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Speaker 2: Carol, we got some good news from a framework with China, right,
Speaker 2: We heard some details from that today. We heard details
Speaker 2: last night on Bloomberg from Scott Besant. Kind of tough
Speaker 2: to keep track of it all.
Speaker 3: Yeah, exactly, So maybe two steps forward, two steps back.
Speaker 3: I don't know how you kind of gauge this, but
Speaker 3: Josh Wingrove has to keep track of it all and
Speaker 3: help us make sense of it. Bloomberg News Senior White
Speaker 3: House correspondent. He is there in our Washington, DC bureau. Josh,
Speaker 3: it's a lot today, but tell us abouts of all,
Speaker 3: let's go to the bad news, because it does feel
Speaker 3: like this is what's pressuring markets today, what's going on?
Speaker 3: And what do you know about US and Canada's negotiations.
Speaker 4: Yeah, the news here is kind of out of left field.
Speaker 4: But Trump is taking issue with this Canada Digital services tax.
Speaker 4: This has been like a long running thing and it's
Speaker 4: not new, but the first payments are due next week,
Speaker 4: is our colleagues in Toronto are writing about. And so
Speaker 4: this is sort of kind of dovetailing with this news
Speaker 4: today of some sort of G seven agreement on global
Speaker 4: taxation and the Global minimum tax that Trump and the
Speaker 4: Trump administration or sort of touting, you know, I don't
Speaker 4: want to get too buried in the weeds. Essentially, Trump
Speaker 4: thinks that the Canadians are pulling a fast one on
Speaker 4: him more or less and proceeding with this at a
Speaker 4: time when there's other questions about how they should be
Speaker 4: taxing these kind of things. And that's what led to this.
Speaker 4: And it's kind of a surprise because Canada was one of,
Speaker 4: you know, a handful of countries that does not have
Speaker 4: a tarif deadline coming up right. They are not included
Speaker 4: in the July ninth pause with a with about five
Speaker 4: dozen countries and the EU set to face potential higher
Speaker 4: tariffs on July ninth. China, Canada, and Mexico have always been,
Speaker 4: or at least have lately been separate from that and
Speaker 4: So the question here is what now The current Canada
Speaker 4: tarif rate is twenty five percent, That is to say,
Speaker 4: Trump's tariff on Canada is twenty five percent, but there
Speaker 4: is a major exemption for goods traded under the USMCA
Speaker 4: Trade Pact. So a blow of options here, I suppose three.
Speaker 4: I guess one is this could be a bargaining tactic
Speaker 4: and they could reach some kind of a deal to
Speaker 4: Trump and seek to raise that rate that applies to
Speaker 4: non USMCA goods, so from twenty five up to a
Speaker 4: different number. For instance, he's previously doubled the rate on
Speaker 4: stealing aluminum to fifty from twenty five. Or he could
Speaker 4: try to claw back some of those exclusions on USMCA trade.
Speaker 4: I think that third one. We get a lot of
Speaker 4: blowback from American industry, in particular the auto industry, who
Speaker 4: you know, were relying on these pretty integrated supply chains
Speaker 4: and saw those exclusions as pretty key. But this is
Speaker 4: a pretty explosive development here. Of course, just you know,
Speaker 4: barely over a weeks the G seven when Trump and
Speaker 4: Prime Minister Carney of Canada seemed to strike a pretty
Speaker 4: upbeat tone. But Tuesday is Canada Day. You know, this
Speaker 4: is not a way to celebrate. I guess the Canadians
Speaker 4: are going to be upset by that. But we'll see.
Speaker 4: We'll see.
Speaker 2: It's Friday, Josh. A lot can happen between now and
Speaker 2: Canada Day.
Speaker 4: Okay.
Speaker 2: I want to go into some details here. This a
Speaker 2: group of twenty one US lawmakers wrote to President Trump
Speaker 2: earlier this month asking him to push for the taxes removal.
Speaker 2: This tax is similar, as you mentioned, to one implemented
Speaker 2: by some other countries, including the UK. It's equal to
Speaker 2: three percent of the digital services revenue that a firm
Speaker 2: makes from Canadian users above fourteen point six million dollars.
Speaker 2: So this would apply to companies such as meta platforms
Speaker 2: and alphabet You know, I want to zoom in on
Speaker 2: what you said was sort of option number one here
Speaker 2: the negotiating tactic. Is this the art of the deal,
Speaker 2: because we've seen the President do this repeatedly over the
Speaker 2: last few months. You can remember what happened on so
Speaker 2: called Liberation Day and the way that he backed away
Speaker 2: from some of those tariffs and put a pause on him.
Speaker 2: But he did get some countries to move.
Speaker 4: Yeah, that's right, and we could be seeing that here.
Speaker 4: I should note also, the Canadians thought there was like
Speaker 4: a thirty day clock, or at least they said so
Speaker 4: on the heels of that G seven meeting that were almost,
Speaker 4: you know, halfway through that thirty days. So Canada wanted
Speaker 4: some kind of a deal within thirty days, not only
Speaker 4: on that twenty five percent and the exclusion for USMCA,
Speaker 4: but the other sectoral tariffs, in particular autos, steel and
Speaker 4: aluminum and the impact those could have. Trump has exempted
Speaker 4: USMCA autos but may still tariff auto parts that are
Speaker 4: USMCA compliant. That's gonna be a big deal for the Canadians.
Speaker 4: So they're looking for some kind of grand bargain here,
Speaker 4: and I think you if it is option one, if
Speaker 4: this is a bargaining tactic, Trump is putting another thing
Speaker 4: on the table here and saying this has to be
Speaker 4: part of any sort of grand bargain. Prime Minister Carney
Speaker 4: has been less quick than his predecessor Trudeau to hit
Speaker 4: with counter tariffs. He's been much more measured. But the
Speaker 4: flip side of that is he that has room to
Speaker 4: do them if he wants to. So the Canadians right
Speaker 4: now have been silent. Last I checked in response to
Speaker 4: the President will see where it goes. But you know
Speaker 4: this this that he could be looking for leverage here.
Speaker 4: But the deadlines here are really kind of you know,
Speaker 4: made up. Trump'ss seven days, but there's nothing holding them
Speaker 4: to that. He doesn't have to do anything within seven days.
Speaker 4: The Canadians have said thirty but likewise there's nothing holding
Speaker 4: them to that. As opposed to the other countries. The
Speaker 4: July ninth stuff that is in that is on the books,
Speaker 4: those terrafts are going up on July ninth unless Trump
Speaker 4: does something to change it. So those ones are a
Speaker 4: different sort of landscape.
Speaker 5: Well let's go there.
Speaker 3: Because the EU and the US believe they can reach
Speaker 3: a trade agreement before that July ninth deadline, that's when
Speaker 3: the US is set to impose a fifty percent tariff
Speaker 3: of nearly all EU products.
Speaker 5: That seems like maybe a very positive sign. Is it
Speaker 5: a positive sign? Because that's a big one.
Speaker 4: It seems to be a positive sign. We've got on
Speaker 4: the record comments from Hower Lattin sort of striking an
Speaker 4: upbeat tone about it. Our colleagues Alberto Nadeli and Jorge
Speaker 4: Valero and in Europe have some reporting today on the
Speaker 4: European view of it. They sound equally optimistic. What's not
Speaker 4: clear is are they are they reaching kind of what
Speaker 4: like a China deal, like a framework type of deal,
Speaker 4: you know, a pathway kind of deal, or are they
Speaker 4: actually getting down to brass tacks and getting something more comprehensive.
Speaker 4: That's not clear. And today we've had comments both from
Speaker 4: Trump and Bess and Secretary Bestident of the Treasury, sort
Speaker 4: of signaling a two tiered approach. Best saying, look, we've
Speaker 4: got like twelve ten, eighteen something like that, big training partners,
Speaker 4: and they might look to wrap that up by September first,
Speaker 4: he said, Labor day. And that raises the prospect of
Speaker 4: extensions for some countries. Bigger countries may be ones that
Speaker 4: are making headway. On the flip side, it's about five
Speaker 4: dozen countries in total that are facing a terrified and
Speaker 4: Trump said today, look, you know, I might even raise
Speaker 4: them before July ninth. We don't expect that, but he
Speaker 4: sort of threw it out there, and he said that
Speaker 4: he kind of wants to do maybe even twenty five
Speaker 4: percent and tariffs and it's best and it's nicer than
Speaker 4: him and Veston doesn't want to do it. And so
Speaker 4: right now we've got this sort of multi track thing.
Speaker 4: Right You've got a group of countries that maybe are
Speaker 4: smaller trading partners that are facing a July ninth deadline,
Speaker 4: and Trump is signaling that he might want to put
Speaker 4: a higher tariff on them. Then he threw out the
Speaker 4: number twenty five percent today, up from the baseline ten.
Speaker 4: Then you've got other ones, presumably including the EU, that
Speaker 4: will either reach a deal or maybe get an extension,
Speaker 4: you know, with talks continuing throughout the summer. Then you've
Speaker 4: got the China situation. They put some ink to paper
Speaker 4: a couple of days ago on their framework, but there's
Speaker 4: another deadline coming in August, so they'll be a fresh
Speaker 4: sort of mile marker there. And then you've got the
Speaker 4: Canada one, and I should add the Mexico one, both
Speaker 4: of those not with firm deadlines, but now Trump pledging
Speaker 4: something on seven days in Canada and Mexico separately, rumors
Speaker 4: of some kind of field deal, and we don't know
Speaker 4: where that stands right now. So a lot of moving
Speaker 4: parts on this. Remember they talked about ninety deals in
Speaker 4: ninety days. So far we have got like two, you know,
Speaker 4: that are not necessarily full baked. So this is complex,
Speaker 4: all right, complex stuff. But Trump loves tariffs.
Speaker 3: Remember that, Josh, You're sitting down a dinner or you're
Speaker 3: I don't know, at a bar with a front tonight
Speaker 3: and they say, hey, are we making progress on trade
Speaker 3: the United States? They actually getting something done and in
Speaker 3: a good way? Do you say yes or no?
Speaker 4: No one hangs out with me anymore because I just
Speaker 4: talk about this stuff all the time. But I think yes.
Speaker 4: I mean, that's is talking about I don't believe that September,
Speaker 4: you know, so we could potentially it seems yes, they
Speaker 4: could be. But remember Trump is clearly itching to want
Speaker 4: to just send a unilateral number Liberation Day two point zero,
Speaker 4: maybe a number not as high as the initial numbers
Speaker 4: you put out, but higher than ten percent. And so
Speaker 4: that combined with the fact that we still have more
Speaker 4: sectoral tariffs coming, and the fact that he's demonstrated and
Speaker 4: Chell for wanting to just raise them on his own,
Speaker 4: like with stealing aluminum, the number of tariffs look like
Speaker 4: they're going to go up, not down going forward. I
Speaker 4: think the market should be aware of that.
Speaker 1: You're listening to the Bloomberg Business Week Daily podcast catch
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Speaker 3: The Supreme Court getting ready to wrap up this term,
Speaker 3: and they did come down with five different rulings. A
Speaker 3: big one was the US Supreme Court limiting the power
Speaker 3: of judges to block government policies nationwide. They did leave
Speaker 3: unresolved to fight over President Donald Trump's restrictions on automatic
Speaker 3: birthright citizenship. But this all gets to tim specifically, what's
Speaker 3: going on in terms of presidential power. We did have
Speaker 3: the President hailing the decision as a monumental victory and
Speaker 3: said the administration would move to get blocks lifted on
Speaker 3: a number of his policies. Here's the president earlier.
Speaker 6: Thanks to this decision, we can now promptly file to
Speaker 6: proceed with numerous policies that have been wrongly enjoined on
Speaker 6: a nationwide basis. And some of the cases we're talking
Speaker 6: about would be ending birthright citizenship, which now comes to
Speaker 6: the fore.
Speaker 2: That was President Trump just a little earlier today commenting
Speaker 2: on this US Supreme Court limiting the power of judges
Speaker 2: to block some government policies nationwide. Let's bring in right now.
Speaker 2: Harold Krant He's a professor of law at the Chicago
Speaker 2: Kent College of Law, also the author of the book
Speaker 2: Presidential Powers, Joining us to talk to these latest Supreme
Speaker 2: Court decisions. That's exactly where I want to start, birthright citizenship.
Speaker 2: This is something that during this term President Trump has
Speaker 2: really gone after. What is your interpretation of what the
Speaker 2: Supreme Court said today when it comes to what many
Speaker 2: had deemed as a constitutional right of birthright citizenship.
Speaker 7: The Supreme Court did not directly address the question of
Speaker 7: whether the ban on birthright citizenship is constitutional or not,
Speaker 7: and most observers think it's not, but the Court refused
Speaker 7: to wave into those waters. Instead, what the court held
Speaker 7: was that the courts below aired in issuing the nationwide
Speaker 7: injunction against the executive ordered by President Trump. Certainly this
Speaker 7: is a victory in a sense for presidential power. It
Speaker 7: denies a court the ability to enjoin a president nationwide.
Speaker 7: While the resident on his or her behalf can obviously
Speaker 7: affect the nation with one fail suit, as President Trump
Speaker 7: has with all these executive orders. Now the attacks will
Speaker 7: have to be the piecemeal fashion.
Speaker 5: So what does this mean then?
Speaker 3: I mean, does this in any way embolden President Trump
Speaker 3: potentially to move on.
Speaker 5: I just I guess what I'm trying to do is
Speaker 5: carry this out. What other actions might.
Speaker 3: Come forward, you know, when the Supreme Court comes back
Speaker 3: that kind of the next turn that they might need
Speaker 3: to be addressing, like what does this do in terms
Speaker 3: of enabling him to move forward on maybe different initiatives
Speaker 3: that maybe before this ruling he might not have done.
Speaker 7: So there are a number of maybe ten twelve nationwide
Speaker 7: injunctions that are in place right now in terms of
Speaker 7: stopping President Trump from cutting funding for various initiatives, stopping
Speaker 7: him from firing federal employees, stopping him from reassigning employees.
Speaker 8: And right now those will no longer be binding.
Speaker 7: They're only binding to the extent that plaintiffs were properly
Speaker 7: situated in the court. In other words, those people who
Speaker 7: filed suit will get the benefit of the injunction, but
Speaker 7: no one else. So, holding back to birthright citizenship, that
Speaker 7: all those who joined the case as plaintiffs challenging this
Speaker 7: policy will still get the benefit of the injunction. But
Speaker 7: the fear is that after thirty days, if those plaintiffs
Speaker 7: other than those plaintiffs the president may try to strip
Speaker 7: citizenship and remove people from the country because they're no
Speaker 7: longer protected by the injunction.
Speaker 8: The natural response.
Speaker 7: Should be either to file a class action or perhaps
Speaker 7: to have state suit on behalf of their citizens. We
Speaker 7: don't know if that will be successful or not, but
Speaker 7: that will be the important reaction to the Supreme Court's
Speaker 7: decision today. So all litigation will have to go now
Speaker 7: more in a radic fashion to counter the presidential assertion
Speaker 7: of authority. And only when all courts have spoken, or
Speaker 7: at least when the Court is spoken, well, can the
Speaker 7: presence policy be stopped across the board.
Speaker 2: You know, I want to follow on Carroll's question a
Speaker 2: little bit, Professor, and talk about presidential power and the
Speaker 2: consolidation of presidential power. How does this court, these nine justices,
Speaker 2: how do they seem to define the power of the
Speaker 2: president in a historical context of the presidential power that
Speaker 2: we're traditionally used to as Americans with three co equal
Speaker 2: branches of government.
Speaker 7: Yeah, obviously we've seen a shift here. It's shown in
Speaker 7: various ways. It's shown in the fact that the Congress
Speaker 7: no longer apparently has the power to limit the president's
Speaker 7: ability to fire whoever he wants to in the administration,
Speaker 7: and that's been true of these agencies such as the
Speaker 7: National Labor Relations Board, the Federal Trade Commission, and many more.
Speaker 7: It shows up in the fact that, again in this case,
Speaker 7: that courts can't order in junctions nationwide against presidential policies
Speaker 7: that they find illegal. And it's shown up, of course
Speaker 7: in the presidential immunities case last year. Would suggests that
Speaker 7: to a scary extent, not fully, but to a scary extent,
Speaker 7: presidents are above the reach of the criminal law. So
Speaker 7: in all these facets, we're seeing more that the court
Speaker 7: is embracing a more powerful president at the expense of
Speaker 7: Congress and even the judiciary itself. This is not to
Speaker 7: say that Congress doesn't have levers. It's just that Congress,
Speaker 7: as we know, it's not using whatever levers that it
Speaker 7: still has remaining to it. And that's again and boldening
Speaker 7: the president to taking even more power.
Speaker 3: All right, So you wrote the book of presidential powers.
Speaker 3: We're talking about this what this decision means. And I
Speaker 3: just wonder so, and maybe this isn't you're Beliwick, but
Speaker 3: I do wonder, professor, whether we need to rethink kind
Speaker 3: of government in terms of balance of We thought these
Speaker 3: three branches would just do it. It worked for a
Speaker 3: long time, it seemed to, and yet now we're seeing
Speaker 3: it come undone. And to be fair, this isn't the
Speaker 3: only administrative stration that has used a lot of executive orders,
Speaker 3: but it does seem like the presidential position has gotten
Speaker 3: a lot more powerful. So are there changes in our
Speaker 3: government that you see need to be forthcoming, including the
Speaker 3: judicial branch.
Speaker 8: I mean it's possible.
Speaker 7: I think that what most people think is that the
Speaker 7: first step would be a reawakening of the legislative branch.
Speaker 7: We always thought that the legislative branch was the most powerful,
Speaker 7: at least intrinsically the most powerful, and that's certainly what
Speaker 7: people thought at the framing when our country was formed.
Speaker 7: But Congress has taken a back seat, and it's allowed
Speaker 7: the president to seize more and more authority tariffs as
Speaker 7: a perfect example, and hasn't fought back over TIFFs. It
Speaker 7: hasn't bought back over the you know, the question of
Speaker 7: sending migrants to third countries. It could it should think
Speaker 7: that what we asserted the kind of by reasserting Congress
Speaker 7: into the mix, I think it would be a more
Speaker 7: healthy separation of powers balance to our government. So you know,
Speaker 7: that would be the most logical wish list is for
Speaker 7: that to happen. I don't know if it will. Congress
Speaker 7: is not so far. Maybe it's going going to happen
Speaker 7: with this big, beautiful bill, but you know, Congress hasn't
Speaker 7: really seized the reins and tried to assert itself in
Speaker 7: this mix.
Speaker 2: This one really has to do with what, if anything,
Speaker 2: we learned from the justices and the discussion among the justices.
Speaker 2: I know, people are still making their way and learning
Speaker 2: about what was decided and what came out at the
Speaker 2: Supreme Court today, what we learned about the Supreme Court,
Speaker 2: But did we get any insight in the way these
Speaker 2: different justices have approached presidential power. That differs today than
Speaker 2: we've learned in recent months, ter in recent weeks.
Speaker 8: A little bit. I mean, the court is still fractured.
Speaker 7: There's still obviously a very very conservative wing and a
Speaker 7: liberal wing and a couple of that we call swing
Speaker 7: justices that will change. And so the configuration of the
Speaker 7: court was different. Two delegation cases, the challenge of the
Speaker 7: eight billion dollars of subsidies that the SEC gives us
Speaker 7: to rural areas and to schools, where three justices conservative
Speaker 7: justices dissented, but the remaining judges, the liberal judges and
Speaker 7: the middle judges came together. And that was true in
Speaker 7: another delegation case to an agency as well. In that
Speaker 7: case there was a delegation to a group to side
Speaker 7: what preventative care services must be funded by an insurance company.
Speaker 7: So those are just two important cases where the middle
Speaker 7: held out. But in terms of overall, I think the
Speaker 7: issue that we could see, particularly from this the injunction case,
Speaker 7: you know, is that the majority of the court is
Speaker 7: content to have a very strong president over atop the
Speaker 7: government with very few guard wheels. And that's what we
Speaker 7: have to watch and that's what we're concerned about. And
Speaker 7: now that these nationwide injunctions will be dissolving, we'll have
Speaker 7: to see if the president moves vigorously and rapidly to
Speaker 7: try to carry out his policies despite the possible very
Speaker 7: very negative impact on people like wirth right citizenship for instance,
Speaker 7: or federal workers who've been fired and so on.
Speaker 3: Yeah, I would expect you there's gonna be a lot
Speaker 3: more discussion debate about this going forward on both sides
Speaker 3: of the political aisle. Perhaps Harold Crenn, thank you so much.
Speaker 3: He is professor of law a Chicago, Kent College of Law,
Speaker 3: author of the book Presidential Powers. Joining us once again,
Speaker 3: joining us several times here on Bloomberg. We're grateful to
Speaker 3: his analysis.
Speaker 1: This is the Bloomberg Business Week Daily Podcast. Listen live
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Speaker 5: Alan McCartney's with us.
Speaker 3: She's managing director and at also private wealth management at UBS.
Speaker 5: She is working, and.
Speaker 3: We're curious to see what she gets out of this event,
Speaker 3: like when you come here help Hello, Yes, what do
Speaker 3: you get out of an event?
Speaker 9: Like you said this?
Speaker 10: So UBS and I traffic at the intersection in liquidity
Speaker 10: events and in individuals, and so what does that mean?
Speaker 10: That's entrepreneurship and so one of the beautiful things about
Speaker 10: this event and about our partnership with it is Michael
Speaker 10: Lobe opened by saying, this is a celebration of entrepreneurs
Speaker 10: and entrepreneurialism. Right. And so if you go through all
Speaker 10: of the things that are happening in our world today,
Speaker 10: all of the trends, deglobalization being a big one.
Speaker 5: Right.
Speaker 10: Where does wealth come from in this country? It's intellectual property.
Speaker 10: It is six million businesses founded last year. It is
Speaker 10: being at these events and having funders and founders meet,
Speaker 10: providing very valuable networking opportunities and for us to be
Speaker 10: able to be supportive of that community full stop is
Speaker 10: really the bread and butter of what we do at ubs.
Speaker 2: Does it give you new opportunities to bring new money
Speaker 2: into your firm or is it more like okay, when
Speaker 2: I'm allocating my client's assets. Yeah, I'm thinking about these
Speaker 2: alternatives because I talked about these types of businesses with
Speaker 2: people at this conference.
Speaker 10: So yes, and yes, I would say there are three
Speaker 10: things it does. It is certainly, you know, a prospecting,
Speaker 10: right rich environment in terms of there are people here
Speaker 10: who obviously we know the numbers of the success of
Speaker 10: startups and franchises, but some of these people are going
Speaker 10: to be the next unicorns, right, So there's that. The
Speaker 10: second is it allows me to learn about AI or
Speaker 10: why the founder of Tesla, you know, founded Tesla and
Speaker 10: what he's thinking about now. And then the third thing
Speaker 10: is it allows me to find new opportunities for myself
Speaker 10: and my clients to be outside of this environment, both
Speaker 10: educated and proximant to the new trends that are driving
Speaker 10: sort of where the puck is and how we'll invest
Speaker 10: for sure.
Speaker 3: You know, it's funny you see the founder of Tesla,
Speaker 3: because Elon Musk was not actually the founder, was he?
Speaker 5: Well, so no, what did he did? He there?
Speaker 1: He?
Speaker 10: So it was very funny because the first panel was
Speaker 10: someone who's just spent seven months in the White House. Yeah,
Speaker 10: and so Elon Musk was a topic of conversation there
Speaker 10: and then they next ran after was the founder of Tesla,
Speaker 10: who I thought Eberhart, who very elegantly decided not to
Speaker 10: answer that question.
Speaker 3: He did, Yes, that's really funny. You know what's funny too,
Speaker 3: is and I think about wealth management, you do have,
Speaker 3: I'm assuming as clients a lot of folks that are
Speaker 3: founders and whether they're looking to sell their company, find
Speaker 3: a deal, or maybe you have other clients who have
Speaker 3: money they want to put to work and they want
Speaker 3: to have a piece of a company, a lot of
Speaker 3: that is what goes on, right.
Speaker 10: So a lot of that is what goes on. So
Speaker 10: I think, like, if you think about the path of
Speaker 10: a founder of an entrepreneur, right, you have an idea,
Speaker 10: there's something disruptive, there's some challenge or problem you're trying
Speaker 10: to solve in the world. And you know, we were
Speaker 10: learning today that most people self fund that by using
Speaker 10: credit cards, personal assets and their four to one K. Right,
Speaker 10: they make less than one hundred thousand dollars for years
Speaker 10: and years and years, and they are just so embedded
Speaker 10: in their company and the mission and the branding that
Speaker 10: they're not thinking about the tax consequences, whether they can
Speaker 10: take advantage of qualified soalled business stock. Could the business
Speaker 10: be stuck in a marriage in court and decided by
Speaker 10: the state of California or Florida if they don't have
Speaker 10: a prenup so all of the So what we do
Speaker 10: is we say, look, if you are extremely successful, you're
Speaker 10: going to get to a liquidity point where some lawyer
Speaker 10: or some general counsel or Anderson Tax is going to say,
Speaker 10: have you talked about the planning and this? And at
Speaker 10: that point you can maybe add a couple percent of value.
Speaker 10: But if you can find these people as they are
Speaker 10: stuck in what I call the valley of death, sort
Speaker 10: of that middle part of building a business, and you
Speaker 10: can get an hour with them, just to say, there
Speaker 10: are a couple things we can do from an investment perspective,
Speaker 10: an entity perspective, and a tax perspective that if you
Speaker 10: are as successful as you think you are, you can
Speaker 10: protect yourself and investors and you can make your net
Speaker 10: much bigger than what it would be otherwise.
Speaker 2: As you know, entrepreneurs are not focused on this stuff
Speaker 2: when no, no, no, So if they haven't taken advantage of
Speaker 2: something like the QSBS as you talked about, which I
Speaker 2: believe allows you tax free up to ten million dollars,
Speaker 2: I mean, it's pretty remarkable.
Speaker 5: It's pretty remarkable.
Speaker 10: There are some like there're three litmus tests that you
Speaker 10: have to pass and if they.
Speaker 2: Didn't set up the business that way initially can get
Speaker 2: can they change it to actually get that benefit?
Speaker 10: Yes, it becomes increasingly difficult as you take in capital,
Speaker 10: you have more LPs, et cetera. But there are many
Speaker 10: many ways to do it. And I think most people
Speaker 10: know about that ten million dollar headline number.
Speaker 5: But when the earlier you plan and the more that.
Speaker 10: Can actually be protected by using different irs, discounting strategies,
Speaker 10: et cetera. So I've seen many many times that protected.
Speaker 10: But again, so our goal is to try to be
Speaker 10: in front of entrepreneurs and support them not only in
Speaker 10: funding and marketing and building their networks, but to try
Speaker 10: to get them either to think about which is really challenging,
Speaker 10: or get them to sort of open up themselves to
Speaker 10: allowing someone to act on their behalf even when they're
Speaker 10: not there yet.
Speaker 3: So we'd be remiss to not ask you about kind
Speaker 3: of the macro environment and what that means for entrepreneurs. Now,
Speaker 3: we've got about a minute and a half left. Who
Speaker 3: are you know, getting ready to wrap up the trade today?
Speaker 3: It's been a volatile one again and we're also getting
Speaker 3: ready to wrap up the trading week. You know, how
Speaker 3: how do you feel about the environment? What do you
Speaker 3: tell some of your clients?
Speaker 5: So it's a really hard environment.
Speaker 10: In the following so you look at your portfolio today,
Speaker 10: private and public, and your public portfolio just hit an
Speaker 10: all time high. Your private portfolio, you haven't gotten as
Speaker 10: much capital back as you wanted. You've been in longer.
Speaker 10: It feels a little, but your values, your marks are
Speaker 10: still they feel okay too, but you feel pretty precarious
Speaker 10: about both. And so that's affecting the way everybody at
Speaker 10: every income level is spending, investing, traveling, you name it.
Speaker 10: So the answer is our market is price to perfection,
Speaker 10: from a trade perspective, from a geopolitical perspective, from a
Speaker 10: big beautiful bill, and spending and deficit perspective. The next
Speaker 10: I think six months in terms of the path that
Speaker 10: the Fed takes with interest rates, whether our president actually
Speaker 10: does put in a shadow FED, and what effect that has,
Speaker 10: what happens in terms of the July ninth trade date,
Speaker 10: right we're probably at about ten percent level of tariffs
Speaker 10: right now. That's different than the thirty eight we were on,
Speaker 10: you know, it's thinking about on April second. It's also
Speaker 10: really different about the than the two point nine we
Speaker 10: came into this president exactly. So there are a lot
Speaker 10: of really macro trends that are going to very much
Speaker 10: effect the next leg from here in both public and
Speaker 10: private markets.
Speaker 3: Great conversation, Elli, Thank you so much. Elli McCartney, Managing director,
Speaker 3: Private Wealth Management over at UBS, joining us here on
Speaker 3: Bloomberg Business Weekdaily.
Speaker 1: You're listening to the Bloomberg Business Week Daily podcast. Catch
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Speaker 3: Michael Lobe is with us. This is his home, this
Speaker 3: is his event. He's the founder and CEO of Lobe
Speaker 3: dot NYC, and he co founded Uncharted a few years ago.
Speaker 3: And I got to talk to you this morning, so
Speaker 3: I feel kind of doubly blessed to get some more
Speaker 3: time with you.
Speaker 5: The event is underway. Tell us about what you're hearing
Speaker 5: some of the things so.
Speaker 11: Far, well, I think that there's a great deal of buzz.
Speaker 11: Most people are saying exactly what you are, which is
Speaker 11: that they're doubly blessed just to be here and get
Speaker 11: to know everybody else.
Speaker 9: But I mean, the.
Speaker 11: If you were to take a look at the background,
Speaker 11: you would see, you know, six hundred people talking to
Speaker 11: six hundred other people.
Speaker 9: It's quite the event.
Speaker 11: And what we really want to do is foster relationships
Speaker 11: between investors and companies, between companies and companies, and between
Speaker 11: you know, CEOs looking for talent and talent looking for
Speaker 11: CEOs so I think I think a good time is
Speaker 11: being had by all. And certainly the weather has been
Speaker 11: totally cooperating. I think you had someone to do with that,
Speaker 11: So I thank you for that.
Speaker 5: You're very welcome.
Speaker 9: Right, So, yeah, little tiny wind, if you could take
Speaker 9: that down.
Speaker 2: Just or this is kind of perfect. It beats the
Speaker 2: weather we had earlier this week. I was a little
Speaker 2: concerned about that. You know, an event like this, You've
Speaker 2: been doing this for a few years. It started during
Speaker 2: the pandemic, started a lot smaller. How do you and
Speaker 2: I heard you say earlier today and your partners say
Speaker 2: this too, Noah, that he is running into people constantly.
Speaker 2: You say, yeah, they raised money as a result of
Speaker 2: being here. They found a co founder here, they found
Speaker 2: employees here. How do you measure the success of an
Speaker 2: event such as this in the days, weeks and months
Speaker 2: following it?
Speaker 7: Right?
Speaker 9: I wish we could, because I should have a vig
Speaker 9: on all that.
Speaker 2: So we were just talking to Damon John, like, you know,
Speaker 2: shark tank kind of thing. Maybe you could kind of
Speaker 2: get in on that.
Speaker 5: I don't know it for a long time.
Speaker 9: So you know, I got to tell you.
Speaker 11: We do solicit testimonials of exactly the things that you're
Speaker 11: talking about. We have quite a few of people saying,
Speaker 11: you know, I met my founder there about two years ago. No,
Speaker 11: and I get an invitation and it was shrouded and missed.
Speaker 11: And it was three women who had us go to
Speaker 11: an event downtown.
Speaker 9: And they brought us up on stage.
Speaker 11: Everybody started a collap And what that was is these
Speaker 11: were three women never met before. They were all, you know,
Speaker 11: elite athletes, and they decided there should be a fund
Speaker 11: supporting elite athletes that they had a different point of view,
Speaker 11: a different sense of how to compete, and they all
Speaker 11: got along very very well, and that thesis led to
Speaker 11: a fifty million dollar fund. So it's that type of
Speaker 11: thing that you know, really propels us.
Speaker 3: Well, talk to us about you know capital, How much
Speaker 3: is out there for startups?
Speaker 9: Wow?
Speaker 11: You know, it's funny things go in cycles. As you know,
Speaker 11: this is not an up cycle for capital formation. Last
Speaker 11: numbers I looked at and they're a little bit stale,
Speaker 11: but you know, down sixty or seventy percent.
Speaker 9: Certainly the secondary market.
Speaker 11: If that's any indication at all, does illustrate that, you know,
Speaker 11: there's a lot lot of illiquidity looking to get liquid right,
Speaker 11: not nearly as frothy as it used to be, was
Speaker 11: I pos even though that's starting to unlock a little bit.
Speaker 9: So no, it's it is hard and the money does.
Speaker 11: Gravitate these days to AI, so you need, you know,
Speaker 11: if you have so win.
Speaker 5: There is an idea when there is a startup, that's
Speaker 5: where it goes.
Speaker 9: It goes there, right.
Speaker 11: And what folks don't I think, really realize or appreciate
Speaker 11: is the forces at play in venture and venture funding,
Speaker 11: a venture capital which is I sometimes call it a
Speaker 11: beauty contest, and that is because there's one breakout winner
Speaker 11: in a category and then all the LPs are asking
Speaker 11: their gps you know, what is your AI strategy? And
Speaker 11: if the answer is you know, we think it's a
Speaker 11: little over sold. We think it's a little bit you know, frothy.
Speaker 11: Whereas there's going to be a couple of winners and
Speaker 11: a lot of losers, we're taking a wait and see attitude.
Speaker 11: The answer is bye bye, I'm bringing my money to
Speaker 11: that fund that made that investment. So a lot of
Speaker 11: pressure for them to jump in. And it's in those
Speaker 11: situations that you know, not so good deals are made.
Speaker 2: Right, So yeah, does it you know in terms of cycles,
Speaker 2: does it feel like this AI cycle is different than
Speaker 2: previous tech hype cycles? And the reason I ask and look,
Speaker 2: nobody wants to hear or utter the phrase this time
Speaker 2: is different. But if you look out at the private
Speaker 2: markets right now, you've got skyhag valuations, I think many
Speaker 2: would argue for open AI right, for anthropic, for perplexity.
Speaker 2: You have meta platforms coming in and dropping billions of
Speaker 2: dollars to buy forty nine percent of an AI company
Speaker 2: that barely existed. You have founders being poached. We're talking
Speaker 2: one hundred million dollar signing bonuses. Yeah, force an individual
Speaker 2: to go to a large company.
Speaker 9: Right.
Speaker 11: So I'm I look at my mailbox every day. I'm
Speaker 11: looking for my hundred million dollar check hasn't come in yet.
Speaker 2: Right, So, if you're going to range, you know, you know,
Speaker 2: make make your way your web browser or your you know,
Speaker 2: your website dot ai and maybe it'll happen.
Speaker 11: I don't know, don so to me, and there's not
Speaker 11: quite answering your question, but I'm it's all about me.
Speaker 11: So I'm going to answer it from my perspective, which
Speaker 11: is that to me, it feels different. Now, what does
Speaker 11: it feel like I've been around for long enough, so
Speaker 11: I'm something of the elder statement here statesman here, I've
Speaker 11: been around long enough that I've seen a few cycles.
Speaker 9: This feels like.
Speaker 11: The late nineties and the late nineties was the advent
Speaker 11: of the internet, right, and it feels this profound.
Speaker 9: Now. You know, people can say.
Speaker 11: Well, you know, if we look back two or three years,
Speaker 11: it was NFTs and that was a false positive. And
Speaker 11: before that it was blockchain, which was sort of a
Speaker 11: false positive. And before that it was cannabis, and before
Speaker 11: that it was bitcoin. And but this one feels real,
Speaker 11: and this as the possibility of disrupting entire industries. I
Speaker 11: had breakfast, by the way with a friend this past week.
Speaker 11: He has a unicorn business is worth almost two billion dollars.
Speaker 11: He has two hundred and seventy people, and he said, Michael,
Speaker 11: by year end, it's one hundred and twenty.
Speaker 2: Meaning he is going to lay people off because AI
Speaker 2: has become celefficient, a.
Speaker 11: Fast growing company, super fast growing company.
Speaker 9: That's really scary, I know, but that's what's going on.
Speaker 2: And so do you think so do you think there
Speaker 2: is something? Do you think there is something to what
Speaker 2: Dario Amaday has said who's the founder of Anthropic. Among
Speaker 2: the co founders of Anthropic, there are many that in
Speaker 2: a couple of years we're going to see a serious
Speaker 2: uptick in unemployment as a result of this tech, Like
Speaker 2: this is something policymakers need to be freaking out about
Speaker 2: right now.
Speaker 11: Yeah, well, look, I respectfully disagree, and all I have
Speaker 11: to go on is history and starting in the seventeen hundreds,
Speaker 11: right when there was that industrial revolution in England and
Speaker 11: we burned down all the factories with a spinning wheel,
Speaker 11: thinking everybody would be unemployed. That has not happened, but
Speaker 11: markets employment, people have an amazing ability to retrain themselves
Speaker 11: find the opportunities. In the end, I think we're going
Speaker 11: to be okay. Is there going to be some displacement.
Speaker 11: There's always some displacement. I hope you find out find
Speaker 11: something that we can have less lawyers, because we'd use
Speaker 11: less warriors. But I think at the end of the day,
Speaker 11: you know, brilliant people are going to find find their way.
Speaker 11: And the people you're talking about are very smart people, engineers.
Speaker 11: They will find their way. We're always going to need them.
Speaker 11: And you know, this is going to be like every
Speaker 11: other labor saving prediction.
Speaker 9: This is going to be just another one.
Speaker 3: All right, We're gonna unfortunately have to leave it there.
Speaker 3: But thank you for inviting us. This has been fun.
Speaker 9: Thank you for inviting me. Guys, I believe this is yours.
Speaker 11: Oh that's not what they told me. They said after today,
Speaker 11: it's all yours. That's not right, Michael, I wouldn't be
Speaker 11: so nice.
Speaker 10: Well, the key is please.
Speaker 5: Michael Low, founder and CEO of Low NYC.
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