WEBVTT - Surveillance: Speculative Bubble With Cooperman 0:00:09.880 --> 0:00:13.800 Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane. Daily 0:00:13.960 --> 0:00:17.560 we bring you insight from the best in economics, finance, investment, 0:00:18.000 --> 0:00:23.480 and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, 0:00:23.600 --> 0:00:27.400 Bloomberg dot Com, and of course, on the Bloomberg Right 0:00:27.440 --> 0:00:30.800 Now our interview of the day without question, on the 0:00:30.880 --> 0:00:34.520 future of Global Wall Street. He was the first kid 0:00:34.560 --> 0:00:36.919 in his family to go to college. He ended up 0:00:37.000 --> 0:00:40.720 landing at Xerox, went on to Columbia University with the 0:00:40.840 --> 0:00:45.000 usual NBA and landed at a small investment shop a 0:00:45.080 --> 0:00:50.360 million years ago, and there he built their investment research department, 0:00:50.880 --> 0:00:53.600 the II winner for I believe it was nine even 0:00:53.640 --> 0:00:56.520 ten years in a row. Leon Cooperman joins us, this 0:00:56.640 --> 0:00:59.520 could be a four hour conversation. We don't have that, 0:01:00.040 --> 0:01:03.680 so let's get to it with a gentleman from Omega. Leon, 0:01:03.880 --> 0:01:06.720 I want to talk right now about the future of 0:01:06.840 --> 0:01:10.560 Golden Sex. You have a beloved relationship with it. You 0:01:10.600 --> 0:01:13.959 and I have talked about this many times before. I 0:01:14.080 --> 0:01:17.000 guess they're trying to be a retail bank. We went 0:01:17.040 --> 0:01:21.320 from Lloyd over to David. How is your Golden Sex doing. 0:01:23.360 --> 0:01:26.200 I think they're doing very well. I didn't expect this question, 0:01:26.680 --> 0:01:29.680 and I retired from Golden Sex excuse me at the 0:01:29.760 --> 0:01:35.119 end of so I'm gone for what twenty years? Um, 0:01:37.000 --> 0:01:39.800 so maybe more than twenty years, to be closer to 0:01:39.840 --> 0:01:42.760 thirty years, and so things have changed. But I have 0:01:42.800 --> 0:01:45.319 an extraordinary high requ off for the firm to have 0:01:45.360 --> 0:01:48.960 a great culture. They're they're they're terrific people. But in 0:01:49.000 --> 0:01:52.920 all honesty, uh, I'm not current. What do you point? Okay, 0:01:52.960 --> 0:01:55.600 that's diplomat. I made a big mistake when I got 0:01:55.680 --> 0:01:58.200 my stock when they went public. I gave it all 0:01:58.240 --> 0:02:00.920 to charity, and that I should have given a cash 0:02:00.920 --> 0:02:03.120 and kept a stock we Okay, that's a good way 0:02:03.120 --> 0:02:06.160 to put it. But Leon Cooperman, what's so important here 0:02:06.240 --> 0:02:10.280 is this experiment of trying to do investment banking, trying 0:02:10.280 --> 0:02:13.919 to do investment research and strategies you did and Golden 0:02:14.000 --> 0:02:17.840 successet management, and also trying to be a bank. Do 0:02:17.919 --> 0:02:22.720 you think that can be a successful strategy. I'm sure 0:02:22.720 --> 0:02:26.560 if Goldman Sacks Persuser will be successful strategy. What can 0:02:26.600 --> 0:02:29.359 I say? You know, I don't run the shop. When 0:02:29.360 --> 0:02:32.000 I was there, we were a private partnership. We used 0:02:32.000 --> 0:02:35.040 to laugh about the banks uh, and then what happened 0:02:35.080 --> 0:02:37.960 during the financial crisis in two thousand and eight, we 0:02:38.040 --> 0:02:41.600 were they were forced to survive, and you know, they'll 0:02:41.639 --> 0:02:43.640 go with the they'll go with the float. You know, 0:02:43.639 --> 0:02:45.600 when I was dead, they were very reluctant get into 0:02:45.600 --> 0:02:48.600 money management. Now that in my management with two feet, 0:02:48.880 --> 0:02:51.480 so you know, they adapt to the environment. They're smart people, 0:02:51.520 --> 0:02:54.000 they're good people, and I would have great confidence in 0:02:54.040 --> 0:02:57.040 the farm. Leon Cooperman Jerome Power will speak at Jackson 0:02:57.080 --> 0:03:00.160 Hole today a virtual jackson Hole this week. Rather, I 0:03:00.160 --> 0:03:03.679 should say, tell me how you perceive the interest rate 0:03:03.800 --> 0:03:06.960 structure that the FED has set. What is the FED 0:03:07.160 --> 0:03:10.799 rant on Global Wall Street? They have created a real 0:03:10.880 --> 0:03:15.320 speculative bubble. In my opinion, I have to admit that 0:03:15.400 --> 0:03:18.919 I'm uncomfortable at the present time because not because of 0:03:18.919 --> 0:03:23.880 the virus, it's a factor. Uncomfortable because focus on something 0:03:23.919 --> 0:03:26.200 the market isn't focused on, and that is the amount 0:03:26.200 --> 0:03:28.959 of debt that's being created. Who pays for the party 0:03:28.960 --> 0:03:31.320 when the party is over? You know, we just celebrate 0:03:31.320 --> 0:03:34.839 our two and forty fourth birthday. And basically it took 0:03:34.880 --> 0:03:36.880 us two and forty four years to go from zero 0:03:37.480 --> 0:03:40.320 national debt to twenty one trillion will probably end this 0:03:40.400 --> 0:03:43.800 year trillion. That is a growth rate in debt far 0:03:43.840 --> 0:03:46.600 in excess of what the economy is growing at. And 0:03:46.640 --> 0:03:48.400 I think that that's going to be a problem down 0:03:48.400 --> 0:03:51.200 the road. And I think they they've created a real 0:03:51.240 --> 0:03:54.920 speculative environment. You know, I was just looking give me 0:03:55.000 --> 0:03:59.000 some statistics. Apple announced their fourth one split on July. 0:04:00.720 --> 0:04:03.880 The twenty day average call volume at that time with 0:04:04.000 --> 0:04:09.720 seven and one calls. Okay. This past Friday, Apple traded 0:04:09.760 --> 0:04:13.360 two point one million calls, three times the average of 0:04:13.480 --> 0:04:17.520 twenty days okay, And the stock is up sevent since 0:04:17.520 --> 0:04:20.880 the announcement of the split. Next before this morning, Tesla 0:04:20.960 --> 0:04:24.839 announced their five for one split August eleven. Same thing, 0:04:24.880 --> 0:04:27.760 big increase in call volume. The stock is up forty 0:04:27.839 --> 0:04:30.719 nine percent since the stock split was announced against the 0:04:30.800 --> 0:04:34.000 SMP up one. Now, the last time I checked, if 0:04:34.040 --> 0:04:36.760 somebody gave me five singles for five dollar bill, it 0:04:36.839 --> 0:04:39.920 didn't create a new wealth, right, did not create Well, 0:04:40.040 --> 0:04:44.000 that was the old calculation. Now this is the new calculation. 0:04:44.000 --> 0:04:46.799 When you've got a big component of robin hood investors, 0:04:46.800 --> 0:04:49.240 that sort of one theory out there, what's risk your 0:04:49.320 --> 0:04:53.919 right now? The high flying stocks or bonds. Well, I 0:04:54.000 --> 0:04:58.400 think no question that bonds to me present the return 0:04:58.520 --> 0:05:01.400 free risk. Uh, and that's what's work in favor of 0:05:01.440 --> 0:05:04.680 the stock market. What I have not fully appreciated is 0:05:04.720 --> 0:05:09.279 the what a zero interest rate environment does for stocks. 0:05:09.760 --> 0:05:11.880 I was focused on the fact that we've had zero 0:05:11.920 --> 0:05:14.520 interest rates in Japan and Europe and their stocks are 0:05:14.560 --> 0:05:17.760 five or six multiple points below the United States market. 0:05:18.040 --> 0:05:20.279 So I think low interest rates are indicative of a 0:05:20.320 --> 0:05:24.919 problem economy. You know, we've had artificial support for the 0:05:24.960 --> 0:05:30.119 economy since two thousand and eight. You know, it's thirteen years. 0:05:30.680 --> 0:05:33.720 And uh, I don't look at that as being the positive. 0:05:33.760 --> 0:05:36.920 I look at that as possibly being a negative. You're 0:05:37.000 --> 0:05:40.120 you're Stephen Ratner, close to Mike Bloomberg, who I have 0:05:40.240 --> 0:05:43.800 enormous respect for, basically wrote an article this morning in 0:05:43.880 --> 0:05:48.440 The Times preach the economic recovery that isn't you know? Um, 0:05:49.040 --> 0:05:52.560 I think that the zero rates is creating a very 0:05:52.640 --> 0:05:56.400 speculative tone to the market. I have said for months 0:05:56.440 --> 0:06:00.400 now that we're really dealing with three markets, not one market. 0:06:00.880 --> 0:06:04.480 The first market is the fang market. And frankly, uh, 0:06:04.640 --> 0:06:09.039 these are very fine companies, these technology companies whose demand 0:06:09.120 --> 0:06:12.200 has been pulled forward by at least five years due 0:06:12.200 --> 0:06:16.800 to the virus. They're not cheap, but by the historical 0:06:16.880 --> 0:06:20.839 standards of the nifty fifty of nineteen seventy two and 0:06:21.160 --> 0:06:24.680 UH the technology bubble of two thousand, they're not in 0:06:24.760 --> 0:06:27.640 any way expensive, and people could conjure up with I 0:06:27.680 --> 0:06:29.800 want to come up, Leon, I want to go through this, 0:06:29.880 --> 0:06:32.080 and we should mention to all of you on our simulcast, 0:06:32.120 --> 0:06:34.440 we welcome you to Bloomberg Radio and Television. We are 0:06:34.480 --> 0:06:38.080 with Leon Cooperman of Omega. Of course he's mentioned Mr Bloomberg, 0:06:38.160 --> 0:06:41.000 the founder of Bloomberg LP, this radio and TV property 0:06:41.240 --> 0:06:44.359 as well, and also Mr Rattner writing today an essay 0:06:44.520 --> 0:06:47.760 on the market, Steve Rattner of course managing uh some 0:06:47.920 --> 0:06:50.760 of the assets of Mr Bloomberg, And of course he's 0:06:50.760 --> 0:06:54.240 appeared with this many times before. Leon Cooperman, to the 0:06:54.279 --> 0:06:58.279 world of Stephen Ratner. You learned a Columbia business school 0:06:58.320 --> 0:07:02.600 of a sixty forty or a six efficient market and 0:07:02.680 --> 0:07:08.360 proper asset allocation? What is the Cooper theory Cooperman theory? 0:07:08.640 --> 0:07:11.760 Given the distortions that we have now, can you stay 0:07:11.840 --> 0:07:15.840 with with original investment science or do you have to 0:07:15.920 --> 0:07:19.200 invent something new for the next ten years. Book of 0:07:19.400 --> 0:07:22.600 seventy seven years of age. I have no clients. I 0:07:22.680 --> 0:07:25.800 retired at the end of twenty eighteen, and I do 0:07:25.840 --> 0:07:29.360 what makes me comfortable. Right now. I have very, very 0:07:29.520 --> 0:07:34.920 very few bonds. I think bonds represent a return free risk. Uh, 0:07:35.040 --> 0:07:37.160 and I don't. I was beginning to explain to you 0:07:37.200 --> 0:07:41.360 there three markets out there. There's the fang market, richly 0:07:41.400 --> 0:07:45.520 appraised but not ridiculously appraised. Okay, then the Robintive market, 0:07:45.520 --> 0:07:49.760 which is ridiculous, totally ridiculous. Regrettably, I said this on 0:07:49.840 --> 0:07:52.200 TV about a month ago, that that mark would end 0:07:52.200 --> 0:07:55.000 in tears, and the very next day, some young man, 0:07:55.440 --> 0:07:59.880 yes seven creating, committed suicide. Okay, when you carl i 0:08:00.080 --> 0:08:03.760 con is as bright as they come. He liquidates his position, 0:08:03.880 --> 0:08:06.480 hurts at seventy two cents a share in three weeks later, 0:08:06.480 --> 0:08:08.760 his training of five dollars. And you check into what's 0:08:08.760 --> 0:08:13.320 going on in the Robin hood uh, platform Eastman, Kodak Robin, 0:08:13.360 --> 0:08:17.240 the platform, Tesla, Robin and platform. So you know that's 0:08:17.280 --> 0:08:19.440 gonna end in tears. I have no interest in that market. 0:08:19.480 --> 0:08:21.600 It's not rational to me. I don't spend time on 0:08:21.640 --> 0:08:24.040 it the third market, the things to be done, and 0:08:24.080 --> 0:08:27.280 that's everything else. So I give a shout out to 0:08:27.400 --> 0:08:30.520 my former partner Sam Martini who did great work or 0:08:30.520 --> 0:08:34.520 something called Mr Cooper c O O P. I own it, Okay, 0:08:34.600 --> 0:08:36.280 I like it. I would add to it right here, 0:08:36.360 --> 0:08:39.320 right now. He did work. The work he did was 0:08:39.400 --> 0:08:43.760 knowable by anybody. Okay, he's a digger, he's a smart 0:08:43.800 --> 0:08:46.800 on the average guy. The coming three weeks ago reported 0:08:46.840 --> 0:08:50.160 earnings in the second quarter five hundred million dollars in 0:08:50.200 --> 0:08:53.720 cash earnings, which was fifty percent of the market value 0:08:53.720 --> 0:08:57.800 of the company in one quarter. Everybody was thinking about 0:08:57.800 --> 0:09:00.200 the stocking work twelve or thirteen. Now that you are right, 0:09:01.240 --> 0:09:03.280 just because the time I want to circle back. We're 0:09:03.280 --> 0:09:05.319 talking about the future of Goldman Sachs, the future of 0:09:05.360 --> 0:09:08.720 Global Wall Street. Can you own the banks here? And 0:09:08.760 --> 0:09:12.480 if Mr Diamond is running the sterling performer of the banks, 0:09:12.840 --> 0:09:17.400 can you acquire shares in JP Morgan? This morning? I 0:09:17.480 --> 0:09:21.280 could I own City Bank, and I'm I'm concerned about 0:09:21.320 --> 0:09:24.120 financial conditions generally, so I'm not adding to my banks. 0:09:24.480 --> 0:09:27.280 I think they're probably cheap. Uh, They're a cheap group 0:09:27.320 --> 0:09:31.160 in the market. You keep with perseverating about Goldman. Don't 0:09:31.160 --> 0:09:34.840 worry about Goldman. Goldman will be just fine. They go 0:09:34.880 --> 0:09:39.080 with the flow, They'll figure out what they gotta do. Right. Well, well, Leanna, 0:09:39.160 --> 0:09:42.040 and perhaps don't worry about Goldman. But what about hedge funds? 0:09:42.080 --> 0:09:44.800 You moved to a family office. If you were starting 0:09:44.800 --> 0:09:46.839 your career out now, would you start a hedge fund 0:09:47.080 --> 0:09:49.480 or would you stay in the private realm? Would you 0:09:49.520 --> 0:09:54.640 say away from that industry? Let me tell you what's happened. Okay, uh, 0:09:54.679 --> 0:09:57.640 And maybe indirectly, I'll answer you a question. If you 0:09:57.800 --> 0:10:01.000 came to me in two thousand and eight and said, Lee, 0:10:01.040 --> 0:10:03.360 I want to invest in your hedge fund, and I 0:10:03.400 --> 0:10:04.920 said to you, know, you don't want to be in 0:10:04.960 --> 0:10:07.800 a hedge fund. You want to be in a relative 0:10:07.840 --> 0:10:12.360 return vehicle. Hedge funds are hedged. Basically, they have a 0:10:12.360 --> 0:10:15.480 short position. We are now in front of a ten 0:10:15.559 --> 0:10:18.920 year bull market in the economy, a tenure bull run 0:10:18.960 --> 0:10:21.120 in the stock market. You don't want to have any 0:10:21.120 --> 0:10:23.880 hedges on. You want to be bulls out investment. You 0:10:23.920 --> 0:10:27.679 would have had me arrested. That's exactly what's happened. Okay. 0:10:27.720 --> 0:10:30.880 Now everybody says, well, the passive index is that beat 0:10:30.920 --> 0:10:32.560 the hedge funds. We don't want to be in the 0:10:32.600 --> 0:10:35.200 hedge funds. And you have to ask yourself a question 0:10:35.320 --> 0:10:37.840 now the time you want to be fully invested on 0:10:37.880 --> 0:10:40.840 alongside and not have a hedge on and I'd say no, 0:10:40.920 --> 0:10:43.360 I think hedge funds make sense now. So the people 0:10:43.480 --> 0:10:45.439 that went into hedge funds in two thousand and eight 0:10:45.440 --> 0:10:48.360 are disenchanted, But the fact is they made that decision. 0:10:48.960 --> 0:10:52.079 I retired the top. I retired to do the path right. 0:10:52.160 --> 0:10:56.040 It's uh and uh, you know, I want to have 0:10:56.080 --> 0:11:00.560 a life of my own. You know, I'm basically I'm 0:11:00.640 --> 0:11:04.200 very focused at philanthropy now. You know. I tell the 0:11:04.280 --> 0:11:08.080 young kids that I meet with it, you know, I 0:11:08.120 --> 0:11:11.600 give them a quote. I gotta fine, Okay, Leon, we're 0:11:11.640 --> 0:11:14.000 on a time. All I can say is that's either 0:11:14.080 --> 0:11:17.400 a phenomenal backdrop in front of three guys on Madison 0:11:17.440 --> 0:11:20.640 Avenue or the island you're on, Lisa and I want 0:11:20.640 --> 0:11:24.880 to visit my con February mean, I I am totally 0:11:24.920 --> 0:11:28.240 illiterate technologically. I pressed a button in my computer that 0:11:28.360 --> 0:11:33.840 background appeared. I can't get rid of it. Short Hills, 0:11:33.920 --> 0:11:38.319 New Jersey. I am a Florida resonate. Uh. So you're 0:11:38.360 --> 0:11:40.160 doing this to get you're doing this to get a 0:11:40.240 --> 0:11:46.040 tech dodge from the I R S. That's what he's doing, everybody. 0:11:46.120 --> 0:11:48.920 Leon Cooperman's in Florida today and for the other hundred 0:11:49.000 --> 0:11:52.480 eighty one days he's gotta be there as well. Mr Cooperman, 0:11:52.600 --> 0:11:58.920 thank you so much. With Omega as well. Right now, 0:11:59.080 --> 0:12:01.480 Dr Bremer to just as well. My book of the 0:12:01.559 --> 0:12:06.520 summer is Richard hass Magisterial The World. It is a 0:12:06.600 --> 0:12:11.560 primer on our international relations. Of course, Ian Bremer knows 0:12:11.640 --> 0:12:14.400 every word of that. He joins us now because he 0:12:14.520 --> 0:12:18.120 is doing one of the coolest things in international relations. 0:12:18.480 --> 0:12:23.240 Ian Bremer escapes every summer to Nantucket and you think 0:12:23.600 --> 0:12:26.760 he's leading the big life. But what he's doing is 0:12:26.880 --> 0:12:31.400 leaned over a desk working like crazy on his next book. 0:12:31.720 --> 0:12:34.719 And that next book. We are in anticipation of the 0:12:34.760 --> 0:12:38.240 crisis we need. What is the crisis, Dr Bremer, that 0:12:38.320 --> 0:12:43.800 we need? And you'd like to believe that it's coronavirus, right, 0:12:43.840 --> 0:12:47.160 because it's the biggest of our lifetimes. As we all know, 0:12:47.440 --> 0:12:51.520 crises do give us the opportunity to respond to things 0:12:51.520 --> 0:12:55.840 that are deeply broken. Uh. It is hard to see. Uh, 0:12:56.000 --> 0:13:00.560 in this environment that we are taking advantage of the 0:13:00.600 --> 0:13:04.080 opportunities this crisis affords us. So the book is all 0:13:04.120 --> 0:13:09.120 about that and other such opportunities on our horizon. What 0:13:09.280 --> 0:13:11.720 we have right now is we jump from news item 0:13:11.760 --> 0:13:14.079 to news item. This morning, Dr bremer It is a 0:13:14.160 --> 0:13:18.120 Secretary of State making a convenient trip to Israel so 0:13:18.200 --> 0:13:23.160 he can speak from Jerusalem to support his president with 0:13:23.320 --> 0:13:28.240 his evangelical base. Comment on the appropriateness of a Secretary 0:13:28.280 --> 0:13:33.199 of State speaking at a convention from Jerusalem. Uh, there's 0:13:33.320 --> 0:13:38.160 not much that this administration is concerned about in terms 0:13:38.400 --> 0:13:43.839 of symbolic appropriateness. Uh. I've never seen anyone in the 0:13:43.840 --> 0:13:46.160 White House state we couldn't do that because it wouldn't 0:13:46.160 --> 0:13:50.360 be appropriate. That's that's not the way they being UM, 0:13:50.400 --> 0:13:53.840 and frankly, it's not the way their base wants them 0:13:54.679 --> 0:13:58.839 to be. But let's be clear that the US relationship 0:13:58.960 --> 0:14:03.720 with Israel UM is one of Trump's best in the world. 0:14:04.679 --> 0:14:10.000 His foreign policy successes are more about Israel than just 0:14:10.160 --> 0:14:15.400 about anywhere else. Remember, they moved the embassy to Jerusalem, 0:14:16.240 --> 0:14:20.520 so you wouldn't be surprised if Pompeo is speaking from 0:14:20.680 --> 0:14:24.840 the new US embassy that many administrations had supported but 0:14:24.880 --> 0:14:28.880 no one had done. You also have now normalization of 0:14:28.960 --> 0:14:34.400 relations between the Israelis and the UA, something actually facilitated 0:14:34.400 --> 0:14:38.360 by the Trump administration. And it looks like Pompeo is 0:14:38.400 --> 0:14:42.240 going to Sudan after that. I think that that my 0:14:42.400 --> 0:14:46.000 expectation is Sudan is also going to normalize. This is 0:14:46.040 --> 0:14:48.120 not going to stop with the U a E. It's 0:14:48.160 --> 0:14:51.320 actually quite something. And since we usually beat up on 0:14:51.360 --> 0:14:54.080 Trump in terms of foreign policy failings and how different 0:14:54.120 --> 0:14:56.800 leaders don't like him, this is one way they do 0:14:57.120 --> 0:15:00.080 forgetting about the way they do it, or the this 0:15:00.240 --> 0:15:03.800 course or the tone. What is the distinction between a 0:15:03.880 --> 0:15:09.200 Biden foreign policy in a second term Trump foreign policy? 0:15:09.720 --> 0:15:14.480 The biggest difference is probably Europe. President Trump and the 0:15:14.680 --> 0:15:18.440 entire administration believes that the EU is bad for the 0:15:18.560 --> 0:15:22.560 United States. They want to deal individually with European governments. 0:15:22.840 --> 0:15:27.720 They strongly supported Brexit. President Biden if he became, if 0:15:27.720 --> 0:15:30.640 he won, would be the antithesis of that. He would 0:15:30.680 --> 0:15:37.240 support a stronger EU. Um he would clearly and build 0:15:37.400 --> 0:15:41.960 up the multilateral aspects of that relationship, where Trump there's not. 0:15:42.480 --> 0:15:47.120 On China, Tom the Biden administration and the Trump administration 0:15:47.200 --> 0:15:50.800 would be almost identical. And it's so interesting from the 0:15:50.920 --> 0:15:53.840 d n C last week, you didn't hear anyone talking 0:15:53.880 --> 0:15:56.480 about China, despite the fact that that's probably the single 0:15:56.520 --> 0:16:01.680 issue that exercises and animates President Trump the most internationally. 0:16:02.040 --> 0:16:05.640 And it's because quietly, when you talk to Biden's national 0:16:05.680 --> 0:16:09.000 security and foreign policy team don't have problems with the 0:16:09.120 --> 0:16:13.640 way that Trump does some of these things. But actually, 0:16:13.680 --> 0:16:16.960 in terms of you know, Taiwan, Hong Kong, South China, 0:16:17.040 --> 0:16:21.000 CE technology based one trade deal, all of that, Biden 0:16:21.040 --> 0:16:24.400 and Trump were nearly identical. All Right, Ian Bremer of 0:16:24.440 --> 0:16:27.480 eur Asia Group joining US right now, let's talk about China. 0:16:27.800 --> 0:16:30.000 President Trump has come out saying that he was going 0:16:30.040 --> 0:16:33.760 to ban all transactions of US businesses with the likes 0:16:33.760 --> 0:16:37.280 of ten Cent and TikTok's parent company. We're seeing him 0:16:37.480 --> 0:16:40.080 perhaps dial back some of those threats, at least in 0:16:40.120 --> 0:16:43.440 private conversations. Where are we on that and how pivotal 0:16:43.640 --> 0:16:46.400 is that to the relationship between China and the US. 0:16:47.280 --> 0:16:52.480 Um it's it's significant. I wouldn't say it's pivotal. UM. 0:16:52.520 --> 0:16:56.360 I would say Huawei is more pivotal. Huawei is the 0:16:56.560 --> 0:17:01.720 most important technology company for China. It is their national champion. 0:17:01.800 --> 0:17:05.360 They're using it to drive five G, which is their 0:17:05.400 --> 0:17:08.399 effort to control the Internet of things and all of 0:17:08.480 --> 0:17:11.800 the data and the monetization of that data, and and 0:17:11.880 --> 0:17:14.159 the advance is an AI that come from it, and 0:17:14.200 --> 0:17:17.560 the United States is not all dialing back. In fact, 0:17:17.680 --> 0:17:21.200 last week we saw tougher efforts against Huawei and specifically 0:17:21.560 --> 0:17:24.760 more companies that would be put on watch lists if 0:17:24.800 --> 0:17:29.159 they are providing semi conductors and other critical pieces of 0:17:29.160 --> 0:17:32.920 of of of supply to Huawei. And you know they 0:17:32.960 --> 0:17:34.959 have some semi conductors store up, but within a year 0:17:34.960 --> 0:17:37.479 they're in serious trouble. So I mean, I really do 0:17:37.560 --> 0:17:40.520 think that on every issue that matters between the US 0:17:40.560 --> 0:17:44.160 and China, whether it's national security or internal human rights, 0:17:44.240 --> 0:17:47.560 or whether it's the economy or tech, the relationship between 0:17:47.560 --> 0:17:50.960 the US and China is heading in a bad direction. Um. 0:17:51.080 --> 0:17:53.920 And so there It's true. I was talking to Jared 0:17:54.000 --> 0:17:57.640 Kushner a few days ago, and he was being considerably 0:17:57.920 --> 0:18:01.320 softer I would argue than say Peter and Navarrow on 0:18:01.560 --> 0:18:05.800 issues like the importance of still doing business with China, 0:18:05.880 --> 0:18:10.600 not breaking tech company's ability to engage. Then I would 0:18:10.640 --> 0:18:13.159 see from others like light Highs or like Pompeale in 0:18:13.200 --> 0:18:17.919 particular my Pompeio securiy state. Um. But in general, we 0:18:18.000 --> 0:18:20.720 know where this relationship is heading, no matter who wins 0:18:20.760 --> 0:18:24.119 in November, and it's probably the most important geopolitical issue 0:18:24.160 --> 0:18:28.800 for the markets by by a factor of magnitude. Yeah. Well, 0:18:29.040 --> 0:18:32.000 the way that you distinguish that is really important. The 0:18:32.000 --> 0:18:34.119 idea that ten Cent shares rallying with the idea that 0:18:34.119 --> 0:18:37.480 perhaps President Trump is softening his stance ambanning these businesses, 0:18:37.480 --> 0:18:39.639 but the direction of travel is what's important to watch. 0:18:39.720 --> 0:18:43.080 Nile Ferguson, a Bloomberg opinion columnist, writing that Joe Biden 0:18:43.119 --> 0:18:46.600 could end up being a wartime president, talking about the 0:18:46.600 --> 0:18:49.960 concern that some people have that the US China titfor 0:18:50.040 --> 0:18:52.600 tat is going to lead to a hot war. Do 0:18:52.640 --> 0:18:55.639 you think that we are getting closer to that? No? No, 0:18:56.119 --> 0:18:59.359 I wrote Neil after he wrote that piece, And you 0:18:59.400 --> 0:19:01.600 know sort of that it would amused me because I 0:19:01.600 --> 0:19:03.679 mean he has become a bit of a bomper on 0:19:03.800 --> 0:19:08.040 that issue. I do think that we are in a 0:19:08.200 --> 0:19:13.200 technology code war with the Chinese, where we literally want 0:19:13.240 --> 0:19:15.679 their tech companies to fail and we will punish not 0:19:15.840 --> 0:19:18.280 just those companies, but those that work with them. But 0:19:18.480 --> 0:19:21.320 I mean the likelihood of a hot war. First of all, 0:19:21.320 --> 0:19:26.280 the Chinese truly don't want one. They understand they're a 0:19:25.600 --> 0:19:30.239 c asymmetric capabilities compared to the United States. I mean, 0:19:30.280 --> 0:19:32.879 there are a regional military power. They know we're close 0:19:33.359 --> 0:19:36.680 to American capacity, but they also still understand that there's 0:19:36.680 --> 0:19:39.880 a lot in that we work on together. I mean, 0:19:39.880 --> 0:19:42.800 no matter how bad the US China relationship gets, I 0:19:42.840 --> 0:19:45.320 still think we're gonna be selling them crude oil. No 0:19:45.359 --> 0:19:47.520 matter how bad it gets. I still think when we 0:19:47.560 --> 0:19:49.840 go to Walmart, we're gonna be buying a lot of 0:19:49.880 --> 0:19:52.680 goods that are made in China. And I still think 0:19:52.680 --> 0:19:55.760 that a lot of our universities are gonna be working 0:19:55.840 --> 0:19:59.360 really hard to make sure that Chinese foreign students can 0:19:59.400 --> 0:20:02.080 come and pay a pull freight, because otherwise many of 0:20:02.119 --> 0:20:04.560 those colleges will be in a lot of trouble. So 0:20:05.000 --> 0:20:07.520 not only do I not see a hot war, I 0:20:07.560 --> 0:20:10.880 think there are limitations to how bad this relationship can get, 0:20:11.160 --> 0:20:14.560 and and they considerably greater than say with the Russians. 0:20:15.200 --> 0:20:17.360 Uh Ian Bremer. Just with the time left, I want 0:20:17.359 --> 0:20:19.760 to turn ourselves to the levant into the future for 0:20:19.880 --> 0:20:22.480 mr Ara Tojan. We don't have time to really dive 0:20:22.520 --> 0:20:26.280 into this correctly. But there's been three or four air 0:20:26.359 --> 0:20:30.720 to ones across the span from two thousand two, which 0:20:31.280 --> 0:20:36.399 are to Wan is affecting Greece, affecting hydrocarbons north of crete, 0:20:36.640 --> 0:20:41.080 which air to Wan is affecting Libya. Uh. Well, Libya, 0:20:41.480 --> 0:20:44.960 we have a cease fire now that actually seems to 0:20:45.040 --> 0:20:49.080 be able to stick. That's a good thing, um, And 0:20:49.720 --> 0:20:53.680 I would say that I recognize that overplaying his hand 0:20:53.840 --> 0:20:58.120 is only gonna lead um to military confrontation. Doesn't want 0:20:58.160 --> 0:21:00.960 The same thing has been true in Seria, uh, with 0:21:01.000 --> 0:21:03.800 their claims for buffer zone but backing away when the 0:21:03.840 --> 0:21:06.960 Russians pushed them hard. Um. I think the same thing 0:21:07.080 --> 0:21:09.639 is true in the East Mediterranean. I mean, you know 0:21:09.680 --> 0:21:12.200 they're saying they're gonna drill, but that's in part it's 0:21:12.240 --> 0:21:14.160 because it's easy to beat up on the Greeks by 0:21:14.200 --> 0:21:18.359 themselves when you have divisions inside the European Union, unwilling 0:21:18.400 --> 0:21:21.760 to have a comedy united front against Turkey. That's been frustrating, 0:21:22.080 --> 0:21:25.760 I think to the Greeks. Um. So the problem is 0:21:25.800 --> 0:21:29.480 that Turkey is in massive economic trouble right now. The 0:21:29.480 --> 0:21:33.680 Turkish leyra, of course, UM continues to fall. Um, the 0:21:33.880 --> 0:21:38.120 the indebtedness is a serious problem. UM and uh and 0:21:38.119 --> 0:21:41.480 and and the the small and medium enterprises. You're doing 0:21:41.600 --> 0:21:44.439 very badly. And so if you're Earnwan and you're thinking 0:21:44.480 --> 0:21:46.800 through how you can continue to leave that country and 0:21:46.880 --> 0:21:49.680 not end up in jail um and a Turkish prison 0:21:49.800 --> 0:21:52.440 is not a fun place to be right Um. You're 0:21:52.520 --> 0:21:54.840 you're thinking about what you can do to rally the 0:21:54.920 --> 0:21:58.239 population behind you. And a lot of this UM is 0:21:58.480 --> 0:22:02.639 overt nationalism and bomb throwing, but it's it's not getting 0:22:02.680 --> 0:22:06.280 involved in serious military confrontation. And I do think that 0:22:06.359 --> 0:22:10.159 earn One is savvy enough to understand how deep doesn't 0:22:10.200 --> 0:22:12.399 want to go. Remember remember Tom that you have that 0:22:12.400 --> 0:22:15.159 turn the Russian relationship which was totally broken. It was 0:22:15.359 --> 0:22:18.720 arder One that ended up apologizing with a face because 0:22:18.720 --> 0:22:21.679 it was hurting his economy. He understands that he can 0:22:21.720 --> 0:22:24.360 only go so far. Ian Bremer, thank you so much 0:22:24.400 --> 0:22:27.080 and good writing to you in Nantucket. He of course 0:22:27.240 --> 0:22:33.800 is with your Asia group an oil and read a 0:22:33.960 --> 0:22:37.720 cent of Energy aspects and reading what is the distinction 0:22:37.880 --> 0:22:41.800 right now in supply, demand dynamics and oil. What are 0:22:41.800 --> 0:22:46.199 you focused on all right now? Even with the storms 0:22:46.240 --> 0:22:49.600 comming Thomas Unfortunately, so long demand and how much we 0:22:49.600 --> 0:22:53.119 are recovering, how far away we are from pre twenty 0:22:53.520 --> 0:22:55.760 that will put it along way away, and we have 0:22:55.880 --> 0:22:58.919 built so much infant treat that. Yes, while these storms 0:22:58.920 --> 0:23:01.840 are supportive for crude in the sense that we are 0:23:01.840 --> 0:23:04.679 shutting in a lot of classes Mexico prodition, it's not 0:23:04.840 --> 0:23:07.520 really going to move the needle. That comes to just 0:23:07.640 --> 0:23:09.760 the shire volume of inventory that we still need to 0:23:09.840 --> 0:23:11.840 run down, all right, So what will move the needle? 0:23:11.840 --> 0:23:14.040 I'm looking right now Crewe traded on the n imax 0:23:14.080 --> 0:23:16.600 forty two dollars and seventy six cents. It's been moving 0:23:17.000 --> 0:23:20.240 in this forty to forty three dollar range for a 0:23:20.280 --> 0:23:23.119 while right now at the upper end of that range. 0:23:23.240 --> 0:23:25.400 What would take? What would it take to break out? 0:23:25.440 --> 0:23:27.199 And it will break out to the upside or to 0:23:27.240 --> 0:23:30.760 the downside? I mean, honestly, had it not been for 0:23:30.760 --> 0:23:33.719 the weaker dollar, given where the physical market is right now, 0:23:33.800 --> 0:23:35.960 crude would have been five dollars law. So this is 0:23:36.040 --> 0:23:39.600 very much in a financial market supporting the price of oil, 0:23:39.600 --> 0:23:42.160