1 00:00:00,080 --> 00:00:13,040 Speaker 1: Ye, Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane 2 00:00:13,480 --> 00:00:17,560 Speaker 1: Jai Ley. We bring you insight from the best in economics, finance, investment, 3 00:00:18,000 --> 00:00:23,520 Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, 4 00:00:23,640 --> 00:00:30,280 Speaker 1: Bloomberg dot Com, and of course on the Bloomberg We 5 00:00:30,400 --> 00:00:34,479 Speaker 1: continue forward with the story on the Attorney General Jeff Sessions, 6 00:00:34,520 --> 00:00:36,360 Speaker 1: and of course what will follow on And there's no 7 00:00:36,400 --> 00:00:38,960 Speaker 1: one better to do that with thin Stephanie Baker, our 8 00:00:39,040 --> 00:00:41,440 Speaker 1: senior writer with Bloomberg Business Week, and we talked to 9 00:00:41,440 --> 00:00:43,920 Speaker 1: her this morning, not about Mr man of Fort, not 10 00:00:44,000 --> 00:00:48,000 Speaker 1: about money laundering, but the arcane constitutional nature of our 11 00:00:48,080 --> 00:00:52,040 Speaker 1: independent Justice Department. Stephanie, let us begin with civics one 12 00:00:52,080 --> 00:00:56,400 Speaker 1: oh one. Why is the Justice Department different from every 13 00:00:56,440 --> 00:00:59,920 Speaker 1: other cabinet office? Why are they supposed to be removed 14 00:01:00,040 --> 00:01:04,880 Speaker 1: from the White House? Well, I mean that has um 15 00:01:04,920 --> 00:01:09,560 Speaker 1: those measures have been reinforced um since Watergate, that you 16 00:01:09,560 --> 00:01:14,600 Speaker 1: would have an independent um attorney general whose job is 17 00:01:14,640 --> 00:01:19,600 Speaker 1: to enforce the rule of law and the constitution UM. 18 00:01:19,680 --> 00:01:23,520 Speaker 1: And yes, um, the president has the authority to fire 19 00:01:23,640 --> 00:01:27,399 Speaker 1: his attorney general. UM. But obviously, in the situation that 20 00:01:27,440 --> 00:01:30,480 Speaker 1: we're in right now, um. It is clear that he 21 00:01:30,760 --> 00:01:34,679 Speaker 1: has fired Jeff Sessions UM because he was annoyed that 22 00:01:34,720 --> 00:01:38,560 Speaker 1: he had recused himself from the Russia investigation. So this 23 00:01:38,680 --> 00:01:41,800 Speaker 1: does look like him trying to intervene in what is 24 00:01:41,800 --> 00:01:45,400 Speaker 1: supposed to be an independent special counsel investigation into the president. 25 00:01:45,560 --> 00:01:48,600 Speaker 1: Stephanie Charlie Savage has a nice overview this morning in 26 00:01:48,640 --> 00:01:51,560 Speaker 1: the New York Times on the future of the acting 27 00:01:51,760 --> 00:01:55,520 Speaker 1: the Assistant Attorney General Mr Rosenstein, who many would suggest 28 00:01:55,520 --> 00:01:58,080 Speaker 1: should be the one in the job I guess now 29 00:01:58,120 --> 00:02:01,720 Speaker 1: of Mr Whittaker, who I guess is a senior careerist 30 00:02:01,880 --> 00:02:06,520 Speaker 1: under the arcane language of Washington, what would you suggest 31 00:02:06,560 --> 00:02:09,840 Speaker 1: that Mr Rosenstein will do in the next twenty four hours. 32 00:02:11,160 --> 00:02:13,760 Speaker 1: That's a really good question. We do not know will 33 00:02:13,800 --> 00:02:16,360 Speaker 1: he stay, will he go? Will he stay out of 34 00:02:16,360 --> 00:02:18,560 Speaker 1: a sense of duty that you know he can be 35 00:02:18,639 --> 00:02:22,840 Speaker 1: there to continue to um have input into the Muller investigation. 36 00:02:23,280 --> 00:02:26,360 Speaker 1: And let's step back. We you know, the Justice Department 37 00:02:26,360 --> 00:02:30,800 Speaker 1: has said that Whittaker will oversee the Russia investigation. But 38 00:02:30,919 --> 00:02:35,200 Speaker 1: what we don't know yet is uh what Justice Department 39 00:02:35,240 --> 00:02:39,160 Speaker 1: ethics lawyers will say about whether or not he is 40 00:02:39,200 --> 00:02:42,200 Speaker 1: biased and has a conflict of interest and cannot would 41 00:02:42,200 --> 00:02:46,200 Speaker 1: recommend that he cannot oversee the Muller investigation. He has 42 00:02:46,240 --> 00:02:49,760 Speaker 1: said publicly in the past. Whittaker that um that he 43 00:02:49,840 --> 00:02:52,720 Speaker 1: thinks that Mueller has gone too far by examining the 44 00:02:52,720 --> 00:02:57,600 Speaker 1: Trump organization UH finances and ties to Russia. UH. And 45 00:02:57,720 --> 00:03:01,720 Speaker 1: he actually outlined a scenario which could actually happen here, 46 00:03:01,800 --> 00:03:04,679 Speaker 1: which is where Jeff Session steps down, Trump appoints a 47 00:03:04,720 --> 00:03:09,800 Speaker 1: new attorney general, and that new person curtails the Mueller investigation, 48 00:03:09,960 --> 00:03:13,760 Speaker 1: starving at a funding. But Stephanie, exactly what did these lawyers? 49 00:03:13,880 --> 00:03:16,760 Speaker 1: I mean, could these lawyers say that, oh, it's unethical 50 00:03:17,120 --> 00:03:19,120 Speaker 1: for for him to get involved because of conflict of 51 00:03:19,160 --> 00:03:21,119 Speaker 1: interest or can they actually get him out of there? 52 00:03:21,919 --> 00:03:25,520 Speaker 1: Um that that is it's been tradition that you follow 53 00:03:25,639 --> 00:03:30,040 Speaker 1: what Justice Department ethics advisors tell you to do, which 54 00:03:30,080 --> 00:03:34,359 Speaker 1: is exactly what Jeff Sessions did. However, Jeff Sessions didn't 55 00:03:34,360 --> 00:03:37,560 Speaker 1: do that immediately. It was only through um pressure from 56 00:03:37,560 --> 00:03:39,920 Speaker 1: the media that he ended up, you know, calling him 57 00:03:39,960 --> 00:03:43,360 Speaker 1: out on his meetings with Russians that he had not disclosed, etcetera. 58 00:03:43,480 --> 00:03:46,880 Speaker 1: That that that led him to follow those ethics rules. 59 00:03:47,240 --> 00:03:49,840 Speaker 1: There are rules in place that would prevent someone from 60 00:03:49,840 --> 00:03:53,880 Speaker 1: overseeing investigation if they have a publicly documented perceived bias 61 00:03:53,920 --> 00:03:56,960 Speaker 1: on that. So how that plays out remains to be seen. 62 00:03:57,600 --> 00:04:01,840 Speaker 1: Whittaker there is there on a temporary basis um regardless, 63 00:04:01,880 --> 00:04:05,800 Speaker 1: he's there for two in ten days until someone Trump 64 00:04:05,840 --> 00:04:08,960 Speaker 1: is able to get a new attorney general confirms. But 65 00:04:09,040 --> 00:04:10,880 Speaker 1: come on, Stephanie, this is the heart of the matter, 66 00:04:10,920 --> 00:04:13,160 Speaker 1: and you're correct it is two days because you and 67 00:04:13,160 --> 00:04:16,960 Speaker 1: I became experts on the Federal Vacancy Act. Last night 68 00:04:17,000 --> 00:04:19,640 Speaker 1: we were both up until two am reading a sixty 69 00:04:19,680 --> 00:04:23,600 Speaker 1: page document. What damage can Mr Whittaker do in two 70 00:04:23,839 --> 00:04:27,960 Speaker 1: d ten days? I would say quite a lot um, 71 00:04:27,960 --> 00:04:31,960 Speaker 1: But I also think that Muller would have anticipated this happening, 72 00:04:32,320 --> 00:04:36,760 Speaker 1: probably would have taken steps to protect the investigation, as 73 00:04:37,040 --> 00:04:39,960 Speaker 1: I would expect Rod Rosenstein would have as well. So 74 00:04:40,040 --> 00:04:42,760 Speaker 1: I mean, the question in my mind is are there 75 00:04:42,880 --> 00:04:46,000 Speaker 1: indictments that are under seal? Now? Has he moved to 76 00:04:46,040 --> 00:04:50,800 Speaker 1: get indictments through and kept them under seal? Um? You know, 77 00:04:51,600 --> 00:04:55,120 Speaker 1: waiting for this moment to happen, and which case you know, 78 00:04:55,200 --> 00:04:58,880 Speaker 1: Whittaker's ability to curtail those is very limited. You're a 79 00:04:58,880 --> 00:05:01,360 Speaker 1: good Stephanie Baker, thank you for the briefing this morning. 80 00:05:01,400 --> 00:05:19,080 Speaker 1: Of course, with Bloomberg joining us now en route from 81 00:05:19,120 --> 00:05:21,560 Speaker 1: the City Group the FED, the I m F along 82 00:05:21,600 --> 00:05:24,800 Speaker 1: the way is Bill Lee Milkin Institute Chief Economist. He 83 00:05:24,880 --> 00:05:27,320 Speaker 1: joins us. Now, good morning to Billy John. What is 84 00:05:27,360 --> 00:05:29,680 Speaker 1: the decision day guy for the Fed? Today? Bill, Well, 85 00:05:29,720 --> 00:05:32,200 Speaker 1: today we snooze because we know the Fed's not gonna 86 00:05:32,240 --> 00:05:34,320 Speaker 1: do anything. They may give a hint at how they 87 00:05:34,400 --> 00:05:37,280 Speaker 1: might be revising their outlook, but the key is next 88 00:05:37,360 --> 00:05:39,400 Speaker 1: year and what's going to be doing go on next 89 00:05:39,480 --> 00:05:42,360 Speaker 1: year after the December rate hike. And there the controversy 90 00:05:42,480 --> 00:05:45,080 Speaker 1: is that you have ranges of of estimates going from 91 00:05:45,160 --> 00:05:48,920 Speaker 1: four rate hikes in next year to possibly one or two. 92 00:05:49,160 --> 00:05:51,280 Speaker 1: And I'm in the one or two camp because one 93 00:05:51,279 --> 00:05:52,680 Speaker 1: of the things that you have to consider what the 94 00:05:52,680 --> 00:05:55,720 Speaker 1: Fed does is that he considers financial market conditions, in 95 00:05:55,760 --> 00:05:59,039 Speaker 1: particular the exchange rate, which is just mentioned. We see 96 00:05:59,080 --> 00:06:00,880 Speaker 1: that the exchange rates and up by about eight and 97 00:06:00,920 --> 00:06:03,360 Speaker 1: a half percent from its lows earlier this year in 98 00:06:03,480 --> 00:06:06,960 Speaker 1: this spring, and that has tightened financial conditions. In fact, 99 00:06:07,000 --> 00:06:10,160 Speaker 1: when you look at mon entre conditions, indusicries UH five 100 00:06:10,200 --> 00:06:13,240 Speaker 1: to ten percentage point appreciation is equivalent to about a 101 00:06:13,279 --> 00:06:15,440 Speaker 1: percentage point in rate hikes. So we have kind of 102 00:06:15,440 --> 00:06:18,120 Speaker 1: almost a percentage point in rate hikes already put in 103 00:06:18,160 --> 00:06:20,760 Speaker 1: place because of the dollar appreciation. There's nothing like a 104 00:06:20,760 --> 00:06:23,000 Speaker 1: good market round through a single month to feel the 105 00:06:23,040 --> 00:06:25,120 Speaker 1: debate about the Fed taking a pause, and I think 106 00:06:25,160 --> 00:06:28,360 Speaker 1: you see right now that suggests the Fed should pause. Bill. Well, 107 00:06:28,360 --> 00:06:30,279 Speaker 1: you know, a lot of the fiscal stiments is rolling off. 108 00:06:30,279 --> 00:06:33,600 Speaker 1: Everyone is expecting the forecast to slow down, and now 109 00:06:33,640 --> 00:06:36,320 Speaker 1: the question is will slow down below potential? And that 110 00:06:36,440 --> 00:06:39,080 Speaker 1: I doubt because I think a lot of the the 111 00:06:39,080 --> 00:06:42,240 Speaker 1: the investment that's been put in place because the tax 112 00:06:42,320 --> 00:06:45,279 Speaker 1: cuts and and the tax reforms UH is likely to 113 00:06:45,320 --> 00:06:47,840 Speaker 1: be longer. Last thing that people are estimating. What I'm 114 00:06:47,880 --> 00:06:51,039 Speaker 1: most concerned with is the condition of the consumer. UM. 115 00:06:51,120 --> 00:06:54,479 Speaker 1: I know that the consumer savings rates are have been restored, 116 00:06:54,680 --> 00:06:57,600 Speaker 1: but the new data showing you know, six percent plus 117 00:06:57,680 --> 00:07:00,000 Speaker 1: personal savings rates, a lot of it is coming from 118 00:07:00,000 --> 00:07:04,440 Speaker 1: either businesses forprietorships, and I think the households themselves are 119 00:07:04,480 --> 00:07:06,960 Speaker 1: still in a weekend condition. Well, let's talk about housing, 120 00:07:06,960 --> 00:07:09,840 Speaker 1: because housing is not looking good. Invantories downing to pick up. 121 00:07:10,080 --> 00:07:11,920 Speaker 1: That was the town. Someone told me a number of 122 00:07:11,960 --> 00:07:14,800 Speaker 1: months ago that when infantry starts to pick up, you 123 00:07:14,840 --> 00:07:16,440 Speaker 1: know there's a bit of a problem. Is there a 124 00:07:16,440 --> 00:07:20,200 Speaker 1: bit of a problem? Bill? Households are not able to 125 00:07:20,360 --> 00:07:23,600 Speaker 1: finance the amount of expensures they really want out of 126 00:07:23,720 --> 00:07:26,560 Speaker 1: current income. They're they're having to dip into savings and 127 00:07:26,560 --> 00:07:29,240 Speaker 1: and not save. And that housing issue is really the 128 00:07:30,200 --> 00:07:32,320 Speaker 1: tip of the iceberg. I know that people say in 129 00:07:32,320 --> 00:07:34,440 Speaker 1: the housing markets say there's not enough supply out there, 130 00:07:34,600 --> 00:07:36,720 Speaker 1: but it's really in that starter home level where you're 131 00:07:36,720 --> 00:07:39,400 Speaker 1: seeing the problems and people just aren't able to afford 132 00:07:39,440 --> 00:07:42,480 Speaker 1: to get out of their apartments into their starter home. 133 00:07:42,760 --> 00:07:45,000 Speaker 1: And right now millennials are getting to the stage where 134 00:07:45,000 --> 00:07:47,360 Speaker 1: the second baby is coming and everyone's looking to move 135 00:07:47,360 --> 00:07:50,920 Speaker 1: out of that cramped department. Bill John mentioned the news flow, 136 00:07:50,960 --> 00:07:53,600 Speaker 1: which is just extraordinary. Will touch on all those themes 137 00:07:53,640 --> 00:07:56,240 Speaker 1: this morning, But I want to back up after this 138 00:07:56,320 --> 00:07:58,320 Speaker 1: election and we still don't even know some of the 139 00:07:58,320 --> 00:08:00,880 Speaker 1: analysis of it and who voted for what and all that. 140 00:08:01,480 --> 00:08:05,320 Speaker 1: How guilded is the guilded age where you sit with 141 00:08:05,480 --> 00:08:07,520 Speaker 1: your work with about it for years at City Group, 142 00:08:07,560 --> 00:08:11,320 Speaker 1: working with Michael Milken, now on bigger themi kinds of things. 143 00:08:11,800 --> 00:08:14,200 Speaker 1: Let's go to the heart of the matter, which is 144 00:08:14,200 --> 00:08:18,360 Speaker 1: this guilded age. How guilded is it? The guilded age 145 00:08:18,400 --> 00:08:21,200 Speaker 1: is one where financial marks are changing, and I think 146 00:08:21,240 --> 00:08:23,680 Speaker 1: that's something that we have to recognize. It used to 147 00:08:23,720 --> 00:08:26,240 Speaker 1: be that corporate America raised money by doing I p 148 00:08:26,400 --> 00:08:28,440 Speaker 1: o s. More than six percent of corporate financing came 149 00:08:28,440 --> 00:08:30,679 Speaker 1: from I p o s. Now more than six percent 150 00:08:30,680 --> 00:08:33,480 Speaker 1: of corporate financing comes from venture capital and private Is 151 00:08:33,520 --> 00:08:37,680 Speaker 1: that just rent capture by the guilded of the guilded age. Well, 152 00:08:37,960 --> 00:08:39,640 Speaker 1: a lot of critics like to say that, They say, well, 153 00:08:39,640 --> 00:08:41,760 Speaker 1: private equity doesn't do anything but to fire a lot 154 00:08:41,760 --> 00:08:44,520 Speaker 1: of people, make firms more efficient that way. But the 155 00:08:44,559 --> 00:08:47,080 Speaker 1: research I'm doing at Milking with my my co researcher 156 00:08:47,160 --> 00:08:50,520 Speaker 1: Jacob Wilhelma's is showing that private equity related I p 157 00:08:50,679 --> 00:08:53,679 Speaker 1: o s once they go public, actually generate jobs at 158 00:08:53,720 --> 00:08:55,719 Speaker 1: a much faster pace than I p o s that 159 00:08:55,760 --> 00:08:57,840 Speaker 1: are not relates to venture capital. So there is some 160 00:08:57,920 --> 00:09:00,880 Speaker 1: longer lasting effect of a pause it of boost that 161 00:09:01,000 --> 00:09:04,560 Speaker 1: comes from employment. Uh, John, I know Henry Cravis flew 162 00:09:04,559 --> 00:09:07,760 Speaker 1: back from Singapore economy, but we need to shut up 163 00:09:07,800 --> 00:09:12,360 Speaker 1: to Mr Kravits Blue. Yeah, he told me that Bloomberg, 164 00:09:12,520 --> 00:09:14,720 Speaker 1: the Bloomberg New Economy for what was good to see 165 00:09:14,760 --> 00:09:19,680 Speaker 1: Henry Kravits nice in economy like you flying? Yeah, of course, 166 00:09:20,000 --> 00:09:22,720 Speaker 1: and Bill Lay as well. I doubt guys. Give me 167 00:09:22,720 --> 00:09:25,199 Speaker 1: a break, Billy. Let's talk about this divided government. Is 168 00:09:25,240 --> 00:09:27,319 Speaker 1: it good for the U? S? Economy? You know a 169 00:09:27,360 --> 00:09:29,920 Speaker 1: lot of people said that fiscal impact is good, and 170 00:09:30,000 --> 00:09:33,640 Speaker 1: yet before they said fiscal action that was taken place 171 00:09:33,640 --> 00:09:35,560 Speaker 1: by the Trump administration is also good. So you can't 172 00:09:35,559 --> 00:09:37,680 Speaker 1: have it both plays. So so I think one way 173 00:09:37,679 --> 00:09:40,000 Speaker 1: to square that circles to say that the lack of 174 00:09:40,040 --> 00:09:42,280 Speaker 1: impacts allowed us to put in place a lot of 175 00:09:42,559 --> 00:09:46,680 Speaker 1: policy stimulus and and tax reform. Now impass will allow 176 00:09:46,760 --> 00:09:50,200 Speaker 1: that action to stay the course and not get reversed. 177 00:09:50,400 --> 00:09:52,319 Speaker 1: So I think that's one positive that you can put 178 00:09:52,360 --> 00:09:55,959 Speaker 1: on the impast But surely that everyone's looking toward infrastructure 179 00:09:55,960 --> 00:09:58,839 Speaker 1: and maybe drug pricing as the new fiscal actions to 180 00:09:58,920 --> 00:10:02,080 Speaker 1: be taking place. I have my doubts about that because, honestly, 181 00:10:02,240 --> 00:10:05,040 Speaker 1: who's paying for all that infrastructure. Yes, it's supposed to 182 00:10:05,080 --> 00:10:07,560 Speaker 1: be public private partnerships, but let's face it. Most of 183 00:10:07,559 --> 00:10:10,920 Speaker 1: those projects are underwater, and we have not perfected the 184 00:10:10,960 --> 00:10:14,600 Speaker 1: model of involving the private sector in public infrastructure spending. 185 00:10:14,640 --> 00:10:17,680 Speaker 1: They ran a yesterday, undoubtedly risk on worldwide off the 186 00:10:17,679 --> 00:10:20,319 Speaker 1: back of that mid term election results. Some people characterizing 187 00:10:20,320 --> 00:10:22,600 Speaker 1: this as the gridlock trade. I wondered that Bill if 188 00:10:22,600 --> 00:10:25,120 Speaker 1: there's just some investor relief out there that there wasn't 189 00:10:25,120 --> 00:10:28,480 Speaker 1: a Democrat wave. Indeed, I I agree with you, John, 190 00:10:28,600 --> 00:10:34,000 Speaker 1: I think the policy uncertainty from the possible revenge of 191 00:10:34,000 --> 00:10:37,480 Speaker 1: the Democrats has has eased financial markets. And and let's 192 00:10:37,520 --> 00:10:40,400 Speaker 1: see how long this this this rally lasts. You know, 193 00:10:40,600 --> 00:10:43,120 Speaker 1: of course, John, if it doesn't last, that's another reason 194 00:10:43,160 --> 00:10:45,880 Speaker 1: why the Fed will not be very aggressive. Because the 195 00:10:45,960 --> 00:10:48,360 Speaker 1: wealth of faith is real and my my four oh 196 00:10:48,360 --> 00:10:50,480 Speaker 1: one K plan is not becoming quickly a tour one 197 00:10:50,520 --> 00:10:52,719 Speaker 1: K plan. As Tom used to say, well, what do 198 00:10:52,720 --> 00:10:55,360 Speaker 1: you mean? Used to say, excuse me, we digress here 199 00:10:55,400 --> 00:10:59,640 Speaker 1: at Bloomberg Surveillance to come upside, you miss still the 200 00:10:59,640 --> 00:11:02,520 Speaker 1: whole bullmarket. I called up Mike Milkin and he wanted 201 00:11:02,559 --> 00:11:04,640 Speaker 1: me to look at derivative strategies. And I'm in the 202 00:11:04,679 --> 00:11:08,600 Speaker 1: triple leveraged all cash fund. You know, Bill, you gotta 203 00:11:08,679 --> 00:11:14,719 Speaker 1: understand one of the hallmarks of he offers us to 204 00:11:14,880 --> 00:11:18,240 Speaker 1: US employees, John, if we had no opening of the 205 00:11:18,280 --> 00:11:22,280 Speaker 1: four oh one K envelope recently, give us delivered electronically. 206 00:11:23,000 --> 00:11:26,000 Speaker 1: I went green, you went green. But we used to, Billy, 207 00:11:26,040 --> 00:11:29,000 Speaker 1: We used to open up Tucker's four owen k envelope 208 00:11:29,080 --> 00:11:31,839 Speaker 1: during the crisis and watch a shrink down to a 209 00:11:31,920 --> 00:11:35,120 Speaker 1: one oh one K at one point, Billy. Within that 210 00:11:35,480 --> 00:11:37,720 Speaker 1: is the sense of profit is magnim to. I would 211 00:11:37,720 --> 00:11:42,760 Speaker 1: say the London School of of Economics about capitalism, is 212 00:11:42,800 --> 00:11:46,080 Speaker 1: our capitalism off the tracks? Or do we just assume 213 00:11:46,200 --> 00:11:49,760 Speaker 1: there is the size profit that will lead to good things? 214 00:11:50,240 --> 00:11:53,440 Speaker 1: You know? Profit margins are really key to everything financial markets, 215 00:11:53,440 --> 00:11:56,679 Speaker 1: whether it's through private equity or through the public markets. 216 00:11:56,960 --> 00:11:59,800 Speaker 1: And and now that we have some sign that wages 217 00:11:59,880 --> 00:12:02,120 Speaker 1: us starting to pick up again, where's it gonna go. 218 00:12:02,240 --> 00:12:05,160 Speaker 1: It's gonna cut into profit markins because firms currently no 219 00:12:05,200 --> 00:12:07,600 Speaker 1: longer have the kind of pricing power they used to 220 00:12:07,600 --> 00:12:09,840 Speaker 1: have to be able to pass on these caused increases. 221 00:12:10,120 --> 00:12:13,120 Speaker 1: So there is a threat. But let's not let's not 222 00:12:13,200 --> 00:12:16,440 Speaker 1: forget profit margins are incredibly thick right now, So there's 223 00:12:16,480 --> 00:12:19,240 Speaker 1: a lot of room for private margins to be squeezed, 224 00:12:19,400 --> 00:12:22,480 Speaker 1: and and and for allowing the wealth to be more 225 00:12:22,520 --> 00:12:25,400 Speaker 1: broadly more broadly enjoyed. But just the final question, just 226 00:12:25,440 --> 00:12:26,760 Speaker 1: to run things up, and I know this will be 227 00:12:26,840 --> 00:12:30,160 Speaker 1: quite difficult to answer, but when the President Donald Trump 228 00:12:30,240 --> 00:12:33,439 Speaker 1: won the election back in November, the soft day to 229 00:12:33,480 --> 00:12:38,439 Speaker 1: the survey data captured this immense confidence almost immediately. I'm 230 00:12:38,440 --> 00:12:41,040 Speaker 1: trying to understand to what degree that pick up in 231 00:12:41,080 --> 00:12:44,679 Speaker 1: confidence has actually fueled a breakout in trend growth and 232 00:12:44,679 --> 00:12:47,040 Speaker 1: whether we can expect it to roll over now we 233 00:12:47,120 --> 00:12:50,240 Speaker 1: have a divided government. John, thanks for the hardest question 234 00:12:50,280 --> 00:12:52,559 Speaker 1: ever received. In one of my favorite topics, that the 235 00:12:52,559 --> 00:12:55,440 Speaker 1: the interplay between soft and hard data, I used to 236 00:12:55,480 --> 00:12:57,120 Speaker 1: say that, you know, if I had if I could 237 00:12:57,160 --> 00:12:59,000 Speaker 1: live on soft data, I wouldn't have to worry about 238 00:12:59,000 --> 00:13:01,640 Speaker 1: my four oh one Cape Lane and and and and 239 00:13:01,640 --> 00:13:04,320 Speaker 1: I think that's really where the issue is. The latest 240 00:13:04,320 --> 00:13:06,960 Speaker 1: GDP numbers are showing kind of a fall off in 241 00:13:06,960 --> 00:13:09,520 Speaker 1: in in corporate investment, but you know, every other piece 242 00:13:09,520 --> 00:13:11,840 Speaker 1: of data, whether it's durable goods or or or or 243 00:13:11,880 --> 00:13:14,640 Speaker 1: industrial production, seems to be showing that swell in place. 244 00:13:14,679 --> 00:13:16,840 Speaker 1: So I think the jury is still out as to 245 00:13:16,840 --> 00:13:19,520 Speaker 1: whether or not there's a longer lasting effect that's coming 246 00:13:19,559 --> 00:13:22,240 Speaker 1: from the corporate tax reform that feeds into an investment 247 00:13:22,280 --> 00:13:24,960 Speaker 1: and raises productivity, which is what we're all hoping for. 248 00:13:25,120 --> 00:13:27,960 Speaker 1: I Bill really appreciate your time this morning. Flow just 249 00:13:28,000 --> 00:13:31,520 Speaker 1: a man's milk in Institute chief economist joining us from 250 00:13:31,559 --> 00:13:45,560 Speaker 1: I think Washington, d C, Washington standing, Washington, DC. You know, 251 00:13:45,600 --> 00:13:48,360 Speaker 1: the hopes were high. The SEC came out and told 252 00:13:48,360 --> 00:13:50,520 Speaker 1: test on an eno mask they needed to get a 253 00:13:50,520 --> 00:13:53,640 Speaker 1: new chairman. Most people thought though they would go outside 254 00:13:53,640 --> 00:13:56,240 Speaker 1: of the company, go outside of the board. They have not. 255 00:13:56,440 --> 00:14:00,360 Speaker 1: They've chosen an insider, Robin Denhome will succeed in Musk 256 00:14:00,480 --> 00:14:04,680 Speaker 1: as the board chair, an independent director becoming the chairwoman 257 00:14:04,720 --> 00:14:08,559 Speaker 1: of the company. Join to discusses consumer research. Senior automotive 258 00:14:08,600 --> 00:14:12,160 Speaker 1: analyst Jamie Abbotty, Jamie, your thoughts on the newest move 259 00:14:12,400 --> 00:14:17,440 Speaker 1: from Tesla, Yeah, thank you and good morning. UM. Look, 260 00:14:17,440 --> 00:14:20,200 Speaker 1: I think you know to to agree with your point. First, 261 00:14:20,240 --> 00:14:23,800 Speaker 1: I think we were hoping or hopeful that there would 262 00:14:23,800 --> 00:14:28,400 Speaker 1: be an outside UM person brought brought to chair the board, UH, 263 00:14:28,480 --> 00:14:32,880 Speaker 1: to really demonstrate the independence UM which I think you know, 264 00:14:32,960 --> 00:14:36,160 Speaker 1: the board needs to demonstrate here after years of corporate 265 00:14:36,200 --> 00:14:39,360 Speaker 1: governance issues and whatnot. Now they've done I think a 266 00:14:39,400 --> 00:14:42,480 Speaker 1: good job to bring somebody, uh, to promote someone who 267 00:14:42,520 --> 00:14:48,479 Speaker 1: has a wealth of experience around accounting and financial management operations, 268 00:14:49,080 --> 00:14:53,160 Speaker 1: has worked with global technology companies and and very highly 269 00:14:53,200 --> 00:14:57,040 Speaker 1: regulated companies in the telecom industry. We expect now the 270 00:14:57,120 --> 00:15:00,680 Speaker 1: two independent directors that the board will likely aiminate soon 271 00:15:01,000 --> 00:15:04,360 Speaker 1: will likely be uh, you know, tesla solution to bringing 272 00:15:04,360 --> 00:15:06,000 Speaker 1: in the outsider. So they just chose to do it 273 00:15:06,040 --> 00:15:08,280 Speaker 1: a slightly different way than what we would have perhaps 274 00:15:08,320 --> 00:15:11,480 Speaker 1: so poor um, but nevertheless, I think they are striving 275 00:15:11,480 --> 00:15:14,520 Speaker 1: to demonstrate that independence and that ultimately is the key. Well, Jemmy, 276 00:15:14,560 --> 00:15:17,320 Speaker 1: I'm not sure they have done that. With disappointment, and 277 00:15:17,360 --> 00:15:20,720 Speaker 1: I'm with you. Robin Denham has great experience. I lived 278 00:15:20,760 --> 00:15:22,480 Speaker 1: in Australia for a little while. Tell Story is a 279 00:15:22,480 --> 00:15:25,880 Speaker 1: big company in Australia, a big telecoms company, very well known. 280 00:15:25,920 --> 00:15:28,000 Speaker 1: If you're the CFO of there, you know what you're 281 00:15:28,000 --> 00:15:30,680 Speaker 1: doing for sure. My point really, and I think everyone 282 00:15:30,920 --> 00:15:33,480 Speaker 1: who's listening most people would share this point as well. 283 00:15:33,800 --> 00:15:36,160 Speaker 1: The board has shown no real ability over the last 284 00:15:36,240 --> 00:15:39,760 Speaker 1: year to provide any oversight, any real oversight over Eon 285 00:15:39,840 --> 00:15:42,680 Speaker 1: Musk whatsoever over the last twelve months that have stopped 286 00:15:42,720 --> 00:15:45,120 Speaker 1: him from behaving the way he has. So why is 287 00:15:45,160 --> 00:15:52,200 Speaker 1: anyone on that board independent or not suitable for this position? Well, 288 00:15:52,240 --> 00:15:54,200 Speaker 1: I look, I like I said, I think I agree 289 00:15:54,200 --> 00:15:57,040 Speaker 1: with you and the premise. Um. And you know this 290 00:15:57,080 --> 00:16:00,440 Speaker 1: would not have been our our first choice. Um, but 291 00:16:00,480 --> 00:16:02,280 Speaker 1: I would I would also say, I mean, it's been 292 00:16:02,720 --> 00:16:05,520 Speaker 1: certainly a few weeks since we've heard anything sort of 293 00:16:05,560 --> 00:16:08,920 Speaker 1: outlandish from Elon's Twitter feed as well, So so perhaps 294 00:16:09,040 --> 00:16:12,480 Speaker 1: the wheels are in motion, um. And it's not necessarily 295 00:16:12,520 --> 00:16:15,760 Speaker 1: a day to day you know, updatable uh metric the 296 00:16:15,760 --> 00:16:17,960 Speaker 1: company is willing to provide, but it does seem that 297 00:16:18,200 --> 00:16:21,560 Speaker 1: they have an opportunity here. Perhaps they missed that opportunity 298 00:16:21,600 --> 00:16:24,880 Speaker 1: with her promotion. But nevertheless, you know, I think it's 299 00:16:24,920 --> 00:16:27,960 Speaker 1: too early to say that they haven't taken full advantage 300 00:16:28,000 --> 00:16:30,600 Speaker 1: until we know who the two independent directors are. Jamie. 301 00:16:30,640 --> 00:16:33,240 Speaker 1: One of your charms is your debt work at SAC 302 00:16:33,400 --> 00:16:37,560 Speaker 1: Capital in other places as well, linking debt into equity analysis. 303 00:16:37,600 --> 00:16:42,680 Speaker 1: What does the Tesla debt tell you? Uh? Well, I 304 00:16:42,760 --> 00:16:45,760 Speaker 1: really do appreciate that praise, you know. Unfortunately I haven't 305 00:16:45,760 --> 00:16:48,760 Speaker 1: looked at it on this news I don't, but I 306 00:16:48,800 --> 00:16:52,080 Speaker 1: mean in general, in the last number of months, is 307 00:16:52,120 --> 00:16:55,840 Speaker 1: the debt firming up with a confidence around Mr Musk 308 00:16:55,960 --> 00:17:00,360 Speaker 1: or not? Look, I think the third core he went 309 00:17:00,400 --> 00:17:03,560 Speaker 1: a long way to a firming up confidence in the 310 00:17:03,680 --> 00:17:05,840 Speaker 1: in the trajectory in the mission, right, I mean that 311 00:17:05,920 --> 00:17:08,720 Speaker 1: was the big debate, will they be profitable and how 312 00:17:08,800 --> 00:17:11,000 Speaker 1: quickly can they be profitable? And I think the third 313 00:17:11,040 --> 00:17:13,400 Speaker 1: quarter went a long way to sort of de risking 314 00:17:13,480 --> 00:17:16,040 Speaker 1: the story. Uh, not only from the equity but also 315 00:17:16,080 --> 00:17:19,520 Speaker 1: from the debt perspective. Answer your question, it's incredibly difficult 316 00:17:19,560 --> 00:17:21,440 Speaker 1: to understand. I think from a day to day or 317 00:17:21,480 --> 00:17:25,000 Speaker 1: even week to week perspective, what dead holders are discounting 318 00:17:25,000 --> 00:17:27,119 Speaker 1: an Elon. I think it's probably very similar to the 319 00:17:27,200 --> 00:17:30,359 Speaker 1: equity holders. You know, he has done a tremendous amount 320 00:17:30,400 --> 00:17:34,800 Speaker 1: of great work and breaking through with revolutionary technologies and 321 00:17:34,840 --> 00:17:38,840 Speaker 1: manufacturing in an industry that is just very resisent to change. Uh, 322 00:17:38,880 --> 00:17:41,440 Speaker 1: and there are believers that will stand by him regardless 323 00:17:41,480 --> 00:17:44,120 Speaker 1: of sort of the idiosyncrasies that that's kind of drive 324 00:17:44,240 --> 00:17:47,439 Speaker 1: the stock market volatility day to day. Um, I do 325 00:17:47,520 --> 00:17:50,320 Speaker 1: think the results matter now, and the third quarter went 326 00:17:50,359 --> 00:17:52,439 Speaker 1: a long way to sort of de risking the story. 327 00:17:52,480 --> 00:17:54,320 Speaker 1: And I think you're seeing a little bit for a 328 00:17:54,480 --> 00:17:56,640 Speaker 1: firming up in both the equity and debt. From that perspective, 329 00:17:56,640 --> 00:17:57,960 Speaker 1: we just in terms of the crising of the debt 330 00:17:58,080 --> 00:18:01,560 Speaker 1: lm as had a love of about eighty three cents 331 00:18:01,560 --> 00:18:03,639 Speaker 1: on the dollar went back to T nine, So certainly 332 00:18:03,640 --> 00:18:06,360 Speaker 1: not as dramatic, and as Jamie points out, the equity 333 00:18:06,400 --> 00:18:08,600 Speaker 1: and the dad is certainly firmed. Nipaffter a drama through 334 00:18:08,600 --> 00:18:14,960 Speaker 1: the suma. Jamie opertune with this out of Morgan Stanley 335 00:18:15,040 --> 00:18:18,200 Speaker 1: years ago in a bunch of really smart people doing 336 00:18:18,480 --> 00:18:31,600 Speaker 1: uh some basic security. And what we have is we 337 00:18:31,720 --> 00:18:35,080 Speaker 1: have Bill Gavin. And let me just introduce Bill Gavin, 338 00:18:35,119 --> 00:18:38,600 Speaker 1: because the topic is gonna be what goes on in Washington, 339 00:18:38,680 --> 00:18:41,320 Speaker 1: not Austin, not New York, but in Washington and the 340 00:18:41,400 --> 00:18:46,320 Speaker 1: ongoing investigation by Mr Muller. And to give due to 341 00:18:46,680 --> 00:18:50,679 Speaker 1: Mr Gavin, he spent more than twenty five years with 342 00:18:50,720 --> 00:18:53,560 Speaker 1: the Federal Bureau of Investigation. He served previously is the 343 00:18:53,600 --> 00:18:57,360 Speaker 1: Assistant director of New York, which is the Bureau's largest 344 00:18:57,480 --> 00:19:00,920 Speaker 1: of field office. He was also in charge of the 345 00:19:00,960 --> 00:19:05,000 Speaker 1: World Trade Center investigation, and I dare say he hails 346 00:19:05,040 --> 00:19:08,479 Speaker 1: from the state of Massachusetts, so he would definitely know 347 00:19:08,560 --> 00:19:11,880 Speaker 1: about the big dig Bill Gavin, thank you very much 348 00:19:11,920 --> 00:19:14,679 Speaker 1: for being with us. What can you tell us about 349 00:19:15,160 --> 00:19:20,440 Speaker 1: the changes at the Justice Department and the ongoing investigation 350 00:19:21,320 --> 00:19:30,080 Speaker 1: into Russian collusion and Russian participation in the sixteen presidential election. 351 00:19:30,200 --> 00:19:33,840 Speaker 1: Does the change at the top mean anything for Mr Mueller? 352 00:19:35,400 --> 00:19:37,600 Speaker 1: I think that's probably I wish I had a big 353 00:19:37,640 --> 00:19:40,439 Speaker 1: crystal ball to be able to give you the right answer, 354 00:19:40,480 --> 00:19:43,240 Speaker 1: But there's a lot of possibilities there. With the new 355 00:19:43,400 --> 00:19:47,840 Speaker 1: acting Attorney General and perhaps to be named Attorney General Um, 356 00:19:48,000 --> 00:19:52,200 Speaker 1: he has a different plant on the investigation than than 357 00:19:52,480 --> 00:19:57,399 Speaker 1: U UM just Sessions did. UH. The it's not going 358 00:19:57,440 --> 00:20:00,160 Speaker 1: to make much of a difference on the opposite side 359 00:20:00,160 --> 00:20:03,199 Speaker 1: of Pennsylvania Avenue and the FBI. It's whoever runs the 360 00:20:03,240 --> 00:20:06,040 Speaker 1: Department of Justice runs it. But I think the the 361 00:20:07,080 --> 00:20:10,760 Speaker 1: UH look by the Department of Justice at Bob Mueller's 362 00:20:10,760 --> 00:20:13,080 Speaker 1: investigation might be a little different than it has been 363 00:20:13,119 --> 00:20:16,000 Speaker 1: in the past. I would cautient, folks, though, as I 364 00:20:16,280 --> 00:20:19,400 Speaker 1: as I look at what has come out of that investigation, 365 00:20:19,760 --> 00:20:23,240 Speaker 1: I suspect it's probably coming to an end fairly shortly, 366 00:20:23,680 --> 00:20:26,399 Speaker 1: and maybe the new acting Attorney General will kind of 367 00:20:26,440 --> 00:20:30,359 Speaker 1: push it over the line. But I suspect that maybe, 368 00:20:30,960 --> 00:20:34,720 Speaker 1: um um, the investigation by Bob Mueller is going to 369 00:20:34,800 --> 00:20:37,720 Speaker 1: determine that there was no collusion by Donald Trump. That 370 00:20:37,760 --> 00:20:40,640 Speaker 1: will surprise everybody, but I don't think it will shock anybody. 371 00:20:40,680 --> 00:20:44,360 Speaker 1: I think that's probably part of what the conclusion Bob 372 00:20:44,440 --> 00:20:48,000 Speaker 1: Mueller might have. The FBI building, uh as you know, 373 00:20:48,160 --> 00:20:52,560 Speaker 1: Mr Gavin, everybody agrees as architecturally deficient. There's a little 374 00:20:52,560 --> 00:20:55,399 Speaker 1: more statue to the Robert F. Kennedy building down on 375 00:20:55,480 --> 00:20:59,000 Speaker 1: Pennsylvania Avenue at Justice. What is it like in those 376 00:20:59,080 --> 00:21:02,360 Speaker 1: halways today is people try to figure out are they're 377 00:21:02,359 --> 00:21:06,640 Speaker 1: taking orders from Whittaker or Rosenstein. I mean, what actually 378 00:21:06,760 --> 00:21:10,040 Speaker 1: is going on by the coffee, the water cooler, the 379 00:21:10,080 --> 00:21:15,760 Speaker 1: Starbucks outside today at Justice. Well, I think that everybody's 380 00:21:15,760 --> 00:21:18,080 Speaker 1: still trying to figure that out. But if in fact, 381 00:21:18,560 --> 00:21:23,200 Speaker 1: um what it can now becomes the head of the 382 00:21:23,200 --> 00:21:27,600 Speaker 1: boss of of of of of the former leaders there, 383 00:21:27,680 --> 00:21:30,600 Speaker 1: then then I think that has a whole new dynamic. 384 00:21:30,840 --> 00:21:33,080 Speaker 1: It's not that he's unknown to them, so they can 385 00:21:33,080 --> 00:21:35,879 Speaker 1: probably predict what he's going to do. They know his personality, 386 00:21:35,880 --> 00:21:38,000 Speaker 1: they know his context, they know where he's been, they 387 00:21:38,000 --> 00:21:40,800 Speaker 1: know his White House context, and so everybody is probably 388 00:21:40,840 --> 00:21:43,320 Speaker 1: gonna have to shift a few gears to get ready 389 00:21:43,359 --> 00:21:46,520 Speaker 1: for that kind of uh, that kind of activity there. Uh, 390 00:21:46,840 --> 00:21:50,159 Speaker 1: there's probably a little bit of not only confusion, but 391 00:21:50,280 --> 00:21:52,720 Speaker 1: some ankst maybe with some folks. But that's the way 392 00:21:52,760 --> 00:21:55,159 Speaker 1: it is. Whenever you have a change, and particularly a 393 00:21:55,200 --> 00:21:59,840 Speaker 1: dynamic change like this, Bill Gavin, is there in you 394 00:22:00,080 --> 00:22:05,119 Speaker 1: or mind, any change in the way in which the 395 00:22:05,280 --> 00:22:08,840 Speaker 1: Justice Department is now going to be viewed by the 396 00:22:08,840 --> 00:22:12,440 Speaker 1: White House? I think the problem we will be. I 397 00:22:13,200 --> 00:22:16,920 Speaker 1: believe that the White household now look at the Department 398 00:22:16,920 --> 00:22:21,400 Speaker 1: of Justice has not being dysfunctional, but having somebody at 399 00:22:21,400 --> 00:22:25,000 Speaker 1: the helm that will right the ship and get it 400 00:22:25,040 --> 00:22:27,640 Speaker 1: to get it going the way it should be going. 401 00:22:27,840 --> 00:22:30,639 Speaker 1: But it should be acting independently of the White Houses 402 00:22:30,720 --> 00:22:33,439 Speaker 1: we all know, as should the FBI across the street 403 00:22:33,520 --> 00:22:36,320 Speaker 1: be acting independently, but by the same token, there has 404 00:22:36,359 --> 00:22:41,320 Speaker 1: to be a working relationship and the credibility between the 405 00:22:41,400 --> 00:22:43,680 Speaker 1: d o J and the White House. Did you havin 406 00:22:43,760 --> 00:22:46,240 Speaker 1: one final question? You have been a great supporter of 407 00:22:46,240 --> 00:22:49,879 Speaker 1: Bloomberg surveillance with your multi city experience with the Federal 408 00:22:49,880 --> 00:22:54,760 Speaker 1: Bureau of Investigation this morning, once again with Bill Gavin, 409 00:22:55,200 --> 00:22:58,320 Speaker 1: we're looking at a horrific shooting. The issue is it's 410 00:22:58,359 --> 00:23:01,000 Speaker 1: not the romance of the FBI in a Smith and Wesson. 411 00:23:02,119 --> 00:23:06,280 Speaker 1: It is a technology of firearms. What's the Gavin prescription 412 00:23:06,720 --> 00:23:13,280 Speaker 1: to make the events like Thousand Oaks stop? I don't 413 00:23:13,280 --> 00:23:15,360 Speaker 1: think there is a prescription form to him. I think 414 00:23:15,359 --> 00:23:20,240 Speaker 1: that looking at what happened uh this individual, it will 415 00:23:20,280 --> 00:23:22,399 Speaker 1: come out. But I haven't seen any details yet as 416 00:23:22,400 --> 00:23:25,040 Speaker 1: to we the ad f of B tracing that that 417 00:23:25,080 --> 00:23:27,240 Speaker 1: weapon down and finding out where he bought it, was 418 00:23:27,280 --> 00:23:30,600 Speaker 1: it legally purchased, and all those kinds of things. Again, 419 00:23:30,640 --> 00:23:33,280 Speaker 1: it just comes right down to the to the mental 420 00:23:33,560 --> 00:23:36,920 Speaker 1: stability or instability of the individual who has a gun. 421 00:23:37,720 --> 00:23:40,840 Speaker 1: This ability involved in maybe it can be a better 422 00:23:40,920 --> 00:23:45,160 Speaker 1: way to determine whether or not a person should have 423 00:23:45,720 --> 00:23:49,399 Speaker 1: a firearm. I think that's part of the solution here, UH, 424 00:23:49,560 --> 00:23:51,879 Speaker 1: to be able to have some sort of a psychological 425 00:23:52,040 --> 00:23:56,679 Speaker 1: profile that goes into a database that prohibits people that 426 00:23:56,800 --> 00:23:59,440 Speaker 1: have a propensity to do something like this from ever 427 00:23:59,560 --> 00:24:02,959 Speaker 1: obtain William Gavin, thank you so much for the service 428 00:24:03,000 --> 00:24:06,040 Speaker 1: in Miami, Denver, Washington, and of course in New York 429 00:24:06,040 --> 00:24:10,639 Speaker 1: with a federal Bureau of Investigation, we think for his attendance. 430 00:24:21,119 --> 00:24:24,679 Speaker 1: Joining us now is David Laufman. He is the former 431 00:24:25,160 --> 00:24:29,000 Speaker 1: high ranking Department of Justice official who oversaw parts of 432 00:24:29,040 --> 00:24:32,399 Speaker 1: the Russia investigation in his role as the chief of 433 00:24:32,440 --> 00:24:37,359 Speaker 1: the Counter Intelligence and Export Control Section, and he joins 434 00:24:37,440 --> 00:24:39,960 Speaker 1: US now. Mr Laufman, thank you very much, and of 435 00:24:40,040 --> 00:24:42,760 Speaker 1: course thank you for your service. I wonder if you 436 00:24:42,800 --> 00:24:48,639 Speaker 1: could comment on the resignation or firing of Senator Jeff 437 00:24:48,800 --> 00:24:54,240 Speaker 1: Sessions as Attorney General and the appointment of Mr Whittaker, 438 00:24:54,440 --> 00:25:00,240 Speaker 1: Matthew Whittaker as the acting a G and whether we're 439 00:25:00,240 --> 00:25:03,480 Speaker 1: getting ourselves all worked up over something that we've seen 440 00:25:03,520 --> 00:25:11,600 Speaker 1: many times before, which is politically influenced appointees to run 441 00:25:11,760 --> 00:25:15,399 Speaker 1: the Department of Justice. We've seen this many times in 442 00:25:15,440 --> 00:25:20,560 Speaker 1: the past, haven't we. Well, there's nothing unusual about someone 443 00:25:20,600 --> 00:25:24,920 Speaker 1: with the prediction, with a political history or credentials being 444 00:25:24,960 --> 00:25:29,680 Speaker 1: nominated for cabinet level position or ascending an interim role. 445 00:25:30,240 --> 00:25:33,280 Speaker 1: It's the context in which this occurred that gives rise 446 00:25:33,320 --> 00:25:38,359 Speaker 1: to such deep concern because the only reason President Trump 447 00:25:38,440 --> 00:25:42,000 Speaker 1: ousted Jeff Sessions is because Sessions was refused through oversight 448 00:25:42,560 --> 00:25:45,679 Speaker 1: of the Russian investigation being conducted by the Special Counsel's Office. 449 00:25:46,240 --> 00:25:48,720 Speaker 1: And the only reason he picked this guy, Mr Whittaker 450 00:25:49,600 --> 00:25:53,000 Speaker 1: to ascend to the ages position, even in an interim 451 00:25:53,040 --> 00:25:56,040 Speaker 1: basis um, is because he's not going to be recused 452 00:25:56,680 --> 00:26:01,199 Speaker 1: because he has manifested a certain new agree of antipathy 453 00:26:01,280 --> 00:26:04,240 Speaker 1: toward the Muller investigation, and he will now be in 454 00:26:04,320 --> 00:26:08,760 Speaker 1: charge of overseeing an investigation that puts Mr Trump family 455 00:26:08,800 --> 00:26:12,720 Speaker 1: members in his business at risk that the President despises. 456 00:26:14,359 --> 00:26:18,160 Speaker 1: I understand that, and and that is certainly a clear 457 00:26:18,359 --> 00:26:21,080 Speaker 1: a clear view. But what I was getting at is 458 00:26:21,119 --> 00:26:24,119 Speaker 1: that this is not unusual, is it. I mean, if 459 00:26:24,119 --> 00:26:29,720 Speaker 1: you go back into into presidential history, whether it was 460 00:26:29,760 --> 00:26:34,240 Speaker 1: the appointment of Edwin Mease or whether it was the 461 00:26:34,320 --> 00:26:39,440 Speaker 1: appointment Robert Bourke was an acting Attorney General, Elliott Richardson, 462 00:26:39,680 --> 00:26:44,040 Speaker 1: Richard Kleindean's John Mitchell, for example, It's not as if 463 00:26:44,080 --> 00:26:49,080 Speaker 1: we've haven't seen this before. Well I would, I would 464 00:26:49,160 --> 00:26:51,399 Speaker 1: differ with you. What it depends on whether this is 465 00:26:51,440 --> 00:26:54,080 Speaker 1: that you're talking about. It's highly unusual, I think for 466 00:26:54,720 --> 00:26:56,679 Speaker 1: the chief of Staff to the Attorney General to be 467 00:26:56,720 --> 00:27:00,880 Speaker 1: elevated to serve on inner basis as Attorney General, opposed, 468 00:27:00,880 --> 00:27:04,480 Speaker 1: for example, to elevating the sitting Senate confirmed Deputy during 469 00:27:04,560 --> 00:27:08,720 Speaker 1: General Mr Rosenstein to that position. And what makes this 470 00:27:08,880 --> 00:27:13,560 Speaker 1: particularly exceptional and of concern is the context in which 471 00:27:13,600 --> 00:27:17,040 Speaker 1: this occurs, which is that you have a highly sensitive 472 00:27:17,080 --> 00:27:20,600 Speaker 1: criminal investigation chart you know, that is assigned as Mr Mueller, 473 00:27:21,280 --> 00:27:24,919 Speaker 1: and the incoming interim ag has manifested publicly on more 474 00:27:24,960 --> 00:27:30,119 Speaker 1: than one occasion a certain antipathy for that very investigation. 475 00:27:30,320 --> 00:27:34,240 Speaker 1: So at risk, UH is the ability of Mr Mueller 476 00:27:34,280 --> 00:27:36,720 Speaker 1: to continue his work to completion in the manner it 477 00:27:36,760 --> 00:27:40,240 Speaker 1: ought to be completed, consistent with Department of Justice practice, 478 00:27:40,960 --> 00:27:43,560 Speaker 1: with the rule of law, and that is at risk. 479 00:27:43,640 --> 00:27:46,760 Speaker 1: And that's what separates this from the realm of so 480 00:27:46,840 --> 00:27:50,600 Speaker 1: called or normal circumstances that you allude to. David Lawton, 481 00:27:50,640 --> 00:27:52,199 Speaker 1: we are honored to have you with us today, in 482 00:27:52,240 --> 00:27:55,919 Speaker 1: particularly with your public service on international work at the 483 00:27:56,040 --> 00:27:59,119 Speaker 1: Justice Department over the years. I want to go back 484 00:27:59,320 --> 00:28:02,959 Speaker 1: years to your work with the House Ethics Committee, and 485 00:28:03,000 --> 00:28:04,960 Speaker 1: it comes up in the discussions I've seen in the 486 00:28:05,040 --> 00:28:10,640 Speaker 1: last twelve eighteen hours of the Department of Justice Ethics office. 487 00:28:11,359 --> 00:28:15,560 Speaker 1: What is that? The basic idea is Senators Sessions on 488 00:28:15,680 --> 00:28:21,400 Speaker 1: joining Justice ran his thoughts by the Departmental Ethics office 489 00:28:22,040 --> 00:28:24,920 Speaker 1: and they briefed him on what to do in this case. 490 00:28:24,960 --> 00:28:28,320 Speaker 1: He recused? Is Mr Whittaker almost does he have an 491 00:28:28,359 --> 00:28:33,480 Speaker 1: obligation to go before the bureaucrats Justice and say here's 492 00:28:33,520 --> 00:28:38,120 Speaker 1: my past or does he get a free pass? Well, 493 00:28:38,160 --> 00:28:42,200 Speaker 1: there is an established ethics process at the department. Um. 494 00:28:42,320 --> 00:28:46,040 Speaker 1: A senior official in the office of the Deputy Attorney General. Mr. 495 00:28:46,120 --> 00:28:50,320 Speaker 1: Rosenstein's office serves as the senior ethics official for the department. 496 00:28:50,360 --> 00:28:54,000 Speaker 1: He is a career officials, so he's nonpartisan. Um. He's 497 00:28:54,040 --> 00:28:58,120 Speaker 1: a fine attorney and customarily and a g coming into 498 00:28:58,120 --> 00:29:00,920 Speaker 1: the department asked to whom there is some issue that 499 00:29:01,480 --> 00:29:04,560 Speaker 1: you know loudly calls out to be resolved, would you know? 500 00:29:04,680 --> 00:29:09,080 Speaker 1: Turned to Mr Rosenstein's office and say, hey, UM, I'm 501 00:29:09,080 --> 00:29:10,640 Speaker 1: not sure what the right thing to do is here. 502 00:29:10,760 --> 00:29:14,040 Speaker 1: I understand the high public interest in the matter. UM, 503 00:29:14,320 --> 00:29:16,520 Speaker 1: give me an opinion on whether you think I should 504 00:29:16,560 --> 00:29:21,160 Speaker 1: be recused? You know that would be the normal situation. Um, 505 00:29:21,200 --> 00:29:25,560 Speaker 1: that's almost certainly not going to happen here, because as 506 00:29:25,600 --> 00:29:28,160 Speaker 1: sure as you and I are talking, the President, you know, 507 00:29:28,320 --> 00:29:32,400 Speaker 1: must have elicited a commitment Mr Whittaker not to recuse himself. 508 00:29:32,400 --> 00:29:35,440 Speaker 1: So there's no point in Mr Whittaker initiating the process 509 00:29:35,440 --> 00:29:39,240 Speaker 1: of getting an ethic okay, because he's not. It's improbable 510 00:29:39,280 --> 00:29:41,280 Speaker 1: that he would honor it. But here are your were 511 00:29:41,360 --> 00:29:44,600 Speaker 1: to recuse. I've heard so many pundits over the last 512 00:29:44,600 --> 00:29:48,200 Speaker 1: twelve eighteen hours way in on this, and you're actually 513 00:29:48,280 --> 00:29:56,160 Speaker 1: legitimately qualified. What is the institutional pushback that will assuage force, 514 00:29:57,440 --> 00:30:01,760 Speaker 1: tend whatever the gentle word is, Mr Whittaker, towards a 515 00:30:01,800 --> 00:30:06,000 Speaker 1: normal process and behavior versus what he and the President 516 00:30:06,000 --> 00:30:08,680 Speaker 1: of the United States assumed once. What what is the 517 00:30:08,760 --> 00:30:12,400 Speaker 1: institutional mph to get the gentleman from Iowa to go 518 00:30:12,480 --> 00:30:16,920 Speaker 1: through the normal process? Well, I'm not sure anything is 519 00:30:16,960 --> 00:30:22,680 Speaker 1: capable of causing that result, given the genesis for his 520 00:30:23,760 --> 00:30:26,480 Speaker 1: elevation in the first place. UM, but I suppose it's 521 00:30:26,560 --> 00:30:30,840 Speaker 1: possible that there could, you know, occur in some sort 522 00:30:30,840 --> 00:30:36,080 Speaker 1: of self initiated context, um, an assessment by Department Ethics 523 00:30:36,080 --> 00:30:39,720 Speaker 1: officials sort of susponsing that is, you know, without responding 524 00:30:39,760 --> 00:30:44,120 Speaker 1: to a request by Mr Whittaker to assess whether he 525 00:30:44,160 --> 00:30:46,520 Speaker 1: ought to recuse himself. And this is different than the 526 00:30:46,560 --> 00:30:50,160 Speaker 1: Sessions recusal. Sessions had to recuse himself essentially as a 527 00:30:50,160 --> 00:30:52,480 Speaker 1: matter of law because of his work on the two 528 00:30:52,880 --> 00:30:56,280 Speaker 1: sixteen Trump campaign. This is a more subjective, even if 529 00:30:56,320 --> 00:31:00,520 Speaker 1: it's an obvious case where even if he doesn't have 530 00:31:00,560 --> 00:31:03,440 Speaker 1: a clear you know, conflict is a matter of law. 531 00:31:03,760 --> 00:31:06,200 Speaker 1: You know, the appearance of a conflict is so strong 532 00:31:06,280 --> 00:31:09,560 Speaker 1: and so putrid um that it just cries out for 533 00:31:09,640 --> 00:31:15,600 Speaker 1: him to not involve himself and oversight of the Meller investigation. U, 534 00:31:16,280 --> 00:31:21,000 Speaker 1: Mr Kaulam, if if all of what you say is accurate, 535 00:31:21,000 --> 00:31:24,880 Speaker 1: and I believe it to be so, does Mr Whittaker 536 00:31:25,120 --> 00:31:29,840 Speaker 1: have the technical expertise to be the acting Attorney General? 537 00:31:32,800 --> 00:31:35,600 Speaker 1: You know? Um it's hard to say. Um. You know, 538 00:31:35,880 --> 00:31:37,920 Speaker 1: people can serve in the position of the Attorney General 539 00:31:37,960 --> 00:31:42,520 Speaker 1: without being you know, legal scholars or technically legally uh 540 00:31:42,720 --> 00:31:45,240 Speaker 1: efficient in the particular area of law. He has served 541 00:31:45,280 --> 00:31:48,280 Speaker 1: as the United States Attorney in Iowa. UM, I can't 542 00:31:48,320 --> 00:31:51,920 Speaker 1: really speak to his technical uh you know, legal legal 543 00:31:51,960 --> 00:31:54,760 Speaker 1: credentials or expertise anything. It's just staff. It's around them 544 00:31:54,800 --> 00:31:58,280 Speaker 1: that can provide support for carrying out the duties of 545 00:31:58,280 --> 00:32:00,560 Speaker 1: the Attorney in general. It's the Deputy Charney in General 546 00:32:00,600 --> 00:32:03,600 Speaker 1: that really runs the day to day operations of the 547 00:32:03,640 --> 00:32:07,400 Speaker 1: Department of Justice. David Loft in one final question, and 548 00:32:07,520 --> 00:32:10,320 Speaker 1: certainly within the stream of punditry, I heard last night 549 00:32:10,760 --> 00:32:14,240 Speaker 1: there were actual experts like you, and the word that 550 00:32:14,400 --> 00:32:18,320 Speaker 1: kept coming up was protect the evidence. Do you have 551 00:32:18,400 --> 00:32:22,520 Speaker 1: a confidence that Mr Muller and his team, whatever anybody's 552 00:32:22,560 --> 00:32:28,760 Speaker 1: belief is, will be able to protect the evidence? Well, 553 00:32:28,800 --> 00:32:30,840 Speaker 1: I'm hopeful. I mean, this is really one of those 554 00:32:30,840 --> 00:32:35,840 Speaker 1: sort of nightmare scenarios that you're positing worthy evidence they 555 00:32:35,840 --> 00:32:39,280 Speaker 1: have gathered could be at risk. Um. You know, the 556 00:32:39,360 --> 00:32:43,000 Speaker 1: FBI is carrying out the investigative functions for the Special 557 00:32:43,040 --> 00:32:46,560 Speaker 1: Council's Office, and I have every reason to believe that 558 00:32:47,440 --> 00:32:51,080 Speaker 1: the FBI, in conjunction with a Special Council's Office and 559 00:32:51,680 --> 00:32:55,440 Speaker 1: the deput Jurney General's Office have taken appropriate steps to 560 00:32:55,640 --> 00:32:59,520 Speaker 1: protect any information the Special Council's Office is generated in 561 00:32:59,600 --> 00:33:03,959 Speaker 1: their case for many political abuse. Oh, this has been wonderful, 562 00:33:04,040 --> 00:33:07,320 Speaker 1: David Lawtin. We greatly appreciate your attendance today. We look 563 00:33:07,360 --> 00:33:09,960 Speaker 1: forward to speaking to you in the future. He's a 564 00:33:10,000 --> 00:33:15,120 Speaker 1: former federal prosecutor prosecutor senior national security official at the 565 00:33:15,200 --> 00:33:22,600 Speaker 1: United States Department of Justice. Thanks for listening to the 566 00:33:22,600 --> 00:33:29,080 Speaker 1: Bloomberg Surveillance podcast. Subscribe and listen to interviews on Apple Podcasts, SoundCloud, 567 00:33:29,480 --> 00:33:33,680 Speaker 1: or whichever podcast platform you prefer. I'm on Twitter at 568 00:33:33,720 --> 00:33:38,000 Speaker 1: Tom Keane before the podcast. You can always catch us worldwide. 569 00:33:38,440 --> 00:33:39,520 Speaker 1: I'm Bloomberg Radio.