Surveillance: Election Day Special

of course, on the Bloomberg On Bloomberg Surveillance Today. Greg Valier from Horizon Investments, David Harrow of Harris Associates, Megan Green for Manual Life, and Stephen Roach, formerly Morgan Stanley's Chief Economists, former Chairman of Morgan Stanley Asia, now Senior Lecturer at the Jackson Institute of Global Affairs at Yale University and Senior lecturer at the School of Management. And Stephen, great to have you with us, Great to be here.

Thank you. I wonder how you were going to be Uh want has Stephen Roach, renowned economist, is going to be watching the results come in? And I don't mean are you gonna get a spot on a couch? And the Schwartzman Center, Yale not to watch the votes rolling, But what are you gonna be looking for? How are you going to process what's happening here tonight and indeed maybe tomorrow. You know, I I, as I said on TV a few minutes ago, I have a sneaking suspicion

this is not going to be close. That the poll showed a little bit of momentum post uh FBI twist and and and that that is now out of the the game. And I think that the American public, um, I think we have to give them credit for having more character than um uh Donald Trump does. And I think there's gonna be a strong reaction against uh everything that he stands for. And I think that, you know, the decency of the American people will ultimately prevail in

choosing the next president. We've talked a lot about d we can continue to talk about here what effect the election could have on the economy going forward. But looking back on the campaign, that's incredibly long, nineteen month campaign, what measurably, what effects measurably have that had has that had on the on the economy. I don't think it's had much of anything. I think the economy is is

really been operating um with the very little steam. Growth has faltered a lot in the last UM year from an already anemic trajectory that had been on since the crisis. I think the economy is struggling against a lot of tough headwinds. Some of the headwinds are global, but most of them are of our own making. The Federal Reserve is done everything and it's power to jump start the economy with zero interest rates and massive balance sheet expansion.

That hasn't worked. Uh. We haven't gotten the fiscal kick that many believe would make a difference. I'm a little suspicious of that as well as if we can manufacture a recovery and aggregate consumer demand by infrastructure spending, as the secular stagnation crowd would want you to believe. Um. I think we need a deep rethink of of the dynamics or lack there of the American economy. And I think that's what um uh President Clinton is going to

have to face in early on in her administration. This hasn't been a campaign of real serious thinking that There's been a lot of rhetoric and other possy is she's a are you at all optimistic that we will get that that period of introspection, that that will have a deep think about where the economy. I think that's a

terrific question. And I think, um, uh, the one thing I do know about um Hillary Clinton as a you know, as a senator, actually as a first lady, as a Secretary of State, that she has got a spectacular her mind, uh, and she's had to put a lot of that intellectual firepower on old deal with very aggressive and a nasty campaign.

And I hope she can go back to her strengths as somebody who really gets the the concepts and the issues uh that are at the heart of the challenge that she will face as president, not just in the economic arena, but in the foreign policy arena and in the social arena as well. And she's got, uh, I think, great skill sets to to grapple with all of those and then put them together. And let's hope that she can put together the team that can really address these challenges.

Steven Roae Triville University with us today of course his book classic book, The Next Asia, as we talked to him about the Next America. Or you can also follow David Gura, who will be on radio for hours and then I believe John Tucker, they've given him away on television during the daylight hours. Will be Oh, parent teacher conference, let's go right, How do our surveillance expert on parent teacher conferences? He has nine daughters? Stephen, Steve, Sorry, how

do you approach a parent teacher conference? Help younger? Coffee? Lots of coffee and um deference. Right, yeah, listen, be a be a good listener, and but draw the line, you know, if it goes a little too far, stand up for your kid. Understood. I love it. Uh. Let me ask you about I'm glad you brought up the specter of fiscal stimulus. Both these candidates have talked about spending billions on infrastructure here if if they're elected, what what are the what are the what could be the

near term effects of that? What could be the long term effects of something like that? If indeed there are potential for long term effects. Look, America needs to repair its infrastructure. I mean, you know, on the car right in today from um Connecticut into Manhattan, you know, I think I had um whiplash multiple times from hitting innumerable potholes and us is you know, not even the pothole season, Yet the roads in the city, the airports in this

city are pathetic. We all know we need infrastructure, but is this going to fix what ails the American economy? We need to look at that very carefully. Infrastructure can boost aggregate demands through public sector spending for a temporary period of time, but unless it catches on to drive consumers and businesses to really raise their sights on growth, aspirations and expectations, Uh, then it's again. It's it's sort of like pushing on a string, and we've been pushing

on lots of strings in the last ten years. Let's take you back to Morgan Stanley. You and Dick burn are sitting around at a table twenty years ago, and somebody says, here's the aggregate economy two point whatever percent, But we really ought to take out inventories and take out exports. That parlor games going on right now. Do you disaggregate economic growth to make it a domestic statistic or do you take it all in and say the

last quarter was actually pretty good? Look, Tom, I mean g d P is a broad construct that consists of lots of different pieces. Um I In in the last ten years um more so than my good friend Dick has focused on the American consumer, because I think that has really been uh uh the Achilles heel of the U s economy, as consumers binged out on spending by borrowing against a property bubble and using a credit bubble

to do it. When the bubbles burst, the consumer was left holding the bag and they're still trying to climb out. Pulls her open to New Hampshire. David blanche Flower tweeting out, let me quote exactly the esteemed professor from Dartmouth College. I am in the great advocate of KWEI. I am an immigrant, and I am voting proudly for at Hillary Clinton. That from Professor blanch Flower, Uh, there's not alone in Hanover,

Steve Roach, where's our immigration right now? The answer is there's less immigration, and that folds directly into less nominal GDP, doesn't it? Well? I think you know, the one distinguishing feature about the US economy compared to other developed economies is that we can continue to enjoy population growth both through up a positive uh net birth rate as well as their positive immigration tom and and although the rate

of increases somewhat slower than it has been. Uh. We we continue to um uh, as I said, boost our workforce, and um we need to do that to overcome very tough productivity headwinds. David gerin time Keene thrilled you with us nationwide this election day. Good morning on Sirious an XM Channel one nineteen. Many of you, I'm sure going to the polls and waking up across Central Mountain and Pacific time as well. We begin our coverage this morning

with Stephen Roach of Yale University. Stephen, I want to color the consumer here. You have provided immense leadership in the shortfall of our consumption. Is it just we build up so much debt coming out of World War Two, moving on and then even adding on more debt from there. Well, Tom, there's a secular uptrend in in debt to income for

American households. But what happened is that, um, you know, in the late nineties in early two thousands, we we talked it up in a in a big way, and so in debt to income, which had been on an upward trend, uh, sword to about um I think a hundred thirty of disposable personal income versus an average of about seventy in the final three decades of the twentieth century, and that debt was levered against a massive, unprecedented property bubble UH and aiden and inbedded by your friend the Maestro,

who believed that um uh rising debt to income was not a threat because America was not experiencing a nationwide housing bubble. When both bubbles burst, property and credit, UM, the consumers were in the biggest hole they'd been in, uh since the nineteen thirties. And digging out of that hole is what a balance sheet recession is all about.

And we've made progress. But I'd say, you know, in a nine inning baseball game, which you're familiar with, Tom as a Red Sox fan, sadly, UM, we're probably in, you know, the fifth of the sixth inning, and uh. That means there's still a lot to be played, and we may even have to go into extra innings. Do you see David the hot stove League stove. I mean they have the coals upon the fire and Rouch has already killing me. I'm still in the therapy. May I

use that as a segue? You would ask you a question about China and the degree to which the administration there is worried about, aware of and worried about the debt picture. There. We saw a rejiggering of the leadership, a new a new finance minister there. What does that portend for dealing with that debt in China. There's a big debate David, right now inside of China about dead intensive growth as a precursor to a Japanese like h L shaped economic outcome. That would be an unmitigated disaster

for China. China doesn't need to go back to ten growth that enjoyed for thirty two years, but it's it's growing now, you know, around seven UH and most likely will slow further UH in the years ahead. But the downside UH is of of great concern if China repeats the Japanese like um UH debt crisis. The banks are play a hugely disproportionate role in China, and that's always

the place to look for debt related issues. Loan quality has deteriorated, both in commercial banks as well as in the shadow banking sector, and so there's a lot of focus on what the government calls supply side policies. We don't know exactly what they are to deliver the Chinese economy and so far this is uh uh, you know, more talk uh than than reality and addressing this issue. If David Guraw I just made a chart, I'm gonna call it the roach chart of consumer uh consumption in

America and the American consumer. If you could take it from nineteen sixty to two thousand, we're down fifty and consumption growth from the glory of what it used to be to what we've seen since August of O seven. That's it's halfed amazing statistic. Save that chart, tom I'm saving it right now. I'm gonna steal and use it on TV tomorrow. Well, you wouldn't be the first time you've done that. Thank you. Last question here, Stevid about

the relationship between China US. Of course, you've written a book about this. Has has China been willfully deaf to to the rhetoric on this campaign trio? What's the legacy of what we've heard over these last nineteen months going to be with regard to our relationship with China. That's an interesting question, David. I mean, my take on the relationship is one of codependency, where China depends on us

as consumers to buy um goods. That they produce that played in a very important part in driving UH their economic growth miracle. But we depend on them uh to give us the cheap goods and stock the shelves of Walmart, um to make ends meet and UM. You know, I think in a codependent relationship, usually what happens is one partners or of wakes up and changes, UH. And that

change is going on in China right now. They're trying to stimulate their own consumption, which will draw down their surplus saving which we have counted on to fund our economy and and buy our treasuries and and support our deficit spending. So as China changes, and if we don't, UH, then there's gonna be a lot of pressure on us to figure out a new way to grow. Stephen Roach

with us with Yale University. He has scheduled in about an hour to have a most interesting interview on Bloomberg Television. Stephen Roach with his support of the US and the support of China UH in discussion we hope with Peter Navarro, who has been a great supporter of Trump economics and is exceptionally cautious on our relationship with China. David Gerin Tom Keene this election day. This is Bloomberg. We hear his insights set from time to time as Tom reads

from his notes. Of course, we talked to him by phone often as well as a pleasure to have in studio with us Greg Lure of Chief Global Strategy to Horizon Investments in New York on election day. Greg, nice sea, great to be with you. Let me ask you, in light of what's happened here the back and forth over this email scandal, are there any black Swan's left in the political ponder? Was that it? Well, you hear rumors, but hopefully that's it. Yes? Does does this continue to

to to go on? I'lbeit not one here that the the election ends things today, but is this something that will continue to dog Secretary Clinton going forward? Absolutely? You know, this is Washington. It's a new climate. It's a very bitter, nasty, polarized environment. I think there's gonna be hearings and more investigations and more partisanship. Her honeymoon will be very short. What is the the the Horizon Investments base case at this point? How do you see things playing out today

going into tomorrow? I think a pretty narrow win in the Electoral College. I think she wins by two three points, maybe four in the popular vote, but without Florida, this could only be like she might only get two seventy five votes, you need to seventy With Florida, we can all go to bed a little earlier. Just in this off Twitter, Howard Ward, who gives us wonderful perspective on equity markets, tweets out quote, biggest crowd ever seen it

polls this morning. Mr Ward is of a certain vintage, and I'm not sure where his poll is, David, do you know where Howard Ward is? I don't know what state even But nevertheless, there's the first anecdotal of a big turn. Yeah. You hear that every four years, and sometimes the final statistics don't bear it out. But the early voting is impressive, especially among Hispanics. I think that's the major reason why I think Hillary Clinton's gonna win.

I've had this question three times in the last three or four days. You nail it in your morning Note the place of Senator Warren within a Clinton presidency. I'm confused. Does she move over to the administration, does she stay in the Senate? And what's it mean for Global Wall Street I think Elizabeth Warren stays in the Senate and is a provocateur. I think she'll start sniping. She and Bernie Sanders and Paul Krugman will start snipe thing at

Hillary Clinton by late winter. Does she control who becomes Treasury because she controlled as Does she have a veto power? Tom? I think yes. I think she does get a veto power. She gets to say and whether we move toward a single payer health insurance plan, she has a role in our troop level in the Middle East, and on and on and on. What does it? What does it say that we're talking about her as the head of the progressive branch of the Democratic Party here and not the

gentleman who ran ran for the Democratic nomination? Is Bernie Sanders now in the in the backdrop and Elizabeth Warren in the front. Well, Bernie Sanders has turned seventy five, that's getting up there. And I think that Elizabeth Warren is going to inherit. His army is a very passionate army. And I think if this president elect, Hillary Clinton doesn't satisfy her, we'll start to hear speculation about a challenge from her. In has the relationship between those two between

Senator Warren and Secretary Clinton warned. We've seen them both on the campaign trail. They weren't the fastest of friends. Yeah, but I do think Elizabeth Warren has been such a pit bull against Donald Trump that she certainly endeared herself, you know, just like the Obama's and the Clintons aren't that friendly. I think a campaign this arduous has bonded them. Is this the Congress that will do something in these next few months, and if so, what's it going to be.

There's been a lot of talk about the prospects for tax reform, prospects of a vote here on on the TPP. Do you anticipate anything happening here in the lame duck session and then in the first few months of the next president's tenure. Lame duck the wild card by far, as Merrick Garland, the Supreme Court nomination. They'll keep the

government open. Whether that will happen early next year. The big story by far is the debts sailing, and if Paul Ryan doesn't handle that adroitly, there'll be a rebellion among his troops. And Paul Ryan is on thin ice. Back to the horse race, which folds in all the campaigning we've seen, and I don't believe this show has talked about it, and I've been remissing that Senator Ruby O I believe was a layup. Yeah, that's not true, right, I think we got I think he'll win. But let's

say Hillary Clinton wins Florida by two points. You know the Rubio margin is going to be really narrow. I I you're right, Tom, I thought a month ago Rubio would win by five sex points. Now I'm not quite assure. Does he pick up the Latino vote, the same vote that very quickly, you're the same vote that Secretary Clinton? Gets some of it and he becomes a big player.

He's got six more years to get some gravity. Toss his election day, and we are really honored to have in our studio someone who lives the country, lives on airplanes, Greg of New Hampshire. On this election day, Greg, we try on surveillance to look forward, and by definition that means third parties. Anybody who's a student history knows there's Ross Perrow and John Anderson and others, But what there really is is nineteen twelve. The establishment didn't like that upstart.

What was his name Risveldi yet bragging about his Philippine exhibition. Yeah, we win for another one to be I mean we got would Row Wilson out of that race. You had two Republicans running against one Democrat, so fearless forecast home. I think the Republican Party begins a civil war within weeks, maybe within days of this election, bitter bitter opposition to Paul Ryan by the Trump people who think Ryan is

a trader. And I think you could see the Republican Party split into two, the Chamber of Commerce more moderate Republicans against the Sean Hannity rush Limbaugh Tea Party Republicans. If that happens, in that could be the pathway for a Democrat to win. Who controls three ten Fruit Street Southeast in d C. Now side of the Republican National Committee?

Who has the case where? Who has the keys? In other words, if there is a third party, which which Branch is creating, it is the the old guard establishment Republican Party leaving where they gonna stay and we're gonna see an offshoot. Well I think they're they want to stay that We're talking about the chain or commerce, the uh, the pro free trade Republicans Mitch McConnell has been very crafty. He has endorsed Trump, but not too warmly, whereas again

Ryan is viewed as a trader. But the core of that party I think is the is the more centrist party. I think the outcast, the outsiders, the insurgents who were so strong at the base around the country, those folks, the Sean Hannity wing. I think they're gonna have to form their own party, and they'll have a TV network, maybe headed by Donald Trump, to advance their narrative. An amazing line in your most recent note here, we think a Cask Rubio ticket would have won tonight's election, today's

election by six to eight point margin. Sure, well, you look at Ohio eighteen votes, You look at Florida twenty nine votes, you look at it. You know so many people said, you know, we could accept Kasich, a lot of moderates. Would I think this huge defection of Hispanic votes that's gonna bury Trump tonight. Obvious Lee wouldn't have occurred had Rubio been on the ticket. So I think it would have been a vastly different race had have

been a case of Rubio ticket. Absolutely, what's the consequence of the uncertainty that could come out of tonight if we don't get a concession speech tonight from from either Canada takes us back to two thousand when it dragged on and on and on. What does that mean for for investors that waiting game and everybody talks about what's the implication of she wins? What about if he wins?

What if? What if we do not have a definitive result tonight, that we have hanging chads and recounts for days, if not weeks, without anybody being sure who actually won, that would be a really bad story. I mean, this is an important point, and I guess we're asking for your treatment. With decades of perspective on the word rigged, What does rigged mean? I think it's overhyped, like so much of what Trump says. Yeah, are there people who were dead to vote? Of course, are there you know,

irregularities in Philadelphia, of course, But it rigged. I think that's that's a real stretch. Are there biases against Trump? Yes, but I think rigged is an explosive word. He's got to be careful playing with matches as Secretary Clinton. Of course, the pageantry last night in Philadelphia, it was a beautiful all the people in front of independence, all in the first ladies speaking in the president. When you when you look at all this greg it's a nation that has

to move on the traditional path. Is the president moves to the center? Do you predict that for Secretary Clinton? Or is it just not going to happen this time. I think she'd like to. I think her instinct is to move to the center, but she has to deal with Elizabeth Warren and Bernie Sanders and a lot of Ronald Reagan had to deal with whoever in the South. But I think essentially she's a pragmatist. That's how she was as a senator, That's how Bill governed, and I

think she will try to govern as a pragmatist. But Elizabeth Warren will start sniping by spring, guarantee. Steven Roach and I were joking about the lack of discussion about issues in this campaign, lack of discussion about politics. But but seriously, here are we ever going to get a campaign which issues are at the center? Well, this, sir,

hasn't been one. I mean, you look at rural America, you ask people what their biggest concern is heroin, You look at people in the markets who look at ten years down the road, we can't necessarily pay for all the benefits we promise. I want to rip up the scripture. I remember the New Hampshire primary and we were thrilled to have you on then from your New Hampshire and it was amazing to see establishment the many candidates running, and all anybody in the audience wanted to talk about

was drug addiction in New Hampshire. I mean, I mean that was maybe one of those initial points where we knew this time was different. You look at the heroin overdoses in Manchester, New Hampshire. It's like Baltimore and New York Chicago, maybe worse. So I do think there are a lot of really important issues, going back to David's question that have been ignored, maybe because the prescriptions are too better. Everyone's checking to talk about, you know, difficult

solutions to problems. No one wants to hear this, but it's really been an abdication by the politicians. It's a good question. How does the agenda change when someone is elected. Do you see a President Clinton or President Trump remembering what that conversation was like in New Hampshire, maybe elevating that on on the agenda. Does that tend to happen in the past. It could, But it's a matter of what you can get done, and I just don't see

a lot that she's going to get done. I think I see a Congress that will try to block her. She'll do a lot with regulations, that's for sure. She'll have a big role geo politically, that's for sure. Well, I guess one inside baseball and we'll let you go. You've ben more than generous with your time this morning. I think a week ago there was talk of Vice President Biden looking awfully good as a Secretary of State? Can he do it early? Too fragile? I don't see it.

I think he's too prone to gaffs. I think he's he doesn't stick to the script enough. Um, he's well liked. But I think Joe Biden is secretary is date. That's just why that just doesn't add up for me. Who would be one, uh, maybe someone who has who has left Congress fairly recently. No one immediately comes to mind. I was thinking at John Tucker, Yeah, I'd be pressing the button, like within minutes. Greg one more thought as we go to tonight helped David gur out here with

his coverage after seven pm tonight. What will David Girl need to focus on? Say at nine pm? Two stories dwarf everything else. Number One, the ground game, the the Clinton ground game is the greatest ground game in the history of American politics. It's worth a point or two in some states. Second point we don't talk about this enough is how dramatically this country has changed demographically. We're biracial,

we're diverse, we're multicultural. I mean, the country has fundamentally shifted, and I think a lot of people still don't recognize it. Greatl you, thank you so much more. The generous of your time today with the Horizon invest is David, were you taking notes right here? Points one and two they're going in the question line who you put your trust in matters. Investors have put their trust in independent registered investment advisors to the tune of four trillion dollars. Why

they see their role is to serve, not sell. That's why Charles Schwab is committed to the success of over seven thousand independent financial advisors who passionately dedicate themselves to helping people achieve their financial goals, learn more and find your independent advisor dot com. Let's bring in David Harrow.

We usually speak investments and of course international investments, David Harrow of Chicago, but with his immense affinity for Wisconsin, where there is a key race tonight, the Senate race. David Harrow, you are quite vocally a Republican. Ron Johnson has done better than good against Mr Finegold. What does Mr Johnson need to do to win in your Wisconsin this morning? Well, you know, it's all about turnout and

getting your supporters to the polls. And if I think Mr Johnson could do that, and if his supporters are more enthusiastic than Mr Finegold's, which I'm hoping to be the case, um, then I think he has a good chance of winning. Recall, he entered office six years ago. It was his first political run ever. He's a manufacturer, he's a businessman. He's not from the political class and Mr Finegold, of course, it's just the opposite. He's been in politics all his life. So I'm sure for Mr Johnson,

I think he's a very strong candidate. I think he's been a good senator. He just isn't necessarily have strong political skills, because that's not what he is one of our themes this morning. Dave Harrold is how the states of our childhood has changed. My Western New York has changed. Many would say it's been carved out into a non economic wasteland. David Gurrow was talking about his North Carolina.

How is your Wisconsin changed over the decades. Well, let's see, the packers aren't doing as well as they should be doing the same. You owe me an apology given the results of the World Series. He's got a great game anyway, that was a great game. Uh, you know, Wisconsin. Wisconsin has changed, but I don't think so radically. So you still have the manufacturing base in the southeast, and of course the central part of the state is very agricultural,

lot of dairy farms and cheese factories. And then the north part of the state is woods and lakes, and that's kind of the rough, rough makeup of Wisconsin. There was a good article in the Wall Street Journal last week about immigration flows into places like western Wisconsin and all over, which has added little bit of diversity to the state. But it was a fairly diverse state anyway. The south east very very German, and as you moved to the north you get the Dutch, and then the

Northwest you get the Scandinavians. So you know it's still to me, Um, it hasn't changed radically, and it is a place for good government. I mean, it's relatively clean and transparent, very different than where I'm sitting here in Chicago, where pay to play is the is the rule of the day. They let me ask you about allegiance to party in the in the context of this election, I imagine you and others have thought a lot about that. I think of of Paul Ryan campaigning with Mike Pence,

but but not with Donald Trump. Has party played a less important role in this election? I I sensed it on the Democratic side. On the Republican side, there were those who might not be that enthusiastic about the Canada but still feel some tied to the party. Yeah. I mean, I personally believe that one should be, uh, have allegiance to your values and what you believe is important and

important issues. And whether it's a Democratic, Republican or libertarian, whoever it is that has those issues character Um, whatever these characteristics are, that's who you should go for. I'm not someone who who advocates this blindly following a party. I I don't think it's a good thing. Um, you know.

And as as someone who's usually votes Republican, I was, you know, this is a tough tough Here a quick note, David jump in here with David Hero but David Garral Dan Kennedy, Professor, New York, Northeastern University in Boston with a photograph and he guess this is the anecdote of turnout. Greg v. David Garrow warning is to be careful about the early take on turnout. But at the West Medford fire Station, West Medford, Massachusetts, Professor Kennedy as a photo

stretching around the block. Is their enthusiasm for voting? Where you are in Illinois, where you're from in Wisconsin, is there's still enthusiasm for the the the active democracy? Yeah, I generally think so. Chicago doesn't seem to be is And I think this is by the way true everywhere. You don't see bumper stickers this year. You don't see a lot of yard signs as in the past. Today, driving in I almost didn't see anything in Chicago. Now in Wisconsin there was a little more. I was in

Wisconsin over the weekend. There was a little bit more. But it used to be in the olden days, the daily machine whipped everyone up and there would be signs every two feet for someone going up and down, say Michigan Avenue or anywhere. It's very quiet here this year. In Illinois, there's some state wide races going on because the governor's fighting with the Speaker of the House, and

there's been a lot of money flying around. But I think in a state like Illinois, which really isn't in play um, there's a lot of turnoff and there I think there will be a low turnout. It's just my guess. David her always saw a pop in the market yesterday. You are want to worry about a one day pop in the market. But it does show the linkage of our politics in the market emotion. If Secretary Clinton is voted president, is that good for the portfolios of Mr Harrow?

I think this is just a guess and and and this is just a short term trading. I think in the medium and long term the differences is very small, depending But if if Secretary Clinton wins the presidency and the Republicans maintain both houses, I would imagine that is would be the most optimistic case for the markets and

in the short term performance. Now, what ultimately matters, but ultimately matters is what policies of the politicians put forth that impact company's ability to earn money and to grow cash flow streams. And here's where there's often opportunity in the short term investors or traders, I should say, acting in very knee jerk fashion, reacting to every change gin poles or change in election outcome. And actually the changes in business value don't move in such a knee jerk way.

Changes in business value happen over the medium and long term, and you know, business people could also react to these changes in legislation. So that's ultimately what happens and what we have to watch as long term investors as traders. I think definitely what markets want are Mrs Clinton to be elected in the Republicans control both houses. I'm not sure why that's either, but I think that's what markets want. David Harrow will continue with the Harris Associates in Chicago's

perspective on his Wisconsin. As Mr Harrow mentioned, he has one in support of not always but usually Republican politics. David Gura, if you'd like to vote in Columbus, Ohio, which would be illegal since I'm registered in New York. We we we showed video earlier of the voting booth it hugh Y Honda out on seventy. I guess after you vote, you can look at the local latest two thousand seventeen HRV crossover. David Harrow with US in Chicago.

But Harris Associates and David, the imagery of Americans voting in a Honda dealership in Columbus, Ohio speaks to your view on foreign investment in the multinational world we live in. Give us an update on the Japanese shares, the European shares you own of their investment in this America. Well, the Honda, of course is has a very big manufacturing footprint United States. In fact, I believe they produced more

cars in the US than they do in Japan. Know that they were the first transplant maybe Volkswagen once you remember Volkswagan at that plant in Pennsylvania many many years ago that made rabbits um, but I think Honda preceded that. And so you know, a huge manufact in footprint for Honda, same with Toyota, even the German luxury makers. Now you know in in the Carolinas, and uh BMW makes trucks.

All their X five, x four x three's are all made in the United States, I think almost eight hundred thousand plus units and X A lot of these are exported. So you know, we certainly have a very global economy. Not that manufacturers want to be near where their consumers are. So you've had foreign companies expanding their footprint in the United States and elsewhere. When I first came into this business,

I remember this was in the mid eighties. You go to Sweden and everyone just exported from Sweden as an example, or from Italy or from Germany. And now these big multinationals and make plants where their customers are. So it's it's been this has been a widespread theme over the last couple of decades. David. Do you expect the conversation in light of that? Do you expect the conversation about trade and trade policy to continue here on the perch of of going down a path that would uh see

the TPP withering away. Do you expect we're going to have a serious conversation about trade after this election is over with a are we done well? I would hope so because properly instituted trade policies are very conducive to economic growth. And you know it's remember David Ricardo and is there is a comparative and competitive advantage. I think these things still hold true today and there there is

a massive benefit to trade. Now. I think people are concerned about some of the impacts of trade that have to be dealt with. And you also have to look at the fairness of the deals. Are are they really objectively negotiated, well negotiated deals, But the notion and the principle a free trade it's very important if you want to continue to keep a vibrant, growing global economy. You need the free flow of good services, of capital, people. You need these things in order to to enhance and

encourage growth. We're about to talk to Megan green with with Manual Life, chief economist of Manual Life, and in her most recent notes she poses a rhetorical question here, that being what's the role of the president for you, David Harry, the investor, What do you look to the president to do? What what makes a good president? Well, I think the president should really kind of set the theme and if you look at what I believe is one of the best presidents we've had in our time,

Ronald Reagan. He set his themes broad general themes, individual responsibility, government that governs the least, governs the best, you know, fair and easy to understand regulation. And notice how that was replicated throughout the world as he was fairly successful at it here in the United States. So that the president really it's it's kind of on the softer side,

really has to take lead at these things. And I think one of the issues in the past has been, you know, we are one country and the president should act as a unifier, not as a divider. And I think in the past we've had, you know, very divisive, strong divisiveness, and this is hopefully the next president, whoever it may be, it's more of a unifier. And yes, we're we're many differences, but we have many similarities and common values and the president must highlight those from the

Northwest as we were taught in school. David Harrow, this has been wonderful, David, thank you so much for the classy diversion from the world of international investment. David Harrow, of course, with Harris Associates with a stunning track record over the years and trying to buy value within international equities. And of course today we speak of the Northwest David as it was taught to us in the middle nineteenth century, early David Gura and Tom Keane. We're gonna flip this

interview on its head. When you would usually start with Dennis Gartman about the markets, about commodities, about red wheat. But now on this selection day we speak of the nation. Dennis. Wonderful to have you on the back. Part of the Gartman letter is always exceptionally trenchant, and you, I must admit, you try like crazy to be nonpartisan. Help us here with what these two candidates mean for your many markets. What does it mean if we have a President Trump

or a President Clinton. Well, I think if we have a President Clinton and I didn't vote for her, if we have a pleasant President Clinton and and a a Senate that is Republican, and a and a House that remains Republican, I think that's probably the best of all worlds, because I think it means gridlock. And I'm a big fan of gridlock, because as long as you can't do

anything to me, you can't harm me. I think if we have a president um Trump, who I find to be a I did, in fact vote for him, but I did so with the nose held the tight uh and a Republican House and a Republican Senate. I fear that we may have an increase in trade protection, and I don't think that that could be possibly good for the stock market or for the capital markets generally. So I guess what I'm hoping for is is a is a presidency that moves to the Democrats side, and a

House and Senate that stay in the Republican side. Give me gridlock or or as one of the great patriots here in Virginia might have said, give me gridlock or give me death. I think that's the best of all worlds. Reading the latest letter, I was struck by the degree to which the the FBI investigation to Hillary Clinton's emails touched every single commodity you wrote about you. You're not underestimating the size of the effect of that. No, I'm

not underestimating the size of the effect of that. I think if if you get a Trump presidency, perhaps it's beneficial to the production of crude oil otherwise, and and but that that that therefore will be detrimental to the price of crude oil. Uh, it might not be drill, baby, drill, but it'll be drill, buddy, drill and drill a little bit and do fine. That can't be supportive of the crude oil market. And protection trade protection is always going

to be deletarious to commodity prices generally. Again, give me gridlock, and then we can return to the fundamentals of each commodity individually. I can make the case that the worst possible news of great production here in the United States is already discounted in the grain market. I don't think that the price at forty four to forty five dollars per barrel for w T I is fully discounted, and I think that that can probably be another two to

three dollars to the downside. But give me gridlock, and I can go back to fundamentals rather than psychologicals rather than technicals. Dennis, help help me understand that. I'm going back to your vote here. You you here hoping for a Democratic president, yet you voted for the Republican I mentioned there are some other people in your shift to walk us through the thinking there, Why not just vote for the person that you to be in the office. Um, Because my wife might have left me if I voted

to the wrong person. I'll be But I had I have to vote for a Republican all all things being otherwise equal, I really didn't have. I make that that comment humorously, but quite honestly, I had really no choice. He is, at least in most instances regarding taxation, closer

to what I think about. UM. He is in in most instances regarding the the corruption of the United States, and the demoralization of the of the psychology of the country, the demeaning of education, He's closer to what I believe in. So I had to vote for him. But but do I still wish that we that we get a gridlocked country? Yes? I do. Dennis. What do you see on turnout? What does it look like? You're in Virginia this morning? Right? Well, yeah, it was interesting. My wife and I went to vote

to the other day. We voted early, and it was really quite crowded. I was really surprised how many people were there in in the voting booth. Uh. The young man Chip who works for US, went and voted this morning here in Virginia and he walked right through. So I was surprised. Given the given the nearly perfect weather prevailing that he was able to get in and get out with that with no problem. Are stocks moving from

the lower left to the upper right? They still are after Yes, they still are moving from the lower left of the upper right. Depends on which which which country one looks at. I'm a little more bullish of the circumstances prevailing in Japan and in Europe than i am here in the United States. I'd rather be bullish of the of the stock markets, where they are continuously being

expansionary as far as their monetary policies are concerned. And without question though, every time you try to get short of the stock market here in the United States, it does in fact blow up in your face, so you have to her upon the side of trying to be long of stocks, all things being otherwise equal. Do you see use of cash continuing the great theme of and Brian Belsky at BEMO Capital Markets was adamant today that this theme continues of dividend growth and share by back.

Do you see any change in that? I'm really concerned that for many many years, you know, for one, the past decade, the the instead of capital moving into plant and equipment too much capital is moving into the buying back of equity, and that I find disconcerting. If things were really economically strong, if things were really doing well, if the tax rates in the United States and in business were reduced, we would see that money moving into

new plant, new equipment, new labor. Instead, it's been moving into buying backstock, and that I think a dismaying event. Well, Dennis, I've got good news. North Carolina plays Duke before they get to North Carolina State, thank god. So the Tarios will be so worn out by Duke in the Citadel by the time they get to Friday November. I think on the nine yard line, cartment on the one yard line. It will be something. You know, they played football at

North Carolina. They have they have a sizeable stadium. I think they're five and one this season. The wolf Pack record is not as good. Sorry, they're killing it. Five and one of the a SEC Dennis, you're watching the wolf Pack this season sadly? Yes, i am. I've watched this miss the field goal from the two yard line to lose to Clemson. I watched us throw an interception the other day against Florida State to lose to them. Yes, sadly, I am, I am I you should indict me for that.

It's ring North Carolina's state football Dennis. It's there you go, Dennis Garbage, editor and publisher of The Garbage Letter. Onto matters of greater significance. Perhaps we had this earthquake outside there's nothing more significant than that. Yeah, we had this earthquake outside Cushing. What's the what's the effect been here on on oil since then? And get us up to speed on the ongoing back and forth and back and

forth and back and forth on production cuts with OPEC. Yeah. Interestingly, well interestingly, one might have thought that that would be bullish of the cude oil market, but in reality it's really not. Maybe it is supportive for of w t I, but it and it might narrow the relationship between w t I and and Brent crude a bit. You will not see as much crude oil. The propensity for moving crude oil into storage and pushing probably has somewhat been

somewhat reduced. And isn't all economics the study of people's propensities to do something. But but on balance, I think the impact of that is other than on the carrying charges, other than on the movement from contango to backwardation and back again. The impact upon crude oil prices generally is really quite small. What's really important is that, yes, there probably shall be some sort of an agreement, and the operative awards are some sort and the operator, the second

of operative awards are will they be cheated on. There may be some sort of an agreement at the November OPEC meeting, but they will be cheated on by everybody. It is, if I've learned anything in forty years of watching the markets, you can count on OPEC cheating. The headline for me seems to be Russian indecision prevails. I mean, since that agreement was reached in principle, we've seen back back and forth from from the President of Russia the head of the largest gas company there. I mean, it's

been a constant back and forth. I think perhaps the most important comments made were not made by anybody within OPEC, but were in fact by Mr Sechin as you as you just suggested, the president of Russneft, who when asked at that last meeting in Algiers if he intended to curtail production and he s he said, why should I? If everybody else is I shall continue to produce. That is his job. And as long as Russneft, the largest Russian oil producer in Russia, vas with with Saudi Arabia

being the largest world's producer of crude oil. If the largest producer in Russia refuses to to curtail production, why would anybody else. It's it's one of those things. It's a race to the bottom as far as I'm concerned. So the odds of any material agreement coming out of the meeting, the OPEC meeting in Vanity at the end of this month that lasts are are negligible at best.

We're talking with Carl Weinberg of High Frequency Economics yesterday about the situation in Canada, something so tightly tied to the energy picture there has it stabilized? Now when you look at the Canadian economy, how is it doing visa VI the the energy economy in Canada. Well, first of all, I'm surprised at how long the honeymoon has lasted for

Mr Trudeau. Yes, he does have very nice hair, but he's not been I I can't imagine him being the greatest of all leaders, but he has done nothing untoward, nothing discouraging UH to to limit production or to increase production. He's basically stayed aside. He's let most of the discourage and most of these circumstances prevailing UH fall upon the

shoulders of the provincial premiere. And I am a little dismayed that Ms Notley, the the Premiere of Alberta, is openly antagonistic towards crude oil production out of the Tar Sans. But I think she is not long for that position of authority in Alberta. She will probably be turned out of office and by the next election, I hope, Well, we'll see on that Canadian elections were not focused on today.

There is a thing called Martingale probability theory. Made a joke about the new Las Vegas hockey team, Dennis that they ought to be called the Las Vegas Martin Gales, and nobody but ed Thorpe. Nobody but Ed Thorpe got my analysis. I'm a big believer in what's called anti Martin Gale theory, which is established a trade and add to that trade as your success and your gain improves. You have an exceptionally important final two sentences of your Monday note, which is you were stopped out in a

modest loss of euro. You were hoping euro would go weak, and it went strong, and you got right back into the trade after the stop. Now, folks, a gardment lesson on being careful discussed this dentist. Well, yes, I did get stopped out. I I sold euro at one and went to one and actually went to eleven thirty five right at the very last trade on Friday. A little discouraging, but it wasn't that much of a loss. It was forty.

But the hard part is to come back in and say, look, the market is telling me that i'm because the euro then got weak again yesterday. The trend has been downward for the past two years. Clearly, uh, it has obviously been lower the past several months and seems to be getting stronger to the downside. And and the the euro is losing on a consistent basis relative to the to the Swiss Frank, which I think is a thermometer of of of foreign exchange trading circumstances. As long as that continues,

I'm going to be barish of of the euro. Was I wrong for forty pips? Yes, But that's the hardest thing to do, is to get stopped out and come back in. When the market tells you that you're right, you always want to try to do it at a higher price than orere you've got stopped out at but coming in and I had no choice, I had to come in and do it again. I think that the Euro trades under par sometime in the next year or two.

I think that what we've seen for the past two years is a consolidation of what's been a long term bear market. The political circumstances in Europe are confusing, and the monetary authorities are remaining expansion there, and you carry that conviction forward with your gold in row terms. I did an inflation adjusted gold chart the other day, and again it is striking how gold is elevated when you

adjust for inflation. Is gold of value now, Mr Gartman, I'm not sure that golden dollar terms is a value, but I see gold as being nothing more than than a safe haven currency it is. I'm not a gold bug. I don't think that gold is to be all an end all. I think it is simply another currency and

currency traders. Having grown up as a currency trader, you are taught to trade one currency against another, to spread the old German mark against the Italian lira to spread the euro against the British pound sterling to spread again against the euro. And I want to own the currency that likely shell rally where the monetary authorities are being constrictive, and and I want to be short of the currency

where the monetary authorities are being expansionary. Uh, there's not that much gold being mined that that monetary authority, if we can call it such, is somewhat restrictive. But the monetary authorities in Europe are being expansion a buy golden euro terms. It eliminates a great good deal of the daily random noise and coming in gold itself. Dennis Ryan Switzer wide receiver, guitar heels Charleston wins Virginia Senior. He's the one to watch, all right, I don't know. I hope, well, yes,

we have to watch everybody. It did so, and actually nobody has to watch us much once we go within the twenty yard line here we apparently cannot score at all. Thank you for that football analysis, Dennis Garb and go North Carolina's day. We greatly appreciate it. On this election day. Thanks for listening to the Bloomberg Surveillance podcast. Subscribe and listen to interviews on iTunes, SoundCloud, or whichever podcast platform you prefer. I'm out on Twitter at Tom Keene. David

Gura is at David Gura. Before the podcast, you can always catch us worldwide at Bloomberg Radio. Who you put your trust in matters. Investors have put their trust in independent registered investment advisors to the tune of four trillion dollars. Why learn more and find your independent advisor dot com.