1 00:00:00,080 --> 00:00:12,960 Speaker 1: Ye, Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene 2 00:00:13,480 --> 00:00:17,560 Speaker 1: Jay Ley. We bring you insight from the best in economics, finance, investment, 3 00:00:18,000 --> 00:00:23,520 Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, 4 00:00:23,600 --> 00:00:28,040 Speaker 1: Bloomberg dot Com, and of course, on the Bloomberg I'm 5 00:00:28,040 --> 00:00:30,240 Speaker 1: pleased to say that your heart Jelly News credits weee's 6 00:00:30,280 --> 00:00:33,040 Speaker 1: head of effects and macro trading strategy jobs into the 7 00:00:33,080 --> 00:00:35,360 Speaker 1: studio to help us get up to speak. Good morning 8 00:00:35,360 --> 00:00:39,479 Speaker 1: to you, Shaharp morning Wednesday. What are you looking for? So? 9 00:00:39,520 --> 00:00:41,400 Speaker 1: I think the market has got his head around now 10 00:00:41,520 --> 00:00:43,440 Speaker 1: the idea that we're only going to get to twenty 11 00:00:43,440 --> 00:00:46,559 Speaker 1: five basis point cuts UM. Just two weeks ago there 12 00:00:46,600 --> 00:00:49,280 Speaker 1: was a debate around this. Maybe we could have fifty. 13 00:00:49,720 --> 00:00:52,040 Speaker 1: But I think the issue is really do we see 14 00:00:52,720 --> 00:00:56,520 Speaker 1: indications that the markets pricing for the rest of the 15 00:00:56,560 --> 00:00:59,240 Speaker 1: year there's another couple of cuts pricing? Is that valid 16 00:00:59,320 --> 00:01:02,240 Speaker 1: or not? And think we'll need to see UM some 17 00:01:02,280 --> 00:01:05,679 Speaker 1: strong language around the risks facing the global economy, for example, 18 00:01:05,720 --> 00:01:08,600 Speaker 1: on trade wars or even Brexit, because the actual numbers 19 00:01:08,600 --> 00:01:12,360 Speaker 1: from the US itself aren't really sufficiently bad to warrant 20 00:01:12,560 --> 00:01:15,000 Speaker 1: more cuts into themselves, so we would need to see 21 00:01:15,600 --> 00:01:17,680 Speaker 1: some strong language. They are on the risks. So sure, 22 00:01:17,720 --> 00:01:19,600 Speaker 1: how are you in that camp that says we have 23 00:01:20,360 --> 00:01:22,280 Speaker 1: you know, a hundred basis points of cuts over the 24 00:01:22,319 --> 00:01:26,319 Speaker 1: next twelve months. So are you in that camp? Uh 25 00:01:26,360 --> 00:01:29,960 Speaker 1: so credits sweeees official House Few Actually is we only 26 00:01:30,000 --> 00:01:33,400 Speaker 1: get one cut and that's the cut that happens in July. Um. 27 00:01:33,440 --> 00:01:38,320 Speaker 1: I think from the market's perspective, it's difficult to imagine 28 00:01:38,360 --> 00:01:41,759 Speaker 1: just one cut now, just because equity markets are record 29 00:01:41,800 --> 00:01:47,200 Speaker 1: highs has already mentioned around the House few does that 30 00:01:47,319 --> 00:01:50,560 Speaker 1: tention at all. It's it's more about you know where 31 00:01:50,560 --> 00:01:52,560 Speaker 1: the market is, and I think where the market is 32 00:01:52,200 --> 00:01:54,760 Speaker 1: is a record highs based on the idea that you 33 00:01:54,800 --> 00:01:57,640 Speaker 1: can't get many cuts. So I think if the House 34 00:01:57,680 --> 00:02:00,680 Speaker 1: Few is correct, then the equity market it will struggle 35 00:02:01,240 --> 00:02:04,080 Speaker 1: unless the reason is that you do get a sudden 36 00:02:04,120 --> 00:02:07,559 Speaker 1: surprise shift on the trade talks front, and of course 37 00:02:07,600 --> 00:02:10,440 Speaker 1: this week we do have the US visiting China again 38 00:02:10,480 --> 00:02:12,920 Speaker 1: on that front. If you did get a positive surprise 39 00:02:12,960 --> 00:02:15,680 Speaker 1: in the next two to three months that eliminates that risk, 40 00:02:15,840 --> 00:02:18,880 Speaker 1: then then yes that House few could work out alongside 41 00:02:18,960 --> 00:02:21,960 Speaker 1: equities staying strong otherwise it gets quite quite tricky. So 42 00:02:22,000 --> 00:02:23,800 Speaker 1: what is your view of trade? Again? We have the 43 00:02:23,840 --> 00:02:27,240 Speaker 1: U S dellegation going over to China this week as 44 00:02:27,360 --> 00:02:29,760 Speaker 1: the are you expecting anything material to come out? Or 45 00:02:29,880 --> 00:02:31,519 Speaker 1: maybe just kick the can down around a little bit. 46 00:02:31,960 --> 00:02:35,639 Speaker 1: Certainly the market's baseline expectation is that they can gets 47 00:02:35,680 --> 00:02:37,920 Speaker 1: kicked down the road. I think the the issue there 48 00:02:38,000 --> 00:02:42,760 Speaker 1: is that both sides now have defined some fairly hardlines, 49 00:02:43,480 --> 00:02:48,160 Speaker 1: and caving in at this point by either side represents 50 00:02:48,160 --> 00:02:52,280 Speaker 1: other way towards the deal until May and then the 51 00:02:52,280 --> 00:02:54,080 Speaker 1: thing got blown up. Shouldn't we just be able to 52 00:02:54,080 --> 00:02:56,200 Speaker 1: start from that point? To Harp, I think was out 53 00:02:56,200 --> 00:02:58,040 Speaker 1: the last ten percent? Well, that's what the U S 54 00:02:58,080 --> 00:03:00,360 Speaker 1: would like because that's that was the point who wished 55 00:03:00,360 --> 00:03:04,000 Speaker 1: to Chinese um hardened their lines. So I think the 56 00:03:04,080 --> 00:03:05,679 Speaker 1: U S would love it if we could go back 57 00:03:05,680 --> 00:03:09,079 Speaker 1: to that point. The question is why the Chinese was, uh, 58 00:03:09,120 --> 00:03:11,919 Speaker 1: you know, shift to a tougher line in May simply 59 00:03:11,960 --> 00:03:14,120 Speaker 1: to change again, you know, at the end of July. 60 00:03:14,280 --> 00:03:17,799 Speaker 1: So I guess the market's logic is fairly sound as 61 00:03:17,800 --> 00:03:20,240 Speaker 1: to why we won't get progressed now. But there's a 62 00:03:20,240 --> 00:03:23,040 Speaker 1: lot of positive surprise potentially if if it's somehow I'd 63 00:03:23,040 --> 00:03:24,880 Speaker 1: love to know what happens in between with the foreign 64 00:03:24,919 --> 00:03:29,359 Speaker 1: exchange market. Larry Cudlow ruling out currency intervention, then hours 65 00:03:29,440 --> 00:03:32,200 Speaker 1: later the President said he hadn't ruled anything. Count Then 66 00:03:32,200 --> 00:03:35,040 Speaker 1: the Wall Street Journal reporting over the weekend the following, 67 00:03:35,320 --> 00:03:37,280 Speaker 1: and I love this quote. There was a meeting on 68 00:03:37,280 --> 00:03:41,720 Speaker 1: Tuesday that's been confirmed. Advices discussed several proposals, including whether 69 00:03:41,720 --> 00:03:43,960 Speaker 1: to jaw burned the dollar lower this according to a 70 00:03:44,000 --> 00:03:46,960 Speaker 1: person familiar with the meeting. Then President Trump quickly cut 71 00:03:46,960 --> 00:03:50,880 Speaker 1: off a proposal from trade advisor Peter Navarro, under which 72 00:03:50,920 --> 00:03:53,880 Speaker 1: the White House would have attempted to reduce the inflation 73 00:03:53,920 --> 00:03:56,800 Speaker 1: adjusted value of the U. S Dollar by ten percent. 74 00:03:56,920 --> 00:04:00,400 Speaker 1: This is Wall Street Journal reporting, But shahab let's gloss 75 00:04:00,440 --> 00:04:03,640 Speaker 1: over the fact that this meeting actually happened on Tuesday 76 00:04:04,000 --> 00:04:06,760 Speaker 1: in the White House to discuss how to weaken the U. S. Dollar. 77 00:04:07,160 --> 00:04:09,120 Speaker 1: What are your talent clients about that at the moment. 78 00:04:09,400 --> 00:04:11,800 Speaker 1: So what we've thought about this for a while is 79 00:04:11,840 --> 00:04:14,880 Speaker 1: that the focus on this issue is likely to increase 80 00:04:15,200 --> 00:04:17,080 Speaker 1: as we go into next year, which is obviously in 81 00:04:17,040 --> 00:04:21,119 Speaker 1: a presidential election year in the US, and this means 82 00:04:21,160 --> 00:04:24,159 Speaker 1: that even though interest rate differentials continue to favor the U. 83 00:04:24,200 --> 00:04:26,479 Speaker 1: S Dollar against the rest of the G ten, it 84 00:04:26,560 --> 00:04:30,120 Speaker 1: probably means that the dollars already peaked in this in 85 00:04:30,160 --> 00:04:33,800 Speaker 1: this cycle, because as we approach new highs for the dollar, 86 00:04:33,839 --> 00:04:37,520 Speaker 1: the market will keep in mind heightened risk that some 87 00:04:37,640 --> 00:04:41,719 Speaker 1: kind of intervention at least talk will materialize UM, but 88 00:04:41,880 --> 00:04:44,480 Speaker 1: maybe even action as well. And you see that even 89 00:04:44,480 --> 00:04:47,760 Speaker 1: in things like the FX options markets, where you can 90 00:04:47,800 --> 00:04:50,200 Speaker 1: see that the market is beginning to pay more of 91 00:04:50,200 --> 00:04:55,200 Speaker 1: a premium for outer the money dollar puts than dollar cause, 92 00:04:55,240 --> 00:04:58,039 Speaker 1: for example, against the euro UM. So some signs are 93 00:04:58,040 --> 00:05:00,760 Speaker 1: beginning to emerge that the market is wanting to buy 94 00:05:00,760 --> 00:05:05,080 Speaker 1: protection for outsized against outsized dollar moves lower. So we've 95 00:05:05,080 --> 00:05:08,360 Speaker 1: heard peak dollar for I've heard it for six months here, 96 00:05:08,440 --> 00:05:11,920 Speaker 1: I'm just not sure against what the dollar depreciates. I 97 00:05:11,960 --> 00:05:13,960 Speaker 1: look at the Euro, I look at Sterling. I mean 98 00:05:14,560 --> 00:05:17,240 Speaker 1: at the end, I mean, how do you what would 99 00:05:17,240 --> 00:05:20,800 Speaker 1: be the catalyst in your mind? Well, the catalysts there's 100 00:05:20,839 --> 00:05:24,640 Speaker 1: a couple of catalysts. Firstly, UH, substantial FED rate cuts 101 00:05:24,720 --> 00:05:28,440 Speaker 1: that narrow rate differentials, we weaken the dollar across the board. 102 00:05:28,640 --> 00:05:32,440 Speaker 1: So you've mentioned a number of different currencies. They're broadly speaking, 103 00:05:32,480 --> 00:05:34,640 Speaker 1: the dollar could fall against a basket and all of those. 104 00:05:34,680 --> 00:05:38,640 Speaker 1: If the FED cuts enough intervention would do the same thing. 105 00:05:38,720 --> 00:05:41,960 Speaker 1: Maybe it would only be a temporary effect initially, but 106 00:05:42,279 --> 00:05:45,919 Speaker 1: again it would simply undermine the dollar against the broad 107 00:05:46,320 --> 00:05:48,040 Speaker 1: we's your hard Let's pick up on that first point 108 00:05:48,040 --> 00:05:50,960 Speaker 1: that rate differentials. The premise of that argument, what will 109 00:05:51,040 --> 00:05:54,960 Speaker 1: rate differentials reassert themselves in this FX market anytime soon? 110 00:05:55,000 --> 00:05:58,120 Speaker 1: Because they don't seem to be the dominant factor in 111 00:05:58,200 --> 00:06:00,920 Speaker 1: exchange rate swings of the last year or so, well, 112 00:06:00,960 --> 00:06:04,360 Speaker 1: there isn't for that is that although the right differentials 113 00:06:04,360 --> 00:06:06,920 Speaker 1: have narrowed somewhat, it's still been the case that other 114 00:06:06,960 --> 00:06:09,880 Speaker 1: central banks, for example of the ECB, but even as 115 00:06:09,920 --> 00:06:13,080 Speaker 1: far away as Australia New Zealand, they've all been trying 116 00:06:13,080 --> 00:06:16,480 Speaker 1: to ease policy at the same time. So the market 117 00:06:16,960 --> 00:06:20,000 Speaker 1: has has known that, for example, you might get even 118 00:06:20,000 --> 00:06:22,320 Speaker 1: more negative rates in Europe, you might get a resumption 119 00:06:22,400 --> 00:06:25,720 Speaker 1: of asset purchases by the ECB. These things mean that 120 00:06:26,680 --> 00:06:31,120 Speaker 1: you don't really get the benefits of seeing your rate 121 00:06:31,160 --> 00:06:34,320 Speaker 1: differentials titled against the US because the market is still 122 00:06:34,360 --> 00:06:36,039 Speaker 1: expecting more things from you as well. What do you 123 00:06:36,080 --> 00:06:38,120 Speaker 1: make of the fact that the BLJ is not part 124 00:06:38,120 --> 00:06:40,320 Speaker 1: of this discussion right now? The Bank of Japan meets 125 00:06:40,320 --> 00:06:43,880 Speaker 1: this week, hardly anybody is talking about action from the 126 00:06:43,880 --> 00:06:46,240 Speaker 1: b o J. Are you thinking about action from the 127 00:06:46,240 --> 00:06:48,640 Speaker 1: b J? I think we have to think about it. 128 00:06:48,800 --> 00:06:51,520 Speaker 1: But what's holding the b o J back in my view, 129 00:06:52,000 --> 00:06:54,720 Speaker 1: is that the level of the dollar against the yen 130 00:06:55,200 --> 00:06:58,920 Speaker 1: is still reasonably high. We haven't seen a significant um 131 00:06:59,080 --> 00:07:02,280 Speaker 1: meltdown in exchange rate, for example, over the past twelve months, 132 00:07:02,320 --> 00:07:05,680 Speaker 1: so the disinflationary forces that could come in if the 133 00:07:05,760 --> 00:07:08,120 Speaker 1: yen were to rally a lot against the dollar, they 134 00:07:08,160 --> 00:07:09,840 Speaker 1: had not come through yet, So I think the BOJ 135 00:07:10,000 --> 00:07:13,840 Speaker 1: is trying to keep its AMMO dry for the time being. Similarly, 136 00:07:13,840 --> 00:07:16,160 Speaker 1: because it also doesn't have that much more it can 137 00:07:16,240 --> 00:07:18,840 Speaker 1: do at this point, given it already has negative rates 138 00:07:19,160 --> 00:07:21,240 Speaker 1: yield could control a bunch of other things in player 139 00:07:21,240 --> 00:07:24,160 Speaker 1: as well, so we could see more, but maybe we 140 00:07:24,200 --> 00:07:25,760 Speaker 1: have to wait for a much lower dolly and rate. 141 00:07:25,800 --> 00:07:28,119 Speaker 1: First half great to catch up with you as always, 142 00:07:28,120 --> 00:07:30,400 Speaker 1: shall harm channel noose their Crowdit sweets head of effex 143 00:07:30,520 --> 00:07:47,600 Speaker 1: and macro trading strategy. I'm really pleased to say that. 144 00:07:47,720 --> 00:07:51,720 Speaker 1: Terry Haynes Joy just now put Geer policy advisor refounder. Terry, 145 00:07:51,760 --> 00:07:53,360 Speaker 1: great to have you with us on the program. Just 146 00:07:53,400 --> 00:07:56,680 Speaker 1: walk me through your expectations as high ranking officials leave 147 00:07:56,760 --> 00:08:01,040 Speaker 1: Washington today and head towards Shankai. My pleasure to be here, John, 148 00:08:01,120 --> 00:08:04,640 Speaker 1: thank you. Uh. The my expectations is the very little halfen. 149 00:08:04,680 --> 00:08:06,600 Speaker 1: I think what what you saw out of the G 150 00:08:06,760 --> 00:08:10,400 Speaker 1: twenty UH is that both leaders in both countries really 151 00:08:10,440 --> 00:08:14,320 Speaker 1: want the illusion of progress more than more than actual progress. 152 00:08:14,720 --> 00:08:18,080 Speaker 1: I continue to say that, Uh, what what I think 153 00:08:18,080 --> 00:08:21,280 Speaker 1: we get is a is kind of a cold piece 154 00:08:21,320 --> 00:08:24,720 Speaker 1: between the UH between the United States and China on 155 00:08:24,880 --> 00:08:28,720 Speaker 1: trade going into I mean, we are now on the 156 00:08:28,720 --> 00:08:31,480 Speaker 1: second half of this year, but you're not going to 157 00:08:31,560 --> 00:08:34,719 Speaker 1: get a comprehensive deal wrapped up. And to me, the 158 00:08:34,760 --> 00:08:39,400 Speaker 1: greatest sticking point remains the enforceability of the deal, something 159 00:08:39,440 --> 00:08:43,600 Speaker 1: that China appeared to be willing to do as up 160 00:08:43,679 --> 00:08:46,800 Speaker 1: until about last May and then pulled back. I mean, clearly, 161 00:08:46,800 --> 00:08:50,480 Speaker 1: I think something happened there, but now but now they 162 00:08:50,520 --> 00:08:53,319 Speaker 1: don't want an enforceable deal, and until that's something the 163 00:08:53,360 --> 00:08:56,400 Speaker 1: United States has always wanted. So until there's enforceability, there's 164 00:08:56,400 --> 00:08:58,920 Speaker 1: no deal. So, Terry, it seemed a couple of months 165 00:08:58,960 --> 00:09:01,760 Speaker 1: ago that both sides were on the cusp of a deal. 166 00:09:01,960 --> 00:09:05,560 Speaker 1: Was that just an illusion? I think it was not 167 00:09:05,640 --> 00:09:10,400 Speaker 1: an illusion all based largely upon statements from both sides 168 00:09:10,480 --> 00:09:14,480 Speaker 1: at the time. I think Cudlow. Cudlow's statements sticks out 169 00:09:14,480 --> 00:09:16,800 Speaker 1: to me because, uh, he said something like we were 170 00:09:16,800 --> 00:09:19,040 Speaker 1: on the seven yard line, and I think that's fair. 171 00:09:19,080 --> 00:09:22,040 Speaker 1: I mean, they were certainly inside the ten. But what 172 00:09:22,120 --> 00:09:26,520 Speaker 1: they pulled back from, in my estimation, uh, in China 173 00:09:26,559 --> 00:09:30,520 Speaker 1: pulled back from, specifically, was enforceability, and all of a sudden, 174 00:09:30,840 --> 00:09:34,680 Speaker 1: the idea that from the Chinese perspective, the idea that 175 00:09:35,320 --> 00:09:38,960 Speaker 1: a deal should be enforceable was a violation of sovereignty. 176 00:09:39,080 --> 00:09:42,640 Speaker 1: And you know, follow the bouncing ball with that, every 177 00:09:42,679 --> 00:09:45,160 Speaker 1: trade deal in order to be enforceable, I mean the 178 00:09:45,240 --> 00:09:50,640 Speaker 1: United States, Europe, anywhere, Korea, anywhere, involves changing your own 179 00:09:50,679 --> 00:09:53,320 Speaker 1: country's laws in order to comply with the trade deal. 180 00:09:53,480 --> 00:09:56,640 Speaker 1: So you know that the idea that trade deal somehow 181 00:09:56,679 --> 00:09:59,560 Speaker 1: our violation of sovereignty. Uh, you know, I think simply 182 00:09:59,559 --> 00:10:02,840 Speaker 1: doesn't ah if you look at it. Uh yeah, clearly 183 00:10:02,880 --> 00:10:06,720 Speaker 1: they want a slow roll here for for for whatever reasons. So, uh, 184 00:10:07,040 --> 00:10:08,840 Speaker 1: you know, this is why I say that, I think 185 00:10:08,920 --> 00:10:12,840 Speaker 1: the moment that China is willing to actually abide by 186 00:10:12,840 --> 00:10:16,600 Speaker 1: an enforceable deal, they can get one from the United States. Right. So, Terry, 187 00:10:16,600 --> 00:10:18,840 Speaker 1: do you think, is it your sense that the time 188 00:10:18,880 --> 00:10:21,880 Speaker 1: has passed for these two sides they get together. We 189 00:10:21,960 --> 00:10:25,040 Speaker 1: might just have to wait till after the election. No, 190 00:10:25,160 --> 00:10:27,199 Speaker 1: I don't think. I don't think so, Paul. I think 191 00:10:27,200 --> 00:10:28,840 Speaker 1: that's a very good question, but I don't think so. 192 00:10:29,840 --> 00:10:32,640 Speaker 1: I think that, uh, there are a lot of challenges 193 00:10:33,000 --> 00:10:37,120 Speaker 1: that the China faces today. They face uh in no 194 00:10:37,240 --> 00:10:41,600 Speaker 1: particular order. They face the Hong Kong challenge, UH, they 195 00:10:41,679 --> 00:10:46,640 Speaker 1: face a concerns about trade overall. They face concerns with 196 00:10:46,760 --> 00:10:50,280 Speaker 1: Belton Road and whether they're uh, you know, trying to 197 00:10:50,280 --> 00:10:54,440 Speaker 1: wrap people up in in debt. Their concerns about Chinese equities, 198 00:10:54,840 --> 00:10:57,319 Speaker 1: bank failure, so on, and so forth. There's an awful 199 00:10:57,360 --> 00:11:01,680 Speaker 1: lot of concerns here. But I think it's I think 200 00:11:01,679 --> 00:11:04,240 Speaker 1: the trajectory has been over the past year and a 201 00:11:04,280 --> 00:11:07,679 Speaker 1: half or so has been that both countries realize that 202 00:11:07,720 --> 00:11:11,240 Speaker 1: what they need to be doing is is concluding a deal. 203 00:11:11,480 --> 00:11:13,520 Speaker 1: And I think that eventually happens. I just don't think 204 00:11:13,520 --> 00:11:16,600 Speaker 1: it happens the remaining five plus months of this year. 205 00:11:16,679 --> 00:11:19,200 Speaker 1: It's Harry, how big is Huawei just as a feature 206 00:11:19,240 --> 00:11:22,560 Speaker 1: of these talks this week From the Chinese side, I 207 00:11:22,600 --> 00:11:25,080 Speaker 1: think it's. I think it's a fairly big factor from 208 00:11:25,120 --> 00:11:28,200 Speaker 1: the Chinese side. I think that it is a red 209 00:11:28,320 --> 00:11:32,240 Speaker 1: herring to suggest from the American side that much is 210 00:11:32,280 --> 00:11:36,040 Speaker 1: available on a but much is available on a compromise. 211 00:11:36,440 --> 00:11:39,240 Speaker 1: You know, there are two very different kinds of issues here, John. 212 00:11:39,320 --> 00:11:42,840 Speaker 1: One kind of issue is whether or not American companies 213 00:11:42,880 --> 00:11:45,280 Speaker 1: can continue to sell the quat way. The other issue 214 00:11:45,760 --> 00:11:49,079 Speaker 1: UH is and that nets very much within the president's 215 00:11:49,080 --> 00:11:52,600 Speaker 1: control and UH and within the president's ability to do UH. 216 00:11:52,640 --> 00:11:56,000 Speaker 1: The other one is not so much. This fundamental concern 217 00:11:56,080 --> 00:12:00,000 Speaker 1: about whether or not Huawei itself or other similar China 218 00:12:00,040 --> 00:12:04,760 Speaker 1: these telecom companies are national security risks. UH is not 219 00:12:04,920 --> 00:12:08,360 Speaker 1: really something the president can give away UH, not least 220 00:12:08,400 --> 00:12:11,280 Speaker 1: because to do so he'll alienate the entire national security 221 00:12:11,320 --> 00:12:15,479 Speaker 1: apparatus of the United States. So I think there's incremental 222 00:12:15,520 --> 00:12:20,320 Speaker 1: moves available to Huawei to on the Huawei supply issue 223 00:12:20,960 --> 00:12:25,640 Speaker 1: to help UH mitigate the problem from the Chinese perspective. 224 00:12:25,679 --> 00:12:29,000 Speaker 1: But if the Chinese or anybody else or expecting a 225 00:12:29,080 --> 00:12:32,679 Speaker 1: reversal from the United States on Huawei overall, I think 226 00:12:32,720 --> 00:12:35,120 Speaker 1: they're dreaming, frankly, So, Terry. One of the things I 227 00:12:35,440 --> 00:12:36,720 Speaker 1: tried to do, and I think a lot of investors 228 00:12:36,760 --> 00:12:38,920 Speaker 1: try to get a sense of, is which side needs 229 00:12:38,960 --> 00:12:41,240 Speaker 1: a deal more. And one of those issues that you 230 00:12:41,280 --> 00:12:42,960 Speaker 1: have to get a handle on this is the tariffs. 231 00:12:42,960 --> 00:12:45,679 Speaker 1: What impact do you think the tariffs are having on 232 00:12:45,840 --> 00:12:50,400 Speaker 1: the Chinese? I think they have a bit higher impact 233 00:12:50,440 --> 00:12:53,839 Speaker 1: on the Chinese than they do on the United States. Frankly. Uh. 234 00:12:53,960 --> 00:12:59,080 Speaker 1: The you know, the difficulty, the difficulty with the tariffs 235 00:12:59,280 --> 00:13:03,040 Speaker 1: from the Chinese perspective is that it's forcing the It's 236 00:13:03,080 --> 00:13:07,760 Speaker 1: forcing the pace and forcing the decisions on things that 237 00:13:07,840 --> 00:13:10,680 Speaker 1: they would prefer to have happened naturally. And you know, 238 00:13:10,760 --> 00:13:12,680 Speaker 1: this this whole idea that they're going to move out of, 239 00:13:13,520 --> 00:13:16,040 Speaker 1: move out of and somewhat away from heavy industry and 240 00:13:16,040 --> 00:13:19,720 Speaker 1: the like, and you know, let that go to other countries. Uh. 241 00:13:19,760 --> 00:13:23,400 Speaker 1: You know, the pace of that is being forced by 242 00:13:23,400 --> 00:13:26,360 Speaker 1: the terror fishes. As more and more countries decide that 243 00:13:26,360 --> 00:13:29,160 Speaker 1: they're going to move they're going to move their facilities 244 00:13:29,200 --> 00:13:32,959 Speaker 1: to Vietnam, you know, some other to some other third 245 00:13:32,960 --> 00:13:36,400 Speaker 1: country and uh. And that's a problem, you know, and 246 00:13:36,400 --> 00:13:38,320 Speaker 1: can combined with all the other that that is not 247 00:13:38,360 --> 00:13:41,160 Speaker 1: an overweening problem, but combined with all the other problems 248 00:13:41,240 --> 00:13:44,760 Speaker 1: that I mentioned earlier, Uh, it's significant, and it certainly 249 00:13:44,800 --> 00:13:48,920 Speaker 1: contributes contributes, uh materially to a slowdown so far, just 250 00:13:48,960 --> 00:13:51,480 Speaker 1: as far as Hong Kong is concerned, Terry, the White 251 00:13:51,480 --> 00:13:55,160 Speaker 1: House hasn't asserted itself very strongly. Over the last couple 252 00:13:55,200 --> 00:13:57,760 Speaker 1: of months, these protests have continued. The Chinese have warned 253 00:13:57,800 --> 00:14:01,400 Speaker 1: Hong Kong that the unrest has gone far beyond peaceful 254 00:14:01,480 --> 00:14:04,320 Speaker 1: protests now, and I just wonder how you think this 255 00:14:04,360 --> 00:14:08,000 Speaker 1: will escalate in the coming weeks. I say two things 256 00:14:08,000 --> 00:14:10,880 Speaker 1: about that, John. One is that I think even since 257 00:14:10,880 --> 00:14:14,720 Speaker 1: we're pivoting from trade on this, let me talk to say, say, 258 00:14:14,760 --> 00:14:18,160 Speaker 1: as far as the trade goes, trade is not U 259 00:14:19,120 --> 00:14:21,240 Speaker 1: Hong Kong is not something that will stop you the 260 00:14:21,320 --> 00:14:23,600 Speaker 1: United States from making a deal. So in that sense, 261 00:14:23,640 --> 00:14:26,320 Speaker 1: it's not a negative, but it's also not a positive. 262 00:14:26,960 --> 00:14:29,120 Speaker 1: The United States is not going to be, you know, 263 00:14:29,200 --> 00:14:31,760 Speaker 1: overly inclined to bend over backwards with a country that's 264 00:14:31,760 --> 00:14:34,400 Speaker 1: widely perceived, you know, not just in the United States, 265 00:14:34,400 --> 00:14:38,520 Speaker 1: but far beyond uh as uh, you know, as having 266 00:14:38,520 --> 00:14:43,120 Speaker 1: a serious problem with its own citizenship based on based 267 00:14:43,120 --> 00:14:46,680 Speaker 1: on human rights and constitutional rights and the UH in 268 00:14:46,760 --> 00:14:49,920 Speaker 1: the one country two systems and the basic law and 269 00:14:49,960 --> 00:14:54,320 Speaker 1: all the rest. So there's that. Uh. The you know, 270 00:14:54,760 --> 00:14:57,520 Speaker 1: my view of the Hong Kong business though, is that 271 00:14:58,640 --> 00:15:02,520 Speaker 1: uh clearly, and you've you've foreshadowed this is clearly the 272 00:15:03,800 --> 00:15:09,160 Speaker 1: Chinese government, in supporting Carrie Lamb, is giving uh MS 273 00:15:09,360 --> 00:15:12,000 Speaker 1: Lamb's government a bit of an ultimatum. Uh. You know, 274 00:15:12,080 --> 00:15:16,160 Speaker 1: they chose not to say anything in in an official 275 00:15:16,240 --> 00:15:20,920 Speaker 1: press conference from the Hong Kong Macau Office about options available. 276 00:15:21,000 --> 00:15:24,880 Speaker 1: But firstly, it was made apparent yesterday that should the 277 00:15:24,880 --> 00:15:27,240 Speaker 1: Hong Kong government wish to call upon the People's Liberation 278 00:15:27,360 --> 00:15:30,760 Speaker 1: Army Garrison there, they could do so. Second, I think 279 00:15:30,800 --> 00:15:34,080 Speaker 1: a little bit more worrisome generally is that you've got 280 00:15:34,120 --> 00:15:39,840 Speaker 1: the the People's Daily editorializing today that that that the 281 00:15:39,840 --> 00:15:43,440 Speaker 1: time has come for forceful action. So what you're what 282 00:15:43,680 --> 00:15:48,520 Speaker 1: you're likely to see here is uh a huge pushback 283 00:15:48,600 --> 00:15:50,680 Speaker 1: from the government in a way that doesn't end well. 284 00:15:50,720 --> 00:15:54,680 Speaker 1: The other thing I would say is very briefly, yeah, 285 00:15:54,840 --> 00:15:59,040 Speaker 1: is the is from this medium the longer term? Does 286 00:15:59,120 --> 00:16:02,360 Speaker 1: this mark a moment where the Chinese wants to take 287 00:16:02,480 --> 00:16:05,280 Speaker 1: Hong Kong down a notch and really move towards Shanghai 288 00:16:05,360 --> 00:16:08,040 Speaker 1: as a world financial center? Terry, We've got to leave 289 00:16:08,040 --> 00:16:09,480 Speaker 1: it that great to catch up with you and get 290 00:16:09,480 --> 00:16:26,120 Speaker 1: your thoughts, Terry Hynes, that of Pangaea Policy Advisory, Geopolitics 291 00:16:26,160 --> 00:16:29,640 Speaker 1: continues to be a key factor in global financial markets, 292 00:16:29,640 --> 00:16:32,760 Speaker 1: whether it is the Mid East with Iran or Asia 293 00:16:32,800 --> 00:16:34,840 Speaker 1: in Hong Kong. To get the latest on some of 294 00:16:34,880 --> 00:16:38,360 Speaker 1: these key topics, returned to Admiral James Trevidis. Admiral Strevidis 295 00:16:38,400 --> 00:16:41,320 Speaker 1: is a Bloomberg opinion columnist, is also a Carlisle Group 296 00:16:41,320 --> 00:16:46,000 Speaker 1: advisor and of course a former Supreme Allied Commander at NATO. Admiral, 297 00:16:46,040 --> 00:16:48,120 Speaker 1: thank you so much for joining us this morning. I 298 00:16:48,160 --> 00:16:51,520 Speaker 1: wonder if we could start with Iran attentions. Tensions there 299 00:16:51,520 --> 00:16:53,520 Speaker 1: seemed to be ramping up, and it seems like we're 300 00:16:53,560 --> 00:16:56,240 Speaker 1: just one mistake away from something serious happening. What is 301 00:16:56,240 --> 00:16:59,680 Speaker 1: your sense of what's going on there? Precisely that we 302 00:16:59,840 --> 00:17:04,720 Speaker 1: have entered a red zone of miscalculation. In other words, 303 00:17:04,760 --> 00:17:07,960 Speaker 1: thus far in this controversy, we have not seen anybody 304 00:17:08,040 --> 00:17:11,400 Speaker 1: get killed. We've seen drones shot down, we've seen explosions 305 00:17:11,440 --> 00:17:15,480 Speaker 1: on tankers, we've seen the US come within the press 306 00:17:15,520 --> 00:17:18,040 Speaker 1: of a button by the President effectively to launch a 307 00:17:18,080 --> 00:17:23,000 Speaker 1: counter strike. But so far, Paul, no one has been killed. That, unfortunately, 308 00:17:23,240 --> 00:17:26,120 Speaker 1: is where we are trending as this summer heats up. 309 00:17:26,160 --> 00:17:29,760 Speaker 1: And having commanded ships at multiple, multiple levels in the 310 00:17:29,760 --> 00:17:32,879 Speaker 1: Arabian Golf, I can tell you those crews are getting tired. 311 00:17:33,040 --> 00:17:36,639 Speaker 1: They're stressed there on watch. And this is on both sides, 312 00:17:37,600 --> 00:17:42,560 Speaker 1: both US and Iranian. So uh, the key here is 313 00:17:42,680 --> 00:17:45,919 Speaker 1: to keep all of the forces that we have in 314 00:17:45,920 --> 00:17:50,119 Speaker 1: the gulf on high level of alert, but keep them 315 00:17:50,160 --> 00:17:54,280 Speaker 1: mentally in a position to avoid escalating the conflict. That's 316 00:17:54,280 --> 00:17:57,680 Speaker 1: a tricky path to walk. So, Admiral, is it your 317 00:17:57,680 --> 00:18:01,360 Speaker 1: sense that is the next move most to come from Iran? 318 00:18:01,480 --> 00:18:04,000 Speaker 1: Per se that whether they want to ratchettentions up or 319 00:18:04,080 --> 00:18:07,040 Speaker 1: maybe pulled back, because it's very difficult to kind of 320 00:18:07,080 --> 00:18:12,399 Speaker 1: predict their behavior. Unfortunately, I think they will ratchet it up, 321 00:18:12,440 --> 00:18:17,160 Speaker 1: and they have very few non inflammatory tools left. They're 322 00:18:17,200 --> 00:18:20,960 Speaker 1: just under crushing economic pressure. I don't need to tell 323 00:18:20,960 --> 00:18:23,840 Speaker 1: a Bloomberg audience that, and it is causing them to 324 00:18:24,040 --> 00:18:26,480 Speaker 1: lash out to get attention and to hope to get 325 00:18:26,520 --> 00:18:31,560 Speaker 1: concessions by demonstrating to the West that they can control 326 00:18:31,640 --> 00:18:34,439 Speaker 1: the Strait of four moves. So now that they've seized 327 00:18:34,440 --> 00:18:36,840 Speaker 1: a tank or pretty much the only thing left is 328 00:18:36,880 --> 00:18:41,399 Speaker 1: to actually attack a worship British or US, or to 329 00:18:41,480 --> 00:18:46,200 Speaker 1: actually sink a tanker, or to horizontally escalate and use 330 00:18:46,240 --> 00:18:50,240 Speaker 1: for example, Hezbollah to strike into Israel, to attack our 331 00:18:50,280 --> 00:18:53,800 Speaker 1: troops in Afghanistan where they have a very strong presence 332 00:18:53,800 --> 00:18:58,840 Speaker 1: in western Afghanistan. So there are very few escalatory moves left, 333 00:18:59,200 --> 00:19:02,119 Speaker 1: and unfortunately, I would say this one is going to 334 00:19:02,200 --> 00:19:04,879 Speaker 1: get worse before it gets better. Admiral, what do you 335 00:19:04,920 --> 00:19:08,600 Speaker 1: believe at this point the US strategy UH and or 336 00:19:08,720 --> 00:19:11,480 Speaker 1: policy is as it released to Iran right here. What 337 00:19:11,600 --> 00:19:14,800 Speaker 1: it should be is working with our allies, partners and 338 00:19:14,880 --> 00:19:17,560 Speaker 1: friends to broaden this thing and get it out of 339 00:19:17,760 --> 00:19:23,280 Speaker 1: a US versus around channel and get it into world 340 00:19:23,680 --> 00:19:27,399 Speaker 1: versus Iran. And I here I commend a Secretary of 341 00:19:27,440 --> 00:19:30,600 Speaker 1: State Pompeio, who has been on foot patrol, particularly around 342 00:19:30,640 --> 00:19:34,439 Speaker 1: the NATO allies, and we just see the British sending 343 00:19:34,480 --> 00:19:37,639 Speaker 1: an additional frigate. We know now that the Italians, the 344 00:19:37,720 --> 00:19:41,320 Speaker 1: Germans and the French are all committed to sending warships 345 00:19:41,320 --> 00:19:43,879 Speaker 1: into the Gulf to do the kind of escort duty 346 00:19:43,920 --> 00:19:46,720 Speaker 1: that will be necessary to keep the straight open. So 347 00:19:46,880 --> 00:19:50,720 Speaker 1: expanding this should be our policy and it appears to 348 00:19:50,760 --> 00:19:54,119 Speaker 1: be what we're doing. And just, Admiral, you've had so 349 00:19:54,200 --> 00:19:56,680 Speaker 1: much experience in that part of the world. Just give 350 00:19:56,760 --> 00:19:58,800 Speaker 1: us a sense of what it's like to sail in 351 00:19:58,880 --> 00:20:03,679 Speaker 1: those waters under these misitions. Well, it's uh. First and foremost, 352 00:20:03,800 --> 00:20:07,080 Speaker 1: you feel that tension ratcheting up as you drive your 353 00:20:07,119 --> 00:20:09,879 Speaker 1: ship out of the Indian Ocean and up through the 354 00:20:10,000 --> 00:20:13,399 Speaker 1: Straight of Four Moves, because you're passing within fifteen to 355 00:20:13,440 --> 00:20:19,359 Speaker 1: twenty miles of Iranian radars missile systems. They immediately launch 356 00:20:19,400 --> 00:20:23,960 Speaker 1: patroyl Craft aircraft to come overfly your ship. Uh. You 357 00:20:24,040 --> 00:20:26,840 Speaker 1: then get into the Persian Gulf and you see even 358 00:20:26,920 --> 00:20:31,080 Speaker 1: more Iranian hardware on one side of the gulf, and 359 00:20:31,119 --> 00:20:33,480 Speaker 1: on the other you see the Saudias, the U a E. 360 00:20:34,040 --> 00:20:37,760 Speaker 1: Fishing boats everywhere, and of course the main event are 361 00:20:37,800 --> 00:20:42,040 Speaker 1: these massive tankers, hundreds of thousands of tons flowing in 362 00:20:42,119 --> 00:20:45,959 Speaker 1: and out. It's the most complex maritime environment in the world, 363 00:20:46,359 --> 00:20:49,439 Speaker 1: and in periods of tension like this, it becomes the 364 00:20:49,480 --> 00:20:52,479 Speaker 1: most dangerous. And let's switch gears a little bit. May 365 00:20:52,480 --> 00:20:54,320 Speaker 1: we go to the other side of the globe, if 366 00:20:54,320 --> 00:20:57,480 Speaker 1: you will, to Hong Kong. It seems like these protests 367 00:20:57,720 --> 00:21:01,320 Speaker 1: in Hong Kong UH cant need to have probably more 368 00:21:01,400 --> 00:21:04,720 Speaker 1: legs than maybe some observers had thought initially. What is 369 00:21:04,760 --> 00:21:07,120 Speaker 1: your sense of how this might play out over there? 370 00:21:08,240 --> 00:21:11,440 Speaker 1: Let's start just with the scale of these protests. UM 371 00:21:11,560 --> 00:21:15,280 Speaker 1: several weeks ago, two million protesters came out as a 372 00:21:15,280 --> 00:21:19,960 Speaker 1: reliable estimate. This is on a population of about seven millions, 373 00:21:20,040 --> 00:21:23,199 Speaker 1: so UH, to have that level of protests in the 374 00:21:23,280 --> 00:21:26,240 Speaker 1: United States, for example, would be a protest that turned 375 00:21:26,240 --> 00:21:31,680 Speaker 1: out eighty or ninety million people. This is an enormous revolt, 376 00:21:31,760 --> 00:21:34,400 Speaker 1: if you will, by the people of Hong Kong. How 377 00:21:34,440 --> 00:21:40,159 Speaker 1: it plays out is China is increasingly worried. Yesterday they 378 00:21:40,280 --> 00:21:43,920 Speaker 1: encouraged the local Hong Kong authorities to really crack down 379 00:21:43,920 --> 00:21:48,400 Speaker 1: on the protesters. China has issued statements saying that they 380 00:21:48,520 --> 00:21:52,679 Speaker 1: viewed the events there gravely. In international politics, that's normally 381 00:21:52,760 --> 00:21:56,080 Speaker 1: quite a signal. So I think China has no intentions 382 00:21:56,119 --> 00:21:59,760 Speaker 1: of letting this get out of control. Having said that, 383 00:21:59,800 --> 00:22:03,320 Speaker 1: I don't think we're looking at Tianamen Square to What 384 00:22:03,560 --> 00:22:06,879 Speaker 1: I believe China will do is encourage the local authorities 385 00:22:06,880 --> 00:22:11,440 Speaker 1: to effectively play robadope to h hope that it peters 386 00:22:11,520 --> 00:22:16,240 Speaker 1: out over the summer particularly and into the fall, and 387 00:22:16,720 --> 00:22:20,240 Speaker 1: they will continue marginally to support Carrie Lamb who is 388 00:22:20,240 --> 00:22:24,000 Speaker 1: the administrator for the city and the territory. But I 389 00:22:24,040 --> 00:22:26,920 Speaker 1: think China again has a red line here. They're not 390 00:22:26,960 --> 00:22:29,600 Speaker 1: going to let this get out of control. So Adama, 391 00:22:29,640 --> 00:22:33,639 Speaker 1: are you surprised that China has been has taken maybe 392 00:22:33,640 --> 00:22:35,920 Speaker 1: such a soft touch here that they haven't come down 393 00:22:35,960 --> 00:22:40,760 Speaker 1: even more harshly on some of these protesters. Um. There's 394 00:22:40,840 --> 00:22:44,360 Speaker 1: one word answer to that question, and it's Taiwan. Um. 395 00:22:44,400 --> 00:22:48,679 Speaker 1: In other words, China knows that everybody in Taiwan is 396 00:22:48,800 --> 00:22:53,359 Speaker 1: watching how China handles these protests, and China's long game 397 00:22:54,000 --> 00:22:58,280 Speaker 1: is to consolidate Taiwan. They already, of course, believe that's 398 00:22:58,320 --> 00:23:01,560 Speaker 1: part of China. UM. What they want is to encourage 399 00:23:01,600 --> 00:23:07,120 Speaker 1: Taiwan peacefully to be assimilated with China. Harsh, harsh crackdown 400 00:23:07,520 --> 00:23:10,560 Speaker 1: in Hong Kong will set that effort back enormously. China 401 00:23:10,640 --> 00:23:14,399 Speaker 1: knows that. So China is kind of on a a 402 00:23:14,480 --> 00:23:18,680 Speaker 1: slippery slope, if you will. They want to control Hong Kong, 403 00:23:18,760 --> 00:23:20,240 Speaker 1: but they want to do it in a way that 404 00:23:20,320 --> 00:23:24,199 Speaker 1: does not completely alienate Taiwan. And well, you mentioned the 405 00:23:24,200 --> 00:23:26,119 Speaker 1: red line that China may have as a relase to 406 00:23:26,280 --> 00:23:27,959 Speaker 1: Hong Kong. What do you think that red line is. 407 00:23:28,880 --> 00:23:32,400 Speaker 1: I would say it would be a violent protests that 408 00:23:32,960 --> 00:23:40,840 Speaker 1: kill or injure significantly authorities. The Chinese, as an authoritarian regime, 409 00:23:40,880 --> 00:23:45,560 Speaker 1: have just they're horrified when they see protests that turn 410 00:23:45,760 --> 00:23:51,000 Speaker 1: bloody and are directed against police. I think that anything 411 00:23:51,080 --> 00:23:55,359 Speaker 1: that smacked of an independence movement would be crushed instantly. 412 00:23:55,720 --> 00:23:58,560 Speaker 1: The protesters have been very careful not to move in 413 00:23:58,640 --> 00:24:01,480 Speaker 1: that direction. I think those would be the two red lines, 414 00:24:01,560 --> 00:24:06,240 Speaker 1: one physical ramping up the protests with more violence, or 415 00:24:07,119 --> 00:24:10,199 Speaker 1: a movement politically that would begin to bring in the 416 00:24:10,240 --> 00:24:13,560 Speaker 1: idea of independence. That would be an incredible redline for China. 417 00:24:14,000 --> 00:24:16,359 Speaker 1: Adamal James Trevitis thank you so much for joining US. 418 00:24:16,359 --> 00:24:19,960 Speaker 1: Admiral Sturvitis. Of course, former Supreme Allied Commander at NATO 419 00:24:20,040 --> 00:24:23,520 Speaker 1: and also Bloomberg opinion columnists and Carlile Group adviser bring 420 00:24:23,600 --> 00:24:26,399 Speaker 1: us up to date with his very informed thoughts on 421 00:24:26,480 --> 00:24:29,600 Speaker 1: some of the geopolitical issues that UH certainly are front 422 00:24:29,600 --> 00:24:32,639 Speaker 1: and center for global investors, most notably the Middle East 423 00:24:32,680 --> 00:24:49,280 Speaker 1: and the tensions rising there as relates to Iran. Well, 424 00:24:49,359 --> 00:24:51,840 Speaker 1: last week was a big week in the wireless business. 425 00:24:52,119 --> 00:24:55,320 Speaker 1: T Mobile and Sprint finally received d o J approval, 426 00:24:55,359 --> 00:24:58,280 Speaker 1: clearing a major hurdle to completing this long away to deal. 427 00:24:58,400 --> 00:25:01,760 Speaker 1: Part of the d J submer required um the companies 428 00:25:01,800 --> 00:25:04,960 Speaker 1: to spin off some spectrum to who other than Charlie 429 00:25:05,040 --> 00:25:07,600 Speaker 1: Organ at DISH. Now the question is what is Mr 430 00:25:07,680 --> 00:25:09,680 Speaker 1: Organ going to do with all this spectrum. To help 431 00:25:09,760 --> 00:25:11,680 Speaker 1: us answer that question question, we welcome our good friend 432 00:25:11,760 --> 00:25:14,920 Speaker 1: Terry La Chapelle, Bloomberg Opinion Columns covering all things t 433 00:25:15,160 --> 00:25:18,359 Speaker 1: empty Tera. Thanks for coming in here and joining us. 434 00:25:18,400 --> 00:25:20,639 Speaker 1: I know you spoke to Charlie Organ last week. What 435 00:25:20,840 --> 00:25:23,320 Speaker 1: you learn? So we asked Charlie, you know, what is 436 00:25:23,359 --> 00:25:27,399 Speaker 1: the plan about becoming a wireless provider and he said, 437 00:25:27,520 --> 00:25:30,080 Speaker 1: you know, they're they're trying to become a serious competitor, 438 00:25:30,160 --> 00:25:32,800 Speaker 1: that they're going to start with the boost business that 439 00:25:32,800 --> 00:25:35,680 Speaker 1: they're acquiring from Sprint and T Mobile, and that from 440 00:25:35,720 --> 00:25:37,440 Speaker 1: there they're going to try to build a five G 441 00:25:37,640 --> 00:25:40,560 Speaker 1: network and eventually become a big wireless carrier. And we 442 00:25:40,600 --> 00:25:42,080 Speaker 1: asked him, you know, how are you going to do that? 443 00:25:42,119 --> 00:25:46,400 Speaker 1: Are you perhaps underestimating the challenge of branding Dish as 444 00:25:46,440 --> 00:25:50,439 Speaker 1: a wireless provider and something that customers will see as 445 00:25:50,440 --> 00:25:52,400 Speaker 1: more than just a satellite TV company? And he said, 446 00:25:52,400 --> 00:25:54,960 Speaker 1: you know, the priority is just having a good network 447 00:25:55,000 --> 00:25:58,320 Speaker 1: and that from there the branding and the reputation recognition 448 00:25:58,320 --> 00:26:01,880 Speaker 1: will kind of follow. What's interesting, I mean, I'm looking 449 00:26:01,920 --> 00:26:04,040 Speaker 1: at the stock it's a fifty six pcent year today, 450 00:26:04,080 --> 00:26:07,159 Speaker 1: which kind of baffles me, because you know, to build 451 00:26:07,160 --> 00:26:10,600 Speaker 1: a wireless network is not a cheap endeavor. Where is 452 00:26:10,600 --> 00:26:12,320 Speaker 1: he gonna get the money? Yeah, I mean, I think 453 00:26:12,359 --> 00:26:15,680 Speaker 1: he's looking for partners at this point, some depocketed companies. 454 00:26:15,680 --> 00:26:19,040 Speaker 1: The rumors have been around Google, Amazon, something like that 455 00:26:19,040 --> 00:26:21,680 Speaker 1: that could help him with the financial aspects of building 456 00:26:21,680 --> 00:26:24,040 Speaker 1: a network, and maybe some of the technological know how 457 00:26:24,320 --> 00:26:27,480 Speaker 1: because it is such a big endeavor. And at this point, 458 00:26:27,520 --> 00:26:29,720 Speaker 1: he's talked a lot about building a network. But it's 459 00:26:29,720 --> 00:26:31,280 Speaker 1: been a lot of talk. You know, we haven't really 460 00:26:31,320 --> 00:26:33,399 Speaker 1: seen much, so I think people are a little bit 461 00:26:33,440 --> 00:26:35,000 Speaker 1: skeptical of where this is going to go. But he 462 00:26:35,040 --> 00:26:37,760 Speaker 1: seems really committed to doing it. Is he committed with 463 00:26:37,920 --> 00:26:39,760 Speaker 1: all the spectrum he has, It's not just the spectrum 464 00:26:39,840 --> 00:26:42,040 Speaker 1: boting from T Mobile Sprint, and he's been buying spectrum 465 00:26:42,040 --> 00:26:45,080 Speaker 1: over the years at various auctions by the government, So 466 00:26:45,280 --> 00:26:47,560 Speaker 1: he's sitting on a tremendous amount of spectrum. The question 467 00:26:47,640 --> 00:26:51,440 Speaker 1: is how does he monetize that spectrum? Is he Initially 468 00:26:51,480 --> 00:26:53,200 Speaker 1: he was talking about, Oh, we're not going to build 469 00:26:53,240 --> 00:26:55,399 Speaker 1: a wireless network. That's too expensive. We're just going to 470 00:26:55,480 --> 00:26:58,679 Speaker 1: build some Internet of things kind of network which is cheaper. 471 00:26:58,920 --> 00:27:00,840 Speaker 1: As he kind of changes to a little bit now, yeah, 472 00:27:00,840 --> 00:27:02,720 Speaker 1: I think so. I think he's kind of downplaying that 473 00:27:02,800 --> 00:27:05,679 Speaker 1: Internet of things idea and as thinking of Dish in 474 00:27:05,720 --> 00:27:08,760 Speaker 1: the future is more of another wireless provider for consumers 475 00:27:08,800 --> 00:27:12,560 Speaker 1: in the five G space, starting with these prepaid businesses 476 00:27:12,600 --> 00:27:16,080 Speaker 1: that he's inheriting through this deal. Is there some timing here? 477 00:27:16,400 --> 00:27:18,280 Speaker 1: I know there's when you when when you buy the spectrum, 478 00:27:18,320 --> 00:27:21,800 Speaker 1: oftentimes there's hurdles or deadlines that the government says like, hey, 479 00:27:21,840 --> 00:27:24,440 Speaker 1: if you're buying the spectrum, you've got to build something 480 00:27:24,520 --> 00:27:26,320 Speaker 1: by a certain certain date, and you've got to show 481 00:27:26,400 --> 00:27:29,080 Speaker 1: us that you're actually going to use the spectrum. Hasn't 482 00:27:29,119 --> 00:27:31,360 Speaker 1: He kind of missed a bunch of those dates, right, 483 00:27:31,400 --> 00:27:33,400 Speaker 1: So that seems to be the biggest reason for him 484 00:27:33,520 --> 00:27:35,720 Speaker 1: striking this deal with Sprint in Tea Mobile now, because 485 00:27:35,720 --> 00:27:39,479 Speaker 1: he has this deadline approaching in March, he probably wouldn't 486 00:27:39,520 --> 00:27:41,520 Speaker 1: have had everything in place by that point that he 487 00:27:41,600 --> 00:27:44,800 Speaker 1: needed to in order to meet the FCC agreement. So 488 00:27:45,040 --> 00:27:47,119 Speaker 1: what this deal does now is it pushes back some 489 00:27:47,200 --> 00:27:50,159 Speaker 1: of those deadlines later in the years. It accelerates what 490 00:27:50,200 --> 00:27:52,520 Speaker 1: he needs to have done, but for the next couple 491 00:27:52,520 --> 00:27:54,640 Speaker 1: of years he has a little bit more leniency as 492 00:27:54,680 --> 00:27:57,119 Speaker 1: he works on building this supposed five G networks. So 493 00:27:57,119 --> 00:27:59,840 Speaker 1: it definitely helps him in terms of working out something 494 00:27:59,840 --> 00:28:01,800 Speaker 1: with the FCCS that he doesn't get fined or have 495 00:28:01,880 --> 00:28:04,359 Speaker 1: the spectrum taken away from him. So Charlie is a 496 00:28:04,400 --> 00:28:08,159 Speaker 1: noted poker player, and a lot of investors are saying, basically, 497 00:28:08,600 --> 00:28:11,439 Speaker 1: I believe in Charlie. I believe he's going to monetize UM. 498 00:28:11,960 --> 00:28:15,080 Speaker 1: This spectrum one way or the other. Is there a 499 00:28:15,080 --> 00:28:18,639 Speaker 1: concern that maybe he's overplayed his hand here, that the 500 00:28:18,840 --> 00:28:21,480 Speaker 1: markets just kind of passed and by the industry is consolidated, 501 00:28:21,520 --> 00:28:24,360 Speaker 1: we don't really need his spectrum. It's possible. I think 502 00:28:24,359 --> 00:28:26,399 Speaker 1: that's one of the biggest concerns because, you know, the 503 00:28:26,440 --> 00:28:29,160 Speaker 1: wireless market is such a tough market right now. It's 504 00:28:29,280 --> 00:28:32,280 Speaker 1: unclear whether Dish can really disrupt the market to the 505 00:28:32,320 --> 00:28:36,600 Speaker 1: point that they can get enough subscribers and kind of 506 00:28:36,640 --> 00:28:39,120 Speaker 1: help keep pricing competitive and and make this a really 507 00:28:39,160 --> 00:28:42,040 Speaker 1: profitable business for Dish. You know, Dish has been pretty 508 00:28:42,040 --> 00:28:44,360 Speaker 1: fortunate over the last couple of years that the stock 509 00:28:44,520 --> 00:28:48,360 Speaker 1: valuation has been based almost entirely on these value valuable 510 00:28:48,360 --> 00:28:51,720 Speaker 1: spectrum licenses that he has, even though they were unused. 511 00:28:52,120 --> 00:28:54,760 Speaker 1: And now with this wireless business that he's getting into, 512 00:28:54,840 --> 00:28:56,320 Speaker 1: it's going to be looked at much more like the 513 00:28:56,360 --> 00:28:59,160 Speaker 1: other companies where they're looking at free cash flow, they're 514 00:28:59,160 --> 00:29:01,920 Speaker 1: looking at earning and less so at these assets because 515 00:29:01,960 --> 00:29:03,440 Speaker 1: they're going to be deployed and it's going to be 516 00:29:03,440 --> 00:29:05,880 Speaker 1: more of an operating business. And I think that may 517 00:29:06,080 --> 00:29:07,680 Speaker 1: you know, while the stock is up this year, that 518 00:29:07,680 --> 00:29:10,280 Speaker 1: could hurt the stock price down the road. So this 519 00:29:10,280 --> 00:29:13,000 Speaker 1: is post paid business. That's not really a great part 520 00:29:13,080 --> 00:29:15,360 Speaker 1: of the wireless business, is it, right, I mean, there's 521 00:29:15,360 --> 00:29:17,520 Speaker 1: not a lot of growth. Five G is going to 522 00:29:17,520 --> 00:29:21,000 Speaker 1: be extremely expensive in terms of just the capital required 523 00:29:21,040 --> 00:29:24,040 Speaker 1: to build these networks and upgrade what's there, and also 524 00:29:24,160 --> 00:29:27,080 Speaker 1: reaching rural parts of the country where five G poses 525 00:29:27,120 --> 00:29:30,280 Speaker 1: just simple technological challenges because of the way that the 526 00:29:30,320 --> 00:29:33,120 Speaker 1: spectrum works. Um, So I think you know, there's a 527 00:29:33,120 --> 00:29:36,160 Speaker 1: little bit being underestimated here. And also again, how does 528 00:29:36,240 --> 00:29:39,640 Speaker 1: dish tell consumers were another option out there? I think 529 00:29:39,640 --> 00:29:41,680 Speaker 1: you know, they they haven't really been great at that 530 00:29:41,760 --> 00:29:44,560 Speaker 1: part of branding their business, and they really need to 531 00:29:44,560 --> 00:29:46,760 Speaker 1: do that in order to be a strong wireless player 532 00:29:46,800 --> 00:29:49,720 Speaker 1: because that business is based so much on advertising and 533 00:29:49,800 --> 00:29:53,280 Speaker 1: promotion and discounts and things like that. It is. Yeah, 534 00:29:53,320 --> 00:29:55,560 Speaker 1: it is a tough business to wireless business, tons of 535 00:29:55,840 --> 00:29:59,320 Speaker 1: price pressure, really no loyalty among consumers, so mark high 536 00:29:59,320 --> 00:30:02,880 Speaker 1: marketing rances. So it's really the bull play here. If 537 00:30:02,920 --> 00:30:06,280 Speaker 1: I'm talking to a big bullish Charlie organ investor, am 538 00:30:06,320 --> 00:30:08,520 Speaker 1: I going to hear something like, Oh, he's just going 539 00:30:08,600 --> 00:30:10,880 Speaker 1: to sell the spectrum. Some technology company is going to 540 00:30:10,920 --> 00:30:12,440 Speaker 1: come along and pay a big number and that's how 541 00:30:12,440 --> 00:30:14,720 Speaker 1: I'm gonna get paid. He says, no, and he's not 542 00:30:14,760 --> 00:30:17,040 Speaker 1: supposed to do that, but I think, you know, I 543 00:30:17,040 --> 00:30:18,960 Speaker 1: think a lot of people will still be hoping for that. 544 00:30:19,000 --> 00:30:22,600 Speaker 1: I think Dish investors still see perhaps it's less likely, 545 00:30:22,680 --> 00:30:25,000 Speaker 1: but the bull case is still that he partners with 546 00:30:25,120 --> 00:30:27,800 Speaker 1: some really big tech company, gets bought out in some way, 547 00:30:27,800 --> 00:30:31,280 Speaker 1: and monetizes that this spectrum much more quickly than building 548 00:30:31,280 --> 00:30:33,960 Speaker 1: a five G network would be. And in the interim, 549 00:30:34,320 --> 00:30:38,920 Speaker 1: the old Dish business to seatellite television business that continues 550 00:30:39,000 --> 00:30:41,680 Speaker 1: to bleed subscribers. Right, So what is he saying about 551 00:30:41,680 --> 00:30:43,920 Speaker 1: that business. I mean he's saying very little, but yeah, 552 00:30:43,960 --> 00:30:46,440 Speaker 1: that the satellite TV business is not doing very well 553 00:30:46,480 --> 00:30:49,640 Speaker 1: for obvious reasons. And I think it's instructive what he's 554 00:30:49,680 --> 00:30:51,640 Speaker 1: done with that in terms of looking at what he 555 00:30:51,680 --> 00:30:54,600 Speaker 1: could do with wireless, because they owned Sling TV, which 556 00:30:54,640 --> 00:30:57,080 Speaker 1: is one of the first streaming services, and they really 557 00:30:57,120 --> 00:30:59,720 Speaker 1: neglected that product. They didn't spend enough on marketing and 558 00:30:59,760 --> 00:31:02,440 Speaker 1: really getting people to be aware of what Sling is 559 00:31:02,480 --> 00:31:04,600 Speaker 1: and how great of a product it really is. So 560 00:31:04,760 --> 00:31:06,720 Speaker 1: that was a big mistake and I think maybe the 561 00:31:06,720 --> 00:31:08,920 Speaker 1: part of the reason was he was trying to protect 562 00:31:09,040 --> 00:31:12,320 Speaker 1: the satellite business since it's more profitable. But it meant 563 00:31:12,320 --> 00:31:14,360 Speaker 1: that he was a slow mover and streaming when he 564 00:31:14,400 --> 00:31:16,840 Speaker 1: had no excuse to be, and he really needs to 565 00:31:16,920 --> 00:31:19,200 Speaker 1: learn a lesson from that. As the enters wireless, Is 566 00:31:19,240 --> 00:31:22,320 Speaker 1: there any sense that they can merge with direct TV? 567 00:31:22,440 --> 00:31:24,360 Speaker 1: I know that was talked about at one point. Maybe, 568 00:31:24,680 --> 00:31:28,480 Speaker 1: but there's antitrust issues. Any chance of that happening again. 569 00:31:28,560 --> 00:31:30,760 Speaker 1: You know, we asked him about that speculation and he 570 00:31:30,800 --> 00:31:34,120 Speaker 1: said there's no reason that speculation won't persist as a 571 00:31:34,160 --> 00:31:36,240 Speaker 1: result of this deal. So, I mean, he said, you know, 572 00:31:36,280 --> 00:31:39,720 Speaker 1: the industrial logic is still there. Whether that means anything, 573 00:31:39,720 --> 00:31:41,880 Speaker 1: we don't know, but it doesn't make sense. You know, 574 00:31:42,000 --> 00:31:44,800 Speaker 1: both of those businesses are you know, slowly going away, 575 00:31:44,960 --> 00:31:47,280 Speaker 1: and they could be more profitable together. And it does 576 00:31:47,320 --> 00:31:49,200 Speaker 1: seem like a T and T at least is becoming 577 00:31:49,200 --> 00:31:51,440 Speaker 1: a little bit less interested in the direct TV business. 578 00:31:51,440 --> 00:31:53,720 Speaker 1: So maybe something happens down the road. Right now, it 579 00:31:53,720 --> 00:31:56,440 Speaker 1: looks like both companies kind of had their hands full. Interesting, 580 00:31:56,480 --> 00:31:58,560 Speaker 1: that was probably one of the worst deals I've seen 581 00:31:58,560 --> 00:32:00,640 Speaker 1: in the last ten or fewer. Eight and T buying 582 00:32:00,680 --> 00:32:02,880 Speaker 1: Direct TV. It wasn't even at the peak. I think 583 00:32:02,880 --> 00:32:04,880 Speaker 1: it was past the peak. They were already losing subscribers. 584 00:32:04,880 --> 00:32:06,920 Speaker 1: They paid a big number um and now that you 585 00:32:06,960 --> 00:32:08,240 Speaker 1: have to figure out what to do with it, they've 586 00:32:08,240 --> 00:32:10,960 Speaker 1: already taken a right off there. So interesting. Tara la Chapelle, 587 00:32:11,000 --> 00:32:13,800 Speaker 1: Thanks so much for joining us. Tara La Chapelle Bloomberg 588 00:32:13,800 --> 00:32:16,160 Speaker 1: opinion columnists covering all things T and T for us. 589 00:32:17,240 --> 00:32:21,440 Speaker 1: Thanks for listening to the Bloomberg Surveillance podcast. Subscribe and 590 00:32:21,520 --> 00:32:26,840 Speaker 1: listen to interviews on Apple Podcasts, SoundCloud, or whichever podcast 591 00:32:26,880 --> 00:32:31,120 Speaker 1: platform you prefer. I'm on Twitter at Tom Keane before 592 00:32:31,160 --> 00:32:35,000 Speaker 1: the podcast. You can always catch us worldwide. 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