WEBVTT - The Return of Inflation Pushing Up Yields in 2021: Bianco 0:00:01.400 --> 0:00:04.120 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, along 0:00:04.120 --> 0:00:06.200 with my co host of Bonnie Quinn. Every business day 0:00:06.240 --> 0:00:10.360 we bring you interviews from CEOs, market pros, and Bloomberg experts, 0:00:10.400 --> 0:00:13.600 along with essential market moving news. Find the Bloomberg Markets 0:00:13.600 --> 0:00:17.000 Podcast on Apple Podcasts or wherever you listen to podcasts, 0:00:17.000 --> 0:00:20.840 and on Bloomberg dot com. Well, last week we had 0:00:20.880 --> 0:00:23.560 the ten year yield range from seventy six basis points 0:00:23.560 --> 0:00:26.280 all the way up to seven basis points. Now, eleven 0:00:26.280 --> 0:00:28.840 basis points may not be a massive move in so 0:00:28.920 --> 0:00:31.920 called normal times, but it is these days. So let's 0:00:31.920 --> 0:00:34.120 bring in Jim Bianco of Bianco Research to tell us 0:00:34.479 --> 0:00:39.480 what kind of volatility we're seeing and what's it get you. Jim, Hey, 0:00:39.479 --> 0:00:44.800 thanks for having me um the fine markets volatility normally 0:00:44.960 --> 0:00:47.920 is not a big deal, but given you know, eleven 0:00:47.960 --> 0:00:50.199 basis points in a week is not the craziest thing 0:00:50.200 --> 0:00:52.720 you would have seen. But given the environment we're in, 0:00:52.800 --> 0:00:56.040 it is a massively large move, and it came on 0:00:56.120 --> 0:00:58.960 the back of a stock market that sold off over 0:00:59.040 --> 0:01:02.960 five That was probably the most surprising part about it 0:01:03.040 --> 0:01:06.520 was there was no risk off rally in the bond market. 0:01:06.600 --> 0:01:08.920 Last week, and that's what's got everybody shaking their head 0:01:09.040 --> 0:01:13.000 right now. So, Jim, you know we have the election 0:01:13.040 --> 0:01:15.400 coming up tomorrow. How are you kind of I'm not 0:01:15.440 --> 0:01:18.399 gonna say playing it, but how are you forecasting how 0:01:18.720 --> 0:01:20.880 this market is going to react going forward? What's kind 0:01:20.880 --> 0:01:22.400 of your base case what we're gonn see tomorrow and 0:01:22.880 --> 0:01:25.880 the days ahead, and how that might impact the credit markets. 0:01:26.959 --> 0:01:29.920 I have a little different base case than most um. 0:01:29.959 --> 0:01:31.960 If you if you look at the world of the 0:01:32.040 --> 0:01:35.440 polls they're giving Trump, I'll go with the incumbent point 0:01:35.440 --> 0:01:37.800 of view, about a five to ten percent chance of winning. 0:01:38.200 --> 0:01:40.880 If you look at the betting markets, they're giving him 0:01:40.880 --> 0:01:45.400 at chance of winning. The betting markets seem to align 0:01:46.080 --> 0:01:49.560 with the financial markets. I think the financial markets think 0:01:49.640 --> 0:01:53.120 that Biden is leading, but it's very very close where 0:01:53.120 --> 0:01:54.720 the polls are saying it's going to be a very 0:01:54.760 --> 0:01:57.720 lopsided race. If the polls turn out to be right 0:01:58.320 --> 0:02:00.360 and it is as lopsided as they say it is, 0:02:00.680 --> 0:02:02.440 I think there's gonna be a lot of discounting in 0:02:02.480 --> 0:02:06.440 the market tomorrow or Wednesday and the Thursday as they 0:02:06.480 --> 0:02:09.480 start to price in more of a Biden victory than 0:02:09.520 --> 0:02:12.800 they have right now, and I think ultimately how the 0:02:12.840 --> 0:02:15.520 markets priced that in it's gonna come down to how 0:02:15.520 --> 0:02:17.959 the Senate goes. The Senate, I think is going to 0:02:18.080 --> 0:02:21.320 probably be the real story as we go forward from here, 0:02:21.480 --> 0:02:24.160 because that's kind of touch and go as to which 0:02:24.200 --> 0:02:26.880 way it can go. Wall Street wants a blue wave 0:02:27.200 --> 0:02:30.520 because it wants fiscal stimulus um and I think if 0:02:30.520 --> 0:02:32.520 it gets that blue wave, there's probably going to be 0:02:32.520 --> 0:02:35.800 a rally based on the knee jerk reaction. But I 0:02:35.800 --> 0:02:38.120 don't think that that blue waves is completely priced and 0:02:38.200 --> 0:02:40.480 it's a lot of people think right now, well, there's 0:02:40.520 --> 0:02:43.720 also a very real possibility of the presidency turning over, 0:02:43.800 --> 0:02:47.079 but not the Senates in that situation. Jim, what are 0:02:47.080 --> 0:02:48.799 we looking at in terms of policy for the next 0:02:48.800 --> 0:02:52.600 four years? Well, for the next four years. History says 0:02:52.639 --> 0:02:55.680 that that should be bullish because Wall Street is always 0:02:55.720 --> 0:02:58.960 liked gridlock of any kind. That seems to be the 0:02:59.040 --> 0:03:02.920 best scenario for it over the next several years. Over 0:03:02.960 --> 0:03:05.680 the short term, it wor like grid luck because what 0:03:05.800 --> 0:03:07.840 it wants right now as it wants a fiscal deal, 0:03:08.320 --> 0:03:10.639 and if we get we were to get the Senate 0:03:10.680 --> 0:03:13.200 to be held by the Republicans. Uh, then what we 0:03:13.240 --> 0:03:17.160 would wind up having happen is um the lessing of 0:03:17.360 --> 0:03:22.680 less likelihood of a fiscal deal at that point. So, Jim, 0:03:22.720 --> 0:03:24.880 I mean, if you look at the ten year it's 0:03:24.919 --> 0:03:27.480 been trading after that volatility in March, and ten years 0:03:27.560 --> 0:03:30.040 kind of been in this range of six basis points. 0:03:30.400 --> 0:03:33.280 Is there a scenario in your analysis where we get 0:03:33.280 --> 0:03:35.760 the ten ure to you know, one one and a 0:03:35.840 --> 0:03:39.160 quarter percent something like that in a reasonable timeframe. Sure, 0:03:39.360 --> 0:03:41.840 And I think there's a likely scenario with that, and 0:03:41.880 --> 0:03:45.000 that is the return of inflation. With all of the 0:03:45.040 --> 0:03:47.880 pump timing that we've done with the fiscal stimulus and 0:03:47.960 --> 0:03:51.960 the monetary stimulus, and the contraction of the economy meaning 0:03:52.360 --> 0:03:56.320 we're making less stuff less gross domestic product. That is 0:03:56.320 --> 0:04:00.640 a prescription for higher prices, otherwise known as inflation. If 0:04:00.680 --> 0:04:03.960 the market thinks that inflation is coming back and coming 0:04:04.000 --> 0:04:07.000 back in a big way, yeah, you'll see investors run 0:04:07.000 --> 0:04:09.880 away from the bond market and you could see higher yields. 0:04:10.080 --> 0:04:11.680 In fact, I think that might be one of the 0:04:11.720 --> 0:04:14.280 things that's been bothering the market the last couple of weeks. 0:04:14.600 --> 0:04:17.040 Even though the stock market is stumbled and the and 0:04:17.080 --> 0:04:20.120 the bond market has been unable to rally on. That is, 0:04:20.160 --> 0:04:24.200 I think that there is this fear of inflation. If 0:04:24.240 --> 0:04:27.159 you add to that one other and uh, and that 0:04:27.360 --> 0:04:30.760 is a vaccine. If you keep sending people money and 0:04:30.839 --> 0:04:33.719 you keep pumping the priming the pump, and then you 0:04:33.760 --> 0:04:35.760 get a vaccine and tell everybody, Okay, now we can 0:04:35.800 --> 0:04:39.640 go back to normal. There really underscores the idea that 0:04:39.800 --> 0:04:42.160 you could get a return of inflation. So I do 0:04:42.320 --> 0:04:45.800 see that is a plausible scenario for much higher yields 0:04:46.120 --> 0:04:51.080 as we move into So interestingly, Jim, the person we 0:04:51.160 --> 0:04:53.920 maybe should be watching that is your own power, because 0:04:54.320 --> 0:04:57.279 he has basically and his fellow Reserve is basically promised 0:04:57.400 --> 0:05:00.400 ultra loose Masuri policy for years to come. But in 0:05:00.440 --> 0:05:03.359 the scenario you just described, the bond market would be 0:05:03.360 --> 0:05:07.000 telling the Fed to actually raise rates. Now, yes, that's 0:05:07.000 --> 0:05:10.400 exactly right. Um. We all have been looking at Paul 0:05:10.560 --> 0:05:13.400 and seeing thinking that he's been the guy that saved 0:05:13.400 --> 0:05:16.520 the markets, and that's largely been the case for twenty twenty. 0:05:16.680 --> 0:05:19.640 And he's promised not to raise rates for years with 0:05:19.720 --> 0:05:22.080 an s on the end of it to come. The 0:05:22.120 --> 0:05:25.000 only thing that changes that is the market itself if 0:05:25.040 --> 0:05:28.440 it decides that it wants a change of policy. It 0:05:28.520 --> 0:05:31.160 did so in the fourth quarter of two eighteen when 0:05:31.200 --> 0:05:33.240 the FED was reducing the balance sheet and it said 0:05:33.320 --> 0:05:36.920 stop sold off the stock market really hard until Paul 0:05:37.040 --> 0:05:39.640 changed his mind and said he'd be patient and flexible 0:05:40.200 --> 0:05:42.279 if we get inflation. We could see something like that 0:05:42.320 --> 0:05:45.159 in one where the market does in a buffets and 0:05:45.200 --> 0:05:47.920 it demands a change of policy and eventually the Fed 0:05:47.960 --> 0:05:51.159 wal chorus and and give it to it. Hey, Jim, 0:05:51.160 --> 0:05:53.360 thanks so much for joining us. We appreciate it as 0:05:53.400 --> 0:05:56.840 always always appreciate your thoughts and opinions. Jim Bianco, President 0:05:56.880 --> 0:06:00.719 and founder Bianco Research. He's also a contributor to Bloom Opinion, 0:06:00.760 --> 0:06:06.279 joining us and he's based in Chicago. Well, certainly a 0:06:06.400 --> 0:06:09.599 better start to this week then we saw trading last 0:06:09.640 --> 0:06:12.560 week here as we go into the election, let's see 0:06:12.560 --> 0:06:14.520 if this has some legs so we can do that 0:06:14.800 --> 0:06:18.040 with Phil Orlando, chief equity market strategist inhead of client 0:06:18.120 --> 0:06:21.920 portfolio Management at Federated Hermes, he joins us. Phil, thanks 0:06:21.920 --> 0:06:23.800 so much for joining us here. What do you make 0:06:24.000 --> 0:06:27.400 of last week's trading? Again one of the rougher weeks. Uh, 0:06:27.440 --> 0:06:30.400 this market is seen going into an election. Well, you 0:06:30.480 --> 0:06:32.320 had a bunch of things that were going on. I 0:06:32.320 --> 0:06:34.680 guess there was a realization that we were not going 0:06:34.680 --> 0:06:38.560 to get this Phase four stimulus package that Congress has 0:06:38.600 --> 0:06:43.000 been negotiating on for months now. We've got this third 0:06:43.080 --> 0:06:46.359 wave of infections that that have spiked here as we 0:06:46.400 --> 0:06:49.320 sent our kids back to school, and you know, late August, 0:06:49.440 --> 0:06:53.600 early September, and then um, you know, investors were starting 0:06:53.640 --> 0:06:56.560 to think, well maybe we could get this this blue 0:06:56.560 --> 0:06:59.120 wave in the election this week, which means taxes and 0:06:59.200 --> 0:07:02.880 regulations are going higher. So for all those reasons, you know, 0:07:02.960 --> 0:07:06.080 you're probably down you know, let's call it ten percent 0:07:06.560 --> 0:07:10.360 excuse me from where the market peaked out on September two, 0:07:10.640 --> 0:07:15.400 where we you know, sort of bottomed out on Friday. Uh. 0:07:15.440 --> 0:07:17.320 And we're getting a little bit of a snap back today. 0:07:17.440 --> 0:07:20.800 That's good, you know, we we've gotten some better data. Um, 0:07:20.840 --> 0:07:23.760 but the big anchilada, of course, is going to be 0:07:23.840 --> 0:07:26.760 the election tomorrow and whether it turns out to be 0:07:26.760 --> 0:07:29.840 contested or not. So fell, if you're buying the market 0:07:29.880 --> 0:07:31.400 today and many people are with the S and D 0:07:31.480 --> 0:07:36.720 at one, what is your reasoning? Um, I'm not quite sure, 0:07:37.240 --> 0:07:40.720 because we've got a two thirds chance of a contested 0:07:40.760 --> 0:07:44.440 election tomorrow and the last time we had a contested 0:07:44.480 --> 0:07:48.280 election was Bush Gore in two thousand with the hanging 0:07:48.400 --> 0:07:54.080 chads in Florida, and stocks were down about from from 0:07:54.080 --> 0:07:58.200 election day into the middle of December when the Supreme 0:07:58.240 --> 0:08:02.120 Court finally came in resolved the issue. Um. So, certainly 0:08:02.200 --> 0:08:05.200 the markets over sold here in your term, but you've 0:08:05.200 --> 0:08:08.200 got to respect the fact that this is an extraordinarily 0:08:08.280 --> 0:08:11.720 contentious election. There's any number of things that can happen, 0:08:11.840 --> 0:08:14.960 some of them not particularly good in terms of the 0:08:15.000 --> 0:08:18.320 contested nature of the election, and at this point, the 0:08:18.360 --> 0:08:21.000 most prudent thing to do, in our opinion, is to 0:08:21.080 --> 0:08:24.080 just sort of stand back, um, see how it plays out, 0:08:24.200 --> 0:08:27.680 and then figure out what to do from an investment standpoint. So, 0:08:27.840 --> 0:08:29.840 what's the source of that that two thirds number. That's 0:08:29.880 --> 0:08:33.280 an interesting number, and kind of how does that How 0:08:33.280 --> 0:08:36.040 do you define a contested election? Well, the fact that 0:08:36.080 --> 0:08:38.720 we're not going to know who won the election tomorrow night, 0:08:39.280 --> 0:08:43.640 and the logic behind that very simply is this. We 0:08:43.720 --> 0:08:47.520 had thirty three million mail in ballots out of a 0:08:47.559 --> 0:08:51.880 hundred and thirty nine million total ballots cast in the election. 0:08:52.559 --> 0:08:54.760 This cycle is going to be very different because of 0:08:54.760 --> 0:08:58.240 the coronavirus. People are scared to death of showing up 0:08:58.280 --> 0:09:00.960 at their their polling place and getting infected. So the 0:09:01.040 --> 0:09:04.360 experts are telling us that instead of thirty three million 0:09:04.400 --> 0:09:07.719 mail in ballots this cycle, we're gonna double that. We're 0:09:07.720 --> 0:09:10.280 gonna be at seventy or eighty million million mail in 0:09:10.320 --> 0:09:12.599 ballots out of a hundred and fifty or hundred and 0:09:12.679 --> 0:09:16.360 sixty total million ballots cast. Literally half of the ballots 0:09:16.400 --> 0:09:18.800 could be mail in. As a result, a lot of 0:09:18.840 --> 0:09:22.360 the states are by law, are not going to be 0:09:22.480 --> 0:09:26.280 starting to count those ballots until you know tomorrow. We're 0:09:26.280 --> 0:09:29.840 not going to have those results tomorrow night. Um. And 0:09:29.840 --> 0:09:32.600 and you've got you've got a number of key swing 0:09:32.679 --> 0:09:35.520 states that that based upon the polling data, are going 0:09:35.559 --> 0:09:38.320 to be really close. We may not know the results 0:09:38.360 --> 0:09:41.800 for a couple of weeks. Um. And So given that 0:09:41.960 --> 0:09:46.320 uncertainty and equity markets hate uncertainty, that that suggests we 0:09:46.360 --> 0:09:49.400 could drift down to you know, let's call it the 0:09:49.440 --> 0:09:52.520 two hundred day moving average, you know, which is another 0:09:52.520 --> 0:09:56.559 couple hundred points below where we are right now. Where 0:09:56.600 --> 0:09:59.520 else is there a possible trade that might pay off 0:10:00.040 --> 0:10:02.520 hedging trade or some kind of a trade that works 0:10:02.760 --> 0:10:07.720 in either instance, and even if there is a contestation. Well, 0:10:07.800 --> 0:10:10.680 what we did back in I guess the middle of August, 0:10:10.840 --> 0:10:13.440 anticipating all of this, because we spent a lot of 0:10:13.480 --> 0:10:18.439 time studying, you know, the intersection between politics and Washington 0:10:18.840 --> 0:10:21.800 is we thought that technology stocks had simply run too far, 0:10:21.880 --> 0:10:25.000 too fast, and and here we are. You know, at 0:10:25.000 --> 0:10:28.200 the beginning of September, the equity market was sitting just 0:10:28.360 --> 0:10:31.280 at about the thirty six hundred level. Our full year 0:10:31.360 --> 0:10:36.280 forecast was so so and and most of that rally 0:10:36.400 --> 0:10:39.040 is being driven by tech. So we took some profits 0:10:39.040 --> 0:10:42.640 in that area, domestic large cap growth technology and and 0:10:42.880 --> 0:10:48.040 rotated those dollars into value stocks, small cap stocks, and 0:10:48.080 --> 0:10:51.720 international stocks. We think, now that the economy is back 0:10:51.720 --> 0:10:54.400 on the growth mode, that they'll start to be generating 0:10:54.760 --> 0:10:59.560 positive revenues and earnings. Again. The valuation gap between growth 0:10:59.559 --> 0:11:03.319 stocks and these other categories was massive, and we felt 0:11:03.360 --> 0:11:05.800 that that that was going to close over time. So 0:11:05.920 --> 0:11:08.920 we're going into this. We decided to lock in some profits, 0:11:09.120 --> 0:11:11.559 play defense a little bit, and then see how how 0:11:11.600 --> 0:11:15.480 this election plays out. I feel just real quickly seconds here. 0:11:16.120 --> 0:11:19.600 What's a blue wave mean for you? Well, it would 0:11:19.600 --> 0:11:23.560 mean that that the Democrats would have a legislative mandate. 0:11:23.960 --> 0:11:28.880 We're probably looking at significantly higher corporate and individual tax 0:11:28.960 --> 0:11:34.680 rates and regulations. That means that economic growth, corporate earnings growth, 0:11:34.679 --> 0:11:37.400 stock prices are going to come down. Um, so as 0:11:37.400 --> 0:11:40.679 we look at the longer term cycle, that would be 0:11:40.760 --> 0:11:47.280 less less beneficial, less favorable for equity investors. Well, Phil, 0:11:47.360 --> 0:11:49.400 we shall see. Thank you so much as always for 0:11:49.520 --> 0:11:52.120 giving us all of your ideas and your analysis. That 0:11:52.240 --> 0:11:55.040 is Phil Orlando, chief equity market strategist at Head of 0:11:55.080 --> 0:11:58.400 Client Portfolio Management at Federated Hermes. It's going to be 0:11:58.480 --> 0:12:01.560 so interesting to speak to more guests post election and 0:12:01.600 --> 0:12:04.280 see what actually happened. And Paul, I'm also looking at 0:12:04.360 --> 0:12:08.880 cmds today, the commodity pricing, and it seems like we're 0:12:09.280 --> 0:12:14.160 seeing some kind of a propane bids exactly. You know, 0:12:14.200 --> 0:12:16.960 we was out at dinner over the weekend, eating outside 0:12:17.000 --> 0:12:20.600 and boy, there are this propane heating all over the 0:12:20.640 --> 0:12:22.800 place and they were all being used and I could 0:12:22.840 --> 0:12:25.079 just see the demand for propane going through the roof 0:12:25.160 --> 0:12:29.839 here over the next several weeks. Well, it is time 0:12:29.880 --> 0:12:32.840 for Bloomberg Opinion. We're joined today by Jonathan Bernstein. He's 0:12:32.840 --> 0:12:36.319 a Bloomberg Opinion columnist covering politics and policies, out with 0:12:36.360 --> 0:12:40.120 a fascinating column today entitled Tomorrow won't be a normal 0:12:40.200 --> 0:12:43.560 election dead. It sounds like an understatement to me, Jonathan, 0:12:43.600 --> 0:12:45.320 thanks so much for joining us here. I guess I 0:12:45.360 --> 0:12:48.920 want to start with, will this election, in your opinion, 0:12:49.360 --> 0:12:52.960 be contested by President Trump? And to what extent do 0:12:52.960 --> 0:12:56.400 you think? Well, of course, first of all, he could win. 0:12:56.559 --> 0:12:59.920 I mean that is um. So put that aside about 0:13:00.240 --> 0:13:02.520 I don't know five ten percent chance that he'll actually 0:13:02.559 --> 0:13:05.760 just flat out win. If he doesn't win, Here's what 0:13:05.800 --> 0:13:08.200 we know. We know he'll claim that there's voter fraud, 0:13:08.640 --> 0:13:13.000 without evidence, without anything, because we know he'll do that 0:13:13.120 --> 0:13:16.240 because he did that four years ago, even though he won, 0:13:16.400 --> 0:13:18.920 he claimed that there was fraud against him. So pretty 0:13:18.920 --> 0:13:22.079 confident that he'll claim all kinds of fraud. He's been saying, 0:13:22.080 --> 0:13:25.640 without any evidence and against all the evidence, that mail 0:13:25.760 --> 0:13:31.480 in absentee voting is fraudulent. It isn't. Um. He's been 0:13:31.559 --> 0:13:36.400 saying that, uh, the vote should stop, the counting should 0:13:36.400 --> 0:13:40.280 stop midnight or on election day, which has never been 0:13:40.320 --> 0:13:43.720 the case before. That's not how the system works. So yeah, 0:13:43.800 --> 0:13:46.880 I mean, at the very least, he's going to complain 0:13:47.000 --> 0:13:49.839 that he was that it was stolen from him. What 0:13:50.200 --> 0:13:52.559 he will do in addition to that, he's claiming that 0:13:52.600 --> 0:13:55.880 he's gonna send out he we know he is sending 0:13:55.920 --> 0:14:00.079 out a team of lawyers to put lawsuits against the 0:14:00.200 --> 0:14:05.480 count everywhere. Can whether that will actually mount amount to anything, 0:14:06.040 --> 0:14:10.400 that's still to come. Jonathan. What a states that you're 0:14:10.440 --> 0:14:14.920 looking at in terms of a difficult process, if the 0:14:15.080 --> 0:14:19.200 count is very close, or if something needs to be contested. Well, 0:14:19.360 --> 0:14:22.800 we know that, UM, Pennsylvania in particular, which is a 0:14:22.840 --> 0:14:25.560 most likely tipping point state that is the one that 0:14:25.640 --> 0:14:28.000 puts one of the canidates or the other over the 0:14:28.040 --> 0:14:31.800 top up, is expecting to have a slow count. Um. 0:14:31.840 --> 0:14:36.920 They're doing that because Republican legislature in the state mandated 0:14:37.000 --> 0:14:41.960 a slow count. They said you can't start, um opening 0:14:41.960 --> 0:14:46.000 the envelopes and even checking to see if they're legitimate 0:14:46.080 --> 0:14:50.320 votes until election day morning. In many states, in Arizona 0:14:50.360 --> 0:14:54.120 and California, that's been going on for days already. UM. 0:14:54.160 --> 0:14:56.480 In fact, the votes are being counted in a lot 0:14:56.520 --> 0:15:02.040 of states, and so as soon as the polls closed Florida, 0:15:02.120 --> 0:15:06.400 for example, of all of the count of the early 0:15:06.760 --> 0:15:09.320 vote UM that will have it. In Texas also, But 0:15:09.320 --> 0:15:11.920 in Pennsylvania it's gonna go slow. They stay they've got 0:15:12.000 --> 0:15:15.000 enough counters that they're gonna go twenty four or seven 0:15:15.400 --> 0:15:19.200 until that the county has done. Jonathan, as you talk 0:15:19.280 --> 0:15:22.600 to folks in the political world if this is a 0:15:22.640 --> 0:15:24.520 close election, is there a sense of how long this 0:15:24.640 --> 0:15:26.960 could drag on? I guess the only real experience we 0:15:27.000 --> 0:15:31.240 have is two thousand and when it went weeks. Well, 0:15:31.240 --> 0:15:34.760 the count itself could take UM one or two weeks 0:15:34.840 --> 0:15:39.680 in the slowest states, UM. That's typical in California. If 0:15:39.920 --> 0:15:43.520 you know Pennsylvania, Wisconsin, Michigan and the states we're really 0:15:43.560 --> 0:15:46.920 looking at that might affect the outcome of the presidential 0:15:46.920 --> 0:15:50.840 election that are expected to be slow. Then lawsuits could 0:15:50.840 --> 0:15:54.560 take weeks the way that they did in UH two thousand. 0:15:54.560 --> 0:15:58.360 There could be recounts, UM, and you know, we'll see 0:15:58.360 --> 0:16:04.000 how that goes. There are constitutional and UM statutory limits 0:16:04.200 --> 0:16:07.800 as to when the electors are supposed to be appointed 0:16:07.880 --> 0:16:11.760 and then when Congress is supposed to open the electoral 0:16:11.840 --> 0:16:14.360 votes and count them and all that and that happens 0:16:14.360 --> 0:16:17.640 in December and January to come. So those are sort of, 0:16:18.200 --> 0:16:20.080 you know, guide posts that we have that we can 0:16:20.120 --> 0:16:25.360 go by. Jonathan, Voter fraud is extremely rare. We know that. 0:16:25.400 --> 0:16:28.600 We've been told that, and yet it's sometimes hard to 0:16:28.640 --> 0:16:32.200 believe when you see some reports of of something that 0:16:32.280 --> 0:16:34.880 might be fraud. Explained to us why it is rare? 0:16:34.960 --> 0:16:37.280 What what what's in place to make sure that fraud 0:16:37.320 --> 0:16:40.640 can't happen very easily? Well, for example, on you know, 0:16:41.120 --> 0:16:43.680 mail in ballots, they have the signature match and they 0:16:43.720 --> 0:16:47.160 have UM A lot of most states have it, you know, 0:16:47.200 --> 0:16:49.680 a code so they know that the ballot that came 0:16:49.680 --> 0:16:51.480 back as the same one that was sent and it 0:16:51.600 --> 0:16:56.400 was properly sent UM. And again you know, some states 0:16:56.840 --> 0:17:02.920 have been doing UM vote by mail exclusively Washington, Oregon, 0:17:03.440 --> 0:17:07.960 Utah UM for several cycles now and they haven't any 0:17:07.960 --> 0:17:11.119 problem with it, so, you know, and including Republican states. 0:17:11.119 --> 0:17:14.280 So you know, one thing that happens is young voters 0:17:14.359 --> 0:17:18.680 tend to vote last. And so because young voters these 0:17:18.720 --> 0:17:22.280 days are more likely to vote Democratic, as those votes 0:17:22.320 --> 0:17:26.639 get counted, the election night totals will start shifting. Over 0:17:26.720 --> 0:17:30.879 the next several days to Democrats, and you know, Republicans say, oh, 0:17:30.880 --> 0:17:33.919 there's something wrong with that, but that happens in Republican 0:17:34.080 --> 0:17:37.880 run states like Utah and Arizona, which have a lot 0:17:37.880 --> 0:17:42.159 of absentee voting, the same thing happened. So obviously Republicans 0:17:42.160 --> 0:17:44.280 are not cheating in favor of Democrats in those days. 0:17:44.359 --> 0:17:48.040 It's just how the system works. Jonathan, is it fair 0:17:48.080 --> 0:17:52.399 to assume, I mean, if it's a close election, I 0:17:52.440 --> 0:17:55.119 guess the default is it will be contested. What's the 0:17:55.160 --> 0:18:00.800 scenario where you know the whole contestability of it. It 0:18:00.880 --> 0:18:03.000 really kind of goes away that, in fact, we will 0:18:03.000 --> 0:18:07.840 know something late tomorrow night. Well, it could get contested 0:18:07.920 --> 0:18:10.560 even though we know something. You know, Trump is going 0:18:10.600 --> 0:18:12.280 to say that he was ripped off no matter what. 0:18:12.960 --> 0:18:17.040 Um so. But it is certainly possible. You know, Florida 0:18:17.119 --> 0:18:20.400 counts its balance very quickly. They could have a result 0:18:20.880 --> 0:18:25.160 very quickly tomorrow night. And if Joe Biden wins in Florida, 0:18:25.720 --> 0:18:28.480 there's no realistic chance that Trump is going to win 0:18:28.480 --> 0:18:31.399 the electoral College after that. So, and there's other states 0:18:31.440 --> 0:18:35.960 that also have quick counts, and if Biden wins, you know, 0:18:36.080 --> 0:18:38.280 right now, Biden looks like he's winning by about eight 0:18:38.280 --> 0:18:40.920 and a half points nationally. If it turns out that 0:18:40.920 --> 0:18:43.840 that's the case, he almost certainly is going to win 0:18:43.840 --> 0:18:47.080 the electoral College by a comfortable margin. And we'll basically 0:18:47.119 --> 0:18:49.960 know that at that point, there's a question of, well, 0:18:50.440 --> 0:18:55.240 to what extent does Trump try to throw out legitimate balance, 0:18:55.280 --> 0:18:57.600 which they're trying to do. For example, in Texas right 0:18:57.640 --> 0:19:01.000 now some Republicans are UM and so it could be 0:19:01.040 --> 0:19:06.560 contested without having a really good chance of succeeding. Jonathan, 0:19:06.560 --> 0:19:08.600 you do say in your column that President Trump's bark 0:19:08.680 --> 0:19:11.480 is often worse than his bite. How does that play 0:19:11.480 --> 0:19:14.080 out here, because you know, if he barks here there's 0:19:14.080 --> 0:19:16.360 a great chance of goes to the Supreme Court. Well, 0:19:16.440 --> 0:19:19.400 it all depends on what exactly he does and what happens, 0:19:19.840 --> 0:19:23.919 so that you know, for example, if Florida comes in 0:19:24.040 --> 0:19:28.800 quickly for Biden, if Biden wins by you know several states, 0:19:29.640 --> 0:19:33.400 Trump may continue to say it's fraud, it shouldn't ever, 0:19:33.680 --> 0:19:35.040 you know, he shouldn't have been allowed to run in 0:19:35.080 --> 0:19:37.320 the first place, and all that. He will probably say 0:19:37.359 --> 0:19:40.560 that up to elect up to inauguration day and past that, 0:19:41.040 --> 0:19:44.000 um but he may not actually be doing much about him. 0:19:44.040 --> 0:19:46.640 It's possible the courts will look at some of these 0:19:46.680 --> 0:19:51.240 absurd lawsuits um saying that legitimate votes just shouldn't count 0:19:51.280 --> 0:19:53.800 just because Trump doesn't like them to be counted, and 0:19:53.840 --> 0:19:55.600 they may toss them out, and it may not go 0:19:55.680 --> 0:19:58.160 to the Supreme Court. It may not go anywhere at all. 0:19:58.600 --> 0:20:02.240 You know, it could turn out that it goes to 0:20:02.280 --> 0:20:06.320 the courts and the courts make um new rules as 0:20:06.320 --> 0:20:09.480 they go along, as they did in the Wisconsin case 0:20:09.760 --> 0:20:13.880 last week or Minnesota case last week. UM. So we'll see, 0:20:13.960 --> 0:20:16.119 you know, what will happen. But the other part of 0:20:16.119 --> 0:20:18.960 this is we're gonna hear a lot of rumors about 0:20:18.960 --> 0:20:21.760 fraud and all that on election day. Trying not to 0:20:21.800 --> 0:20:25.600 get ahead of ourselves. Yes, Jonathan, thank you great reminder 0:20:25.640 --> 0:20:28.480 in today's column. Tomorrow won't be a normal election day. 0:20:28.520 --> 0:20:34.520 Jonathan Bernstein, Bloomberg Opinion. Clearly there's a lot on the 0:20:34.520 --> 0:20:37.760 line for the selection. Everybody, it seems like, has a 0:20:37.880 --> 0:20:41.040 very very keen interest on the outcome of the selection. 0:20:41.080 --> 0:20:45.400 That includes environmentalists as well. To get the latest on that, 0:20:45.440 --> 0:20:49.159 we welcome our next guest, Dr a Shot Rathi, Climate 0:20:49.200 --> 0:20:53.880 and Enjury Porter for Bloomberg Green based in London. UM, actually, 0:20:53.960 --> 0:20:56.080 thanks so much for joining us here. It seems, I 0:20:56.119 --> 0:20:59.600 guess cut and dry that if you're an environmentalist, if 0:20:59.600 --> 0:21:03.520 you're thinking about the environment, you're pulling really hard for 0:21:03.640 --> 0:21:06.879 not just former Vice President Joe Biden, but a blue 0:21:06.880 --> 0:21:09.680 wave in the Senate. Is that as clear as it 0:21:09.680 --> 0:21:11.920 convey is that is easy to analyze as it conveyors 0:21:12.000 --> 0:21:16.520 or other differences there? I think you nailed it. That 0:21:16.800 --> 0:21:20.040 is really the clearest distinction in this election, and I 0:21:20.119 --> 0:21:23.000 don't think it has ever been as clear as you've 0:21:23.040 --> 0:21:26.720 laid it out. Give us a little more detail on that. 0:21:28.440 --> 0:21:31.200 So what we know is that Joe Biden has put 0:21:31.280 --> 0:21:35.399 forth with what is the most ambitious climate plan that 0:21:35.480 --> 0:21:39.960 any US presidential candidate has put forth so far. Among 0:21:40.000 --> 0:21:42.240 the details are that he's going to spend about it 0:21:42.480 --> 0:21:47.240 about two trillion dollars trying to reduce emissions. First step 0:21:47.280 --> 0:21:50.920 will be to get carbon free electricity by twenty five 0:21:51.480 --> 0:21:56.159 across the United States, build out a charging network for 0:21:56.200 --> 0:22:00.800 electric cars, and to retrofit homes with better installations so 0:22:00.880 --> 0:22:06.000 that their energies falls and their emissions decline. On Trump's side, 0:22:06.320 --> 0:22:08.920 what we've known from the past four years is that 0:22:09.359 --> 0:22:11.080 much of the work that has gone on through the 0:22:11.119 --> 0:22:16.200 administration is to roll back regulations for fossil fuel industries 0:22:16.600 --> 0:22:21.000 and open up new areas around the country for extraction 0:22:21.119 --> 0:22:25.080 of fossil fuels. Among the few things that it has 0:22:25.119 --> 0:22:28.720 done to try and reduce emissions um is to try 0:22:28.800 --> 0:22:32.399 and create this plan to plant a trilliant trees or 0:22:32.440 --> 0:22:36.240 at least join a global plan of planting trees, and 0:22:36.320 --> 0:22:39.960 to support a technology called carbon capture, where you capture 0:22:40.000 --> 0:22:43.399 emissions from a power plant and then bury them deep underground. 0:22:44.520 --> 0:22:47.600 But the distinction is very very clear. The science says 0:22:47.640 --> 0:22:51.400 we need to cut emissions really quickly, and Joe Biden's 0:22:51.400 --> 0:22:56.320