More Portfolio Pruning to Come at GE, Heymann Says

be back. A last Poor York, you write, A last fiscal policy in the US looks dead? What role when we look at the record numbers that we've seen this week, Dow hit in, how much of that do you attribute to the to the prospects still that there might be somewhere in the quarters of Congress work proceeding on on new fiscal policy. Well, not much, David, And that's a very controversial, an unpopular view. But consider the fact that emerging markets are up what thirty plus percent this year.

Let's take a look at the Eurozone business cycle. They have the same lift in business confidence and p m I s that we're seeing in the US. So you know, the idea that we can continue to attribute what's happening here, whether it's the market or data, to a surprise election that happened last fall, just to me seems like a real stretch. Now, maybe something minor gets done on the fiscal side, but in terms of sweeping reforms or an enormous tax cut, which isn't reform in my opinion, I

think the chances of that are quite slim. So we can extrapolate that further. It's not just the prospect of an infrastructure package, for instance, it is a tax form package as well. Well. Look, look, reform, at least in my book, implies that you are streamlining and simplifying that you're essentially paying for lower rates with base broadening. So it should be revenue neutral if you're doing it right. Is the gold standard, bipartisan revenue neutral. President Reagan wouldn't

accept anything less. This is not what I'm hearing coming out of Washington. I mean, they you know, they started discussing closing certain loopholes, and there was a violent reaction, and there's been a backing off. And now I'm hearing that you know, some of the Conservative members want a FED chair that runs it hot so they can expand the deficit, the same members that wanted a deflationary monetary

policy under a previous president. I mean, it's just jaw dropping when you look at that that list of five names, including Cheer Yelling. The president says he's considering those five. Um, how much difference is there between them when when you look at the effect they might have on the economy, effect on on the markets. Um, how satisfied are you with the list that that you have in front of you? And and do you think that each stands to to be different a different type of candidate when it comes

to the economy in the markets? Well, I think they all, you know, have their own particular set of strengths. If you know, you want to size the you know, the positive. As far as I'm concerned, I have a bias here. I mean, I think Yelling is on the list, and I think she's the most qualified. I think it's hard to take a look around, uh and not you know, just assume that she's you know, the best person for

the job, especially if you're interested in continuity. That said, she seems to have fallen out of favor you know, with some of the president's closest advisors. So now it looks like it's coming down to a tailor or a Powell. Powell probably would be the you know, candidate that would have the you know, the view would be the most continuity tailor. Maybe. I mean, if you if you're just looking at his rule, it's as short rates should be

hundreds of basis points higher than they are now. That scares some, but anyone who comes in is going to have to govern by consensus. So I don't think with any of these particular individuals you'd have an abrupt, radical, you change in policy. That's just not how the FED operates. You mentioned. Let me take opportunity to ask about seven as well as we can, sort of looking back on on the events of the week thirty years ago, what have we learned since then? What did we not see

leading into leading into a black Monday. Well, we've certainly had a few bad bear markets and significant corrections since then, But unfortunately for individual investors, it seems like they forget the lessons of the past and the sense that if you are you know, if you're not out of the market, and then a severe drop takes place or more. The best thing you can do is just grit your teeth

and hang in there. And that really goes against every human psychological impulse, right, I mean, you know, psychology makes us want to buy at the top and sell everything at the bottom. And it's really difficult to lean against

those impulses. But if we can be unemotional about it, look at the history, you know that's it's really you know, if you'd stayed in there, well, I mean, look how well you did even with two thousand seven and two thousand eight, right, I mean, if you weren't able to get out of the market before that, you know that huge bear trend started. If you just stuck with it,

you've done extremely well. But few did you mentioned earlier Good morning every one time Keenan David girl worldwide getting ready for Yankees Astros tonight, among others, say particularly good morning on serious Sex. I'm Channel one early morning, Los Angeles, coming home from the celebrations of the Dodgers. Michael Darny, you said earlier today on this linkage of bonds to equities,

when do we relink? When do we reattached to normality? Well, and so you know, you know that could happen two ways. It could happen with bond yields rising, or we could continue to enjoy equity price valuation gains. Equity price gains that push up valuations and you could relink in that fashion. Different models will have, you know, tell you that there's a different disparity. But one thing we don't have today that we had, you know, was a big divergence in

favor of bonds. Right, the stock market was very expensive relative to the bond market, and we had a big increase in long rates that you're with the stock market rising up until you know, we were in the late summer, I think we peaked. So three basis points surge in long rates. If something like that today would clearly cause a big stock market upheaval. So if that's your forecast,

and certainly you'd be negative on equities. But we tell clients, look, the Fed is raising short rates and reducing the balance sheet. All the things that were supposed to spike long rates haven't done it. So you know, maybe it's the new normal, Maybe it's debt and demographics, whatever you want to call it. The Fed being able, you know, being willing to undershoot the inflation target, consistently. You know whatever, these you know,

these forces are long. Rates don't look like they're headed up dramatically anytime soon, so we'll have to leave it there. Michael darda just terrific news flow this morning. Thank you so much for coming in my pleasure. Can you try to come in on a quieter fight. I'm glad it's it's great. I'd love to talk to you the day we hear about a fed sherman. Be happy to come back then, you know, pick up the MKM phone he

has in his car. He's got a red phone on the dashboard which is the the surveillance issue surveillance issue phone. Michael Darter, thank you so much to that. Further Ado, Nicholas Hayman joins us on our phone lines. Mr Hayman, I'm among the mix of people we talked to on general Electric has been more constructive. Uh, and we're thrilled that he can join us this morning. Nick, I want to cut to the chase which is in ge power.

Not so much as there a sense of fraud, but was there a sense of deception of how business would slow Well, certainly that was one of the biggest holes in the quarter. Oil and gas was also pretty challenged, but they took some raw right ounds in power um had conversion and I will have to see here, you know, I think that that uh UM, the business you know, is facing a challenge where it you know, shifts from developed countries too more, you know, emerging and non developed countries.

Gas servants are still going to be a functional part of the power solution on the planet. And GE's got the best product in the market. But as we just saw yesterday, Semans is closing eleven out of twenty three plans. What's your timeline for the magic of a new CEO. Is this going to be a hockey stick or a v I should say, where we go down and come

right back? Or is this going to be quarters of agony? Well, I you know, right now, I would have thought time that the market might have been thinking that dollar fifteen or dollar twenty was where we were headed this year. Obviously they suggested a dollar five to a dollar ten, so that would indicate uh still much larger structuring actions are to come in the fourth quarter, and presume only that will begin to set the path for next year

on a stronger footing. So instead of this year being you know part way down in eighteen at the bottom. We'll have to see, but my sense is obviously, uh at one, five, one ten, we're at the bottom this year. The question is where do you go back to next year? David Nick? How large does it does Jeff himiltloom in this in this quarterly report? Do you see evidence of his tenure yet? And and how quickly do you think of the new CEO? John Flannery is proceeding with the transformation. Oh,

he's proceeding at light speed. You know, there's no question about it. You know that he's changing the board, he's changing the senior management, he's changing the culture, he's changing the cost structure radically. And I think we're going to see a lot more of pruning of the portfolio. Not big things, but you know, Perwiphul, things that don't earn

their costic capital. Help an amateur like me. I print out this press release it's very easy to read with a lot of big font and blue text, and then attached to it, I've got I've got recast a G Industrials Finance tools and then as originally reported, G Industrial Financials.

Help me understand the difference between those two spreadsheets. Um, there have been four different sets of earnings from them over the last several years, and this has been one of the issues that um, you know, the company has taken a slant on earnings to exclude pension expands, to exclude contract assets, which in essence are deferred revenues that

are realized upfront. And um, you know, I think that uh as John goes forward, we're going to move back a lot closer to a gap number you know that's adjusted for games and or you know, one time costs or restructuring items. Do you load the boat this morning? I mean, if you love, are gonna love it here? Yeah? I didn't that. This is I don't believe a broken company. Remember that doesn't look like one of my screen nick, It doesn't. This is the heart of the matter, folks.

I'm looking at the financials on my screen, orders, backlog, the sum total. It's pretty darn good. The nick. Why is it start getting beaten up? Well, it's getting beaten up because people obviously, you know, I don't have much of a forward visibility right now, not only about the earnings, but people, you know, the questions are around the dividend and um, you know, is the dividend that right now the markets discounting something in the neighborhood of reduction in

that dividend. And the question is, you know, is that a good decision to make um? You know, given the company has certainly got playing of liquidity, the debt trades all above par um. They're ahead of plan on cost out at one point two billion. We thought they might get to one four. They promised in April to do

a billion. So there, you know, things are are, you know, and they've they've brought out, you know, you know, all brand new products in the last two or three years across all their businesses that are state of the heart. I believe it's November. What's Nick Hayman's number one question November at the analyst meeting where you animals go up against these guys and you really get nasty. What's the nasty?

What is the what is tom what's the pathway forward for you know, revitalizing the cash flow from operating activities? We need fifteen to sixteen to sustain the current level of eight billion in dividends and a normalized level of you know, capital spending it two and a half to three billion, and you know, if you can get to fifteen or sixteen next year, which obviously this year they now project seven instead of twelve to fourteen. And you know we thought maybe it'd be eleven with a lot

more restructuring. Well there's more restructuring and write downs to come. Thank you for the very greatly appreciated and it came into the heart of this most historic day with general elector just an ugly statement in the stock down. Stay with us, this is Bloomberg, David, why do you bring in our steam guest? We got Jeff Sprague coming up on g I should say, after Nick came and thrilled.

This is what we do on surveillance. Give you a set of opinions on general Electric and we'll do that with Mr Sprague in a bit, David, why don't you bring in our steam guests? The former basketball player who shot hoops with the President Obama one of many items on the CV. That's a Bob Hornet's vice Chaircassinger associates from we're Under Secretary State for Economic Growth, Energy and the Environment here with us, As Tom says in our Bloombick eleven three oh studios. You missed it earlier in

the week Tom was practicing the president. She clap on air the constant clap that we are during the address that he gave to the People's Congress. There's this one helping us. Well, that's one tradition in China that the audience claps for you, and you clap for the audience you go. So it's part of the way Chinese culture works. There. We got a very nice thing. But they're good at it. They're very good at and they have a lot of

time to do it. Three hours to start. It's just what's called the work program or the work report, and it's traditionally very long. It's who start, who do we blame? Now? It goes way back. I mean, the work report is provided by the current UM Party secretary, who is now shipging ping about the last five years under his tootledge, under his domain, and then about the next five years. So it's really a long report. And it's good actually that it's long, because it really represents a consensus of

freaking in the party. I actually, come on, President Trump is looking at that, going, David, He's going, I could do that, he could do that. But the fact is it's filled with a lot of interesting stuff. That there's a lot of general language in it, but almost every time this report comes out, very specific things occur afterwards, even though the language itself seems very general. For instance, just an interesting number. President John Zaman mentioned the market

fifty four times when he gave his report. Party Congress President she mentioned it eighteen times. So it shows you, when you look at it and you do your sort of analysis, where the emphasis is and how it's changed. Those things they don't seem to be useful, but in effect they do reflect a consensus on the party. Harman's just looking at the way the white smoke blows when they when he also has uh, there is such a heavy brid of expectations leading to this event. What do

we learn from this? The speech itself, it had a long time horizon. He's looking at many decades out. What what does China look like in his vision here twenty three years out. He sees this as a new era in China, where China has gone through some economic difficulties and is now particularly as a result of how well it survived the financial crisis of two thousand and eight and the difficulties and had a couple of years ago,

feels a lot more self confidence about its economy. It's growing at six point seven six point eight per cent, so the economy is moving ahead. He's positive about that. He's also very assertive about China's role in the world. That China wants to be at he put as he put its center stage, and that is it wants to play a greater role globally. It certainly wants to play

a greater role in the region. The US has obliged him by pulling out of t p P, giving the Chinese trade negotiations that are going on the RCP more opportunity to reflect China's point of view. One Belt, one Road is going to link China to the rest of Asia and Europe and other parts of the world. They have a new base in Djibouti. They're playing a stronger

role in Southeast in South China. See. So he sees a more confident China economically at home, a more confident China, broad and more assertive China, and China is going to play a greater role. And this is the hijin Ping era. Mao started the new China after the revolution, Don got the reforms underway. Shijin Ping will lead China and to a new are of greater economic prosperity and greater certain

rests abroad. It's a new era in his view, and China will be center stage at the world meetings of various swords like the G twenty and elsewhere, and that will give China greater prestige, which Chinese want. There there's a strong feeling of nationalism and that we have a role in the world to play now as we did a couple of hundred years ago. Here's dumb question. Tom's gonna allow me a couple of them here on this this Friday. What's the role of the party in China today?

How much has that changed over these generations. Role of the party is stronger today under shi jin Ping uh in part because Shi Jinping is a strong leader. He's the leader of the party. He believes in the party. The other is that they have established in order to get things done, what they call these small leading groups. The leading groups are led by Shi Jinping, he's the chair, and they bring in party leaders and other government leaders.

But the point to make about this is their groups under the government, under the leadership of the Prime Minister, and then they're smaller groups that are led by the head of the party Si Jinping, also of course out of the government, but also involve members of the Standing Committee of the polit Bureau and other senior leaders. We haven't found out how that's going to change, who's going

to see that. We haven't found out what the Standing Committee is going to look like, but they'll be probably as the world last time, seven, although it could be reduced to five. One of the key questions is Wang shi Shan, who is now the leader of the Anti Corruption Group but also very knowledge about the economy. I work with him a lot because he was the economic guy at the strategic any kind of dialogue with the US,

so I've gotten to know him quite well. It may well be that he retains his role in the Standing Committee. Wang Yang who is the current economic guy, the Vice Minister for Economics, as a candidate for the job of a member of the Standing Committee, another guy I've worked with. So I'm actually fairly comfortable that at least I've had a chance to meet and work with some of these people,

and they're basically knowledgeable about the global economy. They want China to play a greater role in the global economy. They're used to working with Americans and foreigners. These are very sophisticated people, um who are going to be at least candidates for this What are they going to say to their counterparts from the U S when they get there in a couple of weeks time. When you talked about the Strategic Economic DIALOGE, they were these formalized meetings

over the years under these past administrations. That's changing someone under this administration. How robust is that relationship now? How essential is this first meeting going to be For a lot of them, it will be very important because of course President Trump is going there in November. But I think what China is saying, what President she is saying, is we're going to assert our interests. We're not going

to be pushed around. He didn't mention in any detailed relations with the United States, but it's clear that he understands he has to work with the United States. He it's not that he wants a confrontation with US, he does not, but he wants to assert Chinese use and

he's saying, our economic model actually is working. So if your country is around the world thinking about what your econ model ought to be, take a look at how well we've done, but I'm gonna get this question and then we'll come back with you and continuous Is there just a brilliant discussion in ken Burns Vietnam video the ten episodes, our relationship with China is one of the constant changing events throughout Do you see continuity here? Are we just going to continue to change and evolve our

relationship with China? I think it will change and evolve. In part, they'll be continuity because there's a lot of business relationships and financial relationships we work with him, many of which he established, And that was really one of my roles. I thought that the history of the next ten twenty years would be written in part by how effectively we work with China, not that we're always going to agree that we would embed our relationship. Is that going to change? I mean, are you going to be

in a ken Burton's video? I think. I think that the Chinese are gonna want enter in a position to assert their interests to a much greater degree in global institutions, certainly in regional institutions, and they were in the past. We don't seem to have a strategy. We don't have a TV precisely where I seem to have a don't with them, and unless we did commercial, I got to

go to commercial spot, commercial ambassador. Right, We're gonna come back and continue this important discussion, was Elliott Kissinger associate. David's better at this than I am. I' gonna let him pick it up. But I got one issue, you say, a key guy, because we're all Hong Kong and the Brain, Shanghai and the Brain. Some of us have been to Beijing.

There's a whole another China out there, and one of them is is it Chung Ching is at the right production which is in southwest China South and it's where Shang Kai shek was in World War Two. It's one of the four big cities that are governed by a senior party secretary. UM And why are you looking at Chong because Wang Yang, who I think could be he's now the Vice Premier for Economic issues and someone I've worked with variable guy, he used to be party secretary

in Chung Ching. And there's another person we haven't heard much about, but we will, I expect, because I think he'll be on the standing committee. Is a guy named Chen Manair who is currently Party Secretary of Chung Ching. So it's what's what's interesting about China is when an American president comes to office, he's a senator or a governor from unless he's a businessman from a certain area

like Illinois or New York for California. Virtually every one who goes to the Standing Committee of China, of the Standing Paunit of the Polar Borrow has served in several provinces as party secretary, so they know the country. They know the country very well. And many of them have served, including uh President Hi Jin Pain in some very rural areas and some urban areas, so they know the country well. There. It's a very different perspective that they bring to this job.

They've been party secretaries, They've been proved to be successful elsewhere, create jobs, create growth. But they know the whole country. They don't just know one part of it. And that's a very interesting difference in the governance process of China. They also, at sixty eight are supposed to the part office, or at least not be reconfirmed. This time. We may see a surprise. Wang Shi Shun is sixty eight. Now

he is a very able guy. He may be retained to stay on even though he's now reached the tradition a time frame. David, Bob, your your enthusiasm for this country, this region is is palpable, and I wonder why you think it is. This administration doesn't seem to to share it. I know that the Assistant Secretary of State for East Asian Pacific Affairs is somebody feeling that they have not

nominated something that I've seen. There's an acting Assistant Secretary m Rex to listen spend there a couple of times. I was speaking with Secretary Albright yesterday and she said her first trip to China was I think less than a month after she was named Secretary of State. Is the level of engagement enough? And what would you say to this administration about how engaged they have to be with China going forward? Well, the level engagements definitely not enough.

I started going to China in the early seventies when Mao was Party secretary and Joe and I was premier, and so I've seen it change. And the one thing about it is we will find many issues where we agree and many issues where we disagree with China. The critical element is, first of all, to understand it and understand the people who are leading it, understand the people who are leading it, and the fact that they have

to be responsive to public opinion. It's not a democracy, but they have to be responsive to public opinion, and understanding that public opinion is very important. Also, understanding how China perceives its interests is very important. You can't do that sitting in Washington or New York or anywhere else. You've got to go to China talk to China, and not just go Thomas mentioning a moment ago to Shanghai or Beijing. You've got to go to these middle levels

or inner cities. And these are big cities. Chung Chang is a very big city, chung Do, Western China, very big city. So you've got to really see China, understand that there's China, and then there are various provinces. The provinces have different points of view, but virtually anything of consequence in the world over the next several years, certainly in the economic area and almost every part of the security world, is going to depend to some degree on

how the United States and China work together. So it's not something we can dismiss or or take lightly. But we also have to make sure that we have good relations with our allies, our friends UM, Japan, South Korea, the EU, because in fact we're stronger in dealing with China if we have strong friendships and alliances of other

countries as well. The Chinese have the same idea. They're trying to develop strong partnerships and alliances with other countries, so they understand this is one to one, but it's also groups visa v groups, Bob, I believe if I saw Kenra, you know, I had Ken. I had a beverage of my choice in my hand through most of ken Burns Vietnam. But I believe a Republican president quote

unquote open China. Is this administration now anti China? I think this administration's probably not anti China, but some of the things they're doing are going to make our relationship with China very difficult unless they understand. And perhaps this trip by President Trump will help this understanding. Understanding that China is going to be a more assertive player, and while we might not agree with China and won't agree with China on a lot of issues, we have to

work with it. Nixon understood that, he understood that there, and he was a traditional, very conservative Guy've been interested, you had to work with China on key issues. President Trump has to come to understand you have to work with China and you're not going to push them around. You're not going to push them around because they feel a sense of confidence, they feel they've been quite successful

on their economics. They feel they're in a stronger position, certainly in East Asia than they were five years ago. And we have to figure out a way of what the Chinese called win win situations, which essentially are situations or solutions that enable us and the Chinese to come away feeling we have each made progress. That takes a lot of engagement, a lot of engagement at senior levels. And you know Tillerson has going there a couple of times and has tried to do this. We have to

do it across the board. But it has to be done because the world will not work well. The global economy won't work well, global security will not be stable unless we find some way of working with China, even if we don't agree, at least figure out a way of managing our differences. That the j c POA and what we saw from a President Trump a couple of weeks back, he essentially punting a decision over to to Congress to figure out what to do with that run

a nuclear deal. You mentioned Nixon in China, he seemed to own that part of that foreign policy portfolio. I think of President Obama doing the same thing with with Iran. It became something that was squarely centered in the executive branch. Do you understand his motivations for moving it over to to Congress? Did that makes sense to you what he elected to do last week? Well, it made sense, um if you look at it from a domestic political point of view. He didn't want to have to re certify

the graded teeth, the sanctions lifting every ninety days. Um. But what troubles me about it is that if the Congress decides whatever it decides, if it decides to reimpose sanctions or or or the President said, unless we can change the agreement to comply with the kind of criteria he put into his speech, like eliminating these sunsets or doing a number of other things, Uh, then he's going

to reimpose sanctions himself. The Congress if they can't reach an agreement, or we can't reach an agreement with their allies and the Iranians to change the agreement, he said he would reimpose sanctions and get out of the agreement. The problem with that is, what's the strategy getting out of an agreement UM and tearing it up and reimposing sanctions.

You can you can predict what's gonna happen. One will have a big confrontation with their allies because our allies understand that the Iranians are complying with the agreement, So they're going to continue to trade, if and invest in Iran unless the United States takes very tough actions against our allies to try to prevent them from doing that, which requires UM we will lead to a split, will

lead to friction between the US and its allies. And second, if the Iranians say the Americans are violating the agreement, we're going to start a more advanced, more intensive enrichment program because we now feel free to do that, Then what do we do in the region. I think we're in a much better position with this agreement than without it. Is it perfect, no, but we're in a much stronger position.

If the Iranians cut back as they have on their enrichment program and their reactors UM, then then at least we have more transparency and we have a state belie ambassador. Thank you so much. Robert Hormance with us this morning, coming up on General Electric. This is Bloomberg. I'm going to get it right to it. I think it's it's really important to uh to do that uh this morning, and we'll do it. Uh what what What's important to me, David is there's like crossroads states or you know, states

that are so diverse and odd and strange. Illinois, Florida, Maryland is like a mini Illinois, mini Florida. It's a hugely diverse state. It's it's really cool and and one of two representing that state in the U. S. Senate is our next guest, and there Chris van Holland, former cocusman from the eighth District in Maryland, now in the Senate. Among the committees he sits on is the Budget Committee.

And let's start there as we look at the what comes next year after the debate over the debate and the vote over the budget last night in the Senate. Give us your reaction. First of all, I've been scrolling through your Twitter profile this morning, center Fan Hall. I think your your your distaste for this piece of legislation there is is pretty apparent. Give us just a quick quick sense here of of of why you didn't like

this piece of legislation. Absolutely, And first you're right about Maryland. We call it America in miniature because that's geographically endemocratically diverse. But look, and that's a good place to start on this tax plan. This tax plan would really hit uh, Maryland hard as it would the other forty nine states. Unlast, you're at the very top of the income stale. If you're a millionaire, a billionaire, this is a great tax

plan for you. You will get a walking big tax break, but a lot of that tax break is going to be paid for and two sources. One, a lot of middle class taxpayers are going to be hit hard in large part because of their removal of the deduction for state and local taxes, but also other elements. And then their budget sets it up so they could also cut things like a Medicaid by close to a trillion dollar, or's Medicare by close to five billion dollars, cut education.

So at the end of the day, between middle class taxpayers are going to be paid more and folks who are going to see less services, whether it's Medicare education. This is a tax break for very wealthy people, paid for by pretty much everybody else. I look at the present statement from last night. In previous statements, there's been some semblance of an olive branch. You're hoping to work on things in the bipartisan fashion. I don't see that with with this statement from last night on the budget

and tax reform. From your vantage, how much bi partisanship is there on the issue of of tax reform. We know that Senator or in Hatch, the chairman of the Finance Committee, is working away on on legislation on the Senate side. Have you seen all of branches? Have you been invited to participate? What what role are you and your Democratic colleagues playing at this point when it comes to the tax reform process. Look, I think it's been minimal, unfortunately,

because we would like to participate fully. I believe we do need to simplify our tax code. We need to make reforms to our tax code. We should do it in an open and transparent way. We should make sure they're hearings where everybody can weigh in on the impact these proposals will make. But so far, we've seen this proposal put together behind closed doors, little pieces of it

trickling out. What we have seen has not been a good We all know that when they actually did successful tax reform back in it was done in a bipartisan way. And the reason this budget vote is so troubling is because the only reason for this vote is to set up the fast track so called reconciliation process in the Senate, which allows them to jam it through on a purely partisan basis. So we need a bipartisan built You know

your your caucus well. And I want to go back to a line from the President from earlier this week, he met with members of the Senate Finance Committee at the White House, and the marks to the press, he raised the spectru of there being bipartisan support for tax refor him, he said, he's not going to name names, but there are those who said that they are willing

to support it. Does that job with what you're seeing on the hill, what you're hearing from Democratic colleagues, do you think that there is, maybe hidden from site, a number of Democrats here who are in favor of the framework that's been offered by the Big Six. I think that there are Democrats that would support what the President has publicly claiming about this tax plan, but which does not reflected in the tax plans that they put forward

in the Senate. So I think you're gonna you would find road support for a tax plan which really focused on providing uh, some tax release to folks in the middle class, uh, and a tax plan that met what was dubbed the Steve Manutin rule when he announced in November two thousand sixteen, which is there'd be no net tax breaks for the very wealthy, and one that did not explode our debt by another one point five trillion dollars.

So you know, the President has been saying he likes those principles, but they are not reflected in the plan that he's been touting around the country. If you're just joining us right now, Senator Van Hollen with us of Maryland Democrats from Maryland, uh. Fourteen years in the House, Senator Schumer has put him on a couple of prestigious committees, and also he's on the sub Committee to Save the Baltimore Orioles, which is a Senate committee of very great

special Caucus Save the Baltimoreals as we can. Sen Holland long ago and far away in another life, Congressman Emmanuel said to you, you got to go out and recruit Democrats, and you've got five star accolades for doing that. After what you witnessed in the last election, are you gonna be able to go out and recruit Democrats that can shift from an east coast west coast mindset to the middle of the nation where some would argue you lost

the presidential election. Can there be a new recruitment process in your Democrat Party? So I'm focused right now on the two thousand eighteen mid term elections, right the Senate elections. I think you're referring to the fact that chair the Democratic Senatorial Campaign Committee, UH, and in this particular cycle, of the thirty three senators are up, twenty five of them are Democratic incumbents. UH. There are eight Republican UH seats that are up, and in fact, we've recruited some

very good candidates from those states. For example, UH, in the Vata, Jackie Rosen is our candidate. In Arizona, Kirsten Cinema is our candidate. Both of them are currently House members. And we've got other candidates that have been recruited in

a really good candidates in places like Nebraska and other places. However, the Senate map this time around, Uh, it's just tougher for Democrats in terms of the number of number of seats to where you have Republican incumbents versus Democratic incumbents. But I agree with you that, look, we need to we need to focus on a broad and deep economic message focused on jobs and wages. These are things that everybody cares about. That doesn't mean we do it to

the exclusion of important questions of social justice. The Democratic Party will always be the party of inclusion. But inclusion also means, you know, making sure that everybody can benefit from growing prosperity, and we need to we need to drive economic growth, but do it in a way where

more people benefit. Center Van Hollan. In the last couple of minutes we have with you, I know that you'll you'll recognize that the issue who is going to be the next FED chair is important to those who are listening to to the show here on on Bloomberg Radio. You sit on the Senate Banking Committee as well. Give us a sense or your sense of of how you think those hearings are going to proceed. Once we get a nominee from the President to to get to head

the FED. Come two, what are those hearings going to be? Like, what do you want to hear from the next nominee to be the chair of the Federal Reserve? Well, I would want a nominee the Chair of the Federal Reserve to UH be focused on both prongs of the Federal Reserves mandate. So yes, UH, they've obviously got to keep an eye on inflation, but they've also got to make sure that they're focused on UH employment and making sure that we have a strong economy with high levels of employment.

So you know, in my view, the current chair has done a good job of that. But obviously we're watching the series of interviews that the President's undertaking, UH, and they'll have a nominee. But from my perspective, you know, I want somebody who is going to be UH focused on making sure that we put America to work. You look at those those five nominees, does does any stand out to you? Is not qualified? Somebody that you don't

think you could support. You know, I have not had a chance to really look into the background through all of the nominees right now, and so we're kind of waiting for the President to make his choice, and then we'll have an opportunity to really scrub the records. Cal Ripkins on the show, someone you can go as a senator, Senator Van Holland, thank you so much from the great space of pleasure. Thank you. Just love talking to uh, these senators and these congress men and women about the

geography the culture that they encompass. Maryland is extraordinarily underrated for diversity. We just look at his balmore and you know the train goes through on the way to Washington, and that is David beyond silly. It's much much more there To say the least, this is a joy. He's put out three missiles in the last couple of days, one of them on Snapchat. We'll try to get to that in the second block. But as usual, Rich Greenfield, total class actor said, I guess I got step Chat wrong,

and we'll talk about that. Maybe nobody cares B T I G. And of course, wonderful work on media. What stopped me in my tracks, Rich, was your legacy media memo of a few days ago, which was a clarion call stop screwing around with stock by backs in short termism and start thinking long term. What's the shift in

the autumn of two thousand seventeen for legacy media. Look, these these companies are really focused on, you know, trying to maintain earnings, achieve Wall Street expectations, to make sure the executives get their compensation, which is usually tied to earnings growth targets. And they're all failing to to miss that the consumer behavior is shifting rapidly. The whole world is kind of rotating around the mobile phone, and they're

nowhere to be found. And rather than investing aggressively, either through acquisition or through kind of organic um investment, what they're all doing, or so many of them are doing, they're gunning their share by back. And Look, we can debate how fast the media sector, legacy sector is falling apart bundle, you know, kind of the fall up and subscribers and cord cutting, advertising, things that you and I have talked about before. We can debate it, and there's

so only different rates of the climb. But what I think is incredible, Tom, is how can any board of director look at this space and go, God, I am confident that the future looks good. I'm gonna buy my own stock that's the best place to put capital. That just seems to irresponsible. I mean, Disney's bought more stock than any company in the space over the last Okay, is Disney? Is Disney? The next is Disney the next General Electric? Now the folks, folks, we can talk about

ge with oir, NBC, universal ownership, etcetera. Now over to Comcast in such but is Disney and other legacy media are they the next General Electric? I think it's a real fear that you have to have looking at this space.

When when management teams focus on share buy back, it usually means the industry is mature, and you know, I think there has to be far better places for Disney to put capital than reinvesting essentially in what is a meaningful chunk of ESPN right now, not to mention movies that kind of a pinnacle of success over the last few years. The odds of continuing that success are low, and so look, I just think it's it's really hard for me to imagine how the boards get sign off

on buying back lots of stock. I mean, it's one thing if it's a small part of your capital. You know, you look at Facebook, they buy a little bit or Google, they buy a little bit, but for the level of investment that some of these legacy media companies have done, it really just looks irresponsible. Uh. I pick up the New York Times this morning another horrifying tale about Harvey Weinstein, this one written by Lapide and the Ango, and we're

left to wonder what happens to the Weinstein Company. We had a conversation a little bit earlier in the week when we learned that College Capital was taking a big stake in the company. What happens to this, to this, to this company? Rich? I mean, it's been around for a while now, Dimension is reportedly still doing well and making money. Uh. Is it going to be sold off in pieces? What do you think the future of it's going to be? Honestly, I think that's really difficult to

tell right now. Look, film libraries or film and television libraries have lots of value, But how you extricate the assets from all of the issues, and you know, without knowing how long the issues go on for, it's just not clear. I mean, there's absolutely value in the properties. I mean, we've you know, over twenty three years of analyzing this space, we've seen lots of film libry worries and TV libraries change hands. Uh, they're pretty scarce resources,

so there's certainly value there. But but when you know, look, I assume most companies in the space would have interest in a film and TV library. The question is is you know, when are you able to buy it without hair on it? And how long do you think that's going to be? I mean that that is the that is the ten question. I mean the company, the company is gonna change his name. Bob Weinstein says, that does does that make it more palatable? Do you think to

perspective buyer, Yeah, I don't know. I really don't know. All I'd say is that the asset isn't big enough where it moves the needle, you know, for any of the an agers. And I'm sure everyone would have interest. But I don't think you know, this is um you know, I think there's far bigger implications in the story than who ends up owing the asset rich. What is the implication of all the money that's going to be thrown at content, everybody piling into make you finding the next

Game of Thrones, et cetera. What's going to be the outcome of the wall of money coming into l A and New York. I think it's very simple, Uh, in very severe pressure on linear TV ratings. You know, there's only so much time that you and your listeners to this show have. There's great content. You know, Apple's investing five million an episode named Steven Spielberg Show. You know, Amazon is taking a much more you know, much different approach now, going for kind of higher end comedies and dramas.

Netflix is going to do eighty movies next year on their service that you don't have to go to the theaters to see, let alone all the TV series. There's so much competition for your time that though, why turn on TV and start watching the show tonight that has eighteen minutes of commercials and you have to wait to work between episodes? That, um, that is in deep trouble. And so I think that's the biggest takeaway is that TV is in trouble. Well, let's do this, Rich Greenfield

thrilled to have them with us. We're going to continue with Mr Greenfield of bt I G yes, we'll speak of Disney, David Gerr and Tom Keene stay with us. This is Bloomberg Rich Greenfield with us in media. Rich, would you acquire shares of Generous Electric this morning, I have no idea way outside of my category of knowledge. I focused on media companies, which g hasn't been for many years now. But but they tried to do it all maybe and there was a conglomertus, which is the

conglomerate in your world that is most apt to deconglometorize. Well, look the I think the company that's done the best job and probably be remembered in the history books as being the smartest CEO that's ever lived in the media

space d Time Warner and Jeff Bucas. Not only did he de conglomertized, you know, basically split apart a O. L. Warner, Music, Time Warner, Cable, Time Life, you know, publishing, but to finish it all off, not only did it break it into all these little pieces and get smaller and digestible. He ended up just as the industry is starting to um think literally think Tom. He sells the company and

gets out for fift cash. And so while the whole sector has underperformed, look at the success of Time Warner for shareholders. You know, it's pretty amazing. If you look at you go back to when Bob Iger got up on a conference call in August of he basically signaled a big inflection point for the sector where he talked about cord cutting starting to affect ESPN. Since that point,

Disney's lost fifty billion dollars of value. Kind of all of the big cable network driven companies collectively have lost ninety billion. But Time Warner is actually up over that period of time because they sold. And so that's the key thing is is selling has been the only way you've created value for shareholders in this sector over the last couple of years. And David Garrel, We're gonna do what we do best, which is steal ideas from our guests. I'll do a chart of that. We'll call it the

rich Greenfield chart. But it is not remarkable to see the differential between t w X and d I S. It's a little shameless left here on plimpic surveillance. Let me ask you about your sense of the regulatory landscape and watched in d C as we see more regulators being appointed and confirmed. Uh, and you mentioned Time Warner. Of course, is the A T and T Time Warner

deal is still sitting on the back burner. Do we have a better sense here of what this regulatory landscape looks like and and and what that's going to mean for for conglomerates and for for dealmaking. You know, unfortunately, I don't think we do. I think we're gonna learn a lot over the next few months. You've got a couple of very big deals, and I wouldn't say they're back burner. I'd say they're actually, you know, finally kind

of sitting on that front burner. And we're gonna get a real sense of whether how the Trump administration thinks about deals, you know, in terms of big one in my world obviously the Time Warner a T and T deal, which appears like it's going to be pushed through. The one that's a little less clear, although seems likely is Sinclair Tribune uh. And obviously that's a huge consolidation of a broadcast industry merger that we should find out about

over the next several months. And then obviously, in Walt's world, Walt ty sink, I'm talking about B T I G telecom analyst. You're obviously, you know, have the question marks around whether or not we see a Sprint Team Mobile deal. But you know, all of that will probably give you a better sense of what isn't is impossible from an antitrust standpoint in this administration. Just while we're we're in Washington, let me ask you a couple of questions about the

social media companies that you follow. We we're looking ahead in November first, when maybe not the heads of those companies, we've learned, but high ranking members of those companies are gonna come to the Hill to testify. How much does the weight of Washington scrutiny weigh on on companies like Twitter and Facebook right now? Look, I think everyone is you know, every social or every Internet company should be

concerned about greater regulation. I mean, there's no doubt that the lack of regulation has certainly allowed these companies to flourish and the Internet to flourish more generally, over the course of the last several years. You know, we were talking about the loss in market cap of Disney and

the larger meet A sector over the last couple of years. Well, in just the last two years, it's worth pointing out that Facebook and Google have added five hundred and fifty billion dollars together of market cap, and so you know, there is huge, huge growth coming out of the Internet, any kind of fear increased regulation, and not just regulation, but how do you actually you know, how do you actually regulate the sector isn't clear to us, but that

certainly should be a concern to any investor looking at the space. I'm making a chart. Just keep asking. I'm still I'm stealing as we go. Let me ask you about streaming and where things stand. Is there a company that you look to is an example of a company that's doing going about streaming the right way? I know you've been critical of of Disney's approaches. Is there a company that's approaching streaming in a way that's novel, that's

working that I'm actually not critical of disneys approach. I think they waited too long, h you know, I think that's the key issue, is that they've waited so long. They're not launching their streaming service until the end when Netflix will probably have by then a hundred and fifty or a hundred and sixty million subscribers. So it's just hard to start from a standing part when the piers are so big, let alone Amazon, and we could go on and on. Um I think probably the company that

has done the best job in the legacy spasis. Probably CBS. You know, they got out, they have CBS All Access, They've got a couple of million subscribers CBS. This problem is not the product. Their problem is they just don't have a wide enough palette of content to throw at it. You know, they really need to be part of a larger company. It's why we've been arguing for a CBS Viacom merger, because it would give them the ability to make a much more robust CBS Viacom All Access versus

still a fairly limited niche or CBS All Access. I want them to build a new bundle. One final question, I'm gonna put your chat out in a few minutes, and I maybe we'll give credit to rich Greenfield within this is Amazon. I said this on Telivito earlier today. Every conversation now seems to have Amazon, uh in it? Are you long Amazon? From a strategic standpoint in the Greenfield media world? Look, Amazon is someone everyone in so

many industries should be scared about. I think, you know, the reality is they've spent a tremendous amount of money in the media space already, both meet you know, video and music. I think they're gonna be a major player

in music over the next few years. And I think from a video standpoint, while their investment of four to five billion dollars over the last year probably hasn't translated into the critical and consumer kind of viewership success they would have liked, I definitely would not count Amazon out. I think they're gonna be a major player for video.

And I think the real thing, you know, if you're if you're listening to this right now, the major thing your listeners should be thinking about is what are the odds at Amazon buys Monday night football rights? Because I think that is the that that's what the real prize that they're looking at is they're warming up with Thursday night football simulcast. But I think Amazon has much much

bigger ambitions. And if you want to disrupt the media space, the way to disrupt all of legacy media and TV is to take sports away from legacy media and from TV, and I think Amazon is preparing to do that. Brilliant Rich Greenfield greatly appreciate the time he is with b T I G. Thanks for listening to the Bloomberg Surveillance Podcast. Subscribe and listen to interviews on Apple Podcasts, SoundCloud or whichever podcast platform you prefer. I'm on Twitter at Tom

Keene David Gura. Is that David Gura? Before the podcast? You can always catch us worldwide. I'm Bloomberg Radio