Bloomberg's Talev Talks About Trump Oval Office Interview

and of course, on the Bloomberg. Howard Ward, the CIO of Growth Equities for Gabelly Funds, kind enough to join us here in our Bloomberg eleven three oh studios in New York. Hard Great to see you once again, and let me start with when I think is an important line from one of your most recent notes. You're right, this is feeling a bit like late nineteen Help us with the historical analog here when you look at the market. Well, that's what it was, I thought, as uh, as I

think many of your listeners have noticed. There's been a really tremendous rise in the technology number of the large cap technology stocks. Uh, in the last year, you'd be hard pressed to find one that has risen less than thirty percent over the last twelve months. In the case of Apple, it's about sixty above. It's a fifty two week low. Uh. You know, Amazon's up, Microsoft, Google, They're all up thirty plus. And uh, you know this is the and you're having days where some of these very

large cap names will move two to three percent higher. Uh, and a market that has an amazing level of complacency. Um. And this you can see it when you look at the VIX and you can just feel it from the lack of downward pressure in stocks. Uh. We we've gone a long time since we've had a five or ten percent correction, let alone a fifteen percent correction. And Uh, it's gotten too easy to make money. It's gotten too easy to make money in large cap tech. Uh. These

are great companies. They're generating a large sums of profits and free cash flow. And that's all good. But you know, at some point it probably makes sense to take some money off the table. And with respect to the stocks that I've just mentioned, I have sold a chunk of my Amazon in the last week. I still own a chunk of it, but I've I've been a seller of Amazon. Great company, but uh, you know, I think that the expectations for the overall market are somewhat inflated, and I

think the expectations for Amazon are as well. How does Howard board process and earnings report when this comes out, when the Apple report comes out after the buil today, what are you gonna be looking for? What's the first thing that you check? Well, interestingly enough, in this environment that we're in, unless there was a tremendous miss, uh

in terms of their revenues and earnings. Uh And and by the way, the sort of consensus expectations is two dollars and two cents of earnings for Apple for the quarter on revenues that are going to be real close to around fifty three billion dollars for which is amazing for one quarter. But unless there's a real miss, the focus is really going to be on the guidance that they give. Uh. Now you know that also is a bit tricky because Apple, I think appropriately has a tendency

to downplay their guidance, very conservative guidance. And we're heading into the the introduction of the tenth anniversary phone, the next generation of the iPhone, UH probably coming out this summer, and the expectations for this are very large, and that's one of the reasons the stock has done so well. We've had this rerating of Apple shares in the last year.

It's gone from ten times forward earnings to fifteen times forward earnings, which is still not exorbitant before a company of its size, where secular growth and the double digits is going to be a challenge, it's probably not far from where it's likely to peak. I don't think Apple is going to be selling it twenty times forward earnings, So the focus with the report is really going to be on the guidance. I'm assuming there's not gonna be a big mess. It's gonna be uh. There might be

some news on a new dividend today. They don't always do that together with the earnings release. In fact, they frequently decouple that. So let's not get our hopes up for that. But I think it's going to be a pretty healthy report. Apple is made up of a manufacturing worry by the gloomsters over the next product won't do it. You and I know that we've all known that, folks.

I mean, everybody's got this stuff. We have almost too many loggins at home on Apple, like they shut us down because we've got too many toys at home, But around it is a service sector that any other CEO in the world would die for. What's the sum of the parts valuation of Apple? Now, Well, if you've done that work recently, Well, what I can tell you Tom in the service part, Uh, it's not entirely uh separate from the phone itself because a lot of the services

buying applications through the phone. But really, but but the services is about eleven percent of revenues growing in a mid teen mid to high teen rate. I'll go with that. And and uh, this should over time because it's outgrowing the rest of the company. It's going to become a bigger part of the business. It should lend a somewhat greater to a somewhat greater multiple on the company's earnings

over time. It's not that material right now. UM. I think that the greater issue for Apple long term is can they protect that gross margin in the thirty nine area? Where is the gross margin created? Is it created in China, in the manufacturing process of logistics, or is it created in marketing or imagery or goodwill and bad? Well, they manage their costs very well, and they get a premium price for their product and so uh and by the way, the average selling price for the next gen phone is

expected to be a new high for Apple iPhones. So uh, they have continued to defy the skeptics with the pricing power of the iPhone. And part of that there's a quality of the goods, and part of that the Apple ecosystem, which tends to tie you into their applications. Uh, and their their their music, and of course they're now getting into the area of video content as well. How do you mentioned you sold some of your your Amazon stock are you? Are you recommending that more broadly? Is this

a time to a time to sell? Well? I think if anybody is sensitive to uh short term market results, if they have a tax exempt account, even taxable, if you're looking for an exit, what are you waiting for? Um You know Amazon, it is a great company, but you know it too was up more than more than

in the last year. And um I can recall back in the first quarter of two thousand, which was the last up quarter for the bullmarket of the nineties, and and and and um I took four hundred million dollars of capital gains and technology stocks that quarter doing it when I felt like maybe I was a little early, but there was the stocks had just gone too far, too fast. Um. And that's why I say it feels like that again now that it's it's it's gotten too easy.

You need to take some money off the table here. The valuations are more of a challenge than they have been, and you're getting more retail investment in these stocks, and of course the impact that E t f S is is very much part of that. So yeah, I would take some money off the table unless you're really committed to keeping your position for a long period of time. I would let me ask you a bit about growth.

We've heard the administration talk so much about the potential for three percent growth, for percent growth, certainly the unveiling of the White House tax proposal, we heard it again at what your sense of what the economy is going to do domestically, Well, let's start with the sort of expectations are right around two percent growth plus or minus point to uh for this year and next, and so the Trump administration would need to get much more successful

with their legislative agenda in order to ask, you know, improve on that but let's go back to the mathematics of how you improve your GDP growth, because it's pretty simple. You can have your existing workforce work more hours. That's probably not gonna result in much. You can add to your labor force and that's a one half of one percent,

maybe a one percent boost at most. Or you can improve your the productivity of your workforce, and productivity has stalled, you know, that's a one percent or less than one percent improvement these days, and so it's really hard to get a rate of growth north of two percent. And that's why we haven't done it for a while. Can you can you change the tax code and engineer growth or three or fourth three or four percent for a

few quarters? Yes, But unless you can go back to the equation of the productivity and labor force and how are you going to improve that, it's not going to be sustainable. Our word with us with good belly funds, David, I think we need to talk to edge funds. Two in t Yeah, our colleague Eric Shoutsker, number of our colleagues are at the Milk and Institute Global Conference in Beverly Hills, and there are some great interviews yesterday. More

will be on our air, both on radio and television. Today, Eric Shatsker sat down with Ken Griffin, the head of Citadel, and they had a very wide ranging conversation in which they talked about investing, They talked about the political landscape. But in Washington they talked about, as you say, the status of the future of hedge funds. Here's what he had to say. It's not just a shakeout for the

hedge fund industry, it's a shakeout for active management. Right we see the rise of passive money in ETFs and index products. We're seeing money come out of active management and head towards passive structures. Now, as that happens, the money that's in passive structures obviously is not pursuing elpha in the same way. That should make the markets a little less efficient, but should create a larger profit pool for those who remain. So we're gonna find a new

equilibrium over the months and years to come. Passive's gonna be bigger, Active is gonna be smaller, and the firms that are best able to assemble, analyze, and incorporate information in their investment decision making processes are going to continue to earn outsize returns can't grif from there. The head of Citadel speaking with Pelli Garic Shatzker yesterday, we've had that, We've we've been following this debate for so long, the active versus passive today. What did you hear there from

Mr Griffin? Well, that was interesting. And there's one Greek letter in there that there's discussion here, and that is alpha, beta, gamma, delta, vega, theta. They all mean different things to different people. But the thrust of this, David, is so many of our listeners are just trying to beat a benchmark, or even make the benchmark. That's the advantage of passive. You're gonna make the index, or maybe you want to beat the index.

Robert Kirby was a legend at Capital Guardian Trust in Los Angeles, and he would say, boy, if you can make two percentage points better and the SMP, you're living large. Mr Bogol and Vanguard has said maybe you will, some will, many won't. Alpha is different. Alpha's trying to make it so that you can get a two percent hedge fund fee and pick up twenty of the gain over some hurdle rate. It's totally different than like your four oh one K and so you've got to be careful about

the conflation of those two strains of thought. There is less alpha to be had. This interview happened about one thirty yesterday, one thirty Wall Street time, right after our colleague spoke with the President United States, and Eric asked Mr Griffin what he thought about that proposal the President made, or the fact that he's considering the breaking up the big banks, and Ken Griffin telling him he's in favor

of breaking up the big banks. He says he favors a new glass Steagle and said he saw some opportunity there for Citadel if that were if that were to happened. Ken Griffin a long time Republican donor, somebody who as an affiliated member of that of that party, has given a lot of money to that party. He talked a

lot about Washington the context of that. If you said a hundred days is not enough time to judge with the President, well yeah, I'll go with that, but you know, I would defer to the hedge fund manager Michael the Key, who has actually looked around at what people are going to do about this incredibly exciting idea of a new redux of nineteen thirty three banking uh to take us back there. It was a pretty ugly time for the nation. And to remind everyone, Glass Steagle's not an act, it's

not even a legislation. It's it's it's some paragraphs slid into a very slim three yet profound thirty four combo. No one's talking about any kind of reform, and particularly today, David, you're not going to get a slim act today. I mean just look at a voluminous DoD Franks Yeah, or even that funding billed at the House and saidn't have to vote on two thousand pages. They're going to be

presumably finding their way through this week. Ken Griffin saying his biggest concern in the coming years the US could slide into recession. I wrote, Eric Shouts grafted this interview. He very elegantly asked Ken Griffin about Citadel, noting that a lot of people have said it's a tough shop to work in. People come through, they get chewed, chewed up, and they move on. And I thought that Ken Griffin was like he said, there's a lot of good people

availble to hire. I would suggest people listen to Mr Ackman's interview with Francy Lay. I thought the New York Times did a nice treatment on Mr Paulson today in the cover of their Business section. All these guys is Ken mentions there are really struggling to have the opportunity for return, opportunity for alpha, given how dampened volatility is across asset classes. And I mean the VIX ten point one six with that nine print yesterday is symbolic of

a lot of other asset classes as well. You can check out all these interviews on the Bloomberg at tv go. Of course you can look at at Bloomberg dot com. It's well Bill Ackman and Ken Griffin and a number of other ones. Can we talk, say, John, can we do two Greek letters and one interviewer? Is that too much data? Was that the optunity in college? No? I wasn't looking for. That was a sorority. This is Bloomberg. This is a great pleasure. I will probably talk to

Chairman Bernankey about this. We'll see how much time I have David Gurrow joining us now. Next year will be the twentieth anniversary of Against the Tide. It was definitive. If you were cool, you carried Douglas Irwin's Against the Tide hardcover around with you. Some people, Doug actually read it. Hard to believe. I guess maybe the President United States

didn't read it. But let me ask you right now, in two thousand and seventeen, to vamp off of Paul Krugman's Ricardo's Dilemma, what you and Professor Krugman do in international economics and international trade is complex, isn't it. I mean, what Ricardo did on comparative advantage is a tough concept to grasp, isn't it. Actually just a few weeks ago, um, it was two anniversary of David Ricardo's theory of comparative advantage. Uh, And I've written about that. Krugman's written about that in

his little essay called Ricardo's Difficult Idea. And as we know in the classroom, it's very difficult even with bright twenty year olds to talk about this idea of compared to advantage. That's certainly tough in the policy realm as well. Is it difficult to talk to a grizzled seventy year

old sitting in the Oval office as well about comparative advantage? Well, he does seem that he has this zero some you know, a view of trade, and I don't know where that comes from his business background as UHM sino owner or property developer, where you know, in the casino, if the house wins, you lose in property. Either you get the property or someone else does. But international trade is a very different activity where both countries can benefit from exchanging

goods and services with one another. Professor, And what are we learning about this administration's trade policy at this point? We've been citing an interview that our colleagues did with the President yesterday. He said he's already to rewrite revise and after just waiting on the Democrats in the Congress to give him the authorization to do that. Of course, there's all this formality with the letter having to be sent in this and that. But we certainly saw the

countervailing duties imposed last week on uh softwood. Talk of that happening with Darry wilber Ross now looking at aluminum as well. What are we learning about the priorities of this administration when it comes to trade. Well, I think the administration is learning that politics is difficult. Their divisions within the administration about how hard alignes take on China and on Mexico and NAFTA, and also divisions between the executive branch in Congress over what to do as well.

You've seen some pushback from members of Congress who are afraid of just ripping up NAFTA because Mexico will retaliate against our farm ex sports. So we get Republicans members of Congress from the Midwest farm states who are very

much against that. Now, in terms of some of the other things you pointed out in UH softwood lumber or some of the anti anti dumping and countervailing duties, these are actually sort of relatively small product specific trade skirmishes that occur under any administration, So that's not really attacked or a switch in terms of Trumpet administration. But I do expect you'll see many more of those UH, smaller

problems cropping up as well. When you talk to the sector of commerce, he says a priority for the administration is more enforcement. Looking back on the last few administrations, to what degree was enforcement prioritize? What what stands to change here? What stands changes that Usually enforcement depends on the private sector petitioning the government, So an import competing industry will say no imports are being dumped in the market.

This is unfair. They notify the government, and the government launches an investigation. What the Trumpet administration promises to do is be much more proactive, not wait for the private industry to file a case, but actually say we're going to initiate cases on our own. And the statute that they've chosen to invoke now is a very obscure provision in the U s Trade Lock dating back in the

nine saying national security is an issue. So that was the case they announced just a couple of weeks ago regarding a steal um, and so I think we're gonna get any more trade cases that they themselves are going to start the initiation process and not wait for the private sector to to begin on their own. Professor ages ago, you did a wonderful compendium of Jacob Viner of Chicago

lectures in Economics three oh one. What should we learn from Jacob Viner about mercantile is m Well, you're Jacob Viner is one of the great students of mercantilism, one of the great scholars of all time in terms of

international trade. He wrote a terrific book called Studies in the Theory of International trade, and he wrote in the nineteen thirties and forties, and in particularly the period when the US was trying aft World or two to set up this new institution called the GAT the General Agreement on Tarifs and Trade, to try to bring down trade

barriers around the world. And he was a little bit skeptical that they could pull this off, because he realized that the pull of mercantiless thinking, the worry about that is going to harm the domestic economy if we open up to trade. Um is so powerful in the public's minds and in the minds of politicians that it's a

very difficult thing to do. And yet remarkably, over the past sixty seventy years or so, the US has exerted that tremendous leadership in bringing down trade berries around the world, and I think worldwide ecomic prosperity today that we see owe something to that. Douglas Irwin, thank you so much. With Dartmouth Coology as a wonderful book coming out later this year on our Trade policy Vintage two thousand seventeen. I just put on Twitter David Gura his classic Against

the Tide. I also put out Krugman's David Ricardo piece which is must must must read of the frustration of pros and talking about how trade can benefit societies even with a massive labor disruption in the wild, dispersion of wages and income. And I even did a photograph of Jacob Viner's classic summary by Douglas Irwin, brought you by Bank of America. Mary Lynch, dedicated to bringing our clients insights and solutions to meet the challenges of a trans

forming world. That's the power of global connections, Mary Lynch, Pierce Federan Smith Incorporated, Member s I p C. There's something new from Bloomberg. It's called Lens. Starting right now, you can use the Bloomberg Io s app off your iPhone or iPad, or our new Google Chrome extension to read any news story on any website, scan it, and then instantly see the news stories relevant market data from Bloomberg. In addition, see all the bios of the key people

mentioned in the story. It's called lens, and it is just that, a lens into the people and the data of any story you may be reading. Again, Lens brings you the power of Bloomberg's news and data download or Io s app or search for the Bloomberg extension at the Chrome Store to try Lens out. Learn more at Bloomberg dot com slash lens. Talking earlier about the Greek letters, we're elthinging it about Ken Griffith at Citadel as well. Maybe it's time to theta Julian. Emmanuel joins us with UBS.

He's does derivatives and equities for UBS. Will usually keep the conversation sort of not simple, but you know, focused on where we're going in stocks and bonds. I guess we could do that, Julian, but I want to talk about how everybody's smart. And there's a lot of research about the time function, the theta function on the X axis until you blow up in the bottom line is a lot of research, folks, is somewhere in the vicinity of three years. You can be a genius. You can

be smart. You can be oh I got out of that. Okay, you can be a genius. You can be smart four times a row, and then whammo, you get hit by one negative event. And that happens to every hedge fund, and frankly it happens to me. David Gura, John Tucker, you've never enjoyed the six experience because you're going up, up, up for hours. I'm an investment genius, yes, Julian. How do you protect yourself from blowing up? In the land

of data? It is a challenge because basically, when the market volatility is as low as it is now, it sort of seduces you into taking more risk than you might normally. Uh. We saw that in two thousand and six and two thousand and seven. That was when the concept of our value at risk got debunked. Basically, at this point in the cycle eight years in, you need to remain disciplined, and that means don't take on more

leverage than then you believe you can handle. And when you think about things that are causing you to perhaps reassess the position a stock, what what have you? Uh? Theta is actually very inexpensive right now. And hedges make sense when when you see the vix where it was yesterday, how do you react and what do you do? Disbelief to be perfectly frank, because part of this entire story, getting back to THEDA, the fact that that, uh, you know,

money should have some sort of time value. Um, we would have thought that with the FED beginning the rate hike, cycle, and we think they're going to hike in June. Um, that there would be a higher value to THEATA than there is now. But so to us. You know, again, it comes down to selectively looking at one's portfolio when things are a little bit too out of whack or you feel a bit uncomfortable. And frankly, we're seeing clients do that now thinking about hedging their US exposure as

they turned towards Europe. Um, it is a perfect time to take advantage of THEADA as they turned towards Europe. What what do you like in Europe right now? What's what's attracted to you there? Well, if Europe is going to work, Um, obviously political risk is is dead ahead of us on Sunday. But if Europe is going to work, it's going to be different than when it worked, uh to a large extent in the first quarter of two

thousand and fifteen. It's going to work because the economy is going to accelerate, perhaps uh pound for pound a little bit more than the US economy is going to accelerate, and so that leads us towards the cyclicals chemicals. Dare

I say financials Um? Well, we do, um, you know, and and again exporters, because this time the exporters aren't going to be as affected by a gently rising euro, which will happen, um if political risk becomes somewhat less next week, and if the economy does better because they're exporting to emerging markets who are picking up as well. Let's go back to the VIX ten point zero nine. We had a nine handle. I went back once folks, I looked at the daily charts of the VIX, maybe

even Introdut, I can't remember right now. It is ray Her now Julian to be where we are. If we're rare here, why are we at down twenty two thousand? Why is volatility so low if we're not bursting out to massive record hize. Well, it actually has something to do with and I don't know exactly what the Greek letter for this is, is something called low correlation. So basically, on a day to day basis, for the last three months, if you're looking at the Dow, you're looking at the SMP,

it goes nowhere and nowhere very quickly. Um. And what that means is the stocks underlying those indexes are all moving in different directions day to day, minute to minute and the reason that's happening, in our view, is because there's this incredible disconnect between what everyone likes to call the hard data where the economy actually is, and the soft data the confidence uh that you know gets tweeted about so often um, and the market is waiting for

those two to reconcile. How do you like the VIX when you look at measures of volatility? What does it offer you versus versus others? Well, it's it's one of those things in our business generally, the simplest, most accepted measure is the one that makes the most sense. Their derivatives of the VIX, there's you know, double levered inverse and so on and so forth. But at its simplest it just measures, you know, the perception of the risk

and the fear out there. And again, to us, it's one of those things we and and at extremes we tend to lose this perspective. The VIX is a mean reverting instrument, and the long run average is nineteen versus ten. This more, let's get philosophical, folks. Is philosophical Tuesday is cash an asset, absolutely, and it's becoming a more valuable asset with with you know every piece of fed Rederick. How do you position yourself for Sunday night or or

Monday morning. Tom's gonna position himself at buying up a getting some burgundy in Paris. But what are you doing to get ready for that a life You see the polling and see indications of where it's likely to go. How do you prepare for what happens once we do get the official results? Well before events such as this, what you really should do is plan where you think

you want to be several weeks in advance. And actually, when we think about the run up to both Brexit and the U s election, this one is a little different. People are saying, my goodness, hedges didn't didn't make any sense post Brexit, post the US elections, so I'm not going to pay up for hedges, which is why the

vix is where it is today. What you really want to do is have your portfolio in a situation where, if you know the the volatile event occurs, you imagine yourself to be a buyer down ten percent in the US markets. Um Likewise, if the markets start running away, you don't want to be chasing that to the upside. Is this discussion that we're having all about the great distortion? Is it just about the effect of central bank theory and practice upon the fixed income market? Did you just

carry that right through and process it right through the equities? Absolutely? I mean historians will be I'm just trying out my questions for Ben brunnki on you you know, run by

Julian Emmanuel at first. Uh, the historians will look at this period in awe because literally, you know, the suppression of interest rates worldwide, and part of what is potentially the allure of Europe next week is that the risk on mood, if it materializes, is going to take some pressure off the rate markets, and you know, we might start seeing you know, positive yields in some other instruments that might long been might exactly, but it determines everything

we I'm looking at the German two year right now negative point seven one nine, not in your record lows, but still very suppressed towards a larger negative yield everything considered. I also look at the Swiss twenty year. That's positive, but that isn't going anywhere. Nothing's talking positive yields here on my Bloomberg screen. We'll continue with Julian Emmanuel of Ubs Julian Emmanuel to Dove Chowel with this from Ubs Julian,

have you been surprised by earnings? To me from a distance, it's actually, oh, they're pretty good, am I right on that, absolutely absolutely? Um, you know this rises are coming from where we expected them to. Obviously, energy the year on year compare is very easy to remember the plunge below thirty dollars in the first quarter of sixteen. Financials had a tough quarter last year as well, and that's been a big bright spot. We continue to like financials and technology.

This is the second straight quarter of just knocking the cover off the ball. So the picture looks pretty good to us. What are you looking for today in the Apple report? What's it going to tell you about the state of the market overall? When you get better market well, we tend to focus on on the individual report by report all that much. But what will be interesting is if on the happenstance that there's a uh talk about cash, because um, that is one of the biggest holders of

offshore cash. And when we think about tax reform, repatriation is a big part of the puzzle, and we think that's part of the reason that technology in general has outperformed here today. Glad you bring this up, because that was a facet of this tax reform proposal that the

White House released last week. And we can quibble over what's gonna stay and what's gonna go, But based on that, do you begin to game out what that could mean for a company like Apple, what could mean for a sector, as I say, the tech sector, for for companies that have cash overseas, what that might mean for the bottom line, Absolutely, no question about it. And to us, they're the opportunity um.

In November and December of last year, when you know, industrials and the deepest cyclicals got bit up, whereas healthcare and technology, the two sectors with the largest offshare cash balances, underperformed. Was was something coming into seventeen that we thought was

was really a great opportunity. We've seen those sectors outperformed, and the fact is, when you think about it, we think they're going to continue out performing simply because when you look at tax reform, repatriation is the one thing that both sides of the aisle seem to be able to agree on. Jennifer Jacobs, one of our reporters who

sat down with the pressures because it was on the show. Yeah, talking about that interview and the degree to which the President, over the course of it, continue to maintain that we're going to get to three or four percent growth here in the US. And something that Jennifer pointed out was he seems to be doing this too make the markets think that this is happening, whether or not it's happening soon later. How is that playing here in your world?

What the President is saying by talking about tax form and the prospects for healthcare reform, even if we're not seeing much movement, is the only thing that matters, the fact that he's still talking about it. Well, when you look at the confidence numbers, clearly the talk has helped, there's no question about it. But again to us, when you look at a first quarter where GDP came in at point seven versus these confidence numbers that are literally at all time highs uh, you know its It brings

back that old Wendy's commercial where's the beef? You really need to see the economy pick up and move towards where the confidence numbers are. Are we in a trap now? Multiple stocks call it almost I mean it is, but there there is this valuation. Are we at a point where we're beginning to rationalize ownership by buying not one year out or two years out, but farther out revenues rings in cash flow. Are we falling into that, well, it'll be a good value in two thousand nineteen trap.

There's definitely an element of that in the marketplace, but I would suggest it's more in the sectors where growth is you know, tends to be at a lower plane

for longer. Consumer staples utilities in particular, we see some very high multiples there um And you know, frankly, if all of of the plans are going to unfold and the FED is going to hike and we are going to normalize, and we are going to achieve north of two percent GDP growth next year, interest rate sensitive stocks, low growth stocks, even when they beat on earnings, are vulnerable. What are you looking at outside of quis when you look at say the currency space, what what? What's what

are you drawn to at this point? What? What pairs? Uh? Oh, definitely dollar euro is is absolutely in the focus because to us, and again, unlike two thousand and fifteen, when you're about performed, it was completely due to a week Euro trade. The whole thesis was exporters are going to do great because the Euro is crashing, oil is crashing, so on. This is completely the opposite set of circumstances. We want to see the Euro strength and as a

sign that the global economy is is stable and accelerating. Julian, thank you for the up you and Emanuel with w b US there and particularly like the conversation on data. We rarely talk about theta are the xxes now we have a Washington intergy. Yeah, we continue to to look at, talk about analyze the interview that our colleagues, Margaret Talvin Jennifer Jacobs did yesterday with the President of the United States.

They were in the Oval Office with President Donald Trump for about half an hour yesterday having a wide, ranching interview with him. Margaret tal Of, our senior White House correspondent, joins us. Now, Margat, let me just start with where you guys started with that interview. The hundred day marker had passed. You wanted to look ahead with the president. What did you set out to do here in this interview? Well, yes, thanks, we set out to talk to him for as absolutely

long and would keep us in there. Uh, look, we wanted to see where he was going now looking forward, UM, you know, sort of a a mixed review or a humbling review of his first hundred days. He had the Supreme Court nominee, but in terms of most of the major other initiatives, they have at least been sort of

stuck or in process. But he obviously has his mind and not a number of different areas and sort of the big news he made in our interview, um well all seem to circle around the theme of things he'd be willing to do that would upend orthodoxy or defy expectations. Right, his potential theoretical willingness to have for him to be the person doing a direct talk with Kim John on

if it comes to that. Um, the notion that he might be willing to uh look at living in a gas tax, which would you know, would be very controversial among Republicans as well as some folks who would advocate for sort of middle class folks gas prices, etcetera. And then this idea of breaking up the big banks. All of these uh in sort of you know, different um channels would all upend orthodoxy, uh potentially depending on how

he pursued them. Yeah, and you you too. You and Jennifer weren't Dickerson Ushion part because we didn't hit the Obama wire tap question hard. But and it's certainly like if it had an a half hour. I mean, I'm absolutely curious about that. But look, we're Bloomberg and we're incredibly interested in all things economy, and he was interested in talking about them. He knew exactly what he was talking to, he knew exactly whose attention he was trying to get, and uh, you know Wall Street banks, uh,

and Congress. There was a tremendous amount of interest and reaction, although reaction I would say with kind of a let's wait to see what he's talking about sort of feel to it. Margaret, thank you for your comments. The other night I was watching on c SPAN the White House Correspondents Dinner. I thought those were important, uh comes that you made when when I look at Trump in the analysis,

I don't read your stuff, Margaret. I go to Trump draws out on Twitter, and my question to you is when he's doing the joke of Trump draws and the last one is I thought it would be easier there's all these people standing behind them. They seem to have evaporated in the last forty eight hours. Who is providing support to our president on the various and Sunday statements of the last thirty hours or is he really going it alone right now? His staff as top aids UH.

In the course of this sort of post under days reset, it seemed to be in more reactive mode, in part because they're not entirely prepared for all the things that he's saying. But I think we will see Gary constevenution working both on the Hill and in their public comments to try to sort of put offense and boundaries around what he's teasing with regard to banks when it comes

to um foreign policy. You're looking on at least behind the scene that at this being sort of again the job for hr McMaster for jamatics and for Rex Tillerson UH, and on a more public face for his team both in the press operation in the National Security Council at the sort of dial back some of what he said about Kim John and say, well, look, he's preserving his options, he's talking about what's possible, but we are not there yet.

But again, this has left a lot of Republicans on the Hill sort of saying, we need to really understand what he's talking about when he's seeking we're getting some mixed signals here. We understand he wants to keep possibilities does and keep people guessing, but we need a little more certainty. David quickly, Yeah, Margaret, very quickly. We're talking to Marty Shanker just about the message or what he learned from that interview about the relationship between the President

and Congress. And in the hour that has passed since we talked with Marty Shanker, your boss, our senior executive editor for International Government, President Trump has tweeted here about our country needing a good shutdown in September to fix the mess How's that going to ring out over Capitol Hill? Well, I read it a little bit. I read it as a as a dare to Republicans to consider pursuing the nuclear option for legislation as well as for for the

judiciary and for the Supreme Court. And so, uh, look, maybe he's telling Democrats get yourself in order or else. I'm willing to go there on a shutdown, But I think the messaging may even be more complex and be dealing with the balance of power. That what distinguishes the Senate from the House, and President Trump's are to consolidate power around himself. From Margaret, keep the president away from the red button on the desk, the one for the

coke of the pepsi. Yeah, cocon pepsi. Margaret Till, thank you so much with the important interview, yes, seriously important interview yesterday with the President of the United States. Uh, David, what do you make of this? You're covering the Washington beat much more than I am. Synthesized this for us as as you can do. It's it's fascinating to to

read through the transcripts of these interviews. About about a week ago we got interview the AP did with the President and you can really see sort of how he talks about these things, comes to talk about them in this interview. In the transcript for this interview, you see him pausing, wrestling with what to say, acknowledging, as we've heard from Marty and from Margaret, he recognizes the news, making no of of what he's what he's saying. UM,

I agree with Margaret. I see I see the dare here The line before that one about the shutdown changed the rules nowt to fifty one percent, as Margaret was alluding to, that would be a pretty radical reformation of how uh, the world's most famous deliberative body works in Washington. I would suggest that maybe in any regard, he just needs to focus on the here in present. And isn't

that the health care legislation? No, I think it's healthcare to get the Thursday based on what I've read, I mean that they don't have the votes right now, folks. The lights are on until Friday night at last. Yeah, I would say, well, but that's normal. I would say that that comest is normal as well. Thanks for listening to the Bloomberg Surveillas podcast. Subscribe and listen to interviews on Apple Podcasts, SoundCloud, or whichever podcast platform you prefer.

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