1 00:00:09,720 --> 00:00:12,880 Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene with 2 00:00:13,600 --> 00:00:16,520 Speaker 1: David Gura. Daily we bring you insight from the best 3 00:00:16,560 --> 00:00:22,279 Speaker 1: of economics, finance, investment, and international relations. Find Bloomberg Surveillance 4 00:00:22,320 --> 00:00:27,000 Speaker 1: on Apple Podcasts, SoundCloud, Bloomberg dot Com, and of course, 5 00:00:27,320 --> 00:00:35,160 Speaker 1: on the Bloomberg Good morning everyone, David GURRANI came Mr 6 00:00:35,200 --> 00:00:39,040 Speaker 1: Gura off off off today. He's stealed for Indian Yankee 7 00:00:39,080 --> 00:00:42,600 Speaker 1: baseball Diamondbacks winning out West. We'll do some sports report 8 00:00:42,640 --> 00:00:45,040 Speaker 1: for you. I believe the Patriots had a football game yesterday. 9 00:00:45,080 --> 00:00:48,520 Speaker 1: We may touch on that as well. Mr Gurran out 10 00:00:48,560 --> 00:00:52,120 Speaker 1: here London. Francine Laqui will join me here in a 11 00:00:52,240 --> 00:00:56,440 Speaker 1: moment right now. She's Francine, are your coughing? Are you? 12 00:00:56,480 --> 00:00:58,960 Speaker 1: Are you? Are you as ill as the Prime minister? 13 00:00:59,200 --> 00:01:02,160 Speaker 1: The Prime minister, someone someone may give me a P 14 00:01:02,320 --> 00:01:06,240 Speaker 1: forty five shortly, No, I'm kidding, Tom, but talk so 15 00:01:06,560 --> 00:01:09,600 Speaker 1: forty five. When an employer says, thank you so much, Tom, 16 00:01:09,600 --> 00:01:11,399 Speaker 1: You've been great, but actually we have to fire you, 17 00:01:11,440 --> 00:01:13,200 Speaker 1: then they give you a P forty five, which means 18 00:01:13,200 --> 00:01:15,800 Speaker 1: that you bring to the government. So yesterday it was 19 00:01:15,959 --> 00:01:18,760 Speaker 1: unexpected the Prime Minister Theresa May was meant to give 20 00:01:18,800 --> 00:01:21,600 Speaker 1: a great speech outlining you know, her position within the 21 00:01:21,640 --> 00:01:25,200 Speaker 1: conservative garment. She started coughing, started spluttering that made us 22 00:01:25,200 --> 00:01:27,240 Speaker 1: in human. But then you have you know that this 23 00:01:27,600 --> 00:01:29,920 Speaker 1: rogue person also giving her the P forty five. It 24 00:01:29,959 --> 00:01:35,160 Speaker 1: didn't look great. Full Disclosure Surveillance team nationwide, worldwide. You 25 00:01:35,200 --> 00:01:37,800 Speaker 1: may hear a little bit of Prime ministerl coughing today 26 00:01:37,880 --> 00:01:41,640 Speaker 1: from me. I'm fighting the plague a little bit as well. 27 00:01:41,800 --> 00:01:44,120 Speaker 1: Mark Chandler where this with grown brothers Harriman. We've been 28 00:01:44,160 --> 00:01:48,000 Speaker 1: having a really spirited conversation with Mr Chandler this morning 29 00:01:48,000 --> 00:01:51,080 Speaker 1: about the linkage is in here. Let's Mark go to 30 00:01:51,760 --> 00:01:57,120 Speaker 1: what you see in your economic team sees with inflation. Um. 31 00:01:57,160 --> 00:02:01,640 Speaker 1: The vice chairman yesterday, Stanley Fisher, was adamant about shifting 32 00:02:01,680 --> 00:02:05,240 Speaker 1: from transitory to a higher level of inflation. Do you 33 00:02:05,320 --> 00:02:08,400 Speaker 1: buy it? I do think that inflation is going to 34 00:02:08,560 --> 00:02:10,760 Speaker 1: rise over time, but I think that we are stuck 35 00:02:10,800 --> 00:02:12,840 Speaker 1: in this in some ways. It's it's like, you know, 36 00:02:12,880 --> 00:02:15,800 Speaker 1: we talked about what's happening in Catalonia Civil Wars, and 37 00:02:15,840 --> 00:02:19,000 Speaker 1: I think that uh sort of like asking Mrs Lincoln 38 00:02:19,040 --> 00:02:21,920 Speaker 1: besides that, how is the play because I want to 39 00:02:21,960 --> 00:02:24,440 Speaker 1: say is that we are still stuck in this great 40 00:02:24,480 --> 00:02:27,880 Speaker 1: moderation that was interrupted by the Great Financial Crisis, and 41 00:02:27,880 --> 00:02:33,040 Speaker 1: that great moderation is characterized by low growth and low inflation. 42 00:02:33,120 --> 00:02:36,640 Speaker 1: I think we're still in that type of world. I 43 00:02:36,639 --> 00:02:40,920 Speaker 1: mean I I look at that type of world, and 44 00:02:40,919 --> 00:02:43,400 Speaker 1: I look at a VIX of nine point four seven, 45 00:02:43,400 --> 00:02:45,799 Speaker 1: which is a quiet in the market. Do you just 46 00:02:45,840 --> 00:02:50,000 Speaker 1: assume further quieting then in that type of world? Well, 47 00:02:50,040 --> 00:02:53,040 Speaker 1: it scares me. I mean probably as value investors, we're 48 00:02:53,080 --> 00:02:57,679 Speaker 1: really concerned about the lack of value oftentimes how difficult 49 00:02:57,720 --> 00:03:00,640 Speaker 1: values defined after such a strong rally, a stock market, 50 00:03:00,639 --> 00:03:03,120 Speaker 1: a record highs and so I know what I've done 51 00:03:03,160 --> 00:03:05,840 Speaker 1: personally is I've moved more into cash, thinking that eventually, 52 00:03:06,040 --> 00:03:08,040 Speaker 1: and I don't know when, but eventually we're gonna see 53 00:03:08,320 --> 00:03:11,000 Speaker 1: a major pullback. And it just scares me that that 54 00:03:11,120 --> 00:03:13,480 Speaker 1: when we never catch it on time. And I thought 55 00:03:13,520 --> 00:03:17,440 Speaker 1: that missed the the big crash in two thousand, had 56 00:03:17,440 --> 00:03:19,120 Speaker 1: a where that had a weather, that storm had to 57 00:03:19,120 --> 00:03:20,920 Speaker 1: weather the Great Financial christ And this time it just 58 00:03:20,919 --> 00:03:23,560 Speaker 1: seems to me that with a stock market these elevated levels, 59 00:03:23,880 --> 00:03:26,160 Speaker 1: with changing dynamics, with my belief that the Federal Reserve 60 00:03:26,240 --> 00:03:29,400 Speaker 1: is gonna raise interest rates later this year again and 61 00:03:29,560 --> 00:03:32,320 Speaker 1: again next year. That I think that we we have 62 00:03:32,360 --> 00:03:34,760 Speaker 1: some downside. The risk is on the downside the equities. 63 00:03:35,600 --> 00:03:37,680 Speaker 1: All Right, what's the most distorted thing that you see 64 00:03:37,680 --> 00:03:40,040 Speaker 1: out there? If you look at value investing mark, is 65 00:03:40,080 --> 00:03:42,240 Speaker 1: there something that actually I don't know if it's a 66 00:03:42,240 --> 00:03:44,040 Speaker 1: canary in the coal mine that we want to talk about, 67 00:03:44,120 --> 00:03:47,720 Speaker 1: or just something that indicates something sinister. Yeah, So here's 68 00:03:47,720 --> 00:03:50,000 Speaker 1: what I've been looking at lately on a weekly basis. 69 00:03:50,000 --> 00:03:52,080 Speaker 1: I take a look at the Russell one thousand. They 70 00:03:52,080 --> 00:03:54,520 Speaker 1: have a Russell one thousand growth index and a Russell 71 00:03:54,600 --> 00:03:57,640 Speaker 1: one thousand value index. I know a lot of Americans 72 00:03:57,760 --> 00:04:00,960 Speaker 1: have been talking about buying European stocks that chase emerging markets. 73 00:04:01,160 --> 00:04:03,440 Speaker 1: If you take a look at that, I think on 74 00:04:03,560 --> 00:04:08,800 Speaker 1: your Bloomberg it's r l G Russell Growth Fund growth 75 00:04:08,840 --> 00:04:12,200 Speaker 1: index that is up this year. In the US, we're 76 00:04:12,200 --> 00:04:17,080 Speaker 1: talking about the Russell one thousand is at thirty percent 77 00:04:17,200 --> 00:04:20,240 Speaker 1: this year, and so that tells me that that that 78 00:04:20,320 --> 00:04:22,680 Speaker 1: is a warning sign to me, Uh, that's at the 79 00:04:22,880 --> 00:04:25,640 Speaker 1: excessive return, so to speak. And eventually, I think I 80 00:04:25,640 --> 00:04:27,640 Speaker 1: believe in that mean reversion process. I can't tell you 81 00:04:27,680 --> 00:04:30,400 Speaker 1: when it's gonna happen, not that smart. I just think 82 00:04:30,440 --> 00:04:34,080 Speaker 1: that at move in this late in the business cycle 83 00:04:34,440 --> 00:04:36,640 Speaker 1: is something that is either not sustainable. It's something that 84 00:04:36,680 --> 00:04:37,839 Speaker 1: I don't know how to I don't know how to 85 00:04:37,880 --> 00:04:41,000 Speaker 1: deal with, right. But so tell me why, right, or 86 00:04:41,320 --> 00:04:43,520 Speaker 1: tell me how if you see a risk reversal, if 87 00:04:43,560 --> 00:04:46,159 Speaker 1: you see something ugly out there, is it a hord 88 00:04:46,240 --> 00:04:51,960 Speaker 1: mentality or is the catalyst actually you know, coming from something? Oh? Sure, okay, 89 00:04:51,960 --> 00:04:54,640 Speaker 1: So catalyst is not going to just simply come from nothing, 90 00:04:54,800 --> 00:04:56,280 Speaker 1: because I think that's sort of like one of those 91 00:04:56,480 --> 00:04:58,799 Speaker 1: Newton's laws of physics that sort of a four stays 92 00:04:58,800 --> 00:05:03,039 Speaker 1: in motion until it like another force. And so but 93 00:05:03,080 --> 00:05:06,080 Speaker 1: I think that what happens is psychology can be like thinning, 94 00:05:06,400 --> 00:05:09,120 Speaker 1: and the fundamental justification gets thinner and then it just 95 00:05:09,240 --> 00:05:11,479 Speaker 1: takes a spark that doesn't That doesn't necessarily have to 96 00:05:11,480 --> 00:05:13,520 Speaker 1: be a major deal. It could be a delay in 97 00:05:13,600 --> 00:05:15,640 Speaker 1: tax reform. It could be that we don't get some 98 00:05:15,680 --> 00:05:18,119 Speaker 1: of the corporate tax cuts as much as President Trump 99 00:05:18,120 --> 00:05:20,359 Speaker 1: has advocated for. And it could be a lot of 100 00:05:20,400 --> 00:05:22,280 Speaker 1: different things that could be even a bolt out of 101 00:05:22,320 --> 00:05:24,640 Speaker 1: blue I remember when the dollar turned around once when 102 00:05:24,680 --> 00:05:27,080 Speaker 1: Gorbachev was here in New York and got out of 103 00:05:27,080 --> 00:05:29,760 Speaker 1: his car and shook people's hands, and the dollar turned around. 104 00:05:30,120 --> 00:05:33,200 Speaker 1: I mean Mark, Mark beautifully explained and and I go 105 00:05:33,279 --> 00:05:36,800 Speaker 1: back then to uh, you know, almost Newtonian physics. But 106 00:05:36,880 --> 00:05:39,800 Speaker 1: the idea of the momentum or inertial force of the 107 00:05:39,839 --> 00:05:43,120 Speaker 1: market what really messes people up. And you see this 108 00:05:43,200 --> 00:05:46,640 Speaker 1: every Friday in the Gloom reports, is the idea of 109 00:05:46,760 --> 00:05:51,560 Speaker 1: jump conditions. Are we ripe for shocks right now? Or 110 00:05:51,600 --> 00:05:56,600 Speaker 1: is there a real stability within sales, within earnings, and 111 00:05:56,640 --> 00:06:00,159 Speaker 1: within a relatively good g D P. Yes, I do 112 00:06:00,240 --> 00:06:02,640 Speaker 1: think I agree with you that the the US fundamentals 113 00:06:02,680 --> 00:06:05,560 Speaker 1: are not horrible. That is to say, we've got trend growth, 114 00:06:05,880 --> 00:06:09,400 Speaker 1: low inflation. You point out, we've got low unemployment, We've 115 00:06:09,440 --> 00:06:13,479 Speaker 1: got a rising job, rising employment. Uh, the economy is 116 00:06:13,720 --> 00:06:16,000 Speaker 1: is not so bad. But I'm not sure that it 117 00:06:16,080 --> 00:06:22,479 Speaker 1: justifies these kind of uh historically speaking, stretched valuations. But 118 00:06:22,480 --> 00:06:24,240 Speaker 1: I'm not a stock market expert. I just say that 119 00:06:24,440 --> 00:06:26,320 Speaker 1: listen where it looks to me like there's not a 120 00:06:26,320 --> 00:06:30,280 Speaker 1: lot of margin for error, and knowing looking around the globe, 121 00:06:30,400 --> 00:06:32,520 Speaker 1: looking here at the US, I see week leadership. I 122 00:06:32,560 --> 00:06:35,400 Speaker 1: see a lot of chances for errors, lots of chances 123 00:06:35,400 --> 00:06:37,560 Speaker 1: for policy. There's lots of chances for both of the 124 00:06:37,560 --> 00:06:42,599 Speaker 1: blue like a storm, like the Catalonian referendum, a Japanese elections. 125 00:06:42,720 --> 00:06:45,080 Speaker 1: Who would have thought that Merkel could win the German 126 00:06:45,080 --> 00:06:47,200 Speaker 1: election that yet still lose in the stense of having 127 00:06:47,240 --> 00:06:50,920 Speaker 1: to put together a coalition that might, uh say, tamper 128 00:06:51,240 --> 00:06:53,560 Speaker 1: her own like European views. Well, then where do you 129 00:06:53,560 --> 00:06:56,800 Speaker 1: shift to? I mean, David Harrold, you acclaimed international equity 130 00:06:56,839 --> 00:07:00,359 Speaker 1: investor as a strong belief and you go around the world. 131 00:07:00,680 --> 00:07:04,560 Speaker 1: Can you do that in currency or does your strong 132 00:07:04,600 --> 00:07:09,280 Speaker 1: dollar calls simply imply weaker emerging market currencies? Yeah, I 133 00:07:09,320 --> 00:07:11,000 Speaker 1: think that you're right that in in the big picture 134 00:07:11,120 --> 00:07:14,120 Speaker 1: sense that the what's happening an emerging markets this year, 135 00:07:14,160 --> 00:07:16,720 Speaker 1: it's a been a great return for many emerging markets. 136 00:07:16,960 --> 00:07:19,200 Speaker 1: It's been partly a function of a weaker dollar. And 137 00:07:19,240 --> 00:07:21,400 Speaker 1: so said, if I write a dollar strengthens because the 138 00:07:21,400 --> 00:07:24,120 Speaker 1: Fed raising interest rates, because the U s economy is 139 00:07:24,160 --> 00:07:26,480 Speaker 1: growing strong enough that the Fed can continue to raise 140 00:07:26,520 --> 00:07:28,880 Speaker 1: interest rates, the balance sheet is going to is beginning 141 00:07:28,920 --> 00:07:31,440 Speaker 1: to shrink this month in the US while in Europe 142 00:07:31,440 --> 00:07:33,760 Speaker 1: in the fourth quarter, the ECBs balance sheet is going 143 00:07:33,800 --> 00:07:36,400 Speaker 1: to expand by a hundred and eighty billion euros. So 144 00:07:36,440 --> 00:07:38,560 Speaker 1: for these reasons, the dollar is gonna get stronger, and 145 00:07:38,560 --> 00:07:41,120 Speaker 1: I think that sucks somebody out of the emerging markets. 146 00:07:41,160 --> 00:07:44,640 Speaker 1: The interesting thing here, when retail buys a stock, they're 147 00:07:44,680 --> 00:07:47,720 Speaker 1: interested in an asset, they're looking at the asset to appreciate. 148 00:07:48,120 --> 00:07:50,960 Speaker 1: Institutional side, we're not only looking at the asset to appreciate, 149 00:07:51,000 --> 00:07:53,720 Speaker 1: but we think about our funding costs. And so those 150 00:07:53,760 --> 00:07:58,960 Speaker 1: emerging markets were purchased with primarily a short dollar funding position, 151 00:07:59,280 --> 00:08:01,200 Speaker 1: and so as all our strengthens, they gonna have to 152 00:08:01,240 --> 00:08:04,760 Speaker 1: unwind that. While saying European stocks might not be done 153 00:08:04,760 --> 00:08:07,360 Speaker 1: by as much as a dollar. A dollar funding is 154 00:08:07,360 --> 00:08:11,000 Speaker 1: maybe a Swiss strength funding or young funding, right. But Mark, 155 00:08:11,120 --> 00:08:14,480 Speaker 1: and you know, I'm doing it just because it's a Thursday, 156 00:08:14,520 --> 00:08:17,480 Speaker 1: so it's a great day to start about conspiracy theories. 157 00:08:17,480 --> 00:08:19,120 Speaker 1: But what if it was all about China? If you 158 00:08:19,160 --> 00:08:21,440 Speaker 1: look at these dollar moves, you know the idea that 159 00:08:21,520 --> 00:08:24,440 Speaker 1: Chinese effects policy actually plays a much bigger part in 160 00:08:24,480 --> 00:08:28,000 Speaker 1: dollar urine bond fields. Is there any truth in that? 161 00:08:28,080 --> 00:08:30,560 Speaker 1: There might be? I mean I think that one is 162 00:08:30,600 --> 00:08:32,960 Speaker 1: we you know, in my career, we've we've blamed a 163 00:08:32,960 --> 00:08:35,640 Speaker 1: lot of people. We used to blame the Central Bank 164 00:08:35,679 --> 00:08:39,080 Speaker 1: of Malaysia for me playing the currency markets Bank Nagara, 165 00:08:39,200 --> 00:08:42,160 Speaker 1: and then it became sorrels and it became unnamed hedge funds. 166 00:08:42,320 --> 00:08:44,520 Speaker 1: And now, of course China is the eight hundred pound 167 00:08:44,520 --> 00:08:46,600 Speaker 1: gorilla in the room. But here's the story I would 168 00:08:46,640 --> 00:08:50,400 Speaker 1: tell you, and that is this year, China has bought 169 00:08:50,400 --> 00:08:53,160 Speaker 1: about a little bit more than a hundred billion dollars 170 00:08:53,160 --> 00:08:56,439 Speaker 1: worth the U. S. Treasuries. Is that a lot? It's 171 00:08:56,440 --> 00:08:58,840 Speaker 1: as well think about the federal Zia is gonna do this? 172 00:08:59,000 --> 00:09:01,160 Speaker 1: And here the fourth word of the federals not gonna 173 00:09:01,160 --> 00:09:04,200 Speaker 1: go over thirty billion, because it's it's four times three 174 00:09:04,240 --> 00:09:06,959 Speaker 1: times four times what ye making up what the Feds 175 00:09:07,000 --> 00:09:08,960 Speaker 1: not doing, and it's Chinese reserves grow. I think we're 176 00:09:08,960 --> 00:09:11,280 Speaker 1: gonna get another report out the next couple of days. 177 00:09:11,559 --> 00:09:14,520 Speaker 1: So I'm not concerned that China is this major disruption 178 00:09:14,559 --> 00:09:16,520 Speaker 1: and China is driving a dollar. And the reason I 179 00:09:16,640 --> 00:09:20,079 Speaker 1: say is Oakham's razor. The simplest explanation is preferable, and 180 00:09:20,120 --> 00:09:22,040 Speaker 1: I think I can explain the dollars movement by talking 181 00:09:22,080 --> 00:09:25,040 Speaker 1: about what happened in France in April, and I can 182 00:09:25,040 --> 00:09:27,400 Speaker 1: talk about what happened now to the euro dropping about 183 00:09:27,400 --> 00:09:29,840 Speaker 1: three cents since Merkel's election. What a joy to have 184 00:09:29,880 --> 00:09:32,920 Speaker 1: France and lax with this very quickly her francing before 185 00:09:32,920 --> 00:09:36,440 Speaker 1: we get back to Mr Chandler Brown Brothers Harriman. The 186 00:09:36,480 --> 00:09:41,440 Speaker 1: first sentence of a book that stilled my life. Tonight 187 00:09:42,200 --> 00:09:45,360 Speaker 1: I find myself here in a guest house in the 188 00:09:45,400 --> 00:09:49,719 Speaker 1: city of Salisbury, and to see that issue Girl has 189 00:09:49,840 --> 00:09:54,440 Speaker 1: just won the Nobel Prize in Literature from the United Kingdom. 190 00:09:54,600 --> 00:09:57,920 Speaker 1: Is his stunning as Bob Dylan last year. I mean, 191 00:09:57,920 --> 00:10:01,600 Speaker 1: it's just exceptional with me France to see a giant 192 00:10:01,800 --> 00:10:05,480 Speaker 1: with with the Remains of the Day, the huge success 193 00:10:05,600 --> 00:10:08,280 Speaker 1: of the movie and the book, I mean everybody had 194 00:10:08,320 --> 00:10:11,559 Speaker 1: to read it. Just extraordinary how the Nobel Prize in 195 00:10:11,640 --> 00:10:15,719 Speaker 1: Literature has been taken over the last two years. Yeah, 196 00:10:15,800 --> 00:10:18,440 Speaker 1: it is amazing how it's taken and actually also how 197 00:10:18,559 --> 00:10:21,720 Speaker 1: sometimes it takes a life of their own. You know. 198 00:10:21,800 --> 00:10:24,680 Speaker 1: His work, of course includes The Remains of the Day. 199 00:10:25,280 --> 00:10:28,400 Speaker 1: Never let me go, something that a lot of people 200 00:10:28,400 --> 00:10:30,160 Speaker 1: listening to us, I imagine we'll want to go and 201 00:10:30,200 --> 00:10:33,079 Speaker 1: read visit. Yeah, I totally agree with that. It's one 202 00:10:33,080 --> 00:10:35,720 Speaker 1: of the books that's that stilled me as the way 203 00:10:35,760 --> 00:10:38,720 Speaker 1: I would put it, and it just begs for a reread. 204 00:10:38,760 --> 00:10:41,280 Speaker 1: It's amazing a book is different ten years down the road. 205 00:10:41,520 --> 00:10:43,680 Speaker 1: So what you're saying is the prize is going to 206 00:10:43,720 --> 00:10:47,720 Speaker 1: people that you finally have heard over exactly. That's the critique. No, John, 207 00:10:47,760 --> 00:10:50,720 Speaker 1: You're dead on and that there's been a huge critique 208 00:10:50,720 --> 00:10:53,600 Speaker 1: of this and I mean some people still haven't gotten 209 00:10:53,600 --> 00:10:55,680 Speaker 1: over Bob Dylan winning it last year and of course 210 00:10:55,800 --> 00:10:57,720 Speaker 1: Mr Dilon with the idea of what was it going 211 00:10:57,760 --> 00:11:00,360 Speaker 1: to show up? Yes, I would also say, you know, 212 00:11:00,440 --> 00:11:02,360 Speaker 1: because of the Brexit debate and the fact that they're 213 00:11:02,360 --> 00:11:05,479 Speaker 1: talking about foreigners now arriving in the UK and immigration, 214 00:11:05,559 --> 00:11:07,920 Speaker 1: it's interesting that they've given it to a British novelist 215 00:11:08,600 --> 00:11:11,120 Speaker 1: who was born in Japan and then moved to England 216 00:11:11,160 --> 00:11:14,320 Speaker 1: in the nine Absolutely fascinating. Mark Chandler had no idea. 217 00:11:14,320 --> 00:11:17,120 Speaker 1: Who's going to hear this this morning? Mark? Mark, would 218 00:11:17,160 --> 00:11:18,760 Speaker 1: you like to weigh in on the remains of the 219 00:11:18,880 --> 00:11:23,679 Speaker 1: day and what it means for the dollar? Mark Chandler, 220 00:11:23,720 --> 00:11:25,920 Speaker 1: where this brown brother's heremony. What what's gonna mean is 221 00:11:26,080 --> 00:11:27,880 Speaker 1: everybody's gonna go out and buy it and the royalties 222 00:11:27,920 --> 00:11:30,440 Speaker 1: that go through the moon Mark, let's bring it over 223 00:11:30,440 --> 00:11:33,400 Speaker 1: to Sterling, as Francine mentions, and maybe this has something 224 00:11:33,440 --> 00:11:35,960 Speaker 1: to do with Kauzo is your girl winning the Nobel 225 00:11:35,960 --> 00:11:40,120 Speaker 1: Price for literature? Brexit is a new United Kingdom, Mark Chandler? 226 00:11:40,440 --> 00:11:43,320 Speaker 1: Or is it not? Yeah? So I don't know, I 227 00:11:43,320 --> 00:11:48,040 Speaker 1: mean so far away from it still, you know, recently, uh, 228 00:11:48,440 --> 00:11:50,480 Speaker 1: the Prime Minister May gave a speech where she's asking 229 00:11:50,480 --> 00:11:54,760 Speaker 1: for a two year extension transition phase while almost everything 230 00:11:54,800 --> 00:11:57,120 Speaker 1: remains the same. And so I know there's a lot 231 00:11:57,160 --> 00:11:58,679 Speaker 1: of people who think that the longer that you can 232 00:11:58,679 --> 00:12:02,280 Speaker 1: have a transition phase, that longer before the break is 233 00:12:02,280 --> 00:12:05,400 Speaker 1: is that confirmed? The longer that it takes for the 234 00:12:05,520 --> 00:12:07,920 Speaker 1: UK to set up its own system a separate from 235 00:12:07,960 --> 00:12:11,400 Speaker 1: the EU, the more likely that somehow they'll find a 236 00:12:11,400 --> 00:12:13,800 Speaker 1: way to backtrack. I'm not quite there yet, but I 237 00:12:13,840 --> 00:12:15,679 Speaker 1: know that definite suspicion behind a lot of people. The 238 00:12:15,760 --> 00:12:19,040 Speaker 1: transition phase. I think it's really a mess. But in 239 00:12:19,080 --> 00:12:21,719 Speaker 1: the short run, the UK market are being driven by 240 00:12:21,800 --> 00:12:23,960 Speaker 1: Brexit right now, it's really a question of Bank of 241 00:12:24,000 --> 00:12:27,240 Speaker 1: England policy and so the sentiment on sterling. You know 242 00:12:27,360 --> 00:12:29,520 Speaker 1: last week the commitment of traders at the i MM 243 00:12:29,559 --> 00:12:32,640 Speaker 1: in the futures market with speculators with participants have to 244 00:12:32,640 --> 00:12:37,319 Speaker 1: declare whether the commercials have an underlying business interest non commercials, 245 00:12:37,720 --> 00:12:41,840 Speaker 1: that is speculators. The speculative positions in the sterling where 246 00:12:41,880 --> 00:12:45,000 Speaker 1: long for the first time in several years as of 247 00:12:45,120 --> 00:12:48,560 Speaker 1: last Tuesday. Alright, but Mark, what's more of a mean? 248 00:12:48,600 --> 00:12:50,440 Speaker 1: You say it's a mess? What's more of a mess politics? 249 00:12:50,600 --> 00:12:53,280 Speaker 1: And you know within the Conservative Party, which I'm not 250 00:12:53,320 --> 00:12:54,960 Speaker 1: sure what it means. I don't know whether it means 251 00:12:54,960 --> 00:12:57,040 Speaker 1: that Boris Johnson could end up Prime minister. I don't 252 00:12:57,040 --> 00:12:59,520 Speaker 1: know whether it means early elections with the Jeremy Corbyn 253 00:12:59,520 --> 00:13:01,920 Speaker 1: from the labor aside, or are you talking about the 254 00:13:01,960 --> 00:13:05,200 Speaker 1: mess and negotiations between the EU and the UK. Yes, 255 00:13:05,559 --> 00:13:08,760 Speaker 1: and by that I mean that the across the board. 256 00:13:09,080 --> 00:13:11,320 Speaker 1: But I think that the key here in the short 257 00:13:11,400 --> 00:13:15,240 Speaker 1: run is that Brexit is both a national challenge for 258 00:13:15,280 --> 00:13:18,200 Speaker 1: the UK, but it's also a challenge within the Tory Party. 259 00:13:18,240 --> 00:13:20,440 Speaker 1: And this is what Camera knew. There's what other Tory 260 00:13:20,480 --> 00:13:24,400 Speaker 1: Party leaders knew that the EU issue was divisive through 261 00:13:24,520 --> 00:13:27,320 Speaker 1: for the Tory Party. I think that the takeaway that 262 00:13:27,360 --> 00:13:29,720 Speaker 1: I get from this, Francine is that we are in 263 00:13:29,720 --> 00:13:35,040 Speaker 1: this era of weak leadership, and that's a problem. And again, 264 00:13:35,040 --> 00:13:36,400 Speaker 1: this is one of those things to talk about before 265 00:13:36,400 --> 00:13:38,640 Speaker 1: with risk and the sort of dangerous scenarios, is that 266 00:13:38,679 --> 00:13:41,240 Speaker 1: we have much room of margin of error when you 267 00:13:41,280 --> 00:13:43,959 Speaker 1: have weak leaders And I've made this point before that 268 00:13:44,640 --> 00:13:49,160 Speaker 1: mccron in France, Merkel in Germany, May in the UK 269 00:13:49,559 --> 00:13:53,600 Speaker 1: their support ratings are lower than Trump's in the US. 270 00:13:54,320 --> 00:13:55,880 Speaker 1: And this is I think We're part of this. The 271 00:13:55,960 --> 00:13:57,920 Speaker 1: US is part of this. UK is part of this. 272 00:13:57,920 --> 00:14:00,440 Speaker 1: This is a week leadership. And if you get a crisis, 273 00:14:00,520 --> 00:14:02,520 Speaker 1: if we get a shock to the system, things that 274 00:14:02,559 --> 00:14:06,280 Speaker 1: we by definition cannot predict, do we have the leadership 275 00:14:06,520 --> 00:14:08,240 Speaker 1: that can guide us do it this time? And I'm 276 00:14:08,240 --> 00:14:10,440 Speaker 1: not convinced. And that's the same thing about the FED policy. 277 00:14:11,120 --> 00:14:13,000 Speaker 1: Who becomes the chairman of the Federal Reserve is not 278 00:14:13,000 --> 00:14:15,400 Speaker 1: about whether they raise interest rates this quarter next quarter. 279 00:14:15,600 --> 00:14:17,800 Speaker 1: It's about whether they are in a position to be 280 00:14:17,800 --> 00:14:21,120 Speaker 1: able to provide that leadership should we get a crisis. Mark, 281 00:14:21,240 --> 00:14:24,120 Speaker 1: thank you so much. Enough about it, as we have 282 00:14:24,160 --> 00:14:26,880 Speaker 1: the Nobel Prize in Literature to kazoo Is Sugaro, of course, 283 00:14:26,920 --> 00:14:29,200 Speaker 1: the author of the Remains of the Day. We look 284 00:14:29,240 --> 00:14:31,760 Speaker 1: to another Nobel Prize in Literature candidate, that would be 285 00:14:31,840 --> 00:14:35,680 Speaker 1: Mark Chandler for his new book Political Economy of Tomorrow. 286 00:14:36,080 --> 00:14:41,840 Speaker 1: It is a really interesting book, linking in our system 287 00:14:41,840 --> 00:14:46,560 Speaker 1: and astronomy is very much wonderful in the history of 288 00:14:46,680 --> 00:14:49,880 Speaker 1: how far we've come, not only in foreign exchange markets, 289 00:14:49,920 --> 00:14:53,480 Speaker 1: but in our great international economy. Mark Chandler is with 290 00:14:53,560 --> 00:15:07,640 Speaker 1: Brown Brothers, Harriman, Francie Lacoton, London. I'm time can New York. 291 00:15:07,720 --> 00:15:10,160 Speaker 1: David Gura. I think he's what's he doing? John Tucker, 292 00:15:10,200 --> 00:15:14,240 Speaker 1: He's like moving the kale's harvest. It's harvesting, harvest, harvesting 293 00:15:14,280 --> 00:15:17,720 Speaker 1: in the kale patches, in the kelpits. They're harvesting today. 294 00:15:17,800 --> 00:15:20,800 Speaker 1: Joining us in Watchington, John Lieber, you raise your group, John, 295 00:15:20,840 --> 00:15:22,960 Speaker 1: I love your research report for your raise your group. 296 00:15:22,960 --> 00:15:25,320 Speaker 1: It's like you've almost got a by holed cell on 297 00:15:25,400 --> 00:15:31,600 Speaker 1: the politics of of Washington. Short term trajectory neutral, long 298 00:15:31,720 --> 00:15:36,200 Speaker 1: term trajectory neutral. What's the long term trajectory of the 299 00:15:36,200 --> 00:15:40,720 Speaker 1: Trump White House? UM? I think the long term trajector 300 00:15:40,760 --> 00:15:42,840 Speaker 1: the Trump White House. You've got to look ahead past 301 00:15:42,880 --> 00:15:45,800 Speaker 1: the twenty eight team mid terms and kind of, you know, 302 00:15:45,920 --> 00:15:48,000 Speaker 1: do some forecasting about what you think might happen in 303 00:15:48,000 --> 00:15:51,680 Speaker 1: those elections were Democrats to take the House, um, which 304 00:15:51,720 --> 00:15:54,000 Speaker 1: is possible, I mean, probably a coin flip. At this point, 305 00:15:54,520 --> 00:15:57,920 Speaker 1: not much is gonna get done. You're gonna see investigations 306 00:15:57,920 --> 00:16:01,280 Speaker 1: of the Trump administration, possible teachment proceedings, although I think 307 00:16:01,280 --> 00:16:03,560 Speaker 1: that's probably a long but at this point, and you know, 308 00:16:03,560 --> 00:16:05,520 Speaker 1: you're gonna see the normal kind of gridlock in Washington. 309 00:16:05,880 --> 00:16:08,160 Speaker 1: But the reality is, even if Republicans hold the House, 310 00:16:08,440 --> 00:16:10,320 Speaker 1: there's still not much that's gonna happen. It's really hard 311 00:16:10,360 --> 00:16:12,520 Speaker 1: to legislate, hard to get anything done in this environment. 312 00:16:12,680 --> 00:16:15,240 Speaker 1: The Ken Burns the Vietnam War, I'm watching most of 313 00:16:15,280 --> 00:16:17,160 Speaker 1: the folks. I really can't say enough about it. We 314 00:16:17,200 --> 00:16:20,000 Speaker 1: have Mr Burns on the other day to speak of it. 315 00:16:20,400 --> 00:16:23,800 Speaker 1: And in nineteen sixty six sixty seven, Burns has to 316 00:16:23,840 --> 00:16:29,120 Speaker 1: remind us repeatedly, repeatedly the support lb J had and 317 00:16:29,160 --> 00:16:32,480 Speaker 1: the support that was there underlying for the war until 318 00:16:32,600 --> 00:16:36,800 Speaker 1: all fell apart later in the era. What is the 319 00:16:36,960 --> 00:16:41,120 Speaker 1: underlying support for the president, and does does Washington understand 320 00:16:41,160 --> 00:16:45,560 Speaker 1: that the underlying support the president comes from his unexpected 321 00:16:45,560 --> 00:16:47,840 Speaker 1: electoral college victory. I mean, I think that there were 322 00:16:47,880 --> 00:16:51,240 Speaker 1: probably other Republicans didn't have as good as a shot 323 00:16:51,360 --> 00:16:54,080 Speaker 1: in retrospect as Donald Trump did. He put together an 324 00:16:54,120 --> 00:16:58,400 Speaker 1: unusual coalition that delivered Pennsylvania was consin in Michigan over 325 00:16:58,440 --> 00:17:01,520 Speaker 1: to the Republican Aisle uh states that hadn't gone Republican 326 00:17:01,640 --> 00:17:05,200 Speaker 1: for almost thirty years. And because of that unusual coalition 327 00:17:05,240 --> 00:17:07,880 Speaker 1: that only Donald Trump could put together, that gives him, 328 00:17:08,320 --> 00:17:09,800 Speaker 1: you know, a decent amount of power at least to 329 00:17:09,840 --> 00:17:12,679 Speaker 1: the Republican Party because it kind of changes and redefines 330 00:17:12,880 --> 00:17:16,520 Speaker 1: who Republican voters are and how the Republican Party has 331 00:17:16,560 --> 00:17:19,880 Speaker 1: to kind of adapt their policy approach to appeal to them. 332 00:17:19,960 --> 00:17:22,440 Speaker 1: The biggest change, of course is on trade. By other 333 00:17:22,480 --> 00:17:26,479 Speaker 1: things like immigration, um even tax policy to some degree 334 00:17:26,680 --> 00:17:28,840 Speaker 1: are going to change because of the usual politics as 335 00:17:28,840 --> 00:17:34,200 Speaker 1: this president John has, the President's language, tone, tweets, Has 336 00:17:34,240 --> 00:17:38,800 Speaker 1: it changed the Republican Party. I think the party is 337 00:17:38,840 --> 00:17:41,200 Speaker 1: going to be around a lot longer than Donald Trump is. 338 00:17:41,760 --> 00:17:44,520 Speaker 1: And while you will see some kind of junior Trump 339 00:17:44,560 --> 00:17:48,280 Speaker 1: candidates to pop up in the midterm elections, we saw 340 00:17:48,359 --> 00:17:50,440 Speaker 1: Roy Moore win a seed in Alabama on a very 341 00:17:50,480 --> 00:17:55,840 Speaker 1: kind of Trumpian bombastic campaign. Um. Overall, the party is 342 00:17:55,920 --> 00:17:57,320 Speaker 1: what it's going to be and has been been the 343 00:17:57,400 --> 00:18:00,919 Speaker 1: last thirty years or so, which is traditionally this really conservative, 344 00:18:01,440 --> 00:18:04,840 Speaker 1: uh you know, tax cutting, strong on national defense kind 345 00:18:04,840 --> 00:18:07,119 Speaker 1: of party. UM. So, Trump I think can change the 346 00:18:07,160 --> 00:18:10,920 Speaker 1: tone a little bit. You'll see some influence in certain 347 00:18:10,960 --> 00:18:14,080 Speaker 1: elections in certain places, but overall, I mean, the party 348 00:18:14,480 --> 00:18:17,400 Speaker 1: leaders are still who they are, all right, does he 349 00:18:17,800 --> 00:18:20,040 Speaker 1: you know, need loyalty above all. And I know there's 350 00:18:20,080 --> 00:18:22,360 Speaker 1: been a lot of talk about you know, Rex Tillerson 351 00:18:22,440 --> 00:18:24,760 Speaker 1: and what he said and he didn't say, But can 352 00:18:24,800 --> 00:18:27,680 Speaker 1: you see any repercussions on foreign policy because of that? 353 00:18:28,960 --> 00:18:30,720 Speaker 1: And not? Really? I mean, I think that Tillerson is 354 00:18:30,760 --> 00:18:33,320 Speaker 1: doing his best to kind of hold together um US 355 00:18:33,359 --> 00:18:37,360 Speaker 1: foreign policy against the president who doesn't follow a conventional strategy, 356 00:18:37,800 --> 00:18:40,920 Speaker 1: runs his own communications operation, and is prone to saying 357 00:18:41,000 --> 00:18:43,760 Speaker 1: things that aren't necessarily uh you know, vetted or or 358 00:18:43,800 --> 00:18:46,720 Speaker 1: thought through in a policy process. Um. But the reality 359 00:18:46,760 --> 00:18:49,679 Speaker 1: is the foreign policy is really being run by Maddis, 360 00:18:50,040 --> 00:18:53,080 Speaker 1: General Maddie and General McMaster at the Secretary of Defense 361 00:18:53,280 --> 00:18:56,280 Speaker 1: and the National Security Advisor, and you know, the military 362 00:18:56,359 --> 00:18:59,040 Speaker 1: really has a very strong command over this president's foreign 363 00:18:59,080 --> 00:19:01,760 Speaker 1: policy because the president's new to foreign policy and he 364 00:19:01,760 --> 00:19:03,919 Speaker 1: didn't come into office with a really strong one. So 365 00:19:03,960 --> 00:19:05,879 Speaker 1: he's kind of outsourced a lot of that to his 366 00:19:06,040 --> 00:19:09,000 Speaker 1: very experience advisors who are taking on a lot of 367 00:19:09,000 --> 00:19:11,159 Speaker 1: peign policy and will do so whether or not tillers 368 00:19:11,160 --> 00:19:14,359 Speaker 1: and sticks around. Come on the money question, you're John Lieber, 369 00:19:14,480 --> 00:19:21,239 Speaker 1: is canny outsource the behavior, the politics, the cajoling of 370 00:19:21,359 --> 00:19:24,920 Speaker 1: tax reform. I don't buy for a minute any president 371 00:19:24,920 --> 00:19:29,919 Speaker 1: in history is outsourced that unique linkage between the executive 372 00:19:29,960 --> 00:19:33,119 Speaker 1: and the legislative branch. Yeah, when it comes to the 373 00:19:33,160 --> 00:19:34,720 Speaker 1: tax reform, I think the president is going to be 374 00:19:34,760 --> 00:19:37,720 Speaker 1: a critical player, and because they're going to be pushing 375 00:19:38,040 --> 00:19:41,000 Speaker 1: pushing a middle class tax cut, which the President campaigned 376 00:19:41,000 --> 00:19:43,760 Speaker 1: on is very comfortable talking about, and a corporate rate 377 00:19:43,760 --> 00:19:46,879 Speaker 1: cut similarly the president supports it. He will be a 378 00:19:46,960 --> 00:19:49,800 Speaker 1: key messenger in this battle. There's gonna be hard things 379 00:19:49,840 --> 00:19:51,440 Speaker 1: that they have to do, like trying to limit the 380 00:19:51,480 --> 00:19:54,040 Speaker 1: state and local tax deduction, and the President's ability to 381 00:19:54,119 --> 00:19:56,840 Speaker 1: kind of rally folks around those hard things is in question. 382 00:19:57,200 --> 00:19:59,439 Speaker 1: But when it comes to kind of the upside of 383 00:19:59,480 --> 00:20:01,679 Speaker 1: this bill, uh, the tax cuts, the President is going 384 00:20:01,760 --> 00:20:04,000 Speaker 1: to be on board and he'll be an important messenger 385 00:20:04,080 --> 00:20:06,200 Speaker 1: for that for that goal. Do you see evidence that 386 00:20:06,280 --> 00:20:09,280 Speaker 1: he learned from the healthcare debate that will make him 387 00:20:09,320 --> 00:20:17,040 Speaker 1: more Obama like or lb J like? I would Uh no, 388 00:20:17,840 --> 00:20:21,080 Speaker 1: not really. I think that the healthcare debate his lesson, 389 00:20:21,080 --> 00:20:23,080 Speaker 1: and the healthcare debate is at the White House needs 390 00:20:23,080 --> 00:20:24,560 Speaker 1: to take more of a lead on it. At least 391 00:20:24,560 --> 00:20:26,639 Speaker 1: that's what was reported to be a lesson. But the 392 00:20:26,680 --> 00:20:29,679 Speaker 1: reality is you've got Paul Ryan and miss McConnell firmly 393 00:20:29,680 --> 00:20:32,679 Speaker 1: in the driver's seat here, working closely with the president's advisors. 394 00:20:32,960 --> 00:20:34,320 Speaker 1: But at the end of the day, this is a 395 00:20:34,400 --> 00:20:37,200 Speaker 1: vote counting exercise. What can get to eighteen in the House, 396 00:20:37,440 --> 00:20:39,480 Speaker 1: what can get the fifty votes in the Senate? And 397 00:20:39,520 --> 00:20:41,840 Speaker 1: those two guys Ryan and McConnell are going to be 398 00:20:41,880 --> 00:20:45,560 Speaker 1: the ones that make that determination, not the president. John. 399 00:20:45,560 --> 00:20:47,359 Speaker 1: Would you look at what you talk about tax reform. 400 00:20:47,640 --> 00:20:51,600 Speaker 1: Is it clear that the end game is to actually um, 401 00:20:51,840 --> 00:20:53,560 Speaker 1: I mean, actually I'm asking you what the end game 402 00:20:53,640 --> 00:20:55,560 Speaker 1: is? Is Is it for GDP growth? Is it good for 403 00:20:55,560 --> 00:20:59,320 Speaker 1: the economy or is it skewed towards reelection. I think 404 00:20:59,359 --> 00:21:00,840 Speaker 1: it's all about rows. I mean, I think that with 405 00:21:00,960 --> 00:21:03,600 Speaker 1: motivating members, is all about what we're going to be 406 00:21:03,680 --> 00:21:05,919 Speaker 1: members on. The policy is all about growth. What they 407 00:21:06,000 --> 00:21:08,560 Speaker 1: want to see is a pro growth tax code that 408 00:21:08,560 --> 00:21:12,400 Speaker 1: eliminates deductions and credits, is less complicated for American families, 409 00:21:12,600 --> 00:21:15,880 Speaker 1: and helps American corporations compete. That's kind of the policy goal. 410 00:21:16,200 --> 00:21:19,200 Speaker 1: What's driving the politics of it is, of course reelection 411 00:21:19,720 --> 00:21:22,159 Speaker 1: um and a lot of members right now think that 412 00:21:22,160 --> 00:21:24,960 Speaker 1: they're going to have a hard time holding the House 413 00:21:25,040 --> 00:21:27,560 Speaker 1: or winning their seats back in if they don't have 414 00:21:27,600 --> 00:21:31,360 Speaker 1: a significant policy victory for them. And I think that everybody, 415 00:21:31,359 --> 00:21:33,639 Speaker 1: the President included, wants to be able to run on 416 00:21:33,680 --> 00:21:36,800 Speaker 1: the middle class tax cut, which is why they're the 417 00:21:36,920 --> 00:21:39,840 Speaker 1: tax relief is such a big focus of this piece 418 00:21:39,840 --> 00:21:43,399 Speaker 1: of legislation. How much are you focusing on on gun control? 419 00:21:43,440 --> 00:21:45,000 Speaker 1: I know this is of course has been one of 420 00:21:45,040 --> 00:21:47,480 Speaker 1: the biggest debates in the wake of that terrible tragedy 421 00:21:47,520 --> 00:21:51,720 Speaker 1: in Las Vegas, but has a debate shifted So gun 422 00:21:51,720 --> 00:21:53,879 Speaker 1: control is not really something that we follow that closely, 423 00:21:53,960 --> 00:21:56,320 Speaker 1: because in my view, is unlikely to happen at the 424 00:21:56,359 --> 00:21:58,760 Speaker 1: federal level. Um, you're going to see some states that 425 00:21:58,800 --> 00:22:01,080 Speaker 1: will change their gun control of policies. But even at 426 00:22:01,080 --> 00:22:04,800 Speaker 1: the state level gets controversial, and there aren't a lot 427 00:22:04,840 --> 00:22:07,880 Speaker 1: of proposals out there, from from what I understand, that 428 00:22:08,160 --> 00:22:11,399 Speaker 1: are thought of as being particularly effective at stopping, um, 429 00:22:11,440 --> 00:22:13,480 Speaker 1: the kind of mass shootings that we've seen in this country. 430 00:22:13,760 --> 00:22:16,560 Speaker 1: Because there's so many there's access to guns is going 431 00:22:16,600 --> 00:22:19,080 Speaker 1: to be easy no matter what how you change the laws, 432 00:22:19,080 --> 00:22:21,600 Speaker 1: because there's so many guns in the country. So UM, 433 00:22:21,640 --> 00:22:23,480 Speaker 1: you know, I I don't. I'm skeptical if there's going 434 00:22:23,520 --> 00:22:27,399 Speaker 1: to be a big policy movement here. Um. Maybe over time, 435 00:22:27,440 --> 00:22:30,520 Speaker 1: with subsequent generations of politicians, as they kind of cycle through, 436 00:22:30,880 --> 00:22:33,480 Speaker 1: you might see more anti gun people get elected. But 437 00:22:33,560 --> 00:22:36,840 Speaker 1: given the current composition of Congress, UM, I just don't 438 00:22:36,840 --> 00:22:39,920 Speaker 1: see a lot of prospects for changes right now. John, 439 00:22:40,160 --> 00:22:42,480 Speaker 1: what will you look for in the next thirty forty 440 00:22:42,560 --> 00:22:45,199 Speaker 1: days on tax reform? I mean, we've had salt the 441 00:22:45,280 --> 00:22:47,760 Speaker 1: state and local tax issue come up here, But what's 442 00:22:47,800 --> 00:22:52,720 Speaker 1: the next issue, the next observation we'll see in tax reform? 443 00:22:52,800 --> 00:22:55,240 Speaker 1: The critical question right now is can the House and 444 00:22:55,320 --> 00:22:58,520 Speaker 1: Senate come to an agreement on their twenty eighteen budget resolution, 445 00:22:59,119 --> 00:23:02,080 Speaker 1: and both chambers will be passing a budget resolution within 446 00:23:02,119 --> 00:23:05,000 Speaker 1: the next two weeks. And once that's done, they have 447 00:23:05,040 --> 00:23:07,040 Speaker 1: to get together and say, all right, guys, let's work 448 00:23:07,040 --> 00:23:10,720 Speaker 1: out the differences here. And it's an unknown factor whether 449 00:23:10,800 --> 00:23:12,520 Speaker 1: or not they can work out the differences. The House 450 00:23:12,600 --> 00:23:15,159 Speaker 1: has a lot more spending cuts in theirs. The Senate 451 00:23:15,160 --> 00:23:20,119 Speaker 1: bill is much more slimmed down and focused on tax reform. 452 00:23:20,200 --> 00:23:23,720 Speaker 1: And while both chambers want to do tax reform, they 453 00:23:23,760 --> 00:23:26,359 Speaker 1: need this budget resolution done in order to take that 454 00:23:26,440 --> 00:23:28,600 Speaker 1: next step. And it's unclear today if they can work 455 00:23:28,600 --> 00:23:31,159 Speaker 1: out their differences. I think they can and will, and 456 00:23:31,160 --> 00:23:33,760 Speaker 1: we'll see a conferenced budget report come about by the 457 00:23:33,800 --> 00:23:36,160 Speaker 1: end of October, and that will be a very positive 458 00:23:36,200 --> 00:23:39,280 Speaker 1: step for markets and a very big step forward in 459 00:23:39,359 --> 00:23:41,640 Speaker 1: this tax debate because it will allow them to move 460 00:23:41,680 --> 00:23:43,440 Speaker 1: a tax bill with a simple majority in the Senate 461 00:23:43,480 --> 00:23:45,640 Speaker 1: if they can do this, John, Thank you so much, 462 00:23:45,720 --> 00:23:47,840 Speaker 1: John Leaver, would you raise your group just a terrific 463 00:23:47,880 --> 00:23:52,480 Speaker 1: briefing there on the ebbs and flows. Indeed, the many 464 00:23:52,600 --> 00:24:10,440 Speaker 1: currents that you see uh in Washington today. Francie McQuay 465 00:24:10,560 --> 00:24:14,240 Speaker 1: in London and Tom Keene in New York and and 466 00:24:14,320 --> 00:24:20,200 Speaker 1: joining us now Peter Roscom gymnast. Peter Roscom, who has 467 00:24:20,359 --> 00:24:23,199 Speaker 1: not only done the reality of gymnastics, but done the 468 00:24:23,280 --> 00:24:28,200 Speaker 1: political gymnastics over the years, associated with the former Congressman 469 00:24:28,240 --> 00:24:32,560 Speaker 1: Tom Delay, former Congressman Henry Hyde of Illinois. He is 470 00:24:32,600 --> 00:24:38,280 Speaker 1: in the sixth district of Illinois. Uh and is a Republican. Uh. 471 00:24:38,440 --> 00:24:41,880 Speaker 1: You know, Congressman, wonderful have you with us? How polarized 472 00:24:41,960 --> 00:24:45,959 Speaker 1: is Illinois today between Republicans and Democrats. I've been watching 473 00:24:46,040 --> 00:24:49,280 Speaker 1: Ken Burns Vietnam and there was LBJ talking to Everett 474 00:24:49,280 --> 00:24:51,680 Speaker 1: Dirks and years ago, and that was a different time 475 00:24:51,680 --> 00:24:53,920 Speaker 1: and place where there was a middle ground. Is there 476 00:24:53,960 --> 00:24:59,000 Speaker 1: a middle ground in political Illinois today? Doesn't? Right now, 477 00:24:59,040 --> 00:25:03,320 Speaker 1: there's a very deep breach between the political parties and UM, 478 00:25:03,320 --> 00:25:06,199 Speaker 1: it's a pretty fractious state all the way around. And 479 00:25:06,280 --> 00:25:09,080 Speaker 1: here's the shame of it. There is so much good 480 00:25:09,200 --> 00:25:12,320 Speaker 1: that that's going on in Illinois. It's got an incredibly 481 00:25:12,760 --> 00:25:16,000 Speaker 1: solid geography. It's got agriculture that's the n via of 482 00:25:16,080 --> 00:25:19,520 Speaker 1: the World's got a manufacturing base that nobody can compete with, 483 00:25:19,880 --> 00:25:23,760 Speaker 1: financial services companies, healthcare and so forth, it's just got 484 00:25:23,880 --> 00:25:28,960 Speaker 1: bad policy. The bad policies have been coming out of frankly, 485 00:25:29,040 --> 00:25:33,120 Speaker 1: one one city and one one party that has dominated 486 00:25:33,240 --> 00:25:37,080 Speaker 1: things to the exclusion of others. And Illinois isn't going 487 00:25:37,160 --> 00:25:39,320 Speaker 1: to see better days from a financial point of view 488 00:25:39,400 --> 00:25:42,960 Speaker 1: until it better policies some of out of your district. 489 00:25:42,960 --> 00:25:45,440 Speaker 1: The sixth district of Illinois is a long drive from 490 00:25:45,800 --> 00:25:48,520 Speaker 1: Wrigley Field. You gotta go through Chicago over and your 491 00:25:48,520 --> 00:25:52,360 Speaker 1: west of Chicago then up to the northwest is well, 492 00:25:52,720 --> 00:25:55,159 Speaker 1: and I think you probably have a pretty good understanding 493 00:25:55,160 --> 00:25:58,359 Speaker 1: of the gentleman to the north. Speaker Ryan, how what 494 00:25:58,520 --> 00:26:02,280 Speaker 1: is the power of speaker and now in particularly as 495 00:26:02,320 --> 00:26:07,000 Speaker 1: we struggle towards tax reform. So Speaker Ryan, I think 496 00:26:07,000 --> 00:26:10,879 Speaker 1: he has done um done as much work as any 497 00:26:11,000 --> 00:26:15,080 Speaker 1: modern speaker in terms of laying the groundwork for tax reform. 498 00:26:15,240 --> 00:26:19,280 Speaker 1: So there's a you know, he's he's walked in and 499 00:26:19,359 --> 00:26:22,440 Speaker 1: created an expectation that we're going to get this done. 500 00:26:22,840 --> 00:26:26,680 Speaker 1: He's helped, with other leaders in Washington build out literally 501 00:26:26,680 --> 00:26:29,760 Speaker 1: a framework upon which then the tax writing to me 502 00:26:30,440 --> 00:26:33,840 Speaker 1: can fill this in. So speakers cannot declare things we 503 00:26:33,880 --> 00:26:37,560 Speaker 1: know that the the modern speakership in particular, has really 504 00:26:37,680 --> 00:26:41,159 Speaker 1: changed over the past decade, and it's very much a 505 00:26:41,320 --> 00:26:44,520 Speaker 1: first among equals. But there's no demands that come out 506 00:26:44,520 --> 00:26:47,280 Speaker 1: of the Speaker's office now. But what it comes is 507 00:26:47,720 --> 00:26:53,960 Speaker 1: cajoling and admonission and laying the laying the economic argument 508 00:26:54,000 --> 00:26:56,919 Speaker 1: out from the perch of the Speaker's office. So I 509 00:26:56,920 --> 00:26:59,800 Speaker 1: think he's done it as much and actually much more 510 00:26:59,840 --> 00:27:02,679 Speaker 1: than any any speaker in modern history to create an 511 00:27:02,680 --> 00:27:05,919 Speaker 1: expectation the tax reform gets done all right, but we 512 00:27:05,960 --> 00:27:08,760 Speaker 1: still need to wait for the details, sir. So if 513 00:27:08,800 --> 00:27:10,960 Speaker 1: you look at the details, first of all, what is 514 00:27:10,960 --> 00:27:13,959 Speaker 1: the end game of this tax plant? Will it really 515 00:27:14,119 --> 00:27:18,120 Speaker 1: filter through into GDP? Given where the U. S. Economy 516 00:27:18,240 --> 00:27:22,119 Speaker 1: is in this current cycle. The end game is to 517 00:27:22,200 --> 00:27:26,439 Speaker 1: have a transformational tax reform that drives real growth in 518 00:27:26,560 --> 00:27:29,520 Speaker 1: this country and makes me Lessons the most competitive tax 519 00:27:29,640 --> 00:27:32,160 Speaker 1: jurisdiction in the world. And we can do it. Here's 520 00:27:32,160 --> 00:27:35,879 Speaker 1: what's interesting in the tax reform debate itself. There is 521 00:27:35,960 --> 00:27:40,040 Speaker 1: nobody that's descending the status flow than about that. Nobody 522 00:27:40,160 --> 00:27:42,720 Speaker 1: is out there, and I mean not a single person. 523 00:27:42,800 --> 00:27:45,600 Speaker 1: It's going to say, oh, the Internal Revenue Code, I 524 00:27:45,680 --> 00:27:47,840 Speaker 1: love that thing to sleep. It's the way it is, 525 00:27:48,040 --> 00:27:50,639 Speaker 1: which is very different than other you know, than the 526 00:27:50,640 --> 00:27:53,760 Speaker 1: health care debate for example, where there are strong dissenters 527 00:27:53,800 --> 00:27:56,240 Speaker 1: to the death. The name of the game now is 528 00:27:56,520 --> 00:27:59,960 Speaker 1: take advantage of that, um, take advantage of that moment 529 00:28:00,000 --> 00:28:03,760 Speaker 1: then and drive sports and senders and stump of something 530 00:28:03,920 --> 00:28:07,119 Speaker 1: that we need out of I would suggest, Congressman, and 531 00:28:07,160 --> 00:28:09,080 Speaker 1: our final question to you, would love to have you 532 00:28:09,160 --> 00:28:11,000 Speaker 1: back after the Cubs go back to back in the 533 00:28:11,040 --> 00:28:15,120 Speaker 1: World Series. I would I would love to know from 534 00:28:15,160 --> 00:28:18,560 Speaker 1: you what would be your advice to the President over 535 00:28:18,600 --> 00:28:21,080 Speaker 1: a good cup of coffee or two scoops of vanilla 536 00:28:21,160 --> 00:28:25,720 Speaker 1: ice cream, to suggest to him how to engage with 537 00:28:25,760 --> 00:28:29,280 Speaker 1: your brethren in Congress, your GOP brethren. What would be 538 00:28:29,320 --> 00:28:32,359 Speaker 1: your counsel to the president on how to speak to 539 00:28:32,480 --> 00:28:37,800 Speaker 1: experienced moderates like yourself. I would say, you know, there're 540 00:28:38,200 --> 00:28:41,440 Speaker 1: there's I would say two things. Number one, put down 541 00:28:41,440 --> 00:28:44,480 Speaker 1: the Twitter feed. I don't think it's particularly helpful and 542 00:28:44,520 --> 00:28:47,520 Speaker 1: it's a it's a big distraction for people in a 543 00:28:47,680 --> 00:28:51,280 Speaker 1: district like mind. And the second thing is to lay 544 00:28:51,280 --> 00:28:56,080 Speaker 1: out layout a clear priority and on toach reform. He 545 00:28:56,160 --> 00:28:59,239 Speaker 1: had He said, Look, we want um, we want to 546 00:28:59,280 --> 00:29:03,000 Speaker 1: corporate rate higher than wine. We want a task through 547 00:29:03,080 --> 00:29:06,720 Speaker 1: rate no higher than but it all has to be 548 00:29:06,800 --> 00:29:10,520 Speaker 1: thriving and ramped up in the middle income taste. And 549 00:29:10,560 --> 00:29:13,760 Speaker 1: I think it's those kinds of things, that clarity, which 550 00:29:13,760 --> 00:29:16,720 Speaker 1: is a foreshadowing of better things to talk wonderful to 551 00:29:16,800 --> 00:29:19,680 Speaker 1: speak to you the six district, folks, was at Romney 552 00:29:19,720 --> 00:29:23,240 Speaker 1: District and shifted to Secretary Clinton. UH here in the 553 00:29:23,320 --> 00:29:28,120 Speaker 1: last go around. Peter Roscom is the congressman. Republican Congressman 554 00:29:28,160 --> 00:29:31,840 Speaker 1: from the sixth District in Illinois, greatly appreciate his time 555 00:29:32,400 --> 00:29:44,640 Speaker 1: UH today. Thanks for listening to the Bloomberg Surveillance podcast. 556 00:29:45,120 --> 00:29:50,320 Speaker 1: Subscribe and listen to interviews on Apple Podcasts, SoundCloud, or 557 00:29:50,400 --> 00:29:54,680 Speaker 1: whichever podcast platform you prefer. I'm on Twitter at Tom Keene. 558 00:29:54,840 --> 00:29:59,200 Speaker 1: David Gura Is that David Gura before the podcast? You 559 00:29:59,200 --> 00:30:02,480 Speaker 1: can always catch us worldwide. I'm Bloomberg Radio.