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Mueller’s Low-Key Rebuttal Blows Hole In Exoneration · Bloomberg Intelligence

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Speaker 1: Welcome to the Bloomberg Penel Podcast. I'm Paul Swinge. You,
0:05
Speaker 1: along with my co host Lisa Brahma wits each day
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Speaker 1: we bring you the most noteworthy and useful interviews for
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Speaker 1: the trading floor. Find a Bloomberg penl podcast on Apple
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Speaker 1: podcast or wherever you listen to podcasts, as well as
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Speaker 1: at Bloomberg dot com. With us is Andy Harris, who
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Speaker 1: is a legal reporter for Bloomberg News and joining us
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Speaker 1: here in our Bloomberg Interactive Proper Studios can nowaday former
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Speaker 1: corruption and fraud prosecutor for the U. S. Attorney's Office
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Speaker 1: in the Southern District of New York and a partner
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Speaker 1: at Ventable uh Con. I want to start with you,
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Speaker 1: what was your biggest takeaway from those statements. I think
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Speaker 1: the big takeaway is Bob Mueller is a consummate professional.
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Speaker 1: He speaks through his indictments and through his report, and
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Speaker 1: that's very clear from his statement. If you noticed, he
0:55
Speaker 1: kept quoting from the indictments from what the grand jury returned,
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Speaker 1: and he's said, basically, I speak as a prosecutor, as
1:03
Speaker 1: a law enforcement officer, through my report and through my
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Speaker 1: charging documents, and that's all you're gonna get from me. So, Conn,
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Speaker 1: I think one of the interesting aspects, and from his commentary,
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Speaker 1: was that the UH did not believe that he could
1:15
Speaker 1: or the office could indict a sitting president. What is
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Speaker 1: your understanding of that? Is that A is that a
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Speaker 1: constitutional issue? Is that a d J policy issue? Because
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Speaker 1: I know there's certainly some question about that. It's d
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Speaker 1: o J policy based on reading of the Constitution, and
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Speaker 1: that's been d o J policy for quite some time. UM.
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Speaker 1: What what I find interesting is you have a G.
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Speaker 1: Barr Attorney General Bar, on the one hand, being surprised
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Speaker 1: that Bob Mueller didn't reach a conclusion, a prosecutorial conclusion, UH,
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Speaker 1: implying that he could, and on the other hand, Bob
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Speaker 1: Muller Mueller hewing close to d o J policies and
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Speaker 1: playing the role of a prosecutor. Andy, come on in here,
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Speaker 1: what was your takeaway from this? Uh? These comments? Well,
2:00
Speaker 1: onto that observation, I think that the Special Counsel's remarked
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Speaker 1: that quote, if we had confidence that the president clearly
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Speaker 1: did not commit a crime, we would have said so
2:10
Speaker 1: is pregnant with portent. UH. It runs expressly counter that
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Speaker 1: the presidence no obstruction, no collusion narrative and infers that
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Speaker 1: he's been anything but cleared, but that the Special Council
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Speaker 1: believed that there was some other process for addressing that,
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Speaker 1: i e. Congress and potentially the unspoken eye word impeachment.
2:33
Speaker 1: So this was as low key as it was, uh,
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Speaker 1: something of a rebuttal to the President and to his
2:40
Speaker 1: allies who have said that he's been cleared. So con
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Speaker 1: do you believe that? Do you believe that Special Council
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Speaker 1: Mala will be called in front of Congress to testify?
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Speaker 1: And if so, you know, is he going to expand
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Speaker 1: anywhere outside of the scope of that agreement our findings? Well, Paul,
2:57
Speaker 1: you just heard him. He basically said he's going to
3:00
Speaker 1: you very closely to the report, and that's what he's
3:02
Speaker 1: gonna do. So I think he's signaling to Congress, you know,
3:06
Speaker 1: call me. But that's all you're getting. Well, But but
3:08
Speaker 1: Andy raises a really good point, which is, yes, he
3:11
Speaker 1: was hewing closely the report, but he curated the statements
3:14
Speaker 1: that he made from said report, and and really that
3:18
Speaker 1: one statement saying if he believed if the group had
3:21
Speaker 1: believed the President had committed no crime, they would have said.
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Speaker 1: So is that the key takeaway from this report? And
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Speaker 1: does that indicate that he's sort of nudging other parts
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Speaker 1: of government to take action? Uh? I absolutely agree with you,
3:36
Speaker 1: because he is a shrewd man. He's very wise, and
3:40
Speaker 1: he picked very few words to say today, and that
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Speaker 1: was one of the words he said, those words about
3:46
Speaker 1: how guess what everybody going back to that report headline,
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Speaker 1: I couldn't say, and I can't say today that the
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Speaker 1: president didn't commit a crime. So, Andy, what is the
3:56
Speaker 1: feeling within the Beltway here? What is your sense of
3:59
Speaker 1: what we how Democrats will maybe take this commentary, the
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Speaker 1: statement from Mr Mueller as it relates to kind of
4:06
Speaker 1: how they view the presidency, whether you know, continued oversighter,
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Speaker 1: even the impeachment proceedings, Well, it could tie House Democrats
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Speaker 1: and not not. Obviously, Speaker Pelosi has been under substantial
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Speaker 1: pressure from some factions in the House to initiate impeachment
4:23
Speaker 1: proceedings immediately. UH Judiciary Committee Chairman Gerald Nadler has been
4:28
Speaker 1: trying to get a less redacted version of the report,
4:30
Speaker 1: plus the underlying UH evidentiary materials that were gathered up
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Speaker 1: by the Special Council's office. Um, clearly, there's it's almost
4:41
Speaker 1: a volcanic pressure, uh to do something in response to this.
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Speaker 1: But an impeachment is tantamount to a criminal proceeding brought
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Speaker 1: by Congress, as we saw during President Clinton's term. And
4:55
Speaker 1: you can't really initiate this. You can't go off half cock.
4:58
Speaker 1: You've got to have your gunloaded. You got to know
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Speaker 1: what the evidence is before you can start casting allegations.
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Speaker 1: This will, no doubt ramp up the pressure on Speaker Pelosi.
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Speaker 1: It may even ramp up the pressure on Attorney General
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Speaker 1: bar in the Justice Department to turn over some of
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Speaker 1: the information that the House Judiciary Committee is demanding. So,
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Speaker 1: con I'm wondering about Attorney General William Barr and his
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Speaker 1: role in this, the idea that Robert Muller was sort
5:24
Speaker 1: of contradicting some of the things that William Barr had
5:27
Speaker 1: said about being surprised that they didn't come to some
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Speaker 1: sort of recommendation. What do you make of Attorney General
5:34
Speaker 1: Barr's performance up to date and what his likely response
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Speaker 1: will be? UM? So, taking your your your first question, UH,
5:44
Speaker 1: you know, I think turning General Bar is in a
5:46
Speaker 1: tough position. UM. I think both Bob Mueller and Attorney
5:52
Speaker 1: General Bar are coming at this situation from a viewpoint
5:55
Speaker 1: of how to be fair, and Bamler just said, listen
5:59
Speaker 1: to reason, we didn't say that the president committed to
6:03
Speaker 1: crimes because we can't charge him, and that's unfair, right
6:05
Speaker 1: to say somebody committed a crime and then there's no court,
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Speaker 1: there's no criminal case for the president to defend himself.
6:12
Speaker 1: I can imagine the Attorney General Barr having the flip
6:15
Speaker 1: side of that, uh, saying, listen, you have this report
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Speaker 1: with all this stuff in it, and you didn't say
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Speaker 1: either way what your viewpoint was, and now this report
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Speaker 1: will be out there, so I'm going to have to say, listen,
6:28
Speaker 1: there's not enough to charge obstruction because that the report
6:32
Speaker 1: itself is unfair. So I think there are two ways
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Speaker 1: to to look at that. UM. From Attorney General Barr's perspective,
6:38
Speaker 1: trying to be fair to the president by saying, well,
6:40
Speaker 1: this report is out there, they're gonna want to know
6:42
Speaker 1: what does d O J think? UM, So it's unfair
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Speaker 1: to him if I don't say something. So con what
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Speaker 1: do you think your former colleagues in the Southern District
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Speaker 1: of New York are going to do next. Um, They're
6:53
Speaker 1: going to keep doing what they do every day, which
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Speaker 1: is investigate, investigate crimes. Um. I think Uh, Bob Muller
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Speaker 1: just made a very important point by saying, you know,
7:03
Speaker 1: the OLC opinion allows us to investigate the president, and
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Speaker 1: this is an investigation that should have happened. So that
7:10
Speaker 1: kind of insulates that investigation. At same time, the prosecutions
7:15
Speaker 1: on the District of New York, they're investigating, uh, things
7:18
Speaker 1: related to Manafort there. They just charged the uh, the
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Speaker 1: banker with bribery who's involved with manifort Um. They have
7:27
Speaker 1: other investigations going on and those will continue, Those will
7:30
Speaker 1: continue beyond this presidency. Uh. Andy, I'm wondering we are
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Speaker 1: expecting to hear from Attorney General bar within the next
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Speaker 1: few weeks. Isn't that so? I believe that we are.
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Speaker 1: Of course, you know, again, this is a very fraught
7:42
Speaker 1: relationship that the Attorney General has right now, uh with
7:45
Speaker 1: House Democrats. It will be interesting to see in what
7:48
Speaker 1: context we do here. Uh. A committee there believer it's
7:52
Speaker 1: a judiciary committee actually voted to hold the Attorney General
7:54
Speaker 1: and contempt for spurning a subpoena to appear before them
8:00
Speaker 1: that has not yet gone to the full House for
8:02
Speaker 1: a vote, So it's kind of hanging out there in
8:04
Speaker 1: the ether. But at some point, in some format we
8:07
Speaker 1: will likely hear from the A G. And just we
8:09
Speaker 1: have a sense of what Attorney General bars reputation is,
8:13
Speaker 1: sort of how his comments have been perceived, and sort
8:16
Speaker 1: of what you're hearing from the legal community. Boy, that's
8:19
Speaker 1: really an eye of the beholder question. This isn't his
8:22
Speaker 1: first go around as Attorney General. He also served on
8:25
Speaker 1: the administration of President George Herbert Walker Bush. And we're
8:30
Speaker 1: on the one hand, some people see him as a
8:32
Speaker 1: dedicated and experienced law man and a good choice for
8:35
Speaker 1: the job. On the other hand, people from across the
8:39
Speaker 1: aisle look at him as somebody who is a partisan,
8:44
Speaker 1: and I think it was WILLIAMS. Sapphire at one point
8:46
Speaker 1: called him general cover up. So bars reputation is again
8:52
Speaker 1: depending on who's looking at him and wearing out the
8:55
Speaker 1: glass is half half or half full. Andy Harris, thank
8:58
Speaker 1: you so much. Andy Harrison Berk Legal Report are joining
9:01
Speaker 1: us and giving his thoughts on the Moller's statement. Joining
9:04
Speaker 1: us right now is Tim O'Brien, executive out of her
9:07
Speaker 1: Bloomberg opinion on staying with us as kind of nowadays.
9:10
Speaker 1: Former corporation and fraud prosecutor for the U. S. Attorney's
9:12
Speaker 1: Office in the Southern District of New York and a
9:14
Speaker 1: partner at Ventable l LP. So, Tim, just love to
9:18
Speaker 1: get your takeaway from the statement by Mr Mueller. I
9:22
Speaker 1: don't think he was saying anything particularly new. I think
9:26
Speaker 1: he clearly used this opportunity to talk about the fact
9:30
Speaker 1: that his investigation was wrapped up, and then he was
9:31
Speaker 1: moving on to emphasize what he think was was important
9:35
Speaker 1: about his work. And to me, the two things that
9:38
Speaker 1: popped out were obstruction of justice undermines the core mission
9:44
Speaker 1: of the law enforcement investigation, and and I think he
9:47
Speaker 1: chose to emphasize that perhaps because the Attorney General, William
9:50
Speaker 1: Barr did not, especially when he first rolled out the
9:54
Speaker 1: Mall reports findings. I think secondly, he made a very
9:59
Speaker 1: I think, uh trenchant point about the fact that if
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Speaker 1: they could have absolved the president of not committing a crime,
10:09
Speaker 1: they would have done so. On the other hand, they
10:12
Speaker 1: didn't feel it was within their power to charge the
10:14
Speaker 1: president with a crime. And I think that that really
10:17
Speaker 1: highlights again the second half of the Malla Report, which
10:21
Speaker 1: focused in great detail and at great length on obstruction
10:25
Speaker 1: of justice issues. And I think that that's going to
10:27
Speaker 1: be one of the things that lingers over analysis of
10:31
Speaker 1: the Malla Report, analysis of what Bob Mueller chose to
10:34
Speaker 1: do and not to do, and why the Attorney General
10:38
Speaker 1: took the actions he did. In your view, does this
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Speaker 1: change the political calculus at all in terms of what
10:43
Speaker 1: Congress does with the Malla Report. Uh? Well, I think
10:47
Speaker 1: there's two things here that that make that a difficult question, Leasa.
10:50
Speaker 1: I think the first is there's a political analysis as
10:53
Speaker 1: to whether or not impeaching the president or going down
10:57
Speaker 1: a more hardcore path presents political problems with the Democrats.
11:03
Speaker 1: That's certainly what Nancy Pelosi is is weighing in all
11:06
Speaker 1: of this. On the other hand, we are a nation
11:08
Speaker 1: of laws and and we live in the idea that
11:11
Speaker 1: there is a rule of law and no one is
11:13
Speaker 1: above the law, and if laws have been broken, justice
11:16
Speaker 1: should be meted out. And so there's a second piece
11:19
Speaker 1: of this that should just correspond with what the laws
11:21
Speaker 1: tell us to do. And to a certain extent, these
11:23
Speaker 1: things are knocking heads the political calculus versus what we
11:27
Speaker 1: should do as a national laws And I'm just wondering,
11:29
Speaker 1: con come on in here, because a nation of laws,
11:31
Speaker 1: it definitely does go to Congress. But there is a
11:34
Speaker 1: question of what other courts could do and what other
11:38
Speaker 1: prosecutorial offices could do if it is not possible to
11:42
Speaker 1: indict a setting president through the legal system. So that
11:46
Speaker 1: raises a question about some of the investigations at s
11:48
Speaker 1: d n Y. Right, that's that's absolutely right. Um, you know,
11:54
Speaker 1: beyond the investigations that the Southern District of New York
11:57
Speaker 1: has going on, um charge cases and other kinds of cases. Um,
12:01
Speaker 1: there's also the New York Attorney General's Office is being
12:05
Speaker 1: very aggressive with going after Trump or the Trump organization
12:10
Speaker 1: as well as people related to the Trump organization. So, um,
12:14
Speaker 1: you know that if people investigate things, that's what prosecutors do.
12:19
Speaker 1: And there is the report shows the moral report shows
12:22
Speaker 1: there's a lot to investigate, and there's a lot to do.
12:25
Speaker 1: There are a lot of trails to go down, and
12:28
Speaker 1: once you open an investigation, it's very hard to close. Um,
12:33
Speaker 1: it's easy. It's easier to open one than close one
12:35
Speaker 1: because you have people invested and people follow trails. People
12:38
Speaker 1: do their jobs So, Tim, what do you think the
12:41
Speaker 1: response will be from the President to Mr Mueller's statement.
12:46
Speaker 1: I imagine that they'll say, but again I don't know,
12:49
Speaker 1: but that that Robert Mueller came out to say that
12:51
Speaker 1: this investigation is over and it's time to move on.
12:53
Speaker 1: That's what the President has said consistently. A more colloquial
12:58
Speaker 1: version of that would be get over it, um. But
13:01
Speaker 1: the reality again is that there are facts left that
13:04
Speaker 1: need to be explored. I think around uh, financial conflicts
13:08
Speaker 1: of interest, actions taken by the President and members of
13:11
Speaker 1: his team during the election, as it pertains, substruction of
13:16
Speaker 1: justice during the transition into the White House and thereafter
13:19
Speaker 1: that are still unresolved. Any idea what the Republican response
13:24
Speaker 1: will be just real quick, get over it, you know.
13:27
Speaker 1: So they're gonna they're gonna stay behind the very consistent
13:30
Speaker 1: and solid on their messaging around this. I really appreciate
13:34
Speaker 1: both of you being here with us today. It really
13:36
Speaker 1: is an interesting conclusion to a very high profile case.
13:42
Speaker 1: Understated perhaps, but trenchant is a great word. Uh really
13:47
Speaker 1: every word that Bob Muller speaks incredibly powerful. Tim O'Brien,
13:52
Speaker 1: thank you so much for being here with as executive editor,
13:55
Speaker 1: columnist all things having to do with President Trump and
13:59
Speaker 1: everything related for Bloomberg Opinion. Also can Nowaday thank you
14:03
Speaker 1: so much for being with us, former corruption and fraud
14:05
Speaker 1: prosecutor for the U. S. Attorney's Office in the Southern
14:07
Speaker 1: District of New York and a partner at Venable l LP.
14:25
Speaker 1: But first, let's take a look at the bond market.
14:27
Speaker 1: Bond yields continue to grind lower. The yield curve has inverted.
14:31
Speaker 1: The question for many investors is does this mean a
14:33
Speaker 1: recession is imminent? To answer that in other issues, we
14:36
Speaker 1: will speak to our good friend Jim Bianco. Jim as president,
14:39
Speaker 1: founder of Bianco Research. He's also a contributor to Bloomberg
14:42
Speaker 1: Opinion based in Chicago. Jim, thanks so much for joining us.
14:46
Speaker 1: So do you think the Fed will heat these warnings
14:49
Speaker 1: of inverted yield curve and so on and cut rates
14:52
Speaker 1: or with a risk creating a recession. That's a good question,
14:55
Speaker 1: and um, they should heat the warnings. It's a market
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Speaker 1: signal that policy is too tight. But if you look
15:03
Speaker 1: at their public statements over the last couple of weeks,
15:08
Speaker 1: the vast majority of Federal Reserve officials have said that
15:11
Speaker 1: they do not see a need to cut rates anytime soon,
15:15
Speaker 1: and in a couple of them are even still talking
15:17
Speaker 1: about that the next move would be a hike. So
15:19
Speaker 1: I would like them to listen to this statement or
15:22
Speaker 1: to this market signal that policy is too tight. That's
15:26
Speaker 1: why the yeld curve inverts. If the yelk curb stays
15:29
Speaker 1: inverted for a protracted period of time, it just concumulatively
15:33
Speaker 1: weighs on the economy until you potentially get a recession.
15:37
Speaker 1: The way you steep in the yeld curves, you cut
15:39
Speaker 1: short term interest rates. I hope the Fed listens to
15:42
Speaker 1: that and does that exact thing. Well, Jim, it depends
15:45
Speaker 1: which yield curve you look at, because actually they are
15:48
Speaker 1: different stories being told depending on where in the curve
15:51
Speaker 1: you look. Yes, we are seeing an inversion in the
15:54
Speaker 1: ten year three months curve, but further out not so much.
15:58
Speaker 1: In fact, you're seeing a steepening. The extra yeld investors
16:01
Speaker 1: are getting to own thirty year treasuries over ten year
16:03
Speaker 1: treasuries has actually increased a little bit. So why should
16:07
Speaker 1: we pay attention to that one? Uh, that is sort
16:10
Speaker 1: of what people are worried about right now. You're right,
16:13
Speaker 1: that the thirty year yield has got a massive steepening.
16:16
Speaker 1: It's forty five basis points, almost half a percent higher
16:19
Speaker 1: than the ten year note. But the thirty year tends
16:22
Speaker 1: to be kind of a special trading vehicle with not
16:25
Speaker 1: as much economic implication as say the tenure in the
16:29
Speaker 1: three months to Most economic studies have been done on
16:32
Speaker 1: the tenure in the three months. It's been modeled off
16:35
Speaker 1: of the that you'll curve, and that one seems to
16:37
Speaker 1: play the best with giving us an economic signal. The
16:42
Speaker 1: signals you'll get from the bat from the far end
16:44
Speaker 1: of the curve, like the thirty year tenure spread, tend
16:47
Speaker 1: to be more technically driven about flows and about traitor
16:50
Speaker 1: sentiment and a lot of things that do not directly
16:53
Speaker 1: impact the economy. That's why I focus on that ten
16:56
Speaker 1: year three months as much as I do so. Jim,
17:00
Speaker 1: the you curve inverted earlier this year, it's it's inverted now.
17:04
Speaker 1: But is there a certain time period where in terms
17:07
Speaker 1: of duration, that it starts to get your attention and
17:10
Speaker 1: you think it should get the markets attention. Yes, I've
17:13
Speaker 1: used ten consecutive days and we're in day four right now.
17:17
Speaker 1: Back in March, we got the five days and then
17:19
Speaker 1: it uninverted. Now why do I use that conceptually? What
17:22
Speaker 1: I'm trying to say here is the your curve is
17:24
Speaker 1: inverted today, it means policy is too tight today. It
17:28
Speaker 1: means policy was too tight yesterday. If it continues week
17:32
Speaker 1: after week, month after month, and I'll use ten consecutive days,
17:35
Speaker 1: because once you start getting into that room, you usually
17:38
Speaker 1: don't uninverted. But if you stay inverted for a month
17:41
Speaker 1: or two months or three months, the cumulative effect of
17:44
Speaker 1: saying policy is too tight every single day starts to
17:47
Speaker 1: weigh on the economy. Could handle a couple of weeks
17:50
Speaker 1: of it, could maybe handle a month of it, but
17:52
Speaker 1: beyond that you start getting in the problems. And what
17:54
Speaker 1: I found is after ten days that usually is a
17:57
Speaker 1: good enough signal that usually it means we're inverted, We're
18:00
Speaker 1: going to stay there, and it will continue on until
18:03
Speaker 1: the Fed changes policy. So what actually happened to trigger
18:06
Speaker 1: this latest bout of yield tightening? I mean, honestly, we've
18:10
Speaker 1: been talking about trade concerns for a while. Morgan Stanley
18:13
Speaker 1: coming out this morning and saying that actually some of
18:15
Speaker 1: these jitters began well before that, and for and foretell
18:18
Speaker 1: a downturn that would have happened regardless of trade. Do
18:21
Speaker 1: you agree, Yeah, I do agree with that, and I
18:25
Speaker 1: think that what's changed is the perception on inflation, and
18:29
Speaker 1: the answer is there isn't any and there's none coming.
18:32
Speaker 1: And now we've got crudeoil prices, which is a big
18:35
Speaker 1: input to headline inflation falling, and it also has an
18:39
Speaker 1: additive effect on core inflation as well too. Most economists
18:44
Speaker 1: will say, look, the Fed's not going to cut rates.
18:46
Speaker 1: Look at the economy. The economy is fine. That's not
18:49
Speaker 1: what the market is looking at the markets looking at
18:51
Speaker 1: no inflation at all. Now you've got falling crude oil prices. Maybe,
18:57
Speaker 1: as Gary Schilling wrote in a Bloomberg opinion column yesterday,
19:00
Speaker 1: and I thought he made a credible case, trade wars
19:03
Speaker 1: and tariffs could maybe even be deflationary for the economy too.
19:07
Speaker 1: If that's going to depress inflation, then I think that's
19:12
Speaker 1: what the markets focused on saying, Look, you've got very
19:14
Speaker 1: low inflation. That's what's restrictive about interest rates, and that's
19:18
Speaker 1: why you need to cut It's not about real GDP
19:21
Speaker 1: at this point, So Jim, the FED has said pretty
19:24
Speaker 1: consistently recently that it is data dependent. What data are
19:27
Speaker 1: you looking at? What what data are you putting into
19:29
Speaker 1: your model. I'm looking at the inflation data right now.
19:33
Speaker 1: I think that that is the data that is going
19:35
Speaker 1: to that is driving why the YEL curve is inverted,
19:37
Speaker 1: why the Fed fund futures are saying that there will
19:40
Speaker 1: be a hike, I excuse me, a cut in September.
19:42
Speaker 1: So I'm looking at the inflation compensation from the from
19:46
Speaker 1: the Treasury inflation protected securities market or the tips market.
19:50
Speaker 1: I'm looking at a lot of the inflation numbers as
19:53
Speaker 1: well to some of the surveys UH and it's and
19:56
Speaker 1: the price of crudhile, because that is a big input
20:00
Speaker 1: into what people's perceptions are inflation, and all of that
20:03
Speaker 1: is going down right now, especially overseas in Europe. You're
20:08
Speaker 1: at multi year lows and some of those market measures
20:10
Speaker 1: of inflation expectations. UH screaming at Mario Drag that he
20:14
Speaker 1: should be considering something as well too, in terms of
20:17
Speaker 1: cutting rates or easing policy. So those are the inputs
20:21
Speaker 1: I'm looking at, and all these inflation expectation and actual
20:23
Speaker 1: inflation numbers are heading lower, and that's why this market
20:26
Speaker 1: wants a cut we're speaking with Jim Bianco, the president
20:29
Speaker 1: and founder of Bianco Research, talking about the story of today,
20:34
Speaker 1: which is the drive lower in benchmark government bond yields
20:38
Speaker 1: globally and developed markets. And I'm trying to figure out, Jim,
20:42
Speaker 1: what exactly does this say about risk assets because up
20:46
Speaker 1: until now, lower yields has meant support for risk gear
20:50
Speaker 1: credits as well as equities. Is this time different with
20:53
Speaker 1: respect to that too? Is it's getting there? You're definitely
20:58
Speaker 1: right that normally would is seen um lower yields be
21:03
Speaker 1: somewhat supportive. But I think that the reason you're starting
21:06
Speaker 1: to see risk assets wobble with falling interest rates is
21:09
Speaker 1: that there is a heightened fear of too low inflation.
21:13
Speaker 1: Let me let me put a definition on that. Why
21:16
Speaker 1: do we worry that inflation is too low? Because in
21:19
Speaker 1: the next recession, and there will be one at some
21:22
Speaker 1: point we haven't repealed the business cycle, inflation will fall.
21:26
Speaker 1: If we start that recession with a one percent inflation rate,
21:31
Speaker 1: the fear is it will fall to deflation, which is
21:34
Speaker 1: very stressful on the financial services community, very stressful on
21:38
Speaker 1: the banking system. And that's what the FED will pull
21:41
Speaker 1: out and all central banks will pull it all stops
21:43
Speaker 1: to prevent deflation. In one of the ways they try
21:45
Speaker 1: to do it is let's not start at a very
21:48
Speaker 1: low inflation rate. So I think what you're seeing in
21:51
Speaker 1: risk gassets is as interest rates go down and as
21:54
Speaker 1: risk gas has fall, a classic risk off sentiment that
21:58
Speaker 1: is worrying that we might start to see too low
22:02
Speaker 1: of inflation. I don't know if I'd go as far
22:03
Speaker 1: as deflation, but too low and definitely not where you'd
22:07
Speaker 1: want to start if we're going to have a downturn. So, Jim,
22:10
Speaker 1: to what extent do you think this Federal Reserve is
22:13
Speaker 1: influenced by the market. There's certainly been some concerns that,
22:16
Speaker 1: you know, the move in December and the and then
22:19
Speaker 1: the the easing in the first part of the year,
22:21
Speaker 1: where market influence. Is that a real concern? Yeah, I
22:25
Speaker 1: think it is a concern. And I was going to
22:28
Speaker 1: answer the question that they seemed to be reactionary. There
22:32
Speaker 1: was plenty of evidence going into that December rate hike
22:36
Speaker 1: that the markets were unsettled by the idea of another
22:39
Speaker 1: rate hike. The markets were unsettled by automatic pilot, with
22:43
Speaker 1: the balance sheet continuing to move lower and the fed
22:46
Speaker 1: pushed ahead with it anyway, and it kind of blew
22:50
Speaker 1: up in their face. Remember that the Dow Jones industry
22:52
Speaker 1: ravage saw six h points during the one hour of J.
22:56
Speaker 1: Paul's December press conference, and then two weeks later he
22:59
Speaker 1: did what we now, if you sphemistically, called the pulp pivot,
23:02
Speaker 1: where he said, Okay, forget everything I said on December nineteenth.
23:04
Speaker 1: Here's the new scenario. We're not going to be raising
23:07
Speaker 1: rates nearly as much, and we're going to back off
23:09
Speaker 1: on the balance sheet. So I wish they would be
23:12
Speaker 1: a little bit more proactive in looking at what markets
23:16
Speaker 1: are telling them instead of reactive. Just we'll do what
23:19
Speaker 1: we'll do, what the models in the academics say, until
23:22
Speaker 1: the markets blow up, and then we'll just completely reverse ourselves.
23:24
Speaker 1: That's not a good way to run policy. Just quickly hear,
23:27
Speaker 1: what what's the next recession gonna look like? Is it
23:29
Speaker 1: going to be a repeat of Uh? If you can
23:33
Speaker 1: tell me if there's an over leveraged sector that could
23:36
Speaker 1: actually drag the economy down, then yeah, it could be.
23:39
Speaker 1: But I don't see that, and I don't see that
23:41
Speaker 1: in the leverage loan space as well too. I think
23:45
Speaker 1: The thing that could really hurt this economy, which is
23:47
Speaker 1: what I think the markets were signaling in the fall,
23:50
Speaker 1: is higher interest rates. As the old thing goes um,
23:54
Speaker 1: usually the FED raises rates until something breaks. Well, we
23:56
Speaker 1: got the three and a quarter and the tenure in
23:58
Speaker 1: the fall, and all of a sudden the market seemed
24:00
Speaker 1: to get you know, they didn't break, but they got
24:02
Speaker 1: really wobbily at that point. As long as interest rates
24:06
Speaker 1: don't shoot higher, I think that this If we have
24:09
Speaker 1: another recession, I'm a saying we will. But when we do, uh,
24:13
Speaker 1: it will be more of the garden variety. If it
24:15
Speaker 1: comes on the back of spiking inflation and driving up
24:18
Speaker 1: interest rates with all the debt we have, that could
24:21
Speaker 1: be problematic. But like I said, the problem now is
24:23
Speaker 1: too low inflation, not too high inflation. Jim Bianco, thank
24:26
Speaker 1: you so much for being with us. Jim Bianco, President
24:29
Speaker 1: and founder of Bianco Research, also a contributor to Bloomberg Opinion.
24:47
Speaker 1: In March of this year, and Upstart mobile phone manufacturer
24:50
Speaker 1: entered the market with what it builds as a state
24:52
Speaker 1: of the art mobile handsets and wireless connectivity at an
24:56
Speaker 1: unabeatable value. And I took a look at the phone.
24:59
Speaker 1: It is very cool to help us walk us through
25:01
Speaker 1: this story. John Paul de Joria. John Paul is a
25:04
Speaker 1: co foundered CEO of r Okay Group, also the CEO
25:07
Speaker 1: and co founder Paul Mitchell and patron Spirits. I believe
25:10
Speaker 1: Patrona sold the Bacardi in four five point one billion
25:14
Speaker 1: dollars or something that was evaluation. Congratulations on that trade,
25:19
Speaker 1: John Paul, thanks so much for joining us. You walked in,
25:21
Speaker 1: you showed us this phone, and what Lisa amazed Lisa
25:24
Speaker 1: and I was there's three D stuff and we weren't
25:27
Speaker 1: watching we didn't have glasses on. Yeah, it's three D
25:29
Speaker 1: without glasses, a technological breakthrough, and it's a rocket phone,
25:32
Speaker 1: like a rocket ship going on the moon. Are okay?
25:34
Speaker 1: I t rocket phone and it's very very advanced. The
25:37
Speaker 1: phone has dual sims, it has it's unblocked for the world,
25:41
Speaker 1: which is kind of cool. WiFi comes with it in
25:43
Speaker 1: a year's worth of telemedicine, plus other little bundles we have.
25:47
Speaker 1: I think what really blows people away is not only
25:49
Speaker 1: is it advance and two cameras regular camera and three
25:51
Speaker 1: D camera, but blows most people away is the price,
25:54
Speaker 1: especially the retailers during the United States and the consumers.
25:58
Speaker 1: We wanted to have a little bit of profit out
26:00
Speaker 1: a lot, but get them out there. The price on
26:02
Speaker 1: the phone is are big one is only two hundred
26:04
Speaker 1: and nine. In our normal one, which is what most
26:07
Speaker 1: mote phonts are, smartphones are is a hundred and that's
26:10
Speaker 1: the retail price. And that comes with the three D
26:13
Speaker 1: and everything. And you don't have to be attached to
26:15
Speaker 1: any carrier. You go with any carrier you want, any
26:18
Speaker 1: plan you want, because you remember, it's worldwide WiFi, so
26:21
Speaker 1: you can make calls all over the world free. You know.
26:24
Speaker 1: Paul said that he was struck by the phone. I
26:26
Speaker 1: was struck by John Paul de Joria, your enthusiasm for
26:29
Speaker 1: it and the sparkle and and and just sort of
26:32
Speaker 1: her energy given the fact and to what was interesting
26:34
Speaker 1: to me is sort of it explains how you UH
26:37
Speaker 1: at one point where homeless and ended up co founding
26:40
Speaker 1: Paul Mitchell's and UH and Patrone Spirits and now you've
26:44
Speaker 1: moved into phones and and sort of the energy that
26:47
Speaker 1: sort of drove that. I'm just wondering here. Your focus
26:51
Speaker 1: on content is very interesting because a lot of other
26:55
Speaker 1: big cell phone companies and tech companies have been trying
26:58
Speaker 1: to move into the media space. How did you do
27:02
Speaker 1: it here? Well, we ended up with this great technology
27:05
Speaker 1: of three D that actually works on a smartphone. It
27:09
Speaker 1: actually will work. People have tried it before. Dingman across
27:12
Speaker 1: as good anyways, came across really great. So once we
27:15
Speaker 1: had that and we started tying up exclusives on content,
27:18
Speaker 1: we were anticipating this would work. So we went to
27:21
Speaker 1: studios and think of it, if you have a three
27:23
Speaker 1: D movie, it's in the theater or imax, but after
27:26
Speaker 1: there it sets on the shelf because there's no other
27:28
Speaker 1: you know, format to put it on. Well, so we
27:31
Speaker 1: took it off the shelf, gave them some money for it,
27:33
Speaker 1: of course, paid you know, some nice money for it,
27:34
Speaker 1: and then got the exclusive on it for the next
27:36
Speaker 1: three to five years with these various things. So it
27:39
Speaker 1: all it kind of was in harmony and were so excited.
27:41
Speaker 1: I know that it was unbelievable. Like, for example, take
27:43
Speaker 1: Walmart who's starting to launch at June sevent in their stores,
27:47
Speaker 1: and right behind that as Costco and many others. But
27:49
Speaker 1: Walmart was hard to believe. They sent a team over
27:53
Speaker 1: to Asia to check out where they're made, how perfectly
27:55
Speaker 1: they were made. They worked exactly as we said, with
27:58
Speaker 1: the capacity to make a lot, and they said, yeah,
28:00
Speaker 1: this is great. So right now, the only place you
28:03
Speaker 1: get it now would be either on Walmart's website or
28:07
Speaker 1: go to rocket r okay i T dot com. So
28:10
Speaker 1: talking about the pricing a little bit, that the the
28:12
Speaker 1: the handset pricing you mentioned, how about some of the
28:15
Speaker 1: packages of surrounding it. If I want to get these
28:17
Speaker 1: three D movies and maybe the telemedicine and all that
28:19
Speaker 1: kind of stuff, how are you guys packaging that? Yeah,
28:21
Speaker 1: we have these unbelievable bundles the best ways to tell
28:24
Speaker 1: your audience and yourself, especially small businesses that can't afford insurance,
28:28
Speaker 1: life insurance or health insurance for their staff. Our most
28:32
Speaker 1: expensive bundle that you can put on any smartphone, by
28:34
Speaker 1: the way, is only fourteen dollars and ninety five cents
28:37
Speaker 1: a month. But here's what happens to a small business.
28:39
Speaker 1: For fourteen dollars and cents a month per family or
28:43
Speaker 1: per phone, the whole family uses it, you have a
28:45
Speaker 1: hundred thousand dollars worth of accidental life insurance. Twenty thousand
28:49
Speaker 1: dollars with a burial insurance, so the beneficiary gets some money.
28:52
Speaker 1: Tell themedicine seven days a week, twenty four hours a day.
28:55
Speaker 1: A doctor's on the phone with you, diagnosing you and
28:57
Speaker 1: writing you a prescription of necessary and set to get
29:00
Speaker 1: down or saying hey, you're the tycent to go see
29:02
Speaker 1: go see a regular doctor emergency immediately. And then roadside
29:05
Speaker 1: assistance similar to a triple A. And then uh legal
29:09
Speaker 1: advice a thousandars with the legal advice. And the great
29:11
Speaker 1: thing for cities and business people is one hour a
29:15
Speaker 1: week of a therapist on the phone with you. That's
29:18
Speaker 1: our big bundle. That's our four and we've posted for
29:21
Speaker 1: four dollars fine hours. You know other little bundles. But
29:24
Speaker 1: that gives you an idea. So we want to change
29:26
Speaker 1: the game and make affordable for everybody insurance and things
29:30
Speaker 1: of that nature. You know, there are a lot of
29:32
Speaker 1: aspects to this. You're sort of at the epicenter of
29:35
Speaker 1: a lot of the revolutions that are going on right now.
29:37
Speaker 1: One of them people talk about is the slowdown in
29:40
Speaker 1: the smartphone market, and I'm wondering, you know, how you're
29:43
Speaker 1: sort of fitting in there. I understand that your your
29:46
Speaker 1: product is different but not only is there slow down
29:48
Speaker 1: in demand, but there are also are pressures when it
29:50
Speaker 1: comes to trade tensions and supply chains correct on these
29:54
Speaker 1: particular phones. What makes the difference is we put an
29:57
Speaker 1: entire famili's lifestyle, a good portion of it in the phone.
30:01
Speaker 1: We're onto that phone. You have your insurance, you have
30:03
Speaker 1: your roadside assistance, you have a therapist, you have emergency,
30:06
Speaker 1: you know medical things that doctor on the phone. So
30:09
Speaker 1: the big changes and people say, oh my god, this
30:11
Speaker 1: this does five or ten things for me at a
30:13
Speaker 1: very low cost. And your rocket phone is just, you know,
30:16
Speaker 1: pretty incredible. So we're a whole different app universe. We
30:19
Speaker 1: thought it years ago what we need to step up
30:21
Speaker 1: so that we could compete and give the public something
30:24
Speaker 1: they don't have right now, and we have the patent.
30:26
Speaker 1: By the way, I'm bundling on celluator phones twenty seconds.
30:29
Speaker 1: Do you sell anyone's data? Do you collect it? Do
30:32
Speaker 1: you sell anyone's data that you collect? No, we don't
30:34
Speaker 1: take collect anybody's data in order we sell them the data.
30:37
Speaker 1: By the way, most of the parts are not made
30:38
Speaker 1: in China. They're made another place. Especially the United States
30:41
Speaker 1: ship there and China wants to distribute our phones because
30:43
Speaker 1: they can't get the content. I asked that just simply
30:46
Speaker 1: because if everybody is talking to their therapists on the phone,
30:49
Speaker 1: you know they might be worried about No. No, no,
30:51
Speaker 1: we don't do that. We don't collect anything. We collect now.
30:55
Speaker 1: We're all about peace, love and happiness. It's like the
30:58
Speaker 1: culture and all the Paul Mitchell schools. Our peace, love
31:00
Speaker 1: and happiness is a hairstyle is how do you have peace,
31:02
Speaker 1: love and happens in your life. One of them is
31:04
Speaker 1: that you don't have to be afraid of anybe listening
31:06
Speaker 1: in or or tampering with your freedom and privacy in
31:08
Speaker 1: our great country. John Paul de Joria, thank you so
31:11
Speaker 1: much for being here with John. Paul Degoria is co
31:14
Speaker 1: founder and chief executive officer of the Rock Group, talking
31:17
Speaker 1: about his rocket phone. Also the CEO and co founder
31:21
Speaker 1: of Paul Mitchell and Patron Spirits. Thanks for listening to
31:24
Speaker 1: the Bloomberg pl podcast. You can subscribe and listen to
31:27
Speaker 1: interviews at Apple Podcasts or whatever podcast platform you prefer.
31:31
Speaker 1: Paul Sweeney, I'm on Twitter at pt Sweeney. I'm Lisa
31:33
Speaker 1: abram Woyds. I'm on Twitter at Lisa Abram wits one
31:36
Speaker 1: before the podcast. You can always catch us worldwide. I'm
31:39
Speaker 1: Bloomberg Radio.