1 00:00:00,080 --> 00:00:13,040 Speaker 1: Yeah, Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene 2 00:00:13,480 --> 00:00:17,560 Speaker 1: Jai Ley. We bring you insight from the best in economics, finance, investment, 3 00:00:18,000 --> 00:00:23,520 Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, 4 00:00:23,600 --> 00:00:28,160 Speaker 1: Bloomberg dot Com, and of course on the Bloomberg. Yeah, 5 00:00:33,760 --> 00:00:36,479 Speaker 1: it's been the top story President Donald Trump saying the 6 00:00:36,560 --> 00:00:40,600 Speaker 1: US will withdraw from that landmark accord to curb Iran's 7 00:00:40,680 --> 00:00:44,800 Speaker 1: nuclear program and reinstate financial sanctions on the Islamic Republic, 8 00:00:45,200 --> 00:00:48,080 Speaker 1: opening up an uncertain new chapter for the Middle East. 9 00:00:48,159 --> 00:00:51,320 Speaker 1: I'm really pleased to say the privilege is ours. Greg 10 00:00:51,400 --> 00:00:53,880 Speaker 1: Valier is in New York with us this morning, Horizon 11 00:00:53,960 --> 00:00:56,960 Speaker 1: Investment's chief global strategist. Good morning to Gregg. Great to 12 00:00:57,000 --> 00:00:59,360 Speaker 1: see you. Good morning. So what is the deal if 13 00:00:59,360 --> 00:01:02,080 Speaker 1: the United States is no longer in it, Well, it 14 00:01:02,160 --> 00:01:04,680 Speaker 1: does still pose a real risk or Western Europe that 15 00:01:04,720 --> 00:01:08,360 Speaker 1: we could impose more sanctions on some countries there. Uh. 16 00:01:08,360 --> 00:01:11,480 Speaker 1: It I think poses one enormous risk, and that is 17 00:01:11,520 --> 00:01:15,800 Speaker 1: that it may unshackle Benjamin Netanahu. He went in last 18 00:01:15,880 --> 00:01:19,040 Speaker 1: night to southern Syria with a missile attack. The price 19 00:01:19,040 --> 00:01:22,760 Speaker 1: of oil increasing, maybe partly because of that factor and 20 00:01:22,800 --> 00:01:24,880 Speaker 1: Nett and now he was saying a lot of provocative 21 00:01:24,920 --> 00:01:27,920 Speaker 1: things like it's better to deal with Iran now rather 22 00:01:28,000 --> 00:01:29,959 Speaker 1: than later. So let's start with the business angle, and 23 00:01:29,959 --> 00:01:32,120 Speaker 1: then we can start with the geopolitics within the region. 24 00:01:32,360 --> 00:01:35,080 Speaker 1: The some European companies operating in Iran at the moment. 25 00:01:35,120 --> 00:01:38,480 Speaker 1: Tel Tal has a joint venture in the country that 26 00:01:38,520 --> 00:01:41,520 Speaker 1: they need to reconsider at the moment as well. Volkswagen 27 00:01:41,560 --> 00:01:44,839 Speaker 1: has began selling vehicles in Iran as of last year, 28 00:01:45,200 --> 00:01:48,520 Speaker 1: Siemens are operating there. There are big energy companies involved 29 00:01:48,520 --> 00:01:51,120 Speaker 1: as well. What do these companies do even if their 30 00:01:51,160 --> 00:01:55,200 Speaker 1: government's respective governments stay in the deal? Does the United 31 00:01:55,240 --> 00:01:58,000 Speaker 1: States have international reach still hit well, you hit on 32 00:01:58,040 --> 00:02:00,800 Speaker 1: the world earlier. The uncertainty factor is huge right now. 33 00:02:00,840 --> 00:02:03,160 Speaker 1: And I think you know, we can talk about whether 34 00:02:03,200 --> 00:02:05,720 Speaker 1: the deal was a good deal, whether Trump should have 35 00:02:05,720 --> 00:02:08,600 Speaker 1: pulled out of this nuclear deal, But at the bottom 36 00:02:08,880 --> 00:02:12,560 Speaker 1: line is the fact that Western European companies saw making 37 00:02:12,600 --> 00:02:14,959 Speaker 1: a buck, They wanted to make some money by dealing 38 00:02:14,960 --> 00:02:17,400 Speaker 1: with Tehran, and that now is in question. So for 39 00:02:17,400 --> 00:02:18,800 Speaker 1: the rest of the year, how much longer does this 40 00:02:19,000 --> 00:02:22,959 Speaker 1: play out? Quite clearly, these sanctions don't get through straight away. 41 00:02:23,000 --> 00:02:24,919 Speaker 1: The United States has given many of these running and 42 00:02:24,960 --> 00:02:27,679 Speaker 1: all bias several months in the case of I think 43 00:02:27,720 --> 00:02:30,440 Speaker 1: six months to curb some of those purchases. Greg. How 44 00:02:30,480 --> 00:02:34,040 Speaker 1: long have we got before these sanctions really start to bite? 45 00:02:34,680 --> 00:02:37,080 Speaker 1: A few months? But I think the key factor, as 46 00:02:37,160 --> 00:02:39,760 Speaker 1: I said earlier, is what Israel does. If they decide 47 00:02:40,040 --> 00:02:44,119 Speaker 1: it's time to go into Yeaman, Syria, Iraq and take 48 00:02:44,160 --> 00:02:48,200 Speaker 1: out the Iranian military basis, that could greatly inflame the story. 49 00:02:48,320 --> 00:02:51,240 Speaker 1: So let's consider the geopolitics in the region. Do you 50 00:02:51,320 --> 00:02:53,239 Speaker 1: sense that we're about to make the same mistakes we 51 00:02:53,360 --> 00:02:55,840 Speaker 1: made with the rock over ten years ago? Or is 52 00:02:55,880 --> 00:02:58,560 Speaker 1: this different? And if it is different, how so? I 53 00:02:58,600 --> 00:03:02,079 Speaker 1: think it's different. John, and we have an isolation as president. 54 00:03:02,360 --> 00:03:05,600 Speaker 1: He doesn't like committing US troops abroad, and I think 55 00:03:05,600 --> 00:03:08,280 Speaker 1: that while there will be a US presence, I don't 56 00:03:08,320 --> 00:03:10,440 Speaker 1: see it as extensive as the presence we've had for 57 00:03:10,639 --> 00:03:14,959 Speaker 1: the last decade or two. Is he and MacArthur isolationist 58 00:03:15,000 --> 00:03:19,880 Speaker 1: from the Midwest? No, he's a unique isolationist. Is there 59 00:03:19,960 --> 00:03:26,000 Speaker 1: actually a coherent isolationism to the day to day grind 60 00:03:26,080 --> 00:03:29,880 Speaker 1: of the Trump administration? He's reactive more than anything but 61 00:03:29,919 --> 00:03:33,280 Speaker 1: the people around him are reacting to him, including the 62 00:03:33,360 --> 00:03:36,640 Speaker 1: Secretary of State newly minted. So you've got the Secretary 63 00:03:36,640 --> 00:03:39,360 Speaker 1: of State, you've got John Bolton, You've got others who 64 00:03:39,400 --> 00:03:42,440 Speaker 1: I think are much more hawkish, and I think we 65 00:03:42,520 --> 00:03:45,680 Speaker 1: will take a hawkish position. But the key player I 66 00:03:45,720 --> 00:03:49,520 Speaker 1: think for the next few months geopolitically is net and Ahu. 67 00:03:49,640 --> 00:03:52,640 Speaker 1: How aggressive is he going to get? What's the constraint 68 00:03:52,720 --> 00:03:57,760 Speaker 1: on Mr? Yeah, very little. The constraint was the US 69 00:03:57,800 --> 00:03:59,800 Speaker 1: pulling out of the Rainian Deal, and now that we've 70 00:04:00,000 --> 00:04:02,360 Speaker 1: on it twenty four hours ago, I think nets and 71 00:04:02,440 --> 00:04:06,640 Speaker 1: now you may feel unshackled. Israel seems to have incredible 72 00:04:06,680 --> 00:04:10,640 Speaker 1: amounts of influence over this administration compared to the previous one. Indeed, 73 00:04:10,720 --> 00:04:13,120 Speaker 1: what are your thoughts on that correg Well, I think 74 00:04:13,160 --> 00:04:15,760 Speaker 1: Trump ran on that promise. And you know, just a 75 00:04:15,840 --> 00:04:19,120 Speaker 1: quick digression. This is a president who in some respects 76 00:04:19,160 --> 00:04:21,640 Speaker 1: is underrated that he's kept just about all of his 77 00:04:21,720 --> 00:04:25,640 Speaker 1: campaign promises, whether it's the embassy in Jerusalem, going after China, 78 00:04:25,720 --> 00:04:29,799 Speaker 1: North Korea, tax cuts, regulatory reform, right down the list. 79 00:04:30,040 --> 00:04:33,120 Speaker 1: You could look at his campaign promises and say he's Keptah, 80 00:04:33,600 --> 00:04:35,880 Speaker 1: and people are surprised that he has. Yes, they are. 81 00:04:36,040 --> 00:04:38,360 Speaker 1: And I think you know Tom and I were talking earlier, 82 00:04:38,400 --> 00:04:41,520 Speaker 1: you underestimate Trump at your own peril. His job numbers 83 00:04:41,520 --> 00:04:43,880 Speaker 1: have gone up a bit. His handling of the economy, 84 00:04:43,920 --> 00:04:46,599 Speaker 1: those numbers have gone up a bit. One A couple 85 00:04:46,640 --> 00:04:49,560 Speaker 1: of questions here, you know the news look folkus this 86 00:04:49,600 --> 00:04:51,920 Speaker 1: morning is extraordinary, John and I and Pitt will try 87 00:04:51,960 --> 00:04:54,919 Speaker 1: to keep up with it as we can. Part of 88 00:04:54,920 --> 00:04:59,080 Speaker 1: the politics, and part of the mid term election is 89 00:04:59,520 --> 00:05:03,000 Speaker 1: follow the money. YEP. I don't have a clear image 90 00:05:03,520 --> 00:05:06,800 Speaker 1: of what the Democrat money looks like or the Republican 91 00:05:06,880 --> 00:05:09,680 Speaker 1: money looks like. What's it look like? Both parties have 92 00:05:09,760 --> 00:05:11,920 Speaker 1: raised a lot, I don't. I think the Republicans are 93 00:05:11,920 --> 00:05:14,400 Speaker 1: in pretty good shape. But under the heading of follow 94 00:05:14,440 --> 00:05:17,440 Speaker 1: the money, there's one big story, and that's Michael Colin. 95 00:05:17,800 --> 00:05:20,640 Speaker 1: I think that's the thing. We're gonna watch. The money 96 00:05:20,680 --> 00:05:24,320 Speaker 1: he has gotten from various sources, including maybe Russian oligarchs, 97 00:05:24,400 --> 00:05:26,840 Speaker 1: has opened up a whole new angle to this story. No, 98 00:05:27,000 --> 00:05:29,719 Speaker 1: that's a story for Mr. Trump. But does the Cohen 99 00:05:29,800 --> 00:05:34,000 Speaker 1: story redound upon the mid term elections as well? I don't. 100 00:05:34,680 --> 00:05:37,960 Speaker 1: I'm not sure that America's engaged in the tick by 101 00:05:38,040 --> 00:05:40,800 Speaker 1: tick that we are in Manhattan. I travel all around 102 00:05:40,800 --> 00:05:43,840 Speaker 1: America and in most of the country, certainly Middle America, 103 00:05:44,160 --> 00:05:48,280 Speaker 1: nobody cares. They think it's fake news, they think it's overdone. Uh, 104 00:05:48,320 --> 00:05:50,800 Speaker 1: there's not the sense of all We've got another hot 105 00:05:50,800 --> 00:05:53,040 Speaker 1: story that all of us have right now. There's a 106 00:05:53,080 --> 00:05:57,039 Speaker 1: Russian ola, Mr. Oatskin where the Washington capitals have to 107 00:05:57,080 --> 00:05:59,160 Speaker 1: do pretty well. And the time that we have, folks, 108 00:05:59,200 --> 00:06:02,800 Speaker 1: we must like rust John Farrell with Greg Villier, with 109 00:06:02,960 --> 00:06:07,320 Speaker 1: us as we look at the Washington capitals, I mean 110 00:06:07,400 --> 00:06:10,720 Speaker 1: finally right, Well, I love the capitals. They want to 111 00:06:10,720 --> 00:06:13,799 Speaker 1: finally beat Pittsburgh. But I think they're probably so happy 112 00:06:13,839 --> 00:06:16,320 Speaker 1: they they're in danger of getting swept or losing to 113 00:06:16,400 --> 00:06:19,599 Speaker 1: Tampa Bay because I think they've declared victory before we're 114 00:06:19,600 --> 00:06:23,320 Speaker 1: really at the final victory. Is Trump declared victory before 115 00:06:23,360 --> 00:06:25,719 Speaker 1: the final victory? Well, that's a really good point. As 116 00:06:25,720 --> 00:06:28,479 Speaker 1: I said, I think we underestimate Trump at our own peril. 117 00:06:29,320 --> 00:06:31,600 Speaker 1: I think that there is no way right now You're 118 00:06:31,600 --> 00:06:35,400 Speaker 1: may get sixty seven votes in the Senate to convict him. Impeachment, 119 00:06:35,560 --> 00:06:39,279 Speaker 1: maybe conviction, I don't see it, but within that is 120 00:06:39,320 --> 00:06:41,680 Speaker 1: his rising poll numbers. I mean, there's this pole in 121 00:06:41,800 --> 00:06:45,080 Speaker 1: summer shaded Republican and and that. But if we start 122 00:06:45,080 --> 00:06:48,080 Speaker 1: with the idea that gallops a pretty good shop, the 123 00:06:48,240 --> 00:06:51,520 Speaker 1: vector for the president is up. Can it breach to 124 00:06:51,760 --> 00:06:55,240 Speaker 1: new Trump support? Get from that forty is level up 125 00:06:55,240 --> 00:06:58,360 Speaker 1: into the middle forties, I would argue Tom. The key 126 00:06:58,480 --> 00:07:00,719 Speaker 1: is do the Democrats have a game land? Did the 127 00:07:00,760 --> 00:07:04,360 Speaker 1: Democrats stand for anything? And you talk to the Democrats 128 00:07:04,480 --> 00:07:07,440 Speaker 1: and they worry that you can't win on Trump stinks, 129 00:07:07,720 --> 00:07:10,080 Speaker 1: You've got to have something more than that. Hillary Clinton 130 00:07:10,120 --> 00:07:12,960 Speaker 1: proved you need something more substitutive. I'm not sure what 131 00:07:13,000 --> 00:07:15,440 Speaker 1: the Democrats have for an agenda. I just got an 132 00:07:15,440 --> 00:07:18,680 Speaker 1: email and this is from John from Coventry who says, 133 00:07:18,760 --> 00:07:23,040 Speaker 1: no more capitals talk. So we're gonna book. We're gonna 134 00:07:23,240 --> 00:07:27,440 Speaker 1: We're gonna book happy Joseph Cohen, shut up the capital. 135 00:07:28,360 --> 00:07:30,520 Speaker 1: You know. I got some messages yesterday said we've got 136 00:07:30,320 --> 00:07:32,400 Speaker 1: a lot of listeners in Tampa and we're being White 137 00:07:32,400 --> 00:07:35,720 Speaker 1: Sea Boss hits we are well. For those that don't 138 00:07:35,720 --> 00:07:39,240 Speaker 1: follow hockey, you can watch Tampa Washington. They have a 139 00:07:39,280 --> 00:07:46,280 Speaker 1: defenseman from one of the Scandinavians, Mr Headman, who is extraordinary. 140 00:07:46,840 --> 00:07:50,040 Speaker 1: I watched him live in Tampa. Would have thought the 141 00:07:50,080 --> 00:07:52,960 Speaker 1: capitals could be overconfident, but that could be keep it up. 142 00:07:52,960 --> 00:07:58,440 Speaker 1: Come on, oh look another email from John. What was 143 00:07:58,480 --> 00:08:18,840 Speaker 1: he saying? Shut up? From Greg? Thank you. Mark Chandler 144 00:08:18,960 --> 00:08:21,680 Speaker 1: joined us Brown Brothers harrim And Global Head of Currency 145 00:08:21,880 --> 00:08:28,680 Speaker 1: Strategy Mark last year June seventeen, Argentina issued a century bond. 146 00:08:29,360 --> 00:08:33,880 Speaker 1: Eleven months later, Argentina is requesting, I am FF help. 147 00:08:34,480 --> 00:08:37,760 Speaker 1: Why do we keep getting a merchant market's so wrong? Yea? 148 00:08:37,840 --> 00:08:39,439 Speaker 1: You know. The funny thing is, this is the way 149 00:08:39,440 --> 00:08:41,240 Speaker 1: I think capitalism works. You know, I grew up in 150 00:08:41,320 --> 00:08:45,559 Speaker 1: Chicago and United Airlines has had several problems over the years, 151 00:08:45,760 --> 00:08:48,079 Speaker 1: and whenever they emerge from bankruptcy, we're happy to buy 152 00:08:48,080 --> 00:08:50,640 Speaker 1: their bonds again. I think the same thing happens with Argentina. 153 00:08:50,840 --> 00:08:52,520 Speaker 1: When they get out of trouble, that's the time we'll 154 00:08:52,559 --> 00:08:55,480 Speaker 1: be buying this stuff because they've got a a short 155 00:08:55,679 --> 00:08:59,120 Speaker 1: shelf life. I think that the RG situation, I think 156 00:08:59,160 --> 00:09:02,760 Speaker 1: I'm questioning whether Argy gets the flexible line of credit 157 00:09:02,760 --> 00:09:05,520 Speaker 1: they've asked for. That flexible line of credit has gone 158 00:09:05,520 --> 00:09:09,199 Speaker 1: to a put Poland Mexico, Columbia nobody has used it 159 00:09:09,200 --> 00:09:11,920 Speaker 1: at the feel of how good housekeeping jargon will alert 160 00:09:11,960 --> 00:09:15,920 Speaker 1: there Mr Farrell arg means Argentine. Oh really, thank you, 161 00:09:16,160 --> 00:09:19,839 Speaker 1: thank you, thank you, thank you for that. Mark Chamler, 162 00:09:19,880 --> 00:09:22,440 Speaker 1: Let's talk about what's happening in emerging market foreign exchange. 163 00:09:22,480 --> 00:09:24,760 Speaker 1: That seems to be where the pain is more acutely, 164 00:09:24,800 --> 00:09:27,280 Speaker 1: it's in the effects sign of things. Why well, I 165 00:09:27,280 --> 00:09:29,079 Speaker 1: think that what's happened is that first we've got a 166 00:09:29,080 --> 00:09:31,559 Speaker 1: big dollar recovery on the back of higher U S 167 00:09:31,600 --> 00:09:34,160 Speaker 1: interest rates. So emerging markets had been in favor for 168 00:09:34,200 --> 00:09:36,640 Speaker 1: the last couple of years. I think the MSCI Emerging 169 00:09:36,679 --> 00:09:41,040 Speaker 1: Market Index equities up thirty three percent last year. Everybody 170 00:09:41,040 --> 00:09:43,280 Speaker 1: and his sister are long emerging markets, and now it'speaking 171 00:09:43,400 --> 00:09:46,240 Speaker 1: unwind taking profits like we're seeing in the major currencies 172 00:09:46,280 --> 00:09:48,240 Speaker 1: as well. But the currencies in the e M that 173 00:09:48,280 --> 00:09:50,640 Speaker 1: I'm most vulnerable are not just the one that people 174 00:09:50,640 --> 00:09:53,080 Speaker 1: poured into, but they're also the ones that have some 175 00:09:53,120 --> 00:09:56,120 Speaker 1: political or economic problems. So we go after the sick 176 00:09:56,160 --> 00:10:01,280 Speaker 1: and week ones first, Argentina, Turkey, Venezuel Love began off 177 00:10:01,280 --> 00:10:04,040 Speaker 1: in the Philippines. This is just uh, we're going after 178 00:10:04,080 --> 00:10:05,880 Speaker 1: the week once they the ones we're the most vulnerable, 179 00:10:06,040 --> 00:10:07,920 Speaker 1: and then we'll worry about tacking the stronger ones. Are 180 00:10:07,920 --> 00:10:10,120 Speaker 1: we're going after the ones that don't have central bank 181 00:10:10,160 --> 00:10:12,959 Speaker 1: credibility as well. I think that's part of the issue, 182 00:10:12,960 --> 00:10:15,480 Speaker 1: and the credibility that we're seeing in Turkey is questioning 183 00:10:15,480 --> 00:10:17,960 Speaker 1: that where the central banks are truly independent, and that 184 00:10:18,040 --> 00:10:20,880 Speaker 1: affects that credibility issue. So looking at things at the moment, 185 00:10:20,920 --> 00:10:22,680 Speaker 1: where are the opportunities at the moment mark? Because you 186 00:10:22,679 --> 00:10:24,560 Speaker 1: look at things because quite clearly this pain is going 187 00:10:24,600 --> 00:10:28,720 Speaker 1: to spread indiscriminately sometimes. What are your thoughts. My thoughts 188 00:10:28,760 --> 00:10:31,360 Speaker 1: are that emerging markets are sort of like a fad 189 00:10:31,600 --> 00:10:34,280 Speaker 1: and we have serious love affairs with them for a 190 00:10:34,280 --> 00:10:36,640 Speaker 1: while and they fall out of fashion. They're out of 191 00:10:36,679 --> 00:10:38,960 Speaker 1: fashion now, and I think the tendency is that people 192 00:10:39,040 --> 00:10:40,840 Speaker 1: want to be too early to pick a bottom to 193 00:10:40,880 --> 00:10:43,400 Speaker 1: these emerging markets. So you're saying we're not there yet, 194 00:10:43,440 --> 00:10:45,240 Speaker 1: and I'm saying exactly, we're not there yet, that we 195 00:10:45,280 --> 00:10:48,319 Speaker 1: should be expecting more pressure coming from a stronger dollar 196 00:10:48,480 --> 00:10:52,240 Speaker 1: and higher interest rates. It's your linkage in modernity of 197 00:10:52,320 --> 00:10:56,839 Speaker 1: currency depreciation to domestic inflation is a textbook. I think. 198 00:10:57,480 --> 00:10:59,040 Speaker 1: I think what you're what you're getting at time is 199 00:10:59,040 --> 00:11:01,400 Speaker 1: the past through. How much it's a vary some country 200 00:11:01,440 --> 00:11:05,240 Speaker 1: to country. How much a weaker currency filters to domestic inflation, 201 00:11:05,320 --> 00:11:07,720 Speaker 1: and a lot of emerging markets very quick passed through 202 00:11:08,080 --> 00:11:10,640 Speaker 1: in the US typically have very low pass to UK 203 00:11:10,800 --> 00:11:13,720 Speaker 1: has tends to have higher Turkey. It's like what six hours. 204 00:11:14,840 --> 00:11:16,839 Speaker 1: It's true that the It's part of the problem is 205 00:11:16,840 --> 00:11:19,480 Speaker 1: that some of these countries such rapid pass through Federer 206 00:11:19,559 --> 00:11:22,920 Speaker 1: serve is raising interest rates, the economy hitting they needed 207 00:11:24,200 --> 00:11:25,800 Speaker 1: you and are gonna do a history lesson here. There 208 00:11:25,840 --> 00:11:28,439 Speaker 1: was Ecuadora, okay, Ecuador's little Ecuador. They screwed up in 209 00:11:28,600 --> 00:11:32,559 Speaker 1: early nineties. Fine Mexico, what a disaster. Blame the US. 210 00:11:32,840 --> 00:11:36,840 Speaker 1: Thailand blew up, and then a cup of coffee. After Thailand, 211 00:11:37,360 --> 00:11:42,040 Speaker 1: Indonesia blew up. Now Indonesia gainst my attention. It's hugely populated, 212 00:11:42,120 --> 00:11:46,199 Speaker 1: it's a huge economy. I'm watching Ropea and John Farrell. 213 00:11:46,240 --> 00:11:48,560 Speaker 1: To your point, it's not doing a lira, it's not 214 00:11:48,600 --> 00:11:51,640 Speaker 1: doing a paso. But the vectors in the bad direction, 215 00:11:51,720 --> 00:11:53,640 Speaker 1: isn't it. It's in a bad reaction there. I think 216 00:11:53,679 --> 00:11:56,880 Speaker 1: Indonesia is you know, mostly in East Asia. You have 217 00:11:57,000 --> 00:12:01,680 Speaker 1: low yielding countries. Indonesia's an exception. Indonesia so the high 218 00:12:01,760 --> 00:12:04,240 Speaker 1: yielder of Asia, and so that might help give it 219 00:12:04,280 --> 00:12:05,839 Speaker 1: some support. But I think that you're right that the 220 00:12:05,920 --> 00:12:09,400 Speaker 1: tide is against it. John is just a massive what's 221 00:12:09,440 --> 00:12:13,719 Speaker 1: it called day. There's a lot of bud, There's a 222 00:12:13,760 --> 00:12:16,040 Speaker 1: lot going on. I will say some countries have been spared. 223 00:12:16,080 --> 00:12:18,959 Speaker 1: Philippines been one of them. Um, the GDP numbers out 224 00:12:18,960 --> 00:12:21,280 Speaker 1: of the Philippines has just been phenomenal. We're looking at 225 00:12:21,360 --> 00:12:24,080 Speaker 1: numbers north of six percent, Tom and the central Bank 226 00:12:24,160 --> 00:12:27,319 Speaker 1: seems to have way more credibility than the like startin 227 00:12:28,320 --> 00:12:30,760 Speaker 1: it's really supported. We showed when you were in makeup 228 00:12:30,840 --> 00:12:33,520 Speaker 1: John for the real ye Joanos in the makeup folks 229 00:12:33,559 --> 00:12:39,360 Speaker 1: two days ahead of It's like the John is like 230 00:12:39,440 --> 00:12:42,480 Speaker 1: the Matt Gala as he gets ready for Friday, Mark Chandler. 231 00:12:42,920 --> 00:12:45,680 Speaker 1: If I look at trade weighted Philippine, which we called 232 00:12:45,679 --> 00:12:48,720 Speaker 1: on TV T ed to territin the fact is I 233 00:12:48,760 --> 00:12:52,280 Speaker 1: mean very quickly here, trade weighted currencies matter right now. 234 00:12:52,600 --> 00:12:55,520 Speaker 1: Trade weighted manage for how a country has the impact, 235 00:12:55,559 --> 00:13:00,480 Speaker 1: how the weaker currency impacts inflation and so fade weighted. 236 00:13:00,520 --> 00:13:03,240 Speaker 1: It's the best way to fin currency impact on economy. 237 00:13:03,320 --> 00:13:05,880 Speaker 1: We're out of time, somehow, I think you'll be back soon. 238 00:13:05,960 --> 00:13:22,360 Speaker 1: Mark Chandler on e M Emerging Market Currencies. Thomas Petrie 239 00:13:22,400 --> 00:13:26,000 Speaker 1: with US with Petrie Partners, which defines American oil and 240 00:13:26,040 --> 00:13:30,040 Speaker 1: the entrepreneurial spirit of American oil out of West Point 241 00:13:30,080 --> 00:13:34,959 Speaker 1: in Boston University, and then with HC. Wainwright years ago 242 00:13:35,320 --> 00:13:38,320 Speaker 1: onto First Boston and a storied effort with Merrill Lynch 243 00:13:38,800 --> 00:13:42,520 Speaker 1: with Petrie Parkman. And I think a lot of people 244 00:13:42,559 --> 00:13:46,800 Speaker 1: don't know this, Tom Petrie, but we all remember the 245 00:13:46,920 --> 00:13:51,839 Speaker 1: day Korean Air seven disappeared. I had a family thing 246 00:13:51,880 --> 00:13:54,920 Speaker 1: there that was involved, And that's the day you decided 247 00:13:54,960 --> 00:13:58,080 Speaker 1: to go all in all America. And those are those 248 00:13:58,080 --> 00:14:02,800 Speaker 1: global tensions. How is it American oil today linked to 249 00:14:02,920 --> 00:14:06,360 Speaker 1: international oil like it was the day of that horrific 250 00:14:06,440 --> 00:14:10,920 Speaker 1: tragedy for Korea. Well, it's it's it's very much like 251 00:14:11,000 --> 00:14:14,000 Speaker 1: it was then, only better in that we've got a 252 00:14:14,000 --> 00:14:18,480 Speaker 1: better set of growth prospects. We we are just below 253 00:14:18,720 --> 00:14:22,000 Speaker 1: the level we were at nineteen six nine, which was 254 00:14:22,000 --> 00:14:24,200 Speaker 1: peak production for the US, and we thought we'd never 255 00:14:24,240 --> 00:14:29,160 Speaker 1: see it again. But with the redefinition of oil with 256 00:14:29,200 --> 00:14:33,280 Speaker 1: a shale revolution. We now have a situation where, if 257 00:14:33,360 --> 00:14:36,160 Speaker 1: we needed to, could we get to eleven and twelve 258 00:14:36,200 --> 00:14:39,920 Speaker 1: million barrels a day. Some say it'll happen next independent. 259 00:14:40,120 --> 00:14:44,040 Speaker 1: Now we're not fully independent, but we're close, and if 260 00:14:44,040 --> 00:14:47,640 Speaker 1: you really factor in the gas along with it, we are. 261 00:14:47,920 --> 00:14:50,960 Speaker 1: We've got more flexibility than at any time in my 262 00:14:51,080 --> 00:14:56,640 Speaker 1: forty four years as an oil analyst. Ten point five million, 263 00:14:56,680 --> 00:15:00,920 Speaker 1: Now that's a phenomenal tone it is. There's some concern 264 00:15:00,960 --> 00:15:03,840 Speaker 1: about whether we can sustain that and how long we 265 00:15:03,880 --> 00:15:08,080 Speaker 1: can sustain it, but but given the kind of geopolitical 266 00:15:08,120 --> 00:15:11,320 Speaker 1: forces at work, we we probably can. The big thing 267 00:15:11,400 --> 00:15:13,600 Speaker 1: is we've got to build out some infrastructure to get 268 00:15:13,880 --> 00:15:16,920 Speaker 1: the next round of development to market. So let's talk 269 00:15:16,920 --> 00:15:22,720 Speaker 1: about the geopolitical forces. What changed yesterday? The US did 270 00:15:23,000 --> 00:15:26,920 Speaker 1: did adopt a very bold strategy and some would say 271 00:15:27,000 --> 00:15:30,320 Speaker 1: high risk, and I can't argue with that um but 272 00:15:31,000 --> 00:15:33,240 Speaker 1: it is based on the belief that we've got the 273 00:15:33,280 --> 00:15:36,400 Speaker 1: flexibility at this time to do this and the nature 274 00:15:36,400 --> 00:15:39,400 Speaker 1: of the threat that we were facing. Uh, they felt 275 00:15:39,880 --> 00:15:42,440 Speaker 1: was such that now is the time to find out 276 00:15:43,200 --> 00:15:47,000 Speaker 1: where we are. Allies, You're in quite a phenomenal position. Tom, 277 00:15:47,080 --> 00:15:50,080 Speaker 1: with your experience and military background and all that. Analysts, 278 00:15:50,120 --> 00:15:51,600 Speaker 1: you look at the Middle East right now, what are 279 00:15:51,600 --> 00:15:57,680 Speaker 1: the risks? Well, look, there's a fundamental confrontation underway. It's 280 00:15:57,680 --> 00:16:01,600 Speaker 1: been underway even without us UM. Some would say it 281 00:16:01,720 --> 00:16:03,320 Speaker 1: was an outgrowth of some of the things we did 282 00:16:03,320 --> 00:16:08,440 Speaker 1: ten fifteen years ago. But but Saudi Arabia and Iran 283 00:16:09,000 --> 00:16:12,280 Speaker 1: our mortal enemies. UH. There there should be no doubt. 284 00:16:12,520 --> 00:16:15,680 Speaker 1: We've already had a proxy war in Yemen. We have 285 00:16:15,800 --> 00:16:19,880 Speaker 1: the equivalent of one UM in Lebanon, UH. And the 286 00:16:19,960 --> 00:16:23,800 Speaker 1: vote this week UH was certainly a step in in 287 00:16:24,160 --> 00:16:28,000 Speaker 1: UH fortifying the position of Iran as an influence on 288 00:16:28,040 --> 00:16:32,560 Speaker 1: that side of it. So the Saudi Uh Iranian confrontation 289 00:16:32,760 --> 00:16:36,640 Speaker 1: is there. It's real. Really, there's a real argument. President 290 00:16:36,680 --> 00:16:41,360 Speaker 1: Obama deserved the Nobel Peace Prize not for being elected, 291 00:16:41,440 --> 00:16:43,240 Speaker 1: which is what he got it for the last time, 292 00:16:43,520 --> 00:16:46,600 Speaker 1: but he deserved it because he's made Israel and Saudi 293 00:16:46,600 --> 00:16:49,280 Speaker 1: Arabia much closer allies. Well, they've become allies, and they've 294 00:16:49,280 --> 00:16:52,560 Speaker 1: become allies I've Iran, and I just wonder how this 295 00:16:52,600 --> 00:16:56,000 Speaker 1: bleeds into the politics of OPEQ. How can we have 296 00:16:56,160 --> 00:17:00,120 Speaker 1: mortial allies that agree on something like oil and they 297 00:17:00,160 --> 00:17:02,960 Speaker 1: get around the type of opaque. How's that possible? Tone, Well, 298 00:17:03,240 --> 00:17:05,240 Speaker 1: the real key in OPEC right now is not that 299 00:17:05,320 --> 00:17:08,679 Speaker 1: everybody agrees, because there's always been differences between some of 300 00:17:08,680 --> 00:17:10,920 Speaker 1: the smaller players and the big ones. But right at 301 00:17:10,920 --> 00:17:13,880 Speaker 1: the moment there's a new opeck. It it is OPEC 302 00:17:13,960 --> 00:17:17,800 Speaker 1: plus with Russia thrown in, and there's a special agreement 303 00:17:17,840 --> 00:17:21,560 Speaker 1: now between Saudi and Russia about what they want to 304 00:17:21,560 --> 00:17:23,840 Speaker 1: do over the came Are you suggesting the cartel is 305 00:17:23,880 --> 00:17:28,040 Speaker 1: more cartelli than it's been in recent years? It is good. 306 00:17:28,200 --> 00:17:31,520 Speaker 1: Good behavior has been rewarded in the last nine to 307 00:17:31,560 --> 00:17:35,560 Speaker 1: twelve months. And uh, and that's self reinforcing at least 308 00:17:35,640 --> 00:17:38,280 Speaker 1: until it is I would suggest for all of our listeners, 309 00:17:38,280 --> 00:17:43,320 Speaker 1: certainly for me. Oil production of Iran is almost an abstract. 310 00:17:43,480 --> 00:17:46,600 Speaker 1: It's off the east coast of the Persian Gulf and 311 00:17:46,600 --> 00:17:49,760 Speaker 1: then it's up the river sort of up the Iraq border. Right, 312 00:17:51,520 --> 00:17:53,240 Speaker 1: that's right. I mean, do you know how much oil 313 00:17:53,320 --> 00:17:55,679 Speaker 1: is there? Or is it a mystery like it is 314 00:17:55,720 --> 00:17:58,960 Speaker 1: maybe in Saudi Arabia as well well, in that part 315 00:17:58,960 --> 00:18:02,800 Speaker 1: of the world. None of it's the definitional aspects of 316 00:18:02,840 --> 00:18:06,000 Speaker 1: it much workier than they are. I mean, the Colorado's 317 00:18:06,000 --> 00:18:08,040 Speaker 1: school of minds, where you hold court the answers, they 318 00:18:08,040 --> 00:18:10,639 Speaker 1: don't have a clue. It's in a rent right. We 319 00:18:10,720 --> 00:18:12,879 Speaker 1: don't know. And part of the reason we don't know 320 00:18:13,080 --> 00:18:16,960 Speaker 1: is it's the oldest source of production. They preceded by 321 00:18:17,000 --> 00:18:21,159 Speaker 1: almost really a half century, the active development of the 322 00:18:21,160 --> 00:18:24,040 Speaker 1: resources and Iran. The aspect data puts the numbers at 323 00:18:24,040 --> 00:18:27,800 Speaker 1: three point seven five million barons of all the day's productivity. 324 00:18:28,240 --> 00:18:29,720 Speaker 1: You've just had that on the tip of your time. 325 00:18:29,760 --> 00:18:32,680 Speaker 1: That's that's the production numbers. As Tom points out, we're 326 00:18:32,680 --> 00:18:34,560 Speaker 1: not very clear on the reserves, and let's be clear, 327 00:18:34,600 --> 00:18:36,160 Speaker 1: we're not very clear on the reserves in a place 328 00:18:36,200 --> 00:18:39,280 Speaker 1: like Saudi Arabia either. That's the data that's tough to find. 329 00:18:39,320 --> 00:18:41,280 Speaker 1: The big question I think for the all market this morning, 330 00:18:41,320 --> 00:18:43,280 Speaker 1: Tom and I sent you probably agree is if the 331 00:18:43,359 --> 00:18:46,080 Speaker 1: United States is no longer part of the deal, does 332 00:18:46,119 --> 00:18:48,560 Speaker 1: the deal still exist in the sense that the sanctions 333 00:18:48,560 --> 00:18:52,159 Speaker 1: don't apply to the other places that Iran exports crew to. 334 00:18:52,480 --> 00:18:57,080 Speaker 1: Do you see oil production in Iran declining significantly after 335 00:18:57,080 --> 00:18:59,720 Speaker 1: the United States has poured out of this deal. I 336 00:18:59,760 --> 00:19:05,159 Speaker 1: think Iran will have trouble maintaining that production level because 337 00:19:05,359 --> 00:19:09,760 Speaker 1: they need to import technology where the US does have leverage. 338 00:19:11,240 --> 00:19:13,639 Speaker 1: That was one of the reasons from Germany. I'm sorry 339 00:19:13,640 --> 00:19:15,760 Speaker 1: they're not going to get the technology from is not 340 00:19:15,880 --> 00:19:21,280 Speaker 1: clear that Germans have the addibility they Well, this is 341 00:19:21,320 --> 00:19:24,320 Speaker 1: the fundamental question, Tom, can the UK who does have 342 00:19:24,400 --> 00:19:27,800 Speaker 1: that ability? Does have that technology question? Arry on dealing 343 00:19:27,840 --> 00:19:30,919 Speaker 1: with Iran? Now the United States of instituted sanctions? Are 344 00:19:30,920 --> 00:19:33,080 Speaker 1: the u S sanctions or are the international And the 345 00:19:33,119 --> 00:19:36,200 Speaker 1: answer to that question is the UK has other things 346 00:19:36,240 --> 00:19:38,280 Speaker 1: to think about when they decide whether they're going to 347 00:19:38,359 --> 00:19:41,320 Speaker 1: go with Iran or the US something called post brexit, 348 00:19:42,240 --> 00:19:47,359 Speaker 1: and so you know they if Trump plays it appropriately 349 00:19:47,960 --> 00:19:51,600 Speaker 1: and patiently, I think they stay with US. In the 350 00:19:51,640 --> 00:19:53,480 Speaker 1: case of the UK, so you just you just wonder 351 00:19:53,520 --> 00:19:55,520 Speaker 1: who wins this morning in the all market, and I 352 00:19:55,600 --> 00:19:57,680 Speaker 1: sense it's clearly Saudi Arabia. They get in a high 353 00:19:57,720 --> 00:20:01,080 Speaker 1: roll price. And if Iranian crude production drops, who fills 354 00:20:01,119 --> 00:20:04,280 Speaker 1: the void? Saudi Arabia gets to stop pumping again at 355 00:20:04,280 --> 00:20:06,320 Speaker 1: a high rold price, and then the winner is out 356 00:20:06,320 --> 00:20:09,280 Speaker 1: of hold of this. That's right, and and let's talk 357 00:20:09,280 --> 00:20:12,960 Speaker 1: about the sequence price goes up, they start and then 358 00:20:13,119 --> 00:20:16,520 Speaker 1: they become self correcting because they fill a spot, and 359 00:20:16,560 --> 00:20:21,280 Speaker 1: even their allied President Trump decides spr is available to 360 00:20:21,400 --> 00:20:24,080 Speaker 1: We're up two dollars seven cents brent crude seventies six 361 00:20:25,440 --> 00:20:27,840 Speaker 1: dollars away from a hundred dollars baryl. When is the 362 00:20:27,960 --> 00:20:30,560 Speaker 1: last time I said, uh that? But Tom Petre, the 363 00:20:30,560 --> 00:20:34,399 Speaker 1: Iranian oil, in my right, goes through the Persian Gulf, 364 00:20:34,440 --> 00:20:38,480 Speaker 1: across the Indian Ocean and through the Malacca Strait at 365 00:20:38,480 --> 00:20:41,600 Speaker 1: the margin to help China and Asia. Right, Yes, they 366 00:20:41,640 --> 00:20:46,640 Speaker 1: have a huge motivation to keep that flow going, don't they. 367 00:20:47,200 --> 00:20:52,480 Speaker 1: China will, I think be the key for Iran. Discuss 368 00:20:52,600 --> 00:20:55,800 Speaker 1: that further. Well, then Saudi Arabia has weighed in, and 369 00:20:55,840 --> 00:21:00,600 Speaker 1: Saudi Arabia has joint ventures with China in refining. Exxon 370 00:21:00,880 --> 00:21:06,000 Speaker 1: and and Saudi have refined Saudi Oil, have built a 371 00:21:06,040 --> 00:21:09,520 Speaker 1: special refinery to refine that oil, and so there's going 372 00:21:09,560 --> 00:21:18,760 Speaker 1: to be real competition between with the oil needs of China. 373 00:21:18,920 --> 00:21:23,119 Speaker 1: That's right, play one off again. Does it brief the 374 00:21:23,160 --> 00:21:26,439 Speaker 1: President of the United States on this? No, he hadn't asked. 375 00:21:28,520 --> 00:21:32,320 Speaker 1: But there's awareness in our government about those kind of issues, 376 00:21:32,480 --> 00:21:35,960 Speaker 1: and uh, I think I think there's pretty good sophistication 377 00:21:36,040 --> 00:21:38,280 Speaker 1: and understanding that. Okay over there, Yeah, I was just 378 00:21:38,320 --> 00:21:42,200 Speaker 1: looking at the Yankee school last night. Yeah, just to 379 00:21:42,240 --> 00:21:46,240 Speaker 1: get an update. Tom pat and I were going to 380 00:21:46,280 --> 00:21:50,720 Speaker 1: talk about the vastly improved Colorado Avalanche this year. You 381 00:21:50,760 --> 00:21:54,920 Speaker 1: don't talk about baseball. D the New York Yankees three 382 00:21:54,960 --> 00:21:58,960 Speaker 1: and I can see there's a two next to and 383 00:21:59,000 --> 00:22:03,520 Speaker 1: they play again this evening, right, the Red Sox won 384 00:22:05,080 --> 00:22:07,760 Speaker 1: three games and they still didn't get the World Series 385 00:22:07,800 --> 00:22:11,520 Speaker 1: ticket star? Can we go this evening? You don't fancy? No, 386 00:22:11,640 --> 00:22:14,840 Speaker 1: I can't. Can we go tomorrow? Come on, come on, 387 00:22:15,200 --> 00:22:19,880 Speaker 1: I'll take your screen to Yankee Stadium. The family can 388 00:22:19,880 --> 00:22:25,440 Speaker 1: come to hell Yankee stadiums. I imagine there's some listeners 389 00:22:25,440 --> 00:22:29,439 Speaker 1: this morning. Good morning Yankee fans. Um. I think Tom's 390 00:22:29,440 --> 00:22:32,080 Speaker 1: a little bit upset about his Boston Red Sox and 391 00:22:32,119 --> 00:22:35,560 Speaker 1: wants to talk about hockey instead. The next time you 392 00:22:35,640 --> 00:22:39,520 Speaker 1: come over to the man's I'm putting every Red Sox 393 00:22:39,560 --> 00:22:41,239 Speaker 1: book in the house. You know what I want to 394 00:22:41,240 --> 00:22:43,400 Speaker 1: turn I want to turn up at Tom Keane's house 395 00:22:43,440 --> 00:23:03,160 Speaker 1: in a New York Yankees cap without question and John 396 00:23:03,200 --> 00:23:05,919 Speaker 1: to get right to it. This is our interview of 397 00:23:05,960 --> 00:23:09,320 Speaker 1: the day. My book of the summer, one of my 398 00:23:09,359 --> 00:23:12,680 Speaker 1: two books of the summer is The Threat Matrix, which 399 00:23:12,720 --> 00:23:15,359 Speaker 1: is on the FBI at war in the age of 400 00:23:15,400 --> 00:23:20,320 Speaker 1: Global Terror, and Michael Hayden plays prominently in Garrett Grafts 401 00:23:20,400 --> 00:23:23,600 Speaker 1: wonderful The Threat Matrix, And of course, as you would 402 00:23:23,680 --> 00:23:27,320 Speaker 1: always expect the writing Michael haydroan uh is out. General 403 00:23:27,400 --> 00:23:29,480 Speaker 1: Hayden is out with a new book on his take 404 00:23:29,560 --> 00:23:33,399 Speaker 1: on the assault on intelligence. This is a short, brief, 405 00:23:33,960 --> 00:23:38,560 Speaker 1: must read primer on where we are according to General Hayden, 406 00:23:38,600 --> 00:23:41,720 Speaker 1: and the General welcomes us right now. Michael, We've got 407 00:23:41,720 --> 00:23:45,159 Speaker 1: to talk about current events as well. President Trump with 408 00:23:45,280 --> 00:23:48,679 Speaker 1: a decisive decision. What will be the ramifications of that 409 00:23:48,760 --> 00:23:54,080 Speaker 1: for the American intelligence community? Well, um, lots of things 410 00:23:54,119 --> 00:23:57,400 Speaker 1: to think about, and the real answer is we'll see. Uh. 411 00:23:57,520 --> 00:24:00,480 Speaker 1: But at the departure point, I don't think this is 412 00:24:00,480 --> 00:24:04,199 Speaker 1: a decision that the intelligence community would have recommended to 413 00:24:04,280 --> 00:24:06,840 Speaker 1: the president. And look, I get it, presidents get to 414 00:24:06,880 --> 00:24:10,359 Speaker 1: make decisions on a variety of criteria. But the American 415 00:24:10,440 --> 00:24:13,919 Speaker 1: intel assessment right now, not me, I'm talking about Donald 416 00:24:13,920 --> 00:24:17,399 Speaker 1: Trump's intel community, is that a rod is further away 417 00:24:17,440 --> 00:24:19,960 Speaker 1: from a weapon with this deal than they would be 418 00:24:20,000 --> 00:24:22,960 Speaker 1: without it. We know more about the A audience program 419 00:24:23,000 --> 00:24:26,239 Speaker 1: with this deal than we would know without it, and 420 00:24:26,280 --> 00:24:29,480 Speaker 1: so I don't think there was enthusiasm the intelligence community 421 00:24:29,720 --> 00:24:33,359 Speaker 1: for taking the dramatic step that the President took yesterday. Now, 422 00:24:33,880 --> 00:24:38,280 Speaker 1: going forward, INTEL is going to try to organize itself 423 00:24:38,320 --> 00:24:41,600 Speaker 1: around what Plan B is. And here and here's my 424 00:24:41,680 --> 00:24:45,359 Speaker 1: great problem, I don't know Plan B. The President the 425 00:24:45,400 --> 00:24:49,080 Speaker 1: administration has yet to articulate Plan B. So I think 426 00:24:49,080 --> 00:24:52,600 Speaker 1: the Intel guys a little disappointed with the decision and 427 00:24:52,680 --> 00:24:56,119 Speaker 1: a lot anxious about what next. Michael, what is the 428 00:24:56,160 --> 00:25:00,040 Speaker 1: prospect for a series of negotiations now between around the 429 00:25:00,080 --> 00:25:03,119 Speaker 1: United States for broader deal? Is that just dream land? 430 00:25:04,400 --> 00:25:07,800 Speaker 1: I do um and and in fact I think it 431 00:25:07,920 --> 00:25:11,280 Speaker 1: dream lands too strong. Look, anything's possible, and this may 432 00:25:11,400 --> 00:25:13,480 Speaker 1: turn out well, you mean, you can't rull that out. 433 00:25:13,920 --> 00:25:17,919 Speaker 1: But the first association, the first negotiations not with the Iranians. 434 00:25:17,960 --> 00:25:20,920 Speaker 1: The first negotiation is between US and our European French 435 00:25:21,400 --> 00:25:24,240 Speaker 1: and I think that's the first fault line that we're 436 00:25:24,280 --> 00:25:26,560 Speaker 1: now going to have to bridge. And if I'm advising 437 00:25:26,600 --> 00:25:30,480 Speaker 1: the Iranians and I'm not Um, I would suggest to 438 00:25:30,520 --> 00:25:35,479 Speaker 1: them sit tight, continue to observe the external protocols of 439 00:25:35,520 --> 00:25:40,480 Speaker 1: the deal, let the Transatlantic fight play out, and see 440 00:25:41,119 --> 00:25:44,720 Speaker 1: what you can pick up after that battle as you 441 00:25:44,840 --> 00:25:48,399 Speaker 1: police that battlefield for your for your own interests. So 442 00:25:48,440 --> 00:25:51,320 Speaker 1: I think it's gonna be a while before we start 443 00:25:51,400 --> 00:25:57,200 Speaker 1: having an American Iranian certainly a Western Iranian dialogue underway. Michael, 444 00:25:57,200 --> 00:26:00,800 Speaker 1: there was some confusing elements to the President's statement yesterday. 445 00:26:00,840 --> 00:26:04,000 Speaker 1: I'm linking around to Hesballah quite clearly as something we 446 00:26:04,080 --> 00:26:06,560 Speaker 1: all think about, but linking around to Kada was something 447 00:26:06,600 --> 00:26:09,040 Speaker 1: new to me. Um, was that new to you? And 448 00:26:09,080 --> 00:26:14,160 Speaker 1: just how can we link around to Sunny al Qaeda? Yeah, 449 00:26:14,280 --> 00:26:17,920 Speaker 1: so we we We've had this argument back in the 450 00:26:18,080 --> 00:26:21,560 Speaker 1: in the in the Bush administration, and there have been 451 00:26:21,840 --> 00:26:26,200 Speaker 1: There's no question there have been some accommodations between Iran 452 00:26:26,800 --> 00:26:30,320 Speaker 1: and Sunni terrorism, al right, in terms of sayt Haven 453 00:26:30,880 --> 00:26:35,560 Speaker 1: loose house arrest for al Qaeda folks inside Iran. But 454 00:26:35,640 --> 00:26:38,920 Speaker 1: if that is nothing compared to what you suggest, which 455 00:26:39,040 --> 00:26:45,080 Speaker 1: is the sustained significant Iranian support for Hezbollah. A must 456 00:26:45,119 --> 00:26:48,600 Speaker 1: read for the intelligence community and international relations. The Assault 457 00:26:48,720 --> 00:26:52,800 Speaker 1: on Intelligence, American National Security in an Age of Lies. 458 00:26:52,840 --> 00:26:56,160 Speaker 1: This is a terse book by Michael Hayden. Of course, 459 00:26:56,200 --> 00:26:59,080 Speaker 1: you know General Hayden as a former Director of National 460 00:26:59,119 --> 00:27:04,119 Speaker 1: Security Agent see working with the National Intelligence as well, 461 00:27:04,359 --> 00:27:08,000 Speaker 1: and of course with our Central Intelligence Agency. General Hayden, 462 00:27:08,040 --> 00:27:11,320 Speaker 1: page ninety four of your book, you give a raise 463 00:27:11,480 --> 00:27:14,439 Speaker 1: to miss Aspell. She will go up in front of 464 00:27:14,480 --> 00:27:18,440 Speaker 1: a brutal testimony on the Hill in the coming hours. 465 00:27:18,520 --> 00:27:22,240 Speaker 1: In days. There's been so much written about Gina Haspell 466 00:27:22,720 --> 00:27:25,520 Speaker 1: in your c I A. I want you to explain 467 00:27:25,560 --> 00:27:29,840 Speaker 1: to our national and our global audience. Now what the 468 00:27:29,960 --> 00:27:34,399 Speaker 1: critics get wrong about it seems to be some form 469 00:27:34,480 --> 00:27:38,800 Speaker 1: of paths of torture in the past. Yeah, thank you, 470 00:27:39,240 --> 00:27:41,800 Speaker 1: thank you for bringing that up. And in a very 471 00:27:41,800 --> 00:27:45,000 Speaker 1: real way, what I'm gonna say about Gina is tied 472 00:27:45,040 --> 00:27:47,240 Speaker 1: back to what I just said about the Iranian deal. 473 00:27:47,800 --> 00:27:50,320 Speaker 1: I just pointed out that the intel guys had a 474 00:27:50,359 --> 00:27:54,240 Speaker 1: certain view, But it seems as if the decision the 475 00:27:54,280 --> 00:27:59,000 Speaker 1: president made was detached, not connected to what the intelligence 476 00:27:59,040 --> 00:28:03,240 Speaker 1: guys worked telling him. Now, fast forward to Gina. We 477 00:28:03,320 --> 00:28:08,840 Speaker 1: have a president who makes decisions instinctively, some would say emotionally, 478 00:28:09,520 --> 00:28:11,760 Speaker 1: some would even say he does it just so he 479 00:28:11,800 --> 00:28:15,679 Speaker 1: can appear to be not Barack Obama. And so you 480 00:28:15,760 --> 00:28:18,439 Speaker 1: really want some people in the room who want to 481 00:28:18,480 --> 00:28:22,920 Speaker 1: bound the president's decision making, create left and right hand 482 00:28:22,920 --> 00:28:28,280 Speaker 1: boundaries by an objective view of reality. Someone who's gonna 483 00:28:28,280 --> 00:28:30,879 Speaker 1: stand up to the president when everyone else in the 484 00:28:30,920 --> 00:28:32,520 Speaker 1: room is going to go into what I call north 485 00:28:32,560 --> 00:28:36,160 Speaker 1: South auto bob after the President has said something and say, boy, 486 00:28:36,200 --> 00:28:39,160 Speaker 1: you got that right, boss. The one woman I am 487 00:28:39,240 --> 00:28:43,479 Speaker 1: confident will do that will be Gina Haspell. I know Gina. 488 00:28:44,000 --> 00:28:47,600 Speaker 1: She is the truth teller. She is tough, she will 489 00:28:47,680 --> 00:28:51,480 Speaker 1: speak up. And I think we've never nieces More, a 490 00:28:51,600 --> 00:28:54,560 Speaker 1: CIA director, to speak up in the Oval. A lot 491 00:28:54,560 --> 00:28:57,520 Speaker 1: of people want to look to her past. People want 492 00:28:57,520 --> 00:29:00,640 Speaker 1: to look to what happened seventeen eighteen years ago and 493 00:29:00,840 --> 00:29:05,280 Speaker 1: relitigate again what it was my old agency did and 494 00:29:05,280 --> 00:29:08,520 Speaker 1: and frankly, I think we're a bit tired relitigating. But 495 00:29:08,560 --> 00:29:11,880 Speaker 1: if people want to relitigate it, talk to the directors, 496 00:29:12,080 --> 00:29:15,080 Speaker 1: Talk to the presidents, talk to the attorney generals, talk 497 00:29:15,160 --> 00:29:17,440 Speaker 1: to the members of Congress who actually thought this was 498 00:29:17,480 --> 00:29:20,040 Speaker 1: a good idea at the time. Talk to the people 499 00:29:20,080 --> 00:29:23,760 Speaker 1: who created the policy. If you want to religigate direction 500 00:29:23,840 --> 00:29:26,400 Speaker 1: America talk general. Hey, and if we take the realist 501 00:29:26,520 --> 00:29:30,160 Speaker 1: international relations school of Henry Kissinger and maybe Robert Kaplan 502 00:29:30,240 --> 00:29:33,360 Speaker 1: with his wonderful new book The Return of Marco Polos Road, 503 00:29:33,680 --> 00:29:36,800 Speaker 1: and we compare it with those concerned on human rights, 504 00:29:37,200 --> 00:29:40,960 Speaker 1: how does a grizzled veteran like you balance that in 505 00:29:41,040 --> 00:29:44,960 Speaker 1: a debate over this candidate to run the CIA? How 506 00:29:45,040 --> 00:29:51,120 Speaker 1: do you balance realism with an American tenor of human rights? 507 00:29:51,280 --> 00:29:53,920 Speaker 1: I get it, and and and and oh, by the way, 508 00:29:54,560 --> 00:29:58,760 Speaker 1: American values create American power in the world. All right, 509 00:29:58,920 --> 00:30:02,000 Speaker 1: so I thoroughly understand this. So let me take let 510 00:30:02,080 --> 00:30:04,520 Speaker 1: me take one more run at why even on this 511 00:30:04,600 --> 00:30:08,760 Speaker 1: issue you want Gina Haspall to be the direct directed 512 00:30:09,920 --> 00:30:13,640 Speaker 1: was the agency did? And the guarantee I'm giving you 513 00:30:13,680 --> 00:30:16,040 Speaker 1: from you It is not because Gina or the or 514 00:30:16,080 --> 00:30:20,120 Speaker 1: the c repudiate c I A did in the pen 515 00:30:20,920 --> 00:30:23,280 Speaker 1: the CIA and let maybe maybe candid with you and 516 00:30:23,320 --> 00:30:27,320 Speaker 1: your listeners, please, I did this, this did this. They 517 00:30:27,320 --> 00:30:30,400 Speaker 1: believed it was effective, law went appropriate. We're gonna argue 518 00:30:30,400 --> 00:30:33,880 Speaker 1: about that later. That's fine that they also thought that 519 00:30:34,000 --> 00:30:36,600 Speaker 1: the people who told them to go do it. The 520 00:30:36,760 --> 00:30:41,080 Speaker 1: broad American political establishment had their back, and as it 521 00:30:41,120 --> 00:30:45,440 Speaker 1: turns out, they didn't have their back. Gina Haspell as 522 00:30:45,560 --> 00:30:48,960 Speaker 1: the director of the agency, who loves the agency, who 523 00:30:49,040 --> 00:30:54,680 Speaker 1: loves the agency's officers, will because of that, never put 524 00:30:54,720 --> 00:30:57,800 Speaker 1: them into jeopardy again. If you want a director who 525 00:30:57,800 --> 00:31:00,680 Speaker 1: will stand up to even a Donald Trump who might 526 00:31:00,720 --> 00:31:04,440 Speaker 1: be directing enhanced interrogations and simply say, Boss, We're just 527 00:31:04,520 --> 00:31:07,360 Speaker 1: not going to do that, that director's Gina has Well. 528 00:31:07,480 --> 00:31:09,120 Speaker 1: I don't have to leave it there. Michael Hayden, thank 529 00:31:09,160 --> 00:31:11,680 Speaker 1: as so much, General Hayden with the assault on intelligence, 530 00:31:11,680 --> 00:31:15,360 Speaker 1: American national security in an age of lies, agree or 531 00:31:15,440 --> 00:31:19,200 Speaker 1: disagree it as a primimer that will advance your understanding 532 00:31:19,680 --> 00:31:24,200 Speaker 1: of where we are in our recent intelligence wars as well, 533 00:31:24,240 --> 00:31:27,520 Speaker 1: and again the testimonium as Askell before the Senate, I 534 00:31:27,560 --> 00:31:30,440 Speaker 1: believe that is this is that Colum this afternoon the 535 00:31:30,480 --> 00:31:35,120 Speaker 1: Senate this afternoon. General, Yeah, extremely timely. We really thank 536 00:31:35,160 --> 00:31:38,560 Speaker 1: our team for putting us together this conversation with the 537 00:31:38,600 --> 00:31:55,000 Speaker 1: General as well. What's the future of Deutsche Bank. We've 538 00:31:55,040 --> 00:31:57,360 Speaker 1: been considering that for years now. What Deutsche Bank has 539 00:31:57,360 --> 00:32:01,440 Speaker 1: sets me mulling U S cots, hitting twenty percent of staff. 540 00:32:01,920 --> 00:32:04,960 Speaker 1: The author of that story this morning, Snadi Bassek Bloomberg 541 00:32:05,080 --> 00:32:07,600 Speaker 1: News report a great tamuit us on the program, SI, 542 00:32:07,640 --> 00:32:09,680 Speaker 1: walk me through what you've learned in the last twenty 543 00:32:09,720 --> 00:32:12,120 Speaker 1: four hours. Sure, so, the biggest thing here is that 544 00:32:12,120 --> 00:32:15,760 Speaker 1: they're considering cutting of their staff, which is quite a 545 00:32:15,800 --> 00:32:18,880 Speaker 1: lot steeper than the ten percent we initially reported. We 546 00:32:18,920 --> 00:32:21,880 Speaker 1: know more or less where they're making the cuts, though 547 00:32:21,920 --> 00:32:24,360 Speaker 1: we're waiting for more to become clear. We know they're 548 00:32:24,400 --> 00:32:27,600 Speaker 1: making the cuts in cash equities, in repo um in 549 00:32:27,720 --> 00:32:31,120 Speaker 1: prime brokerage, so you know, mostly on their markets desk, 550 00:32:31,440 --> 00:32:33,760 Speaker 1: and a little bit on the rest of their investment bank, 551 00:32:33,760 --> 00:32:36,560 Speaker 1: which includes m and a staff, Let's be clear, is 552 00:32:36,600 --> 00:32:38,840 Speaker 1: more than two thousand um here in the United States. 553 00:32:38,920 --> 00:32:41,920 Speaker 1: This is a decent number of jobs that could be gone, 554 00:32:42,600 --> 00:32:44,760 Speaker 1: and a lot of them also at the high levels. Right, 555 00:32:44,800 --> 00:32:46,960 Speaker 1: so some of these teams have two or three people 556 00:32:47,120 --> 00:32:49,280 Speaker 1: leading them. We can imagine those teams will be led 557 00:32:49,280 --> 00:32:50,920 Speaker 1: by one person. For what does this mean for the 558 00:32:50,960 --> 00:32:54,040 Speaker 1: ambition of this bank and the international ambitions of this 559 00:32:54,120 --> 00:32:56,120 Speaker 1: bank that was so great a number of years ago. 560 00:32:56,160 --> 00:33:00,920 Speaker 1: Where are they now? The interesting thing is it's significant, 561 00:33:00,920 --> 00:33:03,239 Speaker 1: but it also shows that they want to keep some 562 00:33:03,240 --> 00:33:05,440 Speaker 1: sort of presence here. So it's gonna be a weird 563 00:33:05,480 --> 00:33:07,680 Speaker 1: balancing act, right. It's going to be a difficult one 564 00:33:08,040 --> 00:33:10,320 Speaker 1: because we haven't seen any cuts to any other fixed 565 00:33:10,320 --> 00:33:12,840 Speaker 1: income desks yet, for example. And if they want to 566 00:33:12,920 --> 00:33:15,880 Speaker 1: keep clients in fixed income or clients that want to 567 00:33:15,880 --> 00:33:18,080 Speaker 1: have a European presence, they're going to have to make 568 00:33:18,080 --> 00:33:21,320 Speaker 1: those businesses attractive enough to keep them. So the way 569 00:33:21,360 --> 00:33:23,640 Speaker 1: you do it is to be sure you can shop 570 00:33:23,640 --> 00:33:27,560 Speaker 1: at Whole Foods at Columbus Circle, So they're losing one 571 00:33:27,600 --> 00:33:32,680 Speaker 1: out of five bodies, and they're moving from downtown up 572 00:33:32,720 --> 00:33:35,360 Speaker 1: to Whole Foods Time Warner Center so people can go 573 00:33:35,400 --> 00:33:39,760 Speaker 1: gluten free in Aisle seven. It's really interesting. I don't 574 00:33:39,760 --> 00:33:41,680 Speaker 1: know if you guys saw the picture example of the 575 00:33:41,720 --> 00:33:46,160 Speaker 1: trading floor. You can oversee Central Park and you know 576 00:33:46,280 --> 00:33:49,400 Speaker 1: it's it's it's something, but it is less of a 577 00:33:49,400 --> 00:33:52,959 Speaker 1: footprint than it was before. So they're they're downsizing as 578 00:33:53,000 --> 00:33:56,080 Speaker 1: they moved to the Time Warner Center big time. And 579 00:33:56,120 --> 00:33:58,080 Speaker 1: as we know in New York City real estate also 580 00:33:58,240 --> 00:34:00,160 Speaker 1: there's so many firms in the next couple of years 581 00:34:00,160 --> 00:34:02,920 Speaker 1: that are moving to Hudson Yards, so they're moving uptown 582 00:34:03,160 --> 00:34:05,760 Speaker 1: some other firms are moving west and so there's kind 583 00:34:05,760 --> 00:34:10,239 Speaker 1: of a dancing strategy or is this the Christians having strategy? 584 00:34:10,360 --> 00:34:13,520 Speaker 1: Which one is? It's not the drawing strategy. I mean 585 00:34:13,640 --> 00:34:17,280 Speaker 1: it's in some ways. And you know Marcus Schenk also 586 00:34:17,360 --> 00:34:19,440 Speaker 1: the previous head of the investment bank CO had it 587 00:34:19,480 --> 00:34:21,560 Speaker 1: was his strategy as well. You know, there is a 588 00:34:21,600 --> 00:34:25,200 Speaker 1: new leadership in play here. In fact, we also broke 589 00:34:25,280 --> 00:34:27,759 Speaker 1: yesterday that the head of Deutsche Bank Securities is also 590 00:34:27,800 --> 00:34:31,120 Speaker 1: stopping down, very posnano. So they didn't name a replacement 591 00:34:31,160 --> 00:34:35,000 Speaker 1: for him either to run the markets division. So you know, 592 00:34:36,040 --> 00:34:39,399 Speaker 1: the head of Global Markets signs the memo. Maybe that's 593 00:34:39,440 --> 00:34:43,560 Speaker 1: an indication it's for the non sophisticates like cash equities. 594 00:34:43,640 --> 00:34:45,920 Speaker 1: Have no idea what that means. But the basic idea 595 00:34:46,160 --> 00:34:50,799 Speaker 1: is there's markets trading, there's investment banking. And then you 596 00:34:50,840 --> 00:34:54,280 Speaker 1: said Deutsche Bank Securities, what's that? So the securities division 597 00:34:54,320 --> 00:34:58,839 Speaker 1: is pretty much the markets division. It's all the yes, yes, 598 00:34:59,080 --> 00:35:01,600 Speaker 1: so this is trade eating stocks pretty much, right and 599 00:35:01,680 --> 00:35:04,080 Speaker 1: so um, but in that division you have you know, 600 00:35:04,200 --> 00:35:07,880 Speaker 1: rates equities. How will they compare in New York to 601 00:35:07,920 --> 00:35:12,000 Speaker 1: the platform of BMP Perry or to Barclay's. Well, that's 602 00:35:12,000 --> 00:35:14,480 Speaker 1: a good question. I'm not sure what BMP's footprint really 603 00:35:14,520 --> 00:35:17,200 Speaker 1: looks like compared but at least to Barclay's and and 604 00:35:17,400 --> 00:35:21,960 Speaker 1: ubs even also the other European rivals are trying to 605 00:35:22,000 --> 00:35:24,640 Speaker 1: grow here, right, So we'll see in the next year 606 00:35:24,719 --> 00:35:26,920 Speaker 1: or so where they can compete. I mean, there was 607 00:35:26,960 --> 00:35:30,000 Speaker 1: a time when Deutsche Bank was the top prime brokerage 608 00:35:30,000 --> 00:35:32,600 Speaker 1: in the US, for example, and that wasn't too far 609 00:35:32,680 --> 00:35:38,920 Speaker 1: off prime brokerages most of like what prime brokera right 610 00:35:38,920 --> 00:35:42,160 Speaker 1: not hopfully prime brokerage is the business that deals with 611 00:35:42,200 --> 00:35:44,680 Speaker 1: hedge funds. So it's like the main way that a 612 00:35:44,719 --> 00:35:47,400 Speaker 1: hedge fund can enter their operation, you know, their their 613 00:35:47,440 --> 00:35:50,720 Speaker 1: relationship with the bank and then from there they decide 614 00:35:50,719 --> 00:35:53,919 Speaker 1: how they're going to trade equities or how that this morning. Yes, 615 00:35:54,120 --> 00:35:57,319 Speaker 1: you know, it seems like remote from Deutsche Bank when 616 00:35:57,360 --> 00:35:59,759 Speaker 1: they work a Yeah, we're gonna got into the show 617 00:35:59,880 --> 00:36:03,080 Speaker 1: for Deutsche Bank. Whole food you sink to the bakery department? 618 00:36:03,640 --> 00:36:06,000 Speaker 1: Is that what you like? The bakery department. There's there's 619 00:36:06,120 --> 00:36:09,560 Speaker 1: nothing gluten free in it. I mean, everybody's earnest and organic. 620 00:36:10,280 --> 00:36:12,480 Speaker 1: To the bakery depart there's a Whole Foods around the 621 00:36:12,480 --> 00:36:16,439 Speaker 1: corner from here. Yeah, there is, it's not, but he's 622 00:36:16,480 --> 00:36:19,600 Speaker 1: obsessed with the Columbus Circle. Wholeful. You ever go round 623 00:36:19,640 --> 00:36:21,680 Speaker 1: to Tom's and give him the heads up, you just 624 00:36:21,680 --> 00:36:24,120 Speaker 1: need a couple of as he will run to um 625 00:36:24,480 --> 00:36:27,920 Speaker 1: the whole food and then and then he turns up 626 00:36:28,040 --> 00:36:30,759 Speaker 1: with like a load of banked cuts. Are we gonna 627 00:36:30,760 --> 00:36:33,160 Speaker 1: Are we gonna know Deutsche Bank New York in twenty 628 00:36:33,239 --> 00:36:35,000 Speaker 1: four months? Is it gonna be a whole new beast? 629 00:36:35,400 --> 00:36:37,399 Speaker 1: It's gonna be a whole new beast, right, I mean 630 00:36:37,800 --> 00:36:40,960 Speaker 1: you said yesterday, but you know it was ten percent 631 00:36:41,200 --> 00:36:44,640 Speaker 1: cuts like a week or two before that. So and 632 00:36:44,800 --> 00:36:46,560 Speaker 1: you know we have certain areas are going to cut. 633 00:36:46,719 --> 00:36:48,400 Speaker 1: Do they lose your best and brightest? I mean, we're 634 00:36:48,480 --> 00:36:50,880 Speaker 1: running out of time. But if I'm the best and 635 00:36:50,920 --> 00:36:53,440 Speaker 1: brightest at Deutsche Bank, my resume is getting brushed off 636 00:36:53,440 --> 00:36:56,440 Speaker 1: this morning, right, Yes, I mean you're you're definitely wondering. 637 00:36:56,840 --> 00:36:58,839 Speaker 1: You're definitely wondering what the future looks like and if 638 00:36:58,840 --> 00:37:00,799 Speaker 1: you can compete in the same thing as they had 639 00:37:00,800 --> 00:37:03,719 Speaker 1: a hiring spree for the last couple of years, so 640 00:37:04,239 --> 00:37:07,520 Speaker 1: you know, yeah, some of the best and writers just 641 00:37:07,560 --> 00:37:11,600 Speaker 1: got there, so I don't know why you put up 642 00:37:11,640 --> 00:37:13,440 Speaker 1: with us, but thank you for coming back. I'm blaming back. 643 00:37:13,440 --> 00:37:15,799 Speaker 1: News is very young on that Doutsche Bank story, as 644 00:37:15,800 --> 00:37:19,160 Speaker 1: Doutsche Bank considers even bigger cuts to the US business, 645 00:37:19,200 --> 00:37:23,759 Speaker 1: potentially the staff unbelievable. Shell Besse, thank you very much. 646 00:37:29,840 --> 00:37:34,000 Speaker 1: Thanks for listening to the Bloomberg Surveillance podcast. Subscribe and 647 00:37:34,080 --> 00:37:39,440 Speaker 1: listen to interviews on Apple Podcasts, SoundCloud, or whichever podcast 648 00:37:39,480 --> 00:37:43,720 Speaker 1: platform you prefer. I'm on Twitter at Tom Keene before 649 00:37:43,719 --> 00:37:47,560 Speaker 1: the podcast. You can always catch us worldwide. I'm Bloomberg 650 00:37:47,640 --> 00:38:00,440 Speaker 1: Radio