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Speaker 1: Who you put your trust in matters. Investors have put

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Speaker 1: their trust in independent registered investment advisors to the tune

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Speaker 1: of four trillion dollars. Why learn more and find your

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Speaker 1: independent advisor dot com. Welcome to the Bloomberg Surveillance Podcast.

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Speaker 1: I'm Tom Keane. Always with Michael McKee. Daily we bring

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Speaker 1: you insight from the best in economics, finance, investment, and

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Speaker 1: international relations. Find Bloomberg Surveillance on iTunes, SoundCloud, Bloomberg dot Com,

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Speaker 1: and of course, on the Bloomberg Michael. This is fun

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Speaker 1: to talk to Jason Furman today. It is indeed, he's

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Speaker 1: the chairman of the Council of Economic Advisors and um Jason.

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Speaker 1: Perhaps the dumbest question I got uh this week was

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Speaker 1: from me and would I would want to ever say?

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Speaker 1: It came from a tall bow tide man with do

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Speaker 1: you think the White House will celebrate the news on

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Speaker 1: household median income? We were, we were pretty happy to

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Speaker 1: see the report and happy to see what it meant

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Speaker 1: for all Americans. And I should say I'm really happy

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Speaker 1: to be in your show because we just heard you.

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Speaker 1: You know, every other minute you talk about what happens

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Speaker 1: in the stock market. Every other minute you talk about

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Speaker 1: what's happening on treasury yields. It's only once a year

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Speaker 1: that we get a really comprehensive picture about how Americans

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Speaker 1: are doing in the economy, what their incomes are, what

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Speaker 1: poverty is, what health insurance is. Those are ultimately the

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Speaker 1: most important things in the economy. So I think it's

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Speaker 1: great that at least once a year, UM, we have

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Speaker 1: a chance to talk about them. And unfortunately you'll be

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Speaker 1: gone next year, so you can't come back. Well, you

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Speaker 1: can come back probably at the Council of Economic Advisors anyway. UM,

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Speaker 1: we did see household median incomes rise is a lot

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Speaker 1: five We're up to UM fifty thousand dollars. On the

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Speaker 1: other hand, income inequality widened quite a bit. Uh, those

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Speaker 1: in the bottom tenth decile barely saw their incomes rise.

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Speaker 1: Those in the nine saw a lot of games. So

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Speaker 1: is this largely because the stock market is going up?

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Speaker 1: You know? I I hate to correct you there. If

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Speaker 1: you look at though, you saw five point two increase

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Speaker 1: for the median household. If you look at a household

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Speaker 1: at the tenth percentile, you actually saw seven point nine

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Speaker 1: percent increase. So the biggest increases in this report or

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Speaker 1: for households at the bottom, but this is the smallest

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Speaker 1: increases were for households at the top. But everyone gains,

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Speaker 1: so it was good news all around. And there's a

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Speaker 1: couple different ways to measure inequality, something economists called the

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Speaker 1: Genie coefficient, the ratio of people at the enti percentile

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Speaker 1: to the ten percentile, the share of income going to

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Speaker 1: the top or bottom. All of those improved a bit

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Speaker 1: in they're obviously much more inequality than we had a

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Speaker 1: couple of decades ago, but it did get a little

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Speaker 1: bit better last year. Part of the problem with with

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Speaker 1: measuring in percentages, though, is uh, and I'm going to

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Speaker 1: measure in a different percentage to argue back with you.

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Speaker 1: As you know, over the last couple of years, the

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Speaker 1: share of u US income going to the lower decile

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Speaker 1: went from three point three to three point four percent

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Speaker 1: for the top ten percent it's still basically so the

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Speaker 1: rich are getting richer faster than the poor are. Well,

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Speaker 1: you were saying absolute dollars, Yeah, I mean a one

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Speaker 1: percent gain for someone makes a million dollars is worth

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Speaker 1: more than a ten percent gain for someone who makes

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Speaker 1: share is still and is still uh, you know, not

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Speaker 1: not evening out, shall we say, um, yeah, oh absolutely.

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Speaker 1: I mean you've had a huge rise in inequality since

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Speaker 1: the nineteen seventies, and you know this report, we moved

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Speaker 1: in the right direction, and we moved in the right way,

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Speaker 1: which is everyone gained even at the top of the distribution.

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Speaker 1: You got um, you know, two point nine real income game.

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Speaker 1: That's a that's a great game, centil. I was happy

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Speaker 1: to see that, but I was also happy to see

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Speaker 1: that the games are even bigger at the Jason, you

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Speaker 1: have been a leader at the Brookings Institute and throughout

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Speaker 1: your career at cutting through the BS. The poverty line

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Speaker 1: or the official poverty measure, is one of the great

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Speaker 1: debatable footballs of American economics, hugely politically tinged. Would you

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Speaker 1: define the poverty level not as an Obama ight or

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Speaker 1: a Trump height or a Clinton knight, etcetera, etcetera. But

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Speaker 1: how does Jason Furman define poverty? Well, you know, any

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Speaker 1: anything's a little bit arbitrary, and we all have different

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Speaker 1: notions of what it is. What I think we should

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Speaker 1: do is take a clear line and then adjusted a

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Speaker 1: little bit, maybe for the cost in your area, maybe

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Speaker 1: if you have a lot of medical expenses, But then

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Speaker 1: The important thing is also to capture all the resources

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Speaker 1: you get, both what you make on your job, but

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Speaker 1: also if you get nutritional assistance, if you get health

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Speaker 1: help with your health care, make sure you're counting those

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Speaker 1: as well, so you can really look at our policies

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Speaker 1: working Mike. I was at the Carlisle Hotel last night.

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Speaker 1: I got good nutritional assistance as well. I take your

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Speaker 1: point Dr Furman that we've lifted all boats? Did we

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Speaker 1: lift boats because of the minimum wage? Can Republicans say, oh,

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Speaker 1: this is just the Obama administration lifting us up to

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Speaker 1: fifty or an hour? And can the Democrats say, look,

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Speaker 1: this is what we did. I mean, I understand you've

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Speaker 1: got a political mandate, but is there a political tinge

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Speaker 1: to this report? Well, I think there's a It helps

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Speaker 1: make the case for a set of economic policies. Sure,

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Speaker 1: and certainly, Um, some of the games we've seen for

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Speaker 1: workers at the bottom are because we've seen states across

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Speaker 1: this country choose to raise their minimum wages. At the

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Speaker 1: same time, Um, the federal government hasn't acted, and we'd

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Speaker 1: like to see them do that. So I think this

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Speaker 1: does certainly help make the case for that type of policy.

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Speaker 1: We are hearing for more and more central bankers, including

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Speaker 1: Janet Young recently. We need fiscal policy. At this point,

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Speaker 1: central banks are tapped out. Um, I realized that you

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Speaker 1: haven't got a whole lot of time left in office.

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Speaker 1: But what do you think the odds are? Is anybody

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Speaker 1: in Washington starting to agree with her? Anybody on the

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Speaker 1: legislative side. Oh. President Obama has been for years pushing

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Speaker 1: for more substantial investments in our interest structure. Well we

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Speaker 1: got one at the end of last year. We got

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Speaker 1: a five year bill for our highways and our rail

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Speaker 1: It was a five percent increase in inflation adjusted terms

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Speaker 1: above what we're spending now. So that was a decent start.

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Speaker 1: But we should certainly be doing a lot more. And

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Speaker 1: that's something you know, I would love to see in

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Speaker 1: the future. Dr Firman. Donald Trump will talk today. I

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Speaker 1: believe about corporate taxes. There's a bipartisan effort to get

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Speaker 1: all that money abroad back here. Where's common ground between

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Speaker 1: Republicans and Democrats on the corporate text debate? Yeah, I don't, um,

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Speaker 1: you know, speak to the campaign, so I'll let others

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Speaker 1: do that. But as we engage with Congress, I've noticed

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Speaker 1: I've been working on business tax reform from the beginning

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Speaker 1: of this administration. I'd say over the last seven years,

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Speaker 1: there's been a decent amount of convergence. Republicans in Congress

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Speaker 1: talk about similar rates to what the president's talking about.

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Speaker 1: We're all in the twenties, you know, there's there's some

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Speaker 1: differences there. The similar way to pay for that. We

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Speaker 1: all agree it should be revenue neutral. We all agree

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Speaker 1: the international tax system is broken and you want something

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Speaker 1: where you can move your money back and forth more easily.

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Speaker 1: We think it's important that something like a minimum tax

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Speaker 1: so they's collecting some revenue too. So I think there's

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Speaker 1: some common ground there between the parties. And we continue

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Speaker 1: with Jason Furman. He is chairman of the President's Council

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Speaker 1: of Economic Advisors. Dr Furman, the first time I met you,

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Speaker 1: you were reading one of my favorite favorite monographs of

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Speaker 1: all time, Frank Hahn and Robert M. Solo, Critical Essay

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Speaker 1: on Modern Macroeconomic Theory. Full disclosure, folks, This gorgeous little

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Speaker 1: tone is a little mathie. It's got firm and math

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Speaker 1: in it. And Ferman is fluent in this, and I'm not.

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Speaker 1: That's a big decision, big distinction here but seriously, Jason

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Speaker 1: critical essay on modern macro economic theory? Where is our

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Speaker 1: modern macro economic theory? Is there an orthodox is there

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Speaker 1: a new orthodom acts? Or are we going to have

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Speaker 1: to rip up the script? The system is so distorted.

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Speaker 1: You know, there's all sorts of macro research. I think

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Speaker 1: some of it I find more useful, some of it

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Speaker 1: I find um less useful. I think of certain fraction

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Speaker 1: of the profession has gone in a direction that's a

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Speaker 1: little bit abstracted from reality. And you know, I think

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Speaker 1: you can indulge that for a decade or two, but

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Speaker 1: if after twenty years you still haven't figured things out better,

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Speaker 1: you know, maybe too long on that approach. But there's

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Speaker 1: also a lot of people doing really great research that's

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Speaker 1: helping us understand all sorts of things in monetary policy,

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Speaker 1: fiscal policy, economic growth, and you know, is related to

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Speaker 1: the world, and that that I personally find useful. So

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Speaker 1: I think it's hard to generalize. You need to brief

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Speaker 1: the president on the conundrum of productivity. There's a lot

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Speaker 1: of moving parts capital dynamics, labor dynamics, and the residual

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Speaker 1: total factor productivity. Okay, great across all three dynamics is technology.

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Speaker 1: Is technology our friend or enemy? Oh, technology is our friend.

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Speaker 1: The more of it the better. Sometimes it can be

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Speaker 1: a high class problem. It can create some side effects.

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Speaker 1: But then the role of policies and to have less technology,

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Speaker 1: it's to address those side effects. How do we do that?

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Speaker 1: I mean, what is the prescriptive firm and policy to

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Speaker 1: help the body of Americans who feel overwhelmed by technology

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Speaker 1: read the productivity numbers or you know, some proxy of

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Speaker 1: them and say I'm not part of the American dream.

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Speaker 1: It's it's important for people to understand that the problem

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Speaker 1: now is that productivity growth is too slow. So one

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Speaker 1: thing we really need to be doing is investing more

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Speaker 1: in research, infrastructure, reforming our business tax system, expanding international trade,

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Speaker 1: all the steps we need to take so we can

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Speaker 1: have more productivity growth. Um it's certainly the case that

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Speaker 1: some of that can put pressure on some people. So

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Speaker 1: having a labor market that functions better, that helps more

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Speaker 1: people participate in the workforce, helping people be trained for jobs,

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Speaker 1: search for jobs, create jobs through steps like infrastructure for

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Speaker 1: some of the people that might otherwise have difficulty. All

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Speaker 1: of those types of policies are important as well. Would

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Speaker 1: you suggest, particularly after your public service, that we need

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Speaker 1: an industrial policy. This goes back really to World War Two.

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Speaker 1: I mean the idea of we we gifted industrial policies

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Speaker 1: to other nations Japan, so uh MacArthur and others, the

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Speaker 1: Martial Plan to Europe, etcetera. Does American need an an

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Speaker 1: industrial policy to jump start of manufacturing goods, producing renaissance

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Speaker 1: that will put people to work in basic jobs. I

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Speaker 1: wouldn't support an industrial policy, but I think we should

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Speaker 1: have a policy that lets the markets pick the winners

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Speaker 1: and losers. But certainly in areas like you know, research

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Speaker 1: and innovation left to its own devices, companies are going

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Speaker 1: to do too little of that because they get some

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Speaker 1: of the benefits, but some of the benefits spill over

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Speaker 1: to others. That's why it's appropriate to have a tax

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Speaker 1: credit for research and innovation. That's why it's appropriate for

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Speaker 1: the federal government to be spending money in that area.

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Speaker 1: But we should be doing it in a broadway, not

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Speaker 1: you know, you have tax credit for research about X,

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Speaker 1: but not about why. If you're doing research you should

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Speaker 1: get a tax credit. When do you go back to

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Speaker 1: the real world A d January January twenty Okay, January twenties,

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Speaker 1: you're gonna wander back to the world. What do you

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Speaker 1: want to do? I mean, you came out of the

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Speaker 1: think tanks and some academics. Do you have a great

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Speaker 1: desire to write the mother of all books? Or to

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Speaker 1: go back to academics. What's Jason firm we going to do?

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Speaker 1: I'll just figure that out in January. But I certainly

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Speaker 1: expect to be speaking and writing and doing research into

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Speaker 1: the same set of issues that I'm I'm working on now,

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Speaker 1: which you're about how to help advance economic growth and

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Speaker 1: make sure more people should your kid. That was such

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Speaker 1: a non answer. I can't believe that. Jason m thank

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Speaker 1: you so much. He's the chairman of the President's Council

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Speaker 1: of Economic Devices. I really can't say enough, folks about

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Speaker 1: Dr Furman's white papers, the thoughtful papers he and his

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Speaker 1: staff put together. Um, there's always a political tinge to

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Speaker 1: anything you get out of the White House, but at

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Speaker 1: the same time they are thought provoking on this linkage

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Speaker 1: of policy into our economics. Chris Chris Anthy is here

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Speaker 1: of course runs Chris Anti Capital Management, and um, you

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Speaker 1: came in here with Yeah, I mean people should see

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Speaker 1: the size of your wallet. You've got all your cash

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Speaker 1: and your right, it looks like our portfolio. Yeah, yeah,

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Speaker 1: the markets, Uh, you don't like it anymore. Basically is

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Speaker 1: the is the bottom? We don't. I mean, we're still

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Speaker 1: seventy invested, but we do have That's a big number.

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Speaker 1: That's a big number for an equity manager. And and

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Speaker 1: and the reason is that we see bond yields giving

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Speaker 1: the correct signal, which is slow down certainly abroad. And

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Speaker 1: we think by the end of the year here, uh

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Speaker 1: and uh, the equity markets are kind of whistling by

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Speaker 1: the graveyard, and we think that this is an opportunity

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Speaker 1: to take profits but also invest in in in a

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Speaker 1: rifle shot kind of way, and in companies that have

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Speaker 1: real value and that are already down. Well, a lot

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Speaker 1: of people are out saying the markets are gonna correct

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Speaker 1: sometime soon. Do you have a thought on what kind

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Speaker 1: of correction we're going? I mean, we gotta see a

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Speaker 1: ten percent number, which is an actual correction, or is

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Speaker 1: this just gonna be kind of a stumble along mode

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Speaker 1: for a while and until we run our feet Well, well,

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Speaker 1: I honestly think over the next eighteen months, what you'll

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Speaker 1: see is a garden variety recession like environment. Whether we

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Speaker 1: get to a recession, I'm not sure, but but I

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Speaker 1: do think that there'll be evidence of slowing, especially as

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Speaker 1: the FED turns from you know, being easy to being neutral,

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Speaker 1: so maybe being you know, a little hawkish as we

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Speaker 1: as we move along. So our theory is that keep

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Speaker 1: cash and use it just very uh, very particularly in

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Speaker 1: those situations where the risks, uh, you know, are not

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Speaker 1: as big as the rewards, and that's unusual. In a minute,

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Speaker 1: I want to ask more about about your outlook, but

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Speaker 1: I just want to go back to the idea that

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Speaker 1: you're at this very high level of cash. What do

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Speaker 1: your investors say to that, Well, we're fortunate to have

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Speaker 1: investors that appreciate that a percent invested all the time

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Speaker 1: isn't necessarily the right way to go all that, it's

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Speaker 1: it's quite unusual. This is actually the highest cash level

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Speaker 1: we've had in fifteen years. In fact, we were we

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Speaker 1: were more invested in two thousand and in two thousand

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Speaker 1: and eight. And and here what we're saying is not

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Speaker 1: so much of the market's definitely gonna go down, but

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Speaker 1: we can't find securities that offer the risk reward that

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Speaker 1: we'd like for our clients and their patient and I

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Speaker 1: suspect in six months we won't be. But I mean,

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Speaker 1: you you don't want to invest in other than equities?

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Speaker 1: Is it not a place to park cash? Will make

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Speaker 1: some yield at the point, Sure, And if we were

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Speaker 1: going out longer term, I would do that. I think

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Speaker 1: right now, I think there's risk in the fixed income

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Speaker 1: market there. There are a couple of preferred securities that

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Speaker 1: we happen to like right now, but that's kind of

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Speaker 1: one off. But I wouldn't necessarily say, oh, we're cast,

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Speaker 1: so we're gonna go into fixed income. I think that

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Speaker 1: would be in fixed income these days, it's it's a

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Speaker 1: return free risk, as they said, exactly. Well, let's talk

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Speaker 1: more about that in just a moment with Chris Christianti

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Speaker 1: from gris Anti Capital Management. Chris is our growth trap.

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Speaker 1: I mean, nobody ever talks about a growth trap. A trap.

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Speaker 1: There's gotta be a growth trip, there's a growth cab

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Speaker 1: and that it ends up happening when you're you're buying

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Speaker 1: a stock with a multiple of twenty or twenty five

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Speaker 1: and the growth turns out not to be there. Okay,

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Speaker 1: so I gotta div itend growth exercise where you know,

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Speaker 1: you try to figure legitimate diviting growth. How do you

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Speaker 1: figure out legitimate multiples on growth stocks? You know, Tom,

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Speaker 1: that's a question we've been asking for two generations at

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Speaker 1: that you know, at the the New York Securities analysts,

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Speaker 1: and uh, what ends up happening is you draw the

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Speaker 1: line and you do a terminal value and the economy intervenes.

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Speaker 1: Macro factors intervened, So you have to mix the macro

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Speaker 1: with the with the pen pen and paper analysis and

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Speaker 1: that then it's very difficult to do, especially in an

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Speaker 1: economy like this, with so much uncertainty based on macro

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Speaker 1: exogenists events like central banks and politics. It raises a question, Um,

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Speaker 1: I will go back to what you said a minute

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Speaker 1: ago about recession like environment for the next eighteen months.

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Speaker 1: We often see this ahead of presidential elections and then

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Speaker 1: after the election is over, people get encouraged again. Do

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Speaker 1: you think this is a different kind of election where

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Speaker 1: people will wake up on the day after election day

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Speaker 1: and and I say, you know, we're still worried. No,

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Speaker 1: I think you have the dynamics right, Mike. I think

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Speaker 1: what happened regardless of who wins they'll be this feeling

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Speaker 1: of a fresh start, and I think regardless again of

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Speaker 1: who wins, they'll be reaching across the aisle and trying

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Speaker 1: to get something done. My best bet is corporate tax reform,

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Speaker 1: so you'll have a little bit of excitement there. But

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Speaker 1: still if you pull the lens back, we still will

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Speaker 1: have a mnemic growth here, you know, two percent or less.

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Speaker 1: And in addition, you'll have we think China and Europe

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Speaker 1: slowing down to a much more market degree than we

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Speaker 1: have right now. I want to go back to one

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Speaker 1: other thing that you said earlier, and that's the signal

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Speaker 1: from the bond market. Um, how do you know what

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Speaker 1: the bond market is actually saying in terms of yields?

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Speaker 1: When you have distortions from central banks, I mean not

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Speaker 1: just our central bank, but because of what's going on

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Speaker 1: in Europe, you have European buyers coming in and buying

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Speaker 1: up stuff. And then Tom and I were just talking

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Speaker 1: about with Library, the new library rules and the new

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Speaker 1: money market rules coming in. Neverby piling out of funds

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Speaker 1: into government funds, which are going to be affected. That

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Speaker 1: affects the market's so many external things. How do you

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Speaker 1: parse out what the market that's true, I would agree

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Speaker 1: with you that the absolute level of rates is very

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Speaker 1: hard where they ought to be without this exogenous pressures.

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Speaker 1: Having said that, the recent movement because the central banks

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Speaker 1: haven't been necessarily buying more bonds than they were last year,

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Speaker 1: and certainly obviously not the Fed, but we've yet, we've

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Speaker 1: seen long rates drop substantially year on year, and I

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Speaker 1: think that's a valid signal of a fear of weakness,

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Speaker 1: and it's borne out by the GDP statistics, whether it's

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Speaker 1: in China or Europe or here. But now, our max

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Speaker 1: growth right now is two percent. That used to be

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Speaker 1: kind of the floor for decent economic times. If it's

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Speaker 1: two percent, and if you take the reciprocal of that,

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Speaker 1: you end up with a higher stock multiple. Right, So

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Speaker 1: do we need to get used to Sure? But that's

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Speaker 1: that's a tough theory to push limits on because they

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Speaker 1: haven't present means we've got great, great stock multiples, and

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Speaker 1: I don't think that really is going to work. Once

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Speaker 1: folks go from it's a terrific time because we can

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Speaker 1: borrow money cheaply to oh my gosh, rates are low

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Speaker 1: because we're about to really let me, let me bring

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Speaker 1: up a nameless blue chip folks. This is an iconic

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Speaker 1: American company with a dividend growth of seven a yield

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Speaker 1: of just over two percent. They have thirty eight thousand

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Speaker 1: employees in What I see is corporations in this economic

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Speaker 1: environment managing revenues, managing ibadah out to a net income,

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Speaker 1: which is which is you know, okay, it's an okay market.

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Speaker 1: How do you invest in an okay market? I think

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Speaker 1: it again. You take a rifle instead of a shotgun,

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Speaker 1: and you pick the places where there's been uh way

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Speaker 1: too much pessimism. For example, I'm not saying you should

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Speaker 1: buy this, but Wells Fargo might be a place i'd

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Speaker 1: look now traditionally a very well managed bank. It's got

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Speaker 1: a nice dividend yield uh and it's got a nice

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Speaker 1: market position, and it's down on factors that I think

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Speaker 1: if you hold it for two or three years, could

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Speaker 1: be you know, well, it's fifty six essentially off the

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Speaker 1: most difficult two weeks they've had sounds like a Monday

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Speaker 1: night football score. What kind of multiple should would only

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Speaker 1: put this way? Would attract you back? Um? Where where

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Speaker 1: should the where should the market be? Where can it

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Speaker 1: go to? That? You start buying again. You know, that's

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Speaker 1: a question that we're not multiple based, and I think

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Speaker 1: it would be a fool's game to say, well, at

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Speaker 1: at fourteen times we love the market, at seventeen times,

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Speaker 1: we don't like it. Because historically, you know, as Thomas

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Speaker 1: certainly tell you, there's not a big correlation between multiples

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Speaker 1: and performance until you get to the real extremes, the

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Speaker 1: ends of the Bell curve. So what I say, don't

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Speaker 1: look at the multiple, look at the valuation of each

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Speaker 1: individual potential investment compared to the macro environment in which

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Speaker 1: we now live. And I'm only saying the macro environment

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Speaker 1: in which we're living now is substantially grimmer. I think

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Speaker 1: then the market seems to think it is. So I

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Speaker 1: would say ten or fifteen percent lower makes me more

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Speaker 1: comfortable in this kind of macro environment. Uh, but again

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Speaker 1: those things can change. Well, why do you feel comfortable

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Speaker 1: being outside the mainstream in this case, Well, first of all,

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Speaker 1: my clients pay for not the market performance. But uh,

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Speaker 1: and you can't beat the market by being a consensus guy,

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Speaker 1: so you have to pick and choose your items. But

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Speaker 1: here the risk seems so asymmetrical to me that I

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Speaker 1: don't think I'm missing a lot of upside by having

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Speaker 1: a bunch of cash right now. And I feel very

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Speaker 1: comfortable in days like the last in the last few weeks,

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Speaker 1: days when the market goes down sharply and I've got

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Speaker 1: some money in our back pocket that we can spend.

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Speaker 1: I look at where we are and this idea, that

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Speaker 1: dawning reality when people look at their four o one

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Speaker 1: K envelopes of a single digit world, to what single

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Speaker 1: digit level are you? I mean, John Tucker, how how

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Speaker 1: is it looked recently? We have the well after last week,

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Speaker 1: I had ato account for that, but three oh one k,

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Speaker 1: now you open up that, we open up the four

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Speaker 1: oh one K envelop opens today, Tucker. But everybody's getting

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Speaker 1: used to single digit or don't think, Chris, they are.

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Speaker 1: And I'd go back years to King Solomon and say

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Speaker 1: there's a time to reap in a time to sell,

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Speaker 1: and we may just be in the reaping period right now.

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Speaker 1: And that's not bad. And I'm not I'm not calling

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Speaker 1: for two thousand and eight. I'm just saying, let's guard

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Speaker 1: our grain and spend it when we can. Michael Dow

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Speaker 1: up eight point six percent one year back seven point

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Speaker 1: five percent, SMB and then NaNs Deck all in composite

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Speaker 1: six point before we let you go. We don't do

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Speaker 1: a lot of stock picking stuff on this show, but

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Speaker 1: one of those stocks that you like is Apple. Nobody

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Speaker 1: in the last twelve eighteen months has liked Apple. What

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Speaker 1: what do you what do you see turning their profits around? Well,

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Speaker 1: it's funny because, for example, the reviews on the iPhone,

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Speaker 1: the tech guys say, hey, it's not that much different,

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Speaker 1: it's not that great. But I think they're missing the point.

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Speaker 1: The point he reminds me of when you've done this

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Speaker 1: a long time. You remember stuff Intel in the nineties

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Speaker 1: had the pentium chip and it was okay, wasn't that great,

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Speaker 1: blah blah blah. But everyone and their mother had a PC.

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Speaker 1: They were on the they were on that highway. Just

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Speaker 1: like here, everyone's got an iPhone, everyone's waiting for the seven.

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Speaker 1: As long as it's good enough, and this certainly is

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Speaker 1: good enough, they're gonna upgrade. And we've seen terrific numbers

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Speaker 1: this week from the from the carriers on the pre sales,

430
00:24:25,480 --> 00:24:27,720
Speaker 1: and so we're very excited about that. Plus, if you

431
00:24:27,720 --> 00:24:30,240
Speaker 1: can get this stock at twelve times earnings, what's the

432
00:24:30,240 --> 00:24:33,440
Speaker 1: big thing full disclosure, Michael, I made my preorder there. Yeah.

433
00:24:33,920 --> 00:24:35,920
Speaker 1: Did I get my phone in April? Did you did

434
00:24:35,920 --> 00:24:38,960
Speaker 1: you talk to Tom about his experience with the iPhone

435
00:24:39,000 --> 00:24:43,680
Speaker 1: recently before every time and Tom's complaining about I am

436
00:24:43,720 --> 00:24:46,960
Speaker 1: of the brick, right, I got brick. But I would

437
00:24:47,080 --> 00:24:49,359
Speaker 1: still observe that Tom still has an iPhone and is

438
00:24:49,400 --> 00:24:52,800
Speaker 1: not switching exactly that is. I totally agree with you

439
00:24:52,880 --> 00:24:56,000
Speaker 1: on that, and certainly is is. I think David Kirkpatrick

440
00:24:56,040 --> 00:24:58,720
Speaker 1: said we were at the FT book show, thank you

441
00:24:58,800 --> 00:25:02,000
Speaker 1: Lionel Barber for that house fatality. And I think it

442
00:25:02,040 --> 00:25:04,240
Speaker 1: was David Kirkpatrick that said, you know, it couldn't happen

443
00:25:04,240 --> 00:25:07,480
Speaker 1: at a better time for Apple, Iff Sampson these phones.

444
00:25:10,320 --> 00:25:13,560
Speaker 1: That's called an exhaustion is shock when your value investor

445
00:25:14,119 --> 00:25:17,720
Speaker 1: the products on fire. Uh, Chris kasan to thank you

446
00:25:17,840 --> 00:25:23,040
Speaker 1: so much, greatly appreciated. Who you put your trust in matters.

447
00:25:23,680 --> 00:25:27,560
Speaker 1: Investors have put their trust in independent registered investment advisors

448
00:25:27,560 --> 00:25:31,920
Speaker 1: to the tune of four trillion dollars. Why they see

449
00:25:31,960 --> 00:25:35,720
Speaker 1: their role is to serve, not sell. That's why Charles

450
00:25:35,720 --> 00:25:38,440
Speaker 1: Schwab is committed to the success of over seven thousand

451
00:25:38,480 --> 00:25:43,600
Speaker 1: independent financial advisors who passionately dedicate themselves to helping people

452
00:25:43,640 --> 00:25:47,800
Speaker 1: achieve their financial goals. Learn more and find your independent

453
00:25:47,840 --> 00:25:56,680
Speaker 1: advisor dot com. The backdrop for Mr Trump and Secretary

454
00:25:56,680 --> 00:26:01,000
Speaker 1: Clinton is a presidential moving average of our real economic

455
00:26:01,040 --> 00:26:04,800
Speaker 1: growth back to oh seven of four year moving average

456
00:26:04,800 --> 00:26:09,880
Speaker 1: of three point three GDP growth. We haven't had that,

457
00:26:10,000 --> 00:26:15,120
Speaker 1: but boy, if we come close one point nine four

458
00:26:15,200 --> 00:26:20,080
Speaker 1: your economic growth, without question, there is no guests we've had.

459
00:26:20,119 --> 00:26:24,000
Speaker 1: That's more data on on this than three. Command Come on,

460
00:26:24,119 --> 00:26:28,240
Speaker 1: you've called for recession. Maybe it hasn't happened, launchmathon I

461
00:26:28,320 --> 00:26:31,240
Speaker 1: put in that group, but I would suggest three for

462
00:26:31,359 --> 00:26:35,080
Speaker 1: a large part of America, they've always been in recession.

463
00:26:35,800 --> 00:26:43,960
Speaker 1: What percentage of America hasn't enjoyed one GDP growth? I

464
00:26:44,000 --> 00:26:46,879
Speaker 1: would imagine that at thirty to fifty percent of the

465
00:26:46,920 --> 00:26:51,000
Speaker 1: population of our really not doing well, whether it is

466
00:26:51,040 --> 00:26:55,320
Speaker 1: in terms of having to accept part time employment rather

467
00:26:55,359 --> 00:26:59,080
Speaker 1: than full time employment, or going for jobs which are

468
00:26:59,160 --> 00:27:02,280
Speaker 1: lower paying than what they had through two thousand seven.

469
00:27:02,840 --> 00:27:05,359
Speaker 1: So I think it may be as much as half

470
00:27:05,400 --> 00:27:09,840
Speaker 1: of the workforce if you define it that way. And again, Tom,

471
00:27:09,880 --> 00:27:13,159
Speaker 1: talking about recession, which I had called for, as you

472
00:27:13,200 --> 00:27:19,239
Speaker 1: had mentioned, as did Lashmanachutan as well. But recession is

473
00:27:19,320 --> 00:27:22,359
Speaker 1: defined not just as two quarters falling g d P,

474
00:27:22,640 --> 00:27:27,240
Speaker 1: but the overall malaise spreading two different parts of the economy.

475
00:27:27,760 --> 00:27:30,680
Speaker 1: So in some ways I would maintain that the economy

476
00:27:30,960 --> 00:27:34,600
Speaker 1: never recovered from the two thousand eight financial crisis, even

477
00:27:34,640 --> 00:27:38,000
Speaker 1: though the National Bureau of Economic Research says that the

478
00:27:38,040 --> 00:27:41,359
Speaker 1: recovery began in July of two thousand nine. So it

479
00:27:41,400 --> 00:27:45,320
Speaker 1: depends on the viewpoint. I think overall the economy didn't

480
00:27:45,359 --> 00:27:48,960
Speaker 1: really take off, and if you compare with what happened

481
00:27:48,960 --> 00:27:53,400
Speaker 1: after the early nine eighties very severe recession that we had,

482
00:27:53,920 --> 00:27:57,440
Speaker 1: the recovery was also equally dramatic. We had one quarter

483
00:27:57,520 --> 00:28:00,320
Speaker 1: where the growth was more than ten percent annually straight.

484
00:28:00,880 --> 00:28:03,240
Speaker 1: We have not seen anything like that this time around.

485
00:28:04,119 --> 00:28:07,639
Speaker 1: If you if you can, you know, set the definition.

486
00:28:07,680 --> 00:28:10,760
Speaker 1: Of course, you can define anything the way you want to,

487
00:28:11,560 --> 00:28:14,720
Speaker 1: But in terms of the n b R and it's

488
00:28:14,760 --> 00:28:20,320
Speaker 1: criteria or even the old two quarters thing, there don't

489
00:28:20,320 --> 00:28:22,800
Speaker 1: seem to be any numbers that are pointing towards a

490
00:28:22,920 --> 00:28:28,480
Speaker 1: contraction of GDP at this point. Um, it is not

491
00:28:28,680 --> 00:28:31,560
Speaker 1: pointing to a contraction of GDP at this point. Mike

492
00:28:31,720 --> 00:28:36,000
Speaker 1: but we did have since two thousand nine, since the

493
00:28:36,080 --> 00:28:39,840
Speaker 1: so called recovery began, we have had some quarters, single

494
00:28:39,920 --> 00:28:45,600
Speaker 1: quarters of negative growth. Well, that has happened periodically throughout history. True,

495
00:28:45,680 --> 00:28:48,120
Speaker 1: but not in what it's supposed to be a recovery

496
00:28:48,200 --> 00:28:51,880
Speaker 1: from a very sharp economic crisis. It shouldn't happen before

497
00:28:51,920 --> 00:28:54,600
Speaker 1: you've had well no carbon. Reynard will take issue with that,

498
00:28:54,720 --> 00:28:57,200
Speaker 1: you know she and can Roll often her book would say,

499
00:28:57,200 --> 00:28:59,840
Speaker 1: because it was a financial procession, that's what you're going

500
00:28:59,880 --> 00:29:01,960
Speaker 1: to see. You're going to see very weak growth for

501
00:29:02,320 --> 00:29:05,440
Speaker 1: what did she tells, something like seven eight years, So

502
00:29:05,640 --> 00:29:08,080
Speaker 1: we're only now just getting close to the point where

503
00:29:08,160 --> 00:29:11,680
Speaker 1: we could actually grow faster. Well, I would I would

504
00:29:11,720 --> 00:29:14,840
Speaker 1: disagree with that, Mike. I think if the correction had

505
00:29:14,920 --> 00:29:18,160
Speaker 1: been to let the free markets take take the hit

506
00:29:18,240 --> 00:29:21,200
Speaker 1: in terms of the markets, and not to have three

507
00:29:21,280 --> 00:29:24,760
Speaker 1: queue ees and eight years of zero interest rates, we

508
00:29:24,760 --> 00:29:28,000
Speaker 1: would probably be financial crisis or no, we would be

509
00:29:28,040 --> 00:29:31,120
Speaker 1: on the path through a very strong economic recovery, because

510
00:29:31,200 --> 00:29:34,560
Speaker 1: then you would have had changes in the markets, You

511
00:29:34,600 --> 00:29:39,240
Speaker 1: would have had moves towards employment tax credit, you would

512
00:29:39,280 --> 00:29:42,280
Speaker 1: have have business tax credit allowing you to bring money

513
00:29:42,320 --> 00:29:45,640
Speaker 1: back into the United States and all of that would

514
00:29:45,640 --> 00:29:48,280
Speaker 1: have caused employment to rise and the growth to pick up.

515
00:29:48,320 --> 00:29:51,360
Speaker 1: And the reason why that hasn't happened and why we

516
00:29:51,360 --> 00:29:55,880
Speaker 1: are still suffering from this productivity malaise is because you

517
00:29:56,040 --> 00:29:59,880
Speaker 1: depend on zero interest rates, and if you are retired

518
00:30:01,080 --> 00:30:03,120
Speaker 1: or if you depend on a fixed income and your

519
00:30:03,160 --> 00:30:06,360
Speaker 1: interest income is now zero, you're not going to be consuming.

520
00:30:06,520 --> 00:30:09,080
Speaker 1: It's very simple economics. So I want to go back

521
00:30:09,120 --> 00:30:11,320
Speaker 1: to what you're comment around a part time full time

522
00:30:11,360 --> 00:30:14,840
Speaker 1: and the feeling that people have that they're under employed

523
00:30:14,920 --> 00:30:16,720
Speaker 1: or so what is your reading on that right now?

524
00:30:16,880 --> 00:30:20,719
Speaker 1: How under employed is America? Well, if you look at

525
00:30:20,760 --> 00:30:24,560
Speaker 1: the U six unemployment rate, tom where you look at

526
00:30:24,600 --> 00:30:27,520
Speaker 1: people who are working part time, even though you they

527
00:30:27,520 --> 00:30:30,880
Speaker 1: would like to have full time employment, we are still

528
00:30:31,000 --> 00:30:33,840
Speaker 1: not got back to a recovery level of U six.

529
00:30:33,920 --> 00:30:36,080
Speaker 1: Even though the U three number, the one which is

530
00:30:36,120 --> 00:30:40,000
Speaker 1: commonly quoted, has come below five percent, that is not

531
00:30:40,080 --> 00:30:43,440
Speaker 1: the case with the U six And not only is

532
00:30:43,480 --> 00:30:47,640
Speaker 1: it typically higher than the normally known and unemployment rate,

533
00:30:48,080 --> 00:30:52,440
Speaker 1: but it is also high by historical standards. Second, look

534
00:30:52,440 --> 00:30:55,520
Speaker 1: at the participation rate, and whenever I mentioned it, they

535
00:30:55,520 --> 00:30:59,520
Speaker 1: say participation rate has gone down because of demographic factors

536
00:30:59,560 --> 00:31:04,320
Speaker 1: and the ricans aging look at them. Also, the participation

537
00:31:04,440 --> 00:31:07,600
Speaker 1: rate for the twenty five to fifty four year olds

538
00:31:07,640 --> 00:31:11,560
Speaker 1: also published by the Bureau of Labor Statistics, and that

539
00:31:11,600 --> 00:31:14,120
Speaker 1: has not picked up either, and that is not due

540
00:31:14,160 --> 00:31:19,080
Speaker 1: to demographics. So clearly something is amiss. The labor market

541
00:31:19,120 --> 00:31:23,000
Speaker 1: has a lot of slack and people are forced to

542
00:31:23,040 --> 00:31:27,920
Speaker 1: accept part time employment. That's not an economic recovery, Mike,

543
00:31:28,040 --> 00:31:30,320
Speaker 1: I think it's a huge debate. Yeah, I see a

544
00:31:30,400 --> 00:31:32,760
Speaker 1: lot of economists saying we're back to a full time

545
00:31:33,480 --> 00:31:35,720
Speaker 1: and almost to a person the mail, I guess it

546
00:31:35,800 --> 00:31:37,960
Speaker 1: is just a bunch of more. Well, we're not back

547
00:31:38,000 --> 00:31:41,960
Speaker 1: to full time. It's come down tremendous amounts since the recession,

548
00:31:42,000 --> 00:31:44,120
Speaker 1: but you still have maybe a million more people than

549
00:31:44,320 --> 00:31:47,760
Speaker 1: average who are who are working part time. Now, you've

550
00:31:47,760 --> 00:31:49,560
Speaker 1: got to tease out from that. How much is a

551
00:31:49,640 --> 00:31:53,280
Speaker 1: change a secular change in the way companies higher Uh,

552
00:31:53,400 --> 00:31:56,560
Speaker 1: they may just want more part time people. And there

553
00:31:56,560 --> 00:32:00,240
Speaker 1: has been research that women are going more to hard

554
00:32:00,240 --> 00:32:03,080
Speaker 1: time these days for whatever reason. Uh, they want more

555
00:32:03,080 --> 00:32:05,520
Speaker 1: time at home. So it's hard to know exactly. But

556
00:32:05,600 --> 00:32:08,480
Speaker 1: I come back for you again to the whole idea

557
00:32:08,600 --> 00:32:11,800
Speaker 1: this was a different kind of recession um and and

558
00:32:11,840 --> 00:32:15,280
Speaker 1: the Reinhardt rodeoff argument that it just takes a very

559
00:32:15,280 --> 00:32:17,400
Speaker 1: long time to recover from this because you don't have

560
00:32:17,640 --> 00:32:20,320
Speaker 1: the credit impulse going through the economy. Everybody pulls back

561
00:32:20,600 --> 00:32:22,720
Speaker 1: and instead of you know, suddenly you cut rates and

562
00:32:22,760 --> 00:32:26,160
Speaker 1: you get a reaction in the home building and auto sectors.

563
00:32:26,680 --> 00:32:29,400
Speaker 1: You know, the banks just haven't been lending and people

564
00:32:29,400 --> 00:32:32,000
Speaker 1: haven't wanted to borrow because they're so afraid of getting

565
00:32:32,000 --> 00:32:36,640
Speaker 1: into debt. I again, as I said, I differ from

566
00:32:36,640 --> 00:32:39,000
Speaker 1: that opinion, Mike. And the reason for that is, if

567
00:32:39,080 --> 00:32:43,280
Speaker 1: this procession was of a different kind, why did the

568
00:32:43,320 --> 00:32:45,920
Speaker 1: Federal Reserve deal with it as if it was a

569
00:32:45,960 --> 00:32:49,200
Speaker 1: normal kind of recession and they made it worse. If

570
00:32:49,240 --> 00:32:52,000
Speaker 1: they had instead handled it differently, and if we had

571
00:32:52,400 --> 00:32:57,320
Speaker 1: had changes in the employment regulations, profit regulations, tax regulations,

572
00:32:57,920 --> 00:33:00,920
Speaker 1: I think we would be in much better cape then before.

573
00:33:01,640 --> 00:33:06,640
Speaker 1: So again, to say that Roguarf and Reinhart talked about

574
00:33:06,680 --> 00:33:09,280
Speaker 1: it and therefore that is the excuse for it is

575
00:33:09,440 --> 00:33:12,560
Speaker 1: I think it's a cop out. I think if that's

576
00:33:12,600 --> 00:33:14,840
Speaker 1: the case, we should have done other things I think

577
00:33:14,880 --> 00:33:18,840
Speaker 1: to help out with this Three is the idea of

578
00:33:18,840 --> 00:33:21,120
Speaker 1: what is the run rate of US GDP? What is

579
00:33:21,320 --> 00:33:26,120
Speaker 1: can you get above three gdp unless we do something

580
00:33:26,200 --> 00:33:31,160
Speaker 1: dramatically different with policy, tom fiscal policy and structural policy.

581
00:33:31,840 --> 00:33:33,760
Speaker 1: I think we are stuck at somewhere in the range

582
00:33:33,760 --> 00:33:36,000
Speaker 1: of about two percent, not even getting to the three

583
00:33:36,000 --> 00:33:39,440
Speaker 1: percent level. So we are going to be much lower.

584
00:33:39,760 --> 00:33:44,800
Speaker 1: And you have FED members like John Williams talking about

585
00:33:44,840 --> 00:33:48,080
Speaker 1: the now famous our star or the natural rate of

586
00:33:48,120 --> 00:33:51,840
Speaker 1: interest being very low. And if it is very low,

587
00:33:51,880 --> 00:33:55,000
Speaker 1: there is no indication that is going to rise, that

588
00:33:55,160 --> 00:33:57,400
Speaker 1: anything that is being done is going to make it right.

589
00:33:58,280 --> 00:34:01,000
Speaker 1: I like having you on because I can steal charts

590
00:34:01,080 --> 00:34:03,680
Speaker 1: from you all the time. I'm just gonna put out

591
00:34:03,680 --> 00:34:08,280
Speaker 1: a Bloomberg Radio plus a chart comparing the U six

592
00:34:08,400 --> 00:34:14,080
Speaker 1: unemployment as divided by the unemployment rate and real simple,

593
00:34:14,880 --> 00:34:17,520
Speaker 1: there's been exactly one other time in modern history what

594
00:34:17,640 --> 00:34:20,879
Speaker 1: we've been here, and as Mike, as you said, there's

595
00:34:20,880 --> 00:34:25,600
Speaker 1: been an improvement, but we're still miles away. I didn't

596
00:34:25,600 --> 00:34:28,600
Speaker 1: realize this. I mean, I knew it was improved, but

597
00:34:28,680 --> 00:34:34,760
Speaker 1: that's it's remarkable, not not the U six minus unemployment,

598
00:34:35,360 --> 00:34:37,839
Speaker 1: but divided by as compared to it as a whole

599
00:34:37,880 --> 00:34:41,080
Speaker 1: different field. Street Camar with us on the Rise and

600
00:34:41,200 --> 00:34:44,120
Speaker 1: Fall of American Growth. Of course, Robert Gordon making a

601
00:34:44,200 --> 00:34:47,920
Speaker 1: huge splash with a book. Even though shriek Camar talks

602
00:34:47,920 --> 00:34:51,440
Speaker 1: about secular stagnation. I don't get a sense of you

603
00:34:51,560 --> 00:34:55,840
Speaker 1: looking back with nostalgia to a previous century and saying

604
00:34:55,880 --> 00:34:59,040
Speaker 1: this is as good as it gets. If that's the case,

605
00:34:59,680 --> 00:35:02,680
Speaker 1: how do we get back to the rise of American

606
00:35:03,080 --> 00:35:07,960
Speaker 1: economic growth? In order to get to back to it?

607
00:35:08,080 --> 00:35:10,919
Speaker 1: And if you look back, um, as to what made

608
00:35:11,040 --> 00:35:15,640
Speaker 1: us different, what made us grow rapidly? Tom, the first

609
00:35:15,640 --> 00:35:18,400
Speaker 1: thing you come across is it is not monetary policy

610
00:35:18,400 --> 00:35:21,919
Speaker 1: and interest rates. And you you look to see what

611
00:35:21,960 --> 00:35:26,040
Speaker 1: it was, and it was innovation, the opportunity to grow,

612
00:35:26,600 --> 00:35:31,640
Speaker 1: opportunities to hire people, good education, and the system that

613
00:35:31,840 --> 00:35:35,400
Speaker 1: encourages growth. So all what all of these referred to

614
00:35:35,440 --> 00:35:41,000
Speaker 1: a structure rather than policy that comes from Washington. Um.

615
00:35:41,200 --> 00:35:43,600
Speaker 1: And that I think is what do you see time

616
00:35:43,640 --> 00:35:47,440
Speaker 1: and time again led to the US economic growth and

617
00:35:47,480 --> 00:35:50,839
Speaker 1: the vibe, the vibrancy of the growth if you go

618
00:35:50,920 --> 00:35:55,160
Speaker 1: back to the eighteen seventies, and if you like, as

619
00:35:55,160 --> 00:35:58,120
Speaker 1: you see from a book like ron chernos House of

620
00:35:58,160 --> 00:36:00,360
Speaker 1: Morgan and what led to the growth and the second

621
00:36:00,360 --> 00:36:04,040
Speaker 1: half of the nineteenth century was the railroad development, the

622
00:36:04,120 --> 00:36:07,719
Speaker 1: steel and coal development, and the opportunities there that did it.

623
00:36:08,960 --> 00:36:11,960
Speaker 1: What did the Federal Reserve do? It did nothing because

624
00:36:11,960 --> 00:36:17,000
Speaker 1: it didn't exist. Nineteen with the Federal Reserve came, we

625
00:36:17,160 --> 00:36:19,400
Speaker 1: thought it was a panacea, that it was going to

626
00:36:19,480 --> 00:36:22,640
Speaker 1: take care of all future ills. But that is not

627
00:36:22,719 --> 00:36:26,440
Speaker 1: the way it has happened. Again, another period of slow

628
00:36:26,600 --> 00:36:32,080
Speaker 1: stagnation depression in the nineteen thirties. What changed was the

629
00:36:32,120 --> 00:36:36,280
Speaker 1: fact that war related demand boosted the demand for goods

630
00:36:36,280 --> 00:36:41,840
Speaker 1: and services. The American dominance really established itself compared with

631
00:36:41,880 --> 00:36:45,240
Speaker 1: the United Kingdom, which was also sharing the glory within

632
00:36:45,280 --> 00:36:48,400
Speaker 1: the inter war riors, and that was a big positive

633
00:36:48,440 --> 00:36:53,080
Speaker 1: for the United States. Now we need to reinvent ourselves afresh.

634
00:36:53,239 --> 00:36:55,279
Speaker 1: And what we have had in the last eight years

635
00:36:55,320 --> 00:36:58,120
Speaker 1: it's the same old, tired, tired, old policy, and that's

636
00:36:58,160 --> 00:37:00,279
Speaker 1: what we need to get out of. You sugg an

637
00:37:00,320 --> 00:37:04,399
Speaker 1: industrial policy. I am suggesting an industrial policy term very much,

638
00:37:04,400 --> 00:37:07,560
Speaker 1: and if it's an emphasis on infrastructure, so that that's

639
00:37:07,600 --> 00:37:11,000
Speaker 1: a great start, but don't stop there. Deal with other

640
00:37:11,040 --> 00:37:13,480
Speaker 1: things that you have to do, especially the education of

641
00:37:13,520 --> 00:37:16,399
Speaker 1: the youth, where I think the emphasis should be put.

642
00:37:16,920 --> 00:37:19,640
Speaker 1: Going back to your previous question, which I think which

643
00:37:19,680 --> 00:37:23,799
Speaker 1: was which is a solid one. Well, what percentage of

644
00:37:23,880 --> 00:37:26,719
Speaker 1: the people are suffering today? And you have a lot

645
00:37:26,800 --> 00:37:29,640
Speaker 1: of people who are young who cannot get good jobs.

646
00:37:29,680 --> 00:37:33,440
Speaker 1: The participation rate is very low for them, and you

647
00:37:33,560 --> 00:37:36,000
Speaker 1: are a lot of people who are unable to continue

648
00:37:36,120 --> 00:37:39,000
Speaker 1: education because of the burden of the of the student

649
00:37:39,080 --> 00:37:42,920
Speaker 1: related debt. What is being done there as opposed to

650
00:37:43,080 --> 00:37:45,840
Speaker 1: increasing the money supply or setting the interest rate on

651
00:37:45,880 --> 00:37:48,160
Speaker 1: a month to month basis. Those are the changes I

652
00:37:48,200 --> 00:37:52,200
Speaker 1: would look for. What if we don't get that, what

653
00:37:52,320 --> 00:37:54,920
Speaker 1: do you see happening in two thousand seventeen. We'll have

654
00:37:54,960 --> 00:37:58,319
Speaker 1: a new president. But if Congress is not enthusiastic about

655
00:37:58,320 --> 00:38:01,759
Speaker 1: a big spending program, what happens to the economy and

656
00:38:01,880 --> 00:38:05,640
Speaker 1: to the markets? If you don't make and I'm I'm hoping,

657
00:38:05,719 --> 00:38:09,840
Speaker 1: maybe I'm hoping more than forecasting that with the new president,

658
00:38:09,840 --> 00:38:12,880
Speaker 1: whoever he or she may be, that you will have,

659
00:38:12,960 --> 00:38:15,200
Speaker 1: in fact a change in policy, because we can't take

660
00:38:15,239 --> 00:38:19,759
Speaker 1: it anymore. But if they don't, then you have the

661
00:38:19,800 --> 00:38:22,680
Speaker 1: experience of Japan we have They've had twenty five years

662
00:38:22,680 --> 00:38:26,399
Speaker 1: of stagnation and still going with stagnation. We only had

663
00:38:26,440 --> 00:38:29,000
Speaker 1: eight years of slow growth. We have seventeen more to go.

664
00:38:29,440 --> 00:38:33,080
Speaker 1: Is this our last chance? Rodeo? Basically it is either

665
00:38:33,280 --> 00:38:35,239
Speaker 1: it is the last chance to turn it around, but

666
00:38:35,280 --> 00:38:37,839
Speaker 1: if you don't, you have another four years or eight

667
00:38:37,920 --> 00:38:40,440
Speaker 1: years of the similar kind of a situation. That's the choice.

668
00:38:41,920 --> 00:38:45,200
Speaker 1: I look three at the view forward and to get

669
00:38:45,239 --> 00:38:49,080
Speaker 1: away from the secular stagnation you speak of, and you

670
00:38:49,120 --> 00:38:53,280
Speaker 1: did mention infrastructure. The hope right now is a shift

671
00:38:53,320 --> 00:38:56,120
Speaker 1: to fiscal policy. Do you share that hope when we

672
00:38:56,239 --> 00:39:01,319
Speaker 1: see that, I share that hope because infrastructure expenditure, which

673
00:39:01,360 --> 00:39:06,680
Speaker 1: I support, would require a shift to fiscal policy. But

674
00:39:07,080 --> 00:39:09,759
Speaker 1: all I'm saying, Tom is that that is not sufficient.

675
00:39:09,840 --> 00:39:13,680
Speaker 1: You need to go beyond fiscal policy, but essentially give

676
00:39:13,760 --> 00:39:18,680
Speaker 1: monetary policy at rest a long long, maybe ill deserved rest,

677
00:39:18,719 --> 00:39:21,200
Speaker 1: but arrest all the same, and go to fiscal policy

678
00:39:21,320 --> 00:39:25,040
Speaker 1: first and go to structural changes almost at the same time.

679
00:39:25,040 --> 00:39:29,279
Speaker 1: The reason being structural changes are tough to take, as

680
00:39:29,320 --> 00:39:33,440
Speaker 1: German Chancellor Schreuder realized when he lost the two thousand

681
00:39:33,480 --> 00:39:37,160
Speaker 1: five elections after the changes, So you need to have

682
00:39:37,200 --> 00:39:41,320
Speaker 1: a palliative going along with it. So infrastructure spending would

683
00:39:41,360 --> 00:39:45,160
Speaker 1: help you stay in office keep the people happy even

684
00:39:45,200 --> 00:39:47,719
Speaker 1: as you're making structural changes which are good in the

685
00:39:47,800 --> 00:39:51,040
Speaker 1: long term but in the short term are politically unpopular.

686
00:39:51,280 --> 00:39:53,200
Speaker 1: So thank you so much, and again I'm gonna steal

687
00:39:53,200 --> 00:39:56,080
Speaker 1: your shirt comparing Thank you great to see your charge. Tom.

688
00:39:56,239 --> 00:40:01,640
Speaker 1: It's one to three Mike forced in the viations off

689
00:40:01,640 --> 00:40:05,240
Speaker 1: of a twenty one year trend. Wow. That is wow.

690
00:40:06,280 --> 00:40:08,480
Speaker 1: That's a street command chart. We'll steal that and use

691
00:40:08,520 --> 00:40:11,280
Speaker 1: it going out on Bloomberg Radio plus in a moment.

692
00:40:11,719 --> 00:40:14,640
Speaker 1: We'll do it on Facebook Live maybe today if we can,

693
00:40:14,719 --> 00:40:17,880
Speaker 1: and then onto television tomorrow on all sorts of media.

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00:40:18,400 --> 00:40:26,920
Speaker 1: This is Bloomberg Surveillance. Thanks for listening to the Bloomberg

695
00:40:26,960 --> 00:40:32,520
Speaker 1: Surveillance podcast. Subscribe and listen to interviews on iTunes, SoundCloud,

696
00:40:32,840 --> 00:40:36,799
Speaker 1: or whichever podcast platform you prefer. I'm on Twitter at

697
00:40:36,840 --> 00:40:41,640
Speaker 1: Tom Keane. Michael McKee is at Economy Before the podcast,

698
00:40:41,719 --> 00:40:51,919
Speaker 1: you can always catch us worldwide. I'm Bloomberg Radio. Who

699
00:40:52,040 --> 00:40:55,719
Speaker 1: you put your trust in matters. Investors have put their

700
00:40:55,719 --> 00:40:59,080
Speaker 1: trust in independent registered investment advisors to the tune of

701
00:40:59,160 --> 00:41:04,120
Speaker 1: four trillion dollars why learn more and find your independent

702
00:41:04,160 --> 00:41:07,080
Speaker 1: advisor dot com m