Latest / Bloomberg Intelligence / The Return of Inflation Pushing Up Yields in 2021: Bianco

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The Return of Inflation Pushing Up Yields in 2021: Bianco · Bloomberg Intelligence

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  Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, along
• 0:04
  Speaker 1: with my co host of Bonnie Quinn. Every business day
• 0:06
  Speaker 1: we bring you interviews from CEOs, market pros, and Bloomberg experts,
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  Speaker 1: along with essential market moving news. Find the Bloomberg Markets
• 0:13
  Speaker 1: Podcast on Apple Podcasts or wherever you listen to podcasts,
• 0:17
  Speaker 1: and on Bloomberg dot com. Well, last week we had
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  Speaker 1: the ten year yield range from seventy six basis points
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  Speaker 1: all the way up to seven basis points. Now, eleven
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  Speaker 1: basis points may not be a massive move in so
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  Speaker 1: called normal times, but it is these days. So let's
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  Speaker 1: bring in Jim Bianco of Bianco Research to tell us
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  Speaker 1: what kind of volatility we're seeing and what's it get you. Jim, Hey,
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  Speaker 1: thanks for having me um the fine markets volatility normally
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  Speaker 1: is not a big deal, but given you know, eleven
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  Speaker 1: basis points in a week is not the craziest thing
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  Speaker 1: you would have seen. But given the environment we're in,
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  Speaker 1: it is a massively large move, and it came on
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  Speaker 1: the back of a stock market that sold off over
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  Speaker 1: five That was probably the most surprising part about it
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  Speaker 1: was there was no risk off rally in the bond market.
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  Speaker 1: Last week, and that's what's got everybody shaking their head
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  Speaker 1: right now. So, Jim, you know we have the election
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  Speaker 1: coming up tomorrow. How are you kind of I'm not
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  Speaker 1: gonna say playing it, but how are you forecasting how
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  Speaker 1: this market is going to react going forward? What's kind
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  Speaker 1: of your base case what we're gonn see tomorrow and
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  Speaker 1: the days ahead, and how that might impact the credit markets.
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  Speaker 1: I have a little different base case than most um.
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  Speaker 1: If you if you look at the world of the
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  Speaker 1: polls they're giving Trump, I'll go with the incumbent point
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  Speaker 1: of view, about a five to ten percent chance of winning.
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  Speaker 1: If you look at the betting markets, they're giving him
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  Speaker 1: at chance of winning. The betting markets seem to align
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  Speaker 1: with the financial markets. I think the financial markets think
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  Speaker 1: that Biden is leading, but it's very very close where
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  Speaker 1: the polls are saying it's going to be a very
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  Speaker 1: lopsided race. If the polls turn out to be right
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  Speaker 1: and it is as lopsided as they say it is,
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  Speaker 1: I think there's gonna be a lot of discounting in
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  Speaker 1: the market tomorrow or Wednesday and the Thursday as they
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  Speaker 1: start to price in more of a Biden victory than
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  Speaker 1: they have right now, and I think ultimately how the
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  Speaker 1: markets priced that in it's gonna come down to how
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  Speaker 1: the Senate goes. The Senate, I think is going to
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  Speaker 1: probably be the real story as we go forward from here,
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  Speaker 1: because that's kind of touch and go as to which
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  Speaker 1: way it can go. Wall Street wants a blue wave
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  Speaker 1: because it wants fiscal stimulus um and I think if
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  Speaker 1: it gets that blue wave, there's probably going to be
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  Speaker 1: a rally based on the knee jerk reaction. But I
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  Speaker 1: don't think that that blue waves is completely priced and
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  Speaker 1: it's a lot of people think right now, well, there's
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  Speaker 1: also a very real possibility of the presidency turning over,
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  Speaker 1: but not the Senates in that situation. Jim, what are
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  Speaker 1: we looking at in terms of policy for the next
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  Speaker 1: four years? Well, for the next four years. History says
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  Speaker 1: that that should be bullish because Wall Street is always
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  Speaker 1: liked gridlock of any kind. That seems to be the
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  Speaker 1: best scenario for it over the next several years. Over
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  Speaker 1: the short term, it wor like grid luck because what
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  Speaker 1: it wants right now as it wants a fiscal deal,
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  Speaker 1: and if we get we were to get the Senate
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  Speaker 1: to be held by the Republicans. Uh, then what we
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  Speaker 1: would wind up having happen is um the lessing of
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  Speaker 1: less likelihood of a fiscal deal at that point. So, Jim,
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  Speaker 1: I mean, if you look at the ten year it's
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  Speaker 1: been trading after that volatility in March, and ten years
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  Speaker 1: kind of been in this range of six basis points.
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  Speaker 1: Is there a scenario in your analysis where we get
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  Speaker 1: the ten ure to you know, one one and a
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  Speaker 1: quarter percent something like that in a reasonable timeframe. Sure,
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  Speaker 1: And I think there's a likely scenario with that, and
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  Speaker 1: that is the return of inflation. With all of the
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  Speaker 1: pump timing that we've done with the fiscal stimulus and
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  Speaker 1: the monetary stimulus, and the contraction of the economy meaning
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  Speaker 1: we're making less stuff less gross domestic product. That is
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  Speaker 1: a prescription for higher prices, otherwise known as inflation. If
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  Speaker 1: the market thinks that inflation is coming back and coming
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  Speaker 1: back in a big way, yeah, you'll see investors run
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  Speaker 1: away from the bond market and you could see higher yields.
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  Speaker 1: In fact, I think that might be one of the
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  Speaker 1: things that's been bothering the market the last couple of weeks.
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  Speaker 1: Even though the stock market is stumbled and the and
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  Speaker 1: the bond market has been unable to rally on. That is,
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  Speaker 1: I think that there is this fear of inflation. If
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  Speaker 1: you add to that one other and uh, and that
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  Speaker 1: is a vaccine. If you keep sending people money and
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  Speaker 1: you keep pumping the priming the pump, and then you
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  Speaker 1: get a vaccine and tell everybody, Okay, now we can
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  Speaker 1: go back to normal. There really underscores the idea that
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  Speaker 1: you could get a return of inflation. So I do
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  Speaker 1: see that is a plausible scenario for much higher yields
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  Speaker 1: as we move into So interestingly, Jim, the person we
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  Speaker 1: maybe should be watching that is your own power, because
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  Speaker 1: he has basically and his fellow Reserve is basically promised
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  Speaker 1: ultra loose Masuri policy for years to come. But in
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  Speaker 1: the scenario you just described, the bond market would be
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  Speaker 1: telling the Fed to actually raise rates. Now, yes, that's
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  Speaker 1: exactly right. Um. We all have been looking at Paul
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  Speaker 1: and seeing thinking that he's been the guy that saved
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  Speaker 1: the markets, and that's largely been the case for twenty twenty.
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  Speaker 1: And he's promised not to raise rates for years with
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  Speaker 1: an s on the end of it to come. The
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  Speaker 1: only thing that changes that is the market itself if
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  Speaker 1: it decides that it wants a change of policy. It
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  Speaker 1: did so in the fourth quarter of two eighteen when
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  Speaker 1: the FED was reducing the balance sheet and it said
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  Speaker 1: stop sold off the stock market really hard until Paul
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  Speaker 1: changed his mind and said he'd be patient and flexible
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  Speaker 1: if we get inflation. We could see something like that
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  Speaker 1: in one where the market does in a buffets and
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  Speaker 1: it demands a change of policy and eventually the Fed
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  Speaker 1: wal chorus and and give it to it. Hey, Jim,
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  Speaker 1: thanks so much for joining us. We appreciate it as
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  Speaker 1: always always appreciate your thoughts and opinions. Jim Bianco, President
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  Speaker 1: and founder Bianco Research. He's also a contributor to Bloom Opinion,
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  Speaker 1: joining us and he's based in Chicago. Well, certainly a
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  Speaker 1: better start to this week then we saw trading last
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  Speaker 1: week here as we go into the election, let's see
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  Speaker 1: if this has some legs so we can do that
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  Speaker 1: with Phil Orlando, chief equity market strategist inhead of client
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  Speaker 1: portfolio Management at Federated Hermes, he joins us. Phil, thanks
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  Speaker 1: so much for joining us here. What do you make
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  Speaker 1: of last week's trading? Again one of the rougher weeks. Uh,
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  Speaker 1: this market is seen going into an election. Well, you
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  Speaker 1: had a bunch of things that were going on. I
• 6:32
  Speaker 1: guess there was a realization that we were not going
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  Speaker 1: to get this Phase four stimulus package that Congress has
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  Speaker 1: been negotiating on for months now. We've got this third
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  Speaker 1: wave of infections that that have spiked here as we
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  Speaker 1: sent our kids back to school, and you know, late August,
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  Speaker 1: early September, and then um, you know, investors were starting
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  Speaker 1: to think, well maybe we could get this this blue
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  Speaker 1: wave in the election this week, which means taxes and
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  Speaker 1: regulations are going higher. So for all those reasons, you know,
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  Speaker 1: you're probably down you know, let's call it ten percent
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  Speaker 1: excuse me from where the market peaked out on September two,
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  Speaker 1: where we you know, sort of bottomed out on Friday. Uh.
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  Speaker 1: And we're getting a little bit of a snap back today.
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  Speaker 1: That's good, you know, we we've gotten some better data. Um,
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  Speaker 1: but the big anchilada, of course, is going to be
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  Speaker 1: the election tomorrow and whether it turns out to be
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  Speaker 1: contested or not. So fell, if you're buying the market
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  Speaker 1: today and many people are with the S and D
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  Speaker 1: at one, what is your reasoning? Um, I'm not quite sure,
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  Speaker 1: because we've got a two thirds chance of a contested
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  Speaker 1: election tomorrow and the last time we had a contested
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  Speaker 1: election was Bush Gore in two thousand with the hanging
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  Speaker 1: chads in Florida, and stocks were down about from from
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  Speaker 1: election day into the middle of December when the Supreme
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  Speaker 1: Court finally came in resolved the issue. Um. So, certainly
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  Speaker 1: the markets over sold here in your term, but you've
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  Speaker 1: got to respect the fact that this is an extraordinarily
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  Speaker 1: contentious election. There's any number of things that can happen,
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  Speaker 1: some of them not particularly good in terms of the
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  Speaker 1: contested nature of the election, and at this point, the
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  Speaker 1: most prudent thing to do, in our opinion, is to
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  Speaker 1: just sort of stand back, um, see how it plays out,
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  Speaker 1: and then figure out what to do from an investment standpoint. So,
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  Speaker 1: what's the source of that that two thirds number. That's
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  Speaker 1: an interesting number, and kind of how does that How
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  Speaker 1: do you define a contested election? Well, the fact that
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  Speaker 1: we're not going to know who won the election tomorrow night,
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  Speaker 1: and the logic behind that very simply is this. We
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  Speaker 1: had thirty three million mail in ballots out of a
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  Speaker 1: hundred and thirty nine million total ballots cast in the election.
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  Speaker 1: This cycle is going to be very different because of
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  Speaker 1: the coronavirus. People are scared to death of showing up
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  Speaker 1: at their their polling place and getting infected. So the
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  Speaker 1: experts are telling us that instead of thirty three million
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  Speaker 1: mail in ballots this cycle, we're gonna double that. We're
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  Speaker 1: gonna be at seventy or eighty million million mail in
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  Speaker 1: ballots out of a hundred and fifty or hundred and
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  Speaker 1: sixty total million ballots cast. Literally half of the ballots
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  Speaker 1: could be mail in. As a result, a lot of
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  Speaker 1: the states are by law, are not going to be
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  Speaker 1: starting to count those ballots until you know tomorrow. We're
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  Speaker 1: not going to have those results tomorrow night. Um. And
• 9:29
  Speaker 1: and you've got you've got a number of key swing
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  Speaker 1: states that that based upon the polling data, are going
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  Speaker 1: to be really close. We may not know the results
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  Speaker 1: for a couple of weeks. Um. And So given that
• 9:41
  Speaker 1: uncertainty and equity markets hate uncertainty, that that suggests we
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  Speaker 1: could drift down to you know, let's call it the
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  Speaker 1: two hundred day moving average, you know, which is another
• 9:52
  Speaker 1: couple hundred points below where we are right now. Where
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  Speaker 1: else is there a possible trade that might pay off
• 10:00
  Speaker 1: hedging trade or some kind of a trade that works
• 10:02
  Speaker 1: in either instance, and even if there is a contestation. Well,
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  Speaker 1: what we did back in I guess the middle of August,
• 10:10
  Speaker 1: anticipating all of this, because we spent a lot of
• 10:13
  Speaker 1: time studying, you know, the intersection between politics and Washington
• 10:18
  Speaker 1: is we thought that technology stocks had simply run too far,
• 10:21
  Speaker 1: too fast, and and here we are. You know, at
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  Speaker 1: the beginning of September, the equity market was sitting just
• 10:28
  Speaker 1: at about the thirty six hundred level. Our full year
• 10:31
  Speaker 1: forecast was so so and and most of that rally
• 10:36
  Speaker 1: is being driven by tech. So we took some profits
• 10:39
  Speaker 1: in that area, domestic large cap growth technology and and
• 10:42
  Speaker 1: rotated those dollars into value stocks, small cap stocks, and
• 10:48
  Speaker 1: international stocks. We think, now that the economy is back
• 10:51
  Speaker 1: on the growth mode, that they'll start to be generating
• 10:54
  Speaker 1: positive revenues and earnings. Again. The valuation gap between growth
• 10:59
  Speaker 1: stocks and these other categories was massive, and we felt
• 11:03
  Speaker 1: that that that was going to close over time. So
• 11:05
  Speaker 1: we're going into this. We decided to lock in some profits,
• 11:09
  Speaker 1: play defense a little bit, and then see how how
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  Speaker 1: this election plays out. I feel just real quickly seconds here.
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  Speaker 1: What's a blue wave mean for you? Well, it would
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  Speaker 1: mean that that the Democrats would have a legislative mandate.
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  Speaker 1: We're probably looking at significantly higher corporate and individual tax
• 11:28
  Speaker 1: rates and regulations. That means that economic growth, corporate earnings growth,
• 11:34
  Speaker 1: stock prices are going to come down. Um, so as
• 11:37
  Speaker 1: we look at the longer term cycle, that would be
• 11:40
  Speaker 1: less less beneficial, less favorable for equity investors. Well, Phil,
• 11:47
  Speaker 1: we shall see. Thank you so much as always for
• 11:49
  Speaker 1: giving us all of your ideas and your analysis. That
• 11:52
  Speaker 1: is Phil Orlando, chief equity market strategist at Head of
• 11:55
  Speaker 1: Client Portfolio Management at Federated Hermes. It's going to be
• 11:58
  Speaker 1: so interesting to speak to more guests post election and
• 12:01
  Speaker 1: see what actually happened. And Paul, I'm also looking at
• 12:04
  Speaker 1: cmds today, the commodity pricing, and it seems like we're
• 12:09
  Speaker 1: seeing some kind of a propane bids exactly. You know,
• 12:14
  Speaker 1: we was out at dinner over the weekend, eating outside
• 12:17
  Speaker 1: and boy, there are this propane heating all over the
• 12:20
  Speaker 1: place and they were all being used and I could
• 12:22
  Speaker 1: just see the demand for propane going through the roof
• 12:25
  Speaker 1: here over the next several weeks. Well, it is time
• 12:29
  Speaker 1: for Bloomberg Opinion. We're joined today by Jonathan Bernstein. He's
• 12:32
  Speaker 1: a Bloomberg Opinion columnist covering politics and policies, out with
• 12:36
  Speaker 1: a fascinating column today entitled Tomorrow won't be a normal
• 12:40
  Speaker 1: election dead. It sounds like an understatement to me, Jonathan,
• 12:43
  Speaker 1: thanks so much for joining us here. I guess I
• 12:45
  Speaker 1: want to start with, will this election, in your opinion,
• 12:49
  Speaker 1: be contested by President Trump? And to what extent do
• 12:52
  Speaker 1: you think? Well, of course, first of all, he could win.
• 12:56
  Speaker 1: I mean that is um. So put that aside about
• 13:00
  Speaker 1: I don't know five ten percent chance that he'll actually
• 13:02
  Speaker 1: just flat out win. If he doesn't win, Here's what
• 13:05
  Speaker 1: we know. We know he'll claim that there's voter fraud,
• 13:08
  Speaker 1: without evidence, without anything, because we know he'll do that
• 13:13
  Speaker 1: because he did that four years ago, even though he won,
• 13:16
  Speaker 1: he claimed that there was fraud against him. So pretty
• 13:18
  Speaker 1: confident that he'll claim all kinds of fraud. He's been saying,
• 13:22
  Speaker 1: without any evidence and against all the evidence, that mail
• 13:25
  Speaker 1: in absentee voting is fraudulent. It isn't. Um. He's been
• 13:31
  Speaker 1: saying that, uh, the vote should stop, the counting should
• 13:36
  Speaker 1: stop midnight or on election day, which has never been
• 13:40
  Speaker 1: the case before. That's not how the system works. So yeah,
• 13:43
  Speaker 1: I mean, at the very least, he's going to complain
• 13:47
  Speaker 1: that he was that it was stolen from him. What
• 13:50
  Speaker 1: he will do in addition to that, he's claiming that
• 13:52
  Speaker 1: he's gonna send out he we know he is sending
• 13:55
  Speaker 1: out a team of lawyers to put lawsuits against the
• 14:00
  Speaker 1: count everywhere. Can whether that will actually mount amount to anything,
• 14:06
  Speaker 1: that's still to come. Jonathan. What a states that you're
• 14:10
  Speaker 1: looking at in terms of a difficult process, if the
• 14:15
  Speaker 1: count is very close, or if something needs to be contested. Well,
• 14:19
  Speaker 1: we know that, UM, Pennsylvania in particular, which is a
• 14:22
  Speaker 1: most likely tipping point state that is the one that
• 14:25
  Speaker 1: puts one of the canidates or the other over the
• 14:28
  Speaker 1: top up, is expecting to have a slow count. Um.
• 14:31
  Speaker 1: They're doing that because Republican legislature in the state mandated
• 14:37
  Speaker 1: a slow count. They said you can't start, um opening
• 14:41
  Speaker 1: the envelopes and even checking to see if they're legitimate
• 14:46
  Speaker 1: votes until election day morning. In many states, in Arizona
• 14:50
  Speaker 1: and California, that's been going on for days already. UM.
• 14:54
  Speaker 1: In fact, the votes are being counted in a lot
• 14:56
  Speaker 1: of states, and so as soon as the polls closed Florida,
• 15:02
  Speaker 1: for example, of all of the count of the early
• 15:06
  Speaker 1: vote UM that will have it. In Texas also, But
• 15:09
  Speaker 1: in Pennsylvania it's gonna go slow. They stay they've got
• 15:12
  Speaker 1: enough counters that they're gonna go twenty four or seven
• 15:15
  Speaker 1: until that the county has done. Jonathan, as you talk
• 15:19
  Speaker 1: to folks in the political world if this is a
• 15:22
  Speaker 1: close election, is there a sense of how long this
• 15:24
  Speaker 1: could drag on? I guess the only real experience we
• 15:27
  Speaker 1: have is two thousand and when it went weeks. Well,
• 15:31
  Speaker 1: the count itself could take UM one or two weeks
• 15:34
  Speaker 1: in the slowest states, UM. That's typical in California. If
• 15:39
  Speaker 1: you know Pennsylvania, Wisconsin, Michigan and the states we're really
• 15:43
  Speaker 1: looking at that might affect the outcome of the presidential
• 15:46
  Speaker 1: election that are expected to be slow. Then lawsuits could
• 15:50
  Speaker 1: take weeks the way that they did in UH two thousand.
• 15:54
  Speaker 1: There could be recounts, UM, and you know, we'll see
• 15:58
  Speaker 1: how that goes. There are constitutional and UM statutory limits
• 16:04
  Speaker 1: as to when the electors are supposed to be appointed
• 16:07
  Speaker 1: and then when Congress is supposed to open the electoral
• 16:11
  Speaker 1: votes and count them and all that and that happens
• 16:14
  Speaker 1: in December and January to come. So those are sort of,
• 16:18
  Speaker 1: you know, guide posts that we have that we can
• 16:20
  Speaker 1: go by. Jonathan, Voter fraud is extremely rare. We know that.
• 16:25
  Speaker 1: We've been told that, and yet it's sometimes hard to
• 16:28
  Speaker 1: believe when you see some reports of of something that
• 16:32
  Speaker 1: might be fraud. Explained to us why it is rare?
• 16:34
  Speaker 1: What what what's in place to make sure that fraud
• 16:37
  Speaker 1: can't happen very easily? Well, for example, on you know,
• 16:41
  Speaker 1: mail in ballots, they have the signature match and they
• 16:43
  Speaker 1: have UM A lot of most states have it, you know,
• 16:47
  Speaker 1: a code so they know that the ballot that came
• 16:49
  Speaker 1: back as the same one that was sent and it
• 16:51
  Speaker 1: was properly sent UM. And again you know, some states
• 16:56
  Speaker 1: have been doing UM vote by mail exclusively Washington, Oregon,
• 17:03
  Speaker 1: Utah UM for several cycles now and they haven't any
• 17:07
  Speaker 1: problem with it, so, you know, and including Republican states.
• 17:11
  Speaker 1: So you know, one thing that happens is young voters
• 17:14
  Speaker 1: tend to vote last. And so because young voters these
• 17:18
  Speaker 1: days are more likely to vote Democratic, as those votes
• 17:22
  Speaker 1: get counted, the election night totals will start shifting. Over
• 17:26
  Speaker 1: the next several days to Democrats, and you know, Republicans say, oh,
• 17:30
  Speaker 1: there's something wrong with that, but that happens in Republican
• 17:34
  Speaker 1: run states like Utah and Arizona, which have a lot
• 17:37
  Speaker 1: of absentee voting, the same thing happened. So obviously Republicans
• 17:42
  Speaker 1: are not cheating in favor of Democrats in those days.
• 17:44
  Speaker 1: It's just how the system works. Jonathan, is it fair
• 17:48
  Speaker 1: to assume, I mean, if it's a close election, I
• 17:52
  Speaker 1: guess the default is it will be contested. What's the
• 17:55
  Speaker 1: scenario where you know the whole contestability of it. It
• 18:00
  Speaker 1: really kind of goes away that, in fact, we will
• 18:03
  Speaker 1: know something late tomorrow night. Well, it could get contested
• 18:07
  Speaker 1: even though we know something. You know, Trump is going
• 18:10
  Speaker 1: to say that he was ripped off no matter what.
• 18:12
  Speaker 1: Um so. But it is certainly possible. You know, Florida
• 18:17
  Speaker 1: counts its balance very quickly. They could have a result
• 18:20
  Speaker 1: very quickly tomorrow night. And if Joe Biden wins in Florida,
• 18:25
  Speaker 1: there's no realistic chance that Trump is going to win
• 18:28
  Speaker 1: the electoral College after that. So, and there's other states
• 18:31
  Speaker 1: that also have quick counts, and if Biden wins, you know,
• 18:36
  Speaker 1: right now, Biden looks like he's winning by about eight
• 18:38
  Speaker 1: and a half points nationally. If it turns out that
• 18:40
  Speaker 1: that's the case, he almost certainly is going to win
• 18:43
  Speaker 1: the electoral College by a comfortable margin. And we'll basically
• 18:47
  Speaker 1: know that at that point, there's a question of, well,
• 18:50
  Speaker 1: to what extent does Trump try to throw out legitimate balance,
• 18:55
  Speaker 1: which they're trying to do. For example, in Texas right
• 18:57
  Speaker 1: now some Republicans are UM and so it could be
• 19:01
  Speaker 1: contested without having a really good chance of succeeding. Jonathan,
• 19:06
  Speaker 1: you do say in your column that President Trump's bark
• 19:08
  Speaker 1: is often worse than his bite. How does that play
• 19:11
  Speaker 1: out here, because you know, if he barks here there's
• 19:14
  Speaker 1: a great chance of goes to the Supreme Court. Well,
• 19:16
  Speaker 1: it all depends on what exactly he does and what happens,
• 19:19
  Speaker 1: so that you know, for example, if Florida comes in
• 19:24
  Speaker 1: quickly for Biden, if Biden wins by you know several states,
• 19:29
  Speaker 1: Trump may continue to say it's fraud, it shouldn't ever,
• 19:33
  Speaker 1: you know, he shouldn't have been allowed to run in
• 19:35
  Speaker 1: the first place, and all that. He will probably say
• 19:37
  Speaker 1: that up to elect up to inauguration day and past that,
• 19:41
  Speaker 1: um but he may not actually be doing much about him.
• 19:44
  Speaker 1: It's possible the courts will look at some of these
• 19:46
  Speaker 1: absurd lawsuits um saying that legitimate votes just shouldn't count
• 19:51
  Speaker 1: just because Trump doesn't like them to be counted, and
• 19:53
  Speaker 1: they may toss them out, and it may not go
• 19:55
  Speaker 1: to the Supreme Court. It may not go anywhere at all.
• 19:58
  Speaker 1: You know, it could turn out that it goes to
• 20:02
  Speaker 1: the courts and the courts make um new rules as
• 20:06
  Speaker 1: they go along, as they did in the Wisconsin case
• 20:09
  Speaker 1: last week or Minnesota case last week. UM. So we'll see,
• 20:13
  Speaker 1: you know, what will happen. But the other part of
• 20:16
  Speaker 1: this is we're gonna hear a lot of rumors about
• 20:18
  Speaker 1: fraud and all that on election day. Trying not to
• 20:21
  Speaker 1: get ahead of ourselves. Yes, Jonathan, thank you great reminder
• 20:25
  Speaker 1: in today's column. Tomorrow won't be a normal election day.
• 20:28
  Speaker 1: Jonathan Bernstein, Bloomberg Opinion. Clearly there's a lot on the
• 20:34
  Speaker 1: line for the selection. Everybody, it seems like, has a
• 20:37
  Speaker 1: very very keen interest on the outcome of the selection.
• 20:41
  Speaker 1: That includes environmentalists as well. To get the latest on that,
• 20:45
  Speaker 1: we welcome our next guest, Dr a Shot Rathi, Climate
• 20:49
  Speaker 1: and Enjury Porter for Bloomberg Green based in London. UM, actually,
• 20:53
  Speaker 1: thanks so much for joining us here. It seems, I
• 20:56
  Speaker 1: guess cut and dry that if you're an environmentalist, if
• 20:59
  Speaker 1: you're thinking about the environment, you're pulling really hard for
• 21:03
  Speaker 1: not just former Vice President Joe Biden, but a blue
• 21:06
  Speaker 1: wave in the Senate. Is that as clear as it
• 21:09
  Speaker 1: convey is that is easy to analyze as it conveyors
• 21:12
  Speaker 1: or other differences there? I think you nailed it. That
• 21:16
  Speaker 1: is really the clearest distinction in this election, and I
• 21:20
  Speaker 1: don't think it has ever been as clear as you've
• 21:23
  Speaker 1: laid it out. Give us a little more detail on that.
• 21:28
  Speaker 1: So what we know is that Joe Biden has put
• 21:31
  Speaker 1: forth with what is the most ambitious climate plan that
• 21:35
  Speaker 1: any US presidential candidate has put forth so far. Among
• 21:40
  Speaker 1: the details are that he's going to spend about it
• 21:42
  Speaker 1: about two trillion dollars trying to reduce emissions. First step
• 21:47
  Speaker 1: will be to get carbon free electricity by twenty five
• 21:51
  Speaker 1: across the United States, build out a charging network for
• 21:56
  Speaker 1: electric cars, and to retrofit homes with better installations so
• 22:00
  Speaker 1: that their energies falls and their emissions decline. On Trump's side,
• 22:06
  Speaker 1: what we've known from the past four years is that
• 22:09
  Speaker 1: much of the work that has gone on through the
• 22:11
  Speaker 1: administration is to roll back regulations for fossil fuel industries
• 22:16
  Speaker 1: and open up new areas around the country for extraction
• 22:21
  Speaker 1: of fossil fuels. Among the few things that it has
• 22:25
  Speaker 1: done to try and reduce emissions um is to try
• 22:28
  Speaker 1: and create this plan to plant a trilliant trees or
• 22:32
  Speaker 1: at least join a global plan of planting trees, and
• 22:36
  Speaker 1: to support a technology called carbon capture, where you capture
• 22:40
  Speaker 1: emissions from a power plant and then bury them deep underground.
• 22:44
  Speaker 1: But the distinction is very very clear. The science says
• 22:47
  Speaker 1: we need to cut emissions really quickly, and Joe Biden's
• 22:51
  Speaker 1: plan gets us some way towards that. Under Trump administration,
• 22:56
  Speaker 1: we get away from that task. So what's the most
• 23:01
  Speaker 1: immediate and most impactful thing you would expect a bid
• 23:04
  Speaker 1: the administration to do. Biden has promised that on his
• 23:09
  Speaker 1: first day in office, he will rejoin the Paris Climate Agreement.
• 23:13
  Speaker 1: That's something that Trump has pulled out of. He had
• 23:18
  Speaker 1: his intention made clear in twenty seventeen, and actually officially
• 23:22
  Speaker 1: the US will be out of that agreement on November four,
• 23:26
  Speaker 1: which is a day after the election. So Biden is
• 23:28
  Speaker 1: elected first day back sometime in January, the US is
• 23:32
  Speaker 1: back into the Paris Climate Agreement, and that has a
• 23:35
  Speaker 1: number of ramifications because US, as a leader in global politics,
• 23:40
  Speaker 1: carries a lot of weight when it comes to deciding
• 23:44
  Speaker 1: which direction different countries should go in. So a very
• 23:47
  Speaker 1: recent example from my reporting has been that Japan, for instance,
• 23:51
  Speaker 1: has a signal that is going to target net zero
• 23:55
  Speaker 1: emissions by twenty fifty. That's a line at the primary
• 24:00
  Speaker 1: has put forth right now, but it has to go
• 24:03
  Speaker 1: through their legislative system before it becomes law. If Biden
• 24:07
  Speaker 1: is elected, Japan has all the reasons to support it.
• 24:11
  Speaker 1: If Trump is elected, the lawmakers might did there a
• 24:14
  Speaker 1: little bit. And that's the kind of impact that will
• 24:16
  Speaker 1: play out across many, many countries. Will it be just
• 24:20
  Speaker 1: that easy, you just call up a bunch of countries
• 24:23
  Speaker 1: and decide. Yeah. In case of the Paras Climate Agreement,
• 24:29
  Speaker 1: Actually it is easy because it is a voluntary agreement
• 24:33
  Speaker 1: that countries have come together and have agreed upon trying
• 24:37
  Speaker 1: to reduce emissions. Of course, it will be much harder
• 24:41
  Speaker 1: to actually cut emissions when it comes to the United
• 24:45
  Speaker 1: States itself. So a goal to reach carbon free electricity
• 24:48
  Speaker 1: by twenty thirty five is something that none of the
• 24:51
  Speaker 1: countries in the world have yet committed to. So what
• 24:54
  Speaker 1: Biden will have to do to reach that is going
• 24:57
  Speaker 1: to be really really hard. Academics say you can get
• 25:00
  Speaker 1: up to but the last ten percent is going to
• 25:03
  Speaker 1: be very hard. Equally, he's going to have to deal
• 25:06
  Speaker 1: with the tensions that the US has had to deal
• 25:09
  Speaker 1: within the past, which is, if you're going to move
• 25:11
  Speaker 1: away from the fossil fuel industry or move away from
• 25:14
  Speaker 1: fossil fuels, how are you going to help the people
• 25:17
  Speaker 1: in those industries transition away. It's a really hard question
• 25:21
  Speaker 1: that many countries outside Germany, China, Australia are starting to
• 25:26
  Speaker 1: struggle with, but the US hasn't done as much, and
• 25:30
  Speaker 1: that will be on Biden if he gets elected. Actually,
• 25:33
  Speaker 1: I just real quick twenty seconds. How what's been the
• 25:36
  Speaker 1: cost of the four years of the Trump presidency in
• 25:38
  Speaker 1: terms of the environment. How bad has it been? Well, Luckily,
• 25:43
  Speaker 1: renewable energy has been cheap and so um Trump hasn't
• 25:47
  Speaker 1: been able to reverse that trend. But what we know
• 25:50
  Speaker 1: is that for the first time emissions have gone back
• 25:52
  Speaker 1: up in the US under a Trump presidency. That is
• 25:56
  Speaker 1: sort of adding a year or two words of damage
• 26:00
  Speaker 1: in the long terms, in the long long scheme of terms. Yeah, actually,
• 26:05
  Speaker 1: thanks so much. We really appreciate getting your thoughts and
• 26:08
  Speaker 1: insights dr ox Shot Rothy Heasy, climate and energy reporter
• 26:12
  Speaker 1: for Bloomberg Green based in London, giving it the thoughts that, uh,
• 26:16
  Speaker 1: you know, on day one, if President Biden were to
• 26:20
  Speaker 1: win the presidency, the day one of his presidency, he
• 26:23
  Speaker 1: would uh try, he would look to get back into
• 26:26
  Speaker 1: the Paris Agreement as it relates to global environmental curbs
• 26:31
  Speaker 1: and and you know, so we'll have to see how
• 26:34
  Speaker 1: that plays out, but that's clearly on his focus. Thanks
• 26:37
  Speaker 1: for listening to Boomberg Markets podcast. You can subscribe and
• 26:41
  Speaker 1: listen to interviews at Apple Podcasts or whatever podcast platform
• 26:45
  Speaker 1: you prefer. I'm Bonnie Quinn, I'm on Twitter at Bonnie Quinn,
• 26:48
  Speaker 1: and I'm Paul Sweeney I'm on Twitter at pt Sweeney.
• 26:51
  Speaker 1: Before the podcast, you can always catch us worldwide at
• 26:53
  Speaker 1: Bloomberg Radio