WEBVTT - Fed Independence Is Crucial, Abby Joseph Cohen Says 0:00:00.120 --> 0:00:02.920 Brought you by Bank of America, Mary Lynch. Investing in 0:00:03.000 --> 0:00:07.840 local communities, economies and a sustainable future. That's the power 0:00:08.080 --> 0:00:12.360 of global connections, Mary Lynch, Pierce Fenner and Smith Incorporated 0:00:12.760 --> 0:00:27.400 Member s I p C. Welcome to the Bloomberg Surveillance Podcast. 0:00:27.840 --> 0:00:31.520 I'm Tom Keene with David Gura. Daily we bring you 0:00:31.560 --> 0:00:36.600 insight from the best in economics, finance, investment and international relations. 0:00:37.000 --> 0:00:41.600 Find Bloomberg Surveillance on iTunes, SoundCloud, Bloomberg dot Com, and 0:00:41.680 --> 0:00:48.960 of course on the Bloomberg. Tom's going to be back. 0:00:52.600 --> 0:00:56.760 The missed the Pierre Breakfast. Breakfast at the Pierre Hotel 0:00:56.760 --> 0:00:59.680 with an amazing turnout. We've given the snow on fifth 0:00:59.720 --> 0:01:03.480 alf new pim Fox yeoman's duty is Gura called in 0:01:03.520 --> 0:01:05.319 from what do you have like eight ft of snow 0:01:05.360 --> 0:01:08.920 in Brooklyn mcale. You were out there brush Russian snow 0:01:09.000 --> 0:01:13.560 off the Kale bushes, right, This is this is a 0:01:13.600 --> 0:01:19.080 great pleasure and privileged folks. Abby Joseph Cohen has had 0:01:19.120 --> 0:01:22.000 decades of work not only for the CFA Institute and 0:01:22.000 --> 0:01:25.600 for the academics of finance and investment, for her Golden 0:01:25.680 --> 0:01:29.679 Sex as well. She puts it, it's a Golden Sex retirement, 0:01:30.040 --> 0:01:32.600 which means she will be exceptionally active in her eighty 0:01:32.680 --> 0:01:36.640 hour work week. Still with Goldman Sex, what kind of retirement? 0:01:36.800 --> 0:01:40.440 When Steve strongand talks to you about a Goldman Sex retirement, 0:01:40.600 --> 0:01:43.720 what does that exactly? Abby? Tom? What that basically means 0:01:43.760 --> 0:01:47.480 As I'm becoming an advisory director and I'm giving up 0:01:47.520 --> 0:01:52.200 my managerial and administrative responsibilities, but I am still senior 0:01:52.240 --> 0:01:55.680 investment strategist. I'll be working with our clients around the world, 0:01:56.040 --> 0:01:58.760 and our clients include governments, not just here in the 0:01:58.880 --> 0:02:02.640 United States, but it also in various places. And I 0:02:02.720 --> 0:02:05.280 just had a thought that maybe Mr Cohn is a 0:02:05.280 --> 0:02:09.680 little occupying Washington. Abbey chose of Cohen could go down 0:02:09.720 --> 0:02:13.160 and help Gary con help the President of the United States, 0:02:13.360 --> 0:02:17.120 and be that much closer to her beloving agency capital. Yeah, 0:02:17.440 --> 0:02:19.760 let's let me just point out I'm not related to 0:02:19.840 --> 0:02:23.400 Gary Code. But but Tom is right that I am 0:02:23.480 --> 0:02:26.080 a big fan of the Washington capitals, So that would 0:02:26.080 --> 0:02:29.399 be a good work. Abbey. Optimism is easy when there's 0:02:29.400 --> 0:02:31.600 a bear market. There has not been when you've been 0:02:31.639 --> 0:02:37.040 a resilient bull, aw can you stay optimistic on the 0:02:37.080 --> 0:02:41.320 development of cash flow? Tom I think the issue right 0:02:41.360 --> 0:02:46.480 now is more murky than usual because the fundamentals are good, 0:02:46.600 --> 0:02:50.200 including the cash flow data. The economy is growing, we 0:02:50.280 --> 0:02:54.480 had some acceleration coming into two thousand seventeen. Labor markets 0:02:54.480 --> 0:02:58.000 are stronger, wages are in fact rising, running about two 0:02:58.080 --> 0:03:00.440 and a half to three percent year on year growth. 0:03:00.800 --> 0:03:05.120 The question really becomes the overlay of government policy, and 0:03:05.160 --> 0:03:08.000 as everybody knows and you have focused on so well, 0:03:08.440 --> 0:03:11.440 there is no clarity in terms of what those new 0:03:11.520 --> 0:03:14.120 policies will look like. We have some idea of what 0:03:14.160 --> 0:03:17.720 the President indicated he would like to do during the campaign, 0:03:18.080 --> 0:03:19.800 but we now we of course need to see what 0:03:19.880 --> 0:03:23.320 the legislation looks like, what will the Congress pass and 0:03:23.400 --> 0:03:25.960 when will it be implemented. Some of the things that 0:03:26.000 --> 0:03:30.680 many investors are hoping for, including changes in the tax code, 0:03:31.000 --> 0:03:34.400 may be delayed quite a while while the Congress gets 0:03:34.440 --> 0:03:38.200 its act together in terms of actually putting things down 0:03:38.280 --> 0:03:41.160 on paper. What's your sense of the timetable here? We 0:03:41.200 --> 0:03:43.000 had the President saying yesterday we're going to get a 0:03:43.440 --> 0:03:46.080 in his words, phenomenal tax plan here in the next 0:03:46.120 --> 0:03:49.520 few weeks. He said, You mentioned the legislative wrangling that's 0:03:49.640 --> 0:03:52.680 that's sure to follow. Uh, how what's the time to 0:03:52.720 --> 0:03:54.960 would look like to you? And how important is that 0:03:55.000 --> 0:03:57.040 to you as an investor? Sort of waiting to see 0:03:57.040 --> 0:03:59.920 these things. March is an important month because that's the 0:04:00.080 --> 0:04:03.360 point at which the president the new administration will release 0:04:03.400 --> 0:04:07.080 for the first time their draft of a budget. However, 0:04:07.600 --> 0:04:10.600 we then will go into what does the Congress do 0:04:10.680 --> 0:04:14.800 with it? Um, My colleagues in Goldman Sachs Investment Research 0:04:14.920 --> 0:04:18.120 believe that even if something is passed by the end 0:04:18.120 --> 0:04:21.359 of two thousand seventeen, important pieces of it won't be 0:04:21.400 --> 0:04:25.159 implemented until next year. You know, I we hear so 0:04:25.200 --> 0:04:28.359 much about regulatory reform, both in financial services but also 0:04:29.040 --> 0:04:31.760 with the Affordable Care Act? How much of how much 0:04:31.839 --> 0:04:34.400 is that affecting sort of your your outlook the prospect 0:04:34.440 --> 0:04:36.960 there of of saying scaling back Todd Frank for instance, 0:04:37.400 --> 0:04:40.560 We're not quite sure what will happen. Obviously, there has 0:04:40.600 --> 0:04:44.359 been a notable increase in the price levels of financial 0:04:44.360 --> 0:04:49.159 services stocks as many people are anticipating a less onerous 0:04:49.400 --> 0:04:52.680 regulatory environment. Let me point out and say that some 0:04:52.839 --> 0:04:56.599 regulation is very good regulation because it protects us, whether 0:04:56.680 --> 0:05:00.520 it's financial services, the f D A, and many of 0:05:00.520 --> 0:05:04.159 the environmental rigs as well, So it really depends upon 0:05:04.240 --> 0:05:07.400 which regulations are being changed. The other thing that everyone 0:05:07.520 --> 0:05:10.240 is looking for are the adjustments to the A C 0:05:10.480 --> 0:05:13.400 A UM. It now looks like in Congress there's not 0:05:13.520 --> 0:05:18.359 very much appetite for repeal well in advance of replace, 0:05:18.680 --> 0:05:21.400 and there's not yet a plan that has come forward. 0:05:21.600 --> 0:05:24.360 We're hearing that there are four separate plans that are 0:05:24.400 --> 0:05:27.600 being discussed by the Republicans in Congress. It's not really 0:05:27.600 --> 0:05:30.039 clear to us which way the Congress will decide to go. 0:05:30.200 --> 0:05:32.719 What do we know of the potential economic ramifications of 0:05:32.760 --> 0:05:37.040 a repeal or replacement or a picture we were different 0:05:37.080 --> 0:05:39.320 to put in there? But how would that affect the economy? 0:05:39.640 --> 0:05:43.320 One thing that I believe is not being adequately discussed 0:05:43.520 --> 0:05:47.120 is that this period of confusion about what will happen 0:05:47.200 --> 0:05:50.760 to UH the A C A is actually a dampener 0:05:51.120 --> 0:05:54.440 for consumers spending. Many of the families that were most 0:05:54.520 --> 0:05:58.760 benefited by Obamacare are middle income families UH. And these 0:05:58.760 --> 0:06:02.200 are people who don't ullify for Medicaid. UH. They're not 0:06:02.279 --> 0:06:05.760 able to afford their insurance without help. And it may 0:06:05.760 --> 0:06:09.680 in fact be these middle income Americans who are most afflicted. 0:06:09.880 --> 0:06:13.800 They may get nervous, They may begin to spend less, 0:06:14.200 --> 0:06:19.440 save more, and obviously spend more on medical expenses rather 0:06:19.480 --> 0:06:21.680 than other items. You'll forgive us for being a little 0:06:21.680 --> 0:06:24.359 retrospective furiously announced your your retirement, but looking back, has 0:06:24.400 --> 0:06:27.919 there been a moment like gold, not like a John 0:06:27.960 --> 0:06:33.080 Tucker retirement? John Tucking retirement is here's a door with jury, Abby, 0:06:33.080 --> 0:06:37.359 will you adopt me? Have we seen a moment like 0:06:37.440 --> 0:06:39.200 this though, where politics has been as big a driver 0:06:39.240 --> 0:06:41.000 as it seems to be right now, it's providing as 0:06:41.040 --> 0:06:44.320 much uncertainty or driver as you see it. Clearly, this 0:06:44.400 --> 0:06:47.440 is the most that we have seen in many decades. 0:06:47.560 --> 0:06:50.080 I think if we go back over history, and Tom 0:06:50.080 --> 0:06:53.240 and I love to reminisce because of our CIFA backgrounds, 0:06:53.440 --> 0:06:56.120 of the nineteen thirties would have been a period where 0:06:56.120 --> 0:07:00.880 politics had an enormous impact. There was also a period 0:07:01.200 --> 0:07:05.359 when there was the big we shifting of political parties 0:07:05.760 --> 0:07:08.919 in the nineties, sixties and early seventies as a consequence 0:07:08.920 --> 0:07:13.360 of the Democrats um moving forward on things like voting 0:07:13.440 --> 0:07:15.920 rights and civil rights and so on. But this is 0:07:15.960 --> 0:07:19.280 certainly the biggest change that we have seen in several decades. 0:07:19.320 --> 0:07:21.680 Now that we have a golden Sax retirement, maybe she 0:07:21.720 --> 0:07:23.560 can go on the short short list for the new 0:07:23.640 --> 0:07:25.960 chair of the Fed. Here here, not that I would 0:07:25.960 --> 0:07:28.960 want to start any speculation or rumors will continue with 0:07:29.000 --> 0:07:32.560 Abbe Joseph Cohen and speak of global central banks, of course, 0:07:32.600 --> 0:07:36.720 with Mr Abbe visiting uh today, Uh, well, we'll talk 0:07:36.800 --> 0:07:39.640 to Abby about not only global central banks, but of 0:07:39.640 --> 0:07:42.760 course the Federal Reserve system. David Gerr and Tom Keane 0:07:43.040 --> 0:07:46.240 with Abby Joseph Cohen, this moment in time, after a 0:07:46.320 --> 0:07:49.840 story career in management, that golden section moves on to 0:07:49.920 --> 0:07:53.640 an advisory role makes very clear it's a golden Sas retirement, 0:07:53.680 --> 0:07:56.040 which is I think she gets to expand from seventy 0:07:56.040 --> 0:07:59.680 hours a week to seventy two. You should add way 0:07:59.720 --> 0:08:03.560 way too too young to retire. Yes, how kind of 0:08:03.600 --> 0:08:09.480 you first? Are you? Okay? I just I don't know. 0:08:09.720 --> 0:08:13.240 You know, this is the gear the Washington. She probably 0:08:13.240 --> 0:08:15.120 went to Lloyd and said, Lloyd, I gotta see more, 0:08:15.120 --> 0:08:18.280 old Vetchkan. I mean, it's probably what happened. Abby. I 0:08:18.280 --> 0:08:21.240 want to get to the Fed. And David Brooks has 0:08:21.280 --> 0:08:23.560 a great single sentence today among all that's going on 0:08:23.680 --> 0:08:26.800 in Washington. He doesn't have to begin each day by 0:08:26.840 --> 0:08:29.680 making enemies, says Mr Brooks in The New York Times, 0:08:30.240 --> 0:08:35.959 is chair yelling President Trump's enemy? Based upon public commentary, 0:08:36.080 --> 0:08:39.280 It's a little hard to tell. Um. Clearly he made 0:08:39.360 --> 0:08:42.839 some unpleasant comments during the campaign, but has been more 0:08:42.960 --> 0:08:47.280 quiet recently. I believe that the Federal reserves independence is 0:08:47.440 --> 0:08:51.040 crucial to its success and therefore the success of the 0:08:51.160 --> 0:08:53.960 U S economy. One of the things I'm concerned about 0:08:54.160 --> 0:08:57.520 our movements in the Congress. For example, Senator Paul has 0:08:57.559 --> 0:09:02.160 indicated he would like the feds dece visions to be audited. UM, 0:09:02.200 --> 0:09:05.280 and I think to have somebody at the General Accounting Office. 0:09:05.720 --> 0:09:09.720 Second guests, the dedicated staff at the FED on policy 0:09:09.800 --> 0:09:12.199 changes is not a good idea. Maybe you can answer 0:09:12.200 --> 0:09:14.200 this question, because I couldn't answer it myself, and I 0:09:14.200 --> 0:09:17.080 can't find somebody answer for me. We're all becoming an 0:09:17.160 --> 0:09:21.320 expert on Guantanamo, Cuba, Ninth Circuit Court. All this law 0:09:22.080 --> 0:09:27.960 does a judicial process intrude in any threat to central 0:09:27.960 --> 0:09:33.160 bank independence, not to my knowledge. And I believe that 0:09:33.320 --> 0:09:36.360 what we're all getting over the last few days is 0:09:36.400 --> 0:09:39.360 a terrific lesson in civics, and dare I say it's 0:09:39.400 --> 0:09:42.800 some members of the administration are receiving that lesson as well, 0:09:43.040 --> 0:09:46.720 but as a nation, our knowledge of basic civics has 0:09:46.760 --> 0:09:50.400 declined in recent decades. When Sandra Day O'Connor retired from 0:09:50.400 --> 0:09:53.320 the Supreme Court, this was her number one focus. She 0:09:53.440 --> 0:09:57.160 developed something called ice Civics, which was an online curriculum, 0:09:57.320 --> 0:09:59.760 which is now, as I understand it, being used in 0:10:00.000 --> 0:10:02.680 half of the junior high schools throughout the United States. 0:10:03.080 --> 0:10:05.800 It's a huge deal. DA. Absolutely. Let's talk a little 0:10:05.840 --> 0:10:07.560 bit about the dollar as well. Obviously, that is something 0:10:07.559 --> 0:10:09.600 that Donald Trump has been paying attention to and talking about, 0:10:09.640 --> 0:10:11.640 or at least tweeting about where do you see the 0:10:11.880 --> 0:10:14.640 dollar headed? And what do you make of the tweets 0:10:14.679 --> 0:10:17.000 of the of the report that he's calling up General 0:10:17.000 --> 0:10:19.040 Mike Flynn to ask sort of what's better a stronger dollar, 0:10:19.080 --> 0:10:24.480 a weeker dollars. That's an administration that understands currency flux exactly. 0:10:25.040 --> 0:10:29.080 I think most market participants understand that there are pros 0:10:29.120 --> 0:10:33.000 and cons of a strong dollar. A strong dollar all 0:10:33.040 --> 0:10:36.400 of the things being equal, suggests that there's confidence in 0:10:36.440 --> 0:10:39.760 the United States, especially relative to other nations because the 0:10:39.840 --> 0:10:42.640 dollar is a relative price. On the other hand, a 0:10:42.679 --> 0:10:47.520 strong currency all by itself is something that could impede 0:10:48.080 --> 0:10:52.119 export growth. The United States, however, is not as sensitive 0:10:52.400 --> 0:10:55.840 to a strong currency as other nations would be, because 0:10:55.880 --> 0:10:58.560 so much of what we export is high value added 0:10:58.760 --> 0:11:02.320 goods and services, not all that that price depending. This 0:11:02.360 --> 0:11:04.959 is critical. This goes down to terms of traits. I mean, 0:11:04.960 --> 0:11:09.000 this is just absolutely critical that a third world agricultural, 0:11:09.120 --> 0:11:14.640 single product nation can't really be compared in FX dynamics 0:11:14.679 --> 0:11:18.120 to a high value added US. Right, that's exactly every day, 0:11:18.720 --> 0:11:21.400 That's exactly right, Tom. The other thing that's very different 0:11:21.640 --> 0:11:26.240 about the US is that our dollar is the main currency, 0:11:26.280 --> 0:11:29.000 it is the reserve currency, and it is the safe 0:11:29.000 --> 0:11:33.319 haven currency in this world. Whenever something goes wrong, including 0:11:33.320 --> 0:11:36.400 in the United States, there's a rush of foreign capital 0:11:36.720 --> 0:11:39.400 into the US UM. And we have to understand that 0:11:39.440 --> 0:11:43.680 there are large amounts of reserves sitting around the world. UM. 0:11:43.880 --> 0:11:48.360 The two largest holders outside the US China and Japan, 0:11:48.880 --> 0:11:52.200 and we have seen that China has been reducing its 0:11:52.280 --> 0:11:56.040 level of reserves of US dollars as interestingly, they have 0:11:56.200 --> 0:11:59.640 been trying to manipulate their currency, but manipulating it to 0:11:59.720 --> 0:12:02.880 the side, not to the down side. Babby, thank you, 0:12:02.960 --> 0:12:05.120 thank you, thank you for coming in Emmy, Joseph Cohe 0:12:05.120 --> 0:12:08.120 of Goldman Sachs and not enough market talk there for 0:12:08.120 --> 0:12:11.200 those who want to know what Abby thinks about the SMP. 0:12:12.160 --> 0:12:16.200 But certainly there was a sense of caution versus alright, bullish. 0:12:16.360 --> 0:12:19.520 She may have more time to join us in the future. Yeah, back, 0:12:19.960 --> 0:12:25.360 maybe she she she can, she can she do traffic, Yes, 0:12:25.440 --> 0:12:31.480 particularly in Queen's now your Queen's traffic board. There they flow, queens. 0:12:31.720 --> 0:12:34.320 They did very late last night, very like four in 0:12:34.320 --> 0:12:38.160 the morning. Joseph Cohen with Goldman Sachs at the point, 0:12:38.240 --> 0:12:53.640 Thank you, Greg Belly Horizon, Greg eight ways to go here. 0:12:53.679 --> 0:12:56.720 It's just been an extraordinary twenty four hours for all 0:12:56.760 --> 0:13:00.560 of us and our president. The certitude of his tweet 0:13:00.640 --> 0:13:04.640 last night assumes we vault to the Supreme Court. I 0:13:04.679 --> 0:13:08.880 have seen this morning alone, three or four experts say 0:13:09.400 --> 0:13:13.959 maybe not. What is the path from the Ninth Circuit 0:13:14.040 --> 0:13:17.040 Court And to begin the discussion, why don't they just 0:13:17.080 --> 0:13:21.079 go to a larger appeals court decision? Well, I think 0:13:21.080 --> 0:13:23.960 you're right, good morning time. I think that, uh, if 0:13:24.320 --> 0:13:26.920 if he's going to lose in the Supreme Court with 0:13:27.000 --> 0:13:29.600 a four or four tie, which would uphold the Ninth Circuit, 0:13:29.920 --> 0:13:32.839 or loses five to three in the Supreme Court. He 0:13:33.160 --> 0:13:35.680 doesn't like to lose. So I think the White House 0:13:35.720 --> 0:13:40.240 now is considering other options. Maybe they modify the immigration man, 0:13:40.360 --> 0:13:42.880 maybe they seek another court. So all of a sudden, 0:13:42.920 --> 0:13:47.079 that's a little cloudy within this in the greeting today 0:13:47.120 --> 0:13:49.920 and all the emotion of the Prime Minister of Japan 0:13:50.080 --> 0:13:54.600 visiting Arlington and the tomb of the unknown soldier folks, 0:13:54.320 --> 0:14:00.640 one steps, the salute, the second pause by the the 0:14:01.679 --> 0:14:05.440 officers and enlisted people there at the tomb. Within the 0:14:05.559 --> 0:14:09.959 drama and the picture is chaos. What is the part 0:14:10.080 --> 0:14:14.720 of the cacophony, Greg that you're focused on right now? Well, 0:14:14.720 --> 0:14:17.320 I don't want to be contrarian this morning with you, Tom. 0:14:17.640 --> 0:14:21.760 I think that they do things like this masterfully. It'll 0:14:21.800 --> 0:14:24.680 be well orchestrated. There's going to be talk of Japanese 0:14:24.760 --> 0:14:28.800 jobs coming to the US. They won't talk about currency issues. 0:14:28.920 --> 0:14:31.320 They're going to play golf this weekend. It will be 0:14:31.440 --> 0:14:34.440 labeled as a success. This guy, for all of his 0:14:34.600 --> 0:14:38.240 flaws for this horrible week he's had, can still manipulate 0:14:38.360 --> 0:14:42.840 the news cycle and brand himself brilliantly. Let me ask 0:14:42.880 --> 0:14:44.760 you about this phone call that we we heard about 0:14:44.880 --> 0:14:47.720 last night at President Trump calling Chinese president She's and 0:14:47.800 --> 0:14:51.000 being reaffirming the US commitment to the One China policy. Greg, 0:14:51.000 --> 0:14:53.120 what precipitated this and how important is it that the 0:14:53.120 --> 0:14:56.320 President made that call. I think it's a big deal, David, 0:14:56.320 --> 0:14:59.520 and it shows once again he can manipulate the news cycle. 0:14:59.760 --> 0:15:04.320 But a financial markets, this really alleviates fears of the U. S. 0:15:04.400 --> 0:15:07.640 China trade war. It's a good story, just like Japanese 0:15:08.200 --> 0:15:10.600 jobs are a good story, just like his talk yesterday 0:15:10.640 --> 0:15:13.120 about tax cuts is good. So he knows how to 0:15:13.160 --> 0:15:16.280 push the right buttons to change the subject when the 0:15:16.280 --> 0:15:19.440 subject gets pretty ugly, like it did yesterday. You mentioned 0:15:19.480 --> 0:15:22.280 the symbolism that we'll see today at Arlington at the 0:15:22.320 --> 0:15:24.320 White House. How about in the budget. Are we going 0:15:24.360 --> 0:15:26.000 to see a budget from this White House that's going 0:15:26.000 --> 0:15:27.680 to be replete with a lot of symbolism? And we've 0:15:27.680 --> 0:15:29.760 heard about cuts to the National Endowment of the Arts, 0:15:29.840 --> 0:15:32.760 National Endowment for the Humanities, et cetera. A small budget 0:15:32.760 --> 0:15:35.000 line items, but as I said, replete with symbolism. Is 0:15:35.000 --> 0:15:37.760 that what you're expecting when we get that document, it's 0:15:37.760 --> 0:15:40.160 going to be an epic battle. It will. It will 0:15:40.600 --> 0:15:43.840 far far surpass the fights we had with Ronald Reagan 0:15:43.880 --> 0:15:47.720 and his budget. The cuts he will propose will be enormous. 0:15:48.280 --> 0:15:51.080 Defense will get a boost, but everything else I think 0:15:51.120 --> 0:15:53.800 would get a severe cut. And of course he's now 0:15:53.800 --> 0:15:55.920 going to start talking about taxes. We've got a long 0:15:55.960 --> 0:15:58.720 way to go on that, but he he will start 0:15:58.760 --> 0:16:00.960 talking about that as well. Greg, I know on the 0:16:01.000 --> 0:16:04.400 shortlist David Gura comparely, he had to be medicated yesterday. 0:16:04.800 --> 0:16:10.880 The Kale Council will be cut back there subsiden Yeah, Gregg, 0:16:11.000 --> 0:16:13.160 thank you so much for perspective. I you know, I 0:16:13.160 --> 0:16:15.600 think I said last time, Gregg, I can't get crazier. Well, 0:16:15.640 --> 0:16:19.400 guess what, folks, it did last night was extraordinary. Gregg 0:16:19.440 --> 0:16:30.640 Valier with Horizon brought you by Bank of America. Mary Lynch, 0:16:30.760 --> 0:16:35.040 dedicated to bringing our clients insights and solutions to meet 0:16:35.040 --> 0:16:38.520 the challenges of a transforming world. That's the power of 0:16:38.560 --> 0:16:44.360 global connections. Mary Lynch, Pierce Federan Smith Incorporated, Member s 0:16:44.440 --> 0:16:49.760 I p C. This is the most important interview of 0:16:49.800 --> 0:16:53.359 the day for all of you. Across America and worldwide. 0:16:53.520 --> 0:16:57.680 Noah Feldman in Moments from Harvard University and Harvard Law, 0:16:58.040 --> 0:17:02.680 with careful, non political, non angled discussion of what we 0:17:02.760 --> 0:17:06.800 observed in American history yesterday. He's our most valuable players. 0:17:06.840 --> 0:17:12.240 Since January, Noah Feldman has brought clarity to the complexity 0:17:12.280 --> 0:17:15.639 of American law. Now let me start with the announcement, 0:17:15.680 --> 0:17:19.000 and everybody's punded this thing to death. You go back 0:17:19.520 --> 0:17:23.200 to eighteen sixties six. Daniel day Lewis saved the day 0:17:23.240 --> 0:17:27.600 for Abraham Lincoln late in eighteen sixty five, a tragic assassination. 0:17:28.240 --> 0:17:32.239 And then in Milligan we pick up the story of 0:17:32.280 --> 0:17:36.080 what we observed yesterday in San Francisco. Why does a 0:17:36.240 --> 0:17:41.000 Ninth Circuit court care about Milligan of eighteen sixty six. 0:17:42.560 --> 0:17:48.520 The reason is that after Lincoln's death, the federal government 0:17:48.760 --> 0:17:54.400 kept on trying to use the same military courts that 0:17:54.640 --> 0:17:57.440 Lincoln himself had put into place during the Civil War 0:17:58.080 --> 0:18:02.480 against civilians, including civilians who were seen as having been 0:18:02.800 --> 0:18:06.560 sympathetic to the Southern cause. And Lambdon p. Million was 0:18:06.640 --> 0:18:08.680 just such a person, a Southern Democrat, and he was 0:18:08.720 --> 0:18:12.680 put on trial for his life in a military court. 0:18:12.760 --> 0:18:16.199 Despite being a civilian, and the Supreme Court said no. 0:18:17.200 --> 0:18:22.120 It was a landmark decision holding that the criminal courts 0:18:22.640 --> 0:18:26.040 are open, and if they are open, then they have 0:18:26.240 --> 0:18:29.840 to be used to try civilians. The President United States 0:18:30.160 --> 0:18:34.720 is not the commander in chief ultimately of the country. 0:18:34.880 --> 0:18:37.840 He's the commander chief of the armed forces. And in 0:18:37.840 --> 0:18:40.520 this instance the Court struck down the use of the 0:18:40.560 --> 0:18:42.920 miliary courts. And then you moved to two thousand and 0:18:42.960 --> 0:18:46.800 eight with a sitting Judge Anthony Kennedy, and this is 0:18:46.840 --> 0:18:51.400 Guantanamo Bay in Cuba, where the courts said to President 0:18:51.440 --> 0:18:55.320 Bush what they said basically to President Trump yesterday discuss 0:18:55.480 --> 0:19:00.919 is it Boomadian exactly? Yea, just us so and so. 0:19:01.000 --> 0:19:04.680 In the Boden case, which is the last, the culminating 0:19:04.720 --> 0:19:08.360 case of the Guantanamo Bay cases, Congress with the signature 0:19:08.359 --> 0:19:11.680 of the President, had officially said the basic right of 0:19:11.720 --> 0:19:15.040 habeas corpus just doesn't apply to the detainees in Guantanamo. 0:19:15.560 --> 0:19:19.240 There there they can be tried by a military tribunal 0:19:19.600 --> 0:19:21.920 and the courts don't get to review the tribunal with 0:19:22.040 --> 0:19:25.320 the tribunal did and Justice Kennedy, writing for a majority 0:19:25.320 --> 0:19:29.080 of the Supreme Court, said more or less I'm quoting here. 0:19:29.440 --> 0:19:32.119 It's not up to Congress and the President to treat 0:19:32.119 --> 0:19:36.200 the Constitution like an on off switch. The Constitution is there, 0:19:36.280 --> 0:19:38.960 and therefore we're going to apply the Constitution even in 0:19:39.000 --> 0:19:42.240 Guantanamo Bay, which less we've forgotten, isn't actually part of 0:19:42.280 --> 0:19:44.480 the United States. But Justice Kennedy says, we're going to 0:19:44.520 --> 0:19:45.880 treat it as though it is in order to make 0:19:45.920 --> 0:19:50.040 the point that nobody is outside the reach of the Constitution. 0:19:50.119 --> 0:19:52.200 And the Court gets to say that. And as you say, 0:19:52.240 --> 0:19:55.080 that's exactly what the Ninth Circuit panel said yesterday to 0:19:55.119 --> 0:19:57.280 President Trump. Now, how did these attorneys channel deal with 0:19:57.280 --> 0:20:00.720 the issue of standing in this case in particular? Well, 0:20:00.720 --> 0:20:04.320 as you know, it's an open question whether states rather 0:20:04.359 --> 0:20:09.800 than individuals could bring a suit challenging President Trump's executive 0:20:09.880 --> 0:20:12.199 order on immigration, and the Ninth Circuit said that the 0:20:12.240 --> 0:20:15.040 reason the states of Washington and Minnesota were allowed to 0:20:15.080 --> 0:20:17.640 bring that suit is that they basically have a job 0:20:17.640 --> 0:20:22.159 of running universities, and through their state universities, they hire 0:20:22.720 --> 0:20:26.280 professors from abroad, they bring in visiting speakers from abroad, 0:20:26.280 --> 0:20:28.960 they have students who come from abroad. And the court 0:20:29.040 --> 0:20:33.959 bought the argument that the states in that job, essentially 0:20:34.000 --> 0:20:38.800 as university proprietors, are affected by the immigration order and 0:20:38.840 --> 0:20:41.280 therefore can come into court not only on their own behalf, 0:20:41.320 --> 0:20:44.040 but also on behalf of their students. And then went 0:20:44.080 --> 0:20:45.840 all the way back to the beginning of the twentieth 0:20:45.840 --> 0:20:49.760 century to site cases where schools were able to bring 0:20:49.800 --> 0:20:54.600 claims on behalf of their students, including a particularly important 0:20:54.800 --> 0:20:58.399 education case called Pierce against Society of Sisters, which is 0:20:58.480 --> 0:21:01.600 all the question of whether a private religious school was 0:21:01.640 --> 0:21:04.440 allowed to teach German, which actually been prohibited as part 0:21:04.440 --> 0:21:07.120 of the anti German legislation at the time of World 0:21:07.119 --> 0:21:09.000 War One. And it's a famous case and every law 0:21:09.040 --> 0:21:11.719 student reads it. The court ultimately said that you can 0:21:11.720 --> 0:21:15.159 teach your kids any damn thing you please. And the 0:21:15.200 --> 0:21:18.119 Supreme Court side of this for the unusual proposition that 0:21:18.200 --> 0:21:20.000 the case is actually brought by the nuns who ran 0:21:20.080 --> 0:21:24.280 the school. Help me understand how many parallel tracks we 0:21:24.359 --> 0:21:26.520 have here. There's talk of this case not going to 0:21:26.560 --> 0:21:30.040 the Supreme Court, of course, said remember the night of 0:21:30.080 --> 0:21:33.000 this band going into place. There is a decision in Brooklyn, 0:21:33.480 --> 0:21:36.840 another one shortly followed in in Massachusetts. How do you 0:21:36.840 --> 0:21:38.160 how do you make sense of all of this stuff? 0:21:38.160 --> 0:21:41.320 How does it all fit together? You're absolutely right. There 0:21:41.320 --> 0:21:43.439 are those cases, and then there are more. There's a 0:21:43.520 --> 0:21:48.399 Maryland case, there's another case now in Dallas. You know, 0:21:48.440 --> 0:21:51.359 there are many many approaches. If you were the you know, 0:21:51.400 --> 0:21:53.720 if you were the Department of Justice right now, you'd 0:21:53.760 --> 0:21:56.639 be looking around the country and thinking that you're you know, 0:21:56.680 --> 0:22:00.000 you're like the swordswoman in Kill Bill. You've got attackers 0:22:00.000 --> 0:22:01.679 coming you from all directions, and you've got to wield 0:22:01.680 --> 0:22:03.400 that sword and you've gotta keep on going after each 0:22:03.440 --> 0:22:06.560 and every one of them. That, unfortunately, is the reality, 0:22:06.640 --> 0:22:09.639 that's the legal reality from the perspective of the Department 0:22:09.640 --> 0:22:12.040 of Justice and the Trump administration. Because of our system 0:22:12.080 --> 0:22:15.200 of courts, we are the only person, or the only 0:22:15.240 --> 0:22:18.240 institution rather that can impose uniformity on the federal courts 0:22:18.320 --> 0:22:20.280 is the Supreme Court. And you can't get to the 0:22:20.320 --> 0:22:22.040 Supreme Court right away. You've got to work your way 0:22:22.080 --> 0:22:25.240 up through the lower courts. And so that's what happens 0:22:25.240 --> 0:22:28.080 when an administration gets challenged. You know, something similar happened 0:22:28.320 --> 0:22:31.960 in the Obama administration when there were various challenges across 0:22:31.960 --> 0:22:34.320 the country to the Affordable Care Act. They happened all 0:22:34.320 --> 0:22:36.959 over the country, and they gradually made their way up 0:22:37.000 --> 0:22:40.120 to the Supreme Court. So that's the That's the way 0:22:40.119 --> 0:22:41.679 the game is played. It's not how you or I 0:22:41.720 --> 0:22:45.040 would probably design the game from scratch, but that is 0:22:45.080 --> 0:22:47.560 how the several court system has devolved in US history, 0:22:47.600 --> 0:22:49.480 for better or worse. What's your sense of how equipped 0:22:49.480 --> 0:22:51.639 the Justice Department is to deal with with that? To 0:22:51.720 --> 0:22:54.800 be a swordsman fighting so many adversaries here, Remember how 0:22:55.200 --> 0:22:57.520 on the night of this argument in Seattle, how that 0:22:57.520 --> 0:22:59.520 telephone argument that the lawyers who were assigned of the 0:22:59.520 --> 0:23:02.480 case were removed from it because of their previous affiliation 0:23:02.480 --> 0:23:05.000 with Jones Day and a backup I think we can 0:23:05.040 --> 0:23:08.640 say was was shifted into to argue the case. Now 0:23:08.680 --> 0:23:10.840 the Justice Department has a new Attorney General, Jeff Sessions, 0:23:10.840 --> 0:23:14.280 sworn in, confirmed and sworn in. How how prepared, how 0:23:14.320 --> 0:23:16.560 ready is this Justice Department to defend this in so 0:23:16.640 --> 0:23:20.920 many venues? Well under normal circumstances, my answer would be 0:23:21.000 --> 0:23:23.520 extremely ready. You know, the d o J is not 0:23:23.680 --> 0:23:27.639 just an institution run from the top by an Attorney 0:23:27.640 --> 0:23:29.840 in General, though it of course is that. It's also 0:23:29.880 --> 0:23:34.520 got a huge deep bench of excellent lawyers who are 0:23:34.600 --> 0:23:36.680 what are called career employees, that is to say, they're 0:23:36.680 --> 0:23:39.320 not political employees hired and fired by each new president. 0:23:40.000 --> 0:23:43.080