1 00:00:00,680 --> 00:00:12,799 Speaker 1: Yeah, Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene 2 00:00:12,800 --> 00:00:16,239 Speaker 1: with David Gura. Daily we bring you insight from the 3 00:00:16,239 --> 00:00:21,640 Speaker 1: best of economics, finance, investment, and international relations. Find Bloomberg 4 00:00:21,720 --> 00:00:26,640 Speaker 1: Surveillance on Apple Podcasts, SoundCloud, Bloomberg dot Com and of 5 00:00:26,680 --> 00:00:33,599 Speaker 1: course on the Bloomberg David Gerr and Tom Keane Here 6 00:00:33,640 --> 00:00:36,239 Speaker 1: as we look ahead to two thousand and eighteen, and 7 00:00:36,280 --> 00:00:38,280 Speaker 1: it is good to do that with Axel Murk of 8 00:00:38,360 --> 00:00:42,680 Speaker 1: work Investments of course, with a real focus on dollar dynamics. 9 00:00:43,360 --> 00:00:46,640 Speaker 1: Um Kama Charmer was with us from Bank of American 10 00:00:46,720 --> 00:00:50,120 Speaker 1: Maryland today and he really discussed the ambiguity of the 11 00:00:50,159 --> 00:00:53,560 Speaker 1: dollar right now. Is it imbute, is it ambiguous dollar 12 00:00:53,640 --> 00:00:56,760 Speaker 1: direction right now or do you have a strong conviction 13 00:00:56,920 --> 00:00:59,840 Speaker 1: in the next year. Well, one of the themes I've 14 00:00:59,880 --> 00:01:01,800 Speaker 1: had at is that we have far more advanced in 15 00:01:01,840 --> 00:01:04,080 Speaker 1: the hiking second the US and in your zone. But 16 00:01:04,200 --> 00:01:06,480 Speaker 1: unlike what everybody else is saying that the dollars should 17 00:01:06,480 --> 00:01:08,640 Speaker 1: go to the roof because of that, I'm actually thinking 18 00:01:08,680 --> 00:01:11,759 Speaker 1: the opposite. I think quantitative tightening if anything, is going 19 00:01:11,760 --> 00:01:14,080 Speaker 1: to expand with premia, which is going to cause treasuries 20 00:01:14,120 --> 00:01:16,640 Speaker 1: to rally, which means the interstructor referention is going to 21 00:01:16,720 --> 00:01:19,679 Speaker 1: be get less. I also think Drugg is hopelessly behind, 22 00:01:19,840 --> 00:01:22,080 Speaker 1: and while he's not going to change his mind tomorrow, 23 00:01:22,240 --> 00:01:24,480 Speaker 1: it means the dynamics are shifting more favor of the 24 00:01:24,520 --> 00:01:27,720 Speaker 1: europe Treasury is rarely. We've got a collar treasury rarely 25 00:01:27,800 --> 00:01:30,320 Speaker 1: up to two fifty to sixty, and then we've got 26 00:01:30,400 --> 00:01:32,840 Speaker 1: others that says suggests we could migrate to three percent. 27 00:01:32,920 --> 00:01:34,920 Speaker 1: Where are you? I don't think we're gonna go that 28 00:01:35,000 --> 00:01:37,759 Speaker 1: high anytime soon. And partially is that at some point 29 00:01:37,800 --> 00:01:40,039 Speaker 1: we're gonna get volatilion the markets. That's gonna get treasures 30 00:01:40,080 --> 00:01:42,840 Speaker 1: to rally. I think the tax reform is going to 31 00:01:42,920 --> 00:01:46,160 Speaker 1: be disappointing and uh, and just look at the election 32 00:01:46,240 --> 00:01:48,400 Speaker 1: last night. I think that Republicans are going to be 33 00:01:48,480 --> 00:01:52,280 Speaker 1: less inclined to kind of align with the the current administration. 34 00:01:52,520 --> 00:01:55,360 Speaker 1: And so all of that doesn't speak for higher yells. Now, 35 00:01:55,800 --> 00:01:58,080 Speaker 1: maybe maybe inflation near pressure is going to pick up 36 00:01:58,120 --> 00:02:00,880 Speaker 1: a tad, but I do think that the um if 37 00:02:00,920 --> 00:02:03,640 Speaker 1: the feed is an autopilot, that means higher rates that's 38 00:02:03,640 --> 00:02:05,800 Speaker 1: going to flatten the yield curve and the flattened yeld 39 00:02:05,800 --> 00:02:08,520 Speaker 1: curve can happen various ways, but I don't think treasures 40 00:02:08,520 --> 00:02:10,959 Speaker 1: are gonna actually move all that much. But later this morning, 41 00:02:10,960 --> 00:02:13,040 Speaker 1: Michael McKee is going to sit down with the Steve Manusian, 42 00:02:13,120 --> 00:02:14,760 Speaker 1: and I imagine a question he could ask. I don't 43 00:02:14,760 --> 00:02:15,959 Speaker 1: know if he's gonna ask it, is that what this 44 00:02:16,040 --> 00:02:20,000 Speaker 1: administration's dollar policy is? Have you detected the change in it? 45 00:02:20,040 --> 00:02:21,960 Speaker 1: Do you have a clear sense of whether we're seeing 46 00:02:21,960 --> 00:02:24,519 Speaker 1: a continuation of that Ruben dollar policy. Well, it used 47 00:02:24,560 --> 00:02:26,520 Speaker 1: to be after rum in any way that if you 48 00:02:26,520 --> 00:02:28,079 Speaker 1: were able to aufer those words that we have a 49 00:02:28,080 --> 00:02:31,560 Speaker 1: strong dollar policy, that you qualified for the job. Um. 50 00:02:31,639 --> 00:02:34,520 Speaker 1: And and nowadays those the treasure sectary minution has has 51 00:02:34,520 --> 00:02:36,280 Speaker 1: a stronger view of what they want to do. Clearly 52 00:02:36,360 --> 00:02:38,399 Speaker 1: they want to boost the exports, so clearly they want 53 00:02:38,400 --> 00:02:41,239 Speaker 1: to have a week or dollar from that point of view. Um. 54 00:02:41,360 --> 00:02:42,880 Speaker 1: But they of course they want to always want to 55 00:02:42,919 --> 00:02:46,160 Speaker 1: have it both ways, and and so ultimately the policies matter. 56 00:02:46,240 --> 00:02:47,640 Speaker 1: And he had a quick question, is that we're going 57 00:02:47,680 --> 00:02:49,320 Speaker 1: to get a trade war or not? Um? Is it 58 00:02:49,360 --> 00:02:52,400 Speaker 1: all just talk or something gonna happen? Um. I continue 59 00:02:52,440 --> 00:02:54,240 Speaker 1: to think the biggest tail risk. I'm not saying it's 60 00:02:54,240 --> 00:02:56,760 Speaker 1: the most likely risk, because but something's gonna gong with China, 61 00:02:56,919 --> 00:02:58,800 Speaker 1: some dispute over the South China Sea, and they're going 62 00:02:58,840 --> 00:03:01,640 Speaker 1: to retaliate with some trade policy. Right now. Of course, 63 00:03:01,680 --> 00:03:04,000 Speaker 1: everybody is trying to put up a happy face with 64 00:03:04,000 --> 00:03:06,079 Speaker 1: with the president's visit Overada, and so in the meet Tom, 65 00:03:06,120 --> 00:03:08,240 Speaker 1: there's nothing on the horizon. We're broadcasting a day from 66 00:03:08,240 --> 00:03:10,000 Speaker 1: the yearhead. Someone I saw from across the way that 67 00:03:10,040 --> 00:03:11,680 Speaker 1: you were sitting down with David co talks someone I 68 00:03:11,680 --> 00:03:16,200 Speaker 1: know he is thinking a lot about cryptocurrencies versus gold. Uh, 69 00:03:16,240 --> 00:03:18,240 Speaker 1: he's considering himself maybe a bit of a neo Luddite 70 00:03:18,240 --> 00:03:21,600 Speaker 1: here as he struggles to embrace cryptocurrencies and bitcoin in particular. 71 00:03:21,720 --> 00:03:23,720 Speaker 1: Where do you fall in all of this? Probably in this, 72 00:03:23,800 --> 00:03:26,639 Speaker 1: in this still nascent argument about the worth of cryptocurrency, 73 00:03:26,760 --> 00:03:29,880 Speaker 1: I'm based in Santrtisco. I get called about cryptocurrency's probably 74 00:03:29,960 --> 00:03:33,560 Speaker 1: once a week by venture capitalists, loyals, all kinds of folks. Um. 75 00:03:33,600 --> 00:03:37,160 Speaker 1: I do think if you had a bitcoin tied to gold, say, um, 76 00:03:37,200 --> 00:03:39,720 Speaker 1: it's an interesting way to to trade it. I think 77 00:03:39,720 --> 00:03:43,160 Speaker 1: the blockchain technology is fascinating A bitcoin bad by nothing. 78 00:03:43,600 --> 00:03:45,920 Speaker 1: It's ninety nine all over again. That's that's kind of 79 00:03:45,920 --> 00:03:48,240 Speaker 1: fun too, if you want to get into adrenaline. Is 80 00:03:48,480 --> 00:03:52,320 Speaker 1: ninety nine all over again? Or is it seventeen thirty 81 00:03:52,360 --> 00:03:56,280 Speaker 1: whatever in tulips all over again? Which is it? Well, 82 00:03:56,400 --> 00:03:59,360 Speaker 1: the tulips without to Bitcoin. That said, I compare a 83 00:03:59,360 --> 00:04:02,480 Speaker 1: cryptocurren is a bit like Netscape to the Internet. Netscape 84 00:04:02,520 --> 00:04:05,520 Speaker 1: isn't around anymore, but the Internet certainly is. And so 85 00:04:05,560 --> 00:04:07,000 Speaker 1: I think there's a lot to be done with a 86 00:04:07,040 --> 00:04:09,680 Speaker 1: blockchain technology. There's gonna be a lot of this hype 87 00:04:09,720 --> 00:04:11,760 Speaker 1: is going to translate the value somewhere. Go on your 88 00:04:11,840 --> 00:04:14,600 Speaker 1: hard currency, guy, can you go along Bitcoin? Let's cut 89 00:04:14,640 --> 00:04:17,279 Speaker 1: to this. It's not a currency, uh, And so it is. 90 00:04:17,360 --> 00:04:19,760 Speaker 1: It is something called the currency. Um. It is a 91 00:04:19,760 --> 00:04:22,480 Speaker 1: TOOLIP and that's gonna well, just like many fiat currencies 92 00:04:22,520 --> 00:04:25,039 Speaker 1: will UM. But I think the question David had is 93 00:04:25,360 --> 00:04:27,920 Speaker 1: linking it to something else. There is a blockchain technology 94 00:04:28,240 --> 00:04:33,200 Speaker 1: linking contracts um to to the decentralized ledger. And you 95 00:04:33,240 --> 00:04:35,159 Speaker 1: can do that with securities. You can do that with gold, 96 00:04:35,200 --> 00:04:37,560 Speaker 1: you can do that with the real estate. Um. Not 97 00:04:37,640 --> 00:04:40,279 Speaker 1: all of these things are gonna happen but very smart 98 00:04:40,320 --> 00:04:43,880 Speaker 1: minds are putting the brain into it and and something 99 00:04:43,920 --> 00:04:45,440 Speaker 1: is going to come of it. I don't think there's 100 00:04:45,440 --> 00:04:48,719 Speaker 1: any stock or cryptocurrency you can buy right now due 101 00:04:48,720 --> 00:04:50,960 Speaker 1: to to enjoy that, especially not a good value that 102 00:04:51,000 --> 00:04:53,680 Speaker 1: I'm not suggesting anybody by a bitcoin um but if 103 00:04:53,680 --> 00:04:56,719 Speaker 1: I were to, for example, one thing I've been contemplating 104 00:04:56,800 --> 00:05:00,000 Speaker 1: is built an interface between a cryptocontract and to secure 105 00:05:00,000 --> 00:05:04,279 Speaker 1: at these world UM say have a UM gold etf 106 00:05:04,520 --> 00:05:06,600 Speaker 1: link it to a crypto and then go to your 107 00:05:06,600 --> 00:05:08,159 Speaker 1: broke and saying, hey, I want to take delivery and 108 00:05:08,200 --> 00:05:10,760 Speaker 1: facilitate that. That would say something of interest. You know. 109 00:05:10,760 --> 00:05:13,200 Speaker 1: It used to be easier, but it shares the general 110 00:05:13,240 --> 00:05:19,360 Speaker 1: electric and the president is In China, I did trade 111 00:05:19,360 --> 00:05:22,560 Speaker 1: weighted rend mimby today, which is up up. It's a 112 00:05:22,680 --> 00:05:25,960 Speaker 1: thirty three percent trade weted red mimby. Since that a 113 00:05:26,040 --> 00:05:29,760 Speaker 1: storic July two thousand five days, the Chinese done their 114 00:05:29,920 --> 00:05:35,159 Speaker 1: fair share to go strong you wan weaker dollar. The 115 00:05:35,279 --> 00:05:38,000 Speaker 1: Chinese just had the People's Congress. They wanted everything to 116 00:05:38,040 --> 00:05:41,080 Speaker 1: look good. They wanted a strong currency, and that's the 117 00:05:41,080 --> 00:05:42,880 Speaker 1: policy of the day. When you look at China, it's 118 00:05:42,920 --> 00:05:46,000 Speaker 1: always a step forward and reform and then two steps backwards. 119 00:05:46,000 --> 00:05:48,719 Speaker 1: As long as the economy is running, they talk open markets. 120 00:05:48,760 --> 00:05:51,120 Speaker 1: I mean, the most telling thing was that President she 121 00:05:51,440 --> 00:05:53,920 Speaker 1: had a speech about opening the world up, and then 122 00:05:53,960 --> 00:05:55,560 Speaker 1: towards the end of the speech, um in the p 123 00:05:55,720 --> 00:05:57,440 Speaker 1: F that there was market intervention to make sure the 124 00:05:57,480 --> 00:06:00,600 Speaker 1: market goes higher. Now that is China for you. Um, 125 00:06:00,640 --> 00:06:04,120 Speaker 1: it is a market that's still not being driven by 126 00:06:04,200 --> 00:06:06,840 Speaker 1: the bye, by the by the broad masses, but by 127 00:06:06,880 --> 00:06:09,279 Speaker 1: the fame all drive. And as long as that's the case, 128 00:06:09,360 --> 00:06:12,200 Speaker 1: it's anew unsustainable in the right here where it's right now, 129 00:06:12,279 --> 00:06:15,040 Speaker 1: Axel murk out a Brown University. And of course, as 130 00:06:15,040 --> 00:06:18,080 Speaker 1: you mentioned earlier abouting in San Francisco, I want to 131 00:06:18,160 --> 00:06:20,440 Speaker 1: rip up the script here for a couple of minutes. 132 00:06:21,000 --> 00:06:24,479 Speaker 1: How do mere mortals live in your San Francisco. You're 133 00:06:24,520 --> 00:06:28,200 Speaker 1: a prosperous guy. And this has come up in conversation 134 00:06:28,600 --> 00:06:32,120 Speaker 1: four times in the last ten days of of well 135 00:06:32,160 --> 00:06:35,800 Speaker 1: meeting people saying ignorance, ignation, just got a job in 136 00:06:35,880 --> 00:06:39,600 Speaker 1: San Francisco. Where are they gonna live kind of thing. 137 00:06:39,640 --> 00:06:41,760 Speaker 1: I mean, there was a photo on Twitter of a 138 00:06:41,800 --> 00:06:44,280 Speaker 1: woman with a legitimate job sleeping in a car in 139 00:06:44,360 --> 00:06:47,120 Speaker 1: a parking garage. And I'm not talking about homeless. I'm 140 00:06:47,160 --> 00:06:51,600 Speaker 1: talking about you know, professional class slash front class. What's 141 00:06:51,600 --> 00:06:54,800 Speaker 1: gonna happen to your city? Well, I live in about 142 00:06:54,800 --> 00:06:57,560 Speaker 1: what in Sanma says good fellow who cuts my hYP periodically, 143 00:06:57,600 --> 00:06:59,920 Speaker 1: lived in Tracy. That's like a ninety minute drive a 144 00:07:00,120 --> 00:07:03,880 Speaker 1: good day. Um. And and absolutely if you if you'll 145 00:07:03,920 --> 00:07:07,200 Speaker 1: firefight a police officer, it is very difficult to live locally. 146 00:07:07,240 --> 00:07:10,920 Speaker 1: Any service provider cannot. So yeah, price is going to 147 00:07:11,040 --> 00:07:13,280 Speaker 1: go up. Um. But at the same time, yes, you 148 00:07:13,360 --> 00:07:16,080 Speaker 1: do have people sleep and my my daughter, one of 149 00:07:16,120 --> 00:07:18,280 Speaker 1: my kids, is going to community colleges high school student 150 00:07:18,560 --> 00:07:21,560 Speaker 1: and a third of the students don't have a permanent home. 151 00:07:21,760 --> 00:07:24,720 Speaker 1: They do couch not they don't sleep under the bridge, 152 00:07:24,800 --> 00:07:28,280 Speaker 1: but they hop between friends to to just get by 153 00:07:28,400 --> 00:07:32,600 Speaker 1: and did my first three years exactly. But it's happening 154 00:07:32,600 --> 00:07:34,400 Speaker 1: to an ever greater part of the population, not just 155 00:07:34,520 --> 00:07:36,600 Speaker 1: down the privileged compaims of the world. Are you seeing 156 00:07:36,600 --> 00:07:38,440 Speaker 1: cultural fishers as a result of that? I think back 157 00:07:38,480 --> 00:07:41,160 Speaker 1: a year year plus ago when we had a very 158 00:07:41,200 --> 00:07:44,320 Speaker 1: stark divide between uh, those new wealthy people in San 159 00:07:44,360 --> 00:07:46,200 Speaker 1: Francisco and those who were in these service jobs, who've 160 00:07:46,200 --> 00:07:47,600 Speaker 1: been in San Francisco for a long time, who were 161 00:07:47,600 --> 00:07:49,720 Speaker 1: in the artist community. Are we seeing that play out 162 00:07:49,720 --> 00:07:53,200 Speaker 1: as acutely as it did. I'm probably not the expert 163 00:07:53,280 --> 00:07:56,080 Speaker 1: on on local politics in San Francisco from what I 164 00:07:56,120 --> 00:07:58,320 Speaker 1: can tell. Although I listened to blew my radios and 165 00:07:58,640 --> 00:08:03,440 Speaker 1: the local RADIANC I already these things. There was this 166 00:08:03,520 --> 00:08:06,560 Speaker 1: big wave about the Google bosses and so forth, and 167 00:08:06,600 --> 00:08:10,320 Speaker 1: clearly they always discussions dispute that said home would home 168 00:08:10,560 --> 00:08:13,320 Speaker 1: a San Francisco has always been a magnet for the 169 00:08:13,400 --> 00:08:16,160 Speaker 1: homeless and others because they provide many services amongst others, 170 00:08:16,200 --> 00:08:18,440 Speaker 1: and so day it is very, very visible, especially when 171 00:08:18,440 --> 00:08:20,760 Speaker 1: I walked to the office every morning and before dawn. 172 00:08:21,120 --> 00:08:24,840 Speaker 1: Um it is. It is very the contrast of various 173 00:08:24,880 --> 00:08:26,880 Speaker 1: one final question when you're on it. So we get 174 00:08:26,880 --> 00:08:31,880 Speaker 1: a huge turnout from the Austrian economic screw. They love 175 00:08:31,920 --> 00:08:35,240 Speaker 1: it when you come on. Do you sense any Austrian 176 00:08:35,480 --> 00:08:40,400 Speaker 1: in the new Federal Reserve? Absolutely not, Mr Powell. I 177 00:08:40,520 --> 00:08:43,760 Speaker 1: down't doubt his intellect, I down't doubt his integrity, but 178 00:08:43,880 --> 00:08:46,800 Speaker 1: I happen to believe he's completely agnostic to monetary a 179 00:08:46,840 --> 00:08:48,439 Speaker 1: policy and what I mean with that, does that mean 180 00:08:48,440 --> 00:08:51,880 Speaker 1: he can become Austrians And it means it means that 181 00:08:51,920 --> 00:08:54,800 Speaker 1: he's on autopilot, and if something happens, autopia is gonna 182 00:08:54,800 --> 00:08:56,920 Speaker 1: come off, he's gonna have a route awakening. And what 183 00:08:56,960 --> 00:09:00,320 Speaker 1: I mean is that historically the lawyers on the govern 184 00:09:00,480 --> 00:09:02,959 Speaker 1: us who allaw us, which on most of them, historically, 185 00:09:03,240 --> 00:09:05,560 Speaker 1: they don't know monitory policy. They don't have their own staff, 186 00:09:05,720 --> 00:09:07,640 Speaker 1: so they look at awe at the presentation of the 187 00:09:07,760 --> 00:09:09,800 Speaker 1: fat and sign of what the chair does. Now the 188 00:09:09,800 --> 00:09:11,960 Speaker 1: guys in charge, and I've no doubt he'll do something, 189 00:09:12,240 --> 00:09:14,319 Speaker 1: but I don't think he has experienced that. If everybody 190 00:09:14,320 --> 00:09:16,480 Speaker 1: says he does, um, it's going to be very interesting 191 00:09:16,520 --> 00:09:18,680 Speaker 1: securities right over here in our food parts. So they're 192 00:09:18,679 --> 00:09:22,160 Speaker 1: when to come get you. Is the Phillips curve dead? Yes? 193 00:09:23,040 --> 00:09:27,480 Speaker 1: In some ways. How would you respond to Mr Manutian 194 00:09:27,559 --> 00:09:30,920 Speaker 1: today saying that Philip's curve is alive and will Well, 195 00:09:30,960 --> 00:09:32,920 Speaker 1: he's a trade of secretary. I guess his word counts, 196 00:09:33,240 --> 00:09:35,199 Speaker 1: but I I can trade. I can buy ourselves, so 197 00:09:35,320 --> 00:09:37,959 Speaker 1: I can always take an opposing you. It's very good, excellent, 198 00:09:38,160 --> 00:09:40,280 Speaker 1: Thank you so much for joining us on the dollar 199 00:09:41,120 --> 00:09:43,840 Speaker 1: with some thoughts there of a lesser, not strong dolor 200 00:09:43,920 --> 00:09:46,319 Speaker 1: and of course that somewhere those are great comments in 201 00:09:46,400 --> 00:09:50,920 Speaker 1: San Francisco. It's the brightest of the social tests of 202 00:09:50,920 --> 00:09:53,560 Speaker 1: our society. No one, no one can look. Then we've 203 00:09:53,559 --> 00:09:55,320 Speaker 1: talked about in the context of real estate. People are 204 00:09:55,320 --> 00:09:59,520 Speaker 1: getting out of college. I want to move there. Well, exactly. 205 00:10:12,120 --> 00:10:14,960 Speaker 1: This is a very important interview, particularly those at Global 206 00:10:15,000 --> 00:10:18,280 Speaker 1: Wall Street. You know Stephen Major, he's an HSBC and 207 00:10:18,360 --> 00:10:21,680 Speaker 1: he has been uh smarter than most about saying no 208 00:10:22,080 --> 00:10:24,440 Speaker 1: rates won't go up. Now is a particularly good time 209 00:10:24,880 --> 00:10:27,320 Speaker 1: to speak to Mr Major from our studios in London. 210 00:10:27,720 --> 00:10:30,599 Speaker 1: UM this morning. This is people begin to percolate of 211 00:10:30,679 --> 00:10:34,839 Speaker 1: a higher rate environment. Stephen, have you changed your call? 212 00:10:35,200 --> 00:10:37,360 Speaker 1: Do you give way to two point four, two point 213 00:10:37,440 --> 00:10:42,400 Speaker 1: six or three percent ten year yield? No? Our forecast, 214 00:10:42,480 --> 00:10:44,880 Speaker 1: but the end of two thousand eighteen, Tommy is two 215 00:10:44,960 --> 00:10:48,800 Speaker 1: point three UM. We haven't hits our one point nine 216 00:10:49,040 --> 00:10:52,959 Speaker 1: and seventeen forecast, but we're not there yet. It's still 217 00:10:53,000 --> 00:10:56,000 Speaker 1: possibilit of course. But I I I completely reject the 218 00:10:56,040 --> 00:10:59,320 Speaker 1: idea that yields are going higher. People have been calling 219 00:10:59,440 --> 00:11:03,040 Speaker 1: for two and a half to sixty UM from a 220 00:11:03,080 --> 00:11:05,400 Speaker 1: break above two forty. At the start of the year, 221 00:11:05,440 --> 00:11:07,600 Speaker 1: people were calling a break of to sixty would mean 222 00:11:07,640 --> 00:11:10,600 Speaker 1: three percent or three and a half and they're going 223 00:11:10,640 --> 00:11:12,800 Speaker 1: to have to wait a long time. What is the 224 00:11:12,840 --> 00:11:15,480 Speaker 1: why of that? Is it an economic analysis? I think 225 00:11:15,480 --> 00:11:18,520 Speaker 1: a Michael foul yet JP Morrigan with one point four 226 00:11:18,600 --> 00:11:22,280 Speaker 1: potential g d P? Is it a yield analysis? Is 227 00:11:22,440 --> 00:11:25,480 Speaker 1: fluor dynamics? What's the y well? The ten year rate 228 00:11:25,559 --> 00:11:28,760 Speaker 1: is a function of longer term growth. It's much more 229 00:11:28,800 --> 00:11:32,319 Speaker 1: global in nature. So the Fed doesn't have a great 230 00:11:32,360 --> 00:11:35,319 Speaker 1: deal of influence over the ten year rate. Ten year 231 00:11:35,360 --> 00:11:38,240 Speaker 1: bonds of priced off of the five year rate five 232 00:11:38,320 --> 00:11:42,040 Speaker 1: year forward if you like. So we're thinking about five 233 00:11:42,120 --> 00:11:45,800 Speaker 1: year start for a five year bond, the yield shouldn't 234 00:11:45,840 --> 00:11:49,560 Speaker 1: be that dramatically above current levels. And I think this 235 00:11:49,640 --> 00:11:52,560 Speaker 1: is what people are missing, is that the Feds almost 236 00:11:52,559 --> 00:11:57,840 Speaker 1: certainly gonna experience a turn in the economy to the 237 00:11:57,920 --> 00:12:01,120 Speaker 1: worse at some point in the next few years. The 238 00:12:01,200 --> 00:12:04,240 Speaker 1: peak in the rate cycle is much nearer than they 239 00:12:04,280 --> 00:12:08,440 Speaker 1: probably want to think, so in five years time we 240 00:12:08,480 --> 00:12:12,040 Speaker 1: could well be in an easing environment. In that case, 241 00:12:12,160 --> 00:12:14,400 Speaker 1: it's appropriate to look at five year rates that are 242 00:12:14,480 --> 00:12:18,079 Speaker 1: lower than today's spot rate. That's how you can get 243 00:12:18,280 --> 00:12:20,360 Speaker 1: a ten year year that doesn't want to go above 244 00:12:20,559 --> 00:12:23,400 Speaker 1: two point four And to me, we're stuck in that 245 00:12:23,559 --> 00:12:26,800 Speaker 1: range maybe two percent to two and a half for 246 00:12:26,840 --> 00:12:28,920 Speaker 1: the next year or so. And Stephen, let me ask 247 00:12:28,960 --> 00:12:31,439 Speaker 1: you about how your prices in geo political risk at 248 00:12:31,440 --> 00:12:33,520 Speaker 1: this point in Europe in particularly, been watching what's been 249 00:12:33,520 --> 00:12:36,920 Speaker 1: happening in northern Spain, certainly paying attention to Italy as well. 250 00:12:36,920 --> 00:12:39,000 Speaker 1: How much other this should we make, How big a 251 00:12:39,000 --> 00:12:40,800 Speaker 1: deal is what we've seen that in those two countries 252 00:12:40,800 --> 00:12:42,959 Speaker 1: in particular, what we have to we have to build 253 00:12:42,960 --> 00:12:45,400 Speaker 1: an internal process, there's no doubt about that. But just 254 00:12:45,400 --> 00:12:49,880 Speaker 1: just just as a quick comment on this, the ten 255 00:12:49,960 --> 00:12:53,400 Speaker 1: year rate ten years forward, so again, the ten year 256 00:12:53,480 --> 00:12:56,640 Speaker 1: rates starting in ten years time has gone below four 257 00:12:56,720 --> 00:13:01,080 Speaker 1: percent and is pushing three seventy in both Italy and Spain. 258 00:13:01,360 --> 00:13:04,040 Speaker 1: And this has been happening in the last month or so. 259 00:13:04,040 --> 00:13:06,640 Speaker 1: So whilst you've got all of the disruption that you 260 00:13:06,679 --> 00:13:10,920 Speaker 1: can imagine in Spain around Catalan in particular, and the 261 00:13:11,040 --> 00:13:15,400 Speaker 1: concern about Italian politics for two thousand and eighteen, the 262 00:13:15,480 --> 00:13:19,320 Speaker 1: longer dated bondyards have been falling. Now that tells me 263 00:13:19,600 --> 00:13:22,680 Speaker 1: all I need to know. The ECB has confirmed that 264 00:13:22,720 --> 00:13:25,640 Speaker 1: they are low for longer. The ECB policy rate is 265 00:13:25,640 --> 00:13:30,400 Speaker 1: going nowhere until two thousand nineteen earliest, and we'll wait 266 00:13:30,440 --> 00:13:32,880 Speaker 1: and see what the world looks like in two thousand nineteen. 267 00:13:33,559 --> 00:13:36,920 Speaker 1: I suspect the ECB has missed the chance to hike 268 00:13:37,400 --> 00:13:40,880 Speaker 1: this cycle. The data is good, right, The growth data 269 00:13:41,040 --> 00:13:43,120 Speaker 1: is good looking back the last year, but it doesn't 270 00:13:43,120 --> 00:13:44,640 Speaker 1: tell you where the next year is going to be. 271 00:13:45,200 --> 00:13:47,360 Speaker 1: It could be that we're as good as it gets 272 00:13:47,679 --> 00:13:50,160 Speaker 1: at the moment. And I think that many economists are 273 00:13:50,160 --> 00:13:54,240 Speaker 1: finding this frustrating because they're trying to use whatever, some 274 00:13:54,320 --> 00:13:57,840 Speaker 1: kind of neo classic call or Cansian framework to to 275 00:13:57,880 --> 00:14:01,360 Speaker 1: try and guess where the growth rate is and then 276 00:14:01,400 --> 00:14:03,760 Speaker 1: from that guess on the growth rate. They're trying to 277 00:14:03,760 --> 00:14:07,280 Speaker 1: figure out what it means for bonds. Now, the ten 278 00:14:07,400 --> 00:14:11,600 Speaker 1: year German government bond is not point three. It doesn't 279 00:14:11,640 --> 00:14:15,400 Speaker 1: reflect a three point zero growth rate and hasn't done 280 00:14:15,440 --> 00:14:17,560 Speaker 1: for a long time. It looks much more like a 281 00:14:17,640 --> 00:14:21,480 Speaker 1: Japanese yield that is a handful of basis points, and 282 00:14:21,560 --> 00:14:23,880 Speaker 1: so you know, the Japanese yield has been stuck there 283 00:14:23,920 --> 00:14:25,680 Speaker 1: for years it's going to stay there for years. The 284 00:14:25,720 --> 00:14:28,040 Speaker 1: German yield has got more in common with the Japanese 285 00:14:28,120 --> 00:14:32,160 Speaker 1: yield than it does with what's happening in Brazil or Mexico. 286 00:14:32,560 --> 00:14:36,480 Speaker 1: So so, so that's the frustration for economists who find 287 00:14:36,520 --> 00:14:41,840 Speaker 1: themselves somewhat disenfranchised from the process because they're looking at 288 00:14:41,880 --> 00:14:45,440 Speaker 1: cyclical patterns, trying to guess where the growth is, and 289 00:14:45,480 --> 00:14:47,880 Speaker 1: then trying to link the bond yield to that growth rate. 290 00:14:48,120 --> 00:14:52,040 Speaker 1: The two are disconnected. In fact, the three things are disconnected. Okay, 291 00:14:52,080 --> 00:14:56,120 Speaker 1: So so focusing on cyclical patterns when you've got structural 292 00:14:56,160 --> 00:15:00,240 Speaker 1: and secular drivers seems a bit naive. That's if you've 293 00:15:00,240 --> 00:15:02,520 Speaker 1: try an distinction here listening to what we've hear an 294 00:15:02,520 --> 00:15:05,800 Speaker 1: ECB speeches between a focus on stark as opposed to 295 00:15:05,640 --> 00:15:08,120 Speaker 1: to flower face. Why is that significant what the ECB 296 00:15:08,160 --> 00:15:10,560 Speaker 1: has been focusing on talking about. Yeah, I pointed it 297 00:15:10,600 --> 00:15:14,760 Speaker 1: out in the Asset Allocation that was published today because 298 00:15:14,760 --> 00:15:18,200 Speaker 1: I was quite moved by a couple of recent speeches, 299 00:15:18,360 --> 00:15:23,080 Speaker 1: most most recently Peter Pratt, the Chief Economist. He's emphasizing 300 00:15:23,120 --> 00:15:27,400 Speaker 1: the stock effect, and he's doing this with some authority. 301 00:15:27,760 --> 00:15:31,880 Speaker 1: Markets have focused on flow because they're looking at monthly 302 00:15:32,000 --> 00:15:37,240 Speaker 1: patterns and nets supply outlooks. The stock is not just 303 00:15:37,320 --> 00:15:40,680 Speaker 1: the bonds held inside the central banks, which, by the way, 304 00:15:40,800 --> 00:15:45,560 Speaker 1: and never coming back out. That the non reinvestment decision 305 00:15:45,560 --> 00:15:48,360 Speaker 1: in the US, which will later be faced by the 306 00:15:48,360 --> 00:15:51,480 Speaker 1: ECB is not the same as selling bonds at all. Okay, 307 00:15:51,520 --> 00:15:54,720 Speaker 1: so those bonds are not coming out. That The important 308 00:15:54,720 --> 00:15:57,200 Speaker 1: thing is that the stock is not just the bonds 309 00:15:57,240 --> 00:15:59,920 Speaker 1: held inside the central bank. It's the impact that the 310 00:16:00,000 --> 00:16:05,240 Speaker 1: buctresses have on the flute. So the diminished float is 311 00:16:05,280 --> 00:16:08,800 Speaker 1: the main is the main explanation for why Japan trades 312 00:16:08,880 --> 00:16:11,560 Speaker 1: at three or four basis points and why Burns trade 313 00:16:11,560 --> 00:16:14,200 Speaker 1: where they are. Steve Major one final question. If we 314 00:16:14,240 --> 00:16:19,400 Speaker 1: look at Navarro Ross economics, ross Naviro economics or zero 315 00:16:19,520 --> 00:16:22,960 Speaker 1: some society and antagonism towards China, if you were the 316 00:16:23,000 --> 00:16:26,320 Speaker 1: advisor president the United States today, would you tell them 317 00:16:26,360 --> 00:16:28,520 Speaker 1: that China is never going to start buying our paper 318 00:16:28,600 --> 00:16:32,920 Speaker 1: and it's priced up yield down as a China tendency. 319 00:16:33,200 --> 00:16:38,280 Speaker 1: China in the US have a relationship that's very strong 320 00:16:38,440 --> 00:16:42,680 Speaker 1: behind the scenes. Let's forget all the noise because the 321 00:16:42,720 --> 00:16:48,280 Speaker 1: two countries need each other so the Chinese by US 322 00:16:48,360 --> 00:16:53,640 Speaker 1: paper as a choice because they are basically importing a 323 00:16:53,960 --> 00:16:57,040 Speaker 1: monetary policy from outside, whilst they choose to peg their 324 00:16:57,040 --> 00:17:00,520 Speaker 1: currency and actually deny their people of concer umption if 325 00:17:00,520 --> 00:17:03,480 Speaker 1: you like that. The two countries are in a in 326 00:17:03,560 --> 00:17:07,040 Speaker 1: a relationship that works very well for both sides. So 327 00:17:07,359 --> 00:17:11,280 Speaker 1: there may be some phony games going on on the outside, 328 00:17:11,320 --> 00:17:13,600 Speaker 1: but I think behind the closed doors, when the serious 329 00:17:13,640 --> 00:17:16,400 Speaker 1: people are talking, they all realize how much they need 330 00:17:16,440 --> 00:17:19,359 Speaker 1: each other. So so the fear of their being a 331 00:17:19,400 --> 00:17:22,679 Speaker 1: wall of money coming out of China that would somehow 332 00:17:22,800 --> 00:17:25,439 Speaker 1: disrupt the treasury market, I don't think is one that 333 00:17:25,480 --> 00:17:28,560 Speaker 1: we have to worry about for now. Steve Major, thank 334 00:17:28,600 --> 00:17:33,080 Speaker 1: you so much, greatly appreciated from HSBC's just incredibly pressure 335 00:17:33,160 --> 00:17:47,000 Speaker 1: about Laurie's of course said I think the biggest interview 336 00:17:47,000 --> 00:17:49,439 Speaker 1: of the days make McKee's interview with the Treasury Secretary 337 00:17:49,440 --> 00:17:51,520 Speaker 1: sty Moolution down in Washington, d C. A little bit 338 00:17:51,560 --> 00:17:55,320 Speaker 1: later this morning, and it is a changed interview from 339 00:17:55,320 --> 00:17:57,879 Speaker 1: twenty four hours ago. To give us perspective on that. 340 00:17:58,840 --> 00:18:02,920 Speaker 1: Right now, timothy'r uh joins us, I can say he's 341 00:18:02,920 --> 00:18:05,160 Speaker 1: with Bloomberg view, I can say he's done this, He's 342 00:18:05,160 --> 00:18:08,800 Speaker 1: done that. All you need to know, whatever your politics is, 343 00:18:08,840 --> 00:18:13,000 Speaker 1: he is definitive on the finances of the citizen Donald Trump, 344 00:18:13,000 --> 00:18:17,720 Speaker 1: who has become president and in China right now, Tim, 345 00:18:17,760 --> 00:18:21,359 Speaker 1: the Bloomberg View team is a sprawling team of of 346 00:18:21,640 --> 00:18:26,200 Speaker 1: political experts, economic experts. How is your task changed today 347 00:18:26,280 --> 00:18:30,600 Speaker 1: off the election results of last night? Well, you know, 348 00:18:30,640 --> 00:18:32,520 Speaker 1: I think there's a lot of sentiment this morning that 349 00:18:32,720 --> 00:18:36,359 Speaker 1: Virginia and the results they're represented a wave. I I 350 00:18:37,200 --> 00:18:40,359 Speaker 1: want to I guess can genitally want to step back 351 00:18:40,440 --> 00:18:43,080 Speaker 1: from received wisdom a little bit in moments like this. 352 00:18:43,200 --> 00:18:46,359 Speaker 1: I I'm sort of waiting for the mid terms to 353 00:18:46,480 --> 00:18:48,560 Speaker 1: be the real bell weather if we're gonna see whether 354 00:18:48,640 --> 00:18:52,639 Speaker 1: or not there's a ground swell uh in response to 355 00:18:52,720 --> 00:18:56,199 Speaker 1: Trump and Trump is um um. You know, just on 356 00:18:56,240 --> 00:18:59,200 Speaker 1: the data alone, the demographics have gonna change in Virginia 357 00:18:59,480 --> 00:19:01,720 Speaker 1: and you've got big turnout. You had a you know, 358 00:19:01,840 --> 00:19:05,600 Speaker 1: a a cast scade in the suburbs, so it was 359 00:19:05,640 --> 00:19:07,879 Speaker 1: an interesting race on the numbers. To review here, I 360 00:19:07,920 --> 00:19:09,920 Speaker 1: don't want to go Michael Brown on the two of you, 361 00:19:09,920 --> 00:19:13,359 Speaker 1: you're the political experts, but to review in November eighth 362 00:19:13,359 --> 00:19:16,720 Speaker 1: of two thousand sixteen was the turnout issue that the 363 00:19:16,760 --> 00:19:23,840 Speaker 1: Democrats didn't show up for Secretary Clinton. Uh, for sure. 364 00:19:23,920 --> 00:19:26,639 Speaker 1: I mean particularly I mean voters of color. That was 365 00:19:27,240 --> 00:19:29,200 Speaker 1: that was a huge issue, and I think you saw 366 00:19:29,880 --> 00:19:32,879 Speaker 1: voters of color turnout in this race. Now, Virginia is 367 00:19:32,920 --> 00:19:36,119 Speaker 1: also home to Charlotte'sville obviously, and there was a huge, 368 00:19:37,000 --> 00:19:41,280 Speaker 1: uh controversy around the riots there that were racially charged. 369 00:19:41,760 --> 00:19:43,879 Speaker 1: So yeah, I mean I think you saw a change that. 370 00:19:43,920 --> 00:19:45,560 Speaker 1: I don't know if that's a change that translates to 371 00:19:45,560 --> 00:19:47,720 Speaker 1: other states. I just don't know. We saw the president 372 00:19:47,720 --> 00:19:50,240 Speaker 1: tweet yesterday after these election jolts Kim in he tweeting 373 00:19:50,320 --> 00:19:54,320 Speaker 1: from South Korea or in transit that glassbe worked hard, 374 00:19:54,359 --> 00:19:56,080 Speaker 1: but did not embrace me or what I stand for. 375 00:19:56,320 --> 00:19:57,800 Speaker 1: What does that look like as we look ahead to 376 00:19:57,840 --> 00:20:00,320 Speaker 1: the mid terms, as you say, are we see more 377 00:20:00,320 --> 00:20:02,800 Speaker 1: and more candidates on the Republican side doing that? What 378 00:20:02,960 --> 00:20:05,240 Speaker 1: is that? What is what is embracing this president fully? 379 00:20:05,320 --> 00:20:07,200 Speaker 1: You know, David, I think the first thing it says 380 00:20:07,280 --> 00:20:10,040 Speaker 1: is the President Trump in the in the batting of 381 00:20:10,119 --> 00:20:14,080 Speaker 1: and I will throw someone under the bus if it suits. 382 00:20:14,119 --> 00:20:16,399 Speaker 1: How he wants to spend an event because there's no 383 00:20:16,520 --> 00:20:20,320 Speaker 1: question that Ed Gillespie clothed himself fully in Trump is 384 00:20:20,400 --> 00:20:28,040 Speaker 1: um law and order, um hm, immigration, embracing the Confederate statues, um, 385 00:20:28,119 --> 00:20:30,879 Speaker 1: and and that's not escapable. He presented himself as a 386 00:20:30,920 --> 00:20:33,720 Speaker 1: proxy for Trump and he got thumped. But again, whether 387 00:20:33,720 --> 00:20:35,880 Speaker 1: that's going to translate to other races, I don't know. 388 00:20:36,119 --> 00:20:39,040 Speaker 1: You know, I think every GOP candidate has to think 389 00:20:39,040 --> 00:20:42,680 Speaker 1: back to Mike what happened to Mike Huckabee in Arkansas 390 00:20:42,840 --> 00:20:47,240 Speaker 1: when he went was proceeded consoft on crime and and 391 00:20:47,280 --> 00:20:49,280 Speaker 1: he paid for to the polls, and it killed a 392 00:20:49,320 --> 00:20:52,080 Speaker 1: presidential candidacy for him. I think you're gonna see that 393 00:20:52,160 --> 00:20:54,680 Speaker 1: continue to be a theme that Republicans al hits regardless 394 00:20:54,720 --> 00:20:56,800 Speaker 1: of Trump. What are you watching for after we saw 395 00:20:56,840 --> 00:21:01,600 Speaker 1: the indictments last week, as the investigation by Bob Mueller continues, 396 00:21:01,720 --> 00:21:04,960 Speaker 1: as we've seen UH Secretary of Commerce Wolver Ross I 397 00:21:04,960 --> 00:21:08,280 Speaker 1: dont want say implicated, but brought up in these Paradise papers. 398 00:21:08,320 --> 00:21:09,760 Speaker 1: What are you watching for on the money side of 399 00:21:09,800 --> 00:21:12,320 Speaker 1: things going forward? Well? I think that you know, I've 400 00:21:12,320 --> 00:21:14,840 Speaker 1: always kind of thought, David that the collusion stuff is 401 00:21:14,880 --> 00:21:16,680 Speaker 1: not a real threat to Trump. I don't think he's 402 00:21:16,680 --> 00:21:19,120 Speaker 1: worried about it. I think where this may come home 403 00:21:19,119 --> 00:21:22,000 Speaker 1: to roost for him and the Bob Muller investigation is money, 404 00:21:22,000 --> 00:21:25,920 Speaker 1: particularly around bribery and quid pro quos or whether or 405 00:21:25,960 --> 00:21:31,199 Speaker 1: not there was obstruction of justice to mask collusion or bribery. Um. 406 00:21:31,240 --> 00:21:33,320 Speaker 1: But I think that we're in the very early innings 407 00:21:33,320 --> 00:21:35,000 Speaker 1: of all of this, you know. I think again, the 408 00:21:35,040 --> 00:21:38,280 Speaker 1: Trump moment raises people's temperature so high, but there's sort 409 00:21:38,280 --> 00:21:42,920 Speaker 1: of a wishful thinking around issues like impeachment or indictments, 410 00:21:43,000 --> 00:21:45,480 Speaker 1: or is this a wave in Virginia when we still 411 00:21:45,480 --> 00:21:47,480 Speaker 1: have a little empirical evidence of where any of this 412 00:21:47,520 --> 00:21:50,800 Speaker 1: will go. What do you observe of the retirements? I 413 00:21:50,840 --> 00:21:52,840 Speaker 1: was looking at CBS had a great summary of all 414 00:21:52,880 --> 00:21:56,520 Speaker 1: the different retirements and how's people becoming Senate, running for 415 00:21:56,640 --> 00:22:00,240 Speaker 1: office for senate, governor whatever. Is it normal to see 416 00:22:00,280 --> 00:22:03,840 Speaker 1: the sequence of Republican retirements or is there something special? 417 00:22:04,520 --> 00:22:06,920 Speaker 1: I think it's something special, and I don't think it's normal. 418 00:22:06,960 --> 00:22:09,320 Speaker 1: And I think what it speaks to is that the 419 00:22:09,920 --> 00:22:14,480 Speaker 1: GOP right now is struggling to establish a consistent and 420 00:22:14,560 --> 00:22:19,120 Speaker 1: agreed upon identity around contemporary conservatism. And I think there's 421 00:22:19,200 --> 00:22:22,399 Speaker 1: members of the GOP who are uncomfortable with the populist 422 00:22:22,400 --> 00:22:25,360 Speaker 1: wing of the party, and and they haven't sewn up 423 00:22:25,359 --> 00:22:28,679 Speaker 1: those divides. And I think, okay, some some Republicans are 424 00:22:28,680 --> 00:22:30,480 Speaker 1: saying they don't they don't want to be part of that. 425 00:22:30,520 --> 00:22:34,880 Speaker 1: Bloomberg Savannah spoke to the Lieutenant Governor of Virginia yesterday 426 00:22:34,920 --> 00:22:39,359 Speaker 1: who is now the governor elect uh mr North from 427 00:22:39,480 --> 00:22:42,000 Speaker 1: uh doctor I should say North Austria and and and 428 00:22:42,040 --> 00:22:44,480 Speaker 1: the idea here of did we see last night the 429 00:22:44,560 --> 00:22:47,840 Speaker 1: same shift in the Democratic Party from no Bernie Sanders. 430 00:22:47,920 --> 00:22:49,640 Speaker 1: It's really not gonna work, and we need a more 431 00:22:49,680 --> 00:22:53,120 Speaker 1: centrist tendency. Can you take that nationwide? Well? I mean 432 00:22:53,119 --> 00:22:55,000 Speaker 1: that's and that's a debate that goes back to to 433 00:22:55,200 --> 00:22:58,960 Speaker 1: to Bill Clinton and uh the the DLC, going back 434 00:22:58,960 --> 00:23:02,320 Speaker 1: into the you of the eighties and nineties. Um. I 435 00:23:02,359 --> 00:23:05,159 Speaker 1: think both parties have always struggled with this issue of 436 00:23:05,560 --> 00:23:08,760 Speaker 1: you campaign to your base, which is more ignited, more 437 00:23:08,800 --> 00:23:11,639 Speaker 1: ignited than than the national electorate. But you have to 438 00:23:11,800 --> 00:23:14,040 Speaker 1: govern and campaign at the national level as a centerist. 439 00:23:14,320 --> 00:23:16,720 Speaker 1: I think both parties have struggled with that, and they're 440 00:23:16,760 --> 00:23:20,560 Speaker 1: both somewhat um at sea about it right now. Tim 441 00:23:20,640 --> 00:23:22,960 Speaker 1: o brian, thank you so much to Bloomberg View writing 442 00:23:23,040 --> 00:23:25,600 Speaker 1: up a storm. Do we see an essay today from you? 443 00:23:26,160 --> 00:23:32,240 Speaker 1: Not today? It makes you feel November. Tim O'Brian, thank 444 00:23:32,280 --> 00:23:34,920 Speaker 1: you so much, and I really should say Bloomberg View 445 00:23:34,960 --> 00:23:38,120 Speaker 1: with great overnight work, including an important essay from Al 446 00:23:38,200 --> 00:23:41,359 Speaker 1: Hunt with his uh decades as heritage of Washington. What 447 00:23:41,400 --> 00:23:43,239 Speaker 1: do you got? The President Obama just tweeting a moment ago, 448 00:23:43,280 --> 00:23:44,800 Speaker 1: picking up on what we're just talking about that is 449 00:23:44,840 --> 00:23:46,520 Speaker 1: turned out, and he said, quota, this is what happens 450 00:23:46,520 --> 00:23:49,120 Speaker 1: when the people vote. Congrats Ralph Northman, film Murphy New Jersey. 451 00:23:49,119 --> 00:23:51,680 Speaker 1: Congratulations to all the victors and state legislative, county and 452 00:23:51,760 --> 00:23:54,840 Speaker 1: mayor's races, every office in the democracy accounts. So he 453 00:23:55,440 --> 00:24:12,440 Speaker 1: pushing against didn't anybody under the bus? Mr sait Tavia 454 00:24:12,520 --> 00:24:14,600 Speaker 1: and Tom Keen here at the Bloomberg You're Ahead event 455 00:24:14,640 --> 00:24:16,840 Speaker 1: at a Bloomberg headquarters in New York, looking ahead to 456 00:24:16,880 --> 00:24:18,760 Speaker 1: Michael mckeees interview a little later this morning with the 457 00:24:18,760 --> 00:24:21,640 Speaker 1: Secretary of the Treasury Stephen manution down and watching d see. 458 00:24:21,640 --> 00:24:22,959 Speaker 1: A big focus of that is going to be on 459 00:24:23,000 --> 00:24:25,600 Speaker 1: tax from That's a big focus for every legislator in 460 00:24:25,640 --> 00:24:28,280 Speaker 1: Washington right now, including our next guest, who was born 461 00:24:28,280 --> 00:24:31,800 Speaker 1: in Glendale, West Virginia, took a detour down to North Carolina. 462 00:24:31,840 --> 00:24:35,080 Speaker 1: Was a zoology major at Duke University. Eager to hear 463 00:24:35,119 --> 00:24:37,800 Speaker 1: how that training prepared her for the zoo of Washington, 464 00:24:37,880 --> 00:24:41,840 Speaker 1: d C. Navigating she has to Shelley Moore. Capito joins 465 00:24:41,880 --> 00:24:43,800 Speaker 1: us now by from the junior Senator from the state 466 00:24:43,800 --> 00:24:46,200 Speaker 1: of West Virginia. Republican Senator from West Virginia. Great to 467 00:24:46,240 --> 00:24:48,040 Speaker 1: have you with us. Tell us a bit about how 468 00:24:48,080 --> 00:24:50,800 Speaker 1: much how often do you draw up on that BS 469 00:24:50,880 --> 00:24:55,639 Speaker 1: degree from down to Duke, how many years ago? Every 470 00:24:55,720 --> 00:25:00,800 Speaker 1: day only in Washington. Very good. Let's let me ask 471 00:25:00,840 --> 00:25:02,800 Speaker 1: you sort of where things stand when it comes to 472 00:25:02,840 --> 00:25:05,040 Speaker 1: tax before. We've seen the reports out this morning indicating 473 00:25:05,080 --> 00:25:06,840 Speaker 1: that there might be a year delay here on corporate 474 00:25:06,840 --> 00:25:09,280 Speaker 1: tax reform. In particular, we've been paying so much attention 475 00:25:09,640 --> 00:25:11,560 Speaker 1: Center Capital to what's been happening on the House side. 476 00:25:11,560 --> 00:25:12,960 Speaker 1: Give us an update on what's been going on in 477 00:25:13,000 --> 00:25:15,840 Speaker 1: the Senate side and where things stand. Well it certainly 478 00:25:15,920 --> 00:25:20,320 Speaker 1: first of all, applaud our house co works for plowing through. 479 00:25:20,359 --> 00:25:24,240 Speaker 1: They've been hard at work on ways and means and uh, 480 00:25:24,280 --> 00:25:27,640 Speaker 1: you know, doing amendments and listening to arguments and and 481 00:25:27,680 --> 00:25:30,680 Speaker 1: I think making good progress. They're over here. We're gonna 482 00:25:30,680 --> 00:25:33,240 Speaker 1: be releasing the bill. The Finance Committee will release the 483 00:25:33,240 --> 00:25:37,679 Speaker 1: bill around noon, not believe on tomorrow. I believe that 484 00:25:37,960 --> 00:25:41,760 Speaker 1: early reports. I wouldn't put too much stock into what 485 00:25:41,800 --> 00:25:44,399 Speaker 1: it looks. What you know, the the rumors are that 486 00:25:44,440 --> 00:25:46,680 Speaker 1: it's going to be until it's actually out. I think 487 00:25:46,720 --> 00:25:49,919 Speaker 1: that it's it's still I wouldn't say a moving target, 488 00:25:49,960 --> 00:25:52,359 Speaker 1: but there's still tweaks being being done to the bill. 489 00:25:52,720 --> 00:25:54,840 Speaker 1: It will be explained to all of us in great 490 00:25:54,840 --> 00:25:57,280 Speaker 1: details tomorrow morning. All right, So that's that's gonna happen. 491 00:25:57,320 --> 00:25:59,040 Speaker 1: There's there's a lot of pressure to get this done 492 00:25:59,040 --> 00:26:02,639 Speaker 1: by Thanksgiving, by the the calendar year. Are you optimistic 493 00:26:02,680 --> 00:26:04,560 Speaker 1: that's gonna happen? What are the indicators you're looking for 494 00:26:04,640 --> 00:26:06,639 Speaker 1: that things are preceding a pace that they're on track. 495 00:26:07,520 --> 00:26:10,040 Speaker 1: You know, I'm really optimistic on this. I think that 496 00:26:10,680 --> 00:26:13,399 Speaker 1: the fact that the House is moving quickly and is 497 00:26:13,400 --> 00:26:16,399 Speaker 1: expected to have it on the floor and passed next week. 498 00:26:16,960 --> 00:26:20,240 Speaker 1: Our Finance Committee will be uh considering this all week 499 00:26:20,400 --> 00:26:22,960 Speaker 1: next week and hopefully have a vote out of their 500 00:26:23,000 --> 00:26:25,840 Speaker 1: committee next week, which really sets up the Senate floor 501 00:26:25,880 --> 00:26:29,400 Speaker 1: for a vote either right before Thanksgiving or shortly thereafter. 502 00:26:30,040 --> 00:26:32,439 Speaker 1: And um, I think that's the pace we're on. I 503 00:26:32,440 --> 00:26:34,920 Speaker 1: think we'll stay on that. I don't see any leakage. 504 00:26:35,520 --> 00:26:40,439 Speaker 1: I don't see any wabbly wabbly needs and and and 505 00:26:40,520 --> 00:26:43,000 Speaker 1: shaking knees here. I think we're ready to move forward, 506 00:26:43,040 --> 00:26:46,320 Speaker 1: to move big and make a difference in in the country. Senator, 507 00:26:46,440 --> 00:26:50,000 Speaker 1: you received great acclaim a while back with the President 508 00:26:50,000 --> 00:26:53,080 Speaker 1: of the United States where you said, quote, he should 509 00:26:53,119 --> 00:26:57,000 Speaker 1: re examine his candidacy that was in the distant past, 510 00:26:57,080 --> 00:27:00,199 Speaker 1: before a year ago. Do the Republicans have of this 511 00:27:00,320 --> 00:27:03,520 Speaker 1: election yesterday, do they have to re examine their method 512 00:27:04,200 --> 00:27:06,920 Speaker 1: to find the middle of this nation? You've been adept 513 00:27:06,960 --> 00:27:10,000 Speaker 1: at that in West Virginia, do the Republicans have to 514 00:27:10,080 --> 00:27:14,199 Speaker 1: re examine how they're going to get re elected? You know, 515 00:27:14,320 --> 00:27:18,720 Speaker 1: I I see the elections that occurred yesterday as really 516 00:27:18,880 --> 00:27:21,360 Speaker 1: Virginia has become more and more blue, and a lot 517 00:27:21,400 --> 00:27:24,040 Speaker 1: of that is about where the vote comes out in Virginia. 518 00:27:24,080 --> 00:27:27,320 Speaker 1: You know that if you look at northern Virginia and uh, 519 00:27:27,400 --> 00:27:31,000 Speaker 1: Southwest Virginia is like West Virginia, so it's it's much 520 00:27:31,040 --> 00:27:33,280 Speaker 1: more red, uh. And then of course New Jersey has 521 00:27:33,280 --> 00:27:36,919 Speaker 1: always been a very blue state. I think we do 522 00:27:37,080 --> 00:27:39,719 Speaker 1: need to keep examining all the time how we're presenting 523 00:27:39,720 --> 00:27:43,480 Speaker 1: our message and what kind of UH promises we've made 524 00:27:43,520 --> 00:27:46,480 Speaker 1: that we haven't that we can come come through on. 525 00:27:46,560 --> 00:27:49,359 Speaker 1: And I think that reform is that see that thing? 526 00:27:49,600 --> 00:27:52,359 Speaker 1: And so I think, you know, for me and looking 527 00:27:52,400 --> 00:27:54,879 Speaker 1: at it, I don't really it's another election. You know, 528 00:27:54,920 --> 00:27:57,560 Speaker 1: two months ago the Democrats were having to re examine 529 00:27:57,560 --> 00:28:00,439 Speaker 1: what they were doing, you know, southern I look at 530 00:28:00,480 --> 00:28:03,040 Speaker 1: this senator from Main Olympia. Snow you've been able to 531 00:28:03,080 --> 00:28:06,920 Speaker 1: find a middle ground. And we saw yesterday the Democrats, 532 00:28:06,960 --> 00:28:09,639 Speaker 1: whatever the minutia is, they had to turn out and 533 00:28:09,680 --> 00:28:12,040 Speaker 1: they seem to find a middle ground with the Lieutenant 534 00:28:12,080 --> 00:28:15,200 Speaker 1: governor of Virginia, the doctor and you know his election 535 00:28:15,240 --> 00:28:18,320 Speaker 1: here governor electon and all that. I mean, where is 536 00:28:18,359 --> 00:28:21,359 Speaker 1: the middle ground for the Republican Party or does it 537 00:28:21,440 --> 00:28:25,840 Speaker 1: stay polarized? Well, I think that's a really good question. 538 00:28:25,960 --> 00:28:29,040 Speaker 1: I think that UM our party and the Democrats are 539 00:28:29,080 --> 00:28:32,040 Speaker 1: having the same sort of issues. I think, but our 540 00:28:32,119 --> 00:28:35,600 Speaker 1: party is UH is and should be a bigger tent 541 00:28:35,720 --> 00:28:39,080 Speaker 1: where we have all different kinds of u uh, you know, 542 00:28:39,200 --> 00:28:43,160 Speaker 1: more far right and more more moderate, and regional differences 543 00:28:43,160 --> 00:28:46,200 Speaker 1: and all that. I don't think we're losing that, but 544 00:28:46,360 --> 00:28:48,160 Speaker 1: I think we have to be careful not to because 545 00:28:48,440 --> 00:28:50,240 Speaker 1: we can't carry the election at the end of the 546 00:28:50,320 --> 00:28:54,600 Speaker 1: day with one or for the other parts of our party. 547 00:28:54,640 --> 00:28:57,400 Speaker 1: It has to be a united front. And I think 548 00:28:57,440 --> 00:28:59,960 Speaker 1: that's what you'll see people sort of tightening their belt 549 00:29:00,080 --> 00:29:03,360 Speaker 1: here looking at that. We have to appeal to independent voters. 550 00:29:03,440 --> 00:29:06,160 Speaker 1: That means uh that you you know, you have to 551 00:29:06,160 --> 00:29:08,360 Speaker 1: approve you can get things done. And I think that's 552 00:29:08,400 --> 00:29:11,800 Speaker 1: the challenge for everybody. Shelley more Capital with us here 553 00:29:11,840 --> 00:29:14,720 Speaker 1: on Bloomberg Surveillance. Help us understand the particular brand of 554 00:29:14,760 --> 00:29:18,560 Speaker 1: Republicanism you see in in West Virginia. It is something different. 555 00:29:18,600 --> 00:29:20,880 Speaker 1: This is a state that was a Democratic stalwart for 556 00:29:20,880 --> 00:29:23,280 Speaker 1: for so long. What is a Republican voter like in 557 00:29:23,320 --> 00:29:26,760 Speaker 1: West Virginia versus Virginia or North Carolina or Maine for 558 00:29:26,760 --> 00:29:30,200 Speaker 1: for that matter. What makes republican West Virginia different. Well, 559 00:29:30,240 --> 00:29:32,000 Speaker 1: I mean I can go back through when I was 560 00:29:32,040 --> 00:29:34,000 Speaker 1: elected that when I was elected in two thousands of 561 00:29:34,040 --> 00:29:36,080 Speaker 1: the House of Representatives. I was the first Republican in 562 00:29:36,080 --> 00:29:40,120 Speaker 1: twenty years. It took another ten years before another Republican 563 00:29:40,320 --> 00:29:44,200 Speaker 1: was elected. Now the only Democrat really left standing is 564 00:29:44,560 --> 00:29:48,600 Speaker 1: Senator Joe Manchin. What has happened here is but the 565 00:29:48,600 --> 00:29:50,600 Speaker 1: thing is, if you look at the registration numbers in 566 00:29:50,600 --> 00:29:55,080 Speaker 1: our state, it's still heavily registered Democrats. So I think 567 00:29:55,120 --> 00:29:58,880 Speaker 1: what people have started to figure out, at least the 568 00:29:58,920 --> 00:30:01,800 Speaker 1: Democrats that star to figure out, is that while they're 569 00:30:01,840 --> 00:30:05,080 Speaker 1: still registered Democrat, they don't agree with the direction that 570 00:30:05,160 --> 00:30:07,320 Speaker 1: the party has gone at the national level. We still 571 00:30:07,360 --> 00:30:11,800 Speaker 1: have a very vibrant local Democrat party that carries a 572 00:30:11,800 --> 00:30:15,640 Speaker 1: lot of courthouses and things. So I think, um, we 573 00:30:15,640 --> 00:30:18,120 Speaker 1: were you know, and we've West Virginia was one of 574 00:30:18,160 --> 00:30:22,520 Speaker 1: those states that was flown over, forgotten. Our industries were 575 00:30:22,720 --> 00:30:25,000 Speaker 1: just basically shunted to the side. We lost tens of 576 00:30:25,040 --> 00:30:29,080 Speaker 1: thousands of jobs, and people basically just stood up and said, 577 00:30:29,120 --> 00:30:32,080 Speaker 1: I can't, I can't take this anymore. And that's why 578 00:30:32,120 --> 00:30:35,080 Speaker 1: you see Donald Trump who tapped into that, winning our 579 00:30:35,080 --> 00:30:38,520 Speaker 1: state by overt Senator I want to take you back 580 00:30:38,640 --> 00:30:41,320 Speaker 1: to the last week of August, and I think of 581 00:30:41,440 --> 00:30:44,760 Speaker 1: robbed Portman of Ohio and his leadership as well. You 582 00:30:44,880 --> 00:30:48,520 Speaker 1: hosted Chip New York General Counsel and Chief of Staff 583 00:30:49,040 --> 00:30:53,200 Speaker 1: of the Office of National Drug Control Policy. You've had 584 00:30:53,200 --> 00:30:56,840 Speaker 1: the courage to be in the trenches on heroin and opioid. 585 00:30:56,960 --> 00:30:59,760 Speaker 1: What have you learned and what are they at the 586 00:31:00,000 --> 00:31:04,040 Speaker 1: federal level in Washington need to do to address what 587 00:31:04,120 --> 00:31:08,600 Speaker 1: you and Senator Reportman are providing leadership on. Well. I 588 00:31:08,600 --> 00:31:12,720 Speaker 1: think the opioid and drug crisis is just, um, it's 589 00:31:12,760 --> 00:31:15,719 Speaker 1: an enormous problem. Where we are I mean we're at 590 00:31:15,720 --> 00:31:18,160 Speaker 1: the tip of the sphere Ohio, and and and Rob 591 00:31:18,200 --> 00:31:21,000 Speaker 1: and I sort of have been leading to charge with 592 00:31:21,120 --> 00:31:24,320 Speaker 1: more funding. I think that's key. Is anyone listening? Is 593 00:31:24,400 --> 00:31:29,720 Speaker 1: anyone really listening? Or is it just a social issue? No? No, Uh. 594 00:31:29,840 --> 00:31:31,959 Speaker 1: The one thing when you asked me, what have I learned? 595 00:31:32,240 --> 00:31:34,440 Speaker 1: I've learned that it needs a spectrum of solutions. You 596 00:31:34,480 --> 00:31:37,440 Speaker 1: can't just say, Okay, we're gonna fund treatment or okay, 597 00:31:37,440 --> 00:31:40,520 Speaker 1: we're gonna fund law enforcement. It's got to be everything. 598 00:31:40,640 --> 00:31:42,560 Speaker 1: And I think the President touched on this when he 599 00:31:43,000 --> 00:31:46,040 Speaker 1: made the Declaration of Public Health Emergency. People sort of 600 00:31:46,160 --> 00:31:48,800 Speaker 1: um said, oh, that's not enough. But it does it 601 00:31:48,840 --> 00:31:54,600 Speaker 1: does bring the focus in and around uh, a horrible problem. 602 00:31:54,640 --> 00:31:57,600 Speaker 1: I mean, I would recommend to anybody who listening and 603 00:31:57,680 --> 00:31:59,960 Speaker 1: to you all to watch it half an hour next 604 00:32:00,040 --> 00:32:04,000 Speaker 1: like program what's called Heroin, and it is set in Huntington, 605 00:32:04,080 --> 00:32:07,480 Speaker 1: West Virginia, and it will show you exactly where and 606 00:32:07,560 --> 00:32:10,640 Speaker 1: how the problem is and and the strains on a 607 00:32:10,680 --> 00:32:15,600 Speaker 1: small town and families. So we are focused on it. Uh. 608 00:32:15,640 --> 00:32:18,080 Speaker 1: And and I'm an appropriator, so a lot of it 609 00:32:18,120 --> 00:32:21,920 Speaker 1: now is focusing the dollars where we need to put them. Uh. 610 00:32:22,000 --> 00:32:24,440 Speaker 1: Let me ask you lastly here what more the U. S. 611 00:32:24,480 --> 00:32:26,440 Speaker 1: Congress can do? You mentioned the President declaring a public 612 00:32:26,440 --> 00:32:29,120 Speaker 1: health emergency. We've seen action at the local and state level. 613 00:32:29,160 --> 00:32:30,960 Speaker 1: What are you what are you telling your colleagues needs 614 00:32:31,000 --> 00:32:34,720 Speaker 1: to happen in the Senate? Well, I think there's a 615 00:32:34,720 --> 00:32:37,320 Speaker 1: couple of things. I think in terms of we need 616 00:32:37,360 --> 00:32:40,720 Speaker 1: to put the money into research. We need to find 617 00:32:40,720 --> 00:32:43,240 Speaker 1: a non addictive pain medicine. I just had a meeting 618 00:32:43,320 --> 00:32:45,280 Speaker 1: yesterday all about with the v A and the d 619 00:32:45,520 --> 00:32:48,360 Speaker 1: D and pain and all the studies. But if you know, 620 00:32:48,400 --> 00:32:51,160 Speaker 1: if we could find a way to address pain without 621 00:32:51,160 --> 00:32:54,520 Speaker 1: the addiction aspects of an opioid. That's that's pretty key. 622 00:32:54,560 --> 00:32:58,240 Speaker 1: I think also, um, we need to fund drug courts. 623 00:32:58,280 --> 00:33:00,880 Speaker 1: We need to fund um, you know, make sure the 624 00:33:00,960 --> 00:33:03,440 Speaker 1: locks is in the hands of our first responders. I mean, 625 00:33:03,480 --> 00:33:07,360 Speaker 1: there's just it's everything and all things that we need. Uh, 626 00:33:07,720 --> 00:33:09,640 Speaker 1: but you know, we want to make sure also that 627 00:33:10,000 --> 00:33:14,000 Speaker 1: the next generation, the education aspect of it, I think 628 00:33:14,120 --> 00:33:16,440 Speaker 1: is something that we need to put a heavier emphasis 629 00:33:16,440 --> 00:33:18,760 Speaker 1: on that. We sort of we're focusing on the folks 630 00:33:18,800 --> 00:33:20,760 Speaker 1: that are afflicted now, but we've got to make sure 631 00:33:21,320 --> 00:33:24,640 Speaker 1: that that earlier generation understands, you know, when they make 632 00:33:24,680 --> 00:33:27,800 Speaker 1: a decision to do something like that, how dangerous it is. 633 00:33:28,080 --> 00:33:29,880 Speaker 1: Appreciate the time, Thank you very much. Let's talk again. 634 00:33:29,920 --> 00:33:32,040 Speaker 1: Assume that Shellley Moore Capital. She's a junior Senator from 635 00:33:32,040 --> 00:33:34,600 Speaker 1: West Virginia, Republican senator, as she mentioned in West Virginia 636 00:33:34,640 --> 00:33:36,440 Speaker 1: as well. I'm good to get her perspective on the 637 00:33:36,520 --> 00:33:39,800 Speaker 1: hopioid crisis, the election, and indeed, uh, this taxiphorone process. 638 00:33:39,800 --> 00:33:41,440 Speaker 1: That's I'm going I don't know any wisdom on the 639 00:33:41,480 --> 00:33:43,600 Speaker 1: move to moderate of the move to the middle, but 640 00:33:43,840 --> 00:33:45,840 Speaker 1: maybe we saw a little bit of that yesterday, to 641 00:33:45,920 --> 00:34:00,000 Speaker 1: say the least. Thanks for listening to the Bloomberg Surveillance podcast, Subscribe, 642 00:34:00,080 --> 00:34:04,800 Speaker 1: ribe and listen to interviews on Apple Podcasts, SoundCloud, or 643 00:34:04,880 --> 00:34:09,200 Speaker 1: whichever podcast platform you prefer. I'm on Twitter at Tom Keene. 644 00:34:09,320 --> 00:34:13,640 Speaker 1: David Gura is at David Gura. Before the podcast, you 645 00:34:13,680 --> 00:34:16,959 Speaker 1: can always catch us worldwide. I'm Bloomberg Radio