Latest / Bloomberg Intelligence / Infrastructure is Useful But Doesn't Change Economy, Dwane Says

Transcript

Infrastructure is Useful But Doesn't Change Economy, Dwane Says · Bloomberg Intelligence

• 0:04
  Speaker 1: Welcome to the Bloomberg P and L Podcast. I'm Pim Fox.
• 0:08
  Speaker 1: Along with my co host Lisa Abramowitz. Each day we
• 0:11
  Speaker 1: bring you the most important, noteworthy, and useful interviews for
• 0:14
  Speaker 1: you and your money, whether at the grocery store or
• 0:16
  Speaker 1: the trading floor. Find the Bloomberg P L Podcast on iTunes,
• 0:20
  Speaker 1: SoundCloud and at Bloomberg dot com. I'm gonna talk with
• 0:29
  Speaker 1: someone who has to listen quite a bit to the
• 0:32
  Speaker 1: investment officers around the world, Neil Dwayne, global strategist for
• 0:36
  Speaker 1: Alian's Global Investors. Also he in addition to talking with
• 0:41
  Speaker 1: all of the asset managers around the world for Alians,
• 0:44
  Speaker 1: he also manages one point five billion euros in in
• 0:47
  Speaker 1: several funds. Neil, I am so glad you could join us.
• 0:50
  Speaker 1: I want to start with the idea that we're hearing
• 0:53
  Speaker 1: about all of this political warfare going on in the
• 0:56
  Speaker 1: United States, We're hearing about Brexit, We're hearing about what's
• 0:59
  Speaker 1: going on the French elections. At what point do you
• 1:03
  Speaker 1: care when it comes to managing money. Well, firstly, thank
• 1:06
  Speaker 1: you for the invitation to be here. I think when
• 1:08
  Speaker 1: one's managing clients money, one has to invest rather than
• 1:11
  Speaker 1: what I would call trade. If you try to respond
• 1:14
  Speaker 1: to every headline or every tweet, I think you would
• 1:17
  Speaker 1: simply destroy the alpha that your clients are are going
• 1:21
  Speaker 1: to receive. But that's that's an important point. So what's
• 1:24
  Speaker 1: an investment and what's a trade? What's an investment you like?
• 1:27
  Speaker 1: And what's a trade that my people are going into.
• 1:30
  Speaker 1: That's that's not sustainable for you? Okay, well, well, just
• 1:33
  Speaker 1: for me, investing is like a rolling three of you.
• 1:35
  Speaker 1: I'm genuinely trying to get the benefits of companies that
• 1:38
  Speaker 1: are compounding their returns and generating the investments. So a trade,
• 1:42
  Speaker 1: I like his energy. We think from the risks in
• 1:45
  Speaker 1: the Middle East through to the low oil price that
• 1:47
  Speaker 1: there's a supply demand imbalance which we think will work
• 1:51
  Speaker 1: to energy grinding higher from here. Therefore, because of the
• 1:54
  Speaker 1: risks in the of the geopolitics, I like the big
• 1:58
  Speaker 1: UK or US high dividend stocks yielding seven percent you're
• 2:02
  Speaker 1: getting paid to run with them. I think that's a
• 2:04
  Speaker 1: that's a trade, but also an investment on a two
• 2:06
  Speaker 1: to three year horizon. Whereas something I'm may be more
• 2:10
  Speaker 1: concerned about is the growth in China last year was phenomenal.
• 2:13
  Speaker 1: They went back to the old school fiscal stimulus. Unlike
• 2:17
  Speaker 1: President Trump, who may spend a trillion dollars on infrastructure
• 2:20
  Speaker 1: over ten years, we estimate they spent a trillion dollars
• 2:22
  Speaker 1: last year on their infrastructure. So commodities have boomed. We
• 2:26
  Speaker 1: think that's a misalignment of the recognition of the underlying
• 2:30
  Speaker 1: strength of the economy. It's also a misalignment of how
• 2:34
  Speaker 1: much stimulus Trump may deliver. The US consumes four percent
• 2:38
  Speaker 1: of global copper, China consumes seventy so even if Trump
• 2:43
  Speaker 1: really gets stuck in over the next ten years, it's
• 2:45
  Speaker 1: not going to matter to global copper demand. So we
• 2:48
  Speaker 1: think maybe the miners have traveled too far, and therefore
• 2:51
  Speaker 1: we would trade out of them. If you, if you
• 2:53
  Speaker 1: own them, trade out of the miners right now and
• 2:57
  Speaker 1: wait for another entry point. I would say the cycle
• 3:01
  Speaker 1: hasn't finished. China's China's um. You know, rebalancing is going
• 3:04
  Speaker 1: to change, and until you see serious infrastructure spending in
• 3:08
  Speaker 1: countries like India and Indonesia, we don't see the underlying
• 3:10
  Speaker 1: demand for for some of these classic commodities. Right. But
• 3:15
  Speaker 1: do you said you were your energy sector that did
• 3:17
  Speaker 1: you did you were bullish on the energy sector. Why
• 3:20
  Speaker 1: why that's like disconnect energy versus commodities. Well, because everyone
• 3:24
  Speaker 1: needs you, particularly given the success in in China, and
• 3:27
  Speaker 1: also everyone owns a car. The Americans have all traded
• 3:30
  Speaker 1: up to larger cars rather than smaller cars. So the
• 3:33
  Speaker 1: underlying demand for energy is still going to be there.
• 3:35
  Speaker 1: It's very resilient. About ninety eight million barons of Alliday.
• 3:38
  Speaker 1: You know, Neil, as you said, President Trump is expecting
• 3:41
  Speaker 1: to spend about a trillion dollars on infrastructure in the
• 3:44
  Speaker 1: US over the next ten years. There is so much
• 3:46
  Speaker 1: focus on fiscal stimulus and infrastructure spending. How do you
• 3:49
  Speaker 1: as an investor get in on that. Well, the first
• 3:52
  Speaker 1: thing I would say is infrastructure spending takes a very
• 3:54
  Speaker 1: very long time. Um So even if as we discover
• 3:58
  Speaker 1: with the the the baron like Obama stimulus in two
• 4:01
  Speaker 1: thousand and eight. He spent a trillion dollars, but most
• 4:03
  Speaker 1: of it went to the States and they put it
• 4:05
  Speaker 1: in their health in their pension funds. So in the
• 4:08
  Speaker 1: end there weren't many roads or railways built. So we
• 4:11
  Speaker 1: think it's a very long term, long tail investment, and
• 4:14
  Speaker 1: it works better in emerging markets than in developed markets.
• 4:17
  Speaker 1: We think the payback in developed markets is very slow.
• 4:20
  Speaker 1: Can you imagine if you built a faster road to JFK,
• 4:23
  Speaker 1: you'd have to shut the roads to JFK first to
• 4:25
  Speaker 1: build the new road. So the disruption in developed markets
• 4:28
  Speaker 1: of infrastructure is quite high, Whereas if you don't have
• 4:31
  Speaker 1: a road in Vietnam and you build a road, you
• 4:33
  Speaker 1: immediately get the efficiencies of the spending. So we think
• 4:36
  Speaker 1: infrastructure is useful, but it's it doesn't step change the
• 4:40
  Speaker 1: growth rate of the underlying economy. But is there a
• 4:42
  Speaker 1: way that you can invest in companies that will benefit
• 4:46
  Speaker 1: from the spending programs by investing in those you know,
• 4:49
  Speaker 1: infrastructure plans somehow or is that sort of too esoteric? Well,
• 4:53
  Speaker 1: I think at the company level, I think the markets
• 4:55
  Speaker 1: have already run on the basis that the trillion dollars
• 4:58
  Speaker 1: is about to be spent. So we think that that
• 5:00
  Speaker 1: you know that the expectations in the markets are way
• 5:02
  Speaker 1: ahead of where the actual spending is going to come from.
• 5:06
  Speaker 1: So I would say from a strategic long term institutional
• 5:10
  Speaker 1: client investor, accessing the stable cash flows of many of
• 5:14
  Speaker 1: the rose rails or ports that you can do inside
• 5:16
  Speaker 1: infrastructure debt type structures makes a lot of sense as
• 5:19
  Speaker 1: a way of generating a stable but relatively high yield
• 5:22
  Speaker 1: six or seven percent return, but it's not. I think
• 5:25
  Speaker 1: we underestimate because America or the UK are built. We
• 5:28
  Speaker 1: underestimate how disruptive big infrastructure projects are, and the fact
• 5:32
  Speaker 1: that it takes a long time before you earn the
• 5:34
  Speaker 1: returns right well now and also very interesting, a long
• 5:38
  Speaker 1: time before you get to realize the political glory for
• 5:43
  Speaker 1: having done so. Thank you very much, sir, and Neil
• 5:45
  Speaker 1: Dwayne is a global strategist for Alliance Global Investors are
• 6:01
  Speaker 1: here to help us get a little smarter when it
• 6:02
  Speaker 1: comes to the automobile industry. Is John Lippert. Here's our
• 6:05
  Speaker 1: automotive reporter for Bloomberg News. He joins us from our
• 6:09
  Speaker 1: Chicago bureau and you can follow him on Twitter at
• 6:13
  Speaker 1: John M. Lippert with two piece. All right, John with
• 6:17
  Speaker 1: two piece. Let's get some business out of the way.
• 6:21
  Speaker 1: In terms of the January report for automobile sales, I
• 6:25
  Speaker 1: was just racking them up here, some better, some worse.
• 6:28
  Speaker 1: But you're over your results. No one is is defying
• 6:33
  Speaker 1: any major trends. Correct. Well, that's right. There'll there'll be
• 6:37
  Speaker 1: some softening of the overall market, but not not anything
• 6:40
  Speaker 1: like a disaster. So so what we're saying is we're
• 6:43
  Speaker 1: looking at a seventeen point three million annual i's selling
• 6:48
  Speaker 1: where and that will be down from seventeen point nine
• 6:51
  Speaker 1: a year ago. So all the auto companies are saying, Look,
• 6:54
  Speaker 1: if there's gonna be cooling off, that's a cooling off
• 6:57
  Speaker 1: we can live with. Yeah, And we got actually some
• 7:00
  Speaker 1: results from ALI Financial yesterday that seems to suggest that
• 7:04
  Speaker 1: even though there is sort of a plateau ng in
• 7:06
  Speaker 1: the auto industry, at least with respect to auto loans,
• 7:10
  Speaker 1: that the that the credit quality isn't deteriorating as quickly
• 7:14
  Speaker 1: as some had feared. Well that's right, and UM, and
• 7:19
  Speaker 1: now we're all trying to figure out sort of you know,
• 7:22
  Speaker 1: the Trump you know, UM enthusiasm, just how deep root
• 7:26
  Speaker 1: it is. So UM December was an absolute blowout for
• 7:31
  Speaker 1: UM for the auto industry eighteen point four million, and
• 7:35
  Speaker 1: so now and a lot of that was just sort
• 7:37
  Speaker 1: of a year end um uh closeouts. But but but now,
• 7:43
  Speaker 1: I mean there is going to be some softening and
• 7:44
  Speaker 1: so among the many factors are gonna be looking at.
• 7:48
  Speaker 1: But yes, and centives are creeping up. Yes, inventories are
• 7:53
  Speaker 1: creeping up, but none of its disasters. And as you say,
• 7:56
  Speaker 1: you know the credit quality that we're all you know,
• 7:58
  Speaker 1: sub prime loans, I mean, they're creeping up, but they're
• 8:00
  Speaker 1: not soaring at least so far. And then you know,
• 8:04
  Speaker 1: in terms of just January, you know, um uh Toto
• 8:08
  Speaker 1: is down, FIA, Christier down, but then Honda's up five
• 8:14
  Speaker 1: point nine, Nissands up six. So it is a little
• 8:17
  Speaker 1: bit of a mixed bag. But but so far that
• 8:19
  Speaker 1: you know, the markets holding up pretty well. Which companies
• 8:22
  Speaker 1: stand to benefit the most from some of the trade policies,
• 8:25
  Speaker 1: at least from what we can glean from them from
• 8:27
  Speaker 1: President Trump's administration. Well, just taking the border tax UM
• 8:32
  Speaker 1: and these are all sort of crude measures because we're
• 8:36
  Speaker 1: we're all trying to figure out what the border tax,
• 8:38
  Speaker 1: you know, in what form it will actually emerge on
• 8:41
  Speaker 1: the Congress. But if you just take the question of UM,
• 8:45
  Speaker 1: what companies have what percent of um U s sales
• 8:50
  Speaker 1: that they're importing, there are some clearer differences. So um
• 8:55
  Speaker 1: of forward UM only imports ford, you know, of what
• 9:02
  Speaker 1: they sell UH in the United States is built in
• 9:05
  Speaker 1: the United States, and and some companies like you know,
• 9:08
  Speaker 1: Masda's you know, just to take one example, has zero.
• 9:11
  Speaker 1: So obviously the you know four and four it is
• 9:14
  Speaker 1: actually saying, we think we can live with this, you know,
• 9:17
  Speaker 1: with the border tax as we understand it so far.
• 9:20
  Speaker 1: And and then the import companies like Masda are saying this,
• 9:25
  Speaker 1: this is a terrible idea. And and sort of in
• 9:28
  Speaker 1: the middle of there, there's Toyota. I mean, Toyota is
• 9:31
  Speaker 1: coming out pretty strong, and he's saying, even the American
• 9:36
  Speaker 1: made camera that has the most US content in any car, actually,
• 9:39
  Speaker 1: uh that the border tax will drive the cost of
• 9:43
  Speaker 1: that car up by a thousand hours. And and they're
• 9:46
  Speaker 1: saying that, Uh, Toyota is saying, um, you know, consumers
• 9:50
  Speaker 1: are just not going to accept that, and that that
• 9:53
  Speaker 1: will hurt sales and hurt employment. So there's gonna be
• 9:57
  Speaker 1: there's gonna be a big fight about what exact actually
• 10:00
  Speaker 1: all this is going to mean as as it goes
• 10:02
  Speaker 1: through the Congress. Can you give us a perspective about
• 10:05
  Speaker 1: Ford and the relationship that may have been forged between
• 10:10
  Speaker 1: Mark Fields, the chief executive, and the members of the
• 10:14
  Speaker 1: Trump administration. Well, I mean Ford, I mean, as as
• 10:19
  Speaker 1: I say, Ford is saying more than any of the
• 10:22
  Speaker 1: other automakers that we can live with this border tax.
• 10:25
  Speaker 1: There there vocal about saying um um um. We Ford
• 10:33
  Speaker 1: need relief from the the fuel economy and the mission
• 10:36
  Speaker 1: start that's at Barack Obama put in place, and um
• 10:40
  Speaker 1: Donald Trump has said he's going to do all that.
• 10:43
  Speaker 1: So that you know one thing about the border tax,
• 10:46
  Speaker 1: um um. And we can argue if it's going to
• 10:50
  Speaker 1: increase the price of cars and our people gonna um
• 10:53
  Speaker 1: accept that. But there's no question from from Berkley's analyst
• 10:57
  Speaker 1: Brian Johnson. And another is that the border tax will
• 11:01
  Speaker 1: on the margin, creating the center to put more factories
• 11:05
  Speaker 1: in the United States as opposed to also were in NAPTA.
• 11:08
  Speaker 1: So um um. Mark Fields is saying that that the
• 11:12
  Speaker 1: overall business climate that they think will evolve under President
• 11:17
  Speaker 1: Trump is something that's going to be good for Ford.
• 11:20
  Speaker 1: I mean, they're they're they're pretty aggressive and saying that.
• 11:23
  Speaker 1: John Leppert, thank you so much for joining us automated
• 11:25
  Speaker 1: writer for Bloomberg talking about auto sales and what effect
• 11:29
  Speaker 1: the border tax may have on auto companies. Now we're
• 11:44
  Speaker 1: going to get a chance to look at what the
• 11:47
  Speaker 1: trade policies might look like and how an investor really
• 11:51
  Speaker 1: deals with that. I want to bring in Scott Clement's
• 11:53
  Speaker 1: chief investment strategist at Brown Brothers Harriman's private wealth management,
• 11:58
  Speaker 1: and Scott, you know, we've talked a lot about some
• 12:01
  Speaker 1: of the policies. We haven't really solidified anything as of yet.
• 12:05
  Speaker 1: It's unclear what could get through Congress, what the actual
• 12:08
  Speaker 1: proposals will be. Scott, Are you advising clients to change
• 12:12
  Speaker 1: their allocations at this point based on what we know? No,
• 12:17
  Speaker 1: we haven't changed any allocations, partially because we're very long
• 12:20
  Speaker 1: term investors, partially because there's no real clarity on what
• 12:25
  Speaker 1: policies are likely to unfold. There's certainly been a lot
• 12:27
  Speaker 1: of suggestions, a lot of threats steven Um, but at
• 12:30
  Speaker 1: this stage, until we see something more concrete unfold, it's
• 12:33
  Speaker 1: very difficult to analyze and respond to it in a
• 12:35
  Speaker 1: responsible way. Well, Scott, given that context, let's say this continues,
• 12:41
  Speaker 1: Let's say that this is part and parcel for daily
• 12:44
  Speaker 1: operation of the government. What would you be counseling people
• 12:48
  Speaker 1: to do? Um Well. Within the equity market, we remain
• 12:54
  Speaker 1: positioned as we always have in pretty long equities for
• 12:57
  Speaker 1: the time being, we welcome the resurgence in corporate warnings.
• 13:00
  Speaker 1: That's the fuel for the equity market. We're watching with
• 13:03
  Speaker 1: great interest the rise in interest rates, and I think
• 13:05
  Speaker 1: at some point over the course of this year, as
• 13:08
  Speaker 1: the labor market continues to improve, and we got some
• 13:11
  Speaker 1: good data from a DP just this morning, interest rates
• 13:14
  Speaker 1: will continue to rise. That will give investors in fixed
• 13:17
  Speaker 1: income a chance to go back into the intermediate even
• 13:20
  Speaker 1: longer into the yield curve. We're not there yet, but
• 13:22
  Speaker 1: that tradeoff of risk in return is beginning to get
• 13:25
  Speaker 1: a little bit more appealing. Let me just mention that
• 13:27
  Speaker 1: a DP numbers were two two thousand, the estimate was
• 13:32
  Speaker 1: for a hundred and sixty thousand. Well, but Scott, so
• 13:34
  Speaker 1: what's the level at which you would say that that
• 13:37
  Speaker 1: you would recommend investors get back into fixed income. You know,
• 13:43
  Speaker 1: it's more of a process, Lisa than it is an event.
• 13:45
  Speaker 1: That The algorithm that we're using is as long as
• 13:48
  Speaker 1: you can earn a rate of return in traditional fixed
• 13:50
  Speaker 1: income that is higher than inflation. If you're talking about
• 13:54
  Speaker 1: taxable bonds higher than whatever fees you pay for a
• 13:58
  Speaker 1: muni bond fund or whatever, then the risk trade off
• 14:01
  Speaker 1: becomes a lot more interesting. You know, there's another moving
• 14:04
  Speaker 1: part there. Sorry, I was just gonna say so. In
• 14:07
  Speaker 1: other words, with a ten year treasury yield heading north
• 14:10
  Speaker 1: of two point five, we're getting there. We're getting here.
• 14:15
  Speaker 1: It's heading that way very quickly, very quickly. The other
• 14:17
  Speaker 1: interesting moving part to watch is that there have been
• 14:20
  Speaker 1: hints as part of the Trump tax proposals and also
• 14:25
  Speaker 1: the health tax proposals, that would limit the deductibility of
• 14:29
  Speaker 1: municipal income, which for higher tax bracket clients, would have
• 14:33
  Speaker 1: an implication for the appeal of those assets. And again,
• 14:36
  Speaker 1: it's one of those many things on which there are
• 14:38
  Speaker 1: no details yet, So we're playing it safe and waiting
• 14:41
  Speaker 1: watching seeing how this unfolds, because that could certainly change
• 14:45
  Speaker 1: the relative appeal of tax all wands versus municipal bonds,
• 14:49
  Speaker 1: even for investors in a higher income tax brackets. Do
• 14:52
  Speaker 1: you think that money outside the United States will flow
• 14:55
  Speaker 1: into the US in the form of investments or in
• 14:58
  Speaker 1: terms of maybe just any buying up debt. I think
• 15:02
  Speaker 1: we're seeing that already. Uh. You know, if you think
• 15:05
  Speaker 1: about the the central banks worldwide, the United States of
• 15:10
  Speaker 1: America is the only one it's actively trying to raise
• 15:14
  Speaker 1: interest rates. That has implications for currency strength, That has
• 15:18
  Speaker 1: implications for return on fixed incomes. So yes, I expect
• 15:20
  Speaker 1: the flows of funds into the United States to continue. Scott,
• 15:24
  Speaker 1: At what point will yields rise so high in the
• 15:28
  Speaker 1: US that it will endanger the stock rally? I think
• 15:34
  Speaker 1: we're a long way from that. The risk out there
• 15:37
  Speaker 1: is that the labor market improves so rapidly that wages
• 15:41
  Speaker 1: begin to accelerate rapidly. We're not there yet. This is
• 15:44
  Speaker 1: not a forecast. It's a risk, and the FED feels
• 15:47
  Speaker 1: like they have to accelerate their own response to that.
• 15:52
  Speaker 1: If the FED, for example, were to raise interest rates
• 15:55
  Speaker 1: four or five times this year instead of the three
• 15:57
  Speaker 1: that the market is expecting, that that would spook the
• 16:00
  Speaker 1: equity market. That would send the signal that maybe the
• 16:03
  Speaker 1: Fed's a little bit more worried about inflation, which hasn't
• 16:05
  Speaker 1: been a concern for a decade now. Uh, then the
• 16:08
  Speaker 1: market is I don't expect that to unfold, but it's
• 16:10
  Speaker 1: certainly a risk that we're keeping an eye on. Talking
• 16:13
  Speaker 1: about the FED, we're going to hear from them today
• 16:16
  Speaker 1: at the end of their two day meeting, and I'm
• 16:18
  Speaker 1: wondering how much you're looking for guidance with respect to
• 16:22
  Speaker 1: what process they'll follow to unwind their four point five
• 16:26
  Speaker 1: trillion dollar balance sheet, or if they'll start to do
• 16:29
  Speaker 1: that in the near future. I think if it is
• 16:32
  Speaker 1: the right word, because I don't think they have any
• 16:34
  Speaker 1: intent of doing so. There's nothing that requires them to
• 16:37
  Speaker 1: do so. I think the FED would rather restore more
• 16:40
  Speaker 1: normal monetary policy through the old fashioned tool of raising
• 16:43
  Speaker 1: the FED funds rate interest rates and leave the balance
• 16:46
  Speaker 1: sheet where it is at, as you said, roughly four
• 16:49
  Speaker 1: and a half trillion dollars. There's something very important that
• 16:52
  Speaker 1: happened in two thousand and eight. The FED for the
• 16:54
  Speaker 1: first time has the ability to pay interest on bank reserves.
• 16:59
  Speaker 1: Hell at the FED. That's a tool they did not
• 17:02
  Speaker 1: have beforehand. So if they are concerned that commercial bank
• 17:06
  Speaker 1: lending might become inflationary, they have the ability to raise
• 17:10
  Speaker 1: interest rates on reserve and therefore restrain some of that lending.
• 17:14
  Speaker 1: It's a tool they've never used, but it's a tool
• 17:16
  Speaker 1: that would enable them to leave the balance sheet to
• 17:19
  Speaker 1: four and a half trillion dollars without having to actively
• 17:22
  Speaker 1: wind it back down. Tell us more about tax reform
• 17:26
  Speaker 1: in addition to your comments about income earned from municipal bonds.
• 17:31
  Speaker 1: Tell us more about tax reform and some implications. One
• 17:38
  Speaker 1: of the other things pen that we're watching very closely,
• 17:40
  Speaker 1: and again it's part of the Trump proposal, part of
• 17:42
  Speaker 1: the House proposal. The details are are sketchy still, but
• 17:46
  Speaker 1: one of the proposals would limit the ability of corporations
• 17:50
  Speaker 1: to deduct interest on corporate debt issuance. That might have
• 17:56
  Speaker 1: the implication of lowering the desirability for rations to issue debt.
• 18:02
  Speaker 1: It might restrain the supply of corporate debt, and anytime
• 18:04
  Speaker 1: the supply is restrained, that has implications for for the
• 18:08
  Speaker 1: ability of investors to earn a better rate of return
• 18:11
  Speaker 1: on corporate debt. So we're watching. There's a lot of
• 18:13
  Speaker 1: moving parts that that we're watching very closely. Corporate tax reform,
• 18:17
  Speaker 1: on which there's been no progress whatsoever, does have a
• 18:20
  Speaker 1: real ability to affect the equity market for the better,
• 18:23
  Speaker 1: particularly repatriation tax, lowering the corporate statutory rate. These would
• 18:27
  Speaker 1: all be very beneficial for the equity market. Thanks very
• 18:30
  Speaker 1: much for joining us. Scott Clemmens is the chief investment
• 18:33
  Speaker 1: strategist at Brown Brothers Harriman's private wealth management division. Giving
• 18:39
  Speaker 1: us a look into what or what you should not
• 18:42
  Speaker 1: be doing. Maybe just do nothing for a while. A
• 18:57
  Speaker 1: change at the Supreme Court, that's its future. And here
• 19:01
  Speaker 1: to help us understand what might happen is Kimberly Robinson
• 19:04
  Speaker 1: Supreme Court Reward for Bloomberg b n A. Kimberly, thank
• 19:08
  Speaker 1: you for being with us. Tell us. Who is the
• 19:10
  Speaker 1: Supreme Court nominee? Neil Gorsich, Well Neil Gorfis is a
• 19:15
  Speaker 1: long time federal Hellic Court judge who sits on the
• 19:18
  Speaker 1: tenth Circuit. He sits at Denver. He's pretty young, at
• 19:21
  Speaker 1: forty nine years old. He could make a big impact
• 19:24
  Speaker 1: um for a very long time to come. Um. You
• 19:26
  Speaker 1: know when cent uh, when the Senate is going to
• 19:30
  Speaker 1: consider his nomination. UM, they're going to be able to
• 19:33
  Speaker 1: check off a lot of the qualifications that we typically
• 19:36
  Speaker 1: think of with modern day justices. You know, he has
• 19:39
  Speaker 1: an Ivy League pedigree. He worked for the prestigious law firm,
• 19:43
  Speaker 1: he had did a s in the d O J
• 19:46
  Speaker 1: and he even clerked on the Supreme Court. UM, so
• 19:49
  Speaker 1: he's he's got kind of the traditional um qualifications that
• 19:53
  Speaker 1: you would mean. He has also a pretty strong conservative background. UM.
• 19:59
  Speaker 1: Which should get him support UM from Senate Republicans. But
• 20:02
  Speaker 1: he also something that UH Senate Democrats might like as well.
• 20:06
  Speaker 1: And UM that's that he's pushed back on the deference
• 20:10
  Speaker 1: that courts give to administrative agencies. That's something that could
• 20:14
  Speaker 1: look attractive to Senate Democrats UM in the Donald Trump era. Well, Kimberly,
• 20:19
  Speaker 1: we've already heard from some Democratic representatives saying that they're
• 20:22
  Speaker 1: going to vote against him. What measures could they take
• 20:26
  Speaker 1: to do that or is his nomination all but guaranteed
• 20:30
  Speaker 1: at this point. I do think that UH judge is
• 20:34
  Speaker 1: likely to get nominated, but there are some tools that
• 20:38
  Speaker 1: Senate Democrats could use. UM. Although Senate Denemocrats did get
• 20:42
  Speaker 1: rid of the silibuster for lower court nominees, they kept
• 20:45
  Speaker 1: it in place for the Supreme Court and so they
• 20:48
  Speaker 1: still could use the silibuster, and indeed, some Democrats have
• 20:52
  Speaker 1: said that they planned to do that. The danger in
• 20:55
  Speaker 1: that is that Republicans could UH go nuclear themselves, as
• 21:00
  Speaker 1: it's called, and eliminate the filer buster UM for Supreme
• 21:04
  Speaker 1: Court nominees UM, something that really hasn't been thought of,
• 21:09
  Speaker 1: UM in in the history of these confirmation hearings. First
• 21:12
  Speaker 1: for Supreme Court justices. I wonder if you could just
• 21:15
  Speaker 1: speak a little bit about Utah Senator or In Hatch
• 21:18
  Speaker 1: and his role UM. You know, I I don't really
• 21:22
  Speaker 1: know a lot about what his role will be UM
• 21:25
  Speaker 1: in this confirmation process. Sorry, I can't really speak to that.
• 21:29
  Speaker 1: Can you then give us a little bit of an
• 21:30
  Speaker 1: idea of what's next for Neil Gorsage. Well, what will
• 21:34
  Speaker 1: be next is that he'll need to fill up some
• 21:36
  Speaker 1: paperwork that's been tripping out some of uh Donald Trump's
• 21:40
  Speaker 1: other nominees. But uh, pretty it is pretty straightforward for judges. Uh,
• 21:45
  Speaker 1: it's paperwork that he's already done to be confirmed. And
• 21:48
  Speaker 1: then we'll go through, uh likely in a couple of months,
• 21:52
  Speaker 1: some confirmation hearings where we're likely to hear questions about
• 21:56
  Speaker 1: abortion and immigration, um and the lid is freedom. Well, Kimberly,
• 22:02
  Speaker 1: how much is the controversy over Neil Gorsich uh specific
• 22:06
  Speaker 1: to him and his views? And how much is residual
• 22:10
  Speaker 1: anger by the Democrats that Merritt Garland, Obama's nominee was
• 22:15
  Speaker 1: not confirmed. Well, I do think there's still a lot
• 22:19
  Speaker 1: of UM Democrats who are really smarting over the fact that,
• 22:23
  Speaker 1: you know, Senate Republicans didn't give President nominee uh even
• 22:27
  Speaker 1: a hearing. UH. And so I do think that there's
• 22:30
  Speaker 1: some initial sense that Senate Democrats might try to block
• 22:36
  Speaker 1: this nomination as sort of a payback. UM. But if
• 22:39
  Speaker 1: Senate Democrats are playing the long game, they'll need to
• 22:41
  Speaker 1: consider that the election looks pretty tough for Senate Democrats.
• 22:45
  Speaker 1: There are a lot of Democrats who are going to
• 22:47
  Speaker 1: be going up in elections in states that Trump won,
• 22:51
  Speaker 1: and so UM, it may be that the Senate Democrats
• 22:54
  Speaker 1: may be in the minority for a while. UM. And
• 22:57
  Speaker 1: you know, risking a filibuster and risking that that silibuster
• 23:01
  Speaker 1: could be eliminated could be something that puts some a
• 23:05
  Speaker 1: Democrats kind of on the back burner when it comes to,
• 23:09
  Speaker 1: at least in the near future. UM. Supreme Court nominees. Now,
• 23:14
  Speaker 1: the Supreme Court, of course, rules on a variety of topics.
• 23:18
  Speaker 1: Is there any understanding as to where Judge Gorsuch would
• 23:22
  Speaker 1: reside UH in business cases or in cases involving regulation
• 23:27
  Speaker 1: and the government. Well, there has been some indication in
• 23:31
  Speaker 1: those areas. UM. As far as business regulation, UM, we've
• 23:35
  Speaker 1: seen that, you know, he's pretty hostile to the idea
• 23:38
  Speaker 1: of using class actions of the way to get redressed
• 23:42
  Speaker 1: from businesses. UM. And actually he wrote a two thousand
• 23:45
  Speaker 1: and five article that seems to indicate that UM, he's
• 23:48
  Speaker 1: hostible to using the the courts out of the way
• 23:52
  Speaker 1: of getting civil rights litigation UM through as well. UM.
• 23:58
  Speaker 1: But on other issues, you know, we're not as clear.
• 24:01
  Speaker 1: Judge cors which hasn't had a chance to rule on abortion,
• 24:04
  Speaker 1: something that has been hugely important UM in this UH,
• 24:08
  Speaker 1: in this selection, UM, we do have some hints on
• 24:11
  Speaker 1: how he might rule, but UM, we don't know for sure.
• 24:14
  Speaker 1: I thank you. Asked also about how he might um
• 24:16
  Speaker 1: interact with agencies and regulation, and that would be really
• 24:21
  Speaker 1: a change UM there on the Supreme Court. There has
• 24:25
  Speaker 1: been some indication from some of the justices that they
• 24:27
  Speaker 1: want to change the way that courts look at these regulations,
• 24:31
  Speaker 1: that they want to give a harsher look to them
• 24:33
  Speaker 1: and have a bigger role for the courts. UM. And
• 24:35
  Speaker 1: Neil Gorser's would join what is now a minority UM
• 24:38
  Speaker 1: and could turn that into a majority. Kimberly Robinson's Supreme
• 24:42
  Speaker 1: Court reporter for Bloomberg b n A, speaking with us
• 24:46
  Speaker 1: from Arlington, Virginia, thank you so much for speaking with us,
• 24:50
  Speaker 1: and uh. The nominee Neil Gorci has not expressed his
• 24:55
  Speaker 1: opinions on the hot button legal issues like abortion and
• 24:59
  Speaker 1: same sex marriage. There's a lot of questions about what
• 25:02
  Speaker 1: the Democrats will be able to oppose. Thanks for listening
• 25:10
  Speaker 1: to the Bloomberg pen L podcast. You can subscribe and
• 25:13
  Speaker 1: listen to interviews at iTunes, SoundCloud, or whatever podcast platform
• 25:19
  Speaker 1: you prefer. I'm Pim Fox. I'm out there on Twitter
• 25:21
  Speaker 1: at pim Fox. I'm out there on Twitter at Lisa Abramo.
• 25:25
  Speaker 1: It's one before the podcast. You can always catch us
• 25:28
  Speaker 1: worldwide on Bloomberg Radio