Jeffrey Gundlach: Why Trump’s Hyperbole isn’t working anymore

DoubleLine Capital CEO Jeffrey Gundlach joins Yahoo Finance’s Julia La Roche for an exclusive, wide-ranging interview discussing everything from his outlook on the economy amid COVID-19, the 2020 election, and more.

Transcript

00:03
I just want to get your views Jeffrey on
00:06
what’s transpired in the markets in the
00:08
last few months and as it relates to the
00:11
economy as well in the Fed dependency
00:14
here how do you think about the feds
00:16
role in the overall economy and the
00:18
markets well the Fed has decided that
00:21
they want to pull out all the stops to
00:25
reduce market and economic volatility I
00:28
think that was what really got them
00:29
going in the later part of March in
00:32
early part of April was that markets not
00:35
just the stock market but commodity
00:37
markets jump bond markets interest rate
00:41
Marcus we’re experiencing really
00:43
persistent and elevated volatility and
00:45
it just kept throwing things at it to
00:48
make the volatility stop and of course
00:50
when investors use the word volatility
00:52
what they really mean is down prices
00:54
going down a lot and the Fed came in
00:57
because there was a total seized up in
01:00
really the credit market system around
01:02
the world but of course relative to the
01:04
Fed in the United States I was I’ve been
01:07
in the market for thirty five years and
01:09
I’ve seen all kinds of crises including
01:11
I was right at the front lines during
01:14
2008-2009 during the global financial
01:17
crisis which really hit the securitized
01:20
assets sector and what we experienced
01:22
it’s been the last part of March was far
01:25
worse in terms of market conditions in
01:28
the investment grade corporate bond
01:30
market in emerging markets certainly in
01:33
the junk bond markets far worse than the
01:36
very worst date in March of 2009
01:39
literally in 2009 you could get a bid he
01:43
didn’t like it the prices were in a
01:45
freefall from the day before on the
01:47
really ugly days of maybe 10 or 15
01:50
percent price moves to the downside in a
01:52
single day but in March of 2020 here
01:55
there was no bid there were actually
01:58
situations in large swaths of the fixed
02:01
income market where you simply could not
02:03
sell assets and that led to well what
02:07
looked like was going to be some very
02:08
substantial bankruptcies in some of the
02:11
leveraged pools like like mortgage
02:13
related REITs
02:15
other leverage types of investments and
02:17
the Fed just figured that it desperate
02:20
times
02:21
you know they required desk for measures
02:23
and they went all the way into buying
02:25
corporate bonds which as I’ve said in my
02:28
webcasts is not allowed under the
02:30
Federal Reserve Act of 1913 and they did
02:34
not buy corporate bonds during the
02:36
global financial crisis even though I
02:37
know for a fact they talked a lot about
02:39
it because I know people that were
02:41
inside the Fed at at those discussions
02:44
but what they’re doing is really a
02:46
bridge further than they’ve ever gone
02:48
before where they’re not even following
02:50
the room Charter which means that the
02:52
Fed could go even further in violation
02:56
of the photos of Act of 1913 if they
02:59
really feel like you know we go into
03:01
another economic move down so the Fed
03:04
has propped up the economy with just the
03:08
most incredible fiscal lending that
03:12
they’ve ever contemplated and of course
03:14
I think the listeners know that the
03:17
quantitative easing that the Fed has
03:19
done since March is greater than all of
03:22
the quantitative easing that they did
03:24
that they started back you know in the
03:26
little financial crisis it’s it was more
03:28
in just three or four weeks than an
03:30
entire program that was laid out over a
03:33
multi-year framework so that shows the
03:35
level and extent of their commitment
03:37
yeah certainly the word that gets tossed
03:39
around is unprecedented and you were
03:41
just referencing your 35 plus years and
03:43
the markets never seen anything quite
03:45
like this we’ve talked a bit in the past
03:48
Jeffrey about corporate credit and you
03:51
know the issues that were already there
03:52
to begin with how do you begin to assess
03:56
those issues with the latest Fed moves
03:59
and are we just delaying the inevitable
04:01
here well in a certain sense I think
04:04
we’re delaying the inevitable because
04:06
under my analysis many bond prices that
04:09
have been pushed up by the feds buying
04:11
of ETFs and then individual corporate
04:13
bonds
04:14
more recently the prices they’ve pushed
04:17
many of these assets up to I think is a
04:20
higher price that they’re actually
04:21
paying for them then you’ll receive
04:23
through a bankruptcy workout when a lot
04:26
of these companies are
04:27
have to go through a filing also as I
04:30
talked about in the past before I talked
04:32
about this in our last interview the
04:35
fraction of the corporate bond market
04:37
that’s investment-grade and is the
04:39
lowest tier of investment grade which is
04:41
triple B is really enormous it’s
04:44
basically half from now even more than
04:45
1/2 of the entire you know it’s like a
04:48
12 trillion dollar market now there’s
04:50
been so much issuance of corporate bonds
04:51
and the prices have been propped up to
04:54
levels where I think the owners that
04:56
owned them at these levels will end up
04:58
losing principal on a basket of these
05:01
assets so to that extent they’re
05:03
delaying the inevitable in the meantime
05:04
they have a lot of wherewithal to
05:06
continue to layer because they are
05:09
spraying money all over the place and
05:12
buying all of these all these assets the
05:14
one thing that’s happened that a lot of
05:16
investors aren’t aware of relative their
05:18
corporate bond activities is at first it
05:20
really pops the prices of D which is the
05:24
investment grade ETF and J and K which
05:26
is the jump on ETF that I followed and
05:28
since then the the price of hyg
05:33
is not really even up since April 9th
05:36
when they really went fully and I think
05:38
they announced corporate bond purchases
05:40
as a strategy around March 23rd they
05:43
really upped the ante in a meaningful
05:45
very meaningful way on April 9th and 6th
05:47
since then those prices haven’t really
05:49
gone up they fluctuated but they’re
05:51
pretty much unchanged meanwhile that has
05:53
led investors that understand that the
05:56
price of corporate bonds today isn’t
05:58
really real there’s no price discovery
06:00
mechanism that’s being Ted hey there’s
06:02
no there’s a message there’s just a
06:04
target price that the Fed has been doing
06:07
and that led to a pump a pop-up and
06:10
corporate bonds but since April 9 which
06:12
is now we’re moving on to about three
06:14
months the sector’s that were left
06:15
behind to fight further themselves like
06:18
the lower tiers commercial
06:20
mortgage-backed securities or asset
06:22
backed securities and some emerging
06:24
market bonds they’ve really outperformed
06:26
corporate bonds because they’re catching
06:28
up as investors realize that the that
06:31
the interest rate profile of investment
06:33
created like the lqd is very long I mean
06:36
it’s about an eight-year duration so
06:37
it’s about the interest rate risk of
06:39
almost 10-year Treasury and yet the
06:41
yield to no losses is about two and a
06:44
quarter so there’s not a lot of reward
06:46
there and there’s a lot of risk if those
06:48
bonds get downgraded because the the
06:51
yields on junk bonds are far higher
06:53
today than the yields on trip will be
06:56
corporate so if they get downgraded we
06:58
know that the pricing is going to suffer
07:00
very significantly so in that way the
07:03
rating agencies might be might have an
07:06
influence that the Fed can’t really
07:08
offset that easily because those down
07:10
raids leads who probably about a 200
07:13
basis point spread widening which means
07:15
about a 15 point price drop if the
07:17
market starts to factor in the potential
07:19
for the credit quality reevaluated to
07:22
the downside all right Jeffrey I want to
07:24
bring in Brian chunk to give the latest
07:26
on the FOMC meeting minutes Brian why
07:29
don’t you break it down for us well
07:30
Julia the big headlines from that June
07:32
FOMC meeting which took place June 10th
07:34
where the Fed did hold rates steady the
07:36
Federal Reserve did commit to what they
07:38
call highly accommodative monetary
07:40
policy they said that was needed to
07:41
support a recovery for a second quarter
07:44
that the minute said would likely show
07:46
the largest decline in economic activity
07:48
in post-world War two history on the
07:51
other side of the coin the FOMC did see
07:53
financial conditions improve between the
07:55
period between its previous FOMC meeting
07:58
in April and that June 10 meeting they
08:00
also pointed to that may job support
08:02
which as you recall had the surprise of
08:04
job gains during that month the FOMC
08:07
said that the proportion of laid off
08:09
workers who expected to recall to be
08:11
recalled was much larger than they had
08:13
expected but even though they said it
08:15
could indeed be the case that April
08:17
showed to be quote rough of the
08:19
recession participants dead based on the
08:21
minutes that it was too early to draw
08:23
any conclusions a number of participants
08:25
on the FOMC did Express worry about the
08:28
epidemiological a path of the virus a
08:30
number of them saying that there is a
08:32
substantial likelihood was the quote of
08:34
additional waves of outbreaks which in
08:36
some scenarios could result in further
08:38
economic disruptions shifting gears to
08:40
quantitative easing again their asset
08:42
purchases of mortgage-backed securities
08:44
and also US Treasuries the FOMC minutes
08:47
did note that they wanted to increase
08:49
the current pace to quote sustain smooth
08:51
market functioning unquote that was
08:53
something we had heard
08:54
Fed Chairman Powell in that press
08:56
conference and then lastly something if
08:58
you’re watching fix then come very
08:59
closely as your discussion was just
09:00
touching on yield curve control this
09:02
would be further fed intervention in the
09:04
medium term market for US Treasuries a
09:07
couple of participants after receiving a
09:10
briefing on the idea of capping medium
09:12
term perhaps three or five US Treasuries
09:14
remark that it could be quote a powerful
09:16
commitment device for the committee end
09:18
quote but did say and needed further
09:20
studying which means the Fed could be
09:22
getting a little closer to enacting such
09:24
a policy but again a number of Fed
09:26
officials still saying they need to
09:28
study the issue a little bit more so not
09:30
a done deal but again the big headlines
09:32
out of the FOMC minutes highly
09:33
accommodative monetary policy and an
09:35
expectation for some pretty shocking
09:37
second quarter numbers Julia Brian II
09:39
thank you so much for that breakdown
09:41
Jeffrey your reaction to that and also
09:43
even your reaction to the the yield
09:45
curve control part of that that just
09:47
came out I know it’s something you’ve
09:48
brought up on your webcast well I’m glad
09:50
that the Fed acknowledges that they have
09:52
highly highly accommodative monetary
09:54
policy it’s staring you in the face of
09:57
course and it would be disingenuous for
09:59
them to not admit that they have really
10:02
put the pedal to the metal and the that
10:06
they’re right that the economic activity
10:07
everybody knows this for the second
10:09
quarter is going to be terrible the
10:11
Atlanta feds GDP now shows an annualized
10:14
decline during the quarter of about 37
10:18
percent that’s actually improved it used
10:21
to be more like negative 45 for separate
10:23
that analyzes to roughly a 10 percent
10:26
drop off in economic activity for the
10:28
second quarter so yield curve control is
10:31
something that the Fed has been
10:32
telegraphing jpowel
10:35
and I give him credit jpowel which are
10:37
words I don’t speak very often that I
10:39
give him credit
10:40
but give him credit for talking strongly
10:44
against negative interest rates and so
10:47
he says that in the next recession which
10:48
of course were in that he doesn’t my go
10:51
to negative interest rates you can’t go
10:53
to negative interest rates United States
10:54
without a total catastrophe in my view
10:56
so I’m glad he says that so what’s left
11:00
is yield curve control which they’re
11:02
talking about which is just a code word
11:04
for suppressing interest rates there’s
11:06
there’s precedent
11:08
this they did in the late 1940s in the
11:10
early 1950s at the interest rate levels
11:12
that weren’t that dissimilar to where we
11:13
are today in a way to help manage the
11:16
world war two debt so what’s interesting
11:19
is to watch the 30 year Treasury I know
11:21
in the minutes there Brian talked about
11:23
the three and the five year they already
11:25
look like they’re being pegged to me
11:27
there’s very low levels but what what
11:29
seems to be a little bit left to fend
11:30
for itself is the 30 year Treasury bond
11:32
which has gone up in yield from its low
11:35
close by about forty three basis points
11:39
and from its intraday low by about
11:40
seventy basis points which is actually a
11:42
pretty big loss if a 30-year Treasury
11:44
bond goes up and yield by 70 basis
11:46
points you lose you lose about 15
11:49
percent or 12 percent or so which is a
11:51
pretty pretty big loss so the 30-year
11:53
Treasury bond if left on its own will be
11:56
going higher and the real signal to
11:58
watch for is what is the level at which
11:59
the Fed really gets uncomfortable with
12:02
the tenure but in particular 30 year
12:05
Treasury bond yield because the amount
12:07
of debt that needs to be floated that
12:09
the Fed has quantitative done
12:11
quantitative easing but we have a lot
12:13
more debt coming I mean we keep still
12:15
hearing about multi trillion-dollar
12:17
rescue packages and don’t forget we have
12:20
these one of the the programs like the
12:23
$600 program is running off I think at
12:25
the end of July and there’s other
12:27
assistance that runs off at the end of
12:29
the year and it’s going to be a really
12:31
big question as to how the economy can
12:34
handle the taking a way of direct
12:37
monetary payments to American citizens
12:39
that are you know don’t have any savings
12:41
and are in economic distress so if you
12:45
didn’t have the Fed you manipulate the
12:47
30 year Treasury bond I think with all
12:49
the supply that’s coming if we’re
12:51
allowed to actually float into the
12:52
market the rate would go quite a bit
12:54
higher but there’ll be a level at which
12:56
I think the Fed decides to do that yield
12:58
curve control and therefore suppress
13:00
that interest rate so it’s a very tough
13:02
environment for investors because there
13:05
are no market signals there’s just
13:06
targeted assets and targeted prices for
13:10
many sectors of the market and the only
13:11
way to succeed as a fixed income
13:13
investor is to really unfortunately have
13:17
to put in a tremendous amount of time
13:20
and energy
13:21
and with a lot of people working on it
13:24
into the areas that the Fed is not
13:25
supporting and when I talk about that a
13:28
lot of investors get really nervous
13:29
because we’re taught the things that the
13:31
Fed isn’t supporting our areas that have
13:33
a lot of economic question marks around
13:35
them like commercial mortgage-backed
13:37
securities like credit card receivable
13:40
debt these types of things I think we we
13:43
all know that some of these forbearance
13:47
and some of the non-payment is likely to
13:48
continue to increase over time and you
13:51
have to kind of understand that you’re
13:54
likely to take losses from par on some
13:57
of these securities the good news is
13:58
that we don’t think the losses are going
14:01
to take our beyond what the discounted
14:04
prices are already because everybody
14:06
knows that these sectors are in really
14:08
big trouble or this certain particularly
14:10
hotspots of them aren’t truly big
14:12
trouble you know like hospitality Cruise
14:14
Lines and the like but that’s what you
14:17
have to you have to do and investors are
14:19
reluctant to go into fixed income
14:22
securities when they think there’s any
14:24
risk there’s always risk of course but
14:27
when they can see the risk they get
14:29
afraid but that’s why the prices are
14:30
down it’s the paradox of investing
14:32
people don’t like to buy low they like
14:35
to buy high when everything when the Sun
14:37
looks like it’s shining in the sky is
14:38
blue and what it looks like there’s a
14:40
hurricane coming they want out but the
14:42
hurricane is priced in when you know
14:45
that it’s coming and so this is it it’s
14:47
a tough environment for standard
14:49
investment types I’m glad that we at
14:51
double I’ll always have a differentiated
14:53
more creative investment style because
14:55
it’s kind of a suited to this type of
14:57
environment better than more traditional
14:58
or certainly a passive investment style
15:00
which looks like almost doomed to fail
15:02
in in the environment that we’re in
15:04
Jeffrey I’d like to get your take though
15:07
on the economy and we keep hearing about
15:10
a v-shape recovering a u-shaped and L
15:13
shape a W a Nike swoosh what have you
15:15
what is your baseline scenario what does
15:18
it look like to you
15:19
well my baseline scenario is that a
15:22
v-shaped recovery so-called is highly
15:25
optimistic and I don’t think really
15:27
plausible what it basically implies is
15:31
that you can take 20% of the entire work
15:35
force the labor force United States and
15:37
put them in jeopardy
15:39
put him on unemployment benefits have
15:41
them produced nothing and instead
15:43
receive money that’s being lent by the
15:45
Federal Reserve to to buy the bonds and
15:48
that you could do that and nothing bad
15:51
happens and nobody gets hurt it just
15:53
doesn’t seem very likely to me that you
15:55
can have that type of hardship roll over
15:58
the economy and you just it’s like
16:01
nothing happened you know it’s like the
16:03
servpro economy like it never even
16:04
happened
16:05
and I just don’t believe that so when I
16:08
was when I finally started to ocean safe
16:11
I when I first started worrying about
16:13
the Cova 19 being a real thing which was
16:17
in in March in like the first week of
16:19
March I did an interview and I was asked
16:22
what do you think about this virus thing
16:24
and I said you know I I don’t know what
16:27
the consensus view point is about how
16:29
bad this is gonna get and what the
16:30
damage is gonna be to the system but
16:33
whatever that consensus view is I want
16:35
to take the over that it’s gonna be
16:37
worse than that and when it comes to the
16:39
economic outlook going forward here from
16:41
July 1st by the way welcome to the third
16:43
quarter in the second half of 2020 I’m
16:45
glad the first half is over I think that
16:49
whatever the consensus is on the
16:51
so-called shape of the recovery I’m
16:53
taking the under I think that you cannot
16:56
have this type of economic disruption
16:59
and fear that has been instilled in
17:02
people’s psyches I don’t think there’s a
17:04
good appreciation for how much economic
17:06
fear there is I can well imagine the
17:09
people that were making you know seventy
17:12
thousand dollars a year and they
17:13
suddenly got furloughed or laid off and
17:16
they look in their bank account and
17:18
they’re hoping to see something there
17:19
but unfortunately there was no magic
17:21
Genie that showed up and deposited money
17:23
and their balance is still five dollars
17:25
and so they suddenly are looking into an
17:28
economic black hole and I think that’s a
17:30
really major jolt to the psyche of those
17:34
people and I have a feeling that there’s
17:36
going to be more of that that goes on as
17:38
I said these programs roll off so some
17:41
of the people are going to start getting
17:42
economic eggs about that but beyond that
17:44
I believe that the people who are make
17:48
$100,000 to maybe a hundred and fifty
17:51
thousand dollars might be a risk also in
17:55
another wave of layoffs because those
17:57
people also don’t really have any
18:00
savings by and large but also the
18:03
government is unlikely I think to come
18:05
to the rescue for those types of people
18:07
quite as readily as they did for people
18:10
who are lead living paid more paycheck
18:12
to paycheck in a real literal kind of a
18:14
sense and it just seems to me that this
18:17
this economic situation from a jobs and
18:20
wages perspective is fundamentally
18:23
deflationary we have all these people
18:25
that are are working at our risk and you
18:30
might decide through work at home and
18:32
other things that there’s more efficient
18:34
ways of doing things and what we did
18:37
prior to February of 2020 and I could
18:40
see that there could be a round of
18:42
middle management layoffs that come
18:44
around because people might be revealed
18:47
for not being that productive when
18:50
you’re doing work at home it’s more easy
18:52
actually to tell this for me it’s more
18:54
easy for me to tell who’s really doing
18:56
work because who’s responding to the
18:58
emails who’s really contributing to the
19:00
team’s meetings and all that sort of
19:03
thing and I just think that companies
19:05
will realize that there’s a they could
19:07
right-size with the knowledge they’ve
19:09
gained through this pandemic and so we
19:13
could see people who are making $120,000
19:17
a year and if de minimis savings if they
19:19
get R it’s a pink-slipped
19:21
they’re gonna be in a real panic because
19:23
there’s not a lot of jobs open they’ll
19:26
probably have a lot of company in people
19:28
that are in that position and that will
19:30
put downward pressure on these wages
19:32
also we also know that the economy is
19:34
going to be unevenly affected we know
19:36
that make big cities are likely to
19:39
suffer an exodus we know that prices on
19:42
apartments and homes and the in the San
19:44
Francisco area are declining you know
19:46
that’s also happening relative to
19:48
Manhattan real estate and that means
19:50
that other parts of the country are
19:52
going to start to see perhaps inflow of
19:55
population we’ve been tracking a double
19:56
I kind of the the showings the the
20:00
request for showings of home
20:01
in various parts of the country and is
20:03
very uneven there are parts where that
20:07
are more suburban like I’m it’s a
20:09
reversal of the trend that we had a
20:11
decade ago and so there’ll be an uneven
20:14
type of type of effect to the economy
20:16
the other thing that’s going to happen
20:17
isn’t as being talked about nearly
20:18
enough is the states are really in
20:21
trouble the tax revenue from the states
20:23
has completely collapsed and it’s
20:26
unlikely to improve and so a lot of
20:29
these states are going to be looking for
20:32
or in some of them already asked for
20:33
more government bailouts so there’s a
20:36
long queue of entities that want or need
20:39
government bailouts and that’s just
20:41
going to keep further pressuring that
20:44
the situation so I think the economy is
20:47
going to feel the blow the effects of
20:50
the recession and that we’re in now for
20:53
quite some time to come I think it’s
20:55
very unlikely that we’ll get back to our
20:57
peak economic growth even in 2021 well
21:02
it’s certainly a confluence of forces
21:04
that you just highlighted there that are
21:06
playing into your thesis I guess Jeffrey
21:09
what does this mean for the social
21:11
fabric of the country does this actually
21:14
exacerbate the inequality especially if
21:17
you step back and look at some of the
21:18
response we’ve seen because you know a
21:19
stock market go up that we also know not
21:22
everyone owned stocks
21:23
well what’s there’s a lot a lot to that
21:27
question the stock market is partially
21:29
up because of all the money that the
21:31
government has given people who are
21:33
unemployed and if you see the
21:35
commercials on financial media they’ve
21:38
created the investment products that are
21:40
smaller in smaller denominations there’s
21:43
ones that it’s called slices and it can
21:45
buy $5 of a company $5 and you can buy a
21:49
10 stock portfolio and invest $50 and
21:52
it’s been well widely reported and it’s
21:54
true there’s been an incredible increase
21:56
in tiny retail investor activity in
22:00
terms of the accounts on robin hood and
22:01
in other platforms like that that have
22:04
just exploded in terms of size and I
22:06
think that’s pretty dangerous one thing
22:08
it was interesting at the top of the
22:10
stock market in February there was
22:12
really unusually high call option buying
22:15
activity by the little guy but that has
22:17
been far surpassed at the high of about
22:21
three weeks ago around June eighth
22:22
through June ninth where the number of
22:25
call options were purchased then was
22:27
fully fifty plus percent higher than the
22:30
call buying that was happening at the
22:32
peak in February which shows that
22:35
there’s kind of an you phoria weirdly
22:37
from people who made me maybe they would
22:40
normally gamble that money or about that
22:42
they’re getting from the government but
22:43
the casinos are closed so the racetracks
22:47
are closed so you so instead you can you
22:49
can take a flyer on the fans and the
22:53
super six I call includes Microsoft in
22:55
the light without the super six there is
22:57
no earnings growth the United States
22:59
stock market there’s an any for the past
23:00
five years if you take them out it’s
23:02
nothing and there’s no earnings growth
23:04
at all in small caps so this is all
23:06
being driven by by a price not by
23:09
earnings and of course earnings have
23:11
taken the humongous hit and earnings in
23:14
the stock market are now about the same
23:16
as they were in 2016 when the stock
23:18
market was like a third lower than it is
23:20
today
23:21
so the fundamentals are completely out
23:24
of sync with what’s how the markets been
23:26
manipulated I think and then we got of
23:28
course we got the social fabric that you
23:30
brought up which we’ve talked about in
23:31
the past and unfortunately I quite
23:34
certain not predicted this in Prior
23:36
interviews there’s just going to keep
23:37
getting worse and in fact this triple
23:39
crisis of the the economic recession the
23:42
Cova thing the protests and all that
23:44
stuff it’s really just the same problem
23:46
through different through different
23:48
lenses it’s all it all fits together and
23:51
it also fits together that we’ve got a
23:53
horrific allah bad presidential election
23:55
coming up where you know joe biden has a
23:58
real enthusiasm problem everybody knows
24:00
about that and nobody knows really what
24:03
his state of mind is these days because
24:05
he’s hiding out in a bunker and then
24:07
president Trump’s a basic strategy which
24:10
has been very successful for him for
24:12
decades really and certainly in the 2016
24:14
election has backfired his strategy is
24:17
hyperbole he likes to take a situation
24:19
that is pretty good and say that it’s
24:22
great and to take a situation that’s
24:25
great and say it’s the greatest thing of
24:27
all time
24:28
we had the greatest economy of all time
24:29
the first part of 2020 no he didn’t
24:32
that’s ridiculous
24:33
it’s I mean close to the greatest
24:34
economy of all time but this time the
24:37
hyper but in all of those instances the
24:39
hyperbole was on the right side of the
24:41
distribution it was a good economy he
24:44
just called it great he wasn’t saying it
24:46
was a terrible economy that was great
24:48
because that doesn’t resonate with
24:50
people it comes across as disingenuous
24:51
but with the virus he screwed up because
24:55
he’s got a situation where the virus is
24:57
bad and he keeps saying it’s gonna
24:59
disappear it’s not really a prop he’s on
25:01
the wrong side of the distribution the
25:03
virus is a negative side of the
25:05
distribution and he’s pretending that it
25:07
isn’t on the negative side he’s
25:09
pretending that it’s all pretty good and
25:11
it’s just gonna go away
25:12
and that’s I think why his unfavorables
25:15
going up people in the past people said
25:19
Trump’s a liar he was he was an
25:21
exaggerator there’s a difference there’s
25:23
a subtle difference but there’s a
25:25
difference now he’s not an exaggerator
25:27
he’s just changing the sign from a
25:30
cluster from a negative sign to a plus
25:31
sign on that variable and I think that’s
25:34
that’s a really problem for him and I
25:35
don’t know if he knows how to get
25:37
himself out of it so today I saw in the
25:39
news that they’re arguing the argument
25:41
now has become which of these two men is
25:43
more intellectually challenged I think
25:47
they’re safe they’re having to debate on
25:49
who’s more senile okay this is not an
25:51
inspiring conversation when you have to
25:54
ancient guys who they’re there debate is
25:57
centering around which one of them is is
26:00
you know in a greater slope of mental
26:04
decline so this is this is not
26:06
encouraging just having a conversation
26:07
about the election which is only four
26:09
months away at this point Jeffrey I I
26:12
look at the betting markets I know you
26:13
do too and unpredicted those bite and
26:16
beating Trump and also a Democratic
26:18
sweep yet the markets are still going up
26:20
and some people think when there is
26:21
usually a change in leadership that they
26:24
might go down on what do you make of
26:28
that well it’s true that Divine’s ahead
26:31
pretty nicely and unpredicted now and
26:34
it’s also true I think that there’s a
26:36
disconnect between that and the stock
26:38
market because Joe Biden and
26:40
the Democrats broadly they pledged
26:42
pretty loudly that they want to increase
26:46
corporate taxes they want to take that
26:48
tax benefit away from what Trump gave
26:51
corporations and since earnings aren’t
26:54
going up at all really it’s the tax has
26:57
had a lot to do with levitating the
26:59
stock market and if you review if you
27:01
reverse that that’s gonna be a really
27:03
big problem you know I was talking about
27:06
you talked the social fabric and I that
27:08
fits into the election I was listening
27:09
to this fellow who I think they call him
27:11
the president of New York black lives
27:13
matter his name is hawk Newsome and he’s
27:16
actually a pretty interesting guy and he
27:18
was talking on a Sunday program and he
27:20
was talking about politics and the like
27:22
and he was you know he’s got a
27:24
particular core issues that he hammers
27:27
home for his sort of constituency but he
27:29
started to go off on what you hold a
27:30
tangent and he said I don’t want to
27:33
digress too far but you know what’s
27:35
wrong here is I don’t trust any of these
27:37
politicians he said they always show up
27:39
about a year before the election and all
27:41
of a sudden they embrace us they want
27:43
our votes they never do anything for us
27:45
and that sounds that sounded to me to be
27:48
not not a digression or a tangent that
27:50
seemed to me to be really the point the
27:53
point is that there are a lot of people
27:55
that feel that they’re not sure what’s
27:57
wrong but they know that over the last
27:59
however many years twenty years whatever
28:02
thirty years ever it is that somehow
28:04
this economic arrangement is not working
28:06
for them and they understand that takes
28:08
many different forms and you know
28:11
there’s all kinds of data points you can
28:13
look at like wealth inequality but
28:15
there’s other things than that I mean
28:16
these these people these this political
28:19
regime has been in charge for a long
28:20
time and it’s it’s it’s awful how
28:24
they’re the investment in America is so
28:28
uneven how the quality of education is
28:31
so uneven and and really it’s just not
28:34
being addressed and what I hear the
28:36
president black lives matter in New York
28:37
say you know they’re they’re not paying
28:40
attention to us that starts to sound
28:42
like a third party to me I think that if
28:45
if the election were in 2021 and not
28:48
2020 I really think there’d be a third
28:50
party and one thing to watch on that
28:53
is the labor force participation rate
28:55
the number of people that are spoked it
28:57
can have a job that have a job is got
29:00
down I think it it uptick in the most
29:03
recent report but it was down to like 52
29:05
percent that 52 percent of the labor
29:08
force was engaged if that number goes
29:12
any meaningful amount below 50 you’ve
29:14
got a winning third party it’s called
29:16
the unemployment party it’s called the
29:18
omelet out party and I think that’s
29:20
what’s really happening here we’ve
29:22
talked about this in past interviews and
29:24
I just think that that will do nothing
29:26
but get worse and we will ultimately
29:29
I’ve even talked about civil unrest
29:31
during this summer in a past interview
29:33
with you in the context of the
29:35
conventions for this election and that’s
29:38
already here and I think that you were
29:40
going to see an escalation in these
29:43
problems as the voices of the unheard
29:46
remain unheard primarily except except
29:49
for all kinds of sound bites and you
29:52
know promises that I’ve heard a lot of
29:55
times before and so have a lot of other
29:57
people in American constituency yeah
30:00
Jeffrey yeah one final question before
30:01
we let you go one of the things about
30:03
double line even going back to the name
30:05
of it it’s don’t cross the double line
30:07
of risk and we have a lot of investors
30:09
watching a lot of retail investors too
30:11
and what is the risk right now that
30:15
people aren’t talking about enough
30:16
aren’t paying attention to enough that
30:18
they should be more aware of I think
30:22
there’s a real risk and it’s not
30:24
imminent exactly in fact I don’t I don’t
30:26
think it’s really in the next few months
30:27
but I think there’s risk that the dollar
30:30
starts to reverse into a significant
30:32
downtrend because the value of the
30:34
dollar versus other currencies is
30:36
greatly affected by the growth in our
30:39
budget and trade deficit the trade
30:42
deficit is shrinking right now because
30:43
economic growth is bad globally but it
30:46
doesn’t matter because the fiscal
30:48
deficit has just exploded higher I mean
30:50
we’re up at over three and a half
30:51
trillion already and the year in first
30:54
five months of this year in addition to
30:56
that and a lot of people say but the
30:59
dollar will be you say the dog is going
31:00
to go down against what because
31:02
everybody else is doing strange policies
31:04
to and
31:05
that’s a it’s a that’s an okay point
31:08
except it misses the fact that what
31:09
we’re doing here in the United States
31:11
Dwarfs the policies particularly what
31:14
the Federal Reserve is doing versus ECB
31:16
and other central banks what we’re doing
31:18
dwarfs what they’re what they’ve been up
31:20
to we’re really carrying the burden here
31:22
in terms of in terms of fiscal explosion
31:24
and that I think will ultimately lead to
31:26
a weaker dollar which means that you
31:28
might start to see some sort of
31:30
purchasing power problems you might also
31:32
see that the dominance of the US markets
31:36
will start to fade away and maybe not
31:39
turn into dominance but an inferior type
31:41
of a forward-looking
31:43
outcome so I think these people that are
31:46
buying slices of the stock market don’t
31:49
even know what they’re doing and if
31:51
probably lost money already because they
31:53
probably bought them Junaid I just think
31:55
they don’t think they understand that
31:57
this is a is a it’s not a fixed
32:00
situation and there’s all there there
32:02
are several more shoes if not Imelda
32:04
Marcos is closet full of shoes to fall
32:07
on this economic and market situation
32:09
something that we will be watching
32:11
Jeffrey gun lock the CEO of doubling
32:13
capital I thank you so much for this
32:15
great conversation I know our viewers
32:17
appreciate it it’s always great to be
32:18
with you

Esper Says He Saw No Evidence Iran Targeted 4 Embassies, as Story Shifts Again

The disparity between the defense secretary and President Trump added another twist to an ever-evolving explanation for a strike on an Iranian general that led to the brink of war.

They had to kill him because he was planning an “imminent” attack. But how imminent they could not say. Where they could not say. When they could not say. And really, it was more about what he had already done. Or actually it was to stop him from hitting an American embassy. Or four embassies. Or not.

For 10 days, President Trump and his team have struggled to describe the reasoning behind the decision to launch a drone strike against Maj. Gen. Qassim Suleimani, the commander of Iran’s elite security forces, propelling the two nations to the brink of war. Officials agree they had intelligence indicating danger, but the public explanations have shifted by the day and sometimes by the hour.

On Sunday came the latest twist. Defense Secretary Mark T. Esper said he was never shown any specific piece of evidence that Iran was planning an attack on four American embassies, as Mr. Trump had claimed just two days earlier.

“I didn’t see one with regard to four embassies,” Mr. Esper said on CBS’s “Face the Nation.” But he added: “I share the president’s view that probably — my expectation was they were going to go after our embassies. The embassies are the most prominent display of American presence in a country.”

The sharp disparity between the president and his defense secretary only added to the public debate over the Jan. 3 strike that killed Iran’s most important general and whether there was sufficient justification for an operation that escalated tensions with Iran, aggravated relations with European allies and prompted Iraq to threaten to expel United States forces. General Suleimani was deemed responsible for killing hundreds of American soldiers in the Iraq war more than a decade ago, but it was not clear whether he had specific plans for a mass-casualty attack in the near future.

The Trump Administration’s Fluctuating Explanations for the Suleimani Strike

While agreeing that General Suleimani was generally a threat, Democrats in Congress, as well as some Republicans, have said the administration has not provided evidence even in classified briefings to back up the claim of an “imminent” attack, nor has it mentioned that four embassies were targeted. Even some Pentagon officials have said privately that they were unaware of any intelligence suggesting that a large-scale attack was in the offing.

But senior government officials with the best access to intelligence have insisted there was ample cause for concern even if it has not been communicated clearly to the public. Gina Haspel, the director of the C.I.A., and Gen. Mark A. Milley, the chairman of the Joint Chiefs of Staff — who were both appointed by Mr. Trump but are career officials without a political history — have said privately and forcefully that the intelligence was compelling and that they were convinced a major attack was coming.

The challenge for the Trump administration is persuading the public, which has been skeptical about intelligence used to justify military action since President George W. Bush invaded Iraq in 2003 based on what turned out to be inaccurate intelligence indicating that Saddam Hussein had weapons of mass destruction.

Mr. Trump himself has made clear in other circumstances that he does not trust the intelligence agencies that he is now citing to justify his decision to eliminate General Suleimani. Moreover, given his long history of falsehoods and distortions, Mr. Trump has his own credibility issues that further cloud the picture. All of which means the administration’s failure to provide a consistent explanation has sown doubts and exposed it to criticism.

“If indeed the strike was taken to disrupt an imminent threat to U.S. persons — and that picture seems to be getting murkier by the minute — the case should be made to Congress and to the public, consistent with national security,” said Lisa Monaco, a former senior F.B.I. official and homeland security adviser to President Barack Obama. “Failure to do so hurts our credibility and deterrence going forward.”

Intelligence officials, who spoke on the condition of anonymity to describe sensitive data collection, have said there was no single definitive piece of information about a coming attack. Instead, C.I.A. officers described a “mosaic effect,” multiple scraps of information that came together indicating that General Suleimani was organizing proxy forces around the region, including in Lebanon, Yemen and Iraq, to attack American embassies and bases.

Several officials said they did not have enough concrete information to describe such a threat as “imminent,” despite the administration’s assertion, but they did see a worrying pattern. A State Department official has privately said it was a mistake for Secretary of State Mike Pompeo to use the word “imminent” because it suggested a level of specificity that was not borne out by the intelligence.

“I have not seen the intelligence, just to be clear, but it is sometimes possible for the reporting of planned attacks to be very compelling even without specificity of time, target or method,” said John E. McLaughlin, a former acting C.I.A. director. “In a sense, that is the story of 9/11. Our reporting gave us high confidence that a big attack was coming — and we so warned — but we were unable to nail down key details.”

Mr. McLaughlin said that the administration may well have had intelligence adequate to compel action, but that it was a separate question whether killing General Suleimani was the most effective response, as opposed to hardening targets or choosing a less provocative option.

John B. Bellinger III, who was the top lawyer for the National Security Council and later the State Department under Mr. Bush, said the president would have legal authority to strike under the Constitution whether or not there was fear of an imminent attack.

But under the United Nations Charter, the United States cannot use force in another country without its consent or the authority of the Security Council except in response to an armed attack or a threat of an imminent armed attack. “So under international law, the attack on Suleimani would not have been lawful unless he presented an imminent threat,” Mr. Bellinger said.

Claims that an imminent attack could take “hundreds of American lives,” as Mr. Pompeo put it right after the drone strike, have also generated doubts because no attack in the Middle East over the past two decades, even at the height of the Iraq war, has ever resulted in so many American casualties at once in part because embassies and bases have become so fortified.

The contrast in descriptions of what the administration knew and what it did not came in quick succession on a single Fox News show last week.

On Thursday night, Mr. Pompeo, while sticking by his description of an “imminent” attack, acknowledged that the information was not concrete. “We don’t know precisely when and we don’t know precisely where, but it was real,” he told the host, Laura Ingraham.

The next day, in a separate interview, Mr. Trump told Ms. Ingraham that in fact he did know where. “I can reveal that I believe it probably would’ve been four embassies,” he said.

That left administration officials like Mr. Esper in an awkward position when they hit the talk show circuit on Sunday. While the defense secretary revealed on CBS that he had not seen intelligence indicating four embassies were targeted, he sounded more supportive of Mr. Trump’s claim on CNN’s “State of the Union.”

“What the president said in regard to the four embassies is what I believe as well,” he said, seeming to make a distinction between belief and specific intelligence. “And he said he believed that they probably, that they could have been targeting the embassies in the region.”

Appearing on “Fox News Sunday,” Robert O’Brien, the president’s national security adviser, played down Mr. Trump’s claim of specific, imminent threats to four American embassies in the region.

“Look, it’s always difficult, even with the exquisite intelligence that we have, to know exactly what the targets are,” Mr. O’Brien said. “We knew there were threats to American facilities, now whether they were bases, embassies — you know it’s always hard until the attack happens.”

“But,” he added, “we had very strong intelligence.”

Senator Mike Lee of Utah, one of the administration’s most outspoken Republican critics after the strike, said on CNN that he worried about the quality of the information that national security officials were sharing with Congress and had not “been able to yet ascertain specific details of the imminence of the attack.”

“I believe that the briefers and the president believed that they had a basis for concluding that there was an imminent attack, I don’t doubt that, but it is frustrating to be told that and not get the details behind it,” he said.

Speaker Nancy Pelosi struck a similar tone, telling ABC’s “This Week” that “I don’t think the administration has been straight with the Congress of the United States” about the reasons for killing General Suleimani.

On “Face the Nation,” Representative Adam B. Schiff, Democrat of California and chairman of the House Intelligence Committee, accused the president and his top aides of “fudging” the intelligence.

“Frankly, I think what they are doing is overstating and exaggerating what the intelligence shows,” Mr. Schiff said. Officials briefing the so-called Gang of Eight top congressional leaders never said that four embassies were targeted, he added. “In the view of the briefers, there was plotting, there was an effort to escalate being planned, but they didn’t have specificity.”

A Mar-a-Lago Weekend and an Act of God: Trump’s History With Deutsche Bank

At Deutsche Bank, Mr. Offit’s mandate was to lend money to big real estate developers, package the loans into securities and sell the resulting bonds to investors. He said in an interview that one way to stand out in a crowded market was to make loans that his rivals considered too risky.

In 1998, a broker contacted him to see if he would consider lending to a Wall Street pariah: Mr. Trump, who was then a casino magnate whose bankruptcies had cost banks hundreds of millions of dollars.

Mr. Offit took the meeting.

A few days later, Mr. Offit’s secretary called him. “Donald Trump is in the conference room,” she whispered. Mr. Offit said he rushed in, expecting to find an entourage. Mr. Trump was alone.

He was looking for a $125 million loan to pay for gut renovations of 40 Wall Street, his Art Deco tower in Lower Manhattan. Mr. Offit was impressed by the pitch, and the loan sailed through Deutsche Bank’s approval process.

Mr. Trump seemed giddy with gratitude, Mr. Offit recalled. He took Mr. Offit golfing. He flew him by helicopter to Atlantic City for boxing matches. He wrote a grateful note to Sidney Offit for having “a great son!”

Mr. Offit commissioned a detailed model of 40 Wall Street. A golden plaque on its pedestal bore the names and logos of Deutsche Bank and the Trump Organization. Mr. Offit gave one to Mr. Trump and kept another in his office.

Mr. Trump soon came looking for $300 million for the construction of a skyscraper across from the United Nations headquarters. The loan was approved. He wanted hundreds of millions more for his Trump Marina casino in Atlantic City. Mr. Offit pledged to line up cash for that, too.

Not long after, Edson Mitchell, a top bank executive, discovered that the signature of the credit officer who had approved the Trump Marina deal had been forged, Mr. Offit said. (Mr. Offit was never accused of forgery; the loan never went through.)

Mr. Offit was fired months later. He said it was because Mr. Mitchell claimed that he was reckless, a charge Mr. Offit disputed.

It was the first hiccup in the Trump relationship. It would not be the last.

Over the next few years, the commercial real estate group, with Mr. Kennedy now in a senior role, kept lending to Mr. Trump, including to buy the General Motors building in Manhattan. Occasionally, Justice Kennedy stopped by Deutsche Bank’s offices to say hello to the team, executives recalled.

At an annual pro-am golf tournament the bank hosted outside Boston in the early 2000s, Mr. Trump sat down for a recorded interview with the bank’s public relations staff, who asked about his experience with Deutsche Bank.

“It’s great,” Mr. Trump exclaimed, according to a person who witnessed the interview. “They’re really fast!”

In 2003, a Deutsche Bank team led by Richard Byrne — a former casino-industry analyst who had known Mr. Trump since the 1980s — was hired to sell bonds on behalf of Trump Hotels & Casino Resorts. Bank officials escorted Mr. Trump to meet institutional investors in New York and Boston, according to an executive who attended.

The so-called roadshow seemed to go well. At every stop, Mr. Trump was greeted by large audiences of fund managers, executives and lower-level employees eager to see the famous mogul. The problem, as a Deutsche Bank executive would explain to Mr. Trump, was that few of them were willing to entrust money to him.

Mr. Trump requested an audience with the bank’s bond salesmen.

According to a Deutsche Bank executive who heard the remarks, Mr. Trump gave a pep talk. “Fellas, I know this isn’t the easiest thing you’ve had to sell,” the executive recalled Mr. Trump saying. “But if you get this done, you’ll all be my guests at Mar-a-Lago,” his private club in Palm Beach, Fla.

The sales team managed to sell hundreds of millions of dollars worth of bonds. Mr. Trump was pleased with the results when a Deutsche Bank executive called, according to a person who heard the conversation.

“Don’t forget what you promised our guys,” the executive reminded him.

Mr. Trump said he did not remember and that he doubted the salesmen actually expected to be taken to Mar-a-Lago.

“That’s all they’ve talked about the past week,” the executive replied.

Mr. Trump ultimately flew about 15 salesmen to Florida on his Boeing 727. They spent a weekend golfing with Mr. Trump, two participants said.

A year later, in 2004, Trump Hotels & Casino Resorts defaulted on the bonds. Deutsche Bank’s clients suffered steep losses. This arm of the investment-banking division stopped doing business with Mr. Trump.

.. Mr. Trump told Deutsche Bank his net worth was about $3 billion, but when bank employees reviewed his finances, they concluded he was worth about $788 million, according to documents produced during a lawsuit Mr. Trump brought against the former New York Times journalist Timothy O’Brien. And a senior investment-banking executive said in an interview that he and others cautioned that Mr. Trump should be avoided because he had worked with people in the construction industry connected to organized crime.

Nonetheless, Deutsche Bank agreed in 2005 to lend Mr. Trump more than $500 million for the project. He personally guaranteed $40 million of it, meaning the bank could come after his personal assets if he defaulted.

By 2008, the riverside skyscraper, one of the tallest in America, was mostly built. But with the economy sagging, Mr. Trump struggled to sell hundreds of condominium units. The bulk of the loan was due that November.

Then the financial crisis hit, and Mr. Trump’s lawyers sensed an opportunity.

A provision in the loan let Mr. Trump partially off the hook in the event of a “force majeure,” essentially an act of God, like a natural disaster. The former Federal Reserve chairman Alan Greenspan had called the financial crisis a tsunami. And what was a tsunami if not a natural disaster?

.. One of Mr. Trump’s lawyers, Steven Schlesinger, told him the provision could be used against Deutsche Bank.

“It’s brilliant!” Mr. Schlesinger recalled Mr. Trump responding.

Days before the loan was due, Mr. Trump sued Deutsche Bank, citing the force majeure language and seeking $3 billion in damages. Deutsche Bank countersued and demanded payment of the $40 million that Mr. Trump had personally guaranteed.

With the suits in court, senior investment-banking executives severed ties with Mr. Trump.

.. Ms. Vrablic’s superiors encouraged her to make loans that rival banks dismissed as too large or complex. They saw it as a way to elbow into the hypercompetitive New York market.

.. One of Ms. Vrablic’s clients was Jared Kushner, who married Ivanka Trump in 2009. Mr. Kushner regarded Ms. Vrablic as the best banker he had ever worked with, according to a person familiar with his thinking.

Shortly after the Chicago lawsuit was settled, Mr. Kushner was told that Mr. Trump was looking for a loan and introduced him to Ms. Vrablic, according to people familiar with the relationship.

.. Mr. Trump flew Ms. Vrablic to Miami to show her a property he wanted to buy: the Doral Golf Resort and Spa. He needed more than $100 million for the 72-hole property.

Deutsche Bank dispatched a team to Trump Tower to inspect Mr. Trump’s personal and corporate financial records. The bankers determined he was overvaluing some of his real estate assets by as much as 70 percent, according to two former executives.

.. By then, though, Mr. Trump had become a reality-TV star, and he was swimming in cash from “The Apprentice.” Deutsche Bank officials also were impressed that Mr. Trump did not have much debt, according to people who reviewed his finances. Aside from his history of defaults, he was an attractive borrower.

Mr. Trump also expressed interest in another loan from the private-banking division: $48 million for the same Chicago property that had provoked the two-year court fight.

Mr. Trump told the bank he would use that loan to repay what he still owed the investment-banking division, the two former executives said. Even by Wall Street standards, borrowing money from one part of a bank to pay off a loan from another was an extraordinary act of financial chutzpah.

.. Investment-banking executives, including Anshu Jain, who would soon become Deutsche Bank’s co-chief executive, pushed back. Lending to Mr. Trump again would be foolish, they argued, and signal to clients that they could default and even sue the bank.

Executives in the private bank countered that the proposed loans had Mr. Trump’s personal guarantee and therefore were low risk. And the Chicago loan, they noted, would lead to the repayment of tens of millions of dollars that Mr. Trump still owed the investment-banking division.

A top executive with responsibility for the private bank discussed the loans with Mr. Ackermann, the chief executive, who supported them, according to two officials. A powerful committee in Frankfurt, which evaluated loans based on risks to the bank’s reputation, signed off.

“There is no objection from the bank to proceed with this client,” wrote Stuart Clarke, the chief operating officer for the Americas, in a Dec. 5, 2011, email, according to a recipient.

Deutsche Bank wired the money to Mr. Trump. The loans carried relatively low interest rates, executives said, but the business promised to be profitable: As part of the deal, Mr. Trump would hold millions of dollars in a personal account, generating fees for the bank.

“I have no recollection of having been asked to approve that private-banking loan,” Mr. Ackermann said in an interview. He added: “I would have approved it, if it came to me, if it was commercially sound.”

Ms. Vrablic’s relationship with the Trumps deepened.

Deutsche Bank lent money to Donald Trump Jr. for a South Carolina manufacturing venture that would soon go bankrupt. It provided a $15 million credit line to Mr. Kushner and his mother, according to financial documents reviewed by The Times. The bank previously had an informal ban on business with the Kushners because Jared’s father, Charles, was a felon.

In 2012, Jared Kushner recommended that the editor of The Mortgage Observer, one of the publications he owned, write a profile of Ms. Vrablic. The editor, Carl Gaines, knew Mr. Kushner was her client and objected, according to a person familiar with the exchange.

“Just go meet with her,” Mr. Kushner said. “You’ll figure something out.”

gauzy profile of Ms. Vrablic was published in February 2013.

Shortly afterward, the private bank produced a promotional video featuring some of its marquee clients. The video was played at a retreat for Deutsche Bank’s senior leadership in Barcelona. In it, Ivanka Trump extolled the private bank’s work with her family and thanked their relationship manager, according to two people who saw the video.

.. In early 2014, Mr. Trump and his personal lawyer, Michael Cohen, approached Ms. Vrablic about more potential loans.

The owner of the Buffalo Bills had died, and the N.F.L. franchise was up for sale. Mr. Trump was interested, and he needed to show the league he had the financial wherewithal to pull off a transaction that could top $1 billion.

Mr. Trump asked Ms. Vrablic if the bank would be willing to make a loan and handed over bare-bones financial statements that estimated his net worth at $8.7 billion.

.. Mr. Cohen testified to Congress last month that the documents exaggerated Mr. Trump’s wealth. Deutsche Bank executives had reached a similar conclusion. They nonetheless agreed to vouch for Mr. Trump’s bid, according to an executive involved.

Mr. Trump’s bid did not win, but another lending opportunity soon arose.

A federal agency had selected Mr. Trump to transform the Old Post Office Building in Washington into a luxury hotel. But his financial partner — the private equity firm Colony Capital, run by Thomas J. Barrack Jr. — pulled out. Mr. Trump needed nearly $200 million.

.. Because of his decades-long pattern of defaults and his increasingly polarizing political rhetoric — among other things, he had been spreading a lie about President Barack Obama being born overseas — Mr. Trump remained untouchable for most banks.

Ms. Vrablic was willing to help.

In a memo outlining the rationale for the Old Post Office loan, Ms. Vrablic said Mr. Trump was expected to add large sums to his brokerage account if he received the loan, according to an executive who read the document.

This time, there was less internal opposition. One reason: Mr. Jain — by then the bank’s co-chief executive — had a solid relationship with Ms. Vrablic. Mr. Jain accompanied her to meetings with high-profile clients, and he praised her work to colleagues, multiple executives said.

..On a foggy Wednesday in February 2013, Ms. Vrablic and Mr. Jain went to Trump Tower to meet with Mr. Trump, according to two executives with knowledge of the meeting. Ms. Vrablic’s rapport with the client was immediately clear: Mr. Trump’s assistant greeted her as an old friend, and she seemed relaxed with Mr. Trump and his daughter, one executive said.

.. They discussed Mr. Trump’s finances over lunch, and Mr. Jain said he was surprised by his low level of debt, the executives said. After lunch, Ms. Vrablic told her colleagues that Mr. Jain had sounded upbeat about Mr. Trump’s finances.

A $170 million loan to pay for the overhaul of the Old Post Office went through in 2015, and Mr. Trump added more money to his brokerage account. (In May 2016, he reported up to $46 million of stocks and bonds in the account.)

.. On Aug. 6, 2015, Mr. Trump participated in the first Republican presidential debate. He clashed with the Fox News moderator, Megyn Kelly. He flew back to New York early the next morning. That evening, he called in to a CNN talk show and said of Ms. Kelly that there was “blood coming out of her wherever.”

In the intervening hours, Mr. Trump had used a black Sharpie to sign documents for another loan from Deutsche Bank: $19 million for the Doral resort. That brought to more than $300 million the total lent under Ms. Vrablic.

.. On the campaign trail, rivals assailed Mr. Trump’s financial history. In response, he pointed to Deutsche Bank-funded successes like the Old Post Office project, now a gleaming hotel a few blocks from the White House.

.. In early 2016, Mr. Trump asked Ms. Vrablic for one final loan, for his golf course in Turnberry, Scotland.

.. Ms. Vrablic said yes, but a fight soon erupted.

Jacques Brand, who was in charge of Deutsche Bank’s American businesses, angrily objected, partly because of Mr. Trump’s divisive rhetoric.

Ms. Vrablic appealed the decision. Senior executives in Frankfurt, including Christian Sewing, who would become chief executive in 2018, were shocked that the private bank would consider lending Mr. Trump money during the campaign, bank officials said.

The bank’s reputational risk committee killed the transaction in March 2016.

.. That same month, as The Times was preparing an article about Mr. Trump’s excommunication from Wall Street, he cited his warm relationship with Deutsche Bank.

.. “They are totally happy with me,” he said to The Times. “Why don’t you call the head of Deutsche Bank? Her name is Rosemary Vrablic. She is the boss.”

.. After Mr. Trump won the election, Deutsche Bank’s board of directors rushed to understand how the bank had become the biggest lender to the president-elect.

A report prepared by the board’s integrity committee concluded that executives in the private-banking division were so determined to win business from big-name clients that they had ignored Mr. Trump’s reputation for demagogy and defaults, according to a person who read the report.

The review also found that Deutsche Bank had produced a number of “exposure reports” that flagged the growing business with Mr. Trump, but that they had not been adequately reviewed by senior executives.

.. On Deutsche Bank’s trading floor, managers began warning employees not to use the word “Trump” in communications with people outside the bank. Salesmen who violated the edict were scolded by compliance officers who said the bank feared stoking public interest in its ties to the new president.

One reason: If Mr. Trump were to default on his loans, Deutsche Bank would have to choose between seizing his assets or cutting him a lucrative breaka situation the bank would rather resolve in private.

.. Two years after Mr. Trump was sworn in, Democrats took control of the House of Representatives. The chamber’s financial services and intelligence committees opened investigations into Deutsche Bank’s relationship with Mr. Trump. Those inquiries, as well as the New York attorney general’s investigation, come at a perilous time for Deutsche Bank, which is negotiating to merge with another large German lender.

Next month, Deutsche Bank is likely to start handing over extensive internal documents and communications about Mr. Trump to the congressional committees, according to people briefed on the process.

Ms. Vrablic, who is intensely private and rarely discusses her personal life with colleagues, declined to comment. People familiar with her thinking said she expected to be called to testify publicly on Capitol Hill.

Donald Trump’s Phony America

There are several kinds of success stories. We emphasize the ones starring brilliant inventors and earnest toilers. We celebrate sweat and stamina. We downplay the schemers, the short cuts and the subterfuge. But for every ambitious person who has the goods and is prepared to pay his or her dues, there’s another who doesn’t and is content to play the con. In the Trump era and the Trump orbit, these ambassadors of a darker side of the American dream have come to the fore.

.. What a con Holmes played with Theranos. For those unfamiliar with the tale, which the journalist John Carreyrou told brilliantly in “Bad Blood,” she dropped out of Stanford at 19 to pursue her Silicon Valley dream, intent on becoming a billionaire and on claiming the same perch in our culture and popular imagination that Steve Jobs did. She modeled her work habits and management style after his. She dressed as he did, in black turtlenecks. She honed a phony voice, deeper than her real one.

She spoke, with immaculate assurance, of a day when it might be on everyone’s bathroom counter: a time saver, a money saver and quite possibly a lifesaver. She sent early, imperfect versions of it to Walgreens pharmacies, which used it and thus doled out erroneous diagnoses to patients. She blocked peer reviews of it and buried evidence of its failures.

This went on not for months but for years, as Holmes attracted more than $900 million of investment money and lured a breathtakingly distinguished board of directors including two former secretaries of state, George Shultz and Henry Kissinger; a former secretary of defense, William Perry; and a future secretary of defense, James Mattis. What they had before them wasn’t proof or even the sturdy promise of revolutionary technology. It was a self-appointed wunderkind who struck a persuasive pose and talked an amazing game.

She was eventually found out, and faces criminal charges that could put her in prison. But there’s no guarantee of that. Meantime she lives in luxury. God bless America.

Theranos was perhaps an outlier in the scope of its deceptions, but not in the deceptions themselves. In an article titled “The Ugly Unethical Underside of Silicon Valley” in Fortune magazine in December 2016, Erin Griffith tallied a list of aborted ventures with more shimmer and swagger than substance, asserting: “As the list of start-up scandals grows, it’s time to ask whether entrepreneurs are taking ‘fake it till you make it’ too far.”

Is Trump Duping Putin?

Russian President Vladimir Putin seems to think that he has been using his strategically incompetent American counterpart to advance his ends. In fact, Donald Trump has dragged everyone into his reality-TV world, in which sensation, exaggeration, and misinformation all serve his only true goal: to be the center of attention.

But the truth is that neither Democrats nor the media have actually had much success in reining in Trump. As for the Republicans, who control both houses of the US Congress, even once-vocal opponents – such as Senators Lindsey Graham and Ted Cruz – now lick Trump’s boots. With Trump having bullied his party into submission, it seems unlikely that his failure to deliver for Putin can be blamed on others.

The more likely explanation for Trump’s betrayal of Putin is that his warm rhetoric was, like everything else that comes out of his mouth, driven by his desire for ratings, not any actual interest in – let alone commitment to – helping the Kremlin. Consider how Trump’s early overtures to another strongman, Chinese President Xi Jinping, gave way to a full-blown trade war against that country, which Trump now portrays as America’s enemy.

.. Of course, the world has come to expect broken promises and capriciousness from Trump. What is surprising is how Putin has misread the situation so badly. How could such a keen observer of the US, whose former career as a spy honed his ability to decipher people’s motives and intentions, fail to recognize the falseness of Trump’s promises?

.. If anyone knows that actions speak louder than words, it is Putin, whose words often include transparent denials of documented wrongdoing, from meddling in the US election to violating treaties. Yet Putin continues to ignore Trump’s actions and seeks for more meetings “to touch base” with the ever-complimentary US president, such as at this month’s World War I centenary in Paris or the G20 summit in Argentina.

Putin seems to think that he has been using the strategically incompetent Trump to advance his ends. In fact, Trump has dragged everyone into his reality-TV world, in which sensation, exaggeration, and misinformation all serve his only true goal: to be the last “survivor” on the island. By the time Putin finally realizes that he has been duped, the world will probably have paid a high price in terms of political stability, strategic security, and environmental damage. And Putin will have to pay it, too.

How Trump bobs and weaves to avoid the truth

As he so often does, President Trump falsely declared on “60 Minutes” that North Korea and the United States were going to war before he stepped in to thwart it.

Interviewer Lesley Stahl was having none of it. “We were going to war?”

Trump immediately retreated to safer ground, expressing a view rather than trying to assert a fact: “I think it was going to end up in war,” he said, before moving on to his “impression” of the situation.

The 26-minute interview that aired Oct. 14 was typical Trump — bobbing and weaving through a litany of false claims, misleading assertions and exaggerated facts. Trump again demonstrated what The Fact Checker has long documented: His rhetoric is fundamentally based on making statements that are not true, and he will be as deceptive as his audience will allow.

.. Trump resorting to all of his favored moves to sidestep the truth.

.. On Stahl’s first question, about whether Trump still thinks climate change is a hoax, the president dodged by saying “something’s happening.” He then completely reversed course and declared that climate change is not a hoax and that “I’m not denying climate change.”

.. Trump also falsely said the climate will change back again, even though the National Climate Assessment approved by his White House last year said that there was no turning back. He said he did not know whether climate change was man-made, though the same report said “there is no convincing alternative” posed by the evidence.

.. Trump did his usual shrug when asked whether North Korea is building more nuclear missiles. “Well, nobody really knows. I mean, people are saying that.” Among the people who are saying that are U.S. intelligence agencies, who have concluded that North Korea does not intend to fully surrender its nuclear stockpile and is instead working to conceal its weapons and production facilities.

.. Even when he adjusts his rhetoric, at times contradicting what he has just said, Trump almost always appears to believe firmly in what he is saying.

.. On trade, the president continues to suggest that deficits mean the United States is losing money: “I told President Xi we cannot continue to have China take $500 billion a year out of the United States.”

That’s wrong. The trade deficit just means Americans are buying more Chinese products than the Chinese are buying from the United States, not that the Chinese are somehow stealing U.S. money.

.. Trump also continues to misstate the trade deficit with China. It’s not $500 billion, as he told Stahl; it was $335 billion in 2017

.. Curiously, he denied to Stahl that he ever said he was engaged in a trade war with China, even though he has said and tweeted it many times, including on Fox News last week.

.. He also falsely said that “the European Union was formed in order to take advantage of us on trade.” That’s a misreading of history, at best. The E.U. got its start shortly after World War II as the European Coal and Steel Community — an early effort to bind together bitter enemies such as Germany and France in a common economic space to promote peace.

.. Trump surfaced another old favorite knock on U.S. allies — “we shouldn’t be paying almost the entire cost of NATO to protect Europe.” Actually, the United States pays 22 percent of NATO’s common fund. Trump keeps counting U.S. defense spending devoted to patrolling the Pacific Ocean and other parts of the world as part of NATO funding.

When it was pointed out that Defense Secretary Jim Mattis, a former general who served in the military for 44 years, says he believes NATO had kept the peace for 70 years, Trump sniffed, “I think I know more about it than he does.”

.. Questioned about Russian interference in the 2016 election, Trump conceded that “they meddled.” But he added, “I think China meddled, too.” When Stahl said he was “diverting the whole Russia thing,” Trump insisted he was not. “I’m not doing anything,” he demurred. “I’m saying Russia, but I’m also saying China.”

There is no evidence China engaged in the same disinformation effort as Russia, which intelligence agencies have said was designed to swing the election toward Trump.

.. Finally, Trump continued his habit of mischaracterizing what his predecessor did. He claimed that Barack Obama “gave away” the Crimea region of Ukraine, when actually Russia seized it and Obama then led an effort to impose sanctions in response.

.. In one of the testier back-and-forths, Trump tried to shut down Stahl with one line that was indisputably true: “I’m president,” he said, “and you’re not.”

Was Trump really a top student at Wharton? His classmates say not so much

Trump, who graduated from Wharton in 1968, has also never challenged the fact that he “graduated first in his class,” which various publishers and news agencies such as The New York Times have reported. 

Penn records and Trump’s classmates dispute this claim.

In 1968, The Daily Pennsylvanian published a list of the 56 students who were on the Wharton Dean’s List that year — Trump’s name is not among them.