Surveillance: Trump Doesn't Impact Powell, Bremmer Says

five thousand to ten thousand. Additional points quanditative tightening was a killer. We should have done the exact opposite. To weigh in a man that doesn't need much of an introduction, it's Ian Brama, Eurasia Group President, and great to see you. Let's just talk about the independence of the Federal Reserve and to what extent that's being damaged at the moment um. There's no question that Trump's tweets are undermining the way

we think about the FED. But J. Powell is very much a capable, qualified and independent chief and that that's certainly nobody is making the argument that his decisions have been undermined or politically skewed by Trump. I think the bigger question has been the recent move by Trump to push Steven Moore and Herman Kaine as FED board members. I mean, these are Stephen Moore's economic capabilities make AOC look like a strong economist, right, so you would this

This isn't that. I mean, I'm a political scientist, and I it's pretty clear to me that these are not people you want on the board. But um, but I do think that if Trump were to win in UH and he decides to get rid of J. Powell at that point, which you know has not that that's not really been tested UM in UH as like so many things in the true administration, then I think we could be in a different conversation. Let's talk about how generable

the institution is. Do you think it is likely even possible, for that matter, to the president can't get rid of the chaman of the Federal Reserve. I think it's possible at after four years, I do UH, And I think that there would be difficult to UH with republic if Republicans are also um, you know, sort of a majority at that point in Senate, and certainly Trump wins, you think that would be the case. It's hard to see a lot of yelling and screaming about it. I had

to find a blue button. The blue button is for Chelsea Blue. It's good, it's um Ian, okay, fed independence and all that. But it's within an international architecture. Right now, what John and I here interview to interview is the separateness of domestic economies versus all the international back and forth. Do you buy that separateness or is that just a thing of the moment we should bundle it all together.

I mean, look, you look at the ECB and you see a process that is actually not being politicized, even though many people said it would. It actually is, you know, being handled by bureaucratic UH coalition to put to ensure that you have a new technocratic head um. You know that this the Chinese are not moving towards um a a floatable currency, and so you don't think of the p boc UM as being one of the important central

banks in how the world manages flows of currencies. I mean, if you look at all of the ways that the geo political order has been fragmenting in the last twenty five years, central banks have not been one of them. That's actually one of the places where you would say, the world looks more like the old American lead order than in any other area. I mean, the central banks are there, but the arch question for listeners is as

Chairman Paul Central Bank or of the world. And you know, you look at the I m F meetings, which have devolved from multilateralism down to whatever Mr Trump would like his Mr Powell's act changed because of it? Is he is he less multilateral than he used to be? Um, yeah, I guess I would say no. I think that Trump

doesn't impact Powell very much. What what is true is that the United States is more relevant economically compared to the Europeans, right, and the fact that the Europeans feel and disarray, the fact that the UK is neither in nor out, the fact that the Germans and French are weaker than they were in our part of the world. The United States is increasingly the quote unquote rules set. And what stunning John is the dollar range is now a four year range, which I didn't realize till this morning.

I thought it was two three years b d d d x Y. The Bloomberg Dollar Index has been churning for four years after that big jump up. I mean, I mean to to Mr Trump tweet, I mean, we haven't seen dollars. Are you expecting the presidents go after the effects market again? Is that what you know? I'm just saying that that usually with the comments did you give from President Trump in the last forty eight hours, you'd want to see a substantial dollar strength there. And

let's talk about what actually is happening. I mean, the perception of independence hasn't been damaged because the perception of independence will be defined by our guests, not by us sitting around this table. It's market participants. Do they think something has changed at the fat? I don't see that in the market that now that's not in the price. They don't, and they don't for a range of reasons.

One of them is that they don't think. Some of them don't think that these individuals that have been nominated recently, A will officially be nominated in the first place, B will actually be confirmed, and see if they are confirmed, will have much influence on the f O m c in and all those three things play into this. One thing has changed? What changes that the American economy feels softer now than it did six months ago, and as

even though the unemployment numbers are very low. Job creations good, but people are not as excited about the growth, and that means Trump needs to look for people to blame, and the FED is one of many, but one of one of his primary targets right now, and that's going to continue to be the case as long as the U s economy looks soft as we get into the election cycle, that's only going to become more urgent for Trump. I don't think that changes the way market participants think

about the FED. And let's wrap up this conversation by talking about a concept you introduced a long time ago, the Jacob the robustness of institutions, the openness of developed markets, and the reason why we're successful relative to the complete opposite. Updateus on that thinking now so here it's a very different conversation the one we've just had on the FED, which is that most institutions in the West have gotten gradually weaker less stable over the course of the last

couple of decades. That means that the United States, which used to be very stable because it's very open, is becoming a little bit more fragmented, a little bit more closed, and a little bit less stable. Other kind trees like France with their uh, you know, yellow vest movement um and Macron looking very weak. They've they've slipped even farther down the Jacob The countries that haven't slipped much at all would be Germany and perhaps the least would be Japan.

But across all of the advanced industrial democracies, the trend has been these political institutions are becoming a little more closed and a little bit less stable. If you were to rewrite the book right now, what the first couple of pies read like. The first couple of pages would talk about a j that looks a little bit more like a you. In other words, there's a little bit less advantage to being an open advanced industrial democracy today then there was twenty years ago. And one of the

big reasons for that is technology. When I wrote the book, technology was a trend that undermined authoritarian regimes. It led to colored revolutions in the Arab Spring, and its strengthened liberal democracies. Today, when we talk about the data revolution and surveillance, it pushes towards supporting those authoritarian regimes that have control of that data can do the surveillance, and that undermines and fragments some of the advanced industrial democracy.

So what John suggested, here's your next book is an update on Jake Curf. Now he's not suggested dr require an update years out. There's no question and thank you with you guys, he writes a great present and that global Wall Street Chat of the day. We can do that with Fred Cannon of Keith Brietton Woods where he runs the research shop as well. John and I have like two hours of conversation where it's gonna squeeze into six minutes. Here Fred Cannon wins. The bank roll up happened.

I mean, not that we're going to canadaize American banking. We saw the sun Trust merger. When's the roll up really begin with the vengeance that scale begins. It really it's already there, Tom, I mean, if you look at what happened during the financial crisis, that was the roll up the biggest four banks in the US control of the you know, the market. Today beyond that, we are seeing some roll up and we'll continue to see that.

The bb and T sun Trust deal maybe the biggest deal we will have in this cycle, but there'll be a lot of deals underneath that size. We're starting to see m o E s. We're starting to see a lot of these. First of all, I haven't been this industry for a long time. We have to know there's no such thing as a merger of equals. But yet the structure of putting two banks of equal size together um is one that is increasingly folks are looking at it as a way to consolidate the industry. So when

when When? When m o E was the discussed yesterday at home? That's what that meant. We've talked about your marriage merger equals? Was it a merger rarely found in the wild? Continue with Mr kim freend Earnings. Gorman sacks out in about ten minutes time. A little bit after that, we're gonna get City as well. We had JP Morgan on Friday, where you're laser focused. Uh, well, look, I think on the capital market side, I think we're just going to see beating low expectations coming into the quarter.

Everybody cut their estimates. We saw out of JP Morgan on Friday beating those reduced expectations. Still not a great quarter. I think where we're really focused beyond that, especially on City, is net interest margins. What's really happening because of this yield curve. That's kind of the dynamics that everybody's fascinated on. And when will when will we see net interest margins roll over at the bank. There's been an obsession with

the yield curve. But the yield curve has been narrowing flattening over the last couple of years, and net interest margins have been expanding. It's not actually been a good read on bank profitability. What has been is the trajectory of interest rates. Interest rates go higher, income has been going north. And now we have this situation with the Federal Reserve where interest rates aren't coming higher anymore, at least for the time being. So I'm wondering where the

growth comes from. Where does it come from? Well, you're exactly right. The real growth is coming at the big banks from sherry purchase. We calculate sixty of the growth in earnings this year is going to come from sherry purchase at the banks. Well, well, an American, I don't, I mean? I remember Dick Kovasovitch at Wells Fargo called to sign a defeat to repurchase shares. In other words, you can't find something mentioned the break. It's more like a utility. We got cash, give it back when it

raises an important question. The lot a lot of people who are bullish the banks aren't bullish on the earnings. They're bullish on the multiple. They think the multiple will re rate higher. But if the earnings are going to be juiced by what some people would call financial engineering, let's just call it capital returns, Fred, it's going to be juiced by that, is it deserving a higher multiple? Well, if you look at the multiples today, we're trading a

late cycle bank earnings multiples. It's happened before, it happened in two thousand, happened in two thousand and eight, happened in a number of time periods. In other words, why our banks training these multiple stay Because expectations are the earnings have peaked and that we're going to see a downward pressure. That downward pressure is going to come from credit, not from interest rates. And that's the concern your bank guys. I know, Fred, you're above it all. It's sixty feet.

But you're banking team at KBW, what do they like right now in terms of bi hold sell What quality of bank do they like right now? Well? We really because of those multiples. We like the high quality banks, like the big guys that are way behind. We like the big guys that are the quality. I mean, look, you have to kind of keep going with JP Morgan. At this point in time, BA has turned into a quality institution. We wouldn't have said that five or six

years ago. UM. So you're looking at the at the big banks with quality, and then you're looking at this at the commercial banks you can continue to grow. Does Will's Fargo get their act together? You know, I was thinking the other day it was you know, I mean five years ago, Wells Fargo was the go to bank in the US. Um, it's not today. It took Tiger Wood's eleven years to come back. We'll see if it takes the Canada with Fred what's the name you're most

worried about? Uh. In the US, we don't really worry. The banks. Balance sheets are strong, the capital strong. We don't see a big hiccups. I am worried a bit about the kind of expectations that some of these traditional savings alone like New York Community Bank are gonna you know, their stocks have done very well this year. I think

that might be a mystery. Hey, Fred great to cant Show and wonderful Fred Can in their KBW Global director of Research the takeaway over the last hour, I'd say Thomas as follows, if you compare it to the estimates were okay, if you compare it year on year, it's as dreadful as everyone thought it would be. Let's bring in Snali Bassex, Showy Bloomberg Banking reporters. She joins us in the Interactive Broker studios here in New York City.

Snale your take please. Sure it's pretty nassy quarter and we're gonna be waiting for is what things look like going forward for Goldman Sacks. In their presentation so far, they've highlighted all the changes they're making, right, So that doesn't mean, hey, you know, look at how great we did in mergers. For example, it's hey, look at our

Apple partnership and let's see where that's going. And so you know, people are going to be wondering whether they were blaming the government shutdown for a lot of the week performance in the first quarter. But there's some places that there's some real questions. Yeah, John, you nailed it twenty minutes ago by saying revenues are constrained. What I see throughout the first six pages of their power point

is low single digit revenue growth in different subsets. There are some video syncrening reasons why revenues were constrained in the first quarter, specifically the government shut down holding back I P oceanale. Let's talk about where we will be less constraint in the next few months. Is that a pocket an area where they will be I POS is a great thing to bring up because Goldman saxes on slack. JP Morgan was on lift. There's uber around the corners. So I P o f S should jump back quite today.

What do they move the needle on banks? That big? Come on? You know that's the thing, no right to talk about. It's great, cut'll talk. But we're at a point in the banking cycle where we're looking at every business line very aggressively and seeing for any signs of strength. And you know that's exactly a place where buried at the last page conclusions, buried at the second of the last line, while maintaining expense discipline. Do you ever even come out It's April now we're in the summer ballet.

How many bodies are going to walk out the door vary since Sundry hundreds everywhere in very many decisions, in very many divisions. Another place that nobody really talked about this morning is investment management. Goldman also has one of the biggest asset managers. About that, did you talk about it? We talked about seconds. Seconds. Well, it looked at it. It

It was really interesting. They bought in more assets, but they took in lower fees, which shows you even for Goldman Sacks, it's a race to the bottom and asset management when you're just taking in lower fees. And JP Morgan already said they're cutting staff in that division as well, and both of those divisions are over a trillion dollars some of the biggest on all Street City unchanged in the pre market dead flat. We had a boost of bank stocks on Friday, they read across from from JP Morgan.

It gave the whole sector a little bit of a lift off the back of these earning city doing absolutely nothing. Shinali, thank you and happy birthday, Thank you, Thank you very much. Snati Bassik there up Bloomberg Banking reporter. It's a good

time to speak to Diane Swunk. She's with Grant Thornton it's just just does your woman's duty for us and fed day where she she gives this wonderful perspective on the central bank, Dan, I want to go into the nitte gritte around the National Association of Business Economists, which is all this data we're getting, and then we've got this massive divide and what we see from guests. Have you ever seen this before? Is this normal that we're seeing a mystery on the data and then two disparate

views on what the central bank will do? You know, I think what's going on is one we have seen it before. You see it at tipping points in the economy, we start to get cross currents. The question is are we added tipping point or not. Also, I think it's really important to keep perspective out there that you know, when you're in a position where the underlying economy is doing well but slowing, you always worry about how close

you're coming to send ice. And so even though it looks like the underlying economy is still solid, we worry about those soft patches out there, and the subtle reserve is hedging the downside risks of going through the ice and stepping back to the sidelines, which in and of itself, that moved to the sidelines signals that the said may

be more worried. Well, this is critical. If there's one said, if there's one rate cut to come, or let's say it's asymmetric to rate cuts rate rises to come, what is the distinctive data factor that gets someone to two rate rises versus someone looking for one rate cut. You know, that's really interesting, I think at this stage of the game,

because the Fed has so been wrong on inflation. It thought we'd get to three wage growth and sustained three percent wage growth would give us sustained two percent on their target inflation. That has failed. We've fallen short on that.

After accelerating core inflation has actually decelerated. And so I think we need to see not only a sustained two percent reach on the target of inflation to get those rate hikes out there, but we need to see an overshoot on inflation for the FED to feel comfortable that they've really achieved their mandate. And their mandate is getting

much more nuanced as well. Full employment doesn't just mean an unemployment rate anymore, as it's been evolving over several years, it's all now also now the employment to population share, the share of labor income that we're seeing in the economy, which is not moved up enough for the FED to feel comfortable at this stage. League Matt Bowsley here at Bloomberg doing a nice little rite up on that today. I suggest a lot of people reach out to Matt,

if not, just take a read of it. It's really interesting in the push I read it to push Dan seems to become the push seems to be coming from vice share Rich Clarida. So how important is this push and how will it shape the federal reserve reaction function

in the coming way? I think it's it's really important, John, And you know the issue is I was you know, I have to say that it's evolutionary, that revolutionary, and it's not as unique as you know it was pointed out in the article, because I know the FED has been looking at this issue for a long time as of economist for decades, looking at the issue of how labor has lost its bargaining power and that's hurting the labor share of income. We saw it in Janet Yellen's dashboard.

So this has been something that FED has been trying to incorporate. I think Rich has taken it to a new level as Vice Chair of the FED, and really we're coming together and we're looking at it quite carefully, and how do we incorporate it more into the decision rule in understanding where the FED has been wrong on inflation.

And I think that's a very important move going forward, is understanding not just employment, not just these aggregate very you know, basic tools of the economy, but getting the dirties in the details and Clarita and doing this is trying to make the decision much more of a process. It's more inclusive, and I think that's very important. Dian, just to put you on the spot a little bit, is Vice Chair Rich Clarada running the FED right now? But we don't want to put you on the spot now.

You can put me on the spot all you want. No, Rich Clarida is not running the FED right now. Jay Paulo is running the FED right now, and nor is the president running the FED. Jay Paulo is running the FED right now. I have no qualms about that whatsoever. But this is a really strong Fedal Reserve Board at the moment, and I think that really deserves a lot of credit. It's not always been as strong of a board with his um broad base of opinions in different specialties.

I think, you know, sort of, this pushback on nominees to the FED board is not about elitism. It's about having diversity of thought that's informed for the skills of the job, knowing regulation. What does that mean for the economy? Having experienced in that um knowing, it's you know, when I look at the FED boarding day, I really look at a board that is well qualified and rich karitas. You know, stepping out is really um evidence of that.

But we've had many strong vice chairman. Janet Ellen was a vice chairman, Alice Ryland was a vice chairman, Allen Blinder, you know, Roger Ferguson, non economist vice chairman. So the strength in the FED board is really critical. Thank you, Thank you filts in the chief economists. Over that, let us listen to some golf history. Back behind the ball Woods, he has done it. Tiger is back, Tiger is back on top Tiger Woods, that two thousand night to Master's

Chapion and there it is. Let us have a real golfer, talk to a real sports guy, Paul Sweeney. Why don't you being in the extinguished gentleman. Eban no Wi Williams covers all things sports for Bloomberg News. He joins us in our Bloomberg Interactive Broker studio. So Eban, I gotta tell you, I watched every single shot of the tournament yesterday. I can't remember the last time I did that. And the only reason I did that is because of Tiger Woods. How important is he to the game of golf and

how important was yesterday? Yeah, you're not alone. It's funny. It's been eleven years since Tiger last one of Grand Slam or a major. It feels like the sport is as reliant on him today as it was back in two thousand and eight. You know, back then we were talking about the you know, the thirty to fifty percent ratings jump that always happens when he's in contention. You know, he had a rough ten years. But flash forward, we're

still talking about it. Right, You're not alone. Most people watched yesterday because Tiger Woods was doing well, and they're gonna watch moving forward to see if he can sustained this golf is similarly rely on Tiger now as it was ten years ago. Yeah, it's it's amazing. It's been you know, ten years. As you mentioned, so many great young players have come into the game. But it's just it's interesting to see how you know that you could just feel it on Twitter and other social media yesterday

how different yesterday was. What are we interesting to see will be to what extent of the big A list sponsors come back to Tiger Woods. I noticed, you know, the last time he won, I think, you know, a T and T was on his bag, and this time it's Monster Energy. Not that that's not a big brand, but it's not a T and T. So be interested to see kind of how the sponsors come back to Tiger. Yeah, he lost, you know, in that stretch where he was having you know, of his personal problems and also physical

injury problems. He lost a lot of sponsors, right you mentioned a T and T, Gillette, Centure, Gatorade. You know, some of those big brands that were associated with him either dropped him out right or decided they weren't going to renew with him. Nike the one company probably the one that people most associate with Tiger. He's still with them from a clothing standpoint, but they've stopped making balls.

They stopped making bags, they stopped picking club. You know, he's needed to find new partners for all those things. Saturday ratings, I believe a five per cent, but Sunday must be incalculable. We don't know yet those numbers, do we Yeah, we don't know the numbers yet. The thing that's gonna make it a little more difficult is because the weather, whether they moved it up. Yeah, so so Tiger teet off at six thirty a m. West Coast time. Um, so,

you know that's gonna hurt ratings a little bit. The fact that, the fact that for for people on the West Coast, they you know, they probably weren't awake when he started. But I would imagine the final couple hours of that telecast, we're bonkers ratings at the end of it. I noticed Mr Roberts of NBC Universal getting some FaceTime. Is Tiger came off the Green to Hug Family and all to CBS have a lock on the Masters or is this going to be the mother of all bidding

bidding wars? Whenever that comes up, it's an interesting question. They do have a lock on the Masters, but it's not a traditional media rights deal like we're used to. You know, CBS doesn't you know, pay a ten year master Matt Monster a million dollar deal for the Masters. They have a handshake agreement every year where essentially they give the cost it takes to put the put the production on, and the Master says okay, and then they

get their sponsors to to pay the difference. So by most accounts, CBS gets a tremendous bargain on the Masters. You know, they can't sell ads in the same ways because if you watch the telecast yesterday, there's very few commercials.

There's really only which it's like, I agree, I think it's fantastic, but it's it's just not the same kind of economic model that you see for something like the Super Bowl, right where there's millions of dollars paid for the rights and then you have to get you know, get that money back on millions of dollars of ads. Remember a story we were talking about last week. I think somebody kind of came in the last minute put down an eight two th dollar bet on Tiger Woods

at fourteen one. Not a bag. So I mean, but I understand that the bookies didn't do well here, not just with that bet. Yeah, it's funny the for the past ten years, Tiger Woods has been, you know, the best thing going for bookies, right, people continue newestly bet him. You know, he would enter tournaments where he had no shot of winning. They'd put the odds at hift one, and tons of people would wage it. Right. Uh So they've made millions off of Tiger Woods in the past

ten years. And I've talked to these bookmakers and they say, listen, if he ever wins a major again, we're gonna lose big on that major. And it happened, right, He's so popular. Uh this better you know, one point two million dollar payout that that he won most books that I talked to yesterday. Yeah, they took a wash on this. I mean, you two guys know way more about this than I do. I figured out Ricky followers Orange. That's that's about where

I got it. Yeah. Where of the group that was out there was great, like six people vying for it. Where's the next Tiger? I mean, which of these guys is Tiger? Is there ever going to be a next Tiger? I mean who knows? Yeah, I think there there's certainly an argument to be made that that no one will

ever just because of a his dominance. You know, his unique background that there are that they may never be another one of him, right, And and you know, none of these guys, Cockle, Roy Speith, Brooks, Kepco, They've all had moments, but none of them have been able to sustain dominance in the way that that Tiger did. Um. But they also just might not be as marketable or as compelling a story as him. Um, I think there's a chance that we just never have the it guy

for golf ever again. So it's interesting. I wonder if when you think about some of these other players, um, is the expectation that for Tiger this was kind of a flash in a pan kind of weekend it all came together. Or the age of forty three, you know, as you do, you think he can make another multi year run at this thing and maybe even challenge the Jack Nicholas eighteen major kind of it certainly seems possible.

I mean, I'm not a XS and OSK golf guy relate to mixed metaphors, but yeah, I mean he's forty three, right, so he's not not young. And physically, you know, he's always he's been fairly brittle the past ten years. I mean, I imagine, you know, his body is not doing him any favors right now, but you know he just won, you know, the biggest stage and then the most important

tournament of the year. I would imagine that he will, as long as he can stay healthy, continue to compete at least this year, and and and for a couple more years moving forward. And I would think everyone in the golf world is would love that, right. I mean, if he continue, if he has another banner year, if he moves up into the top ten and higher and higher.

I would think if you're NBC or CBS or the Golf Channel, or you know, Nike or even Taylor Made, or companies that work in golf that don't even sponsor him, Adidas for example, I'd imagine they'd be thrilled as well. In sports, there's always the people that go longer. Chris Chelios, who played for the Detroit Red Vision, maybe he's one example. Some other baseball players as well. I think of Tom

Watson in golf, who just delivered and delivered. Does Tiger Woods have the kind of game where he can be a fossil and compete, Yeah. I think the big question is the extent to which the physical toll on his body. What that means when he when he's in the shop or is it putting you know what? What what is the determinant? Yeah, it's more the teacher, I mean Tiger. Tiger evolutionized kind of the way golfers trained physically, right, I mean he he looked differently than almost any other

golf forever. Um. And the reason he needed to be that big is because of the you know, the tremendous torque that he was putting on his body. Um. And he's paid for that in in recent years. Uh So, Yeah, I don't know if you know the fact that a guy like Tom Watson, you know, he he played so well so later possibly because you know, just his swing and the wear and tear on his body was was less than it than it was for Tiger Woods. Um.

That I think remains to be seen. But you know, it's no question that at forty three and despite four back surgeries in the past couple of years, uh, Tiger remains, you know, one of the top players on tour. And I think they've actually we're gonna be able to get to see Tiger in another major sooner than we typically well, because they changed up the schedule this year, right, Evan, Yeah, the p G A is moving up, so the next major will be the PGA. Think I think it's in May.

So yeah, that's best. Page State Parks. You could take this of course out there, Tom and we could do that. See you and Lisa out there, right, you know dat. I mean nobody gets up in golf before nine am, Right, I could see you and Lisa out there. That's a that's a capital idea. A couple of years ago, Beth Page had another major. I don't know if it was the US Open to the p G a um and there was a media availability to play the course and so it was, you know, it was like a week

or two weeks before the pros got here. And I've never seen rough like that. I knew the course was obviously harder than it is on like a normal weekend. The rough was, you know, it felt like it was six inches and I couldn't even find my ball it was two inches. Evan Williams on what an exciting moment for golf and for sport yesterday as well. The course. Look for Bloomberg Business Sports, they do a great job across all the different sports as well. Paul what's the

biggest rough you's ever played in? Probably, you know, just like I've been mentioned that Bethpage Black. It's the hardest course I've ever played, and it's interesting. It's uh, it's the people's course. It's a public course, and uh and the pros love it that. They love the New York vibe, they love the New York Uh, you know, Uh, just a crowds are there and uh it's just a great, great course and a great tournament. So the pgs coming back, so it'll be a great for the New York market.

Thanks for listening to the Bloomberg Surveillance podcast. Subscribe and listen to interviews on Apple Podcasts, SoundCloud, or whichever podcast platform you prefer. I'm on Twitter at Tom Keane before the podcast. You can always catch us worldwide. I'm Bloomberg Radio.