Speaker 1: Yeah, Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane
Speaker 1: jay Ley. We bring you insight from the best in economics, finance, investment,
Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud,
Speaker 1: Bloomberg dot Com and of course on the Bloomberg. Well,
Speaker 1: I think the focus should be today as on rights.
Speaker 1: How low are they going to take rights? Do they
Speaker 1: introduced tearing? And how will the markets respond to the
Speaker 1: prospect of much lower interest rates at the c B.
Speaker 1: We've got the right guest to get the start at
Speaker 1: all that you bring in, Joyce Chang. But John the
Speaker 1: zero hedge chart last night, which I made up years ago.
Speaker 1: What I've forgotten about b double A corporates, the kind
Speaker 1: of stuff you follow on the real yield see it
Speaker 1: one PM Friday's Bloomberg Television Less the SMP dividend we
Speaker 1: are over two standard d creations low and how those
Speaker 1: rates have come in versus a stock dividend so usual time,
Speaker 1: these are the bottom of the investment great stack. There
Speaker 1: the credits that you're looking at, and a lot of
Speaker 1: people have been worried about them because there's been a huge,
Speaker 1: huge amount of debt that's been issued by some of
Speaker 1: those companies, but actually they've held up pretty well through
Speaker 1: the dynamics here into this dragon. Can I say this
Speaker 1: is the biggest ECB meeting ever? I think I can say.
Speaker 1: I think you can say it's the biggest one so
Speaker 1: far this year. I don't think you can say it's
Speaker 1: the biggest ever, but I think it's the biggest so far.
Speaker 1: Joyce chaying with us now. JP Morgan Securities Global Research
Speaker 1: Chair Joyce is great to see you. Let's talk about
Speaker 1: the base case just quickly. We survey the economist here
Speaker 1: at Bloomberg. Of them expect hui. The median forecast seems
Speaker 1: to be to drop the depot rate from negative forty
Speaker 1: to negative fifty and maybe you go again in December.
Speaker 1: What are the team at JP Morgan looking for? So
Speaker 1: we are looking for ten basis points, so we agree
Speaker 1: with where the market it is right now. I mean
Speaker 1: more importantly, what we're looking at is what's the forward guidance.
Speaker 1: Are they really going to push out the communication to
Speaker 1: the end of before they would actually um and and
Speaker 1: be ready to move sooner if they needed to um
Speaker 1: you know, bring rates down further. And it's the tearing
Speaker 1: debate what that means for the banks. I mean, how
Speaker 1: will this impact bank income and bank profitability? So we
Speaker 1: think it's ten basis points. We think it's thirty billion
Speaker 1: euros on the QUI for another nine months right now.
Speaker 1: I think there is some space where the market could
Speaker 1: be disappointed. But you know, it's a transition period, so
Speaker 1: I don't think you can necessarily you move as aggressively
Speaker 1: at this point as what the markets may be expecting
Speaker 1: from some corners. I've spoken to money market participants who
Speaker 1: believe the key element of today's package is what happens
Speaker 1: with tearing now. The ECB in the official that are
Speaker 1: out there seemed to be focused on QI, but for
Speaker 1: market participants, in the speak that I speak to the
Speaker 1: bank income, the bank profitability, and is there a way
Speaker 1: basically not to penalize the bank so much for a
Speaker 1: negative interest rate? So I think the market will look
Speaker 1: at that and they look at the language. I'm tearing.
Speaker 1: It's over the Boston Red Sox because having a bad morning.
Speaker 1: Good morning with the red socks, you're always having a
Speaker 1: bad morning. Great year last year, yeah, okay, it was
Speaker 1: a good six months. I still can't believe we won
Speaker 1: I'm gonna I've just spoken before Kean Abohussin to me,
Speaker 1: he's your most important person at JP Morgan, your European
Speaker 1: bank analyst has to synthesize this for commercial banking in Europe.
Speaker 1: This meeting can't be good for the profitability of European banks,
Speaker 1: can it? Well? I think those are the longer term questions,
Speaker 1: and we've been getting a lot of these types of
Speaker 1: relative value questions. How are you looking at the health
Speaker 1: of US banks versus European banks? So that's why the
Speaker 1: cheering is really where the focus is from many of
Speaker 1: the market participants to really take a look at bank income.
Speaker 1: How's bankin come going to be impacted? Joyce the thing
Speaker 1: I struggle with today for the banks in Europe and
Speaker 1: for me, as for many people I know. Listen to
Speaker 1: this program, you'll be looking at s x seven E,
Speaker 1: which is the euro banks on the Bloomberg terminal, how
Speaker 1: they respond to the package that gets delivered today. If
Speaker 1: we do indeed get the full package in the short term,
Speaker 1: I can see how tearing helps, but it won't be
Speaker 1: too long before people start to think about hang on
Speaker 1: a minute, you start to offset the pain a little
Speaker 1: bit for some of these banks. But with tearing, you've
Speaker 1: just opened up a whole new range of possibilities for
Speaker 1: how low interest rates of the e c B can
Speaker 1: go very quickly. We could be talking about negative suffer
Speaker 1: is seventy five basis points, then negative one percent. We
Speaker 1: won't care about tearing in that context, will just be
Speaker 1: looking at a rate that is going lower and lower
Speaker 1: at the e c B. How important is it to
Speaker 1: grapple with that issue right now? How can you have
Speaker 1: any conviction on what Eurozone banks will be of the
Speaker 1: direction of travel ultimately is lower interest rates? No? I
Speaker 1: think that is absolutely Um. You know the case. Everybody
Speaker 1: is looking at six now of our euro index as
Speaker 1: a negative yield on it, and um a debate on
Speaker 1: whether the U s could go to zero interest rates
Speaker 1: eventually the China goes to zero interest rates. Nobody sees
Speaker 1: you coming out of this very quickly. And I think
Speaker 1: the discussion is going to turn to growth in Europe,
Speaker 1: not just the bank profitability, but are we seeing your
Speaker 1: technical recession? Joyce, I mean, everybody here's kind of nancy
Speaker 1: mathematical knowledge of this. I love what Gina smile like
Speaker 1: digging in the New York Times today with the upside
Speaker 1: down headline for a world turned upside down by negative
Speaker 1: rates on our listeners are listening to John Faro talk
Speaker 1: about what John negatives? Did you say, Well, potentially, I'm
Speaker 1: just looking at Switzerland at the moment they have tearing.
Speaker 1: That's what rights are, Okay, So we get the German tenure.
Speaker 1: Excuse me, the German two year to a negative one percent.
Speaker 1: That's not healthy, is it? It's not healthy? And I
Speaker 1: think you're going to see debates go on all the
Speaker 1: central banks. People will look at Swiss National Bank, what
Speaker 1: are they going to do? You see six out of
Speaker 1: seventeen expecting a rate cut, But is that going to
Speaker 1: actually move more aggressively as well? But there's also going
Speaker 1: to be you look at what PBOC is doing, look
Speaker 1: at what Brazil is doing. I mean we've got twenty
Speaker 1: out of twenty two central banks that are easing right now.
Speaker 1: So you do have synchronized but into John and below
Speaker 1: the zero bound, it's not I think for money market
Speaker 1: bight sessments today they hope that if DCB moves, they
Speaker 1: only go by ten basis points. No one wants to
Speaker 1: sing more than that. A lot of people are starting
Speaker 1: to think about this concept, Joyce, of the reversal rate
Speaker 1: and I would love for you to speak to that
Speaker 1: for us. Are we at the point in Europe right
Speaker 1: now where rate cuts are viewed by market participants as
Speaker 1: negative that could lead to potentially tie to financial conditions,
Speaker 1: to have adverse reactions by market participants and therefore negative
Speaker 1: responses never negative reactions in the broader economy. Well, we
Speaker 1: agree that ten basis points is really what the market
Speaker 1: is expecting to If you did something more aggressive, that
Speaker 1: might send a very different signal. I think what the
Speaker 1: market is really looking for is as you have these
Speaker 1: leadership changes come in your are you going to see
Speaker 1: more focused on fiscal policy? Um and um affected Madame
Speaker 1: Regard trots in and says we need more fiscal policy.
Speaker 1: That's the easy part. Then you have to affect more
Speaker 1: fiscal policy. Well, you need to see what happens around
Speaker 1: Germany on that debate. That's really the key. And I
Speaker 1: think you know the question one has is whether the
Speaker 1: growth numbers are going to come back. We're looking at
Speaker 1: p m i's now that are at two thousand and
Speaker 1: twelve levels on manufacturing, so there's a lot more concern
Speaker 1: on the growth. Are we this morning, are we at
Speaker 1: a point of what Mr Diamond would call macro prudential
Speaker 1: risks or John Lipsky I think the former US force
Speaker 1: at the I M F. Are we at a point
Speaker 1: where Mr drog has to look at the broader, summed
Speaker 1: risks and discrete risks of each European story. I don't
Speaker 1: think that we're at this point yet. I mean, we're
Speaker 1: not at a point where we did the Eurozone crisis
Speaker 1: at all, but we are at a real inflection point
Speaker 1: about the effectiveness of the policy tools, how many policy
Speaker 1: tools are remaining, and where are we at this late
Speaker 1: cycle on the growth outlook? And I think that the
Speaker 1: focus will go back to the growth outlook. And you
Speaker 1: know we have now a number of major economies going
Speaker 1: into recession where the US, even at one and a
Speaker 1: half percent grow than the three quarters is the best
Speaker 1: growth outlook in the developed world. Thank you to all
Speaker 1: your team for particularly with Jan Lewis. Would they really
Speaker 1: the essay of the summer in our world of economics,
Speaker 1: finance and invested. You have Alberto Gallo on the phone.
Speaker 1: It's important to go to Mr gall Alberto, good morning
Speaker 1: and thank you again to our economics team in Frankford
Speaker 1: for their support in this. Alberto, this is absolutely historic,
Speaker 1: absolutely original. Is this Jean Claude Triche's e c B.
Speaker 1: I think that what we're seeing here is a complete
Speaker 1: resignation to the fact that UM by dvs NG and
Speaker 1: negative rates are going to stay with us forever, for
Speaker 1: a very very long time. UM the twenty billion a
Speaker 1: month is UM an open ended after purchase program, so
Speaker 1: UM it is essentially the Quey infinity world that we wear.
Speaker 1: I agree, yeah, Alberto, this is so important, the physics
Speaker 1: of bio draggy, the mathematical physics that you're uh, you know,
Speaker 1: I think of others in Europe that that have have
Speaker 1: led on this. It's original territory, without question. Does your
Speaker 1: fixed income world and the knock on of other asset
Speaker 1: classes and the incentives to business, do they move along
Speaker 1: with full faith and credit reaction. Does the market stay
Speaker 1: LinkedIn correlated together or do you suggest instabilities off this
Speaker 1: new drug policy. The good scenario is governments will follow
Speaker 1: up and do some spending, particularly Germany and France because
Speaker 1: now they can essentially get paid to borrow. If you
Speaker 1: think about you know, Germany thirty year is at minus
Speaker 1: point zero seven, so they're they're they're getting seven basis
Speaker 1: points and the ten yere is at minus sixty three,
Speaker 1: so they're getting paid point six um point to borrow
Speaker 1: with a tenure horizon. If governments don't follow up and
Speaker 1: don't do spending, and you have the risk of creating
Speaker 1: a Japan type economy where people hold cash because populations
Speaker 1: in Europe are aging and Dave Moore, if returns are lower, well, well,
Speaker 1: well said. I want to bring Paul Sweeney in here.
Speaker 1: But one more question before Mr Sweeney wanders in, and
Speaker 1: that's what do the Germans think of that? How does
Speaker 1: axel Weber respond to this? I know Jens Vibin's and
Speaker 1: the cross airs right now. I stood with otmar Issing
Speaker 1: in the nascent ECB building, the old one years ago
Speaker 1: and there was a Germanic feel. Is that gone? I
Speaker 1: think the issue is for Germany there, you know, there
Speaker 1: there's a there's a long debate on spending, and we've
Speaker 1: seen improvements on um on the debate with a discussion
Speaker 1: around exiting the black deuro, the black deer deficit, and
Speaker 1: also a green stimulus, a bit similar to you know,
Speaker 1: the green stimulus that's been discussed in the US UM.
Speaker 1: The question that is when and how this would be implemented,
Speaker 1: because the government still keeps these things as a put option,
Speaker 1: not for for people. In Germany. Generally we have seen
Speaker 1: higher savings rates because when you say returns going down,
Speaker 1: then you know you you have you have a pension
Speaker 1: that's uh that you have to fund and you start
Speaker 1: seeking How big a defeat was this today for the Germans?
Speaker 1: I mean, how miserable is Axels that were listening tomorrow
Speaker 1: dragg and reading the headlines on as Bloomberg. I think
Speaker 1: Germany is better off because they have negative yields, they
Speaker 1: fund more cheaply. And let's not forget that Germany is
Speaker 1: the biggest beneficiary from a lower euro. Um we estimated
Speaker 1: that the Eurozone benefits everyone. You know, there's more economies
Speaker 1: of scale, people can go across borders, and companies can
Speaker 1: invest more freely. But Germany has taken over a third
Speaker 1: of the advantages of the pond of the benefits because
Speaker 1: they have the biggest benefits from having a lower euro
Speaker 1: because of experts. Um of their experts are in an economy.
Speaker 1: So I think Germans are you know, they pretend to complain,
Speaker 1: but they're pretty happy about what a very low euro
Speaker 1: Alberta gallo with us a headline from Mr Drag, the
Speaker 1: ECB will carry out strategic review under leguard. We're gonna
Speaker 1: have a strategic review and let Paul Sweeney run it
Speaker 1: for is Paul, why don't you jump in here? Was
Speaker 1: futures up eight in the euro one oh nine fifty
Speaker 1: six dollars stronger, Alberta. How surprised were you, if at all,
Speaker 1: about Mr drag characterization of the actual meeting itself that
Speaker 1: there was so much support for easing that no vote
Speaker 1: was needed. My personal interpretation, I we spoke about it
Speaker 1: earlier this morning. Thing is that the dissent that was
Speaker 1: flagged by some easy B members in the past few
Speaker 1: days was actually a way to lower market expectations and
Speaker 1: allow the easy bit to surprise with less. Market expectations
Speaker 1: were very high. Some people expected forty billion a month
Speaker 1: and there's just not enough pounds to buy um. But
Speaker 1: what they are doing with twenty billion for a very
Speaker 1: long time, you know, twenty billion forever, let's call it
Speaker 1: is essentially trying to anchor the cost of spending for governments,
Speaker 1: trying to anchor the long end of the treasury cur
Speaker 1: in German, in France and Italy so that governments can
Speaker 1: spend more. So I think that drug has Drug has
Speaker 1: always been able to master consensus, and I think in
Speaker 1: the end the compromise is UM to to UM to
Speaker 1: reduce the volatility of funding costs for governments and then
Speaker 1: try to stimulate governments to spend, which is what the
Speaker 1: next president. The next president's job will be connect Monty
Speaker 1: policy to fiscal policy. So let's let's go there. What
Speaker 1: kind of tools are in the toolbox does the ECB
Speaker 1: president have to incent governments to spend? Not many, but
Speaker 1: the not many direct tools, but with the right instruments,
Speaker 1: you can have a combination similar to what Tarp did
Speaker 1: in the US. You can have a combination of loose
Speaker 1: monetary policy with positive fisical policy. Europe is taking like
Speaker 1: a decade to get there because obviously there's a lot
Speaker 1: of moving parts. But for example, the European Union could
Speaker 1: increase its budget. They there could be green bonds or
Speaker 1: European Investment Bank e i B bonds that fund infrastructure
Speaker 1: and that are that are bought by the ECB as
Speaker 1: part of the program. So this is for example, one
Speaker 1: of the options on the table. I think next year
Speaker 1: we'll have the Monetary Policy Review, which lasts several months,
Speaker 1: and we may see more ideas like this which target
Speaker 1: more the real economy rather than just buying bonds in
Speaker 1: the financial market. Yeah, Calumny skeptical here on cutting rates
Speaker 1: and buying twenty billion dollars or twenty billion euros of bonds.
Speaker 1: It's gonna come down to fiscal stimulus at some point.
Speaker 1: Yet we heard from the Germans recently that there still
Speaker 1: is no political support for that. So is there is
Speaker 1: there some catalysts out there that you think certain governments
Speaker 1: need to see or feel before they can really make
Speaker 1: that big fundamental shift. Unfortunately, in the core European countries
Speaker 1: where economic fundamentals are still better, I think the catalysts
Speaker 1: that they're waiting for our negative events. For example, if
Speaker 1: you had a recession next year, or if you were
Speaker 1: close to zero growth, which is which is in the
Speaker 1: base case, or if the US imposes card tariffs, or
Speaker 1: if there's a heart Brexit, then I'm sure you would
Speaker 1: see a German spending plan coming up. So at the moment,
Speaker 1: it is a put option rather than a product. The
Speaker 1: plant the risk with this is that it may be
Speaker 1: too little, too late, So I think there needs to
Speaker 1: be a productive plan. Albertagalo, thank you so much. With
Speaker 1: Algebras just a superb, superb perspective. This morning, we're looking
Speaker 1: at Frankford and Mario drag I did the back of
Speaker 1: the bow tie calculation off their forecast for next year,
Speaker 1: added up animal spirits, top line g d P in
Speaker 1: Europe would be a vast two point two percent. That
Speaker 1: does not get it done. To cut the ambiguity of
Speaker 1: that is Marcus Ashworth. He's with Bloomberg Opinion and Rights
Speaker 1: exceptionally trenchant essays on the ambiguities of whatever the theme is. Okay, Marcus,
Speaker 1: here's the ambiguity. Mario Draggy affects what he will. We
Speaker 1: get a low rate environment which accommodates business and sustains business.
Speaker 1: And the other side of the coin is Mario Draggy
Speaker 1: develops a low rate forever strategy which breaks the back
Speaker 1: of confidence in business. Revenue goes down. How do you
Speaker 1: cut that over the next twenty four months for European
Speaker 1: and United Kingdom business? I mean, which way does it cut?
Speaker 1: It's it's fiscal policy. We all know that in the
Speaker 1: sense that he's creating the you know, he's thinking he's
Speaker 1: best keeping this plate spinning. Um, he's open ended quei.
Speaker 1: I mean, it's the perfect weapon to keep the Euro
Speaker 1: in check. If you know, the set does get more
Speaker 1: aggressive on rate carts and all the US economy dips,
Speaker 1: that will push the Euro up and it will kill
Speaker 1: off any any hope that Europe has of getting out
Speaker 1: this manufacturing recession, which it's clearly you know, put pointed
Speaker 1: right at so and he's done a broadbrush stuff. He's
Speaker 1: kept everyone on board. Super skillful, ill maestro. He hands
Speaker 1: out of the guard with the perfect bat on pass.
Speaker 1: She's got the ability to cut rates more, she's got
Speaker 1: the ability to increase qui. She's doing ability to widen
Speaker 1: out what type of qui that being much more generous
Speaker 1: the banks with these cheap loans called tel traits. It's
Speaker 1: a it's a complete package. And look, they've emphasized ever
Speaker 1: more more aggressively that it needs to be matched with
Speaker 1: fiscal policy. That's what the god allegedly skilled, skillfull ability
Speaker 1: to coordinate with the your E leaders, and that's what's
Speaker 1: needed to break that obvious the E coostomy. As you
Speaker 1: mentioned it, it's a drill dilemma. You know, you cut rates,
Speaker 1: but all it's goning is you're digging at the whole
Speaker 1: ever deeper, and that's actually going to be detrimental to
Speaker 1: the economy. Even they're not extremely careful. It's interesting. Markets.
Speaker 1: Just give us a sense of magnitude of the twenty
Speaker 1: billion euros in terms of the bond buying. Just give
Speaker 1: us a sense of enough not enough. Just we're just
Speaker 1: kind of showing a little bit of show. Yeah, that's
Speaker 1: exactly right. It's doing it in the twenty billion is
Speaker 1: perhaps less than someone expected, but at least it is happening.
Speaker 1: It's back on the agenda they said at the end
Speaker 1: of last year. This was it. No more bond buying.
Speaker 1: We're calling a hole to KWI. The backstone won't start
Speaker 1: from the number one with the back ten months later. Therefore,
Speaker 1: redoing this to anybody and is quite modest. But the
Speaker 1: point is is that clear the clear the market is
Speaker 1: prepared to go to forty or fifty. Didn't know it
Speaker 1: and coming The Chief Economists pointed out that to have
Speaker 1: the same impact on GDPs ahead, but their omittial or
Speaker 1: of qui they could could do hundred billions. Now that's
Speaker 1: that's in the future. He's leaving that ability to look guard.
Speaker 1: He's setting out all the smogest boarder of options to
Speaker 1: pick up on. Have you seen a Vectors study If
Speaker 1: they do twenty gazillion a month, I guess is the
Speaker 1: number when it runs dry? I mean there's got to
Speaker 1: be a point out there in a Vector's study one year,
Speaker 1: two years, three years, five years out where there's nothing
Speaker 1: more to buy. They have to start buying apple shares. Yeah,
Speaker 1: like the like the Spiss National Bank sextually did. Look,
Speaker 1: they can buy bank bonds, they can buy green bonds,
Speaker 1: that can buy the phones. How long for bonds they
Speaker 1: can keep on buying? I mean this the point is
Speaker 1: they've matched open end QUEI with the rate cycle. Now
Speaker 1: there's none of this nonsense about you know, six months
Speaker 1: forward or year forward. It's it's forever until until just
Speaker 1: before they actually start hiking rates. So the point is
Speaker 1: that they give themselves flexibility and they can alter their
Speaker 1: limits to increase it from thirty of any one issue
Speaker 1: or anyone country, and they can widen out what they buy. Paul,
Speaker 1: was this some point? Was this in the textbooks at Duke.
Speaker 1: This is not this is not what I learned in
Speaker 1: business school. And Marcus, I mean it seems like, you know,
Speaker 1: the ECB maybe going the way of Japan. I'm not
Speaker 1: sure that's where Mario dragging wants to take. Well, look
Speaker 1: how the curves flattened, and you've seen banks sell off
Speaker 1: quite sharply because of that. Were now we could argue
Speaker 1: that the reality of negative rates the first time another
Speaker 1: rate cup for um three years has happened, that that
Speaker 1: that's shocked the banks a bit. But it's the curve flattening,
Speaker 1: and that means they're that it's just smichest gonna get squeezed,
Speaker 1: which is what what actually told me. Your point was
Speaker 1: initially is that this is the this is the dichotomy
Speaker 1: is it's are you going to write on this today
Speaker 1: or are you like home from window. I'm prepping as
Speaker 1: we speak. Very good, Marcus Asher, thank you so much,
Speaker 1: very valuable. Really, I can't say enough about he cuts
Speaker 1: the ambiguities or whatever the issue is. Paul Sween, you
Speaker 1: give me the schedule. Here is it eight o'clock tonight
Speaker 1: when I need to watch Red Sucks baseball. I think
Speaker 1: that's exactly when you want to tune in. But first
Speaker 1: seven thirty with Kevin si really, Kevin Cereuli. Let's go
Speaker 1: to Mr Sireli now in in Houston, Kevin just because
Speaker 1: the time, I want to cut to the chase Biden
Speaker 1: and Warren. What does the Vice president need to accomplish
Speaker 1: against the senator from Massachusetts. He needs to try to
Speaker 1: stop her momentum. And that's why you've seen these pre
Speaker 1: debate attacks coming from the Biden campaign. With regards to
Speaker 1: Senator Elizabeth Warren. You've got Ed Rundell, the former governor
Speaker 1: of Pennsylvania, out in an op ed in the Washington
Speaker 1: Post calling her a hypocrite with regards to how she
Speaker 1: has fundraised. But candidly, when I talked to supporters of
Speaker 1: Senator Elizabeth Warren, they would love to have that debate
Speaker 1: every day of the week. They feel that that just
Speaker 1: offers them an opportunity to provide a contrast between Biden's
Speaker 1: more centrist approach to economics versus Elizabeth Warren's. But look
Speaker 1: for a breakout moment from one of the other candidates,
Speaker 1: the Castros, the Clobachar's bookers, so to speak, to see
Speaker 1: if they can try to make what is increasingly become
Speaker 1: a three way race into a four or five way
Speaker 1: race heading into the later fall. Kevin, that was gonna
Speaker 1: be That's kind of my question here. We had Kamala
Speaker 1: Harris kind of have one of those moments at the
Speaker 1: last debate, but she seems to have lost her momentum.
Speaker 1: What's going on there? Well, I think that she was
Speaker 1: unable to get to get out of the pack, so
Speaker 1: to speak, after that momentum that she obtained earlier in Miami.
Speaker 1: And when I talked to Progressive that they say is well,
Speaker 1: her plans aren't progressive enough, and she was attacked by
Speaker 1: Census for the plan is not being set to the
Speaker 1: plants team to Progressive. She hasn't really been able to
Speaker 1: solidify her support in any which way in terms of
Speaker 1: which policy approach she wants to take. Kevin Surli, thank
Speaker 1: you so much. This is the perfect guest to dovetail. Well,
Speaker 1: we're all gonna see tonight. Charles Gabriel has been doing
Speaker 1: this for a while. I mean, Paul, you can appreciate
Speaker 1: this institutional investor, all American team every every year for
Speaker 1: twelve years exactly. You don't you know who did he know?
Speaker 1: Exactly exactly bringing in the great Chuck Chuck Gabriel, President
Speaker 1: of Cappa Alpha Partners. Chuck, thanks so much for joining us.
Speaker 1: You know, we've got, as Tom Wood does suggest me,
Speaker 1: perhaps the first real Democratic debate tonight. What do you
Speaker 1: expect to see tonight? What do you think is going
Speaker 1: to be the theme? Thanks to thank you, Paul well. I.
Speaker 1: You know, I do agree that there's there's probably more
Speaker 1: focused than is deserved on Senator Warren and whether she
Speaker 1: might really either have a bit of a tiff with
Speaker 1: Bernie Sanders, because it's pretty clear that you know, the
Speaker 1: Vice president has about a quarter of the vote, has
Speaker 1: been very very steady, but doesn't really generate a lot
Speaker 1: of enthusiasm with because he's moderate. Then you've got at
Speaker 1: least a third of the vote with with Senator Warren
Speaker 1: and Senator Sanders, which really is very much more on
Speaker 1: the left side of the party wing. And then you've got,
Speaker 1: you know, a bunch of others that would be moderates.
Speaker 1: The two would be moderates and Kamala Harris and Boudeges,
Speaker 1: but they can't get more than I mid to high
Speaker 1: single digits. And then you've got a lot of others
Speaker 1: that as you mentioned that like O'roorican Book or in
Speaker 1: clob Orchestro and Yang that you know, those swing a way.
Speaker 1: But so far after three debates, it doesn't seem like
Speaker 1: any of those are going to break through. So this
Speaker 1: is we're just going to see if if Mr Biden
Speaker 1: makes any mistakes, as Senator Warren really, uh, if there's
Speaker 1: any pile up on her. She one of the one
Speaker 1: of the great headlines I saw was that she arrives
Speaker 1: at this debate with great momentum, but uh, you know,
Speaker 1: a target on her back. Uh, and then you know,
Speaker 1: well we'll see about that that middle but you know,
Speaker 1: it's a long way four nineteen days, fourteen months till
Speaker 1: the election that the Trump might lose the election. So
Speaker 1: Wall Streets not particularly concerned yet. So Chuck is, as
Speaker 1: you talked to your investor clients and you know you
Speaker 1: kind of, you know, kind of game this out a
Speaker 1: little bit. We've got the former Vice president Biden kind
Speaker 1: of with a lead here if he or someone like
Speaker 1: him were to get in office. Do you have you
Speaker 1: identified kind of sectors that would be winners and losers
Speaker 1: here with with Biden? Yes, yeah, I think I think
Speaker 1: Vice President Biden is is more of the same from
Speaker 1: the Obama year. So I think that they're probably dobably.
Speaker 1: There would be some relief in the health care sector. Um,
Speaker 1: you know, there were there are those that would benefit
Speaker 1: from uh, you know, expansion of basically Medicaid and Medicare
Speaker 1: under you know, the old Obamacare. So I think that
Speaker 1: you'd have some healthcare sector winners. Um, you haven't. You'd
Speaker 1: have some relief probably, you know, it wouldn't be as
Speaker 1: negative for the energy sector, for instance. But other than that,
Speaker 1: you know, it's it'd be just sort of a return
Speaker 1: to Obama type administration. And and the big deal would
Speaker 1: be whether or not he'd be dealing with a continued
Speaker 1: Republican Senate, because if that's the case, we're looking at
Speaker 1: probably blessed gridlock. I mean blessed gridlock. There was a time,
Speaker 1: Chuck Gabriel, where you and I would talk and I
Speaker 1: have seven policy things to talk about, and we'd only
Speaker 1: get the three or four. Now there's zero. Does your
Speaker 1: world really matter at this debate? I mean, does policy
Speaker 1: really matter in the great culture War known as America? No,
Speaker 1: I don't. I don't. I really don't think so. But
Speaker 1: but I think that those that are looking ahead, trying
Speaker 1: to skate to where the puck is going to be. Tom,
Speaker 1: you know, I think that they're they're eyeing Senator Senator
Speaker 1: Warren in particular, because you know, it's pretty clear that
Speaker 1: all of the Democrats are sort of on one side
Speaker 1: or the other, you know, of Medicare for all and
Speaker 1: a green New Deal. There's a pretty clear challenge and
Speaker 1: a transformative story ahead and energy and health. But she
Speaker 1: would create a threat third leg of sorts, a third
Speaker 1: leg of a school taking on Wall Street itself, and
Speaker 1: she knows how to do it. She knows where the
Speaker 1: pressure points are as a former TARP Commission chairman and
Speaker 1: a Senator member for for now seven years and counting.
Speaker 1: So I think that there's there's concern about what accendency
Speaker 1: of Warren could mean four Wall Street in particular, but
Speaker 1: it's far too early. A really good I mean, I
Speaker 1: could go on about Wayne Gretzky, and I'm asking you
Speaker 1: if President Trump is there there is a second Wayne Gretzky,
Speaker 1: but we won't go there. Chuck Gabriel's always thank you
Speaker 1: so much, really really appreciate having a mind with capital alpha.
Speaker 1: We'll shipped gears now with the look at the life
Speaker 1: and legacy of an oil giant. Tea Boon Pickens, the
Speaker 1: Texas oil man, billionaire energy investor, and television pitchman for
Speaker 1: wind and natural gas powers, died of natural causes following
Speaker 1: a series of strokes in recent years. He was we
Speaker 1: get more on the famous and controversial businessman now from
Speaker 1: blue Bergs. Bob Mouton, there's a temptation to use the
Speaker 1: word legendary when describing Tea Boon Pickens, but out of
Speaker 1: respect for the sensitivity he expressed about the term, he
Speaker 1: won't be hearing it here. He figured it was just
Speaker 1: another way of saying he was old. You know when
Speaker 1: legendary came into it when I seventy. Thomas Boone Pickens Jr.
Speaker 1: Was born in and the cow town of Holdenville, Oklahoma,
Speaker 1: near the Greater Seminole oil field, which had been discovered
Speaker 1: a year earlier. The family's roots in England intersected with
Speaker 1: those of Daniel Boone. He said, his grandmother counseled him
Speaker 1: to never forget where he came from. Pickens would recall
Speaker 1: his first lesson in growing a business was delivering newspapers.
Speaker 1: One day he was handed a windfall when he found
Speaker 1: a lost wallet that belonged to a customer who gave
Speaker 1: him a reward of one dollar. That was big money
Speaker 1: because my paper out had twenty eight papers on and
Speaker 1: I made every day one cent for paper ned, so
Speaker 1: I was making twenty eight cents a day. And let
Speaker 1: me tell you that one in peanuts. Twenty eight cents
Speaker 1: a day, and I wasn't throwing it around either. I
Speaker 1: saved it, he said. When he arrived back home waiving
Speaker 1: his reward money around, his mother and grandmother insisted that
Speaker 1: he returned it immediately because they said they weren't going
Speaker 1: to see anyone rewarded for simply being honest. It was
Speaker 1: a formative lesson that the head of his alma mater,
Speaker 1: Oklahoma State University, President Burns. Hargess, says, Picken never forgot boon.
Speaker 1: Is a very honorable man. He keeps his word, which
Speaker 1: might sound like a contradiction for a man who achieved
Speaker 1: fame and fortune as a corporate reader making hostile takeover
Speaker 1: bids in the nineteen seventies and eighties. In his first
Speaker 1: job after graduating in nineteen fifty one, he followed his
Speaker 1: father into the oil business. He worked three years for
Speaker 1: Phillips Petroleum, or, as he later told it, he was
Speaker 1: troubled by the waist and inefficiency he witnessed. He quit
Speaker 1: Phillips in nineteen fifty four and formed a company that
Speaker 1: would become known as Mesa Petroleum and would grow to
Speaker 1: one of the largest independent U S producers of oil
Speaker 1: and gas, going after takeover targets companies that Pickens believed
Speaker 1: were inefficient and undervalued. Some industry executives branded him a pirate,
Speaker 1: but they couldn't dismiss him as an outsider. This is
Speaker 1: a man who was one of the original wildcatters and
Speaker 1: amassed a huge amount of oil and natural gas resources.
Speaker 1: He was really someone who just saw the future. Bloomberg
Speaker 1: reporter Alex Steele notes, though, that his visionary image suffered
Speaker 1: big set x when oil prices plunged with the financial crisis,
Speaker 1: and his grassroots campaign to wean America off OPEC oil
Speaker 1: by building wind farms proved to be a costly miscalculation
Speaker 1: earlier than most people would have thought. And we're talking
Speaker 1: oh seven o eight in Texas. He had a huge
Speaker 1: push upper wind turbine. I'm Taboon Pickens. I've been an
Speaker 1: ol man my whole life, but this is one emergency
Speaker 1: we can't drill our way out of. He later lamented
Speaker 1: that he lost hundreds of millions of dollars with his
Speaker 1: mistimed bet Gone with the Wind, even as he continued
Speaker 1: to support the future of renewable energy in his two
Speaker 1: thousand eight memoir The First Billion Is the Hardest, and
Speaker 1: in interviews, Pickens would point out he actually earned most
Speaker 1: of his wealth as an energy investor in his later years.
Speaker 1: You know, I didn't do that till I was seventy.
Speaker 1: It was after seventy that I made that first billion.
Speaker 1: When Forbes estimated his net worth had slumped to less
Speaker 1: than a billion dollars in twenty thirteen, Pickens tweeted, don't worry.
Speaker 1: At nine hundred fifty million, I'm doing fine, but he
Speaker 1: vowed he would try to make it all back. He
Speaker 1: told Bloomberg Elevation in anyone could do it with enough
Speaker 1: hard work. I've had people say, well, why don't you
Speaker 1: step back and let somebody else get up to its
Speaker 1: feed trough? The feed trough in Americas it's infinity. His
Speaker 1: health failing, though, Pickens decided to close his Dallas based
Speaker 1: pp Capital Hedge fund, early last year, writing on his
Speaker 1: website that he wanted to invest instead in promoting unbridled
Speaker 1: entrepreneurship and philanthropic and political endeavors. Former Oklahoma Chief Supreme
Speaker 1: Court Justice Steve Taylor says that became his new passion.
Speaker 1: He wanted to enjoy the fun of giving away money
Speaker 1: and seeing what happened with that money, scholarships, football stadiums,
Speaker 1: engineering schools, hospitals. His fans will miss his homespun tips
Speaker 1: for success that came to be known fondly as buonisms.
Speaker 1: How I say work eight hours, sleep eight hours. Be
Speaker 1: sure they're not the same eight hours. Asked in one
Speaker 1: of his last interviews for his favorite buonism, Pickens offered
Speaker 1: this cautionary council. The higher the monkey climbs the tree
Speaker 1: there where people can see his and he used a
Speaker 1: three letter word for backside t Boon. Pickens was ninety
Speaker 1: one years old. I'm Bob Moon Bloomberg Surveillance, Bob Moon.
Speaker 1: That was fantastic retrospective on the life and times of
Speaker 1: te Boon and Pickens and what amazes me Thomas just
Speaker 1: the rollercoaster of his career and how he was able
Speaker 1: to come back after some just some amazing setback. And
Speaker 1: I would talk about Oklahoma and um no O s U.
Speaker 1: And he was at College Station when my father was
Speaker 1: there Texas. A and M. Yeah, my father would laugh
Speaker 1: about him. He was a basketball guy. He made twenty
Speaker 1: five bucks a month. And in the twelfth Man magazine
Speaker 1: for A and M. They say the ten worst mistakes
Speaker 1: in history. A and M was letting boot pickings. It's great,
Speaker 1: he said. He was a character. That's right. You know,
Speaker 1: they weren't close friends, but he knew who he was.
Speaker 1: He was like big man on campus. I think he
Speaker 1: was maybe a year or two out of my father.
Speaker 1: But A and M has never forgiven giving him up
Speaker 1: to the folks up in Oklahoma. Yeah, exactly. And he's
Speaker 1: been certainly a wonderful benefactor, wonderful supporter of Oklahoma State University,
Speaker 1: and certainly they're athletic depart Remember the fear of Mason
Speaker 1: was like, you know, I really can't say folks enough
Speaker 1: where he almost invented Yeah, I mean, it's a little
Speaker 1: bit like Mr Singer and Elliott. Now maybe he's an equivalent. Yeah,
Speaker 1: I mean I came on Wall Street in the mid
Speaker 1: eighties and I was just when the whole corporate raider
Speaker 1: thing was really and junk bond financed raiders, and they're
Speaker 1: they're a handful of them, but t Boon in the
Speaker 1: energy space, he was, uh the big player in that space,
Speaker 1: really kind of reshuffling and a lot of the energy
Speaker 1: assets at that time of putting the fear into CEOs
Speaker 1: and boards as well. We've done no corporate jet today.
Speaker 1: I mean at home last night, I had, you know,
Speaker 1: various offspring sing I like the yellow phone, I like
Speaker 1: the break right, Like I mean, what does Tim Cook
Speaker 1: know about my family? I don't know exactly. So you
Speaker 1: know it's Apple is uh you know, they're going all
Speaker 1: in on their services business and uh, you know, so
Speaker 1: we're seeing Apple TV, we're seeing Apple gaming. I know
Speaker 1: you're gonna be gaming, you're away on your Apple device
Speaker 1: coming out about what's it called arcade or something. I think, so, yeah,
Speaker 1: we'll have to get Matt cantriment on it kind of
Speaker 1: explain it to us. But uh, you know, they're getting
Speaker 1: into just it's not about devices for them. It's obviously
Speaker 1: about trying to drive the services on the devices. And
Speaker 1: they've got over a couple, you know, over a billion
Speaker 1: of them out there so certainly some some upside. Now
Speaker 1: we will see. It's been an extraordinary to you. Thank
Speaker 1: you to Colin Tipton and all our team, particularly our
Speaker 1: team in Frankfurt, Germany, h Matt Miller and of course
Speaker 1: all of Bloomberg Economics in Europe for just extraordinary team
Speaker 1: coverage of what we saw on the ECB. Mr Drag
Speaker 1: He did not disappoint. It was wild there. At one
Speaker 1: point markets of vs back a little bit, I want
Speaker 1: to make that clear, the euro stronger on the headlines,
Speaker 1: and then dropped like a rock almost down I believe
Speaker 1: to where we were into day Low's earlier in the month,
Speaker 1: and we've come back nicely. Now you're a dollar one
Speaker 1: tenth or D three sort of a side of relief
Speaker 1: is to me. The headline is uh not q E
Speaker 1: out to one, but it's very urst language for as
Speaker 1: long as it takes. Thanks for listening to the Bloomberg
Speaker 1: Surveillance podcast. Subscribe and listen to interviews on Apple Podcasts, SoundCloud,
Speaker 1: or whichever podcast platform you prefer. I'm on Twitter at
Speaker 1: Tom Keane Before the podcast, you can always catch us worldwide.
Speaker 1: I'm Bloomberg Radio