1 00:00:05,800 --> 00:00:08,720 Speaker 1: Welcome to the Bloomberg p m L Podcast. I'm pim Fox. 2 00:00:08,760 --> 00:00:11,520 Speaker 1: Along with my co host Lisa Bramowitz. Each day we 3 00:00:11,640 --> 00:00:15,120 Speaker 1: bring you the most important, noteworthy, and useful interviews for 4 00:00:15,200 --> 00:00:17,840 Speaker 1: you and your money, whether you're at the grocery store 5 00:00:17,960 --> 00:00:20,720 Speaker 1: or the trading floor. Find the Bloomberg p m L 6 00:00:20,840 --> 00:00:32,440 Speaker 1: Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot Com. China. 7 00:00:32,560 --> 00:00:35,159 Speaker 1: When we talk about China these days, it's usually with 8 00:00:35,280 --> 00:00:38,000 Speaker 1: a bent of optimism. The economic data coming out of 9 00:00:38,040 --> 00:00:42,159 Speaker 1: the nation has been positive. It has re upped Ji 10 00:00:42,360 --> 00:00:45,040 Speaker 1: and Ping's tenure as the head of the country and 11 00:00:45,080 --> 00:00:48,400 Speaker 1: seems to be showing increased unity here to sort of 12 00:00:48,400 --> 00:00:51,040 Speaker 1: break all the myths that we might be depending on. 13 00:00:51,080 --> 00:00:54,400 Speaker 1: As Leland Miller, president of the China Beije Book International, 14 00:00:54,440 --> 00:00:56,880 Speaker 1: which is based in New York, and he joins me 15 00:00:57,000 --> 00:01:01,200 Speaker 1: here from the rid Holes Wealth Management second Annual Evidence 16 00:01:01,320 --> 00:01:04,120 Speaker 1: Based Investing Conference in New York. Leland, thank you so 17 00:01:04,200 --> 00:01:06,679 Speaker 1: much for being with us. So what are we getting 18 00:01:06,680 --> 00:01:09,920 Speaker 1: wrong about Chinese economy right now? Well, the thing that 19 00:01:09,959 --> 00:01:12,480 Speaker 1: everyone has right right now is that China's economy is 20 00:01:12,920 --> 00:01:15,400 Speaker 1: doing pretty well and is doing much better than a 21 00:01:15,440 --> 00:01:17,680 Speaker 1: year ago. So a year and a half ago, we're 22 00:01:17,680 --> 00:01:20,039 Speaker 1: in the middle of the China crisis. Everyone wondered whether 23 00:01:20,080 --> 00:01:23,520 Speaker 1: this was it. UM the Chinese government intervened. They decided 24 00:01:23,560 --> 00:01:26,640 Speaker 1: they needed a really good economy UH for the Party Congress, 25 00:01:26,760 --> 00:01:29,839 Speaker 1: and they got it. The problem is people don't understand 26 00:01:29,840 --> 00:01:32,560 Speaker 1: what they did in order to get them to this point. 27 00:01:32,840 --> 00:01:35,760 Speaker 1: There's a belief that the Chinese government has been deleveraging. 28 00:01:35,920 --> 00:01:40,320 Speaker 1: It's been the economy has been deleveraging. They've been rebalancing, UH, 29 00:01:40,360 --> 00:01:44,080 Speaker 1: They've been cutting capacity on the supply side and commodities 30 00:01:44,080 --> 00:01:46,520 Speaker 1: in order to get the economy on a firm or footing. 31 00:01:46,640 --> 00:01:49,120 Speaker 1: None of these have actually been happening. So the belief 32 00:01:49,200 --> 00:01:51,400 Speaker 1: that these things are are are You've had this great 33 00:01:51,440 --> 00:01:56,400 Speaker 1: economic performance despite deleveraging, despite rebalancing, despite all these strong policies. 34 00:01:56,880 --> 00:01:58,440 Speaker 1: It's a myth. Well, I want to I want to 35 00:01:58,480 --> 00:01:59,840 Speaker 1: push back on you just I mean, if I look 36 00:01:59,840 --> 00:02:02,760 Speaker 1: at of headlines today out of China, China is said 37 00:02:02,800 --> 00:02:06,160 Speaker 1: to weigh crackdown on high rate micro lenders. China's scrutiny 38 00:02:06,200 --> 00:02:09,079 Speaker 1: of H and A leads to record refinancing costs. There 39 00:02:09,120 --> 00:02:12,040 Speaker 1: has been an increase in benchmark yields a lot, in 40 00:02:12,120 --> 00:02:15,360 Speaker 1: large part due to local crackdowns on some of this leverage. 41 00:02:15,600 --> 00:02:18,520 Speaker 1: How does this not count for you, Well, deleveraging means 42 00:02:18,520 --> 00:02:21,720 Speaker 1: that different things to different people. Now, when we track corporates, 43 00:02:21,720 --> 00:02:24,280 Speaker 1: what we're looking for is whether corporates are borrowing more 44 00:02:24,320 --> 00:02:26,960 Speaker 1: or less, and whether they're paying more or less. And 45 00:02:27,160 --> 00:02:30,079 Speaker 1: what we've seen over the past year is not deleveraging. 46 00:02:30,240 --> 00:02:32,919 Speaker 1: So we have seen financial sector crackdowns, we've seen wealth 47 00:02:32,960 --> 00:02:35,640 Speaker 1: management products been attacked, we've seen other things within the 48 00:02:35,639 --> 00:02:38,720 Speaker 1: inner bank market's been been honed in on by regulators 49 00:02:38,760 --> 00:02:41,440 Speaker 1: to try to keep control of what's happening between banks. 50 00:02:41,720 --> 00:02:43,959 Speaker 1: But when it comes to whether corporates are borrowing more, 51 00:02:44,080 --> 00:02:46,480 Speaker 1: we have seen an unmistakable trend over the past year. 52 00:02:46,760 --> 00:02:50,040 Speaker 1: And to get this performance in seen they weren't borrowing less, 53 00:02:50,120 --> 00:02:53,240 Speaker 1: and they weren't and they weren't paying more. There was 54 00:02:53,760 --> 00:02:57,160 Speaker 1: significant borrowing, there was credit easing, and what we've seen 55 00:02:57,240 --> 00:03:00,280 Speaker 1: is not just an absence of deleveraging but going the 56 00:03:00,320 --> 00:03:02,760 Speaker 1: other way, particularly in the third quarter. So there's no 57 00:03:02,880 --> 00:03:05,320 Speaker 1: deleveraging going on right now. And the third quarter was 58 00:03:05,360 --> 00:03:08,639 Speaker 1: actually quite dramatic and how much the Chinese loosened the 59 00:03:08,639 --> 00:03:10,760 Speaker 1: floodgates in order to get this performance going into the 60 00:03:10,760 --> 00:03:13,080 Speaker 1: Party congress. So not all borrowing is the same. And 61 00:03:13,160 --> 00:03:16,040 Speaker 1: one thing that you highlighted, UH in your recent uh 62 00:03:16,200 --> 00:03:19,200 Speaker 1: op ed that you published with for Bloomberg View was 63 00:03:19,680 --> 00:03:22,840 Speaker 1: that there is also a myth that China is moving 64 00:03:22,880 --> 00:03:26,760 Speaker 1: more toward service sectors and away from industrial sectors. Can 65 00:03:26,800 --> 00:03:29,120 Speaker 1: you talk about that? Sure? I mean, I don't know 66 00:03:29,160 --> 00:03:31,680 Speaker 1: how many times I have to be confronted with this, 67 00:03:31,880 --> 00:03:34,400 Speaker 1: these pie charts that the Chinese government puts out showing 68 00:03:34,840 --> 00:03:38,400 Speaker 1: services going up and manufacturing going down, and thus we 69 00:03:38,440 --> 00:03:41,600 Speaker 1: are rebalancing. But the reality is we tracked these things sectorally, 70 00:03:42,000 --> 00:03:44,960 Speaker 1: and what we've seen over the course of and even 71 00:03:44,960 --> 00:03:48,120 Speaker 1: the second half of STEEN is a reversal of rebalancing. 72 00:03:48,320 --> 00:03:50,960 Speaker 1: So the way they got this performance was by juicing 73 00:03:51,000 --> 00:03:53,040 Speaker 1: the old economy sectors. They said they were gonna be 74 00:03:53,080 --> 00:03:55,400 Speaker 1: shutting down, that they were going to be cutting jobs 75 00:03:55,440 --> 00:03:58,600 Speaker 1: in They didn't do that. So manufacturing going really well, 76 00:03:58,880 --> 00:04:03,400 Speaker 1: property has been bloating, commodities has been exploding. UH, Services, 77 00:04:03,600 --> 00:04:06,120 Speaker 1: retail they've been doing fine, but it's been fits and starts. 78 00:04:06,160 --> 00:04:09,280 Speaker 1: So this is not a new economy lead, UH, a 79 00:04:10,200 --> 00:04:13,120 Speaker 1: new economy sector led economy. This has not been something 80 00:04:13,160 --> 00:04:15,640 Speaker 1: in which you are shifting to a new age for 81 00:04:15,720 --> 00:04:18,960 Speaker 1: Chinese growth. They relied on their old growth measures UH 82 00:04:19,000 --> 00:04:21,440 Speaker 1: in order to get their growth, and it's going to 83 00:04:21,520 --> 00:04:23,960 Speaker 1: hurt them down the road. So Leland. As part of 84 00:04:23,960 --> 00:04:27,520 Speaker 1: the Beije book, you quizzed over three thousand, three hundred 85 00:04:27,600 --> 00:04:31,200 Speaker 1: firms across China, both about their particular companies as well 86 00:04:31,240 --> 00:04:33,839 Speaker 1: as the larger sit of the economy. Do they have 87 00:04:33,920 --> 00:04:37,400 Speaker 1: a more pessimistic view of the overall Chinese economy than 88 00:04:37,480 --> 00:04:42,240 Speaker 1: say people internationally that are looking at the good growth numbers? Nodding, Well, 89 00:04:42,279 --> 00:04:44,560 Speaker 1: this is going to be the most interesting quarter we've 90 00:04:44,560 --> 00:04:46,320 Speaker 1: had in a while, Q one. Maybe even more interesting 91 00:04:46,360 --> 00:04:49,159 Speaker 1: than that because for the past year, Chinese firms were 92 00:04:49,200 --> 00:04:51,560 Speaker 1: a bulliant, and they were a bulliant because of something 93 00:04:51,600 --> 00:04:54,599 Speaker 1: we call the Party Congress. Put they knew the government 94 00:04:54,640 --> 00:04:58,960 Speaker 1: would never allow um instability writing up to the Party Congress, 95 00:04:59,000 --> 00:05:01,360 Speaker 1: so even though they were dealing with a number of obstacles, 96 00:05:01,800 --> 00:05:04,839 Speaker 1: they were very confident going forward that nothing bad would happen. 97 00:05:05,120 --> 00:05:07,120 Speaker 1: Now the Party Congress has gone, you're gonna have at 98 00:05:07,160 --> 00:05:10,920 Speaker 1: least a quarter in which Si Jinping's team is getting 99 00:05:10,960 --> 00:05:13,120 Speaker 1: into place. They're not gonna allow instability there, and then 100 00:05:13,160 --> 00:05:16,320 Speaker 1: it becomes very interesting because how is she going to 101 00:05:16,360 --> 00:05:19,800 Speaker 1: meet these incredibly high expectations people have from He's gonna 102 00:05:19,839 --> 00:05:22,440 Speaker 1: combat pollution, he's gonna combat corruption, he's going to keep 103 00:05:22,520 --> 00:05:25,159 Speaker 1: jobs uh stable, he's gonna keep the growth rate stable, 104 00:05:25,160 --> 00:05:27,240 Speaker 1: he's gonna be de leverage, he's gonna do rebounce. So 105 00:05:27,320 --> 00:05:29,000 Speaker 1: he's supposed to be doing all these things at the 106 00:05:29,040 --> 00:05:32,160 Speaker 1: same time as as as he's solidifying the economy. Uh. 107 00:05:32,480 --> 00:05:34,320 Speaker 1: People are going to be in for a surprise here. 108 00:05:34,320 --> 00:05:36,200 Speaker 1: It's not possible. So he's going to write it on 109 00:05:36,240 --> 00:05:38,520 Speaker 1: a unicorn and everybody's going to feel happy. Do you 110 00:05:38,520 --> 00:05:40,560 Speaker 1: think that, just real quick, do you think that the 111 00:05:40,640 --> 00:05:43,720 Speaker 1: economy could be in for a spectacular downturn in the 112 00:05:43,800 --> 00:05:46,840 Speaker 1: near future. I don't think spectacular downturn. I don't think 113 00:05:46,880 --> 00:05:50,640 Speaker 1: near future. But we are very worried about not really 114 00:05:50,680 --> 00:05:53,880 Speaker 1: from the Chinese domestic side, but from the from the 115 00:05:53,960 --> 00:05:56,479 Speaker 1: US China trade tension side. So we think there's a 116 00:05:56,680 --> 00:06:00,240 Speaker 1: very high probability that that the calm you've seen in 117 00:06:00,240 --> 00:06:04,080 Speaker 1: the relationship for the past year goes away in ten 118 00:06:04,200 --> 00:06:08,080 Speaker 1: and you start seeing some very problematic developments in the 119 00:06:08,120 --> 00:06:10,400 Speaker 1: relationship and that will have a dramatic effect on not 120 00:06:10,480 --> 00:06:13,040 Speaker 1: just the economy, but the currency capital outflows, and we 121 00:06:13,040 --> 00:06:14,640 Speaker 1: could be seeing some of the headaches we've been seeing 122 00:06:14,640 --> 00:06:17,000 Speaker 1: in past years. Leland Miller, fascinating to speak with you. 123 00:06:17,040 --> 00:06:19,560 Speaker 1: Thank you so much for joining us. Leland Miller, President 124 00:06:19,640 --> 00:06:23,799 Speaker 1: of China beige Book International based in New York. Really 125 00:06:23,960 --> 00:06:39,000 Speaker 1: fascinating insight into China. This week has been all tech 126 00:06:39,120 --> 00:06:41,160 Speaker 1: all the time. Not only have we gotten a lot 127 00:06:41,160 --> 00:06:45,359 Speaker 1: of tech earnings, but tech executives have been on Capitol 128 00:06:45,480 --> 00:06:49,880 Speaker 1: Hill talking with Congress explaining what went wrong heading into 129 00:06:49,640 --> 00:06:53,640 Speaker 1: the presidential election that led to so much quote fake 130 00:06:53,839 --> 00:06:57,920 Speaker 1: news and advertisements that were not properly disclosed. Here to 131 00:06:57,960 --> 00:07:00,720 Speaker 1: discuss a Scott Galloway, Professor of Mark Getting at n 132 00:07:00,880 --> 00:07:03,720 Speaker 1: y U Stern School of Business, also the author of 133 00:07:03,760 --> 00:07:08,320 Speaker 1: a new book, The Four The Hidden DNA of Amazon, Apple, Facebook, 134 00:07:08,800 --> 00:07:12,400 Speaker 1: and Google. Scott, you know you've talked about how Facebook 135 00:07:12,520 --> 00:07:16,000 Speaker 1: is a young company that doesn't fully appreciate its role 136 00:07:16,520 --> 00:07:20,000 Speaker 1: in media and perhaps the importance of being a media 137 00:07:20,200 --> 00:07:24,120 Speaker 1: player in the US. And I'm just wondering, from your perspective, 138 00:07:24,280 --> 00:07:27,200 Speaker 1: do you what do you think they could have done well. 139 00:07:27,200 --> 00:07:28,880 Speaker 1: The first thing would be to acknowledge they are a 140 00:07:28,920 --> 00:07:31,560 Speaker 1: media firm. They still haven't. They still haven't acknowledged, but 141 00:07:31,680 --> 00:07:35,400 Speaker 1: do you think they are well? The definit into pure definition, 142 00:07:35,440 --> 00:07:37,720 Speaker 1: according to Marion Webster, as a medium that reaches and 143 00:07:37,760 --> 00:07:40,920 Speaker 1: influences people as media. So that's the definition. And then 144 00:07:40,920 --> 00:07:43,520 Speaker 1: on a business level, you spent a billion dollars on 145 00:07:43,560 --> 00:07:48,080 Speaker 1: original content, pay sports leagues to produce original content, and 146 00:07:48,120 --> 00:07:51,400 Speaker 1: then run advertising against that content. You boom your a 147 00:07:51,440 --> 00:07:56,040 Speaker 1: media company. So you know, crises, the crisis itself doesn't 148 00:07:56,080 --> 00:07:58,840 Speaker 1: hurt a firm, it's the response to the crisis. And 149 00:07:58,880 --> 00:08:02,080 Speaker 1: when a company refuses to acknowledge that there are media 150 00:08:02,120 --> 00:08:04,240 Speaker 1: firms for fear that they might trade at a lower 151 00:08:04,360 --> 00:08:08,960 Speaker 1: multiple or that they might expect some sort of expectation 152 00:08:09,000 --> 00:08:11,360 Speaker 1: of responsibility that we have on media firms as being 153 00:08:11,360 --> 00:08:13,000 Speaker 1: part of the fourth the state, I think it just 154 00:08:13,040 --> 00:08:15,680 Speaker 1: makes us angrier and angrier. So I would argue this 155 00:08:15,760 --> 00:08:17,560 Speaker 1: is a kind of a fast moving train wreck in 156 00:08:17,600 --> 00:08:21,200 Speaker 1: a textbook case study and how not to handle a crisis. 157 00:08:21,280 --> 00:08:24,040 Speaker 1: But the first thing is, you know, I am Facebook 158 00:08:24,040 --> 00:08:26,320 Speaker 1: and I'm a media company, and they have refused to 159 00:08:26,360 --> 00:08:28,880 Speaker 1: do that. It's absolutely ridiculous. How would that change anything 160 00:08:28,920 --> 00:08:32,120 Speaker 1: for them? Well, be I don't think it changed anything 161 00:08:32,440 --> 00:08:34,080 Speaker 1: for them. It would change things for us, And that 162 00:08:34,200 --> 00:08:38,480 Speaker 1: is we could we could legitimately expect them to show 163 00:08:38,480 --> 00:08:41,160 Speaker 1: the same type of veracity or some attempt to show 164 00:08:41,760 --> 00:08:45,400 Speaker 1: some sort of supervision around this content. Bloomberg is not 165 00:08:45,400 --> 00:08:48,080 Speaker 1: going to be weaponized by Russia. I'm fairly certain of that. 166 00:08:48,440 --> 00:08:51,320 Speaker 1: How do you really know? But I'm willing. I'm willing 167 00:08:51,360 --> 00:08:52,800 Speaker 1: to go a lot of money that because I think 168 00:08:52,840 --> 00:08:55,520 Speaker 1: you take your responsibility and your influence and your role 169 00:08:55,559 --> 00:08:58,040 Speaker 1: in the fourth the state very seriously, go on, go on, nokidding, 170 00:08:58,679 --> 00:09:00,680 Speaker 1: you know, I just it's up a little bit about 171 00:09:00,679 --> 00:09:03,280 Speaker 1: what you mentioned with Facebook and the idea that they 172 00:09:03,280 --> 00:09:05,920 Speaker 1: could be potentially worried that their multiples would go down. 173 00:09:06,440 --> 00:09:11,080 Speaker 1: Why does being a media company automatically sort of suggest 174 00:09:11,160 --> 00:09:12,720 Speaker 1: that you're going to make less money, even though that's 175 00:09:12,760 --> 00:09:16,080 Speaker 1: how we all view it. Yeah, So my guesses you 176 00:09:16,080 --> 00:09:17,800 Speaker 1: guys are going to forget more about that than I know. 177 00:09:17,960 --> 00:09:21,920 Speaker 1: Just crudely speaking, certain sectors traded higher multiples. People like 178 00:09:22,120 --> 00:09:25,560 Speaker 1: technology stocks, they like software companies. So you want to 179 00:09:25,559 --> 00:09:27,080 Speaker 1: be a technology firm, You don't want to be a 180 00:09:27,120 --> 00:09:31,439 Speaker 1: media company puts you in a different, multiple category, So 181 00:09:31,520 --> 00:09:34,880 Speaker 1: I guess that going forward, my first question is a 182 00:09:34,880 --> 00:09:37,240 Speaker 1: lot of people are looking at Facebook more as a 183 00:09:37,280 --> 00:09:40,560 Speaker 1: media company. Do you expect, uh that people's valuation of 184 00:09:40,600 --> 00:09:42,960 Speaker 1: the company will go down as well even though it 185 00:09:43,080 --> 00:09:46,959 Speaker 1: is reporting good earnings. I don't think so. My sense 186 00:09:47,080 --> 00:09:49,720 Speaker 1: is that we're sort of beyond trying to figure out 187 00:09:49,760 --> 00:09:52,040 Speaker 1: what it is. I think that them identifying themselves as 188 00:09:52,040 --> 00:09:55,760 Speaker 1: a media company is more around setting the expectations of 189 00:09:55,760 --> 00:09:58,720 Speaker 1: what of what they should be held responsible for or 190 00:09:58,840 --> 00:10:04,160 Speaker 1: not use. Me. Having said that, what where you might 191 00:10:04,160 --> 00:10:06,040 Speaker 1: see a decline in the stock if we're writing for 192 00:10:06,040 --> 00:10:07,839 Speaker 1: consumers to step in here, it's not going to happen. 193 00:10:08,280 --> 00:10:10,440 Speaker 1: These companies are going to continue to, in my opinion, 194 00:10:10,480 --> 00:10:13,679 Speaker 1: grow their earnings and have incredibly robust businesses because consumers. 195 00:10:14,040 --> 00:10:16,839 Speaker 1: We'll talk a big game about privacy and weaponization and 196 00:10:16,880 --> 00:10:20,079 Speaker 1: the supply chain ethics of a dress out of somebody 197 00:10:20,080 --> 00:10:22,199 Speaker 1: coming out of Bangladesh, and then they want to they 198 00:10:22,240 --> 00:10:24,480 Speaker 1: want that little black dress delivered to them within forty 199 00:10:24,559 --> 00:10:28,000 Speaker 1: five minutes. So consumers talk of big game about the stuff, 200 00:10:28,000 --> 00:10:31,200 Speaker 1: but they don't vote with their pocketbooks generally speaking. So 201 00:10:31,240 --> 00:10:32,560 Speaker 1: you're seeing this guy, I think you're going to see 202 00:10:32,559 --> 00:10:35,080 Speaker 1: these companies perform as well or better than they ever have. 203 00:10:35,240 --> 00:10:37,920 Speaker 1: What you might see is the risk of regulation might 204 00:10:38,000 --> 00:10:40,840 Speaker 1: result in a lower multiple placed on those profits. But 205 00:10:40,840 --> 00:10:42,360 Speaker 1: I don't see the profits going down. You know, I 206 00:10:42,360 --> 00:10:44,800 Speaker 1: want to push back because Facebook is actually trying to 207 00:10:45,240 --> 00:10:47,319 Speaker 1: vet some of their content more and they have been 208 00:10:47,320 --> 00:10:50,480 Speaker 1: employing more people to do this. It's messy, it's imprecise. 209 00:10:50,559 --> 00:10:53,240 Speaker 1: At what point is this, you know, going against the 210 00:10:53,280 --> 00:10:56,120 Speaker 1: First Amendment and violating people's right to say what they 211 00:10:56,160 --> 00:10:59,199 Speaker 1: want to say, because this ultimately wasn't just about paid advertising, 212 00:10:59,200 --> 00:11:02,120 Speaker 1: It was about what people were posting on their personal sites. 213 00:11:02,440 --> 00:11:05,280 Speaker 1: Well complicated and expensive. That sounds like a decent description 214 00:11:05,280 --> 00:11:08,640 Speaker 1: of democracy. And they used the defense and quite frankly, 215 00:11:08,679 --> 00:11:10,760 Speaker 1: I think you've been co opted into their narrative that 216 00:11:11,360 --> 00:11:13,240 Speaker 1: that they can shouldn't be an arbiter of truth. Well, 217 00:11:13,240 --> 00:11:15,480 Speaker 1: they're sure as hell can try. You try every day 218 00:11:15,480 --> 00:11:17,840 Speaker 1: to be an arbiter of truth. You try every day 219 00:11:17,960 --> 00:11:21,200 Speaker 1: to employ this fantastic and expensive thing called human discretion 220 00:11:21,480 --> 00:11:23,679 Speaker 1: around your advertisers and your content. Why shouldn't they be 221 00:11:23,720 --> 00:11:26,559 Speaker 1: held at the same standards as you do? You have 222 00:11:26,679 --> 00:11:33,000 Speaker 1: evidence that they absolutely do not have discretion over their advertisers. Yeah, 223 00:11:33,040 --> 00:11:35,480 Speaker 1: an intelligence unit of the Russian government paid in rubles 224 00:11:35,520 --> 00:11:38,319 Speaker 1: to so caught chaos in our nation. I think that's 225 00:11:38,320 --> 00:11:40,200 Speaker 1: pretty decent proved. But a lot of it wasn't that 226 00:11:40,280 --> 00:11:41,640 Speaker 1: much money, right, I mean it could have just been 227 00:11:41,720 --> 00:11:44,559 Speaker 1: one employee that was not author I mean, how far 228 00:11:44,640 --> 00:11:48,360 Speaker 1: up does this go? Well? Okay, when when the notion 229 00:11:48,480 --> 00:11:51,880 Speaker 1: was first proposed, they said it was crazy. Then it 230 00:11:52,040 --> 00:11:55,120 Speaker 1: ended up wait, a few million impressions, and now we've 231 00:11:55,200 --> 00:11:57,080 Speaker 1: learned that it's a hundred and twenty seven million people 232 00:11:57,120 --> 00:11:59,079 Speaker 1: sell you that? But how much would they have to 233 00:11:59,120 --> 00:12:01,320 Speaker 1: pay for that? I don't know. I don't know what 234 00:12:01,360 --> 00:12:03,280 Speaker 1: the business model is around that. You know, because there 235 00:12:03,280 --> 00:12:04,319 Speaker 1: are a lot of people. There are a lot of 236 00:12:04,360 --> 00:12:07,400 Speaker 1: eyeballs on Facebook just generally, um, and advertisements could be 237 00:12:07,440 --> 00:12:10,520 Speaker 1: passed around you. Just what I'm trying to get to is, 238 00:12:11,040 --> 00:12:13,920 Speaker 1: you know, yes, big decisions are you know, a big 239 00:12:14,280 --> 00:12:18,400 Speaker 1: like conglomerate. It's like CBS for example, it matters whether 240 00:12:18,440 --> 00:12:20,400 Speaker 1: the spots for the Super Bowl or whether it's for 241 00:12:20,440 --> 00:12:25,160 Speaker 1: a rerun of Law and Order. Right, So the data 242 00:12:25,200 --> 00:12:28,320 Speaker 1: I'm focused on is that a hundred seven million people 243 00:12:28,360 --> 00:12:30,560 Speaker 1: saw these apps, so that's quite a bit. And in 244 00:12:30,600 --> 00:12:34,040 Speaker 1: my opinion, I'm fairly certain that the New York Times 245 00:12:34,040 --> 00:12:36,839 Speaker 1: and CBS in Bloomberg are going to be able to 246 00:12:36,880 --> 00:12:40,400 Speaker 1: protect our elections from subterfuge. The New York Times will 247 00:12:40,440 --> 00:12:42,720 Speaker 1: do with a hundred million of free cash flow. How 248 00:12:42,760 --> 00:12:46,600 Speaker 1: come Facebook camp with twelve billion? There you go, Scott Galloway, 249 00:12:46,600 --> 00:12:48,480 Speaker 1: thank you so much for joining U. Scott Galloway, Professor 250 00:12:48,559 --> 00:12:51,600 Speaker 1: of Marketing at n y U Stern School of Business, 251 00:12:51,679 --> 00:12:53,960 Speaker 1: also the author of a new book, The Four The 252 00:12:54,000 --> 00:12:58,040 Speaker 1: Hidden DNA of Amazon, Apple, Facebook, and Google, which goes biblical. 253 00:12:58,320 --> 00:13:13,400 Speaker 1: This is Bloomberg, and as we've been saying today, we 254 00:13:13,400 --> 00:13:17,320 Speaker 1: are broadcasting live from the rid Holts Wealth Management second 255 00:13:17,440 --> 00:13:21,920 Speaker 1: annual Evidence Based Investing Conference in New York City. And 256 00:13:22,000 --> 00:13:24,240 Speaker 1: who do I have with me none other than Barry 257 00:13:24,320 --> 00:13:27,160 Speaker 1: rid Holts himself. He is the founder of it Holds 258 00:13:27,200 --> 00:13:30,400 Speaker 1: Wealth Management and a Bloomberg View columnist. And he also 259 00:13:30,520 --> 00:13:34,839 Speaker 1: has a fantastic podcast, Masters in Finance. I highly recommended it. 260 00:13:34,840 --> 00:13:38,840 Speaker 1: It's airs on Believe ten am and six pm on Saturday, 261 00:13:39,120 --> 00:13:42,040 Speaker 1: repeats all weekend Masters in Business. You can find it 262 00:13:42,200 --> 00:13:45,720 Speaker 1: wherever finer podcasts are sold all right, So, Barry, evidence 263 00:13:45,760 --> 00:13:50,559 Speaker 1: based investing, I mean, isn't all investing based on evidence? 264 00:13:50,960 --> 00:13:53,400 Speaker 1: You would imagine that, wouldn't you. When when we were 265 00:13:54,040 --> 00:13:58,200 Speaker 1: slowing around with the idea of doing this, every person 266 00:13:58,320 --> 00:14:01,400 Speaker 1: we presented the idea too said the exact same thing. 267 00:14:01,920 --> 00:14:05,680 Speaker 1: Isn't all investing based on evidence? And as it turns out, 268 00:14:06,000 --> 00:14:08,720 Speaker 1: not so much. Well, but what do you mean by that? Well, 269 00:14:09,080 --> 00:14:12,080 Speaker 1: there's lots of myths, there's lots of theories, there's lots 270 00:14:12,080 --> 00:14:15,880 Speaker 1: of behaviors, and behavioral economics is a big part of 271 00:14:15,920 --> 00:14:20,480 Speaker 1: evidence based investing. So let's assume you want to put 272 00:14:20,520 --> 00:14:24,080 Speaker 1: a portfolio together. How are you going to construct that portfolio? 273 00:14:24,320 --> 00:14:27,400 Speaker 1: One of the first questions is should you use an index, 274 00:14:27,480 --> 00:14:30,520 Speaker 1: should you use smart beta? Should you pick stocks yourself? 275 00:14:31,200 --> 00:14:33,160 Speaker 1: And when you look at the data, one of the 276 00:14:33,200 --> 00:14:37,520 Speaker 1: things you find is stock picking is really really hard. 277 00:14:38,160 --> 00:14:41,520 Speaker 1: Picking a manager who can pick stocks is even harder, 278 00:14:42,000 --> 00:14:45,680 Speaker 1: and then picking a manager who could pick stocks consistently 279 00:14:45,840 --> 00:14:49,800 Speaker 1: over time net of costs and fees is almost impossible. 280 00:14:49,840 --> 00:14:53,680 Speaker 1: It's absolutely a needle in a haystack. So that sort 281 00:14:53,720 --> 00:14:57,120 Speaker 1: of data that's out there forces you to say, what 282 00:14:57,200 --> 00:14:59,640 Speaker 1: am I doing, does one does what I'm doing makes 283 00:14:59,640 --> 00:15:04,000 Speaker 1: sense them a probabilistic standpoint, where am I really throwing 284 00:15:04,000 --> 00:15:07,280 Speaker 1: a hall marry here with a very low chance of success? 285 00:15:07,560 --> 00:15:10,120 Speaker 1: What does the evidence suggest? So if what you're saying 286 00:15:10,400 --> 00:15:14,320 Speaker 1: is the case, then why shouldn't everybody just go to indexing? Well, 287 00:15:14,440 --> 00:15:18,160 Speaker 1: we've seen a lot of people move in general towards indexing. 288 00:15:18,560 --> 00:15:22,280 Speaker 1: It's not a coincidence that um Tim Buckley, the incoming 289 00:15:22,320 --> 00:15:24,680 Speaker 1: CEO of Van Guard is gonna be speaking here next 290 00:15:24,800 --> 00:15:31,560 Speaker 1: and Vanguard has swollen up from a trillion dollars around 291 00:15:31,560 --> 00:15:34,760 Speaker 1: the time of the financial crisis, they're now over four 292 00:15:34,800 --> 00:15:39,280 Speaker 1: point four trillion dollars. So we look at indexing as 293 00:15:39,360 --> 00:15:42,640 Speaker 1: a core part of people's portfolio. It doesn't have to 294 00:15:42,640 --> 00:15:46,800 Speaker 1: be straight up market cap weighted indexing. There's arguments for 295 00:15:46,880 --> 00:15:49,640 Speaker 1: things like factor models. We just heard Cliff Assness of 296 00:15:49,680 --> 00:15:54,120 Speaker 1: a qu R describe ways to put together portfolios using 297 00:15:54,200 --> 00:15:59,240 Speaker 1: quantitative data that shows we know things that like valuation. 298 00:15:59,600 --> 00:16:02,600 Speaker 1: Lower cost stocks tend to do better over time than 299 00:16:02,680 --> 00:16:06,160 Speaker 1: more expensive stocks. We looked at we discussed the five 300 00:16:06,240 --> 00:16:09,080 Speaker 1: factor of Fama French model. If we want to really 301 00:16:09,080 --> 00:16:10,960 Speaker 1: get into the weeds, we could look at things like 302 00:16:11,000 --> 00:16:13,600 Speaker 1: what does that mean? So you just I think, spoke French. 303 00:16:13,800 --> 00:16:17,040 Speaker 1: So Eugene Fama just won the Nobel Prize last year. 304 00:16:17,120 --> 00:16:21,280 Speaker 1: He's a professor at at University of Chicago. His colleague 305 00:16:21,400 --> 00:16:25,680 Speaker 1: Can French as a professor at the Dartmouth Um College. 306 00:16:25,800 --> 00:16:32,000 Speaker 1: And they've crunched numbers for decades looking at what characteristics 307 00:16:32,120 --> 00:16:36,480 Speaker 1: of companies do better over time and just some of 308 00:16:36,520 --> 00:16:39,680 Speaker 1: the factors that we know. We know higher quality stocks 309 00:16:40,320 --> 00:16:43,680 Speaker 1: defined by low levels of dead and there's a whole 310 00:16:43,760 --> 00:16:46,680 Speaker 1: run of things that defines what's high quality versus low quality. 311 00:16:47,080 --> 00:16:49,520 Speaker 1: Not surprisingly, they tend to do better over time then 312 00:16:49,680 --> 00:16:54,360 Speaker 1: low quality stocks. The some of the surprising anomalies they've 313 00:16:54,400 --> 00:16:59,359 Speaker 1: discovered has been things like small cap small cap tends 314 00:16:59,360 --> 00:17:01,520 Speaker 1: over time I am and not one or two or 315 00:17:01,520 --> 00:17:05,440 Speaker 1: three years, but decades that tends to do better than 316 00:17:05,640 --> 00:17:09,960 Speaker 1: large cap. Some people actually Cliff talked about is the 317 00:17:10,040 --> 00:17:15,040 Speaker 1: small cap premium? Is it a liquidity premium? You know 318 00:17:15,119 --> 00:17:18,880 Speaker 1: big stocks trade very easily. Uh, Is it a risk premium? 319 00:17:18,880 --> 00:17:22,480 Speaker 1: Are you taking on more risk? We've also another factor 320 00:17:22,560 --> 00:17:27,399 Speaker 1: that actually Cliff Fastness created was momentum. Is momentum a 321 00:17:27,440 --> 00:17:30,880 Speaker 1: factor that helps people invest and and it turns out 322 00:17:30,920 --> 00:17:34,040 Speaker 1: that all these things contribute to better performance. So how 323 00:17:34,080 --> 00:17:37,000 Speaker 1: do these quantitative strategies deal with something like the tax 324 00:17:37,040 --> 00:17:40,040 Speaker 1: bell that we're just hearing about. Moody's just put out 325 00:17:40,080 --> 00:17:42,320 Speaker 1: a in a note that said that the credit implications 326 00:17:42,359 --> 00:17:47,520 Speaker 1: for investment grade companies was positive, whereas for speculative grade companies, UH, 327 00:17:47,640 --> 00:17:50,320 Speaker 1: not so much because they couldn't deduct the interest as 328 00:17:50,400 --> 00:17:53,240 Speaker 1: much going forward, and that would outweigh some of the benefits. 329 00:17:53,480 --> 00:17:56,680 Speaker 1: How would quantitative investing kind of address something like that? 330 00:17:56,880 --> 00:17:59,720 Speaker 1: So quality, as an example, if you're looking at a 331 00:17:59,760 --> 00:18:03,520 Speaker 1: qual ulity screen for companies that have less debt, this 332 00:18:03,600 --> 00:18:07,080 Speaker 1: isn't going to affect them. On the other hand, lower 333 00:18:07,160 --> 00:18:10,920 Speaker 1: quality companies, UH might be more negatively impacted by these 334 00:18:11,000 --> 00:18:14,359 Speaker 1: changes and deductibility. So we still, by the way, we 335 00:18:14,400 --> 00:18:17,360 Speaker 1: still don't know what the final tax bill looks like. 336 00:18:17,440 --> 00:18:19,000 Speaker 1: This is what was introduced. What do you think is 337 00:18:19,000 --> 00:18:20,560 Speaker 1: gonna happen with it? I think there's gonna be a 338 00:18:20,600 --> 00:18:23,920 Speaker 1: lot of horse trading where where whoever created the bill 339 00:18:24,160 --> 00:18:28,120 Speaker 1: created a bunch of anchor points corporate tax rates where 340 00:18:28,160 --> 00:18:30,919 Speaker 1: they're starting. That suggests to me, all right, if we 341 00:18:30,960 --> 00:18:34,240 Speaker 1: have to go to will go to percent repatriation rate, 342 00:18:34,320 --> 00:18:37,000 Speaker 1: which I which seems actually quite high to me. Well, 343 00:18:37,200 --> 00:18:40,399 Speaker 1: I had originally suggested nobody listens to me about this 344 00:18:40,440 --> 00:18:45,399 Speaker 1: first step, but I suggested it graduated. The first billion 345 00:18:45,520 --> 00:18:47,879 Speaker 1: is five percent, and the next two billion is this. 346 00:18:48,359 --> 00:18:51,840 Speaker 1: But listen, if you want to bring that, that's the carrot, 347 00:18:52,160 --> 00:18:54,400 Speaker 1: isn't Is there a stick also on the tax bill? 348 00:18:54,840 --> 00:18:56,960 Speaker 1: It's and if you don't bring it in, you're gonna 349 00:18:56,960 --> 00:18:59,760 Speaker 1: get wack. I haven't heard that, and that's that they 350 00:18:59,760 --> 00:19:01,600 Speaker 1: don't otherwise, I mean, they already bringing it back through 351 00:19:01,600 --> 00:19:03,960 Speaker 1: the corporate bond market. I'm not sure it would incentivize 352 00:19:03,960 --> 00:19:06,040 Speaker 1: them to do this. You know, if you want to 353 00:19:06,080 --> 00:19:08,960 Speaker 1: move some cash from overseas and bring it home to 354 00:19:09,000 --> 00:19:11,600 Speaker 1: do so. It seems weird that Apple, which has more 355 00:19:11,760 --> 00:19:16,159 Speaker 1: cash on its books than you know, than India has GDP. 356 00:19:17,920 --> 00:19:21,320 Speaker 1: Why are they borrowing money to buy back stocks. It's well, 357 00:19:21,400 --> 00:19:23,320 Speaker 1: it's that's how they're bringing the cash back because they're 358 00:19:23,320 --> 00:19:25,960 Speaker 1: paying less of an interest rate. Very Unfortunately, we have 359 00:19:26,040 --> 00:19:28,080 Speaker 1: to leave it there, but we'll have to continue this conversation. 360 00:19:28,160 --> 00:19:30,359 Speaker 1: Barry rid Holds, founder of rit Holt's Wealth Management and 361 00:19:30,359 --> 00:19:34,280 Speaker 1: Bloomberg columnists, also he is running this conference today the 362 00:19:34,359 --> 00:19:38,600 Speaker 1: rit Holt's Wealth Management second Annual Evidence Based Investing. This 363 00:19:38,800 --> 00:19:53,040 Speaker 1: is Bloomberg. Thank you so much, Greg. So, we are 364 00:19:53,080 --> 00:19:56,960 Speaker 1: awaiting Republican leaders to unveil their tax reform bill, which 365 00:19:57,040 --> 00:19:59,440 Speaker 1: is expected any minute, and care to tell us a 366 00:19:59,440 --> 00:20:01,760 Speaker 1: little bit about what we're expecting to be in that 367 00:20:01,840 --> 00:20:06,040 Speaker 1: tax legislation is Laura Davison, Bloomberg Tax Reporters. So, Laura, 368 00:20:06,080 --> 00:20:08,280 Speaker 1: I do know that they released some talking points earlier 369 00:20:08,359 --> 00:20:12,240 Speaker 1: today from those and other insights, What are we gleaning 370 00:20:12,359 --> 00:20:14,879 Speaker 1: about what's in this bill? Well, we're cleaning that this 371 00:20:15,200 --> 00:20:17,680 Speaker 1: six too much of what House Republicans have talked about. 372 00:20:17,680 --> 00:20:19,480 Speaker 1: You know, the big tax cuts down to a corporate 373 00:20:19,560 --> 00:20:23,080 Speaker 1: rate that's expected to be permanent, um, you know, passed 374 00:20:23,119 --> 00:20:26,560 Speaker 1: through the small businesses are getting a rate, so that 375 00:20:26,600 --> 00:20:29,280 Speaker 1: does carve out, uh, you know some what they're calling 376 00:20:29,320 --> 00:20:32,880 Speaker 1: professional services firms that could be investment managers or doctors, 377 00:20:32,920 --> 00:20:35,320 Speaker 1: lawyer's accountants, that sort of thing. On the individual side, 378 00:20:35,760 --> 00:20:38,520 Speaker 1: a new child tax creditors, three dollars doubling of the 379 00:20:38,560 --> 00:20:41,639 Speaker 1: standard deduction. H A lot of those headlines things that 380 00:20:41,640 --> 00:20:43,920 Speaker 1: they were going for are in there. The question now 381 00:20:43,960 --> 00:20:46,640 Speaker 1: and what what we're really passing through is what sort 382 00:20:46,640 --> 00:20:49,399 Speaker 1: of deductions and credits are taken away. You know, on 383 00:20:49,440 --> 00:20:52,359 Speaker 1: the international side, there's a lot of concerns from some 384 00:20:52,440 --> 00:20:55,440 Speaker 1: multinational corporations about how they're going to be taxing um 385 00:20:55,520 --> 00:20:57,760 Speaker 1: profits that you're bringing back on shore profits you might 386 00:20:57,760 --> 00:21:00,520 Speaker 1: be sending overseas. Uh. And this is always really tricky 387 00:21:00,520 --> 00:21:03,440 Speaker 1: and gets really drawn into the details and could could 388 00:21:03,480 --> 00:21:06,239 Speaker 1: cause problems for the bill moving forward. Well, one thing 389 00:21:06,280 --> 00:21:08,719 Speaker 1: that we were just talking with Carla Kadana about was 390 00:21:08,840 --> 00:21:12,880 Speaker 1: the mortgage deduction. We found out that, uh that they 391 00:21:12,920 --> 00:21:16,640 Speaker 1: will keep the deduction for loans that are under five 392 00:21:16,720 --> 00:21:19,960 Speaker 1: hundred thousand dollars, but for over that, uh, those will 393 00:21:20,000 --> 00:21:23,040 Speaker 1: be removed. Is that accurate? Yes, that's correct, that's there. 394 00:21:23,040 --> 00:21:24,960 Speaker 1: So they're basically moving that it used to be a 395 00:21:25,000 --> 00:21:27,480 Speaker 1: million dollars down to five hundred thousands, so basically cutting 396 00:21:27,480 --> 00:21:29,840 Speaker 1: that in half. And the reason is is because it 397 00:21:29,920 --> 00:21:31,439 Speaker 1: raises a lot of money that they can use to 398 00:21:31,480 --> 00:21:34,520 Speaker 1: put towards tax cuts. Mortgage interests is a very popular one. 399 00:21:34,560 --> 00:21:37,600 Speaker 1: It's often called like the sacred cows of of the 400 00:21:37,640 --> 00:21:39,480 Speaker 1: tax code. But it looks like they did a little 401 00:21:39,480 --> 00:21:41,399 Speaker 1: bit of a goring of that cow is there going 402 00:21:41,440 --> 00:21:43,919 Speaker 1: to be a lot of pushback on that front, you know, 403 00:21:44,040 --> 00:21:48,640 Speaker 1: home builders and UM when realtors UM are already skeptical 404 00:21:48,680 --> 00:21:50,800 Speaker 1: about this bill, so they may not have lost anyone 405 00:21:50,880 --> 00:21:53,880 Speaker 1: that they didn't have already. Uh, members are really gonna 406 00:21:53,920 --> 00:21:55,960 Speaker 1: have to go through and look at this and say, Okay, 407 00:21:55,960 --> 00:21:58,439 Speaker 1: in my district, in my state, what how would this 408 00:21:58,480 --> 00:22:01,560 Speaker 1: affect the home values and the people and what they're earning. 409 00:22:01,640 --> 00:22:03,960 Speaker 1: And that will really be the sign and we schooill 410 00:22:04,000 --> 00:22:05,760 Speaker 1: start seeing in the next couple of days that people 411 00:22:05,800 --> 00:22:07,600 Speaker 1: run those numbers of can they get behind this or not? 412 00:22:08,080 --> 00:22:11,639 Speaker 1: So Laura, what about the local and state tax deductions? 413 00:22:11,640 --> 00:22:14,760 Speaker 1: There are some talk about removing those. What does a 414 00:22:14,800 --> 00:22:17,800 Speaker 1: lot of what does the final bill look like? So UM, 415 00:22:17,960 --> 00:22:19,720 Speaker 1: I would say becaus where they landed, but I'm not 416 00:22:19,760 --> 00:22:21,520 Speaker 1: going to say that it's final. So they basically have 417 00:22:21,600 --> 00:22:24,480 Speaker 1: a ten tho dollar cap for property taxes only, so 418 00:22:24,560 --> 00:22:27,119 Speaker 1: you can't deduct your state or local income taxes or 419 00:22:27,119 --> 00:22:29,480 Speaker 1: sales taxes, but you can take up to a ten 420 00:22:29,520 --> 00:22:32,360 Speaker 1: thousand dollar deduction for property taxes. So that's very good 421 00:22:32,400 --> 00:22:35,800 Speaker 1: for New York, New Jersey where property taxes are really high. 422 00:22:36,080 --> 00:22:39,200 Speaker 1: The problem is, though lawmakers, especially Republicans from that state, 423 00:22:39,200 --> 00:22:41,680 Speaker 1: are saying, look, that isn't good enough, and they're reserving 424 00:22:41,720 --> 00:22:43,280 Speaker 1: judgment on whether they're going to vote for the still 425 00:22:43,400 --> 00:22:45,560 Speaker 1: or not again, you know, running the numbers, see how 426 00:22:45,560 --> 00:22:47,400 Speaker 1: it works out with UH, with some of the other 427 00:22:47,440 --> 00:22:50,199 Speaker 1: tax cuts there. But that's still a problem that has 428 00:22:50,240 --> 00:22:52,359 Speaker 1: sort of been plaguing Republicans for several weeks now. They 429 00:22:52,400 --> 00:22:54,320 Speaker 1: haven't been able to come to an agreement and they 430 00:22:54,359 --> 00:22:57,400 Speaker 1: still don't have everyone on board. So how simple is this? 431 00:22:57,480 --> 00:23:00,600 Speaker 1: Is this truly a simplification where we can and write, 432 00:23:00,640 --> 00:23:04,840 Speaker 1: are right file our taxes on a postcard? Well, so 433 00:23:04,880 --> 00:23:07,800 Speaker 1: it's sort of a mixed bag for for individuals. There 434 00:23:07,840 --> 00:23:10,680 Speaker 1: are some simplification measures, you know. The big thing there 435 00:23:10,720 --> 00:23:14,000 Speaker 1: is standards doubling the standard deduction so fewer people will itemize. 436 00:23:14,200 --> 00:23:16,160 Speaker 1: You'll have fewer forms. I don't know that it will 437 00:23:16,200 --> 00:23:17,720 Speaker 1: be a postcard, but it might be just be a 438 00:23:17,760 --> 00:23:20,560 Speaker 1: couple of pages. Uh. Though. Really on the business side, 439 00:23:20,600 --> 00:23:23,240 Speaker 1: that's where you see some complexity kick in of when 440 00:23:23,280 --> 00:23:25,879 Speaker 1: you add special benefits or things that people like, you 441 00:23:25,920 --> 00:23:28,359 Speaker 1: have to come up with rules to prevent companies from 442 00:23:28,359 --> 00:23:30,800 Speaker 1: from abusing those are coming up with a way to 443 00:23:30,800 --> 00:23:33,720 Speaker 1: to take extra advantage of those rules. All right, So, Laura, 444 00:23:33,920 --> 00:23:37,760 Speaker 1: this bill was crafted with incredible secrecy. A lot of 445 00:23:37,800 --> 00:23:41,119 Speaker 1: people in Congress did not see it before it was 446 00:23:41,200 --> 00:23:44,520 Speaker 1: unveiled or it will be unfailed formally, uh, within the 447 00:23:44,560 --> 00:23:47,800 Speaker 1: next few minutes. Do you have any sense of just 448 00:23:47,880 --> 00:23:51,560 Speaker 1: how much of a consensus GOP members have on this 449 00:23:51,600 --> 00:23:55,080 Speaker 1: bill right now? Well, Republican leadership would definitely say that 450 00:23:55,119 --> 00:23:57,600 Speaker 1: they've been having hearings and listening to members and and 451 00:23:57,720 --> 00:24:00,680 Speaker 1: doing the consensus building. So there was definitely some frustration 452 00:24:00,720 --> 00:24:03,520 Speaker 1: for members even on the Ways and Needs Committee yesterday saying, look, 453 00:24:03,560 --> 00:24:04,840 Speaker 1: we don't know what's going on. We don't know what's 454 00:24:04,880 --> 00:24:07,160 Speaker 1: in this bill, and it's you know, twenty four hours 455 00:24:07,160 --> 00:24:10,680 Speaker 1: we're less than that before we're set to to release it. Uh. 456 00:24:10,760 --> 00:24:13,000 Speaker 1: And and that's that's what happened with healthcare, remember, right, 457 00:24:13,000 --> 00:24:14,879 Speaker 1: it was crafted behind closed doors, and people saw it 458 00:24:14,920 --> 00:24:17,320 Speaker 1: and their constituents and said, look, we can't vote for this. 459 00:24:17,640 --> 00:24:19,800 Speaker 1: This doesn't take into the accounts of the needs to 460 00:24:19,800 --> 00:24:22,200 Speaker 1: be American people, and especially when you're on a really 461 00:24:22,240 --> 00:24:24,040 Speaker 1: compressed timeline like they are. They want to pass this 462 00:24:24,119 --> 00:24:26,160 Speaker 1: out of the House and the Senate by Thanksgiving, which 463 00:24:26,160 --> 00:24:27,959 Speaker 1: is you know, just a matter of days really at 464 00:24:27,960 --> 00:24:30,119 Speaker 1: this point. Um, that's really hard to get everyone on 465 00:24:30,200 --> 00:24:33,200 Speaker 1: board in such a short time frame, you know, Laura, 466 00:24:33,359 --> 00:24:36,680 Speaker 1: just some interesting market action Testlas shares extended their declines 467 00:24:36,760 --> 00:24:41,879 Speaker 1: after UH. The US tax bill was introduced today. The 468 00:24:41,960 --> 00:24:45,639 Speaker 1: idea here is that it would repeal credits given to 469 00:24:45,880 --> 00:24:49,080 Speaker 1: electric vehicle buyers. Can you tell us more about that 470 00:24:49,119 --> 00:24:51,280 Speaker 1: in any other sort of tax deductions that would be 471 00:24:51,320 --> 00:24:55,600 Speaker 1: repealed that would go towards more sustainable industries? So there 472 00:24:55,680 --> 00:24:57,720 Speaker 1: I I don't know about the electric vehicle. That's one 473 00:24:57,720 --> 00:24:59,560 Speaker 1: of those details that that lawmakers didn't know as they 474 00:24:59,560 --> 00:25:01,480 Speaker 1: were coming out the room. But we'll be in that 475 00:25:01,520 --> 00:25:04,440 Speaker 1: bill text either one way or the other. Uh. Nuclear, Uh, 476 00:25:04,480 --> 00:25:07,480 Speaker 1: there's an extension of the production tax credit for nuclear energy. 477 00:25:07,480 --> 00:25:09,240 Speaker 1: So that's very good down in Georgia and so after 478 00:25:09,280 --> 00:25:11,840 Speaker 1: aline on southern Corpse stan Us, they've had some projects 479 00:25:11,840 --> 00:25:14,639 Speaker 1: that have been sort of meleeyed by by sort of 480 00:25:14,720 --> 00:25:18,359 Speaker 1: uncertainty there. Um. There's also some other extensions for for 481 00:25:18,359 --> 00:25:21,119 Speaker 1: for some wind and solar provisions to UH that that 482 00:25:21,160 --> 00:25:24,119 Speaker 1: helps with uncertainty because there were has been UH, some 483 00:25:24,280 --> 00:25:27,000 Speaker 1: friction among members of Congress. Republicans typically don't like these 484 00:25:27,000 --> 00:25:29,399 Speaker 1: Democrats want to be them extended, but of course Republicans 485 00:25:29,400 --> 00:25:31,520 Speaker 1: are in power. Can you walk us through the process 486 00:25:31,680 --> 00:25:36,320 Speaker 1: of what will happen to turn this legislation into law? 487 00:25:36,920 --> 00:25:39,000 Speaker 1: So starting next week, they'll have what they call a 488 00:25:39,080 --> 00:25:40,880 Speaker 1: mark up in the House, which is basically the Ways 489 00:25:40,880 --> 00:25:43,880 Speaker 1: and Means Committee sitting down adding amendments, uh and basically 490 00:25:43,920 --> 00:25:46,679 Speaker 1: going through this bill step by step. That's expected to 491 00:25:46,680 --> 00:25:49,640 Speaker 1: be over, you know, next Friday. Uh. Then they'll take 492 00:25:49,640 --> 00:25:51,200 Speaker 1: it to the floor for a House vote, and they're 493 00:25:51,200 --> 00:25:53,919 Speaker 1: they're hoping to get that done the following week. Simultaneously, 494 00:25:53,960 --> 00:25:56,239 Speaker 1: in the Senate, they're looking to introduce a bill as 495 00:25:56,280 --> 00:25:58,400 Speaker 1: soon as next week and do that same markup process 496 00:25:58,400 --> 00:26:00,639 Speaker 1: and take the bills to the floor. The timely they 497 00:26:00,760 --> 00:26:02,639 Speaker 1: lad out to get it done by Thanksgiving is highly 498 00:26:03,240 --> 00:26:05,600 Speaker 1: uh ambitious. You could say even getting it done by 499 00:26:05,640 --> 00:26:06,920 Speaker 1: the end of the year would be a would be 500 00:26:07,000 --> 00:26:10,480 Speaker 1: a stretch, but it's technically possible. And how many votes 501 00:26:10,520 --> 00:26:12,040 Speaker 1: do they need? I mean, is it just a simple 502 00:26:12,080 --> 00:26:14,760 Speaker 1: majority in each in the House and the Senate and 503 00:26:14,760 --> 00:26:17,480 Speaker 1: that would pass or is it something else? Correct? Yeah, 504 00:26:17,520 --> 00:26:20,080 Speaker 1: simple majority House and Senate. Um the House, that's much 505 00:26:20,119 --> 00:26:23,080 Speaker 1: easier because they have a Republicans have a much larger margin. 506 00:26:23,760 --> 00:26:25,680 Speaker 1: Over in the Senate is trickier. They only have fifty 507 00:26:25,680 --> 00:26:28,280 Speaker 1: two Republicans. Uh, so you can lose two of them 508 00:26:28,320 --> 00:26:31,359 Speaker 1: and then Mike Pence can come in and be the tidebreaker. Uh, 509 00:26:31,400 --> 00:26:35,919 Speaker 1: that's very complicated. Has there been any commentary from the 510 00:26:35,920 --> 00:26:38,399 Speaker 1: GOP members. Is there a sense that there is consensus 511 00:26:38,400 --> 00:26:40,320 Speaker 1: on this at this point? And also are there any 512 00:26:40,359 --> 00:26:43,119 Speaker 1: Democrats who are willing to get on board? No Democrats 513 00:26:43,160 --> 00:26:45,679 Speaker 1: yet saying they're they're on board, especially we're in the 514 00:26:45,680 --> 00:26:48,239 Speaker 1: Senate side. President Trump has been reaching out to two 515 00:26:48,320 --> 00:26:51,280 Speaker 1: members who are in states where he wants to height 516 00:26:51,320 --> 00:26:54,200 Speaker 1: Camp of North Dakota Joe Donnelly of Indiana. Uh. Those 517 00:26:54,200 --> 00:26:58,920 Speaker 1: sorts of members um consensus. Uh. How they definitely got 518 00:26:58,920 --> 00:27:01,480 Speaker 1: a larger coalition and really feeling the political pressure because 519 00:27:01,480 --> 00:27:03,760 Speaker 1: they're all up for re election next year to get 520 00:27:03,800 --> 00:27:06,800 Speaker 1: something done, anything done. And sometimes when there's pressure like that, 521 00:27:06,840 --> 00:27:09,159 Speaker 1: the details don't matter as much. Over in the Senate, 522 00:27:09,320 --> 00:27:11,720 Speaker 1: there's less pressure there on a six year cycle, UM 523 00:27:11,800 --> 00:27:14,240 Speaker 1: and and members just typically move a little bit slower 524 00:27:14,280 --> 00:27:17,800 Speaker 1: and and are the dynamics are very much different from 525 00:27:17,800 --> 00:27:19,840 Speaker 1: the House. Uh So why there could be consents in 526 00:27:19,880 --> 00:27:22,600 Speaker 1: the House Senate is a different story. I just want 527 00:27:22,600 --> 00:27:25,679 Speaker 1: to let you know we are awaiting Republican leaders who 528 00:27:25,720 --> 00:27:29,240 Speaker 1: are planning to unveil their tax reform bill. House Speaker 529 00:27:29,280 --> 00:27:31,879 Speaker 1: Paul Ryan just walked out and shaking hands, and we 530 00:27:31,920 --> 00:27:35,760 Speaker 1: will bring that to you live. Laura. This is fascinating 531 00:27:35,920 --> 00:27:38,800 Speaker 1: and I have to wonder from your perspective, can you 532 00:27:38,840 --> 00:27:43,040 Speaker 1: put these tax this tax proposal into historical context. When 533 00:27:43,080 --> 00:27:45,119 Speaker 1: was the last time that we saw this big of 534 00:27:45,160 --> 00:27:47,560 Speaker 1: a change to the way that we pay taxes? So 535 00:27:47,680 --> 00:27:50,399 Speaker 1: the bill that we we we're seeing today, it's about 536 00:27:50,400 --> 00:27:52,359 Speaker 1: thirty years since we've seen changes like this with this 537 00:27:52,440 --> 00:27:56,400 Speaker 1: was President Ronald Reagan where they really went through and 538 00:27:56,400 --> 00:27:59,520 Speaker 1: and totally read redid the tax code. It's possible that 539 00:27:59,560 --> 00:28:02,159 Speaker 1: what we today get saled back just because of you know, 540 00:28:02,320 --> 00:28:06,240 Speaker 1: tight deadlines or unable to build consensus, and perhaps we 541 00:28:06,280 --> 00:28:08,720 Speaker 1: see something more like what we saw, Laura. I'm sorry 542 00:28:08,760 --> 00:28:10,920 Speaker 1: to cut you up. Paul Ryan did just start to speak, 543 00:28:11,080 --> 00:28:16,720 Speaker 1: so Laurie's will leave it there. Thanks for listening to 544 00:28:16,720 --> 00:28:19,600 Speaker 1: the Bloomberg, P and L Podcast. You can subscribe and 545 00:28:19,680 --> 00:28:23,640 Speaker 1: listen to interviews at Apple Podcasts, SoundCloud, or whatever podcast 546 00:28:23,680 --> 00:28:27,160 Speaker 1: platform you prefer. I'm pim Fox. I'm on Twitter at 547 00:28:27,320 --> 00:28:30,720 Speaker 1: pim Fox. I'm on Twitter at Lisa Abramo. It's one 548 00:28:30,920 --> 00:28:33,600 Speaker 1: before the podcast. You can always catch us worldwide on 549 00:28:33,680 --> 00:28:34,520 Speaker 1: Bloomberg Radio