WEBVTT - Tiger Woods Is Once Again Golf's Biggest Star (Podcast) 0:00:02.640 --> 0:00:05.320 Welcome to the Bloomberg Penel Podcast. I'm Paul swing you. 0:00:05.360 --> 0:00:07.680 Along with my co host Lisa Brahma wits. Each day 0:00:07.720 --> 0:00:10.240 we bring you the most noteworthy and useful interviews for 0:00:10.280 --> 0:00:12.520 you and your money. Whether at the grocery store or 0:00:12.560 --> 0:00:15.480 the trading floor. Find a Bloomberg penl podcast on Apple 0:00:15.520 --> 0:00:17.960 podcast or wherever you listen to podcasts, as well as 0:00:17.960 --> 0:00:23.960 at Bloomberg dot com. One share a price that's not 0:00:24.160 --> 0:00:26.480 entirely flatt ast Nike. Nike shares up about a quarter 0:00:26.480 --> 0:00:30.920 of a percentage point after Tiger Woods one yet again, 0:00:31.240 --> 0:00:34.680 although after more than ten years of a hiatus of 0:00:34.720 --> 0:00:37.200 winning a major golf tournament. Joining us now to talk 0:00:37.240 --> 0:00:40.280 about how this is wonderful news for his sponsors is 0:00:40.320 --> 0:00:43.360 Evan Novihi Williams joining us here in our Bloomberg Interactive 0:00:43.360 --> 0:00:46.840 Broker's Studios. So Evan, first, let's just talk about the 0:00:47.040 --> 0:00:50.760 number of sponsors who stuck with Tiger Woods through an 0:00:50.760 --> 0:00:55.360 incredibly tumultuous period. Who stuck with him? Who dropped away? Yeah, 0:00:55.360 --> 0:00:57.720 it's not a long list of companies, right, Nike is 0:00:57.760 --> 0:01:01.200 one of them, um and Upper Deck the st is 0:01:01.240 --> 0:01:02.520 the other one. So those are the only two that 0:01:02.640 --> 0:01:04.800 stuck with him. You have a long list of companies 0:01:04.840 --> 0:01:08.720 like A Center, A, T and T, Gillette, Gatorade, companies, 0:01:08.800 --> 0:01:11.440 Tag Hoyer that either dropped him or you know, refused 0:01:11.440 --> 0:01:14.120 to renew him when their sponsorship came up, right, So, 0:01:14.120 --> 0:01:16.760 so it's been ten long years for Tiger Woods and 0:01:16.800 --> 0:01:19.319 the company's backing him are a bit different, you know. 0:01:19.400 --> 0:01:22.480 So so Nike upper Deck are still there, Bridge Stone 0:01:22.480 --> 0:01:25.520 makes the balls he uses, Tailor Made makes the clubs 0:01:25.560 --> 0:01:28.480 he uses. Monster Energy is the logo on the bag 0:01:28.560 --> 0:01:31.760 for people who watched over the weekend. So it's a 0:01:31.800 --> 0:01:34.080 it's a kind of a whole different stable of of 0:01:34.240 --> 0:01:36.760 endorsers outside of Nike, you know, which has been the 0:01:36.800 --> 0:01:38.800 mainstay and the company that I think people you know 0:01:38.840 --> 0:01:41.800 most closely associate with Tiger. So have we been able 0:01:41.800 --> 0:01:43.759 to quantify what the impact was, Like what do those 0:01:43.760 --> 0:01:47.120 tigers you know, sponsorship income back in the day when 0:01:47.160 --> 0:01:50.160 he had those A listers too? Maybe today where maybe 0:01:50.160 --> 0:01:53.040 it's not so many, Yeah, it's not. He's certainly he's 0:01:53.200 --> 0:01:56.040 he's still making money off the course, obviously, you know, Um, 0:01:56.200 --> 0:01:58.880 his relationship with Nike was once a thirty million dollar 0:01:58.920 --> 0:02:02.400 a year relationship. That's changed a bit because Nike has 0:02:02.520 --> 0:02:05.360 you know, they no longer make golf equipment, so Nike 0:02:05.480 --> 0:02:08.839 doesn't make the ball and the clubs and the bag anymore. Um. 0:02:09.080 --> 0:02:11.400 And and yeah, he's probably not being paid, you know, 0:02:11.440 --> 0:02:13.360 in total what he was when he was making when 0:02:13.400 --> 0:02:16.200 it's sixty million dollars a year off the course. Um. 0:02:16.320 --> 0:02:20.280 But you know, he has a very successful course design business. 0:02:20.720 --> 0:02:23.239 He still has a number of sponsors that pay him well. 0:02:23.520 --> 0:02:25.480 I imagine the fact that he just won the Masters 0:02:25.600 --> 0:02:28.080 is not going to hurt him, uh in any regard 0:02:28.480 --> 0:02:31.560 in that way either. So you know, it's his portfolio 0:02:31.600 --> 0:02:33.440 is not what it used to be, but he's not 0:02:33.520 --> 0:02:36.040 struggling for cash right now. I'm curious, though, you know, 0:02:36.120 --> 0:02:39.320 beyond just Tiger Woods and Nike, I'm wondering what kind 0:02:39.320 --> 0:02:43.800 of audience, uh, these golf tournaments get because my understanding 0:02:43.919 --> 0:02:47.080 is that the population of people watching these has been 0:02:47.120 --> 0:02:49.960 going down and getting older. Yeah. It's funny. Ten years ago, 0:02:50.480 --> 0:02:52.120 you know, we we always talked about, you know, the 0:02:52.120 --> 0:02:55.000 Tiger bump. What happened, you know, the the amount of 0:02:55.000 --> 0:02:57.200 people that turned in just to watch golf only when 0:02:57.240 --> 0:03:00.560 Tiger Woods was playing well. And eleven years it we're 0:03:00.560 --> 0:03:03.880 having the same conversations. Golf is still reliant on this 0:03:04.000 --> 0:03:07.359 one athlete, and it's great for golf that he's back. Right, 0:03:07.440 --> 0:03:10.720 if you're the Golf Channel, if you're CBS, anyone who's 0:03:10.720 --> 0:03:13.080 going to televise a golf a professional golf tournament in 0:03:13.080 --> 0:03:15.160 the next couple of months, you are thrilled by what 0:03:15.280 --> 0:03:17.320 just happened because people are going to tune in to 0:03:17.440 --> 0:03:20.400 watch uh Tiger Woods to see if he can do 0:03:20.440 --> 0:03:24.120 this again. The bigger underlying issue is the sport still, 0:03:24.360 --> 0:03:26.280 you know, is reliant on a forty three year old 0:03:26.320 --> 0:03:28.640 with a bad back, who is who is not going 0:03:28.680 --> 0:03:31.520 to be this good in another eleven years. Right, there 0:03:31.600 --> 0:03:34.120 is a there is a finite end to Tiger woods dominance. 0:03:34.120 --> 0:03:36.720 It's amazing that he got back to this stage, but 0:03:36.880 --> 0:03:38.720 you know, you can make an argument that it's not 0:03:38.760 --> 0:03:41.440 great for golf that that he is still the number 0:03:41.480 --> 0:03:44.200 one biggest draw. Well, a lot of winners came out 0:03:44.200 --> 0:03:47.320 of yesterday's performance by Tiger Woods, but one of the losers, 0:03:47.360 --> 0:03:50.040 which is the sports betting business. You know what happened 0:03:50.040 --> 0:03:51.440 the book He's had the wrong side of this trade, 0:03:51.440 --> 0:03:53.960 and yeah, it's funny they you know, Tiger Woods, just 0:03:54.000 --> 0:03:56.520 because of his popularity is almost always the most bet 0:03:56.640 --> 0:03:59.120 golfer in the field. And when Tiger Woods was bad, 0:03:59.200 --> 0:04:02.440 that was a great, a great business opportunity for for 0:04:02.520 --> 0:04:05.040 sports books. And you know, now that he won, you 0:04:05.080 --> 0:04:07.840 know it was a bad business opportunity. The William Hill 0:04:07.880 --> 0:04:09.760 had a single bet that they paid out one point 0:04:09.760 --> 0:04:12.280 two million dollars on. It's the biggest single golf bet 0:04:12.320 --> 0:04:15.920 liability they've ever had taking bets in the US. FanDuel 0:04:15.960 --> 0:04:18.480 lost two million dollars. Draft Kings was out a million 0:04:18.520 --> 0:04:20.479 and a half. A lot of sports books took a 0:04:20.480 --> 0:04:23.279 big bath on this. Again, it doesn't come close to 0:04:23.320 --> 0:04:25.479 off setting the money they've made off of Tiger in 0:04:25.520 --> 0:04:29.560 the past ten years. Um. But yeah, in general, being 0:04:29.560 --> 0:04:31.640 a sports book is a pretty darn good business model. 0:04:31.960 --> 0:04:35.200 Occasionally you get burned by individual events, and this was 0:04:35.240 --> 0:04:38.400 certainly one that that burned them. Interesting, but thus, certainly 0:04:38.440 --> 0:04:41.920 a lot of winners yesterday, and uh, you know from 0:04:41.960 --> 0:04:45.200 the broadcast networks just just you know, to the sponsors, 0:04:45.200 --> 0:04:46.760 and you know, I won't be surprised at all to 0:04:46.839 --> 0:04:49.599 see some of those A list sponsors who left Tiger 0:04:49.600 --> 0:04:53.200 Woods when he had those troubles uh, come flocking back, um, 0:04:53.240 --> 0:04:54.960 because you know, you could just tell if you think 0:04:54.960 --> 0:04:56.920 about the uh, if you follow the game up off 0:04:56.920 --> 0:04:58.280 and you just kind of look at your Twitter feed 0:04:58.360 --> 0:05:01.560 or your Facebook. It was just exploding yesterday with Tiger 0:05:01.600 --> 0:05:03.960 Woods in contention at the Master. So it's a it's 0:05:04.000 --> 0:05:07.719 a whole another dynamic. As Evan was mentioning, so uh, Evan, 0:05:07.760 --> 0:05:10.600 we appreciated Evan Wi Williams and Bloomberg News bringing us 0:05:10.760 --> 0:05:14.560 the latest on everything that is Tiger Woods and golf. 0:05:14.680 --> 0:05:31.320 He is back. Well. We are right smack in the 0:05:31.360 --> 0:05:33.760 middle of earning season for the big banks. We had 0:05:33.839 --> 0:05:37.560 JP Morgan on Friday Today, Goldman, Sachs and City Group 0:05:37.800 --> 0:05:40.240 mixed bag across the board to dig in to some 0:05:40.360 --> 0:05:41.960 of these results of what it means for the big 0:05:41.960 --> 0:05:45.400 money center banks. We welcome Ken Leon Kenna's Global director 0:05:45.480 --> 0:05:48.880 of Industry and Equity Research at cfr A Research. He 0:05:49.000 --> 0:05:51.400 joins us on the phone from New York. So, Ken, 0:05:51.400 --> 0:05:53.400 thanks so much for joining us. What are some of 0:05:53.480 --> 0:05:57.400 the takeaways that you are seeing from some of these 0:05:57.560 --> 0:06:02.320 first wave of big bank earnings. JP Morgan headed out 0:06:02.320 --> 0:06:05.719 of the park. You know, the expectations for all these 0:06:05.720 --> 0:06:09.920 banks was dismal performance for the first quarter UM March 0:06:10.240 --> 0:06:14.240 really helped JP Morgan and it provides some glimmer of hope, 0:06:14.360 --> 0:06:19.080 you know for certainly City and Golden Sacks today. You know, 0:06:19.160 --> 0:06:23.560 the capital markets were from the government phrase really hurt 0:06:23.680 --> 0:06:28.000 the underwriting pipeline, both equity and debt, and the I 0:06:28.120 --> 0:06:31.359 p O market really just started to click in March. 0:06:32.040 --> 0:06:35.919 So we think what's unusual here is first quarter tends 0:06:35.920 --> 0:06:39.680 to be the strongest quarter for the banks UM and 0:06:39.760 --> 0:06:43.080 it looks to be a base quarter with improvement every quarter. 0:06:43.520 --> 0:06:46.920 In two thousand nineteen, Ken it seems like big US 0:06:47.000 --> 0:06:49.400 banks are being put to the test. How much can 0:06:49.400 --> 0:06:53.440 they diversify away from trading revenue because that has not 0:06:53.720 --> 0:06:56.560 been the driver that it once was. So can you 0:06:56.680 --> 0:06:58.880 give them a grade? How are they doing in terms 0:06:58.960 --> 0:07:05.880 of turning to advisor to the revenue or consumer consumer profitability? 0:07:06.640 --> 0:07:11.680 So the banks are pretty much agents and not principal 0:07:11.760 --> 0:07:15.120 businesses where they invest for the house and from a 0:07:15.160 --> 0:07:20.320 regulatory standpoint in the capacity of how much capital is 0:07:20.360 --> 0:07:23.600 needed for trading, they have been de risking the last 0:07:23.600 --> 0:07:26.000 few years and even on the Goldmen call today, look, 0:07:26.040 --> 0:07:28.800 we have we have a new management, a new management 0:07:28.960 --> 0:07:33.400 now lad from former executives and investment banking, not trading 0:07:33.440 --> 0:07:37.160 as before, and they're going to size down further thick, 0:07:37.240 --> 0:07:40.520 which is the fixed income, currency and commodity business, so 0:07:40.600 --> 0:07:44.120 they get efficiencies and higher returns. When you look at 0:07:44.160 --> 0:07:47.720 the other banks, UM, the one area that's the bread 0:07:47.760 --> 0:07:51.360 and butter for the large commercial banks is treasury because 0:07:51.360 --> 0:07:55.920 he's tied directly into their corporate relationships and corporate lending. 0:07:56.320 --> 0:08:00.680 So I think um directionally, Um, none of these banks 0:08:00.720 --> 0:08:04.160 want to put that much capital. Um. We also had 0:08:04.400 --> 0:08:08.800 low investor activity, we had low volatility as measured by 0:08:08.840 --> 0:08:12.679 the VIS We'll put that together. You had uh high 0:08:13.000 --> 0:08:17.240 uppertee negative declines in trading. So you want to be 0:08:17.240 --> 0:08:21.360 Another business is that you have confidence can grow. So ken, 0:08:21.400 --> 0:08:23.480 as a former wall streeter, I always take a look 0:08:23.480 --> 0:08:25.960 at the cost line for Cindy's big investment banks because 0:08:25.960 --> 0:08:29.600 that usually goes to head count, into compensation to things 0:08:29.680 --> 0:08:31.800 near and dear to my heart as a former wall streeter, 0:08:31.920 --> 0:08:36.640 but I see for Coleman sacks down twent firm wide expenses. Um. 0:08:36.840 --> 0:08:41.320 Is that just the people's side of the business. So um. 0:08:41.520 --> 0:08:44.480 Part of it is the early stages of efficiencies from 0:08:44.679 --> 0:08:49.000 heavy technology investing. UM, it's not. It is absolutely not 0:08:49.320 --> 0:08:54.240 major head count cuts yet. What's interesting for Goldman of 0:08:54.320 --> 0:08:58.280 their workforces technology and that's what's driving their platforms in 0:08:58.320 --> 0:09:04.000 the business. UM. For the other banks UM, the efficiency 0:09:04.120 --> 0:09:09.840 ratios seem to be more of a UM fading indicator 0:09:09.920 --> 0:09:12.320 that no one has. None of the banks have conviction 0:09:12.800 --> 0:09:15.960 to say that we're going to go from low SI 0:09:16.040 --> 0:09:18.880 to low fifty in the next two years, as they 0:09:18.920 --> 0:09:22.400 did for several quarters, not this one UH, and even 0:09:22.440 --> 0:09:25.520 asked that question City Group today. They kind of backed 0:09:25.559 --> 0:09:29.040 off because they're just there is that uncertainty just about 0:09:29.520 --> 0:09:33.720 global economy and the capital markets. But that's generally part 0:09:33.840 --> 0:09:37.559 parcel for these banks. Can One notable factor also with 0:09:37.679 --> 0:09:41.600 City Groups win on bond trading revenues. They actually UH 0:09:41.840 --> 0:09:45.760 posted an increase you over year after it expected decrease, 0:09:45.960 --> 0:09:49.320 and the other banks that have reported have all seen 0:09:49.400 --> 0:09:52.680 declines in their year of year comps for bond trading. 0:09:52.720 --> 0:09:56.280 I'm just wondering where is City getting the volumes? What 0:09:56.320 --> 0:10:00.000 how do they eat this out? They have a very 0:10:00.440 --> 0:10:04.280 UM strong global network in terms of working with corporate 0:10:04.360 --> 0:10:07.160 US treasuries, and they're they're not doing it on the 0:10:07.240 --> 0:10:10.320 high risk side of the curve, which would be derivatives 0:10:10.400 --> 0:10:16.000 or any futures. It's it's mostly UM playing vanilla treasury 0:10:16.040 --> 0:10:20.920 services UM and that continues to be a strength for 0:10:20.960 --> 0:10:24.480 a City also for JP Morgan. What's interesting is Goldman 0:10:24.559 --> 0:10:29.360 Sachs really wasn't in those parts of fixed income trading UH, 0:10:29.360 --> 0:10:32.679 and they have increased their headcount to go there and 0:10:32.720 --> 0:10:36.760 take market share. So can When I think about City Group, 0:10:36.760 --> 0:10:38.560 I'm good at the stock here. It's up almost thirty 0:10:38.640 --> 0:10:42.520 percent year to date. How is this company position globally 0:10:42.559 --> 0:10:46.320 from a franchise perspective, it seems like they have you know, 0:10:46.320 --> 0:10:48.240 they had really had a tough time coming out from 0:10:48.240 --> 0:10:52.160 the financial crisis, but they've seen pretty solid So they 0:10:52.160 --> 0:10:55.240 had a terrific two thousand and eighteen and the first 0:10:55.280 --> 0:10:58.920 quarter as a continuum UM and that's reflected in the stock. 0:10:58.960 --> 0:11:02.400 We raised our target price to seventy from sixty five 0:11:02.480 --> 0:11:07.360 this morning. We do feel um that City Um is 0:11:07.400 --> 0:11:10.360 getting the most out of its global footprint. We have 0:11:10.400 --> 0:11:15.560 a whole recommendation on City buying Goldman simply because we 0:11:15.640 --> 0:11:18.840 think with City it's more now dependent on the global 0:11:18.880 --> 0:11:23.640 economic environment. They had flat first quarter in Europe as 0:11:23.640 --> 0:11:27.280 well as in Asia, Mexico and Latin America is another 0:11:27.400 --> 0:11:31.280 very important franchise for City, and it's likely to be 0:11:31.720 --> 0:11:35.600 flat or low single digit. Look at Goldman Sachs. You've 0:11:35.600 --> 0:11:38.120 got a new management team on board. There's a delta 0:11:38.240 --> 0:11:44.080 for improvement on earnings coming from strategic moves across the 0:11:44.120 --> 0:11:48.560 board in terms of realigning fixed income trading um. They're 0:11:48.640 --> 0:11:52.640 also aligning to get more business and investment banking by 0:11:52.720 --> 0:11:57.160 hiring hundreds of investment bankers for small companies. Never heard 0:11:57.160 --> 0:12:00.439 of that for decades. Well, it seems like that's where 0:12:00.440 --> 0:12:03.160 the profitability is. Ken Leon, thank you so much for 0:12:03.160 --> 0:12:05.760 being with us, Global Director of Industry and Equity Research 0:12:05.800 --> 0:12:24.079 at cf are A Research in New York. Well, there's 0:12:24.120 --> 0:12:27.640 a great story out on the Bloomberg terminal today about taxes. Yes, 0:12:27.679 --> 0:12:32.080 taxes can be interesting. Basically just here is basically President 0:12:32.080 --> 0:12:34.520 Trump gave most Americans a big tax cut last year. 0:12:34.520 --> 0:12:37.000 But the problem is they did not notice it. In fact, 0:12:37.040 --> 0:12:40.160 just one fifth of taxpayers believe that their taxes have 0:12:40.440 --> 0:12:42.720 been cut. So to get a sense of what happened 0:12:42.720 --> 0:12:45.240 here with the messaging, we welcome Lara Davidson one of 0:12:45.280 --> 0:12:48.440 the reporters on this story, larsa congressional tax reporter for 0:12:48.480 --> 0:12:52.480 Bloomberg Tax. She's on Capitol Hill in Washington, d C. Today. Laura, 0:12:52.480 --> 0:12:55.000 thank you so much for joining us. So again, there 0:12:55.240 --> 0:12:57.800 was a tax cut. Not a lot of people believe 0:12:57.880 --> 0:12:59.959 there was a tax cut. So what happened with the mess? 0:13:00.760 --> 0:13:02.880 So really there were there were two big missteps that 0:13:02.880 --> 0:13:05.439 that Republicans made here in One is that the Democrats 0:13:05.520 --> 0:13:08.000 argument that this was going towards the wealthy and towards 0:13:08.040 --> 0:13:11.319 large corporations was just more salient with voters. Um they 0:13:11.320 --> 0:13:14.280 saw the big, big tax breaks go to corporations, and 0:13:14.360 --> 0:13:17.000 when they saw the changes that we're going to to 0:13:17.040 --> 0:13:19.800 them as individuals, it didn't seem as big. The second 0:13:19.800 --> 0:13:21.920 thing is that the way people got their tax cuts, 0:13:21.920 --> 0:13:23.920 so instead of getting a big refund at the end 0:13:23.920 --> 0:13:26.360 of the year, which is what many people expected, they 0:13:26.400 --> 0:13:29.640 got basically they paid less throughout the year, so there 0:13:29.679 --> 0:13:32.120 was less taken out of their paycheck. But in most cases, 0:13:32.160 --> 0:13:38.439 once you spread that out over over paychecks over the year, 0:13:38.559 --> 0:13:40.800 it wasn't that much. So by the time that people 0:13:40.840 --> 0:13:43.840 got to you know today to April fifte uh, they 0:13:43.840 --> 0:13:46.240 either had a much smaller refund or in some cases 0:13:46.280 --> 0:13:48.120 they owed money because they had too much taken out 0:13:48.160 --> 0:13:50.200 over the year. And uh, you know, even though they 0:13:50.559 --> 0:13:52.440 ended up getting more money that they still felt like 0:13:52.480 --> 0:13:54.800 they owed more. So what is the truth here as 0:13:54.840 --> 0:13:57.240 far as who got the biggest tax cuts? Right? Because 0:13:57.240 --> 0:13:59.120 if you're saying that the Democrats kind of one on 0:13:59.160 --> 0:14:03.640 their messaging, they went on the facts, Well, it really depends. 0:14:03.640 --> 0:14:06.520 So you look, our our tax system is progressive, so 0:14:06.600 --> 0:14:09.480 that means that there are higher rates for people at 0:14:09.480 --> 0:14:12.480 the higher end of the income spectrum. So people who 0:14:12.880 --> 0:14:16.000 make more uh also pay more, but they also got 0:14:16.000 --> 0:14:18.599 a bigger tax cut in comparison overall. So it's a 0:14:18.600 --> 0:14:21.520 little bit tricky to say, you know who definitively want 0:14:21.520 --> 0:14:24.520 and lost. But particularly in a lot of U states 0:14:24.560 --> 0:14:27.520 where where Democrats are who already uh disinclined to like 0:14:27.640 --> 0:14:29.840 this tax cut, New York, New Jersey, they were also 0:14:29.920 --> 0:14:32.320 limited by these state and local tax deductions. Used to 0:14:32.320 --> 0:14:33.800 be able to write off all of your state and 0:14:33.800 --> 0:14:36.560 local taxes that's now capped at ten thousand dollars to 0:14:36.720 --> 0:14:39.480 lots of voters in the in the northeastern California are 0:14:39.480 --> 0:14:42.680 finding that they actually saw a tax increase. Overall, it's 0:14:42.680 --> 0:14:44.880 a relatively small portion. You know, about five ten percent 0:14:44.920 --> 0:14:48.760 of people actually had their taxes increase, but they're mostly 0:14:48.800 --> 0:14:50.960 in Democratic leaning places and they feel that they were 0:14:50.960 --> 0:14:53.600 targeted by this law. Boy, you can count me as 0:14:53.600 --> 0:14:56.720 one of those people who paid lost on the sought deduction. 0:14:56.840 --> 0:15:00.320 So here being the metro New York area. UM Laura 0:15:00.400 --> 0:15:04.360 Trump's top economic advisor, Larry Cudlow last week, I believe, 0:15:04.400 --> 0:15:07.920 said that the tax cut package had largely already paid 0:15:07.920 --> 0:15:10.720 for itself. Is that accurate? That is not. We have 0:15:10.800 --> 0:15:13.920 seen that there's been some economic feedback from the law, 0:15:13.960 --> 0:15:15.880 but it's really only paid for a fraction of the 0:15:15.880 --> 0:15:19.480 one point five trillion dollars that this cost over a decade. 0:15:19.480 --> 0:15:21.080 And once you throw on you know, what it costs 0:15:21.120 --> 0:15:23.600 to service this debt um, it's even more than that 0:15:23.600 --> 0:15:26.240 one point five trillion, approaching almost two trillion. So the 0:15:26.680 --> 0:15:29.120 that's simply simply not the case. And and when you 0:15:29.120 --> 0:15:31.280 look at the Republicans have been a little bit um 0:15:31.280 --> 0:15:33.960 inconsistent on their messaging about this. You know, at times 0:15:33.960 --> 0:15:35.480 they've said, oh, look, we never said this was going 0:15:35.520 --> 0:15:37.800 to pay for it for itself. Cudlow said, it would 0:15:37.800 --> 0:15:39.840 pay for itself, but the facts and the numbers that 0:15:39.880 --> 0:15:41.920 have so far been coming in have shown that it 0:15:42.000 --> 0:15:44.080 has not paid for itself, and it probably will not 0:15:44.200 --> 0:15:46.080 over the course of the next decade. Laura, I want 0:15:46.080 --> 0:15:47.920 to go back to the salt the state and local 0:15:47.920 --> 0:15:51.720 tax deductions that were eliminated basically or kept at ten 0:15:51.800 --> 0:15:56.360 thousand dollars. Is there any evidence that residents of some 0:15:56.440 --> 0:15:58.880 of the high tax states New York, New Jersey, California 0:15:59.160 --> 0:16:03.040 have been moving to lower tax states in response to 0:16:03.160 --> 0:16:06.600 this tax lot change. There has not been great evidence yet, 0:16:06.640 --> 0:16:08.480 and we're only you know, a year in um and 0:16:08.520 --> 0:16:10.600 it would be a pretty drastic move to to move 0:16:10.680 --> 0:16:13.600 somewhere across the country just for a lower tax rate. 0:16:13.640 --> 0:16:15.360 On the margins, you're seeing a little bit of that. 0:16:15.400 --> 0:16:18.240 In particular on the higher end, you're seeing um condo 0:16:18.320 --> 0:16:20.720 developers and and real estate agents who are trying to 0:16:20.760 --> 0:16:22.760 target some of these high earners and convince them to 0:16:22.800 --> 0:16:25.440 move to Miami or you know, in California, to move 0:16:25.440 --> 0:16:28.280 across the state line to Nevada. So far that that's 0:16:28.280 --> 0:16:31.160 not necessarily going to be economist or looking at this 0:16:31.320 --> 0:16:34.480 not a huge driving factor, just because there's so many 0:16:34.480 --> 0:16:36.280 reasons to be in New York and your business is there, 0:16:36.320 --> 0:16:38.560 your kids are there, your your network is there. Uh. 0:16:38.600 --> 0:16:40.680 That that uh in New York State also makes it 0:16:40.760 --> 0:16:43.400 very hard to leave. They will look very closely if 0:16:43.440 --> 0:16:45.880 you can have a home in Florida. They look at 0:16:45.880 --> 0:16:48.240 how many nights you're spending in Florida versus New York 0:16:48.240 --> 0:16:50.120 and really sort of this teddy bear test of where 0:16:50.160 --> 0:16:51.960 does your teddy bear at night? Do as you do 0:16:51.960 --> 0:16:55.320 you have your dentists? Do you have your that is 0:16:55.440 --> 0:16:57.040 that's a very technical term. You can look that up 0:16:57.080 --> 0:17:00.200 in the tax coak just real quickly. What is What 0:17:00.200 --> 0:17:01.720 do you think the Democrats are going to do here 0:17:01.720 --> 0:17:03.760 with this tax issue? Are they're gonna try to use 0:17:03.760 --> 0:17:05.840 this as something to really be a positive for them 0:17:05.840 --> 0:17:09.520 and go against the Republicans. So far they were successful 0:17:09.560 --> 0:17:12.359 in that and really ran hard on the tax issue. 0:17:12.400 --> 0:17:15.800 And you've seen so far a lot of Democrats campaigning 0:17:15.840 --> 0:17:18.280 on on raising taxes, particularly for the wealthy. So you know, 0:17:18.320 --> 0:17:20.800 Elizabeth Warren and Bernie Sanders have talked about you know, 0:17:20.800 --> 0:17:24.600 expanding the estate tax or or paying um uh, you know, 0:17:24.680 --> 0:17:27.720 having the wealth the wealthy pay an annual tax on 0:17:27.760 --> 0:17:30.080 their on their total wealth, and and they're saying, look, 0:17:30.080 --> 0:17:32.919 this will pay for you know, um costs for childcare, 0:17:33.000 --> 0:17:35.439 or for free college tuition or medicare for all. And 0:17:35.480 --> 0:17:38.399 that's where they're really seeing that these ideas are polling 0:17:38.440 --> 0:17:42.440 really well, you know in some cases. Laura Davison, thank 0:17:42.440 --> 0:17:44.240 you so much for being with us. Laura Davison is 0:17:44.280 --> 0:17:48.359 Congressional tax reporter for Bloomberg Tax, joining us from Washington, 0:17:48.520 --> 0:18:06.080 d C. Well, it looks like the on again, off 0:18:06.119 --> 0:18:08.520 again trade talks between the US and China are most 0:18:08.520 --> 0:18:11.560 certainly back on again. To get the latest, we welcome 0:18:11.640 --> 0:18:15.000 Mike McDonough. Mike is a chief economist for financial Products 0:18:15.000 --> 0:18:17.600 at Bloomberg. He joined us live here in Bloomberg eleven 0:18:17.640 --> 0:18:21.159 three oh studios in New York. So, Mike, is China 0:18:21.280 --> 0:18:24.120 just gonna buy more soybeans from US? Or is there 0:18:24.160 --> 0:18:26.399 something more substantive coming down the pike? You know, I 0:18:26.440 --> 0:18:28.480 think I think we're going to see something far more 0:18:28.520 --> 0:18:32.359 substantive than China buying more soybeans. I think the reason 0:18:32.400 --> 0:18:34.760 we haven't seen a deal yet, well, there's many reasons, 0:18:35.280 --> 0:18:37.080 but one of them is they are trying to do 0:18:37.160 --> 0:18:40.360 something that is a little bit more holistic that answers 0:18:40.400 --> 0:18:44.720 for some of the UH investor access into China, some 0:18:44.880 --> 0:18:48.879 of the intellectual property UH issues. UH. And of course, 0:18:48.920 --> 0:18:51.200 you know China buying more stuff, trying to buying more 0:18:51.200 --> 0:18:53.560 stuff is actually the easiest thing to tackle it. If 0:18:53.600 --> 0:18:55.240 that was it, this would have been done months ago. 0:18:55.600 --> 0:18:57.439 It's trying to figure out how do you open up 0:18:57.440 --> 0:19:00.879 more of China's economy to foreign investors, how do you 0:19:00.920 --> 0:19:03.920 deal with intellectual property? And what is the enforcement mechanism 0:19:04.000 --> 0:19:06.840 put in place to make sure that that happens well. 0:19:07.000 --> 0:19:10.040 Talking about the enforcement mechanism, Steve mcnuch in, the Treasury 0:19:10.080 --> 0:19:12.479 Secretary in the United States, said over the weekend at 0:19:12.480 --> 0:19:14.360 the I m F meetings that the US is open 0:19:14.400 --> 0:19:17.080 to facing repercussions if it doesn't live up to its 0:19:17.119 --> 0:19:19.960 commitments and a potential trade deal with China. So this 0:19:20.160 --> 0:19:25.040 actually speaks to the mechanism of enforcement. And my question 0:19:25.160 --> 0:19:28.479 is how significant is that statement by Treasure Secretary monution. 0:19:28.640 --> 0:19:31.040 You know, I know there had been some debate over 0:19:31.240 --> 0:19:34.919 what if it was decided China wasn't following through with 0:19:35.040 --> 0:19:37.280 part of the deal, what would happen. The US wanted 0:19:37.320 --> 0:19:40.480 to put sanctions back on China. China wanted to be 0:19:40.520 --> 0:19:43.320 able to reciprocate. I think that that was a line 0:19:43.320 --> 0:19:45.000 in the sand that had been drawn that the US 0:19:45.119 --> 0:19:47.720 was saying no. So it would indicate that there has 0:19:47.760 --> 0:19:50.040 been some progress made on that front. But I'd be 0:19:50.119 --> 0:19:54.440 really really interested to hear President Trump's comments on that 0:19:54.520 --> 0:19:58.480 suggestion to see if they're a line there. So, Mike, 0:19:58.520 --> 0:20:00.480 when you take a look at the both sides, I'm 0:20:00.480 --> 0:20:03.360 thinking about China here, who is more incentive to get 0:20:03.400 --> 0:20:06.320 a real deal done as a one as opposed to 0:20:06.320 --> 0:20:09.680 one is more of a kind of a headline like deal. Uh. Well, 0:20:09.720 --> 0:20:12.119 I think you know, China would like to see a 0:20:12.160 --> 0:20:15.320 deal that kind of makes this go away this problem. 0:20:15.840 --> 0:20:17.640 But I think you know what what China is worried 0:20:17.640 --> 0:20:19.840 about right now is not just getting this deal done. 0:20:20.119 --> 0:20:22.200 They're looking further ahead, and I think they're worried about 0:20:23.320 --> 0:20:25.320 you know what if the economy starts to slow in 0:20:26.280 --> 0:20:28.240 what is the situation going to be? Right if they 0:20:28.240 --> 0:20:32.639 pass a holistic deal, you have these enforcement mechanisms in place. Uh, 0:20:32.680 --> 0:20:36.639 will the bluster continue from the administration, as you know? 0:20:36.640 --> 0:20:39.280 If growth is slowing ahead of the election and China 0:20:39.320 --> 0:20:42.359 becomes another target despite this deal, so I think that 0:20:42.560 --> 0:20:44.679 is a bit of a concern. I think that on 0:20:44.720 --> 0:20:49.120 the U S side, the trade negotiators, the lighthousers of 0:20:49.240 --> 0:20:52.199 the administration, um, they have a certain bar they'd like 0:20:52.280 --> 0:20:54.560 to see. They view this as an opportunity to do 0:20:54.640 --> 0:20:58.000 something meaningful with China. I think though, as growth has 0:20:58.040 --> 0:21:00.320 slowed in the U S a little bit or become yeah, 0:21:00.400 --> 0:21:03.200 that's growth is slowed, markets have become a little bit 0:21:03.200 --> 0:21:07.280 more sang wine, I think that you have, um, the 0:21:07.320 --> 0:21:10.720 President Trump's bar may have actually gone down below that 0:21:10.800 --> 0:21:12.720 of his own trade negotiators. That's why I was saying 0:21:12.760 --> 0:21:16.320 it would be interesting to get his comments on Stephen 0:21:16.320 --> 0:21:20.320 Minusian statement of the China being able to put tariffs 0:21:20.359 --> 0:21:22.240 on the U S if they don't follow through with 0:21:22.280 --> 0:21:26.480