1 00:00:03,320 --> 00:00:06,440 Speaker 1: This is Bloomberg Surveillance. I'm on the lookout for a 2 00:00:06,440 --> 00:00:08,960 Speaker 1: baiting baith in crude oil, but I'm far from having 3 00:00:09,080 --> 00:00:12,119 Speaker 1: enough confidence to add countertrend positions here. But I don't 4 00:00:12,160 --> 00:00:16,880 Speaker 1: think that consumer sentiment necessarily drive consumer activity of spending decisions, 5 00:00:16,880 --> 00:00:19,400 Speaker 1: but they reflect the same thing. We are believing that 6 00:00:19,440 --> 00:00:22,680 Speaker 1: there is a global recession, meaning that globally conton is 7 00:00:22,680 --> 00:00:25,400 Speaker 1: growing at slower than potential. Absolutely no question about it. 8 00:00:25,480 --> 00:00:29,680 Speaker 1: Bloomberg Surveillance your link to the world of economics, finance, 9 00:00:29,760 --> 00:00:33,400 Speaker 1: and investment on Bloomberg Radio. Good morning everyone, Michael McKee 10 00:00:33,400 --> 00:00:37,000 Speaker 1: and Tim King Bloomberg Surveillance worldwide. I'm Bloomberg Radio Plus, 11 00:00:37,640 --> 00:00:40,640 Speaker 1: thrilled that you're with us on Bloomberg dot Com today. 12 00:00:40,680 --> 00:00:44,199 Speaker 1: Bloomberg twelve hundred Boston and Bloomberg nine sixty the Bay Area. 13 00:00:44,640 --> 00:00:48,000 Speaker 1: Good early morning in San Francisco. I'm serious. The next 14 00:00:48,000 --> 00:00:51,360 Speaker 1: time Channel one nineteen across the nation, A particular good 15 00:00:51,360 --> 00:00:55,760 Speaker 1: morning to f M Washington, over to Baltimore and here 16 00:00:55,800 --> 00:00:59,960 Speaker 1: in gorgeous New York, I mean truly gorgeous, like spring 17 00:01:00,200 --> 00:01:03,280 Speaker 1: like New York. Bloomberg and Levin three oh, we say 18 00:01:03,400 --> 00:01:07,280 Speaker 1: good morning as well. Bloomberg surveillance on this Wednesday brought 19 00:01:07,280 --> 00:01:10,800 Speaker 1: you by cone Resnick. Four day work week brought you 20 00:01:10,840 --> 00:01:16,200 Speaker 1: by Cone Resnick. Accounting, tax advisory, Regulatory changes can impact 21 00:01:16,720 --> 00:01:19,880 Speaker 1: UM can impact your business. See how the experts at 22 00:01:19,920 --> 00:01:23,520 Speaker 1: Cone Resnick can help you navigate these complexities. Find out 23 00:01:23,520 --> 00:01:27,440 Speaker 1: more at cone Resnick dot com. C O h N 24 00:01:27,720 --> 00:01:34,040 Speaker 1: R e z n I, c K cone Resnick dot com. 25 00:01:34,080 --> 00:01:36,160 Speaker 1: Michael McKee and Tom Key, we got lots to talk 26 00:01:36,160 --> 00:01:41,480 Speaker 1: about today, Michael, our next guests has usually he's like 27 00:01:41,720 --> 00:01:45,640 Speaker 1: it's like in the spy of geopolitics business. He usually 28 00:01:45,680 --> 00:01:51,840 Speaker 1: walks around with an entourage. Is well out of Cornell University, 29 00:01:51,880 --> 00:01:55,640 Speaker 1: among other things. George Friedman with Geopolitical Futures. Mike, why 30 00:01:55,640 --> 00:01:58,840 Speaker 1: don't you bring in good Mr Freeman. Well, there's a 31 00:01:58,880 --> 00:02:02,800 Speaker 1: lot going on in the world. UM, let's kind of 32 00:02:02,840 --> 00:02:07,000 Speaker 1: start with the economic aspects of it. We're seeing a 33 00:02:07,040 --> 00:02:13,160 Speaker 1: lot of realignments, currencies, economies, and this volatility is changing 34 00:02:13,240 --> 00:02:16,519 Speaker 1: global trade patterns. You've been writing about that. How is 35 00:02:16,560 --> 00:02:20,880 Speaker 1: that playing out? Well, we're in an exporter crisis. H 36 00:02:20,919 --> 00:02:24,240 Speaker 1: It began when in two thousand eight, when Europeanited States 37 00:02:24,280 --> 00:02:29,600 Speaker 1: stopped buying China really was hit by that. Uh, the 38 00:02:29,760 --> 00:02:33,360 Speaker 1: Chinese hit hit the oil producers and the commodity producers. 39 00:02:34,120 --> 00:02:36,080 Speaker 1: Right now, the United States is in a good position 40 00:02:36,080 --> 00:02:39,560 Speaker 1: because it exports relatively little, and that little to Mexico 41 00:02:39,560 --> 00:02:42,120 Speaker 1: and Canada. The rest of the world it depends on 42 00:02:42,160 --> 00:02:47,799 Speaker 1: exports have been smashed. Is this something that is good, bad, 43 00:02:47,919 --> 00:02:52,040 Speaker 1: or just inevitable? Just just the way the world turns. 44 00:02:52,480 --> 00:02:56,799 Speaker 1: We constructed a world system in which exporting was one 45 00:02:56,840 --> 00:03:00,440 Speaker 1: of the key variables that you looked at about economics success. 46 00:03:01,520 --> 00:03:04,079 Speaker 1: It's forgot the fact that an export of success depends 47 00:03:04,080 --> 00:03:07,000 Speaker 1: on his ability as customers to buy. So when you 48 00:03:07,080 --> 00:03:11,639 Speaker 1: go into a worldwide realignment, all these highly exposed countries, 49 00:03:11,919 --> 00:03:17,320 Speaker 1: these major exporters, including Germany which exports GDP, something become 50 00:03:17,400 --> 00:03:21,760 Speaker 1: highly vulnerable. And with that vulnerability, lending patterns, interest rates, 51 00:03:21,760 --> 00:03:25,120 Speaker 1: and everything starts to change. How do you respond? And 52 00:03:25,760 --> 00:03:27,760 Speaker 1: I think of the way you speak around the world 53 00:03:27,840 --> 00:03:31,600 Speaker 1: on international politics and the the interests that George Friedman 54 00:03:31,680 --> 00:03:34,240 Speaker 1: gets on what do we do? I mean, that's what 55 00:03:34,280 --> 00:03:37,360 Speaker 1: you get all the time. Do you have a growth 56 00:03:37,480 --> 00:03:41,960 Speaker 1: jump start? Is it? Uh? There's so many cliches that 57 00:03:41,960 --> 00:03:44,040 Speaker 1: are out there that we know. Mike and I know 58 00:03:44,080 --> 00:03:47,440 Speaker 1: are worn out and ineffective. What is your jump start 59 00:03:47,840 --> 00:03:50,640 Speaker 1: to get the world trade system back on track? There 60 00:03:50,720 --> 00:03:54,360 Speaker 1: is no jump start. We went into a period since 61 00:03:54,400 --> 00:03:59,400 Speaker 1: World War to obsession with international exports, a fabulous belief 62 00:03:59,600 --> 00:04:04,600 Speaker 1: in free trade. We're seeing within this European Union the consequences. 63 00:04:04,600 --> 00:04:07,240 Speaker 1: We're seeing that in China, We're seeing that in Russia. 64 00:04:07,720 --> 00:04:10,960 Speaker 1: The lower exporters are doing relatively well like the United States, 65 00:04:11,440 --> 00:04:15,280 Speaker 1: the higher exporters in GDP are doing badly. You're going 66 00:04:15,320 --> 00:04:19,520 Speaker 1: to have a long realignment international economics. It's not a 67 00:04:19,520 --> 00:04:24,560 Speaker 1: financial crisis. It's a crisis of how economy sell. This 68 00:04:24,640 --> 00:04:28,840 Speaker 1: is a world of floating rate currencies. So the term 69 00:04:28,920 --> 00:04:34,839 Speaker 1: currency war is a misnomer. But uh, are there countries 70 00:04:34,880 --> 00:04:38,920 Speaker 1: that are more vulnerable to than others who may not 71 00:04:39,040 --> 00:04:42,520 Speaker 1: be able to adjust. You can only go so far 72 00:04:43,520 --> 00:04:48,560 Speaker 1: in getting your exports going by adjusting your currency. You 73 00:04:48,600 --> 00:04:52,600 Speaker 1: can do something within a normal range, you can do something. 74 00:04:53,360 --> 00:04:56,640 Speaker 1: This is a massive secular shift and how the global 75 00:04:56,640 --> 00:05:00,000 Speaker 1: economy works. We're looking a lot more like we did 76 00:05:00,040 --> 00:05:03,800 Speaker 1: it uh back in the nineteenth century when the United 77 00:05:03,880 --> 00:05:08,040 Speaker 1: States developed as a protectionist country. More like nineteen fifties, 78 00:05:08,040 --> 00:05:12,160 Speaker 1: when Germany was a protectionist country. Within that and within 79 00:05:12,200 --> 00:05:14,719 Speaker 1: the idea of the Germans of the fifties. Do you 80 00:05:14,760 --> 00:05:19,320 Speaker 1: see our foreign policy as being Westphalian like Kissinger? Is 81 00:05:19,320 --> 00:05:21,760 Speaker 1: it what freed Zakaria is talking about, which is Hubban 82 00:05:22,040 --> 00:05:24,560 Speaker 1: spoke with a lot more players, or we try to 83 00:05:24,560 --> 00:05:27,719 Speaker 1: maintain a dominance or is there George Friedman calculus, I 84 00:05:27,720 --> 00:05:30,360 Speaker 1: haven't heard of. Well, the United States is the overwhelming 85 00:05:30,360 --> 00:05:31,960 Speaker 1: power in the world. We're almost a quarter of the 86 00:05:31,960 --> 00:05:35,839 Speaker 1: world's economy. We're the only major military force. On the 87 00:05:35,880 --> 00:05:38,920 Speaker 1: other hand, our policy since the collapse of the South 88 00:05:39,080 --> 00:05:41,320 Speaker 1: Union has been we're the first callers. We were the 89 00:05:41,320 --> 00:05:45,680 Speaker 1: first responders to a problem. That's impossible. We've now shifted 90 00:05:45,720 --> 00:05:48,760 Speaker 1: to a balance of power policy where we basically tell, 91 00:05:49,040 --> 00:05:53,200 Speaker 1: for example, the Middle East, the Turks, the Iranians, the Saudis, Disraelis, 92 00:05:53,240 --> 00:05:54,920 Speaker 1: you've got a problem, let us know how you're planning 93 00:05:54,960 --> 00:05:56,920 Speaker 1: to handle it. We may or may not be able 94 00:05:56,960 --> 00:05:59,760 Speaker 1: to help you. But we've learned that we cannot be 95 00:06:00,400 --> 00:06:03,960 Speaker 1: the first responders, the first military force coming in as 96 00:06:03,960 --> 00:06:06,200 Speaker 1: a used change in the world. Because everybody is waiting 97 00:06:06,200 --> 00:06:08,880 Speaker 1: for the United States to do something about Syria, and 98 00:06:08,920 --> 00:06:11,520 Speaker 1: we're saying to the world, well, will help you, but 99 00:06:11,600 --> 00:06:13,440 Speaker 1: we're not going to be the ones doing it well. 100 00:06:13,480 --> 00:06:15,800 Speaker 1: That raises an interesting question. It's been said the real 101 00:06:15,880 --> 00:06:19,640 Speaker 1: underlying conflict of the coming years is Saudi Arabia versus 102 00:06:19,720 --> 00:06:23,120 Speaker 1: around They're fighting a proxy war in Syria. How does 103 00:06:23,160 --> 00:06:26,920 Speaker 1: that play out well badly for both countries because these 104 00:06:26,920 --> 00:06:31,240 Speaker 1: are two countries that can't really afford economically, particularly Saudi Arabia, 105 00:06:31,720 --> 00:06:36,480 Speaker 1: the cost of war. I don't buy that particular model. 106 00:06:37,279 --> 00:06:40,400 Speaker 1: The major issue in the world today is Russia. It 107 00:06:40,520 --> 00:06:42,960 Speaker 1: is re emerged as not an aggressive power, but an 108 00:06:43,000 --> 00:06:47,200 Speaker 1: assertive power. It's operating in the Middle East, is putting 109 00:06:47,240 --> 00:06:51,040 Speaker 1: pressure on Europe. Uh. This is a power that can 110 00:06:51,080 --> 00:06:55,320 Speaker 1: only be countered by the United States. The Syria, the 111 00:06:55,560 --> 00:07:00,000 Speaker 1: Syrian issue ultimately is a secondary issue. Is very noisy. 112 00:07:00,040 --> 00:07:02,440 Speaker 1: He is very intense. It's a terrible thing that's happening, 113 00:07:02,920 --> 00:07:04,760 Speaker 1: but it's not going to change the global balts. But 114 00:07:04,880 --> 00:07:06,400 Speaker 1: is that the kind of place they could bring the 115 00:07:06,480 --> 00:07:09,720 Speaker 1: US and Russia into conflict. They had been very careful, 116 00:07:09,760 --> 00:07:12,440 Speaker 1: if you notice, not to be the Russian intervention actually 117 00:07:12,440 --> 00:07:14,960 Speaker 1: help the United States. We didn't want a sod to 118 00:07:15,000 --> 00:07:17,920 Speaker 1: fall because we're afraid Isis would take over. We also 119 00:07:17,960 --> 00:07:22,200 Speaker 1: couldn't support ASAD. The Russians came in protected Assad kept 120 00:07:22,240 --> 00:07:25,480 Speaker 1: Davascus out of ices hands. We condemned them, and we're 121 00:07:25,560 --> 00:07:28,680 Speaker 1: very pleased. Long ago and far away, I did a 122 00:07:28,680 --> 00:07:31,120 Speaker 1: class paper and I think junior high school, but he 123 00:07:31,240 --> 00:07:34,080 Speaker 1: could have been sixth grade, they said, tell us the 124 00:07:34,160 --> 00:07:37,360 Speaker 1: day before. And I did a research project on November 125 00:07:37,440 --> 00:07:42,960 Speaker 1: twenty one, which is an interesting exercise. People talked about 126 00:07:43,000 --> 00:07:47,200 Speaker 1: foreign policy your world back then like adults. Why can't 127 00:07:47,240 --> 00:07:53,280 Speaker 1: we have a debate now that's more adult in interesting 128 00:07:53,480 --> 00:07:57,040 Speaker 1: in your world? We can't do that domestically, can we? Well, 129 00:07:57,080 --> 00:07:59,440 Speaker 1: I mean, we forget a car theism and to claim 130 00:07:59,520 --> 00:08:03,120 Speaker 1: that to stay eight departments full of communists. We forget 131 00:08:03,480 --> 00:08:06,960 Speaker 1: John Kimpy's saying we will go anywhere, we will bear 132 00:08:07,000 --> 00:08:10,080 Speaker 1: any burden, we will do anything to defend freedom. Got 133 00:08:10,160 --> 00:08:13,000 Speaker 1: us in Vietnam. I'm not sure we're that immature. We 134 00:08:13,160 --> 00:08:15,600 Speaker 1: Americans always believe this is the worst time of all. 135 00:08:16,480 --> 00:08:19,320 Speaker 1: The fact of the matter is that the public tends 136 00:08:19,400 --> 00:08:21,880 Speaker 1: not to be interested in foreign policy until the kids 137 00:08:21,920 --> 00:08:26,360 Speaker 1: is sent to war, and the foreign policy elite is 138 00:08:26,400 --> 00:08:30,720 Speaker 1: fairly insular. Sit in Washington talking to each other and 139 00:08:30,760 --> 00:08:33,160 Speaker 1: convincing each other things. But this has been going on 140 00:08:33,200 --> 00:08:36,240 Speaker 1: a long time. We've gott How would you compare the 141 00:08:36,280 --> 00:08:40,280 Speaker 1: isolationism we're seeing on the campaign trail now and the 142 00:08:40,280 --> 00:08:43,719 Speaker 1: public response to it, to previous episodes. I mean, I 143 00:08:44,480 --> 00:08:47,360 Speaker 1: don't know if this would compare to lindberg in in 144 00:08:47,440 --> 00:08:50,840 Speaker 1: the thirties. Well, I think this policy in the thirties 145 00:08:50,880 --> 00:08:54,360 Speaker 1: was this, let's hope the European bounds of power holes 146 00:08:54,400 --> 00:08:56,600 Speaker 1: so that we don't have to get in. We didn't 147 00:08:56,640 --> 00:08:59,920 Speaker 1: anticipate the French collapsing in six weeks That changed the 148 00:09:00,120 --> 00:09:03,559 Speaker 1: entire equation. So you know, the term isolation hasn't became 149 00:09:03,559 --> 00:09:06,720 Speaker 1: an insult. Another way of looking at it is, let's 150 00:09:06,760 --> 00:09:08,400 Speaker 1: hope that the balance of power and the rest of 151 00:09:08,400 --> 00:09:11,280 Speaker 1: the world maintains itself so though we don't have to 152 00:09:11,320 --> 00:09:15,720 Speaker 1: go in, and that's not necessarily in a rational policy. George, 153 00:09:15,960 --> 00:09:17,959 Speaker 1: very quickly, I want to tease on this. You live 154 00:09:18,000 --> 00:09:21,120 Speaker 1: in Austin, Texas, as I do tell us about the 155 00:09:21,160 --> 00:09:25,160 Speaker 1: fixation on supercities now, whether London or New York and that, 156 00:09:25,760 --> 00:09:28,920 Speaker 1: and yet they're all these other smaller locales that are booming. 157 00:09:29,400 --> 00:09:33,360 Speaker 1: I mean, Austin's booming right absolutely. In fact, the traffic 158 00:09:33,400 --> 00:09:38,000 Speaker 1: shows it. Uh. We chose to move to Austin, Texas 159 00:09:38,840 --> 00:09:41,080 Speaker 1: my wife's Australian if she wanted something that was hot, 160 00:09:41,200 --> 00:09:44,720 Speaker 1: dry and had horses. But also we moved to it 161 00:09:44,800 --> 00:09:47,320 Speaker 1: because it was a livable city. I grew up in 162 00:09:47,360 --> 00:09:50,360 Speaker 1: New York City. I find it unlivable. I think we're 163 00:09:50,360 --> 00:09:53,040 Speaker 1: reaching the point you can't sustain the growth of these 164 00:09:53,080 --> 00:09:55,920 Speaker 1: mega cities around the working super cities. We should come 165 00:09:55,920 --> 00:09:58,040 Speaker 1: back and talk about the George Freeman I was were 166 00:09:58,080 --> 00:10:01,960 Speaker 1: thrilled to have them in studio this morning Geo Political Futures. 167 00:10:02,520 --> 00:10:05,800 Speaker 1: UH formerly was stratted Ford, where many of you will 168 00:10:05,800 --> 00:10:08,439 Speaker 1: know the name. And all I can say is, if 169 00:10:08,480 --> 00:10:12,400 Speaker 1: you ever have the chance, just go listen to him speak, 170 00:10:13,040 --> 00:10:17,199 Speaker 1: because it's it's it's not encyclopedic, that doesn't capture it. 171 00:10:17,200 --> 00:10:21,079 Speaker 1: It's just very very smart moment to moment on our 172 00:10:21,200 --> 00:10:25,480 Speaker 1: strange international relations and foreign policy. We're gonna return with 173 00:10:25,520 --> 00:10:29,360 Speaker 1: George Friedman. UH. Features of fifteen down, Features of a 174 00:10:29,440 --> 00:10:32,560 Speaker 1: hundred and twelve, a Yen weeker fractually this morning oil 175 00:10:32,679 --> 00:10:35,160 Speaker 1: is what everybody's watching, Dean Kurt. It was brilliant really 176 00:10:35,559 --> 00:10:40,320 Speaker 1: focusing his cross asset analysis down to oil seven up 177 00:10:40,320 --> 00:10:44,559 Speaker 1: eighty three cents and brent thirty three twenty barrel gold. 178 00:10:44,600 --> 00:10:48,240 Speaker 1: Pauses this morning down four twelve oh five the ounce. 179 00:10:52,280 --> 00:10:53,719 Speaker 1: Let's check it with ba A bye. Now I'll get 180 00:10:53,720 --> 00:10:56,560 Speaker 1: the latest world and national headlines. Mike Tom, thank you 181 00:10:56,679 --> 00:10:59,480 Speaker 1: very much. Apple CEO Tim Cook says the company will 182 00:10:59,520 --> 00:11:02,240 Speaker 1: find a fed Real magistrate's order to help the FBI 183 00:11:02,760 --> 00:11:06,480 Speaker 1: access information on the encryption iPhone that belonged to in 184 00:11:06,640 --> 00:11:09,920 Speaker 1: the San Bernardino, California shooters. Cook says such a move 185 00:11:09,960 --> 00:11:13,760 Speaker 1: and undermine encryption by creating a back door that could 186 00:11:13,760 --> 00:11:17,959 Speaker 1: potentially be used on future devices. A new poll shows 187 00:11:18,000 --> 00:11:21,959 Speaker 1: Democratic presidential candidate Hillary Clinton and rival Bernie Sanders in 188 00:11:22,000 --> 00:11:25,520 Speaker 1: the close race in Nevada. The CNN poll shows Clinton 189 00:11:25,800 --> 00:11:30,160 Speaker 1: at pent and Sanders at forty seven percent. Among the Republicans, 190 00:11:30,200 --> 00:11:33,640 Speaker 1: Donald Trump leads to the poll, with Marco Rubio a 191 00:11:33,720 --> 00:11:37,920 Speaker 1: distant second at and Ted Cruz at seventeen percent. Pope 192 00:11:37,960 --> 00:11:40,440 Speaker 1: Francis is wrapping up his trip to Mexico today with 193 00:11:40,480 --> 00:11:42,520 Speaker 1: a visit to a prison and a stop at the 194 00:11:42,559 --> 00:11:45,920 Speaker 1: Texas border. Global News twenty four hours a day, powered 195 00:11:45,920 --> 00:11:48,480 Speaker 1: by our twenty four hundred journalists and more than a 196 00:11:48,520 --> 00:11:52,120 Speaker 1: hundred fifty news bureaus from around the world. Michael Barr, Tom, 197 00:11:52,240 --> 00:11:54,559 Speaker 1: and that could thanks so much the tenure yell. That's 198 00:11:54,600 --> 00:11:57,360 Speaker 1: a round number one point eight zero, a higher yield 199 00:11:57,360 --> 00:12:00,439 Speaker 1: by a good three basis points. This morning risk on 200 00:12:00,840 --> 00:12:07,360 Speaker 1: Bloomberg Surveillance. This news update brought to you by your 201 00:12:07,360 --> 00:12:10,040 Speaker 1: Mercedes Benz Tri State dealer. When it comes to winter elements, 202 00:12:10,040 --> 00:12:12,880 Speaker 1: put your best four wheels forward with Mercedes Benz Formatic 203 00:12:12,880 --> 00:12:15,319 Speaker 1: All wheel Drive. Visit your Mercedes Benz Tri State dealer 204 00:12:15,480 --> 00:12:24,200 Speaker 1: for a test drive. Today. Global Business News twenty four 205 00:12:24,200 --> 00:12:27,319 Speaker 1: hours a day. If Bloomberg dot Com the Radio Plus 206 00:12:27,360 --> 00:12:30,520 Speaker 1: Mobile Act had on your radio, this is a Bloomberg 207 00:12:30,559 --> 00:12:33,760 Speaker 1: Business Flash and I'm Karen Moscow U s Dock Index 208 00:12:33,800 --> 00:12:36,560 Speaker 1: futures are higher along with the price of Nimax screwed oil. 209 00:12:36,640 --> 00:12:38,480 Speaker 1: Let's go to the First Word Breaking news desk for 210 00:12:38,520 --> 00:12:42,480 Speaker 1: today's morning call, and here's Bill Maloney. No, good morning, Karen. 211 00:12:42,640 --> 00:12:45,320 Speaker 1: US futures are maintaining their games since the last time 212 00:12:45,320 --> 00:12:47,960 Speaker 1: we spoke. Doubt Futures currently hired by a hundred and 213 00:12:48,000 --> 00:12:51,480 Speaker 1: seven points sysame's Game fourteen and as that futures rise 214 00:12:51,559 --> 00:12:54,319 Speaker 1: by thirty eight. The US ten YEL hits one point 215 00:12:54,400 --> 00:12:57,520 Speaker 1: eight percent, and main upay markets are trading higher, led 216 00:12:57,559 --> 00:13:01,040 Speaker 1: by two percent gains in Germany and Italy. On the 217 00:13:01,120 --> 00:13:03,840 Speaker 1: US economic Frinday eight thirty housing starts and p p 218 00:13:03,960 --> 00:13:07,320 Speaker 1: I and a two pm f O MC minutes are released. 219 00:13:07,679 --> 00:13:11,000 Speaker 1: After the last night, Serener Q four bookings missed forecast, 220 00:13:11,280 --> 00:13:15,559 Speaker 1: shares it down thirteen percent pre market, Devin Energy cut 221 00:13:15,720 --> 00:13:18,720 Speaker 1: E and p CAPEX by fifty six percent and they're 222 00:13:18,720 --> 00:13:21,959 Speaker 1: diving ind by seventy five percent, and Express Scripts Q 223 00:13:22,120 --> 00:13:25,800 Speaker 1: four revenue missed estimates regarding earnings. This morning, Garment sees 224 00:13:25,880 --> 00:13:29,760 Speaker 1: Yarps below estimates, price Line beat shares her up eleven 225 00:13:29,800 --> 00:13:34,120 Speaker 1: percent pre market, and Dr Pepper Snapple beat. Another news, 226 00:13:34,120 --> 00:13:36,520 Speaker 1: Bercher Hathaway dis close to four hundred million dollar steak 227 00:13:36,640 --> 00:13:39,280 Speaker 1: in Kinder Morgan finding some of your key wall shoot 228 00:13:39,360 --> 00:13:43,040 Speaker 1: upgrades and downgrades, rack Space cut to neutral like Crid Sweets, 229 00:13:43,400 --> 00:13:46,160 Speaker 1: Surnator cuts a hold at Evercore, I s I, Hormel 230 00:13:46,240 --> 00:13:49,400 Speaker 1: Foods cut the hold at Jeffreys, and finally Carlisle raised 231 00:13:49,520 --> 00:13:53,040 Speaker 1: overweight over at Morgan. Stanley Live from the first breaking 232 00:13:53,040 --> 00:13:55,920 Speaker 1: news desk. I'm Bill Maloney, Karen Ally. Thanks Bill and 233 00:13:55,960 --> 00:13:58,600 Speaker 1: to hear live breaking news over your Bloomberg type squawk 234 00:13:58,640 --> 00:14:01,480 Speaker 1: go and your terminal that says you a w k go. 235 00:14:01,920 --> 00:14:04,600 Speaker 1: That's a Bloomberg business flash. Tom and Mike and Karen, 236 00:14:04,800 --> 00:14:07,760 Speaker 1: thanks so much Bloomberg surveillance. This morning runch by Investco. 237 00:14:08,520 --> 00:14:12,880 Speaker 1: Investing isn't about meeting benchmarks, It's about achieving goals. Find 238 00:14:12,880 --> 00:14:16,959 Speaker 1: out how invest goes high conviction approach can help. Visit 239 00:14:17,000 --> 00:14:21,520 Speaker 1: investco dot com slash high Conviction. Mike, this is a 240 00:14:21,600 --> 00:14:25,920 Speaker 1: sum total of what most Americans know about Russia. They 241 00:14:25,960 --> 00:14:30,960 Speaker 1: walked and walked in saying memory Eternal, and whenever they stopped, 242 00:14:31,080 --> 00:14:34,120 Speaker 1: the singing seemed to be carried on by their feet, 243 00:14:34,520 --> 00:14:38,080 Speaker 1: the horses, the gusts of wind, the opening paragraph of 244 00:14:38,160 --> 00:14:43,120 Speaker 1: Dr Shovago, between that, between that manages sterial book and 245 00:14:43,200 --> 00:14:47,480 Speaker 1: Julie Christie that describes our entire knowledge of Russia. I 246 00:14:47,760 --> 00:14:50,440 Speaker 1: would posit your run. People also know the phrase it 247 00:14:50,480 --> 00:14:54,200 Speaker 1: was the best of times, It was the wi that Yeah. 248 00:14:56,840 --> 00:15:01,200 Speaker 1: George Friedman with Geopolitical Futures, he's the founder and chairman. 249 00:15:01,720 --> 00:15:04,720 Speaker 1: Before the break, you said that Russia is the greatest 250 00:15:04,800 --> 00:15:09,040 Speaker 1: threat in the world today. Vladimir Putin has to run 251 00:15:09,120 --> 00:15:12,480 Speaker 1: for re election in two thousand and eight. Whenever we 252 00:15:12,480 --> 00:15:17,080 Speaker 1: think of their electoral system, what's Russia, what's the world 253 00:15:17,200 --> 00:15:20,000 Speaker 1: going to be like between now and then? Does he 254 00:15:20,080 --> 00:15:25,360 Speaker 1: have to do something to retain his Popularity's got a problem. 255 00:15:25,520 --> 00:15:29,440 Speaker 1: The Sovieting collapsed when there was extreme spending on weapons 256 00:15:30,280 --> 00:15:34,680 Speaker 1: and oil prices collapsed. In Russia, you have extreme spending 257 00:15:34,680 --> 00:15:37,760 Speaker 1: on weapons and oil prices have collapsed. It is going 258 00:15:37,760 --> 00:15:40,800 Speaker 1: to be very hard to hold the Russian Federation together. 259 00:15:41,160 --> 00:15:44,320 Speaker 1: He's doing a great job in transferring ever about his 260 00:15:44,400 --> 00:15:47,640 Speaker 1: attention to foreign policy, He's doing a clinic in the 261 00:15:47,680 --> 00:15:51,240 Speaker 1: United States. In some ways, Uh, this is really good. 262 00:15:51,280 --> 00:15:55,440 Speaker 1: He's a popularity. But the fact is the Russia's and depression, 263 00:15:55,720 --> 00:15:58,560 Speaker 1: it cannot survive at these oil prices. It is an 264 00:15:58,560 --> 00:16:01,720 Speaker 1: oil exporting economy as much as Saudi Arabia or any other, 265 00:16:02,280 --> 00:16:06,080 Speaker 1: and therefore the prospect for them is grim. That makes 266 00:16:06,120 --> 00:16:09,200 Speaker 1: them dangerous because when you push somebody against the wall, 267 00:16:10,400 --> 00:16:13,240 Speaker 1: that's when they strike back. What's a worst case scenario 268 00:16:13,320 --> 00:16:16,320 Speaker 1: for us? For us, the worst case scenarios the Russian 269 00:16:16,480 --> 00:16:20,360 Speaker 1: Federation fragments and collapses and no one's in control of 270 00:16:20,440 --> 00:16:23,600 Speaker 1: five thousand nuclear missiles. That is the scariest thing in 271 00:16:23,640 --> 00:16:27,880 Speaker 1: the world today, not interest rates. What's the odds that 272 00:16:27,880 --> 00:16:31,280 Speaker 1: that could happen, Well, if the Soviet Union does, if 273 00:16:31,360 --> 00:16:34,320 Speaker 1: Russia does with the Soviet Union did, the odds of 274 00:16:34,360 --> 00:16:37,520 Speaker 1: that happening are fairly high, and it's very hard to 275 00:16:37,560 --> 00:16:40,520 Speaker 1: get control of them. I give Foreign Affairs Magazine major 276 00:16:40,600 --> 00:16:44,040 Speaker 1: credit for within a given issue showing two sides of 277 00:16:44,040 --> 00:16:48,160 Speaker 1: a debate. John Mr. Simerridge Universe Chicago has been hypercritical 278 00:16:48,240 --> 00:16:54,200 Speaker 1: of our policy projecting NATO East towards Putin's Russia. Is 279 00:16:54,200 --> 00:16:59,600 Speaker 1: he onto something there that we just completely miscalculated ancient emotions. 280 00:17:00,040 --> 00:17:03,480 Speaker 1: As we migrated NATO East, we were beating in a 281 00:17:03,560 --> 00:17:05,919 Speaker 1: rock and a hard place. Europe is one of the 282 00:17:05,920 --> 00:17:10,560 Speaker 1: foundations of world civilization and one of the foundations of 283 00:17:10,680 --> 00:17:15,440 Speaker 1: US foreign policy. If they start pushing back into Europe, 284 00:17:16,160 --> 00:17:18,800 Speaker 1: that poses a unique problem. On the other hand, when 285 00:17:18,800 --> 00:17:23,399 Speaker 1: we push back, we destabilized Russia, so being between a 286 00:17:23,480 --> 00:17:26,200 Speaker 1: hard rock and a hard place, which everyone we did, 287 00:17:26,320 --> 00:17:29,639 Speaker 1: would be criticized. I know John, and I understand what 288 00:17:29,680 --> 00:17:33,439 Speaker 1: he's saying, but all of us are unaware of I 289 00:17:33,480 --> 00:17:37,480 Speaker 1: think the fragility of Russia at this point, and what 290 00:17:37,680 --> 00:17:39,960 Speaker 1: could happen if it goes So, what's your prescription for 291 00:17:40,000 --> 00:17:43,200 Speaker 1: the next president? The next president is trapped between a 292 00:17:43,280 --> 00:17:46,440 Speaker 1: rock and hard place, the same previously. That's the entire 293 00:17:46,480 --> 00:17:49,240 Speaker 1: of your next book. But what is the to do 294 00:17:49,440 --> 00:17:52,760 Speaker 1: list given the rock and the distance to the hard place? 295 00:17:52,840 --> 00:17:56,080 Speaker 1: Henry Kissinger is in Moscow, I believe right now, and 296 00:17:56,119 --> 00:17:58,800 Speaker 1: then he's trying to find some sort of foundation for 297 00:17:59,040 --> 00:18:01,880 Speaker 1: making agreement on Ukraine, which is the heart of everything 298 00:18:02,240 --> 00:18:06,800 Speaker 1: the Russians wanted neutralize with no Western military presence there. 299 00:18:07,680 --> 00:18:10,439 Speaker 1: The West wants him to withdraw from eastern Russia and 300 00:18:10,560 --> 00:18:13,439 Speaker 1: out of the Crimea U There is a basis of 301 00:18:13,480 --> 00:18:15,679 Speaker 1: some sort of agreement, but it's going to really be 302 00:18:16,000 --> 00:18:18,960 Speaker 1: about the U. S deployment in Poland and Romania, where 303 00:18:19,000 --> 00:18:24,359 Speaker 1: it now placed tanks, armor, uh weapon sorry, artillery and 304 00:18:24,440 --> 00:18:28,160 Speaker 1: other things. So will we withdraw from that that would 305 00:18:28,160 --> 00:18:30,800 Speaker 1: get the Russians to make a deal. How badly is 306 00:18:30,840 --> 00:18:33,440 Speaker 1: the U. S presidential campaign, if at all, hurting America 307 00:18:33,560 --> 00:18:37,119 Speaker 1: right now? All presidential American campaign Presidential campaigns in the 308 00:18:37,160 --> 00:18:40,320 Speaker 1: United States heard America. They heard America because it gives 309 00:18:40,359 --> 00:18:42,879 Speaker 1: a chance to France to look down on us, but 310 00:18:43,040 --> 00:18:45,199 Speaker 1: we managed to survive. I mean, if you look at 311 00:18:45,200 --> 00:18:49,320 Speaker 1: any one of our campaigns, the seven dwarves around Ronald Reagan, 312 00:18:50,200 --> 00:18:54,080 Speaker 1: but every Ronald but Donald Trump is a particularly amusing 313 00:18:55,160 --> 00:18:58,080 Speaker 1: addition to this, I mean, do we run a risk 314 00:18:58,119 --> 00:19:03,160 Speaker 1: here given some of the US policies, no apolicies, you know, policies, 315 00:19:03,160 --> 00:19:05,439 Speaker 1: by the way, you don't really matter. Policies or what 316 00:19:05,560 --> 00:19:08,560 Speaker 1: politicians would like to do in reality is what determines 317 00:19:08,600 --> 00:19:11,240 Speaker 1: they're going to do. No one's going to change their 318 00:19:11,240 --> 00:19:14,719 Speaker 1: relationship with the United States because they can't. On the 319 00:19:14,760 --> 00:19:17,840 Speaker 1: other hand, they always look down on our politics. Europeans 320 00:19:17,920 --> 00:19:20,560 Speaker 1: simply don't understand the United States. So we don't need 321 00:19:20,600 --> 00:19:23,199 Speaker 1: to moving van to Canada yet. I don't think you 322 00:19:23,280 --> 00:19:26,400 Speaker 1: don'tant to move in Canada, and given Trudeau in Canada, 323 00:19:26,440 --> 00:19:29,240 Speaker 1: I'm not sure you want to be there. George Freeman, 324 00:19:29,359 --> 00:19:32,479 Speaker 1: thank you. This is back to back smart political Sir 325 00:19:32,520 --> 00:19:34,920 Speaker 1: Martin Sorrel George Freeman. It could be a thirteen hour 326 00:19:35,000 --> 00:19:38,320 Speaker 1: show today. This is Foreign Affairs today, this is we 327 00:19:38,400 --> 00:19:42,040 Speaker 1: are This is terrific. George Freeman, thank you. Geo Political 328 00:19:42,160 --> 00:19:47,040 Speaker 1: Futures found that Russian ruble doing Yeah, Russian ruble actually 329 00:19:47,040 --> 00:19:49,720 Speaker 1: is doing better. Stronger rubles seventy six point six nine 330 00:19:49,760 --> 00:19:53,240 Speaker 1: away from the eighty level. Watching dollar pay some Mexican 331 00:19:53,280 --> 00:19:56,280 Speaker 1: pay so as well eighteen point seven six really risk 332 00:19:56,320 --> 00:20:00,000 Speaker 1: on across all boards. Futures up fourteen. Stay with us, 333 00:20:00,040 --> 00:20:06,200 Speaker 1: we need to look at economic data. Bloomberg surveillance coming 334 00:20:06,240 --> 00:20:07,840 Speaker 1: up there. With all due respect, highlight brought to you 335 00:20:07,840 --> 00:20:09,560 Speaker 1: by land Rover. If it's in your nature to cast 336 00:20:09,560 --> 00:20:11,600 Speaker 1: off the every day and seek adventure, the Discovery Sport 337 00:20:11,600 --> 00:20:13,640 Speaker 1: was built to help your search. Visit Landrover chie state 338 00:20:13,680 --> 00:20:16,359 Speaker 1: dot com for special offers during the only Adventure Sales event. 339 00:20:16,600 --> 00:20:26,400 Speaker 1: Landrover Above and Beyond broadcasting live to New York, Bloomberg eleventh, 340 00:20:26,520 --> 00:20:31,280 Speaker 1: YO to Washington, d C, Bloomberg to Boston, Bloomberg dwelve, 341 00:20:31,320 --> 00:20:35,600 Speaker 1: WORS to San Francisco, Bloomberg nine to the Country series 342 00:20:35,680 --> 00:20:39,240 Speaker 1: Exam Channel one ninety and around the globe the Bloomberg 343 00:20:39,320 --> 00:20:43,320 Speaker 1: Radio plus Aben Bloomberg dot Com. This is Bloomberg surveillance. 344 00:20:44,720 --> 00:20:46,760 Speaker 1: This is Bloomberg surveillance. I might come a key along 345 00:20:46,800 --> 00:20:49,240 Speaker 1: with Tom Keane. Economic indicators are brought to you by 346 00:20:49,280 --> 00:20:52,240 Speaker 1: Commonwealth Financial Network when it's time to change the conversation, 347 00:20:52,280 --> 00:20:54,400 Speaker 1: talk with a broker dealer r I A that's ready 348 00:20:54,440 --> 00:20:57,560 Speaker 1: to listen Call eight six six four six two three, 349 00:20:57,760 --> 00:21:01,160 Speaker 1: or visit Commonwealth dot com to learn more of Annydale 350 00:21:01,240 --> 00:21:04,280 Speaker 1: jed Ice at the First Word Desk and some numbers. 351 00:21:04,520 --> 00:21:09,359 Speaker 1: Surprise this morning, Michael Yes. Housing starts down three point 352 00:21:09,440 --> 00:21:12,440 Speaker 1: eight percent in January to one point zero nine nine 353 00:21:12,520 --> 00:21:15,919 Speaker 1: million at an annual rate. Economists surveyed by Bloomberg had 354 00:21:15,960 --> 00:21:20,800 Speaker 1: been looking for an increase. What's more, December starts revised lower. 355 00:21:21,000 --> 00:21:24,480 Speaker 1: Building permits also down in January. According to the Commerce 356 00:21:24,480 --> 00:21:28,320 Speaker 1: Department Labor Department figures on inflation, the producer price index 357 00:21:28,480 --> 00:21:32,440 Speaker 1: up point one percent. Economists had anticipated the decline. The 358 00:21:32,440 --> 00:21:36,600 Speaker 1: core excluding food and energy up point four percent. Economists 359 00:21:36,600 --> 00:21:39,920 Speaker 1: had anticipated a little change again, The producer price index 360 00:21:40,000 --> 00:21:43,680 Speaker 1: up in January. Housing starts, building permits down at the 361 00:21:43,720 --> 00:21:46,400 Speaker 1: Bloomberg First Word desc company, tell Judais, let's go back 362 00:21:46,400 --> 00:21:50,560 Speaker 1: to New York. Well as certainly the opposite of what 363 00:21:50,600 --> 00:21:54,080 Speaker 1: we were expecting today. Tom, Let's bring in Jeremy Lawson. 364 00:21:54,119 --> 00:21:57,600 Speaker 1: He's chief economists of Standard Life on us on the 365 00:21:57,680 --> 00:22:01,960 Speaker 1: US ECO data UM, Jeremy obviously one month. You never 366 00:22:02,040 --> 00:22:04,600 Speaker 1: look at just one month in any kind of data. 367 00:22:04,640 --> 00:22:08,600 Speaker 1: But the idea that, um, we don't know what closed 368 00:22:08,600 --> 00:22:10,639 Speaker 1: the housing starts, could have been weather, but pp I 369 00:22:10,760 --> 00:22:16,159 Speaker 1: is kind of a surprise here. When you strip out energy, 370 00:22:16,800 --> 00:22:20,760 Speaker 1: you're looking at some significant increases. Yeah. Sure, I mean again, 371 00:22:21,640 --> 00:22:24,040 Speaker 1: you need to smoo through monthly sort of changes, you know, 372 00:22:24,040 --> 00:22:26,080 Speaker 1: in this sort of data as well. You know, so 373 00:22:26,160 --> 00:22:28,680 Speaker 1: the overall sort of trend, if you look at the 374 00:22:28,680 --> 00:22:30,720 Speaker 1: the year on year growth rate in the core is 375 00:22:30,760 --> 00:22:34,159 Speaker 1: still relatively modest, but that it is, it is. It 376 00:22:34,280 --> 00:22:36,720 Speaker 1: is interesting that the year on year rates come up 377 00:22:36,760 --> 00:22:39,440 Speaker 1: to north point six. That also is well above the 378 00:22:40,000 --> 00:22:44,320 Speaker 1: world of the consensus. So maybe suggested some of them 379 00:22:44,480 --> 00:22:48,200 Speaker 1: about the longer term inflation might be a little bit misguided. 380 00:22:49,720 --> 00:22:52,960 Speaker 1: How misguided might it be? That's going to be the 381 00:22:53,040 --> 00:22:56,840 Speaker 1: question on March sixte when the Fed meets. Well, so 382 00:22:57,320 --> 00:22:59,520 Speaker 1: this is where it's where it gets very interesting. So 383 00:22:59,720 --> 00:23:03,000 Speaker 1: mark it pricing, right, So we look at inflation break evens, 384 00:23:03,000 --> 00:23:06,159 Speaker 1: not just short term but the longer term inflation break evens. 385 00:23:06,160 --> 00:23:09,920 Speaker 1: They've become incredibly pessimistic about the longer term inflation outlook, 386 00:23:09,960 --> 00:23:14,080 Speaker 1: effectively saying actually they think the FED can't or won't 387 00:23:14,640 --> 00:23:16,920 Speaker 1: meet its inflation objectives, not just in the near term, 388 00:23:17,000 --> 00:23:19,919 Speaker 1: the long term, which we would push back on a 389 00:23:19,960 --> 00:23:22,040 Speaker 1: fair bid. So we haven't lost that degree of faith 390 00:23:22,080 --> 00:23:26,720 Speaker 1: in central banks ability to meet their inflation objectives. But 391 00:23:27,200 --> 00:23:29,120 Speaker 1: I think we're at the point where the market needs 392 00:23:29,160 --> 00:23:33,399 Speaker 1: to see inflation surprising to the opppied before it's going 393 00:23:33,400 --> 00:23:36,840 Speaker 1: to believe in that inflation story long agoing far away. 394 00:23:36,960 --> 00:23:39,359 Speaker 1: This is right after Karl Marx died. You were a 395 00:23:39,400 --> 00:23:42,520 Speaker 1: class tutor at the London School of Economics. Let me 396 00:23:42,600 --> 00:23:46,160 Speaker 1: talk about being in the trenches of teaching in your 397 00:23:46,200 --> 00:23:48,800 Speaker 1: world right now, Jeremy Lysson, is any of this in 398 00:23:48,840 --> 00:23:52,000 Speaker 1: the text box? Could you have taught the present day 399 00:23:52,040 --> 00:23:55,440 Speaker 1: economics when you were a class tutor at the London 400 00:23:55,480 --> 00:23:58,760 Speaker 1: School of Economics? And I think you would have had 401 00:23:59,040 --> 00:24:01,199 Speaker 1: You had needed to have gone back to more of 402 00:24:01,240 --> 00:24:03,880 Speaker 1: a depression sort of here of framework to talk about 403 00:24:03,960 --> 00:24:06,720 Speaker 1: what was going on. Right, So you need to have 404 00:24:06,800 --> 00:24:10,080 Speaker 1: had the tools around debt deflation episodes. You know what 405 00:24:10,200 --> 00:24:13,200 Speaker 1: happens when you're in a in a liquidity trap, the 406 00:24:13,320 --> 00:24:15,919 Speaker 1: sort of policy experiments that you need to conduct in 407 00:24:15,920 --> 00:24:18,760 Speaker 1: those circumstances. Then the uncertainty measured when you look at 408 00:24:18,760 --> 00:24:22,920 Speaker 1: the present economic data, including US industrial production coming out 409 00:24:23,280 --> 00:24:27,560 Speaker 1: in forty minutes. I mean, uncertainly is it? Am? I right, 410 00:24:27,680 --> 00:24:30,360 Speaker 1: It's off the chart right now. It's very high, and 411 00:24:30,400 --> 00:24:32,479 Speaker 1: so so I think this is a really good point. Um. 412 00:24:32,720 --> 00:24:35,000 Speaker 1: It's one of the things that we're doing is we're 413 00:24:35,040 --> 00:24:37,560 Speaker 1: looking back at historical episodes at the moment, So you 414 00:24:37,600 --> 00:24:41,040 Speaker 1: look at, okay, periods where uncertainty was high, where financial 415 00:24:41,080 --> 00:24:43,919 Speaker 1: markets were signaling stress, even though when we look at 416 00:24:43,960 --> 00:24:46,800 Speaker 1: say just pure economic data, it doesn't look as bad 417 00:24:46,840 --> 00:24:50,399 Speaker 1: as what's being priced into markets. What's very interesting is 418 00:24:50,440 --> 00:24:53,760 Speaker 1: that pretty much every episode like this that we've seen 419 00:24:53,840 --> 00:24:56,560 Speaker 1: that didn't end in a recession, the FED ended up 420 00:24:56,600 --> 00:24:59,439 Speaker 1: having to ease monetary policy in order to prevent that 421 00:24:59,480 --> 00:25:02,879 Speaker 1: recession from occurring. So this is the unstable equilibrium I 422 00:25:02,880 --> 00:25:06,080 Speaker 1: think that we're in, which is, if you're going to 423 00:25:06,080 --> 00:25:08,680 Speaker 1: be confident about the economy, can you be confident if 424 00:25:08,680 --> 00:25:11,280 Speaker 1: the FED doesn't reverse course, Because as far as we 425 00:25:11,320 --> 00:25:14,280 Speaker 1: can see, they're really in no historical precedence for this 426 00:25:14,400 --> 00:25:17,680 Speaker 1: degree of uncertain in financial stress to not lead to 427 00:25:17,720 --> 00:25:22,480 Speaker 1: a downturn unless the FED does ease the FED can 428 00:25:22,560 --> 00:25:25,119 Speaker 1: cut rates basis points, and I'm going to make it, 429 00:25:26,520 --> 00:25:28,560 Speaker 1: but that's not the only that's not the only thing 430 00:25:28,600 --> 00:25:31,439 Speaker 1: that it can do. Um of course the search right, 431 00:25:31,520 --> 00:25:34,080 Speaker 1: So cutting rates itself, although that would send a signal, 432 00:25:34,359 --> 00:25:36,240 Speaker 1: But I mean when we talk about policy reverse, so 433 00:25:36,280 --> 00:25:39,400 Speaker 1: I think we're talking about a more significant reversal which 434 00:25:39,400 --> 00:25:42,280 Speaker 1: should be back into quantitative easing UM and then even 435 00:25:42,400 --> 00:25:45,000 Speaker 1: within the que framework through are more radical steps of 436 00:25:45,080 --> 00:25:48,200 Speaker 1: central bank can take if true sort of deflationary fears 437 00:25:48,200 --> 00:25:50,680 Speaker 1: are setting in. You know, you know Ben Bernanke gave 438 00:25:50,720 --> 00:25:53,840 Speaker 1: a speech fifteen years ago. Now you know that helicopter 439 00:25:53,880 --> 00:25:55,800 Speaker 1: money drops, right, These are the sort of things that 440 00:25:55,920 --> 00:25:58,240 Speaker 1: start out to be considered if you're in a longer 441 00:25:58,320 --> 00:26:01,000 Speaker 1: term malaise. The other thing, of course, is you know 442 00:26:01,040 --> 00:26:03,800 Speaker 1: what we're realizing in central banks can't solve these problems 443 00:26:03,840 --> 00:26:07,200 Speaker 1: on their own, right. You need fiscal policy, you need 444 00:26:07,359 --> 00:26:09,720 Speaker 1: structural reforms. Is a number of things that need to 445 00:26:09,720 --> 00:26:12,000 Speaker 1: be done to lift growth, which you've got nothing to 446 00:26:12,000 --> 00:26:14,920 Speaker 1: do with central banks at all. Well, in none of 447 00:26:14,960 --> 00:26:17,800 Speaker 1: the cases you've talked about in the past about recessions, 448 00:26:18,080 --> 00:26:22,840 Speaker 1: were we at the zero bound? Can central banks prevent 449 00:26:22,960 --> 00:26:27,199 Speaker 1: a recession? And I mean historically they haven't always been 450 00:26:27,280 --> 00:26:30,040 Speaker 1: very good. So so there are there are these examples 451 00:26:30,119 --> 00:26:33,199 Speaker 1: where you had you know, you had modest downturns, but 452 00:26:33,240 --> 00:26:36,400 Speaker 1: it didn't lead to recession. You're write, policy was more 453 00:26:36,440 --> 00:26:38,760 Speaker 1: powerful back then. We weren't at the zero lower bound. 454 00:26:39,080 --> 00:26:43,880 Speaker 1: The transmissions through the housing and household sector of policy 455 00:26:43,920 --> 00:26:46,880 Speaker 1: and self and credit easing was more powerful back then. 456 00:26:47,880 --> 00:26:49,880 Speaker 1: So you know, perhaps we're about to find out whether 457 00:26:49,920 --> 00:26:52,800 Speaker 1: that's whether that's true. You know, I think that the 458 00:26:52,800 --> 00:26:54,720 Speaker 1: best thing that could be done would be for there 459 00:26:54,720 --> 00:26:59,159 Speaker 1: to be a significant infrastructure investment plan in the United States, right, 460 00:26:59,240 --> 00:27:01,439 Speaker 1: That's the sort of thing that is that is needed 461 00:27:01,480 --> 00:27:03,680 Speaker 1: and would sort have helped the kickstart investment that that's 462 00:27:03,720 --> 00:27:06,239 Speaker 1: not gonna happen in election yet. Jeremy, thank you so much. 463 00:27:06,320 --> 00:27:09,640 Speaker 1: Jeremy Lawson is with Standard life Investments with us after 464 00:27:09,680 --> 00:27:12,199 Speaker 1: economic data this morning again stay with us in the 465 00:27:12,280 --> 00:27:18,120 Speaker 1: nine o'clock are that important widely anticipated industrial production UH 466 00:27:18,280 --> 00:27:21,240 Speaker 1: statistic will have that at nine fifteen. Vineydale Judais in 467 00:27:21,320 --> 00:27:25,720 Speaker 1: perspective as we can, we need to remind you Neil 468 00:27:25,960 --> 00:27:29,879 Speaker 1: cash Carry will join us. What an interesting conversation that 469 00:27:29,920 --> 00:27:34,600 Speaker 1: will be on finance banking and Kiss Carr's Minnesota fed. 470 00:27:36,800 --> 00:27:39,280 Speaker 1: This our surveillance is brought to you by Westchester suber Up. 471 00:27:39,320 --> 00:27:42,359 Speaker 1: Visit Westchester suberu dot com. Here is Michael bar with 472 00:27:42,400 --> 00:27:44,879 Speaker 1: the latest headlines, Mike Tom, thank you very much. Apple 473 00:27:44,920 --> 00:27:47,600 Speaker 1: says it will fight a federal magistrate's order to help 474 00:27:47,640 --> 00:27:51,680 Speaker 1: the FBI crack the code into an encrypted iPhone that 475 00:27:51,800 --> 00:27:55,200 Speaker 1: belonged to one of the San Bernardino, California shooters. Apple 476 00:27:55,280 --> 00:27:58,920 Speaker 1: says forcing it to develop such software would essentially put 477 00:27:58,920 --> 00:28:02,960 Speaker 1: millions of iPhones at risk. Saynt Fruke's iPhone is configured 478 00:28:03,000 --> 00:28:07,239 Speaker 1: to erase data after ten consecutive unsuccessful attempts to unlock it. 479 00:28:07,640 --> 00:28:10,880 Speaker 1: A new survey finds a number of Americans often retire 480 00:28:11,000 --> 00:28:14,000 Speaker 1: earlier than they had planned. According to a University of 481 00:28:14,080 --> 00:28:17,000 Speaker 1: Michigan's Health and Retirement study, more than a third of 482 00:28:17,040 --> 00:28:19,800 Speaker 1: the people's survey did not reach the retirement age they 483 00:28:19,840 --> 00:28:22,840 Speaker 1: set when they were fifty eight because of health issues, 484 00:28:22,880 --> 00:28:27,600 Speaker 1: family issues, layoffs, and business closings. Houston, Texas man says 485 00:28:27,600 --> 00:28:30,760 Speaker 1: he was arrested for not paying an outstanding fifteen hundred 486 00:28:30,760 --> 00:28:35,240 Speaker 1: dollar student loan debt from seven Paul Akers says seven 487 00:28:35,359 --> 00:28:38,200 Speaker 1: armed US marshals showed up at his house and took 488 00:28:38,240 --> 00:28:40,680 Speaker 1: him to court. So much firepower to say that we 489 00:28:41,040 --> 00:28:43,400 Speaker 1: can't miss this guy. We must take him down. And 490 00:28:43,440 --> 00:28:45,800 Speaker 1: when you get me, you celebrate as if you've taken 491 00:28:45,880 --> 00:28:51,920 Speaker 1: down you know. Paul Acre says he was unaware of 492 00:28:51,920 --> 00:28:54,400 Speaker 1: any outstanding debt and has agreed to a payment plan 493 00:28:54,560 --> 00:28:57,240 Speaker 1: for his loan. Global News twenty four hours a day, 494 00:28:57,280 --> 00:29:01,200 Speaker 1: powered by our journalists and a hundred fifty news bureaus 495 00:29:01,200 --> 00:29:04,160 Speaker 1: from around the world. Down, Mike, Labar Mine, Tom, thank 496 00:29:04,200 --> 00:29:06,400 Speaker 1: you my whole time now for the Rakatina Auto Group. 497 00:29:06,400 --> 00:29:10,560 Speaker 1: Bloomberg NBC Sports Update, here's Jones Teshtion. All right, Mike, 498 00:29:10,600 --> 00:29:12,680 Speaker 1: the Nets need a new coach and general manager and 499 00:29:12,760 --> 00:29:15,040 Speaker 1: some better players as well. Yeah who reports they have 500 00:29:15,080 --> 00:29:17,719 Speaker 1: offered their GM job to four year old Shawn Marks, 501 00:29:17,720 --> 00:29:19,200 Speaker 1: the former player of the league who has been an 502 00:29:19,200 --> 00:29:22,440 Speaker 1: assistant GM in San Antonio. If he accepts, the feeling 503 00:29:22,560 --> 00:29:24,800 Speaker 1: is he may bring with him at Tory Messina to 504 00:29:24,880 --> 00:29:27,520 Speaker 1: coach in Brooklyn next years. And he's the top assistant 505 00:29:27,520 --> 00:29:30,920 Speaker 1: to Greg Popovich in San Antonio. NBA trade deadline comes 506 00:29:30,920 --> 00:29:34,680 Speaker 1: tomorrow the Clippers. Doc Rivers asked about Blake Griffin, I've 507 00:29:34,720 --> 00:29:36,959 Speaker 1: told you weren't that trade like, but I guess everyone 508 00:29:37,000 --> 00:29:39,880 Speaker 1: else he wants to keep doing that, So we'll let 509 00:29:39,960 --> 00:29:44,040 Speaker 1: him do with on that from us at off, it 510 00:29:44,160 --> 00:29:45,640 Speaker 1: is what it is, and that we can do about it, 511 00:29:45,760 --> 00:29:49,040 Speaker 1: you know, obviously, Uh, it frustrates you when you know 512 00:29:49,680 --> 00:29:53,240 Speaker 1: nothing's going on. Griffin made his first comments was breaking 513 00:29:53,280 --> 00:29:56,600 Speaker 1: his hand punching a team employee and apologize. Miami's Chris 514 00:29:56,600 --> 00:29:59,280 Speaker 1: Bosh has a calf injury a year ago that led 515 00:29:59,360 --> 00:30:02,480 Speaker 1: to life I mean blood clot issues. Reportedly, Boss is 516 00:30:02,520 --> 00:30:04,640 Speaker 1: now on blood thinners, which means he won't be playing 517 00:30:04,640 --> 00:30:07,760 Speaker 1: for the Heat anytime soon. Hockey Philadelphia four goals over 518 00:30:07,760 --> 00:30:10,160 Speaker 1: the last nine minutes to beat the Devil's six three 519 00:30:10,240 --> 00:30:12,120 Speaker 1: end in their three game winsbreak leaves them the point 520 00:30:12,120 --> 00:30:15,040 Speaker 1: behind the Islanders, point ahead of Fittsburgh, Rangers and Blackhawks. 521 00:30:15,040 --> 00:30:17,680 Speaker 1: To night at the Garden College Troops Illinois all over 522 00:30:17,760 --> 00:30:21,040 Speaker 1: Rutgers two sixty six. The Scarlet Knights are oh and 523 00:30:21,200 --> 00:30:24,040 Speaker 1: thirteen in the Big Ten. We're at the Bloomberg NBC 524 00:30:24,080 --> 00:30:28,320 Speaker 1: Sports Update. I'm John Stash at John thanks so much greatly, appreciate, 525 00:30:28,320 --> 00:30:31,160 Speaker 1: Michael Neil, Cash Curry coming up. This is gonna be like, 526 00:30:31,200 --> 00:30:33,840 Speaker 1: you know, another interview new FED president, somewhat like Robert 527 00:30:33,880 --> 00:30:37,960 Speaker 1: Kaplan at Dallas. Interesting pick for the miniapopus FED. And 528 00:30:38,000 --> 00:30:42,160 Speaker 1: then he dropped a bombshell yesterday. Yeah he's I'm banking 529 00:30:42,320 --> 00:30:47,200 Speaker 1: suggested that maybe we need to break up the biggest banks. 530 00:30:47,480 --> 00:30:52,080 Speaker 1: His speech either misinterpreted or deliberately misinterpreted by many of 531 00:30:52,080 --> 00:30:54,600 Speaker 1: the banking industry who say, well, he hasn't paid attention 532 00:30:54,600 --> 00:30:57,360 Speaker 1: to what's happened. He actually does outline a lot of 533 00:30:57,360 --> 00:30:59,440 Speaker 1: what's happened. He just asked the question of whether it's 534 00:30:59,520 --> 00:31:01,920 Speaker 1: been in enough and says his bank is going to 535 00:31:02,000 --> 00:31:04,320 Speaker 1: look into that, and he's doing a lot of interviews. 536 00:31:04,440 --> 00:31:07,640 Speaker 1: We are going to bring you the pointed interview. This 537 00:31:07,760 --> 00:31:11,719 Speaker 1: particularly goes to the heritage of his Minneappolis fat He's 538 00:31:11,760 --> 00:31:15,440 Speaker 1: got awful big shoes to feel Phil from Mr Cartch Dakota, 539 00:31:15,520 --> 00:31:20,040 Speaker 1: he of the lower dot on the dot plot. Stay 540 00:31:20,080 --> 00:31:24,239 Speaker 1: with us. The Sports Report was brought to you by 541 00:31:24,280 --> 00:31:26,400 Speaker 1: Ray Katina Auto Group for the most competitive luxury car 542 00:31:26,440 --> 00:31:28,680 Speaker 1: buying experience. There's only Ray Katina. Is it any one 543 00:31:28,680 --> 00:31:31,400 Speaker 1: of their sixteen beautiful showrooms in New Jersey and New York, 544 00:31:31,400 --> 00:31:37,840 Speaker 1: call New Auto or go to rate Katina dot com. 545 00:31:37,960 --> 00:31:41,360 Speaker 1: Global business news twenty four hours a day at Bloomberg 546 00:31:41,400 --> 00:31:44,480 Speaker 1: dot com, the Radio plus mobile app, and on your radio. 547 00:31:44,760 --> 00:31:48,640 Speaker 1: This is a Bloomberg Business Flash and I'm Karin Moscow. 548 00:31:48,680 --> 00:31:52,200 Speaker 1: This updates brought to you by American Arbitration Association. Business 549 00:31:52,240 --> 00:31:56,680 Speaker 1: disputes are inevitable resolved faster with the American Arbitration Association, 550 00:31:57,000 --> 00:32:00,680 Speaker 1: the global leader in alternative dispute resolution for over five years. 551 00:32:00,760 --> 00:32:04,280 Speaker 1: Learn more at a d R dot org. Wholesale prices 552 00:32:04,280 --> 00:32:07,440 Speaker 1: in the US unexpectedly increased in January is higher food 553 00:32:07,480 --> 00:32:09,720 Speaker 1: costs more than made up for the plunge, and energy. 554 00:32:09,960 --> 00:32:12,280 Speaker 1: The one tenth percent gain in the Producer Price index 555 00:32:12,320 --> 00:32:15,000 Speaker 1: followed a two tenth percent to client in December. New 556 00:32:15,040 --> 00:32:18,080 Speaker 1: home construction in the US unexpectedly cool than January, with 557 00:32:18,120 --> 00:32:21,080 Speaker 1: housing starts dropping three point eight percent to a one 558 00:32:21,120 --> 00:32:24,360 Speaker 1: point one million annualized rate, the weakest in three months. 559 00:32:24,600 --> 00:32:28,080 Speaker 1: Permits of proxy for future construction were little changed. US 560 00:32:28,160 --> 00:32:31,080 Speaker 1: Dock Index futures are higher, with SNP even A futures 561 00:32:31,080 --> 00:32:34,000 Speaker 1: of fourteen points now, EMUNI futures of a hundred fifteen 562 00:32:34,280 --> 00:32:36,680 Speaker 1: and NAS doc emnity futures of forty. The decks in 563 00:32:36,720 --> 00:32:40,240 Speaker 1: Germany's up two percent ten your treasury down ten thirty seconds. 564 00:32:40,240 --> 00:32:43,800 Speaker 1: The yelled one point eight zero percent, Nimex scrude oil 565 00:32:43,840 --> 00:32:47,120 Speaker 1: of two point one percent or sixty cents four a 566 00:32:47,200 --> 00:32:49,920 Speaker 1: barrel comex gold little changed at twelve o eight and 567 00:32:50,000 --> 00:32:52,960 Speaker 1: ounced the euro a dollar eleven twenty seven, and the 568 00:32:53,080 --> 00:32:56,080 Speaker 1: yen is at one fourteen point twenty two. That's a 569 00:32:56,160 --> 00:33:01,080 Speaker 1: Bloomberg Business flash, Tom and Mike a journey, thanks so much, 570 00:33:01,160 --> 00:33:06,880 Speaker 1: futures of fourteen Again it is moll Street. The following 571 00:33:06,960 --> 00:33:11,000 Speaker 1: is from Bloomberg View. Opinions and commentary from Bloomberg columnists. 572 00:33:11,120 --> 00:33:13,760 Speaker 1: I'm Megan mccartell, a colonists from Number View. With the 573 00:33:13,760 --> 00:33:17,040 Speaker 1: death of Supreme Court Justice Antonin Scalia, America is prepared 574 00:33:17,040 --> 00:33:19,480 Speaker 1: to embark on a great political battle over whether Barack 575 00:33:19,520 --> 00:33:21,880 Speaker 1: Obama will be allowed to appoint a liberal justice in 576 00:33:21,960 --> 00:33:24,720 Speaker 1: his place, and thereby tip the political balance of the court, 577 00:33:24,800 --> 00:33:27,560 Speaker 1: possibly for decades to come. Over the next few weeks, 578 00:33:27,560 --> 00:33:30,240 Speaker 1: he did arguments will we made foreign against Just keep 579 00:33:30,240 --> 00:33:33,040 Speaker 1: in mind that virtually every person making those arguments be 580 00:33:33,120 --> 00:33:35,520 Speaker 1: making the exact opposite argument. If the shoe were on 581 00:33:35,520 --> 00:33:37,440 Speaker 1: the other foot, and some of them in fact already 582 00:33:37,440 --> 00:33:39,920 Speaker 1: did so when Bush was in office. Each side will 583 00:33:39,960 --> 00:33:41,920 Speaker 1: also try to blame the other for the mess we're 584 00:33:41,960 --> 00:33:43,880 Speaker 1: now in, but both sides have been down in the 585 00:33:43,920 --> 00:33:46,520 Speaker 1: trenches for some years now, and both sides fight dirty 586 00:33:46,560 --> 00:33:48,720 Speaker 1: when they think it's to their advantage. The states are 587 00:33:48,720 --> 00:33:51,280 Speaker 1: too high to do otherwise, Because so many issues of 588 00:33:51,320 --> 00:33:54,160 Speaker 1: fundamental values are now run through the courts rather than 589 00:33:54,200 --> 00:33:57,800 Speaker 1: the legislative process. That creates two big problems. First, it 590 00:33:57,920 --> 00:34:00,560 Speaker 1: federalizes more and more issues and the heroine we have 591 00:34:00,640 --> 00:34:04,320 Speaker 1: never been more geographically and ideologically divided. The second problem 592 00:34:04,400 --> 00:34:07,240 Speaker 1: is that by putting the issues beyond the legislative debate, 593 00:34:07,480 --> 00:34:10,920 Speaker 1: we leave large and passionate interest groups with no democratic recourse, 594 00:34:11,320 --> 00:34:13,279 Speaker 1: not even picking up and moving to a state more 595 00:34:13,280 --> 00:34:15,640 Speaker 1: suited to their values. And if they can't work inside 596 00:34:15,640 --> 00:34:18,480 Speaker 1: the system, they're apt to start working against it instead. 597 00:34:18,719 --> 00:34:20,840 Speaker 1: On Megan mccartell. For more of you, please go to 598 00:34:20,880 --> 00:34:23,840 Speaker 1: Bloomberview dot com or view go on the Bloomberg terminal. 599 00:34:24,080 --> 00:34:28,160 Speaker 1: This has been Bloomberg View and Bloomberview commentaries can be 600 00:34:28,200 --> 00:34:31,600 Speaker 1: heard hourly weekdays on Bloomberg Radio. We thought we'd get 601 00:34:31,640 --> 00:34:35,320 Speaker 1: some common sense on the dynamics of oil. Stephen Short 602 00:34:35,360 --> 00:34:38,520 Speaker 1: joins us as he has too often here that recently, Stephen, 603 00:34:38,560 --> 00:34:40,160 Speaker 1: we've talked to you more, I think in the last 604 00:34:40,200 --> 00:34:42,560 Speaker 1: six weeks than the last six years. Is what it 605 00:34:42,600 --> 00:34:48,560 Speaker 1: seems like. Did anything change with Cutter Saudi Russia in 606 00:34:48,640 --> 00:34:50,920 Speaker 1: your world of the valves and nuts and bolts the 607 00:34:50,960 --> 00:34:55,000 Speaker 1: pipelines of the United States? Did did anybody even pause 608 00:34:55,320 --> 00:34:59,879 Speaker 1: and pay homage the Cutter? What we did for about 609 00:35:00,080 --> 00:35:02,680 Speaker 1: four hours, Tom, That is to say that we had 610 00:35:02,719 --> 00:35:05,880 Speaker 1: that large spike last Friday, going in to mind you 611 00:35:06,000 --> 00:35:10,759 Speaker 1: a three day holiday, and therefore there was on speculation 612 00:35:11,080 --> 00:35:13,640 Speaker 1: of what we were going to see with quote unquote 613 00:35:13,640 --> 00:35:16,960 Speaker 1: OPEC cohesion. But the best indicator to know that the 614 00:35:17,000 --> 00:35:21,040 Speaker 1: market is completely disregarding any sort of chatter coming out 615 00:35:21,040 --> 00:35:24,840 Speaker 1: of OPEC is look at the forward curve. Because right now, 616 00:35:25,000 --> 00:35:28,920 Speaker 1: if we were really concerned about OPEC getting its act together, 617 00:35:29,160 --> 00:35:31,520 Speaker 1: the forward curve, that is to say that the contango 618 00:35:31,600 --> 00:35:34,319 Speaker 1: in that curve would begin to flatten. But right now 619 00:35:34,360 --> 00:35:38,319 Speaker 1: we are discounting spot barrel from the forward market. You 620 00:35:38,400 --> 00:35:41,040 Speaker 1: don't see that in a bulmarket. Mike jump in here 621 00:35:41,080 --> 00:35:43,160 Speaker 1: with Stephen Shark we've got a few minutes with do 622 00:35:43,200 --> 00:35:47,480 Speaker 1: we uh? Do we not? The market is not assuming 623 00:35:47,480 --> 00:35:49,799 Speaker 1: then that this agreement is going to lead to an 624 00:35:49,800 --> 00:35:54,040 Speaker 1: additional agreement. Absolutely not, not with what we're seeing now, 625 00:35:54,080 --> 00:35:57,719 Speaker 1: because Mike, not only keep in mind, July is your 626 00:35:57,800 --> 00:36:00,880 Speaker 1: busiest month crudel demand. This is what our refineries are 627 00:36:00,920 --> 00:36:06,239 Speaker 1: running at of capacity. That's July right now. I could 628 00:36:06,280 --> 00:36:09,480 Speaker 1: buy oil for July delivery on the NOMEX, put it 629 00:36:09,520 --> 00:36:13,640 Speaker 1: in storage, and sell it in October when oil demand 630 00:36:13,800 --> 00:36:17,320 Speaker 1: is at its weakest, and I can still gain two dollars. 631 00:36:17,640 --> 00:36:20,640 Speaker 1: And that's not just this summer. Look at next summer. 632 00:36:20,680 --> 00:36:24,239 Speaker 1: I could do the exact same thing for July crude 633 00:36:24,280 --> 00:36:28,560 Speaker 1: oil against October seventeen crude all so that discounts. Think 634 00:36:28,600 --> 00:36:31,440 Speaker 1: of any good retailer. I don't have enough demand, I 635 00:36:31,520 --> 00:36:33,719 Speaker 1: have too much supply. What do I have to do? 636 00:36:33,920 --> 00:36:37,160 Speaker 1: I have to cut prices now to get the inventory 637 00:36:37,280 --> 00:36:40,520 Speaker 1: off of my shelf. It's the same scenario in oil. 638 00:36:41,000 --> 00:36:45,440 Speaker 1: So NY if we were really really concerned about OPEC 639 00:36:45,920 --> 00:36:49,200 Speaker 1: working together, quote unquote, then I would not be able 640 00:36:49,239 --> 00:36:53,120 Speaker 1: to discount spot oil. Well, at this point, do traders 641 00:36:53,239 --> 00:36:56,120 Speaker 1: have an idea of where oil can go? Or are 642 00:36:56,160 --> 00:36:59,439 Speaker 1: we just flying blind? We could go to we could 643 00:36:59,520 --> 00:37:03,120 Speaker 1: go to four five. Yeah, I mean I'm confident, Mike, 644 00:37:03,400 --> 00:37:07,840 Speaker 1: I can I can promise you oil cannot go below zero. 645 00:37:08,000 --> 00:37:14,759 Speaker 1: That's that's what I can say. And I know I'm 646 00:37:14,800 --> 00:37:17,480 Speaker 1: going down on a limb there. But yes, if we 647 00:37:17,520 --> 00:37:20,719 Speaker 1: look at oil volatility, the oil vix, we're at near 648 00:37:20,800 --> 00:37:24,200 Speaker 1: record highs. Which we look at credit energy, right and 649 00:37:24,280 --> 00:37:26,600 Speaker 1: go to your Bloomberg and do the f F I 650 00:37:26,680 --> 00:37:30,160 Speaker 1: C M H command. You can see that high yield 651 00:37:30,320 --> 00:37:33,839 Speaker 1: credit in the energy sector has gone parabolic. It now 652 00:37:33,920 --> 00:37:38,080 Speaker 1: requires sixteen hundred basis points of extra yield for paper 653 00:37:38,440 --> 00:37:42,040 Speaker 1: in this sector. So there are tremendous unknown So yes, Mike, 654 00:37:42,080 --> 00:37:44,200 Speaker 1: could we go to forty five? Absolutely? Could we go 655 00:37:44,239 --> 00:37:47,400 Speaker 1: to fifteen? Absolutely? Gun to my head, we go to 656 00:37:47,440 --> 00:37:50,440 Speaker 1: fifteen before we go to five. Steven Shark, very valuable. 657 00:37:50,480 --> 00:37:53,440 Speaker 1: Thank you so much. The record can't say enough about it. 658 00:37:53,480 --> 00:37:55,080 Speaker 1: We need to rip up the script here. We're honored 659 00:37:55,120 --> 00:37:58,520 Speaker 1: to bring you before important conversation with President Neil cush 660 00:37:58,560 --> 00:38:02,319 Speaker 1: Kerry of the Minneapolis Fed. Someone more than qualified to 661 00:38:02,320 --> 00:38:05,920 Speaker 1: a pine on his bombshell speech. Arthur Levitt is the 662 00:38:05,960 --> 00:38:09,640 Speaker 1: former chairman of the sec. You know, they make an 663 00:38:09,640 --> 00:38:12,600 Speaker 1: outlier pick in Minneapolis, and I think even you know, 664 00:38:12,640 --> 00:38:15,520 Speaker 1: Chris carry would agree with that. They pick him to 665 00:38:15,560 --> 00:38:17,800 Speaker 1: be the FED. He comes in with his maiden speech, 666 00:38:17,840 --> 00:38:21,080 Speaker 1: and I believe the translation is the too big to 667 00:38:21,160 --> 00:38:25,560 Speaker 1: fail banks are still here and they're not productive for America. 668 00:38:25,719 --> 00:38:28,040 Speaker 1: If you were to speak to President Chris Cary, what 669 00:38:28,080 --> 00:38:31,640 Speaker 1: would be your advice on breaking up a Bank of 670 00:38:31,680 --> 00:38:34,919 Speaker 1: America or breaking up a JP Morgan for that matter, 671 00:38:34,920 --> 00:38:37,319 Speaker 1: what Covia. I don't think it can be done in 672 00:38:37,320 --> 00:38:42,080 Speaker 1: this environment, and the FED doesn't have total control over 673 00:38:42,120 --> 00:38:45,000 Speaker 1: what it's going to do. The Congress still is the 674 00:38:45,040 --> 00:38:49,600 Speaker 1: most powerful branch of government, and certainly in this administration. 675 00:38:50,880 --> 00:38:55,279 Speaker 1: Uh do I wish they could break up some of 676 00:38:55,280 --> 00:38:59,239 Speaker 1: the banks. I think those words themselves are inflammatory. I 677 00:38:59,320 --> 00:39:04,040 Speaker 1: think getting the banks to trim down some of their activities, 678 00:39:04,560 --> 00:39:08,840 Speaker 1: some of the things that they're doing, that certainly makes sense. 679 00:39:08,920 --> 00:39:13,799 Speaker 1: But we're we're back, not exactly in the environment of 680 00:39:13,880 --> 00:39:17,200 Speaker 1: two thousand and eight, but we're approaching it. We've come 681 00:39:17,239 --> 00:39:22,560 Speaker 1: a long way from that and we are slipping back. Uh. There. 682 00:39:22,680 --> 00:39:27,000 Speaker 1: There is the feeling of business as usual throughout the 683 00:39:27,040 --> 00:39:32,840 Speaker 1: banking world. Everybody is calling for some controls on the banks, 684 00:39:32,840 --> 00:39:36,120 Speaker 1: but nobody has come up with precisely the right formula. 685 00:39:36,200 --> 00:39:39,799 Speaker 1: And Micaus Nilka's curry doesn't meance words breaking up large 686 00:39:39,800 --> 00:39:43,759 Speaker 1: banks into smaller, less connected, less important entities. You can't 687 00:39:43,760 --> 00:39:49,840 Speaker 1: get much clearer than that. Yeah, but his point is that, uh, 688 00:39:50,080 --> 00:39:54,920 Speaker 1: Dodd Frank has not solved the problem. I totally agree 689 00:39:54,960 --> 00:39:58,600 Speaker 1: with that. I totally agree with that, and everybody that 690 00:39:58,680 --> 00:40:01,800 Speaker 1: the problem with God for Bank is everybody is looking 691 00:40:01,800 --> 00:40:04,440 Speaker 1: at it and saying, there it is, We've done it, 692 00:40:04,480 --> 00:40:07,920 Speaker 1: We're much better off. It hasn't come close to solving 693 00:40:07,960 --> 00:40:11,280 Speaker 1: the problem. The whole question of living wills is still 694 00:40:11,880 --> 00:40:15,319 Speaker 1: very much up in the air. What precisely will a 695 00:40:15,400 --> 00:40:18,000 Speaker 1: living will do to preserve a bank in the event 696 00:40:18,040 --> 00:40:20,479 Speaker 1: of value? As you as you know Arthur let every 697 00:40:20,520 --> 00:40:23,800 Speaker 1: regional bank has a certain character. Minneapolis has a brilliant 698 00:40:23,880 --> 00:40:28,840 Speaker 1: intellectual component coming from Gary Sterns through President Kascha Lakota 699 00:40:28,920 --> 00:40:32,279 Speaker 1: and now the President Cash Kari. Within that is a 700 00:40:32,400 --> 00:40:36,560 Speaker 1: non internationalism that you get out of Global Wall Street 701 00:40:36,600 --> 00:40:38,920 Speaker 1: and out of New York City. Bill Dudley's got to 702 00:40:38,920 --> 00:40:44,480 Speaker 1: worry about international banking. Do we risk our international projection 703 00:40:44,640 --> 00:40:47,319 Speaker 1: of banking. If we break up our big banks, I 704 00:40:47,320 --> 00:40:49,799 Speaker 1: don't think so. We're so far ahead of every other 705 00:40:49,840 --> 00:40:53,480 Speaker 1: bank in the world right now, that's a worry I 706 00:40:53,560 --> 00:40:57,760 Speaker 1: would not have. But again, we're not going to break 707 00:40:57,880 --> 00:41:01,920 Speaker 1: up the banks. We're going to perhaps change at best. 708 00:41:02,160 --> 00:41:06,319 Speaker 1: At best, perhaps we're going to change the way they 709 00:41:06,360 --> 00:41:10,319 Speaker 1: do business and the products they employ. Uh, But we're 710 00:41:10,360 --> 00:41:12,799 Speaker 1: not going to go back to glass Stiegel. That just 711 00:41:13,040 --> 00:41:16,360 Speaker 1: isn't going to keep. The bank lobby is just too strong. 712 00:41:16,760 --> 00:41:18,759 Speaker 1: Let me get out front of my first question at 713 00:41:18,760 --> 00:41:21,880 Speaker 1: President cush Curry. You know you've been brilliant on this. 714 00:41:22,040 --> 00:41:25,839 Speaker 1: The y SEC in two thousand four expanded leverage for banks. Uh. 715 00:41:26,080 --> 00:41:28,879 Speaker 1: Lord Skodowski has written about this. Simon Johnson's written about 716 00:41:28,880 --> 00:41:32,080 Speaker 1: this intro Sorkin as it and others. Is the simple 717 00:41:32,160 --> 00:41:37,560 Speaker 1: solution still to diminish leverage as the guide to sound banking. 718 00:41:37,800 --> 00:41:40,640 Speaker 1: I don't think there is a simple solution, but I 719 00:41:40,680 --> 00:41:46,640 Speaker 1: do think that diminishing the leverage, which will impact earnings obviously, 720 00:41:47,239 --> 00:41:50,880 Speaker 1: is certainly a step in the right direction. Do you 721 00:41:50,920 --> 00:41:52,759 Speaker 1: see how he gets fired up, Mike, It's like you're 722 00:41:52,800 --> 00:41:58,080 Speaker 1: talking about the New York Giants gets fired up about 723 00:41:58,080 --> 00:42:03,160 Speaker 1: this Mike. One last question, well, how far should we 724 00:42:03,200 --> 00:42:09,200 Speaker 1: go in making bankers responsible for the actions of their banks. Well, 725 00:42:09,680 --> 00:42:15,120 Speaker 1: there is a proposal now to do just that that, uh, 726 00:42:15,160 --> 00:42:20,280 Speaker 1: if there are misstatements, bankers themselves will be held responsible 727 00:42:20,320 --> 00:42:23,160 Speaker 1: and have to pay penalties. I think it's another idea 728 00:42:23,239 --> 00:42:28,440 Speaker 1: out there, but it doesn't have much traction philosophically, makes sense, 729 00:42:28,719 --> 00:42:32,400 Speaker 1: practically won't happen. Arthur, this has been phenomenal, Thank you 730 00:42:32,440 --> 00:42:34,480 Speaker 1: so much. What a premiers. We go into this bombshell 731 00:42:34,480 --> 00:42:37,080 Speaker 1: of speech with Neil cash carry. Arthur Levitt is a 732 00:42:37,080 --> 00:42:40,280 Speaker 1: former chairman of the SEC board. Member here at Bloomberg 733 00:42:40,719 --> 00:42:45,040 Speaker 1: LP fugures up fifteen DAL fugures up one D twenty two. Next, 734 00:42:45,320 --> 00:42:48,520 Speaker 1: Neil kesh Cry of the Minneapolis Fed. Stay with us.