WEBVTT - Chevron Lines Up 11 Ships as Venezuela’s Dark Fleet Vanishes 0:00:02.520 --> 0:00:10.480 Bloomberg Audio Studios, Podcasts, radio News. This is Bloomberg Business 0:00:10.520 --> 0:00:14.400 Week Daily reporting from the magazine that helps global leaders 0:00:14.400 --> 0:00:18.320 stay ahead with insight on the people, companies, and trends 0:00:18.360 --> 0:00:23.360 shaping today's complex economy. Plus global business finance and tech 0:00:23.440 --> 0:00:27.320 news as it happens. The Bloomberg Business Week Daily Podcast 0:00:27.640 --> 0:00:31.720 with Carol Masser and Tim Stenebeck on Bloomberg Radio. 0:00:32.320 --> 0:00:34.879 Let's get to Peter Cheer. He's head of macro strategy 0:00:34.880 --> 0:00:37.159 at Academy Securities. He's back with us in our Bloomberg 0:00:37.159 --> 0:00:41.800 Interactive Brokers studio. It is kind of wild, Peter, considering 0:00:41.840 --> 0:00:45.720 how this year has started and the actions in Venezuela 0:00:45.880 --> 0:00:49.240 and then kind of markets to look past it. I'm 0:00:49.280 --> 0:00:51.640 just curious your view on this, and I'm curious what 0:00:51.720 --> 0:00:54.760 kind of calls you were getting from either clients at 0:00:54.760 --> 0:00:55.120 your firm. 0:00:55.200 --> 0:00:57.080 So we certainly had a lot of questions about Venezuela 0:00:57.080 --> 0:01:00.000 over the weekend and into this week. It's at Academy. 0:01:00.040 --> 0:01:02.120 We work with thirty retired generals and admirals, so we've 0:01:02.160 --> 0:01:02.880 been doing it a lot. 0:01:03.040 --> 0:01:03.600 On yesterday. 0:01:03.680 --> 0:01:06.880 Yeah, that's right. Yeah, Master Robinson, he's great. So yeah, 0:01:07.000 --> 0:01:10.160 I think I think the market who's actually do make sense? 0:01:10.160 --> 0:01:10.319 Though? 0:01:10.360 --> 0:01:12.080 I think this is the start of the year stuff. You know, 0:01:12.120 --> 0:01:14.319 you got cs going on, So there's a lot of 0:01:14.319 --> 0:01:16.959 you know, headlines coming out of Vegas that people seem 0:01:17.000 --> 0:01:19.080 to be like. So I'm not surprised that we're kind 0:01:19.080 --> 0:01:21.680 of rallying away from that. I think on Venezuela it 0:01:21.760 --> 0:01:24.800 was a very impressive military operation, whatever else you want 0:01:24.840 --> 0:01:27.200 to think about it, it was very successful, incredibly you 0:01:27.200 --> 0:01:31.120 know fast, you know this very precision. Now, I think 0:01:31.319 --> 0:01:33.479 we're not going to see a lot on oil energy prices. 0:01:33.480 --> 0:01:35.840 I think it's there's a lot of building out and 0:01:35.880 --> 0:01:37.520 what I think this is going to really this is 0:01:37.520 --> 0:01:39.240 a quick fix. None of this is a quick fix. 0:01:39.240 --> 0:01:40.640 And I think what this is really going to boil 0:01:40.680 --> 0:01:43.320 down to is this is our first real confrontation with 0:01:43.400 --> 0:01:46.040 China away from either kind of sphere of influence. 0:01:46.120 --> 0:01:46.240 Right. 0:01:46.400 --> 0:01:49.200 If you think about all the trade negotiation was mainland 0:01:49.280 --> 0:01:51.720 China versus US. You know, there were some tariffs, but 0:01:51.760 --> 0:01:53.280 all of a sudden, we're going and saying we're going 0:01:53.320 --> 0:01:55.440 to take stuff. China's invested a lot of money there. 0:01:55.520 --> 0:01:57.440 China has a lot of loans to companies. How is 0:01:57.440 --> 0:01:59.120 that friction going to play out. China's going to use 0:01:59.120 --> 0:02:01.760 their lawyers to try and stop things. I think this 0:02:01.840 --> 0:02:04.080 is really important too for China because if they kind 0:02:04.080 --> 0:02:06.560 of get pushed out of Venezuela very easily and they 0:02:06.560 --> 0:02:08.640 lose money, the rest of the world where they put 0:02:08.639 --> 0:02:10.640 out their belt and roade initiative starts looking at that 0:02:10.720 --> 0:02:12.360 and it could be a big role on effect. So 0:02:12.639 --> 0:02:14.880 I think we're going to see friction. I honestly think 0:02:14.880 --> 0:02:17.360 we're going to see China first attack with lawyers, and 0:02:17.400 --> 0:02:19.280 they won't attack anything until they start seeing what we're 0:02:19.280 --> 0:02:20.760 actually doing. So far has just spent a lot of 0:02:20.800 --> 0:02:21.480 talk and noise. 0:02:22.160 --> 0:02:24.440 Venezuela was the story yesterday and it certainly is today, 0:02:24.440 --> 0:02:26.359 But in the last few minutes, Greenland has become more 0:02:26.360 --> 0:02:28.920 of a story. President Trump and his team are discussing 0:02:28.919 --> 0:02:31.960 a range of options for acquiring Greenland. A Reuter's reporter 0:02:32.040 --> 0:02:34.760 says in a post on exciting a White House statement, 0:02:35.600 --> 0:02:36.840 where does that strategy fit in? 0:02:36.960 --> 0:02:38.440 That one's a hard one for us. I think when 0:02:38.480 --> 0:02:40.960 we look at the world, when we kind of view Iran, 0:02:41.200 --> 0:02:43.880 we could see maybe doing something the IRGC. I don't 0:02:43.919 --> 0:02:46.720 think we would do anything with the religious side of 0:02:46.760 --> 0:02:48.360 Iran and any way shape or. 0:02:48.320 --> 0:02:49.400 For what When you say do something, what do you 0:02:49.440 --> 0:02:50.200 mean maybe with. 0:02:50.200 --> 0:02:52.560 Support, you know, to attack some of the irg's facilities 0:02:52.600 --> 0:02:55.800 or something. If the IRGC gets very aggressive against the protesters. 0:02:55.800 --> 0:02:58.239 I could see something around there. Cuba seems a little 0:02:58.240 --> 0:03:00.120 bit more easier to deal with we already had have. 0:03:00.280 --> 0:03:04.760 The uss Ford is in the Caribbean Sea. It's actually 0:03:05.480 --> 0:03:07.040 not a very efficient place for it to be. It's 0:03:07.080 --> 0:03:09.280 too small of an area for an aircraft carrier group, 0:03:09.400 --> 0:03:11.639 and it's due for some refitting and remodeling. So I 0:03:11.639 --> 0:03:13.200 think we will try and use it as much as possible. 0:03:13.240 --> 0:03:15.360 So that's why we weren't surprised about action in Venezuela. 0:03:15.680 --> 0:03:17.959 I think we could see activity in around Panama Canal 0:03:18.000 --> 0:03:20.079 where we try and either buy it or invest in it. 0:03:20.200 --> 0:03:23.800 Is that for a China proxy, I. 0:03:23.760 --> 0:03:25.400 Think for a China proxy, And again I think we 0:03:25.480 --> 0:03:29.200 really want to control shipping through central South America and 0:03:29.240 --> 0:03:31.080 the Panama Canal is a big part of that. And 0:03:31.080 --> 0:03:32.919 don't forget Marco Ruby is the first place he went 0:03:33.200 --> 0:03:35.800 on Greenland. I think we all struggle with why this 0:03:35.880 --> 0:03:38.240 term annex or take keeps coming up. I think that's 0:03:38.280 --> 0:03:38.760 a struggle. 0:03:38.800 --> 0:03:44.800 So to recap Panama, Venezuela, Cuba, Iran makes sense, Greenland 0:03:44.800 --> 0:03:45.360 not so much. 0:03:45.840 --> 0:03:48.280 I find it very difficult to like play why we 0:03:48.320 --> 0:03:51.400 would just wrap NATO, And again, I think we've been 0:03:51.520 --> 0:03:53.640 less thoughtful on NATO and where it's important is but 0:03:53.680 --> 0:03:55.800 this kind of puts a lot of friction, And even 0:03:55.800 --> 0:03:59.200 from a business standpoint, I think I can believe that 0:03:59.240 --> 0:04:01.200 in Venezuela there there's a lot of raarers and critical 0:04:01.240 --> 0:04:03.640 minerals that have been underinvested in. I find it hard 0:04:03.680 --> 0:04:05.840 to believe someone hasn't been checking out Greenland and saying 0:04:05.920 --> 0:04:08.680 this is just economically unviable. I do know, and I 0:04:08.680 --> 0:04:10.600 think this is interesting because one of our generals is 0:04:10.600 --> 0:04:13.080 actually now the Undersecretary of War, and before he became 0:04:13.200 --> 0:04:15.800 Undersecretary of earlier still working with us, he did talk 0:04:15.800 --> 0:04:19.159 about and point out that China has more ice breakers 0:04:19.160 --> 0:04:21.880 than we do, and so China views themselves as an 0:04:22.000 --> 0:04:25.080 arctic nation. Russia clearly views themselves as an arctic nation. 0:04:25.520 --> 0:04:27.600 So maybe this has coming something to do with as 0:04:27.600 --> 0:04:31.039 the polar ice caps are melting that it creates different routes, 0:04:31.080 --> 0:04:33.000 so we want some more protection there. So maybe some 0:04:33.040 --> 0:04:34.920 of that makes sense, but again that all feels like 0:04:34.960 --> 0:04:37.680 it could be done within the confines of existing rules 0:04:37.680 --> 0:04:40.520 and regulations rather than having kind of this annex or 0:04:40.520 --> 0:04:41.280 take concept. 0:04:41.680 --> 0:04:43.640 Yeah, I mean, I don't know, how are you thinking 0:04:43.640 --> 0:04:47.320 about this year when it comes to the Trump White House, 0:04:47.520 --> 0:04:51.680 and especially with midterms looming. I've heard some folks say that, Listen, 0:04:51.760 --> 0:04:53.960 there's a lot of pressure on the administration to get 0:04:53.960 --> 0:04:56.640 things done early in the year because as midterms loom, 0:04:56.720 --> 0:05:00.200 there are expectations that there might be pushback against the 0:05:00.240 --> 0:05:03.000 GOP and the Trump administration. But I'm just curious what 0:05:03.040 --> 0:05:04.280 you're telling your clients. 0:05:04.320 --> 0:05:06.119 So what we've really liked is what we've been calling 0:05:06.200 --> 0:05:08.960 prosec or production for security, and it's kind of along 0:05:08.960 --> 0:05:12.120 the lines of resilience, and that includes anything from chips, electricity, 0:05:12.160 --> 0:05:14.480 so Intel, for example. I think there's gonna be huge 0:05:14.480 --> 0:05:17.800 pressure on companies to use US chip manufacturers, right, we 0:05:17.880 --> 0:05:21.000 have to break away from Taiwan. I think there's realization 0:05:21.080 --> 0:05:24.800 we're not producing electricity. We will deregulate, we'll get electricity 0:05:24.839 --> 0:05:27.040 in all forms running. I do think President Trump will 0:05:27.040 --> 0:05:29.040 give up on his kind of hatred of solar and 0:05:29.080 --> 0:05:31.880 adapt solar, but you're gonna see solar nuclear I do. 0:05:32.120 --> 0:05:34.440 I think it's just Wind is a step too far. 0:05:34.480 --> 0:05:36.320 I think Win's a step too far. They really does 0:05:36.360 --> 0:05:38.080 not like he really does not lie. I think there's 0:05:38.080 --> 0:05:40.479 a visceral hatred to it. Partly, I think it does 0:05:40.520 --> 0:05:43.120 destroy views. I think there's questions about his efficiencies, and 0:05:43.160 --> 0:05:44.680 it does kill birds and stuff, and that seems to 0:05:44.680 --> 0:05:46.799 really bother them. So I'm not going to fight the wind. 0:05:46.960 --> 0:05:47.600 I do think on. 0:05:47.640 --> 0:05:51.760 Solar housecats kill a lot of birds too, truly. 0:05:51.600 --> 0:05:53.240 That is probably true. We had one that was very 0:05:53.279 --> 0:05:55.960 good at that, yeah, true, Yeah. So I think those 0:05:55.960 --> 0:05:57.520 are all the things that we can invest. And we 0:05:57.600 --> 0:06:00.000 just saw yesterday two point seven billion going into your 0:06:00.040 --> 0:06:02.320 ranium companies. So I think you can move away from 0:06:02.360 --> 0:06:04.719 the AI story and into anything that's going to be 0:06:04.720 --> 0:06:06.800 part of this building out of infrastructure. You know, you've 0:06:06.839 --> 0:06:10.200 got Cat, You've got Deer, Navistar, all the heavy equipment makers. 0:06:10.320 --> 0:06:12.719 I think we're going to see real efforts to become 0:06:12.960 --> 0:06:14.080 slightly more independent. 0:06:14.839 --> 0:06:16.080 Are all nations doing that? 0:06:16.800 --> 0:06:18.960 So how I see this starting as the US really 0:06:19.000 --> 0:06:21.200 jumpstart of this, right, the US has been all over this. 0:06:21.640 --> 0:06:23.880 I think what we're starting to see now is capital 0:06:24.000 --> 0:06:26.160 is going to follow next, So investors are starting to 0:06:26.160 --> 0:06:28.240 follow this. We talk to private equity companies who are 0:06:28.240 --> 0:06:30.720 starting to scour the universe for Hey, who's got mining 0:06:30.800 --> 0:06:33.000 rights that have been unused, who's got some interesting patents? 0:06:33.040 --> 0:06:35.800 And around these rarest and critical minerals, I think you're 0:06:35.839 --> 0:06:39.280 going to see again these huge buildouts, potentially in electricity production. 0:06:40.040 --> 0:06:43.679 So it's capital vitalization dead well. I think other countries 0:06:43.720 --> 0:06:45.280 are going to figure this out eventually, that they have 0:06:45.320 --> 0:06:47.440 to do it. I think at some point Europe's going 0:06:47.480 --> 0:06:50.920 to release like Shell and BP to actually do what 0:06:50.960 --> 0:06:53.800 they're phenomenally good at. And so far there's still constraints, 0:06:53.880 --> 0:06:55.680 but I think everyone's adopting this. I think you have 0:06:55.720 --> 0:06:57.840 to look much closer when you're thinking about supply. 0:06:57.560 --> 0:07:01.960 Chains, domestic political risk of this new world order. That's 0:07:01.960 --> 0:07:03.599 something I've been thinking a lot about, especially in an 0:07:03.640 --> 0:07:08.120 election year, because we thought that the Make America Great 0:07:08.120 --> 0:07:12.440 Again movement was really about keeping within the US's borders, 0:07:12.880 --> 0:07:15.800 not getting involved in foreign wars. The President has talked 0:07:15.800 --> 0:07:18.880 about leaving countries outside of the US alone, and that's 0:07:18.880 --> 0:07:20.720 not really what we've gotten in the last few months. 0:07:20.880 --> 0:07:23.280 No, though I will say, I think if prior to 0:07:23.360 --> 0:07:24.920 you know, Liberation Day and stuff, I think there was 0:07:24.920 --> 0:07:26.640 a lot of hope that we'd work very closely with 0:07:26.680 --> 0:07:28.480 Canada because Canada has a lot of things that we 0:07:28.520 --> 0:07:29.960 need that would be a big part of this. We 0:07:30.120 --> 0:07:32.240 work closer with Mexico, and we kind of got away 0:07:32.240 --> 0:07:34.000 from that, So I think this starts. Maybe it's just 0:07:34.040 --> 0:07:37.440 trying to reshape how these relationships work. Ultimately, I think 0:07:37.440 --> 0:07:39.240 we're going to need things like podasts, We're going to 0:07:39.280 --> 0:07:42.000 need to work with Canada. But I do think you know, 0:07:42.040 --> 0:07:44.080 they laid it out of the National Security Strategy and 0:07:44.120 --> 0:07:46.240 it's only thirty nine pages of double space. It's even 0:07:46.280 --> 0:07:48.240 I could read it, So I would recommend reading it 0:07:48.240 --> 0:07:50.480 because I think it does form this way. Yeah, we've 0:07:50.480 --> 0:07:52.280 been telling corporations for years now, and I think now 0:07:52.320 --> 0:07:54.760 we're getting a lot of incoming calls. Like we've been saying, 0:07:54.800 --> 0:07:57.640 if you are manufacturing in Thailand and Vietnam, you're not 0:07:57.720 --> 0:08:00.000 really disversified because you're going through the same shipping lane. 0:08:00.280 --> 0:08:02.080 So I think you've got to be very careful about shipping. 0:08:02.080 --> 0:08:03.840 If you're looking at building a new plant this year, 0:08:04.080 --> 0:08:05.640 I think you want to build it in North South 0:08:05.680 --> 0:08:08.440 America or Central America or the US precisely because that's 0:08:08.440 --> 0:08:10.000 where we have a lot more control. So I think 0:08:10.040 --> 0:08:12.320 that's where corporations follow into this. And I don't want 0:08:12.320 --> 0:08:13.680 to say it's going to be us by ourselves. What 0:08:13.760 --> 0:08:15.360 I've been trying to say is I think for every 0:08:15.360 --> 0:08:18.280 single commodity or product, every country is going to have 0:08:18.280 --> 0:08:20.040 an X amount that they want to do themselves so 0:08:20.080 --> 0:08:22.360 they can be sufficient. Why you can do with your 0:08:22.400 --> 0:08:24.720 close neighbors, and then Z or Z you just do 0:08:24.800 --> 0:08:26.600 on the open market. And I think that's going to 0:08:26.640 --> 0:08:28.840 vary by country to country what they can do. But 0:08:28.880 --> 0:08:30.480 I think Europe's behind on this. 0:08:30.600 --> 0:08:31.360 I think the. 0:08:31.360 --> 0:08:33.240 Sad thing is if I look at what we need 0:08:33.240 --> 0:08:34.840 to do in the US, you have a pretty good 0:08:34.920 --> 0:08:36.520 road wrap. Just look at China's done for the last 0:08:36.520 --> 0:08:40.000 ten years, right, They've basically done prosec on steroids, and 0:08:40.040 --> 0:08:42.160 we're just starting to do it. But it's exciting and 0:08:42.200 --> 0:08:44.040 I think some of it will last past an election 0:08:44.160 --> 0:08:46.880 cycle because Biden did do the chipsack, right, So why 0:08:46.920 --> 0:08:49.600 doom was not immune to like understanding we. 0:08:49.640 --> 0:08:51.640 Did a lot of President Trump in his first term 0:08:51.679 --> 0:08:53.200 is China strategy, right? 0:08:53.240 --> 0:08:55.120 So I think this is now truly going to replace 0:08:55.360 --> 0:08:58.640 ESG as a major policy tool, as a major way 0:08:58.679 --> 0:09:02.880 corporations think and how investors think. Right, if everything was ESG, 0:09:03.000 --> 0:09:05.240 I think where we were really is if you think 0:09:05.240 --> 0:09:07.360 about Masso's hierarchy of needs one probably you know psych 0:09:07.360 --> 0:09:09.480 one on one it proves I took it. But we 0:09:09.480 --> 0:09:12.160 were kind of at this kind of high self actualization period, 0:09:12.160 --> 0:09:14.480 like what would we like sustainability look like. But it 0:09:14.520 --> 0:09:16.080 was all based on the premise that we had the 0:09:16.080 --> 0:09:18.679 basics covered. Well, we really have the basics covered if 0:09:18.679 --> 0:09:20.959 we're dependent on China for those basics. So I think 0:09:21.000 --> 0:09:23.440 this is a pullback to say, to be truly sustainable 0:09:23.640 --> 0:09:26.400 and independent and resilient, you need to do some core 0:09:26.480 --> 0:09:28.800 level of this self yourself. And that's where I think 0:09:28.800 --> 0:09:29.840 we are. It's that evolution. 0:09:30.080 --> 0:09:32.600 What are the implications of that in terms of cost 0:09:32.679 --> 0:09:34.920 to society? In terms of does it make things more 0:09:34.960 --> 0:09:38.200 expensive if we're doing more manufacturing in the United States, Well, 0:09:38.280 --> 0:09:40.720 labor isn't cheap here, so I'm just curious what are 0:09:40.760 --> 0:09:43.120 the implications What does it mean for economic growth maybe 0:09:43.120 --> 0:09:44.120 in the United States. 0:09:44.160 --> 0:09:46.480 So I think it's going to be potentially a little 0:09:46.480 --> 0:09:48.080 bit higher on some prices. So it's very good that 0:09:48.120 --> 0:09:49.719 oil and some of these energy costs are coming down. 0:09:49.760 --> 0:09:53.160 That will help on this. At the flip side of that, though, 0:09:53.320 --> 0:09:55.640 is if people can go back to working for you know, 0:09:55.679 --> 0:09:56.960 I hate to say the word about say it like 0:09:57.040 --> 0:10:00.320 national champions right where you feel that your industry, your 0:10:00.440 --> 0:10:03.200 job is important to the country, you probably go home 0:10:03.240 --> 0:10:05.280 feeling slightly safe about your job. I think there's a 0:10:05.360 --> 0:10:07.760 lot of benefits from this we've been talking about. The 0:10:07.760 --> 0:10:09.400 Spider Marks is great. He kind of coined the phrase 0:10:09.440 --> 0:10:12.040 for us by the rough spider Marx General Spider Marks. 0:10:12.080 --> 0:10:14.760 He's quite awesome. But he coined the phrase. We're in 0:10:14.760 --> 0:10:18.120 a pre war environment, and we've always been in a 0:10:18.160 --> 0:10:20.640 post war environment until recently. And I think pre war 0:10:20.679 --> 0:10:23.280 sounds a little bit scary, but it's just like deterrens. 0:10:23.280 --> 0:10:24.800 If you understand that you're in a pre war and 0:10:24.840 --> 0:10:27.960 you do the preparation properly, you deter the enemy. And 0:10:28.000 --> 0:10:29.520 I think the things that to me are really crucial 0:10:29.559 --> 0:10:31.079 about a pre war is it creates a sense of 0:10:31.200 --> 0:10:33.480 urgency which we're seeing and self sacrifice. 0:10:33.559 --> 0:10:36.240 We're speaking with Peter Cheer, head of Macro Strategy, at 0:10:36.280 --> 0:10:38.200 Academy Security. So he joins us here in the Bloomberg 0:10:38.240 --> 0:10:41.559 Interactive Broker's studio. Peter, you mentioned a few We went 0:10:41.600 --> 0:10:43.360 through a little bit around the globe and we talked 0:10:43.400 --> 0:10:48.359 about Iran, We talked about Venezuela, We talked about Greenland, Cuba, Panama. 0:10:48.480 --> 0:10:51.920 What about Mexico and what about Colombia. Have they been 0:10:51.960 --> 0:10:52.680 put on notice? 0:10:52.760 --> 0:10:55.160 I think Colombia has been put on notice. I've been 0:10:55.240 --> 0:10:58.080 much more focused on Mexico. So one of the things 0:10:58.080 --> 0:11:00.680 that we believe to some degree is we been changing 0:11:00.679 --> 0:11:03.840 the rules of engagement with Venezuela. Right, if you go 0:11:03.920 --> 0:11:05.600 back four months ago, who would have thought we would 0:11:05.720 --> 0:11:08.439 shoot a drug boat we're now doing that. I think 0:11:08.480 --> 0:11:10.040 the world would have gone ballistic if we did that 0:11:10.120 --> 0:11:12.960 in the Gulf of Mexico or Golf of America now 0:11:12.960 --> 0:11:15.360 though it's now standard operating procedure. Right, we've attacked some 0:11:15.440 --> 0:11:17.960 of the drug facilities. I suspect that somewhere in Q one, 0:11:18.080 --> 0:11:21.160 Q two Lake Qan early Q two we approach Mexico 0:11:21.280 --> 0:11:23.520 very serious and tells jion Bo, I'm like, we can 0:11:23.559 --> 0:11:26.000 work with you to get rid of your cartels, or 0:11:26.040 --> 0:11:27.640 we can get rid of the your cartels without you, 0:11:28.080 --> 0:11:29.880 and to me, the one thing we haven't talked to 0:11:29.960 --> 0:11:32.280 I know we've been talking about so much oil. If 0:11:32.280 --> 0:11:36.160 we can solve Venezuela's drug problem and cartel problem and Mexico, 0:11:36.400 --> 0:11:39.200 it makes both of those countries safer, more viable countries, 0:11:39.640 --> 0:11:43.040 Fewer people need to migrate all those countries. So I 0:11:43.040 --> 0:11:44.080 think it fits perfectly. 0:11:44.120 --> 0:11:47.520 But then in terms of drugs, maybe I'm crazy here 0:11:47.520 --> 0:11:49.520 and I know we've only got about forty seconds left here. 0:11:49.679 --> 0:11:52.280 What about China and fentanyl? Like have we covered that? 0:11:52.360 --> 0:11:55.720 If we're talking about narco terrorists. I think some might say, 0:11:55.800 --> 0:11:56.560 wait a minute. 0:11:56.679 --> 0:11:58.559 I'm looking at this more from the ability to kind 0:11:58.559 --> 0:12:01.080 of make those countries safer where you have some ability 0:12:01.120 --> 0:12:02.839 to influence it so that people don't want to leave. 0:12:02.880 --> 0:12:04.360 A lot of people who you talk to, people coming 0:12:04.400 --> 0:12:06.600 from Mexico, their choice is letter sob Yeah, you either 0:12:06.600 --> 0:12:08.320 fight the cartel and die or you join. 0:12:08.240 --> 0:12:10.240 The Cartnezuela eight million people or something. 0:12:10.679 --> 0:12:12.000 So I think if you can do that, and on 0:12:12.040 --> 0:12:13.760 top of that, if you cut the head off the snake, 0:12:14.040 --> 0:12:16.200 maybe the drug cartels and their activities in the US 0:12:16.240 --> 0:12:16.840 do slow down. 0:12:18.800 --> 0:12:21.880 So are you're positive about the year. Are you upbeat? 0:12:22.160 --> 0:12:24.320 I am, Actually I'm very positive. I think again, this 0:12:24.480 --> 0:12:26.880 buildout's going to be very interesting. The biggest risk to 0:12:26.920 --> 0:12:29.280 me is China threatening and doing something about rarest and 0:12:29.320 --> 0:12:31.200 critical minerals because we're not there yet where we need 0:12:31.240 --> 0:12:31.360 to be. 0:12:31.480 --> 0:12:33.960 Ten seconds, if President Trump wasn't in the White House 0:12:34.040 --> 0:12:36.199 again for a second term, will we be having this conversation. 0:12:36.679 --> 0:12:38.960 No. I think he actually really kind of planned ahead 0:12:38.960 --> 0:12:40.280 of this though some of it. I think we would 0:12:40.280 --> 0:12:42.240 have finally seen because we've been talking about rarest crtical 0:12:42.280 --> 0:12:44.880 minerals for years and years. We're finally realizing the Chips 0:12:44.920 --> 0:12:47.400 Act realize some of this. This is what progression. How 0:12:47.440 --> 0:12:49.800 we're doing it is just stronger and more aggressive. 0:12:49.960 --> 0:12:52.800 Such a great conversation. Peter Cheer over at Macro Strategy 0:12:52.920 --> 0:12:54.199 and Academy Securities. 0:12:55.280 --> 0:12:58.080 Stay with us more from Bloomberg Business Week Daily coming 0:12:58.160 --> 0:12:59.120 up after this. 0:13:03.080 --> 0:13:06.960 You're listening to the Bloomberg Business Week Daily Podcast. Catch 0:13:07.000 --> 0:13:10.200 us live weekday afternoons from two to five eastering. Listen 0:13:10.240 --> 0:13:13.840 on Applecarplay and Android Auto with the Bloomberg Business app, 0:13:14.000 --> 0:13:16.559 or watch us live on YouTube. 0:13:17.040 --> 0:13:19.840 Bloomberg spoke with economists, US politicians, and heads of trading 0:13:19.840 --> 0:13:22.000 firms and hedge funds to understand really what's at stake 0:13:22.000 --> 0:13:25.200 in the prediction markets. Boom Tanisa Sikova and Lydia Bayoud 0:13:25.240 --> 0:13:27.480 are part of the team behind the story. Danitza is 0:13:27.520 --> 0:13:30.680 Bloomberg News cross Asset reporter. Lydia is Bloomberg News Financial 0:13:30.760 --> 0:13:33.760 Regulations reporter Denisa Here in our Bloomberg Interactive Broker studio, 0:13:34.400 --> 0:13:38.880 Lydia joins us from Bloomberg's Washington, DC bureau. Lydia, I 0:13:38.920 --> 0:13:41.360 want to start with you in Washington because you cover 0:13:41.440 --> 0:13:45.960 financial regulations prediction markets. Is it fair to call it gambling? 0:13:50.600 --> 0:13:54.640 I think these days people increasingly are seeing a blurredline there. 0:13:55.280 --> 0:13:59.000 To your point about marketing speak, the companies are very 0:13:59.080 --> 0:14:02.960 keen to describe themselves one way, but certainly within Washington, 0:14:02.960 --> 0:14:04.320 I don't think a lot of people are seeing much 0:14:04.360 --> 0:14:07.240 of a difference. And for sure in the sports gaming world, 0:14:07.800 --> 0:14:09.439 they see them as direct competitors. 0:14:09.840 --> 0:14:13.840 Yeah, it's interesting gaming gambling. What exactly is this underneath 0:14:13.920 --> 0:14:16.200 the common in for those who maybe have been living 0:14:16.280 --> 0:14:18.080 under a rock, which is kind of fine. I like 0:14:18.120 --> 0:14:20.400 to kind of hibernate every once in a while. Remind 0:14:20.480 --> 0:14:23.560 us what these prediction markets are all about who are 0:14:23.560 --> 0:14:24.280 the big players. 0:14:24.400 --> 0:14:27.080 Yeah, twenty twenty five was a year of prediction markets. 0:14:27.200 --> 0:14:29.560 We had two big firms kind of dominate the space 0:14:29.600 --> 0:14:32.600 of cos Kaushi and Poet Market. Their valuation went through 0:14:32.600 --> 0:14:34.760 the roof. They started from like one to two billions 0:14:34.960 --> 0:14:37.760 and both end of the year in the double digits 0:14:37.800 --> 0:14:41.480 off billions, so really really rapid growth. And we're seeing 0:14:41.640 --> 0:14:44.600 not only those tech city convolling names, We're seeing a 0:14:44.600 --> 0:14:48.320 lot of traditional finance names. We're seeing Ceme, We're seeing 0:14:48.360 --> 0:14:51.119 a lot of those traditional finance players getting. 0:14:50.880 --> 0:14:51.800 Involved in the space. 0:14:51.880 --> 0:14:56.560 So clearly this is interest more beyond city convul. 0:14:56.440 --> 0:14:59.800 The volumes are crazy. So but tell us how it works, 0:15:00.160 --> 0:15:02.120 can Tim or I? Can we go out and place 0:15:02.160 --> 0:15:04.640 the bet? Like how who determines who can do what 0:15:04.720 --> 0:15:05.400 on the platform? 0:15:05.600 --> 0:15:08.480 Super simple, super easy. So obviously sports betting you have 0:15:08.520 --> 0:15:09.680 to be twenty one for this. 0:15:09.920 --> 0:15:10.680 Eighteen is enough. 0:15:10.920 --> 0:15:14.200 It's very accessible. You go the bet is like as 0:15:14.320 --> 0:15:17.640 cheap as like a few cents or a door and 0:15:17.640 --> 0:15:19.840 you just go and create it. Other thing just very shrimple. 0:15:20.160 --> 0:15:21.200 You can create the bet. 0:15:21.520 --> 0:15:22.640 No, you cannot create the bet. 0:15:22.720 --> 0:15:24.280 You can place that. You can ask it. 0:15:24.400 --> 0:15:26.280 Oh, yeah, there is a way to claim a market, 0:15:26.280 --> 0:15:28.680 but of course it's up to the platform to create. 0:15:28.960 --> 0:15:32.240 But as we have seen in recent months, there is 0:15:32.280 --> 0:15:34.960 a lot of variety of bets on things that you know, 0:15:35.040 --> 0:15:38.480 anywhere else you cannot bet from the bet on Nicolas 0:15:38.520 --> 0:15:42.680 Maduro being outed to any type of pop culture thing 0:15:42.840 --> 0:15:43.760 and any top. 0:15:43.680 --> 0:15:45.280 Artists on Spotify this year is on. 0:15:45.520 --> 0:15:47.160 Yeah, of course that's very popular. 0:15:47.240 --> 0:15:48.680 Any type of mentioned market. 0:15:48.720 --> 0:15:51.880 People are watching like politicians stole on TV and betting 0:15:51.920 --> 0:15:54.400 on every word they say, every twist, like people are 0:15:54.440 --> 0:15:56.360 even making front of this. We famously had the coin 0:15:56.400 --> 0:15:59.480 based CEO knowing that people are watching what he says 0:15:59.520 --> 0:16:02.520 on the learning cloth, so he was he was crashing 0:16:02.560 --> 0:16:03.000 the market. 0:16:03.200 --> 0:16:05.600 So that's where I want to bring in Lydia, because 0:16:05.680 --> 0:16:08.680 when you're in a world Lydia Bayud where there is 0:16:08.760 --> 0:16:11.880 one person in control, like a CEO of a company 0:16:11.920 --> 0:16:13.920 like Elon Musk, if the number of tweets that he 0:16:14.000 --> 0:16:16.400 sends between a certain period of time, that's a bet 0:16:16.440 --> 0:16:19.600 on poly market right now, or prediction on poly market 0:16:19.640 --> 0:16:22.920 that one can make. What is the slippery slope that 0:16:23.000 --> 0:16:25.520 opens when one person is in control of the outcome. 0:16:25.200 --> 0:16:30.240 Here, So that's something that I think regulators and policymakers 0:16:30.280 --> 0:16:34.240 are really grappling with. Particularly, I think the Majuro example 0:16:34.280 --> 0:16:37.440 that we highlight on the story has really made that 0:16:37.680 --> 0:16:44.080 so salient for everyone right now. Generally, federal rules prohibit 0:16:45.320 --> 0:16:49.400 federal employees from trading on non public information for their 0:16:49.440 --> 0:16:52.800 own financial game. I think Representative Richie Torres is planning 0:16:52.840 --> 0:16:55.920 to introduce legislation if he hasn't already this week, that 0:16:56.000 --> 0:17:00.200