WEBVTT - We've Been Reducing Risk As Cycle Nears Peak: Commonwealth CIO 0:00:05.800 --> 0:00:08.720 Welcome to the Bloomberg p m L Podcast. I'm pim Fox. 0:00:08.760 --> 0:00:11.440 Along with my co host Lisa A. Bramowitz. Each day 0:00:11.480 --> 0:00:15.000 we bring you the most important, noteworthy, and useful interviews 0:00:15.040 --> 0:00:17.520 for you and your money, whether you're at the grocery 0:00:17.560 --> 0:00:20.560 store or the trading floor. Find the Bloomberg p m 0:00:20.680 --> 0:00:27.040 L Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot Com. 0:00:27.080 --> 0:00:30.360 We are broadcasting live from the Commonwealth Financial Networks Annual 0:00:30.440 --> 0:00:34.720 National Conference of Advisors from the Marriotte in Austin, Texas. 0:00:34.840 --> 0:00:37.279 We are so pleased to say we are joined now 0:00:37.320 --> 0:00:40.120 by Brad McMillan, Managing Principal and Chief Investment Officer at 0:00:40.120 --> 0:00:44.680 Commonwealth Financial Network And Brad, given the fact that you 0:00:44.720 --> 0:00:47.360 look after assets of more than one and a half 0:00:47.640 --> 0:00:51.200 billion dollars, I'm just wondering from your d and fifty 0:00:51.200 --> 0:00:54.720 six billion dollars. Excuse me, I'm just wondering from your perspective, 0:00:55.040 --> 0:00:58.680 whether the October route in stock markets reduced the froth 0:00:58.920 --> 0:01:02.760 enough to make a buying opportunity at this point. Well, 0:01:02.800 --> 0:01:05.119 when you look at valuations, and I think that's really 0:01:05.120 --> 0:01:08.240 the only way we can look at it. What October 0:01:08.280 --> 0:01:11.320 told us was there is a lot of excess confidence 0:01:11.360 --> 0:01:14.520 in there. So on the one hand, we're down at 0:01:14.520 --> 0:01:16.919 the lower level of valuations we've seen for the past 0:01:16.959 --> 0:01:18.760 five years. You can make a good case that, yeah, 0:01:18.760 --> 0:01:21.440 the froughth is out of the system. I'm not convinced 0:01:21.440 --> 0:01:24.280 to that, though, because I think the underlying reality is 0:01:24.280 --> 0:01:28.000 we're starting to see interest rates move back into something 0:01:28.280 --> 0:01:31.040 closer to a normal level, and I think that ultimately 0:01:31.040 --> 0:01:33.840 that's going to apply value imply the valuations dropped to 0:01:33.920 --> 0:01:36.800 something like a normal level. So I think this is 0:01:36.880 --> 0:01:39.720 just the opening round. I don't think it's gonna happen soon, 0:01:40.160 --> 0:01:42.960 but we can definitely see the time or clicking. Brad. 0:01:43.000 --> 0:01:45.120 Can I just push a little bit and say normal 0:01:45.319 --> 0:01:48.840 for whom because there's of us who are old enough 0:01:48.880 --> 0:01:52.280 to remember interest rates? Yes, I agree with you, but 0:01:52.480 --> 0:01:54.840 there are people who have come of age during a 0:01:54.920 --> 0:01:59.720 time when money was relatively inexpensive. That's a great question, Tim, 0:01:59.800 --> 0:02:02.280 and it's really kind of what we struggle with because 0:02:02.280 --> 0:02:04.720 I have some younger folks on my team, and for them, 0:02:04.760 --> 0:02:08.640 normal is to you know, that is what they've grown. 0:02:08.680 --> 0:02:10.840 You tell them that it used to be ten percent, 0:02:10.960 --> 0:02:14.720 fifteen percent, and that the world didn't end. I get 0:02:14.760 --> 0:02:16.240 the look you used to give your dad and I 0:02:16.320 --> 0:02:18.200 used to give my dad when you talked about walking 0:02:18.240 --> 0:02:21.440 uphill to school both ways, So they don't really believe it. 0:02:21.480 --> 0:02:24.400 But nonetheless, you can already see right now. We saw 0:02:24.480 --> 0:02:27.160 interest rates dropped significantly in two thousand and eight, and 0:02:27.200 --> 0:02:30.400 they stayed in a fairly narrow range until eleven, and 0:02:30.440 --> 0:02:33.880 then the Greek crisis took rates down to a new low. Well, 0:02:33.919 --> 0:02:36.200 guess what, We've just moved back into the O eight 0:02:36.240 --> 0:02:40.360 oh eleven range. So we're above where we were, and 0:02:40.400 --> 0:02:43.640 it's looking like it's gonna stick. So well, and I 0:02:43.680 --> 0:02:45.320 guess what I'm trying to I want to go back 0:02:45.360 --> 0:02:46.840 something you were saying, which is this is sort of 0:02:46.840 --> 0:02:48.880 the opening south of what we saw in October, that 0:02:48.880 --> 0:02:51.839 they're more declines and risk your assets to come as 0:02:51.880 --> 0:02:54.000 And I'm assuming, as you talk, part of this is 0:02:54.000 --> 0:02:56.560 predicated on the idea that interest rates are normalizing, so 0:02:56.639 --> 0:02:58.760 some of the froth is going to have to dissipate 0:02:58.800 --> 0:03:01.440 in the froth still is there, right, So I'm wondering, 0:03:01.480 --> 0:03:05.239 I mean, how do you advise investors or investment advisors 0:03:05.240 --> 0:03:07.360 to sort of plan with that in mind, given the 0:03:07.360 --> 0:03:09.359 fact that it might not be imminent, and given the 0:03:09.400 --> 0:03:11.040 fact that there still might be gains in some of 0:03:11.040 --> 0:03:13.160 these risk assets, well, it's a question of what you 0:03:13.200 --> 0:03:15.280 want to optimize around. And this is something I've been 0:03:15.280 --> 0:03:17.880 writing about. Do you want to optimize around reducing your 0:03:17.960 --> 0:03:21.960 risk or do you want to optimize around maximizing your returns? 0:03:22.600 --> 0:03:24.680 And that's a decision we haven't We've been able to 0:03:24.720 --> 0:03:28.160 have both over the past decade. And now you've got 0:03:28.240 --> 0:03:30.160 really got to start thinking about, you know, what are 0:03:30.160 --> 0:03:32.959 you trying to do, and if you're trying to protect 0:03:32.960 --> 0:03:35.720 those gains, if you're trying to minimize the downside, and 0:03:35.760 --> 0:03:38.119 by the way, is people get older, that's becoming more 0:03:38.160 --> 0:03:41.040 and more important, then you need to start taking in 0:03:41.160 --> 0:03:44.920 more defensive stance, have more in cash, modify your return 0:03:45.000 --> 0:03:51.440 expectations much. It depends on the situation. Um, it depends 0:03:51.560 --> 0:03:53.360 on how defensive you want to be. I mean, I 0:03:53.440 --> 0:03:55.640 just finished a book we're handing it out of the 0:03:55.640 --> 0:03:58.680 conference here. As a matter of fact, that suggests that 0:03:58.720 --> 0:04:01.280 when things get bad, you really we should move substantial 0:04:01.280 --> 0:04:03.960 portions of your portfolio to cash. So I mean, I 0:04:04.000 --> 0:04:07.120 think cash is an underappreciated asset class and the only reason, 0:04:07.160 --> 0:04:09.600 we don't appreciate it. So we've gotten used to things 0:04:09.640 --> 0:04:12.120 going up for ten years in a row. Well, that 0:04:12.200 --> 0:04:14.680 may go on forever. I have my doubts, am, I'm 0:04:14.680 --> 0:04:17.640 more worried about return of capital or return on capital. 0:04:17.760 --> 0:04:20.960 It's the old Will Rogers line. Do you know people 0:04:20.960 --> 0:04:23.160 who have six months worth of what it takes for 0:04:23.200 --> 0:04:25.359 them to live in cash? And I don't mean in 0:04:25.400 --> 0:04:29.000 a brokerage account, I mean in a bank. Yes, are 0:04:29.040 --> 0:04:31.400 there more or less of them today than there were, 0:04:31.480 --> 0:04:33.960 let's say in two thousand and eight. There are in 0:04:34.000 --> 0:04:37.080 two thousand and eight before the crisis, or afore the crisis, 0:04:37.080 --> 0:04:39.720 before the crisis, because after the crisis it gets a 0:04:39.720 --> 0:04:42.800 little harder. Well, I think they're probably about the same 0:04:42.880 --> 0:04:45.640 number now because we're hitting the peak of the economic cycle. 0:04:45.839 --> 0:04:48.520 You look at consumer confidence, it's actually higher than it 0:04:48.640 --> 0:04:51.080 was in oh seven. You know, we're at levels we've 0:04:51.160 --> 0:04:53.640 only seen at the peak of the dot com boom. 0:04:53.720 --> 0:04:56.159 You look at there are a lot of numbers you 0:04:56.200 --> 0:04:58.800 go out there and the highest we've ever seen except 0:04:58.839 --> 0:05:01.960 for two thousand. That comes up more and more. So 0:05:02.120 --> 0:05:03.880 we're getting to the point where things are about as 0:05:03.920 --> 0:05:05.839 good as they can get and now is the time 0:05:05.880 --> 0:05:08.279 to start thinking about being defensive. So would you say 0:05:08.279 --> 0:05:12.000 that right now greed is driving most people in the market. Absolutely. Okay, 0:05:12.040 --> 0:05:13.760 So you think that we're getting to that point where 0:05:14.160 --> 0:05:18.200 it is getting a little bit of animal spirits E. Well, 0:05:18.200 --> 0:05:21.440 when you absolutely, when you're starting to see you're starting 0:05:21.440 --> 0:05:23.800 to see the merger boom take off, that's typically what 0:05:23.880 --> 0:05:26.359 happens at the peak of the cycle. You're starting to 0:05:26.520 --> 0:05:29.920 see people continuing to feel good. That's what happens at 0:05:29.960 --> 0:05:32.039 the peak of the cycle. You're starting to see the 0:05:32.080 --> 0:05:34.680 big up and down moves. This may sound familiar after 0:05:34.720 --> 0:05:37.560 the past couple of weeks. That's typically what happens at 0:05:37.600 --> 0:05:39.760 the peak of the cycle. I don't think we're quite 0:05:39.760 --> 0:05:41.760 there yet. You know, they're still gains to be had. 0:05:41.800 --> 0:05:44.719 I think there probably are through year end. But what 0:05:44.920 --> 0:05:48.000 happens when we hit a recession. That's typically when things 0:05:48.000 --> 0:05:53.159 blow up. And that's what I'm watching for personally. Is 0:05:53.240 --> 0:05:56.880 your thought that people ought to wait in cash versus 0:05:57.240 --> 0:06:00.920 fixed income. Well, the thing about fixed income is over 0:06:00.960 --> 0:06:03.719 the past thirty years, we've had we've had two sources 0:06:03.720 --> 0:06:06.800 of returns. We've had coupons which have been higher and 0:06:06.880 --> 0:06:10.880 are now hour, and we've had capital appreciation going forward. 0:06:10.960 --> 0:06:13.080 If rates even just stay the same, you're just gonna 0:06:13.120 --> 0:06:16.160 have coupon. If rates go up, then all you're gonna 0:06:16.160 --> 0:06:19.960 have is coupon minus capital depreciated. Right, But if your 0:06:20.080 --> 0:06:23.600 scenario plays out that where as good as it gets, 0:06:24.440 --> 0:06:27.160 consumer confidences as high as it's gonna get, and you're 0:06:27.200 --> 0:06:31.160 worried about the next recession, wouldn't that mean that investors 0:06:31.200 --> 0:06:33.640 will go to safety, And that means they're gonna go 0:06:33.680 --> 0:06:36.200 and look to buy US treasuries. They're gonna look to 0:06:36.279 --> 0:06:38.640 buy bonds, and as a result, the price of those 0:06:38.680 --> 0:06:41.880 bonds is going to go up. And historically that's absolutely 0:06:41.960 --> 0:06:44.160 been true. But now we have the supply of US 0:06:44.240 --> 0:06:47.880 bonds going up as the Treasury issues more and more. 0:06:48.320 --> 0:06:51.960 We have the buying power going down, as China and 0:06:52.080 --> 0:06:55.159 Japan start to back off. In other words, it's no 0:06:55.200 --> 0:06:58.000 longer as clear cut as it was. You're absolutely right 0:06:58.000 --> 0:07:01.200 based on history, but the underwing dynamics are changing, and 0:07:01.240 --> 0:07:02.920 I don't think we can rely on that. So you've 0:07:02.920 --> 0:07:06.320 got to watch your duration. You've got to manage your expectations. 0:07:06.360 --> 0:07:08.640 You can be in fixed income you're getting paid for 0:07:08.680 --> 0:07:11.760 the risk and the shorter durations now, but going out 0:07:11.800 --> 0:07:14.080 you're still making a pretty big bet. Is there any 0:07:14.080 --> 0:07:18.800 area that you've advised investment managers reduced entirely from their portfolio. 0:07:19.360 --> 0:07:22.800 It depends if you look at, for example, US stocks, 0:07:23.520 --> 0:07:25.400 if you look at on a monthly basis, we drop 0:07:25.440 --> 0:07:27.520 below the two day moving average, you can make a 0:07:27.520 --> 0:07:30.120 case for getting out there. You would have been out, 0:07:30.240 --> 0:07:32.320 you would be back in now. So that's not always 0:07:32.320 --> 0:07:34.560 a good signal, but it is a good time to 0:07:34.560 --> 0:07:37.760 pay attention. I would be reducing risk right now. I 0:07:37.800 --> 0:07:40.280 wouldn't necessarily be taking it off the table, but I 0:07:40.280 --> 0:07:43.800 would be saying, okay, if I'm gonna be reducing exposure 0:07:43.800 --> 0:07:46.480 anyway for tax reasons, now is a good time to 0:07:46.520 --> 0:07:49.320 be thinking about that. Just quickly, give you twenty seconds 0:07:49.360 --> 0:07:51.280 to people a lot of themselves about how much risk 0:07:51.320 --> 0:07:54.440 they're able to take. People tell themselves the absolute truth, 0:07:54.440 --> 0:07:56.600 and then they change change their mind when the risk 0:07:56.680 --> 0:07:59.720 actually shows up. Well done, Thanks very much, thanks for 0:07:59.720 --> 0:08:02.840 showing it up. Brad McMillan is the Chief Investment Officer 0:08:02.920 --> 0:08:06.640 for Commonwealth Financial Network, helping to manage more than a 0:08:06.720 --> 0:08:10.920 hundred and fifty five billion dollars of Customer Assets based 0:08:10.920 --> 0:08:14.360 in Waltham, Massachusetts, and we appreciate you being here and 0:08:14.440 --> 0:08:19.080 hosting us at the Commonwealth Financial Networks Annual National Conference 0:08:19.160 --> 0:08:24.440 of Advisors here in Austin, Texas. Coming up on Bloomberg Markets, 0:08:24.640 --> 0:08:30.280 we're gonna talk about new chairman of Tesla, although Elon 0:08:30.400 --> 0:08:33.600 Musk is still going to be the chief executive. You're 0:08:33.600 --> 0:08:37.320 listening to Bloomberg Market sign Pim Fox along with Lisa Abramwitz. 0:08:40.040 --> 0:08:43.000 I want to bring you some breaking news just crossing 0:08:43.000 --> 0:08:47.320 of the Bloomberg terminal. The probe into a Malaysian high 0:08:47.320 --> 0:08:51.520 profile corruption probe has widened, and a Lloyd Blank find 0:08:51.960 --> 0:08:55.720 the former chief executive of Goldman Sachs was the unidentified 0:08:55.760 --> 0:08:58.800 high ranking Goldman SAX executive referenced in US Cork documents 0:08:58.840 --> 0:09:00.920 who attended a two thousand nine meeting that helped forge 0:09:01.160 --> 0:09:04.400 some of the ties with the Malaysian leader UH and 0:09:04.480 --> 0:09:07.760 its new sovereign wealth fund that led to the bank 0:09:08.160 --> 0:09:10.480 helping it raise six and a half billion dollars that 0:09:10.559 --> 0:09:14.280 has sparked investigations across many nations. We will bring you 0:09:14.320 --> 0:09:17.680 more about this UH in the hours ahead. Pimp. Yes, 0:09:17.920 --> 0:09:20.880 we'll be following that story. That is a Bloomberg exclusive. 0:09:21.200 --> 0:09:24.880 We are broadcasting from the Commonwealth Financial Networks Annual National 0:09:25.000 --> 0:09:29.520 Conference of Advisers in Austin, Texas. Our guest is Christina Hooper, 0:09:29.720 --> 0:09:33.560 chief market strategist for Investco. Christina, thank you very much 0:09:33.720 --> 0:09:37.360 for being with us. Following the results of the mid 0:09:37.520 --> 0:09:40.920 term elections. Do you believe that there is an investment 0:09:41.040 --> 0:09:47.720 thesis that infrastructure spending can drive the price of selective 0:09:47.760 --> 0:09:52.440 stocks higher. I think there's definitely an investment thesis for that. 0:09:53.000 --> 0:09:56.680 UM Now having said that, an infrastructure bill is far 0:09:56.840 --> 0:09:59.599 from a done deal, but I do believe that the 0:09:59.720 --> 0:10:02.719 press send it would like to see infrastructure spending, how 0:10:02.920 --> 0:10:06.080 Democrats would like to see infrastructure spending, and we might 0:10:06.160 --> 0:10:10.240 see enough senators on the Republican side of the aisle 0:10:10.559 --> 0:10:14.000 also support it, especially if we see some kind of 0:10:14.320 --> 0:10:17.640 dip in economic growth in two thousand nineteen. So there 0:10:17.679 --> 0:10:20.600 are a lot of good reasons, and in particular, if 0:10:20.640 --> 0:10:22.760 we want to think about how the US is trying 0:10:22.800 --> 0:10:26.000 to be competitive with China, UM an important way to 0:10:26.040 --> 0:10:29.440 do that is to invest in infrastructure, because clearly, uh 0:10:29.559 --> 0:10:33.600 China's infrastructure, it's more robust, it's newer, it's in better condition, 0:10:33.840 --> 0:10:35.880 and that's one way we can compete. So there are 0:10:35.880 --> 0:10:39.400 a variety of reasons for supporting infrastructure, and I think 0:10:39.440 --> 0:10:42.640 we could see a deal in So if somebody wanted 0:10:42.679 --> 0:10:45.320 to get ahead of that and make investments, where would 0:10:45.320 --> 0:10:47.600 they Where would they go? Right now? Well, I think 0:10:47.600 --> 0:10:51.360 you need to be selective, but many material stocks would 0:10:51.360 --> 0:10:54.760 be poised to benefit from an infrastructure spending bill. Now 0:10:54.800 --> 0:10:57.760 we need to know exactly what would be spent on 0:10:58.000 --> 0:11:00.800 in the infrastructure bill, because keep an mind, it could 0:11:00.800 --> 0:11:04.720 be a telecom heavy infrastructure spending bill. But my guess 0:11:04.800 --> 0:11:07.480 is that because we have so much in the way 0:11:07.640 --> 0:11:12.520 of traditional infrastructure that needs repair or replacement, that that's 0:11:12.720 --> 0:11:17.280 likely where we would see the greatest benefit. So, for example, 0:11:17.320 --> 0:11:20.439 cement companies, I mean, the most basic of materials would 0:11:20.440 --> 0:11:24.880 really benefit from a traditional infrastructure spending bill. Then why 0:11:24.880 --> 0:11:27.960 do we see, for example, industrial metals such as copper 0:11:28.080 --> 0:11:32.280 continue to make new loads. Well, copper is a unique 0:11:32.280 --> 0:11:36.000 phenomenon and I know that it is widely viewed as 0:11:36.000 --> 0:11:39.320 a great indicator for economic growth. What we've seen is 0:11:39.840 --> 0:11:42.960 demand in China has been strong for copper, but in 0:11:43.040 --> 0:11:46.840 fact the traders have impacted where copper prices have gone. 0:11:47.160 --> 0:11:50.679 So I don't look at copper as any kind of 0:11:50.720 --> 0:11:54.640 indication anymore of demand in general, because there are other 0:11:54.679 --> 0:11:57.720 forces at work there. It's a great question. I just 0:11:57.880 --> 0:12:02.240 think that that, um, there are better gauges of demand, 0:12:02.480 --> 0:12:05.480 and of course we won't even see demand really increase 0:12:05.559 --> 0:12:08.560 until we get some kind of infrastructure spending bill. If 0:12:08.640 --> 0:12:11.160 there really is going to be some kind of infrastructure 0:12:11.200 --> 0:12:13.840 spending plan, what does that mean for the US deficit? 0:12:13.960 --> 0:12:16.920 And frankly, whether or not people should own longer term 0:12:17.000 --> 0:12:20.840 US treasuries, Well, it means that all else being equal, 0:12:20.960 --> 0:12:23.920 the deficit is going to continue to grow. This is 0:12:23.960 --> 0:12:27.600 not a new concept though. Um, we're already seeing the 0:12:27.679 --> 0:12:31.520 deficit increase. And I and I think for Republicans it 0:12:31.520 --> 0:12:34.560 will be the same question they asked themselves when they 0:12:34.679 --> 0:12:37.800 came to support the tax reform bill, which was, if 0:12:37.840 --> 0:12:40.680 we get enough economic growth, do we believe that that 0:12:40.760 --> 0:12:44.680 will ultimately make up in tax revenues what we may 0:12:44.800 --> 0:12:47.760 lose in terms of budgets. On a second, I mean 0:12:47.800 --> 0:12:49.880 that's been debunked at this point. It's not that. I mean, 0:12:49.880 --> 0:12:52.160 maybe it sort of took the edge off some of 0:12:52.200 --> 0:12:54.640 the increase in the deficit, but for all intents and purposes, 0:12:54.640 --> 0:12:57.959 almost nobody is saying that it's going to completely pay itself, 0:12:58.600 --> 0:13:00.480 pay for itself at this point and ut realize it 0:13:00.480 --> 0:13:01.960 for the longer term. So I guess I'm just trying 0:13:01.960 --> 0:13:03.960 to figure out at what point does that mean much 0:13:04.040 --> 0:13:06.840 higher borrowing costs for the US or do you think 0:13:06.880 --> 0:13:09.280 that what we've seen over the past few months is 0:13:09.320 --> 0:13:12.400 that there are sufficient demand UH domestically in the United 0:13:12.440 --> 0:13:14.720 States to suck up and soak up some of the 0:13:14.840 --> 0:13:18.520 UH sort of higher treasury bond auction sizes. It's a 0:13:18.600 --> 0:13:20.600 huge question. I don't know if we're going to see 0:13:20.720 --> 0:13:24.360 sufficient demand. Thus far, we've seen it, but quite frankly, 0:13:24.400 --> 0:13:27.520 we're flooding the market with treasuries because it's not just 0:13:27.760 --> 0:13:31.040 issuance as a result of deficit spending, but we also 0:13:31.080 --> 0:13:35.719 have balance sheet normalization going on, and that's accelerating every quarter. UM. 0:13:35.880 --> 0:13:39.120 So that is a very significant question that I think 0:13:39.160 --> 0:13:42.959 will be answered over time. But um from the perspective 0:13:43.000 --> 0:13:46.000 of whether or not we will see legislators supporting this, 0:13:46.200 --> 0:13:49.440 members of Congress supporting this, I think they may fall 0:13:49.480 --> 0:13:52.360 back on that argument that they need to stimulate growth 0:13:52.360 --> 0:13:54.480 and they will see it come back in tax revenue. 0:13:54.960 --> 0:13:58.880 Tell us a little bit about technology, because there seems 0:13:58.920 --> 0:14:03.520 to be from both the President and the Democrats an 0:14:03.559 --> 0:14:09.120 idea about greater regulation and greater taxation of technology companies. Well, 0:14:09.160 --> 0:14:11.840 that's clearly been a theme that we've heard from both 0:14:12.160 --> 0:14:15.320 the Democrats as well as the President. And so the 0:14:15.400 --> 0:14:19.400 question is will the Senate stand in its way? And Uh. 0:14:19.480 --> 0:14:21.200 While I think the Senate would stand in the way 0:14:21.200 --> 0:14:24.240 of the President and House Democrats who want to control 0:14:24.320 --> 0:14:27.480 drug pricing, I don't believe they will be as much 0:14:27.520 --> 0:14:30.760 of an obstacle in terms of greater regulation of technology 0:14:30.800 --> 0:14:33.760 as well as greater taxation of technology. And quite frankly, 0:14:33.760 --> 0:14:37.200 when you're running larger deficits, you're always looking for great 0:14:37.240 --> 0:14:41.960 sources um of taxation, and tech seems front and center 0:14:42.040 --> 0:14:44.800 on that list. Christina, I'd love to get your opinion 0:14:45.040 --> 0:14:48.280 on the route that we saw in US equities in October. 0:14:48.480 --> 0:14:50.640 Do you think that it sufficiently took the froth out 0:14:50.640 --> 0:14:52.760 of the market to be buying opportunity or do you 0:14:52.760 --> 0:14:54.360 think that it was assigned that there's more to come. 0:14:56.680 --> 0:14:59.640 Yes and no. So we certainly saw some of the 0:14:59.680 --> 0:15:01.840 froth taken out of the market. Do I believe all 0:15:01.880 --> 0:15:04.760 the froth has come out of the market. No. UM, 0:15:04.800 --> 0:15:06.600 All we need to do is go back to November 0:15:06.720 --> 0:15:11.280 nine of two thousand and sixteen, when this extraordinary rally began. 0:15:12.080 --> 0:15:15.520 At that time, I worried that UM, while many of 0:15:15.640 --> 0:15:19.320 the Administration's agenda items are pro growth, not all of 0:15:19.360 --> 0:15:23.080 them are, and in fact, to really UM run counter 0:15:23.280 --> 0:15:29.000 to growth. UM, and I mean specifically protectionism and very 0:15:29.040 --> 0:15:33.000 strict immigration policies. And so the market was reacting as 0:15:33.040 --> 0:15:36.800 though it was an entirely pro growth agenda. And UM, 0:15:36.960 --> 0:15:40.200 quite frankly, the kind of give up we saw in February, 0:15:40.240 --> 0:15:42.400 and we've made such a quick recovery, the kind of 0:15:42.440 --> 0:15:44.680 give up we saw in October, to me, doesn't take 0:15:44.720 --> 0:15:48.160 all that froth out of the market. Just quickly give 0:15:48.160 --> 0:15:52.200 you twenty seconds. Federal minimum wage increase. Do you see 0:15:52.200 --> 0:15:55.840 that coming? I think that Senate Republicans would stand in 0:15:55.880 --> 0:15:59.880 the way of a minimum wage increase. UM. That's my view. 0:16:00.480 --> 0:16:02.240 I think it's much more likely that we get greater 0:16:02.280 --> 0:16:05.360 tech regulation and taxation. I think that they would stand 0:16:05.440 --> 0:16:08.280 where they would on drug pricing, which is, we don't 0:16:08.280 --> 0:16:10.760 want to see an increase in minimum wage I could 0:16:10.760 --> 0:16:13.560 be wrong, though, um, and certainly I think so much 0:16:13.560 --> 0:16:16.240 of this will be dependent on the polls because legislators 0:16:16.280 --> 0:16:18.560 are going to care what people are thinking. That's right, 0:16:18.640 --> 0:16:21.280 especially heading in Christina Hooper, thank you so much for 0:16:21.280 --> 0:16:25.360 being with us here at Commonwealth Conference here in Austin, Texas. 0:16:25.400 --> 0:16:28.840 Christina Hooper is chief Global market Strategist at Investco, helping 0:16:28.880 --> 0:16:31.880 to oversee nearly a trillion dollars. Based in New York. 0:16:31.960 --> 0:16:34.240 But you know, we're all here to enjoy the weather 0:16:34.800 --> 0:16:37.680 or the music or the barbecue in Austin, Texas. And 0:16:37.720 --> 0:16:39.640 we're gonna be here tomorrow too. I can't wait. We're 0:16:39.680 --> 0:16:41.960 gonna go get some barbecue and Lisa Ron went along 0:16:42.000 --> 0:16:45.320 with my co hosting colleague Pim Fox Bluebric Politics, Policy, 0:16:45.320 --> 0:16:51.360 power and Law. Up next, we're broadcasting live from the 0:16:51.360 --> 0:16:55.240 Commonwealth Financial Networks Annual National Conference of Advisors in the 0:16:55.280 --> 0:16:59.120 Mariott Hotel in Austin, Texas. I'm Pim Fox along with 0:16:59.160 --> 0:17:02.040 my co host Lisa brahma Witz. Joining us now from 0:17:02.040 --> 0:17:07.840 our Interactive Broker's studio is Larry Liebert, our national security editor. Larry, 0:17:07.920 --> 0:17:11.320 You're normally based in Washington, d C. Where there were 0:17:11.359 --> 0:17:16.399 a lot of tearful goodbyes for former Attorney General Jeff 0:17:16.600 --> 0:17:20.119 Sessions yesterday. Can you tell us what the change at 0:17:20.160 --> 0:17:23.520 the top of the Department of Justice will mean for 0:17:23.640 --> 0:17:29.080 Robert Mueller's investigation? Well, I can't entirely, because it depends 0:17:29.320 --> 0:17:36.360 on which course his acting successor, Matthew Whittaker takes. Whittaker 0:17:36.400 --> 0:17:41.320 has been openly critical as a commentator previously of Mueller 0:17:41.480 --> 0:17:46.879 perhaps going too far and it suggested constraining this investigation. 0:17:47.720 --> 0:17:51.520 But does he mean he would fire Muller, which he 0:17:51.520 --> 0:17:53.879 could could have the power to do, or does he 0:17:53.960 --> 0:17:57.600 mean he will quietly, behind the scenes try to limit 0:17:57.760 --> 0:18:01.520 his avenues of investigation. And that's a real possibility. And 0:18:01.520 --> 0:18:03.320 then the question is will the rest of us know it, 0:18:03.400 --> 0:18:07.080 either through leaks or Mueller quitting or will it remain 0:18:07.200 --> 0:18:12.080 a very secret course. Well, Larry, I'm just looking at 0:18:12.160 --> 0:18:15.720 a CNN report that says that Robert Mueller is actually 0:18:16.000 --> 0:18:20.160 finishing up the final report that he has been working on. 0:18:20.480 --> 0:18:24.600 If that is true, what could matt Whittaker do as 0:18:24.680 --> 0:18:28.400 the acting a g to alter that at this point? 0:18:28.440 --> 0:18:30.240 I mean, in other words, is it too far along? Well, 0:18:30.280 --> 0:18:34.280 the Bloomberg has reported that he is close. Muller is 0:18:34.320 --> 0:18:38.640 to uh some key findings. Whether it's the final final report, 0:18:39.640 --> 0:18:42.240 I'm not sure, but we've already said he's close to 0:18:42.280 --> 0:18:46.880 some key findings. One of the things that his new boss, Whittaker, 0:18:46.960 --> 0:18:50.600 can decide is what happens with those findings. He has 0:18:50.600 --> 0:18:53.440 the power to decide whether they made public, sent to 0:18:53.480 --> 0:18:58.640 congressional committees, where they're short leak, are are kept private. Uh. 0:18:58.760 --> 0:19:03.520 There's no rules beyond uh beyond his oversight. So when 0:19:03.520 --> 0:19:07.640 we hear about Mueller's report being issued, I always try 0:19:07.680 --> 0:19:10.800 to change that, uh that wording in our stories to 0:19:10.840 --> 0:19:14.840 say his findings are being completed. Uh, they may not 0:19:14.880 --> 0:19:17.320 be issued in the public sense. And that's one of 0:19:17.359 --> 0:19:21.560 the powers that Whittaker may have. Larry Liebert, how long 0:19:21.880 --> 0:19:26.120 can Matthew Whittaker remain as the acting Attorney General? Well, 0:19:26.160 --> 0:19:31.960 there's a period of months, but that can be extended 0:19:32.240 --> 0:19:36.920 if the President has trouble uh with whoever he nominates 0:19:37.359 --> 0:19:39.960 to be the permanent attorney Generally, since he's going to 0:19:40.000 --> 0:19:43.000 make that nomination, it clearly won't be acted on until 0:19:43.600 --> 0:19:48.680 uh the new uh Congress UH takes uh as seat 0:19:48.680 --> 0:19:53.920 in January. If anything, approval of a new Attorney General 0:19:54.440 --> 0:19:57.639 is more likely since the Republicans gained a couple at 0:19:57.720 --> 0:20:00.240 least a couple of seats in the Senate. Uh. But 0:20:00.400 --> 0:20:03.439 if you say one nominee fails, as I understand that 0:20:03.440 --> 0:20:07.040 there could be extensions, uh, while a new one is proposed. 0:20:07.240 --> 0:20:08.959 So it's going to be at least a matter of 0:20:08.960 --> 0:20:12.680 some months. Larry, I'm struggling to understand what check there 0:20:12.840 --> 0:20:16.040 is or is not by the House, which has flipped 0:20:16.040 --> 0:20:20.280 to the Democratic or by the existing Democrats. Are people 0:20:20.280 --> 0:20:23.800 who are opposed to crimping Muller's investigation? I mean, is 0:20:23.840 --> 0:20:27.159 there any way that Matt Whittaker could be sort of 0:20:27.200 --> 0:20:32.080 forced to comply with uh, certain parameters enforced by Congress. Well, 0:20:32.119 --> 0:20:34.119 there's a number of things. They gain the power of 0:20:34.200 --> 0:20:37.679 investigation and oversight that the Republicans have had before, and 0:20:37.720 --> 0:20:41.159 that means they can issue subpoenas, they can demand testimony, 0:20:41.440 --> 0:20:44.639 they can demand, as they're already doing while not having 0:20:44.680 --> 0:20:48.440 the dominant power, the preservation of all documents, so they 0:20:48.440 --> 0:20:52.480 can pursue this. The ultimate power, of course, would be 0:20:52.520 --> 0:20:56.080 the power of impeachment. And UH, while there are grassroots 0:20:56.119 --> 0:21:02.480 Democrats already demanding that democratically they won't go Larry, before 0:21:02.560 --> 0:21:05.200 jumping to that level, right, I mean, I'm just wondering, 0:21:05.240 --> 0:21:08.360 with respect to uh sort of oversight of Matt Whittaker, 0:21:08.920 --> 0:21:11.080 is there any real way to do that in the 0:21:11.119 --> 0:21:12.840 near term or now? Well, what I was saying is 0:21:13.040 --> 0:21:15.800 I was saying Democrats won't go there to impeachment. They 0:21:15.880 --> 0:21:20.840 are going to demand testimony, presumably including by him. They're 0:21:20.880 --> 0:21:24.040 demanding documents that can issue subpoenas, but they can't do 0:21:24.119 --> 0:21:27.880 any of that except by pleading until January. So if 0:21:27.920 --> 0:21:31.240 he moves quickly, if Muller is UH in his last 0:21:32.000 --> 0:21:34.879 stages of preparing his reports, that it may all be 0:21:34.920 --> 0:21:36.800 moved by then. So there's only so much they can 0:21:36.800 --> 0:21:39.879 do until they take over, and then it depends on 0:21:40.359 --> 0:21:46.040 how severa constitutional crisis they they believe has taken place 0:21:47.080 --> 0:21:50.840 just quickly. And Larry, you mentioned the evidence that Mr 0:21:50.920 --> 0:21:54.439 Mueller has assembled in order to prepare his report. What 0:21:54.600 --> 0:21:59.520 happens to that actual evidence? Well, what again, the findings 0:21:59.520 --> 0:22:01.600 that he issue us all? As I mentioned, there's a 0:22:01.680 --> 0:22:04.280 question whether they become public. But so much of what 0:22:04.440 --> 0:22:07.600 Mueller has done has already played out in indictments and 0:22:07.680 --> 0:22:10.760 court proceedings. He's made a lot of referrals to US 0:22:10.800 --> 0:22:15.040 attorney's offices, and they can pursue that evidence whether he's 0:22:15.119 --> 0:22:17.919