P&L: Lieberman Says We'll See a Strong Third Party Before 2020

to bring in former Senator Joe Lieberman. Uh. You have founded, or you're the co chairman of a nonpartisan advocacy group called No Labels that's meeting um to sort of figure out how to chart a center political new way forward. Can you tell us a little bit about how this came about? Sure, can, and thanks for having me on. We're holding a big conference were calling at the summit.

We actually called it seven after the year of the Constitutional Convention, to remind everybody that the people at the Constitutional Convention had tremendous disagreements. They almost broke up with three or four times, but they came to the center and negotiated a compromise in the national interest. Uh, and

therefore we have our country. We haven't our leaders and representatives in Washington haven't been doing that for too long, and therefore a lot of our problems have gone unsolved and a lot of opportunities not seized to make life better. And a lot of that expressed itself in the election where uh Donald Trump was elected. Really, in my opinion, is a change candidate against the status quo and maybe somebody who based on his business background, could could make

things work. And so today no labels means put aside your label a Democrat, Republican, liberal, conservative, where all Americans let's work together to get something done for the country. We're announcing today uh fifty members of Congress, pretty evenly divided between Republicans and Democrats, whore signed on to working

together across party lines. And we're also um building a political Action committee to support people in Congress who stand up to their party leadership or interest groups and and vote in a way that they think is best for their constituents or their country. We think the election of Donald Trump really shakes up the system in a way. I didn't support them, but I would tell you it shakes up the system in a way that gives us an opportunity to help him do what we think he

wants to do well. And and speaking about that election, Senator Lieberman, do you think that these first steps are sort of the beginnings of a new political party that's not where that's the Grant's a great question. A few people here have raised the question in our feeling. Governor Huntsman of Utah, the former governor Republican and I have

our co chairs. That's not our intention. Our intention really is to make the two party system work better, like it has for a lot of our history, and it always does when the center right and the senator left gets together. But I'll tell you if something like this doesn't work to help the government produce for the American people, I think there will be a third party before the next presidential election, and it will be a contender. It will be a strong party. Senator Lieberman, what if you

could point to some specific goals you have. I note, for example, that no Labels has called for a bipartisan seating at the State of the Union address. I mean, is that the kind of stuff that you think people really want you to come together on. Well, that's really small process things, uh, And it can't hurt and that's happened over over the years. But the truth is, are

are we? We are really about process. But we for the first time put out what we call a national Strategic Agenda, and we try to form four big goals for the country and uh state them in a way that that most Republicans and Democrats could at least agree on the goal. And then you start to negotiate. So, what are the goals? Million new jobs in ten years.

Actually that's a goal that President Electrump was already embraced. Second, but it's that But that's never not a goal, right, I mean, you never come out and hear people say, oh, no, we don't want to create jobs. So what is different about your approach than the approach that other presidents and the current president elective status? Okay, fair question. And and

here's what we're saying with these four goals. When you when you're not doing anything, when your business is failing or whatever, Uh, the first thing you try to do is decide where do we want to go? We said goals. And in the political process, if you can get people to buy into the goals, then you can sit down and negotiate how you're going to achieve as much of those goals as you possibly can. And and that's why

we started there. Incidentally, we invited all the presidential candidates to a convention we hold in New Hampshire last year. Donald Trump was one of eight to address us. At that time they were over twenty running, and he accepted are he signed our pledge to go for one of these goals, and what it means is to convene a process of leaders, hopefully in both parties in Congress, to

begin to negotiate one of the problems in Washington. Has too many people in Congress today or in the White House have said, I'm only gonna accept this if it's exactly the way I want it, if it's a dent of what I want. And when you do that, you usually end up with zero percent. And of course it's the country that suffers. Senator Lieberman, do you think that it was a mistake for the Democrats to reelect or re select Nancy Pelosi as the as a minority leader

of the United States House of Representatives. Again, Well, and that's up to the House Democrats. I know, I don't. I don't think it's really I wouldn't say it's a mistake. I think the question is, now, what are the House Democrats do and what are the House Republicans do it. Look, I've talked to members of Congress of both political parties since the election, and their voices in each caucus that

are are all too familiar. Some Democrats are saying, we must go into resistance, we must oppose everything that President Trump passed Ford and then some Republicans are saying, let's do what Obama did at the beginning of his term. Let's just ram it down the Democrats throats. We've got uh, we've got majorities in both houses. Well, if that, if

those voices dominate, then really nothing's gonna get done. And and President Trump will not have the record I think he wants to have, and the country will not have the help that it voted for in the last election. So really it depends on what leaders Polosi, Ryan McConnell and Schumer do. Uh and um, that's what we want to help him do it, which is the right thing?

One If you could speak to the issue of combining the work that the Department of Defense does along with the veterans administration, I know that's one of your goals of combining records. Why you want to do that? Oh, outside of our playbook. And let me just say about the playbook that we we combined. Uh, we actually tested a lot of ideas. Some of them are big, some of them are kind of middle sizes are small. But the each command majority support from the American people, and

that was one of But what about the Congress. You think they're going to pass this? Well hopefully, Uh, you know, because it does. It makes sense that it saves money and it probably and it serves both the active duty military and the veterans better. It avoids the sort of spending twice for the same kind of record keeping. I want to thank you very much. Former US Senator, Democrat and independent from a Connecticut, former vice presidential candidate Joe Lieberman.

He is the coach chairman of No Labels. All right, we're gonna learn more about the world of a Wall Street analysts. We have Land and Nuyen are Bloomberg FX reporter joining us now, Lanna and thanks very much for coming in. Uh seventeen cat fines that will slay you every time. No, that may not be the headline of a Bank of America Mary Lynch report, but it might be one day. Well, they haven't stooped quite that far yet, PIM. But what analysts are trying to do here is really

trying to hook readers. They're trying to make bold, short calls in contrarian reports. So I spoke to David wu from Bank of America and uh, he's very feisty, as you know. Um, but I think the bank is trying to spread this ethos across all of its analysts have some guts. If you have an interesting call, you go all the way, don't play it safe, and don't reel it back to be part of the consensus. Okay, So if they haven't gone as low as seventeen cat fines

that will slay you every time. How low have they gone? I don't know if it's low, but they've done what we in the news business do. They've got you know, focused on shorter reports, tighter stories, and um, you know, tighter thematic pieces and better headlines. I think so why now, why is there this push to sort of be more consumer friendly? Well, if you know, they're listening to what happened after the financial crisis, a lot of people have

lost their jobs. There are fewer people out there churning out these twenty page, you know, thirty page reports. So they really got to be smarter with their time, get people reading the reports, and build a following by being amusing, being interesting, and lighthearted in addition to obviously being smart. For your story, you spoke with the global research head of Bank of America, Merrill Lyncha Candice Browning. What did she say? She was interesting? She said, basically, I want

my people to be bold. I want them to talk about what's not already price in the market. I want them to be out of consensus, not just you know, going against consensus for the sake of it, but really um looking to see what the next move in the market is going to be. Because everything that's in the market and in the price right now is already priced in.

So um. She was pretty tough about that. She said, make a big call, you know, stand out from the herd, or else you won't stick arount and catchy titles, right. I mean, for example, one report, I guess it was published what last year last November called the Great Divorce? Right? This was written by Mr Woo. Yes, well, so my question is how do these analysts make money for the banks, and how much of that is the issue here? So right now, they make money for the bank by being

part of an add on service of perks. Right, So if you and I do a deal and Bank America as your bank, then probably the third research in on the side without a separate fee. It's just part of the cost of being a client. But eventually banks may need to, especially in Europe, we'll we'll need to start charging a fee, either directly or as part of a

commission for research. So it means that the researchers have to really jostle to stand out because eventually you may have to put a price tag on each research report. So that's that's really the issue here is that increasingly there has to be justification for this research and its value, and there has to be a loyal following otherwise it

could very well get cut. Precisely, it's the quality of the ideas, but it's also the following of the analysts and the ability of the analysts to engage the readers, which sometimes means they have to put in some song lyrics or use Bob Dylan as a you know, a way to hook readers. Obviously the analysis has to be good as well, but it doesn't hurt to, you know,

throw in a couple of fun touches. So does this mean, for example, that we're going to hear Kit Jukes of Associotation Arel and he's been a guest on Bloomberg for a variety of subjects. Does that mean he's going to start to sing those Bob Dylan lyrics as well as Latin proverbs as he offers him in his notes to clients. I don't know if he'll sing them in audio form, but he's certainly one person that if you want to model UH analyst research with flair, definitely look at Kit Jukes.

Was just looking right now. His current report from today compares the US dollar to the myth of Icarus, So you know, he's very literary in addition to being pretty musical as well. Um So, going forward, is there a particular area, a particular subject of analysis that lends itself to lyrics and is it? Is it f X or is it across all this? I think it's across all disciplines.

I think if you're writing about financial markets, which can be very technical, you need to throw a little spice in there that doesn't hurt in any discipline to write with a flair and entertainment in addition to good analysis and smart comments. Lenan Nunion, thank you so much. For joining us. Lenan Nunion h f X reporter here at Bloomberg News. Really fascinating story about how the culture is changing, not just among mainstream media but also on Wall Street.

I want to bring in my colleague by Bloomberg Gadfly fellow columnist Marcus Ashworth. He is in London covering European Marcus markets, and Marcus, thank you so much for being with us. Uh. You know, I've got to say I'm sort of surprised at the lack of a market reaction to the Italian referendum. Yes, this has been sort of expected. Yes, people were saying it's not as big of an issue

as Brexit or the U S presidential vote. But even still, I think you might finance because the European Central Bank of learned their lessons and they know how to control markets ever better. So I think certainly there was the central banks are in very early supporting the bond market.

And wait, you're saying that actually that they were buying that the Europeans on Bank was out there buying actively buying both the euro as well as as well as potentially government bonds, don't I don't know in the currency and I would doubt that on the currency secret no, no, no, that that they would be buying the Italian government bonds UM, and that would be something which is reasonably widely expected.

They had flagged it up beforehand, and though I cannot confirm for sure, it seems all likelihood would point to that, and the price action would would suggest that no one's

prepared to use the expression and fight the FED. But it's the same sort of story here the Youran Central Bank and made it very clear that are on a negative reaction, they would be in supporting their perfectly titled to It's all part of their PSPP public sector purchasing program, and we may find out on Thursday that they could even increase UM or tweak the purchasing of Italian bonds pro rata all the other bonds, and indeed extend QUEWI as well. So this is this was to be expected, um.

Even so, though I agree with you in a sense that everyone had expecting a wilder reaction, and it really wasn't until the States came in when they wanted to sell bonds off anyway, that there's been a little bit more price action for the downside. Well, and sort of to your point, yes, Italian government debt could be purchased by the European Central Bank. But I'm looking at Manto Paschi bonds and they dropped, yes, but they dropped by less than three cents on the dollar, which was surprising.

You know, there was not a huge move in other words, um, and there was all this talk about Italian banking crisis leading up to this vote, where people just wrong or is there still potentially more risk here than people are pricing in. Um. Yeah, the liquidity or illiquidity on mont Apache is to be seen to be believed. It's completely controlled market. That's just a by bond by back, so anyone wish to get out had their chance. Now it's a very care controlled market because they're about to do

a major stock recapitalization. So um, it's impressive, but I think the lead managers on on the equity deal will be keeping a very careful eye on on price and most of a passion. The reality is is that the authorities or the lead managers want to come in and buy a chunk of these bonds with the market sharply upwards so that there's less active short sellers and these types of things. Is that's very hard to sort of

get liquidity on these types of results. Marcus, I want if you could come into on the reaction from other European governments and markets to the Italian vote. Yeah, I think that's it's all around. It's it's we've taken some of the political risk out because even though it was the worst result expected in some senses, Um, it would be very carefully controlled both by the e CP beforehand.

And I think you know Italy has been here before with technocratic governments in Ramsey him in and not necessary on a full man day anyway. So and that last, I think that the last popularly elected prime minister in Italy was Sylvia Berlsconi back in two thousand and eight.

They have not had a popularly elected government for eight years. Indeed, So in that sense that we have seen this movie before, Um, the Finance minister probably or someone either that or the Culture minister or possibly one of the Senate leaders will come in. So UM, you know that it's not going to be any rash decisions made. That the president is has the electoral ability to control when elections are called to a degree, Um, and I think that they will

try everywhere they possibly can. The one thing is a surprise, I suppose, is the size of the vote that it's it's quite clear that Renzi is going to step down permanently, whereas it had been expected he might have been a sort of called back, a bit like James Brown too, to come back to the stage. But doesn't look like that.

His career is probably over for now. Marcus, your point about the liquidity and Monte Depachis is an important one, and just more broadly looking at the market, I mean, is there a particular gauge that you are looking at to indicate truly the level of risk or so that you think of is the most accurate reflection of of

the risk out there. Honestly, probably the best thing to look at in this sense, because the bond market is so liquid and so tightly controlled and kepting, is the equity price, because that's what's going to be raised five times. But not just with Mount Tapache, but in general. I was looking at Italian financial stocks this morning and they

were down, but not by that much. There's still above the average since the beginning of to Lie, So it doesn't seem to be that people are pricing in any any kind of banking crisis well, I thought they are from there they are that they're doing in a different way because the worst case scenario Italy can't can't bail itself out as it's trying to without state aid. But it's Atlante bailout fund and by this UM non public sector bailout of Montitapache, which will involve five times equity

recap potentially, you know, was supposed to be announced from today. Um. The only other way out is as a major state bailout. I mean, Spain had a sort of forty billion hand out from the EU and obviously that's what Renzi was

trying to avoid. But the the reality of things have got so bad down here that um, if they weren't able to make it a private sector bailout, then there would be a bailion of junior bond holders and there would be a some form of states EU lead all around package for indeed, for UM for the whole banking sector, and it wouldn't us be once of the past, you would be a much wider thing. But you know, UNI

Credit got a result this morning. It sold its pioneer asset management unit to very large French concern a Mundy, which manages over a trillion euros. So in that sense, that's that's that's the progress. They're instant timing and announcing it there, so that I think there's every chance still that this deal is going to get away. It just needs to convince a a corner stone equity beds behind Mount Apache that builds confidence that then have to sell

less of the equity than they were. We're thinking everything trips favorably if a technocratic government comes in um and seems to sort of level the playing field and we can move on from this. But it's a very carefully, very managed thing. And then you know, selling short monster Apacchi bonds is is not really going to get you very far. But one you can't borrow them, and to that they've already had the major debt to equity switch.

So got it all right, Thanks very much. Marcus Ashworth is a gad Fly columnist for Bloomberg News covering a European markets and you know, Lisa, I was looking at the Italian government debt public debt GDP. My favorite quote of the day after Brexit it took three days from markets to shake it off with Trump, three hours with Italy three minutes. This is Bloomberg. Well, imagine that Italian voters go to the polls and they vote no, want a referendum to reform the way their government works. You'd

think that the euro would fall. Not so euro right now higher by about a half percent versus the dollar at one oh seven. Also the dollar weakening against the British pound at one seven. Let's find out more from Mark Chandler. He is Global head of Currency Strategy at Brown Brothers Harriman. Alright, Mark Chandler, what's the answer. Why is the euro rallying? Well? Two eason? Same? One. I

think is that this referendum results was largely expected. All the polls that came out beforehand suggested that the referendum was gonna be rejected, and it was rejected by about basically a sixty vote. What this doesn't mean, though, and this is I think the you're is able to rally, is that does not mean that this is a victory for the anti establishment of anti elite forces in Italy. A former prime minister, Monty, who is also an EU commissioner,

came out against the referendum. So the members of Rendi's own political party and the Commerce magazine, which is no liberal, no like left wing kind of magazine. They also came out against the referendum. And so I think that the situation is, this is Italy. I mean, we're talking about a country that has something like sixty three or sixty four government since the end of World War Two. This is not about populism and nationalism. This is about idiosyncratic

Italian things. And so Italian bonds have suffered, Italian stocks have suffered. But after that knee jerk reaction, the euro really hasn't. Yeah, the German finance minister had a great quote basically saying, yeah, this is Italy. They know they're they're used to this type of thing. They'll work it out. Um. But there still is a lot of talk about how this does empower a sort of anti European Union mentality. And we certainly have more votes coming, uh, not least

of which is the is the French vote. I mean, do you think that people will get concerned in the upcoming months, are more concerned anyway about the breakup of the Eurozone? Well, I think you know on Wall Street, Lisa, and I think in many places in London people have been skeptical about the monetary union since to get go. I was one of those two people who didn't think Greece is going to drop out either time, either in two thousand and ten or a couple of years ago.

I think that people will get nervous. I think again, like like we saw with this past weekend, though, that they're focused on the wrong things. I thought that the Austria elections for president, where the far right candidate had had done very well in the earlier runoff in the spring, I thought that was gonna be more important than the Italian election. As far as those concerns about the e MU goes next year, I think you're right. A lot of people least are talking about the French election, how

well a PENN is running the polls. I want to tell you that before we even get to the French election, there'll be even a scarier election, and that is in the Netherlands, where the far right party is running ahead. In France, it seems to me that the other parties, whether it's the Republican that they've sent, a right party or a socialist, will end up in the second round to do anything to stop the PEN from winning. You don't have that same uh same history in the Netherlands.

So I'd be more worried about the Netherlands at this point that I am about France or Germany for that matter. Mark, can I just press you a little bit about your description of the reason why the euro is rallying against the dollar. I mean, you say that this was a predicted result. Well, okay, if it was predicted, then why

is the euro rally? Why are people buying euros selling dollars when you just said, first of all, it was predicted, and second of all you say that, well it's Italy, it's not a big deal because they're used to changing governments and you have former prime ministers also coming out in favor of a novo. What does that mean? Why? Why is that connected to the euro? Then? Yep, So

I think that what happened is this. I think tim that the euro had been on had been selling off sharply since the election, but most recently the new good news in the US, which would be the jobs data, but also the whole slew of data that we've had suggesting that the US economy didn't only grow well above trend in Q three, but it's headed for another quart of above trend growth and stopped having an effect on

the dollar. Why I think that. I mean, I mean you have that, but then also have rising interest rates in the United States. If you buy a tenure U S government versus a tenure Italian, you're gonna be making

more money. Why wouldn't you want dollars instead of euros? Well, I think that most people do still, But I think that in the short rum, we've got to talk about the different market segments, and I think that the short term market participants are being to take profits on what turned out to be a very large move in the euro, coming down from one twelve one thirteen, we got down to one oh five yesterday, which is a earlier today, which is a new twenty month low. So yes, people

have been selling the euro. But now I think that if the market some kind of rebound or some kind of reaction to that. Thanks for listening to the the Bloomberg P and L podcast. You can subscribe and listen to interview us at iTunes, SoundCloud, or whatever podcast platform you prefer. I'm Pim Fox. I'm out there on Twitter at pim Fox. I'm out there on Twitter at Lisa Abramo. It's one before the podcast. You can always catch US worldwide on Bloomberg Radio