Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: This would probably be controversial among my friends in the
Speaker 2: Biden administration, but I think that there's a general perception
Speaker 2: that Vice President Harris will be a bit more business friendly.
Speaker 1: Welcome back to voter Nomics, where politics and markets collide.
Speaker 1: This year, voters around the world have the ability to
Speaker 1: affect markets, countries, and economies like never before, so we've
Speaker 1: created this series to help you make sense of it all.
Speaker 3: I'm Allegra Stratton, I'm Adrian Wooldridge, and I'm Stephanie Flanders.
Speaker 1: So look, we are seven minutes out.
Speaker 3: From the seven minutes.
Speaker 1: Obviously fail in the first ten seconds. We are seven
Speaker 1: weeks out from the US election, and although the outcome
Speaker 1: is no clearer, the end is coming into sites. So
Speaker 1: we're going to continue to unpick what the candidate's financial
Speaker 1: and regulatory policies could mean for American businesses.
Speaker 3: And one of the things we're going to get into later,
Speaker 3: Adrian and I spoke with one of Wall Street's higher
Speaker 3: profile Democrats and ever Core Chairman emeritus, Ralph sch Losty,
Speaker 3: one of its founders, just to get an idea of
Speaker 3: what the potential ideas could mean for business. You know,
Speaker 3: he's sitting in Wall Street, or certainly was sitting in
Speaker 3: Wall Street, and has a particular perspective that you might
Speaker 3: say was a kind of traditional approach to thinking about
Speaker 3: business and campaigns. You know, how much money are they
Speaker 3: give it putting in what impact of the candidates policies
Speaker 3: going to have? But Adrian and I don't know about you,
Speaker 3: but I've just been struck. You know, Donald Trump progressively
Speaker 3: has so scrambled the way we think about business and
Speaker 3: politics and brought them closer and closer together. And we've
Speaker 3: seen that particularly in an increasingly close relationship between him
Speaker 3: and Elon Musk, where Elon Musk is not just giving
Speaker 3: him a huge amount of money, but giving him a
Speaker 3: platform actively supporting him on Twitter.
Speaker 4: Absolutely, there used to be a sort of hands off
Speaker 4: relationship between the donor on the one hand and the
Speaker 4: candidate on the other. The donor would give some money,
Speaker 4: it would go through a lot of intermediaries and there'd
Speaker 4: be some sort of space between the two. Now you're
Speaker 4: getting a direct intermingling between business on the one hand
Speaker 4: and the candidates on the other. Trump obviously did this,
Speaker 4: and it's most flagrant with his hotel in Washington that
Speaker 4: he encouraged people to go into. But now we're saying
Speaker 4: with Musk, Musk is running this business which is ex Twitter.
Speaker 4: That part of the business model seems to be outrage
Speaker 4: people to put Trump on there to encourage sort of
Speaker 4: active engagement with Twitter through saying Trump Trump leaning things.
Speaker 4: So it's an extraordinary sort of commingling, I think.
Speaker 1: And also there's a kickback because if Trump's selective, Musk
Speaker 1: is going to be given this role looking at So
Speaker 1: there's and I do try not to be too parochial
Speaker 1: and bring it back to the UK. But in the
Speaker 1: UK right now we're having every day on the front page,
Speaker 1: we've got the Prime Minister and his wife being accused
Speaker 1: for taking clothes and money off of Well, money is
Speaker 1: not the problem, but clothes and other benefits that they
Speaker 1: haven't declared off a donor on the one hand. But
Speaker 1: then in America you've got it on a mega mega,
Speaker 1: mega scale and it doesn't not mega but a mega scale,
Speaker 1: And it doesn't seem to there doesn't seem to be
Speaker 1: anybody saying, hold on a second, it's not allowed.
Speaker 3: Well except I mean, there's plenty of people amazed at
Speaker 3: the kind of conflict of interest that would represent. I mean, remember,
Speaker 3: it's not just that it's payback for support in the campaign.
Speaker 3: It would be an ongoing and massive conflict of interest
Speaker 3: for Elon Musk to be reinventing government or thinking about
Speaker 3: how to reduce government at a time when his own
Speaker 3: company is receiving billions of dollars in government contracts. So
Speaker 3: the idea that there are no guardrails against that, I
Speaker 3: think is surprise to people in America, where we always
Speaker 3: taught that, you know, there is this written constitution that
Speaker 3: provides checks and balances. They're increasingly getting faded.
Speaker 1: If you read the biography of Musk, it's clear that
Speaker 1: about eighteen months ago, two years ago, Musk thought Trump
Speaker 1: was a loser.
Speaker 3: And maybe that's the direct quote. Well, not very long ago,
Speaker 3: Donald Trump thought crypto currencies were a scam, and we
Speaker 3: now know that he's going to get his own.
Speaker 1: Okay, So to talk about that change of heart that
Speaker 1: Stephanie just mentioned and how crypto is playing in the
Speaker 1: US election, we have in the podcast studio right now
Speaker 1: Emily Nicole, who is Bloomberg's crypto reporter. Hi, Emily, Hi,
Speaker 1: just explain for us what was launched by Donald Trump
Speaker 1: and family this week launched.
Speaker 5: Maybe a bit of a generous term, actually more like
Speaker 5: a veiled to a certain extent. So earlier this week,
Speaker 5: Donald Trump went on an X spaces I guess you'd
Speaker 5: call it now, where he spoke for about two hours
Speaker 5: along with other members of the Trump family about the
Speaker 5: project that they intend to launch called World Liberty Financial.
Speaker 5: We still don't really know what it is, except for
Speaker 5: the fact that it's going to be in the world
Speaker 5: of decentralized finance, which means that there will be some
Speaker 5: loose form of governance by the people and the community
Speaker 5: that are buying into it rather than by the people
Speaker 5: running it, and that there will be a token attached
Speaker 5: to it for that purpose which people can buy to
Speaker 5: use to vote on proposals on how it's run, but
Speaker 5: also probably speculate with as well.
Speaker 1: So for an expert like yourself, does it look promising
Speaker 1: or does it look a bit odd?
Speaker 3: It looks light on details. I think it's probably not
Speaker 3: the first crypto enterprise that's been a bit light onto.
Speaker 5: Yeah, exactly, but it's probably the most high profile one
Speaker 5: that we've had so far. I mean, for a respective
Speaker 5: of president to be launching something like this. It definitely
Speaker 5: is in that gray area of we don't know exactly
Speaker 5: where it sits between business interests, financial interests, how much
Speaker 5: he might stand to profit from it or benefit from it.
Speaker 5: There is a disclaimer on the project that says Trump
Speaker 5: or his family members, none of them will benefit financially
Speaker 5: from it. But you know, that's assuming that the token
Speaker 5: itself isn't going to be something that can appreciate in value.
Speaker 5: Obviously it will, so whether or not that actually bears
Speaker 5: out to be the case is something to be.
Speaker 1: Seen, Adrian, I mean, before we get onto talking to
Speaker 1: Emily about the crypto in the election, just sort of
Speaker 1: on the principle of a presidential candidate launching or unveiling,
Speaker 1: to use Emily's phrase, unveiling something like this.
Speaker 3: Would we see that in the UK though.
Speaker 4: I can't conceivably imagine it. It's not just that there
Speaker 4: that he's unveiling this. This thing is a presidential candidate.
Speaker 4: He's doing it seven weeks before the election on a
Speaker 4: platform provided by one of his biggest backers, Elon m
Speaker 4: It's quite extraordinary, and.
Speaker 3: It's also the intermingling with the family. The family are
Speaker 3: ever presently and the business interests continue with the family.
Speaker 3: And I noticed even in our story that the white
Speaker 3: paper for well, it sounds like white paper is also
Speaker 3: a sort of a generous phrase. But the World Liberty
Speaker 3: Financial reviewed by Bloomberg News and that listed Donald Trump
Speaker 3: as chief Crypto Advocate, Eric and Donald Junior each as
Speaker 3: Web three ambassadors, and eighteen year old Baron Trump as
Speaker 3: Chief DEFY Visionary. I guess we should. I mean DeFi
Speaker 3: is a sort of particular bit of the crypto universe
Speaker 3: which is even considered a little bit fringe even by
Speaker 3: some of the crypto people. Is that right Somewhat? Yes?
Speaker 5: I mean, if you're kind of the yeah, who would
Speaker 5: buy bitcoin or ether because you think it might be
Speaker 5: a bit of an investment, than Defy is certainly fringe
Speaker 5: to you the crypto traders. Though It's kind of the
Speaker 5: bread and butter of how things work, because it's often
Speaker 5: the way that you get to experiment with new tokens,
Speaker 5: new projects and things before they can get vetted properly
Speaker 5: to be on the big exchanges like Finance or coinbase.
Speaker 5: For Trump, and in this project, the purpose of it
Speaker 5: being in DeFi is quite important because it means that
Speaker 5: they can have this claim to not really have any
Speaker 5: control or say over how it operates. Defy itself as
Speaker 5: a construct is imagine a project that's basically just a
Speaker 5: whole run of code and smart contracts that kind of
Speaker 5: execute when certain conditions are met, and nobody can intervene
Speaker 5: once they're written. So the idea is that people who
Speaker 5: hold this token that's touched the project can use that
Speaker 5: bit of token that they own to say, Okay, well
Speaker 5: I vote this way, and somebody with more tokens can
Speaker 5: vote another way, and in that way, the Trump family
Speaker 5: themselves can say, well, really, I don't have any say
Speaker 5: about how this goes because all the token holders are
Speaker 5: voting whichever way. That doesn't necessarily mean they don't benefit
Speaker 5: financially from it, though, especially if token does trade in
Speaker 5: open markets, which it should do in time.
Speaker 3: I mean, there is this a bit of the sort
Speaker 3: of demographic that Trump is really going for, which is
Speaker 3: the sort of countercultural younger skeptical of government. And this
Speaker 3: is right. Even if they don't make any money on this,
Speaker 3: it does sort of send that message that I'm all
Speaker 3: about sort of somewhat, you know, it's getting away from
Speaker 3: the mainstream financial system. Libertarianism, I mean, that's part of
Speaker 3: the messaging.
Speaker 5: Yeah, all of those things are kind of at the
Speaker 5: heart of crypto, and so a lot of the traders
Speaker 5: who sit within crypto are at least you know, hardcore,
Speaker 5: day to day, live and breathe it very much sit
Speaker 5: on that side. But then you have to wonder if
Speaker 5: that they would have been Trump voters anyway to a
Speaker 5: certain extent. And so Trump has made repeated over to
Speaker 5: the crypto industry this year to say that he wants
Speaker 5: to be part of it, he wants to create rules
Speaker 5: for it, he wants to get rid of sec chair
Speaker 5: Gary Guns are on day one because Gary Guns that
Speaker 5: has been launching several enforcement actions against scripto companies over
Speaker 5: the last few years that the industry is seeves as
Speaker 5: overly harsh. But you know, saying all of that was
Speaker 5: probably enough because by comparison, his competitor Kamala Harris hasn't
Speaker 5: really said anything on crypto.
Speaker 3: I mean, when it comes to the sort of directly
Speaker 3: benefiting financially from the campaign, we had that you know,
Speaker 3: Trump Media ipo. In April Origin it was valued at
Speaker 3: nine billion. I think it's now less than half that
Speaker 3: he could still potentially make two billion and people are
Speaker 3: literally trading him and it's been going down pretty steadily,
Speaker 3: certainly since Biden got out of the race. If people
Speaker 3: end up trading on this platform, which is very much
Speaker 3: associated with him, if they're speculating on Trump media stocks
Speaker 3: based on whether or not they think he's going to win,
Speaker 3: and then they end up losing a lot of money,
Speaker 3: I mean, it isn't done that back fire on him
Speaker 3: in the end, or does it not matter because he's lost?
Speaker 5: And it depends how much he can distance himself from it.
Speaker 5: I mean the ability to be able to say, well,
Speaker 5: you know, we don't earn any money from this, I'm
Speaker 5: just an advisor, or I sit on the periphery. I'm
Speaker 5: just promoting it, but my family are really more involved
Speaker 5: these kind of things. There's always a way from to
Speaker 5: distance himself. That said, we did do a story my
Speaker 5: colleagues Zeker Fox and Miashen early this month about the
Speaker 5: people behind the project who are building it. And they've
Speaker 5: previously built projects that have been subject to hacks, They've
Speaker 5: done get rich quick schemes, they've sold colon cleanses online.
Speaker 5: You know, it's not necessarily the kind of business business
Speaker 5: that you think would be solid footing, so looking ahead
Speaker 5: to what world liberty might look like. I mean, there's
Speaker 5: always a chance, for example, that they don't launch this
Speaker 5: before the election happens, and so he's able to kind
Speaker 5: of say that, well, you know, nothing infringed upon the
Speaker 5: voting process in a certain sense, but once it goes live,
Speaker 5: there's nothing to say. I guess that he couldn't still
Speaker 5: sit on those edges without having all his fingers in.
Speaker 3: I guess this is all part of why it must
Speaker 3: be interesting day to day to be a Bloomberg crypto reporter.
Speaker 3: Thank you very much, Sheery, Thank you my top fact.
Speaker 3: I was looking up while we were talking that Trump
Speaker 3: Media's revenue is equivalent and I have to admit this
Speaker 3: is according to Roy, but it is equivalent to two
Speaker 3: Starbucks coffee shops, and strategists say it's three point six
Speaker 3: billion stock market value is detached from its day to
Speaker 3: day business, since it lost just UNDERD nine hundred thousand
Speaker 3: dollars in its most reported quarter. I love that it's
Speaker 3: worth several billion dollars and its revenue is the same
Speaker 3: as two star coffee shops. We have our guest this week, Adrian,
Speaker 3: and I spoke with one of Wall Street's higher profile Democrats.
Speaker 3: A few days ago, Ralph schlostein chairman emeritus at Evercourt,
Speaker 3: which is a global investment banking advisory business, and I
Speaker 3: started by asking him, at this late stage in the campaign,
Speaker 3: was it really going to come down to who had
Speaker 3: the most money?
Speaker 2: I think the answer to that is how much does
Speaker 2: the relative net worth of Bill Gates and Warren Buffett? Matter?
Speaker 2: Both of them have more money than they need.
Speaker 3: They don't have instant access to massive social media.
Speaker 2: Platform and I would say both campaigns have more than
Speaker 2: enough money to promote their candidate, and the differential in money,
Speaker 2: which at least at the current moment, seems to favor
Speaker 2: Vice President Harris, is not going to be the determining
Speaker 2: factor in this election.
Speaker 4: Can you give us a general sense of how corporate
Speaker 4: America business America is seeing and splitting over this debate.
Speaker 4: Are there any clear lines of difference between different business
Speaker 4: groupings and is it changing? Is that as the election evolves.
Speaker 2: This would probably be controversial among my friends in the
Speaker 2: Biden administration, but I think that there's a general perception
Speaker 2: that Vice President Harris will be a bit more business friendly.
Speaker 2: Large technology and corporate business friendly, and I think some
Speaker 2: of that is a function of her background and where
Speaker 2: she comes from. She's represented in the Senate many of
Speaker 2: these large technology companies, obviously Silicon Valley is in California,
Speaker 2: and she's got a long history of interacting with them,
Speaker 2: being supported by them, and having i think some empathy
Speaker 2: to the issues that might be of interest to them.
Speaker 2: And that's not to say that President Biden has been
Speaker 2: hostile toward business, but he's just he's got less of
Speaker 2: a background and an empathy toward that, and he's got
Speaker 2: a very strong background in foreign policy and that's been
Speaker 2: a big focus of his I think her agenda is
Speaker 2: very focused on two things. Growth for the overall economy,
Speaker 2: which I think is really important, as there is something
Speaker 2: to be said for this long around quote of the
Speaker 2: rising tide lifting all ships. And then she's also i
Speaker 2: think very focused on moving a little bit more of
Speaker 2: the benefits of public policy to the middle class. Her
Speaker 2: housing plan, her childcare plan, her child credit, tax credit,
Speaker 2: capping drug prices, and the fact, you know there's going
Speaker 2: to be a massive discussion next year about what do
Speaker 2: we do with the Trump tax cuts. They all expire
Speaker 2: at the end of twenty twenty five, and there's a
Speaker 2: probably the biggest difference between the two candidates, which neither
Speaker 2: of them talks particularly a lot about, is what their
Speaker 2: view is of what should happen to that next year.
Speaker 4: Against that, I just want to say that surely we're
Speaker 4: seeing business fleeing from California as a significant rate, and
Speaker 4: middle class people fleeing from California as a significant rate,
Speaker 4: because it's hard for middle class people to make ends meet,
Speaker 4: and businesses feel that the burden of regulation is an
Speaker 4: intrusiveness of regulation is very high. If I was looking
Speaker 4: at California, I wouldn't say that that's the sort of
Speaker 4: place I wanted to do business these days.
Speaker 2: Oh, it has a lot of things going for it too.
Speaker 2: It has an incredibly educated labor force, and it's been,
Speaker 2: you know, until relatively recently, a you know, an engine
Speaker 2: of demographic growth for the United States. So you know,
Speaker 2: there certainly are highly publicized, occasionally controversial figures like Elon
Speaker 2: Musk who make very strong statements about the friendliness of
Speaker 2: the California business climate. And I do think as a
Speaker 2: general matter, the Democratic Party has been a little bit
Speaker 2: excessive in its regulatory exuberance, and that's true at the
Speaker 2: national level, and it's certainly true in the states that
Speaker 2: where you have one party rule, one of which I
Speaker 2: live in.
Speaker 3: I'm interested. There's been quite a lot of talk. You
Speaker 3: actually just mentioned it. There about three quite unpopular characters
Speaker 3: in large parts of the business community that are currently
Speaker 3: in the administration, Lena Khan and Gary Gainsler, the head
Speaker 3: of the leader Khan being a Federal Trade Commission head,
Speaker 3: and the Security and Exchange Commission head Gary against Leni
Speaker 3: Khan in particular has distinguished herself for a sort of
Speaker 3: pro competitive, quite aggressive approach to at least a starting
Speaker 3: to regulate big tech companies and others. Then more generally,
Speaker 3: I would say, there's a sort of interesting dividing line
Speaker 3: between right and left in large parts of the world now,
Speaker 3: where it's actually the left of the progressive side that
Speaker 3: is talking more. I don't know if they've done a
Speaker 3: lot more, but talking a lot more about competition and
Speaker 3: worried about concentration of corporate power. I Nikan is a
Speaker 3: sort of symbolic figure for many people and the more
Speaker 3: progressive side of Democrats, because she has been considered to
Speaker 3: be quite radical. Kamala Harras worry about that whether or
Speaker 3: not she gets reappointed, is that going to be a
Speaker 3: key issue.
Speaker 2: A very high quality news organization, Bloomberg that wrote a
Speaker 2: story about how donors and supporters of Kamala Harris were
Speaker 2: suggesting that their support or donations should be conditioned upon
Speaker 2: the removal of her, and I wasn't quoted in that story,
Speaker 2: but I was called about it, and I said that
Speaker 2: I thought that was highly premature and ridiculous. Other than that,
Speaker 2: completely true and the reason I do believe that, first
Speaker 2: of all, you had anti trust policy and competition policy.
Speaker 2: There hasn't been a single change in law since probably
Speaker 2: two thousand or earlier. I said in twenty seventeen that
Speaker 2: I thought one of the most difficult professional jobs in
Speaker 2: America under President Trump was to be an anti trust lawyer,
Speaker 2: because the law didn't really matter. It was whether he
Speaker 2: liked you or not. So he went after the Time
Speaker 2: Warner Att merger because he hated CNN, and of course
Speaker 2: they got thrown out in court. We had an experience
Speaker 2: where we had a merger held at Evercore held up
Speaker 2: under Syphius, which was, by the way, a merger of
Speaker 2: two US companies had nothing to do with Syphius.
Speaker 3: Syphius is the American law that is used just to
Speaker 3: prevent foreign companies from taking big stakes of US company.
Speaker 2: Yes, buying US companies. So this was two American companies
Speaker 2: and it was held up for a long time, and
Speaker 2: then one of the companies decided to redomicile one of
Speaker 2: their headquarters back into the United States and lo and
Speaker 2: behold a week later the merger got approved. Nothing to
Speaker 2: do with law, I think the current group and Lena
Speaker 2: Khan is the tip of the spear there, but the
Speaker 2: Assistant Attorney General for Anti Trust is certainly part of
Speaker 2: that as well Kaplan. They've been definitely more aggressive in
Speaker 2: their interpretation of the law. They've gone to court a
Speaker 2: number of times and lost, they've won a couple And
Speaker 2: so we spend a lot of time at Evercore with
Speaker 2: companies talking about mergers, and this is always a part
Speaker 2: of the discussion. And I would say the prevailing view
Speaker 2: among larger companies today is if we believe the laws
Speaker 2: on our side, we may be challenged, but we'll go
Speaker 2: to court and we'll win. I do think my guess
Speaker 2: would be that there would be a somewhat moderated view
Speaker 2: of that particular of the FTC and the assistant Attorney
Speaker 2: General for Andy Trust under Vice President Harris, with her
Speaker 2: legal background and sensitivity to some of the issues that
Speaker 2: business cares about, might care a little bit more about
Speaker 2: how those particular roles are executed.
Speaker 3: There are some who say that it potentially more influential
Speaker 3: than you would think. Point of disagreement between Trump and
Speaker 3: Harris as asked you to crypto because it is gaining
Speaker 3: so many Ficinado's, particularly in kind of demographics that Kamala
Speaker 3: Harris is trying to attract. And Trump has changed his
Speaker 3: view on crypto but has now been pretty positive about it.
Speaker 3: We think that's partly why Elon Mosque is so supportive
Speaker 3: of him, whereas Gary Goesler stands for a much more
Speaker 3: circumspect and potentially negative approach. Do you think that is
Speaker 3: we are underestimating how much that masses.
Speaker 2: I would say it to me, it's a fringe issue,
Speaker 2: not a central issue. I think the change on President
Speaker 2: Trump's part has been definitely linked in a pretty material
Speaker 2: way to the contributions that have been made. There's an
Speaker 2: interest group out there that has a pack that is
Speaker 2: giving tens of millions of not hundreds of millions of
Speaker 2: dollars in this election cycle to crypto friendly candidates, including
Speaker 2: former President Trump.
Speaker 3: But you're sitting in a mainstream Wall Street maybe you'd
Speaker 3: always say.
Speaker 2: That I must say, I'm in the world that things
Speaker 2: are not probably a complete paleoanthic erea troglodite. I have
Speaker 2: said in the past that to me, the valuation of
Speaker 2: bitcoin reminded me of the beanie baby create But I
Speaker 2: think that's turned out to be and not necessarily correct view.
Speaker 2: And I think it remains to be seen whether there
Speaker 2: are any mainstream uses of these electronic monetary vehicles other
Speaker 2: than a store of value and speculation.
Speaker 4: I want you to ask about something else, which is
Speaker 4: what might be briefly called woke capital, or the passion
Speaker 4: for micro intervention in the way that businesses run themselves
Speaker 4: THROUGHDI and ESD and the rest of it. Is Vice
Speaker 4: President Harris an advocate of that, and if she is,
Speaker 4: is that a problem for business?
Speaker 2: I think the I'm very passionate about the objectives of
Speaker 2: some of that. I think they're really good business reasons
Speaker 2: to have a diverse workforce, and I can articulate those
Speaker 2: for you if you want. But I do think the
Speaker 2: prescriptive nature of this, which has been broadly thrown into
Speaker 2: the pejorative term woke capitalism, is not necessary? Is overdone?
Speaker 2: I really do And I stepped down as a CEO
Speaker 2: of Evercore about two and a half years ago, and
Speaker 2: one of the things I've said privately more than once
Speaker 2: is that being the CEO of a public company today
Speaker 2: is just a lot more challenging and less clear as
Speaker 2: to what you're really trying to accomplish. Evercore is a
Speaker 2: independent investment banking firm. We don't have any balance sheet,
Speaker 2: we have offices, and the idea that we would be
Speaker 2: required to file a lengthy environmental statement about whether our
Speaker 2: buildings are eco friendly or not is in my view,
Speaker 2: complete nonsense. Obviously, if you're a chemical company be focused
Speaker 2: on that. If you're an energy company, should be focused
Speaker 2: on the environmental aspects of your business. But this has
Speaker 2: gone It has gone way too far. The goals that
Speaker 2: they're trying to achieve are laudable. What's gone way overboard
Speaker 2: is the prescriptive exuberance with which they pursue them.
Speaker 3: From the sort of everical perspective, Should anyone be trading
Speaker 3: this election? How does one trade this election?
Speaker 2: I'm not sure how to trade even without an election,
Speaker 2: so with an election it becomes harder. I'm just not
Speaker 2: I think the only thing that I do think is
Speaker 2: truly market effecting is I do believe that if Trump
Speaker 2: were to pursue the tariff policies that he's discussed in
Speaker 2: the campaign, and it's not clear to me that he
Speaker 2: would pursue them, but if he were to pursue those,
Speaker 2: which would be very high tariffs across the board and
Speaker 2: much using that as the principal source of new revenue
Speaker 2: for the finance the government, I think that will have
Speaker 2: a very chilling effect on the markets, and because it
Speaker 2: will be widely perceived to be anti trade and inflationary,
Speaker 2: and I think neither of those things are good for
Speaker 2: equity markets.
Speaker 3: It's interesting you say that there is a Wall Street
Speaker 3: view that I would say is quite common, which is
Speaker 3: that longer term, the macroeconomic mix under Donald Trump would
Speaker 3: undoubtedly be less sustainable, more risky band for the US,
Speaker 3: band for the world, higher inflation, as you say, reduced
Speaker 3: trade connections, and an enormous deficit. It's going to be
Speaker 3: pretty large under either administration, but under a completely out
Speaker 3: of control deficit. But I've seen plenty of notes coming
Speaker 3: through my email saying it will be bullish for risk
Speaker 3: assets in the first year or so. Because you would
Speaker 3: have this text, you would have a feeling that business
Speaker 3: was not going to be constrained by regulations, by the
Speaker 3: long arm of the state. All these things that have
Speaker 3: been you even just talked about just now.
Speaker 2: I think it's interesting. I remember that in twenty sixteen
Speaker 2: the election. I happened to be in Paris at the time,
Speaker 2: and my phone rang at five in the morning and
Speaker 2: it was Ed Hyman, who was the founder of ISI
Speaker 2: and now the chairman of Evercore ISI, and the noted
Speaker 2: I think he's won number one in institutional investor research
Speaker 2: for over forty years as economist. And he said he
Speaker 2: was in Tokyo and he was about to speak to
Speaker 2: a bunch of institutional investors and at that point it
Speaker 2: was clear that Trump was going to be elected, and
Speaker 2: the S and P was down a thousand points futures
Speaker 2: not the market, and he said, what should I say?
Speaker 2: And I said, if you want to be controversial or provocative,
Speaker 2: and I said, I really believe this, by the way,
Speaker 2: I think you should say that notwithstanding the fact that
Speaker 2: the S and P is down a thousand points. Futures
Speaker 2: are down a thousand points right now. By the time
Speaker 2: the market closes at four o'clock in New York, the
Speaker 2: market will be up. And he said, why do you
Speaker 2: say that? And I said, Donald Trump is going to
Speaker 2: be for lower corporate taxes, He's going to be for
Speaker 2: a stimulative fiscal policy, he's going to be for infrastructure investment.
Speaker 2: And that's very bullish for the equity markets, and people
Speaker 2: will realize that. And so he got up and said that,
Speaker 2: and it turned out to me, I'm only telling you
Speaker 2: this story because for once I was right, and I
Speaker 2: do think that the initial effect. Let's take the corporate
Speaker 2: tax rate, for example, which is a twenty one percent
Speaker 2: right now, leaving a side state and local taxes, which
Speaker 2: are won't be changing much. If it's a twenty one percent,
Speaker 2: for every dollar a company makes, seventy nine cents of
Speaker 2: it will go to its shareholders and twenty one cents
Speaker 2: to the US government. If it's at twenty eight percent,
Speaker 2: as Vice President Harris has suggested, and I'm not sure
Speaker 2: it'll ever get that high again, but that's a seven
Speaker 2: percentage point off of seventy nine, which is like a
Speaker 2: ten percent decline in corporate earnings. Ultimately, that filters through
Speaker 2: to the valuation of stocks. If it's at fifteen percent,
Speaker 2: that's six points on. It's a seven and a half
Speaker 2: percent increase in what shareholders will get. The math's pretty simple.
Speaker 2: I think that point alone will provide if Trump is elected,
Speaker 2: will provide a little bit of following wind to the
Speaker 2: stock market.
Speaker 3: But one thing we have in the UK is some
Speaker 3: quite a lot of concern in the City of London
Speaker 3: and elsewhere. That's the moves that the government, that the
Speaker 3: new labor government might make to increase the amount of
Speaker 3: money coming from the richest and from wealth already encouraging
Speaker 3: people to leave for Italy or leave for America. Quite
Speaker 3: a lot of concern about capital flight. Do you think
Speaker 3: there's any issue around that if Kamala Harris stays in
Speaker 3: just as a sort of attractiveness of the US versus
Speaker 3: other places, as a wealthy person for wealthy people. I
Speaker 3: may not referring to you specifically as a wealthy person,
Speaker 3: but I bet you hang out with a few.
Speaker 2: I'll tell you my personal view on this first. My
Speaker 2: personal view on this is my parents were both immigrants.
Speaker 2: My father was a bartender and I've managed to do
Speaker 2: reasonably well in my life. I have an enormous amount
Speaker 2: of gratitude and appreciation both for the United States and
Speaker 2: the opportunities it provides and for New York City. I'm
Speaker 2: not one of these people who's gonna abandon ship because
Speaker 2: I can save a little money on or a lot
Speaker 2: of money on taxes. I think you have to look
Speaker 2: at for the broader question. It's pretty donning what has
Speaker 2: happened in the world in terms of the US economy
Speaker 2: and the US markets relative to the Europe's and relative
Speaker 2: to the Japan's. And if you look at in two
Speaker 2: thousand and eight, the GDP of Europe including the UK,
Speaker 2: and the US were roughly equal. By twenty and sixteen,
Speaker 2: the US was about fifty percent higher, and today it's
Speaker 2: almost double. Taxes are about gee, what do you get
Speaker 2: to keep of what you've made? The opportunities to make
Speaker 2: are so great in the US relative to other places
Speaker 2: in the world. Even with Lena Khan sitting in the
Speaker 2: seat that she sits in and Gary Gensler sitting in
Speaker 2: the seat that he sits in, I think people should
Speaker 2: maybe people who are sitting on a lot of money
Speaker 2: are going to attract it the places like Monaco and Litgenstein,
Speaker 2: in places like that. But the last time I went
Speaker 2: to the opera, I wasn't overwhelmed with the quality of
Speaker 2: the performance.
Speaker 4: Why hasn't that extraordinary economic growth in the US translated
Speaker 4: into more optimistic sentiments. Why is an incumbent struggling to
Speaker 4: be re elected after this incredible economic boom?
Speaker 2: It is shocking. Actually, I think it's a really good question,
Speaker 2: and I think the reason for it is the widespread
Speaker 2: and pernicious effect on people's psyches of inflation. I was
Speaker 2: working in the White House in between nineteen seventy seven
Speaker 2: and nineteen early eighty one under President Carter, when we
Speaker 2: had the greatest inflation in the history of the United States.
Speaker 2: And I have said a number of times to people
Speaker 2: who worked in the Biden administration that you have to
Speaker 2: recognize that is something that touches every single person in
Speaker 2: the country in a negative way. And when you when
Speaker 2: your wages go up, but you're spending You go into
Speaker 2: the grocery store every week and you're spending twenty percent,
Speaker 2: thirty percent, forty percent more for eggs and milk and
Speaker 2: things that you buy every week. It's or for gasoline.
Speaker 2: It's in your face, and it's it's really discouraging and
Speaker 2: off putting. And I think, to me, unemployment's horrible, but
Speaker 2: it touches if unemployment's high, it's six percent or seven percent,
Speaker 2: it touches a relatively small portion of the economy of
Speaker 2: the voter population and their families and friends and such.
Speaker 2: It's certainly a big issue, and its effect obviously on
Speaker 2: those people is huge. Is more dramatic than inflation, But
Speaker 2: inflation touches everybody, and it's a in my view, it's
Speaker 2: a cloud over the confidence that people have about the economy.
Speaker 3: So Ralph Rap, you've given us a lot of time.
Speaker 3: We're going to let you go. In a second. I
Speaker 3: can't help ask you, if you were in Paris on
Speaker 3: the night of the twenty sixteen, where are you're planning
Speaker 3: to be for this for this election, and maybe cast
Speaker 3: some light on whether what you think.
Speaker 2: I'm going to be in New York. I'm going to
Speaker 2: be with my two children and a bunch of friends
Speaker 2: that I'm an election party somewhere, and gosh, I have
Speaker 2: no better insight into who's going to win than I
Speaker 2: do into what the markets are going to do. Between
Speaker 2: now and the end of the year, I hope it's
Speaker 2: Vice President Harris. I actually think she's better for the country.
Speaker 2: I think she's younger, she brings us. I think to me,
Speaker 2: one of the great issues in our country and globally
Speaker 2: is the widening gap of wealth between the one percent
Speaker 2: and then the other ninety nine percent, and particularly the
Speaker 2: eighty percent that is the middle class and those who
Speaker 2: have less means than the middle class. And I think
Speaker 2: she's really attentive to that, and I believe that issue, unattended,
Speaker 2: will ultimately corrode support for capitalism and free democratic institutions.
Speaker 3: Ralph last, thank you very much for joining us.
Speaker 1: Thanks for listening to this week's Votonomics from Bloomberg. This
Speaker 1: episode was hosted by me alegra Stratton with Stephanie Flanders
Speaker 1: and Adrian Wooldridge. It was produced by Somersadi, production support
Speaker 1: from Chris Martlu and Isabella Ward. Sound designed by Blake Maples.
Speaker 1: Brendan Francis Newnham is our executive producer. Sage Bauman is
Speaker 1: head of Podcasts and special Thanks to Ralph Schlosstein and
Speaker 1: Emilie Nicole. Please subscribe, rate, and review wherever you listen
Speaker 1: to podcasts