As we wrap up the year and celebrate the festive season, we wanted to share some of our favorite moments from one of your favorite Speak Up interviews from 2024: David Rosenberg with Anthony Scaramucci. Enjoy!
All the best for a happy, healthy, and prosperous New Year!
Original interview aired Nov 15, 2024: https://youtu.be/bnDktUwoNXA
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Andrew Brill 0:00
Happy Holidays from all of us here at wealthion. To all of you, I’m one of your hosts here at wealthion. Andrew brill, we took a look back at this year, and hope you enjoy these favorite guest moments from one of our best interviews of 2024
Anthony Scaramucci 0:18
but let me ask you about the market, though, the market’s saying, tilt up, bullish, bullish, bullish. That’s that. When I hit the slot machine on the morning of November the sixth, that’s what I got. I got the rocket ship emoji. Is the market Correct? Well,
David Rosenberg 0:36
I would say that whatever the market has embedded in its valuation, whatever it’s pricing in, is probably not going to come to fruition. But look, I was saying that before the election, I mean before the election, you had like a 40 basis point equity risk premium, and now we’re down to like, 10 basis points. So we’ve gone from an egregious equity market price bubble to something that is more like flying Over the Cuckoo’s Nest. So firstly, congratulations on your portfolio. So your heart was telling you one thing and your wallet was telling you the other thing. So I would say that you were obviously perfectly hedged. But the question is, you know, what is the market really pricing in here? And there’s no doubt that there’s a lot of things that Donald Trump can do on his own through executive order and more deregulation, clearly positive. You could point to the financials were the one sector that was really ripping from the outset. But you know, if the market is pricing in massive tax cuts. And of course, we also have the visceral reaction of the bond market to, you know, visions of an $8 trillion incremental debt balloon over the next four years. I think both of those have question marks in front of them, and I think that what nobody’s talking about is the wide divide between what happened top ballot and what happened down ballot. And I’m not talking about the fact that the Senate flipped moderately towards the Republicans, but as you and I are sitting here talking right now, they’re still counting the votes for the house, and the chances are that the Republicans will reclaim their majority in the House, but we’re not going to know for sure earliest until probably the same time next week, and the One thing that we know is that when Trump won in November 2016 and even though he didn’t win the popular vote like he did this time, the Republicans absolutely smoked the Democrats in the House of representatives, where the GOP had a 47 seat majority this time around, no matter what, if they take control once again of the house, it’s going to be razor thin. So the question is, how do you explain that? How do you explain a president that beat his rival by three percentage points in the national poll? But yet, there was not a similar landslide, or even something close to that in the House of Representatives. And what it’s telling me is that this was not really as much a pro Trump vote as it was an anti Harris vote, like I’m stunned Anthony by the fact that Harris got less of a share of the national vote than Hillary Clinton did. And we know what America mostly thought about Hillary Clinton. It was obvious, a very negative vote against her, and I would say, also a negative vote against the ongoing leftward leaning movement within the Democratic Party. So I think that’s a big part of it. This was not as much pro Trump as people think, and I’m not even convinced it’s actually a vote for Trump’s policies. So what happened is that the market believes it’s going to be one party rule, ruled by this pro business party called the Republicans. And so what everybody did at the outset was take out the 2016 to 2018 playbook, where equities ripped and. Bonds sold off until we got the split government in the midterms in 2018 Interestingly enough, the peak in Treasury yields in 2018 happened in the November midterms that very same day. So I don’t think a lot of people really expected there was going to be a clean sweep. Now we don’t know if there’s going to be a clean sweep, but chances are that that’s what it’s going to be. But the house is not the Senate. The house is a fractious group, and it’s replete with fiscal conservatives on both sides of the aisle, including 38 Freedom Caucus members and the Republicans. So people that think she asked me, Do I think the market is wrong. I think the market is way premature and expecting that we’re going to be seeing at least when it comes to fiscal policy, the tax cuts that were being promoted during the campaign, I think that that is probably not going to happen. You
Anthony Scaramucci 5:57
know, Trump is calling for either ending the Fed, ending the Fed, or taking control of the Fed, meaning that the independence of the Fed and its Board of Governors in terms of setting the interest rates would be controlled by the president united states take it out of the hands of the Federal Reserve Chairman. He’s going to do that.
David Rosenberg 6:21
Well, I don’t think that he really can as powerful a man as he is. I think that he would definitely need to have congressional approval. I mean, the Fed the Federal Reserve Act is a congressional act. The President like how he appoints judges, does appoint or nominate the Fed chairman, but the Senate has to confirm it, and so I think that there’s a lot a lot of bluster here. I don’t think that he’s going to be able to replace Powell, and Powell made that very clear at his press conference. I think that what Donald Trump will probably end up doing is using the bully pulp pulpit and his ex account to try and pressure the Fed. We saw him do that in the past, but actually interfering, directly, creating the shadow fed, or having his own personal, you know, Fed chairman, rivaling the actual Fed Chairman. I think that’s just pure fantasy, and I think it was, it’s going to the reason he won’t do it is because it’s going to work against his goals of maintaining financial market stability. That would be a policy prescription of triggering instability. And when we know about financial market instability is that’s that’s what leads to recessions. So I’m going to assume that there’s a certain degree of rationality, and that all the bluster during the campaign is not going to lift to fruition. And that includes what he wants to do about the Federal Reserve.
Anthony Scaramucci 8:19
We have a couple of wars going on. We have the Ukrainian war. We have a war between Israel and Hamas Donald Trump pledges he’s gonna end that war in 24 hours. What do you think have let’s start with the Ukraine war, and then the third piece of this thing, I want to talk about US China, but let’s go Ukraine war, Hamas Israel, and then US China relations. Well,
David Rosenberg 8:42
the easy one is that I do believe that he will be able to get a resolution to Russia, Ukraine, and of course, maybe this is an instance where his relationship with Putin might help foster that, and I don’t think any of the two parties are going to be very happy with the resolution, but probably Zelensky is going to be a lot less happy, so there will be territorial concessions. But I do believe that that is a strong possibility. It’s not, you know, when you’re talking about Israel, it’s not just Hamas, but it’s Hezbollah. You can argue the hooties and all lines go back to Tehran. So it’s really more about Iran than it is necessarily about Hezbollah and Hamas, which are proxies of of Iran. So my comment there is, I do believe, compared to Harris, that he’s going to give Netanyahu a longer lifeline. I don’t think that he’s going to expect that the conflict with Hamas, for example. Apple is going to end that quickly until Hamas surrenders, which maybe that never happens, but I think he’s going to give BB a longer lifeline. I think he’ll first settle what’s easier, which is Ukraine, Russia, and in terms of China, I don’t think that. I don’t think Z is going to be doing anything to get Trump rattled. You know, that’s the thing about Trump, is he’s not a pacifist, but he’s not from the military industrial complex. He’s not really a warmonger, but people are scared of him. Nixon was not a warmonger. People were scared of him. He ended the Vietnam War, and the next thing you know, established his relations with China. And people were scared in 1980 the big knock against Ronald Reagan running against Carter was that he’s gonna start world war three. You certainly remember that, and he’s labeling the Soviet Union the evil empire. And the next thing you know, several years later, we have pest strike, and then under George H W Bush, the Berlin wall comes down. We couldn’t have predicted that in 1980 but people were scared of Nixon, and people were scared of Reagan. And I think it’s probably a good thing for the rest of the world to be scared of the president United States. And so I think that there’s a reason why, even though his White House was chaotic, as you full well would know. But who cares about that? When in those four years, the world was relatively more trouble free, that’s for sure, than it’s been over the course of the past four years. To me, what’s most important is how he deals with Iran. Is the greatest threat China. You could argue? Could you argue China is an economic threat any longer, as they continuously deal with their property sector deflation, they’re in a structural growth slowdown. This is not the China of 10 or 20 years ago. So I see that as less of a threat, and China is not going to do anything with Taiwan, certainly not with Donald Trump in power. To me, the most important geopolitical risk is what happens with Iran. And the one thing we know about Trump is that he was a lot harder on Iran and the sanctions and so on and so forth. And my hope is that he realizes that this war in the Middle East is just broader than just Gaza and the West Bank and Hezbollah and Lebanon, but it’s really about Iran and Islamic Jihad and extreme fundamentalism. So to me, that’s going to be the most important geopolitical hot potato that he’s going to have to handle. Uh, all roads lead to Tehran in the next four years. From that, say, geopolitical aspect, thanks
Andrew Brill 13:16
again for watching these favorite moments of 2024 and we hope we can continue to provide you with information that will help you invest wisely and be financially resilient, wishing all of you a healthy, happy, safe and prosperous 2025!
