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Speaker 1: Welcome to the Bloomberg Penel podcast. I'm Paul Sweene. You,

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Speaker 1: along with my co host Lisa Brahmawitz. Each day we

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Speaker 1: bring you the most noteworthy and useful interviews for you

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Speaker 1: and your money. Whether at the grocery store or the

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Speaker 1: trading floor. Find a Bloomberg Penl podcast on Apple podcast

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Speaker 1: or wherever you listen to podcasts, as well as at

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Speaker 1: Bloomberg dot com. Well. Last night, President Donald Trump, in

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Speaker 1: a State of the Union address, said that he will

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Speaker 1: meet with North Korean leader Kim John Un on February

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Speaker 1: in Vietnam. Help us preview what might come out of

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Speaker 1: that summit is Eli Lake. He is a Bloomberg opinion columnists.

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Speaker 1: He joins us in Washington, d C. Eli, thank you

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Speaker 1: for joining us. What do you expect will come out

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Speaker 1: of this summit between the US and North Korean February.

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Speaker 1: I think there's a very good chance you will see

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Speaker 1: um a statement, a kind of declaration of peace, which

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Speaker 1: is similar to statements that have been made before, but

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Speaker 1: would pave the way to a formal peace treaty that

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Speaker 1: ends the Korean conflict. Today there's only an armistice, and

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Speaker 1: I think you may see a new policy where you

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Speaker 1: would see the relaxation of sanctions on North Korea in

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Speaker 1: exchange for some progress on what's called de nuclearization or disarmament,

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Speaker 1: but not the old policy, which is that no sanctions

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Speaker 1: would be lifted until they were there was verifiable disarmament

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Speaker 1: from North Korea. So eli, are we any closer to

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Speaker 1: de nuclearizing North Korea? Well, especially I I don't think

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Speaker 1: we are. Especially a recent report from the U N

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Speaker 1: Security Council is correct that says that, you know, there's

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Speaker 1: a there's not that the North queens have not only

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Speaker 1: continued their development of weapons programs, but are are continuing

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Speaker 1: to sell it to other rogue actors um. And you know,

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Speaker 1: the leaders of the U S Intelligence community also said

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Speaker 1: that they do not expect that Kim Jong un would

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Speaker 1: ever verifiably give up his nuclear arsenal um completely. And

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Speaker 1: this follows a pattern we know that dictators all, you know,

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Speaker 1: develop nuclear weapons in a way as a kind of

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Speaker 1: insurance policy, because if you have a credible threat to

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Speaker 1: and senerate a city like Seoul or other neighboring cities,

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Speaker 1: then there you will not be invaded like someone like

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Speaker 1: Saddam Hussein or well market Offie, So you like, who

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Speaker 1: has the leverage here, the US versus North China, North

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Speaker 1: North Korea just doesn't seem like anything has materially changed

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Speaker 1: over the years. And I'm just trying wondering, other than

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Speaker 1: the fact that we are the President is meeting with

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Speaker 1: Kim Jong un, which is historic in and of itself,

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Speaker 1: what's changed, well, the Trump administration, the President himself would

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Speaker 1: say that the young leader of North Korea wants to

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Speaker 1: bring economic prosperity to his country, and that this is

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Speaker 1: a source of leverage because the United States is a

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Speaker 1: wealthy country and it can help with that. But that

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Speaker 1: defies in a lot of ways everything we know about

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Speaker 1: Kim Jong Remember, you know, Kim Jong un murdered his

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Speaker 1: uncle and had I think his half brother murdered and

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Speaker 1: and has done terrible things in terms of his climb

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Speaker 1: to power, and has acted in a in a ruthless

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Speaker 1: manner that suggests that if he really is interested in

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Speaker 1: the kinds of things he needs to do for prosperity,

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Speaker 1: um that would mean opening up his society and opening

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Speaker 1: up his economy in a way that would be ultimately

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Speaker 1: a threat to him. So I don't think that I

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Speaker 1: don't I don't believe the happy talk that he's interested

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Speaker 1: in this sort of economic development. But the answer that

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Speaker 1: I think that the White House would give you is that,

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Speaker 1: you know, the US can provide North Korea with the

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Speaker 1: means to get their country out of, you know, extreme poverty.

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Speaker 1: I want to shift gears a little bit beyond North

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Speaker 1: Korea because when we talk about national security, I have

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Speaker 1: to wonder what's going on with Venezuela and how much

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Speaker 1: is this becoming a sort of solidification of an alliance

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Speaker 1: between China and Russia versus United States and other developed markets. Well,

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Speaker 1: that's a very good question, and certainly Venezuela is a

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Speaker 1: country where you've seen both Russia and China play the

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Speaker 1: role of sort of the big power UH and development.

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Speaker 1: But you know, China last year began to call back

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Speaker 1: its loans from Venezuela at a moment when you know,

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Speaker 1: its economy was cratering as it is now um and

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Speaker 1: its oil sector has been so depleted because of its

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Speaker 1: mismanagement and the corruption of the Chavez and Madura regime.

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Speaker 1: UM And in many ways, the Chinese might be looking

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Speaker 1: at their in initial investments in the earlier part of

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Speaker 1: this decade into Venezuela as a pretty bad bet. Um.

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Speaker 1: I think that the Russians have a different kind of

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Speaker 1: interest because they see that Venezuela could potentially play the

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Speaker 1: role at At Cuba played in the Cold War, which

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Speaker 1: is a source for power projection in the hemisphere. Um So,

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Speaker 1: you know, I think their interests a line here. I

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Speaker 1: know that the U. S. Intelligence community leaders last week

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Speaker 1: said that they feared a kind of research sign no

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Speaker 1: alliance against you know, the rest of the sort of

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Speaker 1: more western democracies. But I still think that there are

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Speaker 1: a lot of sort of sources of tension there, and

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Speaker 1: they could very well be a classic mistake that the U. S.

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Speaker 1: Intelligence community, many in the US intelligence community made in

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Speaker 1: the Cold War, where they believe that, you know, two

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Speaker 1: countries that followed the same communist ideology would be natural allies,

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Speaker 1: when in fact, you know, their their rivalries between them.

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Speaker 1: That border uh Is has never really been quite so quiet.

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Speaker 1: So in a lot of ways, I would say that,

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Speaker 1: you know, we still have to sort of wait and see.

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Speaker 1: But there is a different point which is also worth making,

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Speaker 1: which is that we see it all the time that

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Speaker 1: autocrats and autocratic regimes will band together when there is

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Speaker 1: a democratic threat to to to those regimes. So it's

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Speaker 1: in the interest that of China and Russia to see

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Speaker 1: that the democratic tumult that we're seeing now in Venezuela fails,

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Speaker 1: because that is that kind of same thing can be

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Speaker 1: a threat to them at some point. Are you saying

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Speaker 1: that right now China is very much an autocratic company

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Speaker 1: country and that its alliances are going to be with

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Speaker 1: other autocrats period the end, Well, China is an autocratic

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Speaker 1: country and its alliances are you know, largely with other

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Speaker 1: autocratic countries. And we see the China I mean we

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Speaker 1: see with Russia for example, protecting Bashar al Assad and

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Speaker 1: the UN Security Council um and I think you'll see

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Speaker 1: more and more with China the same kind of behavior.

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Speaker 1: I mean, I think that. So, like, what do you

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Speaker 1: what do you think of the next steps in Venezuela.

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Speaker 1: It's been kind of comps since Guido assumed his position

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Speaker 1: as I guess president number two or President number one.

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Speaker 1: What do you think our next steps? Well, we're seeing

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Speaker 1: more and more pressure. I mean, most of Europe has

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Speaker 1: now come out and recognized Guido as the interim president.

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Speaker 1: I think that there will be more and more pressure

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Speaker 1: now through humanitarian aid that you know will be delivered,

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Speaker 1: and we'll see will the real question here is if

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Speaker 1: Muduro gives an order not to accept or to block

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Speaker 1: humanitarian aid to his starving population, will the mill of

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Speaker 1: terry follow that order? If if Maduro gives an order,

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Speaker 1: which by the way, apparently he didn't over the weekend

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Speaker 1: in the face of mass demonstrations for his military to

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Speaker 1: fire into the crowds, will the military follow that order.

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Speaker 1: That's really where the rubber hits the road. And I

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Speaker 1: think that there is an understanding that, you know, he

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Speaker 1: can have his generals, as he did last week, show

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Speaker 1: up in a press conference saying that they're still loyal

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Speaker 1: to him. But if the order is given, how many

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Speaker 1: of the middle and lower ranking members of the Venezuelan

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Speaker 1: military will follow it. They are suffering the same kind

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Speaker 1: of privations as the rest of ordinary Venezuelans. And so

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Speaker 1: in that respect, I do think that Medora's days are numbered,

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Speaker 1: just real quick. In one word, which is a bigger

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Speaker 1: threat North Korea or Venezuela. Well, North Korea is a

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Speaker 1: bigger threat because they have nuclear weapons. Sorry, North Korea,

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Speaker 1: ELI like, thank you so much for being with us,

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Speaker 1: Eli Lake. We always love reading your columns for Bloomberg

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Speaker 1: Opinion coming to us from Washington. D see read his columns.

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Speaker 1: They are fabulous. He covers national security. But we were

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Speaker 1: right in the middle of media industry earning season right now.

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Speaker 1: We had twenty one century Fox report pretty decent numbers

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Speaker 1: this morning, and of course the Walt Disney Company last

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Speaker 1: night out with their numbers which are also slightly better

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Speaker 1: than expected. The stocks are both kind of unchanged here

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Speaker 1: this morning, so it help us dive into kind of

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Speaker 1: what we're seeing in the media landscape. Let's bring in

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Speaker 1: Porter bib Porter Bibs and managing director of Media Tech

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Speaker 1: Capital Partners. He joins us in our Bloomberg Interactive Broker

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Speaker 1: studio here in New York. And Porter has been covering

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Speaker 1: the media business close to forever. I'll put it that way.

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Speaker 1: So Porter, as you kind of look at the landscape

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Speaker 1: today and again we had those results just recently from

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Speaker 1: Fox and um And and Disney. We have some more

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Speaker 1: to go. You know. It looks like investors are stepping

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Speaker 1: back and saying, gee, I have to make a bet

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Speaker 1: here whether some of these big media companies can really

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Speaker 1: survive in a world where there's Netflix and Facebook and Amazon,

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Speaker 1: let's just take a look at Disney, you know, probably

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Speaker 1: the biggest and best position arguably. What's your view on

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Speaker 1: Disney and how they play out over the next several years. Well,

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Speaker 1: Bob Iger in his conference call UH yesterday said direct

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Speaker 1: to consumer is his highest priority. He's putting Disney Plus,

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Speaker 1: his main streaming service, on on fast forward. They're gonna

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Speaker 1: show in April a demo to the world to see

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Speaker 1: how it flies, and hope to launch by the end

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Speaker 1: of this calendar year. Um. But the real bombshell that

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Speaker 1: Disney has is not just Disney Plus, and not their

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Speaker 1: sixty ownership of Hulu, which they probably will um end

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Speaker 1: up owning a pent of buying out Comcast and a

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Speaker 1: T and T the minority shareholders so they can control

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Speaker 1: the whole thing. The bombshell is ESPN Plus, which is

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Speaker 1: going gangbusters, has two million paid subscribers. But where the

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Speaker 1: real money tree is going to start shaking down on

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Speaker 1: Disney is when online betting goes across the country, which

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Speaker 1: is going to do There are three states now where

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Speaker 1: it's legal, and all of a sudden, you're going to

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Speaker 1: find in the next couple of years fifty states legalizing

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Speaker 1: online betting, and who has the most live sports and

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Speaker 1: just a gigantic archive of debtor sports information. It's it's

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Speaker 1: interesting that you bring it up because it's one way

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Speaker 1: that Disney diversifies away from what Netflix has in addition there,

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Speaker 1: in addition to their other original content. My question is

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Speaker 1: we talk a lot about Netflix being sort of the

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Speaker 1: big elephant in the room. Is Netflix going to remain

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Speaker 1: an independent company? Well? It um, I may be in

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Speaker 1: the minority, but since the day that Netflix launched, I

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Speaker 1: said it was an unsustainable business model. Um. They don't

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Speaker 1: make profit, they absolutely and they have gigantic, almost eighteen

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Speaker 1: billion dollars of off balance sheet obligations. And the reason

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Speaker 1: that they don't have to show those is because they don't.

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Speaker 1: They don't come do and payable until they air the

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Speaker 1: content that they've paid over overpaid for. So they're gonna

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Speaker 1: face serious competition already from Amazon, from Disney, from uh,

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Speaker 1: everybody else who wants to get into the streaming business.

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Speaker 1: And somebody is going to have to pick up Netflix

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Speaker 1: and take them over. And who will that person be? Well,

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Speaker 1: a lot a lot of analysts are positing Apple. I'm

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Speaker 1: not sure Apple is the only buyer. I think that

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Speaker 1: Verizon may have to do something because they're they're looking

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Speaker 1: at uh, being dumb pipes for the for the future

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Speaker 1: if they don't have some content to create multiple revenue streams, stories,

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Speaker 1: subscription revenue, and advertising. Uh. It could be Microsoft, which

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Speaker 1: has Xbox distribution network, tens of millions of Xboxes all

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Speaker 1: over the country, all over the world actually, and no

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Speaker 1: content except games. So Microsoft, well, let's take a lot.

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Speaker 1: I mean, Netflix has a hundred and fifty billion dollar

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Speaker 1: market cabin so obviously, Uh, only a handful of companies

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Speaker 1: out there could possibly do that. Are you one of

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Speaker 1: those folks that says that, g as we the landscape

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Speaker 1: today in the in the media consumption world, it's Time Warner,

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Speaker 1: you know, Comcast, Disney, Viacom, and so on and so forth.

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Speaker 1: Are you one of those folks that says, boy, if

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Speaker 1: I look five years into my crystal ball, five years

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Speaker 1: down the road, it's not those companies. It is Amazon,

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Speaker 1: it is Microsoft, it is Netflix. Are you one of

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Speaker 1: those people? And if so, sorry for the two point question.

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Speaker 1: What happens in the traditional media landscape? Do we have

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Speaker 1: to have another massive wave of M and A it vaporizes. Uh,

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Speaker 1: we're the whole media industry right now. Um, every ten

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Speaker 1: years or so, Uh, everybody start screaming content is king.

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Speaker 1: Well that's the scream today. Content is king. And the

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Speaker 1: distribution means that you reach out to the consumer through

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Speaker 1: uh is really irrelevant. It's all going digital. It's and

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Speaker 1: five years and now it'll be virtually all mobile. So uh,

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Speaker 1: the legacy media linear television, cable is not going to

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Speaker 1: exist in any great shape or form alright, So in

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Speaker 1: that vein what major media company that currently exists will

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Speaker 1: be no longer in five years. Well, one of the

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Speaker 1: most vulnerable right now is Comcast because there such a

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Speaker 1: big cable, linear television, Universal Pictures and NBC, um, the

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Speaker 1: major networks. They're trying to go digital right now and

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Speaker 1: trying to walk away from their core businesses on on

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Speaker 1: network television as we know it today. But it's not

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Speaker 1: gonna work. You don't think their broadband business is what's

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Speaker 1: going to be the future of Comcast. And I think

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Speaker 1: the thing that we'll save Comcast as as a business

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Speaker 1: is their ability to deliver five G content and it's

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Speaker 1: probably going to be mostly somebody else's content porter bib

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Speaker 1: it is wonderful having you here. Thank you so much

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Speaker 1: for being with us. Porter bib is managing partner at

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Speaker 1: Media Tech Capital Partners. Has been in the media space

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Speaker 1: for decades. Was the first publisher of Rolling Stone magazine.

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Speaker 1: Talking about that's my favorite part of them. I love it.

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Speaker 1: There's so many favorite parts, talking about shifting industries and

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Speaker 1: UH and just Amazon. This year has seen a significant

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Speaker 1: rally and the price of crude, but there are still

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Speaker 1: some archer existential questions hanging over at the oil market.

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Speaker 1: Joining us now is Jim Crane, Energy Studies Fellow at

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Speaker 1: Rice University's Baker Institute for Public Policy, joining us from Houston.

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Speaker 1: He's also the author of a new book, Energy Kingdoms,

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Speaker 1: Oil and Political Survival in the Persian Gulf. Jim, I

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Speaker 1: think one really pressing question for oil markets recently has

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Speaker 1: been is Opeque on its deathbed? No pick is is

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Speaker 1: alive and kicking UH and getting bigger by the signs

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Speaker 1: of UH. You know the talks that have been revealed

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Speaker 1: recently with Russia and the you know, the OPEC plus

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Speaker 1: countries that that are now caucusing UH frequently with with

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Speaker 1: Saudi Arabia and the other OPEC. In the real OPEC members. UM.

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Speaker 1: A lot of that is because of the U s shale.

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Speaker 1: So you know, this rise in in US oil production

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Speaker 1: has really undercut OPEX market power. So to get it back, uh,

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Speaker 1: it brought in Russia and now we've got the you know,

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Speaker 1: two of the three largest global oil producers, Saudi Arabian

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Speaker 1: Russia working together. Uh. So I think, uh yeah, OPEC

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Speaker 1: is still a going concern for sure. So, professoral Crane,

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Speaker 1: when we think of OPEC in the Middle East, I

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Speaker 1: mean it's obviously oil has transformed that region of the

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Speaker 1: world so dramatically over the last seventy five years. Um.

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Speaker 1: You know, obviously tremendous oil reserves there. Despite the fact

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Speaker 1: that the US is now coming online with a shale.

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Speaker 1: What are some of the downsides that you're concerned about

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Speaker 1: in that region? Um, as they continued to progress. Well.

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Speaker 1: So this basically that's you know, the whole crux in

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Speaker 1: my book. So it's basically a history of energy consumption.

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Speaker 1: You know, these countries were extremely poor. Uh when oil

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Speaker 1: was discovered, they didn't use any oil at all, which

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Speaker 1: was great for the companies that that we're producing that oil.

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Speaker 1: They could export every bit of it. Uh, and over

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Speaker 1: the past oh four or fifty years, they've gone from

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Speaker 1: zero to leading the world in oil consumption, uh, you know,

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Speaker 1: which also happens to be their main export commodity. So

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Speaker 1: that that trend, that continued growth and energy demand was

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Speaker 1: threatening their economies because you know, they were diverting evermore

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Speaker 1: exportable crude oil into their economies, and it was also

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Speaker 1: threatening their political systems. You know. They these are autocratic

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Speaker 1: political systems that are based on patronage by basically giving

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Speaker 1: away stuff. So they were giving away too much, uh

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Speaker 1: in terms of energy domestically, and they needed to get

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Speaker 1: rid of these subsidies that they that they put in

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Speaker 1: place in the nineteen seventies. And they're they're starting it's

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Speaker 1: starting to happen. They're starting to to to raise energy prices.

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Speaker 1: Saudi Arabia is leading the way. But now, you know,

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Speaker 1: sort of the latter stage of my book, I look

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Speaker 1: at how climate change is likely to affect these countries. Uh,

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Speaker 1: and that's a whole new existential issue, sort of a

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Speaker 1: lose lose situation if you will, for them. Uh. You know,

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Speaker 1: if climate action succeeds in reducing carbon emissions, that will

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Speaker 1: probably affect oil demand in their economies. If climate change,

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Speaker 1: if the world does not succeed in reducing oil demand, uh,

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Speaker 1: you know, the raising rising temperatures, you know, Saudi Arabian

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Speaker 1: the Gulf are going to be you know, on the

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Speaker 1: front lines of climate victimhood, with some of those cities

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Speaker 1: along the Gulf coast possibly getting to be too hot

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Speaker 1: and humid for you know, the human for humans to withstand, uh,

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Speaker 1: so by you know, sort of the end of this century.

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Speaker 1: So you're talking about how sort of the the existence

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Speaker 1: of oil and the production of oil in the Middle

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Speaker 1: East really gave rise to the current political regimes and

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Speaker 1: also to the capital there. At the same time, this

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Speaker 1: is going to be a problem for them since this

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Speaker 1: is how they've established, uh, the entire infrastructure of how

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Speaker 1: they operate. I'm just wondering, you know. You we started

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Speaker 1: with talking about OPEC and how it's broadening out and

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Speaker 1: still alive and kicking, But is the center of focus

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Speaker 1: moving away from the Middle East because of some of

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Speaker 1: these challenges and because of uh, the fact that it

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Speaker 1: needs to have a bigger critical mass to fight the

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Speaker 1: U S shale presence. I think, you know, Saudi Arabia

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Speaker 1: and Riad is still the you know where the critical

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Speaker 1: mass of OPEC lies. I mean the Saudi Oil Ministry

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Speaker 1: and the Saudi Minister himself. Um, you know, is still

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Speaker 1: the key personage within OPEC who still calls the shots. Um.

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Speaker 1: You know, the other countries in in the Gulf, you know,

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Speaker 1: the the other monarchies tend to caucus with Saudi Arabia

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Speaker 1: in within OPEX. So there you know, it's still um

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Speaker 1: but yeah, I think you know, Saudi Arabia is still

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Speaker 1: that the heavyweight within OPEC. We're talking to Jim Crane,

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Speaker 1: energy Studies fellow at Rice University's Baker Institute for Public Policy. Jim,

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Speaker 1: you know to the extent that these I mean, we

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Speaker 1: know some of these Gulf area countries are trying to

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Speaker 1: diversify their incomes, diversify their economies. How successful have they

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Speaker 1: been at attracting foreign capital and actually achieving some of

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Speaker 1: that diversification. Well, you've got the first successful post oil

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Speaker 1: economy in the Middle East now in Dubai, right. So

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Speaker 1: Dubai's GDP is you know, about three percent or less

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Speaker 1: now from oil and gas. So so Dubai's done it.

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Speaker 1: They've They've developed a you know economy based on financial services,

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Speaker 1: on tourism and conventions and on shipping and logistics, uh,

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Speaker 1: and on real estate, right those crazy real estate projects

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Speaker 1: we've seen with their the you know the world's tallest

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Speaker 1: building and the you know the islands in the uh

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Speaker 1: you know shaped like palm trees in the Gulf. UM.

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Speaker 1: You know, there's a lot of other real estate projects

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Speaker 1: that are you know, maybe a bit a bit more

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Speaker 1: sense that they've they've managed to convert into a non

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Speaker 1: oil economy pretty successfully. Also airlines, um. But now you've

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Speaker 1: got the you know, the other Gulf Cooperation Council countries,

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Speaker 1: the other monarchies have not followed Dubai's example until recently

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Speaker 1: they're starting to do the same thing. So a giving

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Speaker 1: Dubai a bunch of competition in airlines and in real

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Speaker 1: estate and tourism, um. But they need to go a

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Speaker 1: lot further than this, I think for for oil derived economies,

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Speaker 1: diversification is really something that they really have to be dragged,

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Speaker 1: kicking and screaming into because you know, these these sectors

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Speaker 1: are just not as profitable as oil. I mean, if

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Speaker 1: you can produce oil for five or ten bucks and

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Speaker 1: sell it for fifty or a hundred dollars, you know

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Speaker 1: that's a you know that that level of profit is

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Speaker 1: just not going to be available in pretty much anything else.

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Speaker 1: So uh, it's a tough cell diversification, but unfortunately for them,

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Speaker 1: it is vital. Uh, and that is what they've got

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Speaker 1: to do. Jim Crane, thank you so much for being

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Speaker 1: with us. Jim Crane is Energy Studies Fellow at Rice

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Speaker 1: University's Baker Institute for Public Policy based in Houston. Is

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Speaker 1: a book is Energy Kingdoms, Oil and Political Survival in

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Speaker 1: the Persian Gulf. A very interesting kind of reflection at

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Speaker 1: a time when there is this pressure about global warming

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Speaker 1: and about the use of fossil fuels, and as a

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Speaker 1: lot of these Middle Eastern kingdoms do try to diversify

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Speaker 1: their investments and the resources away from oil. Well. Of course,

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Speaker 1: President Trump delivered his State of the Union address last night,

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Speaker 1: touching on a number of topics. To help us parts

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Speaker 1: through what the President said and the democratic response, we

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Speaker 1: bring in Lonnie Chen. Lonnie is the David and Diane

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Speaker 1: Stuffy Research Fellow at the Hoover Institution, also a director

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Speaker 1: of Domestic Policy Studies and Lecture in the Public Policy

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Speaker 1: Program at Stanford University. Calling on the phone from of

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Speaker 1: Lee Stanford. So, Lonnie, a lot of topics covered in

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Speaker 1: a State of the Union address last night, maybe light

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Speaker 1: on a detail, but certainly a message that was consistent

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Speaker 1: with his past messaging. What did you take away from

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Speaker 1: the State of the Union address last night? Well, I

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Speaker 1: thought the President actually sounded a number of unifying themes

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Speaker 1: during his speech. Obviously there were elements of it that

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Speaker 1: were classic Trump claiming credit for avoiding nuclear armageddon with

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Speaker 1: North Korea was chief among them, But fundamentally, as a

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Speaker 1: as a speech, I think the President from a policy perspective,

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Speaker 1: focused on a few items that ought to get support

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Speaker 1: from Republicans and Democrats. Prescription drug pricing, infrastructure reform, UH,

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Speaker 1: boosting economic growth. Those are all themes that Republicans and Democrats,

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Speaker 1: at least in theories, should agree on. So as a

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Speaker 1: general matter, I would say the President's speech sounded many

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Speaker 1: more unifying tones that might have been president his recent rhetoric. Okay, so,

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Speaker 1: Lunny Chain, this actually does not necessarily jibe with what

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Speaker 1: a lot of other people are saying about the speech

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Speaker 1: in that uh, President Trump did not seem to throw

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Speaker 1: Democrats a bone when it came to the wall and

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Speaker 1: negotiating about avoiding another government shutdown. Why do you disagree well?

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Speaker 1: On immigration? That's an area where obviously the president feels

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Speaker 1: very strongly that he needs to continue to play kate

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Speaker 1: and and uh promote policy that's popular with his base.

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Speaker 1: But bear in mind the current process is largely in

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Speaker 1: the Congress's hands. There's a negotiation going on. We'll see

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Speaker 1: where the President comes out on it. But as a

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Speaker 1: general matter, if you look throughout the speech, I think

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Speaker 1: there were many more times when he tried to bring

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Speaker 1: people together then he tried to drive them apart. Now,

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Speaker 1: with respect immigration, that's obviously a very controversial issue, one

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Speaker 1: where I think there was more divisiveness, but we've come

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Speaker 1: to expect that from the president. Immigration is a hallmark

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Speaker 1: issue for him, and obviously it's kind of central to

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Speaker 1: his political coalition. So it's understandable, not excusable, but understandable

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Speaker 1: the degree to which he uses immigration as an issue

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Speaker 1: to divide Republicans and Democrats. So, Lonnie, I guess the

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Speaker 1: rubber will meet the road, if you will, really, over

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Speaker 1: the next week or so, as we approached the deadline

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Speaker 1: for a potential second shutdown, was there anything you heard

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Speaker 1: in the address last night? Or even in the Democratic

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Speaker 1: response that would lead you to believe that there is

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Speaker 1: a path forward to avoid a second shutdown. Well, the

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Speaker 1: the only question I think will be whether the negotiators

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Speaker 1: who are talking about this issue in Congress now, the

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Speaker 1: Conference Committee that was convened to end the last shutdown,

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Speaker 1: the question is whether they can achieve resolution that's going

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Speaker 1: to be satisfactory to the far left to the far right.

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Speaker 1: I think that's the that's the bigger issue. As far

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Speaker 1: as the path forward, I think that the path forward

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Speaker 1: is actually relatively straightforward. From a policy perspective. We all

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Speaker 1: know the sorts of things that Democrats and Republicans would want.

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Speaker 1: The question is whether as a political will there to

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Speaker 1: avoid a second shutdown. And I would argue that the

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Speaker 1: first shutdown was was considered to be so distasteful by

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Speaker 1: both sides that there will be a very strong push

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Speaker 1: to to avoid a shutdown. And frankly, if it comes

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Speaker 1: down to a question of whether there will be a

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Speaker 1: shutdown or if the President is going to act in

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Speaker 1: some way unilaterally, my senses that the President will act

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Speaker 1: unilaterally and Congress will do what it can to avoid

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Speaker 1: a shutdown. That's not the optimal solution from a policy outcome,

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Speaker 1: but it's not an unlikely outcome given where things are.

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Speaker 1: As we said right now. So your former advisor to

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Speaker 1: the Marco Rubio and make Romney campaigns, and I'm wondering

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Speaker 1: putting that hat on for a minute, how would you

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Speaker 1: view Stacy Abraham's response to Democratic response to President Trump's

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Speaker 1: State of the Union where she talked about voter fairness

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Speaker 1: as she talked about the middle class and the plight there.

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Speaker 1: How would you advise President Trump to respond? Well, the

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Speaker 1: of the themes, You know, if Stacy abrams response echoed

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Speaker 1: the themes that we've heard from Democrats consistently over these

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Speaker 1: many years since the campaign, it was very much a

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Speaker 1: preview of coming attractions in for the president, he has

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Speaker 1: one of two courses pretty fundamentally. One is to to triangulate,

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Speaker 1: and I think you started to see some of that

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Speaker 1: last night, triangulation around issues relating to healthcare, for example,

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Speaker 1: and infrastructure. As I mentioned earlier. The other pathway is

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Speaker 1: for the president to hold firm to some of these

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Speaker 1: more divisive issues like immigration and to really focus in

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Speaker 1: on that. As we moved towards this election, Bill Clinton

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Speaker 1: sort of showed the way he had. You know, Bill

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Speaker 1: Clinton had very low approval ratings entering this year of

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Speaker 1: his presidency in much the same way as President Trump does,

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Speaker 1: and Bill Clinton elected to essentially co opt much or

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Speaker 1: part of at least new Gingrich and Republicans agenda. So

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Speaker 1: if President Trump tries to co opt some of the

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Speaker 1: issues that Democrats care about, various historical evidence to suggestive

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Speaker 1: could be successful in rather than sort of holding firm

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Speaker 1: to what one might consider a based strategy. Lonnie Chen,

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Speaker 1: thank you so much for being with us. Lonnie Chen

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Speaker 1: is a research fellow at the Hoover Institute, also Director

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Speaker 1: of Domestic Policy Studies and lecturer in the Public Policy

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Speaker 1: Program at Stanford University. Joining us from California. We appreciate

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Speaker 1: that look at the State of the Union address as

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Speaker 1: well as a democratic response heading into the elections. Thanks

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00:28:31,040 --> 00:28:33,199
Speaker 1: for listening to the Bloomberg P and L podcast. You

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00:28:33,240 --> 00:28:35,879
Speaker 1: can subscribe and listen to interviews at Apple Podcasts or

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00:28:35,920 --> 00:28:39,240
Speaker 1: whatever podcast platform you prefer. Paul Sweeney, I'm on Twitter

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00:28:39,320 --> 00:28:41,600
Speaker 1: at pt Sweeney, I'm Lisa A. Bram Woyd's I'm on

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Speaker 1: Twitter at Lisa A. Bram Woyds. One. Before the podcast,

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00:28:44,440 --> 00:28:47,040
Speaker 1: you can always catch us worldwide on Bloomberg Radio.