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Speaker 1: This is Bloomberg Surveillance. A global consumer. It's actually quite strong.

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Speaker 1: If you look at unemployment rates in the major economy,

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Speaker 1: is that a little interest rate? I think what's happening

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Speaker 1: is people realize you better be doing hiring now because

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Speaker 1: you may have a tougher time down the road has

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Speaker 1: lost some of its cloud in the world oil market.

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Speaker 1: It's certainly a new world and the swing producer now

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Speaker 1: is the United States. Bloomberg Surveillance your link to the

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Speaker 1: world of economics, finance, and investment on Bloomberg Radio. Good morning, everybody.

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Speaker 1: It is nine o'clock on Wall Street. I'm Michael McKey.

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Speaker 1: Scarlett fou is going to join us for this hour

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Speaker 1: as we continue auditioning replacement no not replacements. Co host

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Speaker 1: John Tucker and I is our third co host today.

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Speaker 1: Takes three people to fill in for Tom Keene actually

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Speaker 1: takes the fourth. We have to bring in Vinnie Dell

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Speaker 1: Judais now because he has some economic data breaking of

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Speaker 1: the first word death. You know, guys, the Pony Express

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Speaker 1: rider just went by. Any looks a lot like m

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Speaker 1: Let's start with housing. The S and P. K. Sholler

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Speaker 1: home price index up but a bit less than forecast.

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Speaker 1: You over your up five point three eight percent. Month

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Speaker 1: over month, up point seven percent. Housing prices continue to rise.

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Speaker 1: Earlier figures on manufacturing weaker than forecast. The point eight

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Speaker 1: percent increase in dirble goods orders excluding transportation up just

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Speaker 1: point two percent. Make that down point two percent, down

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Speaker 1: point two percent. At the pull Bark first work Desk

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Speaker 1: company del twice. Let's go back to New York. Thank you,

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Speaker 1: Vinnie Well. It is time out for the Forex Brief,

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Speaker 1: brought to you by Interactive Brokers, winner of f X

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Speaker 1: Weeks two thousand fifteen award for the best Retail Forex

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Speaker 1: trading platform. Visit ib at I b k R dot

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Speaker 1: com slash for X. We're pretty much training on central

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Speaker 1: banks and that's having some interesting effects in the markets.

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Speaker 1: To FED first up tomorrow. The Bank of Japan follows

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Speaker 1: on Thursday. Right now the euro up to one thirteen

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Speaker 1: o nine, big move higher as the Fed not expected

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Speaker 1: to do anything. The end one eleven oh three is

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Speaker 1: up by about two tenths of eight percent. In China,

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Speaker 1: the Chinese raised the u N reference rate. Actually we

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Speaker 1: canet a little bit, which has Chinese forwards down and

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Speaker 1: that's having an effect on the rest of Asia, which

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Speaker 1: is sort of reacting. The biggest move the Malaysian ring

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Speaker 1: it down half a percent, going for three point nine

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Speaker 1: to nine. Oh so complicated dance in the currency markets

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Speaker 1: as they get ready for central banks. Not so complicated

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Speaker 1: in the equity markets this morning. Dave Wilson A lot

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Speaker 1: about earnings today, absolutely, And let's start with the three

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Speaker 1: companies of the down Jones industrial average of reported results.

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Speaker 1: One of them is do Put. The shares are up

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Speaker 1: about two percent. The chemical company's first quarter earnings and

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Speaker 1: sales beating alest average estates in the Bloomberg survey. D

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Speaker 1: Put benefited from price increases for corn seed and other

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Speaker 1: farm products. The company raises full year profit for cast

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Speaker 1: and set. It expects to complete its combination with Dal

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Speaker 1: Chemical in the second half, and Daal's shares up about

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Speaker 1: one percent in early trading three am. Dal stock down

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Speaker 1: half a percent first quarter profit, though it's actually exceeded

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Speaker 1: estimates as a company increased sales as healthcare and safety businesses,

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Speaker 1: So not a whole lot of movement there, uh, neither.

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Speaker 1: In Procter and Gamble, the shares are up about a

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Speaker 1: quarter of percent. The consumer product company's fiscal third quarter

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Speaker 1: earnings beat estimates as costcuts counterfolding sales. Apples down half

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Speaker 1: a percent. The iPhone maker will release fiscal second quarter

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Speaker 1: results after the close of US exchanges. Apple predicted in

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Speaker 1: January that revenue would fall for the first time in

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Speaker 1: more than a decade. Will also have earnings from A

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Speaker 1: T and T, eBay, and Twitter, among others later today.

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Speaker 1: Eli Lily down two percent. The drug maker's first quarter

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Speaker 1: profit failed to meet estimates, lively hurt by an accounting

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Speaker 1: charge taken on its business in Venezuela. Revenue on the

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Speaker 1: company's biggest seller, the insulin Homologue, also failed to meet

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Speaker 1: project actions. Baxter International on the up to percent. The

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Speaker 1: medical suppliers first quarter earnings beat estimates, and Baxter's forecast

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Speaker 1: for a second quarter and full year profit also top projections.

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Speaker 1: T Mobile US, another company whose results were well received,

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Speaker 1: up two and a half percent, while I was company

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Speaker 1: raised subscriber growth forecast after adding more than one million

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Speaker 1: monthly users with a seventh straight quarter. T Mobile reported

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Speaker 1: first quarter profit and revenue beat estimates. A quick summaries

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Speaker 1: some other stocks moving in response to earnings. N XP

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Speaker 1: semi Conductors up three and a half percent. The truck

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Speaker 1: maker Pacar also up three and a half percent, the

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Speaker 1: building equipment maker Ingosol ran a four percent, and on

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Speaker 1: the other hand, the appliance maker Whirlpool down six and

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Speaker 1: a half percent, and uh, the candy company Hershey with

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Speaker 1: a loss of three percent in early trading. That's very

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Speaker 1: sweet of you. I don't get any reaction from Dave Wilson.

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Speaker 1: You get you know what you get. You get crickets.

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Speaker 1: Thank you very much. That was also the most of

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Speaker 1: Scarlett fu in the background. There she is with us

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Speaker 1: for the next hour, and of course you and I

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Speaker 1: will be co anchoring our FED special on Bloomberg Television

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Speaker 1: and Radio. The FED meeting tomorrow guests to discuss what

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Speaker 1: will likely be no change in the fed's interest rate policy.

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Speaker 1: But we're going to dissect the language, the nuance, the communication. Yes,

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Speaker 1: shameless pluck. Watch Scarlett and I. Listen to Scarlett and

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Speaker 1: I tomorrow two pm Wall Street Time. Right now, we're

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Speaker 1: gonna talk about one of the issues that the FED

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Speaker 1: is concerned about, her has been concerned about, and that

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Speaker 1: is what is happening in China. George Freeman is the

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Speaker 1: founder and chairman of GEO Political futures, and he is

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Speaker 1: writing about the Chinese government and Hijinping basically runs the country,

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Speaker 1: taking on even more responsibility as he tries to move

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Speaker 1: China forward. George, he is now taking control of the

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Speaker 1: People's Liberation Army, which unlike the and I states, it's

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Speaker 1: it's also a bit of an economic actor. It's a factor,

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Speaker 1: it's also a political actor. UH. People's Liberation Army has

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Speaker 1: two major functions. One protected country like a normal military

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Speaker 1: to provide internal security. One Tainament Square was crushed. It

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Speaker 1: was the People's Liberation Army who did it, fighting a

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Speaker 1: zinjang against as long as terrorists. It's the People's Liberation Army.

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Speaker 1: She is terribly concerned about holding onto power given this

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Speaker 1: economic situation in China. Uh, there's a social unrest. He's

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Speaker 1: trying to hold onto it. And he did something extraordinary.

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Speaker 1: He took control of the Joint Operations Command Center personally.

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Speaker 1: And this is like the president taking control of the

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Speaker 1: Joint Chiefs of Staff and the Operations roomed the Pentagon.

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Speaker 1: He is worried about the status of the p l

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Speaker 1: A and he's going to personally run it well. The

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Speaker 1: question that comes to my mind is when we have

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Speaker 1: seen social unrest in other countries, and the leaders of

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Speaker 1: those countries have ordered the military to turn on their people.

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Speaker 1: They don't do it. But that doesn't seem to be

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Speaker 1: the case in China that People's Liberation army seems willing

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Speaker 1: to go along with the leadership. We saw that in

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Speaker 1: Tienamen Square. Why is that, Well, thus far they've gone along,

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Speaker 1: But when they went into Team Square, they bought in

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Speaker 1: military units from other regions. And remember China has many regions,

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Speaker 1: different languages, different religions. People they brought in were essentially foreigners.

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Speaker 1: But it's also a changing situation. This economic situation in

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Speaker 1: China is getting worse. I'm not sure that the numbers

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Speaker 1: on GDP growth are real. I'm not sure about their

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Speaker 1: other numbers, but they're having substantial layoffs. People who moved

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Speaker 1: to Shanghai and other coastal cities haven't let go. They've

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Speaker 1: gone home to their villages. There is tremendous poverty out there.

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Speaker 1: I mean, the standard of living side of the coastal

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Speaker 1: region is below that of Bolivia. This is a very

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Speaker 1: poor country. And the soldiers predictedly enlisted people. They come

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Speaker 1: out of the peasantry. The poverty right there from They're

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Speaker 1: not from Beijing or Shanghai, right they are generally from

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Speaker 1: the interior. This they see, this is upward mobility. And

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Speaker 1: she's afraid of them because these are the people who

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Speaker 1: didn't participate at all. Over a billion of them who

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Speaker 1: didn't participate in the boom. And now no, they're never

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Speaker 1: going to participate in the boom, so he has to

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Speaker 1: control them. So George A. Foold in what she jing

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Speaker 1: Ping is doing with his anti corruption purge, Mike mentioned

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Speaker 1: how the p l A and economic actor, and a

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Speaker 1: significant one at that. So as she jen p continues

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Speaker 1: to try to weed out corruption and graft from within

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Speaker 1: his government and presumably the p l A, how does

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Speaker 1: that make more challenging his effort to complete consolidate his

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Speaker 1: whole over the military. Well, he calls it nanti corruption campaign,

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Speaker 1: but given that corruption is endemic, he has just about

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Speaker 1: arrest every anyone. It's a political purge. He is going

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Speaker 1: after people in various positions who could potentially challenge him.

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Speaker 1: One of his goals is that there should be no

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Speaker 1: group outside the Communist Party that's well enough organized to

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Speaker 1: challenge the Communist Party, and that within the Communist Party

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Speaker 1: anyone who shows tendencies or as a history that might

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Speaker 1: resist g be eliminated. And what he was doing there

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Speaker 1: was intimidating the entire Communist Party, letting him know that

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Speaker 1: I can arrest anyone at any time for any reason.

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Speaker 1: I'll call it corruption, but that's what I'm doing. His

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Speaker 1: next move is to get this in the next major

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Speaker 1: institution in China, the People of Liberation Army under his control.

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Speaker 1: That's what he's doing now. George Freeman is with this.

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Speaker 1: He's the founder and chairman of Geo Political Futures, and

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Speaker 1: it's got it talks so much about China, but uh,

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Speaker 1: they have focused on, you know, the stock market and

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Speaker 1: the growth figures. There isn't a lot of focus, as

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Speaker 1: George is talking about, on the political and military aspect

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Speaker 1: of it. Yes, because so much of making sure that

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Speaker 1: the stock market continues to stay buoyant is tied to

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Speaker 1: making sure that the populist is not uneasy and unstable

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Speaker 1: and there isn't some advent of massive social unrest. So

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Speaker 1: it's a huge part of the equation. And uh, I

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Speaker 1: go back to the idea that so many people think

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Speaker 1: the FED has an unofficial third mandate. Mike which is

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Speaker 1: overseas developments and if you want to take it a

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Speaker 1: little bit further, China, specifically Janet Ellen, central Banker to

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Speaker 1: the world, Well, the world's central banker, UH is meeting

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Speaker 1: with her cohorts down in Washington today. Scarlett and I

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Speaker 1: will have the decision for you at two pm Well

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Speaker 1: Street Time tomorrow on Bloomberg Television and Radio. It's nine

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Speaker 1: ten on Wall Street Time to check in with Michael

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Speaker 1: Barr and get the latest world of national headlines. Mike Scarlett,

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Speaker 1: thank you very much. Voters in five stays in the

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Speaker 1: Northeast have started heading to the polls. It is primary

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Speaker 1: day in Delaware, Maryland, Pennsylvania, Connecticut, and Rhode Island. This morning,

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Speaker 1: Republican front runner Donald Trump accused Democratic front runner Hillary

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Speaker 1: Clinton of using the woman car to get elected. Trump

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Speaker 1: told Fox News she is pandering to the electorate. Trump

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Speaker 1: said he loved to see a woman president, but that

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Speaker 1: Clinton is a disaster. Meanwhile, a big win today by

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Speaker 1: Clinton could put her very close to the number needed

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Speaker 1: to outright win the Democratic nomination. Junior doctors in the

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Speaker 1: state run National Health Service in England started a two

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Speaker 1: day strike and protest over a new contract being imposed

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Speaker 1: by Britain's health secretary. The doctors are upset over pay

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Speaker 1: and conditions. Global News twenty four hours a day, powered

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Speaker 1: by our twenty four hundred journalists and more than a

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Speaker 1: hundred fifty news bureaus from around the world. Michael bar

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Speaker 1: Mike Scarlett, Thank you, Michael. Well. Right now we are

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Speaker 1: looking ahead of the Fed and ahead of the Open

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Speaker 1: at maybe a higher open. SMP features by just about

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Speaker 1: four points. Now two tenths of this is Bloomberg Radio

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Speaker 1: Market Drivers brought to you by Celebrity Motor Car Company,

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Speaker 1: the luxury of BMW, the performance of Maserati, the innovation

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Speaker 1: Motor dot Com. Global Business News twenty four hours a

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Speaker 1: I'm Karen Moscow and the Bloomberg Futures Report is brought

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Speaker 1: to you by Interactive Brokers and CIMI Group. If you're

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Speaker 1: no further Interactive Brokers is the industry leader. Learn more

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Speaker 1: at interactive brokers dot com. Slash CME group U stock

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Speaker 1: index futures are edging higher of it quarterly results from

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Speaker 1: DuPont to Jet Blue, and as investors await tomorrow's federal

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Speaker 1: reserve policy update, to check the markets every fifteen minutes

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Speaker 1: throughout the trading day on Bloomberg SNP E Many futures

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Speaker 1: up three and a half points now we Many futures

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Speaker 1: up thirty five and NASDAKI many futures up six. The

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Speaker 1: acts in Germany is down a tenth of upper set tenure,

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Speaker 1: Treasury up one thirty second. The yeld one point nine

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Speaker 1: zero percent yield done a two year point eight four

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Speaker 1: percent nom X screwed oil up one point seven percent,

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Speaker 1: or seventy one cents to forty thirty five a barrel.

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Speaker 1: Comex gold is up a quarter percent or two dollar

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Speaker 1: sixty cents at twelve forty two ninety announced the Euro

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Speaker 1: another thirteen twenty, the n one ten point nine three,

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Speaker 1: and that's a Bloomberg business flash. Mike and Scarlett Cararasco,

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Speaker 1: thank you very much. We're talking with George Friedman. He

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Speaker 1: is the founder and chairman of geo political futures. One

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Speaker 1: of the countries that is in the news for a

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Speaker 1: number of reasons Saudi Arabia. It's a relationship with Iran,

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Speaker 1: it's oil and George. Now it's planned to remake its economy.

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Speaker 1: How stable is Saudi Arabia at the moment and how

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Speaker 1: necessary is this remake. The economy is stable and the

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Speaker 1: society is stable for now. What they're worried about is

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Speaker 1: what's what it be like in four or five years.

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Speaker 1: They're assuming the oil prices will remain at this level

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Speaker 1: or not much above it. They can't sustain their political

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Speaker 1: obligations based on that. They pay various people, various tribes,

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Speaker 1: and they've got to have the cash. So they're looking

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Speaker 1: at something extraordinary, which is I t owing part of Aramco.

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Speaker 1: And that's a huge step because symbolically that represents the

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Speaker 1: Saudi regime. They took it over in nineteen seventy three,

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Speaker 1: and for them to be selling it off essentially to

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Speaker 1: raise cash really is going to concern people in Saudi Arabia.

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Speaker 1: So uh, the idea that they're going to remake the

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Speaker 1: economy in time to head off their problems is very unlikely.

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Speaker 1: It's you know. They're even raising ten billion dollars on

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Speaker 1: the markets right now to cover a cash flow, and

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Speaker 1: that's not much money for satur Area to raise, but

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Speaker 1: the fact that they're doing that scary, George. They have

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Speaker 1: a timeline, a deadline built in too, because the blueprint

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Speaker 1: is called Saudi Vision that gives them all a fourteen

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Speaker 1: years to turn the economy completely around. Has any other

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Speaker 1: country attempted something as ambitious as this and done it

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Speaker 1: without a whole lot of pain, now, without a whole

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Speaker 1: lot of pain. The only one I can think of

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Speaker 1: as Stalin's Russia, and he did that by imposing starvation

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Speaker 1: on the peasants in Ukraine, using the money to buy

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Speaker 1: foreign equipment, and it was a pretty horrible thing. The

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Speaker 1: Saudis aren't going to do that. And the problem that

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Speaker 1: you have is a culture that is used to not

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Speaker 1: having to exert itself. So they're saying, we are going

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Speaker 1: to make a huge transformation of our society, in the

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Speaker 1: society that has been built on the elite not having

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Speaker 1: to go to much effort and the mass pretty much

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Speaker 1: being taken care of. So this is going to be

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Speaker 1: really tough to do. I don't believe they're gonna do it, Mike,

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Speaker 1: you gotta wonder what this means for Saudi Arabia's neighbors. Yeah,

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Speaker 1: especially around George. Well, it puts a round in a

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Speaker 1: much better position, not that it wasn't in a good

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Speaker 1: position before, but you know, there are four regional powers

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Speaker 1: in that area, Israel, Turkey, Iran, and Saudi Arabia. And

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Speaker 1: in certain ways, Saudi Arabia has taken itself off the table.

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Speaker 1: That leaves three. Israel is not going to get involved.

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Speaker 1: Iran has his own problems. In Iraq. Watched Turkey. Turkey

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Speaker 1: is the key player in the region, in Europe as well,

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Speaker 1: in the Black Sea. This is the emerging country. As

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Speaker 1: for Saudi Arabia, I'd call it a fading one. Well,

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Speaker 1: the question then, of with their Turkey, Well, the Turks

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Speaker 1: right now are very smart. They just don't want to

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Speaker 1: get involved outside the country. They don't want to be

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Speaker 1: pulled in the serial like the United States wants the

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Speaker 1: Russians best within the shootdown a fighter. Uh, They're willing

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Speaker 1: to accept money from the EU two house um refugees,

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Speaker 1: but what they're not going to do is exposed themselves

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Speaker 1: the way the United States did in Iraq. At the fighting.

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Speaker 1: So they're waiting. And this is in the United States

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Speaker 1: of the wall that they really want the Church to

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Speaker 1: commit themselves in Syria to put down the rising, and

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Speaker 1: they're just not going to do that. George, do you

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Speaker 1: think the US is paying enough attention to Turkey, I mean,

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Speaker 1: devoting enough resources and and um building the right relationships. Well,

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Speaker 1: the problem is not the right relationships as different interests.

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Speaker 1: The United States would like to use Turkey as its

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Speaker 1: main force to stabilize Syria on its behalf, and the

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Speaker 1: Turk is saying not in your life. I'm not I'm

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Speaker 1: not going to do this. I'm not going to do

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Speaker 1: this for your benefit. It's not a question of relationships

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Speaker 1: paying attention. Turkey has become a major power. It doesn't

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Speaker 1: need a tremendous amount from the United States. We have

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Speaker 1: relative a few levers and that's a problem. The other

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Speaker 1: question I had about Saudi Arabia is in this would

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Speaker 1: apply to other countries in the region, but Saudi Arabia

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Speaker 1: has one of the more extreme forms of Islam in Wahabiism.

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Speaker 1: Can that be compatible with the kind of society they're

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Speaker 1: talking about reforming into? Good question? That's a very good question,

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Speaker 1: and it's a very tough thing to do because the

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Speaker 1: wa hobbies don't have as their primary goal stabilizing the

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Speaker 1: royal family. Uh, some of them do, but many of

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Speaker 1: them are very radical. So you have very a country

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Speaker 1: afraid of radicalization about to make radical change, or so

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Speaker 1: they think. I'd argue that vision PR to let the

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Speaker 1: people know they're doing something, but they're going to go

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Speaker 1: very cautiously. They're not going to transform the economy in

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Speaker 1: that time. And this is all cover for saying, yes,

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Speaker 1: we have to sell part of Saudi Aramco, but don't

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Speaker 1: worry because we have plans. Well, whether they have plans

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Speaker 1: or not, they're going to be selling part of Saudi Aramco,

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Speaker 1: and they've got to explain why. George Friedman, founder chairman

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Speaker 1: of Geopolitical Future, thanks for joining us on Bluebark Surveillance

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Speaker 1: this morning, Scarlett. Saudi Aramco is going to be a

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Speaker 1: very big deal. I mean five percent of the company

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Speaker 1: and you extract lay down, you get two trillion dollar

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Speaker 1: market cap. Yeah, is going to remake the global oil

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Speaker 1: industry for sure. I also wonder to what extent this

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Speaker 1: Saudi vision, and I know George called it a bit

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Speaker 1: of a pr ploy there um means a changing role

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Speaker 1: for women in Saudiast society. Will they need to be

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Speaker 1: more involved? Are they going to be more a part

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Speaker 1: of the workforce, and will their voices be heard. It's

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Speaker 1: it's a big question and as you mentioned, it may

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Speaker 1: not be compatible with the religious strains there. Yeah, uh,

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Speaker 1: it would seem logical that you would have to do that.

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Speaker 1: But um but dot dot doting. Yes, all right, Well

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Speaker 1: we will continue with Scott Foul and Michael McKee here

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Speaker 1: on Bloomberg Surveillance will get you ready for the opening

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Speaker 1: just a moment. It looks like we are going to

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Speaker 1: open higher today. We've been about three points higher all

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Speaker 1: morning in the S and P futures and that's where

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Speaker 1: we are right now, two tenths of a percent. This

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Speaker 1: is Bloomberg Announce on Bloomberg Radio worldwide. We are counting

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