WEBVTT - Buffett Beware 0:00:04.000 --> 0:00:07.280 Welcome to Bloomberg Opinion. I'm Vonnie Quinn. This week, the 0:00:07.280 --> 0:00:10.600 political scientists John Sides and his co authors talk about 0:00:10.920 --> 0:00:15.680 a cycle of discovery, scrutiny, decline. Jonathan Bernstein on the 0:00:15.720 --> 0:00:20.040 start of campaigning for four. Also Justin Fox on the 0:00:20.079 --> 0:00:23.440 curse of the Warren Buffett comparison. First though, to the markets, 0:00:23.640 --> 0:00:26.880 mac Oman columnist Cameron Christ joined me to discuss what's 0:00:26.880 --> 0:00:30.840 starting to look a lot like shortcovering. Cameron, so, typically 0:00:31.000 --> 0:00:33.600 one percent move is considered, you know, a fairly decent move. 0:00:33.640 --> 0:00:35.680 But we've seen a lot of one percent and way 0:00:35.720 --> 0:00:38.519 more than that moves this year, and yet it's difficult 0:00:38.520 --> 0:00:40.560 to know whether we're hitting bottom or we're heading top. 0:00:41.280 --> 0:00:43.920 You have a great column about how you distinguish between 0:00:44.080 --> 0:00:47.960 shortcovering and a regular If there is everyone rally, what 0:00:48.040 --> 0:00:50.839 are we seeing right now? Yeah? I think you can 0:00:50.880 --> 0:00:55.240 look at the performance of individual securities within an index 0:00:55.320 --> 0:00:58.360 to get some sort of insight as to what's driving 0:00:58.400 --> 0:01:01.640 the index level price. I think the theory here is 0:01:01.680 --> 0:01:04.280 that if there's new money coming in, it should really 0:01:04.319 --> 0:01:08.080 benefit all the securities in the index more or less equally. 0:01:08.120 --> 0:01:10.080 I mean, it isn't necessarily the case but you would 0:01:10.120 --> 0:01:13.840 expect to see a broadly comparable performance across all of 0:01:13.840 --> 0:01:18.160 these individual stocks, whereas if it's a short covering rally 0:01:18.319 --> 0:01:22.320 or a rally it's driven by a reduction of risk positions. 0:01:22.760 --> 0:01:25.120 What you would expect to see is sort of the 0:01:25.160 --> 0:01:29.559 worst performers suddenly being the great beneficiaries of that flow, 0:01:30.280 --> 0:01:35.600 and the strongest performers suddenly tailing off. And that's exactly 0:01:35.640 --> 0:01:40.280 what we've seen since the us CPI figures. So if 0:01:40.280 --> 0:01:42.720 you sort all the stocks in the SMP five D, 0:01:42.840 --> 0:01:46.399 for example, by their performance over the last year, and 0:01:46.440 --> 0:01:50.480 then you look at say the ten worst performers, well, 0:01:50.640 --> 0:01:55.560 they've returned an average of just under eight percent. If 0:01:55.560 --> 0:01:57.960 you look at the ten best performers, on the other hand, 0:01:58.120 --> 0:02:02.120 they've actually fallen by one quarter percent. So the good 0:02:02.160 --> 0:02:05.040 stocks have been sold and the bad dogs have been bought. 0:02:05.520 --> 0:02:09.200 And that naturally suggests that what's been driving the price 0:02:09.200 --> 0:02:12.760 act has been risk reduction on the part of portfolio 0:02:12.800 --> 0:02:17.239 managers and investors. If that's the case and much risk 0:02:17.280 --> 0:02:19.799 has been reduced, are we sort of at a flat 0:02:19.880 --> 0:02:21.840 level here or is there more to be done? Or 0:02:21.880 --> 0:02:24.799 how do you know about that? Yeah, I mean it's 0:02:24.800 --> 0:02:26.480 difficult to say, and it's the sort of thing that 0:02:26.520 --> 0:02:29.160 you can only know to some degree in the hindsight 0:02:29.680 --> 0:02:32.400 that haven't been said. Looking forward, I mean, what have 0:02:32.440 --> 0:02:35.080 we got on the horizon? All right? We've got Thanksgiving 0:02:35.120 --> 0:02:37.880 Week in the US next week, which is typically a 0:02:38.000 --> 0:02:42.160 quiet period or at least appeared with low participation and 0:02:42.240 --> 0:02:46.240 poor liquidity. We've got the Football World Cup starting uh 0:02:46.400 --> 0:02:49.440 this weekend, and while some people may be boycotting that 0:02:49.680 --> 0:02:52.600 on human rights grounds or whatever, it's still the sort 0:02:52.600 --> 0:02:56.680 of event that draws a lot of viewership brittly in Europe, 0:02:57.000 --> 0:03:00.960 Asia and South America. And again, got an environment where 0:03:01.000 --> 0:03:03.960 you've expect trading liquidity to be poor. And all of 0:03:04.000 --> 0:03:05.880 this takes us sort of into the end of the 0:03:05.960 --> 0:03:10.279 year again where trading liquidity is poor. Given the volatility 0:03:10.280 --> 0:03:13.079 that we've seen throughout the course of the year, I 0:03:13.120 --> 0:03:17.240 think it's certainly reasonable for anyone who's had a half 0:03:17.320 --> 0:03:21.280 decent year to sort of think about, well, liquidity is 0:03:21.320 --> 0:03:24.160 bad now, and it's about to get worse. Why not 0:03:24.360 --> 0:03:26.920 just tighten up the ship a little bit, reduce some 0:03:27.000 --> 0:03:31.399 risk positions, particularly given that sort of the macro currents 0:03:31.480 --> 0:03:33.520 are shifting a bit in the sense that we had 0:03:33.560 --> 0:03:36.520 that lower inflation figure last week, and when I just 0:03:36.600 --> 0:03:40.080 run a lower risk profile when things are more likely 0:03:40.160 --> 0:03:43.760 to be erratic. Now, you do say that poor trading 0:03:43.760 --> 0:03:46.480 liquidity can be both an ally and an enemy. So 0:03:46.600 --> 0:03:48.920 for those who maybe didn't have the best of years, 0:03:49.120 --> 0:03:51.360 might be be trying to take it down to jobs. Yeah, 0:03:51.400 --> 0:03:53.200 I mean, I think there's certainly an element of that, 0:03:53.520 --> 0:03:56.800 roll the dice by a few lottery tickets and hope 0:03:56.800 --> 0:03:59.920 for the best. Yeah, that's certainly the case. Because if 0:04:00.040 --> 0:04:02.840 you're you know, I won't name any names, but there 0:04:02.840 --> 0:04:06.000 are some high profile fund managers they are down plus 0:04:06.000 --> 0:04:09.880 on the year. I mean, is there is there much 0:04:09.880 --> 0:04:13.200 difference between down fifty and down sixty? Not really, But 0:04:13.320 --> 0:04:15.560 if you can sort of recover the down all of 0:04:15.600 --> 0:04:18.520 a sudden, it doesn't seem so bad. So yeah, I mean, 0:04:18.520 --> 0:04:21.200 I guess there could be an effort perhaps to try 0:04:21.240 --> 0:04:24.600 to push things some of these poorly performing names, try 0:04:24.640 --> 0:04:27.400 to push them higher, but it remains to be seen 0:04:27.400 --> 0:04:30.599 how successful that might be. Cameron, what about correlation, because 0:04:30.600 --> 0:04:33.040 it does seem like stocks really around the world are 0:04:33.120 --> 0:04:35.920 so correlated right now. Are people doing the same thing 0:04:36.000 --> 0:04:40.919 in every training environment? Well, certainly the phenomenon I've just 0:04:41.000 --> 0:04:43.960 described in terms of risk reduction that does seem to 0:04:44.000 --> 0:04:46.840 be evident in other markets as well. I'm a round 0:04:46.880 --> 0:04:50.240 the same analysis on the eurostocks, on the foot Sea 0:04:50.400 --> 0:04:53.680 and on the kneek, and they've all exhibited broadly similar 0:04:53.760 --> 0:04:56.760 behavior where the performance over the last week or so 0:04:57.279 --> 0:05:00.440 has been sort of negatively correlated with that of the 0:05:00.560 --> 0:05:04.480 last year, which really captures the sort of thematic trend 0:05:05.000 --> 0:05:11.919 of two so um. Again, that's consistent with some risk reduction, shortcovering, 0:05:11.960 --> 0:05:14.880 whatever you want to call it. As as we enter 0:05:14.960 --> 0:05:18.000 this period where liquidity is like going to be even 0:05:18.040 --> 0:05:21.359 worse than it's been recently common, you know, it's an 0:05:21.360 --> 0:05:24.000 impossible style obviously an advance. But if we get another 0:05:24.120 --> 0:05:27.360 CPI or a pp I that shows inflation moderating slightly, 0:05:27.560 --> 0:05:30.000 could that be another catalyst for a five day period 0:05:30.080 --> 0:05:32.919 like we just had. Oh, I mean absolutely. You know 0:05:32.920 --> 0:05:35.600 it's frequently in the US where obviously that would influence 0:05:35.600 --> 0:05:37.960 the FEB, who is, after all, the world's central back. 0:05:38.360 --> 0:05:41.120 That having been said, in the UK on Wednesday we 0:05:41.200 --> 0:05:44.880 had a CPI figured that was above expectations, So you know, 0:05:44.920 --> 0:05:48.360 the notion that we're going to have downside surprises on 0:05:48.400 --> 0:05:51.880 inflation from here on out. Is probably more hope than 0:05:51.920 --> 0:05:55.000 a reasonable expectation. On the retail sales in the US 0:05:55.080 --> 0:05:58.200 were super strong, so clearly the demand side of the 0:05:58.240 --> 0:06:01.440 inflation equation is an moderating to the degree that the 0:06:01.480 --> 0:06:05.279 third would work. Mac Oman columnist Cameron christ More next 0:06:05.400 --> 0:06:09.560 on Bloomberg Opinion. I'm Vanni quinn tip for financial market pros. 0:06:09.760 --> 0:06:12.400 If you're being compared to Warren Buffett or Steve Jobs, 0:06:12.800 --> 0:06:14.960 maybe check the books. I think there's also just a 0:06:15.000 --> 0:06:17.640 thing of like, we need to be a good constructive 0:06:17.640 --> 0:06:19.720 factor in this space if we're not. It's just like 0:06:19.760 --> 0:06:21.840 that on many levels. I had a conversation about all 0:06:21.880 --> 0:06:24.920 of this with Boomberg Opinions justin Fox. So the impetus 0:06:24.960 --> 0:06:28.599 for this column was Sam Bankman Freed's spectacular downfall. This is, 0:06:28.640 --> 0:06:30.919 of course, the third year old who was worth billion 0:06:30.920 --> 0:06:33.680 dollars a year ago and who has bankrupted a lot 0:06:33.680 --> 0:06:36.200 of people, let's put it that way. And yeah, just 0:06:36.279 --> 0:06:37.800 a couple of months ago he was on the cover 0:06:37.880 --> 0:06:40.599 of Fortune, and I act as a former employee. I 0:06:40.600 --> 0:06:43.120 still subscribe to Fortune, and so I had that magazine 0:06:43.160 --> 0:06:47.440 at home with Sam's face and the next Warren Buffett 0:06:47.760 --> 0:06:50.440 exactly right under it. And how many times have we 0:06:50.520 --> 0:06:53.880 seen this phrase? And what does it come to mean? Well, 0:06:54.200 --> 0:06:56.840 the most famous one before this was probably the Business 0:06:56.920 --> 0:07:00.200 We cover in two thousand four, before Business We was 0:07:00.240 --> 0:07:03.240 part of Bloomberg. It was Eddie Lambert Jr. And it 0:07:03.320 --> 0:07:07.039 also asked the next Warren Buffett exact same language, and 0:07:07.360 --> 0:07:09.680 Lambert actually went. And really the next couple of years 0:07:09.680 --> 0:07:11.800 were great. There was some Fortune article a couple of 0:07:11.840 --> 0:07:14.560 years later that called him the greatest investor in America. 0:07:14.640 --> 0:07:18.360 But then his whole Sears makeover didn't work out. It 0:07:18.480 --> 0:07:21.080 wasn't a collapse, but he definitely did not make his 0:07:21.160 --> 0:07:23.800 investors a lot of money. And he's poorer than he 0:07:23.960 --> 0:07:26.880 was fifteen years ago. And there's something really strange, or 0:07:26.920 --> 0:07:29.480 maybe it's lazy or gullible or something about using this 0:07:29.560 --> 0:07:31.800 phrase the next warn Buffett, because Warren Buffett stands for 0:07:31.840 --> 0:07:33.800 a lot of things, a lot of things. These people 0:07:33.840 --> 0:07:37.960 aren't right, And I mean I used the phrase the 0:07:38.080 --> 0:07:42.800 Berkshire Hathaway of net stocks in again in the pages 0:07:42.840 --> 0:07:46.840 of Fortune to describe CMG I, which was this holding 0:07:46.880 --> 0:07:50.480 company for a bunch of lac hosts and Alta Vista 0:07:50.560 --> 0:07:53.560 and netstocks like that, and all I meant at the 0:07:53.600 --> 0:07:56.840 time was it was a holding company for internet stocks. 0:07:56.880 --> 0:07:59.400 But I still kind of cringed when I wrote it that. 0:07:59.520 --> 0:08:02.280 I guess this talk of their being a next Warren 0:08:02.320 --> 0:08:05.440 Buffett curse has kind of grown in recent years because 0:08:05.480 --> 0:08:07.520 of Lampard, and now it will grow even more with 0:08:07.760 --> 0:08:12.360 bank Man Freed. And they're also Chama, thank you. You're 0:08:12.400 --> 0:08:15.280 better pronouncing that than I am. He had this big 0:08:15.360 --> 0:08:18.960 chat with Eric Shatzker Bloomberg, I guess, like a year 0:08:19.000 --> 0:08:21.480 and a half ago where he was comparing himself to Buffett, 0:08:21.680 --> 0:08:24.120 and he's had a big come down lately. He's the 0:08:24.240 --> 0:08:28.040 spack king who was starting to unwind his special purpose 0:08:28.080 --> 0:08:31.240 acquisition companies because that whole boom has turned into a bust. 0:08:31.680 --> 0:08:33.320 But what I did is I spent a bunch of 0:08:33.360 --> 0:08:37.920 time looking farther back in various news databases than just googling, 0:08:38.320 --> 0:08:40.480 and they're actually a fair number people have been compared 0:08:40.520 --> 0:08:43.240 to Buffett and done just fine. The one that I 0:08:43.400 --> 0:08:45.960 knew off the top of my head was Lucadian National, 0:08:46.440 --> 0:08:50.480 which was this much sort of smaller Berkshire Hathaway that 0:08:50.520 --> 0:08:53.920 did very very well in the eighties and nineties and 0:08:53.960 --> 0:08:57.400 continued to do well until it's sort of unwound itself 0:08:57.480 --> 0:09:00.200 over the past decade. And when people talk about Warren 0:09:00.200 --> 0:09:02.880 Buffett and Berkshire Hathway, I guess the definition changes each time. 0:09:03.080 --> 0:09:05.640 But what Berkshire is is it has just a very 0:09:05.720 --> 0:09:08.480 long track record at being very successful, right And Warren 0:09:08.480 --> 0:09:10.840 Buffett is a very long track record at a being alive, 0:09:11.040 --> 0:09:13.640 be continuing to invest and see continuing to make profits. 0:09:13.760 --> 0:09:16.760 He hasn't always made the right choice, but mostly he's 0:09:16.760 --> 0:09:19.120 made the right choice. He wouldn't have a lot in 0:09:19.160 --> 0:09:21.120 common with some of these people. And you know, and 0:09:21.240 --> 0:09:24.000 with Sam Bankman Freed. The specific thing where it came 0:09:24.080 --> 0:09:26.400 up in this Fortune Q and A that led to 0:09:26.440 --> 0:09:30.320 that cover language is just the reporter said that some 0:09:30.400 --> 0:09:33.520 other crypto person had said that as f t X 0:09:33.679 --> 0:09:36.680 was kind of buying up all these other failing companies, 0:09:36.800 --> 0:09:39.480 that Bankman Freed would be like Warren Buffett as the 0:09:39.480 --> 0:09:41.800 guy who was the rescuer, and lots of people owed 0:09:41.880 --> 0:09:44.760 him because Buffett has done that repeatedly. It was one 0:09:44.800 --> 0:09:48.320 little parallel. The investors who get compared to Buffett and 0:09:48.360 --> 0:09:51.760 actually do fine are ones who are very value oriented, 0:09:52.160 --> 0:09:57.320 long term oriented investors. And Buffett himself has always promoted 0:09:57.360 --> 0:10:00.200 the idea that maybe he has some special skill, but 0:10:00.200 --> 0:10:02.920 there's actually a bunch of other people like him, other 0:10:03.000 --> 0:10:07.160 disciples of Benjamin Graham is mentor who will outperform the 0:10:07.200 --> 0:10:09.160 market if you give them a long enough time. But 0:10:09.200 --> 0:10:12.040 it makes for great memes when these people collapse completely 0:10:12.160 --> 0:10:14.200 they have been. It does bring up the question, though, 0:10:14.200 --> 0:10:16.760 are we gullible? Not just journalists but people in general? 0:10:16.760 --> 0:10:18.400 I mean, so many people invested with the like of 0:10:18.440 --> 0:10:20.280 San Bank, bun Freed and then to move away from 0:10:20.320 --> 0:10:22.720 the Warren Buffet comparison, we've seen Elizabeth Holmes, You've seen 0:10:22.760 --> 0:10:26.000 so many fraudsters. Why are we not getting any better 0:10:26.080 --> 0:10:29.360 detecting this kind of fraud in advance? I mean, and 0:10:29.400 --> 0:10:32.520 sometimes it's not fraud, like if somebody, another person who 0:10:32.800 --> 0:10:36.640 got a couple of next Warren Buffett references last year's 0:10:36.920 --> 0:10:41.280 Cathy would the very gung ho tech investor and nothing 0:10:41.320 --> 0:10:43.520 fraudulent about what she's doing. But it just ought to 0:10:43.520 --> 0:10:47.360 be utterly clear to anyone when her arc innovation was 0:10:47.480 --> 0:10:50.239 booming a year ago that this is a really volatile 0:10:50.280 --> 0:10:53.160 way to make money and you know, lots of investors 0:10:53.160 --> 0:10:55.280 are going to pull out when she's having bad times 0:10:55.360 --> 0:10:59.760 right now, I guess, I mean part of it is generational. Clearly, 0:11:00.360 --> 0:11:04.079 something like crypto provides this opportunity to say, oh, well, 0:11:04.120 --> 0:11:05.920 this is different. It's not going to be like all 0:11:05.920 --> 0:11:09.480 the past investment bubbles. So I don't know that we're 0:11:09.520 --> 0:11:11.760 getting more gold, but it is kind of remarkable to 0:11:11.800 --> 0:11:15.280 me that people keep falling for this stuff. Some of 0:11:15.320 --> 0:11:18.040 these people as well, they're united by a kind of charisma. 0:11:18.160 --> 0:11:20.240 They're able to speak in a way that doesn't just 0:11:20.559 --> 0:11:23.480 convince the regular Joe on the street, but also VC 0:11:23.679 --> 0:11:26.199 investors who should know better, especially by now I mean 0:11:26.200 --> 0:11:28.000 as part of this, the fact that the VC investors 0:11:28.040 --> 0:11:29.839 have had just such an easy time over the last 0:11:29.880 --> 0:11:32.600 twenty years because of the Federal Reserve being in the park. Yeah, 0:11:32.640 --> 0:11:34.800 I mean, clearly, it seems like this is one of 0:11:34.800 --> 0:11:38.000 the things that happened at ft X. They started making 0:11:38.040 --> 0:11:41.680 these bets that were really just arbitrage and pretty safe, 0:11:42.320 --> 0:11:45.240 but then they started trying other things that were much 0:11:45.240 --> 0:11:48.760 more sort of dependent on the market continuing to do well. 0:11:49.200 --> 0:11:52.240 And I think you convince yourself you have some special 0:11:52.280 --> 0:11:55.600 knowledge when really Yeah, you're just sort of riding a wave. 0:11:56.200 --> 0:11:58.480 How would you know in advance that somebody like that 0:11:58.600 --> 0:12:01.240 just doesn't have the assets to call what he's talking about. 0:12:01.440 --> 0:12:04.079 I mean, I do think the sort of famous interview 0:12:04.240 --> 0:12:07.920 with Matt Levine and Joe wasn't fall and Tracy Halloway. 0:12:08.679 --> 0:12:12.000 I came away from that thinking he's charming Lee Frank. 0:12:12.120 --> 0:12:14.120 But at the same time, I would not put a 0:12:14.200 --> 0:12:16.360 penny into any of these things he's doing because it's 0:12:16.400 --> 0:12:21.199 just also opaque. They're definitely Ponzi like characteristics to it. 0:12:21.520 --> 0:12:24.520 The value is purely just based on continued confidence that 0:12:24.559 --> 0:12:27.000 they have value. And I mean, the whole point with 0:12:27.280 --> 0:12:32.079 Buffett is it shouldn't matter what financial markets do because 0:12:32.120 --> 0:12:35.280 you're buying a stake in a business that makes money 0:12:35.320 --> 0:12:38.719 outside of financial markets. I just think that idea that 0:12:38.800 --> 0:12:44.319 if you're buying and selling a financial asset, obviously it's 0:12:44.360 --> 0:12:47.440 a lot better if there's some intrinsic value to it. 0:12:47.640 --> 0:12:50.600 And there is no intrinsic value to any of these 0:12:50.640 --> 0:12:53.440 things in crypto, even though I mean, bitcoin clearly has 0:12:53.520 --> 0:12:56.479 shown a lot of staying power, but there's no intrinsic 0:12:56.640 --> 0:12:59.040 cash flow supporting it. If you were looking out of 0:12:59.040 --> 0:13:02.640 the landscape. Now, who deserves the moniker the next Warren Buffets. 0:13:02.679 --> 0:13:05.080 I mean, you know somebody who's gotten it a lot 0:13:05.200 --> 0:13:08.960 is Seth klarman Um, the hedge fund manager. I mean, 0:13:09.000 --> 0:13:11.040 I think the concerns with him at this point are 0:13:11.080 --> 0:13:13.640 sort of the same that you might have with Berkshire Hathaway, 0:13:13.720 --> 0:13:15.960 which is that you know, maybe we're reaching the point 0:13:16.000 --> 0:13:19.400 of diminishing returns. Bill Ackman is somebody who got a 0:13:19.640 --> 0:13:22.760 I think it was Baby Buffett on the cover of Forbes, 0:13:22.960 --> 0:13:25.680 and that was poor timing. It came in two thousand fifteen, 0:13:25.960 --> 0:13:27.960 just before he had a couple of pretty bad years. 0:13:28.000 --> 0:13:30.200 But I mean, I was just reading through the latest 0:13:30.240 --> 0:13:34.120 reports from Pershing Square and it's been doing really well lately, 0:13:34.160 --> 0:13:36.960 and I yeah, he's always been very value oriented, but 0:13:37.080 --> 0:13:40.360 there was this whole activist signed to it that maybe 0:13:40.360 --> 0:13:44.559 he's decided isn't actually as helpful to his returns as 0:13:44.559 --> 0:13:47.480 he maybe thought. It was Bloomberg Opinions at justin Fox. 0:13:47.720 --> 0:13:50.800 Next Jonathan Bernstein on how the midterms exposed a g 0:13:51.000 --> 0:13:54.839 OP in disarray and what it means for the one Congress. 0:13:54.920 --> 0:13:57.760 This is Bloomberg Opinion. So now we have the broad 0:13:57.760 --> 0:14:01.440 parameters of what the United States Congress will look like. 0:14:01.760 --> 0:14:05.000 We also have Donald Trump officially announcing his candidacy for 0:14:05.040 --> 0:14:09.800 the presidential race. This will not be my campaign, This 0:14:09.840 --> 0:14:13.360 will be our campaign. I spoke with Bloomberg Opinions Jonathan 0:14:13.360 --> 0:14:16.400 Bernstein about what the outcome of the mid terms means 0:14:16.440 --> 0:14:19.680 for legislating during the Lame Doc session and beyond, also 0:14:19.920 --> 0:14:23.480 how exactly we should start thinking about all right, Jonathan, Well, 0:14:23.480 --> 0:14:25.240 it's been a few days, so you've been able to 0:14:25.360 --> 0:14:29.480 digest recent events. What do you after a few days 0:14:29.520 --> 0:14:32.120 of rumination is the most surprising thing about what happened 0:14:32.160 --> 0:14:34.320 in the mid terms? You know, I think that I'll 0:14:34.360 --> 0:14:36.960 go along with the conventional wisdom. Democrats definitely did a 0:14:36.960 --> 0:14:40.240 little bit better than I think reasonable expectations based on 0:14:40.680 --> 0:14:43.800 polling and what the expert opinion was. I think they 0:14:43.880 --> 0:14:46.760 beat some of the expectations. There's no question that there 0:14:46.840 --> 0:14:49.120 was sort of some momentum that came out in the 0:14:49.120 --> 0:14:52.400 mainstream media. Few outlets in particular sort of bought the 0:14:52.400 --> 0:14:55.440 Republican spin that it was going to be a landslide. 0:14:55.840 --> 0:14:57.440 The polling really never said it was going to be 0:14:57.440 --> 0:14:59.800 a landslide. It said it should be a moderately good 0:14:59.840 --> 0:15:02.320 year for Republicans, So I don't think that there was 0:15:02.520 --> 0:15:04.640 much that was sort of a shocking surprise, but it 0:15:04.720 --> 0:15:07.000 was a lot that was. It turns out that the 0:15:07.040 --> 0:15:09.600 ball bounced a little bit the Democrats way in enough 0:15:09.840 --> 0:15:13.760 races and enough states that it wound up being an 0:15:13.800 --> 0:15:16.800 unusually good year for Democrats. I guess I would say 0:15:17.120 --> 0:15:19.880 there wasn't that any huge shocker on election day, and 0:15:19.880 --> 0:15:21.680 as the returns came in, if you look at the 0:15:21.680 --> 0:15:25.040 broad sweep of things, if you look at what happens 0:15:25.080 --> 0:15:29.360 when there's a democratic president, and in particular, unpopular democratic 0:15:29.360 --> 0:15:32.000 president in the White House, then it is a big 0:15:32.040 --> 0:15:35.320 surprise that it was basically a draw and that Republicans 0:15:35.320 --> 0:15:37.920 didn't pick up forty seats in the House and you know, 0:15:38.320 --> 0:15:41.120 several seats in the Senate. This was one of the 0:15:41.240 --> 0:15:44.200 very few elections I think there's been six or something 0:15:44.240 --> 0:15:47.400 the last hundred years where the in party picked up 0:15:47.520 --> 0:15:51.320 seats and state legislatures. So while overall it was sort 0:15:51.360 --> 0:15:54.200 of a you know, Democrats will either pick up zero 0:15:54.360 --> 0:15:57.720 or one Senate seats, Republicans are picking up a handful 0:15:57.760 --> 0:16:01.400 of House seats. Democrats are plus two and governors, and 0:16:01.440 --> 0:16:04.960 plus a handful of state legislative seats. But it's sort 0:16:04.960 --> 0:16:08.000 of a fifty fifty type of election. But that in 0:16:08.040 --> 0:16:10.880 itself is over the course of history, very surprising and 0:16:11.040 --> 0:16:14.000 any year where inflation has been insane as well, So 0:16:14.040 --> 0:16:16.960 you would think that the incumbent party wouldn't be benefiting 0:16:16.960 --> 0:16:19.120 from that. Is it fair for the Democrats to do 0:16:19.160 --> 0:16:20.680 a lap of honor or was this a little bit 0:16:20.680 --> 0:16:24.480 of luck? You know, that's a good question. Sure, everybody 0:16:24.520 --> 0:16:27.680 deserves to take bows when they win. I don't think 0:16:27.680 --> 0:16:32.240 it was really much that Democrats did, especially governing Democrats. 0:16:32.440 --> 0:16:34.280 If you look at grassroots, I think that there was 0:16:34.360 --> 0:16:39.320 a huge amount of enthusiasm, again for the fourth cycle 0:16:39.320 --> 0:16:42.680 in a row, coming from women, different demographic groups of 0:16:42.680 --> 0:16:45.320 women over the abortion issue. So in a sense, it 0:16:45.360 --> 0:16:47.280 was Republicans shooting themselves in the foot in some ways, 0:16:47.400 --> 0:16:50.200 or Conservatives I should say, yes, I think that Republicans 0:16:50.240 --> 0:16:53.720 basically blew it rather than Democrats. So two things. First 0:16:53.760 --> 0:16:57.760 of all, the presence of Donald Trump, a very unpopular 0:16:58.040 --> 0:17:01.160 former president who remains very much in the public eye 0:17:01.880 --> 0:17:04.639 and keeps trying to put himself in the political space. 0:17:05.640 --> 0:17:09.240 That probably changed things a little bit, which is interesting 0:17:09.280 --> 0:17:11.480 because it wasn't clear whether it would be a positive 0:17:11.560 --> 0:17:14.080 or negative in the early days, at least of the campaign, 0:17:14.119 --> 0:17:16.840 and even in October. I think all along it looked like, 0:17:17.080 --> 0:17:19.119 to the extent that he was a major figure, it 0:17:19.200 --> 0:17:21.800 was a negative. You know. The thing is that normally 0:17:22.040 --> 0:17:25.240 people think, ah, the president, he's the most important person 0:17:25.359 --> 0:17:28.080 right now, let's balance him out some or if things 0:17:28.119 --> 0:17:31.560 are going badly, blame the president. But with the former 0:17:31.600 --> 0:17:34.920 president being a very important figure in politics to this day, 0:17:35.320 --> 0:17:38.520 people could blame Trump very easily, even though he's not 0:17:38.560 --> 0:17:41.800 around as a governing official. The other thing is that Trump, 0:17:42.040 --> 0:17:45.000 and this is only partially Trump's fault, but he's getting 0:17:45.000 --> 0:17:47.360 blamed for it a lot within Republican circles. The influence 0:17:47.400 --> 0:17:49.520 on the candidates themselves. There were a whole lot of 0:17:49.600 --> 0:17:53.520 terrible candidates chosen by Republicans in this cycle, some of 0:17:53.560 --> 0:17:57.440 them because Trump intervened in primaries, a lot because those 0:17:57.480 --> 0:18:01.159 candidates are just very popular among Republicans, Republican line media, 0:18:01.560 --> 0:18:05.640 among Republican voters who didn't see going in any penalty 0:18:05.880 --> 0:18:07.439 to be faced. And I think some of that may 0:18:07.480 --> 0:18:10.879 have to do with Trump and his electoral history that 0:18:10.960 --> 0:18:13.119 if they don't see Trump as a loser for his 0:18:13.680 --> 0:18:16.080 various things that made him very unpopular as present, he 0:18:16.119 --> 0:18:18.520 was a loser. He is a loser. He was never 0:18:18.600 --> 0:18:22.240 popular as president, He was always unusually unpopular. So the 0:18:22.280 --> 0:18:24.520 Republicans wound up with all these terrible candidates and that 0:18:24.600 --> 0:18:28.160 certainly cost them. Do the make Republicans moderate their views 0:18:28.200 --> 0:18:30.600 a little bit now, given what we've seen and given 0:18:30.640 --> 0:18:32.720 how leadership is going to change, even though there will 0:18:32.720 --> 0:18:35.600 obviously be some extreme candidates and some fringe candidates. Still 0:18:35.920 --> 0:18:38.359 I don't think those people moderate their views because I 0:18:38.359 --> 0:18:42.120 think what they're up to isn't views as much as 0:18:42.119 --> 0:18:45.919 it is confrontation. And what does happen is some of 0:18:45.920 --> 0:18:48.840 them go away because they lost their elections. Um So, 0:18:49.200 --> 0:18:52.680 to the extent that we have fewer of those extremists, 0:18:53.040 --> 0:18:55.320 that does make a difference, but there still are quite 0:18:55.320 --> 0:18:57.080 a lot, and there's still are quite a lot of 0:18:57.080 --> 0:19:00.640 people who in the House, for example, voted to overturned 0:19:00.680 --> 0:19:03.360 the election, and you know, and then new people who 0:19:03.760 --> 0:19:07.800 mostly subscribe to that kind of thinking, and so do 0:19:07.880 --> 0:19:10.640 they moderate. I don't see what in the party there 0:19:10.840 --> 0:19:13.240 is to push them in that direction. We spoke already 0:19:13.280 --> 0:19:15.000 about Kevin McCarthy and how you know he might have 0:19:15.040 --> 0:19:17.320 to negotiate, but it's not clear what promises he can 0:19:17.400 --> 0:19:19.560 give people or what he can offer them. Does anything 0:19:19.560 --> 0:19:24.040 come to mind, No, m Kevin McCarthy is let's assume 0:19:24.280 --> 0:19:27.800 that he winds up having a four seat majority to 0:19:28.000 --> 0:19:31.040 nineteen to two fifteen. There's still some possibilities around that. 0:19:31.280 --> 0:19:34.000 The thing is that in normal times, all you have 0:19:34.040 --> 0:19:36.520 to do to become speaker is to win the vote 0:19:36.560 --> 0:19:39.720 of your caucus, a majority of your caucus, and then 0:19:39.760 --> 0:19:43.280 everybody loyally supports that person. When you have the floor 0:19:43.359 --> 0:19:46.720 vote for speaker, where McCarthy will be opposed, if it's him, 0:19:46.920 --> 0:19:49.840 will be opposing either Nancy Pelosi or whoever the Democrats 0:19:50.320 --> 0:19:53.720 leader is. To some extent, Democrats, but especially Republicans, have 0:19:53.880 --> 0:19:57.520 challenged that norm over the last oh seven eight nine 0:19:57.560 --> 0:20:01.800 Congresses already, and they say, well, we can use this 0:20:02.040 --> 0:20:04.920 procedural tick, which Mitchell Collin doesn't have to worry about, 0:20:04.920 --> 0:20:06.560 because there is no vote like that in the Senate, 0:20:07.000 --> 0:20:09.280 only a vote like that for one office, which is 0:20:09.320 --> 0:20:11.920 Speaker of the House. We can use that to hold 0:20:11.920 --> 0:20:16.840 the party hostage, and if it's a majority if five 0:20:16.880 --> 0:20:20.040 of us vote for King Kong or Donald Trump or 0:20:20.359 --> 0:20:23.280 you know, whoever to be speaker, then nobody will have 0:20:23.280 --> 0:20:26.760 a majority and we can use that. Now, what they 0:20:26.760 --> 0:20:29.680 can use it for, Well, they're not policy demanders. We're 0:20:29.720 --> 0:20:32.000 talking about people like Marjorite Heller Green here, Jim Jordan's 0:20:32.040 --> 0:20:34.800 that's right. What they want is to create controversy. That's 0:20:34.840 --> 0:20:37.720 their goal, you know, as as members of the House, 0:20:38.320 --> 0:20:40.840 is to get their appearances on Fox News and to 0:20:40.960 --> 0:20:45.280 beyond conservative talk radio. And so Kevin McCarthy can't give 0:20:45.320 --> 0:20:49.840 that exactly. Um, so there's nothing to stop them from 0:20:49.880 --> 0:20:53.200 doing it, and other than the realization that, oh, we'll 0:20:53.240 --> 0:20:55.080 have chaos if we do that, but they may not 0:20:55.240 --> 0:20:58.680 mind having some chaos. So who would be the unifier 0:20:58.720 --> 0:21:01.040 in the Republican Party then? Isn't one? There isn't one. 0:21:01.560 --> 0:21:04.280 The bottom line is there is no unifier because the 0:21:04.359 --> 0:21:09.639 people who are revolting are not looking for unity. Is 0:21:09.640 --> 0:21:12.119