WEBVTT - Examining the Principles and Methods of Modern Corporate Finance 0:00:02.520 --> 0:00:09.360 Bloomberg Audio Studios, podcasts, radio news. This is Bloomberg BusinessWeek 0:00:09.680 --> 0:00:13.399 with Carol Masser and Tim Steneveek on Bloomberg Radio. 0:00:13.920 --> 0:00:17.680 Corporate finance is a staple of any business school degree. 0:00:18.000 --> 0:00:20.800 You must learn how to discount cash flows and the 0:00:20.880 --> 0:00:24.520 language around it, the weighted average cost of capital, dividends 0:00:24.840 --> 0:00:28.200 and more. Don Chu can discount cash flows in his sleep. 0:00:28.360 --> 0:00:30.640 He's founding editor and editor in chief of the Journal 0:00:30.640 --> 0:00:32.839 of Applied Corporate Finance, as well as one of the 0:00:32.840 --> 0:00:36.320 founding partners of the corporate finance advisory stern Stwart and Company. 0:00:36.680 --> 0:00:39.120 He's also the author of the book out in February, 0:00:39.440 --> 0:00:41.680 The Making of Modern Corporate Finance, A History of the 0:00:41.720 --> 0:00:44.440 ideas and how they help build the wealth of nations. 0:00:45.080 --> 0:00:47.440 Don joins us from New York. Don good to have 0:00:47.520 --> 0:00:50.559 you on the program. Why should people who are not 0:00:50.640 --> 0:00:53.400 in finance care about corporate finance? 0:00:55.560 --> 0:00:59.160 You, guys, corporate finance has tremendous power to affect their 0:00:59.280 --> 0:01:04.520 live The productivity of corporations is what ends up paying 0:01:04.640 --> 0:01:07.120 for the health, welfare and general well being of the 0:01:07.120 --> 0:01:10.759 rest of US. Private sector productivity is Adam Smith told 0:01:10.800 --> 0:01:13.880 us two hundred and fifty years ago that really creates 0:01:14.680 --> 0:01:16.360 economic and social wealth. 0:01:18.440 --> 0:01:23.840 What specifically about the US and US corporate finance has 0:01:24.160 --> 0:01:28.080 kind of pushed up the stock market and the economy 0:01:29.000 --> 0:01:32.840 in the United States over the last few decades. 0:01:32.840 --> 0:01:33.080 Really. 0:01:34.040 --> 0:01:37.320 Yeah, Now, I argue my book that the corporate America 0:01:37.440 --> 0:01:40.319 was failing in the seventies because it had turned itself 0:01:40.360 --> 0:01:45.399 into bloated conglomerates, collections of unrelated businesses that were unable 0:01:45.440 --> 0:01:48.520 to respond to the high inflation that was the result 0:01:48.600 --> 0:01:50.000 of bad public policy. 0:01:50.840 --> 0:01:53.440 This led to a at. 0:01:53.280 --> 0:01:58.080 That point, court investors had virtually no control over these companies, 0:01:58.120 --> 0:02:00.640 and so what we saw in the eighties was a 0:02:00.680 --> 0:02:06.960 reassertion of investor power over corporations, the ability to tear 0:02:07.000 --> 0:02:12.040 apart these inefficient conglomerates. Basically a restoration of what corporate 0:02:12.080 --> 0:02:15.240 finance was like in the nineteen twenties when JP Morgan 0:02:15.400 --> 0:02:18.679 used to own large positions debt and equhen he sat 0:02:18.760 --> 0:02:23.639 on boards made strategic decisions for fifty years, especially going 0:02:23.680 --> 0:02:28.000 through Glass Stiegel and the Great Depression, professional managers gradually 0:02:28.080 --> 0:02:31.480 assumed control of all decision making. So this was a 0:02:31.520 --> 0:02:34.720 reversal of a trend, you know, going back after fifty 0:02:34.800 --> 0:02:40.799 years to allowing investors to reassume control of corporations, and 0:02:41.120 --> 0:02:43.920 the American system is almost unique in the sense that 0:02:44.560 --> 0:02:49.120 investors really have voice and power and control. So I 0:02:49.160 --> 0:02:52.959 would argue that shareholder activism is the secret sauce of 0:02:53.400 --> 0:02:56.000 the the productivity of the US economy. 0:02:56.840 --> 0:02:59.040 Where do you see things moving right now? You mentioned 0:02:59.080 --> 0:03:02.000 Otis Smith, So that's where I gotta go, because I 0:03:02.000 --> 0:03:04.680 don't think out of Smith would approve of the tariff 0:03:04.720 --> 0:03:10.120 policy of the Trump administration. Certainly he writes aboutations. Yeah, 0:03:10.320 --> 0:03:12.440 I mean, what do you what do you make of it? 0:03:12.440 --> 0:03:14.200 And what do you make of what's happening in Washington? 0:03:14.240 --> 0:03:16.480 And what does that mean for corporate finance? 0:03:18.840 --> 0:03:23.000 I think I think our American institutions are stronger than 0:03:23.160 --> 0:03:26.600 Donald Trump. They're stronger than Joe Biden. They will they 0:03:26.639 --> 0:03:30.320 are flexible, They're lean and mean, they will respond to 0:03:30.400 --> 0:03:33.280 virtually anything that politicians can do to them. You know, 0:03:33.480 --> 0:03:37.520 I'm being uguistic here, but I understand Trump's capacity to 0:03:37.600 --> 0:03:40.520 reduce the market value by two trillion dollars of the 0:03:40.560 --> 0:03:45.160 stock market. But nonetheless, every macro economist I know four 0:03:45.280 --> 0:03:48.400 years ago was saying we were bound to have a recession. 0:03:48.760 --> 0:03:51.080 Now we're starting to hear again the threats we're going 0:03:51.120 --> 0:03:55.440 to have another recession. My response is corporate America knows. 0:03:55.320 --> 0:03:56.120 How to deal with it. 0:03:56.240 --> 0:03:59.800 They will respond, and they will They will cut back 0:03:59.840 --> 0:04:03.160 on failing investments, but they will continue to invest in 0:04:03.200 --> 0:04:06.000 their growth opportunities as they have for the past forty 0:04:06.040 --> 0:04:07.440 five years. 0:04:08.640 --> 0:04:12.360 Don speaking of kind of macro statistics, you have a 0:04:12.400 --> 0:04:17.839 whole chapter in your new book about micro based attempts 0:04:17.839 --> 0:04:22.479 to make macro relevant. Tell us about, you know, this 0:04:22.720 --> 0:04:26.000 argument that you're making because of course we pay a 0:04:26.000 --> 0:04:29.240 lot of attention to macro statistics, or that. 0:04:29.200 --> 0:04:30.120 You read that chapter. 0:04:30.240 --> 0:04:34.000 First of all, I don't think I believe that there's. 0:04:33.800 --> 0:04:37.920 A chasm between macroeconomics and microeconomics. I have not seen 0:04:38.120 --> 0:04:43.320 anybody really pointing to this, and I find macro statistics 0:04:43.360 --> 0:04:48.040 to be almost you know, they have major limitations. They 0:04:48.040 --> 0:04:51.960 don't tell us anything about productivity that they're really There 0:04:52.000 --> 0:04:54.760 are records of transactions. What you see in GDP is 0:04:55.240 --> 0:04:57.040 you know, sales and transactions. 0:04:57.200 --> 0:04:58.800 But what we want to know is. 0:04:58.720 --> 0:05:02.560 The productivity of these expenses. What we want to know 0:05:02.640 --> 0:05:06.680 the consumer surplus. How much would customers actually be willing 0:05:06.720 --> 0:05:08.960 to pay for some of these goods. None of that 0:05:09.040 --> 0:05:13.640 shows up in the conventional macro productivity statistics. So the 0:05:13.680 --> 0:05:17.000 result of this is that macro is a lagging indicator. 0:05:17.080 --> 0:05:20.800 Macrostat stats are the last thing to tell us about productivity. 0:05:20.880 --> 0:05:25.160 Robert Solo said, we have productivity today everywhere, but in 0:05:25.200 --> 0:05:29.359 the productivity statistics. Well, my argument is that if you 0:05:29.400 --> 0:05:31.479 want to know where productivity is going, look at the 0:05:31.480 --> 0:05:36.760 stock market. Look at stock prices, because they reflect consumer surplus. 0:05:36.800 --> 0:05:41.000 They reflect the productivity of expenditures. And I argue China 0:05:41.040 --> 0:05:44.640 has had no productivity growth since the global financial crisis. 0:05:44.920 --> 0:05:48.640 The US has had remarkable productivity growth for the last 0:05:48.640 --> 0:05:50.880 forty five years. It's not in the status. 0:05:51.640 --> 0:05:54.280 Don you have a PhD in English and American literature. 0:05:54.600 --> 0:05:56.279 I think people who don't know you and they see 0:05:56.279 --> 0:05:58.560 you write this book might be surprised to hear that 0:05:58.600 --> 0:06:01.920 somebody with your background, I mean that education background. How 0:06:01.920 --> 0:06:03.960 does that make you better at analyzing companies? 0:06:07.440 --> 0:06:07.839 Well? 0:06:08.160 --> 0:06:11.080 It in the act of writing this book. I've been 0:06:11.120 --> 0:06:13.640 at it for three years now, you know, I've I've 0:06:13.640 --> 0:06:15.440 been editing the Journal of the PLI of Corporate Finance 0:06:15.440 --> 0:06:18.080 for forty five years, and this, this book caused me 0:06:18.160 --> 0:06:21.480 to go back and revisit all these old studies, all 0:06:21.480 --> 0:06:24.440 the things I thought about corporate finance, and then the 0:06:24.560 --> 0:06:27.240 need to actually put it down on paper and formulate 0:06:27.279 --> 0:06:30.080 it in a way that you think other people might 0:06:30.120 --> 0:06:34.039 be able to grasp. It has been really valuable for me. 0:06:34.720 --> 0:06:37.760 Mike Milkan once said to me, don you know I 0:06:37.839 --> 0:06:39.839 want I would like you to write a book on 0:06:39.920 --> 0:06:43.239 corporate finance that could be, that could be it's brought 0:06:43.279 --> 0:06:45.880 down to the level of Walt Disney. And I said, Mike, 0:06:45.920 --> 0:06:48.520 I can't do that, but I can. I can try 0:06:48.560 --> 0:06:51.479 as hard as I can. And I really tried to 0:06:51.520 --> 0:06:55.159 make this book something that, you know, a smart, curious 0:06:55.200 --> 0:06:58.680 person would be able to understand. There's only five equations 0:06:58.680 --> 0:07:01.200 in the book, and I apologize for every one of them. 0:07:02.800 --> 0:07:06.360 Hey, we only have about thirty seconds left. But I'm 0:07:06.360 --> 0:07:08.560 wondering about the evolution of corporate finance the way you 0:07:08.600 --> 0:07:11.920 studied it as an MBA in Rochester to what you 0:07:12.080 --> 0:07:16.720 have seen now. Has it evolved significantly? Has it changed significantly? 0:07:20.440 --> 0:07:24.080 Well, you know, it has evolved from Milton Friedman's version 0:07:24.240 --> 0:07:28.480 of capitalism as the pursuit of profit to something that 0:07:28.520 --> 0:07:32.680 I call that Michael Jensen has called enlightened value maximization 0:07:33.320 --> 0:07:36.440 and that it's really it's long run value maximization. It's 0:07:36.480 --> 0:07:39.760 completely consistent with Freedman's view, but it means that the 0:07:39.800 --> 0:07:43.800 corporation had to pay much more attention to all their stakeholders, 0:07:43.840 --> 0:07:47.920 you know, their employees, their suppliers, the regulators, tax collectors, 0:07:48.640 --> 0:07:50.520 but they also you know, you have to do it 0:07:50.520 --> 0:07:53.240 in such a way that you're not reducing the value 0:07:53.320 --> 0:07:56.760 and the competitive strength of the firm. Do good things 0:07:56.800 --> 0:08:00.120 for society, but make sure you're not destroying value. 0:08:00.480 --> 0:08:03.080 Don appreciate you joining us, congratulations on the new book. 0:08:03.120 --> 0:08:04.960 Don Chu was founding editor and editor in chief of 0:08:05.000 --> 0:08:08.840 the Journal of Applied Corporate Finance. He's also the author 0:08:08.880 --> 0:08:10.960 of the new book, The Making of Modern Corporate Finance, 0:08:10.960 --> 0:08:12.520 A History of the ideas and how they build the 0:08:12.560 --> 0:08:15.440 Wealth of Nations. US stocks climbing for a second day. 0:08:15.480 --> 0:08:18.080 They extended that recovery from a sharp drop that reached 0:08:18.120 --> 0:08:21.640 ten percent last week. Industrial and energy shares rallied on 0:08:21.680 --> 0:08:24.760 economic data that well missing forecast was able to quell 0:08:24.800 --> 0:08:27.840 concern about an imminent recession. More than ninety percent of 0:08:27.880 --> 0:08:29.800 the companies in the S and P five hundred rows 0:08:30.040 --> 0:08:34.440 overshadowing a slide in most megacaps and perhaps exemplifying that. 0:08:34.559 --> 0:08:36.640 Check this out. An equal weighted version of the benchmark 0:08:36.840 --> 0:08:40.040 climbed one point three percent from where we bring in 0:08:40.120 --> 0:08:43.120 Leslie Mark. She's chief investment officer of Mackenzie Investments. She 0:08:43.200 --> 0:08:46.720 joins us from Toronto. Leslie, good to have you this afternoon. 0:08:47.200 --> 0:08:49.200 Is the worst of this slide behind us? 0:08:50.559 --> 0:08:51.760 Well, nice to be here. 0:08:51.840 --> 0:08:54.920 And I'm not sure if the worst of this slide 0:08:55.200 --> 0:08:56.000 is behind us. 0:08:56.000 --> 0:08:56.719 It's hard to say. 0:08:56.800 --> 0:08:59.880 I mean, I think we're going to see a lot 0:08:59.880 --> 0:09:04.440 of clarity leading into April second, when we will get 0:09:04.480 --> 0:09:10.040 more information around reciprocal tariffs and potential sectoral tariffs. So 0:09:10.440 --> 0:09:14.760 I do think that the best case scenario is sort 0:09:14.800 --> 0:09:18.480 of oscillating market on the equity side between now and 0:09:18.640 --> 0:09:22.880 April second. It's hard to see market surge materially higher 0:09:22.920 --> 0:09:23.560 between now. 0:09:23.440 --> 0:09:27.560 And then, Leslie. To go really short term, we saw today, 0:09:28.080 --> 0:09:31.640 you know, some of these megacap tech stocks falling, Wall 0:09:32.320 --> 0:09:36.200 small caps were higher, the equal weighted index was higher. 0:09:36.800 --> 0:09:39.840 What does that kind of tell you about what's really 0:09:40.000 --> 0:09:42.400 driving investors right now? 0:09:43.400 --> 0:09:45.959 Well, I think it's really a concern around growth and 0:09:46.080 --> 0:09:50.080 a lot of the megacap stocks obviously have had high growth, 0:09:50.160 --> 0:09:53.600 high momentum, high valuation, and what we have been seeing 0:09:53.640 --> 0:09:56.959 for a while now, not just since we've had this 0:09:57.080 --> 0:10:00.520 sort of tariff situation, has been a rotator and a 0:10:00.559 --> 0:10:07.559 broadening out in the market and looking towards better valued opportunities. 0:10:07.559 --> 0:10:10.079 And that's really been a theme within the United States, 0:10:10.080 --> 0:10:13.920 but also also globally, and that's where you've seen big 0:10:13.960 --> 0:10:16.880 moves in areas like European equities as well. 0:10:17.960 --> 0:10:21.480 Is this the year finally for European equities? Or maybe 0:10:21.520 --> 0:10:23.480 a better way to ask this is, is this finally 0:10:23.520 --> 0:10:25.559 the year that the US doesn't overperform the rest of 0:10:25.600 --> 0:10:26.439 the world. 0:10:27.360 --> 0:10:28.280 Well, I think that there. 0:10:28.160 --> 0:10:31.000 Is actually a very strong thesis that would support that. 0:10:32.120 --> 0:10:35.520 You know, for the last few years or the last decade, 0:10:35.559 --> 0:10:38.679 maybe I should say, the thesis has really been about valuation. 0:10:39.160 --> 0:10:42.200 And the thing is valuation is never really what drives 0:10:42.240 --> 0:10:42.880 a rotation. 0:10:43.040 --> 0:10:45.560 There always has to be a catalyst, and I actually 0:10:45.559 --> 0:10:48.319 do think we have a catalyst here, and that catalyst 0:10:48.440 --> 0:10:50.600 is a real change and shift. 0:10:50.679 --> 0:10:53.480 You know, there is a thesis around US. 0:10:53.360 --> 0:10:58.880 Exceptionalism really being driven by fiscal spending and driving the 0:10:58.920 --> 0:11:02.960 deficit higher and obviously what we're seeing right now is 0:11:03.000 --> 0:11:06.840 a period of disruption, the period that comes from moving 0:11:06.920 --> 0:11:10.640 spending away from the fiscal side to business investment, which 0:11:10.679 --> 0:11:13.319 is actually, you know, a policy that makes a lot 0:11:13.320 --> 0:11:16.200 of sense, particularly when your deficit is so high, it's 0:11:16.200 --> 0:11:19.720 a necessity to do that, So you know, I think 0:11:19.760 --> 0:11:22.160 that that policy makes a lot of sense. 0:11:22.400 --> 0:11:23.760 But on the other hand, it. 0:11:23.800 --> 0:11:25.960 Is creating a bit of a spending gap here that's 0:11:26.000 --> 0:11:29.800 going to impact US GDP growth. Conversely, you're seeing the 0:11:29.840 --> 0:11:33.280 opposite happen in Europe. You're actually seeing where there's been 0:11:33.640 --> 0:11:37.600 more fiscal restraint. Now what we're starting to see is 0:11:37.640 --> 0:11:40.360 sort of an opening up of the fiscal wallet, something 0:11:40.400 --> 0:11:43.160 we haven't seen for a long time, particularly in. 0:11:43.120 --> 0:11:44.600 Germany with defense spending. 0:11:44.840 --> 0:11:48.680 And that's what's really driving the equity investment or focus 0:11:48.800 --> 0:11:52.480 on European equities. So there actually is a fundamental investment 0:11:52.559 --> 0:11:56.920 thesis that does support the outperformance for European equities. 0:11:57.200 --> 0:12:02.160 Right now, you mentioned GDP and I'm wondering how you're 0:12:02.200 --> 0:12:08.200 thinking about GDP projections. We have the FED meeting later 0:12:08.280 --> 0:12:12.880 this week where the Central Bank will release its SEP 0:12:13.080 --> 0:12:16.720 projections and they will project where they think US growth 0:12:16.800 --> 0:12:20.760 is going in US inflation. What's on your mind now 0:12:20.880 --> 0:12:22.400 when you think about GDP. 0:12:23.720 --> 0:12:25.000 Well, I think the Fed's in a bit of a 0:12:25.000 --> 0:12:28.880 difficult spot because it's really focused on the information that 0:12:28.920 --> 0:12:32.559 it has today and there is a lot of uncertainty 0:12:32.679 --> 0:12:37.240 coming with the economy now going forward in the growth projections, 0:12:37.400 --> 0:12:40.079 and I just can't see the FED really being preemptive 0:12:40.200 --> 0:12:42.679 about that. So the Fed's going to assess the data 0:12:42.679 --> 0:12:44.400 that it has and that's going to tell them to 0:12:44.440 --> 0:12:46.040 stay on the sidelines. 0:12:46.360 --> 0:12:47.600 On the other hand, they do have. 0:12:47.600 --> 0:12:50.120 To be prepared for a big shift because what we're 0:12:50.160 --> 0:12:53.600 starting to see signs of is almost like a freezing 0:12:53.720 --> 0:12:57.079 in behavior. The consumer is starting to freeze, businesses are 0:12:57.080 --> 0:13:01.000 starting to freeze. Without policy certainty, people are having a 0:13:01.040 --> 0:13:04.560 hard time making spending decisions. I mean, I'm sure you 0:13:04.600 --> 0:13:07.480 see it, you feel it yourselves, see it in your communities. 0:13:07.640 --> 0:13:08.920 But we're also hearing. 0:13:08.640 --> 0:13:12.640 This pretty consistently from corporates as well, that when they 0:13:12.640 --> 0:13:16.600 think about making, you know, five, ten, fifteen year capital decisions, 0:13:16.920 --> 0:13:19.880 they need to have more visibility on what that is 0:13:19.920 --> 0:13:22.160 going to look like for them and what the return 0:13:22.520 --> 0:13:24.280 profile will be for them. 0:13:24.400 --> 0:13:27.000 So I do think that we are going to. 0:13:26.960 --> 0:13:31.320 Have several areas of the GDP formula that could be 0:13:31.480 --> 0:13:36.280 at risk for lower expectations over the short to medium term. 0:13:36.600 --> 0:13:39.080 But that doesn't mean that we're not set up very 0:13:39.120 --> 0:13:42.040 well over the longer term. And this is really the 0:13:42.120 --> 0:13:44.920 sort of short term pain for long term gain thesis. 0:13:45.600 --> 0:13:48.920 Has Powell's job gotten any easier given what we've seen 0:13:48.960 --> 0:13:51.559 with financial conditions over the last couple of weeks, a 0:13:51.559 --> 0:13:55.000 little bit of a sell off in stocks, We've seen 0:13:55.040 --> 0:13:59.960 a rally in rates, yields come down. This is this 0:14:00.280 --> 0:14:01.240 make his job easier? 0:14:02.679 --> 0:14:05.480 Well, Powell can join the long lineup of people whose 0:14:05.559 --> 0:14:09.280 jobs have become much more difficult over the last couple 0:14:09.320 --> 0:14:09.880 of months. 0:14:10.840 --> 0:14:12.040 Yes, I mean it's. 0:14:11.960 --> 0:14:14.200 Because you think his job has become more difficult. 0:14:14.920 --> 0:14:17.839 Yes, yes, yes, yes, I think I think. I think 0:14:17.840 --> 0:14:19.440 it's definitely more difficult. 0:14:19.080 --> 0:14:22.000 Because he's he's in a situation where he's, you know, 0:14:22.120 --> 0:14:26.200 having to make decisions on backward data that could look 0:14:26.480 --> 0:14:30.040 very different from forward looking data. 0:14:30.080 --> 0:14:33.000 I think, you know, central bankers around the world. 0:14:33.040 --> 0:14:38.160 Are experiencing a more challenging environment right now as we 0:14:38.280 --> 0:14:43.560 see all of these shifts around how money is spent. 0:14:43.840 --> 0:14:46.880 And you know, as I use the German example of 0:14:46.920 --> 0:14:50.400 a shift from more you know, lower interest rate monetary 0:14:50.440 --> 0:14:54.040 stimulus towards fiscal The US is sort of in the 0:14:54.080 --> 0:14:58.680 opposite situation where it's moving away from fiscal and eventually 0:14:59.160 --> 0:15:02.160 if it's experience, if the United States experience is a 0:15:02.200 --> 0:15:06.200 slowdown in GDP, growth will have to move towards easy 0:15:06.320 --> 0:15:10.320 monetary policy. So you know, that's likely in the cards 0:15:10.840 --> 0:15:14.040 for the future, depending on how growth plays out. 0:15:14.480 --> 0:15:18.160 But we have seen more and more views. 0:15:17.920 --> 0:15:20.680 Around you know, of course, there are people that are 0:15:20.680 --> 0:15:24.880 calling for potential for recession. I would say even calling 0:15:24.920 --> 0:15:28.840 for a soft landing will make the FED want to 0:15:28.880 --> 0:15:31.800 think more dubvishly about the future. 0:15:32.920 --> 0:15:35.360 I want to go back to tariffs for just a moment, 0:15:35.440 --> 0:15:38.640 because you know, I'm looking back at the notes that 0:15:38.640 --> 0:15:42.120 you send over to us about how you know, there's 0:15:42.160 --> 0:15:44.720 this on and off again reddick about the tariffs, and 0:15:44.800 --> 0:15:48.120 everyone right now feels kind of frozen. If you're an investor, 0:15:48.160 --> 0:15:50.560 if you're a business leader, you just are kind of 0:15:50.560 --> 0:15:52.200 in like a wait and see mode to see what 0:15:52.280 --> 0:15:56.800 happens with the tariffs. When do you see markets kind 0:15:56.840 --> 0:16:00.280 of moving on from tariffs? How long are you're going 0:16:00.320 --> 0:16:02.720 to have to be kind of like dealing with headlines, 0:16:02.720 --> 0:16:04.280 and investors is going to have to be waiting on 0:16:04.320 --> 0:16:06.680 the sidelines until things are smoothed out. 0:16:07.200 --> 0:16:10.200 Yeah, well, I do think the next catalyst, as I mentioned, 0:16:10.520 --> 0:16:14.320 is April second, when the President will have all of 0:16:14.360 --> 0:16:17.040 the trade reports on his desk and he will be 0:16:17.400 --> 0:16:20.880 working with his team to make a decision around the 0:16:20.960 --> 0:16:25.720 way forward as pertains to reciprocal tariffs and sectoral tariffs. 0:16:26.720 --> 0:16:30.720 Maybe something else that's quite encouraging is today we heard 0:16:30.880 --> 0:16:35.920 from Jamison Greer that there's the sense of wanting to 0:16:35.960 --> 0:16:41.760 bring a little bit more process around the approach towards tariffs, 0:16:41.800 --> 0:16:44.800 and so for an investor or for the investment community, 0:16:45.000 --> 0:16:49.240 that's really important because the strategy might be a good strategy, 0:16:49.600 --> 0:16:53.600 but so far the execution has been very chaotic, and 0:16:53.680 --> 0:16:57.520 so what we want to see is process and methodology 0:16:57.840 --> 0:17:01.000 around the tariff decisions, and then I think will feel 0:17:01.040 --> 0:17:04.640 more comfortable with the outlook for the market when they 0:17:04.720 --> 0:17:08.360 know what the scope of tariffs is going to be. Today, 0:17:09.040 --> 0:17:13.120 to your point, we really don't know, and we've had 0:17:13.280 --> 0:17:16.440 environments over the last month or so where that has 0:17:16.480 --> 0:17:20.000 really changed day to day and in a very surprising 0:17:20.000 --> 0:17:20.720 way I would. 0:17:20.560 --> 0:17:23.720 Say, Leslie, you're joining us from Toronto. So I'd be 0:17:23.760 --> 0:17:25.879 remiss if we didn't ask just about what the scuttle 0:17:25.920 --> 0:17:28.040 but has been with regard to the way the President 0:17:28.640 --> 0:17:33.360 has been talking about Canada over the last few months. 0:17:34.000 --> 0:17:36.399 What are you guys talking about at work? How are 0:17:36.400 --> 0:17:39.560 you thinking about his comments about Canada becoming the fifty 0:17:39.600 --> 0:17:43.359 first state, the change in leadership in Canada and the 0:17:43.359 --> 0:17:47.920 way that Mark Karney has promised to prevent that from happening. 0:17:47.960 --> 0:17:48.840 What do you make of all this? 0:17:50.200 --> 0:17:55.720 Well, Canadians are very proud about their country and they 0:17:55.760 --> 0:17:58.720 certainly don't see themselves And I'm generalizing, but I would 0:17:58.720 --> 0:18:02.879 say the majority, the overwhelming majority of Canadians, do not 0:18:03.000 --> 0:18:07.639 see themselves becoming a fifty first state. We have a 0:18:07.680 --> 0:18:12.520 democratically elected prime minister, we will have an election soon. 0:18:13.920 --> 0:18:19.080 We feel very strongly about the potential for our country, 0:18:20.240 --> 0:18:23.880 the important and we recognize the importance of our relationship 0:18:24.320 --> 0:18:27.480 with the United States as a trading partner. So I 0:18:27.480 --> 0:18:32.200 think for most Canadians, they've been very surprised by how 0:18:32.359 --> 0:18:36.639 things have gone in the first six weeks or so 0:18:36.840 --> 0:18:43.560 of this administration, and they're definitely thinking about how we 0:18:43.600 --> 0:18:47.639 need to look at the future around our relationship with 0:18:48.440 --> 0:18:52.200 our biggest trading partner, and it's been a mutually beneficial 0:18:52.359 --> 0:18:56.719 relationship and I think most people that participate in that 0:18:56.800 --> 0:18:58.520 relationship would. 0:18:58.240 --> 0:19:00.680 Agree with that statement. 0:19:01.040 --> 0:19:03.880 And so that's what we want to see, going back 0:19:03.920 --> 0:19:07.800 to that mutually beneficial relationship, where there is a mutual 0:19:07.920 --> 0:19:13.800 respect towards our leadership, towards our people, war's our relationships. 0:19:14.520 --> 0:19:17.480 Leslie Marx really appreciate you joining us today. Leslie Marx 0:19:17.600 --> 0:19:19.679 is a CIO of Mackenzie Investments. 0:19:20.960 --> 0:19:24.760 This is Bloomberg Business Week, insight from the reporters and 0:19:24.880 --> 0:19:28.840 editors that bring you America's most trusted business magazine, plus 0:19:29.000 --> 0:19:33.240 global business, finance and tech news as it happens. Bloomberg 0:19:33.280 --> 0:19:38.240 Business Week with Carol Masser and Tim Steneveek on Bloomberg Radio. 0:19:40.240 --> 0:19:42.919 It is Bloomberg BusinessWeek. I'm Tim Stenevek and that is 0:19:42.920 --> 0:19:46.840 Emli Gerfao in for Carol Masser this afternoon. The big 0:19:46.920 --> 0:19:49.760 question I have is is there a worse time to 0:19:49.800 --> 0:19:53.080 be a college president? As public opinion on higher education 0:19:53.200 --> 0:19:56.359 continues to sour and the Trump administration threatens huge spending cuts, 0:19:56.359 --> 0:19:59.520 to say nothing of the royling protests or crippling sticker 0:19:59.520 --> 0:20:03.520 shock campuses are on edge, so right, Anne, Riley Moffatt, 0:20:03.560 --> 0:20:06.000 and Bradstone for Bloomberg Business Week. Bradstone is the editor 0:20:06.040 --> 0:20:08.600 of Bloomberg Business He joins me here in our San 0:20:08.680 --> 0:20:11.560 Francisco bureau. Talk about timing for this story. I mean, 0:20:11.600 --> 0:20:13.760 this was kind of perfect timing to see. 0:20:13.840 --> 0:20:18.320 Yeah, we actually interviewed five We brought together five university 0:20:18.359 --> 0:20:21.200 presidents at the end of February, and that was one 0:20:21.280 --> 0:20:24.560 week before the federal government, before the Trump administration threatened 0:20:24.560 --> 0:20:28.679 to withdraw four hundred million dollars in funding from Columbia University. 0:20:28.800 --> 0:20:31.800 So yes, in some ways the timing was great because 0:20:31.800 --> 0:20:35.679 there was these these clouds were on the horizon. In 0:20:35.720 --> 0:20:39.760 other ways, this publishing this package on higher education has 0:20:40.440 --> 0:20:42.560 is like trying to jump onto a moving horse. Things 0:20:42.600 --> 0:20:43.440 are moving very quickly. 0:20:43.560 --> 0:20:43.760 Yeah. 0:20:43.760 --> 0:20:45.280 I mean even today we got Harvard News and we 0:20:45.359 --> 0:20:48.520 got like, you know, exclusive schools selling bonds at a 0:20:48.520 --> 0:20:51.320 really high rate. Right now, the move the news is 0:20:51.320 --> 0:20:55.679 happening very quick. The decision makers you spoke to at 0:20:55.680 --> 0:20:59.320 these top universities, they were public and private schools, They 0:20:59.320 --> 0:21:03.080 were large schools and small schools. They were liberal arts 0:21:03.119 --> 0:21:06.040 schools and state schools. It really runs the gamut. Who 0:21:06.040 --> 0:21:06.719 are these people? 0:21:06.920 --> 0:21:09.359 And they're the brave few. We put out the call 0:21:09.680 --> 0:21:11.800 far in line and look, I mean, this is a 0:21:11.840 --> 0:21:15.240 tough time for university presidents. You said it in the introduction, 0:21:15.440 --> 0:21:18.360 maybe the hardest job in America right now. Not only 0:21:18.440 --> 0:21:23.520 the pre Trump factors of rising tuition costs, dropping mail enrollment, 0:21:23.640 --> 0:21:27.119 the ambiguity around test scores, protests in twenty three and 0:21:27.160 --> 0:21:30.040 twenty four, and then the kind of post Trump factors, 0:21:31.280 --> 0:21:35.840 the specter of an endowment tax, NIH cutting funding, and 0:21:35.880 --> 0:21:39.639 now the threats around DEI and anti Semitism. But really 0:21:39.680 --> 0:21:44.080 it's the administration viewing universities as a source of elitism 0:21:44.320 --> 0:21:46.840 and something of the enemy. So yes, we got the 0:21:46.880 --> 0:21:51.080 presidents of New York University, Marist University, Grinnell College, the 0:21:51.200 --> 0:21:54.480 University of Colorado A Boulder, and the University of Rhode 0:21:54.480 --> 0:21:57.160 Island all together in a room in New York City 0:21:57.200 --> 0:21:58.440 to hash out these issues. 0:22:00.840 --> 0:22:04.440 Rad I found it interesting that this word crisis came 0:22:04.560 --> 0:22:09.160 up multiple times in your article. I mean, how much 0:22:09.640 --> 0:22:12.680 of the job of being a college president is now 0:22:13.320 --> 0:22:15.280 a job of crisis management? 0:22:16.680 --> 0:22:19.240 I don't think Historically it was one. 0:22:19.320 --> 0:22:21.160 I mean, I think this was you know, this used 0:22:21.200 --> 0:22:24.320 to be the statesman role. I don't know if we 0:22:24.359 --> 0:22:26.960 could say it was ever particularly easy. But the thing 0:22:27.000 --> 0:22:30.359 that has really happened, I think probably starting with October seventh, 0:22:30.400 --> 0:22:34.760 twenty twenty three, and the attack on Israel from Hamas, 0:22:35.600 --> 0:22:38.960 there have been a set of constituencies at universities that 0:22:39.000 --> 0:22:42.680 are all whose interests are all diametrically kind of opposed. 0:22:42.720 --> 0:22:46.960 You have students, particularly at some of these elite universities, 0:22:47.000 --> 0:22:50.679 particularly at mi alma mater Columbia, inheriting the mantle of 0:22:50.720 --> 0:22:56.320 student activism and protest. And then you have alumni that 0:22:56.359 --> 0:22:59.240 are very much against us on campus activism, that feel 0:22:59.320 --> 0:23:03.160 like the college community experience has been co opted. You've 0:23:03.160 --> 0:23:05.920