1 00:00:00,040 --> 00:00:02,640 Speaker 1: Who you put your trust in matters. Investors have put 2 00:00:02,680 --> 00:00:07,000 Speaker 1: their trust and independent registered investment advisors to the two 3 00:00:07,280 --> 00:00:11,360 Speaker 1: four trillion dollars. Why Learn more at find your Independent 4 00:00:11,400 --> 00:00:26,960 Speaker 1: Advisor dot com. Welcome to the Bloomberg Surveillance Podcast. I'm 5 00:00:27,040 --> 00:00:30,920 Speaker 1: Tom Keene with David Gura. Daily we bring you insight 6 00:00:31,040 --> 00:00:35,560 Speaker 1: from the best in economics, finance, investment, and international relations. 7 00:00:35,960 --> 00:00:40,559 Speaker 1: Find Bloomberg Surveillance on iTunes, SoundCloud, Bloomberg dot com, and 8 00:00:40,640 --> 00:00:48,200 Speaker 1: of course, on the Bloomberg Howard Ward as I said 9 00:00:48,200 --> 00:00:50,479 Speaker 1: with a Chief investment officer at Gabelly Funds, Director of 10 00:00:50,520 --> 00:00:52,879 Speaker 1: Growth Equities at Gamco, good morning, Great to have you here, 11 00:00:53,080 --> 00:00:55,560 Speaker 1: Thanks David, great to be here. In your most recent note, 12 00:00:55,640 --> 00:00:58,960 Speaker 1: you caution investors beware a bit of rain here on 13 00:00:59,000 --> 00:01:03,080 Speaker 1: the parade. But but what what's the cause for caution? Well, 14 00:01:03,080 --> 00:01:07,840 Speaker 1: the stock market has reacted very enthusiastically to the election, 15 00:01:07,959 --> 00:01:11,560 Speaker 1: which is uh appropriate. But I think we need to 16 00:01:12,000 --> 00:01:14,000 Speaker 1: bear in mind a couple of things as we move 17 00:01:14,040 --> 00:01:17,319 Speaker 1: into the new year. First of all, the pro growth 18 00:01:17,360 --> 00:01:20,800 Speaker 1: policies that Trump is advocating, which is reducing corporate and 19 00:01:21,040 --> 00:01:27,360 Speaker 1: individual income taxes, deregulating parts of the economy, um massive 20 00:01:27,400 --> 00:01:31,080 Speaker 1: infrastructure spending bill. Uh, those are all positive. We don't 21 00:01:31,080 --> 00:01:34,800 Speaker 1: really know yet exactly what he's going to do on protectionism, 22 00:01:34,800 --> 00:01:37,360 Speaker 1: which has been another thing he has advocated. We would 23 00:01:37,360 --> 00:01:43,240 Speaker 1: be very negative on moves to impose tariffs on imports. Um. 24 00:01:43,280 --> 00:01:46,199 Speaker 1: But beyond all that, let's not forget the stock markets 25 00:01:46,200 --> 00:01:49,760 Speaker 1: at an all time high, so valuations are not cheap. 26 00:01:49,840 --> 00:01:52,680 Speaker 1: This is not like nineteen eighty and Ronald Reagan. Um. 27 00:01:52,800 --> 00:01:56,120 Speaker 1: Interest rates have been going down for thirty five years. Uh. 28 00:01:56,360 --> 00:02:00,240 Speaker 1: So unlike again nineteen eighty, when rates were high, pois 29 00:02:00,320 --> 00:02:05,440 Speaker 1: to go lower. Rates are low and poised to go higher. Uh, 30 00:02:05,560 --> 00:02:11,280 Speaker 1: not only because of percolating inflation and labor costs, but because, uh, 31 00:02:11,400 --> 00:02:16,840 Speaker 1: we're looking at FED rate increases and uh, you know, 32 00:02:16,880 --> 00:02:20,519 Speaker 1: getting the FED increasingly out of the way in terms 33 00:02:20,639 --> 00:02:22,760 Speaker 1: of the bomb market. Let's not forget that. Even though 34 00:02:22,840 --> 00:02:26,640 Speaker 1: the FETE is poised to raise rates in December. Uh, 35 00:02:26,960 --> 00:02:29,399 Speaker 1: of course, they raised rates a year ago. But let's 36 00:02:29,400 --> 00:02:33,080 Speaker 1: not forget the FET is still reinvesting the coupons and 37 00:02:33,120 --> 00:02:36,800 Speaker 1: maturities on the bonds it's holding in its portfolio. So 38 00:02:36,800 --> 00:02:40,440 Speaker 1: while it's not expanding its balance sheet, is still it 39 00:02:40,520 --> 00:02:43,800 Speaker 1: is still active in the market in sopping up some 40 00:02:43,960 --> 00:02:50,040 Speaker 1: of that supply, and so rates will continue to gradually normalize. 41 00:02:50,400 --> 00:02:54,040 Speaker 1: And so you know, rates are rising, valuations are high, 42 00:02:54,360 --> 00:02:58,960 Speaker 1: expectations are high, and I think, uh, profit expectations for 43 00:02:59,000 --> 00:03:02,240 Speaker 1: next year are probably too high because of the pressure 44 00:03:02,280 --> 00:03:05,320 Speaker 1: on profit margins, and so, uh, you know, I think 45 00:03:05,320 --> 00:03:08,400 Speaker 1: investors need to slow down here. This isn't all gonna 46 00:03:08,480 --> 00:03:10,799 Speaker 1: you know, all this good news and we're expecting for 47 00:03:10,840 --> 00:03:13,600 Speaker 1: the economy. It isn't gonna happen overnight. And Trump isn't 48 00:03:13,600 --> 00:03:16,040 Speaker 1: going to get everything that he wants slowed down. You 49 00:03:16,040 --> 00:03:18,160 Speaker 1: you urged there on the heels of the election so 50 00:03:18,280 --> 00:03:20,080 Speaker 1: much fast movement. I wonder if you were caught up 51 00:03:20,080 --> 00:03:22,320 Speaker 1: in that when you saw people betting on on the 52 00:03:22,320 --> 00:03:25,560 Speaker 1: possibility here of a big infrastructure package going into utilities, 53 00:03:25,720 --> 00:03:28,600 Speaker 1: or looking here at the potential demise of the Affordable 54 00:03:28,600 --> 00:03:30,520 Speaker 1: Care Act, looking at at healthcare, where you caught up 55 00:03:30,520 --> 00:03:33,160 Speaker 1: in that? In that world? Well, I have David David 56 00:03:33,400 --> 00:03:37,560 Speaker 1: Howard Word's idea of short terms three years, So I 57 00:03:37,600 --> 00:03:41,240 Speaker 1: have to tell you that that, Uh, in my nearly 58 00:03:41,320 --> 00:03:46,240 Speaker 1: forty year career on Wall Street, the I've never seen 59 00:03:46,360 --> 00:03:51,240 Speaker 1: anything like the violent sector rotation that occurred, UH and 60 00:03:51,280 --> 00:03:53,880 Speaker 1: the immediate aftermath of the election. I think it was 61 00:03:53,920 --> 00:03:57,960 Speaker 1: three or four days where there was a panic stampede 62 00:03:58,520 --> 00:04:03,840 Speaker 1: into cyclicals and out of countercyclicals and almost as if 63 00:04:03,880 --> 00:04:06,960 Speaker 1: price didn't matter anymore. And I don't know whether this 64 00:04:07,200 --> 00:04:14,120 Speaker 1: was computer generated, algorithm based trading, short covering, um other 65 00:04:14,240 --> 00:04:18,040 Speaker 1: momentum type strategies at work, but it was something that 66 00:04:18,160 --> 00:04:22,040 Speaker 1: was an eye opener. And UH, you know it. Clearly 67 00:04:22,400 --> 00:04:26,200 Speaker 1: the market had not anticipated a Trump victory, which is 68 00:04:26,240 --> 00:04:28,360 Speaker 1: why you did have such a violent reaction, I think. 69 00:04:28,360 --> 00:04:31,120 Speaker 1: But I think the move into a lot of those areas, 70 00:04:31,360 --> 00:04:33,800 Speaker 1: whether it's the financials or some of the industrials and 71 00:04:33,839 --> 00:04:37,599 Speaker 1: material stocks, was probably overdone. And we have seen in 72 00:04:37,640 --> 00:04:40,960 Speaker 1: the most recent week a little bit of reversal with 73 00:04:41,120 --> 00:04:45,799 Speaker 1: the more UH countercyclical stocks picking up some ground against 74 00:04:45,839 --> 00:04:48,640 Speaker 1: some of those more cyclical entities. It's their appeal to 75 00:04:48,680 --> 00:04:51,719 Speaker 1: financials right now, anything appealing about that sector in particular. 76 00:04:52,320 --> 00:04:56,680 Speaker 1: I'm underweight financials. I don't view the most of the financials, 77 00:04:56,800 --> 00:04:59,960 Speaker 1: especially in the banking sector, as offering a lot of 78 00:05:00,040 --> 00:05:04,320 Speaker 1: growth prospects. What you've seen is a big bet that 79 00:05:04,720 --> 00:05:09,120 Speaker 1: financials will benefit from higher rates, and so Um, if 80 00:05:09,160 --> 00:05:11,640 Speaker 1: that's what people are doing, I don't know what their 81 00:05:11,680 --> 00:05:15,279 Speaker 1: expectations are, but I don't think interest rates over the 82 00:05:15,320 --> 00:05:17,960 Speaker 1: next three to six months anyway, are going to go 83 00:05:18,279 --> 00:05:21,200 Speaker 1: much higher they made after that. But I think we've 84 00:05:21,200 --> 00:05:23,719 Speaker 1: had a move from one seventy five to thirty five 85 00:05:23,800 --> 00:05:26,840 Speaker 1: on the tenure in the last couple of weeks, and 86 00:05:27,080 --> 00:05:32,280 Speaker 1: I don't really think the fundamentals warrant UH much additional, 87 00:05:32,480 --> 00:05:35,279 Speaker 1: if any interest rate increase over the next few months. 88 00:05:35,560 --> 00:05:40,480 Speaker 1: So maybe that moving financials which was really striking. Maybe 89 00:05:40,480 --> 00:05:42,640 Speaker 1: that's about all we're gonna get for a while. Howard, 90 00:05:43,240 --> 00:05:46,599 Speaker 1: we're talking here about how to position for next year 91 00:05:46,960 --> 00:05:50,240 Speaker 1: within a broader account. How does an equity guy like 92 00:05:50,320 --> 00:05:54,279 Speaker 1: you handle bonds? I mean, we've had a snapback, to 93 00:05:54,360 --> 00:05:58,480 Speaker 1: say the least. Yeah, well, Tom, Uh, an equity guy 94 00:05:58,560 --> 00:06:02,120 Speaker 1: like me doesn't go near bond, especially after a thirty 95 00:06:02,160 --> 00:06:04,400 Speaker 1: five year bull market and bonds. So you and I 96 00:06:04,440 --> 00:06:10,240 Speaker 1: are seeing Austrians and the UH don't really see any 97 00:06:10,320 --> 00:06:14,320 Speaker 1: value there, And of course I am biased. I've had 98 00:06:14,360 --> 00:06:17,200 Speaker 1: a career in equities, although my first couple of years 99 00:06:17,200 --> 00:06:19,760 Speaker 1: of Brown Brothers were in the fixed income department there 100 00:06:20,040 --> 00:06:23,040 Speaker 1: where I was trying to understand what a bond was 101 00:06:23,600 --> 00:06:25,960 Speaker 1: on their short term money desk. But that's what an 102 00:06:25,960 --> 00:06:28,960 Speaker 1: interest rate for the prime rate. That was actually sort 103 00:06:29,000 --> 00:06:35,400 Speaker 1: of interesting. So UM don't have any attraction to bonds. 104 00:06:35,960 --> 00:06:38,599 Speaker 1: If you were to look at the real yield on 105 00:06:38,720 --> 00:06:42,200 Speaker 1: bonds given today's call it one and a half two 106 00:06:42,200 --> 00:06:45,360 Speaker 1: percent inflation rate, there's not much of a real yield there. 107 00:06:45,360 --> 00:06:49,120 Speaker 1: You're not really getting paid for any uh interest rate 108 00:06:49,200 --> 00:06:52,760 Speaker 1: risk looking at the term premium and bonds, although it's 109 00:06:52,800 --> 00:06:55,320 Speaker 1: it's moved up a little bit. This is the notion 110 00:06:55,360 --> 00:06:57,760 Speaker 1: of your in positioning different this year because of what 111 00:06:57,800 --> 00:07:03,200 Speaker 1: we've seen with the election and after it, UM, you know, 112 00:07:04,880 --> 00:07:08,560 Speaker 1: I think that there's been a mad scramble on the 113 00:07:08,600 --> 00:07:11,720 Speaker 1: part of some investors to put cash to work. Now. 114 00:07:11,880 --> 00:07:15,960 Speaker 1: I've always warned against the dangers of market timing, and 115 00:07:16,040 --> 00:07:20,640 Speaker 1: this is a perfect illustration of how you can get 116 00:07:20,640 --> 00:07:25,480 Speaker 1: caught short, caught out of the market. UM. When a surprise, 117 00:07:25,560 --> 00:07:28,640 Speaker 1: in this case an election drives the stock market five 118 00:07:28,680 --> 00:07:31,920 Speaker 1: percent higher in a few weeks. That's a big move 119 00:07:32,760 --> 00:07:34,400 Speaker 1: over the period of a few weeks, and if you 120 00:07:34,520 --> 00:07:38,080 Speaker 1: missed it, you're gonna have a difficult time performing this year, 121 00:07:38,560 --> 00:07:41,080 Speaker 1: unless of course things were to reverse, which I don't 122 00:07:41,080 --> 00:07:43,160 Speaker 1: think we're going to get much of a reverse. Further 123 00:07:43,200 --> 00:07:46,200 Speaker 1: on the banks, you say you're underweight the banks. Underweight 124 00:07:46,280 --> 00:07:48,560 Speaker 1: the banks. What about the distinction between two big to 125 00:07:48,640 --> 00:07:51,760 Speaker 1: fail in regional banks. That's something that we've barely touched on, 126 00:07:52,080 --> 00:07:54,640 Speaker 1: it seems in six months. Yeah. Well, I think that 127 00:07:55,120 --> 00:07:59,840 Speaker 1: the regional banks might offer a somewhat better growth profile, 128 00:08:00,080 --> 00:08:04,520 Speaker 1: probably meriting a somewhat higher valuation. But I will go 129 00:08:04,600 --> 00:08:08,960 Speaker 1: back and say the move that this group had UH 130 00:08:09,000 --> 00:08:13,440 Speaker 1: in the period since the election, I think discounts a 131 00:08:13,480 --> 00:08:17,400 Speaker 1: lot of good news and UH, especially in the case 132 00:08:17,680 --> 00:08:22,040 Speaker 1: of the more money center oriented UH financial institutions like 133 00:08:22,080 --> 00:08:25,560 Speaker 1: a Goldman Sachs or JP More. I think Goldman Sachs 134 00:08:25,920 --> 00:08:29,400 Speaker 1: has gone from about a hundred and seventy d seventy 135 00:08:29,440 --> 00:08:32,600 Speaker 1: two dollars, which was its tangible book value, to well 136 00:08:32,640 --> 00:08:38,480 Speaker 1: over two hundred dollars UH during this space. Yeah, very quick. 137 00:08:38,679 --> 00:08:41,880 Speaker 1: And so these are very volatile things. They're almost that 138 00:08:42,000 --> 00:08:44,559 Speaker 1: some of these financials are almost you can almost think 139 00:08:44,559 --> 00:08:47,400 Speaker 1: of them as calls on the capital markets or calls 140 00:08:47,400 --> 00:08:49,880 Speaker 1: on the start. Mark Howard Ward with US with Cabelly Funds, 141 00:08:49,880 --> 00:08:52,520 Speaker 1: Howard one of the most interesting data points I saw 142 00:08:52,520 --> 00:08:56,160 Speaker 1: in economics oh five six, eight days ago, what's the 143 00:08:56,280 --> 00:09:00,360 Speaker 1: disparity between traditional retail sales bricks and mortar and the 144 00:09:00,440 --> 00:09:05,640 Speaker 1: double digit growth of Internet type retails sales? Help us 145 00:09:05,679 --> 00:09:09,800 Speaker 1: here with our pro like you deals with Amazon ten 146 00:09:09,880 --> 00:09:13,800 Speaker 1: to seve. Do you just keep owning it? Do you 147 00:09:13,880 --> 00:09:17,240 Speaker 1: just keep buying it? Do you pray, pray, prey the 148 00:09:17,320 --> 00:09:21,960 Speaker 1: Jeff Bezos pauses or what do you do? Well? Thank 149 00:09:22,000 --> 00:09:24,640 Speaker 1: you Tom, because that actually is the largest position in 150 00:09:24,679 --> 00:09:29,680 Speaker 1: the Gambro Growth Fund that I manage. Uh. Amazon is 151 00:09:29,760 --> 00:09:35,199 Speaker 1: going to have an out standing holiday season because they 152 00:09:35,240 --> 00:09:41,360 Speaker 1: continue to garner additional market share in retailing. The stock 153 00:09:41,679 --> 00:09:46,440 Speaker 1: pulled back during the vicious rotation in the direction of 154 00:09:46,480 --> 00:09:50,480 Speaker 1: cyclicals out of countercyclicals, and investors had a bit of 155 00:09:50,480 --> 00:09:54,000 Speaker 1: a buying opportunity. Now it's still has recovered a bit 156 00:09:54,360 --> 00:09:58,000 Speaker 1: since since the four but it's not at it's high. 157 00:09:58,120 --> 00:10:03,240 Speaker 1: It's at seventeen times next year's EBITDA. That is I 158 00:10:03,280 --> 00:10:09,160 Speaker 1: think a very attractive price for Amazon dot Com, which 159 00:10:09,240 --> 00:10:12,559 Speaker 1: is not only the pre eminent retailer in the country, 160 00:10:12,600 --> 00:10:16,319 Speaker 1: if not the world, but also the pre eminent provider 161 00:10:16,800 --> 00:10:22,439 Speaker 1: of cloud based web services. Through their Amazon Web Services subsidiary. 162 00:10:22,679 --> 00:10:27,440 Speaker 1: That's a subsidiary growing over and where they are much 163 00:10:27,640 --> 00:10:30,880 Speaker 1: larger than Microsoft, who is the number two player. What's 164 00:10:30,920 --> 00:10:34,520 Speaker 1: their growth rate that you strap on your statistic of 165 00:10:34,640 --> 00:10:40,440 Speaker 1: seventeen times earnings before interest, taxes, depreciation, amortization, and maybe 166 00:10:40,480 --> 00:10:43,360 Speaker 1: the red sox will win. So, Tom, we're looking at 167 00:10:43,360 --> 00:10:47,559 Speaker 1: a company who's if you look at the projected earnings 168 00:10:47,600 --> 00:10:50,520 Speaker 1: growth of this company over two thousand, seventeen and eighteen, 169 00:10:50,559 --> 00:10:55,520 Speaker 1: so looking forward, we're talking about forty percent compounded over 170 00:10:55,559 --> 00:10:57,840 Speaker 1: those two years. The figure for this year is going 171 00:10:57,880 --> 00:11:00,199 Speaker 1: to be even higher, but that's sort of behind us now, 172 00:11:00,200 --> 00:11:02,000 Speaker 1: so we're not going to focus on that. But you're 173 00:11:02,040 --> 00:11:05,120 Speaker 1: not going to growth rate, I mean you for a 174 00:11:05,120 --> 00:11:07,880 Speaker 1: couple of years and then we obviously will be will 175 00:11:07,920 --> 00:11:09,760 Speaker 1: be coming down it Still it grows a twenty or 176 00:11:09,800 --> 00:11:13,559 Speaker 1: twenty x percent on a seventeen times even done right. 177 00:11:13,640 --> 00:11:16,000 Speaker 1: So that's what I'm saying is they have a lot 178 00:11:16,040 --> 00:11:19,160 Speaker 1: of depreciation and embolization. You don't want to value this 179 00:11:19,240 --> 00:11:22,360 Speaker 1: company on its straight p That's a mistake that's been 180 00:11:22,400 --> 00:11:25,280 Speaker 1: a widow making mistake for a lot of short sellers 181 00:11:25,320 --> 00:11:29,800 Speaker 1: over the last ten years. UM Jeff Bezos is a 182 00:11:29,880 --> 00:11:34,560 Speaker 1: brilliant manager who has done a terrific job executing. And 183 00:11:34,760 --> 00:11:37,360 Speaker 1: you know, one of the announcements the company has made 184 00:11:37,400 --> 00:11:42,319 Speaker 1: recently is to UH start building their own air force, 185 00:11:42,360 --> 00:11:46,160 Speaker 1: if you will, to help deliver goods. And some of 186 00:11:46,200 --> 00:11:48,720 Speaker 1: the reaction was, oh, my goodness, they're going to take 187 00:11:48,760 --> 00:11:52,600 Speaker 1: business away from FedEx and UPS. But no they're not. 188 00:11:52,800 --> 00:11:57,280 Speaker 1: They're doing this because FedEx and UPS cannot handle their volumes, 189 00:11:57,320 --> 00:12:00,319 Speaker 1: so they need to supplement what FedEx and you ps 190 00:12:00,400 --> 00:12:03,880 Speaker 1: can do with their own air carrier. How much of 191 00:12:03,920 --> 00:12:06,360 Speaker 1: this still is a bet on Bezos and and you 192 00:12:06,360 --> 00:12:08,959 Speaker 1: see folks who invest in Tesla betting on Musk and 193 00:12:08,960 --> 00:12:12,080 Speaker 1: a kind of similar elon Musk in a similar way here. 194 00:12:12,559 --> 00:12:15,240 Speaker 1: It makes some investory squirmish to have to have to 195 00:12:15,240 --> 00:12:19,120 Speaker 1: do that. Well, I think Jeff Bezos, who has been 196 00:12:19,160 --> 00:12:25,480 Speaker 1: doing this now for eighteen twenty years at Amazon, has 197 00:12:25,520 --> 00:12:31,599 Speaker 1: it at this point instituted UH terrific management, terrific controls, 198 00:12:32,200 --> 00:12:40,040 Speaker 1: and um I a culture that that inundates Amazon UH 199 00:12:40,080 --> 00:12:44,920 Speaker 1: to focus on long term growth, not make short term decisions, 200 00:12:45,000 --> 00:12:49,720 Speaker 1: and to try to dominate markets over the long haul. So, 201 00:12:49,800 --> 00:12:52,679 Speaker 1: for example, they announced in the last day or two, 202 00:12:53,000 --> 00:12:58,959 Speaker 1: an interest in getting into live sports streaming, UH, trying 203 00:12:58,960 --> 00:13:06,080 Speaker 1: to negotiate els with some of the major UH sports leagues. Now. 204 00:13:06,760 --> 00:13:09,160 Speaker 1: I don't think there is an agreement that of any 205 00:13:09,200 --> 00:13:13,760 Speaker 1: magnitude that's coming up for negotiations anytime soon. But I 206 00:13:13,800 --> 00:13:18,880 Speaker 1: have no doubt that Amazon will succeed in planting its flag. 207 00:13:19,600 --> 00:13:22,600 Speaker 1: And I don't know whether it's football, baseball, basketball, hockey, 208 00:13:22,720 --> 00:13:25,160 Speaker 1: or or all of the above, but they will be 209 00:13:25,280 --> 00:13:29,040 Speaker 1: there with the product for their Amazon Prime membership before 210 00:13:29,040 --> 00:13:31,240 Speaker 1: we know it. We saw Walmart numbers this week better 211 00:13:31,640 --> 00:13:33,680 Speaker 1: on the online front. They bought Jet dot Com, have 212 00:13:33,760 --> 00:13:37,120 Speaker 1: been investing in the website. That inspire any fear here? 213 00:13:37,200 --> 00:13:41,080 Speaker 1: Does it? Does it emerges a bigger competitor to Amazon? Nuh, 214 00:13:42,040 --> 00:13:46,080 Speaker 1: you can't ignore Walmart. But Walmart is not really a 215 00:13:46,160 --> 00:13:51,080 Speaker 1: threat to Amazon at this point. And UH, it's it's 216 00:13:51,120 --> 00:13:55,960 Speaker 1: really to two different ecosystems. I got about four two 217 00:13:55,960 --> 00:13:59,840 Speaker 1: more questions out of time. Thank you for sharing your Wednesday. 218 00:14:00,320 --> 00:14:04,520 Speaker 1: Thank you for having me and my wife will be 219 00:14:04,559 --> 00:14:08,080 Speaker 1: doing more of the cooking than me. I'll be opening 220 00:14:08,120 --> 00:14:13,400 Speaker 1: the wine man. Howard W. John Tucker check notes from 221 00:14:13,440 --> 00:14:17,480 Speaker 1: Howard war Done, How to open the wine. Just get 222 00:14:17,480 --> 00:14:31,040 Speaker 1: out of the way, and I want to bring Glen Hubbard. 223 00:14:31,040 --> 00:14:33,080 Speaker 1: He is dean of the Columbia Business School, former chairman 224 00:14:33,120 --> 00:14:36,760 Speaker 1: of George W. Bush's Counsel of Economic Advisors. It's great 225 00:14:36,760 --> 00:14:39,320 Speaker 1: to have you with us. Thanks, Good morning, Good morning. 226 00:14:39,440 --> 00:14:42,200 Speaker 1: Let's talk a bit about day one. Perhaps too much 227 00:14:42,280 --> 00:14:44,080 Speaker 1: is made of day one on the campaign trail. What 228 00:14:44,160 --> 00:14:47,240 Speaker 1: a president would do on day one. You've been in 229 00:14:47,280 --> 00:14:49,560 Speaker 1: the White House, You've had to deal with the negotiation 230 00:14:49,600 --> 00:14:53,080 Speaker 1: of setting an economic agenda. We hear about tax cuts, 231 00:14:53,120 --> 00:14:56,480 Speaker 1: tax reform, and infrastructure package, broader fiscal stimulus. What do 232 00:14:56,520 --> 00:14:59,040 Speaker 1: you think that Donald Trump should tackle on his first 233 00:14:59,120 --> 00:15:02,600 Speaker 1: day in office. Well, I'm pretty optimistic about the policy 234 00:15:02,640 --> 00:15:05,640 Speaker 1: agenda that President Electrump has set out, and I think 235 00:15:05,640 --> 00:15:08,480 Speaker 1: the biggest thing is restarting growth, by which I mean 236 00:15:09,080 --> 00:15:12,200 Speaker 1: convincing business people and all of us the faster growth 237 00:15:12,280 --> 00:15:14,840 Speaker 1: is possible. And to do that, you've got to sequence 238 00:15:14,920 --> 00:15:18,320 Speaker 1: things first that really affect growth, and I would target 239 00:15:18,320 --> 00:15:22,080 Speaker 1: tax changes and regulatory changes first. And it looks like 240 00:15:22,160 --> 00:15:26,040 Speaker 1: the administrations Gean Hubbard, good morning. You and I spoke 241 00:15:26,120 --> 00:15:28,960 Speaker 1: briefly after the Trump lecture at the Economic Club of 242 00:15:29,000 --> 00:15:31,760 Speaker 1: New York a number of months ago, Andrew Oss Sorkin, 243 00:15:31,840 --> 00:15:35,640 Speaker 1: among others, rights on Glenn Hubbard and here's your quote. Hubbard. 244 00:15:35,840 --> 00:15:39,280 Speaker 1: The anti trade and anti immigration policies of Mr Trump 245 00:15:39,600 --> 00:15:43,160 Speaker 1: pretend to slower growth future of all Americans and middle 246 00:15:43,200 --> 00:15:47,000 Speaker 1: and lower income Americans in particular. If Donald Trump is 247 00:15:47,040 --> 00:15:50,480 Speaker 1: speaking with the Governor of Massachusetts, Mitt Romney, I only 248 00:15:50,520 --> 00:15:53,000 Speaker 1: can presume he speaking with the dean of the Columbia 249 00:15:53,320 --> 00:15:56,080 Speaker 1: Business School. Have you spoken with Mr Trump and his 250 00:15:56,240 --> 00:15:59,080 Speaker 1: transition team? I have not. I've certainly spoken to the 251 00:15:59,120 --> 00:16:03,320 Speaker 1: transition team. I think that the idea of an anti 252 00:16:03,520 --> 00:16:08,320 Speaker 1: trade policy is first up seems very unlikely. It's also unwise, 253 00:16:08,400 --> 00:16:11,760 Speaker 1: but I think it's it's unlikely. Everything one hears from 254 00:16:11,800 --> 00:16:14,880 Speaker 1: the new administration is really focused on growth, but there 255 00:16:14,880 --> 00:16:18,480 Speaker 1: two priorities matter. You can't get a lot done quickly 256 00:16:18,520 --> 00:16:20,480 Speaker 1: in Washington, so you have to pick one or two 257 00:16:20,480 --> 00:16:23,280 Speaker 1: big things and go for it. Well, you've got experience 258 00:16:23,360 --> 00:16:26,120 Speaker 1: of that, to say the least. I am fascinated by 259 00:16:26,120 --> 00:16:29,280 Speaker 1: the shift and rhetoric that we're seeing by Mr Trump 260 00:16:29,360 --> 00:16:32,040 Speaker 1: right now. We know the politics of that. What's your 261 00:16:32,080 --> 00:16:35,760 Speaker 1: prism of the shift and economic policy that we see 262 00:16:35,800 --> 00:16:38,600 Speaker 1: from the President elect. Well, again, I see it as 263 00:16:38,640 --> 00:16:42,520 Speaker 1: being very oriented toward growth on tax and regulation. The devil, 264 00:16:42,520 --> 00:16:45,240 Speaker 1: of course, lies in the details. The good news here 265 00:16:45,360 --> 00:16:48,040 Speaker 1: is Speaker Ryan and his colleagues have already done a 266 00:16:48,120 --> 00:16:50,600 Speaker 1: lot of good work here. The administration doesn't really need 267 00:16:50,680 --> 00:16:53,600 Speaker 1: to reinvent the wheel. But the President elect will have 268 00:16:53,680 --> 00:16:56,280 Speaker 1: to decide his priorities and fight on them. Remember also 269 00:16:56,360 --> 00:16:58,200 Speaker 1: that a lot of people who voted for him are 270 00:16:58,320 --> 00:17:01,080 Speaker 1: very concerned too about support for work, and so I 271 00:17:01,080 --> 00:17:03,800 Speaker 1: think people will be looking for what the President elect 272 00:17:03,800 --> 00:17:06,920 Speaker 1: will do for them. On the matter of growth. He 273 00:17:06,920 --> 00:17:08,960 Speaker 1: he has said he can get us to four percent growth, 274 00:17:08,960 --> 00:17:10,960 Speaker 1: maybe north of that as well. From where you sit 275 00:17:11,160 --> 00:17:14,800 Speaker 1: in Morningside Heights, is that a feasible thing when the 276 00:17:14,880 --> 00:17:17,600 Speaker 1: near term the economy can certainly grow much more rapidly 277 00:17:17,680 --> 00:17:20,960 Speaker 1: to complete its recovery. I think in the long term 278 00:17:21,000 --> 00:17:24,840 Speaker 1: the debate is probably more, can we grow less than 279 00:17:24,880 --> 00:17:27,360 Speaker 1: two or well above two? And I think the well 280 00:17:27,400 --> 00:17:29,840 Speaker 1: above two between two and a half and three is 281 00:17:29,840 --> 00:17:33,720 Speaker 1: perfectly reasonable for the long term. But no four, Well, 282 00:17:33,760 --> 00:17:35,480 Speaker 1: I think you just have to do the math. Four 283 00:17:35,560 --> 00:17:38,600 Speaker 1: is about productivity and about hours work, so you'd have 284 00:17:38,640 --> 00:17:42,400 Speaker 1: to imagine an unparalleled productivity boom into which I say, 285 00:17:42,440 --> 00:17:45,119 Speaker 1: may it be. So it's great to have that aspiration. 286 00:17:45,680 --> 00:17:47,840 Speaker 1: The first thing that appeared on the Trump transition team's 287 00:17:47,880 --> 00:17:51,479 Speaker 1: website was about Dodd Frank. That was the first agenda 288 00:17:51,560 --> 00:17:54,439 Speaker 1: item up. There are you convinced here that the President 289 00:17:54,440 --> 00:17:56,520 Speaker 1: elect Trump and the transition team has something to plug 290 00:17:56,560 --> 00:17:59,080 Speaker 1: in there if they are to remove Dodd Frank. Well, 291 00:17:59,119 --> 00:18:01,000 Speaker 1: I think with Dodd Frank, you know, there's some good 292 00:18:01,000 --> 00:18:03,160 Speaker 1: things in Dodd Frank. The real issue with Dodd Frank 293 00:18:03,280 --> 00:18:05,879 Speaker 1: is it wasn't that related to the problems we went through. 294 00:18:06,440 --> 00:18:09,120 Speaker 1: I think the administration will have to be surgical. Removing 295 00:18:09,160 --> 00:18:12,080 Speaker 1: Dodd Frank is probably harder politically than it is a 296 00:18:12,119 --> 00:18:15,040 Speaker 1: repeal and replace of Obamacare. But I think there are 297 00:18:15,040 --> 00:18:17,800 Speaker 1: lots of things to do to change the way Dodd 298 00:18:17,840 --> 00:18:21,120 Speaker 1: Frank treated the FED, the way the Financial Stability Oversight 299 00:18:21,160 --> 00:18:23,840 Speaker 1: Committee was structured and saw on. I think there are 300 00:18:23,840 --> 00:18:26,320 Speaker 1: a lot of things there, but they are in the details. 301 00:18:26,359 --> 00:18:29,000 Speaker 1: There's nothing David Gura, It's great to have Glenn Hubbard 302 00:18:29,040 --> 00:18:32,040 Speaker 1: with us to talk about this. There's just nothing like 303 00:18:32,119 --> 00:18:35,840 Speaker 1: seeing headlines that say stimulus is good for you. Look 304 00:18:35,840 --> 00:18:38,320 Speaker 1: at the red headline that just came across the United 305 00:18:38,400 --> 00:18:42,120 Speaker 1: Kingdom and a jillion dollars planned borrowing over the next 306 00:18:42,160 --> 00:18:44,680 Speaker 1: five years. Philip him and the Chancellor of the Exchequer 307 00:18:44,760 --> 00:18:48,160 Speaker 1: speaking before Parliament deliving his autumn statement right now, talking 308 00:18:48,160 --> 00:18:51,840 Speaker 1: about the resilience of the UK economy, also revising the 309 00:18:51,880 --> 00:18:54,000 Speaker 1: forecast for growth, and I think that's the biggest take 310 00:18:54,040 --> 00:18:55,720 Speaker 1: away from what we've heard so far, down big time. 311 00:18:55,800 --> 00:18:58,360 Speaker 1: So the forecast for two thousand seven and was two 312 00:18:58,400 --> 00:19:00,880 Speaker 1: point two percent, now it's one in four pc. These 313 00:19:00,880 --> 00:19:03,840 Speaker 1: are regime changes. Glenn Hubard with US with Columbia Business School, 314 00:19:04,400 --> 00:19:06,680 Speaker 1: Dean Hubbard, you've lived this. I mean there's a point 315 00:19:06,720 --> 00:19:09,240 Speaker 1: where a government has to come out and say these 316 00:19:09,240 --> 00:19:13,119 Speaker 1: are our best guestimates. Does the word regime change work 317 00:19:13,200 --> 00:19:15,879 Speaker 1: here for the United Kingdom? And will we see a 318 00:19:15,960 --> 00:19:20,840 Speaker 1: regime change for the Trump administration. Policy will have to help, 319 00:19:20,960 --> 00:19:24,480 Speaker 1: But I think for the US the regime changes going 320 00:19:24,480 --> 00:19:27,879 Speaker 1: in the other direction. I think faster growth is definitely possible. 321 00:19:28,240 --> 00:19:31,000 Speaker 1: The question is will the administration focus on those policies 322 00:19:31,040 --> 00:19:34,359 Speaker 1: that help. First, all signs point to yes. Talk a 323 00:19:34,359 --> 00:19:37,120 Speaker 1: bit about the relationship between the White House and Congress. 324 00:19:37,119 --> 00:19:39,320 Speaker 1: We've seen it break down here. Over the last decade 325 00:19:39,400 --> 00:19:43,320 Speaker 1: or so, again, you chaired the Council of Economic Advisers. 326 00:19:43,320 --> 00:19:46,200 Speaker 1: Imagine you interfaced with with legislators on the Hill as well. 327 00:19:46,200 --> 00:19:48,760 Speaker 1: What can Donald Trump do to improve that that relationship? 328 00:19:49,320 --> 00:19:51,840 Speaker 1: Why think he starts out, obviously with a much better 329 00:19:51,880 --> 00:19:55,120 Speaker 1: initial condition because he has a Republican Congress and Speaker 330 00:19:55,200 --> 00:19:59,000 Speaker 1: Ryan in particular has been quite busy working on the 331 00:19:59,119 --> 00:20:01,720 Speaker 1: very things Don Old Trump says he cares about. So 332 00:20:01,760 --> 00:20:04,879 Speaker 1: I think this could be a very good relationship. At 333 00:20:04,920 --> 00:20:07,600 Speaker 1: the same time, when you get in the details, particularly 334 00:20:07,600 --> 00:20:11,560 Speaker 1: in financial regulation, there are members of the House Republican 335 00:20:11,640 --> 00:20:14,520 Speaker 1: Caucus that may have a different view. So Mr Trump 336 00:20:14,560 --> 00:20:16,640 Speaker 1: and Mr Ryan have their work cut out for them. 337 00:20:17,320 --> 00:20:21,000 Speaker 1: Leader McConnell in the Senate is terrific at accomplishing legislation. 338 00:20:21,080 --> 00:20:24,720 Speaker 1: So I'm quite optimistic. You know what, we've seen fiscal 339 00:20:24,720 --> 00:20:27,360 Speaker 1: hawks circle in the past around the last few debates 340 00:20:27,400 --> 00:20:30,040 Speaker 1: over the debt ceiling, raising the debt limit. Do you 341 00:20:30,040 --> 00:20:32,480 Speaker 1: expect that to happen again here? What's the role of 342 00:20:32,680 --> 00:20:35,040 Speaker 1: the so called fiscal hawks going to be here as 343 00:20:35,040 --> 00:20:37,399 Speaker 1: this stuff gets worked out? Well, I think we're going 344 00:20:37,440 --> 00:20:39,600 Speaker 1: to have this discussion in the spring when we come 345 00:20:39,680 --> 00:20:42,639 Speaker 1: to the debt limit, and I think you will see 346 00:20:42,680 --> 00:20:45,320 Speaker 1: it from fiscal hawks. A lot will depend on what 347 00:20:45,400 --> 00:20:48,879 Speaker 1: the administration is doing and what sort of deficits it's proposing. 348 00:20:49,320 --> 00:20:51,680 Speaker 1: The big deficit issue for the country, of course, isn't 349 00:20:51,680 --> 00:20:54,359 Speaker 1: whatever it is next year. It's the longer term issues 350 00:20:54,400 --> 00:20:57,960 Speaker 1: in the entitlement programs, and I really doubt the president 351 00:20:58,000 --> 00:21:00,440 Speaker 1: elect and the Congress are going to tackle those right away. 352 00:21:01,960 --> 00:21:05,840 Speaker 1: I looked Dean at the Hope, and oh, let's go 353 00:21:05,920 --> 00:21:08,480 Speaker 1: to the president of President Obama. The hope and the 354 00:21:08,560 --> 00:21:13,280 Speaker 1: audacity of this economics tell me how the supply side 355 00:21:13,320 --> 00:21:17,200 Speaker 1: affect clicks in. Here. We've had heated debate on surveillance, 356 00:21:17,240 --> 00:21:21,560 Speaker 1: about dynamics, scoring about about the the idea that you 357 00:21:21,680 --> 00:21:25,879 Speaker 1: do action and you can model in the results as 358 00:21:25,960 --> 00:21:28,760 Speaker 1: you do the action. Is that a good way to 359 00:21:28,800 --> 00:21:32,040 Speaker 1: make policy? Well, I think it is in the sense 360 00:21:32,080 --> 00:21:36,040 Speaker 1: that the reason Congress is presumably enacting big changes because 361 00:21:36,080 --> 00:21:38,880 Speaker 1: it thinks it will have a positive effect. Now, reasonable 362 00:21:38,880 --> 00:21:41,919 Speaker 1: people can certainly disagree on how large that is, but 363 00:21:42,000 --> 00:21:45,159 Speaker 1: I don't think reasonable people can disagree that it's not there. 364 00:21:45,720 --> 00:21:48,720 Speaker 1: The real question is, you know which policies are going 365 00:21:48,800 --> 00:21:52,840 Speaker 1: to promote growth. The most that's about really big tax 366 00:21:52,840 --> 00:21:55,439 Speaker 1: reform and regulatory reform. And the good news is the 367 00:21:55,440 --> 00:21:58,239 Speaker 1: president elected the Congress are talking in those words. So 368 00:21:58,280 --> 00:22:00,360 Speaker 1: I think we all can wait and see. Is our 369 00:22:00,480 --> 00:22:06,080 Speaker 1: lack of trade discussion dampen or eliminate the good news 370 00:22:06,119 --> 00:22:10,040 Speaker 1: of tax reform. I don't think so. I think the 371 00:22:10,080 --> 00:22:12,600 Speaker 1: fact that we're not hearing a lot about trade at 372 00:22:12,600 --> 00:22:15,439 Speaker 1: the moment is a good thing in the sense that 373 00:22:15,640 --> 00:22:18,119 Speaker 1: if we were to hear a lot of anti trade talk, 374 00:22:18,200 --> 00:22:20,520 Speaker 1: I think that would be bad for the long run growth. 375 00:22:21,080 --> 00:22:23,359 Speaker 1: You're teaching entrepreneurial finance now, so this might not be 376 00:22:23,400 --> 00:22:26,359 Speaker 1: a question on the exam you're going to give, But 377 00:22:26,400 --> 00:22:28,560 Speaker 1: if you were to ask your students here to define 378 00:22:28,600 --> 00:22:31,600 Speaker 1: globalization in the wake of this election, in the wake 379 00:22:31,640 --> 00:22:33,639 Speaker 1: of the campaign that we've had, where it seems to 380 00:22:33,720 --> 00:22:36,040 Speaker 1: have been really called into question or is being re evaluated, 381 00:22:36,160 --> 00:22:37,560 Speaker 1: how do you how do you find it today? How 382 00:22:37,560 --> 00:22:40,320 Speaker 1: would how would a student define that today? Well, see, 383 00:22:40,320 --> 00:22:44,520 Speaker 1: I think of globalization is openness and interconnectedness within and 384 00:22:44,600 --> 00:22:47,240 Speaker 1: across countries, and you know that moves a lot. The 385 00:22:47,240 --> 00:22:50,480 Speaker 1: peak of globalization was probably just before World War One 386 00:22:51,160 --> 00:22:54,359 Speaker 1: and then resurfaced again in the past few decades after 387 00:22:54,400 --> 00:22:57,639 Speaker 1: the American dominated world order after World War Two. You know, 388 00:22:57,680 --> 00:23:01,920 Speaker 1: globalization doesn't always stay at high levels. It benefits us, 389 00:23:01,920 --> 00:23:04,640 Speaker 1: but frankly, there are going to be people who are challenged. 390 00:23:04,640 --> 00:23:07,679 Speaker 1: And I think the real issue that President Electrump identified 391 00:23:07,720 --> 00:23:10,600 Speaker 1: and I think correctly, is how do we help people 392 00:23:10,800 --> 00:23:13,560 Speaker 1: who have been challenged by globalization and by the even 393 00:23:13,640 --> 00:23:17,359 Speaker 1: bigger factor of technical change. And that is going to 394 00:23:17,400 --> 00:23:19,919 Speaker 1: be the big issue amid all of the studies about 395 00:23:20,560 --> 00:23:23,920 Speaker 1: the role of technology has played here with regard to 396 00:23:23,960 --> 00:23:27,560 Speaker 1: the decline in manufacturing, how much can he do? He's 397 00:23:27,560 --> 00:23:30,439 Speaker 1: made promises of bringing jobs back. Are you optimistic that 398 00:23:30,480 --> 00:23:33,720 Speaker 1: we will see a resurgence of manufacturing in this country. Well, 399 00:23:33,840 --> 00:23:37,760 Speaker 1: manufacturing output in this country is fine and may well improve. 400 00:23:37,920 --> 00:23:42,439 Speaker 1: I'm more skeptical about large scale manufacturing employment increases. I 401 00:23:42,440 --> 00:23:44,720 Speaker 1: think what we can do those support work in a 402 00:23:44,800 --> 00:23:48,159 Speaker 1: variety of industries. Speaker Ryon's talked about this by improving 403 00:23:48,160 --> 00:23:50,520 Speaker 1: the earned income tax credit, and I would expect the 404 00:23:50,520 --> 00:23:52,800 Speaker 1: Trump administration to take a look hard and how we 405 00:23:52,840 --> 00:23:56,399 Speaker 1: can support work for many people in the country. Do 406 00:23:56,480 --> 00:24:00,960 Speaker 1: you have any understanding we get core operations to a 407 00:24:01,040 --> 00:24:06,679 Speaker 1: belief in US investment. What is the trigger to jump 408 00:24:06,720 --> 00:24:12,240 Speaker 1: start investment by American companies to create American jobs. Well, 409 00:24:12,240 --> 00:24:14,280 Speaker 1: I think it's a great question, Tom, And there are 410 00:24:14,280 --> 00:24:16,320 Speaker 1: two big things. First, you have to make business people 411 00:24:16,320 --> 00:24:19,440 Speaker 1: believe growth is possible. Again, that's part of what holds 412 00:24:19,480 --> 00:24:23,200 Speaker 1: investment bath. And the second is big tax reform. If 413 00:24:23,240 --> 00:24:26,119 Speaker 1: we make the US the best place in which to invest, 414 00:24:26,160 --> 00:24:29,600 Speaker 1: whether you're an American company or a foreign company, that 415 00:24:29,640 --> 00:24:32,600 Speaker 1: will happen. And if we bring the corporate rate down 416 00:24:32,640 --> 00:24:36,879 Speaker 1: to fifteen, which is being talked about, that's an enormous 417 00:24:37,040 --> 00:24:39,840 Speaker 1: change in the investment climate in the United States. How 418 00:24:39,880 --> 00:24:42,359 Speaker 1: about consumer sentiment? What can the White House? What can 419 00:24:42,359 --> 00:24:45,560 Speaker 1: a Trump White House due to improve consumer sentiment? Well? 420 00:24:45,560 --> 00:24:48,000 Speaker 1: I think for consumer sentiment it's much the same thing, 421 00:24:48,080 --> 00:24:51,520 Speaker 1: making sure that people believe that faster growth is possible. 422 00:24:51,560 --> 00:24:55,040 Speaker 1: The stock market is already signaling that the administration will 423 00:24:55,080 --> 00:24:58,840 Speaker 1: have to deliver in terms of policies that help consumers. 424 00:24:59,680 --> 00:25:01,840 Speaker 1: I I look here at where we are, it seems 425 00:25:01,840 --> 00:25:04,920 Speaker 1: to be such an important see change. Do you consider 426 00:25:05,080 --> 00:25:10,720 Speaker 1: Mr Trump to have Republican economics? Is that a fair question? 427 00:25:11,880 --> 00:25:15,359 Speaker 1: I don't really know. And I'm not sure that it 428 00:25:15,440 --> 00:25:20,399 Speaker 1: really matters. The question is can Mr Trump accomplish these 429 00:25:20,440 --> 00:25:23,119 Speaker 1: big things? I think he can. You know, the issue 430 00:25:23,160 --> 00:25:26,439 Speaker 1: in policies not so much ideas, because frankly, both sides 431 00:25:26,520 --> 00:25:29,840 Speaker 1: sort of have very good ideas for their agendas. The 432 00:25:29,920 --> 00:25:33,320 Speaker 1: question is getting them done. And I think the constellation 433 00:25:33,440 --> 00:25:35,959 Speaker 1: of Mr Trump in the White House and the congressional 434 00:25:36,040 --> 00:25:39,440 Speaker 1: leadership suggests this is this can happen. Glenn Hubbard, thank 435 00:25:39,480 --> 00:25:42,560 Speaker 1: you so much, greatly appreciated. Dean Hubbard with the Columbia 436 00:25:42,600 --> 00:25:46,160 Speaker 1: Business School, just fascinating, David, the changes of the apps 437 00:25:46,200 --> 00:25:49,720 Speaker 1: to speak to Martin Feldstein yesterday and then to Glenn 438 00:25:49,760 --> 00:25:54,600 Speaker 1: Hubbard today, And these are traditional Republicans and the delicacy, 439 00:25:54,680 --> 00:25:57,240 Speaker 1: the ballet they're having, both of whom have spent a 440 00:25:57,280 --> 00:25:59,879 Speaker 1: significant amount of time in Washington and know how to 441 00:26:00,040 --> 00:26:03,320 Speaker 1: place works. And uh, you know, I detected optimism for 442 00:26:03,400 --> 00:26:06,800 Speaker 1: both of them from me practice sport, from from from 443 00:26:06,920 --> 00:26:12,280 Speaker 1: Professor Felt. They're gonna say, you, if Dean Hobbard gets 444 00:26:12,280 --> 00:26:15,480 Speaker 1: a call, what's he do? And I mean this is 445 00:26:15,480 --> 00:26:18,760 Speaker 1: the backdrop, folks, is are we waiting for a Secretary 446 00:26:18,800 --> 00:26:22,159 Speaker 1: of State announcement today? We're waiting for that. Today, I 447 00:26:22,200 --> 00:26:24,560 Speaker 1: saw a record here and I have a tip the 448 00:26:24,840 --> 00:26:27,640 Speaker 1: new function on the Bloomberg you can seriously, you can 449 00:26:27,800 --> 00:26:32,880 Speaker 1: U monitor in real time tweets by Donald Trump. Oh really, yes, 450 00:26:35,560 --> 00:26:39,240 Speaker 1: I will subscribe to tweets by Donald right now, here's 451 00:26:39,240 --> 00:26:41,560 Speaker 1: the latest headline this well, this is twenty minutes and 452 00:26:41,720 --> 00:26:46,960 Speaker 1: excuse me, Mr Bannon, u strategist for Mr Trump meeting 453 00:26:47,000 --> 00:26:49,600 Speaker 1: with Mark Cuban. Interesting they were seen meeting in New 454 00:26:49,640 --> 00:26:53,200 Speaker 1: York Tuesday. This was from Politico. Mark Cuban, of course, 455 00:26:53,359 --> 00:26:55,160 Speaker 1: did not have much good to say about Donald Trump 456 00:26:55,160 --> 00:26:57,280 Speaker 1: in the latter part of the campaign. At least that's 457 00:26:57,320 --> 00:27:00,240 Speaker 1: interesting just to see the breadth of the outrage cheer 458 00:27:00,240 --> 00:27:03,880 Speaker 1: by the outreach here. But it's a new distribution of message. 459 00:27:03,880 --> 00:27:06,280 Speaker 1: And what we're trying to do, folks, is give that 460 00:27:06,440 --> 00:27:09,879 Speaker 1: to you with the best spirit we can, always citing 461 00:27:09,920 --> 00:27:13,679 Speaker 1: the source, because the sources matter. I still go with 462 00:27:13,760 --> 00:27:25,280 Speaker 1: that old folgy kind of thing. Who you put your 463 00:27:25,280 --> 00:27:29,199 Speaker 1: trust in matters. Investors have put their trust in independent 464 00:27:29,320 --> 00:27:33,160 Speaker 1: registered investment advisors to the tune of four trillion dollars. 465 00:27:33,320 --> 00:27:36,920 Speaker 1: Why they see their roles to serve, not sell. That's 466 00:27:36,920 --> 00:27:40,480 Speaker 1: why Charles Schwab is committed to the success over seven 467 00:27:40,520 --> 00:27:46,840 Speaker 1: thousand independent financial advisors who passionately dedicate themselves to helping 468 00:27:46,920 --> 00:27:51,720 Speaker 1: people achieve their financial goals. Learn more and find your 469 00:27:51,800 --> 00:28:01,480 Speaker 1: independent advisor dot com. David, what did you bringing harm 470 00:28:01,480 --> 00:28:04,920 Speaker 1: bundles the un Credit on the American economy? Ye, writing 471 00:28:04,920 --> 00:28:08,000 Speaker 1: as as many economists are here after three tuesdays ago, 472 00:28:08,080 --> 00:28:10,560 Speaker 1: the events of three tuesdays ago? What what happens to 473 00:28:10,600 --> 00:28:13,120 Speaker 1: the economy under aid? Donald Trump? Prenc Harm Benhold's chief 474 00:28:13,160 --> 00:28:15,560 Speaker 1: US economists that Unit Credit. Great to have you with us. Yeah, 475 00:28:15,560 --> 00:28:18,120 Speaker 1: good morning. Let's talk a bit about how your outlook 476 00:28:18,160 --> 00:28:21,680 Speaker 1: has changed your First of all, obviously many people do 477 00:28:21,760 --> 00:28:24,160 Speaker 1: not forecast that Donald Trump would be the victor. What's 478 00:28:24,240 --> 00:28:27,840 Speaker 1: changed in your outlook since election day? Well? I think 479 00:28:28,119 --> 00:28:29,960 Speaker 1: by now it is only it's only the balance of 480 00:28:30,080 --> 00:28:33,840 Speaker 1: risks that that has changed, because we we wait for 481 00:28:33,920 --> 00:28:38,560 Speaker 1: some some more detailed plans about about the stimulus most importantly, 482 00:28:38,560 --> 00:28:40,560 Speaker 1: but also what happens on the trade side. So so 483 00:28:40,640 --> 00:28:43,600 Speaker 1: obviously the risk to the outlook for for two thousand 484 00:28:43,680 --> 00:28:45,880 Speaker 1: seventeen and two thousand eighteen and no skewed to the 485 00:28:45,960 --> 00:28:49,640 Speaker 1: upside because of the of the discust stimulus but I'm 486 00:28:49,640 --> 00:28:51,880 Speaker 1: also a little bit worried that if the stimulus is 487 00:28:51,920 --> 00:28:54,640 Speaker 1: past that we have maybe bigger downside risk for two 488 00:28:54,680 --> 00:28:57,280 Speaker 1: thousand nineteen, I mean a recession if you just look 489 00:28:57,320 --> 00:28:59,240 Speaker 1: at the length of the business cycle, is at some 490 00:28:59,320 --> 00:29:02,360 Speaker 1: point do any way. And but the problem is if 491 00:29:02,400 --> 00:29:04,800 Speaker 1: you if we do get the stimulus at a time 492 00:29:04,840 --> 00:29:07,160 Speaker 1: where the U. S economy is at full employment, we 493 00:29:07,360 --> 00:29:11,360 Speaker 1: probably add to the volatility of GDP grows, meaning maybe 494 00:29:11,360 --> 00:29:13,800 Speaker 1: some better growth in the short term, but but then 495 00:29:13,840 --> 00:29:16,400 Speaker 1: also a bit of a deeper, deeper and maybe earlier 496 00:29:16,440 --> 00:29:19,080 Speaker 1: recession afterwards. Harm I note the use of your word 497 00:29:19,560 --> 00:29:21,280 Speaker 1: with the word if they're at the beginning of your 498 00:29:21,320 --> 00:29:24,360 Speaker 1: your your sentence, they're talking about if the stimulus packages passed. 499 00:29:24,560 --> 00:29:26,920 Speaker 1: Has the conversation changed here? It seems that after the 500 00:29:26,960 --> 00:29:29,080 Speaker 1: election there was almost certainty that we would see a 501 00:29:29,080 --> 00:29:31,680 Speaker 1: big fiscal stimulus package. Now it seems like something that's 502 00:29:31,680 --> 00:29:35,160 Speaker 1: being chewed over. Well, we have no well the market 503 00:29:35,160 --> 00:29:36,960 Speaker 1: I mean, and the market is still reacting like their 504 00:29:37,000 --> 00:29:40,000 Speaker 1: certainty that we're getting stimulus or for right, I mean, 505 00:29:40,040 --> 00:29:41,720 Speaker 1: we're seeing what is happening to the Dow and the 506 00:29:41,920 --> 00:29:45,760 Speaker 1: esp and and or many other asset classes Um, I 507 00:29:45,760 --> 00:29:47,400 Speaker 1: don't think it has ever been clear that we're getting 508 00:29:47,440 --> 00:29:50,479 Speaker 1: a stimulus. It it it has certainly gotten more likely, um, 509 00:29:51,040 --> 00:29:54,160 Speaker 1: with with the Republicans having control of both Chambers of 510 00:29:54,160 --> 00:29:58,960 Speaker 1: Commerce of Congress. Um. But but as I said, nothing, 511 00:29:59,440 --> 00:30:01,600 Speaker 1: the the only thing that it seems to be certain 512 00:30:01,680 --> 00:30:05,560 Speaker 1: right now is uncertainty. But I think that the chance 513 00:30:05,600 --> 00:30:08,200 Speaker 1: that we're getting some type of stimulus is bigger than 514 00:30:08,880 --> 00:30:10,560 Speaker 1: but it's not close to a hundred. I think the 515 00:30:10,560 --> 00:30:13,360 Speaker 1: political how do I use this? That? Do I keep 516 00:30:13,440 --> 00:30:15,600 Speaker 1: using the Yeah? Yeah, I mean it seems like the 517 00:30:15,600 --> 00:30:17,960 Speaker 1: political argument is there for doing it, but the economic 518 00:30:17,960 --> 00:30:19,680 Speaker 1: one might not be there. And I wonder how much 519 00:30:19,720 --> 00:30:21,400 Speaker 1: of a dialogue you think we're going to have about 520 00:30:21,440 --> 00:30:24,000 Speaker 1: that going forward, with unemployment where it is, with the 521 00:30:24,040 --> 00:30:26,600 Speaker 1: dollar as strong as it is. No, I agree, I 522 00:30:26,640 --> 00:30:29,760 Speaker 1: mean the political argument is certainly there, particularly if you're 523 00:30:29,760 --> 00:30:32,040 Speaker 1: a member of the Republican Party, because I mean it's 524 00:30:32,120 --> 00:30:35,000 Speaker 1: it's a great opportunity. You're running the White House and 525 00:30:35,080 --> 00:30:37,640 Speaker 1: post Chambers of Congress, so so you want to you 526 00:30:37,680 --> 00:30:39,360 Speaker 1: want to enact some of the policies that you have 527 00:30:39,480 --> 00:30:42,760 Speaker 1: been in favor of for some time. It's mostly cutting 528 00:30:42,800 --> 00:30:46,240 Speaker 1: taxes and simplifying the text code. Certainly, simplifying the tax 529 00:30:46,320 --> 00:30:48,520 Speaker 1: codes makes a lot of sense, right, Maybe get rid 530 00:30:48,520 --> 00:30:50,680 Speaker 1: of some some loopholes brought on the tax base and 531 00:30:50,680 --> 00:30:53,560 Speaker 1: cut rates on the corporate side. Um, the question is, 532 00:30:53,800 --> 00:30:55,920 Speaker 1: in my view, and that brings us back to the 533 00:30:55,960 --> 00:30:59,520 Speaker 1: economic argument, do we have to cut the overall text 534 00:30:59,520 --> 00:31:02,320 Speaker 1: burden that much? It could be more revenue neutral. And 535 00:31:03,240 --> 00:31:06,200 Speaker 1: I mean the infrastructure site, that's really the more interesting thing, 536 00:31:06,240 --> 00:31:09,080 Speaker 1: because we remember that the Democrats have been trying to 537 00:31:09,120 --> 00:31:13,280 Speaker 1: push for infrastructure spending for a long time, and I 538 00:31:13,640 --> 00:31:16,920 Speaker 1: still remember one congress Republican congressman saying several years ago 539 00:31:17,320 --> 00:31:20,800 Speaker 1: that infrastructure investment is just another word for government spending, 540 00:31:21,520 --> 00:31:24,920 Speaker 1: and that has maybe that perception has changed, and I 541 00:31:24,960 --> 00:31:29,360 Speaker 1: would hope it has, because infrastructure investment is really an 542 00:31:29,400 --> 00:31:33,600 Speaker 1: important thing. It takes a long time to be enacted, 543 00:31:33,640 --> 00:31:37,680 Speaker 1: and it has also long lasting positive implications. So I 544 00:31:37,720 --> 00:31:42,240 Speaker 1: would hope that we see something on that. But unfortunately, UM, 545 00:31:42,320 --> 00:31:45,000 Speaker 1: if we get the stimulus, it's most likely will be 546 00:31:45,040 --> 00:31:49,600 Speaker 1: centered around the tax breaks, and and infrastructure investment is 547 00:31:50,280 --> 00:31:54,200 Speaker 1: not the highest priority here. How critical is it who 548 00:31:54,320 --> 00:31:57,280 Speaker 1: the tax breaks go to? Is that a big deal 549 00:31:57,320 --> 00:32:01,120 Speaker 1: to a guy like herb Bundle's Oh well, I mean personally, 550 00:32:01,320 --> 00:32:08,000 Speaker 1: for an economist, it's absolutely it's absolutely critical. I mean, well, 551 00:32:08,880 --> 00:32:11,240 Speaker 1: your question. To answer your question, we have to take 552 00:32:11,280 --> 00:32:14,240 Speaker 1: a step back and talk about multipliers. Right, So, how 553 00:32:14,360 --> 00:32:18,440 Speaker 1: much does a given text cut increase GDP at the 554 00:32:18,520 --> 00:32:21,320 Speaker 1: end of the day? Right, we know the estimation the 555 00:32:21,440 --> 00:32:24,800 Speaker 1: estimate of multipliers is very uncertain. But there seems to 556 00:32:24,840 --> 00:32:29,040 Speaker 1: be stylized text and UH and and stylisted sect that 557 00:32:29,080 --> 00:32:32,640 Speaker 1: most people can agree on that tax cuts for the 558 00:32:32,720 --> 00:32:36,320 Speaker 1: more affluent part of the population um has a smaller 559 00:32:36,360 --> 00:32:39,959 Speaker 1: impact on growth than tax cuts for the not so 560 00:32:40,080 --> 00:32:42,840 Speaker 1: rich part of the population because the letter the letter 561 00:32:42,960 --> 00:32:46,360 Speaker 1: group tends to spend more of the additional money they get. 562 00:32:46,480 --> 00:32:48,560 Speaker 1: So unfortunately, of course, at least if you look at, 563 00:32:48,600 --> 00:32:52,840 Speaker 1: for example, the tax foundations distributionary impact of of Mr 564 00:32:52,880 --> 00:32:57,960 Speaker 1: Trump's tex cards, think that by far the biggest increase 565 00:32:57,960 --> 00:33:01,000 Speaker 1: in after tax income will be seen at the at 566 00:33:01,000 --> 00:33:02,800 Speaker 1: the richer ones, if I may say so. So so 567 00:33:02,840 --> 00:33:06,760 Speaker 1: that means the multiplier of the proposed UH stimulus program 568 00:33:07,000 --> 00:33:09,680 Speaker 1: is not as big as it could be. How optimistic 569 00:33:09,680 --> 00:33:12,520 Speaker 1: are you that if if corporate tax law is changed, 570 00:33:12,680 --> 00:33:14,960 Speaker 1: you are going to see companies like Apple and Facebook 571 00:33:15,000 --> 00:33:18,440 Speaker 1: bringing profits back from overseas. Are are you thinking it's 572 00:33:18,480 --> 00:33:21,280 Speaker 1: likely that that would happen? Oh, I think I'm not so. Yeah. 573 00:33:21,280 --> 00:33:23,920 Speaker 1: I think they would probably bring some some some cash back. 574 00:33:24,000 --> 00:33:27,440 Speaker 1: But I mean the ultimate goal is um to spur 575 00:33:27,480 --> 00:33:30,360 Speaker 1: investment in the US, and I'm less confident about that. 576 00:33:30,400 --> 00:33:34,360 Speaker 1: We have seen the repatriation efforts before, and money came back, 577 00:33:34,520 --> 00:33:36,120 Speaker 1: but that it was then used to buy back stocks 578 00:33:36,160 --> 00:33:38,040 Speaker 1: or whatever, to bolt the balance sheets of the companies 579 00:33:38,040 --> 00:33:41,120 Speaker 1: and not put to work in terms of investment. Tom 580 00:33:41,120 --> 00:33:43,680 Speaker 1: asked Glen Hubbard about that a few moments ago. How you, 581 00:33:43,720 --> 00:33:47,960 Speaker 1: in a policy position get businesses to to start investing again? 582 00:33:48,000 --> 00:33:50,800 Speaker 1: Do you actually forward? Yeah, get them to actually do it? 583 00:33:50,840 --> 00:33:54,360 Speaker 1: Do you see a path forward there? Well, we we 584 00:33:54,400 --> 00:33:57,120 Speaker 1: had a pleasure talk talk earlier to thom as well, 585 00:33:57,200 --> 00:33:59,640 Speaker 1: and my my answer is the most important thing that 586 00:33:59,680 --> 00:34:02,600 Speaker 1: the US has to change is to make uh, the 587 00:34:02,680 --> 00:34:04,520 Speaker 1: US more attractives. First of all, you don't do it 588 00:34:04,560 --> 00:34:06,840 Speaker 1: with tariffs, right, so you do it by by making 589 00:34:07,720 --> 00:34:10,399 Speaker 1: by penalizing companies to do something else. But you want 590 00:34:10,400 --> 00:34:13,040 Speaker 1: to make the US more attractive. Tax cards probably help, 591 00:34:13,160 --> 00:34:16,840 Speaker 1: less regulation probably helps, But the most important thing is 592 00:34:16,880 --> 00:34:21,719 Speaker 1: to improve the qualification of your workforce. Unfortunately there's nobody 593 00:34:22,400 --> 00:34:25,440 Speaker 1: talking about this. Um. I mean it's it's not only 594 00:34:25,480 --> 00:34:27,879 Speaker 1: about the big companies, right that have the big money, 595 00:34:27,920 --> 00:34:30,279 Speaker 1: the multinationals who have so much money sitting outside of 596 00:34:30,320 --> 00:34:34,680 Speaker 1: the US. Really the backbone of manufacturing or the put 597 00:34:35,600 --> 00:34:39,799 Speaker 1: the industrial Revolution or uh Renaissance, if you want to 598 00:34:39,960 --> 00:34:42,759 Speaker 1: want to see it, what small and medium sized companies. 599 00:34:43,120 --> 00:34:47,040 Speaker 1: I mean, we have so many internationally operating small businesses 600 00:34:47,080 --> 00:34:49,120 Speaker 1: in Germany or Europe. When I talk to them and 601 00:34:49,160 --> 00:34:51,759 Speaker 1: asked them about the experience in the US, they say, 602 00:34:51,880 --> 00:34:54,920 Speaker 1: by the number one problem they have to get skilled labor, 603 00:34:55,239 --> 00:34:58,640 Speaker 1: and that sometimes prevent them from doing more that. Yes, 604 00:34:58,719 --> 00:35:03,520 Speaker 1: David girl hard Bundles brilliant. He sends emails about the 605 00:35:03,560 --> 00:35:06,279 Speaker 1: next section. So you and I look smart. There you go. 606 00:35:06,600 --> 00:35:09,800 Speaker 1: So I'm reading from arm Bundles. Note he's with UNI credit. 607 00:35:10,320 --> 00:35:13,319 Speaker 1: Tom asked me about the skills gap because you're too 608 00:35:13,400 --> 00:35:16,520 Speaker 1: dumb to come up with this question. Help us with 609 00:35:16,560 --> 00:35:19,960 Speaker 1: the skills gap on a serious matter. This is an 610 00:35:19,960 --> 00:35:23,080 Speaker 1: American issue, isn't it. Yeah? Absolutely mean it's not only 611 00:35:23,120 --> 00:35:25,160 Speaker 1: to be saying it's not only an American issue, but 612 00:35:25,280 --> 00:35:29,640 Speaker 1: some European countries, notably Switzerland and Germany that you kindly caught. 613 00:35:29,680 --> 00:35:32,239 Speaker 1: Little Switzerland, they are a little bit better shape, I 614 00:35:32,239 --> 00:35:36,919 Speaker 1: think because they have an apprenticeship program for apprentices which 615 00:35:37,040 --> 00:35:40,319 Speaker 1: learned the specific skills, including the theoretical background they need 616 00:35:40,360 --> 00:35:43,560 Speaker 1: for some jobs. And I were to be to be 617 00:35:43,800 --> 00:35:47,000 Speaker 1: uh open. The email that I said was a link 618 00:35:47,080 --> 00:35:51,480 Speaker 1: to the report by the Manufacturing Institute. I mean, that's 619 00:35:51,520 --> 00:35:54,040 Speaker 1: of course a special interest group if you want, but 620 00:35:54,120 --> 00:35:56,759 Speaker 1: they estimated over the next decade there will be three 621 00:35:56,760 --> 00:35:59,760 Speaker 1: and a half million manufacturing jobs needed to be filled 622 00:35:59,760 --> 00:36:02,320 Speaker 1: in the US, but two million of those can be 623 00:36:02,320 --> 00:36:04,879 Speaker 1: because of the lack of skills, right, I mean that's 624 00:36:04,880 --> 00:36:07,719 Speaker 1: a serious number. So more than of the most likely 625 00:36:07,800 --> 00:36:09,880 Speaker 1: jobs being that should be created or would would be 626 00:36:09,920 --> 00:36:13,399 Speaker 1: created in the manufacturing industry can be filled because there's 627 00:36:13,400 --> 00:36:15,000 Speaker 1: a lack of skilled worker. And I mean, we don't 628 00:36:15,040 --> 00:36:17,160 Speaker 1: have to look to the future. Just look to the 629 00:36:17,280 --> 00:36:20,000 Speaker 1: n f IB, the National Federation of Independent Business. They 630 00:36:20,280 --> 00:36:25,359 Speaker 1: publishing their monthly monthly Business Outlook, and one question there 631 00:36:25,400 --> 00:36:27,879 Speaker 1: is do you find enough skilled labors to fill your 632 00:36:28,560 --> 00:36:32,480 Speaker 1: your job open openings, And almost over the past several 633 00:36:32,520 --> 00:36:35,640 Speaker 1: months have said no, right, so that is really it's 634 00:36:35,719 --> 00:36:38,000 Speaker 1: really a huge topic. And as I said earlier, I 635 00:36:38,080 --> 00:36:40,200 Speaker 1: think that is the main thing that needs to be 636 00:36:40,320 --> 00:36:44,600 Speaker 1: fixed in order to bring investments back and bring companies 637 00:36:44,600 --> 00:36:46,799 Speaker 1: back to the US. Who's going to push for that 638 00:36:46,840 --> 00:36:49,440 Speaker 1: to happen here in the US. I recall taking a 639 00:36:49,480 --> 00:36:52,200 Speaker 1: reporting trip through my home state of North Carolina, visiting 640 00:36:52,239 --> 00:36:54,200 Speaker 1: a bunch of community colleges, and I was cheered to 641 00:36:54,239 --> 00:36:58,840 Speaker 1: see the relationships growing between companies, manufacturing companies, and community 642 00:36:58,880 --> 00:37:01,600 Speaker 1: colleges that we're training students who could then get jobs 643 00:37:01,640 --> 00:37:03,320 Speaker 1: out where they knew that they could get jobs because 644 00:37:03,680 --> 00:37:06,000 Speaker 1: they were being trained on exactly what that company needed. 645 00:37:06,160 --> 00:37:07,680 Speaker 1: Is it something that the government is going to have 646 00:37:07,719 --> 00:37:11,359 Speaker 1: to pioneer here? Is it something for companies to pioneer? Yeah? Well, 647 00:37:11,400 --> 00:37:14,200 Speaker 1: I mean I'm living here now for almost ten years, 648 00:37:14,200 --> 00:37:16,440 Speaker 1: but on this I'm still more German than American. I 649 00:37:16,480 --> 00:37:21,000 Speaker 1: think it's it's the government should should certainly be more 650 00:37:21,040 --> 00:37:23,080 Speaker 1: involved than it is right now. So the example that 651 00:37:23,080 --> 00:37:24,960 Speaker 1: you gave is exactly what we need to see more. 652 00:37:25,400 --> 00:37:27,839 Speaker 1: But if we know what is the right step, why 653 00:37:28,000 --> 00:37:31,120 Speaker 1: leave it to a chance or some some local initiatives 654 00:37:31,200 --> 00:37:32,960 Speaker 1: to do the right thing? And I mean, North Carolina 655 00:37:33,040 --> 00:37:35,360 Speaker 1: is probably hoping that no other part of the US 656 00:37:35,480 --> 00:37:38,880 Speaker 1: is copying this because it gives you North Carolina advantage. 657 00:37:39,160 --> 00:37:41,640 Speaker 1: But if you are a policymaker and you sit in Washington, 658 00:37:41,760 --> 00:37:44,680 Speaker 1: you look at your whole country, why wouldn't you do 659 00:37:44,800 --> 00:37:47,279 Speaker 1: the best? What wouldn't you do what's right for the 660 00:37:47,400 --> 00:37:52,400 Speaker 1: entire country and then kind of help community colleges and 661 00:37:52,520 --> 00:37:55,960 Speaker 1: companies to to install these programs across the country. So 662 00:37:56,000 --> 00:37:58,440 Speaker 1: I think there should be more government involvement because it's 663 00:37:58,440 --> 00:38:00,879 Speaker 1: the right thing to do. What is your history and harme, 664 00:38:00,920 --> 00:38:05,279 Speaker 1: you're claimed for writing these kind of research notes. What 665 00:38:05,480 --> 00:38:09,279 Speaker 1: is wrong with just a simple investment tax credit that's 666 00:38:09,480 --> 00:38:14,520 Speaker 1: job incentivized. Isn't that like policy one oh one? Yeah? 667 00:38:14,560 --> 00:38:16,839 Speaker 1: But I mean it's still all about the bottom line, right, 668 00:38:16,880 --> 00:38:18,960 Speaker 1: I mean, you can give text credits, but first of all, 669 00:38:19,000 --> 00:38:22,960 Speaker 1: for text credits, um, I mean you you if you 670 00:38:23,040 --> 00:38:26,759 Speaker 1: still can make more money by investing abroad for whatever reason, right, 671 00:38:27,040 --> 00:38:28,520 Speaker 1: the text credit is not enough. I mean, if you 672 00:38:28,760 --> 00:38:31,279 Speaker 1: if if it's it's high enough, maybe you give even 673 00:38:31,320 --> 00:38:34,319 Speaker 1: some subsidies that would help. But is that really what 674 00:38:34,400 --> 00:38:36,520 Speaker 1: you want? I mean, if we talk about making America 675 00:38:36,560 --> 00:38:41,200 Speaker 1: great again? It should. That means to me, the companies 676 00:38:41,239 --> 00:38:44,759 Speaker 1: are lining up to come back without the government have 677 00:38:44,880 --> 00:38:47,759 Speaker 1: to write them checks. You know, if America is great, 678 00:38:47,960 --> 00:38:50,439 Speaker 1: companies want to be here. Everybody wants to be here. 679 00:38:50,560 --> 00:38:52,440 Speaker 1: And you don't have to force them with terrorists, and 680 00:38:52,480 --> 00:38:54,920 Speaker 1: you don't have to convince them with text cuts or subsidies. 681 00:38:55,200 --> 00:38:59,000 Speaker 1: Just make you know, just make the the infrastructure that 682 00:38:59,080 --> 00:39:03,319 Speaker 1: means to the capital, the fixed uh infrastructure as well 683 00:39:03,360 --> 00:39:07,359 Speaker 1: as human infrastructure great, and the companies will be back. 684 00:39:07,840 --> 00:39:10,239 Speaker 1: So as you said, I mean you you may companies 685 00:39:10,280 --> 00:39:13,040 Speaker 1: may be happy to take some of these text breaks, 686 00:39:13,040 --> 00:39:16,800 Speaker 1: but sometimes um, they're just very good in gaming the system, 687 00:39:16,840 --> 00:39:21,360 Speaker 1: taking the text break without actually increasing the total investment spending. 688 00:39:21,520 --> 00:39:23,600 Speaker 1: You know, they may do something, may do an investment 689 00:39:23,600 --> 00:39:26,920 Speaker 1: project here, but then cut somewhere else. Who knows. I 690 00:39:27,000 --> 00:39:31,200 Speaker 1: think the only the only way to overall boost total 691 00:39:31,239 --> 00:39:33,279 Speaker 1: investment spending in the Earth is really is great to 692 00:39:33,320 --> 00:39:37,120 Speaker 1: improve the fundamentals. Arm buttons, thank you so much. Great 693 00:39:37,160 --> 00:39:46,840 Speaker 1: thanksgiving is with the UniCredit view. Thanks for listening to 694 00:39:46,920 --> 00:39:52,960 Speaker 1: the Bloomberg Surveillance podcast. Subscribe and listen to interviews on iTunes, SoundCloud, 695 00:39:53,400 --> 00:39:57,640 Speaker 1: or whichever podcast platform you prefer. I'm out on Twitter 696 00:39:57,719 --> 00:40:01,520 Speaker 1: at Tom Keene. David Gura is at David Gura. Before 697 00:40:01,520 --> 00:40:05,920 Speaker 1: the podcast, you can always catch us worldwide. I'm Bloomberg Radio. 698 00:40:18,360 --> 00:40:21,000 Speaker 1: Who you put your trust in matters? Investors have put 699 00:40:21,000 --> 00:40:25,359 Speaker 1: their trust and independent registered investment advisors to the two 700 00:40:25,360 --> 00:40:29,040 Speaker 1: and four trillion dollars. Why Learn more and find your 701 00:40:29,080 --> 00:40:31,879 Speaker 1: independent advisor dot com