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Speaker 1: Broadcasting live to New York Woolberg eleventh ry oh to Washington,

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Speaker 1: d C, Bloomberg one to Boston, Bloomberg twelve one to

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Speaker 1: San Francisco, Bloomberg nine sixty to the Country series XEN

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Speaker 1: Channel one nineteen and around the globe the Bloomberg Radio

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Speaker 1: plus Appen Bloomberg dot com. This is Bloomberg Surveillance. Good morning,

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Speaker 1: I'm kerin Moscow along with Tom Keene and Michael McKee.

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Speaker 1: The opening delve brought to you by SEI. Today's competitive

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Speaker 1: marketplace requires asset managers to become more operationally adept. Imagine

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Speaker 1: transforming your business with SCIS Global Platform at se i

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Speaker 1: C dot com slash i m S. Stocks are lower

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Speaker 1: at the open. The SNP five hundred is down four

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Speaker 1: tens per cent or seven points to nine down. Jones

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Speaker 1: Industrial average down four tenths percent or seventy six points

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Speaker 1: to seventeen thousand, seven hundred eleven. Then as dacts down

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Speaker 1: four tenths per cent or nineteen points to forty nine

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Speaker 1: twenty nine ten. Your treasury up nine thirty seconds. The

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Speaker 1: yield one point eight one percent. They yelled on the

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Speaker 1: two year point eight seven percent. Now I'm ex scrude

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Speaker 1: oil down two point two percent or a dollar eleven

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Speaker 1: to forty seven nine barrel co make school that'll change

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Speaker 1: down sixty cents to twelve six the euro at dollar

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Speaker 1: eleven sixty nine again one oh nine point one eight

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Speaker 1: Tom and mind Karen, thanks so much. Well, we have

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Speaker 1: news from GM and it is not good. It's like

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Speaker 1: four yeah. GM May auto sales fell eighteen percent. Forecast

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Speaker 1: was for a GM come in much worse than forecast.

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Speaker 1: Only damon. It's the old one Fiat Chrysler. Uh. It

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Speaker 1: is without question the most anticipated Beltway book of the season.

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Speaker 1: If you are in the international relations the book cover

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Speaker 1: alone is the book cover of the year. Julius wag

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Speaker 1: with us. Everybody knows how her second edition book. Did

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Speaker 1: they photoshop in air Force one on your new third edition?

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Speaker 1: Is that a real photo? Is a real photo? And

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Speaker 1: what's astonishing about it? Do you see Air Force one

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Speaker 1: hovering into on its way to the Havannah Airport. The

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Speaker 1: color scheme of Air Force one, you know, is a

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Speaker 1: kind of blue and white. The photo the neighborhood with

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Speaker 1: blue cars and people wearing blue shirts, and it looks photoshopped,

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Speaker 1: and the palette looks like it was selected by an artist.

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Speaker 1: I'm a photographer from writers from Ruyters. Will congratulations just

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Speaker 1: absolutely of the third edition not out yet, I will

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Speaker 1: be all over Twitter. This is the Yeah, the one

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Speaker 1: volume on Cuba. It's just annointed for butts about it.

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Speaker 1: I want to cut to the chase. This is a

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Speaker 1: really important half hour. You are consulting to big shots

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Speaker 1: who want to put millions into Cuba. Do they have

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Speaker 1: their heads screwed on which will provide for stability of

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Speaker 1: a nascent capitalism or is this going to be a mess? Well,

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Speaker 1: I am doing some consulting. It's true, um, and that's

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Speaker 1: been for the last couple of years. It's moved from

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Speaker 1: the back burner to the front burner because the commercial

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Speaker 1: opening is possible. I think the answer to your question

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Speaker 1: is that it ranges, and it ranges because while there

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Speaker 1: are some American companies who understand that this is a

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Speaker 1: long term process, there are other American companies who want

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Speaker 1: to get in and want to have the cake baked already,

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Speaker 1: want to have all the ingredients mixed together properly. And

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Speaker 1: what they're finding, both in Washington and Havana is that

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Speaker 1: the regulatory and political and policy bureaucracies are used to

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Speaker 1: saying no to one another, and they have to figure

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Speaker 1: out how to start saying yes to one another. And um,

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Speaker 1: that's taken a long time. As I understand that one

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Speaker 1: of the big hold ups is that the Cubans want

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Speaker 1: what they want, not what US business wants, and they

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Speaker 1: want it done their way, not the way US business

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Speaker 1: is used to doing things right Because what I found,

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Speaker 1: and I write about this in the book, but it's

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Speaker 1: true in the business space, there's this incredible sense of

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Speaker 1: exceptionalism in the United States an American foreign policy, and

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Speaker 1: Cuba shares that. Cuba thinks cubas special, the United States

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Speaker 1: thinks the United States as special. And so each is

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Speaker 1: coming at the other with an assumption that you should

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Speaker 1: meet me more than halfway. And that's very tough to

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Speaker 1: deal with from the American perspective. From a tiny, little

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Speaker 1: island country that ought to be saying, oh, you're an

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Speaker 1: American business, then I'll change. Cuba is not in the

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Speaker 1: habit of changing for the United States because the United

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Speaker 1: States or an American business asks it to. But what

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Speaker 1: we've found is that um, little by little, American companies

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Speaker 1: can begin to change the way Cuba does business, but

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Speaker 1: it's not overnight. What do the Cubans want? I mean,

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Speaker 1: the Americans go down there and they say, well, god,

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Speaker 1: they need hotels, they need roads fixed, they need the internet,

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Speaker 1: all kinds of things that we take for granted here

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Speaker 1: in the US. But what is Cuba actually asking for?

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Speaker 1: Cuba your your right that the tourism ministry, infrastructure, telecommunications,

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Speaker 1: they're asking for those things, although in telecom it's a

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Speaker 1: little bit more modulated. Um, what they're asking for on

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Speaker 1: paper is foreign investment. What they're demanding in the interactions

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Speaker 1: is um that Americans adapt to their laws and regulations,

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Speaker 1: and they don't that. What that means concretely is, for example,

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Speaker 1: if the Americans say, well, we want to hire your

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Speaker 1: labor directly, the Cubans say, well, we have a you know, hiring,

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Speaker 1: a kind of agency process, and that's not how it's done.

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Speaker 1: But if you want to try, we can maybe experiment

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Speaker 1: with a pilot program and adjust in that way, but

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Speaker 1: not whole cloth overnight, even just joining us. Julius Swagg

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Speaker 1: third edition out soon. Cuba. What everyone needs to know

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Speaker 1: I can't can they enough? It's the one volume on Cuba.

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Speaker 1: The Majesty of your book is you take me out

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Speaker 1: of Havana. There's other part to Cuba. Heaven forbid. It's

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Speaker 1: a big island. Elaine is my travel consultants as Trinidad

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Speaker 1: as a place to go. It's on the southern shore

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Speaker 1: of Cuba. Is the nascent American capitalism or European capitalism

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Speaker 1: in Cuba? Is it about Havanna, Havanna, Havannah or they

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Speaker 1: can actually develop across the island. Well, it is focused

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Speaker 1: on Havana right now. I mean, if Havannah, we're an

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Speaker 1: American city, would be the six or seventh largest city

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Speaker 1: in the United States. Most of the population of Cuba

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Speaker 1: is concentrated in Havana. And because of the nature of

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Speaker 1: American travel policy, that is, the travel ban does not

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Speaker 1: still exist, so when Americans travel there, they can't travel

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Speaker 1: as tourists. So the concentration of interest definitely is in Havana.

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Speaker 1: But when you talk about um the tourism industry, at

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Speaker 1: least you do see an interest and an expansion of

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Speaker 1: the tourism infrastructure throughout the island, not as far east

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Speaker 1: as one would like, but definitely as far as Trinidad

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Speaker 1: and the center of the country. But Havanas where it's

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Speaker 1: mainly focused. For now, let's take it to our specialty

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Speaker 1: economics here outside of tourism. What's Cuba's comparative advantage? What

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Speaker 1: what can that economy do open up to the world.

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Speaker 1: What what Cuba? What Cuban wants to do is to

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Speaker 1: take their value at it in the human capital space.

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Speaker 1: So for example, their science and technology UH sector is

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Speaker 1: very small, but quite advanced. In biotech and pharmaceuticals, very

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Speaker 1: small but quite advanced. What they want to try to

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Speaker 1: do outside of tourism is leverage the medical, the public

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Speaker 1: health and the other kind of brain capacity that the

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Speaker 1: country has invested in for the last fifty years. So

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Speaker 1: you'll see, for example in the marial Port zone, which

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Speaker 1: we should talk about UH, there are special opportunities there

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Speaker 1: for an investment that does emphasize is the potential for

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Speaker 1: call centers for example, and other human based And we'll

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Speaker 1: come back. What's the game theory response of the rest

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Speaker 1: of the Caribbean. What are the other islands, countries, nations,

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Speaker 1: How are they responding to this? Well, they're freaking out

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Speaker 1: in a lot of ways. Because Cuba dominates in terms

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Speaker 1: of the size of its economy and the capacity, well, yes,

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Speaker 1: because you could call it lethargy, but they have invested

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Speaker 1: quite a bit in their human capital and they have

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Speaker 1: functioning institutions which can't be said at large across the region. Again,

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Speaker 1: I come back to tourism because it's the most obvious one.

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Speaker 1: There's an an effort now at multidestination tourism so to

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Speaker 1: attract people to that will go on cruises or by

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Speaker 1: planes from country to country in the Caribbean. Cuba politically,

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Speaker 1: diplomatically and economically is trying to manage that because they're

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Speaker 1: the asymmetries in the other direction. Okay, let's come back

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Speaker 1: Kilia Swag with this. Thank you so much for your

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Speaker 1: comments on this Cuba what everyone needs to know. The

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Speaker 1: second edition out, don't buy it. The third edition will

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Speaker 1: be coming out in a matter of weeks. Matter of

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Speaker 1: weeks till movie writes have and so look for the movie.

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Speaker 1: Fourth of July two thousand eighteen. Julius Wage will continue

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Speaker 1: in a moment I'm not to check in with Michael

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Speaker 1: Barr and get the latest world of national headlines. Mike time,

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Speaker 1: Thank you very much. A French ship has picked up

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Speaker 1: signals that maybe from the black boxes of an egypt

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Speaker 1: airplane that crashed last month in the Mediterranean. All sixty

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Speaker 1: six people on Egypt Air Flight eight oh four were killed.

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Speaker 1: The flight was heading from Paris to Cairo when the

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Speaker 1: airbus A three twenty went down May nine. It's Russia's

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Speaker 1: biggest crackdown ever on hackers that target banks. Russian police

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Speaker 1: have arrested fifty members of an alleged cyber crime ring,

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Speaker 1: accused of stealing more than the equivalent of forty five

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Speaker 1: million dollars from banks. A New Jersey doctor says a

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Speaker 1: baby girl born to a mother with the zeke of

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Speaker 1: virus appears to be affected by the disease. Officials at

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Speaker 1: Hackensack University Medical Center say an ultrasound last week reveal

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Speaker 1: birth defects. Year old mother from Hunduras delivered the child

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Speaker 1: by a C section yesterday. The Obama administration is calling

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Speaker 1: on the food industry to make foods less Salty's proposing

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Speaker 1: voluntary sodium guidelines and effort to prevent thousands of deaths

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Speaker 1: each year from heart disease and stroke. Health and Human

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Speaker 1: Services Secretary Sylvia Matthews Burwell, in terms of what we're

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Speaker 1: doing is creating a situation where the consumers in control.

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Speaker 1: If that consumer once day add more sodium, they're going

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Speaker 1: to be able to do it. What the consumer can't

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Speaker 1: do now is take it out of the product and

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Speaker 1: have real knowledge about it. Global News twenty four hours

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Speaker 1: a day, powered by our twenty four hundred journalists. I'm

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Speaker 1: Michael Barr and Michael thanks so much. Julius Swagge's second edition.

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Speaker 1: But since two thousand and eight, it appears for Dell

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Speaker 1: has agreed to stay out of Rule's way and quietly

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Speaker 1: back his decisions. We'll get an update with Julius swage next.

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Speaker 1: Coming up on Friday, the Jobs Report. Will it give

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Speaker 1: the Fed the all clear for a rate increase? Join

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Speaker 1: us here on surveillance. Bill Gross of Janis will join

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Speaker 1: us as well. Global Business News twenty four hours a

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Speaker 1: day at Bloomberg dot com, the radio plus mobile app,

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Speaker 1: and on your radio. This is a Bloomberg Business Flash

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Speaker 1: and I'm Karen Moscow. This updates Ronte You Buy Pershings

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Speaker 1: inside sixteen, the must attend event for advisers less than

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Speaker 1: one week away June seven through the ninth. If you

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Speaker 1: haven't registered, you stone can visit Insight dot com. That's

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Speaker 1: I n S i t e. Dot com stocks are

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Speaker 1: moving lower amid evidence of suggish global growth, while investors

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Speaker 1: await a report on manufacturing activity in the world's biggest economy.

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Speaker 1: We checked the markets every fifteen minutes throughout the trading day.

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Speaker 1: On bloomberg S n P five hundred down half per cent,

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Speaker 1: down ten points at six down Jones and Austrial average

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Speaker 1: down six tents percent or one hundred six points to

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Speaker 1: seventeen thousand, six hundred eighty. Then Astact down four ten

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Speaker 1: percent or twenty one points to forty nine twenty seven ten.

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Speaker 1: Your treasury of ten thirty seconds, the yield one point

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Speaker 1: eight zero percent yield on the two year point eight

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Speaker 1: six percent. Nim X screwed oil down two point three

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Speaker 1: percent or a dollar ten to forty eight dollars of

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Speaker 1: arrol comacs gold that will changed up twenty cents to

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Speaker 1: twelve seventeen sixty announced, the Euro is at a dollar

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Speaker 1: eleven seventy the yen one oh nine point two five,

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Speaker 1: and General Motors and Ford vehicle sales fell more than

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Speaker 1: analysts had estimated. In May, GM sales plunging eighteen percent,

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Speaker 1: missing estimates for a thirteen percent drop with all four

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Speaker 1: brands reporting declines of at least fourteen percent. Ford's light

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Speaker 1: vehicle sales slid six point one percent, compared with an

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Speaker 1: average estimate for a four point nine percent to Kline.

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Speaker 1: The Chrysler saw May US auto sales rise up one

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Speaker 1: point one percent. Well, analysts, we're looking for a decline

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Speaker 1: there as well. Under Armour meanwhile down five point four

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Speaker 1: percent this morning. Nike is down two point two per cent.

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Speaker 1: This after sports authority. Thus, sports authority liquidation and competition

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Speaker 1: in the footwear market. Race concerns about the athletic apparel giants,

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Speaker 1: and that's a bloomberg business flash. Tom and Mike Karen,

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Speaker 1: thanks so much. Cuba What everyone needs to know. The

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Speaker 1: third edition out in three weeks. It is the Bible,

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Speaker 1: the one volume reading Cuba, Julia's Wig of Texas and

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Speaker 1: working with corporations as they consider Havana. Cuba is with us.

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Speaker 1: This morning, we all get Fidel, we all get role.

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Speaker 1: And then there's what who is the president? Who is

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Speaker 1: our political leadership? Speaking to one year, five years, ten

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Speaker 1: years in Cuba. Well, Raoul Castro steps down in the

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Speaker 1: beginning of two thousand and eighteen, and he has indicated

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Speaker 1: that his successor is now the first Fife President of

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Speaker 1: the Council of State. His name is Miguel Diaz Kinal.

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Speaker 1: He's in his fifties, so next generation. Been Minister of

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Speaker 1: Higher Edgy. Patient been sort of effectively a governor of

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Speaker 1: two provinces. Uh, he's not well known. Starting to travel.

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Speaker 1: You're best friends with him in the loop with President.

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Speaker 1: I've never met him. Record, Well, that's interesting in itself.

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Speaker 1: You've never the air ab parent has begun to meet

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Speaker 1: with some members of Congress. Um is he a Marxist Leninist?

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Speaker 1: Is he No? No? And so I mean no. Look,

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Speaker 1: his training is Marxist Leninist. What he is as a

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Speaker 1: nationalist and a socialist, and that means I think he

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Speaker 1: fundamentally believes in his d n A that the purpose

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Speaker 1: of capital accumulation and growth and economic development is to

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Speaker 1: serve the people, not to concentrate wealth in the hands

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Speaker 1: of a few. Right, That's the essence of the Cuban

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Speaker 1: Revolutions view of capitalism today. Um. His Uh, he's gonna

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Speaker 1: have to govern much more collectively. He's gonna deal with

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Speaker 1: the economy being concentrated very largely in the hands of

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Speaker 1: the military, which may might make people uncomfortable. But the

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Speaker 1: military in Cuba is the least corrupt institution in the

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Speaker 1: country and the least the most effective in terms of management,

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Speaker 1: because when Raoul Castro was head of the armed forces,

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Speaker 1: he sent a bunch of his people coming back from

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Speaker 1: Angola and other foreign deployments to go abroad and retool

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Speaker 1: themselves as managers and accountants and figure out how to

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Speaker 1: run an economy with capitalist business practices. So the military

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Speaker 1: and this gentleman Miguel Diaz Canal will together have a

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Speaker 1: great deal of power. But look five years, ten years

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Speaker 1: down the road, I don't think we can predict what

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Speaker 1: the politics and Cuba looks like. Is it going to

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Speaker 1: be multiparty democracy? Unlikely? Well, have they institutionalized any kind

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Speaker 1: of governmental system or has it all been based on

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Speaker 1: the Castros and the cultural personality. Well, under Fidel was

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Speaker 1: very focused on his personality, and of course there's cabinet,

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Speaker 1: ministries and agencies and a whole probably too much of

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Speaker 1: a government bureaucracy. What has happened under role he said

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Speaker 1: it very clearly is in order to make this thing

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Speaker 1: last once we're gone, we have to institutionalize, meaning he

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Speaker 1: has put a lot more authority and line authority from

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Speaker 1: the top to the bottom to cabinet, ministries, agencies. Um,

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Speaker 1: it looks like a government, talks like a government, walks

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Speaker 1: like a government, and taken the Communist party much out

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Speaker 1: of daily running of the affairs and put it kind

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Speaker 1: of in an a more ideological, uh policy role than

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Speaker 1: a day to day government role. So so yes, the

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Speaker 1: answer is there's plenty of government there. What role has

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Speaker 1: done is actually cut it back, consolidated ministries, tried to

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Speaker 1: get rid of some of it because because the state

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Speaker 1: payroll had been enormous, does the economy work? Can they

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Speaker 1: continue on? I mean, if they want to be socialist,

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Speaker 1: great for them, but that hadn't worked out for anybody else, right,

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Speaker 1: So now what they're trying to do is bring in

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Speaker 1: a mix. It's moving towards a mixed economy. So you

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Speaker 1: keep the lucrative or capital earning parts of the economy

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Speaker 1: in state hands, but allow private sector to grow. With

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Speaker 1: a lot of pushback actually from the population, which on

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Speaker 1: the one hand wants to have small businesses, wants the

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Speaker 1: government to get out of the way, and the other

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Speaker 1: hand is kind of terrified about not being able to

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Speaker 1: lean on all of those freebays that it got for

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Speaker 1: so long. So parts of the economy function okay, but

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Speaker 1: parts of it really really don't. And I think that

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Speaker 1: you know, anybody looking objectively would ask yourself, well, where

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Speaker 1: do you start? If you want to have a functioning

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Speaker 1: market economy with a reasonably modest state sector and uh

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Speaker 1: tax system so that you can find a finance spending

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Speaker 1: on health and education, how do you start? Do you

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Speaker 1: rip off the band Aid fast? Do you do it

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Speaker 1: in provinces that is a pilot program without the kind

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Speaker 1: of political and social upheaval that we've seen in other

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Speaker 1: parts of the world. Let me ask the question that

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Speaker 1: you know, Mike's got some smarter questions than me, but

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Speaker 1: the basic question every parent has the kids go, We're

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Speaker 1: going to Havanna, Jamaica's old news, Turk and Caicos as

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Speaker 1: old news, etcetera, etcetera. Doctor's wagons. It's safe, very safe,

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Speaker 1: very very safe. I mean, look, I've been traveling there

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Speaker 1: since I was myself nineteen years old, and it is

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Speaker 1: compared to other capital cities everywhere in Latin America that

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Speaker 1: I've been enormously safe. In fact, a couple of data

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Speaker 1: points Harvard universities school school exchange programs. The most popular

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Speaker 1: place is not Paris anymore, it's Havannah. The numbers of

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Speaker 1: American universities that are sending kids for semester programs is incredible.

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Speaker 1: The Cubans can barely absorb it. The amanda is so high.

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Speaker 1: Every time I go there, I run into kids from

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Speaker 1: universities all over the country. What's the most important thing

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Speaker 1: for American business to know or understand about Cuban? Now

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Speaker 1: they read about the embargoes being probably the embargo still place,

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Speaker 1: but the President's opening to Cuba uh and they want

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Speaker 1: to do business and they see the market. What do

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Speaker 1: they need to know? The most important thing they need

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Speaker 1: to know is that Cuba has made the political decision

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Speaker 1: to open up to the United States on the economic

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Speaker 1: side of the ledger, on the commercial side of the ledger.

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Speaker 1: But that political decision doesn't translate rapidly into the know

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Speaker 1: how and the capacity to get that done. There's the

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Speaker 1: enormous opportunity in Cuba. Cuba needs pretty much everything, and

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Speaker 1: Cuba is or the United States for Cuba is the

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Speaker 1: natural market. So the disposition is to try to get

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Speaker 1: to yes. But the habits and the skepticism still are

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Speaker 1: at no in many spaces there tell us about the

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Speaker 1: I'll just say the most important question for Tom is

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Speaker 1: how are they going to deal with baseball and the

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Speaker 1: you know, letting the Red Sox sign Cuban baseball players

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Speaker 1: very fraud You know, the Cubans don't want to lose

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Speaker 1: their their precious commodity, which is which is baseball in

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Speaker 1: the world of sports, And um, I don't have any insight.

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Speaker 1: I unfortunately didn't write so much about sports and baseball

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Speaker 1: in the book. But I think it's it's it's not

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Speaker 1: they're still losing players. We still don't have a system

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Speaker 1: between the MLB and Cuban's baseball industry worked out for

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Speaker 1: training games. I think we will know. I think we

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Speaker 1: will when do we look? I mean, I think, well,

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Speaker 1: that's a lot different than when do you get to

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Speaker 1: go to spring training in Havana? And I think spring

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Speaker 1: training in Havana is probably closer to Cuban cigars on

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Speaker 1: Sixth Avenue because the commerce regulations this is Wonky haven't

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Speaker 1: been set up yet to export Cuban agricultural goods to

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Speaker 1: the United States, which is too bad because Cube has

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Speaker 1: twenty seven micro climates and could be feeding the Eastern

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Speaker 1: seaboard with all kinds of niche fancy of fruits and vegetables.

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Speaker 1: See that's that's that's just great. Now it's Julius like,

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Speaker 1: thank you so much, congratulations without question the cover of

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Speaker 1: the year for any book. Air Force one landing above

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Speaker 1: two dilapidated cars. There's two brands of Cuban beer, the

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Speaker 1: light beer and the heavier beer. And I would strongly

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Speaker 1: suggest the heavier beer unless you're gluten free, and then

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Speaker 1: you're because well we are not. There's a problem here.

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Speaker 1: It is Cuba. What everyone needs to know. Julius Wag.

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Speaker 1: Look for about three weeks, Third edition Julius Wag with

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Speaker 1: D seventeen strategies UH negative one thirteen on the data,

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Speaker 1: fix up a full big figure fifteen point one seven

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Speaker 1: yen stability after strong and then stronger yen through the

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Speaker 1: morning one quickly, Michael, the auto industry, what do we

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Speaker 1: what do we think? What's the summary? Well, we're still

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Speaker 1: adding up the numbers, but to Ford and General Motors

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Speaker 1: come in much weaker than expected, and Fiat Chrysler comes

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Speaker 1: in just a scoche better than forecast, So it doesn't

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Speaker 1: look good. Unless it's a market share thing and some

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Speaker 1: of the marks have better, better bumps. This Wednesday we

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Speaker 1: begin a three day visual for our tailor, Riggs, studying

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Speaker 1: for Level two. If a moment of silence, please