WEBVTT - Surveillance: Progressive Capitalism With Joseph Stiglitz 0:00:02.600 --> 0:00:12.960 Ye. Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene 0:00:13.480 --> 0:00:17.560 Jay Lee. We bring you insight from the best in economics, finance, investment, 0:00:18.000 --> 0:00:23.520 and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, 0:00:23.600 --> 0:00:31.400 Bloomberg dot Com, and of course, on the Bloomberg. I 0:00:31.400 --> 0:00:33.599 caught up with JP Morgan's Bob Michael yesterday. Had one 0:00:33.640 --> 0:00:35.800 thing to say to me, enjoy the ride. There's too 0:00:35.920 --> 0:00:38.280 much money in cash. It's been going into cash the 0:00:38.360 --> 0:00:41.000 last three years waiting for the Fed to finish hiking rates. 0:00:41.200 --> 0:00:42.960 They were supposed to finish hiking at the end of 0:00:42.960 --> 0:00:45.440 this year, not last year. That money has yet to 0:00:45.520 --> 0:00:47.559 come back into this market. I want to bring in 0:00:47.600 --> 0:00:52.280 from London Marcus Ashworth Bloomberg Opinion columnists. So Marcus, has 0:00:52.360 --> 0:00:55.200 that cash moved from the sidelines and into equities? It 0:00:55.320 --> 0:00:58.480 sounds so cliche. Just walk me through it. Well, I 0:00:58.480 --> 0:01:01.160 think it has. I think there's there's more to come. Really, 0:01:01.240 --> 0:01:03.840 I mean, I appreciate what Tom is saying about. You know, 0:01:04.000 --> 0:01:05.680 why would you want to buy the high here? But 0:01:06.000 --> 0:01:08.360 and we are close to that selling May. We've got 0:01:08.400 --> 0:01:10.240 another week or two, it's come out the month. Then 0:01:10.360 --> 0:01:13.440 there's a little bit of moving around, going probably out 0:01:13.440 --> 0:01:15.920 of equities today into bonds, which we've seen in the 0:01:15.920 --> 0:01:18.920 price action. But the simple point is the dollar is 0:01:19.319 --> 0:01:22.640 is very very strong. Why because US equities are very 0:01:22.720 --> 0:01:25.680 high and strong and going stronger. And why is that? 0:01:25.720 --> 0:01:28.280 Because the US GDP is going to be a better 0:01:28.319 --> 0:01:30.960 print in quarter one than the market had initially expected. 0:01:31.240 --> 0:01:35.600 The cold snap, the government shutdown that's past. Now, compared 0:01:35.640 --> 0:01:38.319 to everyhe else in the rest of the world, US economy, 0:01:38.440 --> 0:01:41.040 US equities are better than Marcus. You are an expert 0:01:41.040 --> 0:01:44.280 at this, and you wrote an extremely important essay last 0:01:44.360 --> 0:01:47.000 year and asset flows. I don't have it in front 0:01:47.000 --> 0:01:48.960 of me, but I remember it was a jewel. The 0:01:49.000 --> 0:01:52.000 bottom line is the Central Bank of the United States 0:01:52.520 --> 0:01:57.120 reverse course. They've gone all dove essentially with price with 0:01:57.360 --> 0:02:01.920 rate cut stability forever, and that's moved all money to 0:02:02.200 --> 0:02:06.160 all assets at all times. How does that end. What's 0:02:06.200 --> 0:02:13.160 the history of how a central bank driven move ends? Well? 0:02:13.200 --> 0:02:15.359 I don't think The point is is that if you 0:02:15.400 --> 0:02:18.880 listen to Clarita that FED is absolutely on hold. That 0:02:18.960 --> 0:02:21.120 means that the big risk has gone. As you quite 0:02:21.160 --> 0:02:23.600 clearly staid there, the Federal Reserve hiking has been removed, 0:02:23.600 --> 0:02:26.960 and quantitative tightening is also about to be removed. Brexit 0:02:27.080 --> 0:02:29.440 isn't happening for a bit. Oil is going better at 0:02:29.480 --> 0:02:31.880 the moment. There is enough momentum behind the market that 0:02:32.560 --> 0:02:34.520 with nothing else to do, you want to put market 0:02:34.919 --> 0:02:36.960 money to work in the market. And that's what's happening. 0:02:37.080 --> 0:02:39.840 The Fed is not going to hike rates for this 0:02:39.919 --> 0:02:42.079 year and possibly next year, and the next move may 0:02:42.080 --> 0:02:44.520 well be an ease, so that is an incentive to 0:02:44.520 --> 0:02:46.919 get on board. And that's simply the lack of any 0:02:47.000 --> 0:02:49.800 better do. Yes, there's always risks out there, but money 0:02:49.840 --> 0:02:51.240 needs to be put to work, and that's what it's 0:02:51.320 --> 0:02:52.960 what's happening. Well, that's the message coming from a lot 0:02:52.960 --> 0:02:55.000 of people over the last few weeks. And let's be clear, 0:02:55.040 --> 0:02:57.200 it's been the right message because the price action has 0:02:57.240 --> 0:03:00.560 proved to prove that out to to oh higher on 0:03:00.560 --> 0:03:02.560 the equity market for spreads, the grind tighter on high 0:03:02.600 --> 0:03:04.600 yield as well. But Marcus, the cool on the dollar 0:03:04.680 --> 0:03:07.400 is a little bit more interesting for me. Strong dollar 0:03:07.440 --> 0:03:09.080 short over the last couple of days. But the truth 0:03:09.120 --> 0:03:11.600 is we've been stuck in a really narrow training range 0:03:11.800 --> 0:03:14.560 over much of the last six months, we can't seemingly 0:03:14.639 --> 0:03:19.480 sustainably break one twelve on euro dollar zero nine as 0:03:19.520 --> 0:03:22.600 I speak. What's your call there? Well, I'm afraid I'm 0:03:22.600 --> 0:03:24.280 gonna have to say that the euro, you know, try 0:03:24.360 --> 0:03:26.919 to bounce above one thirteen, it's failed. It heads back 0:03:26.960 --> 0:03:30.600 down towards lower levels. Because the European economy is woeful 0:03:31.000 --> 0:03:33.160 and it's continued to be worthful. There is no bounce 0:03:33.200 --> 0:03:35.600 in sight. There's a little bit of a dust production jump, 0:03:35.600 --> 0:03:38.200 but reality, look at orders and forward looking things. The 0:03:38.240 --> 0:03:42.200 European economy has got no good news at Germany, bit Itaally, Bick, etcetera. 0:03:42.520 --> 0:03:44.240 So if you look at what's happening for the euro, 0:03:44.360 --> 0:03:47.400 it's weakning same time so sterling and it's all really 0:03:47.400 --> 0:03:50.280 down to dollar strength. Why is that? Because the quarter 0:03:50.320 --> 0:03:52.720 one GDP number on Friday is going to be strong. 0:03:53.400 --> 0:03:57.440 Marcus As, thank you so much greatly perspective your SMPR 0:03:57.560 --> 0:04:14.960 to record high and a few other industries. Joseph Stiglets 0:04:14.960 --> 0:04:18.279 of Columbia University, the Nobel laureate. He is the liberal 0:04:18.360 --> 0:04:21.479 that conservatives love to hate. Of course, he changed the 0:04:21.640 --> 0:04:26.719 language of economics of no no, they no, no, no, no, 0:04:27.960 --> 0:04:32.520 can't tie Stiglets. Krugman can't tie Stiglets. Shoels is the 0:04:32.560 --> 0:04:35.680 liberal the conservatives love to hate. We like Professor Sticklets. 0:04:35.800 --> 0:04:38.880 We do, okay, thank you. Anyways, Joe Stiglets out with 0:04:38.880 --> 0:04:41.839 the new book, People Power and Profits. And there's like 0:04:42.040 --> 0:04:44.440 thinner Stiglet books and there's thicker one. This is a 0:04:44.520 --> 0:04:47.720 major effort by you. Clearly you're doing it because of 0:04:47.760 --> 0:04:50.599 the time of Trump. But what was the catalyst for 0:04:50.680 --> 0:04:54.320 you to write People Power and Profits? What the catalysts 0:04:54.360 --> 0:04:58.400 were two things. One, Uh, we have these festering problems 0:04:58.440 --> 0:05:01.760 growing inequality. I'd written about that, and after I wrote 0:05:01.800 --> 0:05:06.240 about it, uh night back in twelve, the problems got 0:05:06.279 --> 0:05:10.400 worse and worse, and now they've risen to the top 0:05:10.480 --> 0:05:14.440 of the national agenda. But what worries me is we 0:05:14.520 --> 0:05:18.559 don't have a deep enough diagnosis of well that's well said, 0:05:18.600 --> 0:05:21.760 well said, and what to do about it. And if 0:05:21.800 --> 0:05:24.640 we don't do something about it, it's gonna really tear 0:05:24.680 --> 0:05:26.800 apart our country. And the book with a hundred pages 0:05:26.800 --> 0:05:29.760 of footnotes is that diagnosis type of book? I should 0:05:29.800 --> 0:05:33.039 point out. John Ferrell Krugman of CCN Why the Laureate 0:05:33.080 --> 0:05:36.919 as Well, says Joseph Stigletz is an insanely great economist. 0:05:37.680 --> 0:05:40.159 Krugman is as well. I want you to speak to 0:05:40.440 --> 0:05:44.040 part of our audience that's conservative. They don't like liberals 0:05:44.120 --> 0:05:47.400 like you, but they're miserable. Their kids are miserable, they're 0:05:47.440 --> 0:05:50.640 grand maybe it's their their their parents are misible with 0:05:51.040 --> 0:05:55.200 medications or whatever. Speak to conservatives right now about why 0:05:55.200 --> 0:05:57.560 they need to read your book and start to think 0:05:57.640 --> 0:06:00.560 like liberals of another time and place. Well, if we 0:06:00.640 --> 0:06:05.600 go back, say to the years after World War two, 0:06:05.960 --> 0:06:10.200 America was in that at that moment, creating the first 0:06:10.480 --> 0:06:14.799 middle class society. Everybody thought of themselves as middle class, 0:06:14.960 --> 0:06:19.280 and we were investing a lot in our roads. We 0:06:19.279 --> 0:06:24.320 were investing in education. Uh. Spook Nick motivated us to 0:06:25.360 --> 0:06:29.920 uh government to invest in R and D, and that 0:06:30.000 --> 0:06:34.160 put us on the way to becoming the undisputed to 0:06:34.200 --> 0:06:42.560 global champion in so many areas. Uh. Beginning around I 0:06:42.600 --> 0:06:47.520 think we lost our course. Uh. We adopted a doctrine 0:06:47.600 --> 0:06:53.120 that the market will solve all our problems. Uh it didn't. Uh. 0:06:53.279 --> 0:06:58.560 What it did is lead to actually slower economic growth 0:06:59.200 --> 0:07:02.080 at all of the benefits of the growth went to 0:07:02.160 --> 0:07:06.080 the top one and that has meant that that middle 0:07:06.120 --> 0:07:09.400 class lifestyle that I talked about before has fallen outer 0:07:09.520 --> 0:07:13.520 reach of an increasing fraction of American So professors, is 0:07:13.560 --> 0:07:16.880 a critique of capitalism or a critique of monopolistic behavior 0:07:16.920 --> 0:07:22.680 and abuses of markets. Uh, it's a critique of late 0:07:22.680 --> 0:07:28.400 twentieth century capitalism as critique of early twenty one century capitalism. 0:07:28.400 --> 0:07:31.760 But that's why I called my book Progressive Capitalism for 0:07:31.800 --> 0:07:35.840 an Age of Discontent, because I think the market is 0:07:35.880 --> 0:07:39.080 the only way that you're going to deliver long term 0:07:39.240 --> 0:07:43.680 economic growth. But it doesn't work with unfettered markets markets alone. 0:07:44.680 --> 0:07:49.040 You need government, their collective action, people working together for 0:07:49.080 --> 0:07:51.600 at least two things. One, you have to curb some 0:07:51.680 --> 0:07:54.800 of the excesses, the excesses that we saw in the 0:07:54.920 --> 0:07:57.440 run up to the Great Recession two thousand eight, the 0:07:57.440 --> 0:08:01.160 financial sector, but also uh, the environment. You know, if 0:08:01.200 --> 0:08:04.400 we didn't have good regulations for the environment, New York City, 0:08:04.600 --> 0:08:08.760 Los Angeles would be as unbreathable as Delhi and Embajing 0:08:08.880 --> 0:08:12.680 is today. But the second thing is unique government investment, 0:08:12.840 --> 0:08:16.960 investment for infrastructure, for education, for R and D basic research, 0:08:17.360 --> 0:08:21.160 not all the research, but the basic research. The discovery 0:08:21.160 --> 0:08:24.160 of DNA the discovery of the kinds of things on 0:08:24.160 --> 0:08:27.680 which everything builds. You mean, like fixing terminal five at JFK, 0:08:28.280 --> 0:08:30.720 something like that. Joe Stiglets with a major book. This 0:08:30.800 --> 0:08:34.120 is a thicker one, a deeper one. The subtitle Progressive 0:08:34.240 --> 0:08:37.960 Capitalism for an Age of Discontent. The book is People 0:08:38.440 --> 0:08:57.200 Power and Profits. Joseph Stigletts of Columbia University. It is 0:08:57.240 --> 0:09:00.520 now time to speak with a famed investments for energist 0:09:00.559 --> 0:09:05.199 and equity analyst of higher stock prices. The economist Julia 0:09:05.280 --> 0:09:09.960 Cornado joins us with macro policy perspectives. Julia in any 0:09:10.480 --> 0:09:14.320 level you know, Abel bernanke MANQ whatever the beg, which 0:09:14.320 --> 0:09:18.080 is the British one volume folks on economics in every 0:09:18.120 --> 0:09:22.120 beginning economics book include including Paul Krugman's wonderful two volumes. 0:09:22.480 --> 0:09:25.840 There's one chapter buried in the back which nobody ever 0:09:25.880 --> 0:09:29.440 reads about linking economics into the stock market. Are they 0:09:29.520 --> 0:09:33.360 linked right now? Very much? Though? I mean, I think 0:09:33.360 --> 0:09:36.480 we've been in a financialized world for the last couple 0:09:36.480 --> 0:09:38.800 of decades, and it's something that the FED has been 0:09:38.840 --> 0:09:43.000 catching up to. But clearly the rally we've seen has 0:09:43.040 --> 0:09:47.480 its foundations. The recovery, the rally back in the pivots 0:09:47.800 --> 0:09:51.400 by the FED and other central banks. That provides some 0:09:51.520 --> 0:09:55.440 insurance against what I been a slowing global backdrop. Let 0:09:55.480 --> 0:09:57.719 me ask you the same question answer Michael McKee, and 0:09:58.120 --> 0:10:00.960 both of you informed in your unique way, is what 0:10:01.240 --> 0:10:06.240 happens when the message changes? What's the experience of what happens. 0:10:06.280 --> 0:10:09.480 It will be a speech in Dallas, It'll be cap 0:10:09.760 --> 0:10:13.800 It'll be Caplet's fault, or Powell's fault, or that guy 0:10:13.920 --> 0:10:17.040 up in Boston's fault. What happens when they get that 0:10:17.440 --> 0:10:22.079 one sentence out there? Right particularly when as we watch 0:10:22.160 --> 0:10:26.320 the earning season proceed, it's not all sunshine in roses 0:10:26.440 --> 0:10:30.200 in corporate earnings, so it's not a disaster. But we 0:10:30.280 --> 0:10:35.080 have SMP earnings tracking around four percent right now for 0:10:35.160 --> 0:10:38.760 this year, which is a pretty subdued performance. So um, 0:10:38.800 --> 0:10:42.760 if you don't have the Fed sort of endlessly devish, 0:10:43.360 --> 0:10:46.280 then there may be some disappointment. So it is sort 0:10:46.280 --> 0:10:50.120 of shaky foundations, I think. Um, the real backdrop is 0:10:50.200 --> 0:10:53.840 that growth is slowing and earnings are harder to come 0:10:53.840 --> 0:10:56.880 by in a late cycle with rising labor costs in 0:10:57.040 --> 0:11:01.040 a slower global backdrop. So um, it makes next week 0:11:01.120 --> 0:11:04.120 said in meeting that much more interesting. I don't expect 0:11:04.120 --> 0:11:06.760 the FED to change its tone, but you've had some 0:11:06.800 --> 0:11:09.600 people even get a little excited about the possibility that 0:11:09.640 --> 0:11:13.240 FED could cut right, and I don't think that the 0:11:13.280 --> 0:11:17.160 backdrop we're seeing conducive of that. And as Michael can make, 0:11:17.240 --> 0:11:20.640 you mentioned the spread in opinions now, Julia is shocking 0:11:20.760 --> 0:11:24.439 the the If you take a bell curve, folks of forecasts, 0:11:24.920 --> 0:11:28.800 the tails are dominant right now, with people looking for 0:11:28.840 --> 0:11:32.680 a better economy and rate rises and people looking for 0:11:32.920 --> 0:11:37.600 real stagnation and sluggishness. And even as you say, Dr Cornado, 0:11:37.679 --> 0:11:42.120 speculation of a rate cut, what's your all? I mean, 0:11:42.360 --> 0:11:44.880 I'm kind of in the middle. I think I actually 0:11:44.960 --> 0:11:47.760 do believe in a sort of soft landing, if you 0:11:47.880 --> 0:11:50.079 if you want to use that phrase. I think growth 0:11:50.160 --> 0:11:53.200 is gonna slow this year. I think inflation is going 0:11:53.240 --> 0:11:55.480 to stay subdued, so there's no reason for the FED 0:11:55.559 --> 0:11:59.000 to hike necessarily. But I also think that the FED 0:11:59.080 --> 0:12:02.120 is done enough through pivot, and you've got Chinese stimulus 0:12:02.160 --> 0:12:05.200 now that some of the worst case scenarios are likely 0:12:05.240 --> 0:12:08.480 to be avoided. Uh So, I think that you know 0:12:08.600 --> 0:12:11.800 that that's going to maybe disappoint markets at times, but 0:12:12.080 --> 0:12:14.760 I think it's an open scenario for the Fed. On hold, 0:12:15.040 --> 0:12:19.319 do American executives trying to prop up earnings and margins 0:12:19.360 --> 0:12:22.720 and get decent organic revenue growth, are they going to 0:12:22.760 --> 0:12:27.079 get help with a fiscal up of fiscal stimulus or 0:12:27.440 --> 0:12:31.280 the advantages of the tax bill continuing. I mean, we 0:12:31.320 --> 0:12:33.199 still have a little bit of a tail wind from 0:12:33.200 --> 0:12:36.800 the tax bill, but I don't think we should expect 0:12:36.880 --> 0:12:41.720 fiscal stimulus in this political environment. Um. In fact, we 0:12:41.760 --> 0:12:44.600 have a fiscal cliff coming up in the fall, and 0:12:44.640 --> 0:12:47.599 it will take all the political will in d C 0:12:48.440 --> 0:12:51.680 just to you know, eliminate that fiscal cliff, which would 0:12:51.720 --> 0:12:55.280 be a decline. Describe that. Describe the fiscal cliff. Describe 0:12:55.320 --> 0:12:58.400 that for us. So they passed a two year increase 0:12:58.559 --> 0:13:02.880 in government spending and it is scheduled to expire next 0:13:02.880 --> 0:13:05.600 fiscal year, which would mean government spending would fall back 0:13:05.640 --> 0:13:08.920 down to the prior level and that would be, uh, 0:13:09.080 --> 0:13:13.520 you know, a decline in government spending. So the Congress 0:13:13.559 --> 0:13:16.560 needs to agree to at least at a minimum, raised 0:13:16.640 --> 0:13:19.520 spending back up to where it's been in the last 0:13:19.559 --> 0:13:24.280 two years. So that's going to require bi partisanship in 0:13:24.320 --> 0:13:29.360 an agreement. That's easy. That's that's a heavy lift. So 0:13:29.600 --> 0:13:33.240 I expect I'll get there because nobody wants, uh, you know, 0:13:33.280 --> 0:13:36.400 a headwind like that. But to expect some kind of 0:13:36.800 --> 0:13:42.840 infrastructure package in this political climate, I think that's just 0:13:43.000 --> 0:13:46.280 not going to materialize new things for the optimists. I 0:13:46.280 --> 0:13:48.160 haven't talked about this in Asias, folks. It's good to 0:13:48.160 --> 0:13:52.800 talk with Juliet Cornato macropolicy perspectives about his confidence has 0:13:52.840 --> 0:13:55.400 really held up pretty well. I haven't looked at Michigan 0:13:55.440 --> 0:13:57.960 confidence in a while. I'm going to take the Bloomberg 0:13:58.080 --> 0:14:01.719 chart back to two thousand six and we exceed the 0:14:01.800 --> 0:14:05.439 confidence of two thousand and six seven. That that that 0:14:05.440 --> 0:14:08.839 that provides us with FED stability or even down the road, 0:14:08.880 --> 0:14:13.000 a great rise. Right. Yeah, that's that's the very foundation 0:14:13.480 --> 0:14:17.199 of our expectation that the economy is gonna hold up, 0:14:17.320 --> 0:14:21.200 is that the virtuous cycle between the strong labor market 0:14:21.240 --> 0:14:24.040 and consumer spending. And it doesn't have to be a 0:14:24.120 --> 0:14:27.080 three percent performance that can can but that can pretty 0:14:27.080 --> 0:14:30.760 easily deliver a two percent performance. So you do have 0:14:30.880 --> 0:14:34.800 that virtuous cycle pretty well established and with the labor markets, 0:14:34.840 --> 0:14:37.840 so strong. Consumers are feeling better than they felt in 0:14:37.880 --> 0:14:40.520 a long time. It's been a long time coming when 0:14:40.520 --> 0:14:44.760 consumers actually had a little bargaining power in the labor market. 0:14:44.760 --> 0:14:46.640 You see that in the equity markets as well. Dr 0:14:46.680 --> 0:15:02.240 coronetto things so much, Julia cornetto mecro policies perspective right now, 0:15:02.280 --> 0:15:06.800 the hydro Carbon Interview of the day, Paul Sanky missoo O, Paul, 0:15:07.240 --> 0:15:10.080 it always is fun to see a bidding war and 0:15:10.200 --> 0:15:13.560 grizzled guys like you know, egos getting the way. Who's 0:15:13.560 --> 0:15:17.280 got the bigger ego right now? Well, yeah, he said it. 0:15:17.320 --> 0:15:19.680 I mean it's great. It's historic times here, Tom, and we've, 0:15:19.760 --> 0:15:22.040 as you know, he's had a tough three four five 0:15:22.160 --> 0:15:25.440 years waiting for some of this value to be realized 0:15:26.000 --> 0:15:28.680 that we've seen in these deeply discounted our stocks. So 0:15:28.720 --> 0:15:30.720 who's got the bigger ego? There's no question right here. 0:15:30.720 --> 0:15:35.200 It's oxy CEO of Vicky Hollob who says of this 0:15:35.320 --> 0:15:37.800 morning on her call that she is about to speak 0:15:37.840 --> 0:15:40.320 to shareholders, but on the reggae FD hasn't spoken to 0:15:40.360 --> 0:15:42.800 any I can tell you she's going to have some 0:15:42.840 --> 0:15:46.200 pretty toughations. Well, you and your research note and this 0:15:46.280 --> 0:15:48.640 is really important folks. Thank you writing from a lot 0:15:48.680 --> 0:15:51.960 of experience on what kind of oil, what kind of 0:15:52.040 --> 0:15:56.000 day to day tactical business is it. Oxie really doesn't 0:15:56.120 --> 0:16:01.960 overlap with the anti Darko technological skill olds do that well, 0:16:02.000 --> 0:16:04.560 you know, the former CEO of Boxy, Steve Chas and 0:16:04.600 --> 0:16:08.720 really designed the company not to be offshore, um not 0:16:08.800 --> 0:16:11.200 to be in Africa. If you remember during MRCONDO, the 0:16:11.240 --> 0:16:13.720 stock was a big outperformer during the big oil spill 0:16:13.760 --> 0:16:17.160 because Oxy was very much on shore US, on shore 0:16:17.240 --> 0:16:20.520 Middle East and to the extent that Anadarko is a 0:16:20.640 --> 0:16:24.160 very well known explorer, which Oxy didn't do, but also 0:16:24.600 --> 0:16:28.960 in a massive MOZAMBIICAMERNG project and West Africa in Gulf 0:16:28.960 --> 0:16:31.840 of Mexico. There really isn't a good fit here at all, 0:16:31.920 --> 0:16:34.440 and people don't like the fit at all, whereas with 0:16:34.760 --> 0:16:37.800 with Chevron, you you do have an excellent fit. So 0:16:37.840 --> 0:16:42.000 it's a, to say the least, a brave move by Oxy. So, Paul, 0:16:42.040 --> 0:16:46.160 if I'm a Anadarko shareholder and price aside, let's assume 0:16:46.200 --> 0:16:47.960 the price, you know, the kind of trianglates we get 0:16:47.960 --> 0:16:51.840 to each bid is fairly comparable, Which one do I prefer? 0:16:51.880 --> 0:16:54.640 Do I prefer Chevron or Oxy? Well, I think you 0:16:54.720 --> 0:16:58.120 certainly prefer Chevrons stock here because obviously you've got a bigger, 0:16:58.160 --> 0:17:01.160 more credible bid from a bigger, more credible company in 0:17:01.280 --> 0:17:03.400 terms of, you know, the overlap as we mentioned with 0:17:03.440 --> 0:17:07.400 Anna Darker. I think in regards to the higher bid 0:17:07.440 --> 0:17:10.399 for Oxy from Oxy, we've got to watch what happens 0:17:10.400 --> 0:17:13.560 to Oxy's share price. That's actually holding up now, I 0:17:13.600 --> 0:17:17.080 think partly because people think maybe Oxy did this to 0:17:17.119 --> 0:17:19.840 fight off Exxon. I'm less certain that that's the case. 0:17:19.880 --> 0:17:22.159 In fact, I doubt it, but that's certainly one market 0:17:22.280 --> 0:17:25.920 story as the Oxy went after an a Darker rather 0:17:25.960 --> 0:17:30.320 than lose itself to Exxon. Um. You know. So essentially 0:17:30.320 --> 0:17:32.320 there's some tactical issues here as to why Oxy is 0:17:32.320 --> 0:17:35.400 doing this. But secondly, the chances are that the credibility 0:17:35.440 --> 0:17:38.439 of this bid is so damaging to the current Oxy 0:17:38.480 --> 0:17:41.080 management that the company now becomes in play itself, and 0:17:41.119 --> 0:17:44.440 therefore you Buyoxy on the basis and thinking over subsequent 0:17:45.160 --> 0:17:48.240 to this bid. As a former banker myself, I'm thinking 0:17:48.280 --> 0:17:51.000 about picking up the phone and making the cause and 0:17:51.000 --> 0:17:53.359 trying to shake the tree. What other deals do you 0:17:53.359 --> 0:17:56.040 think are possible in this space, you know, given we 0:17:56.080 --> 0:17:59.000 have a bitting war here for a pretty attractive asset. Well, 0:17:59.040 --> 0:18:01.400 it's known that we've had man change at Pioneer, which 0:18:01.440 --> 0:18:05.480 is a shift back to to the previous CEO, Scott Sheffield. 0:18:05.880 --> 0:18:08.439 You know, he's pretty much seen to be dressing the 0:18:08.480 --> 0:18:11.320 company up for sale. We know in general that the 0:18:11.359 --> 0:18:14.119 Permian needs to be consolidated by the biggest players. So 0:18:14.760 --> 0:18:16.840 you have a number of players in the Permian who 0:18:16.840 --> 0:18:19.680 are relatively smaller but have very good acreage. We're talking 0:18:19.680 --> 0:18:22.560 about the con shows perhaps less willing to sell themselves 0:18:22.600 --> 0:18:25.360 to diamondbacks, but then a whole raft is smaller companies, 0:18:25.600 --> 0:18:28.399 and people question why Oxy didn't just do a you know, 0:18:28.520 --> 0:18:31.960 for the less less risk arguably the same amount of 0:18:31.960 --> 0:18:34.680 money they could have brought three Permian players and being 0:18:34.720 --> 0:18:38.560 consistent with existing strategy. So but Permian is obviously the 0:18:38.600 --> 0:18:42.280 hot area. Paulk you one final question within this hydrocarbon 0:18:42.400 --> 0:18:44.359 roll up that you just described as maybe a what 0:18:44.480 --> 0:18:47.080 if for the reality that we see right now, how 0:18:47.160 --> 0:18:50.359 much of it is oil priced off the memory of 0:18:50.359 --> 0:18:53.560 a hundred and ten to twenty nine back to the 0:18:53.560 --> 0:18:57.000 glory of seventy four brand. How much is the price 0:18:57.160 --> 0:19:02.159 of oil link into the action were from executives. Actually, 0:19:02.240 --> 0:19:04.960 I don't think a whole lot, Tom, It's more the 0:19:04.960 --> 0:19:07.439 scale of the opportunity because this morning, for example, Oxy 0:19:07.520 --> 0:19:09.600 is talking all about the Permian and the attractions of 0:19:09.640 --> 0:19:12.119 the Permian as the primary driver of the deal. The 0:19:12.160 --> 0:19:13.840 other stuff is sort of, you know, an add on 0:19:13.880 --> 0:19:16.119 that they feel they can do well with. There's a 0:19:16.160 --> 0:19:19.040 synergy element here on both sides. So essentially, you know, 0:19:19.080 --> 0:19:23.639 Anadarka has a famously lavish headquarters, the famous double sized 0:19:23.720 --> 0:19:28.200 dancing stag statue outside. You know, there's there's definitely a 0:19:28.280 --> 0:19:30.560 cost savings that can be known across the board here 0:19:30.600 --> 0:19:34.240 from managements that have wildly overpaid themselves. I mean these 0:19:34.280 --> 0:19:37.800 managements they're hated by shareholders for the amount and they've 0:19:37.800 --> 0:19:40.720 paid themselves for not performing very well. So essentially it's 0:19:40.720 --> 0:19:43.239 an industry that needs to be consolidated and cleaned up. 0:19:43.240 --> 0:19:46.879 And the driver here is cost savings and you know, 0:19:47.440 --> 0:19:50.280 synergy improvements really very much late what we saw in 0:19:50.280 --> 0:19:53.040 the late nineties, Tom, when you had you know, struggling 0:19:53.080 --> 0:19:57.360 managements that had high costs and poor performance, and eventually 0:19:57.400 --> 0:20:01.000 the market takes them out, and that's essentially what's happening here. Paul, 0:20:01.040 --> 0:20:02.919 Just real quickly, what does Chevron do here? Did they 0:20:02.920 --> 0:20:07.040 come back? Yeah? I think that the deal has been 0:20:07.080 --> 0:20:09.359 so well received that I can see them atting a 0:20:09.359 --> 0:20:11.520 bit that the Oxy bit is not a knockout blow. 0:20:11.600 --> 0:20:14.440 I mean, there's clearly a fiduciary duty. It's also hostile, 0:20:14.520 --> 0:20:17.800 which is, you know, again, historically a very bad idea. 0:20:17.880 --> 0:20:20.600 I mean, the last hostile might be of this scale 0:20:20.760 --> 0:20:25.760 might be Texico spaghetti, which ended in the bankruptcy of Texica. UM, 0:20:25.760 --> 0:20:27.920 but it's very unusual to go hostile. That's what makes 0:20:27.920 --> 0:20:30.679 this bit of all the more remarkable. But you know, 0:20:30.720 --> 0:20:32.280 I think that they can take a look at Oxy's 0:20:32.280 --> 0:20:36.600 share price at Chevron see how the shareholders uh don't 0:20:36.640 --> 0:20:39.520 like this deal or KNOXI standpoint and then and then 0:20:39.560 --> 0:20:41.480 maybe bump a little bit and get the deal done. 0:20:42.320 --> 0:20:44.840 Welcome bit from Anadarka's point of view, either, I don't think, Paul, 0:20:44.880 --> 0:20:47.520 that was fantastic. Thanks so much for your context and 0:20:47.560 --> 0:20:49.760 color about this transaction. Is probably not the last we're 0:20:49.800 --> 0:20:52.920 going to hear about this deal. Paul Sanky from Miszoo's 0:20:52.920 --> 0:20:55.479 Securities We love having them on talking all things energy 0:20:55.720 --> 0:20:58.399 and we have got an old fashioned a deal at 0:20:58.440 --> 0:21:16.600 war going on here. This is Bloomberg. We'll digress right now. 0:21:16.640 --> 0:21:19.320 For earnings. It's an annual visit and very important always 0:21:19.359 --> 0:21:23.560 for Bloomberg surveillance. They have always supported Bloomberg surveillance right 0:21:23.600 --> 0:21:26.240 from the beginning. The c f A Institute. I'm a 0:21:26.280 --> 0:21:31.720 member of the clan, the Chartered Financial and Analysts program. 0:21:31.760 --> 0:21:34.800 It is three exams. It's a little hard, to say 0:21:34.840 --> 0:21:37.720 the least. And we are honored that Paul Smith UH, 0:21:38.000 --> 0:21:42.280 their president and chief executive officer, joins us UH today. 0:21:42.320 --> 0:21:45.200 Paul the cf A Institute, and I want to get 0:21:45.400 --> 0:21:48.080 right to the heart of so many younger people listening. 0:21:48.560 --> 0:21:51.120 The question I get as a c f A all 0:21:51.200 --> 0:21:54.800 the time is m B A or cf A. You 0:21:54.920 --> 0:21:57.000 get this ten times a day. Yeah, I do. And 0:21:57.040 --> 0:21:58.920 it's a great question. And and the answer, the owners 0:21:58.960 --> 0:22:01.480 answer is it depends depends where you are in your 0:22:01.520 --> 0:22:04.480 career and what you know you want to do. If 0:22:04.520 --> 0:22:07.200 you know you want to be an investment management b 0:22:07.320 --> 0:22:10.040 A c f A, if you're still at the point 0:22:10.080 --> 0:22:12.560 of your career where you're not that sure and you 0:22:12.600 --> 0:22:15.240 want to keep yourself general, and you want more of 0:22:15.880 --> 0:22:19.639 a broader based financial education or a business education allied 0:22:19.640 --> 0:22:22.600 to a financial education than NBA probably enjoys. The gentleman 0:22:22.600 --> 0:22:25.680 from Yeah, so I went to Fucal School of Business, 0:22:25.720 --> 0:22:27.560 that duke from a NBA, like most Like a lot 0:22:27.600 --> 0:22:30.000 of people in my generation, that was the route. Now 0:22:30.040 --> 0:22:33.280 I think there's I'm sensing that there is a lot 0:22:33.359 --> 0:22:36.639 more demand for or attraction. I guess on a part 0:22:36.680 --> 0:22:38.560 of young people for the CFA would have been the 0:22:38.640 --> 0:22:41.600 numbers in terms of people sitting for the test over 0:22:41.600 --> 0:22:43.880 the last five or ten years, well the last five years, 0:22:43.880 --> 0:22:46.680 it's gone from about two hundred twenty thousand people sitting 0:22:46.720 --> 0:22:49.119 the exams in any one twelve month period to about 0:22:49.119 --> 0:22:51.560 three hundred and sixty thousand today. Most of that is 0:22:51.640 --> 0:22:54.400 driven out of Asia, out of China and India, primarily 0:22:55.160 --> 0:22:57.080 Here in the US, we have had growth, but it's 0:22:57.119 --> 0:22:59.840 it's pretty anemic. It's sort of you know, alongside of 0:22:59.840 --> 0:23:02.639 the economy really wants to percent pranum, that sort of 0:23:02.680 --> 0:23:05.439 thing um. But I think, you know, I think for 0:23:05.560 --> 0:23:09.399 young people the payback is just quicker. Obviously, cf A 0:23:09.480 --> 0:23:12.720 costume maybe five grand if you fail one level let's 0:23:12.720 --> 0:23:15.240 say which most people do on average, an NBA is 0:23:15.280 --> 0:23:18.320 going to cost you multiples of that, and so um, 0:23:18.359 --> 0:23:21.680 there's that angle to it. I think the other thing 0:23:21.680 --> 0:23:23.880 which the NBA should sort of kind of think about, 0:23:23.960 --> 0:23:26.199