WEBVTT - Trump Reshapes Global Order With Maduro Capture 0:00:02.520 --> 0:00:13.760 Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg 0:00:13.840 --> 0:00:17.920 Surveillance Podcast. Catch us live weekdays at seven am Eastern 0:00:18.200 --> 0:00:22.000 on Apple CarPlay or Android Auto with the Bloomberg Business app, 0:00:22.320 --> 0:00:25.680 Listen on demand wherever you get your podcasts, or watch 0:00:25.760 --> 0:00:27.040 us live on YouTube. 0:00:27.440 --> 0:00:30.960 The first name on the list was Edward Morse. Absolutely 0:00:31.000 --> 0:00:35.320 definitive within the global zeitgeis, if you will, the Washington 0:00:35.320 --> 0:00:39.360 Consensus on Petroleum. All sorts of efforts here, including his 0:00:39.440 --> 0:00:42.240 work with the Council on Foreign at Relations, and we're 0:00:42.240 --> 0:00:45.520 honored that doctor Morris would join us in our studio today. 0:00:45.560 --> 0:00:49.400 Welcome to Bloomberg, doctor Morse. When I look at this, 0:00:49.520 --> 0:00:53.040 I think the arch question is a cup of coffee 0:00:53.080 --> 0:00:56.440 this morning with the President of the United States, how 0:00:56.440 --> 0:00:59.960 would you brief him on the timeline to get Venezuela 0:01:00.440 --> 0:01:03.200 to a new Caracas, a new Venezuela. 0:01:03.360 --> 0:01:07.640 The timeline is very, very long. The timeline includes not 0:01:07.800 --> 0:01:10.960 just what must be done on the oils patch, but 0:01:11.080 --> 0:01:13.800 also includes how do you get this government to cooperate 0:01:13.840 --> 0:01:16.360 with the United States? And yes, starting out on a 0:01:16.360 --> 0:01:19.760 good foot, but this can't be done without a change 0:01:20.000 --> 0:01:24.240 in the entire view of the government of how they 0:01:24.520 --> 0:01:26.440 do what they do. They're there to make money, they're 0:01:26.480 --> 0:01:29.560 there to control things, and they can't do that and 0:01:29.680 --> 0:01:32.759 have the oil patch resume what it was like twenty 0:01:32.800 --> 0:01:33.440 five years ago. 0:01:33.520 --> 0:01:37.280 This is a transactional president. You have lived, with your 0:01:37.480 --> 0:01:43.240 iconic work at City Group, a transactional big American banks 0:01:43.440 --> 0:01:47.680 enjoying losing big money in Latin America and other places. 0:01:48.040 --> 0:01:51.200 What do you perceive as a relationship of President Trump 0:01:51.640 --> 0:01:55.840 with mister Diamond, with mister moynihan and with other financiers 0:01:56.000 --> 0:01:56.880 of America. 0:01:56.960 --> 0:02:00.000 Well, he's got a good relationship with the financial sect 0:02:00.760 --> 0:02:03.040 for all kinds of good reasons that we can get into. 0:02:03.080 --> 0:02:06.200 That's a separate subject. But here the capital has to 0:02:06.240 --> 0:02:09.960 come from oil companies, and oil companies look at risk. 0:02:10.120 --> 0:02:12.880 They look at the risk in the marketplace, what is 0:02:12.880 --> 0:02:16.040 a supply demand balance, They look at the risks of 0:02:16.080 --> 0:02:19.560 an investment, and in the case of Venezuela, they need 0:02:19.680 --> 0:02:23.600 a lot of capital going into infrastructure, and that infrastructure 0:02:23.639 --> 0:02:26.239 has to be in place before the oil comes out 0:02:26.240 --> 0:02:30.080 of the ground. So we're talking here about billions of 0:02:30.120 --> 0:02:35.160 dollars to start to restore the infrastructure that will get 0:02:35.200 --> 0:02:38.840 things going to allow oil on a sustainable basis to 0:02:39.040 --> 0:02:42.040 rise by a mere four or five hundred thousand barrels 0:02:42.040 --> 0:02:45.120 a day. That's twenty billion dollars. Twenty billion dollars is 0:02:45.120 --> 0:02:52.240 not nothing when oil companies have opportunities in Guyana, opportunities 0:02:52.280 --> 0:02:57.079 in Argentina, opportunities in Brazil, and opportunities in Africa. So 0:02:57.480 --> 0:03:00.920 the question is what will attract companies to spend the 0:03:00.960 --> 0:03:03.640 capital that Trump needs for the transaction toward Paul. 0:03:03.600 --> 0:03:07.440 Chevron debt eleven point seven percent, that's where they are 0:03:07.520 --> 0:03:07.880 right now. 0:03:08.000 --> 0:03:09.440 Just as an example, what do you think the US 0:03:09.480 --> 0:03:13.040 government or what do you think those energy companies would 0:03:13.080 --> 0:03:15.560 need from the US government in terms of assurances or 0:03:15.919 --> 0:03:17.560 whatever to commit that capital. 0:03:17.600 --> 0:03:20.720 Do you think, well, they need the reassurance from the 0:03:20.800 --> 0:03:23.320 Venezuelan side as well as from the US government, because 0:03:23.320 --> 0:03:26.399 the US government said that it's not taking over Venezuela 0:03:26.520 --> 0:03:28.480 have good point, so it needs it needs to have 0:03:28.520 --> 0:03:31.960 the confidence, which will be step by step, and I 0:03:32.000 --> 0:03:34.480 suspect that the first step will be with Chevron to 0:03:34.560 --> 0:03:38.640 see whether they can make good in short term of 0:03:38.720 --> 0:03:41.360 capital with short term return. So I think it's going 0:03:41.400 --> 0:03:44.120 to be a slow process, but it will be trust, 0:03:44.120 --> 0:03:47.600 building on trust, and we'll see how smooth that transition goes. 0:03:48.040 --> 0:03:52.360 Takos to just describe the energy when we talk about Venezuela, 0:03:52.440 --> 0:03:54.520 what do they have, what do they need? 0:03:55.440 --> 0:03:56.360 How big are they is? 0:03:56.520 --> 0:03:59.760 How important is this because I understand there's a lot underground, 0:03:59.840 --> 0:04:00.760 it's quite important. 0:04:00.800 --> 0:04:02.440 So the world is known for a long time that 0:04:02.560 --> 0:04:05.800 Venezuela has the largest known oil reserves in the world. 0:04:05.840 --> 0:04:08.000 The problem is it's not the kind of oil that 0:04:08.040 --> 0:04:11.040 the rest of the world needs or wants. And the 0:04:11.080 --> 0:04:16.440 problem is it's in Venezuela, and it's complicated oil to 0:04:16.440 --> 0:04:19.880 get out of the ground. But they've done it before, 0:04:20.080 --> 0:04:23.440 and they've managed to go from under two million barrels 0:04:23.480 --> 0:04:25.840 a day to three and a half million barrels a 0:04:25.960 --> 0:04:28.760 day in a relatively short period of time a couple 0:04:28.800 --> 0:04:32.080 of decades ago. So if the will is there and 0:04:32.120 --> 0:04:35.320 the government is there to provide the guarantees, but to 0:04:35.400 --> 0:04:38.400 do that you need the government institutions to be rewarned. 0:04:38.680 --> 0:04:42.520 Those government institutions have themselves deteriorate it dramatically. They don't 0:04:42.560 --> 0:04:45.160 have the human resources, they don't have the personnel to 0:04:45.160 --> 0:04:47.160 be able to guide it. So part of the process 0:04:47.200 --> 0:04:49.920 will be a return of that human resource base. 0:04:50.080 --> 0:04:52.920 Edard wars with this for a lengthy conversation this morning 0:04:52.960 --> 0:04:55.279 with heart Tree and of course Definitive It's City Group, 0:04:55.560 --> 0:04:59.159 among other services to the United States over his long 0:04:59.279 --> 0:05:03.320 decades on petroleum on Hydrocarbon's I believe I've shared the 0:05:03.440 --> 0:05:06.400 stage with you and Shannon O'Neil at the Council on 0:05:06.520 --> 0:05:11.640 Foreign Relations. Doctor O'Neil was on with us recently exceptionally 0:05:11.720 --> 0:05:17.159 gloomy about Venezuela's ability to reorganize given an event like 0:05:17.240 --> 0:05:20.680 what we've seen. I assume you've been to Caracas more 0:05:20.720 --> 0:05:24.000 than forty times. You remember a Caracas from another time 0:05:24.320 --> 0:05:27.520 in place. Do you have any optimism that they can 0:05:27.600 --> 0:05:31.440 move from a Cuba like society to something that could 0:05:31.480 --> 0:05:32.760 get capitalism done. 0:05:33.279 --> 0:05:35.359 Well, you have to be a little bit optimistic given 0:05:35.440 --> 0:05:38.760 the change that has already taken place. So changing getting 0:05:38.800 --> 0:05:41.719 Maduro out of that position is a major step. And 0:05:41.800 --> 0:05:45.880 now the government is in a crisis of survival. That 0:05:46.000 --> 0:05:48.960 survival will require them to collaborate with the US. So 0:05:49.880 --> 0:05:53.080 the options that they have are quite limited. Who is 0:05:53.120 --> 0:05:56.400 going to replace the US at this moment in time? 0:05:56.640 --> 0:06:01.280 Given the US military position, the naval position surrounding Venezuela, 0:06:01.720 --> 0:06:05.520 the control that the US has over Venezuelan exports, it's 0:06:05.560 --> 0:06:09.000 not easy to imagine a replacement for that. So the 0:06:09.000 --> 0:06:12.159 good news really is that they are cooperating to start 0:06:12.480 --> 0:06:14.080 and we'll see how that goes, but it will be 0:06:14.160 --> 0:06:15.600 a long road with difficulty. 0:06:16.120 --> 0:06:18.400 Is it your understanding, just based upon the limited reporting 0:06:18.400 --> 0:06:21.680 that we have in the last forty eight hours, that 0:06:21.839 --> 0:06:25.480 the government of Venzezezuela was in contact with the Trump 0:06:25.480 --> 0:06:28.760 administration if to facilitate that mister Maduro being taken. 0:06:29.080 --> 0:06:31.160 Look, it could not have been done without there being 0:06:31.240 --> 0:06:35.080 some contact within the government. We know from reporting that 0:06:36.400 --> 0:06:39.360 the intelligence operations preceded this. They were on the ground, 0:06:39.640 --> 0:06:41.360 they had to have help to be on the ground, 0:06:42.080 --> 0:06:44.600 and undoubtedly they were not taken by surprise because of 0:06:44.640 --> 0:06:47.520 the smooth way events went on over the weekend. 0:06:48.720 --> 0:06:51.440 I do think China is viewing what's going on these days. 0:06:51.720 --> 0:06:56.840 China's in a big difficult position they have. They are 0:06:57.080 --> 0:07:01.760 massive creditor to Venezuela. Venezuela has been part of central 0:07:01.839 --> 0:07:08.960 to the Belton Road initiative enlarging China's influence in Latin America. 0:07:09.320 --> 0:07:12.240 Excuse me and it's been, frankly a failure. They have 0:07:12.360 --> 0:07:16.280 between fifty and one hundred billion of debt. Their operations 0:07:16.480 --> 0:07:19.320 right now are to export oil to pay for that debt. 0:07:19.720 --> 0:07:23.120 The US controls they are exports out of Venezuela. So 0:07:23.280 --> 0:07:27.080 they had, Yes, they came down and condemned the US government. 0:07:27.120 --> 0:07:29.800 They had to do that. But they have to take 0:07:29.800 --> 0:07:32.600 a quiet approach because there's so much at stake between 0:07:32.680 --> 0:07:35.360 them and the US on a global basis, so much 0:07:35.400 --> 0:07:38.200 at stake on a bilateral basis, including their tariffs, that 0:07:38.240 --> 0:07:40.560 they want to see. 0:07:40.720 --> 0:07:42.120 Some resolution on. 0:07:42.920 --> 0:07:46.480 So I think we'll see quiet diplomacy with China and 0:07:46.520 --> 0:07:50.800 the US rather than stamping on the foot or saying 0:07:50.840 --> 0:07:52.200 anything about military force. 0:07:52.360 --> 0:07:55.800 In my reading, I've heard that. But what does Edward Morris, 0:07:55.840 --> 0:07:58.840 I'm going to butcher the pronunciation, doctor Morris. Do we 0:07:58.920 --> 0:08:03.320 need to show the flag this morning and Kaushing Port 0:08:03.560 --> 0:08:07.240 in Taiwan? Does the US Navy need to get over there, 0:08:07.560 --> 0:08:11.680 and you know, like Perry centuries ago, show the flag, tim. 0:08:11.720 --> 0:08:14.880 I think the US showed the flag before Madua was 0:08:14.920 --> 0:08:18.600 taken out. They showed the flag with a massive military 0:08:18.720 --> 0:08:23.360 seal to Taiwan, right, and the military has been there 0:08:23.360 --> 0:08:26.320 the navy has been there. China is not in a 0:08:26.360 --> 0:08:29.000 position to fool around with the US, even with much 0:08:29.040 --> 0:08:33.680 of the US naval fleet now around Venezuela. So I 0:08:33.679 --> 0:08:36.440 think it's going to be stepping you know, very lightly 0:08:36.720 --> 0:08:38.640 on what would happen Van. 0:08:38.600 --> 0:08:41.479 Morris with his folks a special edition of Bloomberg Surveillance. 0:08:41.520 --> 0:08:44.120 We really held back the commercial interruptions to give you 0:08:44.520 --> 0:08:49.280 this conversation for America. Around the world. You have such 0:08:49.280 --> 0:08:54.199 a relationship with Faisal and on in Saudi Arabia. How 0:08:54.200 --> 0:08:57.319 does the Middle East in general, and particularly read and Jetta, 0:08:57.440 --> 0:08:59.319 how do they respond to these actions? 0:08:59.480 --> 0:09:03.160 There is my quite quietly, Riata is looking at the 0:09:03.200 --> 0:09:06.600 global setting. They know that Venezuela could be a threat 0:09:06.720 --> 0:09:11.200 to the production agreement within OPEK plus, but not in 0:09:11.240 --> 0:09:13.559 the short run. And the short run they're looking at 0:09:13.559 --> 0:09:15.960 the year ahead. The year ahead is quite uncertain and 0:09:16.000 --> 0:09:19.120 quite messy, and it was that way before the taking 0:09:19.160 --> 0:09:22.800 of Maduro. So we have Russia, Ukraine, we have uncertainty 0:09:22.840 --> 0:09:26.880 on the distortion and disruption side around the world, and 0:09:26.920 --> 0:09:30.480 the Saudis have also a military tide of the US 0:09:30.600 --> 0:09:33.040 that they don't want to lose, so they have to 0:09:33.320 --> 0:09:36.040 and they look at their budget. The budget requires a 0:09:36.080 --> 0:09:40.760 lot of borrowing. That borrowing may include in their own minds. 0:09:41.040 --> 0:09:43.920 How low can prices go for US six Where. 0:09:44.480 --> 0:09:48.960 Folks I failed the fall, I've failed. Ed Morris nailed 0:09:49.160 --> 0:09:51.439 the decline in oil. Do we have a lower oil 0:09:51.600 --> 0:09:53.280 target from her for heartreat? 0:09:54.559 --> 0:09:56.280 So we don't know how low the price will go. 0:09:56.480 --> 0:09:59.079 It's lifted a little bit by the geopolitical risk. I'd 0:09:59.120 --> 0:10:02.520 say the supply demand balance, which is higher supply than 0:10:02.559 --> 0:10:06.439 the race demand now and going forward, is for oil 0:10:06.760 --> 0:10:10.400 testing branded forty okay, And I think testing branded forty 0:10:10.440 --> 0:10:13.480 is something the Saudia's can swallow. How much lower than 0:10:13.480 --> 0:10:15.000 that they can swallow? It is not known. 0:10:15.040 --> 0:10:17.120 I want to get to say, because Paul's got any questions. 0:10:17.559 --> 0:10:20.680 So you're going to go visit Trump. President Trump is 0:10:20.679 --> 0:10:23.000 going to bean Edward Morris coffee with the President. You're 0:10:23.000 --> 0:10:26.319 going to talk about a transactional American president. And I 0:10:26.480 --> 0:10:28.440 know you're going to get a phone call from Ottawa 0:10:28.480 --> 0:10:31.840 where Mark Kearney is going to go Edmonton's playing Ottawa, 0:10:32.240 --> 0:10:36.160 Edmore's come join me at an Ottawa senator's hockey game. 0:10:36.480 --> 0:10:37.760 I mean, this is the way it's going to work. 0:10:37.800 --> 0:10:40.280 What do you say to Mark Kearney of Canada. 0:10:39.960 --> 0:10:42.120 Well, so with Trump, because I haven't answered your question 0:10:42.160 --> 0:10:44.200 if I say that Trump, and what I said to 0:10:44.240 --> 0:10:49.400 Trump is your policy on energy dominance is a wonderful strategy. 0:10:50.040 --> 0:10:53.000 But mister President, I think you're ignoring some things about 0:10:53.080 --> 0:10:56.120 energy dominance. And there are two things about it. One 0:10:56.240 --> 0:10:59.280 is that you can't get to where you want without 0:10:59.360 --> 0:11:04.160 having a significant growth because this is a world transitioning 0:11:04.559 --> 0:11:09.200 to electricity intensity, and you can't do the electricity intensity 0:11:09.200 --> 0:11:12.560 you need for AI and cloud computing and energy dominance 0:11:13.120 --> 0:11:17.200 without renewables. You can't do it even without hydrogen. So 0:11:17.280 --> 0:11:19.880 you've got to enlarge what you think about energy dominance. 0:11:20.360 --> 0:11:22.760 And then, mister President, you've got to think about the US. 0:11:23.640 --> 0:11:26.240 The US is not one country when it comes to energy. 0:11:26.280 --> 0:11:29.760 At six, we have two exporting segments in the US. 0:11:30.240 --> 0:11:33.040 They are the Gulf Coast of the US and I'm 0:11:33.040 --> 0:11:34.920 not talking about the Gulf of America or the Gulf 0:11:34.960 --> 0:11:38.000 of Mexico, but the Gulf Coast. And we have Alaska, 0:11:38.080 --> 0:11:41.880 both exporters of fossil fuels. And then we have two 0:11:42.200 --> 0:11:46.400 massive importers of fossil fuel with no tie and mister President, 0:11:46.559 --> 0:11:49.800 here is a lesson. The reason that we have two 0:11:49.960 --> 0:11:53.040 importers on the West Coast and the East Coast that 0:11:53.120 --> 0:11:56.720 are massive in scale, global in scale, is because another 0:11:56.800 --> 0:12:00.640 period of dominance around World War One, we thought we 0:12:00.720 --> 0:12:03.920 were the best shipbuilding company country in the world and 0:12:03.960 --> 0:12:07.120 we wanted to retain that dominance. So the Jones Act 0:12:07.200 --> 0:12:10.120 was enacted, and the Jones Act has meant that when 0:12:10.120 --> 0:12:12.840 it comes to energy we are importer. Is because we 0:12:12.880 --> 0:12:16.600 can't afford American chips to take oil from the Gulf 0:12:16.600 --> 0:12:19.200 Coast to the West Coast or the East Coast. We 0:12:19.280 --> 0:12:22.480 need foreign vessels and they carry farm So this is. 0:12:22.440 --> 0:12:24.600 The moment to do away with the Jones Act. 0:12:24.840 --> 0:12:27.480 This is the moment to do it, I mean, and 0:12:27.640 --> 0:12:31.000 also to tell the President energy dominance a good idea 0:12:31.440 --> 0:12:33.679 needs a little bit of massaging at the edge. 0:12:33.800 --> 0:12:36.840 I mean. The photograph of Theodore Roosevelt with a map 0:12:36.880 --> 0:12:39.680 of Venezuela behind him from I believe Paul nineteen oh 0:12:39.800 --> 0:12:44.000 nine was just stunning. I mean, this history going back here, 0:12:44.080 --> 0:12:45.880 Paul Sweeney with Edward Morris. 0:12:46.679 --> 0:12:48.280 So when you go down to Houston, you talk to 0:12:48.280 --> 0:12:50.959 these big energy companies today, are they happy with what's 0:12:51.000 --> 0:12:52.920 going on in the last twenty four or forty eight hours, 0:12:53.000 --> 0:12:55.920 or are they apprehensive that they see a big opportunity here. 0:12:56.480 --> 0:12:59.320 They see a better opportunity that than they've seen in years, 0:12:59.480 --> 0:13:03.600 but they are apprehensive. The risk of putting capital, their capital, 0:13:03.640 --> 0:13:07.559 their shareholders capital at risk looms extremely large in their minds. 0:13:07.760 --> 0:13:09.880 So there's not going to be a rush to put 0:13:09.920 --> 0:13:14.120 money into Venezuela until we see what the structure of 0:13:14.200 --> 0:13:15.559 the investment might look like. 0:13:16.720 --> 0:13:19.120 I'm surprised I don't see a move in WTI and 0:13:19.160 --> 0:13:21.000 Brent Crewe today. Now, I couldn't have told you is 0:13:21.000 --> 0:13:23.080 it going to be a five percent or down five percent? 0:13:23.120 --> 0:13:25.400 But I kind of got nothing going on here today. 0:13:25.440 --> 0:13:27.600 Well, in my prepared remarks, I thought that was the 0:13:27.600 --> 0:13:28.240 first question. 0:13:28.360 --> 0:13:28.880 I didn't know. 0:13:29.520 --> 0:13:31.280 You know that we're going to have prices go down 0:13:31.280 --> 0:13:31.600 a load. 0:13:31.720 --> 0:13:35.640 Its surveillance. You know, we make it up as we're 0:13:35.679 --> 0:13:36.120 winging it. 0:13:37.800 --> 0:13:40.240 No, I'm not surprised. Okay, there is no change in 0:13:40.280 --> 0:13:41.520 the energy market period. 0:13:42.240 --> 0:13:44.400 There you go, all right, So, but I think at 0:13:44.440 --> 0:13:48.120 some point it just feels like almost Opeck and Opeck 0:13:48.120 --> 0:13:50.240 plus become less and less relevant every day. 0:13:51.000 --> 0:13:54.280 Opeck and OUTPECK plus have become less relevant every day 0:13:54.800 --> 0:13:57.800 since the beginning of this decade. And when we look 0:13:57.880 --> 0:14:00.679 at the positions that have put this in, it's not 0:14:00.800 --> 0:14:05.559 just the rise of Guyana and Brazil and Argentina again, 0:14:06.000 --> 0:14:09.400 but it really is the US, the US, you know, 0:14:09.800 --> 0:14:13.040 I have this battle with my colleagues at work almost 0:14:13.040 --> 0:14:16.160 every day. The US is not just a crude oil producer. 0:14:17.440 --> 0:14:21.160 It is a massive liquids producer. We are a producer 0:14:21.160 --> 0:14:23.240 of twenty three to twenty four million barrels a day, 0:14:23.880 --> 0:14:27.160 and our growth has been in natural gas liquids. Natural 0:14:27.200 --> 0:14:30.920 gas liquids compete with oil out of a refinery. They 0:14:30.920 --> 0:14:33.880 compete with gasoline, they compete with dissolate, they compete with 0:14:33.880 --> 0:14:37.760 fuel oil. They're there for transportation, they're there for home 0:14:37.800 --> 0:14:41.800 heating and power generation and industrial use. So we are 0:14:42.560 --> 0:14:46.040 the disruptor of the global market, and we're the ones 0:14:46.040 --> 0:14:49.440 who put OPEC plus in a position of defense. 0:14:51.080 --> 0:14:52.440 I would be out. We're going to have to wrap 0:14:52.440 --> 0:14:55.360 it up here with Mark Champion coming up, folks from Europe, 0:14:55.360 --> 0:14:59.680 with all of his decades of experience, Doctor Morris. Some 0:14:59.720 --> 0:15:02.520 of the the highlights of my career here than with 0:15:02.640 --> 0:15:06.200 you in with Daniel Jurgen. If I was to get 0:15:06.240 --> 0:15:09.520 Jurgen in morse together and look at his the prize, 0:15:10.000 --> 0:15:13.440 just the romance that I, as a kid in college 0:15:13.480 --> 0:15:17.280 read cover to cover. We got to find the romance 0:15:17.360 --> 0:15:20.720 for Venezuela, to save a society, to save a region, 0:15:21.080 --> 0:15:23.560 maybe to support the don Road doctrine. I don't know 0:15:24.080 --> 0:15:27.640 how do we get the romance back that you knew 0:15:28.200 --> 0:15:31.640 working there, that I knew as a student. I don't 0:15:31.680 --> 0:15:32.320 know how we do that. 0:15:32.360 --> 0:15:34.480 I know that I'm not going to bring the romance back, 0:15:34.520 --> 0:15:36.880 and Dan Jurgen certainly has the ability. 0:15:36.480 --> 0:15:36.880 To do it. 0:15:37.200 --> 0:15:39.520 By the way, I was an early reader of the Prize. 0:15:40.120 --> 0:15:42.320 He and I knew each other in graduate school. We 0:15:42.320 --> 0:15:45.480 were in different graduate schools. And when he wrote The Price, 0:15:45.840 --> 0:15:48.440 the original version that I read was actually twice as 0:15:48.520 --> 0:15:51.840 long as a version in print, So he had to 0:15:51.880 --> 0:15:54.800 cut out a lot of wonderful text in order to 0:15:54.800 --> 0:15:55.920 put out that brilliant book. 0:15:56.240 --> 0:15:58.040 The book was it, Paul? It was You had to 0:15:58.040 --> 0:15:59.720 walk around even if you didn't read it. You walked 0:15:59.720 --> 0:16:02.880 a walk it. Yeah, to be cool. You're gonna talk 0:16:03.200 --> 0:16:09.040 about this unique American relationship with various and sundry banana 0:16:09.080 --> 0:16:13.760 republics Reagan and Granada and the rest. Can we develop 0:16:13.880 --> 0:16:18.400 a new process with central in Latin America or will 0:16:18.400 --> 0:16:21.240 this be the same old, same world through the rest 0:16:21.240 --> 0:16:22.120 of the Trump term. 0:16:22.920 --> 0:16:25.160 Now, I think I think there is a process going on. 0:16:25.200 --> 0:16:28.320 If we look at elections that have taken place in 0:16:28.400 --> 0:16:32.800 Latin America, there's a rebellion in those countries against corruption. 0:16:33.560 --> 0:16:38.120 There's a move from the corrupt left to the right. 0:16:38.520 --> 0:16:41.240 We've had a corrupt right in the past, but it's 0:16:41.320 --> 0:16:44.640 been a very constructive set of moves from reelections. So 0:16:44.680 --> 0:16:47.640 I think I think Latin America is in a very 0:16:47.720 --> 0:16:50.000 good position now, better position than it's been in a 0:16:50.040 --> 0:16:52.880 long time. And part of it is the lessons learned 0:16:53.240 --> 0:16:57.920 from China, overspending and having a view that all credit 0:16:57.920 --> 0:16:58.760 has to be repaid. 0:16:59.120 --> 0:17:01.560 Wow, Paul, we got to mark Champion, but doctor Morris, 0:17:01.600 --> 0:17:03.400 I got to bring this up, Paul said, you got 0:17:03.400 --> 0:17:06.480 to ask the question time, what's it mean for land Man? 0:17:09.200 --> 0:17:10.560 Thank you very much for inviting me. 0:17:10.600 --> 0:17:13.600 This had a pleasure to be more. Thank you so much. 0:17:13.840 --> 0:17:15.879 We're the hard Tree And of course doctor Morris was 0:17:15.920 --> 0:17:20.320 City Group for many years. Edward Warrice there stay with us. 0:17:20.560 --> 0:17:23.800 More from Bloomberg Surveillance coming up after this. 0:17:31.040 --> 0:17:34.600 You're listening to the Bloomberg Surveillance Podcast. Catch us live 0:17:34.680 --> 0:17:38.200 weekday afternoons from seven to ten am Eastern Listen on Apple, 0:17:38.240 --> 0:17:41.600 Karplay and Android Otto with the Bloomberg Business app, or 0:17:41.720 --> 0:17:43.400 watch us live on YouTube. 0:17:43.760 --> 0:17:47.320 Keith Leernert, he's the CIO and chief market strategist at 0:17:47.640 --> 0:17:50.520 Truest Keith, So we think about twenty twenty six year, 0:17:50.520 --> 0:17:53.240 we got geopolitics front and center here today to start 0:17:53.359 --> 0:17:56.439 kind of the year off, right, let's step back to 0:17:56.440 --> 0:17:58.919 just a little bit there. What are your outlook for 0:17:59.040 --> 0:18:02.320 markets in twenty twenty six after just outstanding results and 0:18:02.400 --> 0:18:05.440 equities and bonds and commodities in twenty twenty five. 0:18:06.440 --> 0:18:09.040 Yeah, well, first, great to kind of bring in the 0:18:09.080 --> 0:18:10.040 new year with you guys. 0:18:10.040 --> 0:18:10.600 Great to be on. 0:18:11.400 --> 0:18:14.760 So our look that we published in December was called 0:18:14.800 --> 0:18:17.160 the seventh Inning Stretch, and the way we thought about 0:18:17.160 --> 0:18:18.840 it is, you know, we've come a long way in 0:18:18.880 --> 0:18:20.840 the economic cycle and the markets. It was a good 0:18:20.880 --> 0:18:23.439 time to kind of access where we are and our 0:18:23.520 --> 0:18:27.240 bottom line is, you know, our way the evidence approach 0:18:27.280 --> 0:18:30.919 suggests it is still upside in both the economy and 0:18:30.960 --> 0:18:32.920 the stock market. So let me just share a couple 0:18:33.119 --> 0:18:34.040 of stats with you. 0:18:34.640 --> 0:18:35.880 The first one is, you. 0:18:35.800 --> 0:18:38.359 Know, we just had our third year anniversary of the 0:18:38.359 --> 0:18:42.920 bullmarket late last year. When we look historically, there's been 0:18:43.000 --> 0:18:46.200 seven bull markets that has had a third year anniversary, 0:18:46.480 --> 0:18:49.400 all them sore gains over the next year. It's only 0:18:49.440 --> 0:18:51.320 a sample size of seven, but as a starting point, 0:18:51.359 --> 0:18:54.200 that's a positive. If I lay on top of that 0:18:54.200 --> 0:18:57.359 that the Fed once again in December cut rates when 0:18:57.640 --> 0:18:59.919 when the SMP was close to all time highs. 0:19:00.200 --> 0:19:02.560 When you test that out about a year. 0:19:02.480 --> 0:19:04.639 Later, the market has been up more than ninety percent 0:19:04.640 --> 0:19:07.479 of the time, so that's also a positive. And then 0:19:07.520 --> 0:19:10.480 you mentioned the earning side. You know, the pe for 0:19:10.560 --> 0:19:13.600 the overall market last year was flat. For the technology 0:19:13.640 --> 0:19:16.399 sector it was actually down. And all the games really 0:19:16.480 --> 0:19:19.280 last year were earnings. As we move forward, we expect 0:19:19.359 --> 0:19:25.359 low double digit earnings again that should support the overall market. 0:19:25.400 --> 0:19:27.680 I will say it is a mid timber election year. 0:19:27.880 --> 0:19:30.359 Those tend to be somewhere more vatile. We have our 0:19:30.359 --> 0:19:32.720 first turn ball that we saw here with the Venezuela 0:19:32.960 --> 0:19:34.040 over yesday. 0:19:34.119 --> 0:19:36.080 What I got most wrong last year was, as in 0:19:36.119 --> 0:19:38.840 the triple leverage, all cash run for the entire year. 0:19:39.200 --> 0:19:43.360 Paul cratered great. I mean that Cratered you learned. What'd 0:19:43.400 --> 0:19:44.880 you get most wrong? Last year? 0:19:47.040 --> 0:19:50.359 When I get most most wrong, I would say, I thought, 0:19:50.760 --> 0:19:52.960 you know, when think about the April trade side, we 0:19:53.040 --> 0:19:55.600 downgraded equities in February. 0:19:55.800 --> 0:19:57.720 We told a lot of investors do not sell at 0:19:57.760 --> 0:19:58.199 the lowest. 0:19:58.240 --> 0:20:01.159 But then after we had the initial pop, we took a. 0:20:01.160 --> 0:20:02.199 Little bit off the table. 0:20:02.760 --> 0:20:04.359 So I think that's probably if you say what you 0:20:04.400 --> 0:20:06.000 got most wrong. What I'm proud of is that we 0:20:06.000 --> 0:20:08.439 didn't stay there too long. We then upgraded stocks are 0:20:08.960 --> 0:20:11.600 shortly thereafter. But it was you know, we follow this 0:20:11.640 --> 0:20:14.800 way of the evidence approach, and you know it overall 0:20:14.840 --> 0:20:16.120 led us directly in the right way. 0:20:17.440 --> 0:20:20.600 So fixed income here high single did your returns in 0:20:20.640 --> 0:20:23.760 twenty twenty five in twenty six? Is it just a 0:20:23.800 --> 0:20:24.920 function of clipping the coupon? 0:20:24.960 --> 0:20:25.359 Do you think? 0:20:26.280 --> 0:20:26.480 Yeah? 0:20:26.480 --> 0:20:28.480 I think so for the most part, I mean our 0:20:29.160 --> 0:20:32.280 house views is the ten year drifts towards three seventy five, 0:20:32.359 --> 0:20:34.880 So maybe you get a little bit of price appreciation, 0:20:35.640 --> 0:20:38.000 and you know, relative to the last ten fifteen years, 0:20:38.000 --> 0:20:40.119 you know, yields are still somewhat attractive. 0:20:40.400 --> 0:20:43.280 So yeah, we think, you know, we we basically clipped 0:20:43.320 --> 0:20:44.280 the coupon. 0:20:44.840 --> 0:20:47.440 That's why I with an overall assd allocation, we still 0:20:47.440 --> 0:20:50.240 have a modest equity tilt, and we still all year along. 0:20:50.320 --> 0:20:52.919 Last year we had our position in gold, which we 0:20:53.000 --> 0:20:56.199 call the MVP, and we still like gold as we 0:20:56.240 --> 0:21:00.439 move into this year, at least from a portfolio diversification standpoint, Say. 0:21:00.320 --> 0:21:04.280 To people, Keith, like they participated, but maybe they were 0:21:04.400 --> 0:21:07.160 you know, sixty forty they were more fixed income or Paul, 0:21:07.200 --> 0:21:09.480