Speaker 1: Ye. Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane
Speaker 1: jay Ley. We bring you insight from the best in economics, finance, investment,
Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud,
Speaker 1: Bloomberg dot Com, and of course on the Bloomberg. Joining
Speaker 1: us here in New York City is Kate more blank
Speaker 1: Rock Investment Institute Chief Equity Strategistics. She joins us Now,
Speaker 1: Good morning, Kate, Good morning. Some optimism this morning in China.
Speaker 1: Do you have it longer term? I definitely have a
Speaker 1: longer term, and I think that some of what we've
Speaker 1: seen in terms of the price action so far has
Speaker 1: been really really overdone this year. You know, I don't
Speaker 1: understand why investors are surprised that the government has come
Speaker 1: out and said that they are going to support strategic
Speaker 1: industries technology private firms going to provide both explicit and
Speaker 1: implicit support on financing as well as on the regulatory side.
Speaker 1: This has always been the case, and people who have
Speaker 1: been reluctant to invest in China are those that don't
Speaker 1: understand the strength of Chinese political will and how important
Speaker 1: the growth and the breadth of the economy is for
Speaker 1: the future plans. So we saw the plunge protection team
Speaker 1: get into action. What if they learned from and why
Speaker 1: is this response any different? So I think what's happened
Speaker 1: in two thousand eighteen is a little bit different in
Speaker 1: that um the government has put a series of policies
Speaker 1: and new regulations in place that, you know, while hurting
Speaker 1: earnings maybe a little bit in the near term, especially
Speaker 1: around some of the key sectors in China, actually really
Speaker 1: lay the groundwork for more sustained and better growth in
Speaker 1: the future. This isn't just about supporting stocks right now.
Speaker 1: This is about creating the right framework and the long
Speaker 1: term support from you know, the policy side that will
Speaker 1: allow the kind of growth and development that they need
Speaker 1: to achieve their big technology goals. Well, then all the
Speaker 1: you know, the optimism we have and shall we heard
Speaker 1: Kate Moore's optimism here over the last number of hours.
Speaker 1: But within this optimism is a gloom crew. Doug Cass
Speaker 1: will join us later on. Doug Cass is a little
Speaker 1: bit cautious on the market. What do the cautious people
Speaker 1: get wrong? Is it financial? Is it mood? Is it
Speaker 1: the size of the bet one way or another? What
Speaker 1: is it? Yeah? Tom. Let me just say, I don't
Speaker 1: think I'm gonna live this down when I get into
Speaker 1: the office today. Kate, You're too optimistic is going to
Speaker 1: be branded right across my face. But here's what I
Speaker 1: will say. The people who are very pessimistic are concerned that,
Speaker 1: you know, all of these policy things will weigh indefinitely
Speaker 1: on the potential for earnings and growth. People who are optimistic,
Speaker 1: you tend to have a slightly longer time horizon. Exactly
Speaker 1: is Doug cass would say that, did Kate? More is
Speaker 1: X access is way different than the kind of access
Speaker 1: Doug Kiss, don't anow us the characterize what you're saying.
Speaker 1: If it's not optimism, what would you call it? How
Speaker 1: would you frame the way you're thinking about the world
Speaker 1: right now? I'd say I have the ability to look
Speaker 1: through some of the near term noise volatility UH and
Speaker 1: some challenges and some headwinds to Chinese sectors into Chinese
Speaker 1: growth expectations is very likely in the near term, and
Speaker 1: I'm gonna, if I'm gonna be totally honest with you,
Speaker 1: I can't necessarily identify catalysts that's gonna lead China to
Speaker 1: rip and outperform the rest of the market in the
Speaker 1: fourth quarter. But I think you know, as especially longer
Speaker 1: term investors and individual investors think about their allocation to
Speaker 1: this incredibly important economy, to these really interesting markets where
Speaker 1: companies don't look exactly like their US counterparts, they need
Speaker 1: to think about adding over the medium term. And you
Speaker 1: know this is what you hear me say, which is
Speaker 1: to try and reverse the negative. I think that the
Speaker 1: order take away the cloud that's been hanging over a
Speaker 1: lot of people's recent experience in emerging markets and say
Speaker 1: there are some very very strong growth stories. A big
Speaker 1: week for tech earnings in the United States this week.
Speaker 1: The divergence, though, in between Chinese tech and US tech
Speaker 1: has been absolutely massive. Are you saying that you would
Speaker 1: buy the Chinese side of the story and look for
Speaker 1: some convergence here. It's really convenient to say that US company,
Speaker 1: US tech and Chinese tech are kind of similar sides
Speaker 1: of the same idea, But the composition of these companies,
Speaker 1: their demand, their content, the regulatory environment are all totally different.
Speaker 1: And you've seen what is almost four four thousand basis
Speaker 1: points spread between the performance of US tech companies and
Speaker 1: Chinese tech. But apples to apples or it's not these
Speaker 1: are you know. My point is if you're thinking about
Speaker 1: technology over the long term, you've got to own both sides.
Speaker 1: These companies do different things, access different consumer bases and
Speaker 1: and are developing technologies at different pieces. It's not you know,
Speaker 1: you don't have a an Apple in China or you
Speaker 1: know an Amazon in China that I feel pretty calfinated accident.
Speaker 1: She's stand up on the upper west side of the week.
Speaker 1: Kay as much sharper than us about that big week
Speaker 1: coming up for tech and eggs. What are you looking for?
Speaker 1: Netflix just does everything the bulls wanted to do, and
Speaker 1: then the stock ends the week down two. Well, we're
Speaker 1: in this market where if you are putting up numbers
Speaker 1: that look too good that everyone's going to step back.
Speaker 1: Is it possible that we continue to get the same
Speaker 1: kind of subscription growth? Who knows? Um, there's we really
Speaker 1: are looking for goldilocks numbers, things strong but not so
Speaker 1: strong that they don't look unsustainable. And you know, it's
Speaker 1: possible that good numbers this year pardon me, this quarter
Speaker 1: on the top line and the bottom line aren't met
Speaker 1: with huge out performance. So um, but I would say
Speaker 1: that's an opportunity especially our growth managers are looking to
Speaker 1: add shares. At this point, does it matter what corporations
Speaker 1: are doing with their cash, because to me, it's my
Speaker 1: my official line interview after interview is nothing's changed, and
Speaker 1: they're doing a little bit of capex and everybody stands
Speaker 1: up and cheers, but it's a yeah, but kind of capex,
Speaker 1: that's no big deal. Well, the only CAPEX we're really
Speaker 1: seeing grow in a meaningful way into thousand eighteen is
Speaker 1: in tech. Actually, every other sector is kind of doing
Speaker 1: what it's done for most of the post crisis period.
Speaker 1: It's like low single digit growth, just what they need
Speaker 1: to do. It's really interesting to me, though, that when
Speaker 1: growth starts to want to perform, we get a lot
Speaker 1: of people come on this program and say it's time
Speaker 1: to shift to value, that rotation is here, get out
Speaker 1: of growth, go to value. And then you just said
Speaker 1: your growth managers are looking to add to exposure. So
Speaker 1: clearly for black Rock that's the theme. You think growth
Speaker 1: is where it's at, that's where it stays. So last
Speaker 1: week we had a great debate. We had our equities
Speaker 1: off site and value versus growth was one of our
Speaker 1: key discussion points. What do you see Houston, Red Sex.
Speaker 1: Is that where your off site was. Well, there are
Speaker 1: a lot of different teams here. This is what I'm
Speaker 1: gonna say when it comes to value. You tend to
Speaker 1: have value as a style outperform when you are in
Speaker 1: an economic or accelerating economic environment, when the second derivative
Speaker 1: growth looks really good. Um, and that has been you know,
Speaker 1: the experience that most people have lived through. What I
Speaker 1: will tell you though, is that like what's falling into
Speaker 1: the value style and disease right now? Some of it's
Speaker 1: just not very good quality and some of it is
Speaker 1: structurally impaired. And I think our value managers would say,
Speaker 1: you know, the work they have to do is that
Speaker 1: much more difficult than it's ever been in the past.
Speaker 1: We are also, while we're looking for a sustained expansion,
Speaker 1: are not looking for a massive acceleration in the growth
Speaker 1: rate at this point. And that I think, you know,
Speaker 1: tempers the opportunity for value. John Hudeck where this was Brookings,
Speaker 1: we talked policy after the election. Do you just assume John,
Speaker 1: I mean, you're not like a poll wank, but do
Speaker 1: you just assume gridlock Democrat House? Yeah, if the Democrats
Speaker 1: take back the House. Sure, gridlock is going to increase dramatically.
Speaker 1: You're going to have one party controlling the House, another
Speaker 1: party controlling the Senate that agree on next to nothing.
Speaker 1: And unless unless Pelosi and Schumer can somehow extend an
Speaker 1: olive branch to the president, um, it's going to be
Speaker 1: a period in which we have another nothing. Congress. Is
Speaker 1: grid luck good? Well, gridlock is good if Congress is
Speaker 1: proposing a lot of bad ideas. And I think there
Speaker 1: are a lot of Americans who see Congress as a
Speaker 1: group that's proposing a lot of bad ideas in terms
Speaker 1: of policy. But at the same time, there are must
Speaker 1: pass pieces of legislation like appropriations bills that gridlock really threatens,
Speaker 1: and that increases the likelihood of government shutdowns, lacks of
Speaker 1: reauthorization for essential agencies, and in a whole host of
Speaker 1: other problems. John, what can the president do without a
Speaker 1: Republican Congress if that is indeed what we get after
Speaker 1: the midterms, And why do you think the focus will
Speaker 1: be well? Presidents face this fairly regularly. Right the past,
Speaker 1: several presidents have baced a period of unified government and
Speaker 1: then a period in which they lost control of at
Speaker 1: least one House of Congress, and they handle it in
Speaker 1: different ways. An effective president takes a deep breath and says, well,
Speaker 1: the political landscape has changed dramatically, and if I want
Speaker 1: to be effective at all, I have to become a dealmaker.
Speaker 1: And for President Trump, he sort of prides himself on that,
Speaker 1: and I think he has an opportunity to change course
Speaker 1: a bit. If, however, he stays course given a different
Speaker 1: political environment, it means that he will contribute to that gridlock.
Speaker 1: In Any hope of breaking that gridlock, of course, comes
Speaker 1: from the Oval Office, and if the Oval Office is
Speaker 1: not willing to put in the time, then gridlock is
Speaker 1: the name of the game. Who was the last effective president? John, Well,
Speaker 1: you know, I think, uh, It's not often talked about,
Speaker 1: but I think President George W. Bush actually worked surprisingly
Speaker 1: well with uh Democrats in Congress after the two thousand
Speaker 1: six of wave of Democrats taking control. I mean they
Speaker 1: didn't you know, they didn't do everything that they wanted
Speaker 1: to get done, but they were as antagonist because people
Speaker 1: thought they'd be. And John, this goes the heart of
Speaker 1: your academics, which is the idea of a president with
Speaker 1: executive experience, And we can clearly state that President Trump
Speaker 1: did not have that not serving in government, and President
Speaker 1: Obama was Senator Obama. Do you make a big deal
Speaker 1: of someone that enters the office that actually was a governor.
Speaker 1: I think that's pretty helpful when you look at a
Speaker 1: President Clinton who worked well with a Republican Congress, or
Speaker 1: I should say relatively well President Bush who worked well
Speaker 1: with the Democratic Congress. Part of that had to do
Speaker 1: with their experience previously. But I think with President Trump,
Speaker 1: you know, he is an executive. He is a business executive,
Speaker 1: and in his many decades of working not just in
Speaker 1: New York, but in other countries I'm sorry, other major
Speaker 1: cities around the world, he saw these changes in political environments,
Speaker 1: real estate environments, and economic environments, and to be effective
Speaker 1: he need to change when those environments changed. And so
Speaker 1: I think he has an opportunity to do that. The
Speaker 1: question is whether he will. The president's tone and I
Speaker 1: believe I saw the video and the blur of the weekend,
Speaker 1: But Johanna Hudec, can the president get tax legislation through
Speaker 1: by the first Tuesday of November? Absolutely not, thank you.
Speaker 1: Not going to get anything through between now in this
Speaker 1: next election day or frankly now in November of twenty nineteen.
Speaker 1: So let's tell foreign policy, John, because that's where the
Speaker 1: focus is right now, Saudi Arabia. Would it be fant
Speaker 1: to say this is the biggest foreign policy crisis so
Speaker 1: far of the Trump administration. Absolutely. I think some are
Speaker 1: looking at this, or I should say very few are
Speaker 1: looking at this as an issue of a journalist being
Speaker 1: tortured and dismembered. But this is of course much larger.
Speaker 1: It has to do with American values and leadership around
Speaker 1: the world, respect for media, and of course economic and
Speaker 1: defense relationships. And audio Arabia is an important, important economic
Speaker 1: partner and an important partner in America's defense. But we
Speaker 1: have a lot of partners who do things from time
Speaker 1: to time that appalls the US and there has to
Speaker 1: be a response to that. And the president right now
Speaker 1: is facing acrossroads, and he can make a very bad choice,
Speaker 1: and he can make a series of better choices, and
Speaker 1: the ball is really in his core. So walk me through, John,
Speaker 1: what you think are a series of better choices? You know,
Speaker 1: I think a series of better choices includes a serious
Speaker 1: reprimand of Saudi Arabia that would probably come in the
Speaker 1: form of some mild sanctions. Um it would come from
Speaker 1: a very um uh you know, firm statement from the
Speaker 1: President and probably a firm statement from the Congress that
Speaker 1: the United States does not condone this behavior and it
Speaker 1: will stand up for media around the world who, frankly,
Speaker 1: as you both know, are under attack and a variety
Speaker 1: of countries every day. John, one more question, what happens
Speaker 1: the first Wednesday of November. I mean, if there's let's
Speaker 1: assume the Democrats take the House, what's the lame duck
Speaker 1: character of I mean, John Farrell is looking at me like,
Speaker 1: what's lane duck? Explain lame duck to our global audience,
Speaker 1: and what flavor of lame duck? Will this be? Sure?
Speaker 1: Lame duck exists for a Congress or for a president,
Speaker 1: and that happens after an election and before either a
Speaker 1: new Congress has sworn in or a new president is
Speaker 1: sworn in. What you're going to see in the lamb
Speaker 1: Duck is a Senate that is rapidly approving judges as
Speaker 1: quickly as they can. I think that's going to be
Speaker 1: true even if uh the uh, you know, Republicans maintain control.
Speaker 1: There are some loose ends in terms of appropriations. A
Speaker 1: farm bill etcetera that Congress wants to get through, and
Speaker 1: I think sanctions on Saudi Arabia is something that this
Speaker 1: Congress is going to want to get done before January. John,
Speaker 1: Thank you so much January Duck with Brookings to give
Speaker 1: us a good election, John, why don't you bring in
Speaker 1: young Mailey. In the equity markets, Matt Madbie millerit back
Speaker 1: and lac Managing director and equity strategist. Good morning to
Speaker 1: your Matt. Big week for tech nes this week in America.
Speaker 1: What are you looking for? Well, I mean it's it's
Speaker 1: going to be very very important because the tech has
Speaker 1: obviously been the key, key leader in the market, in
Speaker 1: the stock market since the election. Remember everybody said that
Speaker 1: the you know, President Trump is gonna be negative for
Speaker 1: uh for tech companies, and in the group was getting
Speaker 1: hit right after the election. They've rallied strongly since then.
Speaker 1: The one concern, of course, is the key leader within
Speaker 1: the tech group has been the semi conductors, and they've
Speaker 1: been acting very poorly lately. Uh so uh you know,
Speaker 1: they've been much more weaker than the rest of the group.
Speaker 1: We keep talking about the Tunter day moving average in
Speaker 1: the in the SMP five hundred, which we continue to
Speaker 1: cling to the same thing as in the XLK, the
Speaker 1: UH Tech ETF, but the SOCKS Semiconductor Index or the
Speaker 1: SMH which is the semi e t F, it's broken
Speaker 1: well below. It's two winter day moving average seven percent below.
Speaker 1: And it's a very very important support level for that
Speaker 1: one as well. So if we don't get to UH
Speaker 1: this group to turn around and for the general UH
Speaker 1: group to see good earnings to help the you know,
Speaker 1: the tech group, the key leadership group bounced back, We're
Speaker 1: gonna have some more headwines as we moved to the bag,
Speaker 1: just to break down tech a little bit more. We
Speaker 1: have seen a divergence within the big fang names themselves,
Speaker 1: notably the difference between say, Facebook and Netflix through and
Speaker 1: it's been quite dramatic. Are there any particular names, any companies,
Speaker 1: any business models that you think will do better in
Speaker 1: the current environment. Well, I mean, the one thing that
Speaker 1: we have to look at is, you know, this whole
Speaker 1: thing with when it's kind of funny because away from
Speaker 1: the fundamental side of the situation, I'm more interested in
Speaker 1: how crowded this trade. As you talk about the fang stocks,
Speaker 1: you look at a Facebook. You know, in this recent
Speaker 1: most recent downturn, Facebook is actually outperformed. It's it's come
Speaker 1: down a little bit, but it's actually been trading more sideways.
Speaker 1: A lot of these stocks are very very crowded because
Speaker 1: they performed very well. Uh. But Facebook, of course it's
Speaker 1: been washed out. It's done more. It's no longer crowded people.
Speaker 1: It's not not a lot of week money in it.
Speaker 1: So I think some of these underperformers are going to
Speaker 1: do better. It's October whatever it is, and we're all
Speaker 1: focused on the first Tuesday of November. Michael Purvis, Weed
Speaker 1: and Matt Malie wrote a wonderful note a couple of
Speaker 1: weeks ago. A number of weeks ago, I should say
Speaker 1: about how portfolios have to adjust, what percent of portfolios
Speaker 1: are behind right now? The answers, it's ginormous, isn't it. Yes,
Speaker 1: you know, it's well, of course every year it's it's
Speaker 1: kind of funny how how badly the tend money managers,
Speaker 1: both on the hedge fund side and on the mutual
Speaker 1: fund side, UH tend to underperform the market. The thing
Speaker 1: is nowadays, it's it's on a percentage basis. It's a
Speaker 1: big percentage, but a lot of them are very tied,
Speaker 1: very closely to these indexes, so they're not well behind
Speaker 1: the market. However, it's kind of funny because I'm still
Speaker 1: think we might need need to get a little bit
Speaker 1: of more of a wash out here before the market
Speaker 1: really bottoms. But as you get past the election, you know,
Speaker 1: we all know that the in mid term election years,
Speaker 1: and market tends a rally towards the end of the year. Uh,
Speaker 1: then performance sphere become plays a huge, huge, uh component
Speaker 1: to what's going on in the marketplace. Even if you
Speaker 1: think we're gonna have a horrible gonna have a horrible
Speaker 1: recession in two thousand nineteen, if the markets trailing at
Speaker 1: the end of the year, and you're an institutional money manager,
Speaker 1: you've got to be in the market. You've got to
Speaker 1: be buying. So uh. You know, people may be a
Speaker 1: little bit of careful, especially on some of these groups
Speaker 1: that are very badly beaten up, some of the bank
Speaker 1: stocks which have rallied strongly at the end of the
Speaker 1: year the last two years. I've been really negative on
Speaker 1: the group, but I always be careful. Wait are you
Speaker 1: saying no? Uh, you know, I'll take it back yes,
Speaker 1: I think right now. I think as we look at
Speaker 1: the two thousand nineteen with interest rates moving higher, things
Speaker 1: have changed. We keep them saying that in the fundamentals
Speaker 1: haven't changed. You know, mortgage rates have doubled, I'm sorry,
Speaker 1: not double, They've gone up a full percent in the
Speaker 1: last year. Uh A. Long term bonds have doubled since
Speaker 1: a little of two thousand sixteen. The yield on long
Speaker 1: term bonds. Uh. There's, of course, there's a lot of
Speaker 1: uncertainly now with earnings. So my thing is raising a
Speaker 1: little bit of cash in case we have a tough year,
Speaker 1: get a little bit more defensive, because these defensive groups
Speaker 1: are out performing, especially Matt MAYLEI thank you so much,
Speaker 1: milar type. I greatly appreciate it, without question. My interview
Speaker 1: of the day on the issues of Saudi Arabia, Turkey
Speaker 1: at the United States. Stephen Cook, Stephen A. Cook is
Speaker 1: with the Council on Foreign Relations. I can't say enough
Speaker 1: about his book False Dawn, Protest, Democracy and Violence. I'll
Speaker 1: look at the Middle East, look at the Arab Spring.
Speaker 1: It is one of those books where I'm reading every
Speaker 1: word cover to cover. Stephen Cook, good morning. If you
Speaker 1: uh wrote false Dawn today, How would you change the
Speaker 1: chapter on Turkey? Well, I think the chapter actually holds
Speaker 1: up even stronger now. Turkey was one of those countries
Speaker 1: in the early two thousand's that I think people widely
Speaker 1: believed would be a member of the European Union. By
Speaker 1: and um, it is more authoritarian now than I think
Speaker 1: it's been in since the Republic of Turkey's founding almost
Speaker 1: nine years ago. So the Turkish president ridget type Aerdan
Speaker 1: essentially runs a one man elected autocracy. Within this is
Speaker 1: a present from Mr Rohan in his autocracy? Would you
Speaker 1: explain his calculus now? I think it's been confusing within
Speaker 1: the media, the Ariduan calculus of Saudi Arabia combined with
Speaker 1: the calculus is to the United States and to Iran
Speaker 1: as well. Well. The issue of the day being the
Speaker 1: relationship between Turkey and Saudi Arabian. I think it's fairly
Speaker 1: clear that everyone has multiple interest in doing everything possible
Speaker 1: to embarrass the saudiast Um. First of all, he can
Speaker 1: demonstrate through the leaks to the press that Turkey can
Speaker 1: be a responsible citizen as opposed to a reckless Saudi Arabia.
Speaker 1: He's scheduled to announce tomorrow. Uh. There the Turkish government's
Speaker 1: belief of what happened to the Saudi journalist Jamal Kashogi,
Speaker 1: And I think what he's trying to do is to
Speaker 1: demonstrate that for all the criticism that the Turkish Turkish
Speaker 1: press has taken for its past fabrications on this issue,
Speaker 1: they've been one on the story and have reflected accurately
Speaker 1: what's happened. And then it's important to remember that Saudi Arabia,
Speaker 1: he is a arrival and actually in conflict with one
Speaker 1: of Turkeys st jijik Allas, the government of Cota, and
Speaker 1: so anything that Aireduan can do to kind of bring
Speaker 1: the Saudis down and notch will be beneficial to him.
Speaker 1: On the question of Iran, the Turks really have played
Speaker 1: a double game. Um. They have been signal publicly that
Speaker 1: they want to be on the side of the United States,
Speaker 1: while over the course of the preceding decade helped the
Speaker 1: Iranians evade UN sanctions. So uh, it's entirely unclear what
Speaker 1: they're going to do with the renewing sanctions. Stephen A. Cook,
Speaker 1: with his constant formulations, I can't say enough about False Dawn.
Speaker 1: I'm reading it cover to cover Stephen A. Cook. This
Speaker 1: came up this weekend. Let's let's have the pro answer
Speaker 1: the question. If the Saudis are Sunni and the Iranians
Speaker 1: are Shia, what is Turkey. Well, Turkey is predominantly a
Speaker 1: Sunni country, but the Turks have never really pursued a
Speaker 1: sectarian farm policy in the same way that the Saudis have,
Speaker 1: for example, the way the Iranians have. Um, the Turks
Speaker 1: see themselves as natural leaders of the Muslim world and
Speaker 1: that includes sunny and Well then all this is where
Speaker 1: we go from here. Of course, CNN leading with the
Speaker 1: report uh this morning of a double coming out of
Speaker 1: the consulate that looked like Mr Shogen all that. What
Speaker 1: is a pro like you monitoring over the next over
Speaker 1: the next seventy two hours. Well, what's really, I think
Speaker 1: crucially important is the way in which the sad government
Speaker 1: responds to these revelations. Uh. It is a situation which
Speaker 1: is obviously very very difficult for the Saudist to get
Speaker 1: out of. The stories they've told are not believable. Uh.
Speaker 1: This is going to shake the royal family even if
Speaker 1: Mohammed bin Salman remains the crown prince. Uh. Look for
Speaker 1: the king to reign him in a it and for
Speaker 1: his enemies to regain some ground within the royal family.
Speaker 1: How do you depose Mohammed been Salmon if the royal
Speaker 1: family decides to do that. He's not the king, so
Speaker 1: I guess he's not deposable. But have you figured out
Speaker 1: a path yet to what the royal family would do.
Speaker 1: I think it's unlikely that the king will depose his son,
Speaker 1: and it's really up to the king. So any enemies
Speaker 1: of Mohammed bin Salman will have to depose King Salman,
Speaker 1: and it's going to be very hard. The Crown Prince
Speaker 1: and the king control all of the important services, the military,
Speaker 1: the Ministry of in Curia, the Saudi Arabian National Guard,
Speaker 1: that could that could be the instruments of of toppling
Speaker 1: the king. But one can imagine that as Mohammed bin
Speaker 1: Salman gets pulled deeper and deeper into this this scandal,
Speaker 1: that the king and people around him determined that the
Speaker 1: young Crown Prince is doing a service to Saudi Arabia
Speaker 1: and some of those people who have been previously been
Speaker 1: sidelined been brought back as steady hands for the kingdom.
Speaker 1: Stephen at the time that we've got left with you.
Speaker 1: Let's pull it back to the United States. Can you
Speaker 1: rate UH Secretary Pompeo's shuttle diplomacy of last week and
Speaker 1: what would be the next step for the Secretary of State. Well,
Speaker 1: I think that the administration is caught an extraordinarily awkward position.
Speaker 1: Um too allies Turkey and Saudi Arabia vastly different stories,
Speaker 1: and I think that Pompeo's effort to try to get
Speaker 1: the Saudia's on board to at least telling something that's
Speaker 1: believable so that we can get past that wasn't entirely successful.
Speaker 1: I think the administration is growing frustrated with the Saudia.
Speaker 1: Isn't it's time for them to take them on publicly
Speaker 1: and say you have to come clean. Does the Trump
Speaker 1: administration have a Middle East policy? I see Jerusalem in
Speaker 1: the embassy there now Australia is considering that is well,
Speaker 1: But do they have a Stephen A Cook policy? You
Speaker 1: can UH find. I think it's UH focus on countering Iran,
Speaker 1: which is why the administration has been reluctant to UH
Speaker 1: come out swinging against the Saudis on the death of
Speaker 1: Jamak Choti. UH it is to destroy the Islamic State
Speaker 1: UH and in doing both of those things, it's maximum
Speaker 1: support for America's allies in the region, most of whom
Speaker 1: are authoritarian systems. Steven, thank you for the updates Stephen
Speaker 1: and Cook with a Console on foreign relations, and again
Speaker 1: just the highest recommendation of his short brief terse book
Speaker 1: False Dawn on the Arab Spring in the path from that.
Speaker 1: Thanks for listening to the Bloomberg Surveillance podcast. Subscribe and
Speaker 1: listen to interviews on Apple Podcasts, SoundCloud, or whichever podcast
Speaker 1: platform you prefer. I'm on Twitter at Tom Keane before
Speaker 1: the podcast. You can always catch us worldwide. I'm Bloomberg Radio.