WEBVTT - Ross Says He 'Will Probably Sell Stake' in Putin-Linked Company 0:00:09.720 --> 0:00:12.880 Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene with 0:00:13.600 --> 0:00:16.520 David Gura. Daily we bring you insight from the best 0:00:16.560 --> 0:00:22.239 of economics, finance, investment, and international relations. Find Bloomberg Surveillance 0:00:22.320 --> 0:00:27.000 on Apple Podcasts, SoundCloud, Bloomberg dot Com, and of course 0:00:27.320 --> 0:00:34.360 on the Bloomberg Right Now, David Gura and Tom Keene 0:00:34.360 --> 0:00:37.199 in New York with Jonathan Gollub of Credit Sueeze and 0:00:37.280 --> 0:00:39.800 on this Monday at sn in the morning, maybe this 0:00:39.880 --> 0:00:43.040 is the equity interview of the week. John, You're not 0:00:43.120 --> 0:00:48.240 only optimistic, but you're double digit optimistic. So few agree 0:00:48.280 --> 0:00:51.479 with you. What do they get wrong? I think that 0:00:51.520 --> 0:00:54.280 there's this belief that if you're optimistic on stocks, you 0:00:54.360 --> 0:00:57.240 have to think that the economy is going to, you know, 0:00:57.720 --> 0:01:00.480 have this tremendous momentum behind it. And our view is 0:01:00.520 --> 0:01:04.280 that we are in a good economy, but that valuations 0:01:04.280 --> 0:01:08.240 will drift higher because the risks right now, especially around 0:01:08.280 --> 0:01:12.039 the potential for recession, are really much lower than average, 0:01:12.080 --> 0:01:14.840 and that lack of risk is what will push the 0:01:14.840 --> 0:01:17.520 stock market higher. What's your counsel of how worried or 0:01:17.560 --> 0:01:20.119 cognizant we should be of recession risks at this point, 0:01:20.160 --> 0:01:22.319 What are you looking at and what would you advise 0:01:22.319 --> 0:01:24.040 clients to to do at this point when it comes 0:01:24.080 --> 0:01:26.520 to fear of or or worry about a recession. So 0:01:26.560 --> 0:01:30.480 we put together this credit Swiss recessionary dashboard and we 0:01:30.520 --> 0:01:34.680 look at things like is the yield curve flatter inverted? Um? 0:01:34.880 --> 0:01:39.640 Absolutely not? Do you have our jobs being created? Yes? 0:01:39.840 --> 0:01:44.760 Do you have is inflation um under control? Yes? Are 0:01:44.760 --> 0:01:50.960 you seeing UM construction activity improving as opposed to contracting? Yes? 0:01:51.040 --> 0:01:54.560 Are you seeing credit write downs um? Corporations are able 0:01:54.600 --> 0:01:57.920 to meet their dead obligations? Yes? Um. If you look 0:01:57.960 --> 0:02:01.080 at each of these seven criteria, were are about as 0:02:01.560 --> 0:02:05.240 solid as we've ever been. What role is the Fed 0:02:05.280 --> 0:02:07.240 playing in all of this? Is you look at that dashboard? 0:02:07.280 --> 0:02:09.280 How much are you paying attention to what the central 0:02:09.320 --> 0:02:12.360 banks are doing? And what does the j Powell nomination 0:02:12.400 --> 0:02:15.520 mean for markets going forward? Well, so that that's that's 0:02:15.560 --> 0:02:18.840 two questions first, the first, right, the first first come 0:02:18.840 --> 0:02:24.399 on at a time. Monday's folks, we don't do this. 0:02:26.480 --> 0:02:28.079 Let's start with how co you are with the Fed? 0:02:28.160 --> 0:02:30.720 Is well? All right? Um? All right, So since us 0:02:31.000 --> 0:02:32.880 I'll answer in the other direction. But we know but so, 0:02:33.120 --> 0:02:36.160 but Powell really is a continue The market is perceiving 0:02:36.160 --> 0:02:40.680 it as a continuation of yelling type um governance, and 0:02:40.880 --> 0:02:43.880 so I think that that alone probably means that that 0:02:44.000 --> 0:02:46.960 it's not surprising that it got very very little reaction. 0:02:47.919 --> 0:02:53.360 But the there's this consensus view that the FED ultimately 0:02:53.480 --> 0:02:56.120 is propping the market up by all of this money printing, 0:02:56.480 --> 0:02:58.639 and then if they stop printing, bad things are going 0:02:58.680 --> 0:03:01.840 to happen, and I just agree with that wholeheartedly. I 0:03:01.880 --> 0:03:04.160 think that the market is doing well because the economy 0:03:04.200 --> 0:03:06.280 is doing well. I think the Fed is doing is 0:03:06.320 --> 0:03:10.560 actually responding to the economy um as opposed to the 0:03:10.600 --> 0:03:14.960 other way around. And therefore, um if they remove some accommodation, 0:03:15.040 --> 0:03:17.440 I think the market is gonna be perfectly fine. But 0:03:17.480 --> 0:03:19.400 I will tell you that's not the consensus view. The 0:03:19.400 --> 0:03:22.400 consensus view is, oh my god, they're gonna remove liquidity. 0:03:22.440 --> 0:03:24.160 Bad things are gonna happen, and I just think that 0:03:24.160 --> 0:03:26.960 that's off base. It's been almost a year since since 0:03:26.960 --> 0:03:29.280 election night. You were around the building on election night 0:03:29.320 --> 0:03:31.359 as we did the coverage of the results coming in. 0:03:31.880 --> 0:03:33.959 What have we learned about the markets in that year since? 0:03:34.000 --> 0:03:36.360 ALASKI about the prospects for tax form and all that 0:03:36.400 --> 0:03:38.480 in just a sec But but in terms of enthusiasm 0:03:38.520 --> 0:03:41.400 for policy this administration, what have we learned in these 0:03:41.400 --> 0:03:44.520 interviewing three six, five days. Um, well, a bunch of things. 0:03:44.560 --> 0:03:47.000 I mean, the one that that's perhaps the most interesting 0:03:47.080 --> 0:03:49.600 is there was this belief that, and once we kind 0:03:49.600 --> 0:03:53.280 of shook off the surprise of the election, was that 0:03:53.320 --> 0:03:57.640 Trump was going to have this huge impact via tax changes, 0:03:58.120 --> 0:04:01.760 and the market has really taken the opposite side of that. 0:04:01.760 --> 0:04:04.520 That trade in the last six months, and more specifically, 0:04:04.920 --> 0:04:08.360 those companies that would benefit the most from tax changes 0:04:08.720 --> 0:04:13.760 have actually underperformed since, um, you know, since his inauguration, 0:04:13.880 --> 0:04:16.080 and I think that that's been a big surprise for many. 0:04:16.160 --> 0:04:18.560 So it was the market either saying one of two things. 0:04:18.600 --> 0:04:20.480 Either I don't think that these are ever going to 0:04:20.560 --> 0:04:25.120 get implemented into law, or in year nine of a 0:04:25.200 --> 0:04:28.280 recovery cycle with an economy that's in pretty stable footing, 0:04:28.640 --> 0:04:31.719 maybe we don't need or want a big late cycle 0:04:31.800 --> 0:04:36.160 stimulus plan that would create inflationary pressure. So we can 0:04:36.360 --> 0:04:40.320 argue why the market's not celebrating this potential for for 0:04:40.440 --> 0:04:43.200 tax reform. But that's what the markets saying I'm gonna 0:04:43.200 --> 0:04:45.080 ask you what what companies stand to benefit the most 0:04:45.120 --> 0:04:47.039 should it get three. You've done a great list of 0:04:47.040 --> 0:04:48.760 of all the companies you're finally have who have some 0:04:48.839 --> 0:04:51.360 upside here broadly speaking, what types of companies here would 0:04:51.360 --> 0:04:53.800 benefit most from from tax Again, I think that we 0:04:53.839 --> 0:04:55.880 have to split this into two things. If you said 0:04:55.920 --> 0:04:58.320 that we're going to get tax reform, but we weren't 0:04:58.320 --> 0:05:00.800 going to get any inflationary pressure the economy, and the 0:05:00.800 --> 0:05:03.320 FED wasn't going to respond to this stimulus by tightening 0:05:03.360 --> 0:05:07.320 policy more than expected, then it would be companies that 0:05:07.360 --> 0:05:12.960 are more domestically oriented that can't avoid taxes offshore. And 0:05:13.000 --> 0:05:16.440 these could be you know, retailers would be a good example. 0:05:16.760 --> 0:05:19.120 Those should be the biggest wins, and the biggest losers 0:05:19.440 --> 0:05:23.600 are industrial companies that do a lot of business offshore 0:05:23.640 --> 0:05:26.599 that have very low tax effective tax rates. Um. But 0:05:26.720 --> 0:05:29.479 I think that the second issue is the more important 0:05:29.560 --> 0:05:32.839 one is do you get some other feedback loop? And 0:05:32.880 --> 0:05:35.400 that's what investors very often miss its and things don't 0:05:35.440 --> 0:05:38.159 move in a straight law and investment land. UM. So 0:05:38.600 --> 0:05:42.240 if this is stimulus, does that overheat the economy? Does 0:05:42.279 --> 0:05:44.920 the force of FED? And and that's the part that 0:05:44.960 --> 0:05:47.279 people may miss headline crossing the Bloomberg. Here we're talking 0:05:47.279 --> 0:05:49.440 about the President of the New York Fed, Buil Dudley, 0:05:49.560 --> 0:05:52.400 announcing his retirement mid two eighteen that according to the 0:05:52.440 --> 0:05:55.440 New York Offensive, confirming what had been reported over the 0:05:55.440 --> 0:05:57.520 course of the weekend. As we mentioned, Tom sitting down 0:05:57.520 --> 0:05:59.240 with the President New York Fed a little bit later, 0:06:00.360 --> 0:06:04.520 a little lunch for four people. Let's let me explain 0:06:04.600 --> 0:06:07.840 to our global audience, it is always appropriate when the 0:06:07.880 --> 0:06:10.880 New York Fed president speaks to the Economic Club of 0:06:10.920 --> 0:06:13.320 New York, John, what's the question I get to ask 0:06:13.400 --> 0:06:17.160 him questions? Being a good gentleman from the Economist magazine, 0:06:17.160 --> 0:06:21.440 what's the question you would ask? They're very retiring, Bill Dudley, 0:06:22.240 --> 0:06:24.560 one of the perhaps more anything else. And this is 0:06:24.600 --> 0:06:27.440 the guy who, remember it's not that he runs the Fed, 0:06:27.800 --> 0:06:29.520 but he's the one who's in touch with the way 0:06:29.560 --> 0:06:33.440 the markets are going to respond to Fed policy. UM, 0:06:33.480 --> 0:06:35.520 I'd want to get a better understanding of what it 0:06:35.560 --> 0:06:39.040 means if and when the Fed continues to move forward 0:06:39.520 --> 0:06:43.400 with balance sheet liquidation and and how do they how 0:06:43.440 --> 0:06:45.560 do they equate a little bit of tightening from the 0:06:45.600 --> 0:06:49.480 FED funds rate with with balanty liquidation. How do they 0:06:49.600 --> 0:06:51.960 weigh these against each other? How should the market perceive it? 0:06:52.200 --> 0:06:54.440 I'll give Bloomberg Radio a first look at this. One 0:06:54.440 --> 0:06:58.760 of my questions will be under crisis, how does a 0:06:58.880 --> 0:07:04.320 non PhD listen to the fancy pants PhDs the FED 0:07:04.400 --> 0:07:07.360 like the gentleman from Berkeley. I think with a four 0:07:07.440 --> 0:07:12.120 standard deviation move in, John gollubs world down down, down 0:07:12.440 --> 0:07:17.640 seventent You picked the gloom, John, How does a non 0:07:17.640 --> 0:07:22.320 economist chairman and chairman Powell listen to people like Bill Dudley? 0:07:22.520 --> 0:07:25.640 I think Bill's got real knowledge on it. It's it's 0:07:25.640 --> 0:07:28.600 a it's a it's a great Is that okay question? No? No, 0:07:28.680 --> 0:07:30.600 it's it's it's it's a it's a great question. And 0:07:30.960 --> 0:07:34.120 I think if you look at the uh, you know, 0:07:34.280 --> 0:07:39.679 the leadership of FED by academics, I think that there's um, 0:07:39.720 --> 0:07:41.520 you know, in hindsight, I'm sure that there's a lot 0:07:41.600 --> 0:07:44.560 of skepticism over the you know. One is how they've 0:07:44.600 --> 0:07:46.960 did help with the crisis, which I think they've gotten 0:07:47.000 --> 0:07:49.520 tremendously good marks on. And then what does the world 0:07:49.560 --> 0:07:51.760 look like after that when the world has returned to 0:07:51.840 --> 0:07:54.040 normal as a separate question. Here's an email coming in, 0:07:54.160 --> 0:07:58.880 David Girl, Neil Sauce on the shortlist, like place Bill Dudley. 0:07:58.920 --> 0:08:01.440 You're supposed to say, John, Yes, Dr Sauce would be 0:08:01.440 --> 0:08:03.960 a wonderful So we we we we love Niel Sauce. 0:08:05.400 --> 0:08:07.840 Neil Sauce Folks is vice chairman of research for all 0:08:07.880 --> 0:08:12.000 of Credits, is extremely qualified. Looking at the release here, 0:08:12.040 --> 0:08:14.480 Bill Dudley's dream is expected to end in January of 0:08:14.520 --> 0:08:17.160 two thousand nineteen, So Bill, that would be leaving here 0:08:17.200 --> 0:08:19.240 a bit early mid two thousand and eighteen, he's saying. 0:08:19.280 --> 0:08:21.400 And a note here in the release from the New 0:08:21.480 --> 0:08:24.960 York Fed uh search will will begin shortly and they 0:08:24.960 --> 0:08:26.880 expect that search to conclude by mid two thousand and eighteen, 0:08:26.880 --> 0:08:30.720 depending on finding the best candidate. UM, so look for 0:08:30.760 --> 0:08:33.040 more clear on that. I have a moment of silence 0:08:33.040 --> 0:08:36.000 for Terry Longer and the Macy's CEO, and also ahead 0:08:36.000 --> 0:08:38.880 of the Economic Club of New York who's on the committee, 0:08:38.880 --> 0:08:40.280 and I believe he'll be on the committee at the 0:08:40.280 --> 0:08:43.960 New York Fed. You didn't know this was happening, you know, honestly, 0:08:44.040 --> 0:08:45.760 I mean if I if I knew, I wouldn't tell you. 0:08:45.840 --> 0:08:49.720 But the answers. No, I had absolutely no clue in all, 0:08:49.800 --> 0:08:51.720 but I'll tell you guys like Terry London are going 0:08:51.800 --> 0:08:57.320 to be absolutely inundated with names um to take this 0:08:57.480 --> 0:09:01.480 extremely important a position and might point out a position 0:09:01.559 --> 0:09:05.719 under crisis. Bill Dudley, Uh, wonderful guy will retire mid 0:09:05.760 --> 0:09:09.200 two thousand eighteen from the Fed, and again he will speak. 0:09:09.920 --> 0:09:12.200 Matt Bessler and our team will have full coverage of 0:09:12.240 --> 0:09:15.880 that speech from the Economic Club of New York, and 0:09:16.000 --> 0:09:19.880 my questions to President Dudley have shifted from the minutia 0:09:20.000 --> 0:09:24.520 to the bigger and broader. Coming up, Francia Kwan London 0:09:24.960 --> 0:09:30.480 an exceptionally timely conversation with the Secretary of Commerce Wilbur 0:09:30.600 --> 0:09:33.280 Ross in the News as we can, David, what Cyprus 0:09:33.280 --> 0:09:37.440 and Russia is that sort of members of the Putin 0:09:37.520 --> 0:09:41.199 family as well? He denying all of that being improperly. 0:09:41.240 --> 0:09:42.800 So we'll see what he has to say to Francin 0:09:42.880 --> 0:09:44.560 here in just a few minutes. Maybe Mr Ross can 0:09:44.559 --> 0:09:46.120 buy the New York Giants and put him out of 0:09:46.120 --> 0:09:49.760 their misery as well. Coming up, Wilbert Ross, stay with 0:09:49.840 --> 0:10:05.040 us worldwide. This is Bloomberg. He has been on the 0:10:05.080 --> 0:10:09.560 show too many times as an industrialist, as a financier 0:10:10.160 --> 0:10:13.880 out of Yale University. Wilburt Ross selected by the President 0:10:13.920 --> 0:10:17.839 to be Secretary of Commerce, best known over the last 0:10:17.960 --> 0:10:22.120 number of months for Ross Navarro, which was a white paper. 0:10:22.160 --> 0:10:24.400 He actually showed it to me at one point at 0:10:24.440 --> 0:10:28.559 an Economic Club of New York meeting, and uh, that 0:10:28.640 --> 0:10:31.720 was controversial to say the least. Now more controversy with 0:10:31.760 --> 0:10:35.679 Secretary Ross over the weekend his relationships with Russia, Russia 0:10:36.040 --> 0:10:40.080 and Cyprus. From London. Here is Francine Laqui with the Secretary. 0:10:40.520 --> 0:10:42.240 We need to talk about tax but I also need 0:10:42.280 --> 0:10:44.679 to ask you about the Paradise papers. So he's certainly 0:10:44.880 --> 0:10:47.280 in the papers quite a lot. Today. You've retained investments 0:10:47.280 --> 0:10:49.719 in a shipping firm that has business ties to the 0:10:49.760 --> 0:10:51.680 son in law of the Russian president but also an 0:10:51.720 --> 0:10:57.480 oligarch under sanction with hindsights. Should you have divested this stake? Well, 0:10:57.520 --> 0:10:59.920 first of all, let me correct what you just said. 0:11:00.720 --> 0:11:05.360 We have no business ties to those Russian individuals who 0:11:05.400 --> 0:11:10.120 are under sanction. Prior to my joining the board of Navigator, 0:11:10.800 --> 0:11:15.480 they entered into some charter arrangements with Cyborg, which is 0:11:15.520 --> 0:11:20.520 a big Russian hydrocarbon company. I had nothing to do 0:11:20.640 --> 0:11:25.240 with the negotiations, never met the people under sanction. Cyborg 0:11:25.679 --> 0:11:31.160 never has been under sanction, So there's nothing whatsoever wrong 0:11:31.679 --> 0:11:36.080 with Navigator having a deal with them. Second, as to 0:11:36.160 --> 0:11:40.040 the disclosure, much has been made that it wasn't disclosed. 0:11:40.080 --> 0:11:45.160 It was in three places on my form to seventy eight, 0:11:45.240 --> 0:11:50.199 which is public document at place ten point one four 0:11:50.800 --> 0:11:55.440 point one point three, ten point one, five point one 0:11:55.559 --> 0:12:00.160 point three and two four point one point four point too, 0:12:00.840 --> 0:12:04.760 as well as on the Office of Government Ethics website 0:12:05.240 --> 0:12:10.280 public website the symbol is o g E dot CoV okay. 0:12:10.320 --> 0:12:13.800 Couldn't be more clear. But with hindsight, Again, there are 0:12:13.840 --> 0:12:19.520 allegations about ethics, about you know, creating a conflict of interest. 0:12:20.080 --> 0:12:22.600 Do you think you should have divested this? Well, there 0:12:22.679 --> 0:12:26.760 is no conflict of interest. We don't regulate shipping and 0:12:26.880 --> 0:12:32.960 that's why the o g E let me retain shipping interests. 0:12:33.720 --> 0:12:38.480 Would you welcome an investigation into this? Investigate what? But 0:12:38.760 --> 0:12:41.440 is there not an ethical question that needs to be 0:12:41.520 --> 0:12:44.400 raised that you've done no nothing illegal, right, and that's 0:12:44.520 --> 0:12:50.360 very clear, very good, nothing even improper at all. Um, 0:12:50.440 --> 0:12:54.000 The o g E came to an independent decision. Plus, 0:12:54.440 --> 0:12:59.679 before I meet with any corporate party, the O g 0:13:00.080 --> 0:13:04.120 E clears a that I can meet and be the 0:13:04.240 --> 0:13:08.200 accent to which I can participate in conversations. I have 0:13:08.440 --> 0:13:13.160 never sought a waiver from any of those strictures. You're 0:13:13.240 --> 0:13:16.960 keeping the steak? I didn't say that. That's a different question. 0:13:17.000 --> 0:13:22.319 You're saying, was there anything improper? There's nothing improper, either 0:13:22.720 --> 0:13:26.960 in the way we've handled net meetings or in the 0:13:27.040 --> 0:13:32.280 investment itself. Will you keep the steak? Probably not have 0:13:32.400 --> 0:13:37.319 been actually selling it anyway, but um that isn't because 0:13:37.400 --> 0:13:40.240 of this it Talk to me a little bit about 0:13:40.240 --> 0:13:44.120 your upcoming trip to China. What is the president's stands 0:13:44.160 --> 0:13:47.960 on dealing with China when it comes to terroriffs and steel. Well, 0:13:48.240 --> 0:13:52.960 we are hoping for some specific deliverables. We're un leading 0:13:52.960 --> 0:13:57.920 a trade mission of some twenty nine US companies over there, 0:13:58.480 --> 0:14:01.320 and we hope to come away it's some very tangible 0:14:01.400 --> 0:14:06.080 and hopefully large UH deals for them. What are you 0:14:06.080 --> 0:14:09.920 doing in London? Are you talking trade in post Braxit London? 0:14:10.040 --> 0:14:14.200 Is several several different things. UM as spoke to the 0:14:14.280 --> 0:14:21.960 Trilateral Commission UH, speaking to the b C, I, UM 0:14:22.000 --> 0:14:25.920 doing all kinds of things, as well as meeting with 0:14:26.120 --> 0:14:32.920 various government officials, and I went to the Balfour Centennial dinner. Okay, Secretary, 0:14:32.960 --> 0:14:35.920 if there is a Brexit that actually really rips out 0:14:35.960 --> 0:14:38.840 the UK out of the EU, how quickly can the 0:14:38.920 --> 0:14:41.480 US have a trade agreement with the UK. We should 0:14:41.520 --> 0:14:46.600 go pretty fast, because well, we can't negotiate right now, 0:14:46.760 --> 0:14:51.520 that's forbidden under EC rules. We do have a working 0:14:51.640 --> 0:14:56.280 group that meda in July in Washington is meeting next 0:14:56.320 --> 0:14:59.840 week here in London. So they're kind of scoping things 0:15:00.040 --> 0:15:04.480 out and going as far as they can without violating 0:15:05.000 --> 0:15:09.280 the EU regulation to make preparation. Will you also talk 0:15:09.400 --> 0:15:12.920 with the opposition Labor Party in case there's a change 0:15:12.920 --> 0:15:16.880 of people in charge. I think we'll be talking with 0:15:16.920 --> 0:15:20.840 whoever is the government. Mr russ One very last question 0:15:20.920 --> 0:15:23.600 when you look about trade, we're expecting the status of 0:15:23.640 --> 0:15:27.480 the investigation into imports of steel and aluminium. When will 0:15:27.520 --> 0:15:31.040 we get that well, as the President has indicated, that 0:15:31.080 --> 0:15:34.560 will be some time after the tax legislation is dealt with, 0:15:35.400 --> 0:15:37.680 So that should be when you respect tax the rappid 0:15:37.680 --> 0:15:41.800 hopefully pretty soon before Christmas. We would likely think it 0:15:41.800 --> 0:15:45.240 would be a wonderful Christmas present for the American business 0:15:45.760 --> 0:15:49.440 and consumer to get a tax reduction. So we hope 0:15:49.440 --> 0:15:52.680 so Secretary Ross in London with our fancy and a qualm. 0:15:52.760 --> 0:15:56.440 You might note the first interview David Dunne from ours 0:15:56.480 --> 0:15:58.840 that right in London. I believe that was done by 0:15:58.920 --> 0:16:04.680 Mansion House. There's done by Wardour Street or whatever. I 0:16:04.720 --> 0:16:08.040 can't remember now. Mental block Christopher Wren's churches right there. 0:16:08.760 --> 0:16:11.800 St Stephen's as well. Speaking of St. Michael's. Here Michael 0:16:11.840 --> 0:16:16.400 McKinnon to talk to us about Lord Dudley leaving the 0:16:16.480 --> 0:16:19.080 New York Fed. I want to go, Mike, just because 0:16:19.120 --> 0:16:23.560 the time to How is a New York Fed president selected? 0:16:23.880 --> 0:16:25.960 The answers, it's a lot like the other banks. But 0:16:26.160 --> 0:16:30.280 boy is it a different process? Well, it's it's different 0:16:30.560 --> 0:16:32.520 than the Federal Reserve Board. We should make that clear. 0:16:32.640 --> 0:16:35.040 Members of the Federal Reserve Board. There's three openings now 0:16:35.240 --> 0:16:38.840 if Jane leaves before nominated by the President, confirmed by 0:16:38.840 --> 0:16:43.160 the Senate. Individual federal reserve banks have boards of directors, 0:16:43.320 --> 0:16:48.440 and those boards of directors whose the person to be president. 0:16:48.720 --> 0:16:52.240 The Fed Board in Washington has vitail power, never exercised 0:16:52.240 --> 0:16:54.080 it on a nominee, but they do have to get 0:16:54.120 --> 0:16:57.280 approved by the FED. The President of the United States 0:16:57.320 --> 0:16:59.800 does not, he has no role. The other thing is 0:16:59.800 --> 0:17:04.760 there are three classes of directors of each Each FED 0:17:04.800 --> 0:17:08.520 bank has nine directors three classes. One class is bankers 0:17:08.520 --> 0:17:11.440 at the New York FED, it's James Gorman from Morgan Stanley, 0:17:12.240 --> 0:17:14.920 Paul Mellow of salve A Banks, Jerry Lipkin of Valley 0:17:15.000 --> 0:17:18.800 National Bank. None of those can take part. Only the 0:17:18.880 --> 0:17:21.480 other directors, the Class B directors who are finance, and 0:17:21.480 --> 0:17:23.600 Class C directors who are in theory is supposed to 0:17:23.640 --> 0:17:26.880 represent the public. Emily Rafferty of the Metropolitan Museum of Art, 0:17:27.440 --> 0:17:30.399 she's she's a Class C director. Sarah Harowitz is the 0:17:30.480 --> 0:17:33.480 chairman of the FEDS Board of Director New York FEDS 0:17:33.480 --> 0:17:36.600 Board of Director. She's the executive director of the Freelancers Union. 0:17:36.680 --> 0:17:40.040 She's leading the search along with Glenn Hutchins, who is 0:17:40.119 --> 0:17:42.560 the co founder of Silver Lake Partners. In the news 0:17:42.560 --> 0:17:47.880 for the reasons this is this is like a free 0:17:47.880 --> 0:17:50.719 for all. Let's be blunt you. The history of this 0:17:50.800 --> 0:17:56.080 over the last thirty years is everybody piles on for there. Well, 0:17:57.280 --> 0:18:00.560 it's very interesting. The New York Fed obviously the most 0:18:00.640 --> 0:18:04.680 important of the FED banks, and so they tend to 0:18:04.800 --> 0:18:09.320 hire really big names. It's been a mixture of internal 0:18:09.359 --> 0:18:13.800 candidates over the years and external candidates. Two of the 0:18:13.800 --> 0:18:18.040 the New York feds most prominent presidents, Jerry Corrigan and 0:18:18.160 --> 0:18:22.160 Paul Volker, were president of the Minneapolis FED when they 0:18:22.160 --> 0:18:24.640 were selected, and so some people are looking at Neil 0:18:24.720 --> 0:18:27.920 cash Gary and wondering what he's doing the next couple 0:18:28.000 --> 0:18:31.120 of years. Another name that's been floated is Robert Kaplan, 0:18:31.480 --> 0:18:35.280 who of course originally worked in the markets at Goldman Sachs, 0:18:35.359 --> 0:18:36.919 then was at Harvard for a long time and as 0:18:37.000 --> 0:18:39.760 now president of the Dallas FED. You've got Simon Potter, 0:18:39.920 --> 0:18:42.399 who is head of the Open Markets Committee for the 0:18:42.440 --> 0:18:44.440 New York Fed, and that was the job Bill Dudley 0:18:44.520 --> 0:18:47.840 had before he became president. Brian Sack, a former head 0:18:48.280 --> 0:18:52.320 of the Open Markets Group, is also on the list. 0:18:52.359 --> 0:18:55.919 So um, some big names out there that are he 0:18:56.080 --> 0:18:58.680 is he is on the talking Points list. We don't 0:18:58.680 --> 0:19:02.600 have an official copy of Sarah Horowitz's list. Are you 0:19:02.680 --> 0:19:07.720 on the list? Always? Run? I was trying to sell 0:19:07.800 --> 0:19:12.160 Neil Sauce the last hour the voice Chairman. It'll be fun. 0:19:12.240 --> 0:19:17.120 This is a real uh Exerciory Jeffrey Lacker's successor. Yet 0:19:17.119 --> 0:19:18.920 has that been that yet? We're still waiting for a 0:19:19.040 --> 0:19:21.639 Richmond fair enough, Michael McKee, thank you so much. Are 0:19:21.640 --> 0:19:24.040 you going to go to this swarm? I'm gonna watch 0:19:24.080 --> 0:19:27.400 you and you can have half of Thomas Rose. I need, 0:19:27.480 --> 0:19:40.720 I need help with my question for Michael McKee. It 0:19:40.880 --> 0:19:44.760 is tax reformed time. It is a time where lots 0:19:44.760 --> 0:19:49.080 of blowviate. And if you actually have analysis the Tax 0:19:49.160 --> 0:19:53.080 Policy Center of the Urban Institute and Brookings Institute, UH 0:19:53.440 --> 0:19:56.840 lead for years William Gale and Gene Stirley, I should 0:19:56.840 --> 0:20:01.040 mention as well. And in the trenches of our tax reform, 0:20:01.240 --> 0:20:04.639 tax cut, whatever it is, is Howard Blackman. That's a 0:20:04.760 --> 0:20:07.640 name that you will begin to know over the coming 0:20:07.680 --> 0:20:10.040 weeks and months. And we're honored that the senior fellow 0:20:10.040 --> 0:20:14.840 at the Tax Policy Center joins us now, Howard, congratulations 0:20:15.040 --> 0:20:18.639 on the issue coming front and center for you. What 0:20:18.880 --> 0:20:23.399 is your single observation of where we are right now 0:20:23.560 --> 0:20:27.040 on this tax reform bill. Well, as Donald Trump might 0:20:27.080 --> 0:20:31.200 have said, nobody knew tax reform would be this hard. Uh. 0:20:31.440 --> 0:20:34.320 This is a real challenge. It's particularly a real challenge 0:20:34.359 --> 0:20:38.400 for Republicans to do this on a partisan basis, because 0:20:38.600 --> 0:20:42.160 to pay for many of the tax cuts that they favor, 0:20:42.720 --> 0:20:45.080 I need to get rid of tax preferences already in 0:20:45.080 --> 0:20:46.840 the law, and it's really hard to do that when 0:20:46.840 --> 0:20:49.679 you don't have political cover of a bipartisan bill. Let 0:20:49.720 --> 0:20:51.320 me ask you just about what we know about the 0:20:51.560 --> 0:20:54.040 ramifications of this piece of legislation. Of course, the Tax 0:20:54.040 --> 0:20:57.119 Policy Center was in the cross Harris when Kevin Hassett 0:20:57.280 --> 0:20:58.720 made a trip there to speak to you in the 0:20:59.119 --> 0:21:02.159 Tax Foundation as well, and he was critical of the 0:21:02.200 --> 0:21:04.159 fact that y'all did some analysis early on that he 0:21:04.160 --> 0:21:07.520 thought was was premature. We see this bill being rushed 0:21:07.520 --> 0:21:09.760 through committee. Uh. The chair of the House Ways and 0:21:09.760 --> 0:21:11.119 Means Committee says he wants to have it done by 0:21:11.840 --> 0:21:13.840 of November. Is it Is it your sense that we're 0:21:13.840 --> 0:21:16.359 gonna maybe have that happened without having a full sense 0:21:16.400 --> 0:21:19.200 of what this bill means. I think that's true. In 0:21:19.240 --> 0:21:22.120 the House. The House is on a fast track. They 0:21:22.320 --> 0:21:25.000 have the votes, and I suspect it will move pretty quickly. 0:21:25.240 --> 0:21:27.000 The Senate, I think is going to be a different story. 0:21:27.359 --> 0:21:28.840 I think the Senate is going to take quite a 0:21:28.840 --> 0:21:30.720 while to work its way through this bill, and I 0:21:30.720 --> 0:21:34.440 think there will be some opportunity to chew over many 0:21:34.480 --> 0:21:36.840 of the details. One of the things that that we're 0:21:36.880 --> 0:21:39.360 all learning just in the last few days is that 0:21:39.560 --> 0:21:43.320 there there are provisions building enormously complicated. You know, while 0:21:43.440 --> 0:21:46.160 the while the supporters of the bill talked about simplification, 0:21:46.240 --> 0:21:48.960 and there is some simplification here, there's things in here. 0:21:48.960 --> 0:21:52.200 They're very, very complex, and people even four or five 0:21:52.280 --> 0:21:54.159 days after the bill was first introducer just trying to 0:21:54.200 --> 0:21:56.560 figure out what they mean. You have members of this 0:21:56.600 --> 0:21:59.879 administration guaranteeing that there will be no tax increases to 0:22:00.119 --> 0:22:02.159 cuts for for the middle classes. You've seen it is that? 0:22:02.600 --> 0:22:07.280 Is that possible from from what you've read. The problem 0:22:07.359 --> 0:22:10.159 with this bill is is that the changes that they 0:22:10.359 --> 0:22:13.960 make are going to be very idiosyncratic. Whether you pay 0:22:14.080 --> 0:22:16.959 more tax or less tax, particularly from the middle income, 0:22:17.680 --> 0:22:19.720 is going to depend a lot on a lot of 0:22:19.840 --> 0:22:23.480 specific circumstances. Where do you live, what's the makeup of 0:22:23.520 --> 0:22:25.480 your family, how many people who have how do you 0:22:25.560 --> 0:22:28.000 make your living? Uh So, I think what we're going 0:22:28.040 --> 0:22:30.040 to find and we hope to have an analysis of 0:22:30.119 --> 0:22:32.480 this for the next few days. I think what we're 0:22:32.480 --> 0:22:35.120 going to find is that for some middle income people 0:22:35.160 --> 0:22:37.480 it will be a small tax cut, for some build 0:22:37.480 --> 0:22:40.440 income people it will be a small tax increase, and 0:22:40.800 --> 0:22:42.840 for some very high income people it will be a 0:22:42.960 --> 0:22:46.520 very big tax cut. Howard Gluckman was Tax Policy Center. 0:22:46.640 --> 0:22:50.439 To me, the the elephant in the room here, Howard, 0:22:51.240 --> 0:22:53.880 is the one point five trillion number. Bill gil writing 0:22:53.920 --> 0:22:56.760 on this this weekend. Do you believe in that number? 0:22:56.880 --> 0:23:00.280 Are you out at the two trillion dollar level like others? 0:23:01.040 --> 0:23:03.600 So I think that this proposal is likely to cost 0:23:03.800 --> 0:23:07.359 more than the one point five trade. And now the 0:23:07.480 --> 0:23:10.080 problem is they have built themselves this box. They have to, 0:23:10.160 --> 0:23:13.280 at the end of the day pass a bill that 0:23:13.760 --> 0:23:17.239 that increases the deficit or it loses no more than 0:23:17.320 --> 0:23:19.440 one point five How do they do that? What's the 0:23:19.600 --> 0:23:21.920 elephant in the room that goes out the big fat door. 0:23:22.480 --> 0:23:24.520 So this is a so this is a lower the 0:23:24.520 --> 0:23:26.480 bridge or raise the river story. They can either do 0:23:26.640 --> 0:23:30.960 it by h finding more tax preferences to get rid of, 0:23:31.359 --> 0:23:33.679 which is I think pretty unlikely, or the other way 0:23:33.760 --> 0:23:37.240