Latest / Bloomberg Intelligence / Why Bernie Sanders May Be Best For Stock Market: Kaissar

Transcript

Why Bernie Sanders May Be Best For Stock Market: Kaissar · Bloomberg Intelligence

• 0:02
  Speaker 1: Welcome to the Bloomberg Penel Podcast. I'm Paul swing you,
• 0:05
  Speaker 1: along with my co host Lisa Brahma wits. Each day
• 0:07
  Speaker 1: we bring you the most noteworthy and useful interviews for
• 0:10
  Speaker 1: you and your money, whether at the grocery store or
• 0:12
  Speaker 1: the trading floor. Find a Bloomberg Penl podcast on Apple
• 0:15
  Speaker 1: podcast or wherever you listen to podcasts, as well as
• 0:17
  Speaker 1: at Bloomberg dot com. Bernie Sanders emerged the front runner
• 0:21
  Speaker 1: for the Democratic primary after the New Hampshire election yesterday.
• 0:25
  Speaker 1: There is a question what it means for Wall Street
• 0:28
  Speaker 1: and right now it seems like the market just doesn't
• 0:31
  Speaker 1: really care. We've got new highs and the NASDAC and
• 0:34
  Speaker 1: the SMP and this is different from Senator war and
• 0:36
  Speaker 1: when she was taking the lead there seemed to be
• 0:38
  Speaker 1: a more negative effect on markets near Kaisar has been
• 0:41
  Speaker 1: tracking this columnist for Bloomberg Opinion, also founder of Unison Advisers,
• 0:45
  Speaker 1: joining us from A nine and studio in Washington, d C.
• 0:48
  Speaker 1: New Are you surprised at the market's complacency about the
• 0:52
  Speaker 1: potential shift to a different form of populism should Bernie
• 0:56
  Speaker 1: Sanders win high? Lisa, I am surprised in the US
• 1:00
  Speaker 1: that the narrative seems to be that if Bernie Sanders wins,
• 1:02
  Speaker 1: the market's going to tank, and so I would think
• 1:05
  Speaker 1: that that sort of um, that sentiment would weave its
• 1:07
  Speaker 1: way into the market. On the other hand, you know,
• 1:10
  Speaker 1: as I wrote in my column today, I actually think
• 1:13
  Speaker 1: that if Sanders wins, that could give the market a lift.
• 1:16
  Speaker 1: And it's possible that the market is just rejecting the
• 1:18
  Speaker 1: popular narrative, that the market is just not listening to
• 1:21
  Speaker 1: what everyone else is saying. It's interesting with you know,
• 1:24
  Speaker 1: a populist in the White House. Um, you know, like
• 1:28
  Speaker 1: Bernie Sanders, what is the when you when you talk
• 1:31
  Speaker 1: to market participants, investors, did they think that's good for
• 1:34
  Speaker 1: growth or not? You know, there seems to be just
• 1:39
  Speaker 1: a lot of from from the feedback that I get
• 1:41
  Speaker 1: and and the conversations that I'm having, there just seems
• 1:44
  Speaker 1: to be a ton of barrish response around Sanders in general, Um,
• 1:48
  Speaker 1: bad for the economy, bad for acid price, is bad
• 1:51
  Speaker 1: for you know, pretty much anything you can imagine. UM
• 1:54
  Speaker 1: that has to do with free markets. And I'm not
• 1:56
  Speaker 1: necessarily saying that that view is wrong, But when I
• 2:00
  Speaker 1: am saying is that one of the things I think
• 2:01
  Speaker 1: we can be sure about with Sanders is that he's
• 2:03
  Speaker 1: going to spend a lot, and he's proposing to finance
• 2:07
  Speaker 1: some of that with higher taxes. But that seems to
• 2:09
  Speaker 1: me is not going to pay for you know, college
• 2:12
  Speaker 1: for all and housing and health care for all and
• 2:14
  Speaker 1: a green New Deal, and so he's gonna have to
• 2:16
  Speaker 1: run up the federal deficits, the fiscal deficits we've had
• 2:20
  Speaker 1: in recent years, and in general, that should stimulate the economy.
• 2:24
  Speaker 1: Not heard it. It's interesting. I was reading a story
• 2:26
  Speaker 1: on the Bloomberg and it talks about all the reasons
• 2:29
  Speaker 1: why markets may be dismissing the potential for another version
• 2:33
  Speaker 1: of populism. Uh. And one of them is that Bernie
• 2:37
  Speaker 1: Sanders won't get anything done if he gets elected, because
• 2:39
  Speaker 1: you'll have a split Senate, uh where spen a senate
• 2:42
  Speaker 1: in Congress Senate and House of Representatives Democrat versus Republican.
• 2:47
  Speaker 1: Other people saying, well, he'll just spend more. Which is it?
• 2:50
  Speaker 1: Do you think that he will actually be effective in
• 2:52
  Speaker 1: passing these proposals? You know, that's such an interesting question
• 2:56
  Speaker 1: because I think, you know, obviously it's very hard to
• 2:59
  Speaker 1: know for sure, But I think the baseline case is
• 3:03
  Speaker 1: that the things that people worry about the most with
• 3:06
  Speaker 1: Bernie Sanders nationalizing, you know, broad swaths of our economy
• 3:10
  Speaker 1: UM is not going to happen precisely because of what
• 3:13
  Speaker 1: you say, Lisa, that he's just not going to have
• 3:14
  Speaker 1: the legislative muscle or I think the popular support to
• 3:17
  Speaker 1: be able to do it. But I think he can
• 3:20
  Speaker 1: do things around the edges that would increase spending UM,
• 3:23
  Speaker 1: you know, like maybe subsidies for for for college, maybe
• 3:28
  Speaker 1: some new green, new deal initiatives. So I don't think
• 3:31
  Speaker 1: if he becomes president, I don't think that he's gonna
• 3:33
  Speaker 1: be able to do as much as people fear, but
• 3:34
  Speaker 1: I think he will be able to do enough that
• 3:36
  Speaker 1: spending can be expected to go up. What about the
• 3:39
  Speaker 1: narrative that uh A Bernie Sanders as a Democrat to
• 3:43
  Speaker 1: go up against Trump is in fact bullish for the
• 3:45
  Speaker 1: market because the expectation is that Trump will win handily
• 3:49
  Speaker 1: in what former years of pro business type of uh
• 3:52
  Speaker 1: of an administration. You know, that seems to be the consensus.
• 3:55
  Speaker 1: I think now that that the reason markets are quiet
• 3:58
  Speaker 1: is because they're just not buying UM. The the Bernie
• 4:01
  Speaker 1: candidacy It'll be interesting to see how this unfold. I mean,
• 4:04
  Speaker 1: obviously he's gaining a lot of momentum if he wins
• 4:06
  Speaker 1: in the next couple of primaries, and there starts to
• 4:09
  Speaker 1: be some consensus around him as the nominee um and
• 4:13
  Speaker 1: the betting markets start to say maybe he has a
• 4:15
  Speaker 1: chance against Trump Um, then then maybe the market changes,
• 4:19
  Speaker 1: you know, one of the things to look at. You know,
• 4:20
  Speaker 1: people forget that Bernie Sanders upset Hillary Clinton in sixteen
• 4:23
  Speaker 1: in Michigan, and and it's possible that Bernie Sanders will
• 4:26
  Speaker 1: be more popular in the Upper Midwest than anyone currently believes.
• 4:30
  Speaker 1: And if that is the case, If that appears to
• 4:32
  Speaker 1: be the case, I would expect some sort of reaction
• 4:34
  Speaker 1: from markets. So look out for that near. I've heard
• 4:37
  Speaker 1: everyone make an argument about why a potential Bernie Sanders
• 4:40
  Speaker 1: or Senator Warren when would be good or bad for markets.
• 4:44
  Speaker 1: How effective is it to bet on elections? It's a
• 4:48
  Speaker 1: horrible idea, Lisa Um, you know, so, I mean, is
• 4:51
  Speaker 1: it even worth it? I mean, because a lot of
• 4:53
  Speaker 1: people are paying attention and expecting more volatility ahead of
• 4:55
  Speaker 1: the November election this year. Yeah, I don't, I don't.
• 5:00
  Speaker 1: I don't think in general that people ought to uh
• 5:02
  Speaker 1: out to make their out of invest based on their
• 5:05
  Speaker 1: predictions of the future, because none of us are very
• 5:07
  Speaker 1: particularly good at predicting. Um. You know, that's just I
• 5:10
  Speaker 1: think just ranks speculation. But I think it is useful
• 5:14
  Speaker 1: to consider when when there's a narrative, and one of
• 5:16
  Speaker 1: the reasons I wrote this column is when there's a
• 5:17
  Speaker 1: narrative that seems to to pervade the market, um, which
• 5:20
  Speaker 1: I think there is a narrative about Sanders wrecking the market. Um,
• 5:23
  Speaker 1: I think it's helpful to perhaps look at the other
• 5:25
  Speaker 1: side of it and say, wait a second, maybe the
• 5:27
  Speaker 1: assumptions that you're making are not going to work out well. Um.
• 5:30
  Speaker 1: And I'm hoping that that will make you know, that
• 5:32
  Speaker 1: would inject some humility and some of the predictions that
• 5:34
  Speaker 1: we're hearing near k Sor Thank you so much for
• 5:37
  Speaker 1: joining us near as a calumnist for Bloomberg Opinion also
• 5:39
  Speaker 1: founder of Union Advisors. Joining us from the Bloomberg ninety
• 5:42
  Speaker 1: one studio in Washington, d C. You can find all
• 5:45
  Speaker 1: the opinion stuff Bloomberg dot com, Slash Opinion, as well
• 5:47
  Speaker 1: as O P. I. N. Go on the terminal well.
• 5:53
  Speaker 1: With global yields at exceptionally low levels around the world,
• 5:58
  Speaker 1: including some negative yield in place like Germany, Switzerland and Japan,
• 6:01
  Speaker 1: where does he fixed income manager go for yield? I
• 6:05
  Speaker 1: think our next guests can help us out here. Paul
• 6:06
  Speaker 1: Brain had a fixingcoming Newton Investment Management with about sixty
• 6:10
  Speaker 1: six billion dollars under management. He's based in London, but
• 6:12
  Speaker 1: joining us here in our Bloomberg Interactor Broker studio. His
• 6:16
  Speaker 1: last name is actually Brain. No I was I was
• 6:19
  Speaker 1: just gonna let it go and just let him. I'm
• 6:21
  Speaker 1: not going to let that go? Was it? How was
• 6:23
  Speaker 1: it growing up with the last name brain? Damn challenging, challenge,
• 6:28
  Speaker 1: So one of those names that people don't forget right,
• 6:31
  Speaker 1: People just don't believe it's brain. It was called me Brian.
• 6:36
  Speaker 1: I would the pressure to get me, the pressure to
• 6:38
  Speaker 1: get good marks in school? I wink should have been
• 6:39
  Speaker 1: a surgeon that would have made it so Mucheesi exactly. So,
• 6:43
  Speaker 1: Paul again, talk to us about kind of the fixed
• 6:46
  Speaker 1: income markets. You're out there, you're supposed looking for yield.
• 6:50
  Speaker 1: Where do you go, what do you do? How do
• 6:51
  Speaker 1: you frame it up for your portfolio? Well? Yeah, I'm
• 6:55
  Speaker 1: the first thing to let's say, obviously yould aren't always returns,
• 6:57
  Speaker 1: so we all we are using comment bond that perhaps
• 7:00
  Speaker 1: do have very low yields. We've we try to stay
• 7:03
  Speaker 1: clear those negative yielders, and there are alternatives to European yields.
• 7:08
  Speaker 1: You've got over to US yields, Australia, New Zealand and
• 7:10
  Speaker 1: a few there are some European countries with positive yields
• 7:13
  Speaker 1: um but there's also credit, there's emerging markets. We have
• 7:17
  Speaker 1: strategies that are opportunistic and we tend to shop around
• 7:21
  Speaker 1: the globe, so we are looking for those markets that
• 7:24
  Speaker 1: still have a positive yield but also the potential breads
• 7:26
  Speaker 1: for yields to go lower. We don't see this environment
• 7:29
  Speaker 1: changing anytime soon. We're not looking for yields to back
• 7:31
  Speaker 1: up in any meaningful ways. So this sort of search
• 7:35
  Speaker 1: for yield, chase for for returns is still gonna be
• 7:38
  Speaker 1: with us for a while. Emerging markets was one call
• 7:40
  Speaker 1: heading into this year that that would be an area
• 7:42
  Speaker 1: that would have perform in particular local currency, emerging markets debt.
• 7:46
  Speaker 1: The belief also hinging on the dollar continuing to weaken
• 7:50
  Speaker 1: or not continuing starting a weekend, because we've seen it
• 7:53
  Speaker 1: near near the highs versus some peers. I'm just wondering,
• 7:57
  Speaker 1: we're not seeing that. How much does that change your
• 7:59
  Speaker 1: view on emerging markets? Um, the from a tactical point
• 8:04
  Speaker 1: of view, you've got to got to suggest that with
• 8:06
  Speaker 1: things like the virus are out out there, with the
• 8:08
  Speaker 1: geopolitical risk, it's quite high the dollar has a potential
• 8:11
  Speaker 1: to to stay firm. That is true, But is that
• 8:14
  Speaker 1: going to change the interest rate outlook for some of
• 8:16
  Speaker 1: those emerging market countries. Some of the reasons why by
• 8:19
  Speaker 1: local currency emerging markets is because they can cut interestrates.
• 8:22
  Speaker 1: It is because of course their currencies can appreciate over time.
• 8:25
  Speaker 1: So strategically we still like local currency markets. In fact,
• 8:29
  Speaker 1: we're taking advantage of weakness to to increase exposure. UM Technically,
• 8:34
  Speaker 1: we've also got dollars as well, so we have a
• 8:36
  Speaker 1: sort of a barbell approach there. So as you step
• 8:39
  Speaker 1: back and think about, you know where it's called eleven
• 8:41
  Speaker 1: years into this economic cycle here in the United States,
• 8:44
  Speaker 1: how do you think about allocating your fixing com portfolio
• 8:47
  Speaker 1: between investment grade maybe going out? You know, how you've
• 8:50
  Speaker 1: taken some more risk you mentioned you just meant talked
• 8:52
  Speaker 1: about emerging markets, how do you think about your allocation now, Well,
• 8:56
  Speaker 1: with the backdrop of a benign interest rate environment, that's say,
• 8:59
  Speaker 1: an interstrate environment that's not going to change radically one
• 9:02
  Speaker 1: way or the other, you can still chase after some
• 9:05
  Speaker 1: of those opportunities, some of those spreads. So a broad
• 9:08
  Speaker 1: exposure to these markets, risk markets like high yield, I
• 9:11
  Speaker 1: think is okay, but you have to be very selective.
• 9:14
  Speaker 1: I think very for a company point of view, and
• 9:15
  Speaker 1: from a set to point of view, the dispersion within
• 9:18
  Speaker 1: credit is still there. There's a there is a big
• 9:20
  Speaker 1: difference between the ones that are okay and the ones
• 9:22
  Speaker 1: that are not. We're seeing, as you saw last year,
• 9:25
  Speaker 1: companies suffer when they miss earnings reports and P and
• 9:30
  Speaker 1: L numbers. It's only credit quality problems out there that
• 9:32
  Speaker 1: you're seeing in your portfoliore creeping up or because again
• 9:36
  Speaker 1: kind of late in the cycle here and it seems
• 9:38
  Speaker 1: like you might have some credit quality issues. That that
• 9:41
  Speaker 1: is true, that's certainly keeping us not at our maximum exposure.
• 9:45
  Speaker 1: So it's an environment that does support risk on trades,
• 9:48
  Speaker 1: but we're going to be mindful of that possibility that
• 9:51
  Speaker 1: it's a fragile economic environment. Therefore it's a fragile environment
• 9:54
  Speaker 1: for credit and spreads are pretty tight. So well, well,
• 9:57
  Speaker 1: we're balancing some of that exposure by having some some
• 10:00
  Speaker 1: safe haven assets like US treasures, UM and other government
• 10:04
  Speaker 1: bonds with our credit exposure. When was the last time
• 10:07
  Speaker 1: that you changed your allocation around? Well, with the last
• 10:10
  Speaker 1: couple of years, I've seen as being the fairly dynamic.
• 10:13
  Speaker 1: The strategy we run is called dynamic, and it's lived
• 10:15
  Speaker 1: up to his name. Two thousand eighteen, we were very
• 10:19
  Speaker 1: defensive in terms of interest rate risk and credit risk,
• 10:21
  Speaker 1: just brought down both of those leavers, so exposure to
• 10:24
  Speaker 1: both of those was record lows. Two thousand nineteen, we
• 10:29
  Speaker 1: went back the other way, so we we we scaled
• 10:31
  Speaker 1: up adjuration risk, interest rate risk, and also our credit
• 10:34
  Speaker 1: risk by moving back into merger markets, high yield and
• 10:36
  Speaker 1: also government bonds at the same time. Two thousand twenties
• 10:40
  Speaker 1: going to be a bit more of a carry environment,
• 10:43
  Speaker 1: more an environment where you want to just hang onto
• 10:45
  Speaker 1: those returns. You're not going to get big moves and
• 10:48
  Speaker 1: be very particular about your security selection and your set
• 10:51
  Speaker 1: to selection. What could actually happen that would force you
• 10:54
  Speaker 1: to rethink that the two outlies to that central goldilocks
• 10:58
  Speaker 1: environment are of course a recession um and the opposite,
• 11:02
  Speaker 1: of course is a pickup and inflation. That's that's just
• 11:04
  Speaker 1: stating the obvious. But if we move back to a
• 11:07
  Speaker 1: rising intestrate environment as we saw in two thousand and eighteen,
• 11:09
  Speaker 1: then of course fixed income markets are going to suffer.
• 11:12
  Speaker 1: If we move to an environment of collapsing economies, you're
• 11:16
  Speaker 1: going to see credit suffer in particular. Neither those scenarios
• 11:19
  Speaker 1: have particularly high weights at the moment. But what we're
• 11:22
  Speaker 1: monitoring to see whether those two can be triggered is
• 11:25
  Speaker 1: it's really China. The slowdown in economic growth in China
• 11:28
  Speaker 1: before the virus is something that does concern us um
• 11:32
  Speaker 1: that's the global manufacturing base, for instance. And then the
• 11:35
  Speaker 1: other side of that is just the ramping up of
• 11:38
  Speaker 1: potential fiscal spending leading to inflation, which is a longer
• 11:41
  Speaker 1: term story, not one that we're hit this year, but
• 11:43
  Speaker 1: something to constantly monitor. Pobrain, thank you so much for
• 11:46
  Speaker 1: being with us. I gotta say I love your name.
• 11:49
  Speaker 1: I think it's absolutely wonderful. Paperin is head of fixed
• 11:52
  Speaker 1: income at Newton Investment Management, which is owned by b
• 11:54
  Speaker 1: and Y Melon and overseas about six sixty six billion
• 11:57
  Speaker 1: dollars of assets from whide It, normally based in London,
• 12:00
  Speaker 1: joining us here in our interactive broker studio. Is definitely
• 12:03
  Speaker 1: an interesting time to be investing in fixed income where
• 12:06
  Speaker 1: the income portion has been dropped off for a huge
• 12:10
  Speaker 1: portion of markets globally. You know, we have attention Paul
• 12:24
  Speaker 1: on this show where there's a lot going on in Washington,
• 12:27
  Speaker 1: d C. And it's hard to know when it crosses
• 12:30
  Speaker 1: over into the realm of markets and the broader zeitgeist
• 12:34
  Speaker 1: of the United States beyond the Beltway. Noah Felman joining
• 12:38
  Speaker 1: us on a story that does percolate on that very
• 12:41
  Speaker 1: much so. Noah Feldman, Professor of Law at Harvard University,
• 12:44
  Speaker 1: also a Bloomberg Opinion columnist, uh and Professor, I'd love
• 12:47
  Speaker 1: to get your take on what just happened with the
• 12:50
  Speaker 1: Department of Justice coming in making a recommendation to revise
• 12:55
  Speaker 1: the sentencing recommendation by prosecutors in the Roger Stone case
• 12:59
  Speaker 1: after President Trump tweeted about it, and then the subsequent
• 13:03
  Speaker 1: resignation of those prosecutors. Can you just give us a
• 13:07
  Speaker 1: sense how big of a deal is this It's a
• 13:10
  Speaker 1: very big deal when it comes to the independence of
• 13:12
  Speaker 1: the Department of Justice from political influence, especially from the president.
• 13:16
  Speaker 1: So what you have to understand is that you under
• 13:18
  Speaker 1: our constitution, the Department of Justice isn't an independent agency.
• 13:22
  Speaker 1: But because everyone understands that if you don't have real
• 13:24
  Speaker 1: independence and the people who investigate in prosecute crime, you
• 13:27
  Speaker 1: won't live under the rule of law. There's a strong
• 13:29
  Speaker 1: tradition of the executive branch respecting the judgments of the
• 13:33
  Speaker 1: Department of Justice. And what's bad here is not just
• 13:35
  Speaker 1: that the Department of Justice reversed a recommendation for a
• 13:39
  Speaker 1: strong sentence by its prosecutors, but that they did it
• 13:42
  Speaker 1: after a presidential tweet and in a case of Roger Stone,
• 13:46
  Speaker 1: who lied to Congress to protect the president. So it
• 13:49
  Speaker 1: really looks like the Department of Justice is just knuckling
• 13:51
  Speaker 1: under to Donald Trump, no matter what they Department Justice
• 13:55
  Speaker 1: may claim to the contrary. So clearly some pressure being
• 13:57
  Speaker 1: applied by Attorney General William barr Um. How uncommon is
• 14:02
  Speaker 1: it for that to occur, for the Attorney General to
• 14:05
  Speaker 1: insert himself or herself into a d o J proceeding
• 14:09
  Speaker 1: like this, Well, it's extremely uncommon for it to happen
• 14:12
  Speaker 1: in this way after the fact. So you might imagine
• 14:15
  Speaker 1: in a very very high profile case, you would go,
• 14:17
  Speaker 1: you know, through the chain, and someone would say, well,
• 14:19
  Speaker 1: let's check with the mainjustice and maybe the Attorney General
• 14:21
  Speaker 1: before we ask for a sentence. But what's extremely rare
• 14:24
  Speaker 1: is that when the Department has filed a document with
• 14:26
  Speaker 1: the court saying this is how many years we think
• 14:28
  Speaker 1: this defendant deserves, that the autorian Joe would then come
• 14:31
  Speaker 1: in after the fact and after a presidential tweet and say,
• 14:35
  Speaker 1: we're changing our mind, We're reversing ourselves, We're retracting that moment,
• 14:38
  Speaker 1: putting anyone that undercuts the independence of the prosecutors. And
• 14:41
  Speaker 1: that's why those four prosecutors all stepped down from this case.
• 14:45
  Speaker 1: It's essentially the closest that a government employee can come
• 14:48
  Speaker 1: to an official protest. It's a way of saying, Okay,
• 14:51
  Speaker 1: if you're you're going to do this over our heads
• 14:52
  Speaker 1: and we want no part of it, now, can you
• 14:54
  Speaker 1: give us a sense in the bigger picture, giving your
• 14:56
  Speaker 1: experience clerking on the Supreme Court, giving your experi arians
• 15:00
  Speaker 1: studying history and and Harvard, just getting a sense of
• 15:05
  Speaker 1: the potential implications here. I mean, you said it was
• 15:08
  Speaker 1: it's a really big deal, But what does that mean.
• 15:11
  Speaker 1: What it means is that this president is now completely
• 15:15
  Speaker 1: you know, feeling his capacity to do whatever he wants
• 15:18
  Speaker 1: in the aftermath of the failed impeachment. Um, you know,
• 15:21
  Speaker 1: he's going to be able to do whatever he wants.
• 15:24
  Speaker 1: But it more importantly, I think even more importantly than that,
• 15:26
  Speaker 1: in the long run, it undercuts public trust in the
• 15:29
  Speaker 1: FBI and the Department of Justice, and it undercuts the
• 15:32
  Speaker 1: basic idea that we live in a country where you
• 15:34
  Speaker 1: won't be prison imprisoned, or prosecuted or sentenced based on
• 15:38
  Speaker 1: who your friends are or whether you're in with the administration,
• 15:41
  Speaker 1: but rather based on whether you've broken the law and
• 15:43
  Speaker 1: how serious your crimes are. You know, if we lose
• 15:45
  Speaker 1: as a public our faith in that, then that deeply
• 15:48
  Speaker 1: undercuts the capacity of our country to go forward as
• 15:51
  Speaker 1: the rule of law country, losing the faith in it.
• 15:54
  Speaker 1: But there is a pushback that people have to this,
• 15:57
  Speaker 1: that is, it's always been this way. It's just that
• 16:00
  Speaker 1: President Trump is upfront with it, and there's less subtlety
• 16:04
  Speaker 1: about some of the machinations behind the scenes. Why we
• 16:08
  Speaker 1: certainly have heard that with respect some of the travel
• 16:10
  Speaker 1: bands and other things that they have done. Is that
• 16:13
  Speaker 1: the case, I mean that sort of, I don't think so.
• 16:15
  Speaker 1: I don't think the history bears out that claim. You know, certainly,
• 16:17
  Speaker 1: in all of the years that I've been exposed to
• 16:20
  Speaker 1: the Department of Justice and had you know, close colleagues
• 16:22
  Speaker 1: and friends who worked there, there's been an extraordinarily strong
• 16:26
  Speaker 1: tradition of prosecutorial independence, and that's been deeply eroded throughout
• 16:31
  Speaker 1: this administration, but especially now. And you have to add
• 16:33
  Speaker 1: to that the fact that this prosecution was started by
• 16:36
  Speaker 1: Robert Mueller's team. They filed this prosecution, and indeed several
• 16:39
  Speaker 1: of the prosecutors who were still involved were from Mueller's team.
• 16:43
  Speaker 1: That was supposed to be a special prosecutor who was independent,
• 16:47
  Speaker 1: who wasn't pushed around by the by the Attorney in general,
• 16:49
  Speaker 1: by the president. And so that was the whole point
• 16:52
  Speaker 1: of it. And to undercut that really doesn't have a precedent,
• 16:55
  Speaker 1: you know, it basically says special prosecutor isn't actually all
• 16:58
  Speaker 1: that independent? No, I just next thirty seconds, what's the
• 17:01
  Speaker 1: role if any oversight wise that Congress could I guess
• 17:05
  Speaker 1: exercise The most of the Congress can do at this
• 17:08
  Speaker 1: stage is call for an investigation. They can ask the
• 17:12
  Speaker 1: Attorney General and the U. S. Attorney for for Washington,
• 17:16
  Speaker 1: d C. To come and testify before it and ask
• 17:20
  Speaker 1: them how the decision process went and create greater transparency
• 17:24
  Speaker 1: around this. But there's really no other institutional check available,
• 17:28
  Speaker 1: and the ultimate check, which is impeachment, has already been
• 17:31
  Speaker 1: used and it didn't work. No Feldman, thanks so much
• 17:34
  Speaker 1: for joining us. We really appreciate your perspective. Noah Feldman's
• 17:37
  Speaker 1: professor law at Harvard University, also a Bloomberg Opinion columnist. UH.
• 17:41
  Speaker 1: He also has a witness in the House impeachment investigation,
• 17:44
  Speaker 1: and it was a clerk to the U. S. Supreme
• 17:45
  Speaker 1: Court Justice David Suitor, So lots of experience with the
• 17:49
  Speaker 1: law within the belt Way. You can read Noah's work
• 17:53
  Speaker 1: on Bloomberg Opinion at Bloomberg dot com slash opinion uh
• 17:57
  Speaker 1: and on the Terminal and O P I N GO.
• 17:59
  Speaker 1: Lots of great work that those folks do, kind of
• 18:01
  Speaker 1: peeling back the onion on a lot of important issues.
• 18:08
  Speaker 1: Tis the season of love and affection and collective guilt
• 18:13
  Speaker 1: and pressure to get something for your significant other. Uh,
• 18:17
  Speaker 1: it is Valentine's Day coming up on Friday? Are you
• 18:20
  Speaker 1: doing anything, Paul, I'm sure we are actually Eagles concert.
• 18:23
  Speaker 1: Eagles that's with the family. Okay, well, it is a question.
• 18:28
  Speaker 1: You know, what is sort of the appropriate gift. I
• 18:30
  Speaker 1: will say that. Um My older son even asked me
• 18:32
  Speaker 1: that at one point and I thought, oh my goodness,
• 18:35
  Speaker 1: I can't believe already having this conversation between us now,
• 18:38
  Speaker 1: someone probably could have waited a bit better than I did.
• 18:40
  Speaker 1: Chris McCann, president, chief executive officer of one Flowers dot
• 18:43
  Speaker 1: Com in based in Long Island here with us in
• 18:46
  Speaker 1: our interactive broker studios. Is flowers still the go to thing?
• 18:50
  Speaker 1: Is that what people go for on Valentine's Day? Valentine's
• 18:53
  Speaker 1: Day is just such a great day and when you
• 18:54
  Speaker 1: really look at it being the holiday of love, it
• 18:58
  Speaker 1: is it is for you because it counts are a
• 19:00
  Speaker 1: significant portion of your sales. So yes, flowers are the
• 19:03
  Speaker 1: go to a gift. They must have gift, especially if
• 19:07
  Speaker 1: you want to express yourself and connect with so many
• 19:09
  Speaker 1: important people, especially your significant other. Roses say at all,
• 19:14
  Speaker 1: that's still to go to or an Eagles concert, but
• 19:18
  Speaker 1: you still have to have the roses before you go
• 19:19
  Speaker 1: to an eagle. Okay, stuff, That's what some of the
• 19:24
  Speaker 1: new products or something that people are doing today and
• 19:27
  Speaker 1: maybe they didn't do five or ten, ten years. And
• 19:28
  Speaker 1: one of the things that we do is to make
• 19:30
  Speaker 1: sure that we have accessible price points for everything. So
• 19:32
  Speaker 1: roses all the most dominant flower in the most popular
• 19:36
  Speaker 1: flower for Valentine's Day. We bring in other things like,
• 19:38
  Speaker 1: for example, even preserved roses. So we have these magnificent
• 19:42
  Speaker 1: roses that are called which come in this nice round box,
• 19:44
  Speaker 1: a heart shaped box, and they they'll last you for
• 19:47
  Speaker 1: over six months. Can I be a little cynical here,
• 19:50
  Speaker 1: I'm sorry I have this time even get started this
• 19:53
  Speaker 1: thing where people are supposed to go out and buy
• 19:55
  Speaker 1: things for for for their significant others vountable. It's the
• 19:58
  Speaker 1: Feast of Saint Valentine, right, and it's all about love
• 20:00
  Speaker 1: and romance. But what we love about it really is
• 20:03
  Speaker 1: that has expanded beyond that. So when now people and
• 20:06
  Speaker 1: you see the growth and average spend according the National
• 20:08
  Speaker 1: Retail Federation, where you're seeing growth because people are buying
• 20:12
  Speaker 1: more to express themselves to family members, co workers, friends,
• 20:15
  Speaker 1: not just as significant other. Of course, a spouse or
• 20:18
  Speaker 1: a significant o. There's still accounts for about that spend,
• 20:22
  Speaker 1: but we need to do that, we need to express
• 20:25
  Speaker 1: this is really interesting. Hang on, so is for the
• 20:28
  Speaker 1: significant other? How has that changed over time? How much
• 20:31
  Speaker 1: more have have sort of friends, coworkers? Really people are
• 20:34
  Speaker 1: buying so that stayed about the same. Yes, yes, flowers
• 20:38
  Speaker 1: and gifts digital greeting cards if you just want to
• 20:40
  Speaker 1: do something simple, and you could do that with some
• 20:42
  Speaker 1: e cards from one Flowers of course, But really we
• 20:46
  Speaker 1: were seeing the growth in the category is from more
• 20:49
  Speaker 1: and more connections. People need to manage relationships on a
• 20:52
  Speaker 1: broad network, not just the romantic relationship that you have,
• 20:55
  Speaker 1: and we are relationship company. So how do you manage
• 20:59
  Speaker 1: like surgeon volume and demand on a day like Mother's
• 21:02
  Speaker 1: Day or Valentine's Day? Is that? I mean? I would
• 21:06
  Speaker 1: think that'd be a kind of logistical struggle. It's wildly complex.
• 21:10
  Speaker 1: The good news is we've been doing this for over
• 21:12
  Speaker 1: forty years now, and we have a bunch of people
• 21:14
  Speaker 1: that have been with us a long time, and then
• 21:15
  Speaker 1: we complement that staff with new people all the time.
• 21:18
  Speaker 1: I'm really really proud of the team the way we execute,
• 21:21
  Speaker 1: especially if you look at our results coming out of
• 21:23
  Speaker 1: this last first half of year. The execution was phenomenal.
• 21:27
  Speaker 1: We grew the top line by seven percent, but we
• 21:29
  Speaker 1: we had increased the guidance for the second half of
• 21:32
  Speaker 1: the year on EPs from a growth rate of eight
• 21:34
  Speaker 1: to ten percent to fifteen to seventeen percent because of
• 21:37
  Speaker 1: the way we're executing and showing leverage on our operating platform. Paul,
• 21:41
  Speaker 1: have you ever bought flowers for any of your co workers?
• 21:44
  Speaker 1: Co workers? Note? Have you ever bought a Valentine's gift
• 21:47
  Speaker 1: friend co workers? I've actually got a list of names
• 21:51
  Speaker 1: from my kids schools, so that I'm supposed to give
• 21:54
  Speaker 1: out Valentine's to everyone at school with their names on it.
• 21:58
  Speaker 1: And that's a thing that's done everybody, and and my
• 22:01
  Speaker 1: kids always get mad if it's not a sufficient thing. Well,
• 22:03
  Speaker 1: how about chocolate covered berries for a coworker from Sharry's Berries,
• 22:07
  Speaker 1: a company we acquired this past August. But I'm wondering
• 22:14
  Speaker 1: about delivery right now? How challenging is it given that
• 22:18
  Speaker 1: there is a competitive landscape, uh, with something that rhymes
• 22:22
  Speaker 1: with Amazon dot Com. That's kind of you know, the
• 22:26
  Speaker 1: big the big player here. As we look at deliveries
• 22:28
  Speaker 1: I think the floral network that we have bloom That
• 22:30
  Speaker 1: has always been in the same day delivery business, so
• 22:33
  Speaker 1: we've been out in front of that curve for a
• 22:34
  Speaker 1: long time. But one of the things that we're saying
• 22:37
  Speaker 1: that's making it even better for us and the retail
• 22:39
  Speaker 1: Flora's to make those deliveries is the onslaught of new
• 22:42
  Speaker 1: delivery companies, whether that be companies like a door Dash
• 22:45
  Speaker 1: or a deliver or or some of these other third
• 22:48
  Speaker 1: party delivery companies. So we have access to those companies
• 22:52
  Speaker 1: as well as our own networks of delivery personnel. So
• 22:54
  Speaker 1: it's actually making it better for us, even though we've
• 22:57
  Speaker 1: been the pioneer and same day delivery. Well, looking at
• 22:59
  Speaker 1: your but I was just looking at the financials on
• 23:01
  Speaker 1: the Bloomberg terminal, and you're a lot more than a
• 23:04
  Speaker 1: flower company. I mean, it's this, it's the gift. I mean,
• 23:06
  Speaker 1: so what else besides flowers kind of drives your business. Well,
• 23:10
  Speaker 1: that's why I was going to recommend also, I for
• 23:11
  Speaker 1: Valentine's Day, besides the berries, maybe a nice doughnut bouquet
• 23:14
  Speaker 1: from Harry and David. So we've moved into the gomet
• 23:17
  Speaker 1: food category over the past number of years, because that's
• 23:20
  Speaker 1: what our customers tell us they're using to express and
• 23:22
  Speaker 1: connect with the important people in their lives. So Harry
• 23:25
  Speaker 1: and David, Cheryl's Cookies, one hundred of baskets, food bouquets,
• 23:28
  Speaker 1: Sharry's Berries, the popcorn factory, a couple of others, to
• 23:32
  Speaker 1: the point where that's more than half of our business today.
• 23:35
  Speaker 1: What would you want to get for Valentine's Day? I
• 23:37
  Speaker 1: don't know. There's a lot that that cherry sounded good,
• 23:39
  Speaker 1: the chocolate thing, Maji. Yeah, Well, I mean, would you
• 23:42
  Speaker 1: want to be getting Valentine's gifts from your coworkers. I'm
• 23:46
  Speaker 1: gonna make this as awkward for your absolute Possibly you're like,
• 23:48
  Speaker 1: oh my god, let me get back to the Bloomberg terminal. Exactly,
• 23:52
  Speaker 1: but we need to work on this a little bit interesting.
• 23:56
  Speaker 1: Chris McCann, thanks so much for joining us. Get ready
• 23:58
  Speaker 1: for the big day. Chris mccamp press it in, CEO
• 24:00
  Speaker 1: of Flowers dot Com, Inc. Based in Long Island. Yes,
• 24:04
  Speaker 1: I'm gonna make it awkward for you, Paul. Yes, let's
• 24:06
  Speaker 1: keep going. They carry on. You can cite numbers on
• 24:09
  Speaker 1: the on the exactly we got Valentine's Day coming up
• 24:13
  Speaker 1: on Friday, and one flowers dot com will be there.
• 24:16
  Speaker 1: Thanks for listening to the Bloomberg P and L podcast.
• 24:18
  Speaker 1: You can subscribe and listen to interviews at Apple Podcasts
• 24:21
  Speaker 1: or whatever podcast platform you prefer. Paul Sweeney, I'm on
• 24:24
  Speaker 1: Twitter at pt Sweeney. I'm Lisa abram Woy. It's I'm
• 24:27
  Speaker 1: on Twitter at Lisa abram Woit's one before the podcast.
• 24:30
  Speaker 1: You can always catch us worldwide on Bloomberg Radio