Moneybeat: Rolling back woke

MARY REICHARD, HOST: Next up on The World and Everything in It … the Monday Moneybeat.

NICK EICHER, HOST: Time now to talk business, markets, and the economy with financial analyst and adviser David Bahnsen. David heads up the wealth management firm The Bahnsen Group. He is here now. Good morning to you, David.

DAVID BAHNSEN: Well, good morning to you. Good to be with you.

EICHER: David, I want to ask you about something from your most recent Dividend Café and that’s the Bessant Bond rally … so called because of a positive market reaction to the choice of President-elect Trump to lead the Treasury Department … Scott Bessant. So the president’s not sworn in, Bessant’s not been confirmed, hasn’t articulated policy or put policy in place … and yet there’s already this sense that his mere nomination is moving markets. How is that?

BAHNSEN: Yeah, well I would point out that the bond market rallying means interest rates are coming down, and some people may not consider a great thing if they want interest rates going higher.

What it is saying, though, is that because there's been such a universal association with the stock market rally that began the day after the election, it does seem that it's reasonable to say: Hey, the bond market began a very big rally when the Treasury secretary, who oversees such things as the United States debt structure and issues related to the US dollar and foreign exchange—you know, the only thing I would say is Scott Bessett has articulated policies.

So you're right he hasn't been confirmed, but he's a shoo-in for confirmation. There won't be any pushback there.

He has really been more on the record in terms of what his views are about economic growth, about dealing with our debt crisis—by starting with a pro-growth scenario, by targeting with specificity, a budget deficit to GDP of 3%, which right now is 7%.

By targeting a growth rate of over 3%, because you're certainly not going to accomplish the first if you don't accomplish the second, and by targeting additional US energy production—so you combine those things and confidence in his ability to execute and his proficiency as a 30-year veteran in markets and global macroeconomic world, then you have a lot of other factors that I think lend markets to believe that there will be downward pressure on bond yields, which has pushed bond prices up substantially.

It’s a good position for the president to come in as he's negotiating other things regarding trade deals and also most importantly, I can't say this enough: They can only get the tax bill done is by dollar for dollar having it “paid for.”

So if they're going to go do a trillion dollars of tax cuts, they have to have a trillion dollars of pay-fors and that involves spending cuts and it involves other tax cuts that they get rid of.

What are those tax pay-fors going to be now? And if he's going to get no tax on tips, which is the one of all his campaign promises, he promised he would, he has to have pay-fors so other things that are bringing down the budget deficit are going to help the tax cuts a great deal.

EICHER: All right, and the economic team is filling in more and more. Some of the lower-level appointments are getting made. What can you take from this most-recent batch of nominees?

BAHNSEN: Well, it's interesting because I don't think that a lot of the appointments got a lot of attention. So the SBA in particular is one that a lot of Americans end up dealing with, the Small Business Administration, they became uniquely important in the last administration because at the COVID moment, SBA was tasked with administering one of the largest government programs in history, the infamously known a PPP, the paycheck protection program. So the SBA has a lot in its portfolio.

He named Senator Kelly Loeffler from Georgia to run that and she has a vast amount of experience in business and and I think it was an encouraging pick. The other former senator of Georgia, David Purdue, was named the ambassador to China. I think most of these ambassador positions, we kind of look past. But with China, that's different, you know, there's gonna be so many things going on with trade, with the relationship, with technology, potentially the future situation with Taiwan. David Purdue was a real open advocate of trade with China when he was CEO of Reebok and he subsequently was CEO of Dollar General.

So I'm interested in a lot of it.

The final thing I'd mention, Nick, was Pete Navarro, who did not get a cabinet position, did not get a formal position, did not get U.S. trade rep, but then was named this week, almost sort of as a postscript to be a White House adviser on trade. It won't require Senate approval. It doesn't have any formal authority, but to my knowledge, it's the only person now who's been named who does advocate a universal tariff on all countries, on all imports, because the rest of the folks that were named are not really in that camp.

So those are the big takeaways I had from some of the appointments this week.

David Sachs was named a sort of Czar of AI and crypto. He's a very bright guy. He's a bit out there. But, you know, he'll be there as a sort of advocate in the administration for that crypto space.

It's interesting to me how many Silicon Valley people have gone onto the side of the right, or the Trump administration, or the Republican Party, and that was just absolutely unheard of 10-15 years ago.

And now from Mark Andreeson to Elon Musk to Pete Thiel to now, um, this David Sachs, there's many others too, that maybe people wouldn't have heard kind of moved. That center of gravity shifting and it’s interesting because people talk all the time about corporate America has gone woke, corporate America's gone DEI and ESG.

Guys like Jerry Bowyer and myself have had to take on a lot of shareholder engagement projects for the purpose of kind of fighting the good fight against some of these cultural movements.

But I think you're seeing in the technology space and in Silicon Valley, a lot of these things moving away because of those issues, you know, I don't think any of these guys have become pro-life, but it is in a lot of ways, a resistance against some of the woke DEI stuff because this sector is still holding on to a meritocratic emphasis.

EICHER: I want to pick up on what you just said there, David, about fighting the good fight. You mentioned Jerry. He had a piece for WORLD Opinions about Walmart rolling back woke policies … and the subheadline grabbed my attention: “How Bahnsen and Starbuck helped turn America’s largest private employer back to political neutrality” … so how did that happen?

BAHNSEN: Yeah, a lot of Christians think if there's a company doing something bad, the right thing to do is avoid it, don't own the company. My mentality is, well, actually, you're missing out on a great opportunity to do kingdom work because by owning it, you can be small and then punch above your weight because you have shareholder rights as a matter of case law.

You get to make proposals, you get to talk to basically the board through shareholder meetings, through generating shareholder resolutions, and just the ongoing conversation with their investor relations department and in many cases with the C-Suite itself.

We have just chosen to try to engage in conversations with these companies and in many cases make proposals, etcetera. We have a little bit extra weight for us because not only am I a shareholder in these companies and own the portion I own, but then because I represent a multi-billion dollar wealth management firm, we have the clout of our aggregated client interest.

So some companies have been less receptive to ideas than others, but some have been very receptive and the greatest victory to date is definitely been with JP Morgan. It's been an incredible opportunity to engage them and have a very constructive conversation and in fact, in some cases get JP to change policy and in other cases get them to start enforcing policies very rigorously they had been lax in before around debanking.

The situation of Walmart was more complicated because Walmart, I think, was sort of dragged into something that they didn't mean to be participating in. Some of these left-wing campaigns, like the human-rights campaign, and then deciding that they weren't going to do it.

The Human Rights Campaign has this corporate equality index, which is just very, very woke and whatnot. Companies like Disney and Target had done it, and Walmart surprised us by jumping in. A guy named Robbie Starbuck on Twitter really went after them for it and we joined with the shareholder resolution. Then they also have subsequently agreed to stop selling some of this LGBT stuff that ends up in the kids’ section, which Target had famously done.

Walmart's just taken more of an active stance and my resolution really centered around asking them to avoid some of these political fights and to participate in the Alliance Defending Freedom index, the Viewpoint Diversity Index, and they requesting more information and wanting to understand it better. Right now they are looking at not joining this thing called the Global Alliance for Responsible Media—GARM—which is a real left-wing piece of nonsense.

So, we're working hard with it and my strong gratitude goes to Jerry Bowyer, who's really fighting a good fight here. My company has hired Bowyer research as a consultant to engage our efforts, and the latest victory has been with Walmart and we plan to keep fighting.

EICHER: Keep fighting! David Bahnsen, founder, managing partner, and chief investment officer of The Bahnsen Group. David’s Dividend Café is available to you for free at dividendcafe.com. David, thanks, enjoyed it. Hope you have a great week … talk next week!

BAHNSEN: Looking forward to it, thanks so much, Nick.

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