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This would probably be controversial among my friends in the Biden administration, but I think that there's a general perception that Vice President Harris will be a bit more business friendly.
Welcome back to voter Nomics, where politics and markets collide. This year, voters around the world have the ability to affect markets, countries, and economies like never before, so we've created this series to help you make sense of it all.
I'm Allegra Stratton, I'm Adrian Wooldridge, and I'm Stephanie Flanders.
So look, we are seven minutes out.
From the seven minutes.
Obviously fail in the first ten seconds. We are seven weeks out from the US election, and although the outcome is no clearer, the end is coming into sites. So we're going to continue to unpick what the candidate's financial and regulatory policies could mean for American businesses.
And one of the things we're going to get into later, Adrian and I spoke with one of Wall Street's higher profile Democrats and ever Core Chairman emeritus, Ralph sch Losty, one of its founders, just to get an idea of what the potential ideas could mean for business. You know, he's sitting in Wall Street, or certainly was sitting in Wall Street, and has a particular perspective that you might say was a kind of traditional approach to thinking about
business and campaigns. You know, how much money are they give it putting in what impact of the candidates policies going to have? But Adrian and I don't know about you, but I've just been struck. You know, Donald Trump progressively has so scrambled the way we think about business and
politics and brought them closer and closer together. And we've seen that particularly in an increasingly close relationship between him and Elon Musk, where Elon Musk is not just giving him a huge amount of money, but giving him a platform actively supporting him on Twitter.
Absolutely, there used to be a sort of hands off relationship between the donor on the one hand and the candidate on the other. The donor would give some money, it would go through a lot of intermediaries and there'd be some sort of space between the two. Now you're getting a direct intermingling between business on the one hand and the candidates on the other. Trump obviously did this, and it's most flagrant with his hotel in Washington that
he encouraged people to go into. But now we're saying with Musk, Musk is running this business which is ex Twitter. That part of the business model seems to be outrage people to put Trump on there to encourage sort of active engagement with Twitter through saying Trump Trump leaning things. So it's an extraordinary sort of commingling, I think.
And also there's a kickback because if Trump's selective, Musk is going to be given this role looking at So there's and I do try not to be too parochial and bring it back to the UK. But in the UK right now we're having every day on the front page, we've got the Prime Minister and his wife being accused for taking clothes and money off of Well, money is not the problem, but clothes and other benefits that they
haven't declared off a donor on the one hand. But then in America you've got it on a mega mega, mega scale and it doesn't not mega but a mega scale, And it doesn't seem to there doesn't seem to be anybody saying, hold on a second, it's not allowed.
Well except I mean, there's plenty of people amazed at the kind of conflict of interest that would represent. I mean, remember, it's not just that it's payback for support in the campaign. It would be an ongoing and massive conflict of interest for Elon Musk to be reinventing government or thinking about how to reduce government at a time when his own
company is receiving billions of dollars in government contracts. So the idea that there are no guardrails against that, I think is surprise to people in America, where we always taught that, you know, there is this written constitution that provides checks and balances. They're increasingly getting faded.
If you read the biography of Musk, it's clear that about eighteen months ago, two years ago, Musk thought Trump was a loser.
And maybe that's the direct quote. Well, not very long ago, Donald Trump thought crypto currencies were a scam, and we now know that he's going to get his own.
Okay, So to talk about that change of heart that Stephanie just mentioned and how crypto is playing in the US election, we have in the podcast studio right now Emily Nicole, who is Bloomberg's crypto reporter. Hi, Emily, Hi, just explain for us what was launched by Donald Trump and family this week launched.
Maybe a bit of a generous term, actually more like a veiled to a certain extent. So earlier this week, Donald Trump went on an X spaces I guess you'd call it now, where he spoke for about two hours along with other members of the Trump family about the project that they intend to launch called World Liberty Financial.
We still don't really know what it is, except for the fact that it's going to be in the world of decentralized finance, which means that there will be some loose form of governance by the people and the community that are buying into it rather than by the people running it, and that there will be a token attached to it for that purpose which people can buy to use to vote on proposals on how it's run, but also probably speculate with as well.
So for an expert like yourself, does it look promising or does it look a bit odd?
It looks light on details. I think it's probably not the first crypto enterprise that's been a bit light onto.
Yeah, exactly, but it's probably the most high profile one that we've had so far. I mean, for a respective of president to be launching something like this. It definitely is in that gray area of we don't know exactly where it sits between business interests, financial interests, how much he might stand to profit from it or benefit from it. There is a disclaimer on the project that says Trump or his family members, none of them will benefit financially
from it. But you know, that's assuming that the token itself isn't going to be something that can appreciate in value. Obviously it will, so whether or not that actually bears out to be the case is something to be.
Seen, Adrian, I mean, before we get onto talking to Emily about the crypto in the election, just sort of on the principle of a presidential candidate launching or unveiling, to use Emily's phrase, unveiling something like this.
Would we see that in the UK though.
I can't conceivably imagine it. It's not just that there that he's unveiling this. This thing is a presidential candidate. He's doing it seven weeks before the election on a platform provided by one of his biggest backers, Elon m It's quite extraordinary, and.
It's also the intermingling with the family. The family are ever presently and the business interests continue with the family. And I noticed even in our story that the white paper for well, it sounds like white paper is also a sort of a generous phrase. But the World Liberty Financial reviewed by Bloomberg News and that listed Donald Trump as chief Crypto Advocate, Eric and Donald Junior each as Web three ambassadors, and eighteen year old Baron Trump as
Chief DEFY Visionary. I guess we should. I mean DeFi is a sort of particular bit of the crypto universe which is even considered a little bit fringe even by some of the crypto people. Is that right Somewhat? Yes?
I mean, if you're kind of the yeah, who would buy bitcoin or ether because you think it might be a bit of an investment, than Defy is certainly fringe to you the crypto traders. Though It's kind of the bread and butter of how things work, because it's often the way that you get to experiment with new tokens, new projects and things before they can get vetted properly to be on the big exchanges like Finance or coinbase.
For Trump, and in this project, the purpose of it being in DeFi is quite important because it means that they can have this claim to not really have any control or say over how it operates. Defy itself as a construct is imagine a project that's basically just a whole run of code and smart contracts that kind of execute when certain conditions are met, and nobody can intervene
once they're written. So the idea is that people who hold this token that's touched the project can use that bit of token that they own to say, Okay, well I vote this way, and somebody with more tokens can vote another way, and in that way, the Trump family themselves can say, well, really, I don't have any say about how this goes because all the token holders are
voting whichever way. That doesn't necessarily mean they don't benefit financially from it, though, especially if token does trade in open markets, which it should do in time.
I mean, there is this a bit of the sort of demographic that Trump is really going for, which is the sort of countercultural younger skeptical of government. And this is right. Even if they don't make any money on this, it does sort of send that message that I'm all about sort of somewhat, you know, it's getting away from the mainstream financial system. Libertarianism, I mean, that's part of the messaging.
Yeah, all of those things are kind of at the heart of crypto, and so a lot of the traders who sit within crypto are at least you know, hardcore, day to day, live and breathe it very much sit on that side. But then you have to wonder if that they would have been Trump voters anyway to a
certain extent. And so Trump has made repeated over to the crypto industry this year to say that he wants to be part of it, he wants to create rules for it, he wants to get rid of sec chair Gary Guns are on day one because Gary Guns that has been launching several enforcement actions against scripto companies over the last few years that the industry is seeves as
overly harsh. But you know, saying all of that was probably enough because by comparison, his competitor Kamala Harris hasn't really said anything on crypto.
I mean, when it comes to the sort of directly benefiting financially from the campaign, we had that you know, Trump Media ipo. In April Origin it was valued at nine billion. I think it's now less than half that he could still potentially make two billion and people are literally trading him and it's been going down pretty steadily,
certainly since Biden got out of the race. If people end up trading on this platform, which is very much associated with him, if they're speculating on Trump media stocks based on whether or not they think he's going to win, and then they end up losing a lot of money, I mean, it isn't done that back fire on him in the end, or does it not matter because he's lost?
And it depends how much he can distance himself from it. I mean the ability to be able to say, well, you know, we don't earn any money from this, I'm just an advisor, or I sit on the periphery. I'm just promoting it, but my family are really more involved these kind of things. There's always a way from to distance himself. That said, we did do a story my colleagues Zeker Fox and Miashen early this month about the
people behind the project who are building it. And they've previously built projects that have been subject to hacks, They've done get rich quick schemes, they've sold colon cleanses online. You know, it's not necessarily the kind of business business that you think would be solid footing, so looking ahead
to what world liberty might look like. I mean, there's always a chance, for example, that they don't launch this before the election happens, and so he's able to kind of say that, well, you know, nothing infringed upon the voting process in a certain sense, but once it goes live, there's nothing to say. I guess that he couldn't still sit on those edges without having all his fingers in.
I guess this is all part of why it must be interesting day to day to be a Bloomberg crypto reporter. Thank you very much, Sheery, Thank you my top fact. I was looking up while we were talking that Trump Media's revenue is equivalent and I have to admit this is according to Roy, but it is equivalent to two Starbucks coffee shops, and strategists say it's three point six billion stock market value is detached from its day to day business, since it lost just UNDERD nine hundred thousand
dollars in its most reported quarter. I love that it's worth several billion dollars and its revenue is the same as two star coffee shops. We have our guest this week, Adrian, and I spoke with one of Wall Street's higher profile Democrats. A few days ago, Ralph schlostein chairman emeritus at Evercourt, which is a global investment banking advisory business, and I started by asking him, at this late stage in the campaign, was it really going to come down to who had the most money?
I think the answer to that is how much does the relative net worth of Bill Gates and Warren Buffett? Matter? Both of them have more money than they need.
They don't have instant access to massive social media.
Platform and I would say both campaigns have more than enough money to promote their candidate, and the differential in money, which at least at the current moment, seems to favor Vice President Harris, is not going to be the determining factor in this election.
Can you give us a general sense of how corporate America business America is seeing and splitting over this debate. Are there any clear lines of difference between different business groupings and is it changing? Is that as the election evolves.
This would probably be controversial among my friends in the Biden administration, but I think that there's a general perception that Vice President Harris will be a bit more business friendly. Large technology and corporate business friendly, and I think some of that is a function of her background and where
she comes from. She's represented in the Senate many of these large technology companies, obviously Silicon Valley is in California, and she's got a long history of interacting with them, being supported by them, and having i think some empathy to the issues that might be of interest to them.
And that's not to say that President Biden has been hostile toward business, but he's just he's got less of a background and an empathy toward that, and he's got a very strong background in foreign policy and that's been a big focus of his I think her agenda is very focused on two things. Growth for the overall economy, which I think is really important, as there is something to be said for this long around quote of the
rising tide lifting all ships. And then she's also i think very focused on moving a little bit more of the benefits of public policy to the middle class. Her housing plan, her childcare plan, her child credit, tax credit, capping drug prices, and the fact, you know there's going to be a massive discussion next year about what do
we do with the Trump tax cuts. They all expire at the end of twenty twenty five, and there's a probably the biggest difference between the two candidates, which neither of them talks particularly a lot about, is what their view is of what should happen to that next year.
Against that, I just want to say that surely we're seeing business fleeing from California as a significant rate, and middle class people fleeing from California as a significant rate, because it's hard for middle class people to make ends meet, and businesses feel that the burden of regulation is an intrusiveness of regulation is very high. If I was looking at California, I wouldn't say that that's the sort of place I wanted to do business these days.
Oh, it has a lot of things going for it too. It has an incredibly educated labor force, and it's been, you know, until relatively recently, a you know, an engine of demographic growth for the United States. So you know, there certainly are highly publicized, occasionally controversial figures like Elon Musk who make very strong statements about the friendliness of
the California business climate. And I do think as a general matter, the Democratic Party has been a little bit excessive in its regulatory exuberance, and that's true at the national level, and it's certainly true in the states that where you have one party rule, one of which I live in.
I'm interested. There's been quite a lot of talk. You actually just mentioned it. There about three quite unpopular characters in large parts of the business community that are currently in the administration, Lena Khan and Gary Gainsler, the head of the leader Khan being a Federal Trade Commission head, and the Security and Exchange Commission head Gary against Leni Khan in particular has distinguished herself for a sort of pro competitive, quite aggressive approach to at least a starting
to regulate big tech companies and others. Then more generally, I would say, there's a sort of interesting dividing line between right and left in large parts of the world now, where it's actually the left of the progressive side that is talking more. I don't know if they've done a lot more, but talking a lot more about competition and
worried about concentration of corporate power. I Nikan is a sort of symbolic figure for many people and the more progressive side of Democrats, because she has been considered to be quite radical. Kamala Harras worry about that whether or not she gets reappointed, is that going to be a key issue.
A very high quality news organization, Bloomberg that wrote a story about how donors and supporters of Kamala Harris were suggesting that their support or donations should be conditioned upon the removal of her, and I wasn't quoted in that story, but I was called about it, and I said that I thought that was highly premature and ridiculous. Other than that, completely true and the reason I do believe that, first of all, you had anti trust policy and competition policy.
There hasn't been a single change in law since probably two thousand or earlier. I said in twenty seventeen that I thought one of the most difficult professional jobs in America under President Trump was to be an anti trust lawyer, because the law didn't really matter. It was whether he liked you or not. So he went after the Time Warner Att merger because he hated CNN, and of course
they got thrown out in court. We had an experience where we had a merger held at Evercore held up under Syphius, which was, by the way, a merger of two US companies had nothing to do with Syphius.
Syphius is the American law that is used just to prevent foreign companies from taking big stakes of US company.
Yes, buying US companies. So this was two American companies and it was held up for a long time, and then one of the companies decided to redomicile one of their headquarters back into the United States and lo and behold a week later the merger got approved. Nothing to do with law, I think the current group and Lena Khan is the tip of the spear there, but the Assistant Attorney General for Anti Trust is certainly part of that as well Kaplan. They've been definitely more aggressive in
their interpretation of the law. They've gone to court a number of times and lost, they've won a couple And so we spend a lot of time at Evercore with companies talking about mergers, and this is always a part of the discussion. And I would say the prevailing view among larger companies today is if we believe the laws on our side, we may be challenged, but we'll go
to court and we'll win. I do think my guess would be that there would be a somewhat moderated view of that particular of the FTC and the assistant Attorney General for Andy Trust under Vice President Harris, with her legal background and sensitivity to some of the issues that business cares about, might care a little bit more about how those particular roles are executed.
There are some who say that it potentially more influential than you would think. Point of disagreement between Trump and Harris as asked you to crypto because it is gaining so many Ficinado's, particularly in kind of demographics that Kamala Harris is trying to attract. And Trump has changed his view on crypto but has now been pretty positive about it. We think that's partly why Elon Mosque is so supportive of him, whereas Gary Goesler stands for a much more
circumspect and potentially negative approach. Do you think that is we are underestimating how much that masses.
I would say it to me, it's a fringe issue, not a central issue. I think the change on President Trump's part has been definitely linked in a pretty material way to the contributions that have been made. There's an interest group out there that has a pack that is giving tens of millions of not hundreds of millions of dollars in this election cycle to crypto friendly candidates, including former President Trump.
But you're sitting in a mainstream Wall Street maybe you'd always say.
That I must say, I'm in the world that things are not probably a complete paleoanthic erea troglodite. I have said in the past that to me, the valuation of bitcoin reminded me of the beanie baby create But I think that's turned out to be and not necessarily correct view. And I think it remains to be seen whether there are any mainstream uses of these electronic monetary vehicles other than a store of value and speculation.
I want you to ask about something else, which is what might be briefly called woke capital, or the passion for micro intervention in the way that businesses run themselves THROUGHDI and ESD and the rest of it. Is Vice President Harris an advocate of that, and if she is, is that a problem for business?
I think the I'm very passionate about the objectives of some of that. I think they're really good business reasons to have a diverse workforce, and I can articulate those for you if you want. But I do think the prescriptive nature of this, which has been broadly thrown into the pejorative term woke capitalism, is not necessary? Is overdone?
I really do And I stepped down as a CEO of Evercore about two and a half years ago, and one of the things I've said privately more than once is that being the CEO of a public company today is just a lot more challenging and less clear as to what you're really trying to accomplish. Evercore is a
independent investment banking firm. We don't have any balance sheet, we have offices, and the idea that we would be required to file a lengthy environmental statement about whether our buildings are eco friendly or not is in my view, complete nonsense. Obviously, if you're a chemical company be focused on that. If you're an energy company, should be focused on the environmental aspects of your business. But this has gone It has gone way too far. The goals that
they're trying to achieve are laudable. What's gone way overboard is the prescriptive exuberance with which they pursue them.
From the sort of everical perspective, Should anyone be trading this election? How does one trade this election?
I'm not sure how to trade even without an election,
so with an election it becomes harder. I'm just not I think the only thing that I do think is truly market effecting is I do believe that if Trump were to pursue the tariff policies that he's discussed in the campaign, and it's not clear to me that he would pursue them, but if he were to pursue those, which would be very high tariffs across the board and much using that as the principal source of new revenue for the finance the government, I think that will have
a very chilling effect on the markets, and because it will be widely perceived to be anti trade and inflationary, and I think neither of those things are good for equity markets.
It's interesting you say that there is a Wall Street view that I would say is quite common, which is that longer term, the macroeconomic mix under Donald Trump would undoubtedly be less sustainable, more risky band for the US, band for the world, higher inflation, as you say, reduced trade connections, and an enormous deficit. It's going to be pretty large under either administration, but under a completely out
of control deficit. But I've seen plenty of notes coming through my email saying it will be bullish for risk assets in the first year or so. Because you would have this text, you would have a feeling that business was not going to be constrained by regulations, by the long arm of the state. All these things that have been you even just talked about just now.
I think it's interesting. I remember that in twenty sixteen the election. I happened to be in Paris at the time, and my phone rang at five in the morning and it was Ed Hyman, who was the founder of ISI and now the chairman of Evercore ISI, and the noted I think he's won number one in institutional investor research
for over forty years as economist. And he said he was in Tokyo and he was about to speak to a bunch of institutional investors and at that point it was clear that Trump was going to be elected, and the S and P was down a thousand points futures not the market, and he said, what should I say? And I said, if you want to be controversial or provocative, and I said, I really believe this, by the way, I think you should say that notwithstanding the fact that
the S and P is down a thousand points. Futures are down a thousand points right now. By the time the market closes at four o'clock in New York, the market will be up. And he said, why do you say that? And I said, Donald Trump is going to be for lower corporate taxes, He's going to be for a stimulative fiscal policy, he's going to be for infrastructure investment. And that's very bullish for the equity markets, and people
will realize that. And so he got up and said that, and it turned out to me, I'm only telling you this story because for once I was right, and I do think that the initial effect. Let's take the corporate tax rate, for example, which is a twenty one percent right now, leaving a side state and local taxes, which are won't be changing much. If it's a twenty one percent, for every dollar a company makes, seventy nine cents of it will go to its shareholders and twenty one cents
to the US government. If it's at twenty eight percent, as Vice President Harris has suggested, and I'm not sure it'll ever get that high again, but that's a seven percentage point off of seventy nine, which is like a ten percent decline in corporate earnings. Ultimately, that filters through to the valuation of stocks. If it's at fifteen percent, that's six points on. It's a seven and a half percent increase in what shareholders will get. The math's pretty simple.
I think that point alone will provide if Trump is elected, will provide a little bit of following wind to the stock market.
But one thing we have in the UK is some quite a lot of concern in the City of London and elsewhere. That's the moves that the government, that the new labor government might make to increase the amount of money coming from the richest and from wealth already encouraging people to leave for Italy or leave for America. Quite a lot of concern about capital flight. Do you think there's any issue around that if Kamala Harris stays in just as a sort of attractiveness of the US versus
other places, as a wealthy person for wealthy people. I may not referring to you specifically as a wealthy person, but I bet you hang out with a few.
I'll tell you my personal view on this first. My personal view on this is my parents were both immigrants. My father was a bartender and I've managed to do reasonably well in my life. I have an enormous amount of gratitude and appreciation both for the United States and the opportunities it provides and for New York City. I'm not one of these people who's gonna abandon ship because I can save a little money on or a lot of money on taxes. I think you have to look
at for the broader question. It's pretty donning what has happened in the world in terms of the US economy and the US markets relative to the Europe's and relative to the Japan's. And if you look at in two thousand and eight, the GDP of Europe including the UK, and the US were roughly equal. By twenty and sixteen, the US was about fifty percent higher, and today it's almost double. Taxes are about gee, what do you get
to keep of what you've made? The opportunities to make are so great in the US relative to other places in the world. Even with Lena Khan sitting in the seat that she sits in and Gary Gensler sitting in the seat that he sits in, I think people should maybe people who are sitting on a lot of money are going to attract it the places like Monaco and Litgenstein, in places like that. But the last time I went to the opera, I wasn't overwhelmed with the quality of the performance.
Why hasn't that extraordinary economic growth in the US translated into more optimistic sentiments. Why is an incumbent struggling to be re elected after this incredible economic boom?
It is shocking. Actually, I think it's a really good question, and I think the reason for it is the widespread and pernicious effect on people's psyches of inflation. I was working in the White House in between nineteen seventy seven and nineteen early eighty one under President Carter, when we had the greatest inflation in the history of the United States.
And I have said a number of times to people who worked in the Biden administration that you have to recognize that is something that touches every single person in the country in a negative way. And when you when your wages go up, but you're spending You go into the grocery store every week and you're spending twenty percent, thirty percent, forty percent more for eggs and milk and things that you buy every week. It's or for gasoline. It's in your face, and it's it's really discouraging and
off putting. And I think, to me, unemployment's horrible, but it touches if unemployment's high, it's six percent or seven percent, it touches a relatively small portion of the economy of the voter population and their families and friends and such. It's certainly a big issue, and its effect obviously on those people is huge. Is more dramatic than inflation, But inflation touches everybody, and it's a in my view, it's a cloud over the confidence that people have about the economy.
So Ralph Rap, you've given us a lot of time. We're going to let you go. In a second. I can't help ask you, if you were in Paris on the night of the twenty sixteen, where are you're planning to be for this for this election, and maybe cast some light on whether what you think.
I'm going to be in New York. I'm going to be with my two children and a bunch of friends that I'm an election party somewhere, and gosh, I have no better insight into who's going to win than I do into what the markets are going to do. Between now and the end of the year, I hope it's Vice President Harris. I actually think she's better for the country.
I think she's younger, she brings us. I think to me, one of the great issues in our country and globally is the widening gap of wealth between the one percent and then the other ninety nine percent, and particularly the eighty percent that is the middle class and those who have less means than the middle class. And I think she's really attentive to that, and I believe that issue, unattended, will ultimately corrode support for capitalism and free democratic institutions.
Ralph last, thank you very much for joining us.
Thanks for listening to this week's Votonomics from Bloomberg. This episode was hosted by me alegra Stratton with Stephanie Flanders and Adrian Wooldridge. It was produced by Somersadi, production support from Chris Martlu and Isabella Ward. Sound designed by Blake Maples. Brendan Francis Newnham is our executive producer. Sage Bauman is head of Podcasts and special Thanks to Ralph Schlosstein and Emilie Nicole. Please subscribe, rate, and review wherever you listen to podcasts