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Speaker 1: Yea. Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene

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Speaker 1: with David Gura. Daily we bring you insight from the

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Speaker 1: best of economics, finance, investment, and international relations. Find Bloomberg

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Speaker 1: Surveillance on Apple Podcasts, SoundCloud, Bloomberg dot Com, and of course,

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Speaker 1: on the Bloomberg. Let's start with the fat Let's start

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Speaker 1: with that two day FED meeting. Rich Claret to joining

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Speaker 1: us now. He's a global strategic advisor at Pimco. Let

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Speaker 1: the see Lowell Harris, Professor of Economics and the Professor

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Speaker 1: of International and Public Affairs at Columbia University. Rich, great

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Speaker 1: to speak with you once again. Let's start with this meeting.

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Speaker 1: As I said, what are you looking for here? Not

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Speaker 1: a whole lot of dramas. We're not gonna get much

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Speaker 1: commentary aside from the statement tomorrow. That's right, you know, David,

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Speaker 1: thanks for having me on trick or treat. Uh. You know,

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Speaker 1: I think that tomorrow is really a place Today's a

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Speaker 1: place holder, you know. The sure ye'll like to say

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Speaker 1: every meeting is live, but nobody really uh believes that

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Speaker 1: there will be an important meeting in December where where

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Speaker 1: I expect they will be hiking. You know, in the

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Speaker 1: minutes from the September meeting, it was revealed that many

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Speaker 1: participants thought a rate hike would be appropriate later this year,

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Speaker 1: which I think means December. So I think tomorrow minimal

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Speaker 1: changes to the statement, probably acknowledging the stronger GDP growth,

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Speaker 1: and then teeing up that hike at the December meeting.

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Speaker 1: What do you make of that latest GDP read? Of course,

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Speaker 1: we heard a lot of positive spin from from the

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Speaker 1: White House, from the administration about it, indications it is

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Speaker 1: a principle of good thing. But what do you make

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Speaker 1: of and what should we make of the data that

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Speaker 1: we got last week? Well, David thinking you know what,

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Speaker 1: it was a positive surprise. Many folks, including my soft

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Speaker 1: thought that with the hurricanes UH in the third quarter,

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Speaker 1: that that it would have a negative hit to GDP.

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Speaker 1: In the event, we got a three percent headline number. Now,

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Speaker 1: a lot of that was some inventory adjustment. The underlying

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Speaker 1: trend in the economy I think seems to be a

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Speaker 1: little bit north of two percent. But still we've had

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Speaker 1: back to back three percent quarters UH one of the

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Speaker 1: few times in this recovery. So you know, when we

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Speaker 1: get good news, we should value it. How's the FED

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Speaker 1: going to process it when when they look at the

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Speaker 1: data rate across that that conference table today, how important

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Speaker 1: are those figures have we got? I think that they're

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Speaker 1: gonna say it was a pleasant surprise. I think that

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Speaker 1: they believe the momentum in the economy UH is add

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Speaker 1: or above trend growth. They expect the unemployment rate to

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Speaker 1: fall in their Phillips curve model. That means they'll expect

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Speaker 1: and inflation to move up towards target um. And to

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Speaker 1: the extent that it adds some noise to the data,

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Speaker 1: I think they'll probably look through it. So as I said,

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Speaker 1: I expect minimal changes to the statement today, but to

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Speaker 1: tee up at December rate high. Let me ask you

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Speaker 1: about the personnel a bit. This process playing out in

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Speaker 1: a way that we haven't seen before, over a period

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Speaker 1: of time longer than we've seen in the past. Tell

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Speaker 1: us a bit about Governor Jerome Pal J. Pal. What

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Speaker 1: do you know about him and how might he operate

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Speaker 1: as a FED chair reporting indicating the presidents likely to

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Speaker 1: pick him and likely to make that announcement on the

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Speaker 1: three stay Well, you know, Jerome Pal has had a

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Speaker 1: very distinguished career as a senior Treasury official in in

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Speaker 1: the George H. W. Bush administration. He's been a FED

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Speaker 1: governor since two thousand and twelve. Uh. You know, he's

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Speaker 1: very thoughtful. Based upon his comments and writings, I think

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Speaker 1: we would expect the markets would expect that that really

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Speaker 1: a Pal nomination to chairman is really a continuity choice

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Speaker 1: with regards to monetary policy. And so I think if

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Speaker 1: it is, if it is Pal, I think that he

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Speaker 1: will be seen as as really a continuity for the

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Speaker 1: yelling gradual uh normalization of of monetary policy. Is he

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Speaker 1: is he a proxy for Janet yelling for the FED chair?

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Speaker 1: In other words, how closely aligned is there thinking on

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Speaker 1: monetary well as you know in our in our system,

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Speaker 1: it's unusual for presidentially appointed members of the board to dissent.

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Speaker 1: I don't think he's ever dissented from a decision, and

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Speaker 1: if he had, that would have been unusual. So so,

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Speaker 1: certainly at each FED meeting he has voted with the chair. Uh.

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Speaker 1: You know, his writings indicate that he has some comfort

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Speaker 1: for this idea of what I've called the new neutral

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Speaker 1: for monetary poll see that in this rate high cycle

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Speaker 1: rates are going to be going up to a much

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Speaker 1: lower level than we saw in in the past. I

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Speaker 1: think perhaps potentially one potential difference with Yell on a

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Speaker 1: note not a dramatic difference, is his approach to financial regulation.

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Speaker 1: He seems to be someone more receptus the idea that

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Speaker 1: the penel and perhaps has swung a little bit too far,

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Speaker 1: and he might be more open minded to some adjustments

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Speaker 1: in financial regulation post crisis. Richard Claardo with his of

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Speaker 1: Columbia University and PIMCO Tom Keane wandering into the studio.

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Speaker 1: Bounding in the studio, I should say, wearing, Uh, what

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Speaker 1: is this? Bunny Ears? It's Bunny Ears. I was going

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Speaker 1: to go as a dover a hawk, but that got Vito.

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Speaker 1: Richard Clarida. Good morning to you, sir as well, Richard,

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Speaker 1: is this any way to pick a chairman? I mean

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Speaker 1: within the history back to William mc chesney Martin in,

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Speaker 1: all that we see is we know it's the President

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Speaker 1: United States and it's the apprentice. But are we demeaning

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Speaker 1: or debasing your economics? You know, Tom, I don't think so.

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Speaker 1: By all you know, obviously there are some new dimensions here.

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Speaker 1: You like the Instagram video, Tom, that's what he's saying, um,

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Speaker 1: but you know, I think the president, from all accounts,

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Speaker 1: is run a very thorough choice. They've been interviewed five

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Speaker 1: very capable and accomplished uh people obviously in this era,

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Speaker 1: and you know news comes out in a different form

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Speaker 1: than it did uh in the past. But you know,

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Speaker 1: the folks on this short loss list all are very

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Speaker 1: very serious and accomplished individuals. So uh, he's choosing from

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Speaker 1: the right group of people. I think that very politically

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Speaker 1: answered if I've ever heard of answer as well. Another

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Speaker 1: another important question, Rich Claire, is I saw a run

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Speaker 1: rate for GDP and the two's Michael Faroli very accomplished

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Speaker 1: at JP Morgan suggests potential GDP under two percent? Well

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Speaker 1: under two percent? Is there any way we get to

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Speaker 1: a sustain two point eight or three percent economy? Can

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Speaker 1: we migrate back to morning in America? Well, you know, Tom,

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Speaker 1: we certainly cannot do so under the current tax code.

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Speaker 1: And I so I think the ability of the economy

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Speaker 1: to grow uh, you know, north of well north of

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Speaker 1: two and approaching three is really going to depend on

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Speaker 1: getting the adjustments in the corporate tax code. You know,

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Speaker 1: we essentially encourage companies down to invest abroad we've been

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Speaker 1: under investing in our workers, and I'm confident that if

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Speaker 1: we don't get a better tax code, it's gonna be

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Speaker 1: very tough to grow, Uh, you know at three percent

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Speaker 1: depending on what's in the what's what's in the tax bill. Uh,

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Speaker 1: then that's something that could be That's something that that

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Speaker 1: could be thought about. But right now it would be

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Speaker 1: very difficult to see that. What do you make of this,

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Speaker 1: this argument for gradualism, for the gradual implementation of some

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Speaker 1: of these policies. Bloomberg News reporting yesterday that we're perhaps

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Speaker 1: likely to see that in the legislation as it's unveiled yesterday,

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Speaker 1: that could have, you know, a different effect on how

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Speaker 1: we view the deficit effects of this piece of tax legislation.

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Speaker 1: Doesn't matter if the if the changes are implemented immediately

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Speaker 1: and initially, or if they're implemented gradually. Well, you know

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Speaker 1: that that's an excellent point, David, because in fact, when

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Speaker 1: you're talking about tax all see, phasing in things can

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Speaker 1: be very very tricky unless you design it very carefully,

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Speaker 1: because in essence, what you do is, depending on how

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Speaker 1: it's phased in, you essentially encourage firms to delay investing

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Speaker 1: until new rates kick in, and so if anything that

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Speaker 1: can have a depressing effect on the you know, a

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Speaker 1: commune thing is a limiting case where in five years,

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Speaker 1: if you invest, there's a zero tax, and if you

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Speaker 1: invest now it's thirty five they're gonna wait. So phasing

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Speaker 1: in may look good for the budget numbers, but it

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Speaker 1: can be very tricky in terms of the economy. So

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Speaker 1: that's something I think that will have to be considered carefully.

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Speaker 1: What's the House view on this? What is Pimco think

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Speaker 1: the odds are that we're going to see something here

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Speaker 1: by the end of the calendar year into the first

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Speaker 1: quarter next well, I think the I think that to

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Speaker 1: get this done in is going to be tough, given

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Speaker 1: that we're already in UH in November. UM. I think

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Speaker 1: we we believe that it's more likely than not that

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Speaker 1: we get a package in the first quarter of next year.

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Speaker 1: I think it's important that the House passed the budget resolution.

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Speaker 1: There were some who said in September that would be

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Speaker 1: hard to get that done. We're gonna be I think

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Speaker 1: seeing this week UH the House Ways and Means Committee

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Speaker 1: of initial version of the bill UM, and so I

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Speaker 1: believe it is more likely than not that we do

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Speaker 1: get a bill into into but most likely in Richard Clarida,

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Speaker 1: thank you so much. Thank you for your perspective with PIMCO,

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Speaker 1: their global strategist in really an important time to speak

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Speaker 1: to Professor Clarada about so much what we see tape

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Speaker 1: to our Tom Keene here in New York has saying

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Speaker 1: a remarkable day yesterday. Continue to follow the fallout from

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Speaker 1: what happened yesterday morning. Indictments released by the federal prosecutor

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Speaker 1: Sppecial Prosecutor Robert Mueller, and we saw Paul Manafort and

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Speaker 1: Rick Gates that turned themselves into the FBI office in Washington,

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Speaker 1: d C. For some perspective on that and on tax

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Speaker 1: reform as we look ahead the legislation tomorrow. Greg Value

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Speaker 1: joins us. He's the chief global strategy at Horizon Investments

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Speaker 1: in Greg always great to get your perspective on news

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Speaker 1: out of Washington, d C. Let me ask you just

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Speaker 1: for your sense of the timing of all of this.

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Speaker 1: Listening to the commentary last night from the White House,

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Speaker 1: indications they think that this is in its final days.

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Speaker 1: Plenty of people think that this is just the beginning.

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Speaker 1: How do you see all of this playing out. How

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Speaker 1: do you see where we are at this point? Yeah,

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Speaker 1: hey David, good morning. To make a hackneyed sports analogy,

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Speaker 1: I think we're in the second inning, maybe the third inning.

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Speaker 1: We got a long way to go. There's gonna be

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Speaker 1: a lot more indictments to come. With one big goal,

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Speaker 1: and that's to get people to sing. And I do

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Speaker 1: think some people are going to sing. And I do

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Speaker 1: think this goes right to the White House. George Popanopolis,

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Speaker 1: tell us a bit about him in your sense of

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Speaker 1: him here Greg, the White House taking pains to say

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Speaker 1: he was a volunteer on the Foreign policy team. There

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Speaker 1: was just one meeting of the group of which he

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Speaker 1: was a part. I not noticed that distinction in the

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Speaker 1: in the piece of legally, as I saw yesterday, they're

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Speaker 1: not making a distinction between whether someone's a volunteer or

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Speaker 1: somebody who was on the paid to Does it make

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Speaker 1: a difference that he was just a volunteer. No, I mean,

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Speaker 1: he's a minor player. Let's be candid. But at the

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Speaker 1: same time, anyone who has received an email from him,

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Speaker 1: or has sent an email to him is probably going

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Speaker 1: to be questioned by the FBI. And this is just

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Speaker 1: an absolute snake pit for perjury. I mean, let's face

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Speaker 1: at Washington, d C. Juries have a pretty low bar

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Speaker 1: to indict. It's a very liberal town, as you know,

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Speaker 1: and I think to indict on perjury charges is going

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Speaker 1: to be Mueller's favorite tactic as he moves up the

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Speaker 1: chain of command. What I like about your latest notes

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Speaker 1: is you point out there's a snake pit there to

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Speaker 1: the left. You indicate that that could be a distraction.

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Speaker 1: We could be watching that, and it could actually be

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Speaker 1: advantageous for the president as an and his agenda, that

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Speaker 1: it is taking some of the focus away from what's

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Speaker 1: happening on Capitol Hill and what's happened on the White House.

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Speaker 1: Explain you're thinking there. It's a bit counterintuitive. Yeah, it's

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Speaker 1: it's a little tortured logic. But very briefly, I think

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Speaker 1: that the tax bill has so many flaws, and it

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Speaker 1: now looks like some of it's going to be phased in,

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Speaker 1: it's not going to be immediate that maybe the committee

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Speaker 1: would like to deflect a little attention. Maybe all of

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Speaker 1: this stuff with Mueller creates a diversion that allows the

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Speaker 1: Ways and Means Committee to pass a bill quickly. And

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Speaker 1: also maybe they want to divert attention from firing a

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Speaker 1: really great Fed chairman. So there are some counterintuitive pluses

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Speaker 1: with all of the Mulla stuff right now. If it's

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Speaker 1: the second inning, are others in that same frame of mind?

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Speaker 1: Or is the White House think they need to go

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Speaker 1: to the late relief there in the eighth inning? This

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Speaker 1: will be all over by X month of next year. Well,

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Speaker 1: who knows, Tom, what kind of echo chamber prevailed from

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Speaker 1: the White House. I think Trump here's only what it

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Speaker 1: wants to hear. Um. Yeah, I don't mean to interrupt it.

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Speaker 1: I think this Mr Valier, folks just really touched on

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Speaker 1: an important thing. What did you observe in the echo

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Speaker 1: chamber yesterday of news and now newspundit? David gurl I

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Speaker 1: would point out, I thought Vox was extraordinary, Noah Feldman

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Speaker 1: this morning in Bloomberg View is extraordinary, etcetera. But Greg,

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Speaker 1: what did you observe in the analysis of these events yesterday?

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Speaker 1: There's a pervasive view that everybody does it a pox

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Speaker 1: on both of your houses, that the Democrats are slippery,

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Speaker 1: They've got a uranium deal. You can go on and

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Speaker 1: on with the Democrats. So I think for normal Americans

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Speaker 1: which excludes the three of us, of course, But but

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Speaker 1: for normal Americans, I think this all gets very confusing.

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Speaker 1: People have their own lives to lead, and that's what

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Speaker 1: the White House wants. The White House wants to muddy

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Speaker 1: the waters, and they may succeed at that. And this

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Speaker 1: goes to the column that Thomas just mentioned a moment

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Speaker 1: ago no of Feldman writing about how you need a

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Speaker 1: clear narrative here, and this is a story that does

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Speaker 1: not have, at least at this point, a very clear narrative.

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Speaker 1: How cognizant do you think Robert Mueller is of that

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Speaker 1: as he pieces all of this together as it continues

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Speaker 1: to pursue this investigation. I really think he's pretty a

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Speaker 1: political and to immune to all of the the spinmeisters,

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Speaker 1: like the three of us. I think he doesn't really

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Speaker 1: focus on that all that much. He's got a team

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Speaker 1: of pit bull lawyers who are super aggressive and are

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Speaker 1: not real subtle, and I think they will interrogate, interrogate, interrogate,

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Speaker 1: in diet, indict and diet, and this thing moves up

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Speaker 1: the chain of command and at some point, as I

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Speaker 1: was saying to Tom earlier this morning, at some point

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Speaker 1: the president has to think about firing this guy. Greg,

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Speaker 1: Let me just pivot here quickly in the last minute

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Speaker 1: we have with you. When when Kevin Brady, the Chairman

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Speaker 1: of the houseways it means to me, releases these hundreds

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Speaker 1: of pages tomorrow, what are you gonna be flipping through

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Speaker 1: to find? What are you going to be looking for

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Speaker 1: in all of that legislation? Keeping an eye on Okay, quickly,

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Speaker 1: state and local taxes four oh one k the fate

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Speaker 1: of the estate tax. But maybe most importantly do these

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Speaker 1: tax cuts take effect right away or in order to

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Speaker 1: fit everything in to pay for everything to some of

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Speaker 1: the tax cuts get phased in over two or three years.

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Speaker 1: If that's going to be in the proposal, that's not

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Speaker 1: a good story for the markets. Great Vellian, thanks very much.

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Speaker 1: As always, that's great failure. He's chief global strategy to

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Speaker 1: Horizon Investment set. His morning bullets note invaluable for those

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Speaker 1: who are trying to follow what's going on and watchton

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Speaker 1: how it devetails with the markets, and always great to

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Speaker 1: get his perspective on what's happening. We're gonna touch this,

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Speaker 1: David and five things you need to know about. I

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Speaker 1: must admit yesterday was extraordinary, particularly the following of the

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Speaker 1: Papadopolis guilty Is that am I saying that correctly? Guilty?

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Speaker 1: I'm lying to investigators, lying to FBI investigators. So we'll

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Speaker 1: see what role he has played and will play here

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Speaker 1: going forward. We need to thank our team a particular

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Speaker 1: shout out in London to Stephanie Baker, who is definitive

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Speaker 1: on Mr Manafort in Ukraine. She was truly invaluable to

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Speaker 1: surveillance yesterday. David, you do you have Mr Papa Apolis

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Speaker 1: on your show today? We do not Mr Papadopolas on

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Speaker 1: this wire? Well perhaps, I mean that's an interesting wrinkled

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Speaker 1: all of this as well. I think that as I

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Speaker 1: listened and watched uh TV commentary last evening, it seems

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Speaker 1: like there's a lot of speculation among the federal former

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Speaker 1: federal prosecutors I listened to that perhaps he was wearing

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Speaker 1: a wire, that's why he was brought in so early.

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Speaker 1: And just incredible to look at the timetable here when

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Speaker 1: he free spoke to two investigators when he was arrested Dallas,

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Speaker 1: many months in between there I didn't note, and I

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Speaker 1: think this is correct. Uh Paul Manifort's house was rated

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Speaker 1: a day before Mr Papadopolis was apprehended Dullas International Airport.

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Speaker 1: So you're right, there is a a flavor of the

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Speaker 1: cinematic to to all of this, Tom and Uh. Interesting

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Speaker 1: to hear from Greg Valier his sense of where things are.

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Speaker 1: That we're in the second inning of this. Uh, and

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Speaker 1: we'll see what happens next. Yeah, well we'll have to

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Speaker 1: see to say the least. Right now, A good friend

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Speaker 1: of the show, someone who has given us terrific perspective

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Speaker 1: and was long international when it was out of favor,

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Speaker 1: David Harrold of Harris David, if you made any changes

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Speaker 1: in strategy and portfolio with a continued excellence, has been

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Speaker 1: a hero shift. Well, we tend to be gradualists, meaning

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Speaker 1: our movements tend to be very slow, and I would

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Speaker 1: say evolutionary as opposed to revolutionary. But if you compare

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Speaker 1: the way our portfolio looks today versay one or two

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Speaker 1: years ago, you'll see two things that stand out. One

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Speaker 1: is that there's a lot less invested in Japanese companies.

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Speaker 1: And again this is basically a function of unable to

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Speaker 1: find value or company sitting valuation targets Japan, even though

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Speaker 1: it's had a nice run price wise, there's still all

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Speaker 1: kinds of issues surrounding corporate japan profitability, UH, running a

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Speaker 1: company for shareholder value, etcetera. So you see less Japanese

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Speaker 1: uh wait lord Japanese weight than you did a few

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Speaker 1: years ago. Also with in consumer discretionary, we used to

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Speaker 1: be quite heavy in some luxury good names, carrying Richemont, LVMH,

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Speaker 1: Product etcetera. UM, we've trimmed back on a lot of

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Speaker 1: those not completely sold out, with the exception of product

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Speaker 1: where we did sell out of for for company specific reasons.

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Speaker 1: But these docks again had a very very good run.

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Speaker 1: Price has come a lot closer to value. That value

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Speaker 1: gap is quote. On the other hand, within consumer discretionary,

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Speaker 1: you still see a fairly heavy weighting in material and

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Speaker 1: UM Automobiles. You see the wait in Toyota and Daimler

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Speaker 1: as well as BMW. So there has been some changes

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Speaker 1: in complexion. But again these things tend to happen slowly

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Speaker 1: over time. So what do you do with Burbery? Do

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Speaker 1: you own Burbery? Christopher Bailey's out the door? Everybody wants

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Speaker 1: to be the next Gucci. That's part of caring. Does

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Speaker 1: David Harrow acquire Burbery shares? Given the upward there in

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Speaker 1: management now. I mean, first of all, I don't know

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Speaker 1: if it was such a bad thing. Uh. They made

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Speaker 1: a mistake, I believe a few years ago and making Christopher,

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Speaker 1: who's a very good designer, also their chief executive officer.

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Speaker 1: That often does not work two very different skill sets

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Speaker 1: running a business and you know, designing of luxury um pants, shirts, coats, etcetera.

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Speaker 1: And so, uh, you know, I think that was a mistake.

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Speaker 1: And now after after a while, he's he's leaving. Christopher

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Speaker 1: Bailey was replaced the CEO a while ago, and now

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Speaker 1: he's leaving his designer. So a lot of these places

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Speaker 1: need a fresh shock and design. And this is one

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Speaker 1: of those things that led to Gucci success is they

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Speaker 1: brought someone in who was already an insider but really

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Speaker 1: understood the Gucci brand. And of course the results have

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Speaker 1: been just exceptional. I mean, we're we're seeing huge increases.

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Speaker 1: Go to the Gucci store and make that yeah, I

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Speaker 1: mean there's a line outside the door. In fact, that's

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Speaker 1: probably the bigger problem now is keeping your high end

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Speaker 1: customer satisfied. David. I think the last time we had

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Speaker 1: you on surveillance that was shortly after this Swiss hedge

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Speaker 1: fund r r BR Capital indicated it wanted to agitate

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Speaker 1: for a breakup or some changes to Credit Swiz. Of course,

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Speaker 1: Harris has a nine percent stake in that in that bank,

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Speaker 1: and I wonder, with a few weeks perspective here, is

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Speaker 1: there anything about what that hedge fund is proposed that

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Speaker 1: resonates with you? How do you how do you feel

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Speaker 1: about what they've proposed? Have you had conversations with Rudolph

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Speaker 1: Bally who who runs that hedge fund? Now they shared

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Speaker 1: with us their proposals after it was announced, and looking

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Speaker 1: through it, it's just it's just rather what I would

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Speaker 1: say um an effective work, meaning the assumptions they make

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Speaker 1: about value creation and what needs to be done today

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Speaker 1: just are not workable. The assumptions of valuation comparisons are

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Speaker 1: are poor comparisons. For instance, he compares the private bank

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Speaker 1: of Credit Suis with the shrub investment management business. I mean,

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Speaker 1: these things are very, very different. He compares the investment

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Speaker 1: bank of of Credit Suite with Goldman Saxon Morgan Stanley

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Speaker 1: against some material differences, and then he applies those multiples

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Speaker 1: of these companies and puts it on what he assumes

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Speaker 1: is an easily dividable financial institution, and that is an incorrupt,

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Speaker 1: incorrect assumption, and our review it's not easily divided. But

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Speaker 1: in the meantime, in the meantime, so much has been

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Speaker 1: done over the last two years to reform and to

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Speaker 1: restructure the business that now is not the time to

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Speaker 1: just rip it all apart. I mean, with that wonderful answer,

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Speaker 1: and David's smart question, is the idea of the timeline

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Speaker 1: that corporate officers are dealing with within your cross sector

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Speaker 1: analysis is a new five year plan for corporate officers

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Speaker 1: three years and the idea of tactical is trying to

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Speaker 1: get to the next quarterly report. Well, you have to

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Speaker 1: make sure within your planning period you understand what the

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Speaker 1: markets will be like in three, four or five years.

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Speaker 1: If it's a slow moving market, yes maybe a four

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Speaker 1: or five six year plan is good. But if markets

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Speaker 1: are moving rapidly, if your markets are moving rapidly, if

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Speaker 1: your industry is moving rapidly, and think media, perhaps you

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Speaker 1: have to think a little bit shorter, not short term,

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Speaker 1: not being knee jerk, not reacting to every thing an

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Speaker 1: activist investor wants, which is show me a good quarter,

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Speaker 1: but building your business to compete for the future. This

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Speaker 1: is what we want to see, not being overreactive to

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Speaker 1: short term phenomena, but clearly being reactive to what's happening

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Speaker 1: in your industry. David, what's it like to be involved

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Speaker 1: in this in sort of a proxy position? As I said,

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Speaker 1: you have a larger stake in this company than the

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Speaker 1: gentleman who's agitating for all of this. You do you

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Speaker 1: feel like you have to take on a defensive role.

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Speaker 1: What's it like to be an investor with a sizable

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Speaker 1: position as something like this unfolds when you have an

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Speaker 1: activist investor here trying to rally support for for the

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Speaker 1: plan that he's trying to put into place, Well, we

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Speaker 1: have to stick up for our shareholders first and foremost.

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Speaker 1: My responsibility is to the people who have entrusted their

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Speaker 1: savings with me, and so what I have to do

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Speaker 1: is do what's best for our clients and our shareholders,

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Speaker 1: which in my view is pushing a management to think

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Speaker 1: about medium and long term value creation first and foremost.

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Speaker 1: If given up a quarter or two of numbers means

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Speaker 1: being better prepared for the medium and long term. And incidentally,

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Speaker 1: this is exactly how we in Fast then by all

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Speaker 1: means do it. And this is my problem with a

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Speaker 1: lot of the activists and sharehold activist shareholders take the

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Speaker 1: hedge funds, they get paid one and ten, two and twenty,

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Speaker 1: They get paid based on this year's numbers, which to

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Speaker 1: me is a flaw because in capitalism we want long

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Speaker 1: term value creation, not quick you know, swinging for the

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Speaker 1: fences home runs. And so often we, as long term

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Speaker 1: value shareholders, are in conflict. Was of the act of

429
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Speaker 1: a shareholder? David Hals, spend one minute on this, because

430
00:23:03,240 --> 00:23:04,840
Speaker 1: we know you're a huge football fan. We've got a

431
00:23:04,920 --> 00:23:08,520
Speaker 1: large part of our audience casually or intently a tune

432
00:23:09,000 --> 00:23:11,639
Speaker 1: to the National Football League. What are we gonna do

433
00:23:11,680 --> 00:23:16,080
Speaker 1: about protecting quarterbacks? Joe Flacco, Carson Palmer, a guy named

434
00:23:16,080 --> 00:23:19,640
Speaker 1: Aaron Rodgers. I mean, on and on and on these

435
00:23:19,720 --> 00:23:22,880
Speaker 1: quarterbacks go down. I mean, I mean, you're the guy.

436
00:23:22,960 --> 00:23:25,399
Speaker 1: What do we need to do about this? Well, I

437
00:23:25,440 --> 00:23:29,600
Speaker 1: don't know, Tom, but they certainly the NFL um has

438
00:23:29,680 --> 00:23:32,000
Speaker 1: all kinds of issues today. And it isn't just a

439
00:23:32,040 --> 00:23:35,800
Speaker 1: kneeling and isn't just what's happening. What's what's become a quarterback?

440
00:23:35,920 --> 00:23:38,760
Speaker 1: By the way, a quarterback dominated game. I mean, if

441
00:23:38,760 --> 00:23:40,800
Speaker 1: you don't have a good quarterback, you don't have a chance.

442
00:23:40,920 --> 00:23:43,720
Speaker 1: I think the key to success is a strong quarterback

443
00:23:43,720 --> 00:23:46,840
Speaker 1: in a really good defense, probably one with a pass rush.

444
00:23:46,880 --> 00:23:49,400
Speaker 1: But there's other issues with the NFL. I mean, people

445
00:23:49,400 --> 00:23:51,760
Speaker 1: are the s three and a half hour games, the

446
00:23:51,840 --> 00:23:57,480
Speaker 1: TV timeouts, the the you know, constant stops for reviewing plays.

447
00:23:57,680 --> 00:23:59,280
Speaker 1: I mean this has taken all the fun out of

448
00:23:59,359 --> 00:24:02,600
Speaker 1: watching and full beside effect. The players want to get

449
00:24:02,600 --> 00:24:05,440
Speaker 1: political on us, Well, let's come back. David Harrow there

450
00:24:05,440 --> 00:24:08,320
Speaker 1: on the NFL. I believe he can opine Mr Gura

451
00:24:08,440 --> 00:24:12,679
Speaker 1: on politics because he may have a passing interest and

452
00:24:13,440 --> 00:24:17,400
Speaker 1: what we're seeing, uh right now, Mr Harrow an investor

453
00:24:17,400 --> 00:24:21,439
Speaker 1: in international stocks, and as we've said before, his recent

454
00:24:21,520 --> 00:24:26,399
Speaker 1: performance and long term performance is truly extraordinary. Looking at

455
00:24:26,440 --> 00:24:29,960
Speaker 1: Bloomberg data. Yeah, two tweets from the president here quote

456
00:24:29,960 --> 00:24:32,639
Speaker 1: the fake news is working over time. As Paul Manaforts

457
00:24:32,720 --> 00:24:35,479
Speaker 1: lawyers said, there was quote no collusion and events mentioned

458
00:24:35,480 --> 00:24:38,440
Speaker 1: took place long before he came to the campaign. He continues,

459
00:24:38,440 --> 00:24:41,200
Speaker 1: A few people knew the young, low level volunteer named George,

460
00:24:41,200 --> 00:24:44,480
Speaker 1: who's already proven to be a liar, check the damns

461
00:24:44,480 --> 00:24:46,879
Speaker 1: the president rites concludes his tweet with that, of course,

462
00:24:46,920 --> 00:24:50,760
Speaker 1: said George Papadopolis, the person to whom the presidents referring

463
00:24:50,800 --> 00:24:56,080
Speaker 1: their accused and charged with line to FBI agents there.

464
00:24:56,119 --> 00:24:58,159
Speaker 1: And I'll just point out as well that during the

465
00:24:58,160 --> 00:25:01,080
Speaker 1: campaign the President referred to this young, low level volunteer

466
00:25:01,119 --> 00:25:04,560
Speaker 1: named Georgie. It's an energy and oil consultant. Excellent guy,

467
00:25:04,880 --> 00:25:07,919
Speaker 1: David French have yet to get it out on Twitter.

468
00:25:07,960 --> 00:25:09,720
Speaker 1: It's been such a busy morning, but I'll do that.

469
00:25:09,800 --> 00:25:12,320
Speaker 1: Writing in the New York Times, a good time to

470
00:25:12,320 --> 00:25:16,040
Speaker 1: speak with David Harrow, who enjoys a relationship with the

471
00:25:16,080 --> 00:25:18,959
Speaker 1: Republican Party in the great Midwest of this nation and

472
00:25:19,000 --> 00:25:22,840
Speaker 1: considered running for office in Wisconsin at some time. Used

473
00:25:22,840 --> 00:25:28,720
Speaker 1: with Harris associates, David David French's essay is spectacular and

474
00:25:28,760 --> 00:25:32,800
Speaker 1: it talks about the fabric of this nation and now

475
00:25:32,920 --> 00:25:37,400
Speaker 1: the nation to a great extent, has been removed from

476
00:25:37,400 --> 00:25:41,680
Speaker 1: the elites on the East Coast. It's a spectacular essay.

477
00:25:41,760 --> 00:25:46,080
Speaker 1: How is all this playing in the land of David Arrow? Well,

478
00:25:46,440 --> 00:25:49,520
Speaker 1: I mean, I have to say that people, I mean,

479
00:25:49,560 --> 00:25:52,200
Speaker 1: if there's one phrase that kind of describes it, it's

480
00:25:52,240 --> 00:25:55,320
Speaker 1: this strain the swamp people in the Midwest and the

481
00:25:55,359 --> 00:25:59,320
Speaker 1: south of the Southwest, you know, they kind of view

482
00:25:59,600 --> 00:26:02,440
Speaker 1: that the East coast and the West coast are out

483
00:26:02,440 --> 00:26:05,080
Speaker 1: of touch with you know, what people go through on

484
00:26:05,119 --> 00:26:10,040
Speaker 1: a daily basis, you know, wake up, work hard, pay taxes, etcetera.

485
00:26:10,720 --> 00:26:13,960
Speaker 1: And this out of touchiness is perhaps one of the

486
00:26:14,040 --> 00:26:18,040
Speaker 1: things why we saw a surprise election last November. And

487
00:26:18,080 --> 00:26:20,560
Speaker 1: it just shows i mean, every it was so unexpected,

488
00:26:20,680 --> 00:26:24,560
Speaker 1: it was such a given. And I think what needs

489
00:26:24,560 --> 00:26:27,840
Speaker 1: to happen is is that, you know, we all need

490
00:26:27,880 --> 00:26:30,720
Speaker 1: to understand a little better where we're all coming from.

491
00:26:30,760 --> 00:26:33,960
Speaker 1: Instead of uh, you know, just the shouting. You know,

492
00:26:34,040 --> 00:26:36,800
Speaker 1: he who shouts the loudest gets heart. And maybe this

493
00:26:36,880 --> 00:26:39,800
Speaker 1: is one of the whole weaknesses of the social media phenomena,

494
00:26:40,359 --> 00:26:43,400
Speaker 1: as people don't listen and understand where other people are

495
00:26:43,440 --> 00:26:46,639
Speaker 1: coming from. And I think this is you know, something

496
00:26:46,680 --> 00:26:49,560
Speaker 1: we all need to focus on is listen to the

497
00:26:49,600 --> 00:26:53,720
Speaker 1: other side and and try to try to understand their

498
00:26:53,760 --> 00:26:59,000
Speaker 1: perspective and and the context of where someone else is

499
00:26:59,000 --> 00:27:01,720
Speaker 1: coming from when they make a statement. David, let me

500
00:27:01,760 --> 00:27:04,000
Speaker 1: ask you about taxi form pivoting the policy here in

501
00:27:04,040 --> 00:27:05,760
Speaker 1: the last couple of minutes that we have with you.

502
00:27:05,760 --> 00:27:08,080
Speaker 1: We're expecting some legislation from the House Ways and Means

503
00:27:08,080 --> 00:27:11,080
Speaker 1: Committee tomorrow. From a markets perspective, how important is it?

504
00:27:11,200 --> 00:27:13,160
Speaker 1: How how how closely are you going to be looking

505
00:27:13,200 --> 00:27:16,080
Speaker 1: at that document when it's produced tomorrow? Well, I think

506
00:27:16,080 --> 00:27:19,959
Speaker 1: it's very important. And one of your I was driving

507
00:27:20,000 --> 00:27:21,440
Speaker 1: in and I heard I think it was the guy

508
00:27:21,480 --> 00:27:23,959
Speaker 1: from Columbia said that was Did you ever guess from

509
00:27:24,480 --> 00:27:27,800
Speaker 1: Rich Claridave? Oh, he was so good and what he

510
00:27:27,880 --> 00:27:30,280
Speaker 1: was talking about. You can't extend this thing over four

511
00:27:30,359 --> 00:27:33,840
Speaker 1: or five years. Um. What you have to do is

512
00:27:34,160 --> 00:27:40,440
Speaker 1: realize the importance of expectations and the importance of confidence.

513
00:27:40,840 --> 00:27:46,160
Speaker 1: And when people are confident, they won't move very aggressively.

514
00:27:46,280 --> 00:27:49,040
Speaker 1: And what we want our people to invest, we want

515
00:27:49,119 --> 00:27:51,760
Speaker 1: people to hire, We want these things to happen. We

516
00:27:51,800 --> 00:27:54,880
Speaker 1: don't want this delayed over three or four or five years.

517
00:27:54,960 --> 00:27:58,080
Speaker 1: And we want to take distortions so people can make

518
00:27:58,320 --> 00:28:03,080
Speaker 1: clean economic positions. We don't want them distorted by certain

519
00:28:03,320 --> 00:28:07,400
Speaker 1: tax expenditures and tax benefits. We want level playing fields.

520
00:28:07,400 --> 00:28:10,520
Speaker 1: And these are all the things that I believe should

521
00:28:10,520 --> 00:28:14,840
Speaker 1: be in this tax document. Less distortions, which means less

522
00:28:14,880 --> 00:28:19,359
Speaker 1: giveaways and lower rates and more immediacy. Don't stretch this

523
00:28:19,440 --> 00:28:22,439
Speaker 1: thing now, you're just delaying the positive impacts of it.

524
00:28:22,800 --> 00:28:26,480
Speaker 1: I thought your guests did an excellent job at explaining

525
00:28:26,600 --> 00:28:30,119
Speaker 1: the weaknesses of that approach. One last question here, just

526
00:28:30,160 --> 00:28:33,000
Speaker 1: about your portfolio. We had Ray Dalio on the show

527
00:28:33,080 --> 00:28:35,160
Speaker 1: last week out with a new book, his Principles, putting

528
00:28:35,160 --> 00:28:37,240
Speaker 1: them on on paper, and he declined to talk about

529
00:28:37,280 --> 00:28:39,120
Speaker 1: some of the positions that that he has, but it's

530
00:28:39,160 --> 00:28:42,320
Speaker 1: reported that he has a seven million dollar wager against

531
00:28:42,400 --> 00:28:44,520
Speaker 1: Italian banks, including one I know that you're invested in

532
00:28:44,560 --> 00:28:49,080
Speaker 1: that is a intesas and Paulo, how do you react

533
00:28:49,080 --> 00:28:50,640
Speaker 1: to that? How do you react to we were talking

534
00:28:50,640 --> 00:28:52,720
Speaker 1: about sort of the the agitation of a hedge fund

535
00:28:52,720 --> 00:28:55,440
Speaker 1: manager trying to shake up or break up a bank.

536
00:28:55,880 --> 00:28:58,880
Speaker 1: How do you work against or make your case against

537
00:28:58,880 --> 00:29:00,680
Speaker 1: a short position like that. How much do you have

538
00:29:00,760 --> 00:29:03,520
Speaker 1: to respond to that? Um, this is actually kind of

539
00:29:03,560 --> 00:29:06,440
Speaker 1: positive for us, but it's what often happens is these

540
00:29:06,480 --> 00:29:11,320
Speaker 1: types of actors within the global financial environment, they make

541
00:29:11,400 --> 00:29:15,240
Speaker 1: broad generalizations. They say, well, I don't like Italian banks,

542
00:29:15,320 --> 00:29:17,360
Speaker 1: or I don't like media companies, or I don't like

543
00:29:17,440 --> 00:29:20,240
Speaker 1: Glenn Cora, I don't like and then you know, they

544
00:29:20,240 --> 00:29:22,880
Speaker 1: short it, they pressure the share price down. But what

545
00:29:23,000 --> 00:29:27,200
Speaker 1: they don't realize, it's just within that generalization. Our exceptions

546
00:29:27,240 --> 00:29:30,880
Speaker 1: are very good companies. And Antessa is a very good company.

547
00:29:30,920 --> 00:29:35,280
Speaker 1: And by the way, the banking system of of Italy

548
00:29:35,680 --> 00:29:40,680
Speaker 1: and especially Northern Italy has been doing nothing but improving.

549
00:29:41,280 --> 00:29:43,840
Speaker 1: So we're happy to own it. We're happy to take

550
00:29:43,880 --> 00:29:48,200
Speaker 1: advantage of generalizations. Mr Dahio is a very good investor,

551
00:29:48,480 --> 00:29:51,600
Speaker 1: and he may very well make money, but I also

552
00:29:51,720 --> 00:29:54,640
Speaker 1: believe that, um he can make money, maybe I can

553
00:29:54,680 --> 00:29:58,520
Speaker 1: make money too if my bank outperforms you know the

554
00:29:59,040 --> 00:30:02,800
Speaker 1: universe that he should. But I don't have such a

555
00:30:02,840 --> 00:30:05,200
Speaker 1: negative you on the Italian banking system. In fact, I

556
00:30:05,200 --> 00:30:08,480
Speaker 1: think you've taken the necessary steps to improve it. Let's

557
00:30:08,480 --> 00:30:11,320
Speaker 1: sleep with their. David Harrold Harris, soak Mark, thank you,

558
00:30:11,800 --> 00:30:27,120
Speaker 1: this is Bloomberg. This is a pleasure. David ger and

559
00:30:27,160 --> 00:30:30,600
Speaker 1: I welcome a good friend of ours. Uh. Jeffrey Jarvis.

560
00:30:30,640 --> 00:30:33,160
Speaker 1: Jeff Jarvis, you know what would Google do a million

561
00:30:33,240 --> 00:30:36,200
Speaker 1: years ago? The movies out for memorial deviewing, But far

562
00:30:36,280 --> 00:30:41,600
Speaker 1: more importantly, really thinking about the media, the Internet in

563
00:30:41,640 --> 00:30:44,560
Speaker 1: the space he does it at Quney see you and

564
00:30:44,680 --> 00:30:47,400
Speaker 1: Why Graduate School of Journalism. I've had the privilege of

565
00:30:47,480 --> 00:30:49,600
Speaker 1: darkening the door there to talk about the future that

566
00:30:49,640 --> 00:30:53,920
Speaker 1: I see in conversation within News, Jeff Jarvis David Gurrl

567
00:30:53,960 --> 00:30:55,680
Speaker 1: is going to lead the charge on this. But I

568
00:30:55,760 --> 00:30:59,120
Speaker 1: am sort of stunned that we're trying to have the

569
00:30:59,160 --> 00:31:02,560
Speaker 1: Internet leaders be the adults in the room. How are

570
00:31:02,600 --> 00:31:06,720
Speaker 1: they supposed to figure out fake news on Facebook? Isn't

571
00:31:06,760 --> 00:31:12,640
Speaker 1: their obligation to police idiots? No, because there's too damn

572
00:31:12,640 --> 00:31:15,640
Speaker 1: many of them. But I do think they have to

573
00:31:15,640 --> 00:31:18,160
Speaker 1: figure out what their public responsibility and standard is. Right now,

574
00:31:18,200 --> 00:31:21,320
Speaker 1: the standard is set down about we don't like child porn, right,

575
00:31:21,360 --> 00:31:22,720
Speaker 1: and the standard maybe needs to be a little bit

576
00:31:22,800 --> 00:31:26,320
Speaker 1: higher than that. You know, let's not harrass women, um uh,

577
00:31:26,600 --> 00:31:30,160
Speaker 1: let's not have a thousand bots ruining the world. I

578
00:31:30,200 --> 00:31:32,200
Speaker 1: do think that they need to have higher standards, but

579
00:31:32,320 --> 00:31:34,960
Speaker 1: I want to be very careful about those standards being

580
00:31:35,000 --> 00:31:37,760
Speaker 1: set externally by government, you know. I I wonder what

581
00:31:37,800 --> 00:31:39,400
Speaker 1: you make of what we've heard from a number of

582
00:31:39,400 --> 00:31:41,520
Speaker 1: these companies that it's very difficult to police from a

583
00:31:41,520 --> 00:31:44,560
Speaker 1: technical perspective. Are Sarah Fry reporting on Facebook's difficulty just

584
00:31:44,600 --> 00:31:47,200
Speaker 1: waiting through complaints about various posts. And I think back

585
00:31:47,200 --> 00:31:48,880
Speaker 1: to the piece of Jeffrey rosen Road from New York

586
00:31:48,880 --> 00:31:52,000
Speaker 1: Times magazine now well over five years ago, about how

587
00:31:52,040 --> 00:31:54,160
Speaker 1: YouTube was operating at that point, the people who sat

588
00:31:54,200 --> 00:31:57,200
Speaker 1: in this dark room looking at screens reviewing videos that

589
00:31:57,200 --> 00:32:00,520
Speaker 1: people had complained about. From a technical perspective, how hard

590
00:32:00,600 --> 00:32:02,720
Speaker 1: is it to do this, to feel these kind of complaints,

591
00:32:02,760 --> 00:32:05,959
Speaker 1: to police these social media networks? And is that a

592
00:32:05,960 --> 00:32:07,720
Speaker 1: complaint that has salience to you? Do? Do you do

593
00:32:07,760 --> 00:32:09,760
Speaker 1: you empathize at all or sympathize at all with these

594
00:32:09,760 --> 00:32:12,000
Speaker 1: tech companies when they complain about the difficulty of doing it.

595
00:32:12,400 --> 00:32:14,960
Speaker 1: I do, But I think there are ways to do it. One,

596
00:32:15,000 --> 00:32:17,400
Speaker 1: they work very hard with AI to to learn the

597
00:32:17,480 --> 00:32:20,920
Speaker 1: signals and patterns of bad behavior, which obviously always change. Too.

598
00:32:21,040 --> 00:32:23,040
Speaker 1: They have users that do bring complaints to them, and

599
00:32:23,080 --> 00:32:25,560
Speaker 1: the more they encourage that, the better. Three. I think

600
00:32:25,600 --> 00:32:28,760
Speaker 1: we separate out here content from advertising, and advertising is

601
00:32:28,800 --> 00:32:32,080
Speaker 1: easier to police, though advertising now operates at a scale

602
00:32:32,080 --> 00:32:34,800
Speaker 1: that it never operated in our world and media, so

603
00:32:34,880 --> 00:32:37,480
Speaker 1: it's not easy, but I think it's possible. I look

604
00:32:37,520 --> 00:32:39,320
Speaker 1: at the title of this hearing that's going to take

605
00:32:39,320 --> 00:32:41,920
Speaker 1: place before this Judiciary subcommittee this afternoon a two thirty

606
00:32:41,960 --> 00:32:43,600
Speaker 1: at Wall Street time. We're gonna have coverage of course

607
00:32:43,640 --> 00:32:47,000
Speaker 1: here on Bloomberg TV and Bloomberg Radio. Extremist content and

608
00:32:47,080 --> 00:32:51,479
Speaker 1: Russian disinformation online. Working with tech to find solutions? What

609
00:32:51,520 --> 00:32:53,479
Speaker 1: does that mean? What is working with technicals? Like? How

610
00:32:53,560 --> 00:32:58,680
Speaker 1: is this government? I'm very worried about regulating the Internet.

611
00:32:58,720 --> 00:33:01,600
Speaker 1: I think it's too early in Utenburgh years. It's about

612
00:33:01,600 --> 00:33:04,080
Speaker 1: the year fourteen seventy nine, and we don't know what

613
00:33:04,120 --> 00:33:07,840
Speaker 1: a part that's right this years today. So I was

614
00:33:07,880 --> 00:33:12,760
Speaker 1: only doing three hours a day, four just so everybody

615
00:33:12,920 --> 00:33:15,520
Speaker 1: got up um for today is the day when Martin

616
00:33:15,560 --> 00:33:18,720
Speaker 1: Luther five years ago posted his tweets on the door

617
00:33:18,760 --> 00:33:22,000
Speaker 1: of the Wittenburg or Cathedral. And and it takes a

618
00:33:22,040 --> 00:33:23,600
Speaker 1: long time to figure out what this stuff is. I

619
00:33:23,600 --> 00:33:25,560
Speaker 1: think we still see the future and the analog of

620
00:33:25,600 --> 00:33:28,040
Speaker 1: the past. So it's too soon for government of all

621
00:33:28,240 --> 00:33:30,760
Speaker 1: bodies to think they know what the Internet is so

622
00:33:30,800 --> 00:33:33,360
Speaker 1: that they can define it and limited and regulate it.

623
00:33:34,040 --> 00:33:36,440
Speaker 1: If you're just joining us one of the great voices

624
00:33:36,480 --> 00:33:39,960
Speaker 1: of journalism and thinking about media, all that all of

625
00:33:40,040 --> 00:33:42,600
Speaker 1: us have to deal with their kids in our houses.

626
00:33:43,120 --> 00:33:47,720
Speaker 1: Jeffrey Jarvis is with us from Cuney Graduate School of Journalism. David, Yeah,

627
00:33:47,760 --> 00:33:49,800
Speaker 1: it's on that note, I wonder how things have changed

628
00:33:49,840 --> 00:33:51,760
Speaker 1: you when we deal with the issue of Russian interference,

629
00:33:51,760 --> 00:33:54,160
Speaker 1: you talk about child pornography, or harassment of women or

630
00:33:54,160 --> 00:33:56,720
Speaker 1: any number of things. Does the government feel a greater

631
00:33:57,080 --> 00:34:00,000
Speaker 1: impulse to get involved when you have something like political interview?

632
00:34:00,120 --> 00:34:02,440
Speaker 1: It's did that change that the calculus here? Yes? I

633
00:34:02,440 --> 00:34:03,920
Speaker 1: think it went onto their yard and they want to

634
00:34:03,960 --> 00:34:07,440
Speaker 1: try to get it off. But Michael Godwin, who wrote

635
00:34:07,440 --> 00:34:09,960
Speaker 1: the famous Godwin's Law, has been saying on Twitter lately

636
00:34:09,960 --> 00:34:12,719
Speaker 1: that he fears, as do I, that there's a backlash

637
00:34:12,760 --> 00:34:16,479
Speaker 1: coming to technology, a moral panic even and he argued

638
00:34:16,520 --> 00:34:20,000
Speaker 1: on Twitter yesterday that um media are screaming about this,

639
00:34:20,080 --> 00:34:22,640
Speaker 1: politicians are screaming about this, but the public not so much.

640
00:34:23,080 --> 00:34:26,920
Speaker 1: The public is using Twitter and is using Facebook. I

641
00:34:26,960 --> 00:34:29,560
Speaker 1: think that those services have to worry about the quality

642
00:34:29,600 --> 00:34:31,960
Speaker 1: of their experience. Google said recently Ben Gomes, who was

643
00:34:32,000 --> 00:34:34,400
Speaker 1: in charge of search engineering at Google, one of the

644
00:34:34,440 --> 00:34:37,799
Speaker 1: most popular and powerful men on Earth. Uh. He said

645
00:34:37,840 --> 00:34:40,640
Speaker 1: that Google henceforth would start to account for the reliability,

646
00:34:40,680 --> 00:34:44,040
Speaker 1: authority and quality of sources. That's a big deal. That's

647
00:34:44,080 --> 00:34:47,840
Speaker 1: a step toward a flight to quality. Part of your charms.

648
00:34:47,920 --> 00:34:52,080
Speaker 1: You've actually understood. There's payrolls to be met, healthcare has

649
00:34:52,120 --> 00:34:56,920
Speaker 1: to be paid for, etcetera. How is the profitability of

650
00:34:56,960 --> 00:35:00,359
Speaker 1: the new news doing? Every nine months to ten months,

651
00:35:00,360 --> 00:35:03,560
Speaker 1: there's a major implosion where somebody goes down in flames.

652
00:35:03,600 --> 00:35:06,880
Speaker 1: But the things that are out there, the Atlantic Experiment

653
00:35:06,960 --> 00:35:10,879
Speaker 1: that Jeff is doing, the Vox experiment that as he's doing,

654
00:35:10,960 --> 00:35:13,160
Speaker 1: are any of these things going to really get traction,

655
00:35:13,760 --> 00:35:17,719
Speaker 1: be profitable and employee warm bodies? Yes, I absolutely think so.

656
00:35:17,760 --> 00:35:22,720
Speaker 1: The Atlantic was brought by Larian Paul Jones. Uh mrs jobs,

657
00:35:22,760 --> 00:35:27,160
Speaker 1: thank you jons um uh voxes. I think profitable right now?

658
00:35:27,200 --> 00:35:30,120
Speaker 1: The Washington Post is doing well. You know, I think

659
00:35:30,120 --> 00:35:32,840
Speaker 1: I'm one of the big lessons of this Russian bruhaha

660
00:35:33,040 --> 00:35:35,480
Speaker 1: right now is that Facebook said this morning that the

661
00:35:35,560 --> 00:35:38,880
Speaker 1: Russian fake news factory got a hundred twenty six million

662
00:35:38,960 --> 00:35:42,080
Speaker 1: people seeing their jump. Well, why aren't we doing that

663
00:35:42,120 --> 00:35:45,680
Speaker 1: in media? Why aren't we joining the conversation instead? We

664
00:35:45,719 --> 00:35:47,640
Speaker 1: think the media is still a destination you have to

665
00:35:47,680 --> 00:35:50,920
Speaker 1: come to it like an old institution. Instead, when my

666
00:35:51,000 --> 00:35:54,279
Speaker 1: daughter uses YouTube, she's saying this speaks for me. She

667
00:35:54,360 --> 00:35:56,560
Speaker 1: passes it along in her conversations. Why don't we make

668
00:35:56,640 --> 00:36:00,279
Speaker 1: journalism into truth bullets that people can fire on their own?

669
00:36:00,480 --> 00:36:02,960
Speaker 1: Is that hullion number of music that people share that

670
00:36:03,080 --> 00:36:05,319
Speaker 1: in the time we've got left? What would Google do?

671
00:36:05,520 --> 00:36:07,919
Speaker 1: This is a big mystery. What would YouTube do? What's

672
00:36:07,920 --> 00:36:12,200
Speaker 1: the Jarvis prescription for YouTube really to get traction in

673
00:36:12,239 --> 00:36:15,279
Speaker 1: the news business? I don't see it. I I well,

674
00:36:15,320 --> 00:36:18,680
Speaker 1: I think that you do. See a lot of companies podcasts.

675
00:36:18,680 --> 00:36:21,200
Speaker 1: I'm on a podcast every Wednesday afternoon called This Weekend Google.

676
00:36:21,360 --> 00:36:25,400
Speaker 1: About seventy five people watch it, highly loyal, it makes money.

677
00:36:25,719 --> 00:36:28,799
Speaker 1: It's possible to use YouTube to make news. I don't

678
00:36:28,800 --> 00:36:31,160
Speaker 1: think it's YouTube's job to become news, but it's possible

679
00:36:31,160 --> 00:36:33,480
Speaker 1: to make businesses there. David get another question here to say,

680
00:36:33,640 --> 00:36:35,919
Speaker 1: did you see how we got that shameless plug in there?

681
00:36:36,120 --> 00:36:40,000
Speaker 1: It's amazing how Jarvis does that. That was dot TV

682
00:36:40,120 --> 00:36:42,719
Speaker 1: slash lot there you go with with about thirty seconds left,

683
00:36:42,719 --> 00:36:45,600
Speaker 1: here are we seeing that gap between Washington Silicon Valley

684
00:36:45,640 --> 00:36:47,400
Speaker 1: narrow at all? We're not going to see Mark Zuckerberger

685
00:36:47,520 --> 00:36:50,399
Speaker 1: Cheryl Sandburg on Capitol Hill today? Are these companies making

686
00:36:50,440 --> 00:36:52,880
Speaker 1: strides enough here to to narrow that gap between Silicon

687
00:36:52,960 --> 00:36:54,960
Speaker 1: Valley Washington Where you consider their early days they spent

688
00:36:55,080 --> 00:36:57,840
Speaker 1: nothing a lobby uh and they didn't really pay attention

689
00:36:57,840 --> 00:37:00,560
Speaker 1: to the political world. Now they spent a fortune lobbying

690
00:37:00,560 --> 00:37:03,640
Speaker 1: because they realized they have to the problem is can

691
00:37:03,719 --> 00:37:06,319
Speaker 1: we educate lawmakers and understanding what the Internet is? I

692
00:37:06,320 --> 00:37:08,920
Speaker 1: think that's the hardest task. Jeff Jarvis, thank you very much.

693
00:37:08,920 --> 00:37:10,960
Speaker 1: Appreciate the time today as we look forward to these hearing,

694
00:37:11,480 --> 00:37:14,840
Speaker 1: the first of which is this afternoon, should we plug

695
00:37:14,840 --> 00:37:20,359
Speaker 1: our podcast or is it like you know, a folks,

696
00:37:20,560 --> 00:37:23,120
Speaker 1: what's the name of your podcast? This weekend Google? We

697
00:37:23,160 --> 00:37:26,239
Speaker 1: can this weekend Google. Very good. Jeff Jarvis, thank you

698
00:37:26,280 --> 00:37:29,560
Speaker 1: so much, of course always and it really can't say

699
00:37:29,640 --> 00:37:32,520
Speaker 1: enough about it. It's really a timeless book. What would

700
00:37:32,560 --> 00:37:48,160
Speaker 1: Google do? I'm gonna let Mr Gurra bring in our

701
00:37:48,200 --> 00:37:52,759
Speaker 1: next guest, but I will say that in preparation for Watergate,

702
00:37:53,480 --> 00:37:56,120
Speaker 1: there was a Primmer David Gurra, which is in October

703
00:37:56,160 --> 00:37:59,520
Speaker 1: of nineteen nine, a movie came out, you know, It's

704
00:37:59,520 --> 00:38:03,319
Speaker 1: called Butch Cassidy and the Sun Dance Kid, and there

705
00:38:03,400 --> 00:38:05,680
Speaker 1: was a very famous line in it that they played

706
00:38:05,719 --> 00:38:09,720
Speaker 1: through the sparseness of the script, George Roy Hills script,

707
00:38:10,040 --> 00:38:13,480
Speaker 1: who is that guy? Or who are those guys? And

708
00:38:13,520 --> 00:38:16,000
Speaker 1: so go forward what seemed like two years, three years,

709
00:38:16,040 --> 00:38:19,080
Speaker 1: four years, and through a wall of Watergate there was

710
00:38:19,239 --> 00:38:23,360
Speaker 1: one guy where you would go, who is that guy?

711
00:38:23,520 --> 00:38:25,960
Speaker 1: And he's our guest and we're honored this morning. That's

712
00:38:25,960 --> 00:38:28,840
Speaker 1: that Richard Benveniste who joins us now on Bloomberg Surveillance.

713
00:38:28,840 --> 00:38:31,480
Speaker 1: He was a former Watergate special prosecutor, a partner Myer

714
00:38:31,520 --> 00:38:33,239
Speaker 1: Brown now and he's a was a member, of course,

715
00:38:33,239 --> 00:38:34,640
Speaker 1: served the nation as a member of the a N

716
00:38:34,719 --> 00:38:37,319
Speaker 1: eleven Commission after the terrorist attacks of that tape back

717
00:38:37,360 --> 00:38:39,520
Speaker 1: in two thousand one. Great to have you with us.

718
00:38:39,640 --> 00:38:42,200
Speaker 1: I spent some time yesterday on the end train reading

719
00:38:42,239 --> 00:38:45,640
Speaker 1: the complaints that were unsealed yesterday, learning about Paul manifort,

720
00:38:45,719 --> 00:38:48,360
Speaker 1: Rick Gates, and one George Papadopolis, and I wonder just,

721
00:38:48,440 --> 00:38:51,080
Speaker 1: first of all, how you'd advise one to to famili

722
00:38:51,200 --> 00:38:54,759
Speaker 1: familiarizers oneself with what what happened yesterday As you read

723
00:38:54,800 --> 00:38:58,080
Speaker 1: these complaints, what stood out to you, Well, good morning.

724
00:38:58,160 --> 00:39:02,720
Speaker 1: First of all and thank for that nice introduction. Uh,

725
00:39:02,880 --> 00:39:07,240
Speaker 1: there's a lot to untack in each of these indictments.

726
00:39:07,880 --> 00:39:12,400
Speaker 1: I think you start out by saying, UM, that Robert

727
00:39:12,520 --> 00:39:20,400
Speaker 1: Muller is running an efficient and appropriate investigation. He has

728
00:39:21,160 --> 00:39:27,000
Speaker 1: wide authority to investigate, and he is doing so in

729
00:39:27,760 --> 00:39:35,360
Speaker 1: uh a proper manner with no leaks, no drama, no television. Uh.

730
00:39:35,400 --> 00:39:40,000
Speaker 1: It's all here. It is in black and white on paper.

731
00:39:40,160 --> 00:39:44,960
Speaker 1: This is how we speak in court quite properly. So

732
00:39:45,040 --> 00:39:52,879
Speaker 1: if you look at Manaforts indictment, you see Manifort and Gates. Um.

733
00:39:53,080 --> 00:39:58,520
Speaker 1: Gates was sort of the CEO of Manaforts operation. Uh.

734
00:39:58,760 --> 00:40:04,440
Speaker 1: You see a variety of financial crimes staggering really in

735
00:40:04,640 --> 00:40:12,520
Speaker 1: terms of violations of the tax code, money laundering, violations

736
00:40:12,640 --> 00:40:17,680
Speaker 1: of the Foreign Agreed Reporting Act, UM, a variety of

737
00:40:17,800 --> 00:40:25,399
Speaker 1: different crimes which totally staggering penalty if you total them

738
00:40:25,400 --> 00:40:30,600
Speaker 1: all up, as well as a forfeiture which could result

739
00:40:31,200 --> 00:40:38,439
Speaker 1: in a very very substantial financial penalty to Manifort. Uh.

740
00:40:38,640 --> 00:40:46,560
Speaker 1: So that's Manifort former campaign chair. UM. Kind of similar

741
00:40:46,719 --> 00:40:50,640
Speaker 1: in a way to Watergate, where the campaign chair was

742
00:40:50,840 --> 00:40:55,640
Speaker 1: John Mitchell, of course, who was one of the primary

743
00:40:55,719 --> 00:41:00,440
Speaker 1: defendants in that case. So a lot of pressure on

744
00:41:01,000 --> 00:41:05,120
Speaker 1: Manaford and Gates by reason of the penalties they face

745
00:41:06,080 --> 00:41:08,839
Speaker 1: to cooperate. What can you you divine or what can

746
00:41:08,840 --> 00:41:12,040
Speaker 1: you surmise about where this investigation stands based on what

747
00:41:12,120 --> 00:41:15,359
Speaker 1: we saw yesterday, I was hearing a lot of speculation

748
00:41:15,400 --> 00:41:19,000
Speaker 1: about uh, this being the beginning of the investigation going

749
00:41:19,040 --> 00:41:20,680
Speaker 1: at you know, going to this level before you go

750
00:41:20,719 --> 00:41:22,400
Speaker 1: to the next. What can you tell about the status

751
00:41:22,400 --> 00:41:25,759
Speaker 1: of a criminal investigation from what we learned yesterday, Well,

752
00:41:25,800 --> 00:41:29,719
Speaker 1: you can tell that it's it's going forward in a

753
00:41:29,840 --> 00:41:38,520
Speaker 1: methodical way. The Papadopolis Uh indictment comes more as a surprise.

754
00:41:38,719 --> 00:41:44,880
Speaker 1: Mani fort Um and his financial crimes that are alleged

755
00:41:46,600 --> 00:41:54,160
Speaker 1: were fairly well known by reason of earlier reporting. Papadopolis, however,

756
00:41:54,760 --> 00:41:58,439
Speaker 1: is somewhat under the radar and kept that way by

757
00:41:58,520 --> 00:42:06,480
Speaker 1: reason of an agreement Uh initially to um cooperate with

758
00:42:06,680 --> 00:42:13,720
Speaker 1: the Special Counsel's office once he was arrested UM months ago,

759
00:42:14,040 --> 00:42:21,960
Speaker 1: and so UM this provides a little more um uh

760
00:42:22,080 --> 00:42:26,560
Speaker 1: of subject matter for discussion as to what that cooperation

761
00:42:26,800 --> 00:42:31,520
Speaker 1: might have entailed, since his um guilty plea was kept

762
00:42:31,719 --> 00:42:37,080
Speaker 1: or agreement deplete. Guilpie was kept secret for so long?

763
00:42:37,239 --> 00:42:41,840
Speaker 1: Was he asked UM to make telephone calls where a

764
00:42:41,960 --> 00:42:49,360
Speaker 1: wire Uh cooperate in more UM proactive ways than simply

765
00:42:49,600 --> 00:42:53,040
Speaker 1: providing information about what he knew. And in one of

766
00:42:53,040 --> 00:42:55,040
Speaker 1: your works, Richard benvenistad with us, folks, and we're going

767
00:42:55,080 --> 00:42:57,720
Speaker 1: to continue with this. I love this sentence. I watched

768
00:42:57,800 --> 00:43:01,560
Speaker 1: John dene drones through his finn hastic testimony about the

769
00:43:01,600 --> 00:43:04,640
Speaker 1: Watergate cover up on television in the living room of

770
00:43:04,680 --> 00:43:08,080
Speaker 1: my Manhattan apartment. Richard, I saw that flat on my

771
00:43:08,080 --> 00:43:11,720
Speaker 1: back of my parents family room from a hockey and injury.

772
00:43:11,760 --> 00:43:13,920
Speaker 1: We were both stunned by that. Are we going to

773
00:43:14,040 --> 00:43:16,760
Speaker 1: have those moments here? Are we going to have those

774
00:43:17,160 --> 00:43:22,160
Speaker 1: seared into our memory Watergate moments throughout this investigation? Or

775
00:43:22,200 --> 00:43:25,120
Speaker 1: is it going to be a new model. I think

776
00:43:25,120 --> 00:43:27,719
Speaker 1: it's going to be something of a new model, mainly

777
00:43:27,840 --> 00:43:33,480
Speaker 1: because of the difficulties, UM, that the congressional committees are

778
00:43:33,600 --> 00:43:39,000
Speaker 1: having in getting traction and going forward. Uh. You you

779
00:43:39,080 --> 00:43:44,879
Speaker 1: remember that during Watergate, both houses were controlled the Democrats.

780
00:43:44,920 --> 00:43:48,160
Speaker 1: Here the reverse is the case, and it's much more

781
00:43:48,239 --> 00:43:53,239
Speaker 1: difficult uh going forth. But I think you're going to

782
00:43:53,480 --> 00:43:58,239
Speaker 1: see something quite interesting on the on the question of

783
00:43:58,680 --> 00:44:06,560
Speaker 1: Russian um UH interference with our presidential election, what that

784
00:44:06,920 --> 00:44:13,799
Speaker 1: means in terms of the Papadopolis indictment, and how that

785
00:44:14,480 --> 00:44:22,160
Speaker 1: coordinates in time with the attempt to compromise the UH

786
00:44:23,040 --> 00:44:27,720
Speaker 1: top leaders of the Trump inner circle during that meeting

787
00:44:27,800 --> 00:44:30,040
Speaker 1: at Trump We're gonna come back and talk about that.

788
00:44:30,040 --> 00:44:32,160
Speaker 1: I want to talk about very quickly here your classic

789
00:44:32,200 --> 00:44:37,040
Speaker 1: book Stonewall, Is this president in the stonewall? This investigation

790
00:44:37,320 --> 00:44:40,319
Speaker 1: a is you titled water Gate in your book? Well,

791
00:44:40,400 --> 00:44:43,480
Speaker 1: so far he's done much more than Stonewall. He has

792
00:44:44,120 --> 00:44:47,160
Speaker 1: claimed that it's a witch hunt, that it's fake news,

793
00:44:47,680 --> 00:44:56,000
Speaker 1: and has as much more valuably, UM attacked the prosecutor

794
00:44:56,120 --> 00:44:59,920
Speaker 1: and attacked the premise of the investigation on the nick

795
00:45:00,040 --> 00:45:03,680
Speaker 1: Uson never did although they did put out the third

796
00:45:03,800 --> 00:45:08,600
Speaker 1: rate burglary of the Watergate that stuck well quite some time.

797
00:45:08,760 --> 00:45:10,279
Speaker 1: Let's do this just because of the time. David Girl

798
00:45:10,360 --> 00:45:11,719
Speaker 1: is going to come back. He's got a wall of

799
00:45:11,800 --> 00:45:15,040
Speaker 1: questions here wrapped around his good work. This is wonderful.

800
00:45:15,120 --> 00:45:17,560
Speaker 1: Richard ben Venista with us for all of us of

801
00:45:17,560 --> 00:45:20,560
Speaker 1: a certain vintage. It was extraordinary to see his work

802
00:45:20,600 --> 00:45:24,920
Speaker 1: and many others, including the defense of President Nixon years

803
00:45:24,920 --> 00:45:27,520
Speaker 1: ago and Watergate. Richard ben Venista with us this morning

804
00:45:27,520 --> 00:45:30,200
Speaker 1: and we will continue. Let me ask you about something

805
00:45:30,200 --> 00:45:31,799
Speaker 1: that the White House keeps bringing up. That is that

806
00:45:31,800 --> 00:45:34,480
Speaker 1: when you look at George Papadopoulos, he was a volunteer

807
00:45:34,840 --> 00:45:37,360
Speaker 1: on the campaign, He was not a paid a staff member.

808
00:45:37,560 --> 00:45:41,680
Speaker 1: Does that distinction matter Mr ben Venistime, No, it doesn't

809
00:45:42,160 --> 00:45:45,839
Speaker 1: in terms of the facts that are laid out in

810
00:45:45,920 --> 00:45:50,600
Speaker 1: the indictment. Uh. It appears that he was encouraged by

811
00:45:50,719 --> 00:45:55,680
Speaker 1: others in the campaign. UH he met with the President

812
00:45:56,200 --> 00:46:01,600
Speaker 1: to discuss, among other things, the overtures that he had

813
00:46:01,640 --> 00:46:06,319
Speaker 1: received from the Russians. And what is really interesting, I

814
00:46:06,360 --> 00:46:10,560
Speaker 1: think is the parallel between what we see in this

815
00:46:10,719 --> 00:46:16,120
Speaker 1: indictment and the information we received previously about the meeting

816
00:46:16,200 --> 00:46:24,239
Speaker 1: at Trump Tower with Natalia vessel Nitskaya, who made a

817
00:46:24,360 --> 00:46:32,800
Speaker 1: similar overture to Donald Trump Junior through cutouts um about

818
00:46:32,800 --> 00:46:40,320
Speaker 1: providing UH dirt on Hillary Clinton emails and other information

819
00:46:40,880 --> 00:46:47,839
Speaker 1: that Trump Junior responded to by saying I love it

820
00:46:48,000 --> 00:46:51,800
Speaker 1: and setting up the meeting that who attended that meeting

821
00:46:52,400 --> 00:46:58,200
Speaker 1: U Manifort, then the campaign chair, as well as son

822
00:46:58,280 --> 00:47:04,000
Speaker 1: in law Jared Kushner. So it appears that if one

823
00:47:04,040 --> 00:47:08,319
Speaker 1: were to string these facts together UM as early as

824
00:47:08,520 --> 00:47:16,439
Speaker 1: March of sen Um, there's an attempt to interest UH

825
00:47:16,760 --> 00:47:24,440
Speaker 1: young Papadopoulos in discussing UM Russian contacts UH. And that's

826
00:47:24,480 --> 00:47:29,400
Speaker 1: picked up UH and goes forward through the time that

827
00:47:29,520 --> 00:47:34,480
Speaker 1: the Trump Tower meeting takes place. So there's an indication

828
00:47:34,960 --> 00:47:41,080
Speaker 1: of interest by the Trump campaign which then culminates, perhaps

829
00:47:41,160 --> 00:47:45,919
Speaker 1: culminates in the meeting at Trump Tower, where the same

830
00:47:46,000 --> 00:47:51,239
Speaker 1: inducement is made for providing adverse information. We know, we

831
00:47:51,360 --> 00:47:55,480
Speaker 1: know from our intelligence agencies that this is a very

832
00:47:55,480 --> 00:48:01,440
Speaker 1: typical technique by Soviet intelligence, now Russian and diligence UM

833
00:48:01,480 --> 00:48:05,440
Speaker 1: to compromise their targets. We ask you lastly just about

834
00:48:05,480 --> 00:48:07,920
Speaker 1: the role of a grand jury and an investigation like

835
00:48:08,040 --> 00:48:10,200
Speaker 1: this when you hear the clearing of complaints from folks

836
00:48:10,200 --> 00:48:13,480
Speaker 1: on the right in particular that the burden here is

837
00:48:13,480 --> 00:48:15,319
Speaker 1: is uh. You know that the defense doesn't have much

838
00:48:15,360 --> 00:48:17,399
Speaker 1: of a say in a grand jury a case, and

839
00:48:17,400 --> 00:48:20,400
Speaker 1: and and it doesn't take much to to bring somebody

840
00:48:20,400 --> 00:48:22,560
Speaker 1: before a grand jury or to indict somebody by a

841
00:48:22,560 --> 00:48:25,080
Speaker 1: grand jury. What help us understand the role of grand

842
00:48:25,160 --> 00:48:28,920
Speaker 1: jury plays an investigation like this one? Well, the grand

843
00:48:28,960 --> 00:48:33,040
Speaker 1: jury has the right to ask questions, they vote on

844
00:48:33,120 --> 00:48:38,879
Speaker 1: the indictment. Their advisor is the government. Uh So, in

845
00:48:38,920 --> 00:48:44,360
Speaker 1: that sense, the lawyers for the targets of the investigation

846
00:48:44,480 --> 00:48:48,320
Speaker 1: do not have the right to appear or ask questions

847
00:48:48,320 --> 00:48:53,360
Speaker 1: of witnesses in that sense. Um. Since the beginning of

848
00:48:53,800 --> 00:48:58,440
Speaker 1: a modern jurisprudence on the grand jury, which has uh

849
00:48:59,440 --> 00:49:04,000
Speaker 1: which was created as a buffer between the king and

850
00:49:04,960 --> 00:49:12,799
Speaker 1: uh the the defendant to provide a level of due

851
00:49:12,840 --> 00:49:18,120
Speaker 1: process by reviewing the evidence, has become more and more

852
00:49:18,160 --> 00:49:22,319
Speaker 1: a tool of the prosecution. That being said, it's no

853
00:49:22,520 --> 00:49:25,800
Speaker 1: different in this case than any other. Richard, thank you

854
00:49:25,880 --> 00:49:27,359
Speaker 1: very much. I appreciate that what she'd been an east

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Speaker 1: Day a partner in my brown former Watergate special prosecute.

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Speaker 1: Remember the nine eleven Commission joining us here on Bloomberg

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Speaker 1: Surveillance to talk about those indictments unsealed yesterday. Tom, thanks

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Speaker 1: for listening to the Bloomberg Surveillance podcast. Subscribe and listen

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Speaker 1: to interviews on Apple Podcasts, SoundCloud, or whichever podcast platform

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Speaker 1: you prefer. I'm on Twitter at Tom Keene. David Gura

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Speaker 1: Is that David Gura? Before the podcast? You can always

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