1 00:00:00,120 --> 00:00:02,920 Speaker 1: Brought you by Bank of America Mary Lynch. Investing in 2 00:00:03,000 --> 00:00:07,840 Speaker 1: local communities, economies and a sustainable future. That's the power 3 00:00:08,080 --> 00:00:12,360 Speaker 1: of global connections, Mary Lynch, Pierce Fenner and Smith Incorporated 4 00:00:12,760 --> 00:00:27,400 Speaker 1: member s I p C. Welcome to the Bloomberg Surveillance Podcast. 5 00:00:27,800 --> 00:00:31,520 Speaker 1: I'm Tom Keene with David Gura. Daily we bring you 6 00:00:31,560 --> 00:00:36,600 Speaker 1: insight from the best in economics, finance, investment, and international relations. 7 00:00:37,000 --> 00:00:41,600 Speaker 1: Find Bloomberg Surveillance on iTunes, SoundCloud, Bloomberg dot Com, and 8 00:00:41,680 --> 00:00:48,840 Speaker 1: of course on the Bloomberg I'm show to day two 9 00:00:48,880 --> 00:00:51,159 Speaker 1: former vice chairs at the Federal Reserve, Alice Rivlin and 10 00:00:51,159 --> 00:00:53,520 Speaker 1: Alan Blinder, will join us and we'll get market insight 11 00:00:53,560 --> 00:00:55,640 Speaker 1: from Brian Jacobson of Wells Fargo. But first we welcome 12 00:00:55,720 --> 00:00:58,200 Speaker 1: James Sweeney, chief economist and co head of Global Economics 13 00:00:58,200 --> 00:01:00,440 Speaker 1: and Credits, with here in the studio with us, New York. 14 00:01:00,480 --> 00:01:02,960 Speaker 1: Great to see you. Thank you. Let's start with your 15 00:01:03,000 --> 00:01:05,240 Speaker 1: your outlook and a phrase that stood out to me 16 00:01:05,280 --> 00:01:07,119 Speaker 1: that is that we're looking at a new narrative here, 17 00:01:07,160 --> 00:01:09,400 Speaker 1: not a new normal. Give us a sense of what 18 00:01:09,440 --> 00:01:11,440 Speaker 1: you're looking forward to here in the new year. Well, 19 00:01:11,480 --> 00:01:14,399 Speaker 1: it was really trying to think through what will the 20 00:01:14,440 --> 00:01:17,119 Speaker 1: market be focusing on. And I think this era of 21 00:01:17,120 --> 00:01:21,720 Speaker 1: of low interest rates, deflation, fear, central bank obsession, that's 22 00:01:21,760 --> 00:01:26,160 Speaker 1: giving way to talk of protectionism, higher inflation, full employment, 23 00:01:26,280 --> 00:01:30,880 Speaker 1: fiscal policy, tax reform. It's a long list of new things. 24 00:01:30,920 --> 00:01:34,520 Speaker 1: So the narratives are in there, the specifics are not 25 00:01:34,640 --> 00:01:37,120 Speaker 1: exactly filled in for the moment but um. But in 26 00:01:37,120 --> 00:01:39,840 Speaker 1: our view, you know, growth is okay for the for 27 00:01:39,920 --> 00:01:44,959 Speaker 1: the moment um. We are monitoring the political situation for 28 00:01:44,959 --> 00:01:47,960 Speaker 1: for what comes next. We're not fearing high inflation um. 29 00:01:48,000 --> 00:01:50,320 Speaker 1: But I think the market will have an inflation scare 30 00:01:50,360 --> 00:01:52,160 Speaker 1: this year. I think it'll have a growth scared this year. 31 00:01:52,200 --> 00:01:54,600 Speaker 1: I think we'll have a protection scare. This year, might 32 00:01:54,640 --> 00:01:57,640 Speaker 1: have a geopolitical scare. You know, there there's a there's 33 00:01:57,680 --> 00:02:01,320 Speaker 1: a house, there's a decent list. Our. Our outlook this 34 00:02:01,400 --> 00:02:03,880 Speaker 1: year was it was a series of essays rather than 35 00:02:03,960 --> 00:02:07,040 Speaker 1: the usual kind of data focused here, here's what's happening 36 00:02:07,040 --> 00:02:09,000 Speaker 1: in the world. And I think that's by necessity. You 37 00:02:09,040 --> 00:02:11,720 Speaker 1: mentioned protection is um and there was so much conversation 38 00:02:11,760 --> 00:02:15,400 Speaker 1: during the campaign, during the transition about the prospect for tariffs. 39 00:02:16,040 --> 00:02:18,200 Speaker 1: Now it seems the conversation has shifted to this border 40 00:02:18,200 --> 00:02:20,520 Speaker 1: adjustment tax. Are they one and the same as one 41 00:02:20,880 --> 00:02:24,480 Speaker 1: provoke more nervousness for apprehension than the other. Well, I 42 00:02:24,520 --> 00:02:28,120 Speaker 1: think the border adjustment tax in the in the context 43 00:02:28,280 --> 00:02:33,239 Speaker 1: of this destination based cash flow tax with border adjustment 44 00:02:33,919 --> 00:02:37,639 Speaker 1: is really a totally different thing from from a tariff 45 00:02:37,880 --> 00:02:41,520 Speaker 1: or or just a border tariff, a punitive border tariff 46 00:02:41,560 --> 00:02:44,800 Speaker 1: on on firms or on companies. So it would be 47 00:02:44,840 --> 00:02:50,120 Speaker 1: helpful if if people just started separating them altogether. Um. 48 00:02:50,240 --> 00:02:53,960 Speaker 1: The um. I think the border adjusted tax in that 49 00:02:54,600 --> 00:02:59,200 Speaker 1: corporate tax reform context is actually fake protectionism. It's not 50 00:02:59,280 --> 00:03:02,000 Speaker 1: real protection him. Um. I think if you had that 51 00:03:02,120 --> 00:03:04,079 Speaker 1: kind of policy, you know, it's going to give be 52 00:03:04,120 --> 00:03:05,720 Speaker 1: a big move in the dollar, it's gonna give you 53 00:03:05,720 --> 00:03:08,640 Speaker 1: a lot of chaos in the market. Um. But it's 54 00:03:08,680 --> 00:03:12,600 Speaker 1: it's not necessarily protectionist. It may even give cover to 55 00:03:12,639 --> 00:03:15,040 Speaker 1: not do some of the other things, because a more 56 00:03:15,080 --> 00:03:19,640 Speaker 1: idiosyncratic protectionism through actual tariffs, I think is a much 57 00:03:19,760 --> 00:03:22,200 Speaker 1: much bigger problem and more likely lead to tip for 58 00:03:22,280 --> 00:03:26,160 Speaker 1: tat type you know conflicts. You're right, an optimistic sheet. 59 00:03:26,240 --> 00:03:29,320 Speaker 1: What is GDP for the United States? What? What is 60 00:03:29,440 --> 00:03:32,200 Speaker 1: what are you framing? If you will for Mr Trump 61 00:03:32,240 --> 00:03:35,040 Speaker 1: as we move forward. Yeah, we see GDP running in 62 00:03:35,080 --> 00:03:36,440 Speaker 1: the sort of two and a quarter to two and 63 00:03:36,440 --> 00:03:39,200 Speaker 1: a half range right now, that's not three percent. How 64 00:03:39,240 --> 00:03:41,760 Speaker 1: does he get at the three percent? I mean, I 65 00:03:41,800 --> 00:03:44,000 Speaker 1: think you could get it to three percent for a minute, 66 00:03:44,080 --> 00:03:47,920 Speaker 1: with with with with a surgeon investment at some point. Um, 67 00:03:47,960 --> 00:03:50,600 Speaker 1: a pent up surgeon investment appears to be due. But 68 00:03:51,080 --> 00:03:53,760 Speaker 1: dollar strength at the moment is getting in the way. Um. 69 00:03:53,800 --> 00:03:56,200 Speaker 1: You know, some of the energy bust for a few 70 00:03:56,280 --> 00:03:59,920 Speaker 1: years ago could could reverse. Um, getting persistent real GDP 71 00:04:00,160 --> 00:04:02,520 Speaker 1: of three would be really difficult with the with the 72 00:04:02,560 --> 00:04:05,840 Speaker 1: demographics of of the US. And that, David, is what 73 00:04:06,040 --> 00:04:08,640 Speaker 1: is missing in a lot of the media frenzy is 74 00:04:08,680 --> 00:04:14,280 Speaker 1: the time function of growth popping it for what a quarter? James, Yeah, 75 00:04:14,520 --> 00:04:17,320 Speaker 1: but not for a year or two years to get 76 00:04:17,320 --> 00:04:21,400 Speaker 1: to the mid term elections. Is the conversation over about 77 00:04:21,440 --> 00:04:23,640 Speaker 1: whether or not we're going to get an infrastructure package 78 00:04:23,800 --> 00:04:26,440 Speaker 1: or fiscal stimulus. Are we going to have a conversation 79 00:04:26,480 --> 00:04:31,320 Speaker 1: about the economic grounding for for a plan like that? Well, Um, 80 00:04:32,600 --> 00:04:34,640 Speaker 1: so much as there is economic grounding, I suppose, But 81 00:04:35,040 --> 00:04:37,960 Speaker 1: I mean I I think there is some economic grounding 82 00:04:38,040 --> 00:04:42,359 Speaker 1: for for both ideas. UM, well really all three ideas 83 00:04:42,400 --> 00:04:45,559 Speaker 1: if you separate the personal income and corporate income tax 84 00:04:45,600 --> 00:04:48,200 Speaker 1: because they're really very different things but probably need to 85 00:04:48,200 --> 00:04:51,280 Speaker 1: be done together. UM. I think really, and now it's 86 00:04:51,279 --> 00:04:54,560 Speaker 1: just the politics, it's just the horse trading in Washington. 87 00:04:54,720 --> 00:04:57,560 Speaker 1: Can you get to these um reforms? I mean, we 88 00:04:57,640 --> 00:05:02,039 Speaker 1: know there's a fair amount of democratic support for infrastructure there, 89 00:05:02,080 --> 00:05:07,320 Speaker 1: there's some Democrat support for corporate tax reform. UM. Corporate 90 00:05:07,320 --> 00:05:09,880 Speaker 1: tax reform might not even be stimulative, it might not 91 00:05:10,000 --> 00:05:14,200 Speaker 1: even reduce revenues tax revenues from the corporate sector. Personal 92 00:05:14,240 --> 00:05:16,080 Speaker 1: income tax reform I think is a little more of 93 00:05:16,120 --> 00:05:20,360 Speaker 1: a partisan issue UM with less Democrats support, And I 94 00:05:20,400 --> 00:05:23,920 Speaker 1: think the economics of stimulus from that are are a 95 00:05:23,960 --> 00:05:26,520 Speaker 1: little more of an open and there are a different question. 96 00:05:26,600 --> 00:05:29,599 Speaker 1: But basically, you know, I think take off all three 97 00:05:29,600 --> 00:05:31,840 Speaker 1: of these things separately and have the long discussion. I'm 98 00:05:31,839 --> 00:05:34,080 Speaker 1: happy to have it, but but I think it's it's 99 00:05:34,120 --> 00:05:39,200 Speaker 1: difficult to encapsulate the three together into into a short summary. Really, 100 00:05:39,240 --> 00:05:41,680 Speaker 1: each of them is complicated. If you'll indulge me, I'll 101 00:05:41,720 --> 00:05:44,000 Speaker 1: quote once more from your your outlook. Another great line here. 102 00:05:44,000 --> 00:05:48,320 Speaker 1: Markets overreact to political rumors and underreact to political facts, 103 00:05:48,320 --> 00:05:51,320 Speaker 1: which thinks a bit of enthusiasm here during during earning season. 104 00:05:51,400 --> 00:05:53,200 Speaker 1: But do you think that the market is now beginning 105 00:05:53,240 --> 00:05:55,839 Speaker 1: to reckon with some of the facts the political fact, Well, 106 00:05:55,880 --> 00:05:58,320 Speaker 1: I mean what I meant by that is is um, 107 00:05:58,360 --> 00:06:01,839 Speaker 1: you know, forget Donald Trump himself and exactly who's running 108 00:06:01,880 --> 00:06:04,880 Speaker 1: the administration and all that. If you just told someone 109 00:06:04,920 --> 00:06:09,680 Speaker 1: a few years ago that in late January two thousand seventeen, 110 00:06:10,320 --> 00:06:14,720 Speaker 1: the focus would be on US disengagement from the world 111 00:06:14,800 --> 00:06:20,040 Speaker 1: and a significant increase in protectionism pushed by the US UM, 112 00:06:20,080 --> 00:06:23,520 Speaker 1: I think people would say, wow, markets, you know, equity 113 00:06:23,560 --> 00:06:26,920 Speaker 1: markets will be much lower. Um. You know, they would 114 00:06:26,960 --> 00:06:29,200 Speaker 1: think this would be a time of great risk aversion. 115 00:06:29,360 --> 00:06:31,440 Speaker 1: And you look at the markets and it's it's not 116 00:06:32,120 --> 00:06:36,000 Speaker 1: the UM. I think the fact of of US policy 117 00:06:36,000 --> 00:06:42,200 Speaker 1: intentions has changed. UM. The markets haven't really reacted to it, 118 00:06:42,800 --> 00:06:45,599 Speaker 1: UM in the expected way, or at least maybe the 119 00:06:45,640 --> 00:06:50,000 Speaker 1: market is reacting to the expectations of lower regulations and 120 00:06:50,360 --> 00:06:53,000 Speaker 1: stimulus and and so you know, we've had we've had 121 00:06:53,040 --> 00:06:56,640 Speaker 1: that short term rush of of positive and and and 122 00:06:56,680 --> 00:06:58,680 Speaker 1: we're sort of waiting to see maybe there's people are 123 00:06:58,720 --> 00:07:03,800 Speaker 1: not really believing that genuine toothy protection is m is coming. 124 00:07:03,920 --> 00:07:06,400 Speaker 1: When you look at the intersections of politics, economics in 125 00:07:06,440 --> 00:07:10,600 Speaker 1: the markets, are are there historical analogs that jump out 126 00:07:10,600 --> 00:07:12,800 Speaker 1: at you or or we had an unprecedented time here, 127 00:07:12,880 --> 00:07:15,400 Speaker 1: or have we seen things like this before? I mean, 128 00:07:15,480 --> 00:07:18,400 Speaker 1: I think there are periods in history that offer interesting 129 00:07:18,960 --> 00:07:21,920 Speaker 1: UM parallels, and I don't see anything that's perfect. I 130 00:07:21,960 --> 00:07:25,640 Speaker 1: think the mid eighties, the time of um of of 131 00:07:25,640 --> 00:07:29,320 Speaker 1: of rising interest rates, of a strong dollar, of real 132 00:07:29,440 --> 00:07:33,000 Speaker 1: angst in the US manufacturing sector is interesting. You know, 133 00:07:33,040 --> 00:07:37,160 Speaker 1: there was a point in the Reagan administration where basically 134 00:07:37,240 --> 00:07:40,000 Speaker 1: the Treasury Secretary and the chief of staff switched jobs, 135 00:07:40,520 --> 00:07:43,080 Speaker 1: and you you ended up with UM. You ended up 136 00:07:43,120 --> 00:07:46,760 Speaker 1: with a concerted effort to weaken the dollar and to 137 00:07:47,120 --> 00:07:51,960 Speaker 1: UH and to really go after UH. Some Japanese protection 138 00:07:52,080 --> 00:07:55,440 Speaker 1: is um um through some some tariffs of our own. 139 00:07:55,600 --> 00:07:57,800 Speaker 1: That was a big shift. And the last time the 140 00:07:57,840 --> 00:08:00,680 Speaker 1: US had kind of broad tower is actually in the 141 00:08:00,720 --> 00:08:04,960 Speaker 1: early seventies when when we left the the gold standard UM. 142 00:08:05,480 --> 00:08:08,800 Speaker 1: I read that the the equity market actually rallied on 143 00:08:08,960 --> 00:08:13,480 Speaker 1: shore on on that initial policy change in foreign stocks 144 00:08:13,640 --> 00:08:16,600 Speaker 1: sold off. So sometimes protectionism could be good for the 145 00:08:16,600 --> 00:08:19,480 Speaker 1: local companies who are being protected. Um, and then others 146 00:08:19,520 --> 00:08:21,600 Speaker 1: are going all the way back to Smooth Holly and 147 00:08:21,800 --> 00:08:23,559 Speaker 1: talking about, you know, it is just going to cause 148 00:08:23,560 --> 00:08:26,160 Speaker 1: the Great Depression Part two and which gets a little 149 00:08:26,160 --> 00:08:27,920 Speaker 1: over the top. I mean, the evidence is not that 150 00:08:27,920 --> 00:08:29,840 Speaker 1: clear that Smoot Holly was a major driver of the 151 00:08:30,080 --> 00:08:32,960 Speaker 1: depression in the first place. But um, but history helps, 152 00:08:33,000 --> 00:08:36,440 Speaker 1: but history doesn't offer a clear, clear precedent. Let's continue 153 00:08:36,480 --> 00:08:38,400 Speaker 1: with James Sweeney loves to talk about maybe we can 154 00:08:38,440 --> 00:08:42,000 Speaker 1: look at his arch theme of well, there's a deflation 155 00:08:42,040 --> 00:08:46,200 Speaker 1: scare and it's going to be a inflation scared. Would 156 00:08:46,200 --> 00:08:50,160 Speaker 1: you help us, James Sweeney with trade between the United 157 00:08:50,240 --> 00:08:54,200 Speaker 1: Kingdom and the United States. Prime Minister May gave a 158 00:08:54,240 --> 00:08:58,080 Speaker 1: speech in Davos polar opposite of what I'm hearing from 159 00:08:58,080 --> 00:09:01,440 Speaker 1: President Trump. So they meet on Friday, what will you 160 00:09:01,480 --> 00:09:06,400 Speaker 1: listen for? Well, I think, I mean, I think, in 161 00:09:06,559 --> 00:09:11,520 Speaker 1: from a geopolitical perspective, the tone remember the shoulder to 162 00:09:11,600 --> 00:09:16,600 Speaker 1: shoulder comment by Tony Blair year years ago. Um, can 163 00:09:16,640 --> 00:09:19,880 Speaker 1: you maintain that that tone of of of a special 164 00:09:19,920 --> 00:09:23,280 Speaker 1: relationship in the first place under the current conditions. That's 165 00:09:23,960 --> 00:09:28,120 Speaker 1: I think interesting. But I think in terms of economics. Um, 166 00:09:28,200 --> 00:09:32,480 Speaker 1: you know, if if brexit, if this is a hard brexit, Um, 167 00:09:32,600 --> 00:09:35,800 Speaker 1: does the does the UK want a special bilateral trade 168 00:09:35,800 --> 00:09:39,040 Speaker 1: deal with the US? And then if the US is 169 00:09:39,120 --> 00:09:42,320 Speaker 1: willing to to expedite a process leading to such a 170 00:09:42,360 --> 00:09:45,840 Speaker 1: trade deal? Um is that you know? Is that going 171 00:09:45,880 --> 00:09:49,760 Speaker 1: to be done on generous terms or is that going 172 00:09:49,840 --> 00:09:53,080 Speaker 1: to be done in a in a kind of confrontation 173 00:09:53,080 --> 00:09:57,160 Speaker 1: to It can't be done until she straightens out all 174 00:09:57,160 --> 00:10:00,680 Speaker 1: her EU activities. I mean, I mean your Trump can't 175 00:10:00,679 --> 00:10:02,920 Speaker 1: say let's wrap up a trade deal by Christmas. Well 176 00:10:02,920 --> 00:10:05,280 Speaker 1: with so many of these things. When we say it 177 00:10:05,360 --> 00:10:07,720 Speaker 1: can't be done, what is the it? You know? What 178 00:10:07,960 --> 00:10:13,640 Speaker 1: is the protectionism? What is the deal? A deal? And investigation? Um? 179 00:10:13,679 --> 00:10:15,240 Speaker 1: You know, I I I think a lot of this 180 00:10:15,280 --> 00:10:18,079 Speaker 1: stuff is very fuzzy. It seems to live in a 181 00:10:18,160 --> 00:10:24,120 Speaker 1: publicity space rather than on a on a page with 182 00:10:24,120 --> 00:10:26,800 Speaker 1: with with details. And this is not this is not 183 00:10:26,960 --> 00:10:30,480 Speaker 1: especially clear what what kind of document will learne from this? 184 00:10:31,679 --> 00:10:33,760 Speaker 1: Let me let me pick up off of that. Your 185 00:10:33,760 --> 00:10:36,000 Speaker 1: forecast and the outlook is for the dollars that continue 186 00:10:36,040 --> 00:10:37,680 Speaker 1: to be strong in two thousand and seventeen. The outlook 187 00:10:37,640 --> 00:10:40,320 Speaker 1: written before Donald Trump tweeted about the strength of the dollar, 188 00:10:40,440 --> 00:10:42,679 Speaker 1: his his his wish or his concern here that it's 189 00:10:42,760 --> 00:10:46,680 Speaker 1: it's not weak enough. That's kind of unprecedented and of itself. Um, 190 00:10:46,760 --> 00:10:48,640 Speaker 1: does that change your your sense of where the dollar 191 00:10:48,679 --> 00:10:50,880 Speaker 1: will go? Are we seeing the end of the strong 192 00:10:50,920 --> 00:10:52,480 Speaker 1: dollar policy? Do we have a better sense of what 193 00:10:52,520 --> 00:10:54,800 Speaker 1: the dollar policy is going to be here this president? 194 00:10:54,840 --> 00:10:58,319 Speaker 1: I could tell you somewhere in our lengthy outlook was 195 00:10:58,320 --> 00:11:01,200 Speaker 1: was a comment about dollar twe it or policy. Um, 196 00:11:01,240 --> 00:11:04,960 Speaker 1: So that was actually part of our expectation, was that 197 00:11:05,000 --> 00:11:08,080 Speaker 1: we would get some comments. Um. You know, I I, 198 00:11:08,880 --> 00:11:11,000 Speaker 1: as I said earlier, I think the dollar. I think 199 00:11:11,000 --> 00:11:12,920 Speaker 1: the level of the dollar and its move over the 200 00:11:12,960 --> 00:11:16,040 Speaker 1: last couple of years is an issue. Um. It is 201 00:11:16,080 --> 00:11:19,800 Speaker 1: an issue for manufacturing investment. And we have sluggish exports, 202 00:11:19,800 --> 00:11:23,880 Speaker 1: and we have sluggish investment, uh in manufacturing. And even 203 00:11:24,000 --> 00:11:26,320 Speaker 1: I'm talking about the last two years, I'm not talking 204 00:11:26,360 --> 00:11:29,840 Speaker 1: about the longer term terms. Even compared to the last fifteen, 205 00:11:29,920 --> 00:11:31,800 Speaker 1: you can see that the dollar is having a little 206 00:11:31,800 --> 00:11:34,679 Speaker 1: bit of an effect. Um. You know, there's a lot 207 00:11:34,720 --> 00:11:39,040 Speaker 1: of narratives looking back favoring the dollar, growth differentials, interest 208 00:11:39,120 --> 00:11:42,560 Speaker 1: rate differential, stimulus from the US, maybe there's a shortage 209 00:11:42,559 --> 00:11:45,240 Speaker 1: of dollars overseas, there's a great demand for dollars rather 210 00:11:45,280 --> 00:11:47,960 Speaker 1: than R and B in in Asia. Um. All these 211 00:11:48,000 --> 00:11:51,600 Speaker 1: stories have have helped the dollar to rally. But now 212 00:11:51,679 --> 00:11:54,680 Speaker 1: when you're talking protectionism, when you're talking change in the 213 00:11:54,800 --> 00:11:57,720 Speaker 1: US role in the world, some people are talking about 214 00:11:57,840 --> 00:12:03,200 Speaker 1: you could you see reserve managers you know, consider lowering um, 215 00:12:03,200 --> 00:12:06,080 Speaker 1: their their dollar holdings older over time in response to 216 00:12:06,120 --> 00:12:08,079 Speaker 1: some of this. You know, there's there's a lot of 217 00:12:08,120 --> 00:12:10,280 Speaker 1: two way risk on the dollar. But to me, the 218 00:12:11,160 --> 00:12:13,680 Speaker 1: bringing it home to kind of markets and and really 219 00:12:13,800 --> 00:12:18,160 Speaker 1: relevant fact based stuff. Um. The the issue is basically, 220 00:12:18,160 --> 00:12:21,640 Speaker 1: if the dollar continues to strengthen this year, UM, it's 221 00:12:21,640 --> 00:12:26,320 Speaker 1: gonna get in the way of President Trump's objectives in 222 00:12:26,640 --> 00:12:29,480 Speaker 1: uh in improving the short term outlook for manufacturing. And 223 00:12:29,480 --> 00:12:33,400 Speaker 1: I wonder could that be part of the calculus in 224 00:12:33,480 --> 00:12:37,000 Speaker 1: choosing the new James Sweet thank you so much with 225 00:12:37,080 --> 00:12:41,480 Speaker 1: credit sweets, David gurn Tom Kane Worldwide, Coast to coast, 226 00:12:41,640 --> 00:12:57,040 Speaker 1: This is Bloomberg. Brian Jacobson with us right now from 227 00:12:57,280 --> 00:13:00,319 Speaker 1: Wells Fargo. It's almost a relief to talk to Brian 228 00:13:00,400 --> 00:13:03,239 Speaker 1: Jacobsen because I'm not going to ask you any politics 229 00:13:03,640 --> 00:13:07,240 Speaker 1: other than to say, Brian, do I change what I'm 230 00:13:07,280 --> 00:13:10,440 Speaker 1: doing with a little bit of wealth I have because 231 00:13:10,440 --> 00:13:14,080 Speaker 1: of all of this noise going on around us. Well, 232 00:13:14,200 --> 00:13:16,560 Speaker 1: it's a good question. I appreciate not having to talk 233 00:13:16,559 --> 00:13:18,680 Speaker 1: too much about politics. I think we've gotten a little 234 00:13:18,720 --> 00:13:21,920 Speaker 1: weary about that. I did to our client event yesterday, 235 00:13:21,960 --> 00:13:23,400 Speaker 1: which was a lot of fun, but as you can 236 00:13:23,400 --> 00:13:28,040 Speaker 1: probably imagine, it was discussing the political environment, and I 237 00:13:28,080 --> 00:13:30,040 Speaker 1: think it is on the tops of a lot of 238 00:13:30,040 --> 00:13:33,920 Speaker 1: people's minds. My encouragement to everybody is to just not 239 00:13:34,000 --> 00:13:36,880 Speaker 1: let politics affect your portfolio. Try to focus on your 240 00:13:36,920 --> 00:13:40,640 Speaker 1: goals and make sure that your allocations are in line 241 00:13:40,760 --> 00:13:43,000 Speaker 1: with those goals. It's too easy to get caught up 242 00:13:43,040 --> 00:13:47,000 Speaker 1: in the latest tweets or the latest report and panic. Uh. 243 00:13:47,040 --> 00:13:49,800 Speaker 1: And as many people have oftentimes said, many people smarter 244 00:13:49,880 --> 00:13:52,240 Speaker 1: than I am, is that we are oftentimes our own 245 00:13:52,280 --> 00:13:55,600 Speaker 1: worst enemies when it comes to investing, and that overreaction 246 00:13:56,080 --> 00:13:57,960 Speaker 1: can be very detrimental when it comes to trying to 247 00:13:58,000 --> 00:14:01,240 Speaker 1: achieve those goals. Bearing that in mind that there are 248 00:14:01,240 --> 00:14:03,480 Speaker 1: the tweets, there is the short termism. I wonder though 249 00:14:04,240 --> 00:14:06,240 Speaker 1: here I here. I tried into politics a little bit 250 00:14:06,240 --> 00:14:10,800 Speaker 1: if if you if you are able to extrapolate, you know, 251 00:14:11,840 --> 00:14:14,079 Speaker 1: I recall after the election, people were getting into utilities. 252 00:14:14,080 --> 00:14:15,679 Speaker 1: They thought that there was going to be big infrastructure 253 00:14:15,679 --> 00:14:18,840 Speaker 1: spending for this. There are macro themes here. Ignore those 254 00:14:18,880 --> 00:14:21,200 Speaker 1: as well as you ignore the tweets. You know, I 255 00:14:21,240 --> 00:14:23,600 Speaker 1: would look at the macro themes, and it's always it's 256 00:14:23,680 --> 00:14:27,040 Speaker 1: difficult to sort of susce out the difference between what's 257 00:14:27,040 --> 00:14:29,920 Speaker 1: an economic trend and what's sort of a political development 258 00:14:29,920 --> 00:14:32,720 Speaker 1: that you should react to, because politics clearly do affect 259 00:14:32,760 --> 00:14:35,000 Speaker 1: the economy. But the economy itself, even though it's not 260 00:14:35,040 --> 00:14:37,800 Speaker 1: a machine, and I really hate using like physics analogies, 261 00:14:37,880 --> 00:14:41,720 Speaker 1: but uh, the economy develops its own type of momentum. 262 00:14:41,920 --> 00:14:43,800 Speaker 1: And right now I think that really what you saw 263 00:14:43,880 --> 00:14:46,680 Speaker 1: back in July was the economic momentum beginning to shift 264 00:14:46,720 --> 00:14:50,440 Speaker 1: a little bit towards a slightly higher pace of economic activity. 265 00:14:50,480 --> 00:14:53,040 Speaker 1: You know, the labor market is continuing to improve, wages 266 00:14:53,040 --> 00:14:56,400 Speaker 1: are picking up, purchasing manager and disease are looking pretty healthy, 267 00:14:56,720 --> 00:14:59,200 Speaker 1: not just in the United States but even globally. Now 268 00:14:59,320 --> 00:15:03,440 Speaker 1: policy can affect that, but oftentimes policy has very long 269 00:15:03,560 --> 00:15:06,520 Speaker 1: and variable legs. So if they do some sort of 270 00:15:06,520 --> 00:15:09,120 Speaker 1: like let's say infrastructure plan yesterday it was floated, then 271 00:15:09,160 --> 00:15:12,520 Speaker 1: there might be a one trillion dollar infrastructure by the Democrats. 272 00:15:12,640 --> 00:15:15,480 Speaker 1: Well that works out that's one billion dollars per year, right, 273 00:15:15,520 --> 00:15:17,280 Speaker 1: so you have to take that and divided by ten 274 00:15:17,480 --> 00:15:19,160 Speaker 1: because of the way that they do their math, and 275 00:15:19,160 --> 00:15:20,960 Speaker 1: they don't believe in the time value of money, so 276 00:15:21,000 --> 00:15:23,560 Speaker 1: they think that billion dollars event ten years from now 277 00:15:23,640 --> 00:15:25,680 Speaker 1: is the same as a hundred billion dollars today. So 278 00:15:26,000 --> 00:15:28,800 Speaker 1: you know that this stuff takes time to build. David 279 00:15:28,840 --> 00:15:31,400 Speaker 1: be could you explain to Brian that we adore physics 280 00:15:31,440 --> 00:15:35,160 Speaker 1: references just you don't care, you know. I'm sorry. We're 281 00:15:35,160 --> 00:15:37,720 Speaker 1: all Newtonian. There you go, We're all Newtonians. Think that 282 00:15:37,760 --> 00:15:41,200 Speaker 1: the surveillance bumpary sticker. You if you are weary of politics, 283 00:15:41,240 --> 00:15:43,640 Speaker 1: as many are, Brian, you want to look overseas. Are 284 00:15:43,720 --> 00:15:46,760 Speaker 1: there markets right now where it is less of a player, 285 00:15:46,840 --> 00:15:49,960 Speaker 1: less casting, less of a shadow. Uh for those who 286 00:15:50,000 --> 00:15:51,880 Speaker 1: don't want to have to weigh or or think about 287 00:15:51,960 --> 00:15:54,640 Speaker 1: or try to figure out the latest political moctinations. Well, 288 00:15:54,640 --> 00:15:56,240 Speaker 1: one of my favorite areas to look right now are 289 00:15:56,240 --> 00:15:58,960 Speaker 1: some of those where I think from a longer term 290 00:15:59,040 --> 00:16:03,160 Speaker 1: value perspective, there's some decent opportunity and I see that 291 00:16:03,200 --> 00:16:05,240 Speaker 1: in a lot of emerging markets. But the problem is this, 292 00:16:05,560 --> 00:16:09,320 Speaker 1: you know, politics is casting quite a dark shadow across 293 00:16:09,360 --> 00:16:11,960 Speaker 1: a lot of the emerging markets, the uncertainty about what's 294 00:16:12,000 --> 00:16:14,080 Speaker 1: going to happen as far as on the trade front, 295 00:16:14,280 --> 00:16:16,800 Speaker 1: what's going to happen with commodity prices, what's going to 296 00:16:16,880 --> 00:16:20,200 Speaker 1: happen with you know, China's growth slow down. So there 297 00:16:20,200 --> 00:16:22,440 Speaker 1: are a lot of dark clouds. But that is actually 298 00:16:22,480 --> 00:16:26,040 Speaker 1: where I think there's some good opportunities because, uh, you know, valuations, 299 00:16:26,040 --> 00:16:28,000 Speaker 1: when I look back at some charts that you know, 300 00:16:28,040 --> 00:16:31,720 Speaker 1: based on price two expected cash flows, emerging markets are 301 00:16:31,760 --> 00:16:34,840 Speaker 1: trading at a rather significant discount relative to their developed 302 00:16:34,840 --> 00:16:36,880 Speaker 1: market peers. So, you know, I think you can look 303 00:16:36,920 --> 00:16:41,120 Speaker 1: at emerging markets for longer term value opportunities. Keeping in 304 00:16:41,200 --> 00:16:44,760 Speaker 1: mind that emerging markets it's a plural not a singular noun, 305 00:16:45,240 --> 00:16:47,760 Speaker 1: that there are you know, all sorts of differences between say, 306 00:16:47,760 --> 00:16:50,280 Speaker 1: what's going on in Turkey versus what's going on in India, 307 00:16:50,320 --> 00:16:53,360 Speaker 1: with both of which are emerging markets. And you know what, 308 00:16:53,440 --> 00:16:56,000 Speaker 1: we love to have you on because you are truly 309 00:16:56,040 --> 00:16:59,440 Speaker 1: in the trenches of standing in a room with ten 310 00:16:59,560 --> 00:17:03,320 Speaker 1: or one hundred people or more frankly with their hands 311 00:17:03,360 --> 00:17:05,640 Speaker 1: up in the air saying excuse me, sir. I mean, 312 00:17:05,800 --> 00:17:07,840 Speaker 1: you know, some of the real concerns that are out there. 313 00:17:08,440 --> 00:17:11,119 Speaker 1: If we make the statement this is the most unloved 314 00:17:11,119 --> 00:17:15,680 Speaker 1: bull market, ever, how does this moment of January two 315 00:17:15,680 --> 00:17:19,399 Speaker 1: thousand and seventeen change that idea? Do we go to 316 00:17:19,520 --> 00:17:23,480 Speaker 1: effervescence or are we even less loved than we've been 317 00:17:23,840 --> 00:17:26,840 Speaker 1: since early two thousand nine. I think some people are 318 00:17:26,880 --> 00:17:29,480 Speaker 1: loving the wrong parts, you know. As as far as 319 00:17:29,760 --> 00:17:32,800 Speaker 1: looking at expecting that we're going to see continually rising 320 00:17:32,920 --> 00:17:36,399 Speaker 1: interest rates, I did anticipate that will probably see you know, 321 00:17:36,440 --> 00:17:39,159 Speaker 1: the tenure Treasury and the year at around you know, 322 00:17:39,200 --> 00:17:41,719 Speaker 1: two point nine to three something like that. But then 323 00:17:41,760 --> 00:17:43,720 Speaker 1: how much higher are we going to go? Maybe three 324 00:17:43,800 --> 00:17:45,880 Speaker 1: and a half percent. So a lot of people are 325 00:17:45,920 --> 00:17:48,680 Speaker 1: hating on fixed income, a lot of people are hating 326 00:17:48,720 --> 00:17:50,879 Speaker 1: on the emerging markets, and I think that's where to 327 00:17:50,920 --> 00:17:53,600 Speaker 1: represents the best opportunities. So there are pockets where people 328 00:17:53,680 --> 00:17:55,679 Speaker 1: love it. Look coming out of the election, you know, 329 00:17:55,720 --> 00:17:58,480 Speaker 1: small cap stocks did well. I think justifiably, so they 330 00:17:58,480 --> 00:18:01,000 Speaker 1: tend to be more it can deal with the regulations 331 00:18:01,040 --> 00:18:03,880 Speaker 1: quite as well. They also tend to be higher taxed 332 00:18:03,920 --> 00:18:06,240 Speaker 1: than what the large cap stocks are, so and some 333 00:18:06,320 --> 00:18:09,480 Speaker 1: of that increase in price I think was justified. But 334 00:18:09,920 --> 00:18:13,080 Speaker 1: some of the sector uh that people were focusing on, 335 00:18:13,119 --> 00:18:15,320 Speaker 1: as far as what say, the infrastructure build out, I 336 00:18:15,320 --> 00:18:17,399 Speaker 1: think that any infrastructure plan that we get is going 337 00:18:17,440 --> 00:18:19,000 Speaker 1: to have to be paid for to get it through 338 00:18:19,000 --> 00:18:21,600 Speaker 1: a Republican controlled House and Senate. They don't want to 339 00:18:21,600 --> 00:18:24,080 Speaker 1: blow up the deficits. So um. You know, maybe some 340 00:18:24,240 --> 00:18:26,840 Speaker 1: of the run up that we saw in some parts 341 00:18:26,840 --> 00:18:30,640 Speaker 1: of the industrial material space was a little bit overdone. 342 00:18:30,680 --> 00:18:32,280 Speaker 1: So you know, if people I think we're kind of 343 00:18:32,640 --> 00:18:35,240 Speaker 1: you've you've got this mix of euphoria and a mix 344 00:18:35,240 --> 00:18:38,159 Speaker 1: of pessimism, and it makes for a very interesting market 345 00:18:38,200 --> 00:18:41,080 Speaker 1: to causes all sorts of sector rotation. And that's I 346 00:18:41,080 --> 00:18:42,520 Speaker 1: think going to be one of the big themes for 347 00:18:42,560 --> 00:18:45,120 Speaker 1: two thousand seventeen is you'll see periods of time where 348 00:18:45,119 --> 00:18:48,000 Speaker 1: one sector is sort of you know, charging ahead for 349 00:18:48,400 --> 00:18:50,119 Speaker 1: you know, a month at a time, but then suddenly 350 00:18:50,160 --> 00:18:53,120 Speaker 1: it's stumbled. And that's why it's so important to just 351 00:18:53,280 --> 00:18:56,040 Speaker 1: keep it diversified. Don't try to get over your skis 352 00:18:56,080 --> 00:18:59,199 Speaker 1: with any particular one sector. Bet Bryan Jackson, take us 353 00:18:59,200 --> 00:19:03,439 Speaker 1: into that small world. Uh, what's attractive in it to 354 00:19:03,480 --> 00:19:05,880 Speaker 1: you right now? Well, I think that in the small 355 00:19:05,920 --> 00:19:08,960 Speaker 1: cap stocks, you know, it's it's just like the emerging markets. 356 00:19:09,000 --> 00:19:11,719 Speaker 1: It's a it's a it's a very diverse set of 357 00:19:12,119 --> 00:19:15,200 Speaker 1: entities that exist in there. And one of the areas 358 00:19:15,240 --> 00:19:17,840 Speaker 1: that I think people really honed in on after President 359 00:19:18,160 --> 00:19:20,240 Speaker 1: Trump or at that point it was, uh, you know 360 00:19:20,400 --> 00:19:22,800 Speaker 1: candidate Trump became president to lec Trump and now he's 361 00:19:22,840 --> 00:19:25,520 Speaker 1: President Trump, was that a lot of small cap stocks. 362 00:19:25,560 --> 00:19:27,840 Speaker 1: They tend to be more domestically focused as far as 363 00:19:27,880 --> 00:19:30,000 Speaker 1: with their revenues. They also tend to have a higher 364 00:19:30,040 --> 00:19:32,720 Speaker 1: media and effective tax right. But one of the problems 365 00:19:32,760 --> 00:19:35,919 Speaker 1: with just looking at okay, well they're more heavily taxed 366 00:19:35,960 --> 00:19:39,040 Speaker 1: and therefore they'll benefit more from corporate tax cuts is 367 00:19:39,320 --> 00:19:41,760 Speaker 1: not all of those small cap stocks are profitable. As 368 00:19:41,760 --> 00:19:44,280 Speaker 1: of the third quarter two thousand sixteen, for the smallest 369 00:19:44,280 --> 00:19:48,360 Speaker 1: two thousand stocks, only about of them were actually had 370 00:19:48,400 --> 00:19:52,320 Speaker 1: taxable profits. So actually kind of like more MidCap stocks 371 00:19:52,359 --> 00:19:55,080 Speaker 1: in this environment. As far as who might benefit from 372 00:19:55,440 --> 00:19:59,040 Speaker 1: corporate tax reform. Seventy eight percent of MidCap stocks were 373 00:19:59,040 --> 00:20:02,440 Speaker 1: profitable and the at quarter two sixteen effective tax rates 374 00:20:02,440 --> 00:20:07,320 Speaker 1: of around twenty nine, so they could be decent beneficiaries. 375 00:20:07,640 --> 00:20:09,240 Speaker 1: So I would actually kind of shift I think more 376 00:20:09,280 --> 00:20:12,320 Speaker 1: from small cap into mid camp, but even within as 377 00:20:12,400 --> 00:20:15,399 Speaker 1: a looking at mid and small relative to too large. 378 00:20:16,040 --> 00:20:17,919 Speaker 1: A lot of that people are expecting to, say a 379 00:20:17,960 --> 00:20:22,800 Speaker 1: repatriation tax holiday or repatriation changed to the tax code 380 00:20:22,800 --> 00:20:25,639 Speaker 1: in general, and if that money does indeed come back, 381 00:20:25,800 --> 00:20:29,960 Speaker 1: where businesses invest in property equipment, that's probably small and 382 00:20:30,000 --> 00:20:31,840 Speaker 1: mid cap stocks are likely going to be the ones 383 00:20:31,880 --> 00:20:34,600 Speaker 1: who build out that type of property, plant, and equipment. 384 00:20:34,840 --> 00:20:38,000 Speaker 1: We're going to continue this discussion. One quick question Brian Jacobson, 385 00:20:38,560 --> 00:20:45,119 Speaker 1: if I could, do you buy international through US multinationals 386 00:20:45,240 --> 00:20:47,800 Speaker 1: or do you now have to go abroad? Well, I 387 00:20:48,080 --> 00:20:50,560 Speaker 1: think going abroad might be a better way to go. 388 00:20:50,600 --> 00:20:53,760 Speaker 1: It's just a wider opportunity set. If you do it 389 00:20:53,800 --> 00:20:56,080 Speaker 1: through the US, you tend to get a lot of 390 00:20:56,119 --> 00:21:00,760 Speaker 1: geographic concentration. Uh. You know, our biggest trading partners Canada, 391 00:21:00,840 --> 00:21:03,640 Speaker 1: Mexico and Europe. So you know, if you really want 392 00:21:03,680 --> 00:21:06,480 Speaker 1: to have a globally diversified portfolio. I don't think using 393 00:21:06,680 --> 00:21:09,360 Speaker 1: US multinationals as a proxy is really the best way 394 00:21:09,400 --> 00:21:19,920 Speaker 1: to go. Brought you by Bank of America, Mary Lynch. 395 00:21:20,040 --> 00:21:24,280 Speaker 1: Dedicated to bringing our clients insights and solutions to meet 396 00:21:24,320 --> 00:21:27,800 Speaker 1: the challenges of a transforming world. That's the power of 397 00:21:27,840 --> 00:21:33,639 Speaker 1: global connections. Mary Lynch, Pierce Federin Smith Incorporated, Member s 398 00:21:33,720 --> 00:21:40,960 Speaker 1: I p C. Here is the interview of the day. 399 00:21:42,040 --> 00:21:44,680 Speaker 1: I guess you could go back to well President Clinton, 400 00:21:45,280 --> 00:21:47,280 Speaker 1: where she was a vice chair. I think back then 401 00:21:47,400 --> 00:21:50,119 Speaker 1: she was vice chairman, but now she's vice chair. Or 402 00:21:50,200 --> 00:21:54,400 Speaker 1: you could go back to when she was thirty director 403 00:21:54,600 --> 00:21:57,399 Speaker 1: of O M. B Are. You could go back to 404 00:21:57,440 --> 00:21:59,000 Speaker 1: I think it was Hamilton's, but it may have been 405 00:21:59,040 --> 00:22:02,280 Speaker 1: Madison where she sat at the budget for Alexander Hamilton. 406 00:22:02,359 --> 00:22:07,040 Speaker 1: Alice Rivlin, wonderful to have you with us today. I 407 00:22:07,040 --> 00:22:12,359 Speaker 1: am sure was terrific. I am sure from the leafy 408 00:22:12,440 --> 00:22:16,760 Speaker 1: uh leafy groves of Radcliffe a few years ago, you 409 00:22:16,800 --> 00:22:20,240 Speaker 1: didn't expect we'd see what we're seeing right now. Speak 410 00:22:20,320 --> 00:22:24,840 Speaker 1: to the people across this nation listening of how you 411 00:22:24,880 --> 00:22:29,959 Speaker 1: are developing rivelin patients. Given the news flow, how are 412 00:22:30,000 --> 00:22:36,560 Speaker 1: you staying cool? Calm, and Alice Rivlin connected, Well, I've 413 00:22:36,600 --> 00:22:39,280 Speaker 1: seen a lot of upheaval in Washington. This one is 414 00:22:39,359 --> 00:22:42,480 Speaker 1: quite unusual, and the news is coming fast and furious 415 00:22:42,600 --> 00:22:46,640 Speaker 1: as you as you know. Fortunately, though of the economies 416 00:22:46,680 --> 00:22:50,639 Speaker 1: in good shape. We're not in a crisis. And actually 417 00:22:50,760 --> 00:22:54,800 Speaker 1: a lot of the news is about things that are 418 00:22:54,960 --> 00:22:59,280 Speaker 1: important but not central to the economy, of the wall 419 00:23:00,040 --> 00:23:05,359 Speaker 1: and so forth. But um, it's quite a kaleidoscope of 420 00:23:05,680 --> 00:23:08,600 Speaker 1: crazy things happening. How's how difficult is it to filter 421 00:23:08,720 --> 00:23:11,000 Speaker 1: out that noise? It sounds like you're you're regarding that 422 00:23:11,080 --> 00:23:13,639 Speaker 1: as noise conversation about the wall and what may or 423 00:23:13,680 --> 00:23:16,199 Speaker 1: may not happen with regard to UH, to infrastructure, when 424 00:23:16,200 --> 00:23:17,920 Speaker 1: you when you look at the health of the economy, 425 00:23:18,480 --> 00:23:20,480 Speaker 1: how easy is it to factor out the political noise 426 00:23:20,560 --> 00:23:25,040 Speaker 1: right now? Well, I think you just have to concentrate 427 00:23:25,080 --> 00:23:28,720 Speaker 1: on what's important. What I've been concentrating on recently is 428 00:23:28,800 --> 00:23:32,800 Speaker 1: what in the world is going to do about the 429 00:23:32,880 --> 00:23:37,720 Speaker 1: Affordable Care Act. That's pretty big, both economically and in 430 00:23:37,840 --> 00:23:43,159 Speaker 1: people's lives. UH and the President campaigned on it was 431 00:23:43,200 --> 00:23:45,639 Speaker 1: a terrible law and we have to repeal it. It 432 00:23:45,720 --> 00:23:48,479 Speaker 1: promised to replace it with something great. Now they've got 433 00:23:48,480 --> 00:23:51,360 Speaker 1: to do that, and they're finding out that it is very, 434 00:23:51,480 --> 00:23:55,480 Speaker 1: very difficult, in part because a lot of people have 435 00:23:55,720 --> 00:23:59,600 Speaker 1: insurance that they don't want to lose, and institutions like 436 00:24:00,040 --> 00:24:04,440 Speaker 1: hospitals and and the doctors are dependent on getting their 437 00:24:04,440 --> 00:24:09,320 Speaker 1: bills paid. So it's not so easy to change this law. 438 00:24:09,720 --> 00:24:12,880 Speaker 1: And Republicans themselves are not united on what to do. 439 00:24:13,359 --> 00:24:15,840 Speaker 1: Former HHS Secretary Micha Levitt was with us earlier in 440 00:24:15,840 --> 00:24:17,879 Speaker 1: the week and he said that it would be dangerous 441 00:24:17,920 --> 00:24:19,919 Speaker 1: to do a repill without having anything to replace it 442 00:24:19,960 --> 00:24:23,199 Speaker 1: there at the ready. Is there growing consensus about that 443 00:24:23,240 --> 00:24:27,040 Speaker 1: in Washington? Yes, I think there's a growing consensus. Uh, 444 00:24:27,160 --> 00:24:31,720 Speaker 1: and it probably includes President Trump. He has said, well, 445 00:24:31,760 --> 00:24:34,800 Speaker 1: not probably, it definitely includes President Trump. He has said 446 00:24:34,840 --> 00:24:40,080 Speaker 1: several times that replacement must come along with repeal. That's 447 00:24:40,200 --> 00:24:43,760 Speaker 1: very sensible. He doesn't want a political catastrophe on his 448 00:24:43,920 --> 00:24:48,240 Speaker 1: hands in his first month in office. The trouble is 449 00:24:48,280 --> 00:24:52,240 Speaker 1: that replacement is hard, and different parts of his own 450 00:24:52,320 --> 00:24:56,840 Speaker 1: party have different ideas about it. Yesterday we saw an 451 00:24:57,040 --> 00:25:01,320 Speaker 1: entry from Senators Collins and Casting, which I think is 452 00:25:01,720 --> 00:25:05,560 Speaker 1: the sort of a promising opening of a conversation, but 453 00:25:05,640 --> 00:25:09,160 Speaker 1: it basically said, let's states choose. Uh, they can stay 454 00:25:09,160 --> 00:25:12,159 Speaker 1: in Obamacare if they want to, or they can do 455 00:25:12,280 --> 00:25:16,400 Speaker 1: something more republican. Uh. That's something more republican isn't very 456 00:25:16,440 --> 00:25:21,920 Speaker 1: well defined, but would involve health save these accounts. Uh, 457 00:25:22,280 --> 00:25:27,000 Speaker 1: confederal contributions to health saving these accounts. And that's a 458 00:25:27,119 --> 00:25:29,560 Speaker 1: that's the way to talk about it. Help us here 459 00:25:29,920 --> 00:25:34,720 Speaker 1: with our collective wisdom in this a historical America that 460 00:25:34,800 --> 00:25:39,879 Speaker 1: we have. When people talk about high inflation, to a person, 461 00:25:39,960 --> 00:25:43,639 Speaker 1: our guests suggests three, maybe a little bit higher inflation. 462 00:25:43,760 --> 00:25:47,679 Speaker 1: Maybe you lived that what I call the Walter Heller 463 00:25:47,720 --> 00:25:51,600 Speaker 1: inflation of the sixties. Robert Samuelson is wonderful on his 464 00:25:51,720 --> 00:25:55,280 Speaker 1: folks at the Washington Post. Do you see any framework 465 00:25:55,280 --> 00:26:00,159 Speaker 1: where President Trump could stumble into a larger inflation? No, 466 00:26:00,400 --> 00:26:05,200 Speaker 1: Inflation is very low on my list of worries. Uh, 467 00:26:05,359 --> 00:26:10,920 Speaker 1: it's been hard to get anywhere near. Uh. The federal 468 00:26:11,000 --> 00:26:15,080 Speaker 1: reserves goal for two percent inflation. Inflation has been too low, 469 00:26:15,200 --> 00:26:19,399 Speaker 1: not too high. I think it will not be a 470 00:26:19,520 --> 00:26:23,480 Speaker 1: high on our list of worries. The economy is much 471 00:26:23,480 --> 00:26:28,719 Speaker 1: more flexible, it's much more global. Uh, and Uh, people 472 00:26:28,840 --> 00:26:35,320 Speaker 1: don't expect inflation. Uh, nobody under the age of fifty 473 00:26:35,480 --> 00:26:39,840 Speaker 1: has ever experienced inflation, so they don't think about it, 474 00:26:40,680 --> 00:26:42,600 Speaker 1: and I don't think it's a big worry. See how 475 00:26:42,640 --> 00:26:45,000 Speaker 1: she did that, David girl, She put me right. Those 476 00:26:45,119 --> 00:26:51,000 Speaker 1: those youngsters under help me, Alice, on your list of worries? 477 00:26:51,080 --> 00:26:53,240 Speaker 1: Where is Where is the FED? When you're having lunch 478 00:26:53,240 --> 00:26:56,560 Speaker 1: in the fabled Brookings Institution cafeteria, there maybe been bernanke 479 00:26:56,760 --> 00:26:59,399 Speaker 1: Is grabbing a sandwich as well. Do you talk about 480 00:26:59,480 --> 00:27:02,119 Speaker 1: the role of FED is going to play this discussion 481 00:27:02,160 --> 00:27:05,280 Speaker 1: about a rules based FED? Are there concerns about what 482 00:27:05,359 --> 00:27:07,280 Speaker 1: might happen if there is more political involvement with the 483 00:27:07,280 --> 00:27:10,000 Speaker 1: FED reserve? What's your sense of its future? How worried 484 00:27:10,000 --> 00:27:13,040 Speaker 1: about it? Are you? Well? There are All of those 485 00:27:13,080 --> 00:27:16,560 Speaker 1: conversations have been going on, of course for quite a while, because, 486 00:27:17,240 --> 00:27:23,680 Speaker 1: uh there the Republicans in the House particularly have been 487 00:27:23,800 --> 00:27:26,800 Speaker 1: very anti FED for quite a long time. I'm not 488 00:27:26,880 --> 00:27:31,720 Speaker 1: sure that that will carry over into the new administration. 489 00:27:32,160 --> 00:27:34,600 Speaker 1: They were fussing at the FED for not raising interest 490 00:27:34,720 --> 00:27:37,879 Speaker 1: rates faster. Now that they're in control, are they going 491 00:27:37,920 --> 00:27:39,840 Speaker 1: to want interest rates to go up faster? I don't 492 00:27:39,880 --> 00:27:43,160 Speaker 1: think so. Uh So, some of that may die down. 493 00:27:44,080 --> 00:27:48,600 Speaker 1: I do think that threatening the independence of the FED 494 00:27:48,600 --> 00:27:50,480 Speaker 1: would be a big mistake, and in the end, I 495 00:27:50,480 --> 00:27:53,080 Speaker 1: don't think they'll do it. Tell me, with the migratory 496 00:27:53,320 --> 00:27:57,119 Speaker 1: patterns of deficit hawks, I associate you with the OMB, 497 00:27:57,240 --> 00:27:59,440 Speaker 1: with the FED Reserve, and also with a movement to 498 00:27:59,480 --> 00:28:01,679 Speaker 1: while back to tackle the deficit. You and Mind McInnis 499 00:28:01,680 --> 00:28:03,919 Speaker 1: at Committee for Responsible Federal butget worked on that with 500 00:28:04,000 --> 00:28:08,119 Speaker 1: Senator Mark Warner and others. Amid these conversations about tax 501 00:28:08,160 --> 00:28:10,840 Speaker 1: reform about the Affordable Care Act, do you think we're 502 00:28:10,800 --> 00:28:13,959 Speaker 1: gonna see serious opposition here from people who are saying, look, 503 00:28:13,960 --> 00:28:18,240 Speaker 1: we've got to consider the deficit. Well, I hope so, 504 00:28:18,400 --> 00:28:22,280 Speaker 1: But I hope it's sensible opposition. It shouldn't be opposition 505 00:28:22,320 --> 00:28:26,720 Speaker 1: to UH pro growth spending on the grounds that it 506 00:28:26,840 --> 00:28:31,359 Speaker 1: increases the deficit, because you do need the economy growing faster, 507 00:28:31,520 --> 00:28:35,159 Speaker 1: and what matters is the debt to GDP ratio, and 508 00:28:35,240 --> 00:28:40,040 Speaker 1: raising the GDP is a good thing. But uh, I 509 00:28:40,120 --> 00:28:43,840 Speaker 1: am an unreconstructed believer that we need to do two 510 00:28:43,880 --> 00:28:46,600 Speaker 1: things at once. We need to grow the economy faster 511 00:28:47,120 --> 00:28:51,080 Speaker 1: and we need to get our long run debt on 512 00:28:51,240 --> 00:28:57,840 Speaker 1: a stable path. That means entitlement reform sensible entitled reform. Uh. 513 00:28:57,960 --> 00:29:02,840 Speaker 1: And it means tax reform that increases rather than decreases 514 00:29:02,920 --> 00:29:05,800 Speaker 1: revenues in the long run. I think we can do that. 515 00:29:05,840 --> 00:29:08,200 Speaker 1: We I was on the Simpson Bowls Commission. We had 516 00:29:08,280 --> 00:29:12,040 Speaker 1: quite a good plan. Uh. And my old friend Pete 517 00:29:12,040 --> 00:29:15,800 Speaker 1: Domnici and I cheered a bipartisan group that came up 518 00:29:15,800 --> 00:29:20,280 Speaker 1: with another plan. Plans exist. They are good sensible things 519 00:29:20,320 --> 00:29:22,400 Speaker 1: to do. Uh. And I hope we get back to 520 00:29:22,480 --> 00:29:25,760 Speaker 1: that conversation. Vest Sherman, thank you so much. Elise Rivland, 521 00:29:25,800 --> 00:29:29,000 Speaker 1: of course of cbo O, M B and the Fed 522 00:29:29,760 --> 00:29:32,560 Speaker 1: with us this morning with terrific perspective. Look for her writings, 523 00:29:32,560 --> 00:29:51,520 Speaker 1: particularly uh Brookenza in edition of his classic textbook. He 524 00:29:51,600 --> 00:29:55,600 Speaker 1: does what Alan Blinder always does. He tries to make 525 00:29:55,640 --> 00:30:01,040 Speaker 1: you think ideas for beyond the final Exam? And I 526 00:30:01,080 --> 00:30:03,760 Speaker 1: love idea one. And this is like eight thousand page. 527 00:30:03,760 --> 00:30:05,840 Speaker 1: It's like sort of like the Old Testament combined with 528 00:30:05,880 --> 00:30:09,440 Speaker 1: a New Testament. How much does it really cost? Professor 529 00:30:09,480 --> 00:30:12,360 Speaker 1: Blinder of Princeton, wonderful to have you with us this morning. 530 00:30:13,880 --> 00:30:17,320 Speaker 1: Is President Trump able to get out beyond the final 531 00:30:17,400 --> 00:30:22,240 Speaker 1: exam in our nation's economics. It's hard for me to 532 00:30:22,360 --> 00:30:25,440 Speaker 1: imagine that he would pass a final exam, even if 533 00:30:25,480 --> 00:30:29,760 Speaker 1: it was set by a highly conservative free market economists. 534 00:30:31,160 --> 00:30:36,320 Speaker 1: Can Glenn Hubbard and Martin Feldstein support I guess their 535 00:30:36,440 --> 00:30:39,400 Speaker 1: candidate after what you've observed the last four fight? Well, 536 00:30:39,440 --> 00:30:43,200 Speaker 1: I don't think actually he was their candidate. Those two 537 00:30:43,280 --> 00:30:49,040 Speaker 1: gentlemen are conservative compared to me. Uh, their lifelong Republicans, 538 00:30:49,080 --> 00:30:52,400 Speaker 1: but they certainly did not support Donald Trump. How much 539 00:30:52,520 --> 00:30:54,640 Speaker 1: energy do you put into trying to define what Trump 540 00:30:54,720 --> 00:30:58,840 Speaker 1: and omics is in light of what we've seen? Uh, 541 00:30:58,880 --> 00:31:00,640 Speaker 1: there's been a lot of whipsawing here. Are we any 542 00:31:00,680 --> 00:31:02,480 Speaker 1: closer to having a definition of it? Is it worth 543 00:31:02,480 --> 00:31:05,280 Speaker 1: even trying to pin down? I think it's worth trying 544 00:31:05,320 --> 00:31:09,680 Speaker 1: to pin down. Once the economic program has taken greater 545 00:31:09,800 --> 00:31:12,880 Speaker 1: shape than it is, we know the broad outlines. There's 546 00:31:12,920 --> 00:31:19,440 Speaker 1: gonna be tax cuts for individuals, certainly for corporations. Probably, 547 00:31:19,960 --> 00:31:23,760 Speaker 1: there's going to be something that passes for an infrastructure plan. 548 00:31:24,320 --> 00:31:28,120 Speaker 1: They'll most likely be a defense build up. There will 549 00:31:28,160 --> 00:31:34,880 Speaker 1: certainly be an evisceration of regulations but in everyone, and 550 00:31:35,320 --> 00:31:40,240 Speaker 1: there will be something to replace Obamacare, we think, But 551 00:31:40,360 --> 00:31:43,920 Speaker 1: in every one of those domains. We don't really have 552 00:31:44,120 --> 00:31:48,080 Speaker 1: much of an idea concretely about what's going to happen, 553 00:31:49,320 --> 00:31:53,240 Speaker 1: but that kind of idea should start taking shape within 554 00:31:53,280 --> 00:31:57,400 Speaker 1: the coming weeks and months. Let's talk a little bit 555 00:31:57,440 --> 00:32:00,000 Speaker 1: about the Federal Reserves and an institution that you know, well, 556 00:32:00,040 --> 00:32:02,080 Speaker 1: there's the conversation growing on the hill about a more 557 00:32:02,160 --> 00:32:05,560 Speaker 1: rules based approach here. There is a conversation that started 558 00:32:05,640 --> 00:32:08,800 Speaker 1: during the campaign about the politicization of the Federal Reserve. 559 00:32:09,600 --> 00:32:11,240 Speaker 1: To what degree is the fedting to stand up for 560 00:32:11,280 --> 00:32:13,240 Speaker 1: itself more than it has? The expect that we'll hear 561 00:32:13,240 --> 00:32:17,200 Speaker 1: more from the FED Chair here in this yere um. 562 00:32:17,400 --> 00:32:20,680 Speaker 1: We will to the extent that some of the things 563 00:32:20,680 --> 00:32:24,120 Speaker 1: that are bouncing around in Congress that threatened the independence 564 00:32:24,840 --> 00:32:27,280 Speaker 1: of the FED to come up again and again, and 565 00:32:27,400 --> 00:32:32,400 Speaker 1: the Chair needs to respond. But the truth is that, 566 00:32:32,560 --> 00:32:34,920 Speaker 1: for better or for worse, and I think it's mostly 567 00:32:35,000 --> 00:32:40,080 Speaker 1: for better, the Federal Reserve is not a very political institution. 568 00:32:40,280 --> 00:32:42,800 Speaker 1: And the people that need to stand up for the 569 00:32:42,840 --> 00:32:50,120 Speaker 1: FED are the politicians, Democrats and Republicans that see the 570 00:32:50,200 --> 00:32:54,840 Speaker 1: importance of the Federal Reserve as a pretty technocratic, non 571 00:32:54,880 --> 00:33:00,200 Speaker 1: political organization that, by the way, works, I mean One 572 00:33:00,240 --> 00:33:02,360 Speaker 1: of the things that got Donald Trump elected was the 573 00:33:02,400 --> 00:33:06,560 Speaker 1: Republican success in making the government look totally dysfunctional. The 574 00:33:06,600 --> 00:33:11,720 Speaker 1: Federal Reserve has never looked dysfunctional. It's not dysfunctional today. 575 00:33:11,960 --> 00:33:15,400 Speaker 1: Many people in Congress understand that, and they have to 576 00:33:15,480 --> 00:33:19,160 Speaker 1: stand up and be counted. Help me here with another 577 00:33:19,200 --> 00:33:23,240 Speaker 1: one of Blinder Boma's ideas, uh trade is a win 578 00:33:23,320 --> 00:33:27,440 Speaker 1: win situation. Mr Trump doesn't agree and is frankly a 579 00:33:27,480 --> 00:33:30,000 Speaker 1: lot of Americans. I don't know if you saw Brad 580 00:33:30,040 --> 00:33:33,480 Speaker 1: Delong's essay Professor Blinder, but he just killed it on 581 00:33:33,520 --> 00:33:36,680 Speaker 1: the mathematics of how NAPHTA W t on T t 582 00:33:36,840 --> 00:33:40,480 Speaker 1: P don't play that great apart in the debate? Help 583 00:33:40,560 --> 00:33:45,000 Speaker 1: us trade? Can it be win win? Trade is win 584 00:33:45,080 --> 00:33:48,280 Speaker 1: win when you go to the level of the nation, 585 00:33:49,360 --> 00:33:53,760 Speaker 1: which is what that point is about. Every country benefits 586 00:33:54,320 --> 00:33:58,440 Speaker 1: from trade. The problem is that it's not true that 587 00:33:58,560 --> 00:34:02,959 Speaker 1: every citizen in every country benefits from trade. When trade 588 00:34:03,080 --> 00:34:07,080 Speaker 1: moves economic activity from one place where it lacks a 589 00:34:07,120 --> 00:34:11,040 Speaker 1: comparative advantage. This is the term David Ricardo introduced two 590 00:34:11,120 --> 00:34:16,920 Speaker 1: hundred years ago to another country that has a comparative advantage. So, 591 00:34:17,040 --> 00:34:20,920 Speaker 1: for example, those two countries could be the US and China. 592 00:34:21,320 --> 00:34:25,200 Speaker 1: People will lose their jobs, Capitalists will lose their capital 593 00:34:25,880 --> 00:34:29,680 Speaker 1: in the industry that contract. The opposite will happen in 594 00:34:29,719 --> 00:34:35,360 Speaker 1: the industries that expand. And it's demonstrable that in total, 595 00:34:35,480 --> 00:34:40,160 Speaker 1: the winds exceed the losses. But that's very small constellation 596 00:34:40,280 --> 00:34:42,880 Speaker 1: to the losers. And the truth is that we in 597 00:34:42,920 --> 00:34:45,919 Speaker 1: America and also people in other countries have not done 598 00:34:45,960 --> 00:34:50,799 Speaker 1: nearly enough to compensate the losers. Blinders, Chapter eighteen, page 599 00:34:50,840 --> 00:34:55,480 Speaker 1: three seventy one. Can protectionism safe free trade? With a 600 00:34:55,520 --> 00:34:58,759 Speaker 1: grizzled view of Williams Sapphire, That's what you get in 601 00:34:58,840 --> 00:35:02,239 Speaker 1: Blinder's textbook. Wonder if a more lucid explanation could have 602 00:35:02,280 --> 00:35:04,560 Speaker 1: saved a free twade? Looking back on the way that 603 00:35:04,640 --> 00:35:06,880 Speaker 1: Ambassador Mike Froman tried to sell this to to the 604 00:35:06,920 --> 00:35:10,320 Speaker 1: Congress and via them, the American public, I'm not blaming 605 00:35:10,360 --> 00:35:12,279 Speaker 1: him in particular, but but do you do you think 606 00:35:12,320 --> 00:35:15,040 Speaker 1: that more could have been done to explain the role 607 00:35:15,120 --> 00:35:17,319 Speaker 1: of free trade, what benefits it does have, and who 608 00:35:17,320 --> 00:35:20,560 Speaker 1: indeed it would benefit. I think a little, but I 609 00:35:20,560 --> 00:35:24,400 Speaker 1: don't think that would have been enough of a force 610 00:35:24,600 --> 00:35:28,600 Speaker 1: against the demagoguery. We could have done well. I have 611 00:35:28,719 --> 00:35:31,919 Speaker 1: said innumerable times that this is a failure of economists. 612 00:35:31,920 --> 00:35:35,120 Speaker 1: For two hundred years we were all well, most of 613 00:35:35,160 --> 00:35:39,520 Speaker 1: us weren't alive. Then those of just there two hundred 614 00:35:39,560 --> 00:35:43,960 Speaker 1: years ago were instantly converted by David Ricardo. And the 615 00:35:44,000 --> 00:35:47,560 Speaker 1: economics profession has never changed its mind on this, but 616 00:35:47,680 --> 00:35:52,240 Speaker 1: it hasn't really carried the message very well to the public. 617 00:35:53,400 --> 00:35:56,759 Speaker 1: Part of it is a failure, and that David is 618 00:35:56,800 --> 00:35:59,960 Speaker 1: the part that could have been done better to explain 619 00:36:00,120 --> 00:36:04,040 Speaker 1: to people how, for example, all those cheap things they 620 00:36:04,080 --> 00:36:07,960 Speaker 1: buy and applying stores and at Walmart are products of 621 00:36:08,040 --> 00:36:10,680 Speaker 1: free trade and they'd be harder to get a more 622 00:36:10,680 --> 00:36:15,120 Speaker 1: expensive or not for freedom. Let's do this, Professor Blinder, 623 00:36:15,200 --> 00:36:16,960 Speaker 1: Let's come back. Allen Blinder is going to continue with 624 00:36:17,040 --> 00:36:20,520 Speaker 1: its very generous of his time. Uh, Professor Blinder, it 625 00:36:20,600 --> 00:36:22,960 Speaker 1: is an historic day of doubt. Twenty thousand. I was 626 00:36:23,040 --> 00:36:26,520 Speaker 1: trying to look back alan to where I sort of 627 00:36:26,560 --> 00:36:29,759 Speaker 1: remember the Dow, and I used that one moment in 628 00:36:29,920 --> 00:36:32,560 Speaker 1: history so for so many Americans, not Pearl Harbor, but 629 00:36:33,040 --> 00:36:36,480 Speaker 1: for my generation, the assassination of the president, and it 630 00:36:36,600 --> 00:36:39,920 Speaker 1: was a dow seven hundred eight hundred and we're now 631 00:36:39,960 --> 00:36:43,960 Speaker 1: at twenty thousand. We had the Carter malaise um not 632 00:36:44,400 --> 00:36:48,520 Speaker 1: directly associated with President Carter, and whether it's up six 633 00:36:48,560 --> 00:36:51,279 Speaker 1: percent or up nine percent, equities are an awful good 634 00:36:51,280 --> 00:36:55,520 Speaker 1: way to make money. What happened to our spirit of 635 00:36:55,880 --> 00:37:03,239 Speaker 1: capitalism while we migrate ever hired to an unimaginable You know, 636 00:37:03,360 --> 00:37:07,640 Speaker 1: I hear all things about that, but I don't see it. 637 00:37:07,680 --> 00:37:10,800 Speaker 1: I mean, if I look around our society, the spirit 638 00:37:10,840 --> 00:37:15,319 Speaker 1: of capitalism and of entrepreneurship in particular is flourishing. I 639 00:37:15,320 --> 00:37:18,080 Speaker 1: mean it's not just in Silicon Valley, which is the 640 00:37:18,120 --> 00:37:21,120 Speaker 1: most obvious, but you know, you have Silicon valleys in 641 00:37:21,200 --> 00:37:24,880 Speaker 1: New York and lots of other many Silicon valleys in 642 00:37:24,920 --> 00:37:28,600 Speaker 1: New York and and lots of other places. You still 643 00:37:28,640 --> 00:37:33,960 Speaker 1: have Americans opening businesses against the odds. Most of these 644 00:37:34,000 --> 00:37:37,960 Speaker 1: small businesses fail, as you know, but that's part of 645 00:37:37,960 --> 00:37:42,879 Speaker 1: the American dream to start and run your own business. So, 646 00:37:43,560 --> 00:37:46,160 Speaker 1: you know, when people talk about things American needs, I 647 00:37:46,239 --> 00:37:50,120 Speaker 1: see some things like infrastructure, which is falling apart. But 648 00:37:50,280 --> 00:37:54,880 Speaker 1: it seems to me casually anyway, that there's lots of entrepreneurship. 649 00:37:55,680 --> 00:37:58,560 Speaker 1: There's there's lots of entrepreneurship, and I wonder here, a 650 00:37:58,640 --> 00:38:02,280 Speaker 1: Professor Blinder, UH, if there's a way for the government 651 00:38:02,320 --> 00:38:04,040 Speaker 1: to kick start more of that. In other words, is 652 00:38:04,320 --> 00:38:09,960 Speaker 1: the focus misplaced? UM? I think there are ways to 653 00:38:10,160 --> 00:38:14,560 Speaker 1: kick start some of that having to do with UM 654 00:38:14,840 --> 00:38:17,960 Speaker 1: reducing red tape. A good example, by the way, is licensure. 655 00:38:18,640 --> 00:38:21,640 Speaker 1: We require licenses for all kinds of things. Now, some 656 00:38:21,800 --> 00:38:24,360 Speaker 1: of course you want to license. You want your doctor 657 00:38:24,400 --> 00:38:26,960 Speaker 1: to be licensed and so on, but there's lots of 658 00:38:26,960 --> 00:38:31,560 Speaker 1: other things where you know, barbers and hairdressers and things 659 00:38:31,600 --> 00:38:35,360 Speaker 1: like that. Thence we we need the kind of licensing 660 00:38:35,400 --> 00:38:38,799 Speaker 1: restrictions that we have. So that's one thing. People talk 661 00:38:38,840 --> 00:38:43,799 Speaker 1: a lot about capital gains treatment from h startup businesses. 662 00:38:43,920 --> 00:38:45,680 Speaker 1: I think there's something to that, but you've got to 663 00:38:45,719 --> 00:38:49,200 Speaker 1: be careful about that. Imagine that we gave a tax 664 00:38:49,239 --> 00:38:53,120 Speaker 1: free capital gain to Bill Gates when he started Microsoft. 665 00:38:54,719 --> 00:38:56,799 Speaker 1: By the way, he didn't need such an inducement to 666 00:38:56,840 --> 00:39:03,719 Speaker 1: start Microsoft despite the taxes that UH or were in effect. Then, 667 00:39:03,760 --> 00:39:07,680 Speaker 1: so you need to be careful about things like that, 668 00:39:08,760 --> 00:39:11,520 Speaker 1: Professor Blinder, one last question, if we could this morning 669 00:39:11,560 --> 00:39:16,520 Speaker 1: you end your exceptionally well done textbook. No Nation no 670 00:39:16,680 --> 00:39:20,440 Speaker 1: Nation is an island, page four ten, When you wrote 671 00:39:20,480 --> 00:39:24,839 Speaker 1: no Nation is an island? Editions ago? Did you ever 672 00:39:24,880 --> 00:39:27,319 Speaker 1: think we'd be here today? And what do you say 673 00:39:27,320 --> 00:39:30,960 Speaker 1: to the nation is we look at our present political 674 00:39:31,080 --> 00:39:33,640 Speaker 1: economics and might they might be here today? You mean 675 00:39:33,719 --> 00:39:38,440 Speaker 1: with the president that thinks we should go back to uh, isolationism? 676 00:39:38,520 --> 00:39:41,359 Speaker 1: Well I did not. I did not. If you mean 677 00:39:41,400 --> 00:39:43,840 Speaker 1: by that then I think we were going to be 678 00:39:43,880 --> 00:39:47,960 Speaker 1: in an increasingly globalized world. Sure I did. Now did 679 00:39:48,000 --> 00:39:50,480 Speaker 1: I know the details of it then? Of course, not 680 00:39:50,480 --> 00:39:56,800 Speaker 1: not even close. But the forces of history, including technology, uh, 681 00:39:56,800 --> 00:39:59,959 Speaker 1: push only in one direction. You know, they's a history, 682 00:40:00,040 --> 00:40:05,640 Speaker 1: these arcs towards globalization. And you can rail against the 683 00:40:05,680 --> 00:40:08,320 Speaker 1: future the way the Luddites in England did against the 684 00:40:08,600 --> 00:40:12,000 Speaker 1: technology at the early part of the in the beginnings 685 00:40:12,000 --> 00:40:14,600 Speaker 1: of the Industrial Revolution. But it's not gonna do you 686 00:40:14,640 --> 00:40:18,120 Speaker 1: any good. Uh, it's not going to stop the forces 687 00:40:18,160 --> 00:40:21,120 Speaker 1: of history. Very good, Professor Blind, not a nei Luddite, 688 00:40:21,239 --> 00:40:24,919 Speaker 1: Alan Blind, Alan Blinder, thank you so much a mess. 689 00:40:24,920 --> 00:40:36,279 Speaker 1: You appreciate it. Thanks for listening to the Bloomberg Surveillance podcast. 690 00:40:36,640 --> 00:40:41,759 Speaker 1: Subscribe and listen to interviews on iTunes, SoundCloud, or whichever 691 00:40:41,880 --> 00:40:46,320 Speaker 1: podcast platform you prefer. I'm out on Twitter at Tom Keene. 692 00:40:46,400 --> 00:40:50,200 Speaker 1: David Gura is at David Gura. Before the podcast, you 693 00:40:50,239 --> 00:41:00,320 Speaker 1: can always catch us worldwide. I'm Bloomberg Radio m H. 694 00:41:06,040 --> 00:41:09,560 Speaker 1: Brought you by Bank of America Mary Lynch. Dedicated to 695 00:41:09,640 --> 00:41:13,560 Speaker 1: bringing our clients insights and solutions to meet the challenges 696 00:41:13,680 --> 00:41:17,400 Speaker 1: of a transforming world. That's the power of global connections. 697 00:41:17,760 --> 00:41:22,279 Speaker 1: Mary Lynch, Pierce, Fenner and Smith Incorporated, Member s I 698 00:41:22,440 --> 00:41:22,719 Speaker 1: p C.