Gene Sperling: Democrats Must Stick Together To Go Big

what we might see, we welcome Gene Sperling. He's a former director of the National Economic Council under president's Clinton and Obama. He is now president of Sparling Economic Strategies based in Santa Monica, California. Gene, thanks so much for joining us here. A lot to unpack here as it relates to the President elect and his first one days, maybe even first ten days, maybe even today in terms of his actions from an economic perspective. What do you

think he and his administration need to get done quickly? Well, I think they've made it smart decision in that they are bifurcating their uh call it a hundred day plan or uh economics start, which is to first focus on

the economic relief needed for the crisis. So that means both getting huge amounts up to four hundred billion dollars to ensure that we are able as a country to truly deal with the COVID crisis, and that includes the vaccine distribution, all of the testing, all of the things that we've been so weak and weaker than other nations in. And then also the funding that would go to UH people who are hurting, people who are at risk of

losing being evicted. Obviously, you know, more general support, but really for people who need it in the taking the checks up to two thousands. But they're saying, let's do that first. Let's do that relief package first, let's get that done. Let's not hold up UH that for more complex, longer term issues. So you'll see them move quickly, and they're going to try to make it bipartisan. They're going to try to do what's called regular order, working with

Republicans do something with sixty votes. But they know and that they in their back pocket they have the ability through a process called reconciliation, to pass this with just fifty Democratic votes. That won't be their goal, but that's a backup plan to make sure they get this part done fast while people are hurting. Economy needs that. Then they say, let's come back and do the build better jobs plan, the infrastructure, the green uh climate jobs, the manufacturing,

the enhancing care caregiving jobs across the country. They know that's going to take longer, it's gonna be a little more complex. Uh. So they're saying that's our that's that's phase two. And I think that both are important. One is about relief and emergency, the others about more long term recovery, about speeding the speed in which we get back to long term Uh, I mean we get back

to full employment. Remember, uh we're still down nine and a half million jobs since the start of COVID, So we're still in a deep hole with a lot of risk still out there for this recovery. And at this point we have former President George W. Bush and his wife Laura arriving on the platform. Do you know I want to ask you who will Joe Biden and team be targeting in terms of trying to get some of

you know, what they want done. I mean, for example, at one point nine trillion dollars stimulus, there's very few people who actually believe that it will be the full

one point nine trillion dollars. But to get up as much as possible, who are the power brokers they need to to be to be targeting well, I think the I think in the end of the day, the most important thing is can they keep all of the Democrats together, because again, if they have fifty votes they get to use for a budget matters which are kind of the major kind of spending issues. You can do it with reconciliation. So it would be the Democrats that might be holdouts.

I think, you know, you'd want to make sure that the that the ones who are seen as the more moderate Democrats. You know, I think people will be looking a lot at Joe Mansion from West Virginia, UH, Senator Cinema from Arizona Center, Tester from Montana. They're gonna want to say, where can what in this package can we get agreement on? That goes all the way from the most progressive members like Bernie Sanders to the more conservative

members of the Democratic Party like Joe Manson. But I think when they start, they're going to start with the view that a lot of Republicans are not are going to want to support the major money for vaccine distribution. You've had several Republicans support the taking the checks to two thousand dollars. It's gonna be hard for lots of

people to vote against extending long term unemployment. So I think they're going to start with a fairly broad view, looking for where the Republicans, uh, you know, can support them. The biding can show he's doing bipartisan economic legislation, but in the end of the day, they know that ultimate backup card is having all fifty Democrats on board, and so yes, I think they'll be looking for where their

most progressive and most moderate members can find common ground. So, Gene, it's fairly clear that this pandemic and the economic disruption has just exposed yet again, income, inequality, wealth, any quality in this country. And his president, like Biden, thinks about his economic plan is fiscal stimulus, plans plural. How do you think what's the best way to go about addressing some of these issues? Well, you know, you're absolutely right.

I mean, I think it is fair to say that, um that the pandemic, rather than create economic and racial disparities, has just exposed and accelerated them. And I think that will be very much on his mind and will impact his policies. And remember during the campaign he talked about the k recovery or recovery that might have an okay GDP number, but when you looked beneath it, you would find people who are more fortunate Like myself. We've been able to continue to work and work from home doing well.

And you've heard Leo Brainerd at the Federal Reserve estimate that for lower income workers or those who can't just work from the unemployment rate is close to near depression levels. So I think he's going to be looking at that very closely. So Number one, you've got to prevent downward falls. Uh. You know, recessions are tough, but if you lose your home, if you're evicted, if you don't have food on the table, I mean, that's that's offensive to our values. That causes

long term unemployment that many people don't recover from. So I think he's gonna you know, I think these policies will be very targeted to that, and I think when you see him do his jobs plan, there will be a lot of focus on making sure, you know, not just putting dollars out and hoping people, you know, not worrying about who gets hired, but doing it in a way that is ensuring you're improving uh, not just homeownership, but closing that racial homeownership gap, which is a way

of closing the racial wealth gap, making sure when you you know, most presidents often have just an infrastructure plan by I didn't build back better plan includes caregiving jobs those tend to be and health workers those tend to be often helping more women, helping more more women of color. That's very important to him. Gene, who is the next

federal reserved chair? And uh, you know, you know, uh, that's gonna you know that that's going to be the you know, one of the fun parlor games among economic nerds across the globe. Uh. And I don't want to. I guess I have too many friends who were probably soon Uh you know, I really I really don't know. And I'm gonna I've worked enough with Joe Biden to not want to totally second, you know, try to front

run his choices. I think that I think there's no question that the fact that they won Georgia, uh and that they do control the Senate does give him more discretion to think about picking somebody knew, somebody who might be more his own person. But I'm guessing that even within the Buying administration, as they're scrambling to get their cabinet in and chosen and confirmed, I would bet that that decision has not been made. Gen thirty seconds. What's

the greatest risk to this economy? Here? Markets equit, markets hitting all time highs. But what's the risk out there? You know, doing too little, doing too little under uh, you know, underestimating you know that would end up being the problem. Before that, you you can only get one bite at the apple, things get worse. Uh. You can imagine a new strain that's that's resistant to the new vaccine.

When I came inven to be any C director, we were looking at a strong economic year, and then you had the NW clear meltdown in Japan, you had the you had the Arab Spring. Things happen, and I think that's why what you heard from yelling is the risks of going small are much greater than the risk of going big. And I think that is going to define what you see from this president economically in his first year. Gene Sperling, thank you so much for joining us today.

On everything that we know so far, and the parlor games in Washington, d C among economic circles. And you know who might actually be filling out the different roles in d C over the coming couple of years. Jean Sparling, former director of the National Economic Council under Presidents Clinton and Obama and president of Sparreling Economic Strategies, joining us there. So, Paul,

it is an auspicious day. It always is only coming, obviously once every four years, and today we're going to see President elect Joe Biden and Vice President let Kamala Harris sworn in. Yeah, it's gonna be a very unique day, unique inauguration, Vanni, with what we're doing with in terms of the pandemic and what in a couple of weeks ago,

but a day of celebration, nonetheless. So let's hand it over now to our colleague David Weston, who's going to continue for the next three hours with Balance of Power Inauguration Day in our nation's capital. Stay tuned for live coverage of the inauguration of Joe Biden on a special edition of Bloomberg's Balance of Power with David Weston. Our Wall Wall coverage starts at eleven a m. Wall Street

Time on Bloomberg Radio and Television. Let's get a preview of what we might experience later today as inauguration takes place. We welcome Jennie shan Zano, Bloomberg Politics contributor, author of American Democracy in Crisis, also professor Political Science at Iona College. Professor. Thanks so much for joining us, Jennie. What do you think we're going to hear from soon to be President Biden in his inaugural address? You know, what I'm expecting

to hear is a theme of bipartisanship. This is somebody who has been in the Senate for much of his adult life. He understands that in order to get all of the bills he wants to get passed and addressed all of the challenges we're facing, he's going to need to work across the aisle. So I expect we're going to hear about bipartisanship or reach across the aisle. A call for unity that seems to be the buzzword of

the day. Um. You know, so we've had historic inaugural addresses obviously in the past, but I do think that it's going to be a stark contrast to what we heard in sixteen with the infamous carnage speech. I think Biden's tony is going to be completely different from its predecessor, Genie. How does Kamala Harris's role manifest She has an opportunity right now that previous vice presidents haven't had. How will

her and Biden define this new role. It's gonna be so fascinating because, of course, Kamala Harris a historic pick. She's the first woman, she is the first African American Indian descent. Of course, also she is likely to be the leading candidate for the presidency in we widely expect that Joe Biden, given his age at seventy eight, is

not going to be running again. Um. If that is the case, then Kamala Harris is going to be not just serving as vice president and helping the president through all of these challenges we're facing, but also herself gearing up for a run. And that is going to, I

think be fascinating. And I know you're both probably shocked that I'm talking about today, but if we recall Donald Trump, I think it was vunny the day of his inauguration or the day after he announced he was running in so you know, it is really uh, you know, time to gear up for four and Kamala Harris is going to be a leading contender obviously for that position. So, Jenny, the first one days of any president's term tend to be very, very busy where they have a lot of

they try to get a lot of work done. What do you think this president can't get done in the first one days. It's been fascinating. He's been talking about not just the one hundred day marker, which we're so used to in the U s. Sort of this historic day,

a hundred days, he's been talking about ten days. And what we expect is he is immediately as early as today, going to be sending to Congress a massive immigration bill um that I think is going to be a sweeping proposal to provide citizenship for eleven million undocumented people living

in the United States. We also expect in the first day, just this afternoon, he's going to sign a series of executive orders dealing with everything from the environment and climate again, to immigration, to the public health crisis COVID, and to racial justice. So he has a lot on his plate, not just in the first hundred days, but in the first day, because he's expected to be in the Oval

Office working as early as this afternoon. President Hump earlier this morning made some remarks to reporters and also obviously made some remarks on the podium before he left Joint Bass Andrews. He said we will be back, and he had told reporters hopefully it's not going to be a long goodbye. I'm curious as to what you think President Trump will try to do next, particularly given that among the pardons where Steve Bonna, we were expecting some that we didn't get, and then we did get the Steve

Bonn on one. What was the significance of the significance in my mind, is that exactly tied to this we

will be back statement that he made. I think the president, the President Trump expects that he or members of his family, his daughter, his daughter in law, and his son, all looking at potential races in Florida and the South part of the United States, may rely on somebody like as Steve Bannon to be an advisor for potential runs for Congress and potentially if a President Trump, former President Trump decides to run again. So I think you're absolutely right.

I was also struck by his remarks in terms of how he took credit for what is going to happen in the Biden administration, saying that he laid the foundation for what ever good they're able to achieve with a lot of luck. So it was sort of the first time I've heard somebody take credit prior to his successor entering office. So I thought that was fascinating as well. Jennie, Realistically, what do you think um soon to be President Biden can get done legislatively? He has obviously a long track

record in Congress, bipartisan historical record. Can he bring reluctant Republicans and maybe some Democrats over to his side to get meaningful legislation done. He's going to have to do that, And I want to be optimistic on this day of sort of celebration and say yes he can. As you mentioned, he's perfectly situated to do that given his history in the Senate and of reaching across the aisle. I'm not so sure he's going to be able to get the bills that he wants passed in the way he wants.

For instance, this almost two trillion dollar stimulus bill we're already hearing yesterday, during the confirmation, hearings pushback from Republicans on things like the fifteen dollar minimum wage, on the fourteen hundred dollars called by Marco Rubio also contender for a more piecemeal approach, So there is going to be pushed back from Republicans, and I suspect in the case of COVID immigration and the other bills infrastructure that he wants to get past, these are going to be watered down,

if you will. I don't think we'll get at one point nine trillion dollar. I think we're going to be closer to a one trillion dollar bill at the end. It's going to be a negotiation for sure, because he needs not just the moderate Republicans, he needs to also maintain the Democrats. And I would say one thing to watch for Democrats or Republicans who leave their party. Genie. Thank you. Genie will be contributing throughout the day, so

do continue to listen and watch a Genie. Sean Zano Bloomberg politics contributor, professor at Iona College and author of a new book, American Democracy in Crisis. This is Bloomberg. Well, we're just seeing continued gains here for you as equities with an ASDAG up one point seven recent now more than one percent on the ten year yield at one oh ninety eight. Let's bring in Bloomberg process that reporter Sarah Ponsa to give us an idea of what markets

are really concentrating on today. Would seem that the dollar index is a little bit weaker relative to, for example, the Canadian dollar. But other than that, it's all about equity, Sarah. It is all about equities today, and we see the NAZAC at record highs, we see the SMP five hundred at record highs. We also see the Russell two thousand

at record highs. So from small caps to large caps, but really asserting itself in the markets today is the Fame trade once again, this after Netflix was the first of the group to report earnings yesterday after the bell and really just performing. You could say, we saw a net new subscribers coming at eight point five one million that not only beat Netflix his own forecast, but it also beat the expectations from analysts on Wall Street of six point six million. On top of that, they finally

passed two hundred million subscriber mark. At the same time, they said cash flow will now allow it to stop relying on debt to fuel growth. So we see Netflix this morning up almost fifteent, trading out a new record high, and you see the other fang names just trading in tandem. You look at your best performers on a points basis, at least in the SMP five dred as we speak, that's Apple, Microsoft, Amazon, each up at least two and a half percent this morning. Yeah, it's just extraordinary story

last night with Netflix. I think the other big thing, Sarah as the company said that you know they're gonna be free cash flow positive pretty quickly, I think a little bit faster than the street expected. So kind of showing how that company is really matured and really kind of grown into its its growth story. Oh surely, and coming into this earning season, A big question for the

likes of Netflix, maybe Amazon. You think of other large technology companies that benefited all of and even benefited from the rollout of of COVID nineteen and the play out and people forced to stay at home and work from home. The question really has been, we know that business was pulled forwards for them. We know that many people bought Netflix of scripture because they were stuck at home with nothing else to watch, and and they needed to. We

know that happened. Another question is what comes next for these businesses. And there's been this push and pull when we hear investors talk about this rotation not just from from growth to value, but from defensives to cyclicals, and the idea that we might see this shift into the reopening play from the stay at home trade. But it makes you think when you see these companies continue to deliver uh growth companies, And this is also an argument

that's made. It's it's not as if they are going to just drift off it and everyone's gonna stop talking about them, and they're no longer going to be strong companies like you pointed out Netflix now going to be cash flow positive. I mean, these are strong companies and it makes you wonder if we can see this reopening trade. Small caps continue to run, but in tandem with big tech and and streaming companies like Netflix that did very well in How much is the market reacting to John

at Yellen's testimony. Obviously she is going to be the next to insury secretary. It's you know, almost without a doubt that she'll be voted in by sort of all sides of Congress um and therefore, you know, will try to implement a lot of what Joe Biden has been annunciating, the one point nine trillion dollars in stimulus and so on. How much is today's trade off the back about not too much. I mean, we've known that Janet Yellen was going to be Treasury Secretary for quite a while. Now,

she's also a known entity on Wall Street. The expectation is that there really shouldn't be too many surprises here. She has been touting the one point nine trillion dollar stimulus package. On the back of that, we have seen inflation expectations pick up tad Currently I'm looking at tenure break even inflation expectations holding around two point one to

per center. So now there were some surprises yesterday. Max Gochman over Pacific Life Fund Advisors actually reached out to me to say that what was surprising within her testimony was her discussion of tax hikes, saying that it's going to come immediately, but possibly we could see a change to the tax code as part of the infrastructure plan.

So that maybe did take some infestors off guard, But I wouldn't say necessarily that the testimony that we are seeing from Janet Yellen is affecting stock prices, or the bond market or the dollar today for instance. I mean, she's a known entity on Wall Street and we've known for quite a while now that she was the nominee as well. Fiscal stimulus sarah um, you know, one point nine trillion plan proposed. Hearing some pushback that it's not all going to get past. What do you think the

market's kind of discounting here about this next round of stimulus? Right, So, there has been some pushback the idea that we might not see it all get past or all get past immediately. But we haven't seen any negative reaction to this pushback whatsoever in markets. I mean, you see benchmarks today trading at record highs. You see the tenure not really moving all that much, but still holding above one percent and well above one percent now at one point nine percent

and holding. So we're not seeing much reaction in the markets. And we've heard it many times, the idea that the market is forward looking and the expectation, it seems is that even if if it's not done immediately, it will get done eventually, and the market, no matter what is just looking ahead and saying we've got trillions of dollars worth of fiscal stimulus coming down the pipeline. Uh, and clearly the markets like that. Sarah Ponzac, thank you so much.

We appreciate that. Sarah Ponzack, cross asset reporter for Bloomberg News, giving us the thoughts on the markets again, Vanni. Uh, equity markets hitting all time highs here on this bullish outlook I think for the economy in the near intermediate term, given stimulus and given low interest rates. Yeah, absolutely. I mean it's the same narrative that we've been listening to

right as long as we've known. You know that the election results were pretty accepted, you know, and maybe not by everybody, but that that that none of the court proceedings, for example, was going to exceed in the stock market. Let's see where the action is under the hood, and we do that with when we're stocks editor Dave Wilson, Dave, what are you looking at today? Well, there's plenty of

the same in Netflix, a perfect example. You know, you go back and look at the stock performance after past and earning these reports, and you see it was down in seven of the past eight quarters. So it's a real contrast to what we're seeing today with the percent plus gain that Greg Jarrett mentioned. You know, the other side of the coin is what's going on with the financial companies. You know, in general, the fourth quarter results

just haven't been well received. I mean, sure, you've got Morgan Stanley shares higher in the wake of their results. They're only up one percent, though, and the two worst performers in the S and P five hundred are companies that also reported fourth quarter results today, Bank of New York Malwine, which is down six percent, and US Bank Corps down four point four percent. So, you know, and that's consistent with what we saw on Friday. Uh, the reaction to the figures out of City Group and JP,

Morgan Chase and Wells Fargo. You know, you put that all together, and you know, it kind of shows you that is as good as the results might be, if you look at them relative to analysts estimates, they're really not going over all that well in terms of the market reactions. So that's going to be something to watch as we go through. You know, is it going to be more of a Netflix kind of a response to results, or is it going to be more in line with

what we're seeing with the banks. Beyond that day, does a monumental shift happening in Washington, d C. And in the country today in terms of leadership and what that means for policy going forward. But today is the day for pumping circumstances. So what is volume like, Well, you look at what's going on. Just check out the first half hour of trading in stocks listed on either of the New York Stock Exchange or NASDAK. We saw about

two point six billion shares change hands. And just to provide some context to that, you go back and look at yesterday, just you know, for a point of reference, and it's actually just a little bit above what we saw a week ago. So you know it trading carries on basically, and with the earnings reports coming out and and all the rest. I mean, it's not exactly a surprise. One interesting name, guys, I thought was really interesting today

Ali Baba. The stock is up five percent and I guess jack Ma is alive and well, and that's a I guess a reprieve for shareholders in this company. Dave, Well, it is because it's the first time he's really common

seen in public in about three months. You know, ever, since China's government started clamping down on him, you know, in the wake of UH you know and Financial, the UH consumer finance company in which Ali Baba as a controlling stake you know, and planned to go public or with him in the biggest UH initial public offering ever worldwide,

and Chinese government didn't let that happen. And since you know, Jack Ma is kind of keeping a low profile, may it was real concern about, you know, well where is he? And he showed up in a live stream video for this event that he sponsors honoring rural teachers, so at

least people have some reassurance that he's still around. And then from there it's a matter of, you know, what does Uh ali Baba look like going forward, which is a you know, a much bigger question, you know, given UH you know, the the back and forth in terms of how companies are being perceived. I mean, Ali Baba kind of dodged a bullet last week because there was talk UH that the company might uh be kind of taken off the list of potential investments for for US

investors with a blacklist, but that didn't happen. So you know, Ali Baba has got the all clear for the moment, and having Jack Mob being seen in public a sort

of goes along with that. We're expecting a minimum of fifteen executive order is likely to be signed in the five o'clock hour or thereabouts, things like, you know, reversing the US withdrawal from the Harris Climate Accord and the w h O. Also, though, things like revoking apartment for the Keystone Xcel pipeline DAVI or any stocks moving on the idea that we're going to be reversing some of

what Donald Trump had put in place. Well, I'm not seeing a whole lot of reaction a TC Energy, and that's the Canadian company that owns Transcanta pipelines, and they would be directly affected by that order, assuming it's coming on Keystone xl UH shares are only down half for percent in US training though, and they've kind of been, you know, a little changed the last couple of days. Is the prospect of this executive order has come up.

I suppose you could argue that, yeah, it's something that people have been anticipating because you know, President elect Biden had pledged to revoke the permit it, so now it's just a matter of following through. Uh So, you know we'll see how things unfold from here. You know what's interesting today stock that kind of called my eye hitting

a fifty two week high. General Motors. The stock is a fifty seven percent on a trailing twelve month basis on a year to date basis, and Bloomberg has got a nice article on the terminal today about how Mary barrat maybe getting some of that tesla Um kind of halo effective as they move into electric vehicles on autonomous vehicles uh GM. Heck of a move. Yeah, it's all about this unit called Cruise. I mean, GM has a

majority steak. You know, yesterday we found out there was a two billion dollar round of fundraising with Microsoft leading the way along with GM. It's certainly uh gets your attention. And the story you noted, Paul Um highlights. You know, so the back and forth on Twitter between uh GM CEO Mary Barr and Microsoft CEO Sacha Adela about this deal, so you know, to kind of have the in premeter of Microsoft down your business. Yeah, I mean that definitely

gets people's attention. You know, it's interesting. You know we've always talked about that. You know, when are the big global automakers going to make the move into electrical vehicles, if for no other reason than to get some of the valuation bump that maybe they could from someone like you know, like that Tesla enjoys for so long, and maybe we're starting to see a little bit of movement

there on some of these companies. Dave Wilson, thanks so much for joining us Bloomberg Stock centeror we appreciate that. Looking at the market again, a relatively good day here as we start the trading. We have the SMP up about just under one percent here, so we'll certainly keep an eye on that, and we'll have more inauguration coverage coming up in just moments. Thanks for listening to Bloomberg Markets podcast. You can subscribe and listen to interviews at

Apple Podcasts or whatever podcast platform you prefer. I'm Bonnie Quinn. I'm on Twitter at Bonnie Quinn, and I'm Paul Sweeney. I'm on Twitter at pt Sweeney. Before the podcast, you can always catch us worldwide at Bloomberg Radio m H