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Speaker 1: Yeah, Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane.

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Speaker 1: Always with Michael McKee daily we bring you insight from

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Speaker 1: the best in economics, finance, investment, and international relations. Find

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Speaker 1: Bloomberg Surveillance on iTunes, SoundCloud, Bloomberg dot Com, and of

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Speaker 1: course on the Bloomberg Carl Weinberg with us. We've been

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Speaker 1: getting a briefing through the morning from Dr Weinberg. Let

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Speaker 1: me ask you a sixty thou foot question, which goes

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Speaker 1: back to the nation by nation analysis you do with

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Speaker 1: high frequency economics. Are we in global recession? Good morning, Tom.

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Speaker 1: I don't think we're in a global recession, but we

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Speaker 1: are teetering towards that direction. Doesn't mean we're going to

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Speaker 1: get there, but we certainly have a global commodity price

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Speaker 1: the climb. We haven't spoken about that a long time here,

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Speaker 1: but it's still their prices are still low, and while

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Speaker 1: they're off their bottoms, they're still so low that the

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Speaker 1: countries that produce commodities, particularly oil, but also copper and

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Speaker 1: nickel and all that other good stuff that goes into

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Speaker 1: making stuff iron ore coal rides down and those countries

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Speaker 1: now import less from the other countries. That buy the

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Speaker 1: stuff from them and that makes them poorer. So US

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Speaker 1: exports are down, Japan's exports are down, Europe's exports are down.

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Speaker 1: Across the board, we're seeing export growth as a drag

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Speaker 1: and the advanced economies, and that's pulling us all slower.

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Speaker 1: I thought one of the most trenched comments with with

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Speaker 1: everything going on in the world that came from your

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Speaker 1: most recent note where uh you say, uh, yeah, there's Brexit,

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Speaker 1: but all that was wrong with the world before Brexit

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Speaker 1: remains wrong. Yeah, particularly in England, you know, where they've

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Speaker 1: had a balance of payments crisis building for a long

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Speaker 1: time and nobody has done anything about it. They've been

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Speaker 1: so busy deciding whether to stay or leave in Europe,

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Speaker 1: they forgot that they have a hundred and forty billion

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Speaker 1: pound current account deficit that still has to be financed.

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Speaker 1: And if they leave Europe, the incentives are very, very large,

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Speaker 1: at least for companies to slow down their inflow of

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Speaker 1: investment funds into the UK because they don't know what

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Speaker 1: environment they're going to be facing. And some cut firms,

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Speaker 1: as you've already reported here on Bloomberg, are thinking about

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Speaker 1: actually leaving the UK and moving to a base within

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Speaker 1: the European Union. So we've got a STU cooking here

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Speaker 1: in the UK where pre existing problems just became worse. Well,

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Speaker 1: what's the biggest issue out there? I mean, I wouldn't

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Speaker 1: even list them, there's so many. I'll just ask you

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Speaker 1: what are you most worried about. I'm worried in the

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Speaker 1: very immediate term about the emerging economies that produce commodities.

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Speaker 1: And we hear this morning about some civil unrest in Venezuela,

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Speaker 1: which is, as we know, extremely troubled by the low

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Speaker 1: oil and prices. By the low oil prices, We've had

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Speaker 1: trouble financially and economically in Nigeria. I think that where

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Speaker 1: we run into trouble is when the fiscal balances of

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Speaker 1: countries that produce commodities don't it up anymore, and then

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Speaker 1: they have to come to the I M F. And

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Speaker 1: I know Tom's talking to Christine Legard today and I'm

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Speaker 1: hoping that will be one of their topics of conversation.

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Speaker 1: You're you're asking Christine for a loan, Yeah, for a loan.

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Speaker 1: I had Carl right out a set of questions for

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Speaker 1: Madame Legarde so I could get through this in one piece.

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Speaker 1: You've highlighted a Bloomberg article on a changed Bundesbank. This

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Speaker 1: is inside baseball, except for Italy, except for Portugal, except

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Speaker 1: for Greece, and on and on and on. Does the

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Speaker 1: Bundesbank still run Frankfurt? The Bundesbank is clearly, uh, you know,

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Speaker 1: a big player in the e c B and in

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Speaker 1: the European Germany is obviously the key political driving force

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Speaker 1: in Europe right now. They're kind of the leader that

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Speaker 1: everybody looks too. And there's a story on Bloomberg this morning.

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Speaker 1: I'll at middle. I haven't studied it or contemplated its

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Speaker 1: implications yet, but the headline is Bundesbank proposes a proved

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Speaker 1: form of European crisis response mechanism, and it proposes a

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Speaker 1: bigger role for the European stability mechanism. Did they blink

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Speaker 1: this morning? Well, I think they might have. I think

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Speaker 1: this is accepting a central form of fiscal power within

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Speaker 1: Europe that the bundus Bank can perhaps accept and digest it.

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Speaker 1: It indicates a way to move forward. Up to now,

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Speaker 1: their position has always been stopped. Don't move forward anymore.

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Speaker 1: We want to block more Europe in fiscal affairs. We

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Speaker 1: want to keep our independence, but here is a first

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Speaker 1: crack that says, well, here's one way in which we

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Speaker 1: might consider moving forward with a centralized fiscal authority within Europe.

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Speaker 1: And I think it's interesting. Like I said, I have

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Speaker 1: to analyze more. But Calimer, thank you so much. With

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Speaker 1: high frequency economics, and of course Waxy philosophical at New

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Speaker 1: York University is he has want to do in the autumn,

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Speaker 1: in the spring, should we talk to an optimist? This morning?

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Speaker 1: We should? I you know, somebody said, do you have

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Speaker 1: notes from Neil Dudda. I said, I know what deal

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Speaker 1: thinks Neil Neil data from Renaissance Macro is the head

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Speaker 1: of US economics there, Neil um. So we put out

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Speaker 1: this morning a note. It wasn't you, but I thought

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Speaker 1: it was right up your alley. And they put out

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Speaker 1: the economic surprise Index and it has been significantly higher,

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Speaker 1: rising rather rapidly over the last couple of weeks. At

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Speaker 1: a time when everybody is writing off the FED and

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Speaker 1: saying that the economies and in dulgrums and we must

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Speaker 1: be getting ready for recession. The numbers don't support that. No,

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Speaker 1: they don't. But then again, if the surprise indicators moving higher,

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Speaker 1: I guess now the time to get barished, right, given

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Speaker 1: the mean reverting nature of that indicator. Um, you know,

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Speaker 1: I think the surprise indicators provide very little information other

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Speaker 1: than just to tell us that economists aren't that good

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Speaker 1: at forecasting. You know. My sense is that, you know,

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Speaker 1: just let's review the last six months, right, Um, we've

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Speaker 1: had job breaths of about a hundred and fifty thousand

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Speaker 1: on average. We know that's enough to lower the unemployment rate.

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Speaker 1: Core inflation has been firming. Core CPI is running about

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Speaker 1: two and a half percent this year. Uh, core pc

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Speaker 1: you know, it's up about one point six one seven

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Speaker 1: percent year every year. But you know, given its current pace,

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Speaker 1: rising about three tents every six months, it stands to

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Speaker 1: reason that we could be at two percent for core

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Speaker 1: pc inflation by the end of the year. Let's look

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Speaker 1: at financial conditions. The stock markets at new highs. Financial

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Speaker 1: conditions have actually eased, ironically since the Briggsit vote and

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Speaker 1: GDP tracking estimates. The second quarter, we're seeing consumer spending

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Speaker 1: run four and a half percent the average out the

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Speaker 1: first half, consumer spending a three percent, and looking forward,

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Speaker 1: i'd expect more broad based growth this year. Refinancings are

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Speaker 1: picking up because current interest rates are lower than the

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Speaker 1: rates on dead outstanding UH. And we're seeing refi activity accelerate.

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Speaker 1: That supports consumer spending. The recovery and financial conditions. That

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Speaker 1: means that people are less afraid they lower their savings rate.

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Speaker 1: That supports consumer spending. We're seeing wage growth, you know,

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Speaker 1: running close to three percent so far this year. That

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Speaker 1: supports consumer spending. And of course we're getting easier fiscal policy. UH.

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Speaker 1: And I'd also add that the narrowing in the corporate

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Speaker 1: bond market. That's going to support business fixed investment, so

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Speaker 1: we could see more broad based growth later this year.

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Speaker 1: And you know, looking at w I r P on Bloomberg,

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Speaker 1: you know, I don't think the Fed will go in September,

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Speaker 1: but they're going to give it more serious consideration than

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Speaker 1: what the markets are anticipating. I could say not until

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Speaker 1: March of next year. If you're looking at FED funds futures,

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Speaker 1: if you're looking at options overnight index watch, you're talking

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Speaker 1: about May of next year. If the conditions of the

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Speaker 1: of the last at least six months, or any indication

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Speaker 1: of the conditions over the next six months, the federal

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Speaker 1: raise rates this year. UM, I think that we'll see

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Speaker 1: you know, we should see one hike. UM. You know,

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Speaker 1: remember what are the Fed tell us? They want to

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Speaker 1: see a stronger job growth g DP tracking estimates, they

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Speaker 1: want to see some progress on inflation, and they want

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Speaker 1: to see um, basically no event shocks. I don't know.

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Speaker 1: I mean, I think you can make a case for September. UM.

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Speaker 1: I think given their risk aversion, they probably won't go yet. UM,

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Speaker 1: but you could. You can make a strong case. So,

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Speaker 1: you know, I mean the fat of the community communication

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Speaker 1: problem clearly. UM. You know, the minutes laid out those

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Speaker 1: things I mentioned and uh, and you could still come

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Speaker 1: up with a scenario where the FETE sees all four

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Speaker 1: of these things happening and still doesn't right. So I

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Speaker 1: mean that that so the communication issue on the part

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Speaker 1: of the FET is something that we should all be debating.

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Speaker 1: There's a whole other side in NEIL data that no

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Speaker 1: one knows and renaissance macro, and it's not the Fed

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Speaker 1: talk and the parlor talk at what the Federal do.

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Speaker 1: It's really intense statistical analysis. Neil. I adore your first

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Speaker 1: principal component explain variance chart folks, we don't do this

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Speaker 1: on Wednesday or Friday either. All you know is the

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Speaker 1: the ortho normal transformation is different than the linear transformation. Neil,

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Speaker 1: the summary of your spectacular analysis of correlations in the

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Speaker 1: market is now is not oh seven discuss well, I

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Speaker 1: mean what basically what we were just I mean as

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Speaker 1: an observation, and the observation is that crossss that correlations

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Speaker 1: have gone much higher since the financial crisis ended, during

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Speaker 1: this recovery, and you know, I mean for our clients,

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Speaker 1: that's creating challenges because you know, part of the way

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Speaker 1: you make money is by sort of um exploiting UM

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Speaker 1: gaps in the market, and that's not happening right now.

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Speaker 1: And I think we can debate why that's happening, but

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Speaker 1: you know clearly, UM, this creates problems when you have

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Speaker 1: so much cross asset correlation. So you know, if you

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Speaker 1: have a risk off trade globally, UM, that sends the

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Speaker 1: dollar higher and that makes uh, that makes it more

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Speaker 1: difficult for the FET to normalize. Now, that is the

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Speaker 1: economic resident Economic Optimistic Renaissance MACRO. He's the head of

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Speaker 1: US Economics Research and he is with us. Now we're

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Speaker 1: talking earlier about how the numbers keep coming in better,

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Speaker 1: and you mentioned in passing you know that that includes inflation,

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Speaker 1: which probably I guess is bet or is not the

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Speaker 1: word you want to hear. But I'm wondering two things. One,

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Speaker 1: how fast do you think inflation accelerates and to what point?

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Speaker 1: And that brings us, you know, obviously to the relationship

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Speaker 1: between the FED and inflation. How much do they have

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Speaker 1: to do to keep up? I mean, I think I

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Speaker 1: think the FED is basically operating at the moment with

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Speaker 1: the de facto sort of two and a half percent

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Speaker 1: inflation target. Um. You know, I think this is necessary

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Speaker 1: given the fragility of the global economy, right, so one

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Speaker 1: one option for the FED is basically to let the

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Speaker 1: US inflation numbers pick up to offset disinflation elsewhere in

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Speaker 1: the world. And um, you know that basically implies a

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Speaker 1: lower for longer policy stance. You know, my sense of

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Speaker 1: the FED raises rates once uh this year and three

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Speaker 1: times next year, and then um, you know, as inflation

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Speaker 1: kind of remains sticky, you know, between you know, let's

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Speaker 1: say close to two and a half percent um. I mean,

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Speaker 1: as I mentioned before, it's rising about the intense um

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Speaker 1: every six months. So by the end of the year,

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Speaker 1: we could be at core inflation of two once that,

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Speaker 1: once we get towards two and a half, I think

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Speaker 1: that that sort of gets the set into more of

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Speaker 1: a normal rate tightening posture. Um. You know a lot

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Speaker 1: of this talk about tightening financial conditions and that's job done,

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Speaker 1: the work of the sets for it. Advocates of that view,

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Speaker 1: I guess, have to explain why during this period of

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Speaker 1: so called tight financial conditions. You six, unemployment has been

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Speaker 1: falling at about the same rate UM and inflation has

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Speaker 1: been rising at about the same rate as before. UM.

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Speaker 1: So you know, this idea that the tightening cycle started

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Speaker 1: with the taper I think is belied by the evidence

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Speaker 1: coming out of the labor market and the inflation numbers themselves. UM.

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Speaker 1: I don't think we've actually seen much tightening in policy. Well,

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Speaker 1: certainly if you look at the financial conditions indices that

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Speaker 1: there's no indication that it's particularly uh that much tighter.

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Speaker 1: But at this point is it doing anything? Is it

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Speaker 1: weak enough, loose enough that it's actually stimulative? I think so, UM,

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Speaker 1: I don't. I don't think that. I mean, financial conditions

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Speaker 1: right now remain conducive to growth. UM As I mentioned

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Speaker 1: the corporate bond markets narrowing that supportive. UM. You know,

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Speaker 1: I remember that a lot of the weakness and business

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Speaker 1: investment started in uh, basically the second half. And what

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Speaker 1: do we see during then that period? We saw that's

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Speaker 1: when the dollar started strengthening, commodity prices started following, That's

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Speaker 1: when the corporate bond market started widening out. That's when

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Speaker 1: we kind of saw very muted gains in the equity market.

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Speaker 1: We've seen a reversal and all of that this year, UH,

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Speaker 1: and it's sort of sped up more recently, UM, particularly

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Speaker 1: since the March f MC. And you know, I think

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Speaker 1: that's good for something. UM. Whether that sort of gets

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Speaker 1: us to a sustainable, you know, rebounding business investment remains

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Speaker 1: to be seen, but I think it's good enough for

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Speaker 1: a second half bounce. Neil, I want to go back

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Speaker 1: to your beautiful observation and the correlations and the way

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Speaker 1: things are all moving in a lockstep in the market.

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Speaker 1: They do this within a foundational fixed income reality negative

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Speaker 1: interest rate, near negative interest rates, low nominal and except

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Speaker 1: with a few exceptions, low real interest rates as well.

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Speaker 1: Does that put a big asterisk next to our analysis

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Speaker 1: of market dynamics. I mean, it's completely upended some of

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Speaker 1: these sort of you know, back of the envelope calculations

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Speaker 1: that we've used in the business economic community for the

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Speaker 1: last you know, several decades, right, I mean, for example, um,

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Speaker 1: the tenure yield should be you know, tracking nominal GDP. Well,

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Speaker 1: I mean it hasn't worked out forever, right, I mean, so, um,

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Speaker 1: you know, you know, for for years. Um, A lot

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Speaker 1: of this, I mean, if you decompose the moves in

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Speaker 1: US tenure yields, a lot of that is just driven

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Speaker 1: by declining term premiums. Basically things were unrelated to US

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Speaker 1: economic growth and inflation fundamentals, you know. And the net

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Speaker 1: result of that is actually easier financial conditions in the

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Speaker 1: US relative to where we would normally think they should be.

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Speaker 1: And um, you know, I think given where we are,

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Speaker 1: that's that's that's bullish for for the U s economic outlook.

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Speaker 1: So and and almost a perverse way, I think, um,

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Speaker 1: the sort of yield grab globally, UM, particularly amid more

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Speaker 1: sort of risk fear and risk aversion. UM. I think

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Speaker 1: that that's um, it's almost perversely having some stimulative effects

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Speaker 1: on the US economy, and we're seeing that with stronger

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Speaker 1: refinancing activity. But is that brilliant? But is that stimulus

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Speaker 1: effect leading? Are we in or will be we in bubbles?

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Speaker 1: Is we go to the July and then out of

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Speaker 1: the September meeting. I don't think we're will be in

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Speaker 1: one right now, but I mean I do think financial

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Speaker 1: stability concerns should be more on people's minds when the

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Speaker 1: unemployment rate is where it is, right. I mean, you know,

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Speaker 1: we we hear a lot about you know, secular stagnation

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Speaker 1: and um, you know the asset price store a link

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Speaker 1: with that, UM. But you know, what I would say

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Speaker 1: is that it's much more of a concern when the

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Speaker 1: unemployment rate is this low than when it's and so

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Speaker 1: I think investors should be sort of sort of studying

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Speaker 1: the risks associated in financial markets. It's a lower for

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Speaker 1: longer and then more aggressive rate tightening path later on

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Speaker 1: UM scenario, because I think that's ultimately going to be

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Speaker 1: the one that we'll see. Is aggressive really the right word?

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Speaker 1: I mean, world, uh, is that aggressive? With's all aggressive

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Speaker 1: relative to expectations. I mean, there are plenty of people

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Speaker 1: on the markets that think the feted that the next

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Speaker 1: move from the FET is going to be a cut.

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Speaker 1: There are plenty of people on the market of the

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Speaker 1: think the FETE is basically done right now. So I mean,

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Speaker 1: I think it's aggressive relative to the baseline set by

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Speaker 1: the financial markets. We've seen years now where the FET

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Speaker 1: has been bending to the financial markets their market implied

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Speaker 1: passive rates. I don't know. I mean, I think that

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Speaker 1: the data appears to be suggesting that seventeen could be

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Speaker 1: setting up for a year where maybe the market spend

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Speaker 1: a little bit up to the FETs view of the world.

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Speaker 1: Thank you very much. Um. Of course, Renaissance Macro's head

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Speaker 1: every economic research and are one of the resident optimists

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Speaker 1: who likes to call in remind us that we should

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Speaker 1: not feel so badly. Why did this coup failed? They

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Speaker 1: had a reason, They had a way. You studied this

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Speaker 1: at War College at Newport, Rhode Island. Why did this

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Speaker 1: coup fail? I think this coup Tom was more beer

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Speaker 1: hall pooch than it was geo strategic earthquake. In other words,

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Speaker 1: the military had a set of lingering grievances that have

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Speaker 1: been on a slow burn for almost ten years. They

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Speaker 1: took a shot at it, but they were disorganized. They

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Speaker 1: did not have the really senior players, only one four

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Speaker 1: star officer involved. I don't think they put it together effectively,

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Speaker 1: and I think the uh the people rose up against

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Speaker 1: it and the rest of the military helped crush it.

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Speaker 1: Part of being in Europe is no death penalty. We

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Speaker 1: your talk of a renewed death penalty in Turkey. How

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Speaker 1: do we adapt and adjust to the realities that Mr

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Speaker 1: Urdwan faces? How do we support him given the immediacy

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Speaker 1: if something is emotional and real as a death penalty.

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Speaker 1: Tom As we look at the aftermath of this, these

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Speaker 1: numbers are staggering. There are six thousand military judges, prosecutors

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Speaker 1: have been rounded up population adjusted basis. That's a day

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Speaker 1: in the United States where twenty five thousand leaders have

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Speaker 1: been arrested. Tension and emotion are running extremely high. I

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Speaker 1: think there is a possibility that the Turkish government will

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Speaker 1: seek the death penalty against the senior leaders here. How

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Speaker 1: you square that against European norms is going to be

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Speaker 1: very difficult. It will set Turkey back on its path

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Speaker 1: to membership in the European Union. Apper, good morning, it's

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Speaker 1: going in London? Was this this line to fail? You

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Speaker 1: know there's a conspiracy theory running around guy that either

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Speaker 1: President Urdwan or members of his team kind of inspired

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Speaker 1: this and let it bubble in order to bring a

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Speaker 1: crackdown in place. I don't feel that. As I talked

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Speaker 1: to senior Turkish officials and friends, as I look at

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Speaker 1: the news, as I look at the body language on

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Speaker 1: Urdwan himself, I think they felt a real threat from

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Speaker 1: this coup. And I don't think this was a manufactured coup.

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Speaker 1: Am Is Turkey a reliable Nates imember? Well, historically, guys,

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Speaker 1: you know they have been. Turkey has been involved in

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Speaker 1: every operation. When I was the Supreme Allied Commander, I

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Speaker 1: counted on Turkey in Afghanistan, Libya, the Balkans Piracy. They

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Speaker 1: were all in with NATO. They host the largest NATO

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Speaker 1: headquarters in Ismuir. Yet at this moment, I think the

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Speaker 1: internal distraction that comes out of that is going to

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Speaker 1: make them less reliable in one sense. The big winner

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Speaker 1: in all this is the Islamic State. Um. We use

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Speaker 1: the Lira as a litmus paper here boat and if

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Speaker 1: you would bring up the the Lerac chart right now,

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Speaker 1: which shows a shock and awe Friday. Thanks to Matt

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Speaker 1: Miller and Mark Crumpton for terrific coverage Friday evening, and

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Speaker 1: then we come down into a very normal quiet. There

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Speaker 1: is no quiet, Admiral at our air base in Turkey.

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Speaker 1: Explain within your experience how the US has an air base,

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Speaker 1: whether it's in Turkey, the Philippines, wherever, and it's controlled

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Speaker 1: as well by Turkish civilians and Turkish military. Did that

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Speaker 1: look odd to you Friday night when we heard of

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Speaker 1: Turkish involvement off of our military base. Now, not at all, Tom,

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Speaker 1: A very common construct in these bases is kind of

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Speaker 1: dual key ownership, if you will. These are always going

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Speaker 1: to be sovereign territories of the host nation state. Typically

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Speaker 1: the host nation will provide an outer ring of security,

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Speaker 1: the US will provide the inner ring of security. Um,

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Speaker 1: it's normal and logical to see interaction between the two.

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Speaker 1: What was concerning was the fact that those operations were

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Speaker 1: frozen for a period of time. We didn't have effective

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Speaker 1: communication into that base, and of course this is an

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Speaker 1: extremely sensitive strategic base in every dimension. April, one of

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Speaker 1: the key concerns that Europe will have as it watches

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Speaker 1: events unfold is the migration. The deal that has been

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Speaker 1: struck between Europe and Anchora. Is that deal now at risk,

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Speaker 1: do you think. I think it is not um. It

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Speaker 1: is in the interest both of the Turks who are

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Speaker 1: looking for the money they've been promised to make this

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Speaker 1: work as well, obviously, as in Europe's interest. NATO the

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Speaker 1: European Union will continue to work to facilitate that zone

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Speaker 1: guide between Turkey and Greece where so many of the

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Speaker 1: migrants came last summer. I think because it's in the

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Speaker 1: interest of both parties, I think that deal will go forward.

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Speaker 1: The thing that could have said it would be a

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Speaker 1: really violent French revolution, level off with their heads in

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Speaker 1: the streets kind of response, thousands sent to death penalty.

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Speaker 1: I don't predict that, but I think at the dark

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Speaker 1: end of the spectrum, something like that could disrupt the deal.

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Speaker 1: Unlikely to do so, Edma. I want to go over

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Speaker 1: two themes as we finish our interview. One theme is

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Speaker 1: what we just saw in Nice in Paris, France was

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Speaker 1: a moment of silence, which is directly related. This is

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Speaker 1: live pictures, folks from Nice. It was really something at

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Speaker 1: the top of the hour as a marseille was was sung. Admiral.

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Speaker 1: This is a pan European problem. It's not just about

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Speaker 1: a coup here or a tragedy in Nice. How do

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Speaker 1: institutions in Europe get their hands around what has become

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Speaker 1: a chronic problem. Tom, I'll give you three things to

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Speaker 1: think about in the European context. One is international cooperation,

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Speaker 1: and this is why breggsit is so disturbing. Anything that

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Speaker 1: creates centrifugal force and pulls the Union apart reduces that

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Speaker 1: cross border international cooperation. Second, interagency cooperation between the intelligence agencies,

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Speaker 1: the homeland security forces, the military. And third is private

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Speaker 1: public cooperation to develop the technologies that can help the biometrics,

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Speaker 1: the big data, the quantum data. All of that put together,

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Speaker 1: I think is the future of working these problems, recognizing

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Speaker 1: a few are going to get through no matter what

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Speaker 1: we do. Add will. Finally, in our agreement to have

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Speaker 1: you on today, we suggested we would not talk about

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Speaker 1: US domestic politics. You've been a little too visible for

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Speaker 1: the people up at Fletcher School recently, so instead of

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Speaker 1: asking you about your future, I would like to ask

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Speaker 1: you about the new vogue. You joined the Navy when

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Speaker 1: it was the least popular since World War Two. You

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Speaker 1: joined the Navy when it wasn't John McCain and George

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Speaker 1: Bush SR and others. What is this new vogue of

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Speaker 1: looking at military very men to join our senior politicians.

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Speaker 1: Where is this emotion within both parties? Where is it

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Speaker 1: coming from? Tom You're you're nice to raise that as

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Speaker 1: an issue. I appreciate it. I think that there is

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Speaker 1: a sense of the military is a very admired institution,

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Speaker 1: extremely different than when I entered back in the nineties seventies.

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Speaker 1: That sort of sense of accomplishment, of stability, I think

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Speaker 1: appeals and whether or not we see military individuals enter

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Speaker 1: into domestic politics in a serious way remains to be seen.

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Speaker 1: But I think it speaks well for the military, but

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Speaker 1: it speaks well for the nation, the mutual respect between

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Speaker 1: the two tom As I noted, UH, just a moment ago.

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Speaker 1: The circus starts today. It is pulled into Cleveland. Uh,

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Speaker 1: annual quadrennial. Is the word political, Defend you. It's not

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Speaker 1: a political statement, not an angle Trump. It's the same

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Speaker 1: in philadel It is all about entertaining the masses with

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Speaker 1: the bread and circuses. Because the conventions don't decide anything anymore.

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Speaker 1: I mean, we already know who the nominee is going

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Speaker 1: to be, We know what the platform is going to be,

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Speaker 1: and we know who the vice presidential nominee is going

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Speaker 1: to be. So it is about selling yourself to the

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Speaker 1: American public and that is Donald Trump's goal over the

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Speaker 1: next four days. Chuck Gabriel will be watching the circus

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Speaker 1: from no doubt a a good seat. He is with

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Speaker 1: Capital Alpha Partners. And you're writing about what Donald Trump

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Speaker 1: and company need to do. But you have an interesting

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Speaker 1: phrase here, They need a Reagan moment. Ronald Reagan was

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Speaker 1: the guy who talked about shining cities on the Hill.

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Speaker 1: That is not the kind of language that Donald Trump used.

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Speaker 1: So what what do you mean by a Reagan moment? Well,

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Speaker 1: that that actually came from Rins previ Us on some

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Speaker 1: of the weekend talk shows. And he's a r n

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Speaker 1: C chairman obviously, and I thought what was particularly interesting

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Speaker 1: about his comments was that one of his great blessings

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Speaker 1: that he pointed out was the securable borders of you know,

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Speaker 1: the lakeside venue. They're going to have the convention head

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Speaker 1: at Quick and Loans Arena. But but really what they

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Speaker 1: what they hope first is, of course they hope for

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Speaker 1: as as minimal disruptions as possible outside and they certainly

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Speaker 1: hope that Hillary Clinton doesn't. You know, it does what

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Speaker 1: most candidates do when they're being attacked during the other

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Speaker 1: party's convention, They just kind of lay low instead, you know,

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Speaker 1: is she actually goes on the attack. Trump has this

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Speaker 1: reflexive habit of feeling the need to respond, and you

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Speaker 1: know that that doing so, it stepped all over his

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Speaker 1: rollout of of his vice presidential candidate Mike Pence, for instance.

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Speaker 1: So they're hoping for again, securable borders. They're hoping for

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Speaker 1: now no outside disruptions. They're hoping that, you know, that

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Speaker 1: the candidate doesn't go off script start tweeting in response

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Speaker 1: to a Hillary Clint and text or comment. But really

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Speaker 1: what they most hope for is that that Trump can

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Speaker 1: message himself, present himself and his family two the American

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Speaker 1: people in a way that shows that he is human,

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Speaker 1: he's ready to lead. That's exactly what happened with Ronald

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Speaker 1: Reagan and the magic there you go again moment back

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Speaker 1: trailed Jimmy Carter. People want to change, but they had

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Speaker 1: doubts about Reagan, and then in that second debate he

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Speaker 1: broke through and he won going away. So that's what

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Speaker 1: they're daring to dream for. Yeah, That's an interesting point.

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Speaker 1: They may be looking for a bounce out of the convention,

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Speaker 1: and usually candidates get oneman Hillary Clinton gets her shot

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Speaker 1: next week, so maybe it's a wash. But the debates

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Speaker 1: are gonna be far more important than anything else in

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Speaker 1: this election, are are they not? They certainly are, and

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Speaker 1: they don't. They start in late September, so you know,

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Speaker 1: the jury is still out about whether this election is

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Speaker 1: going to be a framed in terms of Donald Trump's

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Speaker 1: temperament vers Secilar Clinton's experience, or whether it's going to

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Speaker 1: be her trust worthy in this or lack of versus

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Speaker 1: you know, his representation of change, or whether he even

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Speaker 1: becomes really nasty and becomes sort of cop killer versus racist.

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Speaker 1: So we can go in multiple directions. By the time

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Speaker 1: we get to those, check what you do so great

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Speaker 1: as you do the policy wank thing to a t,

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Speaker 1: but you also have your eyes sort of on the

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Speaker 1: bloomberg politics political world as well. What portion of the

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Speaker 1: public is undecided I mean versus other go arounds. I mean,

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Speaker 1: the thing is so bizarre. I think whatever anybody's political persuasion,

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Speaker 1: we can identify that. It's so bizarre how many people

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Speaker 1: have yet to make up their mind. Well, that's a

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00:27:38,320 --> 00:27:41,720
Speaker 1: good question. You know, Charlie Cook and other great punsits

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Speaker 1: have argued that, you know, less than ten are truly

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Speaker 1: going to be movable in the end, So maybe more

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Speaker 1: about turnout. Obama was able to get just tremendous turnout

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Speaker 1: outside turnout among those non traditional groups like blacks and

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Speaker 1: Hispanics and younger voters. So the real question for Trump is,

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Speaker 1: you know, if this particularly if this becomes a law

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Speaker 1: and order election, he might bring out more um, you know,

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Speaker 1: sort of frightened white voters, are angry white you know,

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Speaker 1: white working class voters that could more than offset will

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Speaker 1: still be an outsized minority vote. After all, the white

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Speaker 1: vote is still about se it's it's rapidly declining, but

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Speaker 1: it's still seventy of the total. So those are the

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Speaker 1: kinds of wild cards were talking about, not not a

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Speaker 1: big shift and undecided, but really about a big shift

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Speaker 1: in motivation and turnout. Perhaps doesn't Hillary Clinton have the

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Speaker 1: huge advantage on turnout, I think, well, not necessarily on turnout,

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Speaker 1: but she certainly has a huge advantage on in the

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Speaker 1: electoral college. And it's not clear yet that the public

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Speaker 1: really has such a clamoring for change, that it's willing

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Speaker 1: to take a flyer on Donald Trump in order to

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Speaker 1: get changed. And so that's that's really the question. But

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Speaker 1: if but if you know, if we see more violent

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Speaker 1: uh you know, not not just international le on on

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Speaker 1: the terrorist front, but you know with domestic violence. You know,

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Speaker 1: you could you could have some real wild cards here.

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Speaker 1: Like by way, if I could just say, since I

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Speaker 1: know that everybody listens really has an eye on stock market,

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Speaker 1: one of the most amazing things is if you look

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Speaker 1: at all the things that have happened in the last

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Speaker 1: couple of weeks heading into this convention and Niece Turkey

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Speaker 1: Baton Rouge, the Dallas sniper St. Paul, you know, the

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Speaker 1: market has built up an amazing immunity to social unrest,

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Speaker 1: geopolitical worries, even terrorism. And that's just an amazing thing

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Speaker 1: in my view. And that that's that's in the old days,

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Speaker 1: you know, you the market might have wagged the dog.

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Speaker 1: If you had the markets really reacting very negatively these

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Speaker 1: outside demands, they could have impacted the elections. Not today, Chuck,

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Speaker 1: Thank you so much, Charles Gabriel, Capital Alpha Partners, thanks

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00:29:49,560 --> 00:29:53,680
Speaker 1: for listening to the Bloomberg surveillance podcast. Subscribe and listen

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00:29:54,000 --> 00:29:59,360
Speaker 1: to interviews on iTunes, SoundCloud, or whichever podcast platform you prefer.

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Speaker 1: I'm on Twitter at Tom Keane, Michael McKee is at

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Speaker 1: Economy Before the Podcast. You can always catch us worldwide.

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Speaker 1: I'm Bloomberg Radio