Surveillance: Trump Could Boost Europe, Haass Says

of course on the Bloomberg. This is really a joy. We're gonna talk markets here in the correlations that we see right now. With two people totally unqualified to strategize on the markets, that's always a good thing. On surveillance. Michael Spence as a laureate from n y U. He has more than qualified to talk about information within our society and systems. And Richard Haas has a most interesting uh CV and bio on political economics and international relations.

I want to begin with you, ambassador, if I could you have a fabulous moment in your new book on the World Order. You go from Henry Kissinger's World Order onto whatever the new world order is, and you have a phrase as if the tide goes out, we shift from World War Two, and we're how our markets adapting to this subtle chronic shift. You see as the tide goes out, well, the short answers they're having trouble. You used to have certain structures and rules in the world.

We had, for example, all the discipline of the of the Cold War, and when that ended, we found ourselves somewhat lacking and the other institutions really weren't quite up to it. And I think we're at a moment in history where globalization and virtually every one of its manifestations or dimensions is moving at a faster, more robust pace

than politics can catch shops. So we see gaps of for example, take one cyber that's probably the largest gap where the technologies are at one end really really rapidly and profound effects. And the rules it's like the wild West. The world hasn't begun to set rules. Plus there's no sheriff if in one various actors violate what rules there are.

In Professor spent, you have prodigious mathematical abilities here. And when I hear Haws to talk about speed, I look at from an electrical engineering standpoint to slew rates, the abrupt changes within any system and circuitry. From where you sit, our our markets able to keep up with the modern slew rates of globalization. Yeah, the markets can keep up with it, but the the economy can't. Uh. And so I think what you're getting out of Trump is something

quite interesting. Basically, we have lived in the world in which we in America were took the lead in creating this sort of global system, and then we said, we can't touch that system because it yields huge benefits. And it does, and so we did. So take the labor markets, you know, the demand side moves around because of technology and globalization, and we're supposed to adapt. And Trump is saying, no,

I'm reversing those priorities. Right, We're gonna do what it takes to make our economy function in a way that satisfactory to the citizens. And then adults can negotiate mutually beneficial arrangements. So he's going to interfere, you know, with a whole lot of things that used to be untouchable before, so that Donald Trump satisfies Americans. For how long I was speaking to in the Rothschild and she was talking

about inclusive capitalism. It was on Friday in Rome, and she reminded me there are three million truck drivers in America. When we start having driverless cars, it could be three years, four years, five years away. Then those people will lose their jobs at the end of the day. So if you refocus on manufacturing, how long can you how long

can you basically reflight the economy for and keep people happy? Well, in fairness, I mean, I don't think um President elect Trump is relying on manufacturing only to reflate the economy. What he's concerned about is getting on with the process of of having the economy and our labor force and our human capital adapt to this new world. But what he is saying in part is if we can't adapt fast enough, we'll change the rate at which we have to adapt. But can I pick up on some sequence

and said, there's a mismatch. The cause of most of the job dislocation is technological innovation, and the essence of the polar response is to pin the tail on the donkey of either trade or offshoring. And there's a mismatch.

So even if the so called cures being put forward now by the political process go forward, it won't cure the problem, and millions of Americans will still face job dis place But we haven't begun a serious debate in this country about what to do about robotics and artificial intelligence and driverless vehicles and how we're going to cope With a spirited conversation with Michael Spence, the Lord from New York University and Ambassador House of the Consul and formulations,

what an honor to have the two of you here with all that's going on in the distill And really, folks, we were talking about this on the break, about the old in the new ambassador has, how Reagan has. There's so many articles I want to be like Reagan. I'm like Reagan, Come on, you can't mean it's not the same world as President Reagan had. First of all, it's not the same person as Ronald Reagan. Ronald Reagan came

into office with a really developed philosophy. He may have been underestimated by a lot of the pundits, but they missed it. He had written those letters and articles for years, given hundreds and hundreds of policy speeches. Plus politics were different when Reagan was there. Washington was a much more malleable, functional, place now because the funding reforms and other reforms about

how politics are conducted, how the society has changed. It's much harder to to garner concentrated political power, so that the parallels to Reagan, I think are not going to But there is something, and Michael called it animal spirits, there is a sense of with with where we are economically, that this is a moment where we're gonna go from probably an under two percent pro long rate of growth to something much higher with some sort of combination of

corporate tax reform, individual tax reform, and finally some fiscal spending.

It's almost as if we're saying the era in which the only game in town was monetary power and what the central bankers can do is over and now we finally have something larger going on in Washington, right, Richard, two questions on that, So recon reconomics, you you know, right, we point out the differences, the differences, but actually he did produce large fiscal deficits and the ultra strong dollar if we do see the same thing from Donald Trump.

But also may mean that actually Europe it becomes a lot more competitive because the euro goes down. So you could argue that Donald Trump. At the end of the day, we'll save the Eurozone. That you've now discovered the hidden agenda of the of the Trump of presidency is to save the ears. Well, I thought it was a secret that was only between us. I think it'll take a little bit more than that, but it could have some effects that, yes, are advantageous for for European uh, for Europeans.

But let's not kid ourselves. What Europeans doing don't do is gonna have a fight far greater impact on their own future. No about Lauriate Michael Spence at the Stern School of Business at n y U and Ambassador Richard Hass, President of the Council and Form Relations, author of A World in Disarray, American Foreign Policy and the Crisis of the Old Order, out just in time for inauguration. Penguin Press schedule to publish that book on January the tenth,

and Richard host let's start there. Let's start with the Old Order and what comes next. We've heard Donald Trump fulminating on his set his thank you tour across the country in Faietville, North Carolina, last night. Are we any closer here to getting a sense of what what his brand of foreign policy is the short answer is no, most of the team is not in place. We obviously

still don't have a Secretary of State. And even after you staff up, usually the first few months of any administrations are consumed by interagency reviews of pretty much everything you've got, from crisis to standing UH situations. So my my senses, we're not going to have a developed view probably till late spring. But in the meantime we are getting some specifics, the fact that t PP, the Transpacific Trade Agreement is essentially no longer, the questioning of the

One China policy after several UH decades. We had certain statements in the campaign made which again raise at least the some questions about the long term standing of some tradish traditional features of American foreign policy. So there will be elements of change or disruption. I think the the honest answer, though, is we don't quite know what the balances between UH, the old order and the new, and what exactly a new order or disorder might look like.

Prefensi respub struck by how much of foreign policy right now is being driven by economics, and when when you look at recent history, how new a thing is that, How novel is that that we are seeing so much. Be it the relationship with China and Taiwan, be what we saw in Italy earlier this week. It's economics that's the driving force. Well, it is because you know, for a long time we had deteriorating uh, you know, distributional aspects of growth patterns. But they have now burst on

the scene. So it's impossible to ignore it any longer politically, and that is spilling over into you know, the way we formulate how we deal with the rest of the world. Now, we may over emphasize globalization and under emphasized technology as part of the political process. But but the simple fact is that that the what has come to be called job and income polarization in the middle class element is just too large to be set aside politically anymore in

any system. You and I last spoke before that referendum in Italy, and you spend a lot of time in that country. We talked about the referendum. Then looking at what happened on Sunday, what's the best prism through which to see what happened there? Can we draw a broader conclusion about populace sentiment in Europe largely globally or was this a domestic domestic vote. Yeah, it's a Sorry, it's a mixed case. So you what you would not want to mean. Popular sentiment is gaining ground in Europe uh

as well as here. So that's a general trend. Uh, But that trend is not yet strong enough to have determined, you know, a sixty forty loss for the So there's idiosyncratic factors. Uh, there's a political system that people benefit from that somewhat corrupted much of the country that was going to be challenged if the referendum passed. So that you've you've got a whole set of other people voting no for different reasons, you know, not just the nationalist

populist ones. That's your hots going into that referendum. Uh. Looking at the banks now, a lot of people said, look to Greece as an example, uh, an illustrative example of what might be happen in Italy. What countries are watching what's unfolding Italy now in light of that referendum. Well, the Germans are watching us. They're wondering how much of their wallet is going to get back to UH to

pay for it. I think that's probably number one and the Greece there also going to look at to see what's the latest mood in Europe to to bail out the who are who are weak. And I assume people like Mr drag Or spending really fairly long hours at the office figuring out exactly what they're gonna have to do. And again it highlights the the precarious balance between national economic performance and what Brussels and It is meant to do.

And the and the problem is you can't discipline national economic performance in some ways because people are scared to see that through its tent end because it might mean certain countries have to exit. So you're always there a little bit as the banker of last resort, which destroys a lot of the discipline. So you've got the EU on this. It's kind of addicted to a degree of external help and a failure to really discipline things as much as you might want to. Impurely economic Let's I

want to go there the proverbial can. How do you say kick the can down the road in Italian? I don't know, we won't make it up. But wait, that's how I got through foreign language at school. Uh Richard asked with this Michael Spence this morning. Good morning, It has been an interesting morning of conversation here at Bloomberg Surveillance. It has been Professor spends one considered and continuous can down the road. How do you break that? And allahyak,

how do you clear markets? It's crisis every time, isn't No. I actually think it's simple if you take the the Europe or the Eurozone's entire capacity, uh, to sort of do what Trump is saying he's going to do, admitting there's uncertainty, use fiscal measures to make it easier to do the structural reforms. They could change the growth pattern. Now cynics will say that's not very likely, but it's not.

It's not very hard, uh to see what path. You know, if you started going down that path, Roggy could raise the interest rates. Then they'd start the restructuring that that Richard talked about. You know, Italy couldn't sit there with a sovereign debt, the GDP ratio of a D thirty five per cent and a whole lot of good things they're painful with start to happen. But right now it's

sort of locked in its current configuration. Lockton's current configuration and Ambassador Hasse I wonder when you when you look at Europe today, at the economic underpinnings and the security underpinnings, which is stronger, What what's the most compelling case here for the European project at this point, the security case is the most compelling. People take for granted the extraordinary contribution again of what's happened in Europe over the last

what seventy odd years the world. You had World War One on World War Two in Europe, and the whole idea of what began as the Coal and Steel community was to knit together and integrate Europe so much the war would become literally unthinkable and undoable, and it's succeeded. The fact that Western Europe has been as geopolitically stable as it's been now for three quarters of a century.

It's a little bit like oxygen. You take it for granted, but when you look back and you compare the last seventy five years but the fifty years that preceded it, it is it is one of the world's great great accomplishments. And what worries me is so many of these votes and so many of these political decisions, from Gregxit to what have you are being made on really narrow calculus

is of of the trading arrangement or the economics. How much money is going back and forth between Brussels, and no one seems to be considering this larger geopolitical historical thing. It's at stake, but no one seems to be taking it into account. It's the shortsightedness and narrowness of the

European political votes right now that frightened me. Looking Inbastador, Springs have multi ladderism here, and I guess we could say we are multi ladderism light of what we saw here in the US and what we saw perhaps in the United Kingdom before that. Are we at a point where our trade policy investors Professor's fenses is, is going to be purely bilateral. We're gonna have a patchwork quilt here of trade deals. Well, it certainly sounds like we're

going in that direction. I mean, it doesn't have to be all bilateral, but it's certainly not going to be multi multilateral. I think that's stalled. And one of the reason installed is that in in the in the framework where you negotiate with adults, you know and find where your mutual interests overlap. You can't do the multilateral thing because the multilateral thing survived because America was willing to absorb more of the burden of providing the public goods.

And if we find it impossible or we are unwilling to do that anymore, I think that just kicks the

foundations out from underneath the multilateral system. Because Richard Hass and Michael Spence h Professor Hass the Ambassador has a book coming out, The World in Disarray, which I think we can all agree with, and and part of that is this shifting foreign policy, and let's call it from a traditional world order maybe Dr Kissinger's world order of a Westphalian system, to maybe for Red Zakaria's post American

world and maybe to a new isolationism. What you're so good at is not what we observe, but what is not there. What will be the that hume if we don't participate in the world economy and in international relations. Well, there's a whole set of what you might tom you might call public goods. I mean, you know that range from stability to providing the currency that supports the sort of global system. And the United States has had an absolutely central role in that in the entire post war period.

So I think the vacuum is the public goods that support the international system, those public goods, Ambassador Hastening, And this goes to the certitude. I mean, just on the Boeing discussion yesterday from the President elect, how can the president frame his popular certitude and keep us in the consul and foreign relations game? Uh? Not going to be easy? And Professor Spencers exactly right. You know, we have provided

a lot of public goods. Americans at times she more aware of the costs than they do of the benefits, partially extremined people of the benefits, the extraordinnary stability in the world, the extraordinary economic growth that we have benefited uh from it it, all things being equal, as as as decades and most of centuries go, the post World War two era has been extraordinarily generous and favorable, uh to to the United States. And I think when people look at it, they need to look at both sides

of the ledger. And sure we've made mistakes, and sure some things have cost but actually the biggest mistakes were nothing were what what we're Vietnam and the Iraq War, those were bell Those were both self generated self inflicted. But most of what we were done, the alliance systems in Asia and Europe have kept stability the Great Trading and other economic institutional arrangements. Yes, we've we've made them possible, but we have in some ways been the greatest beneficiary.

I want to ask you about some some tweets in particular. That's how we're talking about foreign policy these days. We we saw the tweets about China. We heard about the phone call with the president of Taiwan. You've recently returned from China. Know what do what do the people that you talk to their make of the the outcome of that election and the prospects for this presidency going forward. You see the adversarial nous in the nature of those tweets,

in the nature of the rhetoric. What's their sense of what's to come? Well, when I was there, which was just before all this hit the fan, the general view was uncertainty of as to what to expect. Virtually all my meetings with high ranking Chinese officials was to ask me to basically translate Donald Trump into Mandarin. There was a clear desire for the job in that I think there was a clear desire for continued positive US Chinese relations, which have been quite good over over the years, and

now this has come in. What I think this has done is put into play uncertainty about the One China policy and just more broadly, what will be the tenor of US China relations under this new presidency. And the Chinese haven't quite figured out how to react that. They don't want this to escalate. They do want to still have a stable relationship with stable regions, but they are

genuinely concerned. If you read it, the tenor of their pub the comments has gotten successively tougher if you look at their initial kind of let's we're not going to overreact to the phone call, to what the People's Daily has said in subsequent editorials. They are generally concerned about the thrust of US policy. David notices Richard Hass Mr Trump will up here with NBC's Today's Show. Here in a bit, what is the question you would ask the

President elect right now? Well, I would get him to specifically react to the One China policy and his view about the importance of China and US Chinese relations to to the world, to basically get him to take a step back from some of the smallness of fuel relative smallness of the Taiwan issue, to get a sense of whether he buys into this larger structure that has has been the status quo now for several decades. Professor Suspencer, your question to the President elect, I would ask him

how he's going to negotiate with China. My view is that, um, the relationship so much the same as Richard has no I mean, I mean he's already asked quite why challenge them on the one thing that's a non negotiable I mean, it doesn't make any sense to me, uh, whereas all the other things are negotiable. So I'd ask them, you know, well, what about the rest of the agenda? How are we going to deal with trade? How are we going to deal with financial flows, etcetera. And the biggest issue could

be likely North Korea. The biggest geopolitical issue facing this administration over the next four years is likely to be the advance of North Korean missile in nuclear capability. I was gonna say traffic on, but I guess that's why that's that's beyond that's impossible. 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 roles to serve, not sell. That's why Charles Schwab is committed to the success over seven thousand independent financial advisors who passionately dedicate themselves to helping people achieve their financial goals. Learn more at find your independent advisor dot com. It's another time of year, David Gura, he would show up with to go from the Portland lobster coming. Unfortunately it's the dead of December. They're not even open, Jurd Cassidy are they know? They're not shut down.

They shut down because it's a strange thing called winter. Showed up. Lobster taste is better in cold water, like oysters do they Is lobster better now? I would say not so much better, but the heart shells are more plentiful, so they tend to be better than the soft shelves. There we go our lobsters science and it must mean Gerard Cassidy is dark in the door with OURBC Capital Markets decades of experience and looking at our banks. Let me start with a broader question before we kill you

with the mergers and acquisition ants. What drives you nuts about the zeitgeist now on American banks? You're such an observer of the certitude of people on our financial system. What are we most getting wrong? I would say today, I think the bank stock says, you know, since the election, have been just a great place to be Tom, and I think free standard deviation move off monthly Church, It's

it's incredible. And I think what people are now anticipating is that there will be regulatory reform, higher interest rates in a stronger economy. And what people are nervous about is, because of the way the stocks have acted in the last eighteen months, that this won't last. So what do you do this morning? Are you buy? Are you hold? Can you? I know you're not gonna say sell, but

are do you? What's the mood by hold? Cell? I think the mood is many investors are waiting for a pullback to buy, which suggests to us that they won't be a pullback because people are buying the dips. So you buy if you really believe that we're going to see higher interest rates and regulatory reform, Earnings estimates over the next two years will rise meaningfully, not five or ten percent, but upwards the fifty percent over the next two years because of these potential changes help us with

the the art of measuring interest rate sensitivity. You say it is more art than than science. How do you go about doing it, David? You put your thumb on it. It is where artors art artists when it comes to and just rate forecasts. And I would suggest that it's not a perfect science. Generally speaking, the banks give us some information in their public filings to suggest if they're going to benefit from rising rates, but sometimes rates move

too fast and they don't benefit as much. So what we look at it both to short and long rates. Most importantly, too, is the steepness of the yield curve, and right now all of that's moving in favor of the banks. Tough to do, I imagine, just because the information that you're getting is by no means standards standardized.

That's correct, and I would suggest to you that the banks themselves, they have these very sophisticated models, but the data they put in there is based on assumptions, and if those assumptions don't come true, then the data is not that good. Bank of America's on the edge of a double I know you told me to buy it at twelve. I didn't. I didn't load the boat. Gerard Cassidy, is that still your single best too Big to Fail by? I think it is time. I think that is the name.

This company is finally on a turnaround. The company presented up at Boston. I happen to me, the president of the Boston Distinct. Don't get that shameless. What was the distinctive feature there? This is the feature. This company housed a dinner and brought up twenty of its senior executives. Brian Mornahan hit the ball out of the park in connecting to investors. They are going on the offensive after being in what governance? Did he clear your worries about

governance Bank of America? Absolutely? They have turned this company around and now they're moving forward. Can I state and with will you support me that everybody, including at Bloomberg twelve and in Boston will cheer when they retire Mr Jeter's jersey. I think that's the most deserving Yankee jersey to be retired since the gentleman of many decades ago. I think they will absolutely that they have an interesting relationship with very quickly or so, Guru has got something

to talk about when come back. What's your single best buy? A small banks right now? Small Western Alliance w A, Western Alliance w A L w A L And they're out of UH Phoenix slash Las Vegas. They cover the southwestern part of the United States, and they've done a moonshot like Fortress Point Anne as well. Oh, this company of the sarber of the CEO has done a great job in turning this company around. They're one of the few companies that actually earns fifteen percent return on equity. Well,

that's enough to get our attention, fifteen undred employees. How do you pronounce that? Phoenix? Is that? How you say that? David Phoenix, Arizona? Good morning all of Western Alliance Bank Corps. The headlines off the today's show interview with the President elect. UM, I mean he goes after Alec Baldwin and Friday Night Live and the usual I love Twitter is a quote modern day form of communication. He is correct on that

it's changed the cadence. He says, also, the corporate world is not, in his words, unnerved by what he's been doing. The stock marketing points at an all time record, and UH also says that he does not intend to order any air Force ones if the price does not come down from from what we Well, we have the same problem with the surveillance golf stream and we sent that budget back three times. Gerard Cassidy with us RBC Capital Markets, and I didn't realize the profitability of w A L.

Western Alliance Corps. They take fifty two cents down to the operating income line and then they dash down to a thirty eight percent net income margin. That brings us to the reason we're thrilled your on, which is to explain M and A activity in the small banks. How jackson Ian are we gonna be in two thousand seventeen? Is there going to be a mergers and acquisition frenzy for fifty two cents on the dollar operating income in your world? Tom, Yes, I think the mergers and acquisitions

are going to pick up. I'm not convinced it will accelerate in seventeen, but eighteen when all of the changes by then will be in place, the you know, the peel back of some of the Don Frank legislation, as well as increased profitability. That's when we see M and A. What will be the form of M N a Secretary of Commerce Designate Wilburt Ross is very good at roll ups and other fancy phrases. What will be the nature

of M and A and small banks? I think what you'll see is just outright purchases of banks, both small and large. And the reason being is that the cost savings that can be achieved in an acquisition oftentimes run up the fort of the target's expenses. The example I can give you recently is Key Corps acquisition of First Niagara up in Buffalo, New York, and they expect to

achieve at least cost savings in that deal. To what extent has to what extent has has regular lation, has Dodd Frank and all the rest been a hindrance to this happening. In other words, if if Donald Trump makes good on his promise here to rip up Dodd Frank, uh, the floodgates open up. Absolutely. When you look back since the crisis, we haven't seen a single big deal yet.

Prior to the crisis, we saw a big deal when we were a bit younger, Tom and I. That's when we saw a really the craziness in the M and A market. That's when you might recall cities sold out, the Travelers Bank America sold out the Nation's bank. We could see that kind of frenzy again. Not next year,

but once everything is set in eighteen. Do we edge on being Canadian if we do that, That's an interesting question because currently now if you look at our top ten banks and you look at the amount of assets that they control relative to the entire banking system, it's

a very significant amount. So I don't think we head the way the Canadians run their banking operations with essentially five banks controlling the banking market up there will always have a barbell in this country will have plenty of community banks, but at the other end of the barbel some very large banks. Uh. In all likelihood, they're not going to rip up Dodd Frank. Some of this stuff

is going to stick around. What has worked. And when you look at the President Elex plans, when you look at the plans from Congress over the last however many years since Dodd Frank was put into law, what do you think we'll stick Yep, No, you're you're absolutely right. There are some very good parts of Dodd Frank and they should be congratulated on getting it done. The one in probably the most important part is forcing the banks to carry higher levels of capital and also higher levels

of liquidity. The second part of Dodd Frank that was very effective are the so called stress tests. The stress tests happened once a year is for the largest banks, and the bank over fifty billions in assets goes through it. But that's going to be one of the changes. The banks under two hundred and fifty billion in assets will see the most relief, in our opinion, from changes to Dodd Frank. Our biggest banks will see the least amount of changes. How do you forecast what this will mean

for performance going forward? Other ways, when you when you look at the erosion of regulation, that changes to regulation, how do you predict what that's going to mean for the bottom line. I think what we have to do is we're not expecting a significant reduction in costs. There will be some reduction clients departments correct, but that we anticipate those moneys will be moved over the revenue producing activities,

so they go from compliance to revenue producing. But where we're going to see the benefit is from the fact that the banks will start to be able to merge one another more successfully, and that will bring down costs

to increase the bottom line. When you look at these banks and how they're they're approaching the future, let's move away from from regulation just to talk about fintech and and where things are headed in that in that department, Are you seeing more progressiveness at the smaller level than you are seeing from the bigger banks? Are small banks approaching that wisely? Yep? I would say small banks actually lagging a little bit. The biggest banks are the ones

that are spending the most money. Now, you know, for the folks like my self that have iPhones and we do occasionally use our for banking, there is a new app coming starting in January the banks and putting out called Zell. I'm sorry Gazelle, and what it's gonna be. It's going to be a P two P payment mechanism that the banks don't have currently on a real time basis.

So if I need to transfer it to Tom fifty dollars, I could get his cell phone number transferred over and by the end of the day it will be in his account. That's going right after Venmo, which is part of PayPal. So the biggest banks are moving very aggressively for the fintech space. Well, we talked about bricks and mortar with the Amazon. Where's the bricks and mortar future? I mean, David, I don't know about where David lives east of New York, far east across Berg calls Brooklyn.

No one there goes into banks. It's all cyber. They have kale juice shakes. Well, they do digital banking in the real world, Mr Cassidy, like Portland, Maine. What will happen to branch banks? Yes, I think what we're going to see, Tom, And it really is quite interesting that when the Apple iPhone was introduced, the number of branches in the United States peaked, So we are actually seeing

a decline in a number of branches. So over the next ten years, what we expect is fewer branches and smaller branches, and the branches of the future will have less people in them. It will be more machines. If you get a chance on fifth and fifty third here in the City, um City Bank, or fifth and fifty second, I should say, City Bank has a wonderful, brand new branch of the future, and it looks almost like an Apple store, believe it or not. If I'm playing matchmaker here,

looking at what's complementary about two different small banks. What am I looking for is it is it purely based on geography or when you see these mere just what's what's driving them? Two factors and you identified one of them, which is geography. The second is the age of management, And believe it or not, it goes back to that issue of is the is the management team ready to retire and do they control the decision on whether to

keep the bank independent or not? And so I think what we'll see is managements reach peak or management's age, but their banks reach peak profitability, that's when they're gonna look to hit the bid. Maybe, Okay, walk me through a merger. You mentioned synergy savings for First Niagara taken out by Keycorps on a given merger. What's the normal synergy take out to people benefit from when it's an

intra market deal where there's a lot of overlap. Thirty is not uncommon and some have even gone as high as forty five. What will it do for r o E if two smart people decided to get together, the r o E in this particular case was going to increase by over two hundred basis points in this trus they'll go from ten to twelve or eight to ten, whatever the exactly. And that's really the underlying tone for mergers.

Does the government want mergers to occur? Even though they'll never say it, I do believe at some assets sized they are very supportive of consolidation because they believe there will be a sturdier banking system. But they will not allow the top banks to do deals because they don't want another to make to fail bank. When David gern I do our remote in Portland, Maine for Bloomberg Boston, is there snow Memorial Day or can we go Memorial Dare we have to for to be fifty degrees fourth

of July. You're gonna keep your LLL bean boots on the lined version and it will be warm, but it won't be a woman. So I can wear suit and bow ties in the LLL being brown LLL bean boots that go right up to just below your knee. Yeah, absolutely, those are those are the keepers Stared Cassidy. What's sick is Gura actually has you got TRD Cassidy, thank you

so much. With RBC Capital Markets and uh within that some serious discussion, I will be restrained as I tweet out on Twitter today about Gerard Cassidy, our president elect. With NBC today, Mr Trump asked about tweets, quote, I think I am very restrained. We'll let you interpret that

as you choose. He is the junior senator from the state of Utah share of the Subcommittee on Antitrust, Competition Policy, and Consumer Rights where all the action is going to be today on Capitol Hill is Randall Stevenson, the CEO of A T and T, joins Jeff Bucas, Mark Cuban and others to testify on the A. T. And T Time Warner deal proposed a couple of months ago. The first public airing of that deal on Capitol Hill. Senator Lee,

great to have you with us. It's going to tell us a bit about what you're hoping to to get out of these executives today they've made their case on television in public to investors. What do you want to here today? Well, hard goal is to talk about the svential benefits and downsides of the deal so that regulators in the public are thinking about the issue the right way are Our subcommittee doesn't make a formal ruling, uh, It rather has a public airing of various discussion points

in order to find out more about the deal. And you know there's some potential anti competitive concerns with the deal and it will be investigating those as you prepared for the hearing today. What did you look to for Preston, how much are you looking back at the Comcast deal. Look, this is a different kind of deal. This is um uh not one that you can look to out of the box for any ready precedent. But there are a

couple of potential concerns, you know. One involves whether the merged company could raise prices for Time Warner content content on HBO, t n T, TBS and so forth on existing rival TV distributors. And another concern relates to whether the merged company could withhold Time Warner content in order to promote its new television livestream service, Direct tv Now, at the expense of other new competitors like Sling and

PlayStation View. But on the other hand, you know that I think we will hear um that Direct tv Now could provide a real alternative to the traditional cable bundle and make consumers less dependent on wired networks. Certainly, you know extremely well you lived it. How Washington can change. Your father served in the Attorney General's office a million years ago, you grew up down the street from Uh. Senator read of Nevada, and um, you know you were

in the Washington millieu as a kid. Things change. Is the whole goal here of these corporations to delay until they get a Trump Washington. Look, I don't know. I don't speak for the companies. I don't think that, Uh, I'm not aware of them having that as their end goal is to just delay that until then, that that is coming soon enough anyway, and that this proposed merger

won't be up for review until then anyway. But what I do know is that we've got regulators that we're going to take a close look at this and are hearing today, is going to ask a bunch of questions that I think will help frame that in the time that we've got left to the Senator. I was really taken by almost the domestic struggle of our unique Utah is they faced this election. What did you learn about the people of Utah? Is they chose between Secretary Clinton

and the President elect. Well, look, the first of all, it's important to remember that Utah hasn't voted for a Democrat in a presidential election since nineteen there's only like twelve Democrats, right, Well, there are a few more than that, they're they're generally not enough, at least they haven't been enough since nineteen sixty four to vote for a Democrat. So uh Utah's did break with that tradition this year.

That was not a surprise, and people throughout the country were ready for a change and they wanted to see a different kind of government. They were not prepared for a third term of Barack Obama. When you when you look ahead to January and beyond, how do you see the relationship taking shape between the Congress and the White House? That that stretch, that one and a half mile stretched their Pennsylvania Avenue between the two institutions is not that

far geographically, but the divide has been vast. How are you going to improve that relationship going forward? Well, I wrote in an article that appeared about ten days ago a National Review, talking about how you can tread a needle. You can draw a strate line between many of the things that Donald Trump said as a candidate and things that he could do to govern as a constitutional conservative

as president. My hope is that they'll do that, And in so far as he does that, he'll have no stronger, louder, more vociferous cheerleader than me uh In in the U. S. Senate. And I think there are a number of things he could pursue to help restore constitutionally limited government. This has been a focus of mine. It's been important to me, and as I explained in a book I wrote called Our Lost Constitution, we've lost some of our structural protections

in the Constitution. I think Donald Trump could do a lot to help restore those. That would be a new role for you to take on, to be a vociferous cheerleader. As you said during the campaign, you called upon the now present elected to step aside and allow someone else to be the nominee for the party. You had some

serious concerns about the president elect's character. If you were to talk to him, if you would have a one on one conversation with him, what would you say about how he comports himself now that he is the president elect, now that he's going to be the president of the United States. Well, look, he doesn't need advice for me on that point. He is now the person who will be in charge of that um uh and looked at

was then this is now. I had some doubts as to his electability at the time, I was concerned that he couldn't be elected. I was mistaken in that regard. What's important now is that moving forward, um I think we need to focus on restoring constitutional protections that have been lost, and I hope and expect that he will do precisely that. What does tim View High School, Provo, Utah? What does Tim View High School, Provo, Utah need from the new Secretary of Education? It will be a different

secretary of Education. How will that affect public schools in Utah? Well, I hope and expect that the federal government will acknowledge that its role in primary and secondary education should be limited at at at at most, I mean, primary and secondary education needs to be handled at the most local

level possible. It needs to be uh managed by teachers and parents and consultation with local school officials, and certainly shouldn't be run from Washington, d C. Educational needs differ from one part of the country rate to another, and the strategies that will be pursued in the public education system will be different from one community is compared to another.

Last thing we need is a single national decision maker when it comes to curriculum, when it comes to teaching in the public primary and secondary education arena from Provo Utah Senator Lee, the junior senator from the state of You talk, Mike Lee, David, you know, just we we don't do this enough. We gotta we gotta talk to senators from across this great land. Yeah. And obviously the

point of focus for him today that hearing. But as as I hope we we brought out there in that conversation, he's been somebody who is really reckoning with with this change administration, and I think very interesting to hear sort of how he moves forward from the criticisms he had on the campaign trail. Yeah. And you wonder where the hearing will be in three months or six months or such as we migrate to January. Uh and uh. 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. I'm Bloomberg Radio. Who you put your trust in matters. Investors have put their trust and independent registered investment advisors to the two and four trillion dollars. Why Learn more at find your Independent Advisor dot com