1 00:00:00,120 --> 00:00:02,920 Speaker 1: Brought you by Bank of America Mary Lynch. Investing in 2 00:00:03,000 --> 00:00:07,840 Speaker 1: local communities, economies and a sustainable future. That's a power 3 00:00:08,080 --> 00:00:12,360 Speaker 1: of global connections. Mary Lynch, Pierce Fenner and Smith Incorporated 4 00:00:12,760 --> 00:00:27,400 Speaker 1: Member s I p C. Welcome to the Bloomberg Surveillance Podcast. 5 00:00:27,840 --> 00:00:31,520 Speaker 1: I'm Tom Keene with David Gura. Daily we bring you 6 00:00:31,560 --> 00:00:36,600 Speaker 1: insight from the best in economics, finance, investment, and international relations. 7 00:00:37,000 --> 00:00:41,600 Speaker 1: Find Bloomberg Surveillance on iTunes, SoundCloud, Bloomberg dot Com, and 8 00:00:41,680 --> 00:00:49,080 Speaker 1: of course on the Bloomberg Jim Glassman Joints. We were 9 00:00:49,120 --> 00:00:52,839 Speaker 1: both off on Friday for Jobs Day. Perhaps we were 10 00:00:52,840 --> 00:00:54,400 Speaker 1: both at the Super Bowl. Tom, I don't know, but 11 00:00:55,960 --> 00:00:58,200 Speaker 1: let me let me just get your sense of what 12 00:00:58,240 --> 00:01:00,080 Speaker 1: we saw in those numbers on on Friday. Hi, you 13 00:01:00,120 --> 00:01:02,520 Speaker 1: reacted to the headline number, and I know you've dug 14 00:01:02,520 --> 00:01:05,040 Speaker 1: into the numbers. You know, I'm I'm more interested in 15 00:01:05,040 --> 00:01:08,120 Speaker 1: in the employment picture because weights trends which got everybody 16 00:01:08,360 --> 00:01:11,360 Speaker 1: threw everybody off. We're are very volatile. So this month 17 00:01:11,360 --> 00:01:15,120 Speaker 1: they're very soft. But uh, the fact, when you're saying 18 00:01:15,160 --> 00:01:17,560 Speaker 1: steady job growth month after month, here we are eight 19 00:01:17,600 --> 00:01:19,720 Speaker 1: years in recovery and we're still seeing this, it tells 20 00:01:19,760 --> 00:01:21,480 Speaker 1: you we still have a lot of momentum. You would 21 00:01:21,520 --> 00:01:24,560 Speaker 1: think that if we're getting close to full employment, these 22 00:01:24,560 --> 00:01:26,480 Speaker 1: trends are gonna start slowing down, and just it's a 23 00:01:26,480 --> 00:01:28,560 Speaker 1: reminder that we still have a lot of people out 24 00:01:28,600 --> 00:01:31,399 Speaker 1: there looking for jobs, and it makes me feel like 25 00:01:31,640 --> 00:01:34,080 Speaker 1: we're not yet up to our full potential to So 26 00:01:34,160 --> 00:01:35,880 Speaker 1: that means to me there's more good news to come. 27 00:01:36,319 --> 00:01:38,360 Speaker 1: So I was more focused on that now that The 28 00:01:38,400 --> 00:01:40,200 Speaker 1: other thing is really interesting in the background. What you 29 00:01:40,200 --> 00:01:43,199 Speaker 1: see going on is as the job market is doing better, 30 00:01:43,240 --> 00:01:47,119 Speaker 1: there's more opportunities opening up. And what's happening is people, 31 00:01:47,120 --> 00:01:51,680 Speaker 1: particularly in the thirty five year bracket, the participation rates 32 00:01:51,720 --> 00:01:53,880 Speaker 1: coming back. So a lot of these guys dropped out 33 00:01:53,960 --> 00:01:57,360 Speaker 1: during the recession, maybe they had support from family, but 34 00:01:57,440 --> 00:02:00,440 Speaker 1: with the job market doing better, there's more compelling reason 35 00:02:00,480 --> 00:02:01,960 Speaker 1: to come back in look for a job. And I 36 00:02:02,000 --> 00:02:05,280 Speaker 1: think that's that's a healthy sign that this hidden unemployment 37 00:02:05,280 --> 00:02:09,640 Speaker 1: that's been going on is really we're addressing it, and 38 00:02:09,680 --> 00:02:12,160 Speaker 1: we're seeing lots of signs of this. So I I 39 00:02:12,280 --> 00:02:14,960 Speaker 1: take more. I take comfort in the trends that we 40 00:02:15,000 --> 00:02:17,640 Speaker 1: see in the employment numbers and that but by the way. 41 00:02:17,760 --> 00:02:20,040 Speaker 1: The other thing that's interesting in this For the last 42 00:02:20,040 --> 00:02:22,519 Speaker 1: couple of years we've been dealing with the the oil 43 00:02:22,560 --> 00:02:25,760 Speaker 1: sector has been going through some major cutbacks and you're 44 00:02:25,760 --> 00:02:29,280 Speaker 1: seeing it showing up in mining, utilities, and manufacturing and 45 00:02:29,320 --> 00:02:32,840 Speaker 1: capex bending down. Well, uh, it looks to me like 46 00:02:32,880 --> 00:02:35,720 Speaker 1: we're mostly working got through that because now you're starting 47 00:02:35,760 --> 00:02:40,160 Speaker 1: to see job growth in mining, in manufacturing, and construction. 48 00:02:40,320 --> 00:02:42,720 Speaker 1: So for so these are the three areas that have 49 00:02:42,760 --> 00:02:46,560 Speaker 1: been kind of soft, and this report showed maybe the 50 00:02:46,600 --> 00:02:49,800 Speaker 1: beginning of some return to something more normal. You mentioned 51 00:02:49,800 --> 00:02:51,960 Speaker 1: the volatility of those those wage trends. If you take 52 00:02:51,960 --> 00:02:54,080 Speaker 1: a step back, what are we seeing in terms of 53 00:02:54,080 --> 00:02:56,959 Speaker 1: wage growth from a from a broader perspective, Well, these 54 00:02:57,040 --> 00:03:00,520 Speaker 1: numbers show sort of the wage growth is shifted up 55 00:03:00,520 --> 00:03:03,120 Speaker 1: from two percent annual growth forever to about two and 56 00:03:03,120 --> 00:03:05,760 Speaker 1: a half percent. We're still doing a little better of 57 00:03:05,760 --> 00:03:08,840 Speaker 1: an inflation but frankly, we would I would expect this 58 00:03:08,880 --> 00:03:10,079 Speaker 1: is going to do a little better. It looked to 59 00:03:10,120 --> 00:03:12,639 Speaker 1: me like we were heading our way towards three percent growth, 60 00:03:12,639 --> 00:03:15,560 Speaker 1: which would be quite decent given where inflation is. And 61 00:03:15,600 --> 00:03:17,120 Speaker 1: it may be that we're there. And the thing that's 62 00:03:17,120 --> 00:03:19,200 Speaker 1: surprised everybody is there were a bunch of states that 63 00:03:19,280 --> 00:03:23,240 Speaker 1: implemented minimum wages when minimum wage hikes in January that 64 00:03:23,240 --> 00:03:26,480 Speaker 1: didn't show up. So I think you don't really know 65 00:03:26,600 --> 00:03:29,000 Speaker 1: what's going on here until you see a couple of 66 00:03:29,040 --> 00:03:31,760 Speaker 1: months behind you. Because these numbers are so volatile, they 67 00:03:31,760 --> 00:03:34,240 Speaker 1: swing around a lot, and it wouldn't be surprising to 68 00:03:34,280 --> 00:03:36,320 Speaker 1: me if by spring you see the trend is back 69 00:03:36,320 --> 00:03:38,560 Speaker 1: to where we were thinking before two and a half. 70 00:03:38,680 --> 00:03:42,080 Speaker 1: Heading toward three, I want to ask you about retraining. 71 00:03:42,120 --> 00:03:43,520 Speaker 1: I was looking at your most recent note, and you're 72 00:03:43,520 --> 00:03:45,800 Speaker 1: at there are five point five million unfilled job openings 73 00:03:45,800 --> 00:03:47,640 Speaker 1: today compared with three point five to four million job 74 00:03:47,640 --> 00:03:50,280 Speaker 1: openings the last time unemployment stood at the current level, 75 00:03:50,600 --> 00:03:52,280 Speaker 1: implying that quite a few new jobs could be created 76 00:03:52,280 --> 00:03:55,280 Speaker 1: by retraining folks. So people taking that more seriously, Yeah, 77 00:03:55,320 --> 00:03:58,120 Speaker 1: you see moving towards them. You see in action businesses 78 00:03:58,600 --> 00:04:01,520 Speaker 1: talk about this a lot. Uh. It's it's very difficult 79 00:04:01,560 --> 00:04:04,280 Speaker 1: for small business to train people because what happens is 80 00:04:04,320 --> 00:04:06,320 Speaker 1: you train them and then they jump. You can't you 81 00:04:06,320 --> 00:04:08,520 Speaker 1: can't be sure they're gonna stay your job. So where 82 00:04:08,560 --> 00:04:11,040 Speaker 1: I see it as more in the community college system, 83 00:04:11,280 --> 00:04:14,600 Speaker 1: that's where go to Miami Day Community College. It's massive system. 84 00:04:14,880 --> 00:04:18,200 Speaker 1: They've got a lot of specialized skill programs that tons 85 00:04:18,200 --> 00:04:20,160 Speaker 1: of kids are going into. And I think, I think 86 00:04:20,200 --> 00:04:22,479 Speaker 1: it's just a matter of time people figure out that 87 00:04:22,760 --> 00:04:25,440 Speaker 1: where the opportunities are. You just can't turn yourself into 88 00:04:26,200 --> 00:04:29,680 Speaker 1: a technician overnight. It takes time, and you've gotta get 89 00:04:29,720 --> 00:04:32,320 Speaker 1: some skills that we used to get in shop class, 90 00:04:32,440 --> 00:04:35,120 Speaker 1: or you're gonna have some interest in math. So I 91 00:04:35,120 --> 00:04:37,440 Speaker 1: think it just takes time. And my guess is we 92 00:04:37,520 --> 00:04:40,520 Speaker 1: won't be talking about this five years from now. But 93 00:04:40,600 --> 00:04:43,520 Speaker 1: that's that's why to us economists, this is music to 94 00:04:43,600 --> 00:04:46,400 Speaker 1: our ears because when we hear people complaining but they 95 00:04:46,440 --> 00:04:49,440 Speaker 1: can't find people, that tells me there's opportunities there and 96 00:04:49,480 --> 00:04:51,160 Speaker 1: it's not gonna be long before someone figures that out. 97 00:04:51,440 --> 00:04:54,040 Speaker 1: Strike me as a successful public private partnership. When you 98 00:04:54,080 --> 00:04:55,760 Speaker 1: look at the where the companies are working with these 99 00:04:55,760 --> 00:04:57,680 Speaker 1: communic college yeah, you know what that The thing is 100 00:04:57,839 --> 00:05:00,719 Speaker 1: what used to happen is you're union. Used to have 101 00:05:00,760 --> 00:05:02,520 Speaker 1: a union as a shop that would set or set 102 00:05:02,560 --> 00:05:04,240 Speaker 1: these up. Well, we don't a lot of people don't 103 00:05:04,240 --> 00:05:06,720 Speaker 1: work in unions anymore, particularly manufacturing so we do. We're 104 00:05:06,720 --> 00:05:09,280 Speaker 1: missing an institution that really used to do this. Jim, 105 00:05:09,320 --> 00:05:13,680 Speaker 1: do you just presume a stronger dollar? No, I I 106 00:05:13,680 --> 00:05:16,560 Speaker 1: don't think it makes I think the reason we've seen 107 00:05:16,600 --> 00:05:18,680 Speaker 1: the dollar stronger in the last couple of years is 108 00:05:18,680 --> 00:05:22,159 Speaker 1: because the FETE stopped doing quantitative easing, and the Europeans 109 00:05:22,160 --> 00:05:25,160 Speaker 1: and the Japanese stepped in and and just emulated with 110 00:05:25,240 --> 00:05:28,359 Speaker 1: the FETE was doing. So I don't think it's obvious 111 00:05:28,800 --> 00:05:30,720 Speaker 1: that the US dollars should be stronger. The dollar is 112 00:05:30,800 --> 00:05:32,640 Speaker 1: kind of on a trade weighted basis about where it's 113 00:05:32,640 --> 00:05:35,599 Speaker 1: been on average over the last forty years, so to me, 114 00:05:35,720 --> 00:05:39,560 Speaker 1: unless the US is able to sort of fundamentally change 115 00:05:39,600 --> 00:05:42,120 Speaker 1: the amount of energy in the economy and generates all 116 00:05:42,080 --> 00:05:46,360 Speaker 1: of this new optimism about productivity or something that's unique 117 00:05:46,400 --> 00:05:48,560 Speaker 1: to the US and not others, I don't think there's 118 00:05:48,560 --> 00:05:50,840 Speaker 1: a reason to expect the dollar to keep going up, 119 00:05:51,360 --> 00:05:54,640 Speaker 1: And particularly now that we're seeing more signs maybe not 120 00:05:54,680 --> 00:05:57,520 Speaker 1: in Greece, but in Europe, European and Japanese economies are 121 00:05:57,560 --> 00:05:59,880 Speaker 1: doing a little better, so central banks are getting a 122 00:06:00,000 --> 00:06:02,279 Speaker 1: little more You get the sense that people are thinking 123 00:06:02,279 --> 00:06:05,240 Speaker 1: more about maybe slowing down the asset purchases, and that's 124 00:06:05,240 --> 00:06:08,200 Speaker 1: why the Europeans are doing starting March. So that to me, 125 00:06:08,760 --> 00:06:11,520 Speaker 1: that prospect is what kind of limits the upside for 126 00:06:11,560 --> 00:06:13,440 Speaker 1: the dollar. Get trade balance date of here at eight 127 00:06:13,560 --> 00:06:15,880 Speaker 1: thirty and you've written about trade deaths. That's how we 128 00:06:15,880 --> 00:06:18,440 Speaker 1: should regard trade deaths. That's saying that you should seem 129 00:06:18,440 --> 00:06:23,120 Speaker 1: as paid forward story. I think, so okay. So here 130 00:06:23,120 --> 00:06:25,400 Speaker 1: here is that here's the US. We are among the 131 00:06:25,520 --> 00:06:28,240 Speaker 1: richest of the economies in the world. Right America is 132 00:06:28,279 --> 00:06:31,160 Speaker 1: already great, and and so is Europe. And in terms 133 00:06:31,200 --> 00:06:34,119 Speaker 1: of living standard, much of the world is very poor. 134 00:06:34,720 --> 00:06:39,279 Speaker 1: So to me, trade deficits symbolize an effort on our part. 135 00:06:39,360 --> 00:06:42,520 Speaker 1: It allows companies that are countries that are allowed to 136 00:06:42,720 --> 00:06:45,400 Speaker 1: access our consumer markets, means they can sell to us, 137 00:06:45,760 --> 00:06:49,080 Speaker 1: means they can they can generate their own economic development. 138 00:06:49,600 --> 00:06:51,799 Speaker 1: And so trade deficits are a sign that the world 139 00:06:51,880 --> 00:06:54,160 Speaker 1: is all out of balance. There we're trading with people 140 00:06:54,200 --> 00:06:57,279 Speaker 1: who are poor, but as they do better, they're going 141 00:06:57,320 --> 00:06:59,320 Speaker 1: to be buying more of our stuff. And so to me, 142 00:06:59,480 --> 00:07:04,599 Speaker 1: trade death there's a temporary dislocation that is uh is 143 00:07:04,600 --> 00:07:06,360 Speaker 1: a reflection of a world that's out of saying it's 144 00:07:06,400 --> 00:07:09,440 Speaker 1: not a reflection of countries manipulating their currency to take 145 00:07:09,440 --> 00:07:12,800 Speaker 1: advantage of the US. It's a it's a sign of 146 00:07:12,960 --> 00:07:15,720 Speaker 1: countries waking up. And you know, if you're if you're 147 00:07:15,720 --> 00:07:19,960 Speaker 1: Bangladesh or India or China, you're living standards ten the 148 00:07:20,040 --> 00:07:22,320 Speaker 1: US level. You're not going to be buying the same 149 00:07:22,400 --> 00:07:24,920 Speaker 1: things that we're buying from them. So to me, this 150 00:07:25,000 --> 00:07:28,280 Speaker 1: is a stepping stone to a world where we're all 151 00:07:28,320 --> 00:07:31,120 Speaker 1: going to be doing better and we benefit from that 152 00:07:31,200 --> 00:07:35,920 Speaker 1: process because as these as Asia in particular, continue to develop, 153 00:07:36,160 --> 00:07:38,679 Speaker 1: there's vast new consumer markets that are gonna be developing, 154 00:07:38,720 --> 00:07:41,680 Speaker 1: and our our businesses are gonna be benefiting from that. Americans, 155 00:07:41,760 --> 00:07:43,840 Speaker 1: American jobs are going to be created by that. Is 156 00:07:43,880 --> 00:07:46,240 Speaker 1: this conversation too colored by politics, in other words, to 157 00:07:46,240 --> 00:07:48,680 Speaker 1: be focused too much on China and Mexico because of 158 00:07:48,720 --> 00:07:52,240 Speaker 1: the debate over the border or about who is wh 159 00:07:52,240 --> 00:07:54,000 Speaker 1: who is wielding a heavier hand in the age of 160 00:07:54,040 --> 00:07:56,920 Speaker 1: Pacific region for instance. You know, I can understand the 161 00:07:56,920 --> 00:08:00,000 Speaker 1: focus on China Mexicans. That's where the that's the most 162 00:08:00,000 --> 00:08:02,360 Speaker 1: amic that there's were the biggest changes have taken place 163 00:08:02,440 --> 00:08:06,520 Speaker 1: right in China is big, but it really is a 164 00:08:06,560 --> 00:08:10,200 Speaker 1: mistake to think that China and Mexico are stealing our jobs. 165 00:08:10,520 --> 00:08:14,240 Speaker 1: China and Mexico, as they develop, are creating jobs for us. 166 00:08:14,280 --> 00:08:17,800 Speaker 1: We don't see them every day. Honestly, in my company, 167 00:08:17,840 --> 00:08:20,160 Speaker 1: I don't know how much of JP Morgan's revenues are 168 00:08:20,160 --> 00:08:23,840 Speaker 1: being generated by economic the economic pie growing, but I 169 00:08:23,880 --> 00:08:26,920 Speaker 1: know it's true, and I know that I'm benefiting from 170 00:08:26,960 --> 00:08:29,280 Speaker 1: what's going on around the world. Jim Glastman with US. 171 00:08:29,280 --> 00:08:33,760 Speaker 1: He's economist for Commercial Banking and JP Morgan. Jim Blastman, 172 00:08:33,760 --> 00:08:38,680 Speaker 1: you had a great phrase earlier this morning, bogged down. Well, 173 00:08:38,720 --> 00:08:43,040 Speaker 1: you're bogged down by distractions, whether it's Mr Putin or 174 00:08:43,240 --> 00:08:48,520 Speaker 1: the New England Patriots. We are bogged down. How do 175 00:08:48,600 --> 00:08:51,520 Speaker 1: we get out of this boggedness. It's lovely to be 176 00:08:51,559 --> 00:08:55,520 Speaker 1: bogged down by the patriots, but the problem is we're Yeah, 177 00:08:55,600 --> 00:08:58,880 Speaker 1: it's just it's distracting from the issue that has been 178 00:08:58,920 --> 00:09:03,480 Speaker 1: helping the market, which is focusing on economic initiatives to 179 00:09:03,600 --> 00:09:08,800 Speaker 1: get the economy moving. Regulation, tax reform, infrastructure spending that's coming. 180 00:09:08,880 --> 00:09:11,240 Speaker 1: We know that's percolating in the background. But I think 181 00:09:11,520 --> 00:09:13,520 Speaker 1: all of this other stuff is really kind of worrying 182 00:09:13,600 --> 00:09:16,880 Speaker 1: people that maybe if we're not careful, that can start 183 00:09:16,920 --> 00:09:21,720 Speaker 1: fragmenting the team that's trying to put this together. So 184 00:09:21,920 --> 00:09:24,959 Speaker 1: it's you know, the market, the markets holding on to 185 00:09:25,080 --> 00:09:27,560 Speaker 1: the hope because we have not really seen where they're 186 00:09:27,559 --> 00:09:29,559 Speaker 1: going to go on some of these things. And that 187 00:09:29,679 --> 00:09:32,360 Speaker 1: doesn't have to happen tomorrow. But as long as we 188 00:09:32,400 --> 00:09:36,000 Speaker 1: see that there there's reform coming their actions and we 189 00:09:36,040 --> 00:09:38,719 Speaker 1: know it takes time to get a tax reform put 190 00:09:38,760 --> 00:09:41,560 Speaker 1: in place, but as long as um it looks like 191 00:09:41,600 --> 00:09:44,960 Speaker 1: we're moving in that direction, the you know, it doesn't 192 00:09:45,000 --> 00:09:47,000 Speaker 1: disrupt the market, and I think the benefits from that 193 00:09:47,200 --> 00:09:50,360 Speaker 1: we're sort of already been monetized. We've already seen the 194 00:09:50,360 --> 00:09:53,160 Speaker 1: market move up a lot, and the benefits of the 195 00:09:53,240 --> 00:09:55,920 Speaker 1: higher stock markets created a couple of trillion dollars of wealth. 196 00:09:55,960 --> 00:09:59,360 Speaker 1: So that's going to be affecting consumer spending. But but 197 00:09:59,360 --> 00:10:01,559 Speaker 1: but it's true, we really need to get we were 198 00:10:01,600 --> 00:10:05,559 Speaker 1: hoping that the debate gets refocused on the economic issues 199 00:10:06,160 --> 00:10:08,400 Speaker 1: and we get away from some of these other things 200 00:10:08,440 --> 00:10:10,840 Speaker 1: that are distracting. How much do you pay attention to 201 00:10:11,040 --> 00:10:13,880 Speaker 1: readings of sentiment when you're looking at capex, when you're 202 00:10:13,880 --> 00:10:17,080 Speaker 1: looking at the inventory investment. What does sentiment tell us 203 00:10:17,120 --> 00:10:20,920 Speaker 1: about that? You know, Normally, like consumer sentiment, I never 204 00:10:20,920 --> 00:10:23,800 Speaker 1: really pay much attention to it because you can't spend sentiment. 205 00:10:23,880 --> 00:10:25,640 Speaker 1: You have to spend your not to get money yet, 206 00:10:25,760 --> 00:10:28,240 Speaker 1: you know, and the thing is, we're seeing car sales 207 00:10:28,320 --> 00:10:30,520 Speaker 1: off the charts, so that tells you that the consumer 208 00:10:30,559 --> 00:10:33,080 Speaker 1: is feeling pretty good about things. I think in the 209 00:10:33,080 --> 00:10:36,199 Speaker 1: business area, sentiment does matter a lot because there's a 210 00:10:36,240 --> 00:10:39,920 Speaker 1: lot of activity businesses do. Business investment, for example, in 211 00:10:39,960 --> 00:10:42,600 Speaker 1: cap X, that requires that you have some confidence in 212 00:10:42,640 --> 00:10:45,560 Speaker 1: the future. So sentiment can sometimes tell you if there's 213 00:10:45,559 --> 00:10:48,800 Speaker 1: a mind a change in the mindset, and you know, 214 00:10:48,840 --> 00:10:50,840 Speaker 1: if a business has has to put in place a 215 00:10:50,840 --> 00:10:53,959 Speaker 1: project that requires confidence that things are gonna be better 216 00:10:54,000 --> 00:10:57,040 Speaker 1: in the future. Business sentiment can tell you something about 217 00:10:57,080 --> 00:10:59,640 Speaker 1: what's going on. And we are seeing an improvement in 218 00:10:59,760 --> 00:11:03,840 Speaker 1: cap picks surveys, for example, that's probably more about sentiment 219 00:11:03,920 --> 00:11:06,480 Speaker 1: than it is about real plans. That's what that's that's 220 00:11:06,480 --> 00:11:07,959 Speaker 1: what we're gonna have to sort of watch to see 221 00:11:08,000 --> 00:11:10,640 Speaker 1: whether in fact we do get follow up on some 222 00:11:10,760 --> 00:11:13,560 Speaker 1: of this improvement that we've seen in the sentiment numbers. 223 00:11:14,760 --> 00:11:17,040 Speaker 1: When you look at we've talked about energy and energy 224 00:11:17,080 --> 00:11:19,320 Speaker 1: in the labor market. How big of a driver is 225 00:11:19,320 --> 00:11:21,400 Speaker 1: the energy sector right now when you look at the 226 00:11:21,480 --> 00:11:22,760 Speaker 1: US kind of how important is it to get it 227 00:11:22,800 --> 00:11:25,480 Speaker 1: back online perhaps to where it was. Well, it was 228 00:11:25,520 --> 00:11:29,559 Speaker 1: a big deal because you know, as of two thousand fourteen, 229 00:11:30,000 --> 00:11:33,439 Speaker 1: employment was growing about two fifty thousand a month. It 230 00:11:33,640 --> 00:11:37,720 Speaker 1: just kind of slowed down quite significantly to under two 231 00:11:38,080 --> 00:11:41,000 Speaker 1: thousand as that industry was going through its cutback. So 232 00:11:41,440 --> 00:11:43,640 Speaker 1: I don't know that, and it's a it's a big 233 00:11:43,640 --> 00:11:45,839 Speaker 1: deal for the U. S. Economy. We still use more 234 00:11:45,920 --> 00:11:47,559 Speaker 1: energy than we produced, but it's a real big deal 235 00:11:47,600 --> 00:11:50,920 Speaker 1: for the economy. And it's hard to tell all the 236 00:11:51,160 --> 00:11:53,200 Speaker 1: all the impact its seat of indirect I mean, it 237 00:11:53,240 --> 00:11:57,160 Speaker 1: affects transportation, capex, oil servicing, and there's a lot of 238 00:11:57,240 --> 00:11:59,600 Speaker 1: jobs to spin out of this. And now, folks, at 239 00:11:59,640 --> 00:12:02,360 Speaker 1: seven twenty three oh seven on a Tuesday morning, we 240 00:12:02,440 --> 00:12:05,520 Speaker 1: begin a discussion the Jim Glassman and I have done 241 00:12:05,520 --> 00:12:09,840 Speaker 1: a few times tax reform. Greg Velier this morning in 242 00:12:09,880 --> 00:12:13,520 Speaker 1: his travels is tax reform is front and center and 243 00:12:13,559 --> 00:12:16,680 Speaker 1: even goes to the idea Jim Glassman back dating when 244 00:12:16,720 --> 00:12:20,280 Speaker 1: we back date back to the advantages of tax reform, 245 00:12:20,640 --> 00:12:23,080 Speaker 1: do you and does JP Morgan and your team do 246 00:12:23,120 --> 00:12:27,160 Speaker 1: you do actually feel we'll see tax reform? We do 247 00:12:27,320 --> 00:12:30,000 Speaker 1: because this seems that this is an important part of 248 00:12:30,040 --> 00:12:33,520 Speaker 1: the program, and it seems to be supported by folks 249 00:12:33,520 --> 00:12:36,400 Speaker 1: in the Senate and the House and the President, so 250 00:12:37,000 --> 00:12:38,600 Speaker 1: it would be I mean, we do. We do have 251 00:12:38,679 --> 00:12:42,920 Speaker 1: issues because our companies are not competitive on the global landscape, 252 00:12:42,960 --> 00:12:46,760 Speaker 1: so we know that our corporate tax rate rate is 253 00:12:47,360 --> 00:12:50,920 Speaker 1: putting companies out a disadvantaged compared to others. We would 254 00:12:50,920 --> 00:12:52,960 Speaker 1: like to see the tax coach shift more to a 255 00:12:53,000 --> 00:12:55,800 Speaker 1: consumption based tax and that's part of what's going on. Yeah, 256 00:12:55,800 --> 00:12:58,840 Speaker 1: come on, we were you know, we were children when 257 00:12:58,840 --> 00:13:02,120 Speaker 1: we were talking about know, yeah, we were. We were 258 00:13:02,120 --> 00:13:04,160 Speaker 1: at one time they were trying to turn the tax 259 00:13:04,200 --> 00:13:08,560 Speaker 1: code into a consumption based income tax code. Well diminish, 260 00:13:08,559 --> 00:13:10,439 Speaker 1: you know, there was some bivirus and effort to do that. 261 00:13:10,920 --> 00:13:13,520 Speaker 1: But I think it's I think it's reasonable to assume 262 00:13:13,520 --> 00:13:15,760 Speaker 1: we're going to get some measure of tax reform here 263 00:13:15,800 --> 00:13:19,320 Speaker 1: because it's an important part of the program. Jim Blastmo, 264 00:13:19,480 --> 00:13:34,240 Speaker 1: thank you so much, greatly appreciate it. With Jim, what 265 00:13:34,360 --> 00:13:37,280 Speaker 1: a perfect time to talk to Orville shall, David, why 266 00:13:37,280 --> 00:13:40,760 Speaker 1: don't you bring in Mr Shaw? Absolutely few Americans know 267 00:13:40,840 --> 00:13:42,360 Speaker 1: China as well as our next guests have as much 268 00:13:42,360 --> 00:13:45,360 Speaker 1: experience focusing on the country. Orbit Show, co author of 269 00:13:45,440 --> 00:13:47,880 Speaker 1: Wealth and Power, China's Long March to the Twenty Free Century, 270 00:13:47,960 --> 00:13:50,520 Speaker 1: editor of The China Reader, and many other books. Now 271 00:13:50,559 --> 00:13:53,000 Speaker 1: he is co chair of a task force the Asia 272 00:13:53,040 --> 00:13:55,520 Speaker 1: Society convene to look at U. S. China relations. They're 273 00:13:55,520 --> 00:13:58,040 Speaker 1: out with a new report just this morning. He's former 274 00:13:58,080 --> 00:13:59,800 Speaker 1: dean of the Graduate School of Journalism at You see 275 00:13:59,800 --> 00:14:02,240 Speaker 1: Burke now the Arthur Ross Director of the Center on 276 00:14:02,360 --> 00:14:04,520 Speaker 1: US China Relations at the Age of Society. And Orville 277 00:14:04,520 --> 00:14:07,360 Speaker 1: Shell joins us now from our bureau in Washington at 278 00:14:07,480 --> 00:14:08,920 Speaker 1: d C. Great to have you with us, and why 279 00:14:08,960 --> 00:14:11,920 Speaker 1: don't we start just by talking about the relationship, the U. S. 280 00:14:12,000 --> 00:14:16,360 Speaker 1: China relationship that this president inherited. What does it look like? Well, 281 00:14:16,400 --> 00:14:20,240 Speaker 1: I think he inherited one of the most important relationships 282 00:14:20,280 --> 00:14:22,600 Speaker 1: in the world between two countries, but one that was 283 00:14:22,680 --> 00:14:26,560 Speaker 1: increasingly out of balance. I think that China has been 284 00:14:26,600 --> 00:14:30,320 Speaker 1: pressing in myriad ways in the South China see East 285 00:14:30,400 --> 00:14:33,720 Speaker 1: China see has been somewhat of a laggered in terms 286 00:14:33,760 --> 00:14:40,000 Speaker 1: of pitching into help constrict North Korea and keep them 287 00:14:40,040 --> 00:14:45,520 Speaker 1: from gaining nuclear weapons. I think you see increasingly repressive 288 00:14:46,520 --> 00:14:51,720 Speaker 1: environment within China itself, very level, unlevel playing field in 289 00:14:51,800 --> 00:14:55,120 Speaker 1: terms of trade and investment within China itself. So I 290 00:14:55,160 --> 00:14:58,600 Speaker 1: think Trump comes in at a time when already the 291 00:14:58,680 --> 00:15:02,200 Speaker 1: sort of Chinese side, the equation was out of balance, 292 00:15:02,280 --> 00:15:06,400 Speaker 1: and now he has in effect, uh thrown the puzzle 293 00:15:06,480 --> 00:15:09,000 Speaker 1: on the floor on the American side as well. So 294 00:15:09,080 --> 00:15:13,640 Speaker 1: we have a very curious situation where there are very 295 00:15:13,680 --> 00:15:16,800 Speaker 1: few constants and everything is in the up for grabs 296 00:15:16,840 --> 00:15:19,880 Speaker 1: and in the process of being kind of reinvented, if 297 00:15:19,920 --> 00:15:23,200 Speaker 1: you will. We've seen North Korea amp up it's it's 298 00:15:23,240 --> 00:15:26,960 Speaker 1: testing regime, testing more ballistic weapons. And one of the 299 00:15:26,960 --> 00:15:28,680 Speaker 1: things that this report concludes is there needs to be 300 00:15:28,680 --> 00:15:31,360 Speaker 1: more engagement between the US and China on that issue. 301 00:15:31,760 --> 00:15:33,640 Speaker 1: When you look at President she does he strike you 302 00:15:33,680 --> 00:15:35,720 Speaker 1: as someone who is willing to engage, wants to engage 303 00:15:35,720 --> 00:15:38,480 Speaker 1: more with the US. At this point, I think that 304 00:15:39,080 --> 00:15:44,560 Speaker 1: the Chinese government under Jinping has been quite distrustful of 305 00:15:44,640 --> 00:15:49,000 Speaker 1: the United States, suspecting that deep down inside the agenda 306 00:15:49,440 --> 00:15:52,680 Speaker 1: is regime change, because after all, they have a sort 307 00:15:52,680 --> 00:15:57,640 Speaker 1: of a retrograde Leninist government. We have values differences, political 308 00:15:57,680 --> 00:16:00,640 Speaker 1: system differences. On the other hand, I think President she 309 00:16:00,800 --> 00:16:04,400 Speaker 1: is a realistic man. He knows that in this globalized 310 00:16:04,440 --> 00:16:07,920 Speaker 1: world he has to get along with the major players. 311 00:16:07,960 --> 00:16:10,680 Speaker 1: In the US is one of them. Uh. In Korea, 312 00:16:11,360 --> 00:16:15,120 Speaker 1: we have a curious situation because we do actually share 313 00:16:15,200 --> 00:16:19,200 Speaker 1: a very common interest with China. Neither country US or 314 00:16:19,280 --> 00:16:22,720 Speaker 1: China wants to see Kim Jong un with nuclear weapons 315 00:16:22,800 --> 00:16:26,600 Speaker 1: and and uh, you know, long range ballistic missiles. So 316 00:16:26,720 --> 00:16:31,760 Speaker 1: the question is, is there any possibility with Trump the 317 00:16:31,800 --> 00:16:35,200 Speaker 1: negotiator par excellence, of him coming to some sort of 318 00:16:35,200 --> 00:16:39,160 Speaker 1: the deal was she on Korea where China agrees, yes, 319 00:16:39,240 --> 00:16:43,240 Speaker 1: we'll cooperate with the US, will forge a better relationship, 320 00:16:43,360 --> 00:16:45,840 Speaker 1: and will squeeze North Korea off, will shut off the 321 00:16:45,840 --> 00:16:49,640 Speaker 1: oil pipeline, will close down the trading companies, will stop 322 00:16:49,680 --> 00:16:54,400 Speaker 1: the banking that enables North koreata continue within the zero 323 00:16:54,520 --> 00:16:58,760 Speaker 1: sum architecture and the certitude, which is very anti rable 324 00:16:58,880 --> 00:17:04,000 Speaker 1: show within the certitude of our new administration, everyone vaults 325 00:17:04,040 --> 00:17:06,560 Speaker 1: back to game theory. I think of an ode agerwal 326 00:17:06,640 --> 00:17:09,160 Speaker 1: At Berkeley is someone who's really looked at the game 327 00:17:09,200 --> 00:17:12,520 Speaker 1: theory of trade and diplomacy. What will be the game 328 00:17:12,600 --> 00:17:17,879 Speaker 1: theoretic response of China to the possible actions of our 329 00:17:17,920 --> 00:17:21,760 Speaker 1: new administration. Well, that's a very good question. I think 330 00:17:22,359 --> 00:17:25,280 Speaker 1: you know. I'm here in Washington now, We've been talking 331 00:17:25,280 --> 00:17:29,840 Speaker 1: with White House people and Senate Defense Department, State Department. 332 00:17:30,320 --> 00:17:32,520 Speaker 1: As you go around, you find that nobody has an 333 00:17:32,560 --> 00:17:35,520 Speaker 1: answer to that question. And Uh, this is sort of 334 00:17:35,680 --> 00:17:41,040 Speaker 1: trumpion uh strategy at its sort of highest state of evolution. 335 00:17:41,320 --> 00:17:45,120 Speaker 1: Now it's virtue is, of course, it does throw everyone 336 00:17:45,160 --> 00:17:48,400 Speaker 1: off balance. It also throws the Chinese a little off balance. 337 00:17:48,440 --> 00:17:50,520 Speaker 1: It puts them on notice that things are going to 338 00:17:50,600 --> 00:17:54,160 Speaker 1: be different. So that's not in itself a bad thing. 339 00:17:54,520 --> 00:17:57,600 Speaker 1: But you know, at some point you have to begin 340 00:17:57,800 --> 00:18:00,560 Speaker 1: putting the thing, the puzzle back together. There. You have 341 00:18:00,680 --> 00:18:04,280 Speaker 1: to have some new strategy to replace whatever it is 342 00:18:04,320 --> 00:18:07,040 Speaker 1: that you've taken off the table. David, could I mention 343 00:18:07,840 --> 00:18:10,840 Speaker 1: and I the professor, I can't believe I'm saying this. 344 00:18:12,400 --> 00:18:16,879 Speaker 1: Forty years ago next year, you weren't cool unless you 345 00:18:16,960 --> 00:18:21,439 Speaker 1: had in the People's Republic Orville Shell paperback. David, you 346 00:18:21,560 --> 00:18:23,880 Speaker 1: had to be too cool for school if you didn't 347 00:18:23,960 --> 00:18:29,280 Speaker 1: own a copy of that thirty nine years ago. Thirty 348 00:18:29,359 --> 00:18:31,280 Speaker 1: nine years I mean you had to have it to 349 00:18:31,320 --> 00:18:35,880 Speaker 1: pick up girls, professor, shall let me ask you. Let 350 00:18:35,880 --> 00:18:37,719 Speaker 1: me ask you about who the point person should be 351 00:18:37,760 --> 00:18:40,280 Speaker 1: on US China relations. There was there was a lot 352 00:18:40,320 --> 00:18:42,320 Speaker 1: made of Terry Brandson being picked to be the ambassador 353 00:18:42,320 --> 00:18:44,399 Speaker 1: to China. In actual fact, how much power does the 354 00:18:44,400 --> 00:18:47,080 Speaker 1: ambassador to China have? In other words, is that the 355 00:18:47,080 --> 00:18:49,080 Speaker 1: State Department who should be pushing for these relations to 356 00:18:49,119 --> 00:18:51,080 Speaker 1: improve is at the Treasury Department. Where does that? Where 357 00:18:51,080 --> 00:18:53,760 Speaker 1: does that come from? Well? I think the ambassador actually 358 00:18:53,800 --> 00:18:56,080 Speaker 1: has very little power. And in the present scheme of 359 00:18:56,160 --> 00:19:00,360 Speaker 1: things in China, our ambassadors lately have been completely got out. 360 00:19:00,359 --> 00:19:03,280 Speaker 1: They can't even see a Vice minister, whereas the Chinese 361 00:19:03,280 --> 00:19:06,879 Speaker 1: ambassador here is fetted at the highest levels, even gets 362 00:19:06,880 --> 00:19:09,680 Speaker 1: into the White House to see the president. So here too, 363 00:19:09,760 --> 00:19:13,560 Speaker 1: we are way out of balance. I think that, you know, uh, 364 00:19:13,680 --> 00:19:16,840 Speaker 1: the president obviously has to set the tone, but I 365 00:19:16,880 --> 00:19:20,600 Speaker 1: think in this administration it may well be that he 366 00:19:20,720 --> 00:19:25,359 Speaker 1: sort of remands uh, more than day to day exercise 367 00:19:25,480 --> 00:19:29,000 Speaker 1: of policy to his cabinet secretaries, as we've seen with 368 00:19:29,080 --> 00:19:33,040 Speaker 1: Mattis just got back from Korea, Japan. Uh, and the 369 00:19:33,040 --> 00:19:36,240 Speaker 1: President did kind of defer to him. Now, Tillerson is 370 00:19:36,280 --> 00:19:39,439 Speaker 1: a smart, able man. Uh, He's got to get his 371 00:19:39,520 --> 00:19:42,600 Speaker 1: sea legs and find out just exactly you know, where 372 00:19:42,600 --> 00:19:47,120 Speaker 1: he's standing. But it's possible that he will be uh 373 00:19:47,280 --> 00:19:49,240 Speaker 1: more and more in charge. And then we have people 374 00:19:49,560 --> 00:19:52,639 Speaker 1: like in the White House Peter Navarro, who is an 375 00:19:52,640 --> 00:19:57,200 Speaker 1: economist and who's staked his um, you know, his his 376 00:19:57,440 --> 00:19:59,760 Speaker 1: future in the White House on trade. This is a 377 00:19:59,840 --> 00:20:04,280 Speaker 1: very a delicate question, and he is um, I would say, 378 00:20:04,640 --> 00:20:08,679 Speaker 1: quite neuralgic about China. You're you're being gracious. If you 379 00:20:08,720 --> 00:20:12,120 Speaker 1: were to write in the People's Republican Americans firsthand View 380 00:20:12,520 --> 00:20:15,000 Speaker 1: of China, if you were to rewrite it today, Orville Shell, 381 00:20:15,320 --> 00:20:18,320 Speaker 1: how would you rewriting to explain to the Trump administration 382 00:20:18,760 --> 00:20:21,480 Speaker 1: that it's not a zero sum America, it's not a 383 00:20:21,600 --> 00:20:25,320 Speaker 1: zero sum system and in some way we need to 384 00:20:25,359 --> 00:20:28,080 Speaker 1: work with China. How do you write that today? Well, 385 00:20:28,119 --> 00:20:32,480 Speaker 1: that's the paradox. We absolutely have to work with China. Therefore, 386 00:20:32,800 --> 00:20:36,920 Speaker 1: it doesn't make sense to meddle with the one China policy. Uh. 387 00:20:36,960 --> 00:20:38,880 Speaker 1: You know, if you do that, you tear the whole 388 00:20:39,000 --> 00:20:42,760 Speaker 1: edifice down on the other hand, it's also undeniably true 389 00:20:42,840 --> 00:20:47,240 Speaker 1: that things need to change. Uh. The China has become 390 00:20:47,320 --> 00:20:53,480 Speaker 1: much more assertive aggressive, uh, much less flexible, and you know, 391 00:20:53,960 --> 00:21:00,000 Speaker 1: we cannot solve problems like nuclear proliferation, pandemics, climate change 392 00:21:00,600 --> 00:21:03,480 Speaker 1: uh worth China as a partner if they have such 393 00:21:03,520 --> 00:21:07,360 Speaker 1: a rigid posture. So this is the real question. Can 394 00:21:07,440 --> 00:21:11,600 Speaker 1: we find some new grounds of of collective action or 395 00:21:11,880 --> 00:21:17,200 Speaker 1: are the rather more negative retrograde uh uh tensions going 396 00:21:17,280 --> 00:21:19,800 Speaker 1: to prevail. Do you foresee that we can have a 397 00:21:19,800 --> 00:21:23,399 Speaker 1: conversation about trade with China without the bellicoast rhetoric. It 398 00:21:23,400 --> 00:21:25,520 Speaker 1: seems like it's so imbued with that. It's been so 399 00:21:25,600 --> 00:21:28,160 Speaker 1: imbued with that. Uh. Is there a chance we can 400 00:21:28,160 --> 00:21:31,560 Speaker 1: put that aside? I think it's possible, actually, But the 401 00:21:31,680 --> 00:21:33,840 Speaker 1: US is going to have to arch its back, as 402 00:21:33,880 --> 00:21:37,479 Speaker 1: it did for instance on cyber hacking, where the you know, 403 00:21:37,560 --> 00:21:40,879 Speaker 1: the Minister of Public Security came over here in a 404 00:21:40,920 --> 00:21:44,400 Speaker 1: few days notice because he knew there was trouble and 405 00:21:44,480 --> 00:21:48,199 Speaker 1: he knew that his president visit to Washington would be 406 00:21:48,240 --> 00:21:50,200 Speaker 1: a failure if he didn't do it, and they worked 407 00:21:50,280 --> 00:21:52,960 Speaker 1: something out. I think when the United States makes it 408 00:21:53,040 --> 00:21:57,240 Speaker 1: indelibly clear to China. That's enough. This can't go on 409 00:21:57,480 --> 00:22:00,440 Speaker 1: and there will be consequences. There's a price to pay 410 00:22:00,480 --> 00:22:03,080 Speaker 1: if we don't work this out, then sometimes they come around. 411 00:22:03,480 --> 00:22:05,159 Speaker 1: Or fiel Shell with us. He is co chair of 412 00:22:05,200 --> 00:22:07,680 Speaker 1: the Task Force on US China Relations the Asia Society 413 00:22:07,720 --> 00:22:09,520 Speaker 1: has assembled there out with a new report today, US 414 00:22:09,560 --> 00:22:12,880 Speaker 1: Policy towards China, recommendations for a new administration. Or fiel 415 00:22:12,920 --> 00:22:14,840 Speaker 1: Shell the Arthur Ross, director of the Center on US 416 00:22:15,119 --> 00:22:17,399 Speaker 1: China Relations at AGE at the Asia Society. And or 417 00:22:17,600 --> 00:22:20,399 Speaker 1: let me ask you about the history here. You've written 418 00:22:20,400 --> 00:22:23,880 Speaker 1: more than fifteen books on China. The history is so 419 00:22:23,920 --> 00:22:26,320 Speaker 1: important are you Are you worried about how cognizant this 420 00:22:26,359 --> 00:22:30,600 Speaker 1: new administration is of the history of this relationship. Well, 421 00:22:31,040 --> 00:22:33,760 Speaker 1: it's an incredibly important element in the U. S. China 422 00:22:33,800 --> 00:22:39,840 Speaker 1: relationship because there's such tremendous sensitivities and the whole Chinese 423 00:22:39,920 --> 00:22:43,760 Speaker 1: narrative about you know, China having been occupied by Japan, 424 00:22:44,440 --> 00:22:47,680 Speaker 1: the Opium War, is the history of the West sort 425 00:22:47,680 --> 00:22:52,320 Speaker 1: of predatory postures towards China, and this this, I think 426 00:22:52,440 --> 00:22:57,240 Speaker 1: fuels it's the deep desire that's expressed in the most 427 00:22:57,520 --> 00:23:01,639 Speaker 1: obvious ways by President she of China to become great again, 428 00:23:01,680 --> 00:23:04,800 Speaker 1: in other words, to undergo a rejuvenation. And that's part 429 00:23:04,800 --> 00:23:07,200 Speaker 1: of what I think is driving. It's pushing the South 430 00:23:07,359 --> 00:23:11,200 Speaker 1: China see the East China. See it's sort of silk road, 431 00:23:11,840 --> 00:23:16,080 Speaker 1: uh policies of trying to extend these roots maritime and 432 00:23:16,160 --> 00:23:19,240 Speaker 1: overland to Europe. So China is really on the march 433 00:23:19,400 --> 00:23:24,120 Speaker 1: an effort to regain its old sort of historical ascendant 434 00:23:24,160 --> 00:23:26,720 Speaker 1: power not only within Asia but the world. Let me 435 00:23:26,760 --> 00:23:28,080 Speaker 1: ask you to play that a little bit more. You've 436 00:23:28,080 --> 00:23:31,000 Speaker 1: called it. President she a realistic man. What is his 437 00:23:31,080 --> 00:23:34,440 Speaker 1: vision of China's role in the world. I think his is. 438 00:23:34,560 --> 00:23:38,520 Speaker 1: The first step is China should be pre eminent in Asia. 439 00:23:39,000 --> 00:23:43,200 Speaker 1: And this is why the Seventh Fleet and America's sort 440 00:23:43,200 --> 00:23:48,240 Speaker 1: of twentieth century presence as the predominant sort of power 441 00:23:48,520 --> 00:23:54,360 Speaker 1: in Asia, at least maritime power is uh not not acceptable. 442 00:23:54,680 --> 00:23:57,879 Speaker 1: And that's why we see it claiming that the entire 443 00:23:57,960 --> 00:24:00,960 Speaker 1: South China see in the so called nine dash line 444 00:24:01,000 --> 00:24:05,080 Speaker 1: that goes all almost down to Indonesia. So you know it, 445 00:24:04,640 --> 00:24:09,600 Speaker 1: it wants to rearrange the furniture of Asia in terms 446 00:24:09,640 --> 00:24:12,280 Speaker 1: of who is in charge, who is calling the shots 447 00:24:12,320 --> 00:24:16,560 Speaker 1: and in this sense too, it's very historically rentalent that 448 00:24:17,040 --> 00:24:21,320 Speaker 1: it wants the surrounding powers Korea, Japan, Vietnam that once 449 00:24:21,359 --> 00:24:27,840 Speaker 1: we're tribute bearing subsidiary nations to again being a subsidiary 450 00:24:28,040 --> 00:24:30,680 Speaker 1: role to China the leader. Let me ask you about 451 00:24:30,880 --> 00:24:33,000 Speaker 1: a watchword or a watch phrase, something we hear time 452 00:24:33,000 --> 00:24:34,840 Speaker 1: and time again. That's civil society. And one of your 453 00:24:34,840 --> 00:24:37,800 Speaker 1: recommendations here has to do with civil society saying that 454 00:24:37,800 --> 00:24:40,399 Speaker 1: there are policies in place that harm US organizations, companies, 455 00:24:40,440 --> 00:24:43,720 Speaker 1: individuals and the broader relationship, and the U s should 456 00:24:43,760 --> 00:24:46,880 Speaker 1: respond to that. Haven't we been doing that? I think 457 00:24:46,920 --> 00:24:49,199 Speaker 1: back on the last Strategic and Economic Dialogue, there was 458 00:24:49,200 --> 00:24:53,119 Speaker 1: a whole component part on how how these organizations can 459 00:24:53,160 --> 00:24:55,280 Speaker 1: act independently in China. How does that change? How does 460 00:24:55,320 --> 00:24:58,200 Speaker 1: that conversation begin to change? You know, I think that 461 00:24:58,440 --> 00:25:01,960 Speaker 1: as relations get more tents on a state to state 462 00:25:02,080 --> 00:25:05,200 Speaker 1: level between our governments, it becomes ever more imperative that 463 00:25:05,320 --> 00:25:08,640 Speaker 1: we have a functional sort of second set of muscles, 464 00:25:08,760 --> 00:25:15,760 Speaker 1: namely in civil society, NGO's cultural exchange, you know, music education, 465 00:25:16,200 --> 00:25:18,280 Speaker 1: And I would also say here the media is an 466 00:25:18,280 --> 00:25:21,960 Speaker 1: incredibly important role and the playing field when it comes 467 00:25:22,000 --> 00:25:25,800 Speaker 1: to the media is completely out of balance. China has 468 00:25:26,359 --> 00:25:29,040 Speaker 1: any reporter from China can come in from the New 469 00:25:29,119 --> 00:25:35,040 Speaker 1: China News Agency, the People's Daily. There's CCTV television channels 470 00:25:35,080 --> 00:25:38,920 Speaker 1: playing in the US and Chinese and English radio networks. 471 00:25:39,160 --> 00:25:41,960 Speaker 1: None of these things are possible for Americans in China. 472 00:25:42,160 --> 00:25:44,280 Speaker 1: So this is another area where if we're gonna have 473 00:25:44,280 --> 00:25:48,280 Speaker 1: a healthy relationship, we need to recalibrate. Did you ever 474 00:25:48,320 --> 00:25:53,600 Speaker 1: meet Mao? I never? Did you say, Mr Trump remind 475 00:25:53,680 --> 00:25:57,440 Speaker 1: you of Mao? Yeah, discuss that's quite a statement. Well, 476 00:25:59,000 --> 00:26:03,040 Speaker 1: Mao and Trump are both populists. They're both I think 477 00:26:03,119 --> 00:26:07,280 Speaker 1: quite anti elitist. They both are dedicated to sort of 478 00:26:07,359 --> 00:26:10,879 Speaker 1: turning over the order such as it is. They both 479 00:26:10,920 --> 00:26:15,760 Speaker 1: imagined themselves to be representing kind of people who've lost 480 00:26:15,840 --> 00:26:22,280 Speaker 1: their voice, who are looked down upon, who feel disesteemed, disrespected, 481 00:26:23,119 --> 00:26:25,560 Speaker 1: I think, and you know, Mal Datong had an expression 482 00:26:25,960 --> 00:26:30,640 Speaker 1: that you can't uh, no construction can happen without destruction, 483 00:26:31,040 --> 00:26:34,000 Speaker 1: and I think that's very similar to sort of Donald 484 00:26:34,040 --> 00:26:39,000 Speaker 1: Trump's notion that they both grew up wealthy. Right, Well, 485 00:26:39,119 --> 00:26:41,720 Speaker 1: Mal grew up he was sort of uh not a 486 00:26:41,880 --> 00:26:45,199 Speaker 1: poor and a not a poor peasant family, but a 487 00:26:45,200 --> 00:26:47,800 Speaker 1: peasant family, so he had a very different kind of 488 00:26:47,880 --> 00:26:52,480 Speaker 1: rural upbringing. But interestingly he had tremendous issues as as 489 00:26:52,560 --> 00:26:57,280 Speaker 1: we may say, with his father and became very anti authoritarian, 490 00:26:57,640 --> 00:27:01,520 Speaker 1: which was I think fed into his pench for making revolution. 491 00:27:01,600 --> 00:27:03,359 Speaker 1: And I think there was some of that in Donald 492 00:27:03,400 --> 00:27:08,200 Speaker 1: Trump's family history as well. Last question, here's just about business. 493 00:27:08,880 --> 00:27:10,520 Speaker 1: A lot of people in business say the biggest issue 494 00:27:10,520 --> 00:27:13,199 Speaker 1: in China is cybersecurity. Just the last thirty seconds we 495 00:27:13,240 --> 00:27:15,000 Speaker 1: have here, what do you recommend change with regard to 496 00:27:15,040 --> 00:27:18,240 Speaker 1: cybersecurity in China. Well, there's a lot of hacking not 497 00:27:18,440 --> 00:27:23,040 Speaker 1: just of government networks by the Chinese, but also theft 498 00:27:23,119 --> 00:27:29,159 Speaker 1: of intellectual property and cyber hacking into corporate accounts. And uh, 499 00:27:29,200 --> 00:27:32,760 Speaker 1: this is, you know, not something that the US accepts. 500 00:27:32,760 --> 00:27:35,240 Speaker 1: And I think actually, as we said earlier, this is 501 00:27:35,240 --> 00:27:37,000 Speaker 1: one of the areas where the U. S and China 502 00:27:37,400 --> 00:27:41,280 Speaker 1: did actually come to an agreement that was reasonably affective. 503 00:27:41,840 --> 00:27:43,560 Speaker 1: Thank you so much, or we'll show with the age 504 00:27:43,560 --> 00:27:55,000 Speaker 1: of society with an important new task force on China, 505 00:27:56,920 --> 00:28:00,480 Speaker 1: brought you by Bank of America Mary Lynch, dedicated to 506 00:28:00,560 --> 00:28:04,400 Speaker 1: bringing our clients insights and solutions to meet the challenges 507 00:28:04,560 --> 00:28:08,280 Speaker 1: of a transforming world. That's the power of global connections. 508 00:28:08,680 --> 00:28:13,639 Speaker 1: Marylynch Pierce Federan Smith Incorporated Member s I p C. 509 00:28:17,160 --> 00:28:19,199 Speaker 1: One of our favorite guests, Phil Verlager, who has been 510 00:28:19,320 --> 00:28:23,119 Speaker 1: very cautious about an oil price recovery for decades of 511 00:28:23,160 --> 00:28:25,720 Speaker 1: study out of m I T a few years ago 512 00:28:26,280 --> 00:28:29,960 Speaker 1: studying oil as well, Phil, do you still maintain a 513 00:28:30,080 --> 00:28:38,200 Speaker 1: cautious view of the certitude that oil will recover? Very cautious. Um, 514 00:28:38,560 --> 00:28:42,920 Speaker 1: Thank you very much. Tom. It's what has happened is 515 00:28:44,120 --> 00:28:49,000 Speaker 1: the open interest in features has surged. It's up over 516 00:28:50,200 --> 00:28:54,440 Speaker 1: since the election, and globally we have something like five 517 00:28:54,480 --> 00:29:00,560 Speaker 1: point three million barrels on the IMAX, UH the and 518 00:29:00,760 --> 00:29:04,520 Speaker 1: the International Petroleum Exchange, and it's we could be at 519 00:29:04,600 --> 00:29:08,240 Speaker 1: eight million barrels by the end of the year. That's 520 00:29:08,320 --> 00:29:11,520 Speaker 1: eight billion barrels. If you look at the composition. There's 521 00:29:11,560 --> 00:29:15,880 Speaker 1: a huge surge on the buying side from speculators they're 522 00:29:16,120 --> 00:29:20,200 Speaker 1: betting on OPEC. Refiners have been big buyers. Uh and 523 00:29:20,360 --> 00:29:23,640 Speaker 1: UH there's producers are using this as an opportunity to sell. 524 00:29:24,560 --> 00:29:27,880 Speaker 1: And what this is doing is setting up a bubble. Uh. Now, 525 00:29:27,920 --> 00:29:31,120 Speaker 1: maybe the bubble doesn't pomp. But based on this you've 526 00:29:31,160 --> 00:29:34,480 Speaker 1: got first OPEC, which is uncertain. But secondly you have 527 00:29:34,880 --> 00:29:37,640 Speaker 1: the what I'll call the Trump put like the Greenspan put. 528 00:29:38,360 --> 00:29:41,680 Speaker 1: And what we're what we have is a situation where 529 00:29:41,720 --> 00:29:44,719 Speaker 1: one way or another, US producers are pretty well guaranteed 530 00:29:45,280 --> 00:29:48,800 Speaker 1: of high prices. The free market that Ronald Reagan opened 531 00:29:48,800 --> 00:29:53,920 Speaker 1: in January closed January twentie of this year. Uh, if 532 00:29:53,920 --> 00:29:56,840 Speaker 1: prices start to fall, we know some sort of protectionist 533 00:29:56,880 --> 00:29:58,760 Speaker 1: measure will be taken. It could be the pre tax, 534 00:29:59,680 --> 00:30:01,720 Speaker 1: or could be go ahead. I want to rip up 535 00:30:01,760 --> 00:30:03,880 Speaker 1: the script here, folks. One the most important moments in 536 00:30:03,920 --> 00:30:07,760 Speaker 1: Bloomberg on the Economy years ago was Dr Verligo talking 537 00:30:07,800 --> 00:30:11,280 Speaker 1: about NAFTA and and fulfill what people don't know within 538 00:30:11,320 --> 00:30:15,760 Speaker 1: your cottage industry of oil is you have real tangible, 539 00:30:15,880 --> 00:30:20,760 Speaker 1: firsthand experience with NAFTA and the analysis of this border tax. 540 00:30:21,360 --> 00:30:23,400 Speaker 1: Let I know David wants to jump in here. Let 541 00:30:23,400 --> 00:30:27,080 Speaker 1: me ask you one simple question. Is NAFTA been as 542 00:30:27,200 --> 00:30:30,720 Speaker 1: lousy of a deal is the President makes it? No, 543 00:30:31,080 --> 00:30:34,600 Speaker 1: NAFTA has been a very good deal for consumers. It's 544 00:30:34,600 --> 00:30:38,080 Speaker 1: been a terrible deal for many of the people who 545 00:30:38,160 --> 00:30:40,360 Speaker 1: work in the auto industry and other industries because of 546 00:30:40,400 --> 00:30:42,800 Speaker 1: all the jobs that have moved south. How many of 547 00:30:42,800 --> 00:30:46,600 Speaker 1: those jobs would have been lost anyway. But the arguments 548 00:30:46,640 --> 00:30:49,680 Speaker 1: in favor of trade agreements have always been the consumer benefits, 549 00:30:49,720 --> 00:30:54,200 Speaker 1: lower prices. Uh. The downside has always been that UH 550 00:30:54,440 --> 00:30:57,520 Speaker 1: jobs get lost and that they're supposed to be job retraining. 551 00:30:57,640 --> 00:31:01,360 Speaker 1: My criticism has been that we we were happy with 552 00:31:01,400 --> 00:31:03,520 Speaker 1: the consumer benefits and we didn't do enough for the 553 00:31:03,560 --> 00:31:08,360 Speaker 1: people in Michigan, Wisconsin, Ohio, and Pennsylvania. And so it 554 00:31:08,400 --> 00:31:10,440 Speaker 1: depends where you sit. But after I think for the 555 00:31:10,480 --> 00:31:14,920 Speaker 1: economy has has been good. UM, but it's you know, 556 00:31:15,480 --> 00:31:17,360 Speaker 1: ripping it up isn't going to change the trade deficit. 557 00:31:17,480 --> 00:31:20,880 Speaker 1: Marty Selstein's right, he said it on Bloomberg TV. I'm 558 00:31:20,920 --> 00:31:23,360 Speaker 1: sure he said it on Bloomberg Radio, that you know, 559 00:31:23,400 --> 00:31:27,160 Speaker 1: the trade deficits a difference between savings and investment. And 560 00:31:27,160 --> 00:31:31,400 Speaker 1: and everybody talking about the border tax UH neglects the 561 00:31:31,440 --> 00:31:33,320 Speaker 1: fact that we're going to get a big jump in 562 00:31:33,360 --> 00:31:35,840 Speaker 1: the dollar and we could wind up with a Mexican 563 00:31:35,880 --> 00:31:39,040 Speaker 1: debt crisis or an Asian debt crisis third time around. 564 00:31:39,080 --> 00:31:41,160 Speaker 1: Maybe this is the Chinese debt crisis. Still I went 565 00:31:41,160 --> 00:31:42,680 Speaker 1: into this interview thinking we might need the stage a 566 00:31:42,720 --> 00:31:46,280 Speaker 1: little intervention with you. You have you admittedly been obsessed 567 00:31:46,320 --> 00:31:49,040 Speaker 1: with this border tax. Why have you been so concerned 568 00:31:49,040 --> 00:31:52,280 Speaker 1: with it? What are you looking into? Well? I looked 569 00:31:52,280 --> 00:31:54,680 Speaker 1: into it because I have plants who follow the do 570 00:31:54,760 --> 00:31:57,800 Speaker 1: the oil market, and in fact, people don't understand it, 571 00:31:57,840 --> 00:31:59,840 Speaker 1: and so I have you know, I just got on 572 00:32:00,000 --> 00:32:01,720 Speaker 1: to it, and then I just started following it, and 573 00:32:01,840 --> 00:32:04,680 Speaker 1: people kept saying, we'll keep going because nobody else is 574 00:32:04,720 --> 00:32:07,200 Speaker 1: looking at it. I mean, we did the Brittle study 575 00:32:07,240 --> 00:32:10,040 Speaker 1: in December what's the impact on the consumer price? And 576 00:32:10,320 --> 00:32:13,320 Speaker 1: that it was sponsored by coke and the coke it's 577 00:32:13,360 --> 00:32:15,600 Speaker 1: it's actually works against the things the coke industries but 578 00:32:16,120 --> 00:32:19,280 Speaker 1: best interests, but they are they're worried about all the 579 00:32:19,320 --> 00:32:22,560 Speaker 1: other implications. And uh I was I was the first 580 00:32:22,600 --> 00:32:24,440 Speaker 1: person to start writing about it. And if nobody else 581 00:32:24,440 --> 00:32:26,960 Speaker 1: writes about it, you know, in this business, what you 582 00:32:27,040 --> 00:32:29,640 Speaker 1: try to do is kind of create a little uh 583 00:32:29,760 --> 00:32:33,000 Speaker 1: economic advantage for yourself. You say that the ignorance regarding 584 00:32:33,000 --> 00:32:35,200 Speaker 1: it should frighten everyone. What is what is the oil 585 00:32:35,240 --> 00:32:38,520 Speaker 1: industry writ large not understand about this tax? What it's 586 00:32:38,520 --> 00:32:41,120 Speaker 1: going to do? Is change the flow of products. One, 587 00:32:41,440 --> 00:32:43,680 Speaker 1: so that Gulf Coast refiners are going to be supplying 588 00:32:43,680 --> 00:32:48,640 Speaker 1: the East coast not your European two. Uh, everybody says, well, people, 589 00:32:49,080 --> 00:32:51,320 Speaker 1: I want to export the last year, we had our 590 00:32:51,440 --> 00:32:55,160 Speaker 1: year before last discussion on lifting the export fan. What 591 00:32:55,320 --> 00:32:57,960 Speaker 1: it hasn't been noticed is every independent producer is going 592 00:32:58,000 --> 00:33:01,720 Speaker 1: to be paying no tax. Uh. Nail Resources spends more 593 00:33:01,760 --> 00:33:04,720 Speaker 1: than it takes in this. We know independence have always 594 00:33:04,760 --> 00:33:07,760 Speaker 1: done this. They take they have essentially negative cash flow. 595 00:33:08,080 --> 00:33:11,200 Speaker 1: That means they have zero taxes. So they're all going 596 00:33:11,240 --> 00:33:13,840 Speaker 1: to be pushing to sell their crew to Valero or 597 00:33:13,840 --> 00:33:17,880 Speaker 1: to other domestic producers and so Valero, of which can 598 00:33:17,960 --> 00:33:20,560 Speaker 1: take up to a million barrels a day of domestic 599 00:33:20,600 --> 00:33:24,600 Speaker 1: glow sweet crew will displace Canadian heavy crew, which costs 600 00:33:24,600 --> 00:33:27,720 Speaker 1: more and take as much of its as light crew, 601 00:33:27,800 --> 00:33:30,680 Speaker 1: but it won't be paying as much. It's going to 602 00:33:30,840 --> 00:33:35,440 Speaker 1: you know, the the deduction of instead of depreciation of 603 00:33:35,520 --> 00:33:38,680 Speaker 1: capital expenditures is going to have a significant impact. However, 604 00:33:39,120 --> 00:33:41,600 Speaker 1: if a company wants to buy a coker, say from Europe, 605 00:33:41,760 --> 00:33:43,960 Speaker 1: they won't be able to deduct the cost. So three 606 00:33:44,000 --> 00:33:47,480 Speaker 1: billion dollars for a coker, well sorry, you know, depreciation nothing, 607 00:33:47,520 --> 00:33:49,920 Speaker 1: you just have to take a write off. It is 608 00:33:49,920 --> 00:33:53,160 Speaker 1: going to change the way all the business plans. And 609 00:33:53,160 --> 00:33:55,720 Speaker 1: I don't think anybody, very few people have really played 610 00:33:55,760 --> 00:33:59,200 Speaker 1: all the the moves. It's it's a chess game. And 611 00:33:59,200 --> 00:34:01,120 Speaker 1: I keep getting feed back from companies saying, oh, we 612 00:34:01,160 --> 00:34:04,240 Speaker 1: didn't think of that. What's the fair price of oil? Then? 613 00:34:05,720 --> 00:34:09,480 Speaker 1: UH tell me and no, there's no fair And asked 614 00:34:09,520 --> 00:34:12,200 Speaker 1: you that question eighteen times over the No. But the 615 00:34:12,200 --> 00:34:15,560 Speaker 1: thing is, uh, there's all this buying. I mean, as 616 00:34:15,600 --> 00:34:17,040 Speaker 1: I said, I call it the Trump put. So the 617 00:34:17,040 --> 00:34:20,080 Speaker 1: producers and the speculators have all come in. If you 618 00:34:20,080 --> 00:34:24,280 Speaker 1: remember the Greenspan put, as a Shiller Robert Shiller explained, 619 00:34:24,600 --> 00:34:26,920 Speaker 1: whoever investors knew they thought there was a guarantee that 620 00:34:27,000 --> 00:34:29,800 Speaker 1: Greenspan would intervene in the financial markets to prevent stocks 621 00:34:29,800 --> 00:34:33,960 Speaker 1: from going down. Uh. Now with the Trump administration, we'll 622 00:34:34,000 --> 00:34:36,279 Speaker 1: either get an import fee or we'll get this border tax, 623 00:34:36,280 --> 00:34:38,920 Speaker 1: which will hold up crude at What is happening is 624 00:34:39,040 --> 00:34:43,040 Speaker 1: all the independent producers seeing this are rushing expand drillings. 625 00:34:43,120 --> 00:34:45,840 Speaker 1: What was it like Silverlager to teach up in Calgary? 626 00:34:46,239 --> 00:34:49,840 Speaker 1: I mean they had a Canadian boom in Calgary. Is 627 00:34:49,880 --> 00:34:52,000 Speaker 1: the boom over? Did they throw you out because they 628 00:34:52,000 --> 00:34:56,560 Speaker 1: couldn't pay anymore? No, it was a It was a 629 00:34:56,600 --> 00:34:58,279 Speaker 1: lot of It was a lot of fun. And I 630 00:34:58,320 --> 00:35:00,040 Speaker 1: have friends up there just to the paper for the 631 00:35:00,200 --> 00:35:02,800 Speaker 1: Canadian Patrol and produced association on the impact of the 632 00:35:02,920 --> 00:35:06,920 Speaker 1: tax um because I ran into a problem. And then, uh, 633 00:35:07,440 --> 00:35:10,880 Speaker 1: you can't uh if you under US tax code, if 634 00:35:10,880 --> 00:35:13,160 Speaker 1: you buy a house up there, you pay Canadian taxes, 635 00:35:13,880 --> 00:35:17,000 Speaker 1: pay worldwide taxes on your income. And so I was 636 00:35:17,000 --> 00:35:19,200 Speaker 1: gonna wind up paying a marginal tax rate on my 637 00:35:19,200 --> 00:35:22,839 Speaker 1: my professor salary. What's so what I did is fly 638 00:35:23,000 --> 00:35:31,920 Speaker 1: back and John Tucker, I mean anybody can do that, right, Okay, 639 00:35:32,000 --> 00:35:35,240 Speaker 1: So it was yeah, and the Canadian tax structure it was, 640 00:35:35,280 --> 00:35:37,799 Speaker 1: it was different. And you know, a corporation would have 641 00:35:37,840 --> 00:35:42,640 Speaker 1: put me a clue on that. The universities don't prepare 642 00:35:42,640 --> 00:35:47,160 Speaker 1: the people quite as well. So we compromised. And but 643 00:35:47,360 --> 00:35:50,800 Speaker 1: after three years, uh, the contractor was out and let everyone. 644 00:35:51,040 --> 00:35:56,640 Speaker 1: My trend to the business move to New Jersey. But 645 00:35:56,760 --> 00:35:59,920 Speaker 1: I like California, Colorado really nice. But so this is 646 00:36:00,160 --> 00:36:05,240 Speaker 1: important when we talk simplistically about tax reform and corporate 647 00:36:05,280 --> 00:36:09,360 Speaker 1: tax reduction abroad and all that money will come home. 648 00:36:09,840 --> 00:36:14,799 Speaker 1: It's really quite a simplistic statement, isn't it. It's very simplistic. 649 00:36:14,880 --> 00:36:18,000 Speaker 1: And that's the problem with doing any kind of taxes. 650 00:36:18,360 --> 00:36:20,400 Speaker 1: You know, I worked for Mike wilmothal In in the 651 00:36:20,400 --> 00:36:22,680 Speaker 1: Carter Treasury and I was the author with two other 652 00:36:22,680 --> 00:36:26,239 Speaker 1: people of the crude oil Windfall profit tax. And I 653 00:36:26,480 --> 00:36:29,200 Speaker 1: haven't done a lot of taxes writing. But what you 654 00:36:29,440 --> 00:36:32,160 Speaker 1: learn is you have to be think about all the 655 00:36:32,160 --> 00:36:35,200 Speaker 1: possible implications. It is a three dimensional chess game. It's 656 00:36:35,239 --> 00:36:38,360 Speaker 1: not just a simple statement, Okay, all this cash is 657 00:36:38,360 --> 00:36:40,640 Speaker 1: going to come home when we do this, and we 658 00:36:40,680 --> 00:36:43,760 Speaker 1: did it I think a few years ago on corporate taxes, 659 00:36:43,840 --> 00:36:47,880 Speaker 1: but it's uh, the corporate tax holiday, any kind of 660 00:36:47,880 --> 00:36:52,960 Speaker 1: tax adjustment UH moves all sorts of things because companies 661 00:36:53,040 --> 00:36:57,640 Speaker 1: have hundreds of lawyers and economists working out all the details. 662 00:36:57,640 --> 00:37:03,160 Speaker 1: And if you suddenly just changed the whole whole spectrum, uh, 663 00:37:03,280 --> 00:37:07,880 Speaker 1: it forces many radical changes. And and that's why this 664 00:37:07,960 --> 00:37:10,760 Speaker 1: is it is quite worrisome. Let me ask you about 665 00:37:11,040 --> 00:37:13,480 Speaker 1: energy policy. From moving from tax policy to energy policy 666 00:37:13,480 --> 00:37:16,560 Speaker 1: and specific, what is this administration said about It's it's 667 00:37:16,600 --> 00:37:19,040 Speaker 1: direction that it's going in. UH, you're gonna have a 668 00:37:19,120 --> 00:37:21,840 Speaker 1: new head of the Interior Department who is from is 669 00:37:21,880 --> 00:37:23,920 Speaker 1: from the from the region. We could say, do you 670 00:37:23,960 --> 00:37:27,040 Speaker 1: have a clear sense of what the policy is going forward? Well, yes, 671 00:37:27,120 --> 00:37:30,120 Speaker 1: they're going to open up the federal lands for drilling. UH. 672 00:37:30,880 --> 00:37:34,560 Speaker 1: The Obama administration had imposed rules in terms of UH 673 00:37:34,840 --> 00:37:38,520 Speaker 1: methane emissions, limited access to certain areas. They put the 674 00:37:38,520 --> 00:37:41,200 Speaker 1: stage grounds on the endanger or trying to put the 675 00:37:41,239 --> 00:37:43,919 Speaker 1: sage grounds on the endangered species list. They're gonna undo 676 00:37:44,000 --> 00:37:45,959 Speaker 1: as many of those as possible and try to open 677 00:37:45,960 --> 00:37:50,000 Speaker 1: it up as much US land as possible. Indians here 678 00:37:50,000 --> 00:37:53,520 Speaker 1: in Colorado, the Indians have much more trouble getting selling, 679 00:37:53,600 --> 00:37:56,680 Speaker 1: leasing their land for drilling because of all the hoops 680 00:37:56,680 --> 00:37:58,879 Speaker 1: you have to jump through with the Interior Department, then 681 00:37:59,400 --> 00:38:02,759 Speaker 1: neighboring UH landowners. They're going to open those lands up 682 00:38:02,840 --> 00:38:05,400 Speaker 1: so that there's gonna be a lot more pushed to drill. 683 00:38:06,239 --> 00:38:08,040 Speaker 1: I think at t v A they're going to push 684 00:38:08,080 --> 00:38:12,280 Speaker 1: to use more coal. But it's it's essentially the supply 685 00:38:12,400 --> 00:38:15,080 Speaker 1: is going to go up, and you combine opening lands 686 00:38:15,160 --> 00:38:17,520 Speaker 1: up in some of these areas. Yeah, you know there's 687 00:38:17,520 --> 00:38:20,080 Speaker 1: one area when I started there were twenty billion barrels 688 00:38:20,080 --> 00:38:24,800 Speaker 1: of US reserves. A few months ago the uh USGS 689 00:38:24,840 --> 00:38:27,319 Speaker 1: said there were twenty billion barrels in just one part 690 00:38:27,400 --> 00:38:30,680 Speaker 1: of the Permian basin. The rate at which we're able 691 00:38:30,719 --> 00:38:34,800 Speaker 1: to penetrate these reserves with new technology, so the IINK 692 00:38:34,840 --> 00:38:38,120 Speaker 1: supply is just gonna mushroom. And uh four years from now, 693 00:38:38,120 --> 00:38:39,520 Speaker 1: we're gonna be looking at this in the U s. 694 00:38:39,600 --> 00:38:41,640 Speaker 1: Is it could be the case that the US is 695 00:38:41,640 --> 00:38:43,080 Speaker 1: going to have to be looking for buyers for a 696 00:38:43,120 --> 00:38:45,920 Speaker 1: crude oil because it's gonna have so much crude that 697 00:38:46,719 --> 00:38:48,759 Speaker 1: we won't be able to consume at all. You know, 698 00:38:48,920 --> 00:38:50,880 Speaker 1: the change is going to be quite dramatic. Give us 699 00:38:50,880 --> 00:38:52,840 Speaker 1: your read on the state of technology in the energy 700 00:38:52,840 --> 00:38:54,719 Speaker 1: sector today. We were talking with Jim Glassman at the 701 00:38:54,760 --> 00:38:57,480 Speaker 1: top of the show about the slowdowns in the layoffs 702 00:38:57,480 --> 00:38:59,480 Speaker 1: we've seen in the energy sector over these last few years. 703 00:38:59,600 --> 00:39:03,400 Speaker 1: Is that impacted technological development in the energy sector. No, 704 00:39:03,520 --> 00:39:05,239 Speaker 1: I don't think so. I think to the contrary, it's 705 00:39:05,239 --> 00:39:08,480 Speaker 1: accelerated it more as law applies to the finding of 706 00:39:08,680 --> 00:39:12,600 Speaker 1: finding oil, also to the renewables. UH say, technology is 707 00:39:13,719 --> 00:39:17,000 Speaker 1: is changing at an increasing rate, so that I think 708 00:39:17,040 --> 00:39:20,240 Speaker 1: the cost of rice. Data is the firm in Norway 709 00:39:20,280 --> 00:39:23,359 Speaker 1: that looks at cost of drilling, and they they had 710 00:39:23,520 --> 00:39:26,520 Speaker 1: shown it and following by ten percent excuse me, over 711 00:39:26,600 --> 00:39:31,000 Speaker 1: the last several years and hight years, and I think 712 00:39:31,000 --> 00:39:34,400 Speaker 1: it's going to increase the fifteen that costs of finding 713 00:39:34,400 --> 00:39:36,759 Speaker 1: oil in the United States and many areas will will 714 00:39:36,840 --> 00:39:41,719 Speaker 1: drop down to twenty dollars UH barrelers or maybe fifteen UH. 715 00:39:41,800 --> 00:39:44,920 Speaker 1: And at the same time, the renewable technology costs are 716 00:39:44,920 --> 00:39:48,279 Speaker 1: gonna come down. So that you know, for most of 717 00:39:48,360 --> 00:39:51,640 Speaker 1: my career we've been looking at higher and higher energy costs. UH. 718 00:39:52,400 --> 00:39:55,160 Speaker 1: It's quite possible that uh in ten years we're gonna 719 00:39:55,200 --> 00:39:57,920 Speaker 1: be looking at oil being in many parts of the 720 00:39:57,960 --> 00:40:00,920 Speaker 1: world less expensive and other reforms than less expensive than 721 00:40:00,960 --> 00:40:04,480 Speaker 1: the water give us the the Opeque update I have 722 00:40:04,560 --> 00:40:06,080 Speaker 1: to I have to ask here now that we're a 723 00:40:06,080 --> 00:40:09,920 Speaker 1: few months out from those meetings and in Vienna, are 724 00:40:10,000 --> 00:40:11,640 Speaker 1: the parties up holding their ends of the bargain and 725 00:40:11,840 --> 00:40:13,640 Speaker 1: what effect is that having on energy here in the US. 726 00:40:14,360 --> 00:40:18,239 Speaker 1: They're they're upholding their bargain into the bargain. UH. The 727 00:40:18,320 --> 00:40:21,400 Speaker 1: compliance seems to be about so that's holding up prices 728 00:40:21,600 --> 00:40:23,880 Speaker 1: right now. But I mean this is their last gasp. 729 00:40:24,400 --> 00:40:27,000 Speaker 1: I mean they are the high cost producers except for 730 00:40:27,040 --> 00:40:30,080 Speaker 1: Saudi Arabia. Yeah, five years from now, Venezuela is going 731 00:40:30,120 --> 00:40:33,840 Speaker 1: to be a just a devastated state because of the 732 00:40:33,920 --> 00:40:37,080 Speaker 1: all these technological changes that they're coming here. Argentina is 733 00:40:37,080 --> 00:40:38,920 Speaker 1: starting to adopt them. Rush has got a lot of 734 00:40:38,960 --> 00:40:43,399 Speaker 1: shale oil. The renewables are coming, renewables are going accelerating 735 00:40:43,480 --> 00:40:47,160 Speaker 1: in developing countries. So you know, the beat shell Shell 736 00:40:47,520 --> 00:40:49,959 Speaker 1: was probably pessimistic when they say oil demand is gonna 737 00:40:49,960 --> 00:40:53,360 Speaker 1: peak in I think it probably peaks a little earlier. 738 00:40:53,840 --> 00:40:57,160 Speaker 1: This situation is just changing so rapidly. Phil, Thank you 739 00:40:57,280 --> 00:41:00,279 Speaker 1: so much, particularly those discussions on trade. Now to the 740 00:41:00,360 --> 00:41:04,480 Speaker 1: border Texas well. Mr Furliger. Furliger, when he's with us, 741 00:41:04,520 --> 00:41:07,600 Speaker 1: we get reams of emails. Send me his note. We 742 00:41:07,719 --> 00:41:11,920 Speaker 1: protect the copyright of our guests, including notes at the margin, 743 00:41:12,680 --> 00:41:24,000 Speaker 1: Volume x x I, number six. Thanks for listening to 744 00:41:24,080 --> 00:41:30,120 Speaker 1: the Bloomberg Surveillance podcast. Subscribe and listen to interviews on iTunes, SoundCloud, 745 00:41:30,600 --> 00:41:34,800 Speaker 1: or whichever podcast platform you prefer. I'm out on Twitter 746 00:41:34,920 --> 00:41:38,680 Speaker 1: at Tom Keene. David Gura is at David Gura. Before 747 00:41:38,760 --> 00:41:43,080 Speaker 1: the podcast you can always catch us worldwide. I'm Bloomberg Radio, 748 00:41:55,600 --> 00:41:59,080 Speaker 1: brought you by Bank of America. Mary Lynch dedicated to 749 00:41:59,200 --> 00:42:02,319 Speaker 1: bringing our cloth and it's insights and solutions to meet 750 00:42:02,360 --> 00:42:05,800 Speaker 1: the challenges of a transforming world. That's the power of 751 00:42:05,880 --> 00:42:10,960 Speaker 1: global connections. Mary Lynch, Pierce, Fenner and Smith, Incorporated, Member 752 00:42:11,600 --> 00:42:12,279 Speaker 1: s I p C