1 00:00:03,440 --> 00:00:07,720 Speaker 1: This is Bloomberg surveillance, probably thinking Gafferline is not going 2 00:00:07,760 --> 00:00:11,680 Speaker 1: to be deficient enough to support the whole refining complex. 3 00:00:11,760 --> 00:00:15,240 Speaker 1: It's a general concern that central banks, you really don't 4 00:00:15,240 --> 00:00:17,520 Speaker 1: have a lot left that they can do. We're not 5 00:00:17,600 --> 00:00:21,560 Speaker 1: seeing a week consumer, but we're not necessarily seeing consumers 6 00:00:21,600 --> 00:00:24,280 Speaker 1: spend those savings that they're getting from lower energy prices, 7 00:00:24,320 --> 00:00:27,040 Speaker 1: but the fact that they don't have to Bloomberg Surveillance 8 00:00:27,280 --> 00:00:30,800 Speaker 1: your link to the world of economics, finance, and investment 9 00:00:31,080 --> 00:00:34,400 Speaker 1: on Bloomberg Radio. Good morning, everyone, Michael McKeon, Tim Keenan 10 00:00:34,440 --> 00:00:37,920 Speaker 1: this hour. Neil cash Cary of the Minneapolis Federal Reserve 11 00:00:38,000 --> 00:00:41,680 Speaker 1: Bank a bombshell speech yesterday. We'll get to that quickly 12 00:00:41,720 --> 00:00:43,880 Speaker 1: here in a moment. The four X Brief this morning 13 00:00:44,120 --> 00:00:46,360 Speaker 1: brought to you by Interactive Broker's winner of f X 14 00:00:46,440 --> 00:00:49,760 Speaker 1: Weeks two thousand and fifteen award for the best Retail 15 00:00:49,840 --> 00:00:53,000 Speaker 1: for X trading platform visit ib at ib k r 16 00:00:53,120 --> 00:00:58,400 Speaker 1: dot com. Slash four x yields higher off of interesting 17 00:00:58,480 --> 00:01:01,320 Speaker 1: economic data at eight Already in fifteen minutes, we have 18 00:01:01,360 --> 00:01:05,360 Speaker 1: industrial production futures advance up thirteen now up eighteen down 19 00:01:05,440 --> 00:01:09,000 Speaker 1: futures up one and the foreign exchange again week or 20 00:01:09,000 --> 00:01:14,080 Speaker 1: one fourteen six euro churn dollar strength this morning. We're 21 00:01:14,120 --> 00:01:17,840 Speaker 1: blaming that on the Minneapolis Fed. UH today Mexican payso 22 00:01:17,920 --> 00:01:21,080 Speaker 1: dollar pay so. I've been watching eighteen point seven six 23 00:01:21,560 --> 00:01:25,240 Speaker 1: on dollar. Uh pay so, Mike, I want you to 24 00:01:25,240 --> 00:01:27,800 Speaker 1: bring in our next guest, but we need to point 25 00:01:27,880 --> 00:01:33,039 Speaker 1: out that an aerospace engineer wandering into the halls of 26 00:01:33,080 --> 00:01:37,560 Speaker 1: PhD economics in Minneapolis is a most interesting and twisted 27 00:01:37,880 --> 00:01:41,839 Speaker 1: mathematics Well, and uh, you know Neil cash carries called 28 00:01:41,840 --> 00:01:44,800 Speaker 1: for breaking up the banks yesterday. David Wessel was there. 29 00:01:45,120 --> 00:01:48,520 Speaker 1: He runs the group at Brookings who moderated yesterday's of 30 00:01:48,560 --> 00:01:50,680 Speaker 1: any susis this isn't what you get from a Goldman 31 00:01:50,760 --> 00:01:54,400 Speaker 1: Sacks Republican normally, Uh, Neil used to work at Goldman. 32 00:01:54,720 --> 00:01:56,640 Speaker 1: Let's stand it on attend. We obviously want to talk 33 00:01:56,640 --> 00:01:58,080 Speaker 1: to you about breaking up the banks, but you've been 34 00:01:58,520 --> 00:02:02,000 Speaker 1: making that case, um many places over the last twenty 35 00:02:02,000 --> 00:02:04,360 Speaker 1: four hours. Let's let me ask you about the economy 36 00:02:04,440 --> 00:02:09,680 Speaker 1: and the markets. Um, you're a former markets guy, so 37 00:02:10,280 --> 00:02:13,480 Speaker 1: how much attention do you pay to what's going on? 38 00:02:13,600 --> 00:02:17,040 Speaker 1: Are they telling are they signaling something about the economy 39 00:02:17,120 --> 00:02:19,959 Speaker 1: or are they reflecting something about the economy. Well, first 40 00:02:19,960 --> 00:02:21,440 Speaker 1: of all, thanks for having me. It's great to be here. 41 00:02:21,480 --> 00:02:24,079 Speaker 1: I'm paying attention, like we all are. We don't want 42 00:02:24,080 --> 00:02:26,360 Speaker 1: to ignore the markets, but we also don't want to 43 00:02:26,400 --> 00:02:28,960 Speaker 1: be overwhelmed and have that consume all of our discussions, 44 00:02:28,960 --> 00:02:31,000 Speaker 1: So we pay attention to that. We pay attention to 45 00:02:31,000 --> 00:02:32,760 Speaker 1: the data that came out this morning. Data is coming 46 00:02:32,760 --> 00:02:35,400 Speaker 1: out every day. I know you've heard every FETE officials 47 00:02:35,400 --> 00:02:37,320 Speaker 1: say that we're data dependent, and I can tell you 48 00:02:37,360 --> 00:02:39,919 Speaker 1: the truth. We really are data dependent. We watched all 49 00:02:39,919 --> 00:02:42,160 Speaker 1: of this, we put it together. We use our our 50 00:02:42,200 --> 00:02:46,959 Speaker 1: best judgments. Harker Um Rosen, Grin, Cash, Caari. Over the 51 00:02:47,040 --> 00:02:49,000 Speaker 1: last couple of days have all said maybe we should 52 00:02:49,040 --> 00:02:52,120 Speaker 1: just wait a little longer and see what's going on 53 00:02:52,639 --> 00:02:56,519 Speaker 1: with the economy. Uh, should markets be surprised if you 54 00:02:56,560 --> 00:02:59,160 Speaker 1: did race rates in March at this point, Well, I'm 55 00:02:59,160 --> 00:03:02,040 Speaker 1: not gonna forecast what we're gonna do. I think that 56 00:03:02,760 --> 00:03:05,040 Speaker 1: if you look at our statement in January, it said 57 00:03:05,080 --> 00:03:08,600 Speaker 1: that we are still expecting moderate economic growth, We're still 58 00:03:08,600 --> 00:03:11,840 Speaker 1: expecting expecting inflation returned to our two percent target over 59 00:03:11,880 --> 00:03:14,400 Speaker 1: the medium term, and that would suggest if that happens 60 00:03:14,480 --> 00:03:17,160 Speaker 1: gradual increase in interest rates. We don't have a specific 61 00:03:17,200 --> 00:03:19,880 Speaker 1: timing in mind. We don't have a formula just saying this, 62 00:03:20,080 --> 00:03:21,880 Speaker 1: you know, this meeting we're gonna raise, or that meeting 63 00:03:21,919 --> 00:03:24,040 Speaker 1: we're not. We're just gonna see what the data shows 64 00:03:24,040 --> 00:03:26,440 Speaker 1: and then make the decision as close to the meeting 65 00:03:26,440 --> 00:03:29,079 Speaker 1: as possible. What's the data show? You know? Well, it's mixed, 66 00:03:29,200 --> 00:03:31,960 Speaker 1: you know. I think since the statement came out in January, Uh, 67 00:03:32,000 --> 00:03:34,200 Speaker 1: there's probably been a little bit more downside in some 68 00:03:34,240 --> 00:03:36,360 Speaker 1: of the data that's come out. But I don't want 69 00:03:36,360 --> 00:03:39,120 Speaker 1: to prejudge anything. There's still more data to come ending 70 00:03:39,200 --> 00:03:42,000 Speaker 1: too Big to Fail, I'll cut to the chase. Are 71 00:03:42,040 --> 00:03:46,640 Speaker 1: you advocating the breakup of our top I'm advocating a 72 00:03:46,720 --> 00:03:49,760 Speaker 1: transformation of our top banking system. Break Up is one 73 00:03:49,760 --> 00:03:53,040 Speaker 1: scenario that experts have proposed. Another scenario, as you put 74 00:03:53,080 --> 00:03:55,600 Speaker 1: so much capital in them, they've tournament untility. That's right 75 00:03:55,600 --> 00:03:58,040 Speaker 1: where I want to go, Lord Scodelski in his King's 76 00:03:58,520 --> 00:04:02,040 Speaker 1: Fabulous King's Book of five six years ago, Simon Johnson 77 00:04:02,160 --> 00:04:05,000 Speaker 1: thirteen bankers. They all go back to June of two 78 00:04:05,000 --> 00:04:08,600 Speaker 1: thousand four and the increase of leverage is the simple 79 00:04:08,880 --> 00:04:14,960 Speaker 1: cash cary prescription to reduce leverage more big American banking. Well, 80 00:04:14,960 --> 00:04:16,800 Speaker 1: that's again I don't want to pre judge it. We're 81 00:04:16,839 --> 00:04:19,360 Speaker 1: we're announced the process where we're bringing all the experts 82 00:04:19,400 --> 00:04:22,080 Speaker 1: together and that right, and then we're gonna look at 83 00:04:22,120 --> 00:04:23,919 Speaker 1: it and come out with our recommendation at the end 84 00:04:23,920 --> 00:04:26,440 Speaker 1: of the year. But that's a very reasonable approach. Look, 85 00:04:26,640 --> 00:04:30,000 Speaker 1: the biggest banks are still, in my judgment, too big 86 00:04:30,000 --> 00:04:32,720 Speaker 1: to fail. We have not finished the living will review process, 87 00:04:33,080 --> 00:04:35,360 Speaker 1: and if we had multiple banks run into trouble at 88 00:04:35,400 --> 00:04:38,000 Speaker 1: the same time, they would still get bailed out. Do 89 00:04:38,120 --> 00:04:43,160 Speaker 1: you risk our international excellence in banking by transforming are 90 00:04:43,200 --> 00:04:46,000 Speaker 1: too big to fail banks? Well, I think other countries 91 00:04:46,080 --> 00:04:49,240 Speaker 1: also have similar risks in their banking systems, and while 92 00:04:49,279 --> 00:04:51,440 Speaker 1: we can't control what they do, we should start by 93 00:04:51,440 --> 00:04:53,200 Speaker 1: at least making sure the U s economy and the 94 00:04:53,240 --> 00:04:56,200 Speaker 1: US financial system is resilient and hopefully we can encourage 95 00:04:56,200 --> 00:04:59,359 Speaker 1: other countries to follow. Needless to say, the initial reaction 96 00:04:59,400 --> 00:05:01,679 Speaker 1: from those in the banking industry has been very hostile 97 00:05:02,040 --> 00:05:04,440 Speaker 1: to your comments, and I'm sure you're very pleased by that. 98 00:05:05,040 --> 00:05:09,840 Speaker 1: Um Their arguments, well, they make many arguments, But one, 99 00:05:09,880 --> 00:05:12,200 Speaker 1: of course, is that in a global, interconnected world with 100 00:05:12,279 --> 00:05:15,680 Speaker 1: mega corporations, you've got to have global mega banks. Yeah. 101 00:05:15,680 --> 00:05:18,359 Speaker 1: I don't find that persuasive. The biggest American companies do 102 00:05:18,480 --> 00:05:21,000 Speaker 1: business and countries all around the world, and they somehow 103 00:05:21,040 --> 00:05:24,919 Speaker 1: manage to manage thousands of suppliers. So why can Boeing 104 00:05:24,960 --> 00:05:27,800 Speaker 1: manage thousands of suppliers but they can't handle a few 105 00:05:27,800 --> 00:05:30,479 Speaker 1: more banking relationships. I don't find that compelling. The other 106 00:05:30,600 --> 00:05:34,280 Speaker 1: argument is you make them hold more capital than they 107 00:05:34,320 --> 00:05:37,039 Speaker 1: have fewer funds available to lend, which has been shown 108 00:05:37,080 --> 00:05:39,320 Speaker 1: to be a lie, but it's still a major argument 109 00:05:39,360 --> 00:05:41,280 Speaker 1: out there. Well, no, I agree, if you raise a 110 00:05:41,320 --> 00:05:44,120 Speaker 1: lot of capital requirements for the biggest banks, they will 111 00:05:44,120 --> 00:05:46,479 Speaker 1: probably end up lending a little bit less. But we 112 00:05:46,520 --> 00:05:48,320 Speaker 1: have a lot of banks in America, small and mid 113 00:05:48,400 --> 00:05:50,960 Speaker 1: sized banks can grow and fill some of that void. 114 00:05:51,120 --> 00:05:52,599 Speaker 1: You I hear from a lot of small banks in 115 00:05:52,600 --> 00:05:55,640 Speaker 1: America who say they're getting caught in the regulatory net 116 00:05:55,960 --> 00:05:58,520 Speaker 1: that's targeted at the big banks. Well, if we really 117 00:05:58,560 --> 00:06:01,720 Speaker 1: did transformational measures on big banks, maybe we can relax 118 00:06:01,720 --> 00:06:03,680 Speaker 1: some of the measures on the small banks. You're gonna 119 00:06:03,720 --> 00:06:05,880 Speaker 1: do a symposium on this et cetera. I urge you 120 00:06:05,920 --> 00:06:08,680 Speaker 1: to have Michael McKee attend so you can have smart questions. 121 00:06:09,360 --> 00:06:13,159 Speaker 1: But within this symposium, as the process started by one 122 00:06:13,200 --> 00:06:16,800 Speaker 1: Gary Stern, Mini Appus has a certain culture, a certain 123 00:06:16,920 --> 00:06:21,159 Speaker 1: fabric to its bank. If your PhDs embraced your entering 124 00:06:21,200 --> 00:06:24,320 Speaker 1: the door, I mean, an aerospace engineer with your background 125 00:06:24,600 --> 00:06:28,560 Speaker 1: walks in and the non Keynesians and Keynesians, the Cutcheler 126 00:06:28,680 --> 00:06:31,840 Speaker 1: quote coda crew at Mini Oppus goes, who is this guy? 127 00:06:32,200 --> 00:06:35,280 Speaker 1: What's been the response to this first draft of your speech? 128 00:06:35,360 --> 00:06:37,279 Speaker 1: But the response has been great. You know, I'm spending 129 00:06:37,279 --> 00:06:39,719 Speaker 1: a lot of time working very closely with our research department. 130 00:06:39,720 --> 00:06:42,240 Speaker 1: We have a terrific team of experts in our banking 131 00:06:42,279 --> 00:06:46,200 Speaker 1: supervision department, also in our research department, and I love 132 00:06:46,520 --> 00:06:48,680 Speaker 1: working with them and tapping into their expertise. What I'm 133 00:06:48,680 --> 00:06:50,559 Speaker 1: trying to do is bring the best ideas to the table, 134 00:06:51,000 --> 00:06:53,120 Speaker 1: be honest with the American people about where we are, 135 00:06:53,400 --> 00:06:56,880 Speaker 1: and then move forward with serious proposals. Matthew Levine, who's 136 00:06:56,880 --> 00:07:01,200 Speaker 1: a columnist for Bloomberg Right, it makes an interesting point 137 00:07:01,200 --> 00:07:05,040 Speaker 1: in his Calm today. You make the banks smaller, reducing 138 00:07:05,080 --> 00:07:07,719 Speaker 1: the risk of one big mass of one off failure. 139 00:07:08,040 --> 00:07:11,200 Speaker 1: But if there's a systemic crisis, it doesn't mean that 140 00:07:11,320 --> 00:07:14,680 Speaker 1: smaller banks don't get infected. And we have the same problem. Well, 141 00:07:14,720 --> 00:07:16,760 Speaker 1: I agree. You know, if you took one giant bank 142 00:07:16,800 --> 00:07:21,000 Speaker 1: and made ten carbon copies smaller, maybe you haven't done anything, 143 00:07:21,200 --> 00:07:23,200 Speaker 1: solved anything, because if they take the same risk, they're 144 00:07:23,240 --> 00:07:26,080 Speaker 1: still just as vulnerable as of all failing together. But 145 00:07:26,160 --> 00:07:28,160 Speaker 1: look at the late nineteen eighties. We had a thousand 146 00:07:28,160 --> 00:07:31,160 Speaker 1: little savings and loans fail in the SNL crisis. There 147 00:07:31,280 --> 00:07:33,560 Speaker 1: was it was devastating for them, but there was no 148 00:07:33,680 --> 00:07:36,440 Speaker 1: risk of an economic collapse. When the tech bubble burst 149 00:07:36,440 --> 00:07:39,800 Speaker 1: in two thousand, devastating for Silicon Valley, no risk of 150 00:07:39,800 --> 00:07:42,800 Speaker 1: an economic collapse. We need our banking sector to be 151 00:07:42,840 --> 00:07:46,080 Speaker 1: able to have make mistakes because they're all human, without 152 00:07:46,080 --> 00:07:48,960 Speaker 1: bringing down the whole economy or requiring a bailout. You're 153 00:07:49,000 --> 00:07:52,240 Speaker 1: calling what for a study of this? You're not saying 154 00:07:52,320 --> 00:07:55,120 Speaker 1: break up the banks yet, but if you were to 155 00:07:55,240 --> 00:07:57,640 Speaker 1: make the banks smaller, how would you do that? Obviously, 156 00:07:57,760 --> 00:08:00,600 Speaker 1: the investment banks didn't cause the two thousand eight crisis, 157 00:08:00,840 --> 00:08:04,040 Speaker 1: so going back to Glass Stiegel isn't necessarily the answer 158 00:08:04,120 --> 00:08:06,680 Speaker 1: for this, right. It may be one way that some 159 00:08:06,800 --> 00:08:11,680 Speaker 1: have proposed to actually drastically shrink banks is to drastically 160 00:08:11,720 --> 00:08:14,440 Speaker 1: increase capital requirements as a function of size, so that 161 00:08:14,480 --> 00:08:17,440 Speaker 1: there are such strong incentives. There are some incentives now, 162 00:08:17,960 --> 00:08:21,120 Speaker 1: and you're seeing some banks shed some assets, but in 163 00:08:21,160 --> 00:08:23,560 Speaker 1: my judgment, it's not nearly enough. How do you respond 164 00:08:23,600 --> 00:08:25,400 Speaker 1: the cover of the f T this summer. I think 165 00:08:25,440 --> 00:08:29,760 Speaker 1: it was Mike basically total paranoia intelectrical collapse in Europe, 166 00:08:29,960 --> 00:08:33,040 Speaker 1: that the European banks are falling behind the US banks. 167 00:08:33,240 --> 00:08:35,840 Speaker 1: How do you respond to people in New York who say, 168 00:08:35,880 --> 00:08:38,200 Speaker 1: if it ain't broke, don't fix it. Well, it ain't 169 00:08:38,200 --> 00:08:39,600 Speaker 1: broke it so that they would have said that in 170 00:08:39,600 --> 00:08:41,640 Speaker 1: two thousand six, You know, and when I went to 171 00:08:41,679 --> 00:08:43,960 Speaker 1: Treasury in two thousand and six, all the rage and 172 00:08:44,040 --> 00:08:48,360 Speaker 1: policy circles was on capital markets competitiveness. Everyone was paranoid 173 00:08:48,520 --> 00:08:51,000 Speaker 1: that our capital markets were stifled in two thousand six 174 00:08:51,160 --> 00:08:53,880 Speaker 1: by too much regulation. None of those really smart people 175 00:08:53,920 --> 00:08:56,200 Speaker 1: and I didn't see it. None of us saw the 176 00:08:56,240 --> 00:08:59,119 Speaker 1: crisis coming, and so I don't find that argument persuasive. 177 00:08:59,320 --> 00:09:03,640 Speaker 1: How do you react to the argument that the levels 178 00:09:03,679 --> 00:09:08,400 Speaker 1: of capital that we require now and Dodd frank legislation 179 00:09:08,440 --> 00:09:11,600 Speaker 1: about trading has reduced liquidity in the markets, and that 180 00:09:11,760 --> 00:09:13,800 Speaker 1: is a systemic risk. I don't see that as a 181 00:09:13,800 --> 00:09:16,280 Speaker 1: systemic risk. It may have reduced liquidity, but I think 182 00:09:16,280 --> 00:09:20,040 Speaker 1: the big the big investment managers, whether it's Fidelity or Franklin, 183 00:09:20,040 --> 00:09:22,880 Speaker 1: Templeton or black Rock or Pimco, if they want to 184 00:09:22,880 --> 00:09:24,960 Speaker 1: trade with each other, they can trade with each other. 185 00:09:25,040 --> 00:09:27,080 Speaker 1: And so I I just don't find that community worry 186 00:09:27,120 --> 00:09:29,200 Speaker 1: that if there's some sort of crisis everybody rushes for 187 00:09:29,200 --> 00:09:31,280 Speaker 1: the exit at once and there are no buyers. Well, no, 188 00:09:31,360 --> 00:09:33,320 Speaker 1: but if there's some sort of crisis, everybody rushes to 189 00:09:33,320 --> 00:09:34,679 Speaker 1: the exit of guests, is gonna be rushing for the 190 00:09:34,720 --> 00:09:36,959 Speaker 1: exit to the Wall Street dealers. They're not going to 191 00:09:37,040 --> 00:09:39,079 Speaker 1: step in if there's a real crisis and say we're 192 00:09:39,080 --> 00:09:40,719 Speaker 1: gonna buy all the stuff you want to sell. They're 193 00:09:40,760 --> 00:09:43,040 Speaker 1: gonna run for the fire, run for the exits as well. 194 00:09:43,520 --> 00:09:47,280 Speaker 1: What does it say that our regional banks are hiring 195 00:09:47,880 --> 00:09:52,000 Speaker 1: warm bodies like kesh Kari or Caplan. You guys, aren't 196 00:09:52,000 --> 00:09:56,920 Speaker 1: I s LM theoretical monetary economists. What does it signal 197 00:09:57,559 --> 00:10:00,360 Speaker 1: to the governors and to the president that the members 198 00:10:00,400 --> 00:10:03,959 Speaker 1: of these regional banks I hiring someone like you. Well, 199 00:10:04,000 --> 00:10:06,360 Speaker 1: I think it's saying that they want diversity of opinions. 200 00:10:06,400 --> 00:10:08,240 Speaker 1: And that's literally if you go back a hundred years 201 00:10:08,240 --> 00:10:11,560 Speaker 1: when Congress created the Distributed Central Bank, they want a diversity. 202 00:10:11,640 --> 00:10:14,079 Speaker 1: And when I went through the interview process, I can 203 00:10:14,080 --> 00:10:16,120 Speaker 1: tell you what our board of directors in Minneapolis was 204 00:10:16,160 --> 00:10:18,760 Speaker 1: looking for. They like the fact that I had public 205 00:10:18,760 --> 00:10:22,000 Speaker 1: sector experience, that I had private sector experience, uh, and 206 00:10:22,000 --> 00:10:24,120 Speaker 1: that I had management experience. Let's see if you've got 207 00:10:24,160 --> 00:10:26,280 Speaker 1: the communication down quickly. Here are you going to move 208 00:10:26,280 --> 00:10:29,559 Speaker 1: the dot plot of Kachua Dakota. Uh, we will see. 209 00:10:30,240 --> 00:10:32,520 Speaker 1: Very good. That's it. We're going to continue this interview 210 00:10:32,559 --> 00:10:35,000 Speaker 1: if he doesn't walk out of the radio studio. Eat 211 00:10:35,080 --> 00:10:37,240 Speaker 1: Kane here with an entourage of people. They're all wearing 212 00:10:37,240 --> 00:10:41,600 Speaker 1: Minnesota Vikings jerseys and they all just I've never doing 213 00:10:41,640 --> 00:10:45,480 Speaker 1: the show again. We're gonna continue with President crush Cary 214 00:10:45,600 --> 00:10:53,400 Speaker 1: of the Minnesota Fat Futures of eighteen Ninetena wall Street. 215 00:10:53,440 --> 00:10:54,959 Speaker 1: Let's check out with Michael Barr and get the latest 216 00:10:55,000 --> 00:10:57,640 Speaker 1: world of national headlines. Mike Time. Thank you very much. 217 00:10:57,679 --> 00:11:01,000 Speaker 1: It is a battle between privacy versus secure. Already, Apple 218 00:11:01,080 --> 00:11:03,600 Speaker 1: says it will fight a federal magistrate's order to help 219 00:11:03,600 --> 00:11:07,960 Speaker 1: the FBI access information steward in an iPhone that belonged 220 00:11:07,960 --> 00:11:11,679 Speaker 1: to one of the San Bernardino, California shooters. The magistrate 221 00:11:11,760 --> 00:11:16,199 Speaker 1: rule that Apple must supply the FBI with specialized software 222 00:11:16,640 --> 00:11:19,280 Speaker 1: that can help hack into the encrypted iPhone belonging to 223 00:11:19,400 --> 00:11:23,280 Speaker 1: Saya Farouk. Apple CEO Tim Cook says if it developed 224 00:11:23,320 --> 00:11:26,760 Speaker 1: such software, it will put millions of other iPhones at risk. 225 00:11:27,280 --> 00:11:32,080 Speaker 1: Republican presidential candidate Donald Trump says he agrees with the 226 00:11:32,120 --> 00:11:36,320 Speaker 1: Cords that Apple should unlock Peruke's iPhone. Trump says, we 227 00:11:36,400 --> 00:11:40,360 Speaker 1: have to use common sense. German Chancellor Angler Merkele renewed 228 00:11:40,360 --> 00:11:42,320 Speaker 1: hair call for a no fly zone in Syria to 229 00:11:42,320 --> 00:11:46,680 Speaker 1: protect civilians. That suggestion was promptly rejected by Russia. Moscow 230 00:11:46,720 --> 00:11:49,520 Speaker 1: says it can only be done with the Syrian government's consent. 231 00:11:49,800 --> 00:11:52,880 Speaker 1: Global News twenty four hours a day. Michael Barr, Mike, 232 00:11:52,960 --> 00:11:56,160 Speaker 1: Tom Michael, Thanks so much, Features Up eighteen Town, Features 233 00:11:56,200 --> 00:11:59,760 Speaker 1: Up one, Stay with US Worldwide. Neil Kush Curry on 234 00:12:00,120 --> 00:12:09,440 Speaker 1: America's monetary policy. Brought to you by your Mercedes Benz 235 00:12:09,440 --> 00:12:11,439 Speaker 1: Tri State Dealer. When it comes to winter elements, put 236 00:12:11,440 --> 00:12:13,960 Speaker 1: your best four wheels forward with Mercedes Benz Formatic All 237 00:12:13,960 --> 00:12:16,640 Speaker 1: wheel Drive. Visit your Mercedes Benz Tri State Dealer or 238 00:12:16,640 --> 00:12:24,560 Speaker 1: a test drive. Today. Global business news twenty four hours 239 00:12:24,559 --> 00:12:27,679 Speaker 1: a day at Bloomberg dot Com, the Radio plus Mobile 240 00:12:27,720 --> 00:12:31,040 Speaker 1: Act and on your radio. This is a Bloomberg Business 241 00:12:31,080 --> 00:12:34,439 Speaker 1: Flash and I'm Karen Moscow. This updates Rossy. You buy 242 00:12:34,480 --> 00:12:37,439 Speaker 1: Interactive Brokers and CME Group. If you're looking for global 243 00:12:37,480 --> 00:12:40,920 Speaker 1: futures contracts with low trading costs, look no further. Interactive 244 00:12:40,920 --> 00:12:43,800 Speaker 1: Brokers is the industry leader. Learn more at Interactive Brokers 245 00:12:43,840 --> 00:12:46,520 Speaker 1: dot com slash c m E Group. But it's a 246 00:12:46,559 --> 00:12:49,440 Speaker 1: breaking economic news crossing the Bloomberg. Let's go to Nidell 247 00:12:49,520 --> 00:12:52,920 Speaker 1: Judas with the latest Vinny Yes, Karen from the Federal 248 00:12:53,000 --> 00:12:57,400 Speaker 1: Reserved data on industrial production topping forecast up point nine 249 00:12:57,600 --> 00:13:01,520 Speaker 1: percent in January, factories loan putting in the best performance 250 00:13:01,520 --> 00:13:05,880 Speaker 1: since July. Earlier data on housing starts at decline to 251 00:13:05,920 --> 00:13:08,720 Speaker 1: the lowest level in three months. Also, earlier figures on 252 00:13:08,840 --> 00:13:13,280 Speaker 1: producer prices they were up at the Bloomberg First Word Guests, 253 00:13:13,280 --> 00:13:16,120 Speaker 1: back to you, Cameron, very thanks Vinny. And futures are 254 00:13:16,200 --> 00:13:19,400 Speaker 1: higher SNP EVENY futures up eighteen points down EVENY futures 255 00:13:19,440 --> 00:13:22,000 Speaker 1: of a hundred fifty one NASA DOCUMNY futures at forty 256 00:13:22,080 --> 00:13:25,240 Speaker 1: seven ten year treasury down thirteen thirty seconds, the yield 257 00:13:25,280 --> 00:13:28,199 Speaker 1: one one percent. NIMEX screwed oil ups three and a 258 00:13:28,240 --> 00:13:30,679 Speaker 1: half percent of a dollar three at thirty dollars seven 259 00:13:30,720 --> 00:13:33,480 Speaker 1: cents of barrel comex school little change down a dollar 260 00:13:33,520 --> 00:13:35,920 Speaker 1: ten to twelve or seven ten announced and the Euro 261 00:13:36,240 --> 00:13:39,280 Speaker 1: a dollar eleven eleven. That's a bloomberg business flash. Tom 262 00:13:39,280 --> 00:13:41,880 Speaker 1: and Mike Karen, thank you very much. We're talking with 263 00:13:41,920 --> 00:13:44,360 Speaker 1: Neil Cash Karry. He is the new president of the 264 00:13:44,400 --> 00:13:47,680 Speaker 1: Minneapolis FED, and we were just looking over the data 265 00:13:47,840 --> 00:13:53,400 Speaker 1: on industrial production that crossed and certainly better than expected. 266 00:13:53,520 --> 00:13:58,640 Speaker 1: An interesting note in here, UH manufacturing of half a percent, 267 00:13:59,000 --> 00:14:03,240 Speaker 1: utilities up five point four, mining flat for the first 268 00:14:03,280 --> 00:14:06,960 Speaker 1: time since August that we didn't have a contraction in mining. 269 00:14:07,400 --> 00:14:14,480 Speaker 1: You represent the absolutely is the worst over for UH, 270 00:14:14,559 --> 00:14:18,600 Speaker 1: for for the economy of that area, in the mining industry. 271 00:14:18,920 --> 00:14:20,600 Speaker 1: You know, we don't know. We have a number of 272 00:14:20,600 --> 00:14:22,720 Speaker 1: things happening at the same time, which you're well aware of. 273 00:14:22,720 --> 00:14:24,840 Speaker 1: We've obviously got the price of oil dropping, We've got 274 00:14:24,840 --> 00:14:28,120 Speaker 1: the strong dollar. And in the ninth district, which I represent, 275 00:14:28,480 --> 00:14:31,400 Speaker 1: we've got the oil fields in North Dakota. We've got 276 00:14:31,400 --> 00:14:35,200 Speaker 1: a agricultural sector, we've got mining and manufacturing. All of 277 00:14:35,240 --> 00:14:37,840 Speaker 1: these are impacted by both oil prices and by the dollar. 278 00:14:38,120 --> 00:14:40,080 Speaker 1: You know, one of the things I've been talking about 279 00:14:40,480 --> 00:14:42,360 Speaker 1: systemic risk and too big to fail and how hard 280 00:14:42,400 --> 00:14:44,800 Speaker 1: it is to see financial crises coming. Just look at 281 00:14:44,800 --> 00:14:47,360 Speaker 1: the price of oil a year ago. Two years ago, 282 00:14:47,400 --> 00:14:49,760 Speaker 1: nobody would have predicted. I didn't hear anybody predicting oil 283 00:14:49,840 --> 00:14:52,440 Speaker 1: dropping the thirty dollars. And so I don't want to 284 00:14:52,440 --> 00:14:53,880 Speaker 1: sit here and say we have a crystal ball and 285 00:14:53,920 --> 00:14:56,360 Speaker 1: we know where the price of oil is going in 286 00:14:56,360 --> 00:14:58,160 Speaker 1: the future. We just don't know. I mean, it can't 287 00:14:58,200 --> 00:15:00,600 Speaker 1: fall forever, but we just don't know where it's gonna 288 00:15:00,680 --> 00:15:03,560 Speaker 1: go in the in the intermediate future. Well, the dollar 289 00:15:03,600 --> 00:15:07,240 Speaker 1: and oil certainly pushed down on prices, and uh, we've 290 00:15:07,280 --> 00:15:10,240 Speaker 1: had that issue. But then pp I today you take 291 00:15:10,280 --> 00:15:13,120 Speaker 1: out energy and it's up four tenths percent on a 292 00:15:13,160 --> 00:15:16,840 Speaker 1: year over year basis eight tenths Uh, are you confident 293 00:15:16,960 --> 00:15:21,280 Speaker 1: that we have inflation in train, that we are going 294 00:15:21,360 --> 00:15:25,040 Speaker 1: to see the inflation people have been talking about for years. Well, 295 00:15:25,040 --> 00:15:27,479 Speaker 1: what we have to do? You know, our current expectation 296 00:15:27,640 --> 00:15:30,160 Speaker 1: is over the medium term inflation will return to our 297 00:15:30,200 --> 00:15:33,120 Speaker 1: target of two. We have to keep bringing people into 298 00:15:33,120 --> 00:15:36,040 Speaker 1: the labor force, and as we keep driving unemployment down, 299 00:15:36,360 --> 00:15:40,600 Speaker 1: keep creating jobs as an economy, keep bringing putting people 300 00:15:40,640 --> 00:15:44,760 Speaker 1: back to work, that will at some point drive wages 301 00:15:44,800 --> 00:15:46,760 Speaker 1: back up and drive inflation back up to target. And 302 00:15:46,800 --> 00:15:48,440 Speaker 1: I can tell you that we're totally committed as a 303 00:15:48,480 --> 00:15:51,520 Speaker 1: federal reserve system to the two percent target, the Phillips 304 00:15:51,560 --> 00:15:53,200 Speaker 1: curves and not debt. Well, that's right, right? How did 305 00:15:53,200 --> 00:15:54,600 Speaker 1: you know that, Mike? Why could I never know what 306 00:15:54,640 --> 00:15:56,400 Speaker 1: we're gonna go to the next And Mike just nailed it. 307 00:15:56,760 --> 00:16:00,560 Speaker 1: There are aerospace engineer cush carry work doing within the 308 00:16:00,600 --> 00:16:04,120 Speaker 1: non Gaussian reality of the investment world has to walk 309 00:16:04,160 --> 00:16:07,440 Speaker 1: into the model building of the Phillips curve and within 310 00:16:07,480 --> 00:16:11,000 Speaker 1: a broad sense economic models, where there's to be polite, 311 00:16:11,040 --> 00:16:14,920 Speaker 1: as Vice Chairman Fisher would say, uncertainty. How do you 312 00:16:15,240 --> 00:16:19,720 Speaker 1: adapt an adjust to the model debate within your FED 313 00:16:20,080 --> 00:16:22,160 Speaker 1: or the broader FED. As a whole. Well, you know, 314 00:16:22,240 --> 00:16:25,440 Speaker 1: we we talk about these issues, We have wide ranging 315 00:16:25,480 --> 00:16:28,320 Speaker 1: discussions and we push one another. I try to look 316 00:16:28,360 --> 00:16:31,000 Speaker 1: at things from a common sense perspective. If we if 317 00:16:31,000 --> 00:16:33,640 Speaker 1: we keep putting Americans back to work, you know, at 318 00:16:33,680 --> 00:16:36,920 Speaker 1: something quality jobs though, I mean mord Fed Gazette writes 319 00:16:36,960 --> 00:16:40,040 Speaker 1: this sub beautifully every day. No, look, that's a that's 320 00:16:40,040 --> 00:16:42,920 Speaker 1: the second very important issue, Tom, I totally agree with that. 321 00:16:42,960 --> 00:16:45,360 Speaker 1: But let's just stay with inflation for a second. If 322 00:16:45,400 --> 00:16:48,239 Speaker 1: we put people back to work and drive the unemployment 323 00:16:48,280 --> 00:16:50,760 Speaker 1: rate down, at some point, that has to lead to 324 00:16:50,760 --> 00:16:53,800 Speaker 1: wage growth. Right, that's just first principles of economics. At 325 00:16:53,880 --> 00:16:56,280 Speaker 1: some point supply and demand, that is going to lead 326 00:16:56,320 --> 00:16:58,800 Speaker 1: to wage growth, which will lead to inflation. And the 327 00:16:58,800 --> 00:17:01,320 Speaker 1: FED is committee to that. But do you believe in 328 00:17:01,360 --> 00:17:04,639 Speaker 1: a bimodal system, I mean of Alan Krueger Princeton's talking 329 00:17:04,680 --> 00:17:08,840 Speaker 1: about inequality within a bimodal America. Do you manage policy 330 00:17:09,000 --> 00:17:12,359 Speaker 1: or advise or suggest the policy. Do you listen to 331 00:17:12,359 --> 00:17:15,919 Speaker 1: your economists within the unimodal MAC or economics or is 332 00:17:15,920 --> 00:17:18,280 Speaker 1: it a bimodal to Americas? Now, I think we have 333 00:17:18,359 --> 00:17:20,760 Speaker 1: to look beyond just the unimodal world and look at 334 00:17:20,760 --> 00:17:23,200 Speaker 1: the bimodal world and the different structures that are out there. 335 00:17:23,520 --> 00:17:26,240 Speaker 1: And you know, the FEDS tools are blunt. We can't 336 00:17:26,240 --> 00:17:29,960 Speaker 1: directly affect income inequality, but we can talk. We can 337 00:17:30,040 --> 00:17:32,639 Speaker 1: raise these issues of the American people so that the 338 00:17:32,760 --> 00:17:36,080 Speaker 1: legislative authorities can understand what these issues are and they 339 00:17:36,080 --> 00:17:39,280 Speaker 1: can see if they can take appropriate action. Spreads or widening, 340 00:17:39,720 --> 00:17:45,119 Speaker 1: credit standards are tightening. Are you worried about credit availability 341 00:17:45,240 --> 00:17:49,320 Speaker 1: to companies as they try to continue this expansion, Well, 342 00:17:49,359 --> 00:17:51,359 Speaker 1: it's something we're clearly paying attention to. And there's a 343 00:17:51,359 --> 00:17:53,600 Speaker 1: lot of focus on what's happening outside the US right 344 00:17:53,640 --> 00:17:56,480 Speaker 1: for example, in China, etcetera. And one of the transmission 345 00:17:56,560 --> 00:17:59,399 Speaker 1: channels from a slowdown in China to the US is 346 00:17:59,440 --> 00:18:02,320 Speaker 1: not just to rate the direct trade linkages, it's also 347 00:18:02,400 --> 00:18:05,959 Speaker 1: what happens to risk premiums, what happens to the financial markets, 348 00:18:05,960 --> 00:18:08,960 Speaker 1: to volatility, the availability of credit. So it is something 349 00:18:08,960 --> 00:18:11,840 Speaker 1: that we pay very close attention to. You seeing any 350 00:18:12,080 --> 00:18:14,800 Speaker 1: signs of a problem at this point, Well, certainly in 351 00:18:14,840 --> 00:18:17,080 Speaker 1: the last couple of months with volatility and global markets, 352 00:18:17,119 --> 00:18:20,000 Speaker 1: volatility has increased, risk premiums have gone up, and so 353 00:18:20,240 --> 00:18:21,879 Speaker 1: you know that is something that we're watching and that 354 00:18:21,920 --> 00:18:23,960 Speaker 1: could have an effect in the U. S. Economy. I 355 00:18:24,000 --> 00:18:26,360 Speaker 1: don't think we know yet how big an effect it's 356 00:18:26,359 --> 00:18:28,720 Speaker 1: going to have. What I have to ask you what 357 00:18:28,800 --> 00:18:31,159 Speaker 1: you're feeling about negative interest rates? That seems to be 358 00:18:31,200 --> 00:18:33,680 Speaker 1: the all the rage on Wall Street these days. But 359 00:18:33,720 --> 00:18:36,520 Speaker 1: are there any countries you've seen where they actually work 360 00:18:36,600 --> 00:18:39,520 Speaker 1: to stimulate growth or inflation? Well, if this isn't on, 361 00:18:39,640 --> 00:18:41,600 Speaker 1: this is a real life experiment that we're having the 362 00:18:41,600 --> 00:18:43,840 Speaker 1: benefit of being able to watch what other countries are doing. 363 00:18:44,640 --> 00:18:47,399 Speaker 1: Have you grace the presence of Art Roule Nick yet? 364 00:18:47,600 --> 00:18:50,200 Speaker 1: You know? Uh? I mean, have you passed the role 365 00:18:50,280 --> 00:18:53,240 Speaker 1: Nick test I have not. Art and I have not 366 00:18:53,280 --> 00:18:56,199 Speaker 1: gotten together yet, but I've learned so much wonderful things 367 00:18:56,240 --> 00:18:58,639 Speaker 1: about Art. I'm looking forward to getting together. I mean, 368 00:18:58,640 --> 00:19:01,199 Speaker 1: the herotage just just full. For one thing to know 369 00:19:01,480 --> 00:19:09,760 Speaker 1: many Minnesota. Minneapolis owns childhood education research because because absolutely 370 00:19:09,800 --> 00:19:15,240 Speaker 1: don't screw that up. Some some people like some people 371 00:19:15,240 --> 00:19:17,840 Speaker 1: will point out that that's an interesting topic for the 372 00:19:17,840 --> 00:19:20,199 Speaker 1: Central Bank to be weighing in on. My view is 373 00:19:20,240 --> 00:19:23,240 Speaker 1: if it's important to the economy, then we should be thoughtful. 374 00:19:23,880 --> 00:19:25,800 Speaker 1: A lot of toilets. Michael, you might slip in one 375 00:19:25,880 --> 00:19:29,840 Speaker 1: more observation. Oh well, I think we're gonna let go here. 376 00:19:29,880 --> 00:19:33,440 Speaker 1: He's he has been kind with his time. Neil cash Carry, 377 00:19:33,480 --> 00:19:37,440 Speaker 1: the president of the Minneapolis Fed. Interesting proposition. We will 378 00:19:37,480 --> 00:19:41,000 Speaker 1: be will come out and attend your your hearing, your 379 00:19:41,040 --> 00:19:44,640 Speaker 1: symposia when you when you hold him and see where 380 00:19:44,680 --> 00:19:46,920 Speaker 1: we go with the banking system from here. Have you 381 00:19:46,960 --> 00:19:49,119 Speaker 1: talked to Dan Tarulo about him? I'm looking forward to 382 00:19:49,160 --> 00:19:51,879 Speaker 1: talking to him soon. Thank you, guys, I really appreciate it. 383 00:19:52,000 --> 00:19:55,000 Speaker 1: Neil cash Curry. He is the president of the Fellow 384 00:19:55,000 --> 00:19:58,960 Speaker 1: Reserve Bank of Minneapolis. Stay with us Green on the 385 00:19:59,000 --> 00:20:03,080 Speaker 1: screen at Risk features up sixteen worldwide and in Minnesota. 386 00:20:03,160 --> 00:20:07,160 Speaker 1: Bloomberg Surveillance. We're cutting down to the opany bell brought 387 00:20:07,200 --> 00:20:09,199 Speaker 1: to you by the refined Jeep Grand Cherokee Overland. It 388 00:20:09,200 --> 00:20:11,440 Speaker 1: continues to raise the bar with its luxurious interior and 389 00:20:11,520 --> 00:20:14,080 Speaker 1: legendary four by four capability. Drive one at your local 390 00:20:14,119 --> 00:20:16,760 Speaker 1: jeep dealer Today Chief the official vehicle and killingcoln Resort 391 00:20:23,320 --> 00:20:27,640 Speaker 1: broadcasting live to New York Gloomberg Eleventh Rio through Washington, 392 00:20:27,720 --> 00:20:31,679 Speaker 1: d C. Bloomberg N one to Boston Bloomberg twelve wins 393 00:20:31,720 --> 00:20:35,159 Speaker 1: to San Francisco, Bloomberg nine sixteen to the country to 394 00:20:35,600 --> 00:20:38,639 Speaker 1: set SAM Channel one nineteen and around the globe the 395 00:20:38,680 --> 00:20:42,000 Speaker 1: Bloomberg Radio Plus AVE and Bloomberg dot Com. This is 396 00:20:42,040 --> 00:20:46,000 Speaker 1: Bloomberg Surveillance. Good morning, I'm Terra in Moscow along with 397 00:20:46,119 --> 00:20:48,399 Speaker 1: Tom Keene and Michael McKee and the opening vall is 398 00:20:48,440 --> 00:20:51,320 Speaker 1: brought to you by SEI. In the future, the sset 399 00:20:51,359 --> 00:20:54,360 Speaker 1: management business will be profoundly different. Find out how SEAS 400 00:20:54,400 --> 00:20:57,600 Speaker 1: Global Operating Platform can help you navigate the new operational 401 00:20:57,680 --> 00:21:01,760 Speaker 1: frontier at se i C dot COM's lash Imagine. Stocks 402 00:21:01,760 --> 00:21:03,840 Speaker 1: are higher at the open the S and P five 403 00:21:03,880 --> 00:21:06,280 Speaker 1: hundred up half per cent or ten points to nineteen 404 00:21:06,320 --> 00:21:09,200 Speaker 1: o five down Johnes Industrial average of four ten percent 405 00:21:09,280 --> 00:21:12,120 Speaker 1: or seventy points to sixteen thousand, two hundred sixty eight, 406 00:21:12,240 --> 00:21:14,000 Speaker 1: and then as D acts up eight ten percent or 407 00:21:14,040 --> 00:21:17,320 Speaker 1: thirty five points to forty four seventy Tenure Treasury down 408 00:21:17,359 --> 00:21:20,040 Speaker 1: eleven thirty seconds. The yield one point eight one percent, 409 00:21:20,200 --> 00:21:22,879 Speaker 1: yield on the two year points seven five percent. Now 410 00:21:22,920 --> 00:21:25,000 Speaker 1: i'm x screwed oil up one point six percent or 411 00:21:25,040 --> 00:21:28,640 Speaker 1: forty seven cents to fifty one a barrel. Comex gold 412 00:21:28,720 --> 00:21:31,320 Speaker 1: is it'll change at twelve oh seven ninety announced the 413 00:21:31,359 --> 00:21:34,280 Speaker 1: euro is at a dollar eleven eighteen the end one 414 00:21:34,400 --> 00:21:38,159 Speaker 1: fourteen point to six. Tom and Mike Karen thanks so 415 00:21:38,240 --> 00:21:40,800 Speaker 1: much at ninety points is Karen mentions green on the 416 00:21:40,840 --> 00:21:42,560 Speaker 1: screen of vix Snow, there's the first print in the 417 00:21:42,640 --> 00:21:47,880 Speaker 1: VIX twenty three point four zero. I'd also point out 418 00:21:48,040 --> 00:21:51,960 Speaker 1: Sterling with the Brexit UH weight on forty two is 419 00:21:52,000 --> 00:21:55,600 Speaker 1: a weeker cable uh this morning never weaker? Is David 420 00:21:55,640 --> 00:21:59,160 Speaker 1: Wilson with a look at the equity markets? Is morning, David, 421 00:21:59,240 --> 00:22:01,840 Speaker 1: what do you see in land of equities? Well, we 422 00:22:01,920 --> 00:22:03,800 Speaker 1: might as well start with Kinder Morgan. I mean the 423 00:22:03,880 --> 00:22:07,080 Speaker 1: shares are up eleven and a half percent in early trading. 424 00:22:07,560 --> 00:22:10,240 Speaker 1: The pipeline owner was added to the holdings of Warren Buffetts, 425 00:22:10,240 --> 00:22:13,640 Speaker 1: Berkshire Hathaway during the fourth quarter. Berkshire ended the quarter 426 00:22:13,720 --> 00:22:16,600 Speaker 1: with twenty six point six million shares, where one point 427 00:22:16,600 --> 00:22:20,160 Speaker 1: two percent steak. You've also got Freeport mcmurran up about 428 00:22:20,200 --> 00:22:23,840 Speaker 1: five and a half percent. Billionaire investor Carl Icon disclosed 429 00:22:23,840 --> 00:22:26,000 Speaker 1: that he raised his steak in the mining and energy 430 00:22:26,000 --> 00:22:29,760 Speaker 1: company last quarter. HiCon now has a nine percent holding, 431 00:22:29,800 --> 00:22:33,760 Speaker 1: making him Freeports, largest shareholder. Down the earnings front, you've 432 00:22:33,800 --> 00:22:36,639 Speaker 1: got Price Line Group up ten a half percent. The 433 00:22:36,720 --> 00:22:39,920 Speaker 1: largest US online travel agency reported fourth quarter earnings that 434 00:22:40,000 --> 00:22:42,960 Speaker 1: beat its forecast, as well as annalyst savage essement in 435 00:22:43,000 --> 00:22:47,320 Speaker 1: Bloomberg survey. Revenue also exceeded projections. T Mobile US up 436 00:22:47,359 --> 00:22:50,600 Speaker 1: about four percent. The wireless company's fourth quarter earnings and 437 00:22:50,720 --> 00:22:53,879 Speaker 1: sales surpass estimates. T Mobile said expects to add as 438 00:22:53,880 --> 00:22:57,439 Speaker 1: many as three point four million new subscribers this year. 439 00:22:57,920 --> 00:23:01,480 Speaker 1: On the other hand, cerner A, a healthcare software provider, 440 00:23:01,760 --> 00:23:04,640 Speaker 1: down eight and a half percent. UH Their fourth quarter 441 00:23:04,800 --> 00:23:08,200 Speaker 1: order bookings came up short of estimates. On the deal front, 442 00:23:08,480 --> 00:23:11,680 Speaker 1: Staples up three point two percent. The largest US office 443 00:23:11,720 --> 00:23:15,760 Speaker 1: supply chain, agreed to sell wholesale contracts to Ascendant for 444 00:23:15,800 --> 00:23:18,120 Speaker 1: about twenty two and a half million dollars if it's 445 00:23:18,160 --> 00:23:22,440 Speaker 1: proposed takeover of rival office Depot succeeds. Staples move is 446 00:23:22,480 --> 00:23:26,560 Speaker 1: designed to overcome regulatory objections to the deal. Then you've 447 00:23:26,600 --> 00:23:29,639 Speaker 1: got Terrax up about five and a half percent. China's 448 00:23:29,680 --> 00:23:31,920 Speaker 1: zoom line heavy industry set It received a letter of 449 00:23:32,000 --> 00:23:35,040 Speaker 1: support from banks for a three point three billion dollar 450 00:23:35,160 --> 00:23:38,720 Speaker 1: takeover offer for the cranemaker zoom Line, seeking to scuttle 451 00:23:38,880 --> 00:23:44,800 Speaker 1: ter X's proposed merger with Finland's Conacrats equity ideas. How 452 00:23:44,840 --> 00:23:47,760 Speaker 1: about how about Garment up eight and a half percent. 453 00:23:47,960 --> 00:23:51,360 Speaker 1: The navigation device makers fourth quarter revenue beat estimates, Uh 454 00:23:51,520 --> 00:23:54,280 Speaker 1: so did garment Salesquecast for this year, and Fossil Group 455 00:23:54,440 --> 00:23:58,360 Speaker 1: up almost nineteen percent. The watchmakers of fourth quarter earnings 456 00:23:58,359 --> 00:24:00,480 Speaker 1: top estimates with the help of newburg ants and a 457 00:24:00,520 --> 00:24:03,440 Speaker 1: new website. David Wilson taking so much Lisa Branmo, it's 458 00:24:03,480 --> 00:24:05,399 Speaker 1: with us now as you look at bonds and it 459 00:24:05,480 --> 00:24:07,920 Speaker 1: was a twenty three billion dollar Tuesday. I mean, we're 460 00:24:07,920 --> 00:24:10,440 Speaker 1: gonna talk about Apple and I get all that, but 461 00:24:10,960 --> 00:24:14,680 Speaker 1: I there, it's terrible high yield. We're all gonna die. 462 00:24:15,320 --> 00:24:17,960 Speaker 1: And then Toyota, IBM, Apple, they all show up and 463 00:24:18,000 --> 00:24:21,560 Speaker 1: it's like, what do they do? Make five phone calls? Well, first, 464 00:24:21,640 --> 00:24:23,480 Speaker 1: let's put this into context, right, I mean, this is 465 00:24:23,520 --> 00:24:27,280 Speaker 1: the busiest day in three weeks for investment grade bond issue, 466 00:24:27,320 --> 00:24:29,399 Speaker 1: and so for all intents and purposes, the market was 467 00:24:29,440 --> 00:24:32,760 Speaker 1: pretty much closed for three weeks. Now, suddenly companies are 468 00:24:32,800 --> 00:24:34,960 Speaker 1: seeing an opening. Suddenly the world doesn't seem like it's 469 00:24:34,960 --> 00:24:37,479 Speaker 1: about to fall apart, and people are actually starting to 470 00:24:37,480 --> 00:24:41,280 Speaker 1: sell bonds. I do find it compelling. Tom to your point, 471 00:24:41,560 --> 00:24:43,600 Speaker 1: wasn't the world falling apart? But these guys can just 472 00:24:43,600 --> 00:24:46,280 Speaker 1: sell whatever they want? Can't be but the stuff I 473 00:24:46,320 --> 00:24:50,560 Speaker 1: want you to explain how they quote unquote sell They 474 00:24:50,640 --> 00:24:54,600 Speaker 1: literally make five phone calls, right, it's not an exaggeration. 475 00:24:54,720 --> 00:24:56,480 Speaker 1: The banks do not have to work too hard to 476 00:24:56,520 --> 00:24:59,840 Speaker 1: get this stuff off the books, because realistically, think about 477 00:25:00,119 --> 00:25:03,760 Speaker 1: how many investors out there internationally, let alone in the 478 00:25:03,880 --> 00:25:07,159 Speaker 1: US wants some yield, wants want a sense of safety. 479 00:25:07,359 --> 00:25:09,480 Speaker 1: And if you look at Apple, I mean, think about 480 00:25:09,480 --> 00:25:11,679 Speaker 1: how much cash they have, think about you know what 481 00:25:11,760 --> 00:25:14,680 Speaker 1: a fortreous balance sheet. They seem to have seventy billion 482 00:25:14,760 --> 00:25:18,040 Speaker 1: dollars of annual revenue. I mean, this is not exactly 483 00:25:18,280 --> 00:25:23,560 Speaker 1: uh fragile company. And yet it is interesting that the 484 00:25:23,680 --> 00:25:28,000 Speaker 1: junk universe has gotten so toxic to investors, and yet 485 00:25:28,160 --> 00:25:30,560 Speaker 1: investment grade companies are doing just fine. Do you assume 486 00:25:30,760 --> 00:25:34,359 Speaker 1: dollar for dollar that every bond dollar coming in goes 487 00:25:34,520 --> 00:25:38,320 Speaker 1: back out within the financial engineering to buy back shares 488 00:25:38,600 --> 00:25:41,520 Speaker 1: raised dividends that would be awfully cynical. Would that be 489 00:25:41,640 --> 00:25:52,400 Speaker 1: a cynical mystic aspects of the bond market. Tom is revealing, Um, 490 00:25:52,440 --> 00:25:55,360 Speaker 1: I actually percent agree with you, because if you look 491 00:25:55,440 --> 00:25:58,640 Speaker 1: at the companies that are raising cash through the debt 492 00:25:58,640 --> 00:26:02,439 Speaker 1: markets right now, it's for general corporate purposes, which is 493 00:26:02,480 --> 00:26:05,000 Speaker 1: another word for we can do whatever we want, and 494 00:26:05,000 --> 00:26:06,600 Speaker 1: you guys are just going to deal with it. Johnny, 495 00:26:06,640 --> 00:26:10,479 Speaker 1: should we do a weighted average cost of capital on Wednesday? Well, 496 00:26:10,520 --> 00:26:15,000 Speaker 1: let's see, we have three listeners left, Mike, just as 497 00:26:15,040 --> 00:26:18,920 Speaker 1: a quick quick view, weighted average cost ten equity debt 498 00:26:18,960 --> 00:26:24,640 Speaker 1: cost one? What do you need to know? Well, as 499 00:26:24,680 --> 00:26:27,920 Speaker 1: one trader put it this morning, it's it's really sad 500 00:26:28,320 --> 00:26:31,159 Speaker 1: to see Apple issue debt like this when they have 501 00:26:31,320 --> 00:26:34,720 Speaker 1: all that cash overseas. The fact that our tax code 502 00:26:34,800 --> 00:26:37,600 Speaker 1: forces them to do that is insane. Well, and it's 503 00:26:37,600 --> 00:26:39,480 Speaker 1: not just the tax code, right, I mean, yes, this 504 00:26:39,560 --> 00:26:42,240 Speaker 1: is partly because they don't want to repatriate cash that's 505 00:26:42,240 --> 00:26:45,240 Speaker 1: stash overseas. But this is also, to Tom's point, to 506 00:26:45,280 --> 00:26:48,520 Speaker 1: buy back their shares to basically pad the pockets of 507 00:26:48,560 --> 00:26:51,639 Speaker 1: their stockholders. Mario Belly, take your head off for that. 508 00:26:52,080 --> 00:26:55,200 Speaker 1: It's not a pad pockets. It's a return on capital 509 00:26:55,240 --> 00:26:59,280 Speaker 1: of profit. But is that an appropriate use. That's a debate. 510 00:26:59,720 --> 00:27:01,280 Speaker 1: You know. I'm not going to answer to the debate, 511 00:27:01,320 --> 00:27:04,120 Speaker 1: but Mr Gabelly would push against those who think it's 512 00:27:04,520 --> 00:27:07,199 Speaker 1: bordering on criminal. I don't think it's bordering on criminal. 513 00:27:07,280 --> 00:27:10,240 Speaker 1: I do think that the idea of borrowing from bondholders 514 00:27:10,280 --> 00:27:13,359 Speaker 1: in order to pay stockholders feels a little off because 515 00:27:13,359 --> 00:27:16,159 Speaker 1: it doesn't necessarily lead to and improve me in the 516 00:27:16,200 --> 00:27:19,720 Speaker 1: fundamental business prospect of See how she does that. She's 517 00:27:19,760 --> 00:27:23,200 Speaker 1: more subtle, Michael. She brings in her beautiful Bloomberg gad 518 00:27:23,240 --> 00:27:26,080 Speaker 1: Fly article which you can perceive I'll put it out 519 00:27:26,119 --> 00:27:28,600 Speaker 1: on social in a moment, and buried in the bottom 520 00:27:28,640 --> 00:27:32,000 Speaker 1: of it is the tragedy known as Hewlett Packard where 521 00:27:32,040 --> 00:27:36,000 Speaker 1: the Certitude attack bonds Michael McKee evaporated into a higher 522 00:27:36,080 --> 00:27:39,639 Speaker 1: yield and a lower bond price. I was just looking 523 00:27:39,680 --> 00:27:42,800 Speaker 1: at that portion of this marvelous sort of like the 524 00:27:42,880 --> 00:27:46,360 Speaker 1: King James Bible. I haven't got the edgectives that came 525 00:27:46,400 --> 00:27:50,119 Speaker 1: up with Tommy here Kings Bible. You can find in 526 00:27:50,160 --> 00:27:56,640 Speaker 1: every hotel. He can find Bloomber gad Flight. Everything. We're 527 00:27:56,640 --> 00:28:02,520 Speaker 1: gonna stop right there is this uh is apple the 528 00:28:03,320 --> 00:28:06,000 Speaker 1: Camel's nose under the tenter. Is it's just a function 529 00:28:06,040 --> 00:28:08,879 Speaker 1: of timing that they happen to lead the parade into 530 00:28:08,880 --> 00:28:14,080 Speaker 1: this larger output of bonds. Well, you know, the question 531 00:28:14,320 --> 00:28:17,720 Speaker 1: is ken smaller companies, Ken companies that actually need to 532 00:28:17,800 --> 00:28:20,399 Speaker 1: borrow that aren't just taking advantage of the fact that 533 00:28:20,640 --> 00:28:22,639 Speaker 1: fields are still pretty low. Are they going to be 534 00:28:22,680 --> 00:28:24,800 Speaker 1: able to come to market? And and really the answer 535 00:28:24,920 --> 00:28:27,920 Speaker 1: is it remains to be seen, Thank you, Lisa brand 536 00:28:27,920 --> 00:28:30,960 Speaker 1: Win said. Seriously, folks, Bloomberg gad fly is a really 537 00:28:31,359 --> 00:28:34,920 Speaker 1: valuable idea. You get ten twelve, fifteen ideas a day, 538 00:28:35,080 --> 00:28:36,600 Speaker 1: You're not going to read them all. You're gonna pick 539 00:28:36,640 --> 00:28:39,360 Speaker 1: a few and one of them to considers, uh two 540 00:28:39,480 --> 00:28:44,440 Speaker 1: or three summaries on a huge, ginormous Bonda yesterday led 541 00:28:44,440 --> 00:28:48,240 Speaker 1: by twelve gazillion dollars by Apple Computer. They've got other 542 00:28:48,320 --> 00:28:52,560 Speaker 1: challenges this morning. They're dealing with unlocking their phones as well. 543 00:28:52,640 --> 00:28:55,600 Speaker 1: Michael Barr has talked about that as well. We're up 544 00:28:55,600 --> 00:28:58,920 Speaker 1: on in thirty one point sixteen thousand three eight. The 545 00:28:59,040 --> 00:29:03,200 Speaker 1: vix have way back to average twenty three point four nine. 546 00:29:03,280 --> 00:29:06,560 Speaker 1: Certainly a complacency over the last three four days. Yen 547 00:29:07,120 --> 00:29:11,200 Speaker 1: one fourteen twenty seven weaker Japanese yen really beginning to 548 00:29:11,240 --> 00:29:13,800 Speaker 1: move away from the angst. And we saw the last 549 00:29:13,800 --> 00:29:17,000 Speaker 1: couple of days uh pounds sterling showing angst. Cable dollar 550 00:29:17,040 --> 00:29:20,280 Speaker 1: forty two fifty seven weeker. That's at Brexit angle there 551 00:29:21,040 --> 00:29:25,360 Speaker 1: as well. West Texas Intermedia up sixty four cents and 552 00:29:26,480 --> 00:29:30,120 Speaker 1: Brent Crew thirty three fifteen up a good ninety eight cents, 553 00:29:30,200 --> 00:29:37,720 Speaker 1: widening the West Texas Brent spread. This morning, there's our 554 00:29:37,760 --> 00:29:40,520 Speaker 1: surveillance spot you by Mazda White Plains. Visit Mazda White 555 00:29:40,520 --> 00:29:43,920 Speaker 1: Plains dot com. Here's Michael R with the latest news headlines. 556 00:29:44,120 --> 00:29:46,400 Speaker 1: Mike Tom, thank you very much. Donald Trump says he 557 00:29:46,440 --> 00:29:50,880 Speaker 1: agrees with the Cords that Apple should help the FBI 558 00:29:51,080 --> 00:29:53,280 Speaker 1: and unlock an iPhone that belonged to one of the 559 00:29:53,320 --> 00:29:57,440 Speaker 1: San Bernardino, California shooters. Trump on Fox and Friends says, 560 00:29:57,640 --> 00:29:59,840 Speaker 1: to think that Apple won't allow us to get in 561 00:30:00,000 --> 00:30:02,240 Speaker 1: to the cell phone. Who do they think they are? 562 00:30:02,680 --> 00:30:05,720 Speaker 1: Apple says if it developed such software, it will put 563 00:30:05,760 --> 00:30:10,160 Speaker 1: millions of other iPhones at risk. Technology analyst Rob Enderley 564 00:30:10,400 --> 00:30:13,400 Speaker 1: creates a catch twenty two for them that they one 565 00:30:13,880 --> 00:30:16,920 Speaker 1: they specifically made it so this couldn't happen, and if 566 00:30:16,920 --> 00:30:20,040 Speaker 1: they are able to force force it to happen, then 567 00:30:20,040 --> 00:30:22,120 Speaker 1: they open all the phones to the same kind of 568 00:30:22,120 --> 00:30:24,880 Speaker 1: an attack, at least by a government level entity. For 569 00:30:25,200 --> 00:30:27,880 Speaker 1: us F twenty two South Finders have flown over South 570 00:30:27,960 --> 00:30:31,200 Speaker 1: Korea today and a clear show of power against North Korea. 571 00:30:31,600 --> 00:30:34,479 Speaker 1: Passengers on two planes at the Traite Metropolitan Airport had 572 00:30:34,520 --> 00:30:38,040 Speaker 1: a moment. An American Airlines plane clipped a Southwest Airlines 573 00:30:38,040 --> 00:30:41,080 Speaker 1: plane on the Tarmact this morning. A passenger aboard American 574 00:30:41,120 --> 00:30:43,800 Speaker 1: Airlines flight twelve forty one says they were getting in 575 00:30:43,840 --> 00:30:46,400 Speaker 1: line to be de ice when the incident occurred. There's 576 00:30:46,440 --> 00:30:48,600 Speaker 1: debris on the ground, and I turned and looked at 577 00:30:48,600 --> 00:30:52,640 Speaker 1: everybody because of course there's weird noises and it's not 578 00:30:52,680 --> 00:30:54,400 Speaker 1: a smooth ride at this point, and I just said, 579 00:30:54,440 --> 00:30:56,080 Speaker 1: I'm my god, you guys, we are hitting this plane. 580 00:30:56,120 --> 00:30:58,720 Speaker 1: I'm watching it. We're hitting it. Global News twenty four 581 00:30:58,760 --> 00:31:02,120 Speaker 1: hours a day, powered by or twenty journalists more than 582 00:31:02,120 --> 00:31:04,640 Speaker 1: a hundred fifty news bureaus from around the world. Michael 583 00:31:04,720 --> 00:31:07,520 Speaker 1: bar Man, thanks so much. Curve stepening this morning, the 584 00:31:07,600 --> 00:31:11,280 Speaker 1: two stents spread an indicator of uh well, some would 585 00:31:11,280 --> 00:31:15,040 Speaker 1: say potential recession going the other way with optimism. Stay 586 00:31:15,040 --> 00:31:22,200 Speaker 1: with US only optimism. Bluebird Surveillance Bloomberg Surveilance is brought 587 00:31:22,240 --> 00:31:24,800 Speaker 1: to by Fairley Dickinson University. Boost your career by getting 588 00:31:24,880 --> 00:31:27,320 Speaker 1: CFP certified at FFTERU, named one of the great schools 589 00:31:27,360 --> 00:31:30,880 Speaker 1: for financial planning classes begain February four, is it after 590 00:31:31,680 --> 00:31:40,200 Speaker 1: slash FP Global Business News twenty four hours a day. 591 00:31:40,360 --> 00:31:43,320 Speaker 1: If Bloomberg dot Com the radio plus Mobile act and 592 00:31:43,480 --> 00:31:47,400 Speaker 1: on your radio. This is a Bloomberg Business flash and 593 00:31:47,440 --> 00:31:50,160 Speaker 1: I'm Karen Moscow. This updates brought to you by National 594 00:31:50,160 --> 00:31:53,320 Speaker 1: Realty Returns on cash and rented real estate find them 595 00:31:53,320 --> 00:31:56,560 Speaker 1: at n r i A dot net. US and European 596 00:31:56,640 --> 00:31:59,880 Speaker 1: stocks gaining amid speculation that the recent selloff was over 597 00:32:00,040 --> 00:32:03,240 Speaker 1: done as investors look past lasses in Asian markets triggered 598 00:32:03,280 --> 00:32:05,640 Speaker 1: by a weekending u Wan Curde oil is rising and 599 00:32:05,720 --> 00:32:08,400 Speaker 1: we checked the markets every fifteen minutes throughout the trading day. 600 00:32:08,400 --> 00:32:11,360 Speaker 1: On Bloomberg SNP five hundred up seven tenths per cent 601 00:32:11,440 --> 00:32:14,280 Speaker 1: or thirteen points to nineteen o eight. Dow Jones Industrial 602 00:32:14,320 --> 00:32:17,200 Speaker 1: Average up seven tenths percent or one hundred ten points 603 00:32:17,280 --> 00:32:20,160 Speaker 1: to sixteen thousand, three hundred five. Naz dacks up seven 604 00:32:20,200 --> 00:32:22,920 Speaker 1: tenths percent or thirty one points to forty four sixty six. 605 00:32:23,200 --> 00:32:25,640 Speaker 1: Ten year treasury down eleven thirty seconds, the yield one 606 00:32:25,640 --> 00:32:27,960 Speaker 1: point eight one percent yield on the two year point 607 00:32:28,040 --> 00:32:31,120 Speaker 1: seven four percent. NIMEX crude oil up two point four 608 00:32:31,160 --> 00:32:33,720 Speaker 1: percent or sixty eight cents to twenty nine seventy three 609 00:32:33,720 --> 00:32:36,600 Speaker 1: A barrel comes gold is up three ten percent or 610 00:32:36,600 --> 00:32:39,240 Speaker 1: three dollars eighty cents to twelve eleven ninety an ounce 611 00:32:39,600 --> 00:32:41,960 Speaker 1: the euro and dollar eleven thirty five the en one 612 00:32:42,040 --> 00:32:46,280 Speaker 1: fourteen point one eight. US manufacturing output rising in January 613 00:32:46,320 --> 00:32:48,840 Speaker 1: by the most cents. July twenty fifteen, a half percent 614 00:32:48,880 --> 00:32:51,560 Speaker 1: advanced at factories, which makes up seventy five percent of 615 00:32:51,600 --> 00:32:55,240 Speaker 1: all production, followed a two ten percent decrease the prior month, 616 00:32:55,600 --> 00:32:58,040 Speaker 1: and price lying among the best performer in the SNP 617 00:32:58,160 --> 00:33:01,080 Speaker 1: five hundred today the largest US online travel agent, and 618 00:33:01,200 --> 00:33:05,560 Speaker 1: jumping as much as sixteen percent after reporting fourth quarter 619 00:33:05,560 --> 00:33:08,120 Speaker 1: earnings at beat analysts estimates. It's now up ten and 620 00:33:08,160 --> 00:33:11,160 Speaker 1: a half percent. And that's a bloomberg business flash. Tom 621 00:33:11,160 --> 00:33:15,000 Speaker 1: and Mike, thank you, Karen, Tom. How's this for a prediction? 622 00:33:15,480 --> 00:33:19,880 Speaker 1: Susan Garamoni, president of sth Macro Advisors, sent a note 623 00:33:19,880 --> 00:33:24,280 Speaker 1: doubt lest Thursday, I believe, saying that within hours he 624 00:33:24,440 --> 00:33:27,560 Speaker 1: expected there to be an announcement of a peace deal 625 00:33:28,240 --> 00:33:30,320 Speaker 1: in Syria, a cease fire, not a peace deal, but 626 00:33:30,360 --> 00:33:33,320 Speaker 1: a cease fire, and that that would be followed by 627 00:33:33,400 --> 00:33:40,160 Speaker 1: a Russian Saudi agreement on oil. Very prescient. He did 628 00:33:40,240 --> 00:33:43,280 Speaker 1: not say that they would be cutting oil significantly or 629 00:33:43,320 --> 00:33:45,080 Speaker 1: that there would be peace in the Middle East, but 630 00:33:45,400 --> 00:33:48,560 Speaker 1: those two things were forecast ahead of time. So we 631 00:33:48,600 --> 00:33:51,200 Speaker 1: wanted to bring Sassan on and say, well, if you 632 00:33:51,280 --> 00:33:54,240 Speaker 1: got that right, what's next. Where do you see all 633 00:33:54,280 --> 00:33:57,680 Speaker 1: of this going from here? Sis Hi, Mike, thank you 634 00:33:57,760 --> 00:34:00,600 Speaker 1: very much for having me on, and I appreciate the 635 00:34:00,600 --> 00:34:06,080 Speaker 1: the very nice introduction. Well, we think that the um 636 00:34:07,640 --> 00:34:12,360 Speaker 1: the oil agreement or the oil discussions now are a 637 00:34:12,520 --> 00:34:18,680 Speaker 1: very very very significant development for macro markets, for oil markets. Uh. 638 00:34:18,719 --> 00:34:21,080 Speaker 1: And if there's kind of one message that I would 639 00:34:21,080 --> 00:34:25,040 Speaker 1: like your viewers to take away is that I think 640 00:34:25,080 --> 00:34:27,560 Speaker 1: a lot of what you were seeing and a lot 641 00:34:27,600 --> 00:34:31,719 Speaker 1: of the skepticism that you're reading about, you know, sort 642 00:34:31,760 --> 00:34:35,360 Speaker 1: of having an oil freeze between Russia and Saudi Arabia. 643 00:34:36,160 --> 00:34:38,319 Speaker 1: There is to a large extent, analysts I think are 644 00:34:38,360 --> 00:34:42,799 Speaker 1: missing the forest through the trees here and we are potentially, 645 00:34:42,960 --> 00:34:45,400 Speaker 1: you know, on on a one of the bigger macro 646 00:34:45,719 --> 00:34:50,480 Speaker 1: trades of the of the year and one that impacts 647 00:34:50,520 --> 00:34:54,720 Speaker 1: all markets, global markets. And the shift that occurred wasn't 648 00:34:54,800 --> 00:34:58,240 Speaker 1: really um last week. It actually started a little earlier 649 00:34:58,239 --> 00:35:03,160 Speaker 1: in January, UH in Saudi Arabia, and that was essentially 650 00:35:03,200 --> 00:35:07,680 Speaker 1: a subtle but very important shift from the policy that 651 00:35:07,719 --> 00:35:11,120 Speaker 1: they had vowed to pursue. If everybody recalls at the 652 00:35:12,719 --> 00:35:15,359 Speaker 1: OPEC meeting where they sort of pulled the rugouts from 653 00:35:15,440 --> 00:35:19,719 Speaker 1: under oil prices and said that they are basically pursuing 654 00:35:19,760 --> 00:35:24,560 Speaker 1: a maximum production policy and that they would not, uh 655 00:35:24,719 --> 00:35:29,759 Speaker 1: you sacrifice market share to the quote unquote high cost producers, 656 00:35:29,760 --> 00:35:32,400 Speaker 1: which you know, people can interpret as Russia, can interpret 657 00:35:32,440 --> 00:35:35,280 Speaker 1: as shale, can interpret as as all of the above, 658 00:35:36,080 --> 00:35:39,040 Speaker 1: causing the plunge in prices down to the levels that 659 00:35:39,080 --> 00:35:44,240 Speaker 1: we've seen recently. Um, what happened is clearly the strain 660 00:35:44,840 --> 00:35:51,120 Speaker 1: on finances among all the oil producers in Saudi Arabia specifically, 661 00:35:51,160 --> 00:35:55,359 Speaker 1: as well as in other countries. And uh, what has 662 00:35:55,400 --> 00:35:59,400 Speaker 1: happened once we sort of reached this thirty dollar is 663 00:35:59,719 --> 00:36:02,480 Speaker 1: level UH in oil and it was a big wake 664 00:36:02,560 --> 00:36:06,920 Speaker 1: up call for everybody to start to for the producers 665 00:36:07,160 --> 00:36:09,520 Speaker 1: to start talking among themselves and to see how they 666 00:36:09,520 --> 00:36:13,120 Speaker 1: could tidy up the market. So it's a state, big shift. So, son, 667 00:36:13,280 --> 00:36:17,520 Speaker 1: you have such a heritage with your Iran attending a 668 00:36:17,520 --> 00:36:21,360 Speaker 1: whole set of schools. Is the is the offspring of 669 00:36:21,360 --> 00:36:24,320 Speaker 1: of of a diplomat, the Anglo American School of Moscow, 670 00:36:24,400 --> 00:36:28,680 Speaker 1: Tehran International School, and the acclaimed American School of Madrid. 671 00:36:29,200 --> 00:36:34,480 Speaker 1: What do we most get wrong about your Iran? Uh? 672 00:36:34,800 --> 00:36:37,320 Speaker 1: Thank you very much, tom Uh. I think what people 673 00:36:37,600 --> 00:36:43,840 Speaker 1: get wrong most about Iran is that the the Islamic 674 00:36:43,880 --> 00:36:49,879 Speaker 1: Republic is a very pragmatic UH leadership and they are 675 00:36:50,080 --> 00:36:53,200 Speaker 1: it is a post revolutionary leadership. You're in the second 676 00:36:53,200 --> 00:36:57,640 Speaker 1: and third generation. And I think this is a holdover 677 00:36:57,719 --> 00:37:00,960 Speaker 1: really from the nineteen eighties from you know, from Homany, 678 00:37:01,080 --> 00:37:05,759 Speaker 1: from the very sort of messianic governments that that that 679 00:37:06,080 --> 00:37:09,160 Speaker 1: ran Iran at the time, that to one that has 680 00:37:09,440 --> 00:37:13,080 Speaker 1: turned into basically a government that's really trying to protect 681 00:37:13,160 --> 00:37:16,839 Speaker 1: its own self interests and it is in a bit 682 00:37:16,880 --> 00:37:21,000 Speaker 1: of a defensive position. Quite frankly, economically, visa the world 683 00:37:21,040 --> 00:37:24,160 Speaker 1: and so on. And so you know, I have a 684 00:37:24,280 --> 00:37:27,239 Speaker 1: very good friend, term said Jack Poor, and I will 685 00:37:27,280 --> 00:37:30,160 Speaker 1: borrow quotes that that he uses, and you may have 686 00:37:30,239 --> 00:37:33,040 Speaker 1: spoken to him before, and he says that people think 687 00:37:33,040 --> 00:37:38,120 Speaker 1: that the Iranian regime is uh is suicidal, but it's not. 688 00:37:38,200 --> 00:37:41,000 Speaker 1: So it might be homicidal, but it's not suicidal. And 689 00:37:41,040 --> 00:37:44,640 Speaker 1: I think this is business. Is business, that's what people miss. Well. 690 00:37:44,680 --> 00:37:49,239 Speaker 1: Some people have suggested that the big issue, or one 691 00:37:49,280 --> 00:37:51,000 Speaker 1: of the big issues over the next couple of years 692 00:37:51,160 --> 00:37:53,719 Speaker 1: is going to be the Iranian face off with the 693 00:37:53,760 --> 00:37:57,320 Speaker 1: saudiast in the Middle East. Roxy war underway in Syria already. 694 00:37:57,320 --> 00:38:00,880 Speaker 1: How do you see that playing out? Uh? That's that 695 00:38:01,080 --> 00:38:04,640 Speaker 1: is a There is already a proxy war and and 696 00:38:04,640 --> 00:38:06,439 Speaker 1: and and it's been going on for a long time. 697 00:38:06,440 --> 00:38:09,640 Speaker 1: As I'm sure you're all aware. It's not just in Syria, 698 00:38:09,800 --> 00:38:13,600 Speaker 1: it's in it's in Yemen. Uh. And those are really 699 00:38:13,680 --> 00:38:15,200 Speaker 1: kind of a big hot spots. You know, to a 700 00:38:15,280 --> 00:38:18,080 Speaker 1: lesser extent, there's some skirmishes and you know leman on 701 00:38:18,080 --> 00:38:19,960 Speaker 1: occasionally and so on, but those are the two big 702 00:38:20,000 --> 00:38:25,480 Speaker 1: hot spots. And um, what has happening now that and 703 00:38:25,520 --> 00:38:28,399 Speaker 1: I would say it's it's it's almost a hot war. 704 00:38:28,880 --> 00:38:32,640 Speaker 1: People underestimate people are There's been a lot of articles 705 00:38:32,640 --> 00:38:37,279 Speaker 1: about the you know, Hesbalah involvement in Syria, but the 706 00:38:37,360 --> 00:38:43,520 Speaker 1: Saudis have been funneling an enormous amount of military capability 707 00:38:43,560 --> 00:38:47,560 Speaker 1: into into the region. And what's happening there is that 708 00:38:47,760 --> 00:38:52,520 Speaker 1: the Saudi um young Deputy Crown Prince mom and Been 709 00:38:52,560 --> 00:38:56,680 Speaker 1: Salmon has I think he's overextended it a little bit. 710 00:38:56,719 --> 00:38:59,839 Speaker 1: And this is one of the issues. And the US 711 00:39:00,000 --> 00:39:01,960 Speaker 1: all to see, to put it in a nutshell on 712 00:39:02,040 --> 00:39:06,000 Speaker 1: Syria is quite frankly too sort of trying to extricate 713 00:39:06,120 --> 00:39:10,399 Speaker 1: ourselves from the front, from them from the region. And 714 00:39:10,480 --> 00:39:13,320 Speaker 1: so what what we are seeing his you know, the 715 00:39:13,640 --> 00:39:18,560 Speaker 1: Saudis talk about sending troops. This is the biggest news 716 00:39:18,600 --> 00:39:21,120 Speaker 1: that you've seen recently, is that there's been an ESCALATIONE 717 00:39:21,360 --> 00:39:23,440 Speaker 1: will you see the action to go with the talk. 718 00:39:24,320 --> 00:39:26,399 Speaker 1: I think they're hesitant to do that. I think it's 719 00:39:26,480 --> 00:39:29,279 Speaker 1: it's limited. This is a and there it goes back 720 00:39:29,320 --> 00:39:31,840 Speaker 1: to my earlier point that I think they are a 721 00:39:31,880 --> 00:39:35,080 Speaker 1: little bit over extended. The Yemen is a you know, 722 00:39:35,120 --> 00:39:38,000 Speaker 1: it's a bogged down in Yemen and Syria. You know, 723 00:39:38,080 --> 00:39:41,000 Speaker 1: quite frankly, the Russians are doing some mop up operations 724 00:39:41,000 --> 00:39:44,040 Speaker 1: on Alempa right now. So the Saudis are hiding behind 725 00:39:44,200 --> 00:39:46,200 Speaker 1: the U S on this. This thing will send it 726 00:39:46,239 --> 00:39:49,680 Speaker 1: if there's a U S left that even if there's 727 00:39:49,880 --> 00:39:53,880 Speaker 1: the carnage in supply. Debated microeconomics of oil the sun gremony. 728 00:39:54,080 --> 00:39:57,799 Speaker 1: Is there a geopolitical amount in the price of oil 729 00:39:57,840 --> 00:39:59,960 Speaker 1: at thirty dollars a barrel? Do you have X amount 730 00:40:00,000 --> 00:40:04,000 Speaker 1: of dollars? Is geopolitical risk or is that an analysis 731 00:40:04,080 --> 00:40:07,319 Speaker 1: of another era. I don't think there is. I don't 732 00:40:07,320 --> 00:40:11,080 Speaker 1: think we have a extra bid and oil right now 733 00:40:11,200 --> 00:40:14,799 Speaker 1: because of geopolitical risk. I think it's actually maybe even 734 00:40:14,800 --> 00:40:17,080 Speaker 1: a little bit the opposite. You know, we've we've put 735 00:40:17,080 --> 00:40:20,280 Speaker 1: out these reports since January. We've we've seen some bottoming 736 00:40:20,280 --> 00:40:23,560 Speaker 1: of oil UM. He's saw some spike up off the lows. 737 00:40:23,560 --> 00:40:25,800 Speaker 1: But I think there's a lot of skepticism of anything 738 00:40:25,800 --> 00:40:28,760 Speaker 1: in the oil markets UM right now. And you're seeing 739 00:40:28,800 --> 00:40:31,719 Speaker 1: that in the response to so that these latest developments. 740 00:40:31,760 --> 00:40:34,520 Speaker 1: What about Russia, what about China? What about Iran? Yes, yes, 741 00:40:34,719 --> 00:40:38,360 Speaker 1: but this is a long process. This is a confidence building, 742 00:40:38,440 --> 00:40:42,520 Speaker 1: trust building process. Between big rivals um and and quite 743 00:40:42,560 --> 00:40:46,919 Speaker 1: frankly enemies, but for practical reasons, and we are going 744 00:40:46,920 --> 00:40:50,920 Speaker 1: into maintenance season and I think it's uh that we 745 00:40:50,960 --> 00:40:54,720 Speaker 1: could there there their objectives have been lowered. The Saudis 746 00:40:54,760 --> 00:40:57,359 Speaker 1: everybody would be more than happy to see oil at 747 00:40:57,400 --> 00:41:00,160 Speaker 1: forty fifty dollar region now and I see that it's 748 00:41:00,360 --> 00:41:03,000 Speaker 1: very very plausible. I think we could we can that 749 00:41:03,160 --> 00:41:07,319 Speaker 1: through the course of the son Thank you so much 750 00:41:07,320 --> 00:41:11,120 Speaker 1: since san Garamanti s g H Macro advisors, particularly there 751 00:41:11,160 --> 00:41:14,120 Speaker 1: on the next marginal barrel, which I believe is heading 752 00:41:14,160 --> 00:41:17,279 Speaker 1: out of Tehran UH in the number of weeks. This 753 00:41:17,320 --> 00:41:20,040 Speaker 1: has been a most interesting day. Thank you for your 754 00:41:20,080 --> 00:41:23,760 Speaker 1: many comments on the appearance of the president, the newly 755 00:41:23,800 --> 00:41:27,680 Speaker 1: minted president of the Minnieappis fed Nil Kashkari. We got 756 00:41:27,680 --> 00:41:30,600 Speaker 1: a lot of headlines out of that and really strong 757 00:41:30,680 --> 00:41:37,200 Speaker 1: language from him on a symposium, a careful, measured analysis 758 00:41:37,200 --> 00:41:40,080 Speaker 1: that will be done by his mini appus fed on 759 00:41:40,280 --> 00:41:44,720 Speaker 1: our larger banks. That certainly was an important speech at Brookie's. 760 00:41:44,719 --> 00:41:48,720 Speaker 1: Congratulations to David Wessele and Brookings Institution for really driving 761 00:41:48,760 --> 00:41:52,760 Speaker 1: forward this conversation as they have in the last forty 762 00:41:52,760 --> 00:41:56,600 Speaker 1: eight hours with that we say, good morning Washington, Bloomberg 763 00:41:57,239 --> 00:42:02,280 Speaker 1: point one, f M. Bloomber Austin waking up sixty Bay Area, 764 00:42:03,080 --> 00:42:07,080 Speaker 1: Good morning, Corey and Carol on here in a moment, 765 00:42:07,480 --> 00:42:10,040 Speaker 1: and of course Bloomberg eleven three. A gorgeous spring like 766 00:42:10,800 --> 00:42:13,400 Speaker 1: New York today. I guess it's winter, but it's certainly 767 00:42:13,400 --> 00:42:15,960 Speaker 1: on the inch of spring as well. The market has 768 00:42:16,000 --> 00:42:20,120 Speaker 1: that lift to it up HUT sixteen thousand, three and 769 00:42:20,239 --> 00:42:23,200 Speaker 1: thirty one, the Vics Better twenty three point five four 770 00:42:23,239 --> 00:42:27,880 Speaker 1: in by point five seven Vicks Points West Texas Intermedia 771 00:42:28,440 --> 00:42:35,040 Speaker 1: Fragile earlier think five am cents up sixty four cents 772 00:42:35,080 --> 00:42:38,520 Speaker 1: of Brent crude thirty three oh six era. We are 773 00:42:38,560 --> 00:42:42,240 Speaker 1: produced by y U N. Ken Felio, our global technical 774 00:42:42,239 --> 00:42:45,319 Speaker 1: director from New York. It's Bloomberg Surveillance.