1 00:00:00,240 --> 00:00:04,040 Speaker 1: Runt You by Bank of America Mary Lynch. With virtual reality, 2 00:00:04,320 --> 00:00:09,719 Speaker 1: virtually everything will change. Discover opportunities in a transforming world 3 00:00:10,160 --> 00:00:14,440 Speaker 1: VI of a mL dot Com slash VR, Mary Lynch, 4 00:00:14,520 --> 00:00:28,120 Speaker 1: Pierced Fenner and Smith Incorporated. Ye. Welcome to the Bloomberg 5 00:00:28,160 --> 00:00:32,320 Speaker 1: Surveillance Podcast. I'm Tom Keene with David Gura. Daily we 6 00:00:32,440 --> 00:00:36,080 Speaker 1: bring you insight from the best of economics, finance, investment, 7 00:00:36,120 --> 00:00:42,200 Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, 8 00:00:42,280 --> 00:00:50,160 Speaker 1: Bloomberg dot Com, and of course on the Bloomberg. Let's 9 00:00:50,200 --> 00:00:52,599 Speaker 1: kick things off with Brian Levitt, senior investment strategist at 10 00:00:52,600 --> 00:00:55,080 Speaker 1: Oppenhammer Funds. He joins us here in our Bloomberg eleven 11 00:00:55,080 --> 00:00:57,000 Speaker 1: three oh studios. Great to have you, Thank you. Good 12 00:00:57,040 --> 00:00:58,280 Speaker 1: Martin with us so much here that we could we 13 00:00:58,280 --> 00:00:59,920 Speaker 1: could talk about Le's see where it t Let's start 14 00:00:59,920 --> 00:01:02,760 Speaker 1: with job stay tomorrow. Fascinating interview with James Gorman and 15 00:01:02,800 --> 00:01:06,200 Speaker 1: Morgan Stanley yesterday on Bloomberg Television. Our colleague Tom McKenzie 16 00:01:06,240 --> 00:01:08,800 Speaker 1: and in beating speaking with with him, and he said, quote, 17 00:01:09,040 --> 00:01:11,120 Speaker 1: the dirty little secret here is the US economy is 18 00:01:11,160 --> 00:01:13,959 Speaker 1: doing just fine. From where you sit when you look 19 00:01:14,000 --> 00:01:16,280 Speaker 1: at the U S economy. Is it just fine? It 20 00:01:16,440 --> 00:01:19,080 Speaker 1: is just fine, and it's been just fine for a 21 00:01:19,120 --> 00:01:22,440 Speaker 1: long period of time. Now I think by now investors 22 00:01:22,440 --> 00:01:24,920 Speaker 1: would have hoped for better than just fine. And I 23 00:01:24,959 --> 00:01:27,480 Speaker 1: think you know, the U. S. Election, when we heard 24 00:01:27,520 --> 00:01:30,440 Speaker 1: candidate Trump speak on the campaign trail, he would talk 25 00:01:30,520 --> 00:01:34,760 Speaker 1: of three four or five percent GDP growth, and you know, 26 00:01:34,760 --> 00:01:36,800 Speaker 1: in the aftermath of the election, there was hopes for 27 00:01:36,920 --> 00:01:40,800 Speaker 1: tax cuts, fiscal stimulus and the like, and you know, again, 28 00:01:40,840 --> 00:01:43,200 Speaker 1: three four or five percent GDP growth. The reality is 29 00:01:43,200 --> 00:01:45,800 Speaker 1: in the first quarter the US grew at something like 30 00:01:45,840 --> 00:01:48,880 Speaker 1: one point two percent on an annualized basis. And in 31 00:01:48,920 --> 00:01:51,560 Speaker 1: general we've been saying it's a two percent economy. And 32 00:01:52,000 --> 00:01:54,760 Speaker 1: you know, a two percent economy has been quite good 33 00:01:54,840 --> 00:02:00,640 Speaker 1: for equities, but for workers, Um, most people that want 34 00:02:00,720 --> 00:02:03,720 Speaker 1: jobs generally confined them are there? Are there wages going up? 35 00:02:03,840 --> 00:02:07,559 Speaker 1: Not significantly? So just find David, I think is right. 36 00:02:08,080 --> 00:02:10,800 Speaker 1: You're right that the FED is an a predicament. It's 37 00:02:10,840 --> 00:02:13,160 Speaker 1: an interesting predicament here going into the next MCY meeting 38 00:02:13,120 --> 00:02:15,920 Speaker 1: in June. What are policy makers wrestling with and how 39 00:02:15,919 --> 00:02:19,840 Speaker 1: do you think that's gonna come out? So there's the 40 00:02:19,840 --> 00:02:22,560 Speaker 1: there's a psyche. There was a psyche of zero percent, 41 00:02:22,600 --> 00:02:25,040 Speaker 1: there's sort of now there's like the psyche of one percent. 42 00:02:25,200 --> 00:02:28,280 Speaker 1: The reality is, at some point in the future the 43 00:02:28,320 --> 00:02:30,640 Speaker 1: United States is going to have an economic cycle again, 44 00:02:30,760 --> 00:02:34,800 Speaker 1: and so the Fed would like to have room to 45 00:02:35,040 --> 00:02:39,040 Speaker 1: reduce rates for the next recession, next economic cycle. Here's 46 00:02:39,080 --> 00:02:41,359 Speaker 1: the rub. The problem is the FEDS looking at this 47 00:02:41,440 --> 00:02:45,000 Speaker 1: and saying an unemployment rate below five percent, wages growing 48 00:02:45,040 --> 00:02:47,960 Speaker 1: to two and a half percent, credit spreads are tight, 49 00:02:48,040 --> 00:02:51,320 Speaker 1: the dollars weaker. You know, we're not seeing big capital 50 00:02:51,440 --> 00:02:54,720 Speaker 1: outflows from the emerging market, so why not now? When 51 00:02:54,760 --> 00:02:57,960 Speaker 1: else can we do it? The problem is that the 52 00:02:58,000 --> 00:03:00,639 Speaker 1: long term bond market is not latching on to any 53 00:03:00,680 --> 00:03:03,320 Speaker 1: type of reflation trade. So two point two percent on 54 00:03:03,360 --> 00:03:06,120 Speaker 1: a ten year treasury is consistent with a two percent 55 00:03:06,160 --> 00:03:10,000 Speaker 1: real GDP economy, and there's not that many times you 56 00:03:10,000 --> 00:03:13,360 Speaker 1: can raise rates further without further flattening the yeld curve 57 00:03:13,440 --> 00:03:16,919 Speaker 1: or maybe god forbid, inverting the yield curve, which would 58 00:03:16,960 --> 00:03:19,160 Speaker 1: be a harbinger of worse things to come. So that's 59 00:03:19,200 --> 00:03:21,440 Speaker 1: the rub. As you listen to the course of committee 60 00:03:21,440 --> 00:03:24,160 Speaker 1: members Robert Kaplan talking to Tom yesterday, the counseling for 61 00:03:24,240 --> 00:03:27,400 Speaker 1: Relations level. Brandard speaking earlier this week, the most de 62 00:03:27,480 --> 00:03:30,160 Speaker 1: wish of the doves UH is their consensus forming here 63 00:03:30,200 --> 00:03:31,720 Speaker 1: do you do you think you have a good sense 64 00:03:31,760 --> 00:03:33,280 Speaker 1: from what they've been saying of what the Fed is 65 00:03:33,280 --> 00:03:34,640 Speaker 1: going to do when it comes to the balance sheeter 66 00:03:34,680 --> 00:03:36,840 Speaker 1: when it comes to the next rate increase, Well, I 67 00:03:36,840 --> 00:03:38,720 Speaker 1: don't think we see consensus. If you look at the 68 00:03:38,760 --> 00:03:42,640 Speaker 1: FED dot plot for mid eighteen, it's it's a huge 69 00:03:42,720 --> 00:03:47,160 Speaker 1: band and the medians probably around two percent. So unless 70 00:03:47,280 --> 00:03:50,560 Speaker 1: you get the long term bond yields up with either 71 00:03:50,680 --> 00:03:55,240 Speaker 1: some stimulus or heightened inflation expectations, it's gonna be hard 72 00:03:55,400 --> 00:03:59,240 Speaker 1: to get FED funds to two percent, especially when you're 73 00:03:59,280 --> 00:04:02,640 Speaker 1: trying to scale down a four trillion dollar balance sheet. Now, 74 00:04:02,920 --> 00:04:05,400 Speaker 1: I don't think that the four You know, in early 75 00:04:05,440 --> 00:04:07,240 Speaker 1: on it was what's gonna happen when they have to 76 00:04:07,280 --> 00:04:09,840 Speaker 1: sell all these mortgages and treasuries into the market, and 77 00:04:09,880 --> 00:04:13,160 Speaker 1: that's going to be massively disruptive. That's not going to happen, 78 00:04:13,480 --> 00:04:15,720 Speaker 1: not at you know, two percent inflation or one and 79 00:04:15,720 --> 00:04:18,360 Speaker 1: a half percent inflation. What's going to happen is those 80 00:04:18,360 --> 00:04:20,400 Speaker 1: securities are going to mature, and the Fed's not going 81 00:04:20,480 --> 00:04:24,000 Speaker 1: to reinvest principle. We've never really done that before. The 82 00:04:24,080 --> 00:04:27,719 Speaker 1: history books didn't teach this, so it's it's on precedented. 83 00:04:27,920 --> 00:04:30,280 Speaker 1: So I think the Fed is going to be cautious 84 00:04:30,320 --> 00:04:34,120 Speaker 1: on FED funds more deblish than expected as they scale 85 00:04:34,120 --> 00:04:36,480 Speaker 1: back the balance sheet. Brian love it with this with 86 00:04:36,520 --> 00:04:38,440 Speaker 1: the Uppenheimer. You know, I've been you and I've had 87 00:04:38,480 --> 00:04:40,800 Speaker 1: fun this morning talking about to see if the exam. 88 00:04:40,839 --> 00:04:43,400 Speaker 1: Good morning to all of you taking the the what 89 00:04:43,520 --> 00:04:50,440 Speaker 1: is it like four million people take the exam? Kidding anyways, 90 00:04:50,480 --> 00:04:51,960 Speaker 1: you know we'll talk a lot about this is We're 91 00:04:51,960 --> 00:04:54,120 Speaker 1: gonna job to day tomorrow to see if exams on 92 00:04:54,200 --> 00:04:58,279 Speaker 1: Saturday is well. One of the great fundamentals here of 93 00:04:58,320 --> 00:05:02,280 Speaker 1: those exams is linking equity markets to bond markets. The 94 00:05:02,360 --> 00:05:04,839 Speaker 1: fact is, as you mentioned, it's not in the textbooks. 95 00:05:05,279 --> 00:05:07,840 Speaker 1: You can't do that now because you don't know where 96 00:05:07,839 --> 00:05:10,600 Speaker 1: the risk free rate is. So what are your portfolio 97 00:05:10,680 --> 00:05:14,320 Speaker 1: managers do? Well? I think it's I think simplistically, we 98 00:05:14,360 --> 00:05:17,440 Speaker 1: can still look at the earnings yield of the broad 99 00:05:17,560 --> 00:05:20,239 Speaker 1: market and compare it to a ten year treasury rate. Now, 100 00:05:20,480 --> 00:05:22,600 Speaker 1: you know, people like to look at price over earnings. 101 00:05:22,600 --> 00:05:25,479 Speaker 1: You flip that over earnings over price. I don't have 102 00:05:25,520 --> 00:05:28,240 Speaker 1: the exact numbers, but say the SMP five hundreds at 103 00:05:28,279 --> 00:05:32,560 Speaker 1: two hundred earnings are around a hundred and ten. We 104 00:05:32,680 --> 00:05:35,039 Speaker 1: call that a five percent earnings yield, give or take. 105 00:05:35,120 --> 00:05:36,719 Speaker 1: For those that can do the math in their heads, 106 00:05:37,040 --> 00:05:39,159 Speaker 1: I like that more than two point two percent on 107 00:05:39,160 --> 00:05:43,279 Speaker 1: a treasury yield. So it's unlikely that a bull market 108 00:05:43,279 --> 00:05:46,240 Speaker 1: in equities is going to end with stocks being this 109 00:05:46,400 --> 00:05:49,480 Speaker 1: cheap to bond. Stocks historically are a better asset class 110 00:05:49,480 --> 00:05:52,240 Speaker 1: than bonds. I think over any five year period, stocks 111 00:05:52,240 --> 00:05:54,960 Speaker 1: outperformed bonds about eighty five percent of the time. So 112 00:05:55,880 --> 00:05:58,480 Speaker 1: I think we can still look at that. You know, 113 00:05:59,480 --> 00:06:01,960 Speaker 1: the short of having a risk free rate you can consider. 114 00:06:02,040 --> 00:06:05,320 Speaker 1: Some might say the ten year rate is too low. Um, 115 00:06:05,360 --> 00:06:07,880 Speaker 1: it's been overbought. I would say compare it to the 116 00:06:07,880 --> 00:06:10,560 Speaker 1: nominal growth rate of the economy. Even at two percent 117 00:06:10,680 --> 00:06:12,680 Speaker 1: real yield, Even if you can get one and a 118 00:06:12,760 --> 00:06:16,120 Speaker 1: half two percent of two percent real growth, even if 119 00:06:16,120 --> 00:06:18,280 Speaker 1: you can get one and a half two percent inflation, 120 00:06:18,760 --> 00:06:21,680 Speaker 1: stocks are still cheap to nominal growth. In this country. 121 00:06:22,120 --> 00:06:24,280 Speaker 1: You see catalysts on the horizon, things that could kick 122 00:06:24,320 --> 00:06:28,240 Speaker 1: start econmy change the curved to something different. I mean, 123 00:06:28,279 --> 00:06:30,920 Speaker 1: how how pasimistic are you about seeing a catalyst in 124 00:06:30,920 --> 00:06:34,599 Speaker 1: the near term. I think it's increasingly unlikely. I think 125 00:06:34,640 --> 00:06:37,919 Speaker 1: it's you know, tax reform is difficult, even in the 126 00:06:37,960 --> 00:06:42,159 Speaker 1: best political environments. Um, even when Reagan got tax reform 127 00:06:42,240 --> 00:06:47,120 Speaker 1: two years after his historic electoral College landslide, there were 128 00:06:47,160 --> 00:06:50,719 Speaker 1: an awful number There are a large number of Democrats 129 00:06:50,839 --> 00:06:53,279 Speaker 1: that were involved in that tax reform, including people like 130 00:06:53,320 --> 00:06:56,760 Speaker 1: Bill Bradley. So you know, these things are difficult, They're 131 00:06:56,760 --> 00:07:00,240 Speaker 1: hard to do, and we're dealing with the reality ease 132 00:07:00,360 --> 00:07:03,359 Speaker 1: of governing right now, and those realities never go away 133 00:07:03,680 --> 00:07:05,599 Speaker 1: even with single party where all do you deal with 134 00:07:05,640 --> 00:07:07,960 Speaker 1: the realities of just figuring out what's going on or 135 00:07:08,040 --> 00:07:10,920 Speaker 1: not going on In Washington, d C. We're talking with 136 00:07:10,960 --> 00:07:12,600 Speaker 1: a Stan Collinder, who is an expert on the federal 137 00:07:12,600 --> 00:07:14,400 Speaker 1: budget yesterday and he was up in here in New 138 00:07:14,480 --> 00:07:16,239 Speaker 1: York being with clients, and he said he's just astanded 139 00:07:16,280 --> 00:07:18,760 Speaker 1: by the disconnect between New York and Washington, and uh, 140 00:07:18,800 --> 00:07:20,440 Speaker 1: you know how there has been so much optimism that 141 00:07:20,440 --> 00:07:23,080 Speaker 1: things are going to happen in Washington when he's pessimistic 142 00:07:23,120 --> 00:07:25,800 Speaker 1: that they that anything's gonna happen. How do you deal 143 00:07:25,840 --> 00:07:27,320 Speaker 1: with that? How do you keep apprized of what's going on? 144 00:07:27,360 --> 00:07:29,400 Speaker 1: How do you how do you develop the calculus to 145 00:07:29,440 --> 00:07:31,200 Speaker 1: understand what's going on. Well, the first thing I said, 146 00:07:31,200 --> 00:07:33,160 Speaker 1: and I think I've said this on this program before, 147 00:07:33,160 --> 00:07:35,560 Speaker 1: is that hating the government is not an investment strategy. 148 00:07:35,640 --> 00:07:37,960 Speaker 1: So I said that during the Obama administration. I'm now 149 00:07:38,000 --> 00:07:41,360 Speaker 1: saying that during the Trump administration. The reality is, if 150 00:07:41,400 --> 00:07:44,120 Speaker 1: you go back to the Kennedy administration, markets actually do 151 00:07:44,240 --> 00:07:47,000 Speaker 1: better when the president's approval rating is below fifty. So 152 00:07:47,240 --> 00:07:50,280 Speaker 1: we don't have the I did not know that we 153 00:07:50,360 --> 00:07:52,560 Speaker 1: don't have to like the president for the markets to 154 00:07:52,640 --> 00:07:56,520 Speaker 1: go up. Did you take that from CF level? It's 155 00:07:56,520 --> 00:07:58,720 Speaker 1: really I did not know that. That's amazing. It is 156 00:07:58,760 --> 00:08:00,560 Speaker 1: on the test and my colleague on the other side 157 00:08:00,560 --> 00:08:03,400 Speaker 1: of the glasses studying right now, So so are you 158 00:08:03,480 --> 00:08:06,880 Speaker 1: really studying in there? We have a bulletproof glass between us, 159 00:08:07,160 --> 00:08:10,280 Speaker 1: say sometimes fire Artis and ken Felli will get the 160 00:08:10,600 --> 00:08:13,040 Speaker 1: get the sub machine. Can we drop his name, Tom please? 161 00:08:13,160 --> 00:08:15,000 Speaker 1: Drew Thornton on the other side of the glass, he 162 00:08:15,080 --> 00:08:18,400 Speaker 1: is studying for the Level four derivatives how about forward 163 00:08:18,440 --> 00:08:22,840 Speaker 1: market forge? Okay, so you know, I think for investors, 164 00:08:22,840 --> 00:08:26,400 Speaker 1: for investors that have a broad, long term, consistent investment plan, 165 00:08:26,720 --> 00:08:29,480 Speaker 1: they should not get caught up too much in the 166 00:08:29,520 --> 00:08:33,000 Speaker 1: political theater taking place in DC investors trying to figure 167 00:08:33,040 --> 00:08:35,560 Speaker 1: out it. From an earnings perspective, we should be looking 168 00:08:35,600 --> 00:08:39,520 Speaker 1: from the bottom up. We should not be expecting broad 169 00:08:39,679 --> 00:08:43,480 Speaker 1: stimulus of the fiscal kind that we haven't seen probably 170 00:08:43,480 --> 00:08:46,160 Speaker 1: since two thousand nine to be the driver of earnings 171 00:08:46,200 --> 00:08:48,319 Speaker 1: going forward. Just turn to the FED here quickly and 172 00:08:48,520 --> 00:08:51,199 Speaker 1: the balance sheet as they wind that down. Do you 173 00:08:51,200 --> 00:08:53,040 Speaker 1: think it's gonna happen fairly, stamelessly? Do you think that 174 00:08:53,040 --> 00:08:55,480 Speaker 1: they are going to communicate adequately about what's going what's 175 00:08:55,480 --> 00:08:57,439 Speaker 1: your what's your what are your expectations about how it's 176 00:08:57,440 --> 00:09:00,360 Speaker 1: going to happen? Well, again, it's unprecedented, but my instinct 177 00:09:00,480 --> 00:09:02,640 Speaker 1: is that they are going to be able to manage this, 178 00:09:02,760 --> 00:09:05,760 Speaker 1: that it is going to be a very prolonged, drawn 179 00:09:05,760 --> 00:09:10,080 Speaker 1: out process, gradual slow of allowing security. Critically, I couldn't 180 00:09:10,080 --> 00:09:12,240 Speaker 1: get an answer from Robert Kaplan on this the how 181 00:09:12,280 --> 00:09:14,480 Speaker 1: long part? I wasn't looking for, like, you know, the 182 00:09:14,559 --> 00:09:18,240 Speaker 1: third week of August here we're looking at decades. I'm 183 00:09:18,360 --> 00:09:21,520 Speaker 1: with you, I mean law, I don't think the market 184 00:09:21,559 --> 00:09:25,319 Speaker 1: and the zeitgeist understands. This isn't about two or three years. 185 00:09:25,320 --> 00:09:27,559 Speaker 1: This is not about two or three years. We've got it. 186 00:09:27,640 --> 00:09:29,280 Speaker 1: This is a law there is and he made clear 187 00:09:29,360 --> 00:09:32,719 Speaker 1: this is I love his phrase, Brian managing the choreography, 188 00:09:33,880 --> 00:09:38,240 Speaker 1: original kaplan idea exactly. I love it exactly. But you're seriously, 189 00:09:38,280 --> 00:09:41,000 Speaker 1: you're at decades. I'm at decades. You think of the 190 00:09:41,000 --> 00:09:43,520 Speaker 1: maturity of the securities on the on the balance. Brian Levin, 191 00:09:43,559 --> 00:09:45,880 Speaker 1: thank you so much, and congratulations on your support of 192 00:09:45,880 --> 00:09:48,920 Speaker 1: New Jersey Institute of Technology. You know you're on some 193 00:09:49,000 --> 00:09:51,760 Speaker 1: board up there. They're one of our great sponsors, and 194 00:09:52,360 --> 00:09:55,240 Speaker 1: they've really really helped us along the way with our 195 00:09:55,360 --> 00:09:58,640 Speaker 1: STEM report. So I can make a joke folks about 196 00:09:58,679 --> 00:10:01,679 Speaker 1: getting wonky, which we're going to do year, but it's 197 00:10:01,760 --> 00:10:06,200 Speaker 1: unfortunately no joke because everyone listening is part of the 198 00:10:06,240 --> 00:10:10,600 Speaker 1: game of thrones, like religion of dividend growth, Brian Levitt 199 00:10:10,640 --> 00:10:14,920 Speaker 1: with us with Oppenheimer fun, dividend growth is the bet 200 00:10:14,960 --> 00:10:21,480 Speaker 1: and the future dividend overwhelming yield issues and overwhelming valuation issues. 201 00:10:21,840 --> 00:10:26,600 Speaker 1: How far out are we buying that growth? Are we 202 00:10:26,640 --> 00:10:29,960 Speaker 1: out one year? Are we out two years? When I 203 00:10:30,080 --> 00:10:33,680 Speaker 1: buy a quality stock like something in an Appendheimer Funds 204 00:10:33,679 --> 00:10:36,920 Speaker 1: portfolio International or not? Are we so desperate that we're 205 00:10:36,960 --> 00:10:41,560 Speaker 1: buying year five dividend? I think I think we are, UM, 206 00:10:41,960 --> 00:10:44,800 Speaker 1: and I think that you know, investors continue to search, 207 00:10:44,840 --> 00:10:47,280 Speaker 1: work for yield wherever they could find it, and they 208 00:10:47,320 --> 00:10:49,000 Speaker 1: found a little bit of a come up. And with 209 00:10:49,200 --> 00:10:53,120 Speaker 1: that when interest rates rose last summer and we're climbing 210 00:10:53,280 --> 00:10:55,640 Speaker 1: um all the way through the end of the year. Now, 211 00:10:55,920 --> 00:10:58,000 Speaker 1: of course this year we've seen rates come down and 212 00:10:58,040 --> 00:11:02,320 Speaker 1: dividend strategies have done quite fine. My my view on 213 00:11:02,559 --> 00:11:07,079 Speaker 1: dividend strategies, on low volatility strategies that if we're in 214 00:11:07,120 --> 00:11:12,199 Speaker 1: this slow economic environment, um, those types of strategies can 215 00:11:12,240 --> 00:11:16,560 Speaker 1: do fine. My concern is if investors don't right size 216 00:11:16,600 --> 00:11:21,880 Speaker 1: that position accordingly, they should have some caution. Um, you know, 217 00:11:21,920 --> 00:11:24,480 Speaker 1: the downside could be worse at some point than the 218 00:11:24,559 --> 00:11:27,679 Speaker 1: upside is. From here, look at Europe just a little bit. Here, 219 00:11:27,679 --> 00:11:31,200 Speaker 1: we're focusing a lot on the trans atlantic relationship, American 220 00:11:31,280 --> 00:11:32,920 Speaker 1: leadership in the world in light of what we expect 221 00:11:32,960 --> 00:11:35,040 Speaker 1: to hear today from the President of the Rose Garden 222 00:11:35,080 --> 00:11:38,679 Speaker 1: on the Paris Agreement. What's your attitude generally towards investing 223 00:11:38,679 --> 00:11:41,480 Speaker 1: in Europe at this point? What's attractive to you in Europe? 224 00:11:41,520 --> 00:11:43,440 Speaker 1: It's actually a great part of the economic cycle in 225 00:11:43,480 --> 00:11:45,720 Speaker 1: Europe in which to invest Investors have been asking me 226 00:11:45,800 --> 00:11:48,880 Speaker 1: for years. Is Europe two years behind the United States? 227 00:11:48,880 --> 00:11:52,000 Speaker 1: And and presumably that meant with regards to the financial markets. 228 00:11:52,000 --> 00:11:54,480 Speaker 1: If you look at it from a credit cycle perspective, 229 00:11:54,800 --> 00:11:58,440 Speaker 1: given all the austerity forced on the peripheral country's rate 230 00:11:58,520 --> 00:12:02,040 Speaker 1: hikes in twleven, Europe is probably more like six seven 231 00:12:02,120 --> 00:12:04,240 Speaker 1: eight years behind the United States with regards to their 232 00:12:04,280 --> 00:12:07,240 Speaker 1: credit cycle. We're only first seeing credit growth in twenty 233 00:12:07,320 --> 00:12:11,520 Speaker 1: six seventeen, So that's good news, David. The This was 234 00:12:11,559 --> 00:12:13,920 Speaker 1: supposed to be the make or break year for the 235 00:12:13,920 --> 00:12:18,840 Speaker 1: European Union, the common currency, and one by one the 236 00:12:18,920 --> 00:12:22,960 Speaker 1: elections have gone in favor of the pro europe candidate, 237 00:12:23,000 --> 00:12:26,079 Speaker 1: and we've seen that in Austria and the Netherlands, um 238 00:12:26,120 --> 00:12:29,439 Speaker 1: in France, and less in favor of the euroskeptics. So 239 00:12:29,720 --> 00:12:32,480 Speaker 1: for those investors that didn't want to be positioned because 240 00:12:32,520 --> 00:12:35,440 Speaker 1: of the politics, they've missed out on what's been a 241 00:12:35,720 --> 00:12:39,679 Speaker 1: good economic recovery in Europe. In fact, European growth in 242 00:12:39,720 --> 00:12:41,839 Speaker 1: the first quarter better than US growth. And this is 243 00:12:41,880 --> 00:12:47,160 Speaker 1: a typical Offenhimer Funds question and broader, bigger view of management. 244 00:12:47,360 --> 00:12:52,080 Speaker 1: Are they becoming more Anglo American? They they are, And 245 00:12:52,120 --> 00:12:55,400 Speaker 1: I mean there's a lot of great companies in Europe 246 00:12:55,559 --> 00:12:57,679 Speaker 1: um doing a lot of great things, involved in a 247 00:12:57,679 --> 00:13:01,120 Speaker 1: lot of industries where they maybe the one or two 248 00:13:01,200 --> 00:13:05,240 Speaker 1: largest players within that industry. So, you know, for investors 249 00:13:05,520 --> 00:13:08,320 Speaker 1: that didn't want to be there because of politics, because 250 00:13:08,360 --> 00:13:11,679 Speaker 1: of the strong dollar, that has now all abated. And 251 00:13:12,080 --> 00:13:15,320 Speaker 1: you know, we we aspire as consumers to a lot 252 00:13:15,360 --> 00:13:18,559 Speaker 1: of the products that the Europeans provide U, but as 253 00:13:18,600 --> 00:13:20,880 Speaker 1: investors we tend to shun it. And I don't think 254 00:13:20,920 --> 00:13:25,400 Speaker 1: that that's an appropriate investment strategy. That home bias is 255 00:13:25,440 --> 00:13:28,280 Speaker 1: probably too persistent in the US. Are the politics entirely 256 00:13:28,280 --> 00:13:30,440 Speaker 1: peripheral now in Europe? Are you able to look at 257 00:13:30,480 --> 00:13:33,720 Speaker 1: valuations in a vacuum or or are you still concerned 258 00:13:33,720 --> 00:13:35,400 Speaker 1: about what might happen to Italy, say, or what might 259 00:13:35,440 --> 00:13:37,480 Speaker 1: happen in two weeks, two weeks, not even two weeks 260 00:13:37,520 --> 00:13:39,360 Speaker 1: a weeks time in the UK Well, I, I like 261 00:13:39,559 --> 00:13:43,720 Speaker 1: political uncertainty from the sense that markets like to climb 262 00:13:43,720 --> 00:13:46,880 Speaker 1: a wall of worry. When when we get to UH 263 00:13:47,000 --> 00:13:50,480 Speaker 1: absolute clarity on politics and policy, that's probably when we 264 00:13:50,480 --> 00:13:53,560 Speaker 1: should be concerned about markets. Now, the UK is a 265 00:13:53,559 --> 00:13:56,080 Speaker 1: little bit of a different story than the continent. If 266 00:13:56,280 --> 00:13:59,520 Speaker 1: if we were to stick to the continent valuations, if 267 00:13:59,559 --> 00:14:02,080 Speaker 1: you were to look at it um on a on 268 00:14:02,120 --> 00:14:04,719 Speaker 1: a trailing twelve month earning basis or it is not, 269 00:14:05,280 --> 00:14:08,520 Speaker 1: you wouldn't say this is screaming attractive. But what you 270 00:14:08,600 --> 00:14:11,960 Speaker 1: have to realize is that that denominator has not improved 271 00:14:12,160 --> 00:14:14,560 Speaker 1: in a large in a number of years broadly, and 272 00:14:14,600 --> 00:14:17,560 Speaker 1: we're seeing that now cyclically in Europe. Brian Levit, thank 273 00:14:17,600 --> 00:14:32,240 Speaker 1: you so much with Oppenheimer Funds joining us at Europe. 274 00:14:32,280 --> 00:14:36,040 Speaker 1: Andrew balls right now with Pimco UH an important and 275 00:14:36,120 --> 00:14:39,760 Speaker 1: timely conversation. Andrew I, I we should note that your 276 00:14:39,800 --> 00:14:41,960 Speaker 1: brother has been involved in the United Kingdom politics. I 277 00:14:41,960 --> 00:14:45,000 Speaker 1: don't want to step on family territory. What is your 278 00:14:45,000 --> 00:14:48,960 Speaker 1: reaction to what we've seen in this abrupt change in 279 00:14:49,040 --> 00:14:51,360 Speaker 1: the election in the United Kingdom? Could you give us 280 00:14:51,360 --> 00:14:56,120 Speaker 1: an observation on that? Yes? Great, Thanks for having me today. 281 00:14:56,200 --> 00:14:59,280 Speaker 1: So UM, So you you started up with a very 282 00:14:59,640 --> 00:15:02,960 Speaker 1: um big lead for the Conservatives, it's um, it's it's 283 00:15:03,000 --> 00:15:05,000 Speaker 1: shrunk a lot. I think that's why you would have 284 00:15:05,520 --> 00:15:11,160 Speaker 1: expected UM, and the UK polsters have have done a 285 00:15:11,160 --> 00:15:15,080 Speaker 1: pretty poor job at the time. So I think the 286 00:15:15,080 --> 00:15:18,680 Speaker 1: baseline is um is that we're going to have a 287 00:15:18,720 --> 00:15:24,320 Speaker 1: conservative government and that racer may will increase the majority, 288 00:15:24,400 --> 00:15:26,760 Speaker 1: which is what we expect to going into this. But 289 00:15:26,840 --> 00:15:29,480 Speaker 1: that said, there's an uncertainty in the polls, and you know, 290 00:15:29,600 --> 00:15:32,480 Speaker 1: the campaign is not gone, gone very well. They had 291 00:15:32,480 --> 00:15:35,120 Speaker 1: a major commitment in their manifesto, they reversed it a 292 00:15:35,160 --> 00:15:38,160 Speaker 1: week later and I think that's ever happened before. So 293 00:15:38,200 --> 00:15:40,000 Speaker 1: I think in spite of it, what's not been a 294 00:15:40,000 --> 00:15:44,840 Speaker 1: great campaign. You know, expectation would be conservative government, increased majority. 295 00:15:44,920 --> 00:15:46,760 Speaker 1: But there's a lot of uncertainty. But you weren't right 296 00:15:46,760 --> 00:15:49,240 Speaker 1: where I knew you'd go, which is and you can't 297 00:15:49,320 --> 00:15:51,200 Speaker 1: help us with this. You've got the ability on this. 298 00:15:51,800 --> 00:15:54,920 Speaker 1: How do you poll in a parliamentary system. I mean, 299 00:15:54,920 --> 00:15:57,920 Speaker 1: it's not like polling in the United States is no, 300 00:15:58,280 --> 00:16:01,520 Speaker 1: and the the other thing in the UK is um. Traditionally, 301 00:16:01,520 --> 00:16:06,120 Speaker 1: conservative voters don't want to say they vote conservative in 302 00:16:06,160 --> 00:16:09,200 Speaker 1: a pent of the cases, so the posters have to 303 00:16:09,240 --> 00:16:12,920 Speaker 1: make adjustments for what they call shy um the Conservatives. 304 00:16:13,480 --> 00:16:17,920 Speaker 1: There was an effort by one of the pollsters published 305 00:16:18,280 --> 00:16:22,920 Speaker 1: this week where they went constituency constituency, huge areas around it. 306 00:16:22,960 --> 00:16:24,960 Speaker 1: But what they do is they look at what happened 307 00:16:25,040 --> 00:16:28,160 Speaker 1: last time and they are just based upon the national 308 00:16:28,200 --> 00:16:31,080 Speaker 1: polls for each seat. But they did they did a 309 00:16:31,080 --> 00:16:36,000 Speaker 1: lousy job last time around. So from our perspective, we 310 00:16:36,040 --> 00:16:38,080 Speaker 1: don't have a lot of risk riding on this. But 311 00:16:38,440 --> 00:16:42,840 Speaker 1: from our perspective, the most likely thing is um um 312 00:16:43,080 --> 00:16:48,440 Speaker 1: Conservative majority, um and um. That's what we are assuming. 313 00:16:48,760 --> 00:16:50,560 Speaker 1: But it would be interesting if you had a hung parliament. 314 00:16:50,560 --> 00:16:54,960 Speaker 1: There's the Brexit recommend the Brexit negotiations ready to start. 315 00:16:55,160 --> 00:16:58,520 Speaker 1: Ending up with a hung parliament trouble forming a government 316 00:16:58,520 --> 00:17:01,920 Speaker 1: would be a pretty awful way to start these Brexit negotiations. 317 00:17:02,000 --> 00:17:04,200 Speaker 1: Andrew Brows, thank you for doing at the General Council 318 00:17:04,240 --> 00:17:06,959 Speaker 1: of PIMCO. Just aged David Grew jump in here and 319 00:17:07,119 --> 00:17:08,919 Speaker 1: get Mr Balls on it. Yeah, you're out with your 320 00:17:08,920 --> 00:17:10,680 Speaker 1: global secular outlet. Let me just ask you, how is 321 00:17:10,720 --> 00:17:13,200 Speaker 1: an investor you're watching what's unfolding in the UK. And 322 00:17:13,200 --> 00:17:15,200 Speaker 1: we were talking earlier about the degree to which politics 323 00:17:15,280 --> 00:17:18,760 Speaker 1: is perhaps after skating the health of the European kindly 324 00:17:18,840 --> 00:17:21,080 Speaker 1: just give us your your outlook on on where you're 325 00:17:21,119 --> 00:17:23,040 Speaker 1: ups headed here in the next six to twelve months, 326 00:17:23,080 --> 00:17:25,919 Speaker 1: So the UK, So start with the UK. The it 327 00:17:25,960 --> 00:17:29,000 Speaker 1: looks okay. We slowed a little bit, but overall since 328 00:17:29,040 --> 00:17:32,280 Speaker 1: the Brexit referendum a year ago, it looks it looks 329 00:17:32,280 --> 00:17:35,480 Speaker 1: pretty good. You've got you've got a lot of uncertainty 330 00:17:34,840 --> 00:17:39,280 Speaker 1: m in the in the outlook, um we you know, 331 00:17:39,320 --> 00:17:41,520 Speaker 1: the level of interest rates looks too low here compared 332 00:17:41,560 --> 00:17:44,840 Speaker 1: with the US um um. So I think over time 333 00:17:44,880 --> 00:17:46,720 Speaker 1: we should see higher rates in the UK. You know, 334 00:17:46,760 --> 00:17:49,720 Speaker 1: I want to get paid more to own UK interest 335 00:17:49,800 --> 00:17:54,280 Speaker 1: rate risk than I do in the US. But we haven't. 336 00:17:54,359 --> 00:17:58,680 Speaker 1: We haven't seen Brexit before obviously, and so these negotiations 337 00:17:58,880 --> 00:18:01,720 Speaker 1: they could have a big impact on confidence. But so 338 00:18:01,760 --> 00:18:04,560 Speaker 1: far it's been okay. On the European side, you know, 339 00:18:04,600 --> 00:18:07,720 Speaker 1: by European very low standards, things are going quite well. 340 00:18:08,000 --> 00:18:11,960 Speaker 1: Um um. The the year Zone has been growing above 341 00:18:12,359 --> 00:18:15,040 Speaker 1: above its potential for a couple of years. We expect 342 00:18:15,080 --> 00:18:19,679 Speaker 1: that to um continue um that there. They've been a 343 00:18:19,680 --> 00:18:21,800 Speaker 1: long way behind the US and this recovery. So this 344 00:18:21,880 --> 00:18:25,720 Speaker 1: is what should be happening. But you know, my former 345 00:18:25,760 --> 00:18:28,320 Speaker 1: Cully pot Colleie Paul McCully used to say, you know, 346 00:18:28,440 --> 00:18:31,320 Speaker 1: Europe there's kind of nashing at teeth one percent to 347 00:18:31,440 --> 00:18:33,879 Speaker 1: Nirvana at two percent. We're a bit closer to two 348 00:18:33,920 --> 00:18:36,840 Speaker 1: percent at the moment. It is good fortunately of Andrew 349 00:18:36,840 --> 00:18:40,959 Speaker 1: balls with us of course with Pacific Investment Management Company 350 00:18:41,000 --> 00:18:45,120 Speaker 1: PIMCO and their chief investment officer Global Fixed Income. Let 351 00:18:45,119 --> 00:18:48,200 Speaker 1: me ask you the basic question, Uh, Andrews, you will 352 00:18:48,200 --> 00:18:51,240 Speaker 1: give last rights to see if a test takers at 353 00:18:51,280 --> 00:18:54,480 Speaker 1: PIMCOT here in the coming two days. Where's the risk 354 00:18:54,520 --> 00:18:57,480 Speaker 1: free rate? Right now? Do you have a clue where 355 00:18:57,560 --> 00:18:59,480 Speaker 1: is the risk free rates? So the risk free rate 356 00:18:59,640 --> 00:19:03,360 Speaker 1: is in the US, you know, i'd look at US 357 00:19:03,440 --> 00:19:07,360 Speaker 1: real rates or US nominal rates, and we've just had 358 00:19:07,359 --> 00:19:11,800 Speaker 1: our our annual secular Forum, and in that regard, we 359 00:19:11,800 --> 00:19:16,439 Speaker 1: we think even you know, just above two percent, US 360 00:19:16,840 --> 00:19:19,880 Speaker 1: US rates look look broadly anchored for the next few 361 00:19:19,960 --> 00:19:24,040 Speaker 1: years based on our new neutral view on the FED 362 00:19:24,160 --> 00:19:26,320 Speaker 1: that the FED is you know, maybe gets to two 363 00:19:26,320 --> 00:19:28,840 Speaker 1: percent or a little bit higher, but it's not gonna 364 00:19:28,880 --> 00:19:31,400 Speaker 1: be going much further than that in the next cycle. 365 00:19:31,680 --> 00:19:35,520 Speaker 1: So low level of yields, but pretty well anchored given 366 00:19:35,560 --> 00:19:38,480 Speaker 1: the growth outlook and the FED outlook. I was struck 367 00:19:38,480 --> 00:19:40,800 Speaker 1: by the probability you placed on the likelihood of a 368 00:19:40,800 --> 00:19:43,439 Speaker 1: recession here in the next five years around seventy percent. 369 00:19:43,520 --> 00:19:45,760 Speaker 1: Walk us through your your thinking pimcost thinking on that. 370 00:19:46,040 --> 00:19:48,760 Speaker 1: So if you have you know, something like a twenty 371 00:19:48,760 --> 00:19:52,520 Speaker 1: percent chance of recession every year in the US, given 372 00:19:52,560 --> 00:19:56,320 Speaker 1: the the kind of the frequency of post war recessions, 373 00:19:56,320 --> 00:19:59,760 Speaker 1: then you can get to that kind of number. Now 374 00:19:59,760 --> 00:20:01,640 Speaker 1: you need to be careful because we could always be 375 00:20:01,960 --> 00:20:04,880 Speaker 1: negative based upon expectations of over three to five years 376 00:20:04,920 --> 00:20:07,639 Speaker 1: of recession. But in this case, you know, this is 377 00:20:07,680 --> 00:20:11,320 Speaker 1: a long expansion we've had in the US. It has 378 00:20:11,359 --> 00:20:15,200 Speaker 1: been quite stable the last few years. You don't see 379 00:20:15,200 --> 00:20:18,119 Speaker 1: a lot of imbalances UM, and the FED is not 380 00:20:18,160 --> 00:20:20,879 Speaker 1: going to be trying to kill this um recession by 381 00:20:21,359 --> 00:20:25,320 Speaker 1: very aggressive monetary policy. But over three to five years UM, 382 00:20:25,760 --> 00:20:28,119 Speaker 1: that kind of longer term time frame, then there's a 383 00:20:28,160 --> 00:20:31,200 Speaker 1: good chance we get a slowdown and recession in the US. 384 00:20:31,240 --> 00:20:33,520 Speaker 1: And it's easier to get there when you start at 385 00:20:33,520 --> 00:20:36,320 Speaker 1: two percent growth rather than the uh, you know, the 386 00:20:36,400 --> 00:20:39,160 Speaker 1: three or four percent growth that the Trump administration has 387 00:20:39,280 --> 00:20:41,880 Speaker 1: has has talked about. So you have this this secular 388 00:20:41,960 --> 00:20:44,520 Speaker 1: form you meet around the table Larry Summers is Therey 389 00:20:44,560 --> 00:20:47,600 Speaker 1: Jean claud Trichet Emory slout of the rest. You moved 390 00:20:47,600 --> 00:20:50,119 Speaker 1: from that to investment strategy, and I wonder sort of 391 00:20:50,160 --> 00:20:52,720 Speaker 1: what conclusions you came to in the second half of 392 00:20:53,000 --> 00:20:55,480 Speaker 1: that meeting. Is the focus still going to be here 393 00:20:55,520 --> 00:20:59,320 Speaker 1: on capital preservation? It is, yes, so so a three 394 00:20:59,400 --> 00:21:02,320 Speaker 1: to five year out look, so it doesn't change every year. Um, 395 00:21:03,160 --> 00:21:06,320 Speaker 1: it pivots from time to time, but similar view, so 396 00:21:06,560 --> 00:21:09,600 Speaker 1: that we see an outlook which is pretty stable, but 397 00:21:09,720 --> 00:21:12,040 Speaker 1: we see it as as insecure. There's a lot of 398 00:21:12,200 --> 00:21:15,440 Speaker 1: challengers in the US, in China, in the rest of 399 00:21:15,520 --> 00:21:17,919 Speaker 1: the world. Um. And then the big thing which has 400 00:21:17,960 --> 00:21:20,080 Speaker 1: changed over the last year is risk assets have all 401 00:21:20,160 --> 00:21:24,080 Speaker 1: done UM so well so so credit it looks fair, 402 00:21:24,880 --> 00:21:28,879 Speaker 1: but you don't have any excess risk premium there for that. 403 00:21:29,000 --> 00:21:32,719 Speaker 1: Recession risk or other challenges are the other reasons why 404 00:21:32,800 --> 00:21:37,920 Speaker 1: we might see higher volatility. So preserving capital is always important, 405 00:21:37,960 --> 00:21:41,480 Speaker 1: but this is an environment when preserving capital, we think 406 00:21:41,680 --> 00:21:44,640 Speaker 1: is a good idea and then grind out the alpha, 407 00:21:45,160 --> 00:21:49,920 Speaker 1: the relative value positions, the boring stuff which which helps 408 00:21:50,000 --> 00:21:53,479 Speaker 1: us to outperform. What's the danger of high real yields 409 00:21:53,520 --> 00:21:57,000 Speaker 1: in Asia? You know, cue the Twilight Zone music. You 410 00:21:57,119 --> 00:21:59,400 Speaker 1: must have young bugs of pimcore. You have to say, 411 00:22:00,000 --> 00:22:04,159 Speaker 1: be careful out there. High rail rates in Asia. You 412 00:22:04,240 --> 00:22:06,239 Speaker 1: want to go buy paper in Asia where you get 413 00:22:06,320 --> 00:22:10,240 Speaker 1: a nice coupon, but what's the risk. Well, so when 414 00:22:10,280 --> 00:22:13,880 Speaker 1: you go to the government markets in Asia, the coupons 415 00:22:13,920 --> 00:22:16,560 Speaker 1: the heels aren't that high. When you go to the 416 00:22:16,600 --> 00:22:19,119 Speaker 1: credit markets, if you're going to go to high yield, 417 00:22:20,200 --> 00:22:22,680 Speaker 1: then you can find some some good opportunities there. But 418 00:22:22,800 --> 00:22:25,360 Speaker 1: it comes with a health warning, which is you don't 419 00:22:25,440 --> 00:22:29,280 Speaker 1: have the transparency in terms of the reporting, the regulatory 420 00:22:29,359 --> 00:22:32,080 Speaker 1: environments that you have in the in the US. So 421 00:22:32,200 --> 00:22:34,840 Speaker 1: you need to be able to do that that deep 422 00:22:34,960 --> 00:22:38,879 Speaker 1: credit work. So it's an area, well, we'll find opportunities 423 00:22:38,920 --> 00:22:42,560 Speaker 1: were actually investing in that area, adding people in that area. 424 00:22:43,280 --> 00:22:45,399 Speaker 1: But you you know, if you're investing in Indonesia, you 425 00:22:45,520 --> 00:22:48,880 Speaker 1: need to know how that works. The shareholders in the company. 426 00:22:49,880 --> 00:22:52,520 Speaker 1: Less transparent markets clearly than you have in the US. 427 00:22:53,480 --> 00:22:55,120 Speaker 1: Quickly here, let me just ask you about trade. We're 428 00:22:55,119 --> 00:22:57,239 Speaker 1: talking with Gary huff Baron just a moment ago. How 429 00:22:57,320 --> 00:22:59,119 Speaker 1: real is that risk here in the last three seconds 430 00:22:59,160 --> 00:23:01,720 Speaker 1: we have with you trade risks, I think a real 431 00:23:01,840 --> 00:23:05,359 Speaker 1: when so stable but insecure is the the outlook. And 432 00:23:05,760 --> 00:23:09,440 Speaker 1: one reason for insecurity is, you know, a less predictable 433 00:23:09,560 --> 00:23:14,880 Speaker 1: US administration the potential to launch aggressive trade actions versus 434 00:23:15,000 --> 00:23:18,119 Speaker 1: China or versus other places in the world. So this 435 00:23:18,320 --> 00:23:20,200 Speaker 1: is one of these pivot points, one of these things 436 00:23:20,280 --> 00:23:22,760 Speaker 1: that we need to guard against. The other big one, 437 00:23:22,800 --> 00:23:26,440 Speaker 1: of course, tightening central bank policy over the coming years. 438 00:23:26,760 --> 00:23:28,119 Speaker 1: Andrew bar is great to speak with you. Thank you 439 00:23:28,359 --> 00:23:31,080 Speaker 1: very much. Andrew Boster, Global Fixed Income Chief Investment Officer 440 00:23:31,520 --> 00:23:34,200 Speaker 1: at PIMCO, joining US set from London where he is based. 441 00:23:34,280 --> 00:23:38,480 Speaker 1: Valuable perspective there on pimcoes new global secular outlook. I'll 442 00:23:38,520 --> 00:23:41,080 Speaker 1: tell you it's an interesting time June one. Where where 443 00:23:41,119 --> 00:23:43,760 Speaker 1: did it go? Believe it? Yeah? I gotta start like 444 00:23:44,640 --> 00:23:56,840 Speaker 1: Christmas is upon us. This is Bloomberg Brunt you by 445 00:23:57,119 --> 00:24:01,400 Speaker 1: Bank of America Merrill Lynch. With virtual reality, virtually everything 446 00:24:01,440 --> 00:24:06,359 Speaker 1: will change. Discover opportunities in a transforming world. Be of 447 00:24:06,480 --> 00:24:11,119 Speaker 1: a mL dot com slash vr, Mary Lynch, Pierced Fenner 448 00:24:11,200 --> 00:24:20,800 Speaker 1: and Smith Incorporated. There's something new from Bloomberg. It's called Lens. 449 00:24:21,359 --> 00:24:24,359 Speaker 1: Starting right now, you can use the Bloomberg Io s 450 00:24:24,400 --> 00:24:28,520 Speaker 1: app off your iPhone or iPad, or our new Google 451 00:24:28,640 --> 00:24:32,480 Speaker 1: Chrome extension to read any news story on any website, 452 00:24:33,040 --> 00:24:36,560 Speaker 1: scan it, and then instantly see the news stories relevant 453 00:24:36,640 --> 00:24:40,960 Speaker 1: market data from Bloomberg. In addition, see all the bios 454 00:24:41,119 --> 00:24:44,760 Speaker 1: of the key people mentioned in the story. It's called Lens, 455 00:24:45,119 --> 00:24:47,679 Speaker 1: and it is just that, a lens into the people 456 00:24:48,119 --> 00:24:51,879 Speaker 1: and the data of any story you may be reading. Again, 457 00:24:52,240 --> 00:24:55,359 Speaker 1: Lens brings you the power of Bloomberg's news and data. 458 00:24:55,720 --> 00:24:58,879 Speaker 1: Download or io s app or search for the Bloomberg 459 00:24:58,960 --> 00:25:02,800 Speaker 1: extension at the Rome Store to try lends out. Learn 460 00:25:02,880 --> 00:25:08,960 Speaker 1: more at bloomberg dot com, slash lands Okay, joining us 461 00:25:09,000 --> 00:25:11,560 Speaker 1: now the former Governor New Jersey and force at a 462 00:25:11,640 --> 00:25:14,159 Speaker 1: different e p A from a different time. What a 463 00:25:14,240 --> 00:25:18,199 Speaker 1: perfect time to talk to Governor Whitman of New Jersey. Governor, 464 00:25:18,240 --> 00:25:21,199 Speaker 1: good morning, I assume you're not going to be at 465 00:25:21,240 --> 00:25:25,720 Speaker 1: the Rose Garden today. Frame frame What all of this 466 00:25:25,960 --> 00:25:33,000 Speaker 1: means for Republicans who are to be polite pre Trump? Uh? Well, 467 00:25:33,119 --> 00:25:36,239 Speaker 1: I think it makes their position actually a lot more 468 00:25:36,320 --> 00:25:39,760 Speaker 1: tenable because if you look at every poll, even within 469 00:25:39,840 --> 00:25:43,520 Speaker 1: the Republican Party, better than Republicans believe that climate change 470 00:25:43,560 --> 00:25:45,960 Speaker 1: is a real issue, that humans have a role to play, 471 00:25:46,040 --> 00:25:47,760 Speaker 1: and that we should be doing something about it. So 472 00:25:48,680 --> 00:25:50,600 Speaker 1: this kind I don't know, we don't know what his 473 00:25:50,680 --> 00:25:52,840 Speaker 1: final action is going to be, but clearly he is 474 00:25:53,000 --> 00:25:57,000 Speaker 1: considering he doesn't consider climate change to be a major issue. 475 00:25:58,080 --> 00:26:01,040 Speaker 1: My approach here is, look, timate change is caused by 476 00:26:01,160 --> 00:26:03,480 Speaker 1: what we're putting into the air, which is not good stuff. 477 00:26:03,880 --> 00:26:06,000 Speaker 1: And we have some two hundred thousand people in this 478 00:26:06,119 --> 00:26:10,160 Speaker 1: country a year who die from dirty airborne related causes. 479 00:26:10,560 --> 00:26:12,359 Speaker 1: So if we just clean the air, a will be 480 00:26:12,440 --> 00:26:14,840 Speaker 1: doing something for climate change, would be we'll be protecting 481 00:26:14,880 --> 00:26:18,520 Speaker 1: human health. What really worries me about what the President 482 00:26:18,640 --> 00:26:22,440 Speaker 1: is talking about is it undercuts our position in the world. 483 00:26:23,160 --> 00:26:26,119 Speaker 1: We are seeding leadership in this Others are going to 484 00:26:26,160 --> 00:26:28,680 Speaker 1: step up and fill the vacuum, and we're going to 485 00:26:28,800 --> 00:26:31,160 Speaker 1: see many of our company's trade wars work both ways. 486 00:26:31,359 --> 00:26:35,240 Speaker 1: And while many companies have already adopted very strong UM 487 00:26:35,440 --> 00:26:39,080 Speaker 1: guidelines to reduce their carbon emissions, uh, they're still from 488 00:26:39,119 --> 00:26:41,440 Speaker 1: the if they're headquartered in the United States, they could 489 00:26:41,480 --> 00:26:46,200 Speaker 1: be subject to retaliatory trade worth. It's just unnecessary and 490 00:26:46,320 --> 00:26:48,240 Speaker 1: it's too bad to fly in the face of something 491 00:26:48,320 --> 00:26:51,760 Speaker 1: that people have worked so hard on accomplishing. And you 492 00:26:51,880 --> 00:26:55,000 Speaker 1: have almost two hund countries that have signed it. In fact, 493 00:26:55,119 --> 00:26:58,320 Speaker 1: we would join only North Korea and Nicaragua and being 494 00:26:58,400 --> 00:27:01,440 Speaker 1: non signers, would you learn when you would? Washington d C. 495 00:27:01,560 --> 00:27:04,280 Speaker 1: About long term is um the difficult of planning for 496 00:27:04,440 --> 00:27:07,480 Speaker 1: and crafting policy that takes a long term perspective. It 497 00:27:07,520 --> 00:27:10,600 Speaker 1: strikes me with climate change policy in particular, you're getting 498 00:27:10,640 --> 00:27:13,280 Speaker 1: people to buy into something that is going to take 499 00:27:13,320 --> 00:27:15,119 Speaker 1: place maybe not a year from now, two years from now. 500 00:27:15,640 --> 00:27:17,440 Speaker 1: Yes it's happening, but it's it's a naggregate that we 501 00:27:17,520 --> 00:27:20,080 Speaker 1: care about, and it seems like that's that's something difficult 502 00:27:20,119 --> 00:27:22,719 Speaker 1: that's still to sell them any Americans it is. You're 503 00:27:22,720 --> 00:27:25,480 Speaker 1: absolutely right it we don't think in long term. We 504 00:27:25,600 --> 00:27:27,359 Speaker 1: think in short spurts. But that's why if you go 505 00:27:27,480 --> 00:27:30,959 Speaker 1: back to annual lives lost from dirty air, you can 506 00:27:31,000 --> 00:27:34,000 Speaker 1: perhaps make a more compelling case for people to understand this. 507 00:27:34,160 --> 00:27:37,840 Speaker 1: But I would say that frankly, the weather um is 508 00:27:38,200 --> 00:27:40,960 Speaker 1: something that's already impacting people, and they're getting it that 509 00:27:41,040 --> 00:27:44,440 Speaker 1: things are changing. They don't necessarily know why, and we 510 00:27:44,520 --> 00:27:46,359 Speaker 1: can't say that humans cause all of it, or that 511 00:27:46,400 --> 00:27:48,920 Speaker 1: it's all due to climate change. And certainly the climate 512 00:27:49,000 --> 00:27:51,880 Speaker 1: has been changing since the Earth was formed. But they're 513 00:27:51,880 --> 00:27:55,560 Speaker 1: seeing these storms become more frequent, more severe, and not 514 00:27:55,720 --> 00:27:58,720 Speaker 1: impacts them directly. So there there are these short term 515 00:27:58,760 --> 00:28:00,880 Speaker 1: implications that are beginning to pop up, which is why 516 00:28:00,920 --> 00:28:03,119 Speaker 1: I think you see so many people say this is 517 00:28:03,200 --> 00:28:05,239 Speaker 1: real and we should be thinking about how we're going 518 00:28:05,280 --> 00:28:07,000 Speaker 1: to cope. And there was a piece set by one 519 00:28:07,000 --> 00:28:08,840 Speaker 1: of our colleagues at Bloomer BNA a couple of days 520 00:28:08,880 --> 00:28:11,480 Speaker 1: ago about the Committee on Energy, the Committee on Environment 521 00:28:11,480 --> 00:28:14,320 Speaker 1: and Public Works US Senate Committee Environment Public Works, John Barrasso, 522 00:28:14,359 --> 00:28:16,440 Speaker 1: the Senator now in charge of that, and it seems 523 00:28:16,480 --> 00:28:19,240 Speaker 1: like the focus squarely is on public works and not 524 00:28:19,359 --> 00:28:21,480 Speaker 1: on the environment. I know that's something that you butted 525 00:28:21,560 --> 00:28:22,960 Speaker 1: up against when you were heading the e p A 526 00:28:23,400 --> 00:28:27,199 Speaker 1: a few years back. Do you think that politicians are 527 00:28:27,200 --> 00:28:30,480 Speaker 1: paying enough attention to environmental issues generally now in Washington, 528 00:28:30,560 --> 00:28:32,680 Speaker 1: D C. No, it's kind of sad. I mean the 529 00:28:32,760 --> 00:28:37,359 Speaker 1: first piece of environmental legislation since the Clean Air Acts 530 00:28:37,400 --> 00:28:39,480 Speaker 1: were one that we got through in the very beginning 531 00:28:39,520 --> 00:28:42,560 Speaker 1: of the Bush administration on reducing the pollution from non 532 00:28:42,680 --> 00:28:45,360 Speaker 1: road diesel engines. Since then, there's only been one other, 533 00:28:45,680 --> 00:28:49,440 Speaker 1: and that's been on toxic chemicals. And actually this administration 534 00:28:49,560 --> 00:28:51,240 Speaker 1: is looking for ways to try to roll back some 535 00:28:51,400 --> 00:28:54,720 Speaker 1: of those, um, some of those safeguards that were put in. 536 00:28:54,920 --> 00:28:57,920 Speaker 1: So we're really not paying the kind of attention we 537 00:28:58,080 --> 00:29:00,920 Speaker 1: need to understand that we can have of good, strong 538 00:29:01,040 --> 00:29:04,040 Speaker 1: economic growth. We've proved that over and over again, UM, 539 00:29:04,320 --> 00:29:06,840 Speaker 1: and still have a clean and green environment. Let's come 540 00:29:06,880 --> 00:29:09,200 Speaker 1: back and to talk further very quickly, her Governor, what 541 00:29:09,280 --> 00:29:13,440 Speaker 1: do oil refiners in New Jersey want? Well, what they'd 542 00:29:13,480 --> 00:29:15,880 Speaker 1: like to do is they want to do some offshore drilling. 543 00:29:16,480 --> 00:29:18,800 Speaker 1: That's something that they'd like to see. Also, there are 544 00:29:18,800 --> 00:29:22,240 Speaker 1: a number of the utilities, don't forget, that have nuclear reactors, 545 00:29:22,320 --> 00:29:24,240 Speaker 1: and they'd like to see nuclear put on the same 546 00:29:24,320 --> 00:29:26,640 Speaker 1: par as the other green energy sources so they could 547 00:29:26,720 --> 00:29:30,160 Speaker 1: keep them going. Let me ask you about the role 548 00:29:30,240 --> 00:29:34,760 Speaker 1: of business uh in forestalling climate change. When there were 549 00:29:34,760 --> 00:29:37,200 Speaker 1: whisperings that the President might withdraw from this agreement, we 550 00:29:37,280 --> 00:29:39,320 Speaker 1: had a statement from from a number of business leaders, 551 00:29:39,320 --> 00:29:41,840 Speaker 1: a number of executives urging him not to do that. 552 00:29:41,960 --> 00:29:44,719 Speaker 1: What if we learned about the role, the leadership role 553 00:29:44,760 --> 00:29:48,080 Speaker 1: that businesses can play, well, they certainly are just that 554 00:29:48,520 --> 00:29:51,480 Speaker 1: they're playing a leadership role. What kind of impact they're 555 00:29:51,480 --> 00:29:53,360 Speaker 1: going to have on the president? I don't know. You 556 00:29:53,480 --> 00:29:56,160 Speaker 1: have the Secretary of State Rex Tillerson, a former CEO 557 00:29:56,200 --> 00:29:58,640 Speaker 1: of a major company, going in to say, you've got 558 00:29:58,760 --> 00:30:01,600 Speaker 1: to stick with this because they believe it, they see it. 559 00:30:02,000 --> 00:30:04,240 Speaker 1: Many of them, as I mentioned before, have already set 560 00:30:04,280 --> 00:30:07,080 Speaker 1: aggressive targets. I'm on the board of United Technologies and 561 00:30:07,160 --> 00:30:09,840 Speaker 1: they've had aggressive targets for a number of years now 562 00:30:09,880 --> 00:30:13,760 Speaker 1: to reduce their their greenhouse gas emissions and water usage. 563 00:30:13,760 --> 00:30:17,200 Speaker 1: It's good business. They're saving money, they're more competitive, they're 564 00:30:17,200 --> 00:30:20,239 Speaker 1: able to use it as something that stance sets them 565 00:30:20,240 --> 00:30:22,680 Speaker 1: aside from competitors. It's it's been good for them. And 566 00:30:22,920 --> 00:30:26,520 Speaker 1: you have a whole number of businesses that are willing 567 00:30:26,600 --> 00:30:29,680 Speaker 1: and able and are already doing that. So we'll see 568 00:30:29,760 --> 00:30:31,840 Speaker 1: what kind of an influence they have. They certainly have 569 00:30:31,880 --> 00:30:34,800 Speaker 1: an influence on They can have an influence on Congress 570 00:30:35,200 --> 00:30:37,560 Speaker 1: if they will put their money where their where their 571 00:30:37,560 --> 00:30:40,840 Speaker 1: efforts are, I mean, where their thoughts are, but they're 572 00:30:40,880 --> 00:30:42,600 Speaker 1: going to do it anyway, and that's the good news 573 00:30:42,680 --> 00:30:45,920 Speaker 1: for the environment. You've got businesses, you've got utilities, almost 574 00:30:45,960 --> 00:30:48,440 Speaker 1: every utility. While they may still have coal and they 575 00:30:48,520 --> 00:30:52,080 Speaker 1: may be investing more natural gas, they are also investing 576 00:30:52,240 --> 00:30:55,440 Speaker 1: in renewables and as I mentioned before, number of them 577 00:30:55,520 --> 00:30:58,440 Speaker 1: have nuclear reactors that they'd like to keep going, uh 578 00:30:58,520 --> 00:31:00,600 Speaker 1: in the interim until you can get the renewables to 579 00:31:00,640 --> 00:31:04,160 Speaker 1: a place where their base power. Um these states, there 580 00:31:04,160 --> 00:31:06,400 Speaker 1: are state compacts that have come together. They're going to 581 00:31:06,480 --> 00:31:09,960 Speaker 1: continue to reduce their greenhouse gas emissions and cities as well. 582 00:31:10,120 --> 00:31:12,600 Speaker 1: So you know, the horse has really left the stable, 583 00:31:13,080 --> 00:31:15,600 Speaker 1: it's left the barn, and this is going to happen. 584 00:31:15,840 --> 00:31:19,160 Speaker 1: What really it troubles me is our position as a 585 00:31:19,240 --> 00:31:22,280 Speaker 1: world leader and whether who steps into the vacuum. China 586 00:31:22,560 --> 00:31:25,600 Speaker 1: clearly indicated it will and is looking for that, and 587 00:31:25,760 --> 00:31:29,240 Speaker 1: Russia is always looking for an opportunity to make inroads. 588 00:31:29,720 --> 00:31:32,000 Speaker 1: Let me ask you about the the introspection I assume 589 00:31:32,040 --> 00:31:34,760 Speaker 1: you've done since the presidential election. In November, Tom was 590 00:31:34,840 --> 00:31:38,040 Speaker 1: joking about the quantity of modern Republicans New England Republicans 591 00:31:38,080 --> 00:31:40,120 Speaker 1: whatever you want to want to call them. There are 592 00:31:40,200 --> 00:31:42,880 Speaker 1: fewer than there were. What are you thinking about when 593 00:31:42,880 --> 00:31:44,880 Speaker 1: it comes to the future of the Republican Party. This 594 00:31:45,000 --> 00:31:46,920 Speaker 1: party matter less to you now in light of what 595 00:31:47,040 --> 00:31:50,840 Speaker 1: we saw in November. Well, party has always been um 596 00:31:51,280 --> 00:31:53,920 Speaker 1: it's for my basis of where I how I look 597 00:31:53,960 --> 00:31:56,040 Speaker 1: at issues of the Republican Party. But it is never 598 00:31:56,160 --> 00:31:59,560 Speaker 1: superseded policy for me, and I don't believe it should 599 00:31:59,640 --> 00:32:02,200 Speaker 1: and then hasn't in the past. It now is more 600 00:32:02,280 --> 00:32:04,520 Speaker 1: and more it has been for the last maybe decade 601 00:32:05,000 --> 00:32:06,800 Speaker 1: going that way. And that's what we see. I mean, 602 00:32:07,280 --> 00:32:09,840 Speaker 1: the one thing the president needs to remember, once you're elected, 603 00:32:10,040 --> 00:32:14,080 Speaker 1: you represent all of the people, not just those who 604 00:32:14,160 --> 00:32:17,640 Speaker 1: elected you. And frankly, in his case, if you look 605 00:32:17,680 --> 00:32:20,600 Speaker 1: at the numbers, the raw numbers of people who voted 606 00:32:20,640 --> 00:32:23,280 Speaker 1: for him, he's a minority president. We've had these before, 607 00:32:23,360 --> 00:32:26,320 Speaker 1: but he's clearly a minority president. This is something that's 608 00:32:26,360 --> 00:32:29,360 Speaker 1: important to his base, and his base is quite small 609 00:32:29,560 --> 00:32:31,400 Speaker 1: and the whole when you look at the whole thing, 610 00:32:31,440 --> 00:32:34,480 Speaker 1: they're absolutely dead loyal. This is what they want. But 611 00:32:34,880 --> 00:32:38,120 Speaker 1: he can't just satisfy his base, and something that has 612 00:32:38,240 --> 00:32:43,800 Speaker 1: a huge implications for everyone else, for business, for people's health. Um, 613 00:32:44,280 --> 00:32:46,960 Speaker 1: he's got a a lot and he's got to continue 614 00:32:47,000 --> 00:32:49,320 Speaker 1: to learn and be willing to change where he needs to. 615 00:32:49,720 --> 00:32:53,440 Speaker 1: Christine Todd Whitman, the former governor of New Jersey, you 616 00:32:53,520 --> 00:32:55,680 Speaker 1: are fifty nine and holding, and we thank you for 617 00:32:55,800 --> 00:32:59,120 Speaker 1: that as being a good example for those of us timeless. 618 00:32:59,440 --> 00:33:03,120 Speaker 1: Greg Ville h. Governor Whitman, writes this morning on those 619 00:33:03,240 --> 00:33:07,560 Speaker 1: ages and seventy which includes in two thousand twenty Bernie 620 00:33:07,600 --> 00:33:13,320 Speaker 1: Sanders seventy nine, Senator Warren seventy one, Secretary Clintons seventy three, 621 00:33:13,440 --> 00:33:16,960 Speaker 1: the President seventy four, and of course Joe Biden, thinking 622 00:33:17,000 --> 00:33:19,840 Speaker 1: of running supposedly would be seventy eight. How did we 623 00:33:19,920 --> 00:33:22,080 Speaker 1: get here? What did you call it? David? What was that? 624 00:33:22,200 --> 00:33:28,440 Speaker 1: Fancy sep? Governor Whitman, And I wouldn't know that. How 625 00:33:28,520 --> 00:33:30,640 Speaker 1: did we get to be like the Chinese where everybody's 626 00:33:30,640 --> 00:33:34,040 Speaker 1: a fossil? Well, the problem is you see so many 627 00:33:34,120 --> 00:33:37,200 Speaker 1: young people who well that particularly this millennium generation, something 628 00:33:37,240 --> 00:33:39,560 Speaker 1: that's fascinated me. They really want to make a difference 629 00:33:39,560 --> 00:33:41,560 Speaker 1: in the world. They really believe in making the world 630 00:33:41,600 --> 00:33:44,000 Speaker 1: a better place. They want nothing to do with Yeah, 631 00:33:44,840 --> 00:33:50,320 Speaker 1: nothing because it's gotten so rough, it's so expensive, so nasty. Um, 632 00:33:50,520 --> 00:33:53,760 Speaker 1: it's hard to maintain a dignity when you've got the 633 00:33:53,840 --> 00:33:55,920 Speaker 1: Internet the way it is, people can put off anything 634 00:33:55,960 --> 00:33:57,800 Speaker 1: they want about you, and by the time you get 635 00:33:57,840 --> 00:34:00,560 Speaker 1: around to seeing it or to swat it down, it's 636 00:34:00,600 --> 00:34:04,400 Speaker 1: already gone viral. Um. It's a tough business, and they 637 00:34:04,440 --> 00:34:06,520 Speaker 1: feel that there are other ways they can make a difference. 638 00:34:06,600 --> 00:34:08,719 Speaker 1: The problem is that if you're really going to make 639 00:34:08,719 --> 00:34:11,840 Speaker 1: a lasting difference, you have to get involved in government 640 00:34:11,880 --> 00:34:14,000 Speaker 1: and policy, because that's the way you make the final, 641 00:34:14,120 --> 00:34:16,560 Speaker 1: lasting difference very quickly. Here we've seen a lot of 642 00:34:16,840 --> 00:34:18,960 Speaker 1: business executives going to the White House to bend the 643 00:34:19,040 --> 00:34:21,520 Speaker 1: ear of the president. We've seen that happened at the 644 00:34:21,560 --> 00:34:24,200 Speaker 1: G seven last week, world leaders trying to tell him 645 00:34:24,239 --> 00:34:26,759 Speaker 1: what they think about about climate change. How about you, 646 00:34:26,800 --> 00:34:30,279 Speaker 1: how about others like you who are traditional Republicans. Do 647 00:34:30,320 --> 00:34:32,400 Speaker 1: you feel like you have a conduit to communicate with 648 00:34:32,520 --> 00:34:36,040 Speaker 1: this White House through the press? That's the only way, 649 00:34:36,680 --> 00:34:39,399 Speaker 1: through the press and tweets and that kind of thing. Um. 650 00:34:39,600 --> 00:34:42,120 Speaker 1: He apparently looks at that a lot, cares about that 651 00:34:42,239 --> 00:34:44,120 Speaker 1: a lot. But UM, I certainly don't have an on 652 00:34:44,160 --> 00:34:47,080 Speaker 1: trade of the White House verse Governor, thank you so much, 653 00:34:47,200 --> 00:34:50,080 Speaker 1: Christine Timman. She will not be at the Rose Garden. 654 00:34:50,360 --> 00:35:04,960 Speaker 1: I don't I don't believe. Stephen Colan, he's the director 655 00:35:05,000 --> 00:35:06,920 Speaker 1: of the Earth Institute at Columbia University and at the 656 00:35:06,960 --> 00:35:10,279 Speaker 1: Interdisciplinary Center. That's going great to have you with us today. 657 00:35:10,280 --> 00:35:12,080 Speaker 1: We've talked a lot about what this means for American 658 00:35:12,200 --> 00:35:15,160 Speaker 1: leadership in the world. Let's talk about the deal in 659 00:35:15,239 --> 00:35:18,000 Speaker 1: and of itself. So the difference that it stands to make. 660 00:35:19,040 --> 00:35:21,759 Speaker 1: What could be that that the environmental consequence here if 661 00:35:21,800 --> 00:35:25,640 Speaker 1: the US were to withdraw from it. Well, UH, First, 662 00:35:25,800 --> 00:35:30,440 Speaker 1: the even if the US withdraws from Paris, the Supreme 663 00:35:30,560 --> 00:35:34,280 Speaker 1: Court has already declared greenhouse gas as a dangerous air pollutant. 664 00:35:34,960 --> 00:35:38,719 Speaker 1: And even if they withdraw the Clean Power Plan, EP 665 00:35:38,960 --> 00:35:42,920 Speaker 1: still has to issue a regulation to reduce greenhouse gases. Uh. 666 00:35:43,400 --> 00:35:46,759 Speaker 1: California and New York have already recommitted to meeting the 667 00:35:46,840 --> 00:35:50,440 Speaker 1: Paris targets, probably exceeding them. And UH, I think that 668 00:35:51,719 --> 00:35:54,920 Speaker 1: there will be reductions in greenhouse gases no matter what 669 00:35:55,080 --> 00:35:59,560 Speaker 1: happens UH today or whenever with the President, if the 670 00:35:59,800 --> 00:36:05,640 Speaker 1: if the Paris Accord is about communities and localities. Why 671 00:36:05,800 --> 00:36:10,560 Speaker 1: is it so dominantly discussed by a federal official. How 672 00:36:10,640 --> 00:36:14,440 Speaker 1: did we get to where federal officials are discussing what 673 00:36:14,560 --> 00:36:18,399 Speaker 1: I'm told as a local accord because the federal from 674 00:36:18,600 --> 00:36:21,840 Speaker 1: makes foreign policy, though cities don't do that in a 675 00:36:21,920 --> 00:36:26,400 Speaker 1: global economy where cities in fact and states interact with 676 00:36:26,560 --> 00:36:29,440 Speaker 1: cities and states all over the world. Uh, it's not 677 00:36:29,600 --> 00:36:31,560 Speaker 1: quite the same way. It wasn't we when we developed 678 00:36:31,560 --> 00:36:34,200 Speaker 1: the constitution. But we still only have one foreign policy 679 00:36:34,239 --> 00:36:36,279 Speaker 1: in America, and that, you know, I think it is 680 00:36:36,360 --> 00:36:40,279 Speaker 1: correct when when when you look at the dealing of 681 00:36:40,360 --> 00:36:43,080 Speaker 1: itself again, I keep returning to that, what does it 682 00:36:43,160 --> 00:36:44,960 Speaker 1: call for? What's what's the burden? So much as it 683 00:36:45,040 --> 00:36:47,399 Speaker 1: is want to here on the US. Well there, it's 684 00:36:47,440 --> 00:36:51,600 Speaker 1: actually there is nothing mandatory in the agreement. It's a 685 00:36:51,680 --> 00:36:55,440 Speaker 1: set of targets. And what's mandatory is reporting where you 686 00:36:55,560 --> 00:36:59,719 Speaker 1: are with your greenhouse gases. So there's no actions required. 687 00:37:00,440 --> 00:37:04,000 Speaker 1: In fact, as I said, the Clean Air Act, which 688 00:37:04,080 --> 00:37:08,640 Speaker 1: has which mandates that greenhouse gases be reduced under the 689 00:37:08,680 --> 00:37:12,520 Speaker 1: Supreme Court decision during the George W. Bush administration, UH, 690 00:37:12,760 --> 00:37:15,040 Speaker 1: is much more directive than the treaty is and so 691 00:37:15,360 --> 00:37:18,320 Speaker 1: I think that we're going to see reductions in greenhouse 692 00:37:18,360 --> 00:37:22,600 Speaker 1: gases irrespective of the paris does it does it change 693 00:37:22,680 --> 00:37:24,840 Speaker 1: the Is there anything to incentivize a change to the 694 00:37:24,920 --> 00:37:27,040 Speaker 1: energy makeup in in this in this country? Other way? 695 00:37:27,080 --> 00:37:29,000 Speaker 1: Do you have these targets? Is that has that fundamentally 696 00:37:29,120 --> 00:37:32,200 Speaker 1: changed how we approach energy in the US? Well, I 697 00:37:32,320 --> 00:37:35,320 Speaker 1: think I think that you're beginning to see the changes 698 00:37:35,360 --> 00:37:40,800 Speaker 1: in the marketplace anyway. Um, First, coal is uh, you know, 699 00:37:40,920 --> 00:37:43,560 Speaker 1: it's it's hard to get out of the ground, even 700 00:37:43,680 --> 00:37:48,360 Speaker 1: with the mountaintop removal it it uh, it's very destructive 701 00:37:48,400 --> 00:37:51,279 Speaker 1: of the environment. Natural gas, even with fracking, is still 702 00:37:52,520 --> 00:37:55,640 Speaker 1: has a lower environmental impact. So first stage that we're 703 00:37:55,640 --> 00:37:59,919 Speaker 1: moving from heavily polluting coal to less polluting natural gas. 704 00:38:00,080 --> 00:38:02,319 Speaker 1: But the other thing that's going to happen, and we're 705 00:38:02,320 --> 00:38:06,600 Speaker 1: seeing this also is renewable energy is going to continue 706 00:38:06,640 --> 00:38:10,560 Speaker 1: to get less and less expensive as the technology gets better. 707 00:38:10,719 --> 00:38:13,440 Speaker 1: The source fuel is free, it's the sun. So it's 708 00:38:13,440 --> 00:38:16,280 Speaker 1: going to act the same way Moore's law did with computing. 709 00:38:16,640 --> 00:38:18,799 Speaker 1: You're going to see the price going down and down 710 00:38:18,880 --> 00:38:22,719 Speaker 1: and down. Is already price competitive to a large tree 711 00:38:22,800 --> 00:38:25,520 Speaker 1: with fossil fuels. As the infrastructure built up at the 712 00:38:25,600 --> 00:38:29,040 Speaker 1: technology builds up, UH, fossil fuels will be driven from 713 00:38:29,040 --> 00:38:31,560 Speaker 1: the market by renewables, and I think we're at the 714 00:38:31,640 --> 00:38:42,800 Speaker 1: beginning of that right now. Thanks for listening to the 715 00:38:42,840 --> 00:38:49,640 Speaker 1: Bloomberg Surveillance Podcast. Subscribe and listen to interviews on Apple Podcasts, SoundCloud, 716 00:38:50,040 --> 00:38:53,839 Speaker 1: or whichever podcast platform you prefer. I'm on Twitter at 717 00:38:53,880 --> 00:38:58,520 Speaker 1: Tom Keene David Gura. Is that David Gurra? Before the podcast? 718 00:38:58,880 --> 00:39:13,400 Speaker 1: You can always catch us worldwide. I'm Bloomberg Radio, brought 719 00:39:13,440 --> 00:39:16,960 Speaker 1: you by Bank of America Mary Lynch. With virtual reality, 720 00:39:17,239 --> 00:39:22,600 Speaker 1: virtually everything will change. Discover opportunities in a transforming world, 721 00:39:23,040 --> 00:39:27,359 Speaker 1: be of a mL dot com, slash vr, Mary Lynch, 722 00:39:27,440 --> 00:39:29,760 Speaker 1: Pierced Fenner and Smith Incorporated