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Speaker 3: Abby Joseph Cohen does not remember eighteen fifty six. She's
Speaker 3: too young for this, but she does know what unified
Speaker 3: government is. It's really an interesting thing, a great paragraph.
Speaker 3: I'm stealing this from News Nation. I has some nice
Speaker 3: history here if I can find it. But unified government
Speaker 3: is more common than we think. There's been twenty three
Speaker 3: times Democrats have had unified government, twenty five times Republicans
Speaker 3: have had unified government. Abbi Joseph Cohen, a Columbia University
Speaker 3: will get to the markets. Abby, is gridlock good or
Speaker 3: can we get something done with unified government that supports
Speaker 3: American finance and capitalism.
Speaker 4: Wow, that's a big question, Tom, and thank you for
Speaker 4: inviting me to be here this morning. It depends what
Speaker 4: unified government decides to do. So clearly, if you have
Speaker 4: a policy agenda that is favorable, unified government is good news.
Speaker 4: If not, there are a number of things to watch
Speaker 4: out for.
Speaker 5: Abby, What do you expect here? We've had obviously a big,
Speaker 5: big change on the political stage here in the United States.
Speaker 5: What's your expectation of a second Trump presidency and what
Speaker 5: does that mean for markets? We've certainly had a big
Speaker 5: rally yesterday in financial assets. What do you expect going forward?
Speaker 4: Well, let me put the marker out there, which is
Speaker 4: don't know, because we don't yet know, for example, who
Speaker 4: the key members of the administry will be. We don't
Speaker 4: know who the Secretary of Treasury will be, for example,
Speaker 4: nor do we have an idea of who some of
Speaker 4: the other members of the cabinet will be. The other
Speaker 4: thing that we're not sure about, of course, is what
Speaker 4: happens going forward with regard to regulatory policy. Now there
Speaker 4: is a presumption that less regulation is good for the economy.
Speaker 4: That's not always the case. Obviously regulation is not always perfect,
Speaker 4: but there are a number of areas in which looser
Speaker 4: regulation is in fact quite destabilizing and inflationary. So, for example,
Speaker 4: looser anti trust policy is typically associated with higher inflation,
Speaker 4: and that's something that we need to keep an eye on.
Speaker 4: The Other thing that we need to keep an eye
Speaker 4: on because members of the Trump organization have been chatting
Speaker 4: about this, and when I say Trump Organization, I'm referring
Speaker 4: to the campaign, not the company. They've been talking about
Speaker 4: providing a very easy regulatory environment for crypto and that's
Speaker 4: something that could in fact be problematic with regard to
Speaker 4: whether it creates a source of potential instability for the
Speaker 4: financial markets.
Speaker 3: Listen to that. I mean, I don't know. Let's do it.
Speaker 3: Let's do a crypto data check here right now. I
Speaker 3: quoted the Doze yesterday for the first time ever seventy
Speaker 3: four thousand, seven hundred down eleven hundred. We had seventy
Speaker 3: five thousand print on bitcoin.
Speaker 5: We did for bitcoin.
Speaker 4: Sot's let's let's make the point, however, Tom, and that
Speaker 4: is there has been some discussion among Trump advisors that
Speaker 4: digital currency could be used on bank balance sheets for
Speaker 4: regulatory purposes. And basically, over over time, over history, we
Speaker 4: see that the best assets to put on bank balance
Speaker 4: sheets are the ones that are not quite so volatile.
Speaker 3: Exactly so politicous. She's just got it down, cult. She's
Speaker 3: laughing at me because she knows exactly where I am
Speaker 3: on this poot.
Speaker 5: She knows what she's doing.
Speaker 1: Abby.
Speaker 5: I guess the last time we chatted, you were concerned
Speaker 5: about concentration in the market, as are a lot of
Speaker 5: people when you think about the Magnificent seven or some
Speaker 5: of the AI trade here. Has anything changed there? How
Speaker 5: do you think about that? Just the health of this
Speaker 5: equity market here?
Speaker 4: Yeah, wonderful question, and we if we had a crystal
Speaker 4: ball and we knew what earnings were going to be
Speaker 4: like in twenty twenty five, we might be able to
Speaker 4: answer it better. Yesterday's close on the S and P
Speaker 4: five hundred in excess of fifty nine hundred is something
Speaker 4: that really is touching the top end of the range
Speaker 4: that many people had expected as it relates to valuation
Speaker 4: for the S and P five hundred. So to think
Speaker 4: that the market in general can go higher from here,
Speaker 4: you really need to have an enthusiastic view about economic
Speaker 4: growth next year. But we also now need to worry
Speaker 4: about the interest rate aspect valuation. While there's been so
Speaker 4: much focus about how much the stock market responded yesterday,
Speaker 4: there was also a big response in the bond market,
Speaker 4: and with higher interest rates that creates more of an
Speaker 4: obstacle to equity valuation as well.
Speaker 5: Are the earnings that we're seeing abby this quarter last quarter,
Speaker 5: and more importantly, kind of the forecast. Are the earnings
Speaker 5: there to support this market or do we really have
Speaker 5: some valuation concerns here?
Speaker 4: Based upon consensus earnings expectations, things look like we are okay,
Speaker 4: but clearly this very little margin for error. So should
Speaker 4: there be some unpleasant surprises perhaps in one of the
Speaker 4: high profile names on the company side, or perhaps some
Speaker 4: unpleasant inflation news or interest rates notably higher from current levels,
Speaker 4: That in fact could be problematic, But let's make Let's
Speaker 4: go back to the original question, and that is mag
Speaker 4: seven versus the rest of the market. There are much
Speaker 4: better valuation opportunities amongst small and MidCap names, and some
Speaker 4: people might also argue that there's some opportunities outside the
Speaker 4: United States. The problem, of course, is that the US
Speaker 4: economy is looking far more robust than many of the
Speaker 4: nations are at this point.
Speaker 3: Eby and I think about, you know, if this had occurred,
Speaker 3: all this maelstrom that we're in right now, it occurred
Speaker 3: thirty years ago, you'd be on with Lou Rukaiser Friday
Speaker 3: night and Lou would turn to you and say, okay,
Speaker 3: what is the exuberance ed Yard Denny, who we all
Speaker 3: respect immensely, models out the roaring twenties. He models out
Speaker 3: a bull market. I'm not asking you to give me
Speaker 3: an S and P call, but are the roaring twenties
Speaker 3: that we get with a Republican House, Senate and presidency.
Speaker 3: Can they lead to an exuberance that causes harm? Or
Speaker 3: can we be managed in our enthusiasm.
Speaker 4: The exuberance that you were referring to earlier, Tom, when
Speaker 4: Alan Greenspan spoke about it was irrational exuberance. And the
Speaker 4: irrational exuberance that green Span often referred to was not
Speaker 4: just in the equity market but also in the fixed
Speaker 4: income market. So we need to be looking there very carefully.
Speaker 4: And one of my concerns, and I think needs to
Speaker 4: be carefully monitored by investors, is what will some of
Speaker 4: these new policies mean with regard to inflation. You know,
Speaker 4: the starting point is quite good if you exclude housing,
Speaker 4: which I know is a big exclusion because it does
Speaker 4: harm many people. But if you exclude housing prices, right now,
Speaker 4: core inflation is already under two percent, so it's a
Speaker 4: great starting point. There are, however, some possibilities that inflation
Speaker 4: could be rising from these levels. So, for example, if
Speaker 4: you have fiscal policy that stimulates demand but not supply,
Speaker 4: all of the things being equal, that's inflation. Getting rid
Speaker 4: of the Affordable Care Act is inflationary on a long
Speaker 4: term basis. Not paying attention to climate change is inflationary.
Speaker 4: Think about the wildfire right now in California. How much
Speaker 4: that costs to bring under control, to rebuild, and then
Speaker 4: of course insurance costs go up for everyone afterwards. Just
Speaker 4: think about insurance costs right now in the state of
Speaker 4: Florida because of the bad storms over the last few years.
Speaker 3: Is the fiscal deficit our debt and deficit. Is it
Speaker 3: a constraint for President elect Trump?
Speaker 4: It is a constraint only if from a political standpoint
Speaker 4: it is a constraint right now. With the dollar as
Speaker 4: robust as it is, I think that they will be
Speaker 4: demand for treasury securities from around the world. And I
Speaker 4: also think that at current rates and maybe higher rates
Speaker 4: that we'll be seeing, there will be demand for those
Speaker 4: security and we can finance it. The question, of course,
Speaker 4: is the long term one. If we have a situation
Speaker 4: where we in fact see lower growth in population and
Speaker 4: labor force, that does not bode well for example, for
Speaker 4: the funding for social security and other needs of the government.
Speaker 3: And there's something going on in America. For those of
Speaker 3: you that listen every day, it's just plain and simple.
Speaker 3: I disaggregate. There are the haves the have nots. I
Speaker 3: think we saw that within the tension, the disparity, the
Speaker 3: polarization of this election. And I want to wrap it
Speaker 3: around the Nobel Prize of Osimo Blu Robinson and Simon Johnson.
Speaker 3: We hope to speak to Simon Johnson here in the
Speaker 3: coming days the Laureate on productivity his book Power and Progress,
Speaker 3: Abby Joseph Cohen with US now Columbia University. Abby, there's
Speaker 3: a labor input, there's a capital input, and there's a
Speaker 3: strange thing total total factor productivity. Bill Easterley at a
Speaker 3: school south of Columbi makes clear it's a huge part
Speaker 3: of economic growth. Is our productivity gain going to an
Speaker 3: ever narrower part of the American public.
Speaker 4: I think you've answered your question and the answer is yes,
Speaker 4: of course it has been. And one of the things
Speaker 4: that any new administration needs to address is to make
Speaker 4: sure that all of our people feel that they're participating
Speaker 4: in the American growth and the American dream. And one
Speaker 4: of the things that we need to focus on, of course,
Speaker 4: is long term investment, by which I mean are we
Speaker 4: investing in productivity, are we investing in education in our people?
Speaker 4: And are we investing in the scientific merit and the
Speaker 4: scientific progress that gave us so much economic growth over
Speaker 4: the past few decades. And the answer to those questions
Speaker 4: will really have a dramatic impact on all of us.
Speaker 4: One of the things I'm concerned about, quite frankly, is
Speaker 4: something called Schedule F, which has been talked about during
Speaker 4: the last few years. It was something that was in
Speaker 4: fact enacted by the prior Trump administration, but was gotten
Speaker 4: rid of immediately when mister Biden came into office. Now
Speaker 4: what is it. It's basically not looking at the top
Speaker 4: level of political appointees in the US government, but the
Speaker 4: next forty thousand. So there are ten thousand political appointees.
Speaker 4: Below them are the forty thousand experts in a variety
Speaker 4: of categories, and under Schedule F, many of these positions
Speaker 4: would be converted to political appointments rather than appointments based
Speaker 4: upon what do you know? And I worry that this
Speaker 4: will affect, for example, a number of our science agencies
Speaker 4: and will also affect a number of the agencies that
Speaker 4: are directly involved in boosting productivity throughout the economy.
Speaker 5: Again, we've been so focused on the political agenda over
Speaker 5: the last several days that we almost forget we've got
Speaker 5: a FED meeting today and that historically has had an
Speaker 5: impact on these markets.
Speaker 3: Are future FED Chairman Abby Joseph Colin. I think she's
Speaker 3: shortlisted by President Trump.
Speaker 5: Very good, Abby. What do you what do you what
Speaker 5: do you expect to hear from this FED today?
Speaker 4: You guys might recall that I started my career at
Speaker 4: the FED. I was a very junior economist, and I
Speaker 4: don't think I'm being invited back. The FED always works
Speaker 4: best when it is a political when it looks at
Speaker 4: the facts that it has in front of it and
Speaker 4: makes a decision about what needs to get done. Obviously,
Speaker 4: they do a forecast based upon their prospects for the economy,
Speaker 4: and at a time like this, whenever a new administration
Speaker 4: comes in, you're never quite sure what the new policies
Speaker 4: are really going to be. There's a big difference between
Speaker 4: the campaign and governing. So I believe that the FED
Speaker 4: will make an apolitical decision. They'll look at the data
Speaker 4: in front of them, which basically says the US economy
Speaker 4: is doing well. Inflation has come down except for housing
Speaker 4: as I mentioned before, and of course the price of eggs,
Speaker 4: which the Fed can control because of Avian flu. And
Speaker 4: I think the markets have it right in terms of
Speaker 4: expecting a twenty five basis point reduction in the FED
Speaker 4: Funds rate. But let's be clear. What is happening in
Speaker 4: recent weeks, of course, is that intermediate and long yields
Speaker 4: are going up. So what we're ending up with is
Speaker 4: a steeper yield curve, a more normal looking yell curve.
Speaker 4: And who borrows at the FED funds rate? You know,
Speaker 4: it's not individuals, it's not corporations, it's banks, So the
Speaker 4: banks will be borrowing at a somewhat lower FED Funds rate.
Speaker 4: The thing to watch, particularly if you're an equity investor,
Speaker 4: is what's happening at the intermediate and long yield level.
Speaker 4: And yesterday those yield all moved higher.
Speaker 5: So abby we're eighty percent through earnings for the S
Speaker 5: and P five hundred here, what have you seen?
Speaker 1: What have you heard?
Speaker 5: What? In terms of guidance and outlook here from this
Speaker 5: earning cycle for corporate America.
Speaker 4: The cycle has gone well. The economy underneath it has
Speaker 4: been growing well, not as quickly as it was in
Speaker 4: the immediate post pandemic period, but it's a good, solid,
Speaker 4: sustainable rate of increase. What I often look at, as
Speaker 4: do so many others, particularly this time of year, is
Speaker 4: the forward guidance. And what we have seen is that
Speaker 4: the forward guidance, why and large, is good. There are
Speaker 4: some exceptions. There are some companies with idiosyncratic problems that
Speaker 4: have decided not to issue forward guidance, but in general,
Speaker 4: what companies are saying is consistent with the consensus economic forecast,
Speaker 4: which is that there is no recession on the near
Speaker 4: term horizon. For the United States. Growth is pretty good,
Speaker 4: and it's good enough to generate not just profits but
Speaker 4: also jobs. Last month's data were disrupted by strikes and
Speaker 4: storms and so on, but it looks like we're creating
Speaker 4: enough new jobs for everyone who wants to look and
Speaker 4: get one. There's obviously friction. People need to take some
Speaker 4: time to find the right job for them, but this
Speaker 4: is an economy that's doing quite well.
Speaker 3: Abby Joseph Coin, thank you so much. Thrilled to have
Speaker 3: you on here. Two days after the nation votes Abby
Speaker 3: Joseph Cohen of Columbia University.
Speaker 2: You're listening to the Bloomberg Surveillance Podcast. Catch us live
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Speaker 3: I'm not going to mince words. We protect the copyright
Speaker 3: of all of our guests. Go to Morgan's family to
Speaker 3: get a jewel of a lengthy post election report by
Speaker 3: Monica where ahead of US policy at Morgan Stanley Wealth Management.
Speaker 3: Let me just get to exhibit one because it's sixteen
Speaker 3: hundred Pennsylvania Avenue. They're going to get to Exhibit one.
Speaker 3: Net interest outlays could account for nearly two thirds of
Speaker 3: the federal deficit. Forget about all the happy happy what's
Speaker 3: the budget constraint on the president elect?
Speaker 6: Yeah, that's a great question. Your first Thanks for having
Speaker 6: you guys. It's great to be back.
Speaker 4: But when your last time, yeah, it.
Speaker 3: Was Zetler like, it was a huge continue fantastic.
Speaker 6: Now, when we're thinking about the debt and deficit, what's
Speaker 6: important here is if you have a unified government, if
Speaker 6: we get to a place where Congress is unified, debt
Speaker 6: becomes less of a factor. Yes, we have this ballooning
Speaker 6: interest rate piece, it's going to have to become part
Speaker 6: of the discussion. But when you have you by government,
Speaker 6: that's when time to get your wishless items through and
Speaker 6: so it becomes less about fiscal responsibility. So the best
Speaker 6: thing for the Detton deficit is actually to have that
Speaker 6: gridlock Congress because then fiscal responsibility because the calling card.
Speaker 3: So what's going to happen here without a gridlock Congress?
Speaker 6: Yeah. So, I mean, if you're looking at just the
Speaker 6: baseline for the Tax Custom Jobs Act and you're extending that,
Speaker 6: it adds about five trillion to the federal deficit ten
Speaker 6: year period, ten year period. What it doesn't account for
Speaker 6: these estimates is any kind of government reduction or efficiency
Speaker 6: measures that Trump has talked about Musk measures, musk measures,
Speaker 6: if you want to call it that. I like that,
Speaker 6: I might use it copyright, but tail gets it. You know.
Speaker 6: The other factor is that there's no other sort of
Speaker 6: revenue raisers or clawbacks. So, for example, if they rolled
Speaker 6: back some of the clean energy tax credits, money that
Speaker 6: they can bring back into the government, well.
Speaker 3: A clawback at home is where you order the offspring,
Speaker 3: they have to eat the left over seamless exactly.
Speaker 5: That's a clawback monica. They say financial services, and we
Speaker 5: saw the big stocks. JP Morgan, we're sending Goldman sacs yesterday.
Speaker 5: Just sore Yep talk to us about financial services and
Speaker 5: how a Trump and a Republican administration Republican Congress will
Speaker 5: look at the financial services industry.
Speaker 3: Yeah.
Speaker 6: I mean a lot of the rip from yesterday is
Speaker 6: because of the deregulation promise, and that's what you're likely
Speaker 6: to see, especially with financials. You're likely to see an
Speaker 6: SEC that is shaped differently and let has different leadership,
Speaker 6: as well as potential push on the basil three endgame
Speaker 6: provisions to be looser and more flexible on the cap requirements.
Speaker 6: So that's going to be, you know, a really big factor.
Speaker 6: You know, other areas that are deregulatory rate or AI tech, crypto,
Speaker 6: so we're likely to continue to see tailings in those areas.
Speaker 1: How about it.
Speaker 5: I think if I'm an M and a banker or
Speaker 5: an M and a attorney, I feel pretty good now,
Speaker 5: because I mean the regulatory environment that from the Federal
Speaker 5: Trade Commission to the Department of Justice it's been tough
Speaker 5: to get deals done and improved. Is that also a benefit?
Speaker 6: That is going to be a huge beneficiary. Lena Kon
Speaker 6: does not have a job in January, right, I mean,
Speaker 6: she probably will be employed, but not in the government.
Speaker 6: And so at this point, you know, that's going to
Speaker 6: be an area that we look to. You could see
Speaker 6: m and A activity pick up as a response to that.
Speaker 5: Are you paying attention to like a cabinet, a Trump cabinet,
Speaker 5: because I'm not sure where the Trump cabinet is going
Speaker 5: to come from or when we're going to hear about that,
Speaker 5: but my assumption is that's going to be important as
Speaker 5: to where policy goes.
Speaker 6: Yeah, and we're definitely paying attention to that. We're paying
Speaker 6: particular attention to, you know, who's you know, adding up
Speaker 6: the treasury. One of the things that is critical that
Speaker 6: we saw even at the RNC convention was that this
Speaker 6: is really Trump's party, So a lot of the rank
Speaker 6: and file are officially sort of sideline. At this point,
Speaker 6: the party has changed, the mood has changed, and so
Speaker 6: it'll be a lot of folks that have ideological similarities
Speaker 6: with Trump.
Speaker 3: Part of the grid arm is on your Rezumi, director
Speaker 3: of capital budget and economic deve development point the City
Speaker 3: of New York, it means it gets great Yankee stickers. Yeah,
Speaker 3: not that that means anything, Monica. Just to cut to
Speaker 3: the chase with the immigration shock of this election, how
Speaker 3: do we deport exit remove a migrant immigrant from say
Speaker 3: New York City or Chicago, doesn't really matter. How do
Speaker 3: you actually budgetarily affect that.
Speaker 6: It's going to be greater funding towards the Department of
Speaker 6: Homeland Security. That's gonna be the first place that they
Speaker 6: that they increase spending. We think that that's going to
Speaker 6: be underneath a national defense uh and security budget line. Now,
Speaker 6: if we're thinking about the actual practicality of it state
Speaker 6: by state.
Speaker 3: Right state by state, it's.
Speaker 6: Going to be an issue. You're going to have New
Speaker 6: York you know, fight to keep people you know safe
Speaker 6: for you know, a sanctuary, especially in sanctuary city structures.
Speaker 6: That's going to be a problem.
Speaker 3: That's going to be an Albany issue in the case
Speaker 3: of New York, not a New York City issue.
Speaker 6: New York City could get involved, but Albany is going
Speaker 6: to probably be leading the charge. Now, the thing that's
Speaker 6: important here is that the states that are friendly to
Speaker 6: these policies, you know, will open the doors and allow
Speaker 6: for a smooth process. Doesn't mean that the DHS and
Speaker 6: the federal government doesn't have jurisdiction in parts of New York.
Speaker 6: I'm not the expert on that, but I can tell
Speaker 6: you that the legal battles in the Blue states that
Speaker 6: especially take their sanctuary city responsibilities you know seriously, that
Speaker 6: could become, you know, a real problem for the administration.
Speaker 3: Thank you so much to you in the Morgan Stanley
Speaker 3: for your perspective on this. We'd love to have you
Speaker 3: in as this debate continues into two thousand and twenty five.
Speaker 3: Monica Buerra is head of US Policy for Morgan Stanley.
Speaker 2: This is the Bloomberg Surveillance Podcast. Listen live each weekday
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Speaker 3: Jackie Bowie Sarah partnered on YouTube. You can see that
Speaker 3: Jackie Bowie is esconced in this November with the Red Poppy.
Speaker 3: Tell our American audience you have a jeweled red poppy.
Speaker 3: It is lovely tell us of the British and World
Speaker 3: War One and November eleventh and the red poppy.
Speaker 1: Yeah well, I mean it's such a big day for
Speaker 1: us in the UK where and whilst the poppy is
Speaker 1: to represent also the poppy fields after the war ended,
Speaker 1: the celebration and recognition on the eleventh of November is
Speaker 1: really through all the wars and people who've given their
Speaker 1: lives for their country. So yeah, we take it very seriously.
Speaker 1: You can buy lots of different types of poppies now
Speaker 1: and obviously all of that the nation goes to the
Speaker 1: Royal British Legion for the veterans.
Speaker 3: Very good. Let us talk about the loneliness of the
Speaker 3: United Kingdom. We have a left government, a labor government,
Speaker 3: Tories or Trance. John Burns Murdoch has a fabulous chart
Speaker 3: today showing the crater the Tories versus Italy versus Trump
Speaker 3: in the election here in the United States. How lone
Speaker 3: is the United Kingdom right now? Within G seven.
Speaker 1: Yeah. Well, it certainly feels like some of the political
Speaker 1: statements that were made in the run up to the
Speaker 1: election and afterwards are really divergent from what's happening in
Speaker 1: the rest of Europe. We talked briefly obviously this morning,
Speaker 1: just on the stance on immigration in different countries, taking
Speaker 1: a slightly stronger view on asylum seekers countries that were
Speaker 1: very pro immigration before. So the Labor government have come
Speaker 1: in and kind of paused the previous government's route to
Speaker 1: taking illegal immigration illegal migrants to Rwanda. That was the
Speaker 1: plan to take them for the processing and then decide
Speaker 1: whether they had the right to remain in the UK.
Speaker 1: So that plan is now being completely taken away and
Speaker 1: we're just kind of waiting to see. So yeah, it
Speaker 1: does feel that we're the UK is sort of out
Speaker 1: in a line, which is interesting, right because we're an island,
Speaker 1: so if anything, we should potentially have a stronger position.
Speaker 5: So the Bank of a cut rates again today. It
Speaker 5: was a sense of kind of what the Bank of
Speaker 5: England is thinking in terms of interest rates and the
Speaker 5: economy in the UK.
Speaker 1: Yeah, So, I mean twenty five basis points was as expected.
Speaker 1: If we had taught just a week ago before the budget,
Speaker 1: we would have said twenty five basis points for November
Speaker 1: and a further twenty five likely in December, and that's
Speaker 1: been the big shift. So the UK budget was absolutely
Speaker 1: about tax raising, about spending in public services with no
Speaker 1: conditions of improvement and productivity, and that has led the
Speaker 1: market to start to reduce their expectation that we'll get
Speaker 1: a further twenty five in December. I think the other
Speaker 1: thing to bear in mind is everyone's focused in this
Speaker 1: headline inflation target, which you know, at the two percent
Speaker 1: we've obviously the Bank of England is just out so
Speaker 1: we've not kind of digested the full statement yet, but
Speaker 1: it looks like the inflation forecast for next year we'll
Speaker 1: be around two point six two point seven percent, So
Speaker 1: you're starting to see that you're not getting inflation at
Speaker 1: that two percent target.
Speaker 3: Why is the American Catherine man as a member of
Speaker 3: the Bank of England dissenting and saying don't cut rates?
Speaker 3: Is it a phenominal GDP crow she is?
Speaker 1: I mean she's always been kind of on that side
Speaker 1: of the fence if you look at her voting history,
Speaker 1: so she's been consistent for one. But yeah, you're right,
Speaker 1: I mean an eight to one vote with her being
Speaker 1: the only center in this time round. She continues to
Speaker 1: focus on that inflation number and particularly the underlying services
Speaker 1: inflation and wage inflation in the UK, saying that this
Speaker 1: inflation issue is not under control, so rates should be
Speaker 1: kept higher.
Speaker 3: All right.
Speaker 5: If Tom and I were to come over to the UK,
Speaker 5: which we're working on that as we speak through her
Speaker 5: and go to the Highlands or the Midlands, and what
Speaker 5: are the person on the street, what are they saying
Speaker 5: about the economy in the UK these days?
Speaker 1: I would say it's very similar to the US in
Speaker 1: that everyone is talking about and we say this cost
Speaker 1: of living as a catch holl and the major things
Speaker 1: for the UK, which I think is the same in
Speaker 1: the US as food prices. The second yeah, And the
Speaker 1: second thing for the UK, which I don't feel you
Speaker 1: get the same situation here is fuel prices. So we
Speaker 1: have huge taxes on our fuel fuel underlying fuel prices
Speaker 1: just higher in the UK. So if you're driving, you know,
Speaker 1: a combustion engine, non electric car, and the cost of
Speaker 1: filling up your car and heating your house has gone
Speaker 1: up massively. I mean, I think my utility bills are
Speaker 1: probably up about forty five percent.
Speaker 3: How can labor ram through tax increases?
Speaker 1: Good question.
Speaker 3: The debate is very different from here. There's a huge
Speaker 3: understanding that mister Trump Day one Day two, Day three
Speaker 3: will extend or codify if you will, the Trump tax cuts.
Speaker 3: Is it just genuine Clement et Lee austerity from the
Speaker 3: middle of the twentieth century. Is it just England demands
Speaker 3: to be austere.
Speaker 1: Well you would say it's the opposite, right, because the
Speaker 1: government are spending like billyo despite the deficit being where
Speaker 1: it is, again similar to other countries, the UK is
Speaker 1: not alone in that. But to put through all these
Speaker 1: tax increases which are to support the public sector. So
Speaker 1: let's look at where that spending is going. You know,
Speaker 1: when you're increasing taxes, particularly on employers and national insurance taxation,
Speaker 1: there's nothing in it which has growth oriented, which is
Speaker 1: why it was taken so negatively. I don't think anyone
Speaker 1: has any issues with government spending if you then end up,
Speaker 1: you know, really boosting growth. But after the budget was announced,
Speaker 1: the people saw the extent of the total spend over
Speaker 1: the next four years, right, but no change to the
Speaker 1: growth forecast, and.
Speaker 3: Like literally almost all of the Tottenham Spurs soccer team
Speaker 3: threatening to leave the country, which actually would probably be
Speaker 3: constructive for time.
Speaker 5: For exactly just about I don't know how many years
Speaker 5: on we are from seventy eight years on from Brexit,
Speaker 5: what's the feeling today, I mean, what's the case.
Speaker 1: Yeah, people have stopped complaining about it. I think the
Speaker 1: one thing I would say though, is it's been really
Speaker 1: difficult to separate out the impact of Brexit on the
Speaker 1: economy because we hit COVID right and you're starting to say, well,
Speaker 1: it's the UK situation because of Brexit or because of COVID.
Speaker 1: If you dig really deep into it and looking at
Speaker 1: some of the trade numbers, etc. It looks like the
Speaker 1: UK is actually done. Okay, okay, So, but it's.
Speaker 5: A lot of the dumb question of the day. When
Speaker 5: you fly to Berlin or Geneva, do you have to
Speaker 5: go through customs now and passport control?
Speaker 1: Yes, so you always had to go through passport control,
Speaker 1: but you were classed as an EU traveler.
Speaker 5: So now you're not. You're not, and it's that much
Speaker 5: more difficult now.
Speaker 1: It depends where you go. So interestingly, if you go
Speaker 1: to so I had a few trips in the summer
Speaker 1: fortunately to Palma and New YORKA, so it's been you
Speaker 1: just go through the electronic gates as normal. The only
Speaker 1: difference is you have to get a STEMP if you
Speaker 1: go to Patis or any French airport, you are in the.
Speaker 3: That's the news you use. Yeah, I was sort of
Speaker 3: shocked how easy it was when I went over to
Speaker 3: Rome last Wen Gates. But the luggage took hours. The
Speaker 3: luggage was an absolute outrage. It was like people were
Speaker 3: really upset and.
Speaker 5: You've got many pieces of luggage.
Speaker 3: We have like Emily Rowland's coming in from John Hancock
Speaker 3: today and she's been dead on about American exceptionalism by
Speaker 3: large cap America. Can we buy large cap Footsie?
Speaker 1: You can, but the definition of large cap in your
Speaker 1: global world, I mean large cap Footsie is not going
Speaker 1: to be very large cap for you Britain. And the
Speaker 1: other thing, I think we talked about this when I
Speaker 1: was in before about I don't remember.
Speaker 3: I don't remember when I talked to last I remember
Speaker 3: you dinner.
Speaker 1: By the interesting thing for UK stocks is, and you've
Speaker 1: seen this from your market where there's a lot of
Speaker 1: the larger companies deciding to dealist from the UK and
Speaker 1: choose to list in the US because they have a
Speaker 1: broader investor base and they you know, arguably their stock
Speaker 1: gets better valued. So a combination of that and the
Speaker 1: fact that private equity have been doing a lot of
Speaker 1: take privates in the UK, so d listing companies. The
Speaker 1: choice of things to invest in the UK is getting
Speaker 1: smaller and smaller.
Speaker 3: Jackie, thank you, what a brief Jackie Boy, thank you
Speaker 3: so much for chatam at Europe.
Speaker 2: This is the Bloomberg Surveillance Podcast. Listen live each weekday
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Speaker 3: With that question, our conversation of the day on the
Speaker 3: future of the left, the future of the Democratic Party. Thrilled,
Speaker 3: just really thrilled. Christina Greer could join us from Fordham.
Speaker 3: She's truly expert on the pulse of a nation that
Speaker 3: I guess was defeated we would say two days ago.
Speaker 3: We'll talk to Professor Greer about that. A lot of
Speaker 3: investment ideas as well. Again with futures at fourteen, let's
Speaker 3: get right to it. We're on YouTube. Subscribe to Bloomberg Podcast.
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Speaker 3: Bloomberg Podcast on your commute this morning, Apple car Play,
Speaker 3: Android Auto and good morning in Washington ninety ninety one
Speaker 3: FM up to Boston ninety two to nine in Boston
Speaker 3: from the Interactive Brokers Studios, the Bloomberg Business Flash Lisa Matteo.
Speaker 7: After the dowstart, so it's biggest gain in two years yesterday.
Speaker 7: Right now, down Future is little changed, up about ten points.
Speaker 7: NAZAC Future is up four tens and percent ninety nine points.
Speaker 7: We have SMP futures up two tens and percent or
Speaker 7: fifteen points. We have the two year yield at four
Speaker 7: point two two percent, that's down four basis points. They
Speaker 7: yield on the ten year four point three nine percent,
Speaker 7: that's down three basis points. To currency is a difference
Speaker 7: here too, the dollar retreating. It had its best day
Speaker 7: since twenty twenty two yesterday. Japanese yen stronger, Euro, British
Speaker 7: pound stronger. We have bitcoin, what a difference a day
Speaker 7: makes there too, down one and a half percent after
Speaker 7: it rallied almost ten percent yesterday. It's now at about
Speaker 7: seventy four thousand. Checking in with two stocks that really
Speaker 7: stored after Donald Trump was elected president. Shares of dj
Speaker 7: T they're now down fourteen percent, and shares of Tesla
Speaker 7: down about three tens of percent. Moving over to shares
Speaker 7: of Qualcomm. That's the world's biggest seller smartphone processors. Well,
Speaker 7: they're up five percent, shares of five percent and had
Speaker 7: a bullech sales forecast. Smartphone demand picked up, but then
Speaker 7: you have ARM holdings down three percent. It had a
Speaker 7: little bit more of a tentative outlook. That is your
Speaker 7: Bloomberg business flash, Tom and Paul.
Speaker 3: Thanks so much. Lisa greatly appreciate it. You know, we've
Speaker 3: been talking Eric and as we pieced together the show
Speaker 3: of who we want on to pick up the pieces
Speaker 3: after concession speech yesterday by Vice President Harris, and the
Speaker 3: first name that came up holds Court at Fordham University.
Speaker 3: She holds an absolute franchise. There's no other way to
Speaker 3: put it on blacks within the political process in America,
Speaker 3: there's one item which I just say, I love the type.
Speaker 3: I mean, she sits all day and tries to figure
Speaker 3: out these titles. A nation divided still, how a vote
Speaker 3: for Trump says more about the voter than the candidate himself.
Speaker 3: That in twenty seventeen, Christina Greer joins us this morning. Christina,
Speaker 3: there was an eloquence in Vice President Harris's exit yesterday,
Speaker 3: how do the Democrats pick up the pieces?
Speaker 8: And good morning gentlemen. I do think that the Democrats
Speaker 8: need to come to the table and try and figure
Speaker 8: out what happened. Now, keep in mind, it's barely been
Speaker 8: thirty six hours, so this all feels a little bit
Speaker 8: like Monday morning quarterbacking Go Eagles. So as the Democrats
Speaker 8: try and figure out a fifty state strategy, as they
Speaker 8: try and rebuild state houses across the country, as they
Speaker 8: try and tap into whatever policy issues beyond just economic issues. Now,
Speaker 8: keep in mind, you know, many Americans felt they go
Speaker 8: to the polls because of pockebook issues, but they felt
Speaker 8: inflation was too high. That you know, when they had
Speaker 8: their bills at the end of the month, things weren't
Speaker 8: going in their direction. It's a complicated story for Democrats
Speaker 8: to tell to say, well, under Trump and some of
Speaker 8: his policies, and usually in Republican policies with tax picks
Speaker 8: to the wealthy, Democrats have to come and rebuild the
Speaker 8: social safety net that Republicans tend to take away, and
Speaker 8: also rebuild the economic foundation of the nation. That's a
Speaker 8: much longer argument because voters don't really care about how
Speaker 8: they feel in that present moment, and clearly that message
Speaker 8: wasn't articulated to the voters the way the democratics needs
Speaker 8: needed it to be.
Speaker 3: To pick up the pieces and looking at the punditry
Speaker 3: across the East Coast and the elite you're part of
Speaker 3: the game, you know, the educated elite and all that.
Speaker 3: As you correctly stay, they have to speak to fifty states.
Speaker 3: Doesn't that simply mean the left has to move to
Speaker 3: the middle.
Speaker 8: Well, this is where it gets frustrating. I mean, in
Speaker 8: the past, you know, Jesse Jackson is the architect of
Speaker 8: the fifty state strategy if you remember his nineteen eighty
Speaker 8: four but his incredibly successful nineteen eighty eight campaign. But
Speaker 8: you know, I always show my students the distribution curve
Speaker 8: right that hump in the middle. In the past, we
Speaker 8: have had presidents who all clustered around the middle. We
Speaker 8: had George H. W. Bush, we had Bill Clinton, George W. Bush, Obama.
Speaker 8: That is in our modern presidency, that's where presidents hung out.
Speaker 8: Obama was not a radical about.
Speaker 3: This is really important. David Brooks's let's say a couple
Speaker 3: of weeks ago, was brilliant on this. As you are
Speaker 3: right now, Professor, what happened? How did the Democrats decide
Speaker 3: to polarize versus state of the middle as President Obama
Speaker 3: and President Clinton did well.
Speaker 8: The historical context is important because Donald Trump pulled the
Speaker 8: party far, far, far to the right. Now we've seen
Speaker 8: people campaign on the margins but then govern and win
Speaker 8: a general election in the middle. He was successful by
Speaker 8: never coming to the middle. Never he pulled his party
Speaker 8: to the far right, because in many ways it's a
Speaker 8: campaign of populism and the candidate himself. So Democrats tried
Speaker 8: to chase that as they moved farther and farther to
Speaker 8: the right and left out a core element of their
Speaker 8: base on the left. And so as they try and
Speaker 8: figure out what that means, some of the concern among
Speaker 8: Democrats is, since the Democrats have moved more to the
Speaker 8: center and more to the right, will they stay there
Speaker 8: or will they go back to the left and really
Speaker 8: hammer in which I think they did an excellent job,
Speaker 8: but hammer in some key issues, union membership, making sure
Speaker 8: public education is accessible, making sure climate change is acknowledged
Speaker 8: so people don't have to worry about constantly moving because
Speaker 8: of climate and becoming climate refugees. Within their own country.
Speaker 8: There are larger, much more complicated issues that the Democrats
Speaker 8: were trying to explain to the American public. But Donald
Speaker 8: Trump sells something very different, and we cannot ignore the
Speaker 8: fact that he sells a type of brand of American
Speaker 8: whiteness that is very attractive to a large percentage of
Speaker 8: this country and many people who aren't even white. There's
Speaker 8: an element that James Baldwin explains so much better than
Speaker 8: I there's an element of white supremacy in this nation
Speaker 8: that we have to be real about the fact that
Speaker 8: it still exists that he sells that is incredibly attractive
Speaker 8: to voters and has been for quite some time.
Speaker 5: And Christina, you point on one of the issues. I
Speaker 5: thought it was really interesting as I start reading some
Speaker 5: of the analysis of the voting that President Trump did
Speaker 5: surprisingly well with American and Latino and particularly on the
Speaker 5: male side. What do you make of that?
Speaker 8: Well, I think some of it is just baked in misogyny.
Speaker 3: Period.
Speaker 8: There's some people men and women, who will never be
Speaker 8: able to vote for a woman at the top of
Speaker 8: the ticket. We're one of the few democracies of our
Speaker 8: stature who's never had a female elected leader. And I
Speaker 8: think that stands out on the global stage his inroads
Speaker 8: with African American men, albeit in certain states he went
Speaker 8: up a few percentage points. And I think that that
Speaker 8: is a conversation in a black politics sphere because Black
Speaker 8: people are so ideologically different, but by and large or
Speaker 8: trapped in we call a party capture in one particular party. However,
Speaker 8: black women and Black men are still by and large
Speaker 8: incredibly more supportive of Kamala Harris and the Democratic Party
Speaker 8: at large. Latino men and a growing population of Asian
Speaker 8: American men as well are more attracted to the populism
Speaker 8: and the economic promises of Donald Trump. Now they remain
Speaker 8: to be seen because they were not materialized during his
Speaker 8: first tenure, but there's a certain level of you know,
Speaker 8: if Belle Hooks explains sort of supremacy to us of patriarchy,
Speaker 8: that is incredibly attractive to a lot of new voters.
Speaker 3: Chris Christina Geer. Wendy Schiller was on earlier from Brown
Speaker 3: I think associated with a more democratic tinge of academic politics,
Speaker 3: and she mentioned how Ducacas went down in flames, and
Speaker 3: you turn right around and you find a central Southerner
Speaker 3: in William Jefferson Clinton, and off you go with the
Speaker 3: Democratic Party recovery. Do we have within a fractured Democratic
Speaker 3: Party the ability to move to the center, whether it's
Speaker 3: to the south or the Midwest or the blue wall
Speaker 3: that Trump took took.
Speaker 8: I think we're gonna have to excavate what states. You know,
Speaker 8: Georgia is increasingly purple. But it's not just the voters,
Speaker 8: it's the infrastructure. In many of those states, we have
Speaker 8: you know, secretaries of state that make it harder and
Speaker 8: harder for people to participate.
Speaker 6: We have to.
Speaker 8: Excavate what happened in a place North Carolina where Democrats
Speaker 8: did incredibly well democratic you know, governor, lieutenant governor, attorney general,
Speaker 8: but somehow the presidency was lost and so and even
Speaker 8: in Virginia being a little tighter. So it really, honestly
Speaker 8: for me, depends on who will be in charge of
Speaker 8: the DNC and the d tripleC to really organize some
Speaker 8: of the data that we're seeing, and we're still seeing.
Speaker 3: We got time. This is a really important Thank you
Speaker 3: so much, professor for bringing this up. Who would you
Speaker 3: like to see to take that tough job to pick
Speaker 3: up the pieces of a shattered left?
Speaker 8: Honestly, someone like a Pete Bodhagicge, who clearly has a
Speaker 8: way of serving as a faithful surrogate but understanding a
Speaker 8: zeitgeist of the American public that I didn't think I'd
Speaker 8: ever say that, but he's quite impressive in a three
Speaker 8: hundred and sixty view.
Speaker 3: Professor, don't be a stranger. Thank you so much, Christina Greer,
Speaker 3: Florida University.
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