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Speaker 1: Ye, Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane

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Speaker 1: jay Ley. We bring you insight from the best in economics, finance, investment,

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Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud,

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Speaker 1: Bloomberg dot Com, and of course on the Bloomberg We

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Speaker 1: consider the market moves. The moves continue this morning with

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Speaker 1: tweet Line Noyan of Commerce Bank and Daniel Morris of

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Speaker 1: course of BNP Perry by joining us as well tweet

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Speaker 1: what will this do to the dollar? Do you have

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Speaker 1: to reset at Commerce Bank your dollar call off what

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Speaker 1: Chairman Paul said? Uh No, Actually, in fact we feel

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Speaker 1: confirmed in our dollar of you. We have been expecting

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Speaker 1: a weekending dollar UM next year, particularly as the fat

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Speaker 1: hiking cycle will draw to an end and markets concentrate

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Speaker 1: on that and UM. This is a common pattern that

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Speaker 1: we've seen in the past with past rate hike pikers.

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Speaker 1: As the andraws near, the dollar doesn't benefit from from

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Speaker 1: the last couple of rate hips anymore, as the market

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Speaker 1: is already foreseeing UM the peak of interest rates, and

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Speaker 1: actually UM the dollar starts to weaken UM. So, in

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Speaker 1: fact Powell has confirmed our view in that very good

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Speaker 1: Dan Morris, let us look at John Authors, who channels

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Speaker 1: Jeremy grandson of GMO here on the old Bronosurus Cbranosaurus model.

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Speaker 1: They served rannosaurs at lunch yesterday as well as wonderful

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Speaker 1: Chairman Powell wants more room for discretion. The stock market

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Speaker 1: to a bronosaurs, Well, it took a long time for

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Speaker 1: information to go from the brono sours his head to

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Speaker 1: its tail. In the same way, the bond market is

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Speaker 1: the bronosaurs his head, and the stock market just simply

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Speaker 1: gets the news. Last, Dan Morris, I mean we see

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Speaker 1: again the communication here of any given central banker, the

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Speaker 1: bond market picks up with it. Do you have to

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Speaker 1: reset your bond framework off what the chairman said? Actually

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Speaker 1: not at all, And if anything, we're a bit concerned

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Speaker 1: that the market is over interpreting his comments. I think

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Speaker 1: if we step back and look at the outlook for

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Speaker 1: inflation for next year, the strength of the economy, the

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Speaker 1: level of unemployment and so on, that still suggests three

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Speaker 1: hikes is appropriate in our view for next year. So

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Speaker 1: we may have a pause, be that a March or

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Speaker 1: b then in June, and that is on the margin

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Speaker 1: a change from what we had thought previously. But fundamentally

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Speaker 1: we think you are going to see how interest rates

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Speaker 1: of FED is not going to stop raising rates December,

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Speaker 1: isn't it. There's going to be more than one next year,

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Speaker 1: And for now the market is ignoring all of that.

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Speaker 1: We've obviously got the big rally, but eventually the realization

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Speaker 1: is going to set back in about her interest rates

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Speaker 1: and then there's a risk, of course, at all of

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Speaker 1: these reverses. So Dan, where do you want to be

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Speaker 1: invested right now? Take advantage of that well, and we

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Speaker 1: are in were neutral and equities overall in our multass

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Speaker 1: of portfolio, but we're still underweight fixed income. So you

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Speaker 1: can't particularly enthusiastic about equity at the point, but on

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Speaker 1: a relative basis, we think they should outperform. So that's

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Speaker 1: kind of our position at this point. Then let me

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Speaker 1: kick off with you. When you look at brexit, is

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Speaker 1: it doomsday scenario if we don't have a deal, Does

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Speaker 1: it now make it more likely that we do get

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Speaker 1: the deal? Improvement in Parliament? We think of a range

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Speaker 1: of options. We have a plethora surfeit of alternatives. I

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Speaker 1: think at this point of how it can play out,

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Speaker 1: I think the forecast that we've seen is kind of

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Speaker 1: the worst case assumption, which is you end up not

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Speaker 1: only with no deal in the crashing out, but no

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Speaker 1: kind of mitigating efforts between now and then to ANNAILU. Right,

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Speaker 1: what could be the effects at that point? So you know,

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Speaker 1: if that's our worst case, uh, and then we go

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Speaker 1: from there towards you know, a remain where nothing really changes,

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Speaker 1: so we kind of know what the outlook isn't there.

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Speaker 1: But across that there are, like I said, several options

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Speaker 1: with different economic effects, and the probabilities of those not

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Speaker 1: only are shifting, but there's no one really that stands

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Speaker 1: out as highly probable um to land. And what is

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Speaker 1: being priced into your brexit or you're actually your pound

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Speaker 1: forek offs right now it comes to brexit. UM. I

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Speaker 1: mean we've seen that the options market has become relatively nervous. UM.

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Speaker 1: You've seen implied volatility is picking up. UM. So the

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Speaker 1: market is pricing in or husband pricing in the higher

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Speaker 1: probability of a no deal. But the levels are still

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Speaker 1: nowhere near um that we saw around the two thousands

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Speaker 1: sixteen referendum. So all in all, the market still seems

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Speaker 1: relatively relaxed when it comes to a no deal scenario,

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Speaker 1: UM and UM. I think that is due to the

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Speaker 1: fact that m as just heard, there are so many

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Speaker 1: scenarios how this Brexit could play out, what could happen

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Speaker 1: after this vote in the British Parliament. UM. There are

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Speaker 1: also some scenarios which could play out quite positively for

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Speaker 1: the pound. I mean, people are talking about the second referendum,

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Speaker 1: which could in the end lead to UM the UK

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Speaker 1: remaining in the EU event, which would be positive for

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Speaker 1: the pound. UM. So it's very difficult to make a

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Speaker 1: pound forecast at this moment with all scenarios, I mean,

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Speaker 1: a nicely laid out what are we gonna do? What?

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Speaker 1: What do you do? Where? Where is the opportunity on

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Speaker 1: pound sterling? UM? I think from a risk return perspective,

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Speaker 1: I still think investors with pound exposure UM should take

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Speaker 1: the opportunity to hedge their risks in in in their

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Speaker 1: long positions, because, as I said, UM, yes, volatilities have

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Speaker 1: picked up, but they're still relatively cheap. Because in a

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Speaker 1: in a nodeal scenario, I would expect the pound to

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Speaker 1: depreciate at least by ten per center even more, UM

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Speaker 1: and UM. The market is not yet prepared for that

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Speaker 1: so at this moment um, your uh buying implied volatility

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Speaker 1: is actually a good risk return investment. All right, thank

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Speaker 1: you boys for joining us to Land and there of

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Speaker 1: Commerce Bank and done mores of BNP Paraba. We begin

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Speaker 1: with a man who served as deep Incident of the

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Speaker 1: European Central Bank from two thousand three until two thousand

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Speaker 1: and eleven, living through not one but two crises in

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Speaker 1: the euro Zone. From Leland, France. It is Jean Claude,

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Speaker 1: free Shack and it joins us now. Jean Claude is

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Speaker 1: great to catch up with you pleasure to be here.

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Speaker 1: Talk to me about how difficult it is to stand

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Speaker 1: somewhere like the Economic Club of New York with a

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Speaker 1: load of pressure on you to say the right thing.

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Speaker 1: How difficult is there? I think it that it is.

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Speaker 1: It is quite a challenge, of course. I think that

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Speaker 1: Chairman Powell did extremely well, and he probably corrected what

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Speaker 1: had been an overinterpretation of his previous message on the

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Speaker 1: long Way from Newt Hall in mentioning that it was

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Speaker 1: closer from to a Newt Hall than before. I would

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Speaker 1: say we have to be aware of both over interpretation.

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Speaker 1: But it seems to me that he corrected quite well

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Speaker 1: that what might have been an over into put Ducian

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Speaker 1: before and now we end up with perhaps another over

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Speaker 1: interpretation because just going through the quow at the moment,

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Speaker 1: Joan Flatricia reads as follows, interest rates are still accommodative,

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Speaker 1: but we're gradually moving to a place where there'll be neutral,

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Speaker 1: not restraining growth. We may go past neutral, but we're

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Speaker 1: a long way from neutral at this point. Probably that's

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Speaker 1: October three, here's novembery. Interest rates are still low by

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Speaker 1: historical standards, and they remain just below the broad range

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Speaker 1: of estimates at the level that would be neutral for

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Speaker 1: the economy now October three to judgment November twenty eight,

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Speaker 1: the statement of fact, I mean, we know what the

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Speaker 1: broad range of neutralists. It's two fifty to three fifty,

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Speaker 1: and as a matter of fact, we are just below that.

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Speaker 1: So I'm not sure he actually made a judgment yesterday.

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Speaker 1: Did he's just standing a matter of fact. I think

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Speaker 1: that you're right. I think that it was a matter

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Speaker 1: of fact, and that he did not intended to over

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Speaker 1: I would say communicate to the market that there was

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Speaker 1: a change in the perception on the one hand, and

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Speaker 1: in the in the likely decision of the Open Market Committee,

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Speaker 1: so I would very much agree with you. That being said,

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Speaker 1: it was very well done in my opinion, and of

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Speaker 1: course what counts is what you do, not only what

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Speaker 1: you are pre announcing of any overinterpretation of words, and

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Speaker 1: we will see what happens. I have full confidence in

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Speaker 1: the Open Market Committee to continue to do what is

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Speaker 1: needed in the present circumstances where obviously we have the

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Speaker 1: two targets of the of the Central Bank are very attained,

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Speaker 1: if I may, in terms of employment full employment and

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Speaker 1: in terms of overall solid anchoring of infession expectations in

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Speaker 1: line close to be in line with the definition of

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Speaker 1: price stability, which by the way, is the same in

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Speaker 1: all four major central banks that are issuing the currency

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Speaker 1: that are in the s d R apart from the

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Speaker 1: Renman b you know, the four others are the Sterling,

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Speaker 1: the end, the yar, and the dollar, and all centle

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Speaker 1: banks have the same definition two or close to two percent.

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Speaker 1: That's very important. It's a byproduct of the crisis, in

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Speaker 1: my opinion, solidly anchoring inflation expectations at a level which

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Speaker 1: would be understood by everybody. So we're at this delicate

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Speaker 1: part of the cycle for the United States and for

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Speaker 1: the federal serve as well. He's not just trying to

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Speaker 1: weigh what happens with the labor market and potentially with

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Speaker 1: inflation as well, he's also trying to weigh financial stability concerns.

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Speaker 1: And Jean Quatricia, you know, as well as anyone listening

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Speaker 1: to jerm Powell over the last year or so, again

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Speaker 1: and again and again, he states that the last downturns,

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Speaker 1: the last few downturns over the last few decades, have

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Speaker 1: been caused not by inflation overshoots, but by financial instability

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Speaker 1: and financial crisis. How do you set monetary policy to

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Speaker 1: account for that and anchor inflation expectations too. No, that

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Speaker 1: that's a very very important point. There is absolutely no

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Speaker 1: doubt that. Also one of the consequence of the crazies

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Speaker 1: was to put the central banks, as I would say,

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Speaker 1: very close to the financial stability mandate, without changing necessarily

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Speaker 1: the mandate, but putting the center bank very close. And

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Speaker 1: I have been the witness myself or the setting up

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Speaker 1: of the Financial Stability Oversight Council on in the US

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Speaker 1: of the European Systemic Risk Board, which I was the

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Speaker 1: first chairman of. As a consequence of the crisis and

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Speaker 1: that that is very very important. And I take it

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Speaker 1: that what what Chairman Powells said on what they were doing,

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Speaker 1: encouraging resilience in the financial system, monitoring financial instability and

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Speaker 1: being transparent, and he was very transparent. Obviously, I think

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Speaker 1: it was it was certainly part of the responsibility of

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Speaker 1: the of the center bank. Do we have too much

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Speaker 1: forward guidance now? Do we have enough? Or do we

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Speaker 1: have to ebb it back as clearly Mr Powell is stating,

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Speaker 1: and I would suggest you agree with to the engineering

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Speaker 1: mark some which is data dependency. Well, first of all,

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Speaker 1: the various central banks are not exactly in the same situation.

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Speaker 1: As you know. The US FED is much in advance

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Speaker 1: on Europe, not surprisingly because Europe in the business cycle

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Speaker 1: had a lag visavi the US because of the sovereign

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Speaker 1: risk crisis. So there is a difference. So I take

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Speaker 1: it that the forward guidance in Europe is absolutely necessary

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Speaker 1: because we are in the citucation realm and market participants

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Speaker 1: have to know what will happen. In the US, clearly

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Speaker 1: we are less close to absolute necessity forward guidance, and

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Speaker 1: it seems to me that you can understand what said,

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Speaker 1: were the two questions here? One of them is really important.

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Speaker 1: Let me go with the weaker one. First, the news

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Speaker 1: flaws extraordinary with Deutsche Bank, un a credit the financial

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Speaker 1: system of Europe. John, and I every day of a

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Speaker 1: mystery over the chronic nature of negative interest rates. You

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Speaker 1: didn't study negative interest rates as a kid, and yet

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Speaker 1: bankers are living with it each and every day, particularly

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Speaker 1: in Germany. Now that's true. How does this how do

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Speaker 1: you perceive this ending? Well, first of all, I take

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Speaker 1: it that it was necessary at time, and as you know,

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Speaker 1: it will still be there until probably the last quarter

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Speaker 1: or the end of the third quarter of next year. Uh.

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Speaker 1: At the very beginning, the trust was those negative rates

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Speaker 1: will have devastating consequences on all the funcial sphere, and

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Speaker 1: particularly on the banks. I would say the judgment is

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Speaker 1: much more nuanced now because we saw how banks, some

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Speaker 1: of them, the best managed banks, could cope with it.

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Speaker 1: So I would say it's it was very very non conventional,

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Speaker 1: obviously probably necessary. And what about now and what about

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Speaker 1: in two thousand twenty? How do you get off, as

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Speaker 1: you correctly stated in a panel, the ax of Weber,

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Speaker 1: the addiction of all this. No, it's clear that we

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Speaker 1: have to get progressively I would say, serenely out of

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Speaker 1: a situation which is totally non conventional, and we are

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Speaker 1: starting to do that, as you know, because because the

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Speaker 1: the end of tapering is for the end of this year.

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Speaker 1: In Europe again we have lags in comparison with the

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Speaker 1: United States of America. But the course, the course is

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Speaker 1: more or less the same sequence. But Jean Claude, there

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Speaker 1: is a big question that I think we have to

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Speaker 1: start exploring the prospect that we're stuck here, that we

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Speaker 1: don't get away from zero in the euro Zone because

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Speaker 1: the cycle doesn't last long enough for them to do it.

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Speaker 1: You're starting to think about that, Yes, yes, of course,

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Speaker 1: as I already said, of course it's very very important

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Speaker 1: that we are real feeling the overall weaponry of I

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Speaker 1: would say, not on the central banks, but also the

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Speaker 1: governments and all kinds of of tools that can be

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Speaker 1: utilized when we have to cope with the next recession.

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Speaker 1: The main problem for the European would be that when

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Speaker 1: the US, which is ahead in the cycle, has its

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Speaker 1: recession by contagion, we might have a big, big problems

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Speaker 1: for us. Even if it would not be appropriate in

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Speaker 1: terms of business cycle in Europe. So we will see.

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Speaker 1: But again I take it that what is being done

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Speaker 1: right now is correct. That we have in mind that

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Speaker 1: you have several weaponry that we are non conventional, the

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Speaker 1: interest rates of course, and also the quei or so

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Speaker 1: called quei, and we have to do that, namely normalize

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Speaker 1: progressively and as I said, serially, if we do not

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Speaker 1: want to have counter productive effect. But I take it

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Speaker 1: that all santle bankers in the world are fully aware

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Speaker 1: of the fact that the main, main, major issue for

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Speaker 1: them would be the next slow down of the circle.

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Speaker 1: For anyone just joining us on Bloomberg Radio, Jean claud

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Speaker 1: Trichet joining Bloomberg Surveyments this morning, the former European Central

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Speaker 1: Bank President Jean Claude talking about the next cycle. I

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Speaker 1: think what is really interesting when you were at the ECB,

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Speaker 1: the periphery started trading like credit. Sovereign debt in Italy

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Speaker 1: in Spain has all the characteristics of a credit and

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Speaker 1: not a sovereign. That's still the case. So let's explore

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Speaker 1: this further. We go into the next downturn and Italy

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Speaker 1: still trades like credit. How much of an issue is

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Speaker 1: that going to be? Well? Again, Italy today is more

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Speaker 1: or less a paradox. On the one hand, they have,

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Speaker 1: of course a lot of liabilities, including one percent of

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Speaker 1: the GDP in terms of of I would say state

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Speaker 1: over outstanding debt, so that that's big. On the other hand,

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Speaker 1: they have a card account surplus which is not negligible.

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Speaker 1: They have a primary surplus in their budget, which is

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Speaker 1: something so and the appropriate in the circumstances, but which

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Speaker 1: is there, and you know that they have because they

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Speaker 1: have a current account which is behaving quite properly. They

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Speaker 1: have a lot of I would say domestic investments that

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Speaker 1: are in the overall UH indebtedness of Italy, so they

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Speaker 1: are not as vulnerable as the market is very often

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Speaker 1: saying I think we have to be more nuanced on

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Speaker 1: on Italy. What is clear, of course, is that the

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Speaker 1: new government very I would say sadly, has decided to

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Speaker 1: give the worst possible messages to the market. But I

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Speaker 1: am not desperate. It seems to me that the more

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Speaker 1: I would say, sound and reasonable messages might come now,

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Speaker 1: and I take it as important. The meeting of the

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Speaker 1: Prime Minister of Italy with the President of the Commission.

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Speaker 1: You've written for decades about realism it is finally here.

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Speaker 1: We see it in each and every vote, and we

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Speaker 1: see it in the struggles of Mr McCraw and the

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Speaker 1: protests on the chance. Elise Madame mc gard once told

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Speaker 1: me the protest is the art of France, that people

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Speaker 1: do it there a lot. What was unusual about these

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Speaker 1: recent protests and does it speak to a fragility of

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Speaker 1: Mr mccrow's plans forward. Well, first of all, I think

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Speaker 1: that all the advanced economy have to cope with populism.

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Speaker 1: The UK, it's clear with the Brexit, the US, clear

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Speaker 1: with the election of President Trump, and all continental European. Fortunately,

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Speaker 1: the populism in continental Europe and in Ireland is not

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Speaker 1: directed against Europe first, but against the national government first,

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Speaker 1: and that is something which explains also the resilience of

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Speaker 1: the European institutions and on on the aarea in the

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Speaker 1: worst crisis since World War Two. As rigas France, I

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Speaker 1: would say President mccon engaged in very very important reform.

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Speaker 1: He was right to do so. It was really the

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Speaker 1: mandate he had received from the people. Of course, that

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Speaker 1: would be very very damaging for his political capital. That's

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Speaker 1: unavoidable because most of the reform you have to do

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Speaker 1: because they are good for the country in the medium

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Speaker 1: and long run, have a cost, a political cost on

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Speaker 1: the short run. So I'm not surprised. But what has happened?

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Speaker 1: What what is associated with this? I would say loss

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Speaker 1: of political capital, but it would it would reconquer if

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Speaker 1: if I may, I'm sure that he has time this

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Speaker 1: political capital. But the so called yellow jacket is something

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Speaker 1: which comes out of the digital revolution, clearly, exactly like

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Speaker 1: in the US, the digital revolution is the technology. It

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Speaker 1: seems to me, yes, because because they are bypassing all

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Speaker 1: possible organizations. John and I wanted to speak about German power,

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Speaker 1: about the future of Europe, but there's also larger matters

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Speaker 1: that saw Paris Saint your Man beat Liverpool and John,

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Speaker 1: what was extraordinary is Olympic leon A tied Manchester City.

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Speaker 1: No one expected that weekend to say football we did.

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Speaker 1: Are you a huge supporter of Olympic Leon? I am

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Speaker 1: not really soccer enthusiasts. You know that you can come

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Speaker 1: on the show. You have not the best intellocutor, Well,

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Speaker 1: I could make mistakes in judging. I was surprised myself,

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Speaker 1: of course, because because Manchester City, it's Manchester City. It

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Speaker 1: is yeah, I had a fantastic computations, but we will

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Speaker 1: see me in any case, How does how does France

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Speaker 1: compete in something as visible as football versus the capitalist

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Speaker 1: juggernaut of the Premier League in England? I cannot tell

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Speaker 1: you again. I'm not again a real expert in this.

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Speaker 1: I love that we have the former president of the

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Speaker 1: European Central Bank and you are so keen together. I

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Speaker 1: figured a guy from Leon looked up to see if

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Speaker 1: he was on the board of Olympico and he was

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Speaker 1: busy running the Bank of France from and then in

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Speaker 1: the early two thousands you had this other job to

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Speaker 1: do over the e CB. Jean Corda want to wrapped

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Speaker 1: things up with a delicate story, a delicate topic. And

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Speaker 1: you and I have gone back and forth on this before,

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Speaker 1: and you're a good sport when we talk about it.

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Speaker 1: The great hikes of two thousand and eight and two

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Speaker 1: thousand and eleven at the e c B, A lot

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Speaker 1: of people look back and say that was a policy error.

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Speaker 1: Walk me through how difficult it is to know whether

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Speaker 1: you are indeed making a policy error or not, and

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Speaker 1: how fine the decision actually is that you make well

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Speaker 1: to do replace myself in the circumstances. I would say

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Speaker 1: that what was extremely important for me was to be

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Speaker 1: able in any case to engage in very bold and

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Speaker 1: swift non conventional measures as well I did with my

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Speaker 1: colleagues in or seven nine of August or seven, we

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Speaker 1: gave a limited supply of liquidity to all our banks

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Speaker 1: and they were asking for ninety five billion euros. We

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Speaker 1: gave ninety five billion euros. It was very much criticized

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Speaker 1: at the time, but it won me the Man of

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Speaker 1: the Year of the fancial times because it was swift

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Speaker 1: and bold, swift indeed because we took that decision in

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Speaker 1: two hours and a half and the same it was

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Speaker 1: the same when we had both. I would say the

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Speaker 1: the private sector crisis coming from from Wall Street with

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Speaker 1: Lemon Mothers, where we generalize the fuller lot Ma tad

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Speaker 1: fix rate of liquidity, which again was very very bold

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Speaker 1: because all the banks could ask for everything. At the

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Speaker 1: same time, I had a mandate and as my successor

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Speaker 1: and my predecessor, which was to deliver price stability, be

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Speaker 1: credible in the delivery of priceability, and avoid any kind

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Speaker 1: of doubts in major public opinion in Europe. And I

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Speaker 1: did both if I may, I was anchoring solidly inflation

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Speaker 1: expectations at times where we had a high level of inflation.

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Speaker 1: I have known four pucent inflation. You know, the central

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Speaker 1: bankers to the dream of that on your work you

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Speaker 1: enjoyed on my watch, I had four when I left.

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Speaker 1: I had in the year where I left three two

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Speaker 1: point seven percent when I left, So we were in

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Speaker 1: a different universe. And again I was equally anxious to

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Speaker 1: deliver press stability and be credible in that delivery, including

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Speaker 1: in major public opinion that very often anxious. The main

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Speaker 1: the main fear of half of Europe was we are

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Speaker 1: engaging in some kind of new I would say, experience

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Speaker 1: never attempted in the past, and we will have inflation

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Speaker 1: when you emerge the d M, the Guilder and say

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Speaker 1: that the escudo and very quickly, is the bundes Bank

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Speaker 1: now a different Bundesbank when you were on the watch, Yes, certainly,

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Speaker 1: because now they have twenty years of experience with within

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Speaker 1: the system and the open system of central banks. So

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Speaker 1: this is certainly a different Bundesbank. You have also the experience,

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Speaker 1: the benefit of the experience. But of course I see

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Speaker 1: the Bundesbank as always keen or not losing contact with

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Speaker 1: the public opinion in his own country, in her own country.

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Speaker 1: That being said, the people of Germany, and I think

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Speaker 1: it's paying hammage to all what has been done by

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Speaker 1: the e c B is in favor of the u

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Speaker 1: W at the level of of the citizens in Germany

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Speaker 1: eighty percent. So it's the success of the UH is

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Speaker 1: proved in a way by the support of the people.

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Speaker 1: I've got a tricky question to wrap up. This is

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Speaker 1: the final one. We've got a presidential race next year

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Speaker 1: at the European Central Bank. Would you endorse a candidate

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Speaker 1: Jean Claude. Do you like anyone right now that you

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Speaker 1: think would make a good ECB presidents never coming back? No, No,

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Speaker 1: I would say that it is a decision made by

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Speaker 1: the heads of state and government. Have food confident that

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Speaker 1: they will find out a very good president amongst a

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Speaker 1: number of a potential president that are extremely good. I

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Speaker 1: think we can have a Frenchman at the top. I

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Speaker 1: would not exclude an thank you so much. It's great,

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Speaker 1: You're always fantastic, always thoughtful. Thank you here with the

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Speaker 1: terrific news flow. Donald Gimba with us. He's senior Vice

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Speaker 1: President CIBC Private Wealth Market for ages at Krey with

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Speaker 1: encyclopedic knowledge of Asia, among other things. I have noticed

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Speaker 1: the humor recently that Australia has not had a recession

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Speaker 1: since you're ute twenty five years. Would you explain why

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Speaker 1: a nation is sophisticated in the is Australia has avoided

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Speaker 1: the recession pain. Maybe it's neither of those things. Maybe

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Speaker 1: it is. Well, first of all, it's a small population.

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Speaker 1: It's six million now up from fifteen when I started going.

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Speaker 1: All of Australia's the size of New York City exactly,

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Speaker 1: or the size of Shanghai. You know, it's it's teeny

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Speaker 1: it's natural resource based. And the and the growth in

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Speaker 1: in the PRC, the People's Republic of China has has

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Speaker 1: stimulated the economy. I remember being in Australia in two

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Speaker 1: thousand and seven UM and they were very proud of

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Speaker 1: the idea that the global economy was facing a bit

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Speaker 1: of a down term, but they were insulated. And there

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Speaker 1: was this joke on the news of the time that

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Speaker 1: this politician had used a map of the world and

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Speaker 1: actually physically moved Australia closer to China. And at the time,

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00:25:48,800 --> 00:25:51,000
Speaker 1: people were laughing about it, but actually that was actually

433
00:25:51,000 --> 00:25:53,640
Speaker 1: what was happening in Australia at the time. Absolutely, and

434
00:25:53,800 --> 00:25:56,639
Speaker 1: the long term at that time in two thousand and

435
00:25:56,640 --> 00:26:00,560
Speaker 1: seven was that will will ride the Chinese tail for

436
00:26:00,600 --> 00:26:03,160
Speaker 1: a while and then we'll jump on the Indian tail

437
00:26:03,680 --> 00:26:07,399
Speaker 1: and that'll keep us going for another fifty years. Now,

438
00:26:07,480 --> 00:26:09,720
Speaker 1: we'll see if that happened, and we'll see whether China

439
00:26:09,760 --> 00:26:12,000
Speaker 1: can carry on as well. You've just been to Asia.

440
00:26:12,520 --> 00:26:14,399
Speaker 1: What is the read on what is happening at the moment?

441
00:26:14,440 --> 00:26:16,359
Speaker 1: Because I found over the last couple of weeks as

442
00:26:16,400 --> 00:26:19,560
Speaker 1: we anticipate this gewin Cee, that the conversation is almost

443
00:26:19,600 --> 00:26:22,480
Speaker 1: formed exclusively from the perspective of the White House. What

444
00:26:22,520 --> 00:26:25,119
Speaker 1: does the White House wants? What will the President try

445
00:26:25,160 --> 00:26:28,280
Speaker 1: and deliver, and not so much about the other side

446
00:26:28,280 --> 00:26:31,000
Speaker 1: of the debate in this bilateral what is China willing

447
00:26:31,040 --> 00:26:34,000
Speaker 1: to give up? Well that that you just hit the

448
00:26:34,080 --> 00:26:36,240
Speaker 1: nail on the head, and Tom and I were talking

449
00:26:36,240 --> 00:26:42,120
Speaker 1: about that briefly forty five minutes ago on TV the Properties.

450
00:26:42,520 --> 00:26:53,720
Speaker 1: It's a good shows. Getting back to the point, the

451
00:26:55,080 --> 00:27:00,000
Speaker 1: question in Asia and in Australia is not the US,

452
00:27:00,080 --> 00:27:03,720
Speaker 1: it's China. Where are they going? What? What is the

453
00:27:03,760 --> 00:27:08,280
Speaker 1: president of China's popularity? What is he accomplishing? Is the

454
00:27:08,320 --> 00:27:12,600
Speaker 1: Belton Road actually working? Are coming undone? And and so

455
00:27:12,880 --> 00:27:18,280
Speaker 1: as we go into this weekend, the question is what's

456
00:27:18,400 --> 00:27:23,320
Speaker 1: China going to give? But remembering they need to save face. Okay,

457
00:27:23,320 --> 00:27:26,280
Speaker 1: this is important. I swoket to Robert Hormat yesterday Investador

458
00:27:26,280 --> 00:27:30,359
Speaker 1: Hormats with his international experience serving President Obama. We talked

459
00:27:30,359 --> 00:27:33,800
Speaker 1: about Jonathan Spence the China Yale University, and everybody has

460
00:27:33,840 --> 00:27:37,000
Speaker 1: to read Jonathan Spence to know China. You lived at

461
00:27:37,040 --> 00:27:39,560
Speaker 1: Don Gimbal. What's the number one thing you would say

462
00:27:39,560 --> 00:27:43,040
Speaker 1: to the President United States about the character of the

463
00:27:43,119 --> 00:27:49,360
Speaker 1: Chinese elite. Uh, they're much more pragmatic. They're much more

464
00:27:49,400 --> 00:27:53,560
Speaker 1: long term orientated. They believe very much in saving face

465
00:27:53,640 --> 00:27:57,439
Speaker 1: at all costs. But they know how serious this trade

466
00:27:57,480 --> 00:28:00,639
Speaker 1: thing is and they and they want to come to

467
00:28:00,680 --> 00:28:06,639
Speaker 1: some agreement. And it's really not about trade and tariffs.

468
00:28:06,960 --> 00:28:09,600
Speaker 1: It's much more about intellectual property in terms of the

469
00:28:09,640 --> 00:28:13,000
Speaker 1: United States. And if if they if the President of

470
00:28:13,040 --> 00:28:17,439
Speaker 1: the United States can understand that can understand that the

471
00:28:17,520 --> 00:28:21,520
Speaker 1: Chinese want to save face, but they're willing to concede

472
00:28:22,080 --> 00:28:26,200
Speaker 1: a bit on intellectual property and on on ownership in

473
00:28:26,359 --> 00:28:29,080
Speaker 1: the pier in the People's Republic. Uh, and then we

474
00:28:29,119 --> 00:28:31,760
Speaker 1: can get an agreement, and I personally think we will.

475
00:28:31,960 --> 00:28:33,919
Speaker 1: I think the United States that has got some allies

476
00:28:33,960 --> 00:28:36,640
Speaker 1: here in the likes of Germany, that we obsess over

477
00:28:36,680 --> 00:28:39,200
Speaker 1: the low paid manufacturing jobs that may or may not

478
00:28:39,240 --> 00:28:41,280
Speaker 1: have shifted to China. The real fear for a lot

479
00:28:41,320 --> 00:28:43,320
Speaker 1: of people and within the administration, from the likes of

480
00:28:43,360 --> 00:28:47,720
Speaker 1: Secretary Ross, is that the maiden Twines China program is

481
00:28:47,760 --> 00:28:51,480
Speaker 1: to take the highly paid, high value added good production

482
00:28:51,760 --> 00:28:53,640
Speaker 1: from the likes of the United States from the likes

483
00:28:53,640 --> 00:28:56,440
Speaker 1: of Germany. And the US is not alone. The Germans

484
00:28:56,440 --> 00:29:00,680
Speaker 1: are also very nervous about what the next ten years.

485
00:29:00,680 --> 00:29:02,920
Speaker 1: You know, you've got a point, but I think you're

486
00:29:02,960 --> 00:29:07,800
Speaker 1: running late. The an awful lot of jobs have left

487
00:29:07,960 --> 00:29:11,600
Speaker 1: China and gone to Indonesia, have gone to the Philippines,

488
00:29:11,640 --> 00:29:14,479
Speaker 1: have gone to my Omar because wage rates in the

489
00:29:14,480 --> 00:29:18,520
Speaker 1: PRC People's Republic have actually risen. So I I think

490
00:29:18,720 --> 00:29:21,000
Speaker 1: that that's kind of my point. Actually, what the Chinese

491
00:29:21,000 --> 00:29:22,840
Speaker 1: do want of the high page jobs, now want the

492
00:29:22,880 --> 00:29:25,880
Speaker 1: lower page jobs. Well, I suspect that then we're going

493
00:29:25,920 --> 00:29:28,520
Speaker 1: to have to figure out how to have value added

494
00:29:28,560 --> 00:29:30,120
Speaker 1: in this country, and the Germans are going to do

495
00:29:30,200 --> 00:29:32,680
Speaker 1: have to do the same thing, because that's that's what

496
00:29:32,760 --> 00:29:35,920
Speaker 1: the future of international trade is. It's where you do

497
00:29:35,960 --> 00:29:40,080
Speaker 1: it best at the at the most reasonable price is

498
00:29:40,080 --> 00:29:41,959
Speaker 1: going to get the business. We're gonna all gonna have

499
00:29:42,040 --> 00:29:44,800
Speaker 1: to departmentalize what we do, dun, I don't know if

500
00:29:44,800 --> 00:29:48,880
Speaker 1: you've ret Robert Kaplan's on Asia Cauldron going around the

501
00:29:48,920 --> 00:29:51,959
Speaker 1: South China see of all these secondary nations and how

502
00:29:52,000 --> 00:29:56,000
Speaker 1: they're all finding capitalism. Which of those nations interests you

503
00:29:56,040 --> 00:30:01,400
Speaker 1: the most? Is the opportunity five and ten years out? Gosh,

504
00:30:01,400 --> 00:30:08,480
Speaker 1: that's a great question, thank you. I would say that

505
00:30:08,560 --> 00:30:12,840
Speaker 1: the Philippines, if they can straighten out their government, What

506
00:30:12,880 --> 00:30:16,720
Speaker 1: does the Philippines do with Mr? They replace him at

507
00:30:16,760 --> 00:30:20,360
Speaker 1: some point? I mean he's has he caved into the

508
00:30:20,440 --> 00:30:22,760
Speaker 1: Chinese and the South China Sea in the last number

509
00:30:22,760 --> 00:30:26,720
Speaker 1: of weeks, Yes, a little bit. Can the US respond

510
00:30:26,760 --> 00:30:30,600
Speaker 1: to that? If we could get the President of the

511
00:30:30,640 --> 00:30:32,640
Speaker 1: United States to close his mouth and turn off his

512
00:30:32,720 --> 00:30:34,800
Speaker 1: Twitter machine, I think we'd be a lot better off.

513
00:30:35,240 --> 00:30:37,280
Speaker 1: But do you think the Philippines is I think the

514
00:30:37,320 --> 00:30:41,240
Speaker 1: Philippines looks good. I think that South Korea, if we

515
00:30:41,280 --> 00:30:45,080
Speaker 1: can get the North Korean thing under control, looks looks interesting. Uh.

516
00:30:45,240 --> 00:30:48,240
Speaker 1: Taiwan is under a cloud, always has been and probably

517
00:30:48,240 --> 00:30:51,840
Speaker 1: will continue to be. But they do good good stuff. UM.

518
00:30:51,960 --> 00:30:56,120
Speaker 1: Indonesia has an election coming up and it's it's not

519
00:30:56,240 --> 00:31:00,320
Speaker 1: looking great to me and UH and miamrs on a

520
00:31:00,400 --> 00:31:05,880
Speaker 1: part and the Malaysia. Uh, it's got a new old

521
00:31:06,000 --> 00:31:09,440
Speaker 1: leader nineties plus years old. UH, and it's got a

522
00:31:09,440 --> 00:31:12,280
Speaker 1: lot of potential. There you go, Don, thank you so much.

523
00:31:12,360 --> 00:31:15,880
Speaker 1: Don gimball with us with the IBC, UH private well Management,

524
00:31:15,960 --> 00:31:19,640
Speaker 1: with his travels through Asia and focus there in Asia,

525
00:31:20,320 --> 00:31:23,120
Speaker 1: Pitt bringing our steam guest. You and him are the

526
00:31:23,200 --> 00:31:25,920
Speaker 1: only two people on this island that remember when you

527
00:31:25,920 --> 00:31:30,040
Speaker 1: could drive across Midtown Manhattan east to west midday and

528
00:31:30,080 --> 00:31:34,920
Speaker 1: actually get somewhere. Probably although a Leon Cooperman knows a

529
00:31:34,960 --> 00:31:37,280
Speaker 1: little bit more about the ins and outs of Wall

530
00:31:37,320 --> 00:31:39,520
Speaker 1: Street than I do. He is, of course a hedge

531
00:31:39,560 --> 00:31:42,880
Speaker 1: fund manager philanthropist. He is the chairman and the chief

532
00:31:42,920 --> 00:31:47,360
Speaker 1: executive of Omega Advisors, his alma mater of his Hunter

533
00:31:47,480 --> 00:31:51,480
Speaker 1: College as well as Columbia University, and he's known for

534
00:31:51,520 --> 00:31:55,200
Speaker 1: starting the Goldman Sacks asset management on Leon Cooperman. Thank

535
00:31:55,240 --> 00:31:58,160
Speaker 1: you very much for being with us today more you

536
00:31:58,240 --> 00:32:02,800
Speaker 1: have previous least said, and I think this is great quote.

537
00:32:03,200 --> 00:32:09,080
Speaker 1: All this fixation and fear about interest rates is misplaced

538
00:32:10,040 --> 00:32:14,640
Speaker 1: based on what we saw in stock and bond markets yesterday.

539
00:32:14,680 --> 00:32:18,880
Speaker 1: Can you explain to someone who's just landed from Mars

540
00:32:18,880 --> 00:32:22,760
Speaker 1: how the market could increase the value of all these

541
00:32:22,800 --> 00:32:28,600
Speaker 1: assets just because of a statement from the Federal Reserve chief. Well,

542
00:32:29,440 --> 00:32:31,360
Speaker 1: if I can start off, I'd like to kind of

543
00:32:31,360 --> 00:32:37,120
Speaker 1: make a recommendation, UM, and that is a suggestion. Why

544
00:32:37,160 --> 00:32:41,160
Speaker 1: don't you guys have on your program a senior person

545
00:32:41,200 --> 00:32:45,360
Speaker 1: from the SEC to explain why they eliminated the uptick rule,

546
00:32:45,520 --> 00:32:48,120
Speaker 1: which was instituted in the mid nineteen thirties in response

547
00:32:48,160 --> 00:32:52,200
Speaker 1: to the abuses, worked effectively for I think seven toy

548
00:32:52,240 --> 00:32:54,040
Speaker 1: odd years, and they took it out in two thousand

549
00:32:54,040 --> 00:32:57,560
Speaker 1: and eight, which gave a runway to these electronic high

550
00:32:57,600 --> 00:33:02,600
Speaker 1: frequency traders ums EETRA. And why we have not dealt

551
00:33:02,680 --> 00:33:06,600
Speaker 1: with the all this algorithmic stuff going on which is

552
00:33:06,640 --> 00:33:09,320
Speaker 1: scaring the hell out of the pubble and creating a

553
00:33:09,320 --> 00:33:13,200
Speaker 1: lot of volatility that that that that is relevant. Are

554
00:33:13,200 --> 00:33:16,320
Speaker 1: you suggesting, Mr Cooperman, that we've had flashed this and

555
00:33:16,360 --> 00:33:19,120
Speaker 1: flashed that and we need something more sustainable by the

556
00:33:19,160 --> 00:33:24,200
Speaker 1: al goes before we get I would steer. I would say, certainly. Look,

557
00:33:24,200 --> 00:33:26,640
Speaker 1: I'm old fashioned, so maybe I'm at a date I'm

558
00:33:26,640 --> 00:33:29,360
Speaker 1: willing to learn. And that's why I suggested get somebody

559
00:33:29,360 --> 00:33:32,200
Speaker 1: from the SEC to explain their position. I don't understand it.

560
00:33:32,640 --> 00:33:35,520
Speaker 1: Everyone and I know of that there's accumulated wealth, whether

561
00:33:35,840 --> 00:33:39,760
Speaker 1: it's Warren Buffett, Mary Gabelly, successful investors, Ken Lynn Gone.

562
00:33:40,160 --> 00:33:44,160
Speaker 1: They buy weakness and they sell strength, and these algos,

563
00:33:44,240 --> 00:33:47,600
Speaker 1: not all of them, but there's one approach where they

564
00:33:47,720 --> 00:33:49,800
Speaker 1: when it's up, they want to buy it. When it's down,

565
00:33:49,840 --> 00:33:53,200
Speaker 1: there to sell it. And it's exaggerates the moves, it

566
00:33:53,400 --> 00:33:55,880
Speaker 1: increases volatility in the market, it scares the public and

567
00:33:55,960 --> 00:33:58,360
Speaker 1: his counterproduction. Well, I'll go with the scares of public.

568
00:33:58,400 --> 00:34:00,880
Speaker 1: There's no question about that. Do you mine weakness in

569
00:34:00,920 --> 00:34:03,920
Speaker 1: the market right now? You know, within the purview of

570
00:34:04,040 --> 00:34:07,000
Speaker 1: Leon Cooperman, Is this a point where you can acquire

571
00:34:07,120 --> 00:34:11,680
Speaker 1: shares three years out, five years out? Absolutely? Well, Look,

572
00:34:11,719 --> 00:34:15,320
Speaker 1: the market is the market for bonds is very homogenious.

573
00:34:15,520 --> 00:34:19,200
Speaker 1: If you're dealing with triple A bonds or triple B bonds,

574
00:34:19,280 --> 00:34:22,600
Speaker 1: bonds are the same. Uh, you know, rating trade with

575
00:34:22,680 --> 00:34:24,359
Speaker 1: an eighth or a quarter of a point of each other.

576
00:34:24,680 --> 00:34:27,040
Speaker 1: The stock market, on the other hand, is very heterogeneous.

577
00:34:27,080 --> 00:34:29,480
Speaker 1: There are stocks now that are three thousand on the

578
00:34:29,560 --> 00:34:33,680
Speaker 1: SMP with the index at the stocks that are with

579
00:34:33,719 --> 00:34:37,520
Speaker 1: the index. And my job is to find things that

580
00:34:37,520 --> 00:34:39,840
Speaker 1: are being miss priced in the market. But I didn't

581
00:34:39,840 --> 00:34:43,239
Speaker 1: really respond to the first question regarding interest rates. Uh,

582
00:34:43,480 --> 00:34:46,600
Speaker 1: if they're not an irrelevancy. But clearly interest rates are

583
00:34:46,640 --> 00:34:49,040
Speaker 1: not at the level that represent a problem for the

584
00:34:49,040 --> 00:34:52,160
Speaker 1: stock market. Every bare market and every recession I know

585
00:34:52,880 --> 00:34:56,040
Speaker 1: has been preceded by high real interest rates. Okay, we

586
00:34:56,120 --> 00:34:59,400
Speaker 1: have if I take the Fed funds rate and addressed

587
00:34:59,360 --> 00:35:02,680
Speaker 1: for inflation zero and if you look back in two thousands,

588
00:35:02,719 --> 00:35:06,080
Speaker 1: and excuse me, if you look back as early as

589
00:35:06,160 --> 00:35:12,120
Speaker 1: the mid seventies bear market cycle, basically before the seventy

590
00:35:12,320 --> 00:35:15,759
Speaker 1: three four downturn, the real Fed funds rate was six

591
00:35:15,840 --> 00:35:19,640
Speaker 1: hundred basis points before the eighty downturn. Who was at

592
00:35:19,760 --> 00:35:23,279
Speaker 1: at basis points before the ninety downturn was about six

593
00:35:23,360 --> 00:35:25,920
Speaker 1: hunt basis points and so get a picture that there's

594
00:35:25,960 --> 00:35:29,040
Speaker 1: high real interest rates. Real interest rates today are zero.

595
00:35:29,480 --> 00:35:31,480
Speaker 1: You know, in the last fifty or sixty or ei

596
00:35:31,560 --> 00:35:35,359
Speaker 1: the years, the SMP multiple has averaged fifteen times. That's

597
00:35:35,640 --> 00:35:37,759
Speaker 1: not far from where you are today. However, in the

598
00:35:37,880 --> 00:35:40,920
Speaker 1: last fifty years, were the SUP multiple average fifteen times,

599
00:35:41,200 --> 00:35:43,800
Speaker 1: the tenure government average about six and a half percent,

600
00:35:44,280 --> 00:35:47,880
Speaker 1: uh currently three percent, and they fed funds rate average

601
00:35:47,920 --> 00:35:51,040
Speaker 1: close to five currently a little over two. So you know,

602
00:35:51,080 --> 00:35:54,520
Speaker 1: the stock market is not you know, the stock market

603
00:35:54,640 --> 00:35:58,000
Speaker 1: valuation is very attractive relative to interest rates if you

604
00:35:58,040 --> 00:36:00,799
Speaker 1: believe interest rates are sustainable at these levels. I think

605
00:36:00,840 --> 00:36:03,399
Speaker 1: the biggest point would make UH, and I think it's

606
00:36:03,440 --> 00:36:06,720
Speaker 1: very important for people who understand. F the tenure government

607
00:36:06,760 --> 00:36:09,000
Speaker 1: belonged to three percent, and I'm one of those guys,

608
00:36:09,080 --> 00:36:11,200
Speaker 1: what it would be higher. Frankly, I thought it would

609
00:36:11,200 --> 00:36:13,719
Speaker 1: be higher. But if the tenure government belongs to three

610
00:36:13,760 --> 00:36:16,680
Speaker 1: percent and funds belong at low two percent, you don't

611
00:36:16,719 --> 00:36:18,760
Speaker 1: make ten or fifteen percent a year in the stock market.

612
00:36:19,000 --> 00:36:20,880
Speaker 1: You make five percent a year in the stock working

613
00:36:21,080 --> 00:36:23,040
Speaker 1: and that's the track of you are this year. I

614
00:36:23,040 --> 00:36:26,480
Speaker 1: think we're up four percent. Leon the heads fund business

615
00:36:26,560 --> 00:36:30,040
Speaker 1: is two percent you make the fee you get or

616
00:36:30,080 --> 00:36:33,000
Speaker 1: a big hunk of the piece over a hurdle rate.

617
00:36:33,520 --> 00:36:38,239
Speaker 1: Is the formula broken? Is a formula dead? Well, it's

618
00:36:38,239 --> 00:36:43,680
Speaker 1: a very complex question and requires a complex answer. First,

619
00:36:43,880 --> 00:36:46,239
Speaker 1: the premission you have to accept is to get a

620
00:36:46,280 --> 00:36:49,440
Speaker 1: premium fee, you have to deliver premium performance. Since you

621
00:36:49,480 --> 00:36:52,920
Speaker 1: can't deliver premium performance, you're not gonna get a premium fee.

622
00:36:53,440 --> 00:36:56,279
Speaker 1: But we've been through an unusual period. I go back

623
00:36:56,320 --> 00:37:00,239
Speaker 1: to two thousand and eight. Everybody wanted for them to

624
00:37:00,280 --> 00:37:02,320
Speaker 1: the economy. They wanted to blame the investment banks, to

625
00:37:02,360 --> 00:37:07,640
Speaker 1: commercial banks, the rate engagencies, the broker's industry, the government.

626
00:37:08,040 --> 00:37:10,960
Speaker 1: Nobody wanted to blame the individual for the conduct of

627
00:37:11,000 --> 00:37:13,680
Speaker 1: the financial affairs, saying that they had no responsibility to

628
00:37:13,680 --> 00:37:17,279
Speaker 1: figure out what they could afford and what they can afford. Similarly,

629
00:37:17,320 --> 00:37:20,239
Speaker 1: if in two thousand and nine, I've said to you,

630
00:37:20,480 --> 00:37:22,560
Speaker 1: and we came as close to saying that as anybody.

631
00:37:22,560 --> 00:37:25,919
Speaker 1: Steve Irono and my partner who coordinates love about macro

632
00:37:26,040 --> 00:37:29,479
Speaker 1: research work. We were very bullish in two thousand and nine.

633
00:37:29,520 --> 00:37:31,920
Speaker 1: But if I said to you, you don't want to

634
00:37:31,960 --> 00:37:35,400
Speaker 1: be in an absolute return manager. You want to have

635
00:37:35,440 --> 00:37:37,879
Speaker 1: your money with a relative return manager. So a hedge

636
00:37:37,920 --> 00:37:40,120
Speaker 1: fund is not a good place to have your money

637
00:37:40,160 --> 00:37:42,719
Speaker 1: because we're gonna have a ten year straight up bullmark.

638
00:37:42,800 --> 00:37:45,160
Speaker 1: In a ten year straight up economy, you would have

639
00:37:45,200 --> 00:37:49,239
Speaker 1: had me arrested for being somewhat demented. Okay, And that's

640
00:37:49,280 --> 00:37:52,480
Speaker 1: what's happened. And so the individual that made a decision

641
00:37:52,520 --> 00:37:54,200
Speaker 1: in two thousand nine and they wanted to be in

642
00:37:54,239 --> 00:37:56,480
Speaker 1: a hedge fund, they were not. And they were in

643
00:37:56,520 --> 00:37:59,920
Speaker 1: a vehicle that was designed to be absolute return oriented,

644
00:38:00,440 --> 00:38:03,360
Speaker 1: that was not gonna be fully invested, was going to

645
00:38:03,440 --> 00:38:06,440
Speaker 1: carry a short book, and having a short book is

646
00:38:06,600 --> 00:38:10,040
Speaker 1: a hedge against prospecty in a one way bull market.

647
00:38:10,360 --> 00:38:14,719
Speaker 1: So now the question becomes today at twenty wherever we

648
00:38:14,760 --> 00:38:18,239
Speaker 1: are in the SMP, whatever the number is, you know,

649
00:38:18,360 --> 00:38:20,759
Speaker 1: nine years into a bull cycle, do you want to

650
00:38:20,800 --> 00:38:24,600
Speaker 1: be in a long only um product. So you know,

651
00:38:24,960 --> 00:38:27,600
Speaker 1: I don't complain. I don't complain. It's like Henry Ford

652
00:38:27,600 --> 00:38:29,840
Speaker 1: when have got cooked, you know, driving on a highway

653
00:38:29,840 --> 00:38:33,400
Speaker 1: with a young chick. Uh. He said, you know, don't complain,

654
00:38:33,440 --> 00:38:35,560
Speaker 1: don't explain. You know, you have to live in the

655
00:38:35,600 --> 00:38:37,880
Speaker 1: world we're in. And I say that if we continue

656
00:38:37,880 --> 00:38:41,080
Speaker 1: in a straight up bull market, which I doubt. Basically,

657
00:38:41,120 --> 00:38:43,319
Speaker 1: you want to be in a long only strategy and

658
00:38:43,400 --> 00:38:46,160
Speaker 1: you don't want to be in an absolute return strategy.

659
00:38:46,520 --> 00:38:50,239
Speaker 1: So you know, but the hedge fund model is unequivocally

660
00:38:50,280 --> 00:38:52,880
Speaker 1: being challenged. People are tired of paying a premium fee

661
00:38:53,080 --> 00:38:57,120
Speaker 1: to leg some in this and until that changes, the

662
00:38:57,640 --> 00:38:59,560
Speaker 1: industry is gonna be in the defensive mode, which had

663
00:38:59,560 --> 00:39:01,680
Speaker 1: nothing to do with my decision to retire. To be

664
00:39:01,719 --> 00:39:05,120
Speaker 1: honest with you, you know, my decision was totally based

665
00:39:05,120 --> 00:39:07,040
Speaker 1: on seventy five years old. I've been doing this over

666
00:39:07,120 --> 00:39:09,879
Speaker 1: fifty years. I'm giving my money away to charity, and

667
00:39:10,480 --> 00:39:14,440
Speaker 1: basically it's there were two things I said to my investors.

668
00:39:14,440 --> 00:39:17,520
Speaker 1: I wrote him a letter. I said that basically, statistically,

669
00:39:17,719 --> 00:39:20,520
Speaker 1: if you make it a past sixty five and cancered

670
00:39:20,560 --> 00:39:22,680
Speaker 1: US and get you on average, you make it to

671
00:39:22,800 --> 00:39:25,680
Speaker 1: eighty five. I hope to be better than average. But

672
00:39:25,680 --> 00:39:27,600
Speaker 1: if I'm just average, I got ten years left. Since

673
00:39:27,600 --> 00:39:29,640
Speaker 1: I turned seventy five six weeks ago, I said, I

674
00:39:29,640 --> 00:39:31,279
Speaker 1: don't want to spend the last ten years of my life.

675
00:39:32,040 --> 00:39:36,160
Speaker 1: Let's go to the statistical marvel. Well, Leon Cooperman, I

676
00:39:36,400 --> 00:39:38,040
Speaker 1: want to ask you if you have a green thumb

677
00:39:39,640 --> 00:39:43,480
Speaker 1: have I have? That whole thing is built so out

678
00:39:43,480 --> 00:39:45,920
Speaker 1: of proportion, it's not even funny. What is going on

679
00:39:46,000 --> 00:39:49,560
Speaker 1: with that whole cannabis industry? And tell us your perspectively,

680
00:39:49,640 --> 00:39:52,879
Speaker 1: and you're you're you're asking the wrong guy. I am

681
00:39:52,960 --> 00:39:55,560
Speaker 1: very friendly with the generalman John Coffler, who I have

682
00:39:55,680 --> 00:39:59,040
Speaker 1: known for forty years, a real gentleman. He calls me up,

683
00:39:59,080 --> 00:40:01,560
Speaker 1: he tells me your son a starting a cannabis company.

684
00:40:02,080 --> 00:40:04,560
Speaker 1: He'd like to meet me. I meet with Ben Kabla,

685
00:40:04,840 --> 00:40:08,000
Speaker 1: very impressed, very fine young man, very impressed. I put

686
00:40:08,000 --> 00:40:10,480
Speaker 1: a very small sum of money in. They have a

687
00:40:10,560 --> 00:40:13,759
Speaker 1: conference call, okay, And I asked a question on the

688
00:40:13,800 --> 00:40:15,640
Speaker 1: conference call. The next thing, I know the New York

689
00:40:15,640 --> 00:40:17,759
Speaker 1: Post as my picture in it, as a cannabis kid,

690
00:40:18,239 --> 00:40:22,600
Speaker 1: as a cannabis king. You know, it's obviously an explosive industry,

691
00:40:22,680 --> 00:40:25,600
Speaker 1: but there's gonna be a lot of money that area.

692
00:40:25,800 --> 00:40:27,560
Speaker 1: Let me explain. Let me answer the question before you

693
00:40:27,560 --> 00:40:32,640
Speaker 1: go on. Because of that picture in the post. Okay,

694
00:40:32,680 --> 00:40:35,880
Speaker 1: every new issue in this area calls me up and

695
00:40:35,920 --> 00:40:38,120
Speaker 1: wants to come and visit me. And some thirty five

696
00:40:38,239 --> 00:40:40,920
Speaker 1: year old kids sits in my office and explains to

697
00:40:40,960 --> 00:40:43,320
Speaker 1: me his vision. And if what he tells me is

698
00:40:43,360 --> 00:40:45,520
Speaker 1: accurate on paper, he's worth a half a billion to

699
00:40:45,560 --> 00:40:48,600
Speaker 1: a billion dollars. I know that that doesn't make any sense.

700
00:40:48,960 --> 00:40:51,440
Speaker 1: There's gonna be enormous shakeout. Yes, the industry is going

701
00:40:51,480 --> 00:40:53,799
Speaker 1: to grow, the nation is going to get high and

702
00:40:53,880 --> 00:40:55,680
Speaker 1: this stuff. But you know, you have to figure out

703
00:40:55,680 --> 00:40:57,480
Speaker 1: who the winners and losers are. It will be very,

704
00:40:57,560 --> 00:40:59,560
Speaker 1: very careful. If I was the public and we got

705
00:40:59,600 --> 00:41:01,840
Speaker 1: one minute it left. Have you ever had a public

706
00:41:01,960 --> 00:41:06,040
Speaker 1: relations team? Has there ever been a group that's had

707
00:41:06,080 --> 00:41:11,360
Speaker 1: to control you and get you on message? I'm on message.

708
00:41:11,360 --> 00:41:13,879
Speaker 1: Just ask me a questions. I'll give you a question. Yeah,

709
00:41:13,960 --> 00:41:16,480
Speaker 1: I'll give you I'm totally What do you do right now?

710
00:41:16,520 --> 00:41:18,480
Speaker 1: I want you to know what to do with Apple computer?

711
00:41:18,640 --> 00:41:22,080
Speaker 1: Right now? Apple's imploded, the world's over, Tim Cook's of failure.

712
00:41:22,400 --> 00:41:24,080
Speaker 1: What do you do with Apple? Come on, I have

713
00:41:24,200 --> 00:41:26,319
Speaker 1: my money and Google, I have my money. You know

714
00:41:26,360 --> 00:41:28,000
Speaker 1: I know a lot about what I own. I don't

715
00:41:28,040 --> 00:41:30,560
Speaker 1: know a lot about it. I don't know. You're long Google,

716
00:41:30,680 --> 00:41:33,400
Speaker 1: tell us give us the belief story on Google quickly?

717
00:41:33,640 --> 00:41:37,360
Speaker 1: You know the market sells the fifteen times earnings. Google's

718
00:41:37,400 --> 00:41:39,480
Speaker 1: the twenty times the market is going to grow six percent.

719
00:41:39,480 --> 00:41:42,439
Speaker 1: Google's gonna go to sitting on a fortress balance sheet,

720
00:41:42,760 --> 00:41:46,360
Speaker 1: highly diversified business. It's cheap relative to its growth. You

721
00:41:46,440 --> 00:41:49,000
Speaker 1: look in two thousands, Cisco is a hundred times earnings.

722
00:41:49,600 --> 00:41:53,440
Speaker 1: You know, we're a totally different worlds. Okay, So you

723
00:41:53,480 --> 00:41:55,520
Speaker 1: know I find plenty of things to do and I'm

724
00:41:55,560 --> 00:41:57,640
Speaker 1: on message. You don't need a pr gout to control me.

725
00:41:57,840 --> 00:41:59,800
Speaker 1: I respond to your questions. You asked me a question.

726
00:42:00,000 --> 00:42:02,839
Speaker 1: I believe that's what we got. Leon Cooperman, thank you

727
00:42:02,880 --> 00:42:05,480
Speaker 1: so much with my advisors and thrilled these with us.

728
00:42:05,480 --> 00:42:10,000
Speaker 1: And we're not absolutely thrilled to bring in a mayor

729
00:42:10,960 --> 00:42:12,880
Speaker 1: of a great accomplishment. He is a mayor of a

730
00:42:12,880 --> 00:42:15,160
Speaker 1: small city on the West coast, Los Angeles. We said

731
00:42:15,160 --> 00:42:18,319
Speaker 1: good morning to everyone at Sirius Sex him listening in

732
00:42:18,400 --> 00:42:21,520
Speaker 1: Los Angeles. And before we dive into all the usual

733
00:42:21,600 --> 00:42:25,080
Speaker 1: questions and the rest of it, I just want you

734
00:42:25,120 --> 00:42:28,760
Speaker 1: to parse what it's like when you first nail Oscar

735
00:42:28,840 --> 00:42:32,640
Speaker 1: Peterson and B flat. There's there's something on the piano.

736
00:42:32,880 --> 00:42:35,880
Speaker 1: Oscar Peterson and B flat is an act of God,

737
00:42:36,000 --> 00:42:38,319
Speaker 1: isn't it? It is an act of God, for sure,

738
00:42:38,480 --> 00:42:40,640
Speaker 1: the finest who ever played the piano. And I have

739
00:42:40,640 --> 00:42:43,439
Speaker 1: a piano in my office and I can only hope

740
00:42:43,440 --> 00:42:46,839
Speaker 1: to play a fraction as well of Oscar Peterson did.

741
00:42:47,040 --> 00:42:49,440
Speaker 1: This is a great idea. I could play my fracture

742
00:42:49,560 --> 00:42:52,799
Speaker 1: lousy Garcetti imitation piano here and let's do it. I

743
00:42:52,840 --> 00:42:55,040
Speaker 1: think that we can find if we had a piano

744
00:42:55,120 --> 00:42:57,200
Speaker 1: right now, we could do it from Washington. While we're talking,

745
00:42:57,320 --> 00:43:00,840
Speaker 1: you know, Pim, please tell us a little bit about

746
00:43:01,600 --> 00:43:06,480
Speaker 1: what tune you believe the Democrats should play when they

747
00:43:06,680 --> 00:43:12,680
Speaker 1: enter the majority in the House in January. What tune

748
00:43:12,680 --> 00:43:15,759
Speaker 1: should they play? Uh? I don't know. I think that

749
00:43:16,440 --> 00:43:20,040
Speaker 1: probably sisters are doing it for themselves. Something where we're

750
00:43:20,080 --> 00:43:24,760
Speaker 1: finally stepping up and actually taking agency back and standing

751
00:43:24,840 --> 00:43:27,920
Speaker 1: up for a culture not of corruption and cruelty, but

752
00:43:28,000 --> 00:43:31,600
Speaker 1: hopefully of action and getting stuff done for the American people.

753
00:43:31,600 --> 00:43:33,360
Speaker 1: That's where I live as a mayor, and I'm excited

754
00:43:33,400 --> 00:43:37,480
Speaker 1: to see Congress. I met yesterday with Chairman de Fasio,

755
00:43:37,560 --> 00:43:40,799
Speaker 1: who heads up transportation and infrastructure, and I'm hopeful we'll

756
00:43:40,800 --> 00:43:43,080
Speaker 1: actually start fixing this country and that I hope this

757
00:43:43,120 --> 00:43:46,200
Speaker 1: Congress focuses on that first. When you talk about fixing

758
00:43:46,200 --> 00:43:50,080
Speaker 1: the country, you're talking about infrastructure spending. Absolutely. UM. I

759
00:43:50,120 --> 00:43:53,440
Speaker 1: started a group called Accelerator for America with fellow mayors

760
00:43:53,480 --> 00:43:56,320
Speaker 1: that we founded bring together folks from industry and labor

761
00:43:56,480 --> 00:43:59,919
Speaker 1: and nonprofit world to kind of say, well, Washington, sleep,

762
00:44:00,080 --> 00:44:03,439
Speaker 1: We're gonna kind of take America's destiny ourselves and move

763
00:44:03,520 --> 00:44:06,960
Speaker 1: forward infrastructure and good jobs and opportunity zones. And we

764
00:44:07,080 --> 00:44:09,560
Speaker 1: just met in Philadelphia. We had a poll of a

765
00:44:09,640 --> 00:44:12,440
Speaker 1: thousand voters that we're going to be releasing this week

766
00:44:12,880 --> 00:44:17,000
Speaker 1: and UM, after healthcare and jobs, number three was infrastructure

767
00:44:17,160 --> 00:44:19,640
Speaker 1: and having campaigned for people around the country over the

768
00:44:19,680 --> 00:44:24,120
Speaker 1: last few months, from Mississippi to Oklahoma to California, everywhere.

769
00:44:24,280 --> 00:44:27,879
Speaker 1: Obviously the Midwest, people want the roads paved, they want

770
00:44:27,920 --> 00:44:30,319
Speaker 1: the bridges repaired, they want jobs, and they want, you know,

771
00:44:30,440 --> 00:44:34,040
Speaker 1: infrastructure to be world class again. Am study of Los

772
00:44:34,040 --> 00:44:37,799
Speaker 1: Angeles with this folks coast to coast. David Wasserman over

773
00:44:37,840 --> 00:44:41,080
Speaker 1: at Cook Political Report just did a stunning summary of

774
00:44:41,080 --> 00:44:44,600
Speaker 1: what the House Democrats will represent in the new Congress.

775
00:44:44,640 --> 00:44:49,759
Speaker 1: Sevent of all Asian, of all Latinos, sixty of all

776
00:44:49,800 --> 00:44:53,799
Speaker 1: African Americans sixty of all college grads, and on and

777
00:44:53,880 --> 00:44:57,359
Speaker 1: on and on, and it's a great trend led by

778
00:44:57,400 --> 00:45:03,359
Speaker 1: your Los Angeles of a more demographically diverse America. I

779
00:45:03,400 --> 00:45:06,839
Speaker 1: want you to speak to the tent and Republicans left

780
00:45:06,880 --> 00:45:10,640
Speaker 1: in your state. How do they adapt and adjust to

781
00:45:10,719 --> 00:45:16,040
Speaker 1: the new America that's been led by the diversity of California. Well,

782
00:45:16,040 --> 00:45:18,160
Speaker 1: I'm not going to give advice to the party, but

783
00:45:18,320 --> 00:45:21,719
Speaker 1: you know, I have of my city is registered as Republicans.

784
00:45:21,719 --> 00:45:24,000
Speaker 1: That's a million people, and I would just say, you know,

785
00:45:24,800 --> 00:45:27,160
Speaker 1: I work for you to um. You know, we raised

786
00:45:27,160 --> 00:45:29,680
Speaker 1: the minimum wage together because a majority of Republicans do

787
00:45:29,800 --> 00:45:33,000
Speaker 1: believe in that, contrary to the Republican leadership here in

788
00:45:33,040 --> 00:45:36,279
Speaker 1: Washington d c Um. We also lowered the city's business tax,

789
00:45:36,280 --> 00:45:39,000
Speaker 1: the traditionally kind of Republican idea. But Democrats are behind

790
00:45:39,040 --> 00:45:41,680
Speaker 1: that too because they want to see small businesses start

791
00:45:41,760 --> 00:45:44,399
Speaker 1: up and be prosperous in my city. It's I would

792
00:45:44,480 --> 00:45:47,120
Speaker 1: just tell them put down your party affiliations. You know,

793
00:45:47,320 --> 00:45:49,320
Speaker 1: if you need to duke get out election time, fine,

794
00:45:49,680 --> 00:45:51,879
Speaker 1: but let's figure out a pathway forward of the things

795
00:45:51,880 --> 00:45:54,600
Speaker 1: that unite us. UM. You know, we made community college

796
00:45:54,640 --> 00:45:57,040
Speaker 1: free in l A. And more kids went to college

797
00:45:57,080 --> 00:45:59,319
Speaker 1: the next year in our community college system from our

798
00:45:59,320 --> 00:46:02,600
Speaker 1: public school. And so I think Republicans care about that stuff.

799
00:46:02,640 --> 00:46:04,600
Speaker 1: And if they want to be a party of extremism,

800
00:46:04,600 --> 00:46:07,759
Speaker 1: they can turn into a permanent boutique party in California.

801
00:46:08,280 --> 00:46:10,279
Speaker 1: But if they want to get together with us, we're

802
00:46:10,280 --> 00:46:12,800
Speaker 1: more than happy to work together. Um, you know, between

803
00:46:12,800 --> 00:46:15,439
Speaker 1: elections for sure. And I think if they want any

804
00:46:15,480 --> 00:46:17,360
Speaker 1: sense of ever being back in power, they've got to

805
00:46:17,400 --> 00:46:20,160
Speaker 1: listen to Americans, and they've got to listen to the future,

806
00:46:20,600 --> 00:46:23,760
Speaker 1: which is very much embodied in Los Angeles and California.

807
00:46:23,960 --> 00:46:27,360
Speaker 1: America saidy, could you speak to the issue of natural

808
00:46:27,719 --> 00:46:32,719
Speaker 1: disasters that afflict not only California but many other places

809
00:46:32,760 --> 00:46:36,799
Speaker 1: around the world and are accentuated by the effects of

810
00:46:36,920 --> 00:46:40,080
Speaker 1: climate change, and what you believe should be done in

811
00:46:40,200 --> 00:46:44,399
Speaker 1: order to preserve the current infrastructure that exists. Well, well,

812
00:46:44,400 --> 00:46:47,279
Speaker 1: mayors are the political first responders to these events. Um,

813
00:46:47,320 --> 00:46:50,479
Speaker 1: you can't tell Sylvester Turner in Houston that climate change

814
00:46:50,480 --> 00:46:53,719
Speaker 1: isn't real? Still real rebuilding from Harvey. Um, you know

815
00:46:53,760 --> 00:46:56,840
Speaker 1: local officials in the Florida Panhandle and most you know,

816
00:46:56,880 --> 00:47:00,320
Speaker 1: notably us in California over the last couple of weeks,

817
00:47:00,360 --> 00:47:03,279
Speaker 1: with the heroic work of our firefighters and others who

818
00:47:03,320 --> 00:47:06,520
Speaker 1: responded to these fires. I loved what Jerry Brown said.

819
00:47:06,560 --> 00:47:09,040
Speaker 1: He said, this is the new abnormal, and I think

820
00:47:09,080 --> 00:47:11,399
Speaker 1: it's it's real. It's one of the reasons, with help

821
00:47:11,440 --> 00:47:14,200
Speaker 1: from Mike Bloomberg and others, I serve on the C forty,

822
00:47:14,280 --> 00:47:17,880
Speaker 1: the Global Organization of Mayors confirmed Climate Change and founded

823
00:47:18,080 --> 00:47:20,239
Speaker 1: Climate Mayors, which is the American group. Now that I've

824
00:47:20,239 --> 00:47:22,680
Speaker 1: built a four D and ten cities that have said, hey,

825
00:47:22,719 --> 00:47:24,399
Speaker 1: if this White House is at we're in and we're

826
00:47:24,400 --> 00:47:26,839
Speaker 1: going to implement Paris where we live, you are at

827
00:47:26,880 --> 00:47:32,160
Speaker 1: the absolute nexus of copyright and intellectual property in this nation.

828
00:47:32,200 --> 00:47:35,680
Speaker 1: I mean that is the perception of your Hollywood, your

829
00:47:35,760 --> 00:47:40,400
Speaker 1: Los Angeles. What's your advice to President Trump to actually

830
00:47:40,440 --> 00:47:44,880
Speaker 1: get fixed what everyone agrees is a major issue with China.

831
00:47:45,320 --> 00:47:47,200
Speaker 1: You know, I think he's saying the right things. I

832
00:47:47,239 --> 00:47:50,120
Speaker 1: just don't see much of a strategy. Um. I think

833
00:47:50,120 --> 00:47:53,440
Speaker 1: that it's more about the fireworks of tariffs, which have

834
00:47:53,640 --> 00:47:56,560
Speaker 1: a huge impact. Those are taxes on us, and you know,

835
00:47:56,560 --> 00:47:58,759
Speaker 1: whether it's stock workers in l A or whether it's

836
00:47:58,800 --> 00:48:01,399
Speaker 1: construction workers that are slowing down projects because of soaring

837
00:48:01,400 --> 00:48:03,840
Speaker 1: steel costs. We have to have a strategy. So I

838
00:48:03,840 --> 00:48:05,840
Speaker 1: think we act tough. But you know, I've told that

839
00:48:05,880 --> 00:48:11,280
Speaker 1: directly to Chinese officials. I've said, look, that's absolutely crazy

840
00:48:11,320 --> 00:48:14,080
Speaker 1: that you have a quota on movies from Hollywood. Right now,

841
00:48:14,120 --> 00:48:16,040
Speaker 1: I said, aren't you a strong country? Now? I think

842
00:48:16,040 --> 00:48:18,160
Speaker 1: we have to make that argument. You've grown up. You

843
00:48:18,200 --> 00:48:20,640
Speaker 1: are a powerful nation. If we're going to be a

844
00:48:20,680 --> 00:48:23,160
Speaker 1: relationship of equals, we have to be treated as equals.

845
00:48:23,160 --> 00:48:26,120
Speaker 1: And it's a great place to start. Twenty seconds America study.

846
00:48:26,200 --> 00:48:28,399
Speaker 1: How many times have you seen a star is born?

847
00:48:29,520 --> 00:48:35,640
Speaker 1: Which one there? That's the l A answer with Mr

848
00:48:35,680 --> 00:48:39,840
Speaker 1: Cooper and I haven't seen. I've been too busy working

849
00:48:39,880 --> 00:48:41,920
Speaker 1: for the people of l A and changed in the

850
00:48:42,000 --> 00:48:45,360
Speaker 1: house out. But I saw the Barber Streissan one. I

851
00:48:45,360 --> 00:48:47,520
Speaker 1: haven't seen the two earlier ones, so I'd say one

852
00:48:47,520 --> 00:48:51,240
Speaker 1: time between the four. But I'm looking forward to Cooper

853
00:48:51,760 --> 00:48:55,520
Speaker 1: very good. I'm sure you will. America Study of Lesie Angles.

854
00:48:55,600 --> 00:48:59,400
Speaker 1: Thank you so much. Thanks for listening to the Bloomberg

855
00:48:59,400 --> 00:49:05,359
Speaker 1: Surveillance podcast. Subscribe and listen to interviews on Apple Podcasts, SoundCloud,

856
00:49:05,760 --> 00:49:09,960
Speaker 1: or whichever podcast platform you prefer. I'm on Twitter at

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Speaker 1: Tom Keene before the podcast. You can always catch us worldwide.

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Speaker 1: I'm Bloomberg Radio