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Speaker 1: Bloomberg Audio Studios, Podcasts, radio news.

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Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along

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Speaker 2: with Lisa Bromwitz and a Marie Hordern. Join us each

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Speaker 2: day for insight from the best in markets, economics, and

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Speaker 2: geopolitics from our global headquarters in New York City. We

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Speaker 2: are live on Bloomberg Television weekday mornings from six to

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Speaker 2: nine am Eastern. Subscribe to the podcast on Apple, Spotify

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Speaker 2: or anywhere else you listen, and as always on the

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Speaker 2: Bloomberg Terminal and the Bloomberg Business app. Joining us now

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Speaker 2: a happy man, Daniel Pinto, JP Morgan Chase President. Daniel,

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Speaker 2: It's good to see you, sir.

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Speaker 3: Thank you for me.

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Speaker 4: It's great here.

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Speaker 2: Do you feel happy? Do you feel lighter now you

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Speaker 2: know you're stepping down and Retiringhi have it.

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Speaker 4: I'm in the company for more than four years.

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Speaker 5: I add my contribution to the success of the company.

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Speaker 4: The company is in an amazing place at the moment.

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Speaker 5: It is the right time to embrace the next generation,

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Speaker 5: to work with Jamie and prepare the company for the

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Speaker 5: future and his succession. So I feel good about the

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Speaker 5: opportunity company gave me my contribution and looking forward to

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Speaker 5: a very violence life going forward.

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Speaker 2: You are living the life that we all aspire to.

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Speaker 6: Why now and what do you expect the next twelve

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Speaker 6: to eighteen months.

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Speaker 2: To look like?

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Speaker 5: So it's very simple in the next This has been

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Speaker 5: planned for a long period of time, and now is

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Speaker 5: the time for me to transition a very very smooth way.

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Speaker 5: This transition will go over a couple of years. I

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Speaker 5: will my job will be to help the management team

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Speaker 5: to continue advising Jamie and the war in issues that

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Speaker 5: there is strategic and important for JP Morgan and for

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Speaker 5: the future of the company. So it is a right time.

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Speaker 5: It is the right group that I helped Jamie.

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Speaker 4: To build up to.

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Speaker 5: So I think that I feel good about where the

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Speaker 5: company is and where I am now.

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Speaker 6: I've been a JP Morgan and it's Affilia Banks for

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Speaker 6: poor decades. It's a long time.

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Speaker 2: You've been to a lot of Davoss.

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Speaker 6: You've seen a lot of different cycles of enthusiasm. How

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Speaker 6: enthusiastic is the optimism around the deal making and some

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Speaker 6: of the mergers and acquisitions that could come down the pike.

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Speaker 4: I think that is quite enthusiastic.

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Speaker 5: It was twenty four was a very good year too,

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Speaker 5: So you think about them. An historical average of volumes

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Speaker 5: around four trillion a year in twenty three, it was

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Speaker 5: around three point two, last year three point five. We

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Speaker 5: think that this year could get to around for trillion,

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Speaker 5: which is historical average. And most important, we hope that

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Speaker 5: the timing but there in the US to approve transaction

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Speaker 5: is not as long. It's moved from six months in

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Speaker 5: the bus to running eighteen months.

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Speaker 4: Hopefully we go go back.

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Speaker 5: It's not just to announce new lys, also to close

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Speaker 5: new There's an environment is said for that.

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Speaker 2: Let's talk about the environment. Is it just a regulatory

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Speaker 2: shift that we need or do you find that four

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Speaker 2: percent five percent interest rates of how people back as well?

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Speaker 5: I think that if you think about the US economy

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Speaker 5: has grown very well in twenty four over three percent.

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Speaker 5: It's likely to grow over two percent this year, So

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Speaker 5: the environment is good. I think that even that is

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Speaker 5: an economy that you don't see and balances that tell

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Speaker 5: you that it is an economy that is about to

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Speaker 5: go into recession. This cycle could continue for a period

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Speaker 5: of time. There is plenty of monetization that needs to

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Speaker 5: be done in the sponsor space.

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Speaker 4: That is like essentially the evaluations.

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Speaker 5: In the US that are much higher than any other places.

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Speaker 5: It's also incentivizeding merging into US companies, So I think

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Speaker 5: that it would be a good environment.

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Speaker 2: Which way to one bank yesterday who suggested that maybe

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Speaker 2: these US companies could go on a bit of a

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Speaker 2: shopping spread in places like Europe with evaluations were depressed.

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Speaker 2: You engage any active conversations right now in companies looking

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Speaker 2: to do those kind of things.

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Speaker 5: So we are always engaged with clients all over the world,

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Speaker 5: and there is a lot of optimism everywhere about where

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Speaker 5: the US could do.

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Speaker 4: So therefore, yes, there is dialogue everywhere.

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Speaker 6: So everyone sounds very optimistic, and then you go to

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Speaker 6: some of these forries in the evening and people say

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Speaker 6: there's a lot of enthusiasm. What actually will get done

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Speaker 6: we're less clear on, just simply because there is that

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Speaker 6: question mark to John's point about benchmark rates, about the

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Speaker 6: fact that the economy isn't slowing down so much, so

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Speaker 6: why would they go any lower? And what happens if

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Speaker 6: they go higher still because of debt and deficit.

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Speaker 4: I tell you how I think about it.

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Speaker 5: When you think about the US economy, isn't a good

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Speaker 5: place there not imbalance is consumer is in a good place,

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Speaker 5: the corporate sector is in a good place. Inflation hasn't

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Speaker 5: yet got to the levels that it should be, and

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Speaker 5: the deficit is high. And then you have policies coming

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Speaker 5: from immigration, policies started physical the policies and others.

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Speaker 4: So at the end, the government is about growth.

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Speaker 5: So therefore I hope they will balance the implementation of

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Speaker 5: those policies in a way that it doesn't either overhit

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Speaker 5: the economy or triggers a recessions. So I think that

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Speaker 5: the hope is because of that, because the economy is

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Speaker 5: in a good place, and certain things like rational revelation,

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Speaker 5: I don't like to talk about the regulation. Rational regulation

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Speaker 5: in our sector, in any other sector could be good

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Speaker 5: for growth, but if things go too far, then the

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Speaker 5: fact will have may.

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Speaker 4: Have to hydrate and deal with inflation. Hopefully doesn't happen.

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Speaker 6: I guess what I'm getting at. Some people are asking

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Speaker 6: what potentially derail this optimism? Is there anything that you

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Speaker 6: could see derailing this optimism this year at a time

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Speaker 6: where people are basically counting on this sort of rational

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Speaker 6: regulation or some of the other growth measures.

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Speaker 4: It's an extent, is what I said like inflation.

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Speaker 5: Could be that economy goes a bit too fast and

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Speaker 5: doesn't allow inflation.

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Speaker 4: To to come down.

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Speaker 5: That geo political space is still in a challenging place,

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Speaker 5: though there is some signs of potential improvement there. And

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Speaker 5: at the end is like any other policy, you can

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Speaker 5: do the right amount, you can do too much of

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Speaker 5: do little. Hopefully the right amount, the right amount is

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Speaker 5: done in a way that doesn't really derail. An economy

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Speaker 5: that is not ready for a recession is an economy

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Speaker 5: that is ready to continue to grow at a decent pace.

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Speaker 2: Daniel, A lot's changed in your banking career, tremendous amount,

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Speaker 2: and now a bunch of alternative asset managers are looking

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Speaker 2: for the activity that traditionally was on a bank balance sheet.

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Speaker 2: Can you walk us through as you depart, how different

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Speaker 2: banking might look in the years ahead compared to when

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Speaker 2: you first started.

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Speaker 4: Well, it's very different.

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Speaker 5: I think that is in a better place, with more scale,

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Speaker 5: better quality of service, is a better quality of products,

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Speaker 5: and a safer industry that probably has ever been. I

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Speaker 5: think that you are referring to private credit. I think

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Speaker 5: that banks we've been lending for two hundred years, and

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Speaker 5: private credit is no more than a normal loan. So

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Speaker 5: I think that we feel very good and where we

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Speaker 5: are in order to compete in that space. And at

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Speaker 5: the end, so what is how we're rejected to be

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Speaker 5: able to provide the best possible service to a client.

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Speaker 5: So therefore, what is it is in a certain transaction

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Speaker 5: you will be able to offer a syndicative facility or

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Speaker 5: you will be to offer that a lending facility. Both

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Speaker 5: markets will tend to converge some way or the other.

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Speaker 4: And we are in an.

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Speaker 5: Amazing position to compete because we do have relationship with

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Speaker 5: all those clients and we offer them not just the loan,

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Speaker 5: We offer them a bunch of activities.

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Speaker 2: We saw a relationship developed between Mark row AND's Apollo

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Speaker 2: and Jane Fraser City and that'nced the end of last year.

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Speaker 2: Are you exploring similar partnerships we have?

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Speaker 5: We have plenty of partnerships, several where we have coll

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Speaker 5: landing facilities. We rather as a managers and that they

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Speaker 5: want to participate in the origination. The issue for all

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Speaker 5: these funds at the moment is that they are getting

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Speaker 5: a huge amount of influence and they may not be

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Speaker 5: enough accests to deploy.

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Speaker 4: So therefore to.

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Speaker 5: Have a partnership with someone like us, a city or

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Speaker 5: any other to be able to participate in the origination

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Speaker 5: of these banks. It is a good thing we are

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Speaker 5: doing the same, not just with one, with as many.

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Speaker 4: As we can.

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Speaker 6: That kindt dynamic gets people worried. Not to be negative

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Speaker 6: Nelly here, but you know, going to worries we're going forward.

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Speaker 2: I realize, okay, I.

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Speaker 6: Realized that I'm sounding pretty negative. But I'm wondering, given

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Speaker 6: how much the flows have come in to the private

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Speaker 6: credit sphere and how they've been searching for ways to

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Speaker 6: be deployed, is there anything that makes you nervous within

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Speaker 6: this ecosystem that's grown up.

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Speaker 2: Very quickly.

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Speaker 5: At the moment now, I think that when you look

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Speaker 5: at these funds, they don't have too much leverage. Their

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Speaker 5: leverage one one and a have times so from that

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Speaker 5: point of view, particularly in the more in the bigger space, bigger.

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Speaker 4: Loans and not so much.

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Speaker 5: The only thing that made me post and think about

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Speaker 5: it is there is a lot of direct lending going

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Speaker 5: into small business. There is a lot of direg lending

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Speaker 5: going into the smaller side of middle market, and this

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Speaker 5: industry in the current form hasn't been tested through a

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Speaker 5: down turn cycle because when COVID happened, it was all

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Speaker 5: subsidized by the different governments. So how these funds are

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Speaker 5: going to behave in a downturn with small business is

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Speaker 5: something that you want.

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Speaker 4: To be concerned about. It you want to keep an

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Speaker 4: eye on.

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Speaker 2: But I don't think that there is a systemic re.

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Speaker 5: Issue in this space in the short term. The components

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Speaker 5: are not there for that to happen.

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Speaker 2: Then you find a question. That's the golf game, It's.

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Speaker 5: Okay, it's been deteriorating's a very really worse.

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Speaker 2: What's the handicap now?

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Speaker 4: It has gone from five to eight? Wipfully to do it?

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Speaker 7: Now?

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Speaker 2: Can you appreciate your time, sir? Congratulations on a fantastic career.

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Speaker 2: Now I can do a more formal introduction to the

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Speaker 2: former US Secretary of State John Carey, also co executive

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Speaker 2: chair of Galvanized Climate Solutions. Secretary carry good to see you, sir,

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Speaker 2: start again. We're starting can help be more rugby. I'm

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Speaker 2: happy to see you, you know I am.

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Speaker 3: Thank you, sir.

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Speaker 2: The new president says, drill, baby, drill. I want to

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Speaker 2: understand how you feel about that and what kind of

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Speaker 2: trajectory you think we might be going on through the

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Speaker 2: next four years.

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Speaker 7: Well, I think I think the President's correct that we

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Speaker 7: need an abundance of what we call firm energy.

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Speaker 3: We need to make sure that America.

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Speaker 7: Is leading in the technologies of this this transition to

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Speaker 7: new energy, clean energy.

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Speaker 3: But I would say that build.

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Speaker 7: Baby, builder, I mean drill mayby drill ought to be

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Speaker 7: replaced by build, may be build, because that's what we

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Speaker 7: need to do in all aspects of energy. There will

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Speaker 7: be higher demand. He's absolutely correct, and I'm glad to

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Speaker 7: see a five hundred million dollar infrastructure announced because that's

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Speaker 7: going to be the key to our doing it, and

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Speaker 7: it's going to be the key to leading in AI

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Speaker 7: BUTT and there's a huge butt. Data centers demand a

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Speaker 7: massive amount of energy, and.

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Speaker 3: That's going to become very competitive.

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Speaker 7: Will that energy be provided by clean energy or is

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Speaker 7: it going to just add to the problem we have

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Speaker 7: of a warming planet with increased intensity to our storms,

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Speaker 7: more damage all around the world. We haven't suddenly lost

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Speaker 7: the connection between the choices we make about how we

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Speaker 7: provide energy and its impact just because we elected a

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Speaker 7: new president. So we've got to stay tuned into the science.

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Speaker 7: We have to stay tuned into the marketplace, and the

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Speaker 7: marketplace is going to move predominantly in the direction of

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Speaker 7: this new energy. To wit, last year, about almost two

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Speaker 7: trillion dollars went into venture capital for new energy, clean

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Speaker 7: energy systems. One trillion went into fossil fueld. It's a

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Speaker 7: two to one first time ever shift in the marketplace.

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Speaker 7: And if you look at what's happening in that marketplace,

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Speaker 7: other technologies are coming on, like wind Texas, the home

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Speaker 7: of fossil fuels in America, that is now the leading

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Speaker 7: state for the deployment of wind turbines. So I think

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Speaker 7: the marketplace is going to continue to invest in moving

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Speaker 7: this direction on a global basis.

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Speaker 2: Is that the marketplace or government intervention.

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Speaker 3: Last the marketplace. It's happening all around the world.

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Speaker 7: I mean, I've been recently in the Far East in Singapore, and.

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Speaker 3: Recently also in the Middle East.

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Speaker 7: In most of the Middle Eastern countries, everyone is engaged

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Speaker 7: in this transition. UA a major producer of oil and gas,

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Speaker 7: is also a major producer of new nuclear plants.

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Speaker 3: They've got four new nuclear plants.

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Speaker 7: They have a vast array of solar one of the

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Speaker 7: largest fields in the world, and they are determined to

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Speaker 7: have a higher level of energy produced by renewable energy.

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Speaker 6: The building on John is talking about, I'm thinking about,

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Speaker 6: let's say, the electric vehicle credits, and there was this

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Speaker 6: idea that we would really transition people to vehicles that

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Speaker 6: were considered cleaner. And yet China did it successfully because

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Speaker 6: they have the resources to do that.

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Speaker 2: The United States doesn't.

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Speaker 6: They need to import them, and it actually makes it

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Speaker 6: in the US more dependent on other places or some

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Speaker 6: of the government policies misguided in what was necessary to

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Speaker 6: actually tackle the problem. From an economic perspective.

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Speaker 7: I think we've worked very hard to open up new

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Speaker 7: supply chains, and we did open up new supply chains

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Speaker 7: India as an example, we were invested at about five

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Speaker 7: hundred million dollars in trying to build, not trying to

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Speaker 7: in building the largest production plant in the world. And yes,

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Speaker 7: China has in fact captured much of that market, and

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Speaker 7: they captured it frankly with unfair trade practices, which is

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Speaker 7: one of the reasons that's a legitimate issue.

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Speaker 3: Between US and them, and we have to work that out.

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Speaker 7: Solar was really worked on and developed by the United

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Speaker 7: States and Germany and then China stepped in. There was

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Speaker 7: a massive amount of dumping into our country and.

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Speaker 3: The production gravitated towards China.

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Speaker 7: But today China is now I mean, many people complain,

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Speaker 7: including the President. President said China is not doing what

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Speaker 7: it should be doing well. China is the largest producer

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Speaker 7: of renewable energy and deployer of renewable energy anywhere in

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Speaker 7: the world, including more than all the rest of the

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Speaker 7: world put together. So China is now commanding the market

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Speaker 7: just by virtue of its production level.

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Speaker 3: We need to get into that and compete.

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Speaker 2: But it raises this.

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Speaker 6: Question national security versus cleaner energy. It kind of pits

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Speaker 6: two of your babies together. It sort of raises this question,

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Speaker 6: which do you prioritize.

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Speaker 7: The climate crisis is a national security crisis. The fact

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Speaker 7: there's are about thirty nine million people wandering around Africa

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Speaker 7: elsewhere trying to knock on the door of places where

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Speaker 7: they think they can live because they can't live there anymore.

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Speaker 7: They can't produce the food anymore, it's getting too hot,

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Speaker 7: you can't work outdoors, so that's going to increase that challenge.

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Speaker 7: We had about a million people come in from the

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Speaker 7: desert into Damascus, which changed the dynamic of the Arab spring.

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Speaker 3: And of the war in Syria. So there's a linkage.

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Speaker 7: What happens when water starts being reduced in spread, what

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Speaker 7: happens when the food basket of Africa implodes as they

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Speaker 7: can't grow it anymore. These are real threats that smart

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Speaker 7: people are spending a lot of time analyzing and understanding,

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Speaker 7: and within the Pentagon, the Pentagon has called the climate

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Speaker 7: crisis a threat multiplier. It presents serious challenges to all

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Speaker 7: of us, and we need to treat it like the

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Speaker 7: security issue that it really is.

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Speaker 2: You understand to Lisa's point that we have become more

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Speaker 2: dependent on an adversary on China for all the reasons

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Speaker 2: that you describe, and yet we have some of these

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Speaker 2: critical minerals, these resources within the United States. I'm sure

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Speaker 2: you're familiar with the resolution copper deposit that Rio's explored.

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Speaker 2: It's ready to go, can support twenty five percent of

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Speaker 2: the copper demands of the United States of America, and

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Speaker 2: yet for some reason it's been dragging along and hasn't

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Speaker 2: been greenlit in a way that it should be.

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Speaker 7: We have a problem in the United States, which I

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Speaker 7: hope will be cured. It's a bipartisan challenge. We need

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Speaker 7: Republicans and Democrats alike to come together in order to

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Speaker 7: do permitting reform. Two thousand gigawatts, a huge amount of energy,

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Speaker 7: almost as much as China has today. We have that

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Speaker 7: backed up at FIRK Federal Energy Regulatory Commission, that has

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Speaker 7: not been improved over these years.

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Speaker 3: Why politics.

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Speaker 7: So I hope we're going to get the politics out

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Speaker 7: of the way, and I think President Trump understands that

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Speaker 7: that is a way to accelerate the deployment of the

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Speaker 7: energy that he has now said.

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Speaker 2: It didn't happen under a Democratic president.

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Speaker 8: Didn't come pa Sis, Why didn't the immigration bill? Why

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Speaker 8: didn't the immigration bill that had been put together with

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Speaker 8: you know, Senator Langford from Oklahoma, he worked hard at that.

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Speaker 7: It was bipartisan, it was ready to be passed. And

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Speaker 7: President Trump then then, you know, former President Trump called

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Speaker 7: up and said, don't pass this. It will help the Democrats,

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Speaker 7: it'll help the divide administration look good.

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Speaker 3: I don't want to get involve themselves.

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Speaker 2: Look, I'm not here the start of this conversation. Do

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Speaker 2: you think do you think they helped themselves for the

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Speaker 2: last four years, the Democrats over the last four years

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Speaker 2: did the party have themselves.

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Speaker 7: I think there were serious questions about the message and

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Speaker 7: so forth. But I'm not here to be political. I'm

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Speaker 7: here to talk about the energy crisis.

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Speaker 2: Isn't that something very political about this crisis? Though it

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Speaker 2: is by.

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Speaker 7: Starting nation, it seems to have been weaponized, and unfortunately

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Speaker 7: that's a loss for all Americans.

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Speaker 3: For instance, if you.

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Speaker 7: Decide, as president has to pull out of Paris, we

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Speaker 7: are not at the table. We lose the leverage of

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Speaker 7: being at the table. We lose the protection of our

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Speaker 7: country in terms of something that might be passed or

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Speaker 7: not passed by.

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Speaker 3: Not being at the table. Moreover, you know.

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Speaker 7: Last time he pulled out, there was only one person

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Speaker 7: in the entire world of all the leaders in the

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Speaker 7: world that pulled out of the Paris Agreement. And by

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Speaker 7: the way, the Paris Agreement was still implemented in the

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Speaker 7: United States because we have thirty seven governors who implement

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Speaker 7: renewable portfolio laws and they did that. We had over

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Speaker 7: one thousand mayors join into something called the worst stell

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Speaker 7: In movement. And that's exactly what's going to happen now.

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Speaker 7: And by the way, in this Bloomberg obviously understands.

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Speaker 3: Better than anybody.

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Speaker 7: The power of the marketplace is what is going to

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Speaker 7: make determinations. Air oil is a commodity and hasn't really

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Speaker 7: changed much in price for over one hundred years. But

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Speaker 7: technology is what is really driving these changes that are

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Speaker 7: taking place, and I think rather than being driven by

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Speaker 7: commodity prices, this revolution is going to be driven by

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Speaker 7: technology prices, which are now lower than the prices of

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Speaker 7: fossil fuel.

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Speaker 6: You've been a big proponent of not exceeding this one

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Speaker 6: point five degree increase in the global climate. You've said

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Speaker 6: that you think we're going to blow past it. You're

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Speaker 6: working with Tom Steyer of Galvanies try to raise money.

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Speaker 2: There's been a huge.

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Speaker 6: Vibe shift away from ESG where people are saying, well,

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Speaker 6: if we can't solve it, whatever, how do you sort

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Speaker 6: of see the enthusia siasm to invest in things that

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Speaker 6: have been highly politicized.

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Speaker 3: Really, that is a great question.

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Speaker 7: I'm really glad you asked it because it's central to

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Speaker 7: what we're doing. Nothing that we're doing is based on

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Speaker 7: reliance on the government to do something, or reliance on.

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Speaker 3: A subsidy of some kind. We're not in there to find.

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Speaker 7: Or to be the source of concessionary funding or to

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Speaker 7: find the concessionary funding. We are investing in portfolio companies

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Speaker 7: that have the ability to affect this transition just on

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Speaker 7: basic fundamentals of business, just looking at the marketplace, and

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Speaker 7: we will show people how, in fact, and there are

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Speaker 7: other companies doing this now, how this transition will allow

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Speaker 7: you to invest and make money and you will be

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Speaker 7: able to make better returns than some other things that

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Speaker 7: are out there today. That's the basis of this investing.

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Speaker 7: And when the market sees the way that a whole

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Speaker 7: bunch of people or in fact turning this around making money,

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Speaker 7: AI is going to be a big part of this.

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Speaker 3: Geothermal may be a part of it, but you need

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Speaker 3: an all of the above.

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Speaker 7: Investment effort now because the science is telling us we

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Speaker 7: have to move faster and ultimately that demand is going

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Speaker 7: to change people's attitude about this. You know, electric vehicles

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Speaker 7: grew by fivefold last year, in sales grew by about

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Speaker 7: fourfold last year. Solar has now had a sixty percent

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Speaker 7: reduction in price. So whereas oil is affected by the

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Speaker 7: economy as a commodity, the renewable portfolios are going to

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Speaker 7: be affected by the technology change which is lowering their costs.

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Speaker 7: And I'll tell you what right now, there is no

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Speaker 7: question but that the reduction in price of wind and solar,

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Speaker 7: and the new fibers that's available to transmit higher levels

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Speaker 7: of energy at much lower cost, all of these things

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Speaker 7: that come together to say it is cheaper one point

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Speaker 7: seven since per kilowatt hour in some contracts that are

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Speaker 7: being let now on solar. So I think the marketplace

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Speaker 7: is going to make this decision, and no one person.

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Speaker 2: You'll feel me to jumping in because we're up against

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Speaker 2: the clocks. But I just wanted to fit in one

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Speaker 2: final question because your voice is important on this issue.

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Speaker 2: Are you encouraged by recent developments in the Middle East

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Speaker 2: and the agreement strung between Hamas and Israel.

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Speaker 7: Well, obviously, I think it's great that we've got an

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Speaker 7: agreement that a lot of people worked extremely hard on

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Speaker 7: for some period of time.

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Speaker 3: Things are always tentative and difficult in that part of

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Speaker 3: the world.

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Speaker 7: A lot will depend on the government of Israel and

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Speaker 7: how it approaches the future. I saw a debate this

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Speaker 7: morning on TV about the meaning of the West Bank,

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Speaker 7: and if efforts are made, I think to move to

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Speaker 7: the sort of greater Sumaria today a Samaria.

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Speaker 3: Philosophy.

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Speaker 7: Without resolving what's going to happen in the long term governance, it's.

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Speaker 3: Going to be a real problem.

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Speaker 7: So hopefully wiser heads will prevail and people move forward.

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Speaker 7: But you have to begin to build, build in building box.

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Speaker 7: This is the first step. Build a little confidence, make

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Speaker 7: some things happen, but then hopefully have a shared vision

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Speaker 7: for the long term future of Gaza and of the

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Speaker 7: West Bank, and obviously for Israel security, which is paramount.

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Speaker 7: You've got to be able to resolve that as you

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Speaker 7: move forward.

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Speaker 2: I think we all share that hope. Thanks for being

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Speaker 2: with this. I appreciate your time.

447
00:23:34,320 --> 00:23:35,399
Speaker 3: As always to be here with you.

448
00:23:35,600 --> 00:23:48,160
Speaker 2: Don't carry that the former US Secretary of State joining

449
00:23:48,200 --> 00:23:51,679
Speaker 2: us not to discuss. It's the Guggenheims, Cio and Welsh

450
00:23:51,720 --> 00:23:53,639
Speaker 2: and it's going to see you. Good morning, welcome to

451
00:23:53,680 --> 00:23:56,359
Speaker 2: the studio. Let's talk about it. The salespeople running around

452
00:23:56,400 --> 00:23:59,000
Speaker 2: Davos trying to sell saying things are really good in

453
00:23:59,040 --> 00:24:01,320
Speaker 2: America right now, get even bets. You've got to put

454
00:24:01,359 --> 00:24:03,720
Speaker 2: money to work. We're already priced for a lot of that.

455
00:24:03,960 --> 00:24:05,679
Speaker 2: How challenging is it for you and the team.

456
00:24:06,320 --> 00:24:10,240
Speaker 9: Well, it is an interesting time. You've got rates that

457
00:24:10,280 --> 00:24:13,919
Speaker 9: are range bound the ten year trading between we'll call

458
00:24:13,960 --> 00:24:16,960
Speaker 9: it three seventy five and four seventy five. You have

459
00:24:17,359 --> 00:24:20,840
Speaker 9: credit spreads that are tight relative to history, and you

460
00:24:20,960 --> 00:24:26,720
Speaker 9: have stocks that are stretched and valuation relative to expectations

461
00:24:26,760 --> 00:24:28,760
Speaker 9: and at a risk premium that is less than zero.

462
00:24:29,240 --> 00:24:32,400
Speaker 9: So it can be very tricky at this particular juncture.

463
00:24:32,760 --> 00:24:36,480
Speaker 9: But fundamentals remain pretty strong, and so there's opportunity for

464
00:24:36,560 --> 00:24:42,960
Speaker 9: investment in maybe a wide array of selections and sectors,

465
00:24:43,240 --> 00:24:44,600
Speaker 9: so there's things.

466
00:24:44,400 --> 00:24:45,080
Speaker 10: To invest in.

467
00:24:45,480 --> 00:24:49,320
Speaker 6: I remember this sort of pendulum switching from bonds to stocks,

468
00:24:49,320 --> 00:24:52,120
Speaker 6: people saying that stocks really seem like the dynamic place

469
00:24:52,160 --> 00:24:54,399
Speaker 6: to be in a pro growth administration at a time

470
00:24:54,520 --> 00:24:57,879
Speaker 6: where inflation hasn't completely gone down. Do you agree with

471
00:24:57,920 --> 00:25:00,760
Speaker 6: that that stocks are preferable to bonds at a time

472
00:25:01,040 --> 00:25:02,760
Speaker 6: or really growth is the main theme?

473
00:25:03,560 --> 00:25:08,560
Speaker 9: Well, I think that does give a lift to stocks,

474
00:25:09,000 --> 00:25:11,960
Speaker 9: and as long as earnings per share projections turn out

475
00:25:11,960 --> 00:25:14,639
Speaker 9: to be accurate, I think that there's still room for

476
00:25:15,200 --> 00:25:19,320
Speaker 9: opportunity inequities. However, we also have to remember that not

477
00:25:19,440 --> 00:25:20,520
Speaker 9: all markets.

478
00:25:20,200 --> 00:25:21,080
Speaker 3: Are exactly the same.

479
00:25:21,160 --> 00:25:23,520
Speaker 9: So if you look at the Russell two thousand, you

480
00:25:23,600 --> 00:25:25,960
Speaker 9: still have a very high percentage around forty percent that

481
00:25:26,040 --> 00:25:30,840
Speaker 9: are non earners, and the mag seven of course as well,

482
00:25:30,880 --> 00:25:34,280
Speaker 9: below risk premium levels that we've seen not since the

483
00:25:34,359 --> 00:25:37,880
Speaker 9: late nineteen nineties where we had negative negative risk premiums.

484
00:25:38,200 --> 00:25:41,199
Speaker 9: So I think that we have some risk associated with

485
00:25:41,320 --> 00:25:44,720
Speaker 9: the market that it is priced for perfection. So I

486
00:25:44,720 --> 00:25:48,520
Speaker 9: would be cautious, but cautiously optimistic. And as long as

487
00:25:48,720 --> 00:25:52,239
Speaker 9: and we still see earnings per share rising, maybe not

488
00:25:52,280 --> 00:25:54,199
Speaker 9: at the level that is priced into the S and

489
00:25:54,200 --> 00:25:57,040
Speaker 9: P right now at fifteen percent earnings per share growth,

490
00:25:57,040 --> 00:26:00,000
Speaker 9: but nonetheless still a fairly positive environment.

491
00:26:00,680 --> 00:26:03,800
Speaker 6: Stocks are priced to perfection in your view, our bonds

492
00:26:03,800 --> 00:26:04,720
Speaker 6: price to perfection.

493
00:26:05,440 --> 00:26:08,520
Speaker 9: No, Actually, I think there's some real opportunities in fixed income.

494
00:26:08,560 --> 00:26:10,720
Speaker 2: Still we have a risk premium.

495
00:26:10,280 --> 00:26:14,359
Speaker 9: That's positive relative to certainly relative to equities. And also

496
00:26:14,400 --> 00:26:17,520
Speaker 9: you're getting a real rate of return that is much

497
00:26:17,520 --> 00:26:19,639
Speaker 9: better than we had pre COVID, and you're getting a

498
00:26:19,760 --> 00:26:22,560
Speaker 9: nominal rate of return in any number of areas that

499
00:26:22,640 --> 00:26:24,840
Speaker 9: make a lot of sense. So we like all sorts

500
00:26:24,840 --> 00:26:28,680
Speaker 9: of credit stories, structured credit, corporate credit, even high yield,

501
00:26:29,560 --> 00:26:32,840
Speaker 9: and particularly the high quality portion of the high yield market.

502
00:26:33,400 --> 00:26:37,160
Speaker 9: So there's still some real, real fundamental value that can

503
00:26:37,200 --> 00:26:38,480
Speaker 9: be found in fixed income.

504
00:26:38,560 --> 00:26:40,200
Speaker 2: Can you say the same thing about treasuries?

505
00:26:41,000 --> 00:26:43,480
Speaker 9: Well, like I said, we're range bound in treasuries, and

506
00:26:43,600 --> 00:26:46,840
Speaker 9: there's a trade that's actionable there. As we go up

507
00:26:46,880 --> 00:26:49,480
Speaker 9: towards the top end of the range on the high fours,

508
00:26:49,520 --> 00:26:52,280
Speaker 9: if you will, four seventy five, you can extend duration.

509
00:26:52,640 --> 00:26:55,760
Speaker 9: You can then also as we've moved back shorten after all,

510
00:26:55,800 --> 00:26:57,760
Speaker 9: we saw one hundred and twenty basis point rise in

511
00:26:57,800 --> 00:27:00,280
Speaker 9: the ten year and we were able to play that

512
00:27:00,920 --> 00:27:04,480
Speaker 9: trajectory really quite nimbly, if you will, during that window

513
00:27:04,520 --> 00:27:04,800
Speaker 9: of time.

514
00:27:05,000 --> 00:27:07,439
Speaker 2: The incoming government might have to look at extending duration

515
00:27:07,520 --> 00:27:10,000
Speaker 2: as well. Will that complicate things? How do you think

516
00:27:10,000 --> 00:27:12,280
Speaker 2: about the deficit concerns of the moment and do you

517
00:27:12,320 --> 00:27:14,760
Speaker 2: think that's been responsible for the pickup and yields we've

518
00:27:14,800 --> 00:27:16,880
Speaker 2: seen through December and into the new year.

519
00:27:17,320 --> 00:27:19,560
Speaker 9: I think there's a couple things that have really influenced

520
00:27:19,640 --> 00:27:23,240
Speaker 9: the rise and rate. One is the deficit, and it's

521
00:27:23,359 --> 00:27:26,560
Speaker 9: a real concern who's going to buy all these bonds

522
00:27:26,600 --> 00:27:29,240
Speaker 9: that we have to issue in the US. Right now,

523
00:27:29,359 --> 00:27:33,000
Speaker 9: we're still being able to be financed through both US

524
00:27:33,080 --> 00:27:36,040
Speaker 9: investors as well as international investors. So that story is

525
00:27:36,040 --> 00:27:39,240
Speaker 9: still playing out pretty well. But at the same time,

526
00:27:39,359 --> 00:27:44,200
Speaker 9: you also have a FED that is sending mixed signals

527
00:27:44,200 --> 00:27:48,080
Speaker 9: with regard to the rate trajectory. Now, our belief is

528
00:27:48,280 --> 00:27:51,000
Speaker 9: that rates are still going to be moving down over

529
00:27:51,000 --> 00:27:53,800
Speaker 9: the course of twenty twenty five, and we're going to

530
00:27:53,800 --> 00:27:56,520
Speaker 9: move towards a neutral rate, and I think it's going

531
00:27:56,600 --> 00:27:58,399
Speaker 9: to be tricky for the FED to really find that

532
00:27:58,520 --> 00:28:01,200
Speaker 9: perfect neutral rate. But at the same time, they are

533
00:28:01,240 --> 00:28:06,000
Speaker 9: also still slowly reducing their balance sheet, so they're sending

534
00:28:06,040 --> 00:28:09,240
Speaker 9: mixed messages messages, and they're also acting in mixed ways.

535
00:28:09,280 --> 00:28:11,400
Speaker 6: You know, John alluded to this idea that the US

536
00:28:11,400 --> 00:28:13,440
Speaker 6: has to finance all this, and you are mentioning this, right,

537
00:28:13,480 --> 00:28:15,120
Speaker 6: where's the money going to actually come from?

538
00:28:15,320 --> 00:28:16,080
Speaker 2: And we've talked.

539
00:28:15,840 --> 00:28:18,320
Speaker 6: About how that sucking sound of cash going into the

540
00:28:18,400 --> 00:28:21,160
Speaker 6: United States to feel this crowding out some of the

541
00:28:21,359 --> 00:28:24,520
Speaker 6: debt issue ins and other assets and other regions. How

542
00:28:24,600 --> 00:28:29,320
Speaker 6: destabilizing is it to have one economy accelerating so quickly

543
00:28:29,400 --> 00:28:31,680
Speaker 6: and diverging from the rest of the world.

544
00:28:32,040 --> 00:28:36,400
Speaker 9: Well, it is unusual. But what I would also say

545
00:28:36,440 --> 00:28:38,520
Speaker 9: is that because the strength of the US economy has

546
00:28:38,560 --> 00:28:41,680
Speaker 9: definitely been there if we continue to see an inflow

547
00:28:41,680 --> 00:28:43,440
Speaker 9: of capital, and I think we're going to continue to

548
00:28:43,480 --> 00:28:46,480
Speaker 9: see that, and the opportunity for investment is going to

549
00:28:46,520 --> 00:28:51,000
Speaker 9: go beyond the markets necessarily and into infrastructure, investment, manufacturing,

550
00:28:51,040 --> 00:28:51,840
Speaker 9: build out, real.

551
00:28:51,800 --> 00:28:53,640
Speaker 2: Estate or the US for the US, not for the

552
00:28:53,640 --> 00:28:54,400
Speaker 2: rest of the world.

553
00:28:54,360 --> 00:28:56,520
Speaker 9: Not for the rest of the world so much, and

554
00:28:56,600 --> 00:28:58,960
Speaker 9: so there's going to have to be some real balance there.

555
00:29:00,120 --> 00:29:02,400
Speaker 9: For the meantime, the US is going to continue to

556
00:29:02,440 --> 00:29:03,200
Speaker 9: attract capital.

557
00:29:03,280 --> 00:29:05,200
Speaker 2: Can we get you excited about Europe in any way,

558
00:29:05,240 --> 00:29:07,880
Speaker 2: shape or form. Were sitting care in Switzerland. It's beautiful,

559
00:29:08,000 --> 00:29:09,960
Speaker 2: it's beautiful. A lot of people say it's a great

560
00:29:09,960 --> 00:29:12,360
Speaker 2: place for vacation. I've always been sold that by US

561
00:29:12,400 --> 00:29:15,720
Speaker 2: based investors. Can we get you excited about Europe at all?

562
00:29:16,160 --> 00:29:19,400
Speaker 9: I think that Europe has some real opportunity, but they

563
00:29:19,400 --> 00:29:23,320
Speaker 9: have to really make some structural changes and we'll see

564
00:29:23,400 --> 00:29:24,760
Speaker 9: if Europe is able to do that.

565
00:29:25,200 --> 00:29:27,280
Speaker 10: One of the areas of.

566
00:29:27,280 --> 00:29:32,720
Speaker 9: Maybe concern or caution is that previously very stable governments

567
00:29:33,280 --> 00:29:38,320
Speaker 9: are seeing some turmoil. France, Germany elections coming up, and

568
00:29:38,360 --> 00:29:41,360
Speaker 9: so I think that as we come through those and

569
00:29:41,440 --> 00:29:44,520
Speaker 9: we see more evidence of the trajectory.

570
00:29:44,880 --> 00:29:47,040
Speaker 10: And if we see a real desire for Europe.

571
00:29:46,680 --> 00:29:49,000
Speaker 9: To engage in structural reforms, then I think we might

572
00:29:49,000 --> 00:29:50,760
Speaker 9: be able to see an investable opportunity.

573
00:29:50,880 --> 00:29:53,160
Speaker 2: There's lots of facts and I appreciate your time as always,

574
00:29:53,160 --> 00:29:56,360
Speaker 2: it's good to see it and Welsh the Cockenheim Cio.

575
00:30:05,760 --> 00:30:08,160
Speaker 2: Lots of changes overnight on the trade front once again,

576
00:30:08,320 --> 00:30:10,680
Speaker 2: lots of threats that we can explore with the former

577
00:30:11,040 --> 00:30:13,720
Speaker 2: US House Speaker Paul Ryan speaker run it's going to

578
00:30:13,760 --> 00:30:15,400
Speaker 2: say you sir, it good to be with you. Let's

579
00:30:15,440 --> 00:30:18,000
Speaker 2: think about the ideology at the sitting president. What is

580
00:30:18,000 --> 00:30:21,200
Speaker 2: the ideology? What's your familiarity with the ideology around things

581
00:30:21,240 --> 00:30:21,760
Speaker 2: like trade.

582
00:30:21,800 --> 00:30:23,640
Speaker 1: I think the best way to describe as America first.

583
00:30:23,720 --> 00:30:26,640
Speaker 1: I think he's articulately in America first on trades, a

584
00:30:26,680 --> 00:30:29,680
Speaker 1: little more more caantilistic, say than the traditional Republican you

585
00:30:29,720 --> 00:30:32,719
Speaker 1: know Reagan free trade. But America first is the quickest

586
00:30:32,760 --> 00:30:35,800
Speaker 1: way of describing it. A lot of good fiscal policy,

587
00:30:35,880 --> 00:30:37,920
Speaker 1: you know, regulatory policy, tax policy.

588
00:30:37,960 --> 00:30:38,920
Speaker 10: There's a lot of optimism.

589
00:30:39,000 --> 00:30:40,880
Speaker 1: Frankly, but on trade, I mean, I'm sure you have

590
00:30:40,920 --> 00:30:43,160
Speaker 1: an international audience here. There's going to be some trade friction,

591
00:30:43,160 --> 00:30:44,040
Speaker 1: no two ways about.

592
00:30:43,840 --> 00:30:45,400
Speaker 2: It, without a doubt. How do you feel about the

593
00:30:45,440 --> 00:30:47,800
Speaker 2: mccancil has taken over the Republican Party. It's not the

594
00:30:47,880 --> 00:30:48,360
Speaker 2: right step.

595
00:30:48,680 --> 00:30:52,400
Speaker 1: Well, there's different kinds of Republicans. I'm a classical liberal,

596
00:30:52,560 --> 00:30:55,520
Speaker 1: free market, free trade Republican, so I'm a different breed

597
00:30:55,520 --> 00:31:00,120
Speaker 1: of a Republican. His breed of populist Trump Republican is

598
00:31:00,120 --> 00:31:03,360
Speaker 1: is the ascendant breed. They're basically the dominant force in

599
00:31:03,400 --> 00:31:06,040
Speaker 1: the Republican Party. Donald Trump is the dominant force in

600
00:31:06,040 --> 00:31:08,440
Speaker 1: the Republican Party, no toys about it. But we have

601
00:31:08,480 --> 00:31:10,920
Speaker 1: a coalition that is playing nice with each other right now.

602
00:31:10,920 --> 00:31:13,800
Speaker 1: And frankly, I'm optimistic on a lot of policies that

603
00:31:13,800 --> 00:31:15,880
Speaker 1: are coming together. And all of those policies will not

604
00:31:15,920 --> 00:31:18,720
Speaker 1: happen if you have Republican disunity. So I think it's

605
00:31:18,800 --> 00:31:20,680
Speaker 1: very important that Republicans stay unified.

606
00:31:21,360 --> 00:31:22,440
Speaker 10: The executive branch.

607
00:31:22,200 --> 00:31:24,080
Speaker 1: Has an enormous amount of power when it comes to

608
00:31:24,160 --> 00:31:27,840
Speaker 1: trade policy. That's something that one hundred years ago Congress

609
00:31:27,840 --> 00:31:30,320
Speaker 1: seated to the White House. But on all this other

610
00:31:30,320 --> 00:31:33,160
Speaker 1: fiscal policy, Congress has a huge role to play, and

611
00:31:33,240 --> 00:31:36,160
Speaker 1: it's really important that Republicans stay unified with these razor

612
00:31:36,160 --> 00:31:37,160
Speaker 1: thin majorities we have.

613
00:31:37,400 --> 00:31:39,720
Speaker 6: One of the initiatives that they need to deal with

614
00:31:40,040 --> 00:31:42,840
Speaker 6: is the deficit. And I'm focused very much on the

615
00:31:42,880 --> 00:31:44,840
Speaker 6: bond markets, and I'm sure you are too as a

616
00:31:44,880 --> 00:31:47,680
Speaker 6: free market Republican. And I just wonder how much conviction

617
00:31:47,760 --> 00:31:50,440
Speaker 6: you really see in both camps of the Republican Party

618
00:31:50,480 --> 00:31:53,120
Speaker 6: as you just laid out to truly combat some of

619
00:31:53,120 --> 00:31:55,000
Speaker 6: the deficit concerns that we feel here at DAVA.

620
00:31:55,040 --> 00:31:57,320
Speaker 1: They're definitely definite hawks, and Congress no toys about it.

621
00:31:57,320 --> 00:31:59,560
Speaker 1: The people running the various committees in charge of this,

622
00:31:59,600 --> 00:32:01,960
Speaker 1: the budget, the ways the means can be, definance can be, they.

623
00:32:01,800 --> 00:32:02,760
Speaker 10: Are deficit hawks.

624
00:32:03,240 --> 00:32:05,880
Speaker 1: So first of all, you can't do well on your

625
00:32:05,920 --> 00:32:08,240
Speaker 1: debt servicing if you don't have don lal GDP growth

626
00:32:08,240 --> 00:32:11,960
Speaker 1: outpacing your debt servicing costs. So number one, fast economic

627
00:32:12,000 --> 00:32:16,240
Speaker 1: growth is paramount. That's why this deregulation is very necessary.

628
00:32:16,240 --> 00:32:18,959
Speaker 1: That's why extending tax reform is necessary. We don't want

629
00:32:19,000 --> 00:32:21,160
Speaker 1: to hit the economy with a wet blanket like Biden

630
00:32:21,200 --> 00:32:23,600
Speaker 1: did with the promise to higher taxes and more regulations.

631
00:32:23,880 --> 00:32:25,640
Speaker 10: Really important on the debt.

632
00:32:25,760 --> 00:32:27,480
Speaker 1: The only way to get the debt under control is

633
00:32:27,480 --> 00:32:30,280
Speaker 1: to do in titlement reform that's more of a comprehensive thing.

634
00:32:30,320 --> 00:32:32,000
Speaker 1: That's what I spent most of my time in Congress

635
00:32:32,000 --> 00:32:32,480
Speaker 1: working on.

636
00:32:33,000 --> 00:32:34,360
Speaker 10: I think there's a way to do it.

637
00:32:34,720 --> 00:32:37,720
Speaker 1: There's the most bipartisan solution that's out there right now

638
00:32:37,800 --> 00:32:39,040
Speaker 1: are these fiscal commissions.

639
00:32:39,240 --> 00:32:40,560
Speaker 10: There's a lot of talk about that.

640
00:32:40,600 --> 00:32:43,360
Speaker 1: It wouldn't surprise me if Congress acted in a bipart

641
00:32:43,440 --> 00:32:45,880
Speaker 1: is a way on a fiscal commission, not like Wull Simpsons,

642
00:32:45,880 --> 00:32:48,800
Speaker 1: which I served on, but one with teeth that requires action.

643
00:32:49,360 --> 00:32:53,120
Speaker 1: That's probably the biggest talk in town right now about

644
00:32:53,160 --> 00:32:55,480
Speaker 1: real debt reduction, but in reconciliation.

645
00:32:55,560 --> 00:32:57,640
Speaker 10: Who knows, you could see some debt reduction occur there too.

646
00:32:57,720 --> 00:32:59,840
Speaker 6: We've already heard though from this administration. They're not going

647
00:32:59,880 --> 00:33:01,880
Speaker 6: to Social Security, they're not going to cut Medicare, they're

648
00:33:01,880 --> 00:33:03,400
Speaker 6: not going to cut any of those titlements that they

649
00:33:03,440 --> 00:33:04,880
Speaker 6: really want to cut. And I just wonder what.

650
00:33:05,000 --> 00:33:06,200
Speaker 10: I wouldn't say they really want to cut.

651
00:33:07,880 --> 00:33:11,960
Speaker 1: Okay, everybody who ran for president lately has been saying

652
00:33:11,960 --> 00:33:13,000
Speaker 1: we're not touching these things.

653
00:33:13,400 --> 00:33:15,800
Speaker 10: I don't agree with that. I'm a different, like I said,

654
00:33:16,120 --> 00:33:16,480
Speaker 10: reading and.

655
00:33:16,480 --> 00:33:18,760
Speaker 6: It's going to hit the wall that there's going to

656
00:33:18,800 --> 00:33:21,360
Speaker 6: be a real challenge to undermines some of the optimism

657
00:33:21,360 --> 00:33:22,120
Speaker 6: that we're hearing here.

658
00:33:22,200 --> 00:33:24,680
Speaker 1: Well, within a decade you have both the Medicare part

659
00:33:24,720 --> 00:33:26,680
Speaker 1: a trust fund and the Social Career Trust Fund going

660
00:33:26,720 --> 00:33:28,520
Speaker 1: bankrupt and solve it. So you have to do something

661
00:33:28,520 --> 00:33:30,040
Speaker 1: about that. You've got to step in front of that.

662
00:33:30,280 --> 00:33:32,720
Speaker 1: By the way, you don't need to cut these programs

663
00:33:32,760 --> 00:33:34,920
Speaker 1: to fix this. You can grow them a little more slowly.

664
00:33:34,960 --> 00:33:37,360
Speaker 1: You can reform these programs, and you can do it

665
00:33:37,360 --> 00:33:39,840
Speaker 1: in a prospective way so that you don't affect people

666
00:33:39,840 --> 00:33:42,000
Speaker 1: in or near retirement, but do it for the younger

667
00:33:42,040 --> 00:33:43,360
Speaker 1: generation like my ex generation.

668
00:33:43,720 --> 00:33:45,320
Speaker 10: So there are good reforms.

669
00:33:44,880 --> 00:33:47,920
Speaker 1: Out there that I think are politically palatable that move

670
00:33:48,040 --> 00:33:51,000
Speaker 1: the needle on the debt tremendously. The question is whether

671
00:33:51,120 --> 00:33:52,840
Speaker 1: or not. And by the way, if it were easy,

672
00:33:52,880 --> 00:33:56,240
Speaker 1: we had already done it. I pass four budgets in

673
00:33:56,280 --> 00:33:58,280
Speaker 1: the House when our budget shair that did this, but

674
00:33:58,320 --> 00:33:59,720
Speaker 1: they did meant nowhere in the Senate.

675
00:33:59,800 --> 00:34:02,120
Speaker 10: So this is really hard to.

676
00:34:02,080 --> 00:34:03,960
Speaker 2: Do, which you have for an extension of the tax

677
00:34:04,040 --> 00:34:05,960
Speaker 2: cuts and jobs that absolutely why.

678
00:34:05,880 --> 00:34:07,959
Speaker 1: Does not make sense because we want growth.

679
00:34:08,040 --> 00:34:09,040
Speaker 10: If you don't do this.

680
00:34:09,560 --> 00:34:11,279
Speaker 1: The kind of tax increases that are going to hit

681
00:34:11,320 --> 00:34:14,840
Speaker 1: the economy. First of all, immunia, expensing, R and D, amortization.

682
00:34:14,880 --> 00:34:18,160
Speaker 1: These are very important business tax relief. But what people

683
00:34:18,760 --> 00:34:23,600
Speaker 1: who aren't Americans don't necessarily see is more than two

684
00:34:23,640 --> 00:34:26,680
Speaker 1: thirds of our businesses are not CEA corporations. They're passed

685
00:34:26,719 --> 00:34:29,480
Speaker 1: through LLCs sub sub Chapter A S corporations.

686
00:34:29,640 --> 00:34:31,120
Speaker 10: They pay their taxes as individuals.

687
00:34:31,520 --> 00:34:34,680
Speaker 1: There's a massive tax increase on those businesses the engine

688
00:34:34,719 --> 00:34:37,760
Speaker 1: of job creation in America if you let those things expire.

689
00:34:37,840 --> 00:34:39,839
Speaker 10: So that's really important. It's this thing we call Section

690
00:34:39,920 --> 00:34:41,960
Speaker 10: one nine A. I don't want to get too deep

691
00:34:41,960 --> 00:34:42,480
Speaker 10: in the details.

692
00:34:42,520 --> 00:34:43,240
Speaker 2: We haven't got signed.

693
00:34:43,280 --> 00:34:44,640
Speaker 10: You're going to hit. You're going is gonna be.

694
00:34:44,640 --> 00:34:46,760
Speaker 1: Bad for the economy if you let those tax cuts expire.

695
00:34:46,800 --> 00:34:47,640
Speaker 10: So you do need to extend.

696
00:34:47,640 --> 00:34:49,560
Speaker 2: Sous And said the same thing. They said, it could

697
00:34:49,560 --> 00:34:52,439
Speaker 2: be an economic calamity. Could you describe that colomacy for us?

698
00:34:52,480 --> 00:34:54,919
Speaker 1: Just how about I'd say about eighty percent of small

699
00:34:54,960 --> 00:34:58,240
Speaker 1: businesses would have a massive tax increase, over twenty percent

700
00:34:58,320 --> 00:35:00,400
Speaker 1: tax increase. And oh, by the way, you'll put them

701
00:35:00,400 --> 00:35:04,440
Speaker 1: at a massive competitive disadvantage against corporations, huge job dislocation,

702
00:35:04,760 --> 00:35:07,520
Speaker 1: and most of our jobs come from small and medium businesses.

703
00:35:07,840 --> 00:35:09,840
Speaker 1: You cannot hit those with a big tax increase.

704
00:35:09,920 --> 00:35:12,280
Speaker 2: You know, that's difficult to re import together these bills.

705
00:35:12,400 --> 00:35:13,959
Speaker 2: That's only one piece of a tax eff.

706
00:35:14,040 --> 00:35:16,120
Speaker 1: Yeah, I wrote the last one night you're it was

707
00:35:16,480 --> 00:35:17,760
Speaker 1: I had a twenty two seat margin.

708
00:35:18,000 --> 00:35:19,080
Speaker 10: Easier to play with the twenty and.

709
00:35:19,080 --> 00:35:21,600
Speaker 2: A half dozen montins this time around. How difficult is

710
00:35:21,600 --> 00:35:23,280
Speaker 2: it going to base it to an I think above

711
00:35:23,320 --> 00:35:25,279
Speaker 2: and beyond just extending. This is why I.

712
00:35:25,239 --> 00:35:27,879
Speaker 1: Say Republicans need to stay unified because all of us

713
00:35:27,920 --> 00:35:31,000
Speaker 1: agree on this, this fiscal this type of fiscal policy.

714
00:35:31,080 --> 00:35:33,000
Speaker 1: We may have different agreements on trade, we don't have

715
00:35:33,080 --> 00:35:37,319
Speaker 1: disagreements on this. Really important that Republican factionalism doesn't occur.

716
00:35:37,719 --> 00:35:40,800
Speaker 1: They stay unified and get this done. The country's counting

717
00:35:40,800 --> 00:35:43,040
Speaker 1: on us. Donald Trump promised it, and one of the

718
00:35:43,040 --> 00:35:45,520
Speaker 1: reasons why people are so optimistic is because they believe

719
00:35:45,560 --> 00:35:46,440
Speaker 1: this is going to happen.

720
00:35:47,000 --> 00:35:49,320
Speaker 10: At Tanao, we pulled.

721
00:35:49,200 --> 00:35:52,600
Speaker 1: Seven hundred CEOs ten trillion dollars a wealth and it's

722
00:35:52,640 --> 00:35:55,080
Speaker 1: a thirty two point swing in optimism from last year

723
00:35:55,080 --> 00:35:55,480
Speaker 1: to this year.

724
00:35:55,520 --> 00:35:57,080
Speaker 2: We've seen it on the US E Konda can tye

725
00:35:57,080 --> 00:35:59,920
Speaker 2: spake Iron. We hear it repeatedly every single out that.

726
00:36:00,040 --> 00:36:02,520
Speaker 1: Optimism has to be translated into policy for it to

727
00:36:02,600 --> 00:36:05,680
Speaker 1: be realized, and that means past this bill Speaker Ron, Thank.

728
00:36:05,520 --> 00:36:05,799
Speaker 3: You, sir.

729
00:36:06,760 --> 00:36:10,279
Speaker 2: This is the Bloomberg Surveillance Podcast, bringing you the best

730
00:36:10,360 --> 00:36:13,640
Speaker 2: in markets, economics, and geopolitics. You can watch the show

731
00:36:13,719 --> 00:36:16,640
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732
00:36:16,800 --> 00:36:20,520
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733
00:36:20,680 --> 00:36:22,920
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734
00:36:22,960 --> 00:36:25,359
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