Speaker 1: Yeah, Welcome to the Bloomberg Surveillance Podcast. I'm term Keene
Speaker 1: Jay Lee. We bring you insight from the best in economics, finance,
Speaker 1: investment and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud,
Speaker 1: Bloomberg dot Com and of course on the Bloomberg And
Speaker 1: pleased to say joining us here in the studio is
Speaker 1: in Shepherdson Pantheon macro Economics, Chief Economist. And we've got
Speaker 1: to say a quick word on the Prime Minister in
Speaker 1: the UK as she delivers her speech um at the
Speaker 1: Conservative Annual Party Conference with a little bit of a
Speaker 1: dance to begin to app a dancing queen. Um, what
Speaker 1: are we expecting from the Prime Minister? And are you
Speaker 1: expecting anything that really changes anything at all? I think
Speaker 1: the speech will be undering the condensity here, but the
Speaker 1: speech essentially is going to be a please don't find
Speaker 1: me um that really she has no great vision. She
Speaker 1: just wants to remain as prime minister for the country.
Speaker 1: She's speaking to the part she's speaking to a few
Speaker 1: thousand old white people. I mean, that is the Conservative
Speaker 1: Party and it's so unrepresentative, but they're the ones. Ultimately
Speaker 1: you determine whether she gets to keep the job. She
Speaker 1: seems to want the job very badly. I can't think why.
Speaker 1: I think it's the worst job in the world, but
Speaker 1: she wants it very badly. Other people wanted as well.
Speaker 1: In and in the meantime, of course, Britain is dealing
Speaker 1: with the chaos and confusion of Brexit because the government
Speaker 1: can't make its mind up about what it wants, and
Speaker 1: the EU is just standing watching all this in astonishment.
Speaker 1: There is only one of the man I'm less excited
Speaker 1: about this speech than than you and I Ian, and
Speaker 1: it's Tom King. Um, Tom very abrupt. I mean we
Speaker 1: we usually don't talk like that about our politics in America. Um.
Speaker 1: When I look at the see and I go back
Speaker 1: to Barry Ikon Green of Berkeley, who was heated about
Speaker 1: the negative ramifications of Brexit, and he also said for
Speaker 1: London as well, do you share even a tinge of
Speaker 1: Professor I Congreen's concerns? Oh? Absolutely, it's it's terrifying. You
Speaker 1: know that the British economy over the last forty years,
Speaker 1: as in reinvented itself as a services economy, and and
Speaker 1: services aren't covered by the Canada Agreement that that keeps
Speaker 1: being talked about. And the danger is that that the
Speaker 1: UK services sector is left out in the cold in
Speaker 1: the event of a of a Brexit without a proper deal,
Speaker 1: which would be an absolute disaster. So I lose a
Speaker 1: lot of sleep over this. But let me saying. I
Speaker 1: have to say, spending some time in the city last week,
Speaker 1: I had a lot more people concerned about socialist Corbin
Speaker 1: taking over the government than they were about Brexit. Yeah,
Speaker 1: the people you're talking to probably weren't massively representative of
Speaker 1: the country as a whole, to be fair, now they've
Speaker 1: represented the city, not the country. Indeed, indeed, the country
Speaker 1: has had ten years of conservative austerity for no reason
Speaker 1: other than that they were the religious dogma, and I
Speaker 1: think in the country as a whole people are kind
Speaker 1: of sick of it. Which is not to say that
Speaker 1: what Corbin is offering is a seriously attractive alternative, but
Speaker 1: there's a lot of people would like something different, that's
Speaker 1: for sure. Can I guess a sophisticated country do whatever
Speaker 1: you like. This is your shot. We're watching folks on
Speaker 1: Bloomberg Radio the television feet you know, you make a
Speaker 1: joke about Prime Minister make coming out and dancing all
Speaker 1: I did was seeing within the obligatory clapping the knives up.
Speaker 1: Is it like the crown? Is it like McMillan hates
Speaker 1: Churchill and people? It doesn't, folks, It doesn't look like America.
Speaker 1: It's different. You know, we hate you Mr Trump, or
Speaker 1: we love you Mr Trump. There's a British way here.
Speaker 1: That was frankly, just like in the first and second season,
Speaker 1: and all a lot of people in that in that room,
Speaker 1: and a lot of those people who were smiling and
Speaker 1: clapping because they're on TV would very much like somebody
Speaker 1: else to be prime minister. But you know, it's not
Speaker 1: like an American political convention, which is a stage managed
Speaker 1: to cheer leader event. This is this is real politics,
Speaker 1: read and tooth and claw live on stage. John. How
Speaker 1: about those Yankees? How about those Thankees? Big game tonight?
Speaker 1: Is that right? I believe so? Yes? Against Oakland? Yes,
Speaker 1: at Yankee Stadium. Yes, I look forward to that. Okay,
Speaker 1: let's go back to England. Let's get away from Brexit,
Speaker 1: Let's get to em. Why don't you we set the show.
Speaker 1: We set the show. Good morning, good morning to our
Speaker 1: audience worldwide from New York City. Forget the previous five minutes,
Speaker 1: let's do Brexit. No, we're not going to do that. Ian.
Speaker 1: Let's talk about what's handing an emerging markets, because it's
Speaker 1: quite interesting. Turkish inflation is surging, the Indian rupee is
Speaker 1: a record low. The pockets of pain is still there.
Speaker 1: Walk me through what you're looking at at the moment. Well,
Speaker 1: these pockets are pain aren't going to go away anytime soon.
Speaker 1: And I think for quite a lot of these e
Speaker 1: m s Turkey obviously as the poster child, but but
Speaker 1: also India, increasingly South Africa, Indonesia, countries that have got EM,
Speaker 1: countries that have got inflation problems, that have got current
Speaker 1: account deficits, that are reliant on oil imports. Because I
Speaker 1: was now becoming a big deal everyone's talking about these
Speaker 1: countries are vulnerable anyway. Then you've got the FED raising
Speaker 1: rates and giving all these investors an alternative. They don't
Speaker 1: have to put their money into EM to chase yield anymore.
Speaker 1: They can they can be more inclined to be at home.
Speaker 1: So what happens is that the pressure on EM builds
Speaker 1: as the FED as raising rates, and the pressure builds
Speaker 1: in proportion to how dim a view markets take of
Speaker 1: the way you've been conducting the economy. So in Turkey,
Speaker 1: we've got an authoritarian leader, we've got a guy who
Speaker 1: wants to run honittory policy as well as the country.
Speaker 1: We've got an inflation problem, we've got a current account deficit.
Speaker 1: It's an awful mess, but it's not going to go
Speaker 1: away and the store stop. You'd have to assume the
Speaker 1: oil story just exacerbates the current accounts deficit issues in
Speaker 1: places like Turkey and like India. Absolutely, if you are
Speaker 1: an oil importer, substantial oil importer, this is about as
Speaker 1: as bad as things get. You know, you've got interest
Speaker 1: rate pressure from the Fed, you've got pressure from from
Speaker 1: oil now, which you know, six months ago we weren't
Speaker 1: really worrying about. And now suddenly brents at eighty five,
Speaker 1: w t I is at seventy five. And this is
Speaker 1: a really big problem for these countries that that are
Speaker 1: already running these current account deficits. And it just makes
Speaker 1: markets more inclined to run away, and it becomes self
Speaker 1: some interesting relative trades within emerging markets. I've heard a
Speaker 1: lot of people starting to talk about long Russia short
Speaker 1: Turkey off the back of this crude story. Does that
Speaker 1: kind of make sense to you. I mean from a
Speaker 1: trading proposition, it does. I mean, you know, from a
Speaker 1: big picture perspective, Russia doesn't really have an economy. Um,
Speaker 1: you know, Russia's Russia is a small economy, but it
Speaker 1: does have a lot of oil and a lot of gas.
Speaker 1: So yes, I mean that makes perfect sense to me
Speaker 1: as an entra em trade. And of course there are
Speaker 1: there are winners and losers and other em Some of
Speaker 1: the Latin American ems are in are in rather better
Speaker 1: shape obviously Argentina, Venezuela accepted, but they're in better shape
Speaker 1: than than the Turkeys and South Africa's and India's. So
Speaker 1: it's a it's a shifting game, and it does depend
Speaker 1: enormously on exactly where oil prices go. You know, if
Speaker 1: oil continues to rise and Brent gets up to say,
Speaker 1: and it hits the hundred dollar mark, then you're looking
Speaker 1: at much more widespread em pain and much more currency weakness,
Speaker 1: and you'll get you'll get markets calling on the Fed
Speaker 1: to take a breather. The problem is looking at the
Speaker 1: three point nine domestic unemployment rate, I don't think J.
Speaker 1: Powell can afford. I'm just wondering where the circuit breaker
Speaker 1: comes from because the markets might call on the FED
Speaker 1: to take a breather at some point, maybe next year.
Speaker 1: The President of the the United States is staging a bit
Speaker 1: of an intervention with the with the saudis ramping up
Speaker 1: the pressure again in the last twenty four hours. Do
Speaker 1: you see any response coming from OPEC and Saudi Arabia
Speaker 1: to this, Well not really. I mean then they're not
Speaker 1: the swing players that they used to be in the
Speaker 1: US is not the swing player. But the bizarre thing
Speaker 1: is that actually the US is now an economy which
Speaker 1: which benefits from higher oil prices net because although it
Speaker 1: raises gas prices, which consumers don't like, but it raises
Speaker 1: capital spending the oil business faster. So just in the
Speaker 1: last few years, the way you think you need to
Speaker 1: think about the U S and oil prices has flipped
Speaker 1: add degrees. He used to be we consume a lot
Speaker 1: of oil, the price goes up, it's bad. But that's
Speaker 1: not the case anymore. Now We're still consume it, but
Speaker 1: we produced an awful lot of it, and we've got
Speaker 1: this whole economic infrastructure that's built around oil extraction. The
Speaker 1: shale business is enormous and growing very rapidly still, So
Speaker 1: now higher oil prices actually are a plus for growth.
Speaker 1: What's the ramifications of a blended dollar in X like
Speaker 1: d x Y breaks out the new highs in this
Speaker 1: case ninety four to present ninety five point five, And
Speaker 1: if we get a ninety seven print and dollars stronger dollar,
Speaker 1: I mean, what does the president do? What does chairman
Speaker 1: to Paul do? You're gonna tell me they're going to
Speaker 1: ignore it. I don't buy it. Ah, Well, if depend
Speaker 1: how how it goes. You know, quite a lot of
Speaker 1: the CPI is sensitive to the dollar. The goods compons
Speaker 1: the CPI are sensitive to the dollar, and the things
Speaker 1: like imported clothing and furniture and TVs and gadgets are
Speaker 1: all quite dollar sensitive. So as sustained further uplifting the
Speaker 1: dollar from here, would other things equaled mean a bit
Speaker 1: lower domestic inflation. And that might be what gives the
Speaker 1: Fed the ability to pause, provided that at the time
Speaker 1: this is happening, the labor market isn't scaring the pants,
Speaker 1: which I'm sorry, dovetails right into EM weakness, Joan Ferrell.
Speaker 1: Dovetails right into EM weakness and into you know, maybe
Speaker 1: oil dynamics as well, yeah, there's a toxic mix right now,
Speaker 1: higher crude, stronger dollar, toxic mix and yields just kind
Speaker 1: of bleeding heart slowly lovely. I refused to play Abba,
Speaker 1: I did Williams. Come on, come on, come on, come
Speaker 1: on a bit of abber dancing Queen, just to set
Speaker 1: up a Brexit conversation later on. You know you want
Speaker 1: to do it? You do. I can see your smiling
Speaker 1: Tom smiling therapy, can see that you wanted to five
Speaker 1: step surveillance therapy. Who's put you through therapy? Are you kid?
Speaker 1: They got a car from Washington yesterday, even trumpell big
Speaker 1: trouble expenses. No, no, well that's a separate story, was
Speaker 1: the caller? Now this came from you know, come on, people,
Speaker 1: just don't just like the radio. You'll tell me that
Speaker 1: the I m F aren't happy with you. Yeah, with us,
Speaker 1: m c A everybody, Bloomberg's very own Annah Redwards joining us. Now,
Speaker 1: Anna did you dance? Did I? When dancing Queen came
Speaker 1: I, I I just stood up and and sort of threw
Speaker 1: my arms in the air, And it was a spontaneous
Speaker 1: response to her phenomenal visual experience, guessing that's not what
Speaker 1: happened today in Birmingham, and I walked me through who
Speaker 1: this speech was for, who the audience was, and the
Speaker 1: big takeaways in the last hour. Well, as always, she's
Speaker 1: talking to the preaching to the converted, but she does
Speaker 1: have a divided party, so she did have to win
Speaker 1: the room over to some extent. She had a thing
Speaker 1: to do today, didn't she, And that was to rally
Speaker 1: the troops behind her vision of Brexit because she'd been
Speaker 1: challenged yesterday very directly by her former Foreign Secretary Boris Johnson,
Speaker 1: who had a very different view of Brexit. So her
Speaker 1: ad mission today was to rally the troops around Brexit.
Speaker 1: She she can come to some of the detail if
Speaker 1: you like, but she did seem to manage to do that,
Speaker 1: and she took on Boris Johnson a little bit. And
Speaker 1: she also wanted them to rally against the big enemy
Speaker 1: that she sees, and that's Jeremy Cowin, leader of the
Speaker 1: Labor Party. And I don't care. What I care about
Speaker 1: is in the movie, in the movie The Crown, the
Speaker 1: TV show of The Crown, then lives are out. I
Speaker 1: think for Americans we were shocked and how Churchill was
Speaker 1: treated or McMillan and all the other players. I saw
Speaker 1: that in the faces of the people in the audience.
Speaker 1: It's totally different than in America. How much do they
Speaker 1: hate each other, well, the different parts of the party. Yeah, yeah,
Speaker 1: I mean they're quite quite. I mean, I don't know,
Speaker 1: I hates the wrong. Excuse me, I'm an American. I
Speaker 1: just love the way you frame UK politics through tonight.
Speaker 1: Just I'll just throw in on the chance of the
Speaker 1: Exchequers there with eight guys I don't know who they are,
Speaker 1: and Anna knows them all, and they all look like
Speaker 1: they look like the TV show The Crown. Yeah, I mean,
Speaker 1: there's a there's a lot of falling out now. She
Speaker 1: did say, in typical British understatement, I might have given
Speaker 1: you a little bit of that just then. But she
Speaker 1: she said, you'll be aware that there are some different
Speaker 1: views within the party on Brexit. You know, she said,
Speaker 1: she sort of nods to to that. But what she
Speaker 1: did when she said, um, she did she did have
Speaker 1: some strong messages which will appear to the Brexity is
Speaker 1: she delivered, you know, right down the barrel of the
Speaker 1: of the camera. She said, I want respect from Europe,
Speaker 1: similar to what she said after the Salzburg disaster meeting recently,
Speaker 1: so she's trying to appeal to that side of her party.
Speaker 1: But on the other side, she had a really interesting line.
Speaker 1: She in answer to Boris and all those hard Brexities,
Speaker 1: you'd rather see a hard break, She said, we can't
Speaker 1: have a Brexit that delivers in fifty years. That's no
Speaker 1: good to somebody who lives on a boarder and wants
Speaker 1: frictionless trade or and cited all these other examples. And
Speaker 1: I thought that was really interesting because that he is
Speaker 1: trying to take on the message of the hard Brexities
Speaker 1: who just say, let's rip it up, let's walk away.
Speaker 1: Interesting away from Brexit Anna that she starts talking about
Speaker 1: promising to end austerity. Is this a Conservative party in
Speaker 1: some ways positioning for a potential election? Yeah? Well, I mean,
Speaker 1: you know, in theory the election is not supposed to
Speaker 1: be till twenty two, but you know, who knows. But
Speaker 1: there's a lot of unpredictability in UK policies, so that
Speaker 1: this ending austerity was really trying to take away one
Speaker 1: of Labour's trump cards. They've been able to associate the
Speaker 1: Tories with austerity over recent years. She said, that the
Speaker 1: British people need to know that hard work has paid off.
Speaker 1: She was careful also though to say that the debt
Speaker 1: to GDP number we'll keep dropping. So of course here
Speaker 1: at Bloomberg was were you know, all watching for reaction
Speaker 1: in markets, and there wasn't really very much. And somebody
Speaker 1: I n G saying, maybe the market is going to
Speaker 1: focus more on well, on the promise. You know, then
Speaker 1: we need to have growth, of course, but focus more
Speaker 1: on any fiscal giveaways that we might get in connection
Speaker 1: any quickly you're a saying are you there for another four?
Speaker 1: Is it five days? No, I'm actually back in London. Sorry,
Speaker 1: I heard I heard you say right at the beginning
Speaker 1: that I was in Birmingham. I have been in Birmingham,
Speaker 1: was there until very but I had to get back
Speaker 1: to London to anchor a program this morning. So one
Speaker 1: of your properties of properties and Anna Edwards. You hear
Speaker 1: her in America, folks, you hear her on Bloomberg Radio
Speaker 1: early early in the American morning, and she's fantasistic. She
Speaker 1: anchors the market open show in Europe. Now I'm happy
Speaker 1: to say, right now I want to rip up the
Speaker 1: script and talk about something that's basically off the radar
Speaker 1: of all our distractions of the Amazon, Apple, Italy, Turkey,
Speaker 1: on and on. Of course everything going on in Washington
Speaker 1: is well, you can do this with Craig Trudell working
Speaker 1: out of our Detroit operation on the Automobiles of America.
Speaker 1: And you can do this because he was at Michigan
Speaker 1: State University exactly five miles from the Grand River Assembly
Speaker 1: of General Motors in Lansing, Michigan. And Craig, that means
Speaker 1: you are qualified to talk about the quiet automobile disaster
Speaker 1: out there, not Tesla. The collapse of the Ford Motor
Speaker 1: Company down forty seven percent from the peak of four
Speaker 1: or five years ago. That brought in Mr Hackett. Is
Speaker 1: he going to be shown the door like Mr Flannery
Speaker 1: of General Electric? You know, the the person to be
Speaker 1: asking that Tom is going to be Bill Ford. Um.
Speaker 1: So he is. He is Bill Ford's guy. Um. He
Speaker 1: certainly has raised a lot of questions in terms of
Speaker 1: what is his plan um, and he's not really answered
Speaker 1: those questions to this point, and a lot of people
Speaker 1: are getting very frustrated. The last the last earnings call, uh,
Speaker 1: some sparks really flew between him and analysts at Morgan
Speaker 1: Stanley when they canceled their investor day that was going
Speaker 1: to to be uh some time in September. Uh. And
Speaker 1: when they canceled at the analyst asked, do you think
Speaker 1: you're still going to be around whenever you guys are
Speaker 1: ready to have that investor day? So people are very frustrated. Uh.
Speaker 1: There's some new product on the way, some some new
Speaker 1: SUVs that are desperately needed, but they're late, and the
Speaker 1: company is really struggling in this market. Well, well explain,
Speaker 1: And I want to say, full disclosure. I've got a
Speaker 1: great affinity for Mr Ford. He and I talked pond hockey,
Speaker 1: among other things. He goes up north every year and
Speaker 1: does the whole Midwest pond hockey thing. And I think
Speaker 1: he had a cameo on Wayne's World is Well, Craig,
Speaker 1: when I look at this, I want to know. I'm
Speaker 1: how you explain your car guy? And you know all
Speaker 1: the other guys who got out in Detroit explained to
Speaker 1: me how we got from Alan to Jim. I mean,
Speaker 1: Ford Management was sainted one Ford, Alan Lally, everything was wonderful.
Speaker 1: What happened well one of his big jobs towards the
Speaker 1: end of his tenure. Alan Lally was was to pick
Speaker 1: his successor and played a big role in that. And
Speaker 1: you know, there was really it was between Mark Fields
Speaker 1: and uh, you know another insider within the company, Joe Henrickson,
Speaker 1: and the company went with Mark Fields, and Mark struggled.
Speaker 1: Um I think you know, he uh did not do well.
Speaker 1: The the share price, uh, you know, like really lagged.
Speaker 1: They had some real trouble with with making sure that
Speaker 1: they kept the product lines up to date. And and
Speaker 1: he was shown the door very quickly. So uh, you
Speaker 1: know it was from there we we go back outside
Speaker 1: and it really seemed like Bill Ford was kind of
Speaker 1: trying to pull another Relally. He went outside his company.
Speaker 1: Let's bring in somebody who hasn't been at Ford. Uh.
Speaker 1: And you know, we we can recall that Milally came
Speaker 1: from boeing um and and Hackett was viewed as a
Speaker 1: sort of a turnaround guy. He came from Steelcase, the
Speaker 1: furniture company, and there was some thought that okay, you know,
Speaker 1: I can I can bring in somebody with a fresh perspective.
Speaker 1: Alan obviously brought a fresh perspective to this company and
Speaker 1: that paid huge dividends. But so far we have not
Speaker 1: at all seen this sort of level of success that
Speaker 1: we saw from from Alan mulally. Uh you know when
Speaker 1: he was at Ford. But the new business plan, you know,
Speaker 1: my study of this is and if you're just joining us,
Speaker 1: so it's Craig Trugel with us, he's with Bloomberg and
Speaker 1: just definitive on not so much the gossip of Detroit,
Speaker 1: but just the the leadership and the human condition of Detroit. White.
Speaker 1: Come on, it was one Ford Miley at a five
Speaker 1: am meeting. Everybody got on board. Everybody was on the
Speaker 1: same page. Per the Mortgage Stanley conference call. Is anybody
Speaker 1: on the hack at page? Because I don't you know,
Speaker 1: not that I'm an expert, but I don't see it.
Speaker 1: He's he is original to be kind, moving from Steelcase
Speaker 1: and Craig, you know what everybody's saying, how can you
Speaker 1: move from making file cabinets over to running a global
Speaker 1: automobile company was seven thousand parts per car? How can
Speaker 1: you do that? Yeah? Well, I I think I think
Speaker 1: it's really a question of whether you know whether this
Speaker 1: was the right guy to bring in when the company
Speaker 1: had some real sort of nuts and bolts issues of
Speaker 1: product being behind schedule, needing needing to update to the
Speaker 1: SUV lineup, deciding on whether or not to to play
Speaker 1: in the car business. Obviously they've decided not to do
Speaker 1: that going forward, at least at least here in North America. Okay,
Speaker 1: but what's it's not there? What's a two thousand nineteen Fusion,
Speaker 1: What's a two thousand eighteen CI Max, a two thousand
Speaker 1: nine Mustang? I mean they say they're not in the
Speaker 1: car business, but they are in the car business. Well,
Speaker 1: everything except the Mustang is going to be going away.
Speaker 1: So those those uh, the Sedans and the lineup, with
Speaker 1: the exception of the Mustang muscle car will be phased out.
Speaker 1: They've even you know, started to phase out the advertising
Speaker 1: of some of the models that to your point, are
Speaker 1: still going to remain on the market. But really they're
Speaker 1: turning their attention to mtvs. But but really with Hackett,
Speaker 1: I mean he came in and his background to the
Speaker 1: event that he had when with Ford was with their
Speaker 1: smart mobility unit, and that is really sort of a
Speaker 1: big think, uh you know, sort of what is the
Speaker 1: future going to look like? Uh, you know, play on
Speaker 1: on Ford's part, and you can guess what. No one
Speaker 1: cares right, right, well, and he's continued to to sort
Speaker 1: of take this you know, big sort of universal back
Speaker 1: look at where the future is going to be in
Speaker 1: terms of mobility and and scared autonomous. But you're I
Speaker 1: do the interview, you don't, Craig Listen, It's real simple.
Speaker 1: Shields was fancy. He did all the fit and finish.
Speaker 1: Malally was the god that came out with a flex
Speaker 1: which is the only Ford I see in the island
Speaker 1: of Manhattan. As you said, they desperately need an SUV
Speaker 1: and they got a CEO doing tech babble right. Yeah,
Speaker 1: that that I think gets to it and cuts to
Speaker 1: the chase. I mean when when Jim Hackett made an
Speaker 1: appearance at c S earlier this year, I think a
Speaker 1: lot of people just sort of left his presentation scratching
Speaker 1: their heads. And so if that's any indication of the
Speaker 1: kind of leader he is internally at Ford, that has
Speaker 1: a lot to do with the problem. Now from New
Speaker 1: Jersey just emails in and could you please ask him
Speaker 1: what Mr Hackett's reception is going to be at the
Speaker 1: North American International Auto Show? How is he going to
Speaker 1: be great? I saw Marci ol once when I was
Speaker 1: at the North American International Auto Show and he was
Speaker 1: greeted like a god. Same with Milally likes does anybody
Speaker 1: care of Hacketts shows up at the North American International
Speaker 1: Auto Show. He definitely does not have the star power
Speaker 1: that a MARCHIONI did, that that imulally did. And he's
Speaker 1: not he's not, you know, a car guy in the
Speaker 1: sense of the world where obviously that's a phrase that's
Speaker 1: overused in Detroit, but uh, you know he is. He
Speaker 1: is a big thinker. He's sort of professorial, and he's
Speaker 1: not one to get down into V six and horsepower
Speaker 1: and so forth. Yield six point When did they cut
Speaker 1: the dividends Thursday or is it in November? We asked
Speaker 1: the CFO precisely this question, because the dividend yield has
Speaker 1: been soaring. It is a very rich payout. But importantly
Speaker 1: it's what the Ford family lives off right, So they're
Speaker 1: going to hold on for dear life to that Dad.
Speaker 1: That's well said. This is brilliant, cract true. Thank you
Speaker 1: so much. One of the books of joy of the
Speaker 1: last five years. And this is a serious book to
Speaker 1: be read and considered chapter by chapter. Failure to adjust
Speaker 1: how Americans got left behind in the global economy. It
Speaker 1: was a terrific success with a huge residents. Chapters like
Speaker 1: Confronting the competition, how a strong dollar is hurt, how
Speaker 1: to think about economic competitiveness another important chapter, and it
Speaker 1: can only be teddled into the Council on Foreign Relations.
Speaker 1: I can't say enough about Failure to Adjust. So you've
Speaker 1: got to write a new epilogue, maybe a new prologue.
Speaker 1: How do you rewrite it after U. S m c. A. Well,
Speaker 1: you know, we will have to see. I I still
Speaker 1: think we're at the midpoint of all of this. I
Speaker 1: think the President has shown that that he's able to
Speaker 1: do at least some of what he said he could do,
Speaker 1: which is used terrorists and the threat of tariffs to
Speaker 1: force changes in trade agreements. Um. The big enchilado, of course,
Speaker 1: is China, and we don't know how that was going
Speaker 1: to play out. So I think I'm gonna hold off
Speaker 1: before I read enough. Okay, beach reading two thousand nineteen,
Speaker 1: I can see it. I can see it already now.
Speaker 1: You could be like a girl magnet if I was
Speaker 1: reading Failure to Adjust on the Beach ted great, does
Speaker 1: U s m C A. U s m C. A.
Speaker 1: Does it mean Canada and Mexico lost, well, you know,
Speaker 1: in the narrow confines of the negotiation. Yes, I mean
Speaker 1: Canada and Mexico didn't really get any of the changes
Speaker 1: that they particularly wanted in the deal. They're happy with
Speaker 1: some of the stuff that was brought over from the TPP,
Speaker 1: like the new rules on digital commerce, so they're happy
Speaker 1: with that. Canada didn't get it. Wanted a bunch of these,
Speaker 1: you know, progressive changes to the agreement. They wanted to
Speaker 1: expand temporary immigration the United States under the t n
Speaker 1: vs IS, wanted additional access to US government procure. We
Speaker 1: didn't get any of those things. Mexico made some moderately
Speaker 1: significant concessions, Canada very few. At the end of the day,
Speaker 1: I think they're both pretty happy with it, but but
Speaker 1: it was definitely tilted in the direction that the US
Speaker 1: wanted to tilt it ted. Alden, can you speak to
Speaker 1: the issue of HUCH negotiations, because in the actual text
Speaker 1: of U s m c A, apparently each of the
Speaker 1: individual countries must give thirty days notice to their partners
Speaker 1: if they are to negotiate a free trade agreement with
Speaker 1: what is described as a quote non market economy. What
Speaker 1: do you mean this is this is causing some controversy.
Speaker 1: I think it was one of the elements of the
Speaker 1: agreement that surprised all of us who were watching it
Speaker 1: pretty closely. Does this means China? Of course, Yeah, of
Speaker 1: course it means China. And and you know, the Canadians
Speaker 1: have have talked about the idea of doing a free
Speaker 1: trade agreement with China. Prime Minister Trudeau has sort of
Speaker 1: done some preliminary discussions with his counterparts in China on this.
Speaker 1: I think this is a kind of preemptive strike by
Speaker 1: the US to say we don't want to see Canada
Speaker 1: or Mexico do a free trade agreement with China because
Speaker 1: that could complicate our dealings with China. I mean, the
Speaker 1: non market economy stuff has a little wiggle room because
Speaker 1: the Chinese, of course, have taken a case to the
Speaker 1: w t O saying they should no longer be considered
Speaker 1: a non market economy. And if they win that case,
Speaker 1: I suppose they wouldn't fall under this clause, but we'll
Speaker 1: see how it plays out. It was it was an
Speaker 1: interesting addition to the agreement. To be sure, do you
Speaker 1: believe that the United States is trying to put together
Speaker 1: its own free trade block in North America. I mean,
Speaker 1: I don't think you know that the new U. S.
Speaker 1: M c A is anymore of a block than the
Speaker 1: old NAFTA was. But I do think what the administration
Speaker 1: is doing is trying to kick off these deals one
Speaker 1: by one, you know, Korea, now, Canada and Mexico. We're
Speaker 1: gonna see what happens with Japan in Europe, and then
Speaker 1: really turned everything on the Chinese, with with with you know,
Speaker 1: allies behind the administration. I do think that's the goal. Okay, well,
Speaker 1: let's just get over to China then, I mean, we
Speaker 1: got the happy you know, cross border in Canada and
Speaker 1: we go to Mike McKee juts up to Canada, Michael
Speaker 1: McKee jets down to Mexico. But as you say, everything
Speaker 1: hinges on China. Give us the Ted Alden update on
Speaker 1: is there a dialogue with China? Start with that. Well,
Speaker 1: at the moment, not really, you know, Treasury Secretary Manuchin
Speaker 1: keeps trying to restart at and then the president announced
Speaker 1: his new terrorists, and the Chinese say, we can't negotiate
Speaker 1: with a gun to our head. You know, my you know, here,
Speaker 1: here's my prediction. And you can come back, you know,
Speaker 1: we can come back and however long and see what
Speaker 1: I'm right or not. I think we'll know that the
Speaker 1: negotiations are serious when the US Trade Representative, Bob Lightheiser
Speaker 1: gets put in charge. He was a guy who brought
Speaker 1: home this new NAFTA deal. He's gonna lead the talks
Speaker 1: with Japan. He's the serious negotiator in this administration. As
Speaker 1: long as Manuchin is in charge of the China fall,
Speaker 1: I think it goes nowhere. And the President was pretty
Speaker 1: clear in his press conference on Monday he's not quite
Speaker 1: ready to talk to the Chinese yet. He wants to
Speaker 1: turn up the heat a bit higher. That's a that's
Speaker 1: dangerous game, but but that's the one that that he's playing.
Speaker 1: Ted All then, along with the former Michigan Governor John
Speaker 1: Angler and former U S Secretary of Commerce Penny Pritzker,
Speaker 1: you helped to produce a report called the Work Ahead
Speaker 1: Machines Skills in US Leadership in the twenty one century.
Speaker 1: Would you revise anything in that book currently based on
Speaker 1: what you know? No, and and and I'm you know,
Speaker 1: I've been very pleased with the reception to that that
Speaker 1: report and sectary Pritsker in particular, is just put a
Speaker 1: tremendous amount of energy into promoting this governor. Angler was,
Speaker 1: you know, tied up as interim president of Michigan State University,
Speaker 1: though he's done some great stuff with it too. It's
Speaker 1: really about the current and coming impact of technology on
Speaker 1: the workplace and the broader messengers. We have not done
Speaker 1: a very good job as a country at helping Americans
Speaker 1: succeed in the face of these very rapid economic changes,
Speaker 1: be it the pressure is a global competition or technology,
Speaker 1: and that's just gonna get worse and and and we
Speaker 1: laid that out in the poor I think it's still
Speaker 1: pretty current about Okay, you sound like Bread Long and
Speaker 1: Danny Rodgers. When does that change? I mean, you guys
Speaker 1: have all identified that labor in America got taken to
Speaker 1: the cleaners on NAFTA. When does this get fixed? I
Speaker 1: don't know exactly how you know my group on this
Speaker 1: stuff of that guy named Richard Baldwin, who's a trade
Speaker 1: economist that in Geneva his book the I'm gonna forget
Speaker 1: the name the Great Converge and something like that. Um. Sorry,
Speaker 1: Richard uh points to a real change around as a
Speaker 1: results of the rise of information technology that made it
Speaker 1: possible for multinational companies to create these global supply chains
Speaker 1: locate factories with very advanced technologies and low wage countries.
Speaker 1: That was a big, big shift, and I think you know,
Speaker 1: if you look at if you look at with the
Speaker 1: point at which you know, wages, living standards started grow
Speaker 1: in the developing world, particularly China, which is a great thing,
Speaker 1: but they really stagnated in the advanced economies. And I
Speaker 1: think we're still trying to figure out how to adjust
Speaker 1: to that change, which really kind of kicked in around
Speaker 1: coincident with NAFTA. Na interesting Ted Alton take you for
Speaker 1: the briefing important failure to adjust how Americans got left
Speaker 1: behind the global economy and an update here as we
Speaker 1: see us m uh from the Council on Foreign Council
Speaker 1: on Foreign Relations, we should say so, David Rubinstein peered
Speaker 1: of your preview. It is brought to you by Wells
Speaker 1: Fargo Technology Banking. Wells Fargo helps business leaders find their
Speaker 1: moments of truth. A little outside perspective can create a
Speaker 1: lot of clarity with us not David Rubinstein has done
Speaker 1: just such a wonderful job of going deeper wonderful conversations.
Speaker 1: And again, David, people still talking about your effort with
Speaker 1: Mr Bezos of Amazon. Um, David, it's always important to
Speaker 1: interview somebody who started out in the William Morris mail room.
Speaker 1: It is something legendary Los Angeles, isn't it. I never
Speaker 1: understood how one can start on a mail room and
Speaker 1: all of a sudden wind up a few years later
Speaker 1: running a major studio. But apparently by being in the
Speaker 1: mail room you get a lot of information and contacts.
Speaker 1: So Barry Diller is one of those people. He started
Speaker 1: the mail room. He dropped out of u c l
Speaker 1: A after just a few weeks and never completed college,
Speaker 1: worked in the mail room, ultimately went to ABC, became
Speaker 1: the head of ABC Entertainment, and then at age thirty two,
Speaker 1: the head of Paramount Pictures, and then after that created
Speaker 1: Fox Television, and after that created I a C. Interactive
Speaker 1: Company Corporation, which does enormous amount of Internet related companies
Speaker 1: and now has a very very high market value. Had
Speaker 1: you adjusted, uh, he and he put in two fifty
Speaker 1: million dollars into I a C. It now has a
Speaker 1: market value with all the companies together about fifty seven billion.
Speaker 1: You were expert at this in the distinctive feature of
Speaker 1: Mr Diller's Wikipedia and what we know about him in
Speaker 1: New York is he's a guy that's moved from this
Speaker 1: to this to this. By definition, David, you have to
Speaker 1: fail along the way. What was the dealer failure? It
Speaker 1: stands out among the many successes. Well, he would say
Speaker 1: that he had he failed in in in everything he
Speaker 1: did at ABC, everything he did at Paramount didn't work,
Speaker 1: a lot of things that worked. Uh uh. What he
Speaker 1: would give other people credit for as well, I would
Speaker 1: say that he didn't think he had succeeded at being
Speaker 1: a principle. He was working for other people at at ABC,
Speaker 1: Paramount and at Fox, and ultimately he said to Rupert Murdoch,
Speaker 1: I'd like to be more of a principal here in
Speaker 1: Rupert Murdoch said, there's only one principle in this company,
Speaker 1: and it's me. And so, at the age of forty nine,
Speaker 1: he left taking some of the games he had realized,
Speaker 1: and then ultimately figured out what he wanted to do
Speaker 1: as a principal and created I a C. And it's
Speaker 1: a very big success. So I think he had not failed,
Speaker 1: but he wanted to be a principal at the age
Speaker 1: of forty nine he began it. He's now in his
Speaker 1: seventies and obviously very very successful financially and professionally. David
Speaker 1: Rubinstein in your conversations with Barry Diller, did something in
Speaker 1: terms of his intuition come across his ability to intuit
Speaker 1: what would make good programming, good movies, good entertainment. He
Speaker 1: had the same perspective to some extent as uh as
Speaker 1: Jeff Bezo's intuition is much more important than maybe detailed analysis,
Speaker 1: and so he just felt he had a pretty good
Speaker 1: sense of what would work. He wouldn't put his finger
Speaker 1: on any one thing. But I asked him why he was, um,
Speaker 1: you know, so well versed in so many different areas,
Speaker 1: and he said, even though he dropped out of college,
Speaker 1: he had always been a reader. He loved reading. Reading
Speaker 1: was important part of his life. And as we all know,
Speaker 1: he's a very articulate person, a very good uh user
Speaker 1: of words. And I think that people really respect his intellect,
Speaker 1: and I think he would he wouldn't want to brag
Speaker 1: and say that his intellect was great at other people.
Speaker 1: He didn't say that, but my sense is that elect
Speaker 1: is very, very high and he just has a very
Speaker 1: good way of reading people. A right. If he has
Speaker 1: a very good way of reading people, he's also survived
Speaker 1: in the world of talent and Hollywood. Does that also
Speaker 1: require a bit of a thick skin. It does. Hollywood
Speaker 1: is not for the faint of heart. Um. It makes
Speaker 1: Washington look like a you know, a playground to some
Speaker 1: extent in some ways. Um. But I think that the
Speaker 1: most interesting thing I thought he said in the end,
Speaker 1: when I asked him what about the legacy? What would
Speaker 1: he says, his greatest legacy as great as achievement, and
Speaker 1: you have all these wonderful things he did. He said
Speaker 1: he thought his greatest legacy was his marriage. And he
Speaker 1: married in two thousand one to a very famous UH
Speaker 1: fashion designer, Diane von Furstenburgh. And together they've obviously created
Speaker 1: a terrific life. But they've also been very involved in philanthropy,
Speaker 1: early signers of the Giving Pledge, and as you may know,
Speaker 1: in New York, he's helping to create a park off
Speaker 1: of one of the Peers on the Lower West Side.
Speaker 1: I wanted to talk about that, David. I mean, you're
Speaker 1: known for your philanthropy to America. Mendicined, incalculable contribution to
Speaker 1: the Library of Congress. Barry Dealer's changed the landscape of
Speaker 1: New York. That's quite a statement. Yes, there was an
Speaker 1: abandoned kind of rail line and he well, it was
Speaker 1: abandoned for some time, and he and his wife helped
Speaker 1: with a very talented architect, Liz Diller, create a high
Speaker 1: line where people can have a kind of a park
Speaker 1: along a railway, and that inspired him. I think they
Speaker 1: want to create a park as well off of the
Speaker 1: pier that that now exists in the Lower West Side.
Speaker 1: So he's, you know, a person who who has succeeded
Speaker 1: in business, succeeded in in marriage, succeeded in philanthropy, and
Speaker 1: I think quite impressive in the story is uh, you know,
Speaker 1: he's got some emotional time talking about various things, but
Speaker 1: I thought it was quite compelling. Does he present as
Speaker 1: someone who goes his own way regardless of what is
Speaker 1: going on around him, that he's able to maintain that
Speaker 1: level of intense focus. Yes. Uh. You don't become a
Speaker 1: successful in so many different areas by just going along
Speaker 1: with the conventional wisdom. To be a leader, you have
Speaker 1: to do things on your own and things that other
Speaker 1: people tell you can't be done. So for example, he
Speaker 1: created the ABC Movie of the Week. Well people may
Speaker 1: not remember that now, but for a long time that
Speaker 1: was a very novel thing, having a fresh movie every week,
Speaker 1: created just for television. He also greenlit, uh so many
Speaker 1: of the best known movies of the paramount era when
Speaker 1: he was there, like Raiders of the Lost Art and
Speaker 1: so forth. Did that did pretty well? And maybe maybe
Speaker 1: your favorite is it? Is it Saturday night Fever? Don't
Speaker 1: Saturday Saturdy night Fever was one of his also terms
Speaker 1: of endearment Greece. Um, he had a lot of great movies,
Speaker 1: he wouldn't say, but all his doing. But he obviously
Speaker 1: was the person in charge and hadn't worked out, he
Speaker 1: would have been blamed taking responsibility. Did he talk about
Speaker 1: his parking his driving habits in the city of New York.
Speaker 1: He's kind of famous for that. Um he has say
Speaker 1: he likes to drive face, he likes he has some
Speaker 1: sports cars, and he likes to drive barefoot. Um. I
Speaker 1: guess he feels that gives him a greater sense of
Speaker 1: control or something. But um so he's a pretty good driver.
Speaker 1: I guess I don't have any parking tickets he's got,
Speaker 1: or speeding tickets he didn't. We didn't go into that.
Speaker 1: David Yankees are Oakland New York. Oh, it's too early
Speaker 1: to say, but I hope New York would probably be
Speaker 1: the better choice. David finessaid beautifully. David Rubinside, thank you
Speaker 1: all right, Thanks a great appreciate previous. He moves on
Speaker 1: with his day at Carlisle Group. It airs tonight on
Speaker 1: Bloomberg Television nine pm Eastern and at six pm Eastern
Speaker 1: on Friday and also over the weekend, and the share
Speaker 1: of the show airs also on Bloomberg Radio tomorrow night
Speaker 1: at five pm. Thanks for listening to the Bloomberg Surveillance podcast.
Speaker 1: Subscribe and listen to interviews on Apple Podcasts, SoundCloud, or
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