1
00:00:06,000 --> 00:00:08,920
Speaker 1: Welcome to the Bloomberg P and L Podcast. I'm pim Fox.

2
00:00:08,960 --> 00:00:11,640
Speaker 1: Along with my co host Lisa A. Bramowitz. Each day

3
00:00:11,680 --> 00:00:15,200
Speaker 1: we bring you the most important, noteworthy, and useful interviews

4
00:00:15,240 --> 00:00:17,720
Speaker 1: for you and your money, whether you're at the grocery

5
00:00:17,760 --> 00:00:20,759
Speaker 1: store or the trading floor. Find the Bloomberg P and

6
00:00:20,880 --> 00:00:32,360
Speaker 1: L Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot com,

7
00:00:32,479 --> 00:00:39,120
Speaker 1: National security, trade tweets, Trump and Iran. Here to help

8
00:00:39,159 --> 00:00:41,839
Speaker 1: us understand all of these different things is Jack Divine.

9
00:00:41,840 --> 00:00:46,520
Speaker 1: He is the former acting director of the Central Intelligence Agency,

10
00:00:46,680 --> 00:00:49,239
Speaker 1: and he is also the founding partner and the president

11
00:00:49,320 --> 00:00:52,559
Speaker 1: of the security firm The Arkin Group. He joins us

12
00:00:52,560 --> 00:00:55,200
Speaker 1: here in our eleven three oh studios. Jack, thank you

13
00:00:55,280 --> 00:00:58,160
Speaker 1: very much for being here. Do you have a security clearance?

14
00:00:58,360 --> 00:01:03,560
Speaker 1: I do. What is your reaction to the news reports

15
00:01:03,600 --> 00:01:09,200
Speaker 1: about the potential for revoking the security clearances of several

16
00:01:09,240 --> 00:01:14,600
Speaker 1: former administration security officials. I can understand why the presidents upset.

17
00:01:14,840 --> 00:01:20,680
Speaker 1: I can unders stand um why it's painful to listen

18
00:01:20,720 --> 00:01:23,360
Speaker 1: to them. But free speech is a big part of

19
00:01:23,360 --> 00:01:28,000
Speaker 1: our critically important part of our system, and you can't.

20
00:01:28,520 --> 00:01:30,399
Speaker 1: You have to be in the political rena. You have

21
00:01:30,480 --> 00:01:33,840
Speaker 1: to live with it. UM. I do think there's questions

22
00:01:33,880 --> 00:01:36,880
Speaker 1: about why we have so many people that have security clearance.

23
00:01:37,040 --> 00:01:39,720
Speaker 1: Last time I looked at was the three millions why

24
00:01:39,959 --> 00:01:44,400
Speaker 1: government officials carried into the private sector. I mean legitimate

25
00:01:44,440 --> 00:01:47,400
Speaker 1: reasons is but to go after because you don't like

26
00:01:47,480 --> 00:01:50,120
Speaker 1: what's being said, I think is wrong foot it well,

27
00:01:50,160 --> 00:01:51,720
Speaker 1: and I don't think it has legs. If you'll use

28
00:01:51,840 --> 00:01:54,040
Speaker 1: excuse the pun, I don't. I don't think there's gonna

29
00:01:54,080 --> 00:01:55,880
Speaker 1: be a long lasting story. I don't think you're going

30
00:01:55,920 --> 00:01:59,559
Speaker 1: to do it, but you know, it rattles everybody's cage.

31
00:02:00,000 --> 00:02:03,080
Speaker 1: Another thing that's rattling everybody's cage right now is President

32
00:02:03,080 --> 00:02:07,040
Speaker 1: Trump's rhetoric toward Iran UH, similar to the approach that

33
00:02:07,080 --> 00:02:11,799
Speaker 1: he took with North Korea, basically threatening them and UH

34
00:02:12,040 --> 00:02:15,079
Speaker 1: and and the idea of sanctions are definitely coming up.

35
00:02:15,800 --> 00:02:19,200
Speaker 1: What's going on here? Well, I think there's the bigger

36
00:02:19,280 --> 00:02:22,480
Speaker 1: picture of where we headed in Iran. But let's start

37
00:02:22,520 --> 00:02:27,959
Speaker 1: with today's today's news, if you will, UH. I think

38
00:02:28,000 --> 00:02:32,519
Speaker 1: the fact that Rohani, president in Iran, spoke out so

39
00:02:32,600 --> 00:02:35,480
Speaker 1: forcedly and said if you do try and sanction, as

40
00:02:35,919 --> 00:02:37,799
Speaker 1: you know, be the mother of all wars. I mean

41
00:02:37,960 --> 00:02:40,640
Speaker 1: the predictable reaction. You don't have to be a rocket

42
00:02:40,720 --> 00:02:43,040
Speaker 1: science to know that President Trump is going to come

43
00:02:43,040 --> 00:02:44,800
Speaker 1: back and loves a good fight, and they're just going

44
00:02:44,880 --> 00:02:47,160
Speaker 1: to come back as strong as you can, and says

45
00:02:47,200 --> 00:02:50,880
Speaker 1: if you think that's the mother of all wars, what

46
00:02:50,960 --> 00:02:54,280
Speaker 1: do you see what I have for you? So I

47
00:02:54,320 --> 00:02:58,440
Speaker 1: was reading an article day where quoting someone saying, you

48
00:02:58,480 --> 00:03:01,280
Speaker 1: know they're dealing with the for fish in this pond.

49
00:03:01,320 --> 00:03:04,320
Speaker 1: Now you know what they might have gotten away with

50
00:03:04,480 --> 00:03:07,680
Speaker 1: and passed with challenges. But if you know, if they

51
00:03:07,760 --> 00:03:11,280
Speaker 1: really think they're going to use force the Iranians, then

52
00:03:11,800 --> 00:03:13,639
Speaker 1: then I think they need to be prepared for a

53
00:03:13,639 --> 00:03:16,600
Speaker 1: pretty harsh response. I mean, I don't think it's all bravado.

54
00:03:17,360 --> 00:03:19,559
Speaker 1: So you think that we could have a military altercation

55
00:03:19,639 --> 00:03:22,799
Speaker 1: with Theyran I've been concerned about the prospects. It used

56
00:03:22,800 --> 00:03:25,600
Speaker 1: to be my concern about Pakistan having nuclear weapons that

57
00:03:25,720 --> 00:03:28,240
Speaker 1: kept me awake. The thing that has troubled me, and

58
00:03:28,240 --> 00:03:31,000
Speaker 1: I've written about this in my quarterlies for the past year.

59
00:03:31,320 --> 00:03:34,880
Speaker 1: The Place to Watch. I mean, I'm obviously fixated on

60
00:03:34,920 --> 00:03:38,280
Speaker 1: the Russian Helsinki meeting, but I would say the longer

61
00:03:38,400 --> 00:03:41,560
Speaker 1: term issue where there's a real risk, is Iran an

62
00:03:41,640 --> 00:03:45,320
Speaker 1: arm relationship with them. Jack, You've had a thirty two

63
00:03:45,400 --> 00:03:49,440
Speaker 1: year career with the CIA. You're also the author of

64
00:03:49,480 --> 00:03:54,360
Speaker 1: a book called Good Hunting, a spy Master's story based

65
00:03:54,400 --> 00:03:57,920
Speaker 1: on what you know. Do you believe that the meeting

66
00:03:58,040 --> 00:04:02,080
Speaker 1: that took place between Vladimir Huon and President Donald Trump

67
00:04:02,880 --> 00:04:11,600
Speaker 1: was recorded? That's a good A good question. UM. I

68
00:04:11,800 --> 00:04:15,200
Speaker 1: would I wouldn't bet a lot of money, but I

69
00:04:15,360 --> 00:04:19,520
Speaker 1: think it was limited to the stenography. All right, now,

70
00:04:19,560 --> 00:04:22,600
Speaker 1: they'd have to have an agreement, and I would think

71
00:04:22,640 --> 00:04:25,000
Speaker 1: if I were either the participants, I would not want

72
00:04:25,000 --> 00:04:27,159
Speaker 1: to record it because you're not sure how that meeting

73
00:04:27,279 --> 00:04:30,160
Speaker 1: is going to go. I think it's too risky to

74
00:04:30,240 --> 00:04:33,880
Speaker 1: have it recorded. I think they were prudent. Actually, if

75
00:04:33,920 --> 00:04:37,000
Speaker 1: you want to have UM, you know, once in a while,

76
00:04:37,040 --> 00:04:40,840
Speaker 1: you really do have to do one on one and Uh.

77
00:04:42,080 --> 00:04:45,080
Speaker 1: I seriously doubt that it was recorded, but I wouldn't

78
00:04:45,080 --> 00:04:47,120
Speaker 1: bet a lot of money on it. Do you think

79
00:04:47,200 --> 00:04:53,920
Speaker 1: that President Trump's lack of uh castigation of Prussia for

80
00:04:54,000 --> 00:04:58,920
Speaker 1: their involvement in the election, which is agreed by bipartisan groups,

81
00:04:58,920 --> 00:05:02,480
Speaker 1: that there was meddling the Russian government in the US elections.

82
00:05:02,480 --> 00:05:05,599
Speaker 1: Do you think that the president's tepid kind of approach

83
00:05:05,680 --> 00:05:11,080
Speaker 1: to that puts US into greater danger? I think the UH.

84
00:05:11,320 --> 00:05:14,000
Speaker 1: I think President Trump was on a roll, depending on

85
00:05:14,040 --> 00:05:16,760
Speaker 1: how you look at it, up until he landed in

86
00:05:16,920 --> 00:05:20,039
Speaker 1: the UK, and I thought something wheel fell off of

87
00:05:20,080 --> 00:05:23,480
Speaker 1: the car in terms of the preparation and strategy of

88
00:05:23,560 --> 00:05:26,240
Speaker 1: the meeting. And then I honestly must say Helsinki, I

89
00:05:26,240 --> 00:05:29,040
Speaker 1: thought it was a huge setback for the president in

90
00:05:29,160 --> 00:05:33,680
Speaker 1: terms of the exerting what looked like a very strong president.

91
00:05:33,839 --> 00:05:36,200
Speaker 1: I mean, you may not like the policies that may

92
00:05:36,200 --> 00:05:38,680
Speaker 1: not be popular. Eventually popular already cuts up with it.

93
00:05:39,120 --> 00:05:41,000
Speaker 1: But it was strong, whether you liked it or not.

94
00:05:41,160 --> 00:05:45,160
Speaker 1: I think the biggest and most troubling thing about that

95
00:05:45,240 --> 00:05:49,640
Speaker 1: meeting it was a sense of of weakness and not

96
00:05:49,800 --> 00:05:52,080
Speaker 1: coming out ahead, which is a very bad place for

97
00:05:52,120 --> 00:05:55,640
Speaker 1: a president to be. I remember I was a kid,

98
00:05:55,640 --> 00:05:59,760
Speaker 1: but I remember Khruschef meeting Kennedy on the first seven meeting,

99
00:05:59,760 --> 00:06:01,880
Speaker 1: and they didn't want Kennedy to make the meeting, and

100
00:06:01,920 --> 00:06:05,640
Speaker 1: he did. He being Kennedy and Khrushchov belf. It was

101
00:06:05,680 --> 00:06:09,280
Speaker 1: a disaster for Kennedy after that meeting, Putin went off

102
00:06:09,320 --> 00:06:12,000
Speaker 1: and decided he was going to push, push hard and

103
00:06:12,040 --> 00:06:15,159
Speaker 1: put missiles in the Cuba. But he didn't realize that.

104
00:06:15,240 --> 00:06:17,599
Speaker 1: Jack Kennedy at the same time realized he did poorly,

105
00:06:17,680 --> 00:06:20,120
Speaker 1: and and and strengthen it. And then you had a

106
00:06:20,160 --> 00:06:24,240
Speaker 1: confrontation as close as we've gotten a nuclear war. And

107
00:06:25,160 --> 00:06:29,520
Speaker 1: fortunately for Kennedy, we had in his pocket inside intelligence

108
00:06:29,560 --> 00:06:33,000
Speaker 1: from the spy Pankovski and was able to push back

109
00:06:33,120 --> 00:06:36,080
Speaker 1: on Krushev. So I think there's a dynamic here and

110
00:06:36,160 --> 00:06:39,920
Speaker 1: what is Alice Trump going to regain his strength? And

111
00:06:40,000 --> 00:06:44,600
Speaker 1: does that come from pushing back? And um, I think

112
00:06:44,640 --> 00:06:50,400
Speaker 1: that would be my recommendation. I am a bit befuddled

113
00:06:50,440 --> 00:06:53,039
Speaker 1: by the call for a second summit in that context,

114
00:06:53,080 --> 00:06:54,840
Speaker 1: I thought I had a pretty good grasp of what

115
00:06:54,880 --> 00:06:59,600
Speaker 1: was going to happen next to now ambivalent Jack. One

116
00:06:59,640 --> 00:07:03,400
Speaker 1: of you are various UH duties. You headed the CIA's

117
00:07:03,480 --> 00:07:08,840
Speaker 1: Counter Narcotics Center. You also worked on the response to

118
00:07:08,839 --> 00:07:13,240
Speaker 1: the United States to Russian incursions in Afghanistan. Do you

119
00:07:13,320 --> 00:07:19,560
Speaker 1: believe that there's a casual relationship between human behavior and logic?

120
00:07:23,600 --> 00:07:27,200
Speaker 1: That's that's a really interesting question, but I'm not sure

121
00:07:27,200 --> 00:07:31,640
Speaker 1: where you're coming from, and I would say, yes, qualified,

122
00:07:32,600 --> 00:07:36,960
Speaker 1: quite qualified. Well, I think we all think we're very logic,

123
00:07:37,040 --> 00:07:39,720
Speaker 1: all right, But I do think that we all come

124
00:07:39,760 --> 00:07:43,280
Speaker 1: out of the same place with a DNA and makeup

125
00:07:43,360 --> 00:07:45,360
Speaker 1: that was somehow related to some uncle who was a

126
00:07:45,400 --> 00:07:49,000
Speaker 1: little flaky. So maybe we're not. We're trying to be logical,

127
00:07:49,800 --> 00:07:55,480
Speaker 1: but we do have personalities that are developed. Um so yeah,

128
00:07:55,480 --> 00:08:01,360
Speaker 1: I'd like to be optimistic that mankind woman kind as

129
00:08:01,400 --> 00:08:08,080
Speaker 1: well h are logical. Well, let's hope that logic prevails.

130
00:08:08,520 --> 00:08:11,040
Speaker 1: Jack Divine, thank you so much for being with us.

131
00:08:11,240 --> 00:08:14,800
Speaker 1: We could spend another hour talking. Uh so many questions,

132
00:08:15,200 --> 00:08:32,360
Speaker 1: so we'll leaf to have you back. Let's start our

133
00:08:32,400 --> 00:08:36,960
Speaker 1: focus to emerging markets, in particular Turkey assets are falling

134
00:08:36,960 --> 00:08:40,880
Speaker 1: out of bed there after the central Bank unexpectedly held

135
00:08:41,080 --> 00:08:43,520
Speaker 1: interest rates where they were despite the fact that inflation

136
00:08:44,000 --> 00:08:46,199
Speaker 1: was spiraling out of concern and that many people were

137
00:08:46,200 --> 00:08:49,200
Speaker 1: saying that they needed to support the currency. Of course, uh,

138
00:08:49,240 --> 00:08:52,680
Speaker 1: the president's son in law is now helming the central bank.

139
00:08:52,760 --> 00:08:55,079
Speaker 1: So Damian Sassour joins us. Now fixed income started just

140
00:08:55,120 --> 00:08:59,679
Speaker 1: for Bloomberg Intelligence. Damien, Wow, Turkey, are you surprised by

141
00:08:59,679 --> 00:09:02,320
Speaker 1: this or is this just uh, you know, an ongoing

142
00:09:02,400 --> 00:09:04,720
Speaker 1: mess that just gets worse. Well, I'm not surprised than

143
00:09:04,760 --> 00:09:06,839
Speaker 1: it is an ongoing mess, and it's it's one of

144
00:09:06,880 --> 00:09:08,720
Speaker 1: his own making. It's one of it's one of one's

145
00:09:08,760 --> 00:09:10,679
Speaker 1: own making, right. I mean, we have a country that's

146
00:09:10,720 --> 00:09:14,120
Speaker 1: operating with a six point one percent current account deficit UM.

147
00:09:14,120 --> 00:09:18,560
Speaker 1: It's debt is funded in external currencies and it's all

148
00:09:18,559 --> 00:09:20,520
Speaker 1: short term portfolio flows, right, So how are they going

149
00:09:20,559 --> 00:09:22,600
Speaker 1: to fund their debt? How are they going to fund

150
00:09:22,640 --> 00:09:24,640
Speaker 1: the country's operations? I mean, the only way to do

151
00:09:24,679 --> 00:09:27,640
Speaker 1: that is to raise rates and appeal to offshore creditors

152
00:09:27,679 --> 00:09:31,080
Speaker 1: to continue, you know, basically making its economy more investable.

153
00:09:31,120 --> 00:09:33,800
Speaker 1: And it did not do that today. And so now

154
00:09:33,840 --> 00:09:36,600
Speaker 1: we've seen the lira the worst performer pretty much um

155
00:09:36,880 --> 00:09:41,360
Speaker 1: outside of Argentina on the year down local currency, Turkish

156
00:09:41,400 --> 00:09:44,920
Speaker 1: debt down twenty nine percent year to date in dollar terms.

157
00:09:45,400 --> 00:09:47,840
Speaker 1: Uh yeah. Now you've got yields in the high teams

158
00:09:47,880 --> 00:09:50,720
Speaker 1: now seventeen point eight percent five year yields and local currency.

159
00:09:51,360 --> 00:09:53,880
Speaker 1: It's just it's getting bad, it's getting ugly. You've got

160
00:09:53,920 --> 00:09:57,400
Speaker 1: inflation there of around fifteen percent I believe percent inflation

161
00:09:57,440 --> 00:09:59,360
Speaker 1: that's right. I mean that was that was in June.

162
00:09:59,400 --> 00:10:01,240
Speaker 1: It's average a eight and a half percent over the

163
00:10:01,320 --> 00:10:03,040
Speaker 1: last five years. Just to give you a sense of

164
00:10:03,120 --> 00:10:05,560
Speaker 1: just how far things have gone, I mean, think about

165
00:10:05,559 --> 00:10:07,360
Speaker 1: p M I. P m I felt to its lowest

166
00:10:07,440 --> 00:10:11,840
Speaker 1: level on record in May. That signals slower GDP growth.

167
00:10:11,840 --> 00:10:14,600
Speaker 1: I mean, the only way that could possibly think they're gonna,

168
00:10:14,760 --> 00:10:16,240
Speaker 1: you know, move their way out of this is to

169
00:10:16,360 --> 00:10:18,440
Speaker 1: accelerate growth, right, is to grow their way out of it.

170
00:10:18,480 --> 00:10:21,000
Speaker 1: But clearly that's not happening either. And so where does

171
00:10:21,120 --> 00:10:24,120
Speaker 1: attention now shift. It shifts to the financial sector. And hey,

172
00:10:24,120 --> 00:10:25,800
Speaker 1: we're an earning season, right, So you've got all the

173
00:10:25,800 --> 00:10:29,640
Speaker 1: big Turkish banks reporting starting tomorrow and through next week,

174
00:10:30,120 --> 00:10:33,360
Speaker 1: and they're also huge, huge issuers of US dollar debt

175
00:10:33,520 --> 00:10:35,480
Speaker 1: and they're gonna have trouble rolling it over. When I

176
00:10:35,520 --> 00:10:39,200
Speaker 1: talked to emerging markets investors, particularly the debt world, they say,

177
00:10:39,480 --> 00:10:42,079
Speaker 1: you know, in general, we still find some things to

178
00:10:42,200 --> 00:10:45,200
Speaker 1: like in emerging markets. Credit that's sold off a lot,

179
00:10:45,840 --> 00:10:48,240
Speaker 1: but we're not touching Argentina or Turkey. Some people are

180
00:10:48,240 --> 00:10:51,560
Speaker 1: actually tiptoeing back to Argentina Turkey off limits. I'm just

181
00:10:51,559 --> 00:10:54,960
Speaker 1: wondering I mean, it's Turkey just a completely idiosyncratic story

182
00:10:55,080 --> 00:10:57,760
Speaker 1: unto itself, with a government that just is getting itself

183
00:10:57,760 --> 00:11:01,960
Speaker 1: deeper into mess. Or do you see signs of something

184
00:11:02,080 --> 00:11:05,160
Speaker 1: more pervasive happening across the board and development more? I mean,

185
00:11:05,160 --> 00:11:06,880
Speaker 1: and you know, I mean I I every time I

186
00:11:06,880 --> 00:11:09,280
Speaker 1: think I've got emerging markets figured out, Lesta, they always

187
00:11:09,280 --> 00:11:12,040
Speaker 1: another Turkey pops up. And you know, it's just unbelievable,

188
00:11:12,080 --> 00:11:14,600
Speaker 1: the stubbornness. And look, it's it's not unprecedented. Right, We've

189
00:11:14,600 --> 00:11:17,160
Speaker 1: seen in South in Brazil, we said Dilma, you know,

190
00:11:17,320 --> 00:11:19,440
Speaker 1: you know, contesting the credibility of the of the Brazilian

191
00:11:19,440 --> 00:11:21,400
Speaker 1: Central Bank a few years back. We've seen recently in

192
00:11:21,440 --> 00:11:23,520
Speaker 1: South Africa something somewhere. We're seeing here in the US

193
00:11:23,559 --> 00:11:26,160
Speaker 1: Trump saying he does think rates should continue to go up, right,

194
00:11:26,200 --> 00:11:28,559
Speaker 1: So this is nothing new. But for a president to

195
00:11:28,640 --> 00:11:32,040
Speaker 1: basically just shrug off the markets, um to install his

196
00:11:32,080 --> 00:11:34,720
Speaker 1: son in law as the dual head of the Central

197
00:11:34,720 --> 00:11:38,000
Speaker 1: Bank and the Finance Ministry and give him the control,

198
00:11:38,120 --> 00:11:40,559
Speaker 1: it's basically he's I mean, now the markets believe he's

199
00:11:40,559 --> 00:11:42,760
Speaker 1: a puppet, right, And so you know, Idawin's on the

200
00:11:42,800 --> 00:11:44,920
Speaker 1: record is having said he does not think high rates

201
00:11:44,960 --> 00:11:47,520
Speaker 1: are good for the economy. He wants rates lower, and

202
00:11:47,720 --> 00:11:49,800
Speaker 1: we're seeing evidence of that here today. And it's just

203
00:11:50,080 --> 00:11:53,080
Speaker 1: h yeah, No, I a a central bank that's um,

204
00:11:53,120 --> 00:11:56,760
Speaker 1: that's sort of um, not independent, that's not targeting inflation,

205
00:11:56,800 --> 00:11:59,559
Speaker 1: that's not targeting full employment. You know, the markets have

206
00:11:59,600 --> 00:12:03,079
Speaker 1: a funny way of of showing them where the clearing rate,

207
00:12:03,080 --> 00:12:05,600
Speaker 1: where the clearing prices and um. And I think that's

208
00:12:05,600 --> 00:12:07,480
Speaker 1: what Turkey's undergoing right now, and we don't know where

209
00:12:07,480 --> 00:12:10,400
Speaker 1: the bottom is. They mean, if you're an emerging markets

210
00:12:10,440 --> 00:12:14,920
Speaker 1: investor for debt and you're looking for corporates, what sector

211
00:12:15,600 --> 00:12:21,680
Speaker 1: I'm thinking commodities, maybe extractive industries, mining companies, oil companies.

212
00:12:22,200 --> 00:12:24,400
Speaker 1: How are they doing? Yeah? No, I mean you're now

213
00:12:24,480 --> 00:12:25,960
Speaker 1: now we're going to shift out of Turkey and we're

214
00:12:25,960 --> 00:12:27,439
Speaker 1: getting to get into the fun stuff. So the fun

215
00:12:27,520 --> 00:12:30,640
Speaker 1: stuff is this I happen to think that. I'm sorry,

216
00:12:30,679 --> 00:12:34,200
Speaker 1: we don't think the data tells us that commodities are

217
00:12:34,400 --> 00:12:37,480
Speaker 1: over sold. Right We're starting to see for the first time,

218
00:12:37,520 --> 00:12:41,640
Speaker 1: we've seen copper short up, COMICX copper, we've seen a

219
00:12:41,720 --> 00:12:45,680
Speaker 1: net short, a speculative interest moved, you know, it's moved short.

220
00:12:45,720 --> 00:12:47,679
Speaker 1: It was, it was, it was long for as long

221
00:12:47,720 --> 00:12:49,560
Speaker 1: as we can remember. It's now gone short. We're seeing

222
00:12:49,559 --> 00:12:51,360
Speaker 1: the same thing in oil and other commodities, and what

223
00:12:51,440 --> 00:12:53,920
Speaker 1: that tells us is that these markets are vulnerable to

224
00:12:53,920 --> 00:12:56,120
Speaker 1: a short squeeze to a near term rebound which could

225
00:12:56,120 --> 00:12:58,480
Speaker 1: be accentuated to the upside. So that's good for all

226
00:12:58,520 --> 00:13:03,360
Speaker 1: of the commodity producers. Latin American specific, Peru, Colombia, and

227
00:13:03,440 --> 00:13:05,720
Speaker 1: Chile are three that come to mind there um. But

228
00:13:05,760 --> 00:13:07,640
Speaker 1: then you know, you've got You've got you've got Russia,

229
00:13:07,640 --> 00:13:09,320
Speaker 1: who's a pretty big oil export over they have their

230
00:13:09,320 --> 00:13:11,000
Speaker 1: own problems, and you've got a handful of other there's

231
00:13:11,000 --> 00:13:13,120
Speaker 1: the Middle East and so forth. So so so yeah, I

232
00:13:13,160 --> 00:13:14,839
Speaker 1: happen to agree with you. I think you know you're

233
00:13:14,840 --> 00:13:16,599
Speaker 1: going to see a pivot on the corporate side and

234
00:13:16,640 --> 00:13:20,520
Speaker 1: emerging markets toward commodity exporters. And we're seeing a little

235
00:13:20,520 --> 00:13:22,959
Speaker 1: bit of evidence of that now, although you know, we'll

236
00:13:22,960 --> 00:13:25,320
Speaker 1: see what happens. But I like your thoughts about copper

237
00:13:25,480 --> 00:13:30,319
Speaker 1: very interesting because copper has dropped more than seventeen percent

238
00:13:30,480 --> 00:13:35,360
Speaker 1: in price, not this year, just since the beginning of June.

239
00:13:35,400 --> 00:13:38,640
Speaker 1: Absolutely now it's oversold. I mean, the red metal is oversold.

240
00:13:38,640 --> 00:13:41,240
Speaker 1: If you would ask my colleague Mike mcglonany's actually on

241
00:13:41,280 --> 00:13:43,520
Speaker 1: vacation now, we should get him up here. But yeah, no,

242
00:13:43,600 --> 00:13:47,719
Speaker 1: he would agree with you completely. Vacation. I'm sorry, he's

243
00:13:47,720 --> 00:13:50,880
Speaker 1: not a vacation. He's actually working from home. But yeah, right,

244
00:13:51,240 --> 00:13:53,199
Speaker 1: But you know, broad commodity sell off, I mean, that's

245
00:13:53,200 --> 00:13:54,840
Speaker 1: where we are, and we need to see that kind

246
00:13:54,840 --> 00:13:57,280
Speaker 1: of rebound in order for emerging markets to catch a bid,

247
00:13:57,320 --> 00:13:59,200
Speaker 1: I think and uh, and we might very well be

248
00:13:59,240 --> 00:14:02,240
Speaker 1: on on the verge of that. Thanks very much, Damian Sassaur.

249
00:14:02,360 --> 00:14:06,199
Speaker 1: We love having you on Fixed Income Strategist for Bloomberg Intelligence,

250
00:14:06,480 --> 00:14:10,800
Speaker 1: telling us all about Turkey and commodity related emerging market debt.

251
00:14:27,840 --> 00:14:31,240
Speaker 1: One of the biggest question marks right now is around oil,

252
00:14:31,880 --> 00:14:35,880
Speaker 1: particularly are we heading much higher than seventy dollars a barrel?

253
00:14:35,960 --> 00:14:39,080
Speaker 1: We're much lower? Uh, And a lot of this hinges

254
00:14:39,320 --> 00:14:42,520
Speaker 1: on Iran. Joining us now Will Ryan, founder and chief

255
00:14:42,520 --> 00:14:45,480
Speaker 1: executive officer of Granite Shares in New York. Well, I

256
00:14:45,520 --> 00:14:47,880
Speaker 1: want to start with Iran because we've gotten this battle

257
00:14:47,920 --> 00:14:51,320
Speaker 1: of words between President Trump uh and the Iranian leaders

258
00:14:51,320 --> 00:14:54,080
Speaker 1: and I'm wondering do you think that the market is

259
00:14:54,120 --> 00:14:58,000
Speaker 1: pricing in some kind of escalation here and the likelihood

260
00:14:58,400 --> 00:15:02,400
Speaker 1: that Iranian oil fields would truly be taken out of

261
00:15:02,440 --> 00:15:04,840
Speaker 1: service for the rest of the world. In short, no,

262
00:15:04,960 --> 00:15:07,800
Speaker 1: I don't think so. Um. Iran is a huge producer,

263
00:15:08,280 --> 00:15:11,480
Speaker 1: one of the largest opaque producing countries, and so if

264
00:15:11,520 --> 00:15:14,760
Speaker 1: there was a disruption or an escalation that resulted in disruption,

265
00:15:15,000 --> 00:15:16,920
Speaker 1: that would have a big effect on supply. And right

266
00:15:16,960 --> 00:15:19,360
Speaker 1: now what you have is a situation where we have

267
00:15:20,000 --> 00:15:22,960
Speaker 1: strong demand for oil and almost certainly you see the

268
00:15:23,000 --> 00:15:27,440
Speaker 1: price being pushed higher. How much higher? Uh is impossible

269
00:15:27,480 --> 00:15:29,320
Speaker 1: to say, but I mean give us a range. I mean,

270
00:15:29,440 --> 00:15:31,480
Speaker 1: are we talking, you know, five dollars? Are we talking

271
00:15:31,520 --> 00:15:36,880
Speaker 1: twenty dollars? I think you could see ten to twenty. Yeah, alright, Well,

272
00:15:37,800 --> 00:15:40,720
Speaker 1: before we get into some details about commodity related funds,

273
00:15:40,720 --> 00:15:44,520
Speaker 1: I want to talk just a second about granite shares because, UM,

274
00:15:44,880 --> 00:15:48,280
Speaker 1: when I was young before I think almost just around

275
00:15:48,280 --> 00:15:51,560
Speaker 1: the time they invented the telephone, UM, one of the

276
00:15:51,560 --> 00:15:53,320
Speaker 1: ways to be interested in the world was to read

277
00:15:53,360 --> 00:15:56,200
Speaker 1: annual reports, and it was quite exciting because you got

278
00:15:56,200 --> 00:15:59,960
Speaker 1: to see how things operated, how companies created products are

279
00:16:00,120 --> 00:16:02,240
Speaker 1: versus all over the world was one of the few

280
00:16:02,240 --> 00:16:05,160
Speaker 1: ways to really access the excitement of what was happening

281
00:16:05,160 --> 00:16:08,240
Speaker 1: in the world. Tell our listeners a little bit about

282
00:16:08,320 --> 00:16:10,400
Speaker 1: granite shares and how you're trying to bring some of

283
00:16:10,440 --> 00:16:14,920
Speaker 1: that excitement back. Thank you, um So, grantite Shares is really,

284
00:16:15,600 --> 00:16:20,160
Speaker 1: you know, it's my expression of what a modern day

285
00:16:20,160 --> 00:16:22,880
Speaker 1: E t F company should be about, or an asset

286
00:16:22,880 --> 00:16:25,000
Speaker 1: manager should be about. So we specialize in E t

287
00:16:25,160 --> 00:16:27,520
Speaker 1: F E t F so the new technology, if you will,

288
00:16:27,840 --> 00:16:31,280
Speaker 1: in the asset management space. And really the reason why

289
00:16:31,320 --> 00:16:34,480
Speaker 1: they're driving so much popularity and investor flows is because

290
00:16:34,840 --> 00:16:38,800
Speaker 1: on the whole, lower cost, more transparent and liquid. And

291
00:16:39,160 --> 00:16:42,880
Speaker 1: in terms of specifically why I started the business, I

292
00:16:43,040 --> 00:16:45,800
Speaker 1: felt that there was an opportunity, or actually a rare

293
00:16:45,800 --> 00:16:49,640
Speaker 1: opportunity to really do two things. One was to reinvent

294
00:16:49,680 --> 00:16:53,920
Speaker 1: the way people access commodity markets in investment form. And too,

295
00:16:54,360 --> 00:16:56,880
Speaker 1: I felt like the timing was right for a new

296
00:16:56,960 --> 00:16:59,880
Speaker 1: sort of ball market in commodities. And when I took

297
00:16:59,880 --> 00:17:05,080
Speaker 1: about reinvesting the commodity market, before investors had accessed or

298
00:17:05,160 --> 00:17:08,440
Speaker 1: had access to commodities in two ways, either to buy

299
00:17:08,480 --> 00:17:11,760
Speaker 1: partnerships that issued k ones, which can be pretty clunky

300
00:17:11,760 --> 00:17:14,639
Speaker 1: for investors around tax time. Or they could buy notes

301
00:17:14,680 --> 00:17:17,960
Speaker 1: from banks, and notes from banks have credit exposure to

302
00:17:18,119 --> 00:17:21,520
Speaker 1: that particular issuing bank. So I thought, here's a way

303
00:17:21,560 --> 00:17:25,440
Speaker 1: to actually change the way that investors get access improve

304
00:17:25,520 --> 00:17:28,040
Speaker 1: the solution, so by offering it in a fund of

305
00:17:28,119 --> 00:17:31,479
Speaker 1: forty act fund without k ones, but without the credit

306
00:17:31,600 --> 00:17:35,280
Speaker 1: risk of the the issuing banks of notes, and provide

307
00:17:35,320 --> 00:17:39,199
Speaker 1: that exposure to the broad commodity markets. Okay, thank you,

308
00:17:39,320 --> 00:17:41,520
Speaker 1: that's a great definition. And now I want to turn

309
00:17:41,600 --> 00:17:46,320
Speaker 1: to the actual way in which investors can speculate or invest,

310
00:17:46,400 --> 00:17:50,800
Speaker 1: let's say in crude in oil markets. Is that a

311
00:17:50,880 --> 00:17:56,119
Speaker 1: specific market and there are there specific challenges to doing that? Yes, So,

312
00:17:56,119 --> 00:17:59,040
Speaker 1: so investors have a broad array of options when it

313
00:17:59,040 --> 00:18:03,680
Speaker 1: comes to investing in either individual commodities or broad based commodities.

314
00:18:04,280 --> 00:18:07,639
Speaker 1: Um and you can invest in gold, for example, something

315
00:18:07,760 --> 00:18:10,359
Speaker 1: very specific. You can invest in other metals, you can

316
00:18:10,400 --> 00:18:13,600
Speaker 1: invest in crude, or you can invest in in broad

317
00:18:14,040 --> 00:18:15,920
Speaker 1: Now I would say just to just to be clear

318
00:18:16,000 --> 00:18:20,080
Speaker 1: that when we're talking about precious metals, we're talking about

319
00:18:20,520 --> 00:18:23,280
Speaker 1: owning exposure of fun. For example, we have the Granite

320
00:18:23,280 --> 00:18:26,439
Speaker 1: Shares Gold Trust, the ticket code is bar and what

321
00:18:26,600 --> 00:18:29,680
Speaker 1: that actually holds as physical bars of gold. So every

322
00:18:29,680 --> 00:18:32,639
Speaker 1: share is backed by a tenth of announce of gold.

323
00:18:33,119 --> 00:18:36,639
Speaker 1: Now that's fine for precious metals because the natural state

324
00:18:36,840 --> 00:18:38,720
Speaker 1: is stored in a vault and we can do that,

325
00:18:39,000 --> 00:18:41,760
Speaker 1: but when we go outside into other commodities that either

326
00:18:41,800 --> 00:18:44,760
Speaker 1: decay or die over time, you have to obtain that

327
00:18:44,800 --> 00:18:47,879
Speaker 1: exposure of your futures contracts. So when we're talking about oil,

328
00:18:47,880 --> 00:18:50,440
Speaker 1: we're not talking about physical barrels of oil. We're talking

329
00:18:50,480 --> 00:18:54,399
Speaker 1: about futures contracts are linked to the price of oil.

330
00:18:55,200 --> 00:18:57,919
Speaker 1: So since we started with oil, I'm wondering, what have

331
00:18:57,960 --> 00:19:00,760
Speaker 1: you seen recently with respect to the investors that have

332
00:19:00,840 --> 00:19:04,000
Speaker 1: been using your e t f s in that space

333
00:19:04,240 --> 00:19:05,720
Speaker 1: and do you find that they tend to be more

334
00:19:05,760 --> 00:19:11,919
Speaker 1: speculators or more true investors. Well, we um We offer

335
00:19:12,560 --> 00:19:17,359
Speaker 1: really two broad diversified commodity funds, so take us C O,

336
00:19:17,480 --> 00:19:20,760
Speaker 1: m B, and CMG, and that's really for the investor

337
00:19:20,840 --> 00:19:23,840
Speaker 1: that wants to take broad market exposure. So those people

338
00:19:24,000 --> 00:19:27,480
Speaker 1: are really more longer term investors that are looking to

339
00:19:27,480 --> 00:19:30,760
Speaker 1: to gain longer term exposure. So we don't offer some

340
00:19:30,920 --> 00:19:34,280
Speaker 1: of the more racy individual commodities for example, Um, that

341
00:19:34,359 --> 00:19:36,439
Speaker 1: may be something we do over time, but at the

342
00:19:36,480 --> 00:19:39,919
Speaker 1: moment we have just the two broad based commodities, and

343
00:19:39,920 --> 00:19:43,160
Speaker 1: then we have gold and platinum, and so really that's

344
00:19:43,200 --> 00:19:45,399
Speaker 1: somebody that is looking to put five percent of the

345
00:19:45,440 --> 00:19:50,120
Speaker 1: portfolio typically into commodities, and the decision making process that

346
00:19:50,240 --> 00:19:52,200
Speaker 1: they're going to go through is really to evaluate how

347
00:19:52,280 --> 00:19:56,240
Speaker 1: much energy exposure do I want within that particular fund,

348
00:19:56,680 --> 00:19:58,720
Speaker 1: and that leads you to to the decision of whether

349
00:19:58,760 --> 00:20:01,919
Speaker 1: you buy one or the other. Okay, the reason I

350
00:20:02,000 --> 00:20:05,600
Speaker 1: was focusing on oil and futurist contracts is there is

351
00:20:05,600 --> 00:20:09,800
Speaker 1: a natural seasonality not only to oil and other commodities,

352
00:20:09,920 --> 00:20:13,119
Speaker 1: but there is a rollover effect because you have the

353
00:20:13,160 --> 00:20:17,320
Speaker 1: expiration of those contracts. How do you avoid that natural

354
00:20:17,480 --> 00:20:22,679
Speaker 1: decay of value when you're dealing with futurist contracts, great question.

355
00:20:22,880 --> 00:20:26,159
Speaker 1: So you can't avoid it. That's a market structure issue.

356
00:20:26,320 --> 00:20:30,320
Speaker 1: So by definition, when you're investing in futures contracts, the

357
00:20:30,400 --> 00:20:34,639
Speaker 1: contract you own, depending on what expiry date it is,

358
00:20:34,800 --> 00:20:36,919
Speaker 1: is going to expire at that expiry date. That is

359
00:20:36,920 --> 00:20:39,919
Speaker 1: the whole point. And so by definition, to maintain that

360
00:20:40,000 --> 00:20:42,720
Speaker 1: exposure we call it rolling, you have to sell that

361
00:20:42,800 --> 00:20:47,920
Speaker 1: contract before it expires and buy the next contract, And

362
00:20:48,040 --> 00:20:50,919
Speaker 1: that has a friction associated with it because you're selling

363
00:20:50,960 --> 00:20:54,560
Speaker 1: one contract and buying another, and depending on whether that

364
00:20:55,480 --> 00:20:58,800
Speaker 1: contract that you're buying is trading more expensive or cheaper

365
00:20:59,080 --> 00:21:01,119
Speaker 1: in the money, you're out of the money. Exactly. That's

366
00:21:01,200 --> 00:21:05,119
Speaker 1: either a positive or negative effect. I've been looking at

367
00:21:05,200 --> 00:21:09,240
Speaker 1: comb as. You're one example, right, and this is it

368
00:21:09,320 --> 00:21:13,359
Speaker 1: was trading right about twenty seven back in May, now

369
00:21:13,400 --> 00:21:16,000
Speaker 1: trading at around twenty five s, a drop of about

370
00:21:16,040 --> 00:21:18,360
Speaker 1: eight and a half percent. Do you believe that that's

371
00:21:18,359 --> 00:21:22,280
Speaker 1: an accurate reflection of the overall commodity market? Yes, So

372
00:21:22,359 --> 00:21:24,160
Speaker 1: what's happened actually, and this is this is a great

373
00:21:24,160 --> 00:21:26,760
Speaker 1: point because I think you know, it's important for investors.

374
00:21:26,760 --> 00:21:29,280
Speaker 1: You know, there are three components that make up what

375
00:21:29,400 --> 00:21:32,560
Speaker 1: we call the total return of these kind of funds.

376
00:21:32,600 --> 00:21:34,320
Speaker 1: So the first one is the spot price of the

377
00:21:34,400 --> 00:21:37,600
Speaker 1: underlying futures naturally. The second one is what we're just

378
00:21:37,640 --> 00:21:40,560
Speaker 1: talking about, which is the we call the roll yield,

379
00:21:40,840 --> 00:21:43,680
Speaker 1: which is either positive or negative. The third one is

380
00:21:43,720 --> 00:21:46,760
Speaker 1: the return on the collateral. Because when we invest in

381
00:21:46,800 --> 00:21:49,480
Speaker 1: future as, we hold treasury bills as collateral and they

382
00:21:49,520 --> 00:21:52,119
Speaker 1: generate an interest rate orbit not not a huge amount,

383
00:21:52,160 --> 00:21:54,920
Speaker 1: but still generates an interest rate, and so those three

384
00:21:55,040 --> 00:21:57,600
Speaker 1: make up the total return. What's actually happened is the

385
00:21:57,640 --> 00:22:02,280
Speaker 1: market structure for the majority of commodities is shifted into backwardation,

386
00:22:02,680 --> 00:22:06,160
Speaker 1: so people are being paid to be long that exposure

387
00:22:06,160 --> 00:22:09,320
Speaker 1: and oil for example, Well done, Thanks very much, Will

388
00:22:09,400 --> 00:22:12,280
Speaker 1: ryand he is the founder and the chief executive of

389
00:22:12,640 --> 00:22:17,919
Speaker 1: Granted Shares. Talking about investing in commodities through E T

390
00:22:18,160 --> 00:22:35,080
Speaker 1: F S Well, Verizon decided that it is going to

391
00:22:35,440 --> 00:22:38,560
Speaker 1: seek to partner with either Google or Apple to provide

392
00:22:38,840 --> 00:22:42,440
Speaker 1: television when it launches the first super fast five G

393
00:22:42,720 --> 00:22:46,200
Speaker 1: service to homes in l A and Sacramento later this year.

394
00:22:46,720 --> 00:22:50,280
Speaker 1: A big question, why didn't they go with Hollywood? Why

395
00:22:50,320 --> 00:22:54,880
Speaker 1: didn't they go with the traditional television networks? And here

396
00:22:54,920 --> 00:22:57,280
Speaker 1: to talk about that, John Butler, Senior Telecom Service as

397
00:22:57,320 --> 00:23:03,000
Speaker 1: an equipment analyst with Bloomberg intell Agents, John, what happened here? So,

398
00:23:03,840 --> 00:23:07,719
Speaker 1: first of all, Verizon just held its earnings call and

399
00:23:07,760 --> 00:23:11,400
Speaker 1: the question didn't even come up about content really, so

400
00:23:12,600 --> 00:23:15,280
Speaker 1: I think the and that reflects the fact that the

401
00:23:15,320 --> 00:23:20,960
Speaker 1: company is focused on launching these new five G services. Uh,

402
00:23:21,160 --> 00:23:23,399
Speaker 1: tell people what five G is so five G is

403
00:23:23,440 --> 00:23:28,040
Speaker 1: sort of a next generation wireless technology. It is ultra fast.

404
00:23:28,160 --> 00:23:32,080
Speaker 1: It's probably ten to a hundred times faster than the

405
00:23:32,160 --> 00:23:35,960
Speaker 1: four G connection you get today. What's really important is

406
00:23:36,080 --> 00:23:39,240
Speaker 1: you can as a carrier, you can begin to pars

407
00:23:39,280 --> 00:23:44,040
Speaker 1: off or create these little slices of dedicated network for

408
00:23:44,119 --> 00:23:49,360
Speaker 1: your business customers. And so Verizon is looking at that,

409
00:23:49,400 --> 00:23:54,760
Speaker 1: going wow, an ultrafast dedicated connection. What appeal that's going

410
00:23:54,840 --> 00:23:58,040
Speaker 1: to have for the business community. And so they're structuring

411
00:23:58,080 --> 00:24:02,560
Speaker 1: this whole sort of commercial plan down the road, but

412
00:24:02,680 --> 00:24:07,040
Speaker 1: the initial launch is going to be to over build

413
00:24:07,119 --> 00:24:10,600
Speaker 1: your cable guy or in some cases, I guess your

414
00:24:10,760 --> 00:24:16,120
Speaker 1: teleco providing broadband internet services to the home. But that

415
00:24:16,240 --> 00:24:21,040
Speaker 1: is a first step. Okay, I'm just sorry to stop

416
00:24:21,080 --> 00:24:24,360
Speaker 1: you there. I'm trying to sort of figure out what

417
00:24:24,400 --> 00:24:27,720
Speaker 1: we're who's doing television, who's doing the tech part, who's

418
00:24:27,760 --> 00:24:31,439
Speaker 1: doing what because it seems like there's ever merging of

419
00:24:31,520 --> 00:24:34,400
Speaker 1: all of these things, of the content and the providing

420
00:24:34,400 --> 00:24:38,280
Speaker 1: of the services, and this just sort of increases the confusion.

421
00:24:38,359 --> 00:24:42,560
Speaker 1: So Verizon wants to provide television, uh, and it's going

422
00:24:42,600 --> 00:24:47,399
Speaker 1: to use Google and Apple, which have their own maybe

423
00:24:47,680 --> 00:24:51,800
Speaker 1: which have their own sort of content providers in various ways.

424
00:24:52,920 --> 00:24:55,720
Speaker 1: I'm trying to struggle like who's doing what here. Well,

425
00:24:55,760 --> 00:24:58,760
Speaker 1: there's a lot of convergence going on. So a lot

426
00:24:58,760 --> 00:25:03,040
Speaker 1: of cable companies now can provide your telecom services. They

427
00:25:03,080 --> 00:25:06,760
Speaker 1: provide internet, they provide videos. So does Verizon. I have

428
00:25:06,920 --> 00:25:10,760
Speaker 1: Verizon FiOS at home. I don't get my telephone, I

429
00:25:10,840 --> 00:25:14,679
Speaker 1: get pardon me. I get my telephone, my video, and

430
00:25:14,840 --> 00:25:18,879
Speaker 1: my broadband internet all from Verizon. And I think the

431
00:25:18,960 --> 00:25:24,200
Speaker 1: appeal for residential customer is bundling. You get service discounts

432
00:25:24,240 --> 00:25:28,000
Speaker 1: across the board by going with one carrier. They sort

433
00:25:28,040 --> 00:25:31,320
Speaker 1: of reward you for that in a lot of markets.

434
00:25:31,400 --> 00:25:35,160
Speaker 1: For Rising doesn't have the infrastructure to compete with cable

435
00:25:35,359 --> 00:25:38,439
Speaker 1: by bundling like that. They happen to in my neighborhood.

436
00:25:39,359 --> 00:25:42,879
Speaker 1: But they only have seventeen million homes across the US

437
00:25:42,920 --> 00:25:46,200
Speaker 1: wired to do that. So the plan is to use

438
00:25:46,280 --> 00:25:51,320
Speaker 1: the ultra Fast five G to provide a last hundred

439
00:25:51,359 --> 00:25:55,920
Speaker 1: foot connection to the home using wireless, so they don't

440
00:25:55,920 --> 00:25:58,639
Speaker 1: have to dig trenches like they did in my front yard.

441
00:25:58,720 --> 00:26:01,040
Speaker 1: They don't need to put five or in my basement

442
00:26:01,680 --> 00:26:04,720
Speaker 1: they put an Antenta on my roof and provide service.

443
00:26:04,920 --> 00:26:08,960
Speaker 1: So what would Google or Apple actually do and who's

444
00:26:09,000 --> 00:26:11,879
Speaker 1: the loser here? Well, the punchline is do you want

445
00:26:11,880 --> 00:26:14,159
Speaker 1: to I guess if you're Verizon, do you want to

446
00:26:14,200 --> 00:26:17,840
Speaker 1: provide just the dumb pipe as it's called, or do

447
00:26:17,880 --> 00:26:20,640
Speaker 1: you want to begin to fill it with sort of

448
00:26:20,760 --> 00:26:25,280
Speaker 1: value added services? Uh in In this case, it would

449
00:26:25,359 --> 00:26:29,800
Speaker 1: be video services coming from Apple, which doesn't currently have

450
00:26:29,920 --> 00:26:34,200
Speaker 1: a streaming service, or Google, which has I believe it's

451
00:26:34,200 --> 00:26:39,480
Speaker 1: a sixty channel service on YouTube. So by partnering with them,

452
00:26:39,600 --> 00:26:42,360
Speaker 1: Verizon doesn't really need to get in the content game

453
00:26:42,400 --> 00:26:44,679
Speaker 1: in a big way like a T and T is doing,

454
00:26:44,720 --> 00:26:47,840
Speaker 1: for example. They can sort of stay out of it.

455
00:26:47,920 --> 00:26:50,359
Speaker 1: But what they're offering in terms of the five G

456
00:26:50,680 --> 00:26:54,879
Speaker 1: link over a cable operator or in competing with a

457
00:26:54,920 --> 00:26:57,680
Speaker 1: cable operator, I should say they'll be able to come

458
00:26:57,720 --> 00:27:00,560
Speaker 1: to customers and say, well, not only give you the

459
00:27:00,560 --> 00:27:03,280
Speaker 1: pipe at a discount, but we have content that goes

460
00:27:03,320 --> 00:27:08,639
Speaker 1: along with it. Wow, when you say value added services,

461
00:27:08,680 --> 00:27:13,239
Speaker 1: all I see is an extra bill to pay at

462
00:27:13,280 --> 00:27:19,520
Speaker 1: the end of the month. You have Apple, Amazon, Netflix, Spotify, Hulu, Pandora.

463
00:27:19,600 --> 00:27:21,960
Speaker 1: Now you're telling me what I didn't even add in

464
00:27:22,200 --> 00:27:24,679
Speaker 1: the mobile services, so that may be T Mobile or

465
00:27:25,160 --> 00:27:27,879
Speaker 1: Sprint or whatever. If you've got Plus. Now you're telling

466
00:27:27,920 --> 00:27:30,000
Speaker 1: me that a T T is going to offer something.

467
00:27:30,680 --> 00:27:33,400
Speaker 1: Are they're really going to offer anything that you don't

468
00:27:33,400 --> 00:27:37,280
Speaker 1: have to pay for? I think they'll have a very

469
00:27:37,400 --> 00:27:41,480
Speaker 1: ultra low cost add supported tier on direct TV now,

470
00:27:41,560 --> 00:27:45,720
Speaker 1: which is their streaming service. I will add with Verizon.

471
00:27:45,840 --> 00:27:49,480
Speaker 1: By the way, the partnership with Google or Apple is

472
00:27:49,560 --> 00:27:54,240
Speaker 1: rumored at this point, not the five ge services of course,

473
00:27:54,320 --> 00:27:58,040
Speaker 1: but the content services to go along with it. So

474
00:27:58,080 --> 00:28:01,000
Speaker 1: we'll see if it happens or not. Either way, I

475
00:28:01,000 --> 00:28:04,840
Speaker 1: would say what you you're speaking to that that convergence

476
00:28:04,960 --> 00:28:09,439
Speaker 1: between telecom and cable operators and now even Google and

477
00:28:09,520 --> 00:28:13,560
Speaker 1: Apple is really happening and going to continue. By the way,

478
00:28:14,040 --> 00:28:16,359
Speaker 1: I just don't want know why this convergence has to

479
00:28:16,480 --> 00:28:20,399
Speaker 1: cost so much money every month, And meanwhile you have

480
00:28:20,720 --> 00:28:25,639
Speaker 1: Verizon with its own content provider of oath Man. My

481
00:28:25,680 --> 00:28:28,280
Speaker 1: head is spinning. Yeah, just keep writing the checks, all right.

482
00:28:28,320 --> 00:28:31,280
Speaker 1: Thanks very much, John Butler, He's our expert when it

483
00:28:31,320 --> 00:28:35,240
Speaker 1: comes to telecom services and equipment. He's our analyst for

484
00:28:35,400 --> 00:28:43,880
Speaker 1: Bloomberg Intelligence. Thanks for listening to the Bloomberg P and

485
00:28:44,000 --> 00:28:47,040
Speaker 1: L podcast. You can subscribe and listen to interviews at

486
00:28:47,080 --> 00:28:51,520
Speaker 1: Apple Podcasts, SoundCloud, or whatever podcast platform you prefer. I'm

487
00:28:51,560 --> 00:28:55,000
Speaker 1: pim Fox. I'm on Twitter at pim Fox. I'm on

488
00:28:55,040 --> 00:28:58,440
Speaker 1: Twitter at Lisa Abramowits one before the podcast. You can

489
00:28:58,480 --> 00:29:09,640
Speaker 1: always catch us worldwide on Bloomberg Radio h