WEBVTT - P&L: Where China Comes Into Play in U.S.-Russia Relations 0:00:04.760 --> 0:00:08.080 Welcome to the Bloomberg P and L Podcast. I'm Pim Fox. 0:00:08.119 --> 0:00:11.200 Along with my co host Lisa Abramowitz. Each day we 0:00:11.280 --> 0:00:14.480 bring you the most important, noteworthy, and useful interviews for 0:00:14.520 --> 0:00:16.880 you and your money, whether at the grocery store or 0:00:16.920 --> 0:00:20.680 the trading floor. Find the Bloomberg P L Podcast on iTunes, 0:00:20.840 --> 0:00:29.760 SoundCloud and at Bloomberg dot com. A new kind of 0:00:29.920 --> 0:00:34.800 Cold war, perhaps one waged in trade policy and sanctions. 0:00:34.840 --> 0:00:37.159 Here to tell us more Ariel Cohen. He is a 0:00:37.200 --> 0:00:40.200 Senior Fellow at the Atlantic Council and also the director 0:00:40.240 --> 0:00:44.440 of the Center for Energy, Natural Resources, and Geopolitics at 0:00:44.440 --> 0:00:48.040 the Institute for the Analysis of Global Security. Ariel, thank 0:00:48.080 --> 0:00:51.159 you very much for being with us. Now, I gotta 0:00:51.320 --> 0:00:53.199 just by that introduction, I have to assume you know 0:00:53.320 --> 0:00:56.320 just about everything there is to know, but you can't 0:00:56.360 --> 0:01:00.800 foretell the future. But having said that, so, given your contact, 0:01:00.840 --> 0:01:03.240 the context in which we operate right now, what is 0:01:03.280 --> 0:01:07.240 the most crucial, UH kind of foreign policy issue that 0:01:07.280 --> 0:01:11.679 you believe President elect Donald Trump will tackle. I think 0:01:11.840 --> 0:01:15.800 the clear focus of Trump is on the Pacific UH. 0:01:16.560 --> 0:01:20.280 I suspect that the one who is going to implement 0:01:20.360 --> 0:01:24.399 the pivot to the Pacific that President Obama talked about 0:01:24.480 --> 0:01:27.560 so much and didn't do much uh, and then got 0:01:27.560 --> 0:01:29.559 an egg on his face with the Philippines. Of course, 0:01:30.400 --> 0:01:32.319 the real pivot is going to be on the Trump 0:01:32.680 --> 0:01:35.120 and it's not going to be pretty. Because China is 0:01:35.160 --> 0:01:39.000 the rising power, it's rising great power. Uh. They have 0:01:39.400 --> 0:01:43.720 a history and culture of playing strategic games. UH. Their 0:01:43.800 --> 0:01:48.640 national game is go, which is capturing territory. UH, and 0:01:48.720 --> 0:01:51.960 it's played for a long, long period of time. So 0:01:52.200 --> 0:01:56.320 I suspect that Donald Trump is trying to butter up 0:01:56.840 --> 0:02:02.400 Putin uh detached Russia for China at toll order. Indeed, 0:02:02.520 --> 0:02:06.880 I wasn't Russia three weeks ago, and the Russians told 0:02:06.880 --> 0:02:10.080 me it'll take you a great effort to detach us 0:02:10.080 --> 0:02:13.760 from China. Uh, and then there will be some kind 0:02:13.919 --> 0:02:17.799 of a new Cold war trade war with Beijing. And 0:02:18.000 --> 0:02:20.480 I really hope and pray that our country will come 0:02:20.480 --> 0:02:22.840 out on top and in fact that we'll turn it 0:02:22.880 --> 0:02:26.120 into a win win. Well, based on what you know 0:02:26.320 --> 0:02:29.040 of President elect Donald Trump and also the books that 0:02:29.160 --> 0:02:32.040 he has written, what's your estimate, what's it looked like 0:02:32.080 --> 0:02:35.800 in the future. It looks like the art of the 0:02:35.919 --> 0:02:40.920 deal is going to be the guiding principle, push the 0:02:40.960 --> 0:02:44.200 other side as much as you think it's safe to 0:02:44.240 --> 0:02:47.760 push them without losing the deal. What does Trump want? 0:02:47.800 --> 0:02:51.080 He wants jobs, jobs, jobs for Americans. What does that mean. 0:02:51.160 --> 0:02:56.040 It means that we cannot have our prime, prime industrial 0:02:56.080 --> 0:03:00.120 competitor China with such a low exchange rate for that 0:03:00.200 --> 0:03:02.840 you want. Uh, it means we'll have to find ways 0:03:02.880 --> 0:03:06.200 to make our industry more competitive. After all, if you're 0:03:06.200 --> 0:03:10.760 looking at industrial production, uh, and not just services and 0:03:11.160 --> 0:03:15.399 alto high tech. We have to compete against the workers 0:03:15.440 --> 0:03:18.760 that are paid maybe a fraction of our workers are paid. 0:03:18.880 --> 0:03:21.920 And when it comes to Russia, look, Russia is not 0:03:22.000 --> 0:03:25.520 our friend. Um. I was born there, I speak the language. 0:03:25.520 --> 0:03:28.359 I met put In ten times, and I can tell 0:03:28.360 --> 0:03:31.520 you they don't like us. Having said that, there are 0:03:31.720 --> 0:03:34.040 can you just hold on, Ario, just expand a little 0:03:34.080 --> 0:03:37.800 bit on your your meetings with Vladimir Putin. Maybe just 0:03:37.840 --> 0:03:40.400 give us some insight into the kind of person he's 0:03:40.440 --> 0:03:42.240 he is, and what's it like to be in a 0:03:42.320 --> 0:03:46.640 room with him and so on. Uh. You know, it's 0:03:46.680 --> 0:03:52.320 a weird combination of intensity and being really cold. Um, 0:03:52.400 --> 0:03:56.200 so it's cold intensity, I guess. Uh. He makes his 0:03:56.240 --> 0:04:01.320 staff scared he got his translator that he kept correcting, 0:04:02.520 --> 0:04:05.840 very very nervous in front of the group of US. 0:04:06.760 --> 0:04:10.720 But he commands a huge amount of information, keeps it 0:04:10.760 --> 0:04:15.360 in his head, doesn't use the queue cards or notes uh, 0:04:15.440 --> 0:04:19.880 and sometimes makes really really big mistakes, which raises a 0:04:19.960 --> 0:04:22.320 question who is briefing him? And I know who's briefing 0:04:22.360 --> 0:04:24.840 him to see his security services are briefing him. What 0:04:24.960 --> 0:04:28.400 kind of mistakes are you talking about? Oh, he for example, 0:04:28.440 --> 0:04:31.480 said that the United States was supporting the Gades in 0:04:32.120 --> 0:04:34.839 North Caucuses in Chechenna, and I don't buy it for 0:04:34.880 --> 0:04:37.760 a moment. We're not that crazy. Would you say that 0:04:37.760 --> 0:04:40.040 that's a mistake or rather, do you believe that he 0:04:40.160 --> 0:04:42.840 is saying that because he he wants just to say that, 0:04:42.960 --> 0:04:44.919 rather than knowing that it's a mistake or what what 0:04:45.080 --> 0:04:48.440 is that? I think Russian should know that we did 0:04:48.440 --> 0:04:52.240 not do that. And there's there's a huge difference between collection. 0:04:52.920 --> 0:04:56.560 I asked him flat out, So what's your evidence for that? Said, Oh, 0:04:56.760 --> 0:04:59.599 your intelligence officers met with it, where our intelligence officers 0:04:59.600 --> 0:05:02.680 would meet almost with anybody to collect. But that does 0:05:02.720 --> 0:05:05.760 not mean we would train and equip the jihadi is 0:05:05.760 --> 0:05:09.160 the Chechens who killed children and things like that. I 0:05:09.480 --> 0:05:12.400 hope and pray we don't. All right, law, Let's turn, 0:05:12.800 --> 0:05:14.920 so what is what have you learned about Vladimir Putin's 0:05:14.920 --> 0:05:17.760 relationship with China that would be useful for an investment. 0:05:17.880 --> 0:05:21.559 And they have a strategic they have a strategic relationship. Uh, 0:05:21.960 --> 0:05:24.960 energy is very important, that is aimed at us. Energy 0:05:25.040 --> 0:05:30.159 is important. But if you look at the costs of 0:05:30.600 --> 0:05:35.920 building these two huge gas pipelines, uh, the Power of 0:05:35.920 --> 0:05:39.159 Siberia and the Altai. One is from East Siberia once 0:05:39.160 --> 0:05:42.680 from West Siberia. We're talking billions and billions, tens of 0:05:42.720 --> 0:05:46.120 billions of dollars. And the Chinese were lending this money. 0:05:46.160 --> 0:05:50.560 And to get their worth back, the Russians need high 0:05:50.640 --> 0:05:54.200 oil prices. This is a paramount concern for the Russians. 0:05:54.400 --> 0:05:57.480 The oil prices as they are now are too low. 0:05:58.600 --> 0:06:01.560 Cents fifty two is not good for the Russians at 0:06:01.720 --> 0:06:04.359 not at all, not at all. And you remember everybody 0:06:04.440 --> 0:06:08.400 was talking about this deal that rex Diderson cut with 0:06:08.720 --> 0:06:14.320 ross Neft, the Russian for the Socolon project. No after that, 0:06:14.760 --> 0:06:18.200 after the Arctic for the Arctic hundred billion dollars over 0:06:18.279 --> 0:06:22.159 thirty years. But guess what. The Arctic oil is not 0:06:22.320 --> 0:06:26.320 profitable when oil prices are below eighty and there, as 0:06:26.320 --> 0:06:29.120 you said, fifty two now and nobody knows when they're 0:06:29.120 --> 0:06:32.440 going to be eighty again. So Russia is an interesting play. 0:06:32.480 --> 0:06:35.599 There's plenty of oil and Russian UH and gas UH, 0:06:35.640 --> 0:06:38.800 and some of it is still very economical, so they 0:06:38.839 --> 0:06:41.240 want to compete. But they will push, push, push in 0:06:41.240 --> 0:06:44.320 the Middle East and elsewhere for instability to drive the 0:06:44.360 --> 0:06:49.320 oil prices up. Mr Putin is ahead of Russia oil 0:06:49.320 --> 0:06:52.520 and guests Inc. Meaning the gas prom and ross Neft 0:06:52.520 --> 0:06:55.760 and other companies that they control and UH. He is 0:06:55.800 --> 0:06:59.200 a tough negotiator. Mr Kitchen, the head of Ross's Neft, 0:06:59.839 --> 0:07:02.800 is a very tough negotiator. He just pulled in UH 0:07:03.120 --> 0:07:09.400 over eleven billion from Katar and Glencore to buy rosne 0:07:09.880 --> 0:07:13.680 Still valuations per barrel UH a much much lower than 0:07:13.920 --> 0:07:17.680 x Ono, BP or Shell. But nevertheless, Russia is a 0:07:17.720 --> 0:07:22.400 huge player. They want the sanctions um waived by Mr 0:07:22.440 --> 0:07:26.040 Trump UH. And the question I'm asking is Mr Trump 0:07:26.560 --> 0:07:29.280 applying the art of the deal. What is going to 0:07:29.320 --> 0:07:33.320 be the quickpro lall when you're negotiating with Mr Putson. Well, 0:07:33.400 --> 0:07:35.080 maybe he's going to give you a call. We look 0:07:35.120 --> 0:07:37.840 forward to it. You certainly have met Mr Puttin apparently 0:07:37.880 --> 0:07:41.200 more times than President elect Donald Trump. Thank you very much. 0:07:41.680 --> 0:07:45.239 Ril Cohen. He is a Senior Fellow at the Atlantic Council. 0:07:45.240 --> 0:07:48.400 He's also the director of the Center for Energy, Natural 0:07:48.440 --> 0:07:53.240 Resources and Geopolitics at the Institute for Analysis of Global 0:07:53.400 --> 0:07:56.400 Security in Washington, d C. Of course home to Bloomberg 0:07:57.560 --> 0:08:12.200 and one oh five point seven h d to. I 0:08:12.280 --> 0:08:13.880 know that we've got on on Trin of us and 0:08:13.920 --> 0:08:16.200 he joins us in studio and on you. You are 0:08:16.280 --> 0:08:18.920 the expert when it comes to the semiconductor industry or 0:08:18.960 --> 0:08:21.920 a hardware analysts to force here at Bloomberg Intelligence. Thanks 0:08:21.920 --> 0:08:24.800 for coming in. UH tell us about what's going on 0:08:24.840 --> 0:08:27.680 with the US chip industry and this idea that there is. 0:08:28.120 --> 0:08:32.640 I was writing this down. There's the Committee on Foreign Investments. 0:08:32.720 --> 0:08:34.840 It's a little hard to figure out exactly who they 0:08:34.880 --> 0:08:37.520 are what they do, but they're important. If a foreign 0:08:37.520 --> 0:08:39.880 company wants to buy shares in the U S company 0:08:40.920 --> 0:08:44.000 that that that's right, PIM. This is a congressional committee 0:08:44.080 --> 0:08:48.240 which has different UM. This is an agency that is 0:08:48.320 --> 0:08:52.720 formed with members from Treasury from UM. UH from justice, 0:08:52.760 --> 0:08:57.320 from defense from state, and this collective group will weigh 0:08:57.360 --> 0:09:01.319 in as to the whether mayor can interests are being 0:09:01.840 --> 0:09:05.800 upheld or threatened as a result of any particular transaction. 0:09:06.240 --> 0:09:09.080 This could be the American subsidiary of a firm, This 0:09:09.200 --> 0:09:13.160 could be American manufacturing exposure, or this could be an 0:09:13.160 --> 0:09:17.520 American domiciles company. UM and in this in over the 0:09:17.640 --> 0:09:21.000 last two years or so, the Chinese government has made 0:09:21.040 --> 0:09:25.199 it a mandate of source to UM heighten its exposure 0:09:25.240 --> 0:09:28.720 and interest in the in the global semiconductor space by 0:09:28.800 --> 0:09:33.080 acquiring intellectual property, by acquiring companies outright. They wanted to 0:09:33.080 --> 0:09:35.960 buy Extron right and that they did and they were. 0:09:36.000 --> 0:09:40.720 They were indications of Chinese state owned in company interest 0:09:40.800 --> 0:09:43.320 in Micron as well, which is the last memory company 0:09:43.320 --> 0:09:46.840 here in the United States. And all of this has 0:09:46.960 --> 0:09:51.400 heightened the interest level by Cephius and they are both 0:09:51.679 --> 0:09:56.480 UM more engaged as well as perhaps feel more threatened 0:09:56.520 --> 0:10:00.560 as a result of this heightened state owned interest, a 0:10:00.679 --> 0:10:04.760 Chinese state interest in the semiconducting industry. They're worried that 0:10:05.080 --> 0:10:10.800 intellectual property could go overseas and that the us UM 0:10:10.880 --> 0:10:14.119 interests could be threatened. Now in the case of Extron. 0:10:14.280 --> 0:10:16.640 And the reason I mentioned this is because here you 0:10:16.760 --> 0:10:20.960 have a company that is in domicile in Germany, headquarters 0:10:20.960 --> 0:10:24.040 in Germany, but because just as you described, it has 0:10:24.200 --> 0:10:28.600 operations in the United States. This Committee on Foreign Investments 0:10:28.880 --> 0:10:31.720 they have a say. Right the purview of this particular 0:10:31.760 --> 0:10:35.440 agency isn't determined by whether the company is incorporated here 0:10:36.080 --> 0:10:40.160 UM or is domiciled here, it's UH, it's interests depending 0:10:40.200 --> 0:10:43.679 on whether they have jobs here, there are this intellectual 0:10:43.720 --> 0:10:47.520 property here, there's manufacturing here, there's sales here, and potentially 0:10:47.559 --> 0:10:52.480 customers here, etcetera, etcetera. So loosely defined whether American interests 0:10:52.840 --> 0:10:56.439 are are at risk or not, and you know that 0:10:56.640 --> 0:10:58.959 you have to look at the context overall as well. 0:10:59.000 --> 0:11:01.559 The semikin of industry the last two years has going 0:11:01.679 --> 0:11:05.800 through a substantial consolidation for a variety of reasons, whether 0:11:05.800 --> 0:11:10.280 it's for scale, whether it's for margin expansion, sales expansion, UH, 0:11:10.360 --> 0:11:14.920 putting two products together, UM, logical product overlap, etcetera, etcetera. 0:11:15.000 --> 0:11:18.720 For a whole host of reasons, the consolidation has made sense, 0:11:19.400 --> 0:11:23.840 and the Chinese state owned interest or state owned companies 0:11:23.880 --> 0:11:27.000 have been a participant in in that category. In a 0:11:27.040 --> 0:11:30.480 substantial way. If you take that out, it takes a 0:11:30.520 --> 0:11:34.960 little bit out of the um uh, the fluff out 0:11:35.000 --> 0:11:38.679 of the semiconductor land takes a buy if if right, 0:11:38.720 --> 0:11:40.480 it takes a buyer out. If you've got fewer bias, 0:11:40.559 --> 0:11:43.520 chances are you're not gonna necessarily get that much bidding activities. 0:11:43.559 --> 0:11:46.480 So maybe if the presses prices that these companies are 0:11:46.520 --> 0:11:49.840 hoping to get absolutely so, one of the other routes 0:11:49.920 --> 0:11:52.720 for Chinese companies, whether it's state owned or private, to 0:11:52.800 --> 0:11:56.280 take in this in this scenario could be a partnership. 0:11:56.400 --> 0:12:00.200 We've seen a lot of HP transactions as UM with 0:12:00.280 --> 0:12:03.120 this sort of a model. We've seen as seen a 0:12:03.200 --> 0:12:05.680 little bit of Intel do this similar things. We've seen 0:12:05.760 --> 0:12:09.719 Qualcom do similar things. Maybe the nature of the m 0:12:09.760 --> 0:12:13.760 and A or the nature of the transactions changes into 0:12:13.800 --> 0:12:17.360 more of a JV structure, more of a partnership agreement 0:12:17.400 --> 0:12:20.280 structure rather than an outright by which is going to 0:12:20.360 --> 0:12:23.600 be more difficult. The third parties get squeezed. I mean 0:12:24.320 --> 0:12:27.920 companies that are doing manufacturing let's say in Taiwan or 0:12:28.040 --> 0:12:32.559 in um you know, uh, South Korea, for example, are 0:12:32.559 --> 0:12:34.560 they getting squeezed because it's either going to be you 0:12:34.600 --> 0:12:36.959 make it in China and just strict rules or in 0:12:37.040 --> 0:12:40.400 the introductional property comes from the the Actually, to be 0:12:40.520 --> 0:12:44.080 quite honest, there's a more disrupting influence in this equation, 0:12:44.120 --> 0:12:48.440 which is the US China trade relationship. And if there is, 0:12:48.880 --> 0:12:52.560 if there's a wrench thrown into that kind of a system, 0:12:52.600 --> 0:12:57.920 then UH, semiconductor manufacturing particularly will be will be threatened, 0:12:58.440 --> 0:13:01.880 technology manufacturing gen really will be threatened, and we will 0:13:01.920 --> 0:13:04.600 have to find a new home for all of these places. 0:13:04.640 --> 0:13:08.600 One of the interesting UM by products is of the 0:13:08.760 --> 0:13:13.120 of the new incoming administration, could be some shifts in 0:13:13.160 --> 0:13:17.760 this particular landscape could certainly make a portent to shift 0:13:17.760 --> 0:13:20.480 in where the money is coming. Absolutely, But the interesting 0:13:20.520 --> 0:13:24.760 part of it is, look, US companies or global technology 0:13:24.800 --> 0:13:29.480 companies don't manufacture in China because it's neat, it's it's 0:13:29.520 --> 0:13:36.160 substantially cheaper, and you get substantial tax breaks, manufacturing incentives, etcetera. 0:13:36.280 --> 0:13:40.439 To try and make UM your ecosystem there. And it's 0:13:40.480 --> 0:13:44.360 also you've had a history of success there. All of 0:13:44.360 --> 0:13:48.760 the companies are co located very efficiently from a geographic perspective, 0:13:48.800 --> 0:13:52.480 So all of these things make for UM an interesting location. 0:13:52.520 --> 0:13:55.680 To make it and a movement there will be harmful. 0:13:56.120 --> 0:13:58.480 Thanks very much on Entren of US and our senior 0:13:58.480 --> 0:14:12.120 Semiconductor and hardware anal for Bloomberg Intelligence. We also want 0:14:12.160 --> 0:14:15.559 to look at as the automobile companies because President elect 0:14:15.600 --> 0:14:21.440 Donald Trump tweeted over the holiday, I guess respite that 0:14:21.560 --> 0:14:25.560 the General Motors should be making the Chevy Cruise in 0:14:25.760 --> 0:14:28.800 the United States. Well, when we want to know about automobiles, 0:14:28.880 --> 0:14:33.520 we called David Welch, bureau chief for Bloomberg News in Detroit. David, 0:14:33.720 --> 0:14:37.720 thanks for being with us. How many Crews automobiles are 0:14:37.840 --> 0:14:41.360 made every year and where are they made? Well, So 0:14:41.520 --> 0:14:45.120 GM sols a couple of hundred, and it's mostly the 0:14:45.200 --> 0:14:49.200 sedan these days. Americans aren't really interested in compact cars 0:14:49.240 --> 0:14:52.520 because gas is cheap, and they have never been interested 0:14:52.520 --> 0:14:55.600 in hatchbacks. The crew hatchback is with the plant in 0:14:55.680 --> 0:14:59.320 Mexico builds and it's mostly for the Mexican market, for 0:14:59.440 --> 0:15:03.640 South America and to export to other places. The Cruise 0:15:03.680 --> 0:15:07.880 that is sold mostly to Americans is building words toown Ohio. 0:15:07.960 --> 0:15:11.720 So there's there's a bit of uh saber rattling over 0:15:11.840 --> 0:15:15.960 a really small number of cars. With Donald Trump's tweet 0:15:16.000 --> 0:15:18.600 this morning, I see, so that the point being that 0:15:18.680 --> 0:15:22.800 the automobiles in question are typically for the Mexican market. 0:15:22.920 --> 0:15:26.120 So I read a number that this accounts for maybe 0:15:26.160 --> 0:15:28.480 like two two and a half percent of all the 0:15:28.480 --> 0:15:31.240 production of cruise vehicles. And as you said, the hatchback 0:15:31.360 --> 0:15:36.280 is not a big seller, correct, it's a very small number. Now, 0:15:36.720 --> 0:15:40.760 the broader point, and you know, let's face it, Trump 0:15:40.800 --> 0:15:44.640 has never really um bothered himself with with my new 0:15:44.720 --> 0:15:49.360 details on things or specifics. His broader point is that 0:15:49.480 --> 0:15:52.280 a lot of production has gone to Mexico, and about 0:15:52.280 --> 0:15:56.120 two thirds, a little less let's call it, of Mexican 0:15:56.160 --> 0:16:00.320 auto production is sent to the US or ended that. 0:16:00.520 --> 0:16:04.560 So there is a wage difference. It's about five or 0:16:04.600 --> 0:16:08.000 six hours an hour versus an average of about twenty four. 0:16:08.880 --> 0:16:11.680 Uh So automakers are saving on that. And it's not 0:16:11.760 --> 0:16:15.080 just US automakers. Everybody is down there now. And there 0:16:15.120 --> 0:16:17.840 are also some great free trade deals that allow companies 0:16:17.840 --> 0:16:22.160 to export cars all over over the world. Mexico is 0:16:22.200 --> 0:16:24.120 kind of about flank to the US and Canada on 0:16:24.160 --> 0:16:27.040 those deals. So there's a lot of stagments, and that's 0:16:27.080 --> 0:16:31.880 that's his point. This particular car though, is not really Uh, 0:16:32.080 --> 0:16:35.400 it wouldn't be of any consequence. GM cut a shift. 0:16:35.680 --> 0:16:38.080 They used to make the Cruise on three shifts, now 0:16:38.120 --> 0:16:41.120 they make it at two shifts in Lordstown, Ohio. If 0:16:41.160 --> 0:16:44.240 you brought the Cruise hatchback to the US, that would 0:16:44.280 --> 0:16:46.240 not add a shift. They would just camp up the 0:16:46.280 --> 0:16:48.920 line speed a little bit and have the same workers, 0:16:49.080 --> 0:16:50.640 you know, work a little quicker to make it. It's 0:16:50.680 --> 0:16:54.440 just not a consequential number of cars. It certainly does 0:16:54.520 --> 0:16:57.600 look like investors and kind of seeing through this latest 0:16:58.080 --> 0:17:01.840 Trump effect, you might say in GM was down just 0:17:02.640 --> 0:17:05.560 maybe half a percent or so before the opening bell, 0:17:06.240 --> 0:17:09.920 and since then means stock has generally been higher. It's 0:17:10.000 --> 0:17:12.800 up almost two percent at this point. So for the 0:17:12.840 --> 0:17:15.280 same thing with Ford Motor Company. Ford Motor Company up 0:17:15.480 --> 0:17:17.280 more than two and a half percent, right, and they've 0:17:17.320 --> 0:17:19.399 certainly been in the cross hairs as well because of 0:17:19.480 --> 0:17:23.200 their Mexican production. So you know, it's like people are 0:17:23.240 --> 0:17:25.960 looking at what's coming out over Twitter and really trying 0:17:26.040 --> 0:17:28.280 to make sense out of it, as opposed to just 0:17:29.240 --> 0:17:32.760 knee jerk reacting to whatever the latest A hundred and 0:17:32.800 --> 0:17:36.359 forty characters are saying, Well, David Welch. You mentioned something 0:17:36.400 --> 0:17:39.919 about what Americans like to drive, and right now, with 0:17:40.000 --> 0:17:41.879 gasoline prices where they are, it seems like if they 0:17:41.920 --> 0:17:45.080 only want large automobiles, large vehicles, light trucks for example, 0:17:45.880 --> 0:17:48.560 pretty much yeah, it's you pickup trucks are doing well 0:17:49.080 --> 0:17:51.280 and and now that's often tired of the housing market. 0:17:51.320 --> 0:17:54.679 But it terms were consumers by the family car is 0:17:54.720 --> 0:17:59.200 now really the family crossover actual, So the Chevy Equinox 0:17:59.720 --> 0:18:03.640 is GMS some mid sized crossover suv that's pretty new 0:18:03.680 --> 0:18:07.800 to the market, always the newest generation is that's the 0:18:07.840 --> 0:18:10.000 one that Trump actually could have made some hay out 0:18:10.040 --> 0:18:12.960 of if he had really studied what GM was doing 0:18:12.960 --> 0:18:16.399 in Mexico, because that vehicle is made in a plant 0:18:16.440 --> 0:18:19.199 in Ingersoll, Ontario, and with the new version that's just 0:18:19.280 --> 0:18:22.159 coming out, GM went from one plant, which is the 0:18:22.160 --> 0:18:25.040 one in Canada, to three and the other tour in Mexico. 0:18:25.920 --> 0:18:29.080 So you will see a number of very important vehicles 0:18:29.080 --> 0:18:33.240 that sell for thirty thousand or more for American families 0:18:33.280 --> 0:18:36.119 with a Chevy badge on coming up from Mexico. That's 0:18:36.160 --> 0:18:38.840 really the one that if he wanted to make hay, 0:18:39.000 --> 0:18:41.560 he could have the same kind of goes for the 0:18:41.600 --> 0:18:45.119 link in m K very small volume vehicle that Ford 0:18:45.160 --> 0:18:47.320 made in Kentucky. They were going to send it Mexico. 0:18:47.440 --> 0:18:50.880 Trump got them to keep it. That was another kind 0:18:50.880 --> 0:18:54.080 of similar to the Cruise, pretty small volume. If you 0:18:54.119 --> 0:18:57.000 really want to go after these guys, you got to 0:18:57.040 --> 0:19:00.159 find a big volume vehicle and a plant that and 0:19:00.200 --> 0:19:05.200 started making production. Yet and you say it's the Equinox, Yeah, 0:19:05.840 --> 0:19:09.040 is a big deal. How much? Just quickly? How many? About? 0:19:09.040 --> 0:19:12.240 How many do they sell? You are they planning to sell? Oh? 0:19:12.640 --> 0:19:16.080 It's you know, depending on how will they do it? Well? 0:19:16.119 --> 0:19:20.480 Over two? Right and probably close to three. All right, 0:19:20.480 --> 0:19:23.520 thanks very much. David Welch of your chief Bloomberg News 0:19:23.560 --> 0:19:38.040 from Detroit. Part he's got his comfortable shoes packed. He's 0:19:38.080 --> 0:19:42.679 getting ready for Consumer Electronics show in Las Vegas. But 0:19:42.800 --> 0:19:46.760 before he goes out west, he joins us here in 0:19:46.800 --> 0:19:49.000 the studio. David Garretty is the chief executive a g 0:19:49.320 --> 0:19:54.160 v A Research, a columnist at Investo PDA, and he 0:19:54.240 --> 0:19:57.959 is followable on Twitter at g v A Research. Alright, 0:19:58.240 --> 0:20:00.840 followable at g v A You search, I like you know, 0:20:00.880 --> 0:20:03.480 this is a whole new Twitter world, David, You've been 0:20:03.520 --> 0:20:07.879 following technology for how long now, uh, since the last millennium? Yeah, okay, 0:20:07.920 --> 0:20:10.800 since the lab right when was allowed. Is this a 0:20:10.840 --> 0:20:14.000 new era where you have the President elect of the 0:20:14.080 --> 0:20:18.720 United States tweeting about GM about building a car that 0:20:19.400 --> 0:20:22.320 isn't actually that you know, widely sold the United States, 0:20:22.359 --> 0:20:24.680 building it in Mexico and saying, you know, you better 0:20:24.680 --> 0:20:27.119 build it in the United States, and then Ford coming 0:20:27.119 --> 0:20:30.000 out and saying, on the other hand, we're not going 0:20:30.080 --> 0:20:34.840 to build out that plant in San Potosi, San Luis Potosi, 0:20:34.920 --> 0:20:37.960 in Mexico, the one point six billion dollar plant. This 0:20:38.040 --> 0:20:39.879 is a tech store as much as anything. Do you 0:20:39.920 --> 0:20:41.800 think it's very much of a tech story in very 0:20:41.880 --> 0:20:45.760 much discussion here about the technology disrupting what had been 0:20:45.800 --> 0:20:48.960 sort of well established patterns in this case of communication 0:20:49.040 --> 0:20:53.400 and policy making and also the communication of policy. From 0:20:53.400 --> 0:20:57.560 that standpoint, one has to be always concerned with respect 0:20:57.640 --> 0:21:04.880 to technologies ability to outrun human comprehension. So from that standpoint, 0:21:05.000 --> 0:21:09.280 we stand here at a maybe a dangerous point where 0:21:09.440 --> 0:21:13.360 you know, things out strip, where events move faster than 0:21:13.480 --> 0:21:16.800 people have the ability to actually manage them. And when 0:21:16.840 --> 0:21:20.639 you're talking about you know the world's leading economy and 0:21:20.760 --> 0:21:26.080 worlds leading military power the consequences should be concerning clearly, 0:21:26.440 --> 0:21:29.959 having said that technology always has the mantra that if 0:21:30.000 --> 0:21:33.159 there is a problem that technology creates, they also have 0:21:33.200 --> 0:21:37.680 a solution, and in this case artificial intelligence, this is 0:21:37.720 --> 0:21:39.320 going to be one of the trends that is going 0:21:39.400 --> 0:21:42.600 to be featured at the Consumer Electronics Show. Tell us 0:21:42.600 --> 0:21:45.720 about artificial intelligence very much so in terms of looking 0:21:45.760 --> 0:21:49.160 at AI mean, we're looking here at arguably a technology 0:21:49.200 --> 0:21:52.879 development that one might be considering as an apex, a 0:21:53.040 --> 0:21:57.679 peak element in terms of dominating the technology ecosystem, and 0:21:57.760 --> 0:22:00.520 this is something that potentially is going to be introduced 0:22:00.560 --> 0:22:04.399 in a fairly wide range of areas. We certainly know that, 0:22:04.440 --> 0:22:06.560 you know, there are elements in terms of chat bots 0:22:06.640 --> 0:22:09.000 that are being developed by various social media companies, but 0:22:09.080 --> 0:22:11.920 clearly this goes well beyond that, and we may be 0:22:12.080 --> 0:22:15.520 looking here just given the amount of data that's being generated. 0:22:15.560 --> 0:22:18.439 I mean, we're looking here potentially at something long so 0:22:18.600 --> 0:22:21.159 you know, forty four zetta bytes of data being produced 0:22:21.160 --> 0:22:24.360 by that's a lot of information to basically I don't 0:22:24.400 --> 0:22:26.280 even know what a zetta byte is. I mean, I 0:22:26.320 --> 0:22:27.959 know how many movies you know, you can get with 0:22:27.960 --> 0:22:31.440 one gigabyte. That's kind of one. But Tesla I love 0:22:31.520 --> 0:22:37.159 this example. Tesla has aggregated the data of eight hundred 0:22:37.200 --> 0:22:41.320 million miles of driving already already, And obviously this is 0:22:41.359 --> 0:22:43.200 only you get the opt out when you get into 0:22:43.240 --> 0:22:45.040 behind the wheel of a Tesla and say, look, I 0:22:45.040 --> 0:22:47.480 don't want my driving. I would imagine that you're going 0:22:47.520 --> 0:22:49.480 to find a situation. I don't think that de'll be 0:22:49.560 --> 0:22:52.280 able to because clearly the interest here in terms of 0:22:52.320 --> 0:22:55.320 the people providing the products is to capture the information. 0:22:55.359 --> 0:22:58.240 The value resides in the data and what you can 0:22:58.320 --> 0:23:00.359 learn from this. And in the case of back to 0:23:00.440 --> 0:23:03.800 artificial intelligence, we're probably gonna be seeing creation of new 0:23:03.840 --> 0:23:07.639 market here called artificial intelligence as a service, and in 0:23:07.720 --> 0:23:10.879 its full blown promise, it might lead to an improvement 0:23:10.920 --> 0:23:14.920 in terms of productivity because clearly machines that have greater 0:23:15.000 --> 0:23:18.000 computing power than possibly humans you know, maybe turned over 0:23:18.040 --> 0:23:19.560 to do this work. The question is always going to 0:23:19.600 --> 0:23:20.720 be what are the humans going to do in the 0:23:20.720 --> 0:23:24.920 meanwhile with all this code augmented reality? Because that's trend 0:23:24.960 --> 0:23:28.080 number two. Tell me about a are augmented reality? Well, 0:23:28.119 --> 0:23:31.760 I mean, certainly, you know, uh, ces consumer electronic show 0:23:31.760 --> 0:23:33.760 in twenty sixteen was very much taken up with you 0:23:33.800 --> 0:23:36.320 know what Facebook was coming out with the Oculus Rift 0:23:36.359 --> 0:23:39.240 and with virtual reality headsets, and that turn proved to 0:23:39.240 --> 0:23:41.080 be a little bit bit of a bust because the 0:23:41.160 --> 0:23:43.720 Rift didn't sell as much as Facebook did still sold 0:23:43.760 --> 0:23:45.760 four un a thousand units, but not enough is the 0:23:45.840 --> 0:23:48.439 millions that people might have thought. But here, clearly we're 0:23:48.480 --> 0:23:51.800 looking at a situation that with you know, with augmented reality, 0:23:51.960 --> 0:23:54.560 you know, technologies that are crossing the physical digital divide, 0:23:54.560 --> 0:23:57.199 you know, do represent that the future of computing. And 0:23:57.280 --> 0:23:59.399 from this standpoint, you know, we're looking at a wide 0:23:59.480 --> 0:24:01.080 range of come but he's that be going to be 0:24:01.160 --> 0:24:03.440 coming out, you know, we're thinking here that you're looking 0:24:03.480 --> 0:24:08.080 at you know, at augmented reality headsets UM. You know, 0:24:08.240 --> 0:24:11.280 certainly with regards to UM, you know, all the things 0:24:11.280 --> 0:24:13.440