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Speaker 1: Brought you by Bank of America, Mary Lynch. Investing in

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Speaker 1: local communities, economies and a sustainable future. That's the power

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Speaker 1: of global connections. Mary Lynch, Pierce Fenner and Smith Incorporated

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Speaker 1: member s I p C. Welcome to the Bloomberg Surveillance Podcast.

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Speaker 1: I'm Tom Keene with David Gura. Daily we bring you

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Speaker 1: insight from the best in economics, finance, investment and international relations.

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Speaker 1: Find Bloomberg Surveillance on iTunes, SoundCloud, Bloomberg dot Com and

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Speaker 1: of course on the Bloomberg With this Dominique Constant. I

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Speaker 1: know David's got a series of questions for you, but Dominique,

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Speaker 1: let me talk about sterling at one six this this

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Speaker 1: Prime Minister may want a week sterling or a strong

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Speaker 1: sterling or she oblivious to it. Well, I think the

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Speaker 1: the sort of immediate issue is to have a good

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Speaker 1: trade deal with Europe. That's the biggest concern. And also

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Speaker 1: there's been a lot of concern in the financial sector

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Speaker 1: in terms of banks moving some kind of operations potentially

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Speaker 1: out of the UK on the on a on a

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Speaker 1: bad deal with Europe. And I think the way to

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Speaker 1: think about the currency is that if you think there's

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Speaker 1: a better chance you'll get a good deal. Sterling doesn't

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Speaker 1: need to be so weak. The calls that we have

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Speaker 1: a have as a house had and have had a

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Speaker 1: very weak sterling reflects a concern that the UK would

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Speaker 1: struggle to get a decent deal perhaps and on that

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Speaker 1: basis would would go for a weak occurrency. So I

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Speaker 1: don't think there's anything sacrosanct about, you know, whether where

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Speaker 1: we want sterling or whether the British wants sterling. I

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Speaker 1: think it's an issue of what kind of trade deal

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Speaker 1: are they going to have, and they definitely want a

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Speaker 1: special deal with Europe. That's highlights the integration or the

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Speaker 1: UK economy with the rest of Europe. Just a moment ago,

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Speaker 1: our colleague Ed Letlow was describing the complicated electoral landscape.

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Speaker 1: That's adds a further complication to it for investors. How

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Speaker 1: much does this does this matter having this election here

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Speaker 1: and during the eighth Well, I think the UK it

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Speaker 1: matters a lot. I mean, I mean there's also this

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Speaker 1: other element which I don't think it's going to get

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Speaker 1: a lot of play, but without question, people are going

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Speaker 1: to play it, and for the opposition parties if they

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Speaker 1: can make real inroads against the Tories despite the polls.

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Speaker 1: Then clearly there's going to be an argument that this

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Speaker 1: could be a second referendum, if you like, on on

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Speaker 1: on on the on the whole Brexit stuff. That that's

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Speaker 1: obviously to some extent what they're going to try. And

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Speaker 1: remember the complaints on the referendum itself was that a

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Speaker 1: lot of the Labor Party didn't turn up and they

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Speaker 1: just thought this was not going to happen, and then

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Speaker 1: afterwards people really question whether the British really understood with

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Speaker 1: what they were doing. So this is going to be

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Speaker 1: a way of just making that clarifying that. So it's

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Speaker 1: very important for the rest of the world. Obviously matter

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Speaker 1: is much less. I think France is much more important

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Speaker 1: for your if you will, let me ask you about that.

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Speaker 1: Looking at your most recent note here you said that

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Speaker 1: the risks are the pew to be miss priced. What

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Speaker 1: do you mean by that? And then sort of what's

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Speaker 1: your sense of what will happen here? Well, I think

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Speaker 1: the there's there's a people when they look at the

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Speaker 1: second round intentions, they there's such a wide gap between

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Speaker 1: Lapin and Macron or Fion that people assume it's a

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Speaker 1: kind of not important. I think the issue is what

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Speaker 1: does what does say Lapin have to do in the

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Speaker 1: first round to make you be a bit more worried

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Speaker 1: about it, given the way that previous polls have gone,

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Speaker 1: both in the States and the Brexit for example. So

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Speaker 1: from that perspective, the pricing in the volatility markets was

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Speaker 1: between say five and ten percent, and in both rates

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Speaker 1: and effects was a sort of general view, and the

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Speaker 1: idea is that that's probably a bit too low, although

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Speaker 1: given the way recent polls have gone, you know, maybe

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Speaker 1: it shouldn't be you know, as high I say, you know,

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Speaker 1: sort of forty sixty or something. So I think the

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Speaker 1: question you should ask yourself is what does Lapin have

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Speaker 1: to get in the first round for you to reprice

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Speaker 1: those risks in the two weeks before the second round?

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Speaker 1: And in our view, you know, anything like that, you know,

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Speaker 1: high twenties and definitely something like third cent would be

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Speaker 1: you would be a big concern because it would get

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Speaker 1: you in the sort of marginal polling era. But for now,

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Speaker 1: it's been such an open election now and she's obviously

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Speaker 1: slipped fiance done a bit better very well the time,

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Speaker 1: but a lot of people still underside and I think

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Speaker 1: the last Paul I saw was like a third of

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Speaker 1: the elector that's still on the side. It so, um,

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Speaker 1: you know, it's gonna be interesting. How does one and

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Speaker 1: I suppose I've been quitted by saying, how does one?

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Speaker 1: How do you position yourself ahead of this selection and

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Speaker 1: all of the risk. Well, the good news is that

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Speaker 1: given a various other things going on, including the disappointment

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Speaker 1: in the States on taxire form, some of the data

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Speaker 1: which hasn't been so good on the consumer side, we've

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Speaker 1: got some various forward looking in the cases and make

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Speaker 1: us a look concerned about the economic outlook. You can

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Speaker 1: just be long rates because this is this is a

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Speaker 1: bit of a risk of trade, uh, and you know,

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Speaker 1: the smp IS is quite elevated. In our view, we

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Speaker 1: think the cheapening res has been warranted and I don't

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Speaker 1: think I think it's too early to sort of uh,

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Speaker 1: you know, not have a risk risk off trade. How

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Speaker 1: about this? In our next section will actually talk about

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Speaker 1: your research. That would be that would be what I

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Speaker 1: think is the curve flattening that we're seeing associated with

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Speaker 1: the President of the United States or there are other

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Speaker 1: things going on. Well, the big curve flattening was I

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Speaker 1: think mainly associated with optimism around economic policies post selection

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Speaker 1: in the States and the FED being able to push

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Speaker 1: on with their normalization. Uh. And I don't think people

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Speaker 1: really took a a different view in terms of where

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Speaker 1: the terminal funds rate it's going to be. So people

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Speaker 1: didn't suddenly say, oh my god, I thought it was

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Speaker 1: two to three and now it's gonna be four to five.

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Speaker 1: They took a view it's still two to three, but

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Speaker 1: the Fed can go a bit more quickly because of

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Speaker 1: things going in the right direction and the States. So

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Speaker 1: what you've seen what were or ever so slightly is

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Speaker 1: an attempt to sort of offset unwind some of that flattening.

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Speaker 1: Domini constom with us with dutcher Bank, and he's been

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Speaker 1: a saint today about speaking of United Kingdom. Ramifications to

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Speaker 1: Prime Minister May of the announced Junate general election right

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Speaker 1: now to your research notes help you with where cher

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Speaker 1: yelling is May three is the real surprise? The second quarter? Is?

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Speaker 1: The meeting is important? Um, I mean it could be

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Speaker 1: important if things go very badly in terms of risk assets.

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Speaker 1: So obviously recently risk assets have been on a bit

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Speaker 1: of pressure goals going up. You can imagine a scenario

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Speaker 1: where the French elections are a shock, uh, and the

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Speaker 1: the the Lepan does very well and markets go into

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Speaker 1: a bit of a tailspin, and she could, you know,

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Speaker 1: try and in that sense she could be a surprise

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Speaker 1: from where we are now. But otherwise it's too too

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Speaker 1: soon for her to do anything I'd say meaningful, meaning

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Speaker 1: be different from what the FED has been laying out.

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Speaker 1: How much has changed since the last meeting in the

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Speaker 1: last rate increase. She looks, she looks around at her

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Speaker 1: neighbors in Washington, and strikes me that not a whole

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Speaker 1: lot has has happened. A lot of these promises have

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Speaker 1: not come to fruition. Help concerned is she? How concerned

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Speaker 1: of her? Is the compliment of colleagues there on the

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Speaker 1: FMC about that, Well, it's interesting because I definitely feel

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Speaker 1: that they did more than they might have otherwise intended

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Speaker 1: to do had had the election outcome not been the same.

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Speaker 1: And so they they've definitely sort of been a front

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Speaker 1: running and and to some extent, they tried to play

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Speaker 1: that down early on after the election, saying, you know,

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Speaker 1: sort of, you know, you know, well we'll just sort of,

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Speaker 1: you know, they did obviously talk about fisc or stimulus,

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Speaker 1: food employment, and that maybe a reason to go a

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Speaker 1: bit quicker, but obviously we've had nothing, So from that perspective,

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Speaker 1: there is a danger that they're ahead of the game

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Speaker 1: and in the end they sort of undermine some of

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Speaker 1: the sort of feel good about the economy and the

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Speaker 1: extry market if they keep pursuing. As they look at

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Speaker 1: their forecaster, you're looking at yours as well. Are you

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Speaker 1: revising them in any fashion because of what's happening or

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Speaker 1: not happening in Washington? Well, well, we we are after

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Speaker 1: the election. We we were before the election, we were

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Speaker 1: so mildly barished, and after the on rates, are you

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Speaker 1: expecting high rates and a and a stronger economy? Um?

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Speaker 1: And then based clear after election, we reinforce that quite aggressively,

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Speaker 1: and we had the idea that tenure yields might go

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Speaker 1: to three percent and higher. And to be honest, because

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Speaker 1: there's nothing has happened, we've had to bring our forecast down.

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Speaker 1: So we we are much more conservative now in terms

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Speaker 1: of how high rates can go. And in addition to that,

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Speaker 1: because the FED has been a bit more aggressive than

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Speaker 1: we might have expected, and some of our forward looking

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Speaker 1: in the cases on growth are not so good. I

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Speaker 1: can fully understand this tactical rally that's taking place on

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Speaker 1: rates where you're forcing out the short positions that are there.

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Speaker 1: You know, we think tends near term can probably go

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Speaker 1: down close to two. Obviously, you know, when we assume

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Speaker 1: France isn't going to be a disaster, but you know

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Speaker 1: there's no no mistake. I mean, France goes the wrong way,

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Speaker 1: it is a disaster. So you know there's a small

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Speaker 1: risk of a terrible event. A question for Global War Street.

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Speaker 1: We're hounded folks that you listen to us every morning,

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Speaker 1: which spread full faith and credit us? Does that many

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Speaker 1: constant much? I quote the twos turns and now all

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Speaker 1: the difference in yield between the tenure and the two year.

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Speaker 1: But what does the pro watch? What do you watch? Well?

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Speaker 1: I kind of like, you know, the five year in

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Speaker 1: a way because it sort of trades around a lot

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Speaker 1: more because you don't just capture the sort of you know,

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Speaker 1: the very near terms of rate outlook, but you obviously

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Speaker 1: capturing to some extent where you might expect terminal funds

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Speaker 1: rate to be so fives tens, five thirties, I kind

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Speaker 1: of five times five three, Yeah, Yeah, this is great

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Speaker 1: because David gurw Tony Dwyer looks at the three month

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Speaker 1: five year, which is very different right now than the

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Speaker 1: two is tens. It really shows a flattening versus the

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Speaker 1: two sturns. What is the five ten I've never looked

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Speaker 1: at I'm gonna do that right now. Well, well, it's

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Speaker 1: sort of I mean, you're you're sort of assuming tens

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Speaker 1: thirties is very stable, and so five tens is going

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Speaker 1: to be UM for example, so capturing some um long

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Speaker 1: term rate term premium sort of concept. And then the

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Speaker 1: five year is sort of, you know where the FED

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Speaker 1: is sort of going more or less sort of thing

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Speaker 1: over the over a sort of full cycle and alte

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Speaker 1: uh something like two times ten minus five gives you

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Speaker 1: a five or five year and that's really interesting. There's

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Speaker 1: five or five is quite volatile. So it's a five

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Speaker 1: year eight five years forward, and if you look historically,

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Speaker 1: when you finish it, a tightening cycle five five years

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Speaker 1: pretty much you know, sort of on top of, if

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Speaker 1: not through because perhaps they've they've done it a bit.

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Speaker 1: So that's ranged, by the way, from anywhere sub two

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Speaker 1: to as high as you know, four and a half

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Speaker 1: almost for three quarters in the last couple of years.

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Speaker 1: Do you realize I go in Route twenty four in Massachusetts,

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Speaker 1: just drove off the road. There were so many He

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Speaker 1: was near the dunkin Donuts there right by that. You

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Speaker 1: come north from John Sylvia's Fall River and there's a

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Speaker 1: dunkin Donuts. There's a car off the road and rout.

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Speaker 1: There was enough. There was enough jargon in there, David

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Speaker 1: to keep us all going. Do you the podcast will

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Speaker 1: be that one minute. We're running out of time. Thank god,

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Speaker 1: there you are in spreads. I'm gonna put the five

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Speaker 1: year tenure out on Twitter, just to shake things up

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Speaker 1: this morning worldwide with jargon with Dominique constantly. Right now,

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Speaker 1: the warm body in the room was John Stolphins of

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Speaker 1: Oppenheimer and a Company. As we look at Goldman Sackson

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Speaker 1: Bank of America earlier today, what is the belief in

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Speaker 1: the financial sector right now? Well, we've got to think

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Speaker 1: that what's coming in we've seen some improvement in in

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Speaker 1: terms of the nyms, that the net interest margins spread

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Speaker 1: uh in what what's being reported bet a little bit

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Speaker 1: better than expected. We'd have to think that if if

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Speaker 1: we get some recovery in terms of the progress of

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Speaker 1: normalization of interest rates. That will even get better moving

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Speaker 1: forward in the quarter. But right now, of course that

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Speaker 1: all that progress that we saw for the first quarter

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Speaker 1: may be taken back with interest rates falling again. You

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Speaker 1: look at these bank earnings, are you seeing the formation

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Speaker 1: here a broader theme for for first quarter earnings or

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Speaker 1: say something sort of Germaine only to to these banks. Well,

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Speaker 1: I I think if there there is something among the

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Speaker 1: banks right now, it's that bond trading has picked up significantly,

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Speaker 1: and I think that probably reflects some of the changes

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Speaker 1: We're just seeing an anticipation by investors portfolio managers considering

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Speaker 1: what's coming up ahead. I think the Fed remains committed

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Speaker 1: to the process of normalization. It's a needed process. If

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Speaker 1: the administration ever gets to do some fiscal stimulus will uh,

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Speaker 1: we'll be on the way there and that will be

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Speaker 1: further healing, less pressure on the Fed to hold up

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Speaker 1: the economy. Give us to John Silifa's outlook for for

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Speaker 1: the first quarter earning season more generally, are you are

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Speaker 1: you optimistic here that we're gonna get good readies? Yeah?

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Speaker 1: You know, Big David, I'm still optimistic, still bullish, bullish

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Speaker 1: since oh nine. It's like hard work. Are you as

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Speaker 1: lonely as you were? Or or do you see people

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Speaker 1: coming around? Uh? That's that's one thing that does concern

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Speaker 1: me is I see more people moving to our side

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Speaker 1: of the boat all the time as we we moved forward.

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Speaker 1: But there's still enough healthy skepticism to make us feel

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Speaker 1: pretty comfortable. But we think, you know, the good possibility

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Speaker 1: will see earnings growth around nine percent overall for the

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Speaker 1: I was off for a week last week. Good for

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Speaker 1: you know, it's the first time since two thousand three.

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Speaker 1: And you know, I took I took a vacation. I

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Speaker 1: went to Brooklyn and you know, I'm having a kill

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Speaker 1: juice over there at a place that David Gurrl I mentioned.

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Speaker 1: Somebody said to me, how do you justify consumer stock

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Speaker 1: multiples that are nifty fifty? Like explained to you know,

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Speaker 1: our global Wall Street audience and those of Mere Mortal,

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Speaker 1: How do you buy something's trading at twenty seven times earnings?

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Speaker 1: I think what it is, Tom, is that that it

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Speaker 1: is the post bernanke uh rain is essentially we're still

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Speaker 1: in an environment where everything is relative, and relative valuation

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Speaker 1: tells you that the bond market is very little competition

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Speaker 1: two stocks. I think after almost well nine years of

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Speaker 1: the process of a bull recovery market, many people who

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Speaker 1: had stayed on the sidelines are finally looking at the

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Speaker 1: rule of seventy two. You look at your return. If

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Speaker 1: you've got a one percent return, uh, you divided into

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Speaker 1: seventy two, it will take your seventy two years to

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Speaker 1: double your money. The effect of that means, if you

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Speaker 1: have any kind of objectives, perhaps you should be looking

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Speaker 1: at stocks if you haven't yet. I don't think we've

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Speaker 1: got froth here. I don't think we've got really significant

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Speaker 1: animal spirits. I remember the the tech bubble too well, uh,

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Speaker 1: and that in comparison, there's no comparison for me, at

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Speaker 1: least at this point, so we'd have to thank you

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Speaker 1: pay a little bit more in multiple. The The average

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Speaker 1: a twelve month trailing multiple for the S and P

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Speaker 1: five all the way back to the end of nineteen

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Speaker 1: sixty at sixteen point three times. Current trailing mult to

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Speaker 1: pull as I recall is around twenty one times. So

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Speaker 1: that looks high, But the average yield of the tenure

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Speaker 1: treasury all the way back to nineteen sixty five is

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Speaker 1: about six point four percent versus last I looked at

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Speaker 1: the we were two point two percent. David, can we

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Speaker 1: rip up the script? Bruce Langhorne just passed away. You

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Speaker 1: don't know who he is, folks, but he played died

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Speaker 1: at age seventy eight, a wonderful life and was one

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Speaker 1: of the great folk musicians out there. He worked with

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Speaker 1: Bob Dylan a million years ago and John Stolphus with

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Speaker 1: us with OpCo. John he was Mr tambourine Man. You

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Speaker 1: and I were just talking about Roger mcgwinn and the

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Speaker 1: Birds took tambourine Man and made gave Bob Dylan his

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Speaker 1: first paycheck. But that was the scene back then within

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Speaker 1: the acoustic music that you and I were talking about.

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Speaker 1: That most certainly I can. I can remember seeing the

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Speaker 1: Birds way back in in the in the mid seventies

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Speaker 1: in Central Park when they were in full regale. Guy,

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Speaker 1: I mean they had they they had it was white

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Speaker 1: with the the the telecaster with the string bender on it.

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Speaker 1: David Crosby was a skinny guy. That's that's right. That's

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Speaker 1: a soulful period. Good morning to Roger mcguinney for listening

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Speaker 1: down to Florida. Anyways, we digress here, Let's get back

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Speaker 1: to the equity markets. Here. The fact is now twenty thousand,

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Speaker 1: six hundred there resiliency to equities. What's the why of

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Speaker 1: the resiliency to equities right now? Tom, I think it's

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Speaker 1: the functionality of equities, the potential for dividend income, total return,

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Speaker 1: with potential for capital appreciation in a world in which

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Speaker 1: it looks like inflation will be kept in check by

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Speaker 1: things like UH, robotics on the factory floor, algorithms in

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Speaker 1: the offices, the process of globalization and technology continuing to develop,

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Speaker 1: creating added competition. And so I think people are looking.

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Speaker 1: If they have objectives in their lives, whether it's to

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Speaker 1: leave more money to their favorite university or to their children,

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Speaker 1: or to provide for a retirement, the functionality of equities

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Speaker 1: will likely cause people in this near term, they're already

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Speaker 1: doing it paying more for each dollar of earnings. Uh.

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Speaker 1: It's sort of like, you know, for for us to

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Speaker 1: remember the real estate market in New York and nineteen

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Speaker 1: seventy eight, you could buy an attractive penthouse apartment in Midtown,

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Speaker 1: New York for seventy eight thousand dollars that today would

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Speaker 1: be worth probably six to twelve million, And that is

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Speaker 1: a function of demand. I'm not suggesting we go to

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Speaker 1: to multiples like we had in the tech bubble, but

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Speaker 1: perhaps living with a trailing twelve multiple around twenty one

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Speaker 1: to twenty three four maybe a reality for a while here. Well,

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Speaker 1: rates day so long, what David Jumping? Do you realize

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Speaker 1: that we had Professor gur on yesterday? I actually heard

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Speaker 1: of your dad. You know, he wrote the definitive book

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Speaker 1: on Martin Guitars. I had no idea it was the

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Speaker 1: history of that company. Remember very well, I was a kid.

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Speaker 1: We were on a road trip and we stopped in Nazareth, Pennsylvania,

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Speaker 1: and they said, we've got all these records, professor, come

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Speaker 1: and take a look. They opened up a big vault

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Speaker 1: and literally every record book from the founding of that

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Speaker 1: company was in there. So it's actually a very cool

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Speaker 1: business book because of the you know, the registry that

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Speaker 1: they had, all the wood that he bought, all the

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Speaker 1: John Stolphus and I don't care did your father get

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Speaker 1: a D forty five? He has a double table, a

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Speaker 1: team sweet guitar. We're digressing with pull us back to

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Speaker 1: let me pull us back to these to these Goldman

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Speaker 1: earnings and maybe we can use that a good point here.

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Speaker 1: They're citing political uncertainty as a big problem when you

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Speaker 1: look at equities trading, when you look at FIG treating.

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Speaker 1: A comment from that report is, despite global equity prices

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Speaker 1: generally increasing during the quarter, equities also operating an environment

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Speaker 1: characterized by political uncertainty, low levels of volatility and low

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Speaker 1: client activity levels help us with the with the volatility

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Speaker 1: component of that. First, the big thing with the volatility

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Speaker 1: is the VIX has has been remarkably low. I think

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Speaker 1: last week we had about a twenty four percent upward

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Speaker 1: UH spike in the thing, but still it's way off

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Speaker 1: the twenty fifteen, sixteen highs that we saw on the VIX.

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Speaker 1: And I think I think a lot of that is

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Speaker 1: that the market itself UHICH and it's its own collective

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Speaker 1: I wouldn't say collective wisdom, but it's collective assertion. UH

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Speaker 1: is really looking at greater opportunity UH than risk here,

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Speaker 1: and that is because we are in a period it

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Speaker 1: would appear to us of overall expansion, not just the

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Speaker 1: functionality of equities, but a global recovery, a US economic

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Speaker 1: expansion that appears quite sustainable at the at these levels,

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Speaker 1: with an opportunity to get a further boost at some

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Speaker 1: later date from all this fiscal stimulus potential from UH,

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Speaker 1: whether it's infrastructure spending, a repatriation of of foreign profits

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Speaker 1: by US multinationals, reduced regulation. There's If Washington can never

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Speaker 1: man aage to bridge the aisle UH and work together,

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Speaker 1: we might even see but even more positives coming across.

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Speaker 1: But all the work that the FETE has done, we

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Speaker 1: believe so far has paid off, and the next step

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Speaker 1: really falls to fiscal studios. This has been a wonderful

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Speaker 1: chest to office, Thank you so much. Brought you by

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Speaker 1: Bank of America, Mary Lynch. Dedicated to bringing our clients

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Speaker 1: insights and solutions to meet the challenges of a transforming world.

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Speaker 1: That's the power of global connections, Mary Lynch, Pierce, Fenner

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Speaker 1: and Smith Incorporated, Member s I p C. Joining us

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Speaker 1: now someone who is so much in the news of

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Speaker 1: the politics of the United States, Anthony Scaramucci. Of course,

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Speaker 1: working with the Trump administration, I've got to get to

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Speaker 1: the to the question, everybody that's a supporter of the

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Speaker 1: president in around Republican politics, have you been offered a

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Speaker 1: further position from the White House From so my my

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Speaker 1: status is still unchanged. Tom I'm about five or six

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Speaker 1: weeks away from closing my deal with Transaction exactly, and

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Speaker 1: so I've had several meetings inside the White House and

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Speaker 1: several conversations with Jared and Bryan's previous our chief of staff,

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Speaker 1: as well of Steve Bannon, and so again, I don't

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Speaker 1: want to sound over confident, but I do think that

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Speaker 1: there's a number of roles that need to be filled,

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Speaker 1: and I think I can fill one of those roles. Shortly.

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Speaker 1: I want to go serious or do you want Saturday

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Speaker 1: Night Live? Okay, you want Saturday Night Live. It's a joke.

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Speaker 1: I get it. I can watch it on Sunday morning.

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Speaker 1: I do the same thing. Everybody laughs about it, except

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Speaker 1: this isn't funny. Are we seeing him? We're stable White

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Speaker 1: House where we get away from the skits that we

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Speaker 1: see on Saturday Night Wait wait, way more stable than

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Speaker 1: the external optics. Look. In fact, what what what tends

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Speaker 1: to happen now? Because we have so much me DA,

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Speaker 1: so many cable stations, so many people piling into the

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Speaker 1: press pool that stories have to be generated. And so

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Speaker 1: I think you'll find that the group is way more stable.

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Speaker 1: I think Jared and Steve get along way better than

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Speaker 1: people want to suggest that they do, not saying that

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Speaker 1: people are not scrumming with each other from time to time.

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Speaker 1: How could they not in the superintend I'm reading a

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Speaker 1: book on FDR right now, David Gurra, I'm sorry they

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Speaker 1: were doing it back in the when we were fighting

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Speaker 1: a series. Yes, Travida said, just shut up and read

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Speaker 1: this book, and I'm reading it. Was either that or

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Speaker 1: the history of North Carolina State foots. Help with with

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Speaker 1: who's running the economic show within this White House? Now

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Speaker 1: you have Kevin Hassant name to have the CEO, You've

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Speaker 1: got to Garret Khone of course as well Stephen Manuchin.

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Speaker 1: A lot of a lot of big names, a lot

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Speaker 1: of big personalities. Who's who's really at the front and

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Speaker 1: center for that agenda? Well, listen to the President is

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Speaker 1: at the front and center. I think everybody has to

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Speaker 1: recognize at the end of the day, he's going to

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Speaker 1: drive the economic agenda. Um is a great sense for

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Speaker 1: where he wants to take the tax code. I don't

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Speaker 1: think you see the in fighting there. In fact, I

430
00:23:07,160 --> 00:23:10,560
Speaker 1: worked at Goldman Sachs with both Gary and Steven. These

431
00:23:10,560 --> 00:23:13,200
Speaker 1: are very collegial guys. These guys know how to get

432
00:23:13,200 --> 00:23:17,200
Speaker 1: along with each other and to coordinate policy. And so

433
00:23:17,320 --> 00:23:19,959
Speaker 1: my guess is is that that's gonna go better than

434
00:23:19,960 --> 00:23:22,920
Speaker 1: people expect as well. Uh, if you if you want

435
00:23:22,920 --> 00:23:24,720
Speaker 1: to think about the taxes for a second and just

436
00:23:24,760 --> 00:23:27,439
Speaker 1: go back to the healthcare. I think Stephen was very

437
00:23:27,480 --> 00:23:32,119
Speaker 1: hones Secretary Secretary of Treasury Minutia was very honest yesterday.

438
00:23:32,680 --> 00:23:34,600
Speaker 1: We sort of have to figure out what's going on

439
00:23:34,600 --> 00:23:37,399
Speaker 1: on the healthcare side before you can really get the

440
00:23:37,480 --> 00:23:41,400
Speaker 1: full tax reform in place. And so, uh, it's gonna

441
00:23:41,440 --> 00:23:43,280
Speaker 1: take a little bit longer than people thought. But is

442
00:23:43,320 --> 00:23:46,399
Speaker 1: that surprising to anybody in this room. People in this

443
00:23:46,480 --> 00:23:49,040
Speaker 1: radio room know that these things take a long period

444
00:23:49,040 --> 00:23:52,480
Speaker 1: of time. It's eighteen months to get Obamacare place. As

445
00:23:52,520 --> 00:23:55,600
Speaker 1: a president, know that. I mean, he's learning, he's learning

446
00:23:55,640 --> 00:23:59,040
Speaker 1: about the timeline of the political world, right, I mean,

447
00:23:59,080 --> 00:24:01,920
Speaker 1: you bought Mike pr this jersey. You know the timeline

448
00:24:01,920 --> 00:24:05,440
Speaker 1: of the New York Mets. It's forever right. Yeah, that well,

449
00:24:05,480 --> 00:24:08,160
Speaker 1: that jersey safely ensconced at the nine eleven Museum. Now

450
00:24:08,200 --> 00:24:12,760
Speaker 1: for do you see a presidential patients developing of the

451
00:24:12,800 --> 00:24:16,800
Speaker 1: realities of the Washington timeline? Well, here's Here's one of

452
00:24:16,800 --> 00:24:18,960
Speaker 1: the things I really love about the President. I don't

453
00:24:18,960 --> 00:24:21,679
Speaker 1: think he likes the reality of Washington. I don't think

454
00:24:21,720 --> 00:24:25,800
Speaker 1: he likes the sclerosis of Washington. And so he's a

455
00:24:25,880 --> 00:24:29,960
Speaker 1: disruptive entrepreneur. He's a change agent. I think people elected

456
00:24:30,000 --> 00:24:32,760
Speaker 1: him to be a change agent, and so I don't

457
00:24:32,800 --> 00:24:35,200
Speaker 1: think you want him in the stasis of Washington. I

458
00:24:35,240 --> 00:24:38,320
Speaker 1: think you wanted still rumbling through the china shop a

459
00:24:38,359 --> 00:24:41,000
Speaker 1: little bit and shaking things up. So so, yes, he's

460
00:24:41,040 --> 00:24:45,040
Speaker 1: making some adaptation. I think he's working very well. Here's

461
00:24:45,080 --> 00:24:49,160
Speaker 1: another breaking news story. I think his partnership with Paul

462
00:24:49,280 --> 00:24:52,040
Speaker 1: Ryan is way better than people suggest. I think they're

463
00:24:52,080 --> 00:24:55,919
Speaker 1: working feverishly behind the scenes up on the Hill to

464
00:24:56,080 --> 00:25:00,000
Speaker 1: get the coalition together to repeal and replace. Sobam, you're

465
00:25:00,040 --> 00:25:02,840
Speaker 1: ask a smart how much does does that disruptiveness make

466
00:25:02,920 --> 00:25:05,240
Speaker 1: him difficult to work for? We were just talking about

467
00:25:05,240 --> 00:25:06,960
Speaker 1: the statement on the phone call he made to the

468
00:25:06,960 --> 00:25:10,080
Speaker 1: Turkish president yesterday and how different that was from the

469
00:25:10,119 --> 00:25:12,199
Speaker 1: statement we got from the Secretary of State from the

470
00:25:12,240 --> 00:25:14,080
Speaker 1: from the State Department of the State Department, highlighting the

471
00:25:14,080 --> 00:25:16,159
Speaker 1: fact that they were regularities with that election. The president

472
00:25:16,200 --> 00:25:19,320
Speaker 1: and his statement congratulating him on the on that referendum.

473
00:25:19,520 --> 00:25:21,840
Speaker 1: But I imagine that it could be difficult to work

474
00:25:21,840 --> 00:25:24,080
Speaker 1: to somebody who might be doing something opposite from what

475
00:25:24,119 --> 00:25:27,040
Speaker 1: you're doing. Well, well, listen, I mean this has been

476
00:25:27,040 --> 00:25:29,800
Speaker 1: the hallmark of the President's success and so I I

477
00:25:29,840 --> 00:25:33,680
Speaker 1: spent fifteen months with him on the campaign. Uh, he

478
00:25:33,920 --> 00:25:36,280
Speaker 1: is a guy that will call plays David from the

479
00:25:36,320 --> 00:25:38,920
Speaker 1: line of scrimmage. He's a guy that's his own offensive

480
00:25:38,960 --> 00:25:42,760
Speaker 1: coordinator as well as defensive coordinator. So if you're not

481
00:25:43,040 --> 00:25:46,479
Speaker 1: ready to adapt yourself to him and go with the

482
00:25:46,520 --> 00:25:49,480
Speaker 1: flow with him. If he wants to release his tax returns,

483
00:25:49,480 --> 00:25:56,399
Speaker 1: guess what he's gonna do him surprise everybody and do

484
00:25:56,440 --> 00:25:58,919
Speaker 1: it later on in the year. We don't know. We

485
00:25:58,920 --> 00:26:01,280
Speaker 1: gotta write your newsletter for tomorrow. Jump in with a

486
00:26:01,359 --> 00:26:04,920
Speaker 1: question for Mr scam My biggest question during the entire

487
00:26:05,000 --> 00:26:07,360
Speaker 1: campaign and thus far in the presidency is the president's

488
00:26:07,400 --> 00:26:10,520
Speaker 1: propensity to act towards some sort of trade protectionism. Is

489
00:26:10,560 --> 00:26:12,719
Speaker 1: that going out the door? Is that has that changed

490
00:26:13,080 --> 00:26:15,639
Speaker 1: at all? To Anthony Well, Our our Secretary of Commerce

491
00:26:15,680 --> 00:26:18,800
Speaker 1: Wilver Ross said over the weekend that this all this

492
00:26:18,960 --> 00:26:23,679
Speaker 1: protectionism nonsense just isn't true. All the president is called for, Dennis,

493
00:26:23,880 --> 00:26:26,400
Speaker 1: is an equalization of these trade deals. I don't want

494
00:26:26,400 --> 00:26:28,440
Speaker 1: to take you through seventy years of trade history since

495
00:26:28,480 --> 00:26:31,720
Speaker 1: the war, but we uneven these trade deals so that

496
00:26:31,800 --> 00:26:35,000
Speaker 1: we could create burgeoning middle classes around the world. That

497
00:26:35,160 --> 00:26:40,280
Speaker 1: was very successful. It's led to less violent, more economic interdependence,

498
00:26:40,520 --> 00:26:43,399
Speaker 1: but it's hollowed out the working class families in the

499
00:26:43,480 --> 00:26:46,560
Speaker 1: United States. All the President is saying is let's true

500
00:26:46,600 --> 00:26:49,240
Speaker 1: these up, let's make them more fair. I don't think

501
00:26:49,240 --> 00:26:52,080
Speaker 1: he's looking for protectionism, nor is the Secretary of Commerce.

502
00:26:52,119 --> 00:26:53,560
Speaker 1: Where are you going to be ambassador? If they give

503
00:26:53,600 --> 00:26:55,399
Speaker 1: you a job as an ambassador, will you accept it?

504
00:26:55,400 --> 00:26:58,440
Speaker 1: Which nation would you like to go to. I'm gonna

505
00:26:58,440 --> 00:27:01,240
Speaker 1: go I'm gonna go to Alert because we have we

506
00:27:01,280 --> 00:27:03,120
Speaker 1: have it. We're having a difficult time with the penguins,

507
00:27:03,160 --> 00:27:06,440
Speaker 1: and we gotta get our trade. The Clumbus, the Columbus

508
00:27:06,440 --> 00:27:13,000
Speaker 1: blue jackets. That is the best. Somebody get a memo

509
00:27:13,080 --> 00:27:18,160
Speaker 1: to Scaramouchi, David, the estimates are an article and it's melty.

510
00:27:18,280 --> 00:27:21,639
Speaker 1: Good luck with that. Anthony Scaramucchi with us today. Of

511
00:27:21,680 --> 00:27:24,680
Speaker 1: course he's looking for closing him a transaction with his

512
00:27:24,760 --> 00:27:29,080
Speaker 1: wall Street firm and maybe further employment by the Trump administration.

513
00:27:29,119 --> 00:27:42,600
Speaker 1: Thank you so much for being with us. It was

514
00:27:42,640 --> 00:27:46,919
Speaker 1: a great moment for Bloomberg Surveillance and all of Bloomberg Radio.

515
00:27:47,080 --> 00:27:51,240
Speaker 1: Ken Pruit myself ringing the belt of the New York

516
00:27:51,280 --> 00:27:53,560
Speaker 1: Stock is changed. I get upset with talking about Ken

517
00:27:53,800 --> 00:27:57,320
Speaker 1: with Charlie Pellett and all of Bloomberg Radio and today

518
00:27:57,880 --> 00:27:59,880
Speaker 1: as he did in nineteen o three when they had

519
00:27:59,880 --> 00:28:03,960
Speaker 1: the first bell of the New York stock is Dennis Gartman, Well, Dennis,

520
00:28:04,040 --> 00:28:05,919
Speaker 1: it's really cool. I mean, you're down there on the

521
00:28:06,000 --> 00:28:08,280
Speaker 1: ramp and you know, you go down you go down

522
00:28:08,280 --> 00:28:10,840
Speaker 1: there and you ring the bell and Kenny Pulkari throws

523
00:28:10,880 --> 00:28:15,400
Speaker 1: something at Joe. There's a true piece of working. Why

524
00:28:15,440 --> 00:28:17,400
Speaker 1: are you ringing the bell of New York stocks Change?

525
00:28:17,480 --> 00:28:19,920
Speaker 1: Is this because U n C took the final four?

526
00:28:20,560 --> 00:28:22,639
Speaker 1: You would have to bring that up. You would have

527
00:28:22,680 --> 00:28:26,320
Speaker 1: to bring that up. That's okay, Um No, it's actually

528
00:28:26,359 --> 00:28:28,720
Speaker 1: the third anniversary of the two E T F that

529
00:28:28,760 --> 00:28:30,400
Speaker 1: I have listed on in the New York Stock Exchange,

530
00:28:30,480 --> 00:28:33,800
Speaker 1: gold euro ge U R and gold predicated in the

531
00:28:33,920 --> 00:28:35,960
Speaker 1: n G Y E N. They have lived for four

532
00:28:36,200 --> 00:28:38,920
Speaker 1: or three years and we're celebrating the third year anniversary.

533
00:28:38,960 --> 00:28:41,000
Speaker 1: I made a joke David Garrow. The Gartman got two

534
00:28:41,080 --> 00:28:42,960
Speaker 1: calls in a row, right, and they said, you gotta

535
00:28:43,000 --> 00:28:45,880
Speaker 1: ring a bell? How have you been? Actually I had

536
00:28:45,920 --> 00:28:48,200
Speaker 1: one call in a row? Right, Okay, how have you

537
00:28:48,280 --> 00:28:51,280
Speaker 1: been doing your calls in this crazy stock mark? Actually

538
00:28:51,360 --> 00:28:53,400
Speaker 1: I trade only from my own accounts, so I think

539
00:28:53,400 --> 00:28:55,360
Speaker 1: that that's important. What I write in my newsletter is

540
00:28:55,400 --> 00:28:58,000
Speaker 1: what I do. And I'm up five and point nine

541
00:28:58,000 --> 00:28:59,720
Speaker 1: percent for the year, so I'm doing Okay. Do I

542
00:28:59,760 --> 00:29:02,160
Speaker 1: get things wrong? Oh, you bet you do. I get

543
00:29:02,160 --> 00:29:05,320
Speaker 1: things wrong often, Oh absolutely. I think the important thing

544
00:29:05,400 --> 00:29:07,560
Speaker 1: is not to stay wrong, and I try not to

545
00:29:07,600 --> 00:29:10,000
Speaker 1: stay wrong for a very long period of time. The

546
00:29:10,040 --> 00:29:12,000
Speaker 1: only thing that will take you out of this business

547
00:29:12,480 --> 00:29:15,000
Speaker 1: is getting something wrong and adding to it doing more

548
00:29:15,040 --> 00:29:17,000
Speaker 1: of that which is wrong. I have a very simple

549
00:29:18,000 --> 00:29:20,240
Speaker 1: idiom which I think makes on a lot of sense.

550
00:29:20,240 --> 00:29:22,400
Speaker 1: In investing, Let's do more of the things that have

551
00:29:22,480 --> 00:29:24,760
Speaker 1: been working. Let's try our best to do less of

552
00:29:24,760 --> 00:29:26,520
Speaker 1: the things that have not. It's very If you do

553
00:29:26,560 --> 00:29:28,840
Speaker 1: that in life, you'll succeed. If you do that in investing,

554
00:29:28,880 --> 00:29:31,280
Speaker 1: you'll succeed. Let's talk a bit about the dollar. We

555
00:29:31,280 --> 00:29:33,000
Speaker 1: can get to talk about this with Ana Scaramuchi put

556
00:29:33,080 --> 00:29:35,680
Speaker 1: to the Treasury Secretary Stephen Manuchin quote in the Financial

557
00:29:35,680 --> 00:29:38,120
Speaker 1: Times yesterday talking about the strength of the dollar. We

558
00:29:38,160 --> 00:29:40,680
Speaker 1: had the present talking about that last week. What's your

559
00:29:40,680 --> 00:29:42,800
Speaker 1: sense of the direction of the dollar right now? I

560
00:29:42,800 --> 00:29:44,480
Speaker 1: think it's still a bowl market for the dollar, but

561
00:29:44,520 --> 00:29:47,760
Speaker 1: it's it clearly you have a discussion going on within

562
00:29:47,800 --> 00:29:50,800
Speaker 1: the administration that I think that the the dichotomy of

563
00:29:50,840 --> 00:29:54,160
Speaker 1: the of the people there is confusing to the market. Uh.

564
00:29:54,200 --> 00:29:56,080
Speaker 1: It was nice to see Mr manuch and come out

565
00:29:56,080 --> 00:29:58,360
Speaker 1: and say that a strong dollar is in fact in

566
00:29:58,360 --> 00:30:00,240
Speaker 1: the benefit of the United States and the long run.

567
00:30:00,520 --> 00:30:02,200
Speaker 1: But then he came right back again a few minutes

568
00:30:02,240 --> 00:30:03,959
Speaker 1: later and said, what is the long run? And perhaps

569
00:30:03,960 --> 00:30:05,560
Speaker 1: in the short run we may have to diminish the

570
00:30:05,640 --> 00:30:07,920
Speaker 1: value of the dollar. I think they're confused as to

571
00:30:08,000 --> 00:30:09,960
Speaker 1: what they would like to see the dollar do. I

572
00:30:10,000 --> 00:30:12,000
Speaker 1: still think it's a bullmarket for the dollar. I think

573
00:30:12,080 --> 00:30:14,120
Speaker 1: on balance you want to be long of it, all

574
00:30:14,160 --> 00:30:17,320
Speaker 1: things being otherwise equal. But today, for example, the surprise

575
00:30:17,400 --> 00:30:20,120
Speaker 1: news of the UK election has given a bid to

576
00:30:20,120 --> 00:30:22,600
Speaker 1: the euro and a bid to Sterling, a strong bid

577
00:30:22,720 --> 00:30:24,320
Speaker 1: dollar has gotten very weak in the last three or

578
00:30:24,360 --> 00:30:26,960
Speaker 1: four hours. Very interesting. Let me reprise the question I heard.

579
00:30:27,120 --> 00:30:29,960
Speaker 1: Somebody asked Tom yesterday. We do these Facebook live videos

580
00:30:29,960 --> 00:30:31,600
Speaker 1: a few days a week, and somebody asked, why the

581
00:30:31,680 --> 00:30:33,520
Speaker 1: yen is such a good safe haven right now, if

582
00:30:33,560 --> 00:30:35,880
Speaker 1: in fact it's so close, so proximate to what's going

583
00:30:35,880 --> 00:30:38,600
Speaker 1: on in Korea. I think the only thing that you

584
00:30:38,640 --> 00:30:41,320
Speaker 1: can say is that because it is proximate to what's

585
00:30:41,360 --> 00:30:43,440
Speaker 1: going on, it should be contrary you think otherwise, you

586
00:30:43,520 --> 00:30:46,080
Speaker 1: think money would leave Japan, but perhaps what is what's

587
00:30:46,080 --> 00:30:48,920
Speaker 1: really happening is Mr and Mrs Watson Abe, because they're

588
00:30:48,920 --> 00:30:50,920
Speaker 1: fearful about what's going on, are saying I want my

589
00:30:50,960 --> 00:30:53,520
Speaker 1: money coming home to me rather than send my money

590
00:30:53,520 --> 00:30:56,800
Speaker 1: abroad to somebody else. You would think money would leave Japan,

591
00:30:57,000 --> 00:30:59,440
Speaker 1: but I think the actual rational explanation is money is

592
00:30:59,480 --> 00:31:02,040
Speaker 1: going home because of fear rather than anything else. Does

593
00:31:02,080 --> 00:31:04,600
Speaker 1: it make sense No, Should it go the other way? Yes?

594
00:31:04,760 --> 00:31:06,200
Speaker 1: Is it going the way of a strong end for

595
00:31:06,320 --> 00:31:10,400
Speaker 1: right now? Yes, much to my dismay, the shorts are humbled.

596
00:31:10,520 --> 00:31:14,960
Speaker 1: I guess we've come down drastically from but we just

597
00:31:15,120 --> 00:31:19,920
Speaker 1: can't get the gloom going now. Why is that cherry Yellen. No.

598
00:31:20,120 --> 00:31:22,480
Speaker 1: I think it's because the business community out in the

599
00:31:22,520 --> 00:31:25,440
Speaker 1: United States really is feeling better. If you if you

600
00:31:25,480 --> 00:31:28,000
Speaker 1: get out of New York, if you go to Virginia Beach,

601
00:31:28,080 --> 00:31:30,240
Speaker 1: we want to do that. You really need to do

602
00:31:30,240 --> 00:31:32,600
Speaker 1: that every once in a while. If you if you

603
00:31:32,640 --> 00:31:34,400
Speaker 1: go to Peory, if you go to Cleveland, if you

604
00:31:34,440 --> 00:31:37,760
Speaker 1: go to Sacramento, California, there are help wanted signs everywhere.

605
00:31:37,800 --> 00:31:40,880
Speaker 1: Business is actually doing better at the base. And I

606
00:31:40,920 --> 00:31:42,640
Speaker 1: think that that's what's going on in the stock market

607
00:31:42,680 --> 00:31:44,800
Speaker 1: more than anything else. Is it surprising to me? Yes?

608
00:31:44,840 --> 00:31:48,080
Speaker 1: Do I do? I think share prices are extremely overvalued. Yes,

609
00:31:48,080 --> 00:31:50,800
Speaker 1: our price earnings multiples extended to the upside. Yes, Then

610
00:31:50,840 --> 00:31:53,880
Speaker 1: what do you buy within the land of twenties multiples?

611
00:31:55,280 --> 00:31:57,680
Speaker 1: You've heard me say this before, and I'll say it again.

612
00:31:57,680 --> 00:31:59,840
Speaker 1: I'm an old guy. I like old things. I like

613
00:31:59,880 --> 00:32:02,600
Speaker 1: the simple things that are incumbent in in in in

614
00:32:02,760 --> 00:32:06,000
Speaker 1: infrastructure and economic growth. Give me steel, which is now

615
00:32:06,040 --> 00:32:08,400
Speaker 1: back after having fallen almost thirty percent. I want to

616
00:32:08,400 --> 00:32:10,480
Speaker 1: own steel. This morning, I'm gonna buy steel for myself.

617
00:32:10,800 --> 00:32:13,080
Speaker 1: I want to own Ball bearings manufacturers. I want to

618
00:32:13,120 --> 00:32:15,600
Speaker 1: own cement. I want to own simple things within the

619
00:32:15,640 --> 00:32:18,640
Speaker 1: synthesis of your research. Note and folks, it's interesting page

620
00:32:18,680 --> 00:32:20,520
Speaker 1: one if you read it for long enough. There's page one,

621
00:32:20,560 --> 00:32:23,800
Speaker 1: page two, there's page five and six. On page five

622
00:32:23,800 --> 00:32:26,120
Speaker 1: and six is where you talk about the broader, bigger picture.

623
00:32:26,360 --> 00:32:29,280
Speaker 1: Does Dennis Gartman believe in a resurgence of the great

624
00:32:29,360 --> 00:32:33,800
Speaker 1: commodity cycle that we saw starting with China ten years ago?

625
00:32:33,920 --> 00:32:36,760
Speaker 1: I hope. I don't believe it doesn't count. Hope believe

626
00:32:36,760 --> 00:32:38,520
Speaker 1: the count every once in a while. I hope. It

627
00:32:38,560 --> 00:32:40,240
Speaker 1: looks to me like some of the some of the

628
00:32:40,240 --> 00:32:43,160
Speaker 1: major commodities are trying their best to make lows. It

629
00:32:43,200 --> 00:32:46,360
Speaker 1: doesn't look like the grain market. But I'm not gonna

630
00:32:46,360 --> 00:32:48,000
Speaker 1: bet on the long stop. See how we got red

631
00:32:48,080 --> 00:32:50,080
Speaker 1: corn or winter weeat or whatever the hell he trades

632
00:32:50,120 --> 00:32:53,720
Speaker 1: in her? Hard red winter wheat? Is that what they're

633
00:32:53,760 --> 00:32:57,280
Speaker 1: using budweiser, even now they use barley and budweiser. Hard

634
00:32:57,320 --> 00:33:00,120
Speaker 1: red winter wheat is what goes into bread. It is

635
00:33:00,280 --> 00:33:02,480
Speaker 1: it is the grain that goes into bread. Whereas that's

636
00:33:02,480 --> 00:33:04,800
Speaker 1: what's trade it used to be in Kansas City. Soft

637
00:33:04,840 --> 00:33:07,200
Speaker 1: red winter wheat is what goes into cakes. But that's

638
00:33:07,200 --> 00:33:09,840
Speaker 1: the more dominant futures contract is soft red winter. It

639
00:33:09,840 --> 00:33:12,560
Speaker 1: doesn't make anything. You don't know what goes into No,

640
00:33:12,680 --> 00:33:15,320
Speaker 1: I have no idea, but I can tell you I'm

641
00:33:15,320 --> 00:33:17,560
Speaker 1: not eating any of it. David Wilson, I were talking

642
00:33:17,600 --> 00:33:21,560
Speaker 1: Pretzel Snyder Pretzels yesterday, and I just thought, you know,

643
00:33:21,720 --> 00:33:24,040
Speaker 1: we could talk cheese. It's because that's what I feel like, right,

644
00:33:24,120 --> 00:33:25,800
Speaker 1: we should come back and talk housing. We're gonna get these,

645
00:33:25,920 --> 00:33:30,440
Speaker 1: we should talk. It is a famous Gartman phrase. He

646
00:33:30,520 --> 00:33:32,680
Speaker 1: likes to buy things that if they follow in your foot,

647
00:33:32,720 --> 00:33:34,760
Speaker 1: they hurt. I maybe it's a bell today, gonna fall

648
00:33:34,840 --> 00:33:40,160
Speaker 1: in your foot. I now it's probably show it worse.

649
00:33:40,200 --> 00:33:42,200
Speaker 1: I'll probably ring the bell. It'll fall on somebody else's

650
00:33:42,680 --> 00:33:45,640
Speaker 1: Away from housing starts, We've got industrial production, which is

651
00:33:45,640 --> 00:33:48,720
Speaker 1: a classic Gartman series. It's about things that fall in

652
00:33:48,760 --> 00:33:52,920
Speaker 1: your foot. Why do I care about stagnant industrial production?

653
00:33:53,040 --> 00:33:55,680
Speaker 1: If I'm in a service sector economy, I'm not sure

654
00:33:55,680 --> 00:33:57,720
Speaker 1: that you're in the service sector economy for all intents.

655
00:33:57,800 --> 00:34:00,200
Speaker 1: I mean we're still building houses, were still building codes,

656
00:34:00,240 --> 00:34:02,960
Speaker 1: will still build some bridges. We still make some steal

657
00:34:03,000 --> 00:34:05,840
Speaker 1: but no question, we are more of a service sector

658
00:34:05,880 --> 00:34:07,880
Speaker 1: economy than we were fifteen years ago. But we're still

659
00:34:07,880 --> 00:34:09,960
Speaker 1: going to make things. We still need to have cement,

660
00:34:10,040 --> 00:34:12,520
Speaker 1: We still need ball bearings, we still need steel. We

661
00:34:12,600 --> 00:34:17,200
Speaker 1: shall for the next five years. You always follow gold.

662
00:34:17,200 --> 00:34:19,160
Speaker 1: Here's a question about gold you talked about in different

663
00:34:19,200 --> 00:34:22,600
Speaker 1: denominations you're looking at it's once predicated on on non

664
00:34:22,719 --> 00:34:25,360
Speaker 1: US dollar terms. Why does that matter? Help me understand

665
00:34:25,560 --> 00:34:28,400
Speaker 1: of the biggest people need to understand that when they

666
00:34:28,440 --> 00:34:31,279
Speaker 1: buy something. If you buy soybeans, you bought beans, you

667
00:34:31,400 --> 00:34:33,600
Speaker 1: sold dollars. You've made the You really have made the

668
00:34:33,640 --> 00:34:35,719
Speaker 1: predicated bet that the dollar is gonna weaken. You'd rather

669
00:34:35,760 --> 00:34:38,840
Speaker 1: own beans than than dollars. If you buy crude oil,

670
00:34:39,040 --> 00:34:41,960
Speaker 1: you've effectively made a bet against the U. S. Dollar.

671
00:34:42,320 --> 00:34:44,200
Speaker 1: You've really made a bet against the US dollar. When

672
00:34:44,200 --> 00:34:47,239
Speaker 1: you're buying gold, I mean its supposedly there are two

673
00:34:47,239 --> 00:34:50,879
Speaker 1: different currencies. Goal gets priced in dollar terms. I'd rather

674
00:34:50,920 --> 00:34:53,400
Speaker 1: own gold in currencies that I think are going to

675
00:34:53,560 --> 00:34:56,160
Speaker 1: fall in value rather than currencies that I think are

676
00:34:56,160 --> 00:34:58,359
Speaker 1: going to rise in value. There will be a time

677
00:34:58,360 --> 00:35:00,279
Speaker 1: when I will have no interest in gold in your rows.

678
00:35:00,520 --> 00:35:02,160
Speaker 1: There shall come a time when I'll have no interest

679
00:35:02,160 --> 00:35:04,480
Speaker 1: in gold in Europe. In the end, but right now

680
00:35:04,520 --> 00:35:06,440
Speaker 1: I do think that the the ends probably going to

681
00:35:06,440 --> 00:35:08,720
Speaker 1: continue to weaken. The euro is probably going to continue

682
00:35:08,719 --> 00:35:11,440
Speaker 1: to weaken, and I'd rather own gold in currencies that

683
00:35:11,480 --> 00:35:15,239
Speaker 1: are that I think and that have been devaluing rather

684
00:35:15,239 --> 00:35:17,600
Speaker 1: than evaluing I you have question. Thank you for answering it.

685
00:35:17,680 --> 00:35:19,319
Speaker 1: Let me know it's not a how you question at all.

686
00:35:19,360 --> 00:35:22,000
Speaker 1: We get that question all the time, even from the

687
00:35:22,040 --> 00:35:24,680
Speaker 1: most sophisticated investors in gold, who say, why should I

688
00:35:24,719 --> 00:35:27,080
Speaker 1: do that? There's a rationale, there's a reason to it.

689
00:35:27,280 --> 00:35:28,759
Speaker 1: We're talking at the top of the show about the

690
00:35:28,840 --> 00:35:32,920
Speaker 1: elections coming up now in the UK elections in France,

691
00:35:33,280 --> 00:35:36,120
Speaker 1: So how are you positioning yourself ahead of the French election?

692
00:35:36,640 --> 00:35:39,919
Speaker 1: Frightening lye uh. It is very confusing because two weeks

693
00:35:39,920 --> 00:35:42,680
Speaker 1: ago it was almost a given that Mr mccron was

694
00:35:42,719 --> 00:35:44,680
Speaker 1: going to be first or second, that Miss Lapaul was

695
00:35:44,680 --> 00:35:46,560
Speaker 1: going to be first or second, that both of them

696
00:35:46,560 --> 00:35:48,840
Speaker 1: shall move to the to the second round runoff, and

697
00:35:48,880 --> 00:35:51,960
Speaker 1: that probably mcrown was going to win. Now you don't know.

698
00:35:52,120 --> 00:35:55,160
Speaker 1: The Melancolon has has come out of nowhere to almost

699
00:35:55,160 --> 00:35:58,080
Speaker 1: tie them. Mr Phelon has come along quite some way.

700
00:35:58,360 --> 00:36:00,719
Speaker 1: He would be my preferred candidate. He fell off the

701
00:36:00,800 --> 00:36:02,759
Speaker 1: edge of a cliff with his with his own of

702
00:36:02,800 --> 00:36:06,120
Speaker 1: his own making. But suddenly the polls, instead of having

703
00:36:06,239 --> 00:36:09,319
Speaker 1: ten point disparities, are suddenly narrow to three point disparities.

704
00:36:09,719 --> 00:36:11,799
Speaker 1: You don't know who's going to win that election. You

705
00:36:11,840 --> 00:36:13,560
Speaker 1: don't know who's going to go into the second round,

706
00:36:13,880 --> 00:36:15,799
Speaker 1: and you don't know who's gonna win and end up

707
00:36:15,800 --> 00:36:18,400
Speaker 1: being the next French president. Two weeks ago you just

708
00:36:18,440 --> 00:36:21,120
Speaker 1: said it's over. Now you can't say that it's confusion rains.

709
00:36:21,120 --> 00:36:22,920
Speaker 1: How about Tom He's headed to d C this this

710
00:36:22,960 --> 00:36:26,439
Speaker 1: weekend for the the IMF Spring meetings. What's your sense

711
00:36:26,440 --> 00:36:29,920
Speaker 1: of how this administration, this new administration regards multi ladder institutions.

712
00:36:30,120 --> 00:36:32,320
Speaker 1: There gonna be is there gonna be some worry in Washington.

713
00:36:32,560 --> 00:36:34,680
Speaker 1: There's gonna be plenty of warry in Washington. I think

714
00:36:34,680 --> 00:36:37,040
Speaker 1: you'll end up seeing this. This administration has no respect

715
00:36:37,080 --> 00:36:39,720
Speaker 1: whatsoever for the I m F. And if I wouldn't

716
00:36:39,760 --> 00:36:43,480
Speaker 1: be surprised if we walk away straight in our jackets

717
00:36:43,480 --> 00:36:45,600
Speaker 1: and say, y'all can do what you want to do,

718
00:36:45,640 --> 00:36:47,480
Speaker 1: but we have very little interest. Let me ask you

719
00:36:47,480 --> 00:36:50,040
Speaker 1: a question, little ring your bell, Mr Sender, won't you

720
00:36:50,080 --> 00:36:52,080
Speaker 1: just darken the door. And he's of course talking his book,

721
00:36:52,120 --> 00:36:54,359
Speaker 1: and he's talking the book of the administration. I get that.

722
00:36:54,840 --> 00:36:58,279
Speaker 1: What do you sense living where you live? Somewhere? Where

723
00:36:58,320 --> 00:37:01,680
Speaker 1: is the northeast Chapel Hill, Dave? And I can't remember?

724
00:37:02,280 --> 00:37:04,880
Speaker 1: But but you know you cannot help yourself, can you have?

725
00:37:05,160 --> 00:37:09,680
Speaker 1: You are away from the you were away from the

726
00:37:09,719 --> 00:37:12,319
Speaker 1: oddities of New England and New York and the other

727
00:37:12,760 --> 00:37:17,840
Speaker 1: sanctuary cities. What is the support of our president among

728
00:37:17,920 --> 00:37:21,520
Speaker 1: those that at the margins supported him but seemed to

729
00:37:21,560 --> 00:37:24,640
Speaker 1: be wavering? What do you sense about that? I I

730
00:37:24,800 --> 00:37:27,759
Speaker 1: sensed that the support is stronger now than it was then,

731
00:37:28,280 --> 00:37:30,719
Speaker 1: and it was, yes, And it's really fascinating because the

732
00:37:30,719 --> 00:37:32,800
Speaker 1: president has made a hundred eighty degree turns on a

733
00:37:32,880 --> 00:37:36,759
Speaker 1: number of issues, and yet his supporters are admire him

734
00:37:36,800 --> 00:37:39,080
Speaker 1: for having made those changes. So I think you I

735
00:37:39,280 --> 00:37:41,840
Speaker 1: think in Virginia, in North Carolina, in Ohio, where I

736
00:37:41,880 --> 00:37:45,080
Speaker 1: have some expertise, I think the support levels are the

737
00:37:45,120 --> 00:37:48,440
Speaker 1: support capabilities and levels are stronger now than they were then. Truly,

738
00:37:48,600 --> 00:37:51,080
Speaker 1: do you predict that for the rest of this term?

739
00:37:52,920 --> 00:37:55,319
Speaker 1: Trend is there? The trend is there, But what what

740
00:37:55,520 --> 00:37:58,480
Speaker 1: is disconcerting? To me is that he has the capability

741
00:37:58,480 --> 00:38:00,520
Speaker 1: of switching on a dime, and and he has done

742
00:38:00,520 --> 00:38:03,480
Speaker 1: that many, many times. He may switch again. Confusion, as

743
00:38:03,520 --> 00:38:05,920
Speaker 1: I like to say, breeds contempt. But right now confusion

744
00:38:05,960 --> 00:38:09,520
Speaker 1: is breeding support, which is unusual, and it can may continue.

745
00:38:09,680 --> 00:38:11,640
Speaker 1: If you played golf for the president, he's played with

746
00:38:11,680 --> 00:38:14,040
Speaker 1: everyone else. No, I have not played golf of the president,

747
00:38:14,080 --> 00:38:17,000
Speaker 1: and my handicap has gone from five to nine in

748
00:38:17,040 --> 00:38:18,879
Speaker 1: the course of a year. I'm not playing nearly enough,

749
00:38:18,960 --> 00:38:22,399
Speaker 1: but I won't. I won't ask why it's your lands, right,

750
00:38:22,480 --> 00:38:26,239
Speaker 1: That's how I can't puddle lick. I can't puddle lick. Well.

751
00:38:26,440 --> 00:38:28,440
Speaker 1: I would suggest maybe it has to do with the

752
00:38:28,440 --> 00:38:31,800
Speaker 1: politics you're writing about it. That's the put. Have you

753
00:38:31,880 --> 00:38:34,919
Speaker 1: been writing any calls this week? Can we leave this positively? Yes,

754
00:38:34,960 --> 00:38:36,719
Speaker 1: I've been short of crude oil for the past week

755
00:38:36,760 --> 00:38:38,480
Speaker 1: and a half. I've been I was short of stocks

756
00:38:38,560 --> 00:38:42,319
Speaker 1: until yesterday morning. Uh and uh. For the first time

757
00:38:42,320 --> 00:38:44,400
Speaker 1: in a long while, I'm actually buying soybeans because I

758
00:38:44,400 --> 00:38:46,160
Speaker 1: think you're starting to see a bottom there, but not

759
00:38:46,160 --> 00:38:48,840
Speaker 1: not a dramatic one. Congratulations bringing the bell of the

760
00:38:48,880 --> 00:38:52,160
Speaker 1: New York Stock Change today, Mr Dennis Gartman, who has

761
00:38:52,200 --> 00:39:07,879
Speaker 1: given us great support any number of ways year. Why

762
00:39:07,880 --> 00:39:10,880
Speaker 1: don't you bring in the administrator please? The biggest problem

763
00:39:10,920 --> 00:39:14,040
Speaker 1: with small Business Administration is you want to call her

764
00:39:14,040 --> 00:39:19,960
Speaker 1: secretary or you know, senior executive chairman and vice fancy.

765
00:39:20,400 --> 00:39:23,000
Speaker 1: It's a cabinet job, but it's administrator. Well, well, well

766
00:39:23,280 --> 00:39:25,799
Speaker 1: we'll wrestle with the title administrator and see what we

767
00:39:25,800 --> 00:39:27,960
Speaker 1: can do. Lenna McMahon joins us now Administrator of the

768
00:39:28,000 --> 00:39:32,200
Speaker 1: Small Business Administration, joining us from our Bloomberg studios in Washington,

769
00:39:32,280 --> 00:39:35,480
Speaker 1: d C. Administrative me great to have you. Thank you here.

770
00:39:35,719 --> 00:39:38,000
Speaker 1: Let's talk first about regulation. We hear we hear a

771
00:39:38,000 --> 00:39:41,560
Speaker 1: lot of conversation centering on what Dodd Frank means for

772
00:39:41,560 --> 00:39:43,520
Speaker 1: for the big banks. You're not dealing with the with

773
00:39:43,560 --> 00:39:46,520
Speaker 1: the big banks in particular, that's not not your per view.

774
00:39:46,840 --> 00:39:50,240
Speaker 1: How similar are the regulatory challenges between the big banks

775
00:39:50,239 --> 00:39:52,759
Speaker 1: and the small businesses in this country? Well, let me

776
00:39:52,960 --> 00:39:54,480
Speaker 1: let me share with you what I know and what

777
00:39:54,640 --> 00:39:58,120
Speaker 1: I have dealt with in UM and speaking with a

778
00:39:58,120 --> 00:40:00,440
Speaker 1: lot of the small businesses around the country. You know

779
00:40:00,719 --> 00:40:03,960
Speaker 1: here too. Four community banks were the ones who really

780
00:40:04,000 --> 00:40:08,800
Speaker 1: provided the capital needed for startup companies and the community

781
00:40:08,800 --> 00:40:11,160
Speaker 1: banks were the ones who knew the people in town,

782
00:40:11,280 --> 00:40:14,640
Speaker 1: you know, the local nail salon or the barbershop or

783
00:40:14,719 --> 00:40:17,200
Speaker 1: the dry cleaners getting started on the corner. And often

784
00:40:17,360 --> 00:40:21,480
Speaker 1: they were those banks that helped those entrepreneurs get started,

785
00:40:21,520 --> 00:40:23,720
Speaker 1: even though they might not have much of a track record.

786
00:40:23,760 --> 00:40:25,799
Speaker 1: There was a little bit of guts on bihar on

787
00:40:25,880 --> 00:40:30,439
Speaker 1: behalf of the community bankers. The new regulations tied their

788
00:40:30,440 --> 00:40:32,279
Speaker 1: hands and doing that, and we've seen a lot of

789
00:40:32,280 --> 00:40:36,000
Speaker 1: the community banks go out of business or being overtaken

790
00:40:36,040 --> 00:40:38,279
Speaker 1: by the larger banks, and we've lost a lot of

791
00:40:38,280 --> 00:40:42,680
Speaker 1: that ability in the communities uh to have small businesses

792
00:40:42,719 --> 00:40:45,440
Speaker 1: have that access. So I think that's been one of

793
00:40:45,480 --> 00:40:49,719
Speaker 1: the negative effects of some of the new regulations that

794
00:40:49,760 --> 00:40:52,280
Speaker 1: have come in under Dodd. Frank I was talking with

795
00:40:52,280 --> 00:40:54,840
Speaker 1: with cam Fine, the president of the Independent Community Bankers

796
00:40:54,880 --> 00:40:56,440
Speaker 1: of America a few weeks back. He was at the

797
00:40:56,440 --> 00:40:58,759
Speaker 1: White House meeting up with the President along with some

798
00:40:58,840 --> 00:41:01,000
Speaker 1: other community bankers, and he said he'd been offered some

799
00:41:01,040 --> 00:41:03,800
Speaker 1: assurance that the President was very keen to appoint a

800
00:41:03,840 --> 00:41:07,160
Speaker 1: community banker to the Federal Reserve. To get that perspective

801
00:41:07,520 --> 00:41:10,440
Speaker 1: out there as you think about your role in this administration,

802
00:41:10,480 --> 00:41:13,080
Speaker 1: how much of it is that getting a bigger voice

803
00:41:13,080 --> 00:41:16,160
Speaker 1: here for small businesses, be they community banks, were uh,

804
00:41:16,320 --> 00:41:20,080
Speaker 1: smaller mom and pop businesses across this country. Well, when

805
00:41:20,280 --> 00:41:23,320
Speaker 1: President at that time, Elect Trump asked me to serve,

806
00:41:23,320 --> 00:41:25,839
Speaker 1: and I was very flattered to be to be asked

807
00:41:25,840 --> 00:41:28,000
Speaker 1: to serve in this position. You know, one of the

808
00:41:28,040 --> 00:41:31,120
Speaker 1: things that he and I talked about was absolutely being

809
00:41:31,160 --> 00:41:35,000
Speaker 1: able to build back up, you know, our community banks

810
00:41:35,040 --> 00:41:38,360
Speaker 1: so that we could serve our communities better. And um,

811
00:41:38,560 --> 00:41:43,360
Speaker 1: I I would hope to be able to offer uh

812
00:41:43,400 --> 00:41:46,040
Speaker 1: any of the expertise that I have, or any of

813
00:41:46,080 --> 00:41:49,040
Speaker 1: the information that I garner. When I'm out traveling and

814
00:41:49,160 --> 00:41:53,439
Speaker 1: visiting throughout the sixty eight districts that sp A has

815
00:41:53,480 --> 00:41:57,279
Speaker 1: its offices, I will be talking to lenders, will be

816
00:41:57,320 --> 00:42:02,120
Speaker 1: having roundtable business discussions, will be listening to the community,

817
00:42:02,160 --> 00:42:04,040
Speaker 1: and I want to bring all of that information back

818
00:42:04,040 --> 00:42:08,399
Speaker 1: to the president. M Linda, you're one of the few

819
00:42:08,440 --> 00:42:12,560
Speaker 1: people anywhere within the vicinity of Washington who's actually lived

820
00:42:12,640 --> 00:42:17,880
Speaker 1: what you do. Down a small path in South Yarmouth, Massachusetts,

821
00:42:18,680 --> 00:42:22,440
Speaker 1: was an ice rink. You probably served me a meatball

822
00:42:22,480 --> 00:42:26,080
Speaker 1: sandwich a few years ago, But you and your husband

823
00:42:26,080 --> 00:42:28,960
Speaker 1: of How many years you guys have been married? What eight, nine,

824
00:42:29,080 --> 00:42:32,359
Speaker 1: ten years? How long have we been married? Yeah, it's

825
00:42:32,400 --> 00:42:35,520
Speaker 1: like you know it's been a while. Well i'll tell you.

826
00:42:35,800 --> 00:42:38,920
Speaker 1: Last August we celebrated our fiftieth wedding. Inniverse, that's what

827
00:42:38,960 --> 00:42:41,560
Speaker 1: I thought. Yeah, we were we were kids when we met.

828
00:42:41,640 --> 00:42:45,440
Speaker 1: We've grown up together and uh, he is absolutely truly

829
00:42:45,480 --> 00:42:48,560
Speaker 1: my best friend in life. General Madis has done defense.

830
00:42:48,960 --> 00:42:54,520
Speaker 1: You lived with spades, small business way before Connecticut, way

831
00:42:54,560 --> 00:42:58,359
Speaker 1: before you're huge television success. What do you need as

832
00:42:58,400 --> 00:43:03,520
Speaker 1: a small business the Cape Cod Colosseum in two thousand seventeen,

833
00:43:03,800 --> 00:43:06,440
Speaker 1: What do they need now when they go down that

834
00:43:06,440 --> 00:43:11,040
Speaker 1: that small road in self Yarmouth, Mass Well, uh, that's

835
00:43:11,080 --> 00:43:14,680
Speaker 1: no longer there. But I know that you're talking about clearly.

836
00:43:15,080 --> 00:43:18,520
Speaker 1: You know a comparable situation. And you know, one of

837
00:43:18,560 --> 00:43:22,120
Speaker 1: the things that we could really have used was access

838
00:43:22,160 --> 00:43:24,279
Speaker 1: to capital. You know, when you don't have bricks and

839
00:43:24,360 --> 00:43:28,319
Speaker 1: mortar to collateralized loans and you're dependent upon you know,

840
00:43:28,440 --> 00:43:31,160
Speaker 1: cash flow and you're just starting to build your cash flow.

841
00:43:31,200 --> 00:43:33,760
Speaker 1: It's one of those things that you you need cash

842
00:43:33,760 --> 00:43:35,880
Speaker 1: to build cash flow, but you need cash flow to

843
00:43:35,880 --> 00:43:38,760
Speaker 1: get cash. So one of the things that I always

844
00:43:38,800 --> 00:43:42,160
Speaker 1: advise small businesses once they're up and running, and I said, look,

845
00:43:42,640 --> 00:43:45,319
Speaker 1: when once you start to get good management of your

846
00:43:45,360 --> 00:43:47,359
Speaker 1: cash flow, that's when you need to go in and

847
00:43:47,400 --> 00:43:49,960
Speaker 1: ask for credit line, because when you need it, it's

848
00:43:50,040 --> 00:43:52,880
Speaker 1: much harder to get. But build does relationships with your

849
00:43:52,920 --> 00:43:56,040
Speaker 1: banks so that you can have more of of a

850
00:43:56,040 --> 00:43:58,000
Speaker 1: credit line to do your business. But you're gonna have

851
00:43:58,080 --> 00:44:07,759
Speaker 1: to be showing your business plan. Thanks for listening to

852
00:44:07,800 --> 00:44:13,879
Speaker 1: the Bloomberg Surveillance podcast. Subscribe and listen to interviews on iTunes, SoundCloud,

853
00:44:14,280 --> 00:44:18,560
Speaker 1: or whichever podcast platform you prefer. I'm out on Twitter

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Speaker 1: at Tom Keene. David Gura is at David Gura. Before

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Speaker 1: the podcast, you can always catch us worldwide. I'm Bloomberg Radio,

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Speaker 1: of a transforming world. That's the power of global connections.

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Speaker 1: Mary Lynch, Pierce Feeder and Smith Incorporated Member s I

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