WEBVTT - Fed, Markets, & Apple 0:00:02.520 --> 0:00:13.760 Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg 0:00:13.840 --> 0:00:17.920 Surveillance Podcast. Catch us live weekdays at seven am Eastern 0:00:18.200 --> 0:00:22.000 on Apple CarPlay or Android Auto with the Bloomberg Business app, 0:00:22.360 --> 0:00:25.680 Listen on demand wherever you get your podcasts, or watch 0:00:25.760 --> 0:00:27.040 us live on YouTube. 0:00:27.400 --> 0:00:32.479 He is absolutely unique as a president, president, former president, governor, 0:00:33.159 --> 0:00:36.599 vice chairman and chairman of the FED, and that no 0:00:36.640 --> 0:00:40.320 one in the multiple years I've been covering it synthesized 0:00:40.440 --> 0:00:43.000 Wall Street business. 0:00:42.880 --> 0:00:45.839 And economics like Robert Kaplan. He was at the Dallas 0:00:45.880 --> 0:00:47.120 FED with a. 0:00:47.120 --> 0:00:51.479 Real sense of the border political economics, the heritage of 0:00:51.520 --> 0:00:54.920 the Dallas Fed around Robert McTeer and the Georgia School, 0:00:54.960 --> 0:00:58.120 their research capabilities, and were thrilled he could join us 0:00:58.120 --> 0:01:03.040 this morning for an extended conversation. It's been way too long, Robert. 0:01:03.240 --> 0:01:06.120 Let me cut to the chase, the definitive series which 0:01:06.200 --> 0:01:07.560 Jerome Powell speaks of. 0:01:08.200 --> 0:01:10.720 Is the Dallas trim mean? 0:01:11.440 --> 0:01:14.759 You are expert on that with your research staff. Does 0:01:14.760 --> 0:01:18.560 the Dallas trim mean for Robert Kaplan? Does it indicate 0:01:18.600 --> 0:01:23.000 a vector of disinflation or a new worry back to 0:01:23.080 --> 0:01:26.440 the time of say Wayne Angel in a higher inflation rate. 0:01:27.800 --> 0:01:32.880 It probably suggests inflation is a new word sticky, meaning 0:01:33.040 --> 0:01:35.080 it's kind of going sideways. 0:01:36.880 --> 0:01:39.960 And we're not making improvement. 0:01:40.319 --> 0:01:45.040 And I would guess that if prices edge up a 0:01:45.120 --> 0:01:49.000 little bit, it's going to be more supply side issues 0:01:49.520 --> 0:01:51.560 from here than demand side issues. 0:01:51.920 --> 0:01:55.960 What I'm looking at, Robert Kaplan, is the ambiguity, the swirl, 0:01:55.960 --> 0:02:00.160 if you will, of American economics with our politics is 0:02:00.160 --> 0:02:03.720 a sum total of what our listeners and viewers understand 0:02:04.240 --> 0:02:09.000 on this Friday. Is it towards a depressed real GDP 0:02:09.800 --> 0:02:12.400 because of policy uncertainty? 0:02:13.120 --> 0:02:17.440 Yeah, So there are five big structural changes going on 0:02:17.639 --> 0:02:22.840 that's very unusual and'll just tick off. We're restructuring the 0:02:22.880 --> 0:02:25.000 way we do fiscal spending and it's going to have 0:02:25.360 --> 0:02:28.359 some jarring effect, but we're going to have less fiscal spending. 0:02:28.800 --> 0:02:31.840 If they succeed, that would tend to lower growth. We're 0:02:31.840 --> 0:02:35.320 going to do a regulatory review in every industry to 0:02:35.440 --> 0:02:39.240 try to produce more productivity growth that actually might be helpful. 0:02:40.320 --> 0:02:45.760 There's going to be an effort to control the workforce. Obviously, 0:02:47.160 --> 0:02:50.400 no more people coming in across the border entering the workforce, 0:02:50.720 --> 0:02:53.760 and we're going to deport that tends to lower growth 0:02:53.840 --> 0:02:59.120 unless we have an effort to revitalize legal immigration, and 0:02:59.160 --> 0:03:02.959 then we're going to try to restructured the energy ecosystem 0:03:03.000 --> 0:03:04.520 in this country to lower costs. 0:03:04.800 --> 0:03:05.959 That's probably helpful. 0:03:06.360 --> 0:03:09.080 And then the last thing is the tariffs, and the 0:03:09.160 --> 0:03:12.720 tariffs have a price effect. But I would guess these 0:03:12.800 --> 0:03:18.120 tariffs and the uncertainty with them on margin lower growth. 0:03:18.520 --> 0:03:20.840 So you've got a bunch of cross currents, and I 0:03:20.880 --> 0:03:23.720 would guess the net of it all is I would guess, yeah, 0:03:23.760 --> 0:03:27.000 growth is probably slowing a little bit right now. And 0:03:27.160 --> 0:03:30.440 the uncertainty as well as when you cut government spending 0:03:30.560 --> 0:03:35.600 and you reduce workforce growth or you reduce the growth 0:03:35.640 --> 0:03:39.560 of it, you know, you you limit GDP growth. The 0:03:40.000 --> 0:03:44.280 effort is I don't know if that's that concerning, and 0:03:44.320 --> 0:03:46.840 that I think the effort of this administration is to 0:03:46.960 --> 0:03:50.680 try to create more organic, more private sector growth, less 0:03:50.760 --> 0:03:55.040 government led growth, so quote unquote healthier growth, but top 0:03:55.080 --> 0:03:57.680 line growth probably is going to be somewhat weaker, I 0:03:57.720 --> 0:03:59.040 would guess, so. 0:03:59.080 --> 0:04:02.560 Robert, giving that back in the five big structural changes 0:04:02.600 --> 0:04:05.960 that you just outlined, if I'm the Federal Reserve, do 0:04:06.000 --> 0:04:08.360 I just sit on the sidelines and kind of let 0:04:08.360 --> 0:04:10.160 it all play out because the market is kind of 0:04:10.520 --> 0:04:12.320 suggesting that the Fed's not going to do a lot 0:04:12.520 --> 0:04:12.960 this year. 0:04:13.360 --> 0:04:15.240 Yeah, yeah, I think the right thing. 0:04:15.440 --> 0:04:21.359 Yeah, the FED is quietly drifting stage left, and that's okay. 0:04:22.800 --> 0:04:29.159 The center stage is structural changes, executive branch changes away 0:04:29.240 --> 0:04:32.960 from the FED, and in a period like this, I 0:04:33.000 --> 0:04:35.760 think the wisest thing the FED could do, yes is 0:04:36.240 --> 0:04:41.960 be comfortable standing pat be careful about what they say, 0:04:42.440 --> 0:04:47.680 because I think commenting too definitively on how these structural 0:04:47.760 --> 0:04:49.880 changes are going to play out, It's too early to 0:04:49.960 --> 0:04:50.280 do it. 0:04:50.520 --> 0:04:51.800 Tariffs is a good example. 0:04:51.839 --> 0:04:53.599 We don't even know what the tariffs are going to be, 0:04:54.880 --> 0:04:57.080 and so yeah, I think the FED will do less. 0:04:57.120 --> 0:05:00.000 I think that's fine, and I think Jay pals Can 0:05:00.000 --> 0:05:03.080 communication on that has been good recently, where he's made 0:05:03.080 --> 0:05:03.840 clear we're in no. 0:05:03.839 --> 0:05:06.560 Hurry and people should be prepared. 0:05:06.800 --> 0:05:09.800 Their focus should be more on what's going on at 0:05:09.800 --> 0:05:13.120 the executive branch. And second comment I'd make, if there's 0:05:13.200 --> 0:05:16.440 a rate I'm focused on, I'm much more focused on 0:05:16.520 --> 0:05:19.200 the ten year treasury rate than i am the FED 0:05:19.240 --> 0:05:19.839 funds rate. 0:05:20.440 --> 0:05:23.680 It interesting. So, Robert, as we sit back here, and 0:05:23.839 --> 0:05:27.720 we think about the economic backdrop here, how do you 0:05:27.839 --> 0:05:31.720 view the consumer right here? I mean, we've heard about 0:05:31.760 --> 0:05:34.400 and talked about and noticed in the data this K 0:05:35.000 --> 0:05:36.160 shaped economy. 0:05:36.640 --> 0:05:40.240 How do you think about the consumer? There's two big groups. 0:05:40.560 --> 0:05:46.160 It's confusing because there's two big groups. Probably unlike maybe 0:05:46.200 --> 0:05:48.279 anything I've seen in my career. 0:05:48.720 --> 0:05:49.960 There's one group. 0:05:49.839 --> 0:05:54.080 That's sixty five that's rough numbers, sixty five seventy million 0:05:54.279 --> 0:05:58.719 workers that make fifty five grand a year or less, 0:05:58.760 --> 0:06:01.479 and they are struggling to make ends meet. They've lost 0:06:01.480 --> 0:06:04.920 at least twenty five percent purchasing power. They don't tend 0:06:05.000 --> 0:06:09.400 to own financial assets. That group is spending, but they're 0:06:09.440 --> 0:06:14.200 watching every dollar they're going to McDonald's and they're agonizing 0:06:14.600 --> 0:06:18.800 over even McDonald's trading down. That's sixty five to seventy 0:06:18.839 --> 0:06:24.120 million workers and consumers. There's another sixty five to seventy 0:06:24.160 --> 0:06:27.520 million consumers fifty five and older, own their home, have 0:06:27.600 --> 0:06:31.560 a fixed rate mortgage, have financial assets, and this recent 0:06:31.600 --> 0:06:35.640 period has been pretty good. Yes, there's infliction, but their 0:06:35.680 --> 0:06:39.320 financial appreciation their financial assets is offset it. 0:06:39.680 --> 0:06:40.640 And because their. 0:06:40.440 --> 0:06:43.679 Mortgage is fixed, they're really not that sensitive to higher rates, 0:06:43.839 --> 0:06:48.160 and they are spending much more aggressive. I guess aggressively 0:06:48.400 --> 0:06:51.440 on services and other products. And that's why when you 0:06:51.480 --> 0:06:54.760 see corporate earnings reports, it's confusing. Which of these two 0:06:54.800 --> 0:06:57.880 groups are you serving. If you're serving that first group, 0:06:58.240 --> 0:07:02.159 you're likely seeing a much more challenging business. If you're 0:07:02.200 --> 0:07:05.479 serving the second group, you know business looks better to you. 0:07:06.000 --> 0:07:08.520 Robert Kaplan with us, of course, the vice chairman of 0:07:08.560 --> 0:07:12.400 Goldman Sachs, with farm Wearer's relationship with the Dallas Fed. 0:07:12.520 --> 0:07:15.720 All sorts of academics through the year at his Harvard 0:07:15.720 --> 0:07:17.480 were thrill these with us, and we said good morning 0:07:17.480 --> 0:07:20.640 to you on YouTube in your home, at your office, 0:07:20.880 --> 0:07:23.200 all of Golden Sacks tuned in on YouTube. I mean, 0:07:23.240 --> 0:07:26.720 you know that's happening right now. Robert Caplan, I got 0:07:26.760 --> 0:07:28.880 in the New Foreign Affairs last night. It's a very 0:07:28.920 --> 0:07:33.960 strong issue, folks in these tumultuous times. Marianna Mazakata, who 0:07:34.080 --> 0:07:36.200 Robert Caplan is not on the same page with the 0:07:36.920 --> 0:07:43.520 esteemed left economist, huge economic history student Marianna Mazacato with 0:07:43.600 --> 0:07:46.040 a wonderful essay on where we need to go. And 0:07:46.160 --> 0:07:48.440 Robert Caplan, I'm sure you don't agree with all that 0:07:48.800 --> 0:07:52.080 Professor Mazacata wrote up in The New Foreign Affairs. But 0:07:52.200 --> 0:07:55.360 the one thing she talked about, you're the most qualified 0:07:55.400 --> 0:08:00.720 person I know, is the financialization that we've seen in 0:08:00.760 --> 0:08:05.080 the last ten, twenty, even thirty years, even before the 0:08:05.080 --> 0:08:11.320 Great Financial Crisis. How do you explain the financialization of 0:08:11.360 --> 0:08:15.520 the American culture and the winners you just described in 0:08:15.600 --> 0:08:18.840 the millions of losers out there that are a reality. 0:08:20.200 --> 0:08:23.120 Well, so I'll put it. I'll put it this way. 0:08:23.200 --> 0:08:25.240 And you've heard me talk about this before. 0:08:26.560 --> 0:08:27.360 I listen. 0:08:27.960 --> 0:08:30.600 I work on an a firm now, and we run 0:08:30.680 --> 0:08:33.960 a business, and I've run other businesses. Human capital is 0:08:34.000 --> 0:08:36.680 the most important asset you have. And that's true for 0:08:36.720 --> 0:08:39.280 the United States. It's true for the state of Texas 0:08:39.440 --> 0:08:46.200 and so on. And early childhood literacy, secondary education, skills training, 0:08:47.000 --> 0:08:51.920 a digital divide, allowing people to be more productive. That 0:08:52.240 --> 0:08:56.480 is key to a growing middle class in building the economy. 0:08:57.160 --> 0:08:59.680 And what we're seeing a little bit in the last 0:08:59.720 --> 0:09:05.760 numberumber of years is a divergence financially between that I 0:09:05.880 --> 0:09:10.600 just mentioned those two groups. Working people that don't take 0:09:10.640 --> 0:09:15.000 government money have probably been employed, done everything right their 0:09:15.040 --> 0:09:18.440 whole career, but they don't have a lot of savings. 0:09:18.600 --> 0:09:21.760 They may not own their home, and they're reading in 0:09:21.760 --> 0:09:25.800 the newspaper about another group of people out there who 0:09:25.840 --> 0:09:31.520 are rising by bounds in terms of their financial wealth 0:09:31.559 --> 0:09:36.760 and financial assets, and it seems like capitalism isn't quite 0:09:36.840 --> 0:09:41.160 working for them. And I think education is one of 0:09:41.480 --> 0:09:45.880 the vehicles to try to address this. But one of 0:09:45.880 --> 0:09:51.280 the issues with decelerating workforce growth is education tends to 0:09:51.320 --> 0:09:54.440 be paid for at the state level and city level. 0:09:55.000 --> 0:09:57.200 If you're a growing city or state, you got the 0:09:57.240 --> 0:10:02.760 money to spend on the getting affordable childcare, full day 0:10:02.840 --> 0:10:03.920 versus half day, pre. 0:10:03.880 --> 0:10:06.000 K, all these critical things. 0:10:06.520 --> 0:10:09.000 But if you're in a state which is probably forty 0:10:09.000 --> 0:10:11.800 plus states whose populations. 0:10:11.080 --> 0:10:13.560 Are flat to down, you may not have the money. 0:10:13.600 --> 0:10:17.720 And then philanthropy, which I'm actively involved in, can help 0:10:18.440 --> 0:10:21.800 pick up the slack. But I think we should be 0:10:21.800 --> 0:10:25.240 focusing more on our human capital and a little less 0:10:25.280 --> 0:10:26.920 on financial end and. 0:10:26.840 --> 0:10:29.719 Paul, that's the common ground between Mazocato and Kapitlin, no 0:10:29.920 --> 0:10:30.719 question about that. 0:10:30.840 --> 0:10:34.040 The individual education effort. Robert. 0:10:34.679 --> 0:10:37.000 I know in your role as vice chairman of Golden Sacks, 0:10:37.000 --> 0:10:40.079 who speak to CEOs around the world, what is their 0:10:40.240 --> 0:10:43.360 view of I don't know the ability to take risk 0:10:43.640 --> 0:10:47.280 to maybe think about M and A as a growth scenario. 0:10:47.880 --> 0:10:50.560 Where are they in terms of how they feel about 0:10:50.800 --> 0:10:53.000 their business and their ability to take risk over the 0:10:53.040 --> 0:10:53.839 next couple of years. 0:10:54.920 --> 0:10:59.560 Okay, So on the positive side, I think the prospect 0:10:59.720 --> 0:11:04.800 of a more balanced regulatory environment, more cost benefit analysis, 0:11:04.840 --> 0:11:07.679 more in their words, more sensible regulation. 0:11:08.040 --> 0:11:10.400 They're okay with tough regulation. 0:11:10.040 --> 0:11:12.840 But there has to be a rationale for it. I 0:11:12.840 --> 0:11:17.400 think they're excited about that. On the other hand, they're 0:11:17.400 --> 0:11:20.880 dealing with another They're dealing with the trade uncertainty. And 0:11:22.440 --> 0:11:25.560 if you're going to domicile more manufacturing, for example in 0:11:25.600 --> 0:11:30.120 the United States, you really need the corridor of Mexico 0:11:30.240 --> 0:11:34.439 and Canada for integrated supply chains and logistics. And when 0:11:34.480 --> 0:11:39.520 they see threat of tariffs on for example Mexico, which 0:11:39.520 --> 0:11:43.559 they hope doesn't happen, which could undermine logistics and supply chains, 0:11:43.559 --> 0:11:45.920 it gives them pause and makes them want to just 0:11:46.320 --> 0:11:49.760 slow down a little bit and be more careful. And 0:11:49.800 --> 0:11:54.160 the other big thing is AI and technology. Now, we've 0:11:54.160 --> 0:11:57.800 had technology innovation for years, but if you're a CEO 0:11:57.920 --> 0:12:01.160 right now, you've got to spend on AI in your business. 0:12:01.559 --> 0:12:05.440 You're not sure which use cases will work and which won't, 0:12:06.000 --> 0:12:08.240 but you got to do it. And so I think 0:12:08.280 --> 0:12:11.040 you're going to see though a lot of merger activity 0:12:11.080 --> 0:12:14.599 by companies who feel that, boy, if we're going to 0:12:14.640 --> 0:12:17.360 take share in the years ahead, if we're going to 0:12:17.440 --> 0:12:19.320 grow in the years ahead, we're more likely to have 0:12:19.400 --> 0:12:22.960 to take share, and we're gonna have to size and scale, 0:12:23.000 --> 0:12:26.480 and the ability to ford AI investment is more important 0:12:26.480 --> 0:12:28.560 than its ever and I think you're going to see 0:12:28.559 --> 0:12:31.520 a desire for many companies bigger to try to deal 0:12:31.520 --> 0:12:31.800 with that. 0:12:31.840 --> 0:12:33.599 I gotta squeeze this in too important. 0:12:33.640 --> 0:12:36.520 There seems to be another threat happens every two, three, 0:12:36.600 --> 0:12:41.120 five years. It's not specific to mister Trump on FED independence. 0:12:41.760 --> 0:12:45.920 How does the institution of the Fed, mister Kaplan protect 0:12:45.960 --> 0:12:52.119 itself and stay independent versus the McChesney Martin challenges decades ago. 0:12:53.040 --> 0:12:53.199 Yeah. 0:12:53.280 --> 0:12:56.960 So the thing that's always challenging at the FED, and 0:12:57.000 --> 0:13:01.720 this isn't new, is regulatory provisory policy at the FED 0:13:02.480 --> 0:13:06.960 is not politically independent and has not been politic independent. 0:13:07.400 --> 0:13:12.320 The tilt of it changes, whether it's Obama to Trump, 0:13:12.720 --> 0:13:16.160 then back to Biden, now back to Trump, and that 0:13:16.240 --> 0:13:20.000 you'll see on setting the FED funds rate, though, and 0:13:20.080 --> 0:13:22.760 the stance of monetary policy. I think it's critical of 0:13:22.840 --> 0:13:26.839 this country that stay politically independent. Now the president can 0:13:26.960 --> 0:13:31.839 jawbone and pressure and that's not new. May be more 0:13:31.880 --> 0:13:34.440 intense right now, and the FED will do its job 0:13:34.480 --> 0:13:39.360 and should to try to extent. They can't ignore that 0:13:39.840 --> 0:13:43.520 make decisions only. The biggest threat to the FED, I 0:13:43.559 --> 0:13:47.120 actually think sometimes is not from outside. Then you have 0:13:47.160 --> 0:13:50.600 to be careful as a governor or a president. Don't 0:13:51.120 --> 0:13:55.360 try to say things publicly you think might go over better, 0:13:55.679 --> 0:13:57.080 or worry about the pressure. 0:13:57.480 --> 0:13:59.040 Just do what you think is right. 0:13:59.240 --> 0:14:02.720 And as long as they manage themselves, I think they'll 0:14:03.040 --> 0:14:04.480 through this in an independent way. 0:14:04.600 --> 0:14:06.920 Out of time. Robert Kaplan. Next time you're on, We're 0:14:06.960 --> 0:14:10.040 doing a complete hour on do we need the docks? 0:14:10.320 --> 0:14:13.720 Robert Kaplan of the Dallas Fed, always in forever and 0:14:13.760 --> 0:14:17.400 now vice chairman of his Goldman Sacks. 0:14:23.160 --> 0:14:26.760 You're listening to the Bloomberg Surveillance Podcast. Catch us live 0:14:26.840 --> 0:14:29.960 weekday afternoons from seven to ten am Eastern Listen on 0:14:30.080 --> 0:14:33.440 Apple Karplay and Android Otto with the Bloomberg Business app, 0:14:33.640 --> 0:14:36.080 or watch us live on YouTube right. 0:14:35.880 --> 0:14:36.600 Now on oil. 0:14:36.680 --> 0:14:39.680 It has been too long, and she is definitive on 0:14:39.800 --> 0:14:42.080 Saudi inc. As we have the joy in the honor 0:14:42.120 --> 0:14:45.200 of speaking with Edward Morris a few days ago, now 0:14:45.240 --> 0:14:48.960 in honor to speak with Ellen Wald. Ellen, what does 0:14:48.960 --> 0:14:52.240 the Saudi royalty want besides one hundred dollars barrel oil? 0:14:53.600 --> 0:14:59.480 What's their desire? Given the new hydrocarbon politics of Washington. 0:15:00.240 --> 0:15:03.200 You know, it's interesting right now it seems like they 0:15:03.240 --> 0:15:08.240 really want to broker peace between Russia, Ukraine and the 0:15:08.800 --> 0:15:13.480 US or Europe. They're really pushing themselves as these you know, 0:15:13.600 --> 0:15:17.120 kind of neutral peace brokers. Of course, it isn't all 0:15:17.880 --> 0:15:23.120 so altruistic here, because with an end to Russia Ukraine 0:15:23.200 --> 0:15:27.000 hostilities could come some very interesting developments from the oil market, 0:15:27.040 --> 0:15:29.720 and you can be sure that the Saudis are all 0:15:29.760 --> 0:15:30.280 about that. 0:15:31.000 --> 0:15:33.960 Ellen, Just give us with some hindsight here, with three 0:15:34.040 --> 0:15:37.720 years into this wark where and the sanctions associated with that? 0:15:38.720 --> 0:15:41.800 Where does the Russian oil? Where has it gone? How 0:15:41.800 --> 0:15:43.600 does it get into the marketplace these days? 0:15:44.320 --> 0:15:46.520 Yeah, that's that's a really great question, because it used 0:15:46.560 --> 0:15:48.640 to go all over the place, and it's. 0:15:48.480 --> 0:15:49.520 Still it still goes. 0:15:49.600 --> 0:15:52.320 It just really mostly goes to two places. Now goes 0:15:52.360 --> 0:15:56.040 to China and goes to India. India is just open 0:15:56.120 --> 0:16:00.440 this massive, huge market for Russian crude oil. And what's 0:16:00.480 --> 0:16:04.080 so fascinating about it is their refineries have been benefiting 0:16:04.080 --> 0:16:07.640 immensely from cheap Russian crude. They buy a lot of it, 0:16:07.720 --> 0:16:10.800 and they process it and they make a lot of diesel, 0:16:10.960 --> 0:16:12.800 and then they go ahead and they sell it to Europe. 0:16:12.840 --> 0:16:16.040 And Europe is more than happy to buy this. I 0:16:16.120 --> 0:16:19.440 kind of like call it laundered Russian crude because they 0:16:19.480 --> 0:16:20.440 know where it comes from. 0:16:20.480 --> 0:16:23.120 They know that it's Russian crude. But as long as 0:16:23.320 --> 0:16:25.680 you know the origin of the diesel. 0:16:25.560 --> 0:16:28.760 That they're using, says India and not Russia, they're more 0:16:28.760 --> 0:16:32.720 than happy to buy it and keep their their you know, 0:16:32.800 --> 0:16:36.200 supplies up and from this cheap Russian oil. 0:16:36.800 --> 0:16:39.440 I took out a chart in Bloomberg today Ellen Wild 0:16:39.640 --> 0:16:44.560 It's an inflation adjusted Saudi light and essentially on an 0:16:44.560 --> 0:16:48.400 inflation basis is a generalization the price of a barrel 0:16:48.440 --> 0:16:49.520 of oils where. 0:16:49.360 --> 0:16:50.800 It was forty years ago. 0:16:51.440 --> 0:16:54.880 Do we overplay in the media, Do we overplay in 0:16:54.920 --> 0:16:58.960 our own minds, all of us, the listeners and viewers, 0:16:59.400 --> 0:17:04.280 the importanttons of oil. Has it become inconsequential to the 0:17:04.320 --> 0:17:06.240 public because of its cheapness. 0:17:07.200 --> 0:17:09.680 So that's that's a really good, good question. 0:17:10.119 --> 0:17:13.440 I think that we do overplay the importance of oil 0:17:13.560 --> 0:17:16.000 in some respects. I know, we overplay it in when 0:17:16.040 --> 0:17:18.439 we look at say the Saudi budget. So you know, 0:17:18.480 --> 0:17:21.040 every year the IMF comes out with these these you 0:17:21.080 --> 0:17:23.720 know stats and say, oh, the Saudis need x price 0:17:23.800 --> 0:17:26.159 or a barrel of oil to cover their budget. And 0:17:26.200 --> 0:17:28.760 the fact is that that is a meaningless statement because 0:17:28.800 --> 0:17:31.560 that's not how it works in Saudi Arabia. You know, 0:17:31.560 --> 0:17:35.600 a ramco sells oil and then a ramco you know, 0:17:35.680 --> 0:17:38.840 makes money, and then they the Saudi government gets uh 0:17:38.880 --> 0:17:42.160 you know, they get royalties, they get rents, they get dividends. 0:17:42.200 --> 0:17:44.240 Now they get you know, it's not just that they 0:17:44.280 --> 0:17:46.560 don't just get the money from the barrel. There's a 0:17:46.600 --> 0:17:49.359 lot more that goes into it, and so things are 0:17:49.359 --> 0:17:50.359 a lot more complicated now. 0:17:50.359 --> 0:17:52.639 Of course, if you look even farther back than forty 0:17:52.720 --> 0:17:55.560 years ago, you know, when oil was like to to 0:17:56.160 --> 0:17:57.080 you know, something. 0:17:56.760 --> 0:18:00.640 A barrel, and you realize that in you know, what 0:18:00.640 --> 0:18:03.840 what Opek was fighting for in the nineteen seventies was 0:18:03.880 --> 0:18:06.000 like to increase it to you know, a price of 0:18:06.119 --> 0:18:08.920 like six something, and that was considered obscene. 0:18:09.359 --> 0:18:13.080 You know, the request was considered absolutely obscene, you know, 0:18:13.119 --> 0:18:13.320 and we. 0:18:13.520 --> 0:18:16.320 Think about that now and it seems rather ridiculous. But 0:18:17.200 --> 0:18:19.159 you know, when you do consider inflation and you do 0:18:19.200 --> 0:18:22.080 consider what we're using oil now, I mean, look, natural 0:18:22.119 --> 0:18:24.960 gas is becoming more expensive such that we're seeing a 0:18:25.000 --> 0:18:28.639 lot of switching over to gas oil interesting from natural 0:18:28.640 --> 0:18:31.560 gas right now, which is not good for the environment 0:18:32.080 --> 0:18:32.960 to begin with. 0:18:33.800 --> 0:18:36.640 But it's you know, so oil is still very very 0:18:36.680 --> 0:18:39.080 much a very important and I would. 0:18:38.840 --> 0:18:42.280 Probably say maybe the key role in uh, you know, 0:18:42.320 --> 0:18:44.920 in terms of the hydrocarbrid spectrum. 0:18:44.440 --> 0:18:46.720 Today, I get ten seconds. When do we get a 0:18:46.720 --> 0:18:48.480 new book? It's all anybody? 0:18:49.600 --> 0:18:51.399 Oh, that's a good question. 0:18:52.200 --> 0:18:55.520 Not not anytime soon, you know, thinking maybe I should 0:18:55.520 --> 0:18:57.959 write a TV script considering how successful Land went. 0:18:58.480 --> 0:19:00.840 There you go. Would you like to weigh in on this? 0:19:01.000 --> 0:19:02.040 Joe Tucker can wait? 0:19:02.200 --> 0:19:07.040 Oh, I know everything about bring the land, man. I'll 0:19:07.040 --> 0:19:09.480 tell you what that Getting oil out of a ground 0:19:09.680 --> 0:19:10.880 that is serious business. 0:19:10.880 --> 0:19:14.320 That's not an easy job. That's my deal. 0:19:14.920 --> 0:19:18.400 Idiots like Paul Sweeney and Tom Kane. The closest I've 0:19:18.440 --> 0:19:19.480 done is a gas station. 0:19:20.080 --> 0:19:22.560 It was forty four cents a gallon, and I worked 0:19:22.560 --> 0:19:25.959 at a gas station, so it's not easy. 0:19:26.040 --> 0:19:28.000 I'm ready to be a Senior Fellow of the Atlantic Council. 0:19:28.080 --> 0:19:30.280 Now that's how smart I am. 0:19:30.560 --> 0:19:34.479 Paul Sweeney, oil expert Ellen wald D, thank you, senior 0:19:34.520 --> 0:19:38.160 Fellow at Atlantic Council, the author of Saudi That Life. 0:19:38.400 --> 0:19:42.320 This is the Bloomberg Surveillance Podcast. Listen live each weekday 0:19:42.359 --> 0:19:45.400 starting at seven am Eastern on Apple Corplay and Android 0:19:45.400 --> 0:19:48.439 Auto with the Bloomberg Business App. You can also listen 0:19:48.520 --> 0:19:51.760 live on Amazon Alexa from our flagship New York station, 0:19:52.320 --> 0:19:55.960 Just Say Alexa Play. Bloomberg eleven thirty out of the. 0:19:55.960 --> 0:19:59.240 University of Michigan, he has crafted out the most important 0:19:59.320 --> 0:20:01.600 job in tech journalism. 0:20:02.400 --> 0:20:04.320 Lukas Shaw, I mean it's sort of close. I mean, 0:20:04.359 --> 0:20:08.840 you know, I mean loses if they're on fire. Mark 0:20:08.920 --> 0:20:11.159 Kerman joins us in studio here in New York on 0:20:11.320 --> 0:20:13.960 his ownership of the Apple story. 0:20:14.200 --> 0:20:16.159 Mark where I am on this going back to like 0:20:16.240 --> 0:20:18.520 I was one of the first people to see Lisa 0:20:19.080 --> 0:20:21.560 and the failure of Lisa and a lot of the 0:20:21.600 --> 0:20:25.080 early Max stuff is to me always in forever, what 0:20:25.160 --> 0:20:28.440 the media misses and you don't miss it is chips. 0:20:28.680 --> 0:20:30.680 I don't want to hear about Tim Cook. I don't 0:20:30.680 --> 0:20:33.480 want to hear about stupid videos, launch and stuff. 0:20:33.880 --> 0:20:37.920 I'm gonna butcher the name. Who is Johnny Shrugie? 0:20:38.280 --> 0:20:41.400 Who's going to give us the A eighteen A nineteen 0:20:41.560 --> 0:20:43.920 chip this fall in the new Apple iPhone. 0:20:44.040 --> 0:20:46.400 Well, first of all, Tim, you did not butcher the name? 0:20:46.480 --> 0:20:46.919 That is right? 0:20:47.160 --> 0:20:47.800 I can't close. 0:20:47.960 --> 0:20:49.919 No, no, you got it right. It's Johnny Srugie. 0:20:50.280 --> 0:20:53.720 Okay, nice, you were spot on as always once a year. 0:20:53.880 --> 0:20:58.320 Sugie is probably the most important executive at Apple other 0:20:58.359 --> 0:21:01.879 than Tim Cook. I agree about why at this point, 0:21:02.920 --> 0:21:08.119 with so much commoditization in the technology industry, Apple's unique 0:21:08.119 --> 0:21:10.720 differentiator that makes their products better. 0:21:10.600 --> 0:21:12.399 Than the rest is their chips. 0:21:12.640 --> 0:21:13.000 Thank you. 0:21:13.280 --> 0:21:16.719 It allows them to differentiate the designs. They can have 0:21:16.800 --> 0:21:21.440 thinner form factors, better power efficiency, unique components that all 0:21:21.560 --> 0:21:26.800 enable new features. For instance, the artificial intelligence capabilities that 0:21:26.880 --> 0:21:31.240 everyone is talking about today. That support started to be 0:21:31.280 --> 0:21:34.080 built into their chips in twenty seventeen. 0:21:34.680 --> 0:21:36.640 Okay, I know you're not in speaking terms of say 0:21:36.760 --> 0:21:38.800 Uber bowl like dan ives, but if you add a 0:21:38.800 --> 0:21:41.359 cup of coffee with Dan Eves at Webbush and with 0:21:41.440 --> 0:21:45.800 your journalistic abilities. Is the chip is there a constraint 0:21:45.960 --> 0:21:49.159 or a limit to it on a mathematical basis? Is 0:21:49.200 --> 0:21:51.400 Johnny Strujie and the rest are they going to get 0:21:51.400 --> 0:21:53.679 to a limit where they can't get better in the 0:21:53.800 --> 0:21:55.960 stock levels or goes down? 0:21:56.600 --> 0:22:00.120 Well, I think in terms of performance you've seen drop. 0:22:00.280 --> 0:22:02.879 There was a time ten eleven years ago where you 0:22:02.880 --> 0:22:06.679 were getting one hundred percent, seventy five percent, fifty percent, 0:22:06.720 --> 0:22:10.480 even twenty five percent year over year performance agains. That's 0:22:10.480 --> 0:22:13.520 not the case anymore. At most you're getting ten to 0:22:13.560 --> 0:22:16.680 fifteen percent performance gains. And that's due to a combination 0:22:16.760 --> 0:22:19.919 of the engineering and Apple, but also their secret sauce, 0:22:20.000 --> 0:22:23.720 which is their deep partnership with TSMC, which year after 0:22:23.840 --> 0:22:27.000 year is able to improve their both production capacity and 0:22:27.080 --> 0:22:28.520 their production technology. 0:22:28.560 --> 0:22:29.000 And Bok. 0:22:29.040 --> 0:22:31.680