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Speaker 1: Who you put your trust in matters. Investors have put

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Speaker 1: their trust and independent registered investment advisors to the two

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Speaker 1: and four trillion dollars Why Learn more at find your

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Speaker 1: Independent Advisor dot com. Welcome to the Bloomberg Surveillance Podcast.

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Speaker 1: I'm Tom Keene with David Gura. Daily we bring you

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Speaker 1: insight from the best in economics, finance, investment, and international relations.

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Speaker 1: Find Bloomberg Surveillance on iTunes, SoundCloud, Bloomberg dot com, and

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Speaker 1: of course on the Bloomberg. Joining us now is Peter Hooper.

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Speaker 1: He's the chief economist at which Man Morty. Peter, I

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Speaker 1: won't ask you the question should he stay or should

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Speaker 1: he go? But to maybe we can talk about the

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Speaker 1: ramifications of this decision, the Governor Carney's waging right now.

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Speaker 1: What are there? Well, this is a this is certainly

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Speaker 1: a difficult critical time for the UK economy. UH were

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Speaker 1: as as breakfit unfolds learning how this is going to

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Speaker 1: affect the economy there and and more globally, um the

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Speaker 1: the economy right now facing the effects of substantial weakening

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Speaker 1: of sterling. UH inflation expectations up sharply at a time

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Speaker 1: when growth has not yet picked up a pace so

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Speaker 1: difficult decisions, difficult decisions ahead. I think this is an

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Speaker 1: uncertainty about Mr Carney's future that needs to be resolved

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Speaker 1: this week, and global investors are hoping that he stays on.

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Speaker 1: He's he's a known commodity and someone who is generally trusted,

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Speaker 1: but obviously personal reasons of his own for wanting to

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Speaker 1: go on. I would look through the politics here. Some

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Speaker 1: new statistics at this morning from the Euro Area about

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Speaker 1: growth in in the wake of the Brexit vone gross

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Speaker 1: domestic product for his point three percent in the three

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Speaker 1: months to September, inflation rate picking up to point five

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Speaker 1: percent in October, both of those things in line with

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Speaker 1: with expectations here. What do they tell you about the

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Speaker 1: health of the the euro economy here after that referendum vone, Well,

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Speaker 1: the the the economy is h so far, not taking

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Speaker 1: any kind of a significant hit. We weren't expecting a

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Speaker 1: major negative for the euro economy, but more in an

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Speaker 1: issue for the UK um UH at this point, it's

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Speaker 1: how how does the how do the negotiations move going forward?

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Speaker 1: The UK obviously more sensitive to this than the Euro Area.

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Speaker 1: ECPs goal here are right close to just below two percent.

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Speaker 1: That with the likelihood we get to that anytime soon.

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Speaker 1: We're a ways off. Uh. And our expectation is ECB

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Speaker 1: is going to expand its QUI at the December meeting. Um.

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Speaker 1: But certainly globally things beginning to move in a direction

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Speaker 1: that that that could be helpful. I mean, you're you're

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Speaker 1: seeing inflation slowly pick up in the US. News out

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Speaker 1: of China has been Uh. Inflation is that admit more

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Speaker 1: of the watchword these days, um so um labor markets.

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Speaker 1: Labor markets are tightening. Uh. And it's going to be

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Speaker 1: a slow process. But I'm gonna take a while, Peter,

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Speaker 1: let's do let's do a granular thing. We have two

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Speaker 1: point nine percent and we're assuming it's inventories and exports.

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Speaker 1: Helped me here with if I want to delete inventories

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Speaker 1: from my analysis of g d P, translate that jargon

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Speaker 1: forest okay. Uh. The inventory sales ratio has been has

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Speaker 1: been relatively high. Uh. It plunged. Inventory investment plunged in

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Speaker 1: the second quarter, a big negative on growth. Third quarter

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Speaker 1: looks like it's subtracted something on the order of a

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Speaker 1: half percentage point from from GDP growth going I mean,

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Speaker 1: added something like half a percent as inventory investment went

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Speaker 1: from a substantial negative to a moderate plus. Uh. That

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Speaker 1: is you know what it does going forward, is it

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Speaker 1: takes a little bit out of the fourth quarter we've

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Speaker 1: we've we were expecting to see more correction in inventories

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Speaker 1: UM over the near tournaments. Our Deutsche Bank view, UM,

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Speaker 1: we we now expect to see inventories subtract a few

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Speaker 1: tents in Q four UM. So it was a moderate

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Speaker 1: plus to us, a little bit of surprise, but more

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Speaker 1: in line with consensus expectations. UM. We still have some

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Speaker 1: correction to go going forward. Does it get you to

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Speaker 1: a sustained better g d P or as you told

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Speaker 1: us an hour ago, that it gets you to sub

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Speaker 1: two GDP. You can't have both. Okay, you have two

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Speaker 1: point nine Half of that was exports and inventories. Uh.

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Speaker 1: The underlying feeling growth trend is something in the one

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Speaker 1: and a half to two percent range. That's uh what

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Speaker 1: we're consumer and business investment. Consumer just over two. Business

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Speaker 1: investment has been very week has been a modest negative.

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Speaker 1: That's where we need to really pick up going forward.

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Speaker 1: But let me say that even if we're at just

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Speaker 1: one and a half percent GDP growth, that's enough to

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Speaker 1: give us ongoing improvement in the US labor market. Because

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Speaker 1: productivity output per hour has not grown over the last

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Speaker 1: five years. For overall GDP, labor productivity pretty flat. So

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Speaker 1: one and a half percent GDP growth means one and

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Speaker 1: a half percent labor demand growth, which gives you pretty

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Speaker 1: good growth in in employment. Uh. That's a tightening labor market. Um.

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Speaker 1: Problem here productivity is growing that slowly. Uh. Not just

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Speaker 1: it means very slow potential growth. It means uh lag

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Speaker 1: lagging improvement in the US underd of living. Uh. And

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Speaker 1: it means pressure on unit labor cards. Yeah. And David,

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Speaker 1: not that I want editor lies here, but it touches

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Speaker 1: a little bit on Mr Trump's comments in different debates

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Speaker 1: on a quote unquote one percent economy and not particularly

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Speaker 1: one point zero percent. But Dr Hooper's view is Trumpian

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Speaker 1: in the GDP sense. Squinting a correct word, I think

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Speaker 1: it is my sudden Matt Winkler's piece this work. We

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Speaker 1: can ask him about, yes, whether or not that's vaded

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Speaker 1: to the dictionary. Uh. Squinting through that headline number. Peter

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Speaker 1: looking looking at household spending, looking at the state of

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Speaker 1: the consumer, How does he or she look in light

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Speaker 1: of that two point nine percent figure, I think overall

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Speaker 1: consumer is doing okay, alright, household balance sheets of recovered

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Speaker 1: uh average households net worth income ratio back to previous

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Speaker 1: near previous highs, labor market doing well, hiring going okay,

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Speaker 1: and wage inflation beginning to rise. You you had a

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Speaker 1: four percent increase nominal income, uh two a little of

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Speaker 1: two percent real income. Uh. That's enough to sport a

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Speaker 1: you know, a moderate growth in consumer spending going forward,

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Speaker 1: and that's that's more than two thirds of the economy,

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Speaker 1: so that that's what's giving you this uh, this underlying

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Speaker 1: growth and domestic demand somewhere in the at least one

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Speaker 1: and a half two percent range in the face of

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Speaker 1: some drag on the part of business spending. As I mentioned,

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Speaker 1: we get personal income and personal spending figures this morning.

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Speaker 1: What are you looking for there? I think my expectation

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Speaker 1: is we're going to be somewhere in the four percent

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Speaker 1: range nominal. Yeah, but this is important because you get

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Speaker 1: spending an income. I get it, and then you take

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Speaker 1: it down and you guys calculate. Did the government calculate

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Speaker 1: or do you back out what the personal savings rate is?

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Speaker 1: They give it to us, they give it you. It's

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Speaker 1: all part of it. You don't have to like do incense,

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Speaker 1: you know, do a Harry Potter hell of kind of thing.

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Speaker 1: And the saving saving rate has gone from low of

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Speaker 1: three to five six. Okay, but but Peter, this is

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Speaker 1: really important here. The paradox of savings, the paradox is

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Speaker 1: upon us with with this great distortion of the fixed

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Speaker 1: income market, isn't it. Well? We we've saying, we've been

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Speaker 1: saying that the baby boom generation has not been saving

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Speaker 1: enough for retirement. Savings has picked up, but it picked

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Speaker 1: up primarily because of all the uncertainty around the Great

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Speaker 1: Financial Crisis. People. People were shocked by the by the

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Speaker 1: drop in home prices, people were shocked by the huge

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Speaker 1: drop in in asset values. Uh. All this uncertainty says

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Speaker 1: we need to save more. Of course, that is that

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Speaker 1: is one of the drags on consumer spending. More you say,

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Speaker 1: the less you spend. Uh, that was a drag. That

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Speaker 1: was a drag coming out of the out of the

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Speaker 1: out of the recession. Uh. Saving has been wiggling around,

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Speaker 1: but it's been a little more stable. I would say,

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Speaker 1: what are you doing us for Halloween? What am I

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Speaker 1: worry for Halloween? Are you going this? John Maynard? Keys

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Speaker 1: those jewel man, I've got a mask on the front,

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Speaker 1: a mask on the back. On the front, I'm going

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Speaker 1: as Irving Fisher and my mask in the back is

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Speaker 1: the vice chairman, Stanley Fisher. So I'm going as Fisher

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Speaker 1: Fisher for Hello. We think anybody will get it on

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Speaker 1: the upper east side? What do you think, David? Come

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Speaker 1: on if they get it in Brooklyn? Right? Yeah, you're

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Speaker 1: going as a kil farmer, right of course, of course

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Speaker 1: I'll have my my backpack laden with I'm afraid to

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Speaker 1: ask what the girl offspring? How you're going to embarrass them?

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Speaker 1: Halloween be safe today. Let's let's I just want to

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Speaker 1: rip up the script on Job's Day. This job's day

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Speaker 1: is a big deal. December's job days a bigger deal,

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Speaker 1: right absolutely? I mean this, This Job's Day is not

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Speaker 1: going to affect what the Fed? Uh, what what the

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Speaker 1: Fed's up to? It will raise raise the issue of

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Speaker 1: December if if there's an unusually weak number um and

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Speaker 1: followed up by another one h uh in early December.

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Speaker 1: But at this point that you know, it's uh. I

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Speaker 1: think we're looking for something in the range on payrolls.

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Speaker 1: We're looking for maybe a little bit further updrift and

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Speaker 1: average early earnings and this is right on track for

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Speaker 1: for FED moving ahead. David Girl, December two, December two ish. Yes,

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Speaker 1: we've got an ECB meeting on the heels of down

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Speaker 1: of the eighth I believe. But yep, Peter, in a

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Speaker 1: recent note, you said here we see a good chance

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Speaker 1: of substantial further step down in the unemployment rate. What

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Speaker 1: what leads you to think that could be the case. Well,

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Speaker 1: the unemployee rate has leveled off over the last year

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Speaker 1: because labor force participation has picked up pretty significantly. Uh.

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Speaker 1: The there's a secular downtrend and labor force participation because

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Speaker 1: of demographics, largely the retirement of the Baby Boom generation

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Speaker 1: taking about a quarter percentage point per year, and that

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Speaker 1: adds has a substantial impact on on the unemployer right

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Speaker 1: if it if it backs up, and it has, it's

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Speaker 1: enough to level of things out. Uh. If if it

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Speaker 1: resumes its downtrend, um the unemploint rate with with something

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Speaker 1: anything in the neighborhood of one fifty on payrolls, unemployment

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Speaker 1: rate is going to fall somewhere between three quarters of

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Speaker 1: a percentage point and one percent over the next year.

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Speaker 1: That's how powerful that downtrend is. UM. So we think

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Speaker 1: that the labor force particiation participation rate picked up over

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Speaker 1: the last year, not so much because a lot of

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Speaker 1: people are coming back in, but because the rate of

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Speaker 1: people who are unemployed long term unemployed actually leaving the

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Speaker 1: labor force has dropped off. UH. That says that sometime

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Speaker 1: in the next six months you could see a resumption

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Speaker 1: move toward a bit of a downtrend and labor force participation.

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Speaker 1: That says that unemployment UM begins to trend down. Word again,

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Speaker 1: you and your colleagues did a masterful job. You're going

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Speaker 1: through what was discussed at the Boston FEDS Economic Conference

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Speaker 1: on Octilly the fourteenth, that, of course we're fed share

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Speaker 1: Yellen suggested it might be wise to or there might

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Speaker 1: be a rationale for running the economy in a more

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Speaker 1: high pressure state. To what degree you think that's going

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Speaker 1: to be discussed tomorrow and Wednesday around that giant conference

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Speaker 1: table in the Equals Building in Washington, And and do

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Speaker 1: you think there's much agreement there among policy makers that

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Speaker 1: it's something that they you know, that they could be

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Speaker 1: heading towards Um, you know, I think when when Jane

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Speaker 1: Yellen raised the Center speech, she was sort of asking

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Speaker 1: the question, and her speech was more to raise issues

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Speaker 1: that warrant further research by macroeconomists in the years to come. Um,

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Speaker 1: I'm not expecting a theme to the central theme of

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Speaker 1: the discussion be it's time to run the economy at

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Speaker 1: a hotter level. Uh, in a serious way until until

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Speaker 1: you know, next year. If indeed the unemployed rate stage

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Speaker 1: starts declining significantly, this becomes an issue for FED discussion.

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Speaker 1: So far, however, we're not there. Dr Banky Dean Mackie

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Speaker 1: Barklay is now at point seven two with Steve Cohen

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Speaker 1: has said for quarters the migration here is to four

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Speaker 1: point zero percent unemployment. Can I make some news this morning?

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Speaker 1: Is a major house like Peter Hooper, agree with Dr Mackie. Okay,

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Speaker 1: our house call is for unemployment getting down into the

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Speaker 1: mid fours over the next year. But okay, alright, okay,

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Speaker 1: it's Halloween. You want to risk Uh, they're not my

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Speaker 1: fishure fisher there. Certainly I will tell you it's pure

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Speaker 1: arithmetic that if okay, if pure arithmetic that if a

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Speaker 1: labor force participation rate resumes its downtrend, secular downtrend. Okay,

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Speaker 1: if the economy continues to grow two percent and productivity

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Speaker 1: hasn't picked up, will be below four percent by the

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Speaker 1: end of next year. Let's leave it there, Peter, Thank

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Speaker 1: you news. This one that's shocking, folks, you heard it.

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Speaker 1: I believe folks that David Gurry. I think that's the

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Speaker 1: first I would suggest, yes for what we've heard. I

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Speaker 1: want to I wanna. I want to suggest that DARTR.

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Speaker 1: Hooper did not make a point forecast there or estimate

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Speaker 1: he are or both. He suggested those would be the

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Speaker 1: trends given this, that and the other thing. That's not

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Speaker 1: the same because an official, Mr Cry, And don't let's

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Speaker 1: be sure is badge still works? Mr Cry. That's all

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Speaker 1: we ask Peter Hooper, thank you so much. I want

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Speaker 1: to bring in Steve Whiting now. He is the chief

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Speaker 1: global strategist at City Private Bank. A real pleasure to

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Speaker 1: have him here. And I want to start with with

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Speaker 1: the bond market. Steve. I look at the FED minutes,

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Speaker 1: I look at the Fed statements. I listened to Mario

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Speaker 1: Draggy a week and a half ago, and I wonder

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Speaker 1: hear how much uncertainty remains when it comes to to

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Speaker 1: monta terry policy in light of what we have looking

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Speaker 1: at w I R P here, the probability of a

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Speaker 1: hike at you know, the heels of this FED meeting seventeen,

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Speaker 1: how much uncertainty remains when it comes to central banks. Well,

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Speaker 1: I think they're coming into a path that sort of

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Speaker 1: makes sense now for two thousand and seventeen. When you

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Speaker 1: think about the period when interest rate hikes really became

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Speaker 1: credible in two thousand and fourteen, the markets and the

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Speaker 1: said were very far apart the idea that they'll do

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Speaker 1: one step now before the end of the year and

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Speaker 1: two quarter point tightenings next year. And as Janet Yellen

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Speaker 1: said at Jackson Hole, that was the course if there

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Speaker 1: is a shop free outlook, Um, that is now sort

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Speaker 1: of a reasonable course that we could be on, particularly

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Speaker 1: with that qualification that, um, if there are no outside shocks,

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Speaker 1: you know, history is stilled with them, and there have

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Speaker 1: been FED tightenings through those periods and they couldn't control everything.

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Speaker 1: But now I think that this is a path that

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Speaker 1: we're sort of the hawks and the doves can both

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Speaker 1: take that road together and see if you're not you're

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Speaker 1: not writing off November rate rise completely, are you you know,

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Speaker 1: in my gut, I just can't completely do that. Um.

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Speaker 1: The fact that they didn't even mention the weakness in

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Speaker 1: the pervasive weakness and economic data in the month of August,

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Speaker 1: when you know they followed up in September with a

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Speaker 1: pause in three decents. You know first said that is

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Speaker 1: not political, just the absence of mentioning any of the

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Speaker 1: weak economic news, perhaps so that it doesn't fall into

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Speaker 1: a political context. It just strikes me that with um

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Speaker 1: so much information arguing for a tightening, that just deciding

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Speaker 1: to wait to December, it's just hard to say that

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Speaker 1: that it's entirely off the table. December obviously seems more likely,

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Speaker 1: and the historical proclivity is to the said not the

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Speaker 1: tighten right ahead of political events. But um, I just

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Speaker 1: note that one play this play is after me a

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Speaker 1: little bit here, because we've heard time and time again

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Speaker 1: they won't raise rates because of the election. How could

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Speaker 1: you see those two events interacting with with one another.

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Speaker 1: In other words, if they were to raise it's in November,

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Speaker 1: what what measurable effect would that have on the campaign?

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Speaker 1: On the election? As you see in Well the Strongest

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Speaker 1: argument is maybe not political, it's the sac The Federal

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Speaker 1: Reserve is not, you know, trying to impose a harsh tightening,

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Speaker 1: and markets are unprepared, have not priced in this event,

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Speaker 1: so they politely uh in. They would likely desire not

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Speaker 1: to have that outcome in the market, whereas in December,

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Speaker 1: where's entirely priced in, they're going to have less impact

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Speaker 1: in many ways that it has tried to tighten without

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Speaker 1: impact over you know, the last two years and said

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Speaker 1: only one chance and then take a look at what

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Speaker 1: happened in last December. In fact, historically the Federal Reserve

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Speaker 1: has tried to avoid. December is the period of liquidity

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Speaker 1: year and uncertainty. So they're just a little bit they

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Speaker 1: can't win situation here, but they have managed, you know,

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Speaker 1: to take down expectations so much for the course of

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Speaker 1: future tightening that they're they're okay here one way or

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Speaker 1: the other. Does inflation say next year, Steve writing, I

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Speaker 1: think inflation comes back just simply on the oil price rise.

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Speaker 1: And you know, the depending on how the American economy

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Speaker 1: forms and how willing the fit of Reserve is to

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Speaker 1: go in a different direction from other central banks and

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Speaker 1: will dictate the path of the exchange rate and you know,

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Speaker 1: a meaningful dampening effect from goods prices. You know we

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Speaker 1: were on earlier. I don't think that you're going to

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Speaker 1: see the kind of inflation with a life of its

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Speaker 1: own where demands that year after year year it's going

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Speaker 1: to be a bounce. Yeah, And I like that framework.

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Speaker 1: Stephen Winding with his folks, and Stephen Winding is an

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Speaker 1: economist and a strategist, links in earnings, revenues and the

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Speaker 1: dynamics of profitability of corporations into our greatest greater economy, Stephen,

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Speaker 1: and it will be a changed world if we get

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Speaker 1: a villain bowder economy and others that have frankly been

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Speaker 1: more optimistic than city group migrating towards the city group

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Speaker 1: level of g d P somewhere in the vicinity of

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Speaker 1: two point zero percent some south, some north. Isn't that

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Speaker 1: unex acceptable to the animal spirit of the country. Isn't

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Speaker 1: that unacceptable to develop corporate confidence? Look, I think one

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Speaker 1: of the hard questions has to be when we have

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Speaker 1: nearly two hundred thousand jobs created on average per month

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Speaker 1: for seven years, you know what in terms of headcount

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Speaker 1: looks like a you know, very significant tightening of labor markets.

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Speaker 1: But output growth is slow and so much is out

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Speaker 1: of control of policy makers. You know, we can do

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Speaker 1: things ideally to incentivize labor force participation, to get people

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Speaker 1: looking at the incentives to work and go back, um

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Speaker 1: when it comes to productivity growth. You know the technology

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Speaker 1: surprises uh that we have seen, you know, for one,

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Speaker 1: in the facting sector in oil where we had a

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Speaker 1: couple of years back a dramatic windfall and output uh,

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Speaker 1: you know, a decade earlier in I T You know,

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Speaker 1: these sorts of technology surprises are not something that I

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Speaker 1: think policymakers can plan for. But wheak you think about this,

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Speaker 1: and I think it's actually a really good argument in

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Speaker 1: favor of potential optimism. Is that when you're down, you know,

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Speaker 1: near early nineteen eighties lows on this, and you see

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Speaker 1: enough things going around in the technology front, we might

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Speaker 1: actually one of these days we're not going to get

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Speaker 1: just downside surprises and growths. To cut to the chase

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Speaker 1: and what's what's interesting to me and help me here,

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Speaker 1: Stephen Whiting and David Gura jump in here as someone

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Speaker 1: of wisdom as well. I saw an Apple commercial this

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Speaker 1: weekend which is a bunch of you know, millennials. You

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Speaker 1: want to punch there, you know the whole Apple techie

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Speaker 1: gorgeous thing. You want to punch all of them. But

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Speaker 1: the basic idea is that technology of Apple using your

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Speaker 1: iPhone to do qt C pie selfies. That's productivity, robotics,

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Speaker 1: e commerce. Um. You know the fact that the e

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Speaker 1: commerce sector is sort of displacing you know, standard commerce

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Speaker 1: with a lot less labor input, and people are a

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Speaker 1: little bit happy not having you know, massive amounts of

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Speaker 1: speculum at inventory across you know, millions of square miles

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Speaker 1: across the United States. You know where somebody might just

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Speaker 1: walk in and happen to buy it. There is a

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Speaker 1: technology like that which is in fact disruptive. Uh. You

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Speaker 1: know these sorts of things where you have some resources

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Speaker 1: again on the sidelines that you can redeploy. That's how

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Speaker 1: you know, real income rogers per person. That reminded me

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Speaker 1: of a very vivid moment from stand fisher speech at

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Speaker 1: the Economic Club of New York in which he's urged

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Speaker 1: by a colleague to take a subway ride to see

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Speaker 1: everybody using you sing there iPods. I thought that was

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Speaker 1: I thought that was just great. We were talking with

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Speaker 1: Peter Peter a few moments ago about his take on

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Speaker 1: Janet Yellen speech at the FED conference in Boston a

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Speaker 1: little while back, and so much of that conference had

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Speaker 1: to do with productivity. Alan Krueger spoke there as well.

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Speaker 1: When you look at demographics, how much do you just

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Speaker 1: raise up your hands in defeat here? How much can

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Speaker 1: the FED do? How much can anyone do about the

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Speaker 1: demographic picture we're seeing in this country right now? Well, um,

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Speaker 1: aging is not something we're going to do anything about.

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Speaker 1: It's it's the course of history and where it will go.

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Speaker 1: I think raising labor force participation for older workers is ideal. Um.

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Speaker 1: What striking is in the list seven years, with the

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Speaker 1: exception the last twelve months. Um, you know, we were

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Speaker 1: seeing labor force participation undershoot anything that demographics could explain.

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Speaker 1: People between five and fifty five were not in the

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Speaker 1: labor force US as they were predicted to be. It's

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Speaker 1: been remarkably weak on that front. And you know, for

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Speaker 1: us to see in the last twelve months three million

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Speaker 1: people come back and search for jobs is pretty striking.

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Speaker 1: That's another big forecast miss. Both the short fall and

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Speaker 1: now the improvement are other size that the forecasting is

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Speaker 1: getting better that we've We've talked a ton on this

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Speaker 1: program just about the deficits of of FED forecasting. Uh sure,

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Speaker 1: the FED and others, but you know, how do we

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Speaker 1: forecast better? Uh information, being able to take real time

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Speaker 1: digital information on sales production in the economy, These sorts

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Speaker 1: of things that we probably don't fund very well. Improving

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Speaker 1: these sorts of things can help. Um. You know, if

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Speaker 1: people are looking for the answers to like how to

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Speaker 1: make you know financial markets les volatil, that's a different story.

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Speaker 1: You know, we can people will always try harder to

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Speaker 1: get uh some better forecast, and you know, it becomes

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Speaker 1: a little bit like high frequency trade. Think it's a

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Speaker 1: it's a race for speed, but it won't necessarily improve everything.

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Speaker 1: That's an important point. What is your confidence in your

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Speaker 1: guestiments of C plus I plus G plus n x,

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Speaker 1: particularly after the first look we saw third quarter? Do

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Speaker 1: you have a belief that you can gain the adjustments

402
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Speaker 1: of third quarter or the reality of this fourth quarter

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Speaker 1: across consumption, investment, government, and exports. I think we can

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Speaker 1: interpret it reasonably well that the first cance of the

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Speaker 1: year had some shortfalls. We didn't believe growth would be

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Speaker 1: just one, and so what's happened in the third quarter

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Speaker 1: is a bit of a correction for that. UM. Some

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Speaker 1: of the contributions to growth are you know, not looking

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Speaker 1: so great as of course in the third quarter. But

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Speaker 1: you know, put that in the context of let's look

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Speaker 1: back at the last couple of quarters, and it balances

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Speaker 1: out roughly where we think we are, which is UM,

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Speaker 1: certainly better than one, but probably not as good as

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Speaker 1: do nine. I wanna ask you about energy. We see

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Speaker 1: oil prices here hovering below fifty dollars a barrel. We

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Speaker 1: had another OPEC meeting this weekend that came to no

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Speaker 1: result other than them just accurring they're going to continue

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Speaker 1: talking about production cuts for production freeze. How much is

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Speaker 1: oil weighing on the markets right now? UM, only a

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Speaker 1: little because sort of the absolute level of distress that

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Speaker 1: we were in around the beginning of the year, whereas

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Speaker 1: a variety of things, petro dollar portfolio holders in a

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Speaker 1: state of distress, selling assets outside of petroleum. UM solvency

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Speaker 1: becoming more of a broad question beyond ty of the

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Speaker 1: oil price itself being so high, they were contracts to

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Speaker 1: sell oil UH and fifteen dollars that were sold in January,

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Speaker 1: and so I think we can look at the last

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Speaker 1: you know two years were investment spending to seek out

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Speaker 1: new oil, to maintain the capital stock and oil that

430
00:25:20,840 --> 00:25:22,800
Speaker 1: you know, this is the path forward for oil. It's

431
00:25:22,840 --> 00:25:26,560
Speaker 1: not going to be a better agreements between different actors,

432
00:25:26,840 --> 00:25:29,520
Speaker 1: you know, gentlemen's agreements to do this through that. It's

433
00:25:29,560 --> 00:25:32,639
Speaker 1: really going to be about high cost producers simply not

434
00:25:32,720 --> 00:25:36,439
Speaker 1: being there in the future. Thank you so much, Stephen,

435
00:25:36,480 --> 00:25:48,760
Speaker 1: Winning City Private Bank as well. Who you put your

436
00:25:48,760 --> 00:25:52,679
Speaker 1: trust in matters. Investors have put their trust in independent

437
00:25:52,800 --> 00:25:56,640
Speaker 1: registered investment advisors to the tune of four trillion dollars.

438
00:25:56,840 --> 00:26:00,440
Speaker 1: Why they see their roles to serve, not sell. That's

439
00:26:00,440 --> 00:26:04,000
Speaker 1: why Charles Schwab is committed to the success over seven

440
00:26:04,040 --> 00:26:10,359
Speaker 1: thousand independent financial advisors who passionately dedicate themselves to helping

441
00:26:10,400 --> 00:26:15,200
Speaker 1: people achieve their financial goals. Learn more at find your

442
00:26:15,280 --> 00:26:25,399
Speaker 1: Independent Advisor dot com. It is a perfect time to

443
00:26:25,520 --> 00:26:29,040
Speaker 1: speak with Stephen Lawrence Ratner. I urge you to peruce

444
00:26:29,080 --> 00:26:33,320
Speaker 1: his Wikipedia over a most collected career with will of

445
00:26:33,400 --> 00:26:37,439
Speaker 1: advisors full disclosure. Managing much of the assets of the

446
00:26:37,480 --> 00:26:39,879
Speaker 1: former mayor of New York. Michael Bloomberg, of course a

447
00:26:39,920 --> 00:26:43,000
Speaker 1: majority owner of this UH station. Steve Rattner, I want

448
00:26:43,000 --> 00:26:47,080
Speaker 1: to go back to original sin. You were the leader

449
00:26:47,080 --> 00:26:50,960
Speaker 1: of the Presidential Task Force on the auto industry. You

450
00:26:51,119 --> 00:26:53,880
Speaker 1: had laptops where you had to you know, you had

451
00:26:53,920 --> 00:26:58,320
Speaker 1: sensitive stuff on it. How in God's name did this happen?

452
00:26:58,560 --> 00:27:05,199
Speaker 1: How did six hundred and fifty jillion thousand emails were

453
00:27:06,160 --> 00:27:11,320
Speaker 1: whatever we get getting on get on private computers. I

454
00:27:11,359 --> 00:27:15,960
Speaker 1: don't get it off the clarity of a senior cabinet office. Well,

455
00:27:15,960 --> 00:27:20,280
Speaker 1: first of all, the six emails were heavily Anthony we

456
00:27:20,359 --> 00:27:23,040
Speaker 1: think assume are heavily Anthony Weens emails rather than he

457
00:27:23,240 --> 00:27:27,080
Speaker 1: was right. But but look they were they they broke

458
00:27:27,119 --> 00:27:31,920
Speaker 1: the rules. They were conducting State Department business on private computers.

459
00:27:32,000 --> 00:27:35,160
Speaker 1: Whether it's Anthony and Donald Trump is not completely wrong.

460
00:27:35,560 --> 00:27:40,280
Speaker 1: Potentially Anthony Weiner had access to State Department information, whether

461
00:27:40,320 --> 00:27:42,080
Speaker 1: it was classified or not, that he should not have

462
00:27:42,119 --> 00:27:44,680
Speaker 1: had access. In the crush, You're sitting on the tarmac

463
00:27:44,720 --> 00:27:46,920
Speaker 1: at LaGuardia. You've got to get to Detroit to bail

464
00:27:46,960 --> 00:27:51,040
Speaker 1: out the auto business. At times you must have done

465
00:27:51,080 --> 00:27:53,480
Speaker 1: this original sin right, Well, let me say two things.

466
00:27:53,560 --> 00:27:55,880
Speaker 1: First of all, we had we did have in my case,

467
00:27:55,960 --> 00:27:59,199
Speaker 1: Treasury Department issued blackberries and so on, so there was

468
00:27:59,240 --> 00:28:02,960
Speaker 1: a way to commune kate through the official system. That said,

469
00:28:03,359 --> 00:28:06,120
Speaker 1: I think anyone who's worked in the government, particularly back

470
00:28:06,160 --> 00:28:08,680
Speaker 1: then when the technology was not very robust, would tell

471
00:28:08,720 --> 00:28:11,360
Speaker 1: you that a certain amount of government business does get

472
00:28:11,400 --> 00:28:14,359
Speaker 1: done on personal devices. That is just the reality, as

473
00:28:14,359 --> 00:28:18,000
Speaker 1: you say, of sitting on the tarmac at LaGuardia. But

474
00:28:18,359 --> 00:28:21,800
Speaker 1: in this case, all government business was done off of

475
00:28:21,800 --> 00:28:24,720
Speaker 1: the government server, and that's I think a different kettle

476
00:28:24,720 --> 00:28:27,000
Speaker 1: of fish. In all fairness to everybody, what I wanna

477
00:28:27,000 --> 00:28:28,959
Speaker 1: say next is by no means trying to excuse anything

478
00:28:29,000 --> 00:28:31,520
Speaker 1: that happened here. But when I was reporting in Washington,

479
00:28:31,520 --> 00:28:33,160
Speaker 1: it was not uncommon for me to talk to government

480
00:28:33,160 --> 00:28:36,840
Speaker 1: officials who complained about the updated nous the quality of

481
00:28:36,840 --> 00:28:40,560
Speaker 1: the technology they were using. Stepping aside from the politics

482
00:28:40,600 --> 00:28:43,800
Speaker 1: of this whole matter, what does it say about our

483
00:28:43,840 --> 00:28:47,560
Speaker 1: government's ability to control data, or to to have systems

484
00:28:47,560 --> 00:28:50,360
Speaker 1: in place that works seamlessly so that we can transfer

485
00:28:50,400 --> 00:28:52,640
Speaker 1: information where it's appropriate, from one person to the other.

486
00:28:53,440 --> 00:28:56,720
Speaker 1: It says that our government, not totally surprisingly is behind

487
00:28:56,720 --> 00:29:00,280
Speaker 1: the curve with respect to technology and implement at the

488
00:29:00,560 --> 00:29:02,960
Speaker 1: systems at least we had back then, as you suggest,

489
00:29:03,280 --> 00:29:07,600
Speaker 1: for operating within the total confines of the Treasury, in

490
00:29:07,960 --> 00:29:13,240
Speaker 1: my case, were incredibly difficult and incredibly ornerary. But all

491
00:29:13,280 --> 00:29:15,080
Speaker 1: that said, I would also say this is not in

492
00:29:15,200 --> 00:29:18,280
Speaker 1: any way a reference to Mrs Clinton nor Whoma Aberdeen.

493
00:29:18,600 --> 00:29:21,240
Speaker 1: There were some government officials that I'm aware of, who

494
00:29:21,280 --> 00:29:25,720
Speaker 1: would conduct some government business on personal devices, particularly to

495
00:29:25,800 --> 00:29:29,680
Speaker 1: keep it from being captured within the government email uh

496
00:29:29,800 --> 00:29:33,400
Speaker 1: complex and therefore potentially subject to FOY or other disclosure.

497
00:29:33,960 --> 00:29:36,960
Speaker 1: And so we can argue about that appropriate stuff that

498
00:29:37,080 --> 00:29:39,880
Speaker 1: did go on. What's the legacy going to be here

499
00:29:39,880 --> 00:29:42,240
Speaker 1: of the wiki leaks side of things? I think back

500
00:29:42,280 --> 00:29:44,600
Speaker 1: to just last week, a new sleu of emails came

501
00:29:44,600 --> 00:29:46,920
Speaker 1: out and Marie Slaughter Form believe the State Department's Policy

502
00:29:46,920 --> 00:29:49,560
Speaker 1: Planning Office, you know, saying that she and others did

503
00:29:49,600 --> 00:29:52,680
Speaker 1: this quite regularly. I can imagine this and still some

504
00:29:52,720 --> 00:29:54,280
Speaker 1: fear and those who have worked in Washington, who work

505
00:29:54,320 --> 00:29:56,200
Speaker 1: in Washington about what's going to happen with the emails

506
00:29:56,200 --> 00:29:59,680
Speaker 1: that they've sent. Well, I think I think there's comfort

507
00:29:59,680 --> 00:30:01,600
Speaker 1: and number verse and I think there's so many people

508
00:30:01,640 --> 00:30:04,120
Speaker 1: who did take some liberties with the system, whether it

509
00:30:04,200 --> 00:30:07,520
Speaker 1: was for convenience or privacy or whatever, that you're not

510
00:30:07,560 --> 00:30:10,760
Speaker 1: going to go and prosecute five thousand former government officials.

511
00:30:10,760 --> 00:30:13,120
Speaker 1: So I think I think they're pretty safe. I think

512
00:30:13,120 --> 00:30:15,520
Speaker 1: that I assume that starting whenever you want to date

513
00:30:15,520 --> 00:30:18,800
Speaker 1: it from when this began, was nobody anymore is now

514
00:30:18,840 --> 00:30:22,360
Speaker 1: operating off of the government, you know, anyway deviating from

515
00:30:22,360 --> 00:30:24,840
Speaker 1: the government rules, and so at least we know we've

516
00:30:24,840 --> 00:30:27,880
Speaker 1: accomplished that out of all this, what's your sense of

517
00:30:27,880 --> 00:30:30,560
Speaker 1: the politics here with you know, so a few days

518
00:30:30,640 --> 00:30:32,800
Speaker 1: until the election, the timing of this, obviously, is it

519
00:30:32,880 --> 00:30:36,760
Speaker 1: still being debated and learned about. Uh, does it smell

520
00:30:36,800 --> 00:30:41,640
Speaker 1: of something to you? No? Even in terms of no, no, no,

521
00:30:41,880 --> 00:30:45,480
Speaker 1: I okay. I I think that Comey is the FBI director.

522
00:30:45,520 --> 00:30:48,040
Speaker 1: Comy is in a very tough place. I think in

523
00:30:48,240 --> 00:30:52,760
Speaker 1: question his question, debate his decisions. But I think he's

524
00:30:52,800 --> 00:30:55,600
Speaker 1: within the fairway in terms of having UH done the

525
00:30:55,600 --> 00:30:58,120
Speaker 1: best he could under a very difficult set of sin

526
00:30:58,160 --> 00:31:01,120
Speaker 1: That is a brilliant statement that the smartest thing I've

527
00:31:01,160 --> 00:31:03,200
Speaker 1: heard on all this in the less seventy two hours.

528
00:31:03,680 --> 00:31:09,560
Speaker 1: Within the fairway captures the squishiness. It makes foolish the

529
00:31:09,760 --> 00:31:13,440
Speaker 1: certitude that we're hearing from both sides. Yeah, I think

530
00:31:13,480 --> 00:31:16,400
Speaker 1: the certitude from both sides is not correct. I think

531
00:31:16,440 --> 00:31:20,960
Speaker 1: that I I agreed with Comey's decision back in July

532
00:31:21,160 --> 00:31:24,480
Speaker 1: to explain why he wasn't prosecuting Mrs Clinton because it

533
00:31:24,600 --> 00:31:27,520
Speaker 1: was such a political situation. He then went and testified

534
00:31:27,520 --> 00:31:29,600
Speaker 1: in front of Congress and promised them that if anything

535
00:31:29,640 --> 00:31:32,600
Speaker 1: else came out, he would tell them. Then they learned

536
00:31:32,600 --> 00:31:35,640
Speaker 1: about this uh Anthony Weener laptop, and then he says

537
00:31:35,680 --> 00:31:37,920
Speaker 1: to himself, well do I tell people or do I wait?

538
00:31:38,120 --> 00:31:40,360
Speaker 1: If he waits, and after the election, it turns out

539
00:31:40,400 --> 00:31:43,800
Speaker 1: he knew eleven days before the election there were thousand

540
00:31:43,880 --> 00:31:48,760
Speaker 1: other emails. He will get crucified by the Republicans. He

541
00:31:48,840 --> 00:31:51,920
Speaker 1: brings it out. Now he's being crucified by the Democrats.

542
00:31:51,960 --> 00:31:53,440
Speaker 1: So it is kind of it is a kind of

543
00:31:53,520 --> 00:31:57,719
Speaker 1: equal opportunity, crucified crucifixion that's going on of him. And

544
00:31:57,760 --> 00:31:59,480
Speaker 1: I think he kind of did what he had to

545
00:31:59,520 --> 00:32:02,120
Speaker 1: do on of the circumstances he was faced with. Steve

546
00:32:02,160 --> 00:32:04,680
Speaker 1: I tried to do a balanced approach. I had comments

547
00:32:04,680 --> 00:32:09,040
Speaker 1: from Attorney General holder and from Attorney General Mcasey uh

548
00:32:09,080 --> 00:32:14,000
Speaker 1: this morning. Mr mckasey representing public Service with George bush

549
00:32:14,520 --> 00:32:20,880
Speaker 1: Um emphasize the need for grand juries. Does President Clinton

550
00:32:21,040 --> 00:32:26,200
Speaker 1: move beyond the grand jury if she is president? Let

551
00:32:26,200 --> 00:32:28,160
Speaker 1: me put it this way. I'm not I'm not an

552
00:32:28,160 --> 00:32:30,080
Speaker 1: expert on grand juries, but let me put it this way.

553
00:32:30,120 --> 00:32:31,960
Speaker 1: I think one thing that none of us should be

554
00:32:31,960 --> 00:32:35,200
Speaker 1: happy about, regardless of our politics, is that if she

555
00:32:35,320 --> 00:32:37,880
Speaker 1: is elected, and I think she still will be notwithstanding

556
00:32:38,160 --> 00:32:41,080
Speaker 1: recent events, she is going to be faced with a

557
00:32:41,120 --> 00:32:44,880
Speaker 1: continuing onslaught of investigation, some of them honorable in a

558
00:32:44,920 --> 00:32:47,440
Speaker 1: sense of being by the FBI or whatever, some of

559
00:32:47,440 --> 00:32:51,640
Speaker 1: them perhaps political from Republicans on Capitol Hill. And that

560
00:32:51,800 --> 00:32:54,280
Speaker 1: is a very depressing thing to me as an American,

561
00:32:54,320 --> 00:32:56,520
Speaker 1: that we're going to start a presidency with the president

562
00:32:56,600 --> 00:33:00,760
Speaker 1: under investigation. Depressing. How difficult to make it to govern?

563
00:33:00,840 --> 00:33:03,360
Speaker 1: There are many already so many hurdles to governing, and

564
00:33:03,360 --> 00:33:06,280
Speaker 1: Washington with the kind of divisions we've seen here being

565
00:33:06,360 --> 00:33:09,000
Speaker 1: under that suspicion investigation. Call it what you will, How

566
00:33:09,040 --> 00:33:11,200
Speaker 1: hard will it make it for a President Clinton should

567
00:33:11,200 --> 00:33:13,680
Speaker 1: she be elected to govern? It is one more? It

568
00:33:13,800 --> 00:33:16,960
Speaker 1: is one more log on the fire in difficultness of governing.

569
00:33:17,000 --> 00:33:19,880
Speaker 1: She's already going to be faced almost certainly with divided government.

570
00:33:20,240 --> 00:33:22,640
Speaker 1: She's going to be faced with being elected with not

571
00:33:22,440 --> 00:33:25,200
Speaker 1: the not a great approval rating from the country, and

572
00:33:25,200 --> 00:33:27,239
Speaker 1: then you add this on top of it and an

573
00:33:27,280 --> 00:33:31,440
Speaker 1: ongoing series of investigations, and as I said, as an American,

574
00:33:31,640 --> 00:33:33,960
Speaker 1: you should be depressed. I've got to ask you the

575
00:33:34,000 --> 00:33:36,520
Speaker 1: news question just to clearly or have you been asked

576
00:33:36,520 --> 00:33:40,440
Speaker 1: to provide public service to a Clinton administration? No, and

577
00:33:41,040 --> 00:33:44,560
Speaker 1: I wouldn't. I'm very happy managing all of Mayor Bloomberg's

578
00:33:44,560 --> 00:33:48,040
Speaker 1: philanthropic assets. But I don't think they've asked. I don't

579
00:33:48,040 --> 00:33:49,880
Speaker 1: think they've asked anybody at this point. Just trying to

580
00:33:49,880 --> 00:33:51,560
Speaker 1: get it out there can get it out, so you

581
00:33:51,600 --> 00:33:55,400
Speaker 1: can ask the question President vetted to be Secretary State.

582
00:33:55,520 --> 00:33:57,600
Speaker 1: Is he the energy to be a Secretary of State?

583
00:33:57,800 --> 00:33:59,480
Speaker 1: He would be a great secretary of State, but he

584
00:33:59,560 --> 00:34:01,400
Speaker 1: said that he won't take the job. So I think

585
00:34:01,440 --> 00:34:04,240
Speaker 1: that's now off the tip. That's where your name came up. Yes, exactly,

586
00:34:05,280 --> 00:34:08,319
Speaker 1: are just like two pieces in a pod from our experience.

587
00:34:08,400 --> 00:34:11,000
Speaker 1: Thank you so much. Willing advisers with perspective and we're

588
00:34:11,040 --> 00:34:14,240
Speaker 1: trying for us, We're killing ourselves trying to be balanced. Honest,

589
00:34:14,400 --> 00:34:17,680
Speaker 1: what an uproar this weekend? I shout out again, Chuck Todd.

590
00:34:18,080 --> 00:34:21,680
Speaker 1: I'm Bloomberg Radio Sunday afternoons with his wonderful Meet the

591
00:34:21,680 --> 00:34:25,319
Speaker 1: Press David Gura, Meet the Press. Killed it yesterday at

592
00:34:25,320 --> 00:34:29,640
Speaker 1: the opening yesterday, going back the secretary kissing your announcing

593
00:34:29,719 --> 00:34:33,200
Speaker 1: the war was over forty two hours or whatever before

594
00:34:33,239 --> 00:34:35,440
Speaker 1: the election, chucked out to Stephen, you want to come

595
00:34:35,440 --> 00:34:39,120
Speaker 1: in and then and then the other example of George

596
00:34:39,120 --> 00:34:40,879
Speaker 1: Bush and the d and the du I coming out

597
00:34:40,920 --> 00:34:43,360
Speaker 1: four or five days before the election in two thousands

598
00:34:43,400 --> 00:34:45,440
Speaker 1: and so we have been here before, and we will

599
00:34:45,480 --> 00:34:47,319
Speaker 1: get through it. And well, I don't know, we got

600
00:34:47,320 --> 00:34:50,040
Speaker 1: eight more chase to go. Who knows what could happen

601
00:34:50,360 --> 00:35:05,040
Speaker 1: in eight days. Steve Redner, thank you so much. This

602
00:35:05,120 --> 00:35:08,640
Speaker 1: is Bloomberg Surveillance on Bloomberg Radio. David Gurray here with

603
00:35:08,840 --> 00:35:13,680
Speaker 1: Tom Keane on Halloween. Excuse me, I'm so rattled, like

604
00:35:13,800 --> 00:35:17,120
Speaker 1: I forgot to hit the red button. The advance of J. K.

605
00:35:17,400 --> 00:35:20,960
Speaker 1: Rowling was two thousand, five hundred pounds. I've got a

606
00:35:21,000 --> 00:35:24,640
Speaker 1: working statistic of a Harry Potter thing of fifteen billion

607
00:35:24,680 --> 00:35:28,279
Speaker 1: dollars is what it's worth. I just want you to

608
00:35:28,320 --> 00:35:31,480
Speaker 1: know that for Halloween the Keen household spend about thirteen

609
00:35:31,480 --> 00:35:36,120
Speaker 1: point three billion of the fifteen billion. Like, I don't

610
00:35:36,160 --> 00:35:38,719
Speaker 1: get it. I mean, I I gotta get smarter on

611
00:35:38,840 --> 00:35:43,839
Speaker 1: Harry Potter. It's completely overtaken. You've got your neo Fisherian

612
00:35:44,640 --> 00:35:47,560
Speaker 1: devil faced masks. I am. I'm going as Irving Fisher

613
00:35:47,600 --> 00:35:50,000
Speaker 1: and then on the backside and going as vice Chairman Fisher.

614
00:35:50,320 --> 00:35:54,480
Speaker 1: It was a special custom, you know, like especially late

615
00:35:54,520 --> 00:35:59,200
Speaker 1: tex late text thing. We a what are you doing? Well?

616
00:35:59,560 --> 00:36:01,240
Speaker 1: So my daughter is going to go as a peacock.

617
00:36:01,360 --> 00:36:04,040
Speaker 1: She's she's got enough that she's you know, there's no

618
00:36:04,040 --> 00:36:07,120
Speaker 1: no Harry Potter yet on the language. But yeah, we'll

619
00:36:07,120 --> 00:36:09,439
Speaker 1: be running around park Slope. But that the mayor, the

620
00:36:09,440 --> 00:36:11,759
Speaker 1: current mayor of the city, a park Slope resident at

621
00:36:11,800 --> 00:36:14,480
Speaker 1: least part time. He often leads the parade that we'll

622
00:36:14,520 --> 00:36:17,480
Speaker 1: have down seventh, So keep an out. Doug Cass is

623
00:36:17,520 --> 00:36:21,080
Speaker 1: going as earning Banks. Yeah, with Sea Breeze partners. Doug,

624
00:36:21,120 --> 00:36:23,400
Speaker 1: I mean a little bit on baseball here. This is fun,

625
00:36:23,480 --> 00:36:25,359
Speaker 1: isn't it. Well, we while we wait for that. I've

626
00:36:25,360 --> 00:36:26,799
Speaker 1: got an email here from Doug. I opened it up.

627
00:36:26,840 --> 00:36:29,200
Speaker 1: Here has an image attached as Doug wearing a Cubs

628
00:36:29,239 --> 00:36:36,200
Speaker 1: baseball hat. Optimism continues here. Unshine fresh air, things behind us,

629
00:36:36,440 --> 00:36:39,520
Speaker 1: Let's play too. I mean, what give us your takeaway

630
00:36:39,520 --> 00:36:42,839
Speaker 1: of the excitement at Wrigley Field? I mean Bill Bill

631
00:36:43,120 --> 00:36:48,200
Speaker 1: Bill uh uh Murray almost I love. I loved his

632
00:36:48,239 --> 00:36:52,960
Speaker 1: rendition to pick me out to the ball games. One

633
00:36:52,960 --> 00:36:56,200
Speaker 1: of my closest friends, George Siegel, is in Chicago and

634
00:36:56,880 --> 00:36:59,840
Speaker 1: he went to the game. I almost went to Chicago

635
00:37:00,080 --> 00:37:03,760
Speaker 1: yesterday and I was going to go to Sluggers. But

636
00:37:03,760 --> 00:37:06,160
Speaker 1: but do you know how much the coverage charges? Yeah,

637
00:37:06,160 --> 00:37:11,439
Speaker 1: I'm afraid to ask. Yeah, just to get that, don't

638
00:37:11,600 --> 00:37:15,920
Speaker 1: Sluggers is is outside of Wrigley Field. It's a local bar.

639
00:37:16,000 --> 00:37:18,799
Speaker 1: It's a well known hamburg a joint. You know that

640
00:37:18,800 --> 00:37:21,399
Speaker 1: you're gonna at the dinner for fifteen dollars at Yeah.

641
00:37:21,520 --> 00:37:25,880
Speaker 1: Doug explained to our global audience how Wrigley Field in

642
00:37:25,920 --> 00:37:30,560
Speaker 1: the Chicago Cub's experience is different from Fenway Park, is

643
00:37:30,600 --> 00:37:35,680
Speaker 1: different from Dallas. Cowboy football is different from Manchester United. Oh,

644
00:37:35,719 --> 00:37:38,880
Speaker 1: it's so, it's so His historic with the ivy with

645
00:37:39,080 --> 00:37:43,560
Speaker 1: the vines growing on the outfield. UM. I know every

646
00:37:43,560 --> 00:37:48,560
Speaker 1: time I've gone to Wrigley Field. UM uh the uh

647
00:37:48,800 --> 00:37:52,000
Speaker 1: of course I'll never by the way, just to digressive

648
00:37:52,000 --> 00:37:55,960
Speaker 1: a second, I'll never forget. The best uh pitching duel

649
00:37:56,200 --> 00:37:59,359
Speaker 1: in the history of baseballs, as you remember, was with

650
00:37:59,400 --> 00:38:03,800
Speaker 1: my mys in Sandy and the Chicago Cubs when Sandy

651
00:38:03,840 --> 00:38:07,239
Speaker 1: threw a pitch hitter a perfect game. Excuse me in

652
00:38:07,320 --> 00:38:12,200
Speaker 1: September ninth. I think it was against Bob Henley, who

653
00:38:12,239 --> 00:38:15,600
Speaker 1: was a journeyman. Um picture for the Cubs, who just

654
00:38:15,640 --> 00:38:18,400
Speaker 1: came out of the minor leagues. But it's so beautiful.

655
00:38:18,440 --> 00:38:21,240
Speaker 1: And every time I've gone to Wrigley Field, they played

656
00:38:21,239 --> 00:38:23,480
Speaker 1: take me out to the ballgame before the first inning,

657
00:38:23,719 --> 00:38:25,800
Speaker 1: and they have a parent with a child play catch

658
00:38:25,840 --> 00:38:27,759
Speaker 1: and said to field, I mean, what is better than that?

659
00:38:28,120 --> 00:38:33,440
Speaker 1: Doug Cass, you have written often about peak sports viewership

660
00:38:33,560 --> 00:38:36,120
Speaker 1: and media companies. We have not yet had your comments

661
00:38:36,160 --> 00:38:39,160
Speaker 1: on telephone in time Warner. I love what you say

662
00:38:39,239 --> 00:38:42,719
Speaker 1: about everybody trying to copy the giant. Chris Berman over

663
00:38:42,719 --> 00:38:46,640
Speaker 1: at ESPN or arguably helped invent the modern enthusiasm. Why

664
00:38:46,680 --> 00:38:48,960
Speaker 1: are we at peak sports viewership? Yeah, I thought. I

665
00:38:48,960 --> 00:38:51,120
Speaker 1: thought for some time. I've been writing on the on

666
00:38:51,160 --> 00:38:54,800
Speaker 1: the Street dot com since June of two thousands fifteen,

667
00:38:54,840 --> 00:38:57,800
Speaker 1: and one of my largest short positions, which is a

668
00:38:57,880 --> 00:39:01,160
Speaker 1: secular short investment position, has been Disney. It's done well.

669
00:39:01,200 --> 00:39:05,160
Speaker 1: It's gone from hundred and sixteen to about ninety four. UM.

670
00:39:05,200 --> 00:39:07,080
Speaker 1: You know, if we go back to two thousand five,

671
00:39:07,120 --> 00:39:12,960
Speaker 1: when I established this peak sports viewership thesis, the n

672
00:39:13,000 --> 00:39:16,759
Speaker 1: c Double A semi final College Bowls series showed a

673
00:39:16,880 --> 00:39:20,799
Speaker 1: thirty three percent decline in ratings. Viewership at the UH,

674
00:39:21,280 --> 00:39:24,280
Speaker 1: I know you enjoyed. Hockey at the NHL's Winter Classic

675
00:39:24,360 --> 00:39:28,920
Speaker 1: dropped by twenty in two thousand fifteen versus two thousand fourteen.

676
00:39:29,000 --> 00:39:33,759
Speaker 1: Ratings for the college Football's National Championships subsequently declined by

677
00:39:33,920 --> 00:39:37,520
Speaker 1: almost We have a number of factors, I think in

678
00:39:37,640 --> 00:39:41,840
Speaker 1: terms of explaining this. Firstly, we have oversaturation of products. Secondly,

679
00:39:41,880 --> 00:39:45,920
Speaker 1: we have what you just described as these sinine commentators

680
00:39:46,000 --> 00:39:50,040
Speaker 1: who all want to be UM and mimic ESPNS. Chris

681
00:39:50,040 --> 00:39:53,600
Speaker 1: Berman's only one, Chris Berman. Uh, it's gotten annoying. Thirdly,

682
00:39:53,680 --> 00:39:59,520
Speaker 1: the quality of play UM has arguably eroded with parody UM. Fourthly,

683
00:39:59,680 --> 00:40:03,080
Speaker 1: there's or refereeing and a lack of league discipline. You

684
00:40:03,120 --> 00:40:06,640
Speaker 1: know a lot of especially in the NFL, where a

685
00:40:06,719 --> 00:40:10,960
Speaker 1: number of players are socially off the off the reservation. UM,

686
00:40:10,960 --> 00:40:14,160
Speaker 1: we have unsavory player behavior on and off the field

687
00:40:14,239 --> 00:40:17,520
Speaker 1: in other words, UM. And there are numerous viewing alternatives,

688
00:40:17,560 --> 00:40:20,920
Speaker 1: and at this market segmentation, we're in a social media

689
00:40:21,000 --> 00:40:24,560
Speaker 1: driven world. There's so much time each day for sports TV.

690
00:40:24,719 --> 00:40:27,640
Speaker 1: And I just noticed that Nielsen came out on Friday

691
00:40:27,800 --> 00:40:32,040
Speaker 1: that ESPN lost six five thousand subscribers in the month

692
00:40:32,080 --> 00:40:35,200
Speaker 1: of October, which is astonishing. David. I would suggest also

693
00:40:35,360 --> 00:40:38,080
Speaker 1: that Doug doesn't mention as people are exhausted by ads.

694
00:40:38,239 --> 00:40:41,560
Speaker 1: It's just there's a generational ship David jumping Yeah. PC here.

695
00:40:41,600 --> 00:40:43,600
Speaker 1: I noticed in Business Week a few weeks back, looking

696
00:40:43,640 --> 00:40:47,440
Speaker 1: at viewership of NFL primetime games dropping fourteen percent from

697
00:40:47,440 --> 00:40:50,040
Speaker 1: a year earlier. You say it's a secular trend here,

698
00:40:50,080 --> 00:40:51,719
Speaker 1: I know a lot of people have attributed just to

699
00:40:51,760 --> 00:40:54,279
Speaker 1: the to the news cycle and to the election. You

700
00:40:54,520 --> 00:40:57,280
Speaker 1: do think it's greater than that. It's much greater because

701
00:40:57,280 --> 00:41:01,279
Speaker 1: it began in early well actually late thousand fourteen, and

702
00:41:01,440 --> 00:41:06,080
Speaker 1: coincident with cord cutting among cable TV customers. UM. Yeah,

703
00:41:06,120 --> 00:41:08,359
Speaker 1: I think this is this is um David. This has

704
00:41:08,400 --> 00:41:10,600
Speaker 1: been in place for nearly two years now, you know.

705
00:41:10,880 --> 00:41:13,080
Speaker 1: I think it's it's a trend. You mentioned Disney, and

706
00:41:13,160 --> 00:41:15,520
Speaker 1: I got to ask you about the complimentarity there with

707
00:41:15,520 --> 00:41:17,760
Speaker 1: with Twitter. Is is Twitter something that you think Disney

708
00:41:17,800 --> 00:41:21,759
Speaker 1: should be taking a look at. It's I don't think

709
00:41:21,760 --> 00:41:26,839
Speaker 1: it's higher's um nature to buy buy a company like that,

710
00:41:27,480 --> 00:41:31,880
Speaker 1: terribly diluted. Disney has its own problems right now, David. Um,

711
00:41:31,920 --> 00:41:34,640
Speaker 1: It's earnings estimates are falling like a rock, and I

712
00:41:34,680 --> 00:41:40,319
Speaker 1: don't think they'll even meet the downgraded expectations I noted

713
00:41:40,360 --> 00:41:42,239
Speaker 1: here In your most recently you've talked about history and

714
00:41:42,239 --> 00:41:45,680
Speaker 1: talked about the difficulties of looking back. Given the environment

715
00:41:45,680 --> 00:41:48,319
Speaker 1: we're in right now with central banks and and and

716
00:41:48,400 --> 00:41:52,479
Speaker 1: quant strategies and whatnot. That'll continue, that will persist. Yeah.

717
00:41:52,520 --> 00:41:56,200
Speaker 1: I was talking this morning, UM on my blog about

718
00:41:56,960 --> 00:42:02,040
Speaker 1: the unusual investing backdrop and that we have these these

719
00:42:02,120 --> 00:42:06,359
Speaker 1: basically three influences, David. We have this this dirty water

720
00:42:06,640 --> 00:42:10,640
Speaker 1: central banking liquidity and zero or negative interest rates. We

721
00:42:10,719 --> 00:42:15,760
Speaker 1: have the dominance of quantz strategies like UM risk parity,

722
00:42:16,040 --> 00:42:20,920
Speaker 1: and vola tending volatility trending strategies who are agnostic to

723
00:42:21,080 --> 00:42:24,960
Speaker 1: private market value, income statements and balance sheets. And then

724
00:42:25,000 --> 00:42:29,600
Speaker 1: we have this proliferation of passive investing through exchange trade

725
00:42:29,640 --> 00:42:33,480
Speaker 1: of funds, and they've all up ended the benefits of

726
00:42:33,520 --> 00:42:36,440
Speaker 1: those like myself and I think Tom who are inclined

727
00:42:36,480 --> 00:42:39,080
Speaker 1: to look to the past for a picture of the future.

728
00:42:39,520 --> 00:42:41,640
Speaker 1: Douglas cast with the sea breezes. Doug, you put out

729
00:42:41,640 --> 00:42:43,919
Speaker 1: a note the other day which had in a lot

730
00:42:43,960 --> 00:42:48,520
Speaker 1: of different companies, I think the great mysteries Amazon with

731
00:42:48,520 --> 00:42:51,840
Speaker 1: with the effort in cloud. They've been on a trajectory.

732
00:42:51,960 --> 00:42:55,360
Speaker 1: Then they get hit a little bit. Whether Douglas casts

733
00:42:55,560 --> 00:43:00,279
Speaker 1: on Mr Bezos and Amazon. I took a basic what

734
00:43:00,360 --> 00:43:03,280
Speaker 1: I described as a trading short rental in the stock

735
00:43:03,480 --> 00:43:07,239
Speaker 1: the day before earnings were released, and I did so

736
00:43:08,280 --> 00:43:11,399
Speaker 1: for two basic reasons. Number one, it appeared that just

737
00:43:11,480 --> 00:43:15,520
Speaker 1: technically the stock was making a double top at eight fifty.

738
00:43:15,840 --> 00:43:19,520
Speaker 1: So had I had a tight stop in my short

739
00:43:19,560 --> 00:43:22,279
Speaker 1: position was meant to be a trade, not not the

740
00:43:22,360 --> 00:43:25,520
Speaker 1: investment short the way Disney is. The second more important

741
00:43:25,520 --> 00:43:28,879
Speaker 1: factor from a fundamental standpoint, Retail isn't disarray. I mean

742
00:43:28,880 --> 00:43:31,959
Speaker 1: the retail stock index just makes new lows day after

743
00:43:32,040 --> 00:43:35,040
Speaker 1: day after day, and I didn't believe that Amazon would

744
00:43:35,040 --> 00:43:38,279
Speaker 1: be immune to the retail carnage. As we moved into

745
00:43:38,320 --> 00:43:41,240
Speaker 1: the holiday season and improved that well, and the stock

746
00:43:41,320 --> 00:43:45,080
Speaker 1: went down um from the top by seven or five points,

747
00:43:45,080 --> 00:43:46,880
Speaker 1: at which time I covered the short and it was

748
00:43:46,920 --> 00:43:49,480
Speaker 1: one of my better shorts of the year. What is

749
00:43:49,560 --> 00:43:53,120
Speaker 1: your tone three or five years out? Is it like

750
00:43:53,239 --> 00:43:55,759
Speaker 1: Dartman where that we're going from the lower left of

751
00:43:55,800 --> 00:43:58,840
Speaker 1: the upper right, or could you be more nuance and

752
00:43:58,920 --> 00:44:04,000
Speaker 1: the gentleman? You know? Um? Back in I'm a bit

753
00:44:04,040 --> 00:44:06,319
Speaker 1: of a student of Warren Buffett, as you know. And

754
00:44:06,400 --> 00:44:12,360
Speaker 1: back in his Chairman's letter to Berkshire shareholders, he was

755
00:44:12,440 --> 00:44:16,040
Speaker 1: quoted as saying, to the extent, Charlie and I have

756
00:44:16,160 --> 00:44:21,280
Speaker 1: been successful. It's because we concentrated on identifying one ft

757
00:44:21,320 --> 00:44:24,520
Speaker 1: hurdles that we could step over, rather than because we

758
00:44:24,640 --> 00:44:29,239
Speaker 1: acquired any ability to clear seven foot hurdles. And I

759
00:44:29,280 --> 00:44:32,680
Speaker 1: think the market is now a seven ft hurdle. Um.

760
00:44:32,719 --> 00:44:38,280
Speaker 1: The SMP five index is expensive. Are nearly all valuation metrics.

761
00:44:38,320 --> 00:44:41,440
Speaker 1: I look at eight of them, Enterprise value to sales,

762
00:44:41,719 --> 00:44:45,719
Speaker 1: enterprise value to IBADA, PD growth, which is the rate

763
00:44:46,480 --> 00:44:50,840
Speaker 1: forward PE cash flow yields, cyclically adjusted PE price to

764
00:44:50,880 --> 00:44:54,520
Speaker 1: book and free cash flow yields, and the aggregate index

765
00:44:54,800 --> 00:44:58,279
Speaker 1: is at the eighty third percentile. However, Tom, if you

766
00:44:58,320 --> 00:45:01,920
Speaker 1: look at the median stock it's at nine percentile. This

767
00:45:02,080 --> 00:45:05,080
Speaker 1: to me is a seven ft hurdle and so I

768
00:45:05,080 --> 00:45:09,640
Speaker 1: want to be risk averse in a period of gross uncertainty.

769
00:45:09,840 --> 00:45:12,520
Speaker 1: You mentioned that uncertainty looking ahead here to the election

770
00:45:12,960 --> 00:45:15,720
Speaker 1: just a week away. What do you think, what effect

771
00:45:15,800 --> 00:45:17,200
Speaker 1: is that going to have in volatility to think and

772
00:45:17,239 --> 00:45:21,719
Speaker 1: how are you covering yourself there? Well, my baseline expectation, Dave,

773
00:45:22,719 --> 00:45:25,719
Speaker 1: is in looking at predict Wise and election odds dot

774
00:45:25,760 --> 00:45:30,319
Speaker 1: com and the Lunding betting parlors um. My baseline expectation

775
00:45:30,480 --> 00:45:33,920
Speaker 1: is that Clinton will win the White House, that the

776
00:45:33,960 --> 00:45:40,040
Speaker 1: Democrats will regain the Senate, and the House will be

777
00:45:40,320 --> 00:45:44,440
Speaker 1: maintained by the Republican Party. And my concern is that

778
00:45:45,440 --> 00:45:48,600
Speaker 1: my concern actually is either a Trump or a Clinton

779
00:45:48,680 --> 00:45:51,879
Speaker 1: victory will be market unfriendly. And the reason I say

780
00:45:51,920 --> 00:45:54,840
Speaker 1: that is because it's very important that we have a

781
00:45:55,000 --> 00:46:02,240
Speaker 1: successful policy. Baton pass from monetary policy which has introduced

782
00:46:02,320 --> 00:46:05,319
Speaker 1: massive amount of liquidity and zero interest rates in this

783
00:46:05,400 --> 00:46:13,000
Speaker 1: country to a thoughtful economically growth catalyzing physical policy. And

784
00:46:13,080 --> 00:46:17,239
Speaker 1: I'm afraid that not only are the parties fractured between themselves,

785
00:46:17,280 --> 00:46:20,920
Speaker 1: but within the parties they're fractured. What were the honest

786
00:46:20,960 --> 00:46:23,080
Speaker 1: that you're playing here on on a big fiscal package,

787
00:46:23,120 --> 00:46:25,520
Speaker 1: on on that fiscal policy that that you mentioned, And

788
00:46:25,520 --> 00:46:32,960
Speaker 1: I wonder what the implications of visa the senses um

789
00:46:32,960 --> 00:46:36,319
Speaker 1: you know, my basic expectation I look at my bad

790
00:46:36,360 --> 00:46:39,760
Speaker 1: case on the market, is I see UH Treasury yield

791
00:46:39,840 --> 00:46:41,880
Speaker 1: rise and the tenure rising to around two and a

792
00:46:41,920 --> 00:46:45,440
Speaker 1: half percent next year, and that the yield gap narrows

793
00:46:45,480 --> 00:46:49,080
Speaker 1: slightly to about four hundred basis points. That produces an

794
00:46:49,080 --> 00:46:52,560
Speaker 1: earnings yield of six point five or a PE of

795
00:46:52,640 --> 00:46:56,200
Speaker 1: about fifteen point five times. And you apply that pe

796
00:46:56,280 --> 00:46:58,879
Speaker 1: multiple to my estimate of around a hundred twenty three

797
00:46:58,880 --> 00:47:00,920
Speaker 1: dollars of S and P or and and I come

798
00:47:00,920 --> 00:47:03,840
Speaker 1: out with an SMP at nine, which is in a

799
00:47:03,920 --> 00:47:06,520
Speaker 1: roughly twelve percent below where it is today. A few

800
00:47:06,520 --> 00:47:08,160
Speaker 1: minutes ago, I asked Steve Whiting the degree to which

801
00:47:08,160 --> 00:47:10,960
Speaker 1: there's there's uncertainty surrounding what central banks are doing right now?

802
00:47:11,000 --> 00:47:13,439
Speaker 1: For you for somebody who who looks at technicals, looks

803
00:47:13,480 --> 00:47:16,400
Speaker 1: at history. When you look at at what the central

804
00:47:16,400 --> 00:47:18,160
Speaker 1: banks are doing, how sure are you of of the

805
00:47:18,200 --> 00:47:22,680
Speaker 1: path there on right now? Well, I think they're they're

806
00:47:22,680 --> 00:47:28,040
Speaker 1: they're trapped. They're trapped um in in what is appearing

807
00:47:28,080 --> 00:47:33,320
Speaker 1: to be a Larry Summers um secular stagnation scenario. And

808
00:47:33,680 --> 00:47:37,080
Speaker 1: the problem I have is that the effectiveness David of

809
00:47:37,160 --> 00:47:41,320
Speaker 1: monetary policy, both domestically and around the world, is losing

810
00:47:41,360 --> 00:47:46,120
Speaker 1: its effectiveness. So we're we are really super reliant on

811
00:47:46,560 --> 00:47:49,800
Speaker 1: on an effective um as I said, baton path to

812
00:47:49,880 --> 00:47:54,440
Speaker 1: physical policy, and I don't see it happening in this country. Yes,

813
00:47:54,560 --> 00:47:58,239
Speaker 1: listen one minute. How do we speed up baseball? I mean,

814
00:47:58,280 --> 00:48:01,080
Speaker 1: you know, it's an important issue. How do we speak

815
00:48:01,120 --> 00:48:04,000
Speaker 1: up the game of baseball? Are we nuts? Well, it's

816
00:48:04,040 --> 00:48:06,840
Speaker 1: the question being asked in a number of sports. You know,

817
00:48:06,920 --> 00:48:08,719
Speaker 1: I played two rounds of golf this weekend. It's the

818
00:48:08,760 --> 00:48:13,800
Speaker 1: same problem with golf. Um Uh, it's a real problem.

819
00:48:13,800 --> 00:48:16,040
Speaker 1: As I said in my in our discussion of sports

820
00:48:16,120 --> 00:48:20,160
Speaker 1: viewers peaking sports viewership, people have just so much time

821
00:48:20,160 --> 00:48:22,400
Speaker 1: in the day, and social media is taking a larger

822
00:48:22,719 --> 00:48:26,560
Speaker 1: proportion of our time. And I don't think. I don't

823
00:48:26,560 --> 00:48:28,520
Speaker 1: think the grand old game is going to be changed

824
00:48:28,840 --> 00:48:31,640
Speaker 1: in our lifetime. Tom Okay, Doug Cast, thanks so much,

825
00:48:31,840 --> 00:48:35,600
Speaker 1: brilliant inspired Doug that you're going as Dennis Gartman for Halloween.

826
00:48:35,640 --> 00:48:42,600
Speaker 1: I think that's just absolutely well. We all wish he's

827
00:48:42,640 --> 00:48:45,080
Speaker 1: on the course, like eighty hours a week here whatever

828
00:48:47,440 --> 00:48:50,360
Speaker 1: and in the county around it. Doug Cast, thank you

829
00:48:50,440 --> 00:48:59,120
Speaker 1: so much. With Cebris Partners. Thanks for listening to the

830
00:48:59,120 --> 00:49:05,080
Speaker 1: Bloomberg Surveying podcast. Subscribe and listen to interviews on iTunes, SoundCloud,

831
00:49:05,560 --> 00:49:09,800
Speaker 1: or whichever podcast platform you prefer. I'm out on Twitter

832
00:49:09,880 --> 00:49:13,680
Speaker 1: at Tom Keene. David Gura is at David Gura. Before

833
00:49:13,719 --> 00:49:18,080
Speaker 1: the podcast, you can always catch us worldwide. I'm Bloomberg Radio.

834
00:49:30,520 --> 00:49:33,160
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835
00:49:33,200 --> 00:49:37,600
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836
00:49:37,760 --> 00:49:41,840
Speaker 1: four trillion dollars. Why Learn more at find your Independent

837
00:49:41,920 --> 00:49:44,320
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