Speaker 1: Yea. Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene
Speaker 1: Jay Leye. We bring you insight from the best in economics, finance, investment,
Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud,
Speaker 1: Bloomberg dot Com, and of course on the Bloomberg. Yeah.
Speaker 1: The earnings here in the United States continue to take
Speaker 1: the headlines. And it's Morgan Stanley this morning smashing estimates
Speaker 1: with investment banking revenue up seven percent, trading revenue for
Speaker 1: debt trading and equity trading also smashing estimates, and the
Speaker 1: stock up this morning by one point eight percent in
Speaker 1: the pre market. And please to say that joining us
Speaker 1: to react as Kate Moore, black Rock chief equity strategist
Speaker 1: and on the financials so far, Kake, just to get
Speaker 1: your thoughts, I'll go through the single names and can
Speaker 1: talk about the sector. Um JP Morgan, they beat, they
Speaker 1: deliver a record profit, and the stock is down. We
Speaker 1: sort the same thing with government sacks. We haven't seen
Speaker 1: that with Morgan Stanley, but overall we've seen really really
Speaker 1: decent numbers get a market that doesn't seem to be
Speaker 1: overly impressed. Why do you think that is. You know,
Speaker 1: I've heard a host of reasons why the market is
Speaker 1: reacting so softly to what seemed like very very strong
Speaker 1: numbers and very solid expectations for future earnings growth this year.
Speaker 1: You know. Some of them are that deposit betas are
Speaker 1: rising a little bit, i e. That there's more competition
Speaker 1: across the bank's for deposits, and so they're having to
Speaker 1: pass on the benefits of higher rates um to their customers.
Speaker 1: That might be one explanation. Some of it's been the
Speaker 1: guidance from banks around future growth and loan growth has
Speaker 1: been a little bit lower. That might be one excuse.
Speaker 1: To be honest with you, I think the sector is
Speaker 1: an outstanding shape, and I've been kind of disappointed with
Speaker 1: how the market has reacted to these exceptionally strong numbers.
Speaker 1: I think that we need to stay long the financials
Speaker 1: and particularly a cat banks, and it remains one of
Speaker 1: my favorite picks throughout this year. Okay, to what extent
Speaker 1: is there at a market that's just looking at the
Speaker 1: vis pulling back dance with fifteen handle and saying, yeah,
Speaker 1: well done, great first quarter. You're not going to repeat
Speaker 1: it on the trading side. It's too cute. Yeah, well,
Speaker 1: that's right. I mean, look, it takes some skill though
Speaker 1: to be able to really benefit from significantly higher volatility.
Speaker 1: We had these high vall days um and lots of
Speaker 1: plus and mind is one percent inter day moves much
Speaker 1: more so than we saw, of course in two thousands seventeen,
Speaker 1: where there was no movement, but volumes weren't huge. And
Speaker 1: so in order to really take advantage of it, I
Speaker 1: think you need some skill traders, and you need some
Speaker 1: great relationships. So I wouldn't say it has to just
Speaker 1: be about the vix in order to continue to benefit
Speaker 1: from the trading side. Is there an efficient frontier now?
Speaker 1: I mean, Kate, if we're to wax all theoretical right now,
Speaker 1: is there a thing out there that's all curvy and
Speaker 1: stocks and bonds and I know where I want to
Speaker 1: be and maybe I even know what to do with
Speaker 1: my cash? Is does that theory work? Still? I think
Speaker 1: we've had some sort of evolution in thinking about fully
Speaker 1: considered Well, look, we we've been in a period where
Speaker 1: it made sense to hold a significant amount of debt
Speaker 1: and a hold the signific amount of equity at the
Speaker 1: same time. If we are right about a sustained global
Speaker 1: economic expansion persisting for the next couple of quarters, for
Speaker 1: the next couple of years, that we're not kind of
Speaker 1: at the end of the cycle, and that rates will
Speaker 1: continue to rise. We need to be pretty thoughtful about
Speaker 1: how we approach fixed income. You've heard it from US
Speaker 1: many times, but we prefer short duration. We certainly perform
Speaker 1: prefer you know, parsing the margin market debt world over
Speaker 1: some of the long duration uh U S treasuries. But
Speaker 1: I know this sounds I sound like a broken record
Speaker 1: because I'm an equity strategist, But I still strongly believe
Speaker 1: that equities are the place to be, even this late
Speaker 1: in the cycle, even if your returns are not going
Speaker 1: to be north year. Maybe, Kate, what's so important here
Speaker 1: is we forget about you know, cf A one oh
Speaker 1: one like level one. I'm in a panic, and I
Speaker 1: don't know what this means. You look at way to
Speaker 1: average cost to capital. I'm looking at a major, famous
Speaker 1: consumer durable which will you know a staple almost will
Speaker 1: leave it the name of it out, It doesn't matter.
Speaker 1: They've only got nine point one percent debt. Their cost
Speaker 1: is modeled at two point one percent, which is a
Speaker 1: zero point two percent contribution to a waited average cost
Speaker 1: to capital. This isn't in the theory books. Now, that's right,
Speaker 1: And this is one of the real challenges I think
Speaker 1: when you're looking forward and trying to put together forecasts,
Speaker 1: but then you use historical relationships and historic balance sheets
Speaker 1: and historic um, you know, sort of corporate behavior as
Speaker 1: your guide. That's always this risk, whether you're thinking about
Speaker 1: asset allocation or whether you're thinking about kind of near
Speaker 1: term returns of driving your car by looking through the
Speaker 1: rear view mirror. And so your point about debt being
Speaker 1: relatively low. We've talked about this before, about how what
Speaker 1: a great job companies have done of turning out their
Speaker 1: debt and locking in low rates, and you know, how
Speaker 1: less sensitive they are and how healthy I think their
Speaker 1: balance sheets are relative to say, where they were, you know,
Speaker 1: fifteen or twenty years ago. Um, we need to be
Speaker 1: careful about using history too much as a guide. So, okay,
Speaker 1: what are you concerned about? Most of all, there's no
Speaker 1: big maturity wall coming up for many of these companies,
Speaker 1: as you said, have turned out that debt quite effectively
Speaker 1: of the last couple of years and really locked in
Speaker 1: low right, So what's the concern you know, I really
Speaker 1: worry about risk appetite. We were talking about this in
Speaker 1: terms of trade and geopolitics. I think that's very present.
Speaker 1: You know, there were three things that came up last
Speaker 1: year consistently when talking to companies and talking to investors,
Speaker 1: both on the institutional on the individual side, and they
Speaker 1: were you know, major concerns about where valuations were, anxiety
Speaker 1: around that, uh, significant anxiety around politics and the impact
Speaker 1: that politics could have on market movements. And then I
Speaker 1: think there was a lot of concern that you know,
Speaker 1: significantly higher interest rates were going to you know, be
Speaker 1: around the corner and end impact companies earnings. You know,
Speaker 1: here we are where the anxiety around valuations shouldn't really
Speaker 1: be there. We've compressed multiples, uh, you know around the
Speaker 1: world where now at levels that look much more like
Speaker 1: their five year averages. UM. You know, politics certainly has
Speaker 1: been in play, but most companies have been able to
Speaker 1: continue to operate as usual and are seeing strong growth
Speaker 1: despite the headline noise. And you know, as we were
Speaker 1: saying before, I'm not really concerned that significantly higher rates
Speaker 1: are going to have an impact on on earnings. You know,
Speaker 1: places I'm watching those small and MidCap and I'm watching
Speaker 1: you know, uh, in particular those companies that haven't been
Speaker 1: as smart or engaging in a new round of investment
Speaker 1: that is going to be financed by debt. Okay, well,
Speaker 1: it's great to have you with us to get your thoughts.
Speaker 1: Thank you very much forgiving your trying to Bloomberg Savannas
Speaker 1: on sav and Readier through the morning, Blank Rocks, Chief
Speaker 1: Equity Strategists, Chum Pharaoh at our studios, Blumberg eleventh three
Speaker 1: in New York. I'm Tom Keen and FM Studios in Washington,
Speaker 1: d C. John. Just in the distance, I can see
Speaker 1: the Gucci store, which is always a good and appropriate
Speaker 1: thing here for the World Bank. I m F meetings
Speaker 1: as well, and also today a panel with Luigis and
Speaker 1: Gallis of the Boost School in Chicago. Luigi. One of
Speaker 1: the great jewels which really folds into the modern debate
Speaker 1: right now is a paper by Michael Bordo and Anna
Speaker 1: Schwartz of years ago on the Chicago history of traditional
Speaker 1: Keynesie and economics. And the title of the paper was
Speaker 1: called I S l M and Monitorism, And what it
Speaker 1: amounts to is we set up a geometric structure about
Speaker 1: all this economy stuff works in six and ninety nine
Speaker 1: with Hicks, and we dragged it forward to Milton Friedman.
Speaker 1: Neither of those parties, Hicks, Kines, Alvin Hansen, or Milton
Speaker 1: Friedman at Chicago had to deal with trill in dour deficits.
Speaker 1: How does the fiscal debt fold in through our traditional
Speaker 1: economic models. I think they certainly did not have to
Speaker 1: deal with the deficit of this size, But also they
Speaker 1: did not have to deal with the deficits of the
Speaker 1: side in a moment where the level of debt is
Speaker 1: so high and where the economy is doing relatively well.
Speaker 1: So I think that what is surprising is not so
Speaker 1: much that we have a deficit where the huge deficit
Speaker 1: in two thousand and nine was a bigger deficit, but
Speaker 1: that was in a difficult moment, uh sort of economically,
Speaker 1: and now we are nine years into an expansion and
Speaker 1: the economy is doing relatively well. So I think that
Speaker 1: increasing the deficit at this moment of the cycle, with
Speaker 1: this level of debt coming in my reduce the ability
Speaker 1: to do contact policy when never session will come. Can
Speaker 1: you say that the rising debt and deficit lowers the
Speaker 1: degrees of freedom that monetary authorities have, whether it's the
Speaker 1: Italian government or its chairman Powell, does it? Does it
Speaker 1: give you just less choice? Given an outside chuck Um?
Speaker 1: First of all, I will differentiade between the Italian situation
Speaker 1: that you have, situation that you ask control its own currency,
Speaker 1: So they have a flexibility that Italy does not have.
Speaker 1: They said, I think that what I'm most worried about
Speaker 1: is the limited ability of the fiscal policy. So when
Speaker 1: the next recession will come, and one forecast that can
Speaker 1: make for sure there will be ever session at some point.
Speaker 1: I don't know when, but there will be another session,
Speaker 1: and we have limited ability to uh intervene from a
Speaker 1: monitory point of view because in the typical Rey session
Speaker 1: and interest rate drop by five cents a point, and
Speaker 1: where is the space for the monetary policy to act? Luigi,
Speaker 1: let me bring in my colleague. He and I have
Speaker 1: been discussing the World Cup coming up in Russia. Would
Speaker 1: be there last night in the early evening. I'm talking
Speaker 1: brighton Tottenham Premier League football, not the World Cup. John Farrell, John,
Speaker 1: I just don't get it. So let's bring him Mr
Speaker 1: Ferrell with more important items. A professor greatest speak to
Speaker 1: you again, we're talking about exhausting fiscal policy. Let's talk
Speaker 1: about exhausting monetary policy. That the FED has made a
Speaker 1: move here in the United States in a way that
Speaker 1: the ECB really hasn't. And Professor, I look at Europe
Speaker 1: right now with some concern about the next downturn in Europe,
Speaker 1: and not so much on the fiscal side, a lot
Speaker 1: of people concerned about that, but on the on the
Speaker 1: monetary policy side, with the deposit rate still as negative
Speaker 1: as it is and the ban of sheet as big
Speaker 1: as as it is, in growing Yeah, I think that
Speaker 1: if the United States UH shouldn't share, the Europe is
Speaker 1: in a war situation because there is no European fiscal
Speaker 1: policy to to know of, and as you said, the
Speaker 1: monetary policy is basically zero interest rate, so that it's
Speaker 1: not very much room. Um. I think that there is
Speaker 1: still way to go in the European expansion, so we
Speaker 1: hope that we don't have in a session soon, but
Speaker 1: if we had to add one, it wouldn't look look
Speaker 1: pretty well. Professor. The reason I bring this up is
Speaker 1: because arguably in Europe we've seen peak growth in terms
Speaker 1: of the absolute levels of growth that we had at
Speaker 1: the back end of last year, in the beginning of
Speaker 1: this year, and yet CPI is barely one and a
Speaker 1: half percent. It's at one point three and got revised
Speaker 1: lower this morning on the continents. So the e cp
Speaker 1: has got a choice to make now, haven't they, Professor.
Speaker 1: They can either sort of have their credibility question and
Speaker 1: start moving before they get back to target, or sit
Speaker 1: here and wait and ultimately it might never happen. Yeah,
Speaker 1: I think that the first thing they need to do
Speaker 1: is convinced that adding at one point three percent inflation
Speaker 1: is too low. You know, in the e c B
Speaker 1: website is still written that the price stability means to
Speaker 1: have an inflation below two percent and and some of
Speaker 1: the c B board members say below but close to
Speaker 1: two percent, and but others just saying that below two
Speaker 1: percent is fine. So I think that the first job
Speaker 1: of drug is to convince them again that one point
Speaker 1: three is too law and something needs to be done.
Speaker 1: I look, Luigia, where we are today. I want to
Speaker 1: save time for our panel today, and I guess I
Speaker 1: have to do that right now, because you've got to
Speaker 1: get on with your I m F today as well,
Speaker 1: Professors and goals. It was a panel that you know.
Speaker 1: I was thrilled that Madame m Guard's people called me
Speaker 1: up the honor to do the panel with you and
Speaker 1: Laura Tyson of Berkeley and Mr Harrington of Edelman. They're
Speaker 1: profoundly important folks. Edelement in the measurement of people's moods
Speaker 1: worldwide where they aimed eedlement trust parameter. But Luhig, I
Speaker 1: had no idea when I accepted this panel on trust
Speaker 1: and resilience we would have the political discourse of the day.
Speaker 1: The trust seems to be evaporating towards a new populous state.
Speaker 1: Is it the same populism nation the nation or is
Speaker 1: it really each culturally discreet? Of course, there are many
Speaker 1: ways to be dysfunctional, many way to be populistic. And
Speaker 1: I think that there is a web common theme, and
Speaker 1: the common theme is that the elite that tends to
Speaker 1: be a globalized elite does not appear to be trust wealthy.
Speaker 1: I think that the lack of trust is not fault
Speaker 1: of the people who don't trust us. Is our fault
Speaker 1: that we don't appear and hopefully just a p M
Speaker 1: MAB there's also some substance, but we don't appear as
Speaker 1: trust wealthy, as we should be given the responsibilities that
Speaker 1: we are in charge with. John, I think that part
Speaker 1: of this is almost media exhaustion, where you and I
Speaker 1: are buffeted every single day by the next populous crisis
Speaker 1: or populous reality, and we almost become numb to it. Yeah,
Speaker 1: I'd have to say, if we've seen a populous crisis yet,
Speaker 1: And I asked that because we had the Brexit vote
Speaker 1: and I don't see a crisis in the economy, and
Speaker 1: we've had the President of the United States do on
Speaker 1: a Trump walk into the White House, and I don't
Speaker 1: see a crisis in the economy. Quite the opposite. I'm
Speaker 1: just wondering whether we've actually seen that populous crisis that
Speaker 1: many people forecast but ultimately hasn't materialized. I think he's building.
Speaker 1: If you have paid attention to the last Italian elections,
Speaker 1: I think there was arts were quite disruptive, and we
Speaker 1: don't know when we'll have a government. So I think
Speaker 1: that there is building momentum in different places. And I
Speaker 1: agree with you, we have not seen the wars yet,
Speaker 1: And Professor, I think some people might say that maybe
Speaker 1: Italy without a government is it's a better place at
Speaker 1: the moment. Professor l which she's in Gallas University of Chicago,
Speaker 1: both School of Business professor in Washington, d C. With
Speaker 1: Tom Keane and to get to the markets and the
Speaker 1: commodity market. It's been a rally that not too many
Speaker 1: people saw coming. It's certainly not at this magnitude. By
Speaker 1: eight percent on Brent here today, by almost twelve on
Speaker 1: w t I. It's away. And I'm really pleased to
Speaker 1: say that Francisco Blanche has entered the studio the head
Speaker 1: of Global Commodities and Derivatives Research for Mary Lynch. Francisco
Speaker 1: what happened this year that maybe some people weren't positioned for. Well, look,
Speaker 1: I think I think we've had a meaningful reduction in
Speaker 1: supply on driven by the Cordel or big in Russia
Speaker 1: UM and importantly we've had strong old girls and that's
Speaker 1: led to maybe a fast at an expected invagory withdrawal
Speaker 1: still relates to oil, and that's pushed the price of
Speaker 1: crude higher. That that's that's one one thing. Obviously, metals,
Speaker 1: as you know, having performed as well, and there's smaller
Speaker 1: set of issues there and and on the on the
Speaker 1: precious side, gold has had a nice run up because
Speaker 1: I think people starting to get a little bit nervous
Speaker 1: about policy tightening, volativities picked up and that supported the pressures.
Speaker 1: So there's different reasons driving the moority prices higher, but
Speaker 1: but in general, I mean the strong global growth and
Speaker 1: and the uncertainty about about when it's gonna peak have
Speaker 1: been driving the commodity complex. So we've got three things
Speaker 1: to work through. UM. One is on oil, and we'll
Speaker 1: do that first, and then the second part is these
Speaker 1: sort of idiostocratic stories around metals like aluminum. And then
Speaker 1: the third part is only what global policy means for
Speaker 1: security a product like gold. Um, let's start with oil Francisco.
Speaker 1: The geopolitical risk premium that was injected into this market
Speaker 1: over the last couple of weeks. Seemingly it's going to
Speaker 1: drain back out. Can we keep prices elevated once that
Speaker 1: geopolitical risk premium drains back out if you do believe
Speaker 1: it will train back out. Well, first of all, I
Speaker 1: think I think there's a little bit of geo political risk,
Speaker 1: but not a lot. Um If you if you look
Speaker 1: at the well again, it depends if you call Venezuelan
Speaker 1: production falling geo political risk, then yes, you have geo
Speaker 1: political risk, but I think that's been the main driver
Speaker 1: of of prices moving higher. On the supply side, right,
Speaker 1: you've had a cartel cut, collective cut, and then you've
Speaker 1: had a collapse in Venezuelan production that really kicked off
Speaker 1: starting right around jun July of last year and it's
Speaker 1: accelerated into the start of this year, and that's been
Speaker 1: a big driver of of the upper price moving oil
Speaker 1: prices UM so I think I think the geo political
Speaker 1: risk premium is readically modest still UH, and prices could
Speaker 1: definitely push higher if if that geo political risk UH
Speaker 1: becomes more prominent. But I do think we're going to
Speaker 1: hire anyway. We have an eighty o our target by
Speaker 1: by the end of the quarter. We think we're going
Speaker 1: pretty much in a straight line to eighty from here.
Speaker 1: We have seasonal fectors, we have cyclical factors. There's a
Speaker 1: lot of reasons to believe that in the short run,
Speaker 1: in the next couple of months, oil prices are gonna
Speaker 1: move higher. But within that is move higher, And if
Speaker 1: we don't have a Memory Francisco planche of a hundred
Speaker 1: dollars a barrel, it's a terrific bowl market in oil,
Speaker 1: and the vector's garment would say is from the lower
Speaker 1: left of the upper right, why can't oil just drive
Speaker 1: higher based on to make the global economy a great again.
Speaker 1: The economy uh it can tom and and and I
Speaker 1: think one of the other issues that's popped out more
Speaker 1: recently is that even though we're seeing very strong growth
Speaker 1: in the US and and even in Canada, we're starting
Speaker 1: to hit a lot of transportation bottlenecks here. So UM
Speaker 1: much of the much of the supply that was expected
Speaker 1: to come from from North America is getting clogged up
Speaker 1: in pipes. We've seen differentials to uh W t I
Speaker 1: in in shale basins like the Permian. So the Midland
Speaker 1: UM prices have have really the coupled from prices uh
Speaker 1: in other parts of the US and around the world.
Speaker 1: Sam's happened for Western Canada prices UM and that that's
Speaker 1: I think on a slowdown investment a little bit UM so.
Speaker 1: So my sense is that that we are very reliant
Speaker 1: on on a US infrastructure system is quite clogged up.
Speaker 1: And and at the same time, the cartel is getting
Speaker 1: closer to a deal on June twenty two where they
Speaker 1: may either extend or at least keep a very very close,
Speaker 1: very tight grip on the oil market because Saudi Arabia
Speaker 1: needs it. And also now Russia, UM, with with the
Speaker 1: economic pressures they're facing, they're probably also gonna keep gonna
Speaker 1: gonna be leaning towards staying in the deal. So that
Speaker 1: that's what's going on in oil. I look at the
Speaker 1: going on an oil and I guess the money question
Speaker 1: and John Farroll is better to san I am is
Speaker 1: does it fold over into other commodities? Is oil discreet
Speaker 1: or can Francisco blancheo along Brazil this morning? Um? Well,
Speaker 1: I mean definitely oil. Oil has a lot of spill
Speaker 1: over effects. Um. And Um you know, to your to
Speaker 1: your point, there's gonna be Um if if we do
Speaker 1: break above eighty bucks and start to see a more
Speaker 1: sustained rally, that's gonna have spillover effects, gonna is going
Speaker 1: to move into other markets. Um. And And what's interesting
Speaker 1: about it is really that that we're seeing some of
Speaker 1: it already. Um. We've seen finally recovering some of the
Speaker 1: energy equities. We are seeing moves in in in the
Speaker 1: MLP sector. So even outside just the cruel oil, right
Speaker 1: outside just the the outright crueler price. We're starting to
Speaker 1: see other sectors reacting and and and that's because the
Speaker 1: back end of the price of oil might might even
Speaker 1: move on on a four basis UH in the next
Speaker 1: few weeks. Francancisco, Francisco, this is this really interesting story
Speaker 1: in aluminium over the last couple of weeks. And it's
Speaker 1: an inviously cratic event that roussel has been sanctioned by
Speaker 1: the United States, and ultimately it's very huge concern about
Speaker 1: whether supply is going to come from What are the
Speaker 1: base case? What is the base case for you guys
Speaker 1: now looking at the situation in aluminium. Well, so, so
Speaker 1: first thing, uh you have to you have to put
Speaker 1: in perspective is russ is about six percent of the
Speaker 1: global aluminium market and that's uh and and obviously that's
Speaker 1: creating a pressure on the price. But but we we
Speaker 1: already saw the first round of tariffs adding pressure to
Speaker 1: aluminum risk premium UM and and that was a direct
Speaker 1: effect of the out of the tariff UM in the US. Now,
Speaker 1: obviously we are saying a large chunk of the market
Speaker 1: being carved out. So we do think aluminium could be
Speaker 1: going to three tho dollars at on um. The pressure
Speaker 1: on the aluminium price is directly proportional to the Tariuts
Speaker 1: as well as to the to the sanctions. Right so, um,
Speaker 1: so in in our view, we're talking about one of
Speaker 1: the biggest players in the market. We're talking about a
Speaker 1: large portion of the supply side being pulled out. Can
Speaker 1: you imagine if we pulled out six percent of global
Speaker 1: oil supply, I mean in that that would be I
Speaker 1: mean six percent of global oil supply is bigger than Iraq.
Speaker 1: Iraqi is four and a half percent of global supply.
Speaker 1: To bring into context, so so this is a lot
Speaker 1: of a lot of aluminium. And uh now, aluminium is
Speaker 1: a much more common ingredient. There is some spare capacity.
Speaker 1: We're gonna probably restart smelters in parts of the world
Speaker 1: that that um had been shut down for a while.
Speaker 1: But that that's the story, right and and um and
Speaker 1: and you know, the politics have gotten in the way
Speaker 1: of aluminium here. Francisco Blanch, great to have you with
Speaker 1: us and to get that context and perspective. Head of
Speaker 1: Global Commodities and Derivatives Research for Merrow Lynch right now,
Speaker 1: um he is the pitbull terrier for the Bush family.
Speaker 1: John Snow knew of New Hampshire. He is the mechanical
Speaker 1: engineer from the Massachusetts Institute of Technology. And uh, Mr Sannuna,
Speaker 1: Governor Sannuna, I can only say that you will always
Speaker 1: be fifty five years old and protective of the Bush
Speaker 1: family instead of your more august and retired view. Right now,
Speaker 1: I want to go back to and where some will
Speaker 1: say Mrs Bush salvage the Bush campaign at a speech
Speaker 1: in Lebanon, New Hampshire, and Mr Bush was struggling with
Speaker 1: Mr Buchanan, and uh, some would say Barbara Bush saved
Speaker 1: the day. What did she bring to the politics is
Speaker 1: George Herbert Walker Bush tried to drag the Republican Party
Speaker 1: towards his Republican Party. Well, Barbara Bush had a very
Speaker 1: good political sense. Uh. She liked, I think campaigning in
Speaker 1: New Hampshire, and every time she came here, she seemed
Speaker 1: to connect directly with the voters. You know, we're a seemy,
Speaker 1: touched me, feel me kind of campaign state, and she
Speaker 1: was able to do that quite well. Um, she was
Speaker 1: sort of very comfortable, and I think that comfortable conveyed
Speaker 1: a a sense of warmth, and that sense of warmth
Speaker 1: obviously went to the benefit of the president. There have
Speaker 1: been criticisms over the years of any number of families.
Speaker 1: We can take it back. You were not active in
Speaker 1: the John Adams administration, were you. I think that was
Speaker 1: even before that. I was around for the second one.
Speaker 1: You were around for Quincy Adams. But there's always talk
Speaker 1: about royal families of American politics. The Kennedy's, of course,
Speaker 1: have been front and center in that debate. Were the
Speaker 1: Bushes and was she the queen of a royal family? Well,
Speaker 1: you know, they were strong believers in public service and
Speaker 1: it was something that they felt an obligation to. UM.
Speaker 1: They had an active life in the private sector, unlike
Speaker 1: a lot of the their so called dynasty families in
Speaker 1: American politics, all of them from the President who founded
Speaker 1: and who was one of the early founders and certainly
Speaker 1: developed a great company offshore drilling companies, the Potto Oil
Speaker 1: jeb certainly had a big private sector life in Florida
Speaker 1: and George w including ownership of the Texas Rangers. So
Speaker 1: they as the family, were able to combine private sector
Speaker 1: public sector involvement UM quite effectively. I really do think
Speaker 1: that they all understood that they wanted to give a
Speaker 1: little bit back to the system. She certainly instill that
Speaker 1: in the kids. UM. They they recognized her as the
Speaker 1: as the definer of what the family was like and
Speaker 1: UH and responded to it. So I I think, UH,
Speaker 1: although there was never any stated agenda, there was an
Speaker 1: implicit you owe UH the communities you live in, the
Speaker 1: country you live in a little bit of payback, and
Speaker 1: public service was the mechanism of payback. Governor Sunu, do
Speaker 1: you a call the first time that you met Barbara Bush.
Speaker 1: I think the first time was probably in the night
Speaker 1: campaign that was not successful for the president of the
Speaker 1: eventual president, George Bush, but I don't remember it specifically.
Speaker 1: But I really got to know them extremely well after
Speaker 1: I was elected governor in eighty two and then he
Speaker 1: was vice president UM. And they were smart enough to
Speaker 1: know that if there's any continued ambitions to be president,
Speaker 1: it is good to develop a good relationship with the
Speaker 1: governor of New Hampshire. But we became very close friends
Speaker 1: while I was governor. My wife and I actually spent
Speaker 1: a couple of nights with them in the vice presidential
Speaker 1: residence in Washington and at Goobern at events for national
Speaker 1: governors and things like that. So we we developed a
Speaker 1: very close friendship even before the eighty eight campaign. What
Speaker 1: was what was Barbara Bush like in in your relationship
Speaker 1: with her as the White House chief of staff for
Speaker 1: George H. W. Bush serving in You remember, historically there's
Speaker 1: been some tough relationships between chiefs of staffs and first Lady.
Speaker 1: But I was very lucky. We had a very good relationship.
Speaker 1: I think I think she obviously sensed that that I
Speaker 1: was there to have the President's back. She certainly felt
Speaker 1: that was one of her responsibilities as well, and so
Speaker 1: we shared this mutual responsibility and and and as a result,
Speaker 1: I think that helped bring us even closer together. There's
Speaker 1: a comment that has been published from the late Tim Russert,
Speaker 1: having made a speech quite a while ago talking about
Speaker 1: when you finally left the White House of President George H. W. Bush,
Speaker 1: h that she kind of was someone that you confided in.
Speaker 1: I'm wondering if you could expand on that. Well, she
Speaker 1: was someone I felt very close to. Uh and UH.
Speaker 1: When I was leaving, we spent two or three occasions
Speaker 1: talking about, frankly, the good times we had had. I
Speaker 1: left really on a positive note. I had expected to
Speaker 1: last about six to nine months, which is what most
Speaker 1: Jesus staff last. I left it in the White House
Speaker 1: a little over three years, and and it was very positive.
Speaker 1: We stayed close um uh during that transition, and we
Speaker 1: stayed close afterwards. In fact, I came back to the
Speaker 1: White Does a few times and played Ross Perrot and
Speaker 1: the mock debates, and every time I went back, spent
Speaker 1: a little time chatting with her. She she was really
Speaker 1: the rock of the family, and even in the White House,
Speaker 1: she was the rock the President counted on. And those
Speaker 1: were tough times in the ninety two campaigns, and she
Speaker 1: was there um as as uh stalwart as she had
Speaker 1: been in the eighty eight campaign. You mentioned the role
Speaker 1: of the chief of staff, and I'm wondering if you
Speaker 1: could expand on your thoughts about the current White House
Speaker 1: Chief of Staff and some of the issues that Mr
Speaker 1: Kelly is probably facing. Well, I haven't had any time
Speaker 1: to spend with General Kelly, so I my my analysis
Speaker 1: would only be through the press that I've seen, and frankly,
Speaker 1: that means I probably don't have a real feeling for
Speaker 1: what's going on down there, So I'm going to pass
Speaker 1: on that. Okay, you have been credited with being part
Speaker 1: of a group of people that had recommended David Suitor
Speaker 1: New Hampshire as appointment to the Supreme Court of the
Speaker 1: United States. Uh. Do you have any thoughts about that
Speaker 1: recommendation and subsequent roles of White House chiefs of staff
Speaker 1: for those kinds of appointments. Yeah. If if you read
Speaker 1: my book, you'll actually get the real story. I actually
Speaker 1: ended up supporting Edith Jones in the final selection. David
Speaker 1: Sudor was a great uh Supreme Court judge in New
Speaker 1: Hampshire and a terrible Supreme Court judge when he got
Speaker 1: to Washington. UM. It is a great example, in my opinion,
Speaker 1: of somebody who lives their life with a singular ambition uh,
Speaker 1: and lives their life in order to achieve it. And
Speaker 1: sometimes when you when they get there, the person that's
Speaker 1: at the destination is different than the person that was
Speaker 1: perceived on the trip. And it's one of the great
Speaker 1: disappointments in my public life that that David Suitor ended
Speaker 1: up being as as really a different a Supreme Court
Speaker 1: judge than he sold both the President and all the
Speaker 1: lawyers that that vetted him for the President in that process.
Speaker 1: Boyd and Gray is certainly one of the great conservatives
Speaker 1: in Washington, and uh, he and his staff were all
Speaker 1: quite conservative. They were absolutely convinced reading David Suitor's New
Speaker 1: Hampshire decisions, that this was going to be a good
Speaker 1: conservative judge, and it turned out otherwise. I want to
Speaker 1: thank you very much for joining us former Governor of
Speaker 1: New Hampshire, Johnson new New former White House Chief of
Speaker 1: Staff under President George H. W. Bush, sharing his thoughts
Speaker 1: and memories of Barbara Bush, former First Lady and matriarch
Speaker 1: of the Bush family. She died and was ninety two
Speaker 1: years old. Thanks for listening to the Bloomberg Surveillance podcast.
Speaker 1: Subscribe and listen to interviews on Apple Podcasts, SoundCloud, or
Speaker 1: whichever podcast platform you prefer. I'm on Twitter at Tom
Speaker 1: Keene before the podcast. You can always catch us worldwide.
Speaker 1: I'm Bloomberg Radio.