WEBVTT - California Governor Says U.S. Needs to Step Up Its Game 0:00:00.240 --> 0:00:04.040 Runt you by Bank of America Mary Lynch. With virtual reality, 0:00:04.320 --> 0:00:09.719 virtually everything will change. Discover opportunities in a transforming world. 0:00:10.119 --> 0:00:14.440 Be of a mL dot Com, slash VR, Mary Lynch, 0:00:14.520 --> 0:00:28.120 Pierced Fenner and Smith Incorporated. Ye, Welcome to the Bloomberg 0:00:28.160 --> 0:00:32.360 Surveillance Podcast. I'm Tom Keene with David Gura. Daily we 0:00:32.440 --> 0:00:36.080 bring you insight from the best of economics, finance, investment, 0:00:36.120 --> 0:00:42.160 and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, 0:00:42.280 --> 0:00:50.280 Bloomberg dot Com, and of course on the Bloomberg Welcome 0:00:50.280 --> 0:00:52.440 nor Bloomberg eleven three studios. Joe Quinlan, he's the head 0:00:52.440 --> 0:00:54.880 of market and Thematic Strategy at Mary Lynch and US 0:00:55.360 --> 0:00:56.880 Trust and correct me if I'm wrong with There seems 0:00:56.880 --> 0:00:58.680 to be a great deal of anticipation at the volatility 0:00:58.640 --> 0:01:01.160 we might see on through you say, there's so much happening, 0:01:01.440 --> 0:01:03.480 whether whether it's the hearing on Capitol Hill or the 0:01:03.480 --> 0:01:05.520 e c v U. I mean, how do you position 0:01:05.560 --> 0:01:08.600 yourself ahead of an event like those? Well, you know, 0:01:08.640 --> 0:01:10.400 we we don't do a lot of positioning, you know, 0:01:10.440 --> 0:01:12.800 and more investors than traders, but we do have to 0:01:12.840 --> 0:01:14.880 hold the hands of our clients to say, okay, what's 0:01:14.920 --> 0:01:17.240 the risk to the portfolios when it comes to the 0:01:17.319 --> 0:01:20.560 UK election or what's happening in Middle East and Thursday. So, 0:01:20.640 --> 0:01:23.080 but you know, we kind of see through the political noise, 0:01:23.160 --> 0:01:26.720 try to discern what's real what's not and focus on earnings, 0:01:26.760 --> 0:01:29.800 the underlying growth, um, you know with the FED messaging 0:01:29.800 --> 0:01:31.640 when it comes to the balance sheets. So we're trying 0:01:31.680 --> 0:01:33.760 to look beyond some of the noise. But if we 0:01:33.800 --> 0:01:36.479 get some real fireworks or so smoking, you know, fire 0:01:36.600 --> 0:01:38.679 instead of smoke on Thursday, Yeah, you have to start 0:01:38.680 --> 0:01:40.200 thinking about what do we do with the portfolios to 0:01:40.240 --> 0:01:41.920 manage the risk. We just got a sense of how 0:01:41.959 --> 0:01:44.280 you regard Europe at this point. Um, when you look 0:01:44.319 --> 0:01:47.600 at the economy, it seems like it's in decent defined shape. Politically, 0:01:47.600 --> 0:01:50.840 it's still a bit thorny. How how do you navigate 0:01:50.880 --> 0:01:53.280 to I did navigate that right now. Wait, we still 0:01:53.320 --> 0:01:56.240 like these big large cap companies, life science companies out 0:01:56.240 --> 0:02:00.120 of Switzerland, Um, the capitol machinery guys out of German. 0:02:00.360 --> 0:02:03.200 You know, actually we're looking to buy some Spanish Italian 0:02:03.280 --> 0:02:06.480 banks because I think Merkel's more into Europe now that 0:02:06.600 --> 0:02:09.560 ever before, because of the differences with Trump administration. So 0:02:09.880 --> 0:02:13.280 if you've got a Germany acting more European and ready 0:02:13.320 --> 0:02:15.640 to step up and provide some of that capital, I 0:02:15.639 --> 0:02:17.360 think the spreads come in and I think some of 0:02:17.400 --> 0:02:19.919 these weaker banks look very good on the upside. Hey, 0:02:19.919 --> 0:02:22.040 you highlight this in a recent note of coming from 0:02:22.080 --> 0:02:24.840 Uncle and Merkel. We Europeans must take our destiny into 0:02:24.919 --> 0:02:28.040 our own hands. What changed after the French election, or 0:02:28.240 --> 0:02:30.000 after the G seven summit, or after the US with 0:02:30.080 --> 0:02:32.720 three from from from the Paris Agreement. What's what's Europe 0:02:32.840 --> 0:02:35.000 looking like now? Where is it head to do? You thing? Well? 0:02:35.040 --> 0:02:38.079 I think I don't want to see a transatlantic breaker 0:02:38.240 --> 0:02:40.720 divorce in the United States and Europe are the bedrock 0:02:40.760 --> 0:02:44.120 of the global economy. But there's clearly frustration on the 0:02:44.200 --> 0:02:47.800 part of the Europeans, Brussels, France and particularly Mercle that 0:02:47.880 --> 0:02:50.000 the US is going to just go its own way, 0:02:50.000 --> 0:02:51.680 and therefore we've got to just step up and be 0:02:51.760 --> 0:02:54.359 our own, you know, kind of grow up. The question 0:02:54.440 --> 0:02:57.280 is will Germany actually lead in that lecture? So well, 0:02:57.360 --> 0:02:59.639 that's yet to be determined. So we see what's happening 0:02:59.639 --> 0:03:02.240 in the realm of geopolitics. How weird are you about 0:03:02.280 --> 0:03:06.160 the continuity or the strength of the economic relationship between 0:03:06.160 --> 0:03:08.200 the US and Europe at this point. I think it 0:03:08.200 --> 0:03:10.359 will stand the problems we have here in a near 0:03:10.440 --> 0:03:13.360 term with the Trump administration and also the Merkel because 0:03:13.440 --> 0:03:16.720 when you look at the underlying commercial linkage is they're 0:03:16.800 --> 0:03:20.560 very deep, they're very broad, their investment, their trade. Uh 0:03:20.600 --> 0:03:22.679 you know, you've got Deer just announcing they're going to 0:03:22.720 --> 0:03:25.960 buy a German capital goods maker. That's going to continue 0:03:26.120 --> 0:03:28.840 in Ireland is very much and radar screens of a 0:03:28.880 --> 0:03:31.720 lot of US companies related to taxes or not. So Yeah, 0:03:31.720 --> 0:03:34.760 I think business in general continues, but the policy overlay 0:03:34.800 --> 0:03:36.960 could be better. There's no one's talking about t TIP 0:03:37.000 --> 0:03:39.240 anymore because that died on the vine. Joe Quinlin, the 0:03:39.280 --> 0:03:42.680 head of market in Thematic Strategy at Marylynch and US Trust, 0:03:42.760 --> 0:03:44.760 How would you of a risk? Is trade still at 0:03:44.760 --> 0:03:47.120 this point? You mentioned t TIP, that agreement that was 0:03:47.640 --> 0:03:49.560 being hammered out for for a long time between the 0:03:49.640 --> 0:03:52.600 US and Europe. Is it still downside risk that the 0:03:52.640 --> 0:03:54.680 fact that we could see some increased protectionism or some 0:03:54.760 --> 0:03:57.320 changes to trade policy. I think the biggest risk would 0:03:57.320 --> 0:04:00.400 be really local, whether it's between NAFTA UM in the 0:04:00.480 --> 0:04:03.600 United States because it's the global supply Chaine. It's remarkable. 0:04:03.600 --> 0:04:05.080 In the last ten years or so, even the last 0:04:05.080 --> 0:04:08.360 five years, a lot of US companies brought their supply 0:04:08.480 --> 0:04:12.080 chains closer to the U. S vs V, Canada and Mexico, 0:04:12.360 --> 0:04:15.000 you know, away from China after the crisis, and now 0:04:15.040 --> 0:04:18.720 we're ready to the disruptive supply chains. Mexico is very important. 0:04:18.760 --> 0:04:22.480 It's just an extinction of the industrial production network of 0:04:22.560 --> 0:04:26.599 the United States. Good morning everyone, Good morning David. We 0:04:26.720 --> 0:04:28.240 sent way too much time to you think it's three 0:04:28.279 --> 0:04:32.159 days in a row to change Joe Quitlin with this 0:04:32.240 --> 0:04:36.159 Maryland and US trust as well as some good perspective UM. 0:04:36.240 --> 0:04:38.400 One thing we've seen in our trade interviews is the 0:04:38.440 --> 0:04:41.840 idea of process. Industrial process has changed everything. I understand 0:04:41.839 --> 0:04:45.960 that any politician has to go back to residences of 0:04:46.080 --> 0:04:50.120 previous culture and dialogue within America. How do the politicians 0:04:50.160 --> 0:04:56.960 explain the new industrial proper process to beleaguered constituents. Well, Tom, 0:04:56.960 --> 0:04:58.760 I think they gotta listen to the governors. You know, 0:04:58.839 --> 0:05:01.640 if you're the governor of South Carolina or Alabama, you've 0:05:01.680 --> 0:05:05.040 you've been at the table negotiating with these big multinationals 0:05:05.040 --> 0:05:07.080 in terms of tax incentives, But what are we going 0:05:07.120 --> 0:05:09.280 to get in return when it comes to the number 0:05:09.320 --> 0:05:11.640 of employees, How we're going to bring in parts, how 0:05:11.640 --> 0:05:15.120 we're gonna increase our main in America content. So I 0:05:15.160 --> 0:05:19.039 would talk to Kentucky governors, Michigan maybe perhaps, but the 0:05:19.120 --> 0:05:22.160 southeastern part of this country has done a fabulous job 0:05:22.600 --> 0:05:27.320 reinventing itself as a manufacturing powerhouse courtesy of foreign multinationals 0:05:27.360 --> 0:05:29.120 being on the ground. You mentioned how you're able to 0:05:29.160 --> 0:05:30.640 sort of tune out, to try to tune out that 0:05:30.680 --> 0:05:33.200 the political noise. If if I'm the head of a 0:05:33.279 --> 0:05:37.160 multinational German base multinationals, say, how am I supposed to 0:05:37.240 --> 0:05:39.240 navigate what I'm seeing from the President when it comes 0:05:39.279 --> 0:05:42.279 to his focus on the trade deficit side. Well, I 0:05:42.279 --> 0:05:45.200 mean that's very challenging, and there's a lot of anks around, 0:05:45.400 --> 0:05:48.120 you know, the kind of welcoming Matt for here in Washington. 0:05:48.520 --> 0:05:50.680 But you know, but if you're a CEO, you're spending 0:05:50.680 --> 0:05:52.919 more time out in the states or the local communities 0:05:52.960 --> 0:05:55.000 than you are in Washington. Obviously you've got your big 0:05:55.040 --> 0:05:57.840 lobbyists working the corridors of power. But I think at 0:05:57.839 --> 0:06:00.359 the end of the day. The US economy is still open. 0:06:00.440 --> 0:06:04.120 We've got a very large consumer base, great universities that 0:06:04.200 --> 0:06:05.800 you want to be here. You a lot of just 0:06:06.000 --> 0:06:08.880 many multinationals can't afford not to be here. We're talking 0:06:08.880 --> 0:06:12.200 about European equities, and what you find an attractive there 0:06:12.400 --> 0:06:14.840 is the baskets of the basket of goods, the basket 0:06:14.880 --> 0:06:16.840 of kinds of companies similar in the U S. When 0:06:16.839 --> 0:06:20.680 you're looking at US equities that you like in general, 0:06:20.760 --> 0:06:24.719 whether it's pharmaceuticals, some logistics companies out of the Nordic States. 0:06:24.760 --> 0:06:28.000 But I think the upside, the opportunity could be these 0:06:28.040 --> 0:06:32.200 weaker financial institutions and how do you dare saving Greece, Spain, 0:06:32.360 --> 0:06:35.120 Italy have a Barbell strategy, you have the risk out there. 0:06:35.520 --> 0:06:38.800 You want to own the big, big guys that I 0:06:38.920 --> 0:06:43.159 mean to interrupt, but the theme this morning David Gura 0:06:43.680 --> 0:06:46.760 has been mergers in combinations. That's the only way in 0:06:46.800 --> 0:06:50.160 a subpart nominal GDP is that just what we're gonna see. 0:06:50.200 --> 0:06:53.560 Joe Quitlin is Andrew mellon Redux. I mean, you have 0:06:53.880 --> 0:06:56.520 more more Bolton's. It's it's very hard to drive that 0:06:56.680 --> 0:07:00.960 organic growth and you're gonna you're seeing really transatlantic alliance 0:07:01.000 --> 0:07:04.760 become even more consolidated by industry. I think that's time. 0:07:04.839 --> 0:07:06.680 You know, you gotta buy the market share, and the 0:07:06.960 --> 0:07:09.520 shareholders are okay with us, so the border directors, it's 0:07:09.520 --> 0:07:11.920 just very hard to come out and drive that get 0:07:11.960 --> 0:07:14.880 those new markets. David, I think this is a huge deal. 0:07:15.240 --> 0:07:17.520 I mean, given what we see on the tape with 0:07:17.600 --> 0:07:21.160 futures deteriorating just in the last twenty minutes, yields once 0:07:21.160 --> 0:07:25.520 again coming down Joe Quillan two one. They haven't broken 0:07:25.520 --> 0:07:28.280 through in the two year but you really just wonder 0:07:28.800 --> 0:07:32.600 if rates don't rise, that's got to mean cheap money, 0:07:32.680 --> 0:07:35.920 which means the strongest stronger, right, the strongest stronger they 0:07:35.920 --> 0:07:38.600 can they can take on more risk, leverage up. Not 0:07:38.600 --> 0:07:40.040 not to the point where we're looking at it, but 0:07:40.240 --> 0:07:42.119 I think you know, the m n A, the share 0:07:42.160 --> 0:07:44.720 buy backs, the dividends. Time. You know, it's a it's 0:07:44.720 --> 0:07:47.440 a tired story, but it's it's playing out and you 0:07:47.440 --> 0:07:49.000 don't you don't want to miss it. Given where the 0:07:49.080 --> 0:07:51.040 yields are in the fixed income you have a lot 0:07:51.040 --> 0:07:55.360 of have a lot of people missed it. John Trucker 0:07:55.480 --> 0:08:02.400 Total total no I'm totally on top of it now. 0:08:02.880 --> 0:08:04.640 I think a lot of folks have it, just the 0:08:04.680 --> 0:08:07.760 disbelief of waiting for the turn and it hasn't come yet. 0:08:07.840 --> 0:08:10.840 So we want the dividend payers, the growth players, and 0:08:10.880 --> 0:08:13.200 but you can get some upside when it comes to 0:08:13.240 --> 0:08:15.520 the emerging markets. And I think some of these technology 0:08:15.520 --> 0:08:18.040 companies leverage. Is there a limit to the leanness? How 0:08:18.120 --> 0:08:20.880 lean these companies can can become? That's a good question. 0:08:22.560 --> 0:08:25.680 We're working for a bank, I always think that same thing. Um, 0:08:25.840 --> 0:08:29.120 is there a limit? Yeah, not yet, not that we've seen, right. 0:08:29.160 --> 0:08:31.320 I mean, it's a remarkable what we get out of 0:08:31.320 --> 0:08:34.160 a workforce being so taunt and tank that it is. So, 0:08:34.200 --> 0:08:36.120 I mean, is there a limit? Sure? But we can 0:08:36.200 --> 0:08:39.319 we can automate. But the question is the consumers when 0:08:39.320 --> 0:08:41.360 we're sitting on a line for like, you know, two 0:08:41.360 --> 0:08:43.600 minutes before we get to a body or that's we 0:08:43.679 --> 0:08:47.240 pay Joe Quinlin with US Maryland, US Trust through these 0:08:47.679 --> 0:08:50.200 with US. Joe in the old days used to say, 0:08:50.200 --> 0:08:52.040 can you withstand a bear market? You know you're go 0:08:52.040 --> 0:08:53.960 into equities, you put risk in hand, and the bearer 0:08:54.000 --> 0:08:57.280 markets define I'll call it eighteen percent. The gloom crew 0:08:57.280 --> 0:09:01.040 would say, it's been so long since we've enjoyed a 0:09:01.080 --> 0:09:05.400 ten percent correction or beer market. Are we ready to 0:09:05.440 --> 0:09:13.280 withstand losses in a constructive fashion? I think constructive. I 0:09:13.320 --> 0:09:15.320 think so yes. But we're not seeing that, Tom, I 0:09:15.360 --> 0:09:19.160 mean we were. We're in the portfolios you managed to risk. Um. 0:09:19.200 --> 0:09:21.640 We do have a lot of people I think well 0:09:21.720 --> 0:09:25.280 positioned because they didn't put all their money into into equity. 0:09:25.280 --> 0:09:26.679 If we've got a lot of folks sitting in fixed 0:09:26.720 --> 0:09:29.600 income yielding virtually nothing, but that that helps them sleep 0:09:29.640 --> 0:09:32.040 at night. So I think we can manage the downside. 0:09:32.520 --> 0:09:34.480 I guess you'd have to tell me how do we 0:09:34.520 --> 0:09:37.400 get to a bear market? One of the conditions the catalysts. 0:09:37.679 --> 0:09:39.600 I don't see any of my experiences when we get 0:09:39.640 --> 0:09:41.920 to a bear market. We get there by not experience, 0:09:42.000 --> 0:09:44.959 by not knowing it's that was like, oh, that was 0:09:45.040 --> 0:09:48.320 harsh that now we see it was to see a 0:09:48.360 --> 0:09:52.480 certain percentage of our younger girl like audience has never 0:09:53.040 --> 0:09:56.120 enjoyed the bearer market. But with Tom, I think what 0:09:56.160 --> 0:09:58.120 I've noticed with some of our clients, many of our 0:09:58.120 --> 0:10:00.920 clients actually coming out of the Great Recession two thousand 0:10:01.040 --> 0:10:05.200 nine two, they really remain cautious. We have we have 0:10:05.280 --> 0:10:08.040 clients still in cash, for instance, or they're buying hard 0:10:08.080 --> 0:10:12.839 assets timber, farmland, um, gold, commercial real estate. So I 0:10:12.840 --> 0:10:16.160 don't see I see a cautious undertone to the investors 0:10:16.200 --> 0:10:18.560 since two thousand and nine, So maybe that minimizes some 0:10:18.600 --> 0:10:20.760 of the risk on the downside. We'll get through the 0:10:20.960 --> 0:10:23.160 Comy polluts of this week and two too next week 0:10:23.240 --> 0:10:25.320 when we have a two day FED meeting. We've heard 0:10:25.320 --> 0:10:28.040 a lot of commentary from Fed policy makers about the 0:10:28.120 --> 0:10:31.400 challenges of the plans for unwinding that massive balance sheet, 0:10:32.080 --> 0:10:33.480 and a lot of the maintaining it's not going to 0:10:33.600 --> 0:10:36.679 have a huge effect on on the market. Least that's 0:10:36.679 --> 0:10:38.640 their their hope. What's your sense of of how that's 0:10:38.640 --> 0:10:40.640 all going to play out. I think it's gonna play 0:10:40.679 --> 0:10:43.319 out very in a very long deliberate ways. I mean, 0:10:43.440 --> 0:10:46.240 very very long term. It's not gonna happen all at once. 0:10:46.360 --> 0:10:48.400 I think the Fed wants to move next week and 0:10:48.440 --> 0:10:50.920 then kind of step back and reassess how strong is 0:10:50.960 --> 0:10:53.280 the economy, what kind of cute three numbers where we're 0:10:53.280 --> 0:10:56.080 gonna look at, you know, we need the underlying strength 0:10:56.080 --> 0:10:58.760 to unwind the balance sheet, and so so does Europe 0:10:58.760 --> 0:11:01.080 and Japan and everyone else for that matter. So I 0:11:01.080 --> 0:11:04.000 think that's it's unwinding. The balance sheet is an out 0:11:04.000 --> 0:11:06.720 front and center, but when it comes to actually happening, 0:11:07.000 --> 0:11:10.600 you're talking story mark one. In that end sense, it's 0:11:10.600 --> 0:11:13.199 gonna be a long term process. That long. Yes, I 0:11:13.240 --> 0:11:16.040 think it could take that long because you're you're it's 0:11:16.040 --> 0:11:18.000 gonna you're gonna They're not gonna do it all at once. 0:11:18.000 --> 0:11:21.120 It's gonna be well advertised. I think they're gonna go slow. Now, 0:11:21.280 --> 0:11:23.400 another issue could be who's gonna be running the FED 0:11:23.640 --> 0:11:25.319 a year from how or so that's gonna be another 0:11:25.320 --> 0:11:27.160 issue in the composition of the How much thought are 0:11:27.200 --> 0:11:29.240 you giving to that? I mean, how big a difference 0:11:29.240 --> 0:11:32.079 could that make? Names floated now about who might be 0:11:32.280 --> 0:11:34.400 We're just we're just starting to look at that kind 0:11:34.400 --> 0:11:36.600 of I don't think no one radical, but like it 0:11:36.600 --> 0:11:39.640 could be something that could be a variable in terms 0:11:39.679 --> 0:11:43.920 of the timing. I look, Joe at all the discussions 0:11:43.920 --> 0:11:47.000 today people in the markets, and they still go back 0:11:47.080 --> 0:11:52.840 to basic securities research one on one, which is multiples, multiples. 0:11:52.840 --> 0:11:55.840 It's a bit rich right now, Where is the value 0:11:56.000 --> 0:11:58.719 in the market thinking the value in the market. Time. 0:11:58.760 --> 0:12:01.200 I think in certain I think banks are still there's 0:12:01.200 --> 0:12:03.640 some good value at banks, you know, whether it's large banks, 0:12:03.640 --> 0:12:05.760 some regional banks. And is that because you wake up 0:12:05.840 --> 0:12:08.400 January one to know you're gonna get x percent dividend 0:12:08.559 --> 0:12:12.199 dividend growth and in share buy back. UM, that's part 0:12:12.240 --> 0:12:13.800 of it. But I also think the banks are you know, 0:12:13.880 --> 0:12:15.880 many of them are under owned. I think there's summer 0:12:15.920 --> 0:12:20.400 trading at book value. UM. I believe the US economy 0:12:20.800 --> 0:12:25.800 plots ahead, good demographics, household ownership is rising, the household 0:12:25.880 --> 0:12:29.160 in general net worth is at all time highs UM. 0:12:29.200 --> 0:12:30.760 So I think there's some value there and believe it 0:12:30.840 --> 0:12:32.920 or not. Time I think there's value in technology. I 0:12:33.000 --> 0:12:35.360 know that's crazy because I just go back to like 0:12:35.520 --> 0:12:38.200 all the new Internet users are going to have these phones, 0:12:38.320 --> 0:12:42.120 these devices get connected the digital global economy. It's that 0:12:42.200 --> 0:12:45.160 we're only halfway there in terms of overall development. So 0:12:45.240 --> 0:12:47.000 there I see some value there. Hold in on that 0:12:47.040 --> 0:12:48.280 a little bit if you would. I mean, we saw 0:12:48.320 --> 0:12:50.400 what happened with with Snap. Are you interested in the 0:12:50.480 --> 0:12:52.400 hardware side more than the software side? Where where do 0:12:52.440 --> 0:12:55.840 you see that value where that potentially more in the hardware. 0:12:55.880 --> 0:12:58.360 I mean looking at an Apple or even say a Facebook. 0:12:58.360 --> 0:13:00.559 If they can crack India, I come act to Indian 0:13:00.679 --> 0:13:04.240 China because over two billion people in India's behind when 0:13:04.280 --> 0:13:06.160 it comes to the Internet usage. But it's coming. You 0:13:06.200 --> 0:13:09.079 see with the females, the girls. That's gonna be a 0:13:09.120 --> 0:13:12.760 big issue driver for education. So you know Africa's to poor. 0:13:12.840 --> 0:13:14.920 Do we have a smartphone just yet? But that's changing 0:13:15.080 --> 0:13:17.599 rapidly in the big cities. So I think, you know, 0:13:17.800 --> 0:13:20.240 you've got to look at these big US multinationals, look 0:13:20.280 --> 0:13:22.360 at the valuations, how can they drive earnings? And then 0:13:22.360 --> 0:13:24.120 you've got to look at the emerging markets and match 0:13:24.160 --> 0:13:26.559 it up. So very valuable. Thank you so much. With 0:13:26.600 --> 0:13:41.320 Marylynch and US trust. Joseph Quinland with US today. Failure 0:13:41.360 --> 0:13:44.920 to Adjustice a wonderful complete book on trade dynamics. It 0:13:45.000 --> 0:13:48.200 will make you smarter and more cute about our trade. 0:13:48.200 --> 0:13:51.760 Hees with the Council on Foreign Relations and he's gone 0:13:51.840 --> 0:13:54.400 rusvelty And is that how you pronounce it, David girls, 0:13:54.480 --> 0:13:57.800 welty and honest. He sees a new deal in the 0:13:57.960 --> 0:14:01.800 trade world. When you say new deal, Ted Alden Republicans 0:14:01.960 --> 0:14:07.079 turn shades of pink, what is a new deal in trade? No, 0:14:07.240 --> 0:14:10.120 I'm sure, I'm sure they do, referring to a new 0:14:10.160 --> 0:14:12.319 paper I've I've written with my friend Bob Lytton, who's 0:14:12.320 --> 0:14:15.680 a superb economists. We're, you know, we're trying to think 0:14:15.760 --> 0:14:18.120 through the problem of you know, here we are in 0:14:18.200 --> 0:14:21.440 this hyper competitive global economy, and it's not just trade, 0:14:21.480 --> 0:14:27.120 it's technology, and Americans are having trouble responding to that, 0:14:27.240 --> 0:14:29.600 particularly a lot of people who are not getting the 0:14:29.720 --> 0:14:32.920 education the skills they need to thrive in that economy. 0:14:32.960 --> 0:14:36.400 And we argue that we need to think about that, uh, systematically, 0:14:36.600 --> 0:14:39.160 at the federal level, at the state level. And the 0:14:39.200 --> 0:14:41.600 Republicans have a lot of good ideas here in terms 0:14:41.680 --> 0:14:45.880 of of, you know, people taking individual responsibility for their 0:14:46.040 --> 0:14:48.760 career choices. But Democrats also have a lot of good 0:14:48.800 --> 0:14:51.320 ideas in terms of trying to give people a leg up. 0:14:51.400 --> 0:14:54.000 So so we were trying to blend those two in 0:14:54.160 --> 0:14:56.520 this in this new paper we put together and walk 0:14:56.600 --> 0:14:59.560 us through what you're proposing, just in in broad detail. 0:14:59.640 --> 0:15:01.360 One of the as you're you're suggesting, as we need 0:15:01.440 --> 0:15:04.040 kind of a kind of national and elective national service 0:15:04.120 --> 0:15:06.600 mechanism just to get people trained, get people new skills. 0:15:06.960 --> 0:15:08.200 I mean, there are a bunch of different things. On 0:15:08.280 --> 0:15:10.320 the one hand, where we're arguing, you know, let's let's 0:15:10.400 --> 0:15:13.680 eliminate obstacles to people being able to find work. We've 0:15:13.720 --> 0:15:17.240 got licensing restrictions across states that are a huge obstacle. 0:15:17.320 --> 0:15:19.600 You look at land use restrictions make it very difficult 0:15:19.640 --> 0:15:23.720 for people to move to areas where jobs are being created. 0:15:24.080 --> 0:15:26.280 I mean, we call in general for you know, tax 0:15:26.360 --> 0:15:29.320 reform to increase investment. That's all things that the Republicans 0:15:29.360 --> 0:15:32.200 would be very positive about. On the other side, you've 0:15:32.240 --> 0:15:34.960 got to make it possible for people to acquire the 0:15:35.040 --> 0:15:36.840 skills they need to fill the good jobs that are 0:15:36.880 --> 0:15:39.880 being created. So we call, for instance, for for lifetime 0:15:40.120 --> 0:15:43.400 career loans where you know, not just borrowing for college, 0:15:43.480 --> 0:15:46.160 but you could borrow to to train at any point 0:15:46.200 --> 0:15:50.760 in your career, repayable based on future income, which is 0:15:50.800 --> 0:15:52.680 an idea that's been developed in the in the student 0:15:52.760 --> 0:15:56.720 loan area. And then on the service side, particularly for 0:15:56.880 --> 0:16:01.360 young people, expanded opportunities for or National service to work 0:16:01.440 --> 0:16:04.560 with with other people from different backgrounds to develop a 0:16:04.600 --> 0:16:07.040 set of skills to launch them in their careers. It 0:16:07.160 --> 0:16:11.600 sounds positively Australian. With my limited knowledge of the Austrians 0:16:11.640 --> 0:16:13.360 have done well at some of these things, so well, 0:16:13.360 --> 0:16:14.760 I guess I'm gonna learn. Now. Do we have any 0:16:14.800 --> 0:16:20.560 political feasibility on either party to be less American and 0:16:20.680 --> 0:16:23.640 more Australian? I mean, I do think, you know, we're 0:16:23.760 --> 0:16:27.360 in this period where predictions are really hard because the 0:16:27.440 --> 0:16:30.120 Republicans are a divided party. I think some of what 0:16:30.720 --> 0:16:34.520 Trump ran on I think fits very well with this agenda, 0:16:34.640 --> 0:16:37.160 particularly helping you know a lot of the voters from 0:16:37.200 --> 0:16:39.200 the rest belt who put him in the White House. 0:16:39.280 --> 0:16:42.520 But you've got a Republican party that's that's still basically 0:16:42.640 --> 0:16:45.880 a tax cutting party, very allergic to any sort of 0:16:45.960 --> 0:16:49.080 positive role for government. But I do believe there is 0:16:49.200 --> 0:16:53.160 the possibility here for new cross party coalitions. Whether we're 0:16:53.160 --> 0:16:55.120 gonna get there remains to be seen, but I think 0:16:55.160 --> 0:16:58.160 the possibility exists. Ten Alton, this we will continue with 0:16:58.240 --> 0:17:01.480 the console foreign relations. We'll go back to more traditional 0:17:01.560 --> 0:17:05.480 tradegar you want to talk some sugar, you're in charge 0:17:06.160 --> 0:17:08.080 with us. A senior fell at the Council on Form Relations, 0:17:08.080 --> 0:17:10.520 author of the book Failure to Adjust How Americans Got 0:17:10.600 --> 0:17:13.200 Left Behind? In the global economy and going to break 0:17:13.240 --> 0:17:15.520 ted I said, I wanted to talk sugar. Looks like 0:17:15.520 --> 0:17:17.359 we're going to get a press conference this afternoon with 0:17:17.400 --> 0:17:19.480 wilpur Ross, the Secretary of Commerce, on a deal with 0:17:19.640 --> 0:17:22.359 Mexico on sugar. So much of our focus has been 0:17:22.400 --> 0:17:25.920 on NAFTA, the prospect for reforms or changes to NAFTA. 0:17:25.920 --> 0:17:27.399 Of course, the White House sending it's a letter to 0:17:27.480 --> 0:17:31.119 Congress indicating it plans to renegotiate that deal. What can 0:17:31.200 --> 0:17:34.120 we learn about this administration's trade policy from how they've 0:17:34.160 --> 0:17:37.600 handled the issue of sugar with Mexico. Well, we will 0:17:37.600 --> 0:17:39.680 see what the deal is this afternoon. But I think 0:17:39.760 --> 0:17:43.000 this is actually an encouraging sign. I mean, sugar is 0:17:43.040 --> 0:17:46.800 one of those difficult issues where you've got, uh, you know, 0:17:46.920 --> 0:17:50.840 a very protected market in the United States, sugar producers 0:17:50.880 --> 0:17:54.080 who rely on quotas and other trade barriers. You've got 0:17:54.200 --> 0:17:57.040 a Mexico this pretty efficient in producing sugar, sells a 0:17:57.080 --> 0:17:59.000 lot of it to the United States. And so this 0:17:59.160 --> 0:18:00.879 is just one of those shoes where you've got to 0:18:00.920 --> 0:18:04.159 balance off the interests of Mexico the interests of sugar 0:18:04.320 --> 0:18:06.800 users like candy makers here in the United States. And 0:18:07.000 --> 0:18:10.320 the interests of the sugar producers in Florida and the 0:18:10.400 --> 0:18:13.080 sugar beat producers in Minnesota and other places. And I 0:18:13.119 --> 0:18:15.399 think the fact that they've been able to come away 0:18:15.480 --> 0:18:18.440 with a deal is very encouraging. I mean, you contrast 0:18:18.520 --> 0:18:21.119 that with Canadian lumber, for instance, where we're in the 0:18:21.200 --> 0:18:23.879 middle of of a much more serious trade conflict. I 0:18:23.920 --> 0:18:25.560 think this is a good sign. I think bodes well 0:18:25.600 --> 0:18:28.040 for the NAFTA renegotiation. What if you have observed about 0:18:28.119 --> 0:18:32.560 the interpersonal relationship here between Secretary Ross and his Mexican counterparts, 0:18:32.560 --> 0:18:35.159 when when you look for signs of optimism, does it 0:18:35.240 --> 0:18:38.360 seem like there is a a good basis for conversation 0:18:38.400 --> 0:18:41.520 at the very least between between these officials. I mean, 0:18:41.600 --> 0:18:43.800 I do. I think Ross has emerged as a very 0:18:43.880 --> 0:18:46.959 important figure in this administration on trade. He's very active 0:18:47.040 --> 0:18:50.359 on the subject. He's very engaged both here in the 0:18:50.480 --> 0:18:53.800 United States with the various interests and and with his 0:18:54.400 --> 0:18:56.760 foreign counterparts. I think the fact you've got Bob Leitheizer 0:18:56.880 --> 0:19:00.320 now confirmed as the US trade representative, I think we 0:19:00.440 --> 0:19:04.680 have the makings here of of a serious professional team 0:19:04.760 --> 0:19:06.879 on trade policy. And I think the fact of the 0:19:06.960 --> 0:19:09.680 sugar deal has come together. Here's an indication of that. 0:19:09.920 --> 0:19:12.120 What do we know about Bob Lightheiser helped be different 0:19:12.160 --> 0:19:14.280 from Wilber Rosse's in Paris? As I understand it, this 0:19:14.359 --> 0:19:17.159 week meeting with THEOE see the beginning to travel some. 0:19:17.280 --> 0:19:18.920 Of course, Wilbert Ross has been doing the bulk of 0:19:19.000 --> 0:19:21.720 that while we were waiting for the confirmation of Bob Lightheiser. 0:19:21.960 --> 0:19:24.040 What's he gonna do differently? How's he going to compliment 0:19:24.080 --> 0:19:27.280 Secretary Ross? Well? I think there's clearly some overlap. They 0:19:27.320 --> 0:19:30.000 both have a long history in the steel industry. Ross 0:19:30.119 --> 0:19:33.040 is an investor and Lightheiser as a trade lawyer in 0:19:33.160 --> 0:19:37.240 Washington for steel interests. Um. You know, Lightheiser goes back 0:19:37.320 --> 0:19:40.600 to the Reagan administration, very long history working on these issues. 0:19:40.640 --> 0:19:43.480 I think they they share in common the belief that 0:19:43.520 --> 0:19:46.080 the United States needs to be tougher with its trading 0:19:46.160 --> 0:19:51.119 partners drive better deals. Um. I think they're the difficult 0:19:51.200 --> 0:19:55.680 issues will have to do with the role of trade 0:19:55.760 --> 0:20:00.240 negotiations going forward. I think Lightheiser is more amina boll 0:20:00.320 --> 0:20:03.840 to to doing trade deals of various sorts. I think 0:20:03.880 --> 0:20:05.840 there's a fair bit of resistance from from the White 0:20:05.880 --> 0:20:07.639 House and and from Ross, So we'll see how that 0:20:07.680 --> 0:20:11.359