WEBVTT - Fed's Williams Is Trying to Clean Up Powell's Error (Podcast) 0:00:05.800 --> 0:00:08.720 Welcome to the Bloomberg pim L Podcast. I'm pim Fox 0:00:08.760 --> 0:00:11.440 along with my co host Lisa A. Brahmowitz. Each day 0:00:11.480 --> 0:00:15.000 we bring you the most important, noteworthy, and useful interviews 0:00:15.040 --> 0:00:17.520 for you and your money, whether you're at the grocery 0:00:17.560 --> 0:00:20.560 store or the trading floor. Find the Bloomberg p m 0:00:20.680 --> 0:00:32.560 L Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot com. 0:00:32.560 --> 0:00:35.600 Phil Orlando joining us now in our Bloomberg Interactive Broker Studios. 0:00:35.600 --> 0:00:38.880 Phil Orlando, of course, chief Equity market Strategistic Federated Investors. 0:00:39.120 --> 0:00:41.360 He brought his blood pressure medication with him because it's 0:00:41.400 --> 0:00:44.319 been that kind of that kind of weak. Um, so 0:00:44.479 --> 0:00:47.519 is this enough. It's a step in the right direction. 0:00:47.560 --> 0:00:49.760 I mean, we've seen this movie before. We we think 0:00:49.800 --> 0:00:53.479 we know how it ends. The beginning of October, Powell 0:00:53.560 --> 0:00:57.240 makes a rookie mistake saying we're a ways away from 0:00:57.240 --> 0:00:59.520 neutral in the market. That's when we started to roll 0:00:59.600 --> 0:01:03.279 over and I and then he has that special technical term. 0:01:04.920 --> 0:01:07.920 So then he has this the lunch at the New 0:01:08.000 --> 0:01:12.600 York on November right. I was at that lunch along 0:01:12.640 --> 0:01:16.600 with my closest friends, and he did the right thing. 0:01:16.760 --> 0:01:19.280 He explained to us in a little bit more detail 0:01:19.640 --> 0:01:23.040 exactly what he meant, uh, we're very close to neutral. 0:01:23.400 --> 0:01:25.640 And and as I walked out of that meeting, having 0:01:25.720 --> 0:01:29.479 read his transcript, having listened to his speech, in my 0:01:29.560 --> 0:01:31.440 mind it was like, Okay, we're gonna get a hike 0:01:31.480 --> 0:01:35.640 in December. That's fine, We're gonna get one more hike 0:01:35.880 --> 0:01:40.200 later in ten. I think we're gonna skip March because 0:01:40.440 --> 0:01:43.839 of the March first deadline with the China trade deal 0:01:44.240 --> 0:01:46.520 and breaks it coming at the end of March and 0:01:46.800 --> 0:01:50.520 ceiling debate, and exactly so. So in my mind, I 0:01:50.560 --> 0:01:52.880 walked out of that lunch in November saying, the Fed's 0:01:52.960 --> 0:01:56.160 got one, maybe two hikes left and then we're done. 0:01:56.520 --> 0:01:59.000 And what did the market do? They rallied? Okay. So 0:01:59.040 --> 0:02:01.720 then we fast forward to fo MC meeting and everyone 0:02:02.120 --> 0:02:04.680 myself at the top of this list or expecting the 0:02:04.680 --> 0:02:07.640 FED to come in adjust the dot plots from what 0:02:07.680 --> 0:02:10.239 we saw at the September f MC meeting, literally pull 0:02:10.320 --> 0:02:13.040 in their horns. And then during the Q and A, 0:02:13.560 --> 0:02:16.519 we were expecting Powell to sort of put some some 0:02:16.680 --> 0:02:19.480 flesh on those bones and explain, all right, we just 0:02:19.520 --> 0:02:22.239 got a hike, We're probably gonna skip March for a 0:02:22.280 --> 0:02:25.080 couple of reasons. We've got one more hike next year 0:02:25.120 --> 0:02:27.320 and then we're probably done. That's not what he did, 0:02:27.760 --> 0:02:30.520 and and that's why the market responded is violently to 0:02:30.560 --> 0:02:32.560 the downside, as they did the last couple of days. 0:02:32.680 --> 0:02:35.880 So fast forward to this morning. Uh, John Williams is 0:02:36.120 --> 0:02:39.000 is trotted out on Steve Leesman Show, and and he's 0:02:39.000 --> 0:02:44.160 trying to reset what what the chairman perhaps had intended 0:02:44.200 --> 0:02:46.560 to say with that answer? All right, let's let's roll 0:02:46.600 --> 0:02:49.080 it to the balance sheet? What do you think the 0:02:49.120 --> 0:02:51.520 Fed is looking to do as it relates to, you know, 0:02:51.680 --> 0:02:54.560 quantitative tightening as we roll into do you think this 0:02:54.600 --> 0:02:56.160 is gonna play out? So I think we've got a 0:02:56.160 --> 0:02:59.160 pretty good beat on this that that the Fed's balance 0:02:59.160 --> 0:03:01.360 sheet peeked out about four and a half trillion dollars, 0:03:01.480 --> 0:03:04.680 up from a number below one trillion at the beginning. 0:03:04.919 --> 0:03:07.760 So they've got to pull that in and I think 0:03:07.840 --> 0:03:11.240 create dry powder. They need to prepare for the next recession, 0:03:11.680 --> 0:03:15.799 which we don't think is next year. We still think two. 0:03:16.080 --> 0:03:17.760 And I think they need to pull that back to 0:03:17.800 --> 0:03:20.720 about the three trillion dollar level. Right now, they're rolling 0:03:20.720 --> 0:03:22.799 it off at a pace of about fifty billion dollars 0:03:22.840 --> 0:03:25.560 a month. So where we are right now I think 0:03:25.680 --> 0:03:28.600 is just a shade over four trillion dollars. We're gonna 0:03:28.680 --> 0:03:31.000 roll off six hundred billion next year. That gets us 0:03:31.000 --> 0:03:33.840 to about three four or so, and then if we 0:03:33.960 --> 0:03:36.960 rolled another six hundred billion off in twenty, that takes 0:03:37.000 --> 0:03:40.400 us down about two point eight. Somewhere in there, somewhere 0:03:40.400 --> 0:03:42.840 between two eight and three four, you know, let's call 0:03:42.920 --> 0:03:44.960 it three three and a quarter or something like that. 0:03:44.960 --> 0:03:47.040 That's where I think the Fed stops. But when he 0:03:47.120 --> 0:03:50.080 got the question during the press conference, what are you 0:03:50.120 --> 0:03:51.839 doing with the balance sheet, he was like, Oh, we're 0:03:51.840 --> 0:03:56.520 on autopilot. Explain to us what that means. That Hold 0:03:56.520 --> 0:03:58.360 on a second. I think he did more than that. 0:03:58.480 --> 0:04:00.600 I think it wasn't just that we're on a pilot. 0:04:00.960 --> 0:04:04.440 He seemed to dismiss the significance that quantitative tightening or 0:04:04.520 --> 0:04:06.880 letting the balance sheet roll off had on markets, that 0:04:06.960 --> 0:04:09.560 the reality is that the market is very concerned about 0:04:09.600 --> 0:04:12.480 that because we don't have a full sense. Are they 0:04:12.560 --> 0:04:15.360 going back to you know, a trillion dollars, are they 0:04:15.400 --> 0:04:19.160 going to zero, or were they going to some intermediate 0:04:19.279 --> 0:04:23.160 level at which everyone is comfortable I think some more 0:04:23.400 --> 0:04:26.440 discussion around that point would have been more helpful to 0:04:26.520 --> 0:04:29.400 keep the market calm. Do you think Chairman pal has 0:04:29.440 --> 0:04:31.159 lost the market And by that I mean as he 0:04:31.240 --> 0:04:35.000 lost the confidence at market participants, And if so, what 0:04:35.000 --> 0:04:38.800 do we do? So? I was on Maria Bromo show 0:04:38.880 --> 0:04:42.080 Monday morning, and we were laughing over the rookie mistake 0:04:42.160 --> 0:04:45.880 that Ben Bernanke had made with her at a cocktail party, 0:04:46.040 --> 0:04:48.960 talking about stuff he shouldn't have been talking about. But 0:04:49.040 --> 0:04:52.640 he learned from that mistake and improved. Jenny Yellen made 0:04:52.640 --> 0:04:55.880 a mistake in her first year telling everyone they should 0:04:55.880 --> 0:04:59.640 sell biotechnology stocks that obviously didn't work very well. So 0:05:00.040 --> 0:05:03.040 well had his rookie mistake in in October, he should 0:05:03.080 --> 0:05:06.159 have learned from that. And and you know, I, you know, 0:05:06.720 --> 0:05:10.359 speaking personally, and disappointed that we got the performance we 0:05:10.440 --> 0:05:13.440 got two days ago with three days ago, we should 0:05:13.440 --> 0:05:16.680 have gotten a better, tighter presentation. And I think that's 0:05:16.720 --> 0:05:19.680 why the Williams comment this morning was so important. Honestly, 0:05:20.320 --> 0:05:23.200 I could easily see somebody saying he gave us exactly 0:05:23.240 --> 0:05:25.640 what he should have given us. He was saying that 0:05:25.720 --> 0:05:28.960 the economy looks pretty strong. Their data dependent they're convicting 0:05:28.960 --> 0:05:31.680 they have you know, right now it appears that things 0:05:31.720 --> 0:05:34.440 are going well. They don't want to respond too much 0:05:34.520 --> 0:05:37.039 to markets and use, you know, the stock market as 0:05:37.080 --> 0:05:39.560 a barometer of whether or not they should hike. What 0:05:39.640 --> 0:05:41.440 did you say that was that different? Number one and 0:05:41.520 --> 0:05:44.359 number two? You know, honestly, at a certain point, aren't 0:05:44.360 --> 0:05:46.560 we just seeing price discovery for the first time in 0:05:46.560 --> 0:05:49.640 a decade? Lisa, You're you're a thousand percent correct that 0:05:49.800 --> 0:05:53.720 the context of the environment you're in is something that 0:05:53.720 --> 0:05:56.520 that he's oblivious to. The the S and P five 0:05:56.600 --> 0:06:00.960 hundreds down sixteen since the middle of September, rustles down twenty. 0:06:01.760 --> 0:06:03.760 We're sort of in a free fall here at a 0:06:03.839 --> 0:06:07.040 point in the seasonal cycle where the market should be 0:06:07.080 --> 0:06:09.640 going up. The economic that is pretty good, corporate earning 0:06:09.640 --> 0:06:12.000 is a pretty good GDP growth is pretty good. Yet 0:06:12.080 --> 0:06:15.279 we're in a free fall. That suggested that the market 0:06:15.320 --> 0:06:18.520 is skittish, it's nervous, it's concerned, and and the Fed 0:06:18.560 --> 0:06:21.159 should have recognized that. And I think Williams sort of 0:06:21.200 --> 0:06:25.000 made that comment today. We we we we are looking 0:06:25.040 --> 0:06:28.200 at what the markets telling us. Where we're we're cognizant 0:06:28.200 --> 0:06:30.159 of what the market is telling us, and I think 0:06:30.200 --> 0:06:34.080 that the market perceived Wednesday that the Powell was sort 0:06:34.120 --> 0:06:37.200 of oblivious to what's going on right now. So real quickly, 0:06:37.240 --> 0:06:39.880 given all of that, all that uncertainty that maybe have 0:06:40.000 --> 0:06:42.280 been contributed by the Fed, what are you telling your 0:06:42.279 --> 0:06:46.160 clients in Well, we're telling them that that when we 0:06:46.400 --> 0:06:49.720 once we get work our way through all of this 0:06:49.960 --> 0:06:53.200 noise and nonsense, there's gonna be a massive buying opportunity. 0:06:53.560 --> 0:06:56.320 And as we look at the fundamentals, and ultimately that's 0:06:56.320 --> 0:06:58.200 what we're trying to do. And over the course of 0:06:58.200 --> 0:07:01.080 the next year, we think that corp earnings in twenty 0:07:01.240 --> 0:07:03.680 nine are going to be a hundred and seventy dollars 0:07:03.720 --> 0:07:05.680 off of a hundred and sixty dollars this year. Now 0:07:05.680 --> 0:07:08.120 that's only up five or six percent as opposed to 0:07:08.440 --> 0:07:10.840 five percent this year, So will there'll be a deceleration 0:07:10.840 --> 0:07:14.840 and earnings growth? Yes. Multiples Price earnings ratios over the 0:07:14.880 --> 0:07:18.240 last three or four months have contracted from eighteen times 0:07:18.240 --> 0:07:21.440 earnings trading a little over fourteen times earnings right now, 0:07:21.520 --> 0:07:24.520 we've lost four multiple points. We believe that an eighteen 0:07:24.600 --> 0:07:28.559 multiple is the appropriate multiple given the relatively benign nature 0:07:28.560 --> 0:07:31.280 of both interest rates and inflation. So if that's right, 0:07:31.800 --> 0:07:34.000 and we're slapping an eighteen multiple on a hundred and 0:07:34.040 --> 0:07:37.320 seventy dollars and earnings, that's thirty one the SMP. We're 0:07:37.320 --> 0:07:40.880 sitting here in what dred I mean that you're looking 0:07:40.920 --> 0:07:43.880 at at, you know, a twenty plus kind of return. 0:07:44.160 --> 0:07:46.559 But there's a lot of stuff that's got to happen 0:07:46.560 --> 0:07:49.520 in between now and declaring a bottom. And and the 0:07:49.520 --> 0:07:52.280 things I'd look at are going to happen next spring 0:07:52.320 --> 0:07:55.120 and or next March in terms of the Breggit deadline 0:07:55.240 --> 0:07:57.760 and our Trump and she gonna be able to successfully 0:07:57.840 --> 0:08:01.920 navigate the um you know, the trade and teriff situation. Yea. 0:08:02.000 --> 0:08:05.400 So just wait for those politicians do come together and 0:08:05.400 --> 0:08:09.160 and then that'll be the time. Merry Christmas, Merry Christmas. 0:08:09.400 --> 0:08:14.000 Would love your Christmas time Fill Orlando. What a suspenders 0:08:14.000 --> 0:08:16.680 that are so good? Orlando, chief faculty markets strategist at 0:08:16.680 --> 0:08:35.400 Federated Investors, full on with the holiday gear. General Maddis, 0:08:35.480 --> 0:08:38.320 who has long been thought to be the ballast in 0:08:38.400 --> 0:08:42.160 the current White House administration, is set to retire. He 0:08:42.280 --> 0:08:46.920 released a memo explaining why it was rather scathing. Did 0:08:46.920 --> 0:08:50.440 not mention President Trump by name once joining us now 0:08:50.600 --> 0:08:54.599 here in our Bloomberg Interactive Broker Studios is Clint Watt's 0:08:54.600 --> 0:08:58.360 Distinguished Research Fellow for Foreign Policy Research Institute, also a 0:08:58.360 --> 0:09:00.079 Senior Fellow at the Center for Cyber and Home and 0:09:00.160 --> 0:09:04.280 Security at the George Washington University. Former formerly an FBI 0:09:04.600 --> 0:09:08.840 Special Agent on a Joint Terrorism Task Force, served in 0:09:08.880 --> 0:09:12.079 the Army. He's joining me and Paul Sweeney, who is 0:09:12.120 --> 0:09:14.480 filling in for Pim Fox. Clint, what do you make 0:09:14.520 --> 0:09:20.080 of General Madis's resignation. It's frightening, I think for just 0:09:20.160 --> 0:09:23.600 about anybody, Republican or Democrat, all the way up until now, 0:09:23.720 --> 0:09:26.840 there was some sort of comfort in knowing that General 0:09:26.880 --> 0:09:33.520 Madis was there. Very experienced, level headed executive can seem 0:09:33.600 --> 0:09:37.880 to communicate with President Trump and the rest of the 0:09:38.080 --> 0:09:42.240 executive branch. He's good in terms of building relationships. He's 0:09:42.280 --> 0:09:45.840 got strong bipartisan support even on the Hill. And yet 0:09:46.000 --> 0:09:49.960 he leaves in a very precipitous way at a time 0:09:50.000 --> 0:09:52.839 where we've got a lot of foreign policy chaos, whether 0:09:52.880 --> 0:09:58.200 you look across the board, Russia, China, ran Syria with 0:09:58.320 --> 0:10:01.640 this rapid pull out, the creation of a space force, 0:10:01.679 --> 0:10:04.360 which kind of came out of nowhere. Just every day 0:10:04.400 --> 0:10:07.520 there seems to be a major foreign policy shift or move. 0:10:08.440 --> 0:10:11.800 Yesterday was withdrawing soldiers from Afghanistan after we were just 0:10:11.840 --> 0:10:14.400 talking about, you know, staying there in the fight. And 0:10:14.440 --> 0:10:17.600 so it's hard for people in the executive branch, in 0:10:17.640 --> 0:10:20.960 the defensive department, I think, to execute any sort of 0:10:21.000 --> 0:10:23.600 a plan because it changes on the web based on 0:10:23.640 --> 0:10:26.960 a phone call or an impromptu meeting the president might have. 0:10:27.080 --> 0:10:30.839 And so I think that resignation letter uh sends a 0:10:30.880 --> 0:10:34.040 shock to to the rest of the executive branch and 0:10:34.040 --> 0:10:36.960 and to the legislative branches that we are in a 0:10:37.040 --> 0:10:40.840 very troublesome space right now. So Clint tell us in 0:10:40.880 --> 0:10:45.000 your mind, how correlated was the resignation of General Mattis 0:10:45.360 --> 0:10:49.199 to Trump's announcement about pulling out of Syria, And related 0:10:49.240 --> 0:10:52.679 to that is is isis defeated, as the President claims, 0:10:52.720 --> 0:10:55.600 that would be news to a lot of people. I believe. Yeah. 0:10:55.640 --> 0:10:59.160 I'll start with the second one, which isis is not defeated. 0:10:59.160 --> 0:11:03.120 In President Trump has been so negative about President Obama 0:11:03.200 --> 0:11:06.040 Is handling where he said that essentially al Qaeda had 0:11:06.080 --> 0:11:09.400 been defeated. That was going back into the last administration, 0:11:09.400 --> 0:11:11.719 which seemed very foolish as ISIS sort of rose out 0:11:11.760 --> 0:11:14.680 of the ashes of al Qaeda, out of nowhere and 0:11:14.720 --> 0:11:17.360 became such a more powerful threat, and we're seeing President 0:11:17.360 --> 0:11:20.840 Trump followed that same pattern. It's really crazy. There's a 0:11:20.840 --> 0:11:23.200 lot of detainees there, the Kurds to actually have a 0:11:23.200 --> 0:11:26.400 lot of ISIS detainees. And this really goes to I 0:11:26.440 --> 0:11:29.640 think the Secretary Maddis decision, which is pulling out a 0:11:29.760 --> 0:11:33.200 Syria precipitously like that may have been a good strategy 0:11:33.320 --> 0:11:36.400 over a year or two, but you want to have 0:11:36.480 --> 0:11:39.080 a plan in place to do that, because otherwise you're 0:11:39.200 --> 0:11:42.920 releasing IIS back onto the battlefield. You're empowering a run 0:11:42.920 --> 0:11:45.920 of Russia, two of our you know, biggest adversaries at 0:11:45.920 --> 0:11:49.080 the moment, and we're not really getting anything in return. 0:11:49.160 --> 0:11:51.520 And by the way, we're also turning our back on 0:11:51.640 --> 0:11:54.559 allies that have gone and done the fighting for US. 0:11:54.800 --> 0:11:58.000 Part of the Syria strategy to counter ISIS was to 0:11:58.040 --> 0:12:00.839 have a limited US footprint on the ground. We didn't 0:12:00.840 --> 0:12:03.480 want to send soldiers back into a rocket Syria. We 0:12:03.480 --> 0:12:05.559 we wanted to do it with just a series of 0:12:05.600 --> 0:12:08.760 special Forces operations and air power and we did took 0:12:08.800 --> 0:12:11.640 a little bit longer than everybody wanted. But other people 0:12:11.640 --> 0:12:14.079 did the fighting on the ground force, the Rocky military, 0:12:14.200 --> 0:12:17.480 the Kurds, uh Syrian militias that we started to train, 0:12:17.840 --> 0:12:20.640 and we have just turned our backs on all of them. Uh. 0:12:20.679 --> 0:12:24.000 And I just really wonder that you know, how we 0:12:24.040 --> 0:12:26.679 move forward if anything ever pops up that we want 0:12:26.679 --> 0:12:28.640 to do. Who would stand with us after we've just 0:12:28.679 --> 0:12:30.480 walked away from them? Well, but that's where I wanted 0:12:30.520 --> 0:12:32.720 to go with this, Clint, how permanent is a damage 0:12:32.840 --> 0:12:35.240 in your mind to the relationship of the U. S 0:12:35.280 --> 0:12:40.839 has with its allies. Our allies don't understand what our 0:12:40.880 --> 0:12:44.520 foreign policy is, and it sounds like sective madness doesn't 0:12:44.559 --> 0:12:47.040 understand it either. You know. In the letter he sort 0:12:47.040 --> 0:12:51.120 of said, you deserve a Secretary of Defense that you 0:12:51.160 --> 0:12:54.360 know supports and works towards your views. But I don't 0:12:54.360 --> 0:12:56.760 think anyone really knows what that is. And so if 0:12:56.760 --> 0:12:59.600 you're an ally, you continue to look at the US 0:12:59.679 --> 0:13:03.160 and say, what are you about? What are you pursuing? 0:13:03.320 --> 0:13:06.640 You know what our interest? Because it pivots back and forth. 0:13:07.000 --> 0:13:10.199 Let's take a Afghanistan. We've seen President Trump take General 0:13:10.240 --> 0:13:14.040 McMaster's sort of strategy a year ago and implement, you know, 0:13:14.120 --> 0:13:17.200 say we're going to do this. Now he's already backtracking 0:13:17.240 --> 0:13:19.040 from it. So what does that tell people on the 0:13:19.040 --> 0:13:22.160 ground there? Look at Isis and Syria. You know, we 0:13:22.200 --> 0:13:24.720 said we'll do one thing, then we do another. North Korea. 0:13:25.280 --> 0:13:28.160 We're going to denuclearise North creates as we want. You know, 0:13:28.200 --> 0:13:31.160 every one of these foreign policy matches that we've gone 0:13:31.240 --> 0:13:34.880 up against uh Vladimir Putin in Helsinki, we've come out 0:13:34.880 --> 0:13:38.240 the other side with no real understanding of what we've gained. 0:13:38.280 --> 0:13:41.040 What is America First Defense our strategy? But what do 0:13:41.160 --> 0:13:44.560 we want to achieve? What we've done is alienate literally 0:13:44.600 --> 0:13:47.520 all of our allies to where the strength of US 0:13:47.559 --> 0:13:50.719 as a country over the past five six decades have 0:13:50.840 --> 0:13:53.640 been we've been able to leverage the entire world against 0:13:53.679 --> 0:13:56.640 whatever evil that might arise. I don't think we can 0:13:56.679 --> 0:13:58.720 do that going forward, and I don't think any ally 0:13:58.840 --> 0:14:01.200 would want to engage with us in a sustained way 0:14:01.480 --> 0:14:02.960 when they can't know if we're really going to be 0:14:03.000 --> 0:14:04.840 in it for the long haul or what we actually 0:14:04.840 --> 0:14:08.480 believe in Clint, I just want to challenge you a 0:14:08.480 --> 0:14:10.120 little bit because a lot of people have been saying 0:14:10.160 --> 0:14:11.640 that the U s should not be fighting in the 0:14:11.640 --> 0:14:15.240 war in Syria and that the Afghanistan UH mission has 0:14:15.280 --> 0:14:19.080 been badly handled, with deaths that really shouldn't be happening. 0:14:19.160 --> 0:14:23.080 So isn't isn't Trump right on that part. The part 0:14:23.160 --> 0:14:27.000 with Syria which is fascinating is the Obama administration took 0:14:27.000 --> 0:14:29.920 a very limited stands. They would not put US soldiers 0:14:30.000 --> 0:14:32.520 into Syria, if you remember, for that exact name reason. 0:14:32.760 --> 0:14:34.920 We don't want to be there permanently trying to solve 0:14:34.920 --> 0:14:38.480 serious problems. President Trump's one of his first actions of 0:14:38.520 --> 0:14:41.840 his administration was to send US soldiers and four straight 0:14:41.880 --> 0:14:45.040 into Syria and into that combat zone. He actually took 0:14:45.040 --> 0:14:48.040 the reverse of that. So if if the strategy is 0:14:48.080 --> 0:14:51.200 to just deal with ISIS and also not get stuck 0:14:51.240 --> 0:14:52.760 in this quagmire, you have to do that in a 0:14:52.880 --> 0:14:55.120 very deliberate way. I think that's what the issue is 0:14:55.160 --> 0:14:58.240 with the Syria debate. People don't doubt that Iran and 0:14:58.320 --> 0:14:59.840 Russia we are mostly going to get their way over 0:14:59.880 --> 0:15:02.520 the long term. But what do we want in that fight? 0:15:02.560 --> 0:15:05.960 Because right now, Russia and Iran and anyone else, if 0:15:06.000 --> 0:15:07.640 they don't take care of that ISIS fight. We'll have 0:15:07.680 --> 0:15:12.000 what we had in foreign fighters showing up around the world, 0:15:12.200 --> 0:15:15.200 terrorists checks and our strategy has always been fight them there, 0:15:15.320 --> 0:15:18.360 rather them fight them here. This goes to Afghanistan as well, 0:15:18.440 --> 0:15:21.800 So to make that bridge, the Afghan war has needed 0:15:21.840 --> 0:15:24.680 to wind down for a long long time. But the 0:15:24.720 --> 0:15:28.640 thing is that it's Hotel California. You you can check in, 0:15:28.680 --> 0:15:30.480 but you can never leave. That's the problem in these 0:15:30.520 --> 0:15:34.000 counter terrorism fights is anytime we put ourselves in a 0:15:34.000 --> 0:15:36.480 footprint like that, we're going to have to be there 0:15:36.560 --> 0:15:40.160 or have a proxy or an ally or a surrogate 0:15:40.280 --> 0:15:44.840 someone help us keep that counter terrorism security mission going forever. 0:15:45.040 --> 0:15:47.960 And we don't have that plan hammered out in Afghanistan 0:15:48.080 --> 0:15:50.680 right now, So we don't have that that raises the 0:15:50.800 --> 0:15:56.200 risk of anything happening on our soil. Yes, over time, 0:15:56.280 --> 0:15:59.400 I mean it won't happen instantaneously. These networks, you know, 0:15:59.440 --> 0:16:02.120 they tend to rise, they evolve, and they show up 0:16:02.120 --> 0:16:04.520 in other places and in other ways. I mean, we 0:16:04.560 --> 0:16:07.400 saw an attack in Morocco just this week where two 0:16:07.400 --> 0:16:12.400 women were brutally murdered by four ISIS supporters, which hasn't 0:16:12.440 --> 0:16:15.360 happened quite some time, and so what will tend to 0:16:15.400 --> 0:16:18.160 happen is they will coalesce in a different way. I 0:16:18.200 --> 0:16:20.240 think another big challenge that we've got that we haven't 0:16:20.280 --> 0:16:24.880 thought through is state sponsored terrorism using these proxies, using 0:16:24.880 --> 0:16:27.960 these former foreign fighters around the world against the United 0:16:28.000 --> 0:16:31.160 States or Western interest shars me to death. Right now, 0:16:31.200 --> 0:16:33.280 we're unfortunately, we're gonna have to leave it there. A 0:16:33.320 --> 0:16:34.920 lot to talk about. We'll have to have you back 0:16:34.920 --> 0:16:37.520 on happy holidays, a lot to think about this year. 0:16:37.720 --> 0:16:41.080 Clint Watt's Distinguished Research Fellow at the Foreign Policy Research Institute, 0:16:41.120 --> 0:16:44.600 also a former FBI Special Agent in the counter Terrorism 0:16:44.760 --> 0:17:04.800 Unit One as a class that has been absolutely pummeled. 0:17:04.800 --> 0:17:08.080 Paul has been bitcoin at least this year, and joining 0:17:08.160 --> 0:17:10.240 us now is somebody who is a believer in the 0:17:10.240 --> 0:17:13.959 blockchain technology, a believer, believer in crypto assets and has 0:17:14.000 --> 0:17:17.440 a lot of money invested in the securities. Daniel Masters, 0:17:17.640 --> 0:17:21.159 chairman of coin Shares Group, joining us now from London. Danny, 0:17:21.200 --> 0:17:22.880 thank you so much for being with us. I thought 0:17:22.880 --> 0:17:26.080 it was really interesting a move that Switzerland made. It 0:17:26.160 --> 0:17:34.320 seems to give some edification to the Christian crypto acid world. Yes, him, 0:17:34.760 --> 0:17:36.920 nice to be with you again. It's been a very 0:17:37.000 --> 0:17:41.040 very interesting see days in crypto following what's been obviously 0:17:41.080 --> 0:17:45.640 a terrible year. Now, Switzerland might not be the most 0:17:45.640 --> 0:17:47.960 prominent nation from the US perspective, but it is the 0:17:47.960 --> 0:17:51.359 eighteenth largest economy in the world, bigger than Belgium and Argentina. 0:17:52.080 --> 0:17:56.280 The Swiss Federal Council just issue that framework entitled the 0:17:56.359 --> 0:18:00.439 Legal Framework for Districted Lleged Technology and Blockchain UM and 0:18:00.520 --> 0:18:04.480 it's been issued by the Swiss Federal Council, the most 0:18:04.560 --> 0:18:09.080 senior office in that Swiss nature nation. This for Switzerland, 0:18:09.160 --> 0:18:13.679 in my opinion, is a new crypto constitution. It is 0:18:13.680 --> 0:18:17.720 a global precedent, and it reminds me a lot of 0:18:18.280 --> 0:18:22.840 the US Jobs Act. So, Daniel, I guess when I 0:18:22.920 --> 0:18:26.840 read that about Switzerland, even though it is a relatively 0:18:26.880 --> 0:18:30.800 smaller economy from a banking perspective, it's been a global 0:18:30.880 --> 0:18:33.119 leader forever. So I kind of viewed it maybe as 0:18:33.160 --> 0:18:37.520 a validation, if you will, of the blockchain technology and cryptocurrencies, 0:18:37.880 --> 0:18:40.560 you know, giving the leadership position that Switzerland's kind of 0:18:40.600 --> 0:18:46.000 always had in financial services. You're correct, they are, indeed, 0:18:46.240 --> 0:18:49.960 who have been for many decades leaders in financial services 0:18:50.880 --> 0:18:54.919 that makes this report that much more credible. The report 0:18:54.960 --> 0:18:58.320 itself is very substantial, colors a hundred and sixty two pages, 0:18:59.119 --> 0:19:02.920 over eight hund legal cross references, and what really drew 0:19:02.960 --> 0:19:07.280 our attention to it was that on my professional network 0:19:08.119 --> 0:19:11.200 this was viewed by over three hundred and seventy five 0:19:11.200 --> 0:19:17.080 thousand people that happened to correspond with the rally in 0:19:17.160 --> 0:19:20.680 crypto measured for example, in bitcoin between life than two 0:19:20.720 --> 0:19:24.399 hundred dollars and four thousand dollars. So I think this 0:19:24.680 --> 0:19:29.120 is a meaningful development. Um. Yeah, So, Danny Um, your 0:19:29.320 --> 0:19:33.400 coin shares has combined one billion dollars of assets under 0:19:33.400 --> 0:19:36.840 management focused on cryptocurrencies and their crypto assets. And I'm 0:19:36.880 --> 0:19:39.159 just wondering what are you expecting next year? I mean, 0:19:39.320 --> 0:19:41.679 are we gonna be talking more about bitcoin as a 0:19:41.800 --> 0:19:44.960 viable long term asset class next year? And will it 0:19:45.080 --> 0:19:47.480 rally or is it going to be another difficult period 0:19:47.520 --> 0:19:52.240 for for it? Well, you know, I think this, this 0:19:52.440 --> 0:19:57.960 report is actually possibly a catalyst for some interesting developments 0:19:58.840 --> 0:20:03.800 seen Cryptova were driven by non institutional investors. This current 0:20:03.840 --> 0:20:07.760 year end rally we're seeing in per our inflows and 0:20:07.800 --> 0:20:12.359 per information from our peers is institutionally driven. This is 0:20:12.440 --> 0:20:15.720 supported by the Swiss government stance because it's a sort 0:20:15.760 --> 0:20:20.199 of encouragement the institutional investment committees can buy into. In 0:20:20.320 --> 0:20:24.320 terms of the likely shape of the rally that we 0:20:24.400 --> 0:20:26.520 may see next year, I think it will be much 0:20:26.680 --> 0:20:30.879 narrower than we saw in the past. The proliferation of tokens, 0:20:31.520 --> 0:20:36.200 many of which will fail, but from that wreckage, similar 0:20:36.240 --> 0:20:39.600 to what happened after the Mastack rash in two thousand one, 0:20:40.000 --> 0:20:41.960 I think we're going to see a narrow band of 0:20:42.080 --> 0:20:45.639 some protocol coins and some asset coins that are going 0:20:45.680 --> 0:20:49.160 to do quite well. Daniel, what else would the crypto 0:20:49.240 --> 0:20:53.040 market broadley define like to see too? I guess further 0:20:53.119 --> 0:20:56.359 validate the technology and the potential use cases. Um, you 0:20:56.359 --> 0:21:00.840 know Switzerland, maybe one of those mile post What else 0:21:01.000 --> 0:21:03.080 do you think the market is really looking forward to 0:21:03.119 --> 0:21:08.640 provide some support for this technology discurrency? Yeah, you're right. 0:21:08.760 --> 0:21:13.199 I think that the the evolutionary big bang that we 0:21:13.240 --> 0:21:15.520 saw in crypto over the last few years has been 0:21:15.600 --> 0:21:20.840 largely aspirational. The technology companies that were directly involved with 0:21:21.200 --> 0:21:25.000 are developing really interesting technology. It has been slow to 0:21:25.119 --> 0:21:27.600 come to the market, and that's what the market needs 0:21:27.600 --> 0:21:29.679 to see now. The head winds that these kind of 0:21:29.680 --> 0:21:33.520 technology companies actually face is being addressed by some of 0:21:33.520 --> 0:21:37.200 these Swiss government measures, so just quickly. Money laundering and 0:21:37.560 --> 0:21:41.399 terrorist financing is always a concern. The Swiss have taken 0:21:41.400 --> 0:21:44.880 this an account, recognized its importance and said in their 0:21:44.880 --> 0:21:47.720 studies and tech detection, so far it's not been a 0:21:47.720 --> 0:21:50.560 big issue, so they're going to keep a watching lie 0:21:50.640 --> 0:21:54.040 but allow a more fluid environment. Banking has been a 0:21:54.080 --> 0:21:59.640 headwind for these companies. This document actually talks about Swissland's 0:22:00.000 --> 0:22:03.399 should get this Swiss Bankers Association to buy into this initiative, 0:22:04.400 --> 0:22:07.760 and cleverly the way that the Swiss are looking at 0:22:07.800 --> 0:22:11.679 securities and physical assets which are usually represented in a 0:22:12.920 --> 0:22:16.320 in a de materialized form like trading rights for securities 0:22:16.400 --> 0:22:19.320 or depository seats for commodity, and they're looking at those 0:22:19.359 --> 0:22:21.840 instruments to be digitized. Thank you so much for being 0:22:21.840 --> 0:22:24.520 with us, Jenny Masters, chairman of Chairman of Coin Shares 0:22:24.560 --> 0:22:45.600 Group in London. Right now we're going to turn our 0:22:45.760 --> 0:22:48.960 focus to healthcare. We've seen healthcare shares getting beaten up 0:22:49.000 --> 0:22:52.600 pretty badly as a result of this Texas judge basically 0:22:52.680 --> 0:22:56.200 overturning Obamacare, joining us now to talk about that and 0:22:56.280 --> 0:22:59.840 whatever else is facing the healthcare industry. Heading into Susan 0:22:59.880 --> 0:23:03.400