1
00:00:05,800 --> 00:00:08,720
Speaker 1: Welcome to the Bloomberg p m L Podcast. I'm Pim Fox.

2
00:00:08,760 --> 00:00:11,520
Speaker 1: Along with my co host Lisa Bramowitz. Each day we

3
00:00:11,640 --> 00:00:15,120
Speaker 1: bring you the most important, noteworthy, and useful interviews for

4
00:00:15,200 --> 00:00:17,840
Speaker 1: you and your money, whether you're at the grocery store

5
00:00:17,960 --> 00:00:20,720
Speaker 1: or the trading floor. Find the Bloomberg p m L

6
00:00:20,840 --> 00:00:32,559
Speaker 1: Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot Com. Right now,

7
00:00:32,600 --> 00:00:35,519
Speaker 1: I want to get some perspective from Jeff Dennis. He's

8
00:00:35,520 --> 00:00:39,760
Speaker 1: head of a global emerging market strategy at UBS Securities. Jeff,

9
00:00:39,920 --> 00:00:42,840
Speaker 1: I'm so glad that you could join us, because yesterday

10
00:00:42,880 --> 00:00:47,080
Speaker 1: we did see, uh, the potential demise of the presidency

11
00:00:47,200 --> 00:00:51,000
Speaker 1: of Michele Tamair, although he refuses to resign um, but

12
00:00:51,080 --> 00:00:54,000
Speaker 1: certainly this and Jack's quite a bit more turmoil into

13
00:00:54,600 --> 00:00:58,400
Speaker 1: the Brazilian economy, which already is struggling. I want to

14
00:00:58,440 --> 00:01:00,600
Speaker 1: get your take. Do you think have you've seen any

15
00:01:00,680 --> 00:01:04,080
Speaker 1: signs that there is some level of contagion that's moving

16
00:01:04,400 --> 00:01:07,440
Speaker 1: away from Brazil and into other emerging markets ASTs as well.

17
00:01:07,920 --> 00:01:10,759
Speaker 1: I think what's really interesting is you haven't seen very

18
00:01:10,840 --> 00:01:13,319
Speaker 1: much contagion at all. Now. Obviously, when you get an

19
00:01:13,360 --> 00:01:18,160
Speaker 1: event like Brazil's sudden deterioration of the political situation, you

20
00:01:18,200 --> 00:01:21,320
Speaker 1: will get some heavy selling in Brazil MSCI Brazil the

21
00:01:21,400 --> 00:01:25,000
Speaker 1: doll adjusted index was down early fifteen percent yesterday, and

22
00:01:25,080 --> 00:01:27,640
Speaker 1: you did get some fall out over the rest of EM.

23
00:01:27,680 --> 00:01:31,440
Speaker 1: But in general we have the view here that particularly

24
00:01:31,480 --> 00:01:34,720
Speaker 1: if you look at some of the allegedly vulnerable currencies

25
00:01:34,760 --> 00:01:38,560
Speaker 1: in them, some of the high interest rate deficit currencies

26
00:01:38,600 --> 00:01:42,000
Speaker 1: like a Turkey or South Africa, UM, they've all held up.

27
00:01:42,160 --> 00:01:44,760
Speaker 1: They've both held up relatively well. So I think it's

28
00:01:44,760 --> 00:01:47,840
Speaker 1: fair to say that you've got a shock effect. Of course,

29
00:01:47,880 --> 00:01:50,040
Speaker 1: it looks like a one day shock effect at the moment,

30
00:01:50,400 --> 00:01:53,360
Speaker 1: but the contagion into EM has been has been actually

31
00:01:53,400 --> 00:01:56,640
Speaker 1: relatively limited. So is this just because low rates are

32
00:01:56,680 --> 00:01:58,840
Speaker 1: here forever? People are just looking for that yield and

33
00:01:58,880 --> 00:02:02,360
Speaker 1: they don't really care government, No government turmoil, no turmoil,

34
00:02:02,400 --> 00:02:05,720
Speaker 1: doesn't really matter. More yield, that's all you need to know. Well,

35
00:02:05,760 --> 00:02:07,600
Speaker 1: I mean, I think to a certain extent that it

36
00:02:07,920 --> 00:02:10,000
Speaker 1: is that. I mean, our vi you on EM for

37
00:02:10,040 --> 00:02:13,760
Speaker 1: this year has continued to be UM low, US bond

38
00:02:13,800 --> 00:02:17,000
Speaker 1: deals flat to week a dollar, sucking money towards the

39
00:02:17,040 --> 00:02:20,000
Speaker 1: emerging mars, pushing money towards the emerging markets, with some

40
00:02:20,040 --> 00:02:22,600
Speaker 1: of these high interest rate markets, you know, doing quite

41
00:02:22,600 --> 00:02:25,280
Speaker 1: well because currencies have been strong, and we're not sure

42
00:02:25,320 --> 00:02:29,040
Speaker 1: that scenario is particularly damaged by this Brazil story, although

43
00:02:29,080 --> 00:02:32,760
Speaker 1: of course Brazil was your ultimate number one carry trade story,

44
00:02:32,760 --> 00:02:34,799
Speaker 1: if you like, with an e M And also, I

45
00:02:34,840 --> 00:02:36,799
Speaker 1: think what people are doing is they're saying, look, this

46
00:02:37,000 --> 00:02:41,240
Speaker 1: is a uniquely Brazilian situation that's developed, which is obviously

47
00:02:41,320 --> 00:02:44,280
Speaker 1: very uncertain. We've published a note on it, and really

48
00:02:44,280 --> 00:02:46,639
Speaker 1: the the issue here is how does the political scenario

49
00:02:46,639 --> 00:02:48,920
Speaker 1: play out in Brazil now? But m a lot of

50
00:02:48,960 --> 00:02:51,359
Speaker 1: uncertainty about that. But it's seen, I think by investors

51
00:02:51,400 --> 00:02:55,240
Speaker 1: has really been a rather unique Brazilian situation and the

52
00:02:55,240 --> 00:02:59,440
Speaker 1: global market backdrop, notwithstanding, of course, also a dramatic cell

53
00:02:59,480 --> 00:03:02,079
Speaker 1: off in the US market on Wednesday, it's still seen

54
00:03:02,160 --> 00:03:04,280
Speaker 1: as it's fairly benign, and I think that's why e

55
00:03:04,480 --> 00:03:06,800
Speaker 1: m IS is held up very well. You know, Jeff,

56
00:03:06,840 --> 00:03:09,360
Speaker 1: we've heard some comments from muhammadal Area and of Aliens

57
00:03:09,480 --> 00:03:12,840
Speaker 1: and others talking about the increase of leverage in the

58
00:03:12,919 --> 00:03:15,880
Speaker 1: market and given the sort of low rate environment that

59
00:03:16,120 --> 00:03:18,480
Speaker 1: nothing can seemingly shake. I mean, yes, as you point to,

60
00:03:18,600 --> 00:03:20,679
Speaker 1: there is what a day of volatility and then things

61
00:03:20,680 --> 00:03:23,080
Speaker 1: are back to normal again, even though we still haven't

62
00:03:23,080 --> 00:03:27,240
Speaker 1: resolved anything with the Brazilian situation of late uh So, Jeff,

63
00:03:27,360 --> 00:03:30,160
Speaker 1: I'm wondering from your perspective, have you seen or are

64
00:03:30,200 --> 00:03:35,120
Speaker 1: you worried about increasing leverage in emerging markets trades? Not really,

65
00:03:35,160 --> 00:03:36,840
Speaker 1: I mean, I'm certainly not in a position to know

66
00:03:36,960 --> 00:03:39,600
Speaker 1: how much leverage there is in terms of you know,

67
00:03:39,680 --> 00:03:43,360
Speaker 1: people's positioning within the market. Well, we focus on much

68
00:03:43,400 --> 00:03:46,480
Speaker 1: more is how much leverage there isn't there isn't economies

69
00:03:46,520 --> 00:03:49,000
Speaker 1: and what that is doing for the economic outlook. And

70
00:03:49,040 --> 00:03:52,360
Speaker 1: there's no doubt that since the global financial crisis there's

71
00:03:52,400 --> 00:03:56,280
Speaker 1: been a tremendous increase in leverage in in e M countries.

72
00:03:56,480 --> 00:03:59,000
Speaker 1: Obviously everybody always talks about that with respect to China,

73
00:03:59,040 --> 00:04:01,800
Speaker 1: but other countries as well, such as career and the

74
00:04:01,840 --> 00:04:04,560
Speaker 1: way we think that plays out as we think it,

75
00:04:04,280 --> 00:04:07,200
Speaker 1: it is kind of a dampener, if you know, if

76
00:04:07,240 --> 00:04:11,320
Speaker 1: you like, for growth um in these economies. Rather necessarily

77
00:04:11,360 --> 00:04:14,280
Speaker 1: being a significant financial market risk, it just makes it

78
00:04:14,320 --> 00:04:16,680
Speaker 1: hard for these countries to grow given how much debt

79
00:04:16,720 --> 00:04:19,560
Speaker 1: has been taken on board. At the same time, our

80
00:04:19,720 --> 00:04:24,000
Speaker 1: data tells us that over the last few quarters, corporates

81
00:04:24,040 --> 00:04:26,640
Speaker 1: and e M have begun to shed some of that leverage.

82
00:04:26,680 --> 00:04:30,240
Speaker 1: So um, I don't think leverage within these economies is

83
00:04:30,279 --> 00:04:32,760
Speaker 1: a new problem at all. It's a constraint on growth.

84
00:04:33,160 --> 00:04:34,920
Speaker 1: Where we are in terms of perhaps to be making

85
00:04:35,000 --> 00:04:37,359
Speaker 1: leverage bets in the market that may be very different,

86
00:04:37,400 --> 00:04:39,520
Speaker 1: But I'm you know, that's not something that I've got

87
00:04:39,720 --> 00:04:42,039
Speaker 1: a tremendous amount of data on at this point in time.

88
00:04:42,680 --> 00:04:45,240
Speaker 1: So do you think that there's still are opportunities in

89
00:04:45,360 --> 00:04:48,800
Speaker 1: emerging markets debt and if so where well, I'm I

90
00:04:49,120 --> 00:04:51,440
Speaker 1: don't do debt, and so I'm not going to common

91
00:04:51,520 --> 00:04:54,279
Speaker 1: any detail on that. Although certainly why it's benign global

92
00:04:54,360 --> 00:04:57,000
Speaker 1: environment continues, I think there is going to be You're

93
00:04:57,000 --> 00:05:00,159
Speaker 1: going to continue to see yields potentially staying well to

94
00:05:00,200 --> 00:05:02,240
Speaker 1: be low on on em dead as a whole. But

95
00:05:02,600 --> 00:05:05,279
Speaker 1: I think overall, overall, on the equity side, we need

96
00:05:05,360 --> 00:05:08,520
Speaker 1: to see if the markets are indeed going to settle down.

97
00:05:08,600 --> 00:05:10,839
Speaker 1: We need see how the Brazilian story will play out,

98
00:05:10,880 --> 00:05:13,480
Speaker 1: and where do you get any further US market weakness.

99
00:05:13,560 --> 00:05:16,000
Speaker 1: But while yields are low, and while the dollars flats

100
00:05:16,000 --> 00:05:19,679
Speaker 1: are weaker. Um, I think you'll find that emerging markets

101
00:05:19,680 --> 00:05:24,360
Speaker 1: will will stabilize. We've got tremendous inflows coming into e M. UM,

102
00:05:24,400 --> 00:05:27,600
Speaker 1: we're looking for strong earnings growth this year also across

103
00:05:27,640 --> 00:05:30,400
Speaker 1: em ALO that's now at some risk as our Latin

104
00:05:30,440 --> 00:05:33,120
Speaker 1: strategies to argue this morning in Brazil because of these

105
00:05:33,120 --> 00:05:36,039
Speaker 1: events and so um, and of course everybody is talking

106
00:05:36,080 --> 00:05:38,320
Speaker 1: about the seasons you know, selling main go away and that.

107
00:05:38,400 --> 00:05:41,120
Speaker 1: Obviously that sort of thing is always a concern. But frankly,

108
00:05:41,160 --> 00:05:43,720
Speaker 1: we think the fundamental backdrop to e M is still

109
00:05:43,760 --> 00:05:47,760
Speaker 1: relatively good. And I think it's impressive how this Brazilian

110
00:05:47,800 --> 00:05:50,400
Speaker 1: crisis which suddenly developed in a market that people have

111
00:05:50,520 --> 00:05:52,920
Speaker 1: generally wanted to be in. I think the way it's

112
00:05:52,920 --> 00:05:55,839
Speaker 1: had limited effect on the markets generally is quite impressive.

113
00:05:56,200 --> 00:05:58,360
Speaker 1: Just real quick, Do you think that this complacency over

114
00:05:58,360 --> 00:06:01,839
Speaker 1: the long run is going to be problem addict Um,

115
00:06:01,880 --> 00:06:04,320
Speaker 1: I don't think it is at this level. And I'm

116
00:06:04,360 --> 00:06:08,000
Speaker 1: talking about that Visa v as an e M strategist.

117
00:06:08,040 --> 00:06:11,000
Speaker 1: Looking at valuations, I mean, valuations are a little on

118
00:06:11,000 --> 00:06:12,919
Speaker 1: the high side in the M, but they're nothing like

119
00:06:13,000 --> 00:06:15,919
Speaker 1: as stretch as they've been let me rephrase that they

120
00:06:15,960 --> 00:06:18,400
Speaker 1: have not as stretch as they've been sometimes in the past.

121
00:06:18,400 --> 00:06:20,279
Speaker 1: They're not as stretch as they are in the US.

122
00:06:20,360 --> 00:06:24,280
Speaker 1: So I continue to believe that while is benign scenario

123
00:06:24,440 --> 00:06:29,320
Speaker 1: plays out, most of the market risks actually exist in

124
00:06:29,360 --> 00:06:31,560
Speaker 1: the developed world. Are we going to see further US

125
00:06:31,640 --> 00:06:33,960
Speaker 1: market weakness, for example? Are we going to see an

126
00:06:34,000 --> 00:06:36,919
Speaker 1: upside surprise and inflation that pushes bondial time? You know

127
00:06:37,080 --> 00:06:40,599
Speaker 1: nothing neither of those, particularly being in our scenario, but

128
00:06:40,760 --> 00:06:44,000
Speaker 1: those are the concerns and I don't I don't think Mark,

129
00:06:44,080 --> 00:06:46,760
Speaker 1: given where global markets are, I don't see em as

130
00:06:46,800 --> 00:06:49,120
Speaker 1: being complacent at all. Jeff Dennis, thank you so much

131
00:06:49,120 --> 00:06:51,320
Speaker 1: for joining us. Jeff Dennis as head of Global Emerging

132
00:06:51,360 --> 00:06:55,080
Speaker 1: Market Strategy at UBS Securities. He is based in Boston.

133
00:07:07,680 --> 00:07:09,000
Speaker 1: I want to bring in someone to sort of help

134
00:07:09,480 --> 00:07:13,600
Speaker 1: understand what's really driving this. Mike mclog joins US now

135
00:07:13,680 --> 00:07:15,840
Speaker 1: in our Bloomberg eleven three our studios. Mike McLoone is

136
00:07:15,880 --> 00:07:19,640
Speaker 1: a commodity strategist for Bloomberg Intelligence, and Mike, how much

137
00:07:19,760 --> 00:07:23,040
Speaker 1: is this a story of a supply demand dynamic that's

138
00:07:23,040 --> 00:07:27,000
Speaker 1: improving for oil? And how much is this the weakening

139
00:07:27,080 --> 00:07:31,160
Speaker 1: dollar that is giving rise to the price of crude.

140
00:07:31,320 --> 00:07:34,120
Speaker 1: I guess the answers yes to that, all right, I understood,

141
00:07:34,880 --> 00:07:38,040
Speaker 1: it's it's both um. One thing that was when we

142
00:07:38,120 --> 00:07:40,640
Speaker 1: talked about oil earlier in there's oil needed a flush.

143
00:07:40,680 --> 00:07:43,160
Speaker 1: It was all bullish at fifty five and fifty three

144
00:07:43,200 --> 00:07:45,160
Speaker 1: early in the year, and all the positions were very long.

145
00:07:45,240 --> 00:07:47,760
Speaker 1: We all knew supply was coming on and it's had

146
00:07:47,760 --> 00:07:49,960
Speaker 1: its flushed. We had that and what's happened. We flushed

147
00:07:49,960 --> 00:07:52,200
Speaker 1: out a lot of hedge fund positions, so it got

148
00:07:52,200 --> 00:07:54,320
Speaker 1: down to forty five. Now it's bouncing again. One thing

149
00:07:54,360 --> 00:07:56,840
Speaker 1: that's really changed for oil is it got rid of

150
00:07:56,920 --> 00:07:59,040
Speaker 1: the positions. We are we you know, we kind of

151
00:07:59,040 --> 00:08:01,040
Speaker 1: took the tide away, so saw what the market had

152
00:08:01,040 --> 00:08:03,520
Speaker 1: and open and brought out opex resolve to cut. So

153
00:08:03,560 --> 00:08:07,120
Speaker 1: that seems to be happening, and the dollars weaken this year.

154
00:08:07,120 --> 00:08:08,960
Speaker 1: The dollar has been stronger four years in a row,

155
00:08:09,000 --> 00:08:10,480
Speaker 1: so that's been a bit of a pressure factor in

156
00:08:10,520 --> 00:08:13,840
Speaker 1: all CA money. So I see oil is stabilizing, not bullish,

157
00:08:14,080 --> 00:08:15,680
Speaker 1: but it looks like we got rid of the flush.

158
00:08:15,760 --> 00:08:17,800
Speaker 1: I mean, anytime it goes higher, we get more production.

159
00:08:17,840 --> 00:08:20,120
Speaker 1: From the US. But it's done for now. It's it's

160
00:08:20,120 --> 00:08:22,080
Speaker 1: a market. It's stuck, and it's in the middle of

161
00:08:22,080 --> 00:08:24,360
Speaker 1: the range between forty five and fifty five. Although then

162
00:08:24,400 --> 00:08:27,040
Speaker 1: you have to wonder if people are just getting rid

163
00:08:27,080 --> 00:08:30,120
Speaker 1: of their shorts and going long, could the market be

164
00:08:30,240 --> 00:08:33,480
Speaker 1: in for a swing to the downside later on if

165
00:08:33,520 --> 00:08:35,439
Speaker 1: there isn't the same kind of support to sort of

166
00:08:35,880 --> 00:08:37,480
Speaker 1: keep it up, you know, in other words, people who

167
00:08:37,480 --> 00:08:39,480
Speaker 1: are have short bets that they're going to close out

168
00:08:39,559 --> 00:08:41,760
Speaker 1: and sort of prop up or the market. Yeah, that's

169
00:08:41,760 --> 00:08:44,800
Speaker 1: another yes, all right, I have to look my fare

170
00:08:44,840 --> 00:08:46,600
Speaker 1: and put it up for the air and the wind.

171
00:08:46,640 --> 00:08:49,120
Speaker 1: Because which way it goes now I don't know. But

172
00:08:49,200 --> 00:08:51,720
Speaker 1: one thing that really had our ax to grind early

173
00:08:51,760 --> 00:08:54,120
Speaker 1: in their as positions were way too long. There's still

174
00:08:54,120 --> 00:08:56,320
Speaker 1: a little bit long, but they're mostly flushed. And which

175
00:08:56,360 --> 00:08:58,160
Speaker 1: way it goes next, I don't know, but it looks

176
00:08:58,200 --> 00:09:00,920
Speaker 1: like it's very well supported around forty five, very good

177
00:09:00,920 --> 00:09:03,280
Speaker 1: resistance around fifty five, and we might be in arrange

178
00:09:03,360 --> 00:09:06,240
Speaker 1: for who knows how long. And one way you can

179
00:09:06,280 --> 00:09:09,280
Speaker 1: really tell the range of position emotions get really extreme

180
00:09:09,280 --> 00:09:11,240
Speaker 1: at the at the ends, and we just got that again.

181
00:09:11,280 --> 00:09:12,839
Speaker 1: So here we are in the middle. What do you do?

182
00:09:13,120 --> 00:09:15,160
Speaker 1: You know, the momentum right now is up well. So

183
00:09:15,280 --> 00:09:17,880
Speaker 1: next week OPEC members are going to meet and talk

184
00:09:17,920 --> 00:09:22,280
Speaker 1: about prolonging the output cuts is they're widely expected to do.

185
00:09:22,640 --> 00:09:25,960
Speaker 1: Given the recent bounce up in prices, how will that

186
00:09:26,040 --> 00:09:29,360
Speaker 1: affect these negotiations? So I think that's what happened. This

187
00:09:29,360 --> 00:09:31,680
Speaker 1: This bounce in prices is in the last few days,

188
00:09:31,679 --> 00:09:34,520
Speaker 1: but for the year, crude oil is down or so

189
00:09:34,600 --> 00:09:36,320
Speaker 1: it got down to forty five. To me, that brought

190
00:09:36,360 --> 00:09:39,559
Speaker 1: out their resolve and they have made the point clear

191
00:09:39,600 --> 00:09:42,440
Speaker 1: we're going to be cutting offsetting US production. It looks

192
00:09:42,480 --> 00:09:45,080
Speaker 1: like it's happening. It looks like it should continue, and

193
00:09:45,120 --> 00:09:47,080
Speaker 1: they have bested interest in doing something. They have rush

194
00:09:47,160 --> 00:09:49,400
Speaker 1: on their side, so it looks like it's gonna work

195
00:09:49,440 --> 00:09:51,320
Speaker 1: for now. One thing we did recent analysis and if

196
00:09:51,320 --> 00:09:54,280
Speaker 1: you look all the estimates of production of OPEC crude

197
00:09:54,320 --> 00:09:58,400
Speaker 1: O help US US liquid fuels, that drop in production

198
00:09:58,520 --> 00:10:01,920
Speaker 1: has been is the first time it's strap below month

199
00:10:01,960 --> 00:10:05,520
Speaker 1: moving average since the crisis. So if this is sustained,

200
00:10:05,720 --> 00:10:08,319
Speaker 1: it should at least support the market. Now do bullmarket

201
00:10:08,360 --> 00:10:10,560
Speaker 1: that's another story. You know, a couple of years ago,

202
00:10:10,559 --> 00:10:14,120
Speaker 1: when we talked about the dramatic decline in crude values,

203
00:10:14,160 --> 00:10:16,480
Speaker 1: people were using it as a proxy for global growth.

204
00:10:16,760 --> 00:10:19,400
Speaker 1: People were saying that there isn't as much demand from China,

205
00:10:19,840 --> 00:10:24,200
Speaker 1: that the US inventories are too full. Now it's a

206
00:10:24,200 --> 00:10:27,439
Speaker 1: totally different game. Why is it not considered a proxy

207
00:10:27,440 --> 00:10:30,200
Speaker 1: at all for economic growth or you know, maybe it should.

208
00:10:30,200 --> 00:10:33,160
Speaker 1: People be reading more into it with respect to the

209
00:10:33,200 --> 00:10:36,160
Speaker 1: global expansion. That is the key question. And you have

210
00:10:36,200 --> 00:10:39,640
Speaker 1: to blame technology. That's what crude oil has going against it,

211
00:10:39,640 --> 00:10:41,160
Speaker 1: and that's why I like to bring out that's one

212
00:10:41,200 --> 00:10:43,960
Speaker 1: of the key commodities you can grow crude oil. I

213
00:10:44,080 --> 00:10:45,760
Speaker 1: used to have a farm, we grew we get a

214
00:10:45,760 --> 00:10:49,120
Speaker 1: lot of our patroying in this country are gasoline from corn.

215
00:10:49,160 --> 00:10:53,839
Speaker 1: Now so technologies well no, hell, I had a farm

216
00:10:53,840 --> 00:10:56,080
Speaker 1: and we we grew corn, and you know it's a

217
00:10:56,080 --> 00:10:58,800
Speaker 1: lot of it's now used for ethanol. Thirty of the

218
00:10:58,840 --> 00:11:01,520
Speaker 1: corn in this country. So basically ten percent of our

219
00:11:01,559 --> 00:11:04,800
Speaker 1: gasoline nousrom methanel. So that's what crudels going against it,

220
00:11:04,800 --> 00:11:06,400
Speaker 1: and that's why I always go back to the metals.

221
00:11:06,640 --> 00:11:11,080
Speaker 1: You can't grow metals, gold, copper, They've been mind since

222
00:11:11,120 --> 00:11:14,760
Speaker 1: antiquity and so looking ahead and commodities with the weaker dollar,

223
00:11:14,880 --> 00:11:17,560
Speaker 1: metals usually perform the best. And that's part of the

224
00:11:17,559 --> 00:11:19,400
Speaker 1: reason we put out a bit today that looks like

225
00:11:19,400 --> 00:11:22,679
Speaker 1: the pillars of a line for commodities. UM energy is

226
00:11:22,679 --> 00:11:25,520
Speaker 1: stopped going down, Crudel stopped going down. Looks like the

227
00:11:25,520 --> 00:11:29,160
Speaker 1: the dollar has peaked, and the agriculture market should be

228
00:11:29,160 --> 00:11:33,360
Speaker 1: doing well. With massive US exports corn beans, wheat meat,

229
00:11:33,400 --> 00:11:35,600
Speaker 1: their exports off the chart, and the really the main

230
00:11:35,640 --> 00:11:39,280
Speaker 1: way to suppress those exports is higher prices. Mike mclogan,

231
00:11:39,280 --> 00:11:41,240
Speaker 1: thank you so much for joining us. Truly fascinating. I'm

232
00:11:41,240 --> 00:11:43,319
Speaker 1: looking at iron ore contracts which are up almost five

233
00:11:43,320 --> 00:11:45,720
Speaker 1: percent today, so to your point, uh, they would be

234
00:11:45,920 --> 00:11:49,160
Speaker 1: the beneficiaries of some of this good news for them,

235
00:11:49,280 --> 00:11:52,960
Speaker 1: the lower dollar, as well as a generally benign environment.

236
00:11:53,360 --> 00:11:56,720
Speaker 1: Mike McLoone is an industrials analyst a commodity strategist for

237
00:11:56,920 --> 00:11:59,760
Speaker 1: Bloomberg Intelligence, and he joins us in our Bloomberg eleven

238
00:11:59,800 --> 00:12:11,480
Speaker 1: three oh studios in New York City. We want to

239
00:12:11,480 --> 00:12:13,640
Speaker 1: take a moment to let you know about something new

240
00:12:13,720 --> 00:12:17,160
Speaker 1: from Bloomberg. Starting right now. You can use our io

241
00:12:17,440 --> 00:12:20,640
Speaker 1: s app or our new Google Chrome extension to scan

242
00:12:20,840 --> 00:12:25,040
Speaker 1: any news story on any website, instantly revealing relevant news

243
00:12:25,080 --> 00:12:28,320
Speaker 1: and market data from Bloomberg and other sources related to

244
00:12:28,400 --> 00:12:32,000
Speaker 1: companies and people you're reading about. So no matter where

245
00:12:32,040 --> 00:12:33,839
Speaker 1: you're reading the news, you can bring the power of

246
00:12:33,880 --> 00:12:37,480
Speaker 1: Bloomberg's news and data with you. It's pretty amazing. Download

247
00:12:37,520 --> 00:12:40,520
Speaker 1: our io s app or search for the Bloomberg extension

248
00:12:40,520 --> 00:12:42,880
Speaker 1: on the Chrome Store to try it out. Learn more

249
00:12:42,920 --> 00:12:51,880
Speaker 1: at Bloomberg dot com slash lens. Well. We heard from

250
00:12:51,880 --> 00:12:55,080
Speaker 1: Steven manuch In, the head of the Treasure Department here

251
00:12:55,120 --> 00:12:58,200
Speaker 1: in the US yesterday. He gave his first Congressional testimony

252
00:12:58,240 --> 00:13:00,520
Speaker 1: since taking office, and it was a really why arranging

253
00:13:00,559 --> 00:13:05,160
Speaker 1: discussion from tax reform h to financial regulatory reform. Nathan

254
00:13:05,200 --> 00:13:08,360
Speaker 1: Dean was listening closely, and he had some pretty compelling thoughts.

255
00:13:08,480 --> 00:13:11,360
Speaker 1: Nathan Deed is a government analyst at Bloomberg Intelligence and

256
00:13:11,400 --> 00:13:14,760
Speaker 1: he comes to us from our Bloomberg studios in Washington,

257
00:13:14,880 --> 00:13:17,439
Speaker 1: d C. Nathan, thank you so much for joining us.

258
00:13:17,480 --> 00:13:20,200
Speaker 1: I want to just start with a bit of research

259
00:13:20,240 --> 00:13:23,200
Speaker 1: that you put out today, throwing some cold water on

260
00:13:23,240 --> 00:13:25,400
Speaker 1: some of the promises and the hopes that have been

261
00:13:25,400 --> 00:13:29,800
Speaker 1: reflected in markets for tax reform and financial regulation. Could

262
00:13:29,800 --> 00:13:31,720
Speaker 1: you just sort of give us a sense of what

263
00:13:31,800 --> 00:13:33,840
Speaker 1: your view is here. Yeah, you know, for tax reform,

264
00:13:33,840 --> 00:13:35,720
Speaker 1: this is something that we've seen in the financial sector

265
00:13:35,840 --> 00:13:38,760
Speaker 1: for ever since the election. I think everybody's seen what's

266
00:13:38,760 --> 00:13:41,240
Speaker 1: happened to financial stocks. You know. One of the things

267
00:13:41,280 --> 00:13:43,360
Speaker 1: that we point to is in late March, when you know,

268
00:13:43,400 --> 00:13:46,840
Speaker 1: they failed to pass the Obamacare's vote for the first time.

269
00:13:47,160 --> 00:13:49,240
Speaker 1: You know, bank stocks took about a teen percent hit.

270
00:13:49,320 --> 00:13:52,360
Speaker 1: Why because they wanted tax reform and it showed that

271
00:13:52,400 --> 00:13:55,680
Speaker 1: there wasn't the stability to agree on something, and we

272
00:13:55,800 --> 00:13:57,800
Speaker 1: just seemed to play out, you know, with the turmoil

273
00:13:57,880 --> 00:13:59,559
Speaker 1: that's going on in the White House right now and

274
00:13:59,640 --> 00:14:02,800
Speaker 1: some of the testimony from the Senate from Stephen Manuchin yesterday,

275
00:14:03,000 --> 00:14:05,880
Speaker 1: you know, the financial sector wants a tax reform and

276
00:14:05,920 --> 00:14:08,640
Speaker 1: there's just really no clear line to getting it done

277
00:14:08,640 --> 00:14:12,439
Speaker 1: this year. Well, did did Treasury Secretary Manuchin say anything

278
00:14:12,520 --> 00:14:16,800
Speaker 1: yesterday that gave you hope about anything concrete? So you know,

279
00:14:16,920 --> 00:14:18,960
Speaker 1: one of the things that I think from yesterday's hearing

280
00:14:19,000 --> 00:14:21,160
Speaker 1: that really surprised us with the amount of focus on

281
00:14:21,200 --> 00:14:24,440
Speaker 1: housing reform and specifically Fannie and Freddie, you know, Senator

282
00:14:24,480 --> 00:14:26,520
Speaker 1: crape of the chairman of the Senate Banking Committee, came

283
00:14:26,520 --> 00:14:28,800
Speaker 1: out and spent good deal of his opening statement talking

284
00:14:28,800 --> 00:14:32,040
Speaker 1: about housing reform. Secretary Menuchin came back and said, well,

285
00:14:32,080 --> 00:14:33,760
Speaker 1: you know, housing reform is something that we're going to

286
00:14:33,880 --> 00:14:36,360
Speaker 1: get to after dot Frank, so that probably is around

287
00:14:36,360 --> 00:14:39,560
Speaker 1: the July August time frame, and so there's seems to

288
00:14:39,600 --> 00:14:42,160
Speaker 1: be some momentum building for actually to try and do

289
00:14:42,280 --> 00:14:45,200
Speaker 1: something before the capital buffers of the g SS go

290
00:14:45,280 --> 00:14:48,440
Speaker 1: to zero, which is on January one. Well, and I'm

291
00:14:48,440 --> 00:14:51,120
Speaker 1: looking at the shares of Fanny May and they did

292
00:14:51,160 --> 00:14:54,680
Speaker 1: spike up after the election of President Trump and after

293
00:14:54,680 --> 00:14:58,240
Speaker 1: Stephen Manuchin made some comments that gave people a sense

294
00:14:58,280 --> 00:15:00,800
Speaker 1: that it was going to be re vamped reform to

295
00:15:00,840 --> 00:15:03,240
Speaker 1: possibly give more money back to shareholders, but then it

296
00:15:03,280 --> 00:15:05,120
Speaker 1: came right back down and really didn't move much. So

297
00:15:05,160 --> 00:15:07,040
Speaker 1: it's not that necessarily the market doesn't seem to be

298
00:15:07,040 --> 00:15:11,320
Speaker 1: pricing in because I'm kind a big reform or shift exactly.

299
00:15:11,320 --> 00:15:12,800
Speaker 1: And the one thing that we're telling our clients to

300
00:15:12,840 --> 00:15:15,120
Speaker 1: be careful of our comments from his the h f

301
00:15:15,120 --> 00:15:17,560
Speaker 1: A director Mel Watt, you know, he said that he

302
00:15:17,640 --> 00:15:21,960
Speaker 1: may stop the dividend payments to help with that capital situation.

303
00:15:22,320 --> 00:15:24,760
Speaker 1: You know, they asked the Secretary Treasury about that yesterday

304
00:15:24,760 --> 00:15:26,240
Speaker 1: and he just said, you know, I'm looking forward to

305
00:15:26,320 --> 00:15:28,760
Speaker 1: working with the f h f A on that um.

306
00:15:28,800 --> 00:15:31,120
Speaker 1: But you know, when I say that there's a momentum,

307
00:15:31,320 --> 00:15:33,920
Speaker 1: just have to remember it's also it's Congress. You know,

308
00:15:34,480 --> 00:15:37,640
Speaker 1: big things don't usually happen right now, and so you know,

309
00:15:37,720 --> 00:15:39,680
Speaker 1: as long as there's a silabuster in the Senate, and

310
00:15:39,760 --> 00:15:42,360
Speaker 1: this would actually be you know, a silibuster type entity

311
00:15:42,400 --> 00:15:44,960
Speaker 1: housing reform would would be subject to a filibuster, a

312
00:15:45,000 --> 00:15:47,240
Speaker 1: lot of things have to happen before it actually gets done,

313
00:15:47,320 --> 00:15:49,600
Speaker 1: you know, Nathan. One thing that I'm struck by is

314
00:15:49,600 --> 00:15:53,200
Speaker 1: that the bulk of financial regulation really doesn't come from

315
00:15:53,280 --> 00:15:56,720
Speaker 1: say Dodd Frank, but from some of these regulatory agencies.

316
00:15:57,120 --> 00:16:00,440
Speaker 1: And one thing that Treasury secretariest you have venution with Minutum,

317
00:16:00,520 --> 00:16:04,840
Speaker 1: was asked about yesterday was the sort of backdoor appointment

318
00:16:04,920 --> 00:16:07,360
Speaker 1: of someone to lead the Office of the Controller of

319
00:16:07,360 --> 00:16:13,160
Speaker 1: the Currency without having to get confirmed by Congress um.

320
00:16:13,320 --> 00:16:16,600
Speaker 1: And this actually leads to the potential for some of

321
00:16:16,600 --> 00:16:19,720
Speaker 1: these agencies to work together and change regulations outside of

322
00:16:19,760 --> 00:16:22,200
Speaker 1: the purview of Congress, can you talk a little bit

323
00:16:22,200 --> 00:16:26,800
Speaker 1: about what the scope for regulatory changes from the agency level.

324
00:16:27,160 --> 00:16:29,320
Speaker 1: So this is exactly how dot frank is going to

325
00:16:29,360 --> 00:16:31,720
Speaker 1: be rolled back. If you come in two twenty and

326
00:16:31,720 --> 00:16:33,400
Speaker 1: look back and what's happened, this is how it's going

327
00:16:33,440 --> 00:16:37,360
Speaker 1: to happen. So you can essentially roll back majority of

328
00:16:37,400 --> 00:16:41,040
Speaker 1: dot frank via the regulatory process and bypassed Congress what

329
00:16:41,120 --> 00:16:43,040
Speaker 1: they did at the o c C by putting in

330
00:16:43,080 --> 00:16:45,440
Speaker 1: a new you know, acting director that's only going to

331
00:16:45,480 --> 00:16:48,000
Speaker 1: be for a hundred thirty days, you know, but look

332
00:16:48,000 --> 00:16:50,760
Speaker 1: at them to actually start winding down the compliance and

333
00:16:50,760 --> 00:16:54,800
Speaker 1: the interpretive guidance and how people should react or some

334
00:16:54,960 --> 00:16:57,320
Speaker 1: comply with dot frank. There's a lot of things that

335
00:16:57,360 --> 00:16:59,640
Speaker 1: they can do to the vocal rule, to you know,

336
00:17:00,200 --> 00:17:04,520
Speaker 1: mutual fund regulations, to even capital change how things are calculated.

337
00:17:04,560 --> 00:17:07,320
Speaker 1: And so the regulatory process is the easiest way to

338
00:17:07,400 --> 00:17:09,640
Speaker 1: roll back dot frank. The problem is it just takes

339
00:17:09,680 --> 00:17:12,560
Speaker 1: a lot of time. Have we seen any progress whatsoever

340
00:17:12,600 --> 00:17:17,320
Speaker 1: in any regulatory body toward lighter regulation? Not yet. I mean,

341
00:17:17,440 --> 00:17:19,520
Speaker 1: I think the SEC and the CFTC are the ones

342
00:17:19,560 --> 00:17:21,560
Speaker 1: that are ahead of the game. You know, they're they're

343
00:17:21,640 --> 00:17:23,960
Speaker 1: now led by Trump appointees. You know, the Fund of

344
00:17:24,040 --> 00:17:25,560
Speaker 1: Reserve and the fd i C are still led by

345
00:17:25,640 --> 00:17:28,800
Speaker 1: Obama pointees. In the prudential banking space, they usually have

346
00:17:28,880 --> 00:17:31,000
Speaker 1: to agree, so that's going to be a little bit later.

347
00:17:31,000 --> 00:17:34,639
Speaker 1: But on the sec CFTC front, things actually impacting the markets.

348
00:17:34,680 --> 00:17:37,800
Speaker 1: We've begun to see some technical changes, but you know

349
00:17:38,000 --> 00:17:40,080
Speaker 1: the whole part, you know, most of the Dot Frank

350
00:17:40,200 --> 00:17:43,080
Speaker 1: still remains as is today, and real quick, Nathan. On

351
00:17:43,119 --> 00:17:45,960
Speaker 1: the tax reform side, are there any deadlines we should

352
00:17:45,960 --> 00:17:48,880
Speaker 1: be keeping an eye out that would prompt some real

353
00:17:49,280 --> 00:17:52,200
Speaker 1: kind of soul searching with respect to our tax code?

354
00:17:52,720 --> 00:17:54,679
Speaker 1: You know, I think I think if you look at

355
00:17:54,680 --> 00:17:56,760
Speaker 1: what Congress has to do, June and July is probably

356
00:17:56,760 --> 00:17:58,240
Speaker 1: gonna be spent a lot of time talking about the

357
00:17:58,240 --> 00:18:01,600
Speaker 1: FBI director. August is recess September, they're going to have

358
00:18:01,640 --> 00:18:04,240
Speaker 1: to be doing government shutdown and debt ceiling. So I

359
00:18:04,240 --> 00:18:07,840
Speaker 1: think October November is really when I think you're going

360
00:18:07,880 --> 00:18:09,960
Speaker 1: to see some more debate. But again, a lot of

361
00:18:10,000 --> 00:18:12,000
Speaker 1: it depends on what's going to go on with healthcare

362
00:18:12,000 --> 00:18:13,760
Speaker 1: and what's going to happen with the President. I love

363
00:18:13,760 --> 00:18:15,439
Speaker 1: how you say, you know, June and July, people are

364
00:18:15,440 --> 00:18:16,840
Speaker 1: gonna be looking at the FBI. I thought you're gonna

365
00:18:16,840 --> 00:18:18,200
Speaker 1: say people are gonna be sending a lot of time

366
00:18:18,200 --> 00:18:22,000
Speaker 1: in the beach, you know, contemplating their political careers. Imagine

367
00:18:22,040 --> 00:18:24,400
Speaker 1: it's been a bit of exhausting of an exhausting time

368
00:18:24,960 --> 00:18:28,320
Speaker 1: to keep track of both developments as well as potential

369
00:18:28,720 --> 00:18:30,679
Speaker 1: uh you know, red flags it really ought to be

370
00:18:30,680 --> 00:18:33,479
Speaker 1: paying attention to that could actually have a change. Uh.

371
00:18:33,560 --> 00:18:36,000
Speaker 1: And we really appreciate you following all that for us.

372
00:18:36,240 --> 00:18:39,680
Speaker 1: Nathan Dean is a government analyst of for financial services.

373
00:18:40,200 --> 00:18:43,399
Speaker 1: He works at Bloomberg Intelligence. He is coming to us

374
00:18:43,400 --> 00:18:48,080
Speaker 1: from a Bloomberg newsroom in Washington, d C. Talking about

375
00:18:48,320 --> 00:18:52,680
Speaker 1: what the implications are leading to as far as financial

376
00:18:52,680 --> 00:19:08,160
Speaker 1: reform and tax changes. Well, we've heard a lot about

377
00:19:08,160 --> 00:19:11,960
Speaker 1: President Trump's upcoming odyssey around the world. He's going to

378
00:19:11,960 --> 00:19:15,440
Speaker 1: be spending eight days across the Mideast and Europe. And

379
00:19:15,720 --> 00:19:19,000
Speaker 1: Marty Shanker is the senior executive editor of Global Economics

380
00:19:19,000 --> 00:19:21,239
Speaker 1: and Government here at Bloomberg News. He comes to us

381
00:19:21,280 --> 00:19:25,480
Speaker 1: now from Washington, d C. Marty, can you just start

382
00:19:25,480 --> 00:19:28,200
Speaker 1: by explaining what the purpose of this trip is other

383
00:19:28,240 --> 00:19:31,240
Speaker 1: than a nice uh, a bunch of photo opportunities in

384
00:19:31,280 --> 00:19:35,040
Speaker 1: a nice distraction. Well, every president test of his first

385
00:19:35,040 --> 00:19:38,879
Speaker 1: trip abroad, and this is it, all right? So the

386
00:19:38,960 --> 00:19:44,040
Speaker 1: purpose really is for Donald Trump to establish his presidential

387
00:19:44,200 --> 00:19:48,600
Speaker 1: stature in the world stage. Um. So it's a carefully

388
00:19:48,680 --> 00:19:54,600
Speaker 1: choreographed exercise in being presidential. And I think a lot

389
00:19:54,640 --> 00:19:58,560
Speaker 1: of people are anxious to see just how he performs this.

390
00:19:58,560 --> 00:20:02,000
Speaker 1: This White House is not been a hallmark of organization

391
00:20:02,080 --> 00:20:06,400
Speaker 1: and car choreography, um, but they have put a tremendous

392
00:20:06,440 --> 00:20:09,320
Speaker 1: effort in this one. So uh, let's see how it

393
00:20:09,320 --> 00:20:12,440
Speaker 1: turns out. Well. And when you talk about careful choreography,

394
00:20:12,440 --> 00:20:14,920
Speaker 1: I think that the big fear here is that President

395
00:20:14,920 --> 00:20:19,800
Speaker 1: Trump goes off script right. Well, yes, and that it's

396
00:20:19,840 --> 00:20:22,800
Speaker 1: not just outside the White House. I think that that's

397
00:20:22,800 --> 00:20:26,239
Speaker 1: true inside the White House. Um So Uh, some of

398
00:20:26,280 --> 00:20:30,240
Speaker 1: his more senior and trusted aids will be traveling with

399
00:20:30,320 --> 00:20:33,760
Speaker 1: him at various points, um, try and making sure he

400
00:20:33,880 --> 00:20:39,000
Speaker 1: stays on message. What is the messages? You know, these

401
00:20:39,040 --> 00:20:43,360
Speaker 1: are important relationships that uh, if he wants to fulfill

402
00:20:43,400 --> 00:20:46,720
Speaker 1: his agenda of making America great again, it's not something

403
00:20:46,800 --> 00:20:49,320
Speaker 1: he can do in a vacuum. UH. He is going

404
00:20:49,359 --> 00:20:52,640
Speaker 1: to need the help and cooperation of various people he's

405
00:20:52,680 --> 00:20:57,199
Speaker 1: going to see on this trip, so he has to

406
00:20:57,280 --> 00:21:01,200
Speaker 1: make sure that those relationships are not upset and in fact,

407
00:21:01,359 --> 00:21:04,640
Speaker 1: strength of Saudi Arabia being a great example of that.

408
00:21:04,920 --> 00:21:07,720
Speaker 1: And we've heard a lot about, you know, the potential

409
00:21:07,760 --> 00:21:11,719
Speaker 1: fight against ISIS Islamic state UH is just as well

410
00:21:11,760 --> 00:21:14,359
Speaker 1: as just terrorism in general. But will there be any

411
00:21:14,440 --> 00:21:19,760
Speaker 1: trade negotiations or anything beyond just the general spirit of cooperation.

412
00:21:20,200 --> 00:21:23,800
Speaker 1: I don't think you're going to see any any trade

413
00:21:25,119 --> 00:21:28,960
Speaker 1: issues come up with any specificity. UM. We have we

414
00:21:29,359 --> 00:21:33,040
Speaker 1: Bloomberg has reported that the on the receiving side of

415
00:21:33,119 --> 00:21:36,680
Speaker 1: Donald Trump, they've had a tough time figuring out who

416
00:21:36,720 --> 00:21:39,760
Speaker 1: to talk to in preparation for his arrival for the

417
00:21:39,840 --> 00:21:44,439
Speaker 1: G seven and UM and in in those venues in

418
00:21:44,480 --> 00:21:47,640
Speaker 1: the in the past couple of months, they've had rather

419
00:21:47,920 --> 00:21:51,560
Speaker 1: vague communications come out of those UM. But you will

420
00:21:51,600 --> 00:21:57,720
Speaker 1: see deals UM, you know, UH, contracts, UH investments in

421
00:21:57,720 --> 00:22:01,919
Speaker 1: the US. UM. The foreign leaders are also interested in

422
00:22:01,960 --> 00:22:05,600
Speaker 1: making sure that this goes smoothly, so that part of

423
00:22:05,640 --> 00:22:10,160
Speaker 1: it has been well coordinated among world leaders. They are

424
00:22:10,240 --> 00:22:14,000
Speaker 1: expecting the unexpected so they should be prepared. Yes. Indeed,

425
00:22:14,000 --> 00:22:16,840
Speaker 1: in Saudi Arabia, I believe has an actual clock counting

426
00:22:16,920 --> 00:22:20,120
Speaker 1: down the seconds to when President Trump arrives. I want

427
00:22:20,160 --> 00:22:23,840
Speaker 1: to highlight a comment by Secretary of State Rex Tillerson

428
00:22:23,880 --> 00:22:27,600
Speaker 1: in a recent Bloomberg story talking about quote, the people

429
00:22:27,640 --> 00:22:29,600
Speaker 1: in the rest of the world do not have the

430
00:22:29,680 --> 00:22:33,280
Speaker 1: time to pay attention to what's happening domestically here. Is

431
00:22:33,320 --> 00:22:37,760
Speaker 1: that true? Well, I don't. I don't think that that's

432
00:22:37,840 --> 00:22:42,199
Speaker 1: necessarily true. Um, the U s economy is, you know,

433
00:22:42,520 --> 00:22:45,480
Speaker 1: the largest in the world. Um. What we do here

434
00:22:45,880 --> 00:22:51,840
Speaker 1: on a policy, in policy and um in practical measures

435
00:22:52,000 --> 00:22:56,560
Speaker 1: has a great impact around the world. So obviously I

436
00:22:56,600 --> 00:23:00,760
Speaker 1: don't think who they are as domestic be focused as

437
00:23:00,800 --> 00:23:03,600
Speaker 1: Donald Trump would like to take this nation. But you

438
00:23:03,640 --> 00:23:07,199
Speaker 1: can't forget about Congress too. They h this is a

439
00:23:07,560 --> 00:23:12,360
Speaker 1: uh and the Republicans have always had a global approach

440
00:23:13,000 --> 00:23:18,159
Speaker 1: to how the US governs itself. So, UM, I'm not

441
00:23:18,240 --> 00:23:22,160
Speaker 1: quite sure where that takes us. But uh, I think

442
00:23:22,160 --> 00:23:25,040
Speaker 1: you will hear a very positive message coming out of

443
00:23:25,040 --> 00:23:27,160
Speaker 1: Donald Trump throughout his trip. Well, I mean, I think

444
00:23:27,160 --> 00:23:29,440
Speaker 1: that this was in reference to some of the controversy

445
00:23:29,520 --> 00:23:32,160
Speaker 1: that we've seen recently with the firing of James come

446
00:23:32,280 --> 00:23:35,399
Speaker 1: as head of FBI and then the subsequent memos that

447
00:23:35,440 --> 00:23:38,040
Speaker 1: we got. I think that there's this feeling that in

448
00:23:38,080 --> 00:23:40,640
Speaker 1: the U. S. There's a lot of focus on the internationally,

449
00:23:41,359 --> 00:23:43,320
Speaker 1: at least the White House is trying to project the

450
00:23:43,320 --> 00:23:47,200
Speaker 1: sense that there is not any sort of really broader consequence.

451
00:23:47,440 --> 00:23:51,960
Speaker 1: But is that true. I don't think you can. Basically,

452
00:23:52,119 --> 00:23:56,200
Speaker 1: you can dismiss what's happening here as of little consequence.

453
00:23:56,240 --> 00:23:58,800
Speaker 1: And I think that we have a story out this

454
00:23:58,840 --> 00:24:05,639
Speaker 1: morning that talks about how the swamp is fighting back. Um. Official,

455
00:24:06,520 --> 00:24:11,000
Speaker 1: the permanent Washington government that has ruled this town views

456
00:24:11,080 --> 00:24:16,399
Speaker 1: presidents as transients, and UM that the the gears that

457
00:24:16,520 --> 00:24:20,960
Speaker 1: run government continue regardless of NEOs president. So when those

458
00:24:21,040 --> 00:24:26,040
Speaker 1: gears get uh somewhat stuck when a special counsel was appointed,

459
00:24:26,480 --> 00:24:29,520
Speaker 1: everything slows down in this town. It's already slow, and

460
00:24:29,600 --> 00:24:33,719
Speaker 1: this will slow things down even more so. UM. I

461
00:24:33,760 --> 00:24:40,960
Speaker 1: think that that's extraordinarily consequential to how this White House governs. Um,

462
00:24:41,040 --> 00:24:43,200
Speaker 1: they're going to find it much harder to get things

463
00:24:43,200 --> 00:24:47,119
Speaker 1: done as a result of this. Yeah, well, I'm just wondering.

464
00:24:47,119 --> 00:24:50,040
Speaker 1: I mean, when we talk about the staying on message.

465
00:24:50,080 --> 00:24:53,080
Speaker 1: What are the opportunities that people are pinpointing for President

466
00:24:53,119 --> 00:24:55,159
Speaker 1: Trump to have a little bit more leeway and and

467
00:24:55,200 --> 00:24:58,680
Speaker 1: sort of how he comes across Well, I mean he's

468
00:24:58,680 --> 00:25:01,000
Speaker 1: actually if you if you've looked in the past of

469
00:25:01,080 --> 00:25:04,200
Speaker 1: his encounters with world leaders when they've been coming to Washington,

470
00:25:04,520 --> 00:25:08,879
Speaker 1: has been able to do those pretty well. Um, he is, uh.

471
00:25:09,480 --> 00:25:12,320
Speaker 1: And and in fact, those world leaders look like they

472
00:25:12,520 --> 00:25:17,240
Speaker 1: want to make Donald Trump look good. Um, so that

473
00:25:17,560 --> 00:25:19,760
Speaker 1: is probably something that's going to be replicated on this

474
00:25:19,840 --> 00:25:22,800
Speaker 1: overseas trip. There's not going to be any interest in

475
00:25:22,920 --> 00:25:26,639
Speaker 1: confronting them. And we even hear that the Pope will

476
00:25:26,680 --> 00:25:33,160
Speaker 1: not be preaching to Donald Trump about policy issues. So um,

477
00:25:33,200 --> 00:25:37,040
Speaker 1: if if that stays true, I think he's He's actually

478
00:25:37,080 --> 00:25:40,040
Speaker 1: this trip could could help change the narrative here. Marty Schenker,

479
00:25:40,080 --> 00:25:41,720
Speaker 1: thank you so much for joining and joining us. Marty

480
00:25:41,720 --> 00:25:44,640
Speaker 1: Schenker a senior executive editor of Global Economics and Government

481
00:25:44,720 --> 00:25:51,080
Speaker 1: for Bloomberg News in Washington, d C. Thanks for listening

482
00:25:51,160 --> 00:25:54,040
Speaker 1: to the Bloomberg P and L podcast. You can subscribe

483
00:25:54,080 --> 00:25:57,639
Speaker 1: and listen to interviews at Apple Podcasts, SoundCloud, or whatever

484
00:25:57,720 --> 00:26:01,200
Speaker 1: podcast platform you prefer. I'm pim Fox. I'm on Twitter

485
00:26:01,480 --> 00:26:05,240
Speaker 1: at pim Fox. I'm on Twitter at Lisa Abramoids one

486
00:26:05,480 --> 00:26:08,199
Speaker 1: before the podcast. You can always catch us worldwide on

487
00:26:08,200 --> 00:26:09,040
Speaker 1: Bloomberg Radio