 146 00:08:16,160 --> 00:08:20,560 Speaker 1: while not building anything like the coal fired power stations 147 00:08:20,600 --> 00:08:23,520 Speaker 1: it was previously committed to. And that's because the cost 148 00:08:23,720 --> 00:08:27,280 Speaker 1: of solar energy is collapsing. There's been some amazing bids 149 00:08:27,840 --> 00:08:31,680 Speaker 1: in a India recently at just three routpees pe kilar 150 00:08:31,720 --> 00:08:35,360 Speaker 1: what are which is just five usns pekilar what are? 151 00:08:35,400 --> 00:08:38,080 Speaker 1: There is a real possibility that there are maging merging 152 00:08:38,160 --> 00:08:40,760 Speaker 1: markets which do not have to go through the big 153 00:08:41,000 --> 00:08:44,120 Speaker 1: coal phase which we were previously worried. I wanted to 154 00:08:44,120 --> 00:08:45,840 Speaker 1: come back and talk about Wallstreet. But let's come back 155 00:08:45,880 --> 00:08:48,800 Speaker 1: and do this and renewable energy, because David, I think 156 00:08:48,840 --> 00:08:53,160 Speaker 1: we have stereotypes of how expensive solar panels are in 157 00:08:53,200 --> 00:08:57,040 Speaker 1: your garage in seventy and as we heard from Lord Turner, 158 00:08:57,559 --> 00:08:59,760 Speaker 1: things have changed. David. What I see here is when 159 00:09:00,000 --> 00:09:02,880 Speaker 1: wills in the East River overlooking your view as you 160 00:09:03,640 --> 00:09:07,960 Speaker 1: your kale in Brooklyn, I mean I can see windmills, windmills, 161 00:09:07,960 --> 00:09:11,080 Speaker 1: in your backyard. There apparently turbines under the underwater in 162 00:09:11,080 --> 00:09:14,600 Speaker 1: the East River. Now serious in your Roosevelt Island I 163 00:09:14,600 --> 00:09:16,560 Speaker 1: haven't seen first, Well you can do that. It's called 164 00:09:16,600 --> 00:09:20,319 Speaker 1: tidal flow. A river flows stuff that's less developed than 165 00:09:20,360 --> 00:09:23,679 Speaker 1: the above ground wind. But the crucial thing is that 166 00:09:23,800 --> 00:09:26,880 Speaker 1: over the last five years, the cost of wind has 167 00:09:26,960 --> 00:09:29,920 Speaker 1: come down by and the cost of solo has come 168 00:09:29,960 --> 00:09:33,760 Speaker 1: down by These are dramatic cost reductions. We say thank 169 00:09:33,800 --> 00:09:35,400 Speaker 1: you so much for being with us. I guess you've 170 00:09:35,440 --> 00:09:38,720 Speaker 1: got to run a dear Lord Turner with us today 171 00:09:38,720 --> 00:09:54,640 Speaker 1: and of course with his energy consortium as well. David 172 00:09:54,679 --> 00:09:58,400 Speaker 1: Gerntime Keane together together in New York, shob Johnnus with 173 00:09:58,480 --> 00:10:02,200 Speaker 1: us now with credits squeeze shop. Let's talk actually making 174 00:10:02,240 --> 00:10:04,959 Speaker 1: money or even more not losing money, which is it 175 00:10:05,040 --> 00:10:07,240 Speaker 1: on a foreign exchange desk? Now, it's the goal to 176 00:10:07,360 --> 00:10:11,880 Speaker 1: make money or you're really focused on not losing money. Well, 177 00:10:12,200 --> 00:10:15,040 Speaker 1: ultimately you have to make money to validate why you 178 00:10:15,080 --> 00:10:17,400 Speaker 1: exist as a firm. Um. Now, how you make money 179 00:10:17,400 --> 00:10:20,040 Speaker 1: may have changed over the years due to regulation and 180 00:10:20,080 --> 00:10:22,520 Speaker 1: other factors, but it's still about making money at the 181 00:10:22,600 --> 00:10:24,800 Speaker 1: end of the day. Um, And you know We're still 182 00:10:24,840 --> 00:10:27,439 Speaker 1: about trying to generate ideas for how people can can 183 00:10:27,480 --> 00:10:30,280 Speaker 1: do that ourselves and our investors as well. Expite the 184 00:10:30,320 --> 00:10:32,760 Speaker 1: complexity there, we were all focused on the French election 185 00:10:32,800 --> 00:10:36,160 Speaker 1: on Sunday, going into that days before. UH. This is 186 00:10:36,240 --> 00:10:37,959 Speaker 1: this is a funny environment in which to trade, in 187 00:10:38,000 --> 00:10:40,000 Speaker 1: which to look at at at currency periods when there 188 00:10:40,040 --> 00:10:43,000 Speaker 1: is so much political risk. Yes, absolutely, this is a 189 00:10:43,240 --> 00:10:49,199 Speaker 1: classic macro environment. I would say, UM, the prevalence of elections, 190 00:10:49,280 --> 00:10:52,640 Speaker 1: the uncertainty around policy. You know, as we've discussed, even 191 00:10:52,720 --> 00:10:55,760 Speaker 1: with the US situation now with the budget. There's a 192 00:10:55,760 --> 00:10:59,280 Speaker 1: lot of different factors out there. What's interesting is that, UM, 193 00:10:59,360 --> 00:11:02,720 Speaker 1: the markets tend to be very hot and cold about 194 00:11:02,720 --> 00:11:05,720 Speaker 1: which of these things to focus on. UM. So, for example, 195 00:11:05,720 --> 00:11:08,360 Speaker 1: when the French election was was the topic coming into 196 00:11:08,400 --> 00:11:12,120 Speaker 1: this weekend, euro imply, volatilities went very very high, and 197 00:11:12,200 --> 00:11:15,960 Speaker 1: nothing else was in focus, UM, including the budget situation 198 00:11:16,000 --> 00:11:19,800 Speaker 1: in the US. So UH, that then revolves and changes 199 00:11:19,880 --> 00:11:22,240 Speaker 1: quickly from one team to another. But you don't really 200 00:11:22,280 --> 00:11:26,640 Speaker 1: have I would say, a background environment of generalized high volatility, 201 00:11:26,880 --> 00:11:30,200 Speaker 1: and I think that reflects an underlying sense of well 202 00:11:30,240 --> 00:11:32,440 Speaker 1: being for the global economy at this point. What did 203 00:11:32,520 --> 00:11:35,440 Speaker 1: you do after those those results came in on Sunday? 204 00:11:35,480 --> 00:11:37,280 Speaker 1: What did that confirm for your What were you able 205 00:11:37,320 --> 00:11:39,439 Speaker 1: to do? How are you how are you trading after 206 00:11:39,480 --> 00:11:41,200 Speaker 1: use other results from the first rand of the French election. 207 00:11:41,360 --> 00:11:46,040 Speaker 1: But I think the results actually met expectations in the 208 00:11:46,080 --> 00:11:48,360 Speaker 1: sense that not only did it go in line with 209 00:11:48,360 --> 00:11:51,680 Speaker 1: what the polls were predicting, but they also validated what 210 00:11:51,720 --> 00:11:54,760 Speaker 1: the option markets were pricing in for the scale of 211 00:11:54,800 --> 00:11:57,560 Speaker 1: a one day moved that you would expect on that result. 212 00:11:57,679 --> 00:12:00,360 Speaker 1: So in that framework, there wasn't much that one could do. 213 00:12:00,600 --> 00:12:04,439 Speaker 1: You had a gap in the direction that it was 214 00:12:04,440 --> 00:12:07,240 Speaker 1: supposed to go in the euro's exchange rate in about 215 00:12:07,240 --> 00:12:09,040 Speaker 1: the rough magnitude that it was supposed to do. So 216 00:12:09,120 --> 00:12:11,680 Speaker 1: I think at that point in time really whither you 217 00:12:11,679 --> 00:12:14,280 Speaker 1: had called it correctly to start with or not, but 218 00:12:14,320 --> 00:12:15,640 Speaker 1: there wasn't much else you could do at that et 219 00:12:15,679 --> 00:12:18,440 Speaker 1: that point. Now from here on, of course, it's still 220 00:12:18,440 --> 00:12:21,160 Speaker 1: alive game. I would say that at this point in time, 221 00:12:21,640 --> 00:12:24,120 Speaker 1: and if from a very short term perspective, the market 222 00:12:24,120 --> 00:12:25,880 Speaker 1: has come a long way in terms of pricing in 223 00:12:25,920 --> 00:12:28,560 Speaker 1: a good outcome from the second round, so maybe some 224 00:12:28,640 --> 00:12:31,440 Speaker 1: caution is valid at this point, Um, have you said 225 00:12:31,440 --> 00:12:33,760 Speaker 1: that from a medium to long term perspective, if we 226 00:12:33,840 --> 00:12:37,520 Speaker 1: do get a Macron presidency in France coming out on 227 00:12:37,559 --> 00:12:40,200 Speaker 1: the back of the positive result from the Dutch election 228 00:12:40,240 --> 00:12:44,120 Speaker 1: as well for for let's say, more establishment candidates, it 229 00:12:44,160 --> 00:12:46,360 Speaker 1: will generate a lot of optimism are about whether Europe 230 00:12:46,400 --> 00:12:49,160 Speaker 1: can actually reform and push in the right direction. So 231 00:12:49,160 --> 00:12:51,840 Speaker 1: I think the Euro's medium term outlook has improved a 232 00:12:51,880 --> 00:12:55,400 Speaker 1: lot since this, friend, And you're still saying, well, I 233 00:12:55,400 --> 00:12:58,080 Speaker 1: will say if because I feel that there's a number 234 00:12:58,120 --> 00:13:00,360 Speaker 1: of you know, it's valid valid there. I mean, first 235 00:13:00,360 --> 00:13:02,400 Speaker 1: of all, we don't know the second round result, but secondly, 236 00:13:03,000 --> 00:13:06,120 Speaker 1: it's still unclear whether the reform process in Europe can 237 00:13:06,360 --> 00:13:08,760 Speaker 1: move at the pace markets want to see. Um at 238 00:13:08,800 --> 00:13:12,679 Speaker 1: the end of the day, for example, deregulating labor markets. 239 00:13:12,679 --> 00:13:16,400 Speaker 1: That obviously is something that's beneficial for corporates, um for 240 00:13:16,400 --> 00:13:18,640 Speaker 1: for business, But there's a lot of people in France 241 00:13:18,640 --> 00:13:20,360 Speaker 1: who don't want to see that, those who have voted 242 00:13:20,400 --> 00:13:22,920 Speaker 1: for Melan Sean, those who many of those who vote 243 00:13:22,920 --> 00:13:25,320 Speaker 1: for the pen So the strains and stresses will still 244 00:13:25,360 --> 00:13:27,360 Speaker 1: be there, and I think the jury is still out 245 00:13:27,360 --> 00:13:30,520 Speaker 1: whether we can surpass those so quickly you're the strains 246 00:13:30,559 --> 00:13:33,880 Speaker 1: and stresses on the US dollar. Which way, well, I 247 00:13:33,880 --> 00:13:36,360 Speaker 1: think for now, certainly against the Euro, the US dollar 248 00:13:36,520 --> 00:13:39,520 Speaker 1: is heading south. I think that the longer we have 249 00:13:39,880 --> 00:13:43,079 Speaker 1: an environment in the US where it appears that policy 250 00:13:43,120 --> 00:13:49,040 Speaker 1: uncertainty is a persistent theme, positive changes every well that doesn't. 251 00:13:49,040 --> 00:13:52,640 Speaker 1: That doesn't help either. Frankly, Um, look, there are certain 252 00:13:52,679 --> 00:13:55,079 Speaker 1: trades you can do. We discussed earlier, for example, the 253 00:13:55,559 --> 00:14:00,280 Speaker 1: dollar rising against the Canadian dollar, which interestingly, you know, 254 00:14:00,320 --> 00:14:02,800 Speaker 1: one of the few areas where we are seeing progress 255 00:14:02,840 --> 00:14:05,920 Speaker 1: in inverted commas is on a trade site where the 256 00:14:06,000 --> 00:14:09,800 Speaker 1: US looks likely to impost tariffs on Canadian souft lumber 257 00:14:09,840 --> 00:14:13,200 Speaker 1: for example. Um, so things are happening. There may not 258 00:14:13,240 --> 00:14:16,280 Speaker 1: be the things everyone initially bought the dollar four, but 259 00:14:16,480 --> 00:14:19,280 Speaker 1: in very specific pairs like the dollar against the Canadian dollar, 260 00:14:19,320 --> 00:14:22,360 Speaker 1: you can't buy the dollar. But when you have another side, 261 00:14:22,440 --> 00:14:23,920 Speaker 1: the other side of the corner of the euro, which 262 00:14:24,000 --> 00:14:26,760 Speaker 1: is experiencing us own positive political story and has a 263 00:14:26,760 --> 00:14:29,560 Speaker 1: good economy story behind it for the time being, then 264 00:14:29,640 --> 00:14:32,200 Speaker 1: I think the dollar is going to go. Look, thank 265 00:14:32,240 --> 00:14:34,800 Speaker 1: you so much, John News with wisdom and for in 266 00:14:34,880 --> 00:14:45,840 Speaker 1: exchange this morning, brought you by Bank of America. Mary Lynch, 267 00:14:45,920 --> 00:14:50,200 Speaker 1: dedicated to bringing our clients insights and solutions to meet 268 00:14:50,200 --> 00:14:53,720 Speaker 1: the challenges of a transforming world. That's the power of 269 00:14:53,760 --> 00:14:58,840 Speaker 1: global connections. Mary Lynch, Pierce Feeder and Smith Incorporated member 270 00:14:59,440 --> 00:15:07,320 Speaker 1: s I P. See there's something new from Bloomberg. It's 271 00:15:07,320 --> 00:15:10,720 Speaker 1: called Lens. Starting right now, you can use the Bloomberg 272 00:15:11,000 --> 00:15:14,840 Speaker 1: Io s app off your iPhone or iPad, or our 273 00:15:14,920 --> 00:15:18,720 Speaker 1: new Google Chrome extension to read any news story on 274 00:15:18,880 --> 00:15:22,880 Speaker 1: any website, scan it, and then instantly see the news 275 00:15:22,920 --> 00:15:27,480 Speaker 1: stories relevant market data from Bloomberg. In addition, see all 276 00:15:27,480 --> 00:15:30,600 Speaker 1: the bios of the key people mentioned in the story. 277 00:15:31,120 --> 00:15:34,080 Speaker 1: It's called Lens, and it is just that, a lens 278 00:15:34,160 --> 00:15:37,600 Speaker 1: into the people and the data of any story you 279 00:15:37,680 --> 00:15:41,280 Speaker 1: may be reading. Again. Lens brings you the power of 280 00:15:41,320 --> 00:15:44,560 Speaker 1: Bloomberg's news and data. Download or Io s app or 281 00:15:44,600 --> 00:15:48,360 Speaker 1: search for the Bloomberg extension at the Chrome Store to 282 00:15:48,440 --> 00:15:52,560 Speaker 1: try Lens out. Learn more at Bloomberg dot com slash lens. 283 00:15:57,360 --> 00:15:59,480 Speaker 1: David the budget. We're gonna do five things here in 284 00:16:00,000 --> 00:16:02,840 Speaker 1: it a bit, but my head spinning after the last forts, 285 00:16:02,920 --> 00:16:05,560 Speaker 1: isn't it. Yeah, you know that we had the walls 286 00:16:05,640 --> 00:16:08,160 Speaker 1: like off right, is that the latest moved a few 287 00:16:08,200 --> 00:16:10,040 Speaker 1: months ahead. We'll get the latest from Stan calendar here 288 00:16:10,080 --> 00:16:11,560 Speaker 1: in just just a moment. But it sounds like the 289 00:16:11,560 --> 00:16:14,480 Speaker 1: president's willing to talk about the wall and uh, once 290 00:16:14,520 --> 00:16:16,840 Speaker 1: we get past this government shutdown deadline, which is coming 291 00:16:16,840 --> 00:16:19,040 Speaker 1: at the at the end of the week. We had 292 00:16:19,080 --> 00:16:21,600 Speaker 1: the Treasury Secretary statementution coming out at the Daily Press 293 00:16:21,640 --> 00:16:24,160 Speaker 1: briefing yesterday talking a bit about tax for him. Expect 294 00:16:24,160 --> 00:16:26,000 Speaker 1: to learn more about it tomorrow. Let's bring him in 295 00:16:26,080 --> 00:16:28,160 Speaker 1: right now. Stan Colender, of course, has given us such 296 00:16:28,200 --> 00:16:32,440 Speaker 1: great assistance at Bloomberg Surveillance on fiscal affairs, has worked 297 00:16:32,440 --> 00:16:36,320 Speaker 1: with the legislative body in the Joint Economic Committee years ago. Stan, 298 00:16:36,400 --> 00:16:39,320 Speaker 1: You're in London, Good morning, Greg Valier publishes this morning 299 00:16:39,320 --> 00:16:42,200 Speaker 1: on the shutdown is a phony discussion? Is just a 300 00:16:42,240 --> 00:16:44,360 Speaker 1: debate that you know we're gonna have it, We're gonna 301 00:16:44,400 --> 00:16:46,400 Speaker 1: get there. Do you do you feel like it's a 302 00:16:46,440 --> 00:16:48,880 Speaker 1: non event or should we really give it some respect? 303 00:16:49,160 --> 00:16:52,120 Speaker 1: On to midnight Friday into Saturday. Well, it may not 304 00:16:52,200 --> 00:16:54,680 Speaker 1: be this week tom That is, Congress may give itself 305 00:16:54,720 --> 00:16:57,160 Speaker 1: an extra week or two to work out the kinks here. 306 00:16:57,680 --> 00:17:00,840 Speaker 1: Um Generally speaking, it's not likely we're gonna get a shutdown. 307 00:17:00,880 --> 00:17:03,240 Speaker 1: But given some of the uncertainties going on with the 308 00:17:03,240 --> 00:17:06,960 Speaker 1: Trump administration and the irrationalities that they've they've shown us 309 00:17:06,960 --> 00:17:10,200 Speaker 1: in the first hundred days, I'm not quite as comfortable 310 00:17:10,200 --> 00:17:12,040 Speaker 1: as Greg is and saying this is a non event. 311 00:17:12,080 --> 00:17:14,360 Speaker 1: It probably won't happen. But I don't think you can 312 00:17:14,480 --> 00:17:16,439 Speaker 1: you can just dismiss it out of hand. Who should 313 00:17:16,440 --> 00:17:19,320 Speaker 1: we watch in Congress? Isn't all about the speaker? Do 314 00:17:19,400 --> 00:17:22,120 Speaker 1: we watch this? Freedom Caucus is about you know how 315 00:17:22,200 --> 00:17:26,000 Speaker 1: quaiet is this chairman of committees? Who do we watch? Well? 316 00:17:26,040 --> 00:17:28,400 Speaker 1: There there are two basic things. First of all, where 317 00:17:28,400 --> 00:17:31,240 Speaker 1: the Senate Democrats come out. If they go along with 318 00:17:31,280 --> 00:17:33,440 Speaker 1: the bill that seems to be working its way through 319 00:17:33,480 --> 00:17:36,400 Speaker 1: the Senate, then that will put the House Freedom Caucus 320 00:17:36,520 --> 00:17:38,840 Speaker 1: UH in a in a very difficult position, since the 321 00:17:39,320 --> 00:17:41,960 Speaker 1: essentially you're gonna be asking the Freedom Caucus to agree 322 00:17:42,440 --> 00:17:44,959 Speaker 1: to legislation that is a funding bill that doesn't have 323 00:17:45,040 --> 00:17:47,520 Speaker 1: anything that they want in it. It may have too 324 00:17:47,600 --> 00:17:53,000 Speaker 1: higher deficit, it uh may it won't repeal and replace Obamacare. UM. 325 00:17:53,280 --> 00:17:55,159 Speaker 1: So those are the first two things to watch. But 326 00:17:55,200 --> 00:17:57,800 Speaker 1: the big one, the absolute big one, is watch the 327 00:17:57,840 --> 00:18:02,359 Speaker 1: Trump administration. Watch what what the president says is his 328 00:18:02,440 --> 00:18:04,800 Speaker 1: bottom line, his red line. I mean, we've seen something 329 00:18:04,840 --> 00:18:07,880 Speaker 1: in the last couple of days that his his threats 330 00:18:07,920 --> 00:18:11,879 Speaker 1: about the not funding the wall causing a yes, causing 331 00:18:11,880 --> 00:18:14,960 Speaker 1: a shutdown, have been moderated a little bit. But let's see, 332 00:18:15,040 --> 00:18:18,480 Speaker 1: because you can't necessarily take this White House, you know, 333 00:18:18,720 --> 00:18:21,800 Speaker 1: for what it says for Granted, it could change tomorrow, 334 00:18:21,840 --> 00:18:24,240 Speaker 1: could change this afternoon. Help me with the history here 335 00:18:24,320 --> 00:18:26,880 Speaker 1: if if you would, uh you know, I'm I'm looking 336 00:18:26,920 --> 00:18:29,040 Speaker 1: at a quotation here in a piece on on Bloomberg 337 00:18:29,040 --> 00:18:31,960 Speaker 1: News about back and forth between the White House and Congress, 338 00:18:32,040 --> 00:18:34,040 Speaker 1: Chuck Schumer, the Senate minority leaders, saying things were going 339 00:18:34,080 --> 00:18:36,920 Speaker 1: just fine. Negotiations were going just fine until the White 340 00:18:36,920 --> 00:18:39,399 Speaker 1: House got involved. In the years past, what kind of 341 00:18:39,480 --> 00:18:41,919 Speaker 1: role as the White House played in these discussions, Well, 342 00:18:42,080 --> 00:18:44,880 Speaker 1: basically very small, because typically it's been Congress of one 343 00:18:44,920 --> 00:18:47,440 Speaker 1: party and the president of another when you've gotten a shutdown, 344 00:18:47,640 --> 00:18:50,600 Speaker 1: think of with Gingrich and the Republicans versus Clinton in 345 00:18:50,640 --> 00:18:54,400 Speaker 1: the White House. Um, so things were going along just 346 00:18:54,440 --> 00:18:57,840 Speaker 1: what just fine, as as as Chuck Schumer said, and 347 00:18:57,840 --> 00:18:59,439 Speaker 1: then all of a sudden the White House started to 348 00:18:59,440 --> 00:19:01,720 Speaker 1: make what what it called at the times of non 349 00:19:01,720 --> 00:19:06,600 Speaker 1: negotiable demands. That's my phrase, but basically, you know, saying 350 00:19:06,600 --> 00:19:09,680 Speaker 1: the same thing that protests did in the sixties. Um 351 00:19:09,760 --> 00:19:14,359 Speaker 1: So this is unusual. It's also unusual for one party 352 00:19:14,359 --> 00:19:17,080 Speaker 1: to be having so much trouble coming to an agreement 353 00:19:17,119 --> 00:19:19,720 Speaker 1: among itselves and with the President saying the equivalent of 354 00:19:20,000 --> 00:19:21,600 Speaker 1: I'm gonna put a gun to my head and shoot 355 00:19:21,640 --> 00:19:24,280 Speaker 1: myself if you don't give me exactly what I want. 356 00:19:24,320 --> 00:19:25,960 Speaker 1: And that's what could happen if there's a chefdown the 357 00:19:26,000 --> 00:19:28,359 Speaker 1: deed blame for stand collinder with us our bureau in 358 00:19:28,400 --> 00:19:32,240 Speaker 1: London today, Executive Vice President the MSL group at Budget 359 00:19:32,280 --> 00:19:34,680 Speaker 1: guy on Twitter stand great to speak with you once again. 360 00:19:34,760 --> 00:19:36,920 Speaker 1: Let me ask you about the level of engagement here 361 00:19:36,920 --> 00:19:39,600 Speaker 1: between this White House and the Congress. Last night, the 362 00:19:39,600 --> 00:19:42,680 Speaker 1: President had dinner with Senator John McCain and Cindy McCain 363 00:19:42,760 --> 00:19:45,800 Speaker 1: and Senator Lindsey Graham as well Stundedly Bob Corker. Senator 364 00:19:45,840 --> 00:19:48,119 Speaker 1: Bob Corker, the chair of the Form Relations Committee, is 365 00:19:48,119 --> 00:19:49,960 Speaker 1: gonna be at the White House for dinner as well. 366 00:19:50,000 --> 00:19:52,600 Speaker 1: This is a president who is at least trying to 367 00:19:52,720 --> 00:19:55,000 Speaker 1: and publicly declaring that he is reaching out to two 368 00:19:55,000 --> 00:19:57,560 Speaker 1: members of Congress. How's that? How's that working out? Well, 369 00:19:57,960 --> 00:20:00,880 Speaker 1: it's interesting you ask as we reached first hundred days. 370 00:20:00,920 --> 00:20:03,959 Speaker 1: My my strong impression is that this is the biggest 371 00:20:04,000 --> 00:20:05,960 Speaker 1: failure in the first one hundred days. Is at the 372 00:20:06,080 --> 00:20:09,399 Speaker 1: end the transition, the President's inability to develop a working 373 00:20:09,440 --> 00:20:11,720 Speaker 1: relationship with Congress after a hundred days is going to 374 00:20:11,840 --> 00:20:14,119 Speaker 1: hurt the second hundred days. And remember it's only a 375 00:20:14,160 --> 00:20:16,600 Speaker 1: hundred and fifty days from now that Fiscal two thousand 376 00:20:16,680 --> 00:20:19,240 Speaker 1: eighteen starts. And if we don't have a potential shutdown now, 377 00:20:19,520 --> 00:20:22,480 Speaker 1: we're certainly going to have one then. So, um, this 378 00:20:22,560 --> 00:20:25,840 Speaker 1: is the biggest drawback the administration. The president is still 379 00:20:25,840 --> 00:20:28,600 Speaker 1: treating Congress mostly like they work for him, and they 380 00:20:28,600 --> 00:20:30,399 Speaker 1: don't feel that way. They feel that they work for 381 00:20:30,400 --> 00:20:33,960 Speaker 1: their constituents. Who's leading his his team of negotiators with 382 00:20:34,000 --> 00:20:35,560 Speaker 1: Congress and its who in the White House has the 383 00:20:35,560 --> 00:20:38,520 Speaker 1: best connection to lawmakers on Capitol Hill? Is that Ryan's 384 00:20:38,520 --> 00:20:41,440 Speaker 1: previous is it is that the vice president? Well, it's 385 00:20:41,440 --> 00:20:44,800 Speaker 1: the vice president and it's o n B Director Mulvaney. Uh, 386 00:20:44,800 --> 00:20:46,920 Speaker 1: he you know, a former member of Congress, member of 387 00:20:46,920 --> 00:20:49,600 Speaker 1: the Freedom Caucus. Uh. He's been at the forefront of 388 00:20:49,640 --> 00:20:51,359 Speaker 1: a variety of issues in which they had to deal 389 00:20:51,400 --> 00:20:54,680 Speaker 1: with Congress, including healthcare, including now the tax plan that's 390 00:20:54,720 --> 00:20:58,280 Speaker 1: supposedly going to be at least revealed tomorrow, uh, and 391 00:20:58,320 --> 00:20:59,879 Speaker 1: a variety of other issues. Of course, and you go 392 00:21:00,040 --> 00:21:03,720 Speaker 1: shading on the continuing resolution. So Vice President Pence seems 393 00:21:03,760 --> 00:21:06,480 Speaker 1: to be working behind the scenes. Mostly Mulvaney is out 394 00:21:06,480 --> 00:21:10,439 Speaker 1: there out in front, is both cajoling and uh uh 395 00:21:10,560 --> 00:21:12,600 Speaker 1: covorting with members of Congress to try to get them 396 00:21:12,640 --> 00:21:14,920 Speaker 1: to come along. We understand that the White House is 397 00:21:14,960 --> 00:21:16,840 Speaker 1: thinking here when it comes to tax or form, why 398 00:21:16,920 --> 00:21:20,399 Speaker 1: not just partner with Congressman Kevin Brady and how Speaker 399 00:21:20,440 --> 00:21:22,640 Speaker 1: Paul Ryan on a joint plan. In other words, why 400 00:21:22,720 --> 00:21:25,159 Speaker 1: why go on this parallel track. Why introduce a separate 401 00:21:25,320 --> 00:21:28,040 Speaker 1: proposal entirely? Well, that's one of the things I meant 402 00:21:28,080 --> 00:21:30,399 Speaker 1: by not working out a working relationship with Congress during 403 00:21:30,440 --> 00:21:32,840 Speaker 1: the first one days, you're asking exactly the right question. 404 00:21:33,320 --> 00:21:35,280 Speaker 1: But it looks to me as if the President is 405 00:21:35,359 --> 00:21:38,800 Speaker 1: asking for and says that he's promised more during the campaign, 406 00:21:39,359 --> 00:21:42,080 Speaker 1: then either the Brady or Ryan Plan wants and plus 407 00:21:42,160 --> 00:21:45,320 Speaker 1: the Ryan Plan, which includes the border Adjustment tax, is 408 00:21:45,359 --> 00:21:47,640 Speaker 1: something the President goes hot and called on, depending upon 409 00:21:47,680 --> 00:21:50,280 Speaker 1: which day you talk about it. So all the we 410 00:21:50,320 --> 00:21:52,520 Speaker 1: don't have any details, but the bottom line seems to 411 00:21:52,560 --> 00:21:56,840 Speaker 1: be the President wants a corporate rate, uh corporate tax 412 00:21:56,960 --> 00:21:59,280 Speaker 1: rate that that's going to be difficult to do without 413 00:22:00,320 --> 00:22:02,719 Speaker 1: blowing up the deficit further than it already has been 414 00:22:02,720 --> 00:22:05,680 Speaker 1: blown up. Um. And that's not something that Congress wants 415 00:22:05,680 --> 00:22:07,679 Speaker 1: to go along with. So whether this is a negotiating 416 00:22:07,720 --> 00:22:09,720 Speaker 1: strategy or this is something he really wants it is 417 00:22:09,720 --> 00:22:13,080 Speaker 1: adamant about, we don't know yet. But um, this is 418 00:22:13,200 --> 00:22:15,879 Speaker 1: this is partly ego, partly this is what I promised 419 00:22:15,920 --> 00:22:18,959 Speaker 1: during the campaign. Um. And it just hasn't worked out 420 00:22:19,000 --> 00:22:20,879 Speaker 1: that relationship to say, what do you guys want, what 421 00:22:20,960 --> 00:22:22,920 Speaker 1: do I want? What can we get together on stan 422 00:22:22,960 --> 00:22:24,640 Speaker 1: We've talked a number of times here as we've faced 423 00:22:24,800 --> 00:22:27,680 Speaker 1: a new continuing resolution, it's become a very normal thing 424 00:22:28,119 --> 00:22:30,639 Speaker 1: in Washington. We've becomeing eured to it. Have the markets 425 00:22:30,680 --> 00:22:32,119 Speaker 1: become in eured to it as well? As we as 426 00:22:32,160 --> 00:22:34,719 Speaker 1: we face another short term spending bill to the markets 427 00:22:34,760 --> 00:22:37,040 Speaker 1: really care whether or not we get something longer term 428 00:22:37,080 --> 00:22:39,800 Speaker 1: than that. No. Uh, Look, and I think the average 429 00:22:39,800 --> 00:22:41,680 Speaker 1: American doesn't care either. That is, as long as the 430 00:22:41,720 --> 00:22:44,600 Speaker 1: government doesn't shut down, and it as long as we're 431 00:22:44,640 --> 00:22:47,440 Speaker 1: showing some ability to work together. Neither markets nor the 432 00:22:47,480 --> 00:22:49,400 Speaker 1: average vote is going to care whether it's a continuing 433 00:22:49,440 --> 00:22:53,320 Speaker 1: resolution or an omnibus appropriation or an individual appropriation. Um. 434 00:22:53,440 --> 00:22:55,879 Speaker 1: It's when we start to get too close to this 435 00:22:55,960 --> 00:22:57,720 Speaker 1: point of a shutdown and it doesn't seem to be 436 00:22:57,760 --> 00:23:00,479 Speaker 1: a resolution and it's all irrational. That's what chakes up 437 00:23:00,520 --> 00:23:02,280 Speaker 1: markets the most. That's what one of the reasons I'm 438 00:23:02,320 --> 00:23:04,560 Speaker 1: in London is talking to clients about exactly that kind 439 00:23:04,600 --> 00:23:07,719 Speaker 1: of thing, about the craziness that could go on so um. 440 00:23:07,960 --> 00:23:10,400 Speaker 1: But we've had continuing resolutions now for more or less 441 00:23:10,440 --> 00:23:12,879 Speaker 1: five six seven years in a row, and it hasn't 442 00:23:12,920 --> 00:23:16,159 Speaker 1: really destroyed the country, has it. Stand. Sorry, I was 443 00:23:16,240 --> 00:23:17,840 Speaker 1: late here. I was up in the food court having 444 00:23:17,920 --> 00:23:29,040 Speaker 1: Walker's short breaths. Stan help me here with the thing 445 00:23:29,119 --> 00:23:33,200 Speaker 1: nobody talks about, including the president, and that is tax revenues. 446 00:23:34,400 --> 00:23:37,879 Speaker 1: My my anecdotal evidence is anybody within fifty ft of 447 00:23:37,960 --> 00:23:40,600 Speaker 1: me over the last two weeks of stating that they're 448 00:23:40,640 --> 00:23:43,840 Speaker 1: taking more taxes than they used to take. Do we 449 00:23:43,960 --> 00:23:46,680 Speaker 1: have a lot of tax revenue as compared to g 450 00:23:46,840 --> 00:23:49,879 Speaker 1: d P or whatever per person? Whatever? I don't know 451 00:23:49,920 --> 00:23:52,800 Speaker 1: about per person. Uh. You know, usually when you hear that, 452 00:23:52,960 --> 00:23:55,119 Speaker 1: it's not just the federal taxes, they're talking about the 453 00:23:55,200 --> 00:23:59,159 Speaker 1: total Yes, total taxes, um. And my understanding is its 454 00:23:59,160 --> 00:24:01,600 Speaker 1: state and local government mints have actually increased taxes pretty 455 00:24:01,600 --> 00:24:04,280 Speaker 1: substantially over the past couple of years, so that while 456 00:24:04,320 --> 00:24:08,040 Speaker 1: the federal government often gets blamed, that continuously gets blamed 457 00:24:08,600 --> 00:24:10,600 Speaker 1: very often the reason they're getting blamed is because of 458 00:24:10,720 --> 00:24:12,760 Speaker 1: something they're not doing in that state and local taxes. 459 00:24:13,040 --> 00:24:15,920 Speaker 1: In addition, it's not just taxes time. How many times 460 00:24:15,960 --> 00:24:17,639 Speaker 1: have we all been charge of the additional fees that 461 00:24:17,720 --> 00:24:19,520 Speaker 1: we used to be able to for services that we 462 00:24:19,640 --> 00:24:21,840 Speaker 1: used to be able to get through our taxes? Toum Um, 463 00:24:21,960 --> 00:24:24,040 Speaker 1: that's becoming it's kind of like the airlines, you know, 464 00:24:24,160 --> 00:24:29,119 Speaker 1: charging for airstein that the Treasury Secretary wants to to 465 00:24:29,280 --> 00:24:30,959 Speaker 1: advance a plan that would name us to do our 466 00:24:31,040 --> 00:24:35,959 Speaker 1: taxes on a postcard. Oh, that's come on that, Um, 467 00:24:36,440 --> 00:24:38,439 Speaker 1: how do you square that with with with how long 468 00:24:38,520 --> 00:24:40,600 Speaker 1: it's taken to get principles here from from the White House. 469 00:24:40,640 --> 00:24:42,120 Speaker 1: In other words, on the one hand, you've got something 470 00:24:42,200 --> 00:24:45,280 Speaker 1: very minimalist, on the other very maximalist. Yeah, and and remember, 471 00:24:45,400 --> 00:24:47,560 Speaker 1: did you do your taxes on a postcard? Means you 472 00:24:47,680 --> 00:24:50,280 Speaker 1: have to give up if it's an individual tax, you'd 473 00:24:50,280 --> 00:24:52,320 Speaker 1: have to give up the mortgage deduction and charitable interest 474 00:24:52,359 --> 00:24:54,880 Speaker 1: deduction and every other big deduction and credit that most 475 00:24:54,920 --> 00:24:57,840 Speaker 1: people want, which are so politically popular that you're never 476 00:24:57,880 --> 00:24:59,520 Speaker 1: going to give them up. So the postcards is going 477 00:24:59,600 --> 00:25:02,840 Speaker 1: to have to be an oversized postcard, probably with multiple folds, 478 00:25:02,840 --> 00:25:05,320 Speaker 1: if you're going to do it on a postcard. Uh, 479 00:25:06,000 --> 00:25:08,840 Speaker 1: is there advantage here to going two ways, doing personal 480 00:25:08,920 --> 00:25:11,160 Speaker 1: tax form and corporate tax forms separately? Why do both 481 00:25:11,200 --> 00:25:15,840 Speaker 1: at the same time. Well, chances are the Yeah, there's 482 00:25:15,840 --> 00:25:18,000 Speaker 1: a big support for doing the corporate tax but the 483 00:25:18,040 --> 00:25:21,520 Speaker 1: corporate tax reform first, or maybe only, And and a 484 00:25:21,640 --> 00:25:25,400 Speaker 1: lot of the folks who want individual tax reform are saying, 485 00:25:25,560 --> 00:25:27,679 Speaker 1: I'm not going to vote for the corporate side unless 486 00:25:27,680 --> 00:25:30,520 Speaker 1: you put the individual side together, because they don't think 487 00:25:30,520 --> 00:25:31,960 Speaker 1: there's going to be as much impetus to do the 488 00:25:32,000 --> 00:25:34,640 Speaker 1: individual side if it waits till later. So it's it's 489 00:25:34,720 --> 00:25:38,639 Speaker 1: purely political logistical. Um. Yeah, they could probably do the 490 00:25:38,720 --> 00:25:42,000 Speaker 1: individual the corporate side first, but it's not clear that 491 00:25:42,040 --> 00:25:44,119 Speaker 1: they would actually have the votes to do that because 492 00:25:44,119 --> 00:25:46,600 Speaker 1: some members we just hold back. I'm very interested in 493 00:25:46,640 --> 00:25:48,760 Speaker 1: what you're telling clients in London, what they're interested in, 494 00:25:48,920 --> 00:25:51,560 Speaker 1: and the message that you're telling You're you're conveying to 495 00:25:51,600 --> 00:25:54,080 Speaker 1: them about washing. Imagine that there is flummixed is all 496 00:25:54,119 --> 00:25:56,359 Speaker 1: of us about what's going on. And and recognize that 497 00:25:56,440 --> 00:25:59,160 Speaker 1: this Washington is different from a Washington five years, ten years, 498 00:25:59,200 --> 00:26:02,280 Speaker 1: twenty years ago. Tom, it looked like you were exasperator. 499 00:26:03,440 --> 00:26:06,240 Speaker 1: I just my head is spading over the border wall. 500 00:26:06,720 --> 00:26:10,240 Speaker 1: I mean was it David, like literally thirty hours ago? 501 00:26:10,680 --> 00:26:13,639 Speaker 1: If we're talking about the border wall, are we going 502 00:26:13,680 --> 00:26:17,040 Speaker 1: to see more of this standard? Oh? Absolutely. Look, first 503 00:26:17,080 --> 00:26:19,359 Speaker 1: of all, you don't you don't seem to have a 504 00:26:19,440 --> 00:26:21,560 Speaker 1: long term meeting, three day plan coming out of the 505 00:26:21,600 --> 00:26:26,000 Speaker 1: administration on any particular issue. Um. And and the border 506 00:26:26,040 --> 00:26:28,800 Speaker 1: wall is exactly that. That is. The President should have 507 00:26:28,920 --> 00:26:31,399 Speaker 1: known or his people should have known that threatening to 508 00:26:31,840 --> 00:26:35,440 Speaker 1: veto the Continuing Resolution over the over funding for a 509 00:26:35,480 --> 00:26:38,400 Speaker 1: border wall was just a political nonstarter and the Democrats 510 00:26:38,440 --> 00:26:39,960 Speaker 1: were never going to go along with that, so he 511 00:26:40,040 --> 00:26:42,800 Speaker 1: was setting himself up for a failure. So in the meantime, 512 00:26:42,920 --> 00:26:46,280 Speaker 1: two days later, twenty four hours later, the administration said, well, 513 00:26:46,320 --> 00:26:47,960 Speaker 1: it doesn't actually have to be funding for the wall. 514 00:26:48,040 --> 00:26:50,120 Speaker 1: It can just be you know, some sort of additional 515 00:26:50,160 --> 00:26:53,320 Speaker 1: border security. Helped David and me with the idea that 516 00:26:53,880 --> 00:26:56,359 Speaker 1: they get a plan, they get an idea and then 517 00:26:56,400 --> 00:26:58,240 Speaker 1: go in to the Oval office in the president United 518 00:26:58,240 --> 00:27:00,119 Speaker 1: States is no, we're not going to do that. Is 519 00:27:00,160 --> 00:27:02,560 Speaker 1: that the budget planning that we're doing right now, Well, 520 00:27:02,640 --> 00:27:04,359 Speaker 1: first of all, I'm not sure how much budget planning 521 00:27:04,400 --> 00:27:07,080 Speaker 1: we're doing. Uh, we can talk about that at length, 522 00:27:07,080 --> 00:27:10,600 Speaker 1: because you know that's my specialty. But um, I don't 523 00:27:10,600 --> 00:27:13,240 Speaker 1: see a whole lot of a big picture sit down. 524 00:27:13,359 --> 00:27:15,399 Speaker 1: Let's think about this, let's put it all the pieces 525 00:27:15,440 --> 00:27:16,919 Speaker 1: together and try to come up with a go here 526 00:27:16,960 --> 00:27:19,760 Speaker 1: and plan. And now to get to David's question, David, 527 00:27:19,800 --> 00:27:23,200 Speaker 1: that's exactly what I'm in London talking to clients about, 528 00:27:23,240 --> 00:27:26,040 Speaker 1: which is the irrationality and the lack of planning. And 529 00:27:26,119 --> 00:27:28,880 Speaker 1: so that don't assume just because something doesn't make any 530 00:27:28,920 --> 00:27:30,440 Speaker 1: sense that it's not going to be done that way, 531 00:27:30,840 --> 00:27:33,480 Speaker 1: or it's not going to happen that way. Um, it's 532 00:27:33,560 --> 00:27:36,080 Speaker 1: it's that level of irrationality that I've been telling clients 533 00:27:36,080 --> 00:27:37,680 Speaker 1: about it for a couple of years and it's just 534 00:27:37,760 --> 00:27:41,120 Speaker 1: gotten worse since the election. Stan Calder joining U stuff 535 00:27:41,119 --> 00:27:44,119 Speaker 1: from London today. Stan Calder, senior vice president, executive vice 536 00:27:44,160 --> 00:27:47,040 Speaker 1: president with MSL Group up can give us valuable information, 537 00:27:47,160 --> 00:27:49,200 Speaker 1: valuable in sight there on the budget process. Yes, but 538 00:27:49,280 --> 00:27:52,480 Speaker 1: it's just all of the legislative back and forth in Washington, 539 00:27:52,600 --> 00:27:54,320 Speaker 1: d C. Town. David and I try to be here 540 00:27:54,359 --> 00:27:56,840 Speaker 1: for every minute of surveillance across the six hours that 541 00:27:56,960 --> 00:27:59,280 Speaker 1: we do every day. David's got a show, of course, 542 00:27:59,320 --> 00:28:02,040 Speaker 1: what is the David can't remember twenty o'clock? Excuse me? 543 00:28:02,359 --> 00:28:04,520 Speaker 1: So you know we're going like the whole time, and 544 00:28:04,600 --> 00:28:07,040 Speaker 1: we're you know, I mean, John Tucker, you're a Gerbil. 545 00:28:07,119 --> 00:28:09,760 Speaker 1: We're not. I mean, we get that. But there's points 546 00:28:09,800 --> 00:28:12,960 Speaker 1: where we just miss a few precious minutes. And I'm 547 00:28:13,080 --> 00:28:15,840 Speaker 1: sorry David that I missed the few precious minutes of 548 00:28:15,880 --> 00:28:19,600 Speaker 1: that beginning block was standing, no worries. Now we was 549 00:28:19,640 --> 00:28:22,399 Speaker 1: getting a sandwich. It was no, I was not getting 550 00:28:22,880 --> 00:28:28,359 Speaker 1: an advanced Pierre Sandwich. I was getting Walkers shortbreads, which 551 00:28:28,480 --> 00:28:31,520 Speaker 1: is which I understand you can get at the vincil 552 00:28:31,520 --> 00:28:34,600 Speaker 1: em Party truck stop on the New Jersey Turnpike. Yeah, 553 00:28:35,359 --> 00:28:38,960 Speaker 1: I think I stopped their advanced pr restaurant quality microwave 554 00:28:39,040 --> 00:28:42,480 Speaker 1: convenience taken up by Tyson's Food says. If there's a 555 00:28:42,520 --> 00:28:45,560 Speaker 1: lot of mergers going out, seriously, a lot of mergers 556 00:28:45,640 --> 00:28:49,040 Speaker 1: going on, starting with Bectan, Dickinson, c R. Barton on Sunday, 557 00:28:49,080 --> 00:29:06,440 Speaker 1: stay with us worldwide. This is Bloomberg David Harrold Joyce's 558 00:29:06,560 --> 00:29:11,360 Speaker 1: O David. The international stocks still outperforming as they have 559 00:29:12,040 --> 00:29:16,720 Speaker 1: for the recent months. Yeah, we've had especially after yesterday, 560 00:29:16,800 --> 00:29:19,440 Speaker 1: which was a very large day. You saw the European 561 00:29:19,520 --> 00:29:23,680 Speaker 1: markets were up over three response to what happened on 562 00:29:23,800 --> 00:29:26,320 Speaker 1: Sunday in the election. Kind of a relief for Alley 563 00:29:27,080 --> 00:29:31,360 Speaker 1: and Yeah, I'm looking at our various portfolils and funds 564 00:29:31,400 --> 00:29:34,360 Speaker 1: we manage. We're all up well into the double digits, 565 00:29:34,440 --> 00:29:36,600 Speaker 1: which of course you have to be able careful about 566 00:29:36,720 --> 00:29:42,640 Speaker 1: because uh value often almost rarely changes at the same 567 00:29:42,920 --> 00:29:47,160 Speaker 1: rate that price does. Now we're seeing this price is 568 00:29:47,200 --> 00:29:49,840 Speaker 1: going up faster than values of being created meaning the 569 00:29:49,920 --> 00:29:53,000 Speaker 1: value gap shrinks. I did this chart on Facebook Live yesterday. 570 00:29:53,080 --> 00:29:56,520 Speaker 1: Karen Buchanan demanded that I do this chart. Are a 571 00:29:57,200 --> 00:30:01,000 Speaker 1: head of all production? And and and David, My story 572 00:30:01,240 --> 00:30:03,640 Speaker 1: was cr Bard. Did you own see our Bard with 573 00:30:03,720 --> 00:30:07,560 Speaker 1: the Becton Dickinson take out? Okay, so you know they're 574 00:30:07,560 --> 00:30:09,800 Speaker 1: done better than good. They made four a year for 575 00:30:09,880 --> 00:30:13,080 Speaker 1: the last ten years. But even in a buying a 576 00:30:13,160 --> 00:30:17,040 Speaker 1: hold strategy on a moving average basis, there are quiet 577 00:30:17,360 --> 00:30:21,960 Speaker 1: boring periods. How does David Harrow manage when a stock 578 00:30:22,040 --> 00:30:26,680 Speaker 1: goes nowhere? Why do you handle the well? You take 579 00:30:26,720 --> 00:30:30,160 Speaker 1: advantage of it. Really, if price isn't reflective of the 580 00:30:30,280 --> 00:30:33,920 Speaker 1: underlying build up of intrinsic value, then that becomes a 581 00:30:33,960 --> 00:30:37,640 Speaker 1: buying opportunity. And if price moves a lot more aggressively 582 00:30:37,760 --> 00:30:42,360 Speaker 1: than the build up than underlying value, becomes a trim 583 00:30:42,560 --> 00:30:45,920 Speaker 1: or a selling opportunity. And so we don't really look 584 00:30:46,040 --> 00:30:48,800 Speaker 1: at price movement. We look at the build up or 585 00:30:48,880 --> 00:30:52,400 Speaker 1: the changes that occur in intrinsic value, which is essentially 586 00:30:53,000 --> 00:30:56,200 Speaker 1: pre cash flow per share. That's what makes a company 587 00:30:56,280 --> 00:30:59,480 Speaker 1: valuable is the is the cash that the business generates. 588 00:31:00,000 --> 00:31:02,600 Speaker 1: And so as long as the management team is able 589 00:31:02,640 --> 00:31:07,360 Speaker 1: to drive cash flow per share in a favorable fashion, 590 00:31:07,600 --> 00:31:10,520 Speaker 1: then we're happy. MR Market, you know, for some reason, 591 00:31:10,640 --> 00:31:13,600 Speaker 1: isn't focused on it. If MR Market is ignoring it, 592 00:31:13,760 --> 00:31:17,920 Speaker 1: that's fine because eventually our view is that MR market 593 00:31:17,960 --> 00:31:21,280 Speaker 1: will catch up with fundamentals. How does this this environment 594 00:31:21,360 --> 00:31:23,800 Speaker 1: look for for more mergers, Tom mentioning, we've seen a 595 00:31:23,840 --> 00:31:25,480 Speaker 1: number of them here over these last couple of a 596 00:31:25,560 --> 00:31:27,640 Speaker 1: couple of days. Do you expect it's going to be 597 00:31:27,960 --> 00:31:31,360 Speaker 1: a better environment form going forward? Well, I don't know if. 598 00:31:31,520 --> 00:31:33,440 Speaker 1: I mean, it's been so strong, so I don't know 599 00:31:33,520 --> 00:31:35,640 Speaker 1: how much better it can yet, but I I would 600 00:31:35,720 --> 00:31:39,800 Speaker 1: anticipate that it continues to go on at a at 601 00:31:39,840 --> 00:31:44,080 Speaker 1: a measurable pace. Why because you still have reasonable interest rates, 602 00:31:44,640 --> 00:31:50,200 Speaker 1: there's still opportunities. Companies are having trouble finding growth pockets. 603 00:31:50,600 --> 00:31:53,800 Speaker 1: So what they're doing is trying to merge to gain synergies. 604 00:31:53,840 --> 00:31:58,200 Speaker 1: As an example of a ppg ax Nobell merger, so 605 00:31:58,280 --> 00:32:02,000 Speaker 1: they're using this as a way to utter leverage fixed 606 00:32:02,120 --> 00:32:05,440 Speaker 1: and even human assets. And maybe the asset is the 607 00:32:05,560 --> 00:32:10,440 Speaker 1: distribution system, or it's it's getting better scale and manufacturing. 608 00:32:10,880 --> 00:32:13,479 Speaker 1: You know, the one area where I'm really surprised there 609 00:32:13,520 --> 00:32:17,000 Speaker 1: has been more corporate activity. Is an audible field market. 610 00:32:17,520 --> 00:32:21,480 Speaker 1: You know. Mr Marcioni at Chrysler wrote a paper called 611 00:32:21,560 --> 00:32:26,360 Speaker 1: Confessions of a Capital Junkie, and I basically just demonstrated 612 00:32:26,520 --> 00:32:30,160 Speaker 1: that that industry just as too much capital and there's 613 00:32:30,200 --> 00:32:32,360 Speaker 1: so much the leverage that could be obtained if you 614 00:32:32,960 --> 00:32:36,320 Speaker 1: merge some of these companies and combined some of these brands. 615 00:32:36,640 --> 00:32:40,200 Speaker 1: You saw a little bit of this after the financial crisis, 616 00:32:40,280 --> 00:32:42,680 Speaker 1: but I'm really surprised we haven't seen a little bit more. 617 00:32:43,720 --> 00:32:45,960 Speaker 1: Let me ask you about what changed for you on 618 00:32:46,200 --> 00:32:48,800 Speaker 1: on Sunday night when we got the election results from France. 619 00:32:48,800 --> 00:32:51,040 Speaker 1: Imagine you were looking ahead to whether or not we 620 00:32:51,120 --> 00:32:55,800 Speaker 1: see elections in Italy. But he was he was watching faithball. 621 00:32:56,520 --> 00:32:59,360 Speaker 1: But some time I saw the Rangers playing Dallas on 622 00:32:59,520 --> 00:33:08,040 Speaker 1: Friday saw beat the Royals. But but how how much 623 00:33:08,200 --> 00:33:09,920 Speaker 1: how much does the sort of the political risk factor 624 00:33:09,960 --> 00:33:12,080 Speaker 1: in for you going forward looking ahead to to perhaps 625 00:33:12,120 --> 00:33:16,400 Speaker 1: an election Italy. Yeah, we're the political risk really manifests 626 00:33:16,440 --> 00:33:19,400 Speaker 1: itself and a lot of these financial holdings that we have, 627 00:33:19,640 --> 00:33:23,600 Speaker 1: as you know, we're still overweight European financials in particular, 628 00:33:24,400 --> 00:33:28,320 Speaker 1: and the political stability seems to be better for these 629 00:33:28,520 --> 00:33:31,720 Speaker 1: companies prices. Now again the question is is really that 630 00:33:31,880 --> 00:33:35,160 Speaker 1: much better for their business or not? But it's I 631 00:33:35,240 --> 00:33:39,320 Speaker 1: mean clearly the result who was was accepted by the 632 00:33:39,440 --> 00:33:42,560 Speaker 1: markets or something quite positive because it looks like Mrs 633 00:33:42,680 --> 00:33:45,880 Speaker 1: Lapenn is going to have a very very difficult path 634 00:33:45,960 --> 00:33:50,520 Speaker 1: to victory, and that the person Mr McCrone who um, 635 00:33:51,440 --> 00:33:55,080 Speaker 1: who gathered the most votes is seen as you know, 636 00:33:55,200 --> 00:33:58,760 Speaker 1: a cent for someone who's sympathetic towards shareholder of free 637 00:33:58,800 --> 00:34:02,360 Speaker 1: market capitalism. And I mean that in itself is a 638 00:34:02,440 --> 00:34:06,560 Speaker 1: plus for a French leader US. Not often you don't 639 00:34:06,640 --> 00:34:09,439 Speaker 1: have this attitude. And I think he understands that free 640 00:34:09,480 --> 00:34:12,359 Speaker 1: markets and capitalism are the way that well it has 641 00:34:12,440 --> 00:34:16,840 Speaker 1: created for your for your country. Mr he Um owns 642 00:34:16,880 --> 00:34:19,640 Speaker 1: BMP Perry BA and the answers. It's been a moonshot. 643 00:34:20,120 --> 00:34:23,160 Speaker 1: Given a few years ago, it's essentially thirty to seventy, 644 00:34:23,719 --> 00:34:27,440 Speaker 1: maybe it's forty to seventy recently. You've owned this thing forever. 645 00:34:27,600 --> 00:34:30,840 Speaker 1: Do you buy more here? Is it's still a value 646 00:34:31,239 --> 00:34:34,480 Speaker 1: or you had your ride on BMP Perry back. Well, 647 00:34:34,560 --> 00:34:37,160 Speaker 1: we think it's still a value. But because a big 648 00:34:37,239 --> 00:34:39,520 Speaker 1: position got a lot bigger that you know, you don't 649 00:34:39,880 --> 00:34:43,600 Speaker 1: necessarily buy it because the market increased our weight for 650 00:34:44,040 --> 00:34:47,360 Speaker 1: us UH and if anything, you know, given where it 651 00:34:47,440 --> 00:34:49,560 Speaker 1: stood in our portfolio, we had to trim a little. 652 00:34:50,080 --> 00:34:52,880 Speaker 1: But it's still to us, it's still a good value. 653 00:34:53,120 --> 00:34:55,720 Speaker 1: You know. One of the things that people are failing 654 00:34:55,760 --> 00:34:58,440 Speaker 1: to adjust in their bank models in Europe is some 655 00:34:58,560 --> 00:35:01,040 Speaker 1: kind of interest rate normal Is that? I mean, I 656 00:35:01,160 --> 00:35:03,279 Speaker 1: do not believe that interest rates are going to be 657 00:35:03,360 --> 00:35:06,040 Speaker 1: negative or law forever. And as the interest rates begin 658 00:35:06,160 --> 00:35:09,520 Speaker 1: to drift up, as the economy improved, as the political 659 00:35:09,600 --> 00:35:13,040 Speaker 1: situation dies down, you'll start to see interest rate squad 660 00:35:13,080 --> 00:35:15,600 Speaker 1: which will be good for these financials. And I think 661 00:35:15,600 --> 00:35:18,440 Speaker 1: a lot of people don't really you know, include this 662 00:35:19,239 --> 00:35:22,560 Speaker 1: or price these things on normalcy. When we price the business, 663 00:35:22,640 --> 00:35:26,080 Speaker 1: we look at normal conditions, not current is BNP Perry 664 00:35:26,160 --> 00:35:29,560 Speaker 1: busy European proxy. Are they going to generate for David 665 00:35:29,640 --> 00:35:33,400 Speaker 1: Harrow dividend growth? I mean there their income statement as 666 00:35:33,440 --> 00:35:36,759 Speaker 1: an act of God, it's hugely profitable. Are they going 667 00:35:36,800 --> 00:35:39,359 Speaker 1: to give you that cash? Are they going to say 668 00:35:39,400 --> 00:35:44,240 Speaker 1: mooned you? No? They this is a very very well company, 669 00:35:44,440 --> 00:35:47,600 Speaker 1: I mean as a very shareholder oriented company. In fact, 670 00:35:47,960 --> 00:35:50,959 Speaker 1: in fact, when they had that big fine a couple 671 00:35:50,960 --> 00:35:53,520 Speaker 1: of years ago, they didn't even cut their dividend because 672 00:35:53,560 --> 00:35:56,320 Speaker 1: they had enough safety capital and they didn't want the 673 00:35:56,360 --> 00:35:59,719 Speaker 1: shareholders to pay. And so they maintain their dividend. And 674 00:36:00,040 --> 00:36:03,360 Speaker 1: as they continue to grow their earnings despite this interest 675 00:36:03,480 --> 00:36:07,040 Speaker 1: rate environment. They've been growing their earnings through cutting costs 676 00:36:07,200 --> 00:36:11,520 Speaker 1: and operating more efficiently and through our long losses enters. 677 00:36:11,520 --> 00:36:14,840 Speaker 1: The result we have seen the dividends go up in 678 00:36:14,920 --> 00:36:19,160 Speaker 1: the payout ratio remains steady to hire. So uh, even 679 00:36:19,239 --> 00:36:22,279 Speaker 1: today after the will run, the stock yields over four 680 00:36:22,360 --> 00:36:25,800 Speaker 1: percent on twenty seventeens dividend. David Harrow with US on 681 00:36:25,880 --> 00:36:28,719 Speaker 1: BMP period, which is quite a move. And uh, you 682 00:36:28,800 --> 00:36:31,839 Speaker 1: know he goes back and forth. If international doesn't do that, well, 683 00:36:32,000 --> 00:36:35,239 Speaker 1: Mr Harrold watches more Cubs, more Brewers, He goes see 684 00:36:35,320 --> 00:36:38,720 Speaker 1: Green Bay and Rangers when things were where what's that about? 685 00:36:39,160 --> 00:36:41,560 Speaker 1: And then you know he goes, you know, when things 686 00:36:41,800 --> 00:36:45,400 Speaker 1: crank it up, you know, buys half of Wisconsin or 687 00:36:45,440 --> 00:36:47,120 Speaker 1: whatever he does with his money. We'll come back with 688 00:36:47,239 --> 00:36:51,000 Speaker 1: David David Harrow with US Hares Associates. David is Canada 689 00:36:51,120 --> 00:36:53,759 Speaker 1: avail you I mean weaker currency, and it's got to 690 00:36:53,800 --> 00:36:56,320 Speaker 1: come out of these and there's a whole uproar about 691 00:36:56,520 --> 00:37:01,200 Speaker 1: lumber and in all that, Um, David, help me with Canada. 692 00:37:01,360 --> 00:37:04,400 Speaker 1: Is it something we can invest in US? Something you 693 00:37:04,520 --> 00:37:08,600 Speaker 1: can invest in? It's it's somewhat difficult to find names 694 00:37:08,680 --> 00:37:10,759 Speaker 1: that meet our criteria. We have a few things, We 695 00:37:10,840 --> 00:37:15,719 Speaker 1: have a few investments and our small cap portfolios up there. Um, 696 00:37:15,920 --> 00:37:19,840 Speaker 1: it's an interesting place. It's a vibrant economy. Um. But 697 00:37:20,400 --> 00:37:23,080 Speaker 1: you know, the banks because they're so high quality, they're 698 00:37:23,160 --> 00:37:26,440 Speaker 1: kind of expensive. You have a couple of big manufacturers 699 00:37:26,560 --> 00:37:30,000 Speaker 1: like Bombardier, but they're just saddled with debt. And then 700 00:37:30,040 --> 00:37:33,440 Speaker 1: there's all the mining and mining support and energy business 701 00:37:33,520 --> 00:37:35,480 Speaker 1: and those are some of the things which you could 702 00:37:35,520 --> 00:37:37,719 Speaker 1: look at and pick around the corners to see if 703 00:37:38,160 --> 00:37:41,120 Speaker 1: something looks attractive. When you look at and listen to 704 00:37:41,239 --> 00:37:43,840 Speaker 1: what's coming out of Washington right now, David, I'm curious 705 00:37:43,920 --> 00:37:46,160 Speaker 1: what what's making the most sense to Douse. You see 706 00:37:46,360 --> 00:37:49,440 Speaker 1: the contours of these taxiform plans in particular, how do 707 00:37:49,600 --> 00:37:52,080 Speaker 1: might affect you're investing here in the US. Yeah, the 708 00:37:52,200 --> 00:37:56,520 Speaker 1: problem is we don't get the specific details yet. I mean, 709 00:37:56,640 --> 00:38:00,960 Speaker 1: you hear the presidents throughout a number fifteen corporate rate, 710 00:38:01,560 --> 00:38:05,960 Speaker 1: and then something of the Congress for first. When we're 711 00:38:06,040 --> 00:38:10,640 Speaker 1: at this proposal stage, people I think are positioning for negotiation, 712 00:38:11,440 --> 00:38:16,680 Speaker 1: and the out the outcome of this negotiation is very 713 00:38:16,800 --> 00:38:19,719 Speaker 1: very unclear. I think we do know the rates are 714 00:38:19,880 --> 00:38:23,200 Speaker 1: heading lower. We do know that they will take away 715 00:38:23,400 --> 00:38:26,440 Speaker 1: some certain deductions, and this is probably a very good 716 00:38:26,520 --> 00:38:30,560 Speaker 1: thing because the more you could remove distortions from the economy, 717 00:38:30,960 --> 00:38:34,320 Speaker 1: the more you can get market participants making decisions based 718 00:38:34,400 --> 00:38:38,120 Speaker 1: on the forces of supplying demand, in my view, the better. 719 00:38:38,520 --> 00:38:41,560 Speaker 1: And a tax system that's reflective of this will help 720 00:38:41,680 --> 00:38:48,440 Speaker 1: more efficiently allocate resources. So, yes, lower rates, Yes, takeaway deductions, um, 721 00:38:48,680 --> 00:38:50,239 Speaker 1: And I think the more you could do those two 722 00:38:50,320 --> 00:38:53,160 Speaker 1: things the better. And at this stage we just don't 723 00:38:53,239 --> 00:38:58,000 Speaker 1: have enough details. And I just hope that the government 724 00:38:58,160 --> 00:39:01,880 Speaker 1: will be able to withstand the pressure they're going to 725 00:39:01,960 --> 00:39:04,720 Speaker 1: get from the special interest groups not to take away 726 00:39:04,840 --> 00:39:08,560 Speaker 1: their pet deductions, whether it's beon what we're talking about 727 00:39:08,560 --> 00:39:11,600 Speaker 1: personal rates or business rates. So is your is is 728 00:39:11,680 --> 00:39:14,560 Speaker 1: your attitude toward all of this now one of wait 729 00:39:14,640 --> 00:39:16,719 Speaker 1: and see? Are you frustrated with the pace of how 730 00:39:16,760 --> 00:39:19,640 Speaker 1: it's going? What's your what's your sense of how are 731 00:39:19,640 --> 00:39:22,520 Speaker 1: your reaction to what's happening in Washington right now? I 732 00:39:22,560 --> 00:39:26,040 Speaker 1: would rather have them do it carefully and slowly and 733 00:39:26,239 --> 00:39:31,440 Speaker 1: correctly than rapidly and incorrectly. And as you saw with 734 00:39:31,600 --> 00:39:35,480 Speaker 1: the initial m the visa thing when it was rushed 735 00:39:35,520 --> 00:39:38,680 Speaker 1: don't and it was un kind of sloppily. Uh, it 736 00:39:38,840 --> 00:39:42,040 Speaker 1: was not a good it was not effective. Now, if 737 00:39:42,080 --> 00:39:45,759 Speaker 1: they do this tax reform and health to reform in 738 00:39:45,880 --> 00:39:49,600 Speaker 1: a very careful manner, looking at you know, the various 739 00:39:49,680 --> 00:39:54,560 Speaker 1: economic impacts each one of these policy proposals have, and 740 00:39:54,640 --> 00:39:58,000 Speaker 1: if they do this deliberately and then go all out 741 00:39:58,040 --> 00:40:00,360 Speaker 1: at getting your votes, I think that is way to 742 00:40:00,480 --> 00:40:03,319 Speaker 1: do it. You don't have to. You want to make progress, Yes, 743 00:40:03,440 --> 00:40:05,480 Speaker 1: you want to keep moving the football down the field, 744 00:40:05,760 --> 00:40:08,239 Speaker 1: you know, similar to what Aaron Rodgers does consistently on 745 00:40:08,320 --> 00:40:12,040 Speaker 1: a Sunday afternoon. This is what you want to be done. 746 00:40:12,520 --> 00:40:18,080 Speaker 1: But what you don't want is it done incorrectly. Whose 747 00:40:19,320 --> 00:40:25,200 Speaker 1: packers because they rushed? Uh? This year, David, I'm going 748 00:40:25,239 --> 00:40:28,360 Speaker 1: to talk to you about a foreign a foreign country 749 00:40:28,440 --> 00:40:31,239 Speaker 1: with multinationals that would be the United States of America. 750 00:40:31,640 --> 00:40:34,640 Speaker 1: Even an international guy like you could can find value 751 00:40:35,120 --> 00:40:37,800 Speaker 1: in the U S. Where is it? Yeah, when I 752 00:40:38,040 --> 00:40:41,320 Speaker 1: look at how our global portfolios are positioned, for example, 753 00:40:41,400 --> 00:40:45,120 Speaker 1: we still have a decent amount and kind of some 754 00:40:45,280 --> 00:40:49,960 Speaker 1: of them. We have the technology names like Alphabet because 755 00:40:50,200 --> 00:40:53,359 Speaker 1: that to us represents good value even though it looks 756 00:40:53,400 --> 00:40:55,759 Speaker 1: a little pricy when you look at the cash and 757 00:40:55,880 --> 00:41:00,440 Speaker 1: the growth and the investments, they have almost unpopped kernels 758 00:41:01,080 --> 00:41:04,040 Speaker 1: UH and their leadership position. You know, we think this 759 00:41:04,360 --> 00:41:06,600 Speaker 1: this this is a good stock. And if you look 760 00:41:06,640 --> 00:41:09,320 Speaker 1: at some of our other top names, names like General Motors. 761 00:41:10,040 --> 00:41:12,320 Speaker 1: Now it's not the most dynamic company in the world, 762 00:41:12,520 --> 00:41:14,800 Speaker 1: but it's growing. It's cash floor stream and you're paying 763 00:41:14,920 --> 00:41:18,040 Speaker 1: a very very low price for the cash floor stream, 764 00:41:18,080 --> 00:41:21,279 Speaker 1: and it is a strong UH balance sheet. You know, 765 00:41:21,360 --> 00:41:25,040 Speaker 1: the healthcare stocks H companies like this have gotten really 766 00:41:25,120 --> 00:41:29,080 Speaker 1: tossed around over what happens with healthcare, David, So there 767 00:41:29,160 --> 00:41:32,279 Speaker 1: there is opportunity in the US markets, is our view. David, 768 00:41:32,840 --> 00:41:36,040 Speaker 1: thank you so much, greatly appreciated. He is with Harris Associates. 769 00:41:36,280 --> 00:41:38,560 Speaker 1: Really interesting. I'm gonna put on a chart on trade 770 00:41:38,600 --> 00:41:43,799 Speaker 1: weighted Canadian dollar. It's fascinating. David Gurr and Tom Keane worldwide, 771 00:41:44,120 --> 00:41:56,480 Speaker 1: this is Bloomberg. Thanks for listening to the Bloomberg Surveillance Podcast. 772 00:41:56,960 --> 00:42:02,160 Speaker 1: Subscribe and listen to interviews on Apple Podcasts, SoundCloud, or 773 00:42:02,280 --> 00:42:06,560 Speaker 1: whichever podcast platform you prefer. I'm on Twitter at Tom Keene. 774 00:42:06,680 --> 00:42:11,000 Speaker 1: David Gura is at David Gura. Before the podcast, you 775 00:42:11,080 --> 00:42:25,400 Speaker 1: can always catch us worldwide. I'm Bloomberg Radio, brought you 776 00:42:25,560 --> 00:42:29,160 Speaker 1: by Bank of America Mary Lynch. Dedicated to bringing our 777 00:42:29,239 --> 00:42:32,800 Speaker 1: clients insights and solutions to meet the challenges of a 778 00:42:32,880 --> 00:42:37,279 Speaker 1: transforming world. That's the power of global connections. Mary Lynch, 779 00:42:37,440 --> 00:42:41,719 Speaker 1: Pierce Feeder and Smith Incorporated Member s I p C.