WEBVTT - White House Lax Protocol Opens Window For More Security Breaches 0:00:05.800 --> 0:00:08.720 Welcome to the Bloomberg P and L Podcast. I'm pim Fox. 0:00:08.760 --> 0:00:11.520 Along with my co host Lisa Abramowitz. Each day we 0:00:11.640 --> 0:00:15.120 bring you the most important, noteworthy, and useful interviews for 0:00:15.200 --> 0:00:17.840 you and your money, whether you're at the grocery store 0:00:17.960 --> 0:00:20.720 or the trading floor. Find the Bloomberg P and L 0:00:20.840 --> 0:00:33.280 Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot com. How 0:00:33.320 --> 0:00:37.880 difficult is it to hack into the US election system? While, 0:00:38.000 --> 0:00:43.120 according to one report, Florida's Department of State has criticized 0:00:43.159 --> 0:00:47.600 an experiment to thwart hackers because an eleven year old 0:00:47.640 --> 0:00:51.240 hacker needed only ten minutes to bust into a replica 0:00:51.320 --> 0:00:53.640 site and make it look like the wrong candidate had 0:00:53.680 --> 0:00:56.640 won a presidential election. Here to tell us more about 0:00:56.680 --> 0:00:59.280 the situation is Clint Watts. He is a senior fellow 0:00:59.520 --> 0:01:03.320 for the Far Policy Research Institute. He is also Senior 0:01:03.320 --> 0:01:06.520 Fellow at the Center for Cyber and Homeland Security at 0:01:06.680 --> 0:01:10.560 George Washing at the George Washington University. He was previously 0:01:10.600 --> 0:01:15.520 an infantry officer in the United States Army, executive officer 0:01:15.600 --> 0:01:19.880 of the Combating Terrorism Center at the US Military Academy 0:01:20.000 --> 0:01:24.520 at West Point, and a former FBI official. Clint watts. 0:01:24.720 --> 0:01:28.360 Should we just go back to paper ballots? Yeah, I 0:01:28.400 --> 0:01:31.920 would seem that way, doesn't it. I it's amazing that 0:01:32.040 --> 0:01:34.360 our tech, you know, we should expect it to be 0:01:34.440 --> 0:01:37.520 able to return a vote very quickly and to do 0:01:37.560 --> 0:01:41.480 that efficiently, but it is almost impossible to secure it 0:01:41.520 --> 0:01:43.480 if it has any sort of connection to the web. 0:01:43.680 --> 0:01:46.680 And at the same point, we're relying on just a 0:01:46.720 --> 0:01:51.320 few programmers to try and prevent thousands or even you know, 0:01:51.400 --> 0:01:54.840 hundreds of thousands of potential hackers out there over time 0:01:54.880 --> 0:01:58.440 from breaking into systems. So we're in a tough spot. 0:01:58.520 --> 0:02:00.880 And I think the important thing America is that we 0:02:00.960 --> 0:02:04.160 have some sort of audit trail and paper ballot backup 0:02:04.280 --> 0:02:06.760 so that we can verify a vote, because we've seen 0:02:06.800 --> 0:02:10.600 this happen, particularly Ukraine for example, of Russia had hacked 0:02:10.600 --> 0:02:13.680 into the system there and the Ukrainians caught it before 0:02:13.680 --> 0:02:16.919 it went live. But we will always have this threaten 0:02:16.960 --> 0:02:18.960 as long as we have candidates that are as also 0:02:19.400 --> 0:02:21.960 going that maybe we can't trust the vote, we're going 0:02:22.000 --> 0:02:24.240 to have these sorts of problems over the horizon. You know. 0:02:24.280 --> 0:02:26.560 Pim raised a good point, which is there are these 0:02:26.639 --> 0:02:29.960 tests and studies being done of just how compromise the U. S. 0:02:29.960 --> 0:02:32.919 Electoral system really is right now, And I have to wonder, 0:02:33.040 --> 0:02:36.119 especially as we head into the midterm elections, just how 0:02:36.360 --> 0:02:41.040 far have hackers gotten, How how pervasive has some of 0:02:41.080 --> 0:02:44.240 the influence already been, And are you worried about the 0:02:44.240 --> 0:02:48.040 integrity of these elections. I'm not so much worried about 0:02:48.040 --> 0:02:50.960 the integrity as much as the perception of the integrity. 0:02:51.000 --> 0:02:54.120 And by what I mean by that is it actually is, 0:02:54.440 --> 0:02:57.400 you know, fairly difficult to change the votes. We have 0:02:57.440 --> 0:02:59.400 a lot of people looking at it, but we still 0:02:59.400 --> 0:03:01.919 have about five states. It sounds like that don't have 0:03:02.520 --> 0:03:05.920 a sufficient audit trail or a paper ballot backups that 0:03:05.960 --> 0:03:09.200 we can verify. What I'm more nervous about, though, is 0:03:09.240 --> 0:03:12.640 the perception or the casting of doubt about the integrity 0:03:12.639 --> 0:03:16.240 of elections. We saw this in twenty sixteen when we 0:03:16.240 --> 0:03:19.880 were watching Russian influence. UH. When I was studying this, 0:03:20.320 --> 0:03:23.560 the second way was really about making people nervous that 0:03:23.680 --> 0:03:26.880 democracy isn't true or that their votes didn't count. And 0:03:26.919 --> 0:03:29.200 we're seeing that come up again in twenty eight team. 0:03:29.200 --> 0:03:31.679 We're already worried about it now months in advance, but 0:03:31.800 --> 0:03:34.560 looking forward we're hearing Canadas say that the vote is 0:03:34.600 --> 0:03:36.960 going to be rigged or the election is rigged against me. 0:03:37.640 --> 0:03:41.880 That sort of doubt is almost impossible. And even if 0:03:41.920 --> 0:03:43.640 you didn't change a vote, let's say you just took 0:03:43.640 --> 0:03:46.280 a proemptive hack, you just made it look like you 0:03:46.360 --> 0:03:49.360 hit a voter database, or you change something and then 0:03:49.440 --> 0:03:52.760 dumped it out online. That would create widespread doubt in 0:03:52.800 --> 0:03:55.600 the electoral system. That's an attack on democracy and it 0:03:55.720 --> 0:03:59.480 really under undermines the trust and integrity in both are 0:03:59.520 --> 0:04:03.840 elected officials in our institutions. Clint, what do you believe 0:04:04.000 --> 0:04:09.040 that any conversation or communication is secure, particularly if it 0:04:09.080 --> 0:04:14.000 takes place in the White House. Yeah, it's it's fascinating. 0:04:14.080 --> 0:04:17.440 I would have said yes up until now. I just 0:04:17.520 --> 0:04:22.599 don't know. We've seen unprecedented things in the last two years. Uh. 0:04:22.800 --> 0:04:26.920 One example is the Russian Foreign Minister lab Ra going 0:04:26.960 --> 0:04:29.800 into the Oval office without any US media there, but 0:04:29.839 --> 0:04:33.480 there was Russian media there. Uh. We've seen cases in 0:04:33.520 --> 0:04:36.640 Helsinki with the president is talking with Ladimir Puttin one 0:04:36.680 --> 0:04:39.160 on one and there's no witnesses and we don't know 0:04:39.160 --> 0:04:41.839 what the electronic situation was there. And then this amrose 0:04:41.920 --> 0:04:43.880 to tape that that came out in the last week. 0:04:43.920 --> 0:04:47.360 These are all unprecedented things, and so I don't have 0:04:47.440 --> 0:04:50.520 confidence right now in terms of communications, uh, the way 0:04:50.560 --> 0:04:52.960 I did pre two thousand sixteen. I just know working 0:04:52.960 --> 0:04:55.039 in the government, you didn't take a cell phone in 0:04:55.080 --> 0:04:59.000 anywhere or recording device in anywhere. So it's pretty startling 0:04:59.040 --> 0:05:01.480 to see these revelations come forward, if they're true. And 0:05:01.680 --> 0:05:06.240 just to be clear, uh, Omar rosso Manigald Newman, she 0:05:06.600 --> 0:05:10.440 was a former White House advisor who got fired uh 0:05:10.480 --> 0:05:14.599 and is releasing tapes that she made of President Trump. Uh. 0:05:14.640 --> 0:05:16.719 And she is saying that she has more that she 0:05:16.839 --> 0:05:22.000 will release. President Trump has a couple of colorful tweets 0:05:22.080 --> 0:05:25.960 in response, for example, I'll read you the latest one. Well, 0:05:25.960 --> 0:05:27.800 I know it's not presidential to take on a low 0:05:27.839 --> 0:05:30.960 life like Omar Rossa. And while I would rather not 0:05:31.000 --> 0:05:34.039 be doing so, this is a modern day form of communication, 0:05:34.200 --> 0:05:36.359 and I know the fake news media will be working 0:05:36.400 --> 0:05:40.560 overtime to make even wacky h Omar Rossa look legitimate 0:05:40.640 --> 0:05:44.800 as possible. Sorry, So what is the possible consequence other 0:05:44.839 --> 0:05:47.200 than being this sort of soap opera that everybody is following. 0:05:47.240 --> 0:05:51.160 What is the potential security consequence of have somebody taping 0:05:51.480 --> 0:05:55.760 the current president in the White House and potential advisors. 0:05:56.320 --> 0:05:59.480 What is the security concern here? Yeah, Well, as we 0:05:59.600 --> 0:06:02.760 talked out with the uh eleven year old that may 0:06:02.800 --> 0:06:06.040 be hacked into a simulated voting machine, we don't know 0:06:06.320 --> 0:06:10.160 who's hacked into those devices. Uh, John Kelly, the Chief 0:06:10.160 --> 0:06:12.120 of Staff, there was another point just a few months 0:06:12.120 --> 0:06:14.960 ago where there was reporting that his personal phone had 0:06:15.000 --> 0:06:17.800 been compromised at one point or hacked into. We know 0:06:17.880 --> 0:06:21.000 the President tweets a lot, and so he's carrying around 0:06:21.000 --> 0:06:23.800 a device as well, and so all of the security 0:06:23.800 --> 0:06:26.840 protocols that they're not being followed through on provide an 0:06:26.839 --> 0:06:30.159 open window, uh, you know, either in terms of access 0:06:30.240 --> 0:06:33.960 via microphone, email, or even possibly video at some point 0:06:34.480 --> 0:06:39.960 into our government. And this is just unprecedented. Usually, I know, 0:06:40.080 --> 0:06:43.240 working at the FBI and even with the military, you 0:06:43.320 --> 0:06:45.480 leave your phone in the car, you leave it at 0:06:45.480 --> 0:06:47.880 the door, checked into a box. And so this is 0:06:47.920 --> 0:06:51.360 the highest pinnacle of our government and we have people 0:06:51.400 --> 0:06:54.839 carrying around devices, not only using them uh in places 0:06:54.839 --> 0:06:57.360 maybe they shouldn't be, but using them to record each other. 0:06:57.839 --> 0:07:00.560 Just think the erosion of trust on that staff, right, 0:07:00.560 --> 0:07:03.360 now if you thought you were being recorded by your coworkers, 0:07:03.640 --> 0:07:06.560 where you couldn't openly discuss policy or move forward. It 0:07:06.680 --> 0:07:10.360 slows down the wheels of government at every single level. 0:07:10.400 --> 0:07:13.280 And it also probably makes long time civil servants in 0:07:13.280 --> 0:07:16.120 our country very nervous to not be sure that they 0:07:16.120 --> 0:07:20.880 can openly and discuss policy freely with leadership without maybe 0:07:20.880 --> 0:07:23.440 being recorded by one of their colleagues or with somebody 0:07:23.440 --> 0:07:26.640 in the administration. It's a really dark time in terms 0:07:26.680 --> 0:07:29.920 of personal trust inside the White House. Clint Watts, do 0:07:30.000 --> 0:07:35.040 you believe that your communications are monitored or have been monitored, 0:07:35.120 --> 0:07:40.880 either by US intelligence forces or by overseas intelligence agencies. 0:07:42.200 --> 0:07:44.800 I assume so, you know, in a certain context. I 0:07:44.880 --> 0:07:49.480 traveled overseas before. I know in in certain countries just 0:07:49.520 --> 0:07:53.440 in terms of their cyber capabilities, and in authoritarian regimes 0:07:53.440 --> 0:07:57.280 in particular, they tend to monitor very heavily. That's whether 0:07:57.320 --> 0:08:01.000 you're in Southeast Asia, China, you know, Europe, whatever it 0:08:01.080 --> 0:08:03.720 might be. I always kind of operate under the assumption 0:08:03.720 --> 0:08:06.840 that when I'm particularly in a foreign country or accessing 0:08:06.880 --> 0:08:10.040 through WiFi when I'm traveling, that I'm putting myself at risk, 0:08:10.240 --> 0:08:14.040 because that's it's just different. The standards of surveillance are 0:08:14.040 --> 0:08:16.880 different in different countries. In terms of the United States, 0:08:16.920 --> 0:08:19.280 I can't say that that's the case, but I've definitely 0:08:19.280 --> 0:08:22.280 had hacking attempts against me and and institutions that I've 0:08:22.320 --> 0:08:24.680 worked for. Clint Watts, thank you so much for being 0:08:24.680 --> 0:08:26.800 with us and for all your insights. Clint Watts is 0:08:26.840 --> 0:08:30.280 a former FBI Special Agent. He is currently Senior Fellow 0:08:30.320 --> 0:08:34.199 at the Foreign Policy Research Institute. He also is UH 0:08:34.360 --> 0:08:36.760 a Senior Fellow at the Center for Cyber and Homeland 0:08:36.800 --> 0:08:54.120 Security at the George Washington University. You know, Lisa, at 0:08:54.160 --> 0:08:58.160 the beginning of the year, one dollar would get you 0:08:58.520 --> 0:09:03.520 three point seven for Turkish lira. How many you get today? Yes, 0:09:03.840 --> 0:09:08.520 good question, six point nine one. That is a drop 0:09:08.559 --> 0:09:12.600 in value of more than eighty per cent. Dr Win 0:09:12.720 --> 0:09:15.160 Thin is the global head of Emerging Markets FX for 0:09:15.320 --> 0:09:19.360 Brown Brothers harrim and he joins us now. Dr Win Thin, 0:09:19.720 --> 0:09:22.560 were you able to call this decline in the value 0:09:22.559 --> 0:09:26.440 of the Turkish lira? Well? Uh, first of all, thanks 0:09:26.440 --> 0:09:29.600 for having me. Um. Yes, I've been embarrassed on Turkish 0:09:29.679 --> 0:09:32.040 lever for most of this year, but I think the 0:09:32.080 --> 0:09:34.880 speed of this decline is is great than anyone imagined. 0:09:35.679 --> 0:09:39.880 Why Well, I think in general markets surprise that there's 0:09:39.880 --> 0:09:43.920 been a putal lack of action by the policymakers. Um, 0:09:43.960 --> 0:09:45.920 if they'd come in and allow the center brank to 0:09:45.960 --> 0:09:50.320 high grades. Uh, it takes some orthodox measures. We wouldn't 0:09:50.360 --> 0:09:52.319 be in the situation who we are now, I think. 0:09:52.320 --> 0:09:55.560 But by waiting so long, the situation is really close 0:09:55.600 --> 0:09:58.920 to getting out of hand. Um. And you know at 0:09:58.920 --> 0:10:01.520 this point the sky's limit, all right, So when you 0:10:01.559 --> 0:10:04.120 stay close to getting out of hand, what's the worst 0:10:04.200 --> 0:10:07.480 case scenario and how much should investors in other parts 0:10:07.480 --> 0:10:11.319 of the world care? Well? Luckily? Well, let nas the 0:10:11.360 --> 0:10:13.040 second part first, that you know lucky. I have been 0:10:13.040 --> 0:10:16.840 down playing the denotion of compasion. I mean, if you 0:10:16.840 --> 0:10:19.240 look at em and we've been in a bear market 0:10:19.240 --> 0:10:22.520 for e M for for really much of this year, 0:10:23.160 --> 0:10:26.120 and so you know, I shy away from atasion. I 0:10:26.160 --> 0:10:28.120 think you know, we have rising US interest rates, we 0:10:28.200 --> 0:10:31.520 have rising global tensions, we have economic ris from China. 0:10:31.520 --> 0:10:34.720 There's all very negative em. So my what I've been 0:10:34.720 --> 0:10:38.479 telling clients is that well, within this bears e M backdrop, 0:10:38.559 --> 0:10:42.240 we've got five currencies that are have idiosynocratic risks. That 0:10:42.240 --> 0:10:45.480 are underperforming. That would be Turkish Layer, Argentine Pasto, Brazilian Real, 0:10:45.840 --> 0:10:48.320 Russian Rouble, South Africana Ran. So if you hold any 0:10:48.320 --> 0:10:50.520 five of those currencies, and yes, that would be very concerned. 0:10:50.960 --> 0:10:52.480 That's the bad news. The good news is if you 0:10:52.480 --> 0:10:54.640 look at your wonderful w c RS page, you see 0:10:54.679 --> 0:10:56.439 here to date we actually have the Colombian paste to 0:10:56.520 --> 0:10:59.400 in the mixing pay up here to date Malaitian ring 0:10:59.440 --> 0:11:03.040 get only down three proven sold down when so there's 0:11:03.040 --> 0:11:05.880 definitely divergences within e M and that to me sort 0:11:05.880 --> 0:11:08.880 of speaks less of the sort of contagion and more 0:11:09.440 --> 0:11:12.959 sort of divergences within a bear market. Do you believe 0:11:12.960 --> 0:11:15.920 that there are going to be any surprises from European 0:11:16.040 --> 0:11:20.560 banks that hold large amounts of Turkish debt? Well, we 0:11:20.600 --> 0:11:25.000 know already from ECB that there are several European banks 0:11:25.000 --> 0:11:27.600 that have exposed to Turkey. But uh, you know, if 0:11:27.600 --> 0:11:30.559 we're talked about systemic risk, I don't think it's big enough, 0:11:31.760 --> 0:11:34.560 big enough that big of a concern. Strongly they'll be 0:11:35.120 --> 0:11:38.760 against either scar risks to certain corporates, certain banks, but 0:11:38.800 --> 0:11:43.960 in terms of a widespread systemic um sorry or two 0:11:44.280 --> 0:11:47.520 seven eight type crisis. I really would downplay that. I 0:11:47.520 --> 0:11:49.200 don't think we're as leveraged as we were back in 0:11:49.200 --> 0:11:53.040 those days. The fundamentals in many of these countries are better. 0:11:53.640 --> 0:11:55.080 You know, of course I always hesitate to say this 0:11:55.160 --> 0:11:57.880 time is different, but uh, you know, I'm going to 0:11:58.000 --> 0:11:59.520 kind of go on a limb and and and say 0:11:59.840 --> 0:12:03.200 and downplay the systemic risk. Well, just to be Debbie Downer, 0:12:03.320 --> 0:12:05.280 what would you have to see in order to change 0:12:05.280 --> 0:12:11.560 your view that perhaps this does have more potential for contagion. Uh, well, 0:12:11.600 --> 0:12:13.920 I think we have to see, uh, some greater knock 0:12:13.920 --> 0:12:16.320 on effects. I think the global growth and in that respect, 0:12:16.520 --> 0:12:19.160 Turkeys is no China. Uh, It's one of the larger 0:12:19.200 --> 0:12:22.800 EM countries, but it's it's it's by no means a heavyweight. Uh. 0:12:23.000 --> 0:12:26.520 We have uh several other EM current countries that are 0:12:26.600 --> 0:12:28.640 much more important to the sort of the global supply chain. 0:12:29.400 --> 0:12:32.880 You know. I think the one sort of big unknown 0:12:32.880 --> 0:12:37.000 as sal political risk. I mean, in that respect, Turkeys 0:12:37.040 --> 0:12:40.840 certainly punches above its weight. Um, but you know, again 0:12:40.880 --> 0:12:44.320 it's you know, I think the banking systems in the 0:12:44.360 --> 0:12:47.959 developed world are much stronger now after crisis. Again, you know, 0:12:47.960 --> 0:12:51.960 we've been through a multi year period of de leveraging. Again, 0:12:52.120 --> 0:12:54.040 that's not to say they're not gonna be individual victims 0:12:54.040 --> 0:12:57.080 and individual casualties. But again I'm I'm at this point 0:12:57.120 --> 0:13:01.559 downplaying the systemic risks, al right, down the risks. What 0:13:01.760 --> 0:13:06.880 if there is some political repercussions in Turkey because of 0:13:06.880 --> 0:13:12.040 this in terms of its relations with the West, or 0:13:12.240 --> 0:13:17.880 were relations internally with the government of of President Urdwan 0:13:18.200 --> 0:13:23.160 because of increased inflation, or because of the inability of 0:13:23.200 --> 0:13:28.600 the country in order to import its necessary fuel obligations. Well, 0:13:28.640 --> 0:13:31.520 I will say this, Um, you know, in some ways 0:13:31.640 --> 0:13:34.640 urd One is lucky this happen after selection, because obviously 0:13:34.679 --> 0:13:37.120 there's gonna be a terrible pain. I went back and 0:13:37.120 --> 0:13:39.839 look back at the two major crisis Turkeys. Turkey that 0:13:39.960 --> 0:13:45.439 suffered in recent years. We had a seventy percent evaluation 0:13:45.920 --> 0:13:50.520 that year. The economy contracted five back in two thousand one. Uh. 0:13:50.679 --> 0:13:53.840 The litteral loss I think, uh seventy percent of its 0:13:53.920 --> 0:13:57.800 value UH and the economic contract about six per So 0:13:57.840 --> 0:13:59.440 at the very least, I think that the risk of 0:13:59.440 --> 0:14:02.000 a hard land are there. The way things are going, 0:14:02.720 --> 0:14:05.480 we're going to the brink. We're gonna have hard landing. Whoever, 0:14:05.559 --> 0:14:11.960 recession in Turkey, spiky inflation, corporate default um and probably 0:14:12.000 --> 0:14:15.360 some banking failures. Yes, that's very bad for Urwan, but 0:14:15.400 --> 0:14:17.440 he's lucky. He just got releacted, so he's he's safe 0:14:17.480 --> 0:14:19.240 the next four or five years. So and one of 0:14:19.280 --> 0:14:20.880 the things, we get your crisis, you might as well 0:14:20.920 --> 0:14:23.480 get it early in your term. Well, he certainly has 0:14:23.480 --> 0:14:25.600 a crisis on his hands, but he's got plenty of 0:14:25.800 --> 0:14:28.760 play of runway to go there. Dr Winton, thank you 0:14:28.800 --> 0:14:30.600 so much for being with us. It's always a pleasure 0:14:30.640 --> 0:14:33.400 having new Dr Winton is Global Head of Emerging Markets 0:14:33.480 --> 0:14:48.520 f X for Brown Brothers Harriman in New York City. 0:14:51.240 --> 0:14:55.080 Another day, another announcement of new tariffs. It is hard 0:14:55.120 --> 0:14:58.600 to keep track of which country and which as a 0:14:58.680 --> 0:15:01.560 class commodity is getting hit. Arlen Siderman is going to 0:15:01.640 --> 0:15:03.960 help us understand where we need to be focused right 0:15:03.960 --> 0:15:06.640 now when it comes to the commodity market. Arlan is 0:15:06.720 --> 0:15:10.440 Chief Commodities Economistic I N T l f C S Stone, 0:15:11.120 --> 0:15:14.280 or rather I N T l F C Stone, based 0:15:14.320 --> 0:15:17.080 in Kansas City, Missouri. Thank you so much for being 0:15:17.120 --> 0:15:19.800 with us, so Arlena, and just we do hear about 0:15:19.840 --> 0:15:24.320 President Trump? Doubling tariffs and Turkish steel and aluminum Russian sanctions. Obviously, 0:15:24.320 --> 0:15:28.520 we have the escalating tariff off with China and European Union, 0:15:28.840 --> 0:15:31.960 although that's cooled a little bit. Which set of tariffs 0:15:31.960 --> 0:15:36.760 so far have had the greatest impact on commodity prices 0:15:36.840 --> 0:15:40.200 from your view, Well, certainly the trade war with China 0:15:40.240 --> 0:15:43.080 has had the biggest impact. China is the largest importer 0:15:43.200 --> 0:15:46.160 of commodities overall, and they tend to set the tone 0:15:46.200 --> 0:15:49.760 for the world, and to to lose that market is 0:15:49.800 --> 0:15:53.880 certainly has the biggest impact. Well, they might lose a 0:15:53.920 --> 0:15:57.440 certain market, but what about the market for energy that's 0:15:57.480 --> 0:16:01.200 made by the United States. Hasn't that changed things? Well, 0:16:01.200 --> 0:16:04.160 it certainly has, and we saw as Bloomberg reported on 0:16:04.200 --> 0:16:08.840 Friday that China lifting the tariff, the retaliatory tariff on 0:16:08.920 --> 0:16:11.560 crude oil, I think really shows a significance that the 0:16:11.600 --> 0:16:15.560 United States plays now in the global energy markets. And 0:16:15.600 --> 0:16:17.680 I think it also shows a crack in the armor 0:16:18.000 --> 0:16:22.480 armor of China. Their economy cannot afford to see inflation 0:16:22.520 --> 0:16:26.560 pressures right now. Even some of the social media within China, 0:16:27.000 --> 0:16:30.200 UH seeing some resistance starting to come up from the 0:16:30.240 --> 0:16:34.120 general public. UH comments that the soybean cargo from the 0:16:34.200 --> 0:16:36.280 United States that was holed up in their port for 0:16:36.280 --> 0:16:40.440 about five weeks trying to get unloaded. That all this 0:16:40.520 --> 0:16:43.000 is going to end up costing the consumers. So there 0:16:43.080 --> 0:16:45.080 are some signs of the cracks in the armor there 0:16:45.080 --> 0:16:48.400 in China. I don't expect an end anytime soon. Um, 0:16:48.440 --> 0:16:52.360 but it's still the big player. The big question, Arlen, 0:16:52.640 --> 0:16:56.320 is at what point will all of these tariffs significantly 0:16:56.480 --> 0:17:01.040 slow global growth? And I'm particularly talking about the tip 0:17:01.080 --> 0:17:03.280 for Chad that we're seeing between the US and China. 0:17:03.360 --> 0:17:06.920 What's the answer. Well, I think we're seeing it already 0:17:06.960 --> 0:17:09.920 in China and the US numbers are still strong. Uh. 0:17:10.119 --> 0:17:14.400 China United States are certainly big players in the world market. UH. 0:17:14.560 --> 0:17:18.399 China has an influence on Europe as well. And so 0:17:18.480 --> 0:17:20.400 I think as we go forward and we look at 0:17:20.400 --> 0:17:23.760 the fourth quarter, we probably start seeing some numbers. I 0:17:23.800 --> 0:17:26.840 think we probably, in my opinion, we get a trade deal, 0:17:26.920 --> 0:17:31.200 probably negotiated somewhere in the November December time period. By 0:17:31.240 --> 0:17:34.080 that time we'd probably be starting to see some effects 0:17:34.080 --> 0:17:37.000 on global economic growth. But if we get a deal 0:17:37.040 --> 0:17:39.359 in that time period, then I think some of the 0:17:39.480 --> 0:17:42.200 other trading partners that we have spats, we start to 0:17:42.240 --> 0:17:44.720 fall in place as well, and we start picking some 0:17:44.800 --> 0:17:47.159 momentum backed up again in the first second quarter of 0:17:47.240 --> 0:17:50.080 next year. Arlen, what can you tell us about the 0:17:50.119 --> 0:17:54.880 soft commodity complex, specifically when it comes to soybeans and 0:17:54.920 --> 0:17:58.680 wheat and corn and how their prices have just tumbled 0:17:58.720 --> 0:18:04.640 I mean soybeans nearly twent in just the last sixty days. Oh, 0:18:04.640 --> 0:18:08.199 it's a really amazing since we're setting record exports this summer, 0:18:08.280 --> 0:18:10.840 for this time of year now, the fall is our 0:18:10.920 --> 0:18:13.560 big exports season. Of course, China is a big part 0:18:13.640 --> 0:18:17.440 of that, but with China being the only customer really 0:18:17.520 --> 0:18:21.480 for Brazil, Brazil has a captive customer. Their prices are 0:18:21.640 --> 0:18:26.280 running about above US prices, So the rest of the 0:18:26.280 --> 0:18:29.440 world's coming to United States for soybeans and will likely 0:18:29.560 --> 0:18:32.920 continue to do that as supplies become tight in Brazil, 0:18:33.359 --> 0:18:37.520 this falling right into probably late January February when they 0:18:37.520 --> 0:18:41.480 have new crop supplies available. Uh. Corn and wheat are 0:18:41.560 --> 0:18:44.520 really little affected by this, so they're really caught up 0:18:44.520 --> 0:18:46.959 in the current. And if you look at the numbers 0:18:46.960 --> 0:18:50.440 from USDA on Friday, they were really pretty positive even 0:18:50.440 --> 0:18:52.720 though it had a bigger corn crop than expected. We're 0:18:52.720 --> 0:18:56.280 still seeing domestic stocks decline year on year and just 0:18:56.400 --> 0:18:59.600 in time supplies and global stocks are falling at a 0:18:59.680 --> 0:19:02.600 fast space. When you look at the major exporters of 0:19:02.680 --> 0:19:05.840 wheat in the world, supplies are near thirty year lows 0:19:06.200 --> 0:19:09.560 at around fourteen percent stocks to use the ratio, but 0:19:09.680 --> 0:19:13.200 corn and wheat were pulled under by the tsunami of selling, 0:19:13.240 --> 0:19:16.480 and soybeans did some chart damage. I think at some 0:19:16.600 --> 0:19:20.400 point the trade starts to see the disparity between them 0:19:20.560 --> 0:19:24.120 and starts a trade appropriately. Marlyn, is there a commodity 0:19:24.160 --> 0:19:26.240 that you think has really big upside a really big 0:19:26.440 --> 0:19:30.719 downside going forward? The people perhaps aren't pricing in I 0:19:30.720 --> 0:19:33.240 think a long term the big story is in corn, 0:19:33.760 --> 0:19:36.360 and I think corn and the energy has come out 0:19:36.400 --> 0:19:39.920 the winter. In any trade agreement we've got have with China, 0:19:40.040 --> 0:19:42.399 UH coming maybe at the end of the year or 0:19:42.400 --> 0:19:47.000 early next year. Corn supplies globally are just in time 0:19:47.040 --> 0:19:50.640 supply heavily dependent upon US production year in and year out, 0:19:51.119 --> 0:19:55.679 and and UH we're continually falling short. Production is falling 0:19:55.720 --> 0:19:57.960 short of demand. Then if you throw China in there 0:19:58.359 --> 0:20:04.120 with their move towards ethanol, blending mandate by they're rapidly 0:20:04.200 --> 0:20:08.520 building ethanol production facilities there. They do not have enough 0:20:08.520 --> 0:20:11.280 production to meet that demand. They'd like to clear up 0:20:11.280 --> 0:20:15.760 their air ahead of hosting the next Olympics. And uh, 0:20:16.200 --> 0:20:19.199 they've got some real shortages of corn. They're rapidly moving 0:20:19.200 --> 0:20:22.080 through their reserve supplies and they need to get this 0:20:22.200 --> 0:20:25.359 trade deal done before they need to start importing corn. 0:20:25.760 --> 0:20:28.760 And I think corn is probably the long term winner 0:20:28.880 --> 0:20:31.320 once we get a trade deal with China. Thanks very 0:20:31.400 --> 0:20:34.040 much for being with us. Arlen Superman is the chief 0:20:34.200 --> 0:20:53.920 Commodities economist for International fc Stone talking about corn. The 0:20:54.160 --> 0:20:58.159 Kingdom of Saudi Arabia's public Investment Fund had approached to 0:20:58.200 --> 0:21:03.240 Elon Musk going back almost two years about taking Tesla private. 0:21:03.720 --> 0:21:06.840 It's according to a blog post by Elon Musk, the 0:21:06.920 --> 0:21:11.320 founder and the president and chief executive of Tesla, also 0:21:11.400 --> 0:21:15.640 happens to own nearly of Tesla shares. Here to tell 0:21:15.720 --> 0:21:19.560 us more about this potential investment is Matthew Martin, our 0:21:19.720 --> 0:21:23.800 Mid East finance reporter for Bloomberg. He's based in Dubai, 0:21:23.920 --> 0:21:27.200 but he joins us from London today. Matthew, thank you 0:21:27.280 --> 0:21:28.880 very much for being with us. What can you tell 0:21:28.960 --> 0:21:33.040 us about the interest that the Saudi Arabian Investment Fund 0:21:33.080 --> 0:21:37.560 has has made in Tesla? Well, thanks for having me. UM. Look, 0:21:37.600 --> 0:21:42.639 I think the Public Investment Fund really embarked on a 0:21:42.800 --> 0:21:46.480 very strategic shift about two years ago. It used to 0:21:46.480 --> 0:21:50.320 be very domestically focused and investing within Saudi Arabia, and 0:21:50.320 --> 0:21:54.200 then under the new rulers in Saudia, Saudi Arabia that 0:21:54.320 --> 0:21:57.240 the the onus came on the fund to start looking 0:21:57.240 --> 0:22:01.000 at investing outside um and in start trying to diversify 0:22:01.040 --> 0:22:04.800 the country away from the reliance on oil and obviously, 0:22:04.920 --> 0:22:08.000 you know, one of the biggest oil exporters in the world, 0:22:08.119 --> 0:22:10.639 so they're looking at ways that they can diversify around that. 0:22:10.720 --> 0:22:13.520 And I think, you know, as we've seen from what 0:22:13.600 --> 0:22:16.880 Elon Musk has said, as long ago as two years ago, 0:22:16.920 --> 0:22:19.919 they had identified Tesla as being part of that strategy. 0:22:20.040 --> 0:22:22.200 And I think we've seen the Saudi Is now being 0:22:22.280 --> 0:22:26.480 very interested in the electric vehicle space as as a 0:22:26.520 --> 0:22:30.199 way of hedging against the country's obviously huge oil exposure. 0:22:30.600 --> 0:22:31.960 UM So I think you know we're going to see 0:22:31.960 --> 0:22:35.280 the Saudis being very keen on seeing this transaction go 0:22:35.400 --> 0:22:38.879 through UH and and and very keen on playing a 0:22:38.920 --> 0:22:42.800 big role in Tesla's future. So, Matthew, you said it's 0:22:42.960 --> 0:22:46.080 the Saudi Arabia would be very keen on seeing this 0:22:46.160 --> 0:22:49.920 transaction go through. Are you talking about Tesla going private? 0:22:50.000 --> 0:22:53.240 Is this transaction? And if so, why are Saudi Arabia 0:22:53.359 --> 0:22:56.359 only committing to a five percent stake of Tesla when 0:22:56.400 --> 0:22:59.240 there's a lot more up for graps. Well, so, yeah, 0:22:59.280 --> 0:23:01.680 I think they what we've seen them do is they've 0:23:01.800 --> 0:23:07.280 quietly built up this steak of five percent um just 0:23:07.400 --> 0:23:09.920 or just under five percent to avoid having to disclose 0:23:11.160 --> 0:23:13.119 what they've been doing, so that they've quietly built that 0:23:13.200 --> 0:23:16.159 up in the market in the background while they've obviously 0:23:16.200 --> 0:23:19.280 been having these conversations with Elon Musk. Um And now 0:23:19.320 --> 0:23:21.960 I think now that the potential is there for a 0:23:22.040 --> 0:23:26.440 deal to take Tesla um off the public markets. Um, 0:23:26.680 --> 0:23:28.720 the p i F is very keen to be part 0:23:28.720 --> 0:23:31.479 of that. And you know, I think that the question 0:23:31.520 --> 0:23:35.040 now is going to be how significant um an amount, 0:23:35.560 --> 0:23:37.560 how big a check can the p i F right 0:23:37.920 --> 0:23:42.679 to support Elon Musk's plan of taking Tesla private? You know, 0:23:42.760 --> 0:23:47.520