1 00:00:09,720 --> 00:00:12,880 Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene with 2 00:00:13,600 --> 00:00:16,520 Speaker 1: David Gura. Daily we bring you insight from the best 3 00:00:16,560 --> 00:00:22,279 Speaker 1: of economics, finance, investment, and international relations. Find Bloomberg Surveillance 4 00:00:22,320 --> 00:00:27,000 Speaker 1: on Apple Podcasts, SoundCloud, Bloomberg dot Com, and of course, 5 00:00:27,320 --> 00:00:34,559 Speaker 1: on the Bloomberg Good Morning. I'm Scarlet Boo. I'm in 6 00:00:34,600 --> 00:00:38,400 Speaker 1: with Francine Lockwell. We're here in place of Tom Keene 7 00:00:38,520 --> 00:00:41,600 Speaker 1: and David. Francine, you made it over from the studio 8 00:00:41,640 --> 00:00:44,680 Speaker 1: from the Tom Scarlett. Who's Who Tom? I might Tom? 9 00:00:44,680 --> 00:00:47,200 Speaker 1: Who's David? You know what? I will be David, because 10 00:00:47,240 --> 00:00:49,559 Speaker 1: I think you know, Tom's quible is a little bit 11 00:00:49,560 --> 00:00:51,400 Speaker 1: better these days. It's a little bit of a surveillance 12 00:00:51,400 --> 00:00:54,440 Speaker 1: reunion from old days when I was on the morning 13 00:00:54,480 --> 00:00:56,760 Speaker 1: show a couple of years ago to what it is now. 14 00:00:56,800 --> 00:00:59,680 Speaker 1: And of course Gura is off of looking for Kale somewhere, 15 00:01:00,040 --> 00:01:03,160 Speaker 1: and I hope that Tom is doing the same. Rumor 16 00:01:03,200 --> 00:01:04,440 Speaker 1: has it that he might be off for a couple 17 00:01:04,440 --> 00:01:06,200 Speaker 1: of days. Yeah, I think it's a week and I 18 00:01:06,200 --> 00:01:08,280 Speaker 1: need to do my best as a Tom Keen impression. 19 00:01:08,680 --> 00:01:10,600 Speaker 1: So markets on the move, we have a bit of 20 00:01:10,600 --> 00:01:13,319 Speaker 1: a risk off field this morning, and of course this 21 00:01:13,400 --> 00:01:16,120 Speaker 1: comes on the heels of more devastating news out of 22 00:01:16,160 --> 00:01:19,560 Speaker 1: Europe with the terrorist attack in Barcelona. I want to 23 00:01:19,560 --> 00:01:22,440 Speaker 1: bring in Utah Klausen, a fellow at the Wilson Center. 24 00:01:22,880 --> 00:01:26,640 Speaker 1: Uh Uta founded the Western Jihadism Project, which studies Western 25 00:01:27,000 --> 00:01:31,399 Speaker 1: violent extremists associated with al Qaeda. Uh. Utah, give us 26 00:01:31,480 --> 00:01:35,640 Speaker 1: your analysis about the attack in Barcelona and, perhaps more importantly, 27 00:01:35,680 --> 00:01:39,039 Speaker 1: the second attack in Cameral, Spain, which came a couple 28 00:01:39,040 --> 00:01:45,760 Speaker 1: of hours later. Yes, yes, good morning, UH scarlettmning concern. Yes, 29 00:01:45,840 --> 00:01:50,880 Speaker 1: it's a terrible news of Spain. UH. It appears to 30 00:01:51,000 --> 00:01:56,240 Speaker 1: have been a coordinated effort. UH. The Spanish authorities are 31 00:01:56,240 --> 00:02:00,680 Speaker 1: talking about the Silk comprises as many as world people. 32 00:02:01,480 --> 00:02:06,800 Speaker 1: The second attack occurred late last night, UH and didn't 33 00:02:06,800 --> 00:02:10,360 Speaker 1: go the way the terrorists had planned. A card skilled 34 00:02:10,360 --> 00:02:14,760 Speaker 1: with five people who were carrying fake suicide West ran 35 00:02:14,880 --> 00:02:18,799 Speaker 1: into the police checkpoint and UH they were all killed, 36 00:02:19,600 --> 00:02:22,799 Speaker 1: but they managed to hurt h Boston, some policemen and 37 00:02:23,400 --> 00:02:29,960 Speaker 1: some pedestrians UM before they were shot. UH. The authorities 38 00:02:29,960 --> 00:02:35,919 Speaker 1: are now linked both the devastating attack in Barcelona yesterday 39 00:02:35,960 --> 00:02:40,720 Speaker 1: afternoon and this UH second attack in a tourist area 40 00:02:41,200 --> 00:02:46,320 Speaker 1: called Tarragona and UH to an explosion Wednesday night in 41 00:02:46,360 --> 00:02:51,000 Speaker 1: a house also on the coastline, where the house blew up, 42 00:02:51,400 --> 00:02:56,519 Speaker 1: apparently because of the gasts being prepared for bombs. Yeah, 43 00:02:57,120 --> 00:02:59,600 Speaker 1: you founded the Western Jihadda is a project right which 44 00:02:59,600 --> 00:03:04,079 Speaker 1: studies Western violent extremists associated with al Quaeda. This, what 45 00:03:04,240 --> 00:03:08,000 Speaker 1: happened in Barcelona really has all the hallmarks of similar 46 00:03:08,120 --> 00:03:11,960 Speaker 1: recent atrocities, not only in London, but also Berlin and Stockholm. 47 00:03:12,040 --> 00:03:14,799 Speaker 1: Is there anything that authorities can do to stop these 48 00:03:14,880 --> 00:03:20,480 Speaker 1: kinds of tech well in needs and in this case, um, 49 00:03:21,160 --> 00:03:26,680 Speaker 1: the high casualties appear in part to be the result 50 00:03:26,840 --> 00:03:31,080 Speaker 1: of somewhat failing efforts on the part of local authorities. UM. 51 00:03:31,680 --> 00:03:36,440 Speaker 1: All buildings in many capitals and pedestrians streets are now 52 00:03:37,200 --> 00:03:42,080 Speaker 1: protected with barriers and ballots that can be raised during 53 00:03:42,160 --> 00:03:47,320 Speaker 1: the to protect pedestrian traffic. And in fact it appears 54 00:03:47,400 --> 00:03:52,279 Speaker 1: that UH the authorities had been warned that the Barcelona 55 00:03:52,520 --> 00:03:57,720 Speaker 1: was this particular pedestrian moll area had been on the 56 00:03:57,800 --> 00:04:03,360 Speaker 1: list of possible attacks, and it just that, Yeah, it 57 00:04:03,400 --> 00:04:05,760 Speaker 1: does this feel different to London. In London we had 58 00:04:05,800 --> 00:04:09,000 Speaker 1: some lone wolves attack this seems bigger. This seemed or 59 00:04:09,160 --> 00:04:11,720 Speaker 1: felt more coordinated, and we need to remind all of 60 00:04:11,720 --> 00:04:14,680 Speaker 1: our listeners that there is still an active man hunt 61 00:04:14,680 --> 00:04:19,960 Speaker 1: going on in Barcelona and its surroundings. Well, it turned out, 62 00:04:20,040 --> 00:04:22,839 Speaker 1: in fact that the London Bridge attack also involves some 63 00:04:22,960 --> 00:04:25,960 Speaker 1: careful planning, and it was the three people who were 64 00:04:26,040 --> 00:04:29,720 Speaker 1: the attackers, but behind them were there all others who 65 00:04:29,760 --> 00:04:33,840 Speaker 1: have been supporting UM. So what was What we don't 66 00:04:33,880 --> 00:04:37,400 Speaker 1: know yet is to what extent the people in Barcelona 67 00:04:37,720 --> 00:04:41,080 Speaker 1: where returnees from the Islamic State or if they were 68 00:04:41,240 --> 00:04:44,919 Speaker 1: just at least one was local, but it's possible that 69 00:04:45,000 --> 00:04:48,359 Speaker 1: others had had traveled from the Islamic State, but they 70 00:04:48,400 --> 00:04:51,599 Speaker 1: could also be local, as was the case in in London. 71 00:04:51,800 --> 00:04:55,320 Speaker 1: So they do look very similar those two attacks. In 72 00:04:55,400 --> 00:04:58,880 Speaker 1: many the use of white vans, which is the high symbolic. 73 00:04:59,360 --> 00:05:02,440 Speaker 1: They are called a type UM. The white is an 74 00:05:02,480 --> 00:05:06,160 Speaker 1: allusion to the flag of that the Islamic State carries 75 00:05:06,200 --> 00:05:09,600 Speaker 1: when it goes out into war, so it's an offensive 76 00:05:10,520 --> 00:05:15,320 Speaker 1: the collar uh, and they take suicide that's the knives, 77 00:05:15,320 --> 00:05:18,680 Speaker 1: the gas canvass etcetera. So they were very descripted. They 78 00:05:18,680 --> 00:05:23,120 Speaker 1: were very similarly descripted Utah. How does Spain prevent copycat 79 00:05:23,160 --> 00:05:27,520 Speaker 1: attacks following what happened yesterday, attacks that are that are 80 00:05:27,560 --> 00:05:31,320 Speaker 1: inspired by Islamic state directed attacks or is that impossible 81 00:05:33,120 --> 00:05:34,760 Speaker 1: or you can only tell. I mean, we have been 82 00:05:34,839 --> 00:05:38,599 Speaker 1: taking our shoes off an airports and having our backs 83 00:05:38,640 --> 00:05:42,440 Speaker 1: search and not bringing liquids on board. The only way 84 00:05:42,480 --> 00:05:45,679 Speaker 1: you can really go about this is to take prevent 85 00:05:45,760 --> 00:05:49,359 Speaker 1: some meashes. Uh that would make it more difficult for 86 00:05:49,440 --> 00:05:53,159 Speaker 1: the terrorists. And this is not just the hardest terrorist. 87 00:05:53,240 --> 00:05:57,480 Speaker 1: Terrorists copy from each others. So in Charlotte's wille uh 88 00:05:58,120 --> 00:06:02,560 Speaker 1: vans or cause are now increasingly being used in these 89 00:06:02,560 --> 00:06:07,279 Speaker 1: types of attacks on civilians and you just have to 90 00:06:07,360 --> 00:06:11,960 Speaker 1: change the road design and take cautionary measures the same way. UH. 91 00:06:12,040 --> 00:06:14,919 Speaker 1: That should be due to protect the airplanes. It should 92 00:06:14,920 --> 00:06:18,279 Speaker 1: be said that Spain has been very aggressive in counter 93 00:06:18,400 --> 00:06:24,440 Speaker 1: terrorism and has had many arrests, the many successful prostitutions. UH. 94 00:06:24,520 --> 00:06:27,520 Speaker 1: So it's it's very hard to to act change this 95 00:06:27,680 --> 00:06:30,159 Speaker 1: and say that they have not done what they should 96 00:06:30,160 --> 00:06:32,800 Speaker 1: be doing. Alright, Utah Clausen, thank you so much for 97 00:06:32,880 --> 00:06:36,320 Speaker 1: joining us. Utah. Clausen is a Wilson Center fellow. She 98 00:06:36,440 --> 00:06:40,760 Speaker 1: founded the Western Jihadism Project, which studies Western violent extremists 99 00:06:40,760 --> 00:06:43,840 Speaker 1: associated with al Qaeda. But of course, this latest round 100 00:06:43,880 --> 00:06:48,039 Speaker 1: of attacks in Barcelona was claimed by the Islamic State, 101 00:06:48,360 --> 00:07:04,280 Speaker 1: an attack that was directed by the Islamic State. And 102 00:07:04,400 --> 00:07:07,400 Speaker 1: I'm scarlet food in for let's just say David Gara, 103 00:07:07,560 --> 00:07:11,000 Speaker 1: which means Francy Lacko. You're in for Tom King. That's 104 00:07:11,000 --> 00:07:15,040 Speaker 1: a statement in a hop scote. Tom King actually on vacation, 105 00:07:15,160 --> 00:07:18,200 Speaker 1: so we're waiting for updates from Tom on his vacation. 106 00:07:18,240 --> 00:07:21,720 Speaker 1: May sure he's listen to Instagram. I'm positive he's listening 107 00:07:21,720 --> 00:07:24,280 Speaker 1: in uh, and he'll want to listen in because we 108 00:07:24,400 --> 00:07:28,240 Speaker 1: have Jim Glassman, Jp Morgan, commercial banking head economist with 109 00:07:28,360 --> 00:07:31,640 Speaker 1: us right now. And Jim, one thing that I saw 110 00:07:31,680 --> 00:07:34,040 Speaker 1: in your note, which was absolutely fascinating, kind of blew 111 00:07:34,080 --> 00:07:37,120 Speaker 1: my mind, was this new idea about oil and the 112 00:07:37,200 --> 00:07:40,280 Speaker 1: increased supply of that driving the global economy's recent growth. 113 00:07:40,800 --> 00:07:42,960 Speaker 1: It kind of sounds like oils at a sweet spot 114 00:07:42,960 --> 00:07:45,640 Speaker 1: in that it's no longer a drag on the energy sector, 115 00:07:46,160 --> 00:07:48,600 Speaker 1: but the promise of plentifel supply provides now a bit 116 00:07:48,600 --> 00:07:53,240 Speaker 1: of a stimulus. Yeah, and you know, until recently we 117 00:07:53,240 --> 00:07:55,320 Speaker 1: were seeing all the negative side to this because when 118 00:07:55,320 --> 00:07:58,400 Speaker 1: oil prices fell in half back in two in the fall, 119 00:07:58,920 --> 00:08:01,680 Speaker 1: anybody in that business the reality change. Then they had 120 00:08:01,720 --> 00:08:03,800 Speaker 1: to cut back dramatically. And I really think that's what 121 00:08:04,160 --> 00:08:06,840 Speaker 1: the U. S. Economy has been dealing with the last 122 00:08:06,880 --> 00:08:09,080 Speaker 1: two years. The reason the economy slowed down is because 123 00:08:09,600 --> 00:08:11,360 Speaker 1: those guys live in a mark to market world, so 124 00:08:11,400 --> 00:08:15,240 Speaker 1: they have to cut back. The rail shipment's, energy services businesses, 125 00:08:15,280 --> 00:08:19,120 Speaker 1: cap ex profits, all that stuff got hurt. We consumers 126 00:08:19,120 --> 00:08:21,960 Speaker 1: who benefit um kind of take our time. I mean, 127 00:08:22,120 --> 00:08:24,200 Speaker 1: and what you saw the way you saw that is 128 00:08:24,760 --> 00:08:27,320 Speaker 1: the energy outlets are going way down. We're not spending 129 00:08:27,320 --> 00:08:29,800 Speaker 1: as much anymore for energy, and what do we do 130 00:08:29,800 --> 00:08:32,240 Speaker 1: about it? Well, temporarily we didn't do anything because saving 131 00:08:32,280 --> 00:08:34,400 Speaker 1: went up and now I started to come back down. 132 00:08:34,600 --> 00:08:37,480 Speaker 1: So when you have events like this happening, the initial 133 00:08:37,520 --> 00:08:40,000 Speaker 1: thing that happens is it hurts the economy, and then 134 00:08:40,120 --> 00:08:42,440 Speaker 1: the positive side of it starts to kick in. And 135 00:08:42,480 --> 00:08:44,640 Speaker 1: you know, we as a country, we as a country 136 00:08:44,800 --> 00:08:47,560 Speaker 1: still benefit from cheap energy because we still use twice 137 00:08:47,600 --> 00:08:50,679 Speaker 1: as much oil as we consume and the world actually 138 00:08:50,840 --> 00:08:53,440 Speaker 1: has tremendous needs. I think people aren't aware of this, 139 00:08:53,559 --> 00:08:56,680 Speaker 1: but ask most people how many cars were sold last 140 00:08:56,720 --> 00:09:00,439 Speaker 1: year in the world eighty eight million cars. We sold 141 00:09:00,440 --> 00:09:03,360 Speaker 1: seventeen and a half million here, Jim. That's enormous. That 142 00:09:03,520 --> 00:09:05,760 Speaker 1: what people don't buy hers to go sit in the garage. 143 00:09:06,040 --> 00:09:08,720 Speaker 1: They're they're driving, they have needs using it, right, I 144 00:09:08,720 --> 00:09:10,880 Speaker 1: mean here in Europe at least, there's more and more 145 00:09:10,920 --> 00:09:13,720 Speaker 1: electric cars. But that's a conversation for another day, Jim. 146 00:09:13,760 --> 00:09:15,520 Speaker 1: When you look at the price of oil rights and 147 00:09:15,520 --> 00:09:17,240 Speaker 1: you certainly look, I used to cover up back when 148 00:09:17,240 --> 00:09:19,040 Speaker 1: oil was at seventeen and then it dropped to fifty 149 00:09:19,080 --> 00:09:21,240 Speaker 1: and then dropped to forty and actually didn't give much 150 00:09:21,240 --> 00:09:24,640 Speaker 1: of an impetus to the global economy. So why are 151 00:09:24,640 --> 00:09:26,240 Speaker 1: you so certain that this time it will? You know? 152 00:09:26,280 --> 00:09:28,560 Speaker 1: Because all on even I remember my first experience with 153 00:09:28,600 --> 00:09:31,920 Speaker 1: this mid nineteen eighties, oil prices crashed. They fell fifty 154 00:09:32,440 --> 00:09:35,440 Speaker 1: right where I was at the FED, and we economists said, 155 00:09:35,640 --> 00:09:38,640 Speaker 1: don't worry. This is all really good stuff because there 156 00:09:38,640 --> 00:09:40,800 Speaker 1: are more people benefiting than are hurt. And the next 157 00:09:40,800 --> 00:09:44,400 Speaker 1: thing we saw chaos and and and it did. The 158 00:09:44,480 --> 00:09:47,840 Speaker 1: energy sector just went went down in the South and West. 159 00:09:48,240 --> 00:09:50,320 Speaker 1: And what we did, what we forgot was these things 160 00:09:50,360 --> 00:09:54,080 Speaker 1: play out unevenly. The business community has to cut back first, 161 00:09:54,480 --> 00:09:57,480 Speaker 1: and those who benefit take their time, and so it 162 00:09:57,559 --> 00:10:00,760 Speaker 1: all looks it all looks initially like it's a negative. 163 00:10:00,800 --> 00:10:03,720 Speaker 1: And that's why the equity market was constantly tumbling whenever 164 00:10:03,760 --> 00:10:06,360 Speaker 1: people see oil prices down, forgetting because they don't know 165 00:10:06,400 --> 00:10:08,440 Speaker 1: what consumers doing with this, and it takes time to 166 00:10:08,440 --> 00:10:10,439 Speaker 1: see that. And now I think we're seeing that story 167 00:10:10,480 --> 00:10:13,400 Speaker 1: all around the world. Jim, you write that these are 168 00:10:13,480 --> 00:10:17,640 Speaker 1: benign supply side forces that's helping the benefits of lower 169 00:10:17,679 --> 00:10:22,640 Speaker 1: oil trickle down to UH consumers pockets that and technology 170 00:10:22,840 --> 00:10:26,199 Speaker 1: so for example, cell phone, unlimited data, all that kind 171 00:10:26,200 --> 00:10:30,040 Speaker 1: of stuff. That inflation relief that comes from new technologies 172 00:10:30,200 --> 00:10:33,000 Speaker 1: and better ways of doing things is the good inflation. 173 00:10:33,120 --> 00:10:36,360 Speaker 1: The bad deflation. Bad deflation is when we don't have 174 00:10:36,480 --> 00:10:41,040 Speaker 1: enough demand to meet the supply of the economy. We're 175 00:10:41,080 --> 00:10:44,240 Speaker 1: not seeing that in the developed economies. Employment is growing, 176 00:10:44,280 --> 00:10:47,160 Speaker 1: these economies are growing. We're recovering from a very bad recession. 177 00:10:47,440 --> 00:10:50,000 Speaker 1: So to me, the soft news that we're getting on 178 00:10:50,040 --> 00:10:52,880 Speaker 1: inflation is the good kind of stuff. It's the kind 179 00:10:52,920 --> 00:10:55,400 Speaker 1: of stuff that if the less I had to pay 180 00:10:55,440 --> 00:10:58,000 Speaker 1: for something, the more I have available for something else. 181 00:10:58,040 --> 00:11:01,120 Speaker 1: So we would worry about soft inflay news if we 182 00:11:01,120 --> 00:11:06,079 Speaker 1: were seeing economy stalling out and employment sputtering. But that's 183 00:11:06,120 --> 00:11:09,040 Speaker 1: not People still have a hard time agreeing on whether 184 00:11:09,080 --> 00:11:11,960 Speaker 1: inflation is good or bad for consumers. I mean, you 185 00:11:11,960 --> 00:11:14,640 Speaker 1: want to see inflution in the economy, it's a sign 186 00:11:14,720 --> 00:11:17,920 Speaker 1: of growth of health. But as a consumer, you don't 187 00:11:17,920 --> 00:11:19,920 Speaker 1: necessarily want to know you know people. I think there's 188 00:11:19,920 --> 00:11:24,920 Speaker 1: an illusion here. People have people remember, um, the seventies 189 00:11:24,920 --> 00:11:27,079 Speaker 1: and eighties. If you yere old enough, Uh, they tend 190 00:11:27,160 --> 00:11:29,200 Speaker 1: to think they remember, well, my pay was going up 191 00:11:29,240 --> 00:11:33,040 Speaker 1: every year five. The problem with high inflation is if 192 00:11:33,080 --> 00:11:35,600 Speaker 1: your income isn't keeping up with it, it's not such 193 00:11:35,600 --> 00:11:37,400 Speaker 1: a good thing. If you can keep me the same income, 194 00:11:37,640 --> 00:11:39,880 Speaker 1: cut my prices, I'm great. I'm happy with that. But 195 00:11:39,960 --> 00:11:42,880 Speaker 1: the problem is it's all part of a bundle, and 196 00:11:42,920 --> 00:11:44,959 Speaker 1: if inflation is low, that means wages aren't going to 197 00:11:45,000 --> 00:11:47,520 Speaker 1: be doing as well either, and that's certainly something the 198 00:11:47,520 --> 00:11:50,640 Speaker 1: Federal Reserve has been trying to tackle. Jim Glassman, thank 199 00:11:50,640 --> 00:11:52,679 Speaker 1: you so much for coming by. Jim Glassman is head 200 00:11:52,679 --> 00:11:56,200 Speaker 1: economist at JP Morgan Chase commercial banking and his note 201 00:11:56,280 --> 00:12:00,080 Speaker 1: on the five lessons from the second quarter of fascinating stuff. 202 00:12:00,080 --> 00:12:02,320 Speaker 1: It starts with oil, but it goes on to talk 203 00:12:02,320 --> 00:12:05,240 Speaker 1: about the global economy growing but not necessarily at a 204 00:12:05,320 --> 00:12:08,120 Speaker 1: unified pace, the United States of course leading the way there. 205 00:12:19,040 --> 00:12:22,160 Speaker 1: Let's stay on that topic of Twitter and the President, 206 00:12:22,400 --> 00:12:24,360 Speaker 1: and we want to bring in John Hudac. He's a 207 00:12:24,400 --> 00:12:28,440 Speaker 1: senior Fellow of Governance Studies at Brookings Institute. John, as 208 00:12:28,480 --> 00:12:32,920 Speaker 1: you know, um Bob Corker, the Senator from Tennessee, has 209 00:12:32,960 --> 00:12:36,880 Speaker 1: come out and made some strong points on President Trump, 210 00:12:37,120 --> 00:12:41,200 Speaker 1: calling for radical changes, yes, but questioning the competence of 211 00:12:41,400 --> 00:12:45,040 Speaker 1: President Trump, his dedication, uh and and all of that. 212 00:12:45,600 --> 00:12:49,040 Speaker 1: My question to you is, why isn't the president responding? 213 00:12:49,520 --> 00:12:52,640 Speaker 1: Why aren't we seeing a tweet from the president. His 214 00:12:52,720 --> 00:12:56,640 Speaker 1: supporters certainly want to see him responding, His opponents certainly 215 00:12:56,679 --> 00:12:59,440 Speaker 1: expect him to respond. What do you think, Well, the 216 00:12:59,480 --> 00:13:04,240 Speaker 1: President doesn't respond to criticism well at all. I think actually, 217 00:13:04,280 --> 00:13:08,200 Speaker 1: it's it's remarkable that he hasn't taken a Senator Corker 218 00:13:08,240 --> 00:13:11,200 Speaker 1: to task on Twitter yet, which is normally his his 219 00:13:11,400 --> 00:13:15,480 Speaker 1: childlike response to any criticism. But Senator Corker is doing 220 00:13:15,520 --> 00:13:19,720 Speaker 1: this not because he wants to disrupt things for the 221 00:13:19,800 --> 00:13:22,200 Speaker 1: president or because he's trying to be a thorn in 222 00:13:22,240 --> 00:13:24,400 Speaker 1: his side. He's doing it for the sake of the 223 00:13:24,440 --> 00:13:27,199 Speaker 1: brand of the party. He's looking at this and knows 224 00:13:27,280 --> 00:13:29,760 Speaker 1: that there's a very serious problem in the White House, 225 00:13:29,960 --> 00:13:33,440 Speaker 1: a very serious problem for Republicans, and he wants to 226 00:13:33,480 --> 00:13:36,679 Speaker 1: fix it. And unfortunately, it doesn't seem like the President 227 00:13:36,720 --> 00:13:38,880 Speaker 1: wants to fix it all right, John, What does that 228 00:13:38,920 --> 00:13:42,360 Speaker 1: mean for other high profile Republicans? Do they follow him 229 00:13:42,480 --> 00:13:46,679 Speaker 1: and do the same. It's unclear I think what Republican 230 00:13:46,760 --> 00:13:50,680 Speaker 1: strategy is because I think most people don't know what 231 00:13:50,760 --> 00:13:54,520 Speaker 1: to do with the president. Normally, you would have someone 232 00:13:54,679 --> 00:13:58,080 Speaker 1: in leadership take that step and everyone else step back 233 00:13:58,120 --> 00:14:00,439 Speaker 1: and say, you know what, here is someone who, if 234 00:14:00,480 --> 00:14:03,280 Speaker 1: they say something, will get through to the president. And 235 00:14:03,320 --> 00:14:07,760 Speaker 1: this doesn't need to be a gang style approach. But 236 00:14:07,800 --> 00:14:11,959 Speaker 1: if Senator Corker can't get through Republican space, two choices. 237 00:14:11,960 --> 00:14:15,440 Speaker 1: They're either going to need to pile on, hoping that 238 00:14:15,720 --> 00:14:20,440 Speaker 1: eventually you hit a critical mass that the president starts behaving, 239 00:14:21,080 --> 00:14:24,240 Speaker 1: or you start piling on just to distance yourself from 240 00:14:24,240 --> 00:14:27,720 Speaker 1: the president because he's so toxic. Right, But John, do 241 00:14:28,200 --> 00:14:30,200 Speaker 1: you know, first of all, does the president care and 242 00:14:30,440 --> 00:14:33,520 Speaker 1: if he does care, does it hurt his base? I 243 00:14:33,520 --> 00:14:36,000 Speaker 1: don't think the president cares at all, because he has 244 00:14:36,000 --> 00:14:40,680 Speaker 1: deluded himself into thinking that all criticism is wrong and 245 00:14:40,720 --> 00:14:45,520 Speaker 1: that there is this silent, u super majority of Americans 246 00:14:45,520 --> 00:14:49,320 Speaker 1: who actually support him, who are lying to pollsters, who 247 00:14:49,440 --> 00:14:53,320 Speaker 1: are not connecting with mainstream media. So I think that's 248 00:14:53,360 --> 00:14:55,760 Speaker 1: where the problem is. That's where the disconnect is. The 249 00:14:55,840 --> 00:15:01,720 Speaker 1: reality the president is unpopular and he's making tremendous mistake. Unfortunately, 250 00:15:01,800 --> 00:15:05,160 Speaker 1: the president does not believe that's all fake news to him, 251 00:15:05,840 --> 00:15:09,040 Speaker 1: and so yeah, he doesn't He doesn't care because he 252 00:15:09,080 --> 00:15:12,560 Speaker 1: doesn't think he needs to care. He doesn't care because 253 00:15:12,600 --> 00:15:15,560 Speaker 1: he doesn't think he needs to care. Meantime, of the 254 00:15:15,600 --> 00:15:18,520 Speaker 1: Republicans care quite a bit. And according to Greg Valley 255 00:15:18,600 --> 00:15:21,520 Speaker 1: of Horizon Investments, he put out his warning note today 256 00:15:21,520 --> 00:15:24,760 Speaker 1: and he says that on issues like taxes, one shop 257 00:15:24,920 --> 00:15:27,600 Speaker 1: source says that Trump is irrelevant. They have a job 258 00:15:27,680 --> 00:15:31,320 Speaker 1: to do, according to Republicans, and they can get it done. 259 00:15:31,360 --> 00:15:33,240 Speaker 1: They just want him to butt out. Is that realistic? 260 00:15:34,040 --> 00:15:38,280 Speaker 1: It absolutely is realistic. We have experienced moments in our 261 00:15:38,400 --> 00:15:43,040 Speaker 1: history where presidents have been marginalized for a variety of reasons, 262 00:15:43,520 --> 00:15:47,400 Speaker 1: and typically it's because of scandal, and certainly this president 263 00:15:47,440 --> 00:15:51,080 Speaker 1: is facing scandal with his his sympathetic comments about Nazis 264 00:15:51,120 --> 00:15:54,640 Speaker 1: this past week. But what is really happening here touches 265 00:15:54,680 --> 00:15:58,360 Speaker 1: back on Senator Corker's words, and that is capacity, and 266 00:15:58,360 --> 00:16:01,720 Speaker 1: that is the president doesn't have the knowledge, or the 267 00:16:01,840 --> 00:16:05,480 Speaker 1: understanding or the capacity to deal with the details of policy, 268 00:16:05,800 --> 00:16:09,040 Speaker 1: and so Congress does and they are going to go 269 00:16:09,120 --> 00:16:12,040 Speaker 1: on about their business and start putting things on the 270 00:16:12,080 --> 00:16:16,920 Speaker 1: president's desk without really discussing with him what the details 271 00:16:16,920 --> 00:16:20,080 Speaker 1: of the is. John, I wonder what the polls will 272 00:16:20,120 --> 00:16:24,120 Speaker 1: look like, the approval polls, approval ratings for the president 273 00:16:24,200 --> 00:16:27,800 Speaker 1: after this week, this this blockbuster week. There was a 274 00:16:27,880 --> 00:16:30,720 Speaker 1: poll released on Wednesday by Maris which showed that the 275 00:16:30,720 --> 00:16:34,640 Speaker 1: president has a thirty approval rating. Does the president care 276 00:16:34,640 --> 00:16:38,000 Speaker 1: about his approval rating as long as his basis with him? Well, 277 00:16:38,000 --> 00:16:40,520 Speaker 1: the president's job approval rating, to to the first part 278 00:16:40,560 --> 00:16:43,680 Speaker 1: of your question, is going to continue to slide in 279 00:16:43,800 --> 00:16:48,280 Speaker 1: the near future. It has been since inauguration day, and 280 00:16:48,800 --> 00:16:51,560 Speaker 1: with the antics that we've seen from him over the 281 00:16:51,600 --> 00:16:54,360 Speaker 1: past week, that you have to assume it's going to continue. 282 00:16:54,800 --> 00:16:57,000 Speaker 1: But again, as as I was saying on the other 283 00:16:57,040 --> 00:17:00,520 Speaker 1: side of the break, that the president doesn't leave polls 284 00:17:00,600 --> 00:17:03,680 Speaker 1: unless they say something good about what he's doing. And 285 00:17:04,040 --> 00:17:07,560 Speaker 1: I wrote on Brookings Fixed blog earlier this week that 286 00:17:07,560 --> 00:17:11,359 Speaker 1: that's political malpractice for the president to say only good 287 00:17:11,400 --> 00:17:15,280 Speaker 1: polls are scientific polls. And so yeah, he he doesn't care. 288 00:17:15,400 --> 00:17:18,000 Speaker 1: He thinks that he probably has a better than fifty 289 00:17:18,000 --> 00:17:20,199 Speaker 1: percent approval rating, even though we know it's in the 290 00:17:20,240 --> 00:17:23,600 Speaker 1: low to mid thirties. John Gary Cone State put but 291 00:17:23,600 --> 00:17:25,720 Speaker 1: there was, you know, speculation yesterday that he was so 292 00:17:25,800 --> 00:17:30,120 Speaker 1: unhappy with charlottes phil comments that he may contemplate, you know, resigning. 293 00:17:30,119 --> 00:17:32,000 Speaker 1: Now this wasn't confirmed in any way. But how much 294 00:17:32,000 --> 00:17:34,200 Speaker 1: of a disaster would it have been for the White 295 00:17:34,240 --> 00:17:38,119 Speaker 1: House had he resigned? I think from an economic perspective 296 00:17:38,119 --> 00:17:40,439 Speaker 1: and from a policy perspective, it would have been a 297 00:17:40,440 --> 00:17:44,159 Speaker 1: true disaster. There are there is a real need in 298 00:17:44,200 --> 00:17:46,600 Speaker 1: that White House for adults to be in the room 299 00:17:46,640 --> 00:17:49,960 Speaker 1: because the president is not an adult. H Gary Kone 300 00:17:50,119 --> 00:17:54,040 Speaker 1: understands economic policy as well as anyone, and he's someone 301 00:17:54,160 --> 00:17:58,000 Speaker 1: who has the President's trust and has the president's ear 302 00:17:58,800 --> 00:18:01,160 Speaker 1: they need more of that, and the White House even 303 00:18:01,200 --> 00:18:03,800 Speaker 1: as people look at this and ask themselves, how can 304 00:18:03,880 --> 00:18:07,560 Speaker 1: anyone work for this man? Well, maybe Congress can step 305 00:18:07,560 --> 00:18:09,679 Speaker 1: into the breach and and play the adults in the room. 306 00:18:09,720 --> 00:18:12,480 Speaker 1: They haven't thus far, which is one reason why we're 307 00:18:12,480 --> 00:18:15,640 Speaker 1: in this divisive environment again. I go back to Greg 308 00:18:15,720 --> 00:18:19,919 Speaker 1: Valier of Horizon Investments saying that Republicans on Capitol Hill 309 00:18:19,960 --> 00:18:22,719 Speaker 1: are are nearing this consensus that they need to go 310 00:18:22,760 --> 00:18:24,720 Speaker 1: at it alone. They need to ignore the White House 311 00:18:24,720 --> 00:18:28,320 Speaker 1: and perhaps even work with Democrats on issues like tax 312 00:18:28,320 --> 00:18:31,280 Speaker 1: cuts and infrastructure spending. I mean, perhaps some good can 313 00:18:31,320 --> 00:18:33,879 Speaker 1: come out of this, John, I think that's true. I 314 00:18:33,960 --> 00:18:37,760 Speaker 1: think if Congress buckles down and starts to work across 315 00:18:37,800 --> 00:18:42,520 Speaker 1: the aisle, work across the chambers, and starts engaging with 316 00:18:42,680 --> 00:18:45,720 Speaker 1: some of the president's aids who know what they're talking about, 317 00:18:46,119 --> 00:18:50,119 Speaker 1: you can get some real legislative progress. You know, the 318 00:18:50,160 --> 00:18:53,400 Speaker 1: President in this situation reminds me of people we've all 319 00:18:53,440 --> 00:18:55,920 Speaker 1: worked with before, and that is the type of person 320 00:18:55,960 --> 00:18:58,080 Speaker 1: who never comes up with good ideas, but you have 321 00:18:58,200 --> 00:19:01,560 Speaker 1: to convince them that your ideas actually their ideas before 322 00:19:01,560 --> 00:19:03,840 Speaker 1: they'll sign off on it. I think that's what we're 323 00:19:03,960 --> 00:19:08,159 Speaker 1: entering now. Congress and the President's advisors will draw up 324 00:19:08,160 --> 00:19:11,320 Speaker 1: these plans and then convinced the President that they're his plans. 325 00:19:11,359 --> 00:19:14,680 Speaker 1: That's probably the only way forward. That's called managing up. 326 00:19:14,720 --> 00:19:18,040 Speaker 1: I believe that is right. Okay, Well, that being the case, 327 00:19:18,160 --> 00:19:21,800 Speaker 1: Paul Ryan and Mitch McConnell have certainly come out with 328 00:19:21,880 --> 00:19:25,439 Speaker 1: strong statements after Charlotte'sville. They did not personally tie it 329 00:19:25,520 --> 00:19:27,879 Speaker 1: to President Trump in any way. Are they still in 330 00:19:27,880 --> 00:19:31,159 Speaker 1: a position to work with the president. They are in 331 00:19:31,640 --> 00:19:35,919 Speaker 1: some of the most difficult positions in Washington. That is, 332 00:19:36,320 --> 00:19:40,520 Speaker 1: they have to as leaders of Congress, shepherd legislation through 333 00:19:40,600 --> 00:19:43,760 Speaker 1: their respective chambers, and they still have to keep open 334 00:19:43,840 --> 00:19:46,720 Speaker 1: communication with the White House. The President has had some 335 00:19:46,800 --> 00:19:49,399 Speaker 1: tough words for Mitch McConnell, and I assume he's going 336 00:19:49,440 --> 00:19:51,960 Speaker 1: to have some tough words for the Speaker as well. 337 00:19:52,480 --> 00:19:56,600 Speaker 1: But they are caught between what I think their conscience 338 00:19:56,680 --> 00:19:59,520 Speaker 1: is telling them they should do, and that is stand 339 00:19:59,520 --> 00:20:02,600 Speaker 1: on the roof tops and the rate the president and 340 00:20:02,720 --> 00:20:05,160 Speaker 1: the realities of the job that they have as leaders 341 00:20:05,200 --> 00:20:07,919 Speaker 1: in Congress. It's it's certainly not an enviable position for 342 00:20:07,960 --> 00:20:10,160 Speaker 1: either of them. Right. But John, you say the president 343 00:20:10,240 --> 00:20:12,520 Speaker 1: is not an adult, A lot of people that will 344 00:20:12,560 --> 00:20:15,000 Speaker 1: have voted for him or that respect the presidency will 345 00:20:15,040 --> 00:20:17,760 Speaker 1: push back against that. If you don't think he's an adult. 346 00:20:17,800 --> 00:20:21,080 Speaker 1: Who is an adult that the president would listen to? Well, 347 00:20:21,119 --> 00:20:23,960 Speaker 1: clearly you have people like Steve Mnuchin and Gary Cohen 348 00:20:24,200 --> 00:20:28,600 Speaker 1: and others who are have the President's here, who the 349 00:20:28,640 --> 00:20:32,919 Speaker 1: President UH likes and respects and believes that he's getting 350 00:20:32,920 --> 00:20:36,879 Speaker 1: good counsel from. Those are the types of people who 351 00:20:37,320 --> 00:20:41,439 Speaker 1: need to be the rather. These are the people who 352 00:20:41,520 --> 00:20:44,960 Speaker 1: will be the keys to policy advancement in this administration. 353 00:20:45,520 --> 00:20:50,119 Speaker 1: But will you listen to them? But because part to 354 00:20:50,240 --> 00:20:53,520 Speaker 1: enact it? Right, Yeah, that's absolutely right. It's unclear whether 355 00:20:53,560 --> 00:20:55,480 Speaker 1: he's going to listen to them. I think there were 356 00:20:55,520 --> 00:20:59,040 Speaker 1: some great minds talking to the President about healthcare and 357 00:20:59,080 --> 00:21:02,000 Speaker 1: what the fallout of healthcare would be if he if 358 00:21:02,000 --> 00:21:05,679 Speaker 1: he chased after certain plans, and ultimately none of the 359 00:21:05,680 --> 00:21:08,800 Speaker 1: council got through in a way that proved effective on healthcare. 360 00:21:08,880 --> 00:21:11,600 Speaker 1: So we don't know who the President will listen to 361 00:21:11,800 --> 00:21:14,040 Speaker 1: and when he will listen to those people. And I 362 00:21:14,080 --> 00:21:17,760 Speaker 1: think that's the most confounding problem in the White House. 363 00:21:17,840 --> 00:21:20,960 Speaker 1: Right now. All right, the chief of staff freshly minted, 364 00:21:21,200 --> 00:21:23,560 Speaker 1: he's come on, he's kind of changed the White House 365 00:21:23,560 --> 00:21:25,359 Speaker 1: the rules the way. You know, everybody has to go 366 00:21:25,400 --> 00:21:28,360 Speaker 1: through him, including the President's daughter to talk to the president. 367 00:21:28,520 --> 00:21:31,720 Speaker 1: Can is he instrumental to anything that will happen in 368 00:21:31,720 --> 00:21:35,119 Speaker 1: the White House or how instrumental can he be? You know? 369 00:21:35,160 --> 00:21:38,160 Speaker 1: The chief of staff Mr Kelly he um, he has 370 00:21:38,720 --> 00:21:41,560 Speaker 1: apparently said that he manages the staff and he doesn't 371 00:21:41,560 --> 00:21:45,120 Speaker 1: manage the president. Um. And that's probably the right role 372 00:21:45,200 --> 00:21:47,399 Speaker 1: for a chief of staff, but it's not the right 373 00:21:47,520 --> 00:21:50,719 Speaker 1: role for Trump's chief of staff. Someone needs to manage 374 00:21:50,760 --> 00:21:53,520 Speaker 1: the president. And I think the best thing that that 375 00:21:53,760 --> 00:21:57,320 Speaker 1: uh Kelly can do is to fall back on his roots. 376 00:21:57,640 --> 00:22:01,000 Speaker 1: He's a patriot, he is a general. He is someone 377 00:22:01,080 --> 00:22:04,360 Speaker 1: who has for his entire life put his country above himself, 378 00:22:04,600 --> 00:22:06,359 Speaker 1: and I think he needs to think of the battle 379 00:22:06,400 --> 00:22:08,600 Speaker 1: that's going on in the White House right now is 380 00:22:08,720 --> 00:22:13,000 Speaker 1: one more part of his patriotism. Chiefs of staff normally 381 00:22:13,160 --> 00:22:16,200 Speaker 1: only manage the staff, but John Kelly needs to start 382 00:22:16,240 --> 00:22:18,240 Speaker 1: to manage the president for the sake of the nation. 383 00:22:18,840 --> 00:22:20,639 Speaker 1: I'm so glad you brought up that the chief of 384 00:22:20,680 --> 00:22:23,920 Speaker 1: staff Francine because I wanted to go there next. We've 385 00:22:23,920 --> 00:22:26,320 Speaker 1: had three full weeks of John Kelly as chief of staff, 386 00:22:26,359 --> 00:22:29,359 Speaker 1: and John and Francine. I think you'll remember while the 387 00:22:29,400 --> 00:22:33,400 Speaker 1: President was speaking on Tuesday at Trump Tower, there were 388 00:22:33,480 --> 00:22:39,359 Speaker 1: pictures of John Kelly looking down, looking frustrated, may be dismayed, 389 00:22:39,560 --> 00:22:43,520 Speaker 1: but certainly um. He kind of had to wonder where 390 00:22:43,600 --> 00:22:46,520 Speaker 1: this came from, because it was not anticipated or planned 391 00:22:46,560 --> 00:22:49,680 Speaker 1: for the President to be speaking two reporters. The plan 392 00:22:49,760 --> 00:22:51,399 Speaker 1: was originally for him to give a statement and then 393 00:22:51,440 --> 00:22:54,639 Speaker 1: to turn things over to Gary Conan Elane Chow. John, 394 00:22:54,680 --> 00:22:57,360 Speaker 1: could you rate John Kelly right now in his first 395 00:22:57,440 --> 00:22:59,200 Speaker 1: three weeks as chief of staff? How good of a 396 00:22:59,280 --> 00:23:03,320 Speaker 1: job has he done? I think, uh, Mr Kelly's first 397 00:23:03,359 --> 00:23:06,440 Speaker 1: few days on the job were magnificent. He cleaned house. 398 00:23:06,520 --> 00:23:10,879 Speaker 1: He by all accounts, turned around the organization within the 399 00:23:10,920 --> 00:23:15,399 Speaker 1: West Wing and really set himself apart from the record 400 00:23:15,400 --> 00:23:18,919 Speaker 1: of rents previous. Since then, however, that he cleaned up 401 00:23:18,920 --> 00:23:22,240 Speaker 1: one mess, and the bigger mess, the more problematic mess 402 00:23:22,280 --> 00:23:25,439 Speaker 1: that is the President, continues to get worse. And I 403 00:23:25,440 --> 00:23:28,680 Speaker 1: think what we saw in John Kelly's space the other 404 00:23:28,800 --> 00:23:33,040 Speaker 1: day during the Trump UH Side show was a man 405 00:23:33,200 --> 00:23:38,240 Speaker 1: who for the first time was recognizing the challenges that 406 00:23:38,359 --> 00:23:43,200 Speaker 1: lay ahead, the real depth of that challenge, and maybe, uh, 407 00:23:43,240 --> 00:23:46,280 Speaker 1: he was saying to himself, Yes, I actually do have 408 00:23:46,359 --> 00:23:49,080 Speaker 1: to manage the president. This is the bigger problem. Now 409 00:23:49,119 --> 00:23:51,080 Speaker 1: that the staff is fixed, I need to move on 410 00:23:51,119 --> 00:23:53,879 Speaker 1: to this. Okay, that's from our point of view. But 411 00:23:54,000 --> 00:23:57,000 Speaker 1: from President Trump's point of view, he's doing what he 412 00:23:57,080 --> 00:23:58,960 Speaker 1: wants to do. He wants to speak when he wants 413 00:23:58,960 --> 00:24:01,399 Speaker 1: to speak, and John Kelly, his chief of staff, is 414 00:24:01,400 --> 00:24:05,160 Speaker 1: in charge of this staff. By Donald Trump standards, perhaps 415 00:24:05,320 --> 00:24:08,080 Speaker 1: John Kelly being there and ending the leaks is sufficient. 416 00:24:08,560 --> 00:24:10,800 Speaker 1: Uh do you think President Trump thinks John Kelly is 417 00:24:10,800 --> 00:24:13,760 Speaker 1: doing a good job. Oh, I'm sure that the President 418 00:24:13,800 --> 00:24:16,320 Speaker 1: thinks John Kelly is doing a good job. And I'm 419 00:24:16,320 --> 00:24:18,920 Speaker 1: sure that he also thinks that the job that he's 420 00:24:18,960 --> 00:24:23,600 Speaker 1: doing is sufficient. So it's incumbent upon John Kelly then 421 00:24:23,720 --> 00:24:26,000 Speaker 1: to figure out a way to get through to the 422 00:24:26,000 --> 00:24:30,000 Speaker 1: President to get him to change. He cannot just clearly 423 00:24:30,040 --> 00:24:33,359 Speaker 1: march into the Oval office and say, Mr President, you 424 00:24:33,400 --> 00:24:35,760 Speaker 1: need to shut up, you need to stop talking about this. 425 00:24:35,840 --> 00:24:38,400 Speaker 1: You need to do these things differently. Because the President 426 00:24:38,440 --> 00:24:41,800 Speaker 1: doesn't respond to that he's going to have to learn 427 00:24:42,680 --> 00:24:45,800 Speaker 1: how to get the president to respond in the right ways. 428 00:24:45,920 --> 00:24:48,600 Speaker 1: And one of the problems, of course, is that he's 429 00:24:48,640 --> 00:24:51,800 Speaker 1: not an old friend of Donald Trump. Yes, he's not 430 00:24:51,880 --> 00:24:54,600 Speaker 1: someone who knows him that well. Yeah, very good point. 431 00:24:54,640 --> 00:24:58,040 Speaker 1: He's not one of the original loyalists. John Houdack, Senior 432 00:24:58,040 --> 00:25:00,800 Speaker 1: Fellow of Government Studies at Brookings, Thank you so much. 433 00:25:14,280 --> 00:25:16,600 Speaker 1: The last fifteen minutes of Bloomberg Surveillance, we're going to 434 00:25:16,680 --> 00:25:19,560 Speaker 1: focus on some entertainment that you might partake in this weekend. 435 00:25:20,160 --> 00:25:22,320 Speaker 1: When was the last time you went to go see 436 00:25:22,359 --> 00:25:26,000 Speaker 1: a movie at a movie theater? Francine. Yeah, so my 437 00:25:26,280 --> 00:25:28,600 Speaker 1: mine actually is really not glamorous. So I want to 438 00:25:28,640 --> 00:25:32,040 Speaker 1: see Cars three Kids just ten days in my head, 439 00:25:32,080 --> 00:25:34,440 Speaker 1: I'm cooler than this. So I wanted to see Baby Driver, 440 00:25:34,560 --> 00:25:36,239 Speaker 1: but I haven't. But it's on my list, it's on 441 00:25:36,280 --> 00:25:38,239 Speaker 1: your list, so you plan to go back. I went 442 00:25:38,320 --> 00:25:41,040 Speaker 1: to go see Dunkirk a few weeks ago on Imax, 443 00:25:41,040 --> 00:25:42,439 Speaker 1: so is wonderful. And of course there are a lot 444 00:25:42,480 --> 00:25:45,800 Speaker 1: of really pretty boys with very chiseled cheekbones as well, 445 00:25:45,840 --> 00:25:50,240 Speaker 1: so that helped in addition to the lovely cinematography. Um Our. 446 00:25:50,280 --> 00:25:53,119 Speaker 1: Next guest is Mitch Low. He's CEO of movie Pass. 447 00:25:53,200 --> 00:25:57,000 Speaker 1: And this is interesting because movie passes marketing a Netflix 448 00:25:57,040 --> 00:25:59,960 Speaker 1: type of movie going subscription service that would cost Francie 449 00:26:00,359 --> 00:26:04,000 Speaker 1: nine per month to let her see as many movies 450 00:26:04,040 --> 00:26:08,160 Speaker 1: as she wants, well as frequently as once a day. Bargain. Bargain, Yes, 451 00:26:08,200 --> 00:26:10,080 Speaker 1: if you were to move to the US in about 452 00:26:10,640 --> 00:26:13,440 Speaker 1: the theaters in the US. Uh so we're talking nine 453 00:26:13,440 --> 00:26:16,800 Speaker 1: dollars to see as many movies as you want to Mitch, 454 00:26:17,000 --> 00:26:21,000 Speaker 1: this sounds too good to be true. What's the catch? Well, 455 00:26:21,040 --> 00:26:23,720 Speaker 1: you know, there really is no catch to it. The 456 00:26:23,800 --> 00:26:27,639 Speaker 1: company has a business plan that we've tested over the 457 00:26:27,720 --> 00:26:32,320 Speaker 1: last year of various price points and and utilization and 458 00:26:32,320 --> 00:26:34,919 Speaker 1: and you know, the beauty of this is it gets 459 00:26:34,960 --> 00:26:38,480 Speaker 1: people more energized about going back to the movies. And 460 00:26:38,520 --> 00:26:43,600 Speaker 1: it's it's really addressing those people who have have really 461 00:26:43,640 --> 00:26:46,480 Speaker 1: only go to about three to six movies a year 462 00:26:46,600 --> 00:26:50,520 Speaker 1: but would love to go more. But actually, just as 463 00:26:50,600 --> 00:26:53,640 Speaker 1: much as the price, it's the concern that they're going 464 00:26:53,680 --> 00:26:56,840 Speaker 1: to see a bad movie and feel bad about wasting 465 00:26:56,880 --> 00:27:00,960 Speaker 1: their time. And and you know when when when Netflix launched, 466 00:27:01,000 --> 00:27:03,200 Speaker 1: you know, one of the kind of the two big 467 00:27:03,240 --> 00:27:07,800 Speaker 1: goals were removing the anxiety of having to worry about 468 00:27:07,880 --> 00:27:10,919 Speaker 1: returning the movie to the video store, kind of that 469 00:27:11,280 --> 00:27:15,280 Speaker 1: ugly late see thing. And the second was building a 470 00:27:16,280 --> 00:27:21,040 Speaker 1: unique library that addressed the long tail, so that no 471 00:27:21,040 --> 00:27:24,200 Speaker 1: matter what your taste were, you can find what you wanted. 472 00:27:24,880 --> 00:27:28,200 Speaker 1: What the byproduct of all that was is people started 473 00:27:28,280 --> 00:27:32,880 Speaker 1: experimenting with movies that they never would have rented from Blockbuster. 474 00:27:33,280 --> 00:27:38,160 Speaker 1: They started experimenting, you know, getting interested in a director 475 00:27:38,280 --> 00:27:41,680 Speaker 1: or various films on genres and things that they would 476 00:27:41,760 --> 00:27:44,040 Speaker 1: never have done in an all of our manner. And 477 00:27:44,080 --> 00:27:47,520 Speaker 1: so it expanded people's interest in film and their enjoyment. 478 00:27:47,960 --> 00:27:50,879 Speaker 1: And this is what what movie Pass does is movie 479 00:27:50,880 --> 00:27:54,800 Speaker 1: Past kind of removes that first big obstacle of going 480 00:27:54,880 --> 00:27:57,359 Speaker 1: to the movies, which is isn't really going to be 481 00:27:57,440 --> 00:28:00,240 Speaker 1: worth it? But if it isn't you just track at 482 00:28:00,240 --> 00:28:02,080 Speaker 1: the next day to all your friends and you don't 483 00:28:02,119 --> 00:28:05,480 Speaker 1: feel bad about wasting money. Yeah, I mean you haven't 484 00:28:05,480 --> 00:28:08,520 Speaker 1: only made friends, right, A and A m C slammed 485 00:28:08,560 --> 00:28:12,399 Speaker 1: you and they also threatened with the collection. Yeah, yeah, No, 486 00:28:12,520 --> 00:28:15,800 Speaker 1: it's it's heartwarming that they care so much about us. Uh, 487 00:28:15,840 --> 00:28:19,480 Speaker 1: you know, we're probably you know one one hundred thousands 488 00:28:19,640 --> 00:28:22,800 Speaker 1: the size of their company. Uh. You know, it's the 489 00:28:22,880 --> 00:28:26,119 Speaker 1: same thing that Blockbuster said to me when I was 490 00:28:26,480 --> 00:28:29,159 Speaker 1: running Red Box when we came out with the dollar 491 00:28:29,200 --> 00:28:32,439 Speaker 1: a night rental where they were charging five. And you 492 00:28:32,480 --> 00:28:36,320 Speaker 1: know what they didn't understand is with technology, with getting 493 00:28:36,359 --> 00:28:39,920 Speaker 1: product where people want wanted to be getting people to 494 00:28:39,960 --> 00:28:43,720 Speaker 1: go more often and and utilize the inventory, we were 495 00:28:43,760 --> 00:28:46,800 Speaker 1: able to rent movies for a fraction of what our 496 00:28:46,840 --> 00:28:50,640 Speaker 1: competitors did. And this is the same scenario. We we 497 00:28:50,640 --> 00:28:54,000 Speaker 1: we know what we're doing. Uh, and uh, we're going 498 00:28:54,040 --> 00:28:56,440 Speaker 1: to get people energized to go back to the movies. 499 00:28:56,520 --> 00:28:58,720 Speaker 1: And the good news for AMC is we're going to 500 00:28:58,920 --> 00:29:01,840 Speaker 1: pay them full pride. But here's the thing, and Francine 501 00:29:01,840 --> 00:29:04,800 Speaker 1: brings up a good point with with AMC's objections legal 502 00:29:04,800 --> 00:29:08,959 Speaker 1: objections and that they say that the pricing is unsustainable, 503 00:29:09,240 --> 00:29:12,400 Speaker 1: how how long can you keep this nine a month 504 00:29:12,400 --> 00:29:18,040 Speaker 1: subscription going. Well, we we have plenty of funding for 505 00:29:18,160 --> 00:29:20,720 Speaker 1: the time being. Uh, it may be that we have 506 00:29:20,840 --> 00:29:24,360 Speaker 1: to go back and raise more money. And and we're seeing, 507 00:29:24,840 --> 00:29:28,640 Speaker 1: you know, an amazing amount of response from consumers. They 508 00:29:28,720 --> 00:29:32,000 Speaker 1: love the idea and they're going to go back and 509 00:29:32,040 --> 00:29:34,640 Speaker 1: spend a lot of money at the theaters, and we 510 00:29:34,720 --> 00:29:38,960 Speaker 1: have multiple revenue streams that will be able to generate 511 00:29:39,320 --> 00:29:44,360 Speaker 1: revenue from anywhere from working with the studios to get 512 00:29:44,400 --> 00:29:47,640 Speaker 1: people to those smaller films. Because when our our customers 513 00:29:47,640 --> 00:29:50,440 Speaker 1: go to twice as many as they went before movie 514 00:29:50,440 --> 00:29:54,000 Speaker 1: paths and and almost all of that increase are two 515 00:29:54,120 --> 00:29:57,240 Speaker 1: movies that only that grows less than twenty million. Mitche 516 00:29:57,240 --> 00:30:00,160 Speaker 1: That's where studios need help, Mitch. How many move these 517 00:30:00,200 --> 00:30:01,960 Speaker 1: are they going to on average? Then? What are you 518 00:30:02,040 --> 00:30:06,480 Speaker 1: learning from the data? Well, our primary customer before they 519 00:30:06,520 --> 00:30:09,440 Speaker 1: start goes to three to six movies a year, and 520 00:30:09,480 --> 00:30:12,040 Speaker 1: then after they become a subscriber, they go to six 521 00:30:12,080 --> 00:30:15,160 Speaker 1: to twelve movies a year. All right, Mitch, I might 522 00:30:15,200 --> 00:30:17,560 Speaker 1: ask a question that sounds stupid, but actually here in 523 00:30:17,600 --> 00:30:20,840 Speaker 1: the UK, right they have some special offers for Orange 524 00:30:20,880 --> 00:30:24,440 Speaker 1: Tuesday or Orange Thursdays. Are you seeing people only go 525 00:30:24,520 --> 00:30:26,480 Speaker 1: on Saturday night? And if it is, and what's the 526 00:30:26,520 --> 00:30:31,560 Speaker 1: benefit for you guys? Good? They actually are Our subscribers 527 00:30:31,640 --> 00:30:34,840 Speaker 1: do just the opposite. Uh, they go to movies during 528 00:30:34,880 --> 00:30:38,760 Speaker 1: the weekdays and they go to smaller films. Our subscribers 529 00:30:38,760 --> 00:30:41,400 Speaker 1: are using this as a way to go to films 530 00:30:41,440 --> 00:30:44,160 Speaker 1: that are a little bit less well known, that don't 531 00:30:44,200 --> 00:30:47,040 Speaker 1: benefit from big mass media, and they use it just 532 00:30:47,120 --> 00:30:50,080 Speaker 1: in the same way the Netflix subscribers use it to 533 00:30:50,160 --> 00:30:53,840 Speaker 1: see films that they never would have known about as 534 00:30:53,840 --> 00:30:57,600 Speaker 1: a way to to without risk. Mitch, I want to 535 00:30:57,600 --> 00:30:59,880 Speaker 1: get your thoughts on a story that Bloomberg News published 536 00:31:00,000 --> 00:31:03,280 Speaker 1: this morning about how movie studios are considering whether to 537 00:31:03,560 --> 00:31:06,880 Speaker 1: ignore the objections of a MC and other cinema chains 538 00:31:06,960 --> 00:31:09,360 Speaker 1: and go ahead with this plan to offer digital rentals 539 00:31:09,400 --> 00:31:12,280 Speaker 1: of films just weeks after they appear in theaters. I mean, 540 00:31:12,360 --> 00:31:14,640 Speaker 1: that would be bad news for the theaters. That wouldn't 541 00:31:14,640 --> 00:31:16,680 Speaker 1: be good news for you either. What are your thoughts 542 00:31:16,680 --> 00:31:21,760 Speaker 1: on this possibility. You know, I love innovation and I 543 00:31:21,840 --> 00:31:25,480 Speaker 1: love new ways to expand people's interests. You know, the 544 00:31:25,640 --> 00:31:29,320 Speaker 1: things I learned at Red Box was when you offer 545 00:31:29,440 --> 00:31:34,240 Speaker 1: more options and more ways to consume entertainment, people consume more. 546 00:31:34,240 --> 00:31:38,800 Speaker 1: It does not it'll cannabalize a little bit from each 547 00:31:38,800 --> 00:31:42,080 Speaker 1: of the other options, but the overall pie gets bigger, 548 00:31:42,440 --> 00:31:44,960 Speaker 1: and we see that over and over again. You know, 549 00:31:45,000 --> 00:31:47,760 Speaker 1: I've been in this business for thirty five years. I 550 00:31:47,840 --> 00:31:51,880 Speaker 1: spent thirteen thousand hours working behind video store counters, and 551 00:31:51,960 --> 00:31:55,840 Speaker 1: I have seen every new option expand the total pie, 552 00:31:55,920 --> 00:32:00,240 Speaker 1: and especially the pie for the entertainment community, especially the 553 00:32:00,280 --> 00:32:03,120 Speaker 1: creative side of it. So I'm not worried about that 554 00:32:03,200 --> 00:32:06,320 Speaker 1: at all. I think it will definitely appeal to a 555 00:32:06,320 --> 00:32:09,640 Speaker 1: fair amount of people and it will be exciting. Uh. 556 00:32:10,080 --> 00:32:13,520 Speaker 1: You know, I know the theatrical industry is against it, 557 00:32:13,920 --> 00:32:16,960 Speaker 1: and and that just means, you know, we in the 558 00:32:16,960 --> 00:32:20,640 Speaker 1: theatrical side of the business need to offer a better 559 00:32:20,800 --> 00:32:24,480 Speaker 1: product and more options to our consumers. And many of 560 00:32:24,480 --> 00:32:27,960 Speaker 1: our consumers grew up on subscription, not everybody. You know. 561 00:32:28,040 --> 00:32:30,000 Speaker 1: We don't expect this to take over the world. We 562 00:32:30,120 --> 00:32:34,080 Speaker 1: expect it to appeal to a small amount, you know, millions, 563 00:32:34,160 --> 00:32:37,840 Speaker 1: but relative to Yes, I'm going to ask you a 564 00:32:37,880 --> 00:32:39,480 Speaker 1: question which may be a bit uncomfortable, and actually I 565 00:32:39,560 --> 00:32:41,440 Speaker 1: feel like we have too because of Barcelona and a 566 00:32:41,480 --> 00:32:43,440 Speaker 1: lot of attacks we see, not only in Europe in 567 00:32:43,480 --> 00:32:46,240 Speaker 1: the US. Does security ever coming to your thought? Do 568 00:32:46,360 --> 00:32:51,080 Speaker 1: people go to the movies less because of a tax? Yeah? 569 00:32:51,120 --> 00:32:54,360 Speaker 1: You know, going all the way back to Columbine, Uh, 570 00:32:54,440 --> 00:32:57,920 Speaker 1: you know, there's always been that concern. Uh, you know, 571 00:32:58,440 --> 00:33:02,160 Speaker 1: I think all of us have to stand strong you know, 572 00:33:02,240 --> 00:33:05,480 Speaker 1: as a business, we have to employ all the security 573 00:33:05,520 --> 00:33:09,120 Speaker 1: features we can, and as things get more and more risky, 574 00:33:09,200 --> 00:33:12,720 Speaker 1: we need to put more and more security features for 575 00:33:12,720 --> 00:33:16,760 Speaker 1: for places where people gather, and you know, you see it, 576 00:33:16,960 --> 00:33:20,280 Speaker 1: the barriers. You know, my my son just recently came 577 00:33:20,320 --> 00:33:24,520 Speaker 1: from Barcelona just last week. He lives there, and it 578 00:33:24,600 --> 00:33:27,680 Speaker 1: was you know, I see when I visit him, the 579 00:33:27,720 --> 00:33:30,320 Speaker 1: big barriers they put. Those are the types of things. 580 00:33:30,400 --> 00:33:33,800 Speaker 1: Anybody in the industry, whether it's in the theatrical or 581 00:33:33,800 --> 00:33:37,800 Speaker 1: whether it's amusement parks, needs to continue to improve our 582 00:33:37,840 --> 00:33:41,800 Speaker 1: security features. But we can't at the same time, you know, 583 00:33:42,200 --> 00:33:45,000 Speaker 1: kind of hide in our homes. You know, we need to. 584 00:33:45,280 --> 00:33:49,880 Speaker 1: You know, the battle against terrorism will be one one 585 00:33:49,920 --> 00:33:53,040 Speaker 1: way or another, and we need to stay strong while 586 00:33:53,120 --> 00:33:55,360 Speaker 1: that goes on. We need to continue living our lives, 587 00:33:55,360 --> 00:33:58,320 Speaker 1: all right. Mitch low, CEO of Movie Pass, thank you 588 00:33:58,360 --> 00:34:01,200 Speaker 1: so much. Movie passed as we men and marketing a 589 00:34:01,240 --> 00:34:04,440 Speaker 1: movie going subscription services that costs just under ten dollars 590 00:34:04,440 --> 00:34:07,240 Speaker 1: a month, and let's Francie and see as many movies 591 00:34:07,280 --> 00:34:10,160 Speaker 1: as she wants, up to once a day in about 592 00:34:10,640 --> 00:34:13,040 Speaker 1: theaters in the US. So the catch for you, Franciness 593 00:34:13,040 --> 00:34:15,279 Speaker 1: that you have to move to New York. I will 594 00:34:15,360 --> 00:34:17,279 Speaker 1: if I can leave the kids behind here, I will 595 00:34:17,360 --> 00:34:19,200 Speaker 1: start and we'll go to the movie together. I think 596 00:34:19,280 --> 00:34:21,680 Speaker 1: that's great invitation. I'm taking up on it. I wonder 597 00:34:21,719 --> 00:34:24,120 Speaker 1: how Mr Lock is going to feel about that. Yet 598 00:34:24,320 --> 00:34:27,359 Speaker 1: less good about it right now, Mitch Low, thank you 599 00:34:27,480 --> 00:34:30,520 Speaker 1: once again. This was a pleasure working with you Francine 600 00:34:30,640 --> 00:34:33,239 Speaker 1: for five hours straight TV and then I'm radio. I 601 00:34:33,320 --> 00:34:35,080 Speaker 1: know fun. It's like, we'll do it again. Let's send 602 00:34:35,280 --> 00:34:48,840 Speaker 1: Tom on David back on holiday. This is surveillance. Thanks 603 00:34:48,880 --> 00:34:53,040 Speaker 1: for listening to the Bloomberg Surveillance podcast. Subscribe and listen 604 00:34:53,080 --> 00:34:58,759 Speaker 1: to interviews on Apple Podcasts, SoundCloud, or whichever podcast platform 605 00:34:58,800 --> 00:35:02,320 Speaker 1: you prefer. I I'm on Twitter at Tom Keene, David Gura. 606 00:35:02,640 --> 00:35:06,360 Speaker 1: Is that David Gura? Before the podcast? You could always 607 00:35:06,360 --> 00:35:09,120 Speaker 1: catch us worldwide. I'm Bloomberg Radio.