1 00:00:00,240 --> 00:00:04,040 Speaker 1: Runt You by Bank of America Mary Lynch. With virtual reality, 2 00:00:04,320 --> 00:00:09,719 Speaker 1: virtually everything will change. Discover opportunities in a transforming world. 3 00:00:10,119 --> 00:00:14,440 Speaker 1: Be of a, mL dot Com, slash VR, Mary Lynch, 4 00:00:14,520 --> 00:00:29,240 Speaker 1: Pierced Fenner, and Smith Incorporated. Welcome to the Bloomberg Surveillance Podcast. 5 00:00:29,280 --> 00:00:32,760 Speaker 1: I'm Tom Keene with David Gura. Daily we bring you 6 00:00:32,840 --> 00:00:37,640 Speaker 1: insight from the best of economics, finance, investment, and international relations. 7 00:00:38,120 --> 00:00:43,640 Speaker 1: Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, Bloomberg dot Com, 8 00:00:43,640 --> 00:00:50,360 Speaker 1: and of course, on the Bloomberg. Good Morning. This is 9 00:00:50,400 --> 00:00:54,240 Speaker 1: Bloomberg Surveillance with Tom Keene and UH. The only one 10 00:00:54,280 --> 00:00:56,880 Speaker 1: who's missing is David Gura. Today I'm Michael McKee sitting 11 00:00:56,880 --> 00:00:59,360 Speaker 1: in for David, who is on assignment. He will be 12 00:00:59,400 --> 00:01:02,319 Speaker 1: back tomorrow those of you who are worried about him. 13 00:01:02,440 --> 00:01:07,280 Speaker 1: He's just doing some very key interviews out there in 14 00:01:07,600 --> 00:01:11,080 Speaker 1: TV land and radio land. UH. This morning, we are 15 00:01:11,160 --> 00:01:15,039 Speaker 1: following the China downgrade. Moody's knocks him down a peg, 16 00:01:15,760 --> 00:01:19,520 Speaker 1: no major impact. The Chinese stock market finished up by 17 00:01:19,560 --> 00:01:25,400 Speaker 1: a tenth Shanghai composite by about tenth of a percent overnight. 18 00:01:25,920 --> 00:01:29,679 Speaker 1: Futures in the US are mixed at this point, S 19 00:01:29,720 --> 00:01:32,920 Speaker 1: and P futures unchanged, OW futures down by four points, 20 00:01:33,040 --> 00:01:37,160 Speaker 1: Nasdaq futures up by five. So no real direction there, 21 00:01:37,240 --> 00:01:39,640 Speaker 1: and that's going to be a theme here with our 22 00:01:39,680 --> 00:01:42,520 Speaker 1: first guest. In just a moment I mentioned we are 23 00:01:42,840 --> 00:01:47,560 Speaker 1: starting the day without real direction. Futures are mixed, and 24 00:01:47,600 --> 00:01:51,040 Speaker 1: our first guest, Mike Wilson, is the chief US equity 25 00:01:51,080 --> 00:01:54,280 Speaker 1: strategist at Morgan Stanley. Uh. You sort of sum that 26 00:01:54,480 --> 00:01:57,040 Speaker 1: up in your most recent note when you said, well, 27 00:01:57,080 --> 00:02:00,400 Speaker 1: we're past earning season, we gotta figure out what we're 28 00:02:00,400 --> 00:02:04,400 Speaker 1: going to trade on next. Um, is there a theme 29 00:02:04,640 --> 00:02:07,400 Speaker 1: to look for here beyond the general what the heck 30 00:02:07,480 --> 00:02:10,200 Speaker 1: is going on in Washington? Uh? Thing that we're going 31 00:02:10,240 --> 00:02:12,520 Speaker 1: on with that that we have all the time. Yeah, 32 00:02:12,760 --> 00:02:15,000 Speaker 1: I think the next catalyst is the last catalyst. It's 33 00:02:15,080 --> 00:02:17,600 Speaker 1: just continuation of the same, which is that the next 34 00:02:17,600 --> 00:02:20,320 Speaker 1: two quarters were very confident about where earnings are in 35 00:02:20,360 --> 00:02:23,359 Speaker 1: terms of estimates and the achievability of those. So give 36 00:02:23,360 --> 00:02:25,520 Speaker 1: an example. Q one in the US we did about 37 00:02:25,520 --> 00:02:28,079 Speaker 1: we'll do about fiftent year over year growth, and Q 38 00:02:28,280 --> 00:02:30,400 Speaker 1: two we're only you know, the consensus. Now, I was 39 00:02:30,440 --> 00:02:32,440 Speaker 1: only looking for about six point eight percent year over 40 00:02:32,520 --> 00:02:35,320 Speaker 1: your growth. And that's where the backdrop where we're pretty 41 00:02:35,320 --> 00:02:38,760 Speaker 1: confident that nominal GDP is going to accelerate sharply. We 42 00:02:38,760 --> 00:02:40,920 Speaker 1: could see nominal GDP in two Q in the US 43 00:02:41,120 --> 00:02:43,960 Speaker 1: between five and six percent as things snap back. So 44 00:02:44,040 --> 00:02:47,240 Speaker 1: that's your proxy for sales growth, which is almost as 45 00:02:47,320 --> 00:02:50,120 Speaker 1: high as the expected earnings growth. That's just an easy 46 00:02:50,160 --> 00:02:52,679 Speaker 1: bar to get past. And so once again we're being 47 00:02:52,680 --> 00:02:56,560 Speaker 1: distracted by the news of Washington or the latest political event, 48 00:02:56,919 --> 00:02:59,560 Speaker 1: and you know, the markets are consolidating. Look, we should 49 00:02:59,600 --> 00:03:01,799 Speaker 1: have sold off much more at some point in the 50 00:03:01,880 --> 00:03:03,920 Speaker 1: last six or seven weeks given all the events that 51 00:03:03,960 --> 00:03:06,079 Speaker 1: have transpired, and we did not. To me, that's a 52 00:03:06,160 --> 00:03:08,920 Speaker 1: very constructive back drop. It's a consolidation. You don't think 53 00:03:09,680 --> 00:03:11,600 Speaker 1: that the risk or do you think the risk is 54 00:03:11,639 --> 00:03:14,000 Speaker 1: still out there? When you look at a pe for 55 00:03:14,040 --> 00:03:17,960 Speaker 1: the SMP of twenty one UM, it's not near the 56 00:03:18,000 --> 00:03:21,440 Speaker 1: records we saw in the past, but it is significantly 57 00:03:21,480 --> 00:03:25,560 Speaker 1: higher than the average. Uh. The the idea that we 58 00:03:25,600 --> 00:03:28,120 Speaker 1: could see a sell off still out there, well, we 59 00:03:28,160 --> 00:03:30,440 Speaker 1: have a little different view on that. So last you know, 60 00:03:30,520 --> 00:03:32,680 Speaker 1: we've talked about earnings, but the other story that's going 61 00:03:32,680 --> 00:03:35,040 Speaker 1: on is we are getting multiple expansion this year, So 62 00:03:35,120 --> 00:03:37,000 Speaker 1: we look at a little differently. We think we're training 63 00:03:37,080 --> 00:03:39,800 Speaker 1: seventeen and a half times right now forward twelve month 64 00:03:39,880 --> 00:03:43,280 Speaker 1: estimates of about one thirty eight, and those numbers are 65 00:03:43,320 --> 00:03:45,560 Speaker 1: likely going up over the next two quarters. Our our 66 00:03:45,640 --> 00:03:48,520 Speaker 1: thesis has been for a while that equity rist premiums 67 00:03:48,520 --> 00:03:51,960 Speaker 1: are now finally normalizing, much like other risk assets. And 68 00:03:52,000 --> 00:03:54,000 Speaker 1: if if we just get to a normal equity risk 69 00:03:54,040 --> 00:03:57,080 Speaker 1: premium in the US, we should trade nineteen times. And 70 00:03:57,080 --> 00:03:58,640 Speaker 1: how do we get there. That's two fifty and an 71 00:03:58,680 --> 00:04:01,200 Speaker 1: equity risk premium which is normal for the last hundred years, 72 00:04:01,400 --> 00:04:04,360 Speaker 1: plus a two seventy year which is five and a quarter, 73 00:04:04,440 --> 00:04:07,360 Speaker 1: and that's nineteen times. So nineteen times, you know, call 74 00:04:07,400 --> 00:04:10,080 Speaker 1: it a one two number, which we think is very visible. 75 00:04:10,160 --> 00:04:12,440 Speaker 1: The next sort of six months is something the market 76 00:04:12,480 --> 00:04:14,720 Speaker 1: should start to think about. So we think there's meaningful upside, 77 00:04:14,800 --> 00:04:17,560 Speaker 1: not just a couple percent, but meaningful upside. Mr Keene 78 00:04:17,600 --> 00:04:20,080 Speaker 1: has joined us from the television set, and to I 79 00:04:20,160 --> 00:04:24,080 Speaker 1: point out that Mike is looking for to seventy five tenure, 80 00:04:24,120 --> 00:04:27,640 Speaker 1: where at two eight this morning, there's some distance to go, 81 00:04:28,040 --> 00:04:30,360 Speaker 1: some distance to go but with kurve flattening that we've 82 00:04:30,360 --> 00:04:32,800 Speaker 1: seen in the last couple of days as well. We'll 83 00:04:32,800 --> 00:04:34,640 Speaker 1: do that within our data checks this morning. But as 84 00:04:34,680 --> 00:04:37,040 Speaker 1: Mike mentioned, it pretty quiet, nice day have you here, Michael, 85 00:04:37,360 --> 00:04:39,239 Speaker 1: we have to find time within the morning to speak 86 00:04:39,279 --> 00:04:45,719 Speaker 1: Denver Broncos football. Why exactly? That's what they would say 87 00:04:45,720 --> 00:04:48,800 Speaker 1: in Denver Good Morning and syrus Sex Channel one nineteen 88 00:04:49,480 --> 00:04:52,839 Speaker 1: in Denver, Michael Wilson with us with Morgan selling. Michael, 89 00:04:52,960 --> 00:04:55,719 Speaker 1: I want to go to the great secrets of Morgan 90 00:04:55,839 --> 00:04:59,719 Speaker 1: Stanley which are in your file. You are carrying a 91 00:05:00,000 --> 00:05:05,720 Speaker 1: Finder file that my father used in nineteen fifty eight. 92 00:05:05,880 --> 00:05:07,920 Speaker 1: This is folks. You have to see this. I'm gonna 93 00:05:07,960 --> 00:05:11,359 Speaker 1: take a photo of this and put it out on Twitter. 94 00:05:11,800 --> 00:05:14,680 Speaker 1: What what is in your file? What an equity strategies 95 00:05:14,800 --> 00:05:16,840 Speaker 1: carry around with them? I got this from a guy 96 00:05:16,920 --> 00:05:19,200 Speaker 1: named Clarence Speaks. Does that mean anything to you? It's 97 00:05:19,400 --> 00:05:21,880 Speaker 1: this is a cheap version of of of a fold. 98 00:05:21,920 --> 00:05:23,840 Speaker 1: It's lighter, it's paper. I can throw it away and 99 00:05:24,080 --> 00:05:25,719 Speaker 1: if I if I feeling fancy, I can get a 100 00:05:25,720 --> 00:05:28,279 Speaker 1: new one. Pretty pretty, pretty pretty good. You know. It's great. 101 00:05:28,440 --> 00:05:30,839 Speaker 1: So such a it's a massive throwback we're looking at 102 00:05:30,920 --> 00:05:34,400 Speaker 1: off folks, at this flexible one of those off red 103 00:05:34,640 --> 00:05:38,680 Speaker 1: Crownish files. I think Tom Hanks used that in you know, 104 00:05:39,160 --> 00:05:41,200 Speaker 1: tink Her Tip, whatever the spy movie was he had 105 00:05:41,240 --> 00:05:42,919 Speaker 1: a couple of years ago. What do you read it, 106 00:05:42,960 --> 00:05:46,599 Speaker 1: Morgan Stanley? What forms your equity opinion? Yeah? So we 107 00:05:46,600 --> 00:05:49,039 Speaker 1: we actually, uh, you know, I try to stay current 108 00:05:49,120 --> 00:05:51,280 Speaker 1: on everything, not just what's going on within the four 109 00:05:51,279 --> 00:05:53,320 Speaker 1: walls of Morgan Stanley because it's quite frankly, you know, 110 00:05:53,520 --> 00:05:55,839 Speaker 1: we don't have all the answers. Uh, And you have 111 00:05:55,920 --> 00:05:58,560 Speaker 1: to be yet to be wary of getting a group think. 112 00:05:58,960 --> 00:06:01,360 Speaker 1: So the advantage we have as we're global, we have 113 00:06:01,480 --> 00:06:03,960 Speaker 1: strategists and economists all over the world. We meet frequently, 114 00:06:03,960 --> 00:06:07,479 Speaker 1: we talked regularly, we email, but we but I read everything, Tom, 115 00:06:07,520 --> 00:06:09,480 Speaker 1: I mean you have to stay current. Is you're you're 116 00:06:09,480 --> 00:06:12,040 Speaker 1: well informed at what's the group think right now? What's 117 00:06:12,080 --> 00:06:14,760 Speaker 1: the group think that scares you right now? Well? I 118 00:06:14,800 --> 00:06:16,760 Speaker 1: think you know, we were early last year on the 119 00:06:16,880 --> 00:06:19,880 Speaker 1: idea that the you know, global economy had a recession 120 00:06:19,960 --> 00:06:23,480 Speaker 1: in fifteen and so sixteen was a recovery year, and 121 00:06:23,520 --> 00:06:26,039 Speaker 1: so we've been uh, we were early on that call 122 00:06:26,240 --> 00:06:30,200 Speaker 1: we've gotten more. Uh. I would argue conviction in that 123 00:06:30,240 --> 00:06:32,760 Speaker 1: call that it's more synchronous in nature now that we're 124 00:06:32,760 --> 00:06:35,719 Speaker 1: getting not just right GDP growth, we're getting a little 125 00:06:35,720 --> 00:06:38,760 Speaker 1: bit more inflation, that runaway inflation, and that really has 126 00:06:38,800 --> 00:06:41,800 Speaker 1: given us confidence that nominal GDP you know, is now 127 00:06:41,839 --> 00:06:44,919 Speaker 1: at a more sustainably higher level, which is critical in 128 00:06:44,920 --> 00:06:47,520 Speaker 1: the world has overlevered. And so the risk is is 129 00:06:47,560 --> 00:06:50,440 Speaker 1: that we have been right, uh, and that we now 130 00:06:50,480 --> 00:06:53,280 Speaker 1: are you know, we're looking for the self affrica, you know, 131 00:06:53,320 --> 00:06:55,800 Speaker 1: affirming data points. Okay, so we got to be very 132 00:06:56,520 --> 00:06:59,599 Speaker 1: just cognizant that we don't overstay our welcome because markets, 133 00:06:59,640 --> 00:07:03,480 Speaker 1: you know, eventually will have a tougher time when you 134 00:07:04,320 --> 00:07:06,680 Speaker 1: when you look at what the group think is, how 135 00:07:06,720 --> 00:07:11,200 Speaker 1: often do you step back and say they're right? I mean, 136 00:07:11,600 --> 00:07:14,560 Speaker 1: there's a reason the group is thinking this way. I 137 00:07:14,560 --> 00:07:16,640 Speaker 1: mean how much weight do you put on trying to 138 00:07:16,640 --> 00:07:21,040 Speaker 1: be contrary or worry about what other people I think? 139 00:07:21,440 --> 00:07:23,559 Speaker 1: You know, that's that's a great question, Michael. They Uh, 140 00:07:24,160 --> 00:07:27,040 Speaker 1: I've learned. I've spent the last four years I've spent 141 00:07:27,080 --> 00:07:30,080 Speaker 1: in our wealth management area. Prior to twenty years was 142 00:07:30,120 --> 00:07:32,840 Speaker 1: in the institutional world, and the biggest advantage of being 143 00:07:32,840 --> 00:07:36,160 Speaker 1: in that world was not being is easily distracted by 144 00:07:36,200 --> 00:07:39,640 Speaker 1: the noise. So I've learned to kind of not get 145 00:07:39,680 --> 00:07:43,360 Speaker 1: such an itchy trigger finger. When you know things are 146 00:07:43,400 --> 00:07:45,040 Speaker 1: working and your call is right, you have to let 147 00:07:45,040 --> 00:07:47,160 Speaker 1: things run a little bit. And quite frankly, I think 148 00:07:47,400 --> 00:07:50,040 Speaker 1: the reason why a lot of institutional managers have had 149 00:07:50,080 --> 00:07:52,560 Speaker 1: struggled the last seven or eight years is because they 150 00:07:52,600 --> 00:07:56,160 Speaker 1: haven't been willing to stay with their investments, that their 151 00:07:56,240 --> 00:07:58,920 Speaker 1: their thought process. They've been too willing to trade it 152 00:07:58,960 --> 00:08:00,720 Speaker 1: to to kind of move in and out of things. 153 00:08:00,760 --> 00:08:04,400 Speaker 1: And quite frankly, there's been some terrific, uh, you know, 154 00:08:04,520 --> 00:08:06,440 Speaker 1: longer term themes in the last seven or eight years. 155 00:08:06,480 --> 00:08:08,240 Speaker 1: If you, if you, if you could have captured it 156 00:08:08,240 --> 00:08:10,720 Speaker 1: will defend for me the idea of buying hold. I'm 157 00:08:10,720 --> 00:08:12,640 Speaker 1: sure you saw the Wall Street Journal story this week. 158 00:08:12,840 --> 00:08:15,200 Speaker 1: This is the quants are taking over, and that's trade 159 00:08:15,200 --> 00:08:17,360 Speaker 1: in and out as fast as you can. Well, I think, 160 00:08:17,360 --> 00:08:19,200 Speaker 1: and I think they're in lies the opportunity. So the 161 00:08:19,240 --> 00:08:22,240 Speaker 1: two advantages that the two I would argue advantages that 162 00:08:22,280 --> 00:08:25,440 Speaker 1: are still out there right now are sort of liquidity 163 00:08:25,480 --> 00:08:29,160 Speaker 1: and time, uh and and actually individual investors or wealth 164 00:08:29,200 --> 00:08:32,240 Speaker 1: owners had those advantagers. We don't, you know, individuals don't 165 00:08:32,280 --> 00:08:34,080 Speaker 1: need to perform every day or every month or even 166 00:08:34,080 --> 00:08:37,440 Speaker 1: every year. And so the idea that buy and hold 167 00:08:37,800 --> 00:08:40,360 Speaker 1: went out of style in sort of two thousand and 168 00:08:40,400 --> 00:08:44,080 Speaker 1: two after the you know, tech crisis is classic behavioral 169 00:08:44,120 --> 00:08:46,040 Speaker 1: economics one O one. Right. Everybody wanted to be buy 170 00:08:46,040 --> 00:08:48,440 Speaker 1: and holding the nineties when it's exactly when you should 171 00:08:48,440 --> 00:08:50,720 Speaker 1: have been thinking about, you know, maybe being a bit 172 00:08:50,760 --> 00:08:53,040 Speaker 1: more tactical as we were going into a secular bear market. 173 00:08:53,040 --> 00:08:55,040 Speaker 1: But of course now we're in a secular bowl market, 174 00:08:55,559 --> 00:08:58,840 Speaker 1: and everybody wants to be a trader. And the reality 175 00:08:58,920 --> 00:09:00,600 Speaker 1: is that this is a time time to be more 176 00:09:00,640 --> 00:09:03,280 Speaker 1: of a buy and hold mentality, not not because the 177 00:09:03,320 --> 00:09:07,880 Speaker 1: world's perfect place, but because the compound returns tax deferred 178 00:09:07,920 --> 00:09:09,319 Speaker 1: is the best way to be. I'm putting his on 179 00:09:09,440 --> 00:09:12,680 Speaker 1: on Twitter, and there's a massive global viral support for 180 00:09:12,720 --> 00:09:19,360 Speaker 1: the pendeflex indexed expanding files lettercraft January to December index 181 00:09:19,440 --> 00:09:25,200 Speaker 1: twelve pockets each sixteen dollars. It's no it comes in. 182 00:09:25,480 --> 00:09:29,200 Speaker 1: It's called Wilson red at Staples, and it was Michael 183 00:09:29,200 --> 00:09:32,040 Speaker 1: Wilson with and we will continue with a smart discussion 184 00:09:32,120 --> 00:09:36,280 Speaker 1: on equity uh markets as well. Michael McKee and Tom Keane. 185 00:09:36,320 --> 00:09:38,840 Speaker 1: Michael McKee and for David Girl, where's David today? Michael, 186 00:09:39,280 --> 00:09:45,440 Speaker 1: He's just an assignment as he's on assignment. I always 187 00:09:45,480 --> 00:09:48,760 Speaker 1: have fascinated by that Tiffany news and um, you live 188 00:09:48,840 --> 00:09:50,679 Speaker 1: right by there. You're not chatting? Yeah, I know, but 189 00:09:50,800 --> 00:09:53,840 Speaker 1: I went through. I went through the entire press release, 190 00:09:53,880 --> 00:09:56,240 Speaker 1: and thank you Tiffany's for writing a press release in English. 191 00:09:56,280 --> 00:09:59,400 Speaker 1: It's really quite good their earnings report. And I believe 192 00:09:59,520 --> 00:10:02,520 Speaker 1: I saw no mention of the Trump effect. I was 193 00:10:02,600 --> 00:10:05,600 Speaker 1: just gonna do. I'm curious because, of course, for those 194 00:10:05,640 --> 00:10:07,800 Speaker 1: of you who don't live in New York, Trump Tower 195 00:10:08,440 --> 00:10:13,320 Speaker 1: is literally next door to Tiffany's and you can't get near. 196 00:10:13,880 --> 00:10:16,840 Speaker 1: Um the place. It's better than it was. It's it's 197 00:10:16,840 --> 00:10:18,560 Speaker 1: better than it was. But I don't believe I saw 198 00:10:18,679 --> 00:10:21,760 Speaker 1: like a single line com sales at Fifth Avenue or 199 00:10:22,160 --> 00:10:24,760 Speaker 1: or you know, lower etcetera. But but never those is there. 200 00:10:24,800 --> 00:10:28,760 Speaker 1: And then Google on the other side. Impact, Yeah, a 201 00:10:28,800 --> 00:10:31,600 Speaker 1: great impact at the Keene household. Michael Wilson with us 202 00:10:31,640 --> 00:10:35,240 Speaker 1: with Morgan Stanley on the equity markets, how do you 203 00:10:35,320 --> 00:10:38,800 Speaker 1: advise and not about individual stocks, but you're with with 204 00:10:38,960 --> 00:10:42,760 Speaker 1: your wealth management people or even institutional and they go, look, 205 00:10:42,800 --> 00:10:45,960 Speaker 1: I just need to own four stocks Apple, Amazon, and 206 00:10:46,080 --> 00:10:49,520 Speaker 1: named two others. You know, this isn't in Graham, Dodd 207 00:10:49,559 --> 00:10:53,680 Speaker 1: and Coddle, is it? I mean, Amazon is not in Graham, 208 00:10:53,760 --> 00:10:55,880 Speaker 1: is it? Yeah? I don't think it would qualify as 209 00:10:55,920 --> 00:10:58,920 Speaker 1: a value stocked the way, But is it a value 210 00:10:59,000 --> 00:11:01,320 Speaker 1: given the growth that's out there? Well, Like, I'm not 211 00:11:01,320 --> 00:11:03,360 Speaker 1: gonna comment on Amazon specifically, but I mean I would 212 00:11:03,360 --> 00:11:05,920 Speaker 1: I would say that the secular growth stocks that have 213 00:11:06,000 --> 00:11:08,920 Speaker 1: done so well, there's a whole cohort of them. Uh. 214 00:11:08,960 --> 00:11:10,920 Speaker 1: You know, look, this is the world that we are in. 215 00:11:10,920 --> 00:11:13,480 Speaker 1: In a world that's been starred for growth, the market 216 00:11:13,559 --> 00:11:17,240 Speaker 1: has been up very fast growing companies that can grow 217 00:11:17,360 --> 00:11:21,040 Speaker 1: organically with or without an economic backdrop that's conducive for growth. 218 00:11:21,320 --> 00:11:23,200 Speaker 1: And then going back to we were talking about last 219 00:11:23,200 --> 00:11:25,200 Speaker 1: hour and the dividend pairs, right, So that's the barbell 220 00:11:25,280 --> 00:11:28,360 Speaker 1: that's been working. Uh. And the reality though, is that 221 00:11:28,480 --> 00:11:31,520 Speaker 1: the breath in the market has been much better than 222 00:11:31,600 --> 00:11:34,360 Speaker 1: people might think. Okay, to go back, Mike on television, 223 00:11:34,840 --> 00:11:38,560 Speaker 1: we said Verizon a twelve or thirteen times earnings Colgate 224 00:11:38,600 --> 00:11:43,880 Speaker 1: Palmato the nifty fifty six times earnings, I'm gonna center 225 00:11:43,960 --> 00:11:52,280 Speaker 1: tendency Amazon at a hundred and sixty times earnings one zero. Wow. Well, uh, 226 00:11:52,679 --> 00:11:57,400 Speaker 1: it has been a good run for Jeff Bezos and company. Um, 227 00:11:57,440 --> 00:12:03,160 Speaker 1: but you gotta wonder how your suggestion, Michael, that uh, 228 00:12:03,960 --> 00:12:06,920 Speaker 1: with nominal growth picking up and still room to run 229 00:12:07,520 --> 00:12:12,040 Speaker 1: in terms of multiples, Um, we should see more breath 230 00:12:12,120 --> 00:12:14,920 Speaker 1: developed that we've had. Yeah, but I want to go 231 00:12:14,960 --> 00:12:16,840 Speaker 1: back to that because the breath has actually been quite good. 232 00:12:17,280 --> 00:12:19,880 Speaker 1: It's just that the the you know, the leaders have 233 00:12:20,040 --> 00:12:23,200 Speaker 1: been extraordinary. Uh. And let let's go back to like 234 00:12:23,240 --> 00:12:27,160 Speaker 1: the New York Marathon where you've got four guys from verybody, 235 00:12:27,160 --> 00:12:29,240 Speaker 1: but you still ran a good races. Okay, you know, 236 00:12:29,800 --> 00:12:31,240 Speaker 1: but you know, and that's what kind of what's going 237 00:12:31,280 --> 00:12:33,040 Speaker 1: on is that there are a lot of stocks running 238 00:12:33,080 --> 00:12:35,320 Speaker 1: a good race. There are some stocks that are running 239 00:12:35,360 --> 00:12:39,280 Speaker 1: a ridiculous race. Uh. And they have they have goosed 240 00:12:39,280 --> 00:12:41,120 Speaker 1: the returns. But if you took those stocks out, the 241 00:12:41,160 --> 00:12:43,400 Speaker 1: returns this year would be quite good for the for 242 00:12:43,440 --> 00:12:45,600 Speaker 1: the overall market. And and I also go back to 243 00:12:45,600 --> 00:12:47,880 Speaker 1: the breath of the broader equity market, not just in 244 00:12:47,880 --> 00:12:50,160 Speaker 1: the US but globally. That that the signal from the 245 00:12:50,200 --> 00:12:53,920 Speaker 1: global equity market is I think confirmation of this idea 246 00:12:53,960 --> 00:12:56,240 Speaker 1: that this is a global economic and earnings recovery. It's 247 00:12:56,280 --> 00:12:59,280 Speaker 1: not about the four stocks. This is not let's put 248 00:12:59,280 --> 00:13:01,520 Speaker 1: it that way, whether they're really were only the t 249 00:13:01,640 --> 00:13:03,840 Speaker 1: MT area that was working and everything else was going down, 250 00:13:03,960 --> 00:13:07,160 Speaker 1: or two thousand fifteen when it was extraordinarily narrow and 251 00:13:07,200 --> 00:13:09,839 Speaker 1: there was an outright recession in the old economy. Let's 252 00:13:09,880 --> 00:13:12,120 Speaker 1: talk about two thousand and sixteen, just real quick, um, 253 00:13:12,160 --> 00:13:13,560 Speaker 1: this is you know, this is what happens when we 254 00:13:13,640 --> 00:13:16,360 Speaker 1: come off the recession. Those stocks that we were just 255 00:13:16,400 --> 00:13:21,120 Speaker 1: mentioning the fast growers, uh, they underperformed significantly, and the 256 00:13:21,280 --> 00:13:26,400 Speaker 1: value cyclical areas like financials, industrials, materials really outperformed. We 257 00:13:26,440 --> 00:13:29,079 Speaker 1: think there's another leg of that probably in the second 258 00:13:29,080 --> 00:13:31,680 Speaker 1: half of this year, as people get comfortable, particularly fixed 259 00:13:31,679 --> 00:13:33,959 Speaker 1: income investors, get comfortable that growth is not rolling over, 260 00:13:34,000 --> 00:13:36,319 Speaker 1: that it's actually maybe even accelerating again in the US. 261 00:13:36,640 --> 00:13:39,960 Speaker 1: And then do you see age spots start to develop 262 00:13:40,160 --> 00:13:43,439 Speaker 1: or is it too hard to know given the uncertainty 263 00:13:43,480 --> 00:13:45,720 Speaker 1: with what's happening with fiscal policy in the US and 264 00:13:46,320 --> 00:13:48,640 Speaker 1: monetary policy in Europe. Well, I think the things that 265 00:13:48,679 --> 00:13:50,840 Speaker 1: we were looking for to tell us that we're getting closed, 266 00:13:50,880 --> 00:13:54,319 Speaker 1: it's getting more dangerous, right, would be credit spreads is 267 00:13:54,360 --> 00:13:56,480 Speaker 1: probably a good thing to watch. The YEO curve, as 268 00:13:56,480 --> 00:13:59,320 Speaker 1: we mentioned earlier, tom is not flat yet. It's still 269 00:13:59,360 --> 00:14:02,720 Speaker 1: got you know, eighty basis ninety basis points of steepness 270 00:14:02,760 --> 00:14:05,000 Speaker 1: to it. And that's okay, that's a decent environment. Go 271 00:14:05,080 --> 00:14:07,559 Speaker 1: back in time and look at look at the periods 272 00:14:07,559 --> 00:14:10,280 Speaker 1: when you had about ninety basis points after a big flattening. 273 00:14:10,480 --> 00:14:13,040 Speaker 1: That was actually a pretty good time down stocks. Michael Wilson, 274 00:14:13,080 --> 00:14:15,520 Speaker 1: thank you for joining US Today Television Radio. He is 275 00:14:16,160 --> 00:14:20,680 Speaker 1: chief equity strategist from Morgan Stanley with decades at the firm, 276 00:14:20,720 --> 00:14:36,800 Speaker 1: taking a more fundamental view of these equity markets. Surely 277 00:14:36,840 --> 00:14:40,640 Speaker 1: one of our most valuable guests. Stanley Collendar of Corvis 278 00:14:41,360 --> 00:14:45,040 Speaker 1: MSL Group on the Budget, on his expertise of what 279 00:14:45,080 --> 00:14:49,920 Speaker 1: the hill actually does with your tax dollars. Stan Collendar, 280 00:14:49,960 --> 00:14:52,800 Speaker 1: Michael McKee wants to dive into the budget, but I've 281 00:14:52,840 --> 00:14:57,600 Speaker 1: got to ask about CBO. I keep refreshing CBO waiting 282 00:14:57,680 --> 00:15:00,920 Speaker 1: for that scoring which we will se today. Do you 283 00:15:00,960 --> 00:15:04,840 Speaker 1: have a guestimate of when we'll see the actual healthcare 284 00:15:04,960 --> 00:15:09,680 Speaker 1: scoring by CBO? My guess is later this afternoon, Tom, 285 00:15:09,720 --> 00:15:11,840 Speaker 1: I would stop refreshing for a couple of hours. I 286 00:15:13,280 --> 00:15:16,480 Speaker 1: don't want to jump in here and sound like an expert, 287 00:15:16,560 --> 00:15:21,440 Speaker 1: but you but I will know because the CBO actually 288 00:15:21,600 --> 00:15:26,400 Speaker 1: said they will put it out this afternoon. Blog um, 289 00:15:26,440 --> 00:15:30,800 Speaker 1: they are going to release it in the afternoon. It 290 00:15:30,880 --> 00:15:32,880 Speaker 1: says it doesn't say what didn't I didn't. I just 291 00:15:32,880 --> 00:15:35,080 Speaker 1: say that, Yeah, that's okay, that's why we pay you 292 00:15:35,160 --> 00:15:37,680 Speaker 1: Can I go? Should I just go home? Why you can? 293 00:15:37,720 --> 00:15:40,480 Speaker 1: I just want to leave now and let Colin post 294 00:15:40,560 --> 00:15:43,200 Speaker 1: the show. Stan. What is the scoring actually gonna say? 295 00:15:43,200 --> 00:15:46,800 Speaker 1: What are we gonna see? Well, look, I don't I 296 00:15:47,160 --> 00:15:49,960 Speaker 1: didn't ask, and I don't know precisely what they're gonna say. 297 00:15:50,040 --> 00:15:51,680 Speaker 1: It's going to be an update of the scoring they 298 00:15:51,680 --> 00:15:55,360 Speaker 1: did of the previous version, and there are two things 299 00:15:55,360 --> 00:15:57,600 Speaker 1: to watch. There'll be two numbers that are important. One 300 00:15:57,680 --> 00:16:00,200 Speaker 1: is the impact on the deficit I'll talk about in 301 00:16:00,200 --> 00:16:02,960 Speaker 1: the second, and the second is how many people will 302 00:16:03,000 --> 00:16:05,400 Speaker 1: be thrown off health will lose their health care coverage 303 00:16:05,440 --> 00:16:08,720 Speaker 1: because of this. UM. The first number, the deficit number, 304 00:16:08,840 --> 00:16:12,080 Speaker 1: is important because if it doesn't reduce the deficit by 305 00:16:12,120 --> 00:16:15,480 Speaker 1: two billion dollars, Uh, then it won't comply with the 306 00:16:15,480 --> 00:16:18,080 Speaker 1: reconciliation instructions in the House will have to take another 307 00:16:18,160 --> 00:16:20,720 Speaker 1: vote on this, which it probably can't do and pass. 308 00:16:21,080 --> 00:16:23,280 Speaker 1: But there's that's not gonna happen, right. I mean the 309 00:16:23,800 --> 00:16:27,640 Speaker 1: last scoring UM found it would save a hundred and 310 00:16:27,640 --> 00:16:30,440 Speaker 1: fifty billions, So I mean they got at eight to 311 00:16:30,480 --> 00:16:35,400 Speaker 1: play with. UM. Yeah, I look, they're they're they're they're close. Uh, 312 00:16:36,000 --> 00:16:37,960 Speaker 1: but we don't know what the impact of the changes 313 00:16:38,000 --> 00:16:41,760 Speaker 1: that the House made in the second version. So this 314 00:16:41,840 --> 00:16:43,760 Speaker 1: is this is the big, the big thing that everyone's 315 00:16:43,800 --> 00:16:45,840 Speaker 1: holding their breath on because the House won't be able 316 00:16:45,840 --> 00:16:49,240 Speaker 1: to repass this the second time. But political number that's 317 00:16:49,240 --> 00:16:51,120 Speaker 1: going to be more important is the second one, and 318 00:16:51,160 --> 00:16:53,120 Speaker 1: that's that's the one. How many people are likely to 319 00:16:53,160 --> 00:16:57,080 Speaker 1: lose their healthcare coverage because of this change from Obamacare. Uh. 320 00:16:57,120 --> 00:16:59,360 Speaker 1: If it's if it's around the twenty or twenty four 321 00:16:59,400 --> 00:17:02,600 Speaker 1: billion men that we had the first time, Uh, it's 322 00:17:02,640 --> 00:17:04,679 Speaker 1: going to be a real political problem and it's going 323 00:17:04,720 --> 00:17:06,840 Speaker 1: to make life very very difficult for the Senate and 324 00:17:07,240 --> 00:17:10,320 Speaker 1: probably makes passage of anything, any kind of healthcare reform 325 00:17:10,400 --> 00:17:13,159 Speaker 1: this year much more problematic. As long as we're in healthcare, 326 00:17:13,200 --> 00:17:16,119 Speaker 1: let's stay on that subject for a moment and ask 327 00:17:16,400 --> 00:17:18,520 Speaker 1: where the Senate is at this point. I mean, they 328 00:17:18,520 --> 00:17:20,480 Speaker 1: basically said, forget what the House did, We're going to 329 00:17:20,520 --> 00:17:25,280 Speaker 1: write our own bill. Um, where are they Basically nowhere? 330 00:17:25,320 --> 00:17:28,280 Speaker 1: They're there, you know, Mike, after it's been eight years 331 00:17:28,280 --> 00:17:30,960 Speaker 1: that the Republicans were screaming about Obamacare, but they didn't 332 00:17:30,960 --> 00:17:33,520 Speaker 1: make any serious effort during that time to come up 333 00:17:33,560 --> 00:17:36,360 Speaker 1: with an alternative. They're just dealing with that now. Uh, 334 00:17:36,440 --> 00:17:39,000 Speaker 1: the Senate has got a gang of anywhere from thirteen 335 00:17:39,040 --> 00:17:41,040 Speaker 1: to twenty members, which is a fifth of the Senate 336 00:17:41,359 --> 00:17:43,639 Speaker 1: at any one time, trying to trying to explain to 337 00:17:43,880 --> 00:17:46,720 Speaker 1: uh Mr McConnell, the Senate majority leader, what they want 338 00:17:46,720 --> 00:17:48,280 Speaker 1: and what they need in order to in order to 339 00:17:48,359 --> 00:17:50,639 Speaker 1: be able to vote for something. So these are just 340 00:17:50,680 --> 00:17:53,280 Speaker 1: preliminary discussions that my guess would be and it's just 341 00:17:53,359 --> 00:17:55,880 Speaker 1: a guess that if you see anything had come out 342 00:17:55,880 --> 00:17:58,280 Speaker 1: of the Senate, it won't be until after Labor Day. 343 00:17:58,840 --> 00:18:02,400 Speaker 1: Send condor were gonna continue this discussion here with Ah, 344 00:18:02,640 --> 00:18:05,880 Speaker 1: it's a double I guess it's scathing squared the calendar 345 00:18:05,880 --> 00:18:09,560 Speaker 1: with a scathing note in Forbes, followed by Laurence Summers, 346 00:18:09,560 --> 00:18:12,920 Speaker 1: a former Secretary of Treasury, with an equally terse note 347 00:18:12,960 --> 00:18:16,320 Speaker 1: in The Washington Post. We'll dive into the actual budget 348 00:18:16,320 --> 00:18:19,840 Speaker 1: debate of yesterday and actually to move the story forward 349 00:18:20,320 --> 00:18:24,440 Speaker 1: to where Congress may go again with your tax at dollars. 350 00:18:24,480 --> 00:18:26,119 Speaker 1: Michael McKee and Tom you know I'm gonna ask a 351 00:18:26,160 --> 00:18:29,679 Speaker 1: question here of stand calendar and get out of the way, 352 00:18:29,680 --> 00:18:32,280 Speaker 1: because McKeon knows a lot more about this than I do. 353 00:18:32,480 --> 00:18:39,520 Speaker 1: Stand cold three growth assumptions. Are you kidding me? Good? Look, 354 00:18:39,560 --> 00:18:42,320 Speaker 1: I didn't say it. This is what the administration is 355 00:18:42,320 --> 00:18:45,639 Speaker 1: saying is it's gonna happen, but they don't say exactly 356 00:18:45,720 --> 00:18:48,520 Speaker 1: how it's gonna happen. It's more wishful thinking. And it's 357 00:18:48,640 --> 00:18:51,399 Speaker 1: it's at least a full point Mike, correct me if 358 00:18:51,400 --> 00:18:53,240 Speaker 1: I'm wrong. It's at least a full point over what 359 00:18:53,600 --> 00:18:56,080 Speaker 1: the Congressional Budget Offices is likely to happen over the 360 00:18:56,080 --> 00:18:58,280 Speaker 1: next decade and what the Federal Reserve says it is 361 00:18:58,280 --> 00:19:01,040 Speaker 1: going to happen over the next decade. Um And and 362 00:19:01,320 --> 00:19:03,959 Speaker 1: Mick Mulveny onb director yesterday said if he doesn't get 363 00:19:04,000 --> 00:19:06,879 Speaker 1: three gross, he can't balance the budget. I guess that 364 00:19:06,880 --> 00:19:08,639 Speaker 1: means we're going to have a much bigger deficit than 365 00:19:08,720 --> 00:19:13,000 Speaker 1: anyone any anyone's projecting right now. Uh, let's unpack a 366 00:19:13,080 --> 00:19:19,159 Speaker 1: little bit of this. Uh. The the interesting thing, you 367 00:19:19,240 --> 00:19:21,840 Speaker 1: and I are old enough. Uh. We won't say how 368 00:19:21,880 --> 00:19:25,280 Speaker 1: old we are. But I don't remember a presidential budget 369 00:19:25,320 --> 00:19:29,040 Speaker 1: being delivered to Capitol Hill that wasn't considered dead on arrival. 370 00:19:29,080 --> 00:19:32,840 Speaker 1: It's more a political statement about what they want um. 371 00:19:33,080 --> 00:19:38,399 Speaker 1: And so I don't quite get the fixation with the 372 00:19:38,520 --> 00:19:42,560 Speaker 1: balanced budget in the sense that mulveney is not a 373 00:19:42,640 --> 00:19:45,040 Speaker 1: dumb guy and he has to know that this thing 374 00:19:45,160 --> 00:19:50,040 Speaker 1: is is a jury rigged um kind of joke in 375 00:19:50,160 --> 00:19:53,280 Speaker 1: terms of some of the things the accounting gimmicks they use, 376 00:19:53,359 --> 00:19:55,760 Speaker 1: which a lot of people, including Bloomberg News have written about. 377 00:19:56,080 --> 00:19:58,919 Speaker 1: So why do they do that? I mean, why, why, 378 00:19:58,960 --> 00:20:04,280 Speaker 1: what's the motivation? Why don't they just do a realistic budget? Um? Look, 379 00:20:04,320 --> 00:20:07,119 Speaker 1: the last realistic budget I can remember was Gerald Ford 380 00:20:07,160 --> 00:20:09,719 Speaker 1: when he was predicting that the economy was gonna GDP 381 00:20:09,920 --> 00:20:13,040 Speaker 1: was not going to grow, and he got widely criticized 382 00:20:13,080 --> 00:20:14,840 Speaker 1: for it for saying, how can you predict it it's 383 00:20:14,840 --> 00:20:16,119 Speaker 1: not going to grow and not come up with a 384 00:20:16,119 --> 00:20:19,080 Speaker 1: plan to make it grow. Um. The President promised to 385 00:20:19,119 --> 00:20:22,479 Speaker 1: balance budget during the campaign. He promised economic growth is 386 00:20:22,840 --> 00:20:24,680 Speaker 1: three eight four. I think at one point he said 387 00:20:24,680 --> 00:20:28,440 Speaker 1: it could even be five. Um. So this is you 388 00:20:28,520 --> 00:20:30,200 Speaker 1: got to look at this budget. You're right, it's a 389 00:20:30,200 --> 00:20:32,840 Speaker 1: political statement. You got to look at what the administration 390 00:20:32,920 --> 00:20:36,359 Speaker 1: yesterday did essentially as a Trump political rally. On paper, 391 00:20:37,160 --> 00:20:39,520 Speaker 1: it's just a play to the base to say, see, 392 00:20:39,560 --> 00:20:41,439 Speaker 1: we did what we're doing, what we told you we 393 00:20:41,440 --> 00:20:44,200 Speaker 1: were going to do. I don't think anybody takes it seriously. 394 00:20:44,840 --> 00:20:47,720 Speaker 1: I mean, what struck me about it is it's the 395 00:20:47,800 --> 00:20:51,480 Speaker 1: President appointed a Tea Party congressman as omb director, and 396 00:20:51,480 --> 00:20:54,400 Speaker 1: he got a Tea Party document. The real news here 397 00:20:54,520 --> 00:20:58,159 Speaker 1: is that the people like mc mulvaney and and the 398 00:20:58,240 --> 00:21:01,560 Speaker 1: Freedom Caucus believe that from it is too big. So 399 00:21:01,920 --> 00:21:04,399 Speaker 1: the document says, here's what you do about it. You 400 00:21:04,480 --> 00:21:07,680 Speaker 1: cut funding for everything and you make it go away. Yeah, 401 00:21:07,760 --> 00:21:09,960 Speaker 1: except that the real news actually there are a couple 402 00:21:09,960 --> 00:21:11,679 Speaker 1: of pieces of real news, But the real news is 403 00:21:12,119 --> 00:21:15,399 Speaker 1: they predicted that they put out a Freedom Caucus budget 404 00:21:15,480 --> 00:21:21,320 Speaker 1: that was widely and resoundingly and bipartisanly rejected yesterday. You 405 00:21:21,400 --> 00:21:23,720 Speaker 1: even you even have senior Republicans in the Senate said, 406 00:21:23,760 --> 00:21:25,520 Speaker 1: not gonna happen. We're not going to pay any attention 407 00:21:25,560 --> 00:21:27,960 Speaker 1: to it. Let's move on. So, I mean, this was 408 00:21:28,040 --> 00:21:31,919 Speaker 1: a pretty bad defeat yesterday, a failure for the Freedom 409 00:21:31,960 --> 00:21:33,840 Speaker 1: Caucus budget. And for those who think that we've just 410 00:21:33,880 --> 00:21:36,800 Speaker 1: got to get the government down into into miniscule levels 411 00:21:36,800 --> 00:21:39,480 Speaker 1: and one you one percent growth rates and those types 412 00:21:39,520 --> 00:21:42,159 Speaker 1: of things. Look, the second piece of news is that 413 00:21:42,240 --> 00:21:44,320 Speaker 1: this is the first time in my memory and I 414 00:21:44,400 --> 00:21:46,400 Speaker 1: will not give my age either, but it's at least 415 00:21:46,440 --> 00:21:48,480 Speaker 1: forty years since I've been working on the budget, the 416 00:21:48,560 --> 00:21:50,639 Speaker 1: first time that I can remember the president and not 417 00:21:50,760 --> 00:21:54,160 Speaker 1: being in the country when his budget was revealed. Usually 418 00:21:54,200 --> 00:21:56,880 Speaker 1: the president wants to have a press conference and take 419 00:21:56,880 --> 00:21:58,960 Speaker 1: a victory lap for what what was proposed, and that 420 00:21:59,000 --> 00:22:01,880 Speaker 1: didn't happen yesterday. And the third thing is this Treasury 421 00:22:01,880 --> 00:22:05,679 Speaker 1: secretary was nowhere to be found on on this budget. 422 00:22:05,760 --> 00:22:08,840 Speaker 1: Usually the Treasury secretary is part of the unveiling of 423 00:22:08,880 --> 00:22:12,320 Speaker 1: the president's budgets because presumably taxes are a relatively big 424 00:22:12,359 --> 00:22:15,200 Speaker 1: part of it. So it looks like this administration has 425 00:22:15,320 --> 00:22:17,840 Speaker 1: has walked away from its own budget almost from the 426 00:22:17,880 --> 00:22:19,800 Speaker 1: moment it was submitted. Okay, but that goes back to 427 00:22:19,880 --> 00:22:23,359 Speaker 1: Mike's question, why did they do this budget? If the 428 00:22:23,400 --> 00:22:27,320 Speaker 1: administration just walked away from it, I'm baffled. Well, they 429 00:22:28,040 --> 00:22:29,920 Speaker 1: they did it just to put out of the equivalent 430 00:22:29,920 --> 00:22:32,719 Speaker 1: of a campaign brochure. They'll point to it all. Has 431 00:22:32,760 --> 00:22:34,919 Speaker 1: anyone ever done that before? Have you seen that in 432 00:22:34,960 --> 00:22:38,080 Speaker 1: your what is it? Eighty year history in Washington? Dred 433 00:22:38,119 --> 00:22:42,560 Speaker 1: and thirty two? But thank you? Um right? I used 434 00:22:42,600 --> 00:22:46,800 Speaker 1: dynamic scoring for t come up with my age. Um, Look, 435 00:22:47,119 --> 00:22:50,960 Speaker 1: every president's budget is at least partly a political statement. Uh, 436 00:22:51,000 --> 00:22:53,920 Speaker 1: it's it's usually all a part political statement, part accounting 437 00:22:53,960 --> 00:22:57,280 Speaker 1: document that is part governing document. This one is almost 438 00:22:57,480 --> 00:23:00,720 Speaker 1: entirely political. I've seen that a lot, particularly two of 439 00:23:00,760 --> 00:23:04,320 Speaker 1: the final budgets of the first budgets of presidents. Um. 440 00:23:04,520 --> 00:23:07,160 Speaker 1: But it's unusual to get it's unusually get a political 441 00:23:07,200 --> 00:23:09,320 Speaker 1: document given to a Congress of your own party that 442 00:23:09,400 --> 00:23:13,480 Speaker 1: you expect to act on it. What's the why if 443 00:23:13,520 --> 00:23:17,800 Speaker 1: we stay it's a political document? Why do it? It's 444 00:23:17,800 --> 00:23:21,840 Speaker 1: for it's for re election purposes. It's to reassure the base. Um. 445 00:23:22,160 --> 00:23:25,520 Speaker 1: It has very little to do with actually governing or 446 00:23:25,560 --> 00:23:28,760 Speaker 1: expecting Congress is going to implement or adopt and implement 447 00:23:28,800 --> 00:23:31,800 Speaker 1: what the president proposed. This is just the quickly equivalent 448 00:23:31,800 --> 00:23:34,280 Speaker 1: of a political platform during the campaign. All Right, so 449 00:23:34,320 --> 00:23:36,760 Speaker 1: you said, Um, we move on to what's next? So 450 00:23:36,800 --> 00:23:39,840 Speaker 1: what is next? Does this have a negative effect on 451 00:23:40,160 --> 00:23:43,119 Speaker 1: the effort to pass a two thousand eighteen budget resolution 452 00:23:43,400 --> 00:23:48,560 Speaker 1: and therefore get tax reform. Well, the answer is yes, Um, 453 00:23:48,880 --> 00:23:52,120 Speaker 1: it's it did two things. First of all, it created 454 00:23:52,200 --> 00:23:55,680 Speaker 1: a big wedge between House Republicans basically the Freedom Caucus 455 00:23:55,720 --> 00:23:58,879 Speaker 1: Fax and Seni Republicans who have already rejected the Freedom 456 00:23:58,960 --> 00:24:01,960 Speaker 1: Caucus budget. Um. That's going to make it very difficult 457 00:24:01,960 --> 00:24:04,080 Speaker 1: for the two sides of the House and Center Republicans 458 00:24:04,119 --> 00:24:06,560 Speaker 1: to come up with a budget resolution this year. It 459 00:24:06,640 --> 00:24:08,240 Speaker 1: was always going to be difficult, but this made it 460 00:24:08,280 --> 00:24:11,480 Speaker 1: more difficult yesterday, Mike, as you just suggested, if there's 461 00:24:11,520 --> 00:24:13,840 Speaker 1: no budget resolution, there won't be any tax reform this 462 00:24:13,920 --> 00:24:16,040 Speaker 1: year because they're going to need a budget resolution to 463 00:24:16,119 --> 00:24:20,800 Speaker 1: do reconciliation. There's that word again, that would prevent a 464 00:24:20,840 --> 00:24:23,399 Speaker 1: filibuster from being used on tax reform in the Senate. 465 00:24:24,280 --> 00:24:27,160 Speaker 1: It also sets up the likelihood of a government shutdown 466 00:24:27,200 --> 00:24:29,760 Speaker 1: in October. Okay, Stan Colinder, let's leave it there. Thank 467 00:24:29,800 --> 00:24:37,560 Speaker 1: you so much again. Runch you by Bank of America, 468 00:24:37,640 --> 00:24:42,600 Speaker 1: Mary Lynch. 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It's called lens, and it is 478 00:25:25,240 --> 00:25:28,359 Speaker 1: just that, a lens into the people and the data 479 00:25:28,440 --> 00:25:32,680 Speaker 1: of any story you may be reading. Again, Lens brings 480 00:25:32,720 --> 00:25:35,960 Speaker 1: you the power of Bloomberg's news and data. Download or 481 00:25:36,000 --> 00:25:39,359 Speaker 1: io s app or search for the Bloomberg extension at 482 00:25:39,400 --> 00:25:42,719 Speaker 1: the Chrome Store to try lens out. Learn more at 483 00:25:42,720 --> 00:25:50,480 Speaker 1: Bloomberg dot com slash lens. A few minutes this morning 484 00:25:50,480 --> 00:25:53,560 Speaker 1: with Francisco blanche A, Bank of America, Mara lench here 485 00:25:53,600 --> 00:25:57,399 Speaker 1: on Hyde to Carbon's right. Now, Okay, Vienna, there's vienna, 486 00:25:57,440 --> 00:26:01,600 Speaker 1: there's Vienna one, Vienna to Vienna eight. How how important 487 00:26:01,720 --> 00:26:06,120 Speaker 1: is this vienna versus the last vienna or the next vienna? Well, Tom, 488 00:26:06,160 --> 00:26:08,360 Speaker 1: I think I think it's actually a lot less important 489 00:26:08,600 --> 00:26:13,240 Speaker 1: uh than previous meetings, because it's been telegraphed now for 490 00:26:13,240 --> 00:26:15,919 Speaker 1: for several weeks and uh and and I think the 491 00:26:15,920 --> 00:26:18,440 Speaker 1: outcome is pretty clear. We're gonna get either a six 492 00:26:18,640 --> 00:26:21,280 Speaker 1: or a nine month extension of the deal, which in 493 00:26:21,320 --> 00:26:24,919 Speaker 1: my mind is is uh the market the the market 494 00:26:25,400 --> 00:26:28,200 Speaker 1: upo markets expection. So so not change there. Your range 495 00:26:28,200 --> 00:26:32,160 Speaker 1: bound downside risks gloom and doom are strong dollars, shell 496 00:26:32,240 --> 00:26:35,320 Speaker 1: technology and another price war. Let's go to the drama. 497 00:26:35,520 --> 00:26:37,879 Speaker 1: Are we gonna have a price for I don't think 498 00:26:37,920 --> 00:26:40,439 Speaker 1: Open can afford the price war, Tom, I think if 499 00:26:40,440 --> 00:26:44,440 Speaker 1: Ope goes for another price war, uh, their budgetary position, 500 00:26:44,520 --> 00:26:47,639 Speaker 1: whether it's Suthy or others, is gonna be is gonna 501 00:26:47,640 --> 00:26:50,680 Speaker 1: be severely impaired. So I don't think they can really 502 00:26:50,680 --> 00:26:53,479 Speaker 1: afford it. Um. And equally, I don't think they can 503 00:26:53,520 --> 00:26:57,280 Speaker 1: really afford another big cut because uh, it will force 504 00:26:57,320 --> 00:27:01,160 Speaker 1: them to a permanent markets shared lass, which will also 505 00:27:01,280 --> 00:27:04,760 Speaker 1: impair them um fiscally over over a three to five 506 00:27:04,800 --> 00:27:07,399 Speaker 1: year windows. So their best course of action is to 507 00:27:07,480 --> 00:27:14,040 Speaker 1: stay where they are. We got West Texas this morning, Brent. So, 508 00:27:14,880 --> 00:27:19,320 Speaker 1: has this deal sort of created a balance in the 509 00:27:19,320 --> 00:27:23,920 Speaker 1: oil markets just enough to bring enough fracking in to 510 00:27:24,080 --> 00:27:27,639 Speaker 1: keep prices stable, but not enough to bring enough to 511 00:27:27,720 --> 00:27:31,040 Speaker 1: bring enough production in. The prices are going to fall again? Well, 512 00:27:31,040 --> 00:27:34,199 Speaker 1: I think that's that's kind of apex uh target if 513 00:27:34,200 --> 00:27:36,679 Speaker 1: you like UM and I think I think what we 514 00:27:36,720 --> 00:27:40,600 Speaker 1: are likely to see is uh spot prices continue to rise, 515 00:27:40,880 --> 00:27:43,280 Speaker 1: and we think maybe we'll be close to sixty barrel 516 00:27:43,520 --> 00:27:46,720 Speaker 1: by the summer for Brent. So we look at another 517 00:27:46,760 --> 00:27:50,440 Speaker 1: five six dollar uplifting prices, but we think that the 518 00:27:50,440 --> 00:27:53,320 Speaker 1: longer day, the prices prices for oil in twenty nine, 519 00:27:54,200 --> 00:27:58,199 Speaker 1: uh and even December eighteen will keep moving lower as 520 00:27:58,280 --> 00:28:01,240 Speaker 1: more hedging activity comes into a market. It uh So, yeah, 521 00:28:01,280 --> 00:28:03,480 Speaker 1: we're moving into a more fun equilibrium, I would say, 522 00:28:03,480 --> 00:28:06,160 Speaker 1: And and part of it is really uh this whole 523 00:28:06,160 --> 00:28:10,399 Speaker 1: inventory normalization process to create a buffer between supply and 524 00:28:10,440 --> 00:28:12,600 Speaker 1: demand right, I mean, which which we haven't had for 525 00:28:12,600 --> 00:28:15,760 Speaker 1: for the last year. Thank you for coming in. Thank you. 526 00:28:15,840 --> 00:28:18,560 Speaker 1: We got leave it. There's just too short. Can you 527 00:28:18,600 --> 00:28:24,840 Speaker 1: come back for a longer time? Seven blocks to three hours? 528 00:28:25,320 --> 00:28:28,119 Speaker 1: Bank Bank of American Merrill enjoys interesting in particularly with 529 00:28:28,240 --> 00:28:32,240 Speaker 1: a move over from Hydercarbon's into the other UH other 530 00:28:32,400 --> 00:28:49,800 Speaker 1: parts of commodities as well. The lady from William and Mary, 531 00:28:49,840 --> 00:28:53,840 Speaker 1: Mary Joe White, with an esteemed career in law, was 532 00:28:53,960 --> 00:28:58,320 Speaker 1: selected to take over UH the herding of cats at 533 00:28:58,360 --> 00:29:01,720 Speaker 1: the Securities and Exchange Commission. She did that for call 534 00:29:01,800 --> 00:29:05,400 Speaker 1: it four years. She's the thirty first chair of the 535 00:29:05,440 --> 00:29:10,000 Speaker 1: Securities and Exchange Commission. Attorney why joins us Chairman. Wonderful 536 00:29:10,000 --> 00:29:13,800 Speaker 1: to speak to you UH this morning when you were 537 00:29:13,840 --> 00:29:17,640 Speaker 1: making light talk about the SEC. Now, what is your 538 00:29:17,680 --> 00:29:22,160 Speaker 1: biggest worry? The first great to be with you. I mean, 539 00:29:22,160 --> 00:29:25,640 Speaker 1: I think the biggest worry from the well for the 540 00:29:25,720 --> 00:29:28,920 Speaker 1: SEC's perspective of getting its job done is what happens 541 00:29:28,960 --> 00:29:32,080 Speaker 1: to it in the way of resources. I mean, you 542 00:29:32,120 --> 00:29:35,479 Speaker 1: know clearly an issue that you know, one you know 543 00:29:35,760 --> 00:29:37,640 Speaker 1: it must continue to worry about is to make sure 544 00:29:37,680 --> 00:29:42,440 Speaker 1: that the systems that underlie our electronic markets, uh, you know, 545 00:29:42,520 --> 00:29:44,920 Speaker 1: really work seamlessly. So I spent a lot of time 546 00:29:45,320 --> 00:29:48,520 Speaker 1: doing that, uh, making some changes, making some enhancement when 547 00:29:48,520 --> 00:29:51,240 Speaker 1: I was a chair. One of the issues, and we've 548 00:29:51,280 --> 00:29:54,920 Speaker 1: seen it within our Bloomberg reporting is the budget. I 549 00:29:54,920 --> 00:29:57,640 Speaker 1: guess CBO is going to come out with healthcare analysis 550 00:29:57,720 --> 00:30:00,480 Speaker 1: today and the President dropped a budget. I saw one 551 00:30:00,520 --> 00:30:04,320 Speaker 1: Democrats sunder who took a photo for Twitter of the 552 00:30:04,320 --> 00:30:08,080 Speaker 1: new budget in the waste basket. How is the budget 553 00:30:08,160 --> 00:30:11,680 Speaker 1: of your SEC? Did you leave the SEC with a 554 00:30:11,760 --> 00:30:17,040 Speaker 1: depleted organization? Well, the SEC, I think was comparatively treated 555 00:30:17,160 --> 00:30:21,000 Speaker 1: quite well by the Congress, the appropriators, but you know, 556 00:30:21,080 --> 00:30:24,640 Speaker 1: like I think most of the financial regulators uh that 557 00:30:24,920 --> 00:30:27,480 Speaker 1: aren't self funded, unlike the FED and the banking regulators 558 00:30:27,480 --> 00:30:31,440 Speaker 1: which are self funded, really significantly under resource for the 559 00:30:31,800 --> 00:30:35,240 Speaker 1: really very vast array of responsibilities that Congress has given 560 00:30:35,280 --> 00:30:39,040 Speaker 1: the SEC. So you know, we were in comparatively good 561 00:30:39,080 --> 00:30:43,440 Speaker 1: shape when I left, but still significantly under resourced. When 562 00:30:43,440 --> 00:30:46,760 Speaker 1: I look at what you do, so many people look 563 00:30:46,760 --> 00:30:50,160 Speaker 1: at the SEC is the police officer of bad people 564 00:30:51,040 --> 00:30:55,000 Speaker 1: within the financial system of the United States, And the 565 00:30:55,080 --> 00:30:57,680 Speaker 1: considered opinion is if the bad people are bad they're 566 00:30:57,720 --> 00:31:00,360 Speaker 1: gonna be bad, They're gonna do bad things, and there's 567 00:31:00,400 --> 00:31:03,200 Speaker 1: nothing Mary Joe White or Arthur Levitt or anybody else 568 00:31:03,760 --> 00:31:06,000 Speaker 1: is going to do about it. What did you learn 569 00:31:06,000 --> 00:31:10,040 Speaker 1: about going after bad people running the SEC? Well, of 570 00:31:10,040 --> 00:31:11,720 Speaker 1: course I should have been in that business before his 571 00:31:11,840 --> 00:31:13,800 Speaker 1: U S attorney as well, and I had the you know, 572 00:31:13,840 --> 00:31:16,600 Speaker 1: the criminal powers. I mean, look, I mean the SEC 573 00:31:16,800 --> 00:31:20,200 Speaker 1: is you know, Wall Street's main cop, uh, and it 574 00:31:20,240 --> 00:31:22,560 Speaker 1: needs to be a very strong cop. That doesn't mean 575 00:31:22,560 --> 00:31:25,520 Speaker 1: you're gonna catch you know, every bad guy, but basically 576 00:31:25,680 --> 00:31:28,520 Speaker 1: the fairness of whet of the most reliable, you know, 577 00:31:28,560 --> 00:31:31,840 Speaker 1: strongest markets in the world. Uh, that goes away if 578 00:31:31,840 --> 00:31:35,120 Speaker 1: you're not sufficiently policing and going after the bad guys. 579 00:31:35,560 --> 00:31:37,560 Speaker 1: And so one of the things that the SEC has 580 00:31:37,640 --> 00:31:40,480 Speaker 1: to be sure it's doing is sort of covering the 581 00:31:40,680 --> 00:31:45,160 Speaker 1: range of market participants and not only going after punishing 582 00:31:45,600 --> 00:31:47,560 Speaker 1: the wrong door that you're looking at at the moment, 583 00:31:47,640 --> 00:31:51,160 Speaker 1: but trying to send a deterrent message more broadly to 584 00:31:51,240 --> 00:31:54,320 Speaker 1: the marketplace, so you know that others will pause and 585 00:31:54,400 --> 00:31:56,640 Speaker 1: not do the wrong thing when they see you know, 586 00:31:56,680 --> 00:31:59,760 Speaker 1: how hard the SEC or the Department of Justice in 587 00:31:59,840 --> 00:32:02,320 Speaker 1: some cases comes comes down on them if you're just 588 00:32:02,440 --> 00:32:04,960 Speaker 1: joining us SOS Mary Joe White with as the former 589 00:32:05,040 --> 00:32:09,680 Speaker 1: chairman and recent chairman of Securities and Exchange UH Commission 590 00:32:10,680 --> 00:32:13,280 Speaker 1: A chairman. When when I when I look at the 591 00:32:13,480 --> 00:32:17,560 Speaker 1: SEC today and when I look at the budgets and 592 00:32:17,600 --> 00:32:21,880 Speaker 1: the Trump administration, can you find a distinction between a 593 00:32:22,000 --> 00:32:26,160 Speaker 1: Trump SEC and previous sec s? I don't want to 594 00:32:26,160 --> 00:32:28,680 Speaker 1: get into you know the class that you are, and 595 00:32:28,680 --> 00:32:31,960 Speaker 1: you're not gonna say bad things about good people under 596 00:32:32,000 --> 00:32:35,440 Speaker 1: public service now. But is there a new SEC it's 597 00:32:35,480 --> 00:32:38,360 Speaker 1: different than what you've seen before. Well, again, I do 598 00:32:38,440 --> 00:32:41,760 Speaker 1: worry about the budget impacting the agency's ability to do 599 00:32:41,800 --> 00:32:44,760 Speaker 1: its job compared to how we were able to do 600 00:32:44,840 --> 00:32:47,440 Speaker 1: the job you know when I was there. Uh. In 601 00:32:47,480 --> 00:32:50,520 Speaker 1: other words, better resource, still not enough. You know. I 602 00:32:50,560 --> 00:32:53,440 Speaker 1: think very highly of Jake Clayton, my successor, who just 603 00:32:53,480 --> 00:32:55,920 Speaker 1: took office a couple of weeks ago. Uh So I 604 00:32:55,920 --> 00:32:57,680 Speaker 1: have a lot of confidence in him, a lot of 605 00:32:57,720 --> 00:33:00,440 Speaker 1: confidence in the SEC. Professional. Can you push you? Can 606 00:33:00,440 --> 00:33:04,920 Speaker 1: you push back against Pennsylvania Avenue? Absolutely? I mean the 607 00:33:05,000 --> 00:33:08,160 Speaker 1: SEC is an independent agency now. Sometimes it's easier said 608 00:33:08,160 --> 00:33:10,280 Speaker 1: than done, but it means that you know, you do 609 00:33:10,360 --> 00:33:15,120 Speaker 1: not take direction from Pennsylvania Avenue or anybody else. Basically, 610 00:33:15,160 --> 00:33:17,120 Speaker 1: I mean, you're you obviously, you know you have a 611 00:33:17,280 --> 00:33:20,440 Speaker 1: different priorities depending on particularly the Chairman's point of view, 612 00:33:20,960 --> 00:33:23,480 Speaker 1: and that's perfectly appropriate. But no, I think j will 613 00:33:23,480 --> 00:33:26,080 Speaker 1: be a very independent SEC chair and I think he's 614 00:33:26,160 --> 00:33:29,360 Speaker 1: very focused on, you know, improving our our markets and 615 00:33:29,360 --> 00:33:32,040 Speaker 1: in particular our public markets. You know, something we've talked 616 00:33:32,120 --> 00:33:35,680 Speaker 1: to Chairman love It about too many times is the 617 00:33:35,720 --> 00:33:41,840 Speaker 1: basic tone of regulation in this strange word deregulation. Which 618 00:33:41,880 --> 00:33:45,600 Speaker 1: way should the SEC turn? I think it has to 619 00:33:45,640 --> 00:33:50,560 Speaker 1: be smart regulation. I mean, I think not deregulation connotes 620 00:33:50,640 --> 00:33:52,840 Speaker 1: too much, you know, kind of the wild West. You 621 00:33:52,880 --> 00:33:55,480 Speaker 1: do not want that in the markets expected for investors. 622 00:33:55,680 --> 00:33:59,400 Speaker 1: We know Arthur Lovett doesn't want that. No one ought 623 00:33:59,400 --> 00:34:02,200 Speaker 1: to want it, uh in order to maintain the strength 624 00:34:02,200 --> 00:34:06,360 Speaker 1: of our capital markets. But you do need to not overregulate. 625 00:34:06,800 --> 00:34:08,719 Speaker 1: You need to try as hard as you can not 626 00:34:08,880 --> 00:34:11,840 Speaker 1: to make their regulations so complex that they really either 627 00:34:11,920 --> 00:34:14,920 Speaker 1: can't be complied with or that's all that issuers are 628 00:34:14,960 --> 00:34:17,719 Speaker 1: really you know, really doing, as opposed to focusing on 629 00:34:17,800 --> 00:34:20,000 Speaker 1: you know, growing their business and so forth. So it's 630 00:34:20,000 --> 00:34:22,400 Speaker 1: a balance. But I think I think the regulation is 631 00:34:22,760 --> 00:34:26,480 Speaker 1: I picked that over deregulation, as those terms are understood. 632 00:34:27,040 --> 00:34:29,600 Speaker 1: There has been criticism, and of course we always turn 633 00:34:29,640 --> 00:34:33,200 Speaker 1: to the senator from the Commonwealth of Massachusetts who really 634 00:34:33,200 --> 00:34:36,880 Speaker 1: went after you at times, of course, be Elizabeth Warren. 635 00:34:37,200 --> 00:34:42,480 Speaker 1: How did you handle the criticisms of an anti Wall 636 00:34:42,520 --> 00:34:46,400 Speaker 1: Street or doubting Wall Street left? Where do they fit 637 00:34:47,000 --> 00:34:50,239 Speaker 1: into the dialogue of the future of Wall Street and 638 00:34:50,320 --> 00:34:54,319 Speaker 1: Main Street America? Like you? You basically, I mean criticism 639 00:34:54,400 --> 00:34:57,680 Speaker 1: comes with the territory and the sec in particular, not 640 00:34:57,680 --> 00:35:01,719 Speaker 1: only overseas Wall Street, but with a lot of politically 641 00:35:01,800 --> 00:35:04,960 Speaker 1: charged you know, issues, uh, as well, and so you 642 00:35:05,000 --> 00:35:07,520 Speaker 1: expect the criticism. You listen to it. I think you 643 00:35:07,560 --> 00:35:09,879 Speaker 1: want to be very constructive no matter where it's coming from. 644 00:35:10,280 --> 00:35:12,360 Speaker 1: Listen to it, see if you can learn something from it, 645 00:35:12,440 --> 00:35:14,920 Speaker 1: do something differently or not, as the case may be. 646 00:35:15,560 --> 00:35:18,520 Speaker 1: I don't think it's healthy, uh, to have in effect 647 00:35:18,520 --> 00:35:22,480 Speaker 1: a class warfare against Wall Street. I mean, you look 648 00:35:22,480 --> 00:35:25,040 Speaker 1: at the activities, you look at the regulation, and you 649 00:35:25,120 --> 00:35:28,280 Speaker 1: regulate strongly, and you go after anybody that commits wrongdoing, 650 00:35:28,320 --> 00:35:30,920 Speaker 1: whether on Wall Street or Main Street or wherever. But 651 00:35:31,320 --> 00:35:35,080 Speaker 1: you know to to to vilify Wall Street. I think 652 00:35:35,120 --> 00:35:39,200 Speaker 1: it's a big mistake within that is our nostalgic memory. 653 00:35:39,360 --> 00:35:41,680 Speaker 1: One final question, if I could marry Joe White, and 654 00:35:41,760 --> 00:35:45,120 Speaker 1: that is the idea of glass Stiegel. I find almost 655 00:35:45,160 --> 00:35:49,200 Speaker 1: comical how small glass Stiegel was as part of thirty 656 00:35:49,239 --> 00:35:52,319 Speaker 1: three and thirty four legislation. I believe folks it was 657 00:35:52,360 --> 00:35:56,160 Speaker 1: four pages. That may be off a few. Let's bring 658 00:35:56,160 --> 00:35:59,880 Speaker 1: back glass Stiegel. What's the Mary Joe White reality? I 659 00:36:00,360 --> 00:36:03,000 Speaker 1: think it means very different things to very different people. 660 00:36:03,120 --> 00:36:07,400 Speaker 1: Thank you, that would be the right answer. Well, what 661 00:36:07,440 --> 00:36:09,680 Speaker 1: are we going to see? I mean, I mean it 662 00:36:09,719 --> 00:36:12,320 Speaker 1: doesn't go away. I mean, you know, Glass Steagle, as 663 00:36:12,560 --> 00:36:15,360 Speaker 1: some have in mind for it would basically, you know, 664 00:36:15,400 --> 00:36:18,440 Speaker 1: have banks be the kind of the old fashioned uh 665 00:36:18,680 --> 00:36:21,360 Speaker 1: you know, outdated mode and as I would see that, 666 00:36:21,440 --> 00:36:24,280 Speaker 1: you know, basically handling deposits. That's a very important function 667 00:36:24,280 --> 00:36:28,880 Speaker 1: obviously uh highly regulated to to keep them in their lanes. 668 00:36:28,960 --> 00:36:32,759 Speaker 1: Others would see really a separation of functions where you 669 00:36:32,880 --> 00:36:36,560 Speaker 1: let the non depository part of the function, um, you know, 670 00:36:36,800 --> 00:36:39,839 Speaker 1: have a fair amount of a free reign, you know, 671 00:36:39,920 --> 00:36:42,960 Speaker 1: to to basically you know, grow their business and invest 672 00:36:43,000 --> 00:36:45,640 Speaker 1: in ways they can't do now. So it's not a panacea, 673 00:36:46,080 --> 00:36:48,479 Speaker 1: you know, I think we're beyond you know, that kind 674 00:36:48,520 --> 00:36:52,640 Speaker 1: of simplistic decision, Uh, legislation. I don't think it would 675 00:36:52,640 --> 00:36:55,640 Speaker 1: be a simplistic piece of legislation happened. One final question, 676 00:36:55,800 --> 00:36:58,160 Speaker 1: are you enjoying private practice or is it back to 677 00:36:58,160 --> 00:37:01,560 Speaker 1: the torture or of law. I love private I love 678 00:37:01,600 --> 00:37:04,080 Speaker 1: public service as well. But I'm I'm back at the 679 00:37:04,160 --> 00:37:06,840 Speaker 1: device at Plimpton for the sixth time in my career, 680 00:37:07,600 --> 00:37:10,120 Speaker 1: practicing law flat out and enjoying it a great deal. 681 00:37:10,400 --> 00:37:12,960 Speaker 1: Her billibile hour, Folks, is like a single pitch from 682 00:37:13,000 --> 00:37:15,879 Speaker 1: a Yankee starter. I believe he would say, Mary Joe, 683 00:37:15,920 --> 00:37:19,120 Speaker 1: I thank you so much, greatly, greatly appreciated. She's a 684 00:37:19,160 --> 00:37:22,719 Speaker 1: former chairwoman of the Securities and Exchanged Commission, thirty first 685 00:37:22,840 --> 00:37:27,520 Speaker 1: chair of the Securities in Exchange a commission. She is uh, 686 00:37:28,000 --> 00:37:45,800 Speaker 1: absolutely original. President Trump put out his two thousand eighteen 687 00:37:45,880 --> 00:37:51,040 Speaker 1: proposed budget yesterday. Here's some of the things that they proposed, 688 00:37:51,120 --> 00:37:55,000 Speaker 1: cutting uh twelve point four billion dollars from health and 689 00:37:55,080 --> 00:37:59,320 Speaker 1: human services, National Institutes of Health, five point seven billion 690 00:37:59,360 --> 00:38:03,680 Speaker 1: dollar cut, including a billion cut from the National Cancer Institute, 691 00:38:03,719 --> 00:38:06,960 Speaker 1: one point three billion cut for the Centers for Disease 692 00:38:07,000 --> 00:38:10,920 Speaker 1: Control and Prevention, Food and Drug Administration would lose eight 693 00:38:10,960 --> 00:38:14,920 Speaker 1: hundred and fifty four million dollars over ten years. Representative 694 00:38:14,960 --> 00:38:19,120 Speaker 1: Tom Cole is a Republican from Oklahoma. He is a 695 00:38:19,160 --> 00:38:22,040 Speaker 1: member of the House Budget Committee, and he has been 696 00:38:22,080 --> 00:38:26,640 Speaker 1: a defender of in A H and other health programs 697 00:38:27,200 --> 00:38:30,439 Speaker 1: in the budget process in the US Congress. He joins 698 00:38:30,480 --> 00:38:33,960 Speaker 1: US now Representative Coal. This has to be a disappointment 699 00:38:33,960 --> 00:38:35,800 Speaker 1: to you, I know, even though you'd like to support 700 00:38:36,000 --> 00:38:38,799 Speaker 1: a Republican budget, a disappointment to you in terms of 701 00:38:38,840 --> 00:38:42,360 Speaker 1: the meat acts they want to take to spending on healthcare, 702 00:38:42,400 --> 00:38:47,600 Speaker 1: particularly prevention and disease research, Well, it's a it's a 703 00:38:47,680 --> 00:38:50,520 Speaker 1: mixed bag, to be fair. I mean, this is the 704 00:38:50,560 --> 00:38:53,200 Speaker 1: first presidential budget we've seen in eight years that actually 705 00:38:53,239 --> 00:38:56,200 Speaker 1: comes into balance. So I like that, and as a 706 00:38:56,280 --> 00:38:58,799 Speaker 1: defense fawk, honestly, I favor what the President is trying 707 00:38:58,880 --> 00:39:01,920 Speaker 1: to do there. In terms of the nih however, I 708 00:39:01,960 --> 00:39:06,120 Speaker 1: think honestly they're making a mistake. UH National Institute of 709 00:39:06,120 --> 00:39:09,560 Speaker 1: Health Center for Disease Control are critical and defending the 710 00:39:09,600 --> 00:39:12,240 Speaker 1: country every bit as much as the Pentagon is. Quite frankly, 711 00:39:12,239 --> 00:39:14,239 Speaker 1: you're much more likely to die in a pandemic than 712 00:39:14,280 --> 00:39:19,560 Speaker 1: a terrorist attack. So having a biomedical research infrastructure that 713 00:39:19,719 --> 00:39:22,680 Speaker 1: not only protects Americans, but over time also brings down 714 00:39:22,680 --> 00:39:25,360 Speaker 1: the cost of healthcare. I mean, this country spends, for instance, 715 00:39:25,760 --> 00:39:28,479 Speaker 1: about two hundred and fifty nine billion dollars a year 716 00:39:28,480 --> 00:39:33,480 Speaker 1: looking after patients with Alzheimer's and dementia, and uh, you 717 00:39:33,520 --> 00:39:36,680 Speaker 1: know it's gonna move up as people continue to live 718 00:39:36,719 --> 00:39:41,040 Speaker 1: longer and longer periods of time, and you've got to 719 00:39:41,080 --> 00:39:43,920 Speaker 1: do something to mitigate that cost. And the best Alzheimer's 720 00:39:44,000 --> 00:39:46,160 Speaker 1: research and the world's going on at the National Institute 721 00:39:46,160 --> 00:39:49,000 Speaker 1: of Health. So again, I think you don't want to 722 00:39:49,000 --> 00:39:51,600 Speaker 1: be penny wise and pound foolish. And when it comes 723 00:39:51,640 --> 00:39:54,479 Speaker 1: to investment at the National Institute of Health and Center 724 00:39:54,560 --> 00:39:59,279 Speaker 1: for Disease Control, those are critical investments. Good morning, call 725 00:39:59,320 --> 00:40:01,680 Speaker 1: excuse me here, I was just researching someone. You know, 726 00:40:01,840 --> 00:40:06,360 Speaker 1: will I believe Frank Keating's name is being tossed around 727 00:40:07,080 --> 00:40:10,839 Speaker 1: to run a beleaguered federal Bureau of Investigation. You work 728 00:40:10,920 --> 00:40:15,399 Speaker 1: for Governor Keating, his secretary of State in Oklahoma. How 729 00:40:15,480 --> 00:40:18,719 Speaker 1: wise would President Trump me and choosing Frank Keating to 730 00:40:18,760 --> 00:40:22,600 Speaker 1: be the next Director of the FBI extraordinarily wise, Frank 731 00:40:22,680 --> 00:40:26,160 Speaker 1: Keating is an exceptional public servant. He's a former FBI 732 00:40:26,239 --> 00:40:30,360 Speaker 1: agent himself. He was a special he was a U 733 00:40:30,440 --> 00:40:34,040 Speaker 1: S attorney. He was also the number three person Associate 734 00:40:34,040 --> 00:40:38,080 Speaker 1: Attorney General in the Reagan Justice Department. So his experience 735 00:40:38,120 --> 00:40:41,440 Speaker 1: of law enforcement background is really quite remarkable. He's a 736 00:40:41,480 --> 00:40:44,960 Speaker 1: person of unquestionable integrity. What was it like? What was 737 00:40:45,000 --> 00:40:47,040 Speaker 1: it like working for him day today? We know Frank 738 00:40:47,120 --> 00:40:49,280 Speaker 1: Keating will that's job of my life? Tell you truth? 739 00:40:50,040 --> 00:40:52,799 Speaker 1: Come on, come on now now, I'm I don't care you. 740 00:40:52,920 --> 00:40:55,120 Speaker 1: I mean, you know I used to tell him. I 741 00:40:55,120 --> 00:40:57,920 Speaker 1: actually saw him last week. We stay in very close contact. 742 00:40:58,320 --> 00:41:00,919 Speaker 1: But for six years, I talk to him every day, 743 00:41:01,040 --> 00:41:03,920 Speaker 1: and except for the two weeks around the Oklahoma City bombing, 744 00:41:03,960 --> 00:41:06,880 Speaker 1: I laughed every time I talk to He's witty, he's quick, 745 00:41:06,920 --> 00:41:09,759 Speaker 1: he's funny. Uh he's in private what he seems to 746 00:41:09,760 --> 00:41:12,560 Speaker 1: be in public. Uh. You know, I just had wonderful, 747 00:41:12,920 --> 00:41:15,560 Speaker 1: wonderful relationship with him and tremendous confidence in him. And 748 00:41:15,600 --> 00:41:18,280 Speaker 1: he really dramatically moved the state forward. And he showed 749 00:41:18,360 --> 00:41:20,960 Speaker 1: during the Oklahoma City bombing how he could perform on 750 00:41:21,000 --> 00:41:25,080 Speaker 1: a national stage. I mean he is unbelievable. Uh, and Frankly, 751 00:41:25,080 --> 00:41:28,120 Speaker 1: he's married to somebody equally unbelievable. And Cathy Keating, who 752 00:41:28,200 --> 00:41:30,960 Speaker 1: was a remarkable figure in her own right. Uh. There 753 00:41:31,000 --> 00:41:33,440 Speaker 1: is a headline crossing right now that the Trump administration, 754 00:41:33,440 --> 00:41:35,960 Speaker 1: according to c an n, hitting the reset button in 755 00:41:36,000 --> 00:41:39,520 Speaker 1: the search for an FBI director because they were looking No, 756 00:41:39,680 --> 00:41:41,520 Speaker 1: I think they were looking at Joe Lieberman and a 757 00:41:41,600 --> 00:41:45,000 Speaker 1: lot of blowback from uh members of the Senate, a 758 00:41:45,080 --> 00:41:49,200 Speaker 1: Democratic party against him. And so maybe frank Keating's will 759 00:41:49,280 --> 00:41:51,920 Speaker 1: come up. Uh. We can talk about that forever. But 760 00:41:52,120 --> 00:41:53,520 Speaker 1: since we only have a few more minutes with you, 761 00:41:53,600 --> 00:41:56,080 Speaker 1: let me quickly ask you about what we're expecting from 762 00:41:56,080 --> 00:41:59,120 Speaker 1: the CBO this afternoon. I don't think you'll have to revote. 763 00:42:00,680 --> 00:42:04,439 Speaker 1: I would be surprised. I think deficit reduction. But if 764 00:42:04,920 --> 00:42:08,279 Speaker 1: if you see an increase in the number of people uninsured, 765 00:42:08,400 --> 00:42:10,800 Speaker 1: how big a weight is that going to be around 766 00:42:11,040 --> 00:42:14,359 Speaker 1: Republicans next when they run for re election next Well, 767 00:42:14,400 --> 00:42:17,120 Speaker 1: it depends on Frankly, why they're I mean, if you 768 00:42:17,640 --> 00:42:19,799 Speaker 1: are not in the insurance market because you choose not 769 00:42:19,880 --> 00:42:21,840 Speaker 1: to be. And that was sort of lost in the 770 00:42:21,840 --> 00:42:25,319 Speaker 1: discussion over the last CBO. What they're basically saying, if 771 00:42:25,320 --> 00:42:27,520 Speaker 1: you remove the mandate, a lot of people won't buy 772 00:42:27,520 --> 00:42:30,200 Speaker 1: this stuff. Well, you know that should tell you something 773 00:42:30,280 --> 00:42:32,880 Speaker 1: right there. I mean they've even had people on Medicaid 774 00:42:33,360 --> 00:42:37,960 Speaker 1: getting out of Medicaid, which cost you essentially nothing. So, uh, 775 00:42:38,000 --> 00:42:40,040 Speaker 1: you know, I think it ought to be part of 776 00:42:40,040 --> 00:42:43,640 Speaker 1: the discussion, but it shouldn't be decisive. And it's again, 777 00:42:43,760 --> 00:42:47,640 Speaker 1: CBO numbers are It's a quirky system they have and 778 00:42:47,840 --> 00:42:49,680 Speaker 1: they're not always reliable. As a matter of fact that 779 00:42:49,760 --> 00:42:51,879 Speaker 1: they quite often aren't. But you know, they're the best 780 00:42:51,920 --> 00:42:55,480 Speaker 1: we can do. But I would never take them as 781 00:42:55,480 --> 00:42:58,960 Speaker 1: stuff Congress when we need to continue this discussion, we 782 00:42:59,000 --> 00:43:01,240 Speaker 1: would hope to do it, and she did with Michael McKee, 783 00:43:01,280 --> 00:43:05,840 Speaker 1: David Gura, myself, Tom cole is from Oklahoma. Thank you 784 00:43:05,880 --> 00:43:09,640 Speaker 1: particularly for those comments on the former governor Frank Keating 785 00:43:09,719 --> 00:43:21,520 Speaker 1: as well. Thanks for listening to the Bloomberg Surveillance podcast. 786 00:43:21,960 --> 00:43:27,160 Speaker 1: Subscribe and listen to interviews on Apple Podcasts, SoundCloud, or 787 00:43:27,280 --> 00:43:31,600 Speaker 1: whichever podcast platform you prefer. I'm on Twitter at Tom Keene. 788 00:43:31,680 --> 00:43:36,040 Speaker 1: David Gura is at David Gura. Before the podcast, you 789 00:43:36,080 --> 00:43:50,640 Speaker 1: can always catch us worldwide I'm Bloomberg Radio Runch You 790 00:43:50,719 --> 00:43:54,800 Speaker 1: by Bank of America Mary Lynch. With virtual reality, virtually 791 00:43:54,960 --> 00:44:00,160 Speaker 1: everything will change. Discover opportunities in a transforming world. B 792 00:44:00,320 --> 00:44:04,800 Speaker 1: of A, m L dot Com slash v R, Mary Lynch, Pierce, 793 00:44:04,880 --> 00:44:06,880 Speaker 1: Fenner and Smith, Incorporated,