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Speaker 1: Pierced Fenner and Smith Incorporated. Welcome to the Bloomberg Surveillance Podcast.
Speaker 1: I'm Tom Keene with David Gura. Daily we bring you
Speaker 1: insight from the best of economics, finance, investment, and international relations.
Speaker 1: Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, Bloomberg dot Com,
Speaker 1: and of course on the Bloomberg. Right now, in Jerusalem,
Speaker 1: President Trump meeting with the President of Israel, Ruben Rivlin.
Speaker 1: He fought in the Six Days War fifty years ago.
Speaker 1: Here is the President of the United States together and
Speaker 1: now today being in Israel is just very very special
Speaker 1: for us. So we expect to have some very interesting talks. Absolutely,
Speaker 1: we are praying for peace, and we are pushing for
Speaker 1: peace for the last one other tears and with God's head,
Speaker 1: somebody will bring us peace all together, all together. Thank you,
Speaker 1: Thank you very much, thank you, thank you, thank you. Yeah,
Speaker 1: a photo opportunity. Now you can hear the cameras going
Speaker 1: behind the United States and Israel flags. Israeli flags and attendance.
Speaker 1: UM can't really guess the crowd size. I would guess
Speaker 1: maybe a hundred journalists as well. And we're again shifting
Speaker 1: to another scene where perhaps we'll have more formal comments
Speaker 1: by Mr Trump. He is in Jerusalem, landing at Tel
Speaker 1: Aviv earlier today and by helicopter to Jerusalem. Uh and uh.
Speaker 1: Right now with David Gurray in Boston. I'm Tom keenan
Speaker 1: New York Jerome Schneider with us with Pimco in our
Speaker 1: New York studios. Jerome, thank you for all of us
Speaker 1: for being so patient with the news flow up this morning.
Speaker 1: Let's get basic here on a Monday, we've seen the
Speaker 1: Trump trade fade, steeper yield curve we've rolled over clearly
Speaker 1: based on news events. To a pro like you, what
Speaker 1: does curve flattening mean? Ultimately, it means that we should
Speaker 1: be expecting rates to move higher over the over the
Speaker 1: new yer term. And I think that you know with
Speaker 1: that mind, it's also a relatively healthy economy that one
Speaker 1: could point to, and and and and ultimately that what
Speaker 1: we see in the market is very different, very different
Speaker 1: than what we should project to the market. Let maybe
Speaker 1: be clear about that ultimately, when you look at short
Speaker 1: term interest rate expectations, that we've seen a very drastic
Speaker 1: move over the past week or two in terms of
Speaker 1: the expectations of a June rate hike. The reality is
Speaker 1: is that when you look at the ottening of the yolker,
Speaker 1: specifically over the past few days, we should expect those
Speaker 1: rates to move higher more more probably probability awaited than
Speaker 1: the market is expecting. So simply put, rates are moving
Speaker 1: higher and we should be preparing for that. Well, we
Speaker 1: should be preparing for that, and I guess I see
Speaker 1: it with a one point two nine percent two year
Speaker 1: yield as well. It's away from your remit in short
Speaker 1: term paper. But nevertheless, I know you're wired at PIMCO
Speaker 1: on weaker dollar, stronger oil. Which is the horse and
Speaker 1: which is the cart? Well, ultimately, you know, I think
Speaker 1: you have to look at the dollar because that, ultimately
Speaker 1: is what the FED is going to key off of.
Speaker 1: When you look at the Fed's transition from this data
Speaker 1: dependent model to more of a conditions dependent model, financial
Speaker 1: conditions dependent model back in two thousand sixteen, that's really
Speaker 1: what we have to focus on. The data is there
Speaker 1: for the for the rate hike The only reason that
Speaker 1: the FED doesn't increase rates over the next six months
Speaker 1: or so by one or maybe even two times is
Speaker 1: that the financial conditions tightened. So being being conditions dependent
Speaker 1: is simply driven by data, I'm sorry, driven by volatility
Speaker 1: and currency, specifically the view of the dollar. So I
Speaker 1: put more weight on the dollar than oil right now.
Speaker 1: But it is interesting, Tom, and this is noteworthy, is
Speaker 1: that we basically have seen whatever it takes policy from
Speaker 1: OPEC and and some of the producers, and that sort
Speaker 1: of found a floor and that could have actually pretty
Speaker 1: positive implications potentially for not only global comedy but really
Speaker 1: the domestic economy as you looked forward to that stabilization,
Speaker 1: it could lead to other things including capex, capital expenditures increasing,
Speaker 1: and ultimately you know that that creates stability and upward
Speaker 1: propensity for the economy. Let's play that a little bit here.
Speaker 1: We saw news from the Saudi oil minister over the weekend.
Speaker 1: That's Audi rabing other participants in that OPEQ and non
Speaker 1: opic dealer willing and eager to continue it. What does
Speaker 1: that mean for the economy going forward? Well, ultimately, the
Speaker 1: downside risk if you will, to lower oil prices, UH
Speaker 1: is something that domestic producers are going to be willing
Speaker 1: to increase their capital expenditures or at least maintain it.
Speaker 1: We've seen it sort of seen it in Rigg growth
Speaker 1: here over the past few months. But ultimately it's sort
Speaker 1: of been a seesaw, you know, when when one when
Speaker 1: one party producing party has cut the other sort of
Speaker 1: increase slightly or vice versa. And I think, what we
Speaker 1: what what the goal is to try to achieve a
Speaker 1: healthy balance centered around fifty dollars, maybe it depths slightly below,
Speaker 1: but ultimately create that stability and that and that's ultimately
Speaker 1: what all producers want so that they can forecast and
Speaker 1: maintain profit margins without being whip sled in terms of
Speaker 1: putting out lays that may ultimately prove to be at
Speaker 1: least in the near term, unprofitable. I want to go
Speaker 1: back to that distinction you were drawing between data dependence
Speaker 1: and conditions dependence. Is this something that we see the
Speaker 1: FED embracing talking about. Help me understand just the difference
Speaker 1: a little bit more well, Yes, And and ultimately you
Speaker 1: can look at even you know, the speeches from you
Speaker 1: know Cleveland President Meister and and and others, you know,
Speaker 1: from even the most dubbish to the to the most hawkish.
Speaker 1: Everybody points to, here's the situation, but if this happens,
Speaker 1: then we may not be moving. Everybody wants to normalize
Speaker 1: the balance sheet. Everybody wants that normalization process to continue,
Speaker 1: but if that you know, does if a certain situation
Speaker 1: at all, then they might have to react. So that
Speaker 1: conditions dependency is critical to the markets, and we can
Speaker 1: we know, generally speaking the data it's sort of firm.
Speaker 1: We sort of no idea sure. Q one GDPs was
Speaker 1: a bit disappointing, but jobs data, even even even wage
Speaker 1: pressures are are relatively stable, although inflation, immittedly from the
Speaker 1: headline perspective is a bit disappointing. Those are things that
Speaker 1: they can quote look through and we're all well aware
Speaker 1: of that. But this conditions is the factor that toggles
Speaker 1: the decision making process of the Fed. This June, within
Speaker 1: the debate, drump sider of PIMCO with us within the
Speaker 1: debated PIMCO about how the American economy will prosper. We
Speaker 1: can all agree their gains occurring right now, but once again,
Speaker 1: are the gains going to the few versus being spread
Speaker 1: across a wider part of the American populace. Well that
Speaker 1: that has to be Ultimately, there's gonna be a few
Speaker 1: policy implications in this, and you can look at it
Speaker 1: and from retrospect, and clearly, you know, since the financial crisis,
Speaker 1: it's been skewed one way. But I think ultimately we've
Speaker 1: looked tom about what the policy is looking forward. You know,
Speaker 1: we have a period of time here where animal spirits
Speaker 1: have been relatively constructive. Therefore, you know, they've basically been
Speaker 1: fermenting over periods of time, and we see that in
Speaker 1: both the corporate world and also in the retail the
Speaker 1: individual investor world. But as we move forward, we have
Speaker 1: to really look and see if there's risks on the horizon.
Speaker 1: You know, we were very concerned about at the beginning
Speaker 1: of the Trump presidency about things like protectionism and trans
Speaker 1: to deglobalization. But it's quite possible those don't materialize to
Speaker 1: the severe point that people had expected, and so those
Speaker 1: are positive implications ultimately that that sort of tilt to
Speaker 1: the positive site. I'm not being I'm not being pollyannish here,
Speaker 1: and I'm not being overly optimistic. It's not allowed, of course,
Speaker 1: not if you've been to any one of our investment
Speaker 1: committee meetings. You know, we we we all, we all
Speaker 1: have to put our real hats on and sometimes our
Speaker 1: hard hats. But at the same time, this is something
Speaker 1: that is going to be the tradeoff. If animal spirits
Speaker 1: are going to continue, how does it off? And policy
Speaker 1: implications of one of the key factors in the next
Speaker 1: six months to drive that. Final thoughts with Jerome Schneider
Speaker 1: of PIMCO this morning, are are we just clipping coupons?
Speaker 1: Is is the gold chrome? Given all the noise that's
Speaker 1: out there in your statement of a higher rate environment,
Speaker 1: is a goal just to make the coupon and defend
Speaker 1: the goals preserve capital, the goals to preserve capital with
Speaker 1: the notion that inflation is gently increasing, so purchasing power
Speaker 1: and preserving and purchasing power is the essential element of
Speaker 1: proper investing these days, specifically with those bent for fixed
Speaker 1: income allocations. And I think once you moved to a
Speaker 1: higher rate paradigm, which we're clearly moving and edging towards
Speaker 1: that over the next one to maybe even three years,
Speaker 1: you know, it becomes ever more apparent that that becomes attractive.
Speaker 1: So maintaining optionality to defend against higher rates by having
Speaker 1: limited exposure to effectively two interest rates at the same time.
Speaker 1: Ability to embrace those higher interest rates predominantly through items
Speaker 1: such as hedging and even as simple as owding floating
Speaker 1: rate floating rate notes is essential. One thing just to
Speaker 1: highlight tom here is you know, we see libelar and
Speaker 1: sort of the money market instruments, although it's clearly not
Speaker 1: a harbinger of doom or stress in the marketplace, but
Speaker 1: one month libelar crossed one percent for the first time
Speaker 1: since December of two thousand eight. Last week, and so
Speaker 1: it's a noteworthy that we are finally seeing some tip
Speaker 1: of the hat at least to a normalization happening in
Speaker 1: front end markets as we moved to to the FED.
Speaker 1: That is, obviously, as I mentioned previously, more conditions dependent.
Speaker 1: Jerome Pimco had this big confab a couple of weeks back,
Speaker 1: the secular form uh Newt Gingrich was there, Larry Summers
Speaker 1: was there, the whole lot. What did you take away
Speaker 1: from that about where things are headed in Washington, How
Speaker 1: that's going to devetail with the work that you do. Yeah, well,
Speaker 1: you know, once every year we'd like to bring in
Speaker 1: bringing folks on the outside to help help show shut
Speaker 1: some light on the corners of the realm, corners of
Speaker 1: the universe that we normally don't see. And as you mentioned,
Speaker 1: and we did have our normal normal lineup of you, uh, Bernankey,
Speaker 1: Entriche and Gordon Brown. But at the same time, we're
Speaker 1: really focused on how the world will evolve, looking at
Speaker 1: ultimately at animal spirits with that and how they'll effectively
Speaker 1: move move the economy going forward, both domestically and globally.
Speaker 1: Implications of things we obviously are well aware of populism,
Speaker 1: political populism, uh ebbing and flowing, you know, obviously France
Speaker 1: and the election outcome there was very was very it
Speaker 1: was very pointing in that and then ultimately, you know,
Speaker 1: figuring out where we stand in the world. We're at
Speaker 1: a point where clearly we've been utilizing monetary policy in
Speaker 1: excess for the past seven eight nine years and is
Speaker 1: that remain or or how do we evolve out of
Speaker 1: that situation? And those aren't uh, those aren't concurrent clearly
Speaker 1: as the Fed debates one side of it and other another. Uh,
Speaker 1: monetary policy committees are debating the other side. But ultimately
Speaker 1: that quote endgame will be very important so we debated
Speaker 1: that as well. So those ideas will be forthcoming, and
Speaker 1: we encourage everybody to look at the PIMCO website for
Speaker 1: them to be published in the forthcoming days. There was
Speaker 1: a shameless plug I teed that up. But we get
Speaker 1: a budget tomorrow, We're headed toward a government shutdown in
Speaker 1: September if we don't have a spending figured out by that.
Speaker 1: How worried are you about all of that? Yeah? Ultimately
Speaker 1: am I worried right this second? No, But this is
Speaker 1: a sort of festering in the background, and ultimately, you know,
Speaker 1: you cannot overlook the debt ceiling implications later on this year.
Speaker 1: So when we come back later on this summer, you know,
Speaker 1: while we might view it as a quiet summer, uh,
Speaker 1: you know, this is going to be at the forefront
Speaker 1: of the implications for us to pay attention to Truro.
Speaker 1: Thank you so much, Rup Schneider. I'm more than patient
Speaker 1: with the global news flow this morning. He is with Pimcom,
Speaker 1: impatiently waiting in Boston with the Red Sox one game
Speaker 1: above five, losing three straight grow to the Oakland A's.
Speaker 1: He's up there to assist John Ferrell, David Gurral yes, Tom,
Speaker 1: thanks a much here with her and timber Of the
Speaker 1: director of Global Macro Fideli Investment. He was given me
Speaker 1: the lay of the land here, beautiful bureau. You are
Speaker 1: Bloomberg Studios, high up overlooking a lot of the city.
Speaker 1: You're great to have you with us. And let's start
Speaker 1: with with oil. We heard Karen Mosko a few moments
Speaker 1: go talking about the potential for an exten extension of
Speaker 1: that opaque and non OPEC production freeze agreement. Gives your
Speaker 1: sense of your optimism for that and sort of what
Speaker 1: that means for for markets going forward. Yes, well, a
Speaker 1: very good morning to you. You know, I'm pretty bullish
Speaker 1: on oil. I think eventually we're going to go higher.
Speaker 1: The oil complex will be trading indeficit, which will be
Speaker 1: a big change from where it has been. And most
Speaker 1: people probably agree with that. It's just a matter of
Speaker 1: timing and how long does it take to work off
Speaker 1: all of that excess inventory. So certainly the news out
Speaker 1: of OPEC is helpful if you're if you're bullish, and
Speaker 1: you know, one of the communicators I tend to look
Speaker 1: at is a CRB ROW industrial CRB. You know R
Speaker 1: I N D on your Bloomberg again, that's been in
Speaker 1: a pretty sustained up trend, and I think it's a
Speaker 1: better measure than for instance, coppera iron or which have
Speaker 1: been under pressure lately as well as oil. So um,
Speaker 1: I think commodities are in a good place here to
Speaker 1: continue to rally. Is in a good place You look
Speaker 1: at the the U S economy overall, what's your sensitive
Speaker 1: what's what's still lacking? We're lagging when you look at
Speaker 1: it now. So there's so much noise and headlines and
Speaker 1: you know, tweeting and this and that, and um, I
Speaker 1: think a lot of people tend to attribute everything that's
Speaker 1: happening to the latest headlines, and the way I see
Speaker 1: it sort of sort of the force through the trees,
Speaker 1: if you will. There are really two major issues that
Speaker 1: we have to get right. One is China. You know,
Speaker 1: China just pumped a lot of credit into the system
Speaker 1: to reflate yet again. Uh, there are credit impulse, which
Speaker 1: actually is an indicator that you guys developed on Bloomberg
Speaker 1: is running at airt of GDP rate. But the year
Speaker 1: over your change has gone from plus ten to now
Speaker 1: minus one, so that credit impulse has come and gone.
Speaker 1: So one question is what is the aftermath that I'm
Speaker 1: going to look like? My sentence at the global reflation
Speaker 1: is still intact. And I have liked non US equities
Speaker 1: all year and I continue to do. And the other
Speaker 1: one is what kind of late cycle in the US
Speaker 1: are we actually heading in? And this is where the
Speaker 1: fiscal stuff comes in, because the wrong fiscal kind of
Speaker 1: stimulus that foot pushes the demand side could actually shorten
Speaker 1: the cycle, which is kind of ironic because they could
Speaker 1: push the FED into overdrive and therefore earth the cave
Speaker 1: and then lead us into a recession. But less actually
Speaker 1: could be more in that sense, you're in timor with
Speaker 1: us with fidelity. Out of Babs in colleges, you know
Speaker 1: you're in. There is no bad house in the neighborhood
Speaker 1: around Babs in college. It's in a pretty fancy climb
Speaker 1: of Boston, Massachusetts. I like in your note you provide
Speaker 1: clarity by saying the US is the best house in
Speaker 1: the neighborhood, but there are other places to buy right now.
Speaker 1: Why the shift, because we are in a global reflation
Speaker 1: from since about five quarters ago, so from twenty from
Speaker 1: the US was the best house in the neighborhood, but
Speaker 1: now it's actually only one of a number of good houses.
Speaker 1: And this is why non US equities, whether it's developed
Speaker 1: or emerging markets, have actually done very well. They're actually
Speaker 1: up more since the election in the US market, which
Speaker 1: very few people would have would have predicted six months ago.
Speaker 1: So I do think this is a global story. China
Speaker 1: is very much behind it, and as long as China
Speaker 1: can sort of keep it it's it's stuff together, I
Speaker 1: think global equities will continue to not only go up,
Speaker 1: but actually I'll perform the US. Do you see cash
Speaker 1: flows sustained? I mean one of the big surprises here
Speaker 1: has been UH the rise in UH earnings and revenues.
Speaker 1: I mean they were pretty good, weren't they. Yes. Q
Speaker 1: one earnings for the SMP are of four year over
Speaker 1: year UM, and that's in that that force. Those are
Speaker 1: easy comps, of course, because the Q one of last
Speaker 1: year was the bottom of the cycle when earnings were
Speaker 1: falling at seven. But it's a global story. Earnings are
Speaker 1: inflecting higher everywhere, and you have a pretty significant p
Speaker 1: discount you know in e M at twelve, which of
Speaker 1: course is is justified. You just have to look at
Speaker 1: Brazil last week to know why. But even non US
Speaker 1: um equities are training at a fourteen multiple, whereas the
Speaker 1: US is at an eighteen multiple on a forward earning spaces.
Speaker 1: So the earning story is good if if you look
Speaker 1: at the county year numbers for seventeen and you adjust
Speaker 1: for the normal downward drift that happens to estimates, earning
Speaker 1: should be up eight percent over sixteen, and in twenty eighteen,
Speaker 1: which of course is still miles away, would be up
Speaker 1: six percent on on that math, And those numbers don't
Speaker 1: really reflect any potential boost from either tax cuts and
Speaker 1: or deregulations. So UM, I don't think it's fair to
Speaker 1: say that on the earnings estimate side people have um
Speaker 1: unusually optimistic expectations. If there if there's a premium built in,
Speaker 1: it's on the valuation side, which I do think can
Speaker 1: be an issue going forward. There was for such a
Speaker 1: time for many months now political risk driving so much
Speaker 1: has that dissipated. Now are you returning now to to
Speaker 1: a sense that monetary policy, central banking is back in
Speaker 1: the driver's seat once again? It's political risk off the
Speaker 1: table to agree that it was with France with the
Speaker 1: French election now over with Yes, I've been very bullish
Speaker 1: on on Europe, sort of expecting that to be the
Speaker 1: sleeper hit of teen. And you know, but people were
Speaker 1: very focused on election risk, certainly after Bregson and after
Speaker 1: the U S election and when that didn't materialize, and
Speaker 1: actually the Dutch election a few months earlier was already
Speaker 1: a hint that that populism might actually be contained in Europe.
Speaker 1: And I suspect that that seems to be that that
Speaker 1: is the case. So but there is political risk always,
Speaker 1: of course, but when we're seeing on the trade front,
Speaker 1: which is really where the international risk is, so far,
Speaker 1: things have been pretty benign. You know, We've had summits
Speaker 1: and meetings with international leaders and uh, it's been kind
Speaker 1: of dovish on the trade side and on the fiscal side. Domestically,
Speaker 1: we're we're still waiting and there doesn't seem to be
Speaker 1: a lot of momentum. So it's steady as she goes
Speaker 1: right now, Very good room. You're into timor with this
Speaker 1: with fidelity in Jerusalem at the Presidential Residents with the
Speaker 1: garden is assembled, the US delegation with President Trump, and
Speaker 1: this includes comments by Reuben Rivlin, the President of Israel,
Speaker 1: not the Prime Minister. Mr you know, the president and
Speaker 1: of course with Mr Trump, it is UH to podium
Speaker 1: with the U. S. Flag on the left, the Israeli
Speaker 1: flag on the right, UH, and the President's flag I
Speaker 1: believe in the center of the national flag. I should
Speaker 1: state as well, it is a spectacular backdrop at the
Speaker 1: presidential residence. And of course this creates great residents within Israel,
Speaker 1: really pretty much in the heart of Jerusalem. So the
Speaker 1: President President Rivlin uh speaking right now. I think we'll
Speaker 1: wait on that and wait for Mr Trump to begin
Speaker 1: his comments. Uh. Here in a moment, David Gura, all
Speaker 1: of Washington is watching his trip, but busy on an
Speaker 1: airplane returning as Mr pre Mr Bannon. Do we know
Speaker 1: David this morning wide Prebous and Bannon are returning to Washington.
Speaker 1: I don't think that we have a great sense of that.
Speaker 1: The White House is saying that that was in the
Speaker 1: plans all along. Secretary of Commerce S. Woolber Ross also
Speaker 1: heading back to to Washington as well. Marty Shank and
Speaker 1: I were talking a little earlier about the complement of
Speaker 1: staff the President brought with him to Saudi Arabia. Of course,
Speaker 1: through a number of big business deals that were announced there.
Speaker 1: The President cave that speech to regional leaders on Sunday afternoon.
Speaker 1: So the White House maintaining here this was in the
Speaker 1: cards all along for those two men to have back.
Speaker 1: But you're right in pointing out the drama that exists
Speaker 1: in Washington continues to exist and persist. Uh. There will
Speaker 1: be the reports here that there could be hearing with
Speaker 1: James Coby this week on on Capitol Hill, the former
Speaker 1: FBI director. So that story, which the White House had
Speaker 1: desperately wanted to leave behind, is certainly continuing in Washington,
Speaker 1: d C. This week. Now, the symbolism from Saudi Arabia
Speaker 1: to Israel and then on to the Roman the Vatican
Speaker 1: on an extended trip. I will point out that the President,
Speaker 1: just as a casual observer from a distance like all
Speaker 1: of us, looks a lot more rested today than he
Speaker 1: did when he gave his speech to David in Saudia.
Speaker 1: There's no question that he looked exhausted here twelve and
Speaker 1: twenty four hours, a nine day trip with two summits.
Speaker 1: Marty Shanko commenting earlier as well, you know, foreign travel
Speaker 1: is difficult, as is the first foreign trip that the
Speaker 1: president has taken, the first official trip that he's taken overseas.
Speaker 1: It has jam packed, involves a lot of geographical breath
Speaker 1: as you're as you're mentioning, and just it's a lot
Speaker 1: to get one's head around. Anyone who's traveled with the
Speaker 1: government official at that kind of rank knows that everything
Speaker 1: is tightly scheduled. You're in a bubble um. Everything, every
Speaker 1: minute is taken kind of like when you go to Davos,
Speaker 1: tom every minute is pre scheduled in. But I I
Speaker 1: will take issue and that I once to the trip
Speaker 1: where it was every day day here, day yere day there.
Speaker 1: The moving city to city is a whole another level exhaustion,
Speaker 1: whether it's Asia, Europe and North America. As a presence
Speaker 1: doing and of course many of our listeners, particularly C
Speaker 1: class officers are doing as well. Yeah, thank you very
Speaker 1: much and shalom. I'm honored to be in the great
Speaker 1: State of Israel, the homeland of the Jewish people. I
Speaker 1: am awed by the beauty and majesty of this sacred
Speaker 1: and very holy land. President Rivlin, Mrs Rivlin, thank you
Speaker 1: so much, thank you, thank you for opening your wonderful
Speaker 1: home and welcoming Milani and myself to your amazing country,
Speaker 1: and that's what it is. It is an amazing country.
Speaker 1: What you've done is perhaps has virtually never been done before.
Speaker 1: When my first trip overseas, I've come to this ancient
Speaker 1: land to reaffirm the during friendship between the United States
Speaker 1: and the State of Israel. And it will always be enduring.
Speaker 1: And that's number one to me. We're not only longtime friends,
Speaker 1: we are great allies and partners. We stand together always.
Speaker 1: This moment in history calls for us to strengthen our
Speaker 1: cooperation as both Israel and America face common threats from
Speaker 1: ISIS and other terrorist groups. Two countries like Iran that
Speaker 1: sponsor terrorism and fund and foment terrible violence not only
Speaker 1: here but all over the world. Together, we can work
Speaker 1: to end the scourge of violence that has taken so
Speaker 1: many lives here in Israel and around the world. Most importantly,
Speaker 1: the United States and Israel can declare with one voice,
Speaker 1: the Iran must never be allowed to possess a nuclear weapon,
Speaker 1: never ever, and must seize it's deadly funding training and
Speaker 1: equipping of terrorists and malicious and a must cease immediately
Speaker 1: on those issues. There is a strong consensus among the
Speaker 1: nations of the world, including many in the Muslim world.
Speaker 1: I was deeply encouraged by my conversations with Muslim world
Speaker 1: leaders in Saudi Arabia, including King Solomon, who I spoke
Speaker 1: to at great length. King Salmon feels very strongly and
Speaker 1: I can tell you would love to see peace between
Speaker 1: Israel and the Palestinians. Many expressed their resolve to help
Speaker 1: and terrorism and the spread of Radicalizai. Many Muslim nations
Speaker 1: have already taken steps to begin following through on this commitment.
Speaker 1: There is a growing realization among your Arab neighbors that
Speaker 1: they have common cause with you and the threat posed
Speaker 1: by Iran, and it is indeed a threat, there is
Speaker 1: no question about that. I thank both you and Prime
Speaker 1: Minister net for your commitment to achieving peace between the
Speaker 1: Israelis and the Palestinians. I also look forward to discussing
Speaker 1: the peace process with Palestinian President a Bus. Young Israeli
Speaker 1: and Palestinian children deserve to grow up in safety and
Speaker 1: to follow their dreams free from the violence that has
Speaker 1: destroyed so many lives. The United States and Israel can
Speaker 1: also bring safety and greater presberry to our people through
Speaker 1: stronger ties of trade and commerce. Already our two countries
Speaker 1: do a great deal of business together. We have a
Speaker 1: strong foundation on which to build an even closer trading
Speaker 1: relationship that benefits both of our countries. I'm gonna try
Speaker 1: and narrow that trade deficit just a little bit. Is
Speaker 1: that okay? Unless he doesn't mind. He wants to keep
Speaker 1: it the weather. As I understand today, we have so
Speaker 1: many incredible opportunities before us, and my hope for this
Speaker 1: visit is that we seize every single one of them.
Speaker 1: I am thrilled to be here on behalf of the
Speaker 1: American people. I know Israel and America share the same goals,
Speaker 1: and I have great confidence that we can achieve tremendous
Speaker 1: success together. We can achieve all of our goals together.
Speaker 1: President Rivlin, I look forward to working with you and
Speaker 1: just seeing more of the sacred land and getting to
Speaker 1: spend time with the remarkable people of Israel. Thank you
Speaker 1: very much. Thank you the President United States, shaking hands
Speaker 1: with the President of Israel, Mr Rivlin. This at the
Speaker 1: Presidential Residence in the heart of Jerusalem, in the rows
Speaker 1: and chairs, the first Lady in the front row listening
Speaker 1: to the comments, with a beautiful backdrop of flags and
Speaker 1: artwork in Jerusalem. President uh looks more spirited than he
Speaker 1: looked in Riad. To be honest, it looks like he's
Speaker 1: had a little bit of rest, which you can do
Speaker 1: on air force one miles roughly from Riad to Tel
Speaker 1: Aviv and then thirty six miles by helicopter from Tel
Speaker 1: Aviv to Jerusalem to the UH southeast as well. The
Speaker 1: President just now making comments with Mr Rivlin, is some
Speaker 1: people gather, not too many in the first lady we
Speaker 1: see as well. I saw Secretary Tillerson as well in
Speaker 1: the front row out for what appears to be photo
Speaker 1: opportunities with flags right down a sun drenched patio in Jerusale.
Speaker 1: I'm enough of the travel UH lawd Greg Delier just
Speaker 1: out with his note. We had the courtesy of speaking
Speaker 1: with him earlier this morning. He says, an epic battle
Speaker 1: over fiscal policy begins this week. Urian Timor is with Fidelity. Urian,
Speaker 1: how do you link fiscal policy and the raging battle
Speaker 1: to come on it into investment? How does that work? Well?
Speaker 1: When you look at all the things that are unfolding
Speaker 1: in the markets of the dollar, nominal yields, real rates, tips,
Speaker 1: break evens, financial conditions, commodities of the relative performance of
Speaker 1: the Russell versus the SMP. They're all manifestations of the
Speaker 1: same theme, and that theme is what kind of late
Speaker 1: cycle will the USC So we've been in this prolonged
Speaker 1: midside expansion of the Goldilocks period really from two thousand
Speaker 1: and ten until now, and we're still in it, and
Speaker 1: I don't expect to transition into late cycle, you know, tomorrow,
Speaker 1: but it is usually the next phase in the business cycle.
Speaker 1: You go early, mid, laid down, and the late cycle
Speaker 1: is when things get kind of messy, because no late
Speaker 1: cycle is is the same. And so where the fiscal
Speaker 1: question comes in, um A, when is it going to happen?
Speaker 1: Is it going to happen? How much? What kind right?
Speaker 1: If it pushes up the demand side with an economy
Speaker 1: at full employment eight years into an expansion, the risk
Speaker 1: is that the FED has to offset that and therefore
Speaker 1: not only lower the fiscal multiplier of that stimulus, but
Speaker 1: also raise rates and you know, get us closer to
Speaker 1: the risk of an inverted yield curve down the road,
Speaker 1: and then you know, you know the relationship between inverted
Speaker 1: curves and recessions. So that's one potential playbook the other
Speaker 1: one is that the fiscal either is less than we
Speaker 1: think or it's more supply side oriented, because we need
Speaker 1: productivity to go up in order for the economy speed
Speaker 1: limit to go up. And if that happens, the FED
Speaker 1: doesn't have to offset it as much, and we may
Speaker 1: have a more benign environment, more benign late cycle environment
Speaker 1: where the curve is not overred. So this, I think
Speaker 1: is the big question other than China and it's stimulus.
Speaker 1: This is really the big question. And that's why whenever
Speaker 1: we see headlines going to or fro in terms of
Speaker 1: when we get how much fiscal all of these market
Speaker 1: components move in unison because it's all one trade. Basically
Speaker 1: you're in termor where this fidelity And we will continue
Speaker 1: the President of the First Lady Walking where the President
Speaker 1: and Mrs Rivlin within the Presidential Residents, they visited the garden.
Speaker 1: They take immense pride in Israel with the Presidential Garden
Speaker 1: at the Residents. It was completely restored in two thousand
Speaker 1: nine to represent the flora of the land of Israel.
Speaker 1: Looks now like a red carpet in flags assembled as
Speaker 1: a president moves on to the next moment. Believe I
Speaker 1: see a car in the distance, Urine. When I look
Speaker 1: at investment right now, do you know where the risk
Speaker 1: free return is? It's so important to your managers, your
Speaker 1: portfolio managers in the great distortion? Do I know where
Speaker 1: the risk free rate is? Yes? And this is no,
Speaker 1: we don't act well, we can guess right because we're
Speaker 1: supposed to say, Peter Lynch knows, but no one else does.
Speaker 1: Where is it? So when you when you look at
Speaker 1: valuation right, valuation is driven by the numerator in the
Speaker 1: discount of cashlow model, which is earnings growth, and then
Speaker 1: the denominator which is the discount rage which rate, which
Speaker 1: is the sum of the risk free rate and the
Speaker 1: equity risk premium. And right now, one of the issues
Speaker 1: that I have in the market is that not only
Speaker 1: is the equity risk freamum very low because it basically
Speaker 1: collapsed after the election. The risk preum is about two
Speaker 1: point three percent, which is almost half of what it
Speaker 1: historically has been. But also the rest free rate, as
Speaker 1: you just indicated, is depressed because we had multiple years
Speaker 1: of financial repression. And you know ZURP and QWI and
Speaker 1: where does the ten year yield belong? Because that is
Speaker 1: the risk free rate, and once we know that, then
Speaker 1: we can sort of figure out what the valuation is
Speaker 1: of of all these other asset classes. But because the
Speaker 1: risk free rate is artificially depressed, all asset classes become
Speaker 1: you know, more highly valued as a result, you know,
Speaker 1: from bonds to cash, to equities to credit, and so
Speaker 1: we can we can make some analyses on where the
Speaker 1: term premium is and should be if the FED was
Speaker 1: completely in a normalized environment where GDP growth was historically
Speaker 1: at trent, which of course it isn't. You know, real
Speaker 1: GDP growth over the last ten year ten years is
Speaker 1: at one point three percent. It's very very low. Um So,
Speaker 1: but if if growth returned to something normal three four
Speaker 1: percent real or five six percent nominal, you could argue
Speaker 1: that the ten years should be you know, four percent
Speaker 1: or four and a half percent. But but we're not there. Uran,
Speaker 1: thank you so much, and particularly for the back and
Speaker 1: forth through the President in Jerusalem, Mr timur Is with
Speaker 1: Fidelity in Boston. Runch you by Bank of America, Mary
Speaker 1: Lynch with virtual reality, virtually everything will change. Discover opportunities
Speaker 1: in a transforming world, be of a mL dot com,
Speaker 1: slash VR. Mary Lynch pierced Fenner and Smith Incorporated. There's
Speaker 1: something new from Bloomberg. It's called Lens. Starting right now,
Speaker 1: you can use the Bloomberg iOS app off your iPhone
Speaker 1: or iPad, or our new Google Chrome extension to read
Speaker 1: any news story on any website, scan it, and then
Speaker 1: instantly see the news stories relevant market data from Bloomberg.
Speaker 1: In addition, see all the bios of the key people
Speaker 1: mentioned in the story. It's called Lens, and it is
Speaker 1: just that, a lens into the people and the data
Speaker 1: of any story you may be reading. Again. Lens brings
Speaker 1: you the power of Bloomberg's news and data. Download or
Speaker 1: io s app or search for the Bloomberg extension at
Speaker 1: the Chrome Store to try lens out. Learn more at
Speaker 1: bloomberg dot com slash lens. Michael McKee a studio with
Speaker 1: us right now. Mr Guras on assignment in Boston. Good morning, Michael,
Speaker 1: Good morning. It's nice to be back in Richard Truman
Speaker 1: Is is produced. It's like the old day. It's like nostalgia.
Speaker 1: They put back together. It's final tap. This show goes
Speaker 1: to eleven. It may go to eleven. Uh, We're gonna
Speaker 1: get to Bruce Barlett here in a moment. I just
Speaker 1: want to continue with the day's events. In Jerusalem. We're
Speaker 1: seeing images now on our feed of the Church of
Speaker 1: the Holy sepul Curve back to the fourth century. Mr
Speaker 1: Trump and the First Lady schedule to visit, as well
Speaker 1: as the Western Wall. No activity there's yet, but we'll
Speaker 1: bring you a dialogue of that as we see uh
Speaker 1: it on our images here right now. A dialogue is
Speaker 1: necessary on the future of the Republican Party. I turned
Speaker 1: to our care and Buchanan a week ago and I said,
Speaker 1: I want to talk to one person only, the guy
Speaker 1: that helped Jack Kemp, Bruce Bartlett a few years ago
Speaker 1: out of Georgetown, assisted Mr Kemp in moving tax reform forward. Bruce,
Speaker 1: take us back to that moment. How impossible was it
Speaker 1: to do tax reform then? In his same impossibility now? Well,
Speaker 1: for one thing, a lot of people knew a lot
Speaker 1: more about the idea of tax reform because we've been
Speaker 1: talking about it since the late nineteen sixties. We had
Speaker 1: a big tax reform bill in nineteen sixty nine and
Speaker 1: another one in nineteen seventy six. So in the nineteen
Speaker 1: eighties when Kemp started talking about doing another tax reform,
Speaker 1: the ground was pretty well plowed. People had an understanding
Speaker 1: about the problem of tax loopholes and how they could
Speaker 1: be UH harmful to the economy by causing investment to
Speaker 1: be misallocated and things of that sort. And UH and
Speaker 1: he started working on a tax reform plan with Senator
Speaker 1: Bob Caston of Wisconsin, and simultaneously Senator Bill Bradley of
Speaker 1: New Jersey and Congressman Dick Gephardt we're working on something similar.
Speaker 1: And they were both Democrats. Kemping uh casting we're both Republicans.
Speaker 1: And when they finally came up with their legislation and
Speaker 1: put them, people put him side by side. They discovered
Speaker 1: there was a lot of overlap, and I think that
Speaker 1: was the real impetus that got things going, the the
Speaker 1: idea that this was potentially a win win bipartisan deal.
Speaker 1: Since course Congress has meddled in the tax code, you
Speaker 1: won't get any argument I don't think from any economists
Speaker 1: that the tax code exemptions and UH and loophole's distroyt
Speaker 1: economic activity. So what's the difference between two thousand seventeen
Speaker 1: and the early eighties when this was just dating in
Speaker 1: terms of why we need to do taxes? Why why
Speaker 1: are people in so much disagreement about tax cuts now
Speaker 1: compared to them. Well, the problem is that the Tax
Speaker 1: Reform Act of eighties six was essentially a deal whereby
Speaker 1: taxes were raised on corporations and that revenue was used
Speaker 1: to reduce tax rates on individuals. That's a political deal
Speaker 1: that that worked. The problem today is almost everybody in
Speaker 1: the tax field thinks that the most important thing we
Speaker 1: need to do is lower the corporate at tax rate.
Speaker 1: But there aren't enough corporate tax loopholes to pay for
Speaker 1: more than a small reduction in rates, which means that
Speaker 1: in principle, you'd have to raise taxes on individuals to
Speaker 1: pay for a corporate tax cut, assuming it was done revenue.
Speaker 1: Neutrals want to come back on the Republican Party, but
Speaker 1: just one more tax question, if we could, do you
Speaker 1: have any optimism we can see, Speaker Ryan Ronald Reagan,
Speaker 1: tax reform not really. I think we're still at too
Speaker 1: earliest stage of discussion, and you're seeing to be to
Speaker 1: a fault line of a group of Republicans say screw reform,
Speaker 1: we just want another style, big tax cut. We don't
Speaker 1: give a damn what happens to the deficit, and then
Speaker 1: you have another side which says, you know, we're concerned
Speaker 1: about the deaths that we want to pay for this
Speaker 1: tax reform. But more wortantly, there's a rule in the
Speaker 1: Senate which says, if you pass legislation that reduces that
Speaker 1: increases the deficit in over a ten year budget window, uh,
Speaker 1: it can't be made permanent. And and so this is
Speaker 1: a very powerful argument for doing something reform that would
Speaker 1: be paid for that would be revenue neutral, because then
Speaker 1: it would be permanent and businesses could plan beyond that
Speaker 1: ten year window. Bruce Bartlett is a Republican, and he
Speaker 1: has been harshly critical of modern Republican theology. Bruce Bartlett
Speaker 1: is the president a Republican. Well, of course he is.
Speaker 1: He used a nominee of the Republican Party, which means
Speaker 1: he is a Republican insofar as the Republican Party itself
Speaker 1: is concerned. Is he a conservative, I guess is the
Speaker 1: real question. Well, he's certainly much more of a populist,
Speaker 1: I think, than a traditional conservative. On the other hand,
Speaker 1: it's quite clear that he is pursuing an agenda that
Speaker 1: is very much in the mainstream of the conservative movement
Speaker 1: as it exists today. Which may or may not have
Speaker 1: any connection whatsoever to historical conservatism or the conservatism of
Speaker 1: the Reagan era, which was was my era. Well, that's
Speaker 1: an interesting um point you make, because in your book
Speaker 1: in two thousand nine, UM, The New American Economy, the
Speaker 1: Failure of Reagonomics in a New Way Forward. Um, you
Speaker 1: suggest supply side economics was appropriate for the nineteen seventies
Speaker 1: and eighties but doesn't do not work today. Um. Do
Speaker 1: you still feel that way, And if so, tell us
Speaker 1: why given that that's being cited by many people around
Speaker 1: the administration for what they want to do. Well. I
Speaker 1: don't believe in cookie cutter economics, Okay. I think you
Speaker 1: look at the situation, you analyze new developed policies that
Speaker 1: are appropriate for those circumstances. And I think there's a
Speaker 1: lot of people out there, such as my old friend
Speaker 1: Larry cut Low, who just say task cuts, task cuts,
Speaker 1: task cuts. No matter what the situation is, you know,
Speaker 1: it's always time to cut taxes. And I think sometimes, uh,
Speaker 1: it isn't. And I think cutting taxes in the early
Speaker 1: eighties was something that was clearly necessary. The fact that
Speaker 1: we had inflation, uh, was was strong evidence that the
Speaker 1: supply side of the economy needed to be built up.
Speaker 1: But I think in the in the twenty one century,
Speaker 1: we've had mostly the opposite problem. We've had a very uhh.
Speaker 1: We have not had inflation, We've had a borderline deflation.
Speaker 1: I think we're still suffering from a lack of aggregate demand.
Speaker 1: I think we need different policies for a different situation, Bruce.
Speaker 1: When you look at the present dynamics, in the present politics,
Speaker 1: it's out there. I guess it's great luck. I've called
Speaker 1: it Trump luck as well. It's good luck, a good
Speaker 1: thing right now. Or do you feel there's a huge
Speaker 1: pressure by Republicans to actually find the compromise you've called
Speaker 1: forward for decades. Uh, it's hard to see Republicans compromising
Speaker 1: even with themselves at this point on some key issues. Uh.
Speaker 1: Taxes is a key one. Uh. It looks as if
Speaker 1: the administration has adopted a let's just cut taxes and
Speaker 1: forget about all this reform stuff. But the House of
Speaker 1: Representatives at least seems to be quite determined to do
Speaker 1: a meaningful tax reform bill. And H it's not entirely
Speaker 1: clear where the House or the Senate is. And again,
Speaker 1: I think you've got differences among the Administration, the House,
Speaker 1: and the Senate on health reform and a number of
Speaker 1: other issues. So I think just getting Republicans on the
Speaker 1: same page is going to be an enormous effort. Uh.
Speaker 1: Before we let you go, I have to go back
Speaker 1: to Texas for a second and ask a question. I've
Speaker 1: been dying to find an expert who could tell me,
Speaker 1: and you're probably exactly the person. The administration goes out,
Speaker 1: we want to cut taxes. They put out a rough
Speaker 1: idea of what they want to do, and everybody says,
Speaker 1: tax cuts for the rich, tax cuts for the rich.
Speaker 1: And when you look at obviously the rich pay more
Speaker 1: in taxes, so dollar wise, they pay more. But why
Speaker 1: can't somebody design a tax plan that gives the same
Speaker 1: percentage gain to everybody. Well, for one thing, you've got
Speaker 1: a huge percentage of the population that pays no federal
Speaker 1: income taxes at all. So you've got a problem with
Speaker 1: how to in effect give them a tax cut when
Speaker 1: they don't pay any And the answer has been over
Speaker 1: the last several years, let's give them refundable tax credits. Uh.
Speaker 1: And so you you and once you do that, you
Speaker 1: blurred the distinction between taxes and spending. You're sending checks
Speaker 1: to people who pay no taxes and saying we're going
Speaker 1: to give you a rebate on your taxes, and and
Speaker 1: and this has kind of opened the door to a
Speaker 1: spig at a spending that that many Republicans in fact
Speaker 1: are concerned about. First, thank you so much for your time,
Speaker 1: and a busy newsday, Bruce Bartlett, UH of Virginia. And
Speaker 1: of course a Republican symbolism. And at the Church of
Speaker 1: the Holy Spolker right now in Jerusalem is remarkable the
Speaker 1: President and Mrs Trump entering the church along with their
Speaker 1: daughter and Mr. Kushner as well, and a few of
Speaker 1: the American dignitaries. And they are surrounded Michael McKee by
Speaker 1: that imagery of Jerusalem, of the Greek Orthodox, the Armenian Orthodox,
Speaker 1: and the Catholic Church joining us now in Boston. Karen Mills.
Speaker 1: She is a former Small Business Administration Administrator three head
Speaker 1: of s p A now at the Harvard County School. Uh, Karen,
Speaker 1: good morning. What did you learn in small it's a
Speaker 1: small business administrator? What was the shock? If there's always
Speaker 1: a shock when you enter the bureaucracy, what you learn? Oh,
Speaker 1: Tom it's it's great to talk to you. I think
Speaker 1: the thing that UM I learned in that we really
Speaker 1: learned in the recession in this country is how important
Speaker 1: small businesses are to the economy, because half the people
Speaker 1: who work in this country own to work for a
Speaker 1: small business. So I used to say, I woke up
Speaker 1: at night worrying about half of America's jobs. The issue
Speaker 1: is that small business doesn't really have a big voice
Speaker 1: in Washington because big businesses voice is much more at
Speaker 1: the table. So my job was to be allowed voice
Speaker 1: at the table for small business. Karen, We're going to
Speaker 1: interrupt right now and go to a big business. Eight
Speaker 1: miles west of Detroit is Dearborn, Michigan. Here is Bill Ford.
Speaker 1: And he did that and of course they still made
Speaker 1: furniture throughout the whole and they still make furniture. But
Speaker 1: in doing so, he grew the company, took them to
Speaker 1: first in the in the industry UM worldwide. Uh. And
Speaker 1: the culture was one of optimism and a feeling that
Speaker 1: they could get things done easily because they had a
Speaker 1: very clear view of the future. Then Jim went to
Speaker 1: the University of Michigan, and you can say, well, is
Speaker 1: that relevant to Wentford has got going, I would say yeah,
Speaker 1: and a couple of respects. Look at what again? What
Speaker 1: he did? He walked into an athletic First of all,
Speaker 1: it shows his loyalty because having played football for boun
Speaker 1: Bechler UM, he loved the University of Michigan and when
Speaker 1: they asked him could he come fix the athletic department,
Speaker 1: Jim said sure, you know I'd be happy to Um.
Speaker 1: You know, walking into a very difficult and very public situation.
Speaker 1: So what did he do there? Um? He first got
Speaker 1: the students back because they were feeling alienated. Then he
Speaker 1: got the all the volunteers that are the heart of
Speaker 1: any program like that they were feeling alienated. He got
Speaker 1: them back. Um, he negotiated UH and brought home the
Speaker 1: Nike deal, which was groundbreaking for any university. UM. He
Speaker 1: then hired Jim Harbaugh UM and UH, and then he
Speaker 1: helped select his successor and then left the athletic department
Speaker 1: in much better shape than he found it. So you say, well,
Speaker 1: what does that have to do with Ford? Well, nothing
Speaker 1: directly except I think it shows that Jim can be
Speaker 1: successful and operate in multi environments m a corporate manufacturing
Speaker 1: environment and steelcase where he reimagined it and delivered a
Speaker 1: very uh not only solid set of results, but delivered
Speaker 1: a very convincing future. By the way, he also got
Speaker 1: them through oh eight oh nine, which in the furniture
Speaker 1: business was tougher even than the auto business. UM. So
Speaker 1: it shows his operating acumen as well as his visionary thinking. Um.
Speaker 1: And then you know he's been a part of our
Speaker 1: board for he was for three years. And then I
Speaker 1: asked him, I said, hey, you know we need to
Speaker 1: um build a new business and you know, could you
Speaker 1: help us do that or frankly, would you go do
Speaker 1: that for us? And so again very selflessly. And you
Speaker 1: see that there's a pattern here. He left our board,
Speaker 1: joined our management team when again when he didn't have
Speaker 1: to do that and life had more probably appealing options.
Speaker 1: But and he's in a year he's done an amazing
Speaker 1: job at Ford Smoth. Little technical difficulty there with Bill
Speaker 1: Ford and his discussion really something won a story of course. Uh.
Speaker 1: He was born like other's uh, with every advantage and
Speaker 1: it was pretty much ignored. And then out of Hotchkiss
Speaker 1: Princeton and m I T has dazzled people with his
Speaker 1: ability to avoid bankruptcy a number of years ago, and
Speaker 1: of course with the ascendency and management of Mr Malally
Speaker 1: and then challenges as we hear from the board with
Speaker 1: Mr Fields and they go on to new management. This
Speaker 1: morning he mentioned in the University of Michigan UH linkage
Speaker 1: there we continue with Ms Mills, Karen Mills, the former
Speaker 1: SPA administrator UH joining us UH this morning. Karen I,
Speaker 1: I look at all of this, and you know, whether
Speaker 1: it's Bill Ford in big business or Karen Mills and
Speaker 1: small business, at the end of the day, it's all
Speaker 1: about people, isn't it. How did you manage the expectations
Speaker 1: of you need people to make the sp A go.
Speaker 1: How did you do that? Well, you know with Bill Ford,
Speaker 1: this is actually really important for a small business too
Speaker 1: because UM, as you see there, you know they're making
Speaker 1: a change there. So you're right, people are everything. But
Speaker 1: when you look at the number of suppliers for it
Speaker 1: has they have to get it right or we're in
Speaker 1: real trouble. And small business land, particularly in the Midwest.
Speaker 1: One of the great things UM I did was travel
Speaker 1: all around the country and talk to small business suppliers
Speaker 1: and what you really need in Washington if somebody who's
Speaker 1: got the sensibility of the small business owner and can
Speaker 1: help Congress figure out how to make a bill that
Speaker 1: actually works for small business. It's not about the big
Speaker 1: top headline. It's about the nuts and bolts and how
Speaker 1: much you know, pain and suffering the small business owner
Speaker 1: has to go through. There's a question what would help
Speaker 1: the small business owner? And I asked that because everybody
Speaker 1: says cut their taxes, cut their taxes. When you when
Speaker 1: you look at the list of things that small business
Speaker 1: owners tell, uh, you know the polsters on a regular basis,
Speaker 1: that's not at the top of the list. Well, I
Speaker 1: actually have a list, but I have a plan for
Speaker 1: sort of getting it through Congress. So while the President
Speaker 1: is out traveling in um around the world, I think
Speaker 1: his economic team should get together and go to Congress
Speaker 1: and work with both parties in Congress and do a
Speaker 1: small business bill. And maybe we would call it the
Speaker 1: Small Business Growth Act of and we could stuff it
Speaker 1: with all these things that small businesses like. Um, you know,
Speaker 1: start with a few tax credits, because that's the best
Speaker 1: thing for small business. Rather than wait for a big
Speaker 1: tax bill, small businesses really getting anxious. I think waiting
Speaker 1: for tax legislation. So let's do some taxes, let's do
Speaker 1: some regulatory simplification, and make sure there's taccess to capital
Speaker 1: things that people agree on already. One of the things
Speaker 1: that Michael McKee and I agree on, Karen, and we
Speaker 1: can ask you this because you're living it, is the
Speaker 1: value of a liberal arts education. Bill Ford has a
Speaker 1: history degree out of a small school in New Jersey.
Speaker 1: I believe you did the right thing and took a
Speaker 1: ten at Harvard a few years ago, and you're you
Speaker 1: very much know the efforts of Bowden College. How important
Speaker 1: is liberal arts to small business and any business education today. Well,
Speaker 1: I'm a big believer in liberal arts education. You know,
Speaker 1: it really helps you figure out how to think. And
Speaker 1: as you said, at Bowden and at Harvard and really
Speaker 1: around the community, you want somebody who can have a
Speaker 1: sense of, you know, what is what is the way
Speaker 1: the path forward? And that's not just figuring out how
Speaker 1: to do the numbers. That's about making judgments and studying
Speaker 1: history and thinking about how other people have coped um
Speaker 1: with difficult situations. And when you look at Boden College,
Speaker 1: I think that's one of the reasons why they have
Speaker 1: its proportionate number of leaders Joshua Chamberlain, George Mitchell for
Speaker 1: a very small college in Maine. It's set up how
Speaker 1: you think about living a principal of life and making decisions.
Speaker 1: Plus you have to survive the black Frau flies every spring.
Speaker 1: Karen Mills thanks. Yeah, the winder goes some October to
Speaker 1: the third week of June. Karen Mills, thank you so much,
Speaker 1: greatly appreciate it. Uh the former administrator for the Small
Speaker 1: Business Administration, Thanks for listening to the Bloomberg Surveillance podcast.
Speaker 1: Subscribe and listen to interviews on Apple Podcasts, SoundCloud, or
Speaker 1: whichever podcast platform you prefer. I'm on Twitter at Tom Keene.
Speaker 1: David Gura is at David Gura. Before the podcast, you
Speaker 1: can always catch us worldwide. I'm Bloomberg. Ray. You brought
Speaker 1: you by Bank of America Mery Lynch. With virtual reality,
Speaker 1: virtually everything will change. Discover opportunities in a transforming world.
Speaker 1: Be of a mL dot Com, slash VR, Mary Lynch,
Speaker 1: Pierced Fenner and Smith Incorporated,