WEBVTT - Central Banks Around the World Have Overreached, Plosser Says 0:00:00.240 --> 0:00:04.040 Runt You by Bank of America Mary Lynch. With virtual reality, 0:00:04.320 --> 0:00:09.719 virtually everything will change. Discover opportunities in a transforming world. 0:00:10.119 --> 0:00:14.440 Be of a, mL dot Com, slash VR, Mary Lynch, 0:00:14.520 --> 0:00:29.240 Pierced Fenner, and Smith Incorporated. Welcome to the Bloomberg Surveillance Podcast. 0:00:29.280 --> 0:00:32.760 I'm Tom Keene with David Gura. Daily we bring you 0:00:32.840 --> 0:00:37.680 insight from the best of economics, finance, investment, and international relations. 0:00:38.120 --> 0:00:43.640 Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, Bloomberg dot Com, 0:00:43.640 --> 0:00:51.880 and of course, on the Bloomberg Good Morning everyone, David 0:00:51.920 --> 0:00:55.440 Gura and Tom came. Mr Gura on assignment in Sun Valley, Idol. 0:00:55.560 --> 0:00:57.320 How do you be scarlet? How do you be on 0:00:57.440 --> 0:01:01.720 assignment in Sun Valley Idole? Myself? Come on, you know 0:01:02.440 --> 0:01:04.880 they never say scarlet food. Please go to Idaho or 0:01:05.200 --> 0:01:07.600 no they and you know it's it's so odd. He 0:01:07.920 --> 0:01:09.520 goes for an entire week at a time in the 0:01:09.600 --> 0:01:12.920 middle of July. It's it's all very suspicious. It's very suspicious. 0:01:12.920 --> 0:01:15.120 Scarlet food with us. If you didn't notice that, it's 0:01:15.200 --> 0:01:18.320 always a good thing. We will try to refrain. Diminished down, 0:01:18.360 --> 0:01:22.360 the hockey, diminished down, the New York Rangers discussions. There's 0:01:22.400 --> 0:01:24.039 a lot to be excited for on that front. There 0:01:24.120 --> 0:01:25.840 is two and Howard Word will be with us here 0:01:25.840 --> 0:01:29.559 in a moment. Sometimes Howard where's his New York Rangers 0:01:29.800 --> 0:01:33.280 tie into Bloomberg surveying? Not doing it today though exactly 0:01:33.319 --> 0:01:39.160 Bluin blew what white Bluin it's British, It's it's it's 0:01:39.200 --> 0:01:41.440 British to do. We'll get to Howard Ward in a minute. 0:01:41.440 --> 0:01:46.360 We say good morning, economics, finance, investment, politics, international relations. 0:01:46.520 --> 0:01:49.720 Huge day, huge news flow out of Washington, will do 0:01:49.760 --> 0:01:53.400 that along the way. Bloomberg surveillance this morning, Howard Ward 0:01:53.880 --> 0:01:57.840 with us, with Gabelly. And it's a wonderful time to 0:01:57.880 --> 0:02:00.360 talk to Howard Ward because he stated earlier how you're 0:02:00.360 --> 0:02:04.680 more cautious here the the elevation the multiples in such 0:02:05.080 --> 0:02:07.200 when do or are we even close to getting back 0:02:07.200 --> 0:02:11.120 to where yield is competition for dividend? Are we are? 0:02:11.160 --> 0:02:13.320 We miles away from where we go? I can make 0:02:13.360 --> 0:02:14.840 this in a bond, I can make this in a 0:02:14.880 --> 0:02:19.520 stock um well not really. When you look at the 0:02:19.560 --> 0:02:22.079 historical numbers where you had, let's say for the last 0:02:22.120 --> 0:02:24.640 thirty years and average yield on the tenure treasury of 0:02:24.680 --> 0:02:29.000 six and now it's two point four percent. That's still 0:02:29.000 --> 0:02:32.680 in that very attractive dividend yields right around two percent. 0:02:33.280 --> 0:02:36.320 So dividend really is for people that can have the 0:02:36.360 --> 0:02:39.280 patients to buy stocks and let the dividends grow. You're 0:02:39.320 --> 0:02:42.040 probably if you can handle the f altility of stocks, 0:02:42.040 --> 0:02:44.760 probably better offgoing the dividend route. I think that's been 0:02:44.800 --> 0:02:48.240 a major source of demand for stocks in recent years. 0:02:48.280 --> 0:02:51.200 So bonds bonny yields have a long ways to go 0:02:51.680 --> 0:02:55.960 before they really start to uh be competition for stocks. 0:02:56.000 --> 0:02:59.120 That's not to say that higher interest rates will not 0:02:59.760 --> 0:03:02.800 uh force a penalty on stocks, because I think they will. 0:03:03.000 --> 0:03:05.480 But I will say this that with all the talk 0:03:05.560 --> 0:03:08.480 about where bond yields are today, they're basically where they 0:03:08.480 --> 0:03:11.240 were in December of two thousand and fifteen when the 0:03:11.280 --> 0:03:15.560 FED made their very first tightening measure of this cycle. So, um, 0:03:15.600 --> 0:03:18.960 we've been trading between let's say a two percent yield 0:03:19.000 --> 0:03:21.200 and a two point six percent yield ever since, and 0:03:21.280 --> 0:03:22.640 right now we're sort of in the middle of that. 0:03:23.400 --> 0:03:25.239 How are you one of those people who are worried 0:03:25.280 --> 0:03:31.800 about an unwind of the risk parity trade? Uh, specifically 0:03:31.800 --> 0:03:34.960 in what sense well, with bonds and stocks falling. I mean, 0:03:35.000 --> 0:03:37.000 things have stabilized the last two days, but for a 0:03:37.000 --> 0:03:39.000 while last week there was a lot of talk that 0:03:39.040 --> 0:03:42.640 there is going to be this unwinding of UH risk 0:03:42.640 --> 0:03:44.720 parity trades in which stocks and bonds would fall at 0:03:44.720 --> 0:03:46.680 the same time, and there are so many lever bets 0:03:46.760 --> 0:03:51.240 on that positive rate stock correlation. Yeah, I Scarlet, I 0:03:51.240 --> 0:03:53.960 think that's a possibility, and it it certainly could happen 0:03:54.400 --> 0:03:56.720 over a very short term. But what I do think 0:03:56.800 --> 0:03:59.920 is more likely to happen is that bond yields decline 0:04:00.200 --> 0:04:03.880 in the face of weakening economic activity, and the stock 0:04:03.960 --> 0:04:08.480 market declines um due to issues that might have to 0:04:08.480 --> 0:04:10.600 do with growing trade friction, because I think that's going 0:04:10.640 --> 0:04:14.320 to be a big issue over the next several months. UH, 0:04:14.440 --> 0:04:16.599 because the FED is also tightening. I think that's another 0:04:16.640 --> 0:04:19.520 problem in terms of policy. Trade policy is a problem 0:04:19.520 --> 0:04:22.640 headwind for stocks, Monetary policy is a headwind for stocks. 0:04:22.800 --> 0:04:25.880 Fiscal policy is doing nothing to help stocks, and so 0:04:25.920 --> 0:04:31.200 I think the economic news deteriorates, UH bonny yields go down, 0:04:31.560 --> 0:04:36.280 not up, and the risk parity trade may they may 0:04:36.440 --> 0:04:38.760 go down. In sympathy every now and then, But but 0:04:38.839 --> 0:04:41.560 I think the primary trend for the next five percent move. 0:04:41.640 --> 0:04:44.240 Let's say in stocks, I think stocks are down UH 0:04:44.480 --> 0:04:46.919 is the next five percent move and UH and bonny 0:04:46.960 --> 0:04:49.000 yields will likely be going down with them, all right, 0:04:49.040 --> 0:04:51.599 so we'll continue to see a move into the safe 0:04:51.600 --> 0:04:54.880 haven of bonds UM. You mentioned the economic surprise index 0:04:54.920 --> 0:04:58.200 and how the rate of surprises from the data has 0:04:58.240 --> 0:05:02.159 been coming down. There's been some research done. People have 0:05:02.440 --> 0:05:04.880 pointed out how if you look at a sitecre economic 0:05:04.880 --> 0:05:07.359 surprise index over the last seven or eight years, it 0:05:07.440 --> 0:05:10.200 bottoms around June and each of the previous six years, 0:05:10.200 --> 0:05:13.040 and this is a self reverting, self correcting mean for 0:05:13.160 --> 0:05:16.280 reverting index for the most part, and we've bounced back up. 0:05:16.640 --> 0:05:19.440 What does that tell you, Well, we've had a little 0:05:19.440 --> 0:05:23.720 bit of a bounce after a really a three month collapse. 0:05:23.960 --> 0:05:26.280 And so if we look a little bit deeper at 0:05:26.320 --> 0:05:29.640 some of the underlying economic data, we know that auto 0:05:29.680 --> 0:05:32.120 sales are soft and production cuts have been announced for 0:05:32.120 --> 0:05:35.400 this quarter. We know housing activity has slowed. We know 0:05:35.480 --> 0:05:39.680 commercial industrial loan growth is slowing. We know credit delinquencies 0:05:39.680 --> 0:05:42.799 are growing across the credit chain. We know retail sales 0:05:42.839 --> 0:05:45.760 have been soft, and inventory to sales ratios have been rising. 0:05:46.200 --> 0:05:50.680 We know durable goods orders, especially X defense and aircraft 0:05:50.720 --> 0:05:55.120 are soft. We know payroll growth is slowing. NIPPA profits 0:05:55.160 --> 0:05:58.719 actually declined in the press when somebody get by medications, please, 0:05:59.000 --> 0:06:01.880 NIPPA profits actually declined last quarter. They didn't rise like 0:06:02.000 --> 0:06:06.279 S and P profits. And uh we we've we And 0:06:06.279 --> 0:06:09.120 as I mentioned earlier, trade policy is about to get 0:06:09.160 --> 0:06:11.960 I think very heated because the one hundred days that 0:06:12.000 --> 0:06:15.719 Trump gave China to negotiate a trade deal expires next week. 0:06:16.560 --> 0:06:22.200 So are we in cash? No, because you know this 0:06:22.240 --> 0:06:24.520 is this is really hard, this market time and stuff. 0:06:24.560 --> 0:06:27.800 I don't advocate it. I'm just saying that you will 0:06:27.839 --> 0:06:30.080 probably get a better entry point for stocks and and 0:06:30.560 --> 0:06:33.120 otherwise you should try to be defensively. What does that mean. 0:06:33.240 --> 0:06:35.799 That's a great phrase. It's a famous Howard word phrase 0:06:36.160 --> 0:06:39.560 to help our our our audience. What is the tactical 0:06:39.720 --> 0:06:45.800 to do given an uber bulls caution, Well, if you 0:06:45.800 --> 0:06:48.479 want to stay in the market, you you you gravitate 0:06:48.640 --> 0:06:52.599 towards the more defensive names, the names that have lower beta, 0:06:53.080 --> 0:06:57.719 specifically lower beta, because that's been the most reliable banks metric. No, 0:06:57.960 --> 0:07:00.480 not not the banks. The banks the bank trade has 0:07:00.520 --> 0:07:03.640 been conditioned upon rising rates and rising loan growth, and 0:07:03.680 --> 0:07:05.240 I don't think either one of those is going to 0:07:05.279 --> 0:07:08.640 pan out. So what's a lower beta defensive position. Healthcare, 0:07:09.120 --> 0:07:13.880 consumer staples, utilities would be the three primary sectors. In fact, 0:07:14.640 --> 0:07:18.920 the latest new position in my portfolio is next Era Energy, 0:07:19.080 --> 0:07:21.720 which is in electric Italy, the old Florida Power and Light. 0:07:21.760 --> 0:07:29.280 It's the meeting. It's the leading generator of UH solar 0:07:29.360 --> 0:07:33.760 and principally when alternative energy in the United States where 0:07:33.800 --> 0:07:37.440 you're you are CEO of Growth Equities, right, Yes, So 0:07:37.520 --> 0:07:42.000 this is a business that is growing at around in total, 0:07:42.040 --> 0:07:45.560 including the regulated part, at about eight percent. And I 0:07:45.640 --> 0:07:50.760 will challenge you to find consumer staples names that are 0:07:50.800 --> 0:07:53.840 growing at eight percent. They're probably growing much less and 0:07:53.880 --> 0:07:57.120 they're priced much higher. This is fascinating. This is the 0:07:57.120 --> 0:08:00.400 old Florida Power Light. It is back in our back 0:08:00.440 --> 0:08:03.800 on Scarlett. How did I remember this? Where you owned 0:08:03.840 --> 0:08:07.120 like six utilities and one was always FPL And this 0:08:07.200 --> 0:08:10.640 is next What separates them from Dominion or the other 0:08:10.760 --> 0:08:14.000 victims of our ute, it's their large presence in wind 0:08:14.080 --> 0:08:17.880 power and solar power. And I think it's not well 0:08:17.920 --> 0:08:21.040 known than in much of the South and central United States. 0:08:21.160 --> 0:08:24.720 Right now, without any subsidies, wind power is cheaper than 0:08:24.760 --> 0:08:27.640 the alternatives. Can you can you book in here five 0:08:27.720 --> 0:08:30.360 year dividend growth of ten percent per year, that's a 0:08:30.360 --> 0:08:35.320 phenomenal number for for next Terra Energy, I would feel 0:08:35.320 --> 0:08:38.240 more comfortable with an eight percent dividend growth. That's yielding 0:08:38.280 --> 0:08:43.040 two point eight percent now. And UH there is a 0:08:43.120 --> 0:08:46.920 much smaller cap subsidiary that they have a big stake 0:08:47.000 --> 0:08:50.720 and called next Era UH Energy Partners. It's about a 0:08:50.760 --> 0:08:55.000 one point two or three billion dollar MLP, and the 0:08:55.040 --> 0:08:57.560 dividend yield is higher, and the dividend growth rate is 0:08:57.640 --> 0:09:01.120 going to be tied to their growth and alternative energy, 0:09:01.240 --> 0:09:03.240 and that might be a better play for people that 0:09:03.760 --> 0:09:05.959 are really focused on the income. And you tell these 0:09:05.960 --> 0:09:09.040 four scurs you can't make money in utilities ten year 0:09:09.120 --> 0:09:13.040 track record of Florida Power and Light thirteen point one 0:09:13.080 --> 0:09:16.680 percent per year. It's just a scarlett. You can't make 0:09:16.760 --> 0:09:21.880 money and you tie per years extraordinary, that is the cliche. 0:09:21.960 --> 0:09:23.880 And looking here at the utilities index in the SMP 0:09:23.960 --> 0:09:27.600 five hundred, price earnings eighteen point two times for next 0:09:27.640 --> 0:09:31.160 to any that took her correct. Uh, the pe is 0:09:31.200 --> 0:09:36.040 twenty two and the estimated p the and I think 0:09:36.120 --> 0:09:37.800 and again, if you go back and look at the beta, 0:09:37.840 --> 0:09:41.800 you'll probably find it's something like fifty. So Uh, it's 0:09:41.800 --> 0:09:44.280 going to give you a lot of protection. Historically has 0:09:44.320 --> 0:09:46.320 provided a lot of protection in a down mark. It's 0:09:46.320 --> 0:09:50.640 outperformed in the last decade dominion by two fifty basis points. 0:09:50.640 --> 0:09:52.320 This is a very wonky This is almost like a 0:09:52.320 --> 0:09:55.640 pim Fox conversation. Scarlett. We've gotten into the land of 0:09:56.080 --> 0:09:58.760 fox Well on a Tuesday morning. How appropriate, right? That 0:09:58.800 --> 0:10:00.600 would be very good. Yeah, there's a lot going on 0:10:00.640 --> 0:10:03.720 this morning. We'll have much more for you, including the 0:10:03.760 --> 0:10:06.160 politics of Land State Bank rumor has it. Will have 0:10:06.200 --> 0:10:10.880 that on news as well. Features yet Futures negative to 0:10:11.040 --> 0:10:15.719 Doubt features Negative. Seventeen, Bloomberg Business Week relaunched. I want 0:10:15.760 --> 0:10:17.840 to bring into your attention every week an issue has 0:10:17.880 --> 0:10:21.880 a different theme. Last week it was technology. Uh, the 0:10:21.920 --> 0:10:24.360 week before it was Job's a really good jobs issue 0:10:25.040 --> 0:10:26.719 as well. They'll be out with a new issue in 0:10:26.800 --> 0:10:31.080 forty eight hours. But Bloomberg Business Week we launched. I 0:10:31.080 --> 0:10:33.719 really can't say enough about it. Uh is a is 0:10:33.760 --> 0:10:37.319 a great overview of whatever their theme of the week is. 0:10:37.360 --> 0:10:40.600 I like the thematic approach to it as well. David 0:10:40.640 --> 0:10:44.720 gurn Tom Keane, Mr Gurra on assignment in Idaho, scarlet 0:10:44.720 --> 0:10:47.719 food the short straw. We'll get here a few more 0:10:47.760 --> 0:10:49.880 minutes with Howard warding than we have to turn to 0:10:49.920 --> 0:10:53.880 an important global debate. Um, Howard, I look at the 0:10:53.920 --> 0:10:57.120 equity markets. I look at all the mumbo jumbo of Graham, 0:10:57.120 --> 0:11:00.680 Dott and Coddle and an investment finance. The bottom line 0:11:00.679 --> 0:11:02.600 is a lot of people are wrong. The certitude was 0:11:02.640 --> 0:11:05.480 it's a single digit world and we haven't had that. 0:11:05.840 --> 0:11:08.440 Do you regress to the mean? Do you say, look, 0:11:08.760 --> 0:11:11.840 we had a double digit reality and are we going 0:11:11.880 --> 0:11:14.360 to be negative to get back to a single digit world? 0:11:14.400 --> 0:11:15.920 I don't buy that for a minute. I just can't 0:11:15.920 --> 0:11:19.280 get that defeatist. No, but Tom thinks have changed. So 0:11:19.320 --> 0:11:23.320 we got a ten percent long term compounded return on 0:11:23.360 --> 0:11:27.480 stocks by way of essentially a seven percent nominal GDP 0:11:27.600 --> 0:11:30.600 number and a three percent dividend yield. That's and and 0:11:30.720 --> 0:11:34.439 the GDP number correlated exact almost exactly to the rate 0:11:34.440 --> 0:11:37.920 of earnings growth. And we're no longer in a nominal 0:11:38.080 --> 0:11:40.600 seven percent world. We're in a at the moment a 0:11:40.679 --> 0:11:43.520 nominal three and a half percent GDP world, and maybe 0:11:43.520 --> 0:11:44.760 we can get that to four or four and a 0:11:44.800 --> 0:11:47.800 half percent, and we have a two percent dividend yield 0:11:47.880 --> 0:11:53.120 on the SMP. So from this vantage point, the longer 0:11:53.200 --> 0:11:54.960 term returns on stocks are no longer going to be 0:11:55.040 --> 0:11:59.360 ten percent. They're more like seven percent um. And in fact, 0:11:59.440 --> 0:12:02.560 if you now look back over the last ten years, 0:12:02.600 --> 0:12:05.000 I think that's just about exactly what we've had, although 0:12:05.000 --> 0:12:08.920 with a lot of volatility in between. So, uh, you know, 0:12:09.240 --> 0:12:12.040 and this this, this, this is part of the you know, 0:12:12.320 --> 0:12:15.199 we had for thirty years or so real g D 0:12:15.360 --> 0:12:18.760 real GDP growth of three point three percent in the 0:12:18.840 --> 0:12:21.720 US that was the trend line, and that's now closer 0:12:21.720 --> 0:12:26.440 to two. You talk about the dividends and how it's 0:12:26.480 --> 0:12:28.840 not as rich as it could be or it has 0:12:28.840 --> 0:12:31.160 been in the past. We've seen companies, of course plowed 0:12:31.160 --> 0:12:33.760 their extra cash back into share buy backs, but that's 0:12:33.800 --> 0:12:36.439 tapered off quite a bit because prices are pretty high. 0:12:36.760 --> 0:12:39.360 And Gina Martin Adams and her team at Bloomberck Intelligence 0:12:39.360 --> 0:12:41.400 have done the research that show that the rate of 0:12:41.400 --> 0:12:44.280 buybacks has slowed down quite a bit. What are you 0:12:44.320 --> 0:12:47.400 looking for this earning season when it comes to returning 0:12:47.400 --> 0:12:50.680 cash to shareholders? Well, I think Scarlett, it's worth mentioning 0:12:50.840 --> 0:12:55.040 that corporations went on a binge of borrowing money in 0:12:55.080 --> 0:12:57.839 the in the debt market and using the proceeds to 0:12:57.960 --> 0:13:00.960 buy back stock to the extent that their balance sheets 0:13:00.960 --> 0:13:04.360 are not nearly as secure are safe as they were 0:13:04.400 --> 0:13:07.080 prior to all this. And I think it's also worth 0:13:07.120 --> 0:13:09.839 mentioning because if there is only one metric you want 0:13:09.840 --> 0:13:12.600 to look at to ask yourself, is the stuff? How 0:13:12.679 --> 0:13:16.640 how fairly valued or how attractive the stock market is? Uh, 0:13:16.880 --> 0:13:19.080 don't even look at earnings, but but look at the 0:13:19.160 --> 0:13:23.000 value of the entire stock market relative to GDP, and 0:13:23.040 --> 0:13:26.880 currently it's one. There's only one time in history when 0:13:26.920 --> 0:13:29.120 it's been higher, and that was in the first quarter 0:13:29.160 --> 0:13:31.520 of two thousand when it was one d and sixty 0:13:31.559 --> 0:13:35.120 seven of g d P. So having said all that, 0:13:35.520 --> 0:13:39.439 when you're looking at earnings expectations for the current quarter, 0:13:40.160 --> 0:13:42.960 I don't think that they're going to be bad. I mean, 0:13:43.200 --> 0:13:45.640 we all know that these corporate managers are so good 0:13:45.679 --> 0:13:50.000 at managing earnings that every single quarter, seventy some percent 0:13:50.200 --> 0:13:53.200 of the earnings beat the estimates and continue to be there. 0:13:53.320 --> 0:13:56.040 That's going to continue to be the case. So I'm 0:13:56.040 --> 0:13:58.320 not so focused on that. I think the guidance could 0:13:58.320 --> 0:14:00.720 be critical. I do expect that there will be some 0:14:00.800 --> 0:14:04.240 negative surprises on the guidance front, but in terms of 0:14:04.400 --> 0:14:08.120 the overall market, I'd be looking at the evaluation and 0:14:08.240 --> 0:14:11.440 the fact that we we typically have three five percent 0:14:11.480 --> 0:14:13.800 corrections every year and we haven't had one for the 0:14:13.840 --> 0:14:15.480 last year. We're going to rip up the script here 0:14:15.520 --> 0:14:17.319 with the Howard Ward right now, Scarlet fod with this 0:14:17.520 --> 0:14:20.560 is well for a global audience. Um I I can't 0:14:20.600 --> 0:14:24.760 begin to convey the excitement about Howard Ward and Scarlet Foods. 0:14:25.440 --> 0:14:29.040 New York Rangers. There's a gentleman named Shatton Kirk who 0:14:29.080 --> 0:14:32.240 I first saw with the St. Louis Blues Good Morning Bloomberg, 0:14:32.240 --> 0:14:34.840 one of six one FM Boston, who was a pride 0:14:34.880 --> 0:14:38.280 of Boston University and Howard. Before that, he was playing 0:14:38.320 --> 0:14:41.240 pond hockey just north of New York City, wasn't he well, 0:14:41.280 --> 0:14:43.680 Kevin's from New Marshall, and you know, he spent some 0:14:43.800 --> 0:14:46.280 time local boy and he wanted to come back to 0:14:46.320 --> 0:14:48.480 the Rangers, and he spent some time at the Brunswick 0:14:48.480 --> 0:14:51.520 School in Greenwich, where he played hockey with my son Chriss, 0:14:51.880 --> 0:14:56.200 and uh, it was evident from the moment that Kevin 0:14:56.280 --> 0:14:59.040 hit the ice that this young man was a very 0:14:59.040 --> 0:15:03.200 special hockey player. And he progressed from Brunswick to the 0:15:03.280 --> 0:15:07.320 us UH Olympic or Junior Olympic programming on Arbor, spent 0:15:07.360 --> 0:15:09.360 a couple of years there before becoming a terrier at 0:15:09.360 --> 0:15:12.680 BU And Mrs Lund, quiz, this is good for your husband, 0:15:12.760 --> 0:15:14.960 isn't it? This is very good. This is very good 0:15:15.000 --> 0:15:18.400 for for the goaltenders of the New York Rangers. UM. 0:15:18.560 --> 0:15:20.760 One thing, of course that people were worried about last 0:15:20.760 --> 0:15:23.000 spring was that he signed on with the Washington Capitals 0:15:23.040 --> 0:15:25.720 and that that was our one opportunity to get him, 0:15:25.720 --> 0:15:27.080 But of course it ended up not being. It was 0:15:27.120 --> 0:15:30.520 a tactical move on his part to get into the layoffs. 0:15:30.560 --> 0:15:34.120 And yes, Kevin wasn't Kevin was in big demand as 0:15:34.160 --> 0:15:37.200 one of the top defenseman and and an offensive defenseman 0:15:37.240 --> 0:15:40.400 at that and UH, he did not go for the 0:15:40.440 --> 0:15:43.480 top dollar. Everyone knows that he wanted to be a Ranger. 0:15:43.520 --> 0:15:45.680 He wanted to come home and play for his the 0:15:45.960 --> 0:15:48.960 team that he grew up with and so there's no 0:15:49.000 --> 0:15:50.760 doubt he took less money and he took a shorter 0:15:50.800 --> 0:15:53.400 contract than he could have had elsewhere. I should point out, folks, 0:15:53.640 --> 0:15:55.720 for those of you that follow basketball, it's the same idea. 0:15:55.760 --> 0:15:58.440 There's a huge pressure to leave college early, and he 0:15:58.640 --> 0:16:02.200 stayed at BEU. He could have left be you early. Well, 0:16:02.240 --> 0:16:04.600 I think he left a year earlier. He left year early. 0:16:04.680 --> 0:16:07.480 But a lot of other people have to win national championship, 0:16:07.520 --> 0:16:09.440 I might add, but they leave after their freshman of 0:16:09.520 --> 0:16:12.040 their sophtware year. He didn't do that. Hockey, it tends 0:16:12.080 --> 0:16:15.000 to be more I think the more standard situation if 0:16:15.040 --> 0:16:17.840 you are a college hockey player that Ghost Bros. You 0:16:17.880 --> 0:16:20.200 typically go after your junior Yearkay, is this a hockey 0:16:20.200 --> 0:16:23.320 talks so you'll stay around at the end of the show? Okay, 0:16:23.480 --> 0:16:25.840 very good, Howard Ward, Thank you so much. She's our 0:16:25.880 --> 0:16:38.960 expert on the New York Rangers, and we're Shuldis here today. 0:16:40.080 --> 0:16:43.800 I can say without question this is the most important 0:16:43.800 --> 0:16:49.240 interview for all of us today across economics, finance, and politics. 0:16:49.280 --> 0:16:51.920 And no, we don't have to talk about the madness 0:16:51.960 --> 0:16:55.360 of the Beltway. David Schulkin has about eight other things 0:16:55.400 --> 0:16:58.320 to do besides serve the nation. He does that now 0:16:58.440 --> 0:17:01.880 in the tinder box known as Veterans Affairs. He is 0:17:01.920 --> 0:17:07.320 the President's Secretary of Veterans Affairs and has brought a medical, 0:17:07.640 --> 0:17:12.240 tactical approach to what we do with their veterans. Secretary, 0:17:12.280 --> 0:17:16.080 wonderful to have you with us, uh today. I remember 0:17:16.119 --> 0:17:19.520 whatever the Politzer Prize winning article was about the scandal 0:17:19.560 --> 0:17:22.800 of Walter Reid Hospital a decade ago or whatever. We 0:17:22.920 --> 0:17:26.879 all have our horror stories of veterans affairs. You've brought 0:17:26.920 --> 0:17:31.560 a can do, solution braced approach. Give us one example 0:17:31.720 --> 0:17:35.480 of what you did day one. Well, first of all, Uh, 0:17:35.520 --> 0:17:38.359 it's good to be here. And I think that the 0:17:38.400 --> 0:17:42.359 country agrees that we're tired of reading about all the 0:17:42.400 --> 0:17:45.240 ways that we failed our veterans and it's time to 0:17:45.480 --> 0:17:47.760 fix this. And everybody agrees on this. This is not 0:17:47.920 --> 0:17:50.480 a political debate, is it. No, this is really a 0:17:50.520 --> 0:17:55.720 bipartisan issue. And um, so we're serious about making these changes, 0:17:55.760 --> 0:17:58.800 and this is something that the President actually ran on 0:17:59.040 --> 0:18:02.159 and is committed to doing this. So we're doing a 0:18:02.160 --> 0:18:04.120 lot of things, but one of the things we're making 0:18:04.119 --> 0:18:07.960 sure is those who have healthcare needs are being seen 0:18:08.119 --> 0:18:11.040 and being seen in a timely fashion. So we've put 0:18:11.040 --> 0:18:13.679 into place same day services and every one of our 0:18:13.760 --> 0:18:17.080 v A medical centers throughout the country for primary care 0:18:17.119 --> 0:18:20.040 and mental health, and we've also posted all of our 0:18:20.080 --> 0:18:23.240 weight times for everybody to see. I mean, they don't 0:18:23.280 --> 0:18:25.280 they scarlet. They don't do that. At the hospital up 0:18:25.280 --> 0:18:28.119 in Westchester, they don't do that. You know, it's a 0:18:28.200 --> 0:18:32.320 it's a revolutionary idea. How bureaucratic is it? You did 0:18:32.359 --> 0:18:35.920 service at the Great Institution in Pittsburgh, you did service here, 0:18:36.000 --> 0:18:40.119 service there in general medicine, did you expect a bureaucracy 0:18:40.160 --> 0:18:42.840 of doctors and nurses saying no, no, no, we don't 0:18:42.840 --> 0:18:47.000 do it that way. Guy, Well, uh, what my experience was, 0:18:47.080 --> 0:18:49.800 I've spent my entire career in the private sector, so 0:18:49.840 --> 0:18:52.080 I came expecting it was going to be tough to 0:18:52.119 --> 0:18:56.399 make change. What I found was was that, um, what 0:18:56.680 --> 0:18:59.800 the system needed was just new ideas and needed people 0:18:59.840 --> 0:19:03.119 to show them the way. But people want to be successful, 0:19:03.160 --> 0:19:05.280 particularly when they work in the v A. Their very 0:19:05.320 --> 0:19:07.960 mission driven, and when you show them a different way 0:19:07.960 --> 0:19:10.760 of doing things, they're very open to it. And so 0:19:10.840 --> 0:19:13.480 I have not found it to be resistant to change. 0:19:13.960 --> 0:19:17.639 Do you have the institutional support though for UH to 0:19:17.760 --> 0:19:20.840 make all these changes? You were confirmed by the Senate 0:19:20.840 --> 0:19:25.000 one zero, which is unheard of in this very partisan 0:19:25.119 --> 0:19:27.560 environment right now, What kind of support do you have 0:19:27.600 --> 0:19:30.920 from Congress, from the executive branch. Well, I'm very fortunate 0:19:31.080 --> 0:19:35.440 that there's just great leadership in Congress. Um are chairman 0:19:35.480 --> 0:19:39.359 of our committees and our ranking members, both the Democrats 0:19:39.400 --> 0:19:44.440 and the Republicans are completely united around making the changes necessary. 0:19:44.680 --> 0:19:47.840 And so when we have our committee hearings, there's of 0:19:47.880 --> 0:19:50.920 course debate over the right approach, but in the end 0:19:50.920 --> 0:19:53.240 they get in a room, they decide what the right 0:19:53.280 --> 0:19:56.080 decision is, and they move forward. And does it matter 0:19:56.160 --> 0:19:59.320 that you were part of the Obama administration as the 0:19:59.400 --> 0:20:02.080 Undersecretary or of Health at the Department of Veterans Affairs. 0:20:02.080 --> 0:20:05.160 Does that play into anything? Well, I think that people 0:20:05.320 --> 0:20:07.600 understand that I don't approach to this job in a 0:20:07.640 --> 0:20:10.600 political way. I approach it that this is a job 0:20:10.680 --> 0:20:12.680 that the country needs to get done, and I'm here 0:20:12.760 --> 0:20:15.880 to get it done. I also think it does help 0:20:15.920 --> 0:20:19.240 that people understand that I haven't changed my position on 0:20:19.400 --> 0:20:21.879 what needs to happen to fix the v A. Whether 0:20:21.920 --> 0:20:24.880 I was in the administration or in the Trump administration. 0:20:24.960 --> 0:20:31.000 I think that President Trump wasn't as concerned about anything 0:20:31.040 --> 0:20:35.240 other than getting this fixed for our veterans. Veterans medicine 0:20:35.440 --> 0:20:38.400 has been a lightning rode back to the Revolutionary War. 0:20:38.440 --> 0:20:40.800 Had to be honest, I've got ancestors has fought in 0:20:40.880 --> 0:20:43.200 this war that warn't forty years later they were trying 0:20:43.200 --> 0:20:46.040 to get a check cut from somebody like Veterans Affair. 0:20:46.320 --> 0:20:50.760 Help our audience that believes it's a money pot for 0:20:50.800 --> 0:20:52.840 anybody that wants to come get it. How is the 0:20:52.920 --> 0:20:55.439 budget integrity? Folks, we say this about the guy that 0:20:55.480 --> 0:20:59.840 were in Morristown Memorial Hospital, like a real practicing hospital. 0:21:00.200 --> 0:21:03.199 How do you handle the cash and the money so 0:21:03.240 --> 0:21:06.520 that we know it's fair and audited. Well, I think 0:21:07.080 --> 0:21:10.159 what we've seen over the past couple of administrations is 0:21:10.200 --> 0:21:13.120 more and more money flowing into v A, and it's 0:21:13.119 --> 0:21:17.359 not necessarily translated into better service or better results. So 0:21:17.520 --> 0:21:20.280 I've been very clear, I do not believe that fixing 0:21:20.320 --> 0:21:22.840 and reforming v A is a money issue. This isn't 0:21:22.880 --> 0:21:26.320 that we need, um, you know, more funds to get 0:21:26.320 --> 0:21:29.359 this fixed. What we need are the best practices from 0:21:29.400 --> 0:21:32.560 the private sector, and we need to modernize the system 0:21:32.640 --> 0:21:35.600 and in terms of auditing where our money is going. 0:21:35.720 --> 0:21:39.760 Right now, one of my major initiatives is to bring 0:21:39.840 --> 0:21:43.080 much more integrity to our fraud wasted abuse systems because 0:21:43.080 --> 0:21:47.679 I do believe that there are inefficiencies and areas that 0:21:47.760 --> 0:21:50.080 we do need to audit much closer to make sure 0:21:50.119 --> 0:21:53.679 taxpayers are getting the best value. Well, speaking of modernizing 0:21:53.680 --> 0:21:55.640 the system, there are a lot of concerns for anyone 0:21:55.680 --> 0:21:58.160 who runs a huge bureaucracy about how to protect your 0:21:58.240 --> 0:22:02.760 system from cyber from hacking. What are you doing on 0:22:02.840 --> 0:22:05.639 that and how do you make the v A department 0:22:05.760 --> 0:22:09.040 hack proof or as hack proof as possible. Yeah, I 0:22:09.040 --> 0:22:12.280 wish that there was a way to be hack proof. 0:22:12.400 --> 0:22:16.520 But we have invested significantly in the last few years 0:22:16.560 --> 0:22:20.040 in cybersecurity, and we have systems in place that I 0:22:20.080 --> 0:22:26.439 feel confident in. We essentially identify and protect against thousands 0:22:26.440 --> 0:22:29.720