WEBVTT - Mueller’s Low-Key Rebuttal Blows Hole In Exoneration 0:00:02.640 --> 0:00:05.320 Welcome to the Bloomberg Penel Podcast. I'm Paul Swinge. You, 0:00:05.360 --> 0:00:07.640 along with my co host Lisa Brahma wits each day 0:00:07.720 --> 0:00:10.240 we bring you the most noteworthy and useful interviews for 0:00:10.280 --> 0:00:12.520 you and your money. Whether at the grocery store or 0:00:12.560 --> 0:00:15.480 the trading floor. Find a Bloomberg penl podcast on Apple 0:00:15.520 --> 0:00:17.960 podcast or wherever you listen to podcasts, as well as 0:00:17.960 --> 0:00:24.880 at Bloomberg dot com. With us is Andy Harris, who 0:00:24.920 --> 0:00:27.240 is a legal reporter for Bloomberg News and joining us 0:00:27.240 --> 0:00:30.520 here in our Bloomberg Interactive Proper Studios can nowaday former 0:00:30.560 --> 0:00:33.360 corruption and fraud prosecutor for the U. S. Attorney's Office 0:00:33.440 --> 0:00:35.960 in the Southern District of New York and a partner 0:00:36.000 --> 0:00:38.480 at Ventable uh Con. I want to start with you, 0:00:38.560 --> 0:00:42.120 what was your biggest takeaway from those statements. I think 0:00:42.120 --> 0:00:47.600 the big takeaway is Bob Mueller is a consummate professional. 0:00:48.080 --> 0:00:52.040 He speaks through his indictments and through his report, and 0:00:52.080 --> 0:00:55.280 that's very clear from his statement. If you noticed, he 0:00:55.400 --> 0:00:59.360 kept quoting from the indictments from what the grand jury returned, 0:00:59.640 --> 0:01:03.320 and he's said, basically, I speak as a prosecutor, as 0:01:03.320 --> 0:01:06.720 a law enforcement officer, through my report and through my 0:01:06.880 --> 0:01:10.319 charging documents, and that's all you're gonna get from me. So, Conn, 0:01:10.360 --> 0:01:12.680 I think one of the interesting aspects, and from his commentary, 0:01:12.800 --> 0:01:15.600 was that the UH did not believe that he could 0:01:15.680 --> 0:01:18.800 or the office could indict a sitting president. What is 0:01:18.840 --> 0:01:20.640 your understanding of that? Is that A is that a 0:01:20.680 --> 0:01:23.760 constitutional issue? Is that a d J policy issue? Because 0:01:23.760 --> 0:01:26.039 I know there's certainly some question about that. It's d 0:01:26.160 --> 0:01:29.440 o J policy based on reading of the Constitution, and 0:01:29.520 --> 0:01:33.160 that's been d o J policy for quite some time. UM. 0:01:33.400 --> 0:01:37.080 What what I find interesting is you have a G. 0:01:37.280 --> 0:01:40.319 Barr Attorney General Bar, on the one hand, being surprised 0:01:40.800 --> 0:01:46.119 that Bob Mueller didn't reach a conclusion, a prosecutorial conclusion, UH, 0:01:46.440 --> 0:01:48.960 implying that he could, and on the other hand, Bob 0:01:49.080 --> 0:01:53.000 Muller Mueller hewing close to d o J policies and 0:01:53.160 --> 0:01:55.960 playing the role of a prosecutor. Andy, come on in here, 0:01:56.200 --> 0:01:59.440 what was your takeaway from this? Uh? These comments? Well, 0:02:00.200 --> 0:02:05.440 onto that observation, I think that the Special Counsel's remarked 0:02:05.440 --> 0:02:08.120 that quote, if we had confidence that the president clearly 0:02:08.200 --> 0:02:10.480 did not commit a crime, we would have said so 0:02:10.880 --> 0:02:16.040 is pregnant with portent. UH. It runs expressly counter that 0:02:16.120 --> 0:02:21.120 the presidence no obstruction, no collusion narrative and infers that 0:02:21.200 --> 0:02:25.480 he's been anything but cleared, but that the Special Council 0:02:25.560 --> 0:02:29.000 believed that there was some other process for addressing that, 0:02:29.080 --> 0:02:32.799 i e. Congress and potentially the unspoken eye word impeachment. 0:02:33.000 --> 0:02:36.760 So this was as low key as it was, uh, 0:02:36.800 --> 0:02:40.040 something of a rebuttal to the President and to his 0:02:40.120 --> 0:02:43.200 allies who have said that he's been cleared. So con 0:02:43.240 --> 0:02:46.560 do you believe that? Do you believe that Special Council 0:02:46.600 --> 0:02:48.680 Mala will be called in front of Congress to testify? 0:02:48.720 --> 0:02:52.880 And if so, you know, is he going to expand 0:02:52.960 --> 0:02:57.079 anywhere outside of the scope of that agreement our findings? Well, Paul, 0:02:57.320 --> 0:02:59.799 you just heard him. He basically said he's going to 0:03:00.040 --> 0:03:02.000 you very closely to the report, and that's what he's 0:03:02.000 --> 0:03:05.720 gonna do. So I think he's signaling to Congress, you know, 0:03:06.240 --> 0:03:08.160 call me. But that's all you're getting. Well, But but 0:03:08.320 --> 0:03:11.560 Andy raises a really good point, which is, yes, he 0:03:11.639 --> 0:03:14.720 was hewing closely the report, but he curated the statements 0:03:14.760 --> 0:03:17.959 that he made from said report, and and really that 0:03:18.080 --> 0:03:21.360 one statement saying if he believed if the group had 0:03:21.400 --> 0:03:24.480 believed the President had committed no crime, they would have said. 0:03:24.520 --> 0:03:27.560 So is that the key takeaway from this report? And 0:03:27.600 --> 0:03:31.720 does that indicate that he's sort of nudging other parts 0:03:31.720 --> 0:03:36.400 of government to take action? Uh? I absolutely agree with you, 0:03:36.480 --> 0:03:40.200 because he is a shrewd man. He's very wise, and 0:03:40.640 --> 0:03:44.200 he picked very few words to say today, and that 0:03:44.280 --> 0:03:46.560 was one of the words he said, those words about 0:03:46.680 --> 0:03:50.640 how guess what everybody going back to that report headline, 0:03:51.040 --> 0:03:53.720 I couldn't say, and I can't say today that the 0:03:53.760 --> 0:03:56.680 president didn't commit a crime. So, Andy, what is the 0:03:56.720 --> 0:03:59.480 feeling within the Beltway here? What is your sense of 0:03:59.560 --> 0:04:03.680 what we how Democrats will maybe take this commentary, the 0:04:03.760 --> 0:04:06.840 statement from Mr Mueller as it relates to kind of 0:04:06.840 --> 0:04:10.400 how they view the presidency, whether you know, continued oversighter, 0:04:10.640 --> 0:04:14.520 even the impeachment proceedings, Well, it could tie House Democrats 0:04:14.520 --> 0:04:18.560 and not not. Obviously, Speaker Pelosi has been under substantial 0:04:18.560 --> 0:04:23.280 pressure from some factions in the House to initiate impeachment 0:04:23.360 --> 0:04:28.000 proceedings immediately. UH Judiciary Committee Chairman Gerald Nadler has been 0:04:28.000 --> 0:04:30.400 trying to get a less redacted version of the report, 0:04:30.440 --> 0:04:35.640 plus the underlying UH evidentiary materials that were gathered up 0:04:35.640 --> 0:04:41.200 by the Special Council's office. Um, clearly, there's it's almost 0:04:41.200 --> 0:04:45.280 a volcanic pressure, uh to do something in response to this. 0:04:46.120 --> 0:04:50.800 But an impeachment is tantamount to a criminal proceeding brought 0:04:50.880 --> 0:04:54.839 by Congress, as we saw during President Clinton's term. And 0:04:55.000 --> 0:04:58.200 you can't really initiate this. You can't go off half cock. 0:04:58.279 --> 0:05:00.440 You've got to have your gunloaded. You got to know 0:05:00.480 --> 0:05:04.520 what the evidence is before you can start casting allegations. 0:05:04.520 --> 0:05:08.520 This will, no doubt ramp up the pressure on Speaker Pelosi. 0:05:08.560 --> 0:05:10.760 It may even ramp up the pressure on Attorney General 0:05:10.760 --> 0:05:13.080 bar in the Justice Department to turn over some of 0:05:13.080 --> 0:05:17.560 the information that the House Judiciary Committee is demanding. So, 0:05:17.760 --> 0:05:21.680 con I'm wondering about Attorney General William Barr and his 0:05:21.880 --> 0:05:24.760 role in this, the idea that Robert Muller was sort 0:05:24.800 --> 0:05:27.400 of contradicting some of the things that William Barr had 0:05:27.440 --> 0:05:31.080 said about being surprised that they didn't come to some 0:05:31.120 --> 0:05:34.559 sort of recommendation. What do you make of Attorney General 0:05:34.600 --> 0:05:38.240 Barr's performance up to date and what his likely response 0:05:38.240 --> 0:05:44.520 will be? UM? So, taking your your your first question, UH, 0:05:44.600 --> 0:05:46.520 you know, I think turning General Bar is in a 0:05:46.560 --> 0:05:52.000 tough position. UM. I think both Bob Mueller and Attorney 0:05:52.000 --> 0:05:55.320 General Bar are coming at this situation from a viewpoint 0:05:55.320 --> 0:05:59.760 of how to be fair, and Bamler just said, listen 0:05:59.800 --> 0:06:03.200 to reason, we didn't say that the president committed to 0:06:03.240 --> 0:06:05.880 crimes because we can't charge him, and that's unfair, right 0:06:05.960 --> 0:06:09.280 to say somebody committed a crime and then there's no court, 0:06:09.320 --> 0:06:11.640 there's no criminal case for the president to defend himself. 0:06:12.160 --> 0:06:15.479 I can imagine the Attorney General Barr having the flip 0:06:15.520 --> 0:06:19.760 side of that, uh, saying, listen, you have this report 0:06:19.839 --> 0:06:22.159 with all this stuff in it, and you didn't say 0:06:22.279 --> 0:06:25.520 either way what your viewpoint was, and now this report 0:06:25.560 --> 0:06:28.240 will be out there, so I'm going to have to say, listen, 0:06:28.360 --> 0:06:32.200 there's not enough to charge obstruction because that the report 0:06:32.240 --> 0:06:34.480 itself is unfair. So I think there are two ways 0:06:34.560 --> 0:06:38.080 to to look at that. UM. From Attorney General Barr's perspective, 0:06:38.240 --> 0:06:40.640 trying to be fair to the president by saying, well, 0:06:40.640 --> 0:06:42.640 this report is out there, they're gonna want to know 0:06:42.720 --> 0:06:45.680 what does d O J think? UM, So it's unfair 0:06:45.680 --> 0:06:48.000 to him if I don't say something. So con what 0:06:48.000 --> 0:06:50.000 do you think your former colleagues in the Southern District 0:06:50.040 --> 0:06:53.159 of New York are going to do next. Um, They're 0:06:53.160 --> 0:06:55.880 going to keep doing what they do every day, which 0:06:55.960 --> 0:07:00.559 is investigate, investigate crimes. Um. I think Uh, Bob Muller 0:07:00.640 --> 0:07:02.840 just made a very important point by saying, you know, 0:07:03.400 --> 0:07:07.440 the OLC opinion allows us to investigate the president, and 0:07:07.480 --> 0:07:10.680 this is an investigation that should have happened. So that 0:07:10.800 --> 0:07:15.000 kind of insulates that investigation. At same time, the prosecutions 0:07:15.000 --> 0:07:18.200 on the District of New York, they're investigating, uh, things 0:07:18.200 --> 0:07:21.800 related to Manafort there. They just charged the uh, the 0:07:21.840 --> 0:07:27.120 banker with bribery who's involved with manifort Um. They have 0:07:27.160 --> 0:07:30.120 other investigations going on and those will continue, Those will 0:07:30.120 --> 0:07:33.800 continue beyond this presidency. Uh. Andy, I'm wondering we are 0:07:33.840 --> 0:07:36.760 expecting to hear from Attorney General bar within the next 0:07:36.800 --> 0:07:39.600 few weeks. Isn't that so? I believe that we are. 0:07:39.840 --> 0:07:42.200 Of course, you know, again, this is a very fraught 0:07:42.240 --> 0:07:45.720 relationship that the Attorney General has right now, uh with 0:07:45.920 --> 0:07:48.160 House Democrats. It will be interesting to see in what 0:07:48.280 --> 0:07:52.040 context we do here. Uh. A committee there believer it's 0:07:52.040 --> 0:07:54.920 a judiciary committee actually voted to hold the Attorney General 0:07:54.920 --> 0:08:00.240 and contempt for spurning a subpoena to appear before them 0:08:00.280 --> 0:08:02.200 that has not yet gone to the full House for 0:08:02.240 --> 0:08:04.040 a vote, So it's kind of hanging out there in 0:08:04.040 --> 0:08:07.000 the ether. But at some point, in some format we 0:08:07.000 --> 0:08:09.360 will likely hear from the A G. And just we 0:08:09.400 --> 0:08:13.800 have a sense of what Attorney General bars reputation is, 0:08:13.840 --> 0:08:16.760 sort of how his comments have been perceived, and sort 0:08:16.800 --> 0:08:19.360 of what you're hearing from the legal community. Boy, that's 0:08:19.400 --> 0:08:22.680 really an eye of the beholder question. This isn't his 0:08:22.760 --> 0:08:25.640 first go around as Attorney General. He also served on 0:08:25.720 --> 0:08:30.400 the administration of President George Herbert Walker Bush. And we're 0:08:30.440 --> 0:08:32.520 on the one hand, some people see him as a 0:08:32.640 --> 0:08:35.600 dedicated and experienced law man and a good choice for 0:08:35.640 --> 0:08:39.400 the job. On the other hand, people from across the 0:08:39.440 --> 0:08:43.560 aisle look at him as somebody who is a partisan, 0:08:44.160 --> 0:08:46.520 and I think it was WILLIAMS. Sapphire at one point 0:08:46.559 --> 0:08:52.760 called him general cover up. So bars reputation is again 0:08:52.840 --> 0:08:55.040 depending on who's looking at him and wearing out the 0:08:55.040 --> 0:08:58.880 glass is half half or half full. Andy Harris, thank 0:08:58.880 --> 0:09:01.200 you so much. Andy Harrison Berk Legal Report are joining 0:09:01.240 --> 0:09:04.520 us and giving his thoughts on the Moller's statement. Joining 0:09:04.640 --> 0:09:07.040 us right now is Tim O'Brien, executive out of her 0:09:07.080 --> 0:09:09.959 Bloomberg opinion on staying with us as kind of nowadays. 0:09:10.000 --> 0:09:12.640 Former corporation and fraud prosecutor for the U. S. Attorney's 0:09:12.640 --> 0:09:14.520 Office in the Southern District of New York and a 0:09:14.600 --> 0:09:18.280 partner at Ventable l LP. So, Tim, just love to 0:09:18.280 --> 0:09:22.560 get your takeaway from the statement by Mr Mueller. I 0:09:22.600 --> 0:09:25.600 don't think he was saying anything particularly new. I think 0:09:26.200 --> 0:09:30.000 he clearly used this opportunity to talk about the fact 0:09:30.000 --> 0:09:31.920 that his investigation was wrapped up, and then he was 0:09:31.960 --> 0:09:35.079 moving on to emphasize what he think was was important 0:09:35.120 --> 0:09:38.000 about his work. And to me, the two things that 0:09:38.080 --> 0:09:43.480 popped out were obstruction of justice undermines the core mission 0:09:44.000 --> 0:09:47.120 of the law enforcement investigation, and and I think he 0:09:47.200 --> 0:09:50.960 chose to emphasize that perhaps because the Attorney General, William 0:09:50.960 --> 0:09:54.440 Barr did not, especially when he first rolled out the 0:09:54.480 --> 0:09:58.439 Mall reports findings. I think secondly, he made a very 0:09:59.160 --> 0:10:04.280 I think, uh trenchant point about the fact that if 0:10:04.320 --> 0:10:09.000 they could have absolved the president of not committing a crime, 0:10:09.080 --> 0:10:12.079 they would have done so. On the other hand, they 0:10:12.080 --> 0:10:14.520 didn't feel it was within their power to charge the 0:10:14.559 --> 0:10:17.360 president with a crime. And I think that that really 0:10:17.440 --> 0:10:21.360 highlights again the second half of the Malla Report, which 0:10:21.400 --> 0:10:25.480 focused in great detail and at great length on obstruction 0:10:25.520 --> 0:10:27.559 of justice issues. And I think that that's going to 0:10:27.640 --> 0:10:31.040 be one of the things that lingers over analysis of 0:10:31.040 --> 0:10:34.120 the Malla Report, analysis of what Bob Mueller chose to 0:10:34.200 --> 0:10:37.960 do and not to do, and why the Attorney General 0:10:38.000 --> 0:10:40.600 took the actions he did. In your view, does this 0:10:40.720 --> 0:10:43.640 change the political calculus at all in terms of what 0:10:43.679 --> 0:10:47.559 Congress does with the Malla Report. Uh? Well, I think 0:10:47.559 --> 0:10:50.200 there's two things here that that make that a difficult question, Leasa. 0:10:50.240 --> 0:10:53.800 I think the first is there's a political analysis as 0:10:53.840 --> 0:10:56.960 to whether or not impeaching the president or going down 0:10:57.600 --> 0:11:02.520 a more hardcore path presents political problems with the Democrats. 0:11:03.320 --> 0:11:06.319 That's certainly what Nancy Pelosi is is weighing in all 0:11:06.360 --> 0:11:08.760 of this. On the other hand, we are a nation 0:11:08.800 --> 0:11:11.640 of laws and and we live in the idea that 0:11:11.679 --> 0:11:13.079 there is a rule of law and no one is 0:11:13.120 --> 0:11:16.400 above the law, and if laws have been broken, justice 0:11:16.440 --> 0:11:18.959 should be meted out. And so there's a second piece 0:11:19.000 --> 0:11:20.920 of this that should just correspond with what the laws 0:11:21.000 --> 0:11:23.160 tell us to do. And to a certain extent, these 0:11:23.160 --> 0:11:27.320 things are knocking heads the political calculus versus what we 0:11:27.320 --> 0:11:29.720 should do as a national laws And I'm just wondering, 0:11:29.800 --> 0:11:31.839 con come on in here, because a nation of laws, 0:11:31.840 --> 0:11:34.120 it definitely does go to Congress. But there is a 0:11:34.240 --> 0:11:37.920 question of what other courts could do and what other 0:11:38.000 --> 0:11:42.880 prosecutorial offices could do if it is not possible to 0:11:42.960 --> 0:11:46.080 indict a setting president through the legal system. So that 0:11:46.160 --> 0:11:48.880 raises a question about some of the investigations at s 0:11:48.920 --> 0:11:53.280 d n Y. Right, that's that's absolutely right. Um, you know, 0:11:54.040 --> 0:11:57.520 beyond the investigations that the Southern District of New York 0:11:57.559 --> 0:12:01.800 has going on, um charge cases and other kinds of cases. Um, 0:12:01.800 --> 0:12:04.920 there's also the New York Attorney General's Office is being 0:12:05.080 --> 0:12:10.880 very aggressive with going after Trump or the Trump organization 0:12:10.920 --> 0:12:14.439 as well as people related to the Trump organization. So, um, 0:12:14.480 --> 0:12:19.319 you know that if people investigate things, that's what prosecutors do. 0:12:19.840 --> 0:12:22.600 And there is the report shows the moral report shows 0:12:22.640 --> 0:12:25.320 there's a lot to investigate, and there's a lot to do. 0:12:25.480 --> 0:12:27.440 There are a lot of trails to go down, and 0:12:28.160 --> 0:12:32.559 once you open an investigation, it's very hard to close. Um, 0:12:33.000 --> 0:12:35.120 it's easy. It's easier to open one than close one 0:12:35.160 --> 0:12:38.160 because you have people invested and people follow trails. People 0:12:38.160 --> 0:12:41.320 do their jobs So, Tim, what do you think the 0:12:41.360 --> 0:12:45.000 response will be from the President to Mr Mueller's statement. 0:12:46.120 --> 0:12:49.160 I imagine that they'll say, but again I don't know, 0:12:49.280 --> 0:12:51.400 but that that Robert Mueller came out to say that 0:12:51.480 --> 0:12:53.839 this investigation is over and it's time to move on. 0:12:53.960 --> 0:12:58.160 That's what the President has said consistently. A more colloquial 0:12:58.280 --> 0:13:01.360 version of that would be get over it, um. But 0:13:01.480 --> 0:13:04.480 the reality again is that there are facts left that 0:13:04.559 --> 0:13:08.720 need to be explored. I think around uh, financial conflicts 0:13:08.760 --> 0:13:11.920 of interest, actions taken by the President and members of 0:13:11.920 --> 0:13:16.560 his team during the election, as it pertains, substruction of 0:13:16.640 --> 0:13:19.840 justice during the transition into the White House and thereafter 0:13:19.960 --> 0:13:24.040 that are still unresolved. Any idea what the Republican response 0:13:24.040 --> 0:13:27.400 will be just real quick, get over it, you know. 0:13:27.720 --> 0:13:30.239 So they're gonna they're gonna stay behind the very consistent 0:13:30.280 --> 0:13:34.080 and solid on their messaging around this. I really appreciate 0:13:34.080 --> 0:13:36.480 both of you being here with us today. It really 0:13:36.840 --> 0:13:42.199 is an interesting conclusion to a very high profile case. 0:13:42.559 --> 0:13:47.040 Understated perhaps, but trenchant is a great word. Uh really 0:13:47.080 --> 0:13:52.040 every word that Bob Muller speaks incredibly powerful. Tim O'Brien, 0:13:52.440 --> 0:13:54.960 thank you so much for being here with as executive editor, 0:13:55.559 --> 0:13:59.120 columnist all things having to do with President Trump and 0:13:59.480 --> 0:14:03.680 everything related for Bloomberg Opinion. Also can Nowaday thank you 0:14:03.720 --> 0:14:05.880 so much for being with us, former corruption and fraud 0:14:05.880 --> 0:14:07.920 prosecutor for the U. S. Attorney's Office in the Southern 0:14:07.960 --> 0:14:11.240 District of New York and a partner at Venable l LP. 0:14:25.640 --> 0:14:27.280 But first, let's take a look at the bond market. 0:14:27.320 --> 0:14:31.080 Bond yields continue to grind lower. The yield curve has inverted. 0:14:31.120 --> 0:14:33.520 The question for many investors is does this mean a 0:14:33.600 --> 0:14:36.920 recession is imminent? To answer that in other issues, we 0:14:36.960 --> 0:14:39.360 will speak to our good friend Jim Bianco. Jim as president, 0:14:39.400 --> 0:14:42.720 founder of Bianco Research. He's also a contributor to Bloomberg 0:14:42.840 --> 0:14:46.280 Opinion based in Chicago. Jim, thanks so much for joining us. 0:14:46.360 --> 0:14:49.320 So do you think the Fed will heat these warnings 0:14:49.320 --> 0:14:51.960 of inverted yield curve and so on and cut rates 0:14:52.120 --> 0:14:55.840 or with a risk creating a recession. That's a good question, 0:14:55.920 --> 0:14:59.400 and um, they should heat the warnings. It's a market 0:14:59.480 --> 0:15:03.880 signal that policy is too tight. But if you look 0:15:03.920 --> 0:15:08.000 at their public statements over the last couple of weeks, 0:15:08.040 --> 0:15:10.960 the vast majority of Federal Reserve officials have said that 0:15:11.040 --> 0:15:14.680 they do not see a need to cut rates anytime soon, 0:15:15.160 --> 0:15:17.080 and in a couple of them are even still talking 0:15:17.120 --> 0:15:19.240 about that the next move would be a hike. So 0:15:19.760 --> 0:15:22.040 I would like them to listen to this statement or 0:15:22.160 --> 0:15:26.040 to this market signal that policy is too tight. That's 0:15:26.080 --> 0:15:29.240 why the yeld curve inverts. If the yelk curb stays 0:15:29.280 --> 0:15:33.800 inverted for a protracted period of time, it just concumulatively 0:15:33.920 --> 0:15:37.080 weighs on the economy until you potentially get a recession. 0:15:37.680 --> 0:15:39.800 The way you steep in the yeld curves, you cut 0:15:39.920 --> 0:15:42.680 short term interest rates. I hope the Fed listens to 0:15:42.720 --> 0:15:45.800 that and does that exact thing. Well, Jim, it depends 0:15:45.800 --> 0:15:48.080 which yield curve you look at, because actually they are 0:15:48.080 --> 0:15:51.240 different stories being told depending on where in the curve 0:15:51.360 --> 0:15:53.920 you look. Yes, we are seeing an inversion in the 0:15:54.000 --> 0:15:58.240 ten year three months curve, but further out not so much. 0:15:58.280 --> 0:16:01.400 In fact, you're seeing a steepening. The extra yeld investors 0:16:01.400 --> 0:16:03.720 are getting to own thirty year treasuries over ten year 0:16:03.760 --> 0:16:07.080 treasuries has actually increased a little bit. So why should 0:16:07.080 --> 0:16:10.120 we pay attention to that one? Uh, that is sort 0:16:10.120 --> 0:16:13.320 of what people are worried about right now. You're right, 0:16:13.400 --> 0:16:16.280 that the thirty year yield has got a massive steepening. 0:16:16.280 --> 0:16:19.680 It's forty five basis points, almost half a percent higher 0:16:19.720 --> 0:16:22.600 than the ten year note. But the thirty year tends 0:16:22.640 --> 0:16:25.280 to be kind of a special trading vehicle with not 0:16:25.360 --> 0:16:28.960 as much economic implication as say the tenure in the 0:16:29.000 --> 0:16:32.400 three months to Most economic studies have been done on 0:16:32.480 --> 0:16:34.960 the tenure in the three months. It's been modeled off 0:16:35.000 --> 0:16:37.560 of the that you'll curve, and that one seems to 0:16:37.640 --> 0:16:41.960 play the best with giving us an economic signal. The 0:16:42.400 --> 0:16:44.760 signals you'll get from the bat from the far end 0:16:44.760 --> 0:16:47.400 of the curve, like the thirty year tenure spread, tend 0:16:47.480 --> 0:16:50.360 to be more technically driven about flows and about traitor 0:16:50.440 --> 0:16:53.280 sentiment and a lot of things that do not directly 0:16:53.320 --> 0:16:56.280 impact the economy. That's why I focus on that ten 0:16:56.320 --> 0:16:59.600 year three months as much as I do so. Jim, 0:17:00.120 --> 0:17:03.960 the you curve inverted earlier this year, it's it's inverted now. 0:17:04.000 --> 0:17:07.840 But is there a certain time period where in terms 0:17:07.880 --> 0:17:10.600 of duration, that it starts to get your attention and 0:17:10.640 --> 0:17:13.800 you think it should get the markets attention. Yes, I've 0:17:13.880 --> 0:17:17.120 used ten consecutive days and we're in day four right now. 0:17:17.280 --> 0:17:19.160 Back in March, we got the five days and then 0:17:19.200 --> 0:17:22.119 it uninverted. Now why do I use that conceptually? What 0:17:22.160 --> 0:17:24.639 I'm trying to say here is the your curve is 0:17:24.680 --> 0:17:28.040 inverted today, it means policy is too tight today. It 0:17:28.080 --> 0:17:32.560 means policy was too tight yesterday. If it continues week 0:17:32.640 --> 0:17:35.600 after week, month after month, and I'll use ten consecutive days, 0:17:35.600 --> 0:17:38.440 because once you start getting into that room, you usually 0:17:38.480 --> 0:17:41.400 don't uninverted. But if you stay inverted for a month 0:17:41.480 --> 0:17:44.520 or two months or three months, the cumulative effect of 0:17:44.560 --> 0:17:47.439 saying policy is too tight every single day starts to 0:17:47.560 --> 0:17:50.040 weigh on the economy. Could handle a couple of weeks 0:17:50.040 --> 0:17:52.119 of it, could maybe handle a month of it, but 0:17:52.280 --> 0:17:54.480 beyond that you start getting in the problems. And what 0:17:54.520 --> 0:17:57.359 I found is after ten days that usually is a 0:17:57.400 --> 0:18:00.240 good enough signal that usually it means we're inverted, We're 0:18:00.240 --> 0:18:03.399 going to stay there, and it will continue on until 0:18:03.440 --> 0:18:06.879 the Fed changes policy. So what actually happened to trigger 0:18:06.920 --> 0:18:10.320 this latest bout of yield tightening? I mean, honestly, we've 0:18:10.320 --> 0:18:13.080 been talking about trade concerns for a while. Morgan Stanley 0:18:13.119 --> 0:18:15.600 coming out this morning and saying that actually some of 0:18:15.640 --> 0:18:18.600 these jitters began well before that, and for and foretell 0:18:18.720 --> 0:18:21.600 a downturn that would have happened regardless of trade. Do 0:18:21.600 --> 0:18:25.399 you agree, Yeah, I do agree with that, and I 0:18:25.440 --> 0:18:29.040 think that what's changed is the perception on inflation, and 0:18:29.119 --> 0:18:32.040 the answer is there isn't any and there's none coming. 0:18:32.520 --> 0:18:35.520 And now we've got crudeoil prices, which is a big 0:18:35.560 --> 0:18:39.160 input to headline inflation falling, and it also has an 0:18:39.200 --> 0:18:44.200 additive effect on core inflation as well too. Most economists 0:18:44.200 --> 0:18:46.760 will say, look, the Fed's not going to cut rates. 0:18:46.920 --> 0:18:49.280 Look at the economy. The economy is fine. That's not 0:18:49.359 --> 0:18:51.240 what the market is looking at the markets looking at 0:18:51.640 --> 0:18:56.440 no inflation at all. Now you've got falling crude oil prices. Maybe, 0:18:57.080 --> 0:18:59.920 as Gary Schilling wrote in a Bloomberg opinion column yesterday, 0:19:00.000 --> 0:19:02.960 and I thought he made a credible case, trade wars 0:19:03.160 --> 0:19:07.560 and tariffs could maybe even be deflationary for the economy too. 0:19:07.840 --> 0:19:12.280 If that's going to depress inflation, then I think that's 0:19:12.280 --> 0:19:14.800 what the markets focused on saying, Look, you've got very 0:19:14.840 --> 0:19:18.320 low inflation. That's what's restrictive about interest rates, and that's 0:19:18.320 --> 0:19:20.639 why you need to cut It's not about real GDP 0:19:21.440 --> 0:19:24.760 at this point, So Jim, the FED has said pretty 0:19:24.760 --> 0:19:27.680 consistently recently that it is data dependent. What data are 0:19:27.800 --> 0:19:29.880 you looking at? What what data are you putting into 0:19:29.920 --> 0:19:33.120 your model. I'm looking at the inflation data right now. 0:19:33.280 --> 0:19:35.040 I think that that is the data that is going 0:19:35.119 --> 0:19:37.520 to that is driving why the YEL curve is inverted, 0:19:37.840 --> 0:19:40.040 why the Fed fund futures are saying that there will 0:19:40.080 --> 0:19:42.399 be a hike, I excuse me, a cut in September. 0:19:42.880 --> 0:19:46.640 So I'm looking at the inflation compensation from the from 0:19:46.640 --> 0:19:50.399 the Treasury inflation protected securities market or the tips market. 0:19:50.840 --> 0:19:53.600 I'm looking at a lot of the inflation numbers as 0:19:53.640 --> 0:19:56.760 well to some of the surveys UH and it's and 0:19:56.920 --> 0:19:59.880 the price of crudhile, because that is a big input 0:20:00.280 --> 0:20:03.640 into what people's perceptions are inflation, and all of that 0:20:03.760 --> 0:20:07.960 is going down right now, especially overseas in Europe. You're 0:20:08.000 --> 0:20:10.840 at multi year lows and some of those market measures 0:20:10.840 --> 0:20:14.639 of inflation expectations. UH screaming at Mario Drag that he 0:20:14.640 --> 0:20:17.520 should be considering something as well too, in terms of 0:20:17.560 --> 0:20:21.159 cutting rates or easing policy. So those are the inputs 0:20:21.200 --> 0:20:23.840 I'm looking at, and all these inflation expectation and actual 0:20:23.880 --> 0:20:26.679 inflation numbers are heading lower, and that's why this market 0:20:26.720 --> 0:20:29.880 wants a cut we're speaking with Jim Bianco, the president 0:20:29.880 --> 0:20:33.600 and founder of Bianco Research, talking about the story of today, 0:20:34.280 --> 0:20:38.760 which is the drive lower in benchmark government bond yields 0:20:38.760 --> 0:20:42.040 globally and developed markets. And I'm trying to figure out, Jim, 0:20:42.160 --> 0:20:46.040 what exactly does this say about risk assets because up 0:20:46.080 --> 0:20:50.000 until now, lower yields has meant support for risk gear 0:20:50.080 --> 0:20:53.639 credits as well as equities. Is this time different with 0:20:53.720 --> 0:20:58.320 respect to that too? Is it's getting there? You're definitely 0:20:58.440 --> 0:21:03.040 right that normally would is seen um lower yields be 0:21:03.119 --> 0:21:06.240 somewhat supportive. But I think that the reason you're starting 0:21:06.240 --> 0:21:09.919 to see risk assets wobble with falling interest rates is 0:21:09.960 --> 0:21:13.240 that there is a heightened fear of too low inflation. 0:21:13.880 --> 0:21:16.040 Let me let me put a definition on that. Why 0:21:16.040 --> 0:21:18.960 do we worry that inflation is too low? Because in 0:21:19.040 --> 0:21:22.120 the next recession, and there will be one at some 0:21:22.200 --> 0:21:25.760 point we haven't repealed the business cycle, inflation will fall. 0:21:26.359 --> 0:21:30.520 If we start that recession with a one percent inflation rate, 0:21:31.080 --> 0:21:34.639 the fear is it will fall to deflation, which is 0:21:34.880 --> 0:21:38.399 very stressful on the financial services community, very stressful on 0:21:38.440 --> 0:21:41.320 the banking system. And that's what the FED will pull 0:21:41.359 --> 0:21:43.320 out and all central banks will pull it all stops 0:21:43.320 --> 0:21:45.800 to prevent deflation. In one of the ways they try 0:21:45.840 --> 0:21:48.280 to do it is let's not start at a very 0:21:48.359 --> 0:21:51.320 low inflation rate. So I think what you're seeing in 0:21:51.440 --> 0:21:54.399 risk gassets is as interest rates go down and as 0:21:54.840 --> 0:21:58.000 risk gas has fall, a classic risk off sentiment that 0:21:58.359 --> 0:22:02.160 is worrying that we might start to see too low 0:22:02.200 --> 0:22:03.760 of inflation. I don't know if I'd go as far 0:22:03.800 --> 0:22:07.360 as deflation, but too low and definitely not where you'd 0:22:07.400 --> 0:22:10.320 want to start if we're going to have a downturn. So, Jim, 0:22:10.359 --> 0:22:12.800 to what extent do you think this Federal Reserve is 0:22:13.000 --> 0:22:16.280 influenced by the market. There's certainly been some concerns that, 0:22:16.880 --> 0:22:19.080 you know, the move in December and the and then 0:22:19.080 --> 0:22:21.920 the the easing in the first part of the year, 0:22:21.960 --> 0:22:25.520 where market influence. Is that a real concern? Yeah, I 0:22:25.600 --> 0:22:28.560 think it is a concern. And I was going to 0:22:28.640 --> 0:22:32.320 answer the question that they seemed to be reactionary. There 0:22:32.440 --> 0:22:36.280 was plenty of evidence going into that December rate hike 0:22:36.720 --> 0:22:39.520 that the markets were unsettled by the idea of another 0:22:39.600 --> 0:22:43.280 rate hike. The markets were unsettled by automatic pilot, with 0:22:43.480 --> 0:22:46.680