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Speaker 2: search Bloomberg Podcast. Policy changes. A lot of folks are
Speaker 2: highlighting the financial services industry to benefit from a lot
Speaker 2: of policy changes. The absolute author on all of the
Speaker 2: Bloomberg Intelligence work on this is Nathan Dean, Senior policy
Speaker 2: ANALYSTO Bloomberg Intelligence. Nathan, I know you guys have gamed
Speaker 2: this out. You've kind of looked at financial industry some
Speaker 2: of the regulations that are that it's dealing with now
Speaker 2: and that are still kind of on the table. What
Speaker 2: do you think you're with what we're seeing here with
Speaker 2: the elections.
Speaker 3: Yeah, so, you know, with the fal services industry, it
Speaker 3: all came down to this rule called the Basel three endgame.
Speaker 3: You know, as outlined by the FED. You're talking about
Speaker 3: a nine percent increase for the GESIPS, the Bank America
Speaker 3: JP Morgan's of you will about three to four percent
Speaker 3: in terms of the regional banks. Now, with President Trump
Speaker 3: winning the Office of the Control of the Currency is
Speaker 3: likely going to flip on day one of next year.
Speaker 3: So this rule is effectively indefinitely delayed. You know this,
Speaker 3: you would need to fed the OCC and the FDIC
Speaker 3: to move forward. Now we think at thirty percent chance
Speaker 3: of it being finalized by twenty twenty six. The reason
Speaker 3: why we're not down to zero is because there is
Speaker 3: potential out there that a Republican led regulator may try
Speaker 3: and move forth with it, but the idea is going
Speaker 3: to be completely different and they're going to essentially start
Speaker 3: from scratch. So if you're talking about capital requirements on
Speaker 3: a global scale, remember the European banks have already implemented
Speaker 3: their version of this. There could be some questions here
Speaker 3: on if the Americans aren't going to do this, why
Speaker 3: should the Europeans on the same side. So certainly a
Speaker 3: lot to play here in terms of the you know,
Speaker 3: deregulatory efforts amongst the investment banks.
Speaker 4: Nathan Dean, you are the consummate Washington insider. When I
Speaker 4: need to get my IF's answered about what's happening in Washington,
Speaker 4: I call you so I have a question here. What
Speaker 4: name should I be looking at more closely than others?
Speaker 4: Bill Lackman, Elon Musk's got Bess and Howard Lucknet. I mean,
Speaker 4: talk to us about what the potential for a Trump
Speaker 4: cabinet may very well look like.
Speaker 2: Yeah.
Speaker 3: So you know, obviously the big question is you going
Speaker 3: to get the Wall Street President Trump? Or are you
Speaker 3: going to get a populist President Trump? And that's the
Speaker 3: question that I don't think anybody really has an answer
Speaker 3: to because you know, for example, at the SEC, you
Speaker 3: know you have Commissioner Hester Purse, who I think would
Speaker 3: be a very popular SEC chair coming from more of
Speaker 3: the conservative wing the populist side of the party. But
Speaker 3: then there's also going to be folks like former J. Clayton.
Speaker 3: You know, obviously his name's been in there for a Treasury,
Speaker 3: but you know, somebody like a disciple, if you will,
Speaker 3: a commissioner or chairman Clayton could be also a name
Speaker 3: at the SEC. So the question that we have, and
Speaker 3: we should find out about this more over the next
Speaker 3: few weeks, is are you going to get the populist Trump?
Speaker 3: Are the Wall Street Trump, and I think you're probably
Speaker 3: going to get a combination of the both, where if
Speaker 3: President Trump cares about your issue in terms of he
Speaker 3: specifically wants to be involved, you'll get a populist Trump.
Speaker 3: If it's something where he's happy to delegate to other
Speaker 3: folks in Washington, then I think you may get a
Speaker 3: Wall Street Trump.
Speaker 4: Only think it took a long time for Trump to
Speaker 4: pick his cabinet and his players back the first time around.
Speaker 4: Apparently he's much more prepared this time. Talk to us
Speaker 4: about timing around some of those selections. When can we appear,
Speaker 4: When can we expect to hear something there?
Speaker 3: Yeah, so I think you're gonna hear it, probably before,
Speaker 3: probably within the next few weeks. I mean, to your point,
Speaker 3: you know they've been talking about this for some time.
Speaker 3: But I would also note that the Republicans have somewhere
Speaker 3: between fifty two potentially as much as fifty six seats
Speaker 3: in the Senate, and as a result, the Republican Senate
Speaker 3: is going to be able to confirm a lot of
Speaker 3: President Trump's appointees on a much quicker basis than if
Speaker 3: you were to have a Democrat controlled Senate or even
Speaker 3: a fifty or fifty one. Now why do we care
Speaker 3: about this, Well, because the faster that those regulatory leaders
Speaker 3: come in place, the faster they can start these deregulatory efforts.
Speaker 3: You know, a regulatory leader, for the most part, can't
Speaker 3: just come in and say, right, this regulation, We're going
Speaker 3: to just completely roll it back on day one. It's
Speaker 3: gonna take nine months, twelve months, if not even two
Speaker 3: years to move forth on that effort. So the quicker
Speaker 3: those regulatory leaders come in place, the quicker the de
Speaker 3: regulatory effort can take place.
Speaker 2: Red headline crossing the Bloomberg terminal. Harris to deliver remarks
Speaker 2: at Howard University at four pm Eastern time, so we
Speaker 2: will have more reporting on that. Nathan is Brice president elect?
Speaker 2: I mean, is President elect Trump is see had Lamed
Speaker 2: Duck president? Is that a fair way to look at it? Now?
Speaker 3: So generally, and I say this generally, in the second
Speaker 3: term of a presidential term, if you will think President
Speaker 3: Obama or President George W. Bush, you usually have about
Speaker 3: eighteen months to expend your political capital. First one hundred
Speaker 3: days of the presidency is critical. But as soon as
Speaker 3: Congress begins to think about their midterm elections, and then
Speaker 3: as the result when they come back, you know, why
Speaker 3: should they stick their necks out for the president who's
Speaker 3: going to be gone. So what do presidents tend to do.
Speaker 3: They tend to go internationally, and they tend to travel
Speaker 3: because the power of the presidency it's more powerful there. So,
Speaker 3: you know, we do think President Trump is going to
Speaker 3: be spending a lot of time abroad Ukraine, Middle East,
Speaker 3: for example. There's a lot of stuff that he can
Speaker 3: do there. But I wouldn't call him a lame duck
Speaker 3: just yet, because again, the power of the presidency is
Speaker 3: more powerful there.
Speaker 4: Nathan, it'sok till ten thirty two am Eastern Time this
Speaker 4: morning for China's Mystery of Foreign Affairs To congratulate President
Speaker 4: elect Donald Trump. You know that China tariffs are coming.
Speaker 4: You're betting man, what kind of tariff regime do you
Speaker 4: think we're entering into. Is it going to be that
Speaker 4: ten percent broad? Is it going to be sixty percent
Speaker 4: on China? What are you hearing?
Speaker 3: So this is where I think the process of tariff
Speaker 3: is key. Now, remember, let's just say January twentieth, President
Speaker 3: comes in. You see a red line over the terminal.
Speaker 3: You say, President Trump signs an executive order saying tariffs
Speaker 3: are coming. In the language of that executive order, however,
Speaker 3: I think you'll see language that says the tariff is
Speaker 3: not coming for two hundred and seventy days or three
Speaker 3: hundred and sixty five days. Why, because tariffs are negotiation tools.
Speaker 3: President Trump doesn't know what the reciprocal tariff on China
Speaker 3: from China would be, and President Trump wants to use
Speaker 3: this as a negotiation. So I think there's going to
Speaker 3: be language in there allowing flexibility, allowing President Trump to
Speaker 3: come back and say, eh, maybe not sixty percent, maybe
Speaker 3: we'll go to ten percent because gave us a win
Speaker 3: or something like that. So what we're saying is watch
Speaker 3: out for that headline risk in the first or second
Speaker 3: quarter of next year. But then you're gonna get probably
Speaker 3: six months to actually truly understand what that tariff will
Speaker 3: look like before it goes into fruition.
Speaker 2: All right, Nathan, as always, thank you very much for
Speaker 2: your analysis. Nathan Dean see your policy on US at
Speaker 2: Bloomberg Intelligence. You find all of Nathan's research at Big
Speaker 2: on the Terminal. He really boils down some of this
Speaker 2: very difficult policy minutia into something that like real people
Speaker 2: can you know that real people can understand and use.
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Speaker 2: Live here in our Bloomberg and Actor Brokers studio, streaming
Speaker 2: live on YouTube as well. All Right, we've got a
Speaker 2: Republican in the White House, got a Republican Senate in
Speaker 2: the houses yet to be determined. What does it mean
Speaker 2: for policy? Our next guest has got some thoughts here.
Speaker 2: Ed Mills, managing director in Washington, Policy analysts for Raymond
Speaker 2: James ed, Okay, it's kind of a red wave. The
Speaker 2: House is still to be determined. Now, what what policies
Speaker 2: should we expect from a second Trump administration?
Speaker 5: So I think one of the questions we've been answering
Speaker 5: for folks here at Raymond James is what is different
Speaker 5: this year from twenty sixteen? So, first and foremost, Trump
Speaker 5: did not expect to win a twenty sixteen and didn't
Speaker 5: have a transition Cheam, that's not true.
Speaker 6: This time.
Speaker 5: He's going to have a lot more personnel to start off,
Speaker 5: a playbook that they've been developing to implement, and so
Speaker 5: I do anticipate a lot of robust policies to start
Speaker 5: off twenty twenty five. That's on taxes, on tariffs, on trade,
Speaker 5: on immigration. Now, to get taxes done, you probably need
Speaker 5: the House of Representatives. As we're speaking right now, it's
Speaker 5: starting to inch towards that complete sweep, and Republicans are
Speaker 5: slightly better positioned to have a majority in the House
Speaker 5: than Democrats. But there's a big difference between having a
Speaker 5: majority and being able to govern ed mills.
Speaker 4: I'm looking at the smp OR up two percent on
Speaker 4: the day, led by the financial sector, the banks four
Speaker 4: point seven percent on the day. We are up. Talk
Speaker 4: us about financial regulation under a Trump administration, I mean,
Speaker 4: is bar going to step down? Who's going to replace
Speaker 4: Powell at the FED? I mean, who's going to be
Speaker 4: controlling the Fed?
Speaker 1: Here?
Speaker 4: I mean, we know deregulation is good for the banking sector.
Speaker 4: What are your thoughts there?
Speaker 5: Yeah, Damian, you mentioned the two people that probably are
Speaker 5: the only ones that stay with a Trump victory. Here,
Speaker 5: every single federal financial regulator will lose his or her job.
Speaker 5: This is the largest transition in US history. This has
Speaker 5: become some court cases in the last couple of administrations
Speaker 5: because of precedent. But we've been in what I've described
Speaker 5: as a regulatory supersite. We've talked about higher capital standards
Speaker 5: for big banks following the bank crisis last year and
Speaker 5: the implementation of what's known as Basil three capital standards.
Speaker 5: The regulators came out with new restrictive merger guidance in September.
Speaker 5: Throw all of that out the window with the Trump victory,
Speaker 5: and so that's what financials are reacting to. Not only
Speaker 5: are their capital standards not going to get higher, we
Speaker 5: could see significant regulatory relief because there is a deregulatory bent,
Speaker 5: and we're probably likely to see a considerable amount of
Speaker 5: consolidation in the bank space, which has been almost non existent,
Speaker 5: lower than it was during the financial crisis. So the
Speaker 5: financials are being viewed as a clear winner this morning.
Speaker 4: Well, Paul and I are thinking about allocating the merger arbitrage.
Speaker 4: I mean, talk to us a little bit about anti
Speaker 4: trust regulation here in the US. I mean, can we
Speaker 4: expect that to lighten up under Trump administration.
Speaker 5: This is where it gets a little bit more interesting.
Speaker 5: First and foremost, at the anti trust regulators. I look
Speaker 5: at the FTC and Cheerly con Well. Her term's actually
Speaker 5: already expired, but she gets to stay on as cheer
Speaker 5: or as a commissioner in a democratic majority until the
Speaker 5: president appoints in the Senate confirms her replacement. We'll be
Speaker 5: watching to see if she steps down and goes on
Speaker 5: to a different job. But in that case, it's still
Speaker 5: only a two to two tie. So Donald Trump is
Speaker 5: going to have to nominate someone to replace her and
Speaker 5: elevate maybe one of the existing FTC commissioners to Cheer
Speaker 5: before we have that change. At the Department of Justice
Speaker 5: Anti Trust Division, Jonathan Canter will be gone on January
Speaker 5: twentieth at twelve oh one. How long does it take
Speaker 5: for Trump to make that change. That's something that we'll
Speaker 5: be watching. Who is his attorney general, That's something that
Speaker 5: we need to watch. That said, a lot of anti
Speaker 5: trust activities started when Donald Trump was president. The lawsuit
Speaker 5: against Google that we've been talking about in recent weeks,
Speaker 5: that's finally gotten to the point where we might see
Speaker 5: some action by the court to implement remedies that was
Speaker 5: stuttered under Donald Trump. So populism is driving anti trust.
Speaker 5: Populism drove Donald Trump. We will see some changes, but
Speaker 5: it's not as clear cut of a change as we
Speaker 5: discussed with financials.
Speaker 4: And markets have been looking to, for example, comments by
Speaker 4: Scott Besson x Soros of increasing domestic oil supplied by
Speaker 4: three million oil equivalent barrels per day. People are looking
Speaker 4: at Elon Musk. I mean, is Who's going to be
Speaker 4: in Trump's cabinet here? I mean, is Scott Bessont really
Speaker 4: a candidate for US Treasury Secretary? Is Elon Musk going
Speaker 4: to be running the Department of Transportation? I mean, talk
Speaker 4: to us a little bit about what we can expect
Speaker 4: in the weeks ahead on Trumps cabinet.
Speaker 5: Yeah. So when I look at one of the bigger
Speaker 5: surprises of the election results was the size of the
Speaker 5: victory for Republicans in the Senate, and the more that
Speaker 5: Republicans pick up those seats, it could be a fifty
Speaker 5: five seat majority when all is said and done from Republicans.
Speaker 5: The higher that is, the more Trump is going to
Speaker 5: be able to get anyone that he wants. And we
Speaker 5: wouldn't have to worry about one or two senators denying
Speaker 5: that nomination. Scott Bessen absolutely could be Treasury Secretary. There's
Speaker 5: others leading that role. I'm a little bit more skeptical
Speaker 5: as it comes to Elon Musk. To be a confirmed individual,
Speaker 5: you have to divest a lot from what you own.
Speaker 5: I just don't see that happening. The question I get
Speaker 5: a lot from Elon too, is is he going to
Speaker 5: drive all of these cuts? Call me skeptical of Congress
Speaker 5: actually passing significant budget cuts. We get asked that after
Speaker 5: every election, and our federal budget just continues to go up.
Speaker 2: Ed, thank you so much for joining us. I appreciate
Speaker 2: getting your perspectives. Ed Mills. He's a managing director and
Speaker 2: Washington policy analyst over there at Raymond James joining us
Speaker 2: from New York via a zoom.
Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live
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Speaker 1: ever you get your podcasts, or watch us live on YouTube.
Speaker 2: Damian Sasauer sitting in for Alex deel On paulse When
Speaker 2: You're live, here in a Bloomberg Interactive Brokers studio streaming
Speaker 2: live on YouTube as well. Donald Trump was elected the
Speaker 2: forty seventh President of the United States, pulling off a
Speaker 2: political comeback in one of the most polarized contests for
Speaker 2: the White House in US history. While attending his supporters,
Speaker 2: he said, this will truly be the Golden age of America.
Speaker 7: I will not rest until we have delivered the strong, safe,
Speaker 7: and prosperous America that our children deserve and that you deserve.
Speaker 7: This will truly be the golden age of America. This
Speaker 7: is a magnificent victory for the American people that will
Speaker 7: allow us to make America great again.
Speaker 6: All Right?
Speaker 2: That was President elect Donald Trump's addressing his supporters last evening.
Speaker 2: The question I think for the Democratic Party is where
Speaker 2: does it.
Speaker 1: Go from here?
Speaker 2: Let's check in with Wendy Schuler, Professor Brown University and
Speaker 2: interim director of the Watson Institute, joining us from Providence,
Speaker 2: Rhode Island via zoom. Wendy, we've had, you know, a
Speaker 2: few hours here to digest the news. If you're the
Speaker 2: Democratic Party, how deep do you really have to look
Speaker 2: inside the party to get a sense of what needs
Speaker 2: to be done?
Speaker 8: Well, you have to ask yourself why, you know popular
Speaker 8: incumbent senators have been reelected before shared Brown, Tammy, Baldwin, Casey,
Speaker 8: and Pennsylvania could not withstand the red wave, and so
Speaker 8: you can attribute it to Trump charisma. The Trump followers.
Speaker 8: We can do that if we want to as observers.
Speaker 8: But you know, this ran deep, This reaction across voters,
Speaker 8: across different kinds of voters, from different backgrounds, different ages.
Speaker 8: This ran deep, and it was a signal that said,
Speaker 8: we don't like the policies that you're enacting. So what
Speaker 8: can they do. I think it's curious to go back
Speaker 8: to or I'm sorry, not curious informative to go back
Speaker 8: to Obama. Obama had a much strict border policy than
Speaker 8: Joe Biden, and I think he did that because he
Speaker 8: sensed there wasn't enough support in America for something more
Speaker 8: liberal and more open. So you can say to yourselves,
Speaker 8: the Democrats close the border for too late. The Democrats
Speaker 8: didn't push hard enough to get those interest rates down.
Speaker 8: The Democrats didn't pay attention to the price of eggs,
Speaker 8: and that's unusual for the Democrats, who usually care a
Speaker 8: lot about the price of eggs. So I think this
Speaker 8: is not necessarily a reboot completely, but they have got
Speaker 8: to meet the voter where the voter is, and last
Speaker 8: night the voter was not with the Democratic Party.
Speaker 4: When do you mention the border? And let's look ahead here.
Speaker 4: Trump is about to embark on what many believed to
Speaker 4: be the largest deportation program in US history. How does
Speaker 4: he expect to round them all up? And where does
Speaker 4: he intend to send them?
Speaker 8: Well, you know, Trump always surprises us in the sense
Speaker 8: that he'll sort of go off the ranch and then
Speaker 8: I'll kind of moderate. You know. The idea is how
Speaker 8: long does Trump want to be president? You know, he's
Speaker 8: constitutionally prohibited from electing, being elected, and serving, not from running,
Speaker 8: and so you know, does he want to last a
Speaker 8: long time? Maybe get rid of the twenty second Amendment.
Speaker 8: I don't know what he plans, but I think he
Speaker 8: will scale this idea up back, especially since the border
Speaker 8: has been shut down and you know, undocumented migration has
Speaker 8: slowed so much. Does he really have to do this?
Speaker 8: Does he have to disrupt the country this way? You know,
Speaker 8: he could do some of it, but I don't think
Speaker 8: the pressure's on him to do all of it because
Speaker 8: Biden has already taken this step, and he'll keep that
Speaker 8: policy in place.
Speaker 4: When do you mention the twenty second Amendment? You're not
Speaker 4: the first one today to talk about it, but you
Speaker 4: know what I'm most interested in, And John Tucker mentions
Speaker 4: it's the FED right. And Trump has made no secret
Speaker 4: about his intention to have a greater say and monetary
Speaker 4: policy here in the US. My question for you is
Speaker 4: what legal mechanisms can Trump take advantage of in order
Speaker 4: for the to give the Oval Office more control more
Speaker 4: saying monetary policy.
Speaker 8: Well, I mean the Federal Reserve Act. I mean literally
Speaker 8: the Act creating Federal Reserve and all the bills that
Speaker 8: have come you know after that and reauthorizing it. You know,
Speaker 8: that's something that's been sort of a partnership with private
Speaker 8: monetary institutions BANG and the federal government. And the thing
Speaker 8: about Donald Trump is gonna need cash, right, You can't,
Speaker 8: you know, you can't crash the government and crash the
Speaker 8: economy by the federal government running out of cash. So
Speaker 8: there is a symbiotic relationship between really big banks and
Speaker 8: the Federal Reserve itself and the success of a president.
Speaker 8: So there's going to have to be negotiations there. But
Speaker 8: I don't think the heads of big banks. You're just
Speaker 8: going to hand over the keys of the kingdom to
Speaker 8: the president of the United States and amount of who
Speaker 8: they are, and so that will be a negotiation, and
Speaker 8: Trump fancies himself as a very good negotiator.
Speaker 2: Wendy, does Kamala Harris have a future as a leader
Speaker 2: of the Democratic Party. I'm thinking maybe in four years time.
Speaker 8: I think, all things considered, she ran a good campaign
Speaker 8: what she was given, the time frame that she had
Speaker 8: to work within, and her balancing act of trying to
Speaker 8: separate from the Biden record and also present some sort
Speaker 8: of plan for the future and bringing in and solidifying
Speaker 8: particularly younger women, even older women. I think there's still
Speaker 8: a block and a constituency that she can tap if
Speaker 8: she wanted to run again. I just don't see this
Speaker 8: as a Kamala Harris failed campaign. I see it as
Speaker 8: Trump being a former president and energizing their base and
Speaker 8: not making the same campaign mistakes they did in twenty
Speaker 8: twenty and the Biden record. You know those numbers from
Speaker 8: exit polls yesterday on the wrong track, Those were extraordinarily
Speaker 8: high numbers. And I don't know if anybody could have
Speaker 8: won in the face of those numbers.
Speaker 4: Wendy, I wonder if you could shift your attention here
Speaker 4: to what's going on in Ukraine. Obviously, Zelenski was the
Speaker 4: firebrand who rejected Trump's request for information on Hunter Biden's
Speaker 4: dealings back during his first tenure. And look the battlefield's changing.
Speaker 4: Just yesterday, right, Ukrainian forces had their first run in
Speaker 4: with North Korean troops in the Kurk region. What comes
Speaker 4: next for the Ukraine, for Zelenski, for Central Europe, and
Speaker 4: for Russia under a Trump administration.
Speaker 8: Well, I think Trump is a fan of Putin, and
Speaker 8: I think Trump has said before that he thinks there's
Speaker 8: a deal that can be reached. So my guess is
Speaker 8: Trump says, listen, we're not going to send you the
Speaker 8: same kind of weaponry, We're not going to support you
Speaker 8: the same way. Go to the table, cut a deal,
Speaker 8: up crimea I mean literally, these are the things that
Speaker 8: he'll say. And maybe we'll make sure that more of
Speaker 8: your people don't get chilled. I mean, I think that's
Speaker 8: what we'll do. And in the Middle East, you know,
Speaker 8: I think people who think that he'll be a diehard
Speaker 8: suborner of Israel, maybe, but he may go to the
Speaker 8: saudiast and say, what kind of deal do you want
Speaker 8: to cut to get this thing over with against Iran.
Speaker 8: I mean, he wants to make deals and be the hero.
Speaker 8: And that's something we've seen before and we'll see again.
Speaker 8: So whatever whoever's dealing with him has to be able
Speaker 8: to give him some sort of victory he can walk
Speaker 8: away with.
Speaker 2: Wendy, thank you so much. We appreciate that.
Speaker 1: As always.
Speaker 2: Wendy Schilder, Professor Brown University and Interim Director of the
Speaker 2: Watson Institute. Joining us from Providence, Rhode Island.
Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live
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Speaker 2: He Bloomberg Interactive, Brooker Studio, or streaming live over YouTube
Speaker 2: as well as to check that out Over there, the
Speaker 2: world is reacting, trying to make sense of kind of
Speaker 2: the political elections we held here last evening in the
Speaker 2: United States, new president, new Senate, and still to be determined,
Speaker 2: a House of Representatives, so we're trying to talk to
Speaker 2: some smart people around the world about kind of the
Speaker 2: views of what might change going forward. Our next guest Mukunda.
Speaker 2: He's a professor, a lecturer of management practice at the
Speaker 2: Yale School of Management. So gotam a big surprise for
Speaker 2: a lot of people waking up this morning to find
Speaker 2: out that Donald Trump is the president elect and that
Speaker 2: the Republicans have retaken the Senate. Here, what was your takeaway?
Speaker 2: What do you hear when you when you talk to people.
Speaker 9: Hi, Paul, So, first one is if you were surprised,
Speaker 9: that kind of means weren't paying attention, right, the polling
Speaker 9: was very clear this could go either way that right,
Speaker 9: You know, maybe you're surprised by the magnitude of Trump's victory,
Speaker 9: but this was a fifty to fifty election going in.
Speaker 9: Then fifty fifty elections have to get resolved one way
Speaker 9: or the other. For what's going to happen next, I
Speaker 9: think there's some things you can kind of bet on.
Speaker 9: It looks at this point increasingly likely that Republicans are
Speaker 9: going to take the House of Representatives too. If you
Speaker 9: have Republicans in the House, the Senate, and the presidency,
Speaker 9: you can expect the tax cut. It'll be a realm
Speaker 9: almost certainly a deficit finance tax cut, because that's what
Speaker 9: always happens. Second, I think Trump has committed himself to
Speaker 9: tariffs in a way that I suspect he's not likely
Speaker 9: to back off from right away. But once he does that,
Speaker 9: you're going to see economic impacts within the United States,
Speaker 9: going to see retaliatory tariffs. Like the way in which
Speaker 9: that trade struggle escalates is going to shape the political
Speaker 9: dynamic going forward in ways that we can't predict right
Speaker 9: now because we just don't know what the reactions are
Speaker 9: going to be. That's all domestic domestic policy. On foreign policy,
Speaker 9: I think we can pretty quickly get some insight, and
Speaker 9: there I would be really concerned. If I were the Ukrainians,
Speaker 9: I would just I'm not sure Ukraine's position is tenable anymore.
Speaker 9: They will essentially have to rely on Western Europe to
Speaker 9: supply them for their defense. I just don't know that
Speaker 9: that's within Western Europe's industrial capacity, and I, you know,
Speaker 9: for my friends in Ukraine, I don't know what to
Speaker 9: say to them right now. And Second, the basic underpinning
Speaker 9: of international politics since the Second World War has been
Speaker 9: in a lot of different countries. We're willing to bet
Speaker 9: their survival on the reliability of the United States as
Speaker 9: an ally. That is not an overstatement. South Korea has
Speaker 9: North Korea, but that has nuclear weapons, and they do
Speaker 9: not have nuclear weapons. Japan has China not too far away,
Speaker 9: that has nuclear weapons. They do not have nuclear weapons.
Speaker 9: They had said that we trust the United States so
Speaker 9: much to protect us that we are willing to risk
Speaker 9: our national survival all that. If you are a defense
Speaker 9: that you know you are part of the defense statism
Speaker 9: in South Korea Japan, I don't see how you make
Speaker 9: that bet anymore. I don't see how you could possibly
Speaker 9: do that given Trump's express beliefs about alliances, and in
Speaker 9: that situation, I would suspect both significant increase in defense spending.
Speaker 9: And you know, right now, I'm sure they're having meetings
Speaker 9: about whether they need to acquire a nuclear and Drumman, if.
Speaker 4: You could talk to us a little bit about the
Speaker 4: timeline between now and when Trump is expected to announce
Speaker 4: some of his cabinet picks, I mean any color air.
Speaker 9: So we'll find out a lot more because the cabinet
Speaker 9: picks will determine, you know, a huge amount of what
Speaker 9: happens next. Democrats were obviously deeply concerned by rumors that,
Speaker 9: you know, Steve Bannon and Michael Flynn and Stephen Miller
Speaker 9: would have very very senior roles in the Trump administration
Speaker 9: and shaping its policy. But it's also possible that we'll
Speaker 9: get the second term version of Steve Mnuchen and Jem
Speaker 9: Mattison people like that. And I know when you talk
Speaker 9: to people, you know, very sect people in the financial sector,
Speaker 9: their expectation is that some of their peers will go
Speaker 9: into this administration and act in the same way that
Speaker 9: they did in the last one. Which one of those
Speaker 9: happens is entirely up to Trump. And my guess is
Speaker 9: what we'll start to see is if we look at
Speaker 9: the people around him, the way I would say is
Speaker 9: they're all ambitious and they don't play well with others.
Speaker 9: That would be a characteristic describe to a lot of
Speaker 9: these people, and so I think we're likely to see
Speaker 9: some really intensive what you might call court politics. I
Speaker 9: was just telling a bunch of students earlier today that
Speaker 9: if you want to understand what's going to happen next,
Speaker 9: you need to go back and read histories. The Byzantine Empire,
Speaker 9: because that's kind of what we're thinking about, is lots
Speaker 9: and lots of different people struggling to capture the ear
Speaker 9: of the king and to get his support for what
Speaker 9: they want to do and for their own strength and power.
Speaker 9: And given what we've seen about Trump and Trump and
Speaker 9: how fast he goes through staff, we might see that
Speaker 9: shifting for a moment to moment, because if you look
Speaker 9: at sort of what Stephen Miller wants to do and
Speaker 9: what say Elon Musk wants to do, there's not a
Speaker 9: lot of overlap between those two.
Speaker 2: Gotham talk to us about the idea of checks and
Speaker 2: balances here, Trump and the White House, Republican Senate, perhaps
Speaker 2: a Republican led a House. Is it up to the
Speaker 2: Supreme Court to act as a final check on a presidency?
Speaker 2: Is because there are some concerns that how the Supreme
Speaker 2: Court has evolved over the last several years that even
Speaker 2: that may not be an effective check.
Speaker 9: Well, I think that's right. I mean, it'll be the
Speaker 9: super because there's not it. There's no one else, especially
Speaker 9: if Republicans take the House, that right, that that'll just
Speaker 9: pit for the next two years. There will be no
Speaker 9: center of power significant enough to stand up to the
Speaker 9: White House. And I agree with you. The Supreme Court
Speaker 9: has made a series of rulings that no significant, no
Speaker 9: major legal scholar would have predicted, giving sort of the
Speaker 9: Trump presidency and levels of authority that are unprecedented in
Speaker 9: American history. But the other half of that, I'll say
Speaker 9: is is two years is not that long, and American
Speaker 9: politics is deeply reactive. Political scientists referred to it as thermostatic. Basically,
Speaker 9: whatever the president does, the average Americans starts to oppose it,
Speaker 9: and so we might, you know, ten years later, maybe
Speaker 9: the support at the classic example that is Obamacare, where
Speaker 9: when Barack Obama passed it, it cost him an enormous
Speaker 9: landslide defeat in the next set of elections, but ten
Speaker 9: years later it's actually quite popular. So what we could
Speaker 9: expect is whatever Trump does, whether you agree with it
Speaker 9: or disagree with it, everything we know about political science
Speaker 9: says that the average American is going to disapprove because
Speaker 9: that's just how big America free responder chain. If that
Speaker 9: is strong enough, then you'll see the House switch sides
Speaker 9: again in twenty twenty six, and then you'll might start
Speaker 9: to see some real checks and balances. But for the
Speaker 9: next for the next twenty four months, I expect them
Speaker 9: to have essentially a free hand.
Speaker 2: All right, Gotham, thank you so much. We appreciate that.
Speaker 2: Gotham mccondac Professor, Lecturer of Management Practice at the Yale
Speaker 2: School of Management up in New Haven.
Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live
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Speaker 2: Let's see about policy, because a lot of changes to
Speaker 2: be expected from a global policy here in a Trump administration,
Speaker 2: particularly one where it also has a Republican in the
Speaker 2: Senate as well in the leadership roles. Monica guerre joins
Speaker 2: US executive director and head US Policy from Morgan Stanley
Speaker 2: Wealth Management. Monica, thanks so much for joining us here. Uh,
Speaker 2: I say, huge political news over last evening and into
Speaker 2: this morning. How do you frame that out for your
Speaker 2: Morgan Stanley Wealth Management customers as it relates to their portfolios?
Speaker 6: Yeah, no, that's that's a great question, you know, one
Speaker 6: of the things that you know, we are really focusing
Speaker 6: on is, you know, what does the president have control over,
Speaker 6: especially since we don't have the full outcome on Congress.
Speaker 6: So that's what we're talking about right now. And what
Speaker 6: we see is trade tariffs and energy policy really being
Speaker 6: the most sensitive to President along Trump's second term. So
Speaker 6: for example, you know, you can have higher tariffs on
Speaker 6: China and a potential universal tariff and those could you know,
Speaker 6: potentially negatively drag on growth and boost inflation in the
Speaker 6: short term. But you know, we're also focusing on some
Speaker 6: of the other you know, fact winners that could come
Speaker 6: out of you know, his executive branch.
Speaker 4: True Baby Drill, I mean, Monica talk to us a
Speaker 4: little bit about what we're seeing in the commodity complex here.
Speaker 4: I mean, I see it off one and a half
Speaker 4: percent year to date. It was just up a few
Speaker 4: weeks ago. You would think maybe perhaps with some of
Speaker 4: the policies that Trump is floating here on the energy sector,
Speaker 4: are certainly you know, minerals that are hard to get
Speaker 4: et cetera, that we would see something bounce back here.
Speaker 4: But it seems like things are kind of rolling over.
Speaker 4: Curious to hear your thoughts there.
Speaker 6: Yeah, and you know, the partment of energy. That's a
Speaker 6: great example of you know where Trump has a lot
Speaker 6: of control to acting the laterally on the on the
Speaker 6: drilling side, and we don't see that really impacting the
Speaker 6: market positively because you know, more supply could put pressure
Speaker 6: on pricing as you're thinking about from the from the
Speaker 6: market's perspective, that set. If we're thinking about energy broadly
Speaker 6: inclusive of a clean energy agenda, there's a real risk
Speaker 6: there to clean energy from my policy perspective, from a
Speaker 6: you know, rollback and potential inflation reduct Reduction Act tax credits.
Speaker 6: But one of the things we want to highlight here
Speaker 6: on energy is that even though you could have sort
Speaker 6: of a deconstructive approach to tax credits, clean energy policy,
Speaker 6: et cetera, what you're really focusing on here is rates
Speaker 6: the rate environment. Clean energy is an industry functions like
Speaker 6: growth stocks, and so when rates are low and markets
Speaker 6: right now are currently pricing in four cuts through the
Speaker 6: end of twenty twenty six, essentially energy clean energy can outperform.
Speaker 6: And so that's that's what we're focusing on in the
Speaker 6: energy sector, is that while from a policy perspective, you
Speaker 6: don't see much movement on traditional You could see movement
Speaker 6: sort of negatively placing a drag on clean energy. The
Speaker 6: real story is the rate story on clean energy.
Speaker 4: So I'm looking at the vix here. As my colleague
Speaker 4: Paul Sweeney, you know, rightly points out, we're back down
Speaker 4: to sixteen, off twenty two percent day over day, you know,
Speaker 4: off nearly a third since you know, the fourth since Monday.
Speaker 4: You know, talk to us a little bit about, you know,
Speaker 4: expectations for volatility under a Trump regime. I remember during
Speaker 4: his first term, you know, you know, it was jump risk, right,
Speaker 4: it was, you know, one day he says something, you know,
Speaker 4: his left leg is feeling one thing, and all of
Speaker 4: a sudden he says it, and the markets kind of
Speaker 4: react to that. You know, we've been in an environment
Speaker 4: for the better part of the last four years, Monica,
Speaker 4: where it's been all about rate differentials, all about monetary policies,
Speaker 4: all about the Fed. Is there any chance that the Fed,
Speaker 4: that you know, rate differentials, can retake control of the
Speaker 4: market narrative here or are we just in Trump's world
Speaker 4: and everyone's just living in it.
Speaker 6: That's a that's a great question. I mean, I think
Speaker 6: the drop off in the vix that we're seeing that's
Speaker 6: just par for the course with normal election year activity.
Speaker 6: Once you have right the president set, you have a
Speaker 6: sense of what's happening with Congress. Granted we don't really
Speaker 6: know what's happening with a House, volatility plummets. Yes, you're
Speaker 6: going to see a headline response. One of the one
Speaker 6: of the sort of murky areas around Trump is which
Speaker 6: Trump are we going to get? Does that mean that
Speaker 6: we get more disruption or is it really a story
Speaker 6: all about Congress and what they do with taxes. In
Speaker 6: that case, if it's focused on is things are likely
Speaker 6: to remain more stable, especially as we lost the play
Speaker 6: by play as they debate each provision under the Tax
Speaker 6: Cuts and Jobs Act, you could get you an extension
Speaker 6: of most of it. But what's important here is that
Speaker 6: even if you have you know that's a shallow red
Speaker 6: wave in the House and you have that unified government,
Speaker 6: those thin margins mean that they're still room for the
Speaker 6: GOP to play. So we are going to be watching
Speaker 6: that for a while and I think that yes, Trump
Speaker 6: is the disruptive, disruption president. Right, we're thinking about headline
Speaker 6: reaction volatility that's short lived, but over the long run,
Speaker 6: what we're all going to be focusing on is that
Speaker 6: tax agend and what happens in Congress.
Speaker 2: All right, Monica, thanks so much for joining us. Monica Aguera,
Speaker 2: executive director a head of US policy for Morgan Stanley
Speaker 2: Wealth Management.
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