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 --> 00:00:49,000 Speaker 1: of course on the Bloomberg. Let me bring in Michael 9 00:00:49,040 --> 00:00:51,720 Speaker 1: Darden now, as I said, chief economist at mk M Partners, 10 00:00:51,760 --> 00:00:54,120 Speaker 1: and let's start with that interview in the Wall Street Journal. 11 00:00:54,120 --> 00:00:55,880 Speaker 1: There's been a series of these. He spoke to Fox 12 00:00:55,920 --> 00:00:58,320 Speaker 1: Business yesterday. There was sort of an extended interview with 13 00:00:58,360 --> 00:01:00,120 Speaker 1: The Financial Times a week ago as well. Tim me, 14 00:01:01,000 --> 00:01:03,480 Speaker 1: this one had the greatest deal of substance, especially when 15 00:01:03,520 --> 00:01:06,000 Speaker 1: it comes to the relationship with China and foreign exchange. 16 00:01:06,280 --> 00:01:08,600 Speaker 1: Let's start with with the dollar and what he declared 17 00:01:09,000 --> 00:01:12,280 Speaker 1: in that interview. Michael is somebody who's an investor in economist. 18 00:01:12,280 --> 00:01:14,720 Speaker 1: What did you make it? What he had to say? Well, right, well, 19 00:01:14,760 --> 00:01:18,480 Speaker 1: that was unusual It's unusual for a president to UH 20 00:01:18,640 --> 00:01:21,400 Speaker 1: to weigh in on the foreign exchange value of the dollar. 21 00:01:21,480 --> 00:01:25,400 Speaker 1: Typically the Treasury does that, and ultimately the Federal Reserve 22 00:01:25,520 --> 00:01:28,280 Speaker 1: is the one that has the influence there. But where 23 00:01:28,280 --> 00:01:31,559 Speaker 1: I'd like to take this is if President Trump really 24 00:01:31,600 --> 00:01:34,720 Speaker 1: does believe that the dollar is too strong, that it's overvalued, 25 00:01:35,200 --> 00:01:38,760 Speaker 1: what impact will that have on, you know, his selection 26 00:01:39,000 --> 00:01:42,319 Speaker 1: to UH for future FED appointments. We have three open 27 00:01:42,360 --> 00:01:44,560 Speaker 1: board seats on the FED that he can fill. He 28 00:01:44,640 --> 00:01:48,280 Speaker 1: can also choose to replace FED chair Yelling and Vice 29 00:01:48,360 --> 00:01:51,200 Speaker 1: chair Fisher as their terms come up next year. The 30 00:01:51,280 --> 00:01:55,440 Speaker 1: presumption is that, you know, the Trump administration would move 31 00:01:55,560 --> 00:01:58,720 Speaker 1: towards a more hawk ish FED, but that doesn't really 32 00:01:58,800 --> 00:02:01,960 Speaker 1: jibe with his stay eatements about the dollar being too strong. 33 00:02:02,080 --> 00:02:06,000 Speaker 1: So maybe that that aspect of conventional wisdom will ultimately 34 00:02:06,000 --> 00:02:08,480 Speaker 1: be turned on his head and we won't see a 35 00:02:08,560 --> 00:02:11,639 Speaker 1: move to a more hawkish FED or something that came 36 00:02:11,720 --> 00:02:15,440 Speaker 1: up earlier on TV. Maybe he ends up asking Yellen 37 00:02:15,560 --> 00:02:17,520 Speaker 1: to stay on. That would be a big shocker. It's 38 00:02:17,560 --> 00:02:19,480 Speaker 1: not my call, but I think we need to at least, 39 00:02:19,760 --> 00:02:22,200 Speaker 1: you know, put that out there. Just let me ask 40 00:02:22,240 --> 00:02:25,760 Speaker 1: you about what this means in terms of process. Stephen 41 00:02:25,760 --> 00:02:28,240 Speaker 1: manouch In, the Treasury Secretary, was traveling in Germany. He 42 00:02:28,280 --> 00:02:30,040 Speaker 1: was going to the G seven Finance ministers meeting. In 43 00:02:30,040 --> 00:02:32,240 Speaker 1: Our colleague Michael McKee asked him who speaks through the 44 00:02:32,320 --> 00:02:34,880 Speaker 1: administration on currency and he said, in no inn certain terms, 45 00:02:34,880 --> 00:02:38,000 Speaker 1: it is the President who does. He also said, though 46 00:02:38,000 --> 00:02:40,200 Speaker 1: we should stay tuned for this semi annual report from 47 00:02:40,200 --> 00:02:44,080 Speaker 1: the Treasury Department on Foreign Exchange and currencies. We're looking 48 00:02:44,120 --> 00:02:45,799 Speaker 1: ahead to that that's supposed to come out here with 49 00:02:45,800 --> 00:02:48,480 Speaker 1: within the month. Uh, he's been preempted by the president. 50 00:02:48,520 --> 00:02:51,359 Speaker 1: I mean, what is there going to be anything in 51 00:02:51,400 --> 00:02:53,040 Speaker 1: that you'll be looking to or does this sort of 52 00:02:53,080 --> 00:02:56,040 Speaker 1: settle things? But the President said yesterday no, I think 53 00:02:56,080 --> 00:02:59,000 Speaker 1: we you know, we know at this point that China 54 00:02:59,080 --> 00:03:02,360 Speaker 1: will not be label the currency manipulator in the president's 55 00:03:02,440 --> 00:03:04,959 Speaker 1: views on the dollar, or that he doesn't want it strengthening. 56 00:03:04,960 --> 00:03:08,720 Speaker 1: He has a commitment to try to revive manufacturing and 57 00:03:08,760 --> 00:03:11,640 Speaker 1: so you know, a rising or high dollar sort of 58 00:03:11,840 --> 00:03:14,480 Speaker 1: is it is it headwind in in the face of 59 00:03:14,560 --> 00:03:18,040 Speaker 1: that of that agenda. Um, so I don't you know, 60 00:03:18,120 --> 00:03:21,400 Speaker 1: expect any any big surprises from the all right, Michael, 61 00:03:21,400 --> 00:03:23,840 Speaker 1: where would the next surprise come from. We've been pretty 62 00:03:23,840 --> 00:03:26,840 Speaker 1: surprised right over last two weeks. Is that are we 63 00:03:26,919 --> 00:03:30,400 Speaker 1: going to go back to talking about tax reform or 64 00:03:30,440 --> 00:03:33,680 Speaker 1: will healthcare really take precedence. Well that's a great point. 65 00:03:33,720 --> 00:03:36,080 Speaker 1: I mean, um, there was just a story out on 66 00:03:36,080 --> 00:03:39,480 Speaker 1: on Bloomberg yesterday that had quoted the President saying we 67 00:03:39,560 --> 00:03:43,440 Speaker 1: need to move healthcare reform before we do tax reform. 68 00:03:43,520 --> 00:03:47,320 Speaker 1: And the conventional wisdom after the A c A repeal 69 00:03:47,360 --> 00:03:52,640 Speaker 1: and replace uh face planet was that, you know, we're 70 00:03:52,680 --> 00:03:55,360 Speaker 1: going to move on to tax reform because that would 71 00:03:55,400 --> 00:03:58,880 Speaker 1: be easier. The Treasury Secretary actually even made a statement 72 00:03:58,880 --> 00:04:02,440 Speaker 1: similar to that. So now looks like, um, we might 73 00:04:02,680 --> 00:04:05,680 Speaker 1: you know, might be looking at another attempt to to 74 00:04:05,840 --> 00:04:09,000 Speaker 1: do healthcare reform before tax reform. And I think these 75 00:04:09,040 --> 00:04:14,240 Speaker 1: things are it's being demonstrated that much easier said than done. Um, 76 00:04:14,280 --> 00:04:17,279 Speaker 1: just the you know, the riffs within the Republican Party 77 00:04:17,279 --> 00:04:22,039 Speaker 1: itself within Congress, let alone the Senate are making sweeping 78 00:04:22,160 --> 00:04:25,120 Speaker 1: changes quite difficult. But so, Michael, would he not go 79 00:04:25,279 --> 00:04:27,880 Speaker 1: for an easy win? Doesn't does he need to prove 80 00:04:28,040 --> 00:04:29,919 Speaker 1: that he has the party together and he has the 81 00:04:29,960 --> 00:04:32,800 Speaker 1: backing and if that's the case. Why focus on healthcare 82 00:04:33,120 --> 00:04:35,719 Speaker 1: and not focus on something easier to get through. Yeah, 83 00:04:35,720 --> 00:04:38,080 Speaker 1: that's a good point too. I mean I think ultimately, 84 00:04:38,480 --> 00:04:40,960 Speaker 1: you know, the administration will be forced to go for 85 00:04:41,160 --> 00:04:44,719 Speaker 1: quote unquote an easy win, meaning that the changes, whether 86 00:04:44,760 --> 00:04:48,359 Speaker 1: it's regulation or taxation or healthcare, I think are going 87 00:04:48,400 --> 00:04:51,599 Speaker 1: to be much more marginal. And you know, you could 88 00:04:51,800 --> 00:04:54,680 Speaker 1: you could characterize that is quote unquote easy win. But 89 00:04:54,839 --> 00:04:57,400 Speaker 1: sweeping changes they think are going to be very, very 90 00:04:57,480 --> 00:05:01,240 Speaker 1: very difficult with the divisions uh in in Congress and 91 00:05:01,320 --> 00:05:04,719 Speaker 1: the bar you know, thin majority in the U. S. Senate. 92 00:05:05,040 --> 00:05:07,039 Speaker 1: Let's talk a bit about trade. It was on the 93 00:05:07,040 --> 00:05:10,680 Speaker 1: agenda at that summit in mar Lago in Florida last week, 94 00:05:10,720 --> 00:05:13,400 Speaker 1: the President talking with this Chinese counterpart a bit about 95 00:05:13,440 --> 00:05:15,560 Speaker 1: it help us with the path forward. Here. A few 96 00:05:15,640 --> 00:05:17,960 Speaker 1: days before that, you have the Secretary of Commerce, Wilbur Ross, 97 00:05:17,960 --> 00:05:20,160 Speaker 1: saying that he's now embarking on a ninety day undertaking 98 00:05:20,200 --> 00:05:22,520 Speaker 1: to to look at the bad trade deals. I suppose, 99 00:05:22,560 --> 00:05:24,800 Speaker 1: looking at this on a company by company basis. What 100 00:05:24,839 --> 00:05:26,479 Speaker 1: do you expect the result of that to be in 101 00:05:26,560 --> 00:05:29,480 Speaker 1: terms of what the administration does next? How do they 102 00:05:29,520 --> 00:05:31,920 Speaker 1: leave things? I guess I'm asking in mar Lago. You 103 00:05:31,960 --> 00:05:34,320 Speaker 1: know what what I'll be looking for is, I think 104 00:05:34,440 --> 00:05:36,920 Speaker 1: what we need to focus on, or what markets care about, 105 00:05:37,040 --> 00:05:40,920 Speaker 1: is we just need to avoid uh moving policy in 106 00:05:40,960 --> 00:05:44,360 Speaker 1: an anti growth direction, meaning you know, you end up 107 00:05:44,360 --> 00:05:47,080 Speaker 1: with a trade war you know, taking place, or a 108 00:05:47,160 --> 00:05:52,360 Speaker 1: move towards aggressively protectionist policies. A smooth holy two point oh, 109 00:05:52,440 --> 00:05:55,159 Speaker 1: and that you know those risks look like, if anything, 110 00:05:55,160 --> 00:05:57,719 Speaker 1: they've receded recently, which is, you know, which is a 111 00:05:57,720 --> 00:06:00,560 Speaker 1: positive at the margin. But the idea that we can 112 00:06:00,600 --> 00:06:04,280 Speaker 1: just go in and cookie cutter renegotiate quote unquote bad 113 00:06:04,360 --> 00:06:08,039 Speaker 1: trade deals, I think is something of a myth um. 114 00:06:08,080 --> 00:06:10,280 Speaker 1: You know. The reality is we're probably not looking at 115 00:06:10,320 --> 00:06:12,920 Speaker 1: sweeping changes there, and if there are sweeping changes, it 116 00:06:12,960 --> 00:06:15,679 Speaker 1: would probably be to the negative side, and that's something 117 00:06:15,760 --> 00:06:18,560 Speaker 1: we definitely want to avoid, you know. I I asked 118 00:06:18,640 --> 00:06:21,520 Speaker 1: you about who. I was referencing the comment from Stephen Nuchambaut, 119 00:06:21,520 --> 00:06:23,800 Speaker 1: who speaks for the Administration on currency when it comes 120 00:06:23,839 --> 00:06:25,440 Speaker 1: to trade. Do we have a clear sense of that? 121 00:06:25,560 --> 00:06:28,719 Speaker 1: I mentioned Secretary Commerce Will but Ross Robert Leitheiser, the 122 00:06:28,760 --> 00:06:31,880 Speaker 1: nominee to be US Trade Representative. His nomination still held 123 00:06:31,920 --> 00:06:34,240 Speaker 1: up in Congress, and then Peter Navarro floating on the 124 00:06:34,240 --> 00:06:37,799 Speaker 1: periphery as well, heading up this National Trade councils Uh, 125 00:06:37,880 --> 00:06:39,160 Speaker 1: do you have a sense of who's speaking for the 126 00:06:39,160 --> 00:06:42,400 Speaker 1: administration and how complicating is it to have these three 127 00:06:42,400 --> 00:06:45,720 Speaker 1: people all fighting over this issue? Right? Well, it does, 128 00:06:46,400 --> 00:06:48,480 Speaker 1: you know, make for a bit of confusion. When you 129 00:06:48,480 --> 00:06:51,840 Speaker 1: hear the President or you hear Mr. Navarro speak about trade, 130 00:06:51,920 --> 00:06:56,400 Speaker 1: you definitely are getting you know, the populist, nationalist view 131 00:06:56,800 --> 00:07:00,359 Speaker 1: um you know, more protectionist. But the other voices in 132 00:07:00,440 --> 00:07:03,520 Speaker 1: Treasury at least seemed to be pushing the other way. 133 00:07:03,560 --> 00:07:06,000 Speaker 1: So while that creates confusion, I also think it's an 134 00:07:06,040 --> 00:07:12,040 Speaker 1: important firebreak against radical and potentially disruptive and damaging um, 135 00:07:12,440 --> 00:07:15,280 Speaker 1: you know, policies in terms of moving towards aggressive trade 136 00:07:15,280 --> 00:07:19,000 Speaker 1: protectionism or some kind of a trade war. Michaels are 137 00:07:19,160 --> 00:07:21,000 Speaker 1: danger And we've talked a little bit about this also 138 00:07:21,040 --> 00:07:23,480 Speaker 1: on TV that if he doesn't get healthcare through, that, 139 00:07:23,520 --> 00:07:26,960 Speaker 1: if he doesn't get tax reformed through then to get 140 00:07:27,000 --> 00:07:31,840 Speaker 1: that easier when he goes back to you know, um tariffs, 141 00:07:32,120 --> 00:07:36,040 Speaker 1: adjusted border tax or things like that, I think. So, 142 00:07:36,160 --> 00:07:38,160 Speaker 1: I mean it's interesting if you if you look at 143 00:07:38,200 --> 00:07:40,960 Speaker 1: the history of the president. You know, his views on 144 00:07:41,120 --> 00:07:44,280 Speaker 1: policies have evolved and changed over time. There's a lot 145 00:07:44,320 --> 00:07:48,720 Speaker 1: of fluidity there, but on one specific issue, trade, going 146 00:07:48,760 --> 00:07:50,680 Speaker 1: all the way back to the late eighties, I think 147 00:07:50,680 --> 00:07:54,440 Speaker 1: he's run for president at least temporarily in every cycle 148 00:07:54,920 --> 00:07:57,480 Speaker 1: going back to the late eighties, he's had this view 149 00:07:57,560 --> 00:08:01,680 Speaker 1: of trade that's mercantilist, national a stick UH in zero 150 00:08:01,840 --> 00:08:04,960 Speaker 1: sum and and so that is a concern at least 151 00:08:04,960 --> 00:08:06,840 Speaker 1: for me, and I think it's a concern for markets 152 00:08:06,880 --> 00:08:09,040 Speaker 1: as well. Just about thirty seconds left will come back 153 00:08:09,080 --> 00:08:10,720 Speaker 1: your Michael just a bit, But to what degree are 154 00:08:10,720 --> 00:08:12,680 Speaker 1: you paying attention to Washington when when you look at 155 00:08:12,720 --> 00:08:16,280 Speaker 1: investment at large, how big a role is Washington playing. Well, 156 00:08:16,320 --> 00:08:19,160 Speaker 1: it's probably overstated. I mean, as we saw with the 157 00:08:19,200 --> 00:08:23,120 Speaker 1: attempt UH with repeal and replaced, it didn't go anywhere. 158 00:08:23,600 --> 00:08:26,520 Speaker 1: Very difficult to to get sweeping changes to take place. 159 00:08:26,640 --> 00:08:29,760 Speaker 1: That said, um there is a big focus on it, 160 00:08:29,800 --> 00:08:32,120 Speaker 1: and certainly in the client meetings that I've been doing, 161 00:08:32,920 --> 00:08:35,240 Speaker 1: we spend a lot of time talking about Washington, and 162 00:08:35,280 --> 00:08:38,400 Speaker 1: then everybody complains that they're spending too much time talking 163 00:08:38,440 --> 00:08:42,640 Speaker 1: about it and thinking about it. Um. So it's definitely topical. 164 00:08:43,040 --> 00:08:45,080 Speaker 1: David Ger with Francine Lockwood Day. Tom Keane is on 165 00:08:45,120 --> 00:08:48,240 Speaker 1: vacation this week, back in the chair on Monday. This 166 00:08:48,320 --> 00:08:50,600 Speaker 1: is Bloomber Surveillance on Bloomberg Grady, we're talking with Michael 167 00:08:50,640 --> 00:08:53,360 Speaker 1: Darda of m CAM Partners is the chief economist there. 168 00:08:53,360 --> 00:08:55,240 Speaker 1: And let's talk a little bit about the Fed. There's 169 00:08:55,240 --> 00:08:58,000 Speaker 1: been so much attention being paid now to the balance sheet, 170 00:08:58,040 --> 00:09:00,320 Speaker 1: the parlor game shifts that focus from from rating creases, 171 00:09:00,360 --> 00:09:02,840 Speaker 1: at at least partially to the balance sheet. Give us 172 00:09:02,840 --> 00:09:04,640 Speaker 1: a sense of what you're thinking in light of what 173 00:09:04,679 --> 00:09:07,000 Speaker 1: we've read from the minutes of the March meeting, and 174 00:09:07,080 --> 00:09:09,600 Speaker 1: light of what we've heard from governors and presidents and 175 00:09:09,640 --> 00:09:13,520 Speaker 1: from from Cherry yelling herself. So my thinking is that 176 00:09:13,600 --> 00:09:16,160 Speaker 1: it looks like the Fed is basically on this course 177 00:09:16,240 --> 00:09:20,199 Speaker 1: of quarter to quarter you rate hikes twenty five basis 178 00:09:20,240 --> 00:09:24,280 Speaker 1: points per quarter until or unless something goes wrong, or 179 00:09:24,360 --> 00:09:26,720 Speaker 1: as you mentioned, until they decided to start drinking the 180 00:09:26,760 --> 00:09:32,680 Speaker 1: balance sheet, and then um New York Fed President Dudley 181 00:09:32,920 --> 00:09:37,000 Speaker 1: said recently that when they do begin that process, probably 182 00:09:37,040 --> 00:09:39,520 Speaker 1: they'll pause on the rate hikes for a while just 183 00:09:39,559 --> 00:09:43,559 Speaker 1: to see how financial markets and liquidity conditions are developing. 184 00:09:44,360 --> 00:09:46,760 Speaker 1: Uh So I think, you know, the dot plot gives 185 00:09:46,840 --> 00:09:49,520 Speaker 1: us some sense of, you know, what the consensus view 186 00:09:49,640 --> 00:09:52,560 Speaker 1: is on the FED in terms of prospective rate rises. 187 00:09:52,600 --> 00:09:54,880 Speaker 1: So probably two more this year, but I wouldn't rule 188 00:09:54,880 --> 00:09:57,360 Speaker 1: out for if the data stays decent. I think they're 189 00:09:57,360 --> 00:10:00,320 Speaker 1: going to continue to go a quarter to quarter. If 190 00:10:00,360 --> 00:10:02,720 Speaker 1: we end up with you know, much weaker data or 191 00:10:02,880 --> 00:10:06,080 Speaker 1: disruptive volatility, meaning to the extent that it looks like 192 00:10:06,120 --> 00:10:09,200 Speaker 1: it might threaten the business cycle, they'll clearly, uh, they'll 193 00:10:09,240 --> 00:10:12,680 Speaker 1: clearly stop. But I think, you know, the base case 194 00:10:12,679 --> 00:10:15,640 Speaker 1: scenario is quarter by quarter rate hikes until they start 195 00:10:15,679 --> 00:10:18,560 Speaker 1: to to to work on the balance sheet, probably later 196 00:10:18,600 --> 00:10:20,960 Speaker 1: this year, early next year, so we proceed a pace. 197 00:10:21,559 --> 00:10:24,360 Speaker 1: I wonder what would constitute an event big enough to 198 00:10:24,480 --> 00:10:27,400 Speaker 1: derail moving ahead in the way that they want to. Well, 199 00:10:27,440 --> 00:10:30,280 Speaker 1: at least from my perspective, you know, I'll be watching 200 00:10:30,360 --> 00:10:33,400 Speaker 1: three indicators. One is credit markets. So when the FED 201 00:10:33,480 --> 00:10:37,840 Speaker 1: initially started the taper and then was talking up rate rises, 202 00:10:38,320 --> 00:10:40,320 Speaker 1: we started to see a big move up in the 203 00:10:40,360 --> 00:10:44,480 Speaker 1: dollar and then pressure on credit markets. The conventional wisdom, 204 00:10:44,520 --> 00:10:46,840 Speaker 1: as we talked about on on TV, this morning was 205 00:10:46,880 --> 00:10:49,080 Speaker 1: that it was just an oil market story, but we 206 00:10:49,160 --> 00:10:51,600 Speaker 1: did see a slowdown in the business cycle in the US. 207 00:10:51,679 --> 00:10:55,000 Speaker 1: We had, um, you know, really from late fourteen into 208 00:10:55,000 --> 00:10:57,839 Speaker 1: the middle of last year, pretty big deceleration in year 209 00:10:57,880 --> 00:11:00,760 Speaker 1: over year nominal and even real GDP growth. So the 210 00:11:01,000 --> 00:11:04,360 Speaker 1: conventional view was falling oil will boost growth, but in 211 00:11:04,400 --> 00:11:07,840 Speaker 1: fact that was not the case. Um, So I'll be 212 00:11:07,880 --> 00:11:12,640 Speaker 1: watching credit markets very closely and inflation expectations, and then uh, 213 00:11:12,760 --> 00:11:16,480 Speaker 1: some of the monetary aggregates that don't include access reserves, 214 00:11:16,559 --> 00:11:20,200 Speaker 1: like M one money growth for example, that one weakened 215 00:11:20,200 --> 00:11:24,319 Speaker 1: a lot coming into early last year and now recovered 216 00:11:24,320 --> 00:11:29,640 Speaker 1: back into two recovery ranges. So if those indicators look healthy, 217 00:11:29,679 --> 00:11:31,360 Speaker 1: then I don't think we need to worry about the 218 00:11:31,400 --> 00:11:35,400 Speaker 1: FED either raising rates further or potentially shrinking the balance sheet. 219 00:11:35,440 --> 00:11:37,800 Speaker 1: If those indicators are rolling over, then we're gonna have 220 00:11:37,840 --> 00:11:40,760 Speaker 1: to worry more. And then it's you know, there's some 221 00:11:41,080 --> 00:11:44,680 Speaker 1: subjectivity in terms of what constitutes a material weakening, but 222 00:11:44,760 --> 00:11:48,440 Speaker 1: I would just say a sustained, you know, adverse move 223 00:11:48,559 --> 00:11:50,880 Speaker 1: in in any or all of those indicators, and I 224 00:11:50,920 --> 00:11:55,560 Speaker 1: would become increasingly worried, worried, meaning Michael that they that 225 00:11:55,640 --> 00:11:58,360 Speaker 1: it would actually stop the FED from hiking. What needs 226 00:11:58,440 --> 00:12:00,240 Speaker 1: to happen for the Fed to actually say, you know 227 00:12:00,280 --> 00:12:03,160 Speaker 1: what one right hike if at all this year. Well, 228 00:12:03,200 --> 00:12:06,600 Speaker 1: I think you'd need to see ongoing softness in the 229 00:12:06,640 --> 00:12:09,720 Speaker 1: macro data. So there's some concern that Q one GDP 230 00:12:09,960 --> 00:12:12,079 Speaker 1: looks weak. I think it's you know, we'll have to 231 00:12:12,120 --> 00:12:14,600 Speaker 1: see what the numbers suggest and then whether there's a 232 00:12:14,600 --> 00:12:18,480 Speaker 1: bounce back in Q two. But the payroll figures, you know, 233 00:12:18,559 --> 00:12:21,640 Speaker 1: we we got a disappointing report for March, but keep 234 00:12:21,679 --> 00:12:24,920 Speaker 1: in mind that underlying organic labor for US growth is 235 00:12:24,960 --> 00:12:29,600 Speaker 1: probably only k to k. And if it turns out 236 00:12:29,640 --> 00:12:34,240 Speaker 1: that that headline number on payrolls, you know, you know, 237 00:12:34,520 --> 00:12:36,720 Speaker 1: if it turns out that we either get upward revisions 238 00:12:36,760 --> 00:12:38,640 Speaker 1: or we're bouncing back, the Fed's going to want to 239 00:12:38,679 --> 00:12:42,280 Speaker 1: tighten further to to to temper that. So I think 240 00:12:42,320 --> 00:12:46,079 Speaker 1: you'd need pretty weak data in a sustained fashion or 241 00:12:46,120 --> 00:12:52,040 Speaker 1: what looks like disruptive volatility shocks. Is that dollar strength. 242 00:12:52,440 --> 00:12:54,320 Speaker 1: It could be, but I think it would be They're 243 00:12:54,360 --> 00:12:57,240 Speaker 1: not going to react to the dollar, uh per se. 244 00:12:57,360 --> 00:13:01,679 Speaker 1: But if the dollar is moving, cup bold with adverse moves, 245 00:13:01,679 --> 00:13:05,160 Speaker 1: in credit markets and inflation expectations, then they will definitely 246 00:13:05,240 --> 00:13:07,360 Speaker 1: take note. It took a while for them to wake 247 00:13:07,480 --> 00:13:10,480 Speaker 1: up to that moving into two thousand sixteen, but they 248 00:13:10,480 --> 00:13:13,800 Speaker 1: eventually did move to the sidelines, and that was ultimately 249 00:13:13,840 --> 00:13:17,120 Speaker 1: the right move. Uh. Conditions stabilized, and then the Fed 250 00:13:17,240 --> 00:13:19,760 Speaker 1: was able to start raising rates late last year and 251 00:13:19,880 --> 00:13:22,760 Speaker 1: was you know, and then followed up, um, you know, 252 00:13:22,880 --> 00:13:26,360 Speaker 1: just recently. And those moves were not disruptive because they 253 00:13:26,480 --> 00:13:29,640 Speaker 1: properly paused for a period of time, So no need 254 00:13:29,720 --> 00:13:32,720 Speaker 1: to go there at this juncture. I don't think you 255 00:13:32,760 --> 00:13:34,880 Speaker 1: know that you know that we're looking at those kinds 256 00:13:34,880 --> 00:13:37,800 Speaker 1: of disruptions, so I think they'll be able to continue 257 00:13:37,800 --> 00:13:40,160 Speaker 1: with quarter to quarter moves. Alright. Michael donnan, thanks so 258 00:13:40,280 --> 00:13:42,160 Speaker 1: much for joining us today both on radio and television. 259 00:13:42,200 --> 00:13:44,400 Speaker 1: Great to see it once again. Michael Darta, Chief Economists 260 00:13:44,400 --> 00:13:46,560 Speaker 1: with m k M Partners here in our eleven three 261 00:13:46,559 --> 00:14:02,360 Speaker 1: our studios in New York. M Ken Leon, who was 262 00:14:02,400 --> 00:14:04,439 Speaker 1: kind enough to join us on television earlier this morning 263 00:14:04,480 --> 00:14:07,120 Speaker 1: as well as we got this JP Morgan earnings. And 264 00:14:07,120 --> 00:14:09,640 Speaker 1: before we dig into the numbers and in specific here, Ken, 265 00:14:09,720 --> 00:14:12,120 Speaker 1: let me just ask you about broad themes. Friend and 266 00:14:12,120 --> 00:14:14,720 Speaker 1: I were talking about the contrast here between equities trading 267 00:14:14,720 --> 00:14:16,840 Speaker 1: and fixed income. What are you seeing shape up when 268 00:14:16,880 --> 00:14:18,640 Speaker 1: you look at JP Morgan and you look at City 269 00:14:18,679 --> 00:14:24,640 Speaker 1: this morning? The key is really in capital markets, where 270 00:14:25,640 --> 00:14:28,800 Speaker 1: very strong for JP Morgan. It was mixed at best 271 00:14:28,880 --> 00:14:32,600 Speaker 1: for City. UH. This may suggest the market share gains 272 00:14:32,680 --> 00:14:36,480 Speaker 1: for JP Morgan, you know, obviously always near the top 273 00:14:36,520 --> 00:14:39,840 Speaker 1: in terms of these league rankings for equity UH sixth 274 00:14:39,840 --> 00:14:46,280 Speaker 1: income Underwriting, etcetera. UH. City trading also in areas related 275 00:14:46,320 --> 00:14:50,920 Speaker 1: to equities was okay, but it seems that the year 276 00:14:51,000 --> 00:14:57,080 Speaker 1: over year comparisons for City UM were at best okay. Uh. 277 00:14:57,120 --> 00:15:00,440 Speaker 1: They did a beat in terms of the dollar star 278 00:15:00,520 --> 00:15:04,920 Speaker 1: ten last year UM, but we really don't see across 279 00:15:05,000 --> 00:15:07,840 Speaker 1: the board the same strength that we've seen in JP 280 00:15:08,000 --> 00:15:11,040 Speaker 1: Morgan's results today. How much of a surprise was it 281 00:15:11,080 --> 00:15:13,600 Speaker 1: to you when you got the read unfixed income trading 282 00:15:13,640 --> 00:15:17,000 Speaker 1: from from JP Morgan again beating estimates with some some 283 00:15:17,120 --> 00:15:19,240 Speaker 1: significance there. How big a surprise was that to you? 284 00:15:21,280 --> 00:15:24,080 Speaker 1: The first quarter is typically the strongest quarter for fixed 285 00:15:24,120 --> 00:15:27,280 Speaker 1: income trading, and then in an arising rate environment and 286 00:15:27,360 --> 00:15:30,320 Speaker 1: a little bit more of risk taking by let's call 287 00:15:30,400 --> 00:15:34,600 Speaker 1: it institutional clients. All of this led to very strong results. 288 00:15:35,000 --> 00:15:37,320 Speaker 1: We also got an indication of this really from the 289 00:15:37,400 --> 00:15:42,520 Speaker 1: monthly market exchange data that we get. Can talk to 290 00:15:42,560 --> 00:15:44,480 Speaker 1: me a little bit about city groups. So we're just 291 00:15:44,480 --> 00:15:47,360 Speaker 1: getting the story generating the most revenue from fixed income 292 00:15:47,360 --> 00:15:51,240 Speaker 1: trading in three years. Are you concerned that they won't 293 00:15:51,240 --> 00:15:55,600 Speaker 1: be able to keep it up? It's likely that for 294 00:15:56,040 --> 00:16:00,920 Speaker 1: this year that we will see flat up single digit 295 00:16:01,040 --> 00:16:07,720 Speaker 1: for fixed income trading. UM. A lot relates to investor confidence, 296 00:16:07,840 --> 00:16:12,000 Speaker 1: risk taking, and a fixed income trading along with equities, 297 00:16:12,040 --> 00:16:16,600 Speaker 1: really have not seen a lot of volatility. Volatility tends 298 00:16:16,640 --> 00:16:20,520 Speaker 1: to initially be good for trading revenue like fixed income, 299 00:16:20,840 --> 00:16:24,160 Speaker 1: and then it creates a kind of a pocket where 300 00:16:24,600 --> 00:16:28,480 Speaker 1: UH investors are on the sidelines. City group to consumer 301 00:16:28,560 --> 00:16:31,800 Speaker 1: bank of revenue increasing one percent, that's actually a touch 302 00:16:31,840 --> 00:16:36,000 Speaker 1: below what analysts were expecting. UM is that they're kind 303 00:16:36,040 --> 00:16:39,520 Speaker 1: of a keyless. Hell yeah, that's right. So I don't 304 00:16:39,520 --> 00:16:42,480 Speaker 1: think it speaks to the economy the confidence of you know, 305 00:16:42,640 --> 00:16:45,560 Speaker 1: the consumer UM. You know, when you look at the 306 00:16:45,640 --> 00:16:49,640 Speaker 1: products related to consumer lending, UM, you know, I would 307 00:16:49,840 --> 00:16:54,000 Speaker 1: want to see numbers like, you know, three four percent growth, 308 00:16:54,040 --> 00:16:56,440 Speaker 1: and it was only one percent for City. You know, 309 00:16:56,520 --> 00:17:00,520 Speaker 1: City doesn't have the breaths of franchise and the mestic 310 00:17:00,840 --> 00:17:04,280 Speaker 1: consumer banking. They are very strong in credit cards though, 311 00:17:04,920 --> 00:17:06,680 Speaker 1: where the deficits as you see them when you look 312 00:17:06,680 --> 00:17:09,480 Speaker 1: at these two earnings reports, where the problem of spots 313 00:17:09,680 --> 00:17:14,159 Speaker 1: that that stand out to you. The problem spots really 314 00:17:14,480 --> 00:17:19,679 Speaker 1: relate to UM as the last question with the consumer confidence, 315 00:17:19,760 --> 00:17:22,720 Speaker 1: confidence from the CEOs for M and A mergers and 316 00:17:22,760 --> 00:17:26,280 Speaker 1: acquisitions was actually down year over year, but it was 317 00:17:26,400 --> 00:17:30,439 Speaker 1: made up by strong debt inequity underwriting, particularly I p 318 00:17:30,560 --> 00:17:33,240 Speaker 1: O s like Snap in the first quarter where JP 319 00:17:33,400 --> 00:17:36,040 Speaker 1: Morton was Elite, City was in it as well, So 320 00:17:36,119 --> 00:17:39,240 Speaker 1: that's one year. A second area would be related to 321 00:17:40,080 --> 00:17:44,800 Speaker 1: UM anything on as it speaks to the business climate 322 00:17:44,960 --> 00:17:48,959 Speaker 1: and regulation. Right now, it's it's pretty much business as 323 00:17:49,080 --> 00:17:52,800 Speaker 1: usual UM Again, it may not be in the results, 324 00:17:52,840 --> 00:17:56,959 Speaker 1: but on expectations that in a Trump administration and pro 325 00:17:57,200 --> 00:18:01,400 Speaker 1: business over the course of two thousands seventeen, we're going 326 00:18:01,440 --> 00:18:04,280 Speaker 1: to see some easing on some of the guidelines, whether 327 00:18:04,320 --> 00:18:07,240 Speaker 1: it be Dodge Frank or some of the agencies in 328 00:18:07,359 --> 00:18:10,399 Speaker 1: terms of how they interpret bank regulation. We'll talk with 329 00:18:10,440 --> 00:18:11,879 Speaker 1: ken Ley on a c f R A here as 330 00:18:11,920 --> 00:18:14,679 Speaker 1: we get results from a city and Wells got results 331 00:18:14,680 --> 00:18:16,679 Speaker 1: a little earlier this morning from JP Morgan. Just to 332 00:18:16,680 --> 00:18:19,200 Speaker 1: get everyone up to speed on where things stand. We're 333 00:18:19,200 --> 00:18:21,840 Speaker 1: going through those rings reports now JP Morgan starting its 334 00:18:21,920 --> 00:18:24,440 Speaker 1: call with reporters. That's just under Wayne again. You can 335 00:18:24,440 --> 00:18:27,119 Speaker 1: follow along at t L I V go on the 336 00:18:27,119 --> 00:18:30,480 Speaker 1: BLOOMBERGAINSI listened to us here. Can you mentioned looking ahead 337 00:18:30,480 --> 00:18:32,280 Speaker 1: to what may or may not happen out of Washington? 338 00:18:32,359 --> 00:18:35,520 Speaker 1: How important to banks to the bank's bottom line is 339 00:18:35,560 --> 00:18:38,679 Speaker 1: some sort of reform of financial regulation in the US. 340 00:18:40,280 --> 00:18:45,200 Speaker 1: So the managements, uh, you know are very conservative, they're 341 00:18:45,240 --> 00:18:49,040 Speaker 1: kind of living with the condition of Dodge Frank Um. 342 00:18:49,080 --> 00:18:52,480 Speaker 1: I think it gets into some of the areas or 343 00:18:52,760 --> 00:18:55,399 Speaker 1: or or products that they can get involved in with 344 00:18:55,520 --> 00:18:57,800 Speaker 1: a little bit more risk taking. No one's going to 345 00:18:57,880 --> 00:19:01,040 Speaker 1: remove capital requirements or put the banks who are the 346 00:19:01,080 --> 00:19:04,320 Speaker 1: country at risk, um, but it's more on the edge 347 00:19:04,320 --> 00:19:09,240 Speaker 1: of that ability to maybe enable them to take capital 348 00:19:09,280 --> 00:19:12,920 Speaker 1: and put it, in a principle UM, into a little 349 00:19:12,920 --> 00:19:14,879 Speaker 1: bit of risk your areas to get higher returns. I 350 00:19:14,920 --> 00:19:18,520 Speaker 1: don't think it's the return of prompt trading UM. That's 351 00:19:18,560 --> 00:19:22,040 Speaker 1: not going to happen. But um, I think the mandate 352 00:19:22,080 --> 00:19:26,399 Speaker 1: from the Trump administration, both for the SEC, perhaps with 353 00:19:26,520 --> 00:19:29,480 Speaker 1: the appointments over the next eighteen months with the Federal Reserve, 354 00:19:30,000 --> 00:19:34,840 Speaker 1: is more of a accommodative environment. Four banks. We have 355 00:19:34,880 --> 00:19:36,679 Speaker 1: about thirty seconds here before we'll go to break. We'll 356 00:19:36,720 --> 00:19:38,000 Speaker 1: come back with you in just a little bit here, 357 00:19:38,040 --> 00:19:39,439 Speaker 1: but let me ask you Ken, what we learned from 358 00:19:39,480 --> 00:19:41,520 Speaker 1: Jamie Diamond this morning in terms of his outlook on 359 00:19:41,560 --> 00:19:43,720 Speaker 1: the economy. We had his letter to shareholders at last 360 00:19:43,760 --> 00:19:45,679 Speaker 1: week or the week before, it's all the fog, I 361 00:19:45,680 --> 00:19:47,800 Speaker 1: can't remember which. But what do we learned today about 362 00:19:47,800 --> 00:19:51,880 Speaker 1: the economy? Yeah, so, especially in the meat and potato 363 00:19:52,160 --> 00:19:56,600 Speaker 1: areas of banking, which is consumer bank landing, and also business, 364 00:19:56,800 --> 00:20:02,159 Speaker 1: particularly small uh business US. It's very good. We're seeing 365 00:20:02,400 --> 00:20:07,800 Speaker 1: up up indicators for employment. We're seeing consumer is still confident, 366 00:20:07,880 --> 00:20:10,560 Speaker 1: which means that the housing market is still very good, 367 00:20:10,960 --> 00:20:14,480 Speaker 1: and consumer loans including auto loans, are are good as well. 368 00:20:14,600 --> 00:20:17,480 Speaker 1: Can we haven't talked about Wells Fargo. We approach those 369 00:20:17,480 --> 00:20:19,480 Speaker 1: earnings a little bit differently. Friend and I were discussing 370 00:20:19,520 --> 00:20:22,440 Speaker 1: before we went to you on the phone. Obviously there's 371 00:20:22,440 --> 00:20:25,600 Speaker 1: this fake account scandal still looming. When is this bank 372 00:20:25,640 --> 00:20:27,639 Speaker 1: going to get beyond it? We saw the claw backs 373 00:20:27,680 --> 00:20:31,160 Speaker 1: just a couple of days ago of John Stump's pay package. 374 00:20:31,560 --> 00:20:33,399 Speaker 1: How desperate is this bank to get beyond it? And 375 00:20:33,400 --> 00:20:37,040 Speaker 1: what's it going to happen? Well, it really starts with 376 00:20:37,200 --> 00:20:40,400 Speaker 1: the senior management, and even in today's earnings release there's 377 00:20:40,440 --> 00:20:45,240 Speaker 1: a tone of talking about um, you know, culture and 378 00:20:45,359 --> 00:20:49,040 Speaker 1: doing right for the customer. Uh in the earnings release, 379 00:20:49,400 --> 00:20:52,480 Speaker 1: um you know? With that, Uh, it also ties to 380 00:20:53,160 --> 00:20:57,760 Speaker 1: how they measure performance for employees, particularly those you know 381 00:20:57,840 --> 00:21:00,280 Speaker 1: who are at the bank branches, et cetera. So all 382 00:21:00,400 --> 00:21:03,280 Speaker 1: this is part of rebuilding their brand. It's going to 383 00:21:03,400 --> 00:21:07,320 Speaker 1: take some time. The results are okay, they're not great, 384 00:21:07,920 --> 00:21:11,960 Speaker 1: but this is more of a traditional commercial lending bank 385 00:21:12,080 --> 00:21:16,480 Speaker 1: than one like JP Morgan, which is global and all 386 00:21:16,560 --> 00:21:21,200 Speaker 1: respects for the capital markets and investment banking. Can we 387 00:21:21,280 --> 00:21:23,200 Speaker 1: talk at some length on this show about the European 388 00:21:23,240 --> 00:21:25,240 Speaker 1: banks and you look at Credit Squeez, you look at 389 00:21:25,240 --> 00:21:27,679 Speaker 1: Deutsche Bank. You've got chief executives who have big plans 390 00:21:27,720 --> 00:21:31,000 Speaker 1: to turn those banks around, turn them into new entities. 391 00:21:31,760 --> 00:21:34,520 Speaker 1: What's that? What's the Jamie Diamond or uh, what's Mr 392 00:21:34,600 --> 00:21:38,000 Speaker 1: Corbat thinking he looks overseas to Europe and thinks about 393 00:21:38,000 --> 00:21:41,080 Speaker 1: the role that he could play in rejiggering or reinventing 394 00:21:41,119 --> 00:21:44,000 Speaker 1: banks here based in the US. I think we're what 395 00:21:44,040 --> 00:21:47,640 Speaker 1: we're gonna hear from Jamie Diamond and JP Morgan at 396 00:21:47,680 --> 00:21:49,800 Speaker 1: a thirty on the call is going to be that, 397 00:21:50,160 --> 00:21:53,960 Speaker 1: you know, their rankings in Europe in particular is number 398 00:21:53,960 --> 00:21:58,240 Speaker 1: one or two, and they are taking market share as 399 00:21:58,320 --> 00:22:02,520 Speaker 1: some of the major European bank whether it be Deutsche Bank, 400 00:22:03,040 --> 00:22:07,720 Speaker 1: credit Swists, Ubs, etcetera, continue to be shifting away from 401 00:22:07,960 --> 00:22:12,120 Speaker 1: the investment banking capital market areas well sometimes a little 402 00:22:12,119 --> 00:22:16,600 Speaker 1: bit of riskier and trading to the more conservative wealth 403 00:22:16,680 --> 00:22:19,879 Speaker 1: management areas. Can you're breaking my heart? I'm in London. 404 00:22:20,000 --> 00:22:22,360 Speaker 1: Is some European CEO at some point going to say 405 00:22:22,440 --> 00:22:24,879 Speaker 1: enough is enough for is it regulation? That they'll say, well, 406 00:22:24,920 --> 00:22:28,360 Speaker 1: the U S is deregulating or making their banks jobs easier, 407 00:22:28,440 --> 00:22:32,040 Speaker 1: We're going to do the same. Yeah. So it's almost 408 00:22:32,119 --> 00:22:35,760 Speaker 1: like a two tier issue as it relates to the 409 00:22:35,880 --> 00:22:39,320 Speaker 1: UK and Europe. Of course with Brexit, um and where 410 00:22:39,359 --> 00:22:42,280 Speaker 1: employees are going to be working under the new regimes. 411 00:22:42,280 --> 00:22:46,320 Speaker 1: But um, you know, I think part of what we're 412 00:22:46,560 --> 00:22:49,119 Speaker 1: seeing in Europe. You know, the economies are coming back, 413 00:22:49,160 --> 00:22:54,440 Speaker 1: businesses getting better, um. But the strategies for the large 414 00:22:54,480 --> 00:22:59,200 Speaker 1: banks seems to be a lot more conservative than before um. 415 00:22:59,320 --> 00:23:02,400 Speaker 1: And then given you know some of the leading US 416 00:23:02,440 --> 00:23:05,400 Speaker 1: banks JP, Morgan City, you know they're in a position 417 00:23:06,000 --> 00:23:09,320 Speaker 1: just to gain share because they fixed some of those 418 00:23:09,359 --> 00:23:12,960 Speaker 1: problems a little bit earlier. Do we are we expecting 419 00:23:12,960 --> 00:23:15,359 Speaker 1: consolidation or some of the U s banks because you 420 00:23:15,359 --> 00:23:17,520 Speaker 1: guys are so much stronger, although price the book it 421 00:23:17,600 --> 00:23:19,679 Speaker 1: was looking a lot more expensive than the European banks. 422 00:23:19,920 --> 00:23:22,159 Speaker 1: Can we expect some of the big US majors to 423 00:23:22,200 --> 00:23:25,520 Speaker 1: come in Europe and buy things. It's a very good question, 424 00:23:25,760 --> 00:23:29,159 Speaker 1: and I would say probably not. I mean, when you 425 00:23:29,240 --> 00:23:36,880 Speaker 1: look at unless there's some unusual situation um, But generally um. 426 00:23:36,920 --> 00:23:40,479 Speaker 1: You know, I think most of the major US banks 427 00:23:40,520 --> 00:23:44,440 Speaker 1: have ground, have feet on the ground, if you will, 428 00:23:44,480 --> 00:23:48,840 Speaker 1: in terms of a presence um um and both traditional 429 00:23:48,840 --> 00:23:52,760 Speaker 1: investment banking and lending. I'm wondering here is we look 430 00:23:52,760 --> 00:23:54,160 Speaker 1: at to what may or may not happen and watch 431 00:23:54,200 --> 00:23:55,919 Speaker 1: you Just to reprise that in the last few seconds 432 00:23:55,920 --> 00:23:59,080 Speaker 1: that we we have with you here on on surveillance. Uh, 433 00:23:59,280 --> 00:24:02,600 Speaker 1: there's a great way. Uh. We know what regulatory reform 434 00:24:02,720 --> 00:24:04,960 Speaker 1: lawmakers may be considering, whether it's going to be something 435 00:24:04,960 --> 00:24:07,280 Speaker 1: that's going to come out of Congress. What what banks 436 00:24:07,280 --> 00:24:10,680 Speaker 1: are agitating for. We talked about regulation and reform, regulation 437 00:24:10,720 --> 00:24:12,720 Speaker 1: with a with a broad brush. What's likely to happen, 438 00:24:12,720 --> 00:24:16,400 Speaker 1: what's likely to make the biggest difference to these banks. Well, 439 00:24:16,520 --> 00:24:19,960 Speaker 1: you know, banks come in all different sizes, and I think, um, 440 00:24:20,119 --> 00:24:23,320 Speaker 1: for most banks in the US, it's trying to get 441 00:24:24,040 --> 00:24:26,359 Speaker 1: out of a lot of the restrictions from Dodd Frank 442 00:24:26,440 --> 00:24:30,320 Speaker 1: just because they're so small. When you're talking about the 443 00:24:30,440 --> 00:24:34,800 Speaker 1: larger global banks as we are today, um, it's it's 444 00:24:34,800 --> 00:24:37,320 Speaker 1: really more fine tuning. They are still going to be 445 00:24:37,359 --> 00:24:40,520 Speaker 1: bound by Dodd Frank, by a lot of the capital ratios. 446 00:24:41,080 --> 00:24:44,159 Speaker 1: And where there's some wiggle room, it might be in 447 00:24:44,280 --> 00:24:47,240 Speaker 1: some areas where they want to get into perhaps some 448 00:24:47,359 --> 00:24:52,280 Speaker 1: trading products or businesses, but not in any big strokes. 449 00:24:52,280 --> 00:24:56,200 Speaker 1: So I think generally when we think of deregulation, it's 450 00:24:56,280 --> 00:24:58,399 Speaker 1: it's going to be to give something more for the 451 00:24:58,440 --> 00:25:01,200 Speaker 1: smaller banks, and I think that's part of the mandate 452 00:25:01,240 --> 00:25:03,800 Speaker 1: from the Trump administration. All Kelly on. Thanks so much 453 00:25:03,800 --> 00:25:06,400 Speaker 1: for joining us today both on Bloombergs. Valance on radio 454 00:25:06,440 --> 00:25:08,840 Speaker 1: and television. Ken leyon of CF are joining us on 455 00:25:08,840 --> 00:25:20,200 Speaker 1: our phone lines. Brought you by Bank of America, Mary Lynch. 456 00:25:20,280 --> 00:25:24,560 Speaker 1: Dedicated to bringing our clients insights and solutions to meet 457 00:25:24,560 --> 00:25:28,080 Speaker 1: the challenges of a transforming world. That's the power of 458 00:25:28,119 --> 00:25:33,919 Speaker 1: global connections. Mary Lynch. Pierce Federan Smith Incorporated, Member s 459 00:25:34,000 --> 00:25:39,600 Speaker 1: I p C. He was for six years the President 460 00:25:39,600 --> 00:25:42,080 Speaker 1: and CEO of the Federal Reserve Bank of Minneapolis. He's 461 00:25:42,080 --> 00:25:44,760 Speaker 1: not the Line McKenzie, Professor of economics at the University 462 00:25:44,760 --> 00:25:47,680 Speaker 1: of Rochester. Marianna Kutcha Lakota is also, I should point out, 463 00:25:47,680 --> 00:25:49,320 Speaker 1: a columnist for Bloomberg View and he joins us on 464 00:25:49,320 --> 00:25:50,639 Speaker 1: our phone line. Great to have you with us, and 465 00:25:50,640 --> 00:25:52,440 Speaker 1: I know Francy Lackwell eager to to jump in here 466 00:25:52,440 --> 00:25:55,240 Speaker 1: with some questions. Francy, Yeah, thank you so much. Mr 467 00:25:55,240 --> 00:25:57,520 Speaker 1: Cantarlo Code. A great pleasure to have you, because this 468 00:25:57,640 --> 00:25:59,880 Speaker 1: is the day after the interview that we've all read 469 00:26:00,000 --> 00:26:02,479 Speaker 1: where President Trump for the first time is hinting that 470 00:26:02,560 --> 00:26:05,320 Speaker 1: he's open to keeping Janet Yellen at the helm of 471 00:26:05,359 --> 00:26:09,000 Speaker 1: the Fed. Will he well? Thanks First of all, thanks 472 00:26:09,040 --> 00:26:11,040 Speaker 1: for all for having me on. Uh. You know, I 473 00:26:11,040 --> 00:26:13,480 Speaker 1: don't know for sure what President Trump will do, but 474 00:26:13,920 --> 00:26:17,280 Speaker 1: I was very heartened by his comments about Cherry Yellen. 475 00:26:17,400 --> 00:26:21,480 Speaker 1: I think that, uh, it shows that he's thinking about 476 00:26:22,480 --> 00:26:24,639 Speaker 1: that job in the right way, which is, you know, 477 00:26:24,720 --> 00:26:27,879 Speaker 1: Cherry Yellen has done what she is supposed to do 478 00:26:27,920 --> 00:26:29,919 Speaker 1: is chair of the Fed, which is to keep unemployment 479 00:26:30,240 --> 00:26:34,560 Speaker 1: low and to uh have inflation be close to target. 480 00:26:35,000 --> 00:26:37,000 Speaker 1: That's what you're looking for in terms of what the 481 00:26:37,080 --> 00:26:39,680 Speaker 1: chair is supposed to be achieving in their in their job. 482 00:26:40,160 --> 00:26:41,840 Speaker 1: And so I think it's going to be very hard 483 00:26:42,000 --> 00:26:45,960 Speaker 1: for for President Trump to to find find good reasons 484 00:26:46,040 --> 00:26:48,840 Speaker 1: for to say that the Chair has not been able 485 00:26:48,880 --> 00:26:51,639 Speaker 1: to doing her job right. And he also said that 486 00:26:51,680 --> 00:26:55,040 Speaker 1: he likes low interest rate policies. Right. This is again 487 00:26:55,080 --> 00:26:57,480 Speaker 1: a reversal to what he's said in the past. But 488 00:26:57,640 --> 00:26:59,840 Speaker 1: have you ever met a president that didn't like low 489 00:26:59,880 --> 00:27:03,400 Speaker 1: and was right policy? Well, there there's some true to that, 490 00:27:03,760 --> 00:27:06,240 Speaker 1: although I think that um. Actually, if you track what 491 00:27:06,280 --> 00:27:09,320 Speaker 1: President Trump is said in the past of monetary policy, UM, 492 00:27:09,440 --> 00:27:15,040 Speaker 1: he has said, uh sometimes something extremely hawkish, expressed uh 493 00:27:16,280 --> 00:27:18,680 Speaker 1: expressed positive sentiments where it's gold standard I think on 494 00:27:18,680 --> 00:27:21,000 Speaker 1: on on an occasion. On the other hand, he's also 495 00:27:21,040 --> 00:27:25,640 Speaker 1: in the past expressed um recognition for why low interest 496 00:27:25,720 --> 00:27:28,160 Speaker 1: rates are valuable for business in terms of being able 497 00:27:28,200 --> 00:27:31,000 Speaker 1: to and and in terms of being able to stimulate 498 00:27:31,000 --> 00:27:35,240 Speaker 1: growth in demand. So um, you know, I think yesterday 499 00:27:35,240 --> 00:27:37,679 Speaker 1: we heard the doubbish President Trump. We might hear from 500 00:27:37,680 --> 00:27:40,600 Speaker 1: the hawkish President Trump down the road as well. Um, 501 00:27:40,640 --> 00:27:43,240 Speaker 1: But certainly, if you have a pro growth agenda, as 502 00:27:43,720 --> 00:27:47,280 Speaker 1: the President has has voiced, low low interest rates, you're 503 00:27:47,280 --> 00:27:49,919 Speaker 1: gonna be your friend there. And the challenge for the 504 00:27:49,960 --> 00:27:52,920 Speaker 1: Fed is, Look, they're they're not about keeping in strates low. 505 00:27:52,960 --> 00:27:55,360 Speaker 1: Their trying. Their job is to keep inflation at target 506 00:27:55,800 --> 00:27:59,760 Speaker 1: and keep employment at matt at maxim And they have 507 00:27:59,800 --> 00:28:02,880 Speaker 1: to us any will I know, UM not paying attention 508 00:28:02,920 --> 00:28:05,520 Speaker 1: what the presidents preferences are on this on this matter? 509 00:28:05,960 --> 00:28:07,760 Speaker 1: Did they have to? I mean, I think of what 510 00:28:07,800 --> 00:28:09,840 Speaker 1: he said yesterday. I think about this ongoing debate in 511 00:28:09,920 --> 00:28:13,040 Speaker 1: Washington about the prospects for for a fiscal stimulus. Uh 512 00:28:13,040 --> 00:28:15,240 Speaker 1: did what he said yesterday give them any more grounds 513 00:28:15,280 --> 00:28:17,360 Speaker 1: to debate this? Um? You know? And when they next meet, 514 00:28:17,440 --> 00:28:21,240 Speaker 1: say in Washington, Well, you know, I think a big 515 00:28:21,320 --> 00:28:25,000 Speaker 1: question for the FED is not so much the President's 516 00:28:25,040 --> 00:28:28,840 Speaker 1: preferences for low interest rates, but rather, um are they 517 00:28:29,440 --> 00:28:32,399 Speaker 1: how likely is physical stimulus? And then what is that? 518 00:28:32,440 --> 00:28:34,159 Speaker 1: What is that physical stimulus going to mean for the 519 00:28:34,240 --> 00:28:37,800 Speaker 1: for the economy UM in terms of inflationary pressures? And 520 00:28:38,720 --> 00:28:42,160 Speaker 1: I guess you could say the president as comment yesterday 521 00:28:42,200 --> 00:28:46,920 Speaker 1: meets uh infrastructure UM made it clearer. The administration still 522 00:28:47,080 --> 00:28:51,400 Speaker 1: very very much pro infrastructure UM. But beyond that, you know, 523 00:28:51,480 --> 00:28:54,040 Speaker 1: it's really everything that the President says is really trying 524 00:28:54,080 --> 00:28:56,600 Speaker 1: to They're trying to filter into what's the outlook for 525 00:28:56,640 --> 00:29:00,160 Speaker 1: the economy. What's the outlook for inflation, employment going to be? UM? 526 00:29:00,960 --> 00:29:03,520 Speaker 1: I personally, you know if I, if I still on 527 00:29:03,560 --> 00:29:07,080 Speaker 1: the committee, wouldn't take too much from one interview along 528 00:29:07,080 --> 00:29:09,760 Speaker 1: those lines. Let me ask you about the balance sheet. 529 00:29:09,760 --> 00:29:11,440 Speaker 1: The FED weighing what to do with this four point 530 00:29:11,440 --> 00:29:14,360 Speaker 1: five trillion dollar balance sheet. The debate now seeming to 531 00:29:14,400 --> 00:29:17,480 Speaker 1: center on whether or not the FED can effectively unwind 532 00:29:17,520 --> 00:29:20,240 Speaker 1: that balance sheet while continuing to raise rates. What's your 533 00:29:20,480 --> 00:29:22,960 Speaker 1: I've used the analogy can the Fed walk and chew 534 00:29:23,000 --> 00:29:24,880 Speaker 1: gum at the same time? How difficult is it going 535 00:29:24,920 --> 00:29:28,600 Speaker 1: to be for the Fed to do both. Yeah. First 536 00:29:28,600 --> 00:29:32,640 Speaker 1: of all, um, there's really no need and I certainly 537 00:29:32,640 --> 00:29:34,560 Speaker 1: said this when I was a committee member, I can 538 00:29:34,600 --> 00:29:37,280 Speaker 1: I can say it now again. There's really no reason 539 00:29:37,560 --> 00:29:40,320 Speaker 1: for the FED to reduce the balance sheet. It can 540 00:29:40,600 --> 00:29:44,000 Speaker 1: uh continue the tight economic conditions as needed with the 541 00:29:44,040 --> 00:29:46,920 Speaker 1: current size of the balance sheet. UM, so there's really 542 00:29:46,920 --> 00:29:51,080 Speaker 1: no no need for it to h to reduce about sheet. Eventually, 543 00:29:51,560 --> 00:29:54,080 Speaker 1: the number as the economy continues to grow and it 544 00:29:54,160 --> 00:29:57,440 Speaker 1: is a long ways off thenment of access reserves that 545 00:29:57,480 --> 00:30:01,680 Speaker 1: the banking system has or returned to um pre pre 546 00:30:01,760 --> 00:30:04,080 Speaker 1: crisis levels just because of growth in the economy. So 547 00:30:04,320 --> 00:30:07,240 Speaker 1: there's no real reason for why the FIT has to 548 00:30:07,280 --> 00:30:09,840 Speaker 1: reduce the balance sheet. With that said, there's a lot 549 00:30:09,880 --> 00:30:13,080 Speaker 1: of discussions, as you and your listeners have heard about 550 00:30:13,120 --> 00:30:17,160 Speaker 1: the whether or not the FED will change its reinvestment policy. 551 00:30:17,160 --> 00:30:19,200 Speaker 1: It would be the sort of the first step. I 552 00:30:19,280 --> 00:30:21,920 Speaker 1: think the important thing for the FED is not to 553 00:30:21,920 --> 00:30:24,360 Speaker 1: think about the balance sheet is some separate object off 554 00:30:24,360 --> 00:30:27,680 Speaker 1: on the side, but rather as part of a collective 555 00:30:27,680 --> 00:30:31,240 Speaker 1: package of stimulus. So if you're going to start halting reinvestments, 556 00:30:31,240 --> 00:30:33,600 Speaker 1: for example, that's got to mean that you're going to 557 00:30:33,680 --> 00:30:37,440 Speaker 1: be raising rates more slowly. If because you're ultimate objective 558 00:30:37,560 --> 00:30:41,160 Speaker 1: is to be achieving UM inflation of two percent and 559 00:30:41,640 --> 00:30:45,280 Speaker 1: maximum employment. If you're if you're halting reinvestments, that's going 560 00:30:45,280 --> 00:30:48,320 Speaker 1: to be tightening policies through your balance sheet, and then 561 00:30:48,360 --> 00:30:50,320 Speaker 1: you're going to want to keep rates lower than you 562 00:30:50,320 --> 00:30:53,880 Speaker 1: would otherwise. Right, So what is the one key data 563 00:30:53,920 --> 00:30:56,400 Speaker 1: point that actually you would be looking at at this 564 00:30:56,520 --> 00:31:01,320 Speaker 1: point to give us clues on policy timing. Well, you know, 565 00:31:01,360 --> 00:31:04,920 Speaker 1: I think that from the FEDS point of view. So 566 00:31:05,480 --> 00:31:06,880 Speaker 1: I'll talk first from the FENS point of you, and 567 00:31:06,880 --> 00:31:09,440 Speaker 1: then I'll give a couple of my own thoughts. I 568 00:31:09,440 --> 00:31:12,880 Speaker 1: think the FED is continue to watch unemployment. I think 569 00:31:12,960 --> 00:31:16,960 Speaker 1: that they are, you know, Chair set earlier this week 570 00:31:17,080 --> 00:31:21,760 Speaker 1: that unemployment was now lower than what the Committee as 571 00:31:21,760 --> 00:31:24,479 Speaker 1: a whole sauce is stainable for the long run. Uh, 572 00:31:24,560 --> 00:31:26,840 Speaker 1: That's something I've concerned. If you want to listen to 573 00:31:26,960 --> 00:31:30,360 Speaker 1: FED speakers, and they're not going to be happy with 574 00:31:30,360 --> 00:31:33,479 Speaker 1: that stain continue be true for for for over an 575 00:31:33,480 --> 00:31:37,160 Speaker 1: extended period um. And that's why I think and I 576 00:31:37,160 --> 00:31:40,040 Speaker 1: think they worry that if they don't continue to tighten gradually, 577 00:31:40,040 --> 00:31:42,160 Speaker 1: they're gonna have to type very rapidly at some point 578 00:31:42,200 --> 00:31:46,040 Speaker 1: and cause a reception. My own view is an unemployment 579 00:31:46,160 --> 00:31:49,040 Speaker 1: is not a a great metric for the health of 580 00:31:49,040 --> 00:31:50,960 Speaker 1: the lab market. Right now, we really continue to be 581 00:31:51,000 --> 00:31:54,160 Speaker 1: watching employment. The big question is, you know, how can 582 00:31:54,200 --> 00:31:56,400 Speaker 1: you bring in people off the sidelines back into the 583 00:31:56,400 --> 00:32:01,800 Speaker 1: workforce without generating undue wage pressures and inflationary pressures. We've 584 00:32:01,800 --> 00:32:03,600 Speaker 1: seen it had so much success in the last three 585 00:32:03,640 --> 00:32:06,360 Speaker 1: or four years, and that to mention, I would really 586 00:32:06,400 --> 00:32:09,520 Speaker 1: like to see the FIT continue to keep stimulus in place, 587 00:32:10,280 --> 00:32:13,560 Speaker 1: be very patient about raising rates in order to to 588 00:32:13,800 --> 00:32:17,560 Speaker 1: to to stimulate demand, bringing more workers who are currently 589 00:32:17,840 --> 00:32:20,160 Speaker 1: people who would work who are currently not in the 590 00:32:20,640 --> 00:32:23,120 Speaker 1: labor force. UM. I think you can do that without 591 00:32:23,120 --> 00:32:26,240 Speaker 1: generating wage or inflationary pressures right in the little time 592 00:32:26,240 --> 00:32:28,080 Speaker 1: we have left. Can I ask about the overseas market. 593 00:32:28,080 --> 00:32:31,200 Speaker 1: We're seeing about three trillion dollars of negative yielding government 594 00:32:31,200 --> 00:32:35,120 Speaker 1: bonds have turned, you know, turning positive in recent months. 595 00:32:35,160 --> 00:32:39,880 Speaker 1: What does that mean for treasury buying? You know, I 596 00:32:40,280 --> 00:32:43,720 Speaker 1: think the treasury market continues to be um one of 597 00:32:43,760 --> 00:32:46,120 Speaker 1: the most liquid in the in the world, and so 598 00:32:46,200 --> 00:32:50,320 Speaker 1: I think what that means is that individual price movements 599 00:32:50,440 --> 00:32:54,920 Speaker 1: doesn't don't have really big effects on on the state 600 00:32:54,960 --> 00:32:57,719 Speaker 1: of demand for for treasuries. UM, I think we can 601 00:32:57,760 --> 00:33:01,400 Speaker 1: be pretty comfortable and continue to be offertable that treasuries 602 00:33:01,400 --> 00:33:04,880 Speaker 1: are are just uh. If one kind of buyer steps 603 00:33:04,880 --> 00:33:06,960 Speaker 1: away from the market, there's another buyer who's gonna be 604 00:33:06,960 --> 00:33:08,800 Speaker 1: willing to step in at a price that's very close 605 00:33:08,840 --> 00:33:11,160 Speaker 1: to what that previous buyer was paying. So I don't, 606 00:33:11,200 --> 00:33:13,840 Speaker 1: I don't. I don't see these these moves as being 607 00:33:13,960 --> 00:33:16,200 Speaker 1: very material at this point. I great to speak with you, 608 00:33:16,240 --> 00:33:18,440 Speaker 1: as always, darting to Cutch Lacoda, the former president and 609 00:33:18,480 --> 00:33:20,920 Speaker 1: CEO of the federaltor Bank of Minneapolis, now the Line mckenzy, 610 00:33:20,960 --> 00:33:36,360 Speaker 1: Professor of Economics at the University of Rochester. I've been 611 00:33:36,360 --> 00:33:39,000 Speaker 1: looking forward to this interview all day. We're now joined 612 00:33:39,080 --> 00:33:42,640 Speaker 1: by the Minister of State for Petroleum Resources of Nigeria. 613 00:33:42,760 --> 00:33:47,040 Speaker 1: He is one Emmanuel eBay Cachichool and Minister you join 614 00:33:47,200 --> 00:33:50,840 Speaker 1: us from A One Studios in Washington. I remember a 615 00:33:50,920 --> 00:33:53,200 Speaker 1: great interview that you gave me here in London. And 616 00:33:53,200 --> 00:33:56,480 Speaker 1: of course one of your strongest points, apart from being 617 00:33:56,480 --> 00:33:59,840 Speaker 1: a great analyst, is also having a wonderful Twitter page. 618 00:34:00,000 --> 00:34:03,040 Speaker 1: Why reach everyone to go and follow you, sir on 619 00:34:03,200 --> 00:34:06,320 Speaker 1: there you're in d c um actually meeting with the 620 00:34:06,360 --> 00:34:09,480 Speaker 1: excell and CEO. Will you be talking about opaque or 621 00:34:09,560 --> 00:34:14,360 Speaker 1: investments lively investments. We've already had that meeting meeting to 622 00:34:14,440 --> 00:34:18,040 Speaker 1: place in Dallas yesterday and we focused on my on 623 00:34:18,080 --> 00:34:20,680 Speaker 1: my own side, I focused on trying to see what 624 00:34:20,719 --> 00:34:23,640 Speaker 1: we needed to do to remove all about restrictions there 625 00:34:23,640 --> 00:34:27,040 Speaker 1: to enable ex A Mobile invest more in Nigeria. On 626 00:34:27,080 --> 00:34:30,400 Speaker 1: their own side, they also went through the processes and 627 00:34:30,800 --> 00:34:35,239 Speaker 1: the concerns that they have as the available funds for 628 00:34:35,239 --> 00:34:37,680 Speaker 1: investments are tightening by the day and so countries have 629 00:34:37,760 --> 00:34:40,160 Speaker 1: got to compete for this, and so they laid out 630 00:34:40,160 --> 00:34:42,560 Speaker 1: what their concerns were in the fiscal areas and the 631 00:34:42,760 --> 00:34:45,839 Speaker 1: and the policy areas and what we needed to do 632 00:34:45,920 --> 00:34:49,279 Speaker 1: to get a big portion of that pie. Minister on 633 00:34:49,480 --> 00:34:52,440 Speaker 1: a larger scale, how can Nigeria secure the necessary investment 634 00:34:52,480 --> 00:34:55,080 Speaker 1: to boost out as long as, for example, the oil 635 00:34:55,080 --> 00:34:58,640 Speaker 1: producing Delta region remains unsafe, well, I wouldn't use the 636 00:34:58,640 --> 00:35:01,200 Speaker 1: word and safe is actually becoming safe over the last 637 00:35:01,239 --> 00:35:03,840 Speaker 1: three months. Who haven't had an incident. We're beginning to 638 00:35:03,840 --> 00:35:06,880 Speaker 1: engage them a lot more deeply a multi militancer issues. 639 00:35:07,400 --> 00:35:10,520 Speaker 1: Our production is beginning to go wepinion to address model, 640 00:35:10,560 --> 00:35:13,200 Speaker 1: systemic and fiscal issues that have been in the systems, 641 00:35:13,520 --> 00:35:17,839 Speaker 1: physical and policy issues. Recently renegotiated the areas of debt 642 00:35:17,920 --> 00:35:21,040 Speaker 1: and debted necessary oil companies whatever us experience work that 643 00:35:21,200 --> 00:35:23,040 Speaker 1: a five year programming. How to pay for that work 644 00:35:23,080 --> 00:35:26,399 Speaker 1: like a new process of cash call payments. So we're 645 00:35:26,440 --> 00:35:29,319 Speaker 1: taking polishly the issues that we needed to take on. 646 00:35:29,760 --> 00:35:32,400 Speaker 1: So I think the climate is getting better. Clearly for 647 00:35:32,480 --> 00:35:35,400 Speaker 1: countries who have been very stable in these sort of 648 00:35:35,440 --> 00:35:38,160 Speaker 1: areas and the Gulf countries, we need to We have 649 00:35:38,200 --> 00:35:40,360 Speaker 1: some catching up to do. We need to run fairly 650 00:35:40,400 --> 00:35:43,240 Speaker 1: fast to be able to catch up with the getting 651 00:35:43,239 --> 00:35:47,960 Speaker 1: our environments saying and clean and clear and inviting for investors. Ministers, 652 00:35:48,000 --> 00:35:50,040 Speaker 1: Since you're meeting the excellent CEO, I want to talk 653 00:35:50,040 --> 00:35:51,560 Speaker 1: a little bit more about some of the oil majors 654 00:35:51,600 --> 00:35:54,600 Speaker 1: in Nigeria. For example, has filed corruption charges against Shell 655 00:35:54,680 --> 00:35:57,600 Speaker 1: but also any for allegedly paying bribes to secure and 656 00:35:57,640 --> 00:35:59,799 Speaker 1: oil block. What's going to be the next step in 657 00:35:59,800 --> 00:36:03,520 Speaker 1: that process. Well, I've tried to distinguish between the issues 658 00:36:03,520 --> 00:36:08,960 Speaker 1: of criminality involved and it's is essential that for transparency purposes, 659 00:36:09,520 --> 00:36:11,680 Speaker 1: we deal with those those issues, and like you know, 660 00:36:11,719 --> 00:36:14,879 Speaker 1: our present is very full postal and anti massive anti 661 00:36:14,920 --> 00:36:17,560 Speaker 1: corruption drive to clean up this system. So that's welcome, 662 00:36:17,960 --> 00:36:20,200 Speaker 1: but that's not taking away the advantage of the big 663 00:36:20,239 --> 00:36:24,759 Speaker 1: fields bankers outwe or part of postuantities blocks. So what 664 00:36:24,840 --> 00:36:27,040 Speaker 1: I've said is we're going to put it into different 665 00:36:27,040 --> 00:36:30,359 Speaker 1: dimensions once save the existing deals so that that way 666 00:36:30,400 --> 00:36:33,960 Speaker 1: at least we can continue a massive investment and growth 667 00:36:34,040 --> 00:36:36,719 Speaker 1: that we're trying to send the oil or area on 668 00:36:36,800 --> 00:36:38,720 Speaker 1: on this field. This field is going to train relattle 669 00:36:38,760 --> 00:36:41,239 Speaker 1: of our funder a thousand barrels into the system. But 670 00:36:41,320 --> 00:36:42,960 Speaker 1: then we need to go back and look at the 671 00:36:43,000 --> 00:36:46,600 Speaker 1: transaction itself. And frankly, if of a billion dollars of 672 00:36:46,680 --> 00:36:49,520 Speaker 1: split as bribes to individuals and which whichever way, then 673 00:36:49,520 --> 00:36:51,640 Speaker 1: that is money belonging to the government that was under 674 00:36:51,680 --> 00:36:53,799 Speaker 1: the table, and we need to find a wealth sitting 675 00:36:53,800 --> 00:36:55,640 Speaker 1: down with the oil community to get better attempts and 676 00:36:55,680 --> 00:36:57,440 Speaker 1: get back some of that money back on back on 677 00:36:57,480 --> 00:37:00,520 Speaker 1: the table. Ministo the i A today said global oil 678 00:37:00,560 --> 00:37:04,120 Speaker 1: inventory is probably increased in the first quarter. However, they 679 00:37:04,120 --> 00:37:07,880 Speaker 1: also said that OPEX implementation is near perfect. Do you 680 00:37:08,000 --> 00:37:12,040 Speaker 1: expect OPEC to extend production cuts into the second half. 681 00:37:12,520 --> 00:37:14,560 Speaker 1: I'm not sure we have an alternative. We've got to 682 00:37:14,880 --> 00:37:17,640 Speaker 1: um that is what has kept the markets table at 683 00:37:17,640 --> 00:37:21,440 Speaker 1: the sort of over fifty dollar price bar barrel that 684 00:37:21,440 --> 00:37:24,000 Speaker 1: would send over the last one one and a half months. 685 00:37:24,320 --> 00:37:26,760 Speaker 1: So we need to oversustain that when that ends in June. 686 00:37:27,360 --> 00:37:29,279 Speaker 1: We need to condue some monitor and ensure that the 687 00:37:29,320 --> 00:37:33,279 Speaker 1: efficiency is absolute efficiency in terms of compliant. But more 688 00:37:33,280 --> 00:37:35,840 Speaker 1: important than that, we need to begin to collaboratively bringing 689 00:37:35,880 --> 00:37:39,200 Speaker 1: other players who have so far not participated. US is 690 00:37:39,239 --> 00:37:43,120 Speaker 1: a big issue because the SOFA not being very willing 691 00:37:43,160 --> 00:37:45,960 Speaker 1: to have conversations on this, and in any case, the 692 00:37:46,040 --> 00:37:48,759 Speaker 1: shell production US is throwing quite some numbers back into 693 00:37:48,840 --> 00:37:52,240 Speaker 1: the field and so complicating the dynamics of of monitoring. 694 00:37:52,280 --> 00:37:55,120 Speaker 1: But ultimately, and one of those who optimistic that somewhere 695 00:37:55,120 --> 00:37:58,560 Speaker 1: down the road everybody else Russia, the US and the 696 00:37:58,560 --> 00:38:00,959 Speaker 1: Restidan and we're sitting need for a very stable oil 697 00:38:01,000 --> 00:38:04,480 Speaker 1: market about for cons in mesself, for producers, but with 698 00:38:04,719 --> 00:38:07,640 Speaker 1: Nigeria actually joined the others in cutting production. If the 699 00:38:07,640 --> 00:38:10,799 Speaker 1: deal is extended for the moment, you're actually exempt from 700 00:38:10,840 --> 00:38:13,480 Speaker 1: having to cut. This was because of the unique issues 701 00:38:13,480 --> 00:38:17,120 Speaker 1: were having the Niger delta area. Where my anticipation is 702 00:38:17,160 --> 00:38:19,520 Speaker 1: that if all things been equal, if the infrastructure has 703 00:38:19,560 --> 00:38:22,839 Speaker 1: repaired and all that, somewhere around the October November time frame, 704 00:38:22,960 --> 00:38:26,960 Speaker 1: U see us back into proper production numbers. And once 705 00:38:27,000 --> 00:38:29,200 Speaker 1: we do that, then when we're obviously willing to join 706 00:38:29,200 --> 00:38:31,440 Speaker 1: and join the courts. We're a very strong member of 707 00:38:31,440 --> 00:38:34,439 Speaker 1: Wookpack and would let us support to pack. Minister. Talking 708 00:38:34,400 --> 00:38:36,399 Speaker 1: to me a little bit more about your your trip 709 00:38:36,440 --> 00:38:38,920 Speaker 1: to Texas. So you when do you leave DC to 710 00:38:38,960 --> 00:38:42,680 Speaker 1: go there? No, I already I came from Texas, just 711 00:38:42,719 --> 00:38:46,080 Speaker 1: come back right. Yes, the trip was largely I've been 712 00:38:46,080 --> 00:38:49,360 Speaker 1: going around most of the chairman suits in most of 713 00:38:49,400 --> 00:38:51,960 Speaker 1: the major oil companies that did he and I about 714 00:38:51,960 --> 00:38:54,360 Speaker 1: a month ago. I have just an exam mobile. I 715 00:38:54,480 --> 00:38:57,759 Speaker 1: been doing Chevron during the otic next month and I 716 00:38:57,920 --> 00:38:59,960 Speaker 1: have I'm lined up to do this smpthing for TOTALA 717 00:39:00,080 --> 00:39:02,640 Speaker 1: for Shell that the whole idea is live. Whatever the 718 00:39:02,800 --> 00:39:06,839 Speaker 1: local manager policies, Let's talk to the big players. Let's 719 00:39:06,840 --> 00:39:09,200 Speaker 1: stalk to the guys who make the decision. See what 720 00:39:09,239 --> 00:39:11,440 Speaker 1: it is we need to do, See what the perception 721 00:39:11,480 --> 00:39:14,439 Speaker 1: of the policies that I'm putting in place are see 722 00:39:14,480 --> 00:39:16,960 Speaker 1: what areas of collaboration we can do and ensure that 723 00:39:16,960 --> 00:39:19,560 Speaker 1: we're getting a big piece of that that investment, and 724 00:39:19,600 --> 00:39:22,360 Speaker 1: how I'm challenging them to stop looking at Nagera just 725 00:39:22,440 --> 00:39:25,040 Speaker 1: in terms of crude or your production, but also to 726 00:39:25,080 --> 00:39:28,160 Speaker 1: diversify their businesses. What was the one thing that surprised 727 00:39:28,160 --> 00:39:32,600 Speaker 1: you the most in Texas um one. I won't call 728 00:39:32,640 --> 00:39:34,480 Speaker 1: it a surprise. I've been a member of that team. 729 00:39:34,600 --> 00:39:36,919 Speaker 1: Like you know, I worked for the mobile phone nearly 730 00:39:36,960 --> 00:39:39,080 Speaker 1: fifteen systein years of my career before I left to 731 00:39:39,160 --> 00:39:42,520 Speaker 1: this job, so I could predictably tell where they will stand. 732 00:39:42,760 --> 00:39:45,879 Speaker 1: Where do they stand? The need for firmer policies, need 733 00:39:45,960 --> 00:39:48,480 Speaker 1: for transparency to continue in the way we're doing it, 734 00:39:49,560 --> 00:39:52,680 Speaker 1: a need for great better fiscal conditions and neblet and 735 00:39:52,680 --> 00:39:54,680 Speaker 1: continue to put some of the investment funds that they 736 00:39:54,680 --> 00:39:58,760 Speaker 1: have towards Niger than towards other other developing competent nations. 737 00:39:59,520 --> 00:40:02,800 Speaker 1: But more more important and more more full courses is 738 00:40:02,800 --> 00:40:06,920 Speaker 1: the finified that as far as consent invest in Nigeria, 739 00:40:06,920 --> 00:40:10,799 Speaker 1: we'll skip the Nigose. Yes, thank you so much. It's 740 00:40:10,840 --> 00:40:12,799 Speaker 1: always a great pleasure to speak to the Minister of 741 00:40:12,920 --> 00:40:24,000 Speaker 1: States for Petroleum and Resources of Nigeria. Thanks for listening 742 00:40:24,040 --> 00:40:28,759 Speaker 1: to the Bloomberg Surveillance podcast. Subscribe and listen to interviews 743 00:40:28,840 --> 00:40:34,200 Speaker 1: on iTunes, SoundCloud, or whichever podcast platform you prefer. I'm 744 00:40:34,200 --> 00:40:37,239 Speaker 1: out on Twitter at Tom Keene. David Gura is at 745 00:40:37,320 --> 00:40:41,719 Speaker 1: David Gura. Before the podcast, you can always catch us worldwide. 746 00:40:42,120 --> 00:40:58,040 Speaker 1: I'm Bloomberg Radio, brought you by Bank of America Mary Lynch. 747 00:40:58,160 --> 00:41:02,399 Speaker 1: Dedicated to bringing our client's insights and solutions to meet 748 00:41:02,400 --> 00:41:05,920 Speaker 1: the challenges of a transforming world. That's the power of 749 00:41:05,960 --> 00:41:11,040 Speaker 1: global connections. Mary Lynch, Pierce, Fenner and Smith Incorporated, Member 750 00:41:11,680 --> 00:41:12,320 Speaker 1: s I p C