1 00:00:09,840 --> 00:00:13,800 Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane. Daily 2 00:00:13,960 --> 00:00:17,560 Speaker 1: we bring you insight from the best in economics, finance, investment, 3 00:00:18,000 --> 00:00:23,480 Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, 4 00:00:23,600 --> 00:00:33,120 Speaker 1: Bloomberg dot Com, and of course, on the Bloomberg. Kim 5 00:00:33,200 --> 00:00:37,320 Speaker 1: Wallace at eur Asia Group has a wonderful resume in pedigree. 6 00:00:37,360 --> 00:00:42,159 Speaker 1: The former Assistant Secretary for Legislative Affairs at the Treasury Department. 7 00:00:42,200 --> 00:00:44,920 Speaker 1: He took the Alexander Hamilton Award, which is not first 8 00:00:44,920 --> 00:00:48,440 Speaker 1: singing on Broadway. But Kim Wallace joins us here with 9 00:00:48,600 --> 00:00:53,120 Speaker 1: that interesting mix that you see at Washington. Kim, what 10 00:00:53,320 --> 00:00:57,400 Speaker 1: is the mix of a lane duck session? What really happens? 11 00:00:59,200 --> 00:01:02,160 Speaker 1: What happens, Tom, is the two sides come together and 12 00:01:02,160 --> 00:01:05,800 Speaker 1: there their lick their wounds or celebrate triumphs perceived and real, 13 00:01:06,120 --> 00:01:08,400 Speaker 1: and then they attempt to agree on a bare bones 14 00:01:08,440 --> 00:01:10,480 Speaker 1: agenda so that they can get out of town without 15 00:01:10,520 --> 00:01:14,000 Speaker 1: causing too much harm. What is that bad bones agenda 16 00:01:14,040 --> 00:01:17,440 Speaker 1: this time? Kim? This time, John, it's uh in good morning. 17 00:01:17,480 --> 00:01:21,000 Speaker 1: This time it's UH mainly focused on fiscal so they 18 00:01:21,040 --> 00:01:25,480 Speaker 1: have to avoid shutting down a few agencies of government 19 00:01:25,560 --> 00:01:29,360 Speaker 1: on December twelve. There is very little juice for a 20 00:01:29,360 --> 00:01:31,640 Speaker 1: shutdown in either party, so you figure that they're going 21 00:01:31,720 --> 00:01:34,040 Speaker 1: to get this done the bogie. There, of course will 22 00:01:34,080 --> 00:01:36,399 Speaker 1: be border wall funding. There are a lot of ways 23 00:01:36,440 --> 00:01:39,400 Speaker 1: to skin that cat. There's I think it's an overblown 24 00:01:39,880 --> 00:01:42,959 Speaker 1: view that border wall necessarily leads to a shutdown. In fact, 25 00:01:42,959 --> 00:01:44,880 Speaker 1: I take the other side of that, and then there 26 00:01:44,880 --> 00:01:47,040 Speaker 1: are other things I've got to do. The National Fullood 27 00:01:47,080 --> 00:01:51,040 Speaker 1: Insurance Program expires. Uh. Colin Peterson will be the incoming 28 00:01:51,120 --> 00:01:53,280 Speaker 1: chair of the House at Committee. He was the chair 29 00:01:53,680 --> 00:01:56,560 Speaker 1: last time Democrats held the gavel once to get that 30 00:01:56,640 --> 00:01:59,400 Speaker 1: Farm Bill reauthorization done. If there's anything to watch in 31 00:01:59,520 --> 00:02:04,000 Speaker 1: terms of both intra party relationships and then the inter 32 00:02:04,200 --> 00:02:08,160 Speaker 1: party relationship, I believe it's the Farm Bill. Okay, they 33 00:02:08,200 --> 00:02:11,440 Speaker 1: had every incident to get that done, political and practical. 34 00:02:11,720 --> 00:02:14,360 Speaker 1: Fattal test Washington a little bit. I think they passed 35 00:02:14,360 --> 00:02:17,240 Speaker 1: the test. Do they need the president to do this 36 00:02:17,480 --> 00:02:21,639 Speaker 1: or is a president removed from lame duck legislative process? 37 00:02:22,720 --> 00:02:25,080 Speaker 1: Good question, Tom, to the degree that it's not just 38 00:02:25,160 --> 00:02:28,200 Speaker 1: been in lame ducks, but in the last two years, 39 00:02:28,440 --> 00:02:32,440 Speaker 1: the White House hasn't been terribly involved in resolving appropriations 40 00:02:32,480 --> 00:02:35,120 Speaker 1: issues the appropriators. If you're looking for a group to 41 00:02:35,760 --> 00:02:39,160 Speaker 1: uh see taking back regular order and their power, it's 42 00:02:39,200 --> 00:02:41,679 Speaker 1: been the appropriator. So no, I don't think the President 43 00:02:41,760 --> 00:02:44,320 Speaker 1: is terribly necessary to get a deal done. The President, 44 00:02:44,320 --> 00:02:46,800 Speaker 1: of course can blow the deal up right, Well, he's 45 00:02:47,200 --> 00:02:51,560 Speaker 1: okay with within it. Kim is soybeans, which I guess 46 00:02:51,639 --> 00:02:54,280 Speaker 1: has to do with a farm bill. I mentioned benion 47 00:02:54,320 --> 00:02:57,320 Speaker 1: and apple bonds, wonderful New York Times treatment, and everybody's 48 00:02:57,360 --> 00:03:00,320 Speaker 1: caught up with him of piles of soybeans, which I 49 00:03:00,360 --> 00:03:02,919 Speaker 1: guess rot in real time. Not that you know. We've 50 00:03:02,919 --> 00:03:07,600 Speaker 1: got the soybean pile outside Central Park. That's that's good. No, 51 00:03:07,639 --> 00:03:09,520 Speaker 1: we're just stocking. We you know, we get a little 52 00:03:09,520 --> 00:03:12,920 Speaker 1: rent off because we stock a pilot soybeans off the 53 00:03:13,200 --> 00:03:17,440 Speaker 1: pond the reservoir park. I had no idea with doing that. Well, 54 00:03:17,440 --> 00:03:20,880 Speaker 1: you know, every every nickel counts with afterthought. But but Kim, 55 00:03:21,040 --> 00:03:24,680 Speaker 1: when when I look at soybeans is a proxy for 56 00:03:24,720 --> 00:03:27,440 Speaker 1: the farm bill. There's a lot of tension out there 57 00:03:27,480 --> 00:03:31,320 Speaker 1: across the Midwest, isn't there. There's a great amount of tension, 58 00:03:31,360 --> 00:03:34,000 Speaker 1: and they showed up in midterm elections. People want to 59 00:03:34,040 --> 00:03:36,880 Speaker 1: pretend that trade didn't have a voice in the mid terms. 60 00:03:36,880 --> 00:03:40,400 Speaker 1: So look at Minnesota too. In Minnesota eight, definitely trade 61 00:03:40,400 --> 00:03:43,360 Speaker 1: played a role. And the article you all were running 62 00:03:43,400 --> 00:03:47,520 Speaker 1: about soybeans packed up Roger smells like roadkill is a 63 00:03:47,560 --> 00:03:49,880 Speaker 1: proxy for what's going on in about four or five 64 00:03:49,920 --> 00:03:53,520 Speaker 1: states in the Midwest. States that the President carried narrowly 65 00:03:53,560 --> 00:03:57,640 Speaker 1: in six But in each of those states, in every 66 00:03:57,640 --> 00:04:01,640 Speaker 1: competitive district, many of them Republican health seats. If they 67 00:04:01,680 --> 00:04:05,640 Speaker 1: didn't flip the gap between the Republican and the Democrat close. 68 00:04:05,800 --> 00:04:08,560 Speaker 1: That's true in everything. There's a trend there to watch, 69 00:04:08,560 --> 00:04:10,320 Speaker 1: and I'm sure the message is getting through to the 70 00:04:10,320 --> 00:04:13,040 Speaker 1: White House. If my math is lame duck is seven, 71 00:04:13,080 --> 00:04:16,960 Speaker 1: eight weeks, whatever it is, maybe it's nine weeks halfway through. 72 00:04:17,200 --> 00:04:21,000 Speaker 1: How are the soybeans doing. Soybeans are probably going to 73 00:04:21,040 --> 00:04:24,360 Speaker 1: be smelling a little fresher by the end of November, 74 00:04:24,440 --> 00:04:28,160 Speaker 1: going into early December. I think that the the Agriculture 75 00:04:28,200 --> 00:04:31,000 Speaker 1: Committee is going to close this deal. They have a 76 00:04:31,040 --> 00:04:33,159 Speaker 1: lot of agreement on the bill. The one thing that 77 00:04:33,240 --> 00:04:36,640 Speaker 1: was separating them was what to do with supplemental nutrition programs. 78 00:04:36,839 --> 00:04:39,560 Speaker 1: That position pushed very hard by the hard right in 79 00:04:39,600 --> 00:04:43,360 Speaker 1: the House doesn't have legs because that wing lost and 80 00:04:43,480 --> 00:04:45,799 Speaker 1: Democrats are going to be in control. So what Colin 81 00:04:45,839 --> 00:04:50,520 Speaker 1: Peterson is telling his Republican allies don't be be smart 82 00:04:50,920 --> 00:04:53,239 Speaker 1: and get this thing done sooner rather than later, because 83 00:04:53,240 --> 00:04:55,720 Speaker 1: the politics hurt you a lot more than Democrats. Kim. 84 00:04:55,839 --> 00:04:59,280 Speaker 1: Some of these problems are new. If I pick out 85 00:04:59,440 --> 00:05:02,040 Speaker 1: the eight discussion with China is one, and perhaps the 86 00:05:02,160 --> 00:05:05,960 Speaker 1: NATO contributions as to those two issues aren't new. What's 87 00:05:06,000 --> 00:05:09,080 Speaker 1: new is the way the president this time around is 88 00:05:09,080 --> 00:05:14,840 Speaker 1: addressing those problems once again. The President vocalizing his concerns 89 00:05:14,839 --> 00:05:17,960 Speaker 1: over NATO contributions today and let's just call it a 90 00:05:18,240 --> 00:05:21,960 Speaker 1: original way, um. The trade dispute certainly has moved away 91 00:05:21,960 --> 00:05:24,960 Speaker 1: from the status quo, the way that the president used 92 00:05:25,000 --> 00:05:27,039 Speaker 1: to work with a group of countries and try and 93 00:05:27,080 --> 00:05:28,760 Speaker 1: get something done. And the fact of matter is not 94 00:05:28,839 --> 00:05:31,320 Speaker 1: much got done, Kim. And I'm just wondering how productive 95 00:05:31,360 --> 00:05:33,600 Speaker 1: this new approach can be. It offends a lot of people. 96 00:05:33,760 --> 00:05:37,719 Speaker 1: Can it be productive. It can be productive if you 97 00:05:38,080 --> 00:05:41,880 Speaker 1: exercise leverage at maximum opportunity. The point you're making, Jonathan, 98 00:05:41,960 --> 00:05:44,960 Speaker 1: with which I agree, is it's really difficult to create 99 00:05:45,000 --> 00:05:49,240 Speaker 1: those opportunities and sustain them, and so economic fundamentals are 100 00:05:49,240 --> 00:05:51,480 Speaker 1: going to matter. Where is the US economy and the 101 00:05:51,600 --> 00:05:55,320 Speaker 1: year relative at China's economy. Politics are trade are gonna matter. 102 00:05:55,360 --> 00:05:57,400 Speaker 1: We get a taste of that in the midterm elections, 103 00:05:57,760 --> 00:06:03,160 Speaker 1: and the president's ability to juggle various trade negotiations successfully 104 00:06:03,200 --> 00:06:05,880 Speaker 1: at the same time doesn't have a really strong record, 105 00:06:05,920 --> 00:06:08,239 Speaker 1: And so it comes down to I think the macro 106 00:06:08,360 --> 00:06:11,320 Speaker 1: economics and the politics are trade, and both of those 107 00:06:11,400 --> 00:06:14,920 Speaker 1: lead you to a less bombastic approach by the US administration, 108 00:06:15,120 --> 00:06:19,480 Speaker 1: except in one area, China, where there's strong bipartisan support 109 00:06:19,960 --> 00:06:24,680 Speaker 1: for forcing China to renegotiate her trade rules and practices. 110 00:06:25,120 --> 00:06:27,680 Speaker 1: I'm not buying the notion that one necessarily is at 111 00:06:27,680 --> 00:06:29,960 Speaker 1: the end of this month is going to lead to 112 00:06:30,080 --> 00:06:33,120 Speaker 1: sweetness and light between Beijing and Washington. I think we're 113 00:06:33,120 --> 00:06:35,280 Speaker 1: in for a long haul on this fight, for both 114 00:06:35,320 --> 00:06:40,680 Speaker 1: practical and substantive reasons. Kim in your wonderful post election newsletter, 115 00:06:40,920 --> 00:06:44,240 Speaker 1: the great divide is healthcare. The way the Democrats voted 116 00:06:44,600 --> 00:06:49,520 Speaker 1: the Republicans voting, I'm assume there's no healthcare debate in 117 00:06:49,600 --> 00:06:52,760 Speaker 1: the lame duck term As we move forward towards two 118 00:06:52,800 --> 00:06:57,479 Speaker 1: thousand and twenty, can there be any substantial legislation or 119 00:06:57,560 --> 00:07:00,440 Speaker 1: is it so polarizing it just becomes a campaign issue. 120 00:07:01,000 --> 00:07:03,560 Speaker 1: Now I think this one has moved from that status 121 00:07:03,600 --> 00:07:09,400 Speaker 1: to it's become a fundamental economic, household economic issue, Tom 122 00:07:09,480 --> 00:07:12,000 Speaker 1: and so I think you'll see the reverse of what 123 00:07:12,080 --> 00:07:16,120 Speaker 1: you saw in twenty seventeen coming in. That is, in 124 00:07:16,200 --> 00:07:20,120 Speaker 1: twenty seventeen where the majority attempted to curtail benefits to 125 00:07:20,280 --> 00:07:23,800 Speaker 1: average Americans. That didn't work. It didn't work big. So 126 00:07:24,000 --> 00:07:26,160 Speaker 1: they've got to figure out what they're gonna do with 127 00:07:26,200 --> 00:07:30,040 Speaker 1: healthcare because the costs are burgeoning and the base is growing. 128 00:07:30,520 --> 00:07:32,440 Speaker 1: But I don't think it goes backwards. I don't think 129 00:07:32,440 --> 00:07:34,760 Speaker 1: they start taking away healthcare. But well are we are? 130 00:07:34,800 --> 00:07:38,920 Speaker 1: We heading towards a managed rolling trip to socialized medicine 131 00:07:39,000 --> 00:07:42,320 Speaker 1: in America. I mean, you're getting closer and closer, and 132 00:07:42,360 --> 00:07:44,600 Speaker 1: more and more people are growing comfortable with that as 133 00:07:44,640 --> 00:07:46,800 Speaker 1: a notion. We just have to figure out the program 134 00:07:46,800 --> 00:07:49,840 Speaker 1: and the design. Fascinating kills. We better have you back 135 00:07:49,840 --> 00:07:52,240 Speaker 1: just for an entire discussion on that. We can do 136 00:07:52,280 --> 00:07:55,640 Speaker 1: it with. John Ferrett has lived socialized medicine in the 137 00:07:55,760 --> 00:08:01,240 Speaker 1: United Kingdom is American John in the America. When people 138 00:08:01,360 --> 00:08:04,520 Speaker 1: say that, and a huge body of our listeners feel 139 00:08:05,120 --> 00:08:08,480 Speaker 1: like England is an example of socialized medicine, how do 140 00:08:08,480 --> 00:08:10,440 Speaker 1: you respond, you really want me to wait into the 141 00:08:10,480 --> 00:08:15,480 Speaker 1: healthcare debate? Curious? Let's examine his teeth. Yeah, but but 142 00:08:15,520 --> 00:08:19,280 Speaker 1: he's actually got very good team. Appreciate you know, with 143 00:08:19,360 --> 00:08:22,360 Speaker 1: the hitter that he is. It's like twelve bucks a 144 00:08:22,400 --> 00:08:25,800 Speaker 1: month cash. You know, there's some very sensitive issues in America. 145 00:08:26,120 --> 00:08:28,120 Speaker 1: I am a guest of this great country. There are 146 00:08:28,160 --> 00:08:31,120 Speaker 1: some issues that I'm reluctant. But how do how do 147 00:08:31,240 --> 00:08:39,920 Speaker 1: people need carefully? Well, this is what I will say. 148 00:08:40,000 --> 00:08:42,679 Speaker 1: In the United Kingdom, I had both. I had access 149 00:08:42,679 --> 00:08:45,920 Speaker 1: to what you would consider socialized healthcare, which is incredibly 150 00:08:45,960 --> 00:08:49,160 Speaker 1: convenient and most of the time it was free or 151 00:08:49,320 --> 00:08:52,400 Speaker 1: heavily subsidized. And then I had access to private healthcare 152 00:08:52,480 --> 00:08:56,199 Speaker 1: because I was part of a great company like Bloomberg comp. Okay, 153 00:08:56,240 --> 00:08:59,880 Speaker 1: So when Americans say, you know, the great fear, huge 154 00:09:00,000 --> 00:09:04,400 Speaker 1: about of Americans say we don't want socialized medicine. What's 155 00:09:04,920 --> 00:09:09,480 Speaker 1: the response of people who have lived socialized medicine. I 156 00:09:09,520 --> 00:09:11,800 Speaker 1: don't think they think it's the experiences as bad as 157 00:09:11,840 --> 00:09:14,400 Speaker 1: perhaps you believe it. It's to be. I don't know 158 00:09:15,000 --> 00:09:18,200 Speaker 1: if either one of us got hit by a truck 159 00:09:18,240 --> 00:09:22,680 Speaker 1: at whall visiting in London, you'd be taken care of. Okay, 160 00:09:22,720 --> 00:09:25,720 Speaker 1: well no, but seriously, Winston Churchill got hit by a car, 161 00:09:25,760 --> 00:09:27,760 Speaker 1: and fifth they haven't a long time ago that was 162 00:09:27,960 --> 00:09:30,440 Speaker 1: he said, that was a day he got good. None 163 00:09:30,440 --> 00:09:32,679 Speaker 1: of this really imagine, John, you should still get some 164 00:09:32,760 --> 00:09:34,920 Speaker 1: health insured stuff, just in case it costs. Ready to 165 00:09:34,920 --> 00:09:37,080 Speaker 1: start building up. I could just say that the hospital 166 00:09:37,080 --> 00:09:41,440 Speaker 1: will take you. We do. We have a socialized medicine 167 00:09:41,520 --> 00:09:44,160 Speaker 1: vet bill. It's going in for the annual check up. 168 00:09:44,200 --> 00:09:48,240 Speaker 1: And once again I saw you going around after killing 169 00:09:48,320 --> 00:09:51,400 Speaker 1: with a little basket collecting change. I know that, I know, 170 00:09:51,679 --> 00:09:56,440 Speaker 1: I know that you've socialized vet bills, healthcare. You're asking 171 00:09:56,480 --> 00:09:59,440 Speaker 1: for donations. You got there right. I make the check 172 00:09:59,480 --> 00:10:02,520 Speaker 1: directly out to Horseman. I don't even make the checkout 173 00:10:02,559 --> 00:10:04,760 Speaker 1: to the Venory clinic. The doctor just says, make the 174 00:10:04,840 --> 00:10:08,840 Speaker 1: checkout to Horseman. That one. That's a small Tony school 175 00:10:09,000 --> 00:10:23,520 Speaker 1: in New York that veterinarians send their children to. M 176 00:10:23,800 --> 00:10:26,720 Speaker 1: Dollar Yen was stronger over the last hour and a half. 177 00:10:28,600 --> 00:10:31,400 Speaker 1: A better stronger yean this morning? Yeah, but dollars still 178 00:10:31,440 --> 00:10:34,360 Speaker 1: what one twelve sixty nine against the against the euro 179 00:10:34,480 --> 00:10:37,360 Speaker 1: dollar strength there? You know, if it looks like a 180 00:10:37,480 --> 00:10:41,000 Speaker 1: lame duck and it hops like a lame duck and 181 00:10:41,080 --> 00:10:43,800 Speaker 1: it squawks like a lame duck, I would say it's 182 00:10:43,800 --> 00:10:46,480 Speaker 1: a lame duck. We're bringing in our executive editor lame 183 00:10:46,520 --> 00:10:50,360 Speaker 1: duck right now. Yes, Nancy Ignanovitch joining us our congressional 184 00:10:50,440 --> 00:10:54,720 Speaker 1: leadership reporter from Bloomberg Government. Tell us about this lame 185 00:10:55,000 --> 00:11:00,000 Speaker 1: duck session of Congress and what does House Speaker Paul 186 00:11:00,000 --> 00:11:05,679 Speaker 1: all Ryan outgoing? How Speaker Paul Ryan really want to accomplish? Well, 187 00:11:05,840 --> 00:11:08,800 Speaker 1: it starts today. The boys and the girls are coming 188 00:11:08,840 --> 00:11:11,760 Speaker 1: back into town and a lot of them are demoralized. 189 00:11:12,120 --> 00:11:13,679 Speaker 1: A lot of them are going to have to have 190 00:11:13,760 --> 00:11:16,559 Speaker 1: moving trucks, you know, up against the building taking their 191 00:11:16,600 --> 00:11:20,320 Speaker 1: stuff away. They're looking for jobs, and Paul Ryan has 192 00:11:20,400 --> 00:11:23,640 Speaker 1: to keep people together long enough, um to get a 193 00:11:23,720 --> 00:11:29,000 Speaker 1: few must done, including fund the government. Nancy, do they 194 00:11:29,080 --> 00:11:33,720 Speaker 1: actually measure the curtains? Oh? I don't know about that one. 195 00:11:34,280 --> 00:11:37,640 Speaker 1: But when when it comes to congressional offices, the first 196 00:11:37,640 --> 00:11:39,880 Speaker 1: thing you gotta do is get in the lottery and 197 00:11:39,920 --> 00:11:42,400 Speaker 1: try to get a good office. You might end up 198 00:11:42,400 --> 00:11:46,559 Speaker 1: on the top floor in some back corner without an elevator. 199 00:11:47,000 --> 00:11:49,680 Speaker 1: So it's all about the lottery, and that's going on 200 00:11:50,840 --> 00:11:53,520 Speaker 1: much they want to everybody. Does everybody want to view 201 00:11:53,520 --> 00:11:56,559 Speaker 1: in a parking spot that's close to the entrance. Well, 202 00:11:56,559 --> 00:11:59,120 Speaker 1: of course everybody wants to have their car very close 203 00:11:59,440 --> 00:12:02,160 Speaker 1: to the end trends of the garage so that when 204 00:12:02,160 --> 00:12:04,120 Speaker 1: there's a role call late at night, they can run 205 00:12:04,160 --> 00:12:06,280 Speaker 1: to their car, and they would love to have a 206 00:12:06,320 --> 00:12:11,760 Speaker 1: window overlooking the capital. Who determines the lottery, I mean 207 00:12:12,280 --> 00:12:16,119 Speaker 1: like the Republicans. The Republican who was in the majority, 208 00:12:16,520 --> 00:12:19,440 Speaker 1: they have to move their audience now their office because 209 00:12:19,440 --> 00:12:23,360 Speaker 1: they're in the minority. Right, that's right. These things getting 210 00:12:23,360 --> 00:12:27,440 Speaker 1: negotiated between the two sides in terms of office space 211 00:12:27,600 --> 00:12:30,920 Speaker 1: and staff and so on. But for those people coming 212 00:12:30,960 --> 00:12:35,080 Speaker 1: in there dependent on this lottery, and and that's going 213 00:12:35,160 --> 00:12:39,120 Speaker 1: on um this month before the holiday, and not as 214 00:12:39,200 --> 00:12:43,280 Speaker 1: much attention on the legislation that really ramps up in December. 215 00:12:43,520 --> 00:12:46,360 Speaker 1: All right, So the lottery when it comes to who 216 00:12:46,520 --> 00:12:49,680 Speaker 1: is going to be the next House Speaker that's pretty 217 00:12:49,720 --> 00:12:53,560 Speaker 1: much decided, is it, Nancy Pelosi, Well, it's really looking 218 00:12:53,600 --> 00:12:55,960 Speaker 1: like that. And the reason is is because she's the 219 00:12:56,040 --> 00:13:00,119 Speaker 1: person who knows all the legislation and all the deals 220 00:13:00,160 --> 00:13:04,360 Speaker 1: inside out, a real creature of the House of Representatives, 221 00:13:04,360 --> 00:13:07,400 Speaker 1: who knows every statute backwards and forwards, and all the 222 00:13:07,440 --> 00:13:10,320 Speaker 1: deals and all the people, and of course has brought 223 00:13:10,400 --> 00:13:13,360 Speaker 1: them back into the majority. And although we've heard so 224 00:13:13,440 --> 00:13:17,840 Speaker 1: many rumblings about challengers, we haven't seen the momentum building 225 00:13:17,920 --> 00:13:20,760 Speaker 1: for that. Nancy, just a couple of things here. I'm 226 00:13:20,760 --> 00:13:22,320 Speaker 1: going to give you a list and you can pick 227 00:13:22,360 --> 00:13:25,160 Speaker 1: which one you think will actually make it through the 228 00:13:25,160 --> 00:13:30,840 Speaker 1: whole legislative process. National flood insurance, trade agreement with Canada 229 00:13:30,840 --> 00:13:36,280 Speaker 1: and Mexico, Select Committee recommendations, updating the budget process, multi 230 00:13:36,400 --> 00:13:41,560 Speaker 1: employer pension plans. Those are just some of the issues. Correct. Yes, 231 00:13:41,679 --> 00:13:44,800 Speaker 1: I believe that they will extend the flood program. I 232 00:13:44,800 --> 00:13:46,960 Speaker 1: don't know if they'll do a full fledged bill, but 233 00:13:47,000 --> 00:13:49,480 Speaker 1: I think they'll extend it. The trade bill will arrive 234 00:13:49,520 --> 00:13:52,439 Speaker 1: on Capitol Hill, but probably won't be taken up until 235 00:13:52,520 --> 00:13:55,400 Speaker 1: next year. Um. What was the other one? Oh, the 236 00:13:55,520 --> 00:13:59,680 Speaker 1: updating of the budget process itself. Oh, well, in terms 237 00:13:59,720 --> 00:14:02,600 Speaker 1: of that Select Committee, they're going to make a recommendation 238 00:14:02,679 --> 00:14:07,760 Speaker 1: I believe to have two year budgeting. But that proposal 239 00:14:07,840 --> 00:14:10,920 Speaker 1: has enemies in the Senate, and I don't know whether 240 00:14:10,960 --> 00:14:13,400 Speaker 1: that will become law. Certainly it wouldn't become law on 241 00:14:13,440 --> 00:14:16,320 Speaker 1: the Lame Duck, but it would be something they'll talk about. 242 00:14:16,400 --> 00:14:20,160 Speaker 1: On pensions. The Select Committee there was said not to 243 00:14:20,320 --> 00:14:23,600 Speaker 1: have an agreement yet, and even if they did, that 244 00:14:23,640 --> 00:14:26,440 Speaker 1: would be an issue for next year. But funding the 245 00:14:26,520 --> 00:14:29,320 Speaker 1: government is the one thing they absolutely have to do. 246 00:14:30,440 --> 00:14:33,440 Speaker 1: Where's that fight going to go? Where's that fight going 247 00:14:33,480 --> 00:14:36,640 Speaker 1: to go into the border wall? Because that's a simplistic 248 00:14:36,720 --> 00:14:40,560 Speaker 1: issue that everyone seems to really understand, and that's something 249 00:14:40,600 --> 00:14:43,360 Speaker 1: that Trump has really, you know, staked a lot on. 250 00:14:43,920 --> 00:14:46,320 Speaker 1: And so now they're coming back and they only have 251 00:14:46,480 --> 00:14:50,480 Speaker 1: until December seven, that's Pearl Harbor Day to at least 252 00:14:50,520 --> 00:14:54,240 Speaker 1: extend government funding. And border wall is at the you know, 253 00:14:54,360 --> 00:14:59,640 Speaker 1: the biggest problem. Nancy described Rayburn two three to eight. Oh, 254 00:14:59,680 --> 00:15:04,840 Speaker 1: dear former John Dingle's office, Peter Visklasky, Uh, it's based 255 00:15:04,880 --> 00:15:07,440 Speaker 1: on seniority. Maybe Don Young will be in there. I 256 00:15:07,440 --> 00:15:11,760 Speaker 1: don't know. Some explain Rayburn two three to eight is 257 00:15:11,800 --> 00:15:15,080 Speaker 1: the coolest office on the planet. I haven't been there. 258 00:15:15,400 --> 00:15:17,240 Speaker 1: I have to go there. You have to go. I 259 00:15:17,280 --> 00:15:20,840 Speaker 1: have seen Don Young's office and it's all of the 260 00:15:20,920 --> 00:15:25,200 Speaker 1: walls have animal heads and animal skins and guns. I believe, 261 00:15:25,320 --> 00:15:27,600 Speaker 1: at least from Alaska. What would you expect. I mean, 262 00:15:27,640 --> 00:15:31,040 Speaker 1: you know, he's the one his his legislative funding brought 263 00:15:31,040 --> 00:15:35,560 Speaker 1: bear Cam to Alaska. We watch at that, don't watch 264 00:15:35,640 --> 00:15:41,560 Speaker 1: bear current cam NonStop. And then former Congressman Dingle's office. 265 00:15:41,680 --> 00:15:43,800 Speaker 1: I have to find you. I mean, this is your 266 00:15:43,800 --> 00:15:45,880 Speaker 1: assignment before the next time we talked to you is 267 00:15:45,920 --> 00:15:48,800 Speaker 1: to be Ascons and Rayburn two three to eight. Now 268 00:15:49,120 --> 00:15:52,760 Speaker 1: ms comstock of Alexandria lost and she was gonna be 269 00:15:52,800 --> 00:15:55,680 Speaker 1: on the fifth floor of Cannon or longfellow. I mean, 270 00:15:55,760 --> 00:15:58,120 Speaker 1: how long does it take to walk from the fifth 271 00:15:58,160 --> 00:16:00,920 Speaker 1: floor of Cannon with no railroad and get back to 272 00:16:01,000 --> 00:16:03,440 Speaker 1: the house. About as long as it takes for me 273 00:16:03,560 --> 00:16:07,000 Speaker 1: to walk from the garage and Cannon to the Capital. 274 00:16:07,280 --> 00:16:09,480 Speaker 1: But the fifth floor of Cannon. If you've ever seen 275 00:16:09,520 --> 00:16:14,320 Speaker 1: the Eddie Murphy movie The Distinguished Gentleman, he somehow gets 276 00:16:14,360 --> 00:16:16,920 Speaker 1: into Congress and that's about where he ends up on 277 00:16:16,960 --> 00:16:19,400 Speaker 1: the top of cannon or a long word. I know 278 00:16:19,400 --> 00:16:22,640 Speaker 1: if it's slaughtery Nancy Igdanovitch where this as well, always brilliant. 279 00:16:22,760 --> 00:16:25,480 Speaker 1: Certainly one of the jewels of Bloomberg News with their 280 00:16:25,560 --> 00:16:43,600 Speaker 1: expertise on capital kill. Gret Bottle joins us right now 281 00:16:43,640 --> 00:16:45,480 Speaker 1: with B and P Pari Bottle with the generations in 282 00:16:45,560 --> 00:16:48,080 Speaker 1: the market. What the pros do is they look at 283 00:16:48,080 --> 00:16:51,840 Speaker 1: a lot of underlying dynamics. Those dynamics come out of 284 00:16:51,880 --> 00:16:54,600 Speaker 1: the Greek letters you may know, delta gamma with a 285 00:16:54,640 --> 00:16:58,160 Speaker 1: more acceleration feel, and that Mr Bottle is expert in 286 00:16:58,240 --> 00:17:04,080 Speaker 1: equity and derivative strat g GREG. Within your wonderful detailed 287 00:17:04,359 --> 00:17:08,720 Speaker 1: quantity note is the thunder Is chart of the BMP 288 00:17:08,800 --> 00:17:13,520 Speaker 1: perry Back call a nominal GDP. You people are really 289 00:17:13,560 --> 00:17:17,280 Speaker 1: looking for a growth slowdown? How does that affect your 290 00:17:17,320 --> 00:17:22,359 Speaker 1: equity analysis? Yeah, good morning. I think a slowdown in 291 00:17:22,480 --> 00:17:25,160 Speaker 1: terms of nominal GDP is going to be relatively difficult 292 00:17:25,200 --> 00:17:27,840 Speaker 1: for the US equity market to digest. One of the 293 00:17:27,840 --> 00:17:30,320 Speaker 1: things we've been talking to people about is that the 294 00:17:30,359 --> 00:17:33,360 Speaker 1: outlook for earnings growth next year certainly looks much more 295 00:17:33,440 --> 00:17:36,480 Speaker 1: challenging than the very strong year that we've had this year. 296 00:17:36,720 --> 00:17:39,600 Speaker 1: The slowdown in nominal GDP growth is certainly one part 297 00:17:39,600 --> 00:17:41,879 Speaker 1: of that, but one of the things that concerns us 298 00:17:41,960 --> 00:17:44,439 Speaker 1: is that's also coming at a time where we're starting 299 00:17:44,480 --> 00:17:47,639 Speaker 1: to see some pick up in terms of wage inflation, 300 00:17:47,960 --> 00:17:50,639 Speaker 1: input costs, and interest costs. So we certainly think the 301 00:17:50,640 --> 00:17:54,840 Speaker 1: outlook for corporate profitability is much more challenging next year 302 00:17:54,880 --> 00:17:56,560 Speaker 1: than it has been in the recent couple of minutes. 303 00:17:56,600 --> 00:18:01,359 Speaker 1: Will the market constructively rotate from point A to point B, 304 00:18:01,720 --> 00:18:05,080 Speaker 1: or sector this or sector that, or is it everyone 305 00:18:05,600 --> 00:18:09,600 Speaker 1: challenged together? Well? I think one of the things that 306 00:18:09,640 --> 00:18:11,800 Speaker 1: we certainly see for next year is an environment of 307 00:18:11,840 --> 00:18:15,320 Speaker 1: winners and losers, and we've certainly seen some sectoral rotation 308 00:18:15,440 --> 00:18:17,920 Speaker 1: this year. And we think that the environment that we've 309 00:18:17,920 --> 00:18:20,840 Speaker 1: seen in recent years, a very strong earnings growth in 310 00:18:20,880 --> 00:18:24,000 Speaker 1: a very benign environment for equities, has kind of provided 311 00:18:24,000 --> 00:18:26,800 Speaker 1: a rising tide that lifted all boats. I mean, the 312 00:18:26,920 --> 00:18:29,639 Speaker 1: next year with this slowdown in nominal GDP, but not 313 00:18:29,760 --> 00:18:32,800 Speaker 1: a recession, these rises in costs are going to be 314 00:18:32,840 --> 00:18:36,879 Speaker 1: felt disproportionately by different sectors and different stocks. So we 315 00:18:36,920 --> 00:18:40,160 Speaker 1: certainly think that next year we could have a case 316 00:18:40,160 --> 00:18:42,680 Speaker 1: where some underlyings are feeling a real pinch in terms 317 00:18:42,680 --> 00:18:47,120 Speaker 1: of margins and others are much better position to withstand up. Now, 318 00:18:47,119 --> 00:18:49,399 Speaker 1: A lot of investors want to know your call on 319 00:18:49,440 --> 00:18:54,840 Speaker 1: the technology sector because that has enjoyed improved profitability and 320 00:18:54,960 --> 00:18:59,359 Speaker 1: better margins. But can that continue as tax rates don't 321 00:18:59,440 --> 00:19:03,040 Speaker 1: necessarily change from the lower level that they have been 322 00:19:03,040 --> 00:19:09,000 Speaker 1: turned into, and also you've seen increases in wage growth. Yeah, 323 00:19:09,000 --> 00:19:11,960 Speaker 1: I think the tech sectors disproportionately interesting just because of 324 00:19:12,000 --> 00:19:14,400 Speaker 1: how much of a driver has been of ecutive returns 325 00:19:14,440 --> 00:19:16,800 Speaker 1: in this ball market. Looking forward, are you on the 326 00:19:16,840 --> 00:19:19,560 Speaker 1: tech sector very much preflects the broader market that it's 327 00:19:19,600 --> 00:19:22,840 Speaker 1: not necessarily a single theme for the sector or for 328 00:19:22,880 --> 00:19:25,639 Speaker 1: the market, but it's starting to look into that sector 329 00:19:25,680 --> 00:19:29,160 Speaker 1: and to see which stocks or which subsectors are better 330 00:19:29,200 --> 00:19:32,400 Speaker 1: able to whether that slow down in terms of top 331 00:19:32,440 --> 00:19:35,399 Speaker 1: line growth, which of those have more pricing power so 332 00:19:35,480 --> 00:19:39,800 Speaker 1: they're able to offset wage growth and interest cost and 333 00:19:39,840 --> 00:19:42,560 Speaker 1: input cost growth at the same time that top line 334 00:19:42,560 --> 00:19:46,000 Speaker 1: slow slowdown is happening, and those that aren't as well positioned. 335 00:19:46,040 --> 00:19:48,440 Speaker 1: So as you think even intrasector, we're going to get 336 00:19:48,440 --> 00:19:51,680 Speaker 1: more dispersion. But I think certainly the tech sector, relative 337 00:19:51,760 --> 00:19:56,840 Speaker 1: maybe to the consumer discretionary or industrial sectors, is somewhat 338 00:19:56,880 --> 00:20:01,560 Speaker 1: better position to withstand certainly things like wage cost The 339 00:20:01,560 --> 00:20:04,480 Speaker 1: the amount of revenue per employee for something like the 340 00:20:04,480 --> 00:20:07,280 Speaker 1: tech sector is much higher than some of those kind 341 00:20:07,280 --> 00:20:09,440 Speaker 1: of old economy sectors that could feel the pinch a 342 00:20:09,440 --> 00:20:11,639 Speaker 1: little bit more if we do see an acceleration in 343 00:20:11,640 --> 00:20:15,360 Speaker 1: wage growth. What about input costs. We've heard many companies 344 00:20:15,480 --> 00:20:19,840 Speaker 1: during their quarterly earnings tell us that input costs are 345 00:20:19,880 --> 00:20:23,280 Speaker 1: going up, transport costs are going up, the cost of 346 00:20:23,280 --> 00:20:28,800 Speaker 1: doing business is increasing. Absolutely, I think this theme of 347 00:20:29,200 --> 00:20:31,760 Speaker 1: cost growth at the same time that we're seeing a 348 00:20:31,840 --> 00:20:35,600 Speaker 1: slowdown in growth is a real concern. And again, the 349 00:20:35,640 --> 00:20:37,040 Speaker 1: thing that I would say is that's not going to 350 00:20:37,080 --> 00:20:41,160 Speaker 1: be felt uniformly. So you can think of a tech 351 00:20:41,240 --> 00:20:45,040 Speaker 1: company that potentially doesn't have a large explosure exposure to 352 00:20:45,160 --> 00:20:48,960 Speaker 1: input costs, doesn't have a large exposure to wage growth, 353 00:20:49,040 --> 00:20:52,760 Speaker 1: as being better physicians than maybe an old economy stock 354 00:20:52,840 --> 00:20:55,720 Speaker 1: that relies much more in terms of being able to 355 00:20:55,800 --> 00:21:00,399 Speaker 1: manage that gap between top line revenue and wages and 356 00:21:00,600 --> 00:21:03,560 Speaker 1: input costs in terms of delivering profitability. So that's what 357 00:21:03,640 --> 00:21:06,159 Speaker 1: really drives the environment that we see a relative winners 358 00:21:06,160 --> 00:21:08,480 Speaker 1: and losers. Those who can weather that storm and those 359 00:21:08,480 --> 00:21:11,840 Speaker 1: who find it more difficult. They find it more difficult. 360 00:21:12,080 --> 00:21:15,080 Speaker 1: But then there's the use of cash. Can you explain 361 00:21:15,359 --> 00:21:18,680 Speaker 1: in English, that's our preferred language here all those sometimes 362 00:21:18,680 --> 00:21:23,480 Speaker 1: I fail. But but can you explain Greg how cash 363 00:21:23,760 --> 00:21:29,919 Speaker 1: is an investment within quantitative finance? Yeah, I think that 364 00:21:30,200 --> 00:21:33,480 Speaker 1: cash as an investment really comes in in terms of 365 00:21:33,520 --> 00:21:37,240 Speaker 1: the construction of a portfolio. So I think that if 366 00:21:37,280 --> 00:21:41,240 Speaker 1: you're looking to make investments, whether it's in the bond market, 367 00:21:41,280 --> 00:21:44,879 Speaker 1: the equity market, maybe in commodities, the way that we 368 00:21:45,000 --> 00:21:47,800 Speaker 1: tend to think about things is in a portfolio context. 369 00:21:48,200 --> 00:21:51,840 Speaker 1: UM and cash connect as a diversifier, as a as 370 00:21:51,840 --> 00:21:53,960 Speaker 1: a store of value in that in that context, So 371 00:21:54,000 --> 00:21:56,280 Speaker 1: I think that one of the things for next years 372 00:21:56,280 --> 00:21:59,879 Speaker 1: if we if you know, UM investors do worry about inflations. 373 00:22:00,040 --> 00:22:03,200 Speaker 1: Thing to pick up thinking about those different balances of investments. 374 00:22:03,240 --> 00:22:11,840 Speaker 1: Now they interacted important just quickly what kind of cash dollars, pounds, euros, remimbi. Yeah, 375 00:22:12,280 --> 00:22:14,640 Speaker 1: I think the UM. You know, it's clearly a very 376 00:22:14,800 --> 00:22:18,440 Speaker 1: difficult environment for cooling relative currency moves. There's a lot 377 00:22:18,440 --> 00:22:22,200 Speaker 1: of political uncertainty, domestically, but in many senses there's much 378 00:22:22,240 --> 00:22:25,600 Speaker 1: more political uncertainty. But I mean just a park, not 379 00:22:25,680 --> 00:22:27,480 Speaker 1: to make money, but just the park so that you 380 00:22:27,520 --> 00:22:29,240 Speaker 1: can get the same amount of money back with the 381 00:22:29,240 --> 00:22:32,840 Speaker 1: same amount of buying power. Give you about ten seconds. Yeah, Well, 382 00:22:32,880 --> 00:22:34,600 Speaker 1: and inherently I think if you don't want to take 383 00:22:34,600 --> 00:22:36,639 Speaker 1: a strong view and currency, then the best thing to 384 00:22:36,640 --> 00:22:40,639 Speaker 1: do is to keep your assets denominated in your domestic currency. Alright, 385 00:22:40,680 --> 00:22:43,200 Speaker 1: well said, very good, Thank you so much. As data 386 00:22:43,280 --> 00:22:47,679 Speaker 1: important conversation and these interior dynamics to the equity market, 387 00:22:47,720 --> 00:22:50,640 Speaker 1: not just the headlines of you know, the Dow down 388 00:22:50,680 --> 00:23:09,200 Speaker 1: six hundred points thousand three seven. Let's find out if 389 00:23:09,240 --> 00:23:12,200 Speaker 1: Amazon is a value stock. And we can do that 390 00:23:12,680 --> 00:23:16,760 Speaker 1: with someone who wonderfully does value. William Smide is a 391 00:23:16,840 --> 00:23:20,840 Speaker 1: smade capital, Uh, with just a terrific track record. Bill. 392 00:23:20,960 --> 00:23:24,600 Speaker 1: How ugly is the year, ben, because only six tech 393 00:23:24,680 --> 00:23:30,120 Speaker 1: stocks went up and nothing else did well. Uh, it 394 00:23:30,160 --> 00:23:33,479 Speaker 1: was really ugly until about six weeks ago, and uh, 395 00:23:33,960 --> 00:23:36,359 Speaker 1: all of all of a sudden, the things that we 396 00:23:36,400 --> 00:23:40,280 Speaker 1: had been talking about and working on became to begin 397 00:23:40,359 --> 00:23:43,359 Speaker 1: to work their way through the system. We wrote a 398 00:23:43,359 --> 00:23:47,479 Speaker 1: piece a couple of months ago called smoked in and 399 00:23:47,720 --> 00:23:52,760 Speaker 1: vaped in. And you know, if you're a Facebook shareholder 400 00:23:52,880 --> 00:23:56,480 Speaker 1: or an Amazon shareholder that paid two thousand or or 401 00:23:56,680 --> 00:23:59,360 Speaker 1: two hundred dollars a share for Facebook and you wake 402 00:23:59,480 --> 00:24:02,880 Speaker 1: up two or three months later and you've lost thirty 403 00:24:03,160 --> 00:24:07,119 Speaker 1: or of your money, you got vaped. That capital just 404 00:24:07,200 --> 00:24:12,880 Speaker 1: got vaporized. Bill Smede coming to us from Seattle, home 405 00:24:12,960 --> 00:24:16,879 Speaker 1: of Amazon dot Com. Yeah, well, I wouldn't to ask you. 406 00:24:16,920 --> 00:24:18,959 Speaker 1: What do you have any idea what happened to the 407 00:24:19,000 --> 00:24:23,560 Speaker 1: businesses in Seattle as Amazon expanded? For example, there's a 408 00:24:23,600 --> 00:24:27,880 Speaker 1: home depot in New York a Northern boulevard not too 409 00:24:27,920 --> 00:24:30,159 Speaker 1: far from where Amazon is going to be setting up 410 00:24:30,160 --> 00:24:33,560 Speaker 1: one of its two new headquarters. What kind of business 411 00:24:33,560 --> 00:24:35,440 Speaker 1: are they going to be able to do? I mean, 412 00:24:35,520 --> 00:24:40,520 Speaker 1: is this gang busters? For everybody around Amazon? You know him? 413 00:24:40,560 --> 00:24:44,320 Speaker 1: Your question is such an excellent question because it actually 414 00:24:44,440 --> 00:24:49,560 Speaker 1: speaks both to what Long Island and Northern Virginia are 415 00:24:49,600 --> 00:24:52,199 Speaker 1: going to go through, but it also speaks to the 416 00:24:52,440 --> 00:24:55,119 Speaker 1: about the era that we're coming out of and the 417 00:24:55,200 --> 00:24:58,960 Speaker 1: era we're going into. And so, over the course of 418 00:24:58,920 --> 00:25:01,720 Speaker 1: the last eight or nine years in Seattle, a massive 419 00:25:01,840 --> 00:25:07,200 Speaker 1: number of young college educated tech workers came to this town. 420 00:25:07,920 --> 00:25:12,720 Speaker 1: They're effectively exiles, you know, they're they're they're there. It's 421 00:25:13,040 --> 00:25:16,359 Speaker 1: like being exiled in Babylon. They're not from here. Uh. 422 00:25:16,400 --> 00:25:21,159 Speaker 1: They they are well educated, they're single, and so the 423 00:25:21,240 --> 00:25:25,919 Speaker 1: economy of Seattle has been great. If you sell things 424 00:25:26,040 --> 00:25:30,159 Speaker 1: to single people and if you rent apartments. Okay, so 425 00:25:30,280 --> 00:25:32,480 Speaker 1: that's a good that's a good guide, right, because they're 426 00:25:32,480 --> 00:25:36,200 Speaker 1: gonna fix things up and they're gonna spend money. Well, yeah, 427 00:25:36,240 --> 00:25:40,200 Speaker 1: they're gonna spend money, but they buy Chipotle, Burrito's, craft beer, 428 00:25:40,480 --> 00:25:44,120 Speaker 1: and Apple devices, and the multiplier effect on the United 429 00:25:44,160 --> 00:25:47,600 Speaker 1: States economy of doing that is very low. But there's 430 00:25:47,640 --> 00:25:50,679 Speaker 1: good news. I have great news for you. Those people 431 00:25:50,800 --> 00:25:53,639 Speaker 1: that came here to Seattle, over the course of the 432 00:25:53,680 --> 00:25:57,119 Speaker 1: next five to ten years, are gonna turn thirty five. 433 00:25:57,640 --> 00:26:00,160 Speaker 1: They're gonna be married, they're gonna have a couple of kids, 434 00:26:00,359 --> 00:26:03,199 Speaker 1: and they're gonna want to stand alone house. And so 435 00:26:03,680 --> 00:26:05,840 Speaker 1: the beauty of Seattle is we just built it out 436 00:26:05,880 --> 00:26:08,040 Speaker 1: for twenty seven year olds, and we needed to build 437 00:26:08,040 --> 00:26:10,640 Speaker 1: it out for thirty five year olds. And you guys 438 00:26:10,680 --> 00:26:12,560 Speaker 1: are gonna build out for twenty seven year old and 439 00:26:12,600 --> 00:26:14,720 Speaker 1: you're gonna wake up in eight years and wish you'd 440 00:26:14,720 --> 00:26:16,919 Speaker 1: build it out for thirty five year olds. Oh, this 441 00:26:16,960 --> 00:26:18,680 Speaker 1: is wonderful that Bill Smede with this if you're just 442 00:26:18,760 --> 00:26:22,720 Speaker 1: joining us worldwide, William Smede of Seattle, Washington, this is 443 00:26:22,800 --> 00:26:26,520 Speaker 1: Amazon announces Crystal City. I believe in northern Virginia and 444 00:26:26,600 --> 00:26:30,680 Speaker 1: also New York City. PIM. I saw two headlines. Amazon 445 00:26:30,720 --> 00:26:34,040 Speaker 1: to get performance based direct incentives in New York City 446 00:26:34,600 --> 00:26:40,480 Speaker 1: of one point five to five billion, that's fifteen hundred 447 00:26:40,640 --> 00:26:46,160 Speaker 1: twenty five million dollars. And in Virginia. I lost that, PIM. 448 00:26:46,200 --> 00:26:49,120 Speaker 1: I'm sorry, I lost. Well, let me just add seventy 449 00:26:49,200 --> 00:26:51,000 Speaker 1: three million. All right, let me just add to this 450 00:26:51,080 --> 00:26:53,320 Speaker 1: because the numbers they kind of you know, those are 451 00:26:53,320 --> 00:26:56,680 Speaker 1: all future projections and so on. But Amazon is also 452 00:26:56,720 --> 00:27:02,800 Speaker 1: announcing that Nashville will also getting operations center there. They're 453 00:27:02,800 --> 00:27:06,000 Speaker 1: going to be adding five thousand jobs. They'll speed based 454 00:27:06,000 --> 00:27:10,639 Speaker 1: on your Seattle experience, there's different Amazon jobs. What kind 455 00:27:10,720 --> 00:27:14,399 Speaker 1: of Amazon jobs do the people of Queens in New 456 00:27:14,480 --> 00:27:17,440 Speaker 1: York City? What do they want? Do they want people 457 00:27:17,480 --> 00:27:20,719 Speaker 1: that put stuff in cardboard boxes? Do they want somebody 458 00:27:20,720 --> 00:27:23,359 Speaker 1: that's going Should I get the maserati? I mean what 459 00:27:23,560 --> 00:27:27,360 Speaker 1: kind of person do they want. Well, no, they're they're 460 00:27:27,480 --> 00:27:32,200 Speaker 1: hiring the thousands and thousands of people that are graduating 461 00:27:32,240 --> 00:27:35,359 Speaker 1: from good colleges in the United States with backgrounds and 462 00:27:35,400 --> 00:27:42,400 Speaker 1: computer science and and software engineering and coding. Uh and uh, 463 00:27:42,680 --> 00:27:48,359 Speaker 1: you know, doing their thing uh in in in Basically, 464 00:27:48,760 --> 00:27:52,240 Speaker 1: they are a technology company that for some reason isn't 465 00:27:52,280 --> 00:27:55,440 Speaker 1: categorized as a technology No one that works there. It's 466 00:27:55,520 --> 00:28:00,040 Speaker 1: valued like a tech company. Right, yeah, so so a 467 00:28:00,200 --> 00:28:04,880 Speaker 1: tech workers. And uh they work very long hours. So 468 00:28:05,200 --> 00:28:08,639 Speaker 1: that's the other thing. Near where they work. What's the 469 00:28:08,680 --> 00:28:13,119 Speaker 1: Seattle experience, Yeah, oh yeah they do. I mean we've built, 470 00:28:13,520 --> 00:28:18,040 Speaker 1: we've built, in fact, we've overbuilt apartment buildings within a 471 00:28:18,119 --> 00:28:22,200 Speaker 1: mile to two miles of their campus. Uh. And again 472 00:28:22,600 --> 00:28:26,760 Speaker 1: that worked great until you know in six or seven 473 00:28:26,800 --> 00:28:29,240 Speaker 1: years that they don't want to live in an apartment 474 00:28:29,280 --> 00:28:31,320 Speaker 1: close to where they work. You know, a lot of 475 00:28:31,320 --> 00:28:34,200 Speaker 1: people said the millennials, even after they get married and 476 00:28:34,240 --> 00:28:36,639 Speaker 1: have kids, are gonna want to stay in town, close 477 00:28:36,680 --> 00:28:39,440 Speaker 1: to the restaurants and the bars. And I like to 478 00:28:39,440 --> 00:28:43,000 Speaker 1: say that if you take a married couple thirty five 479 00:28:43,000 --> 00:28:44,840 Speaker 1: with a couple of kids and they're close to the bars, 480 00:28:44,960 --> 00:28:49,120 Speaker 1: you're gonna want to own a publicly traded divorce attorney firm. 481 00:28:49,720 --> 00:28:53,200 Speaker 1: He also wants some noise abatement. I would imagine, and 482 00:28:53,560 --> 00:28:56,880 Speaker 1: exactly who wants their child once they're they're two and 483 00:28:57,000 --> 00:28:59,640 Speaker 1: four year old playing on a sidewalk where all everybody 484 00:28:59,680 --> 00:29:05,280 Speaker 1: else's dogs are pill Did you get back to valuations? Yeah? 485 00:29:05,320 --> 00:29:12,000 Speaker 1: Apple or Amazon? Are they value stocks? Wow? Uh? You know, 486 00:29:12,800 --> 00:29:15,560 Speaker 1: I have never been able to even vaguely come to 487 00:29:15,600 --> 00:29:20,280 Speaker 1: that conclusion on Amazon because I personally believe to this 488 00:29:20,360 --> 00:29:23,880 Speaker 1: day that overall they still lose money selling their e 489 00:29:23,960 --> 00:29:27,000 Speaker 1: commerce right the I don't know if the two of 490 00:29:27,000 --> 00:29:30,000 Speaker 1: you have read George Gilder's book The Life After Google, 491 00:29:30,640 --> 00:29:35,040 Speaker 1: and he points out that that Amazon has given delivery 492 00:29:35,280 --> 00:29:38,840 Speaker 1: for free, Google has given search for free, and Facebook 493 00:29:38,880 --> 00:29:44,120 Speaker 1: gave social media for free, and our our capitalistists democratic 494 00:29:44,160 --> 00:29:49,600 Speaker 1: capitalistic system is distorted by having two massive monopoly or 495 00:29:49,640 --> 00:29:54,560 Speaker 1: three massive monopoly players have effectively restored in the system, 496 00:29:54,640 --> 00:29:58,360 Speaker 1: but by giving things away for free. And so I 497 00:29:59,160 --> 00:30:02,200 Speaker 1: don't I don't no, because every earnings report comes out 498 00:30:02,200 --> 00:30:04,840 Speaker 1: and I run through the e commerce revenues and the 499 00:30:04,880 --> 00:30:09,240 Speaker 1: expenses associated with e commerce, and they're losing money. So 500 00:30:09,640 --> 00:30:12,720 Speaker 1: in in Costco's case to use an example, because it's 501 00:30:12,720 --> 00:30:17,920 Speaker 1: the model that Amazon duplicated. Uh Costco makes of their 502 00:30:17,920 --> 00:30:23,520 Speaker 1: profit off of the membership fees and from running the business. 503 00:30:23,520 --> 00:30:27,160 Speaker 1: So they just slightly breaking Okay, McDonald's breaks even on 504 00:30:27,320 --> 00:30:31,200 Speaker 1: food and they make all their on on beverage. This 505 00:30:31,240 --> 00:30:34,680 Speaker 1: has been well timed. Bill Smeen of Seattle, Washington is 506 00:30:34,720 --> 00:30:40,120 Speaker 1: Amazon announces Northern Virginia in New York City h Q two. 507 00:30:40,160 --> 00:30:47,480 Speaker 1: I guess I'll split the difference. Thanks for listening to 508 00:30:47,520 --> 00:30:52,080 Speaker 1: the Bloomberg Surveillance podcast. Subscribe and listen to interviews on 509 00:30:52,120 --> 00:30:57,960 Speaker 1: Apple Podcasts, SoundCloud, or whichever podcast platform you prefer. I'm 510 00:30:58,000 --> 00:31:01,280 Speaker 1: on Twitter at Tom Keane before the podcast. You can 511 00:31:01,360 --> 00:31:04,560 Speaker 1: always catch us worldwide. I'm Bloomberg Radio.