1 00:00:02,520 --> 00:00:13,760 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg 2 00:00:13,840 --> 00:00:17,920 Speaker 1: Surveillance Podcast. Catch us live weekdays at seven am Eastern 3 00:00:18,200 --> 00:00:22,000 Speaker 1: on Apple CarPlay or Android Auto with the Bloomberg Business app, 4 00:00:22,360 --> 00:00:25,680 Speaker 1: Listen on demand wherever you get your podcasts, or watch 5 00:00:25,760 --> 00:00:27,040 Speaker 1: us live on YouTube. 6 00:00:27,440 --> 00:00:30,920 Speaker 2: Jason Furman has committed himself to policy. There are a 7 00:00:30,920 --> 00:00:33,760 Speaker 2: few others equivalent to him, both Republican and Democrat. He's 8 00:00:33,760 --> 00:00:38,640 Speaker 2: associated with democratic politics, but he's I think been ecumenical 9 00:00:38,720 --> 00:00:41,720 Speaker 2: to use the word that Professor Furman uses a lot, Paul. 10 00:00:41,800 --> 00:00:44,320 Speaker 2: One of the key things with Jason Furman is he 11 00:00:44,520 --> 00:00:49,320 Speaker 2: was voted most handsome freshman on his dorm at Harvard. 12 00:00:49,360 --> 00:00:52,440 Speaker 2: He made out his roommate just by a little bit. 13 00:00:52,520 --> 00:00:56,440 Speaker 2: That would have been Matt Damon from a few years ago. Jason, 14 00:00:56,480 --> 00:00:59,680 Speaker 2: thank you so much for joining us this morning. You're 15 00:00:59,720 --> 00:01:05,800 Speaker 2: an ten and you have to teach ambiguity, microeconomic ambiguity, 16 00:01:05,840 --> 00:01:08,200 Speaker 2: and it can go this way and that. What I 17 00:01:08,280 --> 00:01:11,759 Speaker 2: didn't hear from the Secretary of Treasury is a risk 18 00:01:11,880 --> 00:01:15,800 Speaker 2: of a real or nominal GDP slowdown. With all the 19 00:01:15,840 --> 00:01:20,080 Speaker 2: policy upset the nation faces right now, do you see 20 00:01:20,319 --> 00:01:23,959 Speaker 2: that we could have a lessening of real GDP or 21 00:01:23,959 --> 00:01:26,280 Speaker 2: the animal spirit of nominal GDP. 22 00:01:28,360 --> 00:01:31,520 Speaker 3: Yeah, well, right now, the level of uncertainty is just 23 00:01:31,760 --> 00:01:36,240 Speaker 3: incredibly high. That is definitely a minus for the economy. 24 00:01:36,640 --> 00:01:39,400 Speaker 3: I don't know how big a minus it is, and 25 00:01:39,480 --> 00:01:42,120 Speaker 3: a lot of it depends on how the uncertainty ends 26 00:01:42,160 --> 00:01:45,560 Speaker 3: up getting resolved around things like tariffs, or whether it 27 00:01:45,600 --> 00:01:48,360 Speaker 3: gets resolved. It may be that every month there's a 28 00:01:48,400 --> 00:01:52,320 Speaker 3: new threat, it gets withdrawn, a new threat that gets made. 29 00:01:52,880 --> 00:01:55,840 Speaker 3: That makes it hard to do planning on a global basis. 30 00:01:56,120 --> 00:02:01,880 Speaker 3: And that's the success of American corporations is their global reach. 31 00:02:02,240 --> 00:02:05,200 Speaker 2: Well, help us with the equation then, because everybody focuses 32 00:02:05,280 --> 00:02:08,040 Speaker 2: on consumption, we do the FED parlor game. I was 33 00:02:08,080 --> 00:02:10,560 Speaker 2: amazed we did you know the independence of the fedure. 34 00:02:10,639 --> 00:02:13,480 Speaker 2: We'll talk about that in a moment with Professor Firman, 35 00:02:13,560 --> 00:02:16,840 Speaker 2: but ignore Jason. As you know, is the I and 36 00:02:16,960 --> 00:02:21,400 Speaker 2: the equation business investment as you look at CPI and 37 00:02:21,480 --> 00:02:26,200 Speaker 2: analyze it. How do you analyze business investment right now 38 00:02:26,320 --> 00:02:27,000 Speaker 2: in America? 39 00:02:28,440 --> 00:02:32,440 Speaker 3: Yeah, so consumer spending is the majority of GDP, but 40 00:02:32,639 --> 00:02:36,880 Speaker 3: investment is the majority of fluctuations in GDP because it's 41 00:02:37,040 --> 00:02:43,400 Speaker 3: much more volatile and right now investors. Business investment is 42 00:02:43,480 --> 00:02:46,600 Speaker 3: grappling with continued high interest rates, which are likely to 43 00:02:46,639 --> 00:02:50,760 Speaker 3: stay that way, with an appreciated dollar which is likely 44 00:02:50,800 --> 00:02:55,600 Speaker 3: to stay that way, with uncertainty about global trade, which 45 00:02:55,639 --> 00:02:58,520 Speaker 3: is likely to stay that way. On the other side 46 00:02:58,560 --> 00:03:01,280 Speaker 3: of the ledger, there may be some reductions and investment 47 00:03:01,720 --> 00:03:05,400 Speaker 3: in regulations that will matter more in targeted sectors like 48 00:03:05,639 --> 00:03:11,200 Speaker 3: energy than it does generically across the board. So a 49 00:03:11,240 --> 00:03:14,640 Speaker 3: lot of cross currents right now, but from policy they're 50 00:03:14,639 --> 00:03:17,120 Speaker 3: a little bit more minus than plus on that part 51 00:03:17,160 --> 00:03:21,720 Speaker 3: of GDP that is most critical to business cycle fluctuations. 52 00:03:22,200 --> 00:03:25,679 Speaker 4: Professor of the Federal Reserve is obviously focusing on inflation, 53 00:03:25,760 --> 00:03:29,120 Speaker 4: and inflation was a big, big issue in the recent 54 00:03:29,400 --> 00:03:34,240 Speaker 4: presidential elections. Certainly, are you concerned that inflation in some 55 00:03:34,320 --> 00:03:36,960 Speaker 4: of the policies that Trump administration is talking about, whether 56 00:03:37,000 --> 00:03:42,040 Speaker 4: it's tariffs or changes in immigration policy, could fuel another 57 00:03:42,200 --> 00:03:43,160 Speaker 4: round of inflation. 58 00:03:45,320 --> 00:03:47,600 Speaker 3: I think it's certainly possible, but let's define what we 59 00:03:47,680 --> 00:03:50,760 Speaker 3: mean by another round of inflation. Right now, I believe 60 00:03:50,840 --> 00:03:55,240 Speaker 3: underlying inflation is around two and a half percent, and 61 00:03:56,000 --> 00:03:59,200 Speaker 3: the tariffs that have been done to date on China 62 00:03:59,240 --> 00:04:01,840 Speaker 3: and steel will probably add about a tenth of a 63 00:04:01,880 --> 00:04:05,480 Speaker 3: percentage point to that. If you do another big set 64 00:04:05,520 --> 00:04:08,720 Speaker 3: of tariffs, maybe it adds three four tenths of a 65 00:04:08,760 --> 00:04:11,960 Speaker 3: percent to that. Now you might be at three percent inflation. 66 00:04:12,440 --> 00:04:15,280 Speaker 3: That's a big deal for the FED. That means they're 67 00:04:15,280 --> 00:04:18,320 Speaker 3: not cutting rates. It might mean, depending on their theory, 68 00:04:18,400 --> 00:04:20,960 Speaker 3: but whether or not to look through the price level change, 69 00:04:21,320 --> 00:04:23,600 Speaker 3: that rate increases are back on the table. 70 00:04:24,000 --> 00:04:24,880 Speaker 5: But that isn't. 71 00:04:24,680 --> 00:04:27,960 Speaker 3: Necessarily a huge thing that consumers take note of. I 72 00:04:27,960 --> 00:04:30,880 Speaker 3: don't know how much humans notice the difference between two 73 00:04:30,960 --> 00:04:35,479 Speaker 3: and a half and three percent inflation, but the FED 74 00:04:35,560 --> 00:04:36,280 Speaker 3: certainly does. 75 00:04:37,240 --> 00:04:39,599 Speaker 4: Professor you and I and I think much of our 76 00:04:39,640 --> 00:04:44,520 Speaker 4: audience grew up with this whole concept of internationalism globalization. 77 00:04:45,560 --> 00:04:49,600 Speaker 4: Is that still a thing these days or is kind 78 00:04:49,640 --> 00:04:53,239 Speaker 4: of everybody just kind of trying to enshore friendshore everything 79 00:04:53,320 --> 00:04:53,839 Speaker 4: these days. 80 00:04:55,360 --> 00:05:01,200 Speaker 3: Look, I'm unapologetic in my enthusiasm for globalization. Enormous things 81 00:05:01,279 --> 00:05:07,320 Speaker 3: for American consumers, American producers, the strength of the United States. 82 00:05:07,880 --> 00:05:10,520 Speaker 3: There's no question that politically it's on its back heel 83 00:05:10,640 --> 00:05:14,360 Speaker 3: right now. But it is such an incredibly powerful force 84 00:05:14,680 --> 00:05:17,039 Speaker 3: that to me, it's much more like a dandelion that 85 00:05:17,080 --> 00:05:19,880 Speaker 3: will grow no matter what the conditions are than it 86 00:05:19,960 --> 00:05:22,320 Speaker 3: is like a fragile orchid that needs to be watered 87 00:05:22,680 --> 00:05:25,520 Speaker 3: in just the right way. And look, there's been some 88 00:05:25,600 --> 00:05:28,680 Speaker 3: feedback in the system. If we had tried to put 89 00:05:28,680 --> 00:05:32,040 Speaker 3: twenty five percent tariffs on Canada and Mexico, it would 90 00:05:32,040 --> 00:05:34,960 Speaker 3: have been horrible for the US auto industry. I think 91 00:05:35,000 --> 00:05:37,480 Speaker 3: that might be part of why it didn't happen, and 92 00:05:37,520 --> 00:05:39,159 Speaker 3: part of why I hope it doesn't happen. 93 00:05:40,000 --> 00:05:42,440 Speaker 2: Jason Furman, with US folks on your community across the nation, 94 00:05:42,600 --> 00:05:45,560 Speaker 2: good morning, I'm Bloomberg Surveillance and on YouTube. Thank you 95 00:05:45,640 --> 00:05:48,440 Speaker 2: for letting us be in your living rooms, your offices 96 00:05:48,640 --> 00:05:51,039 Speaker 2: as well, even some people in their cars watching. Sure, 97 00:05:51,040 --> 00:05:54,839 Speaker 2: I don't know. I'm not sure about that, Jason. I 98 00:05:54,880 --> 00:05:56,720 Speaker 2: got to go back to where we are. I want 99 00:05:56,760 --> 00:05:58,440 Speaker 2: you to take a bigger picture here, like look at 100 00:05:58,440 --> 00:06:02,360 Speaker 2: the Washington Post, look at the cacophony of Bloomberg Opinion, etc. 101 00:06:02,760 --> 00:06:05,599 Speaker 2: I got Treasury secretaries. I mean, I know, you go 102 00:06:05,760 --> 00:06:09,000 Speaker 2: back to Albert Gallaton, forget about that. I got Robert 103 00:06:09,080 --> 00:06:11,200 Speaker 2: Rubin and a guy named Summers who used to sign 104 00:06:11,240 --> 00:06:15,400 Speaker 2: your paycheck. I got Jack lou I got James Baker, 105 00:06:16,000 --> 00:06:19,320 Speaker 2: and Company. I mean, the Treasury Secretary is at the 106 00:06:19,480 --> 00:06:25,680 Speaker 2: fulcrum of our executive, legislative, and frankly judicial branch of 107 00:06:25,920 --> 00:06:29,760 Speaker 2: making it work within our financial system. Are we at 108 00:06:29,920 --> 00:06:32,800 Speaker 2: risk now that that financial system is run out of 109 00:06:32,839 --> 00:06:36,800 Speaker 2: the Oval Office. Do we have a Treasury secretary who's 110 00:06:36,839 --> 00:06:41,039 Speaker 2: so diminished that he really can't affect Furman like policy? 111 00:06:43,400 --> 00:06:48,080 Speaker 3: I hope not. Scott the sentis a smart guy. He's 112 00:06:48,120 --> 00:06:52,480 Speaker 3: a talented guy. If this policy making were delegated to him, 113 00:06:53,120 --> 00:06:56,679 Speaker 3: I wouldn't agree with all of it, but I wouldn't 114 00:06:56,720 --> 00:07:02,119 Speaker 3: worry fundamentally about being in deeply unsafe hands. But yeah, 115 00:07:02,160 --> 00:07:04,839 Speaker 3: the tariff calls are being made out of the Oval Office, 116 00:07:04,960 --> 00:07:06,880 Speaker 3: The calls about the FED are being made out of 117 00:07:06,920 --> 00:07:10,200 Speaker 3: the Oval offices. He'scott Descent one moment saying, you know, 118 00:07:10,280 --> 00:07:12,760 Speaker 3: we're comfortable with the FED because we're focused on getting 119 00:07:12,760 --> 00:07:15,080 Speaker 3: down the tenure, which is a great thing to say, 120 00:07:15,560 --> 00:07:18,520 Speaker 3: absolutely makes sense. And then the next moment you see 121 00:07:18,520 --> 00:07:20,440 Speaker 3: Donald Trump commenting on the FED funds. 122 00:07:20,520 --> 00:07:24,080 Speaker 2: Right, Okay, Olivia, we're going to rip up the script 123 00:07:24,200 --> 00:07:26,160 Speaker 2: right now. We can do this with the future vice 124 00:07:26,200 --> 00:07:28,960 Speaker 2: chairman or chairman of the FED. Could you see Governor Furman. 125 00:07:29,680 --> 00:07:32,560 Speaker 2: Come on, let's cut to the chase, Jason. Right now, 126 00:07:32,600 --> 00:07:35,400 Speaker 2: we're beginning to see the percolation. I don't want to 127 00:07:35,440 --> 00:07:38,960 Speaker 2: make editorialize your folks of FED independence. We go back 128 00:07:39,000 --> 00:07:41,800 Speaker 2: to McChesney Martin, We go back to LBJ where he 129 00:07:41,880 --> 00:07:45,600 Speaker 2: took He took McChesney Merrin's years and picked him up 130 00:07:45,640 --> 00:07:48,480 Speaker 2: like the dog back then, Jason Ferban, is this FED 131 00:07:48,480 --> 00:07:50,480 Speaker 2: at risk of its independence? 132 00:07:51,600 --> 00:07:54,800 Speaker 3: Look, I'm nervous so far. I'm a little bit reassured. 133 00:07:54,840 --> 00:07:58,360 Speaker 3: They had a sweeping executive order about independent agencies and 134 00:07:58,400 --> 00:08:03,640 Speaker 3: presidential control, and they explicitly included an exception for monetary 135 00:08:03,680 --> 00:08:07,720 Speaker 3: policy and for the FOMC. It's also hard for them 136 00:08:07,760 --> 00:08:10,360 Speaker 3: to do anything about it because he only gets two 137 00:08:10,400 --> 00:08:14,120 Speaker 3: appointments over the next four years. I hope the courts 138 00:08:14,120 --> 00:08:16,679 Speaker 3: would not let him fire to powel with no reason. 139 00:08:17,360 --> 00:08:19,520 Speaker 3: But you know, but I'm nervous. To me, it's a 140 00:08:19,680 --> 00:08:23,000 Speaker 3: it's a tailorant. It's not the most likely scenario. But 141 00:08:23,840 --> 00:08:27,560 Speaker 3: this is the best economic institution we have, So you know, 142 00:08:27,560 --> 00:08:29,840 Speaker 3: a two percent chance something happens to it, we should 143 00:08:29,840 --> 00:08:31,120 Speaker 3: be we should we should be concerned. 144 00:08:31,280 --> 00:08:33,600 Speaker 2: In your ute, you had to carry water from the 145 00:08:33,640 --> 00:08:37,360 Speaker 2: executive branch over to Capitol Hill. How do you frame 146 00:08:37,400 --> 00:08:42,600 Speaker 2: in your head that the legislative branch, when they choose 147 00:08:42,679 --> 00:08:47,640 Speaker 2: to rebuts a unilateral Trump policy, do you see this 148 00:08:47,720 --> 00:08:51,360 Speaker 2: as given committees like I think of arm services in Putin. 149 00:08:51,400 --> 00:08:54,079 Speaker 2: I'm making this up, Folks, stay with me. But Jason, 150 00:08:54,440 --> 00:08:58,559 Speaker 2: the basic idea is, what's the Firman mechanism about a 151 00:08:58,679 --> 00:09:03,120 Speaker 2: legislative branch responds to this moment in our history. 152 00:09:04,520 --> 00:09:08,040 Speaker 3: Look, when your party's in power, you're frustrated by checks 153 00:09:08,040 --> 00:09:10,400 Speaker 3: and balances, You're like, why can't we do everything we 154 00:09:10,480 --> 00:09:13,160 Speaker 3: want to do? Then when the other parties in power, 155 00:09:13,200 --> 00:09:15,640 Speaker 3: you're like, hey, I appreciate these a bit. I don't 156 00:09:15,640 --> 00:09:18,000 Speaker 3: want them to be able to do every single radical 157 00:09:18,080 --> 00:09:22,960 Speaker 3: idea that they want to do. And you know, I 158 00:09:23,000 --> 00:09:26,960 Speaker 3: think you're going to see maybe less checks and balances 159 00:09:26,960 --> 00:09:30,880 Speaker 3: that I might like coming from Congress, but still a 160 00:09:31,000 --> 00:09:34,400 Speaker 3: decent amount of them. And some of that inertia is bad. 161 00:09:34,440 --> 00:09:36,280 Speaker 3: It means we're not going to get done things we 162 00:09:36,280 --> 00:09:38,800 Speaker 3: should get done. But a lot of that inertia is 163 00:09:38,800 --> 00:09:42,720 Speaker 3: the inherent conservatism of the American system, where you don't 164 00:09:42,760 --> 00:09:47,240 Speaker 3: make large, radical, dramatic changes because conservatives themselves since Burke, 165 00:09:47,280 --> 00:09:52,360 Speaker 3: have understood that that's a recipe for all sorts of problems. 166 00:09:53,400 --> 00:09:55,280 Speaker 4: Jason, as you sit back here and you look at 167 00:09:55,320 --> 00:09:58,280 Speaker 4: some of the economic trends, economic data points coming out here, 168 00:09:58,280 --> 00:10:01,359 Speaker 4: what is the biggest economic concern. 169 00:10:01,120 --> 00:10:04,080 Speaker 6: For you for this US economy. 170 00:10:04,480 --> 00:10:06,920 Speaker 3: I just have the conventional one, which is this stubborn, 171 00:10:06,960 --> 00:10:10,720 Speaker 3: persistent inflation and two and a half percent underlying inflation. 172 00:10:10,800 --> 00:10:14,200 Speaker 3: If it's down three tenths, we're golden. If it's up 173 00:10:14,240 --> 00:10:18,240 Speaker 3: three tenths, we're in a certain amount of hurt. And 174 00:10:18,600 --> 00:10:24,440 Speaker 3: everything else is humming along, basically just fine, assuming we 175 00:10:24,480 --> 00:10:26,880 Speaker 3: don't have very disruptive policies. 176 00:10:27,000 --> 00:10:29,840 Speaker 2: Thank you so much for your interest acrassination. Today on YouTube, 177 00:10:29,840 --> 00:10:32,960 Speaker 2: we are commercial free in this hour a conversation with 178 00:10:33,000 --> 00:10:36,240 Speaker 2: the Treasury Secretary with their Anne Marie Horden. We're honored 179 00:10:36,240 --> 00:10:40,440 Speaker 2: to bring you Jason Furman from Harvard University. Wendy Schiller 180 00:10:40,440 --> 00:10:43,720 Speaker 2: will join us from Bown University. In a moment, never 181 00:10:43,760 --> 00:10:46,080 Speaker 2: in the history of media has there been a joint 182 00:10:46,080 --> 00:10:51,480 Speaker 2: conversation Harvard than Brown. We're not asking either of them 183 00:10:51,520 --> 00:10:52,800 Speaker 2: about the hockey game. 184 00:10:52,600 --> 00:10:53,439 Speaker 6: The hot Exams. 185 00:10:53,559 --> 00:10:56,200 Speaker 2: Furman has tickets you should see where they are. One 186 00:10:56,200 --> 00:10:58,720 Speaker 2: more question please to Professor Furman, Paul. 187 00:10:58,520 --> 00:11:02,440 Speaker 4: Sweeney, Professor uh X ten Principles of economics. How do 188 00:11:02,480 --> 00:11:05,440 Speaker 4: you frame out in the tariff's units? What do you 189 00:11:05,520 --> 00:11:08,200 Speaker 4: talk about in the about terroriffs? 190 00:11:08,240 --> 00:11:10,280 Speaker 6: How do you teach that? What's your thoughts there? 191 00:11:11,120 --> 00:11:13,120 Speaker 3: Look, I'm nervous about that. I'm doing that in about 192 00:11:13,120 --> 00:11:14,880 Speaker 3: a month. I'm going to do it the same way 193 00:11:14,880 --> 00:11:17,280 Speaker 3: that i've tom and I will come up the same 194 00:11:17,320 --> 00:11:19,880 Speaker 3: way that I learned it decades ago. But it's going 195 00:11:19,960 --> 00:11:23,200 Speaker 3: to sound like a rebuttal to Donald Trump. Every single 196 00:11:23,280 --> 00:11:25,840 Speaker 3: sentence is going to sound like the only reason I'm 197 00:11:25,880 --> 00:11:28,839 Speaker 3: saying it is because I want to contradict him, when 198 00:11:28,880 --> 00:11:30,800 Speaker 3: the only reason I'm saying it is that's what's been 199 00:11:30,840 --> 00:11:33,160 Speaker 3: in the textbooks for a long time, and it's been 200 00:11:33,160 --> 00:11:36,520 Speaker 3: in textbooks for a long time for very very good reasons, 201 00:11:36,600 --> 00:11:38,800 Speaker 3: some of which were even a grounded in things like 202 00:11:38,840 --> 00:11:42,000 Speaker 3: accounting identities, which I'm one hundred percent sure or true, 203 00:11:42,040 --> 00:11:45,280 Speaker 3: and not every comment President Trump makes respects them. 204 00:11:45,559 --> 00:11:49,240 Speaker 2: Do you have a magnitude tip point one percent of terroriffs? 205 00:11:49,280 --> 00:11:53,400 Speaker 2: Just ad hoc. I'm talking Krugman Furman here, bring over 206 00:11:53,600 --> 00:11:57,559 Speaker 2: like Glenn Hubbard, even in Columbia, Jason Furman, is there 207 00:11:57,760 --> 00:12:00,440 Speaker 2: a percentage tip point where a blended eight of two 208 00:12:00,520 --> 00:12:05,280 Speaker 2: three percent comes up and it's oops, where's that number? Matters? 209 00:12:05,280 --> 00:12:05,520 Speaker 2: A lot? 210 00:12:05,559 --> 00:12:06,120 Speaker 7: Who they're on. 211 00:12:06,800 --> 00:12:09,520 Speaker 3: Canada and Mexico matter are just so much more than 212 00:12:09,559 --> 00:12:12,720 Speaker 3: any other country. You do ten percent tariffs even on 213 00:12:12,760 --> 00:12:15,920 Speaker 3: the two of them, and an awful lot of the 214 00:12:15,960 --> 00:12:21,400 Speaker 3: way US business is conducted, US employment happens, it gets disrupted, 215 00:12:21,440 --> 00:12:24,280 Speaker 3: frankly to the benefit of a number of other countries. 216 00:12:24,440 --> 00:12:27,920 Speaker 2: Jason, thank you so much for your generous time this morning. 217 00:12:28,040 --> 00:12:37,080 Speaker 1: Jason Furman, you're listening to the Bloomberg Surveillance Podcast. Catch 218 00:12:37,160 --> 00:12:40,199 Speaker 1: us Live weekday afternoons from seven to ten am Eastern. 219 00:12:40,360 --> 00:12:44,319 Speaker 1: Listen on Applecarplay and Android Auto with the Bloomberg Business app, 220 00:12:44,480 --> 00:12:46,360 Speaker 1: or watch us live on YouTube. 221 00:12:46,520 --> 00:12:49,880 Speaker 2: With the single best research note I've seen of this moment, 222 00:12:50,000 --> 00:12:53,920 Speaker 2: Libby Cantrell. Is it Pimco get her research note? Is 223 00:12:53,960 --> 00:12:56,959 Speaker 2: it at the website? And it's titled I Love this. 224 00:12:57,000 --> 00:13:00,120 Speaker 2: I mean this is a cynicism of Cantrell. But but 225 00:13:00,320 --> 00:13:04,600 Speaker 2: but everybody's going but but but but but to find 226 00:13:04,679 --> 00:13:09,840 Speaker 2: the butt on Capitol Hill right now between Republicans and Democrats. 227 00:13:10,120 --> 00:13:13,280 Speaker 8: Between Republicans and Democrats, I mean, even between Hill Republicans 228 00:13:13,400 --> 00:13:15,559 Speaker 8: and the administration. I mean, I think a lot of 229 00:13:15,600 --> 00:13:20,240 Speaker 8: what the administration is doing showing that there's a lot 230 00:13:20,240 --> 00:13:23,320 Speaker 8: of bias towards action. But at the end of the day, 231 00:13:23,720 --> 00:13:26,400 Speaker 8: much of what they're talking about really does fall within 232 00:13:26,440 --> 00:13:28,800 Speaker 8: the remit of Congress. This is where you don't you're 233 00:13:28,840 --> 00:13:31,800 Speaker 8: not seeing a lot of Republicans necessarily push back on 234 00:13:31,840 --> 00:13:35,760 Speaker 8: the president. But as you know, Article one at the 235 00:13:35,760 --> 00:13:38,680 Speaker 8: Constitution pretty clear about who has the power of the purse, 236 00:13:39,120 --> 00:13:44,840 Speaker 8: and ultimately, to really achieve significant savings, for instance, you'll 237 00:13:44,880 --> 00:13:48,000 Speaker 8: need Congress. And so this is where the butt but 238 00:13:48,200 --> 00:13:51,000 Speaker 8: buck comes in in terms of the flurry of executive 239 00:13:51,040 --> 00:13:54,000 Speaker 8: actions we've seen and actually the really the move the market. 240 00:13:54,160 --> 00:13:56,040 Speaker 6: You're gonna need Congress, so you have a faith. 241 00:13:56,200 --> 00:13:58,960 Speaker 2: We talked to Wendy Schiller. It's a college up in Providence. 242 00:13:59,000 --> 00:14:04,000 Speaker 2: Bran Well, yes, familiar with there. Let me cantrol. I mean, 243 00:14:04,040 --> 00:14:07,680 Speaker 2: where are the checks and balances? You're expert the legislative process, 244 00:14:08,080 --> 00:14:12,280 Speaker 2: to the committees, hold forth? Is it leadership? Who's gonna do? 245 00:14:12,600 --> 00:14:16,040 Speaker 8: But but Well, Tom, I think, and this is where 246 00:14:16,120 --> 00:14:18,360 Speaker 8: we're we're just waiting. I think it is a question 247 00:14:18,520 --> 00:14:21,680 Speaker 8: of when and not if the Congress starts asserting themselves. 248 00:14:22,040 --> 00:14:24,840 Speaker 8: But they, you know, Republicans understandably, are trying to give 249 00:14:24,840 --> 00:14:27,880 Speaker 8: the president a wide berth. He has a very high 250 00:14:27,920 --> 00:14:31,440 Speaker 8: approval rating, at least relative to them, and so I 251 00:14:31,440 --> 00:14:33,960 Speaker 8: think they're trying to sort of give him the flexibility 252 00:14:34,400 --> 00:14:36,880 Speaker 8: to do what he can. But again, we're on a 253 00:14:36,880 --> 00:14:41,480 Speaker 8: collision course with either Congress or the Supreme Court, because 254 00:14:41,880 --> 00:14:44,000 Speaker 8: at the end of the day, there are both the 255 00:14:44,040 --> 00:14:47,120 Speaker 8: Constitution and then a law called the Empowerment and Control 256 00:14:47,160 --> 00:14:50,960 Speaker 8: Act that limits what the President can do in terms 257 00:14:50,960 --> 00:14:54,560 Speaker 8: of rescinding or holding back money that's already been appropriated 258 00:14:54,560 --> 00:14:57,440 Speaker 8: by Congress. This is going to make everybody's eyes glaze over. Well, 259 00:14:57,440 --> 00:15:01,320 Speaker 8: we're actually really talking about doges, you know, cost savings. 260 00:15:01,760 --> 00:15:03,680 Speaker 8: At the end of the day, there are going to 261 00:15:03,720 --> 00:15:05,800 Speaker 8: be limits to that. And again, I think this will 262 00:15:05,840 --> 00:15:09,160 Speaker 8: probably be litigated in the courts. And I think the 263 00:15:09,200 --> 00:15:13,120 Speaker 8: broader macro picture for investors from a deficit perspective is 264 00:15:13,160 --> 00:15:16,560 Speaker 8: really to get again these real cost reductions that all 265 00:15:16,600 --> 00:15:19,320 Speaker 8: has to go through Congress. And that's why this the 266 00:15:19,440 --> 00:15:22,280 Speaker 8: tax bill that Reconciliation bill that we're seeing headlines is 267 00:15:22,320 --> 00:15:23,360 Speaker 8: going to be really quite inciting. 268 00:15:23,400 --> 00:15:24,160 Speaker 6: That's kind of I want. 269 00:15:24,720 --> 00:15:26,960 Speaker 4: If I'm just imagining, if I were a portfolio manager 270 00:15:26,960 --> 00:15:29,720 Speaker 4: at PIMCO, I think I'd be calling you and emailing. 271 00:15:29,320 --> 00:15:31,400 Speaker 6: You like five or six times a day. Do I 272 00:15:31,400 --> 00:15:33,200 Speaker 6: pay attention to this? Do I pay attention to that? 273 00:15:33,600 --> 00:15:36,240 Speaker 4: What are you telling your pms to really focus on? 274 00:15:36,840 --> 00:15:39,240 Speaker 4: In terms of the news flow that's coming out of Washing, I. 275 00:15:39,240 --> 00:15:41,480 Speaker 8: Mean, there's honestly so much noise, and I do think 276 00:15:41,480 --> 00:15:45,280 Speaker 8: it's been challenging for everyday Americans, but also for investors 277 00:15:45,320 --> 00:15:48,200 Speaker 8: to really pay attention to the signals. I think, you 278 00:15:48,200 --> 00:15:51,680 Speaker 8: know what we're we're obviously, you know, bond investors dead investors. 279 00:15:51,720 --> 00:15:55,080 Speaker 8: So what's going to move the bond market is going 280 00:15:55,160 --> 00:15:57,920 Speaker 8: to be either fiscal stimulus, it is going to be 281 00:15:58,040 --> 00:16:01,920 Speaker 8: these cost reductions. Again, that's really in the purview of 282 00:16:02,000 --> 00:16:04,800 Speaker 8: Congress in terms of the things that move markets. As 283 00:16:04,800 --> 00:16:07,880 Speaker 8: it relates to executive authority, I mean tariffs, the president 284 00:16:07,960 --> 00:16:10,240 Speaker 8: has a lot of as we know and as I 285 00:16:10,240 --> 00:16:13,040 Speaker 8: think has been demonstrated, he has a lot of unbridled 286 00:16:13,080 --> 00:16:16,760 Speaker 8: authorities around around tariffs, and then also moves for deregulation. 287 00:16:16,960 --> 00:16:19,200 Speaker 8: So there are absolutely things that the president can do 288 00:16:19,280 --> 00:16:21,360 Speaker 8: that you know, are really going to be impactful for markets. 289 00:16:21,360 --> 00:16:24,680 Speaker 8: But on the fiscal side, that really does rest with Congress. 290 00:16:24,720 --> 00:16:26,920 Speaker 8: And this is where the butt butt butt comes from. 291 00:16:27,080 --> 00:16:30,240 Speaker 8: Like a lot of noise, but again kind of pay 292 00:16:30,280 --> 00:16:32,680 Speaker 8: attention to the signal, and the signal really on fiscal 293 00:16:32,680 --> 00:16:34,160 Speaker 8: policy is through Congress. 294 00:16:34,280 --> 00:16:34,440 Speaker 7: You know. 295 00:16:34,480 --> 00:16:36,520 Speaker 4: One of the I guess one of the first issues 296 00:16:36,520 --> 00:16:40,480 Speaker 4: that President Trump took up was just immigration policy large here, 297 00:16:41,000 --> 00:16:42,440 Speaker 4: and a lot of people are saying that could have 298 00:16:42,480 --> 00:16:44,840 Speaker 4: some some serious economic impacts as it relates to the 299 00:16:44,880 --> 00:16:48,240 Speaker 4: labor force as to economic growth, that perhaps some of 300 00:16:48,280 --> 00:16:50,800 Speaker 4: these migrants from the last four or five six years 301 00:16:50,800 --> 00:16:53,480 Speaker 4: have in fact gone into the workforce, are contributing our. 302 00:16:53,440 --> 00:16:55,960 Speaker 6: Paying taxes, and that could be an economic headwind. 303 00:16:56,160 --> 00:16:56,640 Speaker 7: How do you guess? 304 00:16:57,160 --> 00:16:58,640 Speaker 8: Yet, I was remiss not to say, because that he 305 00:16:58,720 --> 00:17:02,200 Speaker 8: does actually have a lot of ult authorities around immigration too. 306 00:17:02,440 --> 00:17:05,720 Speaker 8: I mean, it's interesting because we were already penciling in 307 00:17:05,840 --> 00:17:08,960 Speaker 8: somewhat of a headwind to growth just from President Biden's 308 00:17:09,000 --> 00:17:13,000 Speaker 8: policies on immigration. Back to June twenty twenty four, when 309 00:17:13,240 --> 00:17:15,679 Speaker 8: President Biden, I think acknowledged this was a political issue, 310 00:17:15,720 --> 00:17:18,840 Speaker 8: so he started doing things to really slow the migration. 311 00:17:19,240 --> 00:17:21,359 Speaker 8: So we were already penciling in some slow down. But 312 00:17:21,359 --> 00:17:24,080 Speaker 8: to your point, particularly if you get and again these 313 00:17:24,119 --> 00:17:26,080 Speaker 8: sort of massive portations or what have you, are I 314 00:17:26,080 --> 00:17:27,960 Speaker 8: think going to have to go through Congress and get 315 00:17:28,000 --> 00:17:30,600 Speaker 8: some funding for it. But it could be a headwind. 316 00:17:30,600 --> 00:17:33,000 Speaker 8: And this is where I think that the administration might 317 00:17:33,040 --> 00:17:34,560 Speaker 8: not want to reconcile. I mean, some of the stuff 318 00:17:34,560 --> 00:17:36,800 Speaker 8: that they're going to do could be actually could actually 319 00:17:36,880 --> 00:17:40,440 Speaker 8: slow growth. And you know, tariffs and immigration could actually 320 00:17:40,440 --> 00:17:41,320 Speaker 8: be headwinds to growth. 321 00:17:41,320 --> 00:17:43,960 Speaker 2: And I want to get this in quickly here. I 322 00:17:43,960 --> 00:17:46,359 Speaker 2: think it's too important. I've been picking on a Senate 323 00:17:46,440 --> 00:17:49,520 Speaker 2: Armed Services Committee, particularly with what's going on in Europe. 324 00:17:49,800 --> 00:17:53,320 Speaker 2: Mister Putin, I got three members in each party. Fisher 325 00:17:53,359 --> 00:17:57,280 Speaker 2: of Nevada, Cotton of Arkansas, Rounds of South Dakota has 326 00:17:57,320 --> 00:18:00,280 Speaker 2: been very supportive of this show. Shaheena Newhan, I'm sure 327 00:18:00,359 --> 00:18:04,120 Speaker 2: jillibrand New York and Bloomenthal of Connecticut. What are the 328 00:18:04,160 --> 00:18:08,600 Speaker 2: powers of the committees now after the complete zoo we've 329 00:18:08,640 --> 00:18:12,200 Speaker 2: had for ten years, fifteen years, do the committees have 330 00:18:12,320 --> 00:18:16,360 Speaker 2: power like say, houseways of means add thirty forty years 331 00:18:16,359 --> 00:18:21,080 Speaker 2: ago on form policy issues, not sorry for policy, but 332 00:18:21,160 --> 00:18:25,159 Speaker 2: on Libby Cantrell issues. Does the legislative branch have the 333 00:18:25,160 --> 00:18:28,720 Speaker 2: ability to legislate anymore? I think is what our listening 334 00:18:28,960 --> 00:18:29,399 Speaker 2: And I. 335 00:18:29,400 --> 00:18:31,800 Speaker 8: Think that's such a great question, Tom, because. 336 00:18:31,560 --> 00:18:33,240 Speaker 2: What we do to go with it. 337 00:18:33,520 --> 00:18:38,400 Speaker 8: What we're seeing is the president of Republicans and Democratic 338 00:18:38,400 --> 00:18:42,680 Speaker 8: presidents have taken executive authority and they keep pushing the boundaries. 339 00:18:42,880 --> 00:18:45,040 Speaker 8: We saw this under George W. Bush and then under 340 00:18:46,520 --> 00:18:48,800 Speaker 8: This is not new, It is not new, and honestly, 341 00:18:48,800 --> 00:18:50,760 Speaker 8: this has just been an evolution of something that really 342 00:18:50,800 --> 00:18:52,360 Speaker 8: started at the turn of the centry. And I think 343 00:18:52,359 --> 00:18:56,000 Speaker 8: what happened then you just saw Congress sort of slowly 344 00:18:56,200 --> 00:19:01,000 Speaker 8: seed its authorities as you had very tight height divided Congress. 345 00:19:01,000 --> 00:19:02,760 Speaker 8: I think this is also the issue is that like 346 00:19:03,160 --> 00:19:06,479 Speaker 8: no real party has had a significant majority. I mean, 347 00:19:06,480 --> 00:19:07,920 Speaker 8: there's been like you know, right, a bottom in the 348 00:19:07,960 --> 00:19:10,040 Speaker 8: first year, what have you. But really in terms of 349 00:19:10,080 --> 00:19:13,439 Speaker 8: either a filibuster proof majority or large majority in the House, 350 00:19:13,920 --> 00:19:16,240 Speaker 8: it's just hasn't happened. And so I think as a result, 351 00:19:16,359 --> 00:19:19,800 Speaker 8: executive branch has gotten you know, frustrated with Congress and 352 00:19:19,840 --> 00:19:20,800 Speaker 8: they have moved forward. 353 00:19:20,920 --> 00:19:23,119 Speaker 2: Paul, I were talking about you before he came in 354 00:19:24,480 --> 00:19:27,359 Speaker 2: going to be with this. I saw a chart that 355 00:19:27,600 --> 00:19:32,679 Speaker 2: showed Kansas City and everybody else in America rooting for 356 00:19:32,720 --> 00:19:37,080 Speaker 2: the Eagles. You lead the Committee of Hate the Chiefs. 357 00:19:37,480 --> 00:19:39,360 Speaker 2: What was it like to see the Eagles? 358 00:19:39,640 --> 00:19:42,000 Speaker 8: It was And just to be clear, I'm not necessarily 359 00:19:42,040 --> 00:19:44,160 Speaker 8: an Eagles fan, but I am a very staunched Denver 360 00:19:44,200 --> 00:19:46,720 Speaker 8: Broncos fan, and Denver Broncos we've always we've. 361 00:19:46,520 --> 00:19:48,440 Speaker 5: Never liked the Chiefs. You know. It's like we've never 362 00:19:48,520 --> 00:19:49,080 Speaker 5: liked the Raiders. 363 00:19:49,080 --> 00:19:51,160 Speaker 8: We've always been Raiders haters and we've always we've always 364 00:19:51,160 --> 00:19:51,720 Speaker 8: just liked. 365 00:19:51,560 --> 00:19:53,520 Speaker 2: You get past a third momosa. 366 00:19:53,600 --> 00:19:54,640 Speaker 8: It was fantastic. 367 00:19:54,760 --> 00:19:55,480 Speaker 7: I have to say. 368 00:19:55,520 --> 00:19:57,000 Speaker 8: It was just total vindication. 369 00:19:57,640 --> 00:20:00,520 Speaker 5: You know, we were all wearing green and a little 370 00:20:00,520 --> 00:20:04,239 Speaker 5: bit more in just for you know, the head nod 371 00:20:04,359 --> 00:20:05,080 Speaker 5: to the Broncos. 372 00:20:05,160 --> 00:20:07,320 Speaker 8: But it was a great It was a great thanky. 373 00:20:07,440 --> 00:20:11,000 Speaker 2: Thank you so much. Don't thank peace that more off. 374 00:20:11,600 --> 00:20:15,480 Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday 375 00:20:15,520 --> 00:20:18,560 Speaker 1: starting at seven am Eastern on Apple, Corplay and Android 376 00:20:18,560 --> 00:20:21,600 Speaker 1: Auto with the Bloomberg Business app. You can also listen 377 00:20:21,680 --> 00:20:24,920 Speaker 1: live on Amazon Alexa from our flagship New York station, 378 00:20:25,480 --> 00:20:28,119 Speaker 1: Just say Alexa, play Bloomberg eleven thirty. 379 00:20:28,280 --> 00:20:30,240 Speaker 2: This is a tree. We really try to stake out 380 00:20:30,280 --> 00:20:33,480 Speaker 2: a good amount of time here with David Saurby. He 381 00:20:33,480 --> 00:20:36,800 Speaker 2: has a really interesting history working with the City of Detroit, 382 00:20:37,200 --> 00:20:41,120 Speaker 2: among others, the iconic Loomis sales years ago, and now 383 00:20:41,160 --> 00:20:46,520 Speaker 2: with NCORA looking at not only industrial America. You know, 384 00:20:46,560 --> 00:20:49,520 Speaker 2: it's like Canadian National. They got the train across Canada 385 00:20:49,560 --> 00:20:53,000 Speaker 2: and there they go north south, north south down the 386 00:20:53,000 --> 00:20:57,080 Speaker 2: Mississippi River. But just a twisted and different look with 387 00:20:57,160 --> 00:21:01,359 Speaker 2: a tilted mid cap and small cap. David, can you 388 00:21:01,440 --> 00:21:04,920 Speaker 2: explain to me how Walmart makes five six seven cents 389 00:21:04,920 --> 00:21:09,119 Speaker 2: of the dollar and they're trading in a forty multiple? Please? 390 00:21:09,240 --> 00:21:11,640 Speaker 2: Is that in the Wayne State textbook? 391 00:21:12,720 --> 00:21:16,880 Speaker 9: No, it's not an evaluation textbook, Tom, And in a way, 392 00:21:17,600 --> 00:21:21,199 Speaker 9: it's reminiscent, reminiscent of what we saw in Walmart in 393 00:21:21,240 --> 00:21:24,879 Speaker 9: the late nineties early two thousands when its valuation got 394 00:21:25,040 --> 00:21:28,160 Speaker 9: very stretched to the retail group and then it went 395 00:21:28,240 --> 00:21:31,240 Speaker 9: through an extended period of underperformance. So we'll see what 396 00:21:31,280 --> 00:21:32,840 Speaker 9: happens out of this number today. 397 00:21:33,160 --> 00:21:35,800 Speaker 2: Does this end ugly? I mean. What all our listeners 398 00:21:35,840 --> 00:21:39,040 Speaker 2: want to know from David Sowerby is okay, we're all 399 00:21:39,080 --> 00:21:42,800 Speaker 2: fat and happy in our five oh one ks. David Sowerby, 400 00:21:43,080 --> 00:21:44,119 Speaker 2: does this end ugly? 401 00:21:45,640 --> 00:21:48,359 Speaker 7: No, it doesn't at all. 402 00:21:48,840 --> 00:21:54,200 Speaker 9: Companies are still generating above average free cash flow margins. 403 00:21:54,760 --> 00:21:58,159 Speaker 9: Fourth quarter earnings report, I'd give them up solid BB 404 00:21:58,359 --> 00:22:02,360 Speaker 9: plus for earnings cash flow and revenue growth this year 405 00:22:02,480 --> 00:22:04,640 Speaker 9: is the metric you and I like to talk about. 406 00:22:04,720 --> 00:22:05,000 Speaker 7: Tom. 407 00:22:05,560 --> 00:22:08,160 Speaker 9: Free cash flow for the S and P five hundred 408 00:22:08,240 --> 00:22:12,359 Speaker 9: will grow post to fifteen percent. That's not a backdrop 409 00:22:12,400 --> 00:22:16,200 Speaker 9: where it ends ugly. It just simply means some tempered expectations, 410 00:22:16,760 --> 00:22:19,760 Speaker 9: but still bet on the ability of US companies to 411 00:22:19,840 --> 00:22:21,520 Speaker 9: generate shareholder value. 412 00:22:22,119 --> 00:22:24,800 Speaker 4: David, As we think about you know, twenty twenty five, 413 00:22:25,200 --> 00:22:27,280 Speaker 4: and you look back the twenty three twenty four where 414 00:22:27,320 --> 00:22:29,960 Speaker 4: yet north of twenty percent growth in the S and 415 00:22:30,000 --> 00:22:31,639 Speaker 4: P five hundred or gains in the S ANDP of 416 00:22:31,640 --> 00:22:35,159 Speaker 4: five hundred, We think about twenty twenty five, what can 417 00:22:35,240 --> 00:22:37,720 Speaker 4: drive this market? Hired because it doesn't seem like the 418 00:22:37,800 --> 00:22:39,960 Speaker 4: FED is going to do a whole lot for so 419 00:22:40,440 --> 00:22:42,520 Speaker 4: do we really really have to focus on earnings? 420 00:22:43,560 --> 00:22:43,920 Speaker 7: You do? 421 00:22:44,480 --> 00:22:50,440 Speaker 9: Valuations will have a difficult, if not impossible, ability to 422 00:22:52,040 --> 00:22:55,960 Speaker 9: increase higher valuations. So now it comes down to earnings, 423 00:22:56,080 --> 00:22:59,920 Speaker 9: dividend growth, and free cash growth. That will be the drive, 424 00:23:01,200 --> 00:23:03,960 Speaker 9: and then the other I like that this market is 425 00:23:04,000 --> 00:23:07,000 Speaker 9: broadening out. We can all pick our favorite date. I'm 426 00:23:07,040 --> 00:23:10,600 Speaker 9: going to go back to July eleventh of last year 427 00:23:11,040 --> 00:23:13,399 Speaker 9: when the market started to broaden out. And it's been 428 00:23:13,440 --> 00:23:16,000 Speaker 9: a little bit of two steps forward one step back. 429 00:23:16,480 --> 00:23:19,600 Speaker 9: But small caps have outperformed large caps by about three 430 00:23:19,640 --> 00:23:22,639 Speaker 9: percentage points in that seven month time period. And then 431 00:23:22,680 --> 00:23:26,080 Speaker 9: when you find the alpha producer within smaller smid cap 432 00:23:26,240 --> 00:23:31,080 Speaker 9: the ability of good managers to outperform. You've seen returns 433 00:23:31,080 --> 00:23:33,320 Speaker 9: that have doubled. The S and P five hundred for 434 00:23:33,520 --> 00:23:36,960 Speaker 9: good small cap managers VERSUSS ANDP index. 435 00:23:37,040 --> 00:23:41,359 Speaker 2: July eleven of last year. Sorry, the day is no clue. 436 00:23:41,520 --> 00:23:46,280 Speaker 2: I mean Red Sox seven, Oakland a zero, the Red 437 00:23:46,280 --> 00:23:50,520 Speaker 2: Sox for ten games above five hundred. What happened. 438 00:23:51,840 --> 00:23:53,440 Speaker 7: And the Tigers made the playoffs? 439 00:23:53,760 --> 00:23:56,280 Speaker 2: Exactly there you are? Thank you, Hey, David. 440 00:23:56,280 --> 00:23:59,879 Speaker 6: What what screens well for you guys? These days? 441 00:24:00,080 --> 00:24:03,160 Speaker 4: Sit the big growth stocks that have been the darlings 442 00:24:03,160 --> 00:24:03,960 Speaker 4: over the last few years. 443 00:24:04,040 --> 00:24:06,800 Speaker 6: Is it some value names. Is it different market capitalization? 444 00:24:06,880 --> 00:24:10,280 Speaker 4: What screenswall for you guys these days. 445 00:24:09,840 --> 00:24:13,240 Speaker 9: On d often asked mag seven. I don't think it's 446 00:24:13,240 --> 00:24:17,040 Speaker 9: a binary event all or none, so I think, but 447 00:24:17,160 --> 00:24:19,680 Speaker 9: on a margin, those weights have to come down. While 448 00:24:19,680 --> 00:24:23,520 Speaker 9: their free cash flow margins are still quite impressive, their 449 00:24:23,600 --> 00:24:27,560 Speaker 9: valuation is priced for perfection, if not sainthood. So I 450 00:24:27,600 --> 00:24:29,440 Speaker 9: think you want to be trimming them, and you want 451 00:24:29,480 --> 00:24:33,880 Speaker 9: to be moving your portfolio, not just talking my book 452 00:24:33,960 --> 00:24:38,000 Speaker 9: to small MidCap, but also to the value side. And 453 00:24:37,760 --> 00:24:41,520 Speaker 9: that's where I think there's still opportunity recognizing we're in 454 00:24:41,560 --> 00:24:46,600 Speaker 9: this seven month inflection point rotation that's still going. 455 00:24:46,440 --> 00:24:49,639 Speaker 2: On YouTube across the nation. On your commute as well. 456 00:24:49,960 --> 00:24:53,480 Speaker 2: David Sarby with this with a great sense of the Midwest. 457 00:24:53,520 --> 00:24:55,960 Speaker 2: He Michael bars out here. So I'm glad somebody mentioned 458 00:24:55,960 --> 00:24:59,040 Speaker 2: the Detroit Tigers. No one else cares, but David Sarby 459 00:24:59,080 --> 00:25:01,639 Speaker 2: with us here and think, thank you for subscribing to 460 00:25:01,760 --> 00:25:04,160 Speaker 2: youtubeer is I'm going to steal that line the markets 461 00:25:04,160 --> 00:25:06,920 Speaker 2: price the sainthood very I like that. It's just like. 462 00:25:06,880 --> 00:25:10,480 Speaker 4: It's like, you know, it sounds like the seven are Hey, 463 00:25:10,920 --> 00:25:12,560 Speaker 4: So David, talk to me about a name that. 464 00:25:12,680 --> 00:25:15,440 Speaker 6: I'm not sure. Even Tom and I have not spoken about. 465 00:25:15,880 --> 00:25:16,400 Speaker 6: I'm not sure. 466 00:25:16,440 --> 00:25:21,600 Speaker 4: When ware Heiser we're talking lumber here, we'll talk to 467 00:25:21,680 --> 00:25:22,360 Speaker 4: us about that name. 468 00:25:24,240 --> 00:25:29,000 Speaker 9: Three percent dividend yield. Lumber prices are up fifteen percent 469 00:25:29,080 --> 00:25:33,520 Speaker 9: since December. That's giving them a tailwind. You don't own 470 00:25:33,560 --> 00:25:36,520 Speaker 9: it just because maybe tariffs will be beneficial the US 471 00:25:36,680 --> 00:25:40,119 Speaker 9: lumber and timber, But that's an indirect benefit. They're going 472 00:25:40,200 --> 00:25:44,520 Speaker 9: to double their free cash in twenty twenty five. So 473 00:25:44,920 --> 00:25:47,600 Speaker 9: for a stock that's been sitting around thirty dollars a 474 00:25:47,680 --> 00:25:51,440 Speaker 9: share for too long, now there's this I think more 475 00:25:51,560 --> 00:25:54,560 Speaker 9: macro backdrop with a company that's very well run. 476 00:25:54,840 --> 00:25:55,640 Speaker 7: And think about it. 477 00:25:56,240 --> 00:25:59,879 Speaker 9: Trees are an asset that grow unlike other assets that 478 00:26:00,080 --> 00:26:02,400 Speaker 9: don't have mother nature on their side. 479 00:26:02,840 --> 00:26:04,439 Speaker 7: That can be a beneficiary to. 480 00:26:05,560 --> 00:26:11,600 Speaker 9: A lumber timber company like Wirehauser out in Washington, USA. 481 00:26:12,720 --> 00:26:14,600 Speaker 4: Yeah, it's just a name. You don't think about it 482 00:26:14,600 --> 00:26:16,640 Speaker 4: at all. Another one that's. 483 00:26:16,280 --> 00:26:19,280 Speaker 9: My job is My job is not to bring you Microsoft, 484 00:26:19,560 --> 00:26:20,720 Speaker 9: but bring you something a little bit. 485 00:26:20,760 --> 00:26:21,159 Speaker 2: I love it. 486 00:26:21,240 --> 00:26:23,199 Speaker 6: I love it, I mean again based out in Seattle. 487 00:26:23,240 --> 00:26:26,440 Speaker 4: You think about this, Atlanta Braves, this is the name 488 00:26:26,680 --> 00:26:28,880 Speaker 4: near and dear to my heart, because I've basically been 489 00:26:28,920 --> 00:26:32,040 Speaker 4: followed John Malone since you know, the earliest days of 490 00:26:32,040 --> 00:26:35,639 Speaker 4: his cable career, and he's been such a phenomenal allocator 491 00:26:35,720 --> 00:26:40,040 Speaker 4: of capital. And wherever John Malone goes, I tend to 492 00:26:40,040 --> 00:26:42,359 Speaker 4: follow a lot of smart money tends to follow. 493 00:26:42,400 --> 00:26:44,680 Speaker 6: I think, talk to us about the Atlanta Braves. That's 494 00:26:44,680 --> 00:26:45,480 Speaker 6: a publican. 495 00:26:45,160 --> 00:26:49,600 Speaker 9: Traded company, it is, and John Malone has recently bought 496 00:26:49,920 --> 00:26:53,200 Speaker 9: twenty four thousand, five hundred shares. So if you follow 497 00:26:53,240 --> 00:26:56,440 Speaker 9: the money and you believe in John Malone, as Tom knows, 498 00:26:56,480 --> 00:26:59,400 Speaker 9: he's one of the chapters in Thorndyke's. 499 00:27:00,200 --> 00:27:01,960 Speaker 7: Out Outsider's book. 500 00:27:02,920 --> 00:27:08,760 Speaker 9: So plus you have the franchise, the stadium broadcast rights, 501 00:27:08,880 --> 00:27:11,400 Speaker 9: they owned some mixed use retail around the stadium. 502 00:27:11,720 --> 00:27:13,400 Speaker 7: They were one of the first teams. 503 00:27:13,080 --> 00:27:17,160 Speaker 9: Back in the Dale Murphy Atlanta Braves days to go 504 00:27:17,200 --> 00:27:21,360 Speaker 9: on national TV with with TBS. So when you and 505 00:27:21,359 --> 00:27:23,920 Speaker 9: and then you look at sports valuations going higher and 506 00:27:24,000 --> 00:27:29,280 Speaker 9: hire billionaires buying sports franchises, there's the backdrop to the 507 00:27:29,320 --> 00:27:33,400 Speaker 9: Atlanta Braves and only only four analysts follow it. That's 508 00:27:33,480 --> 00:27:35,880 Speaker 9: right in a wheelhouse for an under followed stock. 509 00:27:35,960 --> 00:27:39,280 Speaker 2: Okay, does a sports franchise. I guess the New York 510 00:27:39,280 --> 00:27:45,119 Speaker 2: Giants public that was that was a joke. Good morning 511 00:27:45,440 --> 00:27:48,840 Speaker 2: to the Tish family. Thank you for your support. David Sowerby, 512 00:27:49,000 --> 00:27:52,080 Speaker 2: as simple as I can, does something like the Atlanta 513 00:27:52,119 --> 00:27:56,320 Speaker 2: Braves trade on how the baseball team does, like if 514 00:27:56,359 --> 00:27:58,400 Speaker 2: they win seven in a row, does a stock go. 515 00:27:58,440 --> 00:28:02,919 Speaker 9: Up if they're if they're destined for the playoffs? And 516 00:28:02,920 --> 00:28:05,920 Speaker 9: then you get that moves money. Yeah, that move that 517 00:28:06,000 --> 00:28:08,680 Speaker 9: moves the needle and the brace in the last several 518 00:28:08,800 --> 00:28:12,000 Speaker 9: years has been better than not right, and that's helped 519 00:28:12,000 --> 00:28:13,800 Speaker 9: evaluation on the stock. 520 00:28:13,960 --> 00:28:15,520 Speaker 2: Right. You and I lived this, and I think Paul 521 00:28:15,560 --> 00:28:19,520 Speaker 2: did tangentially, which is boltons and the basic idea that 522 00:28:19,600 --> 00:28:22,879 Speaker 2: a company like in specialty chemical chemicals out in the 523 00:28:22,920 --> 00:28:26,920 Speaker 2: Midwest would say, Okay, we're going to jettison this hunk 524 00:28:26,920 --> 00:28:29,679 Speaker 2: of our company, and there'd be people out there that 525 00:28:29,720 --> 00:28:32,680 Speaker 2: would see this smaller company that was jettison than maybe 526 00:28:32,680 --> 00:28:34,600 Speaker 2: they would bolt it on. Are we going to get 527 00:28:34,640 --> 00:28:39,520 Speaker 2: a lot of m and a action around industrial companies 528 00:28:40,160 --> 00:28:43,600 Speaker 2: right sizing, downsizing, and aggregating. 529 00:28:45,400 --> 00:28:49,800 Speaker 9: It's already taking place in more small cap value You're 530 00:28:49,840 --> 00:28:53,960 Speaker 9: seeing more and more buyouts We're seeing more and more 531 00:28:54,000 --> 00:28:57,720 Speaker 9: buyouts in our successful small and smid cap strategies. 532 00:28:58,480 --> 00:29:00,000 Speaker 7: It's reminiscent of two thousand. 533 00:29:00,160 --> 00:29:04,200 Speaker 9: In two thousand and one, when valuations were more attractive, 534 00:29:04,360 --> 00:29:05,960 Speaker 9: and as companies want to grow, you're. 535 00:29:05,800 --> 00:29:08,560 Speaker 7: Going to see more buyout in that sector. 536 00:29:08,800 --> 00:29:10,840 Speaker 2: Give us another name, right now, come on, just like 537 00:29:10,880 --> 00:29:14,560 Speaker 2: this is like drug Cassidy and banks up in David. Sorry, 538 00:29:14,840 --> 00:29:17,440 Speaker 2: give us a small cap name, you say, shut up 539 00:29:17,440 --> 00:29:17,920 Speaker 2: and buy it. 540 00:29:19,040 --> 00:29:24,960 Speaker 9: Lakeland Industries symbol lak E, Huntsville, Alabama. Only two analysts 541 00:29:25,000 --> 00:29:25,880 Speaker 9: follow this company. 542 00:29:26,000 --> 00:29:29,880 Speaker 7: What do they do? They do fire apparel and equipment. 543 00:29:30,200 --> 00:29:33,720 Speaker 9: So you're seeing fire departments up their budgets sadly out 544 00:29:33,760 --> 00:29:37,360 Speaker 9: of the out of the tragedy in southern California. So 545 00:29:37,560 --> 00:29:40,120 Speaker 9: here's a here's a play on that for apparel and 546 00:29:40,160 --> 00:29:42,640 Speaker 9: equipment in the safety and fire space. 547 00:29:42,920 --> 00:29:46,240 Speaker 7: Lakeland Industries made twelve percent over the last ten years. 548 00:29:46,320 --> 00:29:50,080 Speaker 2: Had a huge moonshot up to a couple of years ago. 549 00:29:50,120 --> 00:29:52,920 Speaker 2: It came down, it's bounced back nicely. I can go 550 00:29:52,960 --> 00:29:56,480 Speaker 2: to the BQ screen because Paul Screening taught me how 551 00:29:56,520 --> 00:29:59,440 Speaker 2: to do this. I mean, I look at eighteen eight. 552 00:29:59,520 --> 00:30:03,680 Speaker 2: This is like Kelvacina stock eighteen hundred employees ready, it's 553 00:30:03,760 --> 00:30:08,400 Speaker 2: trading at one time sales YEP one point two times sales. 554 00:30:08,720 --> 00:30:11,600 Speaker 2: How does it get discovered if only two people on 555 00:30:11,640 --> 00:30:14,880 Speaker 2: the cell side buy it? So I buy it? But 556 00:30:15,000 --> 00:30:16,080 Speaker 2: do I own it forever? 557 00:30:16,200 --> 00:30:21,280 Speaker 9: David Sowerby, Perhaps not, but you can own it at 558 00:30:21,360 --> 00:30:25,320 Speaker 9: least a year. It's up four And how it gets 559 00:30:25,320 --> 00:30:28,640 Speaker 9: discovered is the formula. They've got a good story, They 560 00:30:28,720 --> 00:30:31,000 Speaker 9: get out on the road, they tell their story, they 561 00:30:31,080 --> 00:30:34,400 Speaker 9: go to more investment conferences. Sell side analysts are a 562 00:30:34,440 --> 00:30:37,640 Speaker 9: little bit like sheep. When the stock starts moving up here, 563 00:30:37,680 --> 00:30:41,200 Speaker 9: they come to pick up coverage on it. That's how 564 00:30:41,240 --> 00:30:44,200 Speaker 9: a company with two analysts turns into a company with 565 00:30:44,280 --> 00:30:48,920 Speaker 9: five analysts following it because they're delivering on capital allocation 566 00:30:49,360 --> 00:30:50,400 Speaker 9: and cash flow. 567 00:30:50,400 --> 00:30:54,640 Speaker 2: Shahoulder Value, Michael Dartis shop rough capital. They follow it. 568 00:30:55,080 --> 00:30:58,120 Speaker 7: I look at the robins are very good on small caps. 569 00:30:58,120 --> 00:30:59,600 Speaker 7: They're one of the few that are very good. 570 00:31:00,080 --> 00:31:03,520 Speaker 4: You know, in addition to ancre advisors asatch advisors. 571 00:31:04,280 --> 00:31:06,920 Speaker 2: How do you pronounce? I never known they're out. 572 00:31:06,760 --> 00:31:08,960 Speaker 6: In Salt Lake. They own a million shares. So, David, 573 00:31:08,960 --> 00:31:10,200 Speaker 6: how do you guys find these six. 574 00:31:10,240 --> 00:31:14,600 Speaker 4: How do you screen for a company Lake Lakeland Industries. 575 00:31:16,640 --> 00:31:21,000 Speaker 9: There's there's really two formulas here. One is you know 576 00:31:21,480 --> 00:31:24,840 Speaker 9: with some degree of certainty what stocks are likely to 577 00:31:24,920 --> 00:31:28,240 Speaker 9: be going into the Russell two thousand on a jewelry balancing. 578 00:31:28,680 --> 00:31:32,040 Speaker 9: You want to turn over those stones and find them 579 00:31:32,440 --> 00:31:35,000 Speaker 9: the right companies before they go in. That's the formula. 580 00:31:35,200 --> 00:31:39,160 Speaker 9: The second formula is you buy the spinouts big small 581 00:31:39,160 --> 00:31:42,760 Speaker 9: company spins out of us of a larger company. Since 582 00:31:42,840 --> 00:31:46,480 Speaker 9: that July eleventh inflection point, the Bloomberg Spinoff Index is 583 00:31:46,600 --> 00:31:50,520 Speaker 9: up more than forty percent. Those are the two formulas, 584 00:31:50,560 --> 00:31:55,120 Speaker 9: spinoffs and unfollowed stocks that are going into the index, 585 00:31:55,200 --> 00:31:56,760 Speaker 9: buy and buy them before. 586 00:31:56,560 --> 00:31:59,640 Speaker 2: David, Can we do this every six weeks? Absolutely? The 587 00:31:59,760 --> 00:32:03,840 Speaker 2: huge spots. David Saarvey, thank you so much. Folks. For 588 00:32:03,880 --> 00:32:05,600 Speaker 2: the rest of the week, all we're going to talk 589 00:32:05,600 --> 00:32:09,240 Speaker 2: about is Amazon, Meta and Apple. We got our dose, 590 00:32:09,280 --> 00:32:12,120 Speaker 2: said mister Sarby. David Sarvey, thank you so much. 591 00:32:17,760 --> 00:32:21,680 Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday 592 00:32:21,720 --> 00:32:25,040 Speaker 1: starting at seven am Eastern on Applecarplay and Android Auto 593 00:32:25,160 --> 00:32:27,959 Speaker 1: with the Bloomberg Business app. You can also watch us 594 00:32:28,000 --> 00:32:31,880 Speaker 1: live every weekday on YouTube and always on the Bloomberg terminal. 595 00:32:32,000 --> 00:32:34,560 Speaker 2: There is a door stop out there. It's a kind 596 00:32:34,560 --> 00:32:39,520 Speaker 2: of paperback book, paperback novel, paperback rider that you hold 597 00:32:39,560 --> 00:32:43,120 Speaker 2: a window open in a Rhode Island, beautiful summer afternoon. 598 00:32:43,680 --> 00:32:47,840 Speaker 2: It's seven hundred and twenty pages, and it's called Gateway 599 00:32:48,040 --> 00:32:52,240 Speaker 2: to Democracy Gateway to Democracy. One of the authors of 600 00:32:52,280 --> 00:32:56,800 Speaker 2: Gateways to Democracy and Introduction to American Government is Wendy 601 00:32:56,840 --> 00:33:01,320 Speaker 2: Schiller of Brown University. She's been very Wendy. First of all, 602 00:33:01,360 --> 00:33:04,240 Speaker 2: thank you for your patience with the best an interview. 603 00:33:04,280 --> 00:33:08,040 Speaker 2: Greatly thrilled that you're with us today, Wendy, You and I, 604 00:33:08,320 --> 00:33:11,760 Speaker 2: Lisa Matteo and all of our listeners and viewers have 605 00:33:12,040 --> 00:33:17,239 Speaker 2: never seen this. Where are the checks and balances that 606 00:33:17,320 --> 00:33:20,560 Speaker 2: you write about in your classic Gateways to Democracy. 607 00:33:21,680 --> 00:33:26,120 Speaker 10: Well, we're not seeing them yet. Good morning, Tom and Paul, 608 00:33:26,560 --> 00:33:30,360 Speaker 10: but we're seeing some simmers, right So, Governor Kathie Hochel, 609 00:33:30,440 --> 00:33:33,040 Speaker 10: I think some of you might have caught that very 610 00:33:33,120 --> 00:33:36,720 Speaker 10: viral clip now and just to see that the Democrats 611 00:33:36,840 --> 00:33:40,640 Speaker 10: are now the party of states rights and the Republicans 612 00:33:40,720 --> 00:33:44,720 Speaker 10: are the party of federal overreach. Now, when I say overreach, 613 00:33:45,160 --> 00:33:48,600 Speaker 10: you know you're cutting the federal employees. Maybe you're cutting 614 00:33:48,600 --> 00:33:53,120 Speaker 10: federal spending. We haven't quite seen that yet materialize. But 615 00:33:53,200 --> 00:33:56,920 Speaker 10: this is an extraordinary flip from what we've seen in 616 00:33:56,960 --> 00:34:00,640 Speaker 10: the last couple of decades. And it's a an earthquake 617 00:34:00,640 --> 00:34:04,000 Speaker 10: in American politics to see this slip where democratic governors 618 00:34:04,040 --> 00:34:07,040 Speaker 10: will be saying, we are defending our state prerogatives. 619 00:34:08,000 --> 00:34:10,040 Speaker 2: Somebody said to me yesterday, stopped me, and they said, 620 00:34:10,080 --> 00:34:12,080 Speaker 2: who are you watching more than anyone? And I said, 621 00:34:12,120 --> 00:34:15,400 Speaker 2: the minority member of the Senator and Services Committee, with 622 00:34:15,520 --> 00:34:20,160 Speaker 2: his military credibility, Senator read of your Rhode Island. Can 623 00:34:20,200 --> 00:34:24,879 Speaker 2: the committees come to the rescue both Republicans and Democrats? 624 00:34:25,160 --> 00:34:30,080 Speaker 2: Is there a committee coherence and strength, Professor Schiller that 625 00:34:30,200 --> 00:34:32,319 Speaker 2: can bring checks and balances? 626 00:34:33,440 --> 00:34:36,719 Speaker 5: Well, the issue of saying rescue this is the whole point. 627 00:34:36,760 --> 00:34:38,840 Speaker 10: I mean, people are saying, oh, you know, this is 628 00:34:38,880 --> 00:34:41,760 Speaker 10: getting very shaky and scary when you know the president's 629 00:34:41,760 --> 00:34:44,480 Speaker 10: tweeting that he's the king. But on the other hand, 630 00:34:44,520 --> 00:34:47,799 Speaker 10: Trump is excellent political theater. So you know, what is 631 00:34:47,920 --> 00:34:50,959 Speaker 10: actually a threat to civil liberties? What is the threat 632 00:34:51,040 --> 00:34:52,719 Speaker 10: to the breedom of the press, your freedom to have 633 00:34:52,800 --> 00:34:56,760 Speaker 10: financial independence, What are those actual federal threats right now 634 00:34:57,480 --> 00:35:01,520 Speaker 10: versus what the appearances are with the rhetoric is and 635 00:35:01,640 --> 00:35:04,160 Speaker 10: until they catch up to each other and the American 636 00:35:04,280 --> 00:35:08,880 Speaker 10: voter feels concerned or feels threatened by the Trump federal government. 637 00:35:09,200 --> 00:35:10,680 Speaker 5: I don't think you're gonna have a lot of legs 638 00:35:10,680 --> 00:35:11,040 Speaker 5: to stand on. 639 00:35:11,080 --> 00:35:12,800 Speaker 10: I don't think you're gonna have a lot of leverage 640 00:35:12,920 --> 00:35:14,680 Speaker 10: to generate public opposition. 641 00:35:14,840 --> 00:35:16,440 Speaker 5: And without public opposition in. 642 00:35:16,400 --> 00:35:19,160 Speaker 10: Those red states and those red districts, I don't see 643 00:35:19,200 --> 00:35:22,480 Speaker 10: the House or the Senate standing up and opposing this president, 644 00:35:22,640 --> 00:35:25,200 Speaker 10: except they will use the debt ceiling I. 645 00:35:25,120 --> 00:35:25,960 Speaker 5: Think as leverage. 646 00:35:25,960 --> 00:35:27,960 Speaker 10: Maybe not in the House, but I think in the 647 00:35:28,000 --> 00:35:30,880 Speaker 10: Senate they'll say, listen, we don't want to crash the economy, 648 00:35:31,040 --> 00:35:32,600 Speaker 10: but there's got to be a limit. And you're seeing 649 00:35:32,640 --> 00:35:35,440 Speaker 10: grumblings already in the House GOP on the extent of 650 00:35:35,520 --> 00:35:38,120 Speaker 10: cuts that they're proposing for this budget deal. Remember, the 651 00:35:38,160 --> 00:35:40,000 Speaker 10: government has to get funded again at the end of March, 652 00:35:40,360 --> 00:35:43,920 Speaker 10: so really the fundamental congressional tool to fund the government, 653 00:35:44,160 --> 00:35:46,680 Speaker 10: even if the President changes how he's spending the money, 654 00:35:47,320 --> 00:35:48,640 Speaker 10: is still their leverage. 655 00:35:48,840 --> 00:35:50,680 Speaker 5: And you know, six weeks from now, things could look 656 00:35:50,760 --> 00:35:51,200 Speaker 5: quite different. 657 00:35:51,200 --> 00:35:53,239 Speaker 10: In terms of the pressure on them to stop some 658 00:35:53,280 --> 00:35:54,360 Speaker 10: of these Trump initiatives. 659 00:35:54,880 --> 00:35:59,680 Speaker 4: Wendy, are you surprised that we haven't seen a democratic 660 00:35:59,760 --> 00:36:04,319 Speaker 4: vue rise up to challenge President Trump on some of policies, 661 00:36:04,680 --> 00:36:07,799 Speaker 4: maybe some of the rhetoric. It doesn't seem like there 662 00:36:07,920 --> 00:36:10,080 Speaker 4: is a democratic voice. 663 00:36:10,960 --> 00:36:12,680 Speaker 5: Well, again, there's two things, Paul. 664 00:36:12,880 --> 00:36:16,719 Speaker 10: You know, what Kaviokle did was in direct result to 665 00:36:16,760 --> 00:36:18,880 Speaker 10: an action that affects New York City. A lot of 666 00:36:18,920 --> 00:36:20,840 Speaker 10: people live in New York City, so you know, she 667 00:36:20,920 --> 00:36:23,360 Speaker 10: got a big state, a big megaphone, a big media market. 668 00:36:23,520 --> 00:36:26,000 Speaker 10: So when there's that opportunity, I think you're going to 669 00:36:26,080 --> 00:36:29,160 Speaker 10: start to see a more Democrats get out of the gate. Remember, 670 00:36:29,239 --> 00:36:31,560 Speaker 10: you know, twenty six is lum meek reelection. Twenty eight 671 00:36:31,640 --> 00:36:32,600 Speaker 10: is the presidential race. 672 00:36:32,840 --> 00:36:33,759 Speaker 5: So they're going to get out. 673 00:36:33,640 --> 00:36:35,680 Speaker 10: Of the gate when there's something Trump does that they 674 00:36:35,680 --> 00:36:39,560 Speaker 10: can latch onto that won't be popular with their state, 675 00:36:39,640 --> 00:36:41,120 Speaker 10: and if it's a big state, that's going to get 676 00:36:41,120 --> 00:36:41,680 Speaker 10: a lot of attention. 677 00:36:42,000 --> 00:36:43,960 Speaker 5: Otherwise it's like it's like whack a mole. 678 00:36:44,040 --> 00:36:45,719 Speaker 10: You know, you start you plain of one thing, and 679 00:36:45,800 --> 00:36:48,120 Speaker 10: then they'll just move in and focus on something else. 680 00:36:48,440 --> 00:36:50,200 Speaker 5: So I think I think the Russia Ukraine. 681 00:36:50,360 --> 00:36:52,920 Speaker 10: Let's watch to see what the Republicans do in the 682 00:36:52,960 --> 00:36:55,919 Speaker 10: House and the Senate. You know, if Trump shows real 683 00:36:56,000 --> 00:36:59,440 Speaker 10: signs of abandoning Ukraine and just giving it away to Russia, 684 00:36:59,480 --> 00:37:02,040 Speaker 10: I think you will start to see some noise, not 685 00:37:02,080 --> 00:37:04,160 Speaker 10: only from Democrats but also Republicans. 686 00:37:04,480 --> 00:37:07,080 Speaker 4: Well, let's go to that issue, because that's certainly been 687 00:37:07,080 --> 00:37:10,000 Speaker 4: in the news over the last several days. Here are 688 00:37:10,000 --> 00:37:16,640 Speaker 4: you surprised at the way President Trump's approachingess seemingly pro Russia, 689 00:37:16,760 --> 00:37:20,319 Speaker 4: perhaps abandoning Ukraine to some extent, It seems like in 690 00:37:20,320 --> 00:37:21,120 Speaker 4: some of the reporting. 691 00:37:21,560 --> 00:37:22,319 Speaker 6: How do you view that? 692 00:37:23,360 --> 00:37:25,280 Speaker 10: I view it in the very macro sence that Trump 693 00:37:25,320 --> 00:37:29,320 Speaker 10: does not have the allegiance to an ideology like George W. Bush, 694 00:37:29,400 --> 00:37:32,359 Speaker 10: somewhat Barack Obama, but really Bush and maybe Biden of 695 00:37:32,360 --> 00:37:33,560 Speaker 10: what the role of the United States is. 696 00:37:33,560 --> 00:37:34,440 Speaker 5: Supposed to be in the world. 697 00:37:34,640 --> 00:37:36,839 Speaker 10: He doesn't believe that it's worth it to the United 698 00:37:36,880 --> 00:37:39,839 Speaker 10: States to go protect other countries around the world. 699 00:37:39,960 --> 00:37:42,560 Speaker 5: I've quoted John Quincy Adams a number of times. Tom right, 700 00:37:42,680 --> 00:37:44,640 Speaker 5: you know, don't go in search of monsters to destroy. 701 00:37:44,800 --> 00:37:46,360 Speaker 5: So this is his position. 702 00:37:46,480 --> 00:37:48,480 Speaker 10: He doesn't have this ideology and he doesn't think the 703 00:37:48,520 --> 00:37:49,759 Speaker 10: United States should do it. 704 00:37:50,040 --> 00:37:51,839 Speaker 5: I don't know if it's Russia per se. You can 705 00:37:51,880 --> 00:37:52,359 Speaker 5: say he's in. 706 00:37:52,280 --> 00:37:54,840 Speaker 10: Love with Putin, but he's like this around the whole world. 707 00:37:55,040 --> 00:37:57,280 Speaker 10: Why are we paying? Why are we sending our troops? 708 00:37:57,600 --> 00:38:00,040 Speaker 10: They're about to propose cuts to the defense budget. I 709 00:38:00,080 --> 00:38:02,520 Speaker 10: haven't seen Republicans cut the defense budget ever. 710 00:38:02,960 --> 00:38:04,120 Speaker 5: So this is the real. 711 00:38:03,920 --> 00:38:06,520 Speaker 10: Sea change in how he views what the United States 712 00:38:06,520 --> 00:38:09,239 Speaker 10: is responsible to do. Does it make us more dangerous? 713 00:38:09,480 --> 00:38:11,960 Speaker 10: You can argue yes, But has it made us more 714 00:38:12,280 --> 00:38:12,919 Speaker 10: threatened yet? 715 00:38:13,200 --> 00:38:17,160 Speaker 2: No? This is what we invented, folks, Bloomberg surveillance. We 716 00:38:17,200 --> 00:38:21,080 Speaker 2: go beyond the standard conversation, a conversation with a Secretary 717 00:38:21,120 --> 00:38:24,040 Speaker 2: of Treasury and this hour. Thank you Anne Marie Horden 718 00:38:24,840 --> 00:38:28,360 Speaker 2: for that. And then Jason Furman of Harvard University and 719 00:38:28,360 --> 00:38:32,719 Speaker 2: now from Brown University, Wendy Schiller with this, Professor Schiller, 720 00:38:33,080 --> 00:38:35,680 Speaker 2: I was reading of Dean Rusk the other day. Of course, 721 00:38:35,719 --> 00:38:38,680 Speaker 2: from another time in place. Many of our listeners won't 722 00:38:38,760 --> 00:38:42,399 Speaker 2: understand the quiet and the cadence, the pace that Dean 723 00:38:42,520 --> 00:38:47,520 Speaker 2: Rusk brought to JFK into LBJ is well, do you 724 00:38:47,640 --> 00:38:51,719 Speaker 2: look at the coophony now? Is one off of a 725 00:38:52,160 --> 00:38:56,000 Speaker 2: specific president or do you look at it is this 726 00:38:56,040 --> 00:39:01,719 Speaker 2: is a continuance, a new form of dialogue. Is President 727 00:39:01,840 --> 00:39:05,600 Speaker 2: Trump here a one and unique president or is there 728 00:39:05,680 --> 00:39:08,720 Speaker 2: a follows through here for a new Republican Party? 729 00:39:09,840 --> 00:39:12,560 Speaker 10: Well, I mean, I think given the loyalty that the 730 00:39:12,600 --> 00:39:15,480 Speaker 10: Republicans have shown in the House and the Senate to 731 00:39:15,560 --> 00:39:19,200 Speaker 10: President Trump already, whether that holds, we'll have to see. 732 00:39:19,480 --> 00:39:21,040 Speaker 5: I think it's a new Republican party. 733 00:39:21,080 --> 00:39:23,279 Speaker 10: It's a get on this bus, be with us, or 734 00:39:23,320 --> 00:39:25,520 Speaker 10: get out, and that's what And they're counting on this 735 00:39:25,600 --> 00:39:27,960 Speaker 10: to resonate with the American people. So far, his approval 736 00:39:28,040 --> 00:39:31,280 Speaker 10: ratings are holding. I've always said when they start to drop, 737 00:39:31,480 --> 00:39:34,680 Speaker 10: he'll change course. But it's a fundamental shift in how 738 00:39:34,680 --> 00:39:37,160 Speaker 10: they view the United States power and what to do 739 00:39:37,200 --> 00:39:40,520 Speaker 10: with that power. And they still have responsibility of delivering 740 00:39:40,520 --> 00:39:42,400 Speaker 10: to the people who vote for Donald Trump when he 741 00:39:42,400 --> 00:39:44,960 Speaker 10: said he would make things better for them, and you know, 742 00:39:45,560 --> 00:39:48,440 Speaker 10: not supporting Ukraine doesn't actually make anything better in the 743 00:39:48,520 --> 00:39:51,239 Speaker 10: United States. So how is he going to deliver on that? 744 00:39:51,360 --> 00:39:53,360 Speaker 10: And we've got months to go before we see the 745 00:39:53,360 --> 00:39:56,000 Speaker 10: results of that. If he falters and he doesn't make 746 00:39:56,040 --> 00:39:58,520 Speaker 10: things better and his approval ratings drop. You'll see the 747 00:39:58,520 --> 00:40:00,520 Speaker 10: same splinter in the Republican Party you seem for. 748 00:40:00,480 --> 00:40:03,120 Speaker 2: The last decade in Paul Sweedey this David Gerr brought 749 00:40:03,120 --> 00:40:06,240 Speaker 2: this up, and you know, let's be direct here, Mister 750 00:40:06,239 --> 00:40:08,560 Speaker 2: Trump got let's just round it up. Folks. Don't give 751 00:40:08,560 --> 00:40:11,799 Speaker 2: me grave fifty percent of the vote, But what percentage 752 00:40:11,840 --> 00:40:16,040 Speaker 2: of that drifts away from the core Trump for supporters. 753 00:40:16,320 --> 00:40:18,919 Speaker 2: That's a mystery. Yeah, into Q two of this year. 754 00:40:19,000 --> 00:40:22,160 Speaker 4: Yeah, absolutely so, Wendy, what do you think is the 755 00:40:22,200 --> 00:40:27,400 Speaker 4: next major challenge or opportunity for President Trump's min administration? 756 00:40:27,520 --> 00:40:30,920 Speaker 4: Is it the funding of the government, some domestic legislation, 757 00:40:31,080 --> 00:40:33,440 Speaker 4: or is it maybe Ukraine? What are you looking at 758 00:40:33,560 --> 00:40:36,200 Speaker 4: as a next big issue for this administration? 759 00:40:36,719 --> 00:40:38,600 Speaker 10: Well, well, the one thing I'm saying about Trump that 760 00:40:38,640 --> 00:40:41,120 Speaker 10: we've seen is that his attention span is pretty short. 761 00:40:41,520 --> 00:40:44,480 Speaker 10: But that also makes him a multitiasker, right, He'll go 762 00:40:44,520 --> 00:40:46,319 Speaker 10: from one to the next, to the next to the next. 763 00:40:46,520 --> 00:40:48,439 Speaker 10: He wants to be busy doing things, So I don't 764 00:40:48,440 --> 00:40:49,240 Speaker 10: think it's exclusive. 765 00:40:49,280 --> 00:40:50,440 Speaker 5: I don't think it's mutually exclusive. 766 00:40:50,480 --> 00:40:52,719 Speaker 10: I think about the budget and Ukraine, but I do 767 00:40:52,760 --> 00:40:55,319 Speaker 10: think that we haven't seen any major impacts except for 768 00:40:55,320 --> 00:40:57,000 Speaker 10: the people who are losing their jobs on a daily 769 00:40:57,000 --> 00:40:58,280 Speaker 10: basis from the federal government. 770 00:40:58,480 --> 00:40:59,920 Speaker 5: We haven't seen the impacts. 771 00:41:00,200 --> 00:41:04,280 Speaker 10: When the impacts come, when the cuts hit this summer, 772 00:41:04,320 --> 00:41:07,520 Speaker 10: maybe this fall, when the education department cuts hit for 773 00:41:07,560 --> 00:41:10,440 Speaker 10: people going back to school next year, that's going to 774 00:41:10,480 --> 00:41:14,480 Speaker 10: affect people's daily lives. How they respond is and then 775 00:41:14,520 --> 00:41:17,160 Speaker 10: how Trump responds. Does he think he wants to run again, 776 00:41:17,200 --> 00:41:20,279 Speaker 10: even though constitutionally he cannot be elected, doesn't say he 777 00:41:20,280 --> 00:41:22,560 Speaker 10: can't run, can't be elected to serve more. 778 00:41:22,480 --> 00:41:23,160 Speaker 5: Than two terms? 779 00:41:23,360 --> 00:41:26,640 Speaker 10: Then that changes the ballgame also, So it's a time 780 00:41:26,680 --> 00:41:29,680 Speaker 10: of great uncertainty, and I think does that affect investment 781 00:41:29,719 --> 00:41:31,919 Speaker 10: in the United States? Do they think that it's still 782 00:41:31,920 --> 00:41:34,280 Speaker 10: a safe economic bet with such a chaotic president. 783 00:41:34,560 --> 00:41:36,320 Speaker 5: We're about to see that the next couple of months. 784 00:41:36,440 --> 00:41:38,799 Speaker 2: I was thinking to Jonathan Fenbe and all that he's 785 00:41:38,800 --> 00:41:42,440 Speaker 2: written about France, Professor Schiller, and I guess, as a 786 00:41:42,520 --> 00:41:46,719 Speaker 2: general a political statement folks across the nation, Europe's got 787 00:41:46,719 --> 00:41:49,680 Speaker 2: to get its act together. Wendy Schuller, do you see 788 00:41:49,760 --> 00:41:53,880 Speaker 2: any ability in your study of our history, our modern 789 00:41:54,000 --> 00:41:58,520 Speaker 2: Western civilization, that Europe can quote unquote get its act together. 790 00:42:00,160 --> 00:42:02,200 Speaker 10: Europe rebuilt after World War Two, is most people know, 791 00:42:02,239 --> 00:42:04,120 Speaker 10: with a tremendous amount of help from the United States. 792 00:42:06,120 --> 00:42:06,440 Speaker 6: We know that. 793 00:42:06,480 --> 00:42:10,000 Speaker 10: But here's the thing to remember about this Trump Republican 794 00:42:10,120 --> 00:42:13,440 Speaker 10: unity and the swiftness of all these changes. Europe has 795 00:42:13,480 --> 00:42:16,440 Speaker 10: parliamentary democracies. The prime minister when they r in control 796 00:42:16,480 --> 00:42:19,480 Speaker 10: on the party that he controls mostly, he not always 797 00:42:19,680 --> 00:42:23,920 Speaker 10: controls all party policy, all government policy. They change everything 798 00:42:23,920 --> 00:42:26,080 Speaker 10: when they win the government and they see if it works, 799 00:42:26,120 --> 00:42:27,560 Speaker 10: and people say they like it or they don't, and 800 00:42:27,600 --> 00:42:30,600 Speaker 10: then they get thrown out. We are now verging into 801 00:42:31,000 --> 00:42:34,120 Speaker 10: that kind of single party dominance in our federal level. 802 00:42:34,200 --> 00:42:36,120 Speaker 5: We're not used to it. So to say that Europe 803 00:42:36,120 --> 00:42:37,000 Speaker 5: has to get us act. 804 00:42:36,800 --> 00:42:40,080 Speaker 10: Together, we're veering towards a political system that looks just 805 00:42:40,200 --> 00:42:42,840 Speaker 10: like Europe in the way the policy changes so swiftly. 806 00:42:43,160 --> 00:42:45,080 Speaker 10: So it's going to be us that has to adapt, 807 00:42:45,360 --> 00:42:47,160 Speaker 10: us that has to get our act together to the 808 00:42:47,200 --> 00:42:48,399 Speaker 10: kind of government that we're about. 809 00:42:48,400 --> 00:42:49,520 Speaker 5: You know that we're seeing right now. 810 00:42:49,920 --> 00:42:54,600 Speaker 2: That is the single smartest thing ever, whatever your politics, folks, 811 00:42:55,040 --> 00:42:57,799 Speaker 2: what Professor Schuller just said about the wars and the 812 00:42:57,880 --> 00:43:02,120 Speaker 2: roses in the parliamentary system of Europe versus. Here is 813 00:43:02,160 --> 00:43:05,279 Speaker 2: more Kojit than all the babble you're hearing, including on 814 00:43:05,360 --> 00:43:08,640 Speaker 2: this show. Professor Sheller, thank you so much, really really 815 00:43:09,040 --> 00:43:09,759 Speaker 2: appreciate that. 816 00:43:10,320 --> 00:43:15,160 Speaker 1: This is the Bloomberg Surveillance podcast, available on Apple, Spotify, 817 00:43:15,280 --> 00:43:19,600 Speaker 1: and anywhere else you get your podcasts. Listen live each weekday, 818 00:43:19,719 --> 00:43:23,160 Speaker 1: seven to ten am Eastern on Bloomberg dot com, the 819 00:43:23,239 --> 00:43:27,279 Speaker 1: iHeartRadio app, tune In, and the Bloomberg Business app. You 820 00:43:27,320 --> 00:43:30,680 Speaker 1: can also watch us live every weekday on YouTube and 821 00:43:30,880 --> 00:43:32,600 Speaker 1: always on the Bloomberg terminal