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Speaker 1: Runt You by Bank of America Mary Lynch. With virtual reality,

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Speaker 1: virtually everything will change. Discover opportunities in a transforming world.

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Speaker 1: Be of a mL dot Com, slash VR, Mary Lynch,

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Speaker 1: Pierced Fenner and Smith Incorporated. Welcome to the Bloomberg Surveillance Podcast.

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Speaker 1: I'm Tom Keene with David Gura. Daily we bring you

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Speaker 1: insight from the best of economics, finance, investment, and international relations.

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Speaker 1: Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, Bloomberg dot Com,

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Speaker 1: and of course on the Bloomberg Getting Rose joining us

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Speaker 1: now in our Bloomberg eleven three oh studios. He's the

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Speaker 1: editor of Foreign Affairs and the Peter G. Peterson Chair

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Speaker 1: at the Council on Foreign Relations, and I hold Gideon's

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Speaker 1: Bible here the latest issue of for Affairs magazine and Time.

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Speaker 1: What now Trump's next steps and let's let's take stock

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Speaker 1: here Now four or five months into the presidency, do

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Speaker 1: you have a clearer sense of what Trump's foreign policy prescriptions,

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Speaker 1: what his what his foreign policy is given? Actually, no,

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Speaker 1: I don't think we do. Um. He came into office

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Speaker 1: with a very strong agenda, with a lot of both

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Speaker 1: contradictory but also somewhat radical proposals, and what has been

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Speaker 1: notable has been backing off of many of those, but

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Speaker 1: not all of them, but not putting in its place

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Speaker 1: any kind of new framework that uh explains and justifies

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Speaker 1: which parts of the campaign agenda he's kept in which

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Speaker 1: parts he hasn't. So right now, basically you just have

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Speaker 1: a sort of mostly an inertial mishmash that is continuing

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Speaker 1: on autopilot for general American foreign policy, with occasional reactions

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Speaker 1: coming out of DC on particular events and issues. Let

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Speaker 1: me ask you what we learned from from the speech

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Speaker 1: that the President gave in Brussels when he was there

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Speaker 1: for the NATOS. Since then, Susan Glasser, who's at Political

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Speaker 1: Magazine has written about how I think twenty five words

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Speaker 1: were stricken from the speech that he ended up reading.

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Speaker 1: Those were the ones in which he would have affirmed, uh,

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Speaker 1: the importance of Article five part of NATO. What do

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Speaker 1: we learned from that that speech in Brussels and what happened?

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Speaker 1: I think we learned a couple of things, UH. One

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Speaker 1: is that the president really doesn't like NATO. Second that

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Speaker 1: the responsible quote unquote adults in the administration don't necessarily

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Speaker 1: get their way when it comes to the president's words.

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Speaker 1: Whether it comes to actual policies is a different question.

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Speaker 1: So one of the interesting things that happens, I mean,

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Speaker 1: think about the question of the president's tweets, uh, and

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Speaker 1: everyone's debating are the president's tweets official reflections of US policy?

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Speaker 1: Increasingly the president's tweets, everybody seems to agree are the

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Speaker 1: president's tweets and not actual reflections of US policy. So

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Speaker 1: figuring out at this point when the president is speaking

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Speaker 1: as Donald J. Trump, and when he's speaking as the

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Speaker 1: authoritative commander in chief of US forces, and uh, the

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Speaker 1: expression of U S foreign policy is a really kind

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Speaker 1: of odd We don't know. So people, I would say,

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Speaker 1: foreigners and most people should watch what the United States

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Speaker 1: does and not listen to any of the words coming

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Speaker 1: out of Washington, because it's not clear who at these

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Speaker 1: these days is authoritatively speaking for the country. Kideon Rose,

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Speaker 1: there are teen things up perfectly for me to read

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Speaker 1: the latest tweet from the president now just a few

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Speaker 1: minutes ago, writing well, as predicted, the Ninth Circuit did

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Speaker 1: it again ruled against the travel band at such a

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Speaker 1: dangerous time in the history of our country. S C.

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Speaker 1: Which stands for Supreme Court. I assume where do they

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Speaker 1: stand with this trass should be South Carolina on the

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Speaker 1: hills of rereading Clemson at the White House. Indeed, our

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Speaker 1: national champions there on the south lawn of the White House.

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Speaker 1: Getting what what? What changes now that we have this

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Speaker 1: Ninth Circuit decision? How much closer are we to seeing

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Speaker 1: this case being argued before the Supreme Court? You know,

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Speaker 1: you have to get a legal expert to talk about

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Speaker 1: the specifics of the thing that The fact is, this

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Speaker 1: whole thing is a bit of a joke in the

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Speaker 1: sense that there wasn't actually a real problem. The solution

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Speaker 1: was a fake solution, and it was driven by an

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Speaker 1: agenda other than a rational policy making, which is why

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Speaker 1: it has been undermined in the courts. So what really

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Speaker 1: should happen is they should get the entire point of

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Speaker 1: this was supposedly a temporary band of which the period

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Speaker 1: now is almost over, and there was no actual real

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Speaker 1: problem with betting in the first place. So it's not

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Speaker 1: clear to me that other than politics and stubbornness, that

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Speaker 1: there's any reason for this to go any further whatsoever.

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Speaker 1: The question of immigration policy and protecting yourself from counter terrorism. UH,

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Speaker 1: threats is a real and terrorist threats is a real

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Speaker 1: and major issue. But the idea that that's actually what's

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Speaker 1: going on in this discussion about travel band is silly.

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Speaker 1: You've been complaining all morning. What do you want from

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Speaker 1: Secretary Tillerson? Secretary Tillerson is a very interesting character. I mean,

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Speaker 1: he's gonna go to CFR concept formulations is going to

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Speaker 1: greet him. You're gonna do a foreign affairs interview. We

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Speaker 1: would love to interview. We we have standing offers to

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Speaker 1: interview ton of people. We would love to it. What's

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Speaker 1: your first question? You know, it's really hard to where

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Speaker 1: what is okay? What is the grand strategy of the

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Speaker 1: Trump administration? I don't think he'd answer that. UH. And

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Speaker 1: Totson has not exactly been a large public voice in

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Speaker 1: American farm policy recently. UM. The what I've heard, however,

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Speaker 1: is that indeed he has been working closely with Mattis

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Speaker 1: and uh McMaster uh to to help guide things in

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Speaker 1: ways that the people at State would feel are are responsible,

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Speaker 1: in which we should be very thankful for. So. I

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Speaker 1: the question of what is actually going on inside the

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Speaker 1: Trump farm policy and national security apparatus is a very

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Speaker 1: interesting question that for all the reporting that goes on

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Speaker 1: about the White House itself and the soap opera and

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Speaker 1: the melodrama of all the key characters, there's very little

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Speaker 1: reportage about the details of foreign policy making and how

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Speaker 1: decisions and strategic process actually plan. There's a really fascinating

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Speaker 1: piece in New York Magazine this week by Jessica Pressler

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Speaker 1: looking at Gary Cone, the chairman of the National Economic Council,

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Speaker 1: and and she sort of looks at him as a

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Speaker 1: long stay ending number two. He was the number two

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Speaker 1: to to Lloyd Blank find at Goldman Saxon's with What

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Speaker 1: the piece posits is why is he putting up with

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Speaker 1: with all of this? And I wonder if you can

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Speaker 1: extrapolate that to to Rex Tillerson as well. I'm reminded

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Speaker 1: of the statement that he gave on Friday about Cutter

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Speaker 1: that was immediately reversed by the President in the Rose

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Speaker 1: Garden at press conference shortly thereafter. Does this president want

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Speaker 1: his cabinet secretaries to have any degree of autonomy? Do

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Speaker 1: you think? Uh? The answer to that last question probably

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Speaker 1: is no. I mean, if we all will y'all watch

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Speaker 1: that meeting yesterday and it doesn't look like this is

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Speaker 1: somebody a boss who wants to have a lot of

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Speaker 1: delegated authority to freelancing underlings who are Pierre players. This

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Speaker 1: is more like a court than it is a cabinet um.

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Speaker 1: With regard to what Tillerson's thinking, I don't know. I

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Speaker 1: can't get inside Tillerson's head. I don't know the man,

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Speaker 1: and it's not clear what the mindset he's bringing to

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Speaker 1: diplomacy is. After an entire career spent in corporate management.

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Speaker 1: What Tillerson, sorry, what McMaster the General's McMaster and Mattis

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Speaker 1: are thinking, and what many of the professionals around out

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Speaker 1: of thinking is, Look, the United States is the leader

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Speaker 1: of the world. We are running a very important set

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Speaker 1: of policies globally on a whole bunch of areas, and

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Speaker 1: we need to keep the ship on track. And they're

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Speaker 1: basically spending their time trying to run the world and

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Speaker 1: doing a decent job of it. Anthony from New Jersey

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Speaker 1: emailed in and he said, you know, very succinctly, what's

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Speaker 1: going to happen next. We had Ambassador Burns with us yesterday,

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Speaker 1: Nicholas Burns of Kennedy in here. Those guys aren't in

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Speaker 1: a Republican government. Maybe guys like Has, guys like Ambassador

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Speaker 1: Burns and such. What needs to happen to get the

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Speaker 1: normal apparatus of our Republican foreign policy into the Republican Senate,

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Speaker 1: Republican House, Republican White House. That's what Anthony from New

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Speaker 1: Jersey wanted to know. I think that is a great question.

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Speaker 1: I didn't come up with it, Anthony from New Jersey,

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Speaker 1: and I think I think that that is the kind

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Speaker 1: of question that many of us are asking. UM. The

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Speaker 1: it's easier to ask the question than to answer it,

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Speaker 1: because what we've seen increasingly is that everything we thought

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Speaker 1: we knew about US farm policy and government operations does

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Speaker 1: not seem to apply in the short term, at least,

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Speaker 1: whether that will be true over a medium term or

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Speaker 1: longer term. I cannot see how this is sustainable. I

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Speaker 1: cannot see how what we've seen over the last few

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Speaker 1: months goes on for too much longer, many more months longer,

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Speaker 1: without something. We've been so incredibly lucky that there's been

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Speaker 1: no actual crisis abroad. UM, we've posentially been stalled in

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Speaker 1: the water. US farm policy is stalled in the water. UM,

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Speaker 1: nothing bad has happened. No pirates have come along to

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Speaker 1: attack us. No, uh, No giant whale has come to

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Speaker 1: rock the boat. Uh. You didn't see the new Johnny

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Speaker 1: Depp movie. What will actually happen? You know? Every month

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Speaker 1: that goes by, we're running out of time when we

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Speaker 1: can expect our luck to hold with no crisis. Want

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Speaker 1: to come back and talk about the new Foreign Affairs

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Speaker 1: magazine And this is always controversial and very balanced. There's

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Speaker 1: some different views across it. What now the President's next steps?

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Speaker 1: Getting rose with this Foreign Affairs magazine? The new issue?

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Speaker 1: What now Trump's next SIPs? How do you make an issue?

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Speaker 1: Is it like? Is it like a war? Is it

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Speaker 1: like you know the bunker room there at the White House,

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Speaker 1: it's like six you get in the room and screaming

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Speaker 1: to each other for with the Tom King Grand strategy?

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Speaker 1: When do we get that piece? And so we have

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Speaker 1: to we have to two tracks. We have a daily

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Speaker 1: website where we put out several pieces a day, and

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Speaker 1: that's the constant production of stuff. That's like a lot

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Speaker 1: of other organizations trying to add real value to contemporary

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Speaker 1: commentary on breaking events. We also have a bi monthly

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Speaker 1: print issue which is sort of like the carriers of

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Speaker 1: the battle Fleet and the sort of you deploy them

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Speaker 1: on long deployments on major subjects. What we try and

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Speaker 1: do is have a steady run of articles on regular important,

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Speaker 1: big topics, but we also have a lead package each issue,

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Speaker 1: and we try to shape that a couple of months

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Speaker 1: out so what we think will be on the news

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Speaker 1: of the day. And so when we were putting this

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Speaker 1: one together, we're putting it together in April, sending it

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Speaker 1: to Bed in May to appear in June and July.

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Speaker 1: The idea was that, Okay, after all the craziness of

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Speaker 1: the first few months, it'll get It's gonna get commerce.

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Speaker 1: So let's talk about actual policy stuff, right. So we

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Speaker 1: had suggestions for foreign policy, suggestions for healthcare reform, suggestions

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Speaker 1: for tax reform, projection for economic policy internationally. The idea

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Speaker 1: being that at some point there are some people who

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Speaker 1: should go about trying to govern um. Whether that is

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Speaker 1: actually in sync with what's happening in d C, you

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Speaker 1: never know, but those discussions should be had no matter

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Speaker 1: what you mentioned. Carriers and battleships right now, they're off

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Speaker 1: North Korea at Moalstavidas told us from Fletcher one of

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Speaker 1: your sponsors in Foreign Affairs magazine h the idea of

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Speaker 1: there's an a model off of North Korea. What is

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Speaker 1: the Foreign affairs take on our risks in North Korea? So, uh,

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Speaker 1: North Korea. Look at General Mattis said just the other day,

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Speaker 1: that's the sort of probably the single most important or

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Speaker 1: urgent immediate national security threat that people are focusing on,

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Speaker 1: even more so than Russia and cyber stuff. Uh, it's dangerous.

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Speaker 1: On the other hand, it's always kind of been dangerous.

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Speaker 1: We've been having a Korea standoff for sixty years, So

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Speaker 1: I'm not as freaked as other people are. But that

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Speaker 1: doesn't mean you don't have to handle this very carefully

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Speaker 1: and very securely. Probably the thing to do that makes

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Speaker 1: sense is not and this is something that Richard Hass

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Speaker 1: says in his piece, is not assumed that you can

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Speaker 1: solve the North Korea problem. We're not going to solve

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Speaker 1: the North Korea problem. So what you should be looking

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Speaker 1: for is not some fundamental resolution to the issue, but

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Speaker 1: some sort of interim agreement that can pause things, keep

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Speaker 1: them from escalating further, and jolly things along and kick

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Speaker 1: the can down the road. We've been doing that with

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Speaker 1: North Korea for six decades, nobody has any better ideas.

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Speaker 1: We should keep doing it now, and you want responsible

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Speaker 1: adults managing that to make sure that it doesn't actually

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Speaker 1: erupt to escalate into a giant war. Yeah, that's a

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Speaker 1: big part of Ambassador hass Is piece where to go

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Speaker 1: from here? Rebooting American foreign policy at the front of

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Speaker 1: the latest issue of Foreign aferous let me ask you

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Speaker 1: about Russian hacking. You mentioned that just a moment to go.

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Speaker 1: Bloomberg News reporting this morning that the hacking during the

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Speaker 1: election much wider than was initially thought. Hackers hit systems

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Speaker 1: in a total of thirty nine states here. This is

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Speaker 1: ostensibly the focus of the Senate Intelligence Committees investigation, and

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Speaker 1: we heard from James Comey on this subject last week.

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Speaker 1: Are we at risk of of of not seeing the

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Speaker 1: forest through the trees, focusing too much here on the

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Speaker 1: interpersonal conflict and not on this larger issue where we

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Speaker 1: at risk of losing sight of the larger issue here,

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Speaker 1: that being um, the cyber attacks that Russian made during

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Speaker 1: the during the campaign I think are absolutely correct. Um.

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Speaker 1: So essentially there's a bunch of different issues here, all

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Speaker 1: of which are worth talking about investigating. Discussing, addressing, and

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Speaker 1: so forth, but which cannon should follow separate tracks. So

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Speaker 1: whatever happened on the legal front or or the whatever

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Speaker 1: is going on in the investigative front, that's issue. That's

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Speaker 1: one set of issues. Whatever happened between the Trump campaign

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Speaker 1: and Russia's another issue. But what the Russians did and

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Speaker 1: are continuing to do, and what they've they've done in

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Speaker 1: other countries as well, is use cyber attacks and as

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Speaker 1: part of a broader diplomatic UH and economic and UH

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Speaker 1: political strategy for challenging American dominance and and overall turning

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Speaker 1: various American policies they don't like. And so the this

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Speaker 1: should be a major object of investigation and a major

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Speaker 1: UH challenge to deal with, no matter who's in the

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Speaker 1: White House. And the fact that this has gotten somehow

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Speaker 1: tied up in and suck connected to the partisan split

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Speaker 1: going on in Washington, in which it shouldn't matter what

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Speaker 1: party affiliation you have to just determine what your stance

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Speaker 1: should be on our Russian cyber attack against American democracy.

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Speaker 1: And yet unfortunately it seems to be getting trapped in

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Speaker 1: that as if the people who care about the Russia

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Speaker 1: leaks and the Russian investigation are seemingly doing it for

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Speaker 1: partisan reasons and the people on the other side are

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Speaker 1: hosing them. Thank you so much for coming in. Oh,

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Speaker 1: it's hugely valuable. Get here this you know, this is

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Speaker 1: what the show is about. We do economics and the

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Speaker 1: Fed and finance and investment, and we have to link

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Speaker 1: it into the politics at the moment is well, Gideon Rose,

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Speaker 1: Thank you so much. Foreign Affairs at magazine. What now

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Speaker 1: Trump's next steps? We are advantaged. Um Bromberg is doing

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Speaker 1: a big deal in Germany today and we've got a

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Speaker 1: lot of German news coming out, including important comments by

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Speaker 1: their finance minister. It would be good to have a

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Speaker 1: German expert in the house. That would not be John

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Speaker 1: Tucker or Tom Keane, but David Gurri, Carston Brasilski with us,

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Speaker 1: with I n G. Germany. Uh, usually in Frankfurt, US

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Speaker 1: Frankfort right in Berlin born, Berlin born, and good, wonderful

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Speaker 1: day have you here. Let's start with something we usually

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Speaker 1: don't ask. What I'm gonna ask it. Who's Mr Schreibler.

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Speaker 1: How is Mr Schreibla the finance minister perceived by the

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Speaker 1: German people a bit like Mr Bismarck back hundred hundred

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Speaker 1: twenty years ago. I think he's the the iron He's

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Speaker 1: not the iron lady. He's the iron man and the

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Speaker 1: standing for a fiscal discipline and what the Germans called

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Speaker 1: the black zero, so more or less balanced budgets. What

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Speaker 1: what did you hear last week? We were paying attention

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Speaker 1: to Admirio Druggi was saying in Estonia after the rate

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Speaker 1: decision last week? What changed in terms of language last week?

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Speaker 1: What stood out to you? Obviously we are the other

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Speaker 1: ones on they they cut down the the easing bias,

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Speaker 1: so no not interstise, will no longer could no longer

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Speaker 1: be even lower than is. And also the expected thing

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Speaker 1: that the drug it changed the balance of the economic

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Speaker 1: out look to the balanced um. I think that that

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Speaker 1: was the new thing as expected. Now the next steps

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Speaker 1: will be will he gradually prepare a tapering announcement? What

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Speaker 1: we're talking about personality here? What's the relationship like between

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Speaker 1: Mr Scheibler and Mr Drug? Is there much of one

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Speaker 1: one of Whether there is, I would call it a

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Speaker 1: professional relationship because mrs as you know, Mr Schi likes

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Speaker 1: to to do some some e CB bashing once in

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Speaker 1: a while out of out of public um created the

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Speaker 1: ECB does not like it because the journe public is

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Speaker 1: very critical about the ECB. UM. So I think it's

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Speaker 1: a professional relationship. But I wonder whether it goes beyond

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Speaker 1: that dovetail. For is, if you would what's going on

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Speaker 1: with the e c B and what we expect to

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Speaker 1: see the FED due today? How cognizant is the the

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Speaker 1: e c B of what the Fed is is doing

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Speaker 1: or may do today tomorrow. I think what wasn't Tree share,

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Speaker 1: the former SCB president who always talked about some some

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Speaker 1: mutual brotherhood of central bankers. Um, Obviously they're watching what

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Speaker 1: the FED is doing and and the impact on the currency.

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Speaker 1: I think that that's what what's most interesting, because if

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Speaker 1: the FED would not hike interest rates, if and if

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Speaker 1: the ECB would continue going towards tapering, this argus in

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Speaker 1: favor of a stronger euro. But for the ECB, the

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Speaker 1: Euro should not get too strong because otherwise it would

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Speaker 1: on the mine exports. We have a deadline coming up

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Speaker 1: here for for Greece on Friday, I gather another meeting

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Speaker 1: on on on Friday. Have we seen Mr choy bliss

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Speaker 1: offt in his tone at all when it comes to

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Speaker 1: the situation in Greece. Has has that story changed markedly? No,

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Speaker 1: it has not. The only change is that hardly anyone

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Speaker 1: is interested in what Chilable thinks about about the Greek

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Speaker 1: because it will be muddling through, because I think we

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Speaker 1: know that no one really is interested in the escalation

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Speaker 1: of the situation, neither the Germans a couple of months

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Speaker 1: before their own elections, nor the Greek um. So therefore

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Speaker 1: we will get some muddling through and this will Morris

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Speaker 1: go off the RADA screen. I mentioned he's watching the

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Speaker 1: the US two year What are you watching mostly these day?

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Speaker 1: What were the indicators that you pay the most attention

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Speaker 1: to As we have these ECB meetings, in the FED

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Speaker 1: meeting of bo J meeting on the heels of the

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Speaker 1: FED meeting later this week. Obviously it is bondy heels,

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Speaker 1: it's it's ten year, it's it's two year year rates,

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Speaker 1: and it's a bit of the exchange. And I think,

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Speaker 1: especially when you look at the the U S situation,

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Speaker 1: it's also overshadowed by politics. When when I look at this,

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Speaker 1: and I did this chart the other day, not only

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Speaker 1: is there a yield of virgins between the negative two

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Speaker 1: year in Germany and the US two year. But the

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Speaker 1: first derivative, the widening divergence is tangible. That's always a symmetric.

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Speaker 1: Is a divergence widening a bigger deal for the United

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Speaker 1: States or is it a bigger deal for Germany? It's

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Speaker 1: a it's a it's a bigger deal for the for

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Speaker 1: the U S because it are always argues in favor

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Speaker 1: of of a stronger of a stronger US dollar um.

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Speaker 1: But it's it's also distorted by by by the fact

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Speaker 1: that you have so many institutional investors who actually have

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Speaker 1: to invest in shorter short materiality droan paper. And this

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Speaker 1: is not just the e c B. It's the explain

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Speaker 1: that because because banks actually they they could deposit the

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Speaker 1: liquidity at the ECB at minds opened four. But if

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Speaker 1: you look at where where one year or two year

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Speaker 1: German bundyal standard is are a far lower, which means

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Speaker 1: you have institutional investors which cannot dump their liquidity at

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Speaker 1: the ECB, they have to buy that they are they

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Speaker 1: are forced to buy German paper. And this is what

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Speaker 1: what distorts the market. You can't tell me that is

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Speaker 1: functional for the people of Germany. We talked to you know,

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Speaker 1: Bill Gross of Janice um Henderson about this about the

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Speaker 1: financial repression. What is the financial repression of one third

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Speaker 1: of Germany who are savers um there? It's each one

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Speaker 1: because if if if you are a savor you don't

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Speaker 1: get any any any interest rates any longer on your

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Speaker 1: saving accounts, it's college you can't eat well there they

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Speaker 1: still have enough to eat um, but maybe they won't

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Speaker 1: have enough to eat in twenty or thirty years from now.

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Speaker 1: Plus the same as if when you look at the

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Speaker 1: pension system in Germany, it's pay as you go, so

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Speaker 1: it's also dependent on on the on the current interest rate.

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Speaker 1: So it's it's not another start. This is an unfair question,

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Speaker 1: but it's unfair Tuesday, right, Okay, what's the actual assumption

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Speaker 1: of a German pension plan? Here? It was eight percent

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Speaker 1: and maybe it's six percent for Illinois. We don't even

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Speaker 1: know they're blowing up. Thanks the Bank of American zero

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Speaker 1: heads for a great article that that. What's the actual

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Speaker 1: assumption of a German pension pl? I think, honestly, I

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Speaker 1: think it's around four percent. Of course it's not as

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Speaker 1: up to missus L and I, but it's between three

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Speaker 1: and four percent. Wow, I've never heard that, David. What

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Speaker 1: that means cf A level seven. Wait, there's Larry the Cat.

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Speaker 1: We have a we have wired in here all sorts

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Speaker 1: of videos and we just have a cat siding that

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Speaker 1: is like the white smoke outside the chimney. The Prime

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Speaker 1: Minister will make it. Okay, back on this. This is

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Speaker 1: really David. This is important because the lower the actual

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Speaker 1: Taylor Riggs told me this, the lower the actuarial assumption,

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Speaker 1: the more of cash you have to impute into your

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Speaker 1: pension system. So Germany has got to put trillions, trillions,

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Speaker 1: I say, into their system. Is that happening, Um, it's

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Speaker 1: not happening. What are people doing. People are investing in

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Speaker 1: in bricks and modeling, so that this is this is

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Speaker 1: why we have this construction housing boom in Germany because

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Speaker 1: because people do invest in housing, whether it's the best

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Speaker 1: investment for the future, it meant to be seen. Um.

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Speaker 1: But of course your foot ride nominally you would have

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Speaker 1: you would expect that people put in more cash. It's

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Speaker 1: not happening. I think I looked at the numbers. It's

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Speaker 1: only two to three percent of the people actually say

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Speaker 1: that they do this we focused on how the relationship

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Speaker 1: between Manu macon and Uncle and Merkel, What that means

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Speaker 1: for France, What does it mean for for Germany? Are

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Speaker 1: we are we seeing a new political dawn in Germany

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Speaker 1: as well as a result of that relationship? Is is

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Speaker 1: the is the European project looking different now in light

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Speaker 1: of the mccron victory from from a from a German perspective,

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Speaker 1: I think it is probably a lot. Will also depend

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Speaker 1: on whether or not Mr Chidley will return in the

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Speaker 1: next German government, because probably he's the one standing most

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Speaker 1: on the breaks, much more than Mrs Merkel. Um the

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Speaker 1: entire I think German media and public embraced Mr mccon

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Speaker 1: when when when he came in. UM. I don't know

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Speaker 1: whether they really know what they're embracing because if you

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Speaker 1: if you ask the German majority, they would say, yes,

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Speaker 1: we are in favor of more European integration. If you

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Speaker 1: ask them, are you in favor of of of a

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Speaker 1: common Europe and of of a Eurozone finance minister, of

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Speaker 1: a Eurozone budget, they would probably say no. UM. So therefore,

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Speaker 1: the sentiment right now is very positive and they are

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Speaker 1: embracing mccoon UM. But I think it will remain and

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Speaker 1: we need more changes to receive what is needed, and

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Speaker 1: that the Germans except that they have to give away something.

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Speaker 1: Ask you lastly about the comments that President Trump made

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Speaker 1: while he was in Europe, perhaps a little bit lost

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Speaker 1: in translation, talking about trade deficits when it comes to

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Speaker 1: German automakers in the U S. Tariff's in the US,

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Speaker 1: how big a deal is that in Germany? What he

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Speaker 1: had to say about BMW, Mercedes, all of these companies

430
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Speaker 1: that yes, manufactured cars and sell cars here in the US.

431
00:22:31,480 --> 00:22:33,280
Speaker 1: In Germany, it is a big deal. I think this

432
00:22:33,400 --> 00:22:35,879
Speaker 1: is the biggest fear in in the German industry. It

433
00:22:35,880 --> 00:22:39,439
Speaker 1: also in German politics that there's one single thing on

434
00:22:39,640 --> 00:22:42,879
Speaker 1: which Mr Trump has been consistent over decades, and that

435
00:22:43,040 --> 00:22:45,240
Speaker 1: is trade, and that is his his criticism about the

436
00:22:45,359 --> 00:22:48,679
Speaker 1: trade deficits UM. So, therefore, of course the Germans have

437
00:22:48,720 --> 00:22:51,960
Speaker 1: started to realize that that factual arguments do not work,

438
00:22:53,080 --> 00:22:56,359
Speaker 1: even telling the U. S. Administration that I think b M,

439
00:22:56,440 --> 00:23:00,560
Speaker 1: BMW exports more cars um from the S to the

440
00:23:00,600 --> 00:23:05,440
Speaker 1: outside world then than then the two largest American car manufacturers.

441
00:23:05,800 --> 00:23:09,480
Speaker 1: That apparently is an argument which does not fall fall

442
00:23:09,560 --> 00:23:11,960
Speaker 1: well with the Yes Administration, Carson, great to see you,

443
00:23:11,960 --> 00:23:15,680
Speaker 1: Thank you very much at car Yes, chief Economist Iron G.

444
00:23:15,680 --> 00:23:18,720
Speaker 1: Germany joining us here in bloom leven three Studios in

445
00:23:18,720 --> 00:23:28,480
Speaker 1: New York, brought you by Bank of America Mary Lynch

446
00:23:28,760 --> 00:23:34,240
Speaker 1: with virtual reality Virtually everything will change, Discover opportunities in

447
00:23:34,280 --> 00:23:38,880
Speaker 1: a transforming world VI of a mL dot Com slash VR,

448
00:23:39,760 --> 00:23:49,040
Speaker 1: Mary Lynch, Pierced Fenner and Smith Incorporated. Um. I really

449
00:23:49,040 --> 00:23:55,120
Speaker 1: thought it was interesting yesterday, uh David, when CNN lined

450
00:23:55,200 --> 00:23:58,720
Speaker 1: up the cabinet meeting at the White House in our

451
00:23:58,800 --> 00:24:03,239
Speaker 1: next guest fair very well. He did not, you know,

452
00:24:03,800 --> 00:24:07,159
Speaker 1: kiss the President's ring or get He was really classy

453
00:24:07,760 --> 00:24:10,479
Speaker 1: and it was great about it was I'm gonna let

454
00:24:10,480 --> 00:24:12,080
Speaker 1: you bring in our next guess, David, because you do

455
00:24:12,119 --> 00:24:15,240
Speaker 1: a lot more politics than I do. But besides fixing

456
00:24:15,240 --> 00:24:18,560
Speaker 1: Detroit Tiger middle relief pitching, which he's working on in

457
00:24:18,560 --> 00:24:22,560
Speaker 1: his spare time, our our next guest had a lot

458
00:24:22,640 --> 00:24:26,639
Speaker 1: of bad things said about him a while back, and

459
00:24:26,640 --> 00:24:29,520
Speaker 1: he's taken the high road. Not many people do that.

460
00:24:29,560 --> 00:24:32,240
Speaker 1: In Washington. We have the sexually of housing urban development

461
00:24:32,280 --> 00:24:34,000
Speaker 1: with us here in our Bloombergo eleven three O studios.

462
00:24:34,000 --> 00:24:36,119
Speaker 1: That's Dr Ben Carson joining us here in New York.

463
00:24:36,119 --> 00:24:37,640
Speaker 1: What brings you to New York. Let me start there

464
00:24:37,640 --> 00:24:41,240
Speaker 1: by asking you that question. First, I was ringing the

465
00:24:41,280 --> 00:24:46,120
Speaker 1: bell at the New York and Celebration of National homeowners

466
00:24:47,000 --> 00:24:48,439
Speaker 1: Let me ask you, first of all, just about that

467
00:24:48,440 --> 00:24:51,320
Speaker 1: the importance of homeownership. We've been through the financial crisis,

468
00:24:51,359 --> 00:24:53,840
Speaker 1: We've we've seen a lot of people lose their homes. Uh,

469
00:24:53,960 --> 00:24:56,879
Speaker 1: the notion of home ownership has has changed. How do

470
00:24:56,920 --> 00:24:59,359
Speaker 1: you see the importance of it today? Well, it is

471
00:24:59,440 --> 00:25:04,640
Speaker 1: the primary mechanism where by American families bill wealth. The

472
00:25:04,720 --> 00:25:07,680
Speaker 1: average net worth of a homeowner in this country is

473
00:25:07,760 --> 00:25:10,800
Speaker 1: two hundred thousand dollars and of a renter it's five

474
00:25:10,840 --> 00:25:14,919
Speaker 1: thousand dollars. So hence you can understand the push several

475
00:25:14,960 --> 00:25:17,920
Speaker 1: years ago for getting everybody into a home. But you're

476
00:25:17,920 --> 00:25:19,960
Speaker 1: not doing anybody any favors. If you put them in

477
00:25:20,040 --> 00:25:22,120
Speaker 1: home they can't afford, they lose their home, they lose

478
00:25:22,160 --> 00:25:25,359
Speaker 1: their credit, they lose their future opportunities. So we've we've

479
00:25:25,440 --> 00:25:29,080
Speaker 1: learned from those things obviously, um and we have to

480
00:25:29,359 --> 00:25:33,359
Speaker 1: teach people the correct mechanism for home ownership. One of

481
00:25:33,359 --> 00:25:36,680
Speaker 1: the things we're doing at hud is loosening their restrictions

482
00:25:36,720 --> 00:25:42,480
Speaker 1: on condominium uh financing, so that's frequently the first step

483
00:25:42,560 --> 00:25:46,399
Speaker 1: into home ownership, and then teaching people the principles of

484
00:25:46,520 --> 00:25:49,680
Speaker 1: building equity and moving to the next step rather than

485
00:25:49,840 --> 00:25:53,080
Speaker 1: jumping too far ahead and then finding themselves in financial

486
00:25:53,080 --> 00:25:54,919
Speaker 1: difficulty for the rest of their lives. What have you

487
00:25:55,000 --> 00:25:57,160
Speaker 1: learned here on these first few months on the job?

488
00:25:57,200 --> 00:26:00,119
Speaker 1: They were speculation after the election, the perhaps surgeon gener all,

489
00:26:00,119 --> 00:26:03,479
Speaker 1: you got this this position. Uh, it's all new. I

490
00:26:03,359 --> 00:26:06,119
Speaker 1: imagine being in a government bureaucracy like like this one.

491
00:26:06,160 --> 00:26:08,520
Speaker 1: What's most surprising to you that you've learned here over

492
00:26:08,560 --> 00:26:11,280
Speaker 1: these last few months. Well, you know that the principle

493
00:26:11,400 --> 00:26:15,280
Speaker 1: of problem solving goes with you anywhere, and that's something

494
00:26:15,359 --> 00:26:19,560
Speaker 1: that's always been something I'd like to do to solve problems.

495
00:26:20,280 --> 00:26:23,440
Speaker 1: So I'm getting ample opportunity to do that. But also

496
00:26:23,600 --> 00:26:25,440
Speaker 1: a lot of people tell me that it would be

497
00:26:25,800 --> 00:26:31,199
Speaker 1: extraordinarily difficult to get cooperation, particularly from government workers who

498
00:26:31,240 --> 00:26:33,280
Speaker 1: have been around for a long time, and that they

499
00:26:33,280 --> 00:26:35,200
Speaker 1: were lazy and they didn't want to do any work.

500
00:26:36,320 --> 00:26:38,960
Speaker 1: I'm not finding that to be the case. Uh, I'm

501
00:26:39,000 --> 00:26:42,359
Speaker 1: finding that as long as you're engaged with them. They're

502
00:26:42,400 --> 00:26:47,119
Speaker 1: a part of the process. Everybody understands what the principles are. Uh,

503
00:26:47,280 --> 00:26:50,119
Speaker 1: no problem. I've been dealing with a lot of governors

504
00:26:50,240 --> 00:26:53,720
Speaker 1: and mayors. You know, a both parties. Doesn't matter what

505
00:26:53,760 --> 00:26:55,800
Speaker 1: the party is, because the fact of the matter is

506
00:26:55,840 --> 00:26:59,640
Speaker 1: what we're trying to do is is not a partisan thing.

507
00:27:00,240 --> 00:27:03,440
Speaker 1: You know, in terms of getting people into safe, decent,

508
00:27:03,560 --> 00:27:07,159
Speaker 1: affordable housing. That's not a Republican or Democrats. Do you

509
00:27:07,160 --> 00:27:10,159
Speaker 1: have empty offices in your building? I mean, are you

510
00:27:10,160 --> 00:27:11,840
Speaker 1: getting your nominees through? What do you what do you?

511
00:27:11,840 --> 00:27:16,000
Speaker 1: Are you screaming at the president? Well, you know there's

512
00:27:16,119 --> 00:27:19,680
Speaker 1: been a combination of things that has resulted in us

513
00:27:19,760 --> 00:27:23,000
Speaker 1: not having Uh. Okay, I'll go most of us. Come on,

514
00:27:23,280 --> 00:27:25,919
Speaker 1: you're in surgery. Did you take Sy Schwartz? Did you

515
00:27:25,960 --> 00:27:30,000
Speaker 1: do general surgery T book Sy Schwartz a million years ago? Okay,

516
00:27:30,040 --> 00:27:32,320
Speaker 1: I know I grew up with Sy Schwartz. Wonderful guy,

517
00:27:32,680 --> 00:27:36,240
Speaker 1: Cy Schwartz. As principles of surgery, like forty seven editions.

518
00:27:36,400 --> 00:27:38,720
Speaker 1: You know, in a surgeon's ward you need a team

519
00:27:38,720 --> 00:27:41,920
Speaker 1: of twenty people around you. Right. The The good thing

520
00:27:42,040 --> 00:27:45,080
Speaker 1: is we have a deep bench, so I'm able to

521
00:27:45,119 --> 00:27:48,840
Speaker 1: get what I need while I'm searching for what I need,

522
00:27:49,080 --> 00:27:52,280
Speaker 1: because what I've really wanted to do do is change head

523
00:27:52,320 --> 00:27:56,360
Speaker 1: into a business model. So therefore we have with that.

524
00:27:56,440 --> 00:28:01,480
Speaker 1: We we've hired, We've hired a CEO. We're looking now

525
00:28:01,960 --> 00:28:09,720
Speaker 1: diligently for an excellent CFO G and a c I

526
00:28:09,800 --> 00:28:14,040
Speaker 1: OH so that we can tackle the material deficiencies in

527
00:28:14,080 --> 00:28:17,800
Speaker 1: a holistic manner rather than just a pin prick here

528
00:28:17,800 --> 00:28:20,359
Speaker 1: and there. You you what's great about you doing this

529
00:28:20,520 --> 00:28:22,920
Speaker 1: job as you lived it as a kid in Detroit?

530
00:28:23,520 --> 00:28:26,359
Speaker 1: You you lived the a side. Where's the common ground

531
00:28:26,440 --> 00:28:30,280
Speaker 1: between Ben Carson and the Democrats in terms of getting

532
00:28:30,359 --> 00:28:33,240
Speaker 1: us to a better housing stock in the country. Well

533
00:28:33,280 --> 00:28:36,960
Speaker 1: I helped. The common ground is recognition of the fact

534
00:28:37,400 --> 00:28:40,360
Speaker 1: that it's not just about putting people under a roof.

535
00:28:40,920 --> 00:28:44,200
Speaker 1: It's about developing people. It's about giving people an opportunity

536
00:28:44,240 --> 00:28:48,000
Speaker 1: to climb up that ladder. Because for every person that

537
00:28:48,040 --> 00:28:51,080
Speaker 1: we can help do that, it makes room for another

538
00:28:51,440 --> 00:28:53,440
Speaker 1: that we can help. But it doesn't help if we

539
00:28:53,480 --> 00:28:57,320
Speaker 1: have people sort of sessile sitting there. We've got to

540
00:28:57,360 --> 00:29:01,280
Speaker 1: have a continual movement going on. If the President's budget

541
00:29:01,320 --> 00:29:03,400
Speaker 1: proposal were to go through were to become law, the

542
00:29:03,440 --> 00:29:06,880
Speaker 1: HUT budget would be smaller. I know that you've you've

543
00:29:06,880 --> 00:29:10,400
Speaker 1: criticized the Community Development Block Grant program as well, partially

544
00:29:10,400 --> 00:29:12,360
Speaker 1: because in the abodministration did this too. It's hard to

545
00:29:12,400 --> 00:29:14,720
Speaker 1: track results. How do we get better at doing that?

546
00:29:15,560 --> 00:29:17,560
Speaker 1: And I think that's that's maybe a critique Tom, that's

547
00:29:17,600 --> 00:29:19,200
Speaker 1: that's sort of a universal one. We need we need

548
00:29:19,240 --> 00:29:20,720
Speaker 1: to do a better job of seeing what's working and

549
00:29:20,760 --> 00:29:24,680
Speaker 1: what's not. Without question, we need better metrics. You look

550
00:29:24,720 --> 00:29:29,120
Speaker 1: at CDBG, I said, you know in my budget hearings

551
00:29:29,160 --> 00:29:32,080
Speaker 1: that there have been some very excellent things that's happened

552
00:29:32,120 --> 00:29:36,240
Speaker 1: to through that program, and particularly the fostering of public

553
00:29:36,280 --> 00:29:40,080
Speaker 1: private partnerships, because the real money is not in the government,

554
00:29:40,400 --> 00:29:44,000
Speaker 1: it's in the private sector, so you create win win situations.

555
00:29:44,600 --> 00:29:48,560
Speaker 1: I'm all for that and for those principles, but also

556
00:29:48,680 --> 00:29:52,080
Speaker 1: we have to remember what our primary goals are, and

557
00:29:52,120 --> 00:29:57,480
Speaker 1: those goals are providing affordable, decent housing for people. So

558
00:29:57,680 --> 00:30:02,840
Speaker 1: CBDG program percent of the money goes to that purpose.

559
00:30:03,000 --> 00:30:05,560
Speaker 1: That's not to say that the other things aren't good,

560
00:30:06,040 --> 00:30:09,520
Speaker 1: but in a in a situation of fiscal restraint, you

561
00:30:09,640 --> 00:30:16,800
Speaker 1: have to prioritize. Yesterday, a leading international relations expert, a

562
00:30:16,840 --> 00:30:19,400
Speaker 1: former ambassador of this nation sat in the chair you're

563
00:30:19,400 --> 00:30:23,280
Speaker 1: sitting in, Ben Carson, and he is someone that would

564
00:30:23,320 --> 00:30:27,480
Speaker 1: be perfect for any Republican administration. This is an administration

565
00:30:28,120 --> 00:30:31,360
Speaker 1: based on loyalty, loyalty, loyalty. You're one of the few

566
00:30:31,440 --> 00:30:34,920
Speaker 1: people that have been appointed by this administration where clearly

567
00:30:34,960 --> 00:30:37,000
Speaker 1: that wasn't evident with the battle with you and the

568
00:30:37,080 --> 00:30:41,400
Speaker 1: president during the campaign. What is the price of loyalty?

569
00:30:41,560 --> 00:30:46,880
Speaker 1: What is the cost to Republicans into your administration with

570
00:30:47,000 --> 00:30:51,320
Speaker 1: a litmus test of loyalty daily from this president? Well,

571
00:30:51,360 --> 00:30:55,080
Speaker 1: and I think the whole loyalty argument has been blown

572
00:30:55,080 --> 00:30:59,520
Speaker 1: out of proportion, uh, because there's been so many leaks

573
00:31:00,240 --> 00:31:04,040
Speaker 1: and so much backstamping. I think it has been pushed

574
00:31:04,240 --> 00:31:07,360
Speaker 1: to the forefront where it really doesn't need to be.

575
00:31:07,480 --> 00:31:11,320
Speaker 1: But anybody that you're working with, you expect some degree

576
00:31:11,320 --> 00:31:14,400
Speaker 1: of loyalty. Now it depends on your definition of loyalty,

577
00:31:14,920 --> 00:31:19,840
Speaker 1: you know. Uh, to me, that does not include doing

578
00:31:20,000 --> 00:31:25,400
Speaker 1: wrong things for a person or accepting things that are dishonest. That's,

579
00:31:25,560 --> 00:31:28,840
Speaker 1: to me, is not loyalty. Don't be a stranger, David. David,

580
00:31:28,880 --> 00:31:31,600
Speaker 1: Why don't you give our guests the appropriate correct exit

581
00:31:31,800 --> 00:31:34,400
Speaker 1: towards I wanted to look at my toe when we're

582
00:31:34,800 --> 00:31:37,200
Speaker 1: Secretary Ben Carson and Dr Ben Carson, the Secretary of

583
00:31:37,360 --> 00:31:39,480
Speaker 1: Housing Urban Development joining us here in our Bloomberg eleven

584
00:31:39,480 --> 00:31:41,960
Speaker 1: three studios in New York. Here, as he said during

585
00:31:42,000 --> 00:31:43,720
Speaker 1: the belt the New York Stock Exchange, it this morning.

586
00:31:43,720 --> 00:31:45,360
Speaker 1: Great to see you here in New York, and thanks

587
00:31:45,360 --> 00:31:47,200
Speaker 1: for making the time to talk with us today. Hope

588
00:31:47,200 --> 00:31:49,080
Speaker 1: to talk to you again. This is Bloomber Surveillance on

589
00:31:49,080 --> 00:31:51,640
Speaker 1: Bloomberg Radio, David Garret and Tom Keene in New York

590
00:31:51,680 --> 00:32:08,400
Speaker 1: coast to coast and worldwide. This is Bloomberg joining us

591
00:32:08,400 --> 00:32:12,800
Speaker 1: now in Washington. He's retired, which I doubt because he's

592
00:32:12,840 --> 00:32:16,000
Speaker 1: solving the problems of the Philadelphia Phillies. On the side

593
00:32:16,520 --> 00:32:19,000
Speaker 1: is one Charles Plaza, for years the president of the

594
00:32:19,000 --> 00:32:24,280
Speaker 1: Philadelphia Fed, and of course his academics noted, particularly his

595
00:32:24,360 --> 00:32:27,880
Speaker 1: work at the University of Rochester. Professor Plaza, wonderful to

596
00:32:27,960 --> 00:32:30,640
Speaker 1: have you back in. What's the difference in retirement now?

597
00:32:30,680 --> 00:32:33,400
Speaker 1: If you leave the grind of the Fed? Are you

598
00:32:33,440 --> 00:32:38,719
Speaker 1: better arrested? I hope so, because I wasn't always well

599
00:32:38,800 --> 00:32:41,120
Speaker 1: arrested at the FED. But it's good to be with you, Tom,

600
00:32:41,120 --> 00:32:43,320
Speaker 1: It's always it's always fun chatting with you. Let's get

601
00:32:43,400 --> 00:32:47,640
Speaker 1: right to inflation. Many were worried about inflation. Their critics

602
00:32:47,680 --> 00:32:51,680
Speaker 1: would call them inflation EASTA is the vectors migrating higher.

603
00:32:51,680 --> 00:32:55,080
Speaker 1: It's particularly migrating higher in the United Kingdom, a little

604
00:32:55,080 --> 00:32:58,320
Speaker 1: bit of a pause here into the set of meetings

605
00:32:58,360 --> 00:33:01,160
Speaker 1: for the end of the year. Which way is the

606
00:33:01,240 --> 00:33:06,040
Speaker 1: plaster inflation vector right now? Well, that's an interesting question.

607
00:33:06,080 --> 00:33:09,280
Speaker 1: I think it's it's a it's a challenge to forecast inflation.

608
00:33:09,400 --> 00:33:12,800
Speaker 1: I think, as you well know, Tom, Um, the models

609
00:33:12,800 --> 00:33:16,280
Speaker 1: that policymakers tend to use have relied heavily on the

610
00:33:16,280 --> 00:33:20,200
Speaker 1: Phillips curve as a means of generating forecast of inflation.

611
00:33:20,640 --> 00:33:22,800
Speaker 1: That hasn't really worked very well for the last i

612
00:33:22,840 --> 00:33:26,800
Speaker 1: don't know, thirty five years. Um. So I do think

613
00:33:26,840 --> 00:33:29,680
Speaker 1: that my own view is that inflation right now I'm

614
00:33:29,680 --> 00:33:32,040
Speaker 1: pretty happy with here. It is all the measures are

615
00:33:32,080 --> 00:33:35,640
Speaker 1: clustering around two percent, give or take a few tents um,

616
00:33:36,000 --> 00:33:39,360
Speaker 1: So they all are signaling the same thing at this point. Uh,

617
00:33:39,560 --> 00:33:41,280
Speaker 1: you don't want to react too much to sort of

618
00:33:41,600 --> 00:33:44,800
Speaker 1: month to month, uh numbers, But I think they're in

619
00:33:44,840 --> 00:33:48,200
Speaker 1: pretty good place. I think that that where it's going

620
00:33:48,240 --> 00:33:51,920
Speaker 1: to end up remains a big question. People say, well,

621
00:33:52,360 --> 00:33:55,320
Speaker 1: you guys who were against quantitative easy and we're worried

622
00:33:55,320 --> 00:33:59,680
Speaker 1: about inflation. And I think the question remains of the

623
00:33:59,760 --> 00:34:01,760
Speaker 1: jury remains out and sort of how all this will

624
00:34:01,880 --> 00:34:05,520
Speaker 1: end up? How much have we strayed from orthodox and

625
00:34:05,320 --> 00:34:09,200
Speaker 1: and folks to be clear here, Professor plaster is a

626
00:34:09,200 --> 00:34:11,800
Speaker 1: recent FED president may not want to answer these questions,

627
00:34:11,800 --> 00:34:15,400
Speaker 1: but we'll give it to college. Try Charles plas Or

628
00:34:15,600 --> 00:34:18,520
Speaker 1: how far is that's the nice thing about being retired? Yes,

629
00:34:18,600 --> 00:34:22,319
Speaker 1: I know? How how far at the equals building are

630
00:34:22,360 --> 00:34:27,760
Speaker 1: they from orthodox economics? Well, we the FED straight pretty

631
00:34:27,800 --> 00:34:30,440
Speaker 1: far during the crisis, perhaps for good reason, and we

632
00:34:30,480 --> 00:34:32,839
Speaker 1: could that's a kind of a question for another day.

633
00:34:32,960 --> 00:34:36,839
Speaker 1: But I think that, um, they are further than I

634
00:34:36,840 --> 00:34:40,960
Speaker 1: would like to see them, because what I see is

635
00:34:41,000 --> 00:34:43,840
Speaker 1: a FED part of perhaps because of the because of

636
00:34:43,880 --> 00:34:48,160
Speaker 1: the crisis, the FED is now much more interventionist than

637
00:34:48,200 --> 00:34:50,640
Speaker 1: it used to be, much more engaged in trying to

638
00:34:50,719 --> 00:34:55,480
Speaker 1: manipulate asset prices of various kinds, interest rates on various maturities,

639
00:34:55,520 --> 00:34:59,640
Speaker 1: and asset classes. It's a very interventionist mentality at the

640
00:34:59,640 --> 00:35:02,160
Speaker 1: FED and has been ever since the crisis, and I'm

641
00:35:02,160 --> 00:35:06,200
Speaker 1: worried that that interventionist mentality is not going to go away.

642
00:35:06,280 --> 00:35:09,040
Speaker 1: And that's troubling to me. Do you see it as

643
00:35:09,080 --> 00:35:11,200
Speaker 1: an evolution? Are we are we at a new place

644
00:35:11,200 --> 00:35:13,800
Speaker 1: and we're going to continue in that direction, Or amid

645
00:35:13,840 --> 00:35:17,120
Speaker 1: the conversation about who might populate the FED next year

646
00:35:17,200 --> 00:35:19,279
Speaker 1: the year after that, if we might get a more

647
00:35:19,360 --> 00:35:21,560
Speaker 1: rules based FED, do you see that as a return

648
00:35:22,000 --> 00:35:24,279
Speaker 1: to a different kind of orthodoxy? Or we are we are?

649
00:35:24,320 --> 00:35:25,640
Speaker 1: We are we going down a path that we're not

650
00:35:25,640 --> 00:35:27,879
Speaker 1: going to turn back home. Well, it's it's hard. It's

651
00:35:27,880 --> 00:35:30,319
Speaker 1: hard to know exactly. Certainly, it will depend in part

652
00:35:30,440 --> 00:35:32,640
Speaker 1: upon who the new appointments to the Board of Governors

653
00:35:32,640 --> 00:35:34,719
Speaker 1: and to the presidents happened to be in terms of

654
00:35:34,719 --> 00:35:39,160
Speaker 1: how they shape policy. Uh. And I think that certainly

655
00:35:39,200 --> 00:35:42,600
Speaker 1: I would like to see people who either drifted more

656
00:35:42,640 --> 00:35:46,239
Speaker 1: towards systematic policy or rules based policy less intervention is

657
00:35:46,320 --> 00:35:49,239
Speaker 1: FED because I think what we've done, what the Fed's done,

658
00:35:49,320 --> 00:35:52,280
Speaker 1: is set itself up for all sorts of credibility problems,

659
00:35:52,360 --> 00:35:56,920
Speaker 1: communication problems, and and and expectations that they're just not

660
00:35:57,000 --> 00:35:58,759
Speaker 1: going to be able to meet. So I'd like a

661
00:35:58,760 --> 00:36:01,399
Speaker 1: little more humility at the FED. That's a quick question

662
00:36:01,400 --> 00:36:04,600
Speaker 1: just to bount communication. When the FED chair would come

663
00:36:04,600 --> 00:36:07,480
Speaker 1: out and do a press conference, what were you doing

664
00:36:07,520 --> 00:36:09,080
Speaker 1: at the time. How much attention to the do the

665
00:36:09,080 --> 00:36:13,920
Speaker 1: FED presidents pay to to that event every other meeting? Um,

666
00:36:13,960 --> 00:36:23,480
Speaker 1: I would continue, Well, I think usually it's the case

667
00:36:24,080 --> 00:36:26,960
Speaker 1: after an f o MC meeting. Oftentimes presidents are back

668
00:36:27,000 --> 00:36:30,239
Speaker 1: on airplanes or trains heading heading back home. That's part

669
00:36:30,280 --> 00:36:31,720
Speaker 1: of it, so they may not be in a position

670
00:36:31,760 --> 00:36:33,799
Speaker 1: to hear it. But you have to understand that during

671
00:36:33,840 --> 00:36:38,680
Speaker 1: the course of the meeting over the two days, uh,

672
00:36:38,760 --> 00:36:42,560
Speaker 1: the chair has as a as a rule so to speak,

673
00:36:42,640 --> 00:36:44,960
Speaker 1: or at least as a habit practicality, we'll talk a

674
00:36:45,000 --> 00:36:47,799
Speaker 1: lot about what he or she was gonna say in

675
00:36:47,920 --> 00:36:50,759
Speaker 1: terms of the opening remarks at the press conference. You

676
00:36:50,800 --> 00:36:52,759
Speaker 1: don't always know what the questions are gonna be, but

677
00:36:52,920 --> 00:36:55,920
Speaker 1: you kind of know the gist of what message is

678
00:36:55,960 --> 00:36:59,960
Speaker 1: gonna be provided what is attention in that equals room

679
00:37:00,320 --> 00:37:04,240
Speaker 1: between freshwater and saltwater economics. We toss these phrases around,

680
00:37:04,719 --> 00:37:08,520
Speaker 1: but if you get Marvin good friend from Pittsburgh, Pennsylvania,

681
00:37:08,640 --> 00:37:12,080
Speaker 1: or Charles Plass or the late great Alan Meltzer, whoever.

682
00:37:12,520 --> 00:37:15,360
Speaker 1: If you get guys like you in the room with

683
00:37:15,440 --> 00:37:21,680
Speaker 1: the saltwater people, what happened brackish that's good or muddy

684
00:37:21,680 --> 00:37:24,479
Speaker 1: as the case maybe no. Uh, you know I think

685
00:37:24,560 --> 00:37:31,240
Speaker 1: that obviously, Tom. You know I've known Marvin for thirty years. Um,

686
00:37:31,480 --> 00:37:33,480
Speaker 1: hey and I share a lot. I have a lot

687
00:37:33,480 --> 00:37:36,800
Speaker 1: in common. We think about monetary policy in similar ways,

688
00:37:36,840 --> 00:37:40,080
Speaker 1: not always accurring, but we're very, very close. And so

689
00:37:40,200 --> 00:37:44,600
Speaker 1: I think that right now, Uh, many of what you

690
00:37:44,600 --> 00:37:52,080
Speaker 1: would describe as freshwater economists have been um, they're lacking

691
00:37:52,440 --> 00:37:54,799
Speaker 1: in the EPO. Okay, let's do this. Let's come back

692
00:37:54,840 --> 00:37:56,960
Speaker 1: with Charles plus. So we're gonna pick this theme up

693
00:37:57,280 --> 00:38:01,279
Speaker 1: on freshwater economics. This is blue work. David Gerd and

694
00:38:01,360 --> 00:38:05,000
Speaker 1: Tom Key in a few minutes right now with Charles

695
00:38:05,200 --> 00:38:08,600
Speaker 1: plots Er, who long ago and far away did some

696
00:38:08,800 --> 00:38:12,279
Speaker 1: really first rate academics. Professor plots I want to get

697
00:38:12,320 --> 00:38:13,879
Speaker 1: back to the FED in the future of the FED,

698
00:38:14,280 --> 00:38:19,360
Speaker 1: but enlightened us on OURBC real business cycle theory. What

699
00:38:19,560 --> 00:38:24,240
Speaker 1: is that? Well, Tom, real business cycle theory I actually

700
00:38:24,280 --> 00:38:27,160
Speaker 1: coined the phrase back in nineteen eighty one or eight two.

701
00:38:27,440 --> 00:38:31,279
Speaker 1: Excuse me, I thought it well. Other days I feel

702
00:38:31,320 --> 00:38:33,880
Speaker 1: like it might have been at our age. You know,

703
00:38:33,920 --> 00:38:37,000
Speaker 1: the memory sales begin to fade after a while. But uh,

704
00:38:37,160 --> 00:38:39,360
Speaker 1: real business cycle theory it is a way of looking

705
00:38:39,400 --> 00:38:44,640
Speaker 1: at the economy. Um that rather than putting monetary policy

706
00:38:44,680 --> 00:38:46,759
Speaker 1: at the center of all the things that matter for

707
00:38:46,800 --> 00:38:49,359
Speaker 1: the economy. And so it says, look, lots of things

708
00:38:49,440 --> 00:38:52,640
Speaker 1: happened to the economy, their shocks from all different sorts

709
00:38:52,640 --> 00:38:55,759
Speaker 1: of sources. It doesn't all come from monetary policy, that

710
00:38:55,840 --> 00:38:59,720
Speaker 1: didn't all come from fiscal policy. And but real business

711
00:38:59,760 --> 00:39:02,160
Speaker 1: cycle tried to do which will try to build a

712
00:39:02,239 --> 00:39:07,960
Speaker 1: framework for thinking about how things other than policy play

713
00:39:07,960 --> 00:39:11,160
Speaker 1: out in an economy, what kind of things change, whether

714
00:39:11,320 --> 00:39:16,000
Speaker 1: impacts and oftentimes that Uh, we called it real because

715
00:39:16,000 --> 00:39:19,239
Speaker 1: it wasn't monetary, and so we were looking for other

716
00:39:19,400 --> 00:39:23,160
Speaker 1: sources of fluctuations, if you, because we couldn't understand what

717
00:39:23,320 --> 00:39:27,200
Speaker 1: happens with policy unless you learn understand what happens without

718
00:39:27,640 --> 00:39:32,440
Speaker 1: those could converse in professor in oiler functions and I

719
00:39:32,440 --> 00:39:36,640
Speaker 1: will I will mention the greatly respected economists Michael Woodward.

720
00:39:37,200 --> 00:39:41,359
Speaker 1: UH is one example of the mathiness of modern economics.

721
00:39:41,360 --> 00:39:46,040
Speaker 1: They've all been humbled over this financial crisis. Can the

722
00:39:46,120 --> 00:39:50,200
Speaker 1: leaders of the next FED be more RBC like even

723
00:39:50,239 --> 00:39:54,520
Speaker 1: if they're not real business cycle economists. Well, I think

724
00:39:54,560 --> 00:39:58,319
Speaker 1: that even today, among lots of academic macro economists who

725
00:39:58,320 --> 00:40:01,160
Speaker 1: look at things, the real business cycle model still is

726
00:40:01,239 --> 00:40:04,719
Speaker 1: kind of has now mainstream in the sense that it's

727
00:40:04,719 --> 00:40:08,040
Speaker 1: at the core of lots of models now. So I

728
00:40:08,080 --> 00:40:13,040
Speaker 1: think that certainly people like Marvin good Friend and UH

729
00:40:13,120 --> 00:40:17,719
Speaker 1: are deeply steeped and understanding real business cycle models, understanding

730
00:40:17,760 --> 00:40:19,680
Speaker 1: how they work, what they have to say, what they

731
00:40:19,719 --> 00:40:23,440
Speaker 1: don't have to say. So I would I would certainly

732
00:40:23,520 --> 00:40:27,600
Speaker 1: hope that the fo MC and the FED in general.

733
00:40:27,719 --> 00:40:30,640
Speaker 1: I think we need a little bit humility from the FED. Then,

734
00:40:30,640 --> 00:40:32,879
Speaker 1: if we go to Kittling and Prescott in the work

735
00:40:32,920 --> 00:40:36,880
Speaker 1: of Charles Plosser, there's an x axis as a time function,

736
00:40:36,960 --> 00:40:39,840
Speaker 1: Mr Bullerd St. Louis would suggests we should not be

737
00:40:39,960 --> 00:40:42,400
Speaker 1: slaves to the X axis and we should look for

738
00:40:42,480 --> 00:40:45,480
Speaker 1: so called regimes change that sort of goes into a

739
00:40:45,520 --> 00:40:48,560
Speaker 1: real world analysis, doesn't it. Well, somebody is trying to.

740
00:40:48,640 --> 00:40:53,160
Speaker 1: I think analyzing regime changes is very challenging and determined

741
00:40:53,280 --> 00:40:56,480
Speaker 1: how you get there, why they're changing and understanding those things.

742
00:40:56,480 --> 00:41:00,319
Speaker 1: So um but uh, Milton Freeman used to used to

743
00:41:00,320 --> 00:41:05,520
Speaker 1: tell us that changes in tastes or preferences is the

744
00:41:05,680 --> 00:41:08,040
Speaker 1: um Is it the last resort of an economist who

745
00:41:08,080 --> 00:41:10,520
Speaker 1: doesn't understand what's really happening? Well, that would be me

746
00:41:10,680 --> 00:41:13,960
Speaker 1: excuse with David up here? Thank you? Did you see that,

747
00:41:14,120 --> 00:41:17,000
Speaker 1: Ken Ken follow your technical director? Save that. That's a

748
00:41:17,000 --> 00:41:20,400
Speaker 1: great moment where Charles Plasser really put me in my place.

749
00:41:22,640 --> 00:41:25,240
Speaker 1: David saved me. Let me ask you a bit about

750
00:41:25,480 --> 00:41:28,760
Speaker 1: how much power a person has to shape the Federal Reserve.

751
00:41:28,840 --> 00:41:30,960
Speaker 1: So we could have a President Taylor, we could have

752
00:41:30,960 --> 00:41:34,399
Speaker 1: a President Warsh. Given all the cacophony we hear from

753
00:41:34,520 --> 00:41:37,440
Speaker 1: governors and presidents giving a lot of speeches to my

754
00:41:37,520 --> 00:41:39,719
Speaker 1: ear at least ahead of these these FED meetings, how

755
00:41:39,800 --> 00:41:41,520
Speaker 1: much just one person have to shape the direction of

756
00:41:41,560 --> 00:41:44,239
Speaker 1: the f OMC right now? Well, it's very hard. It's

757
00:41:44,239 --> 00:41:46,560
Speaker 1: a it's a it's a it's a committee after all,

758
00:41:46,840 --> 00:41:49,560
Speaker 1: and it functions in a committee. And that's actually a

759
00:41:49,560 --> 00:41:51,680
Speaker 1: good thing because that means that lots of different views

760
00:41:51,800 --> 00:41:54,759
Speaker 1: get to be presented. I think it's very important whether

761
00:41:54,760 --> 00:41:57,560
Speaker 1: it be presidents or governors, that you have people who

762
00:41:57,560 --> 00:42:00,120
Speaker 1: are smart enough and knowledgeable enough to present the as

763
00:42:00,200 --> 00:42:04,160
Speaker 1: different views and to force the committee to confront different

764
00:42:04,200 --> 00:42:06,640
Speaker 1: perspectives and come up with a with a with a

765
00:42:06,719 --> 00:42:10,480
Speaker 1: policy insight. So it's rarely, it's rarely one person, and

766
00:42:10,480 --> 00:42:12,520
Speaker 1: in fact, I would prefer it not be the power

767
00:42:12,560 --> 00:42:15,600
Speaker 1: of one person. That's why you have a committee. I'm

768
00:42:15,719 --> 00:42:18,439
Speaker 1: very incurred. I don't know what the Trump administration's goal

769
00:42:18,560 --> 00:42:21,160
Speaker 1: is for monetary policy yet they haven't said very much

770
00:42:21,200 --> 00:42:24,120
Speaker 1: about it. I think the most recent names that are

771
00:42:24,160 --> 00:42:28,120
Speaker 1: being discussed Marvin good Friend and Randy Quarrels Mr Jones,

772
00:42:28,160 --> 00:42:33,879
Speaker 1: I don't know, um uh for me, are quite reassuring

773
00:42:34,320 --> 00:42:38,360
Speaker 1: that these are both solid people in their respective fields. Uh,

774
00:42:38,640 --> 00:42:41,480
Speaker 1: very moderate in their views, not extremist one way or another.

775
00:42:41,760 --> 00:42:44,759
Speaker 1: And so I'm very encouraged by what I see so far.

776
00:42:45,040 --> 00:42:48,280
Speaker 1: If these two individuals I just mentioned ultimately get nominated

777
00:42:48,280 --> 00:42:50,760
Speaker 1: in the time we have left with you linked together

778
00:42:50,920 --> 00:42:53,960
Speaker 1: from the world of Charles loss or interest rate dynamics

779
00:42:54,480 --> 00:42:57,719
Speaker 1: with the diminution of the balance sheet, there are two

780
00:42:57,719 --> 00:43:00,480
Speaker 1: different dynamics, are two different set of there's if you

781
00:43:00,520 --> 00:43:04,799
Speaker 1: will yields up yields down first and second derivatives, and

782
00:43:04,840 --> 00:43:07,880
Speaker 1: then this strange thing the balance sheet. How do you

783
00:43:07,920 --> 00:43:11,359
Speaker 1: link the two together? Professor Oh, I think it's very hard.

784
00:43:11,600 --> 00:43:14,200
Speaker 1: As I mentioned earlier, Tom, I'm worried about sort of

785
00:43:14,239 --> 00:43:17,200
Speaker 1: the interventionist view of the FED and how it its

786
00:43:17,320 --> 00:43:21,160
Speaker 1: role of manipulating or changing or intervening in different asset

787
00:43:21,200 --> 00:43:23,840
Speaker 1: prices and classes, and the balance sheet kind of plays

788
00:43:23,840 --> 00:43:26,520
Speaker 1: into this. And right now the FED is busy trying

789
00:43:26,560 --> 00:43:28,799
Speaker 1: to raise rates at the same time claiming it's trying

790
00:43:28,800 --> 00:43:31,560
Speaker 1: to keep accommodation by having a big balance sheet. Well,

791
00:43:31,600 --> 00:43:34,960
Speaker 1: which is it? Those are two very different policies. How

792
00:43:34,960 --> 00:43:37,919
Speaker 1: do we get calibrat and think about monetary policy. I'm

793
00:43:37,960 --> 00:43:41,920
Speaker 1: really hoping that the FED will will very soon, as

794
00:43:41,920 --> 00:43:44,200
Speaker 1: I tried to get the FED to do several years

795
00:43:44,200 --> 00:43:48,640
Speaker 1: ago articulate its vision. But where we go to extract

796
00:43:48,680 --> 00:43:51,960
Speaker 1: ourselves from all this? Where is policy headed heading to

797
00:43:52,320 --> 00:43:54,880
Speaker 1: one kind of strategy or a different kind of strategy?

798
00:43:54,920 --> 00:43:57,080
Speaker 1: What role is the balance sheet's gonna play? And what's

799
00:43:57,120 --> 00:43:59,880
Speaker 1: gonna be the relationship with setting short term rates? For

800
00:44:00,080 --> 00:44:03,279
Speaker 1: this this this effort to you know, by a bunch

801
00:44:03,280 --> 00:44:05,960
Speaker 1: of stuff, I got twenty Sewonds left its Coulchu lacoda

802
00:44:06,080 --> 00:44:09,120
Speaker 1: killing it at Rochester right now? Did you get on

803
00:44:09,239 --> 00:44:14,239
Speaker 1: that job. I'm sure he's doing just five. I'm sure

804
00:44:14,239 --> 00:44:17,239
Speaker 1: he is, Professor Colchula Coota hopefully listening up at the

805
00:44:17,360 --> 00:44:20,640
Speaker 1: University of Rochester and the Simon School, Charles plus or

806
00:44:20,680 --> 00:44:23,879
Speaker 1: as a former head of Philadelphia. That was great, David,

807
00:44:23,920 --> 00:44:26,759
Speaker 1: that was good. That's right special on RBC. That was

808
00:44:26,880 --> 00:44:42,960
Speaker 1: really really interesting. It is a wonderful time to speak

809
00:44:43,120 --> 00:44:45,759
Speaker 1: to Stewart Blickman. Why would that be. We've been in

810
00:44:45,760 --> 00:44:50,120
Speaker 1: a range on oil and uh, we're at the bottom

811
00:44:50,160 --> 00:44:52,480
Speaker 1: of the range and we've stayed there for the last

812
00:44:52,640 --> 00:44:56,120
Speaker 1: number of days. Stewart, I look at forty five six

813
00:44:56,160 --> 00:45:00,279
Speaker 1: cents of barrel on West Texas intermediate, is or any

814
00:45:00,320 --> 00:45:02,920
Speaker 1: indication we break the range lower? Or do you just

815
00:45:02,960 --> 00:45:07,040
Speaker 1: saying we're range bound? Good morning, Tom. I think we're

816
00:45:07,080 --> 00:45:09,680
Speaker 1: probably a range bound, But my my inclination would be

817
00:45:09,680 --> 00:45:11,160
Speaker 1: if we are going to break down, it's probably going

818
00:45:11,239 --> 00:45:15,760
Speaker 1: to be a little bit higher from here. Um the uh.

819
00:45:15,800 --> 00:45:17,800
Speaker 1: With that said, I don't expect a major move and

820
00:45:17,880 --> 00:45:21,600
Speaker 1: crewed um in I think I think we say kind

821
00:45:21,600 --> 00:45:24,760
Speaker 1: of marooned in this call at forty five dollar fifty

822
00:45:24,800 --> 00:45:27,320
Speaker 1: five dollar range for a while. When you see supply

823
00:45:27,480 --> 00:45:32,960
Speaker 1: headlines come across Bloomberg, do you really know regional or

824
00:45:33,080 --> 00:45:36,759
Speaker 1: country or global supply? I mean, is it? Is it

825
00:45:36,920 --> 00:45:41,319
Speaker 1: something that's really countable? Well, there are some countries where

826
00:45:41,320 --> 00:45:44,239
Speaker 1: it's difficult to estimate production, like China for example, is

827
00:45:44,320 --> 00:45:47,319
Speaker 1: notoriously difficult to get get a handle on UM. But

828
00:45:47,440 --> 00:45:50,520
Speaker 1: the International Energy Agency does a fairly good job with

829
00:45:50,600 --> 00:45:53,520
Speaker 1: their oil market report, and so I think, you know,

830
00:45:54,000 --> 00:45:56,279
Speaker 1: more so than the absolute numbers, I think I think

831
00:45:56,600 --> 00:45:58,239
Speaker 1: they do a fairly good job of looking at the

832
00:45:58,280 --> 00:46:01,040
Speaker 1: trend lines. And you know, I do think that the

833
00:46:01,080 --> 00:46:03,960
Speaker 1: markets are moving into balance, but it's it's going to

834
00:46:04,080 --> 00:46:05,760
Speaker 1: take a while. I think this is a longer fuse,

835
00:46:05,800 --> 00:46:08,200
Speaker 1: not a shorter one. Stewart, what do we learn about

836
00:46:08,320 --> 00:46:11,719
Speaker 1: OPEX relevance after this last OPEC, meaning the continuation of

837
00:46:11,760 --> 00:46:14,759
Speaker 1: that that production for there was so much speculation going

838
00:46:14,760 --> 00:46:17,799
Speaker 1: into the first meeting, now many months ago about how

839
00:46:17,800 --> 00:46:22,040
Speaker 1: relevant the cartel the organization was. Has it re established

840
00:46:22,080 --> 00:46:25,520
Speaker 1: its relevance somewhat? No? I think I think it's relevance

841
00:46:25,560 --> 00:46:28,520
Speaker 1: is still open to question. David, I think that you

842
00:46:28,520 --> 00:46:32,560
Speaker 1: know they they've effectively boxed themselves in by by, you know,

843
00:46:32,880 --> 00:46:36,960
Speaker 1: assuming that a relatively small cut would be enough to

844
00:46:37,640 --> 00:46:39,719
Speaker 1: bring US shale to its knees, and it just hasn't

845
00:46:39,719 --> 00:46:43,279
Speaker 1: worked out that way. Obviously, Um, most of the US

846
00:46:43,600 --> 00:46:46,640
Speaker 1: oil community on shore has spent the better part of

847
00:46:46,680 --> 00:46:49,640
Speaker 1: the last two years getting their act together and cutting costs,

848
00:46:50,040 --> 00:46:52,040
Speaker 1: and the even they're now at a position where they

849
00:46:52,080 --> 00:46:55,520
Speaker 1: can make money at forty five dollar oil, and I

850
00:46:55,560 --> 00:46:58,680
Speaker 1: think it's going to take more significant cuts from OPEC

851
00:46:58,760 --> 00:47:01,120
Speaker 1: to really push it a lot are um or else

852
00:47:01,160 --> 00:47:04,080
Speaker 1: we're looking at at a at a continuation of this range.

853
00:47:04,960 --> 00:47:07,359
Speaker 1: I want to ask about the Paris Agreement. Obviously we're

854
00:47:07,360 --> 00:47:09,680
Speaker 1: beginning to process what the landscape looks like now that

855
00:47:09,680 --> 00:47:12,000
Speaker 1: the U s has withdrawn or intends to withdraw from

856
00:47:12,040 --> 00:47:15,160
Speaker 1: from that that international deal. Do we have a sense

857
00:47:15,200 --> 00:47:17,240
Speaker 1: of what it's going to mean for the global energy

858
00:47:17,600 --> 00:47:19,759
Speaker 1: marketplace to not have the US be a party to

859
00:47:19,840 --> 00:47:25,160
Speaker 1: that deal? Well, I think that, you know, the the

860
00:47:25,160 --> 00:47:27,879
Speaker 1: the real import of the Paras Deal was, and again

861
00:47:27,880 --> 00:47:30,240
Speaker 1: this was this was not a binding treaties, or actually

862
00:47:30,360 --> 00:47:31,680
Speaker 1: wasn't even a treaty to begin with. It was a

863
00:47:31,719 --> 00:47:35,640
Speaker 1: non binding accord where they were talking about what kinds

864
00:47:35,680 --> 00:47:39,480
Speaker 1: of cuts they would expect to make between But I

865
00:47:39,520 --> 00:47:41,040
Speaker 1: think it takes a little bit of the wind out

866
00:47:41,040 --> 00:47:44,279
Speaker 1: of the sales for renewable energy. But even if you

867
00:47:44,320 --> 00:47:46,560
Speaker 1: look at at companies like Exxon Mobil for example, that

868
00:47:46,680 --> 00:47:51,080
Speaker 1: do thirty year strategic planning ahead, UM, renewables are are

869
00:47:51,120 --> 00:47:53,880
Speaker 1: an increasing piece of that mix. It's just not a

870
00:47:53,960 --> 00:47:56,000
Speaker 1: dominant piece of that mix. I think, you know, oil

871
00:47:56,040 --> 00:47:59,440
Speaker 1: and natural gas particularly are still going to be you know,

872
00:47:59,560 --> 00:48:03,040
Speaker 1: major fluences on energy consumption. Where's demand dynamics right now?

873
00:48:04,960 --> 00:48:07,920
Speaker 1: Where are demand dynamics right now? I mean we go

874
00:48:08,160 --> 00:48:11,520
Speaker 1: guests after guests. There seems to be a real distinction

875
00:48:11,560 --> 00:48:15,880
Speaker 1: between people looking for good, ample demand that can support

876
00:48:15,960 --> 00:48:20,239
Speaker 1: prices versus oops that ain't gonna be there. Which is it? Um,

877
00:48:20,480 --> 00:48:22,439
Speaker 1: I'm a little worried about demand. I don't I don't

878
00:48:22,480 --> 00:48:25,400
Speaker 1: think that If you think about who are the drivers

879
00:48:25,560 --> 00:48:30,120
Speaker 1: of energy demand, it's mostly emerging markets. And I think that,

880
00:48:30,520 --> 00:48:33,439
Speaker 1: you know, if you look at global GDP estimates, they're

881
00:48:33,480 --> 00:48:36,400
Speaker 1: not I mean they're they're up, but they're not they're

882
00:48:36,440 --> 00:48:39,800
Speaker 1: not especially bullish. So I have a hard time seeing

883
00:48:40,400 --> 00:48:43,839
Speaker 1: demand being the way out of this conundrument for oil.

884
00:48:43,840 --> 00:48:45,560
Speaker 1: I think it's supply got us into this mess, and

885
00:48:45,560 --> 00:48:47,000
Speaker 1: I think supply is gonna have to get us at

886
00:48:47,160 --> 00:48:49,680
Speaker 1: That's a really interesting way to put it. Which geography

887
00:48:49,719 --> 00:48:53,160
Speaker 1: are you looking at most on the delta of supply?

888
00:48:53,600 --> 00:48:56,440
Speaker 1: Is it not o Peck in particularly Russia? Is it Saud,

889
00:48:56,440 --> 00:48:59,920
Speaker 1: East Saud, East Saudi? Which is it? It's definitely not

890
00:49:00,040 --> 00:49:02,680
Speaker 1: opec UM, I think so. I think Opec has done

891
00:49:02,680 --> 00:49:04,920
Speaker 1: about as much as they're going to be willing to do.

892
00:49:04,960 --> 00:49:08,960
Speaker 1: I mean, everyone's talking about how how compliance that um

893
00:49:08,960 --> 00:49:11,239
Speaker 1: Opec has been with his last round of cuts, But

894
00:49:11,400 --> 00:49:14,200
Speaker 1: keep in mind the amount that they actually asked to

895
00:49:14,320 --> 00:49:16,239
Speaker 1: cut in the first place was just a fraction of

896
00:49:16,280 --> 00:49:19,800
Speaker 1: what they've cut in previous cuts. UM non Opec is

897
00:49:19,920 --> 00:49:23,480
Speaker 1: especially interesting in particular the us UM. The thing that

898
00:49:23,520 --> 00:49:26,360
Speaker 1: I'm looking at the most right now is the degree

899
00:49:26,360 --> 00:49:30,279
Speaker 1: to which the older legacy wells UM are accelerating their

900
00:49:30,280 --> 00:49:32,960
Speaker 1: decline rates. If those start to catch up with new

901
00:49:32,960 --> 00:49:36,520
Speaker 1: wells and perhaps overtake them, then I think inventories are

902
00:49:36,520 --> 00:49:38,600
Speaker 1: going to start to pull in. And if they don't,

903
00:49:38,640 --> 00:49:40,840
Speaker 1: then I think inventories are gonna are going to arise.

904
00:49:41,200 --> 00:49:43,360
Speaker 1: I was listening to the President speak a couple of

905
00:49:43,400 --> 00:49:46,279
Speaker 1: days ago. He was in Cincinnati talking about infrastructure during

906
00:49:46,280 --> 00:49:49,240
Speaker 1: what the White House branded as Infrastructure weaken And something

907
00:49:49,280 --> 00:49:50,920
Speaker 1: he brought up, as he has from time to time,

908
00:49:51,520 --> 00:49:54,360
Speaker 1: is the building of these pipelines, the Dakota pipeline, a

909
00:49:54,440 --> 00:49:58,239
Speaker 1: Keystone XL pipeline. Help me understand that the economic landscape

910
00:49:58,280 --> 00:50:00,080
Speaker 1: to all of that, does it make economic sense for

911
00:50:00,120 --> 00:50:02,239
Speaker 1: those pipelines to be built right now? And if in

912
00:50:02,239 --> 00:50:03,840
Speaker 1: fact we do see them build, how's that going to

913
00:50:04,000 --> 00:50:09,239
Speaker 1: change the the the the energy economic landscape. Uh, there's

914
00:50:09,280 --> 00:50:12,120
Speaker 1: definitely an economic rationale to have a lot of these

915
00:50:12,120 --> 00:50:14,759
Speaker 1: pipelines built, in particular in the Permian basin, which is

916
00:50:14,800 --> 00:50:18,360
Speaker 1: starting to get a little bit um congested because of

917
00:50:18,400 --> 00:50:21,000
Speaker 1: the massive amounts of growth that have taken place there.

918
00:50:21,200 --> 00:50:23,200
Speaker 1: Pipelines are not the only way to get the oil

919
00:50:23,640 --> 00:50:26,000
Speaker 1: out of the producing areas and into the into the

920
00:50:26,000 --> 00:50:29,439
Speaker 1: consumer areas. But you know, your alternatives like crewed by rail,

921
00:50:29,480 --> 00:50:32,880
Speaker 1: for example, are more expensive. So you know if crewde

922
00:50:32,920 --> 00:50:37,120
Speaker 1: remains range bound. Uh, the mid streaming space where we're

923
00:50:37,440 --> 00:50:39,320
Speaker 1: which is which is the companies that actually build and

924
00:50:39,520 --> 00:50:42,759
Speaker 1: maintain these pipelines and operate them that to me is

925
00:50:42,760 --> 00:50:44,799
Speaker 1: actually an attractive area to be in. It's one of

926
00:50:44,800 --> 00:50:47,920
Speaker 1: the only areas in fact and energy that I'm bullish

927
00:50:47,960 --> 00:50:49,719
Speaker 1: on right now. Sure, thank you so much for the

928
00:50:49,719 --> 00:50:53,800
Speaker 1: news slow today. Greatly appreciate having you on a on oil.

929
00:51:02,520 --> 00:51:06,640
Speaker 1: Thanks for listening to the Bloomberg Surveillance podcast. Subscribe and

930
00:51:06,719 --> 00:51:12,120
Speaker 1: listen to interviews on Apple Podcasts, SoundCloud, or whichever podcast

931
00:51:12,160 --> 00:51:15,680
Speaker 1: platform you prefer. I'm on Twitter at Tom Keene. David

932
00:51:15,760 --> 00:51:19,880
Speaker 1: Gura is at David Gura. Before the podcast, you can

933
00:51:19,960 --> 00:51:34,560
Speaker 1: always catch us worldwide. I'm Bloomberg Radio Brunch you by

934
00:51:34,840 --> 00:51:39,160
Speaker 1: Bank of America Mary Lynch. With virtual reality, virtually everything

935
00:51:39,160 --> 00:51:44,080
Speaker 1: will change. Discover opportunities in a transforming world. Be of

936
00:51:44,200 --> 00:51:48,840
Speaker 1: a mL dot Com, slash vr, Mary Lynch, Pierced Fenner

937
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Speaker 1: and Smith Incorporated,