1 00:00:05,800 --> 00:00:08,720 Speaker 1: Welcome to the Bloomberg P and L Podcast. I'm pim Fox. 2 00:00:08,760 --> 00:00:11,520 Speaker 1: Along with my co host Lisa Abramowitz. Each day we 3 00:00:11,640 --> 00:00:15,120 Speaker 1: bring you the most important, noteworthy, and useful interviews for 4 00:00:15,200 --> 00:00:17,840 Speaker 1: you and your money, whether you're at the grocery store 5 00:00:17,960 --> 00:00:20,720 Speaker 1: or the trading floor. Find the Bloomberg P and L 6 00:00:20,840 --> 00:00:31,880 Speaker 1: Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot com. The 7 00:00:32,040 --> 00:00:35,360 Speaker 1: leveraged finance industry here to tell us more about it 8 00:00:35,400 --> 00:00:38,000 Speaker 1: is Stephen Oh. He is the global head of Credit 9 00:00:38,040 --> 00:00:40,879 Speaker 1: and fixed Income and co head of Leveraged Finance for 10 00:00:41,080 --> 00:00:46,199 Speaker 1: pine Bridge Investments, helping to manage more than ninety billion dollars. 11 00:00:46,240 --> 00:00:49,479 Speaker 1: He is based in Los Angeles. Stephen Oh, thank you 12 00:00:49,560 --> 00:00:52,400 Speaker 1: very much for being with us. Do you see more 13 00:00:52,479 --> 00:00:59,040 Speaker 1: potential for distressed and leverage loans in the marketplace currently? Well, 14 00:00:59,200 --> 00:01:02,000 Speaker 1: we've been in a ironment where there has been very 15 00:01:02,000 --> 00:01:08,240 Speaker 1: strong fundamentals and earnings growth, therefore reasonably low default rates. 16 00:01:08,280 --> 00:01:13,080 Speaker 1: While distress will be increasing in the future, there currently 17 00:01:13,200 --> 00:01:17,960 Speaker 1: isn't enough excesses to create material problems. Where we see 18 00:01:18,040 --> 00:01:21,560 Speaker 1: the distress forming is not broad based but much more 19 00:01:21,600 --> 00:01:25,160 Speaker 1: idiosyncratic in nature. All right, I'd love to take a 20 00:01:25,160 --> 00:01:27,760 Speaker 1: look at where we're coming from in the year and 21 00:01:27,800 --> 00:01:29,920 Speaker 1: where we're heading. I know you just put out your 22 00:01:29,920 --> 00:01:34,360 Speaker 1: mid year outlook for fixed income, and I'm struck by 23 00:01:34,520 --> 00:01:37,600 Speaker 1: the huge outperformers in the first half, at least in 24 00:01:37,640 --> 00:01:41,959 Speaker 1: the US, the worst rated companies did the best. The 25 00:01:42,080 --> 00:01:46,720 Speaker 1: riskiest securities outperformed. I'm just wondering how long do you 26 00:01:46,760 --> 00:01:50,120 Speaker 1: think that can continue. Well, we're we're in an environment 27 00:01:50,160 --> 00:01:54,440 Speaker 1: where a combination of risk seeking, desire to stretch for yield, 28 00:01:54,520 --> 00:01:58,080 Speaker 1: combined with a benign fundamental near term environment. And so 29 00:01:58,160 --> 00:02:01,880 Speaker 1: in that environment, we've had really two components out performing, 30 00:02:01,960 --> 00:02:04,800 Speaker 1: and one you noted, which was the highest risk component 31 00:02:04,840 --> 00:02:07,840 Speaker 1: within the leverage finance space. But the other element of 32 00:02:07,880 --> 00:02:12,320 Speaker 1: that is asset classes that have less interest rate sensitivity, 33 00:02:12,400 --> 00:02:16,120 Speaker 1: because so far, year to day, most of the differentials 34 00:02:16,120 --> 00:02:19,680 Speaker 1: and fixed income performance has really been around interest rate 35 00:02:19,760 --> 00:02:23,480 Speaker 1: risk as opposed to credit spread fears, with the exception 36 00:02:23,520 --> 00:02:26,519 Speaker 1: of the emerging markets Arena. Well, Stephen, and maybe you 37 00:02:26,560 --> 00:02:28,560 Speaker 1: could just offer a little bit more detailed. Is it 38 00:02:28,680 --> 00:02:32,480 Speaker 1: the desire for yield that drives the price up or 39 00:02:32,560 --> 00:02:36,640 Speaker 1: is it actually the increased performance of the asset, the 40 00:02:36,720 --> 00:02:40,840 Speaker 1: underlying asset the company for example, it's a combination of 41 00:02:40,919 --> 00:02:44,040 Speaker 1: both that's taking place right now, and so in that 42 00:02:44,200 --> 00:02:49,079 Speaker 1: environment in the short term, yes, the macro GDP growth 43 00:02:49,160 --> 00:02:52,280 Speaker 1: is very good. We're in a benign environment of very 44 00:02:52,280 --> 00:02:55,360 Speaker 1: low default race within the leverage finance space. Earnings are 45 00:02:55,400 --> 00:02:59,760 Speaker 1: broadly improving, so there is an element of justification for 46 00:03:00,120 --> 00:03:04,920 Speaker 1: or credit improvement, particularly the area that has perhaps the 47 00:03:05,000 --> 00:03:08,560 Speaker 1: highest yield, which fits investor appetype. But the way we 48 00:03:08,680 --> 00:03:11,240 Speaker 1: like to think about it is this is the type 49 00:03:11,240 --> 00:03:14,800 Speaker 1: of environment where portfolio should be getting more defensive because 50 00:03:15,160 --> 00:03:19,120 Speaker 1: when we think about what we're getting paid in terms 51 00:03:19,120 --> 00:03:23,080 Speaker 1: of incremental units of risk. While triple cs and the 52 00:03:23,120 --> 00:03:27,280 Speaker 1: highest risk component maybe outperforming right now, we don't believe 53 00:03:27,320 --> 00:03:30,720 Speaker 1: that you're getting paid adequately for a large component of 54 00:03:30,760 --> 00:03:35,080 Speaker 1: that arena, and we never have present insights into exactly 55 00:03:35,120 --> 00:03:36,800 Speaker 1: when is going to be the top or one is 56 00:03:36,800 --> 00:03:39,280 Speaker 1: going to be the bottom. But as we recognize the 57 00:03:39,320 --> 00:03:41,960 Speaker 1: fact that we're not getting paid adequately for some element 58 00:03:42,000 --> 00:03:45,920 Speaker 1: of risk, the prudent manner and approach is to reduce 59 00:03:45,960 --> 00:03:48,200 Speaker 1: the risk in your portfolio, not to take more risk. 60 00:03:48,440 --> 00:03:52,000 Speaker 1: As we're seeing more people doing Stephen, have you witnessed 61 00:03:52,080 --> 00:03:57,160 Speaker 1: either at Pine Bridge or in your colleagues and competitors 62 00:03:57,200 --> 00:04:01,800 Speaker 1: of business the increase sort of build up of cash 63 00:04:02,280 --> 00:04:07,360 Speaker 1: in order to anticipate that potential opportunity. We're not we 64 00:04:07,440 --> 00:04:11,119 Speaker 1: haven't particularly seen that at this point. I think right 65 00:04:11,160 --> 00:04:16,760 Speaker 1: now cash is being fully invested uh in most asset 66 00:04:16,800 --> 00:04:20,200 Speaker 1: classes because in the market environment where performance is about 67 00:04:20,720 --> 00:04:24,520 Speaker 1: generating current income and current yield, and cash acts as 68 00:04:24,560 --> 00:04:28,359 Speaker 1: a dragon that arena. But having said that, as what 69 00:04:28,480 --> 00:04:32,680 Speaker 1: you get paid in cash has increased in recent months, 70 00:04:33,400 --> 00:04:37,800 Speaker 1: being in cash and having the liquidity flexibility is I 71 00:04:37,839 --> 00:04:42,200 Speaker 1: think a relatively prudent approach for portfolios and looking to 72 00:04:42,279 --> 00:04:46,200 Speaker 1: increase cash or alternatively what we like to call cash 73 00:04:46,200 --> 00:04:51,520 Speaker 1: plus substitute, so high quality generally floating rate assets where 74 00:04:51,520 --> 00:04:55,160 Speaker 1: you're getting paid a premium above cash. But feel comfortable 75 00:04:55,360 --> 00:04:57,880 Speaker 1: us sitting in for now, what's the most dangerous spot 76 00:04:57,880 --> 00:04:59,960 Speaker 1: in the fixed income market right now, heading into your end, 77 00:05:01,600 --> 00:05:05,520 Speaker 1: the most dangerous spot our areas that we believe are 78 00:05:05,720 --> 00:05:09,640 Speaker 1: tied to developed market sovereign Yolk curve and so less 79 00:05:09,680 --> 00:05:12,160 Speaker 1: so on the U S side, because the US and 80 00:05:12,200 --> 00:05:16,360 Speaker 1: the FED has already been engaged in a long process 81 00:05:16,400 --> 00:05:19,919 Speaker 1: of normalization. But as we look at you know, Europe 82 00:05:20,000 --> 00:05:22,640 Speaker 1: as we look at Japan and as we see the 83 00:05:22,760 --> 00:05:26,279 Speaker 1: shifting in their approach UH and as they hit an 84 00:05:26,320 --> 00:05:30,520 Speaker 1: inflection point in their monetary policy, that really is set 85 00:05:30,600 --> 00:05:34,640 Speaker 1: up to cause downward volatility for the next eighteen months. 86 00:05:35,160 --> 00:05:39,440 Speaker 1: So that's interesting, especially because other people are pinpointing, perhaps 87 00:05:39,480 --> 00:05:42,279 Speaker 1: concerned that they have with either leveraged loans which have 88 00:05:42,360 --> 00:05:46,200 Speaker 1: been expanding very quickly and have had much more aggressive structures, 89 00:05:46,440 --> 00:05:48,800 Speaker 1: as well as on the investment grade side, with triple 90 00:05:48,880 --> 00:05:51,839 Speaker 1: B rated bonds with the lowest cheer of investment grade. 91 00:05:52,080 --> 00:05:55,239 Speaker 1: You're saying, again, that's not where the real risk lies. 92 00:05:55,279 --> 00:05:58,640 Speaker 1: It's really in sovereign rates and developed markets. Is that? 93 00:05:58,760 --> 00:06:01,640 Speaker 1: Is that what I'm hearing From a broad based standpoint, 94 00:06:01,640 --> 00:06:04,800 Speaker 1: That's correct, But you actually hit upon something that's very important, 95 00:06:04,880 --> 00:06:08,800 Speaker 1: because risk is not solely about asset classes, but within 96 00:06:08,880 --> 00:06:12,279 Speaker 1: asset classes overall. And just as I noted the fact 97 00:06:12,279 --> 00:06:14,560 Speaker 1: that we believe that we're in an environment right now, 98 00:06:14,560 --> 00:06:16,960 Speaker 1: we're on the leverage loan or the HIO bond side, 99 00:06:17,240 --> 00:06:20,719 Speaker 1: triple C risk is not being adequately compensated on the 100 00:06:20,760 --> 00:06:23,640 Speaker 1: investment great credit side. Triple B s are entering that 101 00:06:23,800 --> 00:06:26,640 Speaker 1: territory as well, and I think The dilemma that most 102 00:06:26,680 --> 00:06:30,080 Speaker 1: portfolio managers face is as they look into the future, 103 00:06:30,160 --> 00:06:33,120 Speaker 1: the next six to twelve months looked fairly benign for 104 00:06:33,240 --> 00:06:36,680 Speaker 1: continuing to take that risk. So it's about timing of 105 00:06:36,800 --> 00:06:40,520 Speaker 1: when does one feel comfortable reducing that exposure, And it's 106 00:06:40,560 --> 00:06:45,520 Speaker 1: always the ongoing issue of short term performance versus long term. 107 00:06:45,560 --> 00:06:48,799 Speaker 1: Well do you believe that this is something that professionals 108 00:06:48,880 --> 00:06:53,040 Speaker 1: are selling down as a result of this condition? Uh, 109 00:06:53,080 --> 00:06:55,800 Speaker 1: we're not seeing a broad base, but we are taking 110 00:06:55,839 --> 00:06:58,279 Speaker 1: the approach and have always taken the approach of a 111 00:06:58,400 --> 00:07:02,760 Speaker 1: contrarian mindset that it when risk appetite is extremely strong, 112 00:07:03,640 --> 00:07:06,919 Speaker 1: the right approaches to become more defensive and similarly the 113 00:07:07,000 --> 00:07:09,920 Speaker 1: time to buy and reach for more risk. And there's 114 00:07:09,960 --> 00:07:12,800 Speaker 1: a lot of fear in the marketplace, uh right now, 115 00:07:13,280 --> 00:07:15,400 Speaker 1: And so you know, I think we're in an environment 116 00:07:15,400 --> 00:07:18,480 Speaker 1: where we're starting to as an analogy, you know, we're 117 00:07:18,520 --> 00:07:21,240 Speaker 1: heading into the baseball playoff push, but now is not 118 00:07:21,360 --> 00:07:23,600 Speaker 1: the time to swing for home runs. It's really more 119 00:07:23,680 --> 00:07:28,000 Speaker 1: about timely singles by taking opportunist to advantage of technical 120 00:07:28,080 --> 00:07:31,000 Speaker 1: driven deviations, and it's really more about shoring up your 121 00:07:31,040 --> 00:07:35,680 Speaker 1: defenses right now when it looks like everything is going smoothly, Stephen, 122 00:07:35,840 --> 00:07:39,320 Speaker 1: just a mountain twenty seconds. You also are favoring emerging markets, 123 00:07:39,360 --> 00:07:41,920 Speaker 1: especially in Asia heading into year end. Is that correct? 124 00:07:42,920 --> 00:07:46,360 Speaker 1: We favor asset class as an area where you're getting 125 00:07:46,360 --> 00:07:50,120 Speaker 1: incremental only paid for complexities, whether in the form of 126 00:07:50,440 --> 00:07:55,560 Speaker 1: structure like clos or bank loans, or in geographic complexity 127 00:07:55,560 --> 00:07:58,600 Speaker 1: and emerging markets overall. And so yes, we like the 128 00:07:58,600 --> 00:08:02,000 Speaker 1: fundamental outlook of We think that a component of the 129 00:08:02,040 --> 00:08:04,840 Speaker 1: sell off that's occurred this year is more technical driven. 130 00:08:05,200 --> 00:08:07,680 Speaker 1: But you have to be very targeted in your purse 131 00:08:07,760 --> 00:08:10,440 Speaker 1: to e M and within Asia Asia, it's really more 132 00:08:10,480 --> 00:08:13,800 Speaker 1: about a corporate story, not a sovereign story the e M. Steven, Oh, 133 00:08:13,880 --> 00:08:15,720 Speaker 1: thank you so much for being with us. That was great. 134 00:08:15,720 --> 00:08:18,440 Speaker 1: Steven though, Global head of Credit and fixed Income at 135 00:08:18,520 --> 00:08:23,160 Speaker 1: pine Bridge Investments. Pine Bridge menages ninety point five billion 136 00:08:23,360 --> 00:08:38,000 Speaker 1: dollars globally. Right now it is that special time of 137 00:08:38,080 --> 00:08:40,360 Speaker 1: day we take a look at small and mid cap stocks. 138 00:08:40,840 --> 00:08:43,640 Speaker 1: They are turning up, but not as much as the 139 00:08:43,920 --> 00:08:48,120 Speaker 1: larger cap piers. Your communists bloggard, I'm left go on 140 00:08:48,120 --> 00:08:50,599 Speaker 1: the bloomberg, not at all. In fact, the rust of 141 00:08:50,679 --> 00:08:54,000 Speaker 1: two thousand is actually lowered by a tenth of at 142 00:08:54,040 --> 00:08:59,120 Speaker 1: the moment it was higher, just like stocks are bouncing around. 143 00:08:59,240 --> 00:09:01,880 Speaker 1: What can I mean? You've got the S and P 144 00:09:02,040 --> 00:09:04,280 Speaker 1: five hundred up a quarter of percents just in the 145 00:09:04,360 --> 00:09:06,760 Speaker 1: last few minutes or so that the Russell has taken 146 00:09:07,080 --> 00:09:09,760 Speaker 1: a leg down here. Of course, you're not talking about 147 00:09:09,920 --> 00:09:13,560 Speaker 1: much movement from yesterday's close in either direction. That said, 148 00:09:13,600 --> 00:09:15,440 Speaker 1: since we're down, let's talk about the stock with the 149 00:09:15,440 --> 00:09:18,600 Speaker 1: biggest decline. De Bold nick Storff. The ticker on that 150 00:09:18,640 --> 00:09:22,720 Speaker 1: one is DBD, the maker of automated telemachines, has tumbled 151 00:09:22,800 --> 00:09:26,240 Speaker 1: thirty three and a half percent. De Bald had an 152 00:09:26,360 --> 00:09:30,840 Speaker 1: unexpected second quarter loss, cut annual forecast, and said it's 153 00:09:30,920 --> 00:09:35,199 Speaker 1: asking banks to ease loan terms. You've got New Linked 154 00:09:35,240 --> 00:09:38,760 Speaker 1: Genetics ticker n l n K down twenty percent. The 155 00:09:39,080 --> 00:09:42,720 Speaker 1: drug developer reported second quarter revenue the trout estimates and 156 00:09:42,800 --> 00:09:46,080 Speaker 1: said it's cutting thirty percent of its staff. Also is 157 00:09:46,240 --> 00:09:49,240 Speaker 1: its chief financial officer will be leaving in a few months. 158 00:09:49,920 --> 00:09:53,600 Speaker 1: Biggest gain in the Russell belongs to what Constainer Store Group, 159 00:09:53,600 --> 00:09:56,920 Speaker 1: whose ticker is TCS. It's up almost the thirty nine 160 00:09:56,920 --> 00:10:00,600 Speaker 1: percent fiscal first quarter results at the reds Ollers showed 161 00:10:00,640 --> 00:10:04,320 Speaker 1: a narrower loss and higher revenue than analysts expected based 162 00:10:04,320 --> 00:10:08,800 Speaker 1: on Bloomberg survey and Pandora Media tick her p one 163 00:10:08,880 --> 00:10:12,400 Speaker 1: letter up eighteen percent. The internet radio company posts a 164 00:10:12,440 --> 00:10:15,319 Speaker 1: smaller loss and higher sales for the second quarter than 165 00:10:15,360 --> 00:10:19,280 Speaker 1: analysts predicted. Thank you very much, David Wilson, Bloomberg stocks 166 00:10:19,280 --> 00:10:21,520 Speaker 1: comust remember to send him an email at d Wilson 167 00:10:21,559 --> 00:10:24,400 Speaker 1: at Bloomberg dot net, sign up for his daily free 168 00:10:24,440 --> 00:10:27,520 Speaker 1: email newsletter, and also you'll get his chart of the 169 00:10:27,640 --> 00:10:32,000 Speaker 1: day featuring Apple and its share buy backs. D Wilson, 170 00:10:32,040 --> 00:10:36,480 Speaker 1: Bloomberg dot net. Return our attention now to CBS and 171 00:10:36,720 --> 00:10:41,280 Speaker 1: it's chief executive, Less Moonvest. The Los Angeles District Attorney's 172 00:10:41,320 --> 00:10:45,560 Speaker 1: Offers said it would not prosecute Mr Moonvest for alleged 173 00:10:45,760 --> 00:10:49,560 Speaker 1: sexual crimes because too much time has elapsed to pursue 174 00:10:49,600 --> 00:10:53,120 Speaker 1: incidents from the nineteen eighties. Here to tell us about 175 00:10:53,200 --> 00:10:56,760 Speaker 1: CBS and potential risks for the company's Brian Weezer. He 176 00:10:56,880 --> 00:11:00,640 Speaker 1: is the senior research analyst for Pivotal Research Group. Brian, 177 00:11:01,240 --> 00:11:06,120 Speaker 1: what's the outlook for CBS with Less Moonvest? Well, the 178 00:11:06,200 --> 00:11:09,600 Speaker 1: question is that is it with or without even though 179 00:11:10,000 --> 00:11:15,000 Speaker 1: it is um clearly indicating he intends to stay. Um. 180 00:11:15,280 --> 00:11:19,199 Speaker 1: I mean it's uh, it's hard to fathom that he 181 00:11:19,440 --> 00:11:24,040 Speaker 1: can continue to do so for very long. UM. You know, 182 00:11:24,080 --> 00:11:27,360 Speaker 1: you have two issues. One is that although really this 183 00:11:27,440 --> 00:11:31,000 Speaker 1: is as much now a board issue as anything, uh, 184 00:11:31,280 --> 00:11:34,599 Speaker 1: it is studying that the board and this day and 185 00:11:34,640 --> 00:11:40,720 Speaker 1: age would not have investigated uh previously, given that reports 186 00:11:40,720 --> 00:11:44,480 Speaker 1: are rumors of this were out there months ago, the board, 187 00:11:44,559 --> 00:11:47,920 Speaker 1: as a sort of press reports of indicated wasn't aware 188 00:11:48,080 --> 00:11:52,120 Speaker 1: of reports for this months ago. On top of the 189 00:11:52,280 --> 00:11:55,520 Speaker 1: CBS news issues that were widely reported in the way 190 00:11:55,600 --> 00:12:00,120 Speaker 1: to the Charlie Rose episode, shall we say, uh, and 191 00:12:00,240 --> 00:12:04,320 Speaker 1: that they didn't act suggests strongly that you have a 192 00:12:04,360 --> 00:12:08,720 Speaker 1: board that was in, for lack of better word, management's pocket. Uh. 193 00:12:08,920 --> 00:12:11,120 Speaker 1: That's a problem. Then when you look at what's going 194 00:12:11,160 --> 00:12:14,600 Speaker 1: on with Viacom and the murder potential, where one of 195 00:12:14,640 --> 00:12:17,319 Speaker 1: the concerns is that you have a board CBS who 196 00:12:17,400 --> 00:12:20,640 Speaker 1: is really acting primarily in the CEO's interests, not in 197 00:12:20,720 --> 00:12:24,840 Speaker 1: shareholders interests. They're going to go to Viacom at some point. 198 00:12:25,080 --> 00:12:27,800 Speaker 1: This is just delaying it. Well, but you bring up 199 00:12:27,800 --> 00:12:30,080 Speaker 1: a lot of good points there I mean also the 200 00:12:30,120 --> 00:12:31,679 Speaker 1: fact that the board is coming out and saying that 201 00:12:31,720 --> 00:12:35,000 Speaker 1: they're hiring outside council to investigate the issue. They're doing 202 00:12:35,040 --> 00:12:37,160 Speaker 1: that now after the news before it came out. Why 203 00:12:37,160 --> 00:12:39,920 Speaker 1: didn't they do that, uh, you know, six months ago 204 00:12:40,120 --> 00:12:42,800 Speaker 1: or however long ago when they first found out. But 205 00:12:42,920 --> 00:12:46,040 Speaker 1: Brian translate all of this and concern about the board 206 00:12:46,160 --> 00:12:49,080 Speaker 1: into what a shareholder ought to be doing, or what 207 00:12:49,240 --> 00:12:52,120 Speaker 1: somebody who's looking at the decline and CBS shares ought 208 00:12:52,160 --> 00:12:54,719 Speaker 1: to be thinking. Is this a buying opportunity or does 209 00:12:54,760 --> 00:12:57,040 Speaker 1: this indicate that there are a lot of problems that 210 00:12:57,040 --> 00:13:00,680 Speaker 1: really maybe haven't even been flushed out yet. You know, 211 00:13:00,720 --> 00:13:03,560 Speaker 1: A joke that uh, CBS is board has managed to 212 00:13:03,559 --> 00:13:09,200 Speaker 1: make Viacom's board look good, which is a very difficult task. Um. Unfortunately, 213 00:13:09,240 --> 00:13:12,080 Speaker 1: that is the outcome here. Whereas prior to all, the 214 00:13:12,160 --> 00:13:15,200 Speaker 1: CBS had a chance to kind of well, they had 215 00:13:15,200 --> 00:13:18,439 Speaker 1: a fighting chance at independence, a fighting chance at persuading 216 00:13:18,440 --> 00:13:21,800 Speaker 1: investors to fight as hard as possible to keep CBS 217 00:13:21,800 --> 00:13:23,839 Speaker 1: independence so that it could be sold on to someone 218 00:13:23,880 --> 00:13:27,360 Speaker 1: else for a higher price than what Viacom might pay. 219 00:13:27,440 --> 00:13:30,760 Speaker 1: And now here we are, Viacom will be We'll have 220 00:13:30,760 --> 00:13:34,400 Speaker 1: the upperhand in any negotiation. Um, you have to assume 221 00:13:34,480 --> 00:13:38,520 Speaker 1: the combination happened and not unfavorable terms to CBS. Of course, 222 00:13:38,520 --> 00:13:40,560 Speaker 1: it's impossible to know what those terms will be, what 223 00:13:40,679 --> 00:13:43,800 Speaker 1: the combinations, what the ratios will be for any sure 224 00:13:43,800 --> 00:13:46,360 Speaker 1: exchanges or anything else like that. But it will happen, 225 00:13:47,040 --> 00:13:49,040 Speaker 1: and so I wouldn't It's hard to call the buying 226 00:13:49,040 --> 00:13:52,600 Speaker 1: opportunity of a hold rating on the stock. Brian. What 227 00:13:52,880 --> 00:13:57,880 Speaker 1: are the jewels in the CBS business? Is it the 228 00:13:58,160 --> 00:14:03,120 Speaker 1: television network and the TV studo? Yeah, I mean, certainly 229 00:14:03,120 --> 00:14:06,640 Speaker 1: they they've been in power, although it does so many 230 00:14:06,720 --> 00:14:10,240 Speaker 1: questions are are are are opened up by movies if 231 00:14:10,559 --> 00:14:14,400 Speaker 1: he is in fact eventually removed um, because you know, 232 00:14:14,520 --> 00:14:18,199 Speaker 1: he singularly was involved in most of their businesses, I 233 00:14:18,200 --> 00:14:20,240 Speaker 1: mean Simon and Schust the part that he was least 234 00:14:20,280 --> 00:14:23,760 Speaker 1: involved with, and of course is probably the least important. Um. 235 00:14:23,960 --> 00:14:26,840 Speaker 1: Show Time has developed in its own right, um and 236 00:14:26,960 --> 00:14:30,280 Speaker 1: is doing well and you know, has relatively a significant 237 00:14:30,280 --> 00:14:33,400 Speaker 1: degree of autonomy. But of course, the flagship broadcast network 238 00:14:33,680 --> 00:14:38,040 Speaker 1: is you know, the kind of where the the flywheel moves, 239 00:14:38,160 --> 00:14:40,680 Speaker 1: Um for the whole business. It's it's certainly they're all 240 00:14:40,720 --> 00:14:43,520 Speaker 1: access business, which is one of the more promising and 241 00:14:43,600 --> 00:14:48,440 Speaker 1: issues for streaming service from you know, a traditional broadcaster UM. 242 00:14:49,360 --> 00:14:52,880 Speaker 1: Obviously that they've been successful in driving retransmission consent, blade 243 00:14:52,920 --> 00:14:58,720 Speaker 1: revenues UM and recapturing economics from their local broadcast affiliates UM, 244 00:14:58,800 --> 00:15:01,920 Speaker 1: but primarily because of the success it had at the 245 00:15:01,920 --> 00:15:06,040 Speaker 1: broadcast network level. So you know, that's all without movies, 246 00:15:06,120 --> 00:15:08,320 Speaker 1: it's it's not clear that it would be as successful. 247 00:15:08,680 --> 00:15:11,000 Speaker 1: Brian Weezer, thank you so much for joining us and 248 00:15:11,040 --> 00:15:14,080 Speaker 1: for your insights. Brian Weezer is senior research analyst for 249 00:15:14,160 --> 00:15:17,000 Speaker 1: Pivotal Research Group. And right now I'm looking at these 250 00:15:17,040 --> 00:15:20,640 Speaker 1: shares of Viacom down about three quarters of a percent 251 00:15:20,880 --> 00:15:23,720 Speaker 1: and CBS shares down about a half a percent. It's 252 00:15:23,720 --> 00:15:25,880 Speaker 1: been a rocky period, though, rocky couple of days for 253 00:15:25,960 --> 00:15:29,280 Speaker 1: both shares, although Viacom has come out the better of 254 00:15:29,360 --> 00:15:32,960 Speaker 1: the two by far, in particular from Friday last week, 255 00:15:32,960 --> 00:15:35,280 Speaker 1: when Viacom shares were up about four and a half 256 00:15:35,360 --> 00:15:55,920 Speaker 1: percent and CBS down more than six percent. What do 257 00:15:56,040 --> 00:16:00,360 Speaker 1: Puerto Rican municipal bonds as well as tobacco settlements and 258 00:16:00,440 --> 00:16:03,560 Speaker 1: bonds tied to a New Jersey Mega mall have in common. 259 00:16:03,800 --> 00:16:06,400 Speaker 1: Here to tell us is Matt Winkler. He is columnist 260 00:16:06,480 --> 00:16:09,840 Speaker 1: and for Bloomberg Opinion. It's also editor in chief emeritus 261 00:16:09,840 --> 00:16:12,880 Speaker 1: of Bloomberg News. And you can follow Matt Winkler on 262 00:16:12,920 --> 00:16:18,840 Speaker 1: Twitter at Matthew Underscore Winkler. Alright, Matt Winkler, what do 263 00:16:18,920 --> 00:16:24,160 Speaker 1: these three assets have in common? Uh? They depend on 264 00:16:24,440 --> 00:16:29,640 Speaker 1: a booming economy and ours is just a year away 265 00:16:29,720 --> 00:16:33,440 Speaker 1: from perhaps surpassing the longest expansion in our time, UM, 266 00:16:33,560 --> 00:16:37,040 Speaker 1: and that was back in the nineties. And uh, there's 267 00:16:37,080 --> 00:16:41,720 Speaker 1: every indication that the economy can at least match that 268 00:16:41,800 --> 00:16:47,080 Speaker 1: record and keep going. And UH, the reason why these 269 00:16:47,760 --> 00:16:50,520 Speaker 1: very risky, high yield investments are doing as well as 270 00:16:50,600 --> 00:16:55,720 Speaker 1: they are is typically investors want the greatest yield wherever 271 00:16:55,760 --> 00:16:58,800 Speaker 1: they can get them, and when times are good, which 272 00:16:58,840 --> 00:17:02,800 Speaker 1: they are right now. Uh, the so called risk on 273 00:17:03,000 --> 00:17:07,400 Speaker 1: trade is very attractive, especially UM in the debt market 274 00:17:07,400 --> 00:17:10,600 Speaker 1: where you have some of these issues with coupons of 275 00:17:10,680 --> 00:17:15,640 Speaker 1: six plus and that is a very very attractive UM 276 00:17:15,920 --> 00:17:18,760 Speaker 1: bond h to say the least, when we've had interest 277 00:17:18,880 --> 00:17:21,840 Speaker 1: rates as low as they've been for ten years now. 278 00:17:22,280 --> 00:17:25,280 Speaker 1: So that's what they have in common. And UH, so 279 00:17:25,320 --> 00:17:28,719 Speaker 1: far so good, so far, so good. You highlight some 280 00:17:29,000 --> 00:17:33,240 Speaker 1: really important statistics here in this column. For one, UH, 281 00:17:33,359 --> 00:17:35,880 Speaker 1: the sales tax bonds in Puerto Rico, which has been 282 00:17:35,920 --> 00:17:40,320 Speaker 1: decimated by Hurricane Maria, has yet to fully rebuild. Those 283 00:17:40,359 --> 00:17:43,200 Speaker 1: have doubled in price. UH. You talk about how junk 284 00:17:43,200 --> 00:17:46,320 Speaker 1: graded municipal debt has gained more than four percent so 285 00:17:46,359 --> 00:17:48,960 Speaker 1: far this year. Well, investors who went to top rated 286 00:17:49,000 --> 00:17:51,480 Speaker 1: corporate debt in the US debt of the likes of 287 00:17:51,640 --> 00:17:57,600 Speaker 1: Apple and Amazon, you would have lost money. UM where 288 00:17:57,640 --> 00:18:00,040 Speaker 1: where just sort of the tipping point comes where we 289 00:18:00,160 --> 00:18:03,159 Speaker 1: will have to face the reality of perhaps a not 290 00:18:03,320 --> 00:18:07,000 Speaker 1: yet built New Jersey mega mall that they are supposedly 291 00:18:07,400 --> 00:18:10,080 Speaker 1: going to be financing and then paid back so LESA. 292 00:18:10,119 --> 00:18:15,040 Speaker 1: The dichotomy is that when you're in a normal economic cycle, 293 00:18:15,240 --> 00:18:19,239 Speaker 1: like presumably the one we're in, when the Fed UH 294 00:18:19,560 --> 00:18:23,919 Speaker 1: is very excited about the expansion, so excited that it 295 00:18:24,160 --> 00:18:27,880 Speaker 1: has announced several times that's going to raise interest rates, 296 00:18:28,400 --> 00:18:32,360 Speaker 1: all the investment grade debt behaves as you would expect 297 00:18:32,359 --> 00:18:37,280 Speaker 1: it to. It retreats because higher interest re means that 298 00:18:37,400 --> 00:18:41,760 Speaker 1: at some point, UH, the economy has to UH slow 299 00:18:41,800 --> 00:18:47,639 Speaker 1: down for the highest yielding investments. However, in the debt market, 300 00:18:48,080 --> 00:18:51,679 Speaker 1: it goes its own way until the music stops, and 301 00:18:51,760 --> 00:18:54,760 Speaker 1: it's very sudden. But it's kind of like, for example, 302 00:18:54,760 --> 00:18:57,879 Speaker 1: two thousand six. Uh, if we look back now, we 303 00:18:57,920 --> 00:19:01,560 Speaker 1: should have been pretty concerned, um, because it was just 304 00:19:01,640 --> 00:19:04,960 Speaker 1: two years from the worst or meanest recession since the 305 00:19:05,000 --> 00:19:08,920 Speaker 1: Great Depression. But in two thousand six, everybody was partying. 306 00:19:09,600 --> 00:19:13,720 Speaker 1: Highest yielding investments were sought after around the world. It 307 00:19:13,760 --> 00:19:16,480 Speaker 1: was a little bit different then because we were making 308 00:19:16,800 --> 00:19:19,159 Speaker 1: those investments as trip away so it was a bit 309 00:19:19,200 --> 00:19:24,400 Speaker 1: of a um, uh, misleading and can and con actually 310 00:19:24,440 --> 00:19:26,679 Speaker 1: to the world. But here we are today. We have 311 00:19:26,800 --> 00:19:31,000 Speaker 1: very legitimate high yield investments. They are rated or not 312 00:19:31,119 --> 00:19:34,639 Speaker 1: rated at all. They're rated low and um, they're not 313 00:19:34,680 --> 00:19:37,600 Speaker 1: going to follow the behavior patterns of the of what 314 00:19:37,640 --> 00:19:41,920 Speaker 1: the Fed does the way conventional investment grade debt does, 315 00:19:42,520 --> 00:19:45,800 Speaker 1: and investors for their part, are gonna say, look, as 316 00:19:45,840 --> 00:19:49,919 Speaker 1: long as things are going well, um, getting the compound 317 00:19:50,000 --> 00:19:54,480 Speaker 1: interest from the high yielding investment is a far better 318 00:19:55,200 --> 00:19:59,040 Speaker 1: return total return, even if it's at a discount on 319 00:19:59,080 --> 00:20:00,919 Speaker 1: the dollar. And so that's why you've had some of 320 00:20:00,960 --> 00:20:05,639 Speaker 1: these bankrupt issues. To say the least appreciate as they have, 321 00:20:05,800 --> 00:20:09,120 Speaker 1: because as long as they're paying something, people want them, 322 00:20:09,160 --> 00:20:11,840 Speaker 1: so then there This really raises an important question, especially 323 00:20:11,880 --> 00:20:14,560 Speaker 1: as you raise the rating agency issue, the rating a 324 00:20:15,520 --> 00:20:19,119 Speaker 1: rating company issue from leading up to the prior crisis. 325 00:20:19,920 --> 00:20:23,719 Speaker 1: Do investors recognize the risks that they're taking the specific 326 00:20:24,800 --> 00:20:29,879 Speaker 1: issues of these different municipalities or are they investing through 327 00:20:30,040 --> 00:20:33,120 Speaker 1: index funds that don't necessarily delineate or do the fundamental 328 00:20:33,160 --> 00:20:35,879 Speaker 1: research that would unearth the problems and figure out what 329 00:20:35,920 --> 00:20:39,439 Speaker 1: the correct compensation ought to be for investors. So, Uh, 330 00:20:39,560 --> 00:20:45,240 Speaker 1: most of the performances actively managed, so it's not an algorithm. UM. 331 00:20:45,359 --> 00:20:50,800 Speaker 1: And since you mentioned the context of ratings, you know, 332 00:20:51,560 --> 00:20:57,960 Speaker 1: ratings themselves have been essentially contrary indicators. UM. When rating 333 00:20:58,000 --> 00:21:03,080 Speaker 1: companies downgrade in sen grade debt, particularly sovereign debt. Uh, 334 00:21:03,160 --> 00:21:05,520 Speaker 1: it's been a buying opportunity and you've seen that over 335 00:21:05,560 --> 00:21:08,439 Speaker 1: and over again. So the reality probably is that the 336 00:21:08,480 --> 00:21:11,399 Speaker 1: investors who are buying these high risk communities or muni 337 00:21:11,480 --> 00:21:15,520 Speaker 1: junk aren't really paying any attention to the credit rating. Uh, 338 00:21:15,640 --> 00:21:17,720 Speaker 1: it doesn't mean anything to them. What they're looking at 339 00:21:18,040 --> 00:21:22,560 Speaker 1: is something more fundamental, which is what are these borrowers 340 00:21:22,600 --> 00:21:26,680 Speaker 1: able to pay right now, Um, what is the return 341 00:21:26,800 --> 00:21:30,520 Speaker 1: I likely will get for the preeseeable future? And is 342 00:21:30,640 --> 00:21:35,439 Speaker 1: that reward much greater than the risk that the world's 343 00:21:35,440 --> 00:21:38,120 Speaker 1: going to come to an end tomorrow? And the way 344 00:21:38,160 --> 00:21:39,680 Speaker 1: they see it is the world's not going to come 345 00:21:39,680 --> 00:21:41,399 Speaker 1: to an end tomorrow or the day after or the 346 00:21:41,480 --> 00:21:44,480 Speaker 1: day after. Therefore, this is very attractive and it's a 347 00:21:44,560 --> 00:21:49,560 Speaker 1: very rational decision. Um. So that's the mindset. And so far, 348 00:21:49,600 --> 00:21:53,399 Speaker 1: as I said, so good until it ends. Well. This 349 00:21:53,480 --> 00:21:55,399 Speaker 1: is in about thirty sex and I was wondering, is 350 00:21:55,400 --> 00:21:58,399 Speaker 1: it possible that things are really not as good as 351 00:21:58,560 --> 00:22:03,080 Speaker 1: many have scribe because state and local pension plans they 352 00:22:03,160 --> 00:22:05,479 Speaker 1: have less than three quarters of the money that they 353 00:22:05,520 --> 00:22:07,720 Speaker 1: need in order to meet their promised payouts. Is it 354 00:22:07,760 --> 00:22:10,160 Speaker 1: possible that things are really not good under the surface. 355 00:22:10,600 --> 00:22:16,399 Speaker 1: It's possible, Um. Bloomberg News uh just published a piece 356 00:22:16,480 --> 00:22:21,000 Speaker 1: that said, uh, you know, the faults by municipal issuers 357 00:22:21,080 --> 00:22:23,159 Speaker 1: is relatively low this year. I think only three I 358 00:22:23,200 --> 00:22:25,639 Speaker 1: think I've mentioned so far this year. So that's another 359 00:22:25,680 --> 00:22:31,240 Speaker 1: indication that in a booming economy, the big and small 360 00:22:31,320 --> 00:22:35,280 Speaker 1: state and local governments have tax revenue that is more 361 00:22:35,320 --> 00:22:40,359 Speaker 1: than adequate to cover their expenses. Matt Winkler, thank you 362 00:22:40,400 --> 00:22:42,119 Speaker 1: so much for being with us. Matt Winkler is a 363 00:22:42,119 --> 00:22:45,879 Speaker 1: columnist for Bloomberg Opinion, also editor in chief Emeritus of 364 00:22:46,160 --> 00:23:04,600 Speaker 1: Bloomberg News. Our next guest has been a long time 365 00:23:04,640 --> 00:23:08,000 Speaker 1: proponent of free trade and the importance that it brings 366 00:23:08,640 --> 00:23:12,680 Speaker 1: two economies and how much it has helped the American economy. 367 00:23:12,760 --> 00:23:16,320 Speaker 1: Dr Adam Posen, President of the Peterson Institute for International 368 00:23:16,320 --> 00:23:20,080 Speaker 1: Economics in Washington, d C. Dr Posen, I'm so glad 369 00:23:20,080 --> 00:23:22,439 Speaker 1: that you could join us today. UM, I want to 370 00:23:22,480 --> 00:23:25,960 Speaker 1: start with a question of who's in your camp now. 371 00:23:26,000 --> 00:23:30,240 Speaker 1: Republicans traditionally were the party of free trade. Where do 372 00:23:30,320 --> 00:23:33,960 Speaker 1: we go when the populism of that party flips that 373 00:23:34,080 --> 00:23:36,880 Speaker 1: narrative on its head. Thank you very much for having 374 00:23:36,880 --> 00:23:39,800 Speaker 1: me on Bloomberg Markets today and to talk about this 375 00:23:39,840 --> 00:23:44,560 Speaker 1: issue in in in terms of flipping. Yeah, there's there's 376 00:23:44,640 --> 00:23:47,520 Speaker 1: various times in American history where the parties have had 377 00:23:47,560 --> 00:23:51,200 Speaker 1: different roles on trade. There were periods where the Republicans 378 00:23:51,240 --> 00:23:54,200 Speaker 1: were anti trade and the Democrats were not, or we 379 00:23:54,440 --> 00:23:58,520 Speaker 1: pro free trade. One can think of Cordell Hull, FRANKL. Delo, 380 00:23:58,640 --> 00:24:03,840 Speaker 1: Roosevelt Secretary of State and Anclendela Roosevelt and um then 381 00:24:03,880 --> 00:24:07,399 Speaker 1: President Truman pushing the idea that trade deals with Europe, 382 00:24:07,480 --> 00:24:11,800 Speaker 1: with Japan, with the major economies were necessary for peace 383 00:24:11,840 --> 00:24:16,439 Speaker 1: and security, UM as well as the economic benefits. So 384 00:24:16,520 --> 00:24:19,320 Speaker 1: when you look today, however, it is hard in the 385 00:24:19,400 --> 00:24:22,119 Speaker 1: Congress to find anybody who's really pushy it. There's a 386 00:24:22,160 --> 00:24:26,320 Speaker 1: handful of some older Republican senators who are standing by 387 00:24:26,359 --> 00:24:29,040 Speaker 1: their principles on free trade, and there's a handful of 388 00:24:29,080 --> 00:24:33,840 Speaker 1: moderate Democrats. UM. But I think that's kind of misrepresents 389 00:24:33,880 --> 00:24:35,960 Speaker 1: the situation. I promised not to go on too long, 390 00:24:36,000 --> 00:24:39,159 Speaker 1: but two points. First, there are a lot of people 391 00:24:39,600 --> 00:24:41,800 Speaker 1: in the Congress who may or may not be have 392 00:24:42,080 --> 00:24:44,640 Speaker 1: free trade out of conviction, but it can be convinced 393 00:24:44,640 --> 00:24:48,960 Speaker 1: on national security or a job safety grounds, and for 394 00:24:49,040 --> 00:24:51,720 Speaker 1: whom being anti trade isn't as much of a priority 395 00:24:51,760 --> 00:24:54,600 Speaker 1: as it is safe for President Trump. And the second 396 00:24:54,600 --> 00:24:56,320 Speaker 1: thing is, if you look at the polling data, and 397 00:24:56,359 --> 00:24:59,000 Speaker 1: we're going to be hosting a release from the Pew 398 00:24:59,040 --> 00:25:03,679 Speaker 1: Research Group on these polling in September, all the recent 399 00:25:03,680 --> 00:25:07,399 Speaker 1: polling data suggests there is a growing pro trade, pro 400 00:25:07,520 --> 00:25:11,560 Speaker 1: globalization feeling among younger people of all parties in the US, 401 00:25:11,600 --> 00:25:14,040 Speaker 1: and so that's where we have to hope the allies 402 00:25:14,080 --> 00:25:18,760 Speaker 1: come from for everybody's good. Dr Polston, It's been written 403 00:25:19,000 --> 00:25:22,320 Speaker 1: that low cost airfares in Europe have done more for 404 00:25:22,359 --> 00:25:25,439 Speaker 1: the integration of Europe than all of the political moves 405 00:25:25,480 --> 00:25:28,399 Speaker 1: on the part of the various countries in the European Union. 406 00:25:28,800 --> 00:25:32,920 Speaker 1: Do you believe that internationalization and globalization can be stopped? 407 00:25:35,119 --> 00:25:38,800 Speaker 1: I think internationalization and globalization for the world as a 408 00:25:38,840 --> 00:25:44,119 Speaker 1: whole can't be stopped, but it can be halted, temporarily, 409 00:25:44,200 --> 00:25:48,359 Speaker 1: reversed and limited. Um. So, getting out of the vague 410 00:25:48,359 --> 00:25:51,600 Speaker 1: into the specific, you're absolutely right, Pim. What matters in 411 00:25:51,640 --> 00:25:54,959 Speaker 1: some ways, both for politics and economics is how international 412 00:25:55,000 --> 00:25:58,640 Speaker 1: integration affects people's day to day lives. Do they meet 413 00:25:58,680 --> 00:26:01,560 Speaker 1: people from other countries? Do they value goods and services 414 00:26:01,600 --> 00:26:04,160 Speaker 1: from other countries? Do they look at those people as 415 00:26:04,240 --> 00:26:07,280 Speaker 1: allies and friends? Do they interact in a business sense 416 00:26:07,280 --> 00:26:11,760 Speaker 1: and see the opportunities? And if the US pulls out 417 00:26:11,800 --> 00:26:15,800 Speaker 1: and pulls back from leading and supporting an open world economy, 418 00:26:15,840 --> 00:26:19,640 Speaker 1: which the US has done for seventy years, then there 419 00:26:19,680 --> 00:26:23,200 Speaker 1: will be a lot more small countries and emerging markets 420 00:26:23,240 --> 00:26:26,040 Speaker 1: who will get bullied either by the US or by 421 00:26:26,119 --> 00:26:31,000 Speaker 1: China or by Russia, and their associations will be less. 422 00:26:31,040 --> 00:26:34,040 Speaker 1: But at the same time, the economic advantages are so 423 00:26:34,160 --> 00:26:39,160 Speaker 1: overwhelming that it's like, you know, trying to plug the dike, 424 00:26:39,359 --> 00:26:41,520 Speaker 1: something else will get through. And so this is why 425 00:26:41,520 --> 00:26:43,760 Speaker 1: I wrote in Foreign Affairs a few months ago, as 426 00:26:43,840 --> 00:26:46,880 Speaker 1: much as I dislike what the Trump administration is doing 427 00:26:46,920 --> 00:26:50,000 Speaker 1: on trade, that what they're doing is probably going to 428 00:26:50,040 --> 00:26:52,800 Speaker 1: be more harmful. Through other channels, Trade and the rest 429 00:26:52,840 --> 00:26:56,800 Speaker 1: of the world will continue. So Dr Posen, I want 430 00:26:56,800 --> 00:26:59,200 Speaker 1: to note that you also sit on a panel of 431 00:26:59,240 --> 00:27:03,439 Speaker 1: economic advice the United States Congressional Budget Office, and with 432 00:27:03,560 --> 00:27:07,400 Speaker 1: that perspective and that interaction with the current administration, I'd 433 00:27:07,400 --> 00:27:09,720 Speaker 1: love to get your view on how many people within 434 00:27:09,760 --> 00:27:14,040 Speaker 1: the administration are proponents of free trade and UH and 435 00:27:14,119 --> 00:27:17,680 Speaker 1: how conflicted it really is there or whether the message 436 00:27:17,680 --> 00:27:21,480 Speaker 1: is pretty consistent UH consistently for tariffs across the board. 437 00:27:22,200 --> 00:27:24,879 Speaker 1: My sense is the message is consistent across the board. 438 00:27:24,920 --> 00:27:27,520 Speaker 1: There are one or two people I know who serve 439 00:27:27,600 --> 00:27:32,680 Speaker 1: in various capacities in the administration who I believe are 440 00:27:32,800 --> 00:27:36,640 Speaker 1: trying to fight internally. But look, the President has chosen 441 00:27:36,680 --> 00:27:39,119 Speaker 1: to make this a priority. I've said for two years 442 00:27:39,200 --> 00:27:41,919 Speaker 1: when when he was the nominee, that this is a 443 00:27:42,000 --> 00:27:44,680 Speaker 1: sincere conviction of his and other people have now documented 444 00:27:44,720 --> 00:27:46,920 Speaker 1: he's been saying the same things on trade with great 445 00:27:46,920 --> 00:27:49,520 Speaker 1: fervor for thirty years. He hasn't. It's one of the 446 00:27:49,520 --> 00:27:51,760 Speaker 1: few things he hasn't changed his mind or flip flopped 447 00:27:51,800 --> 00:27:54,639 Speaker 1: on in his thirty years of interfering in public life. 448 00:27:55,119 --> 00:28:01,120 Speaker 1: So you know, UM, I shouldn't say interfering intervening inublic life. Um, 449 00:28:01,400 --> 00:28:04,399 Speaker 1: so I think it's not worth be it people betting 450 00:28:04,440 --> 00:28:08,280 Speaker 1: in markets or journalists getting into Oh does there somebody 451 00:28:08,320 --> 00:28:10,720 Speaker 1: in the White House who secretly cares deeply? This is 452 00:28:10,760 --> 00:28:16,400 Speaker 1: like the nonsense about Colin Powell and Iraq fifteen years ago. Um. 453 00:28:16,520 --> 00:28:19,120 Speaker 1: In the end, the President has a priority on being 454 00:28:19,200 --> 00:28:23,400 Speaker 1: anti trade, anti globalization, against US interests, and that dominates 455 00:28:23,440 --> 00:28:27,160 Speaker 1: he is. The people who fit his role his view 456 00:28:27,200 --> 00:28:30,119 Speaker 1: on that are the ones who advance just to push 457 00:28:30,119 --> 00:28:32,080 Speaker 1: back for a second doctor post. I mean the President 458 00:28:32,160 --> 00:28:37,159 Speaker 1: said that he is for fair trade. Yeah, yeah, you know, 459 00:28:37,560 --> 00:28:40,560 Speaker 1: it's it's but his definition of fair trade doesn't make 460 00:28:40,560 --> 00:28:46,640 Speaker 1: any sense. Um. Fair trade is about the idea that you, 461 00:28:47,360 --> 00:28:51,160 Speaker 1: the people have the choice, and uh that you don't 462 00:28:51,200 --> 00:28:56,520 Speaker 1: get ridiculous cheating in the sense of substandard goods and 463 00:28:56,560 --> 00:29:00,680 Speaker 1: services or huge government subsidies. There is a that of 464 00:29:01,280 --> 00:29:05,719 Speaker 1: goods and services, notably in steel and aluminum, where China 465 00:29:05,960 --> 00:29:10,520 Speaker 1: has huge subsidies and probably is cheating. But you know, 466 00:29:11,320 --> 00:29:14,400 Speaker 1: it's actually a very small piece of the world economy. 467 00:29:14,680 --> 00:29:17,600 Speaker 1: It's worth fighting about. But you know, think of it 468 00:29:17,640 --> 00:29:22,040 Speaker 1: in football terms, right, Um, there's a difference between oh 469 00:29:22,080 --> 00:29:25,080 Speaker 1: my god, somebody tackled low and you call a penalty 470 00:29:25,120 --> 00:29:28,120 Speaker 1: and they should suffer the penalty, versus oh my god, 471 00:29:28,520 --> 00:29:31,520 Speaker 1: these guys have like destroyed the playing field. It's unsafe 472 00:29:31,520 --> 00:29:34,360 Speaker 1: and taking my team off the field. Trump when he 473 00:29:34,400 --> 00:29:37,920 Speaker 1: says his definition of fair trade is to claim everything 474 00:29:38,440 --> 00:29:42,720 Speaker 1: is due to an uneven playing field with unsafe surf, 475 00:29:42,800 --> 00:29:46,160 Speaker 1: hazardous surfaces, and that's just wrong. It's just you got 476 00:29:46,160 --> 00:29:47,800 Speaker 1: a team to play. You're playing. It's a team to 477 00:29:47,840 --> 00:29:49,640 Speaker 1: plays a little dirty and you want to make sure 478 00:29:49,680 --> 00:29:51,640 Speaker 1: the ref makes most of the calls and that you 479 00:29:51,640 --> 00:29:53,560 Speaker 1: you you play the game and you beat him. Anyway, 480 00:29:54,080 --> 00:29:56,400 Speaker 1: Just twenty seconds here a doctor pose in I want 481 00:29:56,400 --> 00:29:58,440 Speaker 1: to just go back to what you said about how 482 00:29:58,520 --> 00:30:02,400 Speaker 1: younger people are increasingly for free trade. Just how significant 483 00:30:02,520 --> 00:30:06,880 Speaker 1: is that wave. I don't know politically, I'm frankly not 484 00:30:06,960 --> 00:30:09,240 Speaker 1: a political scientist. I don't know how to assess how 485 00:30:09,240 --> 00:30:13,560 Speaker 1: influential will be. But poll after poll, especially from credible 486 00:30:13,600 --> 00:30:18,080 Speaker 1: places like pube but other mainstream posters, shows that there 487 00:30:18,160 --> 00:30:20,800 Speaker 1: is actually majority support for trade now if you ask 488 00:30:20,880 --> 00:30:25,840 Speaker 1: the question um, and that it's increasingly correlated with age, 489 00:30:25,920 --> 00:30:28,480 Speaker 1: meaning the younger you are, the more in favor you are. 490 00:30:28,880 --> 00:30:32,000 Speaker 1: And so, you know, this is one of those things where, yeah, 491 00:30:32,000 --> 00:30:35,680 Speaker 1: there are certain individuals whose communities feel they were hurt 492 00:30:35,760 --> 00:30:39,120 Speaker 1: by trade, and probably they were hurt by some combination 493 00:30:39,320 --> 00:30:43,280 Speaker 1: of technology, trade and cultural change they didn't want to 494 00:30:43,320 --> 00:30:47,680 Speaker 1: face UM. But you know that's not most of the 495 00:30:47,720 --> 00:30:50,000 Speaker 1: people in the US. You've gotta leave it there. Thank 496 00:30:50,040 --> 00:30:52,000 Speaker 1: you very much, Dr Adam pose And he is the 497 00:30:52,040 --> 00:30:59,760 Speaker 1: president of the Peterson Institute for International Economics. Thanks for 498 00:30:59,800 --> 00:31:02,320 Speaker 1: Liz ening to the Bloomberg P and L podcast. You 499 00:31:02,360 --> 00:31:06,160 Speaker 1: can subscribe and listen to interviews at Apple Podcasts, SoundCloud, 500 00:31:06,280 --> 00:31:09,760 Speaker 1: or whatever podcast platform you prefer. I'm pim Fox. I'm 501 00:31:09,760 --> 00:31:13,760 Speaker 1: on Twitter at pim Fox. I'm on Twitter at Lisa Abramo. 502 00:31:13,920 --> 00:31:16,520 Speaker 1: It's one before the podcast. You can always catch us 503 00:31:16,520 --> 00:31:18,120 Speaker 1: worldwide on Bloomberg Radio