Surveillance: Diversification in Botswana with Min. Kenewendo

let's get going. I mean that's what happens, right. So rates are going up, but you also have companies with a lot of access to cash given the new changes in the tax policy, given a prolonged period of economic activity, so businesses are utilizing that cash. I think the bigger question for investors, when you think about it from a broad odd investment strategy, is whether or not this leads to new, higher sustained levels of growth in the United States. Uh.

I'm somewhat skeptical. So while you might see some steepening in the yield curve and a rotation as we've seen a little bit to the more value oriented stocks, I don't think that that's gonna be prolonged. I think ultimately the US will slow within this environment, and um, we'll go back to the environment of flatter yield curve, more growth oriented names out performing well. Brian. If you believe that that's the case, where should you put your money?

Should you be looking to Europe for example? I mean European stocks have been languishing the last couple of months. I suppose it depends on the time horizon. I mean, we probably have a last leg of US strengthen here in US dollar support and here. You know, ultimately, if you're looking over a five to seven year time period, you should consider that US equity returns are likely to be more modest than they are outside of the United States.

And I know a lot of investors after a prolonged period of US out performance are gonna have a hard time reasoning what qualifies as modest. Because we've got the SMP up nine and a half percent this year. Yeah, it's been a prolonged period of US you and that's not bad. Half ten percent? No, No, I mean, I think you're a hero. I think I think US equities over the next five to seven years probably returned something more like five percent rather than the eight percent average

that investors have expected. You're likely to do better outside the United States, simply given where valuations are and where growth is likely to take. I think this is to me, folks, one of the arch decisions of Q four and and into two thousand nineteen. And I understand, you know the international it's a different feel. But Brian, we've all got to admit how humbling it's been that the single digit crowd has been so wrong, wrong, wrong, wrong, wrong, for

pushing ten years. We're only going to grow five or six percent. Maybe we'll get well as long as people have that kind of can't you be a contrarian and trade against that? Well you could. I mean, we we've we've been of the mind that this is the longest this was gonna be the longest cycle on record. Investors needs to own equities, um, and we were not of the view that this was going to be a prolonged

period of modest returns in the United States. I mean, this is secular bull market that started at very low valuations and a zero interest rate. Where you are now or valuations are higher. I don't think they're excessive, this is not. But valuations are higher and the Federal Reserve is raising interest rates. So it's a different part of the cycle, and you might again get some last leg of US strengthen here. But I'm talking more looking out

over the next five seven years. Think about what happened in the late nineties, the the U s c O curve was flattening. You've got another great period of of of um US equity returns. Ultimately you had a recession and in the years like go three oh four, oh five, oh six, oh seven, emerging markets outperformed the United States considerably. So is that where you want to go right now?

I mean, you want to look for things that people on that the crowd is not interested in buying, So move out of US equities, take your profits, pay your taxes, and find something better again. I think we're gonna have a last leg of dollar strength. What we would we would favor is what's going to continue to be in our mind, growth in a slow growth world. So people viewing this as a new you know, higher sustained growth

in the United States, and that's gonna persist forever. It's not so what kind of stocks, what kind of companies are industries? I mean I would favor I would continue to favor technology and discretionary in the United States and outside of the United States, it's a it's a growth story as well. I mean what we're looking at is, you know, particularly places like China, which has been on loved recently, you're looking at four hundred million millennials that

are that are shop. It's lunning. I mean, that's bigger than the Later America of millennials. Just in China. It's bigger than the labor force of the US, Canada, and Europe combined. So how do you buy a bear market? If we say Shanghai's creator, Shanghai tech is created, how when do you know to buy? Or do you just with your time frame of five to seven year hold? That solves a lot of problems, right, I think too

often investors are trying to time these things. We need to make sure that we we can't do this back tober First, we need to make sure we've got our policy statements right, we know why we do what we do, and if we're looking for long term growth as investors, a lot of that's going to be an emerging market. What do you do on your I mean, there's all the focus on Europe and of course it's overarching theme of immigration and migration. But how does Oppenheimer Funds find opportunity,

particularly in Eastern Europe. That's very different than inn Asia analysis, right, I mean, the big story in Europe is going to be a lot of the you know, a lot of the brand names that we all love UM, So it's gonna be a more of a company specific story than a broad macro story. Yeah, we had some synchronized growth in UM in seventeen. That's more of an abnormality than the norm and that a lot of that was based

on Chinese stimulus. So we shouldn't expect UM significant economic growth out of Europe because of the demographic issues, because of some of the structural issues in the periphery. But it really comes down more to brands and luxury and so what are we talking about LVMH. I mean, do you want to be buying LVMH because of those four million millennials, You probably not want to. Maybe Michael Core's

you heard the news today, Michael core is buying. That is a big growth story UM in the world is that citizens in the emerging markets are are starting to wear wealth like we do in the United States. Did you see how Oh Michael Barr walked into the studio different than the Michael Barr. We all need something to do with a football. Oh he was just like you were, just looking like you know, the distant days, I would have played a theme song. How much money did you

make on this game? You bet like your middle child? Right, you know, tell people, come on, I could tell Detroit that Detroit Tom Brady, that's all that matter. That's the New York Giants won a game, and we're talking about Detroit Lions. Well exactly. You see how he wears Detroit Lions blue. Not only is it blue, but it's a correct Thanksgiving Day blue. I got my red and blue time, Michael, like forty of those, forty of these shirts worn just to give the Detroit Lions feel. How did they do this?

So wise? One? Well we look secondary for the Patriots, they're not all that great, so careful not good morning one of six weeks. I know, listen, and I love you guys out in Boston. But like I said, I'm a native Detroit and I guess Matt Patrician those a little bit about the Patriots. That's where I was heading. Is this coaching advantage had to be tangible. Yeah, yeah, well we liked the kid that found a ten dollar

bill on the curb. And it's now a later for everybody, and so later on, you know, we'll come back to earth the next one. Michael Barre say, good morning SEM Boston FM, Washington, Good morning at Bay or PIM. We gotta go back to gridlock. This is the week where I get cut and chiseled everywhere. Don't worry about it. You're tall. Well that's true, but just say hi to

the came down here. You know, the Sikorski was down because of the clouds of the rain, and I took the car down Fifth Avenue and you just stop at sixty Street. They won't let you buy so a little walking. Never heard anybody. I had to walk three blocks store. Goodness, you're gonna wear out the shoe leather on those loafers. Right. You want to talk giants football. That's why you haven't talked to the last giants football. I do want to talk giants. I mean I worked downtown, so the gridlock.

I can't add much to the conversation. Brian Levitt, thank you so much for and I have friends coming up one hour on the New York football giants. Right now, Vers Yorks joins US with the National Foreign Trade Council messaging of course on trade and all uh ruvers. Wonderful to have you with us. How fragile is our trade right now? Well, obviously we're in a period where we're having significant fights with a number of countries. The biggest

one now, of course, this US China fight. But you know, concerning that, we've also had restrictions imposed on a number of other countries in sectors like steel, wominum talk about doing on tariffs retaliation by those countries. For the time being, we've had retaliation on about two hundred and fifty billion dollars of US exports. Uh increases on imports, increased tariffs on imports. Of course, in the nineteen trillion dollar economy,

you know, that's not major mat eco economic effects. Economy is still strong, but long term there's a lot of concern about how this will impact our international trade relations. US raising terrace for a number of other countries are

making deals. Well, it's different this time around. Perhaps, is the idea of intermediate processes of all the back and forth between nations is I think it's identified that the President and his team is simplistic about a true bilateral trade debate which involves many different nations that many different back and force of a given product. Within your National Foreign Trade Council, do you see that UH constituent to a constituent, that they're all dealing with these complex processes

versus the president's simple message. Yeah, I think that's the biggest concern. You've hit your You've hit the mark very well there, because you know, if you have global rules and they're strong and they reflect us kind of market based principles, which obviously we're concerned about China not meeting those standards. But if you can strengthen the international rules multilaterally and business knows what the rules are, they can plan their global supply chains. You know, it helps both

our exports and the costs of our imports. But if those rules start to break down and you start having a lot of bilateral tit for tat fights and bilateral agreements, the rules become murkier. It's a more mercantilist environment for companies operate and they're not certain where to move their supply chains to UH, and that becomes you know, kind of a longer term uncertainty that undermines their their their

competitiveness and their cost structure. Rufus, you are previously Deputy Director General of the World Trade Organization also US Ambassador to the General Agreement on Tariffs and Trade. Do you feel that those various bodies were effective in dealing with what many countries have said is unfair trade practices by China. And I'm not just talking about pricing, I'm talking about

things like intellectual property theft. Yeah, I think there's a consensus that, you know, the rules have not been as effective as we had hoped they would be on China. I don't think they're totally ineffective. I mean, China has reformed in a number of areas since the nineteen nineties, for example, but recently under Sijan thing there's obviously been more of a trend towards a harder edged economic nationalist approach, things like force technology transfer. Like you say, still very

big problems in the intellectual property realm. Concerned that even the Chinese state is involved in helping companies with theft of trade secrets and things like that. So clearly we're

not satisfied with how the rules are working. But the question becomes how do we best get China to begin to abide by those rough as the President has just started speaking at the United Nations with Secretary and that sort of Hailey rather and Secretary of State Pompeo and Mr Bolton sitting next to them, what should he say

to the U n about trade? Well, hopefully from our point of view, he would say, we want to work with a number of countries in strengthening rules and disciplines and do it in a way that's convincing enough that we gained the support of Japan, of Europe, of other Asian countries. Uh impressing China to play more within the rule book of of sort of you know, market principles.

But I'm fearful that it's going in the other direction, that he's starting a bilateral fight with kind at the same time that we're fighting with the Europeans over automobiles in Canada and Mexico. We're not building the global coalition. Mr Years, So thank you so much, greatly, greatly appreciate that.

This morning, Rufus, he said, the National Foreign Trade Council, if you move north from Pretoria and we begin really our coverage here of United Nations week across South Africa and into Botswana and pim I I said this earlier to the Minister. I've never known anyone who's going to Botswana that was just not absolutely blown away by the beauty of the country, the wildlife, Kalahari desert. Yeah. I mean, I'm waiting for someone to give me a negative vibe

in Botswana and hasn't happened. And also since nineteen sixty six after its independence from Britain has been a well run electoral based democracy and there it is. And that's two and a half to earn a quarter million people. Someone messaging the Botswana word is boholo kind of window. Uh. She is up Botswana Minister of Investment, Trade in Industry and joins us from New York where she is here for the week. What do you hope to accomplished, Minister as you come to UH in New York? What do

you want to accomplish for your Botswana? Thank you very much and a very good morning to earth of you.

We are here to share the Bozana story. We are having by a lot of bilateral meetings, but most importantly we want to ensure that by the time we leave New York we have left Bosana in people's minds and in people's tongues that you're talking about it and where of our story and that those that would like to come in and invest in Bosana because it is a fantastic investment destination and an even more fantastic tourism destination.

I know that, and I hope that no one will ever give a negative review about the visit to Bosana. I'm wondering, Minister, if you could just share a little bit of your background so people can understand your perspective. You are the youngest minister ever in Botswana's cabinet. Congratulations, thank you very much. I am youngest minister in Bozonna's cabinet and I joined parliament two years ago and I have been given this responsibility of head in the Ministry

of Investment, Trade and Industry. And I am from one of the most remote areas in Bosana, but very much a very beautiful part of Bazana along the river. And I pride myself with my heritage and having been a diamond baby. And in that I mean you know, I was born in a government hospital, went to government school, I was sent to university by the government and I

think I'm very much the Bozona diamond story. Can you tell people a little bit about the economy of Botswana and how it has changed over your thirty one years and the competition that exists not just in natural resources but in the banking industry, and how that has helped the economy of Botswana. Right well, about thirty years or thirty one years ago or Bosana was heavily dependent on

our agricultural base. It used to contribute to well over fifty percent of our very small g d P. But there was a rev up in the economy when diamond revenue started increasing and then we became heavily dependent on

our diamonds. We produced and I'd like to say the world's best diamonds um And we have since managed to diversify to some extent into financial services and the banking industry has really driven very good growth in the economy and we are seeing investment and good productive sectors that we are hoping will continue to increase the wealth in

Boslana end uplift the lives of Bosana. But most importantly, the opportunities remained vast and we're aiming at increasing our GDP growth from four percent to eight percent, so that we can see that transition from a middle income country to a high income country by twenty thirty six. Can I interrupt the show to just the standout effort you did, which you were single handedly, Uh, you got it done, minister. Kind of window that the Duchess of Sussex has on

her left hand abouts Wana diamond. Is it true that Princess Megan has a Botswana diamond on her left hand? She she she does have a Bosona diamond on her left hand, and we're very proud of that, and we're very proud that we've played a part in that love story. In that day it said that they fell in love in Bosona and most importantly and where I'm from, so I feel very proud to have contributed. I saw you at the wedding. I understand that. But seriously, this is

Kimberly Process certification and it's about conflict free diamonds. How does bots want to do that? The conflict free diamonds, And what we keep saying is a piece as so much, very much and economic issue. And when you are able to keep increasing the piece of cake and the pressures on that national cake are not that strong, then you have stability, and that stability comes from good governance and

being able to provide equitable distribution of our resources. And over the years we've managed to reinvest the rents that we're getting from our diamonds, so that that very much people centered and they are not blood diamonds. And like I said earlier, i am a Bazona diamond. Sorry, and so many other Bazana share that history with me. Now, just to note that democratic self government in Botswana was

established in the mid sixties and it has continued. What would you say to business leaders that may want to participate in the growing tool is some industry in Botswana? What kind of incentives and what kind of government support is there for foreign investment? Well, we you're right to say, we've had in democracy since nineteen sixty six, and we are proud to say that we have the longest running stable democracy in the continent and an open economy without

any exchange controls. And we have a lot of incentives, including corporate text at five percent for some industries and ten per cent for others. And we have land banks, particularly in my ministry, to facilitate investors that come in to ensure that they are able to set up, and we also have an office at one stop shop that facilitates from registering all the way to markets. And we consider ourselves a very well centered economy that is lend

linked to the rest of the region. And we are able to facilitate trade two countries like Zambia, Zimbabwe and Golambia. That's our neighbors and we we we see to it. That's all um foreign investors that come in. As a government we rule out that red COPT Minister, thank you so much. As we look at the United Nations week in the Bloomberg form, Botswana's Minister of Investment, Trade and

Industry Bhola kind of window joins us this morning. We now turned what is completely and totally in entirely consumed the Beltway, and that is the Kavanaugh hearings plural that we're moving forward and rather than the politics and all that, we talk about the long term damage or I guess it's stands to be fair of the Supreme Court. There's no one better to do that within Greg's store of Bloomberg,

a student and reporter of all Supreme Court. Gregg, is there any damage that will come out of this to this most important American institution. Oh, absolutely, Tom, And that's really no matter how this comes up comes out. The Court has tried to over the decades keep itself out of politics. It has been harder and harder to do that as court appointments have become more political. This nomination

at Brett Havanaugh was already intensely political beforehand. Uh. Now you have this specter of of the sexual assault allegations against him. If he is confirmed, it will be probably with entirely Republican votes. Uh. And there will be opponents will say a big cloud over him. If he is not concerned, we're gonna have a whole another fight coming up soon. Does it go into let's say he is confirmed. Does it go into the operations of the Supreme Court.

Does this whole debate in fact, the choosing of cases, the debate of cases, the outcome of cases. It could, but a lot of that depends on something we don't know, which is what effect is this having on Brett Kavanaugh if he is confirmed. Um. You know, personally, we've seen with uh, some of the other Justices Clarence Thomas, certainly Justice sam Alito as well, who had somewhat difficult confirmation fights. That they've gone on the court and they have really

dug in. Uh As as you know, they were always going to be conservative justices, but but uh, you know, it's possible they are are even more conservative now. It could happen to Brett Kavanaugh too, if he has confirmed.

We we don't really know now. One other possibility is that some of the other justices, like Chief Justice John Roberts, may say that, at least for the time being, we need to try to not get ourselves in the middle of controversial and take fewer really controversial cases so that we can kind of lay low a little bit um and get ourselves out of the political spotlight. Greg Store, talking about the political spotlight, can you give us an update on what Senator Diane Feinstein notified the FBI about

and how this plays into the ongoing hearings. The uh, you know, I may not have the very latest information on that. Um. She she has called for an FBI investigation. Uh, these new allegations that were published in The New Yorker last night, the um uh you know, Democrats have been saying throughout that they want an FBI investigation of the earlier allocations involving Christine Ford Uh, the Republicans have resisted, and at this point there is no indication that there

will be an FBI investigation. Would there be an investigation just generally, I mean for anybody that is coming up as a potential nominee, would there be some kind of background check and so on? There is always a background check, But as a general matter, the FBI is gathering information

for the the White House. And it's not something where the FBI is investigating as they would in a criminal case, where they are determining whether there is probable cause to determine whether you know something happened, whether a crime was committed. There they would be gathering facts and they will do that. They have done that on Brick, with Brick having off on many issues, and they will do that on any

future nominee. But they're not they're not equipped or they're not prepared in a situation like this to sort of get to the bottom of us and tell get to the bottom of it and tell us all what what the correct answer is. Is there any way that this makes or creates even more bad blood between Republicans and Democrats in the Senate, or is it just so bad to begin with that nothing's going to change it. It's

hard to imagine it could be even worse. And you know, with these new allegations, Senator Grassley, the Republican chairman, was, uh, you know, is accusing Democrats of withholding information. The New York report indicates that some Democratic staff members were aware of the allegations, and Grassley says, we didn't know about these.

Uh So there there is certainly mistrust and it may well explode if if indeed we do have the hearing that currently is scheduled for for Thursday of this week, if Kevana steps aside in some form, how does that change the process for the president in nomination? So you know, the president, of course we get to nominate somebody knew the kind of the wild card in here are the two wild cards together? Or that we have the midterm

election coming up. Uh, it seems impossible that somebody could get confirmed before the midterm election, which means we move into the the lame duck Senate period and Republicans would still have a majority no matter what happens in November. Uh, it is at least theoretically possible that especially Republicans, uh you, maintain or enlarge their majority. In the Senate that we could have to push this into next year in the

and the new Senate that starts in early January. Alright, So if that's part of the plan, don't they need to actually vote on a variety of other measures. And I know that's outside of your wheelhouse, really, but they need to get the government funded. They do need to get the government government funded. You know, that is still on the table. Um. There are plenty of other issues out there. I mean, Kavanaugh is the Kavanaugh issue is attempting to suck all the year out of the room.

But but you're correct that there's some uh, you know, traditional business that needs to be needs to be done. You know, it's like it's like there's a lot more that they can disagree on and and mess up. Yes, absolutely, well, I mean the prospect of a government shutdown is is hanging out there. Um, and uh, you know there are a lot of senators who would like to leave town and go campaign as well. Let's move one them forward

before you let you go. Greg Noah Phelbin, Professor Phelman of Harvard has a terse essay out Rosenstein must go so Mueller can stay. It's a gamble but it's at least the least bad option for continuing the Trump investigation. Do you just presume a Supreme Court guy, that the Supreme Court gets involved as they did with Nixon slash,

Watergate and all this Rosenstein's sessions Trump festivities. I don't presume it is certainly know there's some issues out there, like if Mueller decides the subpoena as the president, that is an unresolved legal issue that could get up to the Supreme Court. In terms of you know, just say that the question of Ken Robert Mueller be fired. I'm not sure that that is a Supreme Court issue. This is not a case like um, you know, Ken Starr,

who was an independent council. It's it's clear that Bert Mueller could be fired through the proper channels, UM, and that would be a huge political controversy, but it wouldn't necessarily be something that would rise to the Supreme the level of the Supreme Court. There's a good chance something we'll get to the Supreme Court involving the Mueller investigation, but but but very hard to say that it's imminent

or or to say what it is. Greg S, thank you so much greatly, appreciated, of course, on edge of legendary and Supreme Court balance and coverage. 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 Keane before the podcast. You can always catch us worldwide. I'm Bloomberg Radio m