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Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keen with

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Speaker 1: David Gura. Daily we bring you insight from the best

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Speaker 1: of economics, finance, investment, and international relations. Find Bloomberg Surveillance

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Speaker 1: on Apple Podcasts, SoundCloud, Bloomberg dot Com, and of course

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Speaker 1: on the Bloomberg. Earning season continues. Third quarter earning season continues.

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Speaker 1: Apple reporting later this week, and I think that's a

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Speaker 1: good place to start with our first guest, Chris Groissanti.

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Speaker 1: He's the founder and c of Grissanti Capital Management. He's

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Speaker 1: here with us in our Bloomberg and leven three oh studios.

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Speaker 1: It strikes me that we've got a tech and we've

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Speaker 1: got everything else. It seems like, in particular, let's look

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Speaker 1: ahead to Apple. I know you've been enthusiastic about Apple

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Speaker 1: in the past. What are you looking for this week

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Speaker 1: and how is this company doing in your estimation? So

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Speaker 1: so this week is really a bridge to uh the

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Speaker 1: fourth quarter, which uh we think will be this strong quarter. Uh.

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Speaker 1: You know, you're covering the quarter that didn't have the

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Speaker 1: new phone and that didn't have the new watch. So

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Speaker 1: what you're looking for is forward guidance. I think what

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Speaker 1: you're gonna get is very positive comments about the iPhone ten.

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Speaker 1: Uh and that sales. I I ordered my iPhone ten

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Speaker 1: on Friday, the first day and uh seven seven week wait,

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Speaker 1: although that means it will still get here in time

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Speaker 1: to be counted in the fourth quarter. And um, you know,

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Speaker 1: that's an eleven hundred dollar phone. And if you sell

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Speaker 1: a lot of eleven phones, which we think they will,

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Speaker 1: your gross margins are gonna go up a lot. So

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Speaker 1: we're excited about that. We don't think that's in the

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Speaker 1: numbers on the street, which has been optimistic, but we

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Speaker 1: think not optimistic enough. Are there other tech companies like

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Speaker 1: Apple that are appealing to you at this point? What

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Speaker 1: what sets Apple apart from the rest? Well, they're monopolistic.

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Speaker 1: Positioning phones is obviously terrific, and as I said to

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Speaker 1: Tom earlier, um, it's really a phone company that sells

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Speaker 1: other cool stuff like iPads and watches, but but it's

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Speaker 1: really a phone company. This is the best phone they've produced,

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Speaker 1: really since the six So we've got a new phone

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Speaker 1: cycle and it's the obviously the most expensive phone. So

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Speaker 1: we're looking for good things there. But in terms of

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Speaker 1: other companies, Oracle we think is a company that's a

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Speaker 1: lot like Microsoft, which reported terrific earnings last week, and

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Speaker 1: they're about two years behind in terms of moving its

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Speaker 1: software brains to the cloud rather than you know, a

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Speaker 1: package you order. And we think the same kind of

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Speaker 1: momentum that's propelled Microsoft to more than double over the

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Speaker 1: last two to three years will will be a breeze

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Speaker 1: behind the stock of Oracle. When you look at history

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Speaker 1: at this point, when you see the enthusiasm for tech

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Speaker 1: at this point, the valuations in tech, do do you

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Speaker 1: have the tendency to look back to the late nineties?

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Speaker 1: Do do you feel the need to and sort of

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Speaker 1: what lessons can we do? Yeah, I suddenly do so.

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Speaker 1: So there's two lessons. One is wow, things can get

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Speaker 1: expensive and then get you in trouble. But the other

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Speaker 1: lesson you learn is, wow, you shouldn't be in cash

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Speaker 1: the whole ride up because the valuation. Now we stay

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Speaker 1: away from you know, the Tesla's or the Netflix because

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Speaker 1: the valuations there are scary to us value guys. But

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Speaker 1: on the other hand, the Apples, the Oracles, even the

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Speaker 1: facebooks of the world have the real revenue growth that

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Speaker 1: you don't see as much at those other places. And

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Speaker 1: they also are able to bring it down to the

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Speaker 1: bottom line. So if we can see bottom line and

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Speaker 1: top line growth in the double digits, or god forbid,

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Speaker 1: in Facebook's case, in the in the in the range,

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Speaker 1: you know, we get some confidence that this has has

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Speaker 1: legs to it, and so we remained there. We're not

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Speaker 1: going to cash yet, but by ninety eight we were

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Speaker 1: in no technology at all. In the first year that

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Speaker 1: was terrible as you go from and then it really

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Speaker 1: was a terrific place not to be for the next

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Speaker 1: three years. Good morning everyone worldwide, coast to coast. Those

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Speaker 1: watching World Series Baseball late at night. Volmer comes in

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Speaker 1: so early he watches it. Then he literally comes in.

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Speaker 1: He doesn't even sleep when he comes in. I haven't

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Speaker 1: seen a minute of the excitement that we're getting a

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Speaker 1: beauty rest CHRISTMASTI Capital Management. Let's go to see if

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Speaker 1: a one oh one Christmas Santi General Mills is trading

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Speaker 1: at eighteen times earnings, Apple is trading at eighteen times earning.

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Speaker 1: Apple generates thirty one cents on the dollar at the

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Speaker 1: EBITA margin. General Mills does ten basis points under that

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Speaker 1: one cents on the dollar. Why are they traded at

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Speaker 1: the same same valuation. If Apple mints money, you know,

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Speaker 1: you know, that's the same question I asked my analysts.

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Speaker 1: The honest answer is because they always have. What other

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Speaker 1: folks will say is well, in the economy head south

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Speaker 1: that people will still buy cereal and maybe not. So

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Speaker 1: we're not going to buy a phone, right, Well, we

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Speaker 1: might not pay eleven hundred dollars for the high This

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Speaker 1: is this upsets me. This is a this is a

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Speaker 1: person acquiringly and this goes directly to the girl household

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Speaker 1: where both children will have Apple exs, so they go

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Speaker 1: to nursery school properly equipped. Here you tell me it's

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Speaker 1: eleven hundred bucks a phone, No, it's plus. People do

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Speaker 1: the monthly plan. Sure, they don't see eleven hundred bucks.

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Speaker 1: They see XX as an Apple a shareholder. Thank goodness. Right,

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Speaker 1: that's exactly right. And Verizon actually will or a T

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Speaker 1: and T will make some money off of financing that phone,

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Speaker 1: just as as car dealers off of leasing the cars.

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Speaker 1: That's absolutely right. But at the end, somebody's beaning eleven

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Speaker 1: for that phone. They may take them two years to

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Speaker 1: pay that money, but but Apple is getting it. It's

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Speaker 1: going to their bottom line, and life is good. For

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Speaker 1: an Apple shareholder, let me ask you about Disney as

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Speaker 1: we think about the device that can convey all of

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Speaker 1: the videos and the games and all of that. What's

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Speaker 1: appealing to you about Disney at this point? How hard

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Speaker 1: is it to ignore the deficits or the problems with

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Speaker 1: with the cable networks. Yeah, so clearly cable is a

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Speaker 1: shifting landscape, and anyone who tells you they have it

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Speaker 1: all figured out is just being naive everything. So, but

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Speaker 1: so what we gravitate towards is valuation plus at the

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Speaker 1: end of the day, something that's really valuable, And in

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Speaker 1: Disney's case, it's unparalleled count tent. So it's a movie

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Speaker 1: library going back almost a hundred years. Now it's ESPN

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Speaker 1: where you can't ESPN is the only cable channel where

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Speaker 1: you can't kind of watch it on demand because you

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Speaker 1: want to see the game now. So that's a terrific

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Speaker 1: piece of content. Now, how they deliver that content, how

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Speaker 1: they get paid for it, is up in the air

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Speaker 1: right now. So what we're doing is taking a bet

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Speaker 1: that Disney will figure it out, that that content will

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Speaker 1: have value regardless of the delivery mechanism. And Disney, which

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Speaker 1: is now selling at a ten year low in terms

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Speaker 1: of relative to an expensive market. It's still not a

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Speaker 1: terribly cheap stalking about sixteen times or anything, but relative

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Speaker 1: to Disney where it ought to trade in an expensive market,

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Speaker 1: it's attractive to us. So we see that as a

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Speaker 1: pretty good risk reward. So you were cheered by the

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Speaker 1: news that Disney is going to approach streaming on its own,

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Speaker 1: very cheered, and and and and it makes sense because

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Speaker 1: the only folks that can really do that are the

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Speaker 1: folks that I would say, wow, I gotta get ESPN. Disney,

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Speaker 1: tell me how you're going to do it, and I'll

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Speaker 1: go find it, And that that's an advantage over maybe

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Speaker 1: a via commerce CBS that does and have as attractive content.

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Speaker 1: When you look at the economy as a whole, what

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Speaker 1: are you most concerned about? We here waiting for this,

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Speaker 1: this announcement, who's going to be the next fed cheer?

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Speaker 1: But as a value investor, what are the macroeconomic for you?

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Speaker 1: You know, it's a tough question because what you're asking

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Speaker 1: is where where's the black swan coming from? And of

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Speaker 1: course if it wouldn't be black, if I could see

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Speaker 1: if coming um, but I guess what I'm really concerned out. Finally,

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Speaker 1: for the first time in ten years, he's a little

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Speaker 1: bit of fire as opposed to ice. We were talking

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Speaker 1: about that again in the last hour, where you know,

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Speaker 1: I I think a year from now, we're really going

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Speaker 1: to be talking about wage inflation and we're really going

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Speaker 1: to talk What I'm concerned about overturning the Apple card

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Speaker 1: is a FED that's going to have to have successive raises,

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Speaker 1: and we're gonna start seeing a FED funds rate at

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Speaker 1: three basis points and three in our fifty basis points,

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Speaker 1: and then you know, a twenty two times multiple for

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Speaker 1: the market is starting to look expensive. This is the

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Speaker 1: second Robert Frost solution we've had in two weeks. Tom

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Speaker 1: with two Roads just got the fire and isolation with

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Speaker 1: Christmas as well. We said fire and ice, and I's

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Speaker 1: gonna break into let it go. But what we're Miles,

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Speaker 1: I don't hear any economist Christmas anity talking about one

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Speaker 1: and a half percent target rate. Let alone's three percent.

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Speaker 1: We are rate hikes away from what accommodative. Yeah, I

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Speaker 1: think that's true, but but let's say we have less

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Speaker 1: room for error at a one multiple in the market

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Speaker 1: than we did at a fifteen. You certainly admit that.

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Speaker 1: What I'd also say is is the ten uere is

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Speaker 1: now at two point four where three or four months

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Speaker 1: ago it is at two point one five. UM, So

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Speaker 1: you're starting to get that move. Whether that's confirmed over

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Speaker 1: the next few months in terms of unemployment, in terms

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Speaker 1: of wage pressures, will see. I think that in the

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Speaker 1: ninth year of of an expansion and one that's finally

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Speaker 1: delivering some decent, not great, but decent GDP growth. UH,

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Speaker 1: And with four percent unemployment, I think you're gonna start

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Speaker 1: to see a classic economists and say you're gonna start

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Speaker 1: to see wage pressures. UM. Find very very The banks. Yeah,

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Speaker 1: I like the banks, especially if my thesis about higher

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Speaker 1: long rates are are correct. I'm not afraid of a

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Speaker 1: flat curve over the next year. A team. The other

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Speaker 1: thing on the banks, if you pick the right ones,

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Speaker 1: domestic banks are Wells Fargo, They're gonna be tremendous recipients

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Speaker 1: of tax reform. So Wells Fargo has a thirties six

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Speaker 1: percent tax rate and that can can drop by a third,

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Speaker 1: and that's a big deal. Okay, Chris Kasanti, thanks for

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Speaker 1: the briefing UH this morning. With Grassante Capital Management on

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Speaker 1: Twitter at least has been christened Mueller. Monday, We're waiting

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Speaker 1: an indictment reportedly from the Special Council looking into Russia's

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Speaker 1: involvement in the U S. Presidential election. Alan Levin writing

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Speaker 1: this up on Bloomberg News this morning and saying multiple

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Speaker 1: reports say at least one person has been charged and

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Speaker 1: could be arrested as early as today. For some perspective

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Speaker 1: on this and the debate over tax or form continuing

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Speaker 1: on Capitol Hill is Terry Haynes. He's the head of

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Speaker 1: political analysis at ever Core I s I and joins

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Speaker 1: us from our nine on one newsroom in Washington, DC. Terry,

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Speaker 1: great to speak with you, as ever, and let me

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Speaker 1: put a question to you here. What are you gonna

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Speaker 1: be looking for as this day unfolds with regard to

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Speaker 1: this investigation, with regard to this reported indictment, how are

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Speaker 1: you going to get the news and process the news?

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Speaker 1: What are you looking for today? Well, what I'm looking for, fundamentally, David,

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Speaker 1: is to see if, firstly, if the Muller investigation has

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Speaker 1: really anything to do with the core of the Trump

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Speaker 1: Russia business. I mean, if it's if it's something give

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Speaker 1: you an example, and it's only an example, but somebody

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Speaker 1: like Mr Manafort for example, but the but he ended

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Speaker 1: up uh running a foul of Foreign Agent Registration Act filings,

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Speaker 1: or or didn't completely disclose whereas clients were coming from

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Speaker 1: or his money was coming from, something like that. I

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Speaker 1: think everybody shrugs it off pretty quickly and then thinks, Okay,

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Speaker 1: there's uh yeah, you know, this doesn't have any immediate

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Speaker 1: impact upon the presidency. There may be something else coming

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Speaker 1: down the line, but here we are and really kind

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Speaker 1: of no distraction. Uh. If it's a bigger surprise and

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Speaker 1: it goes sort of right to the core of of

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Speaker 1: some of the Russia issues, uh, you know, then we've

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Speaker 1: got something else, and then we'll have a market reaction

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Speaker 1: and probably some immediate discombobulation. Although I don't think it

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Speaker 1: has any any significant impact on the timing of tax reform.

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Speaker 1: How easily can can lawmakers shrug this off no matter

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Speaker 1: what comes down today? Um, they're very much focused Republican

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Speaker 1: lawmakers I'm meaning here focused on tax reform and getting

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Speaker 1: something through here by the end of the calendar year.

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Speaker 1: They're optimistic they can do that. How much of a

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Speaker 1: shadow is this casting over their work on Capitol Hill today.

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Speaker 1: Well today, it will cast a shadow in the sense

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Speaker 1: that you know, it's it's it can be an inflection point.

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Speaker 1: We don't know whether it will be it not, of course,

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Speaker 1: but it can be. Uh and you know, but beyond that,

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Speaker 1: I think you shrug it off as I think accurate

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Speaker 1: in the sense that it's not likely to be really

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Speaker 1: consequential for what goes on on on the Hill. But

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Speaker 1: they won't shrug it off. They'll pay very close attention

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Speaker 1: to it. But the shoes will end up dropping on

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Speaker 1: for tax reform really on Tuesday and Wednesday, because the

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Speaker 1: members will come back and start briefing and and start

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Speaker 1: trying to move this thing forward. We've continued to say

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Speaker 1: that the that the realistic time frame for tax reform

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Speaker 1: is early in calendar. I look at the schedules of

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Speaker 1: the House and Senator put out as very aggressive, and

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Speaker 1: I understand why they would do that, but it's largely aspirational.

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Speaker 1: Is is there a point where tax reform we begin

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Speaker 1: to get it scored or added up, or smart people

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Speaker 1: figure out its ramifications, or does that not matter? It

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Speaker 1: will matter tom and in the House. And I don't

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Speaker 1: think this I don't think Senate Finance Chairman Hatch has

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Speaker 1: made a statement about this, but I know that his

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Speaker 1: House counterpart, Mr Brady has, and Brady says that you'll

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Speaker 1: end up having a score before they get to the House.

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Speaker 1: What does that mean when when we say I have

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Speaker 1: a score, they're gonna come out and say this is

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Speaker 1: gonna cost X billion or trillion? I mean, is it

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Speaker 1: that simple? Yeah? Pretty much. Uh, you know, they'll but

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Speaker 1: they will also uh score it dynamically, which in Washington speak,

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Speaker 1: it takes into account the future economic activity generated from it.

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Speaker 1: And you know, so there's there's been a big debate,

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Speaker 1: as you both know, for quite some time about not

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Speaker 1: only will they score it dynamically, but how how aggressively

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Speaker 1: will the dynamics? How aggressive will the dynamic score be?

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Speaker 1: In other words, how aspirational might it be. One wonders

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Speaker 1: how lawmakers can come up with such a big piece

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Speaker 1: of legislation so quickly. And is I just wonder if

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Speaker 1: it's your opinion that they're just using the bulk of

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Speaker 1: what Dave Camp drafted many years ago? Now, is that

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Speaker 1: the draft? Is that the thing on which this is based.

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Speaker 1: I don't think. Let me say two things about that, David.

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Speaker 1: One is that I don't think they've come up with

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Speaker 1: it quickly. I think what they've what they're doing is firstly,

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Speaker 1: uh uh, writing something off the Big Six negotiations that

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Speaker 1: culminated about a month ago. Number one. Number two, they've

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Speaker 1: been playing around with exactly how to deal with these

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Speaker 1: issues with a great deal of secrecy for quite some time.

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Speaker 1: And you know, there's an old joke down here which

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Speaker 1: I gather you both know, which is uh that you

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Speaker 1: know something serious if no one's talking about it, and

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Speaker 1: they've been working seriously, nobody's been talking about it for

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Speaker 1: quite some time to develop what the legislative backdrop looks like.

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Speaker 1: Uh So I think they've been doing that for quite

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Speaker 1: some time. But and they'll move on. They'll move on

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Speaker 1: from there to try to kind of have people come

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Speaker 1: together around the pay for us after that. But this

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Speaker 1: has been in the works for some time. I think, David,

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Speaker 1: let's interrupted. It's really good to have Terry Haynes with

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Speaker 1: us from Washington on. We need to be very careful,

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Speaker 1: you're folks, but it is uh. Mattapuzzo in The New

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Speaker 1: York Times, David, why didn't you bring a very widely

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Speaker 1: respected and great investigative reporter for The Times, writing this

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Speaker 1: piece this morning, just at a moment ago. Paul Manaford

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Speaker 1: and his former business associate Rick Gates were told to

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Speaker 1: surrender to federal authorities Monday morning, the first charges in

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Speaker 1: a special counsel investigation. According to a person involved in

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Speaker 1: the case, I'm gonna read on here in light of

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Speaker 1: what you're just discussing with, Terry Haynes, the charges against

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Speaker 1: Mr Manaford, President Trump's former campaign chairman and Mr Gates

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Speaker 1: of business associate of Mr Manafort, We're not immediately clear,

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Speaker 1: but represent a significant escalation in a special counsel investigation

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Speaker 1: that's cast a shadow over the President's first year in office.

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Speaker 1: What can you tell us about Rick Gates here, Terry Haynes,

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Speaker 1: And again it seems like that just to summarize what

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Speaker 1: we're reading here, we don't know the details of why

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Speaker 1: these two gentlemen have been indicted in as you said here,

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Speaker 1: that's going to be something upon which this this turns. Well,

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Speaker 1: that's true. And you know, as I as I said earlier,

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Speaker 1: I think I think Manafort uh probably has something to

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Speaker 1: do with the has something to do with his his

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Speaker 1: overall the entanglement with with Russia and the Ukraine for

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Speaker 1: for for quite a while, uh, Gates, as I understand

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Speaker 1: it was a Manifort partner for quite a long time.

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Speaker 1: And head can and it's probably a generation. It's probably

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Speaker 1: a generation younger than Manifort. And think you have something

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Speaker 1: to do with the movement of money or the movement

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Speaker 1: of the movement of money or the movement of or

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Speaker 1: the lack of transparency here. I would think that's about it.

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Speaker 1: Well with within this is is the y here and

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Speaker 1: you know it's all speculation and we're not doing that

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Speaker 1: on surveillance. But they're indicted or whatever. And then is

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Speaker 1: the whole idea here, almost like Perry Mason, that they

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Speaker 1: spill the beans because they're indicted or is it more

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Speaker 1: discreet in about any one or two individuals. I'm assuming

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Speaker 1: and I want to underscore that, but yeah, but but

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Speaker 1: I'm assuming that what one of the things that ends

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Speaker 1: up happening here is that Mr Manafort and Mr Gates

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Speaker 1: are it is suggested to them, uh that uh, you know,

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Speaker 1: that their own involvement in whatever the issue is might

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Speaker 1: go might go better, smoother, easier, with less penalty if

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Speaker 1: they actually provide more information about other things that maybe

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Speaker 1: you're more directly affecting the campaign, that uh, that are

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Speaker 1: of interest to the investigators. This is too important. We're

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Speaker 1: gonna keep Mr Haynes around, of course from Washington, with

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Speaker 1: decades of perspective across the legislative of the executive. I

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Speaker 1: don't know if he's got any knowledge and judicial we'll

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Speaker 1: we'll make it up here as we go, But seriously,

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Speaker 1: we are fortunate if Terry higges with us with this news. Again, David,

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Speaker 1: why don't you recap this is off the New York

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Speaker 1: Times report? Yeah, and then we are attributing it to

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Speaker 1: Matoposo here. He's reporting this set for the time. It's

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Speaker 1: but indicating that Rick Gates and Paul Manaford have been

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Speaker 1: asked to surrender by the as a result of this

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Speaker 1: grandjury investigation. So the first to arrest, I guess, going

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Speaker 1: on the first first indications here that we're seeing movement

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Speaker 1: in that special investigation. And we're gonna keep watching this

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Speaker 1: throughout the day here on Blomberg Radio, of course, as

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Speaker 1: we do reporting of our own here at Bloomberg News.

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Speaker 1: But as you mentioned, Terry Haynes, of every core I

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Speaker 1: saw I'm going to join us as we continue to

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Speaker 1: to look into this story here on as I mentioned

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Speaker 1: what's been called metaphord Monday, the investigation taking a taking

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Speaker 1: a turn here Charles Riley over at CNN mentioning that Mr.

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Speaker 1: Manaford quote is turning himself into day to special counsel

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Speaker 1: Robert Weller. That from a good source at CNN as

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Speaker 1: well the New Modern News. Thanks to our headline team,

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Speaker 1: particularly how To HuaHua for bringing clarity here on the

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Speaker 1: New York Times story. We continue with Terry Haynes in

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Speaker 1: a historic day within the law in Washington, as well

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Speaker 1: much else going on. An economics finance Rick Gates, that's

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Speaker 1: the name many people don't know looking into him now.

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Speaker 1: I mean he was an associate of Paul Manafort protege

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Speaker 1: junior partner according to profile of him in the in

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Speaker 1: the New York Times. Um and with this firm did

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Speaker 1: a lot of work internationally, and I suspect that's where

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Speaker 1: we're gonna see. Uh, some of the contours of this

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Speaker 1: come into focus, the work that he and Paul Manifort

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Speaker 1: did overseas. Uh. As I said, we're quoting here from

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Speaker 1: a Matapoozo piece in the New York Times that cross

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Speaker 1: just moments ago, indicating that Mr Gates and Paul Manifort

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Speaker 1: were asked to turn themselves into Robert Muller and his team.

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Speaker 1: As this investigation continues, and we don't have any detail

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Speaker 1: yet on the rational or the reasoning behind that, I'm

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Speaker 1: sure that we'll get that as the day goes on.

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Speaker 1: But the early word here again, as reported by the

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Speaker 1: New York Times, is that we've had to Paul Manifort.

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Speaker 1: Rick Gates told his surrender to federal authorities this morning.

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Speaker 1: From from a New York Times article of I'm doing

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Speaker 1: the math four months ago quote Mr gates rapid ascent

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Speaker 1: into into Mr Trump's orbit and his sudden ejection from

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Speaker 1: it is just one example about these controversies have shaken

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Speaker 1: the Trump administration. Which is a good time to bring

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Speaker 1: in Terry Haynes, who's given his wonderful perspective on Washington

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Speaker 1: and particularly on the legislative branch. We're gonna promise to

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Speaker 1: get back to tax reform here. Mr Haynes is never

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Speaker 1: going to show up again. Terry. What what happens when

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Speaker 1: something like this transfixes Washington? Can it actually slow down

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Speaker 1: everything else? You know? If I guess, the way I

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Speaker 1: would answer that, Tim is if it's if it's consequential enough. Sure,

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Speaker 1: uh you know, come on, I mean it's not that

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Speaker 1: I don't want to compare to water game. Come on,

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Speaker 1: this is consequential, right, yeah, yes it is. But we

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Speaker 1: don't know how consequential. Of course, we don't know what

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Speaker 1: what Maniforts or Gates have been indicted on or why.

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Speaker 1: Uh So this could be anywhere from a concerns about

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Speaker 1: things that have little to do with the Trump campaign.

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Speaker 1: I mean Manifort, of course had these relationships in Eastern

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Speaker 1: Europe for many years before he was ever involved with Trump,

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Speaker 1: and it could be anywhere from at to some sort

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Speaker 1: of direct connection with with the campaign. So right now,

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Speaker 1: I would imagine people are on tenter hooks. But the

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Speaker 1: thing I would raise with you is that even in

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Speaker 1: you know, the world of Washington does not stop for

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Speaker 1: two And I'll give you a current example, in a

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Speaker 1: historical example. The current example is that it's something I've

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Speaker 1: I've talked a lot to both of you about on

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Speaker 1: Bloomberg Air for quite a while. Tax reform is a

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Speaker 1: big deal because it's a big deal to Republican members

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Speaker 1: of Congress who are now and you know now have

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Speaker 1: majorities and think this is their one big shot to

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Speaker 1: actually get something consequential done. They want to do it

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Speaker 1: for their own policy and their own political reasons. It

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Speaker 1: says very little to the media storyline, generally speaking, is

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Speaker 1: this is all about Trump, and it's Trump's steal and

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Speaker 1: Trump's putting pressure on Trump's doing this, Trump's doing that.

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Speaker 1: In reality, this is an awful lot about the members

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Speaker 1: of Congress themselves and not so much about the president.

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Speaker 1: So they will they will continue to do everything possible

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Speaker 1: to move this along firstly, and secondly, you know, even

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Speaker 1: in the Watergate days, I mean, I think it's a

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Speaker 1: it's understandable, but it's a trope to think that that

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Speaker 1: that the world stopped in Washington during Watergate. Uh. You know,

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Speaker 1: the major legislation that was passed in the two years

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Speaker 1: while the Watergate investigation was going on and Nixon was

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Speaker 1: resigning and all the rest included everything from uh the

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Speaker 1: War Powers Resolution, to the Endangered Species Act, to the

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Speaker 1: Original Water Resources Act to the Budget Act that we're

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Speaker 1: all you know that we've all still been dealing with today.

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Speaker 1: Uh ARISA was was was passed in those two years,

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Speaker 1: a Safe Drinking Water Act, a Privacy Act, the Original

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Speaker 1: Trade Act, all those things were pasted while Watergate was

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Speaker 1: going on. And you know, and I think that, if anything,

428
00:22:49,640 --> 00:22:53,160
Speaker 1: what may end up happening is that Congress buckles down

429
00:22:53,200 --> 00:22:55,639
Speaker 1: even more and tries to finish the work that it

430
00:22:55,680 --> 00:22:58,199
Speaker 1: really wants to prioritize, and that includes tax reform. So

431
00:22:58,240 --> 00:23:00,080
Speaker 1: here's what I'm wondering. You have a president reading to

432
00:23:00,119 --> 00:23:01,760
Speaker 1: take a very long trip to Asia. At the end

433
00:23:01,760 --> 00:23:04,800
Speaker 1: of this week. We're due to get legislation from Chairman Brady,

434
00:23:04,840 --> 00:23:07,480
Speaker 1: I believe on Wednesday of this week. Now, of course,

435
00:23:07,520 --> 00:23:10,480
Speaker 1: we have this new news that we've just been discussing, uh,

436
00:23:10,520 --> 00:23:12,440
Speaker 1: taking up a lot of the oxygen washed at least

437
00:23:12,440 --> 00:23:16,080
Speaker 1: today over these next few days. Our lawmakers in the

438
00:23:16,119 --> 00:23:18,159
Speaker 1: House and Senate cool with that? Are they Are they

439
00:23:18,200 --> 00:23:19,600
Speaker 1: happy with the fact that they're going to have a

440
00:23:19,640 --> 00:23:21,840
Speaker 1: president who's going to be out of the country, indeed

441
00:23:21,880 --> 00:23:24,400
Speaker 1: out of the time zone here for well over a week, uh,

442
00:23:24,440 --> 00:23:26,720
Speaker 1: and maybe out of this tax reform news cycle for

443
00:23:26,800 --> 00:23:28,560
Speaker 1: some time? Are they Are they content to be the

444
00:23:28,560 --> 00:23:31,640
Speaker 1: ones taking the lead on taxiform here going forward? Oh?

445
00:23:31,680 --> 00:23:34,359
Speaker 1: I think so. I think what they were interested in

446
00:23:34,400 --> 00:23:37,399
Speaker 1: having from the president is what I would think of

447
00:23:37,440 --> 00:23:41,440
Speaker 1: as kind of a strategic boosts. Uh. You know, they're

448
00:23:41,520 --> 00:23:46,480
Speaker 1: interested in in the President applying pressure where pressure is needed,

449
00:23:46,480 --> 00:23:50,199
Speaker 1: when pressure is needed. Today, I don't think that members

450
00:23:50,200 --> 00:23:53,520
Speaker 1: of Congress think they need that. Uh. They're putting plenty

451
00:23:53,520 --> 00:23:55,720
Speaker 1: of pressure on themselves to get things done, so I

452
00:23:55,720 --> 00:23:58,560
Speaker 1: don't think, uh, I don't think having the President around

453
00:23:58,960 --> 00:24:02,280
Speaker 1: and constant focused on, say tax reform or pushing or

454
00:24:02,280 --> 00:24:05,960
Speaker 1: pulling people, uh, will be seen as particularly helpful. This

455
00:24:06,000 --> 00:24:09,280
Speaker 1: is this is now up to uh. This part of

456
00:24:09,320 --> 00:24:12,320
Speaker 1: it what some people have been calling the vegetables part

457
00:24:12,320 --> 00:24:14,520
Speaker 1: as opposed to the ice cream part. This is much

458
00:24:14,560 --> 00:24:17,760
Speaker 1: more up to the members, so they'll take it on. David,

459
00:24:17,800 --> 00:24:20,240
Speaker 1: I should point out for a radio audience, particularly driving

460
00:24:20,280 --> 00:24:23,120
Speaker 1: coast to coast, that we're beginning to get the big

461
00:24:23,160 --> 00:24:28,840
Speaker 1: obligatory black SUV vehicle leaving. I believe it's Mr Manaford's

462
00:24:28,880 --> 00:24:32,520
Speaker 1: house with various people in the car like the lawyers driving. Yeah,

463
00:24:32,720 --> 00:24:38,840
Speaker 1: could be Uber, could be me, Alexandrew. We should wait,

464
00:24:38,600 --> 00:24:40,600
Speaker 1: wait good good for you to couch that I think

465
00:24:41,320 --> 00:24:44,480
Speaker 1: just to see you know, we're trying to frame the speculation, folks,

466
00:24:44,560 --> 00:24:48,080
Speaker 1: with fact could be maybe it's left, but I don't know. Yeah,

467
00:24:48,200 --> 00:24:50,680
Speaker 1: I'll just ask you, Terrius. We continue to wait into

468
00:24:50,680 --> 00:24:53,720
Speaker 1: this sort. You mentioned the work that Mr Manafort did overseas,

469
00:24:53,720 --> 00:24:55,800
Speaker 1: and we talked about the registration that one has to

470
00:24:55,800 --> 00:24:58,280
Speaker 1: do when he does that. What what are the rules

471
00:24:58,400 --> 00:25:00,480
Speaker 1: just in broad terms here, if you're working with the

472
00:25:00,520 --> 00:25:02,000
Speaker 1: foreign government, what do you have to declare? What do

473
00:25:02,040 --> 00:25:04,000
Speaker 1: you have to do? And what might this hinge on?

474
00:25:04,280 --> 00:25:06,560
Speaker 1: The rules are very strict, you know, and and and

475
00:25:07,160 --> 00:25:09,080
Speaker 1: you know, one thing I want to want to make

476
00:25:09,080 --> 00:25:12,639
Speaker 1: sure that people understand is that, uh, the kind of

477
00:25:12,680 --> 00:25:16,399
Speaker 1: business Mr Manafort was in, by and large, in in

478
00:25:16,440 --> 00:25:18,840
Speaker 1: Europe and all the rest as a campaign consultant and

479
00:25:18,840 --> 00:25:22,359
Speaker 1: the like. Uh, it's not unusual for for consultants of

480
00:25:22,400 --> 00:25:24,600
Speaker 1: either party to be involved in those and indeed, you

481
00:25:24,600 --> 00:25:27,520
Speaker 1: know many of them were, uh you, so that should

482
00:25:27,520 --> 00:25:31,000
Speaker 1: be understood. But the this is colloquial. The Foreign Agents

483
00:25:31,040 --> 00:25:36,680
Speaker 1: Registration Act is colloquially termed FARAH here and FARA filings

484
00:25:36,720 --> 00:25:41,159
Speaker 1: are very strict. Uh, They're very comprehensive, and there are

485
00:25:41,280 --> 00:25:45,480
Speaker 1: there are civil and criminal penalties associated with misrepresentation. Uh.

486
00:25:45,640 --> 00:25:48,199
Speaker 1: You do not want to make a mistake on a

487
00:25:48,200 --> 00:25:51,760
Speaker 1: FARA filing, a regular lobbying disclosure act. You know, if

488
00:25:51,760 --> 00:25:54,879
Speaker 1: I'm working for company X, and you know, I forgot

489
00:25:54,880 --> 00:25:57,520
Speaker 1: to list some issue that I'm involved in. Uh, you

490
00:25:57,560 --> 00:25:59,240
Speaker 1: know that's not going to be a death sentence sort

491
00:25:59,280 --> 00:26:03,639
Speaker 1: of thing. But FARA filings are are very serious things.

492
00:26:03,800 --> 00:26:07,080
Speaker 1: And Kevin Kevin surely mentioned this this morning. This goes

493
00:26:07,080 --> 00:26:11,960
Speaker 1: back to yeah, and it's basically on K Street. This

494
00:26:12,000 --> 00:26:17,080
Speaker 1: stuff is deadly serious, right, yes, yes, uh, just so

495
00:26:17,200 --> 00:26:21,520
Speaker 1: and and and and and pretty comprehensive. And as I say, you,

496
00:26:21,600 --> 00:26:23,920
Speaker 1: you you better not make a mistake on it. Uh.

497
00:26:23,960 --> 00:26:28,880
Speaker 1: And any reputable firm will, any reputable lobbying firm will

498
00:26:28,880 --> 00:26:30,960
Speaker 1: go over those filings with a fine tooth, come to

499
00:26:31,000 --> 00:26:33,920
Speaker 1: make sure they're entirely correct before they're filed. Switch gears

500
00:26:34,000 --> 00:26:37,520
Speaker 1: Terry here, as we have the the manifest Gates indictments

501
00:26:37,720 --> 00:26:41,760
Speaker 1: under way. Back to the you're you're you're meeting potatoes,

502
00:26:41,760 --> 00:26:44,920
Speaker 1: which is a legislative process, I must assume the two

503
00:26:45,000 --> 00:26:49,119
Speaker 1: thousand and eighteen campaign, is it in fully underway now

504
00:26:49,359 --> 00:26:52,000
Speaker 1: or does that wait November of this year. I don't

505
00:26:52,000 --> 00:26:55,120
Speaker 1: think it's fully underway. You know, my general rule of thumb,

506
00:26:55,440 --> 00:26:58,320
Speaker 1: and you know, which can vary depending on circumstances. Of course,

507
00:26:58,560 --> 00:27:01,840
Speaker 1: my general rule of thumb is that UH campaign season

508
00:27:01,880 --> 00:27:03,720
Speaker 1: doesn't really get into full swing until the end of

509
00:27:03,760 --> 00:27:06,120
Speaker 1: the first quarter of the calendar year of the election.

510
00:27:06,280 --> 00:27:10,760
Speaker 1: So I think until you get into March April, the

511
00:27:10,800 --> 00:27:14,320
Speaker 1: answer is pretty much no. But after that, UH campaigns

512
00:27:14,480 --> 00:27:18,879
Speaker 1: your way increasingly on the decisions of above members of

513
00:27:18,920 --> 00:27:22,480
Speaker 1: Congress and senators at both parties. This is great. Yeah,

514
00:27:22,680 --> 00:27:25,119
Speaker 1: thank you for staying with us as we've processed this

515
00:27:25,200 --> 00:27:27,440
Speaker 1: news again. The New York Times reporting that DEPAULM. Manafort

516
00:27:27,480 --> 00:27:30,240
Speaker 1: and his former business associate Rick Gates told the surrender

517
00:27:30,280 --> 00:27:32,400
Speaker 1: de federal authorities this morning, and his Tom mentioned we've

518
00:27:32,400 --> 00:27:36,360
Speaker 1: seen a photo on social media Mr Manafort leaving here.

519
00:27:36,600 --> 00:27:38,320
Speaker 1: It's from CBS. I mean, we think we can go.

520
00:27:40,320 --> 00:27:42,520
Speaker 1: Charlie Rose says there was a black He has his

521
00:27:42,680 --> 00:27:45,359
Speaker 1: impromoter on it anyway, So we'll continue to follow this

522
00:27:45,400 --> 00:27:47,200
Speaker 1: throughout the morning. Thanks again to Tarry Hands and everywhere

523
00:27:47,200 --> 00:27:49,520
Speaker 1: I assigned for the perspective on the work that Mr

524
00:27:49,600 --> 00:27:52,360
Speaker 1: Manafort was doing in his career and about the news

525
00:27:52,400 --> 00:28:07,080
Speaker 1: of the day as well. A discussion with Mark Mobius

526
00:28:07,160 --> 00:28:09,159
Speaker 1: for those of you have a certain vintage. He is

527
00:28:09,359 --> 00:28:13,480
Speaker 1: emerging markets. He was Sir John Templeton had the courage

528
00:28:13,520 --> 00:28:18,400
Speaker 1: and I mean encourage intellectually to go out and about

529
00:28:18,640 --> 00:28:22,840
Speaker 1: across borders and actually consider these odd and strange cultures

530
00:28:23,400 --> 00:28:26,159
Speaker 1: and economies and turned it into the industry which we

531
00:28:26,240 --> 00:28:29,200
Speaker 1: all take for granted. Today. Mr Melby is holding court

532
00:28:29,240 --> 00:28:32,960
Speaker 1: at seventy nine years old. Are you retired from Templeton?

533
00:28:33,640 --> 00:28:38,640
Speaker 1: What I said, you're holding its seven nine? Thank you

534
00:28:39,680 --> 00:28:42,680
Speaker 1: is Henry Kaufman was in the other day. He's well preserved.

535
00:28:42,840 --> 00:28:47,040
Speaker 1: What's the secret to your vitality? Being optimistic? I think yes,

536
00:28:47,640 --> 00:28:50,720
Speaker 1: and exercising every day. Wait, wait a being optimistic. They

537
00:28:50,800 --> 00:28:55,600
Speaker 1: got the surveillance casket out there in two days. Mark Um,

538
00:28:55,840 --> 00:29:01,600
Speaker 1: it's so changed now, passive, active, walls of money. What

539
00:29:01,880 --> 00:29:05,080
Speaker 1: is different now? The key thing since you and Sir

540
00:29:05,240 --> 00:29:10,240
Speaker 1: John invented this, First of all, we've lost that first

541
00:29:10,280 --> 00:29:12,920
Speaker 1: found a hundred million dollars a lot of money. We

542
00:29:13,040 --> 00:29:15,360
Speaker 1: had only six or seven markets in which to invest.

543
00:29:15,880 --> 00:29:18,280
Speaker 1: Now we're in seventy markets around the world. We've got

544
00:29:18,360 --> 00:29:21,120
Speaker 1: twenty nine billion, and we're small fry compared to the

545
00:29:21,160 --> 00:29:24,840
Speaker 1: whole industry. The industry is huge, and now the big

546
00:29:25,000 --> 00:29:28,320
Speaker 1: changes the e t F revolution because if you look

547
00:29:28,320 --> 00:29:31,160
Speaker 1: at the flows of funds, they're really going into the

548
00:29:31,240 --> 00:29:34,040
Speaker 1: e t f s rather than the active matter. The

549
00:29:34,280 --> 00:29:37,160
Speaker 1: sharp ratio of the core fund one year sharp ratio

550
00:29:37,280 --> 00:29:40,040
Speaker 1: is an act of God. It's really quite good. And

551
00:29:40,120 --> 00:29:44,040
Speaker 1: there's the volatility one year, two years lousy, one year

552
00:29:44,520 --> 00:29:47,640
Speaker 1: Are you kidding? That was great? Is that CYC locality

553
00:29:47,920 --> 00:29:51,360
Speaker 1: still there or is it a different calculus now? The

554
00:29:51,600 --> 00:29:55,280
Speaker 1: ups and downs of emergency it's becoming smoother in other ways.

555
00:29:55,280 --> 00:29:58,760
Speaker 1: The volatility is not as great as it was before,

556
00:29:59,040 --> 00:30:01,520
Speaker 1: simply because the MO it's so bigger. You've got many

557
00:30:01,560 --> 00:30:04,160
Speaker 1: more markets and they're bigger, so the movements are a

558
00:30:04,280 --> 00:30:08,960
Speaker 1: lot less volatile, but they're still more volatile in the US. David,

559
00:30:08,960 --> 00:30:12,520
Speaker 1: why don't you bring in those headlines? Apologies here for interrupting,

560
00:30:12,520 --> 00:30:15,120
Speaker 1: but we're continuing to follow what's happening in Washington, d C. Today.

561
00:30:15,520 --> 00:30:18,160
Speaker 1: Paul Maniford and rickets that indicted on twelve counts in

562
00:30:18,240 --> 00:30:21,800
Speaker 1: this investigation that Robert Muller is conducting, and charges include

563
00:30:22,400 --> 00:30:25,480
Speaker 1: conspiracy against the United States and money laundering as well.

564
00:30:25,560 --> 00:30:27,400
Speaker 1: So we're getting more color runs with what led to

565
00:30:27,520 --> 00:30:29,480
Speaker 1: this and it's Terry hands a diver core I s

566
00:30:29,560 --> 00:30:32,080
Speaker 1: I said to us just about an hour ago. This

567
00:30:32,240 --> 00:30:35,040
Speaker 1: is what matters here. If if these were smaller charges

568
00:30:35,480 --> 00:30:37,560
Speaker 1: related to taxes or something like else, that'd be one thing.

569
00:30:37,680 --> 00:30:39,960
Speaker 1: But the factory that we see this conspiracy charge, I

570
00:30:40,040 --> 00:30:43,600
Speaker 1: think indicates through something bigger at playtime, and Mark there goes,

571
00:30:43,800 --> 00:30:45,440
Speaker 1: you know, taking the politics. I don't want to bring

572
00:30:45,520 --> 00:30:48,280
Speaker 1: it over to your world, but the rap if you will,

573
00:30:48,320 --> 00:30:52,160
Speaker 1: and emerging markets is it's done by secret decoding in

574
00:30:52,320 --> 00:30:55,880
Speaker 1: Hong Kong and other places. How is the transparency the

575
00:30:55,960 --> 00:31:00,320
Speaker 1: Big six accounting transparency and the acquisite for that matter,

576
00:31:00,640 --> 00:31:04,760
Speaker 1: the legal background of these different companies. Is it more transparent? Now?

577
00:31:05,240 --> 00:31:08,600
Speaker 1: Much more transparent, and mainly because there are more and

578
00:31:08,680 --> 00:31:12,240
Speaker 1: more players, the more people who are demanding information. You know,

579
00:31:12,360 --> 00:31:17,400
Speaker 1: E s G is the big big thing nowadays Environmental

580
00:31:18,160 --> 00:31:23,840
Speaker 1: social governance, sustainable governance, governance and of course those of

581
00:31:23,920 --> 00:31:26,240
Speaker 1: those three E s G. Governance is the key word

582
00:31:26,720 --> 00:31:29,360
Speaker 1: because that's what is really hitting emerging markets in a

583
00:31:29,440 --> 00:31:32,959
Speaker 1: big way. We are demanding more disclosure, we're demanding more

584
00:31:33,080 --> 00:31:36,200
Speaker 1: transparency and so forth. How does Mark Mobius parse out

585
00:31:36,360 --> 00:31:39,840
Speaker 1: E M do parse it out, is frontier economies E,

586
00:31:40,160 --> 00:31:44,400
Speaker 1: M and eleven, etcetera. How do you partition your world? Well,

587
00:31:44,520 --> 00:31:48,240
Speaker 1: emerging markets in general and within the emerging market space,

588
00:31:48,320 --> 00:31:51,440
Speaker 1: we have a frontier pocket, so to speak, which is

589
00:31:51,520 --> 00:31:56,160
Speaker 1: relatively small but very very perspective in terms of growth.

590
00:31:56,480 --> 00:31:59,000
Speaker 1: Because if you look at the ten fastest growing countries

591
00:31:59,040 --> 00:32:01,800
Speaker 1: in the world, all of them are emerging markets and

592
00:32:01,960 --> 00:32:05,560
Speaker 1: half of them are frontier. So it's it's quite remarkable

593
00:32:05,560 --> 00:32:07,480
Speaker 1: to see what's happening in the frontier space. Are the

594
00:32:07,640 --> 00:32:11,120
Speaker 1: drivers of economic growth in developed and developing economies different?

595
00:32:11,280 --> 00:32:13,680
Speaker 1: When you look at what's driving emerging markets? Now? Is

596
00:32:13,720 --> 00:32:18,080
Speaker 1: it politics principally? Uh? Is it central bank policy? Is

597
00:32:18,160 --> 00:32:20,200
Speaker 1: it fiscal policy? What do you see as the main

598
00:32:20,280 --> 00:32:22,600
Speaker 1: drivers when you paint with the broadbrush your emerging market

599
00:32:22,600 --> 00:32:24,920
Speaker 1: The main driver and the reason why we're in business

600
00:32:25,520 --> 00:32:29,560
Speaker 1: is because of the philosophy of government has changed. They're

601
00:32:29,600 --> 00:32:35,240
Speaker 1: now moved from communist status government ownership to privatization of

602
00:32:35,320 --> 00:32:39,120
Speaker 1: state enterprises. That's the reason why we're in business. And

603
00:32:39,240 --> 00:32:42,320
Speaker 1: this is a remarkable development and you have to really

604
00:32:42,400 --> 00:32:45,400
Speaker 1: congratulate the I m F the i f C World

605
00:32:45,480 --> 00:32:49,000
Speaker 1: Bank for pushing this concept and saying to these countries, look,

606
00:32:49,040 --> 00:32:51,400
Speaker 1: you want to grow, you've got to privatize your state

607
00:32:51,480 --> 00:32:54,320
Speaker 1: and enterprise. You've got to open up your market and

608
00:32:54,440 --> 00:32:57,800
Speaker 1: make it a market economy. That's the reason why China

609
00:32:58,400 --> 00:33:01,480
Speaker 1: is growing because they've adopted the market economy model. How

610
00:33:01,560 --> 00:33:04,200
Speaker 1: much standardization is there as a result of the multilateralism

611
00:33:04,280 --> 00:33:05,920
Speaker 1: that that you describe as a result of that that

612
00:33:06,080 --> 00:33:08,360
Speaker 1: push by having the I m F, the World Bank

613
00:33:08,440 --> 00:33:11,080
Speaker 1: cheering for this or making it happen, is it easier

614
00:33:11,160 --> 00:33:12,960
Speaker 1: for you to enter into a market or to see

615
00:33:13,000 --> 00:33:16,239
Speaker 1: how a market is doing. It's much easier for us

616
00:33:16,280 --> 00:33:18,800
Speaker 1: to go in when a government is saying, look, we're

617
00:33:18,840 --> 00:33:22,720
Speaker 1: gonna privatize, we're gonna list state owned enterprises, we're going

618
00:33:22,760 --> 00:33:25,760
Speaker 1: to open up the market to more free enterprise environment.

619
00:33:26,280 --> 00:33:29,720
Speaker 1: But of course then we've still got the problems of politics,

620
00:33:30,120 --> 00:33:32,880
Speaker 1: because there's some of the old apparationis who don't want

621
00:33:32,920 --> 00:33:35,680
Speaker 1: to give up power of this so state owned enterprises?

622
00:33:36,120 --> 00:33:38,160
Speaker 1: And then of course we got the legal system, which

623
00:33:38,240 --> 00:33:40,920
Speaker 1: is different in every country. We'll come back here in

624
00:33:40,960 --> 00:33:42,520
Speaker 1: just a moment. But on the issue of passive investment,

625
00:33:42,600 --> 00:33:45,320
Speaker 1: is it change how we approach emerging markets? Are you

626
00:33:45,360 --> 00:33:47,800
Speaker 1: at all concerned that less research or less engagement goes

627
00:33:47,840 --> 00:33:49,840
Speaker 1: into the process if you have a more passive approach

628
00:33:50,200 --> 00:33:52,760
Speaker 1: to investing. Of course, it's a it's a sea change

629
00:33:52,880 --> 00:33:54,720
Speaker 1: because what happens is that you're going to have on

630
00:33:54,840 --> 00:33:57,040
Speaker 1: one side the E t F space, which is just

631
00:33:57,480 --> 00:34:00,680
Speaker 1: following the leader, following the index, and the other side

632
00:34:00,720 --> 00:34:03,960
Speaker 1: you're gonna have active And by the way, I'm kind

633
00:34:04,000 --> 00:34:06,720
Speaker 1: of happy. Even though we're not getting the flows of

634
00:34:06,840 --> 00:34:10,000
Speaker 1: the size of btf s getting right, I'm very happy

635
00:34:10,040 --> 00:34:12,439
Speaker 1: with this change because now it's forcing us to say, look,

636
00:34:12,960 --> 00:34:15,960
Speaker 1: we are not following the index. We cannot look at

637
00:34:15,960 --> 00:34:17,759
Speaker 1: the index. Now we've got to do our own things.

638
00:34:17,840 --> 00:34:20,200
Speaker 1: What's your our square to the index? Oh god, I

639
00:34:20,200 --> 00:34:25,239
Speaker 1: don't have that. But basically we're moving away from the

640
00:34:25,280 --> 00:34:26,640
Speaker 1: index in a big way. I want to come back

641
00:34:26,680 --> 00:34:29,440
Speaker 1: and talk economics with the gentleman of the parchment from

642
00:34:29,480 --> 00:34:33,240
Speaker 1: the Massachusetts Institute of Technology, that would be Mark Mobius.

643
00:34:33,360 --> 00:34:35,880
Speaker 1: We will do that. Terrific news flow out of Washington.

644
00:34:36,160 --> 00:34:38,480
Speaker 1: We're gonna get back to Washington and Mr Mueller here

645
00:34:38,520 --> 00:34:41,960
Speaker 1: in a bit. But we're enjoying the presence of Mark Mobius.

646
00:34:42,520 --> 00:34:45,719
Speaker 1: Those of you of a more vintage character will know

647
00:34:45,920 --> 00:34:49,800
Speaker 1: that he and Sir John Templeton's single handedly and invented,

648
00:34:49,920 --> 00:34:53,560
Speaker 1: along with the marketing genius of John Gelbraith years ago,

649
00:34:53,800 --> 00:34:58,400
Speaker 1: domestic and international blue chip investing. And then Mark Mobius

650
00:34:58,920 --> 00:35:03,040
Speaker 1: courageously went out work no others were and invented emerging

651
00:35:03,120 --> 00:35:05,960
Speaker 1: market funding as well. Your parchment from M I T.

652
00:35:06,080 --> 00:35:08,080
Speaker 1: Who did you take your PhD? With the M I T.

653
00:35:08,440 --> 00:35:11,359
Speaker 1: I was with Samuelson where he was at that time,

654
00:35:11,440 --> 00:35:14,840
Speaker 1: But Ethiel the solo pool I don't remember. He was

655
00:35:14,880 --> 00:35:18,080
Speaker 1: a great, great professor. Is a number of very good

656
00:35:18,320 --> 00:35:21,000
Speaker 1: emerging market type professors there at that time. They were

657
00:35:21,160 --> 00:35:24,120
Speaker 1: struggling with the issue of what makes countries grow. Of

658
00:35:24,160 --> 00:35:28,239
Speaker 1: course the emerging market name was not invented yet, but

659
00:35:28,400 --> 00:35:32,040
Speaker 1: they were really struggling with that issue. It's the economics

660
00:35:32,120 --> 00:35:35,960
Speaker 1: that underpins your investment work. Has it changed or is

661
00:35:36,040 --> 00:35:41,520
Speaker 1: it the same old rules of professors Emielson haven't changed.

662
00:35:41,600 --> 00:35:44,520
Speaker 1: They're really the same. I mean, the principles are basically

663
00:35:44,640 --> 00:35:47,320
Speaker 1: the same, and there the principles that we're trying to

664
00:35:47,400 --> 00:35:50,319
Speaker 1: push forward in these countries still today. He was there's

665
00:35:50,320 --> 00:35:53,960
Speaker 1: so many people who want to have a statist, government

666
00:35:54,000 --> 00:35:57,799
Speaker 1: owned economy basically that would define China. David, why don't

667
00:35:57,800 --> 00:36:00,160
Speaker 1: you jump in there? Yeah? I wonder how your uh

668
00:36:00,400 --> 00:36:03,399
Speaker 1: engagement with China has changed as you look for opportunity there.

669
00:36:04,040 --> 00:36:05,960
Speaker 1: We hear from guest after guest after guests, you have

670
00:36:06,040 --> 00:36:09,320
Speaker 1: to look inland more to these quote unquote smaller cities,

671
00:36:09,360 --> 00:36:13,280
Speaker 1: which an actual factor with larger than most people have visited.

672
00:36:13,440 --> 00:36:15,239
Speaker 1: How is your level of engagement change? How's the way

673
00:36:15,239 --> 00:36:17,640
Speaker 1: that you approached China changed over this last five, ten fifty.

674
00:36:17,680 --> 00:36:19,520
Speaker 1: First of all, if you go back, you miss remember

675
00:36:19,600 --> 00:36:21,360
Speaker 1: when we first were in China, we could only go

676
00:36:21,440 --> 00:36:25,200
Speaker 1: to one place, Huangzo Trade Fair. Remember that every year

677
00:36:25,239 --> 00:36:27,600
Speaker 1: and I think it was October, we get to China

678
00:36:27,680 --> 00:36:30,640
Speaker 1: do some trading and that was it. That Now it's

679
00:36:30,680 --> 00:36:33,480
Speaker 1: all over China. We can travel freely in any of

680
00:36:33,560 --> 00:36:36,879
Speaker 1: these cities in the hinter land along the coast. Of course.

681
00:36:37,120 --> 00:36:39,040
Speaker 1: I mean, even though people tell you you should go

682
00:36:39,280 --> 00:36:42,360
Speaker 1: to the interior cities, the reality is that the action

683
00:36:42,920 --> 00:36:47,480
Speaker 1: is in Beijing, Shanghai, shen Zen. Those is the big

684
00:36:47,600 --> 00:36:50,000
Speaker 1: cities where the action is. Are you able to get

685
00:36:50,120 --> 00:36:52,000
Speaker 1: a clear sense of what's going on there? We watched

686
00:36:52,040 --> 00:36:54,239
Speaker 1: this Party congress unfold of the last week, week and

687
00:36:54,239 --> 00:36:56,960
Speaker 1: a half and tried to piece together you know what

688
00:36:57,080 --> 00:37:00,120
Speaker 1: that might portend for the economy of the country. Back

689
00:37:00,120 --> 00:37:03,040
Speaker 1: to what we're talking about earlier about statistics and standardization

690
00:37:03,080 --> 00:37:05,000
Speaker 1: and knowing what's going on. Do you have a clear

691
00:37:05,080 --> 00:37:08,279
Speaker 1: sense now of of what's happening with the Chinese economy? Well,

692
00:37:08,320 --> 00:37:10,719
Speaker 1: in the sense that yes, in the sense that it

693
00:37:10,840 --> 00:37:12,520
Speaker 1: is a planned economy. This is what I've been trying

694
00:37:12,520 --> 00:37:15,480
Speaker 1: to tell people who are worried about the debt crisis

695
00:37:15,960 --> 00:37:19,640
Speaker 1: in China. I tell them, Look, it's a planned economy.

696
00:37:20,320 --> 00:37:22,839
Speaker 1: That's the key, and you've got to remember that because

697
00:37:22,880 --> 00:37:26,439
Speaker 1: if there's any possibility of a crisis, the Communist Party

698
00:37:26,480 --> 00:37:29,279
Speaker 1: will step in and rescue. Does that make it less

699
00:37:29,320 --> 00:37:32,239
Speaker 1: risky or or more risky? Having a planned economy less

700
00:37:32,360 --> 00:37:36,200
Speaker 1: risky for us? Definitely? For the time we've got left,

701
00:37:36,280 --> 00:37:38,840
Speaker 1: Mark well bs first, see if a crew listen to this,

702
00:37:39,040 --> 00:37:41,120
Speaker 1: we say good one to all of you worldwide from

703
00:37:41,640 --> 00:37:43,960
Speaker 1: let's see if the institute, I should say, I'm a

704
00:37:44,080 --> 00:37:47,359
Speaker 1: member and I think my dues are paid. Uh. Mark,

705
00:37:47,880 --> 00:37:53,520
Speaker 1: the the importance of hedging emerging markets in foreign exchange.

706
00:37:53,680 --> 00:37:56,840
Speaker 1: What a back and forth this has been. Does hedging

707
00:37:56,960 --> 00:38:02,120
Speaker 1: currencies at benefit total return. We found that it doesn't

708
00:38:02,239 --> 00:38:07,240
Speaker 1: add if you're going to spend money to hedge. However,

709
00:38:07,960 --> 00:38:09,840
Speaker 1: what we do is we pay attention to what we

710
00:38:10,000 --> 00:38:13,200
Speaker 1: think the currencies will do, and then we invest accordingly.

711
00:38:13,640 --> 00:38:16,520
Speaker 1: So the obvious, simple example, if we look at a

712
00:38:16,600 --> 00:38:20,359
Speaker 1: weekend in currency, let's go to exporters because they're going

713
00:38:20,400 --> 00:38:22,880
Speaker 1: to benefit from this sort of thing. Just over the

714
00:38:22,960 --> 00:38:26,320
Speaker 1: weekend on Thailand, and we've seen, of course the passing

715
00:38:26,400 --> 00:38:30,359
Speaker 1: of a king in a nation morning their king. You've

716
00:38:30,400 --> 00:38:32,880
Speaker 1: always been an optimist, Just say, can you be optimistic

717
00:38:32,920 --> 00:38:37,520
Speaker 1: on Southeast Asia and particularly on Thailand, particularly Southeast Asia,

718
00:38:37,560 --> 00:38:40,399
Speaker 1: because they're growing at an incredible page. They're growing within

719
00:38:40,440 --> 00:38:43,040
Speaker 1: the rule of law. Do you see a new vigor

720
00:38:43,120 --> 00:38:47,120
Speaker 1: there to emulate tiger economies of another time in place? Well,

721
00:38:47,200 --> 00:38:49,760
Speaker 1: you see what happens is when you have a market economy,

722
00:38:50,520 --> 00:38:56,080
Speaker 1: you are being forced to adopt proper legal structures otherwise

723
00:38:56,160 --> 00:38:59,400
Speaker 1: you can't operate. So that's the beauty. So then for example,

724
00:38:59,520 --> 00:39:03,640
Speaker 1: let's be Nam government privatize as a company. Then there

725
00:39:03,680 --> 00:39:07,800
Speaker 1: are shareholders who are demanding certain corporate governance. Then the

726
00:39:07,960 --> 00:39:11,440
Speaker 1: legal system has to react and reform. So this is

727
00:39:11,440 --> 00:39:13,640
Speaker 1: what we're seeing around the world. Mark, let me ask

728
00:39:13,680 --> 00:39:17,600
Speaker 1: you lastly about Latin American and Venezuela in particular. We've

729
00:39:17,640 --> 00:39:20,920
Speaker 1: seen them make another debt payment. The author increasingly stacked

730
00:39:20,920 --> 00:39:22,759
Speaker 1: against them doing so, but it seems like something of

731
00:39:22,800 --> 00:39:24,600
Speaker 1: pride that they continue to to do that. We've seen

732
00:39:24,640 --> 00:39:27,320
Speaker 1: the sanctions continue to be leveled on that on that country.

733
00:39:27,640 --> 00:39:30,719
Speaker 1: How do you approach a place like Venezuela recognizing the

734
00:39:30,719 --> 00:39:32,279
Speaker 1: fact that there aren't many like it at this point?

735
00:39:32,480 --> 00:39:35,360
Speaker 1: But is there opportunity still in a country like that?

736
00:39:35,560 --> 00:39:40,400
Speaker 1: And how do you balance the ethical difficulties of investing

737
00:39:40,400 --> 00:39:42,360
Speaker 1: in a country where you see such difficulty between the

738
00:39:42,400 --> 00:39:45,080
Speaker 1: people and the government itself. Well, there there are opportunities,

739
00:39:45,160 --> 00:39:49,560
Speaker 1: no question, but probably not yet. I remember when Mr

740
00:39:49,680 --> 00:39:53,120
Speaker 1: Chevez came in, we were heavily invested in Venezuela, and

741
00:39:53,239 --> 00:39:55,719
Speaker 1: I said to my guys, let's get out because he's

742
00:39:55,760 --> 00:39:58,360
Speaker 1: making it very clear he's going to take over companies

743
00:39:58,680 --> 00:40:01,880
Speaker 1: and this is anathema to what we're about. So we

744
00:40:02,000 --> 00:40:04,360
Speaker 1: got out and luckily, and you know, we didn't suff

745
00:40:04,360 --> 00:40:09,440
Speaker 1: any losses. So until the government changes it stands, it

746
00:40:09,800 --> 00:40:11,719
Speaker 1: doesn't make any sense to go into a gundry light

747
00:40:11,760 --> 00:40:14,400
Speaker 1: that Mark Webbus, thank you so much, Thank you to

748
00:40:14,400 --> 00:40:17,880
Speaker 1: see you. Mark Wobius is with Templeton. That's all that

749
00:40:17,960 --> 00:40:21,200
Speaker 1: needs to be said, Executive Chairman for the Templeton Emerging

750
00:40:21,280 --> 00:40:37,960
Speaker 1: Markets Group as well. Um, this could not be more

751
00:40:38,080 --> 00:40:41,040
Speaker 1: well timed with us the defense attorney kiss sense, no,

752
00:40:41,120 --> 00:40:44,400
Speaker 1: excuse me, No, you're not sorry. Loss lost my head there.

753
00:40:44,400 --> 00:40:45,960
Speaker 1: It would be a perfect day to speak to an

754
00:40:45,960 --> 00:40:49,279
Speaker 1: attorney about the festivities of Mr Manifert. We'll get to

755
00:40:49,360 --> 00:40:51,360
Speaker 1: that in a bit. And David Girl is going to

756
00:40:51,440 --> 00:40:56,680
Speaker 1: bring in this exceptionally important little book which is big, big,

757
00:40:56,880 --> 00:41:01,200
Speaker 1: important now. But David, I told myself that when cass

758
00:41:01,280 --> 00:41:04,239
Speaker 1: Sunstein would sit with us that I must bring up

759
00:41:05,040 --> 00:41:09,400
Speaker 1: the essay of the year Scalia I knew, the Scalia

760
00:41:09,600 --> 00:41:12,799
Speaker 1: I knew will be greatly missed. I want to congratulate

761
00:41:12,840 --> 00:41:16,080
Speaker 1: you on the essay. We get tons of hate mail

762
00:41:16,160 --> 00:41:19,759
Speaker 1: when you're on from the usual ilk and you went

763
00:41:19,840 --> 00:41:23,080
Speaker 1: to bed for their guy explained to us in your

764
00:41:23,280 --> 00:41:28,640
Speaker 1: wonderful essay of February a year ago, the Scalia that

765
00:41:28,840 --> 00:41:31,680
Speaker 1: you knew that will be missed. Well, I think he

766
00:41:31,880 --> 00:41:34,320
Speaker 1: was one of the three greatest writers in the history

767
00:41:34,360 --> 00:41:38,080
Speaker 1: of the Supreme Court. Um, he was a person of

768
00:41:38,280 --> 00:41:42,279
Speaker 1: tremendous wit and brilliance. Uh, there was one thing he

769
00:41:42,360 --> 00:41:44,279
Speaker 1: cared about. I'll get to him as a person in

770
00:41:44,320 --> 00:41:46,799
Speaker 1: a moment that there's one thing he cared about as

771
00:41:46,840 --> 00:41:49,399
Speaker 1: a judge more than anything, and it's the rule of law.

772
00:41:50,200 --> 00:41:52,799
Speaker 1: And that's a pretty good thing to care about more

773
00:41:52,840 --> 00:41:56,400
Speaker 1: than anything. He's often misunderstood by people who are his

774
00:41:56,520 --> 00:42:00,680
Speaker 1: political opponents because his real focus is on you know,

775
00:42:01,000 --> 00:42:02,840
Speaker 1: you have to follow the law. You have to follow

776
00:42:02,880 --> 00:42:06,520
Speaker 1: the rules. And that's why he was very favorable off

777
00:42:06,560 --> 00:42:10,200
Speaker 1: into criminal defendants, saying the government violated the rules with

778
00:42:10,320 --> 00:42:12,279
Speaker 1: respect to them. That's why he protected the right to

779
00:42:12,360 --> 00:42:14,880
Speaker 1: burn the American flag, said, we have a free speech

780
00:42:14,920 --> 00:42:17,759
Speaker 1: in this country. Uh. He was a great judge in

781
00:42:17,800 --> 00:42:21,880
Speaker 1: my view. As a person, he was Uh, funny and kind.

782
00:42:22,920 --> 00:42:26,600
Speaker 1: After Justice Prior was chosen as um part of the

783
00:42:26,640 --> 00:42:30,279
Speaker 1: Supreme Court, and then and Ruth Vader Ginsburg in short succession,

784
00:42:30,360 --> 00:42:32,760
Speaker 1: he put his arm around me and he said, cass

785
00:42:33,280 --> 00:42:37,320
Speaker 1: Uh first Ruth and now Steve, it's almost enough to

786
00:42:37,400 --> 00:42:40,680
Speaker 1: make me vote Democrats, with an emphasis on the almost.

787
00:42:40,920 --> 00:42:44,719
Speaker 1: Within this almost is the history being made today where

788
00:42:44,840 --> 00:42:48,040
Speaker 1: the third District Court in Washington. Next door is the

789
00:42:48,239 --> 00:42:53,720
Speaker 1: John Marshall Park, in honor of the gentleman that founded

790
00:42:53,800 --> 00:42:55,920
Speaker 1: our law. Do you believe that the law of the

791
00:42:56,080 --> 00:43:00,840
Speaker 1: nation is good standing to test these testing times? I

792
00:43:00,960 --> 00:43:03,720
Speaker 1: do think so then, and partly because of John Marshall,

793
00:43:03,880 --> 00:43:07,560
Speaker 1: partly because of antonin Scalia. Uh, we have a legal

794
00:43:07,680 --> 00:43:14,520
Speaker 1: system that is been robust against multiple challenges from presidents,

795
00:43:14,760 --> 00:43:19,840
Speaker 1: from Congresses, from judges themselves, and it's possible in the

796
00:43:19,920 --> 00:43:23,400
Speaker 1: next year's we'll see um, pretty severe tests that we

797
00:43:23,520 --> 00:43:27,040
Speaker 1: all hope, No, it's possible. But what we got back

798
00:43:27,120 --> 00:43:31,520
Speaker 1: in uh the eighteenth century has been you know, a rock.

799
00:43:32,560 --> 00:43:34,520
Speaker 1: Let me ask you just about your sense of how

800
00:43:34,640 --> 00:43:37,760
Speaker 1: well Americans understand the legal process, in the legal system

801
00:43:37,800 --> 00:43:40,680
Speaker 1: and indeed the Constitution as well here in two thousand seventeen,

802
00:43:40,680 --> 00:43:42,719
Speaker 1: and maybe that's a good segue to get into, uh,

803
00:43:42,960 --> 00:43:45,000
Speaker 1: the issues that you raised in this new book. But

804
00:43:45,400 --> 00:43:47,360
Speaker 1: as all of this unfolds, you sense a level of

805
00:43:47,440 --> 00:43:51,080
Speaker 1: engagement that's adequate to what's happening here. I think so,

806
00:43:51,600 --> 00:43:56,960
Speaker 1: and the intensity of interest in for example, are we

807
00:43:57,040 --> 00:43:59,080
Speaker 1: going to stick with the Affordable Care Act or not?

808
00:44:00,600 --> 00:44:03,480
Speaker 1: What are we going to do about immigration? How should

809
00:44:03,520 --> 00:44:07,600
Speaker 1: we handle threats from North Korea. That's a positive in

810
00:44:07,719 --> 00:44:11,640
Speaker 1: a era of what is not a positive, which is polarization.

811
00:44:12,160 --> 00:44:15,120
Speaker 1: So I think is citizen engagement with the legal system,

812
00:44:15,200 --> 00:44:19,480
Speaker 1: the political system, UH is at least among many millions,

813
00:44:19,640 --> 00:44:23,560
Speaker 1: very high. And that's kind of UH. That's really something

814
00:44:23,640 --> 00:44:25,800
Speaker 1: to work with and be proud of. The book is

815
00:44:25,840 --> 00:44:28,120
Speaker 1: Time mentioned his impeachment a citizen's guide, And I'll start

816
00:44:28,120 --> 00:44:29,480
Speaker 1: with the caveat that you have at the front of

817
00:44:29,480 --> 00:44:31,319
Speaker 1: the book as well, and that is with the goal

818
00:44:31,360 --> 00:44:32,960
Speaker 1: of neutrality in mind, I'm not going to speak of

819
00:44:32,960 --> 00:44:34,880
Speaker 1: any current political figure. I'm going to focus on the

820
00:44:34,920 --> 00:44:39,239
Speaker 1: majesty and the mystery. I want my money back. The

821
00:44:39,360 --> 00:44:43,480
Speaker 1: T word isn't in the index. The word don't need

822
00:44:43,560 --> 00:44:46,120
Speaker 1: that in the index. It's all over the book. To

823
00:44:46,239 --> 00:44:48,080
Speaker 1: the point of engagement with this. That's something that you

824
00:44:48,160 --> 00:44:50,120
Speaker 1: highlight early on. It's a through line throughout the book

825
00:44:50,160 --> 00:44:53,319
Speaker 1: is is how important issue impeachment was. We don't treat

826
00:44:53,360 --> 00:44:55,920
Speaker 1: it as such today, but at the time the Constitution

827
00:44:56,000 --> 00:44:58,760
Speaker 1: was being argued over and written, this was the subject

828
00:44:58,800 --> 00:45:04,520
Speaker 1: of fierce and passion debate. Yes, so without impeachment, probably

829
00:45:04,640 --> 00:45:07,680
Speaker 1: wouldn't have gotten the Constitution at all. Keep in mind

830
00:45:07,760 --> 00:45:12,320
Speaker 1: the Constitution was ratified against the background of the American Revolution.

831
00:45:12,680 --> 00:45:15,880
Speaker 1: If you read the Declaration of Independence, gosh if it

832
00:45:15,920 --> 00:45:19,719
Speaker 1: doesn't read like articles of impeachment. And that's no coincidence

833
00:45:19,840 --> 00:45:22,960
Speaker 1: because the Americans before we started fighting and conquered and

834
00:45:23,080 --> 00:45:27,160
Speaker 1: Lexington had actually heard issued shots in the form of

835
00:45:27,280 --> 00:45:32,000
Speaker 1: impeachment proceedings against people who were following orders from the king.

836
00:45:32,560 --> 00:45:36,879
Speaker 1: Impeachment was a homegrown American institution in the second half

837
00:45:36,960 --> 00:45:41,600
Speaker 1: of the eighteenth century. And without impeachment, the idea of

838
00:45:41,640 --> 00:45:45,360
Speaker 1: having a powerful president, which was itself super controversial. It

839
00:45:45,480 --> 00:45:48,960
Speaker 1: was Hamilton's smashing victory at the convention. Uh, he wouldn't

840
00:45:48,960 --> 00:45:52,480
Speaker 1: have enjoyed that victory unless impeachment was available, So we

841
00:45:52,600 --> 00:45:54,800
Speaker 1: kind of lost sight of it. But it is a

842
00:45:55,600 --> 00:46:00,200
Speaker 1: necessary condition for having the republic that was bequeathed to us.

843
00:46:00,520 --> 00:46:03,520
Speaker 1: How plastic a term was it or the rationale for it.

844
00:46:03,640 --> 00:46:06,239
Speaker 1: You look at state constitutions or documents like that at

845
00:46:06,280 --> 00:46:08,440
Speaker 1: the state level as it's being hashed out at the

846
00:46:08,640 --> 00:46:11,520
Speaker 1: federal level at that that's the Constitution is being written.

847
00:46:11,600 --> 00:46:13,920
Speaker 1: How much agreement or unanimity was there about what would

848
00:46:14,000 --> 00:46:18,480
Speaker 1: be something that would be would merit a call for impeachment. Um.

849
00:46:18,719 --> 00:46:21,520
Speaker 1: By the time the constitution got ratified, there was a

850
00:46:21,640 --> 00:46:25,239
Speaker 1: ton of agreement before ratification. It was a bit of

851
00:46:25,280 --> 00:46:27,960
Speaker 1: a chaos, So I say a bit of a chaos,

852
00:46:28,120 --> 00:46:31,040
Speaker 1: meaning some people thought we shouldn't have impeachment at all.

853
00:46:31,320 --> 00:46:33,560
Speaker 1: That was a small minority view. But they thought the

854
00:46:33,640 --> 00:46:37,279
Speaker 1: president elected every four years, that's enough. Other people thought

855
00:46:37,360 --> 00:46:41,480
Speaker 1: the president should be basically uh, subject to removal by

856
00:46:41,600 --> 00:46:44,920
Speaker 1: the Congress if it saw grounds. That was a minority

857
00:46:45,000 --> 00:46:48,680
Speaker 1: view also uh. And in between the two poles were

858
00:46:48,760 --> 00:46:52,040
Speaker 1: some people who thought treason and bribery and other people

859
00:46:52,040 --> 00:46:55,640
Speaker 1: who thought treason and bribery and maladministration at high crimes

860
00:46:55,680 --> 00:46:58,960
Speaker 1: and misdemeanors was kind of the cavalry that solved everything.

861
00:46:59,360 --> 00:47:02,239
Speaker 1: And once they had high crimes and misdemeanors of the formulation,

862
00:47:02,680 --> 00:47:05,880
Speaker 1: I say, they had a pretty crisp and well defined understanding.

863
00:47:05,920 --> 00:47:08,279
Speaker 1: We're gonna come back here and continue this discussion. But

864
00:47:08,360 --> 00:47:11,600
Speaker 1: a simple question, what's the number one thing you see

865
00:47:11,719 --> 00:47:16,040
Speaker 1: wrong in the media analysis and the citizen analysis of

866
00:47:16,160 --> 00:47:19,440
Speaker 1: this word impeachment? And the number one mistake is to

867
00:47:19,560 --> 00:47:22,080
Speaker 1: think that if the president has committed a crime he

868
00:47:22,239 --> 00:47:25,239
Speaker 1: is impeachable. And if the president hasn't committed a crime,

869
00:47:25,320 --> 00:47:28,560
Speaker 1: he isn't impeachable. The president can be impeached even if

870
00:47:28,640 --> 00:47:31,399
Speaker 1: he hasn't committed a crime. And if the President Jay

871
00:47:31,480 --> 00:47:35,759
Speaker 1: walks or uh steals from a store, he's not impeachable,

872
00:47:35,920 --> 00:47:38,560
Speaker 1: even though those are crimes. Have you because you've moved

873
00:47:38,600 --> 00:47:42,080
Speaker 1: in New England? Have you become a New England Patriots fan? Absolutely?

874
00:47:42,200 --> 00:47:44,840
Speaker 1: Tom Brady is the greatest football player and probably the

875
00:47:44,920 --> 00:47:50,080
Speaker 1: greatest person. That's an impeachable offense too. If Frady runs

876
00:47:50,120 --> 00:47:53,400
Speaker 1: for president, I think the unanimity would be a good idea.

877
00:47:54,040 --> 00:47:58,640
Speaker 1: It's an impt matter what political substaed with us. And

878
00:47:59,000 --> 00:48:01,800
Speaker 1: can't say enough that team of Cass Sunstein and Noah

879
00:48:01,880 --> 00:48:06,120
Speaker 1: Feldman writing for Bloomberg View is just a treasure on

880
00:48:06,280 --> 00:48:10,320
Speaker 1: our law trying to craft as smart people into English.

881
00:48:10,800 --> 00:48:13,960
Speaker 1: So many things we get wrong about our judiciary. We'll

882
00:48:14,000 --> 00:48:16,560
Speaker 1: come back. We'll talk about the Third District Court in

883
00:48:16,680 --> 00:48:19,880
Speaker 1: Washington where history is made at today and also continue

884
00:48:19,920 --> 00:48:25,239
Speaker 1: our discussion on this glorious little book, Cass Sunstein Impeachment

885
00:48:25,440 --> 00:48:29,200
Speaker 1: a Citizens Guide. It's magical. Not one word on the

886
00:48:29,280 --> 00:48:32,440
Speaker 1: President of the United States in it to us to

887
00:48:32,480 --> 00:48:36,000
Speaker 1: talk about with Cass Sunstein, what Bloomberg surveillance is about

888
00:48:36,360 --> 00:48:39,160
Speaker 1: is you get lucky, and we do that by booking

889
00:48:39,200 --> 00:48:41,560
Speaker 1: weeks in advanced days in advance and then the news

890
00:48:41,640 --> 00:48:44,319
Speaker 1: flow catch us up with us. I made a joke

891
00:48:44,360 --> 00:48:46,880
Speaker 1: about it earlier. But of course we will tread lightly

892
00:48:47,080 --> 00:48:51,520
Speaker 1: on other aspects of law from Professor Sunstein's expertise. And

893
00:48:51,600 --> 00:48:57,440
Speaker 1: with that, David, why don't you grill Professor Sunstein about

894
00:49:00,000 --> 00:49:02,400
Speaker 1: of an a law. Of course your background in constitutional law,

895
00:49:02,480 --> 00:49:04,480
Speaker 1: but you know you're write in the book, the book

896
00:49:04,520 --> 00:49:06,960
Speaker 1: You're on Impeachment that you came to study this deeply

897
00:49:07,040 --> 00:49:09,640
Speaker 1: because back touring the Clinton administration you were being asked

898
00:49:09,680 --> 00:49:11,200
Speaker 1: about it came to be something that a lot of

899
00:49:11,280 --> 00:49:13,839
Speaker 1: people were focusing on. So bearing that in mind, as

900
00:49:13,880 --> 00:49:16,080
Speaker 1: we get these indictments today, as we get a lot

901
00:49:16,120 --> 00:49:18,000
Speaker 1: of legal documents, what are you gonna be looking for?

902
00:49:18,200 --> 00:49:21,360
Speaker 1: What's your counsel to somebody who is interested in understanding

903
00:49:21,400 --> 00:49:23,719
Speaker 1: the import of what's happening today and wants to find

904
00:49:23,800 --> 00:49:26,279
Speaker 1: his way through the thorny legally's that we're going to

905
00:49:26,360 --> 00:49:28,560
Speaker 1: see here from from the federal government. I think there

906
00:49:28,560 --> 00:49:31,160
Speaker 1: are two tracks. The first, and the more important as

907
00:49:31,239 --> 00:49:34,480
Speaker 1: the connection to the White House and the campaign apparatus.

908
00:49:34,800 --> 00:49:37,800
Speaker 1: So if this is a kind of one off about

909
00:49:38,000 --> 00:49:41,000
Speaker 1: a guy who was engaged in something wrong or two

910
00:49:41,080 --> 00:49:44,719
Speaker 1: people who were engaged in something wrong, then that's not good.

911
00:49:44,960 --> 00:49:47,520
Speaker 1: But the connection with the campaign and the White House

912
00:49:47,640 --> 00:49:50,479
Speaker 1: might be marginal. That would be kind of the best

913
00:49:50,560 --> 00:49:55,040
Speaker 1: case for our our system. Let's say, Um, if it's

914
00:49:55,080 --> 00:49:57,320
Speaker 1: the case that the connection with the White House and

915
00:49:57,400 --> 00:50:01,399
Speaker 1: the and the campaign operation was uh not marginal, then

916
00:50:01,719 --> 00:50:05,120
Speaker 1: then we're talking about something of more gravity. So that's

917
00:50:05,160 --> 00:50:07,640
Speaker 1: kind of track number one, and that's the most important

918
00:50:07,680 --> 00:50:11,359
Speaker 1: in terms of history. There's also, you know, an independently

919
00:50:11,440 --> 00:50:15,040
Speaker 1: important thing. If someone who worked for the now president

920
00:50:15,040 --> 00:50:18,000
Speaker 1: of the United States was engaged in criminal acts, uh

921
00:50:18,080 --> 00:50:21,320
Speaker 1: to figure out exactly what they were. If they involved

922
00:50:21,400 --> 00:50:24,719
Speaker 1: financial self dealing or something, that's one thing. If they

923
00:50:24,800 --> 00:50:29,600
Speaker 1: involved something that involved other countries, especially in a way

924
00:50:29,640 --> 00:50:33,160
Speaker 1: that evolved occurring favor interacting with them in a way

925
00:50:33,239 --> 00:50:38,400
Speaker 1: that isn't let's say, fully patriotic, then we find something

926
00:50:38,480 --> 00:50:43,120
Speaker 1: that is not just criminal, but it is um alarming. Uh.

927
00:50:43,320 --> 00:50:47,040
Speaker 1: Not not we're stipulating because of the president, but because

928
00:50:47,080 --> 00:50:51,920
Speaker 1: of the person who's who's under criminal uh inspection. Let's say, Tom,

929
00:50:52,040 --> 00:50:54,080
Speaker 1: I know you want to ask about the newest Nobel laureate,

930
00:50:54,160 --> 00:50:59,520
Speaker 1: but quickly before but before we do, I'm reading indict Okay, Uh,

931
00:51:00,200 --> 00:51:02,640
Speaker 1: how must understand? Do you think that the founderies and

932
00:51:02,680 --> 00:51:05,040
Speaker 1: the framewories would have been surprised by how little we've

933
00:51:05,080 --> 00:51:07,920
Speaker 1: exercised this part of the constitution in terms of all

934
00:51:07,960 --> 00:51:09,840
Speaker 1: of the effort that went into crafting it, getting the

935
00:51:09,920 --> 00:51:14,280
Speaker 1: language right. Uh. Impeachment was not principally or exclusively targeted

936
00:51:14,280 --> 00:51:16,320
Speaker 1: at the presidency. It could have been for cabinet officials

937
00:51:16,360 --> 00:51:18,239
Speaker 1: and others as well. Would they be surprised by how

938
00:51:18,320 --> 00:51:20,400
Speaker 1: infrequently we've had to exercise it over the course of

939
00:51:20,440 --> 00:51:22,640
Speaker 1: our history. I think they would, and I think they'd

940
00:51:22,680 --> 00:51:25,640
Speaker 1: be pleased. I think their initial reaction would be, well,

941
00:51:25,760 --> 00:51:29,480
Speaker 1: our other safeguards must have worked. I think then they'd say,

942
00:51:29,480 --> 00:51:33,080
Speaker 1: because they were kind of arithmetically excellent. They would have

943
00:51:33,200 --> 00:51:38,040
Speaker 1: said three out of forty four, that's not so low,

944
00:51:38,960 --> 00:51:41,239
Speaker 1: and so I don't think they would have thought it was,

945
00:51:41,520 --> 00:51:44,080
Speaker 1: you know, marginal. And then they would have added some

946
00:51:44,320 --> 00:51:46,919
Speaker 1: version of the old phrase the importance of the sort

947
00:51:46,960 --> 00:51:50,040
Speaker 1: of Damocles is not that it falls, but that it hangs.

948
00:51:50,680 --> 00:51:53,880
Speaker 1: So the importance of the impeachment mechanism is not that

949
00:51:54,040 --> 00:51:57,680
Speaker 1: we invoke at necessarily, it's that it's present and it

950
00:51:57,800 --> 00:52:01,400
Speaker 1: deters the worst forms of wrongdoing. We must in honor

951
00:52:01,520 --> 00:52:04,759
Speaker 1: of Mr Taylor, and folks were pleased Richard Taylor could

952
00:52:04,800 --> 00:52:07,080
Speaker 1: join us on his way to a Cubs game in

953
00:52:07,239 --> 00:52:10,800
Speaker 1: Chicago after taking the Nobile price. This was no surprise

954
00:52:10,840 --> 00:52:14,760
Speaker 1: to anyone. But what is the distinction of Richard Taylor

955
00:52:14,960 --> 00:52:19,360
Speaker 1: in Chicago behavioral economics compared to the good work of

956
00:52:19,480 --> 00:52:24,000
Speaker 1: Common Princeton and diversity. It was Amos Diversky and also Schiller.

957
00:52:24,320 --> 00:52:27,440
Speaker 1: You know what's the Chicago? What's in the air out

958
00:52:27,520 --> 00:52:31,120
Speaker 1: there that makes it different? Okay? Well, Daniel Khneman, who's

959
00:52:31,200 --> 00:52:33,399
Speaker 1: very much with us, and nam Us Diversky who died

960
00:52:33,480 --> 00:52:39,680
Speaker 1: young are Slash were psychologists. They were kind of Matthew psychologists,

961
00:52:39,719 --> 00:52:43,160
Speaker 1: but they thought too how to heads work. What made Taylor,

962
00:52:43,320 --> 00:52:46,759
Speaker 1: what makes they learn different is he's an economist, so

963
00:52:46,960 --> 00:52:51,600
Speaker 1: he thinks, how does economic behavior work? What do investors do?

964
00:52:52,120 --> 00:52:57,759
Speaker 1: How do consumers behave? How do sellers of products uh

965
00:52:58,000 --> 00:53:02,120
Speaker 1: incorporate Let's say d v as from rationality. Why is

966
00:53:02,160 --> 00:53:05,120
Speaker 1: it kind of dumb in a storm to raise the

967
00:53:05,200 --> 00:53:09,200
Speaker 1: price of umbrellas. Sailor kind of nailed that because people

968
00:53:09,239 --> 00:53:11,800
Speaker 1: who sell umbrellas. No, if you've raised the price of

969
00:53:12,080 --> 00:53:14,120
Speaker 1: umbrellas during a storm, a lot of people are gonna

970
00:53:14,160 --> 00:53:16,800
Speaker 1: get mad, and that's not going to be good for business.

971
00:53:17,360 --> 00:53:20,160
Speaker 1: And that idea, that surge pricing, let's call it, can

972
00:53:20,239 --> 00:53:23,720
Speaker 1: backfire on the seller. That is kind of Sailor's invention,

973
00:53:24,120 --> 00:53:26,879
Speaker 1: the idea that people have different mental accounts in their head.

974
00:53:27,280 --> 00:53:30,120
Speaker 1: This is vacation money, this is retirement money, this is

975
00:53:30,239 --> 00:53:33,399
Speaker 1: kid money, this is fun money, this is oh my god,

976
00:53:33,440 --> 00:53:36,840
Speaker 1: I have to pay my bills money. That is Sailor's invention.

977
00:53:37,120 --> 00:53:41,600
Speaker 1: And that's an economic concept. So he's is he's unique

978
00:53:41,719 --> 00:53:44,400
Speaker 1: in many ways, and he's an economist. You hold a

979
00:53:44,440 --> 00:53:46,319
Speaker 1: position now that gives you latitude to teach in any

980
00:53:46,400 --> 00:53:50,080
Speaker 1: number of the constituent academic colleges at at Harvard, different

981
00:53:50,440 --> 00:53:53,279
Speaker 1: graduate schools, and and and the like. Um Clue had

982
00:53:53,280 --> 00:53:55,960
Speaker 1: a great relationship with with Richard Taylor as well. What

983
00:53:56,120 --> 00:53:57,600
Speaker 1: worked well for you in terms of that sort of

984
00:53:57,640 --> 00:54:00,440
Speaker 1: cross disciplinary approach to to academia. It's sounds like it's

985
00:54:00,480 --> 00:54:02,000
Speaker 1: still a very rare thing that you would get an

986
00:54:02,040 --> 00:54:05,480
Speaker 1: economist collaborating with somebody background in law or psychology or

987
00:54:05,520 --> 00:54:08,279
Speaker 1: English or any other subject. Why did it work so well,

988
00:54:08,320 --> 00:54:09,520
Speaker 1: How did it work so well for you, and how

989
00:54:09,560 --> 00:54:12,040
Speaker 1: do you replicate that across the academy. Well, if you're

990
00:54:12,120 --> 00:54:17,800
Speaker 1: thinking about law, like environmental law or law that's designed

991
00:54:17,840 --> 00:54:20,480
Speaker 1: to protect consumers, it's kind of good to think that

992
00:54:21,080 --> 00:54:24,440
Speaker 1: about how people behave. So if it turns out that

993
00:54:24,719 --> 00:54:28,520
Speaker 1: consumers are gonna be too optimistic and then buy products

994
00:54:28,600 --> 00:54:31,160
Speaker 1: that are going to make them sick, you probably should

995
00:54:31,239 --> 00:54:33,600
Speaker 1: know about that when you're thinking about the legal system.

996
00:54:33,960 --> 00:54:35,520
Speaker 1: Or if it turns out people are going to get

997
00:54:35,560 --> 00:54:38,680
Speaker 1: really scared about some environmental risks and not at all

998
00:54:38,760 --> 00:54:42,040
Speaker 1: scared about others, that bears on what the law is doing.

999
00:54:42,600 --> 00:54:45,319
Speaker 1: So I thought, and I'm one of a large number

1000
00:54:45,320 --> 00:54:47,880
Speaker 1: of people, thought, you know, this new material and what

1001
00:54:48,080 --> 00:54:52,839
Speaker 1: people actually do that is indispensable to think about our

1002
00:54:52,920 --> 00:54:56,360
Speaker 1: legal system. Can our nation move back to the middle.

1003
00:54:56,520 --> 00:54:59,880
Speaker 1: We've had other earrors I think of blame and nineties

1004
00:55:00,000 --> 00:55:03,640
Speaker 1: into to your Teddy Roosevelt. Can we move back to

1005
00:55:03,719 --> 00:55:08,239
Speaker 1: the middle. Do we have the structural mechanisms migrate back

1006
00:55:08,320 --> 00:55:11,120
Speaker 1: to Olympia, snow and Scoop Jackson. Will you refer to

1007
00:55:11,200 --> 00:55:14,239
Speaker 1: a Mr. Versity who said he's an optimist and it's

1008
00:55:14,320 --> 00:55:17,720
Speaker 1: rational being optimist because if you're a pessimist, you suffered twice,

1009
00:55:18,560 --> 00:55:20,640
Speaker 1: once when the bad thing happens and once when you

1010
00:55:20,680 --> 00:55:22,279
Speaker 1: think about what would you do? Talk to my wife?

1011
00:55:22,640 --> 00:55:26,880
Speaker 1: So not you know, but she, if she's an optimist,

1012
00:55:27,160 --> 00:55:30,759
Speaker 1: good is an optimist. So with respect to moving back

1013
00:55:30,800 --> 00:55:33,719
Speaker 1: to the middle, I think the objective judgment is that

1014
00:55:33,920 --> 00:55:39,760
Speaker 1: that's extremely challenging, especially given the operation of social media

1015
00:55:39,920 --> 00:55:43,040
Speaker 1: and the fragmented media market. Now, on the other hand,

1016
00:55:43,360 --> 00:55:46,759
Speaker 1: the arc of history suggests optimism makes some sense. One

1017
00:55:46,800 --> 00:55:50,760
Speaker 1: final question, back to impeachment a citizen's guide. Should President

1018
00:55:50,880 --> 00:55:55,120
Speaker 1: Clinton have been impeached? Absolutely not. It was an unconstitutional impeachment.

1019
00:55:55,280 --> 00:55:58,200
Speaker 1: Why because it wasn't a high crime or misdemeanor within

1020
00:55:58,280 --> 00:56:00,360
Speaker 1: the meaning of the constitution. And how did get that

1021
00:56:00,560 --> 00:56:04,920
Speaker 1: far in the process? It was a political um uh

1022
00:56:05,960 --> 00:56:10,120
Speaker 1: errand which succeeded. And that's not to say that what

1023
00:56:10,239 --> 00:56:13,640
Speaker 1: President Clinton did was good or anything close to good.

1024
00:56:13,719 --> 00:56:16,200
Speaker 1: It was bad, and it was worse than bad, but

1025
00:56:16,320 --> 00:56:18,760
Speaker 1: it was not an impeachable events, It wasn't an abuse

1026
00:56:18,800 --> 00:56:23,320
Speaker 1: of presidential authority as the Constitution's ratifiers understood. And I

1027
00:56:23,360 --> 00:56:25,040
Speaker 1: think it's you bring up in the book early on

1028
00:56:25,480 --> 00:56:28,759
Speaker 1: questions one can ask himself, Uh, as you way whether

1029
00:56:28,840 --> 00:56:30,600
Speaker 1: or not to approach it impeaching? What are they? How

1030
00:56:30,640 --> 00:56:32,759
Speaker 1: do you approach impeachment from a neutral perspective? There is

1031
00:56:32,840 --> 00:56:36,319
Speaker 1: so much political drama and excitement surrounding what's happening at

1032
00:56:36,360 --> 00:56:38,320
Speaker 1: this point? How do you get through that noise? One

1033
00:56:38,360 --> 00:56:42,120
Speaker 1: way to think about it is, imagine you loved the

1034
00:56:42,200 --> 00:56:45,840
Speaker 1: current president. Uh, would you still want him to be

1035
00:56:45,960 --> 00:56:49,680
Speaker 1: impeached given the act which you think is impeachable? Or

1036
00:56:50,120 --> 00:56:54,440
Speaker 1: imagine you hate or dislike the current president, would you

1037
00:56:54,480 --> 00:56:58,000
Speaker 1: think he wasn't impeachable given the conduct that he's accused

1038
00:56:58,120 --> 00:57:01,080
Speaker 1: of engaging in that has maybe each able. So to

1039
00:57:01,280 --> 00:57:05,279
Speaker 1: put to entirely to one side and political views is

1040
00:57:05,320 --> 00:57:08,759
Speaker 1: a really excellent reality check. Are the New York Jets

1041
00:57:08,800 --> 00:57:13,719
Speaker 1: a high corn? Uh? If they challenge the New England Patriots,

1042
00:57:13,920 --> 00:57:17,160
Speaker 1: then they are. I think as of this moment they

1043
00:57:17,240 --> 00:57:24,960
Speaker 1: are innocent and us your football analysis of Kess Sunstin

1044
00:57:25,600 --> 00:57:28,120
Speaker 1: this is wonderful. I really can't say enough. It is

1045
00:57:28,320 --> 00:57:31,920
Speaker 1: It's the last book I saw this Approachable was a

1046
00:57:31,960 --> 00:57:35,200
Speaker 1: guy named Joseph Nye, who I believe is a sconstin

1047
00:57:35,240 --> 00:57:38,880
Speaker 1: the Charles River is well up in Boston. Cass Sunstein

1048
00:57:39,480 --> 00:57:44,640
Speaker 1: Impeachment a Citizens Guide. It is a fabulous history lesson

1049
00:57:45,200 --> 00:57:48,640
Speaker 1: on one of the most confusing and emotional words within

1050
00:57:48,680 --> 00:57:53,440
Speaker 1: the American experience. Cass Sunstein Impeachment. Rave Reviews can't say

1051
00:57:53,560 --> 00:57:56,160
Speaker 1: enough about it, and Mr Trump does not make an

1052
00:57:56,200 --> 00:58:00,440
Speaker 1: appearance in the book, which is a major credit to

1053
00:58:00,680 --> 00:58:12,920
Speaker 1: Mr Sunsteen. Thanks for listening to the Bloomberg Surveillance podcast.

1054
00:58:13,400 --> 00:58:18,600
Speaker 1: Subscribe and listen to interviews on Apple Podcasts, SoundCloud, or

1055
00:58:18,720 --> 00:58:23,000
Speaker 1: whichever podcast platform you prefer. I'm on Twitter at Tom Keene.

1056
00:58:23,120 --> 00:58:27,440
Speaker 1: David Gura is at David Gura. Before the podcast, you

1057
00:58:27,520 --> 00:58:30,760
Speaker 1: can always catch us worldwide. I'm Bloomberg Radio.