Latest / Bloomberg Intelligence / Ending Short Selling Would Be A Mistake: Former E*Trade CEO

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Ending Short Selling Would Be A Mistake: Former E*Trade CEO · Bloomberg Intelligence

0:00
Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside
0:04
Speaker 1: my co host Matt Miller. Every business day, we bring
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Speaker 1: you interviews from CEOs, market pros, and Bloomberg experts, along
0:11
Speaker 1: with essential market moving news. Find the Bloomberg Markets Podcast
0:15
Speaker 1: on Apple Podcasts or wherever you listen to podcasts, and
0:18
Speaker 1: at Bloomberg dot com slash podcast. Well, we had in Washington,
0:23
Speaker 1: d C. Yesterday, you know, the whole discussion about game stock.
0:27
Speaker 1: We had all the kinds of different players in the
0:29
Speaker 1: market there, but it seems to be maybe more theater,
0:32
Speaker 1: uh than real substance. Let's get some expert overview. We
0:36
Speaker 1: can do that today with former E Trade CEO Karl Rossner.
0:39
Speaker 1: He's now CEO of Left Terrorist Acquisition. Carl, thanks so
0:42
Speaker 1: much for joining us here. Again, what was your takeaway
0:46
Speaker 1: from the hearings yesterday? So so, I think I think
0:49
Speaker 1: you hit it. Thanks for having me on the show,
0:51
Speaker 1: And I think you hit it right on the right,
0:53
Speaker 1: on the head right. There was a lot of political theater.
0:55
Speaker 1: There was some you know, sort of political one one
0:59
Speaker 1: upmanship and you know, making sure that each of them
1:01
Speaker 1: had their you know, three four or five minutes of
1:03
Speaker 1: fame as they call it. Um. But I do think
1:06
Speaker 1: a couple of points came out of it that we're
1:08
Speaker 1: very helpful. Right. One was around payment for order flow. Um.
1:11
Speaker 1: I think maybe retail investors and some of the more
1:15
Speaker 1: wider audience maybe can start to understand that payment forward
1:19
Speaker 1: to flow does have a place when it comes for
1:21
Speaker 1: retail trading, and that there are tradeoffs to just you know,
1:25
Speaker 1: a knee jerk reaction of saying there is no no
1:27
Speaker 1: more payment for order flow allowed. I think short selling, right,
1:30
Speaker 1: we'll come under pressure and they'll definitely be some reviews
1:33
Speaker 1: I think in additional rulemaking and lawmaking coming down the pipe,
1:37
Speaker 1: and then there will be a push over the next
1:40
Speaker 1: few years because I think it will take that long
1:42
Speaker 1: to move you know, clearing and settlement to a T
1:45
Speaker 1: plus one type arrangement, you know, agreeing with some of
1:48
Speaker 1: the witnesses in terms of the the difficulty of moving
1:51
Speaker 1: the entire securities clearing to you know intra day. Yeah,
1:54
Speaker 1: I thought that was really interesting. Actually, Um, you know
1:57
Speaker 1: a lot of the comments from senators maybe one or
2:00
Speaker 1: how much their staffs had actually prepared them for this,
2:03
Speaker 1: but um, it was worth it to hear ken Griffin
2:07
Speaker 1: talk about because I thought Y T plus two, we're
2:10
Speaker 1: not in the Stone ages, let's do it instantly, And
2:13
Speaker 1: actually Ken Griffin explained that that would be really difficult
2:16
Speaker 1: and even dangerous for a lot of market participants. So, um,
2:20
Speaker 1: I really learned something. What about the short selling pushback? Carl? Why,
2:25
Speaker 1: um wasn't there any? I mean, in an efficient market,
2:30
Speaker 1: you need people to go long and um to to
2:35
Speaker 1: to keep discipline in order, you need people to go short. Yeah, no,
2:39
Speaker 1: I I agree. I think the short sellers are going
2:41
Speaker 1: to come under pressure, right if there's any area that
2:44
Speaker 1: and you've seen it from some of the senators who
2:46
Speaker 1: have written letters and some of the congress men and
2:48
Speaker 1: women who have you gotten involved, that they look at
2:51
Speaker 1: that as hedge funds gaming the market, and they're going
2:54
Speaker 1: to vilify hedge funds. So I do think you'll have
2:56
Speaker 1: some focus from you know, the SEC and and other
2:59
Speaker 1: relatry bodies to figure out what curbs and what pushback
3:03
Speaker 1: can they put around shorts. I agree with you that
3:05
Speaker 1: in an efficient market you need all order types, right.
3:08
Speaker 1: You have to be able to to sort of look
3:10
Speaker 1: at the market both ways and having you know, run
3:13
Speaker 1: a public company when shorts get into your stock. You
3:16
Speaker 1: open your eyes and say, what do we you know,
3:19
Speaker 1: is something Are we doing something wrong? Right? Do we
3:20
Speaker 1: need to do something better? Are we getting a little
3:22
Speaker 1: bit behind? You know? It makes you think, and I
3:25
Speaker 1: think that's there are good aspects to it as well.
3:28
Speaker 1: So I do hope they don't just knee jerk and
3:30
Speaker 1: you know, and start to try and move that out
3:33
Speaker 1: of the system. I think that would be a mistake. Well, Carl,
3:35
Speaker 1: one of the things, I mean, you know, we we've
3:37
Speaker 1: all seen short squeezes before. We've all seen short selling
3:41
Speaker 1: come under scrutiny. It happens seems like every four or
3:45
Speaker 1: five years. What's different this time is the use of
3:49
Speaker 1: social media and the ability of these short sellers to
3:52
Speaker 1: really coordinate their actions. Do you expect there to be
3:55
Speaker 1: any regulatory overlay on perhaps the use of social media?
4:01
Speaker 1: How do you think that might play out? So so,
4:03
Speaker 1: I look, I think you heard one of them, one
4:05
Speaker 1: of the witnesses yesterday say that, you know, in looking
4:08
Speaker 1: at their next sort of short selling campaign or other
4:11
Speaker 1: entities that might be looking at going short against they
4:14
Speaker 1: will employ sort of data scientists and data data experts
4:18
Speaker 1: to take a look at the social media boards and
4:20
Speaker 1: and see if there's a you know, and other way.
4:23
Speaker 1: I thought that was kind of funny too. And they
4:25
Speaker 1: said they're going to employ data scientists. I figured they
4:27
Speaker 1: put their teenagers on Reddit, right, I mean, just just
4:30
Speaker 1: read Wall Street bets they will employ more than teenagers.
4:34
Speaker 1: That I can guarantee you, just given the amount of
4:35
Speaker 1: money that's at stake. But I agree, I mean, it's
4:38
Speaker 1: it's getting through that piece. I think social media is
4:41
Speaker 1: here to stay. I think it's helpful and and by
4:44
Speaker 1: that I mean, of course it's here to stay, but
4:46
Speaker 1: I look at it in terms of, you know, for
4:48
Speaker 1: retail trading and for others to use that as a
4:50
Speaker 1: mode of communication and a mode for sharing ideas. I
4:54
Speaker 1: think it's a great tool for you know, for retail
4:56
Speaker 1: right to learn and to use it as an education tool.
4:59
Speaker 1: When you start, you know, sort of getting down the
5:01
Speaker 1: edge of manipulation or you start getting on that, then
5:03
Speaker 1: then I look to regulators to say, there's a line, right,
5:07
Speaker 1: and this is where we think we can start drawing
5:09
Speaker 1: that line. But but again, you know, the knee jerk
5:12
Speaker 1: red line in the sand, it's not going to work.
5:15
Speaker 1: And Carl, if there is that red line to be drawn?
5:18
Speaker 1: Is it not the SEC? Maybe the CFTC that does it?
5:22
Speaker 1: Not are good friends down in the halls of Congress.
5:26
Speaker 1: I don't. I don't believe that any rulemaking should come
5:29
Speaker 1: from the folks who were on that committee yesterday. Um.
5:33
Speaker 1: I think you need to go to deep market experts.
5:36
Speaker 1: I think you saw very clearly the difference among the
5:39
Speaker 1: witnesses in terms of their expertise, and you only hope
5:43
Speaker 1: that certain individuals like that are involved in market structure
5:47
Speaker 1: and putting things together that can work, because in my view,
5:50
Speaker 1: it's always been a Jenga puzzle. But you can't just
5:53
Speaker 1: pull out one piece without knowing what else is going
5:55
Speaker 1: to fall. And that's that's what we need when people
5:58
Speaker 1: look at this. So I do think it's it's SEC.
5:59
Speaker 1: I I believe Gary Gensler. I believe you know, Secretary
6:02
Speaker 1: yelling right. You put the right people in the room
6:05
Speaker 1: with the right experience, and and maybe we can move
6:07
Speaker 1: things forward in a productive way that doesn't box out retail. Hey, Carl,
6:12
Speaker 1: thank you so much. We appreciate that. Carl Rossner, he's
6:14
Speaker 1: a former e Trade CEO, is now the CEO of
6:17
Speaker 1: Left Terrorists Group. UM. You know, really interesting, Matt. I mean,
6:22
Speaker 1: you just feel like there are rules in place. The
6:24
Speaker 1: SEC is they're looking at these things. Well you know, yeah,
6:28
Speaker 1: well there's also you know, um age old rules of thumb.
6:32
Speaker 1: There's no such thing as a free lunch, right, And
6:35
Speaker 1: when AOC was grilling Lad Tenev and saying, you know,
6:39
Speaker 1: you've got these free products have to be as good
6:41
Speaker 1: as the ones people pay for, you ask yourself if
6:44
Speaker 1: anyone really believes that's the case. Yeah, And I think
6:47
Speaker 1: it's just exposed not I guess, not surprisingly that the
6:50
Speaker 1: you know, the plumbing, if you will, back office Wall
6:53
Speaker 1: Street is not widely understood. So maybe maybe a little
6:56
Speaker 1: bit of knowledge came to light yesterday. Maybe that's going
6:58
Speaker 1: to be helpful. The housing market continues to be a
7:04
Speaker 1: very pleasant surprise in a very difficult economic landscape here
7:08
Speaker 1: in US. Just today, sales have previously owned US homes
7:11
Speaker 1: unexpectedly rose to a three month high in January. That
7:15
Speaker 1: there's pleasant, Yeah, absolutely, well, I think there's right because
7:21
Speaker 1: what we've seen, Matt, is particularly here in the metro
7:23
Speaker 1: New York area, but another urban areas people kind of
7:26
Speaker 1: fleeing the city during the pandemic, trying to get some
7:29
Speaker 1: more space going to suburbia, and that has created this
7:31
Speaker 1: extraordinary demand in many, many markets around the country. And
7:35
Speaker 1: we won't want to talk real estate, Matt. We talked
7:38
Speaker 1: to Logan Mohachomy. He is the housing data analysts and
7:42
Speaker 1: also lead analysts for the Housing Wire. Logan thanks so
7:45
Speaker 1: much for joining us here. I mean, I know interest rates,
7:48
Speaker 1: mortgage rates are at or near you know, all time lows,
7:51
Speaker 1: despite a little move back in rates here, But are
7:54
Speaker 1: you surprised at how strong housing is in this country
7:58
Speaker 1: given what's going on with the pandemic. Absolutely not. This
8:02
Speaker 1: has been my working thesis for many years that years
8:06
Speaker 1: four would have the best housing demographics ever recorded in
8:09
Speaker 1: US history. We have the biggest single uh demographic buying patch.
8:13
Speaker 1: Ages twenty seven and thirty three are the biggest ever.
8:16
Speaker 1: They're roughly about thirty two and a half million. And
8:18
Speaker 1: mortgage rates have always been low. They've been lows since
8:21
Speaker 1: two thousand and eight. But when you combine the biggest
8:23
Speaker 1: demographic patch with the lowest mortgage rates ever and you're
8:26
Speaker 1: not working from an overheating housing cycle like we had
8:29
Speaker 1: in the previous expansion, home sales are gonna rise. And
8:32
Speaker 1: this is exactly what's happening here. And I don't think
8:35
Speaker 1: it's so much about COVID as it's more about simple
8:38
Speaker 1: demographics here. I think a lot of people make that
8:40
Speaker 1: that people are fleeing the cities and they need bigger homes.
8:44
Speaker 1: This is just a continuation of a slowest steady cycle
8:48
Speaker 1: running into this massive demographic patch, and mortgage rates are low,
8:52
Speaker 1: and the problem with this is home prices are growing
8:54
Speaker 1: to pass the interesting thing. The interesting thing Logan is
8:58
Speaker 1: that the last for years has been pushing for more density.
9:03
Speaker 1: And I've always thought, you know, if if if I'm
9:08
Speaker 1: not wealthy, I don't want to be stuffed into a
9:11
Speaker 1: box next to a whole bunch of other people like
9:13
Speaker 1: I want to get out there. But the problem is,
9:16
Speaker 1: of course the jobs are all in the city, right
9:19
Speaker 1: Is this going to uh? Is this new working from
9:23
Speaker 1: home UH era gonna stick? Are people going to be
9:28
Speaker 1: continue to be able to continue to do that so
9:30
Speaker 1: that you don't have to be stuck in a box
9:32
Speaker 1: so you can get out there and have a backyard
9:34
Speaker 1: and a garage of your own. You know, I if
9:38
Speaker 1: even if the working from home thesis doesn't work out,
9:40
Speaker 1: I just generally think people would have moved. I mean, naturally,
9:44
Speaker 1: people buy bigger homes when they have families or bigger families,
9:48
Speaker 1: so this would have been the case anyway. The work
9:51
Speaker 1: from home model is like the most exciting thing get
9:53
Speaker 1: housing ever because if you don't have to live near
9:57
Speaker 1: your work, then if you wanted to, you can move
10:00
Speaker 1: to areas that are cheaper. And we're not talking about
10:02
Speaker 1: state the state moving. You know, you could just move
10:05
Speaker 1: miles away from the city and things are more affordable.
10:09
Speaker 1: Uh So that is a very exciting I just think
10:11
Speaker 1: we have to wait until after the crisis is over
10:15
Speaker 1: and then when people are starting to you know, go
10:17
Speaker 1: back to work, and well, we'll see if this actually sticks.
10:20
Speaker 1: I just don't believe it's going to be as big
10:22
Speaker 1: as many people think it will be. But naturally, even
10:25
Speaker 1: if COVID didn't happen, people would have been moving anyway,
10:28
Speaker 1: because you don't live in apartments when you when you
10:30
Speaker 1: when you when you're starting to create a family, you
10:32
Speaker 1: have to buy something bigger or rent something bigger. So
10:35
Speaker 1: this is just a natural progress of running into a
10:38
Speaker 1: decade where we have a lot of people ages thirty
10:40
Speaker 1: to thirty nine. So logan, let's talk about supply here.
10:43
Speaker 1: I mean, there's been a concern that the supply that
10:46
Speaker 1: we've seen come on the residential housing market over the
10:48
Speaker 1: last decade or so has been more on the higher
10:52
Speaker 1: end the mcmanchion's, if you will. We haven't seen enough
10:54
Speaker 1: supply for the first time buyer, and that's been a problem.
10:59
Speaker 1: What's the stat us now? This is this is a
11:01
Speaker 1: long term issue. We've been building bigger and bigger homes
11:04
Speaker 1: for many decades, and the builders are trying to bring
11:09
Speaker 1: smaller homes into the mix. That's something that happened after
11:13
Speaker 1: after the big sales miss they had back then. So naturally,
11:17
Speaker 1: even if you bring smaller homes into the market, we're
11:19
Speaker 1: still talking about homes that are over two thousand square foot.
11:23
Speaker 1: So there is no more kind of a kind of
11:26
Speaker 1: a small thousand square foot single family home anymore. Everything
11:30
Speaker 1: is bigger here in America. And it's just as as
11:33
Speaker 1: long as mortgage rates stay low, people will be able
11:35
Speaker 1: to buy homes. You know, millions and millions of people
11:37
Speaker 1: buy homes every year. It's just that now we just
11:40
Speaker 1: have an extra push of uh demographics coming in with
11:44
Speaker 1: lower mortgage rates. And now you see what's happening. The
11:47
Speaker 1: prices are up year year fourteen percent. This is very
11:50
Speaker 1: unhealthy and the only thing that changes is too hot.
11:54
Speaker 1: Right the housing market is too hot, so you basically
11:56
Speaker 1: need mortgage rates to rise to calm that. To cool
11:59
Speaker 1: that down, we need a breather. Days from sales from
12:04
Speaker 1: our days on the market went went from forty three
12:06
Speaker 1: days last year to twenty one days. If this continues,
12:09
Speaker 1: we could have another twelve percent home price growth year,
12:13
Speaker 1: and that's not healthy. Because mortgage rates are abnormally low
12:17
Speaker 1: because of COVID, it won't stay here that long. So
12:20
Speaker 1: hopefully as rates rise, economy is getting better, it just
12:24
Speaker 1: cools the market down a little bit to get a breathing.
12:26
Speaker 1: There's way too many multiple dad offers right now generally
12:30
Speaker 1: in the market, and unlike the previous expansion where we
12:33
Speaker 1: didn't have the best demographics ever, we're running into a passionward.
12:36
Speaker 1: Just a lot of people need shelter. Logan is Florida
12:41
Speaker 1: at risk of becoming overcrowded. It just seems like every
12:44
Speaker 1: day I read a story here, story, see a story
12:47
Speaker 1: about this mass migration, companies relocating. It just seems like
12:52
Speaker 1: they're all going upon beach. I guess exactly. So who
12:55
Speaker 1: tells us about the Florida market. You know, Florida it
12:59
Speaker 1: was always you know where that's where baby boomers actually
13:02
Speaker 1: go to retire. Now there's this, you know, if tech moves.
13:05
Speaker 1: I don't think that's too much of a story because
13:09
Speaker 1: you know, if a few companies move, they don't really
13:12
Speaker 1: bring all their workers in. So I these stories are
13:15
Speaker 1: great for headlines. I just don't think it's going to
13:17
Speaker 1: be the case where it's this this massive massive migration
13:21
Speaker 1: from younger people, middle age people and boomers. It's it's
13:26
Speaker 1: just things are cheaper in Florida, and if you can
13:30
Speaker 1: work there and you want to raise your family, that's
13:32
Speaker 1: what's gonna happen. And Okay, COVID wasn't here, that will
13:35
Speaker 1: be there. Logan, thanks so much for joinings Logomota show
13:38
Speaker 1: me Housing appreciated, Greg Jared, We really appreciate that update.
13:43
Speaker 1: You know, looking at the ten year match again one
13:45
Speaker 1: point three, pushing pushing higher. It was wasn't long ago.
13:49
Speaker 1: We're down in the very very low ones. Let's get
13:51
Speaker 1: a sense of what that means for the pros in
13:54
Speaker 1: the fixed income market. And there's nobody better to chat
13:56
Speaker 1: with an r J. Gallows, senior portfolio manager, head of
13:59
Speaker 1: the group Federated her music got. He manages eleven point
14:03
Speaker 1: nine billion out of a total firm wide assets under
14:06
Speaker 1: management of five seventy six billion. They're located in beautiful Pittsburgh,
14:10
Speaker 1: p A. When I was on the South side, Federate
14:12
Speaker 1: was a must stop to talk to the smart people
14:15
Speaker 1: out there in Pittsburgh. R J. Again, we've got the
14:18
Speaker 1: ten yere at one point three two percent higher than
14:21
Speaker 1: we've seen in a while. What does that tell you, Well,
14:25
Speaker 1: it feels sort of good as a as a firm
14:28
Speaker 1: um we've been short duration and expecting a steeper curve,
14:32
Speaker 1: and on the year the ten years now up almost
14:35
Speaker 1: forty BIPs, the thirty years up almost forty five, two tens,
14:39
Speaker 1: two thirties up forty to forty five basis points as well.
14:42
Speaker 1: So in a business like this where we're trying to
14:45
Speaker 1: position for what we anticipate happening. When you're short duration
14:48
Speaker 1: and expecting a curb to steep and then you get
14:50
Speaker 1: it right, it's helped returns and a lot of our
14:52
Speaker 1: bond portfolios, like the Total Return Blond pund I'm a
14:54
Speaker 1: co manager on that a lot of our portfolios have
14:57
Speaker 1: position wealth for the trade so far, We've got to
15:00
Speaker 1: keep looking forward from here. All right, Well, that's uh,
15:05
Speaker 1: I mean you deserve an iron city for that for sure.
15:08
Speaker 1: Do you think that the yield curve will continue steepening?
15:12
Speaker 1: I mean, um, it does look like when that happens
15:15
Speaker 1: it causes a little bit of havoc in the equity markets. Yeah,
15:18
Speaker 1: it's a it's a great point. I think looking forward,
15:21
Speaker 1: we've remained short and still think the steepening has some
15:24
Speaker 1: more legs to go. The bottom line is when you
15:27
Speaker 1: get an entirely changeover in control in Washington, d C.
15:31
Speaker 1: That will lead to a fiscal expansion, meaning more debt
15:33
Speaker 1: and more spending with macroeconomic implications i e. Faster growth. Uh,
15:38
Speaker 1: you shouldn't have inflation expectations rising. That's happened. You should
15:42
Speaker 1: have curve steepening. That's happened too. We don't think we're
15:44
Speaker 1: done with this dynamic. I mean, obviously we've had a
15:47
Speaker 1: pretty good size move um. The vaccination push, despite its
15:51
Speaker 1: hurdles and bumps in the road because we know it
15:53
Speaker 1: hasn't been as smooth as many would have hoped, is
15:55
Speaker 1: still leading towards more people getting vaccinated over time, months
16:00
Speaker 1: roll forward, and that will also support in the economic
16:03
Speaker 1: normalization and pent up demand for services, travel, hospitality, etcetera.
16:07
Speaker 1: Are all wind at the back of the economy. So
16:09
Speaker 1: we're pretty bullish on the economy, which means that we
16:11
Speaker 1: think freights should still be heading somewhat higher. We had
16:14
Speaker 1: the tenuere before the change in the Georgia Senate seats,
16:18
Speaker 1: probably around one and a quarter by the end of
16:19
Speaker 1: the year, and then once Georgia flipped control of the
16:22
Speaker 1: Democrats with narrow margins, we felt the ten years probably
16:24
Speaker 1: one fifty maybe with some upside beyond there. So we
16:27
Speaker 1: still have some room to go as we look forward
16:29
Speaker 1: into the rest. I'm here. I'm here to tell you,
16:32
Speaker 1: by the way, UM, be happy about the vaccine situation
16:36
Speaker 1: that you've got, because you're one of the world leaders
16:39
Speaker 1: in terms of R and D, in terms of developing
16:42
Speaker 1: the vaccine, in terms of acquiring the doses, and in
16:45
Speaker 1: terms of giving them out. I know that when you're
16:49
Speaker 1: there in the US doesn't feel great, but you're doing
16:51
Speaker 1: better than almost any other country in the world. You're
16:54
Speaker 1: up there with the UK and Israel. Here in Germany,
16:57
Speaker 1: you know, we basically having started yet so because I
17:02
Speaker 1: was so, we had a national sales conference recently, I
17:05
Speaker 1: was saying that exact thing to all of our sales
17:07
Speaker 1: people around the country. Even though you see it in
17:09
Speaker 1: the media, this frustration and disappointment. We are vaccinating and
17:13
Speaker 1: are more rapid pace than much of the rest of
17:15
Speaker 1: the world. And we're vaccinating and much more rapid pace
17:18
Speaker 1: than the well famous polio vaccine way back in the fifties.
17:22
Speaker 1: People invoke that as being, you know, the gold standard.
17:25
Speaker 1: We're actually vaccinating more people now over the same time
17:28
Speaker 1: period than occurred in nineteen So this is a complicated process.
17:33
Speaker 1: I'm with you. But yet in the media and you
17:36
Speaker 1: know when you talk to your parents who still can't
17:38
Speaker 1: get their shot. Yeah, there's a lot of frustration, but
17:41
Speaker 1: in big picture perspectives I agree with. So now, what's
17:46
Speaker 1: what's the pushback then? Because usually the Germans are known
17:48
Speaker 1: as for efficiency, so all things is the government. I
17:51
Speaker 1: will tell you what I what I have noticed. If
17:53
Speaker 1: you go onto JOHNS Hopkins website and look at who
17:56
Speaker 1: are the world leaders? Um, you see Israel, there, you
18:00
Speaker 1: see the United States, there, you see the UK there, um.
18:04
Speaker 1: And these are countries that had governments who think things
18:07
Speaker 1: like America first, right, These are countries, um, who have
18:11
Speaker 1: governments who think, you know, protect the homeland at all costs.
18:15
Speaker 1: And because of you know, by the time Donald Trump
18:18
Speaker 1: left office, the US was vaccinating a million people a day.
18:21
Speaker 1: So whether you agree or disagree with his policies, um,
18:24
Speaker 1: it doesn't matter. The point is he already had the
18:27
Speaker 1: number up to Joe Biden's goal, right. And and then
18:31
Speaker 1: here in Germany you've got a more liberal, multilateral approach
18:35
Speaker 1: of things. They didn't want to grab the vaccines and
18:38
Speaker 1: have them before the Italians. They didn't want to leave
18:41
Speaker 1: the French in their dust, you know, they wanted to
18:43
Speaker 1: bring everybody up at the same pace. So what they
18:45
Speaker 1: did is they decided to give it to this huge
18:46
Speaker 1: bureaucracy in Brussels and let them handle it. And then
18:50
Speaker 1: Brussels was like, we'll wait and see if we can
18:52
Speaker 1: get someone eBay later. All right. R J. Gallow, thank
18:56
Speaker 1: you so much for joining us there. Archi Gallo, Senior
19:00
Speaker 1: portfolio manager at Federated Hermes and Matt. That's an interesting
19:04
Speaker 1: here because again the feeling is okay, it's going well,
19:07
Speaker 1: but it should be going a lot better, Like here
19:09
Speaker 1: in New Jersey, We've got these mega distribution centers set
19:13
Speaker 1: up all around the state. But they're just sitting there,
19:15
Speaker 1: you know, somewhat vacant and just waiting for supply. But
19:18
Speaker 1: I guess the good news is, uh, they are set up.
19:21
Speaker 1: We are ready to go. And once you according to
19:25
Speaker 1: JOHNS Hopkins, you have administered fifty seven million doses, You've
19:29
Speaker 1: gotten sixteen million people vaccinated. A conversation that you and
19:35
Speaker 1: I had the other day reminded me of something that
19:38
Speaker 1: I want to bring up with Tim O'Brien. He's a
19:40
Speaker 1: Bloomberg opinion columnist, and he wrote, Texas shows what comes
19:44
Speaker 1: from ignoring climate change. Um. Clearly, Tim, Texas has had
19:50
Speaker 1: something happened for which it was not prepared. Um. You know, Greg,
19:53
Speaker 1: Jared's family comes from down in San Antone, and uh,
19:58
Speaker 1: it's unlikely that they thought when were building a house
20:01
Speaker 1: that they should insulate their pipes. Right. Sort Of like,
20:05
Speaker 1: as Greg mentioned the other day, if you're building something
20:07
Speaker 1: in Chicago, you don't need to use San Francisco earthquake codes, right,
20:12
Speaker 1: because it's terribly unlikely that you're going to have an
20:14
Speaker 1: earthquake in Chicago. And yet that's basically what happened in Texas. Well.
20:21
Speaker 1: Actually though Texas had the same problem in two thousand
20:24
Speaker 1: and eleven. It's entire grid from and UM industry and
20:29
Speaker 1: analysts said you should winter rise the grid. Uh. It's
20:32
Speaker 1: a straight forward, uh risk practice that will keep you
20:36
Speaker 1: in good stead. And at that point, Texas was beginning
20:39
Speaker 1: to diversify the energy sources that uses it used to
20:43
Speaker 1: power the grid, uh, and it made sense to winter
20:45
Speaker 1: rise all of it. There are wind turbines and natural
20:49
Speaker 1: gas powered turbines in northern climates such as Sweden for example,
20:55
Speaker 1: that don't freeze up in the winter, and they didn't
20:58
Speaker 1: do it, and then low and beholds around and the
21:01
Speaker 1: grid freezes. The second piece of information is, uh, yeah,
21:05
Speaker 1: you wouldn't have to protect your home against earthquakes if
21:08
Speaker 1: earthquakes were a we're a rarity in your area. But
21:12
Speaker 1: the reality of climate change and what you're seeing now
21:15
Speaker 1: with meteorology predictions is that it's likely Texas is going
21:18
Speaker 1: to have colder winters for some time now. Well, this
21:20
Speaker 1: is exactly why I love your column. You mentioned the
21:22
Speaker 1: two thousand eleven freezing in Texas. Back in two thousand four,
21:26
Speaker 1: Dennis Quaid and Jake Jillenhall made a movie called The
21:29
Speaker 1: Day After Tomorrow and it's pretty awesome. I highly recommended,
21:33
Speaker 1: big budget popcorn flick. But the idea is global warming,
21:37
Speaker 1: as I knew when we were a kid, when I
21:39
Speaker 1: was a kid, or climate change can actually cause these
21:43
Speaker 1: huge cooling phases that roll down over North America and
21:47
Speaker 1: other parts of the globe. And that's what we're seeing now, right,
21:51
Speaker 1: that is what we're seeing now, and I think we should.
21:54
Speaker 1: You know, it's it's obviously as an issue to political football,
21:57
Speaker 1: it's charged with a lot of ideological Asian but people
22:01
Speaker 1: should step away from that and just look at the
22:03
Speaker 1: facts of the matter and be practical about how to
22:06
Speaker 1: deal with it. I think, uh, you know, the energy
22:09
Speaker 1: companies in Texas have had you know, long track records
22:13
Speaker 1: of of lush profitability. I think reinforcing their grid by
22:17
Speaker 1: winterizing it is not a profit killer and to protect
22:22
Speaker 1: him in the long run, but they haven't done that,
22:24
Speaker 1: so Tim, I guess, you know, it shouldn't be that
22:26
Speaker 1: much of a surprise to see some people in Texas
22:29
Speaker 1: come out and kind of point figures at the you know,
22:33
Speaker 1: the eco energy, the more efficient energy sources as a
22:37
Speaker 1: as a source of the issue here. But it's your colleague.
22:40
Speaker 1: Matthew Winkler was out with a fascinating calm today saying, Hey,
22:44
Speaker 1: if you look at just job growth in Texas, it's
22:48
Speaker 1: coming from renewables. It's not coming from you know, uh,
22:51
Speaker 1: you know, fossil fuels, which is one of the reasons
22:54
Speaker 1: Texas embraced it. And and you know this whole topic
22:58
Speaker 1: that a lot of misinformation around it from from both
23:01
Speaker 1: sides of the aisle. Um. You know, the Texas grid
23:04
Speaker 1: they've actually done a good job of trying to diversify
23:08
Speaker 1: and and and make their sources of energy um more
23:11
Speaker 1: diverse as sources of power I should say more diverse
23:15
Speaker 1: um uh than than other grids and uh. And it
23:20
Speaker 1: it took job positive development and and again it's useful
23:25
Speaker 1: in moments like this arise to look at the fact
23:27
Speaker 1: pat rather than saying windmills are coming to clean out
23:31
Speaker 1: your town, which is how I think the right jumped
23:34
Speaker 1: on this when we first happened. Yeah, I love Winkler's column.
23:37
Speaker 1: He said, points out that Tesla employed nine people a
23:41
Speaker 1: decade ago. Now they employed forty eight thousand. That's just
23:44
Speaker 1: at their own company, not you know at suppliers and
23:47
Speaker 1: that there are three moved to Austin by the way. Yeah, yeah, totally.
23:52
Speaker 1: That's that. That's kind of the point. And what I
23:54
Speaker 1: don't get is why doesn't Greg Abbott embrace it. You know,
23:56
Speaker 1: the governor of Texas was also one of the people
23:59
Speaker 1: kind of blaming the green energy um industry, and they're
24:04
Speaker 1: gonna supply him with the money that he needs to
24:06
Speaker 1: get re elected if I think he was freaked out
24:11
Speaker 1: about taking responsibility here. You know, he pointed a lot
24:15
Speaker 1: of fingers at at air COT, which is the public
24:19
Speaker 1: agency that oversees the grid, uh and saying that an
24:21
Speaker 1: investigation needed to occur because they let down Texas consumers. Well,
24:25
Speaker 1: who oversees air Cot? The governor does and the Texas
24:29
Speaker 1: legislature does. And he then inside Texas said, you know,
24:33
Speaker 1: the problem with all this was natural gas deliveries. We
24:36
Speaker 1: couldn't get enough natural gas to keep powering the grid.
24:38
Speaker 1: But anyone on National Tellerson pos and said, it's wind
24:42
Speaker 1: And I think he's playing politics. It's he wants to
24:45
Speaker 1: avoid culpability for it because this could be a potential
24:47
Speaker 1: career killer. Ted Cruz learned that yesterday, right when he
24:50
Speaker 1: flew off to cankon Um Greg Abbott could learn that
24:54
Speaker 1: as well. There's gonna be a lot of backlash from
24:56
Speaker 1: voters over this, So I think he took the low
24:59
Speaker 1: road the high road and offering a public response to
25:03
Speaker 1: what happened. So Tim Wawe've got on the line. You
25:06
Speaker 1: mentioned Ted Cruz. I mean that Cancoon situation. It seems
25:09
Speaker 1: like such a rookie public relations blunder. What happened. You know,
25:15
Speaker 1: it's amazing like we saw this happening in in in
25:18
Speaker 1: the UK right when when they had the lockdown and
25:21
Speaker 1: members of Boris Johnson's government decided to take off on
25:24
Speaker 1: weekends for personal trips and uh, you know, it's just
25:29
Speaker 1: I think it's it's complete lack of empathy and indiscretion
25:35
Speaker 1: and he should be penalized for it. It's completely bonkers
25:38
Speaker 1: that that that he flies to Cancoon from his state
25:41
Speaker 1: because the types are freezing, well was constituents are boiling
25:44
Speaker 1: water to stay alive. Yeah, I think it's probably, if
25:49
Speaker 1: I can speculate a little bit, he probably had the
25:50
Speaker 1: trip planned and thought, you know, I've had this plant.
25:54
Speaker 1: But you're right, I mean it didn't work well for
25:55
Speaker 1: dominic rob who is the one who decided to drive
25:58
Speaker 1: to Barnaby Castle. Um, and in fact, my favorite to
26:03
Speaker 1: to sort of get away from the main topic. My
26:05
Speaker 1: favorite brewery is called brew Dog Scottish Brewery. But they
26:08
Speaker 1: have they gotten away from the topic. Well no, they
26:12
Speaker 1: they actually brewed to be here for Dominic. Rob called
26:15
Speaker 1: Barnaby Castle after he went it was quite good. So
26:19
Speaker 1: so there'll be a beer coming after Ted Cruz, can
26:24
Speaker 1: some delight or something some Texas whiskey? Hey, Tim, just
26:28
Speaker 1: real quickly again while we have yet, are you surprised
26:30
Speaker 1: that we haven't heard that much coming out of Palm Beach. Uh,
26:35
Speaker 1: you know, I'm not surprised. I think I think Trump
26:38
Speaker 1: is laying low right now to let some of the
26:40
Speaker 1: fall out of the impeachment trial pass. I don't think
26:44
Speaker 1: that will last very long. He obviously didn't waste much
26:47
Speaker 1: time in going after Mitch McConnell after McConnell criticized him. Um,
26:51
Speaker 1: you know we've got news that that the children aren't,
26:54
Speaker 1: at least in the near term, gonna run for political office. Um.
26:58
Speaker 1: I think you know, I think you're going to start
27:00
Speaker 1: to see him incoming weeks be more visible. Uh. The
27:03
Speaker 1: interesting thing will be how much traction does he continue
27:06
Speaker 1: to maintain in the incoming months and years. Hey, Tim,
27:09
Speaker 1: thanks so much for joining us. We appreciate it. As always,
27:12
Speaker 1: Tim O'Brien, Senior columnists for Bloomberg Opinion. You can read
27:15
Speaker 1: all of Tim's work and that of all of the
27:17
Speaker 1: Bloomberg Opinion columnists at Bloomberg dot com, slash Opinion, or
27:22
Speaker 1: on the Bloomberg terminal by typing O, P, I n go.
27:25
Speaker 1: The good folks of Bloomberg Opinion. Lots of fantastic work
27:29
Speaker 1: coming out every single day. It's must read. Thanks for
27:33
Speaker 1: listening to the Bloomberg Markets podcast. You can subscribe and
27:37
Speaker 1: listen to interviews of Apple Podcasts or whatever podcast platform
27:41
Speaker 1: you prefer. I'm Matt Miller. I'm on Twitter at Matt
27:44
Speaker 1: Miller three. Pet On Ball Sweeney I'm on Twitter at
27:48
Speaker 1: pt Sweeney. Before the podcast, you can always catch us
27:51
Speaker 1: worldwide at Bloomberg Radio