Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: This is arguably the most important conversation of the day.
Speaker 2: Libby Cantrell is with the Pacific Investment Management Company PIMCO,
Speaker 2: and she is expert on Washington process, and she joins
Speaker 2: us right now, the President elect's going to want to
Speaker 2: run this from the White House with some form of
Speaker 2: autocratic certitude. Who knows what it's going to be. Where
Speaker 2: are the checks and balances if we presume a Republican
Speaker 2: Senate fifty five senators back to two thousand and five,
Speaker 2: maybe a House maybe Democrat, maybe a Republican. Where does
Speaker 2: Libby Cantrell see the checks in the balances of our legislation?
Speaker 3: Yes, well, good morning.
Speaker 4: So so the Senate looks almost definite that Republicans will
Speaker 4: have a fifty three forty seven majority, and then to
Speaker 4: Nevada and Mission again depending on how those states are called.
Speaker 4: So you know, fifty three forty seven a bit of
Speaker 4: a check, right. You need sixty votes still in the
Speaker 4: Senate to pass major legislation, except for tax bills, which
Speaker 4: can be passed by a budget reconscillation, which only requires
Speaker 4: fifty votes. People's eyes glaze over, understandably, but it's actually
Speaker 4: quite yes, I know, but it's actually but it is
Speaker 4: actually quite important. The House, however, looks like it's going
Speaker 4: to be very close. It will likely be kept in
Speaker 4: the kind of the Republican column, but maybe they only.
Speaker 3: Have one two three seat majority with it.
Speaker 2: That matters within American political punditry. Let's go like all
Speaker 2: the TV networks in that is our legislation, our law
Speaker 2: going to be run out of sixteen hundred Pennsylvania Avenue.
Speaker 2: How do you respond to that?
Speaker 4: Look, I think from an economic perspective, there are many
Speaker 4: things that Trump can do unilatterly that he's already talked
Speaker 4: about doing.
Speaker 3: He will increase.
Speaker 4: Tariffs, and I think our view is that this is
Speaker 4: an ideology of his that has been you know, for
Speaker 4: his entire public life. So we're expecting tariffs to go up.
Speaker 4: Now you know how much they go up, and what
Speaker 4: that exact policy looks like, I think reminds to be seen.
Speaker 4: Immigration he can do unilaterally in terms of slowing the
Speaker 4: flow and basically you know, stopping stopping the border. But
Speaker 4: outside of that, I think this is really quite important
Speaker 4: from uh, you need the you need the Congress. So
Speaker 4: the big, bigger majority in the Senate is important he
Speaker 4: can get all of his folks confirmed.
Speaker 3: That's going to be very important for him.
Speaker 4: But if he doesn't have a bigger majority in the House,
Speaker 4: it's going he'll be able to pass things for sure,
Speaker 4: but it's going to be a lot more of a
Speaker 4: negotiation than I think what maybe the market expects right
Speaker 4: now about.
Speaker 1: The financial services industry. Talk about an industry that feels
Speaker 1: that it's has with maybe it's fair share of regulations.
Speaker 1: What do we know about the Trump administration and how
Speaker 1: they view the financial services industry.
Speaker 4: Yeah, so I think a couple of things, just to
Speaker 4: you know, for folks listening, you know, there are a
Speaker 4: few things that a few regulators that Trump can replace
Speaker 4: basically date on one. That's the CFPB, the Consumer of
Speaker 4: Financial Protection Bureau, the FHFA, which oversees Fanny and Freddie,
Speaker 4: the OCC and then he can likely nominate the new
Speaker 4: chairs of the SEC and the CFTC, but that will
Speaker 4: take time.
Speaker 3: The FED, however, it's.
Speaker 4: Pretty clear that he cannot do anything with Chairman Powell.
Speaker 4: So Powell's here here to stay at least until twenty
Speaker 4: twenty six when his termo's chair is over. So in
Speaker 4: terms of like putting fingerprints on financial regulation. There are
Speaker 4: areas where he absolutely can do this sort of day one,
Speaker 4: but basically everything else in terms of you're talking about
Speaker 4: Basil three end game, that will take some time.
Speaker 3: But to be clear here, the direction of travel is clear.
Speaker 4: There's going to be a softer touch on financial regulation,
Speaker 4: and that's why financials are.
Speaker 2: I guess it's bipartisan. I mean, you know this Libby viscerally,
Speaker 2: there's got to be a collegiality. Howard Baker talking to
Speaker 2: Sam Irvin. Is it gone?
Speaker 3: Is it gone?
Speaker 2: I don't.
Speaker 4: I mean I think Look, I think that that people
Speaker 4: come to Washington in order to get things done. And
Speaker 4: given that President Trump is coming to the presidency with
Speaker 4: a very strong mandate and a pretty nice majority at
Speaker 4: least in the Senate. I mean, the folks on the
Speaker 4: Democratic side, if they want to see anything get done,
Speaker 4: they're going to have to work with, you know, with
Speaker 4: President Trump.
Speaker 3: Now, I may they may have to hold their nose just.
Speaker 4: Based on kind of the Twitter reaction, but I think that, yeah,
Speaker 4: people come to Washington and in order to govern and
Speaker 4: to govern, you know, it's a compromise.
Speaker 2: It's a great insight the Truman and Dewey didn't have
Speaker 2: to worry about Twitter as well. And my all night
Speaker 2: are gir again forcing me to have an all nighter.
Speaker 2: I neglected to say for Governor need Lamont that his
Speaker 2: wife Annie Lamont is on the board of Bloomberg LP.
Speaker 2: That was my folks, my major folks this morning.
Speaker 3: Hey Lebby.
Speaker 1: If I'm an M and a banker, if I'm an
Speaker 1: M and a attorney, I think I'm pretty happy here
Speaker 1: because the concern here of the last number of years
Speaker 1: has been, boy, it's tough to get deals through the
Speaker 1: regulatory particularly the Federal Trade Commission. There's been some calls
Speaker 1: some change in leadership there. How do you think we
Speaker 1: may see that reflected in the Federal Trade Commission, maybe
Speaker 1: the Department of Justice.
Speaker 4: Yeah, so I think that An important thing to keep
Speaker 4: in mind is actually that Lena Kahn's term was actually
Speaker 4: expired the third week of September, so effectively she is
Speaker 4: a lamed duck. If Harris had been elected, she would
Speaker 4: have had to either renominate her or nominate somebody else. Now,
Speaker 4: of course Trump will not. He will he will choose
Speaker 4: somebody else. So that is another regulatory change that he
Speaker 4: is going to be able to bring about you.
Speaker 3: Know, pretty much in short order.
Speaker 4: Now he's going to course have to get that person
Speaker 4: confirmed by the US Senate and what have you.
Speaker 3: But to your point, I mean, this is.
Speaker 4: Absolutely kind of risk positive in terms of well, folks.
Speaker 2: I need some drama the day after an election. Is
Speaker 2: Libby Cantra willing to say MEGS seven regulation by Washington
Speaker 2: goes away?
Speaker 4: No, And I think this is actually quite important. So
Speaker 4: executive orders will go away. But actually deregulation takes a
Speaker 4: lot of time. Usually it takes years. What I think
Speaker 4: that the market is understandably and rightfully responding to is
Speaker 4: the absence of new regulation and just a more you know,
Speaker 4: just more clarity in terms of the regulatory landscape.
Speaker 3: I mean the thing about President Biden.
Speaker 4: Even though he ran more as a centrist Democrat back
Speaker 4: in tw twenty twenty, you know, he really nominated and
Speaker 4: was able to get confirmed some pretty ideological folks on
Speaker 4: the regulatory side, and that is going to be a
Speaker 4: big chef. But again we shouldn't expect necessarily deregulation. We
Speaker 4: will see some executive orders unwound that will help traditional energy,
Speaker 4: in particular the LG export pause, for instance, is likely
Speaker 4: to go away kind of day one.
Speaker 3: But outside of that, deregulation is it takes all? It
Speaker 3: takes much.
Speaker 1: A mental Arguably the biggest issue for corporate Wall Street
Speaker 1: is taxation. What's your call on taxation under Trump?
Speaker 4: Yes, so this is actually where again sort of my
Speaker 4: nummy as it may be, where the.
Speaker 3: Majority of the Chamber of majorities actually do matter.
Speaker 1: Yeah.
Speaker 4: So you know, assuming that the Republicans keep the House,
Speaker 4: they will likely be able to get through an extension
Speaker 4: of all of the Trump task cuts on the individual side. Now,
Speaker 4: remember there are no no expiration on the corporate tax side,
Speaker 4: so that is likely not going to change. I would
Speaker 4: sort of fade the idea that it's going to decrease
Speaker 4: significantly the deficits of six and a half percent. Unlikely that,
Speaker 4: you know, republic He's gonna be able to get Republican
Speaker 4: unanimity to do something that actually you know, costs you know,
Speaker 4: billions hundred billion.
Speaker 2: Live me thirty eight seconds. John from New Jersey emails
Speaker 2: in and says all I care about is assault text.
Speaker 2: No Trump did it.
Speaker 3: He should have to prep.
Speaker 2: Then, right, But the salt text stays the.
Speaker 4: Salt, So the salt cap, which ten thousand. Yeah, so
Speaker 4: if that expires and if Converse doesn't do anything that's
Speaker 4: fully reinstated, that is very unlikely. It cost about a
Speaker 4: trillion dollars over ten years. I do think that Trump
Speaker 4: will have pressure to increase the cap. Maybe it's to
Speaker 4: twenty thousand, maybe it's even higher, maybe it's to forty thousand.
Speaker 3: So maybe you're called from New Jersey will be happy
Speaker 3: with that.
Speaker 4: But in terms of the reinstatement of the salt deduction,
Speaker 4: that is very unlikely. It is very expensive. It's about again,
Speaker 4: about trillion dollars over ten years.
Speaker 2: What a yields do in your space? Are yields inflation yields?
Speaker 2: Worry about the fiscal deficit? Is that a constraint for
Speaker 2: this political revelution?
Speaker 3: That a constraint from Washington. I'm not sure that they
Speaker 3: understand what a curf steepner is. For instance, I kind
Speaker 3: of doubt it.
Speaker 4: But obviously the bond market is reacting right, and that's
Speaker 4: you know, the sting. Now again, we would have made,
Speaker 4: I think, made the argument that regardless of whether it's
Speaker 4: Harris or Trump, both would.
Speaker 3: Have been bad for the deficit.
Speaker 4: We were looking at high deficits regardless of who won,
Speaker 4: so we would have said that the curse hast even regardless.
Speaker 2: Lily comeback the next time, the Denver Broncos win. Let
Speaker 2: me cantrol a clinical there, wishing Laway would return at
Speaker 2: some point