Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene with
Speaker 1: David Gura. Daily we bring you insight from the best
Speaker 1: of economics, finance, investment, and international relations. Find Bloomberg Surveillance
Speaker 1: on Apple Podcasts, SoundCloud, Bloomberg dot Com, and of course
Speaker 1: on the Bloomberg Good morning everyone, Bloomberg Surveillance, David Gurratt
Speaker 1: and Tom Keene in New York. We're going to go
Speaker 1: to a most important interview. Good morning to all of
Speaker 1: you of Global Wall Street and David, this really frames
Speaker 1: out the struggle for all of investment, conservative, boring, mutual
Speaker 1: fund managers, everyone in every flavor of hedge fund and
Speaker 1: you see it when I quote the VIX ten point
Speaker 1: seven one. We look at foreign exchange vix, we look
Speaker 1: fixed income volatility. The dampening and quiet of the market
Speaker 1: is challenging for everyone. In conversations at Cantor Fitzgerald on
Speaker 1: September eleven and that charity event, you talked to the
Speaker 1: people in the trenches, and I'll tell you, David, it's
Speaker 1: it's a trade to trade of quiet through two thousand seventeen.
Speaker 1: Hugh Henry Georges now from our studios in London. He
Speaker 1: the manager of a collect gasset management, announced in a
Speaker 1: letter yesterday that that fund closing after fifteen years. Great
Speaker 1: to have you with us here on bloom brigs Veils.
Speaker 1: Appreciate the time this morning. Let's just start with the
Speaker 1: motivations for for doing this, the complexity, the global complexity
Speaker 1: that led you to make this decision and tell your
Speaker 1: investors this yesterday. But there was absolutely no complexity. Um.
Speaker 1: I'd like to think in my life I've done things differently,
Speaker 1: don't I don't want to sign like Frank Sinatra. Um,
Speaker 1: but in my messages, I died and in act of combat,
Speaker 1: if you go, I died having a goal. Um. I
Speaker 1: think what we've seen. Uh, A lot of my contemporaries
Speaker 1: like we're rich, we're tired, we're fed up, and just
Speaker 1: kind of you know, slipped out of the back door.
Speaker 1: I wanted to go out with a buying if you will,
Speaker 1: when I went together saying I see the word it's huge.
Speaker 1: I have these trades. I'm here and let me. I
Speaker 1: think you're missing this. Let's have this dialogue. It just
Speaker 1: the economics and there's nothing complex. Yeah, you no inks,
Speaker 1: but against me you Good morning wonderful to come on
Speaker 1: with us at Global Wall Street. Listen. You know, across
Speaker 1: all of our radio you said the Lionel Barber's rag
Speaker 1: five years ago. We're harshly disciplined by market trends. You
Speaker 1: will never see us pursue a homegrown idea to the
Speaker 1: detriment of the prevailing trend. The trend hasn't been there
Speaker 1: with a damp and vall across all asset classes. Are
Speaker 1: you a victim of the dampening of Janet Yellen, John Karney,
Speaker 1: Mr Corona and Mr drug Um. Far from me to
Speaker 1: to play my violin and claim to be a victim,
Speaker 1: but certainly I believe they're whier forces to play, because
Speaker 1: this is not a story about individuals. This is a
Speaker 1: genetic story about a great group of some of the
Speaker 1: most provocative and fantastic brains in the world. Who has
Speaker 1: a group since two thousand and twelve really have consistently
Speaker 1: failed to produce Brits Well? But I made the key
Speaker 1: distinction this morning, hum, and I think this is critically
Speaker 1: important in the mathematics failure. You didn't blow up. I mean,
Speaker 1: you're down nine percent this year. I get that, But
Speaker 1: you didn't blow up this is a sequence of frankly
Speaker 1: good subpar returns. How do we end that and get
Speaker 1: back to alpha generation or alpha lass? I mean, somebody loses,
Speaker 1: but how do we get back to so called normal
Speaker 1: where the game is fair when you wake up in
Speaker 1: the morning. Well, I'm not arguing that the game is unfair.
Speaker 1: I would actually say that global macro enjoyed a moment
Speaker 1: in time which where the fortunes and the great performance
Speaker 1: of the protagonists perhaps owed much to the context. I
Speaker 1: believe that we had that inflation drama in the nineteen seventies,
Speaker 1: and for three at least three decades, if not forty years,
Speaker 1: it remained long in the market memory, if you will,
Speaker 1: that we could return to such an environment. It was
Speaker 1: also there with the Fed. I mean remember as early
Speaker 1: as back in the taper transroom of two thousand and thirteen,
Speaker 1: the FED was proposing to tighten its policy. With the
Speaker 1: national unemployment where it's seven and a half percent and
Speaker 1: with no credible sign of inflation, we've just been on
Speaker 1: this high alert now. The The result of that has
Speaker 1: been that for decades, the real recurn on US treasury
Speaker 1: bonds were very, very high, and the macro model was
Speaker 1: simple you come in, you leverage those returns, you get
Speaker 1: a a high risk adjusted return. It pays for the
Speaker 1: commercial cost of running the business, and it pays for
Speaker 1: taking like buying convective Veer puts on fixed income or
Speaker 1: equity Marcus, and periodically they go in your favor and
Speaker 1: everyone thinks you're a rock star. Now quantitative easing. Now,
Speaker 1: I estimate the ten year real treasury bond yards are
Speaker 1: zero point three pc. So even leveraging that which I advise,
Speaker 1: because they see, you know, well that's where we are.
Speaker 1: When do you envision the young kids see a phase?
Speaker 1: When do they get to play again? Because we've seen
Speaker 1: X number of years of this dampened idea. When does
Speaker 1: the game get fun again? Well, the game gets and
Speaker 1: you know the game will get fun again. But I
Speaker 1: think I always look at the irony and the paradox
Speaker 1: of of the path that the world chooses to take.
Speaker 1: It will become relevant again because there will be a
Speaker 1: moment when people will call upon diversifying us as they
Speaker 1: were discovered, to their great horror, their U S treasuries
Speaker 1: are not doing the job, and so they will be
Speaker 1: calling upon global micro but they'll be looking at their
Speaker 1: allocation they'll be saying, you'd be used to see where
Speaker 1: all the customers. Yachts will be saying where all the
Speaker 1: micro managers, and he might retore on the yachts, but
Speaker 1: you know where we are. We're de scaling portfolio, diversifying subsector.
Speaker 1: You don't be a stranger when you're in New York
Speaker 1: when you take the conquered. He's the only one still
Speaker 1: talk the concord when when you take the conquered over
Speaker 1: your private golf stream. Please stop by in New York.
Speaker 1: We'd love to talk to you for a longer conversation,
Speaker 1: or when we're in London. Mr Henry shutting down his
Speaker 1: hedge fund yesterday really global, major global news for Global
Speaker 1: Wall Street. David, I really can't convey enough. He didn't
Speaker 1: blow up. That's the news here. He didn't blow up.
Speaker 1: It was just the dampening. I can honestly say, I've
Speaker 1: never seen this, David. There you go invoking Frank Sinatra regrets.
Speaker 1: I've had a few. Hugh Henre great to speak with
Speaker 1: him exclusively here on Bloomberg this morning, on the heels
Speaker 1: of that news. This is Bloomberg Surveillance. On Bloomberg Radio,
Speaker 1: David Gura and Tom Keane in New York coast to
Speaker 1: coast and worldwide. Ben Carton has been in the U. S.
Speaker 1: Senate since two thousand seven. Before that, he represented third
Speaker 1: District in Maryland in the U. S. House of Representatives.
Speaker 1: He's now the ranking member of the Senate form Relations Committee.
Speaker 1: Joins us now on our phone lines on a day
Speaker 1: when we are keenly focused on what's happening in the Pacific.
Speaker 1: Of course, another nuclear sorry, another missile test last last
Speaker 1: night by a North Korea intermediate range ballistic missile shot
Speaker 1: a distance farther than the distance between North Korea and Guam,
Speaker 1: a protectorate that country has threatened several times now, Senator Carten,
Speaker 1: great to speak with you. I look at the President's
Speaker 1: schedule today, your colleague on the Senate Formulations Committee, Senator
Speaker 1: Bob Corker of Tennessee, is going to be meeting with
Speaker 1: the President today. I wonder if you have any insight
Speaker 1: into what the two of them will be talking about,
Speaker 1: and if you could tell us a bit about the
Speaker 1: kind of interface you've had with this administration on issues
Speaker 1: like these thus far. Well, first of all, good morning,
Speaker 1: and I'm certain that Senator Corker will be talking about
Speaker 1: North Korea as one of the subjects on the agenda
Speaker 1: with the President. We've I've had discussions with the members
Speaker 1: of the Trump administration and North Korea and other issues.
Speaker 1: But clearly, this most recent tests confirms the fact that
Speaker 1: North Korea not only has the nuclear weapon, but they
Speaker 1: are developing the means of which it could be delivered
Speaker 1: um not just in the region, but beyond the region.
Speaker 1: So it's a matter of it's extremely dangerous and it's
Speaker 1: a it's an urgent issue for the United States to
Speaker 1: to change its game plan from the point of view
Speaker 1: of I believe starting a diplomatic surge working with China
Speaker 1: that changed the equation. As you watch all of these tests,
Speaker 1: and I think there have been thirteen or fourteen of
Speaker 1: them this year alone, do you regard them as tests,
Speaker 1: as North Korea trying out to or showcasing technology they've developed,
Speaker 1: or these simply provocations to you? How do you view them?
Speaker 1: I believe that they want to have a functional UH
Speaker 1: nuclear arsenal that is capable of reaching the US and
Speaker 1: our allies. This they look at this as an ability
Speaker 1: to prevent the United States from UH affecting their regime.
Speaker 1: But you never know how these weapons could be used.
Speaker 1: It's a it's it's a regime that's unpredictable. It violates
Speaker 1: international mall. So our objective is to prevent a North
Speaker 1: Korea from destabilizing the region in our our interest, and
Speaker 1: that means freezing and hopefully eliminating their nuclear weapon program.
Speaker 1: The Senor cardon Good Morning, I think Maryland is possibly
Speaker 1: the most misunderstood state in the country. Cumberland, Maryland, hundred
Speaker 1: thirty eight miles away from your Baltimore went plus vote
Speaker 1: for President Trump. When you travel out to west astern Maryland,
Speaker 1: what do you see as the reaction to the follies
Speaker 1: of your Washington over the last two or three days.
Speaker 1: What's the response you as a die Aard Baltimore Democrat,
Speaker 1: what do you see in Republican Maryland? Well, you know,
Speaker 1: Maryland is called American miniature. We have the mountains of
Speaker 1: Western Maryland, we have the beaches of eastern Shore. Uh. Clearly,
Speaker 1: the western part of our state is more politically conservative
Speaker 1: than either the Baltimore or Warsington regions, which is much
Speaker 1: more progressive. Uh. It's the western part is traditional conservative
Speaker 1: areas of our state. Uh. They're good people. If they wavered,
Speaker 1: they wavered on the president. If they wavered on the president,
Speaker 1: I think if you, if you, if you deal with
Speaker 1: the issues. They're certainly disagreeing with a lot of the
Speaker 1: policies that have been proposed by the Trump administration, and
Speaker 1: they are certainly against a lot of the language the
Speaker 1: president is used. Whether that would translate into votes that
Speaker 1: would but against the president, I don't know, but I
Speaker 1: do believe there is disagreement with a manner in which
Speaker 1: the President is conducting his affairs. Sender Kardin, You're gonna
Speaker 1: get through the weekend. On Tuesday. Next week there's a
Speaker 1: nominations hearing before the Senate to Form Relations Committee. The
Speaker 1: Honorable John Huntsman is going to be sitting down taking
Speaker 1: questions from you and your colleagues. He of course nominated
Speaker 1: to be the next ambassador to Russia. How much is
Speaker 1: is his nomination clouded by the the scandal involving Russian
Speaker 1: interference in the US presidential election? And what questions do
Speaker 1: you have for him about how he's going to move
Speaker 1: forward if in fact he's confirmed. Well, Mr Hudson is
Speaker 1: well qualified to the ambassador to Russia. He is a
Speaker 1: person who is well respected by both Democrats and Republicans.
Speaker 1: I'm pleased that he's willing to allow his name to
Speaker 1: come forward. My guess is that the confirmation hearing is
Speaker 1: going to focus more about our challenges with Russia than
Speaker 1: the qualifications of Mr Huntsman. Uh. The the US Russia
Speaker 1: relationship is extremely important and it is very challenged today.
Speaker 1: I bring up bring up that a nation that's a
Speaker 1: high level one for a big ambassadorship, when when you
Speaker 1: look at the names the White House is putting forward,
Speaker 1: how worried are you about how few of them you've
Speaker 1: seen thus far? Are you getting any indication here that
Speaker 1: the White House is going to be moving faster to
Speaker 1: fill some of the vacant positions that still exist in
Speaker 1: Foggy Bottom. I am extremely concerned by the slow pace
Speaker 1: of filling critical positions at the State Department. I'm not alone.
Speaker 1: Democrats and Republicans have voiced our concern just talking about
Speaker 1: North Korea, we don't have an Assistant secretary for that region,
Speaker 1: so we don't have the people in place that can
Speaker 1: give a clear direction to U S policy in so
Speaker 1: many parts of the world. So it's not just our
Speaker 1: ambassadors in important countries, it's key positions within the State
Speaker 1: Department that are political appointments, such act confirmation about a
Speaker 1: Senate that hadn't been filled. It's Friday, so I'm allowed
Speaker 1: to do gossips. I'm absolutely fascinated by who's sitting on
Speaker 1: the couch in the Oval office. Do the Democrats have
Speaker 1: the back of Senator Schumer and Speaker Pelosi? Do they
Speaker 1: have the support of not common sense Democrats like Cardon
Speaker 1: of Maryland but the other rabble? Are they in support
Speaker 1: of the two? Oh? Absolutely. We very much want our
Speaker 1: political system to work, and the only way it's going
Speaker 1: to work is with Democrats and Republicans all being involved.
Speaker 1: So we applaud our leaders willingness to sit down with
Speaker 1: President Trump and to work out solutions that the doctor children.
Speaker 1: We need to protect the Dreamers, and it's one of
Speaker 1: it's one of our highest priorities among the Democratic caucus.
Speaker 1: We were pleased to see that we didn't have a
Speaker 1: default on our government debt. We would see a budgets
Speaker 1: passant's keep government open. So look, we were disappointed by
Speaker 1: the election, but we wanted to make sure that our
Speaker 1: system works and Democrats need to be part of the process.
Speaker 1: Senator I was medicated coming in this morning because I
Speaker 1: had to watch Orioles baseball last night. Come on, guys,
Speaker 1: doing like a public grant to help Mr Show Walter
Speaker 1: out any Kenny hit the ball. It's a Nutcome on,
Speaker 1: When does this turn around for the dreaded Baltimore Orioles. Well,
Speaker 1: you know that we've had ups and downs during the sea,
Speaker 1: some stretches that we we thought we were going to
Speaker 1: be the world champions, and we're not giving up hope
Speaker 1: yet We're still in We're still in a pennant chase,
Speaker 1: and but it's it's been a very disappointing two weeks,
Speaker 1: no question about it. And we love our Orioles. We
Speaker 1: just wish they were flying along higher. They play in
Speaker 1: the most gorgeous modern ballpark. Senator Card, Thank you so much,
Speaker 1: Senator for the Baltimore word. Great to speak with him again,
Speaker 1: the ranking member of the Senate Foreign Relations Committee. Incredibly
Speaker 1: timely interview. Grateful to have him taking the time on
Speaker 1: this busy Friday morning to talk to us about North
Speaker 1: Korean particularly David, did those states like I think in
Speaker 1: Georgia North South that span geography Maryland is remarkable over
Speaker 1: a short distance from the West on serious XM to Baltimore,
Speaker 1: M Baltimore, Washington. This is Bloomberg. We had one solitary
Speaker 1: guest this hour, and he brought an entourage with him.
Speaker 1: Why did you attempt an introduction, David, I'm gonna I'm
Speaker 1: gonna run down the list you get Mark last year
Speaker 1: with us, Jeff down in West, Eden's as well here
Speaker 1: in our Bloomberg eleven three oh studios in New York.
Speaker 1: And Uh, I don't know who to begin with you.
Speaker 1: Let's let's start with West if we could talk it,
Speaker 1: I'll let you follow up from here. Let me just
Speaker 1: get your your sense of sort of where things stand
Speaker 1: from an investment perspective right now, where there's the greatest
Speaker 1: opportunity as you see it, and and UH just too
Speaker 1: maybe outline if you could some of the challenges of
Speaker 1: of being invested right now. Well, good morning, thanks for
Speaker 1: having us. You know, the UH, I think the environment
Speaker 1: right now from an investment standpoint is pretty tough. You know,
Speaker 1: you've had a long period of very low interest rates
Speaker 1: and you've got pretty good good growth in the US
Speaker 1: and nowithstanding kind of lots of challenges, but there's not
Speaker 1: a lot that is obviously cheap, you know, So it's
Speaker 1: a it's a time to pay attention to what you're doing.
Speaker 1: This is a four hour interviews. If you have three
Speaker 1: guys in the studio, go, can I get into here?
Speaker 1: David Mark? Last year, I've been dying to talk to
Speaker 1: you about the follies of Washington. How did you enter America?
Speaker 1: Were you were like on? You didn't go through Ellis Island,
Speaker 1: right comes through? Jfk JFK. I mean, what do you think?
Speaker 1: I mean, you're Moroccan, you come into the country. You're
Speaker 1: the definition of success of immigrants. What do you think
Speaker 1: of what's going on in Washington with Dacca and with
Speaker 1: the debate over rich or poor immigration and the rest. Look,
Speaker 1: I think I mean for me, it's probably a little
Speaker 1: bit more sensitive. But I think at the end of
Speaker 1: the day, you know, this country was made on immigrants
Speaker 1: and what's going on today is a bit ridiculous over
Speaker 1: all this stuff, So you would hope that people would
Speaker 1: be able to solve this issue. On doc CO. You
Speaker 1: came out of one of the coolest schools on the
Speaker 1: East Coast, Clark University. Would you have to go back home? Now?
Speaker 1: I mean you, I mean, I guess you were in
Speaker 1: the US then, But think of the immigrants that are
Speaker 1: going through top flight engineering schools and am I right?
Speaker 1: They gotta go home? Now? Well they do. I mean,
Speaker 1: good news is I got naturalized, So I guess for
Speaker 1: me it's okay. But ultimately, at the end of the day,
Speaker 1: for all these people who are at school, they'd have
Speaker 1: to return, should be done. Let me let me turn
Speaker 1: to you have a wide ranging conversation. You're obviously there. Yeah,
Speaker 1: well let's let's go there if we could. And and
Speaker 1: and this is something of particular fascination we we've we've
Speaker 1: seen the sale here the Houston Rockets recently for for
Speaker 1: an extraordinary sum of money. Help us understand how you
Speaker 1: value a basketball team. You hear the three of you investors,
Speaker 1: owners of a big NBA franchise, What does it? What
Speaker 1: does a sale like that mean for how you you
Speaker 1: you assign a value to to an NBA franchise. Jamie, Sorry,
Speaker 1: I think we're blood as well. Yeah, we can't get flooded. Um, No,
Speaker 1: you know it's you know what's at the at the
Speaker 1: end of the day, which really happening is really a
Speaker 1: few things. One is the modern NBA game is probably
Speaker 1: as exciting, if not the most exciting. I think sports
Speaker 1: thing to watch and as a result, viewers are watching it,
Speaker 1: kids are watching, millennials are watching it, the world is
Speaker 1: watching it. I think it's probably you know, the most
Speaker 1: popular you know, big type you know sport I can
Speaker 1: China for example, and after soccer, it's the number two
Speaker 1: sports in the world. That's that's really number one. And
Speaker 1: as you look at what's happening with money for sports, okay,
Speaker 1: money for entertainment, it's really live sports that basically is
Speaker 1: the one thing you cannot watch the next day, don't
Speaker 1: want to watch the next day, you don't you know,
Speaker 1: want to basically deal with the so called court coloring risk.
Speaker 1: You have to watch it, you know, live, So it's
Speaker 1: real value that. And then lastly, quite frankly, is I
Speaker 1: think there's a live people who love the you know teams.
Speaker 1: You know. I would say, of all my investments I've
Speaker 1: ever done, and I think Mark and West would agree,
Speaker 1: this is by far the most fun investment. You had
Speaker 1: more fun at d l J a few years ago, right,
Speaker 1: it was a long time ago, A long time Mark
Speaker 1: last three and Jamie dining with us. You know, we're
Speaker 1: gonna mix it up. We could literally, folks, we could
Speaker 1: go worldwide here for four hours. And these three guys,
Speaker 1: they've got such great experience, an individual and distinct experience. Jamie,
Speaker 1: let me start with you. You were in the d
Speaker 1: LJ Orange book years ago, right, Elliott Platt would write
Speaker 1: the Maroon book for DLJM Fixed Income and you had
Speaker 1: the whole thing going. Can you tell a kid today
Speaker 1: to go into global Wall Street given a method two,
Speaker 1: giving the battle over research? Can you tell some kid
Speaker 1: coming out of Pennsylvania like you did? Can you tell
Speaker 1: him to go into finance be like Mark last? Three? Absolutely,
Speaker 1: if it is your passion. Okay. I remember when I
Speaker 1: went into Wall Street and it was one My first
Speaker 1: job paid me twenty two thousand dollars a year. It
Speaker 1: was a decent salary, but it wasn't like you know
Speaker 1: the kind of numbers you're hearing about today. And I
Speaker 1: went because I was passionate about I actually wanted to
Speaker 1: do it. If this is the career that you're passionate about,
Speaker 1: you really want to do, you should do it. I
Speaker 1: think it's still a good career. Okay. If if you're
Speaker 1: going to get rich, I wouldn't do that. If you're
Speaker 1: going to because you want to make something that you're
Speaker 1: actually gonna enjoy doing and actually do well. Got absolutely,
Speaker 1: Let's see this. Let me ask you about infrastructure in particularly.
Speaker 1: We came out of the election headed into inauguration with
Speaker 1: a lot of talk about there being a big infrastructure
Speaker 1: spending package, there being a renewed policy focus on infrastructure
Speaker 1: in this country. You know this is something you're keenly
Speaker 1: interested in as an investor. Are you convinced we're gonna
Speaker 1: see something? How essential is it in your estimation that
Speaker 1: we get Washington to play some sort of catalytic role
Speaker 1: here to to to provide some sort of package that's
Speaker 1: gonna renew focus on infrastructure in this country. I think
Speaker 1: it's critical, you know, I think that the returns on
Speaker 1: infrastructure are you know, multiplier effects. I think, who do
Speaker 1: you have great infrastructure and actually is the kind of
Speaker 1: bedrock of a lot of economics activity. So it's really
Speaker 1: important and there's lots and lots of need for in
Speaker 1: the country. Um. I think there will be something on Washington,
Speaker 1: hopefully by the end of the year or the first
Speaker 1: part of next year. And uh, I don't know what
Speaker 1: they're gonna what they're gonna say and how effective it's
Speaker 1: going to be, But I think it's desperately needed. What
Speaker 1: what's the I mean, what what could be most effective?
Speaker 1: You know, I've listened to the presidency talked about this
Speaker 1: and you see it sort of Eban flow what he
Speaker 1: focuses on. And he's talked about infrastructure sum he was
Speaker 1: out in Io talking about it and the merits of
Speaker 1: more public private partnerships. Is there a policy tool or
Speaker 1: something in particular that you think would be more effective
Speaker 1: than others at at boosting investment infrastructure. Yeah, I think
Speaker 1: I think it's very very clear. I think that the
Speaker 1: essential thing to to provide is uh a mechanism for
Speaker 1: private capital to fund a lot of it and so
Speaker 1: and and really the missing link in the capital structure
Speaker 1: for a lot of this is debt. So I think
Speaker 1: the government can be a debt provider and not cost
Speaker 1: the government a lot of money. And I think they
Speaker 1: can then enable a lot of product and direct investment.
Speaker 1: And I think that you could really see a tremendous moment.
Speaker 1: And so it's true, and jump in here if you
Speaker 1: we just got it's a phone with Hugh Henry of
Speaker 1: Scotland over in England. He's shutting down his hedge fun today.
Speaker 1: And I made a key distinction here. He didn't blow up.
Speaker 1: A lot of people blow up. We all blow up.
Speaker 1: I've by mistakes. Everybody else's may mistakes. At three of you,
Speaker 1: I'm sure have your war stories as well. He was
Speaker 1: killed by just damp and volatility. You know, he's down
Speaker 1: nine percent. That's you're fine, But all the rest of
Speaker 1: the returns with just the single digitness mark last week
Speaker 1: to begin with you, is that where we are now
Speaker 1: as perpetual single digitness or can we actually get back
Speaker 1: to making elfit within the industry. Look, it's hard. I mean,
Speaker 1: the biggest issue that's out there today is pretty simple.
Speaker 1: The risk free rate is sort of zero, right, So
Speaker 1: you know when if you just look at ten years ago,
Speaker 1: ten years ago, the risk fy rate if you left
Speaker 1: your money in the bank was four percent. So if
Speaker 1: you did four or five times the risk fy rate,
Speaker 1: you're fine. You're a twenty. Here today you do four
Speaker 1: times or five times a risk free rate. Let's just
Speaker 1: say it's ten bibs. You're making fifty bibs, so you're
Speaker 1: taking a lot more risk. It's what West said, I
Speaker 1: mean It's just you're in a much much harder environment
Speaker 1: and because of that, you're taking a lot more risk,
Speaker 1: and you're gonna end up having, in my opinion, fewer
Speaker 1: and fewer people who do what we do, because you know,
Speaker 1: people aren't going to tolerate the lower returns west quickly.
Speaker 1: Is this dampening because of central bank policy? Is as
Speaker 1: simple as that. I asked the same question, Hugh. I
Speaker 1: think if you had to pick one thing, you say, yeah,
Speaker 1: I mean, I think that it really is keeping rates
Speaker 1: low as they have been as long as they have been.
Speaker 1: While it might have been a great idea, you know,
Speaker 1: in the middle of the financial crisis, financial crisis has
Speaker 1: been over for a long time, and I think that's
Speaker 1: a real challenge. It really is in this lower rate
Speaker 1: that Mark talks about, that actually is what drives than
Speaker 1: all other related returns, and that's what makes the challenges everythink.
Speaker 1: But we're surveillance on bloom Bgradio David Durrett and Tom
Speaker 1: Keene in New York. Here with a packed house, we
Speaker 1: live in three smart you got your seat back, Tom,
Speaker 1: you should take it away, go go forward here, uh
Speaker 1: fact asked here with so many things to speak of,
Speaker 1: but I think it would be unfair to speak to
Speaker 1: Mr Dinning, Mr last Fore industry and not speak about
Speaker 1: basketball and television in that we're all fixated by Cleveland
Speaker 1: and Boston and this and that and the stories on
Speaker 1: the West Coast. I guess as a team David on
Speaker 1: the West Coast it's pretty good. I can't remember. But
Speaker 1: but is the is the gravy train going to continue
Speaker 1: that thing? There's one of you three, the TV expert
Speaker 1: of the three at West is the is the party
Speaker 1: going to continue for you? That is TV sports? Well,
Speaker 1: it's a lot of sports. Is UM is very very valuable? Right,
Speaker 1: It's it's what everyone wants to watch, And even the
Speaker 1: cable cutting and whatnot, you still want to watch a
Speaker 1: lot of sports. Now. The old media companies, I think
Speaker 1: are struggling and the new media companies are in the
Speaker 1: in the rise. So I think, UM, the answer is
Speaker 1: that the content very valuable conn continue to be valuable
Speaker 1: more valuable. Perhaps the nature of how it's distributed I
Speaker 1: think could change a lot. Next week it will change
Speaker 1: in distribution, But will it poured over to the Facebook's,
Speaker 1: the Twitters, the Googles. I don't understand how I watched
Speaker 1: The Bucks on a little itty bid computer screen like
Speaker 1: you do on the Big four case Sony. I mean,
Speaker 1: I just I can't get there. Help me get there.
Speaker 1: You might be a little too old. It's conceived about it.
Speaker 1: It's uh, I think that people can. So you think
Speaker 1: that's funny, you're I think I think people can. I
Speaker 1: think people consume the sports in a lot of different ways.
Speaker 1: And I think what's gonna happen though, is that unquestionably
Speaker 1: it's gonna be distributed many different ways. You know the
Speaker 1: you saw the big announcement from uh, you know Disney
Speaker 1: on the streaming you know product, and we haven't really
Speaker 1: figured out how to monetize it properly as an industry,
Speaker 1: but it's coming. It's coming fast. We're classic. Let me
Speaker 1: just ask you about your audience that the Bucks is
Speaker 1: audience right now, obviously incredibly important to that city itself.
Speaker 1: But but how connis that are you? How connies are
Speaker 1: all three of you? About the national the international reputation
Speaker 1: of of the brand. What's the focus there? Well, I
Speaker 1: actually think we're America's team. I mean, I think if
Speaker 1: you forget about everybody else, if you look at but
Speaker 1: it's not the Um, I know. I think because of
Speaker 1: Janice and number are the other players that we have. Um,
Speaker 1: it is an international team, right and because of that,
Speaker 1: you could be anywhere. My daughter was on her honeymoon
Speaker 1: in Greece and she was wearing a Milwaukee Bucks T
Speaker 1: shirt and everybody just keeps running up to her. Why
Speaker 1: are you a fan of your honest? And you know
Speaker 1: she was like, yeah, I love your honest. I mean
Speaker 1: it's I think wherever you are, UM, especially for our
Speaker 1: team and where you've got international players, I think it's huge.
Speaker 1: How about the issue of of of legalized gambles. I
Speaker 1: don't know who would take a bite out of this,
Speaker 1: but Adam Silver talks about the need to have a
Speaker 1: better mechanism in place for that. Uh, Marco, have you
Speaker 1: take a bite of it if you want, and y'
Speaker 1: all can jump in if you want. Do you think
Speaker 1: that's gonna happen? Is there is there a lot of
Speaker 1: money to unlock there? Do you think we're gonna get
Speaker 1: some sort of legal, legalized system within the context of
Speaker 1: the NBA for for legalized gambling. Look, my view is
Speaker 1: you should have it. I mean, it happens so UM,
Speaker 1: we can stop making believe it doesn't happen, And I
Speaker 1: think Adams right, I think sooner or later it will
Speaker 1: end up becoming legal. And once it does, I don't
Speaker 1: know what ultimately happens, but I'm sure um ask people
Speaker 1: are betting um there will be ways for people to
Speaker 1: figure out. Yeah, you know, I don't pretend to be
Speaker 1: an expert, but you went inside? Is this right for
Speaker 1: the GM? The new GM? You had one guy go
Speaker 1: to Orlando, and you tell me about that decision. I
Speaker 1: mean the pressure to to to spend huge money to
Speaker 1: go outside. Why did the bucks stay internal to pick
Speaker 1: up the guy that's got to keep the egos in check? Well,
Speaker 1: we ran a very robust process to look at a
Speaker 1: lot of people, and in the end we concluded even
Speaker 1: did they call you they can It wasn't quite that,
Speaker 1: but we ran a barrow must right. We talked a
Speaker 1: lot of people and concluded at the end that the
Speaker 1: guy that worked for us is the best candidate. So
Speaker 1: it was that simple and we're very happy with them.
Speaker 1: But big decision. Mark, just certainly back something Tom asked
Speaker 1: you about a few moments ago, that being Hedge Funds.
Speaker 1: We had this conversation with Henry just a little while
Speaker 1: while ago and we didn't talk about was fees, and
Speaker 1: he said he's thrown in the towel, not not going
Speaker 1: out with the disappointedly um is the conversation about fees
Speaker 1: and ancillary conversation. He said that we were seeing the
Speaker 1: end of a global macro moment um. How much readjustment
Speaker 1: has to happen with fees and hedge funds and is
Speaker 1: that going to be something that saves hedge funds you're
Speaker 1: going forward. I don't think people mind paying fees, to
Speaker 1: be perfectly blunt, if you're giving them the returns right
Speaker 1: at the end of the day. What gets people upset
Speaker 1: is if you're charging them two and twenty and you're flat,
Speaker 1: or you're up one, you're up five, right, It's that's
Speaker 1: what gets people upset. It's not so fees become a
Speaker 1: big part when you sort of look at it and say,
Speaker 1: all right, the tenure, which is a little bit of
Speaker 1: what West said. If the safest investment is a treasury
Speaker 1: and a ten years two percent and you're charging somebody
Speaker 1: two percent um, that's kind of tough, you know, It's
Speaker 1: it's just math. I mean, ultimately, at the end of
Speaker 1: the days, done to that yeah, that's all it is.
Speaker 1: We just got forty seconds, Jamie donald Let's go back
Speaker 1: to the acclaimed Elliott plattet Donaldson generated a few years ago.
Speaker 1: He never had a deal with negative. The three of
Speaker 1: you survive when you got a German two year done
Speaker 1: negative seventy beeps in a Swiss twenty year it I
Speaker 1: can't remember what it is, just quickly here. When do
Speaker 1: the negative rates bill a end without? We don't know,
Speaker 1: but my guess is ultimately it has to end. This
Speaker 1: is not normal. But I think you know we've all
Speaker 1: survived by finding idiots and crack opportunity. Just because markets
Speaker 1: and markets really globally, particularly risk acid markets are fully priced.
Speaker 1: You can still find out he's a fully price Jamie Diamond.
Speaker 1: What's het in the smart Lazarie? Thank you so much.
Speaker 1: This is Bloomberg for continuing to follow the news out
Speaker 1: of the Korean Peninsula. The U N. Security Council scheduled
Speaker 1: to meet at three o'clock this afternoon here in New
Speaker 1: York to discuss the situation there as Secretary State Rexi
Speaker 1: Solurial calls from more action against that rogue regime. Our
Speaker 1: next guest, without question, the interview of the show. Ambassador
Speaker 1: Christopher Hill joins us now on our phone lines. Distinguished
Speaker 1: career in public service in the government. He was most
Speaker 1: recently US Ambassador to Iraq. Now he's the dean, as
Speaker 1: I said, of the Corbel Schooled International Studies at the
Speaker 1: University of Denver. I should note he was an ambassador
Speaker 1: to the Pope of Korea as well, and a participant
Speaker 1: in the Six Party talks on the North Korean nuclear issue.
Speaker 1: Abastad Hill, great to have you with us today, and Uh,
Speaker 1: the word of the day is inured. We've seen so
Speaker 1: many of these tests over the course of the year.
Speaker 1: Uh is each one different? What was different about the
Speaker 1: one that happened last night? Well, at a certain point
Speaker 1: you have to ask, you know, why are they testing
Speaker 1: as every week or so, because clearly it's it's more
Speaker 1: than just you know, to check the flight path. And
Speaker 1: I think what they're really doing it's kind of an
Speaker 1: any of the face move. They're trying to say. Christ
Speaker 1: of all, we're in full for auction with these things,
Speaker 1: so clearly they don't have to hand make them every cast.
Speaker 1: I mean, they've got some production line. And secondly, I
Speaker 1: think they're trying to make the point that we are
Speaker 1: a full switched uh uh nuclear power and you're just
Speaker 1: going to have to deal with us as such. And
Speaker 1: the more we send up these missiles, the more of
Speaker 1: a reality and their view will sink. In my own
Speaker 1: view is we cannot accept them as a nuclear are
Speaker 1: when we certainly cannot accept a situation where country points
Speaker 1: uh possibly nuclear tipped missiles at us and uh, We're
Speaker 1: gonna have to step up our game. You've lived this,
Speaker 1: You've watched the deliberations of the U N. Security Council.
Speaker 1: We certainly saw some heated ones. On Monday, the U.
Speaker 1: S Ambassador to the UN, Nikki Haley, wanted more severe
Speaker 1: sanctions yet placed on North Korea with regard to oil
Speaker 1: that didn't happen because of China in particular. What do
Speaker 1: you think is going to happen next? I'm going to
Speaker 1: steal a question that Tom asked a little earlier on
Speaker 1: the show, that is, what more can the U N
Speaker 1: do at this point? Well, I think clearly the Chinese
Speaker 1: are going to have to do more. I mean it's
Speaker 1: not enough to say there against it and and sort
Speaker 1: of go along with these limited sanctions. They've really got
Speaker 1: to go the full go the full distance. North Korea
Speaker 1: does not have refining capacity, and so I mean it's
Speaker 1: amazing they have nuclear facilities, but not on oil refiery.
Speaker 1: So I think China really needs to look at this
Speaker 1: critical issue of gasoline. But looking beyond that, I think
Speaker 1: the US and China really need to look at what's
Speaker 1: going to do about this. And it's more than sanctions,
Speaker 1: because the sanctions train just moves too slowly compared to
Speaker 1: the legalization train. And so I think we do need
Speaker 1: to look at some options, and I do I think
Speaker 1: we need to make China understand that we're going to
Speaker 1: have their choice. But to go forward, to borrow a
Speaker 1: line from from the musical Hamiltons, you've been in the
Speaker 1: room where it happens. You you were part of the
Speaker 1: Six Party talks on North Korea. Very few few people
Speaker 1: have been engaged in direct diplomacy with with the North
Speaker 1: Korean regime. What's that like and is it likely to
Speaker 1: be different now? If if at some point in the
Speaker 1: near future we see all these parties returning to talk
Speaker 1: to each other one again, What are the particular complexities
Speaker 1: of dealing diplomatically with North Korea? Well, first of all,
Speaker 1: these people are aren't not stupid, they're not robots. They're
Speaker 1: not just reading from talking points. Uh, they're making their case.
Speaker 1: So you know you're up against people who know what
Speaker 1: they're talking about. But I think it's important to understand
Speaker 1: that when you talk to these negotiators, you're basically talking
Speaker 1: to the note taker, because the note taker is going
Speaker 1: to take the message back to Piong Young, and we've
Speaker 1: not really had any kind of capacity to take a
Speaker 1: message to put Pill and Young. Well. I emphasize, however,
Speaker 1: the North Korean's have shown no interests, zero interests in
Speaker 1: a in getting back to the original purpose of these talks,
Speaker 1: which was demo verzations that they've talked about the need
Speaker 1: to have kind of some kind of limits. And I
Speaker 1: don't think we should go that way. I think we
Speaker 1: should really press the Chinese and work together with China
Speaker 1: on this. If you're just joining us first, Christopher Hill,
Speaker 1: where us is David and I both degree, this is
Speaker 1: without question the interview of the day for Bloomberg Surveillance. Inbassador,
Speaker 1: I want to go through a little bit of the
Speaker 1: path here from Moses Brown in Providence to Boden to
Speaker 1: your continued public services ambassadors to different areas. You work
Speaker 1: critically in Kosovo and then on the Eastern Europe in Poland,
Speaker 1: and then your expertise on Asia, You more than anyone
Speaker 1: we speak to, understands the trenches of the State Department.
Speaker 1: How destroyed is the State Department from the actions of
Speaker 1: the president with Secretary Tillerson, Well, to put it gently,
Speaker 1: I think there's a problem. Uh. Diplomacy does, after all,
Speaker 1: needs some diplomats, and it's worrisome to see many of
Speaker 1: the better ones, some of the best ones leaving. I
Speaker 1: think Secretary Tillerson has really tried to address some of
Speaker 1: the main issues, but it's a bit of a team sports,
Speaker 1: and I don't think the Secretary of State can do
Speaker 1: it alone. And I think he needs to understand the
Speaker 1: secretary of the role of the Secretary of State should
Speaker 1: be someone who comes into the ninth inning and shuts
Speaker 1: down a problem, rather than shows up in the third
Speaker 1: inning and encourages parties to keep on talking or something.
Speaker 1: So I think there's a kind of a failure to
Speaker 1: understand the sort of u uh technology of it all
Speaker 1: of how why you have lower ranked people, I have
Speaker 1: middle ranked people, And I think there's a failure to
Speaker 1: understand that these are career people who have a heck
Speaker 1: of a lot to offer there. You know, when Secretary
Speaker 1: Killers have showed up at the State Department in February,
Speaker 1: there wasn't one person there at the C Street entrance
Speaker 1: who wanted anything but full success for for him. And
Speaker 1: instead he's gotten involved in this issue of reforming the
Speaker 1: State Department. Look, that's a good idea. I think everything
Speaker 1: needs to be reformed. But my goodness, we have far
Speaker 1: more uh you know, urgent matters out there in the
Speaker 1: world and having some accounting firm. Look at how the
Speaker 1: State Department is organized. We're we've got all sorts of
Speaker 1: new investor. One more question, if I could, one of
Speaker 1: the few things you have and I have in common,
Speaker 1: besides a view of the athletic fields of Moses Brown,
Speaker 1: is we really are concerned about Aaron Judge. The ball
Speaker 1: he hit last night for the New York Yankees in
Speaker 1: Fenway Park, Chris, it would have gone over the turnpike,
Speaker 1: probably would have landed across the Charles River. What are
Speaker 1: the Red Sox going to do about the surging dreaded
Speaker 1: New York Yankees. I think they need to pitch him
Speaker 1: high in a way and uh, make him bite on
Speaker 1: sliders as well. I mean, I'm not really sure, but
Speaker 1: you're absolutely right. We've got to deal with that problem.
Speaker 1: It is this true national problem. Chris Hill, thank you,
Speaker 1: Thank you so much. We look forward to seeing you
Speaker 1: in our Washington and New York studios. He's not, David Is.
Speaker 1: It's correct with the University of Denver at the University
Speaker 1: of Denver heading up the Corbel School of International Studies.
Speaker 1: They're a fine and growing program there and always incredibly
Speaker 1: great to talk to him about this issue in particular,
Speaker 1: and I've talked about the Middle East as well, legendary
Speaker 1: stories of wearing Red Sox, carrying the Red Sox flag
Speaker 1: across all of Asia, like he's been known to go
Speaker 1: into meetings with with swag Kiss reminds you of Megan
Speaker 1: Green with her Red Sox socks that she will tell
Speaker 1: our audience, Dave, in the time we've got left, we're
Speaker 1: waiting for something to happen here. Our team is working
Speaker 1: on it right now. David. Why when when we say
Speaker 1: that's the most important interview of the day. To me,
Speaker 1: it's the guy's experience. He's in the trenches. Yeah, absolutely,
Speaker 1: I think what I want to highlight again and I
Speaker 1: did in the question to him they're about about diplomacy,
Speaker 1: is that he lived this as the ambassador to to
Speaker 1: South Korea and then as a part of those talks.
Speaker 1: You know, many years ago now we were engaging with
Speaker 1: North Korea diplomatically, with a few other countries in the region.
Speaker 1: I think it's just extraordinary to think about how few
Speaker 1: people have been in a wardroom, sent it around a table,
Speaker 1: having occasion to exchange words with representatives of the North
Speaker 1: Korean government and Basterd Christopher Hill, as you said at
Speaker 1: the University of Denver, one of those few. Thanks for
Speaker 1: listening to the Bloomberg Surveillance podcast. Subscribe and listen to
Speaker 1: interviews on Apple Podcasts, SoundCloud, or whichever podcast platform you prefer.
Speaker 1: I'm on Twitter at Tom Keene. David Gura is at
Speaker 1: David Gura. Before the podcast, you can always catch us worldwide.
Speaker 1: I'm Bloomberg Radio.