Speaker 1: Yeah, Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene
Speaker 1: with David Gura. Daily we bring you insight from the
Speaker 1: best of economics, finance, investment, and international relations. Find Bloomberg
Speaker 1: Surveillance on Apple Podcasts, SoundCloud, Bloomberg dot Com and of
Speaker 1: course on the Bloomberg David Gerr and Tom Keane Here
Speaker 1: as we look ahead to two thousand and eighteen, and
Speaker 1: it is good to do that with Axel Murk of
Speaker 1: work Investments of course, with a real focus on dollar dynamics.
Speaker 1: Um Kama Charmer was with us from Bank of American
Speaker 1: Maryland today and he really discussed the ambiguity of the
Speaker 1: dollar right now. Is it imbute, is it ambiguous dollar
Speaker 1: direction right now or do you have a strong conviction
Speaker 1: in the next year. Well, one of the themes I've
Speaker 1: had at is that we have far more advanced in
Speaker 1: the hiking second the US and in your zone. But
Speaker 1: unlike what everybody else is saying that the dollars should
Speaker 1: go to the roof because of that, I'm actually thinking
Speaker 1: the opposite. I think quantitative tightening if anything, is going
Speaker 1: to expand with premia, which is going to cause treasuries
Speaker 1: to rally, which means the interstructor referention is going to
Speaker 1: be get less. I also think Drugg is hopelessly behind,
Speaker 1: and while he's not going to change his mind tomorrow,
Speaker 1: it means the dynamics are shifting more favor of the
Speaker 1: europe Treasury is rarely. We've got a collar treasury rarely
Speaker 1: up to two fifty to sixty, and then we've got
Speaker 1: others that says suggests we could migrate to three percent.
Speaker 1: Where are you? I don't think we're gonna go that
Speaker 1: high anytime soon. And partially is that at some point
Speaker 1: we're gonna get volatilion the markets. That's gonna get treasures
Speaker 1: to rally. I think the tax reform is going to
Speaker 1: be disappointing and uh, and just look at the election
Speaker 1: last night. I think that Republicans are going to be
Speaker 1: less inclined to kind of align with the the current administration.
Speaker 1: And so all of that doesn't speak for higher yells. Now,
Speaker 1: maybe maybe inflation near pressure is going to pick up
Speaker 1: a tad, but I do think that the um if
Speaker 1: the feed is an autopilot, that means higher rates that's
Speaker 1: going to flatten the yield curve and the flattened yeld
Speaker 1: curve can happen various ways, but I don't think treasures
Speaker 1: are gonna actually move all that much. But later this morning,
Speaker 1: Michael McKee is going to sit down with the Steve Manusian,
Speaker 1: and I imagine a question he could ask. I don't
Speaker 1: know if he's gonna ask it, is that what this
Speaker 1: administration's dollar policy is? Have you detected the change in it?
Speaker 1: Do you have a clear sense of whether we're seeing
Speaker 1: a continuation of that Ruben dollar policy. Well, it used
Speaker 1: to be after rum in any way that if you
Speaker 1: were able to aufer those words that we have a
Speaker 1: strong dollar policy, that you qualified for the job. Um.
Speaker 1: And and nowadays those the treasure sectary minution has has
Speaker 1: a stronger view of what they want to do. Clearly
Speaker 1: they want to boost the exports, so clearly they want
Speaker 1: to have a week or dollar from that point of view. Um.
Speaker 1: But they of course they want to always want to
Speaker 1: have it both ways, and and so ultimately the policies matter.
Speaker 1: And he had a quick question, is that we're going
Speaker 1: to get a trade war or not? Um? Is it
Speaker 1: all just talk or something gonna happen? Um. I continue
Speaker 1: to think the biggest tail risk. I'm not saying it's
Speaker 1: the most likely risk, because but something's gonna gong with China,
Speaker 1: some dispute over the South China Sea, and they're going
Speaker 1: to retaliate with some trade policy. Right now. Of course,
Speaker 1: everybody is trying to put up a happy face with
Speaker 1: with the president's visit Overada, and so in the meet Tom,
Speaker 1: there's nothing on the horizon. We're broadcasting a day from
Speaker 1: the yearhead. Someone I saw from across the way that
Speaker 1: you were sitting down with David co talks someone I
Speaker 1: know he is thinking a lot about cryptocurrencies versus gold. Uh,
Speaker 1: he's considering himself maybe a bit of a neo Luddite
Speaker 1: here as he struggles to embrace cryptocurrencies and bitcoin in particular.
Speaker 1: Where do you fall in all of this? Probably in this,
Speaker 1: in this still nascent argument about the worth of cryptocurrency,
Speaker 1: I'm based in Santrtisco. I get called about cryptocurrency's probably
Speaker 1: once a week by venture capitalists, loyals, all kinds of folks. Um.
Speaker 1: I do think if you had a bitcoin tied to gold, say, um,
Speaker 1: it's an interesting way to to trade it. I think
Speaker 1: the blockchain technology is fascinating A bitcoin bad by nothing.
Speaker 1: It's ninety nine all over again. That's that's kind of
Speaker 1: fun too, if you want to get into adrenaline. Is
Speaker 1: ninety nine all over again? Or is it seventeen thirty
Speaker 1: whatever in tulips all over again? Which is it? Well,
Speaker 1: the tulips without to Bitcoin. That said, I compare a
Speaker 1: cryptocurren is a bit like Netscape to the Internet. Netscape
Speaker 1: isn't around anymore, but the Internet certainly is. And so
Speaker 1: I think there's a lot to be done with a
Speaker 1: blockchain technology. There's gonna be a lot of this hype
Speaker 1: is going to translate the value somewhere. Go on your
Speaker 1: hard currency, guy, can you go along Bitcoin? Let's cut
Speaker 1: to this. It's not a currency, uh, And so it is.
Speaker 1: It is something called the currency. Um. It is a
Speaker 1: TOOLIP and that's gonna well, just like many fiat currencies
Speaker 1: will UM. But I think the question David had is
Speaker 1: linking it to something else. There is a blockchain technology
Speaker 1: linking contracts um to to the decentralized ledger. And you
Speaker 1: can do that with securities. You can do that with gold,
Speaker 1: you can do that with the real estate. Um. Not
Speaker 1: all of these things are gonna happen but very smart
Speaker 1: minds are putting the brain into it and and something
Speaker 1: is going to come of it. I don't think there's
Speaker 1: any stock or cryptocurrency you can buy right now due
Speaker 1: to to enjoy that, especially not a good value that
Speaker 1: I'm not suggesting anybody by a bitcoin um but if
Speaker 1: I were to, for example, one thing I've been contemplating
Speaker 1: is built an interface between a cryptocontract and to secure
Speaker 1: at these world UM say have a UM gold etf
Speaker 1: link it to a crypto and then go to your
Speaker 1: broke and saying, hey, I want to take delivery and
Speaker 1: facilitate that. That would say something of interest. You know.
Speaker 1: It used to be easier, but it shares the general
Speaker 1: electric and the president is In China, I did trade
Speaker 1: weighted rend mimby today, which is up up. It's a
Speaker 1: thirty three percent trade weted red mimby. Since that a
Speaker 1: storic July two thousand five days, the Chinese done their
Speaker 1: fair share to go strong you wan weaker dollar. The
Speaker 1: Chinese just had the People's Congress. They wanted everything to
Speaker 1: look good. They wanted a strong currency, and that's the
Speaker 1: policy of the day. When you look at China, it's
Speaker 1: always a step forward and reform and then two steps backwards.
Speaker 1: As long as the economy is running, they talk open markets.
Speaker 1: I mean, the most telling thing was that President she
Speaker 1: had a speech about opening the world up, and then
Speaker 1: towards the end of the speech, um in the p
Speaker 1: F that there was market intervention to make sure the
Speaker 1: market goes higher. Now that is China for you. Um,
Speaker 1: it is a market that's still not being driven by
Speaker 1: the bye, by the by the broad masses, but by
Speaker 1: the fame all drive. And as long as that's the case,
Speaker 1: it's anew unsustainable in the right here where it's right now,
Speaker 1: Axel murk out a Brown University. And of course, as
Speaker 1: you mentioned earlier abouting in San Francisco, I want to
Speaker 1: rip up the script here for a couple of minutes.
Speaker 1: How do mere mortals live in your San Francisco. You're
Speaker 1: a prosperous guy. And this has come up in conversation
Speaker 1: four times in the last ten days of of well
Speaker 1: meeting people saying ignorance, ignation, just got a job in
Speaker 1: San Francisco. Where are they gonna live kind of thing.
Speaker 1: I mean, there was a photo on Twitter of a
Speaker 1: woman with a legitimate job sleeping in a car in
Speaker 1: a parking garage. And I'm not talking about homeless. I'm
Speaker 1: talking about you know, professional class slash front class. What's
Speaker 1: gonna happen to your city? Well, I live in about
Speaker 1: what in Sanma says good fellow who cuts my hYP periodically,
Speaker 1: lived in Tracy. That's like a ninety minute drive a
Speaker 1: good day. Um. And and absolutely if you if you'll
Speaker 1: firefight a police officer, it is very difficult to live locally.
Speaker 1: Any service provider cannot. So yeah, price is going to
Speaker 1: go up. Um. But at the same time, yes, you
Speaker 1: do have people sleep and my my daughter, one of
Speaker 1: my kids, is going to community colleges high school student
Speaker 1: and a third of the students don't have a permanent home.
Speaker 1: They do couch not they don't sleep under the bridge,
Speaker 1: but they hop between friends to to just get by
Speaker 1: and did my first three years exactly. But it's happening
Speaker 1: to an ever greater part of the population, not just
Speaker 1: down the privileged compaims of the world. Are you seeing
Speaker 1: cultural fishers as a result of that? I think back
Speaker 1: a year year plus ago when we had a very
Speaker 1: stark divide between uh, those new wealthy people in San
Speaker 1: Francisco and those who were in these service jobs, who've
Speaker 1: been in San Francisco for a long time, who were
Speaker 1: in the artist community. Are we seeing that play out
Speaker 1: as acutely as it did. I'm probably not the expert
Speaker 1: on on local politics in San Francisco from what I
Speaker 1: can tell. Although I listened to blew my radios and
Speaker 1: the local RADIANC I already these things. There was this
Speaker 1: big wave about the Google bosses and so forth, and
Speaker 1: clearly they always discussions dispute that said home would home
Speaker 1: a San Francisco has always been a magnet for the
Speaker 1: homeless and others because they provide many services amongst others,
Speaker 1: and so day it is very, very visible, especially when
Speaker 1: I walked to the office every morning and before dawn.
Speaker 1: Um it is. It is very the contrast of various
Speaker 1: one final question when you're on it. So we get
Speaker 1: a huge turnout from the Austrian economic screw. They love
Speaker 1: it when you come on. Do you sense any Austrian
Speaker 1: in the new Federal Reserve? Absolutely not, Mr Powell. I
Speaker 1: down't doubt his intellect, I down't doubt his integrity, but
Speaker 1: I happen to believe he's completely agnostic to monetary a
Speaker 1: policy and what I mean with that, does that mean
Speaker 1: he can become Austrians And it means it means that
Speaker 1: he's on autopilot, and if something happens, autopia is gonna
Speaker 1: come off, he's gonna have a route awakening. And what
Speaker 1: I mean is that historically the lawyers on the govern
Speaker 1: us who allaw us, which on most of them, historically,
Speaker 1: they don't know monitory policy. They don't have their own staff,
Speaker 1: so they look at awe at the presentation of the
Speaker 1: fat and sign of what the chair does. Now the
Speaker 1: guys in charge, and I've no doubt he'll do something,
Speaker 1: but I don't think he has experienced that. If everybody
Speaker 1: says he does, um, it's going to be very interesting
Speaker 1: securities right over here in our food parts. So they're
Speaker 1: when to come get you. Is the Phillips curve dead? Yes?
Speaker 1: In some ways. How would you respond to Mr Manutian
Speaker 1: today saying that Philip's curve is alive and will Well,
Speaker 1: he's a trade of secretary. I guess his word counts,
Speaker 1: but I I can trade. I can buy ourselves, so
Speaker 1: I can always take an opposing you. It's very good, excellent,
Speaker 1: Thank you so much for joining us on the dollar
Speaker 1: with some thoughts there of a lesser, not strong dolor
Speaker 1: and of course that somewhere those are great comments in
Speaker 1: San Francisco. It's the brightest of the social tests of
Speaker 1: our society. No one, no one can look. Then we've
Speaker 1: talked about in the context of real estate. People are
Speaker 1: getting out of college. I want to move there. Well, exactly.
Speaker 1: This is a very important interview, particularly those at Global
Speaker 1: Wall Street. You know Stephen Major, he's an HSBC and
Speaker 1: he has been uh smarter than most about saying no
Speaker 1: rates won't go up. Now is a particularly good time
Speaker 1: to speak to Mr Major from our studios in London.
Speaker 1: UM this morning. This is people begin to percolate of
Speaker 1: a higher rate environment. Stephen, have you changed your call?
Speaker 1: Do you give way to two point four, two point
Speaker 1: six or three percent ten year yield? No? Our forecast,
Speaker 1: but the end of two thousand eighteen, Tommy is two
Speaker 1: point three UM. We haven't hits our one point nine
Speaker 1: and seventeen forecast, but we're not there yet. It's still
Speaker 1: possibilit of course. But I I I completely reject the
Speaker 1: idea that yields are going higher. People have been calling
Speaker 1: for two and a half to sixty UM from a
Speaker 1: break above two forty. At the start of the year,
Speaker 1: people were calling a break of to sixty would mean
Speaker 1: three percent or three and a half and they're going
Speaker 1: to have to wait a long time. What is the
Speaker 1: why of that? Is it an economic analysis? I think
Speaker 1: a Michael foul yet JP Morrigan with one point four
Speaker 1: potential g d P? Is it a yield analysis? Is
Speaker 1: fluor dynamics? What's the y well? The ten year rate
Speaker 1: is a function of longer term growth. It's much more
Speaker 1: global in nature. So the Fed doesn't have a great
Speaker 1: deal of influence over the ten year rate. Ten year
Speaker 1: bonds of priced off of the five year rate five
Speaker 1: year forward if you like. So we're thinking about five
Speaker 1: year start for a five year bond, the yield shouldn't
Speaker 1: be that dramatically above current levels. And I think this
Speaker 1: is what people are missing, is that the Feds almost
Speaker 1: certainly gonna experience a turn in the economy to the
Speaker 1: worse at some point in the next few years. The
Speaker 1: peak in the rate cycle is much nearer than they
Speaker 1: probably want to think, so in five years time we
Speaker 1: could well be in an easing environment. In that case,
Speaker 1: it's appropriate to look at five year rates that are
Speaker 1: lower than today's spot rate. That's how you can get
Speaker 1: a ten year year that doesn't want to go above
Speaker 1: two point four And to me, we're stuck in that
Speaker 1: range maybe two percent to two and a half for
Speaker 1: the next year or so. And Stephen, let me ask
Speaker 1: you about how your prices in geo political risk at
Speaker 1: this point in Europe in particularly, been watching what's been
Speaker 1: happening in northern Spain, certainly paying attention to Italy as well.
Speaker 1: How much other this should we make, How big a
Speaker 1: deal is what we've seen that in those two countries
Speaker 1: in particular, what we have to we have to build
Speaker 1: an internal process, there's no doubt about that. But just
Speaker 1: just just as a quick comment on this, the ten
Speaker 1: year rate ten years forward, so again, the ten year
Speaker 1: rates starting in ten years time has gone below four
Speaker 1: percent and is pushing three seventy in both Italy and Spain.
Speaker 1: And this has been happening in the last month or so.
Speaker 1: So whilst you've got all of the disruption that you
Speaker 1: can imagine in Spain around Catalan in particular, and the
Speaker 1: concern about Italian politics for two thousand and eighteen, the
Speaker 1: longer dated bondyards have been falling. Now that tells me
Speaker 1: all I need to know. The ECB has confirmed that
Speaker 1: they are low for longer. The ECB policy rate is
Speaker 1: going nowhere until two thousand nineteen earliest, and we'll wait
Speaker 1: and see what the world looks like in two thousand nineteen.
Speaker 1: I suspect the ECB has missed the chance to hike
Speaker 1: this cycle. The data is good, right, The growth data
Speaker 1: is good looking back the last year, but it doesn't
Speaker 1: tell you where the next year is going to be.
Speaker 1: It could be that we're as good as it gets
Speaker 1: at the moment. And I think that many economists are
Speaker 1: finding this frustrating because they're trying to use whatever, some
Speaker 1: kind of neo classic call or Cansian framework to to
Speaker 1: try and guess where the growth rate is and then
Speaker 1: from that guess on the growth rate. They're trying to
Speaker 1: figure out what it means for bonds. Now, the ten
Speaker 1: year German government bond is not point three. It doesn't
Speaker 1: reflect a three point zero growth rate and hasn't done
Speaker 1: for a long time. It looks much more like a
Speaker 1: Japanese yield that is a handful of basis points, and
Speaker 1: so you know, the Japanese yield has been stuck there
Speaker 1: for years it's going to stay there for years. The
Speaker 1: German yield has got more in common with the Japanese
Speaker 1: yield than it does with what's happening in Brazil or Mexico.
Speaker 1: So so, so that's the frustration for economists who find
Speaker 1: themselves somewhat disenfranchised from the process because they're looking at
Speaker 1: cyclical patterns, trying to guess where the growth is, and
Speaker 1: then trying to link the bond yield to that growth rate.
Speaker 1: The two are disconnected. In fact, the three things are disconnected. Okay,
Speaker 1: So so focusing on cyclical patterns when you've got structural
Speaker 1: and secular drivers seems a bit naive. That's if you've
Speaker 1: try an distinction here listening to what we've hear an
Speaker 1: ECB speeches between a focus on stark as opposed to
Speaker 1: to flower face. Why is that significant what the ECB
Speaker 1: has been focusing on talking about. Yeah, I pointed it
Speaker 1: out in the Asset Allocation that was published today because
Speaker 1: I was quite moved by a couple of recent speeches,
Speaker 1: most most recently Peter Pratt, the Chief Economist. He's emphasizing
Speaker 1: the stock effect, and he's doing this with some authority.
Speaker 1: Markets have focused on flow because they're looking at monthly
Speaker 1: patterns and nets supply outlooks. The stock is not just
Speaker 1: the bonds held inside the central banks, which, by the way,
Speaker 1: and never coming back out. That the non reinvestment decision
Speaker 1: in the US, which will later be faced by the
Speaker 1: ECB is not the same as selling bonds at all. Okay,
Speaker 1: so those bonds are not coming out. That The important
Speaker 1: thing is that the stock is not just the bonds
Speaker 1: held inside the central bank. It's the impact that the
Speaker 1: buctresses have on the flute. So the diminished float is
Speaker 1: the main is the main explanation for why Japan trades
Speaker 1: at three or four basis points and why Burns trade
Speaker 1: where they are. Steve Major one final question. If we
Speaker 1: look at Navarro Ross economics, ross Naviro economics or zero
Speaker 1: some society and antagonism towards China, if you were the
Speaker 1: advisor president the United States today, would you tell them
Speaker 1: that China is never going to start buying our paper
Speaker 1: and it's priced up yield down as a China tendency.
Speaker 1: China in the US have a relationship that's very strong
Speaker 1: behind the scenes. Let's forget all the noise because the
Speaker 1: two countries need each other so the Chinese by US
Speaker 1: paper as a choice because they are basically importing a
Speaker 1: monetary policy from outside, whilst they choose to peg their
Speaker 1: currency and actually deny their people of concer umption if
Speaker 1: you like that. The two countries are in a in
Speaker 1: a relationship that works very well for both sides. So
Speaker 1: there may be some phony games going on on the outside,
Speaker 1: but I think behind the closed doors, when the serious
Speaker 1: people are talking, they all realize how much they need
Speaker 1: each other. So so the fear of their being a
Speaker 1: wall of money coming out of China that would somehow
Speaker 1: disrupt the treasury market, I don't think is one that
Speaker 1: we have to worry about for now. Steve Major, thank
Speaker 1: you so much, greatly appreciated from HSBC's just incredibly pressure
Speaker 1: about Laurie's of course said I think the biggest interview
Speaker 1: of the days make McKee's interview with the Treasury Secretary
Speaker 1: sty Moolution down in Washington, d C. A little bit
Speaker 1: later this morning, and it is a changed interview from
Speaker 1: twenty four hours ago. To give us perspective on that.
Speaker 1: Right now, timothy'r uh joins us, I can say he's
Speaker 1: with Bloomberg view, I can say he's done this, He's
Speaker 1: done that. All you need to know, whatever your politics is,
Speaker 1: he is definitive on the finances of the citizen Donald Trump,
Speaker 1: who has become president and in China right now, Tim,
Speaker 1: the Bloomberg View team is a sprawling team of of
Speaker 1: political experts, economic experts. How is your task changed today
Speaker 1: off the election results of last night? Well, you know,
Speaker 1: I think there's a lot of sentiment this morning that
Speaker 1: Virginia and the results they're represented a wave. I I
Speaker 1: want to I guess can genitally want to step back
Speaker 1: from received wisdom a little bit in moments like this.
Speaker 1: I I'm sort of waiting for the mid terms to
Speaker 1: be the real bell weather if we're gonna see whether
Speaker 1: or not there's a ground swell uh in response to
Speaker 1: Trump and Trump is um um. You know, just on
Speaker 1: the data alone, the demographics have gonna change in Virginia
Speaker 1: and you've got big turnout. You had a you know,
Speaker 1: a a cast scade in the suburbs, so it was
Speaker 1: an interesting race on the numbers. To review here, I
Speaker 1: don't want to go Michael Brown on the two of you,
Speaker 1: you're the political experts, but to review in November eighth
Speaker 1: of two thousand sixteen was the turnout issue that the
Speaker 1: Democrats didn't show up for Secretary Clinton. Uh, for sure.
Speaker 1: I mean particularly I mean voters of color. That was
Speaker 1: that was a huge issue, and I think you saw
Speaker 1: voters of color turnout in this race. Now, Virginia is
Speaker 1: also home to Charlotte'sville obviously, and there was a huge,
Speaker 1: uh controversy around the riots there that were racially charged.
Speaker 1: So yeah, I mean I think you saw a change that.
Speaker 1: I don't know if that's a change that translates to
Speaker 1: other states. I just don't know. We saw the president
Speaker 1: tweet yesterday after these election jolts Kim in he tweeting
Speaker 1: from South Korea or in transit that glassbe worked hard,
Speaker 1: but did not embrace me or what I stand for.
Speaker 1: What does that look like as we look ahead to
Speaker 1: the mid terms, as you say, are we see more
Speaker 1: and more candidates on the Republican side doing that? What
Speaker 1: is that? What is what is embracing this president fully?
Speaker 1: You know, David, I think the first thing it says
Speaker 1: is the President Trump in the in the batting of
Speaker 1: and I will throw someone under the bus if it suits.
Speaker 1: How he wants to spend an event because there's no
Speaker 1: question that Ed Gillespie clothed himself fully in Trump is
Speaker 1: um law and order, um hm, immigration, embracing the Confederate statues, um,
Speaker 1: and and that's not escapable. He presented himself as a
Speaker 1: proxy for Trump and he got thumped. But again, whether
Speaker 1: that's going to translate to other races, I don't know.
Speaker 1: You know, I think every GOP candidate has to think
Speaker 1: back to Mike what happened to Mike Huckabee in Arkansas
Speaker 1: when he went was proceeded consoft on crime and and
Speaker 1: he paid for to the polls, and it killed a
Speaker 1: presidential candidacy for him. I think you're gonna see that
Speaker 1: continue to be a theme that Republicans al hits regardless
Speaker 1: of Trump. What are you watching for after we saw
Speaker 1: the indictments last week, as the investigation by Bob Mueller continues,
Speaker 1: as we've seen UH Secretary of Commerce Wolver Ross I
Speaker 1: dont want say implicated, but brought up in these Paradise papers.
Speaker 1: What are you watching for on the money side of
Speaker 1: things going forward? Well? I think that you know, I've
Speaker 1: always kind of thought, David that the collusion stuff is
Speaker 1: not a real threat to Trump. I don't think he's
Speaker 1: worried about it. I think where this may come home
Speaker 1: to roost for him and the Bob Muller investigation is money,
Speaker 1: particularly around bribery and quid pro quos or whether or
Speaker 1: not there was obstruction of justice to mask collusion or bribery. Um.
Speaker 1: But I think that we're in the very early innings
Speaker 1: of all of this, you know. I think again, the
Speaker 1: Trump moment raises people's temperature so high, but there's sort
Speaker 1: of a wishful thinking around issues like impeachment or indictments,
Speaker 1: or is this a wave in Virginia when we still
Speaker 1: have a little empirical evidence of where any of this
Speaker 1: will go. What do you observe of the retirements? I
Speaker 1: was looking at CBS had a great summary of all
Speaker 1: the different retirements and how's people becoming Senate, running for
Speaker 1: office for senate, governor whatever. Is it normal to see
Speaker 1: the sequence of Republican retirements or is there something special?
Speaker 1: I think it's something special, and I don't think it's normal.
Speaker 1: And I think what it speaks to is that the
Speaker 1: GOP right now is struggling to establish a consistent and
Speaker 1: agreed upon identity around contemporary conservatism. And I think there's
Speaker 1: members of the GOP who are uncomfortable with the populist
Speaker 1: wing of the party, and and they haven't sewn up
Speaker 1: those divides. And I think, okay, some some Republicans are
Speaker 1: saying they don't they don't want to be part of that.
Speaker 1: Bloomberg Savannah spoke to the Lieutenant Governor of Virginia yesterday
Speaker 1: who is now the governor elect uh mr North from
Speaker 1: uh doctor I should say North Austria and and and
Speaker 1: the idea here of did we see last night the
Speaker 1: same shift in the Democratic Party from no Bernie Sanders.
Speaker 1: It's really not gonna work, and we need a more
Speaker 1: centrist tendency. Can you take that nationwide? Well? I mean
Speaker 1: that's and that's a debate that goes back to to
Speaker 1: to Bill Clinton and uh the the DLC, going back
Speaker 1: into the you of the eighties and nineties. Um. I
Speaker 1: think both parties have always struggled with this issue of
Speaker 1: you campaign to your base, which is more ignited, more
Speaker 1: ignited than than the national electorate. But you have to
Speaker 1: govern and campaign at the national level as a centerist.
Speaker 1: I think both parties have struggled with that, and they're
Speaker 1: both somewhat um at sea about it right now. Tim
Speaker 1: o brian, thank you so much to Bloomberg View writing
Speaker 1: up a storm. Do we see an essay today from you?
Speaker 1: Not today? It makes you feel November. Tim O'Brian, thank
Speaker 1: you so much, and I really should say Bloomberg View
Speaker 1: with great overnight work, including an important essay from Al
Speaker 1: Hunt with his uh decades as heritage of Washington. What
Speaker 1: do you got? The President Obama just tweeting a moment ago,
Speaker 1: picking up on what we're just talking about that is
Speaker 1: turned out, and he said, quota, this is what happens
Speaker 1: when the people vote. Congrats Ralph Northman, film Murphy New Jersey.
Speaker 1: Congratulations to all the victors and state legislative, county and
Speaker 1: mayor's races, every office in the democracy accounts. So he
Speaker 1: pushing against didn't anybody under the bus? Mr sait Tavia
Speaker 1: and Tom Keen here at the Bloomberg You're Ahead event
Speaker 1: at a Bloomberg headquarters in New York, looking ahead to
Speaker 1: Michael mckeees interview a little later this morning with the
Speaker 1: Secretary of the Treasury Stephen manution down and watching d see.
Speaker 1: A big focus of that is going to be on
Speaker 1: tax from That's a big focus for every legislator in
Speaker 1: Washington right now, including our next guest, who was born
Speaker 1: in Glendale, West Virginia, took a detour down to North Carolina.
Speaker 1: Was a zoology major at Duke University. Eager to hear
Speaker 1: how that training prepared her for the zoo of Washington,
Speaker 1: d C. Navigating she has to Shelley Moore. Capito joins
Speaker 1: us now by from the junior Senator from the state
Speaker 1: of West Virginia. Republican Senator from West Virginia. Great to
Speaker 1: have you with us. Tell us a bit about how
Speaker 1: much how often do you draw up on that BS
Speaker 1: degree from down to Duke, how many years ago? Every
Speaker 1: day only in Washington. Very good. Let's let me ask
Speaker 1: you sort of where things stand when it comes to
Speaker 1: tax before. We've seen the reports out this morning indicating
Speaker 1: that there might be a year delay here on corporate
Speaker 1: tax reform. In particular, we've been paying so much attention
Speaker 1: Center Capital to what's been happening on the House side.
Speaker 1: Give us an update on what's been going on in
Speaker 1: the Senate side and where things stand. Well it certainly
Speaker 1: first of all, applaud our house co works for plowing through.
Speaker 1: They've been hard at work on ways and means and uh,
Speaker 1: you know, doing amendments and listening to arguments and and
Speaker 1: I think making good progress. They're over here. We're gonna
Speaker 1: be releasing the bill. The Finance Committee will release the
Speaker 1: bill around noon, not believe on tomorrow. I believe that
Speaker 1: early reports. I wouldn't put too much stock into what
Speaker 1: it looks. What you know, the the rumors are that
Speaker 1: it's going to be until it's actually out. I think
Speaker 1: that it's it's still I wouldn't say a moving target,
Speaker 1: but there's still tweaks being being done to the bill.
Speaker 1: It will be explained to all of us in great
Speaker 1: details tomorrow morning. All right, So that's that's gonna happen.
Speaker 1: There's there's a lot of pressure to get this done
Speaker 1: by Thanksgiving, by the the calendar year. Are you optimistic
Speaker 1: that's gonna happen? What are the indicators you're looking for
Speaker 1: that things are preceding a pace that they're on track.
Speaker 1: You know, I'm really optimistic on this. I think that
Speaker 1: the fact that the House is moving quickly and is
Speaker 1: expected to have it on the floor and passed next week.
Speaker 1: Our Finance Committee will be uh considering this all week
Speaker 1: next week and hopefully have a vote out of their
Speaker 1: committee next week, which really sets up the Senate floor
Speaker 1: for a vote either right before Thanksgiving or shortly thereafter.
Speaker 1: And um, I think that's the pace we're on. I
Speaker 1: think we'll stay on that. I don't see any leakage.
Speaker 1: I don't see any wabbly wabbly needs and and and
Speaker 1: shaking knees here. I think we're ready to move forward,
Speaker 1: to move big and make a difference in in the country. Senator,
Speaker 1: you received great acclaim a while back with the President
Speaker 1: of the United States where you said, quote, he should
Speaker 1: re examine his candidacy that was in the distant past,
Speaker 1: before a year ago. Do the Republicans have of this
Speaker 1: election yesterday, do they have to re examine their method
Speaker 1: to find the middle of this nation? You've been adept
Speaker 1: at that in West Virginia, do the Republicans have to
Speaker 1: re examine how they're going to get re elected? You know,
Speaker 1: I I see the elections that occurred yesterday as really
Speaker 1: Virginia has become more and more blue, and a lot
Speaker 1: of that is about where the vote comes out in Virginia.
Speaker 1: You know that if you look at northern Virginia and uh,
Speaker 1: Southwest Virginia is like West Virginia, so it's it's much
Speaker 1: more red, uh. And then of course New Jersey has
Speaker 1: always been a very blue state. I think we do
Speaker 1: need to keep examining all the time how we're presenting
Speaker 1: our message and what kind of UH promises we've made
Speaker 1: that we haven't that we can come come through on.
Speaker 1: And I think that reform is that see that thing?
Speaker 1: And so I think, you know, for me and looking
Speaker 1: at it, I don't really it's another election. You know,
Speaker 1: two months ago the Democrats were having to re examine
Speaker 1: what they were doing, you know, southern I look at
Speaker 1: this senator from Main Olympia. Snow you've been able to
Speaker 1: find a middle ground. And we saw yesterday the Democrats,
Speaker 1: whatever the minutia is, they had to turn out and
Speaker 1: they seem to find a middle ground with the Lieutenant
Speaker 1: governor of Virginia, the doctor and you know his election
Speaker 1: here governor electon and all that. I mean, where is
Speaker 1: the middle ground for the Republican Party or does it
Speaker 1: stay polarized? Well, I think that's a really good question.
Speaker 1: I think that UM our party and the Democrats are
Speaker 1: having the same sort of issues. I think, but our
Speaker 1: party is UH is and should be a bigger tent
Speaker 1: where we have all different kinds of u uh, you know,
Speaker 1: more far right and more more moderate, and regional differences
Speaker 1: and all that. I don't think we're losing that, but
Speaker 1: I think we have to be careful not to because
Speaker 1: we can't carry the election at the end of the
Speaker 1: day with one or for the other parts of our party.
Speaker 1: It has to be a united front. And I think
Speaker 1: that's what you'll see people sort of tightening their belt
Speaker 1: here looking at that. We have to appeal to independent voters.
Speaker 1: That means uh that you you know, you have to
Speaker 1: approve you can get things done. And I think that's
Speaker 1: the challenge for everybody. Shelley more Capital with us here
Speaker 1: on Bloomberg Surveillance. Help us understand the particular brand of
Speaker 1: Republicanism you see in in West Virginia. It is something different.
Speaker 1: This is a state that was a Democratic stalwart for
Speaker 1: for so long. What is a Republican voter like in
Speaker 1: West Virginia versus Virginia or North Carolina or Maine for
Speaker 1: for that matter. What makes republican West Virginia different. Well,
Speaker 1: I mean I can go back through when I was
Speaker 1: elected that when I was elected in two thousands of
Speaker 1: the House of Representatives. I was the first Republican in
Speaker 1: twenty years. It took another ten years before another Republican
Speaker 1: was elected. Now the only Democrat really left standing is
Speaker 1: Senator Joe Manchin. What has happened here is but the
Speaker 1: thing is, if you look at the registration numbers in
Speaker 1: our state, it's still heavily registered Democrats. So I think
Speaker 1: what people have started to figure out, at least the
Speaker 1: Democrats that star to figure out, is that while they're
Speaker 1: still registered Democrat, they don't agree with the direction that
Speaker 1: the party has gone at the national level. We still
Speaker 1: have a very vibrant local Democrat party that carries a
Speaker 1: lot of courthouses and things. So I think, um, we
Speaker 1: were you know, and we've West Virginia was one of
Speaker 1: those states that was flown over, forgotten. Our industries were
Speaker 1: just basically shunted to the side. We lost tens of
Speaker 1: thousands of jobs, and people basically just stood up and said,
Speaker 1: I can't, I can't take this anymore. And that's why
Speaker 1: you see Donald Trump who tapped into that, winning our
Speaker 1: state by overt Senator I want to take you back
Speaker 1: to the last week of August, and I think of
Speaker 1: robbed Portman of Ohio and his leadership as well. You
Speaker 1: hosted Chip New York General Counsel and Chief of Staff
Speaker 1: of the Office of National Drug Control Policy. You've had
Speaker 1: the courage to be in the trenches on heroin and opioid.
Speaker 1: What have you learned and what are they at the
Speaker 1: federal level in Washington need to do to address what
Speaker 1: you and Senator Reportman are providing leadership on. Well. I
Speaker 1: think the opioid and drug crisis is just, um, it's
Speaker 1: an enormous problem. Where we are I mean we're at
Speaker 1: the tip of the sphere Ohio, and and and Rob
Speaker 1: and I sort of have been leading to charge with
Speaker 1: more funding. I think that's key. Is anyone listening? Is
Speaker 1: anyone really listening? Or is it just a social issue? No? No, Uh.
Speaker 1: The one thing when you asked me, what have I learned?
Speaker 1: I've learned that it needs a spectrum of solutions. You
Speaker 1: can't just say, Okay, we're gonna fund treatment or okay,
Speaker 1: we're gonna fund law enforcement. It's got to be everything.
Speaker 1: And I think the President touched on this when he
Speaker 1: made the Declaration of Public Health Emergency. People sort of
Speaker 1: um said, oh, that's not enough. But it does it
Speaker 1: does bring the focus in and around uh, a horrible problem.
Speaker 1: I mean, I would recommend to anybody who listening and
Speaker 1: to you all to watch it half an hour next
Speaker 1: like program what's called Heroin, and it is set in Huntington,
Speaker 1: West Virginia, and it will show you exactly where and
Speaker 1: how the problem is and and the strains on a
Speaker 1: small town and families. So we are focused on it. Uh.
Speaker 1: And and I'm an appropriator, so a lot of it
Speaker 1: now is focusing the dollars where we need to put them. Uh.
Speaker 1: Let me ask you lastly here what more the U. S.
Speaker 1: Congress can do? You mentioned the President declaring a public
Speaker 1: health emergency. We've seen action at the local and state level.
Speaker 1: What are you what are you telling your colleagues needs
Speaker 1: to happen in the Senate? Well, I think there's a
Speaker 1: couple of things. I think in terms of we need
Speaker 1: to put the money into research. We need to find
Speaker 1: a non addictive pain medicine. I just had a meeting
Speaker 1: yesterday all about with the v A and the d
Speaker 1: D and pain and all the studies. But if you know,
Speaker 1: if we could find a way to address pain without
Speaker 1: the addiction aspects of an opioid. That's that's pretty key.
Speaker 1: I think also, um, we need to fund drug courts.
Speaker 1: We need to fund um, you know, make sure the
Speaker 1: locks is in the hands of our first responders. I mean,
Speaker 1: there's just it's everything and all things that we need. Uh,
Speaker 1: but you know, we want to make sure also that
Speaker 1: the next generation, the education aspect of it, I think
Speaker 1: is something that we need to put a heavier emphasis
Speaker 1: on that. We sort of we're focusing on the folks
Speaker 1: that are afflicted now, but we've got to make sure
Speaker 1: that that earlier generation understands, you know, when they make
Speaker 1: a decision to do something like that, how dangerous it is.
Speaker 1: Appreciate the time, Thank you very much. Let's talk again.
Speaker 1: Assume that Shellley Moore Capital. She's a junior Senator from
Speaker 1: West Virginia, Republican senator, as she mentioned in West Virginia
Speaker 1: as well. I'm good to get her perspective on the
Speaker 1: hopioid crisis, the election, and indeed, uh, this taxiphorone process.
Speaker 1: That's I'm going I don't know any wisdom on the
Speaker 1: move to moderate of the move to the middle, but
Speaker 1: maybe we saw a little bit of that yesterday, to
Speaker 1: say the least. Thanks for listening to the Bloomberg Surveillance podcast, Subscribe,
Speaker 1: ribe and listen to interviews on Apple Podcasts, SoundCloud, or
Speaker 1: whichever podcast platform you prefer. I'm on Twitter at Tom Keene.
Speaker 1: David Gura is at David Gura. Before the podcast, you
Speaker 1: can always catch us worldwide. I'm Bloomberg Radio