1 00:00:00,320 --> 00:00:04,160 Speaker 1: Who you put your trust in matters. Investors have put 2 00:00:04,200 --> 00:00:07,640 Speaker 1: their trust in independent registered investment advisors to the tune 3 00:00:07,640 --> 00:00:12,240 Speaker 1: of four trillion dollars. Why learn more and find your 4 00:00:12,240 --> 00:00:28,080 Speaker 1: independent advisor dot com. Welcome to the Bloomberg Surveillance Podcast. 5 00:00:28,480 --> 00:00:32,199 Speaker 1: I'm Tom Keene with David Gura. Daily we bring you 6 00:00:32,240 --> 00:00:37,280 Speaker 1: insight from the best in economics, finance, investment, and international relations. 7 00:00:37,680 --> 00:00:42,279 Speaker 1: Find Bloomberg Surveillance on iTunes, SoundCloud, Bloomberg dot com, and 8 00:00:42,360 --> 00:00:50,199 Speaker 1: of course, on the Bloomberg Carl Winberg, chief economist high 9 00:00:50,200 --> 00:00:53,239 Speaker 1: Frequency Economics and Jonathan Gold, chief US market strategist with 10 00:00:53,479 --> 00:00:56,320 Speaker 1: RBC Capital Markets. Both of them joined me. Now, great 11 00:00:56,320 --> 00:00:59,040 Speaker 1: to have you with us. Good morning, uh Johnathan, let 12 00:00:59,040 --> 00:01:01,120 Speaker 1: me start with you at this point in the game. 13 00:01:01,120 --> 00:01:02,920 Speaker 1: Are you're paying as much attention to polls here? Is 14 00:01:03,000 --> 00:01:06,240 Speaker 1: p s? Well, I mean in in in the very 15 00:01:06,319 --> 00:01:08,560 Speaker 1: in the very near term. The polls are really what's important. 16 00:01:08,560 --> 00:01:10,520 Speaker 1: If you look at the Vegas odds. Of Vegas odds 17 00:01:10,520 --> 00:01:13,480 Speaker 1: are that that Hillary is an eight percent chance of winning, 18 00:01:13,560 --> 00:01:15,640 Speaker 1: So the polls make it seem closer than it it 19 00:01:15,720 --> 00:01:19,600 Speaker 1: probably is, and those odds obviously move substantially after the 20 00:01:19,760 --> 00:01:22,960 Speaker 1: coming announcement. Over the weekend. Is this more uncertain than 21 00:01:23,000 --> 00:01:24,640 Speaker 1: you expected it would be? I wonder if over the 22 00:01:24,720 --> 00:01:26,759 Speaker 1: last week you have changed much in terms of your 23 00:01:26,800 --> 00:01:28,640 Speaker 1: your investment strategy and light of what we've seen in 24 00:01:28,680 --> 00:01:31,520 Speaker 1: the polls and light of the uncertainty. No. I mean 25 00:01:31,560 --> 00:01:33,560 Speaker 1: if if if you're investing with a with a three 26 00:01:33,600 --> 00:01:36,679 Speaker 1: week horizon, then this is important. If you're investing with 27 00:01:36,760 --> 00:01:39,800 Speaker 1: a one year horizon, UM, I'm not sure that that 28 00:01:39,920 --> 00:01:43,720 Speaker 1: much is um has ultimately as ultimately changing. What are 29 00:01:43,720 --> 00:01:47,040 Speaker 1: we looking at. We're looking at a relatively weak economy. 30 00:01:47,360 --> 00:01:50,480 Speaker 1: That's probably going to be the case under either either candidate. 31 00:01:50,720 --> 00:01:53,000 Speaker 1: We're also looking at environment where equities are returning a 32 00:01:53,040 --> 00:01:56,320 Speaker 1: boatload of capital back to shareholders, which makes them attractive. 33 00:01:56,360 --> 00:01:58,400 Speaker 1: And I think that that's the case. The tone of 34 00:01:58,400 --> 00:02:01,400 Speaker 1: what leads to market and the journals will be quite different, though, 35 00:02:01,520 --> 00:02:03,560 Speaker 1: depending on the candidates. Carl Wanberg, let me bring you 36 00:02:03,560 --> 00:02:05,960 Speaker 1: in here, Carl Weinberg, with with high frequency economics. How 37 00:02:05,960 --> 00:02:08,160 Speaker 1: have you forecasted this out and has it changed much 38 00:02:08,160 --> 00:02:10,000 Speaker 1: for you here in the last week or so? Well, 39 00:02:10,040 --> 00:02:12,720 Speaker 1: the last week, you know, we've been our baseline case 40 00:02:12,760 --> 00:02:14,840 Speaker 1: has been a Clinton victory, and the polls seemed to 41 00:02:14,840 --> 00:02:16,840 Speaker 1: support that, but of course we've all been through Brexit, 42 00:02:16,919 --> 00:02:18,960 Speaker 1: and we know that the polls can be wrong. So 43 00:02:19,000 --> 00:02:21,960 Speaker 1: we're all waiting till uh till Wednesday morning to know 44 00:02:21,960 --> 00:02:24,280 Speaker 1: a little bit more about what shape policy is going 45 00:02:24,320 --> 00:02:26,880 Speaker 1: to take. I suspect the market is doing pretty much 46 00:02:26,880 --> 00:02:28,520 Speaker 1: the same thing at this point. While there will be 47 00:02:28,560 --> 00:02:31,560 Speaker 1: some betting on the probability of this candidate or that 48 00:02:31,600 --> 00:02:33,800 Speaker 1: candidate winning, at the end of the day, we have 49 00:02:33,919 --> 00:02:35,800 Speaker 1: to first find out who the candidate is, and then 50 00:02:35,800 --> 00:02:38,320 Speaker 1: we also have to understand the shape of Congress before 51 00:02:38,320 --> 00:02:40,640 Speaker 1: an investor really knows what to do. You know, you 52 00:02:40,639 --> 00:02:46,320 Speaker 1: look at the Trump campaigns uh propensity toward protectionism, and 53 00:02:46,360 --> 00:02:48,760 Speaker 1: you think, well, that has implications for certain companies. You 54 00:02:48,760 --> 00:02:51,040 Speaker 1: look at the tax policies that both candidates. They have 55 00:02:51,080 --> 00:02:53,960 Speaker 1: different implications for different companies. So I think if you're 56 00:02:53,960 --> 00:02:56,760 Speaker 1: an investor right now, you really have to see how 57 00:02:56,760 --> 00:02:58,840 Speaker 1: are the companies you're looking at are going to be 58 00:02:58,880 --> 00:03:01,560 Speaker 1: affected by who ever wins and by whatever the shape 59 00:03:01,560 --> 00:03:03,600 Speaker 1: of Congress is, And we just don't know that. On 60 00:03:03,680 --> 00:03:06,000 Speaker 1: Monday morning, I'll ask both of you this question. Carl, 61 00:03:06,080 --> 00:03:08,280 Speaker 1: let me start with you. There is the tendency here 62 00:03:08,320 --> 00:03:10,600 Speaker 1: to draw the parallel to that breaks it vote. How 63 00:03:10,639 --> 00:03:13,000 Speaker 1: how lustrative is that? How illuminating is it to have 64 00:03:13,080 --> 00:03:15,519 Speaker 1: that parallel? Well, that's a really good question, and I 65 00:03:15,560 --> 00:03:17,560 Speaker 1: don't think anybody knows the answer. I mean, I wish 66 00:03:17,600 --> 00:03:20,600 Speaker 1: I knew why the Brexit polls were off by so much, 67 00:03:20,639 --> 00:03:22,560 Speaker 1: and I wish I knew why the Brexit vote went 68 00:03:22,600 --> 00:03:24,600 Speaker 1: the way that it did, which reveals my politics a 69 00:03:24,600 --> 00:03:27,480 Speaker 1: little bit. But to be honest with you, um, I 70 00:03:27,480 --> 00:03:30,040 Speaker 1: think polling is is not a science. It's an art, 71 00:03:30,400 --> 00:03:33,480 Speaker 1: and there's interpretation, there's polling techniques. There are a lot 72 00:03:33,480 --> 00:03:35,240 Speaker 1: of things can go wrong in a poll. So at 73 00:03:35,240 --> 00:03:36,800 Speaker 1: the end of the day, what matters is when the 74 00:03:36,880 --> 00:03:39,600 Speaker 1: votes are counted, how it all turns out, and also 75 00:03:39,920 --> 00:03:42,360 Speaker 1: whether there are any hanging chads or other things like 76 00:03:42,440 --> 00:03:45,040 Speaker 1: that that cloud the election result. You know, the worst 77 00:03:45,040 --> 00:03:47,120 Speaker 1: possible outcome of all of this is we get to 78 00:03:47,160 --> 00:03:48,920 Speaker 1: Wednesday and we don't have an answer, and we get 79 00:03:48,960 --> 00:03:50,840 Speaker 1: to Thursday and we don't have an answer, and we 80 00:03:50,880 --> 00:03:53,640 Speaker 1: have a protracted dispute over what the result actually is. 81 00:03:53,880 --> 00:03:56,280 Speaker 1: That's a possible outcome to that's not part of any 82 00:03:56,280 --> 00:03:58,480 Speaker 1: of the polls. And if that's the way it goes. 83 00:03:58,520 --> 00:04:01,160 Speaker 1: That will be very disruptive for the economy. Jonathan, how 84 00:04:01,200 --> 00:04:03,520 Speaker 1: but from a market perspective, how useful is it to 85 00:04:03,520 --> 00:04:06,360 Speaker 1: look back on that prexit vhone? Well, I think there 86 00:04:06,400 --> 00:04:09,560 Speaker 1: was one lesson, which is when you have a populist election, UM, 87 00:04:09,880 --> 00:04:14,960 Speaker 1: the enthusiasm for populist leaders UM can't be underestimated. So 88 00:04:15,240 --> 00:04:17,159 Speaker 1: you know, I'm not you know, we we could in 89 00:04:17,240 --> 00:04:21,200 Speaker 1: fact be surprised. And that's why the odds of of 90 00:04:21,200 --> 00:04:23,600 Speaker 1: of a of a Trump win are probably greater than 91 00:04:23,640 --> 00:04:26,839 Speaker 1: the the electoral map would tell you, UM that they 92 00:04:26,880 --> 00:04:29,200 Speaker 1: should be. But I do agree with the point that 93 00:04:29,279 --> 00:04:32,240 Speaker 1: Carl was making, which is, Um, what we really want 94 00:04:32,279 --> 00:04:34,560 Speaker 1: here is a landslide one way or another, so that 95 00:04:34,600 --> 00:04:37,320 Speaker 1: we we have a clean break from all of this 96 00:04:37,440 --> 00:04:40,000 Speaker 1: horrible rhetoric that we've been engaged in for so long, 97 00:04:40,440 --> 00:04:42,880 Speaker 1: and something which allows us to move beyond this in 98 00:04:42,920 --> 00:04:46,760 Speaker 1: a much more constructive way. And I don't think that 99 00:04:46,760 --> 00:04:49,760 Speaker 1: that's what we're going to get after election night. John 100 00:04:49,760 --> 00:04:53,239 Speaker 1: Galliber this RBC Capital Markets and Carl Ainberg, Good morning everyone, 101 00:04:53,560 --> 00:04:57,240 Speaker 1: David Greg Vllier Publishers. Moments ago, he calls the Senate 102 00:04:57,279 --> 00:05:02,800 Speaker 1: a coin toss, probably not determin and until early Wednesday 103 00:05:02,839 --> 00:05:05,520 Speaker 1: morning somehow I think David Girl will be up there. 104 00:05:05,839 --> 00:05:08,599 Speaker 1: I don't know what you'll be doing, David, but early 105 00:05:11,520 --> 00:05:14,240 Speaker 1: on the Senate, Greg, he'll be with us tomorrow. Looking 106 00:05:14,279 --> 00:05:17,240 Speaker 1: forward to that as well, Carl. The backdrop here, as 107 00:05:17,279 --> 00:05:22,560 Speaker 1: we've been talking to the morning is UH a wall 108 00:05:22,720 --> 00:05:26,159 Speaker 1: of economic data and the back and forth linked in 109 00:05:26,160 --> 00:05:29,000 Speaker 1: to politics. And the politics is not only this election, 110 00:05:29,440 --> 00:05:33,120 Speaker 1: it's the Italian election coming up, the French election coming up, 111 00:05:33,160 --> 00:05:38,200 Speaker 1: and on and on. It's populism, UH, pushed up against 112 00:05:38,279 --> 00:05:40,880 Speaker 1: the elites is essentially what we've got. How will that 113 00:05:40,920 --> 00:05:43,800 Speaker 1: play out in America? Gosh, you know, I wish I knew. 114 00:05:43,839 --> 00:05:46,560 Speaker 1: It's a question that I'm pondering from a personal point 115 00:05:46,600 --> 00:05:48,640 Speaker 1: of view. You know, have we gotten to the point 116 00:05:48,680 --> 00:05:52,800 Speaker 1: in this country where emotion overtakes facts and where you know, 117 00:05:52,839 --> 00:05:55,080 Speaker 1: you go through a whole presidential campaign and there's a 118 00:05:55,279 --> 00:05:59,200 Speaker 1: distinct shortage of, first of all, any facts and secondly 119 00:05:59,760 --> 00:06:02,960 Speaker 1: at gear at facts on both sides, um and we 120 00:06:03,040 --> 00:06:06,600 Speaker 1: get we're deciding a presidency, you know, without discussing important issues. 121 00:06:06,920 --> 00:06:09,280 Speaker 1: You know, the growth rate of GDP. I haven't heard 122 00:06:09,320 --> 00:06:12,479 Speaker 1: that mentioned by either candidates specifically. You know, I've only 123 00:06:12,520 --> 00:06:15,520 Speaker 1: heard e G, GDP and the economy mentioned in emotional 124 00:06:15,640 --> 00:06:18,440 Speaker 1: terms and hard issues as we talked about on television 125 00:06:18,440 --> 00:06:23,480 Speaker 1: earlier this morning, like social security and funding, are changing population, 126 00:06:23,760 --> 00:06:26,560 Speaker 1: the relationship between generations. These are all the issues of 127 00:06:26,560 --> 00:06:29,320 Speaker 1: our times and they haven't been part of this conversation 128 00:06:29,360 --> 00:06:32,839 Speaker 1: at all. It's very disturbing to me. But as you say, Tom, worldwide, 129 00:06:32,839 --> 00:06:36,720 Speaker 1: this is what we're seeing time to hear. Yeah, I 130 00:06:36,800 --> 00:06:39,480 Speaker 1: mean I do think that that there there has been 131 00:06:39,520 --> 00:06:43,200 Speaker 1: a mention of GDP, but it hasn't been in serious terms. 132 00:06:43,279 --> 00:06:46,240 Speaker 1: I mean you've heard you've heard UM candidates talking about 133 00:06:46,480 --> 00:06:48,640 Speaker 1: you know, if I do the following things, we're gonna 134 00:06:48,640 --> 00:06:50,960 Speaker 1: get GDP back to four percent and five percent. And 135 00:06:51,000 --> 00:06:53,080 Speaker 1: those are just silly numbers. I mean. The reality is 136 00:06:53,080 --> 00:06:54,800 Speaker 1: is that there might be things that we can do 137 00:06:55,480 --> 00:06:58,080 Speaker 1: UM to to create economic efficiency, but we're but we 138 00:06:58,120 --> 00:07:01,400 Speaker 1: are in a soular growing world. There realities around that. Uh. 139 00:07:01,560 --> 00:07:04,160 Speaker 1: You know, Karl was mentioning on on TV this morning, 140 00:07:04,480 --> 00:07:06,880 Speaker 1: the fact that we're going to be facing um, you know, 141 00:07:07,200 --> 00:07:11,240 Speaker 1: real long term deficit related issues and retirement issues over 142 00:07:11,280 --> 00:07:13,520 Speaker 1: the next eight or ten years. So this presidency is 143 00:07:13,560 --> 00:07:15,720 Speaker 1: going to have to address those and they weren't even 144 00:07:15,760 --> 00:07:19,160 Speaker 1: part of the public debate. But I think the key 145 00:07:19,200 --> 00:07:22,160 Speaker 1: here is the reality of lower interest rates and lower 146 00:07:22,200 --> 00:07:25,560 Speaker 1: growth is something that investors, professional investors are focused on, 147 00:07:25,960 --> 00:07:27,640 Speaker 1: but it's not really part of the public debate yet. 148 00:07:27,680 --> 00:07:29,840 Speaker 1: I wonder if it goes back to the thoughts that 149 00:07:29,840 --> 00:07:32,120 Speaker 1: great Value was expressing and Tom was quoting from just 150 00:07:32,240 --> 00:07:35,720 Speaker 1: a moment ago, a recognition here that to do much 151 00:07:35,800 --> 00:07:39,120 Speaker 1: of anything you need the participation of the willing participation 152 00:07:39,160 --> 00:07:41,680 Speaker 1: of Congress, and at this point that still seems like 153 00:07:41,680 --> 00:07:44,440 Speaker 1: something will be difficult for the next present. Again, I 154 00:07:44,440 --> 00:07:46,720 Speaker 1: don't know. I mean, I'm I'm of the belief that 155 00:07:46,880 --> 00:07:50,679 Speaker 1: the whether or not fiscal um policy is the solution 156 00:07:50,720 --> 00:07:52,720 Speaker 1: to the problems that that, you know, the weakness we have. 157 00:07:53,200 --> 00:07:55,520 Speaker 1: I think that what you've heard is that the people 158 00:07:55,640 --> 00:07:59,680 Speaker 1: are dying for some alternative. And ultimately, why is it 159 00:07:59,720 --> 00:08:01,840 Speaker 1: that we're seeing so much political extremism on both the 160 00:08:01,920 --> 00:08:03,520 Speaker 1: right and left, not only in the US, but really 161 00:08:03,520 --> 00:08:05,800 Speaker 1: a talking about around the world. Is because when you 162 00:08:05,880 --> 00:08:09,960 Speaker 1: have weak economics um, people are willing to listen to 163 00:08:10,440 --> 00:08:14,120 Speaker 1: crazier and crazier things in order to um in order 164 00:08:14,120 --> 00:08:17,920 Speaker 1: to to get some type of a of of economic boosts. 165 00:08:17,920 --> 00:08:21,480 Speaker 1: So I think that'd be more interest in fiscal stimulus 166 00:08:21,440 --> 00:08:23,560 Speaker 1: and new ideas than than we've had in the past. 167 00:08:24,040 --> 00:08:26,240 Speaker 1: Carl agree with that. Yeah, I mean, I think Congress 168 00:08:26,320 --> 00:08:29,200 Speaker 1: is the key to everything. That what matters after this election, 169 00:08:29,400 --> 00:08:33,679 Speaker 1: whoever wins, is that Congress gets together, comes together and 170 00:08:33,760 --> 00:08:37,080 Speaker 1: does its job and its jobs. You actually believe that's 171 00:08:37,120 --> 00:08:39,960 Speaker 1: going to happen. Well, I hope it happens because what 172 00:08:40,000 --> 00:08:42,520 Speaker 1: we've seen over the last few years has been unacceptable. 173 00:08:42,920 --> 00:08:45,040 Speaker 1: And what we need to see moving forward to get 174 00:08:45,040 --> 00:08:47,560 Speaker 1: anything done is for what's probably going to be a 175 00:08:47,600 --> 00:08:51,040 Speaker 1: divided Congress Republicans in one house, Democrats in the other house, 176 00:08:51,200 --> 00:08:54,120 Speaker 1: and Congress has to do its thing proposing budgets that 177 00:08:54,160 --> 00:08:56,319 Speaker 1: makes sense, and the Senate has to and the Senate 178 00:08:56,320 --> 00:08:57,959 Speaker 1: has to the truth. No, you realize you're in a 179 00:08:58,040 --> 00:09:01,000 Speaker 1: room with David Gura, Tom Keen, John Tucker, and Michael 180 00:09:01,000 --> 00:09:05,600 Speaker 1: Barr and the level of cynicism in here is the 181 00:09:05,679 --> 00:09:10,560 Speaker 1: meters over. Well, let's consider what happens if that doesn't occur. Okay, 182 00:09:10,679 --> 00:09:13,600 Speaker 1: let's consider what happens if a contentious Congress comes back 183 00:09:13,640 --> 00:09:16,840 Speaker 1: that can't agree on anything, then we see neither trump 184 00:09:16,840 --> 00:09:20,080 Speaker 1: aomics nor clinton anomics, if there's such a word. Alright 185 00:09:20,360 --> 00:09:23,320 Speaker 1: occur Alright, we go into a vacuum on policy in 186 00:09:23,360 --> 00:09:25,960 Speaker 1: which none of the issues of our time are addressed. 187 00:09:26,080 --> 00:09:28,400 Speaker 1: And how does that make us better? How does that 188 00:09:28,440 --> 00:09:31,080 Speaker 1: make America great? And if you have a Congress that 189 00:09:31,160 --> 00:09:36,480 Speaker 1: won't approve appointments, whether Supreme Court or where the Treasury 190 00:09:36,520 --> 00:09:39,920 Speaker 1: secretary or garbage collector in Washington, d c. If Congress 191 00:09:40,040 --> 00:09:41,480 Speaker 1: can't get the other on that, then where do we go? 192 00:09:41,760 --> 00:09:44,680 Speaker 1: John Gallub with its RBC Capital Markets, Carl Weinberg high 193 00:09:44,679 --> 00:09:47,960 Speaker 1: frequency Economics, sort of looking at the the blur here 194 00:09:48,000 --> 00:09:51,440 Speaker 1: on a Monday before Tuesday, John Gallub, one of your 195 00:09:51,440 --> 00:09:57,120 Speaker 1: great themes is dividend growth, return of cash to shareholders, etcetera, etcetera. 196 00:09:57,240 --> 00:10:00,760 Speaker 1: How are those stocks valued as compared to they're foolish 197 00:10:00,800 --> 00:10:03,960 Speaker 1: times like the so called nifty fifty? Are we nifty 198 00:10:04,040 --> 00:10:07,920 Speaker 1: fifty valuations today? Well, first of all, the overall stock 199 00:10:07,960 --> 00:10:10,520 Speaker 1: market is is you know, not crazy at like sixteen 200 00:10:10,520 --> 00:10:14,840 Speaker 1: and a half pe. But the low vall stocks and 201 00:10:14,840 --> 00:10:16,440 Speaker 1: we're not even talk about the high dividend stocks, but 202 00:10:16,480 --> 00:10:20,319 Speaker 1: that low vall basket of stocks is trading very expensive, 203 00:10:20,320 --> 00:10:24,080 Speaker 1: and probably the most important thing, it's very interest rate sensitive. 204 00:10:24,200 --> 00:10:27,680 Speaker 1: So if we get inflation to continue to ride higher 205 00:10:27,720 --> 00:10:31,120 Speaker 1: and interest rates rise, that basket is really vulnerable. The 206 00:10:31,240 --> 00:10:34,280 Speaker 1: valuation itself is not a problem. It's the risk to 207 00:10:34,320 --> 00:10:37,360 Speaker 1: interest rate rises that on that basket that's most concerning. 208 00:10:37,520 --> 00:10:40,200 Speaker 1: So what is your interest rate call? Here? You looked 209 00:10:40,200 --> 00:10:42,120 Speaker 1: at with you and Tom were selling it together, and 210 00:10:42,480 --> 00:10:44,360 Speaker 1: you know what do you what's your call? Yeah? First 211 00:10:44,360 --> 00:10:46,480 Speaker 1: of all, as a starting point, my view is that 212 00:10:46,600 --> 00:10:49,640 Speaker 1: interest rates are going to be lower for longer. That said, 213 00:10:50,080 --> 00:10:52,840 Speaker 1: we are seeing a real pickup and inflation. We saw 214 00:10:52,880 --> 00:10:56,319 Speaker 1: this on Friday's job reports were inflation um wage inflation 215 00:10:56,360 --> 00:10:59,080 Speaker 1: is running two point eight percent, and with the four 216 00:10:59,160 --> 00:11:02,720 Speaker 1: point nine percent unemployment rate, which basically means full employment, 217 00:11:03,080 --> 00:11:05,880 Speaker 1: there's a risk that interest rates start to um pick 218 00:11:06,000 --> 00:11:09,000 Speaker 1: up more than people expect. Well, I think we're looking 219 00:11:09,040 --> 00:11:12,360 Speaker 1: at the acceleration of wages. It's unambiguous. Now we're looking 220 00:11:12,400 --> 00:11:15,800 Speaker 1: at labor market that's tight by pretty much any measure. Tom, 221 00:11:15,880 --> 00:11:17,760 Speaker 1: I know you were at the New York Economics Club 222 00:11:18,480 --> 00:11:20,520 Speaker 1: two weeks ago when Stan Fisher was there. He told 223 00:11:20,600 --> 00:11:23,880 Speaker 1: us a pretty straightforward terms, that the Fed season's job 224 00:11:24,000 --> 00:11:26,880 Speaker 1: is being done, which means we've reached full employment and 225 00:11:26,920 --> 00:11:30,360 Speaker 1: the inflation target. So what happens next is that the 226 00:11:30,360 --> 00:11:33,080 Speaker 1: economy gets too tight. Of history is any guide. We 227 00:11:33,200 --> 00:11:35,720 Speaker 1: run hotter than we want to be, we see wages accelerate, 228 00:11:36,000 --> 00:11:38,959 Speaker 1: and then that leads eventually to higher interest rates, probably 229 00:11:39,120 --> 00:11:41,959 Speaker 1: faster than the market expects, because that's just the way 230 00:11:41,960 --> 00:11:43,840 Speaker 1: it always works out the car. Where do you fall 231 00:11:43,880 --> 00:11:46,319 Speaker 1: on on the argument that Janet Yellen raised at the 232 00:11:46,559 --> 00:11:50,120 Speaker 1: Boston FED conference about running the economy hot hot a 233 00:11:50,160 --> 00:11:53,880 Speaker 1: smart idea? Well, it's an interesting idea, and if only 234 00:11:53,920 --> 00:11:56,240 Speaker 1: they could do if that would be great. But I 235 00:11:56,240 --> 00:11:58,920 Speaker 1: know you're gonna have Alan Greenspan on a little bit 236 00:11:59,160 --> 00:12:01,960 Speaker 1: later this morning on here on Bloomberg somewhere, and you know, 237 00:12:02,040 --> 00:12:04,560 Speaker 1: he's the guy who described monetary policy as being a 238 00:12:04,600 --> 00:12:07,720 Speaker 1: blunt edged instrument. And you know, can you really fine 239 00:12:07,760 --> 00:12:10,959 Speaker 1: tune the economy when you only have one weapon interest rates? 240 00:12:11,000 --> 00:12:13,840 Speaker 1: And And the thing is, it's more more likely that 241 00:12:13,880 --> 00:12:16,959 Speaker 1: they're gonna be unable to do that then, although their 242 00:12:16,960 --> 00:12:19,400 Speaker 1: intentions may be good. And let me ask you about 243 00:12:19,480 --> 00:12:21,280 Speaker 1: the GDP figures in your most recent note you have 244 00:12:21,600 --> 00:12:24,320 Speaker 1: a chart, a simple chart looking at GDP historically, and 245 00:12:24,360 --> 00:12:27,559 Speaker 1: the downward trend is striking, striking. The new averages is 246 00:12:27,600 --> 00:12:30,640 Speaker 1: striking as well. What should our takeaway be from from them? 247 00:12:31,080 --> 00:12:34,120 Speaker 1: I don't think we're in a new normal of low growth. 248 00:12:34,200 --> 00:12:37,040 Speaker 1: I think we were in an old abnormal. That the 249 00:12:37,280 --> 00:12:40,120 Speaker 1: fifty year period from the mid nineteen fifties all the 250 00:12:40,160 --> 00:12:42,000 Speaker 1: way up to oh six, where GDP was three and 251 00:12:42,000 --> 00:12:45,080 Speaker 1: a half, that is gone. It's not coming back. And 252 00:12:45,120 --> 00:12:49,000 Speaker 1: the reasons for it um women entering the labor force, UM, 253 00:12:49,280 --> 00:12:52,760 Speaker 1: huge pickup in housing activity on the back of Fannie 254 00:12:52,760 --> 00:12:55,400 Speaker 1: Mae and Freddie Mack and the like. Those jimmied up 255 00:12:55,440 --> 00:12:58,559 Speaker 1: the prior numbers, and so the head fake was the prior, 256 00:12:58,679 --> 00:13:01,319 Speaker 1: not the weakness now. So I think this is kind 257 00:13:01,320 --> 00:13:03,640 Speaker 1: of where we are, which is why the Fed can 258 00:13:03,679 --> 00:13:05,840 Speaker 1: do all they want to run this economy hot. We 259 00:13:05,880 --> 00:13:08,199 Speaker 1: can spend all we want on fiscal stimulus and we're 260 00:13:08,200 --> 00:13:10,000 Speaker 1: still going to probably be left with something close to 261 00:13:10,000 --> 00:13:12,120 Speaker 1: two percent g d P. And the reason they're principally 262 00:13:12,200 --> 00:13:18,360 Speaker 1: is demographics. Demographics is of the story. There's other smaller issues, uh, 263 00:13:18,440 --> 00:13:21,280 Speaker 1: you know, beating up on the banking sector, UM is 264 00:13:21,280 --> 00:13:23,600 Speaker 1: surely not a help. You need a healthy banking sector 265 00:13:23,960 --> 00:13:26,240 Speaker 1: to get growth. That's why we see weaker growth in Europe, 266 00:13:26,280 --> 00:13:30,480 Speaker 1: among other reasons, but demographics is the primary issue. Thank 267 00:13:30,520 --> 00:13:44,520 Speaker 1: you so much. We appreciate it. We're taking different tax 268 00:13:44,600 --> 00:13:47,400 Speaker 1: this morning. We're looking at markets and certainly a better 269 00:13:47,480 --> 00:13:52,160 Speaker 1: market off the FBI announcement and a surge stronger Mexican 270 00:13:52,280 --> 00:13:56,520 Speaker 1: Paso for those keeping score eighteen point six seven distant 271 00:13:57,200 --> 00:14:03,520 Speaker 1: from nineteen, distant from twin stronger Paso a lower statistic 272 00:14:03,640 --> 00:14:07,200 Speaker 1: eighteen point six eight right now, futures up twenty eight 273 00:14:07,240 --> 00:14:11,280 Speaker 1: down features up to nine in all the usual correlations, 274 00:14:11,840 --> 00:14:15,680 Speaker 1: there is well. One thing that is a mystery is 275 00:14:15,679 --> 00:14:19,920 Speaker 1: how our next commander in chief will command the Pentagon. 276 00:14:20,240 --> 00:14:24,200 Speaker 1: We have terrific perspective and it has been valued perspective 277 00:14:24,280 --> 00:14:30,240 Speaker 1: from James Travitas Tough University and before a selected few 278 00:14:30,320 --> 00:14:34,040 Speaker 1: years with the United States Navy. The admiral, of course, 279 00:14:35,240 --> 00:14:38,920 Speaker 1: very much associated with the United States representation with NATO 280 00:14:39,480 --> 00:14:43,560 Speaker 1: is well, admiral, good morning. Does a president affect the 281 00:14:43,680 --> 00:14:48,080 Speaker 1: spending of the Pentagon or is a Pentagon such its 282 00:14:48,120 --> 00:14:52,840 Speaker 1: own thing that there's the delusion the defense affects it 283 00:14:52,880 --> 00:14:55,520 Speaker 1: but it's really just keeps going, keeps going, keeps going 284 00:14:55,560 --> 00:14:59,200 Speaker 1: by itself. Well, terrific question, Tom, and you know, kind 285 00:14:59,200 --> 00:15:04,160 Speaker 1: of hearkens back to Eisenhower's warnings about the military industrial complex. 286 00:15:04,440 --> 00:15:06,680 Speaker 1: I think the answer is somewhere in the middle, which 287 00:15:06,760 --> 00:15:12,720 Speaker 1: is to say that probably sixty the Pentagon's budget is 288 00:15:12,720 --> 00:15:16,920 Speaker 1: baked in its personnel costs, it's long term contracts. That 289 00:15:17,040 --> 00:15:22,160 Speaker 1: remaining thirty, however, is discretionary within the Pentagon, and the 290 00:15:22,200 --> 00:15:26,080 Speaker 1: administration and the President have great influence over it. When 291 00:15:26,120 --> 00:15:30,000 Speaker 1: I look at the Pentagon and I look at the 292 00:15:30,040 --> 00:15:34,840 Speaker 1: influence that we will have, it comes down to weapons programs. 293 00:15:35,200 --> 00:15:40,680 Speaker 1: Would President Clinton be sharply different from President Obama? I 294 00:15:40,800 --> 00:15:46,200 Speaker 1: doubt it. I think that the Clinton national security team 295 00:15:46,200 --> 00:15:51,520 Speaker 1: will include people like Michelle Flournoy, Bill Burns, Nick Burns, 296 00:15:51,720 --> 00:15:57,160 Speaker 1: very broad area expertise on the security side. And I 297 00:15:57,280 --> 00:16:02,480 Speaker 1: expect probably small all incremental increases in the defense budget 298 00:16:02,640 --> 00:16:05,720 Speaker 1: under a President Clinton. And Mt. Frids, I want to 299 00:16:05,760 --> 00:16:08,360 Speaker 1: get get your take on on what General Marty Dempsey 300 00:16:08,360 --> 00:16:12,040 Speaker 1: has said about the role of retired military officials in 301 00:16:12,080 --> 00:16:15,160 Speaker 1: this election. So far, he's been critical of of of 302 00:16:15,200 --> 00:16:17,440 Speaker 1: them speaking out. He's been been critical of the candidates 303 00:16:17,480 --> 00:16:20,480 Speaker 1: holding up their endorsements. Does it put a bad taste 304 00:16:20,480 --> 00:16:22,840 Speaker 1: in your mouth? Are we seeing a change here when 305 00:16:22,880 --> 00:16:26,160 Speaker 1: we see politicians holding up lists of of of admirals 306 00:16:26,160 --> 00:16:29,360 Speaker 1: and generals who've endorsed them. I don't think so. Um. 307 00:16:29,440 --> 00:16:32,480 Speaker 1: I disagree with General Dempsey on this. I think that 308 00:16:33,120 --> 00:16:37,080 Speaker 1: it's perfectly fine for retired military to weigh in. I 309 00:16:37,120 --> 00:16:40,720 Speaker 1: think that their citizens. I think the public is perfectly 310 00:16:40,800 --> 00:16:44,480 Speaker 1: capable of understanding who's retired and who's not. We would 311 00:16:44,520 --> 00:16:46,920 Speaker 1: never want to see and we never will see active 312 00:16:47,000 --> 00:16:50,640 Speaker 1: duty soldiers, sailors, airmen weighing in. But I think it's 313 00:16:50,680 --> 00:16:54,800 Speaker 1: fine for retired And I'll give you two prominent examples 314 00:16:54,840 --> 00:16:56,880 Speaker 1: who are Chairman of the Joint chiefs of Staff. One 315 00:16:56,960 --> 00:17:00,640 Speaker 1: is Colin Powell, who's endorsed candidates and endorsed in this 316 00:17:00,720 --> 00:17:04,120 Speaker 1: election Secretary Clinton, for example, even though he's a Republican, 317 00:17:04,640 --> 00:17:07,280 Speaker 1: and prior to that, Admiral Bill Crout, chairman of the 318 00:17:07,320 --> 00:17:10,919 Speaker 1: Joint Chiefs of Staff, endorsed uh the first President Clinton. 319 00:17:11,080 --> 00:17:14,520 Speaker 1: So there's President. I don't think it's a threat to 320 00:17:14,560 --> 00:17:16,639 Speaker 1: the Republic and it does not leave a bad taste 321 00:17:16,720 --> 00:17:18,800 Speaker 1: in my mouth. Are you satisfied with the degree to 322 00:17:18,840 --> 00:17:21,800 Speaker 1: which the candidates have been talking about foreign policy during 323 00:17:21,800 --> 00:17:24,399 Speaker 1: this this election. I would say they've talked about it 324 00:17:24,440 --> 00:17:26,440 Speaker 1: a lot. I don't know how much, in what detail 325 00:17:27,080 --> 00:17:29,479 Speaker 1: if that's been satisfying. But how about you, what's your 326 00:17:29,480 --> 00:17:31,280 Speaker 1: sense of how they've been talking about it. I think, 327 00:17:31,359 --> 00:17:34,560 Speaker 1: like most Americans, I'd say the unfortunate character of this 328 00:17:34,640 --> 00:17:38,119 Speaker 1: election is that we spent seems to me about sixty 329 00:17:38,600 --> 00:17:43,080 Speaker 1: of the time on um ephemeral issues, UM kind of 330 00:17:43,080 --> 00:17:48,359 Speaker 1: the personalities of the candidates, sharp elbows, denigrating comments, and 331 00:17:48,440 --> 00:17:51,400 Speaker 1: only to my ear, about forty percent at the time 332 00:17:51,440 --> 00:17:55,080 Speaker 1: on the issues. And of that maybe on foreign policy. 333 00:17:55,160 --> 00:17:58,600 Speaker 1: So no, I don't think we've talked enough about foreign policy. Well, 334 00:17:58,280 --> 00:18:01,240 Speaker 1: I think we can all agree on that. Admiral the 335 00:18:01,400 --> 00:18:04,639 Speaker 1: morning after or I guess five days after or twenty 336 00:18:04,720 --> 00:18:09,520 Speaker 1: days after, certainly by January twenty whatever. A president is briefed. 337 00:18:10,080 --> 00:18:12,800 Speaker 1: How do guys like you, with all that brass in 338 00:18:12,840 --> 00:18:17,159 Speaker 1: your chest, how do you brief a president either experience 339 00:18:17,240 --> 00:18:20,399 Speaker 1: like Secretary Clinton or someone new at the job like 340 00:18:20,520 --> 00:18:25,200 Speaker 1: President Trump. I think the active duty admirals and generals 341 00:18:25,280 --> 00:18:30,520 Speaker 1: will be called over early and often. Tom frankly, because 342 00:18:30,560 --> 00:18:34,119 Speaker 1: I think the new president is going to be challenged 343 00:18:34,240 --> 00:18:39,359 Speaker 1: early and often, uh, starting from Moscow. So you you 344 00:18:39,480 --> 00:18:42,439 Speaker 1: take into account the president's level of experience and expertise, 345 00:18:42,480 --> 00:18:45,840 Speaker 1: you adjust the briefings. Um, we are pretty good at this, 346 00:18:45,960 --> 00:18:48,760 Speaker 1: and we can deal with candidates who come into office 347 00:18:48,800 --> 00:18:53,000 Speaker 1: with vast knowledge and our veterans themselves, and we deal 348 00:18:53,040 --> 00:18:56,359 Speaker 1: with candidates who have zero experience. So we know how 349 00:18:56,400 --> 00:18:58,840 Speaker 1: to do this. I think back on the conference you 350 00:18:58,920 --> 00:19:00,720 Speaker 1: had at that tough just to couple weeks ago, our 351 00:19:00,760 --> 00:19:02,960 Speaker 1: colleague Michael McKee was there speaking to you. Then you've 352 00:19:02,960 --> 00:19:04,680 Speaker 1: written that the rest of Europe in the United States 353 00:19:04,680 --> 00:19:08,000 Speaker 1: needs to stand with Greece during this difficult period. President 354 00:19:08,040 --> 00:19:10,560 Speaker 1: Obama has announced one of his last trips abroad, if 355 00:19:10,600 --> 00:19:14,119 Speaker 1: not his last trip abroad as president, will be to Greece. 356 00:19:15,000 --> 00:19:17,680 Speaker 1: With with all of your experience and and knowledge of 357 00:19:17,840 --> 00:19:20,040 Speaker 1: that country. What do you hope that that he does there? 358 00:19:20,040 --> 00:19:22,400 Speaker 1: What do you hope that he says well? I think 359 00:19:22,440 --> 00:19:25,640 Speaker 1: hope is the key word. What what has really held 360 00:19:25,680 --> 00:19:29,280 Speaker 1: the Greeks back? In a psychological sense, Let's leave aside 361 00:19:29,320 --> 00:19:32,720 Speaker 1: the obvious challenges in the economy, but psychologically the people 362 00:19:32,760 --> 00:19:35,840 Speaker 1: feel very beaten down. They feel as though they're in 363 00:19:35,840 --> 00:19:38,320 Speaker 1: this kind of hot corner of Europe on the front 364 00:19:38,400 --> 00:19:41,879 Speaker 1: line to the Syrian War, got a restive Turkey across 365 00:19:41,960 --> 00:19:45,560 Speaker 1: the Aegean, and they feel as though the rest of 366 00:19:45,600 --> 00:19:48,560 Speaker 1: the West has kind of let them drift away a 367 00:19:48,600 --> 00:19:52,840 Speaker 1: little bit. So simply by coming to Athens and speaking 368 00:19:52,880 --> 00:19:56,159 Speaker 1: to the people, he'll energize the Greek people and I 369 00:19:56,440 --> 00:19:59,200 Speaker 1: over time, I'm a big believer that the human capital 370 00:19:59,200 --> 00:20:02,040 Speaker 1: in Greece is going to uh make that country succeed. 371 00:20:02,240 --> 00:20:04,240 Speaker 1: Does it need to be a speech that centers on 372 00:20:04,320 --> 00:20:07,520 Speaker 1: on economics? Are you hoping for for oratory that's bigger 373 00:20:07,560 --> 00:20:11,240 Speaker 1: than that? I think both. I think it does need 374 00:20:11,359 --> 00:20:15,840 Speaker 1: uh some economic underpinning, It needs some security commentary, given 375 00:20:16,040 --> 00:20:19,280 Speaker 1: how the Greeks are position geographically. But above all, I'd 376 00:20:19,280 --> 00:20:24,120 Speaker 1: like to see President Obama bring his admittedly extraordinary oratorical 377 00:20:24,160 --> 00:20:27,119 Speaker 1: skills to bear to inspire the people. Emerald back to 378 00:20:27,160 --> 00:20:30,919 Speaker 1: the new president. How staffed I'm easily say this as 379 00:20:30,920 --> 00:20:34,600 Speaker 1: an amateur. How staffed is our army? How staff does 380 00:20:34,600 --> 00:20:38,040 Speaker 1: our navy? Remember when we talked about aircraft carriers out 381 00:20:38,040 --> 00:20:42,639 Speaker 1: to sea with not enough personnel on board? Are we 382 00:20:42,720 --> 00:20:47,439 Speaker 1: properly budgeted now to run our military, I think we 383 00:20:47,600 --> 00:20:51,159 Speaker 1: have roughly the right amount of money coming into the 384 00:20:51,200 --> 00:20:54,480 Speaker 1: department Tom, but I would argue we need to reallocate 385 00:20:54,520 --> 00:20:58,399 Speaker 1: it somewhat. We probably need small and cremental increases, but 386 00:20:58,480 --> 00:21:01,800 Speaker 1: we need more money. In cyber defense we need more money. 387 00:21:01,800 --> 00:21:06,680 Speaker 1: And unmanned vehicles we need more money. And special forces. Um, 388 00:21:06,720 --> 00:21:12,840 Speaker 1: we need to do a renovation of our UH nuclear triad. 389 00:21:12,920 --> 00:21:15,080 Speaker 1: Those are the big ticket items where I think the 390 00:21:15,119 --> 00:21:18,920 Speaker 1: money needs to go. In terms of personnel, we're pretty strong, 391 00:21:19,440 --> 00:21:22,399 Speaker 1: but if the economy does pick up post election, that 392 00:21:22,520 --> 00:21:26,280 Speaker 1: competition for bright young men and women will hurt us 393 00:21:26,320 --> 00:21:29,440 Speaker 1: in that dimension. Okay, So to bring a full circle 394 00:21:29,480 --> 00:21:33,080 Speaker 1: back to our original question, finally, at must venus. If 395 00:21:33,080 --> 00:21:36,720 Speaker 1: that's the case, can a new president make those tough 396 00:21:36,840 --> 00:21:43,160 Speaker 1: old military decisions to budget Stevens's new military decisions? I 397 00:21:43,160 --> 00:21:47,680 Speaker 1: think Uh, she or he can, and it'll require both 398 00:21:47,880 --> 00:21:51,760 Speaker 1: firm will on the part of the president, also experience 399 00:21:51,800 --> 00:21:55,600 Speaker 1: in Washington to understand how the system works, and thirdly, 400 00:21:55,800 --> 00:21:58,639 Speaker 1: a good team of advisors around him or her and 401 00:21:58,720 --> 00:22:02,400 Speaker 1: Mrs Lastly, here, are you convinced that that can come 402 00:22:02,400 --> 00:22:04,120 Speaker 1: from the White House? That can come from the Pentagon. 403 00:22:04,160 --> 00:22:07,480 Speaker 1: In years past, we have seen Congress over rule Pentagon 404 00:22:07,640 --> 00:22:10,800 Speaker 1: budget requests. Do you think that's going to change UH? 405 00:22:10,920 --> 00:22:12,960 Speaker 1: In the end, I think we all know this. The 406 00:22:13,760 --> 00:22:16,440 Speaker 1: Congress has the final word on the budget. That's the 407 00:22:16,480 --> 00:22:20,320 Speaker 1: way our system is built. But um an administration can 408 00:22:20,400 --> 00:22:24,600 Speaker 1: influence that in a variety of ways, from UH making 409 00:22:24,680 --> 00:22:29,760 Speaker 1: the appropriate political accommodations quid pro quoes, to simply laying 410 00:22:29,760 --> 00:22:33,440 Speaker 1: out articulate cases to the Congress, to making the public case. 411 00:22:33,800 --> 00:22:35,520 Speaker 1: I think the new administration is going to need to 412 00:22:35,560 --> 00:22:38,000 Speaker 1: do all those things to get its budget through ed. Well, 413 00:22:38,040 --> 00:22:41,560 Speaker 1: thank you so much for your perspective over the length 414 00:22:41,560 --> 00:22:45,280 Speaker 1: of this election cycle. I'm sure we'll touch upon you 415 00:22:45,400 --> 00:22:48,080 Speaker 1: as we move into next year. James Tavitis is at 416 00:22:48,119 --> 00:22:51,800 Speaker 1: Fletcher School to University, and we should say that he 417 00:22:51,960 --> 00:22:54,919 Speaker 1: was vetted, I guess would be the right word. As 418 00:22:54,920 --> 00:22:57,840 Speaker 1: a vice presidential candidate for Secretary Clinton, We'll have to 419 00:22:57,920 --> 00:23:00,240 Speaker 1: We'll have to ask to feel it all wistful to 420 00:23:00,680 --> 00:23:05,600 Speaker 1: this campaign cycle, Maybe not think of somebody, but we 421 00:23:05,640 --> 00:23:14,600 Speaker 1: should say that. Just clear who you put your trust 422 00:23:14,640 --> 00:23:19,120 Speaker 1: in matters. Investors have put their trust in independent registered 423 00:23:19,160 --> 00:23:23,240 Speaker 1: investment advisors to the tune of four trillion dollars. Why 424 00:23:24,200 --> 00:23:27,840 Speaker 1: they see their role is to serve, not sell. That's 425 00:23:27,840 --> 00:23:30,240 Speaker 1: why Charles Schwab is committed to the success of over 426 00:23:30,320 --> 00:23:35,600 Speaker 1: seven thousand independent financial advisors who passionately dedicate themselves to 427 00:23:35,680 --> 00:23:39,800 Speaker 1: helping people achieve their financial goals. Learn more and find 428 00:23:39,840 --> 00:23:51,000 Speaker 1: your independent advisor dot com. David Gurry here with Tom 429 00:23:51,040 --> 00:23:54,200 Speaker 1: Keane on Bloomberg Surveillance. We've been talking all morning about 430 00:23:54,200 --> 00:23:56,440 Speaker 1: the degree to which policy has or has not been 431 00:23:56,480 --> 00:24:00,399 Speaker 1: discussed on the campaign trail during this election season. Focus 432 00:24:00,440 --> 00:24:04,080 Speaker 1: now shifts, so what happens after the election tomorrow? How 433 00:24:04,119 --> 00:24:06,520 Speaker 1: soon we'll see Washington get down to the business of 434 00:24:06,560 --> 00:24:09,640 Speaker 1: crafting policy. Dan Clifton is the head of policy research 435 00:24:09,680 --> 00:24:12,960 Speaker 1: at Fertigas Research Partner's head of the DC office for Fertigus, 436 00:24:12,960 --> 00:24:15,240 Speaker 1: and he joins its now morning, Dan, good break, Thanks 437 00:24:15,280 --> 00:24:18,040 Speaker 1: for having me on today. What happens here after the election? 438 00:24:18,080 --> 00:24:19,359 Speaker 1: What's what's going to be at the top of the 439 00:24:19,359 --> 00:24:22,680 Speaker 1: agenda for either a President Clinton or a President Trump. Yeah, 440 00:24:22,760 --> 00:24:24,840 Speaker 1: let me let me just slow down for one second 441 00:24:24,960 --> 00:24:27,639 Speaker 1: and say that once the election ends, we'll have a 442 00:24:27,720 --> 00:24:30,000 Speaker 1: lame duck session of Congress, and I think that will 443 00:24:30,000 --> 00:24:33,159 Speaker 1: be important for a new President Clinton or President Trump. 444 00:24:33,440 --> 00:24:38,400 Speaker 1: Will the Republicans actually put President obama Supreme Court pick 445 00:24:39,200 --> 00:24:42,920 Speaker 1: in UH into the Supreme Court before the new president 446 00:24:42,960 --> 00:24:45,919 Speaker 1: takes office. If the Democrats take over the Senate and 447 00:24:46,040 --> 00:24:49,200 Speaker 1: Hillary Clinton wins the election, they're threatening to put somebody 448 00:24:49,200 --> 00:24:51,600 Speaker 1: on there who's more left of center. So you may 449 00:24:51,640 --> 00:24:54,680 Speaker 1: see some sort of lane duck deal where we actually 450 00:24:54,720 --> 00:24:57,080 Speaker 1: do put the Supreme Court pick in early. And I 451 00:24:57,080 --> 00:25:00,280 Speaker 1: think that's critical for the next president because that is 452 00:25:00,320 --> 00:25:03,880 Speaker 1: something they won't have to waste their uh early political 453 00:25:03,920 --> 00:25:07,200 Speaker 1: capital on once they get into office. So what happens 454 00:25:07,200 --> 00:25:09,240 Speaker 1: in lame duck will be important. And the second thing 455 00:25:09,240 --> 00:25:11,840 Speaker 1: that I've watched is that we're continuing to hear that 456 00:25:11,880 --> 00:25:14,439 Speaker 1: maybe Paul Ryan will have trouble getting the votes for 457 00:25:14,480 --> 00:25:17,679 Speaker 1: Speaker of the House. That vote will happen before the 458 00:25:17,720 --> 00:25:20,360 Speaker 1: new president comes into office as well, could happen as 459 00:25:20,359 --> 00:25:23,280 Speaker 1: early as November December when they take those votes. So 460 00:25:23,359 --> 00:25:26,119 Speaker 1: who will run the Republican House will be critical. And 461 00:25:26,160 --> 00:25:28,960 Speaker 1: if the Republicans get into a lot of infighting before 462 00:25:28,960 --> 00:25:32,280 Speaker 1: a President Clinton takes office, UH, that could only complicate 463 00:25:32,320 --> 00:25:35,760 Speaker 1: their efforts in the new administration. Itself. Now, then I've 464 00:25:35,760 --> 00:25:38,359 Speaker 1: done all that to your new question, your question about 465 00:25:38,680 --> 00:25:42,239 Speaker 1: what what will happen with a with a Hillary Clinton president, say, 466 00:25:42,600 --> 00:25:45,119 Speaker 1: you know, I think what Hillary is suggesting is that 467 00:25:45,160 --> 00:25:47,440 Speaker 1: she's going to come in and she's going to try 468 00:25:47,480 --> 00:25:50,840 Speaker 1: and be bipartisan early in her administration. And the reason 469 00:25:50,880 --> 00:25:53,960 Speaker 1: for that that she really wants to get infrastructure spending 470 00:25:54,200 --> 00:25:55,919 Speaker 1: and she's gonna look to see if she can do 471 00:25:56,040 --> 00:25:58,760 Speaker 1: some sort of deal with the Senate and with a 472 00:25:58,800 --> 00:26:02,000 Speaker 1: Republican House that would enable her to get that spending. 473 00:26:02,240 --> 00:26:04,959 Speaker 1: The Republicans will obviously be asking for some sort of 474 00:26:04,960 --> 00:26:08,640 Speaker 1: corporate tax reform changes for that additional spending. There will 475 00:26:08,680 --> 00:26:12,760 Speaker 1: be problems both on Hillary's left and Paul Ryan's right, uh, 476 00:26:12,800 --> 00:26:15,240 Speaker 1: in terms of getting that deal done. But I think 477 00:26:15,280 --> 00:26:17,600 Speaker 1: that's going to really set the stage for the first 478 00:26:17,640 --> 00:26:20,280 Speaker 1: six seven months. And I would remind investors that we're 479 00:26:20,280 --> 00:26:22,480 Speaker 1: going to have to raise the debt ceiling sometime in 480 00:26:22,520 --> 00:26:25,320 Speaker 1: the summer. So doing it while you're handing out duties 481 00:26:25,320 --> 00:26:27,840 Speaker 1: like corporate tax rate cuts makes it a little bit easier. 482 00:26:28,240 --> 00:26:30,280 Speaker 1: But this is not going to be easy to to 483 00:26:30,320 --> 00:26:33,040 Speaker 1: do and divide a government. Where are we on government 484 00:26:33,200 --> 00:26:35,720 Speaker 1: shut down? I mean, one of our experts to and 485 00:26:35,880 --> 00:26:39,760 Speaker 1: calendars that don't count on it, but is it out there? 486 00:26:39,880 --> 00:26:43,960 Speaker 1: Is it something to consider? Sure? So tom our fiscal 487 00:26:44,040 --> 00:26:47,280 Speaker 1: year started on October one. That budget runs up on 488 00:26:47,359 --> 00:26:49,960 Speaker 1: December ninth, I believe is the date. So we're going 489 00:26:50,000 --> 00:26:51,879 Speaker 1: to have to pass a budget in the lame duck 490 00:26:51,960 --> 00:26:54,359 Speaker 1: session of Congress. Again, why we keep going back that 491 00:26:54,440 --> 00:26:56,280 Speaker 1: the lame duck period is going to be important. Now 492 00:26:56,320 --> 00:26:58,120 Speaker 1: I don't think that there will be a government shutdown, 493 00:26:58,200 --> 00:27:00,680 Speaker 1: but what the debate is, is you with three month 494 00:27:00,720 --> 00:27:03,720 Speaker 1: extension we did that when President Obama took office in 495 00:27:03,760 --> 00:27:06,120 Speaker 1: two thousand and eight, or do you do a full 496 00:27:06,160 --> 00:27:09,000 Speaker 1: budget in December? That's what we did when George W. 497 00:27:09,119 --> 00:27:11,399 Speaker 1: Bush came into office in two thousand one. And I 498 00:27:11,480 --> 00:27:13,879 Speaker 1: think that will be the parameters of the discussion in 499 00:27:13,920 --> 00:27:16,880 Speaker 1: the lame Dutch session of Congress. We're far more worried 500 00:27:17,000 --> 00:27:19,800 Speaker 1: about the debt ceiling in the summer of two thousand 501 00:27:19,840 --> 00:27:22,560 Speaker 1: and seventeen than we are about a potential government shutdown 502 00:27:22,560 --> 00:27:24,880 Speaker 1: because of what we saw in two thousand eleven. Now, 503 00:27:24,920 --> 00:27:26,920 Speaker 1: I tend to believe that it will get resolved, but 504 00:27:27,040 --> 00:27:28,840 Speaker 1: what we learned in two thousand eleven is that the 505 00:27:28,880 --> 00:27:31,320 Speaker 1: process could be just as important as the outcome. Are 506 00:27:31,320 --> 00:27:33,600 Speaker 1: you confident that Paul Ryan remains Speaker of the House. 507 00:27:34,840 --> 00:27:37,200 Speaker 1: I would say that we give it a greater than 508 00:27:37,240 --> 00:27:40,960 Speaker 1: fifty probability. We just got a new letter this morning 509 00:27:40,960 --> 00:27:45,040 Speaker 1: of some moderates asking to delay when that vote will happen. Uh, 510 00:27:45,080 --> 00:27:47,320 Speaker 1: that's never a good sign that you have the votes 511 00:27:47,800 --> 00:27:50,159 Speaker 1: to do that if you're looking to delay. But let 512 00:27:50,240 --> 00:27:52,320 Speaker 1: me tell you what I think is very important in 513 00:27:52,320 --> 00:27:54,800 Speaker 1: the data this morning, that it's completely under reported and 514 00:27:55,119 --> 00:27:58,000 Speaker 1: being overshadowed by the coming data, is that the map, 515 00:27:58,160 --> 00:28:02,040 Speaker 1: the best macro indicator for House seats, is now indicating 516 00:28:02,080 --> 00:28:05,359 Speaker 1: that the Republicans are just going to lose two Republican 517 00:28:05,400 --> 00:28:07,879 Speaker 1: House seats. Now, the number may be a little bit higher, 518 00:28:08,000 --> 00:28:10,800 Speaker 1: but three weeks ago that number was flashing fifteen to 519 00:28:10,920 --> 00:28:15,119 Speaker 1: eighteen seats. If the Republicans only lose two or five 520 00:28:15,240 --> 00:28:18,480 Speaker 1: or seven seats in the House, that will really strengthen 521 00:28:18,520 --> 00:28:22,040 Speaker 1: Paul Ryan for two reasons. First, they'll have a larger majority, 522 00:28:22,119 --> 00:28:24,120 Speaker 1: so that gives this wiggle room to win the votes. 523 00:28:24,520 --> 00:28:27,520 Speaker 1: And too, he does much better than expect it where 524 00:28:27,520 --> 00:28:30,000 Speaker 1: he was supposed to lose at least fifteen seats that 525 00:28:30,040 --> 00:28:32,439 Speaker 1: would really strengthen his hands. So the outcome of the 526 00:28:32,440 --> 00:28:35,840 Speaker 1: House races will really determine the strength of Paul Ryan. 527 00:28:36,080 --> 00:28:38,040 Speaker 1: But my sense today is that he will he will 528 00:28:38,080 --> 00:28:40,200 Speaker 1: be a House speaker, and if not, he's gonna go 529 00:28:40,240 --> 00:28:43,160 Speaker 1: watch Packer games with his kids on Sunday afternoon and 530 00:28:43,440 --> 00:28:49,160 Speaker 1: probably leave Congress. What Senate race are you following closely? Missouri? Uh, 531 00:28:49,280 --> 00:28:53,400 Speaker 1: we think Missouri is very important. Republican Roy Blunt is underperforming. 532 00:28:53,720 --> 00:28:56,040 Speaker 1: Nevada is going to be very interesting. Tom. You probably 533 00:28:56,080 --> 00:28:58,680 Speaker 1: saw the news over the weekend that early voting has 534 00:28:58,720 --> 00:29:02,320 Speaker 1: been very strong Clinton in Nevada. That could affect the 535 00:29:02,320 --> 00:29:04,840 Speaker 1: Senate race, and the Republicans were looking in the polls 536 00:29:05,120 --> 00:29:06,880 Speaker 1: to be holding that race. So that's going to be 537 00:29:06,880 --> 00:29:10,120 Speaker 1: another import one. But Indiana, which heavan by had a 538 00:29:10,280 --> 00:29:14,400 Speaker 1: fifteen point lead, he's now flipped where the Republican is 539 00:29:14,440 --> 00:29:16,280 Speaker 1: now in the lead. And I which I would note 540 00:29:16,360 --> 00:29:20,280 Speaker 1: that Nate Silver flipped the Senate today for the Republicans 541 00:29:20,320 --> 00:29:23,240 Speaker 1: in his model. So you're really seeing these down ballot 542 00:29:23,320 --> 00:29:25,840 Speaker 1: races both of the Senate and House have moved towards 543 00:29:25,880 --> 00:29:28,760 Speaker 1: the Republicans as the racist tightened up. Trump may not win, 544 00:29:28,960 --> 00:29:31,080 Speaker 1: but the impact of this has been to strengthen up 545 00:29:31,120 --> 00:29:35,440 Speaker 1: the House and Senate seats. Were with Strategous Research Partners, 546 00:29:35,520 --> 00:29:37,920 Speaker 1: David Garrol, Why did you climb on board Dan Clifton 547 00:29:38,040 --> 00:29:41,120 Speaker 1: here and and see what he's thinking? Dan? You you 548 00:29:41,280 --> 00:29:43,680 Speaker 1: laid out a big agenda here for Congress in the 549 00:29:43,760 --> 00:29:47,239 Speaker 1: lame duck session. You didn't mention the Trans Pacific Partnership 550 00:29:47,280 --> 00:29:50,040 Speaker 1: are Michael McKie spoke with Ambassador Michael Frohman last week 551 00:29:50,520 --> 00:29:52,560 Speaker 1: and there's still a lot of bright eyed optimism of 552 00:29:52,680 --> 00:29:55,000 Speaker 1: the U. S. Trade representative, despite the fact that the 553 00:29:55,000 --> 00:29:57,240 Speaker 1: odds seems stacked against him. What do you think is 554 00:29:57,240 --> 00:29:59,040 Speaker 1: this gonna get an upper down vote before President Obama 555 00:29:59,120 --> 00:30:03,000 Speaker 1: leaves office? You know, politics is dynamic, right, So it's 556 00:30:03,040 --> 00:30:04,720 Speaker 1: one thing to say no, we're not going to vote 557 00:30:04,760 --> 00:30:06,920 Speaker 1: on the Supreme Court pick, We're not going to vote 558 00:30:06,920 --> 00:30:08,560 Speaker 1: on t p P, and then you have an election 559 00:30:08,600 --> 00:30:10,680 Speaker 1: and then you say, okay, what are we really going 560 00:30:10,760 --> 00:30:13,360 Speaker 1: to do now? And I think a Supreme Court pick 561 00:30:13,480 --> 00:30:15,560 Speaker 1: is more likely to be voted on than the t 562 00:30:15,760 --> 00:30:18,520 Speaker 1: p P. And and before there was a Donald Trump 563 00:30:18,640 --> 00:30:22,560 Speaker 1: or a Bernie Sanders with their populist message. This t 564 00:30:22,760 --> 00:30:25,960 Speaker 1: p P was already losing votes, and that's because there's 565 00:30:26,000 --> 00:30:28,840 Speaker 1: some problems there with tobacco, so you lose the North 566 00:30:28,880 --> 00:30:33,239 Speaker 1: Carolina and Kentucky centers. There's some issues with pharmaceuticals, and 567 00:30:33,280 --> 00:30:36,040 Speaker 1: so you really never had a good strong two hundred 568 00:30:36,080 --> 00:30:39,400 Speaker 1: and eighteen. Those issues would have been worked out, probably, 569 00:30:39,680 --> 00:30:42,080 Speaker 1: but then you throw on the populism of this campaign. 570 00:30:42,160 --> 00:30:44,680 Speaker 1: And I would argue there are more Republicans that are 571 00:30:44,720 --> 00:30:47,440 Speaker 1: against TPP today than when the campaign started, and there 572 00:30:47,440 --> 00:30:50,120 Speaker 1: are more Democrats against t p P than when the 573 00:30:50,160 --> 00:30:54,040 Speaker 1: campaign started. So it's still a very difficult vote in 574 00:30:54,080 --> 00:30:56,680 Speaker 1: the House of Representatives, and I would argue that it 575 00:30:56,760 --> 00:30:59,280 Speaker 1: might not get done in the lame duck session of Congress. 576 00:30:59,320 --> 00:31:02,200 Speaker 1: That's important because you're going to start seeing our allies 577 00:31:02,280 --> 00:31:05,200 Speaker 1: moving away from the US and looking for other trade 578 00:31:05,240 --> 00:31:08,520 Speaker 1: opportunities without the TVP. Going into what is your measure 579 00:31:08,720 --> 00:31:13,880 Speaker 1: of grid luck? What is that gridlock? Meters say? So 580 00:31:14,160 --> 00:31:18,440 Speaker 1: I would argue Tom that passing bills is not a 581 00:31:18,480 --> 00:31:21,040 Speaker 1: good indicator of the productivity of Congress because you could 582 00:31:21,040 --> 00:31:23,560 Speaker 1: pass a lot of bad bills, right And I would 583 00:31:23,760 --> 00:31:27,480 Speaker 1: argue that gridlock is can you reasonably get your normal 584 00:31:27,520 --> 00:31:32,040 Speaker 1: business done, and could there be avenues for bipartisan cooperation 585 00:31:32,520 --> 00:31:34,560 Speaker 1: if there is an emergency. And I'll give you one example. 586 00:31:34,560 --> 00:31:36,640 Speaker 1: In two thousand two, we had a Democratic Senate, we 587 00:31:36,640 --> 00:31:39,760 Speaker 1: had a Republican House. We were still able to get Sarbians, 588 00:31:39,760 --> 00:31:41,800 Speaker 1: got Fley legislation done, we were still able to get 589 00:31:41,800 --> 00:31:44,480 Speaker 1: its department on the security Post nine eleven. There was 590 00:31:44,600 --> 00:31:47,040 Speaker 1: there was the ability to get things done. And what 591 00:31:47,160 --> 00:31:51,840 Speaker 1: I would really argue here is that we're underestimating what 592 00:31:51,920 --> 00:31:54,960 Speaker 1: it's like when a new president comes into office. Hillary 593 00:31:55,040 --> 00:31:59,360 Speaker 1: is very unpopular, her numbers are approval rating. She's been 594 00:31:59,400 --> 00:32:02,240 Speaker 1: there all year. But when she wins and the media 595 00:32:02,320 --> 00:32:05,239 Speaker 1: focuses on her, you're going to start to see her 596 00:32:05,320 --> 00:32:08,040 Speaker 1: numbers increase before she takes office and most of the 597 00:32:08,080 --> 00:32:10,760 Speaker 1: independent voters will start to rally around here. Okay, we 598 00:32:10,840 --> 00:32:13,000 Speaker 1: may not like the two candidates, but let's see what 599 00:32:13,040 --> 00:32:15,320 Speaker 1: they can do, and that gives her a little bit 600 00:32:15,400 --> 00:32:18,720 Speaker 1: of political capital get things done. I would also argue 601 00:32:19,000 --> 00:32:21,640 Speaker 1: the same is true if Donald Trump wins and a 602 00:32:21,680 --> 00:32:23,440 Speaker 1: lot of people are ruling out Trump today, but there's 603 00:32:23,480 --> 00:32:25,440 Speaker 1: still a chance for a surprise when he comes in. 604 00:32:26,000 --> 00:32:28,240 Speaker 1: And then the question is one, are you going to 605 00:32:28,400 --> 00:32:30,600 Speaker 1: be able to get somebody on the Supreme Court. There's 606 00:32:30,600 --> 00:32:33,240 Speaker 1: some talk about not putting anybody on the Supreme Court, 607 00:32:33,280 --> 00:32:36,120 Speaker 1: so being able to come to a resolution on the 608 00:32:36,160 --> 00:32:39,000 Speaker 1: Supreme Court on the debt ceiling. These are the required 609 00:32:39,040 --> 00:32:41,880 Speaker 1: things that we need to get done. The question for 610 00:32:41,920 --> 00:32:45,120 Speaker 1: investors is whether monetary policy is going to take It's 611 00:32:45,160 --> 00:32:48,000 Speaker 1: going to pass the baton to fiscal policy and see 612 00:32:48,000 --> 00:32:50,160 Speaker 1: if we can do something on fiscal policy. And that's 613 00:32:50,200 --> 00:32:52,520 Speaker 1: going to be a parder test to meet in Grid Lawn. Dan, 614 00:32:52,640 --> 00:32:56,040 Speaker 1: thank you so much. Dan Clifton was Fatiguaus Research Partners. 615 00:32:56,080 --> 00:33:12,280 Speaker 1: As we go to the election at tomorrow, ye, David 616 00:33:12,280 --> 00:33:15,440 Speaker 1: gerin Tom King, we're sort of slicing and dicing and 617 00:33:15,520 --> 00:33:18,880 Speaker 1: looking at what we have and what we have is 618 00:33:18,920 --> 00:33:24,000 Speaker 1: now important perspective. Alan Greenspan is the chairman, former chairman 619 00:33:24,040 --> 00:33:26,959 Speaker 1: of the Fellow Reserve System and on this day before 620 00:33:26,960 --> 00:33:31,560 Speaker 1: an election, Chairman Greenspan joins us good morning, sir, good morning. 621 00:33:32,480 --> 00:33:36,480 Speaker 1: I I look Alan Greenspan at the scope of history 622 00:33:36,640 --> 00:33:40,040 Speaker 1: and this new president that we will have, and many 623 00:33:40,120 --> 00:33:44,000 Speaker 1: people talk of a reaffirmation of the independence of the Fed. 624 00:33:44,720 --> 00:33:48,320 Speaker 1: You know, William McChesney Martin. You know what happened in 625 00:33:48,360 --> 00:33:52,080 Speaker 1: the early nineteen fifties is he battled with Harry Truman, 626 00:33:52,120 --> 00:33:56,520 Speaker 1: and Treasury battled with the FED and we found a 627 00:33:56,640 --> 00:34:01,640 Speaker 1: common ground after nineteen one? Will this FED move over 628 00:34:01,680 --> 00:34:05,000 Speaker 1: the next four in the next eight years with the 629 00:34:05,160 --> 00:34:11,200 Speaker 1: new renewed independence. I don't think there's anything new about independence. 630 00:34:11,320 --> 00:34:15,319 Speaker 1: Either have it or you don't. And as far as 631 00:34:15,360 --> 00:34:20,720 Speaker 1: I can see, at the stage, the FED has pretty 632 00:34:20,800 --> 00:34:25,520 Speaker 1: much restricted itself to being a central banker. Once it 633 00:34:25,640 --> 00:34:29,200 Speaker 1: starts to get into the whole issue of trying to 634 00:34:29,360 --> 00:34:33,560 Speaker 1: determine what its role in the society and in the 635 00:34:33,719 --> 00:34:38,480 Speaker 1: economy is, we're in trouble. I wonder the degree to 636 00:34:38,560 --> 00:34:41,799 Speaker 1: which the FED is paying attention to markets, degree which 637 00:34:41,840 --> 00:34:43,759 Speaker 1: it's paid attention to the markets when when you were 638 00:34:43,800 --> 00:34:46,160 Speaker 1: helming it and it is now, how where is it 639 00:34:46,200 --> 00:34:52,720 Speaker 1: of what's going on hundred and five percent all the time? 640 00:34:52,840 --> 00:34:55,359 Speaker 1: Or or or or what what? What what causes them 641 00:34:55,360 --> 00:35:01,040 Speaker 1: to pay particular attention it's you're going to well, let 642 00:35:01,080 --> 00:35:04,080 Speaker 1: me give you my usual pattern. I would go into 643 00:35:04,120 --> 00:35:06,799 Speaker 1: the board the first thing in the morning. The first 644 00:35:06,880 --> 00:35:09,600 Speaker 1: thing I would do is to see what the markets 645 00:35:09,600 --> 00:35:13,480 Speaker 1: were doing both in the United States and especially abroad 646 00:35:13,520 --> 00:35:16,799 Speaker 1: because obviously in Europe the markets have been open for 647 00:35:16,840 --> 00:35:22,320 Speaker 1: five hours longer, and try to judge what the consequences 648 00:35:22,320 --> 00:35:27,400 Speaker 1: are to the American economy and to the American financial system, 649 00:35:27,440 --> 00:35:31,120 Speaker 1: and what type of adjustment would be required, if at all, 650 00:35:31,360 --> 00:35:35,399 Speaker 1: And most of the time's nothing. Uh, So that what 651 00:35:35,520 --> 00:35:38,040 Speaker 1: we were, what we used to do, is to monitor 652 00:35:38,120 --> 00:35:45,440 Speaker 1: the markets very closely, would act very rarely hastily. Do 653 00:35:45,480 --> 00:35:47,600 Speaker 1: you think that that that kind of attention is being 654 00:35:47,600 --> 00:35:51,080 Speaker 1: paid today? And with the level of relative transparency we 655 00:35:51,160 --> 00:35:55,080 Speaker 1: have now, the news conferences, uh, the the occasional interviews, 656 00:35:55,120 --> 00:35:59,120 Speaker 1: the the ton of speeches we have from from FETE officials. Uh, 657 00:35:59,560 --> 00:36:03,480 Speaker 1: is some of that lost? Well? I don't think that 658 00:36:03,560 --> 00:36:08,760 Speaker 1: the issue of how much transparency you have is that critical. 659 00:36:09,040 --> 00:36:15,000 Speaker 1: It's what the content of the transparency is. Uh. Central 660 00:36:15,000 --> 00:36:20,239 Speaker 1: bankers are no better than an average good economist in 661 00:36:20,400 --> 00:36:25,279 Speaker 1: forecasting the economy. As a consequence of that, we are 662 00:36:25,480 --> 00:36:30,080 Speaker 1: limited in our projections of what policy is apt to 663 00:36:30,200 --> 00:36:35,160 Speaker 1: be by the limits of our knowledge. And in that context, 664 00:36:35,239 --> 00:36:38,920 Speaker 1: you try to convey as much as will be useful 665 00:36:39,000 --> 00:36:42,279 Speaker 1: to the economy, and where there is a long term 666 00:36:42,360 --> 00:36:46,799 Speaker 1: strategic position in place about where the FED is going 667 00:36:47,080 --> 00:36:50,960 Speaker 1: to just to reinforce that, Chairman, you know that language matters. 668 00:36:51,000 --> 00:36:53,200 Speaker 1: You did that with your Age of Turbulence. I think 669 00:36:53,200 --> 00:36:56,000 Speaker 1: Sebastian mail Vy capture the life and times of Alan 670 00:36:56,080 --> 00:36:59,160 Speaker 1: Greenspan quite nicely in his book. We just spoke with 671 00:36:59,200 --> 00:37:03,239 Speaker 1: Sebastian out the man who knew Alan Greenspan. What has 672 00:37:03,360 --> 00:37:07,839 Speaker 1: changed is the language we now have forward guidance, data, dependency, 673 00:37:07,920 --> 00:37:11,759 Speaker 1: and evidence. I know you don't speak about present monetary 674 00:37:11,880 --> 00:37:16,239 Speaker 1: policy of any central bank, but can you define for 675 00:37:16,480 --> 00:37:20,640 Speaker 1: us this new word evidence? What does evidence mean? To 676 00:37:20,719 --> 00:37:27,200 Speaker 1: Alan Greenspan? Evidence means the same thing that means in 677 00:37:27,239 --> 00:37:31,240 Speaker 1: a court fact and whether or not they are valid. 678 00:37:32,280 --> 00:37:34,560 Speaker 1: And that's as much as I can say on the 679 00:37:34,640 --> 00:37:38,520 Speaker 1: issue unless you want me to get it into detailed econometrics. Well, 680 00:37:38,560 --> 00:37:44,719 Speaker 1: the detailed econ econometrics is making forward guestimates and plugging 681 00:37:45,000 --> 00:37:50,479 Speaker 1: in beliefs forward and judging from that. Do we need 682 00:37:50,560 --> 00:37:53,960 Speaker 1: to move back to a more rules based set of 683 00:37:54,080 --> 00:37:59,359 Speaker 1: evidences or is discretion the better choice right now? Well? 684 00:37:59,760 --> 00:38:06,440 Speaker 1: I've argued over the years that we have to do discretion, 685 00:38:07,280 --> 00:38:13,560 Speaker 1: largely because any fixed paradigm doesn't seem to work very well. 686 00:38:14,160 --> 00:38:18,560 Speaker 1: You run into very difficult problems and the system breaks downs. 687 00:38:19,120 --> 00:38:22,879 Speaker 1: So you have no choice but to use the discretion 688 00:38:22,960 --> 00:38:26,520 Speaker 1: of the Federal Open Market Committee and its best judgment. 689 00:38:27,360 --> 00:38:30,400 Speaker 1: The one thing that I think is important is not 690 00:38:30,600 --> 00:38:36,640 Speaker 1: to communicate the markets seemingly more than you know, because 691 00:38:37,680 --> 00:38:40,000 Speaker 1: market will come up and bite you, so to speak. 692 00:38:40,560 --> 00:38:44,279 Speaker 1: So it's it's a very one thing I learned that 693 00:38:44,360 --> 00:38:48,759 Speaker 1: the Federal Service the years went on is that there's 694 00:38:48,800 --> 00:38:55,120 Speaker 1: an extraordinary amount of just playing analytical simple work of 695 00:38:55,400 --> 00:38:59,240 Speaker 1: judging how the economy is going. And the best central 696 00:38:59,280 --> 00:39:07,279 Speaker 1: banking is the best really determined by the best economic forecasting. 697 00:39:07,800 --> 00:39:11,800 Speaker 1: So I would say that central backing starts with the 698 00:39:11,840 --> 00:39:16,360 Speaker 1: economic forecasting, which essentially means how a global view of 699 00:39:16,360 --> 00:39:19,319 Speaker 1: how the system works and what it is likely to 700 00:39:19,400 --> 00:39:22,359 Speaker 1: do if the FED moves in one direction or the other. 701 00:39:23,360 --> 00:39:28,600 Speaker 1: And uh, once you've set that in place, you're basically 702 00:39:28,719 --> 00:39:33,360 Speaker 1: using your state of knowledge of forecasting to translate it 703 00:39:33,440 --> 00:39:38,560 Speaker 1: into monetary policy. A question here about about the institution 704 00:39:38,760 --> 00:39:42,920 Speaker 1: on the campaign trail. It's independence, it's integrity has been 705 00:39:42,920 --> 00:39:46,200 Speaker 1: called into doubt by at least one of the candidates. 706 00:39:46,960 --> 00:39:48,799 Speaker 1: Does the FED need to do more to stand up 707 00:39:48,800 --> 00:39:50,839 Speaker 1: for itself. In other words, is it at risk here 708 00:39:51,040 --> 00:39:53,960 Speaker 1: of losing control of the narrative if it's becoming a 709 00:39:53,960 --> 00:39:58,239 Speaker 1: political punching bag. Does that damage the institution? It does, 710 00:39:58,400 --> 00:40:02,399 Speaker 1: But it's not up to the Feed Reserve to cure that. 711 00:40:03,160 --> 00:40:08,799 Speaker 1: It's up to the general political system which put the 712 00:40:08,920 --> 00:40:13,480 Speaker 1: FED in place. Remember that the federal federals are governors, 713 00:40:13,600 --> 00:40:19,239 Speaker 1: were given fourteen year terms. Why to insult them from 714 00:40:19,360 --> 00:40:24,680 Speaker 1: short term political considerations. And the way the FED was 715 00:40:24,760 --> 00:40:29,600 Speaker 1: set up originally in nineteen thirteen and started in nineteen 716 00:40:29,680 --> 00:40:36,800 Speaker 1: fourteen was basically a series of things which tried to 717 00:40:36,840 --> 00:40:44,480 Speaker 1: blunt the relationship between monetary policy and and I would 718 00:40:44,480 --> 00:40:52,560 Speaker 1: just say four the other the average view of everybody. 719 00:40:52,560 --> 00:40:59,080 Speaker 1: In other words, the you can't take You cannot take 720 00:40:59,400 --> 00:41:05,160 Speaker 1: a survey the whole of the population to determine what 721 00:41:05,320 --> 00:41:09,160 Speaker 1: they would like to be uh the monetary policy. You 722 00:41:09,360 --> 00:41:15,200 Speaker 1: have to have expertise like you need expertise and economic forecasting. 723 00:41:15,600 --> 00:41:19,279 Speaker 1: There is no substitute for that. Alan Greenspan, thank you 724 00:41:19,320 --> 00:41:21,320 Speaker 1: so much, the former chairman of the Fuller Reserve. This 725 00:41:21,440 --> 00:41:24,520 Speaker 1: day before the nation votes, he comes to us from 726 00:41:24,520 --> 00:41:37,040 Speaker 1: our Washington studios Thanks for listening to the Bloomberg Surveillance podcast. 727 00:41:37,400 --> 00:41:42,520 Speaker 1: Subscribe and listen to interviews on iTunes, SoundCloud, or whichever 728 00:41:42,640 --> 00:41:47,080 Speaker 1: podcast platform you prefer. I'm out on Twitter at Tom Keene. 729 00:41:47,160 --> 00:41:50,960 Speaker 1: David Gura is at David Gura. Before the podcast, you 730 00:41:51,000 --> 00:42:00,400 Speaker 1: can always catch us worldwide. I'm Bloomberg Radio m HM. 731 00:42:07,080 --> 00:42:10,960 Speaker 1: Who you put your trust in matters. Investors have put 732 00:42:10,960 --> 00:42:14,359 Speaker 1: their trust in independent registered investment advisors to the tune 733 00:42:14,400 --> 00:42:19,000 Speaker 1: of four trillion dollars. Why learn more and find your 734 00:42:19,040 --> 00:42:23,000 Speaker 1: independent advisor dot com