WEBVTT - Immigration is the American Dream, Gutierrez Says 0:00:00.080 --> 0:00:12.960 Ye, Welcome to the Bloomberg Surveillance podcast. I'm Tom Keane. 0:00:13.480 --> 0:00:17.560 Daily we bring you insight from the best in economics, finance, investment, 0:00:18.000 --> 0:00:23.480 and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, 0:00:23.600 --> 0:00:33.640 Bloomberg dot Com, and of course, on the Bloomberg. Four 0:00:33.680 --> 0:00:36.479 months ago, there was a modest press release out of 0:00:36.560 --> 0:00:40.640 Think Tank America's would with the Peterson Institute brand. It 0:00:40.720 --> 0:00:43.960 was a wonderful press release. Douglas Irwin and Mary Lovely 0:00:44.240 --> 0:00:48.519 joined Peterson Institute for International Economics. Many of you will 0:00:48.560 --> 0:00:53.960 know Professor Irwin of Dartmouth, perhaps fewer very Lovely of 0:00:54.040 --> 0:01:01.440 Syracuse University, who is absolutely definitive on intellectual transfer across nations, 0:01:01.440 --> 0:01:04.640 and she joins us this morning with the Peterson Institute 0:01:05.160 --> 0:01:08.800 on tariffs and such. Mary, what's the number one thing 0:01:09.000 --> 0:01:14.000 we get wrong in our tariff analysis or discussion two 0:01:14.040 --> 0:01:20.600 thousand eighteen vintage. I think the biggest misconception is the 0:01:20.720 --> 0:01:23.800 extent to which the trade between the United States and 0:01:24.080 --> 0:01:29.600 China happens via multinationals by a foreign firms operating in China. 0:01:29.720 --> 0:01:33.680 To a large extent, it is uh supply chain trade. 0:01:35.000 --> 0:01:38.440 What does that mean? Is that just more amorphous or 0:01:38.520 --> 0:01:40.920 harder to get our hands on that it's within the 0:01:40.959 --> 0:01:44.920 menu facture of products. Well, it has a lot of 0:01:44.959 --> 0:01:49.000 implications for how the us UH is either helped or 0:01:49.080 --> 0:01:52.440 hurt by these tariffs. First of all, when we when 0:01:52.440 --> 0:01:54.720 we place tariffs on these types of goods, we're not 0:01:55.160 --> 0:01:59.120 we're almost indirectly trying to get at the Chinese were 0:01:59.280 --> 0:02:04.240 first off, hitting mainly our allies operations in China. Secondly, 0:02:04.240 --> 0:02:07.640 we're hurting our own corporations, the companies that employ people 0:02:07.640 --> 0:02:11.359 in the United States by raising their costs. Because the 0:02:12.520 --> 0:02:15.560 overwhelming majority of the goods that were hit with tariffs 0:02:15.560 --> 0:02:18.959 are inputs to our production processes. I mean, Katherine Rampole 0:02:19.000 --> 0:02:21.840 in the Washington Post has made this huge distinction, folks, 0:02:22.320 --> 0:02:26.200 between finished goods and inputs. Give us an example of 0:02:26.240 --> 0:02:28.680 what an input would be is that like a distributor 0:02:28.760 --> 0:02:32.200 in a car. Absolutely, it could be a distributor to car. 0:02:32.680 --> 0:02:36.560 It could be semiconductors that we originally exported to China 0:02:36.639 --> 0:02:39.400 coming back to us after they've been tested and packaged. 0:02:40.000 --> 0:02:44.040 It can be auto parts, although primarily it's not. Primarily 0:02:44.040 --> 0:02:47.880 it's electronics. Let's go right there. We make a semiconductor 0:02:47.919 --> 0:02:52.000 in California, it gets shipped to China. Or what do 0:02:52.000 --> 0:02:54.240 they do? They bless it and pour holy water on it? 0:02:54.280 --> 0:02:56.880 What do they I doubt if it's holy Water town. 0:02:57.160 --> 0:02:59.720 What do they do? They test it, they package it, 0:02:59.800 --> 0:03:02.079 they send it back in a suran rap thing. It 0:03:02.200 --> 0:03:05.480 comes off a thing in Long Beach. And that's the 0:03:05.520 --> 0:03:10.240 input that's taking jobs away from America right Well, in 0:03:10.320 --> 0:03:13.840 the rhetoric it is. In reality, it's not firms that 0:03:13.840 --> 0:03:16.440 that have off short have added jobs in the US. 0:03:16.560 --> 0:03:18.560 The problem is that there are different jobs than the 0:03:18.639 --> 0:03:21.800 jobs that are that are destroyed by changes in the 0:03:21.800 --> 0:03:25.680 global economy. So the jobs are moving towards the more 0:03:25.760 --> 0:03:28.799 highly skilled folks. They're moving away from sort of the 0:03:28.880 --> 0:03:32.160 use of physical labor. But at the same time, we're 0:03:32.200 --> 0:03:35.600 seeing exactly the same changes happening with changes in technology 0:03:35.680 --> 0:03:37.960 and firms and and we've all heard a great deal 0:03:38.000 --> 0:03:42.960 about coming robotization of the factory floor. So technology shocks 0:03:42.960 --> 0:03:45.160 are hitting us at the same time that China has 0:03:45.200 --> 0:03:48.720 opened up and also made it easier to offshore to them. 0:03:48.720 --> 0:03:51.040 So Mary, you say China's opened up to what extent 0:03:51.120 --> 0:03:54.119 has the Chinese economy opened up over the last decade? 0:03:54.920 --> 0:03:58.360 The Chinese economy has opened up quite dramatically. They lowered 0:03:58.400 --> 0:04:02.200 their tariffs quite a bit uh to well below ten 0:04:02.240 --> 0:04:05.720 percent with the agreement that was made between the US 0:04:05.760 --> 0:04:07.560 and China for them to join the w t O. 0:04:08.240 --> 0:04:11.240 They've opened up in terms of decreasing the number of 0:04:11.280 --> 0:04:14.800 sectors in which you have to participate in a joint 0:04:14.880 --> 0:04:18.040 venture to invest in China. We hear a lot about 0:04:18.120 --> 0:04:21.480 joint ventures and how they're the conduit forward technological theft 0:04:21.480 --> 0:04:25.400 from the United States, but in fact they've decreased dramatically 0:04:25.400 --> 0:04:27.320 the number of sectors in which you need to have 0:04:27.400 --> 0:04:31.720 a joint venture. And recently uh Sheet and Ping mentioned 0:04:32.120 --> 0:04:35.080 or offered to open up the automobile sector to wholly 0:04:35.120 --> 0:04:37.279 owned subsidiary Mary. Would it be fair to say that 0:04:37.279 --> 0:04:39.800 they've opened up things they've started to dominate. For instance, 0:04:39.800 --> 0:04:42.960 the auto sector is a great example. For many manufacturers. 0:04:42.960 --> 0:04:47.080 They've had to take the manufacturing position to China to 0:04:47.200 --> 0:04:50.360 avoid the import tariffs, and now the Chinese are looking 0:04:50.400 --> 0:04:54.440 at removing import tariffs or at least luring imports tariffs 0:04:54.480 --> 0:04:56.919 on imports. It's not as if those manufacturers that have 0:04:56.960 --> 0:04:58.800 already moved to China and now going to move back 0:04:58.839 --> 0:05:01.240 to Europe or move to the Nazis States as it 0:05:01.320 --> 0:05:04.640 that's stuck that. Uh, well, I think they want to 0:05:04.680 --> 0:05:06.400 be there. I think they want to serve the market. 0:05:06.760 --> 0:05:09.560 As far as are they dominating the auto industry? The 0:05:09.640 --> 0:05:13.600 US imports only about a billion dollars worth of of 0:05:13.600 --> 0:05:16.479 of vehicles from China, and yet we export more than 0:05:16.560 --> 0:05:20.080 ten billion. So are they dominating autos? No? I certainly 0:05:20.080 --> 0:05:21.920 don't want to trade in my car for a car 0:05:22.000 --> 0:05:24.919 that's made holy in China. So I think this idea 0:05:24.960 --> 0:05:28.520 that they're dominating already is getting way ahead of ourselves 0:05:28.520 --> 0:05:34.200 by several decades. Your core research is on intellectual transfer 0:05:34.839 --> 0:05:39.080 between China and US. Give us that dynamic. Right now, 0:05:39.200 --> 0:05:42.960 They in droves are sending their kids over here at 0:05:43.000 --> 0:05:48.400 different levels of brightness to study. Do they all go home? No, 0:05:48.560 --> 0:05:51.400 they don't, although you know more will go home with 0:05:51.440 --> 0:05:55.520 the changes in uh US policies. But there's lots of 0:05:55.600 --> 0:05:59.080 avenues by which technology transfer is happening, including what we 0:05:59.160 --> 0:06:02.960 call intellectual attorneys. Not only the return of of students 0:06:03.000 --> 0:06:05.640 who have received you know, a Bachelor of Science or 0:06:05.680 --> 0:06:09.320 a Bachelor of Arts, but of course PhDs and highly 0:06:09.360 --> 0:06:12.800 skilled professionals. So This is happening at all levels, in 0:06:12.839 --> 0:06:15.560 all sectors. It's happening in my own field, which is 0:06:15.640 --> 0:06:20.839 higher education, where the Chinese are wooing back very skilled people. Um. 0:06:20.880 --> 0:06:25.200 There's no international laws against this. You're able to, uh, 0:06:25.240 --> 0:06:29.599 you know, offer higher salaries or better housing subsidies to 0:06:29.680 --> 0:06:32.640 people if you want. So that's one way. Other ways, 0:06:32.720 --> 0:06:37.200 or of course they're enticing corporations to bring technology to China. 0:06:37.279 --> 0:06:39.320 This is something we don't really want to talk about. 0:06:39.360 --> 0:06:42.160 We want to talk about theft and other things. But 0:06:42.360 --> 0:06:47.240 many corporations do transfer technology voluntarily. The Chinese offer you know, 0:06:47.320 --> 0:06:52.039 ready fields for factories or for you know, high tech businesses. UM. 0:06:52.160 --> 0:06:55.080 And the the opening up, the growth of the market 0:06:55.120 --> 0:06:59.479 there is very attractive. Let's say it there you so 0:06:59.560 --> 0:07:03.080 much great, appreciate it, very lovely with the Peterson Institute. 0:07:03.120 --> 0:07:24.000 From our studios in Washington to this morning, Douglas Peebles 0:07:24.080 --> 0:07:27.000 is with us with a B alliance Bernstein in fix 0:07:27.040 --> 0:07:29.200 ting What do you actually do? Do you? Are you 0:07:29.280 --> 0:07:31.600 running money? Are you are you in the mail room 0:07:31.640 --> 0:07:33.880 clipping coupons? What do you do for a B? Well 0:07:33.880 --> 0:07:35.840 those two things are sort of one and the same 0:07:35.880 --> 0:07:39.280 these days. Um, but yeah, I'm the chief investment officer 0:07:39.320 --> 0:07:41.920 for the fixed income group. I've been at a b 0:07:42.520 --> 0:07:45.440 UH and its affiliates forty one years. I know that's 0:07:45.440 --> 0:07:47.080 where I wanted, exactly where I wanted to go. You 0:07:47.120 --> 0:07:50.680 and I remember when fixed income at trouble competing with 0:07:50.800 --> 0:07:54.720 CDs and other manipulated coupon products, and then there was 0:07:54.760 --> 0:07:57.120 a point where everybody was a genius and total return 0:07:57.280 --> 0:08:00.800 was easy. He's easy with your wonder for three decades 0:08:00.840 --> 0:08:03.840 of experience, what's the mood this year? They just clip 0:08:03.880 --> 0:08:06.360 the coupon and say thank you? Well. I think two 0:08:06.360 --> 0:08:09.800 thousand eighteen is really a transition year, UM. And we've 0:08:09.840 --> 0:08:13.800 had the main influence on all financial markets over the 0:08:13.880 --> 0:08:17.680 last ten years has been monetary policy. And and the 0:08:17.720 --> 0:08:19.880 reason I call it a transition year is we have 0:08:19.920 --> 0:08:24.280 a transition of monetary policy. And the Fed has two 0:08:24.400 --> 0:08:27.400 levers now in which they tighten policy, and they're using 0:08:27.440 --> 0:08:30.160 both of them. They're they're now shrinking their balance sheet 0:08:30.440 --> 0:08:34.439 and they're obviously raising interest rates, which we saw last week. UM. 0:08:34.480 --> 0:08:38.240 I think what happened globally last week of importance is 0:08:38.280 --> 0:08:42.160 that Drag and team decided that they were going to 0:08:42.440 --> 0:08:45.720 be more dubbish for longer, and and I think that 0:08:45.720 --> 0:08:48.640 that kept the fixed income markets under wrap, and that 0:08:48.679 --> 0:08:51.520 will probably continue to do so for the for at 0:08:51.600 --> 0:08:54.640 least for the summer um. But this transition is in place, 0:08:55.160 --> 0:08:58.640 and you know, we we tom we we look back 0:08:58.679 --> 0:09:00.920 and say, okay, I and when the ten year note 0:09:01.000 --> 0:09:04.400 was was ten eleven, but the five year note today 0:09:04.679 --> 0:09:07.280 is just under three percent, and I think that that's 0:09:07.320 --> 0:09:10.320 what the new normal is in terms of what is 0:09:10.760 --> 0:09:14.400 a respectable return and can two or three percent compete 0:09:14.400 --> 0:09:17.720 for capital? Are there any signs of credit stress right now? Well, 0:09:17.720 --> 0:09:20.640 I don't think there's any particular signs in the marketplace 0:09:21.040 --> 0:09:23.760 in terms of credit stress. But that's the worry, right, 0:09:23.800 --> 0:09:27.280 I mean, we have we have certain signals. UH we 0:09:27.400 --> 0:09:30.960 use a combination of quantitative and fundamental factors. The fundamental 0:09:31.000 --> 0:09:33.800 team has been saying rightfully so that we are late 0:09:33.840 --> 0:09:35.960 in the credit cycle for a long period of time. 0:09:36.600 --> 0:09:40.880 We have very very highly levered, particularly investment grade companies 0:09:40.880 --> 0:09:44.920 relative to history. And then a very important signal that 0:09:44.960 --> 0:09:47.040 we follow is the flattening of the yield curve. And 0:09:47.080 --> 0:09:51.000 that flattening of the yield curve historically has meant UH 0:09:51.440 --> 0:09:54.040 rain in on risk because that's not in good environment 0:09:54.040 --> 0:09:56.280 for risk taking. I've heard this a lot right in 0:09:56.320 --> 0:09:58.719 on risk. Do you actually see that in the positioning 0:09:59.000 --> 0:10:01.040 of west some of these fun zon right now? Because 0:10:01.240 --> 0:10:03.360 people will come on the program with me and they'll say, 0:10:03.559 --> 0:10:05.880 it's conte day risk. Because you've pointed out there's a 0:10:05.920 --> 0:10:08.400 competition for capital. You can just buy treasuries at the 0:10:08.400 --> 0:10:10.640 front end. You don't have to take as much duration risk, 0:10:10.679 --> 0:10:12.760 you don't have to take as much credit risk. I 0:10:12.800 --> 0:10:15.880 hate that cooler law. People actually acting on it well. 0:10:15.920 --> 0:10:18.040 I think if you look at the mutual fund flows, 0:10:18.080 --> 0:10:20.800 the fixed income flows are in outflow mode right now. 0:10:21.480 --> 0:10:23.280 I'm not sure what they're doing with their money. My 0:10:23.280 --> 0:10:26.720 my guess is they're not buying CDs. I do think 0:10:26.760 --> 0:10:29.840 that they're they're actually more often than not moving out 0:10:29.880 --> 0:10:32.360 the risk spectrum, but not in the fixed income world. 0:10:32.720 --> 0:10:35.040 The only place where they're moving out the risk spectrum 0:10:35.040 --> 0:10:38.360 in the fixed income world is in the floating rate. 0:10:38.400 --> 0:10:42.040 The bank loans the the new nirvana at the moment, 0:10:42.080 --> 0:10:44.720 if you will, And and that's because they're so afraid 0:10:44.720 --> 0:10:47.920 of interest rate risk um And I think that when 0:10:47.960 --> 0:10:51.400 people look at bond markets and their bond investments. They 0:10:51.440 --> 0:10:53.840 really have to break it down into between what is 0:10:53.880 --> 0:10:57.720 my risk reducing bond portfolio and what is my return 0:10:57.720 --> 0:11:02.120 seeking bond portfolio. And bank owns, for example, are in 0:11:02.720 --> 0:11:06.200 our opinion and should be in the return seeking don't 0:11:06.280 --> 0:11:10.079 worry about duration if you're a high yield investor, right, 0:11:10.160 --> 0:11:12.720 what you should worry about duration, which is the interest 0:11:12.800 --> 0:11:17.360 rate risk if you're a risk mitigating investor. Now, one 0:11:17.360 --> 0:11:20.240 thing that hasn't changed in this environment is the negative 0:11:20.280 --> 0:11:25.200 correlation between treasuries and risk markets. And and are recommendation 0:11:25.280 --> 0:11:28.400 to people is with this transition in place from the 0:11:28.440 --> 0:11:32.520 central bank, particularly the FED move back into more balance. 0:11:33.000 --> 0:11:35.680 So don't be so afraid of duration. I don't think. 0:11:36.000 --> 0:11:38.840 I don't think that that's the fear that most people 0:11:38.840 --> 0:11:41.160 should have, even though they do one thing. We john 0:11:41.400 --> 0:11:43.840 correct me if I'm wrong, but we're way too full 0:11:43.880 --> 0:11:47.120 faith and credit focused. And then we look at high yield, 0:11:47.600 --> 0:11:50.520 and then there's the in between the investment grade paper. 0:11:50.960 --> 0:11:54.120 What's the in between risk look like? Well? I think 0:11:54.160 --> 0:11:56.760 the in between risk looks fine as long as the 0:11:56.800 --> 0:11:59.600 economy is strong. So, for example, if you look at 0:11:59.600 --> 0:12:03.800 the investor grade market, the investment grade average credit quality 0:12:03.840 --> 0:12:05.760 has never been as low as it is right now. 0:12:06.120 --> 0:12:08.840 So why is that. It's not because the economy has 0:12:08.880 --> 0:12:13.400 been doing, you know, so awful. It's because the average 0:12:13.480 --> 0:12:17.360 CFO in the marketplace has now decided instead of running 0:12:17.360 --> 0:12:20.760 their balance sheet at a single A rating, they want 0:12:20.800 --> 0:12:23.720 to move it down to a triple B. Yeah, they're 0:12:23.720 --> 0:12:26.760 they're issuing bonds to buy backstop. Is that what Comcast 0:12:26.800 --> 0:12:29.600 is doing? But they're not going Yeah. Look, I think 0:12:29.679 --> 0:12:32.520 each and every company is different. I'm looking at it 0:12:32.559 --> 0:12:36.200 as a as a macro position, and from a macro position, 0:12:36.800 --> 0:12:40.920 the CFOs have been rewarded for doing this, right, I mean, 0:12:40.960 --> 0:12:43.840 that's that's That's just the way it's been. Will that continue? 0:12:44.480 --> 0:12:46.760 We that's why we want to reign inst case a 0:12:46.800 --> 0:12:49.920 really interesting point. You write an important concept. You've said 0:12:49.960 --> 0:12:52.640 we're nswering the latter stages of the cycle, and we 0:12:52.640 --> 0:12:54.199 can have a separate debate on where we are on 0:12:54.240 --> 0:12:57.200 the cycle. But let's assume that's true. At this point, 0:12:57.440 --> 0:13:00.560 we've got the government livering up and you've got corporate 0:13:00.600 --> 0:13:03.719 America adding leverage as well. What does it mean when 0:13:03.720 --> 0:13:07.840 the government and corporate America at leverage this light in 0:13:07.840 --> 0:13:10.640 the cycle well, I think there's two things. I think 0:13:10.679 --> 0:13:12.600 that this when we look at the cycle, we have 0:13:12.679 --> 0:13:15.679 to separate the credit cycle and the economic cycle, and 0:13:15.720 --> 0:13:19.040 we are, one could argue, fairly early in the economic cycle, 0:13:19.080 --> 0:13:22.000 but late in the credit cycle, and that is something 0:13:22.040 --> 0:13:24.560 that we haven't seen before. And the laboring up on 0:13:24.600 --> 0:13:27.480 the government side is the second half of this grand 0:13:27.480 --> 0:13:30.640 experiment we talked about. Monetary policy is the first half. 0:13:30.960 --> 0:13:33.640 The second half is we've never seen fiscal thrust to 0:13:33.760 --> 0:13:37.880 this large in an economy that's already operating at full employment. 0:13:38.360 --> 0:13:42.240 So I would imagine that we're gonna, you know, continue 0:13:42.240 --> 0:13:46.400 to do okay until the economy doesn't do so well, 0:13:46.440 --> 0:13:48.960 and we don't think that's for a while yet. Dug 0:13:49.040 --> 0:13:52.920 one final question, if we could in terms of the 0:13:53.040 --> 0:13:56.800 actual assumption of fixed income you mentioned three before. There's 0:13:56.800 --> 0:13:58.559 still a lot of people out there they just say 0:13:58.600 --> 0:14:01.080 I can't live on that. Well, again, he goes back 0:14:01.120 --> 0:14:03.680 to how much debt has been issued, and so if 0:14:03.720 --> 0:14:06.280 we have real interest rates right now that are at 0:14:06.320 --> 0:14:10.800 one percent, or nominal rates at three percent, we would 0:14:10.800 --> 0:14:14.920 think that with so much debt outstanding, the old assumptions 0:14:15.040 --> 0:14:18.040 of let's say a four percent real rate or of 0:14:18.240 --> 0:14:21.440 five or six percent nominal rate. They probably don't work anymore. 0:14:22.000 --> 0:14:24.040 People think you so much. Mr. People's with a B 0:14:24.920 --> 0:14:43.280 fixed income this morning, without question, this is my interview 0:14:43.320 --> 0:14:45.760 of the day. I might point out it maybe my 0:14:45.920 --> 0:14:49.240 interview of the week, and even Carlos gudierres I could 0:14:49.320 --> 0:14:52.360 suggest it could be my interview of the year. Four 0:14:52.440 --> 0:14:55.360 or five years ago, long ago and far away, the 0:14:55.440 --> 0:14:58.760 former Secretary of Commerce and I did an interview on 0:14:58.920 --> 0:15:03.640 short notice the day a one immigration debate in America collapse, 0:15:03.760 --> 0:15:07.280 and I clearly remember Mr Secretary speaking to you at 0:15:07.280 --> 0:15:11.400 that time, and we do it again today. Is one 0:15:11.440 --> 0:15:15.480 first lady Mrs Bush, and another first lady Mrs Trump, 0:15:16.080 --> 0:15:20.520 say stop. Have you ever seen anything like what we're 0:15:20.520 --> 0:15:25.240 doing at our border? Carlos Gutiers, I've never seen it. 0:15:25.440 --> 0:15:27.920 I've read that if we go back far enough in 0:15:27.920 --> 0:15:32.040 our history, we've had moments where families have been divided. 0:15:32.120 --> 0:15:35.800 We know that happened during slavery, it happened somewhat during 0:15:36.000 --> 0:15:40.840 some of the Chinese immigration, but it never, ever, ever 0:15:41.320 --> 0:15:45.480 is something that we can get used to. The images 0:15:45.520 --> 0:15:49.600 are heartbreaking, and it's just hard to imagine that this 0:15:49.680 --> 0:15:52.320 is the US. Your father was an enemy of the 0:15:52.360 --> 0:15:55.840 state of Cuba. How did you come into this country 0:15:55.960 --> 0:15:59.480 and were you separated at the border? We flew in, 0:15:59.640 --> 0:16:03.120 We who in as a family on a Pan American 0:16:03.160 --> 0:16:06.600 airlines into Miami, and I'll tell you we felt so welcome. 0:16:07.840 --> 0:16:10.520 I felt like people wanted me to be here, and 0:16:10.680 --> 0:16:15.160 people wanted me to succeed. Conservatives in those worried about 0:16:15.160 --> 0:16:18.040 the future of America. In one way, I would say 0:16:18.080 --> 0:16:21.640 that's fine because the Good Years were educated, etcetera, etcetera. 0:16:21.800 --> 0:16:23.920 But so many of these people that are at the 0:16:23.960 --> 0:16:28.400 border and the language that used as appalling, they're not 0:16:28.520 --> 0:16:32.840 Carlos Goodyears. Can we make a distinction at the Texas 0:16:32.960 --> 0:16:37.360 border between that the smart, the haves, and the less 0:16:37.520 --> 0:16:41.400 fortunate and make a separation of parents and children. You know, 0:16:41.440 --> 0:16:45.480 I don't think history makes that distinction. Uh. So many 0:16:45.560 --> 0:16:49.760 immigrants came over uh from all over the world, starting 0:16:49.760 --> 0:16:54.120 in Europe. Many were he literate, many had very low schooling. 0:16:54.240 --> 0:16:57.760 But you know what, their kids went to school, became lawyers, 0:16:57.760 --> 0:17:01.480 and became tweachers and became business people. I believe that 0:17:01.520 --> 0:17:05.439 happens to every generation of immigrants. Full disclosure, Folks, my 0:17:05.480 --> 0:17:07.840 middle name. They came over in handcuffs. It was a 0:17:07.880 --> 0:17:11.359 few years ago, John Farrell, there was a small civil 0:17:11.359 --> 0:17:13.639 war in England. I believe it was at the time. 0:17:14.280 --> 0:17:17.359 It was back. Thank goodness you came, Tom. I know, 0:17:17.400 --> 0:17:20.360 I look at look at that call us. What would 0:17:20.400 --> 0:17:22.159 we have done every morning with that Tom, that's a 0:17:22.240 --> 0:17:25.480 great example of the power of immigration. Or a few 0:17:25.560 --> 0:17:28.040 years and as some listeners thinking, that's a great example 0:17:28.040 --> 0:17:32.800 as to why we shouldn't let people in not be 0:17:32.840 --> 0:17:36.480 a good argument. So tell tell us, uh, Mr Secretary, 0:17:36.560 --> 0:17:39.719 what your Republican party needs to do. There's two pieces 0:17:39.760 --> 0:17:42.879 of legislation in But what leadership do you need from 0:17:42.920 --> 0:17:51.240 President Trump? How do the Republicans make this their constructive issue? Well, yeah, 0:17:51.280 --> 0:17:55.000 the Republican Party is almost indistinguishable. We look more like 0:17:55.200 --> 0:18:01.440 a right wing European party. Populus, not to concerned about business, 0:18:01.680 --> 0:18:04.920 anti immigrant, you know, every everything that the US has 0:18:04.920 --> 0:18:07.439 not been. UM, and I do think we need to 0:18:07.440 --> 0:18:10.879 get back to where we have always been. The American dream. 0:18:11.000 --> 0:18:15.680 Immigration is the American dream, free enterprise. Business, businesses can't 0:18:15.680 --> 0:18:18.760 find enough workers. That's just that's the first reason why 0:18:18.760 --> 0:18:22.359 we need immigration. But um, it is indistinguishable, and we 0:18:22.440 --> 0:18:24.080 have to get back, and I think this is all 0:18:24.119 --> 0:18:28.240 about leadership. Tom Uh. You know, the Democrats had President Obama, 0:18:28.320 --> 0:18:31.360 he changed the party, that looked like he had changed 0:18:31.440 --> 0:18:34.840 the trend of history. Well, now we have President Trump. Uh, 0:18:34.880 --> 0:18:37.600 it's all about leadership, and it's not going to happen 0:18:37.640 --> 0:18:40.920 inside the party. It's going to happen through the leadership 0:18:41.000 --> 0:18:43.200 of one person in the coming days. Do you think 0:18:43.240 --> 0:18:46.760 that this could rupture his relationship with his attorney general, 0:18:47.160 --> 0:18:50.560 who has led the charge on this. Uh, it could, 0:18:50.840 --> 0:18:53.800 it could. It could happen, because you know, it's interesting 0:18:53.840 --> 0:18:57.640 that everyone but the president is taking responsibility for this. 0:18:58.280 --> 0:19:01.239 So if he is looking for a scapegoat, there's no 0:19:01.240 --> 0:19:03.679 one better than Jeff Sessions, given that they already have 0:19:03.840 --> 0:19:08.400 a a very strained relationship. But I just don't see 0:19:08.400 --> 0:19:11.480 how this can continue. And the photographs will continue. We've 0:19:11.520 --> 0:19:13.200 all seen some of the photographs that will come out 0:19:13.240 --> 0:19:15.440 today and that's you know, it's going to be the 0:19:15.480 --> 0:19:18.400 cover of magazines all over the world, the cover of newspapers. 0:19:18.840 --> 0:19:21.479 This isn't good for us. Give us an update. One 0:19:21.520 --> 0:19:24.040 final question, if you wouldn't, we're saying with the politics 0:19:24.080 --> 0:19:27.840 with Carlos goodyears on Cuba, and the transfer from a 0:19:27.920 --> 0:19:32.679 generational castro regime. Are you optimistic the Cuba can find 0:19:33.600 --> 0:19:37.920 a place beyond the two Castros? Yes, I believe that 0:19:38.040 --> 0:19:42.400 Cuba is going through gradual change, but it is change, 0:19:43.000 --> 0:19:46.080 and they will continue to go down that direction. They 0:19:46.080 --> 0:19:50.840 will continue to have to allow private businesses. I think 0:19:50.880 --> 0:19:54.679 that's pretty much irreversible. The irony is that, you know, 0:19:54.760 --> 0:19:58.359 we're trying to make friends with North Korea, but here's 0:19:58.440 --> 0:20:02.080 Cuba going U in the in the right direction. Economically, 0:20:02.080 --> 0:20:05.959 They're ninety miles away, and we've got crippling sanctions on Cuba. 0:20:06.119 --> 0:20:11.199 So uh, it's very contradicting. Greatly honor to have you 0:20:11.280 --> 0:20:14.440 with us today, Secretary Goodiers, thank you always use the commerce. 0:20:15.400 --> 0:20:20.760 Just a timely and important discussion on these issues. John. 0:20:20.840 --> 0:20:25.480 I can certainly say the combination of the morning note 0:20:25.520 --> 0:20:28.960 from Mr Velier in the morning note from Mr Allen 0:20:29.480 --> 0:20:34.680 was stunning. The two together, it was absolutely stunning, and 0:20:34.720 --> 0:20:37.640 I think it was domestically speaking, this is something that's 0:20:37.720 --> 0:20:40.520 sort of I've had taken everything else I would take 0:20:40.600 --> 0:20:43.040 tried for sure, very quickly on Friday and through the 0:20:43.040 --> 0:20:46.200 weekend till that was a wonderful conversation. You can hear 0:20:46.240 --> 0:20:48.919 Carlos Goodiers. We'll do that on our podcast out in 0:20:48.960 --> 0:21:04.920 a bit. You can talk to Paul Sweeney for somewhere 0:21:04.960 --> 0:21:07.960 between two three and even four hours today on any 0:21:08.040 --> 0:21:10.400 number of topics. I want to touch on a couple 0:21:10.400 --> 0:21:13.040 of topics here and then get over, of course, to 0:21:13.040 --> 0:21:18.120 the business of Fox, Disney and comcause, Paul, the soccer 0:21:18.359 --> 0:21:22.480 on TV is incredibly controlled by FIFA, the video and 0:21:22.560 --> 0:21:26.560 they pay huge fees Fox and Telemundo and all that. 0:21:27.200 --> 0:21:29.399 Is that going to change by the time the next 0:21:29.440 --> 0:21:33.280 World Cup comes around? No? I think the you know, 0:21:33.320 --> 0:21:36.919 World Cup rights, sports rights globally, but certainly the NFL 0:21:36.920 --> 0:21:40.520 and the US and Premier League in the UK and 0:21:40.520 --> 0:21:43.280 then World Cup rights across the globe continue to go 0:21:43.359 --> 0:21:45.479 up in value. You know, I think the rate of 0:21:45.560 --> 0:21:48.639 increase might be slowing. And the reason I say that 0:21:48.760 --> 0:21:51.040 is because the pay TV business and much of the 0:21:51.080 --> 0:21:53.639 Western world is slowing, and so the feet you know, 0:21:53.680 --> 0:21:56.560 the fees that these networks can charge consumers are passed 0:21:56.560 --> 0:21:59.240 along to consumers I think are peaking, if not completely 0:21:59.280 --> 0:22:01.440 peaked as in the U S. So how much more 0:22:01.480 --> 0:22:04.160 can ESPN or Fox for to pay for US rights? 0:22:04.680 --> 0:22:06.920 I think remains to be seen. But you know, we've 0:22:06.920 --> 0:22:10.840 certainly been in an environment with tremendous rights inflation, and uh, 0:22:11.119 --> 0:22:12.679 you know, we just don't really see any end in 0:22:12.680 --> 0:22:14.480 sight at the moment. But you know, you could certainly 0:22:14.480 --> 0:22:16.240 look out over the next four to five years and 0:22:16.359 --> 0:22:18.680 and expect to see it at least the rate of 0:22:18.720 --> 0:22:22.600 growth slow. I mean, I saw Germany Mexico, the Germany 0:22:22.320 --> 0:22:26.359 in Germany rather they had share, which is a number 0:22:26.400 --> 0:22:31.160 I can't even fathom that that that's so it's so high. 0:22:31.359 --> 0:22:34.160 Is this where the stupid money comes in? The Amazons 0:22:34.160 --> 0:22:37.640 and the rest of them with jillions of inflated dollars, 0:22:37.640 --> 0:22:41.720 do they come in? And I think, did these typical carriers, Yeah, 0:22:41.880 --> 0:22:43.880 I think you will. I think you know, Amazon dipped 0:22:43.920 --> 0:22:46.520 their toe into the English Premier League. They've dipped their 0:22:46.520 --> 0:22:49.359 toe into NFL, and as Facebook and some others, and 0:22:49.760 --> 0:22:51.719 you know, I think the belief is from a certainly 0:22:51.760 --> 0:22:54.159 from the leagues around the world, is to extend the 0:22:54.359 --> 0:22:56.480 espns and the Foxes. The world stepped back a little 0:22:56.520 --> 0:22:59.840 bit because their businesses are challenge income will be that 0:23:00.040 --> 0:23:02.760 the technology companies with bottomless pockets, and I think that's 0:23:02.800 --> 0:23:05.280 the hope for the leagues and the players and the 0:23:05.320 --> 0:23:09.640 teams and all that. Okay, next team before Disney, Fox Comcast, 0:23:10.080 --> 0:23:13.080 The Incredible is brought in a hundred eight zillion dollars. 0:23:13.480 --> 0:23:15.880 You know they're gonna bring in double triple that over time. 0:23:15.920 --> 0:23:17.280 I don't know if it's going to be the biggest 0:23:17.320 --> 0:23:21.359 movie ever. I'll let you decide. Well, who gets that money? 0:23:21.840 --> 0:23:24.760 When they say The Incredibles two brings in a hundred 0:23:24.800 --> 0:23:29.040 and eighty million, how is that divided up? Yeah, well, 0:23:29.160 --> 0:23:32.000 roughly half goes to the theater distributors in the US. 0:23:32.800 --> 0:23:36.680 Outside the US, uh, probably more than half goes, probably 0:23:37.680 --> 0:23:40.600 goes the theater distributors. The remainder goes to the studio, 0:23:40.680 --> 0:23:42.560 and then the studio takes the money and then the 0:23:42.560 --> 0:23:46.240 creative Hollywood accounting comes in. And it's always a question 0:23:46.280 --> 0:23:48.280 if you're a star and you have back end of 0:23:48.280 --> 0:23:49.680