WEBVTT - Trump’s Win and Its Industry Impacts 0:00:14.040 --> 0:00:17.720 Hello, and welcome to the Votes and Verdicts podcast, hosted 0:00:17.760 --> 0:00:21.239 by the litigation and policy team at Bloomberg Intelligence, the 0:00:21.280 --> 0:00:25.840 investment research platform of Bloomberg LP. Bloomberg Intelligence has five 0:00:25.920 --> 0:00:29.800 hundred analysts and strategists working across the globe and focused 0:00:29.800 --> 0:00:33.519 on all major markets. Our coverage includes over two thousand 0:00:33.560 --> 0:00:36.440 equities and credits, and we have outlooks on more than 0:00:36.560 --> 0:00:40.760 ninety industries and one hundred market industries, currencies and commodities. 0:00:41.360 --> 0:00:45.800 This podcast series examines the intersection of business policy and law. 0:00:46.280 --> 0:00:50.560 I'm Elliott Stein, an analysts with Bloomberg Intelligence covering financials litigation. 0:00:51.960 --> 0:00:55.600 The Forthcoming Conversation was a post election webinar that our 0:00:55.640 --> 0:01:01.080 Bloomberg Intelligence policy analysts hosted on November sean to discuss 0:01:01.400 --> 0:01:05.480 the industry impacts of the November fifth US elections, which 0:01:05.520 --> 0:01:08.760 saw Donald Trump win the presidency and Republicans take control 0:01:08.880 --> 0:01:11.920 of the Senate. The House of Representatives has yet to 0:01:12.000 --> 0:01:16.080 be called as of this recording, but various new sources 0:01:16.120 --> 0:01:20.119 point to a likely slim Republican majority. I was joined 0:01:20.120 --> 0:01:24.479 by my colleagues Nathan Dean, Jenrie, Matt Schattenhelm, Holly from 0:01:24.840 --> 0:01:29.200 Justin TERESI Rob Barnett, Andrews Silverman, and Ben Elliott. I 0:01:29.200 --> 0:01:30.400 hope you enjoyed the episode. 0:01:30.400 --> 0:01:30.720 Thank you. 0:01:31.959 --> 0:01:35.160 We saw Donald Trump win the presidency and Republicans take 0:01:35.200 --> 0:01:39.160 control of the Senate. The House of Representatives has yet 0:01:39.200 --> 0:01:42.399 to be called as of this recording, but it does 0:01:42.440 --> 0:01:46.880 seem from various news sources at this point that is 0:01:47.000 --> 0:01:51.240 likely to also go to the Republicans. I'm Elliot Stein. 0:01:51.240 --> 0:01:54.320 I'm a litigation analyst with Bloomberg Intelligence. Thank you all 0:01:54.440 --> 0:01:57.680 for joining today. I'm delighted today to also be joined 0:01:57.680 --> 0:02:02.640 by my bi policy analyst colleagues. We have several on 0:02:02.680 --> 0:02:05.160 the line here, so let me just introduce them quickly. 0:02:05.920 --> 0:02:09.480 We have Nathan Dean who covers financials policy, Ben Elliott, 0:02:09.480 --> 0:02:12.880 who covers Fannie May and Freddie Mack and the card lenders. 0:02:13.080 --> 0:02:18.000 Holly from who covers consumer and industrials policy and litigation. 0:02:18.760 --> 0:02:23.240 Justin Teresi and Jen Ree who cover antitrust policy in litigation. 0:02:23.960 --> 0:02:28.720 Andrews Silverman who covers tax policy, Rob Barnett who covers renewables, 0:02:29.160 --> 0:02:33.919 and Matt Chettenhelm who covers TMT litigation and policy. So 0:02:33.960 --> 0:02:37.639 we have a lot of sectors and issues to cover today. 0:02:37.720 --> 0:02:41.600 So I'm going to stop my introductory remarks here and 0:02:41.800 --> 0:02:45.120 we'll start going around the horn to hear from all 0:02:45.200 --> 0:02:47.480 of my colleagues on this call. We're going to start 0:02:47.880 --> 0:02:50.520 with Holly from who, like I said, covers policy and 0:02:50.639 --> 0:02:54.600 litigation in the consumer sector as well as the industrial sector, 0:02:56.080 --> 0:02:58.920 since the imposition of tariffs is likely to be one 0:02:58.960 --> 0:03:02.160 of the first things we see President Trump do when 0:03:02.160 --> 0:03:05.240 he takes office. So, Hollie, what why don't you come 0:03:05.280 --> 0:03:09.480 in tell us what you are thinking and seeing and 0:03:09.639 --> 0:03:13.080 expecting in terms of tarriffs and other issues in the 0:03:13.320 --> 0:03:15.000 consumer and industrial sectors. 0:03:15.440 --> 0:03:18.640 Sure, thanks, Elliott. So, the top thing that we're looking 0:03:18.680 --> 0:03:22.040 at from Trump's administration that could impact consumer and industrial 0:03:22.080 --> 0:03:26.480 space are terroriffs, like you said, changes to electric vehicle policy, 0:03:26.560 --> 0:03:29.919 and potential revision to p pass rules. So I'll start 0:03:29.960 --> 0:03:32.880 with tariffs. Trump has made tariffs an important part of 0:03:32.919 --> 0:03:35.360 his economic plan. He said he would impose terris of 0:03:35.440 --> 0:03:38.160 sixty percent on goods from China, and we think that 0:03:38.200 --> 0:03:41.800 could impact apparel companies like Nike and Adidas, who source 0:03:41.840 --> 0:03:44.840 fourteen to eighteen percent of their footwear from China according 0:03:44.880 --> 0:03:49.040 to BI estimates, and perhaps auto companies too, like Bolo 0:03:49.120 --> 0:03:52.080 and full Stars and some of their evs are meeting China. 0:03:52.400 --> 0:03:55.840 Trump has also pledged tariffs at a rate of ten 0:03:55.960 --> 0:03:58.440 to twenty percent on goods from everywhere else, and we 0:03:58.480 --> 0:04:01.320 think that could impact a peril companies like Lululemon and 0:04:01.360 --> 0:04:05.480 All Birds, given they largely make products in Vietnam. Opponents 0:04:05.480 --> 0:04:08.320 have said Trump's tariffs could drive up per household costs 0:04:08.360 --> 0:04:11.560 by over two thousand dollars a year. So does Trump 0:04:11.600 --> 0:04:13.800 have the power to do that this The short answer 0:04:13.800 --> 0:04:17.080 we think is yes, very such. He'd delegate congressional authority 0:04:17.120 --> 0:04:19.880 to the president to impose tariffs when, for example, they 0:04:19.880 --> 0:04:23.960 are necessary to tech national security, to prevent appreciation of 0:04:24.000 --> 0:04:27.240 the dollar, or when a foreign countries practices deny US 0:04:27.360 --> 0:04:30.400 rights under trade agreements or burning US commerce. This last 0:04:30.440 --> 0:04:32.960 section refers to powers granted to the president under section 0:04:33.040 --> 0:04:35.560 three oh one of the Trade Acts. President Trump used 0:04:35.600 --> 0:04:38.279 this power in twenty eighteen to impose terror some five 0:04:38.320 --> 0:04:42.240 hundred billion dollars worth of goods. Multiple companies challenge these 0:04:42.279 --> 0:04:44.920 actions in the US Court of International Trade, which never 0:04:45.000 --> 0:04:47.679 ruled on the case because the Biden administigation took over 0:04:47.960 --> 0:04:49.960 and the case was rendered moot. But we think that 0:04:50.000 --> 0:04:52.360 those challenges were her, the court would have held them, 0:04:52.400 --> 0:04:55.760 and this is because courts have read terror powers very broadly. 0:04:55.800 --> 0:04:57.640 In fact, we have them openated a single case in 0:04:57.640 --> 0:05:01.320 which a court invalidated the president's imposition terror under this section. 0:05:01.800 --> 0:05:05.560 So that is why we think this judicial challenge will fail. 0:05:05.800 --> 0:05:08.359 With regard to electric vehicle policies, we think there's a 0:05:08.360 --> 0:05:11.320 strong chance that tax credits granted in the Inflation Reduction 0:05:11.400 --> 0:05:13.880 Act to purchasers of eed vehicles in the amount of 0:05:13.920 --> 0:05:17.440 seven thousand, five hundred for new vehicles and four thousand 0:05:17.440 --> 0:05:20.800 dollars for used vehicles use DV vehicles could be scaled 0:05:20.839 --> 0:05:23.640 back now that President Trump has been re elected. We 0:05:23.720 --> 0:05:26.480 also continued to try to scale back Biden administration EPA 0:05:26.600 --> 0:05:30.120 rules that required more stringent emission limits on light and 0:05:30.160 --> 0:05:34.400 medium d vehicles. While on the campaign trail, Trump pledged 0:05:34.440 --> 0:05:37.039 to eliminate a so called eb mandate, and when he 0:05:37.120 --> 0:05:40.680 was president, he attempted to scale back Obama EPA mission rules. 0:05:40.960 --> 0:05:43.880 The elimination these credits and potential revision to EPA rules 0:05:43.960 --> 0:05:46.800 could benefit traditional automakers like Ford and Toyota, who have 0:05:46.880 --> 0:05:49.440 blessed EV penetration, and we think it could hurt ev 0:05:49.560 --> 0:05:52.640 companies and companies that provide charging our grid infrastructure for 0:05:53.080 --> 0:05:57.080 eeds like Sensada to connectivity and Eton. The final thing 0:05:57.120 --> 0:05:59.800 we expect may happen during Trump's administration relate to pe 0:06:00.600 --> 0:06:03.280 p fasts were so called forever chemicals are chemicals that 0:06:03.279 --> 0:06:05.480 have been found in the drinking water and have been 0:06:05.520 --> 0:06:08.920 linked to serious, diverse health effects. The Biden administration ep 0:06:09.040 --> 0:06:11.000 and March promulgated rules that would make two of the 0:06:11.000 --> 0:06:14.960 most widely studied and harmful prefast hazardous hazardous substances under 0:06:15.000 --> 0:06:18.600 super Fund rules and would set maximum contaminant levels or 0:06:18.720 --> 0:06:21.280 MCLs and drinking water, and the EPA is set those 0:06:21.360 --> 0:06:23.920 levels in drinking water at four parts per trillion, which 0:06:23.960 --> 0:06:27.760 is the lowest level that analytical equipment can detect. Industry 0:06:27.800 --> 0:06:30.920 stakeholders have fought back against this level, saying it doesn't 0:06:30.960 --> 0:06:34.440 make economic sense, it's not necessary to protect health, and 0:06:34.480 --> 0:06:37.840 it's absorbitantly expensive. While in office, Trump had a p 0:06:38.000 --> 0:06:40.560 Fast action plan in which he intended to set MCLs 0:06:40.600 --> 0:06:43.240 and designate the substances hazardous, but that never came to 0:06:43.520 --> 0:06:48.200 fruition during his administration, and that Trump administration opposed a 0:06:48.279 --> 0:06:50.800 prior version of the Pfast Action Act, which would have 0:06:50.800 --> 0:06:52.480 done the same thing as the rules that would have 0:06:52.520 --> 0:06:55.640 set limits and designate the substance hazardous. Trump said he'd 0:06:55.640 --> 0:06:58.880 probably detailed that legislation because the costs out the benefits. 0:06:59.240 --> 0:07:01.760 This is the same argument some industry stakeholders are making 0:07:01.760 --> 0:07:04.320 with respect to the MCL level or four parts per trillion, 0:07:04.600 --> 0:07:06.240 So we think the level will keep us. The four 0:07:06.279 --> 0:07:09.520 parts patrillion may be revisited by Trump's EPA, and if so, 0:07:09.720 --> 0:07:12.200 there may be less us too many factors like random 0:07:12.880 --> 0:07:15.880 which has been subject to lawsuits for alleged contamination, and 0:07:16.040 --> 0:07:18.840 other industries like waste companies who may be required to 0:07:18.880 --> 0:07:22.520 immediate or maybe themed responsible parties under super farm laws. 0:07:22.560 --> 0:07:24.720 And so with that Elliott alternative, back to you. 0:07:25.720 --> 0:07:29.520 Great, thanks Holly. All right, Rob Barnett, let's bring you in. 0:07:29.680 --> 0:07:34.960 Holly touched on IRA a little bit and evs you 0:07:35.000 --> 0:07:40.280 know nice with green energy, you cover renewables. Why don't 0:07:40.280 --> 0:07:43.920 you tell us what you're expecting in Trump two point zero. 0:07:45.440 --> 0:07:48.679 Well, so first let me just start by observing that 0:07:49.680 --> 0:07:52.840 the clean energy space had a very tough day in 0:07:52.920 --> 0:07:59.760 the markets yesterday. We saw solar names really pull back 0:08:00.240 --> 0:08:04.680 the aggregate solar name, So if you look at our 0:08:06.080 --> 0:08:11.080 solar theme basket, the companies in that pulled back about 0:08:11.080 --> 0:08:18.200 ten percent on average yesterday. Some names went down more 0:08:18.280 --> 0:08:22.040 than that. I'm just looking at First Solar right now, 0:08:22.640 --> 0:08:26.880 it had pulled back about twenty percent. Currently it's down 0:08:26.920 --> 0:08:30.520 about nine percent versus where it was pre market, and 0:08:30.600 --> 0:08:32.959 so it's kind of climbed back a little bit from 0:08:33.360 --> 0:08:40.600 that initial reaction following some information about the election results. 0:08:40.640 --> 0:08:44.840 And I think, you know, this sort of vibe, you know, 0:08:45.120 --> 0:08:49.079 why did these companies react the way they did really 0:08:49.120 --> 0:08:55.160 comes down to views one, what could potentially happen, I think, 0:08:55.280 --> 0:09:01.920 to the Inflation Reduction Act under a second Trump administration 0:09:02.400 --> 0:09:09.120 and Republican controlled Senate and possibly the House too, and 0:09:09.200 --> 0:09:10.640 so you know, I think the question is, you know, 0:09:10.679 --> 0:09:13.000 what's what's how is this actually going to play out? 0:09:13.400 --> 0:09:17.280 You know, Holly just mentioned a perspective that that maybe 0:09:17.360 --> 0:09:21.240 some of the ev tax credits go away, and I 0:09:21.280 --> 0:09:24.120 think when you look at the wind in solar space, 0:09:25.240 --> 0:09:32.680 it's it's probably not quite as high of a probability 0:09:32.720 --> 0:09:38.040 of an outright repeal of some of those subsidies. And 0:09:38.280 --> 0:09:40.560 I'll try to tackle a few of the big ones, 0:09:40.760 --> 0:09:45.120 so you know, we we've talked quite a bit in 0:09:45.200 --> 0:09:47.920 the in some of these calls previously, so the idea 0:09:47.920 --> 0:09:51.720 of a full IRA repeal, I think we kind of 0:09:51.960 --> 0:09:56.599 handicap at say ten percent, and other other folks on 0:09:56.640 --> 0:09:59.600 this call can probably more eloquently speak to sort of 0:09:59.720 --> 0:10:01.920 why that is the case. But then you go through 0:10:01.920 --> 0:10:05.240 and sort of say, well, look, maybe individual pieces do 0:10:05.360 --> 0:10:10.959 get dismantled or scaled down or are phased out earlier, 0:10:11.160 --> 0:10:13.480 however you want to think about it. And so in 0:10:13.760 --> 0:10:17.640 the win in solar space, there's I think three buckets 0:10:17.640 --> 0:10:20.600 that I pay the most close attention to. So you've 0:10:20.600 --> 0:10:23.960 got the PTC Production Tax Credit, You've got the ITC, 0:10:24.280 --> 0:10:27.400 the Investment Tax Credit, and I think the way you 0:10:27.400 --> 0:10:30.200 should think about both of those is that they're the 0:10:30.200 --> 0:10:36.360 ones that are kind of driving demand for solar and wind. 0:10:37.320 --> 0:10:38.840 But then you've. 0:10:38.679 --> 0:10:41.800 Got this other provision called a forty five X manufacturing 0:10:41.880 --> 0:10:45.679 tax credit, and that one is the one that's really 0:10:46.320 --> 0:10:50.160 I think quite important to the companies that are producing 0:10:50.240 --> 0:10:54.640 equipment in the US, like a First Solar, and this 0:10:54.720 --> 0:10:59.720 has been a very beneficial provision for the company. You know, 0:10:59.760 --> 0:11:04.079 they're their gross margin is forty five fifty percent right now, 0:11:04.480 --> 0:11:08.360 and roughly half the margin contribution is coming from that 0:11:08.400 --> 0:11:11.120 forty five x tax credit. So if it were to 0:11:11.120 --> 0:11:17.000 go away, it's it's a pretty serious impact on the company. 0:11:17.880 --> 0:11:23.839 And I think that our view is that there's probably 0:11:24.920 --> 0:11:29.400 a fair amount of quiet support for that staying in place. 0:11:29.760 --> 0:11:34.000 And I'll try to articulate why that is true. So 0:11:34.640 --> 0:11:38.160 even though this was the Inflation Reduction Act was a 0:11:38.200 --> 0:11:44.240 Bidenarrow policy, it's sort of magical or interesting that most 0:11:44.280 --> 0:11:47.640 of the companies that appear to be really leveraging it 0:11:47.760 --> 0:11:53.079 and benefiting it built their facilities in fairly red states. 0:11:53.400 --> 0:11:56.960 So you see a lot of construction of solar module 0:11:57.000 --> 0:12:03.839 manufacturing capacity and states like Georgia, UH, Alabama, Louisiana, Texas, 0:12:04.720 --> 0:12:07.559 and and and if you're kind of familiar with how 0:12:08.280 --> 0:12:13.839 these how these projects came to fruition, there's a lot 0:12:13.880 --> 0:12:17.360 of courtship with the governors of those states saying, oh, 0:12:17.400 --> 0:12:20.160 come come to our state, build built your factory here. 0:12:20.559 --> 0:12:23.000 And so I think there's probably a lot of quiet 0:12:23.040 --> 0:12:27.640 support saying hey to from governors and state lawmakers saying hey, look, 0:12:27.679 --> 0:12:30.959 it's okay to be philosophically opposed to win in solar, 0:12:31.400 --> 0:12:35.880 but hey, this. These companies have built factories in my 0:12:36.080 --> 0:12:39.520 state and my district that is employing folks in my state, 0:12:39.600 --> 0:12:41.520 So you know, don't don't get rid of the forty 0:12:41.520 --> 0:12:44.199 five X credit is something I think you're going to 0:12:44.280 --> 0:12:47.840 sort of quietly hear, and I doubt we're ever going 0:12:47.880 --> 0:12:51.400 to see forty five X really discussed much in headlines 0:12:51.760 --> 0:12:56.720 or it's it's this boring wonky name. And my sense 0:12:56.800 --> 0:13:00.040 is that you know, there's there's a decent chance that 0:13:01.760 --> 0:13:07.200 this survives a second term administration. And let me just 0:13:07.240 --> 0:13:10.880 say that even if it doesn't, I would still make 0:13:10.920 --> 0:13:15.200 the argument that wind and solar has a fairly bright 0:13:15.440 --> 0:13:21.040 future in the United States, and that is because federal 0:13:21.040 --> 0:13:25.400 policy is not the only thing driving outcomes in the space. 0:13:26.720 --> 0:13:33.920 California many other states have very ambitious policies aimed at 0:13:34.720 --> 0:13:41.120 reducing emissions transforming the electric generation components within their state, 0:13:41.320 --> 0:13:43.760 and they don't care who the president is or what 0:13:43.840 --> 0:13:46.160 the federal policy is. And so I think you're going 0:13:46.200 --> 0:13:51.560 to see very strong continued support for wind and solar 0:13:51.720 --> 0:13:54.200 at the local level, at the state level, depending on 0:13:54.240 --> 0:13:58.040 the state. And I also think you're going to see 0:13:58.240 --> 0:14:03.280 a continued evolution of the economics for the technology. At 0:14:03.280 --> 0:14:04.800 the end of the day, win and solar have gotten 0:14:04.800 --> 0:14:09.240 fairly cheap. That's why they're being so aggressively installed in 0:14:09.360 --> 0:14:12.120 so many different locations. And so I think at the 0:14:12.200 --> 0:14:15.520 end of the day, we're going to see continued growth 0:14:15.520 --> 0:14:18.920 for wind under President trump second administration. We're going to 0:14:18.960 --> 0:14:22.680 see continued growth for solar on their second administration. Maybe 0:14:22.680 --> 0:14:25.280 some of the subsidies get modified or tweaked, but it's 0:14:25.480 --> 0:14:28.720 probably not a sea change for the industry. So that's 0:14:28.760 --> 0:14:32.320 my broad, high level conclusions. And for anyone listening, if 0:14:32.360 --> 0:14:34.320 you want to talk shop or go into any more 0:14:34.360 --> 0:14:37.800 detail on any of these companies or segments, I'm happy 0:14:37.840 --> 0:14:42.240 to chat with you about it offline. So thanks a lot, Eliott, Great, 0:14:42.240 --> 0:14:42.720 thanks a lot. 0:14:42.840 --> 0:14:43.080 Rob. 0:14:43.840 --> 0:14:48.400 All right, why don't we pivot to financials, Nathan, let's 0:14:48.480 --> 0:14:53.720 bring you in to talk about what you're expecting in 0:14:53.920 --> 0:14:57.640 Trump's second administration. Is it all about the basle three 0:14:57.720 --> 0:14:59.880 endgame or is there more to it than that? 0:15:00.360 --> 0:15:02.600 Yeah, So, you know how Rob mentioned that the solar 0:15:02.640 --> 0:15:05.880 stocks weren't doing so well yesterday. The opposite could be 0:15:05.920 --> 0:15:07.760 said for the bank stock. So I was just looking 0:15:07.800 --> 0:15:11.200 at Bank America, for example, and it's up eight point 0:15:11.320 --> 0:15:14.640 six percent as we speak since prior to the election, 0:15:14.680 --> 0:15:16.920 and that's very indicative of the Bosal three endgames. So 0:15:17.280 --> 0:15:18.560 what I want to do is on one on one 0:15:18.560 --> 0:15:21.640 through the sector talking about the impact. 0:15:21.200 --> 0:15:23.240 And the regulators and so forth like that. So let's 0:15:23.240 --> 0:15:23.720 start with the. 0:15:23.680 --> 0:15:26.520 Banks and this is the FED, the OCC, the Office 0:15:26.520 --> 0:15:28.680 of the Control of the Currency, and the FDIC. Now 0:15:28.720 --> 0:15:31.480 there are two rules that are really looking at here. 0:15:31.520 --> 0:15:33.280 The first one is the Bosal three end game. Now, 0:15:33.280 --> 0:15:36.800 this rule has proposed would increase capital requirements as outlined 0:15:36.800 --> 0:15:39.800 by the FED around nine percent. Our view is that 0:15:39.840 --> 0:15:42.160 the bos of three endgame is going to be indefinitely 0:15:42.200 --> 0:15:44.800 delayed for now. Reason being is is that while the 0:15:44.920 --> 0:15:49.000 FED will keep their leadership individuals through twenty twenty six, 0:15:49.040 --> 0:15:51.880 this is the chairman Drome Poll and advice chair Michael Barr, 0:15:52.200 --> 0:15:55.000 the OCC acting chair Michael Sue most likely le on 0:15:55.120 --> 0:15:57.360 day one, and the FDIC will most likely flip to 0:15:57.400 --> 0:15:58.720 a republican control. 0:15:58.880 --> 0:16:00.480 And if you don't have all three, then you don't 0:16:00.520 --> 0:16:01.000 have a rule. 0:16:01.320 --> 0:16:03.800 And so we think the bosle three endgame will be delayed. 0:16:04.400 --> 0:16:06.520 It's feasible that they can come around in twenty twenty 0:16:06.560 --> 0:16:08.800 six or twenty twenty seven and repropose it and try 0:16:08.840 --> 0:16:11.760 and implement something that's much more watered down. But for 0:16:11.800 --> 0:16:14.640 the next year, those capital requirements are most likely not 0:16:14.680 --> 0:16:17.320 going to happen. A similar story could be set in 0:16:17.360 --> 0:16:20.080 the regional bank side, you know the big buzzle three 0:16:20.160 --> 0:16:22.120 end games set three to four percent increase in capital. 0:16:22.280 --> 0:16:23.800 Again, we don't think that's going to happen. 0:16:24.360 --> 0:16:26.280 But secondly, there's a rule out there from the FED 0:16:26.360 --> 0:16:29.440 on long term debt issuances. We don't think the FED 0:16:29.480 --> 0:16:32.680 is going to finalize that even before the new administration 0:16:32.760 --> 0:16:35.280 takes office. Reason being is is that if they do, 0:16:35.920 --> 0:16:37.840 Congress has the authority overturn. 0:16:37.560 --> 0:16:39.000 It via the Congressional Review Act. 0:16:39.080 --> 0:16:41.720 And if Congress does overturn it, and this would be 0:16:41.760 --> 0:16:45.440 the next Congress the Republican controlled the House, Senate, and Presidency, 0:16:45.480 --> 0:16:48.320 assuming the Republicans do take the House, if they do 0:16:48.400 --> 0:16:50.040 overtake it, then the FED has to go back to 0:16:50.080 --> 0:16:52.760 the drawing board and essentially can't even use that rule 0:16:52.760 --> 0:16:55.600 as the baseline. Has to substantially change that rule. So 0:16:55.640 --> 0:16:58.160 we don't think they're going to finalize that. Over on 0:16:58.200 --> 0:17:01.040 the asset management space, a lot of status quo happening here. 0:17:01.560 --> 0:17:04.840 The Financial Stability Oversight Council had been talking about systemic 0:17:04.960 --> 0:17:07.560 risk of asset managers. We don't think that's really much 0:17:07.600 --> 0:17:09.919 of a risk anymore. We don't think that the future 0:17:10.000 --> 0:17:12.919 f SoC is going to take any steps there. I 0:17:12.920 --> 0:17:15.439 would say, though, is that this idea of private credit 0:17:15.760 --> 0:17:18.600 is still something that I think a Republican administration via 0:17:18.640 --> 0:17:22.280 their regulators will certainly look at. If you have bank 0:17:22.359 --> 0:17:25.119 lobbyists whispering into the regulatory ears, hey don't look at us, 0:17:25.200 --> 0:17:27.640 look at our friends up in Connecticut, I at least 0:17:27.640 --> 0:17:29.399 think the question is going to be asked, and so 0:17:29.560 --> 0:17:32.000 you know, we'll see scrutiny of hedge funds and private 0:17:32.040 --> 0:17:35.960 equity funds in private credit, but more questions than actual 0:17:36.080 --> 0:17:40.359 tangible proposals or regulations at this point. So you know, 0:17:40.400 --> 0:17:43.480 over at the SEC this is where cryptocurrency comes in. Now, 0:17:43.480 --> 0:17:46.119 we do think a cryptocurrency framework is going to happen 0:17:46.119 --> 0:17:49.200 next year. Via Congress, President Trump vowed to be the 0:17:49.240 --> 0:17:51.080 crypto capital, or vow of the United States to be 0:17:51.080 --> 0:17:53.439 the crypto capital of the world. But just remember this 0:17:53.480 --> 0:17:56.160 does come from Congress. So we do think a crypto 0:17:56.200 --> 0:17:58.919 framework can pass next year. I don't think the stable 0:17:58.960 --> 0:18:00.920 coin bill that people are taught talking about and Lane 0:18:01.040 --> 0:18:04.000 Duck is going to happen. I think this is just 0:18:04.040 --> 0:18:05.920 my own personal belief that I think the Lame Duck 0:18:05.960 --> 0:18:08.080 is not going to be as active due to the 0:18:08.160 --> 0:18:10.280 victory of the Republicans. I think they may just say, hey, 0:18:10.520 --> 0:18:12.320 let's pick up our toys and play next year. 0:18:12.160 --> 0:18:13.480 When we actually have control. 0:18:14.200 --> 0:18:16.359 But you know, Gary Gensler, the Chairman of the SEC, 0:18:16.440 --> 0:18:18.320 will most likely step down probably about a. 0:18:18.280 --> 0:18:21.359 Week before inauguration. Then at this point you're gonna have 0:18:21.359 --> 0:18:21.840 a two to two. 0:18:22.560 --> 0:18:25.600 I do believe that the Trump White House may take 0:18:25.680 --> 0:18:27.720 some time to figure out who the next chairman is, 0:18:27.760 --> 0:18:30.359 So don't be surprised if commission Er hester Purse is 0:18:30.359 --> 0:18:32.560 the acting chair for a few months before potentially she 0:18:33.119 --> 0:18:35.640 or somebody else gets the nomination for the full chair, 0:18:35.840 --> 0:18:37.960 which essentially means the SEC is just going to be in. 0:18:37.960 --> 0:18:38.719 A quiet period. 0:18:39.119 --> 0:18:41.440 Same can be said for exchanges, and this is coming 0:18:41.480 --> 0:18:44.440 from the Commodity Futures Training Commission CFTC is not doing 0:18:44.480 --> 0:18:46.760 a lot in the exchange place at this moment, and 0:18:46.800 --> 0:18:49.719 I'm talking about derivative exchanges. Remember, equity is controlled by 0:18:49.760 --> 0:18:52.680 the SEC but in the derivative side. So CMME group 0:18:52.680 --> 0:18:55.040 in Ice mostly going to be status quo probably for 0:18:55.080 --> 0:18:57.640 the next few years, just because there's really not much 0:18:57.640 --> 0:19:00.520 over at the CFTC. That's really like the Republicans will 0:19:00.520 --> 0:19:03.120 come in and dramatically change and so forth like that. 0:19:03.640 --> 0:19:05.119 And then the last thing I want to talk about 0:19:05.160 --> 0:19:08.400 is consumer finance, and this is the Consumer Financial Protection Bureau. 0:19:08.520 --> 0:19:12.560 So these are essentially non bank consumer firms, ranging from 0:19:12.600 --> 0:19:17.680 mortgage lenders to credit unions, to you know, to payday lenders, 0:19:17.720 --> 0:19:20.760 debt collectors, and so forth, even some of Matt Schttenhelm's 0:19:21.080 --> 0:19:24.560 technology companies that he talks about. So what you should 0:19:24.600 --> 0:19:26.399 know about the CFPB is that there's a lot of 0:19:26.480 --> 0:19:28.160 rumors and a lot of thoughts. And if you read 0:19:28.160 --> 0:19:30.439 Project twenty twenty five, you may have seen language that 0:19:30.920 --> 0:19:34.000 President Trump needs to essentially gut the agency and abolish 0:19:34.040 --> 0:19:36.520 the agency. We don't think that's going to happen. What 0:19:36.560 --> 0:19:38.119 we think is going to happen is you're going to 0:19:38.119 --> 0:19:40.320 see a very similar playbook to what you did in 0:19:40.359 --> 0:19:44.480 the first Trump administration when former cd CFPB director Kathy 0:19:44.520 --> 0:19:48.439 Cranager came in and essentially scaled up a deregulatory effort, 0:19:48.440 --> 0:19:52.480 but at the same time still keeping up examination authority 0:19:52.520 --> 0:19:56.240 and examination interests. So I think that's what the CFPB 0:19:56.400 --> 0:19:58.520 is most likely going to be going forward. Rohee Chopra, 0:19:58.640 --> 0:20:01.320 if he doesn't leave, will be most like fired. But 0:20:01.359 --> 0:20:03.560 then I think if you're on the examination side, or 0:20:03.560 --> 0:20:06.800 the compliance side, or the risk side, CFPB still is 0:20:06.800 --> 0:20:08.240 going to be something that you got to deal with. 0:20:08.560 --> 0:20:10.840 You're probably just not going to see a dramatic number 0:20:10.880 --> 0:20:12.640 of regulations coming out. 0:20:12.960 --> 0:20:13.600 Certainly you're not. 0:20:13.560 --> 0:20:16.200 Going to see any of the current initiatives being finalized, 0:20:16.200 --> 0:20:18.960 and we'll have to wait and see what those deregulatory 0:20:19.000 --> 0:20:22.240 efforts look like when we have personnel, because remember personnel's 0:20:22.280 --> 0:20:24.320 policy for a lot of these regulatory agencies. 0:20:24.600 --> 0:20:26.639 So with that, I'm going to pass it back to you. 0:20:27.160 --> 0:20:31.000 Thanks, Nathan, excuse me, and I just I happened to 0:20:31.000 --> 0:20:34.879 be looking at Project twenty five briefly before this call, 0:20:35.200 --> 0:20:37.320 in particular with respect to the CFPB, and I think 0:20:37.320 --> 0:20:41.919 a lot of the you know, the concern that Project 0:20:41.920 --> 0:20:45.840 twenty twenty five had or has with the CFPP is 0:20:45.840 --> 0:20:49.360 that it was unconstitutionally funded. But that argument was really 0:20:49.359 --> 0:20:53.680 struck down by the Supreme Court last term. So I 0:20:54.760 --> 0:20:57.520 agree with you that you know, any attacks on the 0:20:57.560 --> 0:21:00.359 agency are going to be a little more target and 0:21:00.400 --> 0:21:05.280 not sort of wholesale trying to eliminate the agency completely. 0:21:06.200 --> 0:21:09.199 This is a good pivot. Talking about consumer finance to 0:21:09.640 --> 0:21:15.560 Ben Elliott, who, in addition to covering card lenders, covers 0:21:15.680 --> 0:21:19.760 Fannie May and Freddie Mac, two companies who's preferred stock 0:21:19.800 --> 0:21:23.840 at least yesterday also went up somewhere to the increases 0:21:23.880 --> 0:21:27.239 we saw in bank stock prices. Ben, why don't you 0:21:27.320 --> 0:21:30.480 come in talk to us about Fanny and Freddie. Lotta 0:21:31.280 --> 0:21:36.720 chatter on Twitter and elsewhere about you know, whether those 0:21:36.800 --> 0:21:39.959 companies are finally going to get out of conservatorship or not. 0:21:40.440 --> 0:21:42.359 Yeah, thanks Elliott. So this is really one of the 0:21:42.400 --> 0:21:46.320 most binary of the Trump trades, I think clearly from 0:21:46.320 --> 0:21:51.040 the price action yesterday, people were discounting Trump's reelection. I 0:21:51.080 --> 0:21:53.280 was looking at the common stock this morning. It's up 0:21:53.560 --> 0:21:57.520 sixty something percent in two days, which, for reasons I 0:21:57.520 --> 0:21:59.400 can discuss in more detail, is maybe. 0:21:59.200 --> 0:22:01.640 Not the smartest move there. 0:22:02.280 --> 0:22:05.800 And some of the preferred issuances are up two hundred 0:22:05.840 --> 0:22:10.920 percent year to date, about sixteen percent, seventeen percent again 0:22:10.960 --> 0:22:14.560 today and in theory those could trade up to their. 0:22:14.400 --> 0:22:17.200 Par value. 0:22:17.680 --> 0:22:21.080 As as a potential additional upside to this trade. So 0:22:21.160 --> 0:22:23.120 this is kind of like a big, sort of unfinished 0:22:23.119 --> 0:22:26.560 piece of business from the first Trump administration. They kind 0:22:26.560 --> 0:22:29.879 of got things all the way to the starting line, 0:22:29.920 --> 0:22:32.440 I want to call it, and then ran out of time. 0:22:34.600 --> 0:22:38.959 But as The Wall Street Journal reported last September, some 0:22:39.000 --> 0:22:42.680 of the former Trump administration officials that were intimately involved 0:22:42.880 --> 0:22:46.960 in the prior administration have really been sort of stewing 0:22:47.000 --> 0:22:49.800 on this ever since they left office, So it's possible 0:22:49.920 --> 0:22:52.040 this time around they can get a much quicker start 0:22:52.040 --> 0:22:57.280 off the line and actually move the process much further along. 0:22:58.400 --> 0:23:02.120