September 24, 2024 • 43 mins
The US presidential race is between Vice President Kamala Harris, former President Donald Trump and the couch, according to Bloomberg Intelligence senior policy analyst Nathan Dean. In this episode of the Choppin’ It Up podcast, Dean sits down with BI’s senior restaurant and foodservice analyst Michael Halen to discuss why strong voter turnout may help Harris. He also comments on how turnout could decide which party controls the US House of Representatives, why Republicans have an inside track at a Senate majority, tariffs, M&A, price gouging, consumer-facing company regulation, tax reform and why he doesn’t think tips will be made nondeductible.
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Episode Transcript
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Speaker 1 (00:22):
Welcome to Chopping it Up.
Speaker 2 (00:23):
I'm your host, Mike Hallen, the senior restaurant and food
service analysts at Bloomberg Intelligence. Our research and that of
bi's five hundred analysts around the globe can be found
exclusively on the Bloomberg terminal. Today, Nathan Dean, BI senior
US policy analyst, is here to give us a download
on the US election. Thanks for doing this, Nathan.
Speaker 3 (00:42):
Oh, thanks for having me. Really appreciate it.
Speaker 1 (00:44):
Nathan does great work here for BI.
Speaker 2 (00:46):
They put out a very very large, deep dive report
on the election, so I figured i'd have him here
to let us know how it's going to impact consumer
spending and potentially the restaurants.
Speaker 3 (01:00):
Yeah, if anybody wants to copy that, you can always
just reach out to us. We'll get you a PDF
and we'll give you about sixty five pages that I
think you can read from probably Grand Central station I'm
guessing to maybe Westchester or Connecticut. I think if that's
the train station that goes to Connecticut.
Speaker 2 (01:15):
So I try to avoid the trains, especially New Jersey
Trains has had a lot of trouble this summer, so
I can't help you with where the trains are going.
But yeah, how about that first debate? Man, that's two
hours of my life that I'll never get back.
Speaker 3 (01:32):
So I was asked on Bloomberg Radio what my preferred
food was for the debate? What is the Dean household
going to be? And my response was I was going
to take as much Bloomberg popcorn as the pinetry as
security would allow me to. But it was a very
entertaining debate. But for those of us in the policy
side where I was looking for policy statements, a I
(01:53):
wasn't anticipating it. This is not a policy election, you know.
This is an election between two different candidates, former President
Donald Trump and Vice President Kamala Harris, that both have
very stark differences on the view of where this country
should go. And when you have that combined with the
fact that Kamala Harris only had about one hundred and
(02:15):
twenty days to put a campaign together, you don't have
in an equation where you're going to get into policy,
and getting into policy probably it'd even hurt you more
so than help you. For all the talk. I mean,
obviously I don't run campaigns, so I can't accurately preview
say that. But you know, going into the debate, we
did not anticipate that there was going to be much
(02:36):
of the way of policy. However, we got some nuggets.
President Trump talked about tariff, something very important to a
lot of the investors of the clients of Bloomberg, and
you know, just I'm guessing for people who are listening
to this podcast right now, we got some on taxes,
so tariff taxes, and we also got a little bit
of you know, Vice President Harris's views on price gouging
(02:59):
and so forth like that. But for the most part,
I don't think the debate. In fact, my post debate
note that I put on the terminal said, look, there
wasn't much. The endorsement of Taylor Swift was, you know,
certainly a big deal that could you know, that could
do stuff. But I think the race and you know,
for those of you who have a terminal, you can
look at the betting markets a WSL election go and
I was watching this during the debate, and you could
(03:21):
see the betting markets decline for President Trump an increase
for Vice President Harris. And this is both poly market
and predicted. Is on the terminal, But when I looked
at it yesterday, things are normalized a little bit. And
so in the poly market space, President Trump is leading
in the predicted space, Vice President Harris is leading. To me,
(03:43):
that is no change from prior to the debate. So
life continues.
Speaker 2 (03:47):
Okay, So basically we spoke about this before. You know,
he looked pretty miserable. He did not have a very
good performance. But so it sounds like it doesn't really matter.
I know some people have been saying a conservative pundits
have been saying it. Say, you know, do I believe
that what they're telling me that it doesn't matter? But
if you're telling me it doesn't matter, maybe it really doesn't.
Speaker 3 (04:06):
Well, but for all the argument that it doesn't matter,
let's also remember that there's going to be approximately one
hundred and fifty million Americans that are going to vote
in the selection. One hundred thousand of them spread across
seven swing states, are going to be the ones that
ultimately decide who's going to be the next president. And
if you're listening to us right now in Philadelphia, I
(04:26):
am sorry for all the advertisements that you're seeing. I
saw that the NBC affiliate had twenty eight advertisements between
five am and seven am earlier this week, and so
it's the folks at Pennsylvania, North Carolina, Georgia, Arizona, and Nevada.
You know, they're the ones that are ultimately can decide.
And what both candidates are trying to do here is
(04:47):
get people off the couch or stay on the couch.
Because this isn't a race between Vice President Harris and
Donald Trump. This is a race between Vice President Harris,
President Trump and the couch. And if you remember in
that debate, Vice President Harris said, you know, she was
talking about NATO and Ukraine and she said, they're eight
hundred thousand Polish Americans living in the state of Pennsylvania.
(05:08):
That was a way of taking a statement that President
Trump had used and trying to push some of those
eight hundred thousand Polish Americans to get off the couch.
If people stay on the couch, more likely than not,
President Trump wins.
Speaker 1 (05:20):
Yeah. It's interesting, man.
Speaker 2 (05:22):
They sounds like their neck and neck. So do you
have any opinion on who you think is going to
pull this out?
Speaker 3 (05:26):
Look, I can show you pulling. You know, I can
show you polling that President Trump is going to win.
I'm going to show you pulling. I can show you
the polling the Vice President Harris will Win. In fact,
I had to. I've been flying around the US and
one of the things that I've been saying to clients
when I go to them is like, I apologize that
the DC expert flies all the way out here just
(05:47):
to tell you that he doesn't know who's going to
win the election. But it is going to be that close.
I mean, we're talking about if there is a snowstorm
in the greater Philadelphia area or in the greater Pittsburgh
area the day of election, of election day, that potentially
swing things left and right. President Trump has actually, you know,
embraced the crypto community fairly aggressively to try and make
(06:10):
the United States the crypto capital of the world because
there are potentially, let's just call it, three thousand individuals
in the United States in those seven swing states that
crypto is their only issue that they're voting on, and
as a result, you need every single vote. So it's
going to be that close, and you know, I can
(06:30):
still see scenarios for both.
Speaker 2 (06:32):
Yeah, and I'd assume the last debate is going to
be really important.
Speaker 3 (06:37):
If they hold it.
Speaker 1 (06:39):
If they hold it, all right, yeah, so.
Speaker 3 (06:41):
Right now, the next debate is on October first, that
is between vice president of the vice presidential candidates, so
Governor Tim Wallas and Minnesota and Senator J. D. E.
Vans of Ohio. Vice president debates usually are good popcorn watching,
but they don't ultimate. I mean, how many folks can
you think that vote primarily because of the vice president.
Certainly for the folks in Ohio and Minnesota it's a
(07:02):
little bit more personal to them. For the rest of
the folks in the United States, the vice president debate
usually doesn't matter all that much. But then we have
the third debate, which may or may not happen, as
if we're recording this, you know, September thirteenth, you know,
President Trump said there's not going to be a third debate.
Immediately after the second debate, Vice President Harris's team came
out and said, we want a third let's do this,
(07:23):
Let's do so forth, and President Trump said, no, I'm good,
untruth social he said something and I'm paraphrasing here. You know,
the winner, the person who's calling for the rematch isn't
the winner. I won the debate, and so forth. Therefore,
there's no need to have a third debate. What I
will say is is that there potentially could be a
third debate. I don't want to say it's not going
to happen because it is September thirteenth. We don't know
(07:47):
what the race is going to look like on October fifteenth,
and if Kamala Harris begins to move, you know, maybe
some additional voter enthusiasm in Pennsylvania, for example, President Trump
may want to have that debate again because you know,
he could be better prepared, and it could be a
different story because President Trump. I mean, look, anybody watched
the first debate between President Trump and President Biden. Debates matter,
(08:11):
and so you know, debates have real consequences, and so
let's give both candidates time. I think, you know, we'll
see how it plays out. But around that October fifteenth
October twentieth timeline, you certainly could have a third debate.
But you know, right now, it seems like the debate's off.
But maybe in a week or two they'll come back
to it.
Speaker 2 (08:31):
Okay, interesting and remind me last four years ago the
first debate, how did that pan out?
Speaker 3 (08:36):
Well? You know which which one I mean it was?
There was there were multiple debates, but I think I
was referring to the first debate. This s this cycle.
So when President Trump and President Biden had their debate,
President Biden came across, you know, you know, he came
across in a way that essentially made a lot of
(08:57):
people question his ability to be present. And within a
few weeks he was announcing that he's not going to
run anymore. And so, you know, some debates have matter.
I mean, look, I remember watching a debate, one of
the debates between President Obama and current Utah Senator Mitt Romney.
And Senator Romney I think handily won that debate, but
(09:19):
as we all know, President Obama won the election. And so,
you know, debates have real consequences. But so do policy statements.
So does the economy, So does the FED either cutting
or not cutting interest rates, and so there's all these
different factors. And when you're talking about one hundred thousand
voters over some swing states, you know, it's that how
(09:43):
how I mean the amount of regression analyzes you have
to run to try and figure out how those factors
are going to impact those one hundred thousand votes is
extremely difficult. And that's why polling in particular is very
difficult to get.
Speaker 1 (09:58):
Right, gotcha.
Speaker 2 (10:00):
Yeah, And you know, I was curious because I thought
I saw something on Twitter. Some pundit was saying how
in the last cycle four years ago, Trump performed poorly
on the first debate, but then had a nice rebound
in the second one.
Speaker 1 (10:13):
That was kind of what I oh.
Speaker 3 (10:14):
Yeah, yeah, okay, yeah, I mean, look, you know, President
Trump had a great first debate against President Biden. The
second debate not so well. You know, if they have
a third debate, you know, there are real risk and
opportunities for both candidates. If it's a replay of the
second debate, Kamala Harris certainly would do well if President
Trump shows up and you know, begins to put the
(10:37):
onus back on her. You know, essentially, the way it
works is that whoever we're talking about at the end
of the debate is the one that loses. And if
we're talking about President Trump and President Trump's policies and
statements and things like cats and dogs, you know, that
means the chances are you lost the debate. If we're
talking about things like Kamala Harris's policies or maybe the
(10:59):
lack there of of policies, then she's lost the debate.
So you know, it's really just I think a challenge,
and I think that both candidates will go back and
they'll conduct their analysis and so forth, and I think
that if they decide, if they both decide that a
third debate is you know, advantageous to them, we'll see
(11:20):
one around that October fifteenth, October twentieth time frame.
Speaker 2 (11:23):
Okay, Yeah, it'll be interesting to see how it unfalls, right,
because I thought the Democrats did a good job of
setting the bar very low for Kamala, right, and she
clearly outperformed those expectations. But you're always curious to see
how that would change if she's expected to win the
third debate or you know, actually outline some policies.
Speaker 1 (11:44):
So it's going to be interesting to watch.
Speaker 3 (11:45):
Well, just remember that's politics, one on one. You never
set the debate or the bar high, you know. So,
I mean that's they could you know, a candidate could
be up by thirty points and they still are going
to go in there saying that they're the underdog. They're
going to you know, they're going to try and do
their best and so forth, but they don't have great
expectations because then they overperform.
Speaker 2 (12:05):
If they do all right, so I you know, almost
as important. How do you expect the Senate in the
House to pan out?
Speaker 3 (12:12):
Yeah? So this is this is where Poland gets a
little bit more difficult because if everybody thinks of the
text messages or you're getting on your phone at the moment,
it's always how are you going to vote? For the
presidential race. Nobody's texting you to say, how are you
going to vote in the third district of Colorado. I
mean maybe the folks that live in the third District
of Colorado are getting that text, but I'm certainly not
(12:32):
getting that text about the House and Senate. So it's
a little bit more difficult. So when it comes to
the House, I rely on our friends over at Bloomberg
Government and they rely on the Cook Political Report and
so forth like that. And the Cook Political Report is
showing that there's about forty four seats that are either
leaning or toss up. Now, if you're listening and you're
(12:53):
not in the United States, just remember four hundred and
thirty five members of the House Representatives. Every single one
of them is up for reelection this sight. They serve
two year terms. Currently, the Republicans have the House two
hundred and twenty to two hundred and eleven. You need
two hundred and eighteen for majority, So the Republicans can
only afford to lose three. And this is why Speaker
Mike Johnson has struggled in a lot of times, and
(13:14):
current you know, the current spending bill is a perfect
example of that of why the Republicans have struggled to
get the certain bills across the line. Now when it
comes to the House with you know, because I said
forty four are leaning or toss ups, that means eighty
eight percent of the House are going to go to
bed on election night knowing that they've won their race. Well,
what happens for the other twelve, Well a couple things
(13:35):
to note. One, it's not the swing states that matter.
It's more so swing districts in states like New York
and California that matter. And it's going to be certainly
interesting that's going to be tying out to turnout. So
if Vice President Harris has great turnout, chances are that
could then go down into the House races as well.
Taking my Bloomberg hat off and putting my own personal
(13:57):
hat on, my view on the House is whoever wins
the presidency will ultimately win the House. And the reason
why that's important is because twenty twenty five is going
to be a year about tax debate and tax reform,
and generally tax policy starts in the House of Representatives
and then goes to the Senate. So whoever controls the
House controls the committees, and then whoever is the chairman
(14:19):
or the chairwoman of the House Ways and Means Committee
will be the one that offers the opening salvo, the
base case negotiation, if you will, of tax reform. But again,
I think whoever wins the presidency will probably win the House. Now,
on the Senate, this is a much better picture for
the Republicans, much more difficult picture for the Democrats because
thirty three, roughly one third of the Senate, goes up
(14:41):
every two years one hundred senators, two from every state
they serve six year terms. This year we have thirty
four because Nebraska has a special election, so there's two
senator votes upctually going on in Nebraska right now. But
this is an extremely difficult election for the Democrats. The
reason being is of those thirty four seats, f three
of them are held by Democrats and a lot of
(15:02):
them are held in Trump states or in swing states.
So currently the Democrats control the Senate fifty one to
forty nine. There are four independents. They give Senator Joe
Manchin Senator Bernie Sanders independence that caucus with the Democrats,
and immediately they're going to go down to fifty to
fifty because Senator Joe Manchin is retiring. Now again, I'm
(15:23):
not a polster, I'm not a political expert, but you
don't need to be one to know that more likely
than not, West Virginia is going to turn to a
Republican and the former governor, Jim Justice is going to
take that seat. So now the Democrats are down to
fifty to fifty. And if you have fifty to fifty,
remember the vice president is the one that ultimately controls
fifty to fifty votes. But in order for the Democrats
(15:46):
even to get to fifty to fifty, they have to
run the gauntlet and they have to defend a seat
like Senator Sherit Brown, the chairman of Senate Banking Committee
in Ohio. Senator John Tester in Montana, Montana is a
Republican state Senator. Tester on his last two elections just
by Finn Margins, Senator Jackie Rosen in Michigan, the retiring
seat of Senator Dabbie Stabenow in Michigan. The Democrats have
(16:09):
to run the gauntlet of those seats to potentially even
just get back to fifty to fifty. So the general
thought here is is that the Republicans have a very
good shot of taking the Senate. And the reason why
that's important is because the Senate filibuster exists for legislation.
It does not exist for regulatory appointments, judges, and nominations.
(16:31):
And for those of you who aren't familiar with the philibuster,
it is two hundred and fifty years of best practice.
It's not written down in the Constitution anywhere, but essentially
it's just two hundred and fifty years of best practice
which allows one Senator to stand up and say I
blocked this legislation and sixty senators need to overturn it. Now,
there used to be a filibuster for nominations and appointments,
(16:52):
and that went away under the Obama administration. And as
a result, if the Republicans take the Senate and President
Trump wins, are appointments in the the appointments of his
cabinet and so forth will move much quicker. In the
flip scenario, if the Republicans take the Senate and Vice
President Harris wins, the Republicans could jam up a good
(17:12):
portion of the first one hundred days of her presidency
by you know, blocking a lot of her appointments.
Speaker 1 (17:18):
They have thrown some sand in the gears.
Speaker 2 (17:20):
All right, let's figure out what's going on with consumer
spending under each potential administration. You know, talk to us
a little bit about the policies on regulation, taxes, and
stuff like that.
Speaker 3 (17:33):
So it's important to remember. And this is if there's
ever a debate. If you're watching a campaign speech, it's
like it's like the Hamilton Musical when Aaron Burr says
to Hamilton, how are you going to get your debt
plan through? Hamilton responds and says, by listening to you,
aka negotiate. So any single time a candidate says I
want to do this tax, or I want to do
this policy, or I want to do that, the question
(17:55):
is how you going to do it? And there's three
ways of I would argue three ways of how things
get done in Washington. The first is legislation. You don't
need to be me to know that. Legislation is hard
to come by. The second is regulation. Regulation takes time.
You have to get those leaders in place. It has
to go through a rulemaking process. Probably usually takes you know,
usually takes the quickest ever ever seen it done is
(18:16):
about a year. More likely not it's two to three years.
And the third is executive orders eighty five percent. My
estimation of executive orders are a headline risk. You'll see
a red line on the terminal, it'll be flashing, you'll
look into it, but more likely than not, it's a
fancy way of the president picking up the phone and
saying to his staff, I want you to do something,
(18:36):
either the legislative route or the regulatory route. Now, the
other fifteen percent, though, is a little bit different. The
power of the presidency is a lot more powerful when
it comes to things like trade, tariffs, foreign relations, national security,
because Congress over the last fifty to one hundred years
has delegated a lot of that to the president. If
(18:57):
you're investing right now in US steel and you've been
watching Sifius review, you know exactly what I'm talking about.
Ciphius is most likely going to make a recommendation that
President Biden blocks the Nippon Steel US Steel and that
he can do that, and there's very little recourse that
Congress or the judges could do in response. So let's
talk about consumer facing in various in both the Harris
(19:20):
presidents and a Trump president's. Let's start with Vice President Harris. Now,
Vice President Harris wins. She has already come out and
said price gouging food inflation, if you will, is one
of her big you know, this is something that she
has talked about. So our initial assessment is the risk
of any bad things happening. And I say risk and
(19:43):
opportunity because remember for every risk there's an opportunity. But
for the risk to these grocery stores that they then
could be targeted by price caps and so forth like that,
or to food who's wholesalers or anything, it's actually quite low.
The reason being is that price gouging we'll have to
go via the legislative route. The filibuster will still exist
(20:04):
even if the Democrats have the Senate, and we don't
see the filibuster going away, and as a result, there's
going to be a block there. Okay, So if there's
a block there let's go to the executive order route. Well,
if we go to the executive order route and she
can only do things within the that she has the
authority of the executive order or the executive branch, it
(20:25):
may turn up very similar to how President Biden had
with his student debt relief reforms, where they ran into
the courts and then you know, sort of so you know,
I think that you know, again a risk or an
opportunity for the price gouging argument, it's somewhat quite low
because a states already have price gouging laws and b
(20:45):
we just don't see one actually being implemented at the
federal level. Now, she will certainly go after consumer facing
sectors for bad actors. And this is where it's important
to go back to her time as the Attorney General
of California, because as Vice president, remember she's supporting President Biden,
she's supporting the White House line. And then it's as Senator,
she was just one of one hundred. You know, Senator,
(21:07):
it's difficult to actually create a policy that you're you know,
specifically geared on because a lot of times you're negotiating
and working. But as Attorney General of California, she was
one of the attorney generals that led and received a
twenty five billion dollars settlement against the big banks for
home foreclosures. And so we think that if as president,
(21:28):
she will certainly institute a policy amongst the staffers and
the agencies like the Department of Justice and maybe even
the SEC or the Federal Trade Commission and so forth
to go after bad actors. So if you're looking at
a company, and let's just say, look, we can't say
that there are certain companies are going to be targeted
because we don't know who bad actors are and so
(21:50):
forth like that, but it's certainly something that compliance and
risk individuals that these companies should keep in mind, and
it's something that they probably keep the chief compliance officer
up at night. Probably won't make up the CEO unless
there's something that there's there, but certainly is going to
be because if you can go after the examination side
(22:10):
or the enforcement side, a lot more investigations and a
lot more so forth like that. Now when it comes
to President Trump, you know, we think that these tariffs
are certainly a real threat slash opportunity here because, like
I said before, the powers of presidency is a lot
more powerful. I would call that a phase one argument,
because that's something they will probably do in the first say,
(22:33):
six months of his presidency. Now again, if the tariffs
come out, I think he'll have an executive order, he'll
hind out, we'll hold it up, he'll have a ceremony,
but there will be language in that executive order saying
these tariffs don't take you in place until a certain dates,
say six, nine, twelve months down the line, because presidencies
always want to give themselves flexibility. But Phase two is
(22:54):
this tax reform debate. And the reason why I'm bringing
this up in the consumer sector's discussion is because one
of the questions we get often is what is the
probability for a deficit increasing policy to come out over
the next administration? And the if the Republicans take the House,
(23:17):
the Senate, and the presidency, then there is a real
risk slash opportunity for massive tax cuts coming at the
tail into twenty twenty five because the tax cuts, the
Trump era tax cuts for individuals expires at the tail
into twenty twenty five, and neither president wants to see
those individual tax cuts go up. Now, they have differences.
(23:38):
You know, if you're Kamala Harris, you want to see
them go up for four hundred thousand individuals that make
more than four hundred thousand dollars. But if you're looking
at this from a deficit inducing, grandiose, multi trillion dollar bill,
this reconciliation process, if the House is the Republicans, the Senate,
if the Republicans take the House, the Senate, and the presidency,
the probability of that there is much more. Because I
(24:01):
don't want to get too wonky. I'm happy to do
it if you like. But there's this process called reconciliation.
This is how President Obama got Obamacare through, this is
how President Trump got his tax cuts through, and this
is how President Biden got the Inflation Reduction Act through.
What reconciliation is is that it is a budgetary maneuver.
It's not actually a it's not actually a legislation, but
(24:23):
it's a budgetary maneuver that would allow the House, the
Senate to avoid the filibuster and said something to the
president desk. You can only do it by a you
can only do it once per fiscal year. And now
the Democrats have been tried in the past as part
of the inflation Reduction Act debate, they tried to raise
(24:44):
the national wage to fifteen dollars. Now, the Senate parliamentarian
came in and said that doesn't it actually break what
breaks what's called the Bird rule. Senate parliamentarian says, that
doesn't adhere to the Bird rule. You can't do it. Now. Look,
the Senate could then just fire the Senate parliamentarian and
get a new Senate parliamentarian, and it's certainly feasible they
could do that, but more likely than not they wouldn't.
(25:06):
And so you know, keep that in mind. If you
hear anybody talking about reconciliation, just remember it's got to
impact the budget. And so in a republican administration it's
mostly going to be tax cuts. In a democratic administration,
it will probably be some form of tax cuts or
at least tax extenders, combined with some potentially additional inflation
(25:27):
reduction at two point on language.
Speaker 2 (25:29):
Yeah, from where I sit, you know, as a guy
who's a student of the Austrian School economics, it's like,
you know, they're both leading us down the path of
financial ruin. To be honest, it's nice to hear that
price gouging is low risk, but the fact that you
know tariffs are still on the table. It's like, come on,
haven't haven't we experienced enough inflation over the last four years?
Speaker 3 (25:50):
Well, I mean, but also remember tariffs are popular, you know.
I say that knowing that that's a lot of consensus statement.
Because look, if I've gone to my local, I have
Harris I sit in Washington, d C. I'm in Northern Virginia.
I've got Harris Teeter, I've got Giant, I've got Whole Foods,
got Trader Joe's fresh Market. I've got a whole host
of grocery stores that I can choose from. When I
(26:11):
go to it, I see the price of chicken going up.
So food inflation is real, but when it comes to tariffs,
they are still somewhat popular. Because let's start with China.
Being tough on China is good politics no matter who
you are. It's easy, though, for a policymaker in the
House and the Senate to be seen being tough on
(26:32):
China because they are not the one that looks Jiji
opinion in the face, and they're not the one that
actually has this by letteral negotiation with the Chinese government.
That is up to the President and so you know,
if President Trump wins, I certainly think there is a
real risk slash opportunity for very broad tariffs to be
(26:53):
placed onto the Chinese the government. President Trump has said
sixty percent tariffs on all goods coming in from China,
one hundred percent tariffs on any country that moves away from.
Speaker 1 (27:02):
The dollar and buys Amazon bills are going to go
through the roof.
Speaker 3 (27:05):
Well, and you know, you know it's We've had discussions
with clients and they've said, especially non US clients, they've said,
we're not playing in China anymore. You know, let's look
at Vietnam and Thailand and see what's going on there,
because potentially they again to the opportunity side of the equation.
You know, Vietnam and Thailand could be certainly a place
for opportunities there. But let's talk about Kamala Harrison tariffs.
(27:27):
President Biden put tariffs on several industries earlier this year
to protect you know, certain industries in the rust belt
Ohio and Pennsylvania, in Michigan, and my colleague Holley from
put out a piece just yesterday talking about how we
think there's a seventy percent chance of tariffs no matter
who wins. It's just is it broad or is it targeted?
(27:50):
And so you know, the tariff argument is a tool
the presidents love because a it helps them politically, be
it also helps them with certain industries and so forth.
But see, they can also be easily reversed because the
power of the presidency is a lot more powerful there
and so you don't need to go through Congress. This
is essentially just a tool. And so again I go
(28:12):
back to my at my piece where if the if
the president, whether it being former President Donald Trump or
Vice President Harris, if the president institute tariffs, you'll see
an executive order. Chances are you will have heard this
six months before they do it. But again, in that
(28:32):
executive order, there will probably be language that allows them
opt out cards because it is a tool. It's a
negotiation tool, and you know they will certainly want not
want to go there unless they think they have a
winning hand.
Speaker 2 (28:46):
Okay, so talk to me about tariffs and how they
can impact food costs.
Speaker 3 (28:50):
So obviously, you know, if you come from the side
of the school where tariffs are attacks, you know it's
like okay, So, but the best way of doing this
is I'm gonna go back to my financial regulation days,
and there was something called the Durbin Amendment. So during
Dodd Frank in twenty eleven, there was a proposal and
(29:12):
then a final rule called the Durbin Amendment. And what
the Derbin Amendment did is it it capped the amount
that banks could charge for using debit cards. So every
time you go to a debit card and you go
to Chipotle or you go to you know, I'm gonna
call it Portillo's, my favorite place in Chicago. So if
I go to Portillos and I get an Italian beef,
and if there's anybody from Portillos listening to this, please
(29:33):
put up one in the Washington, DC area. I know,
I see you expanding down to Florida and Arizona and
so forth. You can come to DC. But if I
go to Portillo's and use my debit card, how much
the banks get is capped. Okay. Now, the argument here
was is that then the companies that the big retailers,
(29:54):
for example, when you use these debit cards, they would
pass it on to consumers. Now I can show you
studies that they pass to consumers. I can show you
studies they didn't pass it onto consumers. But more often
than not, anytime that there's a tariff, I view it
as sort of like a tax, because the tariff comes in,
and if the tariff, if I'm sitting at the company,
(30:16):
I'm gonna say, Okay, well, we've got a huge amount
of tariffs now coming in. We have to pay for this,
for the imports and so forth. It's going to take
us two to three years to move our supply chain.
How do we protect ourselves in the interim? More likely
than not price increases And might correct me if for' wrong.
Every single time my restaurant has a new menu, it
means that they've increased prices, right, So you know, I
(30:38):
think that if you have a lot of tariffs, and
then again this is my own personal opinion, there could
be a lot of menus being changed over the next uh,
you know, the next one to two years.
Speaker 2 (30:48):
Yeah, and that's put some of my restaurants in a
tough spot because traffic's been declining pretty consistently for three years, right,
and so we've got to that tipping point where people
are pushing back hard against price increases. So restaurants have
been squeezed, the consumer has been squeezed it's been a
difficult a year or so, especially, trends have definitely gotten
(31:11):
worse over last year or so.
Speaker 3 (31:13):
But I'll also say that before they do tariffs, there
will be an analysis done. And you know, I think
a lot of people just presume that candidate says something
and then they put it out there. That's not usually
how it happens in Washington. Every once in a while
it does. The President will say something and then it
just immediately happens and so forth like that. But President
(31:35):
Biden's tariffs from earlier this year, I think the working
group that was working on this was working on it
for like at least twelve months, if not longer. And so,
you know, I think politicians of both sides of the
aisle are very sensitive to price increases and they know
that this is one of the biggest issues that Americans
are facing today. And look, it's not just America. I
(31:56):
mean we've seen this in the UK, We've seen this
in Canada, we've seen this in France, and for length,
this is something that we've seen across the globe. And
so I'm going to be the optimist here and I'm
going to say that I think no matter which candidate wins,
there will be analysis done. Now the candidate may ignore
that analysis, but there will be analysis done on what
(32:16):
that ultimately does to the end consumer.
Speaker 2 (32:19):
Yeah, I appreciate that. I appreciate your optimism. Uh, I
myself have more cynical I wish we had more. We
had more politicians that understood that they're spending and the
FEDS printing of money actually contributes greatly to inflation. All right,
let's keep it moving. Making tips non tax deductible should
(32:40):
boosts low and middle income consumer spending. Will that get
through Congress?
Speaker 3 (32:45):
I don't think so. I mean, I was talking to
Andrew Silverman, who is our tax guru. So if anybody
does have a terminal and they want to like really
get into the weeds with tax, contact Andrew because he
loves tax. I mean, and so I was talking to
Andrew Silverman about this. And the thing is is that
when they do this tax reform debate next year, the
(33:08):
number one goal is do no harm. Because you go
back to George H. W. Bush read my lips, no
new taxes. He paid a political price for that, and
so raising taxes is not good policy no matter who
you are. And so you know when Kamala Harris is
approaching this tax debate. You'll hear her say, I don't
(33:31):
want to increase taxes. I want to extend the tax
cuts from the Trump era. Now I want to increase
taxes unwealthy. That's a different argument. There's a different political
aspect to that. But so going back to this idea
of no taxes on tips or President Trump just last
night proposed no taxes on overtime pay. You know, going
(33:51):
back to that, how are you going to pay for that? Now? Look,
Washingtonians can certainly say that economic growth will pay for it.
There's always and whenever you look at certain analyzes of
how they're going to pay for certain things, there's always
this line of economic growth. For any bankers that are
listening right now, you'd probably be very upset with your
(34:12):
first year associate if you did something like this, But
you know, they have this economic growth and certainly economic
growth is a way you can pay for certain things,
but it has to be more concrete than just that.
And so when these proposals come out and you'll say, look,
it's going to be X billions of dollars that it's
going to cost us for this, how are you going
to pay for it. That's where the salt deduction comes in.
(34:32):
So for folks that are living in New York and
New Jersey right now, the salt deduction, it's supposed to
come back, But the salt deduction is also an easy
way to pay for something. So how are you going
to pay for it? How does it come in? So
I think, you know, let's let's let's run the odds.
If Vice President wins. If Vice President Harris wins, the
tax reform debate next year is going to be very constrained,
(34:53):
very small, very negotiated, because she's more likely not going
to have to work with a Republican Senate. If President
Trump wins, you know he's going to have to work
with Republicans, but it'll have a little bit more leeway.
Going to the corporate tax debate, corporate tax rate right
now was twenty one percent. That's a permanent fixture. President
Trump has said I want to go down to fifteen percent.
Vice President Harris said, I want to go to twenty
(35:13):
eight percent. I doubt, in talking with Andrew, I doubt
either scenario is going to play out because I've seen
I can give you Democrats that say, yeah, maybe I'll
give you twenty two to twenty three percent, but I'm
not going to twenty eight. And I can give you
Republicans saying, man, maybe i'll give you twenty or nineteen percent,
but we're not going to fifteen just because you gotta
pay for it.
Speaker 1 (35:33):
That's great color. How will each candidate impact M and A.
Speaker 3 (35:37):
If there's anybody here that loves restaurants and big tech,
you know, this is where I'm going to go for
this because right now, I think if you if I
were to give if I were to bring big tech
CEOs in their given truth serum, they would probably say
that the Biden era regime has been very tough on
big tech and very tough on M and A, and
I agree. You know, our anti trust analyst Jenriy would
(36:01):
certainly agree with you. There's a lot of tough scrutiny
on big tech that's led by Lena Khan, the chairwoman
over the Federal Trade Commission. Now, in a Harris presidency,
that will probably continue, maybe a little bit of moderation
in certain areas, but they'll probably continue tough scrutiny on
big tech. Now when it comes to a Trump presidency,
(36:23):
this is where it gets a little bit more interesting
because you have this perception out there, I'll call it
the US Chamber of Commerce perception that Republicans equal good
for big business. And if that's the type of thinking
that comes into the White House, then M and A
activity will get a little bit easier. Notwithstanding the court argument.
I'll talk about the court argument in a minute. But
(36:43):
then you have the JD. Vance economic populism side of
the Republican Party. And what I mean by that is
Senator Vance came to the Bloomberg office in DC about
five months ago and he called Lena Khan, the chairwoman
of the FTC, one of the best things President Biden
has ever done, and even insinuated that President Trump should
(37:04):
keep her on to continue the crusade against big tech.
That is not the type of thinking that a typical
Republican big business thinking. And so if that is going
to get into the White House, then big tech could
have much different M and A may have a very
much different of antitrust may be very different. We don't
(37:25):
know which side of the thinking would get into the
White House if President Trump wins. And so you know
what we have to do right now, Let's just play
what if scenarios. I think overall, because of the way
certain courts, the courts are acting these days, I think overall,
if President Trump wins m and a activity, at least
the scrutiny of it will get a little bit easier.
(37:47):
But how much we just really don't know.
Speaker 1 (37:50):
Yeah, I'll be interesting to watch.
Speaker 2 (37:51):
In A lot of the libertarian pundits that I follow
are not happy with Vanci's commentary that you at referring.
Speaker 3 (37:59):
You know, but the economic populism side of the Republican
Party is validing out there, and you know, it's certainly
something that you need to take into a consideration because
if President Trump wins and that type of thinking gets
into his fear of influence, you know, it's certainly a
it will be an interesting time.
Speaker 2 (38:17):
Okay, And so let's wrap it up with marijuana. It's Friday,
so legalization. So is Kamala gonna you know, I'd assume
Trump would probably continue to leave it to the states.
You know, Is Kamala going to make a good push
for federal marijuana legalization?
Speaker 3 (38:35):
No, So there's really three issues here. You have full
federal legalization, which I personally don't think is going to happen.
For at least another four to five years there. And
forget the candidates at the White House, there's just enough
folks in the Senate that I don't think are on
board with this at the federal level, especially when the
states are either legalizing it or decriminalizing it. So I
don't think I don't think there's gonna be a ton
(38:56):
of political capital at the federal legalization side, which you
know is interesting because like in the District of Columbia,
we have district land where it is decriminalized and then
federal land where it is not. And so there's like
hot pockets of the District of Columbia and that's where
it'd be really interesting to see it play out. But
then you have this idea of reschedulization. Currently, marijuana is
(39:17):
a Schedule one drug. It's on there with cocaine. The
FDA has proposed moving into Schedule three. Think tiling all
with codeine. You need a doctor's prescription. Now the prescription
thing doesn't apply, but what applies here is that if
you move it too Schedule three, you get something that's
known as two to eighty tax relief. So for a
lot of these marijuana firms out there, your effective tax
(39:37):
rate goes from about forty percent to five percent. That's
a lot of cash back. And so you know, if
reschedulization happens, and I do think it will happen in
twenty twenty five, I'm giving it a sixty to seventy
percent chance of happening at the end of twenty twenty five,
no matter who wins, I do think it's going to happen.
I don't think it's going to happen in twenty twenty four.
(39:58):
And I'm just calling that out BECA because there are
a lot of marijuana investors right now who think that
this will be one of President Biden's last acts is
to complete this rule making. I don't think it's going
to happen. I may be out of consensus on that,
and the reason being is is that we still have
heard anecdotally that there are a lot of career staffers
over at the Drug Enforcement Agency the DEA, that are
(40:20):
not on board with this, and in fact, in the
proposal there was language that said, we at the DEA
are not making a determination on going to Schedule three.
We're just putting this out here for comment, and then
if you follow the administrative Procedures Act, which is the
rule that these regulators have to follow to conduct these rulemakings.
To go from language where it says we're not making
(40:40):
a determination to finalization within the quickest time frame that
I have ever seen in my history of Washington. That
means to me that the courts could eventually get involved.
And I don't think the President Biden would want to
go there now, but President Trump has said that he's
open to it, and you know, I think that, you know,
maybe at the tail end of twenty two twenty five,
(41:00):
this could happen. And then the final issue for marijuana
is to call it something called the Safe Banking Act,
and this is the bill that will allow banks to
service marijuana businesses. And the reason why I cover the
Safe Banking Act so much is because these marijuana equities
have what I call is hot sauce. You know, there's
a lot of volatility on these things. One policy statement
saying we're going to get Safe Banking Act, and then
(41:20):
these things start moving up and down fifteen to twenty percent.
It's very low dollar denomination, high probability change. Safe Banking
Act has the votes. There are enough votes, I would
estimate to get this through. The question is how does
it get through right now? You would have to spend
about thirty right now. There's not enough time for the
(41:43):
rest of the year to get this done. And I
don't think it can be attached to something as a
vehicle to get something done. So I think safe Banking
will come back next year. I think there's a decent chance.
But full disclosure, I said safe Banking was going to
get done at the end of the last congressional term
and it hasn't, and so full disclosure, I was wrong
on this one once. So but still I'm going to
(42:05):
go again and say that I think it's going to
get done next year.
Speaker 2 (42:07):
All right, great, we're going to end it there on
some good news. Thanks for doing this, Nathan, You're great man.
I learned so much. Where can listeners find your work
outside of the Bloomberg terminal?
Speaker 3 (42:19):
Well, so the best thing to do is we actually
have a call every Monday at ten am. It's open
to both Bloomberg and non Bloomberg. If you want to
join that, just shoot me an email at end ten
at Bloomberg dot net or find me on LinkedIn or
Twitter at Nathan Dan DC. But we'll be more than
happy to have you host you on that call. We'll
put you on our distribution list and then we'll get
(42:39):
you access to a lot of the information that we
provide as well.
Speaker 2 (42:43):
Yeah, it's a great, very in depth newsletter with some
humor sprinkled in.
Speaker 1 (42:48):
I highly recommend it and thanks to the audience for
tuning in.
Speaker 2 (42:51):
If you liked the episode, please share it with your
friends and colleagues. Check back soon for a discussion with
Brandon Barton
Speaker 1 (42:57):
The CEO of Bite.
Welcome to Chopping it Up.
Speaker 2 (00:23):
I'm your host, Mike Hallen, the senior restaurant and food
service analysts at Bloomberg Intelligence. Our research and that of
bi's five hundred analysts around the globe can be found
exclusively on the Bloomberg terminal. Today, Nathan Dean, BI senior
US policy analyst, is here to give us a download
on the US election. Thanks for doing this, Nathan.
Speaker 3 (00:42):
Oh, thanks for having me. Really appreciate it.
Speaker 1 (00:44):
Nathan does great work here for BI.
Speaker 2 (00:46):
They put out a very very large, deep dive report
on the election, so I figured i'd have him here
to let us know how it's going to impact consumer
spending and potentially the restaurants.
Speaker 3 (01:00):
Yeah, if anybody wants to copy that, you can always
just reach out to us. We'll get you a PDF
and we'll give you about sixty five pages that I
think you can read from probably Grand Central station I'm
guessing to maybe Westchester or Connecticut. I think if that's
the train station that goes to Connecticut.
Speaker 2 (01:15):
So I try to avoid the trains, especially New Jersey
Trains has had a lot of trouble this summer, so
I can't help you with where the trains are going.
But yeah, how about that first debate? Man, that's two
hours of my life that I'll never get back.
Speaker 3 (01:32):
So I was asked on Bloomberg Radio what my preferred
food was for the debate? What is the Dean household
going to be? And my response was I was going
to take as much Bloomberg popcorn as the pinetry as
security would allow me to. But it was a very
entertaining debate. But for those of us in the policy
side where I was looking for policy statements, a I
(01:53):
wasn't anticipating it. This is not a policy election, you know.
This is an election between two different candidates, former President
Donald Trump and Vice President Kamala Harris, that both have
very stark differences on the view of where this country
should go. And when you have that combined with the
fact that Kamala Harris only had about one hundred and
(02:15):
twenty days to put a campaign together, you don't have
in an equation where you're going to get into policy,
and getting into policy probably it'd even hurt you more
so than help you. For all the talk. I mean,
obviously I don't run campaigns, so I can't accurately preview
say that. But you know, going into the debate, we
did not anticipate that there was going to be much
(02:36):
of the way of policy. However, we got some nuggets.
President Trump talked about tariff, something very important to a
lot of the investors of the clients of Bloomberg, and
you know, just I'm guessing for people who are listening
to this podcast right now, we got some on taxes,
so tariff taxes, and we also got a little bit
of you know, Vice President Harris's views on price gouging
(02:59):
and so forth like that. But for the most part,
I don't think the debate. In fact, my post debate
note that I put on the terminal said, look, there
wasn't much. The endorsement of Taylor Swift was, you know,
certainly a big deal that could you know, that could
do stuff. But I think the race and you know,
for those of you who have a terminal, you can
look at the betting markets a WSL election go and
I was watching this during the debate, and you could
(03:21):
see the betting markets decline for President Trump an increase
for Vice President Harris. And this is both poly market
and predicted. Is on the terminal, But when I looked
at it yesterday, things are normalized a little bit. And
so in the poly market space, President Trump is leading
in the predicted space, Vice President Harris is leading. To me,
(03:43):
that is no change from prior to the debate. So
life continues.
Speaker 2 (03:47):
Okay, So basically we spoke about this before. You know,
he looked pretty miserable. He did not have a very
good performance. But so it sounds like it doesn't really matter.
I know some people have been saying a conservative pundits
have been saying it. Say, you know, do I believe
that what they're telling me that it doesn't matter? But
if you're telling me it doesn't matter, maybe it really doesn't.
Speaker 3 (04:06):
Well, but for all the argument that it doesn't matter,
let's also remember that there's going to be approximately one
hundred and fifty million Americans that are going to vote
in the selection. One hundred thousand of them spread across
seven swing states, are going to be the ones that
ultimately decide who's going to be the next president. And
if you're listening to us right now in Philadelphia, I
(04:26):
am sorry for all the advertisements that you're seeing. I
saw that the NBC affiliate had twenty eight advertisements between
five am and seven am earlier this week, and so
it's the folks at Pennsylvania, North Carolina, Georgia, Arizona, and Nevada.
You know, they're the ones that are ultimately can decide.
And what both candidates are trying to do here is
(04:47):
get people off the couch or stay on the couch.
Because this isn't a race between Vice President Harris and
Donald Trump. This is a race between Vice President Harris,
President Trump and the couch. And if you remember in
that debate, Vice President Harris said, you know, she was
talking about NATO and Ukraine and she said, they're eight
hundred thousand Polish Americans living in the state of Pennsylvania.
(05:08):
That was a way of taking a statement that President
Trump had used and trying to push some of those
eight hundred thousand Polish Americans to get off the couch.
If people stay on the couch, more likely than not,
President Trump wins.
Speaker 1 (05:20):
Yeah. It's interesting, man.
Speaker 2 (05:22):
They sounds like their neck and neck. So do you
have any opinion on who you think is going to
pull this out?
Speaker 3 (05:26):
Look, I can show you pulling. You know, I can
show you polling that President Trump is going to win.
I'm going to show you pulling. I can show you
the polling the Vice President Harris will Win. In fact,
I had to. I've been flying around the US and
one of the things that I've been saying to clients
when I go to them is like, I apologize that
the DC expert flies all the way out here just
(05:47):
to tell you that he doesn't know who's going to
win the election. But it is going to be that close.
I mean, we're talking about if there is a snowstorm
in the greater Philadelphia area or in the greater Pittsburgh
area the day of election, of election day, that potentially
swing things left and right. President Trump has actually, you know,
embraced the crypto community fairly aggressively to try and make
(06:10):
the United States the crypto capital of the world because
there are potentially, let's just call it, three thousand individuals
in the United States in those seven swing states that
crypto is their only issue that they're voting on, and
as a result, you need every single vote. So it's
going to be that close, and you know, I can
(06:30):
still see scenarios for both.
Speaker 2 (06:32):
Yeah, and I'd assume the last debate is going to
be really important.
Speaker 3 (06:37):
If they hold it.
Speaker 1 (06:39):
If they hold it, all right, yeah, so.
Speaker 3 (06:41):
Right now, the next debate is on October first, that
is between vice president of the vice presidential candidates, so
Governor Tim Wallas and Minnesota and Senator J. D. E.
Vans of Ohio. Vice president debates usually are good popcorn watching,
but they don't ultimate. I mean, how many folks can
you think that vote primarily because of the vice president.
Certainly for the folks in Ohio and Minnesota it's a
(07:02):
little bit more personal to them. For the rest of
the folks in the United States, the vice president debate
usually doesn't matter all that much. But then we have
the third debate, which may or may not happen, as
if we're recording this, you know, September thirteenth, you know,
President Trump said there's not going to be a third debate.
Immediately after the second debate, Vice President Harris's team came
out and said, we want a third let's do this,
(07:23):
Let's do so forth, and President Trump said, no, I'm good,
untruth social he said something and I'm paraphrasing here. You know,
the winner, the person who's calling for the rematch isn't
the winner. I won the debate, and so forth. Therefore,
there's no need to have a third debate. What I
will say is is that there potentially could be a
third debate. I don't want to say it's not going
to happen because it is September thirteenth. We don't know
(07:47):
what the race is going to look like on October fifteenth,
and if Kamala Harris begins to move, you know, maybe
some additional voter enthusiasm in Pennsylvania, for example, President Trump
may want to have that debate again because you know,
he could be better prepared, and it could be a
different story because President Trump. I mean, look, anybody watched
the first debate between President Trump and President Biden. Debates matter,
(08:11):
and so you know, debates have real consequences, and so
let's give both candidates time. I think, you know, we'll
see how it plays out. But around that October fifteenth
October twentieth timeline, you certainly could have a third debate.
But you know, right now, it seems like the debate's off.
But maybe in a week or two they'll come back
to it.
Speaker 2 (08:31):
Okay, interesting and remind me last four years ago the
first debate, how did that pan out?
Speaker 3 (08:36):
Well? You know which which one I mean it was?
There was there were multiple debates, but I think I
was referring to the first debate. This s this cycle.
So when President Trump and President Biden had their debate,
President Biden came across, you know, you know, he came
across in a way that essentially made a lot of
(08:57):
people question his ability to be present. And within a
few weeks he was announcing that he's not going to
run anymore. And so, you know, some debates have matter.
I mean, look, I remember watching a debate, one of
the debates between President Obama and current Utah Senator Mitt Romney.
And Senator Romney I think handily won that debate, but
(09:19):
as we all know, President Obama won the election. And so,
you know, debates have real consequences. But so do policy statements.
So does the economy, So does the FED either cutting
or not cutting interest rates, and so there's all these
different factors. And when you're talking about one hundred thousand
voters over some swing states, you know, it's that how
(09:43):
how I mean the amount of regression analyzes you have
to run to try and figure out how those factors
are going to impact those one hundred thousand votes is
extremely difficult. And that's why polling in particular is very
difficult to get.
Speaker 1 (09:58):
Right, gotcha.
Speaker 2 (10:00):
Yeah, And you know, I was curious because I thought
I saw something on Twitter. Some pundit was saying how
in the last cycle four years ago, Trump performed poorly
on the first debate, but then had a nice rebound
in the second one.
Speaker 1 (10:13):
That was kind of what I oh.
Speaker 3 (10:14):
Yeah, yeah, okay, yeah, I mean, look, you know, President
Trump had a great first debate against President Biden. The
second debate not so well. You know, if they have
a third debate, you know, there are real risk and
opportunities for both candidates. If it's a replay of the
second debate, Kamala Harris certainly would do well if President
Trump shows up and you know, begins to put the
(10:37):
onus back on her. You know, essentially, the way it
works is that whoever we're talking about at the end
of the debate is the one that loses. And if
we're talking about President Trump and President Trump's policies and
statements and things like cats and dogs, you know, that
means the chances are you lost the debate. If we're
talking about things like Kamala Harris's policies or maybe the
(10:59):
lack there of of policies, then she's lost the debate.
So you know, it's really just I think a challenge,
and I think that both candidates will go back and
they'll conduct their analysis and so forth, and I think
that if they decide, if they both decide that a
third debate is you know, advantageous to them, we'll see
(11:20):
one around that October fifteenth, October twentieth time frame.
Speaker 2 (11:23):
Okay, Yeah, it'll be interesting to see how it unfalls, right,
because I thought the Democrats did a good job of
setting the bar very low for Kamala, right, and she
clearly outperformed those expectations. But you're always curious to see
how that would change if she's expected to win the
third debate or you know, actually outline some policies.
Speaker 1 (11:44):
So it's going to be interesting to watch.
Speaker 3 (11:45):
Well, just remember that's politics, one on one. You never
set the debate or the bar high, you know. So,
I mean that's they could you know, a candidate could
be up by thirty points and they still are going
to go in there saying that they're the underdog. They're
going to you know, they're going to try and do
their best and so forth, but they don't have great
expectations because then they overperform.
Speaker 2 (12:05):
If they do all right, so I you know, almost
as important. How do you expect the Senate in the
House to pan out?
Speaker 3 (12:12):
Yeah? So this is this is where Poland gets a
little bit more difficult because if everybody thinks of the
text messages or you're getting on your phone at the moment,
it's always how are you going to vote? For the
presidential race. Nobody's texting you to say, how are you
going to vote in the third district of Colorado. I
mean maybe the folks that live in the third District
of Colorado are getting that text, but I'm certainly not
(12:32):
getting that text about the House and Senate. So it's
a little bit more difficult. So when it comes to
the House, I rely on our friends over at Bloomberg
Government and they rely on the Cook Political Report and
so forth like that. And the Cook Political Report is
showing that there's about forty four seats that are either
leaning or toss up. Now, if you're listening and you're
(12:53):
not in the United States, just remember four hundred and
thirty five members of the House Representatives. Every single one
of them is up for reelection this sight. They serve
two year terms. Currently, the Republicans have the House two
hundred and twenty to two hundred and eleven. You need
two hundred and eighteen for majority, So the Republicans can
only afford to lose three. And this is why Speaker
Mike Johnson has struggled in a lot of times, and
(13:14):
current you know, the current spending bill is a perfect
example of that of why the Republicans have struggled to
get the certain bills across the line. Now when it
comes to the House with you know, because I said
forty four are leaning or toss ups, that means eighty
eight percent of the House are going to go to
bed on election night knowing that they've won their race. Well,
what happens for the other twelve, Well a couple things
(13:35):
to note. One, it's not the swing states that matter.
It's more so swing districts in states like New York
and California that matter. And it's going to be certainly
interesting that's going to be tying out to turnout. So
if Vice President Harris has great turnout, chances are that
could then go down into the House races as well.
Taking my Bloomberg hat off and putting my own personal
(13:57):
hat on, my view on the House is whoever wins
the presidency will ultimately win the House. And the reason
why that's important is because twenty twenty five is going
to be a year about tax debate and tax reform,
and generally tax policy starts in the House of Representatives
and then goes to the Senate. So whoever controls the
House controls the committees, and then whoever is the chairman
(14:19):
or the chairwoman of the House Ways and Means Committee
will be the one that offers the opening salvo, the
base case negotiation, if you will, of tax reform. But again,
I think whoever wins the presidency will probably win the House. Now,
on the Senate, this is a much better picture for
the Republicans, much more difficult picture for the Democrats because
thirty three, roughly one third of the Senate, goes up
(14:41):
every two years one hundred senators, two from every state
they serve six year terms. This year we have thirty
four because Nebraska has a special election, so there's two
senator votes upctually going on in Nebraska right now. But
this is an extremely difficult election for the Democrats. The
reason being is of those thirty four seats, f three
of them are held by Democrats and a lot of
(15:02):
them are held in Trump states or in swing states.
So currently the Democrats control the Senate fifty one to
forty nine. There are four independents. They give Senator Joe
Manchin Senator Bernie Sanders independence that caucus with the Democrats,
and immediately they're going to go down to fifty to
fifty because Senator Joe Manchin is retiring. Now again, I'm
(15:23):
not a polster, I'm not a political expert, but you
don't need to be one to know that more likely
than not, West Virginia is going to turn to a
Republican and the former governor, Jim Justice is going to
take that seat. So now the Democrats are down to
fifty to fifty. And if you have fifty to fifty,
remember the vice president is the one that ultimately controls
fifty to fifty votes. But in order for the Democrats
(15:46):
even to get to fifty to fifty, they have to
run the gauntlet and they have to defend a seat
like Senator Sherit Brown, the chairman of Senate Banking Committee
in Ohio. Senator John Tester in Montana, Montana is a
Republican state Senator. Tester on his last two elections just
by Finn Margins, Senator Jackie Rosen in Michigan, the retiring
seat of Senator Dabbie Stabenow in Michigan. The Democrats have
(16:09):
to run the gauntlet of those seats to potentially even
just get back to fifty to fifty. So the general
thought here is is that the Republicans have a very
good shot of taking the Senate. And the reason why
that's important is because the Senate filibuster exists for legislation.
It does not exist for regulatory appointments, judges, and nominations.
(16:31):
And for those of you who aren't familiar with the philibuster,
it is two hundred and fifty years of best practice.
It's not written down in the Constitution anywhere, but essentially
it's just two hundred and fifty years of best practice
which allows one Senator to stand up and say I
blocked this legislation and sixty senators need to overturn it. Now,
there used to be a filibuster for nominations and appointments,
(16:52):
and that went away under the Obama administration. And as
a result, if the Republicans take the Senate and President
Trump wins, are appointments in the the appointments of his
cabinet and so forth will move much quicker. In the
flip scenario, if the Republicans take the Senate and Vice
President Harris wins, the Republicans could jam up a good
(17:12):
portion of the first one hundred days of her presidency
by you know, blocking a lot of her appointments.
Speaker 1 (17:18):
They have thrown some sand in the gears.
Speaker 2 (17:20):
All right, let's figure out what's going on with consumer
spending under each potential administration. You know, talk to us
a little bit about the policies on regulation, taxes, and
stuff like that.
Speaker 3 (17:33):
So it's important to remember. And this is if there's
ever a debate. If you're watching a campaign speech, it's
like it's like the Hamilton Musical when Aaron Burr says
to Hamilton, how are you going to get your debt
plan through? Hamilton responds and says, by listening to you,
aka negotiate. So any single time a candidate says I
want to do this tax, or I want to do
this policy, or I want to do that, the question
(17:55):
is how you going to do it? And there's three
ways of I would argue three ways of how things
get done in Washington. The first is legislation. You don't
need to be me to know that. Legislation is hard
to come by. The second is regulation. Regulation takes time.
You have to get those leaders in place. It has
to go through a rulemaking process. Probably usually takes you know,
usually takes the quickest ever ever seen it done is
(18:16):
about a year. More likely not it's two to three years.
And the third is executive orders eighty five percent. My
estimation of executive orders are a headline risk. You'll see
a red line on the terminal, it'll be flashing, you'll
look into it, but more likely than not, it's a
fancy way of the president picking up the phone and
saying to his staff, I want you to do something,
(18:36):
either the legislative route or the regulatory route. Now, the
other fifteen percent, though, is a little bit different. The
power of the presidency is a lot more powerful when
it comes to things like trade, tariffs, foreign relations, national security,
because Congress over the last fifty to one hundred years
has delegated a lot of that to the president. If
(18:57):
you're investing right now in US steel and you've been
watching Sifius review, you know exactly what I'm talking about.
Ciphius is most likely going to make a recommendation that
President Biden blocks the Nippon Steel US Steel and that
he can do that, and there's very little recourse that
Congress or the judges could do in response. So let's
talk about consumer facing in various in both the Harris
(19:20):
presidents and a Trump president's. Let's start with Vice President Harris. Now,
Vice President Harris wins. She has already come out and
said price gouging food inflation, if you will, is one
of her big you know, this is something that she
has talked about. So our initial assessment is the risk
of any bad things happening. And I say risk and
(19:43):
opportunity because remember for every risk there's an opportunity. But
for the risk to these grocery stores that they then
could be targeted by price caps and so forth like that,
or to food who's wholesalers or anything, it's actually quite low.
The reason being is that price gouging we'll have to
go via the legislative route. The filibuster will still exist
(20:04):
even if the Democrats have the Senate, and we don't
see the filibuster going away, and as a result, there's
going to be a block there. Okay, So if there's
a block there let's go to the executive order route. Well,
if we go to the executive order route and she
can only do things within the that she has the
authority of the executive order or the executive branch, it
(20:25):
may turn up very similar to how President Biden had
with his student debt relief reforms, where they ran into
the courts and then you know, sort of so you know,
I think that you know, again a risk or an
opportunity for the price gouging argument, it's somewhat quite low
because a states already have price gouging laws and b
(20:45):
we just don't see one actually being implemented at the
federal level. Now, she will certainly go after consumer facing
sectors for bad actors. And this is where it's important
to go back to her time as the Attorney General
of California, because as Vice president, remember she's supporting President Biden,
she's supporting the White House line. And then it's as Senator,
she was just one of one hundred. You know, Senator,
(21:07):
it's difficult to actually create a policy that you're you know,
specifically geared on because a lot of times you're negotiating
and working. But as Attorney General of California, she was
one of the attorney generals that led and received a
twenty five billion dollars settlement against the big banks for
home foreclosures. And so we think that if as president,
(21:28):
she will certainly institute a policy amongst the staffers and
the agencies like the Department of Justice and maybe even
the SEC or the Federal Trade Commission and so forth
to go after bad actors. So if you're looking at
a company, and let's just say, look, we can't say
that there are certain companies are going to be targeted
because we don't know who bad actors are and so
(21:50):
forth like that, but it's certainly something that compliance and
risk individuals that these companies should keep in mind, and
it's something that they probably keep the chief compliance officer
up at night. Probably won't make up the CEO unless
there's something that there's there, but certainly is going to
be because if you can go after the examination side
(22:10):
or the enforcement side, a lot more investigations and a
lot more so forth like that. Now when it comes
to President Trump, you know, we think that these tariffs
are certainly a real threat slash opportunity here because, like
I said before, the powers of presidency is a lot
more powerful. I would call that a phase one argument,
because that's something they will probably do in the first say,
(22:33):
six months of his presidency. Now again, if the tariffs
come out, I think he'll have an executive order, he'll
hind out, we'll hold it up, he'll have a ceremony,
but there will be language in that executive order saying
these tariffs don't take you in place until a certain dates,
say six, nine, twelve months down the line, because presidencies
always want to give themselves flexibility. But Phase two is
(22:54):
this tax reform debate. And the reason why I'm bringing
this up in the consumer sector's discussion is because one
of the questions we get often is what is the
probability for a deficit increasing policy to come out over
the next administration? And the if the Republicans take the House,
(23:17):
the Senate, and the presidency, then there is a real
risk slash opportunity for massive tax cuts coming at the
tail into twenty twenty five because the tax cuts, the
Trump era tax cuts for individuals expires at the tail
into twenty twenty five, and neither president wants to see
those individual tax cuts go up. Now, they have differences.
(23:38):
You know, if you're Kamala Harris, you want to see
them go up for four hundred thousand individuals that make
more than four hundred thousand dollars. But if you're looking
at this from a deficit inducing, grandiose, multi trillion dollar bill,
this reconciliation process, if the House is the Republicans, the Senate,
if the Republicans take the House, the Senate, and the presidency,
the probability of that there is much more. Because I
(24:01):
don't want to get too wonky. I'm happy to do
it if you like. But there's this process called reconciliation.
This is how President Obama got Obamacare through, this is
how President Trump got his tax cuts through, and this
is how President Biden got the Inflation Reduction Act through.
What reconciliation is is that it is a budgetary maneuver.
It's not actually a it's not actually a legislation, but
(24:23):
it's a budgetary maneuver that would allow the House, the
Senate to avoid the filibuster and said something to the
president desk. You can only do it by a you
can only do it once per fiscal year. And now
the Democrats have been tried in the past as part
of the inflation Reduction Act debate, they tried to raise
(24:44):
the national wage to fifteen dollars. Now, the Senate parliamentarian
came in and said that doesn't it actually break what
breaks what's called the Bird rule. Senate parliamentarian says, that
doesn't adhere to the Bird rule. You can't do it. Now. Look,
the Senate could then just fire the Senate parliamentarian and
get a new Senate parliamentarian, and it's certainly feasible they
could do that, but more likely than not they wouldn't.
(25:06):
And so you know, keep that in mind. If you
hear anybody talking about reconciliation, just remember it's got to
impact the budget. And so in a republican administration it's
mostly going to be tax cuts. In a democratic administration,
it will probably be some form of tax cuts or
at least tax extenders, combined with some potentially additional inflation
(25:27):
reduction at two point on language.
Speaker 2 (25:29):
Yeah, from where I sit, you know, as a guy
who's a student of the Austrian School economics, it's like,
you know, they're both leading us down the path of
financial ruin. To be honest, it's nice to hear that
price gouging is low risk, but the fact that you
know tariffs are still on the table. It's like, come on,
haven't haven't we experienced enough inflation over the last four years?
Speaker 3 (25:50):
Well, I mean, but also remember tariffs are popular, you know.
I say that knowing that that's a lot of consensus statement.
Because look, if I've gone to my local, I have
Harris I sit in Washington, d C. I'm in Northern Virginia.
I've got Harris Teeter, I've got Giant, I've got Whole Foods,
got Trader Joe's fresh Market. I've got a whole host
of grocery stores that I can choose from. When I
(26:11):
go to it, I see the price of chicken going up.
So food inflation is real, but when it comes to tariffs,
they are still somewhat popular. Because let's start with China.
Being tough on China is good politics no matter who
you are. It's easy, though, for a policymaker in the
House and the Senate to be seen being tough on
(26:32):
China because they are not the one that looks Jiji
opinion in the face, and they're not the one that
actually has this by letteral negotiation with the Chinese government.
That is up to the President and so you know,
if President Trump wins, I certainly think there is a
real risk slash opportunity for very broad tariffs to be
(26:53):
placed onto the Chinese the government. President Trump has said
sixty percent tariffs on all goods coming in from China,
one hundred percent tariffs on any country that moves away from.
Speaker 1 (27:02):
The dollar and buys Amazon bills are going to go
through the roof.
Speaker 3 (27:05):
Well, and you know, you know it's We've had discussions
with clients and they've said, especially non US clients, they've said,
we're not playing in China anymore. You know, let's look
at Vietnam and Thailand and see what's going on there,
because potentially they again to the opportunity side of the equation.
You know, Vietnam and Thailand could be certainly a place
for opportunities there. But let's talk about Kamala Harrison tariffs.
(27:27):
President Biden put tariffs on several industries earlier this year
to protect you know, certain industries in the rust belt
Ohio and Pennsylvania, in Michigan, and my colleague Holley from
put out a piece just yesterday talking about how we
think there's a seventy percent chance of tariffs no matter
who wins. It's just is it broad or is it targeted?
(27:50):
And so you know, the tariff argument is a tool
the presidents love because a it helps them politically, be
it also helps them with certain industries and so forth.
But see, they can also be easily reversed because the
power of the presidency is a lot more powerful there
and so you don't need to go through Congress. This
is essentially just a tool. And so again I go
(28:12):
back to my at my piece where if the if
the president, whether it being former President Donald Trump or
Vice President Harris, if the president institute tariffs, you'll see
an executive order. Chances are you will have heard this
six months before they do it. But again, in that
(28:32):
executive order, there will probably be language that allows them
opt out cards because it is a tool. It's a
negotiation tool, and you know they will certainly want not
want to go there unless they think they have a
winning hand.
Speaker 2 (28:46):
Okay, so talk to me about tariffs and how they
can impact food costs.
Speaker 3 (28:50):
So obviously, you know, if you come from the side
of the school where tariffs are attacks, you know it's
like okay, So, but the best way of doing this
is I'm gonna go back to my financial regulation days,
and there was something called the Durbin Amendment. So during
Dodd Frank in twenty eleven, there was a proposal and
(29:12):
then a final rule called the Durbin Amendment. And what
the Derbin Amendment did is it it capped the amount
that banks could charge for using debit cards. So every
time you go to a debit card and you go
to Chipotle or you go to you know, I'm gonna
call it Portillo's, my favorite place in Chicago. So if
I go to Portillos and I get an Italian beef,
and if there's anybody from Portillos listening to this, please
(29:33):
put up one in the Washington, DC area. I know,
I see you expanding down to Florida and Arizona and
so forth. You can come to DC. But if I
go to Portillo's and use my debit card, how much
the banks get is capped. Okay. Now, the argument here
was is that then the companies that the big retailers,
(29:54):
for example, when you use these debit cards, they would
pass it on to consumers. Now I can show you
studies that they pass to consumers. I can show you
studies they didn't pass it onto consumers. But more often
than not, anytime that there's a tariff, I view it
as sort of like a tax, because the tariff comes in,
and if the tariff, if I'm sitting at the company,
(30:16):
I'm gonna say, Okay, well, we've got a huge amount
of tariffs now coming in. We have to pay for this,
for the imports and so forth. It's going to take
us two to three years to move our supply chain.
How do we protect ourselves in the interim? More likely
than not price increases And might correct me if for' wrong.
Every single time my restaurant has a new menu, it
means that they've increased prices, right, So you know, I
(30:38):
think that if you have a lot of tariffs, and
then again this is my own personal opinion, there could
be a lot of menus being changed over the next uh,
you know, the next one to two years.
Speaker 2 (30:48):
Yeah, and that's put some of my restaurants in a
tough spot because traffic's been declining pretty consistently for three years, right,
and so we've got to that tipping point where people
are pushing back hard against price increases. So restaurants have
been squeezed, the consumer has been squeezed it's been a
difficult a year or so, especially, trends have definitely gotten
(31:11):
worse over last year or so.
Speaker 3 (31:13):
But I'll also say that before they do tariffs, there
will be an analysis done. And you know, I think
a lot of people just presume that candidate says something
and then they put it out there. That's not usually
how it happens in Washington. Every once in a while
it does. The President will say something and then it
just immediately happens and so forth like that. But President
(31:35):
Biden's tariffs from earlier this year, I think the working
group that was working on this was working on it
for like at least twelve months, if not longer. And so,
you know, I think politicians of both sides of the
aisle are very sensitive to price increases and they know
that this is one of the biggest issues that Americans
are facing today. And look, it's not just America. I
(31:56):
mean we've seen this in the UK, We've seen this
in Canada, we've seen this in France, and for length,
this is something that we've seen across the globe. And
so I'm going to be the optimist here and I'm
going to say that I think no matter which candidate wins,
there will be analysis done. Now the candidate may ignore
that analysis, but there will be analysis done on what
(32:16):
that ultimately does to the end consumer.
Speaker 2 (32:19):
Yeah, I appreciate that. I appreciate your optimism. Uh, I
myself have more cynical I wish we had more. We
had more politicians that understood that they're spending and the
FEDS printing of money actually contributes greatly to inflation. All right,
let's keep it moving. Making tips non tax deductible should
(32:40):
boosts low and middle income consumer spending. Will that get
through Congress?
Speaker 3 (32:45):
I don't think so. I mean, I was talking to
Andrew Silverman, who is our tax guru. So if anybody
does have a terminal and they want to like really
get into the weeds with tax, contact Andrew because he
loves tax. I mean, and so I was talking to
Andrew Silverman about this. And the thing is is that
when they do this tax reform debate next year, the
(33:08):
number one goal is do no harm. Because you go
back to George H. W. Bush read my lips, no
new taxes. He paid a political price for that, and
so raising taxes is not good policy no matter who
you are. And so you know when Kamala Harris is
approaching this tax debate. You'll hear her say, I don't
(33:31):
want to increase taxes. I want to extend the tax
cuts from the Trump era. Now I want to increase
taxes unwealthy. That's a different argument. There's a different political
aspect to that. But so going back to this idea
of no taxes on tips or President Trump just last
night proposed no taxes on overtime pay. You know, going
(33:51):
back to that, how are you going to pay for that? Now? Look,
Washingtonians can certainly say that economic growth will pay for it.
There's always and whenever you look at certain analyzes of
how they're going to pay for certain things, there's always
this line of economic growth. For any bankers that are
listening right now, you'd probably be very upset with your
(34:12):
first year associate if you did something like this, But
you know, they have this economic growth and certainly economic
growth is a way you can pay for certain things,
but it has to be more concrete than just that.
And so when these proposals come out and you'll say, look,
it's going to be X billions of dollars that it's
going to cost us for this, how are you going
to pay for it. That's where the salt deduction comes in.
(34:32):
So for folks that are living in New York and
New Jersey right now, the salt deduction, it's supposed to
come back, But the salt deduction is also an easy
way to pay for something. So how are you going
to pay for it? How does it come in? So
I think, you know, let's let's let's run the odds.
If Vice President wins. If Vice President Harris wins, the
tax reform debate next year is going to be very constrained,
(34:53):
very small, very negotiated, because she's more likely not going
to have to work with a Republican Senate. If President
Trump wins, you know he's going to have to work
with Republicans, but it'll have a little bit more leeway.
Going to the corporate tax debate, corporate tax rate right
now was twenty one percent. That's a permanent fixture. President
Trump has said I want to go down to fifteen percent.
Vice President Harris said, I want to go to twenty
(35:13):
eight percent. I doubt, in talking with Andrew, I doubt
either scenario is going to play out because I've seen
I can give you Democrats that say, yeah, maybe I'll
give you twenty two to twenty three percent, but I'm
not going to twenty eight. And I can give you
Republicans saying, man, maybe i'll give you twenty or nineteen percent,
but we're not going to fifteen just because you gotta
pay for it.
Speaker 1 (35:33):
That's great color. How will each candidate impact M and A.
Speaker 3 (35:37):
If there's anybody here that loves restaurants and big tech,
you know, this is where I'm going to go for
this because right now, I think if you if I
were to give if I were to bring big tech
CEOs in their given truth serum, they would probably say
that the Biden era regime has been very tough on
big tech and very tough on M and A, and
I agree. You know, our anti trust analyst Jenriy would
(36:01):
certainly agree with you. There's a lot of tough scrutiny
on big tech that's led by Lena Khan, the chairwoman
over the Federal Trade Commission. Now, in a Harris presidency,
that will probably continue, maybe a little bit of moderation
in certain areas, but they'll probably continue tough scrutiny on
big tech. Now when it comes to a Trump presidency,
(36:23):
this is where it gets a little bit more interesting
because you have this perception out there, I'll call it
the US Chamber of Commerce perception that Republicans equal good
for big business. And if that's the type of thinking
that comes into the White House, then M and A
activity will get a little bit easier. Notwithstanding the court argument.
I'll talk about the court argument in a minute. But
(36:43):
then you have the JD. Vance economic populism side of
the Republican Party. And what I mean by that is
Senator Vance came to the Bloomberg office in DC about
five months ago and he called Lena Khan, the chairwoman
of the FTC, one of the best things President Biden
has ever done, and even insinuated that President Trump should
(37:04):
keep her on to continue the crusade against big tech.
That is not the type of thinking that a typical
Republican big business thinking. And so if that is going
to get into the White House, then big tech could
have much different M and A may have a very
much different of antitrust may be very different. We don't
(37:25):
know which side of the thinking would get into the
White House if President Trump wins. And so you know
what we have to do right now, Let's just play
what if scenarios. I think overall, because of the way
certain courts, the courts are acting these days, I think overall,
if President Trump wins m and a activity, at least
the scrutiny of it will get a little bit easier.
(37:47):
But how much we just really don't know.
Speaker 1 (37:50):
Yeah, I'll be interesting to watch.
Speaker 2 (37:51):
In A lot of the libertarian pundits that I follow
are not happy with Vanci's commentary that you at referring.
Speaker 3 (37:59):
You know, but the economic populism side of the Republican
Party is validing out there, and you know, it's certainly
something that you need to take into a consideration because
if President Trump wins and that type of thinking gets
into his fear of influence, you know, it's certainly a
it will be an interesting time.
Speaker 2 (38:17):
Okay, And so let's wrap it up with marijuana. It's Friday,
so legalization. So is Kamala gonna you know, I'd assume
Trump would probably continue to leave it to the states.
You know, Is Kamala going to make a good push
for federal marijuana legalization?
Speaker 3 (38:35):
No, So there's really three issues here. You have full
federal legalization, which I personally don't think is going to happen.
For at least another four to five years there. And
forget the candidates at the White House, there's just enough
folks in the Senate that I don't think are on
board with this at the federal level, especially when the
states are either legalizing it or decriminalizing it. So I
don't think I don't think there's gonna be a ton
(38:56):
of political capital at the federal legalization side, which you
know is interesting because like in the District of Columbia,
we have district land where it is decriminalized and then
federal land where it is not. And so there's like
hot pockets of the District of Columbia and that's where
it'd be really interesting to see it play out. But
then you have this idea of reschedulization. Currently, marijuana is
(39:17):
a Schedule one drug. It's on there with cocaine. The
FDA has proposed moving into Schedule three. Think tiling all
with codeine. You need a doctor's prescription. Now the prescription
thing doesn't apply, but what applies here is that if
you move it too Schedule three, you get something that's
known as two to eighty tax relief. So for a
lot of these marijuana firms out there, your effective tax
(39:37):
rate goes from about forty percent to five percent. That's
a lot of cash back. And so you know, if
reschedulization happens, and I do think it will happen in
twenty twenty five, I'm giving it a sixty to seventy
percent chance of happening at the end of twenty twenty five,
no matter who wins, I do think it's going to happen.
I don't think it's going to happen in twenty twenty four.
(39:58):
And I'm just calling that out BECA because there are
a lot of marijuana investors right now who think that
this will be one of President Biden's last acts is
to complete this rule making. I don't think it's going
to happen. I may be out of consensus on that,
and the reason being is is that we still have
heard anecdotally that there are a lot of career staffers
over at the Drug Enforcement Agency the DEA, that are
(40:20):
not on board with this, and in fact, in the
proposal there was language that said, we at the DEA
are not making a determination on going to Schedule three.
We're just putting this out here for comment, and then
if you follow the administrative Procedures Act, which is the
rule that these regulators have to follow to conduct these rulemakings.
To go from language where it says we're not making
(40:40):
a determination to finalization within the quickest time frame that
I have ever seen in my history of Washington. That
means to me that the courts could eventually get involved.
And I don't think the President Biden would want to
go there now, but President Trump has said that he's
open to it, and you know, I think that, you know,
maybe at the tail end of twenty two twenty five,
(41:00):
this could happen. And then the final issue for marijuana
is to call it something called the Safe Banking Act,
and this is the bill that will allow banks to
service marijuana businesses. And the reason why I cover the
Safe Banking Act so much is because these marijuana equities
have what I call is hot sauce. You know, there's
a lot of volatility on these things. One policy statement
saying we're going to get Safe Banking Act, and then
(41:20):
these things start moving up and down fifteen to twenty percent.
It's very low dollar denomination, high probability change. Safe Banking
Act has the votes. There are enough votes, I would
estimate to get this through. The question is how does
it get through right now? You would have to spend
about thirty right now. There's not enough time for the
(41:43):
rest of the year to get this done. And I
don't think it can be attached to something as a
vehicle to get something done. So I think safe Banking
will come back next year. I think there's a decent chance.
But full disclosure, I said safe Banking was going to
get done at the end of the last congressional term
and it hasn't, and so full disclosure, I was wrong
on this one once. So but still I'm going to
(42:05):
go again and say that I think it's going to
get done next year.
Speaker 2 (42:07):
All right, great, we're going to end it there on
some good news. Thanks for doing this, Nathan, You're great man.
I learned so much. Where can listeners find your work
outside of the Bloomberg terminal?
Speaker 3 (42:19):
Well, so the best thing to do is we actually
have a call every Monday at ten am. It's open
to both Bloomberg and non Bloomberg. If you want to
join that, just shoot me an email at end ten
at Bloomberg dot net or find me on LinkedIn or
Twitter at Nathan Dan DC. But we'll be more than
happy to have you host you on that call. We'll
put you on our distribution list and then we'll get
(42:39):
you access to a lot of the information that we
provide as well.
Speaker 2 (42:43):
Yeah, it's a great, very in depth newsletter with some
humor sprinkled in.
Speaker 1 (42:48):
I highly recommend it and thanks to the audience for
tuning in.
Speaker 2 (42:51):
If you liked the episode, please share it with your
friends and colleagues. Check back soon for a discussion with
Brandon Barton
Speaker 1 (42:57):
The CEO of Bite.
Host
Michael Halen
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