WEBVTT - Job Creation Should Be Required for Corporate Tax Cuts, Macke Says 0:00:05.800 --> 0:00:08.720 Welcome to the Bloomberg p m L Podcast. I'm Pim Fox. 0:00:08.760 --> 0:00:11.520 Along with my co host Lisa Abramowitz. Each day we 0:00:11.640 --> 0:00:15.120 bring you the most important, noteworthy, and useful interviews for 0:00:15.200 --> 0:00:17.840 you and your money, whether you're at the grocery store 0:00:17.960 --> 0:00:20.720 or the trading floor. Find the Bloomberg p m L 0:00:20.840 --> 0:00:32.680 Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot Com. Right now, 0:00:32.680 --> 0:00:36.200 we've got Justin Sink also out of our DC bureau, 0:00:36.360 --> 0:00:40.800 and Justin you're covering the president and you know, we've 0:00:40.840 --> 0:00:43.440 talked to us briefly about his planned trip to Puerto Rico. 0:00:43.760 --> 0:00:46.720 When he gets there, he's not is he gonna find 0:00:46.760 --> 0:00:50.959 any love? Well, I think that's a big question. Obviously, 0:00:51.000 --> 0:00:53.720 the White House is depicted. Um, the response to the 0:00:53.760 --> 0:00:57.160 storm is more than adequate, they've said, you know, they 0:00:57.480 --> 0:01:01.200 think that, Uh, it's been a kind of unprecedented response 0:01:01.240 --> 0:01:04.760 in terms of military personnel and getting supplies down there. 0:01:05.840 --> 0:01:07.560 We've seen a lot of stories from the ground that 0:01:07.680 --> 0:01:10.840 suggests that and heard from the mayor of San Juan 0:01:10.880 --> 0:01:13.679 to suggest that there's a lot of frustration the things 0:01:13.720 --> 0:01:16.119 still aren't great there, that food and water aren't getting 0:01:16.160 --> 0:01:18.640 to people that need it. That power is still not 0:01:18.800 --> 0:01:22.520 on and so uh we are. I think that's going 0:01:22.560 --> 0:01:25.080 to be the big question coming out of tomorrow is 0:01:25.080 --> 0:01:28.560 what kind of reception he receives um and how far 0:01:28.640 --> 0:01:31.600 he goes. It's possible that the president schedule just leaves 0:01:31.640 --> 0:01:33.760 him kind of on a military base where he's unlikely 0:01:33.800 --> 0:01:35.520 to face some of the criticism. But if he does 0:01:35.560 --> 0:01:39.760 decide to go out some of the more storm ravaged areas, 0:01:40.200 --> 0:01:42.480 it's a real question of how people are going to respond, 0:01:42.680 --> 0:01:46.160 you know. Justin I'm really struck by the normal playbook 0:01:46.200 --> 0:01:48.320 that we normally have when there are tragedies. And this 0:01:48.440 --> 0:01:50.880 of course is relevant to the comments that we are 0:01:50.920 --> 0:01:55.400 waiting from President Trump imminently about the Las Vegas shooting. Normally, 0:01:55.560 --> 0:01:59.440 presidents come out and they say, oh, what a horrible catastrophe. 0:01:59.640 --> 0:02:01.880 We will do everything in our power to make things 0:02:02.080 --> 0:02:04.960 as better as we can for the surviving victims. Whether 0:02:05.000 --> 0:02:07.800 it's in Puerto Rico, we have, you know, doubling down 0:02:07.880 --> 0:02:10.919 all of our efforts. Our line is open, call us. 0:02:11.160 --> 0:02:13.120 We want to hear from you. We want to figure 0:02:13.160 --> 0:02:16.000 out how to go go forward in a better and 0:02:16.040 --> 0:02:19.000 bigger way go you know, in the future. This is 0:02:19.040 --> 0:02:23.160 this is so out of the norm to basically try 0:02:23.200 --> 0:02:28.040 to attack people and spin the picture in the process. 0:02:28.240 --> 0:02:30.760 Am I wrong? No? I think I think you're right. 0:02:30.880 --> 0:02:34.280 The presidents of both parties have really tried to play 0:02:34.320 --> 0:02:37.639 that consoler in chief role, you know, um, in the 0:02:37.720 --> 0:02:40.880 light of tragedy, whether it's President Bush going down to 0:02:40.960 --> 0:02:44.120 Katrina after We're going down to New Orleans after Katrina 0:02:44.160 --> 0:02:48.000 and Jack Parking and trying to harness that moment, even 0:02:48.040 --> 0:02:52.080 though obviously I think um it ended up being a 0:02:52.160 --> 0:02:56.000 situation the damage is presidency. Uh. You mentioned Las Vegas, 0:02:56.000 --> 0:02:58.400 and I think some of the most memorable moments President 0:02:58.400 --> 0:03:01.959 Obama's term were has response him actually in events the 0:03:02.040 --> 0:03:06.200 church and Charleston being maybe at the top of that list. 0:03:06.240 --> 0:03:09.680 And Uh, it's not a role that that President Trump 0:03:09.760 --> 0:03:14.519 has really had to confront until the last couple of weeks, 0:03:14.560 --> 0:03:17.080 and it's one where he seems a little uncomfortable. I 0:03:17.080 --> 0:03:21.160 think that this is um, somebody who is throughout his 0:03:21.160 --> 0:03:25.679 political career found um some of the most success in 0:03:25.680 --> 0:03:30.960 in rallying his core supporters and outraging UM some of 0:03:30.960 --> 0:03:35.320 his critics. And and that's an approach that is different 0:03:35.320 --> 0:03:38.000 from what many presidents have taken. At times where you 0:03:38.080 --> 0:03:40.960 might see them try to, I think, bring together a 0:03:41.040 --> 0:03:44.720 national unity. And so it might be a reflection of 0:03:44.760 --> 0:03:48.839 Donald Trump, of a changing political climate, of different expectations 0:03:48.840 --> 0:03:50.920 among Americans. But it's going to be very interesting to 0:03:50.960 --> 0:03:54.360 see how he tried to navigate the speech coming up 0:03:54.400 --> 0:03:57.000 in a couple of minutes. But also, uh, is that 0:03:57.080 --> 0:04:00.640 it's Puerto Rico tomorrow. So justin just sticking Puerto Rico, 0:04:00.760 --> 0:04:02.840 I'm trying to get a sense of just how much 0:04:02.840 --> 0:04:05.960 of a humanitarian disaster it is and where the US 0:04:06.160 --> 0:04:09.680 troops and other first responders are in in uh, in 0:04:10.080 --> 0:04:12.680 dealing with what's going on. I mean power has been 0:04:12.680 --> 0:04:15.080 restored to a lot of people, right, I mean are 0:04:15.080 --> 0:04:17.720 we out of the danger zone? I don't think we're 0:04:17.800 --> 0:04:19.559 quite out of the danger zone yet. And the reason 0:04:19.560 --> 0:04:21.839 that I say that is that, well, you know, there 0:04:21.839 --> 0:04:24.760 has been measurable progress throughout much of the island. There 0:04:24.760 --> 0:04:28.880 are still hospitals that aren't fully online. Um, there are 0:04:28.920 --> 0:04:32.479 still remote areas of Puerto Rico where we don't have 0:04:32.480 --> 0:04:36.080 great visibility into both what has already happened and the 0:04:36.120 --> 0:04:41.400 current status. Uh. But things are getting better uh day 0:04:41.440 --> 0:04:44.359 to day. And so I think one of the big 0:04:44.440 --> 0:04:47.719 kind of outstanding questions is what is the extent of 0:04:47.720 --> 0:04:50.400 the damage since we don't have full communications, since we 0:04:50.600 --> 0:04:53.160 haven't been able to clear all the roads and get 0:04:53.200 --> 0:04:55.840 to everywhere. Um, you know, we have a sense of 0:04:56.480 --> 0:05:01.119 the major population centers starting to it into recovery mode, 0:05:01.120 --> 0:05:04.799 but I think especially in remote rural areas and areas 0:05:04.880 --> 0:05:09.599 where communications continue to be a real issue. UM, we 0:05:09.720 --> 0:05:13.599 just don't have a size or or scope of of 0:05:13.640 --> 0:05:16.080 what this sort of damage is yet. You know, justin 0:05:16.160 --> 0:05:18.839 I'm struck by the notion that there may be a 0:05:19.000 --> 0:05:25.440 connection between the damage that the commonwealth faces and economic 0:05:25.560 --> 0:05:29.440 decisions that were made years hence in the sense that 0:05:29.520 --> 0:05:32.479 you know, if you're not able to continually upgrade and 0:05:32.880 --> 0:05:37.240 strengthen and bolster your infrastructure and to take account of 0:05:37.240 --> 0:05:41.840 new information such as weather patterns and so on, Uh, 0:05:42.040 --> 0:05:45.719 then you're faced with what the what has happened in 0:05:45.800 --> 0:05:49.120 Puerto Rico. Is there any way that in the rebuilding 0:05:49.160 --> 0:05:52.560 that takes place, it can be framed in such a 0:05:52.600 --> 0:05:56.080 way that it would actually lead to something positive for 0:05:56.600 --> 0:05:59.039 the future not only of the island itself, but of 0:05:59.080 --> 0:06:02.839 the way the economy works. Yeah, So I think there's 0:06:02.880 --> 0:06:05.560 two elements. This one is the sort of rebuilding of 0:06:05.600 --> 0:06:08.719 the infrastructure on the island, and something that Trump administration 0:06:08.720 --> 0:06:13.080 officials are really emphasized as they are sort of rebuilding 0:06:13.080 --> 0:06:14.680 the power grid, which is going to be a huge 0:06:14.800 --> 0:06:20.040 undertaking UM. As they're rebuilding utility services like the sort 0:06:20.040 --> 0:06:23.680 of water and sewage systems, they're going to try to 0:06:23.800 --> 0:06:26.640 future proof those in a way that UM makes them 0:06:26.720 --> 0:06:29.000 less susceptible to the type of damage that we saw 0:06:29.400 --> 0:06:31.440 the after method that's hurricane. So that's going to be 0:06:32.320 --> 0:06:36.440 hopefully positive for the people of Puerto Rico as they 0:06:36.480 --> 0:06:40.640 confront future tropical storms. UH. The second part of this 0:06:40.680 --> 0:06:43.400 is the trickier part, which is that there's still tens 0:06:43.400 --> 0:06:45.880 of billions of dollars of debt that hangs over the 0:06:46.279 --> 0:06:48.440 island's government and that's the problem that's only going to 0:06:48.520 --> 0:06:52.479 get worse as they try to grapple with UM an 0:06:52.560 --> 0:06:56.200 economy that's going to be as devastated as everything else 0:06:56.240 --> 0:06:59.480 on the island. UM. So a big outstanding question is 0:06:59.480 --> 0:07:04.200 whether cong steps in and provides any sort of bailout 0:07:04.240 --> 0:07:08.400 to help the island UM get from under that you know, 0:07:08.480 --> 0:07:11.680 economic news that has really prevented them from doing the 0:07:11.720 --> 0:07:14.360 sort of maintenance and upgrades that that we've seen in 0:07:14.400 --> 0:07:18.080 other states. So far, we haven't seen a big movement 0:07:18.160 --> 0:07:21.160 for that on Capitol Hill. But it's justin let let 0:07:21.200 --> 0:07:23.040 me just break in because it makes me think, is 0:07:23.040 --> 0:07:26.320 there a possibility that the Republicans would take this as 0:07:26.360 --> 0:07:29.720 an opportunity and therefore, because you know, one of the 0:07:29.760 --> 0:07:32.200 issues has always been if you were to in some 0:07:32.280 --> 0:07:35.800 way smooth the path for Puerto Rico to become part 0:07:35.880 --> 0:07:39.800 of to become a state, that would tilt the balance 0:07:39.840 --> 0:07:43.720 in the Senate, and uh, is this an opportunity for 0:07:43.720 --> 0:07:48.680 the Republicans to maybe gain if they seize the moment. Well, 0:07:49.040 --> 0:07:54.160 it's it's tricky politics for sure. The statehood um issue 0:07:54.200 --> 0:07:56.080 is not something that we've seen a lot of traction 0:07:56.160 --> 0:07:59.480 on here in Washington, and I would be very surprised 0:07:59.480 --> 0:08:02.120 if that was now come. But it is going to 0:08:02.160 --> 0:08:05.640 be tricky to navigate, I think for politicians on both 0:08:05.680 --> 0:08:07.960 sides of this, because a lot of Puerto Ricans who 0:08:07.960 --> 0:08:11.000 are displaced by storm are going to end up moving 0:08:11.200 --> 0:08:13.960 to the Continental US where they can vote just like 0:08:14.000 --> 0:08:16.600 any other American citizen and make their voices heard. But 0:08:16.840 --> 0:08:18.760 a lot of that it's likely to happen in Florida, 0:08:20.120 --> 0:08:24.200 where a big influx influx into a state that has 0:08:24.240 --> 0:08:29.280 historically been a swing state kind of fifty fifty Republican Democrat, 0:08:29.680 --> 0:08:33.120 uh could really be impacted by tens or hundreds of 0:08:33.160 --> 0:08:36.600 thousands of people moving there, and they if they are 0:08:36.720 --> 0:08:40.560 upset by the government's handling of of the storm, that 0:08:40.679 --> 0:08:45.240 could really create um some political trouble for Republicans. Similarly, 0:08:45.240 --> 0:08:48.520 if Democrats aren't seen as responsive enough here or in 0:08:48.559 --> 0:08:51.360 some way holding up the relief effort, then you know, 0:08:51.440 --> 0:08:53.600 can swing back the other way. But I think a 0:08:53.640 --> 0:08:56.520 lot of politicians are sort of attuned to the political 0:08:56.520 --> 0:08:59.280 consequences of what's happened, justin Do you have a sense 0:08:59.520 --> 0:09:03.200 of the response overwhelmingly in Puerto Rico, because we've seen 0:09:03.240 --> 0:09:06.320 some conflicting reports out the governor trying to make peace 0:09:06.600 --> 0:09:10.079 up between the mayor of San Juan and President Trump, 0:09:10.320 --> 0:09:13.040 others saying look, we have a ways to go, trying 0:09:13.040 --> 0:09:16.360 to saying kumba ya. Is that the mood among the 0:09:16.400 --> 0:09:19.280 residents or are they even following this because I know 0:09:19.320 --> 0:09:22.360 internet has been down, yeah, exactly. So it's it's hard 0:09:22.360 --> 0:09:25.440 to get a real sense um of what sentiment on 0:09:25.480 --> 0:09:29.160 the island is both because uh, communications have been difficult, 0:09:29.160 --> 0:09:32.120 but also I think the primary concern for most of 0:09:32.120 --> 0:09:34.520 the people in Puerto Rico is can I get somewhere 0:09:34.520 --> 0:09:37.000 that the air conditioned. Can I get food and clean 0:09:37.080 --> 0:09:41.480 water and sort of the basic services that people need 0:09:41.520 --> 0:09:43.840 to to stay alive and live their lives. Can I 0:09:43.840 --> 0:09:47.800 start rebuilding my business? So uh, it's not clear how 0:09:47.840 --> 0:09:51.880 engaged um the sort of everyday people of Puerto Rico 0:09:51.920 --> 0:09:54.360 are and this sort of back and forth spat that 0:09:54.400 --> 0:09:57.880 we saw over the weekend, But you know, the governor's 0:09:57.880 --> 0:10:01.560 comments are indicative of I think a politician who knows 0:10:01.640 --> 0:10:04.640 that massive federal aid is going to be needed and 0:10:04.679 --> 0:10:07.720 that is going to be distributed through the White House 0:10:07.720 --> 0:10:10.680 in some way. And so even if I think the 0:10:10.720 --> 0:10:15.319 governor might be sensing frustration among um, the constituents in 0:10:15.679 --> 0:10:19.400 Puerto Rico or be a little uh starting to get 0:10:19.400 --> 0:10:21.959 agitated with the federal response, there is sort of a 0:10:22.000 --> 0:10:25.640 strategic advantage and keeping uh that sort of come by 0:10:25.640 --> 0:10:28.760 a spirit together because it's gonna be a long rebuilding process. 0:10:29.080 --> 0:10:32.160 Justin is that is that a contrast to what would 0:10:32.160 --> 0:10:36.559 happen to a state versus being a commonwealth that you 0:10:36.600 --> 0:10:39.560 would go directly to the president rather than if you 0:10:39.559 --> 0:10:42.200 were a state and you had a coalition or a 0:10:42.200 --> 0:10:45.000 group of colleagues in the Senate in the House. Well, 0:10:45.400 --> 0:10:47.920 I mean, I think you bring up an important point, 0:10:48.000 --> 0:10:51.320 which is that, um, you know, one Florida or Texas 0:10:51.320 --> 0:10:55.720 were hit by the massive hurricanes. They do have to 0:10:55.760 --> 0:10:58.000 sort of rely on the federal government for aide, but 0:10:58.240 --> 0:11:01.600 that they have both a state government that is more 0:11:01.679 --> 0:11:06.280 equipped to borrow money to help with recovery efforts that 0:11:06.400 --> 0:11:09.080 sort of thing, and they have a congressional delegation of 0:11:09.600 --> 0:11:12.600 at least you know, well two senators and at least 0:11:12.640 --> 0:11:15.560 one member of the House of Representatives that can be 0:11:16.200 --> 0:11:19.080 sort of forceful advocates for them in Washington, and whose 0:11:19.120 --> 0:11:22.040 colleagues have to interact with them and count on them 0:11:22.080 --> 0:11:36.880 and need their votes for a whole range of things. Well, 0:11:36.880 --> 0:11:40.600 when we call upon Mark Gilbert are Bloomberg gad Fly columnists, 0:11:40.640 --> 0:11:43.520 we want to know one thing, what is the aftermath 0:11:43.600 --> 0:11:47.520 of the vote in Catalonia, the northeastern region of Spain, 0:11:48.200 --> 0:11:52.880 where the Spanish government from Madrid did just about everything 0:11:52.920 --> 0:11:55.920 they could think of in order to prevent the vote 0:11:56.000 --> 0:11:58.920 from taking place, What went on and what should we 0:11:58.960 --> 0:12:02.520 take away? Everything went wrong? I mean, they've had three 0:12:02.640 --> 0:12:06.200 years of notice that that Catalonia was was was heading 0:12:06.200 --> 0:12:09.160 for an independence vote. They could have diffused it. They 0:12:09.160 --> 0:12:12.760 could have granted more independence. Economically to Catalonia, it's it's 0:12:12.760 --> 0:12:15.520 the country's richest region. It contributes about a fifth of 0:12:15.559 --> 0:12:20.360 the economic output. And yet Prime Minister Mariano RADIOI he's 0:12:20.360 --> 0:12:22.880 done just about everything wrong. And those those YouTube videos 0:12:22.920 --> 0:12:26.280 that we're seeing today of police using rubble bullets and 0:12:26.320 --> 0:12:29.880 batons against the ordinary people who are voting. It's just 0:12:30.000 --> 0:12:33.600 terrible for for the country, you know. Just there was 0:12:33.640 --> 0:12:35.440 one image that really stuck out to me when I 0:12:35.480 --> 0:12:39.040 was looking at the videos and pictures of a woman, 0:12:39.280 --> 0:12:42.440 an elderly woman with gray hair, with blood coming down 0:12:42.480 --> 0:12:45.559 her face, after getting into an altercation with the police 0:12:45.960 --> 0:12:50.760 for voting allegedly illegally, because the Spanish government said that 0:12:50.840 --> 0:12:55.240 this was not illegal vote. I'm just wondering what's the 0:12:55.280 --> 0:12:59.320 path ahead. And markets seem incredibly sanguine given the amount 0:12:59.320 --> 0:13:03.079 of turmoil now. Well even last week, the bookmakers odds 0:13:03.080 --> 0:13:05.719 were putting the chances of a vote in favor of 0:13:05.760 --> 0:13:10.160 independence between eighty and but that's largely because of turnout. 0:13:10.240 --> 0:13:13.560 So they're about five million eligible voters in Catalonian, of 0:13:13.559 --> 0:13:16.240 whom two point three million actually turned out, and of 0:13:16.240 --> 0:13:20.280 whom two million backed independence. So you've got about voting 0:13:20.320 --> 0:13:22.959 in favor of independence, but only on a turnout of 0:13:23.000 --> 0:13:26.600 a bit more than forty. So the vote in terms 0:13:26.600 --> 0:13:29.000 of claiming to be the will of the people, that's 0:13:29.040 --> 0:13:32.400 tricky because a lot of those who oppose independence didn't 0:13:32.400 --> 0:13:34.760 turn out. They take the government's view that this is 0:13:34.920 --> 0:13:39.199 an illegitimate vote on the Spanish constitution um and surely 0:13:39.280 --> 0:13:41.800 didn't turn out there. But you know, it's never a 0:13:41.800 --> 0:13:47.319 good look on you, honestly, Mark, I mean in the US, honestly, 0:13:47.360 --> 0:13:50.280 turnout isn't usually all that much more than that, frankly 0:13:50.360 --> 0:13:53.760 for elections, which shouldn't be necessarily a model. But it's 0:13:53.760 --> 0:13:57.280 pretty amazing that nearly half of the population voted in 0:13:57.440 --> 0:14:01.000 this illegal referendum, according to the Spanish government, and then 0:14:01.000 --> 0:14:03.920 the violence sort of sets up ongoing and escalating tension 0:14:03.960 --> 0:14:07.120 going forward. Now it does, but the turnout matters for 0:14:07.200 --> 0:14:10.400 something as momentous as seceding, And let's bear in mind 0:14:10.400 --> 0:14:13.400 Catle only has debts of about six billion euros. The 0:14:13.480 --> 0:14:16.040 Spanish country as a whole as debt of about one 0:14:16.040 --> 0:14:19.160 point two trillion euros. So not only will catalonly have 0:14:19.240 --> 0:14:21.000 to take on a chunk of that debt, as I said, 0:14:21.000 --> 0:14:23.280 it accounts for about a fifth of economic output, so 0:14:23.960 --> 0:14:26.400 on on a competitive basis, it would end up with 0:14:26.480 --> 0:14:29.160 about a fifth of those debts. The European Union says 0:14:29.200 --> 0:14:31.440 it won't be part of the EU even if it 0:14:31.520 --> 0:14:33.840 man it's the succeed so it will be out there 0:14:33.840 --> 0:14:35.600 on a limb. It would make Brexit look like a 0:14:35.640 --> 0:14:38.200 walk in the park. And so the turnout really does 0:14:38.320 --> 0:14:40.920 matter for something as momentous as a readion of Spain 0:14:41.000 --> 0:14:44.320 seceding from the country as a whole. And the problem 0:14:44.400 --> 0:14:46.920 is that the government has wanted the problem to go away. 0:14:46.920 --> 0:14:48.960 It kind of wish they would go away. Now it's 0:14:49.000 --> 0:14:51.720 on its doorstep. It's not really clear where roy can 0:14:51.760 --> 0:14:56.640 turn next. Our investors expressing their doubts by pulling money 0:14:56.680 --> 0:14:59.400 from the stock market. I'm just looking at a chart 0:14:59.480 --> 0:15:02.560 of the I becks thirty five and if you go 0:15:02.680 --> 0:15:06.480 back to the beginning of May of of the year, 0:15:06.760 --> 0:15:09.720 you were looking at well, you know, a peak, right, 0:15:09.760 --> 0:15:13.600 so over eleven thousand but now we're down almost eight 0:15:13.600 --> 0:15:17.360 percent and it has been a steady decline. Is that 0:15:17.440 --> 0:15:20.400 an expression that investors are saying, look, I'm really not 0:15:20.520 --> 0:15:24.240 interested in adding more capital, so the prices are getting cheaper. 0:15:24.880 --> 0:15:28.480 The benchmark stock index is down about two percent today, 0:15:28.480 --> 0:15:31.160 whereas the rest of Euros benchmark indexes are up. In 0:15:31.200 --> 0:15:34.440 the past month, the IBEX index is underperformed the stock 0:15:34.480 --> 0:15:38.400 six hundred, the benchmark for the Aurozone, by about four percent, 0:15:38.560 --> 0:15:40.680 so clearly it's having an effect. A couple of the 0:15:40.720 --> 0:15:43.680 Barcelona based banks are down about five percent or so today, 0:15:43.760 --> 0:15:47.760 Kaiser Bank, Banco Sabadel. They're being hit the worriors that 0:15:47.840 --> 0:15:50.160 you can end up with a general strike in Catalonia 0:15:50.600 --> 0:15:53.360 um and I think that some of the secessionists are 0:15:53.400 --> 0:15:55.640 threatening to call a general strike in the idea is 0:15:55.640 --> 0:15:59.600 if if, if, if we're in favor independence, then forty 0:15:59.600 --> 0:16:02.640 percent not turn up for work, and again with the 0:16:02.680 --> 0:16:05.920 reason contributing a fifth of Spanish economic output. You know 0:16:05.960 --> 0:16:09.720 there's a nascent economic recovery in Spain, unemployment down, but 0:16:09.840 --> 0:16:11.840 the last thing it needs as a general strike in 0:16:11.880 --> 0:16:14.440 this kind of this kind of strife going on, investors 0:16:14.480 --> 0:16:16.800 have have punished the bonds as well. A ten year 0:16:16.840 --> 0:16:19.880 yields up about time basis points, but it's down from 0:16:19.880 --> 0:16:21.920 where it was earlier this year, so there's not a 0:16:21.960 --> 0:16:24.239 sense of panic. There's not really a sense of crisis, 0:16:24.640 --> 0:16:27.480 and investors have known this was coming for for for 0:16:27.520 --> 0:16:30.480 a couple of weeks now um, but there's definitely a 0:16:30.520 --> 0:16:33.560 feeling that this could turn nasty um and that Prime 0:16:33.600 --> 0:16:36.320 Minister Marini a ra high has got to do something. 0:16:36.400 --> 0:16:38.320 He's gonna have to offer some kind of olive branch 0:16:39.080 --> 0:16:41.240 otherwise you can end up with this general strike and 0:16:41.240 --> 0:16:43.960 that would be economically very damaging to the region and 0:16:44.040 --> 0:16:46.840 to the country. Hey, Mark, when when do you think 0:16:46.840 --> 0:16:49.120 you're gonna start to get to those analysts reports to 0:16:49.240 --> 0:16:54.480 talk about how there's some value out there because these are, yes, 0:16:54.560 --> 0:16:58.320 there are social and political events. They turned violent. They 0:16:58.400 --> 0:17:02.040 make great headlines, and we feel for the people without, 0:17:02.080 --> 0:17:05.280 you know, with physical injury and all that. But as 0:17:05.320 --> 0:17:08.480 an investor, you know your job is supposed to be 0:17:08.600 --> 0:17:12.880 able to find those things that other people have dropped 0:17:13.000 --> 0:17:17.000 or have neglected because they are swayed or they are 0:17:17.119 --> 0:17:21.080 manipulated by fear or or things that may not be 0:17:21.119 --> 0:17:24.600 a long term positive. What you've sensed that at all, 0:17:24.640 --> 0:17:26.119 And I'm sorry if you're taking so long, give you 0:17:26.160 --> 0:17:28.399 about ten seconds or so. Now, Well, the in the 0:17:28.480 --> 0:17:30.879 broader market, the euros down as well today. Now that 0:17:30.880 --> 0:17:33.480 could be partly dullar strength, but it's definitely part of 0:17:33.480 --> 0:17:35.679 the sentiment. Look, we saw the German election with the 0:17:35.680 --> 0:17:38.520 populous DAFD winning some of the votes. That comes after 0:17:38.560 --> 0:17:41.679 Macrome won the French election. This is populism in Spain. 0:17:42.119 --> 0:17:45.000 It's a reminded. Look, we've got Italian elections coming up 0:17:45.040 --> 0:17:47.840 at some point. It's a reminder of the political landslape 0:17:47.840 --> 0:17:51.439 in Europe is not completely settled, even after Macrome won 0:17:51.520 --> 0:17:54.160 the French presidency. It's a reminder of the risks. There 0:17:54.240 --> 0:17:56.840 is it a buying opportunity? Well, I mean, what is 0:17:56.880 --> 0:17:59.320 there Is there a particular company, let's say in Spain, 0:17:59.359 --> 0:18:02.240 because you know, just because it's in Spain doesn't mean 0:18:02.240 --> 0:18:04.840 it just has a Spanish market. I think for example 0:18:04.880 --> 0:18:08.359 of Iberdrola, And I mean you have very large companies 0:18:08.400 --> 0:18:12.000 that are financials. I was looking at earlier. We Banko 0:18:12.119 --> 0:18:14.520 San Sanderia is one of it's one of the biggest. 0:18:14.520 --> 0:18:16.680 You say, you know, maybe this is you know, people 0:18:16.720 --> 0:18:19.719 that have been looking to get into equities. You know, 0:18:19.840 --> 0:18:22.040 if there was a catastrophe the United States, God forbid, 0:18:22.080 --> 0:18:24.639 then you know you look at the same kind of thing. Listen, 0:18:24.640 --> 0:18:28.639 the Eurozone economic revival is here, it is real. The 0:18:28.880 --> 0:18:31.280 p m I is the Purchasing Manager indexes have been 0:18:31.280 --> 0:18:34.639 rebounding for Europe all this year. European central banks about 0:18:34.680 --> 0:18:36.960 to take its photoph the accelerator, but it's not quite 0:18:36.960 --> 0:18:40.520 there yet. European stocks have been have been performing well. Um, 0:18:40.520 --> 0:18:42.080 and this is this is a hic up, but it 0:18:42.160 --> 0:18:44.600 is a reminder that the political backdrop to the whole 0:18:44.640 --> 0:18:49.840 European Union project, Brexit notwithstanding, is still not set in stone, 0:18:49.880 --> 0:18:52.199 and there could still be my steps ahead. You know, 0:18:52.320 --> 0:18:55.720 I have to say I would take the other view. Frankly, 0:18:55.800 --> 0:18:58.560 PIM is that you're saying there could be buying opportunities, 0:18:58.600 --> 0:19:01.600 but there isn't that much selling. And perhaps the reason 0:19:01.640 --> 0:19:04.440 why there isn't so much selling is because investors really 0:19:04.440 --> 0:19:07.400 are looking at this and saying it's just a hiccup. 0:19:07.440 --> 0:19:10.120 This has all been smoothed out in the past, even Brexit. 0:19:10.240 --> 0:19:13.040 Yes we've seen consequences, but it hasn't been that serious. 0:19:13.080 --> 0:19:15.919 Even the ten year treasure ten year yields in Spain. 0:19:16.200 --> 0:19:19.960 It went up not tremendously. People don't seem that worried, 0:19:20.200 --> 0:19:22.639 and perhaps it's because it's never been paid off to 0:19:22.640 --> 0:19:25.040 to be too worried about some of these political events, 0:19:25.119 --> 0:19:29.400 right well. I think that this one is particularly pressing 0:19:29.480 --> 0:19:33.800 because of the implications for what it says about populism 0:19:33.800 --> 0:19:36.520 in Europe, which you know, investors thought was off the 0:19:36.560 --> 0:19:39.639 table with the election of Macron in France, which has 0:19:39.680 --> 0:19:42.000 come back with the German election a few weekends ago. 0:19:42.760 --> 0:19:45.959 This reminds people that in Italy, which is the really 0:19:46.280 --> 0:19:49.000 sort of the the core of of of the problem 0:19:49.000 --> 0:19:54.080 of the Eurozone and its political issues, Italy still has 0:19:54.119 --> 0:19:56.320 a five Star movement which is doing well in the polls, 0:19:56.320 --> 0:19:59.399 which is still anti the euro and at some point 0:20:00.000 --> 0:20:02.160 they're going to be an election in Italy. I think 0:20:02.160 --> 0:20:05.600 that it's a reminder that that maybe the political backdrop 0:20:05.680 --> 0:20:08.760 you're investing against is not too settled as as it 0:20:08.800 --> 0:20:12.119 looked even a few weeks ago. Mark Gilbert, thank you 0:20:12.160 --> 0:20:14.320 so much for your insights. Mark Gilbert is a Bloomberg 0:20:14.320 --> 0:20:18.560 gad Flight columnists covering asset management and debt markets. Talking 0:20:18.640 --> 0:20:23.719 about the Catalonia independence referendum and the ongoing turbulence that 0:20:23.800 --> 0:20:37.639 has that it has engendered. I want to bring in 0:20:37.720 --> 0:20:41.280 Chris Mackie now. He is the founder of Solution Nomics, 0:20:41.280 --> 0:20:45.200 based in New York, and it is a platform described 0:20:45.240 --> 0:20:50.440 as being dedicated to developing and disseminating return on investment 0:20:50.520 --> 0:20:54.760 based corporate tax policy. Chris Mackie, thank you very much 0:20:55.000 --> 0:20:57.480 for being with us. A former contributed to the Federal 0:20:57.520 --> 0:21:01.320 Reserve Beije book. Uh your topic, and I want you 0:21:01.400 --> 0:21:04.480 to expand if you can, though, because tax reform is 0:21:04.560 --> 0:21:06.640 you know, it can lead you down a rabbit hole. 0:21:07.040 --> 0:21:11.439 But specifically, what is the the US administration trying to 0:21:11.560 --> 0:21:16.600 do with the relationship between US corporations, what they earned overseas, 0:21:16.880 --> 0:21:19.520 how much tax they should pay, and how to get 0:21:19.560 --> 0:21:22.200 as much of that money back to the United States 0:21:22.240 --> 0:21:25.679 as possible. Well, good morning, it's a pleasure to be 0:21:25.760 --> 0:21:28.720 with you. What they are trying to do is, and 0:21:28.840 --> 0:21:32.600 this is their broader perspective in their entire proposal is 0:21:33.040 --> 0:21:37.000 they're trying to stimulate job growth and higher wages. And 0:21:37.040 --> 0:21:39.639 one of the theories is that if we lower the 0:21:39.880 --> 0:21:45.840 tax rate on the earnings from overseas, that will entice 0:21:45.880 --> 0:21:48.760 companies to use that cash to create more jobs in America. 0:21:48.800 --> 0:21:53.280 And well, I commend the Republicans for undertaking a reform 0:21:53.280 --> 0:21:55.359 of the tax code. That the problem is it's actually 0:21:55.440 --> 0:21:58.920 not a reform, it's just more of the same. It's 0:21:59.000 --> 0:22:02.800 let's lower the tax rates more unconditionally, which means that 0:22:02.920 --> 0:22:06.120 whether or not those the foreign or in profits create 0:22:06.200 --> 0:22:08.600 jobs in America, the tax rates will go down. Now 0:22:08.640 --> 0:22:13.640 there's an alternative, which is to say, when companies increase 0:22:13.680 --> 0:22:17.880 American employment and when they increase American wages, then we'll 0:22:17.920 --> 0:22:20.040 have lower tax rates. And that's what we mean by 0:22:20.119 --> 0:22:25.040 an r o I based tax policy. But Chris, I 0:22:25.080 --> 0:22:28.480 wonder how much of this is a rhetorical exercise. And 0:22:28.600 --> 0:22:31.760 so many companies pay a lower tax rate, they probably 0:22:31.800 --> 0:22:34.639 pay more in line with where the government would like 0:22:34.680 --> 0:22:37.639 to cut the taxes due to all of the deductions 0:22:37.680 --> 0:22:42.200 and other engineering that accountants do. So to me, I mean, 0:22:42.280 --> 0:22:44.320