Surveillance: Normalization With Former ECB President Trichet

what will this do to the dollar? Do you have to reset at Commerce Bank your dollar call off what Chairman Paul said? Uh No, Actually, in fact we feel confirmed in our dollar of you. We have been expecting a weekending dollar UM next year, particularly as the fat hiking cycle will draw to an end and markets concentrate on that and UM. This is a common pattern that we've seen in the past with past rate hike pikers.

As the andraws near, the dollar doesn't benefit from from the last couple of rate hips anymore, as the market is already foreseeing UM the peak of interest rates, and actually UM the dollar starts to weaken UM. So, in fact Powell has confirmed our view in that very good Dan Morris, let us look at John Authors, who channels Jeremy grandson of GMO here on the old Bronosurus Cbranosaurus model. They served rannosaurs at lunch yesterday as well as wonderful

Chairman Powell wants more room for discretion. The stock market to a bronosaurs, Well, it took a long time for information to go from the brono sours his head to its tail. In the same way, the bond market is the bronosaurs his head, and the stock market just simply gets the news. Last, Dan Morris, I mean we see again the communication here of any given central banker, the bond market picks up with it. Do you have to

reset your bond framework off what the chairman said? Actually not at all, And if anything, we're a bit concerned that the market is over interpreting his comments. I think if we step back and look at the outlook for inflation for next year, the strength of the economy, the level of unemployment and so on, that still suggests three hikes is appropriate in our view for next year. So we may have a pause, be that a March or b then in June, and that is on the margin

a change from what we had thought previously. But fundamentally we think you are going to see how interest rates of FED is not going to stop raising rates December, isn't it. There's going to be more than one next year, And for now the market is ignoring all of that. We've obviously got the big rally, but eventually the realization is going to set back in about her interest rates and then there's a risk, of course, at all of these reverses. So Dan, where do you want to be

invested right now? Take advantage of that well, and we are in were neutral and equities overall in our multass of portfolio, but we're still underweight fixed income. So you can't particularly enthusiastic about equity at the point, but on a relative basis, we think they should outperform. So that's kind of our position at this point. Then let me kick off with you. When you look at brexit, is it doomsday scenario if we don't have a deal, Does it now make it more likely that we do get

the deal? Improvement in Parliament? We think of a range of options. We have a plethora surfeit of alternatives. I think at this point of how it can play out, I think the forecast that we've seen is kind of the worst case assumption, which is you end up not only with no deal in the crashing out, but no kind of mitigating efforts between now and then to ANNAILU. Right,

what could be the effects at that point? So you know, if that's our worst case, uh, and then we go from there towards you know, a remain where nothing really changes, so we kind of know what the outlook isn't there. But across that there are, like I said, several options with different economic effects, and the probabilities of those not only are shifting, but there's no one really that stands

out as highly probable um to land. And what is being priced into your brexit or you're actually your pound forek offs right now it comes to brexit. UM. I mean we've seen that the options market has become relatively nervous. UM. You've seen implied volatility is picking up. UM. So the market is pricing in or husband pricing in the higher probability of a no deal. But the levels are still nowhere near um that we saw around the two thousands

sixteen referendum. So all in all, the market still seems relatively relaxed when it comes to a no deal scenario, UM and UM. I think that is due to the fact that m as just heard, there are so many scenarios how this Brexit could play out, what could happen after this vote in the British Parliament. UM. There are also some scenarios which could play out quite positively for

the pound. I mean, people are talking about the second referendum, which could in the end lead to UM the UK remaining in the EU event, which would be positive for the pound. UM. So it's very difficult to make a pound forecast at this moment with all scenarios, I mean, a nicely laid out what are we gonna do? What? What do you do? Where? Where is the opportunity on

pound sterling? UM? I think from a risk return perspective, I still think investors with pound exposure UM should take the opportunity to hedge their risks in in in their long positions, because, as I said, UM, yes, volatilities have picked up, but they're still relatively cheap. Because in a in a nodeal scenario, I would expect the pound to depreciate at least by ten per center even more, UM and UM. The market is not yet prepared for that so at this moment um, your uh buying implied volatility

is actually a good risk return investment. All right, thank you boys for joining us to Land and there of Commerce Bank and done mores of BNP Paraba. We begin with a man who served as deep Incident of the European Central Bank from two thousand three until two thousand and eleven, living through not one but two crises in the euro Zone. From Leland, France. It is Jean Claude, free Shack and it joins us now. Jean Claude is great to catch up with you pleasure to be here.

Talk to me about how difficult it is to stand somewhere like the Economic Club of New York with a load of pressure on you to say the right thing. How difficult is there? I think it that it is. It is quite a challenge, of course. I think that Chairman Powell did extremely well, and he probably corrected what had been an overinterpretation of his previous message on the long Way from Newt Hall in mentioning that it was

closer from to a Newt Hall than before. I would say we have to be aware of both over interpretation. But it seems to me that he corrected quite well that what might have been an over into put Ducian before and now we end up with perhaps another over interpretation because just going through the quow at the moment, Joan Flatricia reads as follows, interest rates are still accommodative, but we're gradually moving to a place where there'll be neutral,

not restraining growth. We may go past neutral, but we're a long way from neutral at this point. Probably that's October three, here's novembery. Interest rates are still low by historical standards, and they remain just below the broad range of estimates at the level that would be neutral for the economy now October three to judgment November twenty eight, the statement of fact, I mean, we know what the

broad range of neutralists. It's two fifty to three fifty, and as a matter of fact, we are just below that. So I'm not sure he actually made a judgment yesterday. Did he's just standing a matter of fact. I think that you're right. I think that it was a matter of fact, and that he did not intended to over I would say communicate to the market that there was a change in the perception on the one hand, and in the in the likely decision of the Open Market Committee,

so I would very much agree with you. That being said, it was very well done in my opinion, and of course what counts is what you do, not only what you are pre announcing of any overinterpretation of words, and

we will see what happens. I have full confidence in the Open Market Committee to continue to do what is needed in the present circumstances where obviously we have the two targets of the of the Central Bank are very attained, if I may, in terms of employment full employment and in terms of overall solid anchoring of infession expectations in line close to be in line with the definition of price stability, which by the way, is the same in all four major central banks that are issuing the currency

that are in the s d R apart from the Renman b you know, the four others are the Sterling, the end, the yar, and the dollar, and all centle banks have the same definition two or close to two percent. That's very important. It's a byproduct of the crisis, in my opinion, solidly anchoring inflation expectations at a level which would be understood by everybody. So we're at this delicate part of the cycle for the United States and for

the federal serve as well. He's not just trying to weigh what happens with the labor market and potentially with inflation as well, he's also trying to weigh financial stability concerns. And Jean Quatricia, you know, as well as anyone listening to jerm Powell over the last year or so, again and again and again, he states that the last downturns, the last few downturns over the last few decades, have been caused not by inflation overshoots, but by financial instability

and financial crisis. How do you set monetary policy to account for that and anchor inflation expectations too. No, that that's a very very important point. There is absolutely no doubt that. Also one of the consequence of the crazies was to put the central banks, as I would say, very close to the financial stability mandate, without changing necessarily

the mandate, but putting the center bank very close. And I have been the witness myself or the setting up of the Financial Stability Oversight Council on in the US of the European Systemic Risk Board, which I was the first chairman of. As a consequence of the crisis and that that is very very important. And I take it that what what Chairman Powells said on what they were doing, encouraging resilience in the financial system, monitoring financial instability and

being transparent, and he was very transparent. Obviously, I think it was it was certainly part of the responsibility of the of the center bank. Do we have too much forward guidance now? Do we have enough? Or do we have to ebb it back as clearly Mr Powell is stating, and I would suggest you agree with to the engineering mark some which is data dependency. Well, first of all, the various central banks are not exactly in the same situation.

As you know. The US FED is much in advance on Europe, not surprisingly because Europe in the business cycle had a lag visavi the US because of the sovereign risk crisis. So there is a difference. So I take it that the forward guidance in Europe is absolutely necessary because we are in the citucation realm and market participants have to know what will happen. In the US, clearly we are less close to absolute necessity forward guidance, and it seems to me that you can understand what said,

were the two questions here? One of them is really important. Let me go with the weaker one. First, the news flaws extraordinary with Deutsche Bank, un a credit the financial system of Europe. John, and I every day of a mystery over the chronic nature of negative interest rates. You didn't study negative interest rates as a kid, and yet bankers are living with it each and every day, particularly in Germany. Now that's true. How does this how do

you perceive this ending? Well, first of all, I take it that it was necessary at time, and as you know, it will still be there until probably the last quarter or the end of the third quarter of next year. Uh. At the very beginning, the trust was those negative rates will have devastating consequences on all the funcial sphere, and particularly on the banks. I would say the judgment is much more nuanced now because we saw how banks, some of them, the best managed banks, could cope with it.

So I would say it's it was very very non conventional, obviously probably necessary. And what about now and what about in two thousand twenty? How do you get off, as you correctly stated in a panel, the ax of Weber, the addiction of all this. No, it's clear that we have to get progressively I would say, serenely out of a situation which is totally non conventional, and we are starting to do that, as you know, because because the the end of tapering is for the end of this year.

In Europe again we have lags in comparison with the United States of America. But the course, the course is more or less the same sequence. But Jean Claude, there is a big question that I think we have to start exploring the prospect that we're stuck here, that we don't get away from zero in the euro Zone because the cycle doesn't last long enough for them to do it.

You're starting to think about that, Yes, yes, of course, as I already said, of course it's very very important that we are real feeling the overall weaponry of I would say, not on the central banks, but also the governments and all kinds of of tools that can be utilized when we have to cope with the next recession. The main problem for the European would be that when the US, which is ahead in the cycle, has its recession by contagion, we might have a big, big problems

for us. Even if it would not be appropriate in terms of business cycle in Europe. So we will see. But again I take it that what is being done right now is correct. That we have in mind that you have several weaponry that we are non conventional, the interest rates of course, and also the quei or so called quei, and we have to do that, namely normalize progressively and as I said, serially, if we do not

want to have counter productive effect. But I take it that all santle bankers in the world are fully aware of the fact that the main, main, major issue for them would be the next slow down of the circle. For anyone just joining us on Bloomberg Radio, Jean claud Trichet joining Bloomberg Surveyments this morning, the former European Central Bank President Jean Claude talking about the next cycle. I think what is really interesting when you were at the ECB,

the periphery started trading like credit. Sovereign debt in Italy in Spain has all the characteristics of a credit and not a sovereign. That's still the case. So let's explore this further. We go into the next downturn and Italy still trades like credit. How much of an issue is that going to be? Well? Again, Italy today is more or less a paradox. On the one hand, they have, of course a lot of liabilities, including one percent of the GDP in terms of of I would say state

over outstanding debt, so that that's big. On the other hand, they have a card account surplus which is not negligible. They have a primary surplus in their budget, which is something so and the appropriate in the circumstances, but which is there, and you know that they have because they

have a current account which is behaving quite properly. They have a lot of I would say domestic investments that are in the overall UH indebtedness of Italy, so they are not as vulnerable as the market is very often saying I think we have to be more nuanced on on Italy. What is clear, of course, is that the new government very I would say sadly, has decided to give the worst possible messages to the market. But I

am not desperate. It seems to me that the more I would say, sound and reasonable messages might come now, and I take it as important. The meeting of the Prime Minister of Italy with the President of the Commission. You've written for decades about realism it is finally here. We see it in each and every vote, and we see it in the struggles of Mr McCraw and the protests on the chance. Elise Madame mc gard once told me the protest is the art of France, that people

do it there a lot. What was unusual about these recent protests and does it speak to a fragility of Mr mccrow's plans forward. Well, first of all, I think that all the advanced economy have to cope with populism. The UK, it's clear with the Brexit, the US, clear

with the election of President Trump, and all continental European. Fortunately, the populism in continental Europe and in Ireland is not directed against Europe first, but against the national government first, and that is something which explains also the resilience of the European institutions and on on the aarea in the worst crisis since World War Two. As rigas France, I would say President mccon engaged in very very important reform. He was right to do so. It was really the

mandate he had received from the people. Of course, that would be very very damaging for his political capital. That's unavoidable because most of the reform you have to do because they are good for the country in the medium and long run, have a cost, a political cost on the short run. So I'm not surprised. But what has happened? What what is associated with this? I would say loss of political capital, but it would it would reconquer if if I may, I'm sure that he has time this

political capital. But the so called yellow jacket is something which comes out of the digital revolution, clearly, exactly like in the US, the digital revolution is the technology. It seems to me, yes, because because they are bypassing all possible organizations. John and I wanted to speak about German power, about the future of Europe, but there's also larger matters that saw Paris Saint your Man beat Liverpool and John, what was extraordinary is Olympic leon A tied Manchester City.

No one expected that weekend to say football we did. Are you a huge supporter of Olympic Leon? I am not really soccer enthusiasts. You know that you can come on the show. You have not the best intellocutor, Well, I could make mistakes in judging. I was surprised myself,

of course, because because Manchester City, it's Manchester City. It is yeah, I had a fantastic computations, but we will see me in any case, How does how does France compete in something as visible as football versus the capitalist juggernaut of the Premier League in England? I cannot tell you again. I'm not again a real expert in this. I love that we have the former president of the

European Central Bank and you are so keen together. I figured a guy from Leon looked up to see if he was on the board of Olympico and he was busy running the Bank of France from and then in the early two thousands you had this other job to do over the e CB. Jean Corda want to wrapped things up with a delicate story, a delicate topic. And you and I have gone back and forth on this before, and you're a good sport when we talk about it.

The great hikes of two thousand and eight and two thousand and eleven at the e c B, A lot of people look back and say that was a policy error. Walk me through how difficult it is to know whether you are indeed making a policy error or not, and how fine the decision actually is that you make well

to do replace myself in the circumstances. I would say that what was extremely important for me was to be able in any case to engage in very bold and swift non conventional measures as well I did with my colleagues in or seven nine of August or seven, we gave a limited supply of liquidity to all our banks and they were asking for ninety five billion euros. We

gave ninety five billion euros. It was very much criticized at the time, but it won me the Man of the Year of the fancial times because it was swift and bold, swift indeed because we took that decision in two hours and a half and the same it was the same when we had both. I would say the the private sector crisis coming from from Wall Street with Lemon Mothers, where we generalize the fuller lot Ma tad fix rate of liquidity, which again was very very bold

because all the banks could ask for everything. At the same time, I had a mandate and as my successor and my predecessor, which was to deliver price stability, be credible in the delivery of priceability, and avoid any kind of doubts in major public opinion in Europe. And I did both if I may, I was anchoring solidly inflation expectations at times where we had a high level of inflation.

I have known four pucent inflation. You know, the central bankers to the dream of that on your work you enjoyed on my watch, I had four when I left. I had in the year where I left three two point seven percent when I left, So we were in a different universe. And again I was equally anxious to deliver press stability and be credible in that delivery, including

in major public opinion that very often anxious. The main the main fear of half of Europe was we are engaging in some kind of new I would say, experience never attempted in the past, and we will have inflation when you emerge the d M, the Guilder and say that the escudo and very quickly, is the bundes Bank now a different Bundesbank when you were on the watch, Yes, certainly, because now they have twenty years of experience with within the system and the open system of central banks. So

this is certainly a different Bundesbank. You have also the experience, the benefit of the experience. But of course I see the Bundesbank as always keen or not losing contact with the public opinion in his own country, in her own country. That being said, the people of Germany, and I think it's paying hammage to all what has been done by the e c B is in favor of the u W at the level of of the citizens in Germany

eighty percent. So it's the success of the UH is proved in a way by the support of the people. I've got a tricky question to wrap up. This is the final one. We've got a presidential race next year at the European Central Bank. Would you endorse a candidate Jean Claude. Do you like anyone right now that you think would make a good ECB presidents never coming back? No, No, I would say that it is a decision made by

the heads of state and government. Have food confident that they will find out a very good president amongst a number of a potential president that are extremely good. I think we can have a Frenchman at the top. I would not exclude an thank you so much. It's great, You're always fantastic, always thoughtful. Thank you here with the terrific news flow. Donald Gimba with us. He's senior Vice President CIBC Private Wealth Market for ages at Krey with

encyclopedic knowledge of Asia, among other things. I have noticed the humor recently that Australia has not had a recession since you're ute twenty five years. Would you explain why a nation is sophisticated in the is Australia has avoided the recession pain. Maybe it's neither of those things. Maybe it is. Well, first of all, it's a small population. It's six million now up from fifteen when I started going. All of Australia's the size of New York City exactly,

or the size of Shanghai. You know, it's it's teeny it's natural resource based. And the and the growth in in the PRC, the People's Republic of China has has stimulated the economy. I remember being in Australia in two thousand and seven UM and they were very proud of the idea that the global economy was facing a bit of a down term, but they were insulated. And there was this joke on the news of the time that this politician had used a map of the world and

actually physically moved Australia closer to China. And at the time, people were laughing about it, but actually that was actually what was happening in Australia at the time. Absolutely, and the long term at that time in two thousand and seven was that will will ride the Chinese tail for a while and then we'll jump on the Indian tail and that'll keep us going for another fifty years. Now, we'll see if that happened, and we'll see whether China can carry on as well. You've just been to Asia.

What is the read on what is happening at the moment? Because I found over the last couple of weeks as we anticipate this gewin Cee, that the conversation is almost formed exclusively from the perspective of the White House. What does the White House wants? What will the President try and deliver, and not so much about the other side of the debate in this bilateral what is China willing

to give up? Well that that you just hit the nail on the head, and Tom and I were talking about that briefly forty five minutes ago on TV the Properties. It's a good shows. Getting back to the point, the question in Asia and in Australia is not the US, it's China. Where are they going? What? What is the president of China's popularity? What is he accomplishing? Is the Belton Road actually working? Are coming undone? And and so as we go into this weekend, the question is what's

China going to give? But remembering they need to save face. Okay, this is important. I swoket to Robert Hormat yesterday Investador Hormats with his international experience serving President Obama. We talked about Jonathan Spence the China Yale University, and everybody has to read Jonathan Spence to know China. You lived at Don Gimbal. What's the number one thing you would say to the President United States about the character of the

Chinese elite. Uh, they're much more pragmatic. They're much more long term orientated. They believe very much in saving face at all costs. But they know how serious this trade thing is and they and they want to come to some agreement. And it's really not about trade and tariffs. It's much more about intellectual property in terms of the

United States. And if if they if the President of the United States can understand that can understand that the Chinese want to save face, but they're willing to concede a bit on intellectual property and on on ownership in the pier in the People's Republic. Uh, and then we can get an agreement, and I personally think we will. I think the United States that has got some allies here in the likes of Germany, that we obsess over the low paid manufacturing jobs that may or may not

have shifted to China. The real fear for a lot of people and within the administration, from the likes of Secretary Ross, is that the maiden Twines China program is to take the highly paid, high value added good production from the likes of the United States from the likes of Germany. And the US is not alone. The Germans are also very nervous about what the next ten years. You know, you've got a point, but I think you're

running late. The an awful lot of jobs have left China and gone to Indonesia, have gone to the Philippines, have gone to my Omar because wage rates in the PRC People's Republic have actually risen. So I I think that that's kind of my point. Actually, what the Chinese do want of the high page jobs, now want the

lower page jobs. Well, I suspect that then we're going to have to figure out how to have value added in this country, and the Germans are going to do have to do the same thing, because that's that's what the future of international trade is. It's where you do it best at the at the most reasonable price is

going to get the business. We're gonna all gonna have to departmentalize what we do, dun, I don't know if you've ret Robert Kaplan's on Asia Cauldron going around the South China see of all these secondary nations and how they're all finding capitalism. Which of those nations interests you the most? Is the opportunity five and ten years out? Gosh, that's a great question, thank you. I would say that the Philippines, if they can straighten out their government, What

does the Philippines do with Mr? They replace him at some point? I mean he's has he caved into the Chinese and the South China Sea in the last number of weeks, Yes, a little bit. Can the US respond to that? If we could get the President of the United States to close his mouth and turn off his Twitter machine, I think we'd be a lot better off. But do you think the Philippines is I think the Philippines looks good. I think that South Korea, if we

can get the North Korean thing under control, looks looks interesting. Uh. Taiwan is under a cloud, always has been and probably will continue to be. But they do good good stuff. UM. Indonesia has an election coming up and it's it's not looking great to me and UH and miamrs on a part and the Malaysia. Uh, it's got a new old leader nineties plus years old. UH, and it's got a lot of potential. There you go, Don, thank you so much.

Don gimball with us with the IBC, UH private well Management, with his travels through Asia and focus there in Asia, Pitt bringing our steam guest. You and him are the only two people on this island that remember when you could drive across Midtown Manhattan east to west midday and actually get somewhere. Probably although a Leon Cooperman knows a little bit more about the ins and outs of Wall Street than I do. He is, of course a hedge

fund manager philanthropist. He is the chairman and the chief executive of Omega Advisors, his alma mater of his Hunter College as well as Columbia University, and he's known for starting the Goldman Sacks asset management on Leon Cooperman. Thank you very much for being with us today more you have previous least said, and I think this is great quote. All this fixation and fear about interest rates is misplaced based on what we saw in stock and bond markets yesterday.

Can you explain to someone who's just landed from Mars how the market could increase the value of all these assets just because of a statement from the Federal Reserve chief. Well, if I can start off, I'd like to kind of

make a recommendation, UM, and that is a suggestion. Why don't you guys have on your program a senior person from the SEC to explain why they eliminated the uptick rule, which was instituted in the mid nineteen thirties in response to the abuses, worked effectively for I think seven toy odd years, and they took it out in two thousand and eight, which gave a runway to these electronic high

frequency traders ums EETRA. And why we have not dealt with the all this algorithmic stuff going on which is scaring the hell out of the pubble and creating a lot of volatility that that that that is relevant. Are you suggesting, Mr Cooperman, that we've had flashed this and flashed that and we need something more sustainable by the al goes before we get I would steer. I would say, certainly. Look, I'm old fashioned, so maybe I'm at a date I'm

willing to learn. And that's why I suggested get somebody from the SEC to explain their position. I don't understand it. Everyone and I know of that there's accumulated wealth, whether it's Warren Buffett, Mary Gabelly, successful investors, Ken Lynn Gone. They buy weakness and they sell strength, and these algos, not all of them, but there's one approach where they when it's up, they want to buy it. When it's down,

there to sell it. And it's exaggerates the moves, it increases volatility in the market, it scares the public and his counterproduction. Well, I'll go with the scares of public. There's no question about that. Do you mine weakness in the market right now? You know, within the purview of Leon Cooperman, Is this a point where you can acquire shares three years out, five years out? Absolutely? Well, Look, the market is the market for bonds is very homogenious.

If you're dealing with triple A bonds or triple B bonds, bonds are the same. Uh, you know, rating trade with an eighth or a quarter of a point of each other. The stock market, on the other hand, is very heterogeneous. There are stocks now that are three thousand on the SMP with the index at the stocks that are with the index. And my job is to find things that are being miss priced in the market. But I didn't really respond to the first question regarding interest rates. Uh,

if they're not an irrelevancy. But clearly interest rates are not at the level that represent a problem for the stock market. Every bare market and every recession I know has been preceded by high real interest rates. Okay, we have if I take the Fed funds rate and addressed for inflation zero and if you look back in two thousands, and excuse me, if you look back as early as the mid seventies bear market cycle, basically before the seventy three four downturn, the real Fed funds rate was six

hundred basis points before the eighty downturn. Who was at at basis points before the ninety downturn was about six hunt basis points and so get a picture that there's high real interest rates. Real interest rates today are zero. You know, in the last fifty or sixty or ei the years, the SMP multiple has averaged fifteen times. That's

not far from where you are today. However, in the last fifty years, were the SUP multiple average fifteen times, the tenure government average about six and a half percent, uh currently three percent, and they fed funds rate average close to five currently a little over two. So you know, the stock market is not you know, the stock market valuation is very attractive relative to interest rates if you

believe interest rates are sustainable at these levels. I think the biggest point would make UH, and I think it's very important for people who understand. F the tenure government belonged to three percent, and I'm one of those guys, what it would be higher. Frankly, I thought it would be higher. But if the tenure government belongs to three percent and funds belong at low two percent, you don't make ten or fifteen percent a year in the stock market.

You make five percent a year in the stock working and that's the track of you are this year. I think we're up four percent. Leon the heads fund business is two percent you make the fee you get or a big hunk of the piece over a hurdle rate. Is the formula broken? Is a formula dead? Well, it's a very complex question and requires a complex answer. First, the premission you have to accept is to get a

premium fee, you have to deliver premium performance. Since you can't deliver premium performance, you're not gonna get a premium fee. But we've been through an unusual period. I go back to two thousand and eight. Everybody wanted for them to the economy. They wanted to blame the investment banks, to commercial banks, the rate engagencies, the broker's industry, the government.

Nobody wanted to blame the individual for the conduct of the financial affairs, saying that they had no responsibility to figure out what they could afford and what they can afford. Similarly, if in two thousand and nine, I've said to you, and we came as close to saying that as anybody. Steve Irono and my partner who coordinates love about macro research work. We were very bullish in two thousand and nine. But if I said to you, you don't want to be in an absolute return manager. You want to have

your money with a relative return manager. So a hedge fund is not a good place to have your money because we're gonna have a ten year straight up bullmark. In a ten year straight up economy, you would have had me arrested for being somewhat demented. Okay, And that's what's happened. And so the individual that made a decision in two thousand nine and they wanted to be in

a hedge fund, they were not. And they were in a vehicle that was designed to be absolute return oriented, that was not gonna be fully invested, was going to carry a short book, and having a short book is a hedge against prospecty in a one way bull market. So now the question becomes today at twenty wherever we are in the SMP, whatever the number is, you know, nine years into a bull cycle, do you want to be in a long only um product. So you know,

I don't complain. I don't complain. It's like Henry Ford when have got cooked, you know, driving on a highway with a young chick. Uh. He said, you know, don't complain, don't explain. You know, you have to live in the world we're in. And I say that if we continue in a straight up bull market, which I doubt. Basically, you want to be in a long only strategy and you don't want to be in an absolute return strategy. So you know, but the hedge fund model is unequivocally

being challenged. People are tired of paying a premium fee to leg some in this and until that changes, the industry is gonna be in the defensive mode, which had nothing to do with my decision to retire. To be honest with you, you know, my decision was totally based on seventy five years old. I've been doing this over fifty years. I'm giving my money away to charity, and basically it's there were two things I said to my investors.

I wrote him a letter. I said that basically, statistically, if you make it a past sixty five and cancered US and get you on average, you make it to eighty five. I hope to be better than average. But if I'm just average, I got ten years left. Since I turned seventy five six weeks ago, I said, I don't want to spend the last ten years of my life. Let's go to the statistical marvel. Well, Leon Cooperman, I want to ask you if you have a green thumb have I have? That whole thing is built so out

of proportion, it's not even funny. What is going on with that whole cannabis industry? And tell us your perspectively, and you're you're you're asking the wrong guy. I am very friendly with the generalman John Coffler, who I have known for forty years, a real gentleman. He calls me up, he tells me your son a starting a cannabis company. He'd like to meet me. I meet with Ben Kabla, very impressed, very fine young man, very impressed. I put

a very small sum of money in. They have a conference call, okay, And I asked a question on the conference call. The next thing, I know the New York Post as my picture in it, as a cannabis kid, as a cannabis king. You know, it's obviously an explosive industry, but there's gonna be a lot of money that area. Let me explain. Let me answer the question before you go on. Because of that picture in the post. Okay, every new issue in this area calls me up and

wants to come and visit me. And some thirty five year old kids sits in my office and explains to me his vision. And if what he tells me is accurate on paper, he's worth a half a billion to a billion dollars. I know that that doesn't make any sense. There's gonna be enormous shakeout. Yes, the industry is going to grow, the nation is going to get high and this stuff. But you know, you have to figure out who the winners and losers are. It will be very, very careful. If I was the public and we got

one minute it left. Have you ever had a public relations team? Has there ever been a group that's had to control you and get you on message? I'm on message. Just ask me a questions. I'll give you a question. Yeah, I'll give you I'm totally What do you do right now? I want you to know what to do with Apple computer? Right now? Apple's imploded, the world's over, Tim Cook's of failure. What do you do with Apple? Come on, I have my money and Google, I have my money. You know

I know a lot about what I own. I don't know a lot about it. I don't know. You're long Google, tell us give us the belief story on Google quickly? You know the market sells the fifteen times earnings. Google's the twenty times the market is going to grow six percent. Google's gonna go to sitting on a fortress balance sheet, highly diversified business. It's cheap relative to its growth. You look in two thousands, Cisco is a hundred times earnings.

You know, we're a totally different worlds. Okay, So you know I find plenty of things to do and I'm on message. You don't need a pr gout to control me. I respond to your questions. You asked me a question. I believe that's what we got. Leon Cooperman, thank you so much with my advisors and thrilled these with us. And we're not absolutely thrilled to bring in a mayor of a great accomplishment. He is a mayor of a

small city on the West coast, Los Angeles. We said good morning to everyone at Sirius Sex him listening in Los Angeles. And before we dive into all the usual questions and the rest of it, I just want you to parse what it's like when you first nail Oscar Peterson and B flat. There's there's something on the piano. Oscar Peterson and B flat is an act of God, isn't it? It is an act of God, for sure,

the finest who ever played the piano. And I have a piano in my office and I can only hope to play a fraction as well of Oscar Peterson did. This is a great idea. I could play my fracture lousy Garcetti imitation piano here and let's do it. I think that we can find if we had a piano right now, we could do it from Washington. While we're talking, you know, Pim, please tell us a little bit about what tune you believe the Democrats should play when they

enter the majority in the House in January. What tune should they play? Uh? I don't know. I think that probably sisters are doing it for themselves. Something where we're finally stepping up and actually taking agency back and standing up for a culture not of corruption and cruelty, but hopefully of action and getting stuff done for the American people. That's where I live as a mayor, and I'm excited

to see Congress. I met yesterday with Chairman de Fasio, who heads up transportation and infrastructure, and I'm hopeful we'll actually start fixing this country and that I hope this Congress focuses on that first. When you talk about fixing

the country, you're talking about infrastructure spending. Absolutely. UM. I started a group called Accelerator for America with fellow mayors that we founded bring together folks from industry and labor and nonprofit world to kind of say, well, Washington, sleep, We're gonna kind of take America's destiny ourselves and move forward infrastructure and good jobs and opportunity zones. And we

just met in Philadelphia. We had a poll of a thousand voters that we're going to be releasing this week and UM, after healthcare and jobs, number three was infrastructure and having campaigned for people around the country over the last few months, from Mississippi to Oklahoma to California, everywhere. Obviously the Midwest, people want the roads paved, they want the bridges repaired, they want jobs, and they want, you know, infrastructure to be world class again. Am study of Los

Angeles with this folks coast to coast. David Wasserman over at Cook Political Report just did a stunning summary of what the House Democrats will represent in the new Congress. Sevent of all Asian, of all Latinos, sixty of all African Americans sixty of all college grads, and on and on and on, and it's a great trend led by your Los Angeles of a more demographically diverse America. I want you to speak to the tent and Republicans left in your state. How do they adapt and adjust to

the new America that's been led by the diversity of California. Well, I'm not going to give advice to the party, but you know, I have of my city is registered as Republicans. That's a million people, and I would just say, you know, I work for you to um. You know, we raised the minimum wage together because a majority of Republicans do believe in that, contrary to the Republican leadership here in Washington d c Um. We also lowered the city's business tax,

the traditionally kind of Republican idea. But Democrats are behind that too because they want to see small businesses start up and be prosperous in my city. It's I would just tell them put down your party affiliations. You know, if you need to duke get out election time, fine, but let's figure out a pathway forward of the things that unite us. UM. You know, we made community college free in l A. And more kids went to college the next year in our community college system from our

public school. And so I think Republicans care about that stuff. And if they want to be a party of extremism, they can turn into a permanent boutique party in California. But if they want to get together with us, we're more than happy to work together. Um, you know, between elections for sure. And I think if they want any sense of ever being back in power, they've got to listen to Americans, and they've got to listen to the future, which is very much embodied in Los Angeles and California.

America saidy, could you speak to the issue of natural disasters that afflict not only California but many other places around the world and are accentuated by the effects of climate change, and what you believe should be done in order to preserve the current infrastructure that exists. Well, well, mayors are the political first responders to these events. Um, you can't tell Sylvester Turner in Houston that climate change

isn't real? Still real rebuilding from Harvey. Um, you know local officials in the Florida Panhandle and most you know, notably us in California over the last couple of weeks, with the heroic work of our firefighters and others who responded to these fires. I loved what Jerry Brown said. He said, this is the new abnormal, and I think

it's it's real. It's one of the reasons, with help from Mike Bloomberg and others, I serve on the C forty, the Global Organization of Mayors confirmed Climate Change and founded Climate Mayors, which is the American group. Now that I've built a four D and ten cities that have said, hey, if this White House is at we're in and we're going to implement Paris where we live, you are at the absolute nexus of copyright and intellectual property in this nation.

I mean that is the perception of your Hollywood, your Los Angeles. What's your advice to President Trump to actually get fixed what everyone agrees is a major issue with China. You know, I think he's saying the right things. I just don't see much of a strategy. Um. I think that it's more about the fireworks of tariffs, which have

a huge impact. Those are taxes on us, and you know, whether it's stock workers in l A or whether it's construction workers that are slowing down projects because of soaring steel costs. We have to have a strategy. So I think we act tough. But you know, I've told that directly to Chinese officials. I've said, look, that's absolutely crazy that you have a quota on movies from Hollywood. Right now, I said, aren't you a strong country? Now? I think we have to make that argument. You've grown up. You

are a powerful nation. If we're going to be a relationship of equals, we have to be treated as equals. And it's a great place to start. Twenty seconds America study. How many times have you seen a star is born? Which one there? That's the l A answer with Mr Cooper and I haven't seen. I've been too busy working for the people of l A and changed in the house out. But I saw the Barber Streissan one. I haven't seen the two earlier ones, so I'd say one

time between the four. But I'm looking forward to Cooper very good. I'm sure you will. America Study of Lesie Angles. Thank you so much. 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 before the podcast. You can always catch us worldwide. I'm Bloomberg Radio