1 00:00:09,880 --> 00:00:13,800 Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane. Daily 2 00:00:14,000 --> 00:00:17,599 Speaker 1: we bring you insight from the best in economics, finance, investment, 3 00:00:18,000 --> 00:00:23,560 Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, 4 00:00:23,640 --> 00:00:34,080 Speaker 1: Bloomberg dot Com, and of course on the Bloomberg lots 5 00:00:34,080 --> 00:00:36,280 Speaker 1: to talk about here. We're gonna stay on the markets. 6 00:00:36,280 --> 00:00:38,600 Speaker 1: But miss roman joins now from your Raisier group and 7 00:00:39,040 --> 00:00:41,680 Speaker 1: uh we gave us great perspective earlier in this uh 8 00:00:42,000 --> 00:00:44,880 Speaker 1: Monday morning, and we'll do it again, Miss Ramen. Over 9 00:00:44,920 --> 00:00:48,800 Speaker 1: the weekend there was a headline that basically said, the 10 00:00:48,920 --> 00:00:52,599 Speaker 1: United States has a big old air force base in Turkey, 11 00:00:53,120 --> 00:00:55,520 Speaker 1: and Turkey is not happy with our big old air 12 00:00:55,560 --> 00:00:58,960 Speaker 1: force base in Turkey, and that's creating a lot of tension. 13 00:00:59,520 --> 00:01:03,880 Speaker 1: Give us briefing right now and that real visceral thing 14 00:01:04,040 --> 00:01:08,440 Speaker 1: for Arijuan and Trump, which is a huge US presence 15 00:01:08,800 --> 00:01:13,039 Speaker 1: in southern Turkey. Thanks for having me, Tom, Yeah, I 16 00:01:13,040 --> 00:01:17,960 Speaker 1: think look that the context here is a quickly deteriorating 17 00:01:18,080 --> 00:01:23,760 Speaker 1: relationship between Turkey and the US where absolutely everything is 18 00:01:23,840 --> 00:01:28,080 Speaker 1: in play, from air bases to US sanctions on how Bank, 19 00:01:28,640 --> 00:01:33,640 Speaker 1: to corporation in Syria, to US funding of Turkey's current account. 20 00:01:33,680 --> 00:01:37,679 Speaker 1: I mean, the relationship is really on the precipice, and 21 00:01:37,720 --> 00:01:41,040 Speaker 1: I think that's why we still assume some degree of 22 00:01:41,160 --> 00:01:43,679 Speaker 1: rationality on the side of Rod And I do think 23 00:01:44,000 --> 00:01:48,440 Speaker 1: he will signal a commitment this week to release the pastor, 24 00:01:48,800 --> 00:01:51,240 Speaker 1: as well as some decisive action by the Central Bank, 25 00:01:51,240 --> 00:01:55,240 Speaker 1: because otherwise he's looking at much much more difficult choices 26 00:01:55,640 --> 00:01:59,640 Speaker 1: that could undermine his political mega project back home. Which 27 00:02:00,080 --> 00:02:02,680 Speaker 1: what underpins your confidence that that will happen, both in 28 00:02:02,760 --> 00:02:05,720 Speaker 1: terms of the relations of the pastor and the actual 29 00:02:05,840 --> 00:02:09,200 Speaker 1: move to do what's needed domestically higher interest rates, perhaps 30 00:02:09,200 --> 00:02:11,480 Speaker 1: tied the fiscal policy. What gives you confidence that's about 31 00:02:11,520 --> 00:02:15,200 Speaker 1: to happen. It's it's really looking at the alternative. So 32 00:02:15,360 --> 00:02:19,440 Speaker 1: what's what's the counter factual? If Dan does not allow 33 00:02:19,520 --> 00:02:22,720 Speaker 1: the central Bank to move decisively this week, if this 34 00:02:22,880 --> 00:02:26,040 Speaker 1: row with the US is not de escalated, Essentially he's 35 00:02:26,040 --> 00:02:29,560 Speaker 1: looking at two options capital controls, which for a country 36 00:02:29,680 --> 00:02:35,000 Speaker 1: as dependent on foreign exchange as Turkeys, would be absolutely disastrous, 37 00:02:35,000 --> 00:02:38,520 Speaker 1: a massive blow to investor confidence, far more than we've 38 00:02:38,560 --> 00:02:40,920 Speaker 1: seen over the course of the last few weeks. Or indeed, 39 00:02:40,919 --> 00:02:43,280 Speaker 1: and I'm a stand by agreement because he will need 40 00:02:43,360 --> 00:02:46,760 Speaker 1: external funding for the current account, and of course that 41 00:02:46,800 --> 00:02:51,080 Speaker 1: would come with conditions and constraints that would undermine a 42 00:02:51,200 --> 00:02:55,200 Speaker 1: large part of Rodan's political narrative. Remember, he has made 43 00:02:55,200 --> 00:02:58,359 Speaker 1: political hay of the fact he was the leader who 44 00:02:58,480 --> 00:03:02,680 Speaker 1: kicked the I M s our and return full sovereignty 45 00:03:02,680 --> 00:03:05,640 Speaker 1: to Turkey. So to now have to accept an I 46 00:03:05,800 --> 00:03:07,799 Speaker 1: m F program with all of the conditions that that 47 00:03:07,880 --> 00:03:10,320 Speaker 1: would impose on him, I think would be a massive 48 00:03:10,400 --> 00:03:12,959 Speaker 1: humiliation for him, and I just I find those two 49 00:03:12,960 --> 00:03:17,280 Speaker 1: options so unpalatable for him that although we moved by 50 00:03:17,280 --> 00:03:20,560 Speaker 1: the Central Bank would be difficult, it's far easier than 51 00:03:20,600 --> 00:03:24,320 Speaker 1: the alternative. I'm just wondering, though, whether he has no choice, 52 00:03:24,320 --> 00:03:28,160 Speaker 1: whether he's been completely overtaken by events now and something 53 00:03:28,200 --> 00:03:30,400 Speaker 1: that might have worked a week two weeks ago, we'll 54 00:03:30,480 --> 00:03:33,280 Speaker 1: just no longer work. That the highest short term interest 55 00:03:33,360 --> 00:03:35,880 Speaker 1: rates and time of fiscal policy won't regain confidence to 56 00:03:35,960 --> 00:03:39,920 Speaker 1: this market, and they'll have to institute the emergency measures 57 00:03:40,000 --> 00:03:43,360 Speaker 1: that you just pointed out, Mitch Well, I I think 58 00:03:43,560 --> 00:03:47,040 Speaker 1: there is a precedent for the dynamic that we're currently seeing. 59 00:03:47,080 --> 00:03:49,200 Speaker 1: Back in May, I think you could see a very 60 00:03:49,280 --> 00:03:52,080 Speaker 1: decisive rate hike by the central Bank, let's say five 61 00:03:52,400 --> 00:03:55,840 Speaker 1: d to thousand basis points, five to tentage points, that 62 00:03:56,120 --> 00:03:58,360 Speaker 1: kind of number, and then every one would say, look, 63 00:03:58,400 --> 00:03:59,760 Speaker 1: you know, this is not what I support. But the 64 00:03:59,800 --> 00:04:02,480 Speaker 1: sun Traw Bank is independent. I think that would stop 65 00:04:02,600 --> 00:04:05,200 Speaker 1: the immediate bleeding. And then you're right. We would need 66 00:04:05,280 --> 00:04:08,760 Speaker 1: to see alba Iraq being able to demonstrate he's a 67 00:04:08,760 --> 00:04:12,240 Speaker 1: positive influence on Araduan by coming forward with a much 68 00:04:12,320 --> 00:04:15,560 Speaker 1: broader and comprehensive strategy of economic reform that includes the 69 00:04:15,880 --> 00:04:18,719 Speaker 1: consolidation is one of his legs. Now, is that likely? 70 00:04:19,080 --> 00:04:22,440 Speaker 1: I think highly, highly questionable. But again the alternatives I 71 00:04:22,440 --> 00:04:26,120 Speaker 1: think are so impalatable, both economically and politically. I think 72 00:04:26,120 --> 00:04:28,560 Speaker 1: we are going to see some fairly decisive action this 73 00:04:28,600 --> 00:04:31,640 Speaker 1: week in our time. Fox for a Monday dumb question 74 00:04:31,680 --> 00:04:34,960 Speaker 1: of the Day, I'll ask it, But the midge, what 75 00:04:35,120 --> 00:04:38,200 Speaker 1: does Mr arad One want? I mean, I understand he's 76 00:04:38,200 --> 00:04:40,880 Speaker 1: pushing back against the US first set of reasons, and 77 00:04:41,240 --> 00:04:44,320 Speaker 1: there's a traditional German Turkish relationship. I get all that, 78 00:04:44,800 --> 00:04:49,880 Speaker 1: But what's it really want with allies and non allies? 79 00:04:51,600 --> 00:04:55,360 Speaker 1: I think Tom Ultimately, we we've seen it crystallized on 80 00:04:55,400 --> 00:04:58,080 Speaker 1: the back of the presidential election. I think he wants 81 00:04:58,160 --> 00:05:02,440 Speaker 1: to ultimately institution analize and entrench his power and those 82 00:05:02,720 --> 00:05:06,800 Speaker 1: around him. And anything that could potentially complicate or undermine 83 00:05:07,520 --> 00:05:10,960 Speaker 1: the institutionalization of power, I think he will. He will 84 00:05:11,000 --> 00:05:14,880 Speaker 1: be a threat. He has his presidential system in place, 85 00:05:15,240 --> 00:05:19,159 Speaker 1: he has his preferred successes now all around the cabinet table, 86 00:05:19,520 --> 00:05:23,760 Speaker 1: and ultimately wants, I think, to to move that mega 87 00:05:23,839 --> 00:05:29,279 Speaker 1: political project of his forward. Now being dependent on foreign capital, 88 00:05:29,320 --> 00:05:32,680 Speaker 1: having to raise interest rates, having to be dictated to 89 00:05:32,800 --> 00:05:36,360 Speaker 1: eventually by external actors of the markets, I think undermines 90 00:05:36,600 --> 00:05:39,960 Speaker 1: that that that mega project that he is that he 91 00:05:40,000 --> 00:05:45,080 Speaker 1: is so desperately seeking to implement. Does Germany? Does Germany 92 00:05:45,120 --> 00:05:46,760 Speaker 1: come in the next couple of days, I mean, just 93 00:05:46,760 --> 00:05:49,080 Speaker 1: want to final question, Madge if we could. I mean, 94 00:05:49,120 --> 00:05:52,719 Speaker 1: Germany has an historic and unique relationship with the people 95 00:05:52,800 --> 00:05:56,920 Speaker 1: of Turkey. Does chance or miracle coming unilaterally and try 96 00:05:56,960 --> 00:06:01,280 Speaker 1: to fix this in terms of the politics. So there's 97 00:06:01,320 --> 00:06:04,280 Speaker 1: definitely something to this. There is a state visit between 98 00:06:04,279 --> 00:06:06,760 Speaker 1: Aridoan and Merkel at the end of September, and I 99 00:06:06,760 --> 00:06:09,600 Speaker 1: think that will be used as a vehicle to try 100 00:06:09,640 --> 00:06:13,359 Speaker 1: and pass diplomatic messages onto the Turks around what the 101 00:06:13,400 --> 00:06:16,600 Speaker 1: Germans think Turkey needs to do. I think, like the US, 102 00:06:16,680 --> 00:06:19,240 Speaker 1: they think the plan the government's presented does not fit 103 00:06:19,279 --> 00:06:22,880 Speaker 1: for purpose. It's largely cosmetic. That a structural crisis was 104 00:06:23,040 --> 00:06:26,040 Speaker 1: likely returning the economy because of all of the rule 105 00:06:26,080 --> 00:06:29,000 Speaker 1: of law violations and the undermining of investor confidence we've 106 00:06:29,040 --> 00:06:31,160 Speaker 1: seen over the last two years. So I think there 107 00:06:31,160 --> 00:06:33,520 Speaker 1: will be that there is a context for Germany to 108 00:06:33,520 --> 00:06:36,200 Speaker 1: try and influence actions in Turkey. And of course that's 109 00:06:36,200 --> 00:06:39,440 Speaker 1: a big concern in Germany at least because they're implementing 110 00:06:39,440 --> 00:06:42,080 Speaker 1: an agreement that is stemming the flow of migrants into Germany, 111 00:06:42,080 --> 00:06:45,000 Speaker 1: which is you know, in fifteen was massively important for 112 00:06:45,040 --> 00:06:48,000 Speaker 1: angler Merkell survival. So the Europeans are watching this closely. 113 00:06:48,240 --> 00:06:50,600 Speaker 1: Miss thank you so much for Raman with the international 114 00:06:50,640 --> 00:06:54,640 Speaker 1: relations update that overlays and the finance that economics and 115 00:06:54,680 --> 00:07:12,160 Speaker 1: the investment. We're looking. What John and I try to 116 00:07:12,200 --> 00:07:16,360 Speaker 1: do in the modern media is we always cite everything, 117 00:07:16,520 --> 00:07:19,600 Speaker 1: and what you don't see is we and our great 118 00:07:19,680 --> 00:07:27,760 Speaker 1: team are scrambling to separate out from like legitimate news organizations. John, 119 00:07:27,840 --> 00:07:30,720 Speaker 1: we just walked through that twenty minutes ago. With the 120 00:07:30,800 --> 00:07:34,240 Speaker 1: market moving tweet. Yeah, fact is the tweet moved the market. 121 00:07:34,280 --> 00:07:36,200 Speaker 1: The tweet did move the market to some extent. We 122 00:07:36,240 --> 00:07:38,640 Speaker 1: saw some Turkish lera come in, we saw euro dollar 123 00:07:38,920 --> 00:07:41,560 Speaker 1: flat on the session, and we saw US futures past 124 00:07:41,640 --> 00:07:43,880 Speaker 1: some of the early losses. It was a tweet essentially 125 00:07:43,920 --> 00:07:48,880 Speaker 1: communicating on Twitter, which has now been completely unconfirmed. Um 126 00:07:48,880 --> 00:07:52,280 Speaker 1: the US Anchor Embassy official speaking to Reuters saying they 127 00:07:52,320 --> 00:07:56,280 Speaker 1: haven't issued a statement regarding the US pastor Brunson. This 128 00:07:56,320 --> 00:07:58,800 Speaker 1: is from Ruyters, This is from anchor. This is the 129 00:07:58,800 --> 00:08:01,160 Speaker 1: reporting coming from Roy. So is this after a tweet 130 00:08:01,160 --> 00:08:05,440 Speaker 1: suggested that the pastor Andrew Branson, who was facing espionage 131 00:08:05,440 --> 00:08:09,280 Speaker 1: and terrorism allegations related to that fail and ultimately is 132 00:08:09,320 --> 00:08:11,640 Speaker 1: that the epicenter of the spat between the US and Turkey. 133 00:08:11,800 --> 00:08:13,800 Speaker 1: There was a tweet suggesting he would be released. And 134 00:08:13,800 --> 00:08:16,680 Speaker 1: now we are seeing, according to Routers Reuters that the 135 00:08:16,720 --> 00:08:19,960 Speaker 1: Anchor Embassy is saying, nah, we haven't said anything about it. 136 00:08:20,240 --> 00:08:22,920 Speaker 1: And to show you the market reaction, we have to 137 00:08:22,960 --> 00:08:26,200 Speaker 1: live with. Lower numbers are stronger Lira. We weren't from 138 00:08:26,240 --> 00:08:30,480 Speaker 1: about seven o two exploded down to six point six zero, 139 00:08:30,560 --> 00:08:33,400 Speaker 1: six point five zero, and now we've come about eight 140 00:08:33,600 --> 00:08:36,960 Speaker 1: five back to six point man, this is the danger 141 00:08:37,000 --> 00:08:40,400 Speaker 1: of getting unverified news on Twitter. It moves markets. People 142 00:08:40,480 --> 00:08:43,520 Speaker 1: make stuff up. It's unconfirmed reports, and we're seeing it again. 143 00:08:43,600 --> 00:08:46,560 Speaker 1: I don't want to speculate about the why that that 144 00:08:46,640 --> 00:08:50,080 Speaker 1: tweet came out. I'm just going do you know what 145 00:08:50,120 --> 00:08:52,520 Speaker 1: we did learn from that tweet? Though? That the market 146 00:08:52,600 --> 00:08:55,280 Speaker 1: is assigning great importance to the to the poster and 147 00:08:55,360 --> 00:08:59,360 Speaker 1: his release. Um, yeah, yeah, there's there's yes. I think 148 00:08:59,400 --> 00:09:03,520 Speaker 1: that's true. I want to bring Georget Boll, a b 149 00:09:03,720 --> 00:09:07,360 Speaker 1: n am Ro Bank currency and commodity strategist joining us now, Georget, 150 00:09:07,400 --> 00:09:08,920 Speaker 1: great to have you with us on the program. I 151 00:09:08,920 --> 00:09:10,960 Speaker 1: would have thought the more important piece of this puzzle 152 00:09:11,360 --> 00:09:13,840 Speaker 1: was getting a real domestic response higher rates kind of 153 00:09:13,840 --> 00:09:17,920 Speaker 1: fiscal policy. But off the back of an unconfirmed turning 154 00:09:17,920 --> 00:09:21,199 Speaker 1: out to be false tweet that the pastor would be released, 155 00:09:21,200 --> 00:09:23,800 Speaker 1: we saw a sizeable market move. Is it that important 156 00:09:23,840 --> 00:09:27,079 Speaker 1: the US side of this story, Georget, Yeah, yeah, that's right. 157 00:09:27,960 --> 00:09:29,920 Speaker 1: The thing is just that if you look at this 158 00:09:30,000 --> 00:09:33,600 Speaker 1: kind of volatility in the market, marketers relatively thin and 159 00:09:33,640 --> 00:09:34,960 Speaker 1: not a lot of people want to be in the 160 00:09:35,000 --> 00:09:37,800 Speaker 1: Turkeys clear in the current environment on the other hand, 161 00:09:38,240 --> 00:09:40,439 Speaker 1: you know they are also afraid to be caught on 162 00:09:40,480 --> 00:09:43,640 Speaker 1: the wrong side of the market. If you get like, yeah, 163 00:09:43,720 --> 00:09:47,240 Speaker 1: now I had an exponential weakening off the lira. Um 164 00:09:47,480 --> 00:09:51,319 Speaker 1: if you now get an kind of communication that may 165 00:09:51,320 --> 00:09:54,199 Speaker 1: be despat between the US and Turkey, may be cooling 166 00:09:54,200 --> 00:09:57,719 Speaker 1: down or into calming or on the other hand, if 167 00:09:57,760 --> 00:10:01,040 Speaker 1: you were to get an announcement with sounds a bit credible, 168 00:10:01,120 --> 00:10:03,800 Speaker 1: could be a combination of interest rate higher or anything else, 169 00:10:04,320 --> 00:10:06,840 Speaker 1: then you can also see a quite recovery of the 170 00:10:06,920 --> 00:10:10,800 Speaker 1: lira because people say, okay, we were negative, let's skal 171 00:10:10,800 --> 00:10:13,920 Speaker 1: a little bit back. So this is quite a dangerous market. 172 00:10:14,000 --> 00:10:17,079 Speaker 1: And yeah, you get volatility like this because the factor 173 00:10:17,240 --> 00:10:19,720 Speaker 1: is barely a market Georgia, what is your call on end? 174 00:10:19,760 --> 00:10:23,560 Speaker 1: If that's the global proxy, deepest market, stronger yen fear 175 00:10:23,559 --> 00:10:26,560 Speaker 1: in the market one tense sixty. Clearly we're seeing that 176 00:10:26,840 --> 00:10:28,680 Speaker 1: his A, B and EMMO. Do you have a call 177 00:10:28,760 --> 00:10:30,720 Speaker 1: on end and if you have to change it in 178 00:10:30,800 --> 00:10:34,960 Speaker 1: the last two trading days, Yes, we have a call 179 00:10:35,040 --> 00:10:37,080 Speaker 1: on end and we have not changed in the last 180 00:10:37,080 --> 00:10:41,000 Speaker 1: two trading days for the end of the third quarters, 181 00:10:41,000 --> 00:10:42,760 Speaker 1: at the end of September, any end of the year, 182 00:10:42,800 --> 00:10:45,319 Speaker 1: we have one ten in dollar yen. You know, the 183 00:10:45,559 --> 00:10:48,120 Speaker 1: nervousness you see currently in the market is more visible 184 00:10:48,160 --> 00:10:51,560 Speaker 1: in Urian because there is some kind of nervousness about 185 00:10:51,600 --> 00:10:55,800 Speaker 1: the Euro as well. We don't completely share that nervousness, 186 00:10:55,840 --> 00:10:58,720 Speaker 1: but it is something you see in market. So Urian 187 00:10:58,920 --> 00:11:01,959 Speaker 1: is the one which is more slid down for the day. 188 00:11:02,000 --> 00:11:06,360 Speaker 1: And there's also something we yeah, in terms of possible 189 00:11:06,440 --> 00:11:10,040 Speaker 1: quantation risk reflected in market jury and it's more than 190 00:11:10,120 --> 00:11:12,840 Speaker 1: one to watch than Dolian as well as yours with 191 00:11:12,880 --> 00:11:18,800 Speaker 1: at amoment which is making a low again. So so overall, yeah, 192 00:11:18,800 --> 00:11:22,720 Speaker 1: on quotation, I would look at Urine and euroswizz gold 193 00:11:22,840 --> 00:11:26,400 Speaker 1: is less for good indicator at the moment um. And 194 00:11:26,440 --> 00:11:30,000 Speaker 1: then yeah, Dolly and you have effect two currencies which 195 00:11:30,000 --> 00:11:32,880 Speaker 1: are the most liquid in which all both qualify for 196 00:11:32,960 --> 00:11:34,959 Speaker 1: a safe haven which are the dollar in the end, 197 00:11:35,320 --> 00:11:38,400 Speaker 1: So there the the the effect is not that visible. 198 00:11:38,559 --> 00:11:40,520 Speaker 1: Some big calls coming in on euro dollar this morning 199 00:11:40,520 --> 00:11:42,720 Speaker 1: on this program, John Jet, we caught up with Kitchukes 200 00:11:42,720 --> 00:11:45,960 Speaker 1: of Socken about thirty minutes ago looking for euro dollar 201 00:11:46,160 --> 00:11:49,120 Speaker 1: to strike one ten um. What's your call on you're 202 00:11:49,160 --> 00:11:50,679 Speaker 1: a dollar now and has it changed in the last 203 00:11:50,760 --> 00:11:54,240 Speaker 1: couple of weeks and why no. We have, in fact, 204 00:11:54,280 --> 00:11:57,679 Speaker 1: for for quite some time already want ten um And 205 00:11:57,880 --> 00:12:01,079 Speaker 1: it was a bit yeah questioning because one fifteen was 206 00:12:01,160 --> 00:12:04,679 Speaker 1: a quite crucial level. And then because of the nervousness 207 00:12:04,720 --> 00:12:08,439 Speaker 1: about Turkey and possible spill over to Europe, Yeah, it 208 00:12:08,559 --> 00:12:11,920 Speaker 1: becomes more likely to effects one then and that for 209 00:12:12,040 --> 00:12:15,560 Speaker 1: us would be the lowest points because I see towards 210 00:12:15,600 --> 00:12:17,880 Speaker 1: the end of the year and next year you're straightening 211 00:12:18,040 --> 00:12:20,920 Speaker 1: or recovering again, because you also expect that the dollar 212 00:12:20,960 --> 00:12:23,920 Speaker 1: will pick around those levels. So so we have one 213 00:12:23,960 --> 00:12:26,520 Speaker 1: tim poo the end of September. George Broll, thank you 214 00:12:26,559 --> 00:12:28,720 Speaker 1: so much for joining us across all of our Bloomberg 215 00:12:28,760 --> 00:12:31,760 Speaker 1: platforms of the A, B and AM world timely to 216 00:12:31,800 --> 00:12:46,800 Speaker 1: say this is the right guy to talk to, Stephen Gandell. 217 00:12:47,640 --> 00:12:52,040 Speaker 1: It's made a career of being testy and asking the 218 00:12:52,160 --> 00:12:56,960 Speaker 1: right questions. There's different kinds of journalists, phim and then 219 00:12:56,960 --> 00:13:00,800 Speaker 1: there's journalists that come from the Washington Universe city of St. 220 00:13:00,880 --> 00:13:06,280 Speaker 1: Louis and they make people squirrel. Then let's go. So 221 00:13:06,320 --> 00:13:10,120 Speaker 1: this is a squirm back away streets of Wall Street 222 00:13:10,160 --> 00:13:17,679 Speaker 1: and watching the bubble pop. Yeah, well the bubbles for 223 00:13:17,880 --> 00:13:21,640 Speaker 1: Mr Musk. Tell me. That tell me the squirm factor 224 00:13:22,760 --> 00:13:27,360 Speaker 1: of Mr Musk now secured financing and yet the deals 225 00:13:27,400 --> 00:13:31,560 Speaker 1: going forward. Right, So I think the squirming factors a 226 00:13:31,600 --> 00:13:34,360 Speaker 1: lot on the board, right, because they seemed clear from 227 00:13:34,360 --> 00:13:37,439 Speaker 1: the statement the next day that they were kind of uh, 228 00:13:37,480 --> 00:13:39,320 Speaker 1: you know, in the dark. Maybe they had a conversation, 229 00:13:39,360 --> 00:13:41,240 Speaker 1: but they did no way knew this tweet was coming 230 00:13:41,600 --> 00:13:45,360 Speaker 1: from Wall Street right there. Squirming. And and now if 231 00:13:45,720 --> 00:13:49,600 Speaker 1: possibly the Sawdies or someone was going to uh you know, 232 00:13:49,720 --> 00:13:52,240 Speaker 1: had secured funding for this deal, right, was going to 233 00:13:52,360 --> 00:13:55,800 Speaker 1: fund it. The fact that now Musk is under investigation 234 00:13:55,840 --> 00:14:00,439 Speaker 1: by the SEC, it's gonna make anyone really scorm me. 235 00:14:00,520 --> 00:14:03,800 Speaker 1: I mean, that's the scormiest person right now. Whoever, if 236 00:14:03,800 --> 00:14:06,000 Speaker 1: there was someone who was going to fund this deal, 237 00:14:06,720 --> 00:14:08,920 Speaker 1: why why? I mean if they're already in with with 238 00:14:09,040 --> 00:14:13,480 Speaker 1: Elon Musk. This is not the first time that Elon 239 00:14:13,559 --> 00:14:18,440 Speaker 1: Musk has done something that has upset the status quo 240 00:14:18,480 --> 00:14:20,600 Speaker 1: and the way the companies are either rush, but this 241 00:14:20,680 --> 00:14:23,560 Speaker 1: is the first time that's put him himself in jeopardy 242 00:14:23,840 --> 00:14:27,600 Speaker 1: as as the CEO, because the SEC could based on 243 00:14:27,640 --> 00:14:30,640 Speaker 1: this and it's it's potentially market madulation. They could bar 244 00:14:30,760 --> 00:14:33,680 Speaker 1: him from being an officer, and he this company is 245 00:14:33,720 --> 00:14:37,600 Speaker 1: so entwined with him, right, You're not just investors. Let 246 00:14:37,600 --> 00:14:39,520 Speaker 1: me just push back on that, because that is something 247 00:14:39,520 --> 00:14:42,760 Speaker 1: that is true. Whether he did this tweet for four 248 00:14:43,520 --> 00:14:48,600 Speaker 1: dollars go private transaction or not. Every investor had already 249 00:14:48,640 --> 00:14:52,680 Speaker 1: bet the farm on Elon Musk running the company. Correct. Yes, 250 00:14:52,800 --> 00:14:54,480 Speaker 1: but when you make a deal with Elon must to 251 00:14:54,480 --> 00:14:57,680 Speaker 1: take his company private, you take the biggest risk right 252 00:14:57,720 --> 00:14:59,720 Speaker 1: away in this stuff, which is that he says something 253 00:15:00,000 --> 00:15:02,640 Speaker 1: stupid that moves the stock. Right. If you're thinking, Okay, 254 00:15:02,680 --> 00:15:04,120 Speaker 1: I'm gonna do a deal with him, I'm gonna get 255 00:15:04,160 --> 00:15:07,040 Speaker 1: him private, I'm gonna remove this risk. Now the risk 256 00:15:07,120 --> 00:15:09,560 Speaker 1: is even biggo, it's even bigger the elephant in the 257 00:15:09,640 --> 00:15:12,040 Speaker 1: room for me. What you're gonna write for for Bloomberg Opinion, 258 00:15:12,080 --> 00:15:15,720 Speaker 1: Steven get dealt with this is. Musk has notified Tesla 259 00:15:15,800 --> 00:15:20,800 Speaker 1: board August two on wanting to privatize. But that could 260 00:15:20,800 --> 00:15:23,960 Speaker 1: have been like August two at nine pm versus reruns 261 00:15:23,960 --> 00:15:27,440 Speaker 1: of Azie and Harriet. I mean, we don't know if 262 00:15:27,480 --> 00:15:30,840 Speaker 1: he even got out in front on this tweet and 263 00:15:30,920 --> 00:15:33,200 Speaker 1: told the board. I mean, we don't know, do we. 264 00:15:33,800 --> 00:15:36,400 Speaker 1: You know, boards have a lot of discussions. Uh So 265 00:15:36,480 --> 00:15:39,760 Speaker 1: he had discussion with um soft Bank, which didn't you know, 266 00:15:39,960 --> 00:15:43,440 Speaker 1: go very far. So people have these kind of discussions, right, 267 00:15:43,480 --> 00:15:45,480 Speaker 1: and he can kind of use that for cover, But 268 00:15:45,560 --> 00:15:48,680 Speaker 1: it does not sound like they had the type of 269 00:15:49,320 --> 00:15:52,880 Speaker 1: discussions that usually have before you make a tweet like 270 00:15:52,920 --> 00:15:56,640 Speaker 1: this or before you uh make something public. And there 271 00:15:56,680 --> 00:15:58,920 Speaker 1: was no press release, there was no filing with the 272 00:15:59,040 --> 00:16:01,840 Speaker 1: Securities in Exchange commissioned, there was nothing. There's a lot 273 00:16:01,920 --> 00:16:04,880 Speaker 1: of potential conflicts of here. Any reasonable board would have 274 00:16:04,880 --> 00:16:08,160 Speaker 1: a special non conflicted you know, panel or group to 275 00:16:08,200 --> 00:16:10,240 Speaker 1: investigate this. Okay, but that they're just drawing up the 276 00:16:10,240 --> 00:16:14,120 Speaker 1: special group now agreed. But I go back to the 277 00:16:14,160 --> 00:16:19,160 Speaker 1: original point, which is that Tesla is a company run 278 00:16:19,240 --> 00:16:24,040 Speaker 1: by a gentleman who doesn't use any rule book, right, 279 00:16:24,320 --> 00:16:27,240 Speaker 1: And you do that, I agree, But you it wasn't 280 00:16:27,280 --> 00:16:30,680 Speaker 1: necessarily run by someone who's under investigation by the SEC 281 00:16:30,840 --> 00:16:34,760 Speaker 1: who could be removed, right, And so I don't know 282 00:16:34,760 --> 00:16:36,760 Speaker 1: how you put seventy billion dollars in the company that way. 283 00:16:36,800 --> 00:16:38,280 Speaker 1: And I'm not saying the SEC and that really goes 284 00:16:38,280 --> 00:16:40,600 Speaker 1: after him and he can say we had these discussions 285 00:16:40,640 --> 00:16:45,720 Speaker 1: and funding secured. Was was a loose term, and you know, 286 00:16:46,120 --> 00:16:48,880 Speaker 1: it's it's been well established that CEOs can use Twitter. 287 00:16:49,240 --> 00:16:51,560 Speaker 1: So I'm not sure the ses after him. But at 288 00:16:51,560 --> 00:16:53,640 Speaker 1: the very least, the biggest risk of this deal is 289 00:16:53,680 --> 00:16:56,680 Speaker 1: now the fact that he's he's created this sec investigation. 290 00:16:56,920 --> 00:16:59,120 Speaker 1: I'll go with that. But is it the biggest risk 291 00:16:59,680 --> 00:17:02,960 Speaker 1: media is it's somebody lost report at one point seven 292 00:17:03,040 --> 00:17:05,800 Speaker 1: billion because he didn't want to use the rule book 293 00:17:06,280 --> 00:17:10,360 Speaker 1: that this bar at General Motors would have to use, 294 00:17:11,640 --> 00:17:15,640 Speaker 1: meaning that so got killed, right, and so there's lawsuits coming. 295 00:17:15,640 --> 00:17:18,800 Speaker 1: It's that you're saying that to me, it's almost I'm 296 00:17:18,800 --> 00:17:22,200 Speaker 1: not saying it's a bigger risk. But it's a huge distraction, 297 00:17:22,320 --> 00:17:25,480 Speaker 1: isn't it. It's a it's a huge distraction because it 298 00:17:25,560 --> 00:17:29,399 Speaker 1: puts Musk at legal risk. I think you know, the 299 00:17:29,760 --> 00:17:31,840 Speaker 1: money they if if they get fine, I mean they'll 300 00:17:31,840 --> 00:17:33,920 Speaker 1: have to they'll have to have some class action lawsuits 301 00:17:33,960 --> 00:17:37,159 Speaker 1: and they'll be It's it's a big distraction. But I 302 00:17:37,200 --> 00:17:38,800 Speaker 1: think the bigger issue for the deal is that it 303 00:17:38,800 --> 00:17:41,639 Speaker 1: puts Muske at risk. But you know, I mean, the 304 00:17:41,680 --> 00:17:43,760 Speaker 1: bigger issue could because it's it's kind of a dumb 305 00:17:43,840 --> 00:17:48,040 Speaker 1: transaction too. I mean, there are we're relatively good public company. 306 00:17:48,160 --> 00:17:51,000 Speaker 1: I can't assure you that it's a good stock, but 307 00:17:51,040 --> 00:17:52,720 Speaker 1: I think it's a better public company than is a 308 00:17:52,760 --> 00:17:55,679 Speaker 1: private company because stock pairs are paying what hundred and 309 00:17:55,680 --> 00:17:59,080 Speaker 1: forty times two years out earnings. If you're James Murdoch, 310 00:17:59,520 --> 00:18:02,000 Speaker 1: you're on the board, you've been there for less than 311 00:18:02,040 --> 00:18:06,800 Speaker 1: two years. What kinds of conversations are you're having with 312 00:18:06,880 --> 00:18:11,959 Speaker 1: your own counsel or maybe you don't have counsel. UM, 313 00:18:12,000 --> 00:18:16,200 Speaker 1: I think you're I don't I don't know what legal 314 00:18:16,280 --> 00:18:20,320 Speaker 1: risk he has other than UM. I mean, I think 315 00:18:20,359 --> 00:18:22,440 Speaker 1: he's on the board because I would guess that he's 316 00:18:22,480 --> 00:18:24,199 Speaker 1: on the board because he sees this as the future, 317 00:18:24,680 --> 00:18:27,560 Speaker 1: and I would think that he'd be on the board 318 00:18:28,320 --> 00:18:31,119 Speaker 1: UM and and sees Musk as a visionary. So I 319 00:18:31,560 --> 00:18:34,399 Speaker 1: don't know if I think it's probably he's probably like 320 00:18:34,440 --> 00:18:37,200 Speaker 1: a lot of the Tesla shareholders who are just you know, 321 00:18:37,880 --> 00:18:40,439 Speaker 1: they they believe in this vision. Thanks very much for 322 00:18:40,520 --> 00:18:58,960 Speaker 1: being with us, Stephen Gandel Bloomberg opinion on Tesla. There 323 00:18:58,960 --> 00:19:03,520 Speaker 1: has been any number of topics in this really interesting August. 324 00:19:03,720 --> 00:19:07,159 Speaker 1: We could start with Turkey. We could end with the 325 00:19:07,200 --> 00:19:11,760 Speaker 1: politics of the nation, but one of them has been Tesla, 326 00:19:12,920 --> 00:19:16,760 Speaker 1: and a Bloomberg survey carefully done show that to seven 327 00:19:16,840 --> 00:19:20,920 Speaker 1: five of the people talking about Tesla PIM have never 328 00:19:21,000 --> 00:19:24,760 Speaker 1: been into Tesla, and that would include me. Should we 329 00:19:24,760 --> 00:19:30,040 Speaker 1: talk to someone who actually has a Tesla owner Tesla driver? 330 00:19:30,960 --> 00:19:33,240 Speaker 1: And I gotta say, I did test drive at Tesla 331 00:19:33,720 --> 00:19:37,800 Speaker 1: and I was completely bowled over. It was an amazing experience. 332 00:19:37,920 --> 00:19:40,399 Speaker 1: It's like the center of gravity has shifted, and the 333 00:19:40,440 --> 00:19:43,400 Speaker 1: stock has done done so poorly forty two point five 334 00:19:43,440 --> 00:19:46,720 Speaker 1: percent per year from inception, and it's down a little 335 00:19:46,720 --> 00:19:50,280 Speaker 1: bit from two thousand seven. Matthew Winkler with US emeritus 336 00:19:50,359 --> 00:19:53,360 Speaker 1: editor in chief of Bloomberg News and Tesla owner. When 337 00:19:53,359 --> 00:19:56,800 Speaker 1: you hear the Tesla gloom and Doom crew, as a 338 00:19:56,880 --> 00:20:01,480 Speaker 1: car guy, which you are, how do you respond on So, 339 00:20:01,520 --> 00:20:04,200 Speaker 1: first of all, thank you very much for that. I'm 340 00:20:04,240 --> 00:20:07,199 Speaker 1: not a car guy. Um. You know, before I had 341 00:20:07,240 --> 00:20:11,720 Speaker 1: a Tesla, I had a thirteen year old Toyota Avalon 342 00:20:11,840 --> 00:20:14,439 Speaker 1: and that was solely because it has a great back seat. 343 00:20:14,480 --> 00:20:17,199 Speaker 1: And when I tested my Tesla, the one that I 344 00:20:17,200 --> 00:20:19,720 Speaker 1: have now, which I bought in two thousand fourteen, it 345 00:20:19,800 --> 00:20:21,640 Speaker 1: was because of its back seat. They are all kinds 346 00:20:21,640 --> 00:20:24,959 Speaker 1: of other things. Of course they come with it. But 347 00:20:24,960 --> 00:20:29,040 Speaker 1: but the answer to your question is, uh, you shouldn't ask, 348 00:20:29,200 --> 00:20:33,120 Speaker 1: actually me, Um, you should ask the people actually own 349 00:20:33,200 --> 00:20:37,639 Speaker 1: the shares of Tesla, who, according to data compiled by Bloomberg, 350 00:20:37,680 --> 00:20:41,600 Speaker 1: which all of our users can access, shows um a 351 00:20:41,680 --> 00:20:45,960 Speaker 1: greater loyalty and commitment to Tesla than is seen in 352 00:20:46,119 --> 00:20:49,960 Speaker 1: any other automaker, which is astounding to me. In other words, 353 00:20:50,600 --> 00:20:52,840 Speaker 1: the people with the most at stake, who are the 354 00:20:52,920 --> 00:20:57,720 Speaker 1: investors who are following Tesla and following Tesla's experience with 355 00:20:58,640 --> 00:21:00,800 Speaker 1: its owners and I'll get to that in a second, 356 00:21:01,760 --> 00:21:04,919 Speaker 1: have made Tesla the most lucrative, as you said. But 357 00:21:05,160 --> 00:21:09,080 Speaker 1: also here's the here's the real surprise. The least volatile 358 00:21:09,760 --> 00:21:15,159 Speaker 1: UM share among automakers major competitors. Why is that. Partly 359 00:21:15,200 --> 00:21:18,280 Speaker 1: it's because of the sales growth of Tesla, which is 360 00:21:19,119 --> 00:21:23,600 Speaker 1: an exponential multiple of the sales growth of other carmakers. 361 00:21:23,640 --> 00:21:25,600 Speaker 1: And you could say, okay, they're starting from a very 362 00:21:25,640 --> 00:21:30,000 Speaker 1: low base, but that is also in the context of 363 00:21:30,160 --> 00:21:33,160 Speaker 1: at some point, so many more of us, a multiple 364 00:21:33,400 --> 00:21:35,600 Speaker 1: of us, are going to be driving electric vehicle. So 365 00:21:35,680 --> 00:21:39,560 Speaker 1: Tesla is the only carmaker that is fully committed to 366 00:21:39,640 --> 00:21:42,080 Speaker 1: doing that. And then finally, if you just went to 367 00:21:42,119 --> 00:21:46,360 Speaker 1: Consumer Reports, which everybody can do, and see what do 368 00:21:46,520 --> 00:21:50,679 Speaker 1: the people like me think about Tesla. You know, the 369 00:21:50,760 --> 00:21:55,400 Speaker 1: Models is the highest rated car in the world according 370 00:21:55,400 --> 00:21:59,080 Speaker 1: to Consumer Reports, and the Model three, which is meant 371 00:21:59,119 --> 00:22:02,480 Speaker 1: to be a vehicle for everybody, every man, every woman, 372 00:22:03,200 --> 00:22:06,239 Speaker 1: has the highest owner satisfaction. So you didn't do this 373 00:22:06,400 --> 00:22:09,800 Speaker 1: just because you wanted your kids to think you were cool. Actually, 374 00:22:10,080 --> 00:22:12,720 Speaker 1: one of the appeals of the Tesla was that I 375 00:22:12,760 --> 00:22:16,679 Speaker 1: could put two grandchildren there. You go in the in 376 00:22:16,720 --> 00:22:21,560 Speaker 1: the back seat and they've got and they've got you 377 00:22:21,600 --> 00:22:24,920 Speaker 1: know this whatever five point seat belt system, so it's 378 00:22:24,960 --> 00:22:27,840 Speaker 1: totally safe, and that was cool. It was really cool 379 00:22:27,840 --> 00:22:32,280 Speaker 1: that I could do that. Well, okay, I'm just gonna 380 00:22:32,320 --> 00:22:34,480 Speaker 1: throw some some issues at you and you can tell 381 00:22:34,520 --> 00:22:38,120 Speaker 1: me what you think. A hundred years ago, the vehicles 382 00:22:38,160 --> 00:22:40,840 Speaker 1: on the road in the United States were electric that 383 00:22:40,880 --> 00:22:43,679 Speaker 1: didn't work out. There was a lot of money spent, 384 00:22:43,880 --> 00:22:47,240 Speaker 1: a lot of cheering, a lot of people lost money. 385 00:22:47,400 --> 00:22:50,760 Speaker 1: In addition, if you go on forums online and you 386 00:22:51,359 --> 00:22:55,920 Speaker 1: read what Tesla owners say about getting very minor parts 387 00:22:56,600 --> 00:23:00,479 Speaker 1: in order to fix their cars that have been minor 388 00:23:00,760 --> 00:23:06,720 Speaker 1: fender benders. People wait two three months at a certain point, 389 00:23:06,760 --> 00:23:09,400 Speaker 1: do you think that patients is exhausted after they've spent 390 00:23:09,440 --> 00:23:13,720 Speaker 1: a hundred thousand dollars for an automobile? Um? Well, according 391 00:23:13,720 --> 00:23:17,720 Speaker 1: to the data, apparently not, because, uh, the sales growth 392 00:23:18,280 --> 00:23:23,879 Speaker 1: continues unabated. So nobody is perfect, obviously, but putting that 393 00:23:23,960 --> 00:23:26,960 Speaker 1: in context, the sales growth is unabated. To your question 394 00:23:27,000 --> 00:23:31,240 Speaker 1: about electric vehicles, way back when, you know, it was 395 00:23:31,359 --> 00:23:37,320 Speaker 1: Edison himself, Thomas Edison who thought, uh, that was the future. Ironically, 396 00:23:38,320 --> 00:23:43,679 Speaker 1: it was Thomas Edison who dismissed Nicola Tesla is at 397 00:23:43,760 --> 00:23:47,720 Speaker 1: one point colleague rival you could say, uh, and his 398 00:23:47,880 --> 00:23:53,960 Speaker 1: invention of the alternating uh current motor um as impractical. 399 00:23:54,160 --> 00:23:57,200 Speaker 1: And of course we all we all embrace a C today. 400 00:23:57,280 --> 00:24:01,520 Speaker 1: So I would say Nicola Tesla, who um, you know, 401 00:24:01,640 --> 00:24:04,920 Speaker 1: did so many things anticipating the twenty one century, including 402 00:24:04,960 --> 00:24:09,800 Speaker 1: by the way, uh you know, moving pictures and audio 403 00:24:09,920 --> 00:24:12,280 Speaker 1: video and all that that all comes out of Nicola Tesla. 404 00:24:12,520 --> 00:24:14,760 Speaker 1: He did that. So you know, if you go back 405 00:24:14,760 --> 00:24:17,760 Speaker 1: in time, the electric vehicle was the right idea. It's 406 00:24:17,760 --> 00:24:20,560 Speaker 1: where we should have gone Edison in fact said as much. 407 00:24:21,040 --> 00:24:23,439 Speaker 1: He was very disappointed that we wound up with a 408 00:24:23,720 --> 00:24:26,240 Speaker 1: internal combustion engine. For as long as we have, well 409 00:24:26,240 --> 00:24:28,080 Speaker 1: you wonder world be in ten years. I've got to 410 00:24:28,080 --> 00:24:30,159 Speaker 1: cover this man because it's so important. You were truly 411 00:24:30,200 --> 00:24:32,960 Speaker 1: one of the leaders within journalism on regge f D. 412 00:24:33,200 --> 00:24:35,960 Speaker 1: You led the charge. And we've seen all sorts of 413 00:24:36,000 --> 00:24:38,920 Speaker 1: stuff about Mr Musk the litigation. We've done three interviews 414 00:24:38,960 --> 00:24:42,480 Speaker 1: today on it as well. And this folds into the 415 00:24:42,560 --> 00:24:45,080 Speaker 1: fact does this guy get a different rule book? Does 416 00:24:45,119 --> 00:24:50,000 Speaker 1: he does? Does does an executive at this firm, entrepreneur, owner, 417 00:24:50,040 --> 00:24:53,600 Speaker 1: et cetera played by a different rule book than the 418 00:24:53,640 --> 00:24:57,120 Speaker 1: CEO of Colgate just as one example? And this goes 419 00:24:57,119 --> 00:25:01,080 Speaker 1: into disclosure, doesn't it. Yeah, I mean I think it's 420 00:25:01,119 --> 00:25:05,240 Speaker 1: a hard question to answer. I mean, obviously there are, 421 00:25:05,600 --> 00:25:09,399 Speaker 1: to say the least idiosyncrasies and to say the worst 422 00:25:09,440 --> 00:25:12,840 Speaker 1: maybe irregularities. Um, but in the age of Twitter, which 423 00:25:12,840 --> 00:25:16,800 Speaker 1: we're all in, all kinds of things are happening with 424 00:25:16,880 --> 00:25:21,280 Speaker 1: respect to disclosure that were unimaginable when we did the 425 00:25:21,320 --> 00:25:25,600 Speaker 1: coverage of selective disclosure back in the nineties of Bloomberg News, 426 00:25:25,640 --> 00:25:29,280 Speaker 1: which led to, as you say, the reg f D regulation. 427 00:25:29,560 --> 00:25:31,239 Speaker 1: We need to go back to that or do we 428 00:25:31,280 --> 00:25:38,000 Speaker 1: need to find something new given modern digital distribution. I mean, 429 00:25:38,119 --> 00:25:43,239 Speaker 1: if you ask me, greater transparency is always preferred, and 430 00:25:43,280 --> 00:25:46,960 Speaker 1: we should do everything we can uh in our public 431 00:25:47,040 --> 00:25:53,880 Speaker 1: markets to perpetuate and accentuate transparency. So anything that gets 432 00:25:53,920 --> 00:25:57,880 Speaker 1: in the way of that, I guess I'm in the opposition. 433 00:25:58,119 --> 00:26:00,480 Speaker 1: Matt Winker, think you so much as emeritus editor in 434 00:26:00,560 --> 00:26:05,560 Speaker 1: chief and writing intelligently on Tesla actually going down the 435 00:26:05,680 --> 00:26:14,320 Speaker 1: silent world. Grand Chors. Thanks for listening to the Bloomberg 436 00:26:14,400 --> 00:26:20,360 Speaker 1: Surveillance podcast. Subscribe and listen to interviews on Apple Podcasts, SoundCloud, 437 00:26:20,720 --> 00:26:24,920 Speaker 1: or whichever podcast platform you prefer. I'm on Twitter at 438 00:26:24,960 --> 00:26:29,240 Speaker 1: Tom Keene before the podcast. You can always catch us worldwide. 439 00:26:29,680 --> 00:26:30,800 Speaker 1: I'm Bloomberg Radio.