WEBVTT - Bloomberg Businessweek Special Edition with David Rubenstein 0:00:00.480 --> 0:00:02.960 This is Bloomberg Business Week. I'm Carol Masser and I'm 0:00:03.040 --> 0:00:05.520 Jason Kelly. We're here every day bringing you the latest 0:00:05.519 --> 0:00:09.800 news from the world of business and finance, plus technology, politics, economics, 0:00:09.880 --> 0:00:13.440 all harnessing the power of Bloomberg Business Week reporters and editors, 0:00:13.480 --> 0:00:16.759 not to mention our journalists and analysts more than a 0:00:16.840 --> 0:00:19.520 hundred and twenty countries. You can download Bloomberg Business Week 0:00:19.560 --> 0:00:22.439 on iTunes, SoundCloud, or Bloomberg dot Com. You can also 0:00:22.480 --> 0:00:24.880 listen to our radio show weekdays at two pm Eastern 0:00:25.000 --> 0:00:28.360 only on Bloomberg Radio. You're listening to a special edition 0:00:28.400 --> 0:00:30.920 of Bloomberg Business Week, live from the nation's capital. I'm 0:00:31.000 --> 0:00:35.280 Jason Kelly alongside David Rubenstein, co founder, co chairman of 0:00:35.360 --> 0:00:39.559 the Carlisle Group. So David, catching our breath here a 0:00:39.600 --> 0:00:44.760 little bit. Another record day on Wall Street. It's hard 0:00:44.800 --> 0:00:47.880 to believe it can keep going on. I've been amazed, 0:00:47.920 --> 0:00:50.559 and I think most people would not have predicted this 0:00:50.640 --> 0:00:53.160 one or two months ago. I think one or two 0:00:53.159 --> 0:00:55.280 months ago people thought this steam was coming out, and 0:00:55.320 --> 0:00:57.640 now the steam is kind of heating up. So I 0:00:57.680 --> 0:01:00.480 wish I could explain it, but I really cannot. So lutely. Well, 0:01:00.520 --> 0:01:02.680 if you can't explain it, I'm not sure who can. 0:01:02.800 --> 0:01:05.240 But we will turn to set the business week agenda 0:01:05.560 --> 0:01:08.560 with a guy who watches the markets every day, Dave Wilson, 0:01:08.800 --> 0:01:11.000 Stocks Editor, author of the chart and stock of the day. 0:01:11.200 --> 0:01:13.720 He's back in our Bloomberg Interactor Broker studio. So Dave, 0:01:13.800 --> 0:01:16.919 come on in here. What are you seeing underneath this trade? 0:01:17.440 --> 0:01:20.120 You've got all eleven of the main industry groups in 0:01:20.160 --> 0:01:23.319 the SNP five hundred higher, which really kind of jumps out. 0:01:23.319 --> 0:01:26.000 I mean, some of the more defensive areas of the 0:01:26.040 --> 0:01:30.200 market leading the way, you know, consumer staples, food, beverage, tobacco, 0:01:30.440 --> 0:01:33.679 healthcare utilities. But on the other side of the coin, 0:01:34.160 --> 0:01:37.280 you look at what's going on with the cruise line owners, 0:01:37.520 --> 0:01:41.000 and they're really leading the way here, especially Carnival up 0:01:41.040 --> 0:01:43.960 more than seven percent, biggest gay in the SNP five 0:01:44.040 --> 0:01:47.720 hundred UH. Their fiscal fourth quarter earnings beat analysts average, 0:01:47.800 --> 0:01:50.360 Essman and Bloomberg survey by the most in two years. 0:01:50.640 --> 0:01:54.400 Revenue came out ahead their outlook for the current fiscal 0:01:54.480 --> 0:01:58.919 year also positively. Put it all together, you've got Royal 0:01:59.000 --> 0:02:02.960 Caribbean and Norwegian cruise line up by about three and 0:02:02.960 --> 0:02:05.400 a half percent, also lifting the S and P five. 0:02:06.040 --> 0:02:08.760 And you want to talk about an economically sensitive kind 0:02:08.760 --> 0:02:12.000 of area, certainly you would think, you know, cruise line 0:02:12.040 --> 0:02:14.600 travel fits that bill. So you've kind of got it 0:02:14.639 --> 0:02:19.600 from both directions. In today's trading. You know, it's interesting, Uh, 0:02:19.800 --> 0:02:24.239 with the impeachment crisis going on or in preachment process 0:02:24.280 --> 0:02:27.079 going on, one might think, if you're an outsider, that 0:02:27.120 --> 0:02:29.239 there'd be uncertainty in the markets. People are not sure 0:02:29.280 --> 0:02:31.440 what's going on. What I think is really going on 0:02:31.560 --> 0:02:34.880 is the China deal is essentially done, the Mexican deal, 0:02:35.000 --> 0:02:37.640 County Canadian Mexican deal is essentially done. Interest rates are 0:02:37.680 --> 0:02:41.239 staying low, unemployment is very low, and I think many 0:02:41.280 --> 0:02:44.280 people feel that the impeachment process, however it unfolds, is 0:02:44.320 --> 0:02:47.519 not likely to lead to the president leaving office anytime soon. 0:02:48.040 --> 0:02:50.120 So people who are looking for certainty in the markets 0:02:50.160 --> 0:02:53.079 see that there's pretty gonna pretty a fair amount of 0:02:53.120 --> 0:02:55.800 certainty going forward. We know what the interest rates are 0:02:55.840 --> 0:02:58.520 likely to be, we know what the trade situations likely 0:02:58.480 --> 0:03:00.239 to be in the air term. Uh, we know with 0:03:00.280 --> 0:03:02.639 the unemployment situations like to be, and we don't see 0:03:02.639 --> 0:03:06.040 any real change in their presidential situation, and are you surprised, 0:03:06.080 --> 0:03:10.200 Dave Wilson at how little politics either has not played 0:03:10.240 --> 0:03:13.560 in or has been baked into. David's point, Well, it 0:03:13.680 --> 0:03:16.800 really goes to show you that new investors are focusing 0:03:16.840 --> 0:03:19.119 on things like the economy and earnings. You know, here 0:03:19.120 --> 0:03:23.480 we are, you know, ten years plus into an economic expansion. 0:03:24.080 --> 0:03:27.520 And though certainly you go back to say August and 0:03:27.560 --> 0:03:31.079 there was concerned that we we finally start to see 0:03:31.080 --> 0:03:35.000 a contraction, it hasn't materialized. And you know, you'll look 0:03:35.000 --> 0:03:37.360 out to next year and a whole lot of people 0:03:37.360 --> 0:03:40.800 are anticipating the growth will last. And then as far 0:03:40.840 --> 0:03:43.840 as earnings go, you'll look at the numbers we've compiled 0:03:43.880 --> 0:03:48.240 on S and P five companies from individual companies, and 0:03:48.320 --> 0:03:51.800 you see analysts anticipating that, yeah, we may be down 0:03:51.840 --> 0:03:55.600 this quarter, but you look at the first, second, third, 0:03:55.640 --> 0:03:58.120 and fourth quarters and next year you're seeing what you 0:03:58.160 --> 0:04:02.320 would call sequential improvement quartered a quarter. By the time 0:04:02.360 --> 0:04:05.800 you get to the fourth quarter, thirteen percent plus earnings growth. 0:04:05.840 --> 0:04:08.480 Now that's the view. Whether it plays out or not, 0:04:09.000 --> 0:04:12.480 it remains to be seen. Nonetheless, you can understand where 0:04:12.480 --> 0:04:17.200 the optimism on stocks comes from. Given the sustainability of 0:04:17.240 --> 0:04:20.880 the economic expansion and the prospects for earnings as are 0:04:20.880 --> 0:04:24.159 reflected in analysts estimates. Absolutely, and I think that the 0:04:24.240 --> 0:04:26.719 markets generally like to figure out what is going to 0:04:26.760 --> 0:04:28.680 happen the next couple of months or six months or so, 0:04:28.839 --> 0:04:31.240 and like like predictability. And right now over the next 0:04:31.240 --> 0:04:33.360 six months, they don't see a change in interest rates 0:04:33.400 --> 0:04:35.480 going up. They think President Trump will be in office 0:04:35.520 --> 0:04:37.799 for certain, they think there's not gonna be trade wars 0:04:37.839 --> 0:04:41.280 of any consequence. So I think investors are pretty good now. 0:04:41.320 --> 0:04:43.919 There's no doubt are some economists somewhere who are saying 0:04:44.160 --> 0:04:45.960 it's going to lead to a at some point we're 0:04:45.960 --> 0:04:48.239 gonna have a slowdown, and those memos will be pulled 0:04:48.240 --> 0:04:50.400 out of the files when we actually have a slowdown, 0:04:50.520 --> 0:04:54.480 But right now people are not actually surfacing those memos. Yeah. Absolutely, 0:04:54.520 --> 0:04:56.840 it does not seem to be the case at all. 0:04:56.920 --> 0:04:58.960 Dave Wilson, thank you so much. You'll be back with 0:04:59.000 --> 0:05:01.440 me later on with your chart and stock of the day. 0:05:01.480 --> 0:05:03.600 David Reuben signing, gonna be with me here for a 0:05:03.640 --> 0:05:05.400 couple of hours. And David, I have to ask you, 0:05:05.400 --> 0:05:08.279 you know, over at Carlisle, a huge portfolio of companies. 0:05:08.320 --> 0:05:10.640 You talk to CEOs all the time, you interview them, 0:05:11.000 --> 0:05:13.680 many of them one your show Peer to Peer Conversations 0:05:13.680 --> 0:05:16.880 here on Blueberg TV. How do they feel? I mean, 0:05:17.279 --> 0:05:21.440 because we have sent some caution from CEOs over the 0:05:21.520 --> 0:05:24.040 back half of this year. Well, CEOs don't want to 0:05:24.080 --> 0:05:27.719 look like they're too um a bulliant, and they always 0:05:27.720 --> 0:05:30.000 want to be prepared for a downturn. But right now 0:05:30.080 --> 0:05:32.040 they have a fair amount of cash, their stock prices 0:05:32.040 --> 0:05:34.359 are high. Um, they're feeling pretty good about things. They 0:05:34.360 --> 0:05:35.640 don't want to go out in the public and say, 0:05:35.680 --> 0:05:37.640 look how great things are and things can't go wrong, 0:05:38.000 --> 0:05:40.599 but they're feeling privately pretty good about things. There's always 0:05:40.640 --> 0:05:42.960 a cautionary word here or there, but generally they're feeling 0:05:42.960 --> 0:05:45.400 pretty good. And are they doing deals? I mean, that's 0:05:45.440 --> 0:05:47.919 always one of the questions around, you know, where we 0:05:47.960 --> 0:05:49.760 are in the cycle, in terms of do they feel 0:05:50.080 --> 0:05:54.280 comfortable doing a big acquisition or or sort of spending 0:05:54.320 --> 0:05:56.039 some of that money. I think the M and A 0:05:56.120 --> 0:05:59.000 market is okay, but that the slowdown there at center 0:05:59.080 --> 0:06:02.000 is a slowdown is simply that prices are very high, 0:06:02.320 --> 0:06:04.279 so there are no very there are very few bargains 0:06:04.320 --> 0:06:06.920 out there, and you don't see any value investors really 0:06:06.960 --> 0:06:09.760 saying there's a great cheap thing to buy. So prices 0:06:09.760 --> 0:06:11.479 are high and you have to swallow the idea that 0:06:11.480 --> 0:06:14.400 you're gonna be paying for good companies a much higher 0:06:14.440 --> 0:06:16.520 multiple than you normally would pay. And I know we're 0:06:16.520 --> 0:06:18.440 going to talk about private equity throughout the show, but 0:06:18.480 --> 0:06:21.440 does that make private equity deal making that much harder 0:06:21.480 --> 0:06:26.240 those valuations. Private equity deal making is doing okay this year. 0:06:26.279 --> 0:06:28.520 I would say it's about what it was last year. 0:06:28.800 --> 0:06:31.200 The principal issue is that you have to get comfortable 0:06:31.240 --> 0:06:35.560 with paying thirteen fourteen times cash flow or EBIT down multiples. 0:06:35.600 --> 0:06:37.440 And the way you can get comfortable with it is 0:06:37.480 --> 0:06:39.920 really that investors are willing to accept somewhat lower rates 0:06:39.920 --> 0:06:42.440 of return than they were five or ten years ago. Today, 0:06:42.560 --> 0:06:44.600 in the low interest rate environment, if you can get 0:06:44.600 --> 0:06:48.360 an investor thirteen fourteen, fifteen percent net intern and ray 0:06:48.400 --> 0:06:50.640 to return over five years, they're happy with that. In 0:06:50.680 --> 0:06:53.400 the old days, you might have won. So investors are 0:06:53.400 --> 0:06:55.200 willing to take lower rate return. You can still do 0:06:55.279 --> 0:06:59.520 these deals, but they're no doubt more expensive. Well feels amazing, 0:06:59.600 --> 0:07:02.240 and then world of negative interest rates and where you're 0:07:02.279 --> 0:07:04.800 just not seeing the sorts of yields that you might 0:07:04.839 --> 0:07:07.200 be used. That's true. Be course, those deals take three 0:07:07.279 --> 0:07:09.600 or four years to pull off, and there's some liquidity 0:07:09.600 --> 0:07:11.640 for the in the markets when you when you do 0:07:11.640 --> 0:07:14.240 those deals. But generally people are pretty uh a feeling 0:07:14.240 --> 0:07:15.840 they can get those kind of returns, and we have 0:07:15.880 --> 0:07:18.360 been able to do that, and a lot of enthusiasm 0:07:18.440 --> 0:07:22.240 still for alternatives. It feels like among institutional investors there's 0:07:22.320 --> 0:07:25.160 more enthusiasm. And then in the thirty years I've seen 0:07:25.520 --> 0:07:28.320 uh this market, and I think the reason is that 0:07:28.360 --> 0:07:30.640 people think there will be a turn down at some point. 0:07:31.040 --> 0:07:32.800 And what we learned in the last turn down, the 0:07:32.840 --> 0:07:35.960 Great Recession, is that private equity and alternatives tended to 0:07:36.000 --> 0:07:38.840 be a pretty good hedge Uh. Not not so much 0:07:38.880 --> 0:07:42.120 hedge funds, but uh private equity firms did pretty well 0:07:42.120 --> 0:07:45.360 through the Great Recession because they fix their companies, they 0:07:45.440 --> 0:07:47.800 put in more equity if necessary, or they bought some 0:07:47.880 --> 0:07:49.800 debt back at discount. And people think, if there's a 0:07:49.840 --> 0:07:51.920 downturn again, these same managers will figure out how to 0:07:51.920 --> 0:07:54.280 get through it all right, much much more to come 0:07:54.320 --> 0:07:57.080 with David Rubinstein here on a special edition of Bloomberg 0:07:57.280 --> 0:08:01.000 Business Week. I'm Jason Kelly in wash Ington, d C. 0:08:01.200 --> 0:08:03.400 We're gonna talk a little bit about this split screen 0:08:03.880 --> 0:08:06.600 week that we had in politics, talk a little bit 0:08:06.600 --> 0:08:09.840 about trade, and much more coming up. You are listening 0:08:09.880 --> 0:08:13.600 to Bloomberg Business Week. Jason Kelly and David rubinstide here 0:08:13.600 --> 0:08:17.720 in our studio and just crossing the Bloomberg terminal. President 0:08:17.720 --> 0:08:21.880 Trump accepting the February fourth State of the Union invitation 0:08:22.360 --> 0:08:26.080 from House Speaker Nan Nancy Pelosi, and who better to 0:08:26.200 --> 0:08:28.920 break down politics? We go straight to the boss. We 0:08:29.000 --> 0:08:32.400 come here to Washington. Craig Gordon, Executive editor and Washington 0:08:32.600 --> 0:08:37.360 Bureau Chief, joining David and myself in our studio. So 0:08:38.000 --> 0:08:40.400 we're gonna hear from the President in February four. Yeah, 0:08:40.440 --> 0:08:43.880 I mean the sort of the historical moments keep piling 0:08:43.960 --> 0:08:47.319 up here. I mean, if we understand the schedule for 0:08:47.360 --> 0:08:50.320 the impeachment trial in the Senate, which we don't really 0:08:50.320 --> 0:08:52.440 have yet, but the sort of rough guessing is it 0:08:52.440 --> 0:08:55.400 maybe starts around the second week in January, takes only 0:08:55.440 --> 0:08:57.200 a couple of weeks. I mean, you could literally have 0:08:57.280 --> 0:09:00.719 the president having been acquitted of impeachment the too impeachment 0:09:01.160 --> 0:09:04.560 charges days before he steps into the well of the 0:09:04.600 --> 0:09:06.840 House to to give his address on the State of 0:09:06.840 --> 0:09:10.199 the Union. The person who brought those impeachment articles, of course, 0:09:10.240 --> 0:09:13.760 the Speaker, Nancy Pelosi, staring right sitting right behind him. Actually, 0:09:14.120 --> 0:09:15.920 and I mean, it's just I feel like every day 0:09:15.960 --> 0:09:17.880 we come to work here, there's just another thing that's 0:09:17.880 --> 0:09:19.280 going to end up in the history books in this 0:09:19.600 --> 0:09:22.840 That Friday, that Tuesday, February fourth, will be another one 0:09:22.840 --> 0:09:27.240 of them. It will be surreal. Generally, you don't have 0:09:28.240 --> 0:09:30.880 an impeachment just having been completed in somebody giving their 0:09:30.880 --> 0:09:33.320 State of Union right afterwards. So I'm sure it'll be 0:09:33.320 --> 0:09:36.920 an interesting address, and I suspect they'll have record ratings. 0:09:36.960 --> 0:09:40.440 And so Craig tell us about this week. I mean, 0:09:40.640 --> 0:09:44.200 because I feel like all of us around this table, 0:09:44.960 --> 0:09:47.720 if you had told us a year ago, certainly five 0:09:47.800 --> 0:09:53.360 years ago, the level to which people were met about 0:09:53.400 --> 0:09:56.520 the idea of a president being impeached, we would have 0:09:57.040 --> 0:09:59.800 told ourselves we were insane. Am I wrong? No, You're 0:10:00.000 --> 0:10:02.800 resolutely right. And and and it's it's interesting because, as the 0:10:02.800 --> 0:10:04.520 Washington Beer rechief, I r in a Bureau of seventy 0:10:04.520 --> 0:10:07.000 five people that reports me. We cover this news every day, 0:10:07.040 --> 0:10:08.880 and I did feel myself having to give a couple 0:10:08.880 --> 0:10:11.080 of new Rockney style speeches like, hey, folks, this is 0:10:11.080 --> 0:10:13.440 a big moment. Let's not lose sight of that. It's 0:10:13.480 --> 0:10:15.960 just we were in like big moment overload. You know, 0:10:16.240 --> 0:10:18.920 every day, almost literally every day since Salstrom has been 0:10:18.960 --> 0:10:22.800 the president, something unbelievable has happened. He fires James Comey, 0:10:22.960 --> 0:10:25.160 he you know, the Muller Report, the Muller testimony, he 0:10:25.240 --> 0:10:26.880 go right down all the list, all the all the 0:10:26.880 --> 0:10:29.599 moments we remember. And so when it finally comes to 0:10:29.760 --> 0:10:32.720 again the ultimate sanction of the United States Congress against 0:10:32.760 --> 0:10:35.840 the president impeachment, it was a little bit hard sometimes 0:10:35.840 --> 0:10:37.640 to muster the energy. Not part of that was just 0:10:37.760 --> 0:10:39.960 like we all knew there was a foregone conclusion and 0:10:40.120 --> 0:10:41.439 you know they were going to get the majority in 0:10:41.480 --> 0:10:43.839 the House. There was never any drama or question about that. 0:10:44.400 --> 0:10:46.319 You know, it was hard to get excited about will 0:10:46.320 --> 0:10:48.319 any Democrats to fact, I guess two or three ended 0:10:48.400 --> 0:10:50.280 up defecting that We kind of even knew who those 0:10:50.280 --> 0:10:52.679 people were gonna be, So there was some of the 0:10:52.760 --> 0:10:54.720 drama was just wrung out of it by the by 0:10:54.760 --> 0:10:58.200 the sheer inevitability of it um. But what did add 0:10:58.240 --> 0:11:00.360 certainly a little bit of spice to the day was, 0:11:00.559 --> 0:11:02.920 you know this split screen moment where you have the 0:11:02.920 --> 0:11:06.280 President United States that rally and Battle Creek, Michigan literally 0:11:06.480 --> 0:11:10.480 as the gavel is falling on his impeachment for several minutes, 0:11:11.000 --> 0:11:13.240 not knowing that, and you know, so he's sort of 0:11:13.280 --> 0:11:15.319 giving a lot of his standard lines as which hunt 0:11:15.520 --> 0:11:17.840 is unfair and then no president ship to go through this, 0:11:18.240 --> 0:11:20.559 and we all know something that the President United State 0:11:20.600 --> 0:11:23.199 saysn't know that he's all right, actually just been impeached. 0:11:23.480 --> 0:11:25.680 And there was actually quite a moment where one of 0:11:25.720 --> 0:11:28.079 his staffers I believe was one of his staff stenographers 0:11:28.120 --> 0:11:30.640 literally held up a giant white, you know, sort of 0:11:30.640 --> 0:11:32.959 piece of poster board that had the vote on it 0:11:33.320 --> 0:11:35.280 that uh and then he could read it and we 0:11:35.280 --> 0:11:37.120 could watch him reading it, and we saw him reading it, 0:11:37.160 --> 0:11:38.640 and then he read it and he said, oh, no 0:11:38.760 --> 0:11:41.720 Republicans woke, so you know whatever. So you know, the 0:11:41.960 --> 0:11:45.040 just again, you almost words almost fail you as you 0:11:45.080 --> 0:11:47.560 try to capture the history of it. And yet that 0:11:47.640 --> 0:11:50.600 day there was a certain amount of equality and watching 0:11:50.640 --> 0:11:53.120 paint drive what's hard to run believe really is that 0:11:53.200 --> 0:11:56.720 for two years Bob Muller did an investigation. Most people 0:11:56.760 --> 0:11:59.520 thought something would come from that that would be perhaps 0:11:59.520 --> 0:12:01.520 not favorite bo to the president, but nothing really came 0:12:01.520 --> 0:12:03.960 out of that. Then I whistle blower sent in an 0:12:04.000 --> 0:12:07.280 anonymous letter three months ago, and in three months you're 0:12:07.320 --> 0:12:10.000 at the stage. Who would have predicted that? Yeah, I mean, 0:12:10.080 --> 0:12:12.600 I think I think the one place where Trump, you know, 0:12:12.600 --> 0:12:14.280 there's a he has a little bit of of a 0:12:14.320 --> 0:12:17.240 little ground to stand on, is like, folks, you spent 0:12:17.320 --> 0:12:19.960 two years you hired Robert Mueller. Everybody told me he 0:12:20.040 --> 0:12:22.520 was the prosecutor's prosecutor, the you know, the most honest 0:12:22.559 --> 0:12:25.880 man on earth and whatever. And he put out his report. 0:12:26.080 --> 0:12:28.520 He we all know, he didn't exonerate the president entirely 0:12:28.559 --> 0:12:30.400 on the obstruction of justice. Party sort of did in 0:12:30.400 --> 0:12:33.160 the coclusion part, and the Democrats really did kind of 0:12:33.160 --> 0:12:35.679 have to just sweep all that aside until this new 0:12:35.720 --> 0:12:37.840 thing came along from the whistle blower. And it's not 0:12:37.920 --> 0:12:40.840 my job to decide, you know, whether that's impeachable or not, 0:12:40.960 --> 0:12:43.560 but it is sort of remarkable. And this is the 0:12:43.559 --> 0:12:45.520 one thing that I do think Trump can can make 0:12:45.559 --> 0:12:49.199 some hay on in the campaign trail that the investigation 0:12:49.240 --> 0:12:51.160 that was supposed to bring me down bring me didn't 0:12:51.160 --> 0:12:52.640 bring me down, so they had to come up with 0:12:52.640 --> 0:12:54.600 something else. Right Now, look what the whistle blower says, 0:12:54.600 --> 0:12:56.320 pretty dramatic. We all know the facts of the case. 0:12:56.360 --> 0:12:58.760 He called the guy in Ukraine and said, should investigate 0:12:58.800 --> 0:13:01.040 Joe Biden and the guys. Let me get back down 0:13:01.120 --> 0:13:04.400 that and you know whatnot But you know, again, over 0:13:04.440 --> 0:13:07.200 three and a half years of Donald Trump's presidency, essentially 0:13:07.559 --> 0:13:09.200 it was really just the thing that happened the last 0:13:09.200 --> 0:13:11.280 two months that led to his impeachment, and that alone, 0:13:11.400 --> 0:13:13.240 I think will give him something to whip up his 0:13:13.280 --> 0:13:15.960 crowds with, which is quite good at doing, without addressing 0:13:16.000 --> 0:13:18.959 the merits of the impeachment, the effort, and so forth. 0:13:19.280 --> 0:13:21.680 I do wonder if the approach that had been used 0:13:21.679 --> 0:13:24.719 by Ronald Reagan when he dealt with Iran Contra had 0:13:24.720 --> 0:13:27.640 been used here, whether this would have faded away. In 0:13:27.679 --> 0:13:30.880 other words, a speech by the president saying I didn't 0:13:30.960 --> 0:13:33.840 quite understand the implications of what I was saying, I'm 0:13:33.880 --> 0:13:37.600 sorry I made a mistake, whether that contrition might have 0:13:38.400 --> 0:13:40.800 kept this from going forward and obviously work with Ronald 0:13:40.840 --> 0:13:42.599 Reagan because many people at the time we're thinking he 0:13:42.600 --> 0:13:44.640 should have been impeached for the Iran contra thing, and 0:13:44.640 --> 0:13:47.160 then he made a speech that kind of diffused all 0:13:47.160 --> 0:13:49.640 of that. Obviously the president didn't choose to do that, 0:13:49.679 --> 0:13:52.560 but I think historians will always debate whether something like 0:13:52.640 --> 0:13:55.080 that might have made a difference. Yeah. I mean, we 0:13:55.200 --> 0:13:57.160 have been struck many times that there are two words 0:13:57.160 --> 0:13:59.440 that do not seem to exist in Donald Trump's vocabulary, 0:13:59.480 --> 0:14:02.160 and they are i'm sorry. So you're right in that 0:14:02.240 --> 0:14:05.400 case where Reagan, at that point, somewhat somewhat of a 0:14:05.440 --> 0:14:07.800 line in winter, somewhat of a fading figure, still had 0:14:07.960 --> 0:14:11.880 enough of a reservoir of goodwill to tap into to say, hey, yeah, 0:14:12.040 --> 0:14:14.800 I probably should have done that or I'm sorry. I'm 0:14:14.840 --> 0:14:17.760 just not sure. Trump his reservoir is empty. There was 0:14:17.960 --> 0:14:19.720 not much to begin with, so that would have been 0:14:19.720 --> 0:14:22.120 a harder trip for him to pull off. Recognized it 0:14:22.160 --> 0:14:24.640 was probably unlikely would do that. I just wondered if 0:14:24.680 --> 0:14:27.600 somebody other than Trump had had this same situation and 0:14:27.640 --> 0:14:31.160 you said I'm sorry, Because generally and in society, people 0:14:31.200 --> 0:14:32.840 get away with a lot when you say i'm sorry. 0:14:32.840 --> 0:14:34.920 I made a mistake and people are willing to forgive people. 0:14:34.920 --> 0:14:38.600 But obviously that's not this situation. Well, the story goes on. 0:14:38.680 --> 0:14:40.440 We know that after the first of the year, at 0:14:40.560 --> 0:14:43.440 some point, maybe before the articles will be sent to 0:14:43.480 --> 0:14:46.120 the Senate, and the story goes on, we will count 0:14:46.120 --> 0:14:48.360 on Creig Gordon and his team here in Washington to 0:14:48.400 --> 0:14:50.920 bring it to us. Craig Gordon, Executive Editor, Washington Bury 0:14:51.000 --> 0:14:54.840 chief for Bloomberg, joining David Rubinstein and myself here in 0:14:54.840 --> 0:14:58.440 our one studio. Coming up, I'm gonna talk a little 0:14:58.440 --> 0:15:01.920 bit about trade. You are listening to Bloomberg Business Week 0:15:02.000 --> 0:15:05.720 Jason Kelly the studio in d C. Alongside David reuben Stein, 0:15:05.800 --> 0:15:09.320 co founder of Carlisle Group and with us now Sean Donnin, 0:15:09.760 --> 0:15:14.000 senior trade reporter for Bloomberg, one of the busiest guys 0:15:14.120 --> 0:15:16.840 across the empire. Sean, great to be with you in 0:15:16.840 --> 0:15:20.240 your town, thanks to having me. All Right, So a 0:15:20.320 --> 0:15:24.360 big week, to say the least, on a couple fronts 0:15:24.440 --> 0:15:28.080 as it relates to trade. Let's talk about China first. 0:15:29.520 --> 0:15:32.760 What happens next? We're gonna actually get something signed? Yeah, well, 0:15:32.880 --> 0:15:35.640 you heard Will Burross there. It looks like they're in 0:15:35.680 --> 0:15:38.120 the final stages of getting something translated. Was talking to 0:15:38.160 --> 0:15:41.560 someone close to the process yesterday who said they're basically 0:15:41.600 --> 0:15:45.440 trading drafts in Chinese right now that are going back 0:15:45.480 --> 0:15:48.280 and forth across the Pacific U I guess you go 0:15:48.320 --> 0:15:51.840 with email on that one. They're talking by um the 0:15:52.160 --> 0:15:55.960 phone as well throughout still working out the details of 0:15:55.960 --> 0:15:58.280 a signing, but the plan at this point is for Luja, 0:15:58.400 --> 0:16:01.120 the Chinese Vice Premier, to come to Washington in the 0:16:01.160 --> 0:16:04.200 first couple of weeks of January and to sign this 0:16:04.320 --> 0:16:06.960 thing with Bob Leitheiser, the U S Trade representative, who 0:16:07.000 --> 0:16:11.480 of course led the negotiations. I think this is agreement 0:16:11.560 --> 0:16:15.280 that doesn't do everything that everybody wanted out of this agreement, 0:16:15.320 --> 0:16:17.360 but it does get enough done so that I think 0:16:17.360 --> 0:16:22.160 the market uncertainty that arose because of the China dispute 0:16:22.480 --> 0:16:24.520 is probably gone for a while. So, in other words, 0:16:24.560 --> 0:16:26.560 every issue with China is not going to be resolved, 0:16:26.800 --> 0:16:28.560 but the market is no longer going to say, what's 0:16:28.560 --> 0:16:30.040 happening with China? What are we gonna do? And I 0:16:30.040 --> 0:16:31.840 think this for the time being is a pretty good 0:16:31.840 --> 0:16:34.600 deal for that purpose. Yeah. No, there's no question that 0:16:34.680 --> 0:16:38.520 this absolutely kind of puts at least a pause on 0:16:38.600 --> 0:16:42.120 any escalation or the prospect of any escalation. I think 0:16:42.160 --> 0:16:45.080 one of the things that's remarkable is, UH, we always 0:16:45.120 --> 0:16:47.400 forget just how far we've come. A year ago we 0:16:47.440 --> 0:16:50.040 had tariffs on fifty billion dollars in imports from China. 0:16:50.280 --> 0:16:53.160 We now have tariffs on three hundred sixty billion dollars 0:16:53.160 --> 0:16:56.320 in imports from China. Two hundred and fifty billion dollars 0:16:56.320 --> 0:17:00.080 of those imports are subject to UH tariff that is 0:17:00.160 --> 0:17:03.160 likely to continue for the foreseeable future. It is not 0:17:03.200 --> 0:17:06.640 going to be rolled back as part of this trade deal. UH. 0:17:06.840 --> 0:17:08.520 And so one of the questions is going to be 0:17:08.600 --> 0:17:13.080 for businesses I think is UH. You know, the administration 0:17:13.119 --> 0:17:15.440 likes these tariffs. The presidents really likes these tests because 0:17:15.440 --> 0:17:18.560 he thinks they're causing supply chains to shift. But whether 0:17:18.600 --> 0:17:22.720 we get into a more permanent shift and in terms 0:17:22.720 --> 0:17:25.320 of businesses, in terms of supply chains and adapting to that. 0:17:25.520 --> 0:17:27.880 But there's still a lot of uncertainty hanging out there, 0:17:28.160 --> 0:17:30.080 not as much as there was. I think the President 0:17:30.080 --> 0:17:32.360 does like tariffs in part because it's something he can 0:17:32.400 --> 0:17:34.760 do by himself. He doesn't need to go to Congress 0:17:34.840 --> 0:17:36.920 or get the courts to approve it. So that's something 0:17:36.920 --> 0:17:40.399 that is real presidential power. I think the real issue 0:17:40.400 --> 0:17:43.320 that Bob Leitheiser wanted to address and hasn't yet addressed 0:17:43.359 --> 0:17:47.240 because it wasn't politically feasible, is the China five issues. 0:17:47.640 --> 0:17:50.920 Those are the issues that people think next ten twenty 0:17:51.000 --> 0:17:53.160 years are the more serious ones, which is to say 0:17:53.200 --> 0:17:56.920 that China wants to use its government money and resources 0:17:57.000 --> 0:17:59.760 to enable its companies to be a leader in semiconductor 0:17:59.800 --> 0:18:03.800 for auction, semichinductor sign artificial intelligence five G. That's the 0:18:03.840 --> 0:18:06.800 future of trade and the future of technology, and those 0:18:06.840 --> 0:18:10.000 issues for lots of reasons, just couldn't be addressed right now. Yeah, 0:18:10.040 --> 0:18:13.400 And well, I mean and and that's the big question, 0:18:13.520 --> 0:18:15.240 right I mean, if we look at Phase one is 0:18:15.280 --> 0:18:18.680 a pause with some commitments from the Chinese on intellectual 0:18:18.720 --> 0:18:20.919 property that we don't know the details of yet, some 0:18:20.960 --> 0:18:24.600 commitments on currency manipulation to not do it, uh, some 0:18:24.720 --> 0:18:28.600 commitments on opening up the financial sector. Uh. And of 0:18:28.640 --> 0:18:32.360 course these big agricultural purchases, the President saying that we're 0:18:32.359 --> 0:18:35.800 talking about two hundred billion dollars and purchases and manufactured 0:18:35.800 --> 0:18:39.400 and agricultural goods over two years. But I mean, really, 0:18:39.440 --> 0:18:42.760 this is a pause and the big issues like that issue, 0:18:42.760 --> 0:18:45.920 those issues of me and China, and the broader issue 0:18:45.920 --> 0:18:49.320 of industrial subsidies uh in China. I mean, that is 0:18:49.400 --> 0:18:53.119 what fueled the rise of industrial China, and that is 0:18:53.160 --> 0:18:56.120 the reason we talk about China. Is this great economic 0:18:56.160 --> 0:18:59.160 power in the world today, is this web of industrial subsidies, 0:18:59.160 --> 0:19:02.760 whether it's cheap owns or cheap electricity, those aren't going away. Well, 0:19:02.840 --> 0:19:05.080 let me try to explain it in my terms that 0:19:05.119 --> 0:19:08.360 I often understand this. The trade deficit was a problem 0:19:08.560 --> 0:19:11.200 and it was very recognizable. So if you're a presidential 0:19:11.240 --> 0:19:13.320 candidate or president, you could say, the trade deficit is 0:19:13.359 --> 0:19:15.240 too high. I've got to do something about it. This 0:19:15.320 --> 0:19:18.639 might have some moderating effect and it won't dramatically change it. 0:19:19.000 --> 0:19:21.440 But there hasn't been a political issue that people vote 0:19:21.480 --> 0:19:25.240 on China. People don't quite understand that. So if you're 0:19:25.240 --> 0:19:28.680 warning for re election in two thousand twenty, if you've 0:19:28.680 --> 0:19:30.840