WEBVTT - Stimulus Gridlock Will Test Fed's Toolbox: State Street's Loh 0:00:01.400 --> 0:00:04.120 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney. Along 0:00:04.120 --> 0:00:06.200 with my co host of Bonnie Quinn. Every business day 0:00:06.240 --> 0:00:10.360 we bring you interviews from CEOs, market pros, and Bloomberg experts, 0:00:10.400 --> 0:00:13.600 along with essential market moving news. Find the Bloomberg Markets 0:00:13.600 --> 0:00:17.000 Podcast on Apple podcast or wherever you listen to podcasts, 0:00:17.000 --> 0:00:21.079 and on Bloomberg dot com. It is time to bring 0:00:21.120 --> 0:00:23.159 in our next guest. Now we have Marvin Low. Very 0:00:23.239 --> 0:00:24.960 lucky to happen because he deals in all sorts of 0:00:24.960 --> 0:00:29.000 derivatives and trades that I'm sure are particularly exciting at 0:00:29.040 --> 0:00:32.760 a time like this. Marvin Low of State Street in Boston. So, Marvin, 0:00:32.920 --> 0:00:34.440 have you been having found the last couple of days 0:00:34.440 --> 0:00:38.040 in the market. It certainly has been a wild ride, 0:00:38.040 --> 0:00:40.920 hasn't it. Um. I'm I'm tired like everyone else, so 0:00:41.440 --> 0:00:42.839 we would like to move on to the next thing. 0:00:42.880 --> 0:00:44.920 But you know, clearly we're still in the service of 0:00:44.960 --> 0:00:48.279 the election and you know, waiting outcomes. How do you 0:00:48.320 --> 0:00:50.080 read it, though? How do you read this market where 0:00:50.080 --> 0:00:52.160 we've had a vix all the way off, as Paul said, 0:00:52.360 --> 0:00:54.880 coast of forty but way back down now, even though 0:00:54.880 --> 0:00:57.160 there's more more uncertainty over who's actually going to be 0:00:57.200 --> 0:01:00.600 president of this country? Yeah, I mean, I mean only UM. 0:01:00.800 --> 0:01:03.840 I had always thought that the Senate was the you know, 0:01:03.880 --> 0:01:06.720 and of course the um who occupies the White Houses 0:01:06.880 --> 0:01:09.360 is clearly important for for tone, but the Senate was, 0:01:09.920 --> 0:01:13.800 um potentially one of the most important outcomes, UM, particularly 0:01:13.880 --> 0:01:16.200 for businesses and how to approach the next four years. 0:01:16.480 --> 0:01:18.760 And from that perspective, we do have clarities. So I 0:01:18.760 --> 0:01:21.960 think that there is a lot of pricing around, UM, 0:01:22.000 --> 0:01:28.120 around kind of the gridlock that divided Congress provides. So Marvin, again, 0:01:28.560 --> 0:01:31.399 it looks like if current transfold, we we will have 0:01:31.400 --> 0:01:33.720 a split government in terms of the Democratic White House 0:01:33.760 --> 0:01:37.920 and a Republican Senate. What what do you think the 0:01:38.160 --> 0:01:42.400 from a fiscal stimus package can get done? Should get done? 0:01:42.680 --> 0:01:46.640 What's kind of in your forecast? Yeah, should should get done, 0:01:46.680 --> 0:01:50.760 Absolutely can get done. UM. I think it's the size 0:01:50.800 --> 0:01:55.440 that ultimately it has has been um the unknown over 0:01:55.480 --> 0:01:58.760 the last couple of weeks. Ultimately, you know, ultimately once again, UM, 0:01:59.200 --> 0:02:02.600 you know, I'm I'm are marking somewhere around a trillion dollars, 0:02:02.640 --> 0:02:05.680 certainly much less than the conversation around the Blue Wave, 0:02:05.760 --> 0:02:09.520 which was closer to three. But even more important, Um, 0:02:09.760 --> 0:02:13.359 that blue Wave discussion also included you know, infrastructure spending 0:02:13.360 --> 0:02:18.359 and potential transfer of wealth types type strategies, if you will. 0:02:18.720 --> 0:02:21.160 And and that is off the table with kind of 0:02:21.160 --> 0:02:23.880 this divided Congress that we're looking at now. But but 0:02:24.280 --> 0:02:27.760 should happen, um, And and now we're kind of parsing 0:02:27.880 --> 0:02:32.120 when it will happen. Alright, So you think a trillion, 0:02:32.200 --> 0:02:35.440 which is pretty stunning given that we were at one 0:02:35.480 --> 0:02:39.160 point eight trillion on the Republican side before this all happened. 0:02:39.400 --> 0:02:41.359 What brings you down to a trillion? Do you think 0:02:41.360 --> 0:02:43.800 that because Mitch McConnell seems to have work control over 0:02:43.840 --> 0:02:46.160 the santut now and there may not even be Speaker 0:02:46.240 --> 0:02:49.600 Nancy Pelosi in the next version of Congress, that that's 0:02:49.639 --> 0:02:53.080 why we'll come back down again. Yeah, you know, I 0:02:53.120 --> 0:02:57.440 mean the the um the Senate Republicans certainly were at 0:02:57.480 --> 0:03:01.560 a much lower level than even even that brilliant Um. Uh. 0:03:01.720 --> 0:03:05.359 It does depend I think who occupies the White House. Um. 0:03:05.600 --> 0:03:07.960 You know, there's all conjecture at this point. Um, But 0:03:08.400 --> 0:03:10.960 you know, I could see I could see if um, 0:03:11.320 --> 0:03:15.760 President Trump somehow is reelected that the package might be 0:03:15.840 --> 0:03:18.919 larger because he would be able to um UH to 0:03:19.000 --> 0:03:22.800 pressure the Senate Republicans in a way that President Biden couldn't. 0:03:23.080 --> 0:03:25.480 So you know, there's still ultimately a lot in flux. 0:03:25.600 --> 0:03:28.000 But I think I think the key is that UM 0:03:28.040 --> 0:03:30.840 it is needed and likely will happen UM. You know, 0:03:30.880 --> 0:03:33.840 particularly as we're on the eve of non you know, 0:03:34.040 --> 0:03:36.280 the next employment report, and you know we're we're we're 0:03:36.320 --> 0:03:41.280 parsing economic data which, while not terrible, certainly isn't improving 0:03:41.680 --> 0:03:46.080 that much. Margaret, are you surprised at perhaps how well 0:03:46.560 --> 0:03:51.280 risk assets, equities credit is holding up in the face 0:03:51.360 --> 0:03:54.640 of what are just the worst pandemic numbers we've seen 0:03:54.680 --> 0:03:58.920 since the beginning of this Yes and no, UM. I 0:03:58.920 --> 0:04:02.440 mean certainly, if you asked me in the middle of March, 0:04:02.640 --> 0:04:04.920 you know where where a lot of these risk levels 0:04:04.920 --> 0:04:07.640 would be, I would not be here UM. And and 0:04:07.680 --> 0:04:10.480 you know I'm not ashamed to ultimately say that UM. 0:04:10.600 --> 0:04:14.000 The biggest determinant for risk assets has been the amount 0:04:14.000 --> 0:04:16.320 of stimulus UM, and it has been kind of the 0:04:16.400 --> 0:04:19.920 dual approach of both fiscal and monetary UM. I think 0:04:20.000 --> 0:04:25.200 what we wind up with is UM comfort, or the 0:04:25.240 --> 0:04:28.960 need for the Fed ultimately to remain very very active 0:04:28.960 --> 0:04:30.720 in these markets, and I think and I think we're 0:04:30.720 --> 0:04:33.479 seeing some of that make its way through risk assets 0:04:33.480 --> 0:04:35.760 over the last couple of days. UM that the Fed 0:04:35.839 --> 0:04:38.720 has no choice now but to really go full out 0:04:38.960 --> 0:04:42.320 on anything that it can UM, because we're not going 0:04:42.320 --> 0:04:44.800 to get the degree of fisical that I think that 0:04:44.839 --> 0:04:47.120 they had been hoping for and that the Blue Wave 0:04:47.200 --> 0:04:50.600 would have implied. So the trillion that you think might 0:04:50.680 --> 0:04:53.520 come out of Congress, where will it go? Will there 0:04:53.520 --> 0:04:55.560 be help for the states? Will there be any targeted 0:04:55.600 --> 0:04:58.840 stimulus for certain industries? Yeah, you know, and and and 0:04:58.839 --> 0:05:01.240 and a lot of this still UM still kind of 0:05:01.279 --> 0:05:04.440 requires UM knowledge of who's gonna sit in there, who's 0:05:04.480 --> 0:05:06.480 gonna sit in the in the White House. But certainly 0:05:06.560 --> 0:05:10.120 unemployment benefits UM kind of a restart of that. Uh. 0:05:10.200 --> 0:05:13.080 Certainly something UM on the small business side of things, 0:05:13.120 --> 0:05:15.760 because I do think that there is agreement that we've 0:05:15.760 --> 0:05:19.320 got to help mainstreat more. UM. There's still contention around 0:05:19.760 --> 0:05:22.080 around state eight and kind of I think that's one 0:05:22.080 --> 0:05:25.440 of the more volatile aspects of the discussion. UM. So 0:05:25.480 --> 0:05:28.360 the easy parts of small business and certainly the certainly 0:05:28.480 --> 0:05:33.600 UM bring unemployment benefits kind of back into discussion. So Marvin, 0:05:33.680 --> 0:05:37.320 as a global macro strategist, where do you see I 0:05:37.320 --> 0:05:40.120 guess the best opportunities. Here's you as you look at 0:05:40.160 --> 0:05:43.760 twelve months are you are you geographically diversified to the 0:05:43.800 --> 0:05:45.799 extent you'd like to be or do you find yourself 0:05:45.880 --> 0:05:48.800 a little bit more concentrated in the US? Yeah? You 0:05:48.800 --> 0:05:50.920 know what, I still find myself concentrating in the US. 0:05:51.080 --> 0:05:54.000 You know, I think US companies UM have an advantage 0:05:54.400 --> 0:05:57.640 over many of the other companies around the world. So 0:05:57.920 --> 0:06:00.160 really this kind of tech discussion that you know, we've 0:06:00.200 --> 0:06:03.320 all participated into the last six months still makes sense. 0:06:03.560 --> 0:06:07.280 UM yields themselves. You know, I think that without stimulus 0:06:07.279 --> 0:06:11.240 and kind of with UM, the potential of inflation UM 0:06:11.320 --> 0:06:14.400 increasing as part of UM kind of the reflation trade 0:06:14.839 --> 0:06:18.280 going away keeps yields kind of at these levels. The 0:06:18.360 --> 0:06:22.760 FED ultimately UM needing to be aggressive, will you know, 0:06:23.120 --> 0:06:25.280 help those yields remain at these levels. So, you know, 0:06:25.320 --> 0:06:27.920 taking that threat and kind of UM figure out which 0:06:27.920 --> 0:06:31.839 asset classes are most attractive to you and that environment 0:06:31.880 --> 0:06:33.599 is kind of what we do. So certainly the tech 0:06:33.640 --> 0:06:36.440 discussion still makes makes sense to reach for yield still 0:06:36.440 --> 0:06:39.360 makes sense. UM. I think emerging markets become more interesting 0:06:39.360 --> 0:06:41.520 if there's a little bit more stability, But it does 0:06:41.600 --> 0:06:43.559 wind up being, you know, what parts of the world 0:06:43.560 --> 0:06:46.440 in which countries are most interested in UM, and then 0:06:46.480 --> 0:06:49.360 reach for yield really does uh go into go into 0:06:49.400 --> 0:06:51.640 various parts of the spread market, so kind of looking 0:06:51.680 --> 0:06:55.200 for those spread products, which makes sense in this in 0:06:55.240 --> 0:06:57.800 this new if you will, divide a government is what 0:06:57.800 --> 0:07:02.280 we're doing now. Why though our equities rallying as well 0:07:02.320 --> 0:07:05.440 as all sorts of safe haven assets from bonds, treasuries 0:07:05.440 --> 0:07:09.320 obviously to gold. You know, I I think I think 0:07:09.440 --> 0:07:12.920 UM kind of them. The spectr that yields might rise 0:07:13.360 --> 0:07:16.040 UM to an uncomfortable level is off the table right now, 0:07:16.200 --> 0:07:18.679 so you're kind of seeing that long duration trade uh 0:07:18.760 --> 0:07:21.480 play its way into it. UM. I do think that 0:07:21.640 --> 0:07:24.680 investors had been somewhat neutral kind of going into the 0:07:24.720 --> 0:07:28.360 elections with with the risk associated with it and UM. 0:07:28.400 --> 0:07:30.800 You know, there's still a lot of repair that needs 0:07:30.800 --> 0:07:32.560 to be done in the economy. But kind of a 0:07:32.600 --> 0:07:36.120 divided government is you know, with an active FED UM 0:07:36.280 --> 0:07:40.040 is good for financial assets UM. You know, uh, you know, 0:07:40.680 --> 0:07:42.400 as as kind of a base case, if you will, 0:07:43.280 --> 0:07:46.640 we're speaking with Marvin Low, Global macro strategists at State Street. Marvin, 0:07:46.800 --> 0:07:49.880 you mentioned you touched on just emerging markets. It's it 0:07:50.040 --> 0:07:52.920 seems like, I know a lot of people are tempted 0:07:53.240 --> 0:07:54.760 to go out on the risk curve and take a 0:07:54.760 --> 0:07:57.920 look at emerging markets. But boy, with this pandemic backdrop 0:07:58.000 --> 0:08:00.080 and with some of the economic uncertainty that's like it 0:08:00.120 --> 0:08:03.680 to continue from it, it just feels like it just 0:08:03.840 --> 0:08:06.680 isn't a time. How do you guys think about it? Yeah, 0:08:06.800 --> 0:08:09.480 I mean, I mean generally, um, but most certainly there's 0:08:09.720 --> 0:08:13.360 you know, and we're all making implications, um, and assumptions 0:08:13.360 --> 0:08:15.600 as to what the new government is going to try 0:08:15.640 --> 0:08:18.080 to do without really knowing you know, firmly what the 0:08:18.080 --> 0:08:20.000 new government is going to look like even you know, 0:08:20.080 --> 0:08:22.080 even if even if we're correct, and who sits in 0:08:22.120 --> 0:08:24.880 the White House and how kind of how Congress is divided, um, 0:08:25.160 --> 0:08:27.560 you know, where we're making guesses on what those policies 0:08:27.600 --> 0:08:30.400 look like. So in terms of reflation and in terms 0:08:30.480 --> 0:08:34.720 of um potentially um you know, uh, some benefits associated 0:08:34.720 --> 0:08:38.000 with commodities and therefore commodity countries where we're we're making guesses. 0:08:38.040 --> 0:08:41.000 So so gingerly, I do think that there is a 0:08:41.040 --> 0:08:44.680 lot of liquidity in the market. Um, So funding for 0:08:44.679 --> 0:08:48.000 for what the emerging markets might need to do to 0:08:48.160 --> 0:08:50.920 kind of get their economies back in place seems to 0:08:50.960 --> 0:08:54.280 be available, and that does provide some comfort, um, so 0:08:54.360 --> 0:08:56.040 you know, parcel through it. There are there are ways 0:08:56.120 --> 0:08:59.600 within the fixing come market to take out the FX exposure. 0:08:59.640 --> 0:09:02.280 So you know, certainly have liked hard currency and bonds 0:09:02.320 --> 0:09:05.040 as part of the discussion. UM in Asia right now 0:09:05.120 --> 0:09:08.200 is certainly interesting, given that the virus seems to be 0:09:08.640 --> 0:09:11.120 in better control and you know, um the data coming 0:09:11.160 --> 0:09:13.560 out of Asia is a bit more solid. So you 0:09:13.600 --> 0:09:16.040 know that ultimately is the process that I think all 0:09:16.080 --> 0:09:19.640 investors in emerging markets need to go through. So obviously 0:09:19.720 --> 0:09:22.440 fed Ter J. Powell will try to stay away from 0:09:22.480 --> 0:09:26.559 anything political or partisan. Later on today when he speaks, nevertheless, 0:09:26.600 --> 0:09:28.840 he'll get some questions about what he might be able 0:09:28.840 --> 0:09:31.400 to do if there is no stimulus or delated stimulus 0:09:31.480 --> 0:09:34.680 or a small stimulus. What can he say to calm 0:09:34.760 --> 0:09:40.120 markets or not pull the middle tailsmen? Yeah, I mean certainly, certainly, um, 0:09:40.160 --> 0:09:42.679 you know, continuing to say that the fet is there, um, 0:09:42.800 --> 0:09:47.080 they will use all tools available, UM that they believe 0:09:47.120 --> 0:09:51.000 they still have more tools UM that they can deploy. Uh. 0:09:51.040 --> 0:09:53.600 You know, I think that I'm looking for kind of 0:09:53.720 --> 0:09:57.880 twisting in their asset purchases, particularly with UM UH, with 0:09:58.000 --> 0:10:00.720 the U. S. Treasury still issuing more long a data paper. 0:10:00.720 --> 0:10:04.160 And you know, we had seen some of the steepening 0:10:04.240 --> 0:10:07.280 of the curve, you know, prior to again the election results, 0:10:07.320 --> 0:10:10.280 because I think that there's been so much coupon issuance 0:10:10.280 --> 0:10:12.600 in the market. So UM, you know, I I think 0:10:12.640 --> 0:10:16.800 that stage one but you know, his toolbox is UM 0:10:17.200 --> 0:10:19.679 depleted relative to where we were a year, year and 0:10:19.720 --> 0:10:22.960 a half ago. UM, and the Fed's going to continue 0:10:23.000 --> 0:10:27.680 to be pushed UM towards obtaining its new long term 0:10:27.720 --> 0:10:31.120 goals around inflation and around kind of helping the jobs market. 0:10:31.200 --> 0:10:33.360 So uh, you know, for the time being, UM, there's 0:10:33.360 --> 0:10:35.480 still que wei that they could do. There's still some twisting. 0:10:36.000 --> 0:10:40.480 UM yields remained fairly controlled. Uh, and you know, they'd 0:10:40.520 --> 0:10:43.720 like to see what the economy looks like as we 0:10:43.760 --> 0:10:46.360 go into next year, with the virus still UM, you know, 0:10:46.400 --> 0:10:50.160 front and center in terms of their concerns. Hey, Marvin, 0:10:50.280 --> 0:10:53.120 just looking on my Bloomberg screen. Here I see gold 0:10:53.320 --> 0:10:56.480 up forty two maybe forty three dollars announced. That's two 0:10:56.480 --> 0:11:01.160 point to five percent five dollars announced for gold. What 0:11:01.200 --> 0:11:02.480 do you think is going on in the gold market? 0:11:02.480 --> 0:11:06.920 How do you guys? Uh have yourself position? V goal? Um? Yeah, 0:11:07.000 --> 0:11:08.680 so so, UM, you know, I think that's part of 0:11:08.679 --> 0:11:11.080 the dollar story at this point. Um, there's been uh, 0:11:11.320 --> 0:11:14.720 a re acceleration of kind of this dollar debasement type story, 0:11:15.080 --> 0:11:16.800 given that you know, the FED is probably going to 0:11:16.880 --> 0:11:19.680 buy more bonds um. And and you know, kind of 0:11:19.720 --> 0:11:23.800 relative to what other economy, other countries are able to do. 0:11:24.000 --> 0:11:25.679 So you know, I do. I do think gold and 0:11:25.760 --> 0:11:29.120 kind of that dollar debatement story go hand in hand. Um. 0:11:29.280 --> 0:11:31.720 And you know that that that is a popular trade 0:11:31.800 --> 0:11:35.080 that um uh that even if we don't get as 0:11:35.120 --> 0:11:39.040 much stimulus, the FED can kind of offset that based 0:11:39.080 --> 0:11:43.960 on how it approaches them as it purchases. So, Marvin, 0:11:44.000 --> 0:11:45.680 if there was one piece of advice that you would 0:11:45.679 --> 0:11:48.320 give to a client who calls you up today and said, 0:11:48.440 --> 0:11:52.400 oh my gosh, you know then I'm terrified. I'm terrified 0:11:52.440 --> 0:11:54.920 of what's going to happen. What would you tell them? Now? 0:11:54.960 --> 0:11:58.000 I say, holistically, UM, you know, realize that the central 0:11:58.000 --> 0:12:01.080 banks are still a large part of this discussion, and 0:12:01.280 --> 0:12:04.080 you know, from a stimulus side of things, Washington will 0:12:04.200 --> 0:12:07.880 get something done. Um. You know, it's the size that 0:12:07.880 --> 0:12:10.080 we're arguing with, but you know, the economy needs it, 0:12:10.120 --> 0:12:12.800 and um, I think that they're going to, um uh, 0:12:12.840 --> 0:12:15.000 you know, get something that's going to provide relief to 0:12:15.640 --> 0:12:16.960 you know a lot of people who who need it 0:12:17.040 --> 0:12:20.320 right now. Marvin Low, thank you so much. We appreciate it. 0:12:20.320 --> 0:12:23.440 Marvin Low, Global macro strategists at State Street appreciate his 0:12:23.640 --> 0:12:26.240 perspective on a cross assets where we asked him about 0:12:26.240 --> 0:12:30.120 just about everything from gold equities to credit two commodities. Uh. 0:12:30.200 --> 0:12:33.080 But it just seems Vanni here that this is a 0:12:33.280 --> 0:12:36.840 market rallying here, it's looking for risk, it's comfortable taking risk, 0:12:36.920 --> 0:12:39.640 and the status quo I think for this market, Uh, 0:12:39.679 --> 0:12:42.920 it seems to be pretty bullish here, right. And I 0:12:42.920 --> 0:12:45.680 think there was money on the sidelines, particularly for a 0:12:45.760 --> 0:12:49.040 distress investments, you know, junk bonds and so on, and 0:12:49.160 --> 0:12:51.240 that's probably rolling in a little bit more as we 0:12:51.679 --> 0:12:54.440 head throughout the months into the winter, and you know, 0:12:54.720 --> 0:12:59.160 unsurprisingly as COVID cases start to absolutely go crazy again. 0:12:59.200 --> 0:13:01.760 I mean We're over hundred thousand a day now in 0:13:01.800 --> 0:13:05.040 the US, and you know, you have to wonder what 0:13:05.160 --> 0:13:07.680 that will do to economies around the country. Obviously, we're 0:13:07.720 --> 0:13:10.400 getting you know, labor market data and so on showing 0:13:10.400 --> 0:13:12.720 that the labor market was slowly improving, but that's going 0:13:12.760 --> 0:13:15.400 to turn around as well. Pole if if coronavirus keeps 0:13:15.640 --> 0:13:22.000 popping its head up, well, we're still counting votes, as 0:13:22.040 --> 0:13:24.319 we all know, but it appears that we may be 0:13:24.440 --> 0:13:28.840 headed towards a government structure where the Democrats control the 0:13:28.840 --> 0:13:32.400 House and potentially the White House Wall. The Republicans retained 0:13:32.400 --> 0:13:35.199 control of the Senate, and business leaders are trying to 0:13:35.240 --> 0:13:37.640 figure out what it means for their business, and one 0:13:37.679 --> 0:13:41.720 of the big areas is taxation. Kate Barton, Global Fast, 0:13:41.760 --> 0:13:45.480 chair of tax at accounting firm e Y, joins us 0:13:45.480 --> 0:13:48.000 to give us some color here. So, Kate, given what 0:13:48.080 --> 0:13:51.839 we know now about how the government may be structured 0:13:51.840 --> 0:13:55.120 in terms of Republicans and Democrats, what are you telling 0:13:55.120 --> 0:13:58.760 your clients today about how they should be thinking about 0:13:58.840 --> 0:14:04.800 their tax situation. Well, thank you, I think we're I'm 0:14:04.840 --> 0:14:09.720 definitely telling our clients to practice patients and uh, that's 0:14:09.760 --> 0:14:12.320 the key and we're all wondering what happened to the 0:14:12.360 --> 0:14:16.240 polls here, But um, you know, patience is the key. 0:14:16.320 --> 0:14:18.840 But you know, I think that if it does in 0:14:18.960 --> 0:14:22.880 fact go um red, you know, blue red, blue, if 0:14:22.880 --> 0:14:26.880 you will, um, you know, it's a different perspective companies 0:14:26.920 --> 0:14:29.840 before that or before you know, the last two days 0:14:29.880 --> 0:14:34.040 we're modeling out a blue waves to be ready for that. UM. 0:14:34.080 --> 0:14:36.440 I think that if it is in fact blue red blue, 0:14:36.600 --> 0:14:40.400 it will be less changed but still could be significant. Right, 0:14:40.520 --> 0:14:44.040 We're we're looking at every scenario. Yeah, and in fact 0:14:44.040 --> 0:14:47.840 it's it's it's even blue red less blue, right, you know, 0:14:47.960 --> 0:14:50.600 blue red, a little more red than than it was 0:14:50.760 --> 0:14:54.840 in Congress. So talk to us about Biden's tax fan 0:14:54.960 --> 0:14:57.440 because he very much has one. Would he be able 0:14:57.480 --> 0:15:02.720 to get anything through well? I think that, um, Biden 0:15:02.800 --> 0:15:06.640 has had a record of really going bipartisan and trying 0:15:06.640 --> 0:15:09.160 to work both sides of the aisle, So you know, 0:15:09.360 --> 0:15:13.800 the his efforts on collaboration, I wouldn't underestimate he does 0:15:13.920 --> 0:15:16.840 have a headline rate going up from twenty one to 0:15:16.920 --> 0:15:21.480 twenty eight percent. He's also contemplating a corporate minimum tax, 0:15:21.560 --> 0:15:24.600 which has a lot of our clients concerned. But you 0:15:24.600 --> 0:15:27.960 know what happens um in terms of campaign rhetoric and 0:15:28.320 --> 0:15:31.160 what actually happens. I'm sure there'll be a lot of 0:15:31.360 --> 0:15:35.520 distance between those. So you know, the other aspect is, 0:15:35.840 --> 0:15:40.480 you know, the indirect taxes that could come president or nominee. 0:15:40.840 --> 0:15:44.440 Biden has basically said that he would want carbon taxes 0:15:44.760 --> 0:15:48.320 or UM. You know, really take a closer look at 0:15:48.360 --> 0:15:51.520 that area. So it could be uh that indirect taxes 0:15:51.680 --> 0:15:55.400 take on more of the front page news story. And 0:15:55.440 --> 0:15:58.800 I think what we've heard from Canada Biden and generally 0:15:58.840 --> 0:16:03.160 from the Democratic Party is perhaps a reallocation of the 0:16:03.200 --> 0:16:07.440 tax burden UM, so that perhaps wealthy people pay more, 0:16:07.520 --> 0:16:12.320 corporations pay more. Is there any appetite for meaningful tax 0:16:12.360 --> 0:16:14.560 reform here? If in fact we do have somewhat of 0:16:14.600 --> 0:16:19.280 a split government, you know, you really have to wonder 0:16:19.320 --> 0:16:22.520 whether it will be their first priority. Most leading economists 0:16:22.520 --> 0:16:26.120 say that governments have to be super careful about doing 0:16:26.160 --> 0:16:30.680 that tast dance between stimulus versus revenue raising. Clearly, we 0:16:30.760 --> 0:16:32.520 have a lot of deficits. They're going to have to 0:16:32.560 --> 0:16:35.000 be paid at some point, but the timing of that 0:16:35.080 --> 0:16:37.680 could have a huge impact on the US economy and 0:16:37.680 --> 0:16:40.960 the recovery from the virus. So I think that is 0:16:41.040 --> 0:16:43.800 something that you know, has to be carefully thought through. 0:16:44.120 --> 0:16:46.440 For sure. I think we're gonna see governments around the world, 0:16:46.480 --> 0:16:49.920 including the US, um try to tax big business and 0:16:50.200 --> 0:16:56.440 ultra high network individuals. Uh. Candidate Biden basically had a 0:16:56.480 --> 0:16:59.680 proposition that he wanted to tax individuals over that make 0:16:59.760 --> 0:17:02.880 over four hundred thousand dollars a year. And so you know, 0:17:02.920 --> 0:17:05.520 we'll have to see if that actually goes forward in 0:17:05.560 --> 0:17:08.320 a blue red blue, and and what would be the 0:17:08.400 --> 0:17:10.880 timing you know is going to be the first order 0:17:10.880 --> 0:17:13.320 of business. There was also the idea that he would 0:17:13.320 --> 0:17:17.600 do something about tax headquarters that are overseas. What are 0:17:17.640 --> 0:17:19.879 you telling clients to do in terms of where they 0:17:19.960 --> 0:17:24.560 might be headquartered? Listening, companies are all every country around 0:17:24.600 --> 0:17:27.840 the world is looking at where supply chains are and 0:17:28.000 --> 0:17:32.560 our goods, especially health and consumer products like um asprin 0:17:32.720 --> 0:17:35.720 and and that type of drugs are they made close 0:17:35.840 --> 0:17:39.360 enough to the consumer. So you know, both candidates, if 0:17:39.359 --> 0:17:43.399 you will, President Trump and and candidate Biden, both of 0:17:43.440 --> 0:17:47.640 them have made in America aspect to their attack plans 0:17:47.720 --> 0:17:50.880 and and more more focused on things should be made 0:17:50.880 --> 0:17:54.320 closer to the consumer. So what form that takes some 0:17:54.520 --> 0:17:56.720 we're all watching. I mean, at the end of the day, 0:17:56.760 --> 0:18:00.359 our clients need to make goods and services and places 0:18:00.400 --> 0:18:02.720 that make sense for around. Yeah, but I'm not talking 0:18:02.720 --> 0:18:04.679 about supply chain or where things are made. I mean 0:18:04.680 --> 0:18:07.000 if you take Apple for example, things made in China, 0:18:07.080 --> 0:18:09.760 but it's it's it's paying its tax, you know, in 0:18:09.760 --> 0:18:13.680 a very complicated way and goes through Ireland in various places. 0:18:13.800 --> 0:18:17.639 That that's what I mean. Well, companies that are have 0:18:17.680 --> 0:18:20.520 a digital footprint, I mean are around the world. The 0:18:20.600 --> 0:18:23.000 o e c D. Everybody is looking at that and 0:18:23.080 --> 0:18:25.800 trying to come up with a multilateral approach to tax 0:18:26.320 --> 0:18:28.840 if every country does their own thing. I mean, companies 0:18:28.880 --> 0:18:31.440 are looking at double triple tax station which could be 0:18:31.760 --> 0:18:34.480 really a killer in this type of an environment. And 0:18:34.560 --> 0:18:38.159 so um, you know that is a big issue in 0:18:38.280 --> 0:18:40.920 one where you know the U. S. Treasury and its 0:18:41.400 --> 0:18:45.320 relationship with the o e c D is an important one, Kate. 0:18:45.400 --> 0:18:47.680 One of the tax issues that's near and dear to 0:18:47.760 --> 0:18:50.080 the hearts of our listeners in the tri state area 0:18:50.119 --> 0:18:53.520 of New York is a state and local tax. What 0:18:53.640 --> 0:18:58.119 if anything is Canada. Biden said about that well, Karida 0:18:58.240 --> 0:19:01.840 Biden had a proposal all that he would allow state 0:19:01.840 --> 0:19:05.399 and local taxes to be deducted, although they would be 0:19:05.400 --> 0:19:09.000 phased out um if you will, as you earned more 0:19:09.080 --> 0:19:12.439 money closer to that one hundred dollars I reference. But 0:19:12.920 --> 0:19:15.240 you know he would put back in the state and 0:19:15.280 --> 0:19:19.000 local deduction, so that wasn't important. So well again we're 0:19:19.040 --> 0:19:23.960 watching that. Well that's critical, all right, Well, thank you 0:19:24.080 --> 0:19:29.879 for that. That's some fascinating thoughts. Um, you know something 0:19:29.880 --> 0:19:31.639 to too over Kate part and Global Vice share of 0:19:31.720 --> 0:19:34.880 tax That e, why discussing what the tax landscape might 0:19:34.960 --> 0:19:38.440 look like. Although there's still a lot of uncertainty out there, 0:19:40.160 --> 0:19:42.520 so a little bit of a delayed reaction, I think 0:19:42.520 --> 0:19:44.080 you could say from kind of a stocks as you 0:19:44.160 --> 0:19:47.440 might expect or seeing them rally today. Of course, they 0:19:47.480 --> 0:19:50.000 took a bit of hit, so to speaking, yesterday, even 0:19:50.000 --> 0:19:53.440 though some valid measures legalizing the use of recreational marijuana 0:19:53.520 --> 0:19:58.240 did pass yesterday. Let's bring in Ken Shane, senior analysts 0:19:58.359 --> 0:20:02.360 for Global Food, Beverages Tobacco at Bloomberg Intelligence, to tell 0:20:02.440 --> 0:20:06.360 us what gives so, Ken, why the delayed reaction? Yeah? 0:20:06.400 --> 0:20:09.920 Hi money, Um, well, I think a lot of investors 0:20:09.920 --> 0:20:13.119 may be awaiting the outcome for the presidential election and 0:20:13.160 --> 0:20:15.880 the state of the Senate, you know, two big important 0:20:15.920 --> 0:20:19.320 components to trying to UM you know, estimate the future 0:20:19.400 --> 0:20:23.879 sales potential so it can So what happened, Yes, I 0:20:23.960 --> 0:20:26.840 just are on election date. We had five additional states 0:20:26.960 --> 0:20:33.399 including uh here in New Jersey legalized UM recreational me 0:20:33.480 --> 0:20:36.480 marijuana is at the bottom line, Yeah, right, Paul, that's 0:20:36.520 --> 0:20:39.480 exactly right. UM. You know, the big takeaway from yesterday 0:20:39.800 --> 0:20:43.000 was the overwhelming nature of the voter approval of all 0:20:43.160 --> 0:20:47.000 five state US marijuana about initiatives is a big plus 0:20:47.040 --> 0:20:49.920 for the industry on a number fronts. First, it further 0:20:50.040 --> 0:20:56.280 validates this industry as a legitimate place in society. You know, 0:20:56.320 --> 0:20:58.720 talk about a nineteen billion dollar industry. Now it's no 0:20:58.800 --> 0:21:03.639 longer some nason upcoming group. It's now you know, almost 0:21:03.680 --> 0:21:05.840 at the level of bottled water sales. I mean, it's 0:21:05.840 --> 0:21:09.480 out there yet. You know, yesterday's four states that are 0:21:09.520 --> 0:21:13.160 proved New Jersey, Arizona, Montana, and South Dakota for recreational 0:21:13.640 --> 0:21:20.480 authorization UH for marijuana markets now allows them to push 0:21:20.480 --> 0:21:24.840 ahead with increasing number dispensaries, locations, licensing activity, can pick 0:21:24.920 --> 0:21:28.000 up and make contribute over a billion dollars in sales 0:21:28.040 --> 0:21:30.440 by the year three to an industry, like I said, 0:21:30.920 --> 0:21:35.120 is um around nine or so. Yeah, and for context, 0:21:35.200 --> 0:21:37.600 let's give some of the companies. We're talking about Aurora Cannabis, 0:21:37.600 --> 0:21:40.520 we're talking about until Ray, We're talking about Afria, some 0:21:40.600 --> 0:21:44.240 of them up double digits today. The thing is, though 0:21:44.760 --> 0:21:48.159 it doesn't the cannabis industry want federal change so that 0:21:48.200 --> 0:21:50.520 we're not talking about state by state change here. We're 0:21:50.560 --> 0:21:53.320 talking about, you know, an entire country, at which point 0:21:53.359 --> 0:21:56.840 then you could really scale up operations, invite private equity 0:21:56.880 --> 0:21:59.440 in and so on. Yeah, that's right. Some of the 0:21:59.480 --> 0:22:01.760