1 00:00:00,120 --> 00:00:02,920 Speaker 1: Brought you by Bank of America, Mary Lynch. Investing in 2 00:00:03,000 --> 00:00:07,840 Speaker 1: local communities, economies and a sustainable future. That's a power 3 00:00:08,080 --> 00:00:12,360 Speaker 1: of global connections, Mary Lynch, Pierce Fenner and Smith Incorporated 4 00:00:12,760 --> 00:00:26,400 Speaker 1: Member s I p C. Welcome to the Bloomberg Surveillance Podcast. 5 00:00:26,440 --> 00:00:29,920 Speaker 1: I'm Tom Keene with David Gura. Daily we bring you 6 00:00:29,960 --> 00:00:34,800 Speaker 1: insight from the best of economics, finance, investment, and international relations. 7 00:00:35,240 --> 00:00:40,760 Speaker 1: Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, Bloomberg dot Com, 8 00:00:40,800 --> 00:00:48,240 Speaker 1: and of course, on the Bloomberg. Howard Ward, the CIO 9 00:00:48,280 --> 00:00:50,760 Speaker 1: of Growth Equities for Gabelly Funds, kind enough to join 10 00:00:50,840 --> 00:00:53,120 Speaker 1: us here in our Bloomberg eleven three oh studios in 11 00:00:53,159 --> 00:00:55,560 Speaker 1: New York. Hard Great to see you once again, and 12 00:00:55,640 --> 00:00:57,120 Speaker 1: let me start with when I think is an important 13 00:00:57,160 --> 00:00:58,640 Speaker 1: line from one of your most recent notes. You're right, 14 00:00:59,120 --> 00:01:02,720 Speaker 1: this is feeling a bit like late nineteen Help us 15 00:01:02,720 --> 00:01:06,720 Speaker 1: with the historical analog here when you look at the market. Well, 16 00:01:06,760 --> 00:01:10,240 Speaker 1: that's what it was, I thought, as uh, as I 17 00:01:10,280 --> 00:01:13,160 Speaker 1: think many of your listeners have noticed. There's been a 18 00:01:13,240 --> 00:01:17,160 Speaker 1: really tremendous rise in the technology number of the large 19 00:01:17,160 --> 00:01:20,760 Speaker 1: cap technology stocks. Uh, in the last year, you'd be 20 00:01:20,800 --> 00:01:23,720 Speaker 1: hard pressed to find one that has risen less than 21 00:01:23,760 --> 00:01:27,119 Speaker 1: thirty percent over the last twelve months. In the case 22 00:01:27,240 --> 00:01:31,880 Speaker 1: of Apple, it's about sixty above. It's a fifty two 23 00:01:31,880 --> 00:01:36,720 Speaker 1: week low. Uh. You know, Amazon's up, Microsoft, Google, They're 24 00:01:36,720 --> 00:01:40,880 Speaker 1: all up thirty plus. And uh, you know this is 25 00:01:41,040 --> 00:01:44,479 Speaker 1: the and you're having days where some of these very 26 00:01:44,560 --> 00:01:49,680 Speaker 1: large cap names will move two to three percent higher. Uh, 27 00:01:49,720 --> 00:01:54,320 Speaker 1: and a market that has an amazing level of complacency. Um. 28 00:01:54,480 --> 00:01:56,080 Speaker 1: And this you can see it when you look at 29 00:01:56,080 --> 00:01:58,920 Speaker 1: the VIX and you can just feel it from the 30 00:01:59,000 --> 00:02:02,400 Speaker 1: lack of downward pressure in stocks. Uh. We we've gone 31 00:02:02,400 --> 00:02:05,560 Speaker 1: a long time since we've had a five or ten 32 00:02:05,600 --> 00:02:09,639 Speaker 1: percent correction, let alone a fifteen percent correction. And Uh, 33 00:02:09,680 --> 00:02:11,440 Speaker 1: it's gotten too easy to make money. It's gotten too 34 00:02:11,480 --> 00:02:14,320 Speaker 1: easy to make money in large cap tech. Uh. These 35 00:02:14,320 --> 00:02:19,400 Speaker 1: are great companies. They're generating a large sums of profits 36 00:02:19,440 --> 00:02:23,360 Speaker 1: and free cash flow. And that's all good. But you know, 37 00:02:23,440 --> 00:02:26,120 Speaker 1: at some point it probably makes sense to take some 38 00:02:26,200 --> 00:02:29,680 Speaker 1: money off the table. And with respect to the stocks 39 00:02:29,680 --> 00:02:32,680 Speaker 1: that I've just mentioned, I have sold a chunk of 40 00:02:32,760 --> 00:02:35,160 Speaker 1: my Amazon in the last week. I still own a 41 00:02:35,240 --> 00:02:37,840 Speaker 1: chunk of it, but I've I've been a seller of Amazon. 42 00:02:38,720 --> 00:02:42,560 Speaker 1: Great company, but uh, you know, I think that the 43 00:02:42,639 --> 00:02:45,840 Speaker 1: expectations for the overall market are somewhat inflated, and I 44 00:02:45,880 --> 00:02:49,240 Speaker 1: think the expectations for Amazon are as well. How does 45 00:02:49,280 --> 00:02:51,840 Speaker 1: Howard board process and earnings report when this comes out, 46 00:02:51,840 --> 00:02:53,640 Speaker 1: when the Apple report comes out after the buil today, 47 00:02:53,639 --> 00:02:55,440 Speaker 1: what are you gonna be looking for? What's the first 48 00:02:55,440 --> 00:02:59,600 Speaker 1: thing that you check? Well, interestingly enough, in this environment 49 00:02:59,680 --> 00:03:03,639 Speaker 1: that we're in, unless there was a tremendous miss, uh 50 00:03:03,680 --> 00:03:06,919 Speaker 1: in terms of their revenues and earnings. Uh And and 51 00:03:06,960 --> 00:03:10,799 Speaker 1: by the way, the sort of consensus expectations is two 52 00:03:10,800 --> 00:03:13,440 Speaker 1: dollars and two cents of earnings for Apple for the 53 00:03:13,520 --> 00:03:16,080 Speaker 1: quarter on revenues that are going to be real close 54 00:03:16,120 --> 00:03:19,240 Speaker 1: to around fifty three billion dollars for which is amazing 55 00:03:19,280 --> 00:03:22,160 Speaker 1: for one quarter. But unless there's a real miss, the 56 00:03:22,200 --> 00:03:24,160 Speaker 1: focus is really going to be on the guidance that 57 00:03:24,240 --> 00:03:28,160 Speaker 1: they give. Uh. Now you know that also is a 58 00:03:28,200 --> 00:03:31,880 Speaker 1: bit tricky because Apple, I think appropriately has a tendency 59 00:03:32,000 --> 00:03:36,640 Speaker 1: to downplay their guidance, very conservative guidance. And we're heading 60 00:03:36,680 --> 00:03:42,560 Speaker 1: into the the introduction of the tenth anniversary phone, the 61 00:03:42,600 --> 00:03:46,560 Speaker 1: next generation of the iPhone, UH probably coming out this summer, 62 00:03:47,040 --> 00:03:50,119 Speaker 1: and the expectations for this are very large, and that's 63 00:03:50,160 --> 00:03:52,360 Speaker 1: one of the reasons the stock has done so well. 64 00:03:52,480 --> 00:03:55,680 Speaker 1: We've had this rerating of Apple shares in the last year. 65 00:03:55,720 --> 00:03:58,480 Speaker 1: It's gone from ten times forward earnings to fifteen times 66 00:03:58,520 --> 00:04:01,720 Speaker 1: forward earnings, which is still not exorbitant before a company 67 00:04:01,760 --> 00:04:06,080 Speaker 1: of its size, where secular growth and the double digits 68 00:04:06,160 --> 00:04:08,600 Speaker 1: is going to be a challenge, it's probably not far 69 00:04:08,640 --> 00:04:11,360 Speaker 1: from where it's likely to peak. I don't think Apple 70 00:04:11,400 --> 00:04:14,040 Speaker 1: is going to be selling it twenty times forward earnings, 71 00:04:14,040 --> 00:04:16,320 Speaker 1: So the focus with the report is really going to 72 00:04:16,360 --> 00:04:19,520 Speaker 1: be on the guidance. I'm assuming there's not gonna be 73 00:04:19,600 --> 00:04:21,960 Speaker 1: a big mess. It's gonna be uh. There might be 74 00:04:22,040 --> 00:04:24,960 Speaker 1: some news on a new dividend today. They don't always 75 00:04:24,960 --> 00:04:26,880 Speaker 1: do that together with the earnings release. In fact, they 76 00:04:26,920 --> 00:04:30,320 Speaker 1: frequently decouple that. So let's not get our hopes up 77 00:04:30,360 --> 00:04:32,560 Speaker 1: for that. But I think it's going to be a 78 00:04:32,560 --> 00:04:36,200 Speaker 1: pretty healthy report. Apple is made up of a manufacturing 79 00:04:36,240 --> 00:04:39,400 Speaker 1: worry by the gloomsters over the next product won't do it. 80 00:04:39,640 --> 00:04:41,440 Speaker 1: You and I know that we've all known that, folks. 81 00:04:41,440 --> 00:04:43,839 Speaker 1: I mean, everybody's got this stuff. We have almost too 82 00:04:43,880 --> 00:04:46,719 Speaker 1: many loggins at home on Apple, like they shut us 83 00:04:46,760 --> 00:04:49,599 Speaker 1: down because we've got too many toys at home, But 84 00:04:49,760 --> 00:04:52,800 Speaker 1: around it is a service sector that any other CEO 85 00:04:52,880 --> 00:04:55,440 Speaker 1: in the world would die for. What's the sum of 86 00:04:55,440 --> 00:04:58,920 Speaker 1: the parts valuation of Apple? Now, Well, if you've done 87 00:04:58,920 --> 00:05:00,800 Speaker 1: that work recently, Well, what I can tell you Tom 88 00:05:00,880 --> 00:05:05,880 Speaker 1: in the service part, Uh, it's not entirely uh separate 89 00:05:05,920 --> 00:05:08,040 Speaker 1: from the phone itself because a lot of the services 90 00:05:08,080 --> 00:05:11,599 Speaker 1: buying applications through the phone. But really, but but the 91 00:05:11,640 --> 00:05:15,800 Speaker 1: services is about eleven percent of revenues growing in a 92 00:05:16,000 --> 00:05:18,400 Speaker 1: mid teen mid to high teen rate. I'll go with that. 93 00:05:18,520 --> 00:05:23,040 Speaker 1: And and uh, this should over time because it's outgrowing 94 00:05:23,040 --> 00:05:24,680 Speaker 1: the rest of the company. It's going to become a 95 00:05:24,680 --> 00:05:28,280 Speaker 1: bigger part of the business. It should lend a somewhat 96 00:05:28,279 --> 00:05:32,159 Speaker 1: greater to a somewhat greater multiple on the company's earnings 97 00:05:32,160 --> 00:05:36,440 Speaker 1: over time. It's not that material right now. UM. I 98 00:05:36,440 --> 00:05:39,800 Speaker 1: think that the greater issue for Apple long term is 99 00:05:39,880 --> 00:05:44,600 Speaker 1: can they protect that gross margin in the thirty nine area? 100 00:05:44,640 --> 00:05:46,960 Speaker 1: Where is the gross margin created? Is it created in China, 101 00:05:47,000 --> 00:05:50,200 Speaker 1: in the manufacturing process of logistics, or is it created 102 00:05:50,240 --> 00:05:53,560 Speaker 1: in marketing or imagery or goodwill and bad? Well, they 103 00:05:53,560 --> 00:05:55,520 Speaker 1: manage their costs very well, and they get a premium 104 00:05:55,560 --> 00:05:59,280 Speaker 1: price for their product and so uh and by the way, 105 00:05:59,720 --> 00:06:03,359 Speaker 1: the average selling price for the next gen phone is 106 00:06:03,400 --> 00:06:08,279 Speaker 1: expected to be a new high for Apple iPhones. So uh, 107 00:06:08,320 --> 00:06:12,200 Speaker 1: they have continued to defy the skeptics with the pricing 108 00:06:12,320 --> 00:06:14,720 Speaker 1: power of the iPhone. And part of that there's a 109 00:06:14,800 --> 00:06:18,039 Speaker 1: quality of the goods, and part of that the Apple ecosystem, 110 00:06:18,080 --> 00:06:21,599 Speaker 1: which tends to tie you into their applications. Uh, and 111 00:06:21,640 --> 00:06:25,080 Speaker 1: their their their music, and of course they're now getting 112 00:06:25,120 --> 00:06:27,919 Speaker 1: into the area of video content as well. How do 113 00:06:27,920 --> 00:06:30,120 Speaker 1: you mentioned you sold some of your your Amazon stock 114 00:06:30,160 --> 00:06:32,200 Speaker 1: are you? Are you recommending that more broadly? Is this 115 00:06:32,240 --> 00:06:35,760 Speaker 1: a time to a time to sell? Well? I think 116 00:06:35,800 --> 00:06:41,680 Speaker 1: if anybody is sensitive to uh short term market results, 117 00:06:41,760 --> 00:06:45,120 Speaker 1: if they have a tax exempt account, even taxable, if 118 00:06:45,120 --> 00:06:47,920 Speaker 1: you're looking for an exit, what are you waiting for? 119 00:06:48,320 --> 00:06:52,159 Speaker 1: Um You know Amazon, it is a great company, but 120 00:06:52,520 --> 00:06:54,360 Speaker 1: you know it too was up more than more than 121 00:06:55,680 --> 00:07:00,400 Speaker 1: in the last year. And um I can recall back 122 00:07:00,560 --> 00:07:04,480 Speaker 1: in the first quarter of two thousand, which was the 123 00:07:04,800 --> 00:07:08,280 Speaker 1: last up quarter for the bullmarket of the nineties, and 124 00:07:08,279 --> 00:07:12,680 Speaker 1: and and and um I took four hundred million dollars 125 00:07:12,680 --> 00:07:16,520 Speaker 1: of capital gains and technology stocks that quarter doing it 126 00:07:16,600 --> 00:07:18,680 Speaker 1: when I felt like maybe I was a little early, 127 00:07:18,760 --> 00:07:22,360 Speaker 1: but there was the stocks had just gone too far, 128 00:07:22,480 --> 00:07:25,560 Speaker 1: too fast. Um. And that's why I say it feels 129 00:07:25,600 --> 00:07:28,760 Speaker 1: like that again now that it's it's it's gotten too easy. 130 00:07:29,480 --> 00:07:31,440 Speaker 1: You need to take some money off the table here. 131 00:07:31,480 --> 00:07:34,560 Speaker 1: The valuations are more of a challenge than they have been, 132 00:07:35,320 --> 00:07:38,840 Speaker 1: and you're getting more retail investment in these stocks, and 133 00:07:38,880 --> 00:07:40,520 Speaker 1: of course the impact that E t f S is 134 00:07:40,920 --> 00:07:43,440 Speaker 1: is very much part of that. So yeah, I would 135 00:07:43,440 --> 00:07:45,760 Speaker 1: take some money off the table unless you're really committed 136 00:07:46,160 --> 00:07:48,920 Speaker 1: to keeping your position for a long period of time. 137 00:07:48,920 --> 00:07:50,560 Speaker 1: I would let me ask you a bit about growth. 138 00:07:51,080 --> 00:07:53,560 Speaker 1: We've heard the administration talk so much about the potential 139 00:07:53,560 --> 00:07:56,680 Speaker 1: for three percent growth, for percent growth, certainly the unveiling 140 00:07:56,680 --> 00:07:59,119 Speaker 1: of the White House tax proposal, we heard it again 141 00:07:59,600 --> 00:08:01,480 Speaker 1: at what your sense of what the economy is going 142 00:08:01,520 --> 00:08:05,560 Speaker 1: to do domestically, Well, let's start with the sort of 143 00:08:05,640 --> 00:08:10,280 Speaker 1: expectations are right around two percent growth plus or minus 144 00:08:10,360 --> 00:08:14,960 Speaker 1: point to uh for this year and next, and so 145 00:08:15,200 --> 00:08:18,160 Speaker 1: the Trump administration would need to get much more successful 146 00:08:18,280 --> 00:08:22,200 Speaker 1: with their legislative agenda in order to ask, you know, 147 00:08:22,520 --> 00:08:26,360 Speaker 1: improve on that but let's go back to the mathematics 148 00:08:26,400 --> 00:08:30,200 Speaker 1: of how you improve your GDP growth, because it's pretty simple. 149 00:08:30,720 --> 00:08:33,760 Speaker 1: You can have your existing workforce work more hours. That's 150 00:08:33,760 --> 00:08:37,680 Speaker 1: probably not gonna result in much. You can add to 151 00:08:37,800 --> 00:08:41,840 Speaker 1: your labor force and that's a one half of one percent, 152 00:08:42,040 --> 00:08:45,480 Speaker 1: maybe a one percent boost at most. Or you can 153 00:08:45,520 --> 00:08:50,600 Speaker 1: improve your the productivity of your workforce, and productivity has stalled, 154 00:08:51,200 --> 00:08:53,480 Speaker 1: you know, that's a one percent or less than one 155 00:08:53,520 --> 00:08:57,480 Speaker 1: percent improvement these days, and so it's really hard to 156 00:08:57,520 --> 00:09:00,280 Speaker 1: get a rate of growth north of two percent. And 157 00:09:00,360 --> 00:09:02,960 Speaker 1: that's why we haven't done it for a while. Can 158 00:09:03,000 --> 00:09:07,000 Speaker 1: you can you change the tax code and engineer growth 159 00:09:07,080 --> 00:09:10,040 Speaker 1: or three or fourth three or four percent for a 160 00:09:10,120 --> 00:09:13,280 Speaker 1: few quarters? Yes, But unless you can go back to 161 00:09:14,040 --> 00:09:17,840 Speaker 1: the equation of the productivity and labor force and how 162 00:09:17,840 --> 00:09:19,600 Speaker 1: are you going to improve that, it's not going to 163 00:09:19,640 --> 00:09:36,600 Speaker 1: be sustainable. Our word with us with good belly funds, David, 164 00:09:36,600 --> 00:09:38,480 Speaker 1: I think we need to talk to edge funds. Two 165 00:09:38,520 --> 00:09:41,200 Speaker 1: in t Yeah, our colleague Eric Shoutsker, number of our 166 00:09:41,200 --> 00:09:43,320 Speaker 1: colleagues are at the Milk and Institute Global Conference in 167 00:09:43,360 --> 00:09:46,040 Speaker 1: Beverly Hills, and there are some great interviews yesterday. More 168 00:09:46,040 --> 00:09:48,800 Speaker 1: will be on our air, both on radio and television. Today, 169 00:09:48,880 --> 00:09:51,400 Speaker 1: Eric Shatsker sat down with Ken Griffin, the head of Citadel, 170 00:09:51,400 --> 00:09:53,560 Speaker 1: and they had a very wide ranging conversation in which 171 00:09:53,559 --> 00:09:56,880 Speaker 1: they talked about investing, They talked about the political landscape. 172 00:09:56,880 --> 00:09:59,120 Speaker 1: But in Washington they talked about, as you say, the 173 00:09:59,200 --> 00:10:01,719 Speaker 1: status of the future of hedge funds. Here's what he 174 00:10:01,760 --> 00:10:04,160 Speaker 1: had to say. It's not just a shakeout for the 175 00:10:04,160 --> 00:10:08,439 Speaker 1: hedge fund industry, it's a shakeout for active management. Right 176 00:10:08,440 --> 00:10:11,480 Speaker 1: we see the rise of passive money in ETFs and 177 00:10:11,600 --> 00:10:14,520 Speaker 1: index products. We're seeing money come out of active management 178 00:10:14,840 --> 00:10:19,240 Speaker 1: and head towards passive structures. Now, as that happens, the 179 00:10:19,280 --> 00:10:22,800 Speaker 1: money that's in passive structures obviously is not pursuing elpha 180 00:10:22,800 --> 00:10:25,120 Speaker 1: in the same way. That should make the markets a 181 00:10:25,120 --> 00:10:28,200 Speaker 1: little less efficient, but should create a larger profit pool 182 00:10:28,280 --> 00:10:30,439 Speaker 1: for those who remain. So we're gonna find a new 183 00:10:30,440 --> 00:10:33,880 Speaker 1: equilibrium over the months and years to come. Passive's gonna 184 00:10:33,880 --> 00:10:36,480 Speaker 1: be bigger, Active is gonna be smaller, and the firms 185 00:10:36,480 --> 00:10:41,960 Speaker 1: that are best able to assemble, analyze, and incorporate information 186 00:10:42,000 --> 00:10:44,920 Speaker 1: in their investment decision making processes are going to continue 187 00:10:44,960 --> 00:10:48,560 Speaker 1: to earn outsize returns can't grif from there. The head 188 00:10:48,559 --> 00:10:52,120 Speaker 1: of Citadel speaking with Pelli Garic Shatzker yesterday, we've had that, 189 00:10:52,120 --> 00:10:54,360 Speaker 1: We've we've been following this debate for so long, the 190 00:10:54,360 --> 00:10:56,400 Speaker 1: active versus passive today. What did you hear there from 191 00:10:56,480 --> 00:10:58,640 Speaker 1: Mr Griffin? Well, that was interesting. And there's one Greek 192 00:10:58,720 --> 00:11:06,240 Speaker 1: letter in there that there's discussion here, and that is alpha, beta, gamma, delta, vega, theta. 193 00:11:06,480 --> 00:11:10,040 Speaker 1: They all mean different things to different people. But the 194 00:11:10,400 --> 00:11:13,520 Speaker 1: thrust of this, David, is so many of our listeners 195 00:11:13,640 --> 00:11:16,240 Speaker 1: are just trying to beat a benchmark, or even make 196 00:11:16,440 --> 00:11:19,719 Speaker 1: the benchmark. That's the advantage of passive. You're gonna make 197 00:11:19,760 --> 00:11:22,160 Speaker 1: the index, or maybe you want to beat the index. 198 00:11:22,320 --> 00:11:25,600 Speaker 1: Robert Kirby was a legend at Capital Guardian Trust in 199 00:11:25,679 --> 00:11:28,000 Speaker 1: Los Angeles, and he would say, boy, if you can 200 00:11:28,040 --> 00:11:31,880 Speaker 1: make two percentage points better and the SMP, you're living large. 201 00:11:32,520 --> 00:11:36,280 Speaker 1: Mr Bogol and Vanguard has said maybe you will, some will, 202 00:11:36,360 --> 00:11:40,439 Speaker 1: many won't. Alpha is different. Alpha's trying to make it 203 00:11:41,120 --> 00:11:43,160 Speaker 1: so that you can get a two percent hedge fund 204 00:11:43,200 --> 00:11:47,520 Speaker 1: fee and pick up twenty of the gain over some 205 00:11:47,679 --> 00:11:51,240 Speaker 1: hurdle rate. It's totally different than like your four oh 206 00:11:51,320 --> 00:11:53,760 Speaker 1: one K and so you've got to be careful about 207 00:11:53,760 --> 00:11:59,719 Speaker 1: the conflation of those two strains of thought. There is 208 00:11:59,800 --> 00:12:02,600 Speaker 1: less alpha to be had. This interview happened about one 209 00:12:02,880 --> 00:12:06,360 Speaker 1: thirty yesterday, one thirty Wall Street time, right after our 210 00:12:06,400 --> 00:12:08,600 Speaker 1: colleague spoke with the President United States, and Eric asked 211 00:12:09,240 --> 00:12:11,920 Speaker 1: Mr Griffin what he thought about that proposal the President made, 212 00:12:12,240 --> 00:12:14,000 Speaker 1: or the fact that he's considering the breaking up the 213 00:12:14,000 --> 00:12:16,480 Speaker 1: big banks, and Ken Griffin telling him he's in favor 214 00:12:16,559 --> 00:12:18,880 Speaker 1: of breaking up the big banks. He says he favors 215 00:12:18,880 --> 00:12:21,160 Speaker 1: a new glass Steagle and said he saw some opportunity 216 00:12:21,160 --> 00:12:23,520 Speaker 1: there for Citadel if that were if that were to happened. 217 00:12:23,559 --> 00:12:28,240 Speaker 1: Ken Griffin a long time Republican donor, somebody who as 218 00:12:28,240 --> 00:12:30,240 Speaker 1: an affiliated member of that of that party, has given 219 00:12:30,240 --> 00:12:32,160 Speaker 1: a lot of money to that party. He talked a 220 00:12:32,200 --> 00:12:33,959 Speaker 1: lot about Washington the context of that. If you said 221 00:12:33,960 --> 00:12:35,560 Speaker 1: a hundred days is not enough time to judge with 222 00:12:35,600 --> 00:12:38,839 Speaker 1: the President, well yeah, I'll go with that, but you know, 223 00:12:38,880 --> 00:12:41,160 Speaker 1: I would defer to the hedge fund manager Michael the Key, 224 00:12:43,520 --> 00:12:46,439 Speaker 1: who has actually looked around at what people are going 225 00:12:46,520 --> 00:12:50,160 Speaker 1: to do about this incredibly exciting idea of a new 226 00:12:50,400 --> 00:12:54,960 Speaker 1: redux of nineteen thirty three banking uh to take us 227 00:12:55,000 --> 00:12:57,160 Speaker 1: back there. It was a pretty ugly time for the nation. 228 00:12:57,280 --> 00:13:01,400 Speaker 1: And to remind everyone, Glass Steagle's not an act, it's 229 00:13:01,440 --> 00:13:05,559 Speaker 1: not even a legislation. It's it's it's some paragraphs slid 230 00:13:05,760 --> 00:13:12,559 Speaker 1: into a very slim three yet profound thirty four combo. 231 00:13:13,440 --> 00:13:17,880 Speaker 1: No one's talking about any kind of reform, and particularly today, David, 232 00:13:17,880 --> 00:13:20,800 Speaker 1: you're not going to get a slim act today. I 233 00:13:20,840 --> 00:13:24,000 Speaker 1: mean just look at a voluminous DoD Franks Yeah, or 234 00:13:24,000 --> 00:13:25,680 Speaker 1: even that funding billed at the House and saidn't have 235 00:13:25,720 --> 00:13:27,640 Speaker 1: to vote on two thousand pages. They're going to be 236 00:13:28,200 --> 00:13:31,079 Speaker 1: presumably finding their way through this week. Ken Griffin saying 237 00:13:31,480 --> 00:13:33,439 Speaker 1: his biggest concern in the coming years the US could 238 00:13:33,440 --> 00:13:35,720 Speaker 1: slide into recession. I wrote, Eric Shouts grafted this interview. 239 00:13:35,720 --> 00:13:39,520 Speaker 1: He very elegantly asked Ken Griffin about Citadel, noting that 240 00:13:39,559 --> 00:13:41,640 Speaker 1: a lot of people have said it's a tough shop 241 00:13:41,679 --> 00:13:44,160 Speaker 1: to work in. People come through, they get chewed, chewed up, 242 00:13:44,160 --> 00:13:46,680 Speaker 1: and they move on. And I thought that Ken Griffin 243 00:13:46,760 --> 00:13:48,280 Speaker 1: was like he said, there's a lot of good people 244 00:13:48,320 --> 00:13:51,720 Speaker 1: availble to hire. I would suggest people listen to Mr 245 00:13:51,760 --> 00:13:55,160 Speaker 1: Ackman's interview with Francy Lay. I thought the New York 246 00:13:55,160 --> 00:13:58,200 Speaker 1: Times did a nice treatment on Mr Paulson today in 247 00:13:58,240 --> 00:14:00,800 Speaker 1: the cover of their Business section. All these guys is 248 00:14:00,880 --> 00:14:06,040 Speaker 1: Ken mentions there are really struggling to have the opportunity 249 00:14:06,200 --> 00:14:12,120 Speaker 1: for return, opportunity for alpha, given how dampened volatility is 250 00:14:12,160 --> 00:14:15,840 Speaker 1: across asset classes. And I mean the VIX ten point 251 00:14:15,840 --> 00:14:19,760 Speaker 1: one six with that nine print yesterday is symbolic of 252 00:14:19,800 --> 00:14:22,040 Speaker 1: a lot of other asset classes as well. You can 253 00:14:22,120 --> 00:14:24,480 Speaker 1: check out all these interviews on the Bloomberg at tv go. 254 00:14:25,120 --> 00:14:26,720 Speaker 1: Of course you can look at at Bloomberg dot com. 255 00:14:26,760 --> 00:14:28,680 Speaker 1: It's well Bill Ackman and Ken Griffin and a number 256 00:14:28,680 --> 00:14:31,680 Speaker 1: of other ones. Can we talk, say, John, can we 257 00:14:31,720 --> 00:14:33,640 Speaker 1: do two Greek letters and one interviewer? Is that too 258 00:14:33,760 --> 00:14:39,600 Speaker 1: much data? Was that the optunity in college? No? I 259 00:14:39,640 --> 00:14:43,680 Speaker 1: wasn't looking for. That was a sorority. This is Bloomberg. 260 00:14:57,080 --> 00:15:01,000 Speaker 1: This is a great pleasure. I will probably talk to 261 00:15:01,080 --> 00:15:03,360 Speaker 1: Chairman Bernankey about this. We'll see how much time I 262 00:15:03,400 --> 00:15:07,440 Speaker 1: have David Gurrow joining us now. Next year will be 263 00:15:07,480 --> 00:15:12,040 Speaker 1: the twentieth anniversary of Against the Tide. It was definitive. 264 00:15:12,120 --> 00:15:17,080 Speaker 1: If you were cool, you carried Douglas Irwin's Against the 265 00:15:17,120 --> 00:15:21,200 Speaker 1: Tide hardcover around with you. Some people, Doug actually read it. 266 00:15:21,960 --> 00:15:24,880 Speaker 1: Hard to believe. I guess maybe the President United States 267 00:15:24,880 --> 00:15:28,240 Speaker 1: didn't read it. But let me ask you right now, 268 00:15:28,680 --> 00:15:32,560 Speaker 1: in two thousand and seventeen, to vamp off of Paul 269 00:15:32,640 --> 00:15:38,440 Speaker 1: Krugman's Ricardo's Dilemma, what you and Professor Krugman do in 270 00:15:38,440 --> 00:15:44,640 Speaker 1: international economics and international trade is complex, isn't it. I mean, 271 00:15:44,640 --> 00:15:49,040 Speaker 1: what Ricardo did on comparative advantage is a tough concept 272 00:15:49,120 --> 00:15:53,400 Speaker 1: to grasp, isn't it. Actually just a few weeks ago, um, 273 00:15:53,440 --> 00:15:58,320 Speaker 1: it was two anniversary of David Ricardo's theory of comparative advantage. Uh, 274 00:15:58,360 --> 00:16:01,320 Speaker 1: And I've written about that. Krugman's written about that in 275 00:16:01,480 --> 00:16:05,360 Speaker 1: his little essay called Ricardo's Difficult Idea. And as we 276 00:16:05,400 --> 00:16:08,120 Speaker 1: know in the classroom, it's very difficult even with bright 277 00:16:08,160 --> 00:16:11,920 Speaker 1: twenty year olds to talk about this idea of compared 278 00:16:11,960 --> 00:16:14,680 Speaker 1: to advantage. That's certainly tough in the policy realm as well. 279 00:16:14,840 --> 00:16:18,000 Speaker 1: Is it difficult to talk to a grizzled seventy year 280 00:16:18,000 --> 00:16:22,760 Speaker 1: old sitting in the Oval office as well about comparative advantage? Well, 281 00:16:22,800 --> 00:16:25,640 Speaker 1: he does seem that he has this zero some you know, 282 00:16:25,760 --> 00:16:27,440 Speaker 1: a view of trade, and I don't know where that 283 00:16:27,440 --> 00:16:31,160 Speaker 1: comes from his business background as UHM sino owner or 284 00:16:31,280 --> 00:16:34,160 Speaker 1: property developer, where you know, in the casino, if the 285 00:16:34,160 --> 00:16:36,880 Speaker 1: house wins, you lose in property. Either you get the 286 00:16:36,880 --> 00:16:39,480 Speaker 1: property or someone else does. But international trade is a 287 00:16:39,560 --> 00:16:43,480 Speaker 1: very different activity where both countries can benefit from exchanging 288 00:16:43,520 --> 00:16:46,120 Speaker 1: goods and services with one another. Professor, And what are 289 00:16:46,120 --> 00:16:48,760 Speaker 1: we learning about this administration's trade policy at this point? 290 00:16:48,800 --> 00:16:50,560 Speaker 1: We've been citing an interview that our colleagues did with 291 00:16:50,560 --> 00:16:55,280 Speaker 1: the President yesterday. He said he's already to rewrite revise 292 00:16:55,360 --> 00:16:57,920 Speaker 1: and after just waiting on the Democrats in the Congress 293 00:16:57,920 --> 00:16:59,720 Speaker 1: to give him the authorization to do that. Of course, 294 00:16:59,720 --> 00:17:01,360 Speaker 1: there's all this formality with the letter having to be 295 00:17:01,400 --> 00:17:03,520 Speaker 1: sent in this and that. But we certainly saw the 296 00:17:03,600 --> 00:17:07,760 Speaker 1: countervailing duties imposed last week on uh softwood. Talk of 297 00:17:07,800 --> 00:17:11,000 Speaker 1: that happening with Darry wilber Ross now looking at aluminum 298 00:17:11,000 --> 00:17:13,600 Speaker 1: as well. What are we learning about the priorities of 299 00:17:13,640 --> 00:17:16,760 Speaker 1: this administration when it comes to trade. Well, I think 300 00:17:16,880 --> 00:17:20,600 Speaker 1: the administration is learning that politics is difficult. Their divisions 301 00:17:20,640 --> 00:17:23,800 Speaker 1: within the administration about how hard alignes take on China 302 00:17:23,960 --> 00:17:27,280 Speaker 1: and on Mexico and NAFTA, and also divisions between the 303 00:17:27,400 --> 00:17:30,120 Speaker 1: executive branch in Congress over what to do as well. 304 00:17:30,160 --> 00:17:32,920 Speaker 1: You've seen some pushback from members of Congress who are 305 00:17:32,960 --> 00:17:36,440 Speaker 1: afraid of just ripping up NAFTA because Mexico will retaliate 306 00:17:36,440 --> 00:17:39,000 Speaker 1: against our farm ex sports. So we get Republicans members 307 00:17:39,000 --> 00:17:41,320 Speaker 1: of Congress from the Midwest farm states who are very 308 00:17:41,400 --> 00:17:43,359 Speaker 1: much against that. Now, in terms of some of the 309 00:17:43,359 --> 00:17:46,720 Speaker 1: other things you pointed out in UH softwood lumber or 310 00:17:47,040 --> 00:17:50,760 Speaker 1: some of the anti anti dumping and countervailing duties, these 311 00:17:50,800 --> 00:17:55,040 Speaker 1: are actually sort of relatively small product specific trade skirmishes 312 00:17:55,040 --> 00:17:58,240 Speaker 1: that occur under any administration, So that's not really attacked 313 00:17:58,760 --> 00:18:01,080 Speaker 1: or a switch in terms of Trumpet administration. But I 314 00:18:01,119 --> 00:18:03,760 Speaker 1: do expect you'll see many more of those UH, smaller 315 00:18:04,040 --> 00:18:06,639 Speaker 1: problems cropping up as well. When you talk to the 316 00:18:06,640 --> 00:18:09,159 Speaker 1: sector of commerce, he says a priority for the administration 317 00:18:09,240 --> 00:18:13,280 Speaker 1: is more enforcement. Looking back on the last few administrations, 318 00:18:14,440 --> 00:18:17,119 Speaker 1: to what degree was enforcement prioritize? What what stands to 319 00:18:17,200 --> 00:18:22,080 Speaker 1: change here? What stands changes that Usually enforcement depends on 320 00:18:23,040 --> 00:18:25,800 Speaker 1: the private sector petitioning the government, So an import competing 321 00:18:25,840 --> 00:18:29,280 Speaker 1: industry will say no imports are being dumped in the market. 322 00:18:29,359 --> 00:18:32,240 Speaker 1: This is unfair. They notify the government, and the government 323 00:18:32,320 --> 00:18:35,679 Speaker 1: launches an investigation. What the Trumpet administration promises to do 324 00:18:35,760 --> 00:18:38,000 Speaker 1: is be much more proactive, not wait for the private 325 00:18:38,040 --> 00:18:40,800 Speaker 1: industry to file a case, but actually say we're going 326 00:18:40,840 --> 00:18:43,560 Speaker 1: to initiate cases on our own. And the statute that 327 00:18:43,600 --> 00:18:47,679 Speaker 1: they've chosen to invoke now is a very obscure provision 328 00:18:47,680 --> 00:18:48,960 Speaker 1: in the U s Trade Lock dating back in the 329 00:18:49,040 --> 00:18:53,840 Speaker 1: nine saying national security is an issue. So that was 330 00:18:53,880 --> 00:18:55,680 Speaker 1: the case they announced just a couple of weeks ago 331 00:18:55,760 --> 00:18:59,080 Speaker 1: regarding a steal um, and so I think we're gonna 332 00:18:59,119 --> 00:19:02,200 Speaker 1: get any more trade cases that they themselves are going 333 00:19:02,240 --> 00:19:04,919 Speaker 1: to start the initiation process and not wait for the 334 00:19:04,920 --> 00:19:08,920 Speaker 1: private sector to to begin on their own. Professor ages ago, 335 00:19:08,960 --> 00:19:12,360 Speaker 1: you did a wonderful compendium of Jacob Viner of Chicago 336 00:19:12,480 --> 00:19:15,560 Speaker 1: lectures in Economics three oh one. What should we learn 337 00:19:15,600 --> 00:19:20,800 Speaker 1: from Jacob Viner about mercantile is m Well, you're Jacob 338 00:19:20,880 --> 00:19:23,560 Speaker 1: Viner is one of the great students of mercantilism, one 339 00:19:23,560 --> 00:19:25,560 Speaker 1: of the great scholars of all time in terms of 340 00:19:25,560 --> 00:19:27,919 Speaker 1: international trade. He wrote a terrific book called Studies in 341 00:19:27,960 --> 00:19:30,960 Speaker 1: the Theory of International trade, and he wrote in the 342 00:19:31,000 --> 00:19:33,680 Speaker 1: nineteen thirties and forties, and in particularly the period when 343 00:19:33,960 --> 00:19:36,040 Speaker 1: the US was trying aft World or two to set 344 00:19:36,080 --> 00:19:39,000 Speaker 1: up this new institution called the GAT the General Agreement 345 00:19:39,040 --> 00:19:40,800 Speaker 1: on Tarifs and Trade, to try to bring down trade 346 00:19:40,800 --> 00:19:43,040 Speaker 1: barriers around the world. And he was a little bit 347 00:19:43,040 --> 00:19:45,400 Speaker 1: skeptical that they could pull this off, because he realized 348 00:19:45,400 --> 00:19:48,320 Speaker 1: that the pull of mercantiless thinking, the worry about that 349 00:19:48,640 --> 00:19:50,560 Speaker 1: is going to harm the domestic economy if we open 350 00:19:50,640 --> 00:19:53,240 Speaker 1: up to trade. Um is so powerful in the public's 351 00:19:53,280 --> 00:19:55,920 Speaker 1: minds and in the minds of politicians that it's a 352 00:19:56,000 --> 00:19:58,800 Speaker 1: very difficult thing to do. And yet remarkably, over the 353 00:19:58,840 --> 00:20:02,040 Speaker 1: past sixty seventy years or so, the US has exerted 354 00:20:02,040 --> 00:20:05,040 Speaker 1: that tremendous leadership in bringing down trade berries around the world, 355 00:20:05,040 --> 00:20:08,440 Speaker 1: and I think worldwide ecomic prosperity today that we see 356 00:20:09,000 --> 00:20:11,800 Speaker 1: owe something to that. Douglas Irwin, thank you so much. 357 00:20:11,800 --> 00:20:14,800 Speaker 1: With Dartmouth Coology as a wonderful book coming out later 358 00:20:15,040 --> 00:20:19,600 Speaker 1: this year on our Trade policy Vintage two thousand seventeen. 359 00:20:19,640 --> 00:20:22,959 Speaker 1: I just put on Twitter David Gura his classic Against 360 00:20:23,000 --> 00:20:26,200 Speaker 1: the Tide. I also put out Krugman's David Ricardo piece 361 00:20:26,200 --> 00:20:30,800 Speaker 1: which is must must must read of the frustration of 362 00:20:30,880 --> 00:20:35,119 Speaker 1: pros and talking about how trade can benefit societies even 363 00:20:35,160 --> 00:20:38,720 Speaker 1: with a massive labor disruption in the wild, dispersion of 364 00:20:38,760 --> 00:20:41,720 Speaker 1: wages and income. And I even did a photograph of 365 00:20:41,800 --> 00:20:52,560 Speaker 1: Jacob Viner's classic summary by Douglas Irwin, brought you by 366 00:20:52,800 --> 00:20:56,520 Speaker 1: Bank of America. Mary Lynch, dedicated to bringing our clients 367 00:20:56,640 --> 00:20:59,960 Speaker 1: insights and solutions to meet the challenges of a trans 368 00:21:00,040 --> 00:21:04,120 Speaker 1: forming world. That's the power of global connections, Mary Lynch, 369 00:21:04,240 --> 00:21:14,200 Speaker 1: Pierce Federan Smith Incorporated, Member s I p C. There's 370 00:21:14,240 --> 00:21:17,800 Speaker 1: something new from Bloomberg. It's called Lens. Starting right now, 371 00:21:17,880 --> 00:21:20,719 Speaker 1: you can use the Bloomberg Io s app off your 372 00:21:20,760 --> 00:21:25,679 Speaker 1: iPhone or iPad, or our new Google Chrome extension to 373 00:21:25,760 --> 00:21:29,679 Speaker 1: read any news story on any website, scan it, and 374 00:21:29,680 --> 00:21:34,159 Speaker 1: then instantly see the news stories relevant market data from Bloomberg. 375 00:21:34,480 --> 00:21:37,560 Speaker 1: In addition, see all the bios of the key people 376 00:21:38,000 --> 00:21:41,199 Speaker 1: mentioned in the story. It's called lens, and it is 377 00:21:41,280 --> 00:21:44,359 Speaker 1: just that, a lens into the people and the data 378 00:21:44,480 --> 00:21:48,720 Speaker 1: of any story you may be reading. Again, Lens brings 379 00:21:48,760 --> 00:21:52,000 Speaker 1: you the power of Bloomberg's news and data download or 380 00:21:52,040 --> 00:21:55,359 Speaker 1: Io s app or search for the Bloomberg extension at 381 00:21:55,400 --> 00:21:58,720 Speaker 1: the Chrome Store to try Lens out. Learn more at 382 00:21:58,760 --> 00:22:06,720 Speaker 1: Bloomberg dot com slash lens. Talking earlier about the Greek letters, 383 00:22:06,760 --> 00:22:10,480 Speaker 1: we're elthinging it about Ken Griffith at Citadel as well. 384 00:22:11,200 --> 00:22:15,240 Speaker 1: Maybe it's time to theta Julian. Emmanuel joins us with UBS. 385 00:22:15,320 --> 00:22:18,760 Speaker 1: He's does derivatives and equities for UBS. Will usually keep 386 00:22:18,800 --> 00:22:22,639 Speaker 1: the conversation sort of not simple, but you know, focused 387 00:22:22,680 --> 00:22:24,920 Speaker 1: on where we're going in stocks and bonds. I guess 388 00:22:24,960 --> 00:22:27,200 Speaker 1: we could do that, Julian, but I want to talk 389 00:22:27,280 --> 00:22:30,640 Speaker 1: about how everybody's smart. And there's a lot of research 390 00:22:30,720 --> 00:22:34,320 Speaker 1: about the time function, the theta function on the X 391 00:22:34,359 --> 00:22:38,399 Speaker 1: axis until you blow up in the bottom line is 392 00:22:38,560 --> 00:22:41,400 Speaker 1: a lot of research, folks, is somewhere in the vicinity 393 00:22:41,440 --> 00:22:44,000 Speaker 1: of three years. You can be a genius. You can 394 00:22:44,040 --> 00:22:46,560 Speaker 1: be smart. You can be oh I got out of that. Okay, 395 00:22:46,600 --> 00:22:48,880 Speaker 1: you can be a genius. You can be smart four 396 00:22:48,880 --> 00:22:52,440 Speaker 1: times a row, and then whammo, you get hit by 397 00:22:52,520 --> 00:22:55,880 Speaker 1: one negative event. And that happens to every hedge fund, 398 00:22:55,880 --> 00:22:58,840 Speaker 1: and frankly it happens to me. David Gura, John Tucker, 399 00:22:58,880 --> 00:23:01,840 Speaker 1: you've never enjoyed the six experience because you're going up, up, 400 00:23:01,920 --> 00:23:07,760 Speaker 1: up for hours. I'm an investment genius, yes, Julian. How 401 00:23:07,800 --> 00:23:11,240 Speaker 1: do you protect yourself from blowing up? In the land 402 00:23:11,280 --> 00:23:15,240 Speaker 1: of data? It is a challenge because basically, when the 403 00:23:15,400 --> 00:23:19,320 Speaker 1: market volatility is as low as it is now, it 404 00:23:19,440 --> 00:23:23,359 Speaker 1: sort of seduces you into taking more risk than you 405 00:23:23,480 --> 00:23:26,560 Speaker 1: might normally. Uh. We saw that in two thousand and 406 00:23:26,600 --> 00:23:29,000 Speaker 1: six and two thousand and seven. That was when the 407 00:23:29,040 --> 00:23:33,640 Speaker 1: concept of our value at risk got debunked. Basically, at 408 00:23:33,680 --> 00:23:36,840 Speaker 1: this point in the cycle eight years in, you need 409 00:23:36,880 --> 00:23:40,040 Speaker 1: to remain disciplined, and that means don't take on more 410 00:23:40,119 --> 00:23:43,160 Speaker 1: leverage than then you believe you can handle. And when 411 00:23:43,240 --> 00:23:46,520 Speaker 1: you think about things that are causing you to perhaps 412 00:23:46,600 --> 00:23:50,280 Speaker 1: reassess the position a stock, what what have you? Uh? 413 00:23:50,480 --> 00:23:54,360 Speaker 1: Theta is actually very inexpensive right now. And hedges make 414 00:23:54,440 --> 00:23:58,320 Speaker 1: sense when when you see the vix where it was yesterday, 415 00:23:58,400 --> 00:24:02,320 Speaker 1: how do you react and what do you do? Disbelief 416 00:24:02,400 --> 00:24:06,359 Speaker 1: to be perfectly frank, because part of this entire story, 417 00:24:06,560 --> 00:24:09,480 Speaker 1: getting back to THEDA, the fact that that, uh, you know, 418 00:24:09,920 --> 00:24:14,239 Speaker 1: money should have some sort of time value. Um, we 419 00:24:14,320 --> 00:24:18,000 Speaker 1: would have thought that with the FED beginning the rate hike, cycle, 420 00:24:18,040 --> 00:24:21,080 Speaker 1: and we think they're going to hike in June. Um, 421 00:24:21,200 --> 00:24:24,880 Speaker 1: that there would be a higher value to THEATA than 422 00:24:24,920 --> 00:24:28,600 Speaker 1: there is now. But so to us. You know, again, 423 00:24:29,000 --> 00:24:32,960 Speaker 1: it comes down to selectively looking at one's portfolio when 424 00:24:33,080 --> 00:24:36,199 Speaker 1: things are a little bit too out of whack or 425 00:24:36,320 --> 00:24:39,920 Speaker 1: you feel a bit uncomfortable. And frankly, we're seeing clients 426 00:24:39,960 --> 00:24:44,520 Speaker 1: do that now thinking about hedging their US exposure as 427 00:24:44,520 --> 00:24:48,120 Speaker 1: they turned towards Europe. Um, it is a perfect time 428 00:24:48,160 --> 00:24:50,560 Speaker 1: to take advantage of THEADA as they turned towards Europe. 429 00:24:50,600 --> 00:24:52,240 Speaker 1: What what do you like in Europe right now? What's 430 00:24:52,320 --> 00:24:54,760 Speaker 1: what's attracted to you there? Well, if Europe is going 431 00:24:54,800 --> 00:25:00,240 Speaker 1: to work, Um, obviously political risk is is dead ahead 432 00:25:00,240 --> 00:25:03,160 Speaker 1: of us on Sunday. But if Europe is going to work, 433 00:25:03,240 --> 00:25:06,640 Speaker 1: it's going to be different than when it worked, uh 434 00:25:06,680 --> 00:25:08,920 Speaker 1: to a large extent in the first quarter of two 435 00:25:08,960 --> 00:25:11,840 Speaker 1: thousand and fifteen. It's going to work because the economy 436 00:25:11,920 --> 00:25:15,840 Speaker 1: is going to accelerate, perhaps uh pound for pound a 437 00:25:15,880 --> 00:25:19,760 Speaker 1: little bit more than the US economy is going to accelerate, 438 00:25:20,000 --> 00:25:24,120 Speaker 1: and so that leads us towards the cyclicals chemicals. Dare 439 00:25:24,160 --> 00:25:29,879 Speaker 1: I say financials Um? Well, we do, um, you know, 440 00:25:29,960 --> 00:25:34,760 Speaker 1: and and again exporters, because this time the exporters aren't 441 00:25:34,800 --> 00:25:38,439 Speaker 1: going to be as affected by a gently rising euro, 442 00:25:38,880 --> 00:25:44,080 Speaker 1: which will happen, um if political risk becomes somewhat less 443 00:25:44,160 --> 00:25:47,520 Speaker 1: next week, and if the economy does better because they're 444 00:25:47,560 --> 00:25:50,080 Speaker 1: exporting to emerging markets who are picking up as well. 445 00:25:50,160 --> 00:25:52,240 Speaker 1: Let's go back to the VIX ten point zero nine. 446 00:25:52,280 --> 00:25:54,440 Speaker 1: We had a nine handle. I went back once folks, 447 00:25:54,480 --> 00:25:57,200 Speaker 1: I looked at the daily charts of the VIX, maybe 448 00:25:57,200 --> 00:25:59,919 Speaker 1: even Introdut, I can't remember right now. It is ray 449 00:26:00,040 --> 00:26:04,240 Speaker 1: Her now Julian to be where we are. If we're 450 00:26:04,320 --> 00:26:06,960 Speaker 1: rare here, why are we at down twenty two thousand? 451 00:26:07,480 --> 00:26:11,479 Speaker 1: Why is volatility so low if we're not bursting out 452 00:26:11,760 --> 00:26:15,520 Speaker 1: to massive record hize. Well, it actually has something to 453 00:26:15,560 --> 00:26:17,480 Speaker 1: do with and I don't know exactly what the Greek 454 00:26:17,560 --> 00:26:22,160 Speaker 1: letter for this is, is something called low correlation. So basically, 455 00:26:22,200 --> 00:26:24,600 Speaker 1: on a day to day basis, for the last three months, 456 00:26:24,640 --> 00:26:26,879 Speaker 1: if you're looking at the Dow, you're looking at the SMP, 457 00:26:27,359 --> 00:26:30,639 Speaker 1: it goes nowhere and nowhere very quickly. Um. And what 458 00:26:30,760 --> 00:26:34,399 Speaker 1: that means is the stocks underlying those indexes are all 459 00:26:34,480 --> 00:26:38,240 Speaker 1: moving in different directions day to day, minute to minute 460 00:26:38,400 --> 00:26:41,840 Speaker 1: and the reason that's happening, in our view, is because 461 00:26:41,880 --> 00:26:45,000 Speaker 1: there's this incredible disconnect between what everyone likes to call 462 00:26:45,240 --> 00:26:48,280 Speaker 1: the hard data where the economy actually is, and the 463 00:26:48,320 --> 00:26:51,840 Speaker 1: soft data the confidence uh that you know gets tweeted 464 00:26:51,840 --> 00:26:55,439 Speaker 1: about so often um, and the market is waiting for 465 00:26:55,520 --> 00:26:58,440 Speaker 1: those two to reconcile. How do you like the VIX 466 00:26:58,480 --> 00:27:00,399 Speaker 1: when you look at measures of volatility? What does it 467 00:27:00,440 --> 00:27:04,000 Speaker 1: offer you versus versus others? Well, it's it's one of 468 00:27:04,000 --> 00:27:08,679 Speaker 1: those things in our business generally, the simplest, most accepted 469 00:27:08,720 --> 00:27:11,520 Speaker 1: measure is the one that makes the most sense. Their 470 00:27:11,600 --> 00:27:14,920 Speaker 1: derivatives of the VIX, there's you know, double levered inverse 471 00:27:14,960 --> 00:27:18,320 Speaker 1: and so on and so forth. But at its simplest 472 00:27:18,520 --> 00:27:22,560 Speaker 1: it just measures, you know, the perception of the risk 473 00:27:22,760 --> 00:27:25,800 Speaker 1: and the fear out there. And again, to us, it's 474 00:27:25,840 --> 00:27:28,840 Speaker 1: one of those things we and and at extremes we 475 00:27:28,920 --> 00:27:31,920 Speaker 1: tend to lose this perspective. The VIX is a mean 476 00:27:32,040 --> 00:27:36,400 Speaker 1: reverting instrument, and the long run average is nineteen versus ten. 477 00:27:36,520 --> 00:27:41,520 Speaker 1: This more, let's get philosophical, folks. Is philosophical Tuesday is 478 00:27:41,600 --> 00:27:46,440 Speaker 1: cash an asset, absolutely, and it's becoming a more valuable 479 00:27:46,480 --> 00:27:50,719 Speaker 1: asset with with you know every piece of fed Rederick. 480 00:27:51,359 --> 00:27:54,080 Speaker 1: How do you position yourself for Sunday night or or 481 00:27:54,480 --> 00:27:56,560 Speaker 1: Monday morning. Tom's gonna position himself at buying up a 482 00:27:56,600 --> 00:27:58,960 Speaker 1: getting some burgundy in Paris. But what are you doing 483 00:27:58,960 --> 00:28:00,520 Speaker 1: to get ready for that a life You see the 484 00:28:00,560 --> 00:28:02,760 Speaker 1: polling and see indications of where it's likely to go. 485 00:28:03,160 --> 00:28:05,280 Speaker 1: How do you prepare for what happens once we do 486 00:28:05,320 --> 00:28:09,680 Speaker 1: get the official results? Well before events such as this, 487 00:28:10,119 --> 00:28:13,280 Speaker 1: what you really should do is plan where you think 488 00:28:13,320 --> 00:28:17,160 Speaker 1: you want to be several weeks in advance. And actually, 489 00:28:17,160 --> 00:28:19,280 Speaker 1: when we think about the run up to both Brexit 490 00:28:19,359 --> 00:28:22,240 Speaker 1: and the U s election, this one is a little different. 491 00:28:22,520 --> 00:28:26,120 Speaker 1: People are saying, my goodness, hedges didn't didn't make any 492 00:28:26,160 --> 00:28:29,280 Speaker 1: sense post Brexit, post the US elections, so I'm not 493 00:28:29,280 --> 00:28:31,359 Speaker 1: going to pay up for hedges, which is why the 494 00:28:31,440 --> 00:28:34,560 Speaker 1: vix is where it is today. What you really want 495 00:28:34,560 --> 00:28:38,840 Speaker 1: to do is have your portfolio in a situation where, 496 00:28:39,200 --> 00:28:43,760 Speaker 1: if you know the the volatile event occurs, you imagine 497 00:28:43,760 --> 00:28:47,320 Speaker 1: yourself to be a buyer down ten percent in the 498 00:28:47,440 --> 00:28:52,000 Speaker 1: US markets. Um Likewise, if the markets start running away, 499 00:28:52,280 --> 00:28:54,320 Speaker 1: you don't want to be chasing that to the upside. 500 00:28:54,760 --> 00:28:57,560 Speaker 1: Is this discussion that we're having all about the great distortion? 501 00:28:57,840 --> 00:29:01,680 Speaker 1: Is it just about the effect of central bank theory 502 00:29:01,880 --> 00:29:06,080 Speaker 1: and practice upon the fixed income market? Did you just 503 00:29:06,160 --> 00:29:11,200 Speaker 1: carry that right through and process it right through the equities? Absolutely? 504 00:29:11,640 --> 00:29:15,000 Speaker 1: I mean historians will be I'm just trying out my 505 00:29:15,080 --> 00:29:18,760 Speaker 1: questions for Ben brunnki on you you know, run by 506 00:29:18,800 --> 00:29:24,200 Speaker 1: Julian Emmanuel at first. Uh, the historians will look at 507 00:29:24,240 --> 00:29:28,840 Speaker 1: this period in awe because literally, you know, the suppression 508 00:29:28,920 --> 00:29:33,080 Speaker 1: of interest rates worldwide, and part of what is potentially 509 00:29:33,520 --> 00:29:38,960 Speaker 1: the allure of Europe next week is that the risk 510 00:29:39,160 --> 00:29:42,400 Speaker 1: on mood, if it materializes, is going to take some 511 00:29:42,440 --> 00:29:45,520 Speaker 1: pressure off the rate markets, and you know, we might 512 00:29:45,600 --> 00:29:49,520 Speaker 1: start seeing you know, positive yields in some other instruments 513 00:29:49,600 --> 00:29:54,000 Speaker 1: that might long been might exactly, but it determines everything 514 00:29:54,040 --> 00:29:56,480 Speaker 1: we I'm looking at the German two year right now 515 00:29:56,640 --> 00:29:59,280 Speaker 1: negative point seven one nine, not in your record lows, 516 00:29:59,360 --> 00:30:04,760 Speaker 1: but still very suppressed towards a larger negative yield everything considered. 517 00:30:04,760 --> 00:30:07,520 Speaker 1: I also look at the Swiss twenty year. That's positive, 518 00:30:07,520 --> 00:30:11,200 Speaker 1: but that isn't going anywhere. Nothing's talking positive yields here 519 00:30:11,240 --> 00:30:15,000 Speaker 1: on my Bloomberg screen. We'll continue with Julian Emmanuel of 520 00:30:15,320 --> 00:30:18,800 Speaker 1: Ubs Julian Emmanuel to Dove Chowel with this from Ubs Julian, 521 00:30:18,840 --> 00:30:21,720 Speaker 1: have you been surprised by earnings? To me from a distance, 522 00:30:21,760 --> 00:30:24,440 Speaker 1: it's actually, oh, they're pretty good, am I right on that, 523 00:30:24,640 --> 00:30:29,000 Speaker 1: absolutely absolutely? Um, you know this rises are coming from 524 00:30:29,080 --> 00:30:32,720 Speaker 1: where we expected them to. Obviously, energy the year on 525 00:30:32,800 --> 00:30:35,960 Speaker 1: year compare is very easy to remember the plunge below 526 00:30:36,000 --> 00:30:39,320 Speaker 1: thirty dollars in the first quarter of sixteen. Financials had 527 00:30:39,320 --> 00:30:41,239 Speaker 1: a tough quarter last year as well, and that's been 528 00:30:41,280 --> 00:30:45,240 Speaker 1: a big bright spot. We continue to like financials and technology. 529 00:30:45,320 --> 00:30:47,720 Speaker 1: This is the second straight quarter of just knocking the 530 00:30:47,800 --> 00:30:50,440 Speaker 1: cover off the ball. So the picture looks pretty good 531 00:30:50,440 --> 00:30:52,600 Speaker 1: to us. What are you looking for today in the 532 00:30:52,600 --> 00:30:54,160 Speaker 1: Apple report? What's it going to tell you about the 533 00:30:54,160 --> 00:30:59,680 Speaker 1: state of the market overall? When you get better market well, 534 00:30:59,720 --> 00:31:02,720 Speaker 1: we tend to focus on on the individual report by 535 00:31:02,800 --> 00:31:06,880 Speaker 1: report all that much. But what will be interesting is 536 00:31:07,000 --> 00:31:11,320 Speaker 1: if on the happenstance that there's a uh talk about cash, 537 00:31:11,680 --> 00:31:15,320 Speaker 1: because um, that is one of the biggest holders of 538 00:31:15,320 --> 00:31:19,720 Speaker 1: offshore cash. And when we think about tax reform, repatriation 539 00:31:19,920 --> 00:31:22,160 Speaker 1: is a big part of the puzzle, and we think 540 00:31:22,160 --> 00:31:25,120 Speaker 1: that's part of the reason that technology in general has 541 00:31:25,160 --> 00:31:27,520 Speaker 1: outperformed here today. Glad you bring this up, because that 542 00:31:27,520 --> 00:31:29,360 Speaker 1: was a facet of this tax reform proposal that the 543 00:31:29,360 --> 00:31:31,880 Speaker 1: White House released last week. And we can quibble over 544 00:31:31,880 --> 00:31:34,800 Speaker 1: what's gonna stay and what's gonna go, But based on that, 545 00:31:35,120 --> 00:31:36,720 Speaker 1: do you begin to game out what that could mean 546 00:31:36,760 --> 00:31:39,480 Speaker 1: for a company like Apple, what could mean for a sector, 547 00:31:39,520 --> 00:31:41,520 Speaker 1: as I say, the tech sector, for for companies that 548 00:31:41,560 --> 00:31:45,720 Speaker 1: have cash overseas, what that might mean for the bottom line, Absolutely, 549 00:31:45,760 --> 00:31:50,720 Speaker 1: no question about it. And to us, they're the opportunity um. 550 00:31:50,960 --> 00:31:53,520 Speaker 1: In November and December of last year, when you know, 551 00:31:53,600 --> 00:31:57,800 Speaker 1: industrials and the deepest cyclicals got bit up, whereas healthcare 552 00:31:57,880 --> 00:32:03,240 Speaker 1: and technology, the two sectors with the largest offshare cash balances, underperformed. 553 00:32:03,600 --> 00:32:06,560 Speaker 1: Was was something coming into seventeen that we thought was 554 00:32:06,560 --> 00:32:10,160 Speaker 1: was really a great opportunity. We've seen those sectors outperformed, 555 00:32:10,360 --> 00:32:12,200 Speaker 1: and the fact is, when you think about it, we 556 00:32:12,240 --> 00:32:15,240 Speaker 1: think they're going to continue out performing simply because when 557 00:32:15,240 --> 00:32:18,600 Speaker 1: you look at tax reform, repatriation is the one thing 558 00:32:18,880 --> 00:32:20,960 Speaker 1: that both sides of the aisle seem to be able 559 00:32:20,960 --> 00:32:23,640 Speaker 1: to agree on. Jennifer Jacobs, one of our reporters who 560 00:32:23,640 --> 00:32:25,560 Speaker 1: sat down with the pressures because it was on the show. Yeah, 561 00:32:25,560 --> 00:32:27,680 Speaker 1: talking about that interview and the degree to which the President, 562 00:32:27,720 --> 00:32:30,040 Speaker 1: over the course of it, continue to maintain that we're 563 00:32:30,040 --> 00:32:32,280 Speaker 1: going to get to three or four percent growth here 564 00:32:32,280 --> 00:32:34,600 Speaker 1: in the US. And something that Jennifer pointed out was 565 00:32:34,600 --> 00:32:37,320 Speaker 1: he seems to be doing this too make the markets 566 00:32:37,320 --> 00:32:39,600 Speaker 1: think that this is happening, whether or not it's happening 567 00:32:39,600 --> 00:32:43,200 Speaker 1: soon later. How is that playing here in your world? 568 00:32:43,480 --> 00:32:45,920 Speaker 1: What the President is saying by talking about tax form 569 00:32:45,920 --> 00:32:48,240 Speaker 1: and the prospects for healthcare reform, even if we're not 570 00:32:48,280 --> 00:32:51,040 Speaker 1: seeing much movement, is the only thing that matters, the 571 00:32:51,080 --> 00:32:53,320 Speaker 1: fact that he's still talking about it. Well, when you 572 00:32:53,360 --> 00:32:56,400 Speaker 1: look at the confidence numbers, clearly the talk has helped, 573 00:32:56,680 --> 00:32:59,720 Speaker 1: there's no question about it. But again to us, when 574 00:32:59,720 --> 00:33:03,280 Speaker 1: you look at a first quarter where GDP came in 575 00:33:03,520 --> 00:33:07,480 Speaker 1: at point seven versus these confidence numbers that are literally 576 00:33:07,560 --> 00:33:10,760 Speaker 1: at all time highs uh, you know its It brings 577 00:33:10,760 --> 00:33:13,800 Speaker 1: back that old Wendy's commercial where's the beef? You really 578 00:33:13,840 --> 00:33:17,800 Speaker 1: need to see the economy pick up and move towards 579 00:33:17,840 --> 00:33:21,240 Speaker 1: where the confidence numbers are. Are we in a trap now? 580 00:33:21,720 --> 00:33:25,320 Speaker 1: Multiple stocks call it almost I mean it is, but 581 00:33:26,200 --> 00:33:28,600 Speaker 1: there there is this valuation. Are we at a point 582 00:33:28,600 --> 00:33:32,560 Speaker 1: where we're beginning to rationalize ownership by buying not one 583 00:33:32,640 --> 00:33:36,280 Speaker 1: year out or two years out, but farther out revenues 584 00:33:36,320 --> 00:33:39,360 Speaker 1: rings in cash flow. Are we falling into that, well, 585 00:33:39,440 --> 00:33:42,040 Speaker 1: it'll be a good value in two thousand nineteen trap. 586 00:33:43,120 --> 00:33:47,360 Speaker 1: There's definitely an element of that in the marketplace, but 587 00:33:47,440 --> 00:33:51,160 Speaker 1: I would suggest it's more in the sectors where growth 588 00:33:51,480 --> 00:33:54,520 Speaker 1: is you know, tends to be at a lower plane 589 00:33:54,920 --> 00:34:00,200 Speaker 1: for longer. Consumer staples utilities in particular, we see some 590 00:34:00,360 --> 00:34:04,080 Speaker 1: very high multiples there um And you know, frankly, if 591 00:34:04,440 --> 00:34:08,120 Speaker 1: all of of the plans are going to unfold and 592 00:34:08,160 --> 00:34:10,359 Speaker 1: the FED is going to hike and we are going 593 00:34:10,400 --> 00:34:13,200 Speaker 1: to normalize, and we are going to achieve north of 594 00:34:13,239 --> 00:34:17,160 Speaker 1: two percent GDP growth next year, interest rate sensitive stocks, 595 00:34:17,400 --> 00:34:20,719 Speaker 1: low growth stocks, even when they beat on earnings, are vulnerable. 596 00:34:21,760 --> 00:34:23,640 Speaker 1: What are you looking at outside of quis when you 597 00:34:23,640 --> 00:34:25,480 Speaker 1: look at say the currency space, what what? What's what 598 00:34:25,520 --> 00:34:27,960 Speaker 1: are you drawn to at this point? What? What pairs? Uh? Oh, 599 00:34:28,080 --> 00:34:31,960 Speaker 1: definitely dollar euro is is absolutely in the focus because 600 00:34:32,000 --> 00:34:36,160 Speaker 1: to us, and again, unlike two thousand and fifteen, when 601 00:34:36,200 --> 00:34:39,880 Speaker 1: you're about performed, it was completely due to a week 602 00:34:39,880 --> 00:34:42,520 Speaker 1: Euro trade. The whole thesis was exporters are going to 603 00:34:42,640 --> 00:34:46,360 Speaker 1: do great because the Euro is crashing, oil is crashing, 604 00:34:46,360 --> 00:34:50,520 Speaker 1: so on. This is completely the opposite set of circumstances. 605 00:34:50,840 --> 00:34:53,400 Speaker 1: We want to see the Euro strength and as a 606 00:34:53,520 --> 00:34:58,200 Speaker 1: sign that the global economy is is stable and accelerating. Julian, 607 00:34:58,239 --> 00:35:00,040 Speaker 1: thank you for the up you and Emanuel with w 608 00:35:00,160 --> 00:35:02,640 Speaker 1: b US there and particularly like the conversation on data. 609 00:35:03,320 --> 00:35:19,440 Speaker 1: We rarely talk about theta are the xxes now we 610 00:35:19,480 --> 00:35:23,399 Speaker 1: have a Washington intergy. Yeah, we continue to to look at, 611 00:35:23,480 --> 00:35:26,640 Speaker 1: talk about analyze the interview that our colleagues, Margaret Talvin 612 00:35:26,719 --> 00:35:29,000 Speaker 1: Jennifer Jacobs did yesterday with the President of the United States. 613 00:35:29,000 --> 00:35:30,839 Speaker 1: They were in the Oval Office with President Donald Trump 614 00:35:30,840 --> 00:35:33,400 Speaker 1: for about half an hour yesterday having a wide, ranching 615 00:35:33,440 --> 00:35:36,360 Speaker 1: interview with him. Margaret tal Of, our senior White House correspondent, 616 00:35:36,400 --> 00:35:38,479 Speaker 1: joins us. Now, Margat, let me just start with where 617 00:35:38,480 --> 00:35:41,439 Speaker 1: you guys started with that interview. The hundred day marker 618 00:35:41,480 --> 00:35:43,320 Speaker 1: had passed. You wanted to look ahead with the president. 619 00:35:43,360 --> 00:35:46,400 Speaker 1: What did you set out to do here in this interview? Well, yes, thanks, 620 00:35:46,640 --> 00:35:50,359 Speaker 1: we set out to talk to him for as absolutely 621 00:35:50,440 --> 00:35:55,680 Speaker 1: long and would keep us in there. Uh, look, we 622 00:35:55,719 --> 00:35:58,279 Speaker 1: wanted to see where he was going now looking forward, UM, 623 00:35:58,320 --> 00:36:01,200 Speaker 1: you know, sort of a a mixed review or a 624 00:36:01,320 --> 00:36:04,040 Speaker 1: humbling review of his first hundred days. He had the 625 00:36:04,040 --> 00:36:06,480 Speaker 1: Supreme Court nominee, but in terms of most of the 626 00:36:06,640 --> 00:36:09,759 Speaker 1: major other initiatives, they have at least been sort of 627 00:36:09,760 --> 00:36:13,359 Speaker 1: stuck or in process. But he obviously has his mind 628 00:36:13,400 --> 00:36:15,160 Speaker 1: and not a number of different areas and sort of 629 00:36:15,200 --> 00:36:17,879 Speaker 1: the big news he made in our interview, um well 630 00:36:17,960 --> 00:36:20,359 Speaker 1: all seem to circle around the theme of things he'd 631 00:36:20,360 --> 00:36:24,400 Speaker 1: be willing to do that would upend orthodoxy or defy expectations. Right, 632 00:36:24,520 --> 00:36:28,040 Speaker 1: his potential theoretical willingness to have for him to be 633 00:36:28,120 --> 00:36:30,279 Speaker 1: the person doing a direct talk with Kim John on 634 00:36:30,440 --> 00:36:32,640 Speaker 1: if it comes to that. Um, the notion that he 635 00:36:33,480 --> 00:36:36,080 Speaker 1: might be willing to uh look at living in a 636 00:36:36,200 --> 00:36:39,759 Speaker 1: gas tax, which would you know, would be very controversial 637 00:36:39,800 --> 00:36:44,080 Speaker 1: among Republicans as well as some folks who would advocate 638 00:36:44,160 --> 00:36:47,319 Speaker 1: for sort of middle class folks gas prices, etcetera. And 639 00:36:47,360 --> 00:36:49,680 Speaker 1: then this idea of breaking up the big banks. All 640 00:36:49,760 --> 00:36:53,320 Speaker 1: of these uh in sort of you know, different um 641 00:36:53,480 --> 00:36:58,560 Speaker 1: channels would all upend orthodoxy, uh potentially depending on how 642 00:36:58,560 --> 00:37:01,320 Speaker 1: he pursued them. Yeah, and you you too. You and 643 00:37:01,400 --> 00:37:09,000 Speaker 1: Jennifer weren't Dickerson Ushion part because we didn't hit the 644 00:37:09,000 --> 00:37:12,360 Speaker 1: Obama wire tap question hard. But and it's certainly like 645 00:37:12,360 --> 00:37:13,960 Speaker 1: if it had an a half hour. I mean, I'm 646 00:37:13,960 --> 00:37:16,600 Speaker 1: absolutely curious about that. But look, we're Bloomberg and we're 647 00:37:16,800 --> 00:37:19,920 Speaker 1: incredibly interested in all things economy, and he was interested 648 00:37:19,920 --> 00:37:22,080 Speaker 1: in talking about them. He knew exactly what he was 649 00:37:22,120 --> 00:37:24,839 Speaker 1: talking to, he knew exactly whose attention he was trying 650 00:37:24,840 --> 00:37:27,719 Speaker 1: to get, and uh, you know Wall Street banks, uh, 651 00:37:27,840 --> 00:37:32,200 Speaker 1: and Congress. There was a tremendous amount of interest and reaction, 652 00:37:32,320 --> 00:37:35,640 Speaker 1: although reaction I would say with kind of a let's 653 00:37:35,640 --> 00:37:39,160 Speaker 1: wait to see what he's talking about sort of feel 654 00:37:39,200 --> 00:37:41,520 Speaker 1: to it. Margaret, thank you for your comments. The other 655 00:37:41,600 --> 00:37:43,439 Speaker 1: night I was watching on c SPAN the White House 656 00:37:43,440 --> 00:37:46,960 Speaker 1: Correspondents Dinner. I thought those were important, uh comes that 657 00:37:47,120 --> 00:37:50,600 Speaker 1: you made when when I look at Trump in the analysis, 658 00:37:50,640 --> 00:37:52,799 Speaker 1: I don't read your stuff, Margaret. I go to Trump 659 00:37:52,920 --> 00:37:56,640 Speaker 1: draws out on Twitter, and my question to you is 660 00:37:56,840 --> 00:37:59,160 Speaker 1: when he's doing the joke of Trump draws and the 661 00:37:59,239 --> 00:38:01,759 Speaker 1: last one is I thought it would be easier there's 662 00:38:01,800 --> 00:38:05,319 Speaker 1: all these people standing behind them. They seem to have 663 00:38:05,360 --> 00:38:09,280 Speaker 1: evaporated in the last forty eight hours. Who is providing 664 00:38:09,440 --> 00:38:14,160 Speaker 1: support to our president on the various and Sunday statements 665 00:38:14,200 --> 00:38:17,440 Speaker 1: of the last thirty hours or is he really going 666 00:38:17,520 --> 00:38:22,359 Speaker 1: it alone right now? His staff as top aids UH. 667 00:38:22,640 --> 00:38:25,400 Speaker 1: In the course of this sort of post under days reset, 668 00:38:25,760 --> 00:38:27,919 Speaker 1: it seemed to be in more reactive mode, in part 669 00:38:27,960 --> 00:38:30,880 Speaker 1: because they're not entirely prepared for all the things that 670 00:38:30,920 --> 00:38:33,880 Speaker 1: he's saying. But I think we will see Gary constevenution 671 00:38:34,600 --> 00:38:37,080 Speaker 1: working both on the Hill and in their public comments 672 00:38:37,120 --> 00:38:39,840 Speaker 1: to try to sort of put offense and boundaries around 673 00:38:40,160 --> 00:38:42,440 Speaker 1: what he's teasing with regard to banks when it comes 674 00:38:42,440 --> 00:38:48,080 Speaker 1: to um foreign policy. You're looking on at least behind 675 00:38:48,120 --> 00:38:50,200 Speaker 1: the scene that at this being sort of again the 676 00:38:50,320 --> 00:38:54,600 Speaker 1: job for hr McMaster for jamatics and for Rex Tillerson UH, 677 00:38:54,640 --> 00:38:57,160 Speaker 1: and on a more public face for his team both 678 00:38:57,160 --> 00:38:59,520 Speaker 1: in the press operation in the National Security Council at 679 00:38:59,520 --> 00:39:02,000 Speaker 1: the sort of dial back some of what he said 680 00:39:02,000 --> 00:39:05,760 Speaker 1: about Kim John and say, well, look, he's preserving his options, 681 00:39:05,800 --> 00:39:08,359 Speaker 1: he's talking about what's possible, but we are not there yet. 682 00:39:08,400 --> 00:39:11,279 Speaker 1: But again, this has left a lot of Republicans on 683 00:39:11,320 --> 00:39:14,240 Speaker 1: the Hill sort of saying, we need to really understand 684 00:39:14,280 --> 00:39:16,160 Speaker 1: what he's talking about when he's seeking we're getting some 685 00:39:16,200 --> 00:39:19,080 Speaker 1: mixed signals here. We understand he wants to keep possibilities 686 00:39:19,040 --> 00:39:20,719 Speaker 1: does and keep people guessing, but we need a little 687 00:39:20,760 --> 00:39:23,480 Speaker 1: more certainty. David quickly, Yeah, Margaret, very quickly. We're talking 688 00:39:23,520 --> 00:39:25,360 Speaker 1: to Marty Shanker just about the message or what he 689 00:39:25,440 --> 00:39:27,760 Speaker 1: learned from that interview about the relationship between the President 690 00:39:27,800 --> 00:39:29,680 Speaker 1: and Congress. And in the hour that has passed since 691 00:39:29,680 --> 00:39:32,000 Speaker 1: we talked with Marty Shanker, your boss, our senior executive 692 00:39:32,040 --> 00:39:35,200 Speaker 1: editor for International Government, President Trump has tweeted here about 693 00:39:35,200 --> 00:39:37,760 Speaker 1: our country needing a good shutdown in September to fix 694 00:39:38,040 --> 00:39:40,840 Speaker 1: the mess How's that going to ring out over Capitol Hill? Well, 695 00:39:41,239 --> 00:39:43,200 Speaker 1: I read it a little bit. I read it as 696 00:39:43,239 --> 00:39:46,040 Speaker 1: a as a dare to Republicans to consider pursuing the 697 00:39:46,120 --> 00:39:49,000 Speaker 1: nuclear option for legislation as well as for for the 698 00:39:49,080 --> 00:39:52,719 Speaker 1: judiciary and for the Supreme Court. And so, uh, look, 699 00:39:53,200 --> 00:39:56,120 Speaker 1: maybe he's telling Democrats get yourself in order or else. 700 00:39:56,280 --> 00:39:57,920 Speaker 1: I'm willing to go there on a shutdown, But I 701 00:39:57,960 --> 00:40:00,440 Speaker 1: think the messaging may even be more complex and be 702 00:40:00,480 --> 00:40:03,000 Speaker 1: dealing with the balance of power. That what distinguishes the 703 00:40:03,040 --> 00:40:05,880 Speaker 1: Senate from the House, and President Trump's are to consolidate 704 00:40:05,960 --> 00:40:08,400 Speaker 1: power around himself. From Margaret, keep the president away from 705 00:40:08,440 --> 00:40:10,040 Speaker 1: the red button on the desk, the one for the 706 00:40:10,080 --> 00:40:14,239 Speaker 1: coke of the pepsi. Yeah, cocon pepsi. Margaret Till, thank 707 00:40:14,239 --> 00:40:17,360 Speaker 1: you so much with the important interview, yes, seriously important 708 00:40:17,360 --> 00:40:22,160 Speaker 1: interview yesterday with the President of the United States. Uh, David, 709 00:40:22,239 --> 00:40:24,040 Speaker 1: what do you make of this? You're covering the Washington 710 00:40:24,080 --> 00:40:27,640 Speaker 1: beat much more than I am. Synthesized this for us 711 00:40:27,480 --> 00:40:30,200 Speaker 1: as as you can do. It's it's fascinating to to 712 00:40:30,320 --> 00:40:32,680 Speaker 1: read through the transcripts of these interviews. About about a 713 00:40:32,680 --> 00:40:34,400 Speaker 1: week ago we got interview the AP did with the 714 00:40:34,400 --> 00:40:36,399 Speaker 1: President and you can really see sort of how he 715 00:40:36,880 --> 00:40:39,360 Speaker 1: talks about these things, comes to talk about them in 716 00:40:39,400 --> 00:40:41,239 Speaker 1: this interview. In the transcript for this interview, you see 717 00:40:41,320 --> 00:40:43,440 Speaker 1: him pausing, wrestling with what to say, acknowledging, as we've 718 00:40:43,440 --> 00:40:46,800 Speaker 1: heard from Marty and from Margaret, he recognizes the news, 719 00:40:46,840 --> 00:40:49,920 Speaker 1: making no of of what he's what he's saying. UM, 720 00:40:50,080 --> 00:40:52,040 Speaker 1: I agree with Margaret. I see I see the dare 721 00:40:52,080 --> 00:40:54,399 Speaker 1: here The line before that one about the shutdown changed 722 00:40:54,440 --> 00:40:57,160 Speaker 1: the rules nowt to fifty one percent, as Margaret was 723 00:40:57,160 --> 00:40:59,480 Speaker 1: alluding to, that would be a pretty radical reformation of 724 00:40:59,520 --> 00:41:03,920 Speaker 1: how uh, the world's most famous deliberative body works in Washington. 725 00:41:04,320 --> 00:41:07,120 Speaker 1: I would suggest that maybe in any regard, he just 726 00:41:07,160 --> 00:41:09,799 Speaker 1: needs to focus on the here in present. And isn't 727 00:41:09,840 --> 00:41:15,240 Speaker 1: that the health care legislation? No, I think it's healthcare 728 00:41:15,280 --> 00:41:17,560 Speaker 1: to get the Thursday based on what I've read, I 729 00:41:17,640 --> 00:41:19,400 Speaker 1: mean that they don't have the votes right now, folks. 730 00:41:19,440 --> 00:41:22,279 Speaker 1: The lights are on until Friday night at last. Yeah, 731 00:41:22,360 --> 00:41:25,160 Speaker 1: I would say, well, but that's normal. I would say 732 00:41:25,160 --> 00:41:38,480 Speaker 1: that that comest is normal as well. Thanks for listening 733 00:41:38,520 --> 00:41:42,880 Speaker 1: to the Bloomberg Surveillas podcast. Subscribe and listen to interviews 734 00:41:43,239 --> 00:41:48,320 Speaker 1: on Apple Podcasts, SoundCloud, or whichever podcast platform you prefer. 735 00:41:48,880 --> 00:41:51,840 Speaker 1: I'm on Twitter at Tom Keene David Gura. Is that 736 00:41:52,040 --> 00:41:56,919 Speaker 1: David Gura? Before the podcast? You can always catch us worldwide. 737 00:41:57,080 --> 00:42:11,239 Speaker 1: I'm Bloomberg Radio, brought you by Bank of America Mary Lynch, 738 00:42:11,320 --> 00:42:15,600 Speaker 1: dedicated to bringing our clients insights and solutions to meet 739 00:42:15,600 --> 00:42:19,120 Speaker 1: the challenges of a transforming world. That's the power of 740 00:42:19,160 --> 00:42:24,240 Speaker 1: global connections. Mary Lynch, Pierce, Fenner and Smith Incorporated, Member 741 00:42:24,880 --> 00:42:25,520 Speaker 1: s I p C.