23 Jan 2020: CNBC Squawk Box Europe Anchor Karen Tso spoke to Anthony Scaramucci, Managing Partner and Founder of Skybridge, at the CNBC Sanctuary in Davos at the World Economic Forum.
AS: Thank you for having me.
KT: So Anthony Scaramucci, or “The Mooch”, Managing Partner and Founder of SkyBridge, thank you very much for joining us here.
AS: It’s great to be here. Thank you.
KT: What a terrific year we’re setting up for. It’s a presidential election year, we’ve just had President Trump here in Davos. Last outing, he was talking about his brand of economic nationalism; this year he’s tackling stakeholder capitalism. What do you make of how he approached the topic here in Davos? Do you think he had a good outing?
AS: Well, you know, the speech was very American centric, and so he had a good outing from a campaign perspective, in my objective opinion, because, had he given that same speech in New York or D.C., you know, it was a flat speech, and it was a lot of the pabulum that he’s talking about in the campaign, but coming to Davos and giving that speech from here, he got a tremendous amount of attention at home. So I think the Davos community probably thought it was too American centric, and probably too self-congratulatory about things that maybe he didn’t necessarily contribute, but I think it was effective for him, back in the United States, as it relates to a campaign, and he’s also trying to create some counterprogramming to the impeachment crisis that he’s facing right now.
KT: So rating out of ten? How would you rank it, out of zero to ten?
AS: Well, the problem-, the President’s always had a very tough time reading from a teleprompter, and so, you know, he was slurring words, mispronouncing them, and so-, I mean, you see-, you see, the problem is-, people are laughing about that, but the problem is, we-, we’re always talking about gaslighting, and so President Trump gaslights people, and so what we’ve done now is we’ve shifted the bell curve of normal, and we’re hyper-normalising something that’s actually not normal. So when you talk about it very truthfully, people giggle, and they, like, “Wow, he’s actually telling the truth.” You know? So I mean that’s sort of where we are right now. But he has a hard time reading, he had a hard time reading the prompter, very slow, mispronouncing words, and he’s having a difficult time, because he’s under a lot of stress, he knows he’s done a lot of things wrong, and it’s going to be very, very hard to cover up everything. I mean, there’s going to be another waterfall of information and bad facts that come out, above and beyond what’s already out there, over the next couple of months, so-,
KT: Politics is often about timing, and the President just inked two major trade deals, that have been going on for a very long time, but it also culminates with the start of impeachment process in the Senate. So what do you make of the timing? What was in it for Trump to come to Davos, when many US presidents have simply avoided this very elite conclave?
AS: Well, I mean, you know, that-, that is something unique to him, so-, sort of like a trivia fact, I’m the person that introduced him Klaus, I-, I was on his executive transition team, and so Dr Schwab came to New York in December, and I arranged a meeting for him and the President Elect to meet. And I think what people don’t understand about President Trump is that, yes, he’s an economic nationalist, he has an American-first agenda, but he does want to uplink that in to the global community, and so this is a very good forum for him to do that. And, of course, it’s counterintuitive, you know, President Obama wouldn’t come here, because he didn’t want to face criticism related to being a globalist, and didn’t want to face criticism being, you know, in the elitish circle, but because President Trump is not viewed that way, it’s easier for him to come here.
KT: Why is he not viewed that way? He is a very wealthy man, a billionaire-,
AS: Is he, though? Is he wealthy?
KT: Well, apparently-,
KT: According to President Trump, ultra-wealthy-,
AS: We’ll have to see, in June, if the-, you know, if the Supreme Court rules on the tax returns, we’ll have to see what really is going on. But just remember, Steve Bannon always said, “Man, I hope these tax returns don’t come out,” because one of his big cases is that he’s so wealthy; but is he, though? Maybe he’s not.
KT: My point is that he’s positioned as though he is-,
KT: And his lifestyle certainly suggests that he is ultra-wealthy.
KT: At the same time, he comes to Davos and he talks about a blue-collar boom-,
KT: Talking about the average worker, and economy that works for everyone. The messaging, he can almost walk on both sides of the line, appeal to the very wealthy in society, but also-,
KT: The very poor, the average person.
AS: So I really-,
KT: How is he able to do that?
AS: I really believe-, I mean, there was a number of different reasons why he won. Now, remember, the rise of Trumpism is concomitant with the decline of Clintonism, because Secretary Clinton, for whatever reason, didn’t go in to certain states, that I guess her consultants told her that she had in the bag; but, you know, we always were wondering why she wasn’t in Wisconsin, you know, she didn’t go to Wisconsin at all, and she lost it by a very small margin. So the rise of Trumpism is concomitant with the decline of Clintonism. Secondarily, the President has done a good job of relating to those people, and the facts on the ground are-, I grew up in a blue-collar family, my dad was an hourly worker, and he spent 42 years as a crane operator, but he put us in the middle class. I would never dishonour my dad, or his work ethic, by telling you I grew up poor, I did not grow up poor. But that very same job today, that my father had in the 70s, the real economic wages are down about 26.5%, and so that’s the forces of globalisation, and the, you know, surplus of labour in the global society, all those different things have brought those wages down, and now that would’ve put my family closer to the poverty line, that big, big loss. And so, when I travelled with the President, during the campaign, and one of the things that did draw me to him, was the notion that these families-, I grew up in an economically aspirational blue-collar family, but a lot of these families, you could feel, were in an economically desperational situation. And so one big criticism of elites, which would include establishment Republicans and establishment Democrats, is they weren’t focused on these people. And so when Secretary Clinton was calling them “deplorables”, you know, my message to the Democratic candidate is: please don’t call these people deplorables, or white ethnic nationalists, and things like that. Go have a cup of coffee with them and ask them how you can come up with the right policy solutions to help their lives. And so the thing that the President has done is he’s expressed their anger in the community. He is a metaphorical thumb, pressing in to the eyeball of the media, and the elite, and the establishment, and he won, Karen, and this is a very important thing, because we’ve had populism in our country before, we had Huey Long, we had Father Coughlin, we’ve had William Jennings Bryan, we’ve had a whole host of populists, but he won because of his elite status. He was able to get in there and express himself to the populists, and the capitalists and the elitists felt, “Well, okay,” you know, “He’s-, he’s one of us, too,” and he was able to build that bridge. And so the other populists in the American political history weren’t able to get as far as he’s gotten, because of that-, that unique skillset that he has.
KT: So has President Trump done enough to get re-elected this year? Because if you look at the facts on the ground about income inequality, it’s the widest in 50 years. So as President Trump takes the podium, he talks about an economy that works for all; the argument isn’t necessarily stacking up that trickle-down works for everyone. We’ve seen the top 1% do particularly well, the tax reform has worked very much for the C-suite, and for those in the top 1%, and, sure, the bottom might’ve been lifted a little bit, but not very much, as that gap has grown wider. So has he done enough to be re-elected?
AS: Well, I mean, listen, I mean, the data certainly suggests that he hasn’t done enough, but remember, people are angry, and-, and so he’s representing that anger. And-, and the-, I guess the good news, if you don’t like the President, he’s missile at 42%. If you look at where the stock market is, economic growth, a lot of the data, if he was just halfway normal, and didn’t do the tweeting, and all the bullying, and all the nonsensical inanity, he would have a much higher approval rating, it would’ve been easier for him to win re-election. But he’s missile-locked at a certain position, and he’s now a known entity. Before he ran, there was a lot of speculation of what he could be. Now we know what he is. And so I firmly think he’s going to lose. Because 85% of the delegates here in Davos think he’s going to win. Okay? And I think that’s a pretty good contrary indicator. Because I was here in January of 2016, people told me there was no chance for him to get the nomination and Secretary Clinton was going to be the President. And so we’re here now, four years later, and the consensus of the people that I’m talking to think that he’s going to win. And so there’s something not right about the situation, and again we’re hyper-normalising something that is very abnormal. And he’s also going after a very, very sensitive area of the country, that there’s 5 or 6% of the Republican Party, myself included, say, “Okay, I’m not going for that,” and that is the institutions of the United States. He is putting the checks and balances of that institution and the sacredness of that constitution at risk. And if you read those documents, which I have, and I’ve obviously gone to law school, and taken constitutional law, that document is based on one word, and the word is virtue.
AS: And so you need virtuous men and women in a society to protect that document. And what we’ve learned about my fellow Republicans that are elected leaders is they-, they don’t have the will, or the courage, to speak up to protect that document. And so I find that very unsettling, and I do believe that we can – it’s going to be a very close election – we can peel off 4 to 5% of those people, okay, that will move to the side of the Democrats, moderate-, hopefully it’ll be a moderate Democrat. If it’s not a moderate Democrat, Trump will-, you know, he will-, he will destroy the Jeremy Corbyn of our society, which is Bernie Sanders, and he will destroy the Jenny Corbyn of our society, which is Elizabeth Warren. He will destroy them.
KT: So you’re saying that only Biden can win this election for the Democrats.
AS: No, no, I think a moderate-, you know, and Klobuchar is in the moderate camp, Pete Buttigieg is in the moderate camp, you know, Mayor Bloomberg is obviously an extraordinarily talented person, a great business leader. Mayor Bloomberg is more about right and wrong, as opposed to left or right, he’s a policy wonk, and if you look at his-, his plan that he put out yesterday, which I read through last night, it’s a brilliant plan, and so-, we need infrastructure, we need education. The failure in the political class of the United State is we no longer have any 10-year plans. The Chinese government has a 10, 20, 30, 50-year plan, and the US politicians have, like, a two-minute plan where they’re going to beat each other up on a cable news cycle. So, for me, somebody like Mayor Bloomberg, who I’ve known a long time, he could do an amazing job, but he’s got to win the nomination.
AS: And he’ll destroy-, I mean, he’ll-, he’ll-, he’ll knock Trump right out of the rink, actually, if he-, if he got the nomination. Because he’ll have the money-,
AS: He has the temperament to handle his bullying, and all that nonsense. He’ll call him out for it. Those other politicians, they were afraid of him, you know, they’re-, they’re intimidated. You know, you’ve never felt more alive in your life than when the President of the United States is calling you an unstable nutjob. Okay? That’s-, which he-, which he’s called me. Okay? So what ends up happening is these guys get scared of that. Okay? I’m not scared of that; I grew up in a blue-collar neighbourhood, I’m not-, you know? And I live in a free society. You know? So we have to find a politician that’s capable of taking him on like that, and I think Mayor Mike could do that.
KT: Anthony, you know financial markets extremely well, because of your experience in markets. What’s the reaction going to be, if we do see a change in government, from a Trump administration, to a moderate Democratic candidate taking the White House? If that is-,
KT: If that’s what plays out.
AS: Yeah, somebody like Mike Bloomberg, you’d probably see the markets rise on something like that. I mean, it’d be like a return to normalcy. Somebody like Joe Biden, I think the market would, you know, react a little bit, but not overly negative. You know, again, somebody like Bernie Sanders, you’ll have a 25% correction in the market, and you will start a cascade of very, very bad events in our society. And-, and so, I mean, the good news is, there’ll be enough checks and balances to stop his sort of nonsense, but-, but it would not be good for our society.
KT: What’s the upside of a moderate Democratic candidate winning the White House? Is it because you’d get infrastructure spending, more fiscal stimulus across the economy?
AS: No, it’s the removal of Donald Trump. That’s the number-,
KT: But he’s been positive for the stock market.
AS: I’m sorry?
KT: He’s been extremely positive for the stock market, though.
AS: Okay, so I’ve been-, I’ve been in the market for 31 years, I’m running about $11.5 billion. You know, if you really study the market, and you study the market, as a student of the market, it’s really been mostly driven by Federal Reserve monetary policy, and then people that really understand this-, remember, what happens in the political society is that situations get personalised, and so it’s George Herbert Walker Bush’s recession, but it’s Bill Clinton’s recovery, but yet the cyclical economy would’ve moved in that direction, one way or the other. And so if you look what the Fed did, remember, 2019 was a great year, but 2018, the market was down about 3.5-4%, because the Fed was moving to normalise interest rates. The Fed has now made a decision, three rate cuts, they’re buying – they won’t call it QE, but it’s effectively asset purchases – and they’re now in the repo market, clearing the trades in the repo market, which is lifting the market. And so we can pretend that it’s President Trump, if we want to, but it’s really born from Federal Reserve interest rate policy. Where I give the President credit, though, is there were layers of regulation that got deregulated, I mean, we were overregulated during the Obama administration. I’m for propitious regulation-,
AS: But I’m not for overregulation, because, you know, you’re just going to harm businesses. And-, and, you know, Americans know when there’s the right level, the mama bear level of regulation, and where it gets out of control.
KT: Anthony, we’ve got a short amount of time left, so-,
KT: I want to get to stakeholder capitalism and the environment-,
KT: And whether Americans will vote for climate change-,
AS: I love these buzzwords. I don’t even know what stakeholder capitalism means-,[Laughter].
AS: But I’m going to try to answer the questions. Okay.
KT: Putting the environment at the forefront-,
KT: And we saw President Trump also mention the environment, just switching tone a little bit, calling out the pessimists, of course, but also speaking about creating solutions, supporting the 1 Trillion Trees Initiative, if we look at his voter base, evangelical voters were very instrumental in 2016, and they are calling for some action on climate change, as well, considering whether they should be investing-,
KT: In fossil fuels. Are we seeing a subtle shift, at the highest levels in office in the United States because American voters are kind of on the page that something needs to happen on climate change?
AS: Yeah. Yeah, so, I mean, I think the short answer to that is yes, but I think the-, the longer answer is that this thing is not going to be resolved without some inclusion of the global community. You know, the US is 22-23% of the GDP, I personally think that we, you know, for 50 years were having basically a frat party with the environment, and we’re going to push our kids to live in a frat house; 100 years from now, our grandchildren and greatgrandchildren will be living in the frat house on a Sunday morning. Okay? And we’re-, and we’re doing a lot of destructive things. And so the notion that somebody could say to me, and I’m a Republican, and they-, they try to act like a climate denier. I’m like, “Okay, let’s stipulate that you are right, that it’s not affecting the climate. It’s still destroying the quality of the air that people are breathing.” I mean, so there’s-, there’s no argument that you could make for what we’re doing right now to the earth. Even if you’re a climate denier, you can’t make an argument that it’s okay to live in the status quo of what we’re doing.
KT: Anthony Scaramucci, thank you so much-,
AS: Hey, thank you very much.
KT: For joining us today.
AS: Big pleasure to be here. Thank you.
– Ends –
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