WEBVTT - Surveillance: Extraordinary Support Needed, Yellen Says 0:00:09.880 --> 0:00:13.800 Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane. Daily 0:00:13.960 --> 0:00:17.560 we bring you insight from the best in economics, finance, investment, 0:00:18.000 --> 0:00:23.520 and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, 0:00:23.600 --> 0:00:27.400 Bloomberg dot Com, and of course on the Bloomberg. Now 0:00:27.440 --> 0:00:30.960 a wonderful opportunity to speak to the fifteenth Chairman of 0:00:31.000 --> 0:00:34.560 the Federal Reserve System, Janet Yellen. A FED chairs through 0:00:34.640 --> 0:00:38.000 some of the most difficult years of this nation. Of 0:00:38.000 --> 0:00:41.560 course we mentioned earlier her work on an American labor 0:00:41.600 --> 0:00:44.760 economy to bring it out of that slack of course, 0:00:44.880 --> 0:00:48.080 yelling of Yale of a time of Tobin and Stiglets, 0:00:48.320 --> 0:00:51.720 and now after the FED at the Brookings Institution with 0:00:51.800 --> 0:00:54.880 important work with a group of thirty on climate. I 0:00:54.880 --> 0:00:57.480 want to get to that chair yelling in a moment, 0:00:57.520 --> 0:01:01.600 but I really must ask about the weekend speculation of 0:01:01.680 --> 0:01:07.160 Treasury Secretary Yelling. If we were to get a Biden administration, 0:01:07.720 --> 0:01:12.480 would you be willing to serve for a President Biden? Um. 0:01:12.560 --> 0:01:16.000 I appreciate your asking and the notion that it's a 0:01:16.120 --> 0:01:18.960 job I can do, but I really have no comment 0:01:19.120 --> 0:01:21.440 on that. I'm sorry. Well, that would be good and we, 0:01:21.520 --> 0:01:23.840 of course I knew that would be the gracious answer 0:01:23.959 --> 0:01:28.800 from Janet yelling show Yellen away from the monetary discussion, 0:01:28.800 --> 0:01:30.600 and maybe we'll touch on that a bit. Here. We 0:01:30.720 --> 0:01:34.560 must speak about this important research you are steeped in. 0:01:34.600 --> 0:01:39.160 This long ago and far away. A Nobel laureate introduced 0:01:39.280 --> 0:01:44.560 us to auction theory speaking about Richards Scary and children's 0:01:44.640 --> 0:01:48.200 books at a Nobel Price speech in Stockholm. This is 0:01:48.280 --> 0:01:52.560 long ago and far away. You're very right. That was 0:01:52.680 --> 0:01:57.600 my Spause who won the Nobel prize, and um uh 0:01:57.760 --> 0:02:02.240 discussed the relevance of Richard's area to um his work. 0:02:03.120 --> 0:02:06.080 Mr Acker, last wonderful speech there that really advent with 0:02:06.160 --> 0:02:09.560 stiglets of what we're talking about here. Wilson and Milgram 0:02:09.600 --> 0:02:12.880 there at a small school across the Poncher yelling just 0:02:13.080 --> 0:02:17.760 to just took the trophy as well. Can auction theory 0:02:18.040 --> 0:02:23.160 help us solve climate change by fixing carbon pricing? I 0:02:23.200 --> 0:02:26.200 see no evidence that it can do it. Can we 0:02:26.320 --> 0:02:31.919 actually get to a legitimate, workable auction market for climate 0:02:32.000 --> 0:02:37.639 change through carbon pricing? Well, um let me let me say, 0:02:37.680 --> 0:02:41.000 referring to the group of thirty reports that we just 0:02:41.120 --> 0:02:46.639 put out. Um we urge governments to take the steps 0:02:46.680 --> 0:02:50.919 that are necessary to get a transition to nit zero, 0:02:51.520 --> 0:02:56.800 and carbon pricing is central to that. So we strongly 0:02:56.880 --> 0:03:02.520 believe that every government should price emissions. And uh, well 0:03:02.560 --> 0:03:07.079 that's not the only policy that's necessary. That is a 0:03:07.120 --> 0:03:13.920 critical um tool to create the right incentives for UM 0:03:14.160 --> 0:03:18.600 for a transition to KNIT zero. There are different ways 0:03:18.639 --> 0:03:23.440 of doing it. You said auction theory. So one way 0:03:23.520 --> 0:03:31.320 to do this is to limit emissions by requiring permits 0:03:31.480 --> 0:03:38.320 to amid greenhouse gases and uh, those they would create 0:03:38.360 --> 0:03:42.240 a market in which they would be priced. It's possible 0:03:42.360 --> 0:03:46.440 to auction the permits if the permits are auctions. I'm 0:03:46.480 --> 0:03:49.760 not aware of any country that's doing that now, but 0:03:50.400 --> 0:03:54.760 that would generate revenue that could be used for many 0:03:54.840 --> 0:04:00.760 different purposes, including compensating low income people. But a more 0:04:00.840 --> 0:04:05.040 straightforward way to do this, and it's what I would 0:04:05.040 --> 0:04:09.360 recommend for the United States that hopefully we will in 0:04:09.400 --> 0:04:12.960 the years ahead go in this direction, is simply to 0:04:13.040 --> 0:04:18.000 put in place a carbon tax. UM. A very efficient 0:04:18.040 --> 0:04:22.400 way to price carbon would be uh, to go to 0:04:22.560 --> 0:04:28.200 the mind head, the well um where where energy that 0:04:28.360 --> 0:04:34.320 creates carbon emissions enters the economy and to simply livy attacks. 0:04:34.400 --> 0:04:37.760 So UM, I think that's an easier and more efficient 0:04:37.800 --> 0:04:42.000 way than auctioning permits. But one way or another, UM, 0:04:42.400 --> 0:04:45.719 we think carbon pricing is important. With your report with 0:04:45.839 --> 0:04:49.240 Governor Carney and with all of the efforts Jacob Frankel 0:04:49.279 --> 0:04:51.799 and all of the Group of thirty. If we say 0:04:51.800 --> 0:04:55.760 that auction pricing has failed, where is the evidence that 0:04:55.839 --> 0:04:59.880 these societies will do a carbon tax? Are you optimi 0:05:00.040 --> 0:05:06.440 stick we can get a carbon tax initiated country to country. Well, 0:05:06.600 --> 0:05:11.000 different countries have taken different approaches, and what we're looking 0:05:11.080 --> 0:05:15.320 for is carbon pricing. UH. For the United States that 0:05:15.480 --> 0:05:19.280 doesn't have this in place, I would, and other countries 0:05:19.400 --> 0:05:23.080 that have not started going down this route, I think 0:05:23.120 --> 0:05:27.479 carbon carbon tax is a reasonable way to go. But 0:05:28.160 --> 0:05:33.080 UM auctioning off permits or simply putting in place a 0:05:33.200 --> 0:05:37.400 system where there needs to be a permit to admit. 0:05:37.839 --> 0:05:41.839 That's that's UM an approach that we see in many 0:05:41.920 --> 0:05:46.720 European countries, and we're not criticizing that is an alternative. 0:05:47.320 --> 0:05:49.880 Cherry Elen, As I was reading this report, I was 0:05:49.920 --> 0:05:53.039 struck by the firepower of the people who co authored this. 0:05:53.120 --> 0:05:57.039 It's who's who in Central banking weighing and on important policy, 0:05:57.080 --> 0:05:59.400 and I know you've been called on to weigh in 0:05:59.520 --> 0:06:02.120 on other important policy in the United States. In August, 0:06:02.120 --> 0:06:04.680 it was reported that you've had conversations with the Biden 0:06:04.720 --> 0:06:08.200 Harris camp about how to fix the economy going forward. 0:06:08.480 --> 0:06:11.800 Can you share anything from what you think we should 0:06:11.800 --> 0:06:16.280 do to get the economy back on track from here right? Well, 0:06:16.400 --> 0:06:18.680 let me say that I did meet with Biden and 0:06:18.800 --> 0:06:23.080 Harris and brief them about financial sector issues, but I'm 0:06:23.120 --> 0:06:28.280 not working with the campaign. UM. But you you asked 0:06:28.279 --> 0:06:30.400 me what I think we need to do to get 0:06:30.440 --> 0:06:35.560 the economy back on track. UM, so I would say 0:06:35.839 --> 0:06:41.000 what hits my list is dealing more effectively with the pandemic, 0:06:41.400 --> 0:06:46.359 with the health related issues, getting the infection level under 0:06:46.440 --> 0:06:53.640 control through contact tracing testing, UM, isolation of people who 0:06:53.760 --> 0:06:57.560 have it. I think we need a much more effective 0:06:57.640 --> 0:07:02.640 effort than we've had, and UM, if we have that 0:07:02.720 --> 0:07:05.880 will be good not only for health but for being 0:07:05.920 --> 0:07:08.680 able to open up the economy. And we've seen that 0:07:09.080 --> 0:07:14.280 in countries ranging from Germany to Korea to China that 0:07:14.400 --> 0:07:19.240 have been successful. And then we need UM support for 0:07:19.320 --> 0:07:24.720 the economy, both for monetary and fiscal policy and monetary 0:07:24.760 --> 0:07:30.240 policy has already done a huge amount. Fiscal policy response 0:07:30.280 --> 0:07:36.160 in the United States has been extremely impressive. But UM, 0:07:36.200 --> 0:07:40.480 actually it's it's much larger the fiscal support than what 0:07:40.680 --> 0:07:45.160 was done after the two thousand and eight nine financial crisis. 0:07:45.520 --> 0:07:51.200 But UM the fiscal support has now lapsed and UM 0:07:51.320 --> 0:07:57.000 so far spending has held up UM. Unemployed workers who 0:07:57.120 --> 0:08:00.200 got that extra six hundred dollars a week through the 0:08:00.320 --> 0:08:04.080 end of July UM they use that to stay current 0:08:04.200 --> 0:08:08.600 on their bills to support UM they're spending. They even 0:08:08.640 --> 0:08:11.600 stashed some of it away so that they've been able 0:08:11.640 --> 0:08:15.040 to get through this last couple of months and pay 0:08:15.160 --> 0:08:18.320 their bills. But it's running out, and I think we 0:08:18.400 --> 0:08:22.280 need to do that. And state and local governments also 0:08:22.400 --> 0:08:27.679 face huge budget shortfalls. I'm working on the task force 0:08:27.840 --> 0:08:32.199 with the governor of California to address the pandemic. They 0:08:32.240 --> 0:08:37.200 face a fifty four billion dollars shortfall this year. I 0:08:37.240 --> 0:08:40.200 think that's very important too. So in in the meantime, 0:08:40.200 --> 0:08:43.160 Steve Shoodo of Miszoojo just was on He said that 0:08:43.240 --> 0:08:46.360 if the if Congress were to pass a two trillion 0:08:46.400 --> 0:08:50.040 dollar fiscal support plan, that he expects the Federal Reserved 0:08:50.080 --> 0:08:53.120 potentially buy up all of that in order to help 0:08:53.200 --> 0:08:55.920 things along. Do you think that that's an advisable step? 0:08:57.720 --> 0:09:03.760 So the Federal Reserve's asset purchases, UM, they have not 0:09:03.960 --> 0:09:08.360 made clear their plans going forward, and I'm expecting them 0:09:08.400 --> 0:09:12.800 to offer more guidance. But their objective there is going 0:09:12.880 --> 0:09:17.080 to be to try to keep both long and short 0:09:17.360 --> 0:09:22.480 interest rates at low levels to support in economic recovery. UM. 0:09:22.520 --> 0:09:26.920 It is not their objective ever to directly try to 0:09:27.040 --> 0:09:31.920 help the federal government finance its um budget deficit, and 0:09:32.440 --> 0:09:36.760 that would be a very dangerous kind of support to provide. 0:09:37.240 --> 0:09:42.240 But I do expect I think asset purchases have worked there. 0:09:42.280 --> 0:09:46.880 They're holding down longer term rates, and I expect there 0:09:46.880 --> 0:09:52.880 to be ongoing purchases, but probably not geared to the 0:09:53.000 --> 0:09:57.120 federal deficit. Sure yell. And we are rebuilding our institutions 0:09:57.120 --> 0:09:59.400 out of this natural disaster. I want to go back 0:09:59.440 --> 0:10:01.560 to James Hope and a few years ago, who you 0:10:01.600 --> 0:10:05.400 took your PhD with, where he introduced with Nordhouse, the 0:10:05.480 --> 0:10:10.080 measure of our welfare system, just simply thinking about the 0:10:10.120 --> 0:10:14.600 welfare state within a capitalistic market. We now come up 0:10:14.640 --> 0:10:17.640 to where we are now with this historic election, and 0:10:17.679 --> 0:10:20.199 we've got the Democrats trying to get back to some 0:10:20.320 --> 0:10:24.400 form of social construct and Mr Trump and others with 0:10:24.559 --> 0:10:29.040 a lackey and individualistic nature as well. How do you 0:10:29.160 --> 0:10:34.480 perceive how we move forward with our new capitalism, our 0:10:34.559 --> 0:10:39.400 new welfare state, Given the fiscal deficits, given the trade 0:10:39.440 --> 0:10:42.600 deficit where it is, and given a monetary theory that 0:10:42.679 --> 0:10:46.600 seems to be extended and exhausted. What does the new 0:10:46.760 --> 0:10:53.440 system look like for you and the next few years. So, UM, 0:10:53.480 --> 0:10:57.439 that's a hard that's a very hard and comprehensive question, 0:10:57.559 --> 0:11:00.920 but I would save that I think fiscal policy needs 0:11:01.000 --> 0:11:06.240 to play an active role. UM. Once upon a time, UH, 0:11:06.679 --> 0:11:10.120 starting in the nineteen eighties, UM, there was a view 0:11:10.320 --> 0:11:15.200 that UM, the Fed can handle the job of keeping 0:11:15.240 --> 0:11:19.800 the economy operating at full employment, and fiscal policy should 0:11:19.880 --> 0:11:25.600 focus on allocative issues. And now we're faced with the 0:11:25.679 --> 0:11:32.680 world characterized by secular stagnation. There is a surfeit too 0:11:32.760 --> 0:11:37.960 much saving in the global economy, especially among developed countries, 0:11:38.040 --> 0:11:42.040 and weak investment demand, and it's been pushing down real 0:11:42.160 --> 0:11:47.520 rates of interest and depriving monetary policy of UM a 0:11:47.600 --> 0:11:51.600 lot of the ability it had to address um to 0:11:51.720 --> 0:11:56.080 address economic weakness. And uh, you know, I would never 0:11:56.120 --> 0:12:00.480 have imagined when two thousand and eight crisis hit that 0:12:00.840 --> 0:12:03.960 short rates would stay at zero for seven full years, 0:12:04.200 --> 0:12:07.800 and here we are back again with zero short rates. 0:12:08.160 --> 0:12:12.120 And of course there are unconventional tools as it purchases 0:12:12.240 --> 0:12:17.760 forward guidance that expand what monetary policy can do, but 0:12:17.920 --> 0:12:22.479 there are some limits and it's important for fiscal policy 0:12:22.640 --> 0:12:27.640 to um fill in that gap. And um, you know, 0:12:27.760 --> 0:12:32.960 I believe while the pandemic is still seriously affecting the economy, 0:12:33.280 --> 0:12:38.240 we need to continue extraordinary fiscal support. But even beyond that, 0:12:38.360 --> 0:12:41.560 I think it will be necessary. But a good side 0:12:41.559 --> 0:12:44.960 of low interest rates is that it reduces the interest 0:12:45.040 --> 0:12:48.800 burden of the debt, and I think it makes it possible. 0:12:48.840 --> 0:12:52.199 And it's not a short run phenomenon short rates. It's 0:12:52.240 --> 0:12:55.839 something that's going to probably be with us for many 0:12:56.000 --> 0:12:58.920 years to come, and we can afford to have more 0:12:59.000 --> 0:13:02.880 debt than we used to think was sustainable. Yellen, thank 0:13:02.880 --> 0:13:05.439 you so much, and most generous conversation, of course, and 0:13:05.520 --> 0:13:08.600 celebration of a group of thirty report with Governor Kearney 0:13:09.120 --> 0:13:17.439 on our place forward with climate control. The charge no 0:13:17.559 --> 0:13:20.640 principal Global Investors chief strategies seem were welcome to the 0:13:20.640 --> 0:13:23.440 goat rodeo. I'm sure that's what other people think. This 0:13:23.559 --> 0:13:25.640 is at the moment, seem as fantastic to see you. 0:13:26.200 --> 0:13:27.880 First question to you, I asked at the top of 0:13:27.880 --> 0:13:30.800 the hour, how much hinges on the next two weeks 0:13:30.800 --> 0:13:36.439 as you put togethers not that much? You know, we 0:13:36.760 --> 0:13:42.320 see this time. Sorry I'm discussing them. Yeah, we see 0:13:42.360 --> 0:13:43.679 this time and time again. You know, if you look 0:13:43.720 --> 0:13:47.320 at all the election years through time and actually you 0:13:47.360 --> 0:13:51.200 know the volatility tempt to ever way, the returns typically 0:13:51.200 --> 0:13:53.360 move with fundamentals. So at the end of all of this, 0:13:53.960 --> 0:13:56.480 won't you pass through the noise? The markets just go 0:13:56.559 --> 0:13:58.600 back to what really drive them, which, as we've seen 0:13:58.640 --> 0:14:00.600 this year, is going to be that demic and it's 0:14:00.600 --> 0:14:02.480 going to be central banks and a little bit of 0:14:02.520 --> 0:14:04.719 fiscal stimulats if we can see that. But those are 0:14:04.720 --> 0:14:06.760 the key drivers. It's not really going to be what 0:14:06.920 --> 0:14:08.720 happens in the next two weeks, Throve in the next 0:14:08.720 --> 0:14:11.120 three or four weeks, have long take SMA. We've been 0:14:11.120 --> 0:14:13.679 doing a lot on equity. Tell me what's tradeable and 0:14:13.840 --> 0:14:20.440 fixed income? Where he is a quote unquote opportunity in yield. Yeah, 0:14:20.480 --> 0:14:22.680 it's it's it's a tough question at the moment. You know, 0:14:22.760 --> 0:14:25.600 we we have still liked investment grades, but of course 0:14:25.600 --> 0:14:28.240 we have been reducing some of our allocations. They've given 0:14:28.240 --> 0:14:31.200 then you're not getting too much. We actually like professed securities. 0:14:31.280 --> 0:14:33.760 You get a bit of a pickup um. It's still 0:14:33.800 --> 0:14:36.720 relatively safe area. So so there are some opportunities there, 0:14:36.960 --> 0:14:39.400 and of course we've been high yield. You have to 0:14:39.400 --> 0:14:41.760 be in the better part of that spectrum because you know, 0:14:42.520 --> 0:14:45.320 the economic recovery, it's slow, it's protracted, there are a 0:14:45.320 --> 0:14:47.800 lot of potholes ahead, and it's going to be those 0:14:48.640 --> 0:14:50.800 riskier companies that are going to see that playing out 0:14:50.840 --> 0:14:53.600 in So of course you have to be careful when 0:14:53.600 --> 0:14:56.000 we look at equity, as the story really has been 0:14:56.200 --> 0:15:00.720 do you buy into the rotation trade, the cyclical story 0:15:00.960 --> 0:15:03.120 rather than just big tech? Where do you stand on that? 0:15:04.560 --> 0:15:07.320 So we have maintained a pretty significant positioning to big 0:15:07.320 --> 0:15:11.280 tech through all of this. We still really like that sector. There's, 0:15:11.280 --> 0:15:12.600 you know, so much to be said that as long 0:15:12.640 --> 0:15:15.800 as you've got the ongoing pandemic, there's continued concentration of 0:15:15.880 --> 0:15:18.800 working from home and reliance on technology. It still plays 0:15:18.800 --> 0:15:21.440 out even the macro environment. You know, if you've got 0:15:21.520 --> 0:15:23.600 economic bank drop, which is a little bit risky as 0:15:23.600 --> 0:15:27.040 today is right now, then companies investors just needs companies 0:15:27.080 --> 0:15:30.400 with strong balances balance, it's positive cash flow, you're getting 0:15:30.440 --> 0:15:32.400 that from Big tex and of course with a low 0:15:32.440 --> 0:15:34.520 bond yield environment where we know that central banks are 0:15:34.520 --> 0:15:37.360 not moving any time soon. Um, I think everything plays 0:15:37.360 --> 0:15:40.520 out well now. Having said that, there are um, there 0:15:40.560 --> 0:15:43.600 are hurdles ahead. We have to think about regulations, we 0:15:43.680 --> 0:15:45.640 have to think about even the fact that they have 0:15:45.720 --> 0:15:48.920 to meet really really higher EARNIS expectations. Now, through all 0:15:48.920 --> 0:15:50.200 of that, I don't want to say we haven't got 0:15:50.240 --> 0:15:52.720 any exposure to cyclicals, because I think this is the 0:15:52.800 --> 0:15:55.800 time to start thinking about adding a bit more exposure, 0:15:55.800 --> 0:15:59.200 because if we're looking at a continued recovery, then cyclicals 0:15:59.280 --> 0:16:03.600 should do better next year. Seemen a recovery where as 0:16:03.600 --> 0:16:05.840 soon as you look at things right now momentum in 0:16:05.880 --> 0:16:08.160 the United States, Tom and I were just talking about that, 0:16:08.400 --> 0:16:10.800 a really good recovery. It looks like emerging in China 0:16:10.960 --> 0:16:13.720 and just nothing of the sort in Europe. Where do 0:16:13.760 --> 0:16:17.760 you want that cyclical exposure, so a little bit in 0:16:17.800 --> 0:16:19.720 the US. I mean you look at I agree that 0:16:19.800 --> 0:16:22.480 you know. Europe's just it's a perennial disappointment. Every time 0:16:22.480 --> 0:16:25.000 we think it can come through, something else comes along. 0:16:25.040 --> 0:16:27.480 And I'm sending right now, it's not an error which 0:16:27.520 --> 0:16:30.720 is looking particularly attractive. UM you said it emerging Asia. 0:16:30.760 --> 0:16:34.160 Anything which has got any kind of close relationship with China, 0:16:34.800 --> 0:16:38.160 UM and even the new sectors of technology there really 0:16:38.160 --> 0:16:40.480 should do well. So that's where I think that's cyclically 0:16:40.480 --> 0:16:42.840 exposure can come from, and of course from from a 0:16:42.960 --> 0:16:45.120 kind of a large cap. I think there is an 0:16:45.160 --> 0:16:49.760 opportunity here to raise your exposure to small up smash 0:16:49.960 --> 0:16:52.480 of principal club investor Simoth, thank you great to catch 0:16:52.520 --> 0:16:57.960 help me this morning. I've got a big wall. Your 0:16:58.040 --> 0:17:00.640 focus was forty seven TV networks on it. I got 0:17:00.680 --> 0:17:03.400 TV Mound in Paris, not that I understand a word 0:17:03.400 --> 0:17:05.879 of it, but I've got medals on Fox. I got 0:17:06.000 --> 0:17:09.280 Radcliffe of Intelligence with Marie over on Fox Biz. And 0:17:09.320 --> 0:17:11.480 I guess that's the kind to it for the administration. 0:17:11.800 --> 0:17:14.840 John where Senator McConnell, you see out of doing any 0:17:14.840 --> 0:17:18.720 of these interviews, Lada McConnell was talking about a package 0:17:18.720 --> 0:17:20.720 of skinny deal of something in the region of five 0:17:20.880 --> 0:17:24.120 six hundred billion dollars. I imagine he'll listen. I think 0:17:24.119 --> 0:17:25.639 he said that over the weekend. If they come to 0:17:25.680 --> 0:17:28.080 a bipartisan deal, he'll take a look at it. But 0:17:28.119 --> 0:17:30.280 it's not up to him, isn't it. Lady McConnell has 0:17:30.280 --> 0:17:31.639 got to get it through the Senate, and there's been 0:17:31.640 --> 0:17:34.200 no evidence the last several months that he has the 0:17:34.280 --> 0:17:37.800 votes in his core constituencies in that Senate. Right now, 0:17:37.960 --> 0:17:40.959 Tom to pass a bill of two trillion. We focus 0:17:41.160 --> 0:17:43.520 on the stimulus with Jonathan Lieber. He is with your 0:17:43.560 --> 0:17:46.200 Asia group and thrilled that he could join us this morning. 0:17:46.280 --> 0:17:49.520 Jonathan Lieber, you've written tersely on stimulus as well. Meadows 0:17:49.640 --> 0:17:52.720 Is is pounding the drum. What's the chance anybody's gonna 0:17:52.800 --> 0:17:55.720 listen to the drum and join the band. I think 0:17:55.720 --> 0:17:57.199 it's a little late in the game to get this 0:17:57.240 --> 0:18:00.280 done right now. You had some support for a really 0:18:00.400 --> 0:18:03.399 fairly large stimulus deal earlier in the summer, but with 0:18:03.600 --> 0:18:07.000 Trump's re elections campaign prospects cratering, he just doesn't have 0:18:07.040 --> 0:18:09.119 the stroke he had in July to push something through 0:18:09.160 --> 0:18:11.879 the Senate Republican Conference, so they are a much smaller 0:18:12.000 --> 0:18:13.639 number than he is. I think it's gonna be a 0:18:13.720 --> 0:18:15.919 really heavy lift to get anything close to the kind 0:18:15.920 --> 0:18:18.600 of deal Nuchan is talking about through the Senate right now. 0:18:18.680 --> 0:18:21.199 Are Kevin Surli sees the benefit to the president, he 0:18:21.200 --> 0:18:24.880 sees the benefit to moderate Democrats. Does the stimulus benefit 0:18:25.000 --> 0:18:29.119 Vice President Biden? No? I don't think so. I mean, 0:18:29.119 --> 0:18:30.840 I think that Biden gets it done one way or 0:18:30.840 --> 0:18:32.640 the other, so it's basically neutral for him. But it's 0:18:32.640 --> 0:18:35.080 a risk that this is some kind of bipartisan deal 0:18:35.160 --> 0:18:37.600 President Trump strikes a couple of weeks before the election 0:18:37.920 --> 0:18:40.879 and that helps him. So if you're Biden or your Pelosi, 0:18:41.160 --> 0:18:42.639 do you really want to take that risk? I mean, 0:18:42.640 --> 0:18:45.280 can you imagine being Nancy Pelosi. You cut a deal 0:18:45.640 --> 0:18:47.800 with the president through two weeks before the election, and 0:18:47.840 --> 0:18:50.000 then he wins, You're gonna be the greatest goat in 0:18:50.040 --> 0:18:52.600 democratic political history. So I just don't think that this 0:18:52.640 --> 0:18:54.600 is something Pelosi really wants to do. I think it's 0:18:54.640 --> 0:18:58.600 a real risk for Biden if it happens. I'm sud naive, John. 0:18:58.640 --> 0:19:01.280 I thought that policy was about out pink the country, 0:19:01.600 --> 0:19:07.240 not about just winning the election, dice to go, fifteen 0:19:07.359 --> 0:19:11.040 days to go, John, and last time around, those polls 0:19:11.119 --> 0:19:15.600 narrowed aggressively in the President's favor. In the final two weeks, 0:19:15.880 --> 0:19:19.200 there's doubling down on the existing strategy, get it done. 0:19:20.240 --> 0:19:22.000 You know, there's a lot of differences between now and 0:19:23.040 --> 0:19:26.280 the biggest one being just the size and consistency of 0:19:26.320 --> 0:19:29.800 Biden's national lead. This guy's been between seven and nine 0:19:29.840 --> 0:19:32.320 points since he clinched the nomination. There were times in 0:19:32.720 --> 0:19:35.600 sixteen where Trump was within two of Hillary Clinton, and 0:19:35.600 --> 0:19:38.439 that's not even come close to happening now. What's unique 0:19:38.440 --> 0:19:40.680 about predicting this election is that the swing states are 0:19:40.760 --> 0:19:44.280 all closer than the national polls tell you. But this 0:19:44.320 --> 0:19:46.639 has not really been There's not been much variance in 0:19:46.640 --> 0:19:49.040 this election, so it would be really surprising to see 0:19:49.080 --> 0:19:52.520 it tightened suddenly without a major game change in the narrative, 0:19:52.800 --> 0:19:54.600 like a big screw up at the debates or something 0:19:54.640 --> 0:19:58.040 like that for Joe Biden. John. Let's say you're right. 0:19:58.119 --> 0:20:01.720 Let's say markets are right that president that President Trump 0:20:01.760 --> 0:20:05.119 loses the election, that former Vice President Biden wins, that 0:20:05.200 --> 0:20:08.679 we get some sort of blue wave. Our markets adequately 0:20:08.760 --> 0:20:12.960 pricing in the potential change to taxes and other fiscal 0:20:13.000 --> 0:20:17.440 approaches of a Democratic a majority Senate right now, given 0:20:17.440 --> 0:20:20.399 where people are positioning, are they are they really gaming 0:20:20.400 --> 0:20:23.840 this out correctly? Well? I think that the variable here 0:20:23.920 --> 0:20:26.000 is that most of our clients we talked to are 0:20:26.000 --> 0:20:28.359 expecting there to be a really large stimulus in Q 0:20:28.560 --> 0:20:30.960 one of next year. And that happens, then sure, that's 0:20:31.000 --> 0:20:33.560 positive for the economy. That's a big fiscal stimulus. That's 0:20:33.560 --> 0:20:36.159 probably good for earnings. But once you start looking through that, 0:20:36.400 --> 0:20:39.040 you look out six to twelve eighteen months, that's when 0:20:39.080 --> 0:20:41.320 you start seeing the tax increases and the new levels 0:20:41.320 --> 0:20:44.040 of regulations starting to bite. And I would expect markets 0:20:44.040 --> 0:20:46.200 maybe a little slow to catch up to that, given 0:20:46.200 --> 0:20:48.119 that there's going to be this flood of cash in 0:20:48.160 --> 0:20:50.560 the first half half of next year. So you're uniquely 0:20:50.560 --> 0:20:53.040 positioned to talk about this because you help you helped 0:20:53.119 --> 0:20:58.159 craft tax policy under former President Barack Obama's regime, which 0:20:58.200 --> 0:21:01.920 sectors which types of companies could get hit hardest by 0:21:01.960 --> 0:21:04.760 a new attacks regime such as the like that Joe 0:21:04.760 --> 0:21:08.200 Biden is proposing. Well, the biggest threats that Biden's making 0:21:08.240 --> 0:21:10.879 are to US multinational companies so you're talking about raising 0:21:10.880 --> 0:21:13.280 the corporate tax rate blow where it was during the 0:21:13.280 --> 0:21:16.399 Obama administration, but higher than it is today. But I 0:21:16.400 --> 0:21:19.080 think in some ways more importantly, you're talking about changing 0:21:19.080 --> 0:21:21.720 the way that they tax overseas earnings in the US, 0:21:22.000 --> 0:21:24.800 and that's gonna make US business is less competitive, make 0:21:24.840 --> 0:21:27.600 it harder for them compete in foreign markets. And I 0:21:27.640 --> 0:21:29.840 think that you know, in a year or two from now, 0:21:29.880 --> 0:21:31.879 once we're under this regime, we're gonna be back to 0:21:31.880 --> 0:21:34.920 the battle days of talking about inversions and losing companies 0:21:34.960 --> 0:21:38.360 to foreign UH jurisdictions. There's gonna be rules in place 0:21:38.400 --> 0:21:40.440 to stop that from happening. But I do think that 0:21:40.440 --> 0:21:42.840 that's a bad look for the multinationals in the US. 0:21:42.880 --> 0:21:45.679 I'm gonna ask this question, Jonathan, very quickly here and 0:21:45.880 --> 0:21:49.840 very important on the first Wednesday of November. Whatever the 0:21:49.920 --> 0:21:54.400 results are, everybody's gonna dash to two thousand twenty two. 0:21:54.840 --> 0:21:59.000 What is that gonna look like? Well, I think the Democrats, 0:21:59.000 --> 0:22:00.920 I mean, you know, the Demo Guts are fairly well 0:22:00.960 --> 0:22:03.040 positioned if you look at the Senate. They also have 0:22:03.119 --> 0:22:05.879 the opportunity to redistrict coming out of the census, in 0:22:07.320 --> 0:22:10.439 which should help them in the House. But you know, 0:22:10.520 --> 0:22:13.879 the historical pattern here is that presidents lose seats in 0:22:13.880 --> 0:22:16.399 their first midterm elections because of the backlash. So a 0:22:16.400 --> 0:22:18.879 lot of that question comes on how much overreach you 0:22:18.960 --> 0:22:21.159 see from the first two years of a Biden administration 0:22:21.359 --> 0:22:23.359 and what's so important here, John As I know you 0:22:23.440 --> 0:22:26.399 tried to redistrict me out of Bloomberg surveillance three or 0:22:26.400 --> 0:22:28.720 four years ago. I mean, you know he's talking to 0:22:28.800 --> 0:22:35.440 John Farrell LL. He's absolutely talking to making redistricting down 0:22:35.520 --> 0:22:40.000 White John, I'm working on it. Jerryman, get that one 0:22:40.080 --> 0:22:51.520 day Salem mass Science. You're not directly on the pandemic 0:22:51.560 --> 0:22:55.280 from the JOHNS. Hompkins University. Johnshrew Sharpstein, Well, the first 0:22:55.320 --> 0:22:57.000 of all, I point out that there really, at least 0:22:57.359 --> 0:23:00.520 states aren't lockdowns at the moment. People are not recommending knockdowns, 0:23:00.520 --> 0:23:04.680 They're recommending reasonable steps in vigilance, and you know, not 0:23:05.160 --> 0:23:08.320 pretending that the virus isn't here. And I remind them 0:23:08.359 --> 0:23:11.680 that two fifteen thousand people have already died in the 0:23:11.760 --> 0:23:13.879 United States and it is not hard at all to 0:23:13.960 --> 0:23:17.439 imagine another two d fifteen thousand, and then another two 0:23:17.840 --> 0:23:20.680 fifteen thousand dying if we decide that we're just gonna 0:23:20.760 --> 0:23:23.800 let everybody get the virus um, which seems to be 0:23:23.840 --> 0:23:27.000 some people's strategy, but really is the strategy of giving 0:23:27.080 --> 0:23:30.200 up what we know about the Visor vaccine. It seems 0:23:30.240 --> 0:23:32.960 that they actually would be ready to, you know, start 0:23:33.000 --> 0:23:35.960 for an application in November. November is a couple of weeks, 0:23:36.320 --> 0:23:38.960 you know, a way are the first ones to get 0:23:39.000 --> 0:23:42.359 it right, But we have no idea because they haven't 0:23:42.400 --> 0:23:45.399 reported the studies yet. I think what they're saying is 0:23:45.400 --> 0:23:47.880 that they will have the first read of the studies 0:23:48.400 --> 0:23:52.520 UM with including data on safety, sometime in November, and 0:23:52.560 --> 0:23:55.320 I certainly hope that it's positive, that it looks good, 0:23:55.480 --> 0:23:58.920 and that the FDA will look at it carefully, convene 0:23:58.920 --> 0:24:01.399 an advisory committee, and then we'll all be able to 0:24:01.400 --> 0:24:03.760 look at the data. And if that happens, I think 0:24:03.760 --> 0:24:06.639 we'll at least have a one vaccine, which is great, 0:24:07.160 --> 0:24:10.520 and then there will be other UM studies that will 0:24:10.560 --> 0:24:12.160 read out and we'll have a chance to get more. 0:24:12.520 --> 0:24:15.280 How do you you know, convince citizens that we're not 0:24:15.320 --> 0:24:17.960