WEBVTT - The Election's Final Stretch and Earnings Season Underway 0:00:02.440 --> 0:00:06.800 Bloomberg Audio Studios, podcasts, radio news. 0:00:11.960 --> 0:00:16.360 This is the Bloomberg Surveillance Podcast. Catch us live weekdays 0:00:16.360 --> 0:00:19.880 at seven am Eastern on applecar Player, Android Auto with 0:00:19.880 --> 0:00:23.360 the Bloomberg Business App. Listen on demand wherever you get 0:00:23.360 --> 0:00:26.239 your podcasts, or watch us live on YouTube. 0:00:26.520 --> 0:00:29.120 Henrietta trez joins us. She's a managing partner, Vida partner. 0:00:29.200 --> 0:00:31.440 She's the one that really gives us a sense of 0:00:31.480 --> 0:00:33.520 kind of what's happening on this election and on the 0:00:33.560 --> 0:00:36.599 political side, how it might affect markets here, Henriette, As 0:00:36.680 --> 0:00:38.720 David was just mentioning, he's gonna be out there in 0:00:38.760 --> 0:00:40.519 the field trying to get a sense of how this 0:00:40.600 --> 0:00:42.800 is going to play out over the next week or so. 0:00:43.080 --> 0:00:45.479 What is your sense between now and election day, Henriette, 0:00:45.520 --> 0:00:48.080 Is there anything that might move the needle. 0:00:47.840 --> 0:00:49.840 One way or the other? Or are we pretty much 0:00:50.240 --> 0:00:50.840 where we are? 0:00:52.159 --> 0:00:54.720 You know, we're seeing a lot of really robust turnout 0:00:54.800 --> 0:00:58.400 from Republicans in rural areas right now. That's the main 0:00:58.440 --> 0:01:01.360 theme of the last week of early voting. So in 0:01:01.400 --> 0:01:04.480 states like Nevada, I'm confident saying, you know, this is 0:01:04.520 --> 0:01:07.120 a very bad position for Democrats to be in the 0:01:07.160 --> 0:01:09.560 state of Nevada, which is a critical swing state, but 0:01:09.600 --> 0:01:13.920 it's not necessarily translating elsewhere yet. That's because different states 0:01:13.959 --> 0:01:17.760 have different voting patterns and in person early regulations, like 0:01:17.800 --> 0:01:21.240 the state of Pennsylvania for example. So there's a lot 0:01:21.280 --> 0:01:24.440 of shift. But this week is really an integral one 0:01:24.480 --> 0:01:27.319 to watch. You want to watch the suburban vote and 0:01:27.400 --> 0:01:32.520 the youth vote. Those demographics disproportionately start voting this week before, 0:01:32.600 --> 0:01:35.759 and it had been principally an older, white, rural voter, 0:01:35.880 --> 0:01:39.120 and a lot of that is Republicans cannibalizing their election 0:01:39.360 --> 0:01:42.200 day vote from twenty twenty. So this week should give 0:01:42.280 --> 0:01:44.920 us some new information to see whether it's going to 0:01:44.920 --> 0:01:47.920 be a scenario where Democrats continue to stay home as 0:01:48.000 --> 0:01:50.120 they did during the first week of early voting, or 0:01:50.120 --> 0:01:52.320 if they're going to start coming out, which would be 0:01:52.400 --> 0:01:56.600 disproportionately again your urban, suburban and younger voters, which is 0:01:56.600 --> 0:02:00.440 a demographic that this cycle is skewing Democratic, particularly on 0:02:00.440 --> 0:02:02.360 the suburban side, which I think is where we should 0:02:02.400 --> 0:02:03.120 really be focused. 0:02:03.440 --> 0:02:06.000 Henry and I helped me understand the metamorphosis of the 0:02:06.040 --> 0:02:08.600 Republicans as it comes to the early vote, because it 0:02:08.639 --> 0:02:10.800 was something that during the last presidential election. The one 0:02:10.840 --> 0:02:13.120 before that, Donald Trump was not an enthusiast for he 0:02:13.200 --> 0:02:16.600 was not encouraging his supporters to vote early. What has 0:02:16.720 --> 0:02:18.880 changed and sort of how does it or how could 0:02:18.919 --> 0:02:21.800 it affect what we see after election day in terms 0:02:21.800 --> 0:02:24.680 of the way in which Republicans in particular look at 0:02:24.680 --> 0:02:25.640 these votes as they're talent. 0:02:26.840 --> 0:02:29.440 Yeah, and it really does need to change, otherwise Democrats 0:02:29.440 --> 0:02:32.080 are going to get wiped out across the swing states. 0:02:32.120 --> 0:02:34.480 So right now what we're seeing is a material shift 0:02:34.800 --> 0:02:36.720 from twenty twenty in terms of early voting. 0:02:36.760 --> 0:02:38.800 And this is a result. The metamorphosis comes. 0:02:38.600 --> 0:02:44.760 From millions of dollars in Republican Party operation explanations or 0:02:44.840 --> 0:02:48.239 sort of explainers to voters that you should vote early 0:02:48.320 --> 0:02:52.760 in person. So Republicans are disproportionately voting early in person, 0:02:53.040 --> 0:02:55.720 whereas Democrats have an advantage in the mail in ballot. 0:02:55.800 --> 0:02:59.000 So to get really granular for you, the voters out 0:02:59.000 --> 0:03:01.400 in Nevada who are able to vote early in person 0:03:01.480 --> 0:03:02.880 are doing so in rural areas. 0:03:02.880 --> 0:03:04.440 But then you have Clark County. 0:03:04.560 --> 0:03:07.880 Where there's the disproportionate share of Democrats and ninety percent 0:03:07.880 --> 0:03:10.480 of the electorate, and they mostly vote via mail in 0:03:10.560 --> 0:03:12.519 ballot that now all in the Vatans get So there's 0:03:12.560 --> 0:03:15.280 a lot of granular changes that have happened since twenty twenty. 0:03:15.520 --> 0:03:18.440 But the rule of thumb is that Republicans now are 0:03:18.480 --> 0:03:21.880 voting in person early, where Democrats are favoring mail in 0:03:21.960 --> 0:03:24.560 balloting early, and as I mentioned this week, is when 0:03:24.600 --> 0:03:26.920 a lot of the youth vote will go and vote 0:03:26.960 --> 0:03:30.480 in person early. But there is an indication that will 0:03:30.520 --> 0:03:33.440 have less of a blue wall going into election day, 0:03:33.760 --> 0:03:36.640 but also less of a red wave on election day 0:03:36.640 --> 0:03:39.720 again because they're voting early at about double the rate 0:03:40.040 --> 0:03:42.760 Democrats are. So it is going through quite a bit 0:03:42.800 --> 0:03:45.480 of a shift and creating a lot of problems for 0:03:45.520 --> 0:03:47.560 people like me who are obviously trying to track against 0:03:47.600 --> 0:03:50.200 a very difficult copier in twenty twenty, which was a pandemic. 0:03:50.240 --> 0:03:55.000 Anyway, is any party any particular more advantage or less 0:03:55.000 --> 0:03:58.440 advantage in getting out the vote. 0:03:57.960 --> 0:04:00.440 When it comes to ground game, I think it's clear 0:04:00.480 --> 0:04:03.240 that the Democrats have a better ground game. Something like 0:04:03.320 --> 0:04:06.160 three hundred and twenty six field offices nationwide where the 0:04:06.200 --> 0:04:09.280 Trump campaign famously does not disclose its numbers. I think 0:04:09.280 --> 0:04:11.280 the Trump camp has farmed out a lot of it's 0:04:11.360 --> 0:04:15.080 get out the vote to third party campaigns. The penultimate 0:04:15.080 --> 0:04:17.279 example would be Elon Musk, you know, auctioning off a 0:04:17.279 --> 0:04:18.279 million dollars. 0:04:18.000 --> 0:04:19.040 To voters who register. 0:04:19.880 --> 0:04:23.159 That's an example of a third party campaign sort of 0:04:23.200 --> 0:04:27.359 in kind donation, whereas Democrats are doing that within the 0:04:27.400 --> 0:04:30.600 campaign structure. So in terms of field offices, I want 0:04:30.640 --> 0:04:32.279 to say they have like twelve just in the state 0:04:32.279 --> 0:04:35.720 of Florida, for example, and then tens of thousands of 0:04:35.800 --> 0:04:39.320 volunteers that have signed on since Kamala Harris joined the race. 0:04:39.400 --> 0:04:41.280 So that's the difference in the field operation. 0:04:41.360 --> 0:04:44.680 But the Democrats' job is harder now because more Republicans 0:04:44.720 --> 0:04:47.080 have voted early and you want to bank those votes, 0:04:47.120 --> 0:04:49.680 not because they're any more or less important, but you 0:04:49.720 --> 0:04:52.000 don't want to have to worry about more people on 0:04:52.080 --> 0:04:54.560 election day in terms of getting people out to vote. 0:04:54.880 --> 0:04:56.640 You bring up Elon Musk. He was in New York 0:04:56.640 --> 0:05:00.360 City yesterday for this six hour long rally Thatald Trump 0:05:00.360 --> 0:05:02.920 put on at Madison Square Garden, and he talked about 0:05:03.440 --> 0:05:05.200 what he might be able to cut if Donald Trump 0:05:05.200 --> 0:05:07.000 were to win. He were named to this new position, 0:05:07.040 --> 0:05:09.840 which I checked the name of here. This is the 0:05:09.880 --> 0:05:14.279 department of government efficiency or doge another crypto illusion there 0:05:14.560 --> 0:05:18.640 from Elon Musk. Curious what you heard from that rally 0:05:18.640 --> 0:05:20.080 so much as you listened to it. And I just 0:05:20.160 --> 0:05:22.520 think back on the conversation that we had with you 0:05:22.800 --> 0:05:24.640 last week or the week before just about this rally. 0:05:24.640 --> 0:05:26.600 It was kind of couched as if a bit of 0:05:26.640 --> 0:05:28.960 a vanity project for Donald Trump coming back to New York, 0:05:29.000 --> 0:05:30.880 which is where he'd lived and had kind of spurned 0:05:30.920 --> 0:05:35.000 him in recent years. Now we're really seeing what could 0:05:35.000 --> 0:05:37.280 be kind of damaging legacy from some of the comments 0:05:37.320 --> 0:05:40.880 that were made there at that event. Should he be 0:05:40.960 --> 0:05:44.360 worried about how they're reverberating, how those clips are kind 0:05:44.360 --> 0:05:45.640 of spreading across this country. 0:05:47.040 --> 0:05:49.839 Yeah, I mean, I'm a New Yorker myself. You do 0:05:49.960 --> 0:05:52.440 not come for Puerto Rico. That's not something that I 0:05:52.440 --> 0:05:55.560 would advise. And you're seeing members from the Senators to 0:05:55.600 --> 0:05:59.159 the House members, including even the Trump campaign trying to 0:05:59.200 --> 0:06:02.560 dis some suff distance themselves from the comedian who called 0:06:02.600 --> 0:06:04.480 Puerto Rico a floating island of garbage. 0:06:04.480 --> 0:06:06.120 I mean, that's that's just not workable. 0:06:06.360 --> 0:06:09.400 Six hundred thousand Puerto Ricans in the state of Pennsylvania, 0:06:09.560 --> 0:06:11.240 you know, where were going to go right outside of Philly. 0:06:11.520 --> 0:06:13.120 That's a problem, and you can't. 0:06:12.880 --> 0:06:15.360 Really have that bad bunny then coming out and endorsing 0:06:15.480 --> 0:06:17.440 j Loo coming out and endorsing I mean, this is 0:06:17.480 --> 0:06:19.960 New York Pride in its fullest, and you have the 0:06:20.000 --> 0:06:23.240 fate of the House of Representatives riding on some swing 0:06:23.360 --> 0:06:26.599 seats in the House in New York City and in 0:06:26.640 --> 0:06:28.360 New York State in the surrounding region. 0:06:28.480 --> 0:06:30.240 So that right there is the problem. 0:06:30.240 --> 0:06:33.400 But you mentioned Elon Musk, and I think that his 0:06:33.920 --> 0:06:36.560 understanding of what can be cleaned up is sort of 0:06:36.720 --> 0:06:42.159 a canard. Members always say, you know, we couldn't trim fraud, waste, 0:06:42.200 --> 0:06:42.719 and abuse. 0:06:42.839 --> 0:06:45.400 That's been since I ever got to d C. 0:06:45.640 --> 0:06:49.080 You know, it's roughly three hundred billion dollars, and I 0:06:49.120 --> 0:06:51.480 believe last night Elon Musk said that it was two 0:06:51.560 --> 0:06:55.120 trillion dollars. So you're not even playing the same sport 0:06:55.200 --> 0:06:57.679 at this point. Now, there is not two trillion dollars 0:06:57.720 --> 0:07:00.800 to cut. That's the entire budget of the entire federal 0:07:00.839 --> 0:07:04.640 government for the entire year. So it's just not real 0:07:04.720 --> 0:07:08.279 numbers that he is referencing. And DOGE would be responsible 0:07:08.360 --> 0:07:14.120 if you want to call it that for cutting. It's 0:07:14.160 --> 0:07:17.520 just not it's you're not playing with real numbers, Henrietta. 0:07:17.560 --> 0:07:20.440 What's the call here, what's the feeling, what's the consensus 0:07:20.440 --> 0:07:22.880 about some of the down ballot voting here? 0:07:22.920 --> 0:07:27.440 At this stage, my expectation is that Republicans are going 0:07:27.480 --> 0:07:29.200 to win the United States Senate. I've been at ninety 0:07:29.200 --> 0:07:31.360 percent odds of that for the entire year, and I 0:07:31.400 --> 0:07:35.160 feel very comfortable with that. Montana, Ohio, Pennsylvania are all 0:07:35.280 --> 0:07:38.400 very disconcerting races for Democrats right now. You're going to 0:07:38.440 --> 0:07:40.600 go interview Tammy Baldwin. I know she's concerned up there 0:07:40.640 --> 0:07:43.880 as well. They're really fighting for all the turnout in general, 0:07:43.920 --> 0:07:45.320 if you want, like a whole lay of the land, 0:07:45.360 --> 0:07:47.720 state of the race. The battle looks very bad for Democrats. 0:07:47.800 --> 0:07:50.400 Republicans are outperforming. You got the urban voters who were 0:07:50.400 --> 0:07:52.880 coming excuse me, rural voters who are coming out in 0:07:52.960 --> 0:07:57.080 droves in terms that get out the vote campaign. Arizona 0:07:57.120 --> 0:08:00.800 has less read through but also looks very promising for 0:08:00.840 --> 0:08:04.160 Republicans right now. And in Pennsylvany and in North Carolina 0:08:04.200 --> 0:08:06.720 it also looks pretty good for Republicans right now. So 0:08:06.760 --> 0:08:11.280 Democrats have to crush this next week of early voting 0:08:11.320 --> 0:08:14.840 in Michigan, Wisconsin, Pennsylvania, and then see how souls to 0:08:14.880 --> 0:08:15.640 the polls did. 0:08:15.520 --> 0:08:16.400 In Georgia yesterday. 0:08:16.400 --> 0:08:17.920 I haven't had a chance to look at that data, 0:08:18.240 --> 0:08:20.480 but you want to see what the voter turnout is 0:08:20.520 --> 0:08:25.200 in suburban areas in all of those states. But Democrats 0:08:25.280 --> 0:08:29.640 are have an incumbency problem of getting all those all 0:08:29.640 --> 0:08:33.080 those voters out now that Republicans can be a little 0:08:33.080 --> 0:08:35.800 bit RESTful about because they've turned out such so many 0:08:35.880 --> 0:08:39.040 members and droves over the last couple weeks of early 0:08:39.120 --> 0:08:41.559 voting and it's disproportionately looking very good for that in 0:08:41.679 --> 0:08:42.440 states like Nevada. 0:08:42.920 --> 0:08:45.520 Henrietta, thanks so much for the latest there. Henrietta Trece, 0:08:45.640 --> 0:08:48.240 managing partner in Veda Partner. She is all over this 0:08:48.400 --> 0:08:52.959 election news and analysis from the presidential election all the 0:08:53.000 --> 0:08:55.280 way down to the local races in the House and 0:08:55.360 --> 0:08:56.960 sent We appreciate getting some of her time. 0:09:03.080 --> 0:09:06.920 You're listening to the Bloomberg Surveillance Podcast. Catch us live 0:09:07.040 --> 0:09:10.360 weekday afternoons from seven to ten am. Easter Listen on 0:09:10.400 --> 0:09:13.640 Apple car Play and Android Auto with a Bloomberg Business app, 0:09:13.760 --> 0:09:15.480 or watch us live on YouTube. 0:09:15.600 --> 0:09:16.800 Eight days to the election. 0:09:17.679 --> 0:09:19.679 I guess here from the perspective of Bloomberg, A lot 0:09:19.679 --> 0:09:22.120 of the discussion is, you know what the economic policies 0:09:22.160 --> 0:09:25.920 of either candidate might mean for this domestic. 0:09:25.520 --> 0:09:26.800 Economy and the global economy. 0:09:26.840 --> 0:09:30.959 We pose that to Hugh Johnson, Chairman, Hugh Johnson Economics. 0:09:31.360 --> 0:09:32.880 Hugh, thanks so much for joining us here. 0:09:33.840 --> 0:09:36.160 What are you telling your clients here eight days out 0:09:36.200 --> 0:09:37.280 to the election about? 0:09:38.000 --> 0:09:40.240 What is an election? It's probably too close to call. 0:09:40.040 --> 0:09:42.240 Here, but how should they be thinking about it? 0:09:42.320 --> 0:09:43.240 What are you telling your clients? 0:09:43.280 --> 0:09:47.520 Well, it's really complex and obviously very difficult to talk 0:09:47.559 --> 0:09:50.920 about because it's very difficult to understand really what it 0:09:50.960 --> 0:09:53.680 comes down to. First of all, people should be or 0:09:53.679 --> 0:09:57.920 should start to start thinking about what's going to happen 0:09:57.960 --> 0:10:00.880 after the election, regardless of who it's elected. Now, I 0:10:00.920 --> 0:10:04.920 know the projection polls are suggesting that maybe Trump has 0:10:04.960 --> 0:10:08.000 a slight edge, So part of what we're talking about 0:10:08.280 --> 0:10:10.840 is what we might see if Trump is elected. But 0:10:10.920 --> 0:10:13.880 quite frankly, it's not going to be much different. It's 0:10:13.920 --> 0:10:16.440 a close call on the election. We all kind of 0:10:16.480 --> 0:10:19.120 know that we can't predict who's going to win, So 0:10:19.160 --> 0:10:21.680 you've got to think about both when it comes to 0:10:21.880 --> 0:10:25.720 economic policy, and it's going to be very important in 0:10:25.760 --> 0:10:29.560 my judgment, when we get into the next administration. It 0:10:29.600 --> 0:10:33.920 really comes down to taxes and trade policy or terroriffs. 0:10:34.480 --> 0:10:37.560 And when it comes to taxes, the number one focus 0:10:38.600 --> 0:10:40.960 of I think both and I think of all of 0:10:41.040 --> 0:10:45.480 us should be on really tax policy. And really what 0:10:45.520 --> 0:10:48.800 we're talking about is trying to get an extension of 0:10:48.840 --> 0:10:53.679 the two thousand and seventeen tax reductions. Reductions in the 0:10:53.800 --> 0:10:59.880 marginal rate, increase in standard deductions, higher exemptions for get 0:11:00.240 --> 0:11:04.920 taxes as well as state taxes, but basically trying to 0:11:04.960 --> 0:11:08.920 get an extension of the twenty seventeen tax reductions which 0:11:08.960 --> 0:11:13.080 sunset or expire at the end of two thousand and 0:11:13.160 --> 0:11:18.920 twenty five. And what we've learned when in twenty eighteen 0:11:18.960 --> 0:11:22.240 and nineteen when we had the initial passage of those 0:11:22.280 --> 0:11:26.079 twenty seventeen reductions is, first of all, you're going to 0:11:26.200 --> 0:11:30.319 obviously see, and this is really predictable, a decline in 0:11:30.480 --> 0:11:34.520 corporate income tax revenues at the federal level, and as 0:11:34.559 --> 0:11:40.960 you might guess, meaningful increases and deficits, meaningful increases in 0:11:41.240 --> 0:11:45.400 the US debt. If you look at the Congressional Budget 0:11:45.400 --> 0:11:49.199 Office they'll tell you over ten years if we get 0:11:49.320 --> 0:11:53.920 if we pass the twenty seventeen tax reductions, you'll get 0:11:53.920 --> 0:11:59.559 about a three through trillion dollars increase in the federal 0:12:00.200 --> 0:12:05.800 yeah deficits, and about four hundred and sixty seven billion 0:12:05.880 --> 0:12:10.200 dollar increase in interest payments by the federal government. We 0:12:10.400 --> 0:12:13.840 got to get that money from somewhere, and that's when 0:12:13.880 --> 0:12:19.599 we have a collision between tax policy, the increase in deficits, 0:12:20.000 --> 0:12:23.400 and then trade policy tariffs. When you start to get 0:12:23.559 --> 0:12:26.280 increases in tariffs, we should talk about that. 0:12:26.520 --> 0:12:28.040 Well, let's talk a bit about it. And you know, 0:12:28.400 --> 0:12:31.080 I've been noticing, as I'm sure you have, how little 0:12:31.080 --> 0:12:33.440 conversation there has been about the size of deficits and 0:12:33.480 --> 0:12:35.120 sort of what this might mean. There aren't many fiscal 0:12:35.160 --> 0:12:38.640 hawks left in Washington these days, it seems like. But 0:12:38.880 --> 0:12:41.599 you bring up this kind of convergence of yes, the 0:12:41.600 --> 0:12:45.839 potential continuation of those Trump tax cuts and these tariffs policies. 0:12:46.640 --> 0:12:48.560 We heard the former president last night here in New 0:12:48.600 --> 0:12:50.839 York in Madison Square Garden making the cases he has 0:12:50.880 --> 0:12:53.400 before species as it might be that you know, you 0:12:53.400 --> 0:12:55.480 could do away with taxes and just have tariffs pay 0:12:55.480 --> 0:12:57.800 for everything. The numbers here tell a different story. 0:12:58.720 --> 0:13:01.720 Yeah, they do. The most important thing is if you 0:13:01.760 --> 0:13:06.000 do get First of all, they're very wedded to reducing taxes, 0:13:06.400 --> 0:13:12.000 are basically extending the twenty seventeen tax policies tax reductions, 0:13:12.000 --> 0:13:15.320 So that's very important. Now the question is, Okay, how 0:13:15.320 --> 0:13:17.520 are you going to pay for The way you pay 0:13:17.600 --> 0:13:19.400 for them is the way we've always paid for them. 0:13:19.400 --> 0:13:22.199 A lot of it comes from households, but a significant 0:13:22.200 --> 0:13:24.240 portion of what we pay for as far as the 0:13:24.280 --> 0:13:29.240 deficits concerned, is from foreign investors. Now, if you do 0:13:29.400 --> 0:13:34.040 have increased taxes or tariffs, you know roughly ten to 0:13:34.080 --> 0:13:39.959 twenty percent universal baseline tax increases. You've heard about sixty 0:13:40.000 --> 0:13:44.240 percent on imports from China, You've heard about specific taxes 0:13:44.280 --> 0:13:49.000 on things like automobiles from Mexico, one hundred percent increases 0:13:49.040 --> 0:13:52.960 in tariffs. That's not going to endear those folks that 0:13:53.000 --> 0:13:56.760 are getting those countries that are getting increased taxes or 0:13:56.800 --> 0:13:59.920 increased tariffs. That's not going to endear them to find 0:14:00.000 --> 0:14:03.200 financing our federal deficits. So it's going to get a 0:14:03.320 --> 0:14:08.120 lot more difficult to finance those deficits as we move 0:14:08.200 --> 0:14:12.400 through the next ten years. Very difficult. What does that mean? 0:14:12.559 --> 0:14:15.480 That probably means you're going to have to offer higher 0:14:15.480 --> 0:14:18.520 interest rates to get that done, and higher interest rates 0:14:18.600 --> 0:14:21.600 is likely to have some weight on the outcome for 0:14:22.440 --> 0:14:26.160 the economy. And I would add, and I hesitate to 0:14:26.200 --> 0:14:30.120 add this, if you look back at the Great Depression 0:14:30.760 --> 0:14:34.160 of nineteen twenty nine to nineteen thirty nine, one of 0:14:34.160 --> 0:14:38.800 the principal reasons that we had that depression was because 0:14:38.880 --> 0:14:44.400 we had such significant terraces, remember the Smooth Holly terrace, 0:14:44.760 --> 0:14:48.480 which led the US economy, the world economy quite frankly 0:14:48.920 --> 0:14:52.080 into a depression. So the point being very simple, if 0:14:52.120 --> 0:14:55.160 you reduce taxes, you get a big deficit, you get 0:14:55.200 --> 0:14:57.840 a big debt has to be financed. A lot of 0:14:57.840 --> 0:15:01.960 it gets financed by foreign investment or capital flows, and 0:15:02.040 --> 0:15:03.880 they're not going to be happy about it if we're 0:15:03.880 --> 0:15:08.120 imposing At the same time, we're imposing significant tariffs on them. 0:15:08.200 --> 0:15:11.000 So this is what I'm just simply saying, is that 0:15:11.040 --> 0:15:14.840 when we move into the next administration, either one, when 0:15:14.880 --> 0:15:17.960 we move into the next administration, the risks are going 0:15:18.000 --> 0:15:19.480 to get a little bit higher, and they have to 0:15:19.520 --> 0:15:22.720 be watched very carefully. Things are good now, but we've 0:15:22.720 --> 0:15:25.200 got to watch them very carefully as we move into 0:15:25.240 --> 0:15:28.360 the next administration. I hope that's clear. This is not 0:15:28.720 --> 0:15:30.640 an easy subject to understand. 0:15:31.200 --> 0:15:34.640 QUE What is your view of the current economic situation 0:15:34.760 --> 0:15:38.120 here in the US. It seems like GDP, you know, 0:15:38.240 --> 0:15:43.640 still pretty solid, inflation coming down, most people who want 0:15:43.640 --> 0:15:46.600 a job have jobs, their wages are growing. What's your 0:15:46.680 --> 0:15:48.120 view of this US economy right now? 0:15:48.720 --> 0:15:52.160 It's about It's about as good as you could possibly get. 0:15:52.640 --> 0:15:55.320 Read the Economist magazine and they'll tell you the same 0:15:55.360 --> 0:15:59.080 thing on the recent issue. It's very good. You're absolutely right. 0:15:59.400 --> 0:16:03.920 GDP is solid, it's slowing, Employment is slowing, the economy 0:16:04.000 --> 0:16:08.960 is slowing, Personal disposable income slowing, personal consumption slowing, but 0:16:09.320 --> 0:16:13.040 very solid. You're likely to get lower numbers after the 0:16:13.080 --> 0:16:16.040 third quarter numbers. Third quarter b around three percent, but 0:16:16.080 --> 0:16:18.000 then we'll be looking at one and a half to 0:16:18.120 --> 0:16:21.840 two percent fourth quarter, first quarter, second quarter of twenty 0:16:21.920 --> 0:16:25.960 twenty five. That's soft landing, and inflation will be coming down. 0:16:26.000 --> 0:16:28.680 The Federal Reserve will be reducing short term interest rates. 0:16:29.160 --> 0:16:33.640 Long term interest rates should be coming down under those conditions, 0:16:33.840 --> 0:16:35.680 and stock prices should be doing better. 0:16:35.840 --> 0:16:36.280 Very good. 0:16:36.400 --> 0:16:39.400 That's the good news. The nots of good news, at 0:16:39.480 --> 0:16:43.080 least in my gentleman judgment. Everybody sees this differently. Is 0:16:43.120 --> 0:16:46.640 we're a little bit high or pricey or overvalue. That's 0:16:46.680 --> 0:16:49.040 one problem. And I'm a little bit worried that I 0:16:49.120 --> 0:16:52.640 see such widespread optimism, which means if we got a 0:16:52.720 --> 0:16:55.960 six to eight percent correction, I would welcome it because 0:16:56.000 --> 0:16:59.080 we'd get to levels that I think attractive, would be 0:16:59.120 --> 0:17:02.960 much more attractive for investors. But basically, when you look ahead, 0:17:03.360 --> 0:17:07.560 everything you say is correct. The outlook prospects, the economy 0:17:07.680 --> 0:17:13.160 is really good, really solid soft landing. I don't dismiss 0:17:13.240 --> 0:17:14.920 the case for a hard landing, but I don't think 0:17:14.960 --> 0:17:16.080 that's a very good case. 0:17:16.520 --> 0:17:18.200 Hugh, thanks so much for joining us, as I always 0:17:18.200 --> 0:17:21.440 appreciate getting your perspective. Hugh Johnson. He's the chairman of 0:17:21.520 --> 0:17:23.200 Hugh Johnson Economics. 0:17:23.280 --> 0:17:27.480 This is the Bloomberg Surveillance Podcast. Listen live each weekday 0:17:27.600 --> 0:17:30.800 starting at seven am Eastern on applecar Play and Android 0:17:30.800 --> 0:17:33.679 Auto with the Bloomberg Business App. You can also listen 0:17:33.760 --> 0:17:36.880 live on Amazon Alexa from our flagship New York station, 0:17:37.280 --> 0:17:39.960 Just Say Alexa, playing Bloomberg eleven thirty. 0:17:40.080 --> 0:17:43.520 Let's get the latest on the developments coming out of 0:17:43.560 --> 0:17:45.600 the Middle East. Here, we're more than a year into 0:17:45.600 --> 0:17:48.520 this war. Jack Devine joins us. He's the founder and 0:17:48.560 --> 0:17:51.399 he's the chairman of the Arcan Group. And Jack is 0:17:51.440 --> 0:17:55.359 also a thirty two year veteran of the Central Intelligence Agency, 0:17:55.440 --> 0:17:59.399 so he has some experience in these matters. Jack, what's 0:17:59.400 --> 0:18:02.200 your latest read coming out of the Middle East? 0:18:02.200 --> 0:18:02.360 Here? 0:18:02.400 --> 0:18:04.560 Again, I think the most recent data point would be 0:18:04.880 --> 0:18:07.399 Iran's response to the missile tacks on Iran. 0:18:07.440 --> 0:18:07.960 They could have. 0:18:07.880 --> 0:18:10.240 Gone a lot broader, a lot wider, a lot deeper. 0:18:10.240 --> 0:18:12.480 They chose not to put your read of what's going 0:18:12.480 --> 0:18:13.439 on there in Middle East? 0:18:14.840 --> 0:18:18.840 Well, I think Israel has demonstrated tremendous power and by contrast, 0:18:18.920 --> 0:18:24.560 the adversaries tremendous weakness, much less than many people anticipated, right, 0:18:24.560 --> 0:18:26.480 and it di mended. I would say Israel's in the 0:18:26.520 --> 0:18:30.679 catbird seat. Their adversaries are pushing, I think now pushing 0:18:30.680 --> 0:18:32.959 for a cease fire. They got their back up against 0:18:33.000 --> 0:18:34.920 the wall. 0:18:35.080 --> 0:18:37.000 You know, I'm very curious here sort of how you 0:18:37.040 --> 0:18:38.879 see this playing out going forward. So they're in the 0:18:38.880 --> 0:18:43.120 catbird seat around with their back against the wall. Has 0:18:43.160 --> 0:18:44.920 this sort of tit for tat ended at this point 0:18:44.960 --> 0:18:47.080 in time, where do you see things going here? Of course, 0:18:47.119 --> 0:18:49.280 it's all kicked off with Iran attacking Israel a few 0:18:49.280 --> 0:18:49.760 weeks back. 0:18:50.920 --> 0:18:55.720 Yeah, my read is that Iran his belah Amas all 0:18:55.760 --> 0:18:59.560 know that there's no bouncing back right now, right, you 0:18:59.560 --> 0:19:02.639 can only beat up more. The fact that the Israelis 0:19:02.680 --> 0:19:06.240 went in with one hundred airplanes right, not a single 0:19:06.280 --> 0:19:10.400 one shot down. That tells you Iran is tremendously vulnerable. 0:19:10.400 --> 0:19:12.320 The Israelis could take up tomorrow and bob in the 0:19:12.320 --> 0:19:15.600 oil feels combind to nuclear sites, but they won't be able, 0:19:15.640 --> 0:19:20.479 I think, to do the damage at this point without 0:19:20.520 --> 0:19:21.359 sustained attack. 0:19:21.880 --> 0:19:23.560 But I think they decided not to do that. 0:19:23.640 --> 0:19:27.040 THEIRS was restrained. The Israelis could do more, but it 0:19:27.080 --> 0:19:30.119 was powerful. Now the Iranians are passing it off as 0:19:30.119 --> 0:19:32.360 though it wasn't so bad. Well, it was pretty bad, 0:19:32.359 --> 0:19:34.080 but it didn't hit the two things. I think there 0:19:34.119 --> 0:19:37.320 was a deal made with Washington understandable in this one 0:19:37.760 --> 0:19:39.840 this case. So I think they're trying to find a 0:19:39.880 --> 0:19:41.920 way to catch their breath. And I think that's true 0:19:41.960 --> 0:19:45.720 with his beloved. Remember, all the leadership has been wiped 0:19:45.760 --> 0:19:50.119 out of Hamas and his blog. Both places have taken 0:19:50.119 --> 0:19:53.680 a tremendous beating. They need to regroup. So I think 0:19:54.000 --> 0:19:57.320 you know they're going to negotiations now. Egypt and Hamas 0:19:57.359 --> 0:20:01.679 have issues, have agreements and of discussing them. But I 0:20:01.800 --> 0:20:04.200 think you know Netta is sitting in a strong place. 0:20:04.320 --> 0:20:06.480 He's going to ask for a bigger price. What's that price? 0:20:07.040 --> 0:20:09.680 One will be the northern territory of the Israelis got 0:20:09.680 --> 0:20:13.000 back into it and they cease with these the firing 0:20:13.119 --> 0:20:14.800 and the hostages right out front. 0:20:15.080 --> 0:20:19.320 Number one have to be a race. He's gonna he's 0:20:19.320 --> 0:20:21.440 gonna argue, he's gonna have he's hold all the cars. 0:20:21.480 --> 0:20:22.560 He's gonna have a tough bargain. 0:20:22.640 --> 0:20:24.240 They could have gotten to maybe a little less a 0:20:24.240 --> 0:20:27.560 little while ago, perhaps, but right now, just because they 0:20:27.600 --> 0:20:29.200 say they want to seize fire to to be more 0:20:29.240 --> 0:20:29.800 on his terms. 0:20:29.800 --> 0:20:30.159 You've got to. 0:20:30.160 --> 0:20:32.560 Watch these negotiations. It's not going to be simple. There 0:20:32.600 --> 0:20:36.600 to be some fine print that have long term implications. 0:20:37.200 --> 0:20:40.120 Well, Jack, I mean, I guess my next question would 0:20:40.119 --> 0:20:43.200 be timing. If if Nettanelho and Israel are in such 0:20:43.240 --> 0:20:46.959