WEBVTT - Growth is Not Quite as Stable, Morse Says Description: 0:00:00.080 --> 0:00:13.800 Ye, Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane Jaily. 0:00:13.960 --> 0:00:16.960 We bring you insight from the best in economics, finance, 0:00:17.040 --> 0:00:23.480 investment and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, 0:00:23.600 --> 0:00:34.199 Bloomberg dot Com, and of course on the Bloomberg This 0:00:34.240 --> 0:00:36.839 is what Bloomberg Surveillance is all about. Edward Morris with 0:00:36.880 --> 0:00:40.800 a subsidy group, with his work on international relations, geopolitics, 0:00:40.880 --> 0:00:45.600 and of course commodities for the bank. Ed Morris expect 0:00:45.680 --> 0:00:49.159 the unexpected, or maybe the shocks come away from the 0:00:49.200 --> 0:00:52.640 certitude of looking at Syria or that I'm looking at 0:00:52.680 --> 0:00:58.040 a dollar Turkish lira of four seventeen, which screams to 0:00:58.080 --> 0:01:04.160 me instabilities. What's the instability in the region you're focused on? Uh? 0:01:04.600 --> 0:01:07.559 Is you use all of the research capabilities of your bank. 0:01:08.280 --> 0:01:12.000 I don't know where to start on this. Uh there's uh, 0:01:12.120 --> 0:01:14.520 you know, putting aside what's happening with the Turkish lyra. 0:01:14.800 --> 0:01:17.679 These are all economies in the Gulf that are pegged 0:01:17.720 --> 0:01:22.759 to the US dollar. They've benefited remarkably by uh what's 0:01:22.760 --> 0:01:26.000 happened with the price of oil? Um the pressure on 0:01:26.080 --> 0:01:30.920 them too. Deepegg has gone away. Um uh and um. 0:01:31.000 --> 0:01:33.760 What's next is really know how these economies going to 0:01:34.360 --> 0:01:37.240 adjust to this new world of getting out of oil. 0:01:37.360 --> 0:01:40.399 It screams shuttle diplomacy, except we don't have a Secretary 0:01:40.440 --> 0:01:43.400 of State to get on the shuttle right not yet, 0:01:43.440 --> 0:01:45.360 and it remains to be seen whether he's going to 0:01:45.440 --> 0:01:47.200 be confirmed by the Senate. What do you make of 0:01:47.280 --> 0:01:49.720 the price section that we've seen over the last couple 0:01:49.760 --> 0:01:51.680 of weeks, said, because I'm looking at this risk off 0:01:51.760 --> 0:01:55.280 move and I'm saying risk off with inverted commas on 0:01:55.320 --> 0:01:58.920 either side, because treasuries a bit, yes, but yields it 0:01:59.000 --> 0:02:01.400 down like three bay Sis points and Dolly ends off 0:02:01.400 --> 0:02:03.560 by about a third of one percent. And I think 0:02:03.560 --> 0:02:05.240 if you look at the equity market alone, you would 0:02:05.240 --> 0:02:07.960 think something very vicious has been happening in the market 0:02:08.000 --> 0:02:10.160 over the last couple of weeks. But everything house seems 0:02:10.160 --> 0:02:13.600 to be holding up Cross asset, and I think, Tom, 0:02:13.680 --> 0:02:15.880 what's been really interesting over the last couple of weeks 0:02:15.960 --> 0:02:17.880 is that this risk on risk off regime of the 0:02:18.000 --> 0:02:21.399 last few years has changed. It used to be sal 0:02:21.480 --> 0:02:25.480 equities by treasuries in a proportional amount and do the 0:02:25.520 --> 0:02:28.040 same thing with the Japanese yen, and I don't see 0:02:28.080 --> 0:02:31.520 that in the same way anymore. What's changed, dead Well, 0:02:31.520 --> 0:02:33.239 one of the things that's changed we haven't talked about 0:02:33.280 --> 0:02:36.520 it is a commodity is actually outperformed both equities and 0:02:36.600 --> 0:02:40.359 bonds in the first quarter. Uh. That's something to keep 0:02:40.360 --> 0:02:42.720 your eye on, and we can talk a lot about that. 0:02:42.800 --> 0:02:45.480 Another thing that's changed is the I think there's been 0:02:45.520 --> 0:02:48.280 an acceleration of risk on risk off. One of the 0:02:48.320 --> 0:02:51.600 things to worry about is with this risk on risk 0:02:51.639 --> 0:02:57.680 off have been massive inflows of debt issuance and equity 0:02:57.720 --> 0:03:01.000 investments into emerging markets and out of emerging markets. And 0:03:01.040 --> 0:03:05.320 that's that's also flirted with the notion that growth is 0:03:05.360 --> 0:03:07.480 not quite as stable as it might be. So when 0:03:07.520 --> 0:03:10.360 you look at the situation worldwide, do you actually see 0:03:10.400 --> 0:03:13.320 a firm macro backdrop, because there are some people starting 0:03:13.360 --> 0:03:15.800 to question that. I imagine I'll speak to many investors 0:03:15.840 --> 0:03:18.640 today and I'll talk to them about this geopolitical risk 0:03:18.680 --> 0:03:20.080 store and they will say shore in the short term, 0:03:20.160 --> 0:03:22.160 it's it's going to be a sentiment driven story. What 0:03:22.280 --> 0:03:25.000 this means for markets expects the more volatility, but the 0:03:25.000 --> 0:03:27.520 fundamentals will re assert them sounds earning season is going 0:03:27.560 --> 0:03:30.160 to start and a macro backdrop is still firm. Is 0:03:30.200 --> 0:03:33.120 the macro backdrop still as firm as people say it is, Well, 0:03:33.160 --> 0:03:35.040 it looks like that's it's fraying at the edges. There 0:03:35.080 --> 0:03:36.720 are a lot of data points that are coming in 0:03:36.840 --> 0:03:39.800 that show weakness, that show that the growth may in 0:03:39.880 --> 0:03:42.760 fact be impacted. And that's that's the problem of the 0:03:42.800 --> 0:03:46.680 brinksmanship that we're seeing on the trade front. Where brinksmanship 0:03:46.720 --> 0:03:48.800 when you when you draw lines in the sand and 0:03:48.880 --> 0:03:51.320 somebody says they're not going to budge, what do you do? 0:03:51.920 --> 0:03:55.200 What would you say to General Matters Right now? I 0:03:55.200 --> 0:03:57.480 don't know what you say to the State Department. I'm 0:03:57.560 --> 0:03:59.960 sure I don't know what you say to the sixty 0:04:00.120 --> 0:04:03.720 under Pennsylvania Avenue. But with all of your years of experience, 0:04:04.440 --> 0:04:10.720 what do you say to the Secretary Defense into our military? Well, yeah, 0:04:10.840 --> 0:04:14.880 they're they're the last bastions of consensus politics, and and 0:04:14.920 --> 0:04:18.400 you've got to assume that the military, given their organization, 0:04:18.440 --> 0:04:21.279 are going to tow the line. So that's the encouragement 0:04:21.320 --> 0:04:24.080 that they need, and that's the voice of reason that's 0:04:24.120 --> 0:04:28.040 that's required. I mean, within that is the surgical strikes 0:04:28.120 --> 0:04:32.359 certitude that we've all seen within modern warfare, you know, 0:04:32.360 --> 0:04:34.599 whether it was the advent of air the air force, 0:04:34.720 --> 0:04:37.680 or whatever. We can be surgical and your experience of 0:04:37.680 --> 0:04:40.600 the Middle East, surgical really doesn't work, doesn't now the 0:04:41.240 --> 0:04:43.680 danger in the Middle East, and and maybe you know, 0:04:43.839 --> 0:04:51.040 maybe there's something that will will will unmask, uh what's happening. 0:04:51.080 --> 0:04:54.960 But uh, Now, Russia's an economy that's slightly bigger than 0:04:55.000 --> 0:04:57.160 the state of Florida, slightly smaller than the state of 0:04:57.200 --> 0:04:59.760 New York, and they've been managing to do something on 0:04:59.760 --> 0:05:03.480 the global front, partly because of what's happened with their 0:05:03.520 --> 0:05:06.440 relationship with Saudi Arabia on the oil side, that that 0:05:06.480 --> 0:05:08.400 has made them seem a lot more powerful than they 0:05:08.400 --> 0:05:12.080 actually are. So maybe we're gonna see something resulting from that. 0:05:12.400 --> 0:05:15.760 Edward Morris, thank you so much, greatly appreciate your effort 0:05:15.800 --> 0:05:19.160 to come in today for an extended period with Bloomberg surveillance. 0:05:19.240 --> 0:05:22.120 Dr Morris, of course, with City Group running all of 0:05:22.160 --> 0:05:42.560 their commodity or with us right now Gary Shilling on inflation. Gary, 0:05:42.600 --> 0:05:44.760 the big deal right now and with the data here 0:05:45.240 --> 0:05:49.960 in forty minutes is the base effect the base effect 0:05:50.600 --> 0:05:54.880 is where and the fourteenth and the fifteen month drifts away. 0:05:55.600 --> 0:05:58.680 How do you respond to people saying, well, inflation is 0:05:58.680 --> 0:06:02.560 going to be higher because is the base effect? Well, there, 0:06:02.680 --> 0:06:04.800 there certainly isn't effect. I mean, if you go back 0:06:04.839 --> 0:06:06.520 to all months, of course it was a reverse that 0:06:06.640 --> 0:06:09.320 was reversed. And that's what you're that's what you're talking about. 0:06:09.360 --> 0:06:12.000 But I think it's more important to concentrate on the future. 0:06:12.320 --> 0:06:15.359 And one are the basic forces there. And you know, 0:06:15.400 --> 0:06:17.960 we're in a globalized world. There's a lot of deflationary 0:06:18.000 --> 0:06:22.080 forces there. You're seeing lower inflation and medical medical care 0:06:22.120 --> 0:06:26.880 and education. You're seeing Amazon what they're doing to bricks 0:06:26.920 --> 0:06:30.479 and mortar stores and prices. Uh, And you know, I 0:06:30.480 --> 0:06:33.560 I think they're just there are a lot of downwards pressure. 0:06:34.120 --> 0:06:36.279 Let's rip up the script here, folks. That's what we 0:06:36.320 --> 0:06:39.359 do on Bloomberg surveillance. Hn Farrell demands I do it 0:06:39.920 --> 0:06:43.960 once a day. Gary, you went there. It is stunning. 0:06:44.240 --> 0:06:49.440 The second derivative of empty stores in this nation. Everyone, 0:06:49.560 --> 0:06:54.239 even his his arch angry opposites, agree with President Trump. 0:06:54.560 --> 0:06:58.200 There's a lot of empty stores. How does that market clear? 0:06:58.480 --> 0:07:01.719 A wise one, one would hope, And and and a 0:07:01.720 --> 0:07:03.760 lot of areas they tear down the buildings and make 0:07:03.839 --> 0:07:08.320 parking lots. But but you know, but rental price can 0:07:08.440 --> 0:07:13.840 come down. And that's a very heavily leveraged business time 0:07:13.880 --> 0:07:16.400 as you know, and so there's no reason that those 0:07:16.440 --> 0:07:19.480 rental rates can't come down. But you know that the 0:07:19.720 --> 0:07:22.560 reality is it isn't going to get any any easier. 0:07:23.040 --> 0:07:26.280 I mean, you pull out your your spark, your smartphone, 0:07:26.720 --> 0:07:28.520 you got an app there, you push a couple of 0:07:28.560 --> 0:07:31.440 a couple of buttons and you can find the absolute 0:07:31.520 --> 0:07:35.400 lowest price. You know, there is no ability to compete 0:07:35.400 --> 0:07:39.280 on everything is coming in years decades of experience at 0:07:39.280 --> 0:07:42.360 Mary Lynch and inventing market economics. I'm gonna say with that, 0:07:42.480 --> 0:07:46.640 Hyman is well, maybe you're denial throw in there is well, 0:07:46.760 --> 0:07:52.360 Gary Shilling, how do you clear and absolutely unique tobaccle 0:07:53.000 --> 0:07:56.040 in real estate? Which is what we all observe. Everybody 0:07:56.080 --> 0:07:59.400 listening to this program coast to coast is observing it. Well, 0:08:00.800 --> 0:08:05.360 what happens is that at at a long enough price, uh, 0:08:05.360 --> 0:08:08.920 those buildings are worth something you have to convert into 0:08:08.960 --> 0:08:12.480 alternative spaces. Now that's what's happening to malls today. Of course, 0:08:12.960 --> 0:08:16.000 because you're seeing they put in fitness centers, they put 0:08:16.080 --> 0:08:19.880 in restaurants, UH, they put in they put in movie 0:08:19.920 --> 0:08:23.400 theaters and so on. But that still means that they 0:08:23.440 --> 0:08:26.560 don't replace them at the same rental rates. Because anchor 0:08:26.680 --> 0:08:30.040 stores UH generate a lot more traffic and they support 0:08:30.040 --> 0:08:32.520 a lot of the small jewelry stores and sestionary stores, 0:08:32.559 --> 0:08:35.440 and the severe she have to mark the price down, 0:08:35.480 --> 0:08:40.199 in other words, the market in price, and the text 0:08:40.320 --> 0:08:43.640 is that the landlord pays have to clear it will 0:08:43.720 --> 0:08:46.200 lower rate. Well, that's that's right. And of course this 0:08:46.320 --> 0:08:48.040 is what this does is it puts a lot of 0:08:48.080 --> 0:08:51.319 pressure on everything. It puts pressure on the municipalities and 0:08:51.600 --> 0:08:54.120 point out because of the taxes, it pulls pressure on 0:08:54.160 --> 0:08:56.680 the area. You look at a lot of of areas 0:08:56.679 --> 0:09:01.560 in this country and tremendous amount of of suburban housing 0:09:01.640 --> 0:09:05.080 real estate is around malls. You know where where I am, 0:09:05.120 --> 0:09:07.480 Short Hills, New Jersey. They built a Short Hills mall 0:09:08.240 --> 0:09:12.480 basically to UH to Prudential did this because they were 0:09:12.480 --> 0:09:15.840 developing a huge amount of land around there for residential 0:09:15.920 --> 0:09:18.600 right after World War Two, and that mall was really 0:09:18.760 --> 0:09:22.440 there to in effect attract people into this residential area, 0:09:22.440 --> 0:09:25.560 and that's obviously far from unique. So you do have 0:09:25.640 --> 0:09:29.160 a lot more than just the retail stores, particularly in 0:09:29.160 --> 0:09:31.520 the case of the malls. To switch your back to 0:09:31.559 --> 0:09:35.599 showing one oh one, do you stay in your newsletter 0:09:36.040 --> 0:09:39.719 with lower rates? And how low is the Is there 0:09:39.760 --> 0:09:42.280 a new low? I should say for Gary showing is 0:09:42.280 --> 0:09:47.240 it a higher low? I don't. I don't think so. 0:09:47.480 --> 0:09:49.600 You know, I've been of the opinion that we would 0:09:49.600 --> 0:09:52.000 get to two percent on the thirty year bond and 0:09:52.040 --> 0:09:54.360 one percent on the ten uere and I don't see 0:09:54.360 --> 0:09:56.920 any reason to change that. I just think there's an 0:09:56.920 --> 0:10:00.160 awful lot of We're in an excess supply world, and 0:10:00.240 --> 0:10:02.680 I don't think that's going to change. You labor markets 0:10:02.679 --> 0:10:05.920 are tightening up in this country. But unless we're gonna 0:10:06.360 --> 0:10:09.080 unless Trump is gonna build not only a wall in 0:10:09.120 --> 0:10:12.439 the Mexican border, but a terrible wall completely around the country, 0:10:12.679 --> 0:10:16.600 you're really you're really faced with a whole globalization effect. 0:10:16.679 --> 0:10:18.760 It's a huge coal Gary. What's the what's the time 0:10:18.800 --> 0:10:21.839 arising for that? Cool? Because I think many people would say, 0:10:21.840 --> 0:10:23.960 but it's the next recession. Then I think a lot 0:10:24.000 --> 0:10:25.920 of people might say that could make sense because we 0:10:26.000 --> 0:10:29.240 hit around mark on a ten year and we weren't 0:10:29.240 --> 0:10:31.679 in a recession. So is it the next recession you're 0:10:31.679 --> 0:10:33.920 thinking about, or is it in this cycle? What's the 0:10:33.920 --> 0:10:37.040 time arising for the cool? Well? Uh, one of the 0:10:37.040 --> 0:10:40.000 great forecasters of history say you should forecast what will 0:10:40.040 --> 0:10:42.760 happen or when it will happen, but not both. Yes, 0:10:44.160 --> 0:10:47.160 I'm not dumb enough to put a put an exact 0:10:47.160 --> 0:10:50.200 timeline on that, John, But but I do think that 0:10:50.360 --> 0:10:52.199 is in the cars. And you say, I mean, you 0:10:52.480 --> 0:10:55.400 look at this, you look at the situation today, and 0:10:55.720 --> 0:10:58.440 given the fact that everybody is screaming about tight labor 0:10:58.520 --> 0:11:02.720 markets and and that's where inflation only starts to his eyes, 0:11:03.240 --> 0:11:05.720 and where are you? You know, you're below three percent 0:11:05.840 --> 0:11:08.400 on the third ear The characteristics of the treasury market 0:11:08.440 --> 0:11:11.080 has adapted somewhat in the last couple of months, though 0:11:11.120 --> 0:11:13.880 on a morning like today, with features down quite hard, 0:11:14.160 --> 0:11:16.160 you've only got a bid that comes into treasuries that 0:11:16.200 --> 0:11:19.360 generates a move of negative three basis points. Were down 0:11:19.440 --> 0:11:22.040 three basis points on the US tenure now in in 0:11:22.200 --> 0:11:24.840 risk off of previous years, we might have been bound 0:11:24.880 --> 0:11:28.360 down ten perhaps even fifteen. We aren't seeing these big 0:11:28.400 --> 0:11:32.320 haven flows rush into treasuries in periods of risk aversion. 0:11:32.440 --> 0:11:34.720 Something's changed, Gary, can you put your finger on it? No, 0:11:34.840 --> 0:11:37.800 you're right. As a matter of fact our April newsletter. 0:11:37.840 --> 0:11:40.280 I look at that because it is it is. It 0:11:40.400 --> 0:11:43.640 is strange because when when you saw the starting in 0:11:43.679 --> 0:11:46.880 early February, when you saw the collapse of the of 0:11:47.000 --> 0:11:50.680 the of the volatility trade, the vixed trade, uh, you 0:11:50.800 --> 0:11:53.880 did not get the normal rush into treasuries and gold. 0:11:54.559 --> 0:11:57.040 And I think there are offsetting things. I mean, one is, 0:11:57.160 --> 0:12:01.840 people are worried about inflation, they're worried about big government deposition. 0:12:01.960 --> 0:12:04.520 Of course, you've got to you've got to at least 0:12:04.600 --> 0:12:07.800 one trillion over ten years for the tax cuts, and 0:12:07.880 --> 0:12:11.560 another three billion for the two year uh two year 0:12:12.240 --> 0:12:15.520 spending bill. And then behind that you've got the retiring 0:12:15.559 --> 0:12:19.560 post for our baby, social Security, medicare funding those things. 0:12:19.559 --> 0:12:22.880 And then and we talked about this on TV earlier time, 0:12:22.960 --> 0:12:29.360 about about about down the road, military spending and infrastructure. 0:12:29.520 --> 0:12:31.160 You've got a lot of things. And now I don't 0:12:31.200 --> 0:12:33.199 think those are going to be that I don't. I 0:12:33.559 --> 0:12:37.520 think the the treasures will, they'll they'll find homes in 0:12:37.640 --> 0:12:39.400 race will be lower. But there's a lot of concern 0:12:39.480 --> 0:12:41.800 about that right now. And I think this is this 0:12:41.880 --> 0:12:45.199 is holding off what normally would be a greater rush. 0:12:45.440 --> 0:12:47.800 Finally dr showing the zite guys just three to four 0:12:47.920 --> 0:12:51.000 rate increases this year. It's April, we're dashing to May. 0:12:51.320 --> 0:12:55.640 I believe it's the schedule right now. Does that crack? 0:12:56.000 --> 0:12:58.880 Do we do? We do we reset with all the 0:12:58.960 --> 0:13:01.360 discourse and the finale seeing a message? Do we? Yeah? 0:13:01.600 --> 0:13:03.800 That what you see like June, July, August. Yeah, I 0:13:04.960 --> 0:13:07.440 really suspect there will be a dialing back. I mean again, 0:13:07.520 --> 0:13:10.920 the Fed does one higher race. They'd like to have 0:13:11.040 --> 0:13:13.560 some higher race to cut when the next recession comes 0:13:13.600 --> 0:13:16.400 along the ground. As John was pointing out, Uh, you 0:13:16.720 --> 0:13:21.000 also have their tremendous concern about the speculation to take 0:13:21.000 --> 0:13:25.480 a look at bitcoin and everything in between that hedge 0:13:25.520 --> 0:13:28.959 funds of private equity people have so zealous for yielded. 0:13:29.200 --> 0:13:32.600 FED worries about that. Uh. But at the same time 0:13:32.800 --> 0:13:35.719 they've they've got this lack of inflation and that that 0:13:35.800 --> 0:13:39.079 really is bothering him now. They basically have said this 0:13:39.160 --> 0:13:41.880 is a one off deal. Uh, you know, Yelling kept 0:13:41.880 --> 0:13:44.520 saying it was it was a matter of the of 0:13:44.600 --> 0:13:51.920 the cell phone race coming down, and then medical care UH, Medicaid, etcetera. 0:13:52.480 --> 0:13:54.920 Powell has adopted some of the same policy. But when 0:13:54.920 --> 0:13:56.720 you get a series of one offs after a while, 0:13:56.760 --> 0:13:59.719 you say, that's a trend showing thank you so much. 0:13:59.760 --> 0:14:02.840 This great all the time on Bloomberg television and radio 0:14:03.280 --> 0:14:20.040 with Bloomberg surveillance. Before we had president's tweeting, we had 0:14:20.080 --> 0:14:24.560 people writing thoughtful books about people and changing things. You 0:14:24.600 --> 0:14:26.960 should be David Kirkpatrick, and of course many of you 0:14:27.040 --> 0:14:31.520 that know me know my rave review of The Facebook Effect. 0:14:31.600 --> 0:14:34.280 It is not a dated book. It is a wonderful 0:14:34.400 --> 0:14:39.520 window into a young Zuckerberg. Your book, The Facebook Effect. 0:14:40.200 --> 0:14:42.640 We've moved on from that, haven't we, David. It was 0:14:42.680 --> 0:14:46.360 a different moment, So we're having a Facebook Effect. I 0:14:46.400 --> 0:14:49.840 think that could be absolutely agreed upon. But certainly my 0:14:49.920 --> 0:14:52.680 book was, you know, an introduction to a company that 0:14:52.920 --> 0:14:56.320 you know, the book came out originally in so people 0:14:56.360 --> 0:14:58.640 really didn't even realize it was important at that time. 0:14:58.720 --> 0:15:00.560 But what really brought their ten to do it was 0:15:00.600 --> 0:15:02.600 the I P O. Of course, and it it you know, 0:15:02.720 --> 0:15:04.560 did it well then? And then it dropped because they 0:15:04.600 --> 0:15:07.360 didn't get mobile and he came back, and Zuckerberg showed 0:15:07.360 --> 0:15:10.000 great leadership in that period. But I think what we've 0:15:10.040 --> 0:15:13.520 really learned, and what I think even he's learned even 0:15:13.560 --> 0:15:17.680 this week, is that he hasn't shown enough leadership when 0:15:17.680 --> 0:15:21.280 it came to certain key things around privacy and security. 0:15:21.840 --> 0:15:25.320 And you know, it's it's shocking to me that they 0:15:25.400 --> 0:15:28.800 made so many oversights when it came to that area. 0:15:28.880 --> 0:15:33.080 But I will say, listening to the hearings yesterday and 0:15:33.120 --> 0:15:35.680 spending too much of my time thinking about this company, 0:15:36.280 --> 0:15:40.840 I am relatively cautiously optimistic that they are moving in 0:15:40.880 --> 0:15:43.640 a direction that will be extremely productive for them and 0:15:43.720 --> 0:15:47.640 for society, because that's where we've gotten to that. It's 0:15:48.280 --> 0:15:51.560 the relationship with society is the thing that matters of Facebook. 0:15:51.600 --> 0:15:56.000 They are that globe spanning, that influential in our daily lives. 0:15:56.720 --> 0:16:01.080 David Kirkpatrick, I'm just curious if you are covering any 0:16:01.080 --> 0:16:05.040 other company, and there had been a situation in which 0:16:05.400 --> 0:16:09.520 years prior to an event, there was a mess up 0:16:09.560 --> 0:16:12.840 of this magnitude that caused the CEO to have to 0:16:12.880 --> 0:16:17.120 appear before Congress, and there was an actual paper slash 0:16:17.200 --> 0:16:24.440 email trail that connected various executives Okay, well, um, I 0:16:24.480 --> 0:16:28.240 don't know about you, but in most companies someone gets 0:16:28.240 --> 0:16:33.360 shown the door. Yes, who's accountable here other than someone 0:16:34.160 --> 0:16:37.000 saying I'm sorry, I don't think that lets you keep 0:16:37.040 --> 0:16:39.400 your job in most companies. Here's the one of the 0:16:39.440 --> 0:16:42.120 many oddities about Facebook, which is one of the reasons 0:16:42.120 --> 0:16:43.760 I chose to write a book about it because I 0:16:43.800 --> 0:16:46.160 really felt that it was a unique company from the beginning, 0:16:46.760 --> 0:16:49.680 is that there really is only one person who's accountable 0:16:49.720 --> 0:16:54.000 for everything, and that really does change the calculation in 0:16:54.040 --> 0:16:58.560 a situation like what you're describing. So it really is, 0:16:58.680 --> 0:17:02.400 in some central sense Zuckerberg's fault that all this happened. 0:17:03.000 --> 0:17:07.679 He didn't put the priorities where he should, and ultimately 0:17:07.920 --> 0:17:12.280 he unilaterally and solely that's the priorities at Facebook, which 0:17:12.640 --> 0:17:15.359 let's acknowledge, for a company that is worth half a 0:17:15.400 --> 0:17:18.359 trillion dollars, it's a very weird thing. You know, everybody 0:17:18.440 --> 0:17:21.240 showing I think I saw an MSNBC or CNE and David. 0:17:21.280 --> 0:17:24.680 Everybody shows this guy in intense conversation with the one 0:17:24.720 --> 0:17:28.439 guy he can talk to, who's David Kirkpatrick. Chapter six, 0:17:29.520 --> 0:17:33.800 Chapter six of your book, David Becoming a Company every 0:17:33.880 --> 0:17:37.399 single business person listening to this program is going, you 0:17:37.520 --> 0:17:40.240 gotta be kidding me. You got this kid running the show. 0:17:40.560 --> 0:17:46.760 He's a billionaire. Great congratulations, Miss Samberg is messaging who's 0:17:46.800 --> 0:17:50.920 the adult that could come in and shift this company 0:17:51.280 --> 0:17:54.720 to proper business practices? You mean then or now you're 0:17:54.720 --> 0:17:59.119 talking about now? No, he needs some I will agree 0:17:59.160 --> 0:18:03.040 with you. He needs somebody. You know. I was actually 0:18:03.080 --> 0:18:06.560 you know who I suggested the other day, Jerry Brown, 0:18:07.000 --> 0:18:09.440 because it's not really a business leader that he needs that. 0:18:09.520 --> 0:18:11.199 Jerry Brown has got a job, we know that. But 0:18:11.520 --> 0:18:13.760 the point is he needs somebody of that degree of 0:18:13.840 --> 0:18:17.480 gravitas that he can't ignore. Who you know, he would 0:18:17.520 --> 0:18:20.280 still be somebody who had no real power because Zuckerbert 0:18:20.320 --> 0:18:24.320 controls literally everything. But he needs he needs gray hairs 0:18:24.359 --> 0:18:27.159 in there who really understand the way the world works 0:18:27.240 --> 0:18:30.720 and share some of his idealism about how the world 0:18:30.760 --> 0:18:33.240 ought to be. But that who are capable of saying 0:18:33.240 --> 0:18:37.160 to him, Mark, listen to me, this is wrong. I mean, 0:18:37.600 --> 0:18:42.440 David just described David Kirkpatrick, Well, okay, if Jerry Brown 0:18:42.480 --> 0:18:46.280 won't take the job, maybe David Kirkpatrick, Well, well, you 0:18:46.320 --> 0:18:49.840 know it's funny because I I sometimes this is arrogant preps. 0:18:49.880 --> 0:18:51.440 But sometimes I think that I am in a role. 0:18:51.520 --> 0:18:54.800 Since I'm sixty five, I've been around journalist, business journalists 0:18:54.840 --> 0:18:57.840 thirty four years or whatever. But sometimes I think I'm 0:18:57.840 --> 0:18:59.960 trying to give them a message. And when I interviewed 0:19:00.040 --> 0:19:03.400 him on stage at the Techonomy conference in two days 0:19:03.400 --> 0:19:06.480 after the election, in which is when he said his 0:19:06.520 --> 0:19:09.760 faithful fake news comment, that got a lot of this inquiry, 0:19:09.840 --> 0:19:12.480 you know, and in this controversy started. I asked him 0:19:12.520 --> 0:19:17.960 four times did Facebook have a unique responsibility for given 0:19:17.960 --> 0:19:20.680 its scale, given its impact an election, given the power 0:19:20.720 --> 0:19:22.520 of the news feed in media. And I used that 0:19:22.560 --> 0:19:24.960 word four times. He never used the word in response. 0:19:25.359 --> 0:19:27.480 When you read his stuff now, he all he says 0:19:27.560 --> 0:19:30.720 his responsibility. He doesn't want to listen until he's ready. 0:19:31.160 --> 0:19:33.919 That's the thing about David Kirkpatrick, the author of the 0:19:33.960 --> 0:19:50.600 Facebook Effect. Right now, Kevin's surreally with us, our chief 0:19:50.640 --> 0:19:54.280 Washington correspondent, Kevin, have you ever seen the cot, the 0:19:54.320 --> 0:19:58.960 proverbial cot that speaker Ryan's sleeps on at the house. 0:20:00.560 --> 0:20:05.080 I have not, the completely honest I have not taught, 0:20:05.160 --> 0:20:08.480 but I can tell you that yesterday I spoke with 0:20:08.760 --> 0:20:12.640 a Republican lobbyists who told me, hey, have you heard 0:20:12.680 --> 0:20:16.440 about the Speaker Ryan's timing? Reverse uh, that we could 0:20:16.480 --> 0:20:19.000 get this announcement, you know, because he has to declare 0:20:19.080 --> 0:20:22.640 by next Friday whether or not he's gonna seek reelection. 0:20:23.520 --> 0:20:27.119 So this has been whispered about all of the Congress 0:20:27.160 --> 0:20:29.680 for quite some time. But it's the timing of the 0:20:29.720 --> 0:20:34.520 announcement this day in particular, I find, you know, I mean, 0:20:34.520 --> 0:20:38.520 it's just such a crazy day already with period the 0:20:38.560 --> 0:20:40.719 news flows overwhelming, and we have to change it here 0:20:40.720 --> 0:20:43.760 in the next eight minutes thirty two seconds. But Kevin's 0:20:43.920 --> 0:20:46.399 really when when we look at this and we compare 0:20:46.400 --> 0:20:48.800 and contrast to other House speakers, and of course Mr 0:20:48.840 --> 0:20:51.920 Bainer of Ohio, was he run out of this job? 0:20:54.560 --> 0:20:56.280 I don't know if he was run out of his 0:20:56.359 --> 0:20:58.800 job in the way the Speaker run or Speaker Bayner was, 0:20:59.280 --> 0:21:02.280 but I do think said it's worth noting that back 0:21:02.320 --> 0:21:04.960 on the campaign trail, when I covered candidate Donald Trump 0:21:05.240 --> 0:21:09.320 and we went to Speaker Paul ryan district, they were 0:21:09.440 --> 0:21:13.440 booing Paul Ryan. Donald Trump was on stage and had 0:21:13.480 --> 0:21:16.920 them booing Paul Ryan at the mention of his name. 0:21:17.440 --> 0:21:21.360 So the relationship between Speaker Ryan and President Trump has 0:21:21.440 --> 0:21:26.840 been tent putting it mildly for quite some time. They 0:21:26.840 --> 0:21:29.720 were never really big fans of each other. And even 0:21:29.800 --> 0:21:32.240 I can tell you this, like the Aids that I 0:21:32.359 --> 0:21:36.240 talked with on to President Trump still don't like Speaker 0:21:36.280 --> 0:21:40.120 Paul Ryan, Kevin Sirelli. I don't know where where where 0:21:40.160 --> 0:21:41.440 you want to go? Do you want to talk about 0:21:41.440 --> 0:21:44.480 the Wisconsin first and who takes who takes the seat, 0:21:44.680 --> 0:21:47.840 or what happens to all those committee ships and the 0:21:48.640 --> 0:21:53.640 actual running of the legislative branch. Now that the Speaker 0:21:53.720 --> 0:21:56.520 Ryan has already said that he's not going to be 0:21:56.600 --> 0:22:00.119 returning to the halls of Congress, well, so this is 0:22:00.200 --> 0:22:03.560 very It's interesting because we talk about the different political 0:22:03.600 --> 0:22:06.320 factions within the Republican Party all the time, but a 0:22:06.400 --> 0:22:10.719 lot of these new factions and political alliances in the 0:22:10.720 --> 0:22:14.159 halls of Congress have really been dramatically redrawn, and the 0:22:14.240 --> 0:22:18.840 steers of influence, particularly within the last twenty four months, 0:22:18.840 --> 0:22:22.119 have really been shifting and and and look no further 0:22:22.240 --> 0:22:27.919 than then Speaker Ryan's political alliance with Ryank's previous and 0:22:28.240 --> 0:22:34.000 UH and UH as well as that former apparatus Sean Spyser, Well, 0:22:34.000 --> 0:22:36.840 talk about having a Wednesday moment. I couldn't remember Shanna 0:22:37.160 --> 0:22:41.359 Shawn Spyser. Paul Ryank's previous and Paul Ryan were really 0:22:41.920 --> 0:22:44.439 a trio about town when I was coming up as 0:22:44.480 --> 0:22:48.560 a Cup reporter. To see them essentially be irrelevant right now, 0:22:48.920 --> 0:22:54.240 it's not irrelevant, but to see them really equipped is remarkable. Um. 0:22:54.640 --> 0:22:56.560 And the Freedom Caucus is going to be pouncing on those. 0:22:57.400 --> 0:22:59.200 I was just gonna say, I'll offer up the tweet 0:22:59.240 --> 0:23:02.919 that presidents Wednesday for the President. And you know, when 0:23:02.960 --> 0:23:04.560 you were a Cup reporter, I don't know, maybe they 0:23:04.560 --> 0:23:06.399 didn't even have Twitter, you didn't have to follow us 0:23:06.440 --> 0:23:10.080 on a regular basis, but we've always had Twitter, all 0:23:10.200 --> 0:23:14.680 right in short pants? Um uh, just a minute ago, 0:23:14.880 --> 0:23:17.520 the President tweeting the speaker. Paul Ryan is a truly 0:23:17.600 --> 0:23:20.679 good man, and while he will not be seeking re election, 0:23:20.800 --> 0:23:23.760 he will leave a legacy of achievement that nobody can question. 0:23:24.200 --> 0:23:29.080 We are with you, Paul, exclamation point. So who takes 0:23:29.119 --> 0:23:32.720 over from Paul Ryan from the Wisconsin First Well, he 0:23:32.760 --> 0:23:35.480 would like to see Kevin McCarthy or Steve Scalise replace 0:23:36.080 --> 0:23:40.000 President Trump has developed personal relationship with Congress Mr. Scalise. 0:23:40.320 --> 0:23:43.920 So remember, of course the tragic baseball shooting several months ago. 0:23:44.960 --> 0:23:48.680