1 00:00:05,800 --> 00:00:08,360 Speaker 1: Welcome to the Bloomberg p m L Podcast. I'm pim 2 00:00:08,400 --> 00:00:11,440 Speaker 1: Fox along with my co host Lisa Bramowitz. Each day 3 00:00:11,480 --> 00:00:15,000 Speaker 1: we bring you the most important, noteworthy, and useful interviews 4 00:00:15,040 --> 00:00:17,520 Speaker 1: for you and your money, whether you're at the grocery 5 00:00:17,560 --> 00:00:20,560 Speaker 1: store or the trading floor. Find the Bloomberg p m 6 00:00:20,680 --> 00:00:27,479 Speaker 1: L Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot Com. 7 00:00:27,560 --> 00:00:30,880 Speaker 1: I am here alongside Paul sweet News filling in for 8 00:00:31,200 --> 00:00:35,520 Speaker 1: pim Fox for broadcasting live from the Bloomberg Interactive Broker's studios. 9 00:00:35,560 --> 00:00:38,680 Speaker 1: Definitely oil prices, as Greg Jarrett was talking about driving 10 00:00:38,760 --> 00:00:40,720 Speaker 1: a bunch of the price action that we're seeing in 11 00:00:40,840 --> 00:00:44,559 Speaker 1: markets today. Oil prices up about five percent as OPEC 12 00:00:44,760 --> 00:00:48,560 Speaker 1: plus is said to agree to cut more than people 13 00:00:48,560 --> 00:00:52,120 Speaker 1: had expected per day. Joining us now Megan O'Sullivan, Professor 14 00:00:52,159 --> 00:00:55,160 Speaker 1: of International Affairs at Harvard's Kennedy School. She's also a 15 00:00:55,200 --> 00:00:58,440 Speaker 1: Bloomberg opinion columnist and also a Senior Fellow at the 16 00:00:58,440 --> 00:01:02,240 Speaker 1: Council on Foreign Relations, and also I'm sure many other things. Megan, 17 00:01:02,280 --> 00:01:04,360 Speaker 1: thank you so much for being with us. I want 18 00:01:04,400 --> 00:01:08,000 Speaker 1: to start with that opaque agreement that we have yet 19 00:01:08,040 --> 00:01:10,840 Speaker 1: to hear all the details on what was your reaction 20 00:01:10,880 --> 00:01:12,640 Speaker 1: when you saw that they decided to cut one point 21 00:01:12,640 --> 00:01:17,520 Speaker 1: two billion barrels a day versus the one that they 22 00:01:17,520 --> 00:01:21,399 Speaker 1: were expected to. Good morning, Lisa. Like others, I was 23 00:01:21,480 --> 00:01:25,360 Speaker 1: surprised that they went beyond expectations in terms of the cuts. 24 00:01:25,560 --> 00:01:28,840 Speaker 1: Of course, yesterday a lot of comments left there a 25 00:01:28,880 --> 00:01:31,039 Speaker 1: lot of doubt about whether they re greached it, but 26 00:01:31,120 --> 00:01:34,039 Speaker 1: that's not entirely unheard of. That's pretty much par for 27 00:01:34,080 --> 00:01:37,120 Speaker 1: the course in many of these um outcomes. But the 28 00:01:37,160 --> 00:01:40,760 Speaker 1: real question was was Russia going to join in? And 29 00:01:40,800 --> 00:01:42,959 Speaker 1: I think that was one of the one of the 30 00:01:43,040 --> 00:01:46,240 Speaker 1: things that people were really uncertain was going to happen. 31 00:01:46,319 --> 00:01:49,880 Speaker 1: And of course was Iran going to be an obstacle 32 00:01:50,120 --> 00:01:53,600 Speaker 1: to a consensus deal? And as it turns out, Iran 33 00:01:53,760 --> 00:01:57,120 Speaker 1: sought the exemption it wanted and Russia appears to As 34 00:01:57,120 --> 00:01:59,880 Speaker 1: you said, we're still waiting for more details, but given 35 00:02:00,080 --> 00:02:03,400 Speaker 1: one point to number and the idea that OPEC would 36 00:02:03,680 --> 00:02:07,000 Speaker 1: be responsible for eight hundred thousand barrels of that cut, 37 00:02:07,320 --> 00:02:12,239 Speaker 1: presumably large, Russia has taken on a larger cut than 38 00:02:12,320 --> 00:02:15,320 Speaker 1: people expected it to agree to. So that's the big 39 00:02:15,320 --> 00:02:17,720 Speaker 1: surprise there. The other takeaway is just the role that 40 00:02:17,760 --> 00:02:20,359 Speaker 1: Russia played, and I'm happy to talk more about that. Well, 41 00:02:20,400 --> 00:02:22,360 Speaker 1: you just led right right into my question. You know, 42 00:02:22,440 --> 00:02:25,880 Speaker 1: we've it's been really interesting how the role of Russia 43 00:02:25,919 --> 00:02:28,799 Speaker 1: within uh, you know, the whole global oil spectrum you know, 44 00:02:28,880 --> 00:02:30,600 Speaker 1: has changed. To just give us an updated where do 45 00:02:30,600 --> 00:02:33,720 Speaker 1: you think Russia is today in the global oil markets 46 00:02:33,720 --> 00:02:35,280 Speaker 1: and kind of maybe what role you expect on the 47 00:02:35,320 --> 00:02:38,600 Speaker 1: play going forward. Sure, I mean, as many of your 48 00:02:38,680 --> 00:02:41,520 Speaker 1: viewers will know, there are three really big producers of 49 00:02:41,560 --> 00:02:45,080 Speaker 1: oil today. They're all producing a little over eleven million 50 00:02:45,080 --> 00:02:47,280 Speaker 1: barrels of oil a day. That's Russia, the U S 51 00:02:47,320 --> 00:02:51,200 Speaker 1: and Saudi Arabia. And so Russia is in a in 52 00:02:51,240 --> 00:02:53,919 Speaker 1: a strong position here. It's in a stronger position than 53 00:02:54,000 --> 00:02:58,280 Speaker 1: many of of the other large producers because it um 54 00:02:58,320 --> 00:03:02,360 Speaker 1: it has a few protections in its economy that countries 55 00:03:02,440 --> 00:03:04,760 Speaker 1: that have their currency paying to the dollar don't have. 56 00:03:05,560 --> 00:03:08,280 Speaker 1: We've seen a huge devaluation the rule, and that makes 57 00:03:08,960 --> 00:03:12,440 Speaker 1: the Russians effectively get more for their money. For every 58 00:03:12,480 --> 00:03:15,600 Speaker 1: dollar that they sell or every dollar they obtained from 59 00:03:15,600 --> 00:03:18,560 Speaker 1: selling a barrel of oil buys them more inside Russia 60 00:03:18,840 --> 00:03:22,320 Speaker 1: than is the case for their their counterparts in the Gulf. 61 00:03:22,360 --> 00:03:25,600 Speaker 1: So they have more resilience to lower prices. But I 62 00:03:25,639 --> 00:03:28,160 Speaker 1: think the real key thing coming out of this is 63 00:03:28,160 --> 00:03:31,480 Speaker 1: there were two obvious winners. One was Iran because it 64 00:03:31,560 --> 00:03:34,280 Speaker 1: got its exemption, as I said, but the other is Russia. 65 00:03:34,639 --> 00:03:38,040 Speaker 1: So everyone, I think will agree that this deal would 66 00:03:38,080 --> 00:03:41,120 Speaker 1: have not happened without Russia's help, that Russia has really 67 00:03:41,160 --> 00:03:46,480 Speaker 1: catapulted itself to be uh critical broker in global oil market. 68 00:03:46,920 --> 00:03:50,960 Speaker 1: Everyone uh, pretty much was of the notion, including the Saudis, 69 00:03:51,040 --> 00:03:52,800 Speaker 1: that this cut had to be done with not just 70 00:03:52,920 --> 00:03:56,920 Speaker 1: OPEC but also non Opeque countries and Russia was key 71 00:03:57,000 --> 00:04:00,360 Speaker 1: to that. But Russia was also the mediator between Saudi 72 00:04:00,400 --> 00:04:03,280 Speaker 1: Arabia in Iran, which has been the sticking point yesterday 73 00:04:03,320 --> 00:04:06,000 Speaker 1: and into the evening and so with. You also added 74 00:04:06,000 --> 00:04:09,000 Speaker 1: the dimension that President Trump clearly did not want this 75 00:04:09,080 --> 00:04:12,800 Speaker 1: cut to happen, and that Russia was the critical actor 76 00:04:12,920 --> 00:04:17,000 Speaker 1: in making this happen. The benefits to Russia go beyond 77 00:04:17,080 --> 00:04:20,280 Speaker 1: even the bumping oil prices that we've already started to see, right, 78 00:04:20,320 --> 00:04:24,479 Speaker 1: but a geopolitical kind of political exactly. So it kind 79 00:04:24,480 --> 00:04:27,000 Speaker 1: of it kind of leads me into wondering what this 80 00:04:27,040 --> 00:04:30,000 Speaker 1: means for the US versus Russia, right, because OPEC has 81 00:04:30,040 --> 00:04:33,520 Speaker 1: kind of been losing stature as the US increases its output, 82 00:04:33,520 --> 00:04:36,599 Speaker 1: becoming a next net exporter for the first time ever, 83 00:04:37,360 --> 00:04:40,080 Speaker 1: as we learned yesterday, I just have to wonder, what 84 00:04:40,200 --> 00:04:42,880 Speaker 1: is this due to the US Russia relationship and is 85 00:04:42,960 --> 00:04:45,719 Speaker 1: opex cut going to make as much difference as the 86 00:04:45,720 --> 00:04:50,800 Speaker 1: markets seems to think based on US output, right? I think, 87 00:04:51,040 --> 00:04:53,480 Speaker 1: you know, I'm of the view that it's not just 88 00:04:53,600 --> 00:04:56,480 Speaker 1: the US output, the sheer volume of barrels of the 89 00:04:56,560 --> 00:04:59,480 Speaker 1: US is producing, but it's the nature of the shale 90 00:04:59,480 --> 00:05:03,000 Speaker 1: oil into street in the United States that makes OPEC weaker. 91 00:05:03,440 --> 00:05:06,200 Speaker 1: It's basically because of the way that shale is produced, 92 00:05:06,560 --> 00:05:10,400 Speaker 1: it reacts to price rarely, very very quickly compared to 93 00:05:10,440 --> 00:05:14,160 Speaker 1: conventional oil production. So an increase in price is almost 94 00:05:14,200 --> 00:05:17,880 Speaker 1: always quickly associated with a bump in production, and so 95 00:05:17,920 --> 00:05:20,800 Speaker 1: that eats away at any game that OPEC makes in 96 00:05:20,839 --> 00:05:24,520 Speaker 1: the price market quite quickly. So I think that certainly 97 00:05:24,560 --> 00:05:27,520 Speaker 1: this is not the kind of deal that would have 98 00:05:27,560 --> 00:05:29,600 Speaker 1: had it wouldn't It won't have the long term effects 99 00:05:29,640 --> 00:05:31,480 Speaker 1: that it might have had in a different oil market. 100 00:05:32,000 --> 00:05:35,600 Speaker 1: And you know, going back to the point about has 101 00:05:35,640 --> 00:05:39,680 Speaker 1: OPEC been diminished, opec um would not be able to 102 00:05:39,680 --> 00:05:42,599 Speaker 1: have the effect that it's having without Russia, which of 103 00:05:42,640 --> 00:05:44,960 Speaker 1: course is not a member of OPEC. So really, the 104 00:05:45,000 --> 00:05:47,880 Speaker 1: idea that OPEC alone can have a big impact on 105 00:05:47,920 --> 00:05:50,640 Speaker 1: the markets, I think it's really an idea of the past, 106 00:05:50,839 --> 00:05:54,000 Speaker 1: in large part because of American production, but also because 107 00:05:54,000 --> 00:05:56,800 Speaker 1: of a few other dynamics. So we do see that 108 00:05:56,839 --> 00:05:59,880 Speaker 1: OPEC alone doesn't matter as much as it used to. 109 00:06:00,000 --> 00:06:03,040 Speaker 1: It's really opaque plus non OPEC And if we're really 110 00:06:03,080 --> 00:06:05,359 Speaker 1: honest about it, and these are the details will have 111 00:06:05,400 --> 00:06:08,240 Speaker 1: to wait for. It really looks a lot like Russia 112 00:06:08,400 --> 00:06:11,640 Speaker 1: and Saudi Arabia, and this calls into question about the 113 00:06:11,800 --> 00:06:14,880 Speaker 1: viability of OPEC as an organization. Over the law long run, 114 00:06:15,120 --> 00:06:18,160 Speaker 1: we saw cutar lead the organization or announce it's leaving 115 00:06:18,200 --> 00:06:22,159 Speaker 1: the organization, And in part that's because smaller countries are 116 00:06:22,360 --> 00:06:26,679 Speaker 1: getting frustrated with this. Russia Saudi detant in the sense 117 00:06:26,760 --> 00:06:29,120 Speaker 1: that these two countries are really the only ones that matter, 118 00:06:29,160 --> 00:06:33,320 Speaker 1: and the voices of small countries are pretty powerful. So, Megan, 119 00:06:33,320 --> 00:06:36,640 Speaker 1: do we even care then whether OPEC sticks to this 120 00:06:36,960 --> 00:06:40,120 Speaker 1: production cut? In years past and decades past, it was 121 00:06:40,800 --> 00:06:43,039 Speaker 1: very closely watched, and they didn't have did not have 122 00:06:43,080 --> 00:06:45,760 Speaker 1: a great track record of sticking with their decisions. Do 123 00:06:45,839 --> 00:06:49,160 Speaker 1: we care well, I think we care in the sense 124 00:06:49,200 --> 00:06:52,760 Speaker 1: that it affects our economy. Even though we're net x quarter, 125 00:06:53,080 --> 00:06:56,200 Speaker 1: we're still really tied to global markets, and so when 126 00:06:56,240 --> 00:06:59,200 Speaker 1: there is a change in the supply and demand balance globally, 127 00:06:59,520 --> 00:07:05,000 Speaker 1: that effect America's American consumers in America's economy directly um 128 00:07:05,040 --> 00:07:07,080 Speaker 1: one way or the other. So either it's a benefit 129 00:07:07,320 --> 00:07:12,080 Speaker 1: or it's a detractor. But also this matters for American 130 00:07:12,160 --> 00:07:15,040 Speaker 1: companies because they, of course are deeply affected in our 131 00:07:15,040 --> 00:07:17,840 Speaker 1: stock market affected by the price of oil. I don't 132 00:07:17,880 --> 00:07:21,120 Speaker 1: think this is an existential issue for the United States 133 00:07:21,160 --> 00:07:24,200 Speaker 1: because we are now in a different economic space. It 134 00:07:24,360 --> 00:07:27,800 Speaker 1: used to be that low oil prices were really closely 135 00:07:27,880 --> 00:07:31,760 Speaker 1: correlated with bump and growth for the U. S economy, 136 00:07:32,080 --> 00:07:34,320 Speaker 1: And now, in part because we have such a large 137 00:07:34,480 --> 00:07:38,400 Speaker 1: energy sector ourselves, and we have so many UH sectors 138 00:07:38,400 --> 00:07:42,680 Speaker 1: and producers and related industries that benefit from a high 139 00:07:42,720 --> 00:07:45,440 Speaker 1: oil price, it's not as clear cut as it used 140 00:07:45,480 --> 00:07:47,800 Speaker 1: to be. You know, you might even say I haven't 141 00:07:47,800 --> 00:07:49,920 Speaker 1: done all the map, but you might even say, you know, 142 00:07:50,160 --> 00:07:52,200 Speaker 1: UH it's sort of a wash for the US if 143 00:07:52,200 --> 00:07:54,600 Speaker 1: the price goes up or down, because you're helping consumers 144 00:07:54,600 --> 00:07:57,080 Speaker 1: and producers, all of them in the United States one 145 00:07:57,120 --> 00:07:59,120 Speaker 1: way or the other. So I think we do care. 146 00:07:59,200 --> 00:08:02,240 Speaker 1: It does affect us, particularly if things go to one 147 00:08:02,280 --> 00:08:05,720 Speaker 1: extreme or the other. But I don't think this cut one. 148 00:08:06,120 --> 00:08:09,200 Speaker 1: You know, it's only supposed to go until April two. 149 00:08:09,720 --> 00:08:12,200 Speaker 1: We'll have to see if Russia actually cut. I mean, 150 00:08:12,240 --> 00:08:14,520 Speaker 1: Russia has a history of saying it's going to cooperate 151 00:08:14,520 --> 00:08:17,040 Speaker 1: with OPEC and not cutting. It did depart from that 152 00:08:17,080 --> 00:08:19,520 Speaker 1: pattern and two thousand and sixteen, but we'll have to 153 00:08:19,560 --> 00:08:23,280 Speaker 1: watch that closely again, Professor. But you know, a lot 154 00:08:23,320 --> 00:08:24,840 Speaker 1: of a lot of one of the points, unfortunately, have 155 00:08:24,880 --> 00:08:27,040 Speaker 1: to leave it there. Thank you so much for being 156 00:08:27,080 --> 00:08:30,920 Speaker 1: with us. Professor Meggat O'Sullivan of Harvard's Kennedy School, also 157 00:08:30,920 --> 00:08:33,360 Speaker 1: a Bloomberg opinion columnist and a Senior Fellow at the 158 00:08:33,360 --> 00:08:37,000 Speaker 1: Council on Foreign Relations. And Lisa A. Brahmoy it's alongside 159 00:08:37,000 --> 00:08:40,840 Speaker 1: Paul Sweeney. We are broadcasting live from Bloomberg's eleven three 160 00:08:40,840 --> 00:08:47,120 Speaker 1: oh headquarters. Lisa Bramwoit's here alongside Paul Sweeney, who is 161 00:08:47,160 --> 00:08:51,000 Speaker 1: Director of North American Research at Bloomberg Intelligence. Uh, the 162 00:08:51,120 --> 00:08:54,320 Speaker 1: jobs report this morning was the narrative for about five 163 00:08:54,360 --> 00:08:56,960 Speaker 1: minutes before OPAC came out, and then after we got 164 00:08:57,120 --> 00:09:00,160 Speaker 1: some of the new announcements from President Trump and out 165 00:09:00,240 --> 00:09:03,000 Speaker 1: there's trade tensions taking over. But let's go back to 166 00:09:03,160 --> 00:09:05,120 Speaker 1: jobs because at the end of the day, a strong 167 00:09:05,400 --> 00:09:09,559 Speaker 1: jobs backdrop will cause the FED to hike rates. And 168 00:09:09,760 --> 00:09:12,280 Speaker 1: Tom Gimble now joining us, founder and chief executive of 169 00:09:12,360 --> 00:09:16,000 Speaker 1: the sal Network in Chicago. Tom, can you give us 170 00:09:16,040 --> 00:09:19,360 Speaker 1: an on the ground look at the jobs market. How 171 00:09:19,440 --> 00:09:24,640 Speaker 1: good is it today compared with six months ago? It's 172 00:09:24,800 --> 00:09:27,720 Speaker 1: just as good as it was six months ago, Lisa. 173 00:09:28,440 --> 00:09:32,600 Speaker 1: The big challenge that people are facing is there's so 174 00:09:32,720 --> 00:09:36,600 Speaker 1: much fear and intrepidation that we're in the ninth inning 175 00:09:36,600 --> 00:09:38,880 Speaker 1: of this economy that it's got to fall off that 176 00:09:39,120 --> 00:09:41,920 Speaker 1: you know, people want it might become a self fulfilling prophecy. 177 00:09:42,000 --> 00:09:44,760 Speaker 1: But companies are still hiring. We saw that we averaged 178 00:09:44,920 --> 00:09:48,000 Speaker 1: or put in a hundred and fifty thousand new jobs 179 00:09:48,040 --> 00:09:51,160 Speaker 1: non farm payroll, and we saw that there, Yes, it 180 00:09:51,200 --> 00:09:55,319 Speaker 1: did drop a little bit for the for the October 181 00:09:55,400 --> 00:09:57,920 Speaker 1: numbers as well. We're recast a little bit. But the 182 00:09:57,920 --> 00:10:00,360 Speaker 1: the economy is great. It is is that the job 183 00:10:00,480 --> 00:10:03,600 Speaker 1: sector is as strong as it's ever been. So Tom, 184 00:10:03,600 --> 00:10:06,360 Speaker 1: can you tell us where in particular you're seeing strength 185 00:10:06,400 --> 00:10:09,240 Speaker 1: as you try to place some of your clients um 186 00:10:09,360 --> 00:10:12,000 Speaker 1: in the job market. Where are some areas that are showing, 187 00:10:12,040 --> 00:10:14,680 Speaker 1: you know, surprising strength and maybe even conversely, where are 188 00:10:14,679 --> 00:10:18,240 Speaker 1: some areas that you're surprised you know, aren't stronger? Well, 189 00:10:18,240 --> 00:10:23,920 Speaker 1: I mean we did. The traditional stalwarts are are still there, right, healthcare, transportation, UH, 190 00:10:23,920 --> 00:10:27,000 Speaker 1: and transportation and logistics and warehouse and then and then 191 00:10:27,040 --> 00:10:30,480 Speaker 1: back office when we're seeing accounting, finance, technology are still 192 00:10:30,520 --> 00:10:34,120 Speaker 1: strong and companies are still hiring sales people by the truckload. 193 00:10:34,440 --> 00:10:37,440 Speaker 1: No pun intended on the strength and logistics. But when 194 00:10:37,480 --> 00:10:40,920 Speaker 1: we look at this situation, when companies are hiring sales people, 195 00:10:40,960 --> 00:10:44,439 Speaker 1: they want to aggressively take take control of their destiny 196 00:10:44,440 --> 00:10:47,280 Speaker 1: in the short term and get those numbers going. I 197 00:10:47,320 --> 00:10:50,079 Speaker 1: know people are fearful of what happened with General Motors 198 00:10:50,120 --> 00:10:53,439 Speaker 1: and Ford coming with some layoffs on manufacturing and forecasting 199 00:10:53,760 --> 00:10:58,080 Speaker 1: three five years down the road. But healthcare is still strong, 200 00:10:58,240 --> 00:11:03,800 Speaker 1: technology still wrong. So I'm very optimistic about what's going on. Now, 201 00:11:04,160 --> 00:11:08,800 Speaker 1: the interesting thing about logistics and warehouse increasing the numbers 202 00:11:09,240 --> 00:11:12,200 Speaker 1: is that that probably shows how retail shifting, right, is 203 00:11:12,200 --> 00:11:14,560 Speaker 1: that it's not in store retail as much as it 204 00:11:14,679 --> 00:11:17,640 Speaker 1: is warehouse and e commerce. But it shows me that 205 00:11:17,679 --> 00:11:22,040 Speaker 1: people are still forecasting a strong Christmas. Well, Tom, this 206 00:11:22,120 --> 00:11:24,080 Speaker 1: brings me to my next question, which is, you know, 207 00:11:24,240 --> 00:11:27,440 Speaker 1: packing boxes is a very different experience and different skill 208 00:11:27,480 --> 00:11:30,240 Speaker 1: set than being in a store and talking to customers 209 00:11:30,240 --> 00:11:33,760 Speaker 1: and trying to, you know, cater to their needs. And 210 00:11:33,760 --> 00:11:37,280 Speaker 1: I'm just wondering what you make of the increase in 211 00:11:37,400 --> 00:11:40,120 Speaker 1: jobs for people who don't have a high school degree 212 00:11:40,520 --> 00:11:42,800 Speaker 1: and whether that sort of indicates that the real job 213 00:11:42,840 --> 00:11:45,640 Speaker 1: gains are coming on the lower end of the scale, 214 00:11:45,679 --> 00:11:48,800 Speaker 1: and what that means the real job gains are coming 215 00:11:48,800 --> 00:11:51,840 Speaker 1: on the lower end and what we see so traditionally, 216 00:11:52,080 --> 00:11:55,120 Speaker 1: when you have a cold November, cold December, and then 217 00:11:55,160 --> 00:11:57,800 Speaker 1: you see that the housing market isn't as strong and 218 00:11:57,840 --> 00:12:00,240 Speaker 1: you see that there isn't as much construction going on, 219 00:12:00,480 --> 00:12:02,839 Speaker 1: that the blue collar jobs are going to shift. And 220 00:12:02,920 --> 00:12:05,720 Speaker 1: when they shift, and it goes warehouse that that's happening. 221 00:12:05,720 --> 00:12:07,640 Speaker 1: You don't need a college degree. That you don't need 222 00:12:07,640 --> 00:12:11,520 Speaker 1: a college degree to work retail at at Nordstromer or Macy's, 223 00:12:11,559 --> 00:12:14,960 Speaker 1: either on the floor. So there's really it might be 224 00:12:15,000 --> 00:12:18,160 Speaker 1: a different skill set of packing a box versus selling 225 00:12:18,240 --> 00:12:23,559 Speaker 1: a piece of clothing. However, the the type of education 226 00:12:23,679 --> 00:12:26,160 Speaker 1: needed isn't that different. And I think we've got to 227 00:12:26,160 --> 00:12:28,000 Speaker 1: get into the market of hey, this is where the 228 00:12:28,120 --> 00:12:30,960 Speaker 1: jobs are and if you want to get one, they 229 00:12:31,000 --> 00:12:34,280 Speaker 1: are available. Now we're still seeing it at the fifty 230 00:12:34,320 --> 00:12:36,400 Speaker 1: to a hundred thousand and a hundred thousand to a 231 00:12:36,440 --> 00:12:39,360 Speaker 1: hundred and fifty thousand level, whether it be developers, whether 232 00:12:39,360 --> 00:12:42,280 Speaker 1: it be accountants, whether it be marketing professionals. And it's 233 00:12:42,280 --> 00:12:44,880 Speaker 1: a global economy. The job may not be working for 234 00:12:44,880 --> 00:12:47,800 Speaker 1: a company in your city. It may be doing it remotely, 235 00:12:47,880 --> 00:12:50,800 Speaker 1: may be doing it from home, which three years ago 236 00:12:50,840 --> 00:12:53,360 Speaker 1: people were excited about. So you've got to be flexible 237 00:12:53,360 --> 00:12:55,440 Speaker 1: on where the jobs are and how you're gonna be working. 238 00:12:55,760 --> 00:12:57,480 Speaker 1: It's just a little bit of a shift right now. 239 00:12:57,840 --> 00:13:00,000 Speaker 1: So Tom, let's talk about wages. You you you talk about 240 00:13:00,000 --> 00:13:02,600 Speaker 1: a couple of you know, compensation bands that you think 241 00:13:02,640 --> 00:13:04,680 Speaker 1: about out there in the marketplace. We saw a little 242 00:13:04,679 --> 00:13:09,520 Speaker 1: bit today's numbers um some wage inflation coming back into 243 00:13:09,520 --> 00:13:12,120 Speaker 1: the market. But one could argue that given the strength 244 00:13:12,559 --> 00:13:14,560 Speaker 1: of the economy and given where you are in terms 245 00:13:14,559 --> 00:13:18,080 Speaker 1: of employment, i e. Nearer at full employment, we should 246 00:13:18,120 --> 00:13:22,080 Speaker 1: be seeing even higher wages. What do you seeing out there? Yeah, 247 00:13:22,120 --> 00:13:24,280 Speaker 1: you know, and I don't know if I necessarily buy 248 00:13:24,320 --> 00:13:26,760 Speaker 1: into that argument fall and reason being is there's a 249 00:13:26,760 --> 00:13:30,120 Speaker 1: global economy, and so we're not competing against somebody in 250 00:13:30,160 --> 00:13:31,959 Speaker 1: the on the cul de sact or in the apartment 251 00:13:32,000 --> 00:13:34,440 Speaker 1: building for the job. You're competing against somebody on the 252 00:13:34,440 --> 00:13:35,920 Speaker 1: other side of the world for a lot of it. 253 00:13:35,960 --> 00:13:38,440 Speaker 1: So that's gonna keep that There isn't gonna be huge 254 00:13:38,520 --> 00:13:41,120 Speaker 1: no matter how strong the economy is, there isn't gonna 255 00:13:41,120 --> 00:13:43,800 Speaker 1: be huge wage gains. We're also seeing that the effect 256 00:13:43,880 --> 00:13:47,040 Speaker 1: of the hourly increases in municipality and the overtime or 257 00:13:47,080 --> 00:13:51,080 Speaker 1: on the minimum wage increases taken effect over the past 258 00:13:51,120 --> 00:13:52,640 Speaker 1: few months, and we've seen some of that too, So 259 00:13:52,679 --> 00:13:56,640 Speaker 1: you're not gonna see huge wage gain every single month 260 00:13:56,679 --> 00:13:59,920 Speaker 1: of the report. And as we continue to go right 261 00:14:00,080 --> 00:14:03,000 Speaker 1: summer is more of the increase in hospitality and that 262 00:14:03,040 --> 00:14:06,720 Speaker 1: really affects into it as wages are reported for servers 263 00:14:06,720 --> 00:14:08,880 Speaker 1: and people in that line of business. So we're talking 264 00:14:08,880 --> 00:14:12,760 Speaker 1: about regular white collar increases in in wages. You're just 265 00:14:12,840 --> 00:14:14,920 Speaker 1: not going to see it at the rapid rate that 266 00:14:14,960 --> 00:14:16,800 Speaker 1: a lot of people want to. But we should see 267 00:14:17,000 --> 00:14:19,400 Speaker 1: because we added over a hundred and fifty thousand jobs 268 00:14:19,400 --> 00:14:22,920 Speaker 1: at three point seven percent unemployment. In any other economy 269 00:14:23,120 --> 00:14:25,200 Speaker 1: when we're not talking about Chicken Little waiting for the 270 00:14:25,240 --> 00:14:26,920 Speaker 1: sky to fall, people are going to say, those are 271 00:14:26,960 --> 00:14:29,680 Speaker 1: great numbers for this many months in a row. All right, 272 00:14:29,760 --> 00:14:32,800 Speaker 1: Tom Gimble, who is not Chicken Little. Tom Gimble, founder 273 00:14:32,800 --> 00:14:35,240 Speaker 1: and chief executive of La Salad Network, coming to us 274 00:14:35,480 --> 00:14:39,880 Speaker 1: from Chicago. Paul, you're noticing this before? The markets really 275 00:14:39,960 --> 00:14:41,960 Speaker 1: rolling over right now, isn't it. Yeah, it really is. 276 00:14:42,000 --> 00:14:43,440 Speaker 1: I think, you know, we kind of opened kind of, 277 00:14:43,480 --> 00:14:45,280 Speaker 1: you know, calmly this morning. I thought we would have, 278 00:14:45,400 --> 00:14:48,600 Speaker 1: you know, maybe a little bit of a low volatility today, 279 00:14:48,600 --> 00:14:50,200 Speaker 1: but it's just kind of dropped off the market here 280 00:14:50,240 --> 00:14:52,720 Speaker 1: and now we're down, you know again on the equity 281 00:14:52,720 --> 00:14:54,760 Speaker 1: inducies over one and a half percent pretty much across 282 00:14:54,760 --> 00:14:56,840 Speaker 1: the board. Yeah, and the NASDAC leading the way down. 283 00:14:56,880 --> 00:14:59,840 Speaker 1: You have to wonder why China trade tensions right now 284 00:15:00,480 --> 00:15:03,680 Speaker 1: is sort of gaining the the sort of top of 285 00:15:03,720 --> 00:15:06,920 Speaker 1: the narrative creation here, I mean more than OPEC, more 286 00:15:06,960 --> 00:15:10,800 Speaker 1: than jobs, it's trade tensions. We'll keep you posted. I'm 287 00:15:10,880 --> 00:15:18,240 Speaker 1: Lisa Abramowitz alongside Paul Sweeney. I am joined by Paul Sweeney, 288 00:15:18,280 --> 00:15:21,480 Speaker 1: who is Director of North American Research of Bloomberg Intelligence, 289 00:15:22,040 --> 00:15:25,600 Speaker 1: joining me instead of Pem Fox, who is off today 290 00:15:25,600 --> 00:15:29,480 Speaker 1: on a well deserved vacation. Uh. Definitely. The tone of 291 00:15:29,520 --> 00:15:32,640 Speaker 1: the day is jobs. And there is a big question, 292 00:15:32,680 --> 00:15:36,160 Speaker 1: as Tom Gimble of Lasal Network was raising earlier in 293 00:15:36,200 --> 00:15:39,000 Speaker 1: the show, which is the biggest gains are happening at 294 00:15:39,000 --> 00:15:41,760 Speaker 1: the lower end. The middle is kind of getting lost. 295 00:15:41,840 --> 00:15:45,480 Speaker 1: Joining us now, Noah Smith, columnist for Bloomberg Opinion, joining 296 00:15:45,520 --> 00:15:49,800 Speaker 1: us from California. Noah, you wrote a fantastic column about this, 297 00:15:49,920 --> 00:15:53,120 Speaker 1: how probably the poverty rate is being understated. I want 298 00:15:53,120 --> 00:15:56,400 Speaker 1: to start with why you think we are seeing bigger 299 00:15:56,440 --> 00:15:59,720 Speaker 1: gains on the lower end of the job scale, some 300 00:15:59,800 --> 00:16:04,640 Speaker 1: on upwards end, and kind of a loss in the middle. Well, 301 00:16:04,680 --> 00:16:08,760 Speaker 1: you know, that's a pretty recent phenomenon um that's happened 302 00:16:09,000 --> 00:16:11,480 Speaker 1: basically in the recovery from the Great Recession. We've seen 303 00:16:11,480 --> 00:16:14,480 Speaker 1: low wage jobs, do okay. Uh, you know we've seen 304 00:16:14,560 --> 00:16:17,760 Speaker 1: high wage jobs do do okay, and we've seen middle 305 00:16:17,760 --> 00:16:21,360 Speaker 1: class jobs or in terms of wages, um, in terms 306 00:16:21,400 --> 00:16:23,400 Speaker 1: of jobs, you know, unemployments low. Everybody kind of has 307 00:16:23,400 --> 00:16:26,360 Speaker 1: a job. The question is where the money going and uh, 308 00:16:26,360 --> 00:16:28,800 Speaker 1: and the question is why is it's happening. One hypothesis 309 00:16:28,880 --> 00:16:30,560 Speaker 1: is just that a lot of places have raised their 310 00:16:30,600 --> 00:16:33,120 Speaker 1: minimum wages and so that's going to affect people at 311 00:16:33,120 --> 00:16:35,720 Speaker 1: the low end of the scale obviously much more. And 312 00:16:35,880 --> 00:16:40,720 Speaker 1: so UM. There's also the idea that sort of, you know, 313 00:16:41,160 --> 00:16:44,280 Speaker 1: robots are hollowing out the middle class jobs. Automation is 314 00:16:44,320 --> 00:16:47,200 Speaker 1: replacing people who sort of push paper around an office, 315 00:16:47,280 --> 00:16:50,920 Speaker 1: but you know, instead it's replacing it's turning people into 316 00:16:50,960 --> 00:16:55,280 Speaker 1: basically like warehouse robots, um, you know, who are only 317 00:16:55,360 --> 00:16:57,800 Speaker 1: useful for their ability to push things around because robots 318 00:16:57,800 --> 00:17:00,000 Speaker 1: aren't good enough to do that yet. So that's an 319 00:17:00,000 --> 00:17:03,480 Speaker 1: other hip hopsis UM. I don't know how to be honest, 320 00:17:03,520 --> 00:17:05,879 Speaker 1: I don't know how how much either of those is 321 00:17:05,920 --> 00:17:08,720 Speaker 1: really in effect. And I think what might have happened 322 00:17:08,800 --> 00:17:11,840 Speaker 1: is just a low wage you know, low wage, low 323 00:17:11,880 --> 00:17:15,480 Speaker 1: skilled jobs have had compressed wages for so long that 324 00:17:15,640 --> 00:17:17,840 Speaker 1: now that labor demand is high they're the first ones 325 00:17:17,920 --> 00:17:21,280 Speaker 1: to to ask for for raises, so that might be 326 00:17:21,359 --> 00:17:23,480 Speaker 1: going on as well. So basically we don't know. Yeah, 327 00:17:23,480 --> 00:17:26,040 Speaker 1: so no, your column, this is really interesting. I loved 328 00:17:26,040 --> 00:17:27,720 Speaker 1: in the middle of your column you you quoted a 329 00:17:27,760 --> 00:17:32,040 Speaker 1: campaign slogan from um, when the middle class is defined 330 00:17:32,080 --> 00:17:34,560 Speaker 1: by having a chicken in every pot and a car 331 00:17:34,600 --> 00:17:37,720 Speaker 1: in every backyard, I'm assuming that's not how we define 332 00:17:37,760 --> 00:17:41,639 Speaker 1: the middle class anymore. How do you think we should 333 00:17:41,680 --> 00:17:44,280 Speaker 1: define the middle class? And and do we need to 334 00:17:44,359 --> 00:17:49,359 Speaker 1: change the way we define the middle class? Right? Well, so, um, 335 00:17:49,400 --> 00:17:53,439 Speaker 1: basically the middle class is a very squishy term. But 336 00:17:53,560 --> 00:17:55,919 Speaker 1: my column was really more about how we define poverty 337 00:17:55,960 --> 00:17:59,280 Speaker 1: than about how we define the middle class. So, um, 338 00:17:59,320 --> 00:18:02,000 Speaker 1: we have two bag definitions of poverty. The first definition 339 00:18:02,040 --> 00:18:04,040 Speaker 1: is sort of absolute poverty, you know, are you starving? 340 00:18:04,280 --> 00:18:06,800 Speaker 1: And the second definition is relative poverty, which is just 341 00:18:06,840 --> 00:18:10,240 Speaker 1: basically inequality, like do you have a lot less money 342 00:18:10,280 --> 00:18:13,919 Speaker 1: than you know, the median person. And so both of 343 00:18:13,920 --> 00:18:17,080 Speaker 1: those are pretty inadequate because we I hope that a 344 00:18:17,160 --> 00:18:19,280 Speaker 1: rich society like ours would allow people to be able 345 00:18:19,320 --> 00:18:21,320 Speaker 1: to do better than just you know, eat and stay 346 00:18:21,359 --> 00:18:24,359 Speaker 1: alive and um, and therefore we should revise up our 347 00:18:24,359 --> 00:18:27,600 Speaker 1: definition of poverty. But the inequality definition is also leads 348 00:18:27,600 --> 00:18:29,520 Speaker 1: a little bit to be desired, because you know, if 349 00:18:29,520 --> 00:18:31,840 Speaker 1: everybody gets fabulously rich, if some people get a little 350 00:18:31,880 --> 00:18:35,240 Speaker 1: less obviously rich, or they're really poor, especially compared to 351 00:18:35,320 --> 00:18:38,320 Speaker 1: you know, people in developing countries and you know, South Asia, 352 00:18:38,359 --> 00:18:42,119 Speaker 1: Africa somewhere, and so both of these definitions of poverty 353 00:18:42,160 --> 00:18:43,680 Speaker 1: leaves something to be desired. But we have this sort 354 00:18:43,720 --> 00:18:45,600 Speaker 1: of intuition. We look around. We see a lot of 355 00:18:45,600 --> 00:18:48,840 Speaker 1: Americans that we call poor because they're always on the 356 00:18:48,920 --> 00:18:51,200 Speaker 1: verge of getting a victim. They're always on the verge 357 00:18:51,200 --> 00:18:53,280 Speaker 1: of a medical bankruptcy, they're always on the verge of 358 00:18:53,280 --> 00:18:56,399 Speaker 1: not being able to pay for things. And this this risk, 359 00:18:56,720 --> 00:19:00,120 Speaker 1: you know, this precarity, always being on the verge of 360 00:19:00,160 --> 00:19:03,720 Speaker 1: bad stuff. Um is another definition of poverty. Is another 361 00:19:03,760 --> 00:19:06,400 Speaker 1: conception of poverty, and so I think that we need 362 00:19:06,440 --> 00:19:08,880 Speaker 1: to add that we need to focus more on that 363 00:19:08,960 --> 00:19:11,639 Speaker 1: as our definition of who's poor. Well, no, it's a 364 00:19:11,680 --> 00:19:14,600 Speaker 1: fascinating calum I recommend everyone read it. Of course, the 365 00:19:14,680 --> 00:19:17,080 Speaker 1: naysayers would would say, how big do you want the 366 00:19:17,080 --> 00:19:19,760 Speaker 1: safety network to be that the government provides, and who's 367 00:19:19,760 --> 00:19:21,399 Speaker 1: going to pay for it. In other words, if you 368 00:19:21,440 --> 00:19:26,439 Speaker 1: start to finding just the relative worth net worth of 369 00:19:26,480 --> 00:19:28,760 Speaker 1: a household, you're talking socialism, right, I mean you start 370 00:19:28,760 --> 00:19:31,520 Speaker 1: to finding poverty as a relative game and trying to 371 00:19:31,560 --> 00:19:34,200 Speaker 1: equalize things, then are you just heading towards a more 372 00:19:34,240 --> 00:19:37,720 Speaker 1: socialist society? Oh? Of course, And that's why people define 373 00:19:37,760 --> 00:19:40,560 Speaker 1: poverty that way. You know. Obviously socialists want everybody to 374 00:19:40,600 --> 00:19:45,040 Speaker 1: get really really really upset over you know, inequality, no 375 00:19:45,080 --> 00:19:48,240 Speaker 1: matter how rich society gets there. You know, then then 376 00:19:48,320 --> 00:19:50,719 Speaker 1: that doesn't allow society to grow its way out of 377 00:19:50,880 --> 00:19:53,520 Speaker 1: out of its responsibility for redistribution, and there can be 378 00:19:54,000 --> 00:19:57,240 Speaker 1: you know, sort of people getting upset about poverty no 379 00:19:57,280 --> 00:20:00,399 Speaker 1: matter how rich the people we call poor whatever become 380 00:20:00,840 --> 00:20:03,600 Speaker 1: So obviously, you know, I don't I don't really buy that. 381 00:20:03,720 --> 00:20:08,000 Speaker 1: I you know, I'm pretty skeptical that. But that's you know, 382 00:20:08,560 --> 00:20:12,560 Speaker 1: my suggestive definition of poverty isn't about inequality. It's about precarity. 383 00:20:12,640 --> 00:20:16,560 Speaker 1: It's about risk, it's about security. It's about you know, 384 00:20:16,600 --> 00:20:18,119 Speaker 1: not just do you have enough seat today, but do 385 00:20:18,160 --> 00:20:19,879 Speaker 1: you know you'll have eno seat tomorrow? Not just do 386 00:20:19,920 --> 00:20:21,199 Speaker 1: you have a roof over your head, but do you 387 00:20:21,280 --> 00:20:23,200 Speaker 1: know you'll have a roof over your head in a week, 388 00:20:24,040 --> 00:20:28,240 Speaker 1: and and things like that. Those those are those really 389 00:20:28,240 --> 00:20:31,520 Speaker 1: fit into our intuitive definition of who's poor, but they 390 00:20:31,560 --> 00:20:34,000 Speaker 1: don't fit into our official definition of who's poor yet. 391 00:20:34,400 --> 00:20:37,840 Speaker 1: How about with so no, with with your proposed definition 392 00:20:38,080 --> 00:20:40,639 Speaker 1: or you know, just enhanced definition of what poverty is, 393 00:20:41,040 --> 00:20:45,160 Speaker 1: how does the US rank relative to some other developed markets? 394 00:20:46,480 --> 00:20:48,520 Speaker 1: It's hard to say because so far we don't collect 395 00:20:48,640 --> 00:20:52,080 Speaker 1: uniform numbers about this. Probably we're gonna be a little 396 00:20:52,080 --> 00:20:56,960 Speaker 1: bit higher. Um. One thing is because you know, we're 397 00:20:57,080 --> 00:20:59,200 Speaker 1: we're a lot more of a spread out country and 398 00:20:59,560 --> 00:21:01,760 Speaker 1: we have a lot more sort of these like you know, 399 00:21:01,880 --> 00:21:08,480 Speaker 1: poor neglected neighborhoods. Um. You know. So, UM, I think 400 00:21:08,480 --> 00:21:09,960 Speaker 1: that we're going to have a bit higher of a 401 00:21:10,040 --> 00:21:12,600 Speaker 1: poverty rate than other countries. But we already do, you know, 402 00:21:12,640 --> 00:21:14,560 Speaker 1: by the other measures. So my guess is that the 403 00:21:14,560 --> 00:21:18,719 Speaker 1: international comparisons won't come out very different from a policy perspective. 404 00:21:18,760 --> 00:21:24,160 Speaker 1: What would change if they defined poverty as what you're proposing. Well, 405 00:21:24,200 --> 00:21:28,560 Speaker 1: one thing is that um, sort of policies to to 406 00:21:28,600 --> 00:21:31,760 Speaker 1: make sure that people have material security would then take 407 00:21:31,840 --> 00:21:35,680 Speaker 1: more center stage. So making sure that people have access 408 00:21:35,760 --> 00:21:39,040 Speaker 1: to you know, health care in an emergency takes more 409 00:21:39,080 --> 00:21:42,160 Speaker 1: center stage, making sure that, you know, people always get 410 00:21:42,240 --> 00:21:44,600 Speaker 1: enough food and uh. I'm also making sure that it's 411 00:21:44,600 --> 00:21:46,920 Speaker 1: hard for people to get evicted. Have you ever read 412 00:21:46,920 --> 00:21:51,280 Speaker 1: the book Evicted. It's an exact Oh yeah, it just 413 00:21:51,400 --> 00:21:53,720 Speaker 1: it paints a really accurate picture of poverty. And you 414 00:21:53,800 --> 00:21:55,840 Speaker 1: see that the problem with for these people is not 415 00:21:55,880 --> 00:21:58,600 Speaker 1: that they're starving, right, and it's not that they're just 416 00:21:58,720 --> 00:22:02,399 Speaker 1: resentful of some upper middle class people somewhere far away. 417 00:22:02,720 --> 00:22:04,720 Speaker 1: The problem with the people is that they're always sort 418 00:22:04,760 --> 00:22:07,080 Speaker 1: of on the edge of disaster. And so if we 419 00:22:07,119 --> 00:22:11,280 Speaker 1: define these disasters like lack of you know, food, insecurity, 420 00:22:11,920 --> 00:22:15,679 Speaker 1: probability of medical bankruptcy, probability of eviction, if we define 421 00:22:15,720 --> 00:22:18,560 Speaker 1: those and we we add those to the poverty numbers, 422 00:22:18,800 --> 00:22:21,640 Speaker 1: and we sort of, you know, give local and state 423 00:22:21,640 --> 00:22:25,040 Speaker 1: government some sort of incentive to improve those numbers. That 424 00:22:25,160 --> 00:22:28,600 Speaker 1: I think they'll focus more on policies that ensure material security, 425 00:22:28,840 --> 00:22:31,840 Speaker 1: that protect people from eviction, that make sure that people 426 00:22:31,880 --> 00:22:34,520 Speaker 1: have steady access to food and uh, and you know, 427 00:22:34,560 --> 00:22:36,399 Speaker 1: maybe it will put pressure on the national government to 428 00:22:36,440 --> 00:22:37,919 Speaker 1: make a better health there system than the one we 429 00:22:37,920 --> 00:22:39,840 Speaker 1: have now. Noah Smith, thank you so much. For being 430 00:22:39,840 --> 00:22:42,640 Speaker 1: with us. Noah Smith is Bloomberg opinion columnist talking about 431 00:22:42,680 --> 00:22:45,840 Speaker 1: his column on poverty and how to Measure it. Paul Sweeney, 432 00:22:45,880 --> 00:22:48,160 Speaker 1: thank you so much for being with me today. Thank 433 00:22:48,160 --> 00:22:53,760 Speaker 1: you for having me. A pleasure having you billion today 434 00:22:53,800 --> 00:22:56,800 Speaker 1: for pim Fox. Paul Sweeney, who is the director of 435 00:22:56,800 --> 00:23:00,679 Speaker 1: North American Research for Bloomberg Intelligence. And Paul, since you 436 00:23:00,760 --> 00:23:03,080 Speaker 1: are with us, UH, and since I've been spending so 437 00:23:03,160 --> 00:23:04,640 Speaker 1: much time with you, I want to learn more about 438 00:23:04,680 --> 00:23:07,960 Speaker 1: this really interesting Dish story. They've kind of been having 439 00:23:08,280 --> 00:23:12,159 Speaker 1: some pretty heated discussions and negotiations with HBO, which has 440 00:23:12,200 --> 00:23:14,919 Speaker 1: led to a blackout. First, can you use tell us 441 00:23:14,960 --> 00:23:16,840 Speaker 1: what's going on here, and then we'll get into sort 442 00:23:16,880 --> 00:23:20,679 Speaker 1: of what this means. Sure, I mean HBO historically, you know, 443 00:23:20,720 --> 00:23:23,320 Speaker 1: over the history of HBO, like other cable channels, they're 444 00:23:23,359 --> 00:23:25,760 Speaker 1: they're carried by distributors, whether it's a cable company like 445 00:23:25,800 --> 00:23:29,359 Speaker 1: Comcast or satellite company like UH Dish or Direct TV 446 00:23:29,880 --> 00:23:33,199 Speaker 1: UH and typically the content owners in this case HBO 447 00:23:33,560 --> 00:23:37,400 Speaker 1: UH they charge for the right to distribute their product. 448 00:23:37,400 --> 00:23:40,720 Speaker 1: They're their programming, and what happens occasionally is, you know, 449 00:23:40,760 --> 00:23:43,200 Speaker 1: you get a programmer like HBO and a distributor like Dish, 450 00:23:43,240 --> 00:23:45,359 Speaker 1: and they can't come to an agreement on those carriage fees, 451 00:23:45,400 --> 00:23:48,320 Speaker 1: and then they negotiate. Sometimes it gets ugly, and the 452 00:23:48,400 --> 00:23:51,440 Speaker 1: ultimate ugliness is when the content owner in this case 453 00:23:51,640 --> 00:23:54,200 Speaker 1: HBO says, okay, I'll take my programming off the air. 454 00:23:54,280 --> 00:23:56,960 Speaker 1: You're not going to get it anymore. Then what happens 455 00:23:56,960 --> 00:23:59,280 Speaker 1: if it, particularly if it's you know, really valuable programming, 456 00:23:59,359 --> 00:24:01,639 Speaker 1: is all the customers complain and they complain to their 457 00:24:01,640 --> 00:24:04,800 Speaker 1: cable company or their satellite company. Uh. And then usually 458 00:24:04,840 --> 00:24:07,440 Speaker 1: they you know, that distributory will cave and you get 459 00:24:07,440 --> 00:24:10,440 Speaker 1: the programming back back on. In this case, we're seeing 460 00:24:10,520 --> 00:24:14,280 Speaker 1: Charlie Organ at Dish, who is a very aggressive negotiator, saying, 461 00:24:14,400 --> 00:24:17,360 Speaker 1: you know what, I don't need HBO programming and uh 462 00:24:17,400 --> 00:24:20,119 Speaker 1: in an In addition, they've also dropped Univision, which is 463 00:24:20,160 --> 00:24:23,720 Speaker 1: really problematic because Dish tends to serve communities with large 464 00:24:23,760 --> 00:24:27,719 Speaker 1: Hispanic populations. Simply because he's saying, you're programming is not 465 00:24:27,840 --> 00:24:30,600 Speaker 1: worth what you're charging me for. Okay, So I'm looking 466 00:24:30,600 --> 00:24:34,040 Speaker 1: at Dish shares are down so far this year. Is 467 00:24:34,200 --> 00:24:37,760 Speaker 1: Charlie Organ wrong? I mean, is there transformation under the 468 00:24:37,840 --> 00:24:41,240 Speaker 1: underway here that he is just kind of ignoring where 469 00:24:41,480 --> 00:24:45,040 Speaker 1: they can distribute their content HBO and Univision online, they 470 00:24:45,040 --> 00:24:48,320 Speaker 1: can bypass him. Yep and uh. By his own admission, 471 00:24:48,400 --> 00:24:50,720 Speaker 1: Charlie Organ will tell you he has a terrible business. 472 00:24:50,800 --> 00:24:53,640 Speaker 1: The satellite TV business is a terrible business. He has said, 473 00:24:53,840 --> 00:24:55,960 Speaker 1: it's not encouraging. You don't want to hear that from 474 00:24:55,960 --> 00:24:58,080 Speaker 1: the leader exactly. And this was about four or five 475 00:24:58,160 --> 00:25:00,400 Speaker 1: years ago. He gets on his call and he says, basically, 476 00:25:00,440 --> 00:25:02,960 Speaker 1: my business is going to zero, but by my stock, 477 00:25:03,280 --> 00:25:06,320 Speaker 1: Yes and uh. And the reason is simply because you 478 00:25:06,359 --> 00:25:08,280 Speaker 1: don't need my Dish to get program. You can get 479 00:25:08,280 --> 00:25:10,239 Speaker 1: more and more of it now online and you can 480 00:25:10,320 --> 00:25:13,520 Speaker 1: use their substitutes like Netflix. Uh. And the real value 481 00:25:13,600 --> 00:25:16,640 Speaker 1: for Dish, however, is not in the core satellite business, 482 00:25:16,640 --> 00:25:19,440 Speaker 1: but it's in their spectrum. They own tens of billions 483 00:25:19,480 --> 00:25:22,840 Speaker 1: of dollars of wireless spectrum and people own this stock 484 00:25:22,960 --> 00:25:26,679 Speaker 1: simply because of the option value of that spectrum. What 485 00:25:26,760 --> 00:25:29,600 Speaker 1: can Charlie Organ do with all that spectrum? Will he 486 00:25:29,640 --> 00:25:33,080 Speaker 1: build a new wireless service for the United States, like 487 00:25:33,119 --> 00:25:36,320 Speaker 1: we need another one of those, or will he build 488 00:25:36,440 --> 00:25:40,800 Speaker 1: some other type of network that can drive um, you know, 489 00:25:40,840 --> 00:25:43,640 Speaker 1: some of this tech technology we're seeing, we don't know, 490 00:25:43,720 --> 00:25:45,679 Speaker 1: and Charlie Organ doesn't know what he's gonna do with 491 00:25:45,720 --> 00:25:48,040 Speaker 1: the spectrum. And so what's happened is people saying, Gee, 492 00:25:48,040 --> 00:25:50,639 Speaker 1: why am I owning the stock? Your core business is 493 00:25:50,640 --> 00:25:52,439 Speaker 1: going to zero, and I don't see a plan how 494 00:25:52,440 --> 00:25:55,120 Speaker 1: you're going to monetize your spectrum. So I'm what I'm 495 00:25:55,119 --> 00:25:58,800 Speaker 1: struggling with it an arrow where everyone says content is king? 496 00:25:59,359 --> 00:26:02,480 Speaker 1: What's he thinking? King? I mean, is I understand that 497 00:26:02,520 --> 00:26:05,679 Speaker 1: he doesn't want to pay them? But at the same time, 498 00:26:06,720 --> 00:26:10,280 Speaker 1: doesn't it help the business for its visibility and for 499 00:26:10,520 --> 00:26:12,960 Speaker 1: its you know, being able to market its spectrum in 500 00:26:13,000 --> 00:26:16,560 Speaker 1: real time to have these shows? Yeah, it doesn't. That's 501 00:26:16,680 --> 00:26:19,040 Speaker 1: historically that most of the leverage was on the part 502 00:26:19,080 --> 00:26:22,240 Speaker 1: of the programmer um and not the distributor, because the 503 00:26:22,280 --> 00:26:25,720 Speaker 1: programming really is the value. Content is King. In all, 504 00:26:26,000 --> 00:26:28,720 Speaker 1: a satellite company is simply a just distributor, and now 505 00:26:28,840 --> 00:26:30,960 Speaker 1: is a content owner. I have more ways to distribute 506 00:26:30,960 --> 00:26:33,479 Speaker 1: my content. I can go direct to the consumer like 507 00:26:33,720 --> 00:26:36,040 Speaker 1: HBO can do now with HBO now, So if you're 508 00:26:36,080 --> 00:26:39,840 Speaker 1: Charlie Organ, you're in a bad negotiating position and you're saying, basically, 509 00:26:39,920 --> 00:26:42,399 Speaker 1: the economics for me, you know, just don't work. I 510 00:26:42,440 --> 00:26:44,360 Speaker 1: operate in a business where I'm losing four to five 511 00:26:44,359 --> 00:26:47,200 Speaker 1: percent of my subscribers every year. And if I deem 512 00:26:47,240 --> 00:26:50,440 Speaker 1: a piece of programming not valuable to me, I'm just 513 00:26:50,480 --> 00:26:52,679 Speaker 1: gonna not you know, pay for it, and I'll suffer 514 00:26:52,720 --> 00:26:56,280 Speaker 1: the consequences. I'm already losing subscribers. Um. So it's a 515 00:26:56,400 --> 00:26:59,680 Speaker 1: very tough decision. Charlie organ is very much of a maverick. 516 00:27:00,119 --> 00:27:04,200 Speaker 1: Don't see other operators doing this to degree that he does. 517 00:27:04,680 --> 00:27:06,359 Speaker 1: But he's just much more aggressive, and I think he 518 00:27:06,400 --> 00:27:09,680 Speaker 1: has another end game again. He's more focused on how 519 00:27:09,720 --> 00:27:13,080 Speaker 1: do I monetize my spectrum um, and that's really the 520 00:27:13,160 --> 00:27:16,560 Speaker 1: future of the company. One thing I'm struggling to understand 521 00:27:16,640 --> 00:27:20,680 Speaker 1: is just how many people do view HBO shows online. 522 00:27:20,680 --> 00:27:22,280 Speaker 1: I mean, do you have a sense of how many 523 00:27:22,280 --> 00:27:25,080 Speaker 1: people have moved to streaming? Uh? You know, it's they 524 00:27:25,119 --> 00:27:27,840 Speaker 1: haven't really disclosed time, owners not disclosed it, but it's 525 00:27:27,960 --> 00:27:30,639 Speaker 1: it's probably two to three million already. So it's actually 526 00:27:30,640 --> 00:27:32,919 Speaker 1: gaining some pretty good traction um and we're seeing some 527 00:27:33,000 --> 00:27:36,920 Speaker 1: other um um, you know, direct to consumer services also 528 00:27:36,960 --> 00:27:39,760 Speaker 1: gaining traction. We've seen the Walt Disney Company say that 529 00:27:39,760 --> 00:27:43,480 Speaker 1: they're going to take ESPN directly to consumers with ESPN Plus, 530 00:27:43,520 --> 00:27:45,960 Speaker 1: they're going to take their all their movies and cool 531 00:27:45,960 --> 00:27:48,520 Speaker 1: TV shows and all that stuff, and they're going to 532 00:27:48,600 --> 00:27:51,240 Speaker 1: launch a direct to consumer service. So everybody's just trying 533 00:27:51,240 --> 00:27:53,560 Speaker 1: to compete with Netflix, and that may end up being 534 00:27:53,560 --> 00:27:55,399 Speaker 1: a losing battle for a lot of these media companies. 535 00:27:55,400 --> 00:27:58,400 Speaker 1: Have you cut the cable? I have not. Unfortunately, I'm 536 00:27:58,440 --> 00:28:01,439 Speaker 1: one of Brian Roberts and cast best customers. I can 537 00:28:01,480 --> 00:28:03,080 Speaker 1: tell you that, Oh yeah, would you what would what 538 00:28:03,119 --> 00:28:04,720 Speaker 1: would it take for you to cut the court? Um, 539 00:28:04,760 --> 00:28:10,120 Speaker 1: just the courage to call up those notoriously aggressive salespeople Comcast. 540 00:28:10,480 --> 00:28:13,080 Speaker 1: Oh my gosh, you should not be saying this out loud, 541 00:28:13,080 --> 00:28:16,480 Speaker 1: exact only going to impold in them exactly. So, but yeah, 542 00:28:16,480 --> 00:28:18,879 Speaker 1: it's the cable business. They have you with the bundle 543 00:28:18,960 --> 00:28:21,600 Speaker 1: that you know, it's really about having the broadband access 544 00:28:21,600 --> 00:28:23,800 Speaker 1: in the home. That's really the value driver. I love 545 00:28:23,800 --> 00:28:26,680 Speaker 1: it getting bullied by those uh they are very good 546 00:28:26,680 --> 00:28:28,040 Speaker 1: at what they do. They are very good at what 547 00:28:28,119 --> 00:28:29,840 Speaker 1: they do. They guilty trip you, They make you sort 548 00:28:29,880 --> 00:28:32,919 Speaker 1: of explain your your psychological state is when you know 549 00:28:32,960 --> 00:28:35,840 Speaker 1: as to when you decided to cancel things, tell you 550 00:28:35,960 --> 00:28:39,160 Speaker 1: know while you're missing out, So that retention salesperson is 551 00:28:39,200 --> 00:28:41,600 Speaker 1: probably the most valuable salesperson that a cable company has. 552 00:28:41,680 --> 00:28:44,960 Speaker 1: Don't you don't you like me? Paul Sweeney? Thank you 553 00:28:45,200 --> 00:28:47,080 Speaker 1: as always, You're going to be, of course sticking with me. 554 00:28:47,720 --> 00:28:50,280 Speaker 1: Paul Sweeney is the director of North American Research at 555 00:28:50,400 --> 00:28:54,600 Speaker 1: Bloomberg Intelligence, filling in for Pim Fox with me today. 556 00:28:55,080 --> 00:28:57,600 Speaker 1: Thanks for listening to the Bloomberg P and L podcast. 557 00:28:57,960 --> 00:29:01,880 Speaker 1: You can subscribe and listen to interviews at Apple Podcasts, SoundCloud, 558 00:29:02,000 --> 00:29:05,440 Speaker 1: or whatever podcast platform you prefer. I'm pim Fox. I'm 559 00:29:05,480 --> 00:29:09,480 Speaker 1: on Twitter at pim Fox. I'm on Twitter at Lisa Abramo. 560 00:29:09,600 --> 00:29:12,200 Speaker 1: It's one before the podcast. You can always catch us 561 00:29:12,240 --> 00:29:13,800 Speaker 1: worldwide on Bluebirg Radio.