Speaker 1: Yeah, Welcome to the Bloomberg Surveillance Podcast. I'm Tom keene Jailey.
Speaker 1: We bring you insight from the best in economics, finance, investment,
Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud,
Speaker 1: Bloomberg dot Com, and of course on the Bloomberg. Joining
Speaker 1: us now to break things down is Ron's Temple Lazard,
Speaker 1: Asset Management, Managing Director and co head of Multi Assets Ron.
Speaker 1: It's great to catch up with you. What's on the
Speaker 1: agenda as you get back to work. It's Wednesday, January three.
Speaker 1: FED minutes were about to drop your waiting for earnings
Speaker 1: from some of the big corporate side of the next
Speaker 1: couple of weeks as well. What is at the top
Speaker 1: of the list I think today on the agenda. Obviously
Speaker 1: we're watching for the FMC minutes, as you've already mentioned.
Speaker 1: But the other thing I think a lot of us
Speaker 1: are working on right now is trying to figure out
Speaker 1: exactly how the tax reforms in the US will affect
Speaker 1: earnings for US companies. I mean, there's a lot of
Speaker 1: detail and the Tax Cutting Jobs Act the t c
Speaker 1: j A, and so we've had companies gradually trickling out
Speaker 1: a bit of information about how they might pay out
Speaker 1: a small bonus to employees. You know, a number of
Speaker 1: the banks have come out and said they'll give a
Speaker 1: thousand dollar bonus to each of their employees who make
Speaker 1: under a certain income level. But what we really need
Speaker 1: to see is the very specifics of how that tax
Speaker 1: plan will affect net income. And it's not that easy
Speaker 1: to assess from outside of a company because a lot
Speaker 1: of it depends on cross border flows in terms of
Speaker 1: between multinational entities, and you know, understanding how I think
Speaker 1: the provision was called BEAT, which is basically the the
Speaker 1: Enhancement and Avoidance of tax element, so base enhanced, baseline enhancement.
Speaker 1: So we're trying to watch a lot of this waiting
Speaker 1: for companies to give us more granularity. I think we'll
Speaker 1: start getting that late next week, whenever we start getting
Speaker 1: the bank earnings. How mechanical would it be run? Because
Speaker 1: from the outside looking in from thirty five, fast and fate,
Speaker 1: you could just sit there and say, Wow, they tighten
Speaker 1: the new open tax. Right, they pluck that in, and
Speaker 1: then they give you some brand new guidance for the
Speaker 1: year ahead. Oh it's I wish it were that simple.
Speaker 1: And I think what you've seen from a number of
Speaker 1: the cell side strategists, which is still helpful, is taking
Speaker 1: a broad brush approach and saying, Okay, if your effective
Speaker 1: tax rate was x and the new tax rate is why,
Speaker 1: let's look at the difference. Now, machits go up. But
Speaker 1: it really does come down to which legal entities within
Speaker 1: a company have, which exposures across borders really drives for example,
Speaker 1: some of the interest the corporate interest deductibility provisions, and
Speaker 1: that is not disclosed in most ten ks or ten queues.
Speaker 1: So even if you do the most in depth fundamental
Speaker 1: research you can possibly do from outside a company, much
Speaker 1: of this is almost impossible to decipher. Do you have
Speaker 1: a big sector focus right now? Uh? With in terms
Speaker 1: of holdings, No. I think one area where we have
Speaker 1: seen opportunity over the last year, and say the latter
Speaker 1: part of last year, was increasing disposure to the energy sector.
Speaker 1: Um it is one of the few areas of the
Speaker 1: market where actually you've seen the PE ratio go down
Speaker 1: materially last year, we've seen energy prices basically move up,
Speaker 1: which could bode well for some of these companies. And
Speaker 1: also our long term analysis of the demand trajectory for
Speaker 1: fossil fuels still actually looks reasonably positive for these companies.
Speaker 1: You mentioned fossil Fuels catch us right to a headline
Speaker 1: which is run from our ute when you and I
Speaker 1: were younger doing level one, level two, level three, and
Speaker 1: it would be the offshoot of the Virginia Railway and
Speaker 1: Power Company, And of course that is Dominion D and
Speaker 1: you know the ultimate yield stock of years ago, Dominion
Speaker 1: to buy Scanner. I hate these modern names run s, C, A,
Speaker 1: N A. I have no idea what Scanning is. I
Speaker 1: think they serve hot dogs at the Atlanta Brave Stadium.
Speaker 1: South Carolina Electric and Gas Company is the adult name
Speaker 1: for SCANNA, but it does speak to one of the
Speaker 1: trends here, which is mergers. Into this year Dominion to
Speaker 1: buy Scanna stock deel fifty five dollars thirty cents, A
Speaker 1: little buch more on that through the day, but there
Speaker 1: it is no nominal GDP. Tough revenue growth, we gotta merge.
Speaker 1: That's a theme, right. I think we'll continue to see that.
Speaker 1: I mean, I do think we will see better top
Speaker 1: line growth on the back of better wage growth in
Speaker 1: the US. I think the synchronized global recovery will lead
Speaker 1: to a better economic environment for companies to organically grow.
Speaker 1: But I also think if you think about what drives murders,
Speaker 1: mergers and acquisitions, it's CEO confidence, it's financing costs. You know,
Speaker 1: it's a number of these kind of factors in terms
Speaker 1: of the drive activity. And John and I have talked
Speaker 1: about this before. John, this is the Lemmings thing. Everybody
Speaker 1: for the door in the theater is rates rise, John Farroll,
Speaker 1: you wonder what CFOs tell the CEO, like, let's go,
Speaker 1: is maybe the big surprise for two thousand have they
Speaker 1: been planning that already run on the refinancing side of things,
Speaker 1: if they've been plugging in the low rights for longer,
Speaker 1: longer maturities, lower rights, that they've been making those moves
Speaker 1: before rates rise. I do think the corporates have largely
Speaker 1: termed out their debt and taken advantage of these incredibly rates,
Speaker 1: and they recognize that they're historically low. But by the way,
Speaker 1: let's be fair, they've recognized they were historically low for
Speaker 1: the last ten years, right, so every time you turn
Speaker 1: them out, you found you could turn it out even
Speaker 1: longer at a lower rate. But I do believe in
Speaker 1: two thousand and eighteen, that we are going to see
Speaker 1: higher interest rates the long end of the curve. I mean,
Speaker 1: if I look at the Eurozone, we're fifty percent roughly
Speaker 1: of Eurozone sovereign debt had a negative yield at the
Speaker 1: end of the year in nominal terms, and yet you've
Speaker 1: got an economic recovery that is four years into this process.
Speaker 1: I think you're going to see higher rates in the Eurozone.
Speaker 1: I mean easily. I think you could see ten year
Speaker 1: blewn yield's top one percent this year, and I think
Speaker 1: that will have a relative value effect on US treasuries.
Speaker 1: So so if I look at fixed income and interest rates,
Speaker 1: I do believe rates higher in twenty eighteen is a
Speaker 1: high probability call. And if I'm a company, I'm going
Speaker 1: to think about that in terms of my opportunity to
Speaker 1: lock and load in terms of these So that's the
Speaker 1: culporate response. I want to gudge what the investor response is,
Speaker 1: because investors will look at that situation. At some point,
Speaker 1: you stop using the SMP five hundred a t F
Speaker 1: as a money market fund and catching in whenever you
Speaker 1: like for a profit, and start looking at what's happening
Speaker 1: in treasuries and saying, you know what, there's some income
Speaker 1: in fixed income and I'd like to go to that.
Speaker 1: This is a multi factor question, right. I think part
Speaker 1: of it is the level of dividing yields. Part of
Speaker 1: it is the level of interest rates. The other factor
Speaker 1: to keep in mind is what's happening with corporate pension plans.
Speaker 1: With record levels on equity markets, many of the private
Speaker 1: pensions are now fully funded, and if they get the
Speaker 1: opportunity where you get a fifty basis point, you'll back up.
Speaker 1: The appeal of immunizing their pension risk and shifting out
Speaker 1: of equities into fixed income to match their assets and
Speaker 1: liabilities will be pretty compelling. So I do think that
Speaker 1: will be an interesting interplay. Run Thank you, Thank you,
Speaker 1: Thank a run Temple with us Lazar just a great
Speaker 1: way to kick off the year. He is with Lazard
Speaker 1: Asset Management out of Minneapolis. Narrianna Cucha Dakota one of
Speaker 1: our most esteemed economists. Thinking in a way of mathematics.
Speaker 1: He decided getting out the map in Minnesota to move
Speaker 1: to warmer climbs and joins us this morning for Rochester,
Speaker 1: New York. Let's cut to the chase. UH Professor Caucho
Speaker 1: Dakota at the University of Rochester. You can look out
Speaker 1: your window his the Genesee River frozen over. Uh you know,
Speaker 1: I I don't look on the river, but I'm sure
Speaker 1: it's frozen. It is. Well, it's quite quite cold. It's
Speaker 1: been called here for quite some time. You know. Hate
Speaker 1: the Jenny Creemel was worm as well. You have a
Speaker 1: terrific chart out for Bloomberg View today of the core
Speaker 1: conundrum the chairman Powell of faces Can people like you
Speaker 1: actually move inflation? We have disinflation, we're told we have
Speaker 1: a core pc South. Can people in suits and ties
Speaker 1: and expensive dresses like cher yelling war? Can you actually
Speaker 1: move the needle on inflation? You know, I think the
Speaker 1: key is really to think about it is that the
Speaker 1: FED can stop inflation from coming, and it can stop
Speaker 1: inflation from coming by by raising it's it's regulator tightening
Speaker 1: its regulat around the economy that is raising rates. Um.
Speaker 1: And what I worry about is that over the past
Speaker 1: few years, you know, since the initiation lift off in December. Uh,
Speaker 1: you the Fed's complaining, boy, inflation is too low. Well,
Speaker 1: if inflation is too low, why are you trying to
Speaker 1: choke off acond of activity by raising rates. Um. If
Speaker 1: the FED were to to take a much more gradual
Speaker 1: approach to raising rates, uh, standing back letting, letting the
Speaker 1: economy grow more rapidly, that's gonna it's going to have
Speaker 1: to lead to more demand for for workers. That's gonna
Speaker 1: push up on wages and costs for firms, and you're
Speaker 1: gonna get inflation within the model building that we do,
Speaker 1: within the Newtonian mechanics that you are expert at. And frankly,
Speaker 1: we go beyond the work of say Alfred Marshall and
Speaker 1: even Maynard Keynes and and John Hicks as we go
Speaker 1: to modern mathematics. Do we have the tools available given
Speaker 1: the behavioral and demographic realities of our economy? Can you
Speaker 1: dovetail your mathematical world with the d peopling of America,
Speaker 1: with a lack of population growth, with with all sorts
Speaker 1: of inequalities that are out there. Yeah, these are great questions,
Speaker 1: and there's a ton of work going on and all
Speaker 1: these issues, um, you know they uh. The major meetings
Speaker 1: for for economics are gonna be taking place over the
Speaker 1: weekend and there'll be a lot of conversation about exactly
Speaker 1: these kinds of questions. But with all that said, monetary
Speaker 1: policy doesn't really isn't really at the cutting edge of
Speaker 1: all these kinds of issues. It if you see inflation
Speaker 1: too low, it's pretty simple what you have to do,
Speaker 1: keep policy and and and right now what we're seeing
Speaker 1: is the opposite you are, I'll suggest, I mean, and
Speaker 1: this goes to the legacy of Gary Stern in the
Speaker 1: Minneapolis You were wonderfully agnostic in the political debate. There
Speaker 1: is a common ground. I'm just gonna pick on two
Speaker 1: folks between Rick Michigan of Colombia and Charles Plasser out
Speaker 1: of the Carnegie Rochester Freshwater School. They have a lot
Speaker 1: of common ground, and yet they aggressively disagree on whether
Speaker 1: a central bank can get out in front of the
Speaker 1: trend or if by definition they act after the fact.
Speaker 1: What's your experience here is a central bank by definition
Speaker 1: ex post? I think that the it's it's very difficult
Speaker 1: to predict where bad times are going to come from. Always,
Speaker 1: I think the the the job of central banks is
Speaker 1: to be as aggressive as possible in terms of the
Speaker 1: clean up after after bad shocks have taken place. Well,
Speaker 1: I agree that I guess we saw that but it's
Speaker 1: not two thousand and eight, two thousand ten, the intellectual
Speaker 1: courage of Ben Bernanki and other as we came out
Speaker 1: of this crisis, we're now a decade on. So now
Speaker 1: what should be the policy? Uh? Look, I think that um,
Speaker 1: the post you are kind enough are referred to, made
Speaker 1: the point that actually we still see the economy very
Speaker 1: subdued relative where we were ten years ago, and even
Speaker 1: even relatively we were eighteen years ago at the beginning
Speaker 1: of the two thousands, um, And so I think that
Speaker 1: behooves the FED to remain very accommodated with monetary policy. Look,
Speaker 1: it's not a question of trying to make things happen,
Speaker 1: it's a question of not getting in the way of
Speaker 1: things that are happening. So you see this great tax
Speaker 1: bill that Congress passed, and I say great in terms
Speaker 1: of actually trying to improve the growth outcomes for for
Speaker 1: the US, both on the demand side and on the
Speaker 1: supply side. If um, uh that those growth outcomes can
Speaker 1: only materialize if the FED doesn't get in the way
Speaker 1: of them happening by raising rates to rapidly. How do
Speaker 1: you respond to the cocktail of potent chual GDP, that
Speaker 1: is subpar based on new productivity and population realities. If
Speaker 1: Michael Faroli at JP Morgan out of Boost Chicago, if
Speaker 1: Michael Faroli can say it's sub two percent, do you
Speaker 1: adjust your calculus now at the FED or do you
Speaker 1: have to wait until you see the whites of subpar?
Speaker 1: G d p iyes. I think that you know, the
Speaker 1: FED has been adjusting it's it's vision and potentially agree
Speaker 1: with the last over the last eight or nine years.
Speaker 1: And and um, you you'll see in the forecast from
Speaker 1: CEE participants that they they've adjusted their their vision downward.
Speaker 1: But the question is how much downward should you go?
Speaker 1: And how much gap has left? And I I I
Speaker 1: think there's still more room for improvement that can be
Speaker 1: facilitated by monetary policy. Um. The one piece I'll mate
Speaker 1: point on makeoff potential is that that some of the
Speaker 1: things that are in the tax bill and also the
Speaker 1: deregulatory UH initiatives coming out of White House are actually
Speaker 1: aimed at boosting potential output. Okay, but that's something that
Speaker 1: that the fantastic no account This is critical and I
Speaker 1: don't want you know it's a media question. I apologize, professor,
Speaker 1: but I'm gonna go there right now? How do you
Speaker 1: respond when the President United States suggests three percent real
Speaker 1: GDP and some of his supporters get out to four
Speaker 1: percent real GDP? Can we get there given the potential
Speaker 1: calculus we've got right now? So I think it's a
Speaker 1: question of what people mean when they throw those numbers around.
Speaker 1: If they need uh they think that uh potential? Can
Speaker 1: growth can be permanently or even over a decade at
Speaker 1: four percent per year? I'm extremely skeptical, Um, can we
Speaker 1: get there without? Can we get four percent growth for
Speaker 1: a year or even two years without causing undue inflation? Possibly?
Speaker 1: I mean that's a possible issue. And then that becomes
Speaker 1: you know, if you're in the White House, I can
Speaker 1: see why you might want to push on that as
Speaker 1: much as you can. Professor Cutchy Cola, let me ask
Speaker 1: you one final question by requirement, do we need a
Speaker 1: culture lacoda like vice chairman of the Fed? Everybody says
Speaker 1: Chairman Powell has certain constructive attributes, but does he need
Speaker 1: someone that understands Clarida and Gurtler's d s g E.
Speaker 1: Does he need somebody sitting in that vice chairman chair
Speaker 1: that can get through your pH D thesis. Uh. You know,
Speaker 1: I I think that I worked closely with Jay when
Speaker 1: I j Paul when I was on the scene. I
Speaker 1: think that he's a very smart guy. He's able to
Speaker 1: analyze a bunch of the frame I think he understands
Speaker 1: the frameworks well. I think he understands how they come
Speaker 1: to the data. Is is he going to do cutting
Speaker 1: edge research and economics? Now? Do you need a vice
Speaker 1: chair like that? Please? I don't. I don't really think so.
Speaker 1: I think that it's you want someone who the chair.
Speaker 1: The main thing you're gonna want in that position is
Speaker 1: um someone who's gonna be very supportive to the chairs.
Speaker 1: The chair feels comfortable with the chair, feel ols is
Speaker 1: going to be helpful to to him in uh, in
Speaker 1: making their decisions. That might well be somebody who has
Speaker 1: a lot of mathematical firepower, but it might well not be.
Speaker 1: I think it really depends on what on the chair,
Speaker 1: what what what? What? In this case he wants professor,
Speaker 1: thank you so much for joining us today from the
Speaker 1: University of Rochester and Arianna Cultural Dakota. Of course, with
Speaker 1: the mini applos fed a good tour of duty there
Speaker 1: between Gary Stern and Neil Cush Curry a bit ago.
Speaker 1: Why don't you bring in Christian Mamandy, Alright, you don't.
Speaker 1: I don't even know why he showed up for work
Speaker 1: in two thousand and eighteen after Hour International performed last year.
Speaker 1: All right, well, Christian MoManI, thanks very much for being
Speaker 1: with us. Of course, from Oppenheimer Funds, the chief investment officer,
Speaker 1: Happy new year to you. You've written in the past
Speaker 1: or set in the past that the tax overhaul bill
Speaker 1: is going to give us a one time pop. What
Speaker 1: happens after that? So for the markets to get to
Speaker 1: a different level altogether, economic growth has to pick up
Speaker 1: in a meaningful way through increased investments. If this tax
Speaker 1: bill is going to deliver superior growth, in our view,
Speaker 1: that is less likely. What is going to happen is
Speaker 1: you basically have a trillion dollar deficit. That's basically provide
Speaker 1: a fiscal stimulus, and as a result, in the short
Speaker 1: term you'll get a pop in terms of growth. In addition,
Speaker 1: companies would be making more money because they're paying less taxes,
Speaker 1: and as a result, earnings are going to go up.
Speaker 1: Once all of that kind of flushes through the system,
Speaker 1: we're back to the same trend upward trajectory as we
Speaker 1: had before. When you say upward trajectory, upward trajectory of
Speaker 1: what asset prices like stocks? Oh, yes, upward trajectory. Both.
Speaker 1: Growth is going to be at a constant in our
Speaker 1: view around let's say two and change. In that context,
Speaker 1: as the economy grows, profitability grows, asset prices will probably
Speaker 1: continue to trend up. In our view, this is still
Speaker 1: going to be the longest business cycle that any of
Speaker 1: us has ever experienced. We don't expect a recession in
Speaker 1: two thousand and eighteen or two thousand nineteen for that matter.
Speaker 1: Is this really a business cycle or is it a
Speaker 1: credit cycle? Really good? I think that's a that's a
Speaker 1: that's a really good question. I think the business cycle
Speaker 1: and credit cycle at this point are correlated. And because
Speaker 1: this cycle really has been so muted. If the if
Speaker 1: the credit cycle UH has difficulty in some way, that
Speaker 1: is we in a situation where we have problems in
Speaker 1: in credit creation, I think the growth is going to
Speaker 1: slow down. Okay more so than before PIM was old enough.
Speaker 1: We were too young Christian to do this. But if
Speaker 1: we were at Oxford with Johnny Hicks a few years ago,
Speaker 1: and you look at the classic I S l M model.
Speaker 1: What Pim's great question is, are we on the I
Speaker 1: S curve and is that the dynamics we should watch
Speaker 1: the real economy? Or are we on the l M
Speaker 1: curve that strange financial system and money base that we
Speaker 1: work within. What has your attention here that real economy
Speaker 1: or is it the financial dynamics that that reigns supreme
Speaker 1: in two thousand eighteen. So, I think this has been
Speaker 1: a topic of discussion for quite some time, people asserting
Speaker 1: that it's really all funny money, that is, it's because
Speaker 1: of monetary jerrymandering that we are getting the markets to
Speaker 1: a different level. We don't think that is the case.
Speaker 1: That is, if you look at the growth and earnings,
Speaker 1: if you look at the fundamentals of the economy, things
Speaker 1: have improved meaningfully and they continue to improve. In two
Speaker 1: was an eighteen. We think growth is going to be
Speaker 1: better in the US and on a global basis, Earnings
Speaker 1: are going to be better in the US and on
Speaker 1: a global basis, and therefore markets are going to be had.
Speaker 1: A lot of that is already anticipated and therefore price thing.
Speaker 1: So we don't have superlative expectations with respect to the market.
Speaker 1: But I think this is more fundamental driven rather than
Speaker 1: just the LM part that you were talking about. So
Speaker 1: where do you focus your attention in growth stocks? Well, yes,
Speaker 1: we continue to favor growth stocks. We some expectations in
Speaker 1: the market is that we'll get back to the value
Speaker 1: band wagon soon. I I don't think that is the case.
Speaker 1: For that to happen, rates have to move up meaningfully higher,
Speaker 1: inflation expectations have to go up meaningfully higher. We don't
Speaker 1: think that happens. Uh. You know, the things to watch
Speaker 1: in that regard would be if the investment cycle picked
Speaker 1: up in a meaningful way. Again, we don't think that
Speaker 1: is going to be the case. So we are still
Speaker 1: focused on growth stocks, and we are from a geographic standpoint,
Speaker 1: we have far more folks in international and emerging markets
Speaker 1: than in the US. Christian. If I go to Davos,
Speaker 1: which I am here in a number of weeks, there
Speaker 1: are gonna be buses plastered with there's gonna be an
Speaker 1: infrastructure boom and pick kazakhstand This morning, Jonathan Mahler in
Speaker 1: New York Magazine writes a definitive article Excuse me, New
Speaker 1: York Times Magazine, The definitive article on the case for
Speaker 1: the subway. I'm building the subway, and you know all
Speaker 1: that I mean is infrastructure part of the investment cycle
Speaker 1: that I could be in domestically and international. So internationally,
Speaker 1: investments are actually slowing rather than accelerating, primarily because of
Speaker 1: slowdown in investments in the places like China, which have
Speaker 1: been booming for quite some time. They are moving to
Speaker 1: a consumer driven economy. What you're talking about is really
Speaker 1: an infrastructure boom. Uh. In the US, I wish that
Speaker 1: was the case. I wish the billion or the trillion
Speaker 1: dollars that we spent on tax cuts was spent actually
Speaker 1: in infrastructure, because that would have revived the U s
Speaker 1: economy and potentially gotten us to a different level from
Speaker 1: a growth perspective. We're thrilled to have with his Christian
Speaker 1: Mormoney it Oppenheimer Funds. Full disclosure, folks, Oppenheimer Funds has
Speaker 1: been more than supportive of all we do, your Bloomberg
Speaker 1: Radio and Bloomberg surveillance. Uh, Christian, we've had a bang
Speaker 1: up year. As we mentioned earlier. How do you find companies?
Speaker 1: I mean, do you make sector bets on Indonesia? Do
Speaker 1: you go long Indonesia like the game of risk from
Speaker 1: our childhood or does somebody out there, some thirty two
Speaker 1: year old young Turk at Oppenheimer Funds, do they find
Speaker 1: a mom and pop business forwarded miles from Jakarta and
Speaker 1: say this looks good, how do you actually do it?
Speaker 1: So for investing in emerging markets, for that matter, investing anywhere,
Speaker 1: we are more companies specific rather than geography. So the
Speaker 1: best example of that is probably China. If you want
Speaker 1: to invest in China, you don't want to invest in
Speaker 1: a Chinese steel company, despite the fact that Chinese steel
Speaker 1: companies probably the largest part of the Chinese economy. You
Speaker 1: really want to invest in Chinese consumers, the internet companies
Speaker 1: who are doing fantastic things in terms of creating new
Speaker 1: businesses and opportunities. So for us, it's all about companies,
Speaker 1: and then we aggregated up to a level that that
Speaker 1: we look at, but it's really about companies rather than geography. Okay,
Speaker 1: So in the time of Method two, in this historic
Speaker 1: day for Global Wall Street, it's based on by side
Speaker 1: like Oppenheimer Funds or sell side traditional sell side research.
Speaker 1: Do you need sell side research in the future or
Speaker 1: is that can become less dominant for her Christian Mamani
Speaker 1: by side animals. Well, so you know, at the end
Speaker 1: of the day, if we simply rely on sales side research,
Speaker 1: then we basically would be part of the consensus because
Speaker 1: there are lots of consumers of that reason, So we
Speaker 1: we we really focused on doing all of our things.
Speaker 1: Our investment philosophy is really focusing on long term trends.
Speaker 1: You know, we have stocks that we have owned for
Speaker 1: twenty thirty years because if it's a particular approach and philosophy,
Speaker 1: so we focus on finding those opportunities and companies that
Speaker 1: can take advantage of those. You'll remember this the way
Speaker 1: you played Mexico hosted by t Max. Yeah, I mean
Speaker 1: that's what you used to do, Christian. You'd buy the
Speaker 1: big telephone company or the big concrete company. Writing those
Speaker 1: days are over, Christian, I just want to push a
Speaker 1: little bit here. Okay, I got the idea of China
Speaker 1: and the consumers, So in my mind I immediately think
Speaker 1: Ali bobba symbol B A B A. That's not hard
Speaker 1: if you decide that Ali Bob is going to be
Speaker 1: sticking around and going to benefit from ink respending from
Speaker 1: the Chinese consumer, Why do I need Oppenheimer to tell
Speaker 1: me that the stock is up a d from last
Speaker 1: December from December. Why wouldn't I just stick with Ali
Speaker 1: Baba and call it a day. If you have the
Speaker 1: capability of going out and finding those opportunities, but not
Speaker 1: finding those opportunities, I mean finding this opportunity, right, I mean,
Speaker 1: Ali Baba's plastered over every story that you write or
Speaker 1: here when it comes to China, I mean, we we
Speaker 1: got it, Ali Baba, jack mass success story, fabulous stocks
Speaker 1: up seven and a p this year so far, and
Speaker 1: I mean so I'm wondering, why make it more complicated? Well,
Speaker 1: we we like Ali Baba too, but our point would
Speaker 1: be that there are better opportunities than just Ali Baba.
Speaker 1: What do you want to do is find Ali Baba
Speaker 1: five years ago so or finding ten then ten years ago.
Speaker 1: So it's really not focusing on names that we all
Speaker 1: know about. It's really focusing on names that have the
Speaker 1: potential of becoming names that we will eventually know about.
Speaker 1: So that means that you were you were invested in
Speaker 1: Ali Baba way back for example. Absolutely, we have been
Speaker 1: invested in Ali Baba from the I P O and
Speaker 1: we invest in some private companies long before the I
Speaker 1: p R. So, yes, we go out and talk to
Speaker 1: I was actually in China three weeks ago meeting all
Speaker 1: of these little companies that that kind of are creating
Speaker 1: new businesses. So tell us about the best new business,
Speaker 1: the best small business that you met with three weeks ago. Well,
Speaker 1: so you know, we we met with a car hailing company,
Speaker 1: the competitor for uber in in in in China, and
Speaker 1: they are delivering almost let's say, twenty million rides right here.
Speaker 1: It's a private company, and we are invested in it
Speaker 1: as a private company, along with all sorts of really
Speaker 1: good investors like soft Bark and Alive Baba and and
Speaker 1: having getting access to these types of opportunity would be yes,
Speaker 1: that would be exactly d D. All Right, so you
Speaker 1: you met with you met with d D and you said,
Speaker 1: this is a company that we love. Is there any pushback?
Speaker 1: I mean, what do you mean? I guess right, hearing,
Speaker 1: but I mean, you know, Hubert doesn't make any money,
Speaker 1: and d D is investing money in places like Brazil
Speaker 1: and buying bike sharing programs. Well, so you know clearly
Speaker 1: they are investing in lots of new opportunities. But there
Speaker 1: their current business in China, and even their business in
Speaker 1: Brazil is actually getting to a much better level than
Speaker 1: their their comparis. The point isn't that that we we
Speaker 1: uh we invested in d D because the point returning up,
Speaker 1: you know, positive. The point is you basically have to
Speaker 1: tap into the ecosystem. We met a company there, for example,
Speaker 1: that is actually trying to do the same thing that
Speaker 1: the car healing companies did for ride sharing into the
Speaker 1: half truckload transportation in China, which is a fantastic opportunity
Speaker 1: where you can distant media a whole lot of local
Speaker 1: brokers and create a create a good business. Then if
Speaker 1: you can get to that in an early stage enough,
Speaker 1: you can you can do very well. Thanks so much,
Speaker 1: Christian Mamati greatly greatly appreciate it. With Oppenheimer Funds a
Speaker 1: good briefing there on some of the block and tackle
Speaker 1: because all of this on the backdrop of MIVID too. Okay,
Speaker 1: the stereotype, the myth Texas is Republican. That's begin with
Speaker 1: a little history. Lyndon Baines Johnson twenty three seats in
Speaker 1: the Texas Delegation, the explosion of the Texas economy. It
Speaker 1: brings us out to thirty six seats today and the
Speaker 1: stereotype and myth is they're all Republican. You know the story.
Speaker 1: Will Heard knows that is not true. He's a congressman
Speaker 1: from a twenty three district, thinks San Antonio, his district
Speaker 1: is Hispanic and he won barely within that closely contested
Speaker 1: twenty three district and he joins US right now. Thomas
Speaker 1: Cogsman heard wonderful to uh speak to you. I know,
Speaker 1: my colleague Pim Fox wants to talk to you about
Speaker 1: the fractious nature of your district. I want to talk
Speaker 1: about your skill set. Out of Texas A and M.
Speaker 1: You became a c I, a employee and operations officer.
Speaker 1: Does the President of the United States from your party,
Speaker 1: does he understand what our intelligence community does? Um? He
Speaker 1: does understand what the intelligence community does. A selection of
Speaker 1: a guy like Mike Pompeo to run the CIA, he's
Speaker 1: a real professional and it knows what he's doing. Sellecting
Speaker 1: a guy like General Maddis to head d O D,
Speaker 1: which has you know, significant intelligence operation and UM is important.
Speaker 1: And while you know I probably wouldn't be tweeting about
Speaker 1: some of the things that our federal law enforcement or
Speaker 1: intelligence communities aren't involved in the rank and file. The
Speaker 1: folks that do the job that I used to do. Um,
Speaker 1: they don't listen to the nonsense in the belt Way. Um.
Speaker 1: They're they're quiet professionals that go on and do their job.
Speaker 1: You people. And we feature the people that have died
Speaker 1: for the Federal Bureau of Investigation and Frank and folks.
Speaker 1: There's a lot of people that are Central Intelligence Agency.
Speaker 1: If you know, if they died, we never hear about it.
Speaker 1: Within this is centered the Justice Department is the president's
Speaker 1: interpretation of how justice works. Is it appropriate or does
Speaker 1: he need to find a new techt for two thousand eighteen? Um?
Speaker 1: I think the Department of Justice should be you know, independent, Um.
Speaker 1: One of the folks that should be looking out and
Speaker 1: making sure the Justice Department is doing everything properly. Is
Speaker 1: is the is Congress. Um. That's why we have an
Speaker 1: oversight role. Um. But we also can't just think that
Speaker 1: d o J and the political leadership of d o
Speaker 1: J are always going to do the right thing. Um,
Speaker 1: and so so having overside over them is important. UM.
Speaker 1: And that's why Congress has that responsibility. UM. You know
Speaker 1: d o j's ability to investigate Americans to UM get
Speaker 1: you know, fis a collection that's foreign intelligence, UM collection
Speaker 1: on Americans. It's you know, we got to make sure
Speaker 1: that they're following and protecting Americans Fourth Amendment rights and
Speaker 1: that they're crossing all their teas and and dotting all
Speaker 1: the eyes. So UM, there should always be a healthy
Speaker 1: a healthy at tension, UM, and we should always be
Speaker 1: making sure um that because you know there are you know,
Speaker 1: I always say I've gotten the honor of serving side
Speaker 1: by side with many men and women in in the FBI.
Speaker 1: And the reason that we haven't had another attack on
Speaker 1: a homeland like that we saw in at the Pentagon
Speaker 1: and the Twin Towers in New York back in two
Speaker 1: thousand and one is because these current professionals are out
Speaker 1: doing their job every single day. UM. But again, we
Speaker 1: got to make sure that we're all crossing the teas
Speaker 1: and dotting dotting the ice. Congressman, you and your colleagues
Speaker 1: are going to have to vote on a resolution on
Speaker 1: a bill to keep the government open. I believe the
Speaker 1: deadline is January the UH. If the President insists on
Speaker 1: funding for the border wall, can you give us some
Speaker 1: thoughts about your position because I believe that you have
Speaker 1: already gone on the record to say that a wall
Speaker 1: between the United States and Mexico on our southern border
Speaker 1: is a third century solution to a century problem. Um.
Speaker 1: That that's pretty accurate. I think building a thirty foot
Speaker 1: high concrete structure that takes four hours to penetrate from
Speaker 1: sea to shining sea is the most expensive and least
Speaker 1: of active way to do border security. Um. It's we
Speaker 1: do not do not have operational control of our border.
Speaker 1: And the reason we don't is because we don't look
Speaker 1: at all two thousand miles of our southern border at
Speaker 1: the same time. And the only way to do that
Speaker 1: is with technology. And so I I favor a smart
Speaker 1: wall or a smart solution to border security that relies
Speaker 1: on technology. Now, there are some places that a physical
Speaker 1: barrier makes sense, um, where there's urban urban contact. You know,
Speaker 1: something along the lines of some of the physical barriers
Speaker 1: that are already um in existence makes a little bit
Speaker 1: more sense. Um. But this is you know, border security
Speaker 1: is is going to be part of the debate as
Speaker 1: we look forward to funding the government and in the
Speaker 1: next couple of weeks. And I think, um, I hope
Speaker 1: the only way we're going to solve some of these
Speaker 1: problems is by working together across party lines, and um,
Speaker 1: I think we can we can get there. Sometimes a
Speaker 1: rhetoric what you see on social media on TV is
Speaker 1: not always there. But behind closed doors, UM, there's a
Speaker 1: lot of good conversations going on. Well, could you give
Speaker 1: us some idea of what some of those good conversations
Speaker 1: are because if you look at the votes that have
Speaker 1: taken place in Congress in there's no bipartisan anything. Uh, well,
Speaker 1: I would I would disagree with that. I think probably
Speaker 1: one of the biggest things that we did was something
Speaker 1: that we have to do every year, the National Defense
Speaker 1: Authorization Act UM, which authorizes, uh, you know, the activity
Speaker 1: of our military. It gave the largest raise to our
Speaker 1: military in in eight years. UM. You know piece of
Speaker 1: legislation that I work on dealing with I T procurement
Speaker 1: um is something that is that was included in that.
Speaker 1: So so there there, there are. There are some of
Speaker 1: those examples, um in um that we've seen in but
Speaker 1: but we need more and and I actually believe, you know,
Speaker 1: in a district like mine, UM, folks want to see
Speaker 1: us come up here and actually get things done. Um.
Speaker 1: And and not just have these food fights we just had. Congressman,
Speaker 1: if you're just joining us here, we're thrilled to speak
Speaker 1: to the Congress. Fro from the twenty three district of
Speaker 1: Texas is along the southern border up to San Antonio
Speaker 1: as well. His name is William will heard out of
Speaker 1: Texas saying him a few years ago and a former
Speaker 1: operations officer with the CIA as well. Congressman heard, I
Speaker 1: believe we just passed tax legislation. I believe somebody in
Speaker 1: New Jersey or Connecticut is hammered by the inability to
Speaker 1: deduct a good portion of state and local taxes. I
Speaker 1: think the same thing maybe is gonna happen in Del Rio,
Speaker 1: Texas to people that are very financially successful. How is
Speaker 1: the tax bill played on the border with Del Rio
Speaker 1: or the fat cats of San Antonio. Are they as
Speaker 1: livid as the people in New Jersey? No, they're not
Speaker 1: um and And the bottom line is was when you
Speaker 1: really start getting into the details, this is something that's
Speaker 1: could have benefit all Americans in my district. Of the
Speaker 1: folks in the district, UM do not itemize, so they
Speaker 1: fill out to say pretty easy. So if you're filling
Speaker 1: out the ten forty easy and the you UM have
Speaker 1: UM the standard deduction doubling, and that's a pretty big deal.
Speaker 1: I think a lot of people don't understand what the
Speaker 1: standard deduction is, and when he started explaining it to them,
Speaker 1: they get it. You know, Folks like my brother. He's
Speaker 1: gonna be able to buy a whole lot more diapers
Speaker 1: for his his twin girls that are you know, about
Speaker 1: to be about to be too. And when you look
Speaker 1: at the impact that this has on business, you know,
Speaker 1: we've seen the number of of business, you know, corporations
Speaker 1: that have increased hiring, that are talking about the investment
Speaker 1: they're gonna be doing in in UM in their businesses.
Speaker 1: We're seeing small businesses being able to take advantages from
Speaker 1: the pastors. What about you, how do you find a
Speaker 1: common ground with Mr Smith the fourth District of New Jersey.
Speaker 1: You're both Republicans? Do you just throw Chris Smith under
Speaker 1: the bus? Now? I look, I think it goes down
Speaker 1: to every individual person, right, And I think when you
Speaker 1: look at some of these high net worth individuals that
Speaker 1: are in UM New Jersey or New York City, when
Speaker 1: you look at you know, much of their income is
Speaker 1: probably coming through UM. You know escorts or they're they're
Speaker 1: gonna see benefits in other ways. And so I think
Speaker 1: really drilling down into the details on an individual is
Speaker 1: is the most important thing and the way people are
Speaker 1: going to see this realized. One of the things I'm
Speaker 1: nervous about, you know, in in looking at the impact
Speaker 1: two jobs in our economy and the markets, is what
Speaker 1: we're gonna do with NAFTA. Um. That's something that hasn't
Speaker 1: been talked about enough. Um. The one way to screw
Speaker 1: up the markets, the run the markets are on is
Speaker 1: screwing up. Here's here's what we're gonna do. We're gonna
Speaker 1: get you back on again soon. Congress heard to talk
Speaker 1: about NAFTA. We've been unfair enough to bring that up
Speaker 1: with you with your district on the border. Will heard
Speaker 1: the twenty three district of Texas a Republicans Pim Fox
Speaker 1: of surveillance. Bad phone just lit up like a candle.
Speaker 1: You think it's just the lights. We gotta yeah, we
Speaker 1: gotta get impact on a lot of interesting stuff to
Speaker 1: talk about. But when he said there about Christmas in
Speaker 1: the fourth District of New Jersey, is the whole debate. Yeah,
Speaker 1: people need to have money in order to spend money.
Speaker 1: I think that was great. Will heard from Texas. Thank
Speaker 1: you so much for being with us. Thanks for listening
Speaker 1: to the Bloomberg Surveillance podcast. Subscribe and listen to interviews
Speaker 1: on Apple Podcasts, SoundCloud, or whichever podcast platform you prefer.
Speaker 1: I'm on Twitter at Tom Keane before the podcast. You
Speaker 1: can always catch us worldwide. I'm Bloomberg Radio