WEBVTT - Irish Border Issue Is Increasingly Difficult to Solve: Harkin 0:00:05.800 --> 0:00:08.720 Welcome to the Bloomberg p m L Podcast. I'm Pim Fox. 0:00:08.760 --> 0:00:11.520 Along with my co host Lisa Bramowitz. Each day we 0:00:11.640 --> 0:00:15.120 bring you the most important, noteworthy, and useful interviews for 0:00:15.200 --> 0:00:17.840 you and your money, whether you're at the grocery store 0:00:17.960 --> 0:00:20.720 or the trading floor. Find the Bloomberg p m L 0:00:20.840 --> 0:00:32.920 Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot Com. The 0:00:32.960 --> 0:00:38.199 Brexit negotiations are ongoing and painful. The latest and uh, 0:00:38.400 --> 0:00:41.800 probably one of the most difficult stumbling blocks is the 0:00:41.960 --> 0:00:45.640 issue of the Irish border. And here to talk about 0:00:45.680 --> 0:00:49.400 this with us ahead of St. Patrick's day tomorrow in 0:00:49.479 --> 0:00:54.600 the US Marian Harkin, European Union parliament member representing Ireland. Uh. 0:00:55.440 --> 0:00:57.240 But she is here with us here in our eleven 0:00:57.280 --> 0:00:58.880 three studios in New York. Thank you so much for 0:00:58.960 --> 0:01:01.200 joining us, Marion, I want to just talk about this. 0:01:01.280 --> 0:01:05.520 According to several diplomats in a Bloomberg News story, UH, 0:01:05.600 --> 0:01:08.840 there hasn't been a lot of progress made on this 0:01:09.040 --> 0:01:11.959 Irish border issue. Can you just describe the issue from 0:01:12.080 --> 0:01:15.080 your perspective and what needs to happen for a deal 0:01:15.120 --> 0:01:18.520 to be reached. Well, good morning to you, sent to 0:01:18.840 --> 0:01:23.920 all your listeners. Unfortunately, today, just before I arrived here, 0:01:24.319 --> 0:01:26.839 I had a very quick look at a report which 0:01:26.840 --> 0:01:30.119 has just come out from the House of Commons Northern 0:01:30.160 --> 0:01:34.800 Ireland Committee, and they say that they have failed to 0:01:34.880 --> 0:01:40.800 find a technical solution for this frictionless soft border that 0:01:40.840 --> 0:01:44.440 we're supposed to have. And not only do they say that, 0:01:44.840 --> 0:01:48.800 they say there is no evidence that such a type 0:01:48.800 --> 0:01:52.760 of order can be found anywhere in the work. So 0:01:53.000 --> 0:01:56.040 what is the soft border. It's basically a way for 0:01:56.160 --> 0:02:01.360 Ireland to maintain access direct access to the Union. Correct, Well, 0:02:01.440 --> 0:02:05.880 a soft border would be between the Republic and Northern 0:02:06.000 --> 0:02:12.839 Ireland as of now free floor goods, people's services, animals, etcetera. 0:02:13.280 --> 0:02:17.600 But after breakfit, we will have a different regulatory regime, 0:02:18.000 --> 0:02:21.600 we will have different rules, etcetera. And we have to 0:02:21.720 --> 0:02:25.600 find a solution because we do not want a border 0:02:26.080 --> 0:02:29.640 on the island of Ireland. Now, I understand that there 0:02:29.720 --> 0:02:32.920 is going to be a European Commission in Irish government 0:02:32.960 --> 0:02:37.480 and UK government meeting that will take place March that 0:02:37.560 --> 0:02:40.799 will last until April the eighteen and the idea is 0:02:40.840 --> 0:02:44.960 to resolve these issues about policing the Irish border when 0:02:45.000 --> 0:02:49.959 the UK leaves the European Union. If this Committee does 0:02:50.080 --> 0:02:53.840 not reach some kind of consensus. What's your worst case 0:02:53.880 --> 0:02:56.760 scenario for what the border looks like after the United 0:02:56.840 --> 0:03:00.639 Kingdom leaves the European Union. Well, I hate even say 0:03:00.720 --> 0:03:05.440 what the worst kiss scenario. It's because nobody, absolutely nobody 0:03:05.880 --> 0:03:08.960 north or south of the border wants to see that. 0:03:09.360 --> 0:03:12.280 We do not want to go back to the bad 0:03:12.280 --> 0:03:17.480 old dates when there were customs points, police soldiers, et 0:03:17.520 --> 0:03:20.880 cetera on the border. And the issue is him that. 0:03:21.360 --> 0:03:26.320 Just before Christmas, the British Government signed an agreement which 0:03:26.360 --> 0:03:30.959 gave three options. Number one, the trade deal, the comprehensive 0:03:31.000 --> 0:03:34.560 trade deal it would do with the EU would solve 0:03:34.639 --> 0:03:38.360 the issue of the border. Number two, if that didn't work, 0:03:38.560 --> 0:03:42.440 they would set up some kind of a specific arrangement 0:03:42.560 --> 0:03:46.880 for the Republic and Northern Ireland. And number three the 0:03:46.920 --> 0:03:51.520 backstop option, which was that there would be full regulatory 0:03:51.560 --> 0:03:57.560 alignment between the Republic and then Earth. And if either 0:03:57.680 --> 0:04:01.120 one or two are not possible, then three still remains. 0:04:01.360 --> 0:04:04.520 But the problem is that that would mean a border 0:04:04.720 --> 0:04:07.440 in the Irish Sea and the d up which the 0:04:07.440 --> 0:04:11.880 Democratic Union this Party in Northern Ireland have said that's 0:04:11.920 --> 0:04:17.479 not acceptable. So the main obstacle at this point is who. Well, 0:04:17.520 --> 0:04:22.200 the main obstacle is that the British government have signed 0:04:22.520 --> 0:04:26.080 an agreement to say they will either do one, two 0:04:26.240 --> 0:04:30.440 or three, and they are not coming up with technical 0:04:30.720 --> 0:04:35.200 feasible solutions to deliver any of those three. I suppose 0:04:35.360 --> 0:04:39.600 number one the trade deal. That's for further down that. Okay, 0:04:39.680 --> 0:04:43.760 So the fact that the British leadership hasn't come up 0:04:43.800 --> 0:04:48.240 with technical solutions, how much does that reflect a broader 0:04:48.320 --> 0:04:52.960 issue that you see of this entire Brexit negotiation, of 0:04:53.000 --> 0:04:56.640 a lack of details and a lack of cohesion. Look, 0:04:56.760 --> 0:04:59.720 my personal opinion, and I know it's shared by many, 0:05:00.360 --> 0:05:03.080 is nobody thought this would happen, and when it did, 0:05:03.720 --> 0:05:08.080 everybody was taken by surprise. And I mean we had 0:05:08.120 --> 0:05:11.880 the likes of Boris Johnson just recently saying that the 0:05:11.920 --> 0:05:15.080 border between the Republican the North was the very same 0:05:15.120 --> 0:05:19.159 as the border between two boroughs in London. I mean, 0:05:19.520 --> 0:05:23.359 such an incredible level of ignorance in the sense of 0:05:23.400 --> 0:05:28.720 not knowing about an international order is just unbelievable. So 0:05:29.040 --> 0:05:32.159 that is part of the if you like, the background 0:05:32.360 --> 0:05:35.719 to all of this, that nobody was prepared for this, 0:05:36.120 --> 0:05:40.760 nobody thought true. What the main outcomes of a Brexit 0:05:40.839 --> 0:05:44.600 would be on the island of Ireland, so you know 0:05:44.839 --> 0:05:49.039 the British government are as as Jean clad Yunker said, 0:05:49.440 --> 0:05:51.799 I listened to him in the Parliament. I was sitting 0:05:51.839 --> 0:05:54.920 there listening to him this week and he said it's 0:05:54.960 --> 0:05:59.360 time to turn at fine words into treaties. In other words, 0:05:59.680 --> 0:06:02.600 we need the detail, we need to sort this and 0:06:02.640 --> 0:06:06.160 we're not getting it from the British is the European 0:06:06.480 --> 0:06:09.680 Union and leaders in the European Union. Are they trying 0:06:09.720 --> 0:06:13.200 to push or have they pushed UK Prime Minister Theresa 0:06:13.240 --> 0:06:17.040 May into a corner from which it is more difficult 0:06:17.120 --> 0:06:21.120 for her to extricate herself. And this is in the 0:06:21.240 --> 0:06:24.760 context that, as you mentioned, the d u P has 0:06:24.839 --> 0:06:28.160 ten members of Parliament which are part of her governing 0:06:28.200 --> 0:06:34.320 coalition in Westminster, and she has not only two assuage 0:06:34.360 --> 0:06:38.599 their demands, but also she needs to be I guess 0:06:38.640 --> 0:06:42.599 remained firm in this in gaining taking the support of 0:06:42.640 --> 0:06:47.640 her UH fellow Conservative members of Parliament. Well, again, my 0:06:47.800 --> 0:06:51.360 perspective on this since pim that Brexit day one was 0:06:51.400 --> 0:06:55.840 about a split and the Conservatives and the question is 0:06:56.200 --> 0:07:00.800 what's changed, what's new. Look at what's happening. So to 0:07:00.920 --> 0:07:03.880 some extent, you're right, she is in a corner. But 0:07:03.960 --> 0:07:06.800 the question is who put her there? How much of 0:07:06.839 --> 0:07:10.360 this is her own making or Cameron's a making? And 0:07:10.800 --> 0:07:14.000 you know, what can the EU do to try to 0:07:14.200 --> 0:07:17.920 ensure that we can reach some kind of agreement. This 0:07:17.960 --> 0:07:22.000 whole phrase of cake and eat it is still there, 0:07:22.080 --> 0:07:25.600 It's still part of the negotiations. As I said, I 0:07:25.640 --> 0:07:29.960 don't think anybody actually ever thought this would happen, and 0:07:30.000 --> 0:07:33.679 therefore no plans in place to deal with it. Marian 0:07:33.880 --> 0:07:38.360 real quickly. Do you think that the mersiness is discourage 0:07:38.560 --> 0:07:41.480 discouraging some of the populism that we had seen previously 0:07:42.280 --> 0:07:46.000 in the UK? Yes, well, I think I saw a 0:07:46.120 --> 0:07:50.600 program the other night where a very well known British 0:07:51.000 --> 0:07:54.080 chef for cook Poulte, she'd be seen as sort of 0:07:54.120 --> 0:07:58.400 a very sensible sort of woman, and she actually just said, 0:07:58.760 --> 0:08:02.240 look it time just to get on with us, and 0:08:02.280 --> 0:08:05.560 there was everybody in the audience capped, even though there 0:08:05.560 --> 0:08:08.520 were people in that audience who are remain and people 0:08:08.560 --> 0:08:11.880 who are breakfast. So that the I think the feeling 0:08:12.080 --> 0:08:15.360 may be coming to the point that we just have 0:08:15.480 --> 0:08:18.320 to deal with this. What it is a days and 0:08:18.400 --> 0:08:21.640 it's all over. So I think maybe that's the way 0:08:21.720 --> 0:08:25.000 British people are beginning to think, not maybe they can 0:08:25.040 --> 0:08:28.320 influence the negotiators. Marian Harkin, thank you very much, European 0:08:28.400 --> 0:08:48.720 Union parliament member representing Ireland. Shares of Walmart dropped yesterday 0:08:48.760 --> 0:08:52.440 after a Bloomberg News exclusive story that talked about a 0:08:52.480 --> 0:08:58.640 whistleblower suit against the company charging that they encouraged manipulation 0:08:59.080 --> 0:09:02.280 of some of their on line sales numbers. Here to 0:09:02.320 --> 0:09:04.840 talk about that and other issues that Walmart is currently 0:09:04.880 --> 0:09:09.040 facing is Jennifer Batasha's senior US food retail mass merchant 0:09:09.080 --> 0:09:13.600 wholesale restaurants analyst for Bloomberg Intelligence, and Alan berga agricultural 0:09:13.640 --> 0:09:17.120 reporter for Bloomberg News. Jennifer, I want to start with 0:09:17.360 --> 0:09:20.640 you to talk about this whistleblowers suit. What was your 0:09:20.640 --> 0:09:23.320 reaction to it? Does it seem feasible? Does it pass 0:09:23.360 --> 0:09:26.160 the smell test? Um? You know, when when you look 0:09:26.160 --> 0:09:28.520 at how the market reacted, there was an initial initial 0:09:28.559 --> 0:09:31.280 reaction and this the stock really regained a lot of 0:09:31.320 --> 0:09:35.400 what it lost fairly quickly following the news. Um when 0:09:35.400 --> 0:09:37.079 you when you look at it, it's hard to believe 0:09:37.120 --> 0:09:39.440 that Walmart would really open itself up to this sort 0:09:39.480 --> 0:09:42.600 of risk, especially when you think of all the measures 0:09:42.600 --> 0:09:45.240 that put into place following the bribery probe that that 0:09:45.360 --> 0:09:48.080 it was involved with UM that started back in two 0:09:48.120 --> 0:09:51.680 thousand and twelve when Walmart was accused of being engaged 0:09:51.720 --> 0:09:54.439 in a multi year bribery campaign in Mexico. So that 0:09:54.559 --> 0:09:57.920 the company is very sensitive about its ethics and compliance 0:09:57.960 --> 0:10:00.560 at this point. So it's hard to believe that, um, 0:10:00.640 --> 0:10:04.439 that something of this scale UM would be taking place. Well, 0:10:04.520 --> 0:10:06.800 Jennifer just tells who is actually the whistle blower, give 0:10:06.840 --> 0:10:10.280 us a little background. UM. Well, so the whistleblowers is 0:10:10.360 --> 0:10:13.880 an ex employee, UM, you know, someone who has been 0:10:13.920 --> 0:10:17.400 involved in the e commerce side of the business ummerly 0:10:17.440 --> 0:10:21.920 at Amazon, formerly at Amazon. UM. And and really you know, 0:10:21.960 --> 0:10:26.400 the calms center around the idea that that UM, there's 0:10:26.400 --> 0:10:30.040 some artificial manipulation in the numbers that were actually published UM, 0:10:30.120 --> 0:10:33.800 whether it's by under reporting returns or not processing returns 0:10:33.880 --> 0:10:36.600 or things of that nature. UM. And so you know, 0:10:36.720 --> 0:10:39.720 it's it's it's difficult with a retail business the size 0:10:39.720 --> 0:10:43.320 of Walmart to to you know, assume that everything happens 0:10:43.360 --> 0:10:46.800 exactly when it's supposed to. Um. But the fact that 0:10:47.040 --> 0:10:51.120 you know the employee, UM, you know it just it 0:10:51.200 --> 0:10:54.319 seems that it seems that if something happened, it maybe 0:10:54.400 --> 0:10:57.240 more of an isolated incident than the pattern of abuse. 0:10:57.280 --> 0:11:00.880 That is, you know that it's alleged in this although 0:11:00.960 --> 0:11:04.280 the fact that the stocks responded at all highlights this 0:11:04.480 --> 0:11:08.679 increasing challenge that Walmart faces to keep up with Amazon 0:11:09.040 --> 0:11:12.360 and to lower costs going forward. Alan, I want you 0:11:12.360 --> 0:11:14.080 to come on in here. There was a story that 0:11:14.120 --> 0:11:18.360 caught our attention about how Walmart might consider using drones 0:11:18.600 --> 0:11:22.679 to help reduce agricultural costs, in other words, planting and 0:11:23.200 --> 0:11:25.480 weeding and doing other things like that. Can you explain 0:11:25.559 --> 0:11:27.520 what is this? Well, this sounds like nothing that has 0:11:27.559 --> 0:11:30.040 anything to do with a whistleblower suit, but there actually 0:11:30.120 --> 0:11:33.079 is a connection here. UM. Walmart gets more than half 0:11:33.080 --> 0:11:35.000 of its revenues from groceries at this point, and of 0:11:35.040 --> 0:11:38.160 course Amazon is becoming a big entrant into the grocery market, 0:11:38.480 --> 0:11:40.920 and Walmart is looking at ways to make itself ever 0:11:41.000 --> 0:11:43.200 more efficient, um, and part of that is looking at 0:11:43.240 --> 0:11:47.240 agricultural drones. Walmart is known for very tight control of 0:11:47.240 --> 0:11:50.000 its supply chains, and ultimately one of the things it 0:11:50.080 --> 0:11:53.000 could do is fine technology that allows it to even 0:11:53.040 --> 0:11:56.360 have more control by requiring farmers, for example, to use 0:11:56.400 --> 0:11:59.800 these specific drones to cut down on pesticide applications, be 0:12:00.040 --> 0:12:02.760 as of the efficiency of using something mechanized rather than 0:12:02.840 --> 0:12:05.840 human beings who tend to be more wasteful. Alan, you know, 0:12:06.280 --> 0:12:08.120 I have to confess that you and I share a 0:12:08.160 --> 0:12:11.559 love of videos looking at the variety of planters, automatic 0:12:11.600 --> 0:12:14.280 planters that a variety of agriculture companies have come up 0:12:14.280 --> 0:12:18.680 with in order to sow the seeds literally of farms. Well, 0:12:18.720 --> 0:12:21.280 I mean, and I think you here the out one 0:12:21.280 --> 0:12:24.280 out here, Lisa, Yeah. Well, and the reason I bring 0:12:24.320 --> 0:12:25.800 this up is because I wonder if you could just 0:12:25.840 --> 0:12:28.800 discust that pack and describe for people that you know, 0:12:28.840 --> 0:12:32.120 they may not understand exactly the mechanization and the automation 0:12:32.160 --> 0:12:34.480 that is taking place on the farm. Sure, I mean, 0:12:34.520 --> 0:12:37.280 the story of agriculture is the story of mechanization. I mean, 0:12:37.320 --> 0:12:40.840 people stop being hunter gatherers because they learned to domesticate crops. 0:12:40.920 --> 0:12:42.880 You know, the tractor was a big innovation of the 0:12:42.960 --> 0:12:45.840 nineteenth and twentieth centuries, and things like the reaper, and 0:12:45.840 --> 0:12:48.920 now we have precision agriculture that you know, gives you 0:12:49.080 --> 0:12:52.120 opportunities to put your seeds exactly where they're most fertile 0:12:52.120 --> 0:12:53.880 in the soil. A lot of people are seeing the 0:12:53.920 --> 0:12:56.640 sort of drone technology as the next frontier Right now. 0:12:56.720 --> 0:12:58.920 Drones are very much used to sort of map fields, 0:12:58.960 --> 0:13:01.720 fly around, serves oil soil tops, see how the harvest 0:13:01.760 --> 0:13:03.559 is going. But this would be where you could be 0:13:03.679 --> 0:13:06.840 using big data and a drone basically to come up 0:13:06.880 --> 0:13:10.520 with a most efficient application of inputs to your field possible. 0:13:10.880 --> 0:13:13.320 One of the patents for that Walmart has it's gotten 0:13:13.320 --> 0:13:15.520 a lot of attention, actually deals with bees, the idea 0:13:15.559 --> 0:13:19.719 that you can start mechanically pollinating things rather than using insects. So, 0:13:19.840 --> 0:13:22.360 Jennifer coming in here, I love your take on whether 0:13:22.400 --> 0:13:26.280 Walmart is doing enough or spending too much on sort 0:13:26.320 --> 0:13:30.080 of nascent technologies that could eventually reduce costs. Yeah, so 0:13:30.080 --> 0:13:32.760 so you know, to me, this story um is less 0:13:32.800 --> 0:13:36.680 about bees, um, but more about the the idea that 0:13:36.800 --> 0:13:40.240 Walmart is taking a broad approach to technology UM. And 0:13:40.240 --> 0:13:42.680 then it's really a reflection of all of the investments 0:13:42.679 --> 0:13:45.440 that they have been making since two thousand and eleven. UM. 0:13:45.440 --> 0:13:47.720 I think that right now in a world where technology 0:13:47.800 --> 0:13:51.200 is progressing at such an unprecedented rate. Um, Walmart can't 0:13:51.200 --> 0:13:54.160 afford to not be participating in all of these iterations 0:13:54.240 --> 0:13:58.240 of potential technologies. Um. Whether you know, it seems that 0:13:58.280 --> 0:14:01.080 they've done fairly well in terms of bell thing the 0:14:01.080 --> 0:14:05.360 the the cost of participating in the technology evolution versus 0:14:05.760 --> 0:14:09.240 running their day to day business. Um. You know. However, 0:14:09.520 --> 0:14:12.400 investors are expecting that there is a payoff with regards 0:14:12.440 --> 0:14:15.800 to seeing actual growth in sales, and not only in 0:14:15.840 --> 0:14:17.800 their stores, but on the in line, on the in 0:14:17.880 --> 0:14:22.280 the online e commerce world as well. Alan, just a 0:14:22.640 --> 0:14:25.880 thought for you, is this not just limited to the 0:14:25.960 --> 0:14:30.760 planting and cultivation of crops, This is also about harvesting 0:14:30.760 --> 0:14:33.680 as well. Yes, I mean you're looking for patents off. 0:14:33.680 --> 0:14:36.680 Walmart has filed forty six patents dealing with everything from 0:14:36.720 --> 0:14:38.840 the planting to the logistics of it. And I would 0:14:38.840 --> 0:14:41.720 respectfully disagree with my co guests. I actually think this 0:14:41.800 --> 0:14:44.680 is all about bees in the sense that bees are 0:14:44.680 --> 0:14:48.080 a variable cost. Pollination becomes more and less expensive, and 0:14:48.080 --> 0:14:50.680 what Walmart's trying to do as they get their costs down, 0:14:50.680 --> 0:14:53.520 as they try to make things more reliable down the road, 0:14:53.720 --> 0:14:57.160 find the technology that allows them to compete with Amazon 0:14:57.200 --> 0:14:59.560 and beat them at their own low price game. So, 0:15:00.280 --> 0:15:03.400 you know, metaphorically, some of the stuff seems very very 0:15:03.440 --> 0:15:05.840 you know, space age and in several years away, and 0:15:06.080 --> 0:15:08.560 maybe it's just gaining some intellectual property so you can 0:15:08.600 --> 0:15:11.040 sue Amazon down the road. We don't know. But the 0:15:11.080 --> 0:15:14.080 point is, you know, as we've been saying, Walmart is 0:15:14.120 --> 0:15:16.640 trying to get the technology that gets them ahead so 0:15:16.680 --> 0:15:19.040 that they can win not in just today's marketplace, but 0:15:19.040 --> 0:15:21.440 tomorrow's as well. I want to thank you both very much. 0:15:21.640 --> 0:15:25.920 Alan burga joining US our agriculture reporter for Bloomberg News, 0:15:26.120 --> 0:15:30.040 and Jennifer A. Bartash, senior US food and retail analyst 0:15:30.080 --> 0:15:33.000 for Bloomberg Intelligence. Him you're going to have to share 0:15:33.080 --> 0:15:35.720 some of those scintillating videos with me. You just haven't 0:15:35.760 --> 0:15:39.600 shared the I just got an email all about the bees. 0:15:39.760 --> 0:15:42.280 It's all about the bees and these and these videos. 0:15:42.600 --> 0:15:46.280 Well check it out. It's an amazing story, the automation 0:15:46.320 --> 0:15:48.440 of the U S farm, and none better than Alan 0:15:48.480 --> 0:16:05.080 burg gonna tell us about it. A ruling from the 0:16:05.200 --> 0:16:10.000 Federal Energy Regulatory Commission touched off a sell off in 0:16:10.200 --> 0:16:13.840 Master Limited Partnerships yesterday, at one point the Larian MLP 0:16:14.080 --> 0:16:17.880 index was off by about ten percent. It ended up 0:16:17.920 --> 0:16:21.160 closing lower by about four and a half percent. The 0:16:21.800 --> 0:16:25.480 issue has to do with master limited partnerships operating interstate 0:16:25.560 --> 0:16:30.480 pipelines and they charge customers a price under a cost 0:16:30.520 --> 0:16:33.320 of service model. Now they also have to collect a 0:16:33.440 --> 0:16:37.880 portion to cover corporate tax charges, but because they're massed 0:16:37.960 --> 0:16:42.040 limited partnerships, they don't actually pay these taxes. Here to 0:16:42.080 --> 0:16:44.720 help us understand this more is Chuck Lieberman. He is 0:16:44.760 --> 0:16:47.920 a Bloomberg profit and also chief investment officer and managing 0:16:47.960 --> 0:16:52.760 partner for Advisors Capital Management. Chuck, maybe you could just 0:16:52.840 --> 0:16:56.120 expand on my attempt to explain what is going on here. Well, 0:16:56.160 --> 0:16:59.160 you did a pretty good job him. So there are 0:16:59.520 --> 0:17:03.520 count acts for pipelines that are done as cost plus, 0:17:04.320 --> 0:17:07.520 and the question then is what is included in costs? 0:17:07.520 --> 0:17:11.680 And there's an allowance for corporate tax rates, although, as 0:17:11.720 --> 0:17:16.199 you point out, the pipelines structured as partnerships do not 0:17:16.320 --> 0:17:20.760 in fact pay taxes. And that's why, uh, it was disallowed. Now, 0:17:20.840 --> 0:17:25.399 it's a long term issue. It's been debated for twenty years. 0:17:26.080 --> 0:17:29.119 The courts weighed in and that finally pushed for to 0:17:29.359 --> 0:17:33.119 kick that stuff out. Now, keep in mind that most 0:17:33.240 --> 0:17:37.400 contracts are not cost plus, they're negotiated between the pipeline 0:17:38.000 --> 0:17:42.200 and the shipper. UM. And now, of course, one way 0:17:42.200 --> 0:17:46.200 to get around this ruling is to renegotiate those contracts, 0:17:46.440 --> 0:17:51.560 the cost plus kite contracts on a negotiated basis directly 0:17:51.600 --> 0:17:55.480 with the shipper and restructure them. Uh. There's also another 0:17:55.960 --> 0:17:59.240 aspect of it, which is it only affects companies that 0:17:59.240 --> 0:18:03.159 are structured as partnerships. A lot of these pipeline companies 0:18:03.480 --> 0:18:08.359 are structured as C corporation standard corporations. They do pay tax. 0:18:08.680 --> 0:18:13.040 Those companies can, in fact, uh in a cost plus 0:18:13.119 --> 0:18:17.040 contract add in the cost of the tax. Uh. And 0:18:17.160 --> 0:18:22.119 it is likely that uh, this ruling will accelerate the 0:18:22.280 --> 0:18:28.120 consolidation of partnerships with their C corporation parents. Uh. That's 0:18:28.160 --> 0:18:31.280 another trend that's been going on in the industry, and 0:18:31.440 --> 0:18:35.360 probably more companies will do it sooner than expected because 0:18:35.400 --> 0:18:38.280 of this ruling. Yeah, you know, just broadening out so 0:18:38.359 --> 0:18:40.680 so clearly there are people on both sides here who 0:18:40.720 --> 0:18:42.919 think that this is going to her MLPs and other 0:18:42.960 --> 0:18:45.480 people who think that the move has been overdone. I 0:18:45.520 --> 0:18:48.560 thought It was interesting though, because the biggest exchange traded 0:18:48.600 --> 0:18:54.320 fund that tracks America's energy pipelines, hillaryon e t F, 0:18:54.800 --> 0:18:58.639 saw one hundred and eighteen million dollar outflow yesterday, which 0:18:58.800 --> 0:19:01.639 is the biggest one day with all since July of 0:19:01.840 --> 0:19:05.600 last year. What this indicates to me is that the 0:19:05.640 --> 0:19:09.119 retail investors are sort of the peripheral investors will be 0:19:09.200 --> 0:19:12.199 quick to leave should there be any threat to the 0:19:12.240 --> 0:19:15.800 tax benefit that these funds enjoy. How much of a 0:19:15.840 --> 0:19:19.800 concern is that to you just the perception of these funds. Uh, 0:19:19.840 --> 0:19:23.280 it's a youth concern, and that's actually the primary driver 0:19:23.440 --> 0:19:25.760 in the entire sector. So if you go back to 0:19:25.800 --> 0:19:30.399 two thousand fourteen, oil prices fell that actually boosted demand 0:19:30.440 --> 0:19:35.640 for products like gaslene. So some pipeline saw an immediate 0:19:35.720 --> 0:19:41.240 boost to shipments. Some of the downstream pipeline businesses saw 0:19:41.280 --> 0:19:44.560 an increase in business and an increase in profitability. Don't 0:19:44.560 --> 0:19:48.400 confuse me with facts. They sold off too because there's 0:19:48.400 --> 0:19:52.040 a general lack of understanding on the part of retail investors. 0:19:52.119 --> 0:19:54.760 So they have been getting out of the space. They've 0:19:54.800 --> 0:19:58.160 lost money in the space. Therefore they've been getting out 0:19:58.160 --> 0:20:00.800 of the space, and all of this has driven all 0:20:00.880 --> 0:20:04.760 of these stocks literally across the board, including companies that 0:20:04.880 --> 0:20:08.680 really have not been affected by the decline in oil prices, 0:20:08.720 --> 0:20:12.320 that have seen an increase in business volumes anyway, they 0:20:12.359 --> 0:20:15.480 have still decline in value. And most of these things 0:20:15.520 --> 0:20:19.480 are trading at low low levels, meaning very very attractive valuations. 0:20:19.800 --> 0:20:22.760 And now this is just one more kick in the 0:20:22.800 --> 0:20:25.440 rear end at a time when the stocks are already down. 0:20:25.760 --> 0:20:28.240 And I'm sure there are a lot of unsophisticated investors 0:20:28.280 --> 0:20:31.240 who were saying, I've been I've lost too much money. 0:20:31.280 --> 0:20:33.800 This doesn't seem to be turning around. I don't understand 0:20:33.840 --> 0:20:36.560 what's going on. I want out. So I'm sure that 0:20:36.600 --> 0:20:40.560 it's a negative, okay, But as a sophisticated investor, and 0:20:40.680 --> 0:20:42.399 of course that's one of the reasons we speak to you, 0:20:42.480 --> 0:20:47.679 Chuck this and what maybe presents an opportunity because number one, uh, 0:20:48.119 --> 0:20:51.879 it may have been an exaggerated response to this ruling. 0:20:52.080 --> 0:20:56.119 But also if these master limited partnerships decide, you know what, 0:20:56.520 --> 0:20:59.280 we can't spend all this time, money and effort educating 0:20:59.280 --> 0:21:01.200 people about what we really are. We're just going to 0:21:01.280 --> 0:21:04.440 turn ourselves into a regular CE corps that's going to 0:21:04.560 --> 0:21:07.919 make it more attractive for institutional investors to buy them. Right, 0:21:08.600 --> 0:21:11.600 That's exactly right, and I expect all of that to happen. 0:21:12.320 --> 0:21:16.480 I do think that a lot of these unsophisticated investors 0:21:16.720 --> 0:21:20.359 are going to methodically continue to pull out because they 0:21:20.400 --> 0:21:25.000 don't understand the institutional investors will want to get in, 0:21:25.119 --> 0:21:27.080 and in fact, some of them have been getting in. 0:21:27.600 --> 0:21:30.240 But I think what will really turn it around is 0:21:30.280 --> 0:21:33.440 if more of the companies turn themselves into C corporations 0:21:33.760 --> 0:21:37.120 and then become part of indexes, because then they can 0:21:37.160 --> 0:21:40.879 be all of that will bring in new buyers and 0:21:41.600 --> 0:21:44.120 they'll take advantage of the fact that pricing is very, 0:21:44.200 --> 0:21:46.800 very attractive. Thank you so much for being with us. 0:21:47.080 --> 0:21:51.960 Charles Lieberman, Chuck Lieberman, Bloomberg Profit and chief investment Officer 0:21:52.000 --> 0:21:56.600 and managing partner at Advisors Capital Management talking about the 0:21:56.880 --> 0:22:00.760 MLP ker fluffle yesterday, and you know, it's funny, PIM. 0:22:00.800 --> 0:22:04.040 In the past few years, there have been record amounts 0:22:04.119 --> 0:22:07.480 of MLPs that have I p oed, So it's very 0:22:07.560 --> 0:22:10.919 interesting to see the turmoil now and wonder whether retail 0:22:10.920 --> 0:22:14.160 investors are going to exit until the opportunity is lost. 0:22:27.160 --> 0:22:31.960 Cyber attacks are literally happening hundreds of thousands of times 0:22:31.960 --> 0:22:35.119 a day. This according to Energy Secretary Rick Perry in 0:22:35.160 --> 0:22:38.920 a speech to lawmakers during a hearing yesterday. Here to 0:22:39.040 --> 0:22:42.760 speak about these attacks which are ongoing UH and are 0:22:42.800 --> 0:22:46.600 targeting the US electric grid is Dr Eric Cole, chief 0:22:46.640 --> 0:22:50.840 executive officer of Secure Anchor Consulting in Ashbourne, Virginia. He 0:22:50.880 --> 0:22:53.640 comes to us from Los Angeles today. Dr Cole, thanks 0:22:53.640 --> 0:22:55.480 so much for being here. I just would love to 0:22:55.480 --> 0:22:59.040 get your perspective on where these attacks are mostly coming 0:22:59.119 --> 0:23:04.480 from and infrastructure they are targeting. They're coming from the 0:23:04.600 --> 0:23:10.760 usual players Russia, China, North Korea, but what we've seen 0:23:10.840 --> 0:23:14.680 in the last six months is that cyber attacks level 0:23:14.760 --> 0:23:18.919 the playing field. There are some small countries that can't 0:23:18.960 --> 0:23:22.400 play in the nuclear weapons space. It's either too expensive 0:23:22.480 --> 0:23:25.840 or they're regulated. But when it comes to cyber weapons, 0:23:26.320 --> 0:23:29.159 anybody can build them. So we're even seeing some of 0:23:29.160 --> 0:23:33.840 these smaller countries, Pakistan and others starting to target the 0:23:33.960 --> 0:23:37.240 US infrastructure. And what they're really trying to do is 0:23:37.359 --> 0:23:43.200 have command to control capability, so they're targeting water, electrical, nuclear, 0:23:44.240 --> 0:23:47.439 air traffic control. And most people think if they break 0:23:47.480 --> 0:23:50.080 in that they're gonna want to go in and take 0:23:50.080 --> 0:23:52.359 it down to destroy, but it's really more of a threat. 0:23:52.840 --> 0:23:56.480 If they have control of our nuclear power plans, they 0:23:56.520 --> 0:23:59.040 now can influence the United States in a lot of 0:23:59.040 --> 0:24:02.679 different areas. Dr Cole, And what if you could just 0:24:02.680 --> 0:24:05.240 step back, and perhaps this is not your purview, but 0:24:05.280 --> 0:24:07.679 I want to give you an opportunity. Do we have 0:24:07.760 --> 0:24:11.280 a clear definition of who, quote, the enemy of the 0:24:11.320 --> 0:24:16.480 United States is or who are our enemies? The way 0:24:16.520 --> 0:24:20.240 I always say in the real world we have allies. 0:24:20.880 --> 0:24:25.399 In cyberspace there is no allies, So in cyberspace I 0:24:25.440 --> 0:24:29.560 would say every other country other than the US is 0:24:29.600 --> 0:24:33.440 our enemy. And even surprisingly a lot of cyber attacks 0:24:33.480 --> 0:24:36.840 against the US are coming from Canada. Okay. The reason 0:24:36.920 --> 0:24:40.320 I asked this is because Article three, Section three of 0:24:40.359 --> 0:24:44.200 the U. S Constitution seems pretty clear. If a subversive 0:24:44.359 --> 0:24:47.399 act has any tendency to weaken the power of the 0:24:47.440 --> 0:24:51.119 United States to attack or resist its enemies, aid and 0:24:51.280 --> 0:24:56.480 comfort has been given, that's a definition of treason. Why 0:24:56.600 --> 0:25:03.280 is this so difficult for both the prosecutors, it seems, 0:25:03.280 --> 0:25:06.880 of these acts and those that are defending this as 0:25:06.880 --> 0:25:10.680 a freedom of speech notion? Why are they so Why 0:25:10.720 --> 0:25:13.920