Latest / Bloomberg Intelligence / Stock Rally Is More A Sign of Relief Than Cheering Gridlock

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Stock Rally Is More A Sign of Relief Than Cheering Gridlock · Bloomberg Intelligence

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  Speaker 1: Welcome to the Bloomberg P and L Podcast. I'm pim Fox.
• 0:08
  Speaker 1: Along with my co host Lisa Bramowitz. Each day we
• 0:11
  Speaker 1: bring you the most important, noteworthy, and useful interviews for
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  Speaker 1: you and your money, whether you're at the grocery store
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  Speaker 1: or the trading floor. Find the Bloomberg P M L
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  Speaker 1: Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot Com. The
• 0:32
  Speaker 1: knee jerk reaction is gridlock is good for risk assets?
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  Speaker 1: Is that the right reaction? Leo Groshowski, now joining US
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  Speaker 1: chief investment Officer at bny Melon Wealth Management, what's your
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  Speaker 1: take on that? Well, I think today we're seeing a
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  Speaker 1: relief Rallie and most participants in the markets are aware
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  Speaker 1: that UM, a Republican president combined with a divided Congress
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  Speaker 1: isn't a bad combination for future market performance. It's not,
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  Speaker 1: in a certainly the best, but it's by no means
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  Speaker 1: the worst. So I think we're seeing that today. There's
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  Speaker 1: obviously a relief that it's behind us. We've got some
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  Speaker 1: certainty and UM, and again, most market participants know that
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  Speaker 1: we're in a period both seasonally and for the next
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  Speaker 1: couple of years that's normally pretty favorable for the equity market.
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  Speaker 1: Do you see any risk to the tax overhaul that
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  Speaker 1: past last year, not with the gains that the Republicans
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  Speaker 1: picked up in the in the Senate, And I think
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  Speaker 1: the market you could see this a little bit in
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  Speaker 1: the bond market today, right. I think this gridlock is
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  Speaker 1: good is probably showing up as much in the bond
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  Speaker 1: market as the stock market because of what you were
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  Speaker 1: talking about in your earlier segment with respect to debt
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  Speaker 1: and deficits. Right, the chances of tax cut two point
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  Speaker 1: oh or significant significantly diminished, I think, and the bond
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  Speaker 1: market doesn't mind that, right. I think it's it's stay
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  Speaker 1: the course with the fiscal policy that's been put in place,
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  Speaker 1: but don't necessarily add a lot more. Of course, we
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  Speaker 1: did hear from Senate Majority Leader Mitch McConnell that they
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  Speaker 1: might work across the aisle on infrastructure spending. Do you
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  Speaker 1: think that's lip service at this point? I think that's
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  Speaker 1: the big one of the two eyes, right, There's there's infrastructure,
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  Speaker 1: and then there's going to be investigation. And I hope
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  Speaker 1: there's more talk around infrastructure than there is around investigations.
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  Speaker 1: I think the market would be favorably disposed to bar
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  Speaker 1: bipartisan support for infrastructure, the market being equities bonds perhaps
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  Speaker 1: not so much correct correct the I think two pims
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  Speaker 1: earlier point. You know how we pay for all of
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  Speaker 1: this with a trillion three about to be floated right
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  Speaker 1: in in bond debt at higher prices. Um. I think
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  Speaker 1: that's something the bond market right now is breathing a
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  Speaker 1: bit of a cyber lead for the time being. Any
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  Speaker 1: thoughts on trade policy because that seems to be one
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  Speaker 1: issue which you could get Democrats and Republicans together and
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  Speaker 1: a China bashing trade war that looks like something they
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  Speaker 1: both agree on. Yeah, And I think the good news there,
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  Speaker 1: pim is is the markets become more prepared for, you know,
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  Speaker 1: a longer war of words on the trade front, so
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  Speaker 1: that I would put in the positive surprise um um column.
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  Speaker 1: And I also think there's gonna be a lot of
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  Speaker 1: focus here towards the end of the month on the
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  Speaker 1: G twenty, on the G twenty meeting. Um. So through
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  Speaker 1: all this election, right the key drivers for the market, earnings,
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  Speaker 1: interest rates, economy, no changes in the b n Y
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  Speaker 1: melon view with respect to any of those, and the
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  Speaker 1: serious issues that we have to grapple with trade and
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  Speaker 1: monetary policy. Right, they're still they're still with us well,
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  Speaker 1: which raises my question going back to the first question,
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  Speaker 1: which is is the appropriate reaction to buy stocks here
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  Speaker 1: if trade is still the potential concern, that's not something
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  Speaker 1: that will get held up by gridlock. I think you're
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  Speaker 1: seeing part of the relief rally is I think also
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  Speaker 1: a return to a bounce from an oversold condition. I
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  Speaker 1: think the market overreacted to fundamentals that really hadn't changed
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  Speaker 1: that much. It was really just the focus on, you know,
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  Speaker 1: the Fed policy and this longer lasting, you know trade.
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  Speaker 1: I think the underlying market drop backdrop is still, in
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  Speaker 1: my view, very equity friendly with respect to earnings, interest rates, inflation.
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  Speaker 1: Trade is a cloud that continues to build the longer
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  Speaker 1: it goes on, because I learned a long time ago
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  Speaker 1: that longer lasting trade and tariffs have an S word
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  Speaker 1: associate associated with them, and that's stagflation. And that's that's
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  Speaker 1: an environment that the market likes least as far as
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  Speaker 1: the outcome of the election, that's one thing, but we
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  Speaker 1: still have all these unresolved issues to investors just kind
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  Speaker 1: of shrug their shoulders. What's the biggest question You're getting
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  Speaker 1: right now from investors. You know, we touched on it
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  Speaker 1: a little bit earlier. UM, we're getting a lot of
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  Speaker 1: questions around debt, debt and deficits. I think in the
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  Speaker 1: wealth management business, you know, many of our clients are
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  Speaker 1: correctly thinking in years, decades, multigenerational wealth transfer right and
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  Speaker 1: so interest thing, as opposed to many market participants focusing
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  Speaker 1: on day to day, week to week, quarter to quarter.
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  Speaker 1: If you're really taking a multi year outlook, the debt
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  Speaker 1: and deficit picture and how are we going to pay
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  Speaker 1: for it and who's going to pay for it is
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  Speaker 1: weighing I think more heavily on our client's minds correctly,
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  Speaker 1: particularly given the uptick and interest rates. Thanks very much
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  Speaker 1: for being with us. Always a pleasure, Leo Groshowski. He
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  Speaker 1: is the chief investment officer for b n y Melon
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  Speaker 1: Wealth Management. Giving us a take on the results of
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  Speaker 1: the midterm elections and what it means for investors. We've
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  Speaker 1: been listening to send a majority at leader at Mitch
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  Speaker 1: McConnell address reporters today after the mid term elections, talking
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  Speaker 1: about the potential for both parties to work together on
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  Speaker 1: infrastructure spending, as well as tackling what he called the
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  Speaker 1: healthcare crisis. Here with us to talk about what we
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  Speaker 1: just heard and what it might mean for both sides
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  Speaker 1: of Congress going forward. Steve Dennis joins US Now Center
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  Speaker 1: reporter for Bloomberg News. Uh, Steve, what was your big
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  Speaker 1: takeaway from that address? You know, I think that was
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  Speaker 1: a very happy Mitch McConnell. There was a lot of
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  Speaker 1: nervousness the last few weeks that the Democrats would be
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  Speaker 1: able to maybe even pick up a seat or hold
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  Speaker 1: serve and and and the fact that Republicans are now
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  Speaker 1: looking to expand their majority by several seats is Uh,
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  Speaker 1: it's huge for for everything that he cares about, but
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  Speaker 1: especially the judiciary. If there's another Supreme Court opening, it's
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  Speaker 1: gonna be a cakewalk. It's not going to be this
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  Speaker 1: excruciating battle where Susan Collins and Lisa mckowski had to
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  Speaker 1: be on board and and uh and his members got
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  Speaker 1: beat up for months. Uh, you know, and so you know,
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  Speaker 1: as far as actually the agenda, I thought it was
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  Speaker 1: interesting he came out and said that he's all he
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  Speaker 1: started discussing an infrastructure package with Nancy Pelosi, and he
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  Speaker 1: also said prescription drugs might be an area where there
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  Speaker 1: could be bipartisan agreement to save money. Now that's not
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  Speaker 1: necessarily what you want to hear if you're in the
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  Speaker 1: pharmaceutical industry. You know, they were pretty happy they knocked
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  Speaker 1: off Claire McCaskill in Missouri. She had been a thorn
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  Speaker 1: in the side of the big pharmaceutical companies. But you know,
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  Speaker 1: we have a huge deficit issue. That's one thing that
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  Speaker 1: he didn't doesn't think that there's gonna be much bipartisan
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  Speaker 1: agreement on dealing with the deficit anytime soon. But if
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  Speaker 1: there's one area where they seem to have both sides
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  Speaker 1: saying we need to save some money for the taxpayers
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  Speaker 1: and for people, it's gonna be prescription drugs. Um. So
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  Speaker 1: it is a very happy miss McConnell. I mean, this
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  Speaker 1: is this is about as good a result as you
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  Speaker 1: could have mapped out with a president who is unpopular
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  Speaker 1: enough to lose the House. You know, the fact that
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  Speaker 1: they're winning, uh looks like you know, there's still some
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  Speaker 1: votes out, and but they're winning Florida, they're winning Missouri big,
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  Speaker 1: they're winning Indiana big, they're winning a North Dakota big.
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  Speaker 1: These are not small victories. And if they hold on
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  Speaker 1: on Arizona in Montana. Uh, and this Florida recount looks
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  Speaker 1: like it's you know, Nelson's behind by forty votes. It's
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  Speaker 1: not likely to to change this. This has long you know,
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  Speaker 1: Miss McConnell is all about the long game. If they
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  Speaker 1: actually get to fifty four fifty five seats, it's almost
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  Speaker 1: impossible for the Democrats to come back and take back
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  Speaker 1: the Senate in you know, even if they take the presidency,
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  Speaker 1: Mitch McConnell might be staring right there preventing them from
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  Speaker 1: doing all the stuff they want to do. Um, and
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  Speaker 1: maybe even blocking Supreme Court justices that they want to
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  Speaker 1: put up. So Uh, this is a this is a
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  Speaker 1: very big, very happy Mitch McConnell. This morning, you mentioned
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  Speaker 1: the deficit and infrastructure spending. How is anyone going to
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  Speaker 1: pay for this? You know, that's always been the rub, right.
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  Speaker 1: You know, every once in a while you can find
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  Speaker 1: stuff under the cushions of your couch. Uh. You know,
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  Speaker 1: I remember there's always ideas on infrastructure spending. Nobody ever
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  Speaker 1: wants to raise the gas tax, right, I mean every
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  Speaker 1: once in a while. I mean last year Trump said,
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  Speaker 1: for a hot minute, said maybe he'd consider raising the
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  Speaker 1: gas tax, but it's the most unpopular tax and generally
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  Speaker 1: people don't want to raise taxes. So maybe you can
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  Speaker 1: find things like oil drilling revenue, you know, uh, can
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  Speaker 1: can you give Republicans something like energy resources or sailing
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  Speaker 1: off land or something, and you give the Democrats what
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  Speaker 1: they want, which is roads and bridges and transit and
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  Speaker 1: and all that stuff. So, uh, you know, there there
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  Speaker 1: are ways to reach these biparson deals if you don't
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  Speaker 1: care about the deficit as well, you just do what
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  Speaker 1: they've been doing the last two years. You know, the
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  Speaker 1: deficit has been expanding dramatic medically under a Republican watch.
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  Speaker 1: Part of it was the tax got a huge part
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  Speaker 1: of it. Where these bipartisan spending deals where they basically
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  Speaker 1: took out the credit card and said, we're going to
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  Speaker 1: increase spending by a hundred and fifty billion a year,
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  Speaker 1: and you know, our grandkids are gonna pay for it.
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  Speaker 1: They didn't say, oh, here's our it's gonna get more
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  Speaker 1: expensive because interest rates are going up. And and it's
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  Speaker 1: gonna get more expensive because interest rates are going up.
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  Speaker 1: You know, you could see where it's a very good chance,
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  Speaker 1: especially if interest rates keep going up, uh that we're
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  Speaker 1: gonna have a trillion dollar deficit this fiscal year and
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  Speaker 1: one point one next fiscal year. And you know, voters
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  Speaker 1: so far have not been willing to come in and say, hey,
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  Speaker 1: we care about that issue. Good luck trying to find
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  Speaker 1: that trillion dollars in the cushions of the couch. Thanks
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  Speaker 1: very much, Stephen Dennis, congressional reporter for Bloomberg. Appreciate your work.
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  Speaker 1: Looking forward to more. We are awaiting comments from President
• 11:08
  Speaker 1: Trump addressing the nation after the midterm election results. Rolled
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  Speaker 1: in joining us now to talk about what we've been
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  Speaker 1: seeing and what to expect from the speech. Billy House
• 11:17
  Speaker 1: joins is now congressional porter for Bloomberg, as well as
• 11:20
  Speaker 1: Tolu alorinipa White House correspondent for Bloomberg. We have both
• 11:23
  Speaker 1: of them in the flesh here in our eleven three
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  Speaker 1: oh studios. It is very exciting. Billy. I want to
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  Speaker 1: start with you, how long do you think this is
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  Speaker 1: going to go? Because the last time President Trump held
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  Speaker 1: a conference like this it went for more than an hour.
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  Speaker 1: I suspect it's going to go fairly lengthy. He's got
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  Speaker 1: a lot of things to say, including bashing already Democrats
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  Speaker 1: for what he was describing as an intended reign of terror,
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  Speaker 1: of investigations that'll take up a lot of time. Yeah,
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  Speaker 1: alright to lou And the President likes to change the narrative.
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  Speaker 1: The narrative right now is that he lost the House
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  Speaker 1: and that he is seen as an unpopular president, and
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  Speaker 1: this press conference is an opportunity for him to use
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  Speaker 1: the bully pulpit of the White House, which he uses
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  Speaker 1: on a regular basis, to change the story. He may
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  Speaker 1: talk about the elections and try to put a positive
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  Speaker 1: spin on it, but I would caution the listeners to
• 12:11
  Speaker 1: get ready for other topics to come up. He may
• 12:14
  Speaker 1: want to talk about North Korea. You may want to
• 12:15
  Speaker 1: talk about his weekend trip to Paris this weekend when
• 12:18
  Speaker 1: he's going to be meeting with Vladimir Putin. Possibly there
• 12:22
  Speaker 1: are a number of different issues that the President may
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  Speaker 1: throw out there. He may talk about getting rid of
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  Speaker 1: some cabinet officials or announced a new U n ambassador,
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  Speaker 1: anything to change the story, change the narrative, get it
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  Speaker 1: on a positive message for the president, and have fewer
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  Speaker 1: people talking about all these investigations. It's the penis that
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  Speaker 1: are going to be flying around because he lost the House. Billy,
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  Speaker 1: what kind of issues do you think that House Democrats
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  Speaker 1: can present to the President and to Republicans that they
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  Speaker 1: would rather not be presented with that Republicans would not well, Uh,
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  Speaker 1: Jerry's kind only a congressman from Northern Virginia whose chair
• 13:02
  Speaker 1: of the Subcommittee on Oversea Government Oversight, says it's going
• 13:05
  Speaker 1: to seem like Democrats are drunk crazy with subpoenas, but
• 13:09
  Speaker 1: he points out that that's in comparison to Republicans that
• 13:12
  Speaker 1: Democrats say basically gave the Trump administration a pass. So
• 13:17
  Speaker 1: everything from um Trump's border policies to his family financial
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  Speaker 1: ties with Deutsche Bank to uh everything on immigration. Uh,
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  Speaker 1: a whole gambit as Democrats take over all these committees
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  Speaker 1: that have been from democ where Democrats been frustrated by
• 13:39
  Speaker 1: chairman Republican chairman refusing to issue any subpoenas on anything.
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  Speaker 1: To Lou, I want to pick up on something that
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  Speaker 1: you were just talking about, which is that right now,
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  Speaker 1: the narrative is that this is a loss for President Trump.
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  Speaker 1: Is that narrative correct? I mean, yes, the Democrats did
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  Speaker 1: flip the House, but the Senate actually got even more
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  Speaker 1: Republican majority, and this is really the outcome that people
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  Speaker 1: had expected, if not, frankly a little bit better than
• 14:04
  Speaker 1: expected in the Senate for the Republicans. Now, yeah, this
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  Speaker 1: was a mixed result in both sides have something that
• 14:08
  Speaker 1: they can capitalize on. And I think that's part of
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  Speaker 1: the reason you're seeing the President come out and do
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  Speaker 1: a press conference. He wants his narrative to get out there.
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  Speaker 1: You're probably going to see more from the Democrats. Nancy
• 14:17
  Speaker 1: Pelosi will probably be doing a press conference of her
• 14:20
  Speaker 1: own where she gets out her narrative. But it's we
• 14:23
  Speaker 1: can't underestimate the impact of having the House flipped to
• 14:27
  Speaker 1: the Democrats, having Democrats in power in the House for
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  Speaker 1: the first time in eight years, and all of the
• 14:33
  Speaker 1: various investigatory powers that they're they're going to have as
• 14:36
  Speaker 1: a result of having the chairmanships of various committees, having
• 14:40
  Speaker 1: the subpoena power, having the ability to call Cabinet secretaries
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  Speaker 1: up before Capitol Hill and change the narrative and dominate
• 14:48
  Speaker 1: the media with that subpoena power, and with that ability
• 14:52
  Speaker 1: to u change the national conversation. It's something Democrats did
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  Speaker 1: not have when they were out in the wilderness. They
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  Speaker 1: were in the minority in the House and the Senate
• 15:01
  Speaker 1: and the governor's races. Now that they have won a
• 15:04
  Speaker 1: number of these races in the House, they have much
• 15:07
  Speaker 1: more power to shape the national narrative. And that's probably
• 15:10
  Speaker 1: what we're going to see later today with this, with
• 15:11
  Speaker 1: these dueling news conferences, Billy, the narrative, though having to
• 15:17
  Speaker 1: do with judicial appointments, doesn't seem to have changed. Indeed,
• 15:20
  Speaker 1: we spoke earlier with Steven Dennis of Bloomberg and he said,
• 15:24
  Speaker 1: it's like it's it's possible that you can get Mitch McConnell.
• 15:28
  Speaker 1: He'll be he could be standing up there in five
• 15:30
  Speaker 1: years saying the same thing about other Supreme Court or
• 15:35
  Speaker 1: appointees to the federal bench. Absolutely. Uh. And so while
• 15:39
  Speaker 1: that uh will likely be continued winds in the views
• 15:44
  Speaker 1: of many Republicans, UH, they will cast what the House
• 15:48
  Speaker 1: Democrats are doing is harassment of the administration. Talu. I
• 15:54
  Speaker 1: wouldn't just zoom out a little bit and talk about
• 15:57
  Speaker 1: what sort of message the Democratic Party can take from
• 16:00
  Speaker 1: this election, because frankly, it showed that there wasn't really
• 16:04
  Speaker 1: as big of a blue wave as many people had expected,
• 16:07
  Speaker 1: and that just sort of hatred for Donald Trump among
• 16:10
  Speaker 1: people who swing left wasn't enough to give them a
• 16:14
  Speaker 1: majority in both how both sides of Congress. I'm just
• 16:17
  Speaker 1: wondering what does this say for who people will look
• 16:20
  Speaker 1: to pick for the presidential election. Yeah, there's a lot
• 16:24
  Speaker 1: of the Democrats are going to have to do a
• 16:26
  Speaker 1: lot of soul searching, in part because they put out
• 16:28
  Speaker 1: a number of different types of candidates, diverse candidates, progressive candidates,
• 16:33
  Speaker 1: more moderate candidates, and it's hard to really get a
• 16:36
  Speaker 1: clear message in terms of who one. We did see
• 16:39
  Speaker 1: some of the progressive candidates win, but not a large
• 16:42
  Speaker 1: number of them. A number of them ended up going down.
• 16:44
  Speaker 1: We also saw a lot of the moderate candidates either
• 16:47
  Speaker 1: go down trying to win in Trump districts, districts that
• 16:50
  Speaker 1: were heavily Republican and just not being able to pass
• 16:54
  Speaker 1: that margin. So, uh, We've seen the Democrats try a
• 16:58
  Speaker 1: number of different strategies and in this race, and in
• 17:01
  Speaker 1: some cases it worked, I think, uh, having women run
• 17:05
  Speaker 1: and ended up being successful for them. There's gonna be
• 17:07
  Speaker 1: a record number of women in Congress, and that may
• 17:09
  Speaker 1: be something they look at in and trying to increase that.
• 17:13
  Speaker 1: When the margin with the women's vote, which was pretty
• 17:16
  Speaker 1: impressive for Democrats this time around, in part because President
• 17:19
  Speaker 1: Trump is toxic to a lot of female voters. That
• 17:23
  Speaker 1: may be something they try to hone in on, But
• 17:25
  Speaker 1: trying to convert other Trump voters to Democrats was not
• 17:28
  Speaker 1: something that they were very successful at, and that's part
• 17:30
  Speaker 1: of the reason that they had trouble. Uh, and they
• 17:33
  Speaker 1: lost a number of seats in the Senate. Billy Well,
• 17:37
  Speaker 1: Aside from presidential aspirants, I would have to say that
• 17:40
  Speaker 1: the party generally is looking to tiptoe around those larger
• 17:44
  Speaker 1: questions of impeachment that many of outside Congress are demanding
• 17:49
  Speaker 1: they pursue. Uh. So whild Republicans are stirring the pots
• 17:54
  Speaker 1: saying that's what this Democratic House is going to do,
• 17:58
  Speaker 1: and other witch hunts. Uh. You already see Nancy Pelosi
• 18:02
  Speaker 1: and her lieutenants insisting that they're gonna wait for the
• 18:05
  Speaker 1: Special Council Robert Bohler uh and not shred into territory
• 18:09
  Speaker 1: that maybe he won't even find or even report. Well,
• 18:13
  Speaker 1: as we wait for President Donald Trump to give a
• 18:16
  Speaker 1: post election news conference, do you believe that there will
• 18:19
  Speaker 1: be anything done during the lane duck session? Between now
• 18:22
  Speaker 1: and when the next Congress takes its seats, well in
• 18:26
  Speaker 1: terms of just figuring out the leadership of both parties
• 18:30
  Speaker 1: in the House, UH, even before you get to policy
• 18:34
  Speaker 1: and in the in the short time they have UH,
• 18:37
  Speaker 1: it's assumed Nancy Pelosi will be the House Speaker, but
• 18:40
  Speaker 1: she UH is going to have to do some maneuvering. Obviously,
• 18:44
  Speaker 1: some of the newly elected incoming freshman members have said
• 18:47
  Speaker 1: they would not support her. And with her caucus going
• 18:53
  Speaker 1: to UH number anywhere from to to eighteen to nineteen
• 18:58
  Speaker 1: to twenty nine, I think at twenty two now, she
• 19:02
  Speaker 1: can't go to the floor to be elected speaker unless
• 19:04
  Speaker 1: she secures two in eighteen votes. So even before we
• 19:07
  Speaker 1: get to that, they've got to resolve their leadership thing.
• 19:09
  Speaker 1: On the other side, Kevin McCarthy is the majority leader.
• 19:12
  Speaker 1: He's the number. He's lost the majority. I mean, roral
• 19:15
  Speaker 1: Republicans really like the majority leader who lost the majority
• 19:18
  Speaker 1: as their new minority leader. Who have to wait to
• 19:20
  Speaker 1: see you know, I wanna Talu talk a little bit
• 19:23
  Speaker 1: about turnout because I know that in my district there
• 19:25
  Speaker 1: was a line out the door at six twenty a m.
• 19:28
  Speaker 1: And I saw photographs on social media and elsewhere of
• 19:32
  Speaker 1: lines that were similar around the country. Do we have
• 19:35
  Speaker 1: a final tally of just how big the turnout was
• 19:38
  Speaker 1: for this particular midterm election. Yeah, this is a record
• 19:42
  Speaker 1: turnout election in terms of the number of people who
• 19:44
  Speaker 1: turned out to vote. The earliest numbers official totals that
• 19:48
  Speaker 1: I've seen has turnout above hundred and eleven million Americans,
• 19:52
  Speaker 1: and that's compared to I think about eighty four million.
• 19:56
  Speaker 1: Can you give us a sense though, of the proportion
• 19:57
  Speaker 1: of the population, because, I mean, the population is rising,
• 20:01
  Speaker 1: so you expected, Yeah, that is, that is true, but
• 20:04
  Speaker 1: it's a it's a huge jump, almost thirty from and uh,
• 20:09
  Speaker 1: even though we've had population growth, we haven't had it
• 20:12
  Speaker 1: at that rate rate, so definitely a higher number. I
• 20:15
  Speaker 1: think there's still numbers coming in, So I don't want
• 20:18
  Speaker 1: to say specifically what the turnout rate was, but you
• 20:22
  Speaker 1: have to remember, Ineen, we were at historically low turnout
• 20:25
  Speaker 1: in the you know, thirties and forties and a number
• 20:27
  Speaker 1: of different states. I think we're going to be well
• 20:29
  Speaker 1: above fifty in several states, places like Florida saw a
• 20:33
  Speaker 1: huge turnout in the high fifties and the in the
• 20:35
  Speaker 1: sixties and some counties, uh turn out that you don't
• 20:39
  Speaker 1: normally get during a mid term, not necessarily presidential level
• 20:42
  Speaker 1: um turnout, but definitely really high turnout. And not only
• 20:46
  Speaker 1: turn out among Democrats. We saw a number of rural
• 20:50
  Speaker 1: voters turn out very high high rates. Normally people think
• 20:53
  Speaker 1: that high turnout is better for Democrats because you have
• 20:55
  Speaker 1: new voters, you have younger voters, you have a more
• 20:57
  Speaker 1: diverse electorate. And in this case, we saw a number
• 21:01
  Speaker 1: of Trump supporters, a number of rural voters turnout in
• 21:04
  Speaker 1: very high numbers, and that was able. That was part
• 21:07
  Speaker 1: of the reason that the Florida race ended up being
• 21:10
  Speaker 1: so close, and part of the reason why the Republicans
• 21:13
  Speaker 1: are favored to win in those races. Do the results, Billy,
• 21:16
  Speaker 1: just to echo the fact that the divisions in the
• 21:18
  Speaker 1: country remain so deep, I think they do. I think
• 21:22
  Speaker 1: the large turnout actually was reflective of excitement among the extremes.
• 21:27
  Speaker 1: And therefore, for instance, in the House, some of the
• 21:30
  Speaker 1: moderates are moderate more moderate Republicans Carbello in Florida and
• 21:37
  Speaker 1: Leonard Lance New Jersey, they fell. So what was known
• 21:40
  Speaker 1: as the Tuesday Group Tuesday Lunch group of moderates is
• 21:44
  Speaker 1: now down to basically a snack. And uh, I think
• 21:49
  Speaker 1: that is one of the the offshoots of a high
• 21:51
  Speaker 1: voter turnout. The extremes turned out so to lou just
• 21:56
  Speaker 1: looking forward here, I mean, one thing that's really striking
• 21:58
  Speaker 1: to me is that the nation appears more divided than
• 22:03
  Speaker 1: I believe I have ever seen in terms of district
• 22:05
  Speaker 1: by districted. So you just really can't make overwhelming characterizations.
• 22:10
  Speaker 1: People are going more left, people are going more right,
• 22:12
  Speaker 1: people are getting more extreme here. Is there anything that
• 22:15
  Speaker 1: is sort of a unifying issue that kind of emerges
• 22:19
  Speaker 1: from this entire election? I would say healthcare. Even though
• 22:22
  Speaker 1: healthcare is one of the most polarizing issues that has
• 22:25
  Speaker 1: caused so many fights in the Congress, we did see
• 22:28
  Speaker 1: people come out and candidates come out and talk about
• 22:32
  Speaker 1: defending and protecting pre existing conditions. Uh, that's a Republican issue. Now,
• 22:37
  Speaker 1: it's a Democratic issue. It's part of Obamacare. And even
• 22:40
  Speaker 1: though Republicans voted multiple times to repeal Obamacare and actually
• 22:44
  Speaker 1: get rid of those pre existing conditions protections or roll
• 22:48
  Speaker 1: them back in significant ways, this election, in which healthcare
• 22:52
  Speaker 1: turned out to be one of the top issues, ended
• 22:54
  Speaker 1: up being a situation where both Republicans and Democrats agree
• 23:00
  Speaker 1: read that covering people with pre exact eisting conditions, forcing
• 23:03
  Speaker 1: insurance companies to cover those people at the same rate
• 23:07
  Speaker 1: is something that they can agree on. Now there is
• 23:09
  Speaker 1: going to be a discussion about how to actually make
• 23:11
  Speaker 1: that happen and how to actually craft legislation that can
• 23:14
  Speaker 1: achieve that goal. But the idea of repealing Obamacare and
• 23:17
  Speaker 1: getting rid of those pre existing condition protections is an
• 23:21
  Speaker 1: idea of the past. Right now, we are, of course
• 23:23
  Speaker 1: a waiting President Donald Trump giving a news conference to
• 23:27
  Speaker 1: discuss the mid term elections and their results, and of
• 23:30
  Speaker 1: course many other topics. To lou just to follow up
• 23:34
  Speaker 1: on on what you said having to do with healthcare.
• 23:37
  Speaker 1: It doesn't seem as though economics or the economy was
• 23:41
  Speaker 1: in the election this year, or did I miss something. Yeah,
• 23:45
  Speaker 1: if you look at the economy, you would not expect
• 23:47
  Speaker 1: there to be a multiple seat lost by the party
• 23:51
  Speaker 1: in power in the House. I mean, this is an
• 23:53
  Speaker 1: economy with three point seven percent unemployment. We have waged
• 23:56
  Speaker 1: growth at least nominally that's higher than it's been in
• 24:00
  Speaker 1: several years. And the economy has been you know, working
• 24:04
  Speaker 1: and firing on all cylinders. For for the last couple
• 24:07
  Speaker 1: of years, definitely continuing the trend that was started under
• 24:11
  Speaker 1: the previous administration. But President Trump said it very transparently
• 24:15
  Speaker 1: on the campaign trail that he thought talking about the
• 24:17
  Speaker 1: economy was boring and he thought that, you know, talking
• 24:20
  Speaker 1: about things like immigration and the migrant caravan in Central
• 24:23
  Speaker 1: America was much more of a motivating factor for his supporters.
• 24:28
  Speaker 1: And that calculation was made. It helped in the Senate,
• 24:32
  Speaker 1: it seemed to have hurt in the House, and that's
• 24:34
  Speaker 1: what the President decided to do. And I'm sure we're
• 24:37
  Speaker 1: gonna hear during this news conference that he believes that
• 24:39
  Speaker 1: that was a positive and successful strategy. Billy, real quick,
• 24:43
  Speaker 1: I just want to get a sense was there any
• 24:44
  Speaker 1: foreign interference in this election or is that something people
• 24:47
  Speaker 1: are talking about. There was, There's up to the this
• 24:50
  Speaker 1: time been scant evidence of that. I mean, there's certainly
• 24:53
  Speaker 1: obviously probably was were attempts, but there has not been any.
• 24:57
  Speaker 1: Of course, we learned about much of the last and
• 24:59
  Speaker 1: true should late and this fact, and we are starting
• 25:03
  Speaker 1: a forty five day clock under an executive order signed
• 25:06
  Speaker 1: by President Trump that will force the intelligence agencies to
• 25:10
  Speaker 1: decide and and confirm whether or not there was any
• 25:13
  Speaker 1: foreign interference and report that to the President, and if
• 25:16
  Speaker 1: that happened, we will all know about it and there
• 25:18
  Speaker 1: will be sanctions in the results. Something that is new
• 25:21
  Speaker 1: during this election that there is a forty five day
• 25:23
  Speaker 1: period the intelligence community will let us know sometimes sometime
• 25:27
  Speaker 1: before the end of the year, whether or not there
• 25:28
  Speaker 1: was foreign interference. Thank you, gentlemen, very much to lou Alaripa,
• 25:32
  Speaker 1: he is our White House correspondent, and our thanks also
• 25:35
  Speaker 1: to our congressional reporter Billy House, much appreciated. Joining us
• 25:50
  Speaker 1: now in our Bloomberg Interactive Broker Studios is Amanda Albright,
• 25:54
  Speaker 1: our municipal bond reporter for Bloomberg News. Amanda, as always
• 25:58
  Speaker 1: a pleasure to have you with us. Across the United States,
• 26:02
  Speaker 1: US voters approved more than twelve billion dollars in bond
• 26:06
  Speaker 1: sales to support school construction, water infrastructure, as well as
• 26:12
  Speaker 1: upgrades to a variety of bridges and roads. Tell us
• 26:17
  Speaker 1: about this ballot busting initiative and what it means for
• 26:21
  Speaker 1: infrastructure spending. Sure, so, we've already seen the number of
• 26:25
  Speaker 1: bonds approved um rise up to twenty billion. We're still
• 26:28
  Speaker 1: seeing results coming in UM California, which is a big
• 26:31
  Speaker 1: issue in state. We're still seeing results coming in there,
• 26:33
  Speaker 1: so UM we definitely expect that this will be another
• 26:36
  Speaker 1: big year for bond measures approved by voters UM. Interestingly enough,
• 26:40
  Speaker 1: it's actually been kind of a mixed year for bond
• 26:42
  Speaker 1: ballot measures. UM. We saw Colorado voters UM vote down
• 26:46
  Speaker 1: over nine billion and two different bond measures for transportation projects. UM.
• 26:50
  Speaker 1: In California voters actually UM did the rare thing of
• 26:54
  Speaker 1: voting down UM over eight billion in bonds for water
• 26:57
  Speaker 1: infrastructure UM that would have helped with like drought conditions
• 27:00
  Speaker 1: and and things like that. So it was a really
• 27:02
  Speaker 1: interesting year and we're still kind of parsing through what
• 27:04
  Speaker 1: it all means. Well, yeah, I'm just wondering how much
• 27:07
  Speaker 1: this indicates that voters are concerned about paying more. Right, So,
• 27:12
  Speaker 1: I think it is a really interesting dynamic, and the
• 27:15
  Speaker 1: way that I like to look at it is state
• 27:16
  Speaker 1: by state. So UM. New Jersey had one measure that
• 27:19
  Speaker 1: I was very focused on because obviously New Jersey voters
• 27:22
  Speaker 1: are worried about their taxes, UM, they're worried about the
• 27:24
  Speaker 1: state's finances. But New Jersey voters actually agreed to UM
• 27:28
  Speaker 1: five million in bonding for schools. Um. But you go
• 27:31
  Speaker 1: to a place like Colorado, UM, and voters you know,
• 27:34
  Speaker 1: shot down these transportation measures. UM. Maybe a little bit
• 27:37
  Speaker 1: of concerns about property taxes rising there. Sort of interesting.
• 27:41
  Speaker 1: Maybe it's the reason that people aren't concerned in New Jersey.
• 27:44
  Speaker 1: Perhaps is the reason why they have a fiscal situation,
• 27:47
  Speaker 1: and that is that is the way that it is, Pam.
• 27:51
  Speaker 1: Let's talk about just one state, North Carolina for a moment.
• 27:54
  Speaker 1: This is in Wake County. Voters approved a half billion dollar,
• 27:58
  Speaker 1: more than a half billion dollars in school construction bonds. Yeah.
• 28:03
  Speaker 1: So we've seen a lot of school measures, um. You
• 28:05
  Speaker 1: know this basically the high amount of bond measures that
• 28:08
  Speaker 1: we're seeing, you know, just across the board. California is
• 28:11
  Speaker 1: always a big one, Um, Texas is a big one,
• 28:14
  Speaker 1: But places like Wait County in North Carolina not necessarily
• 28:17
  Speaker 1: one where you'd see like a chart topping bond measure UM. There.
• 28:21
  Speaker 1: So what this really says is that, you know, states
• 28:23
  Speaker 1: and cities across the country are getting a little bit
• 28:26
  Speaker 1: more comfortable with taking on debt UM, which kind of
• 28:28
  Speaker 1: speaks to where the economy is right now. So moving aside,
• 28:32
  Speaker 1: from moving a little bit away from the actual ballot
• 28:35
  Speaker 1: measures that would approve bond issue in Are there other
• 28:39
  Speaker 1: measures that were voted on that you think are interesting
• 28:41
  Speaker 1: and could affect the credit worthiness of different states? For example,
• 28:45
  Speaker 1: I was speaking with one investor who said that the
• 28:47
  Speaker 1: legalization of marijuana in Michigan actually improves the state's finances
• 28:52
  Speaker 1: because they'll get more revenues. Right. So, Michigan is a
• 28:54
  Speaker 1: state that I definitely have my eye on. Um. That's
• 28:57
  Speaker 1: a state where fourteen out of eighteen school passed bond
• 29:00
  Speaker 1: initiatives there. Um, they passed, you know, the marijuana initiative. Um.
• 29:04
  Speaker 1: They've also just elected a Democrat as governor. And this
• 29:07
  Speaker 1: governor is very friendly towards infrastructure. She ran on a
• 29:10
  Speaker 1: plan of um, fixing the roads, um, and you know,
• 29:14
  Speaker 1: outlined a very detailed proposal on infrastructure. So for Michigan
• 29:17
  Speaker 1: at a state where maybe you could see debt increase,
• 29:20
  Speaker 1: which would be a credit issue, but if voters are
• 29:22
  Speaker 1: willing to raise taxes to pay for it, then, um,
• 29:25
  Speaker 1: you know, maybe they can handle that increase in debt.
• 29:27
  Speaker 1: How about affordable housing? How did that turn out? The
• 29:31
  Speaker 1: variety about initiatives, I think there was one in California. UM. Yes,
• 29:35
  Speaker 1: And in Oregon, voters approved over six hundred million in
• 29:38
  Speaker 1: bonds for affordable housing. UM. That's something that you know,
• 29:41
  Speaker 1: bondholders actually worry about affordable housing because they worry about
• 29:45
  Speaker 1: this idea of UM seeing out migration from communities where
• 29:49
  Speaker 1: rents get too high and um, you know, flight from
• 29:51
  Speaker 1: really high housing prices. UM. You know, one investor actually
• 29:55
  Speaker 1: emailed me today and said affordable housing is one of
• 29:57
  Speaker 1: his top concerns. UM. And he's based Georgia, so he's
• 30:01
  Speaker 1: talking about other communities. But that just gives you an
• 30:03
  Speaker 1: idea of how important affordable housing is from a credit perspective.
• 30:06
  Speaker 1: So just overall taking a step back, is it just
• 30:10
  Speaker 1: hard to generalize when it comes to municipalities acting or
• 30:14
  Speaker 1: voters voting on things that are good for the bottom
• 30:16
  Speaker 1: line or bad for the bottom line. It's just this
• 30:17
  Speaker 1: sort of locality by Yeah, I mean, the thing that's
• 30:21
  Speaker 1: kind of um struck me this year is just on infrastructure.
• 30:24
  Speaker 1: It's a really really complicated year. So you're seeing people
• 30:27
  Speaker 1: be more bullish on infrastructure policies federally, um, but on
• 30:31
  Speaker 1: the local level, with this Colorado measure failing and the
• 30:34
  Speaker 1: big California measure failing. We've also seen voters in Missouri
• 30:37
  Speaker 1: and Utah reject gas tacks increases. It's really really hard
• 30:41
  Speaker 1: to generalize about how people are feeling about infrastructure. It
• 30:44
  Speaker 1: might have something to do with the way that the
• 30:46
  Speaker 1: measures were advertised to them on TV or you know,
• 30:49
  Speaker 1: how the measures were written on ballots. UM. But it's
• 30:53
  Speaker 1: kind of fascinating the way that there are these like
• 30:55
  Speaker 1: nuances between different communities. And just quickly there were a
• 30:58
  Speaker 1: couple of ballot initiatives changing state laws having to do
• 31:02
  Speaker 1: with whether they were going to increase taxes. Right, Yeah,
• 31:06
  Speaker 1: that affected my home state of North Carolina. So voters
• 31:08
  Speaker 1: they're agreed to cap the maximum possible personal income tax
• 31:12
  Speaker 1: rate UM. North Carolina is an extremely low tax state. UM.
• 31:15
  Speaker 1: It's triple A. So this isn't going to change UM
• 31:18
  Speaker 1: their credit rating. But if there is a recession scenario UM,
• 31:22
  Speaker 1: a lot of liberal groups in the state, we're a
• 31:24
  Speaker 1: little bit worried about that. UM. In Florida, they passed
• 31:26
  Speaker 1: a supermajority requirement on tax hikes against Florida's triple A.
• 31:30
  Speaker 1: So not necessarily a credit rating changer, but definitely something
• 31:33
  Speaker 1: that could crop up. Later on down the line and
• 31:35
  Speaker 1: create pressures. Well, Amanda, we're gonna let you go get
• 31:38
  Speaker 1: some rest because I understand you were here all night.
• 31:41
  Speaker 1: So thank you a million times over for your coverage
• 31:44
  Speaker 1: on all levels. Amanda Albright, Star Muni, reporter for Bloomberg News,
• 31:49
  Speaker 1: joining us here in our eleven three oh studios. Thanks
• 31:55
  Speaker 1: for listening to the Bloomberg P and L podcast. You
• 31:57
  Speaker 1: can subscribe and listen to interviews at a full podcasts, SoundCloud,
• 32:01
  Speaker 1: or whatever podcast platform you prefer. I'm pim Fox. I'm
• 32:05
  Speaker 1: on Twitter at pim Fox. I'm on Twitter at Lisa
• 32:08
  Speaker 1: Abramo wits one. Before the podcast, you can always catch
• 32:11
  Speaker 1: us worldwide on Bloomberg Radio