WEBVTT - Surveillance: A Fed Minutes Preview With Vincent Reinhart 0:00:09.880 --> 0:00:13.800 Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene Jay Ley. 0:00:13.960 --> 0:00:17.560 We bring you insight from the best in economics, finance, investment, 0:00:18.000 --> 0:00:23.520 and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, 0:00:23.600 --> 0:00:29.080 Bloomberg dot Com, and of course on the Bloomberg Joining Us. 0:00:29.160 --> 0:00:33.160 Vincent Reinhart Standish Melon economist and investment strategist. Good morning 0:00:33.200 --> 0:00:35.000 to you, Vince. Is that how you see this plank 0:00:35.040 --> 0:00:40.800 out a short term win? Good more and Jonathan uh So, Look, 0:00:40.880 --> 0:00:43.120 I think that we have to accept that the government's 0:00:43.159 --> 0:00:46.280 going to be shut down for a while, that it 0:00:46.360 --> 0:00:52.800 was pretty clearly a distinct standoff we saw yesterday, and 0:00:53.080 --> 0:00:56.520 that the Federal Reserve is on the sidelines for a bit. 0:00:56.760 --> 0:00:59.480 The minutes will be an interesting this afternoon, though. What 0:00:59.520 --> 0:01:01.440 are you looking for from the minutes? To South Benoon. 0:01:02.640 --> 0:01:05.800 One thing you gotta remember is that the minutes are 0:01:05.880 --> 0:01:09.840 supposed to be an accurate depiction of what was discussed 0:01:09.840 --> 0:01:12.400 at the f MC meeting, But a lot of stuff 0:01:12.480 --> 0:01:15.280 is discussed at the FMC meeting. The transcript runs something 0:01:15.319 --> 0:01:17.280 like a d and twenty pages, and they just still 0:01:17.280 --> 0:01:23.160 look down to eleven or twelve pages in those minutes. Um. Therefore, 0:01:23.400 --> 0:01:26.399 there's some selectivity in the week or two after the 0:01:26.480 --> 0:01:31.560 meeting to nudge the boat in a in a better direction. 0:01:32.319 --> 0:01:35.160 Chair Pal came off a little tone death in the 0:01:35.360 --> 0:01:37.640 in the press conference. They'll try to fix it in 0:01:37.640 --> 0:01:41.360 the minute. So you'll seem more responsive to financial conditions. 0:01:41.400 --> 0:01:45.840 You'll see him more worried about the world and emphasizing 0:01:45.880 --> 0:01:50.960 the range of views on appropriate monetary policy be a 0:01:51.000 --> 0:01:53.320 bigger tent. In an interview in The Wall Street Journal today, 0:01:53.400 --> 0:01:55.800 Jim Blad saying we're bordering on coming too far on 0:01:55.960 --> 0:01:59.559 rates and possibly tipping the economy into recession. If rights 0:01:59.560 --> 0:02:01.040 on left did vince, what do you think of that? 0:02:01.160 --> 0:02:03.040 The idea that we're one right hunk away from a 0:02:03.080 --> 0:02:06.040 policy mistake at a federal reserve. So the first thing 0:02:06.040 --> 0:02:08.400 I would say is I believe in market economies. I 0:02:08.440 --> 0:02:11.160 don't think they're so fragile that if you get a 0:02:11.240 --> 0:02:15.120 quarter point wrong one way or the other, you are 0:02:15.280 --> 0:02:19.359 headed to the abyss. Uh. And so I hope that 0:02:19.680 --> 0:02:23.919 you know the world works better than that. Second, remember 0:02:23.960 --> 0:02:29.440 that president Board has had of you consistently over the 0:02:29.639 --> 0:02:33.520 over the last five years or so. Uh that uh, 0:02:33.760 --> 0:02:36.400 it's not possible to predict where rates are going, and 0:02:36.480 --> 0:02:39.280 so your best estimate of where the neutral rate is 0:02:39.280 --> 0:02:42.520 is where it is right now. And so he could 0:02:42.520 --> 0:02:47.640 have repeated the concern uh he expressed in the in 0:02:47.680 --> 0:02:51.720 the journal, uh, this morning, just about any time over 0:02:51.720 --> 0:02:54.600 the last several years. So I'm not sure that's news, 0:02:55.280 --> 0:02:58.760 Vince Reynard. In the minutes, there's these key words some 0:03:00.240 --> 0:03:03.840 several several members several of this, John, it's like you 0:03:03.880 --> 0:03:08.320 and me, some several, Vince Reynard. How is several different 0:03:08.400 --> 0:03:12.960 with Chairman Powell versus several with yelling bernankey in back 0:03:13.080 --> 0:03:16.720 to your time with Chairman Greenspan. I mean, is there 0:03:16.760 --> 0:03:21.120 an active discussion that Chairman Powell listens to or is 0:03:21.120 --> 0:03:25.720 he alone as Greenspan was alone. So I would say 0:03:25.960 --> 0:03:30.360 the first thing the minutes drafters, and remember I signed 0:03:30.360 --> 0:03:33.680 the minutes for six or seven years. Uh tried he 0:03:33.760 --> 0:03:38.920 used to quill John. It was with a quill can, 0:03:39.080 --> 0:03:43.280 candle light and a quill um. Uh, try to be 0:03:43.360 --> 0:03:47.800 consistent across time. And so I probably everybody still has 0:03:47.920 --> 0:03:52.600 that dog eared cheat sheet on parchment paper. I would 0:03:52.600 --> 0:03:55.800 say that gives the translation of some and several and 0:03:55.880 --> 0:03:59.520 a couple and a few, So I don't think that 0:03:59.520 --> 0:04:01.960 that's not a part of the minute. Question is how 0:04:02.480 --> 0:04:10.720 consultative is chair Pal relative to other of his predecessors. 0:04:11.320 --> 0:04:16.200 My bed is is pretty consultative. He comes from a background, uh, 0:04:16.480 --> 0:04:19.800 you know, from a bush bush triggery from the private sector, 0:04:19.800 --> 0:04:23.880 some think tank um, in which you get along by 0:04:24.160 --> 0:04:30.520 by by getting along. And he uh often said hey, 0:04:30.560 --> 0:04:33.960 I'm not an economist. That means he listens to economists. 0:04:34.000 --> 0:04:37.880 So I would suspect that, um, he does talk a lot. 0:04:38.279 --> 0:04:41.280 I think the concern you should have is he talks 0:04:41.320 --> 0:04:44.280 a lot to people who are just like him. That 0:04:44.480 --> 0:04:48.960 he had a material influence admiring the last eight bank presidents. 0:04:49.920 --> 0:04:56.040 The board appointments are relatively you know, uh similar to his, 0:04:56.320 --> 0:05:00.560 to his they're basically rebuilding the bush triggery um, and 0:05:00.680 --> 0:05:03.360 so there's a question how much diversity of opinion there 0:05:03.480 --> 0:05:07.359 is that the you know, in FMC discussions, that's always 0:05:07.360 --> 0:05:09.160 a risk. Well, then being able to listen to the 0:05:09.200 --> 0:05:11.599 committee is important. Being able to present all the committee 0:05:11.640 --> 0:05:16.200 things coherently and consistently is something altogether different, and I 0:05:16.200 --> 0:05:18.360 see a chairman that's really struggling to do that. We 0:05:18.440 --> 0:05:20.400 seem to have flip from one view to another in 0:05:20.400 --> 0:05:23.520 the emphasis every time he speaks seems to change. Do 0:05:23.520 --> 0:05:25.400 you think the chairman's struggling in the early part of 0:05:25.400 --> 0:05:30.479 his tenure events? So, I think the chairman's uh issue 0:05:30.920 --> 0:05:33.560 and he is that he has an ambition to explain 0:05:33.680 --> 0:05:41.600 monetary policy as as clearly as possible. His audience is 0:05:41.640 --> 0:05:45.880 not Bloomberg or the Wall Street Journal, It's the readership 0:05:45.880 --> 0:05:50.279 of USA today. And the problem is when you try 0:05:50.360 --> 0:05:53.880 to simplify the message to a few key points, you're 0:05:53.920 --> 0:05:58.040 going to leave some stuff out, and global financial markets 0:05:58.040 --> 0:06:01.680 will very quickly remind you what you left out. And 0:06:01.760 --> 0:06:05.200 so I don't uh. So, I think there is an 0:06:05.279 --> 0:06:09.800 issue of how much financial market experience there is at 0:06:09.800 --> 0:06:13.719 the top of the house across you know, when you 0:06:13.760 --> 0:06:16.200 think about the leadership of the said and I think 0:06:16.240 --> 0:06:19.760 there's also a sincere desire to keep it simple. But 0:06:20.040 --> 0:06:23.560 keeping it simple may mean you kept it too simple. 0:06:23.680 --> 0:06:26.359 How important is January thirty? I mean it's changed, I 0:06:26.400 --> 0:06:29.000 know in six, eight weeks, etcetera. But Vince, right now 0:06:29.080 --> 0:06:32.200 we're in ten twelve days away from January thirty. Whatever 0:06:32.200 --> 0:06:34.760 the math is, it's most more than that fifteen days 0:06:34.800 --> 0:06:37.680 or whatever. But but it's right now, how important is 0:06:37.720 --> 0:06:41.400 this January meeting become? So it's important in a couple 0:06:41.440 --> 0:06:43.920 of ways. One is it's how will we handle a 0:06:43.960 --> 0:06:48.000 press conference? Uh, the now that he's will be doing 0:06:48.040 --> 0:06:50.400 eight of them a year. But I think it's also 0:06:50.480 --> 0:06:56.280 important in that they have changed change their communications strategy. 0:06:56.520 --> 0:07:00.920 They don't want to be responsible for commun indicating the 0:07:01.160 --> 0:07:05.280 entire path of interest rates, because that then the headlines 0:07:05.320 --> 0:07:08.400 are the FED tightened and intense to tighten more. They 0:07:08.440 --> 0:07:11.240 want to be able to say the data drove them 0:07:11.280 --> 0:07:14.880 to raise rates this meeting. They don't want the responsibility 0:07:14.920 --> 0:07:17.320 of a long term commitment, but they also don't want 0:07:17.320 --> 0:07:20.840 to comprise markets. So the question is do they lean 0:07:20.960 --> 0:07:24.320 into tightening in March or do they signal that they 0:07:24.360 --> 0:07:27.240 are pausing. That's the big question for January. This has 0:07:27.240 --> 0:07:29.280 been a wonderful Vincent Reynard, thank you so much for 0:07:29.320 --> 0:07:32.640 the briefing with standard Melon of course for years even 0:07:32.720 --> 0:07:35.800 decades with a FED serving as head of research for 0:07:35.880 --> 0:07:53.280 Chairman Alan Greenspan as well. It was an original and 0:07:53.360 --> 0:07:56.880 historic moment for the nation. The President spoke last night, 0:07:56.960 --> 0:08:02.000 let's listen the border wall, when very quickly pay for itself. 0:08:02.560 --> 0:08:07.280 The cost of illegal drugs exceeds five billion dollars a year, 0:08:08.160 --> 0:08:11.600 vastly more than the five point seven billion dollars we 0:08:11.640 --> 0:08:15.920 have requested from Congress. The wall will also be paid 0:08:15.960 --> 0:08:20.000 for indirectly by the great new trade deal we have 0:08:20.160 --> 0:08:23.720 made with Mexico. The President the United States, and of 0:08:23.760 --> 0:08:28.120 course Speaker Pelosi and Senate Leader Schumer speaking after the 0:08:28.200 --> 0:08:31.480 President last night. He is a Democrat from Texas, but 0:08:31.600 --> 0:08:36.680 that barely describes his visceral understanding of the border. There 0:08:36.800 --> 0:08:39.280 is no one I know in America more linked to 0:08:39.400 --> 0:08:43.160 Laredo and the border east and west. And Henry Quire 0:08:43.240 --> 0:08:46.600 of the twenty district in UH, Texas, and of course 0:08:46.600 --> 0:08:50.680 the Democrat and conservative Democrat, I might point out from Texas. 0:08:50.960 --> 0:08:53.640 Mr Quaier, I am thrilled that you're with us today. 0:08:53.679 --> 0:08:57.600 What does President Trump get most wrong about what the 0:08:57.720 --> 0:09:01.240 people on the border want. Well, first of all, he 0:09:01.280 --> 0:09:04.480 makes it sound like it's a crisis and a very 0:09:04.559 --> 0:09:07.000 difficult place to live. If you look at the latest 0:09:07.120 --> 0:09:10.040 FBI stats, UH, and I've looked at him for years, 0:09:10.040 --> 0:09:12.800 that's the same thing. When you look at murder rates, 0:09:12.920 --> 0:09:17.840 crime rate, violent rape assaults and all that the border 0:09:17.880 --> 0:09:20.720 crime rate is lower than the national crime rate. In fact, 0:09:20.760 --> 0:09:23.120 if you look at Laredo, my hometown on the border, 0:09:23.720 --> 0:09:26.920 that murder rate UH is about two or three times 0:09:27.000 --> 0:09:29.840 lower than Washington, d C. So when the President leaves 0:09:29.880 --> 0:09:33.120 tomorrow to the border, the most dangerous thing he's gonna 0:09:33.120 --> 0:09:35.280 see is when he leaves Washington to go to the 0:09:35.320 --> 0:09:38.000 border again. You have a visceral understanding with this, with 0:09:38.080 --> 0:09:40.000 the history of your parents, with the history of a 0:09:40.040 --> 0:09:43.600 Laredo and folks, Laredo isn't Murdy Robin's song. Just for 0:09:43.880 --> 0:09:46.800 to get it straight, Laredo is a huge depot for 0:09:46.920 --> 0:09:51.000 trade in America. Now, it's completely different than the stereotype. 0:09:51.600 --> 0:09:54.880 We're gonna have funding and this is axios. Mike Allen 0:09:54.960 --> 0:09:58.400 just reporting moments ago oh MB is talking to Pentagon 0:09:58.920 --> 0:10:03.080 about a military refunding of this project. How would you 0:10:03.160 --> 0:10:06.360 respond to having the Pentagon come down and do this 0:10:06.440 --> 0:10:10.600 infrastructure project for your Laredo. You know it's wrong, And 0:10:10.720 --> 0:10:14.480 I said on both the subcommittees are appropriations for homeland 0:10:14.800 --> 0:10:17.800 and defense. There are two different things. We're talking about 0:10:17.840 --> 0:10:21.880 a law enforcement issue at the border, not a military issue. 0:10:21.880 --> 0:10:24.240 And the President needs to understand this. If you wanted 0:10:24.240 --> 0:10:26.760 to stop drugs, and the latest d A report will 0:10:26.760 --> 0:10:29.560 tell you that most drugs that come into the United 0:10:29.600 --> 0:10:33.800 States will come through ports of entry uh. Cars, drugs 0:10:34.200 --> 0:10:36.320 uh and And he just doesn't understand that a wall 0:10:36.440 --> 0:10:38.320 is not going to stop the drugs coming in the 0:10:38.360 --> 0:10:40.480 way he thinks it is. So he's got to have 0:10:40.559 --> 0:10:44.079 a better understanding the way the border works. And require 0:10:44.160 --> 0:10:46.359 you're you're on the edge of the Blue Dog coalition, 0:10:46.400 --> 0:10:49.839 you're a conservative Democrat. There's a lot of Republicans out there, 0:10:49.840 --> 0:10:51.960 we saw this at the election, who have moved away 0:10:52.320 --> 0:10:55.120 from the certitude of the president of belief in the president. 0:10:55.400 --> 0:10:59.719 How lonely is this president within his Republican party. How 0:10:59.720 --> 0:11:04.160 many Republicans are over with the Blue Dog coalition. You know, 0:11:04.240 --> 0:11:06.840 it's interesting. That's a very good point. When you talk 0:11:06.880 --> 0:11:10.079 to a lot of the Republicans on on a private matter, 0:11:10.280 --> 0:11:13.280 they'll tell you that they understand that the President is 0:11:13.320 --> 0:11:16.959 not correct on this issue, but many of the times 0:11:16.960 --> 0:11:19.280 they have to stick with them because the party. But 0:11:19.360 --> 0:11:21.199 a lot of them understand that the wall is a 0:11:21.320 --> 0:11:25.400 fourteenth century solution to a twenty one century problem. He 0:11:25.520 --> 0:11:28.080 thinks that the only way you're gonna secure the border 0:11:28.440 --> 0:11:31.480 is by having a wall, and that's wrong as China 0:11:31.920 --> 0:11:33.959 at you know, look at the Berlin Wall, look at 0:11:34.640 --> 0:11:36.840 the Germans and the French are in the World War One. 0:11:37.200 --> 0:11:41.040 You know, we just gotta look at technology and personnel 0:11:41.200 --> 0:11:44.760 and other ways of securing the border. Right, So so 0:11:44.800 --> 0:11:48.520 that Congressman, what you're calling for is more practical border security. 0:11:48.600 --> 0:11:50.559 Do we have any idea of how much that would cost? 0:11:50.640 --> 0:11:53.240 What kind of training are you talking about? Well, you know, 0:11:53.320 --> 0:11:56.200 first of all, let's look at border patrol. Uh where? 0:11:56.320 --> 0:11:59.400 Now two thousand border patrols short from the higher lights 0:11:59.440 --> 0:12:02.160 that we used to half two thousand border patrol. So 0:12:02.200 --> 0:12:05.480 what does the administration do? They put a two million 0:12:05.480 --> 0:12:08.880 dollar contract to hire border patrol to show them how 0:12:08.880 --> 0:12:11.520 to hire border patrol. In fact, they just hired with 0:12:11.679 --> 0:12:14.959 fourteen point eight million dollars. They hired two new border patrol. 0:12:15.240 --> 0:12:17.800 Now maybe one of them is Captain America. I don't know, 0:12:17.840 --> 0:12:19.880 but if you're gonna spend that much money, you better 0:12:19.920 --> 0:12:22.400 get something good for for that money. So we gotta 0:12:22.480 --> 0:12:25.320 hire border patrol. We gotta give them the equipment. The 0:12:25.400 --> 0:12:28.480 military has a lot of technology that works very well. 0:12:28.559 --> 0:12:31.120 A lot of the tech companies out there have the 0:12:31.240 --> 0:12:35.160 latest technology that works very well. But again, we can't 0:12:35.160 --> 0:12:37.720 play defense on the one yard line called the US 0:12:37.800 --> 0:12:41.120 Mexico border, where we spent over eighteen billion dollars. We 0:12:41.240 --> 0:12:44.559 got to expand that work with Mexico with Central America. 0:12:44.640 --> 0:12:46.600 A couple of years ago, if I can say this briefly, 0:12:46.920 --> 0:12:49.760 we added fourteen million dollars to help Mexico secure the 0:12:49.760 --> 0:12:53.120 border with Guatemala. Did you know with that amount of 0:12:53.120 --> 0:12:55.880 money they were able to stop over two d and 0:12:55.920 --> 0:12:59.240 twenty thousand people a year, people that would have come 0:12:59.280 --> 0:13:01.840 to our borders. We gotta be smart on how we 0:13:01.920 --> 0:13:06.120 secure the border. Congressman, how what kind of changes would 0:13:06.120 --> 0:13:09.520 you also make to the American detention system? Well, you know, 0:13:09.800 --> 0:13:12.240 again the detention. You know, one of the things I've 0:13:12.280 --> 0:13:15.240 done is I make sure that there's transparency, make sure 0:13:15.280 --> 0:13:18.000 that you know we if somebody ends up in the detention, 0:13:18.000 --> 0:13:21.360 that we treat them with dignity and respect. But again, 0:13:21.840 --> 0:13:25.320 you know, uh, it's important to know that detention is 0:13:25.320 --> 0:13:28.120 a deterrence. We can and not have catch and release. 0:13:28.440 --> 0:13:30.600 And I know that some of my Democrat party don't 0:13:30.600 --> 0:13:33.959 like detentions, but again, you gotta have some detention beds, 0:13:34.000 --> 0:13:36.600 because if somebody comes in, you gotta be able to 0:13:36.720 --> 0:13:39.680 hold them and then send them back. I want to 0:13:40.000 --> 0:13:43.000 stretch from Laredo up to the sixteenth District and help 0:13:43.000 --> 0:13:47.640 pass so and Congresswoman Escobar's district as well. That's the 0:13:47.800 --> 0:13:50.440 span in the reach. That's the emotion that the President 0:13:50.480 --> 0:13:56.120 talks about. Speak to liberal Democrats about their belief on 0:13:56.160 --> 0:13:59.959 the wall. What the liberal Democrats get wrong, the cushion 0:14:00.040 --> 0:14:04.080 Democrats of California, even the President up on Fifth Avenue 0:14:04.320 --> 0:14:07.640 in New York, what do they get wrong about a 0:14:07.720 --> 0:14:12.840 liberal approach to our immigration and border activity. Well, you know, again, 0:14:12.920 --> 0:14:15.560 so without due respect. I think the extreme right and 0:14:15.559 --> 0:14:18.319 the extreme left don't understand the way the border works 0:14:18.360 --> 0:14:21.440 without due respect. Some people want open borders. I don't 0:14:21.440 --> 0:14:23.640 believe in open borders. I want to have a law 0:14:23.720 --> 0:14:26.120 and order at the border. And we have that. Like 0:14:26.160 --> 0:14:29.120 I said, our our areas are very safe. That we 0:14:29.200 --> 0:14:31.640 have problems, of course we do, but it's safer than 0:14:31.720 --> 0:14:35.000 many other places. But the bottom line is, uh, you know, 0:14:35.040 --> 0:14:37.200 you've got to have some sort of deterrence. You cannot 0:14:37.240 --> 0:14:39.800 just open up the border to anybody coming in. And 0:14:39.840 --> 0:14:41.840 if you're gonna have a wall too, And I say 0:14:41.840 --> 0:14:45.040 that to to to certain people a wall if you 0:14:45.280 --> 0:14:47.880 I've asked this question to all the border patrol chiefs 0:14:47.920 --> 0:14:50.920 since Bush, Obama, and Trump, and I've asked them how 0:14:51.000 --> 0:14:54.200 much time there's a border wall by you quote this 0:14:54.240 --> 0:14:56.880 is from from all of them, a few minutes or 0:14:56.920 --> 0:14:59.760 a few seconds. So we're gonna spend billions of dollars 0:15:00.320 --> 0:15:03.320 to uh to spend on a wall? Or do I 0:15:03.400 --> 0:15:05.400 spend a hundred dollars and buy you a ladder that 0:15:05.440 --> 0:15:09.720 can jump people over that uh, that fence. One final question, 0:15:09.840 --> 0:15:12.080 I know Dr Quaire that the only reason you got 0:15:12.080 --> 0:15:15.400 elected is your affiliation with the University of Texas and 0:15:15.400 --> 0:15:17.880 what Texas A and m as well, folks, that is 0:15:17.920 --> 0:15:21.560 just in Texas. You don't do that, and Mr Quaire 0:15:21.720 --> 0:15:25.200 did as well. What is it signal to Texas that 0:15:25.320 --> 0:15:28.600 Apple computer is gonna drop another x thousands of bodies 0:15:28.920 --> 0:15:34.040 into austin Texas? What does that signal about Texas capitalism? 0:15:34.080 --> 0:15:37.200 You know, let me tell you Texas some years ago 0:15:37.400 --> 0:15:41.120 was was creating about one third of all the private 0:15:41.200 --> 0:15:43.600 jobs in the country. One third. We were just growing, 0:15:43.640 --> 0:15:47.160 so we got trade is important to our area. Uh, 0:15:47.320 --> 0:15:49.800 energy is very important to oiline gas is very important 0:15:49.800 --> 0:15:52.320 to our area. But now the tech. If you go 0:15:52.400 --> 0:15:54.520 to Austin and I used to work there at Secretary 0:15:54.520 --> 0:15:56.920 of State and as a State rep. I've seen Austin 0:15:56.960 --> 0:16:00.840 now become a hub for technology for new startups and 0:16:00.920 --> 0:16:03.480 so that that means a lot. They just got to 0:16:03.520 --> 0:16:06.240 work on the transportation because it's got a little congested 0:16:06.240 --> 0:16:09.440 in Austin. Congressman, thank you so much. Enquire the twenty 0:16:09.440 --> 0:16:12.680 eight district in Texas, thank you for joining us. Thanks 0:16:12.880 --> 0:16:28.520 so much. With us is the right person to speak 0:16:28.560 --> 0:16:33.240 to on the changes of Mr Trump's Republican Party, and 0:16:33.240 --> 0:16:36.720 he is John Braybender, working with Mr Santorum among others. 0:16:37.400 --> 0:16:40.960 Mr Brabender has been in recovery from the lousy Steelers 0:16:41.000 --> 0:16:43.600 season that we've just seen, and we're thrilled that he 0:16:43.640 --> 0:16:48.080 could join us today as well. John. When I look 0:16:48.400 --> 0:16:51.760 at the Republican Party, it has to be a party 0:16:51.840 --> 0:16:54.840 of change. There's a lot of talk about Democrats, the 0:16:54.880 --> 0:16:59.320 new liberalism of the Democratic Party. With this crisis right now, 0:17:00.280 --> 0:17:03.320 what do you perceive is the change in Republicans as 0:17:03.360 --> 0:17:07.680 they greet two thousand nineteen. Well, look, first of all, 0:17:07.720 --> 0:17:11.399 we're we're saying the President and the Republican Party are synonymous, 0:17:11.440 --> 0:17:15.520 and I'm not sure that on this particular shoe they are. 0:17:15.640 --> 0:17:20.320 I think everybody agrees with border security, everybody agrees with 0:17:20.400 --> 0:17:23.919 the importance of getting something done. The real question comes, 0:17:24.280 --> 0:17:27.280 do you do it at the expense of closing down 0:17:27.359 --> 0:17:30.359 the government? And you know, one thing that I've learned 0:17:30.359 --> 0:17:34.560 over time is that generally the White House owns problems, 0:17:34.600 --> 0:17:38.000 whether they created them or not. And so what what 0:17:38.080 --> 0:17:40.320 I really believe is that last night turned out to 0:17:40.320 --> 0:17:45.000 be a non event because there was no major announcement. Uh. 0:17:45.080 --> 0:17:46.760 In fact, you know, the only thing I think we 0:17:46.920 --> 0:17:49.520 learned were two things. What is that President Trump is 0:17:49.600 --> 0:17:53.680 much more comfortable in front of twenty thousand people out 0:17:53.680 --> 0:17:56.320 an auditorium trying to free wheel it. And I think 0:17:56.320 --> 0:17:59.720 we also learned what Nancy Pelosi and Chuck Schumer will 0:17:59.720 --> 0:18:02.320 look if they were ever side by side at a 0:18:02.320 --> 0:18:06.600 wax museum. Beyond that, I don't think every you were 0:18:06.760 --> 0:18:09.879 left they're saying where where do we go? But it's 0:18:09.920 --> 0:18:13.760 an easier message for the Democrats. The presidents saying we 0:18:13.840 --> 0:18:17.600 need border security borders really means a wall, and I'm 0:18:17.600 --> 0:18:20.320 not opening until we did it. I mean, you know, 0:18:21.480 --> 0:18:25.360 but you've always had a more sophisticated message about GOP politics, 0:18:25.359 --> 0:18:28.600 and some people think it's a Whig Party forty going 0:18:28.640 --> 0:18:32.879 into oblivion. What is a gentleman from Kentucky need to 0:18:33.000 --> 0:18:39.640 do to regain a voice for non Trumpian Republicans. Well, 0:18:39.640 --> 0:18:42.520 and that's a that's a really good point, because what 0:18:42.640 --> 0:18:46.680 I believe this president was elected on was a lot 0:18:46.720 --> 0:18:50.560 of disenfranchised Americans who had very little loyalty the either 0:18:50.720 --> 0:18:54.480 party that felt both sides and let them left them 0:18:54.520 --> 0:18:59.040 alone on the economic battlefield, and that it chronically took 0:18:59.080 --> 0:19:02.600 a billionaire to give them a loud enough megaphone to 0:19:02.720 --> 0:19:05.639 say I'm gonna go there, fight for you, give you 0:19:05.680 --> 0:19:08.960 a voice and change things. In fact, I think you 0:19:09.000 --> 0:19:11.880 know more than you know. Everybody cheered the wall when 0:19:11.960 --> 0:19:15.000 Donald Trump keep these speeches. What I think was missed 0:19:15.080 --> 0:19:18.359 was what people were really cheering even louder for, was 0:19:18.400 --> 0:19:21.439 heven saying I was going to drain the swamp. And 0:19:21.520 --> 0:19:24.160 I think that where the party has gotten off here 0:19:24.200 --> 0:19:27.280 a little bit is uh number one, we're poor on messaging. 0:19:27.400 --> 0:19:31.120 Number two, it is more of this shake up Washington 0:19:31.320 --> 0:19:34.560 and make it for real people again. That is going 0:19:34.640 --> 0:19:38.480 to get the president reelected. And honestly, I'm not sure 0:19:38.520 --> 0:19:40.720 that they go to bed at night worrying as much 0:19:40.760 --> 0:19:43.480 about the wall as they do about their next next 0:19:43.480 --> 0:19:47.920 paycheck and fuming over the fact that Washington politicians, in 0:19:48.000 --> 0:19:51.159 Washington insiders seem to have a lot of benefits and 0:19:51.200 --> 0:19:53.680 privileges that they don't enjoy. So Joel Nice, talk about 0:19:53.680 --> 0:19:56.680 the classic grid luck we have right now. Typically it's 0:19:56.760 --> 0:19:59.720 tension elsewhere the breaks the grid luck. What it's the 0:19:59.760 --> 0:20:01.960 ten shouldn't come from? Is it the lines of the airport, 0:20:02.119 --> 0:20:04.680 Is it the employees that don't receive that paychecks? Where 0:20:04.680 --> 0:20:07.960 does it come from? But well, what it really comes 0:20:07.960 --> 0:20:10.120 from is who's gonna win in the poll data that's 0:20:10.119 --> 0:20:13.280 going to influence the next election. If one side or 0:20:13.320 --> 0:20:15.680 the other side feels that somebody else has all of 0:20:15.720 --> 0:20:19.119 a sudden gaining an advantage, they're gonna move on this. 0:20:19.240 --> 0:20:22.159 I mean, let's be honest. This is a public relations 0:20:22.240 --> 0:20:26.840 and pr problem. It is it is not a policy problem. 0:20:26.880 --> 0:20:29.159 And and so you know, you have two sides who 0:20:29.200 --> 0:20:31.560 are trying to figure out how they can make the 0:20:31.600 --> 0:20:35.480 other side own this, which appears to be losing. John, 0:20:35.520 --> 0:20:38.280 We're gonna run out of time, but we would love 0:20:38.359 --> 0:20:40.359 to get you back on again with us, and of 0:20:40.359 --> 0:20:44.200 course with Kevin so early down a FM in Washington, 0:20:44.280 --> 0:20:46.360 John Brave Under, thank you so much, just way way 0:20:46.400 --> 0:20:48.920 too short a time. Today we'll have Mr brave under 0:20:48.920 --> 0:20:52.120 on away uh on again of course with brave Undercott 0:20:52.520 --> 0:21:11.679 Cox in Washington. This is a joy. We'd like to 0:21:11.680 --> 0:21:16.200 see her every ninety days. We don't. Betsy is just happy. 0:21:16.280 --> 0:21:21.440 We have an adult in the room of Morgan Stanley 0:21:21.840 --> 0:21:24.399 and every everybody on the cell side is their own style. 0:21:24.600 --> 0:21:28.520 Ms Graci style is to do pristine work on the banks, 0:21:28.680 --> 0:21:33.199 involving a lot of analysis, math in numbers and the 0:21:33.280 --> 0:21:37.000 mathiness of Betsy Grazi or Morgan Stanley with your team. 0:21:37.040 --> 0:21:40.320 What's the Mathew number that sticks out right now for 0:21:40.359 --> 0:21:45.439 the banks loan loan or what's the math thing that 0:21:45.560 --> 0:21:47.679 matters right now? The math thing that matters for the 0:21:47.720 --> 0:21:53.080 stocks is that they are pricing in recession level valuations 0:21:54.560 --> 0:21:57.280 even though radio you have to keep talking, okay, so 0:21:57.520 --> 0:22:05.240 even okay, even though we've got fundamentals that are flashing positive. 0:22:06.080 --> 0:22:08.359 So that's that's so, what's your level is strong by 0:22:08.440 --> 0:22:10.760 what's your level of conviction right now in the major banks, 0:22:11.320 --> 0:22:15.719 we'll overweight the group, and our top picks are State Street, 0:22:16.040 --> 0:22:19.280 Bank of America and JP Morgan. So usually going into 0:22:19.400 --> 0:22:22.159 arning season, we've had some guidance on traving revenue from 0:22:22.160 --> 0:22:24.800 the big CEO, somebody's big banks. They got it this 0:22:24.840 --> 0:22:26.480 one way, then got us in another in the spice 0:22:26.520 --> 0:22:28.040 of a couple of weeks. So I have no idea 0:22:28.080 --> 0:22:30.560 what to expect this quota. What are we getting? That's 0:22:30.560 --> 0:22:34.520 why you read our stuff? So, um, why did that happen? Right? 0:22:34.560 --> 0:22:37.000 Because we had a conference it was second week in December. 0:22:37.560 --> 0:22:39.920 Message was somewhere you know, trading revenues are going to 0:22:40.000 --> 0:22:43.320 be flat to plus, you know, maybe mid single digits. 0:22:43.640 --> 0:22:45.600 And then towards the end of the month you heard 0:22:45.640 --> 0:22:47.560 from I think it was b of a right, Brian 0:22:47.560 --> 0:22:50.080 Wayne hen CEO coming out and saying, hey, you know 0:22:50.080 --> 0:22:51.800 it's gonna be a little bit lower, it's gonna be 0:22:51.840 --> 0:22:54.240 sub zero. You know it's going to be negative. And 0:22:54.880 --> 0:22:57.680 does that surprise any of us really? Because we had 0:22:57.800 --> 0:23:01.560 such a market pullback, especially with bonds breads widening a 0:23:01.640 --> 0:23:03.960 lot the last couple of weeks in December. You guys 0:23:03.960 --> 0:23:07.480 know that, right, I mean we would paying attention, Yeah, attention. 0:23:07.520 --> 0:23:09.560 So you've got if you've got exposure to high yield, 0:23:09.600 --> 0:23:12.760 if you've got exposure to leverage, finance revenues are probably 0:23:12.760 --> 0:23:15.680 coming in lower capital markets. Is going to be difficult. 0:23:16.119 --> 0:23:18.160 What are the positive signs, what are the green lights 0:23:18.160 --> 0:23:20.560 to say buy bank stocks that come from this? And Okay, 0:23:20.720 --> 0:23:23.720 so part of what you know we're doing here is 0:23:23.760 --> 0:23:25.840 we've got a four queue that's in the rear view 0:23:25.880 --> 0:23:28.119 mirror and it's stock analysts. We want to look forward. 0:23:28.640 --> 0:23:31.520 So the rear view mirror is showing that it was 0:23:31.560 --> 0:23:34.560 a tough quarter. Four Q is a tough quarter because 0:23:34.600 --> 0:23:37.840 you had so much market this location, I mean, was 0:23:37.880 --> 0:23:40.080 the last time we had a quarter with SMP down. 0:23:41.160 --> 0:23:45.720 It's been a while, right, So looking forward, we've got 0:23:46.000 --> 0:23:50.200 loan growth flashing positive, the hight fed data right comes 0:23:50.200 --> 0:23:52.119