WEBVTT - China is Not Monolithic, Tsang Says 0:00:00.080 --> 0:00:13.840 Yeah, Welcome to the Bloomberg Surveillance Podcast. I'm term Keene Jaylie. 0:00:13.960 --> 0:00:17.560 We bring you insight from the best in economics, finance, investment, 0:00:18.000 --> 0:00:23.520 and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, 0:00:23.600 --> 0:00:32.400 Bloomberg dot Com, and of course on the Bloomberg. So 0:00:32.479 --> 0:00:35.240 the main event, it's Chairman Powell. In this first semi 0:00:35.280 --> 0:00:38.640 annual testimony Deutsche Banks Alan Ruskin saying the following, and 0:00:38.680 --> 0:00:41.280 I love this quote. When a new sheriff comes to town, 0:00:41.360 --> 0:00:43.920 what does he do if things have been unruly? He 0:00:43.960 --> 0:00:47.000 asserts himself and shows whose boss. If the old regime 0:00:47.040 --> 0:00:51.560 was largely peaceful, successful, he follows the old sheriff's protocols. 0:00:51.560 --> 0:00:54.440 So is it time to follow the old sheriff's product tools. 0:00:54.680 --> 0:00:57.720 Let's ask Brian Levitt shown we openheim At Funds Senior 0:00:58.080 --> 0:01:00.880 investment strategist, BRIANO. It's great a cash up with you. 0:01:00.960 --> 0:01:02.600 Is that what today is about? Keeping the peace and 0:01:02.640 --> 0:01:05.560 not saying too much? Yes, that's what today is about. 0:01:05.760 --> 0:01:07.959 And this is a federal reserve who is going to 0:01:08.080 --> 0:01:10.800 be gradually raising interest rates. But you'll hear things like 0:01:10.880 --> 0:01:15.240 data dependent and you know the expectation of continued improvements 0:01:15.240 --> 0:01:18.920 in the US economy and and rising inflation expectations, which 0:01:18.959 --> 0:01:21.560 is all good news for the equity markets and good 0:01:21.600 --> 0:01:26.520 news for households. But UM, remember the Federal Reserve is 0:01:26.560 --> 0:01:29.920 still looking at their preferred measure of inflation, which is 0:01:30.280 --> 0:01:32.959 below their comfort zone. And and so we have some 0:01:33.040 --> 0:01:36.280 time here. I think that investors shouldn't get too concerned 0:01:36.640 --> 0:01:40.479 that this tightening cycle UM is gonna curtail this cycle 0:01:40.520 --> 0:01:43.360 anytime soon. There is some excitement out there, Brian about 0:01:43.400 --> 0:01:46.959 the prospect of moving from three hikes to four. One 0:01:46.959 --> 0:01:50.120 on earth with a new chairman Jerome pal come in 0:01:50.160 --> 0:01:53.520 and make that move, to communicate to the market this early, 0:01:54.000 --> 0:01:56.360 He would not, And and I gotta be honest with you, 0:01:56.400 --> 0:01:59.400 I don't see why why anybody would UM want to 0:01:59.440 --> 0:02:01.440 set forth and say we're gonna have four interest rate 0:02:01.520 --> 0:02:04.200 hikes in the coming year. Remember the last or in 0:02:04.240 --> 0:02:06.559 this year. The last time we did that, I believe 0:02:06.680 --> 0:02:11.800 was in late early sixteen. Stanley Fisher was was signaling 0:02:11.840 --> 0:02:14.080 four interest rate hikes in the year ahead, and the 0:02:14.120 --> 0:02:17.880 dollar rallied substantially. So the Fed wants to be cautious 0:02:17.880 --> 0:02:20.080 on this. The good news is this is not late 0:02:21.000 --> 0:02:24.040 growth outside the United States looks a lot better than 0:02:24.080 --> 0:02:26.800 it did in late so we don't need to see 0:02:27.040 --> 0:02:31.239 the dollar rally significantly on the back of interest rate hikes. 0:02:31.480 --> 0:02:35.000 But if the Fed gets too tight, they could flatten 0:02:35.000 --> 0:02:37.120 the Yelk curve and and increase the dollars. So I 0:02:37.160 --> 0:02:39.639 don't We're not going to hear four interest rate hikes 0:02:39.720 --> 0:02:43.200 this year. We're gonna hear, you know, gradual rise in rates, 0:02:43.240 --> 0:02:45.760 but it'll be data depending at each meeting. So another 0:02:45.800 --> 0:02:48.880 question that overhangs the new leadership of the Federal Reserve 0:02:48.919 --> 0:02:51.880 is how willing he may be to allow for an 0:02:51.880 --> 0:02:55.560 inflation overshoot. Big conversation about that brant going into this um. 0:02:55.680 --> 0:02:58.200 Do you think this Federal Reserve is willing to accommodate 0:02:58.320 --> 0:03:01.320 an inflation overshoot? Well, it's spect that this this Federal 0:03:01.360 --> 0:03:05.080 Reserve is going to be willing to allow inflation above 0:03:05.200 --> 0:03:08.440 two percent for a period of time. That doesn't mean 0:03:08.800 --> 0:03:11.600 high and rising inflation, like there's a there's a level 0:03:11.600 --> 0:03:14.840 where high and rising inflation is detrimental to businesses in 0:03:14.840 --> 0:03:17.480 the equity market. But when you're coming out of a 0:03:18.400 --> 0:03:21.880 deflationary scare in two thousand and eight, a deflationary scare 0:03:21.880 --> 0:03:26.080 in sixteen. The last thing you want to do is 0:03:26.280 --> 0:03:29.320 harm the first time you see any real hints of inflation. 0:03:29.560 --> 0:03:32.040 Brian love it with this with Hoppenheimer Funds. Good morning everyone, 0:03:32.120 --> 0:03:36.160 John Farrell and Tom Keen. Huge news flow this morning, 0:03:36.240 --> 0:03:38.720 just just just stunning what we had to deal with 0:03:39.120 --> 0:03:41.120 early in the morning. We're gonna do a lot on that, 0:03:41.440 --> 0:03:45.760 particularly this this amazing British merger of Sky TV, and 0:03:45.960 --> 0:03:49.000 of course we're hugely advantage toy of John Farrell where 0:03:49.040 --> 0:03:50.920 this Who's do you watch a lot of Sky John? 0:03:50.920 --> 0:03:55.360 And like a Sky Yeah, Yeah, fantastic platform. Brian love 0:03:55.360 --> 0:03:57.440 it with us. And you know what's interesting And I 0:03:57.440 --> 0:03:59.880 mentioned this yesterday at chart by Dean Baker or SEEP 0:04:00.520 --> 0:04:04.520 showing inflation and taking out shelter and there's still no 0:04:04.640 --> 0:04:08.560 inflation when you take out shelter. This sort of reminds 0:04:08.600 --> 0:04:11.880 me of Janet Yellen and cell phones, where she's gonna 0:04:11.920 --> 0:04:14.240 be He's gonna be in a press conference and they're 0:04:14.240 --> 0:04:17.800 gonna go raise Race, Race is gonna go yeah X shelter. 0:04:18.800 --> 0:04:21.400 But there's a lot of yeah butts when he goes 0:04:21.440 --> 0:04:23.960 to his first press conference. Well sure, but if I 0:04:23.960 --> 0:04:26.760 mean there are there're gonna be some components of inflation, 0:04:26.880 --> 0:04:29.359 some things that we purchase going up in price, but 0:04:30.200 --> 0:04:33.800 the aggregate numbers are still I mean, we look at 0:04:33.839 --> 0:04:36.000 a lot of things that we consume. We are the 0:04:36.000 --> 0:04:42.560 beneficiaries of as consumers, as lower cost labor around the world, UM, automation, uh, 0:04:43.279 --> 0:04:46.560 things that are bringing the price of a lot of 0:04:46.600 --> 0:04:49.159 our goods down. So we do and we and we 0:04:49.200 --> 0:04:52.160 have not seen the substantial credit growth that usually leads 0:04:52.200 --> 0:04:55.160 to a significant amount of money chasing too few goods? 0:04:55.240 --> 0:05:00.400 Should we do a chart for bluebird radio work? So 0:05:01.800 --> 0:05:06.440 he should do it, John two thousand two. Cleveland CPI 0:05:06.560 --> 0:05:08.919 my favorite number. I know. It is up to two 0:05:08.960 --> 0:05:14.320 points six zero percent early this year off a cliff, 0:05:15.000 --> 0:05:18.800 and it's rebounded about two thirds. But the Cleveland CPI 0:05:18.960 --> 0:05:22.839 hasn't broken out yet. Granted, the vectors in the power 0:05:23.000 --> 0:05:25.880 like you know, one to three four rate increased direction, 0:05:25.920 --> 0:05:28.560 but we're not there yet. And co PC isn't there 0:05:28.680 --> 0:05:31.440 yet either, Brian. So it just makes you wonder what 0:05:31.520 --> 0:05:33.400 the thinking is either the Federal Reserve. Now, I know 0:05:33.480 --> 0:05:35.919 it started to improve recently, at least in terms of 0:05:35.920 --> 0:05:38.680 how they would view things, but quite obviously to a 0:05:38.680 --> 0:05:41.560 lot of people. The bias has been to hike regardless 0:05:41.560 --> 0:05:44.160 of the data, even though they tell us the data dependent. Um, 0:05:44.279 --> 0:05:46.640 can you give me some insight as to why I 0:05:46.680 --> 0:05:51.120 think the people believe that there that were the economy 0:05:51.200 --> 0:05:53.760 is doing better, the patient is, you know, out of 0:05:53.800 --> 0:05:56.719 the emergency room, and there's no reason to a lot 0:05:56.760 --> 0:06:00.200 of people to have this type of ongoing support for 0:06:00.240 --> 0:06:03.800 the economy. What I would counter with that is, you know, 0:06:03.920 --> 0:06:07.159 we've gone through the de leveraging process. The economy is 0:06:07.360 --> 0:06:11.599 doing well, but the last thing you want to do 0:06:11.839 --> 0:06:16.280 is curtail the cycle unnecessarily when more households are are 0:06:16.400 --> 0:06:19.520 participating in the economic expansion and there's still more people 0:06:19.640 --> 0:06:22.320 left to come into the equity markets. I also think 0:06:22.360 --> 0:06:24.719 one of the concerns, Jonathan, is that we have never 0:06:24.760 --> 0:06:27.560 seen stimulus to this extent this late in the cycle 0:06:27.600 --> 0:06:30.680 on the fiscal side. So you know, those that grew 0:06:30.760 --> 0:06:33.520 up in the late seventies and early eighties have this 0:06:33.720 --> 0:06:36.760 fear that we could get back to the environment where 0:06:36.760 --> 0:06:40.640 inflation gets out of hand. I would counter that by saying, 0:06:41.040 --> 0:06:43.240 we are a long ways away from what we saw 0:06:43.240 --> 0:06:45.880 in the late seventies. In the early rise is a 0:06:45.880 --> 0:06:48.600 really important theme that staving and drive at Raffiki has 0:06:48.640 --> 0:06:51.920 been up running some research about recently. It's how does 0:06:51.920 --> 0:06:55.400 the Federal Reserve communicate that it's leaning against the policy 0:06:55.440 --> 0:06:58.920 goals of this administration by having tied to monetory policy, 0:06:59.200 --> 0:07:04.400 because you're getting sophiscal So now, serious, serious question, How 0:07:04.440 --> 0:07:07.000 on earth does the Federal Reserve communicate that effectively what 0:07:07.040 --> 0:07:10.320 it's going to be doing is leaning against the policy 0:07:10.320 --> 0:07:12.800 goals of this administration. Yeah, and we do have an 0:07:12.800 --> 0:07:15.840 independent central bank, and I hope that we continue to 0:07:15.880 --> 0:07:18.720 have an independent central bank. And and so the point 0:07:18.840 --> 0:07:21.560 is on the administration and Congress are going to be 0:07:21.560 --> 0:07:23.600 stepping on the gas pedal at the time that the 0:07:23.640 --> 0:07:25.640 Fed is going to be stepping on the brake. So 0:07:25.880 --> 0:07:28.280 what you get in the States is a bounce between 0:07:28.320 --> 0:07:32.240 expansion and slow down. And my opinion that's fine for markets. 0:07:32.280 --> 0:07:34.960 But I think markets will outperform when you have recovery 0:07:34.960 --> 0:07:37.880 and expansion. That's the international and emerging markets. Brian Levin, 0:07:37.960 --> 0:07:54.040 thank you so much, greatly appreciate with and now, and 0:07:54.120 --> 0:07:57.360 particularly after our discussion yesterday was center deportment of Ohio. 0:07:57.920 --> 0:08:00.040 I'm gonna try to get away from the drone of 0:08:00.120 --> 0:08:02.400 the different issues of Washington, and I can do that 0:08:02.520 --> 0:08:06.360 nicely with Margaret Tullef. She's our senior White House correspondent. 0:08:06.800 --> 0:08:10.440 UH loads and loads of perspective here on the history 0:08:10.480 --> 0:08:12.760 of the White House and on the temperament of the 0:08:12.760 --> 0:08:15.840 White House in this fractious February. In the March of 0:08:15.880 --> 0:08:19.160 two thousand e tream Margaret. There's a paragraph off of 0:08:19.240 --> 0:08:22.720 Laura Litvin's work where the President had a private lunch 0:08:22.760 --> 0:08:25.560 Sunday with Wayne LaPier of the n r A and 0:08:25.600 --> 0:08:29.520 their top lobbyist, Christopher Cox. He's spoken with Paul Ryan, 0:08:29.880 --> 0:08:32.720 He's spoken with Mitch McConnell. And there's going to be 0:08:32.760 --> 0:08:38.720 a bipartisan lawmakers meeting tomorrow with the President. What is 0:08:38.760 --> 0:08:41.920 he going to say to them or how is he 0:08:42.000 --> 0:08:46.240 going to listen to them? I mean, it is really 0:08:46.280 --> 0:08:48.920 the most important question right now when you think about 0:08:49.160 --> 0:08:53.000 the prospects of having any legislation or change come out 0:08:53.040 --> 0:08:56.520 of this tragedy. And so far the reaction from Capitol 0:08:56.600 --> 0:08:58.080 Hill is that the President, who has been a little 0:08:58.080 --> 0:09:00.079 bit all over the map. On the one hand, E 0:09:00.200 --> 0:09:03.280 and his top aids have said they have a sense 0:09:03.280 --> 0:09:05.319 of urgency. There is a moment here there is a 0:09:05.360 --> 0:09:07.360 window they want something to be done, and then on 0:09:07.400 --> 0:09:10.240 the other hand, they have not yet come forward with 0:09:10.559 --> 0:09:13.160 specific asks. This is what we wanted to plan, this 0:09:13.240 --> 0:09:15.800 is what we don't and he's thrown out things like 0:09:16.240 --> 0:09:19.200 army teachers or whatever that are. You know, lightning rod 0:09:19.280 --> 0:09:21.520 is not going to happen at the federal legislative level, 0:09:21.880 --> 0:09:25.479 and so a lot of lawmakers in the Republican Party 0:09:25.720 --> 0:09:28.200 are now either waiting for guidance if they're in the 0:09:28.200 --> 0:09:31.040 camp that wants something to be done, or are not 0:09:31.080 --> 0:09:33.320 waiting for guidance and think very little as getting done. 0:09:33.400 --> 0:09:36.520 And Democrats are in an interesting position because while the 0:09:37.200 --> 0:09:40.800 overwhelming majority of the Democratic Party uh when they go 0:09:40.880 --> 0:09:43.320 home to their constituency say they want this, there are 0:09:43.360 --> 0:09:46.880 an important handful of Democratic lawmakers to particularly in the Senate, 0:09:46.920 --> 0:09:50.240 particularly in tight races this year, who don't necessarily want 0:09:50.240 --> 0:09:52.400 to be having test votes on something unless it's actually 0:09:52.440 --> 0:09:56.160 gonna happen. You know, Margaret, what I find so important here, 0:09:56.200 --> 0:09:58.560 and you've got a lot more perspective at watching paint 0:09:58.640 --> 0:10:02.480 dry than I do, is the advantage here for the 0:10:02.720 --> 0:10:07.480 entrenched Republicans is to let time go by, and the 0:10:07.520 --> 0:10:10.760 time will slip by and we'll move on. Is that 0:10:10.800 --> 0:10:16.200 the arch presidential strategy? Well, if that's what the president 0:10:16.240 --> 0:10:18.880 is trying to accomplish, that's certainly always true. But I 0:10:18.920 --> 0:10:21.480 really am hearing from inside these what the president does 0:10:21.520 --> 0:10:23.800 want to get things done. The question are what does 0:10:23.840 --> 0:10:25.200 he want to get done and how does he want 0:10:25.200 --> 0:10:28.000 to get it done? And in my conversations last night, 0:10:28.440 --> 0:10:30.520 there seems to be a strategy emerging with the White 0:10:30.559 --> 0:10:33.360 House where they would they believe that it makes sense 0:10:33.360 --> 0:10:35.160 to do this in waves, but if you do sort 0:10:35.160 --> 0:10:39.080 of an omnibus gun control package, there's too many constituencies 0:10:39.080 --> 0:10:40.719 who will be against too many little parts and the 0:10:40.760 --> 0:10:42.920 whole thing will fall apart. So they want to do 0:10:42.960 --> 0:10:46.560 this low hanging fruit first, this six Nick's thing, and 0:10:46.559 --> 0:10:49.160 then they want to come back with school safety grants 0:10:49.200 --> 0:10:51.160 and then kind of come back and try another wave. 0:10:51.559 --> 0:10:54.080 It looks like one of the immediate casualties to all 0:10:54.120 --> 0:10:56.199 of this is the prospect of raising the age on 0:10:56.280 --> 0:11:00.319 the faults. Why is that one? I had three people 0:11:00.440 --> 0:11:03.400 yesterday asked me the why of that? Not that I 0:11:03.440 --> 0:11:07.000 have any unique wisdom on this, but let's parse and 0:11:07.040 --> 0:11:09.960 whatever the gun is an A or whatever the gun 0:11:10.080 --> 0:11:13.640 is that that that creates this horror? What's the difference 0:11:13.679 --> 0:11:20.760 between sixteen eight? Hike? Right? I think the simple answer, 0:11:20.840 --> 0:11:22.720 and there really are no simple answers in gun control, 0:11:22.760 --> 0:11:24.840 is that this is a crucial issue for the lobby, 0:11:24.920 --> 0:11:28.160 and it is an issue that UM lawmakers, either who 0:11:28.160 --> 0:11:31.440 believe in this ideologically or who faced primary challenges, don't 0:11:31.440 --> 0:11:33.520 want to fight out. But even the White House, and 0:11:33.559 --> 0:11:35.280 I talked to officials in the White House, they what 0:11:35.400 --> 0:11:36.880 they kind of sigh when you say, what are the 0:11:36.920 --> 0:11:39.520 prospects creating the age? They say there seems to be 0:11:39.559 --> 0:11:43.199 a different UM gun instinct or reaction on whether a 0:11:43.240 --> 0:11:45.560 little bit more can be done on background checks. The 0:11:45.559 --> 0:11:48.120 bump stock thing seems to be easier, but uh, you know, 0:11:48.160 --> 0:11:50.679 whether this goes to gun sales. Are in the right 0:11:50.679 --> 0:11:52.640 to bear arms? It is like it's an obvious question 0:11:52.679 --> 0:11:55.920 if you can regulate um, you know, alcoholis, why can't 0:11:55.920 --> 0:11:58.800 you regulate the age of having a gun exactly? I mean, 0:11:58.840 --> 0:12:01.079 I mean, you know, you're Margaret, You're way too young 0:12:01.120 --> 0:12:03.320 to remember when they took the drinking age from eighteen 0:12:03.400 --> 0:12:05.400 up to twenty one. And you know, we had guys 0:12:05.480 --> 0:12:08.120 literally dying in wars in Asia while we were raising 0:12:08.120 --> 0:12:14.199 the drinking age. Nobody really could figure out. Yeah, you know, 0:12:14.320 --> 0:12:16.160 I didn't miss the cut. I was living it and 0:12:16.200 --> 0:12:19.000 it was sporting to say. At the least, Margaret Tell, 0:12:19.160 --> 0:12:22.760 when we look at all this, you'd think conversations would 0:12:22.800 --> 0:12:25.440 be engaged. I tried to do that yesterday from the 0:12:25.520 --> 0:12:29.880 junior senator from Ohio, Rob Portman, the Senator from Cincinnati. 0:12:30.200 --> 0:12:34.000 We talked about Holland, Ohio on the border with Michigan, 0:12:34.040 --> 0:12:38.679 and about he has a constituency with a real agricultural 0:12:38.760 --> 0:12:41.640 fabric and they believe in an n r A of 0:12:41.679 --> 0:12:45.560 a different time and place. Is the President engaging the 0:12:45.640 --> 0:12:51.360 Rob Portman's of the Republican Party. Uh. The President does 0:12:51.400 --> 0:12:54.199 not seem to have decided precisely what he wants to 0:12:54.240 --> 0:12:55.880 ask for yet, And what we do know is that 0:12:55.880 --> 0:12:59.839 he's engaged the n of the world and talking to 0:12:59.880 --> 0:13:04.080 the K Street crew, when with the starting point so 0:13:04.200 --> 0:13:07.400 far has in terms of those behind general discussions, has 0:13:07.480 --> 0:13:09.840 been basically, what can I get without too much of 0:13:09.840 --> 0:13:12.400 a fight? Could we start there? If he wants to 0:13:12.400 --> 0:13:15.240 get something big done, he's gonna need to flip the switch. 0:13:15.280 --> 0:13:17.600 But he seems to have decided were now that getting 0:13:17.960 --> 0:13:20.600 a few smaller things done is pieces may be more 0:13:20.640 --> 0:13:23.199 effective than getting a big thing done, Margaret to shift 0:13:23.240 --> 0:13:25.400 gears here in the final few minutes we have with you, 0:13:25.800 --> 0:13:28.719 um this morning. There seems to be a great curiosity 0:13:28.800 --> 0:13:32.000 within the zeitgeist and certainly within my messaging and email 0:13:32.400 --> 0:13:35.680 from listeners over the future of the two generals, General 0:13:35.760 --> 0:13:39.439 Kelly and General McMaster. Do you lump them together? Are 0:13:39.440 --> 0:13:43.680 those two separate conversations for the President, for Mr Kushner 0:13:43.800 --> 0:13:46.920 and others within the White House? Well, we have always 0:13:46.920 --> 0:13:49.319 been really different figures. I mean McMaster came in and 0:13:49.360 --> 0:13:53.240 as kind of a caretaker after Mike Flynn debacle to 0:13:53.280 --> 0:13:56.920 stabilize things, But things with he and the President were 0:13:56.920 --> 0:13:59.440 always a little bit on easy. McMaster's, you know, like 0:14:00.320 --> 0:14:02.640 it has a different kind of style and has been 0:14:02.679 --> 0:14:06.400 more of a facilitator. Kelly is this guy who he 0:14:06.520 --> 0:14:08.800 and President Trump were sort of forged in the crucible 0:14:08.800 --> 0:14:11.240 of the immigration fight. And he's like a you know, 0:14:11.280 --> 0:14:13.520 like a manly man like getting there and gets stuff done, 0:14:13.520 --> 0:14:15.439 and and he has that sort of the generals of 0:14:15.520 --> 0:14:18.880 the Capital chief thing that President Trump vincerally responds to. 0:14:19.040 --> 0:14:21.800 But then of course became competitive with almost instantly. You 0:14:21.800 --> 0:14:24.960 could like see that coming three miles away. So in 0:14:25.120 --> 0:14:29.480 their uh, in their manner, they're completely different in the 0:14:29.520 --> 0:14:32.200 type of ways in which the interact are completely different. 0:14:32.320 --> 0:14:34.680 The one thing they have in common is that they're 0:14:35.200 --> 0:14:38.360 sometimes chafe at one another, and that President Trump has 0:14:38.400 --> 0:14:41.680 had tensions with them both. I do see them separate 0:14:41.760 --> 0:14:46.000 in terms of the specific calculus. McMaster's job is, by 0:14:46.040 --> 0:14:49.040 design is more of a facilitator job. The chief of 0:14:49.040 --> 0:14:51.880 staff job, particularly when you have a president without real 0:14:51.960 --> 0:14:57.240 political experience, is uh much more kind of one of channeling, 0:14:57.320 --> 0:15:00.160 you know, power and decision making. So but they do 0:15:00.240 --> 0:15:03.400 both speak to kind of that push and pull about 0:15:03.600 --> 0:15:07.160 Presidents Trump's desire to have competent leadership versus President Trump's 0:15:07.200 --> 0:15:09.600 desire to have the flexibility to pivot when he wants 0:15:09.640 --> 0:15:11.800 to Thank you so much. I could go to the 0:15:11.800 --> 0:15:13.840 tweets of the President today, but we'll leave it that 0:15:13.880 --> 0:15:16.960 Margaret Tell has been more than generous with her time. 0:15:17.000 --> 0:15:30.280 Our senior White House corresponded her interview of the day 0:15:30.440 --> 0:15:35.280 on Sky Craig Moffett Moffett uh Nathan Soon Mr. Years 0:15:35.320 --> 0:15:38.680 writing Black Books at Sanford Bursting. Craig I want to 0:15:38.720 --> 0:15:43.640 cut to the chase. US satellites doesn't work, Sky satellites. 0:15:43.720 --> 0:15:48.560 What's Comcast getting themselves into with satellites? Yeah, good morning Tom. 0:15:48.600 --> 0:15:50.200 You know, look, I think that's going to be the 0:15:50.320 --> 0:15:53.680 question of the day, and I think that Comcast investors 0:15:53.680 --> 0:15:56.560 are going to be scratching their heads over this um 0:15:56.640 --> 0:16:00.080 for a while, irrespective of whether they actually win the 0:16:00.120 --> 0:16:03.160 bidding here or whether Disney comes in and top says, 0:16:04.200 --> 0:16:08.120 when satellite has been proven to already be an obsolete 0:16:08.160 --> 0:16:10.800 technology in the US and and starting to go into 0:16:10.840 --> 0:16:14.400 free fall, why in heaven's name is Comcast saying we 0:16:14.440 --> 0:16:18.440 want a piece of that in Europe before that same 0:16:19.360 --> 0:16:23.800 evolution takes place. Within this is the profitability. I looked 0:16:23.800 --> 0:16:26.440 at the Bloomberg quickly, and it looks like Comcast is 0:16:26.480 --> 0:16:30.680 way more profitable than Sky. Can they move the needle down? 0:16:30.680 --> 0:16:35.720 The income statement on emerged Sky TV not clear why? 0:16:35.920 --> 0:16:39.440 I mean, you know, Comcast is a good operator, but 0:16:39.480 --> 0:16:42.320 it's not clear that that Sky is not a good operator. 0:16:42.440 --> 0:16:45.320 And so um so I'm not sure that there's some 0:16:46.000 --> 0:16:49.920 missing magic sauce that Comcast bring to the table. Well, 0:16:50.000 --> 0:16:53.760 explained US Craig. Why then a T and T in 0:16:53.920 --> 0:16:59.840 their direct TV operations? Is that not successful? And I 0:17:00.040 --> 0:17:03.720 thought that people were cutting the cord. People are cutting 0:17:03.720 --> 0:17:05.560 the cord and that's the problem for a T and 0:17:05.600 --> 0:17:09.200 T and direct TV. I mean, look direct tv, um, 0:17:09.600 --> 0:17:12.120 they bought direct tv what two and a half years 0:17:12.119 --> 0:17:16.560 ago for eight times ibata UM. Two and a half 0:17:16.640 --> 0:17:21.440 years later, Ibada is growing at negative at direct TV. 0:17:21.640 --> 0:17:26.560 Subscribership is starting to fall pretty rapidly. Subscribership for Dish 0:17:26.600 --> 0:17:29.960 Network is falling at almost ten percent a year, and 0:17:30.000 --> 0:17:34.520 there he does, falling by five Um, Why in Heaven's 0:17:34.600 --> 0:17:36.680 name again would you want to own a piece of that? 0:17:37.320 --> 0:17:40.800 When you look in your colleague and crying Michael Nathanson, 0:17:40.880 --> 0:17:46.200 When the two of you look in folks generally Mofatt's hardware, wireless, Comcast, 0:17:46.240 --> 0:17:48.720 and Nathanson does touchy feeling he gets to go to 0:17:48.760 --> 0:17:53.080 the movie openings and where exactly you get to go 0:17:53.119 --> 0:17:56.800 to conventions about plumbing and pipes, Craig, when the two 0:17:56.840 --> 0:17:59.000 of you got together on this, to me and Pim, 0:17:59.000 --> 0:18:02.160 it's started with eight T and T time, Warner, let's 0:18:02.160 --> 0:18:05.600 back up. Why are we having a mating of everyone 0:18:05.640 --> 0:18:10.040 in all in media? Um? Well, the first the first 0:18:10.040 --> 0:18:12.080 thing I would say, is it's not entirely clear that 0:18:12.160 --> 0:18:16.120 we are. UM. But let's go back into the dark 0:18:16.160 --> 0:18:20.040 ages for a second. UM. When there were a set 0:18:20.080 --> 0:18:25.320 of rules passed way back in in UH in the 0:18:25.440 --> 0:18:30.120 UH in the Cable Act that that created a prohibition 0:18:30.240 --> 0:18:35.520 carried through the Telecom Act, that created a prohibition for 0:18:35.800 --> 0:18:43.320 vertically integrated UM operators against withholding content from their competitors. 0:18:43.320 --> 0:18:46.080 Those were called the program Access Rules or the exclusivity 0:18:46.080 --> 0:18:49.440 provisions of the Program Access Rules in in Layman's terms 0:18:49.480 --> 0:18:52.920 simple language. They kept it. They made sure that if 0:18:52.920 --> 0:18:55.399 you were a distributor that also owned content, that you 0:18:55.440 --> 0:19:01.200 couldn't exercise under market power by withhold thing that content from, 0:19:01.880 --> 0:19:04.400 say a satellite operator and leaving them from being able 0:19:04.400 --> 0:19:08.760 to compete. When those rules sunset. There was back in 0:19:08.800 --> 0:19:14.200 two thousand nine, there was some speculation that that the 0:19:14.240 --> 0:19:17.639 doors had been thrown open to vertical integration and that 0:19:17.840 --> 0:19:23.359 new strategies that would effectively work around content exclusivity UM 0:19:23.760 --> 0:19:27.000 were made possible UM, And that may still be true. UM. 0:19:27.040 --> 0:19:31.480 You know, Comcast agreed to provisions that would UM that 0:19:31.520 --> 0:19:35.359 would prohibit that kind of behavior for the first seven years. 0:19:35.400 --> 0:19:39.680 Well those seven years expire um, sorry ten years. Those 0:19:39.760 --> 0:19:43.000 those ten years expire in June. In Mark, I mean, 0:19:43.119 --> 0:19:45.520 so next month you're going to get to find out 0:19:46.200 --> 0:19:49.080 whether Comcast can do some of those kinds of things. 0:19:49.480 --> 0:19:50.879 A T and T may be able to do some 0:19:50.920 --> 0:19:53.200 of those kind of things too, and if so, you 0:19:53.240 --> 0:19:55.480 could see more of these types of deals with the 0:19:55.520 --> 0:19:58.080 time that we've got left with you. Is Mr robertson 0:19:58.080 --> 0:19:59.880 a bidding work. I mean, this is all the dusk 0:20:00.000 --> 0:20:02.960 in a settle and the whole I did an extrapolation 0:20:03.040 --> 0:20:04.600 chart which I can send and you can give me 0:20:04.640 --> 0:20:07.359 your royalty and off at Nathanson. But I did a 0:20:07.440 --> 0:20:11.720 log extrapolation chart. We're right on extrapolation and by definition 0:20:11.720 --> 0:20:14.280 it's got to go for one or two standard deviations 0:20:14.320 --> 0:20:16.840 above the eight year trend. That tells me bidding war. 0:20:17.200 --> 0:20:19.960 Is that what you guys see here? Yeah? Look, I 0:20:20.240 --> 0:20:23.800 think UM Disney will have to come back um and 0:20:23.880 --> 0:20:26.280 decide what it wants to do here the markets already 0:20:26.320 --> 0:20:30.040 anticipating that there will be a higher bid. Um. I 0:20:30.040 --> 0:20:33.880 think the real question here is is this a prelude 0:20:33.960 --> 0:20:37.720 to a Comcast bid for the rest of the same 0:20:37.760 --> 0:20:40.399 Fox assets in the US that Disney is trying to 0:20:40.440 --> 0:20:44.840 buy and this doesn't preclude that in any way. And 0:20:44.880 --> 0:20:47.760 they were on their conference call they were pretty clear 0:20:47.920 --> 0:20:51.240 that um that they aren't ruling that out. They didn't 0:20:51.280 --> 0:20:54.199 want to talk about it. And so if the judge 0:20:54.280 --> 0:20:56.359 in the COMCAT or in the Time Warner A T 0:20:56.520 --> 0:21:00.240 and T case approves the vertical integration of a T 0:21:00.359 --> 0:21:05.240 and T and Time Warner, then the regulatory door is 0:21:05.320 --> 0:21:08.119 open for Comcast to then try to buy a box. 0:21:08.560 --> 0:21:11.200 And you can see a bitting war for the rest 0:21:11.240 --> 0:21:14.600 of Fox. That a lot hinges on what happens in 0:21:14.600 --> 0:21:17.359 that A T and T Time Warner trial. We'll have 0:21:17.520 --> 0:21:19.560 much more to say, I'm sure, Craig Moffatt, thank you 0:21:19.600 --> 0:21:36.480 so much. On short notice, Mafitt Nathanson, if you have 0:21:36.600 --> 0:21:39.760 been taken by the news out of China, this is 0:21:39.760 --> 0:21:41.879 without question, I've only the interview of the day, but 0:21:42.000 --> 0:21:45.199 the interview of the week. On short notice. I'm absolutely 0:21:45.200 --> 0:21:48.560 thrilled to bring to you Stephens Saying out of Oxford 0:21:48.560 --> 0:21:51.440 now at the University of London, and they're wonderful School 0:21:51.440 --> 0:21:55.440 of Oriental and African Studies s o A. S Dr. 0:21:55.600 --> 0:21:59.879 Saying is absolutely definitive. His one volume on Hong Kong 0:22:00.560 --> 0:22:04.400 is heartbreaking at its end when Chris Patton hands over 0:22:04.440 --> 0:22:07.679 the keys to the Chinese doctors, saying, wonderful to have 0:22:07.800 --> 0:22:11.880 you with us this morning. Were you surprised by the 0:22:11.960 --> 0:22:18.359 dictatorship or the extension of President Gee's term. I was 0:22:18.400 --> 0:22:23.240 surprised that he would push it for the extension of 0:22:23.440 --> 0:22:27.840 the potential extension for his term of office as State president. 0:22:28.520 --> 0:22:33.520 I was surprised because it is unnecessary. The State presidency 0:22:33.560 --> 0:22:38.439 is a ceremonial position, is not an office with real power, 0:22:39.359 --> 0:22:43.000 and the office of real power is being General Secretary 0:22:43.080 --> 0:22:46.960 of the Communist Party of China. There's no limits to 0:22:47.000 --> 0:22:51.199 how many terms he can serve as General Secretary, so 0:22:51.320 --> 0:22:55.280 it's not necessary for Ji Jimpings to extend his um 0:22:56.359 --> 0:22:59.800 potential for him to stay on a state president, knowing 0:23:00.160 --> 0:23:05.399 well that there will be significant discomfort within the Communist 0:23:05.400 --> 0:23:09.280 Party and the population at large, and yet he pressed 0:23:09.280 --> 0:23:14.440 for that within This is the divide between presidents activities 0:23:14.480 --> 0:23:19.520