WEBVTT - Bloomberg's Townsend on Best Buy, Halperin on McAuliffe (Audio)

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<v Speaker 1>I'm Charlie Pellet, and that's a Bloomberg business flash. You're

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<v Speaker 1>listening to taking stock with pim Box at Dathlene Hayes

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<v Speaker 1>on Bloomberg Radio. Shares of Best Buy are down more

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<v Speaker 1>than seven percent today. This comes after the company reported

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<v Speaker 1>a current fiscal profit that was below analyst estimates that

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<v Speaker 1>they're citing disruption in their supply chain after following the

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<v Speaker 1>earthquake in Japan and Fukushima sorted. Here to tell us

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<v Speaker 1>a little bit more is Matt Townsend, retail reporter for

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<v Speaker 1>a Bloomberg News. Matt, thanks for musure come in. Yeah,

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<v Speaker 1>thanks for having me. Is this the story that just

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<v Speaker 1>keeps on giving as far as spy in the sort

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<v Speaker 1>of never ending turnaround. Yeah, it's been three plus years now.

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<v Speaker 1>The curren CEO Ubert Jolie came in has a background

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<v Speaker 1>in the hospitality industry, and um, you know, so far,

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<v Speaker 1>what they've done is they've cut a lot of costs,

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<v Speaker 1>They've sold off a lot a lot of their foreign divisions.

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<v Speaker 1>They just have Canada Canada in the US basically right now,

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<v Speaker 1>and investors have like that to a point, but now

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<v Speaker 1>they're basically saying, Okay, start showing some sales growth or

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<v Speaker 1>even a path towards sales growth, and so far the

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<v Speaker 1>company hasn't been able to do that. Um today they

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<v Speaker 1>reiterated that they expect sales for the year to be

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<v Speaker 1>basically flat. Yeah, and the same store sales down zero

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<v Speaker 1>point one, which was smaller than the one point six

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<v Speaker 1>projected among the analysts, even people of Best Spot. What

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<v Speaker 1>is what can they do to achieve more growth and

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<v Speaker 1>more sales. They're in a very very tough space. Circuit

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<v Speaker 1>City couldn't make it, you know, Radio Shack couldn't make it.

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<v Speaker 1>They're like the last standing big brick and mortar store

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<v Speaker 1>you can go into and look at everything from a

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<v Speaker 1>printer to a big screen TV. Exactly what can they do?

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<v Speaker 1>It's tough. I mean, one of the things they rely

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<v Speaker 1>on is these the electronic industry to create hit products.

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<v Speaker 1>So if the iPhone is hot, if some other thing

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<v Speaker 1>is hot, Best Buy basically, you know, benefits from that.

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<v Speaker 1>And right now we're in a kind of lag within

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<v Speaker 1>the product cycle. There's not a lot of things out

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<v Speaker 1>there that are really hot and grabbing consumers attention. So

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<v Speaker 1>besides relying on that, um, they've done some things around

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<v Speaker 1>the margins, uh, making the stories more efficient, um, you know,

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<v Speaker 1>selling return to merchandise. But at the end of the day,

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<v Speaker 1>they really really really need for there to be a

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<v Speaker 1>nice product cycle. That's what's going to drive sales. Do

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<v Speaker 1>they also really really need a new CFO because they

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<v Speaker 1>got one they did. Yeah, that was It's debatable why

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<v Speaker 1>the stock is down to day. Some of them might

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<v Speaker 1>be the weak second quarter forecast, but also there's CFO.

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<v Speaker 1>A woman named Sharon McCollum who came in along with

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<v Speaker 1>who bears A Lee, the CEO, about three years ago.

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<v Speaker 1>She had a lot of credibility to the turnaround. She

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<v Speaker 1>was a retail veteran. She was at William Sanoma, operating

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<v Speaker 1>officer at William Sanoma. The analysts who covered her loved her.

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<v Speaker 1>I mean almost every time I would speak to analyst,

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<v Speaker 1>they would rave about share. I'm gonna call him. She

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<v Speaker 1>came out and said, look, we're gonna cut a billion

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<v Speaker 1>dollars and annualized costs. They did, They backed that up

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<v Speaker 1>and that was a big proving ground for this turnaround.

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<v Speaker 1>And her leaving, you know, has some analysts maybe questioning

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<v Speaker 1>what's to come next even though the company been over

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<v Speaker 1>backwards to say her replacement, this woman named Corey Barry

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<v Speaker 1>been in the company a long time, was grooming buy

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<v Speaker 1>Sharing to take over. So they're trying to paint it

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<v Speaker 1>as you know, in a smooth transition. Right now, Where

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<v Speaker 1>does the stand in terms of buys, holds cells for

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<v Speaker 1>Best buyes? Anybody real positive? Are most people negative? It's

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<v Speaker 1>a lot of people in the middle. What was big

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<v Speaker 1>today was City Group analyst came out and went back

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<v Speaker 1>from a bye to a hold. Analyst named Kim McShane

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<v Speaker 1>is pretty influential in the industry, and she basically cited,

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<v Speaker 1>you know, concerns about going forward without the CFO UM

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<v Speaker 1>and you know, just a week overall electronics market, I

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<v Speaker 1>mean as much hype as Apple and a lot of

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<v Speaker 1>these tech companies get. I mean, they haven't really come

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<v Speaker 1>out with a huge hit product in a couple of

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<v Speaker 1>years now, Alright, hit products very important if you're in retail.

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<v Speaker 1>Mattown's and hit story for you today retail reporter for

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<v Speaker 1>Bloomberg News looking at Best Buy earnings and their cf

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<v Speaker 1>C E c FO departing well from retail to politics.

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<v Speaker 1>Big story breaking the last couple of days. The governor

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<v Speaker 1>of Virginia, Terry McCall of, a Democrat, of close ties

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<v Speaker 1>to the Clinton's and a former board member of the

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<v Speaker 1>Clinton Global Initiative, is now being investigated by federal authorities

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<v Speaker 1>for perhaps some uh campaign law violations. Joining us to

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<v Speaker 1>discuss this and tell us where what he thinks it

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<v Speaker 1>means for Hillary Clinton's Campaign's Mark Halprin, he's the host

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<v Speaker 1>of Bloomberg TVs. With all due respect, but you can

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<v Speaker 1>watch weekdays at five pm Wall Street Time, and of

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<v Speaker 1>course you can listen on Bloomberg in Washington, d C. So, Mark,

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<v Speaker 1>this comes out of left field. What exactly is Trey

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<v Speaker 1>mccullop being accused of and why do you think it's

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<v Speaker 1>a bad thing for Hillary Clinton? Well, we don't know

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<v Speaker 1>exactly what the prosecutors are looking at, but it involves

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<v Speaker 1>the kind of mix of relationships, fundraising, government access that

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<v Speaker 1>you often see as run of the middle activity for politicians.

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<v Speaker 1>It's interesting and notable that this is a democratic justice

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<v Speaker 1>department that's looking at a democratic governor. So if the

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<v Speaker 1>if the two entities were of opposite parties, there would

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<v Speaker 1>be a instant speculation that this was something political, because

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<v Speaker 1>there is no more important person in the Clinton's life

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<v Speaker 1>than Terry mccaull if. He has been their biggest fundraiser

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<v Speaker 1>over the years. He has also been a titleless advocate

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<v Speaker 1>for them within the Democratic Party circles now as governor

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<v Speaker 1>Virginia used to be the Democratic Party chairman, and Virginia

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<v Speaker 1>course is a critical state in the election and the

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<v Speaker 1>presidential election, and Terry mccaulliffe was expected to is expected

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<v Speaker 1>to spearhead and effort in Virginia for Hillary Clint to

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<v Speaker 1>keep those electoral votes in the Democratic column. This is

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<v Speaker 1>uh a evolving situation. Yeah, the investigation might go nowhere,

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<v Speaker 1>but it does threaten to engulf Terry mccaulliffe and the

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<v Speaker 1>kind of accusations that the Clinton's have faced again at

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<v Speaker 1>co mingling of fundraising, including potentially money from overseas with

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<v Speaker 1>relationships that verge into the governmental as well. Uh, Mark Happer,

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<v Speaker 1>I just want to understand this that Terry mcculliffe is

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<v Speaker 1>being investigated by the FBI and the Justice Department for

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<v Speaker 1>accepting about a hundred and twenty thousand dollars in his

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<v Speaker 1>for his gubernatorial campaign from companies that are controlled by

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<v Speaker 1>Wang Wang Yang, the Chinese businessman, is also donated to

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<v Speaker 1>the Clinton Foundation. Is that the sort of connection that's

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<v Speaker 1>gonna lead to the Clinton Foundation. Well, those are the

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<v Speaker 1>reports of the of the kind of outlaw lines of

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<v Speaker 1>the um of the of the charges. Most of the

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<v Speaker 1>news accounts say that this is not something that's targeting

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<v Speaker 1>the foundation's activities. It's not entirely there with the wrongdoing

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<v Speaker 1>being looked at. Is is it simply or LEDs wrong doing?

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<v Speaker 1>Is it simply the prospect that mccaulliff took money from

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<v Speaker 1>a foreign entity? Uh? The fundraising rules are are such that,

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<v Speaker 1>based on his citizenship and the nature of his companies,

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<v Speaker 1>if the money was made here in the United States,

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<v Speaker 1>that would be fine. Or is there more to it?

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<v Speaker 1>Is there more about again a nexus of relationships related

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<v Speaker 1>to the government, the foundation as well as the private campaign.

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<v Speaker 1>We just don't know and and and you know, the

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<v Speaker 1>presumption of innocence is isn't one element. But there's also

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<v Speaker 1>the fact that often in the reporting, at this phase

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<v Speaker 1>of an investigation, and the reports arts gone on for

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<v Speaker 1>some time, the prosecutors or or agents FBI agents who

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<v Speaker 1>get frustrated that the cases and moving put things out

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<v Speaker 1>to try to shake things up. And you don't want

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<v Speaker 1>to assume that all the things that are being leaked

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<v Speaker 1>out there are necessarily true, or that just because there's

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<v Speaker 1>smoke somewhere, there's necessarily fire. But as a potential problem

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<v Speaker 1>for certainly for Terry mccafugh and potentially for the Clinton's

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<v Speaker 1>both symbolic and substantively saying a great development, And again

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<v Speaker 1>I'll say it comes not from a Republican Justice Department

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<v Speaker 1>but a Democratic one, suggesting that their motives are prosecutorial

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<v Speaker 1>and potentially dangerous politically. So how does Hillary Clinton handle

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<v Speaker 1>is for now? Mark? Does she just avoid the issue?

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<v Speaker 1>Will reporters start hounding her about this at her appearances? Well,

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<v Speaker 1>John Homed and I asked her campaign spokesman last night,

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<v Speaker 1>Brian Fallon, about it. Uh and subsis simply, well, you

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<v Speaker 1>vouched for Terry McCall of its integrity. Fallon is himself

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<v Speaker 1>a former Justice Department spokesman, and it's pretty cautious sectisnas

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<v Speaker 1>He would not. I suspect Hillary Clinton will eventually be

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<v Speaker 1>asked about this, and she'll probably plead ignorance. Terry mccough

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<v Speaker 1>himself claims until the news accounts he didn't know anything

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<v Speaker 1>about the investigation, so she can probably as long as

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<v Speaker 1>there are no indictments, she can probably get away with

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<v Speaker 1>saying it's an investigation, I don't know anything out, but

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<v Speaker 1>she's certainly I'm home. A certain will be asked about

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<v Speaker 1>it the next time reporters get a chance. Mark Senator

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<v Speaker 1>Bernie Sanders and the Democratic National Committee agreeing to put

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<v Speaker 1>some of his supporters on the convention platform committee. It's

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<v Speaker 1>certainly a step towards unity. It's one of the long

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<v Speaker 1>list of things that Sanders and his supporters have been

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<v Speaker 1>looking for to try to move towards a reconciliation. Sanders,

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<v Speaker 1>at the feet level says that he doesn't want Donald

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<v Speaker 1>Trump to win. He will if he's not. The nomine

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<v Speaker 1>helped Hillary Clinton. But in the meantime, there's a lot

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<v Speaker 1>of time between now and the final primaries and caucuses

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<v Speaker 1>and first part of June, and then from there five

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<v Speaker 1>weeks or so out of the Democratic Convention in Philadelphia.

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<v Speaker 1>The hope for the optimist of the Clinton camp is

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<v Speaker 1>that moves like this, giving him representation on an important

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<v Speaker 1>committee for the convention will get him effectively out of

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<v Speaker 1>the race. Before the convention. The real danger for her

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<v Speaker 1>now is that Sanders spends the intervening weeks continuing to

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<v Speaker 1>agitate against her and and and talking about issues, and

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<v Speaker 1>uses a convention to make points rather than to unified.

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<v Speaker 1>Thank you very much. Mark Halpern hosted, with all due respect,

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<v Speaker 1>Bloomberg Politics weeknights five pm Wall Street Time on Bloomberg

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<v Speaker 1>Television and nine and Night one in Washington, d C.