Speaker 1: Welcome to Bloomberg Opinion. I'm Bonnie Quinn. This week, Jonathan
Speaker 1: Bernstein wraps up the year in Politics, which included a
Speaker 1: recommendation to the Department of Justice that a former president
Speaker 1: be prosecuted politically, it would have been certainly a big
Speaker 1: deal if they had not recommended this after all that
Speaker 1: they did. And I think it's perfectly okay to celebrate
Speaker 1: the sport as long as we are cognizant of what
Speaker 1: is happening around it. And this World Cup was the
Speaker 1: first time I think both of those things were happening simultaneously.
Speaker 1: Bobby go Shawn Lessons learned from a strange World Cup. First, though,
Speaker 1: to the markets, it was not a quiet week in markets.
Speaker 1: Mid week the Bank of Japan tweaked its yield curve
Speaker 1: control mechanism a little out of the blue Bloomberg Opinions.
Speaker 1: Marcus Ashworth joined me for an all encompassing conversation about
Speaker 1: the year in markets, and then we revisited our conversation
Speaker 1: post b O j move. That's all in part two,
Speaker 1: so stay tuned. Marcus. What do you think were the
Speaker 1: biggest lessons of two for market participants? Oh? Um, I
Speaker 1: think the ability for people to forecast the future has
Speaker 1: been called dramatically into question because in every central bank,
Speaker 1: in particular some very smart economists i'm sure, did predict
Speaker 1: a very unpleasant inflation. But I think the ability for
Speaker 1: people to divine what was going on this year got
Speaker 1: very rattled, and we were left in obviously a terrible
Speaker 1: year for most asset classes. Slight recovery towards the end,
Speaker 1: lastly as the dollar level weakened, but you know, we're
Speaker 1: left looking at ourselves thinking, you know, starks bonds, part
Speaker 1: from mild commodity. You know, pretty much everything went against
Speaker 1: us this year, spreads widens, the worst is probably over,
Speaker 1: but it's just equally as hard to look forward in
Speaker 1: this year and say, okay, will inflation drop and drop
Speaker 1: quickly enough to actually change thinking of central banks, which
Speaker 1: is probably not maybe to hike much more, but to
Speaker 1: a keep rates high levels a longer. And that's not
Speaker 1: gonna be easy for bond markets or indeed stock markets
Speaker 1: to do too well next year. Yeah, and Marcus, it
Speaker 1: seemed like everything was trading in tandem, right, Was there
Speaker 1: anything different about how a classes were traded this year? Well,
Speaker 1: and I think it shows you that was people having
Speaker 1: to liquidate, and it didn't matter whether it was bonds
Speaker 1: or equities. Ever will realized inflation was bad for pretty
Speaker 1: much every asset class bar as I said, to the
Speaker 1: occasional commodity, but even gold didn't do very well at times.
Speaker 1: So I mean, in that context we saw you know,
Speaker 1: everything from crypto to particularly text stocks, meme stocks no
Speaker 1: longer were very meanly and indeed pretty much the safest
Speaker 1: things long ends, guilts and government bonds and different other
Speaker 1: types of normally very safe stuff got absolutely pampered at
Speaker 1: The big lesson is that bonds were really not that
Speaker 1: safety placed or inflation link bonds either, actually right exactly Now,
Speaker 1: do you anticipate that changing, that markets will go back
Speaker 1: to sort of trading each other class on its own merits,
Speaker 1: or are we looking at an environment now where traders
Speaker 1: are just doing things differently. I think it's a change
Speaker 1: environment and less confident, much more volatile. I don't expect
Speaker 1: things over it or to be as bad as twenty
Speaker 1: two was, but I do think volatility is here to
Speaker 1: stay until we've got much more clarity from central banks
Speaker 1: view on inflation. Not too much inflation itself is how
Speaker 1: central bats can feel confident they are not overdoing it
Speaker 1: by tightening too much, planning into recessions. I think it
Speaker 1: is a big risk. Clearly. The risk that center banks
Speaker 1: are most worried about is not doing enough now on
Speaker 1: inflation and having a comeback and do more in a
Speaker 1: later time. They want to make sure they won this battle.
Speaker 1: The price of that very likely is to be recession.
Speaker 1: And from there's various large central banks that come to mind.
Speaker 1: We could talk about any of them, but are they
Speaker 1: on a collision path or working side by side? Well,
Speaker 1: I think clearly the European Central Bank has decided that
Speaker 1: as they were very late to the past, that they
Speaker 1: need to do more, and there is a determined Hawkeach
Speaker 1: element driving that. The FED I think is getting sort
Speaker 1: of towards the close of their peak, maybe one or
Speaker 1: two more hikes. The same for the Bank a Mainlan
Speaker 1: who are clearly sending some dubb signals. But the one
Speaker 1: that really watched, I think the next year's find out
Speaker 1: it is gonna be the back of Japan because they've
Speaker 1: done nothing. But you know, some of their core inflation
Speaker 1: to give England they called super core inflation is really
Speaker 1: quite high in Japanese terms. Well about the two cent target,
Speaker 1: and that's a rare occasional you haven't seen that for
Speaker 1: a few decades. So at some point, possibly by April
Speaker 1: when they changed the governor, we may see a shift
Speaker 1: in the Bank of Japan and that could have very
Speaker 1: big impacts across the rest of the world. Yeah, we
Speaker 1: are hearing that there is going to be a shift
Speaker 1: in policy, which would really be dramatic for the world
Speaker 1: because we haven't seen the Bank of Japan do that
Speaker 1: for a long time. In terms of inflation or recession
Speaker 1: being top of mind in the United States next year,
Speaker 1: which should it be, well, clearly the Fed wants to
Speaker 1: battle the inflation genie back into the bottle if it can,
Speaker 1: and it's prepared to risk recession. I mean, so far,
Speaker 1: the US ECON is very impressive, particularly on the employment
Speaker 1: labor stats. The Fed are trying to do their best,
Speaker 1: but the markets are continuing to try and look for
Speaker 1: the pivot, indeed, pricing in future rate cuts, which I
Speaker 1: don't think is at all the message that the Fed wants,
Speaker 1: because they want to make sure financial condition are tight
Speaker 1: enough to do the work, and the longer or the
Speaker 1: more the stock markets pays up, the harder it is
Speaker 1: for them to their victory, Marcus, if we move theater
Speaker 1: for a moment's China's direction of travel. There's a lot
Speaker 1: of talk about this now. COVID seems to be ripping
Speaker 1: through the economy. Can China achieve a five percent growth
Speaker 1: rate next year? I don't think they can, and and
Speaker 1: fascinating to say that because I mentioned in Japan earlier
Speaker 1: the two most important to we say inflation, the sets
Speaker 1: of numbers are the pan in the sense it's on
Speaker 1: the way up after being in deflation for so many years.
Speaker 1: I'm worried about that because it means Japan will have
Speaker 1: to hype rates and perhaps do some things equally China.
Speaker 1: The real worry on China is how quickly inflation is
Speaker 1: dropping there. It's turning negative on the producer prices and
Speaker 1: it's plunging on the consumer level down to sort of
Speaker 1: one and headed lower. That's a real worry because that
Speaker 1: means that deflation is coming through in China. The Chinese
Speaker 1: economy is in a bad way, and it doesn't seem
Speaker 1: to be much light at them, and there as far
Speaker 1: as belief on that. So I think China is a
Speaker 1: real worry for us, and that peaks through into my
Speaker 1: further worry, which is why the oil price, probably the
Speaker 1: most important chant in the world, is lower, and I
Speaker 1: think very heavily China related. Well, let's dig into this
Speaker 1: a little bit more. How would China goose inflation, assuming
Speaker 1: that China would want to. I guess China would need
Speaker 1: to in order to keep the labor market some way strong.
Speaker 1: I mean the labor markets and tatters at the moment
Speaker 1: in China would seem especially for younger people. Yeah, the
Speaker 1: youth employment of my word, and I think that's they
Speaker 1: used the word goose there, and I think it's quite
Speaker 1: interesting because that's the problem with China is that every
Speaker 1: time they come to a clear evident problem here, whether
Speaker 1: they're they've got real property bubble having burst, they've got
Speaker 1: a real problem with employment as you mentioned, and a
Speaker 1: general lack of Obviously, any momentum in the economy is
Speaker 1: completely gone. So they need to pull on that credit
Speaker 1: lever and get money supply going and breathe inflation in
Speaker 1: some senses back of the system. But that they pull
Speaker 1: on this leaver so many times and it's less and
Speaker 1: less effective. And I think that's a big infrastructure plays
Speaker 1: or the usual boosting of huge building is not going
Speaker 1: to be effective and like as it once was. So
Speaker 1: that's the trouble. They've got a real issu here with
Speaker 1: very aging demographics at the same time as they've got
Speaker 1: ballooning debt, maybe not on a government state level, which
Speaker 1: optically looks low, but across the rest of the economy,
Speaker 1: state banks, and insurance companies, all sorts of other aspects
Speaker 1: spreading the low debtload far and wide. And that's something
Speaker 1: which is going to be very hard. But to get
Speaker 1: the same tact in economy. That's why I'm not saying
Speaker 1: they don't get a better economy in next year. They
Speaker 1: probably almost certainly will have they reopened by the days
Speaker 1: of you know, you mentioned five percent, that's possible, but
Speaker 1: getting up to six, seven, eight percent growth that we
Speaker 1: were used to a few years ago, I think it's
Speaker 1: going to be forms impossible. Marcus, what are the ramifications
Speaker 1: of your three major worries you mentioned Japan, China and oil.
Speaker 1: Will we see ramifications in the bond markets? We may,
Speaker 1: I mean clearly the issue you know, it's looking at
Speaker 1: US market to call for everything. It's it's heavily inverseed
Speaker 1: in the sense that front end yields tier yields are
Speaker 1: really quite interestingly the price at the moment you can get,
Speaker 1: you know, for a quarter percent for to your money,
Speaker 1: and it's it's that makes you know, equities look less attractive.
Speaker 1: But you know, the yields and along end are are
Speaker 1: heavily lower, and I think at the moment too low
Speaker 1: with starting a bit of a correction, but belowly three
Speaker 1: and a half percent for ten years in the US
Speaker 1: is too low and fast fed through. Now already we
Speaker 1: start to see you mentioned the federal hawk is, but
Speaker 1: really what what not bond markets recently was that the
Speaker 1: ECB was much more hawk is as well, and that
Speaker 1: combined effect is starting to hit bond markets. I think
Speaker 1: it's got itself a little bit priced too low and yield,
Speaker 1: and I think they will start to move higher and yield,
Speaker 1: and that may well come with economic recession finding up
Speaker 1: as well. Normally would think that bond yields would will
Speaker 1: go lower as econently weakens. But in some senses, I
Speaker 1: think the markets are pricing ahead of themselves, and I
Speaker 1: steer that bond markets need a bit more of a shakeout,
Speaker 1: and I could see yields headed higher across the board.
Speaker 1: It sounds like an earnings recession is a foregone conclusion
Speaker 1: given everything you've said, Yeah, and this isn't it. And
Speaker 1: I think that's the thing to watch is that is
Speaker 1: that you know where where earnings go. It's very important
Speaker 1: because you know that, Let's face it, the pandemic was
Speaker 1: golden from many many corporates days. A lot of the
Speaker 1: price increases you come through. I think people starting to
Speaker 1: realize that, not just due to commodity prices and people
Speaker 1: moving their prices up ahead of expected commodity rises. So
Speaker 1: I mean a lot of corporate profits have been very
Speaker 1: good the last year or two. It's the music stopped
Speaker 1: this year, and I think that's going to feed through.
Speaker 1: And I think that corporate profits is something to keep
Speaker 1: a very close eye on. Does that all give a
Speaker 1: lead indicated where credit spreads will go? And indeed, probably
Speaker 1: equities because their values had a bit of a comeback
Speaker 1: against growth. Text obviously had a worrying time and things
Speaker 1: like energy stops them. They're able this year. It's gonna
Speaker 1: be much harder work, I think in twenty three. And
Speaker 1: not to say the stop market won't do perssly okay,
Speaker 1: but it's not going to be very much more stop
Speaker 1: pickers market rather than just playing momentum. The UK obviously
Speaker 1: has had a huge amount of political turmoil in the
Speaker 1: last year. What happens, to say the least, what happens
Speaker 1: next a little bit of stability. All this government is
Speaker 1: currently trying to do is do as little as possible
Speaker 1: moment I mean the media all screaming, whereas which she so,
Speaker 1: I tell you exacut it's the hiding um and a
Speaker 1: little bit of calm is very much appreciated appointment. You know.
Speaker 1: He's more of a technocrat, loves a spreadsheet and wants
Speaker 1: to get some competency back in. It's the only chance
Speaker 1: they have to you know, which looks pretty slim of
Speaker 1: retaining any form of parente as time they have to
Speaker 1: have an excellection. So expect more of the same. You know,
Speaker 1: we are going to get very type focused on keep
Speaker 1: trying to get one or two things they can get through.
Speaker 1: There some promising science and on some financial forms, but
Speaker 1: we've got to see delivery. This is what we've not
Speaker 1: seen the last few years is a lot of every
Speaker 1: week there's a new policy and yet nothing comes up
Speaker 1: the back of that. And I think that's what the
Speaker 1: current government is going to try and calm things down
Speaker 1: and at least not make things any worse. And that's
Speaker 1: it's about probably as as better as we can hope for.
Speaker 1: Marcus Ashworth continues with us, including fresh comments following the
Speaker 1: Bank of Japan's move to widen the trading band on
Speaker 1: the tenure bond yield just hours after we spoke. This
Speaker 1: is Bloomberg Opinion. You're listening to Bloomberg Opinion. I'm Vannie
Speaker 1: Quinn and back to my conversation now with Marcus Ashworth.
Speaker 1: Our is after we first spoke this week, the Bank
Speaker 1: of Japan announced a decision to tweak its yield curve
Speaker 1: control mechanism and allow long term yield rise to around
Speaker 1: point five percent, double the previous limit. The b o
Speaker 1: J kept its ten year yield and short term rate
Speaker 1: unchanged at zero and minus point one percent, respectively. Governor
Speaker 1: Howrohko Kuroda said the shift wasn't a rate hike and
Speaker 1: was intended to enhance bond market functionality. Although the government
Speaker 1: bond interest rates will widen as a result of this measure,
Speaker 1: we believe that the effects of monetary easing will spread
Speaker 1: more smoothly. The b o J intends to aim for
Speaker 1: price stability by increasing the sustainability of this monetary easing.
Speaker 1: It's not the beginning of an exit strategy. Traders were
Speaker 1: caught off guard. The end strengthened four percent, and the
Speaker 1: mediate aftermath and speculation began over what the next move
Speaker 1: might be and whether it would wait until horo Heko
Speaker 1: Kuroda's successor takes over at the Bank of Japan in April.
Speaker 1: I called Marcus back, I email you, and you said, Wow, amazing,
Speaker 1: these guys have learned. It's going to cost them a
Speaker 1: four to but I guess it's better take slugs of
Speaker 1: pain than for it to go properly. Bang. Did it
Speaker 1: go properly bang overnight? A well? I mean it was
Speaker 1: clearly a very clever move to perhaps shot the market
Speaker 1: surprise and markets, particularly for foreigners who may have unwound
Speaker 1: their positions ahead of the crisest New year period. Certainly,
Speaker 1: the topics at nick Stockings Sees took it quite badly
Speaker 1: interesting to see the divergence. Nicke down two and a
Speaker 1: half per cent, the topics so much. Why they're index
Speaker 1: only down one and a half, that's because the banks
Speaker 1: are in the topics in next We're not seeing too
Speaker 1: much of reaction here in the US either. No, and
Speaker 1: that's the brilliant bit. I mean you can see it
Speaker 1: in the you know, the US is are, UK's are,
Speaker 1: but I mean clearly you know, the banks did very well,
Speaker 1: and that's princely because the deepening the yeeld curve caused
Speaker 1: by the winding ten you'll bann up to fifty basis
Speaker 1: points only got up to forty basis points. Again, the
Speaker 1: bomb reaction wasn't as big as it could have been,
Speaker 1: but it means the net interest minded for banks is
Speaker 1: wide because the ill curve steeper. We saw that feature
Speaker 1: to US Treasury bonds. You sort of knock on effect
Speaker 1: to European bonds. But as far as Japan's concerned, the yen,
Speaker 1: you know, the currency gained about four percent to the dollar.
Speaker 1: You know, it's been handled pretty well. I always think
Speaker 1: the back of Japan would consider this a win. It
Speaker 1: doesn't get away from the fact that things are going
Speaker 1: to have to be addressed before or by April, when
Speaker 1: the current governor Corona steps down and a new person
Speaker 1: replaced him and almost certainly under pressure to do even more.
Speaker 1: The best things for the Japanese is that were probably
Speaker 1: just as when all of the new central banks will
Speaker 1: be stopping hiking and maybe even start and think about cuttings.
Speaker 1: It means then they will have to hike, will be
Speaker 1: much less exactly and the end strengthen as you say,
Speaker 1: four percent, which will help importers. Will it mean much
Speaker 1: for the Japanese economy this particular move, No, but clearly
Speaker 1: they are really in the bell to their aggressive inflation,
Speaker 1: breeding in booteresting of inflation, beating of deflation. That that
Speaker 1: this is nearing an end, and I think Stony was
Speaker 1: steadily we will see move away from negative brains and
Speaker 1: higher bond yields. About will have something back about it's
Speaker 1: the first early bit of pain Bloomberg Opinions. Marcus Ashworth
Speaker 1: is there. I also got some reaction out of Asia.
Speaker 1: Paul Dobson as an executive editor for Asia Markets at Bloomberg,
Speaker 1: and he gave me his thoughts. After the market had settled.
Speaker 1: We discussed these comments from Middle Potata, head of Emerging
Speaker 1: Market Strategy at t D Bank. It has had global reverberations.
Speaker 1: It's hard to put this back in the bag again,
Speaker 1: and I think it is a start of more steps
Speaker 1: going forward, so we could see further van widening, we
Speaker 1: could see dismantlement of the band altogether. What I do think, though,
Speaker 1: is a governor Corona is probably not in a rush
Speaker 1: to change things now in terms of the policy rate
Speaker 1: and y CEC zero percent target. That may not happen
Speaker 1: until he leaves in April next year we get a
Speaker 1: new Banka Japan governor. But look, the reality is that
Speaker 1: bo j was fighting against an environment with Global Central
Speaker 1: Bank of titan relatively sharply. Last week we had a
Speaker 1: whole bunch of hawkish messages from Central Bags ECB, for example,
Speaker 1: at walking the FED even and it's very hard to
Speaker 1: contend with that, and continued pressure on the top of
Speaker 1: the yield curve target as well, so they have no
Speaker 1: choice in a way. But I don't think this is
Speaker 1: a one and done deal. I think that's going to
Speaker 1: be more to come, and it does spell more bad
Speaker 1: news for global bonds. Japan holds about a trillion dollars
Speaker 1: of treasuries still, so we could still see more selling
Speaker 1: pressure from Japanese investors. So, Paul, you heard there what
Speaker 1: middle Kotecha said, hard to put this back in the box.
Speaker 1: How do Japanese investors react in the new year. Will
Speaker 1: it unsettled markets again? Yeah? I think this is a
Speaker 1: very significant shift for global markets and for global investors
Speaker 1: as well. The Bank of Japan has been that last
Speaker 1: last of the negative, very low interest rate, and the
Speaker 1: fact that it's easing off just that little bit signaling
Speaker 1: a slight shifting policy is going to be enough to
Speaker 1: get investors very excited. Remember, Japanese investors have three trillion
Speaker 1: dollars worth of all over the world, and if they
Speaker 1: see that the home markets are suddenly little more repealing
Speaker 1: and they start bringing that money back to Japan, it's
Speaker 1: going to have two effects. It's going to be very
Speaker 1: supportive for the end. It's also going to be a
Speaker 1: downside for all of those sectors where they've got their funds,
Speaker 1: So not just US treasuries, which is obviously a big one,
Speaker 1: but also government once of France for example, or Australia
Speaker 1: where they own a high concentration of the That's something
Speaker 1: that we're going to be watching very carefully into the
Speaker 1: new year. It should be a sort of slow and
Speaker 1: gradual shift rather than a massive, short sharp move as well,
Speaker 1: so it could influence global markets significantly. Over a period
Speaker 1: of time into the new year. As you said, you
Speaker 1: mentioned three trillion dollars worth of holdings outside of Japan,
Speaker 1: about a trillion of that so or at least a
Speaker 1: third of that as in US treasuries, and surely some
Speaker 1: of that will move back to Japan at a time
Speaker 1: when the Federal Reserve is also changing its relationship with
Speaker 1: the bond market. So how do US investors react? I
Speaker 1: think the U S investors will be very cautious about
Speaker 1: the idea that there could be outflows from Japanese investors,
Speaker 1: which we've already seen the most of this year, but
Speaker 1: as well as a slight shift in the yield differentials,
Speaker 1: hedging costs is still very high as well for those
Speaker 1: Japanese investors taking on exchange rate risks that they probably
Speaker 1: don't want to do that, and so they may continue
Speaker 1: to repatricate funds, the alternative being to lay on extra
Speaker 1: effect hedges and to hold onto those securities. So it
Speaker 1: could be that there's more outflows, which means it could
Speaker 1: be that these extra pressure to the downside on US government.
Speaker 1: They're higher borrowing costs, which could make it a little
Speaker 1: bit more painful for the U S Treasury as it
Speaker 1: seems to refinance that over becoming year. Yeah, the currency
Speaker 1: are going to be fascinating to watch as well. The
Speaker 1: other thing to remember is that the global pile of
Speaker 1: bonds now at sub zero yields. It's under seven hundred
Speaker 1: billion dollars, which sounds like a lot, but the peak
Speaker 1: two years ago was eighteen point four trillion dollars worth.
Speaker 1: I mean, I know these are all sort of just numbers, right,
Speaker 1: but it makes a big difference at the same time. Yeah,
Speaker 1: this is my favorite a conversation Bunny Um. You know. Finally,
Speaker 1: fixed income as a's offering a posit of return wherever
Speaker 1: you are in the world, and that's a really big
Speaker 1: difference to what we've seen over the past ten years.
Speaker 1: So in general, it's going to make bonds a more
Speaker 1: viable perspect for long term investors. It's going to make
Speaker 1: people more confident wherever they are in the world that
Speaker 1: they can have decent earnings on their bonds, on their
Speaker 1: fixed income failure. So after the pretty huge losses that
Speaker 1: we've seen this year, it should writen the outlook for
Speaker 1: in general into three. How will that be seen in
Speaker 1: the market, pol I mean, it seems like we've had
Speaker 1: correlations that have been extraordinarily odd for many years. Now
Speaker 1: that moms are actually you know, returning positive returns, will
Speaker 1: we see those correlations change. Yeah. I think there's something
Speaker 1: people really need to watch very carefully next year. This year, extraordinarily,
Speaker 1: we've seen stocks and bonds moving very closely together and
Speaker 1: are very to take correlation, which is terrible if you
Speaker 1: know you're a sixty for the investor, as terrible as
Speaker 1: you're long only investor. It's terrible if your pension funds
Speaker 1: and have your money trailed up in stocks and bonds
Speaker 1: because you get no shelter. Their stocks sell off because
Speaker 1: bonds are selling off at the same time. So it
Speaker 1: would be really interesting to see whether that relationship breaks
Speaker 1: and tracement the next year or whether it holds. There's
Speaker 1: a big argument in a higher inflation universe, the correlation
Speaker 1: between stocks and bonds stage positive. On the other hand,
Speaker 1: we're very used to risk on risk off stocks to
Speaker 1: go up, bonds go down, and the other way around
Speaker 1: as well. So we'll see whether that re establishes itself
Speaker 1: as the keys reading the pabtern as we move through
Speaker 1: next year. Pulled Ups, an executive editor for Asia Markets,
Speaker 1: based in Singapore. Stay tuned. Wrapping up the year in
Speaker 1: politics next with Jonathan Bernstein. This is Bloomberg Opinion. You're
Speaker 1: listening to Bloomberg Opinion. I'm Vonnie Quinn as this Congress
Speaker 1: wraps up and we have a small respite before campaigning begins.
Speaker 1: In earnest, I spoke with Bloomberg Opinions Jonathan Bernstein about
Speaker 1: developments concerning former President Donald Trump and the scorecard for
Speaker 1: this Congress. So, Jonathan, the how Select Committee investigating the
Speaker 1: January sixth attack on the Capitol did formally recommend the
Speaker 1: DOJ that former President Donald Trump we criminally prosecuted now
Speaker 1: for violating for federal laws. Does this change anything? We
Speaker 1: sort of knew this was going to happen. Yeah, you know,
Speaker 1: it was expected. The fact that it happened couldn't make
Speaker 1: some difference. One of the jobs of the committee was
Speaker 1: to influence neutral journalists, mainstream journalists who are not partisan,
Speaker 1: who have a heavy tendency to want to say that
Speaker 1: both sides did whatever it is bad and just to
Speaker 1: underscore how extraordinary what happened been, that what Trump did
Speaker 1: in office really was something that no president has ever
Speaker 1: come close to doing before, even you know that it's
Speaker 1: much worse than what Richard Nixon, for example, would have
Speaker 1: been impeached and removed for if he hadn't resigned. I
Speaker 1: think that every piece of that matters. It also matters
Speaker 1: that the committee gathered a huge amount of information which
Speaker 1: now goes to the Justice Department and to the Special
Speaker 1: Prosecutor and makes their job a lot easier. So I
Speaker 1: do think that politically it would have been certainly a
Speaker 1: big deal if they had not recommended this, after all
Speaker 1: that they did and after everything we've heard. So the
Speaker 1: executive summary says that Trump, more than any other person,
Speaker 1: was responsible. Literally it literally says this with a violent mob.
Speaker 1: Does this take the air out of the bubble for Trump?
Speaker 1: For four for example, Who's going to come out and
Speaker 1: defend him. We haven't heard much yet. Yeah. I think
Speaker 1: we have heard House Republicans saying, well, the committee is
Speaker 1: not legitimate in the first place, which is not true.
Speaker 1: It's hard to tell going forward how all of Trump's
Speaker 1: legal liabilities will affect his chances of winning the nomination.
Speaker 1: There are a lot of Republicans at the voter level
Speaker 1: who like Donald Trump, and that's probably not going to change.
Speaker 1: What's not clear and has not been clear really from
Speaker 1: the get go. But certainly as we look at is
Speaker 1: how many of these people who like Donald Trump also
Speaker 1: will like other candidates and may find other candidates more appealing.
Speaker 1: And you know, it's hard to tell. There certainly are
Speaker 1: some Republicans who say, if you hit our candidate, that's
Speaker 1: the one that we will go to, no matter how
Speaker 1: legitimate the hit is, because we will assume it's not.
Speaker 1: But there probably are also Republicans who are saying, you know,
Speaker 1: this is somebody who lost the popular vote the first
Speaker 1: time around, barely want in the archtical college, who lost
Speaker 1: everything the second time around, whose candidates that he pushed
Speaker 1: lost in two and they may start thinking, maybe it's
Speaker 1: time for somebody different. How his legal situation fits into that,
Speaker 1: it's very hard to know until we actually get to
Speaker 1: the point where people voting, or we'll see what happens
Speaker 1: if he's indicted, if he comes to trial, there's a
Speaker 1: good chance he won't come to trial before the Iowa caucuses,
Speaker 1: which are only fourteen months away. Right exactly what would
Speaker 1: his defense look like? I mean, you mentioned one of
Speaker 1: the pillars there, which would be to discredit the committee itself.
Speaker 1: I presume there are the attacks on some of the
Speaker 1: star witnesses like Cassidy Hutchinson, who picks and so on,
Speaker 1: that there is in terms of a defense. You know,
Speaker 1: I think that on some of this stuff, the charges
Speaker 1: are unusual. And one of the disadvantages for Trump at
Speaker 1: this stage is he doesn't have a whole lot of
Speaker 1: experienced lawyers, and a lot of experienced lawyers don't want
Speaker 1: to work for him because he has a habit of
Speaker 1: incriminating his lawyers, or at least trying to. He also
Speaker 1: has a habit of not paying his lawyers. So how
Speaker 1: much quality legal helpful? Yet it's harder to tell. There's also,
Speaker 1: you know, he's under a lot of legal trouble the
Speaker 1: moral Ago documents case, which the Federalssial prosecutor is also handling.
Speaker 1: Both that and the January six stuff that seems more
Speaker 1: open and shot from what I can tell you know,
Speaker 1: again not a lawyer, but that's sort of a normal
Speaker 1: kind of prosecution that has been done many times and
Speaker 1: seems more straightforward than some of these more complex things
Speaker 1: where you know, are you figuring out how to charge
Speaker 1: the former president with trying to overturn an election? You know,
Speaker 1: there are specific statutes, there are prosecutions that have happened
Speaker 1: the past. But so he's got that, He's got his
Speaker 1: business in trouble in New York. He's got the Georgia
Speaker 1: State prosecution over interfering with the presidential election there. So
Speaker 1: he's got a lot of these things going on, which
Speaker 1: is a lot of pressure. The other problem for him,
Speaker 1: and we'll see how much the problem it is. The
Speaker 1: House Committee recommended prosecution for others, and if that's what happens,
Speaker 1: some of those people may want to cut deals which
Speaker 1: could also work out exactly and so, and there could
Speaker 1: be more people that were not covered by the House
Speaker 1: referrals the special prosecutor may go after. So we'll see
Speaker 1: about that also whether that makes Trump's position even more tenuous.
Speaker 1: Have any sense of how far the d J will
Speaker 1: go and trying to protect its credibility in terms of
Speaker 1: not wanting to be perceived as partisan, is that still
Speaker 1: an issue? You know, I think both the Attorney General
Speaker 1: and the president want things to be seen as not partisan.
Speaker 1: So part of what's important about the January six committee,
Speaker 1: to the extent that they established a public record, and
Speaker 1: even though you know, it was mostly Democrats and all
Speaker 1: Trump opponents were in the committee. The evidence is the
Speaker 1: evidence to a large extent that will make it easier
Speaker 1: for this departments act and having a special counsel brought
Speaker 1: in makes it easier to act without them worrying about
Speaker 1: that it seems partisan, you know at some point there's
Speaker 1: also the flip side of that, which is if you
Speaker 1: don't indicte someone when you have a strong case against
Speaker 1: them that everybody knows about, you know, that's not equal
Speaker 1: justice either. So to the extent that the goal of
Speaker 1: the committee was to make it seem like the only
Speaker 1: reason you would not invite him is because he was president. Jonathan,
Speaker 1: what do you make of the whole carry Lake case?
Speaker 1: What's going to happen there is stay. Judge has now
Speaker 1: said she can present evidence that electoral improprieties called her
Speaker 1: to lose the election for governor of Arizona, but she
Speaker 1: has to prove that was intentional misconduct. Side show. Yeah,
Speaker 1: I think so. And you know, the fascinating thing from
Speaker 1: elections is that most of the candidates, even the ones
Speaker 1: who campaigned on falsely claiming there was fraud, most of
Speaker 1: them accepted the results. Most of them acted like normal politicians.
Speaker 1: They congratulated the winner, they conceded the election. There are
Speaker 1: a few exceptions, with like being one of them. It
Speaker 1: was not that close an election. It was close, but
Speaker 1: it was not that close. Of course, there's nothing wrong
Speaker 1: with fighting for your rights in court. Candidates have always
Speaker 1: felt that if there was something in very close elections,
Speaker 1: you go to court and you try to push where
Speaker 1: you can. So this is a little more than that,
Speaker 1: and it's already been certified, so it would be very
Speaker 1: unusual for her actually win in court. That's I would
Speaker 1: think extremely unlikely. It's hard to tell how deep rooted
Speaker 1: this election denial businesses. That's certainly a case where it
Speaker 1: does exist separate from the Trump example, Yes, separate forms
Speaker 1: of playing at electoral denial or what have you. Does
Speaker 1: a Congress that's finishing up now the legacy of a
Speaker 1: Jonathan will we see anything done by year end in
Speaker 1: terms of the Electoral Account Act or anything like that,
Speaker 1: and you know, just generally what will be the legacy
Speaker 1: of this Congress. The Elector Account Act is included in
Speaker 1: the omnibus bill, the big spending bill that they're doing
Speaker 1: at the end the Congress, that full spending for this
Speaker 1: phistical year it's been a very productive Congress because some
Speaker 1: extent unusually so. The first Congress during Barack Obama's presidency
Speaker 1: was also quite productive, but the one during Bill Clinton's
Speaker 1: first Congress, and of course Congress doesn't belong to the president,
Speaker 1: but just the shorthand. I hate using that shorthand, but
Speaker 1: certainly as a contrast to Donald Trump's first two years
Speaker 1: when that was a unified Republican government and a Congress,
Speaker 1: although they did pass a major tax cut bill, did
Speaker 1: very little else and it was probably most remembered for
Speaker 1: John McCain killing with his big thumbs down their attempt
Speaker 1: to do healthcare legislation, and then it ended with the
Speaker 1: government shutdown. At this point of that Congress, they had
Speaker 1: shut down the government and it stayed shutdown until Democrats
Speaker 1: took over the House of Representatives and quickly cut a
Speaker 1: deal with the still Republican Senate, and Trump went along.
Speaker 1: So I think that you know, you have a lot
Speaker 1: of important bills the past. It's not for me to
Speaker 1: say whether good bills or not. You had major spending
Speaker 1: to fight the pandemic, to boost the economy, which some
Speaker 1: people think is what gave us inflation. On some people
Speaker 1: saying that inflation was going to happen either way. So
Speaker 1: you can argue that all you want. We had the
Speaker 1: infrastructure Bill, we had gun legislation for the first time
Speaker 1: in a long time. There were just a lot of
Speaker 1: pieces of legislation tast and quite a few bipartisan pieces
Speaker 1: of legislation. There were some things which got done democratic
Speaker 1: votes only using reconciliation in the Senate, but there were
Speaker 1: a lot of things that passed by defeating a Republican filibuster,
Speaker 1: by peeling off ten or more Republicans, such as the
Speaker 1: legislation defending marriage rights, which just passed a few weeks
Speaker 1: ago in the Senate. So I think it's going to
Speaker 1: be looked at as a very productive Congress, and you know,
Speaker 1: for Democrats it was successful. There were a lot of
Speaker 1: democratic priorities that didn't get done, such as their entire
Speaker 1: voting rights agenda and attempts to codify Roe v Way.
Speaker 1: But there were a lot of democratic priorities that did
Speaker 1: get done, and Republicans in the Senate turned out to
Speaker 1: be willing to cut deals, although Republicans in the House
Speaker 1: were not. Well. We will have a chat with you
Speaker 1: early in the new year about priorities for the next Congress, because,
Speaker 1: believe it or not, it's changing over already January three
Speaker 1: and we'll see what whether we get a speaker on
Speaker 1: January three or not. Bloomer Opinions Jonathan Bernstein world Cup
Speaker 1: was riven with moral questions from years before played out.
Speaker 1: The matches themselves were pretty glorious. I think it's fair
Speaker 1: to say with surprise coming after surprise, but how to
Speaker 1: separate the moral questions surrounding the games from the sport
Speaker 1: itself was a recurring question. I asked Bloomberg Opinions Bobby
Speaker 1: Ghosh about the thorny questions plaguing many spectators talked to
Speaker 1: us about this World Cup. It definitely rewarded those who
Speaker 1: stuck with it, but it was very difficult to watch
Speaker 1: a lot of the games. And I'll have a niggling
Speaker 1: feeling about human rights, all the foreign workers that were
Speaker 1: exploited during the building of the stadiums and all of
Speaker 1: the protests that were going on in Iran at the
Speaker 1: same time. How should we feel about this World Cup?
Speaker 1: The two aspects to it, and one was what was
Speaker 1: taking place on the field of soccer. Probably the best
Speaker 1: World Cup of my lifetime and the drama, the Cinderella
Speaker 1: run of Morocco, the crashing of great expectations with the
Speaker 1: big European teams, and of course Leo Messi, the greatest
Speaker 1: player of all time, possibly finally getting his hands on
Speaker 1: the biggest price. That was all taking place on the
Speaker 1: green turf. Off the turf were bigger questions, political questions,
Speaker 1: questions of morals and ethics. This is the first time,
Speaker 1: I think, in a long long time, when these questions
Speaker 1: were asked in conjunction with probably the greatest show on Earth.
Speaker 1: These were not questions asked four years ago when the
Speaker 1: previous World Cup was held in Russia, another country with
Speaker 1: highly questionable human rights records, the country that at that
Speaker 1: time was occupying Crimea and parts of eastern Ukraine. These
Speaker 1: were not questioned, asked going way back in the World
Speaker 1: Cup history in eight when the World Cup was held
Speaker 1: in Argentina, then ruled by a military junta. I for one,
Speaker 1: welcome the questions being asked, even if it might appear
Speaker 1: to be hypocritical in the context of history. If going
Speaker 1: forward we always ask these questions in every World Cup,
Speaker 1: then I think so much the better. We shouldn't kid
Speaker 1: ourselves that sport can completely be divorced from the reality
Speaker 1: of the society around us. You mentioned Iran. That is
Speaker 1: the best definition of how sports and the political reality
Speaker 1: around it clash. In Iran, you have sports people who
Speaker 1: are being jailed, who are being tortured, who may face
Speaker 1: the death sentence because they have dared to express the
Speaker 1: political opinion. That was an extraordinary stance. Wasn't another part
Speaker 1: of Iran's football team. Yes it was, and to some
Speaker 1: degree it was forced on them by fans demanding a
Speaker 1: more lean forward posture by their sporting heroes. If the
Speaker 1: fans want their sporting heroes to speak up on important
Speaker 1: political topics of the day, then sporting authorities should let
Speaker 1: it happen. I think you mentioned that it was a
Speaker 1: little bit hypocritical, that perhaps we were asking these questions
Speaker 1: now when it comes to a Middle Eastern country and
Speaker 1: we haven't been asking them about other major countries. That's
Speaker 1: something we should think about, right, Yes, we should, and
Speaker 1: we should now going forward learn the lessons. Let's not
Speaker 1: be hypocritical the next time. Let's admit that it was hypocritical,
Speaker 1: but then let's resolve going forward to say hereafter whenever
Speaker 1: a major sporting event takes place in a country that
Speaker 1: has questionable human rights records, that mistreats its own people,
Speaker 1: we will step up and we will hold those countries
Speaker 1: to account, just as we have done with Cuttle. Should
Speaker 1: FIFA have done more? I know, FIFA is not a
Speaker 1: body that anybody really has all of that much respect for.
Speaker 1: At the same time they rule world soccer. There's not
Speaker 1: much you can do without the backing of FIFA. And
Speaker 1: if it didn't make any kind of a stance, well,
Speaker 1: FIFA has let itself down, let down the sport, let
Speaker 1: down the fans. As you say, this is not new.
Speaker 1: FIFA has always been this way, the IOC has always
Speaker 1: been this way. But you know what, sports stars, football players,
Speaker 1: soccer players themselves are now talking over FIFA's quite often
Speaker 1: and making themselves heard and more part of them. I say,
Speaker 1: if the institutions won't speak up, then we should embrace
Speaker 1: individuals who do it and welcome it and encourage it
Speaker 1: when it happens. And it was a phenomenal final, as
Speaker 1: you say, possibly the best match of our lifetimes. As
Speaker 1: a fan of of Leo Messi and as an Argentina
Speaker 1: partisan myself, this was the best possible result in best outcome,
Speaker 1: but you know what, it was an amazing final, and frankly,
Speaker 1: whoever had won it, I think I would have embraced
Speaker 1: that result. Is it okay to enjoy these matches, the
Speaker 1: camaraderie that we see between teams sometimes after one loses
Speaker 1: and one wins. I think it's perfectly okay to celebrate
Speaker 1: the sport as long as we are cognizant of what
Speaker 1: is happening around it. And this World Cup was the
Speaker 1: first time I think both of those things were happening simultaneously.
Speaker 1: Bloomberg Opinions, Bobby Gosh. That's it for this week. Don't
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