1 00:00:03,279 --> 00:00:08,600 Speaker 1: This is Bloomberg surveillance. That's something which by its nature 2 00:00:08,800 --> 00:00:12,760 Speaker 1: cannot be forecast. If you could forecast, that wouldn't be innovation. 3 00:00:12,920 --> 00:00:15,960 Speaker 1: We think that people have leap probbed what is reasonable 4 00:00:16,160 --> 00:00:19,759 Speaker 1: into excessive worry. We took some major fiscal steps to 5 00:00:19,800 --> 00:00:22,560 Speaker 1: expand the economy in two thousand nine, were followed up 6 00:00:22,560 --> 00:00:27,240 Speaker 1: with several more, but those ended prematurely. Bloomberg surveillys your 7 00:00:27,280 --> 00:00:30,920 Speaker 1: link to the world of economics, finance, and investment on 8 00:00:31,000 --> 00:00:35,199 Speaker 1: Bloomberg Radio. Good morning, Michael McKee along with Tom Keen. 9 00:00:35,360 --> 00:00:38,639 Speaker 1: It is seven am on Wall Street seven pm in Tokyo, 10 00:00:38,680 --> 00:00:40,199 Speaker 1: where the Bank of Japan is in the middle of 11 00:00:40,280 --> 00:00:44,479 Speaker 1: a two day meeting. Imagine most of the world's central 12 00:00:44,479 --> 00:00:46,680 Speaker 1: banks meeting at the same time. What would you call it? 13 00:00:47,280 --> 00:00:50,720 Speaker 1: We call that this week monetary policy being made in 14 00:00:50,800 --> 00:00:54,280 Speaker 1: the U S, tom, UK, Japan, Switzerland, Norway, South Africa, 15 00:00:54,320 --> 00:00:56,880 Speaker 1: and Russia, along with some other emerging You would have 16 00:00:56,920 --> 00:00:59,320 Speaker 1: that whole list of names. And on top of that 17 00:00:59,360 --> 00:01:02,560 Speaker 1: political the German elections yesterday followed by a big day 18 00:01:02,560 --> 00:01:04,440 Speaker 1: at the polls in the US Tomorrow going to be 19 00:01:04,440 --> 00:01:08,560 Speaker 1: a very interesting day for investors, interesting week for investors. 20 00:01:08,640 --> 00:01:11,440 Speaker 1: Around the world. Head of all that three day winning 21 00:01:11,520 --> 00:01:14,200 Speaker 1: streak for Japanese equities, the knee k up one and 22 00:01:14,240 --> 00:01:17,480 Speaker 1: three quarters percent. The yend weekends almost to one fourteen 23 00:01:17,520 --> 00:01:20,280 Speaker 1: one thirteen sixty eight. At this point the foot see 24 00:01:20,280 --> 00:01:23,520 Speaker 1: ahead of the Bank of England meeting is higher right 25 00:01:23,560 --> 00:01:27,000 Speaker 1: now by thirty six points six tenths of eight percent. 26 00:01:27,520 --> 00:01:32,440 Speaker 1: The pound is weaker one fifty five. European equities overall stronger. 27 00:01:32,480 --> 00:01:35,840 Speaker 1: The stocks six hundred is three points higher this morning, 28 00:01:35,880 --> 00:01:39,960 Speaker 1: eight tenths of eight percent. The euro has weakened one 29 00:01:40,040 --> 00:01:45,839 Speaker 1: eleven fifteen, though still way stronger than I'm sorry, way 30 00:01:45,920 --> 00:01:49,320 Speaker 1: stronger than it was when the ECB met last week. 31 00:01:49,760 --> 00:01:54,240 Speaker 1: UH strong protest vote against Angela Merkel in Germany, but 32 00:01:54,280 --> 00:01:56,680 Speaker 1: the docks is up this morning a hundred fifty five 33 00:01:56,720 --> 00:02:00,560 Speaker 1: points one point six percent. UH the US stronger dollar, 34 00:02:00,760 --> 00:02:03,440 Speaker 1: lower oil. They seem to go together. West Texas down 35 00:02:03,520 --> 00:02:07,880 Speaker 1: almost two percent this morning, thirty six eight one and 36 00:02:07,920 --> 00:02:10,799 Speaker 1: a half percent lower, which has futures down, SMP evening 37 00:02:10,840 --> 00:02:13,880 Speaker 1: features of four points about two tenths of eight percent, 38 00:02:13,960 --> 00:02:17,400 Speaker 1: a tenth drop for down futures fifteen points, and antic 39 00:02:17,440 --> 00:02:21,040 Speaker 1: features down four points. Right now a tenth of eight percent. 40 00:02:21,880 --> 00:02:26,480 Speaker 1: Interesting that central bank risk is definitely in the markets 41 00:02:26,639 --> 00:02:29,120 Speaker 1: this week, but as I noted, in Germany, political risk 42 00:02:29,240 --> 00:02:33,080 Speaker 1: is not, and in the US, investors don't seem rattled 43 00:02:33,120 --> 00:02:35,720 Speaker 1: at the moment by Trump, is um. Richard hass Is, 44 00:02:35,760 --> 00:02:38,640 Speaker 1: President of the Council on Foreign Relations. We thank him 45 00:02:38,680 --> 00:02:41,919 Speaker 1: for coming by this morning. Richard. Our investors feeling so 46 00:02:42,040 --> 00:02:45,200 Speaker 1: protected by central bank policy that they don't need to 47 00:02:45,360 --> 00:02:48,560 Speaker 1: worry at the moment about the political divisions that seem 48 00:02:48,600 --> 00:02:52,079 Speaker 1: to be arising in countries around the world. I'm not 49 00:02:52,160 --> 00:02:55,440 Speaker 1: sure people are seeing the connections that you may be 50 00:02:55,480 --> 00:02:58,680 Speaker 1: assuming here. So you have all the events you talked about, 51 00:02:58,760 --> 00:03:02,880 Speaker 1: from any number of central banks meeting to terrorist attacks 52 00:03:02,960 --> 00:03:07,160 Speaker 1: and the code Ti Voi or in Anchora, to the 53 00:03:07,320 --> 00:03:11,000 Speaker 1: German state elections, to the primary elections here. But I 54 00:03:11,040 --> 00:03:14,600 Speaker 1: don't think people necessarily are drawing direct lines or links 55 00:03:14,639 --> 00:03:17,480 Speaker 1: between any of those events and their economic situation, which 56 00:03:17,520 --> 00:03:19,639 Speaker 1: they see is as something that's apart from that. I'm 57 00:03:19,680 --> 00:03:22,679 Speaker 1: much more fundamental. The question that came to my mind 58 00:03:22,760 --> 00:03:25,920 Speaker 1: when um what I was saying about over the weekend, 59 00:03:26,040 --> 00:03:29,400 Speaker 1: with with what's going on with Trump and what's going 60 00:03:29,480 --> 00:03:32,560 Speaker 1: on in Germany and what's going on in England as 61 00:03:32,600 --> 00:03:35,520 Speaker 1: they prepare for their meeting with fiscal policy just off 62 00:03:35,600 --> 00:03:39,120 Speaker 1: the board. When fiscal policy is what people say, you know, 63 00:03:39,240 --> 00:03:41,720 Speaker 1: the experts, they would really help. What how have we 64 00:03:41,840 --> 00:03:46,600 Speaker 1: gotten to the point where people so thoroughly reject that 65 00:03:46,800 --> 00:03:49,640 Speaker 1: which would be good for them, because fiscal policy is 66 00:03:49,720 --> 00:03:52,920 Speaker 1: you and people listening to show, is about spending and taxing, 67 00:03:53,280 --> 00:03:55,200 Speaker 1: and there's hard that It's hard to think about two 68 00:03:55,280 --> 00:03:58,280 Speaker 1: more politically loaded questions than how to tax and how 69 00:03:58,360 --> 00:04:02,160 Speaker 1: to spend. Monetary has the advantage of being made by 70 00:04:02,240 --> 00:04:05,280 Speaker 1: a few people who are essentially apart from the political process. 71 00:04:05,680 --> 00:04:07,800 Speaker 1: That's the strength, that's the strength of it. But you 72 00:04:07,920 --> 00:04:10,920 Speaker 1: can't take fiscal policy out of the political process. It 73 00:04:11,080 --> 00:04:14,480 Speaker 1: is the political process, and essentially it's gridlocked in most countries. 74 00:04:14,880 --> 00:04:17,680 Speaker 1: For years though it was just talk about the US 75 00:04:17,760 --> 00:04:21,480 Speaker 1: for years, the federal government spent money to stimulate the economy. Uh, 76 00:04:21,880 --> 00:04:27,200 Speaker 1: Kanes and economics was accepted. And now uh, the whole 77 00:04:27,279 --> 00:04:31,080 Speaker 1: idea of any kind of fiscal activity is an athema. 78 00:04:31,560 --> 00:04:34,680 Speaker 1: Well it is, and you see it particularly course of 79 00:04:34,760 --> 00:04:37,240 Speaker 1: some changes in the in the Republican Party. And I 80 00:04:37,279 --> 00:04:39,320 Speaker 1: think in this country, I won't speak for others. The 81 00:04:39,400 --> 00:04:43,960 Speaker 1: inability to agree on fiscal policy is increasingly a reflection 82 00:04:44,040 --> 00:04:48,560 Speaker 1: of the polarization of of of our politics. I think 83 00:04:48,640 --> 00:04:51,000 Speaker 1: you had you finally had say, a budget deal this year. 84 00:04:51,120 --> 00:04:53,440 Speaker 1: But what's is interesting is what it didn't get to, 85 00:04:54,160 --> 00:04:56,760 Speaker 1: among other things, that it didn't touch entitlements, it didn't 86 00:04:56,800 --> 00:05:00,760 Speaker 1: touch some important parts of the society and the economy. 87 00:05:00,800 --> 00:05:04,240 Speaker 1: Infrastructure is still not getting funded anywhere near the way 88 00:05:04,279 --> 00:05:06,680 Speaker 1: it uh it should in this country. I just think 89 00:05:06,720 --> 00:05:09,600 Speaker 1: these things, uh here are the inability to deal with 90 00:05:09,680 --> 00:05:13,440 Speaker 1: fiscal policy is a reflection of our political gridlock, and 91 00:05:13,480 --> 00:05:14,880 Speaker 1: I just don't see at the moment how to how 92 00:05:14,880 --> 00:05:17,560 Speaker 1: to change that anytime. So an important conversation this morning 93 00:05:17,600 --> 00:05:20,040 Speaker 1: with Richard Hawas the Council and formulations of course, with 94 00:05:20,080 --> 00:05:23,400 Speaker 1: all due respect with our politics, look for that this 95 00:05:23,560 --> 00:05:27,359 Speaker 1: evening and through the election day tomorrow in Florida, Ohio 96 00:05:27,560 --> 00:05:31,440 Speaker 1: and others selected states. Bloomberg Surveillance this Monday, brought to 97 00:05:31,560 --> 00:05:34,920 Speaker 1: by Investco. Investco believes it's time to say goodbye to 98 00:05:34,960 --> 00:05:39,800 Speaker 1: the traditional sixty forty stock bond allocations, say hello two 99 00:05:39,880 --> 00:05:43,760 Speaker 1: alternatives as a core part of modern portfolios. Learn more 100 00:05:43,880 --> 00:05:47,680 Speaker 1: at investco dot com. Slash Alts Investco I n v 101 00:05:48,200 --> 00:05:52,520 Speaker 1: s CEO Investco dot Com, slash Alts A l T 102 00:05:53,040 --> 00:05:55,960 Speaker 1: S and we thank Investco for their commitment to our 103 00:05:56,040 --> 00:06:01,120 Speaker 1: conversation on economics, finance, investment and Internet relations, which means 104 00:06:01,240 --> 00:06:04,360 Speaker 1: Richard Hans is a good person to speak to. What's 105 00:06:04,360 --> 00:06:05,720 Speaker 1: your new book going to be called? I know you've 106 00:06:05,720 --> 00:06:08,200 Speaker 1: already sold the movie rights. What what's the book going 107 00:06:08,240 --> 00:06:10,720 Speaker 1: to be called? Us? Who you're playing that? Tom? It's 108 00:06:10,760 --> 00:06:14,320 Speaker 1: called A World in Disarray and Penguin Press is publishing 109 00:06:14,360 --> 00:06:18,320 Speaker 1: it later this year. It is America in disarray. No 110 00:06:18,560 --> 00:06:21,280 Speaker 1: one thought we'd be where we are after the last 111 00:06:21,320 --> 00:06:27,119 Speaker 1: ten days we've seen. Define establishment and it's a hugely 112 00:06:27,200 --> 00:06:30,760 Speaker 1: misused word. Define establishment and tell me what the to 113 00:06:30,880 --> 00:06:33,039 Speaker 1: do list is. One of the reasons the world isn't 114 00:06:33,040 --> 00:06:35,719 Speaker 1: disarray is because the United States isn't disarray. And one 115 00:06:35,760 --> 00:06:38,040 Speaker 1: of the reasons the United States is in disarray is 116 00:06:38,080 --> 00:06:40,440 Speaker 1: there isn't any establishment anymore. And by that I mean 117 00:06:40,520 --> 00:06:44,119 Speaker 1: there there's there's no consensus. There's no consensus between the parties. 118 00:06:44,160 --> 00:06:46,880 Speaker 1: We were just talking about that, there's no consensus within 119 00:06:46,960 --> 00:06:50,120 Speaker 1: the parties, there's no consensus outside the parties. This is 120 00:06:50,160 --> 00:06:53,040 Speaker 1: a country which has changed in so many ways demographically, 121 00:06:53,760 --> 00:06:57,440 Speaker 1: uh politically, economically, socially. The consensus was born of the 122 00:06:57,600 --> 00:06:59,960 Speaker 1: United States. It was very much centered in the northeast. 123 00:07:00,800 --> 00:07:03,880 Speaker 1: It was a much smaller country in terms of population, 124 00:07:04,040 --> 00:07:07,120 Speaker 1: much more controlled by men. It was controlled by politics 125 00:07:07,240 --> 00:07:10,720 Speaker 1: that was essentially between the forty yard lines. Major media 126 00:07:10,840 --> 00:07:13,640 Speaker 1: had a large role. It was before the Internet and 127 00:07:13,720 --> 00:07:17,400 Speaker 1: so forth. Well, suddenly we're seeing narrowcasting rather than broadcasting. 128 00:07:17,480 --> 00:07:19,680 Speaker 1: We're seeing all sorts of ways of funding our politics 129 00:07:19,800 --> 00:07:23,640 Speaker 1: that don't require parties. We're seeing the country has demographically 130 00:07:23,760 --> 00:07:26,080 Speaker 1: changed in any number of ways. So I actually think 131 00:07:26,440 --> 00:07:29,680 Speaker 1: it's it's increasingly impossible to speak of an establishment that 132 00:07:29,800 --> 00:07:33,240 Speaker 1: also has unraveled because of political developments from Vietnam to 133 00:07:33,400 --> 00:07:36,680 Speaker 1: the to the two thousand three Iraq War. On foreign policy, 134 00:07:37,480 --> 00:07:40,640 Speaker 1: basic questions about civil liberties versus privacy. Look at the 135 00:07:40,680 --> 00:07:44,120 Speaker 1: debate between FBI and Apple, some of the problems over 136 00:07:44,200 --> 00:07:47,280 Speaker 1: two thousand eight, and fundamental questions now we're seeing, for example, 137 00:07:47,320 --> 00:07:50,560 Speaker 1: about trade. Used to have an establishment view that free 138 00:07:50,600 --> 00:07:52,920 Speaker 1: trade was good to United States. That is completely out 139 00:07:53,000 --> 00:07:55,960 Speaker 1: the window, and both Democrats and Republicans are beginning to 140 00:07:56,040 --> 00:07:59,400 Speaker 1: question and Michael Ambassador House told me an hour ago 141 00:07:59,680 --> 00:08:02,320 Speaker 1: that EPP really is at risk. I mean, it's just 142 00:08:02,520 --> 00:08:05,280 Speaker 1: it's just evaporated after what we've seen over two years. 143 00:08:05,960 --> 00:08:08,360 Speaker 1: I just don't see it getting passed. Uh not just 144 00:08:08,520 --> 00:08:10,240 Speaker 1: before the election. It's very hard to see how it 145 00:08:10,240 --> 00:08:13,360 Speaker 1: gets passed in the Lane duck now and in its 146 00:08:13,440 --> 00:08:15,320 Speaker 1: present form. I don't think any of the four top 147 00:08:15,400 --> 00:08:18,360 Speaker 1: people would be committed to passing against them. You're talking 148 00:08:18,400 --> 00:08:22,520 Speaker 1: about either renegotiation with the other parties, which is extremely difficult, 149 00:08:22,800 --> 00:08:25,080 Speaker 1: or some sort of a unilateral deal on the United 150 00:08:25,120 --> 00:08:27,680 Speaker 1: States between the Executive Branch and Congress certain sorts of 151 00:08:27,760 --> 00:08:31,040 Speaker 1: side agreements and understandings. So either way that the path 152 00:08:31,160 --> 00:08:33,960 Speaker 1: for t p P has become far more tenuous. Let 153 00:08:34,000 --> 00:08:36,160 Speaker 1: me ask you to expand on what you said about 154 00:08:36,280 --> 00:08:41,160 Speaker 1: no UM consensus. We tend we're in the Northeast, We're 155 00:08:41,200 --> 00:08:45,079 Speaker 1: in New York. We are where the media focus is. 156 00:08:45,640 --> 00:08:49,080 Speaker 1: We watch television constantly, the cable networks in the tank 157 00:08:49,160 --> 00:08:52,200 Speaker 1: for Donald Trump, and uh, you know all this stuff 158 00:08:52,240 --> 00:08:54,720 Speaker 1: that's going on. But in the rest of the country, 159 00:08:54,800 --> 00:08:58,199 Speaker 1: where people aren't as narrowly focused minute by minute on 160 00:08:58,320 --> 00:09:01,640 Speaker 1: all this stuff, is there more of a uh, consensus 161 00:09:01,720 --> 00:09:04,360 Speaker 1: about what should happen in the country. In other words, 162 00:09:04,679 --> 00:09:08,360 Speaker 1: is there more of a middle class, a middle not class, 163 00:09:08,440 --> 00:09:10,760 Speaker 1: but the middle view of what should happen out there 164 00:09:10,760 --> 00:09:13,959 Speaker 1: than maybe we give credit. I don't. I don't think 165 00:09:14,000 --> 00:09:15,920 Speaker 1: so in terms of what the policy should be. And 166 00:09:15,920 --> 00:09:19,360 Speaker 1: there's often disconnects. So you see people you know, very 167 00:09:19,640 --> 00:09:23,760 Speaker 1: concerned about any changes to entitlements, to Social Security, to medicaid. 168 00:09:24,280 --> 00:09:27,120 Speaker 1: You see, on the other hand, they also then will complain, 169 00:09:27,240 --> 00:09:30,320 Speaker 1: complain about the size of the deficit and the debt 170 00:09:31,160 --> 00:09:33,800 Speaker 1: h an issue after issue. I think there's certain intellectual 171 00:09:33,840 --> 00:09:36,000 Speaker 1: and political disconnects. But now I don't think if you 172 00:09:36,080 --> 00:09:39,400 Speaker 1: get outside with the Beltway in Washington, or the Northeast Corridor, 173 00:09:39,480 --> 00:09:42,200 Speaker 1: the Amtract corridor, I don't think there's what we call 174 00:09:42,400 --> 00:09:45,719 Speaker 1: rotc rest of the country consensus. I don't think. I 175 00:09:45,960 --> 00:09:49,760 Speaker 1: don't think it's it's there. Mike mentioned, I believe it 176 00:09:49,840 --> 00:09:52,600 Speaker 1: was a Michigan election in that Tuesday a week ago 177 00:09:52,720 --> 00:09:57,400 Speaker 1: seems forever ago. After what we witnessed, the massive turnout, 178 00:09:57,679 --> 00:10:00,560 Speaker 1: in the massive belief that this system is not working. 179 00:10:00,960 --> 00:10:04,240 Speaker 1: The the overwhelming thing is a public that flat out 180 00:10:04,320 --> 00:10:08,520 Speaker 1: disagrees with the elite optimism we get in this show, absolutely, 181 00:10:08,640 --> 00:10:10,800 Speaker 1: and people don't feel the system is working for them. 182 00:10:10,840 --> 00:10:13,120 Speaker 1: I think they feel it's rigged. And what's interesting is 183 00:10:13,320 --> 00:10:15,760 Speaker 1: if you take some of the talking points of Donald 184 00:10:15,800 --> 00:10:18,520 Speaker 1: Trump and some of the talking points of Bernie Sanders, 185 00:10:18,800 --> 00:10:23,160 Speaker 1: there's a considerable overlap between those talking pointtions is considerable, well, uh, 186 00:10:23,720 --> 00:10:26,760 Speaker 1: common deal, but they're both in some ways crossover candidates. 187 00:10:26,920 --> 00:10:28,520 Speaker 1: And I think we're beginning to see Tom and this 188 00:10:28,600 --> 00:10:30,520 Speaker 1: is slightly dangerous ground, but I think we're beginning to 189 00:10:30,520 --> 00:10:33,679 Speaker 1: see greater class appeals in American side of the part 190 00:10:33,720 --> 00:10:35,839 Speaker 1: of the ethos of the United States because of upward 191 00:10:35,880 --> 00:10:39,120 Speaker 1: mobility is we never really thought about class. We're gonna 192 00:10:39,160 --> 00:10:41,480 Speaker 1: come back with Richard Hanks of the Console on formulations, 193 00:10:41,520 --> 00:10:47,000 Speaker 1: these important conversations before Florida, Ohio and others vote tomorrow. 194 00:10:47,120 --> 00:10:54,040 Speaker 1: Futures negative four. All right, that's second with Michael Barnet 195 00:10:54,040 --> 00:10:56,559 Speaker 1: the Latest World of National Headlines. Michael, Mike, Tom, thank 196 00:10:56,600 --> 00:10:59,599 Speaker 1: you very much. Five primaries take place tomorrow and the 197 00:10:59,679 --> 00:11:03,000 Speaker 1: Canda bits are trying to push their case. Donald Trump 198 00:11:03,040 --> 00:11:05,800 Speaker 1: could basically set up an insurmountable lead if he has 199 00:11:05,840 --> 00:11:09,520 Speaker 1: a big day. His Republican rivals continue their criticism of 200 00:11:09,559 --> 00:11:12,719 Speaker 1: the violence at some of Trump's rallies, accusing Trump of 201 00:11:12,960 --> 00:11:16,880 Speaker 1: causing it with his comments. The primaries are in Ohio, Illinois, Missouri, 202 00:11:16,960 --> 00:11:21,319 Speaker 1: North Carolina, and Florida. Turkey's air force is hitting Kurdish 203 00:11:21,400 --> 00:11:24,840 Speaker 1: rebels in northern Iraq today, hours after a suicide car 204 00:11:24,920 --> 00:11:28,440 Speaker 1: bombing and anchor killed thirty seven people and heightened tensions 205 00:11:28,480 --> 00:11:31,560 Speaker 1: with the Kurdish rebels. Police plan to resume their search 206 00:11:31,679 --> 00:11:33,840 Speaker 1: later this morning on the Hudson River for the body 207 00:11:34,080 --> 00:11:36,559 Speaker 1: of a third crew member who went missing after a 208 00:11:36,640 --> 00:11:40,160 Speaker 1: tug boat crashed into a barge north of New York City. 209 00:11:40,280 --> 00:11:43,000 Speaker 1: The accident caused the tug boat to sink. Last night, 210 00:11:43,040 --> 00:11:46,079 Speaker 1: police diver stopped searching inside the sunken tug boat for 211 00:11:46,200 --> 00:11:49,160 Speaker 1: fifty six year old Harry Hernandez. Global News twenty four 212 00:11:49,200 --> 00:11:52,480 Speaker 1: hours a day, powered by our journalists and more than 213 00:11:52,480 --> 00:11:54,600 Speaker 1: a hundred fifty news bureaus from around the world. I'm 214 00:11:54,600 --> 00:11:57,240 Speaker 1: like Lubar, Mike, Tom Michael, thanks so much. Yeah in 215 00:11:57,360 --> 00:12:00,800 Speaker 1: one thirteen sixty nine, slightly weaker Young This morning with 216 00:12:01,000 --> 00:12:07,480 Speaker 1: Richard Hass This is Bloomberg Surveillance. Bloomberg surveillances brought you 217 00:12:07,520 --> 00:12:09,600 Speaker 1: by your tri state at BMW Centers, visit the online 218 00:12:09,640 --> 00:12:12,280 Speaker 1: and try STATETMW dot Com. At the MW they make 219 00:12:12,320 --> 00:12:23,640 Speaker 1: only one thing, the ultimate driving machine. Global Business news 220 00:12:23,760 --> 00:12:26,640 Speaker 1: twenty four hours a day at Bloomberg dot com, the 221 00:12:26,800 --> 00:12:29,880 Speaker 1: Radio plus Mobile Act and on your radio. This is 222 00:12:29,920 --> 00:12:33,520 Speaker 1: a Bloomberg Business Flash and I'm Karen Moscow. This updates 223 00:12:33,520 --> 00:12:36,040 Speaker 1: brought to you by Brown University, were the new Executive 224 00:12:36,080 --> 00:12:39,280 Speaker 1: Master and cyber Security prepares leaders in law, technology and 225 00:12:39,400 --> 00:12:43,760 Speaker 1: business to face tomorrow's greatest threats. The Brown University Executive 226 00:12:43,800 --> 00:12:48,200 Speaker 1: Master in cyber Security Strategy is the best security. Apollo 227 00:12:48,280 --> 00:12:51,480 Speaker 1: Global Management agreeing to buy grocery Train fresh Market for 228 00:12:52,480 --> 00:12:54,880 Speaker 1: fifty cents a share in cash, or almost one point 229 00:12:54,960 --> 00:12:58,920 Speaker 1: four billion dollars, and fresh Market shares are up this morning. 230 00:12:59,000 --> 00:13:02,439 Speaker 1: Starwood Hotels and Resources Worldwide saying it received an unsolicited 231 00:13:02,480 --> 00:13:05,240 Speaker 1: takeover proposal from a group of companies. It's up more 232 00:13:05,280 --> 00:13:08,280 Speaker 1: than seven percent. U stock index futures are lower, with 233 00:13:08,480 --> 00:13:10,920 Speaker 1: SNP eveny futures down three and a half points DOWNI 234 00:13:10,960 --> 00:13:13,880 Speaker 1: mini futures down thirteen, NAZ DOCU mini futures down four. 235 00:13:14,280 --> 00:13:16,880 Speaker 1: Docks in Germany's up one point six percent ten your 236 00:13:16,920 --> 00:13:20,040 Speaker 1: treasury up to thirty seconds at one point nine seven percent. 237 00:13:20,440 --> 00:13:22,800 Speaker 1: Nimex screwed oil down two point one percent or eighty 238 00:13:22,840 --> 00:13:25,600 Speaker 1: one cents to thirty seven sixty nine a barrel comex 239 00:13:25,679 --> 00:13:28,040 Speaker 1: goal down to ten percent or two dollars forty cents 240 00:13:28,080 --> 00:13:30,959 Speaker 1: to twelve fifty seven. Announced the euro at dollar eleven 241 00:13:31,080 --> 00:13:34,520 Speaker 1: ten again one thirteen point seven zero. That's a Bloomberg 242 00:13:34,559 --> 00:13:37,440 Speaker 1: business flash, Tom and Mike Karen, thanks so much. Michael 243 00:13:37,520 --> 00:13:40,920 Speaker 1: McKee is a host of questions for our guest, Richard 244 00:13:40,960 --> 00:13:45,000 Speaker 1: Hass of the Council on Foreign Relations. Quickly, um, a 245 00:13:45,080 --> 00:13:47,679 Speaker 1: guy with I think a right wing persuasion out on Twitter, 246 00:13:47,800 --> 00:13:53,040 Speaker 1: Republican persuasion. Just ask a brilliant question, why do Europeans 247 00:13:53,200 --> 00:13:56,160 Speaker 1: or anybody else for that matter, give us the criticism 248 00:13:56,240 --> 00:13:59,240 Speaker 1: we do when the U s. Taxpayer is providing for 249 00:13:59,440 --> 00:14:03,800 Speaker 1: Internet sational defense. This free ride off of the United 250 00:14:03,880 --> 00:14:07,400 Speaker 1: States with our military might give us an update on 251 00:14:07,520 --> 00:14:11,880 Speaker 1: where that stands? Is that a correct observation. The only 252 00:14:11,920 --> 00:14:14,000 Speaker 1: way to defend it is the United States has paid 253 00:14:14,080 --> 00:14:16,600 Speaker 1: the lion's share of what say what NATO has spent 254 00:14:16,880 --> 00:14:18,760 Speaker 1: not as a favor to the Europeans, but as a 255 00:14:18,840 --> 00:14:21,360 Speaker 1: favor to ourselves. One of the lessons we learned from 256 00:14:21,400 --> 00:14:23,760 Speaker 1: World War Two is the balance of power in Europe 257 00:14:23,800 --> 00:14:26,880 Speaker 1: and other places beyond the United States is in the 258 00:14:27,040 --> 00:14:30,080 Speaker 1: u S national interests, and in some places the Europeans 259 00:14:30,160 --> 00:14:32,760 Speaker 1: just don't have certain capacity. Should they do more, yes, 260 00:14:33,880 --> 00:14:35,960 Speaker 1: even more than how much they spend, they should integrate, 261 00:14:36,000 --> 00:14:38,680 Speaker 1: the more they should specialize, because there's no there's no 262 00:14:38,880 --> 00:14:42,040 Speaker 1: system in Europe so that this country, say, focuses our 263 00:14:42,080 --> 00:14:44,640 Speaker 1: air forces as opposed to landor was supposed to enable. 264 00:14:44,840 --> 00:14:47,000 Speaker 1: So the whole is less than the some of its parts. 265 00:14:47,240 --> 00:14:50,680 Speaker 1: But again it's not just giveaways, uh from the United States. 266 00:14:50,760 --> 00:14:53,120 Speaker 1: It's it's something that we do because it makes you know, 267 00:14:53,320 --> 00:14:56,640 Speaker 1: we have benefited tremendously from the stability in Europe, and 268 00:14:57,000 --> 00:15:00,000 Speaker 1: we benefit out of all this from being the world 269 00:15:00,040 --> 00:15:02,360 Speaker 1: the reserve currency and in ways people I don't think 270 00:15:02,360 --> 00:15:05,200 Speaker 1: I understand at all. Absolutely. Look, there's there's a lot 271 00:15:05,240 --> 00:15:07,320 Speaker 1: of benefits that comes from the United States being what 272 00:15:07,400 --> 00:15:10,920 Speaker 1: I would describe as first among unequals in the world. 273 00:15:10,960 --> 00:15:13,120 Speaker 1: And we have to think twice and then three times 274 00:15:13,520 --> 00:15:17,240 Speaker 1: if we're thinking about moving away from that from that position, 275 00:15:17,240 --> 00:15:19,680 Speaker 1: I think the Middle East is a frightening glimpse of 276 00:15:19,800 --> 00:15:22,640 Speaker 1: what happened what could happen the worst case possible when 277 00:15:22,680 --> 00:15:25,480 Speaker 1: the United States essentially says we're going to back away 278 00:15:25,840 --> 00:15:28,840 Speaker 1: from a set of involvements. I'm not suggesting that would 279 00:15:28,880 --> 00:15:30,920 Speaker 1: necessarily be replicating in other parts of the world, but 280 00:15:30,960 --> 00:15:34,280 Speaker 1: imagine what Asia would look like if the US Japanese 281 00:15:34,360 --> 00:15:37,200 Speaker 1: or US South Korean relationships were not seen as robust. 282 00:15:37,480 --> 00:15:39,920 Speaker 1: You would suddenly have a region, I believe, of more conflict, 283 00:15:40,040 --> 00:15:43,280 Speaker 1: more proliferation, and worse. So the United States needs to 284 00:15:43,320 --> 00:15:45,160 Speaker 1: stay involved in these parts of the worlds which are 285 00:15:45,480 --> 00:15:48,560 Speaker 1: simply not self regulating. You've written a piece called the 286 00:15:48,640 --> 00:15:52,520 Speaker 1: Inbox of the next Commander in Chief. Unfortunately, we don't 287 00:15:52,560 --> 00:15:54,760 Speaker 1: have two hours to sit and talk with what the 288 00:15:56,160 --> 00:15:58,720 Speaker 1: what's at the top of the what's the scariest thing 289 00:15:58,800 --> 00:16:02,160 Speaker 1: out there? That whoever curious thing for Richard has three 290 00:16:02,200 --> 00:16:08,680 Speaker 1: hours with you. What's the second scary uh, just a 291 00:16:08,760 --> 00:16:11,160 Speaker 1: couple of things out there. One is going to be 292 00:16:11,240 --> 00:16:14,760 Speaker 1: how do we persuade Iran's neighbors UH not to develop 293 00:16:14,880 --> 00:16:17,800 Speaker 1: nuclear options or hedges of their own against the uncertainty 294 00:16:17,840 --> 00:16:20,240 Speaker 1: of where Iran might be down the road. What do 295 00:16:20,320 --> 00:16:23,800 Speaker 1: we do about North Korea's nuclear program. North Korea, possibly 296 00:16:23,880 --> 00:16:26,200 Speaker 1: during the time of the next presidency, will be able 297 00:16:26,240 --> 00:16:29,240 Speaker 1: to miniaturize nuclear weapons and put them on with web 298 00:16:29,480 --> 00:16:32,000 Speaker 1: missiles that can reach the United States. Are we prepared 299 00:16:32,040 --> 00:16:35,000 Speaker 1: to tolerate that? If so, how do we? Uh? How 300 00:16:35,040 --> 00:16:36,920 Speaker 1: do we? How do we deal with that? Then You've 301 00:16:36,960 --> 00:16:40,680 Speaker 1: got any number of traditional issues dealing with with China, 302 00:16:41,520 --> 00:16:44,520 Speaker 1: with with with Russia. Uh. I could go on and 303 00:16:44,600 --> 00:16:46,200 Speaker 1: on and just look at some other issues. And I 304 00:16:46,200 --> 00:16:48,800 Speaker 1: have been talked about how to kind of govern cyberspace, 305 00:16:49,080 --> 00:16:50,600 Speaker 1: how to how to deal with the threat of an 306 00:16:50,640 --> 00:16:54,480 Speaker 1: international pandemic. Uh. You know, it's a it's a long 307 00:16:54,600 --> 00:16:58,160 Speaker 1: long list of regional and global issues out there. You've 308 00:16:58,160 --> 00:17:01,920 Speaker 1: been at this a long time. Are you more concerned 309 00:17:02,000 --> 00:17:05,560 Speaker 1: about what's going on in the world than you have 310 00:17:05,720 --> 00:17:08,639 Speaker 1: been in many years? I hate to be pessimistic, and 311 00:17:08,720 --> 00:17:11,040 Speaker 1: my kids call me Debbie Downer, but the short answer 312 00:17:11,160 --> 00:17:13,920 Speaker 1: is yes, Uh, there's there. I'm worried about two things 313 00:17:14,000 --> 00:17:16,600 Speaker 1: in the combination. I'm worried about a world that's unraveling 314 00:17:16,640 --> 00:17:18,920 Speaker 1: in a lot of places, where and where capacity is 315 00:17:18,960 --> 00:17:21,680 Speaker 1: spreading more and more places have the means to do 316 00:17:21,800 --> 00:17:23,840 Speaker 1: things They're making more and more decisions on their own, 317 00:17:23,960 --> 00:17:26,320 Speaker 1: deferring to us a lot less. And I worry that we, 318 00:17:26,520 --> 00:17:28,919 Speaker 1: to some extent have I've opted out in many cases, 319 00:17:29,119 --> 00:17:31,120 Speaker 1: and we simply don't have the consensus or we don't 320 00:17:31,119 --> 00:17:34,040 Speaker 1: have the will. So this combination of an America that's 321 00:17:34,160 --> 00:17:37,040 Speaker 1: that's divided and distracted and a world that's unraveling is 322 00:17:37,080 --> 00:17:41,680 Speaker 1: a toxic combination. You are carefully bipartisan, or I should 323 00:17:41,680 --> 00:17:46,560 Speaker 1: say nonpartisan. Let's cfr. You have a history with Republican politics. 324 00:17:47,119 --> 00:17:49,960 Speaker 1: What would you like to hear at a Republican convention, 325 00:17:50,080 --> 00:17:53,119 Speaker 1: not just the main speech of whoever it is, but 326 00:17:53,760 --> 00:17:57,520 Speaker 1: the set of speeches at a GOP convention. The last 327 00:17:57,520 --> 00:17:59,760 Speaker 1: Republican president who I thought got it right on foreign 328 00:17:59,760 --> 00:18:02,919 Speaker 1: pole see was George Herbert Walker Bush for a few 329 00:18:03,040 --> 00:18:05,920 Speaker 1: years ago. Yeah, it's twenty it's it's five years ago. 330 00:18:06,240 --> 00:18:08,600 Speaker 1: And it had a sense of American leadership in the world. 331 00:18:08,720 --> 00:18:11,600 Speaker 1: But it wasn't unilateralism. It was working with others. We 332 00:18:11,680 --> 00:18:13,159 Speaker 1: were trying to do things in the world, but we 333 00:18:13,240 --> 00:18:16,119 Speaker 1: weren't trying to remake the societies of other countries. For 334 00:18:16,200 --> 00:18:18,639 Speaker 1: the most part, I had a sense of limits. It 335 00:18:18,760 --> 00:18:22,040 Speaker 1: understood the need for a strong society and economy at homes, 336 00:18:22,160 --> 00:18:24,400 Speaker 1: if you will, to balance guns in butter. I want 337 00:18:24,400 --> 00:18:28,560 Speaker 1: to see that sort of thing again if President Bush 338 00:18:28,600 --> 00:18:30,879 Speaker 1: agreed to come back or somebody like him were to 339 00:18:30,920 --> 00:18:33,639 Speaker 1: take office again, though, could we recreate that in the 340 00:18:33,760 --> 00:18:36,080 Speaker 1: sense that, as you said, the world is making its 341 00:18:36,119 --> 00:18:38,960 Speaker 1: own decisions now? Is it too late for it's much 342 00:18:38,960 --> 00:18:41,520 Speaker 1: more difficult to understands is it's much more difficult because 343 00:18:41,640 --> 00:18:44,600 Speaker 1: capacity in many forms has spread around the world, whether 344 00:18:44,600 --> 00:18:48,160 Speaker 1: it's military capacity or technology. And I also think there's 345 00:18:48,200 --> 00:18:51,120 Speaker 1: been a loss of confidence in American reliability. I disagree 346 00:18:51,160 --> 00:18:53,800 Speaker 1: with President Obama has recent interview in Atlantic magazine. I 347 00:18:53,880 --> 00:18:56,400 Speaker 1: think we've paid an enormous price for what he said 348 00:18:56,440 --> 00:18:59,160 Speaker 1: he would do and then didn't do in Syria, raising 349 00:18:59,200 --> 00:19:03,520 Speaker 1: fundamental questions about the strength of American commitments. I also 350 00:19:03,560 --> 00:19:05,680 Speaker 1: think we've paid a price for the dysfunction at home, 351 00:19:05,960 --> 00:19:09,399 Speaker 1: all these years of sequester, a threatened government shutdowns, of 352 00:19:09,480 --> 00:19:11,200 Speaker 1: not being able to say, to pass the t p 353 00:19:11,320 --> 00:19:14,280 Speaker 1: P or other legislation that we've negotiated. So the rest 354 00:19:14,359 --> 00:19:16,200 Speaker 1: of the world has come to see the United States 355 00:19:16,280 --> 00:19:19,560 Speaker 1: quite correctly as a less predictable place. It's very hard 356 00:19:19,600 --> 00:19:22,200 Speaker 1: to be a great power who was not reliable and predictable. 357 00:19:22,320 --> 00:19:25,560 Speaker 1: We'll get a message into President Bush to see if 358 00:19:25,600 --> 00:19:28,800 Speaker 1: he can serve another four years. He will celebrate Michael 359 00:19:28,880 --> 00:19:33,560 Speaker 1: June twelve, his nineties birthday, and happy birthday to him. 360 00:19:33,760 --> 00:19:36,639 Speaker 1: I covered his presidency and he was one of the 361 00:19:36,840 --> 00:19:39,840 Speaker 1: nicest people you ever man, Richard honest, thank you so much. 362 00:19:39,880 --> 00:19:42,680 Speaker 1: With the Council on Foreign Relations, can't say enough about 363 00:19:42,680 --> 00:19:48,399 Speaker 1: their campaign two thousand sixteen. Actual intelligence and discourse on 364 00:19:48,680 --> 00:19:51,639 Speaker 1: the nation's issues. What a shock that is. Campaign two 365 00:19:51,680 --> 00:19:55,280 Speaker 1: thousand and sixteen out at CFR. Michael McKee and Tom 366 00:19:55,359 --> 00:19:58,360 Speaker 1: Keene to get your Monday ready on economics, finance, investment, 367 00:19:58,720 --> 00:20:06,800 Speaker 1: and international relations. This is Bloomberg Surveillance. Bloomberg Surveillance is 368 00:20:06,840 --> 00:20:08,800 Speaker 1: brought to by land Rover Adventures. Yours for the taking. 369 00:20:08,880 --> 00:20:10,920 Speaker 1: Visit land Rover tri State dot com for special LEAs 370 00:20:10,960 --> 00:20:25,120 Speaker 1: and financing offers. Land Rover Above and Beyond, Yes broadcasting 371 00:20:25,240 --> 00:20:28,960 Speaker 1: live to New York, Bloomberg eleventh Yo to Washington, d C, 372 00:20:29,200 --> 00:20:34,440 Speaker 1: Bloomberg to Boston, Bloomberg twelve Hunders to San Francisco, Bloomberg 373 00:20:35,320 --> 00:20:38,320 Speaker 1: to the Country series at SAM Channel one ninet and 374 00:20:38,480 --> 00:20:42,200 Speaker 1: around the globe. The Bloomberg Radio Plus happened Bloomberg dot Com. 375 00:20:42,560 --> 00:20:46,840 Speaker 1: This is Bloomberg Surveillance. Good morning. I'm Michael McKee along 376 00:20:47,040 --> 00:20:49,879 Speaker 1: with Tom Keane. Where two hours away from the opening 377 00:20:49,920 --> 00:20:52,320 Speaker 1: of trading this week, and it looks like we're going 378 00:20:52,440 --> 00:20:55,240 Speaker 1: to open lower, but we shall see a couple of 379 00:20:55,320 --> 00:20:58,800 Speaker 1: stories breaking in the last hour. Follow Global Management agreeing 380 00:20:58,800 --> 00:21:01,600 Speaker 1: to buy a grocery chain market. They're gonna pay fifty 381 00:21:01,640 --> 00:21:05,680 Speaker 1: a share in cash, it's about one point four billion dollars. 382 00:21:06,200 --> 00:21:09,359 Speaker 1: And Starwood Hotels says it got a seventy six dollar 383 00:21:09,400 --> 00:21:13,440 Speaker 1: a share cash non binding proposal from a consortium of companies. 384 00:21:13,560 --> 00:21:15,800 Speaker 1: This came in March tenth, last week. That would be 385 00:21:15,920 --> 00:21:19,000 Speaker 1: a seven point nine percent premium. Now they had agreed 386 00:21:19,040 --> 00:21:21,680 Speaker 1: to sell to Marryott. Marriott is giving them a waiver 387 00:21:21,840 --> 00:21:26,640 Speaker 1: to uh discuss this latest offer. It expires at midnight 388 00:21:26,800 --> 00:21:30,520 Speaker 1: on March seventeen. And speaking of hotels, over the weekend, 389 00:21:30,600 --> 00:21:34,400 Speaker 1: Blackstone agreeing to sell Strategic Hotels and Resorts to China's 390 00:21:34,440 --> 00:21:36,800 Speaker 1: an Bang insurance company. That's a six and a half 391 00:21:37,240 --> 00:21:40,480 Speaker 1: billion dollar deal. They only bought the company about three 392 00:21:40,640 --> 00:21:44,080 Speaker 1: months ago. Will continue to follow those stories as the 393 00:21:44,160 --> 00:21:46,240 Speaker 1: morning goes on. But in the meantime we're going to 394 00:21:46,359 --> 00:21:48,879 Speaker 1: check in with Michael Barr and get the latest world 395 00:21:48,920 --> 00:21:52,800 Speaker 1: in national headquart headlines. Thank you very much. Mike Turkey's 396 00:21:52,960 --> 00:21:56,359 Speaker 1: air force conducted air strikes on Curtish rebels in northern 397 00:21:56,400 --> 00:22:00,000 Speaker 1: Iraq today, hours after a suicigned car bombing and curriculum 398 00:22:00,119 --> 00:22:03,439 Speaker 1: thirty seven people and heightened tensions with the Kurdish rebels. 399 00:22:03,880 --> 00:22:06,360 Speaker 1: Yesterday's car bombing and anchor it took place just two 400 00:22:06,400 --> 00:22:09,600 Speaker 1: hundred yards from the office of Turkey's Prime Minister. An 401 00:22:09,600 --> 00:22:12,800 Speaker 1: Amtrak train with about a hundred twenty eight passengers and 402 00:22:12,960 --> 00:22:17,639 Speaker 1: fourteen crew members derailed in southwest Kansas, sending about twenty 403 00:22:17,680 --> 00:22:20,920 Speaker 1: people to the hospital. Amtrak says the train was traveling 404 00:22:20,960 --> 00:22:23,840 Speaker 1: from Los Angeles to Chicago early this morning when it 405 00:22:23,920 --> 00:22:28,199 Speaker 1: derailed about twenty miles west of Dodge City. Republican presidential 406 00:22:28,320 --> 00:22:33,400 Speaker 1: candidates are readying their closing arguments in Ohio, Illinois, Missouri, 407 00:22:33,840 --> 00:22:37,480 Speaker 1: North Carolina, and Florida, with a trove of delegates at stake. 408 00:22:37,840 --> 00:22:40,440 Speaker 1: The number of delegates up for grabs tomorrow account for 409 00:22:40,520 --> 00:22:42,720 Speaker 1: more than a quarter of the one thousand, two hundred 410 00:22:42,760 --> 00:22:46,600 Speaker 1: thirty seven necessary for nomination. A top performance by front 411 00:22:46,640 --> 00:22:50,320 Speaker 1: runner Donald Trump can make him nearly unbeatable for the nomination. 412 00:22:50,760 --> 00:22:53,840 Speaker 1: Global News twenty four hours a day, powered by our 413 00:22:53,960 --> 00:22:56,760 Speaker 1: twenty four hundred journalists and more than a hundred fifty 414 00:22:56,800 --> 00:22:59,480 Speaker 1: news bureaus from around the world. I'm Michael bar Mike. 415 00:23:00,840 --> 00:23:04,920 Speaker 1: Thank you Michael for the Bloomberg NBC Sports Update to 416 00:23:04,920 --> 00:23:07,800 Speaker 1: break a Tina Auto Group. Bloomberg NBC Sports Update with 417 00:23:07,960 --> 00:23:11,640 Speaker 1: Rob Bushkin. He good morning, Mike. For basketball fans, it's 418 00:23:11,680 --> 00:23:13,840 Speaker 1: the best time of the year. It's March Madness. Selection 419 00:23:13,960 --> 00:23:16,600 Speaker 1: Sunday was kind to a half dozen New York and 420 00:23:16,680 --> 00:23:19,399 Speaker 1: New Jersey teams. Seaton Hall, the upstart winner of the 421 00:23:19,400 --> 00:23:22,480 Speaker 1: Big East Tournament, draws perennial power Gonzaga in the six 422 00:23:22,600 --> 00:23:26,000 Speaker 1: verses eleven matchup. Fairlee Dickinson rounds out the New Jersey list, 423 00:23:26,040 --> 00:23:30,160 Speaker 1: while Syracuse, Iona Buffalo, and Stony Brook represent New York. 424 00:23:30,480 --> 00:23:34,560 Speaker 1: The tournament's officially underway Tuesday, but starts in full on Thursday, 425 00:23:34,840 --> 00:23:37,200 Speaker 1: as a road to Houston goes through Brooklyn, where Barkley 426 00:23:37,320 --> 00:23:40,800 Speaker 1: Center will host opening round games next weekend. The Knicks, 427 00:23:40,880 --> 00:23:42,600 Speaker 1: they take advantage of a slow start in l a 428 00:23:42,680 --> 00:23:45,560 Speaker 1: by the Lakers to win that game eighties seven. Retiring 429 00:23:45,680 --> 00:23:48,720 Speaker 1: Lakers legend Kobe Bryant says he'll miss all that is 430 00:23:48,800 --> 00:23:51,280 Speaker 1: Madison Square Garden. You always love going to the garden, man. 431 00:23:51,359 --> 00:23:54,360 Speaker 1: It's just so much history there. And you know, I'm 432 00:23:54,400 --> 00:23:57,920 Speaker 1: gonna miss that, missed the fact that you have something great. 433 00:23:58,280 --> 00:24:03,320 Speaker 1: I didn't get a chance to probably shake by m 434 00:24:06,440 --> 00:24:09,680 Speaker 1: Carmelo AD six and the win. The Nets lose to 435 00:24:09,760 --> 00:24:12,000 Speaker 1: the box and on the ice Rangers they fall the 436 00:24:12,040 --> 00:24:15,600 Speaker 1: Pittsburgh five. Three Yankees shot out the Mats. They shot 437 00:24:15,600 --> 00:24:18,600 Speaker 1: out Miami. And that's your NBC Bloomberg Sports update, Mike, 438 00:24:19,720 --> 00:24:22,720 Speaker 1: thank you, Rob, got your brackets filled out. Um, gonna 439 00:24:22,760 --> 00:24:25,720 Speaker 1: be a very interesting tournament this year. A lot of 440 00:24:25,760 --> 00:24:29,080 Speaker 1: people say no real favorite could go anyway. So, uh, 441 00:24:29,200 --> 00:24:34,200 Speaker 1: maybe we'll do a surveillance bracket ahead here on Bloomberg Radio. 442 00:24:38,800 --> 00:24:41,680 Speaker 1: Welcome back to Bloomberg Surveillance. I Mightael mc key along 443 00:24:41,880 --> 00:24:44,760 Speaker 1: with Tom Keane. As I mentioned, it looks like a 444 00:24:44,920 --> 00:24:47,479 Speaker 1: down open in the United States. Test and p features 445 00:24:47,480 --> 00:24:49,680 Speaker 1: off by four points to tenths of a percent. Down 446 00:24:49,720 --> 00:24:52,680 Speaker 1: features and down sixteen. That's a tenth of a percent. 447 00:24:52,800 --> 00:24:55,920 Speaker 1: Europe still higher. The stock six three points, up three 448 00:24:56,000 --> 00:24:59,560 Speaker 1: quarters of a percent. The Bloomberg n j I t 449 00:24:59,720 --> 00:25:02,000 Speaker 1: ST Report brought to you by a New Jersey Institute 450 00:25:02,040 --> 00:25:04,639 Speaker 1: of Technology partnering with government and industry to apply the 451 00:25:04,720 --> 00:25:08,520 Speaker 1: university's world class research assets to innovate and spur economic growth. 452 00:25:08,600 --> 00:25:11,119 Speaker 1: Learn more at in j I T dot E d 453 00:25:11,240 --> 00:25:14,920 Speaker 1: U Here's Michael, thank you, and at seven thirty five 454 00:25:15,080 --> 00:25:17,520 Speaker 1: on Wall Street, Here's what's making news and science, technology, 455 00:25:17,640 --> 00:25:20,719 Speaker 1: engineering and math. Airbnb will soon give people running out 456 00:25:20,800 --> 00:25:23,240 Speaker 1: rooms and homes to its website a better way to 457 00:25:23,280 --> 00:25:25,920 Speaker 1: find out how the strangers showing up at their properties 458 00:25:25,920 --> 00:25:29,119 Speaker 1: are behaving. A new tool will let neighbors way in 459 00:25:29,280 --> 00:25:32,320 Speaker 1: with feedback on Airbnb properties nearby. According to the head 460 00:25:32,560 --> 00:25:35,440 Speaker 1: of Airbnb in Japan, the future will be rolled out 461 00:25:35,440 --> 00:25:38,320 Speaker 1: globally in a few weeks. Venture capital firms bet tens 462 00:25:38,359 --> 00:25:41,359 Speaker 1: of millions of dollars that startups offering affordable valet parking 463 00:25:41,760 --> 00:25:44,680 Speaker 1: to harry urban nights would flourish in the on demand 464 00:25:44,800 --> 00:25:48,080 Speaker 1: economic pioneered by Uber Parking. Valets working for companies with 465 00:25:48,200 --> 00:25:51,280 Speaker 1: names like lux Zerks and valet Anywhere became a common 466 00:25:51,359 --> 00:25:54,359 Speaker 1: site in the congested precincts of San Francisco, Chicago, and 467 00:25:54,440 --> 00:25:56,680 Speaker 1: New York, among other places. Turns out it's hard to 468 00:25:56,760 --> 00:25:59,880 Speaker 1: make money parking cars. Two startups quickly imploded, three more 469 00:26:00,000 --> 00:26:02,680 Speaker 1: shifting away from the on demand model and selling those 470 00:26:02,720 --> 00:26:05,800 Speaker 1: services to companies instead of consumers. And Sean Parker, who 471 00:26:05,880 --> 00:26:08,240 Speaker 1: co founded the music sharing service Napster and returned to 472 00:26:08,320 --> 00:26:11,080 Speaker 1: online music a decade later as a backer of Spotify, 473 00:26:11,640 --> 00:26:14,640 Speaker 1: is defending music streaming. In an interview with Bloomberg Television's 474 00:26:14,640 --> 00:26:17,639 Speaker 1: Emily Chang, he suggested artists such as Taylor Swift may 475 00:26:17,720 --> 00:26:20,400 Speaker 1: not have a problem with streaming as much as their managers, 476 00:26:20,440 --> 00:26:23,560 Speaker 1: who he says, have a job of squeezing every last 477 00:26:23,640 --> 00:26:26,000 Speaker 1: dime out to a lot of other artists who who's 478 00:26:26,040 --> 00:26:29,040 Speaker 1: managers are on a vandetta, who love streaming and they 479 00:26:29,080 --> 00:26:30,960 Speaker 1: just want their music to be heard as widely as possible. 480 00:26:31,080 --> 00:26:35,000 Speaker 1: Sean Parker speaking to Bloomberg Television, and that is this 481 00:26:35,119 --> 00:26:38,240 Speaker 1: morning's Bloomberg and j I t Stem Report. Michael, thank 482 00:26:38,280 --> 00:26:40,480 Speaker 1: you very much as long for talking about stuff like that. 483 00:26:40,520 --> 00:26:42,200 Speaker 1: We could note that you can go to iTunes and 484 00:26:42,320 --> 00:26:46,800 Speaker 1: you can download Bloomberg Surveillance podcasts UM and then is 485 00:26:47,000 --> 00:26:52,240 Speaker 1: the best way to share files? Well. The International Energy 486 00:26:52,359 --> 00:26:54,879 Speaker 1: Agency said last week that it looked like we have 487 00:26:55,080 --> 00:26:58,160 Speaker 1: a floor in for oil prices, and auto prices were 488 00:26:58,240 --> 00:27:01,440 Speaker 1: elevated for the past week at LEE until today. Now 489 00:27:02,000 --> 00:27:05,160 Speaker 1: West Texas is off by two point four percent, Brandon 490 00:27:05,280 --> 00:27:08,399 Speaker 1: is downboard forty dollars again, down one point nine percent 491 00:27:08,560 --> 00:27:11,000 Speaker 1: on the day. Paul Thanky is a senior oil and 492 00:27:11,119 --> 00:27:15,359 Speaker 1: gas analyst at WILLF Research. He joins US now and Paul, 493 00:27:16,119 --> 00:27:18,720 Speaker 1: everything seemed to be moving in the direction the i 494 00:27:18,960 --> 00:27:20,919 Speaker 1: A was suggesting til irand came out and said we're 495 00:27:20,920 --> 00:27:24,720 Speaker 1: going to ramp up our oil sales over the weekend. Um, 496 00:27:25,200 --> 00:27:28,040 Speaker 1: is this a one day story? As people digest what 497 00:27:28,119 --> 00:27:29,520 Speaker 1: they say, are they actually going to be able to 498 00:27:29,600 --> 00:27:31,640 Speaker 1: produce more? And we go back to where we were 499 00:27:31,720 --> 00:27:35,560 Speaker 1: of supply growing faster than demand. Well, we don't really know, 500 00:27:35,680 --> 00:27:37,480 Speaker 1: to be honest with you. Good morning by the way, UM, 501 00:27:38,200 --> 00:27:41,399 Speaker 1: it's tough for Iran. The level of true understanding of 502 00:27:41,480 --> 00:27:43,800 Speaker 1: what's going on there is very limited. I've been looking 503 00:27:43,840 --> 00:27:47,600 Speaker 1: at it in some detail and actually the National Oil 504 00:27:47,640 --> 00:27:53,080 Speaker 1: Company's website was lost updated in so even speaking to 505 00:27:53,160 --> 00:27:55,720 Speaker 1: major companies such as Xson and asking them about what 506 00:27:55,800 --> 00:27:59,399 Speaker 1: they thought Iran could export. There's a very high degree 507 00:27:59,440 --> 00:28:02,600 Speaker 1: of uncertain See, the main problem here is is that 508 00:28:02,640 --> 00:28:04,840 Speaker 1: we're in the US turnaround season and we can't take 509 00:28:04,960 --> 00:28:08,000 Speaker 1: any more barrels. So this idea that Iran is sending 510 00:28:08,200 --> 00:28:10,840 Speaker 1: more on into the market is enough just to push 511 00:28:10,920 --> 00:28:13,240 Speaker 1: us down again today. As you said, let's push us 512 00:28:13,280 --> 00:28:17,200 Speaker 1: down to in terms of brent thirty sixty three? Is 513 00:28:17,320 --> 00:28:19,280 Speaker 1: gonna push us further than that? Are we're going to 514 00:28:19,320 --> 00:28:21,440 Speaker 1: go back and threaten the lows that we had seen? 515 00:28:21,640 --> 00:28:23,960 Speaker 1: Or is this about where we go while people try 516 00:28:24,000 --> 00:28:26,520 Speaker 1: to figure out what happens next. I think we always 517 00:28:26,560 --> 00:28:29,000 Speaker 1: thought that first half of this year would be the low. 518 00:28:29,640 --> 00:28:31,720 Speaker 1: The problem is we're in March, so you know, I 519 00:28:31,760 --> 00:28:34,920 Speaker 1: think there's still risk in April, possibly less in May 520 00:28:34,960 --> 00:28:38,840 Speaker 1: and driving season starts. We're not convinced that we've for 521 00:28:39,000 --> 00:28:41,440 Speaker 1: sure seen the bottom, but you know, we've rallied pretty 522 00:28:41,440 --> 00:28:43,800 Speaker 1: well off the extreme loads that we saw earlier this year, 523 00:28:43,880 --> 00:28:45,960 Speaker 1: and I think it's fair to say, if you're a 524 00:28:46,040 --> 00:28:48,760 Speaker 1: long term investor, we've seen we're putting in the lows 525 00:28:48,800 --> 00:28:51,160 Speaker 1: for a and I think that's reasonable. Well, there's a 526 00:28:51,520 --> 00:28:54,480 Speaker 1: concarmined question to that, is what could be the highs. 527 00:28:54,560 --> 00:28:57,760 Speaker 1: Where could we go from here? Well, I view all 528 00:28:57,800 --> 00:28:59,760 Speaker 1: as a boom and bust business. So my view is 529 00:29:00,200 --> 00:29:04,000 Speaker 1: over time will actually run out of available supply growth 530 00:29:04,480 --> 00:29:07,520 Speaker 1: given the scale of spending cuts that we've seen here, 531 00:29:07,560 --> 00:29:10,760 Speaker 1: and given the issues that the major government companies are facing. 532 00:29:11,400 --> 00:29:14,200 Speaker 1: And my view of where demand destruction is is actually 533 00:29:14,320 --> 00:29:17,959 Speaker 1: back towards eighty or a hundred dollars of barrel. I've 534 00:29:18,040 --> 00:29:20,240 Speaker 1: come off the hundred a bit recently because things have 535 00:29:20,320 --> 00:29:23,240 Speaker 1: been so weak, but demand destruction for me is back 536 00:29:23,360 --> 00:29:26,160 Speaker 1: up towards you know, over three fifty a gallon at 537 00:29:26,200 --> 00:29:28,120 Speaker 1: the US pump, and I think you'll get there over 538 00:29:28,200 --> 00:29:32,120 Speaker 1: the next three years. Really, that would be a shock 539 00:29:32,200 --> 00:29:35,239 Speaker 1: to drivers. Does it happen a couple of cents at 540 00:29:35,240 --> 00:29:37,680 Speaker 1: a time or do we see a spike somewhere now? 541 00:29:37,720 --> 00:29:39,360 Speaker 1: I think it happens a couple of cents at the time. 542 00:29:39,400 --> 00:29:42,520 Speaker 1: There's a major overhang in terms of inventory. Um, you know, 543 00:29:42,600 --> 00:29:44,400 Speaker 1: I think we're going to grind our way back there. 544 00:29:44,480 --> 00:29:47,640 Speaker 1: And it really feels like there's so much available oil, 545 00:29:47,800 --> 00:29:49,840 Speaker 1: as I say, particularly in inventory right now, that we're 546 00:29:49,880 --> 00:29:52,720 Speaker 1: not going to suddenly spike back up. It could jump 547 00:29:53,000 --> 00:29:55,120 Speaker 1: with an OPEC cut which would obviously be a bit 548 00:29:55,160 --> 00:29:59,640 Speaker 1: of a surprise to the market, especially given the Iranian 549 00:29:59,720 --> 00:30:01,600 Speaker 1: news and the fact that the Iranians really don't get 550 00:30:01,600 --> 00:30:03,880 Speaker 1: on a tour with the Saudis. So I think the 551 00:30:03,960 --> 00:30:06,120 Speaker 1: risk of a of a jump is more related to 552 00:30:06,200 --> 00:30:10,120 Speaker 1: OPEC cuts than a than the cycle working and demand 553 00:30:10,800 --> 00:30:12,760 Speaker 1: beginning to exceed supply in the way that it will 554 00:30:12,840 --> 00:30:15,840 Speaker 1: this year. Well, that's just very quickly, in thirty seconds 555 00:30:15,920 --> 00:30:19,280 Speaker 1: if you could um when you say demand destruction, how 556 00:30:19,360 --> 00:30:22,880 Speaker 1: much do we go down? Well, the issue is that 557 00:30:22,960 --> 00:30:26,400 Speaker 1: we're so aggressively cutting capital expenishure globally for all supply, 558 00:30:26,520 --> 00:30:29,440 Speaker 1: and then we have, unlike any other commodity of commodity 559 00:30:29,520 --> 00:30:32,840 Speaker 1: and oil that declines and supply naturally. The key question 560 00:30:32,920 --> 00:30:34,720 Speaker 1: for us that when whether how bearish we wanted to 561 00:30:34,760 --> 00:30:38,320 Speaker 1: be with oil was, has demands reacted to low prices? 562 00:30:38,920 --> 00:30:41,640 Speaker 1: Has demand got stronger because the price is low. The 563 00:30:41,760 --> 00:30:44,120 Speaker 1: day that doesn't happen, that's the end of the oil age. 564 00:30:44,200 --> 00:30:46,160 Speaker 1: But in fact, in this cycle last year and this 565 00:30:46,320 --> 00:30:49,440 Speaker 1: year again, especially looking at US gasoline demand, there has 566 00:30:49,520 --> 00:30:52,480 Speaker 1: been an aggressive demand response and knowing that the supply 567 00:30:52,600 --> 00:30:56,640 Speaker 1: side naturally corrects itself and will aggressively increase its correction 568 00:30:56,680 --> 00:30:59,920 Speaker 1: as spending cuts roll through. We're convinced that you're going 569 00:31:00,000 --> 00:31:02,440 Speaker 1: back to high prices over the eight three years. Well, 570 00:31:02,520 --> 00:31:04,760 Speaker 1: let's come back with Paul Sankey, senior oil and gas 571 00:31:04,800 --> 00:31:10,520 Speaker 1: analyst at Wolf Research. Looking at prices right now, gasoline 572 00:31:10,560 --> 00:31:14,719 Speaker 1: retails for one a gallon. That's up from one one 573 00:31:14,800 --> 00:31:16,920 Speaker 1: about a week or so ago, but still far from 574 00:31:16,920 --> 00:31:22,440 Speaker 1: the three dollars he's talking about. Bloomberg Surveillance is that 575 00:31:22,520 --> 00:31:23,880 Speaker 1: brought to you by a Flashing bank op and a 576 00:31:23,880 --> 00:31:26,120 Speaker 1: complete business checking account with fifteen thou dollars or more 577 00:31:26,160 --> 00:31:28,680 Speaker 1: and get a free sixteen gig WiFi tablet. Visits flushing 578 00:31:28,680 --> 00:31:30,480 Speaker 1: Back dot com for details, member f d I C 579 00:31:30,720 --> 00:31:39,440 Speaker 1: Equal Housing lender, Bloomboog Business News twenty four hours a 580 00:31:39,520 --> 00:31:42,760 Speaker 1: day at Bloomberg dot com, the Radio plus mobile app 581 00:31:42,840 --> 00:31:46,240 Speaker 1: and on your radio. This is a Bloomberg Business Flash 582 00:31:46,680 --> 00:31:49,000 Speaker 1: and I'm Karen Moscow. This updates brought to you by 583 00:31:49,080 --> 00:31:51,880 Speaker 1: Sector Spider et F. Why buy a single stock when 584 00:31:51,920 --> 00:31:55,160 Speaker 1: you can invest in the entire sector? Visits Sector spd 585 00:31:55,360 --> 00:31:58,400 Speaker 1: r S dot com or call six Sector e t 586 00:31:58,720 --> 00:32:01,840 Speaker 1: F start Ward, Hote Hills and Resources Worldwide, which is 587 00:32:01,920 --> 00:32:05,719 Speaker 1: being bought by Marriott International received a separate unsolicited takeover 588 00:32:05,840 --> 00:32:08,800 Speaker 1: proposal from a group of companies led by n Bang 589 00:32:08,880 --> 00:32:12,520 Speaker 1: Insurance Group. Starwood is up more than eight percent this morning, 590 00:32:12,520 --> 00:32:15,080 Speaker 1: and Apollo Global Management agrain to buy Grosser the fresh 591 00:32:15,160 --> 00:32:17,800 Speaker 1: Market for about one point four billion dollars in cash. 592 00:32:18,120 --> 00:32:20,800 Speaker 1: Fresh Market up more than twenty three percent. U s 593 00:32:20,840 --> 00:32:23,320 Speaker 1: Ack Index Future is lower. SNP E Many Future is 594 00:32:23,360 --> 00:32:26,000 Speaker 1: down five points, Dow E Mini futures down twenty six, 595 00:32:26,360 --> 00:32:29,320 Speaker 1: NAS Documny futures down ten at acts in Germany's up 596 00:32:29,320 --> 00:32:32,320 Speaker 1: one point four percent. Ten your treasury up to thirty seconds, 597 00:32:32,360 --> 00:32:35,120 Speaker 1: he had one point nine seven percent. Nine Max Screwed 598 00:32:35,160 --> 00:32:37,440 Speaker 1: Oil down two point six percent, or ninety eight cents 599 00:32:37,480 --> 00:32:40,240 Speaker 1: to thirty seven fifty two. A barrel comes gold is 600 00:32:40,280 --> 00:32:42,560 Speaker 1: down three tents per cent, or three dollars thirty cents 601 00:32:42,600 --> 00:32:45,440 Speaker 1: to twelve fifty six. Ten announced the euro a dollar 602 00:32:45,520 --> 00:32:48,320 Speaker 1: eleven O nine, the en one thirteen point six four. 603 00:32:48,840 --> 00:32:52,320 Speaker 1: And that's a Bloomberg business flash. Tom and Mike Caroon Lasko, 604 00:32:52,440 --> 00:32:55,080 Speaker 1: thank you very much. We're talking with Paul Sanky, senior 605 00:32:55,120 --> 00:32:59,080 Speaker 1: Oil and Guess analysted Will Fresearch, and we talked before 606 00:32:59,120 --> 00:33:01,719 Speaker 1: the break about. In fact, there may be a bottom 607 00:33:01,760 --> 00:33:05,040 Speaker 1: in now for oil prices, and that is leading you 608 00:33:05,200 --> 00:33:07,640 Speaker 1: to put out some notes that suggest maybe it is 609 00:33:07,720 --> 00:33:12,240 Speaker 1: time to start looking at oil um stucks again, and 610 00:33:12,720 --> 00:33:15,040 Speaker 1: your advice seems to be go big or go home 611 00:33:15,280 --> 00:33:17,520 Speaker 1: at this point. Well, we've got the idea that the 612 00:33:17,600 --> 00:33:20,120 Speaker 1: very biggest oils maybe into a positive cycle. And I'm 613 00:33:20,160 --> 00:33:22,720 Speaker 1: talking about Exxon and Chevron particularly here, but also to 614 00:33:22,800 --> 00:33:25,720 Speaker 1: an extent of Coast phillips Um. The idea is that 615 00:33:25,800 --> 00:33:28,960 Speaker 1: over the past five years, these companies really struggled with growth, 616 00:33:29,160 --> 00:33:33,360 Speaker 1: struggled with very high cost and high spending, and also 617 00:33:34,000 --> 00:33:37,920 Speaker 1: you know, essentially struggled at access to new resources governments. 618 00:33:38,000 --> 00:33:40,160 Speaker 1: But we're making so much money at a hundred dollars. 619 00:33:40,640 --> 00:33:42,640 Speaker 1: And what we've got going forward from here now is 620 00:33:42,720 --> 00:33:45,520 Speaker 1: a is a very aggressive capital expenditure program from the 621 00:33:45,600 --> 00:33:49,920 Speaker 1: past five years is being has been significantly reduced, but 622 00:33:50,080 --> 00:33:53,000 Speaker 1: the growth that they got from that lagging capital expenditure 623 00:33:53,080 --> 00:33:55,640 Speaker 1: is still coming through. So what we've got, unlike the 624 00:33:55,720 --> 00:33:59,160 Speaker 1: previous five years, is rising growth and falling capex and 625 00:33:59,280 --> 00:34:02,880 Speaker 1: by extension, rising returns. And that's the absence of the 626 00:34:02,960 --> 00:34:05,760 Speaker 1: bull argument that we put together for Chevron Texico when 627 00:34:05,800 --> 00:34:09,520 Speaker 1: we upgraded it last week, Paul, Are they forever changed? 628 00:34:09,640 --> 00:34:12,960 Speaker 1: What was the lesson learned? I give them great credit, 629 00:34:13,000 --> 00:34:14,799 Speaker 1: and this goes back to your work at Deutsche Bank 630 00:34:14,840 --> 00:34:18,040 Speaker 1: with Adam Saminski, where the big oil companies never got 631 00:34:18,160 --> 00:34:20,920 Speaker 1: carried away with a hundred dollars of barrel. But what 632 00:34:21,080 --> 00:34:26,759 Speaker 1: is their tone? Is there a new humility among big oil? Well? Yes, 633 00:34:27,080 --> 00:34:29,479 Speaker 1: actually that word did come up at the Chevron analysts meeting, 634 00:34:29,480 --> 00:34:31,520 Speaker 1: and I was impressed that the CEO was using it, 635 00:34:31,600 --> 00:34:34,360 Speaker 1: obviously in a not to judge the man. I'm judging 636 00:34:34,400 --> 00:34:38,200 Speaker 1: the corporation here, And you know, having said that, I 637 00:34:38,480 --> 00:34:40,000 Speaker 1: do believe that at the top of the cycle they 638 00:34:40,040 --> 00:34:43,040 Speaker 1: did get carried away. The Chevron's capex reached forty billion 639 00:34:43,040 --> 00:34:46,879 Speaker 1: dollars a year um, and they guided that they would 640 00:34:46,920 --> 00:34:49,880 Speaker 1: remain that elevated and that was really just far too 641 00:34:50,000 --> 00:34:52,879 Speaker 1: much money. The companies, also, having spent all that money, did, 642 00:34:52,920 --> 00:34:55,920 Speaker 1: as I said, failed to grow. Chevron's major projects are 643 00:34:55,960 --> 00:34:58,839 Speaker 1: only just now starting up exactly at the wrong moment 644 00:34:58,880 --> 00:35:01,399 Speaker 1: from an a price points of view. But as I said, 645 00:35:01,400 --> 00:35:03,240 Speaker 1: if we look at it on a longer term basis, 646 00:35:03,320 --> 00:35:05,680 Speaker 1: I do think they're now into a much more positive cycle, 647 00:35:06,080 --> 00:35:08,280 Speaker 1: and I do think that that humility that you reference 648 00:35:08,320 --> 00:35:11,680 Speaker 1: will keep them from greatly ramping up spending again even 649 00:35:11,760 --> 00:35:13,640 Speaker 1: as the old post begins to rise again. Here, as 650 00:35:13,680 --> 00:35:16,120 Speaker 1: we talked about over the next three years, they are, 651 00:35:16,640 --> 00:35:20,319 Speaker 1: you said, just coming online with major projects. How much 652 00:35:20,400 --> 00:35:22,560 Speaker 1: is that going to add to the amount of oil 653 00:35:22,800 --> 00:35:27,000 Speaker 1: out there and back off? Well, in certain cases the 654 00:35:27,200 --> 00:35:29,640 Speaker 1: s there's going to be tens of thousands of additional 655 00:35:29,680 --> 00:35:32,880 Speaker 1: barrels of oil just coming out of the partition neutral 656 00:35:33,000 --> 00:35:36,080 Speaker 1: zone between Qwait and Saudi Arabia over the course of summer. 657 00:35:36,760 --> 00:35:38,439 Speaker 1: A lot of what they're producing in terms of growth 658 00:35:38,480 --> 00:35:41,279 Speaker 1: at Chevron is liquid natural gas, and that market is 659 00:35:41,320 --> 00:35:45,160 Speaker 1: also in glut so the additional volume is definitely not needed. 660 00:35:45,200 --> 00:35:47,080 Speaker 1: And what we really need to see here is a 661 00:35:47,160 --> 00:35:51,560 Speaker 1: correction and overall global supply, which essentially we're getting from 662 00:35:51,640 --> 00:35:54,759 Speaker 1: the lowered rig count in the US. That's the first mechanism, 663 00:35:55,200 --> 00:35:57,680 Speaker 1: but we're also looking at the clients beginning in Russia, 664 00:35:58,600 --> 00:36:01,719 Speaker 1: in places like kazakh Star, Brazil will grow a lot 665 00:36:01,840 --> 00:36:03,759 Speaker 1: less and so on. So globally we are seeing a 666 00:36:03,840 --> 00:36:06,239 Speaker 1: correction shaver on the next and I think can work 667 00:36:06,320 --> 00:36:10,359 Speaker 1: into that market share opportunity. Where's the terminal value? I mean, 668 00:36:10,440 --> 00:36:13,520 Speaker 1: I know you and Mike talked earlier about oil bottom 669 00:36:13,600 --> 00:36:16,200 Speaker 1: or that is, is there a number out there or 670 00:36:16,200 --> 00:36:19,120 Speaker 1: are you just throwing the towel on that. Well, that's 671 00:36:19,160 --> 00:36:21,960 Speaker 1: a great question. We think, as as I've said many times, 672 00:36:22,040 --> 00:36:23,719 Speaker 1: that this is the end of the oil age in 673 00:36:23,800 --> 00:36:26,480 Speaker 1: the twenty one century. So the twentieth century was the 674 00:36:26,760 --> 00:36:29,719 Speaker 1: age of oil. They one will be the age of electricity. 675 00:36:30,040 --> 00:36:32,640 Speaker 1: But this is obviously not something that you you switch clip, 676 00:36:32,680 --> 00:36:35,120 Speaker 1: clicker switch on. It'll take thirty years for that to 677 00:36:35,239 --> 00:36:37,880 Speaker 1: come through. If if we are in the end of 678 00:36:37,920 --> 00:36:39,800 Speaker 1: the oil age, and as I said, if if demand 679 00:36:39,920 --> 00:36:42,400 Speaker 1: doesn't respond to low prices, were in the end of 680 00:36:42,440 --> 00:36:45,480 Speaker 1: the oil age, by definition the cycle has ended. Then 681 00:36:45,719 --> 00:36:48,319 Speaker 1: exactly the highlight, there's no terminal value, and we're very 682 00:36:48,360 --> 00:36:50,880 Speaker 1: worried about that. The good news for all valuation is 683 00:36:50,920 --> 00:36:53,520 Speaker 1: over the next ten years we have seen a demand 684 00:36:53,560 --> 00:36:57,040 Speaker 1: response to low prices. We have seen very significant increases 685 00:36:57,080 --> 00:36:59,839 Speaker 1: in sales of gasoline driven cars and trucks in the US, 686 00:37:00,360 --> 00:37:03,040 Speaker 1: and so I believe we have one final cycle. If 687 00:37:03,040 --> 00:37:05,360 Speaker 1: you want to look twenty thirty years, I think possibly 688 00:37:05,400 --> 00:37:08,920 Speaker 1: the terminal value could be zero. When you talk about 689 00:37:10,120 --> 00:37:14,879 Speaker 1: the majors, the big ones, even with the problems they 690 00:37:15,000 --> 00:37:18,279 Speaker 1: have in the most recent quarter, Exxon, for example, has 691 00:37:18,600 --> 00:37:22,480 Speaker 1: one point billion dollars in free cash flow. If they're 692 00:37:22,520 --> 00:37:25,760 Speaker 1: not going to be ramping up um their capital spending, 693 00:37:25,800 --> 00:37:29,360 Speaker 1: what are they gonna do with the cash well over time, again, 694 00:37:29,480 --> 00:37:31,520 Speaker 1: we think the free cash flow is certainly in the 695 00:37:31,560 --> 00:37:33,440 Speaker 1: case of Chevron x on their balance sheets are still 696 00:37:33,480 --> 00:37:35,560 Speaker 1: in good shape, so we do think it will probably 697 00:37:35,600 --> 00:37:37,919 Speaker 1: go back to buy back and certainly we've we've said 698 00:37:37,960 --> 00:37:39,840 Speaker 1: that we will upgrade Chevron on the basis that we 699 00:37:39,880 --> 00:37:43,839 Speaker 1: don't see any threat to its dividend now, um we're 700 00:37:43,840 --> 00:37:46,800 Speaker 1: still expecting. We think Russia, Russia, the loss of Russia 701 00:37:46,880 --> 00:37:49,080 Speaker 1: is going to force Exon into making a big deal. 702 00:37:49,600 --> 00:37:51,400 Speaker 1: The problem is that the only big buyer and the 703 00:37:51,480 --> 00:37:54,359 Speaker 1: market knows they're coming. So everything that's worth buying from 704 00:37:55,000 --> 00:37:57,799 Speaker 1: an operational point of view, for for Excen is very 705 00:37:57,840 --> 00:38:00,799 Speaker 1: aggressively priced and they haven't been able to see something 706 00:38:00,840 --> 00:38:02,719 Speaker 1: that they find to be attractive in value. But we 707 00:38:02,760 --> 00:38:06,360 Speaker 1: think they've really got to do something. Um So unlike Chevron, 708 00:38:06,400 --> 00:38:07,799 Speaker 1: where we don't see the need for them to deal, 709 00:38:07,840 --> 00:38:09,320 Speaker 1: and we do think you could get back into a 710 00:38:09,360 --> 00:38:12,279 Speaker 1: situation of rising dividend and buy back for excellent We 711 00:38:12,320 --> 00:38:15,160 Speaker 1: see a deal is necessary. Well, we're underweight that one. 712 00:38:15,160 --> 00:38:17,279 Speaker 1: We're under perform on that stop. By the way, gos 713 00:38:17,320 --> 00:38:20,520 Speaker 1: some for instances and what XIME might be looking at Permian. 714 00:38:20,719 --> 00:38:22,600 Speaker 1: There's no question at the number one oil field in 715 00:38:22,640 --> 00:38:24,759 Speaker 1: the world today, the number one will play in the 716 00:38:24,800 --> 00:38:27,440 Speaker 1: world today is the Permian in Texas, right in their backyard, 717 00:38:27,640 --> 00:38:32,440 Speaker 1: multiple stacks and zones there, so an almost unlimited upside um. 718 00:38:32,719 --> 00:38:34,560 Speaker 1: You know, the new technology that we've seen here has 719 00:38:34,640 --> 00:38:36,399 Speaker 1: made the break even to come all the way down 720 00:38:36,480 --> 00:38:40,359 Speaker 1: into the twenties twenty dollar barrel type range. And as 721 00:38:40,400 --> 00:38:42,320 Speaker 1: I said, it's in their own backyard. That's sick and 722 00:38:42,360 --> 00:38:43,840 Speaker 1: tired of dealing with what they've had to deal with 723 00:38:43,920 --> 00:38:47,040 Speaker 1: in places like Russia, so you might as well deal 724 00:38:47,120 --> 00:38:49,359 Speaker 1: with wherever the Permian involved. To get the map out 725 00:38:49,400 --> 00:38:51,799 Speaker 1: and look at that help me with peak oil. Then 726 00:38:52,280 --> 00:38:57,560 Speaker 1: you mentioned new technology which completely redefined decertitude of peak oil. 727 00:38:57,920 --> 00:39:01,040 Speaker 1: What's the new peak I mean from from a hydrocarbon 728 00:39:01,120 --> 00:39:05,760 Speaker 1: engineering standpoint, what's the new peak? Peak technology? Peak demand? 729 00:39:06,040 --> 00:39:07,640 Speaker 1: That's the threat I mean you can see in the 730 00:39:07,719 --> 00:39:11,120 Speaker 1: markets pricing Tesla that ultimately the way we drive, which 731 00:39:11,200 --> 00:39:14,600 Speaker 1: is Americas I think drive less than forty miles a day. 732 00:39:14,640 --> 00:39:18,800 Speaker 1: We're sitting in congested urban space driving. We should be 733 00:39:18,960 --> 00:39:21,359 Speaker 1: all driving electric cars. There's no doubts about that. If 734 00:39:21,360 --> 00:39:23,600 Speaker 1: you want to drive to California from New York, you 735 00:39:23,680 --> 00:39:26,120 Speaker 1: want a gasoline car, but almost no one's doing that. 736 00:39:26,719 --> 00:39:29,160 Speaker 1: So over the next fifteen twenty years, I think the 737 00:39:29,239 --> 00:39:31,759 Speaker 1: penetration of electric cars is going to be enormous. And 738 00:39:31,840 --> 00:39:35,600 Speaker 1: that's of global oil demand is basically transport demand. And 739 00:39:35,680 --> 00:39:38,239 Speaker 1: how can you be institutionally long oil. It's like you 740 00:39:38,320 --> 00:39:40,560 Speaker 1: can be in it and you know, but then five 741 00:39:40,640 --> 00:39:42,040 Speaker 1: or ten years, so now you got to get out. 742 00:39:42,680 --> 00:39:45,080 Speaker 1: I think, well, I think on a thirty of you 743 00:39:45,239 --> 00:39:46,960 Speaker 1: you aren't. And I think what you'll see is that 744 00:39:47,000 --> 00:39:48,960 Speaker 1: if you look at the multiple of Tesla versus the 745 00:39:49,000 --> 00:39:51,120 Speaker 1: multiple of eggs, and you've got your answer right there. 746 00:39:51,560 --> 00:39:53,359 Speaker 1: I think over the next five to ten years there 747 00:39:53,480 --> 00:39:56,839 Speaker 1: is a there is another peak cycle coming and that's 748 00:39:56,880 --> 00:40:00,880 Speaker 1: what you're playing for right here. In my view. Interesting. 749 00:40:01,000 --> 00:40:05,239 Speaker 1: In the meantime, Um Bloomberg government has a no doubt 750 00:40:05,960 --> 00:40:10,920 Speaker 1: UH this morning, Congress is going to be looking in 751 00:40:11,000 --> 00:40:15,080 Speaker 1: the administration will be looking at um the what's the 752 00:40:15,120 --> 00:40:19,440 Speaker 1: administration releasing the next version of its offshore leasing proposals 753 00:40:19,680 --> 00:40:23,240 Speaker 1: Virginia's coastline, I guess is the issue? Uh, do people 754 00:40:23,280 --> 00:40:26,000 Speaker 1: care anymore? Do people bid for these things? Is something 755 00:40:26,040 --> 00:40:28,759 Speaker 1: you bid for, put in your pocket but don't explore. 756 00:40:29,480 --> 00:40:31,040 Speaker 1: It would have been a big deal under the drill, 757 00:40:31,120 --> 00:40:35,080 Speaker 1: baby drill days, but nobody wants us to drill anymore. Yeah, right, 758 00:40:35,120 --> 00:40:36,440 Speaker 1: I mean this is one of the reasons we can 759 00:40:36,520 --> 00:40:38,719 Speaker 1: firmly believe that oil ists locks into a boom and 760 00:40:38,760 --> 00:40:42,319 Speaker 1: bus cycle. Essentially, there's a natural cycle. Higher prices give 761 00:40:42,520 --> 00:40:45,359 Speaker 1: give less demand and more supply. But there's a there's 762 00:40:45,360 --> 00:40:47,520 Speaker 1: a plus g here which is not gross. That's the 763 00:40:47,600 --> 00:40:50,400 Speaker 1: impact of government. It's a big g and the government 764 00:40:50,440 --> 00:40:53,040 Speaker 1: always shows up. But exactly the wrong moment of what 765 00:40:53,160 --> 00:40:59,960 Speaker 1: we know, absolutely opening up off shore leases to expiration 766 00:41:00,000 --> 00:41:02,719 Speaker 1: and today, as as you say, is ludicrously irrelevant. What 767 00:41:02,800 --> 00:41:05,600 Speaker 1: they should be doing is putting in a gasolene text. 768 00:41:05,760 --> 00:41:07,560 Speaker 1: But of course no one can do that. But obviously, 769 00:41:07,640 --> 00:41:09,759 Speaker 1: with gasolene prices as low as they are now and 770 00:41:09,880 --> 00:41:13,319 Speaker 1: the opportunity to stop the price going any lower. Let's 771 00:41:13,360 --> 00:41:15,840 Speaker 1: they put a floor in at two or two fifty 772 00:41:15,840 --> 00:41:19,239 Speaker 1: a gallon, and you really make this move that would 773 00:41:19,280 --> 00:41:23,040 Speaker 1: be very beneficial to towards electric car. Very valuable. Paul, 774 00:41:23,120 --> 00:41:26,000 Speaker 1: thank you, thank you so much for what a what 775 00:41:26,120 --> 00:41:29,359 Speaker 1: a briefing that was, Mike, the Permian Basin. I'll try 776 00:41:29,400 --> 00:41:31,200 Speaker 1: to figure out a map that can get out on 777 00:41:31,360 --> 00:41:36,680 Speaker 1: social is Central Texas to the left, so it's over 778 00:41:36,840 --> 00:41:40,040 Speaker 1: in West Texas, the Midland Basin and things we know, 779 00:41:40,760 --> 00:41:43,520 Speaker 1: almost down to the Rio Grand and then a little 780 00:41:43,560 --> 00:41:46,719 Speaker 1: bit of a lower corner of New Mexico. Yeah, I 781 00:41:46,880 --> 00:41:52,000 Speaker 1: did I describe that? Okay, it seems to be yeah basin. 782 00:41:52,120 --> 00:41:54,480 Speaker 1: I think Paul had a great idea. Nobody's driving New 783 00:41:54,560 --> 00:41:57,400 Speaker 1: York California. We can take surressless on the road on 784 00:41:58,120 --> 00:42:00,480 Speaker 1: we can listen to it on Channel one us Sex 785 00:42:01,480 --> 00:42:09,080 Speaker 1: all the way from New York our Permian Permian Basin. Yeah, sure, 786 00:42:09,480 --> 00:42:13,080 Speaker 1: from three oh in New York City to San Francisco 787 00:42:13,120 --> 00:42:16,400 Speaker 1: Bay area coast to coast, we call that bloomber t Boston, 788 00:42:16,920 --> 00:42:20,320 Speaker 1: bloom FM in Washington, good morning and yes after the 789 00:42:20,400 --> 00:42:24,759 Speaker 1: West Coast Bloomberg nine sixty San Francisco and the Bay area. 790 00:42:24,800 --> 00:42:29,359 Speaker 1: We're thrilled you're listening nationwide across Canada on Serious Sex. 791 00:42:29,440 --> 00:42:32,160 Speaker 1: I'm show on one nineteen as well, Paul Sanky, I'll 792 00:42:32,200 --> 00:42:35,120 Speaker 1: look for that on the Bloomberg terminal. That interview deserves 793 00:42:35,200 --> 00:42:37,360 Speaker 1: to be really listened to, is what I would suggest 794 00:42:37,760 --> 00:42:41,880 Speaker 1: you can do that. iTunes has all of our radio interviews. 795 00:42:41,960 --> 00:42:46,360 Speaker 1: That's all you need to know. iTunes Bloomberg Surveillance, our podcast. 796 00:42:46,640 --> 00:42:47,880 Speaker 1: They're free. Good morning,