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How NPR's Former CEO Left the Liberal Bubble and Learned to Love the Right · Bloomberg Intelligence

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  Speaker 1: Welcome to the Bloomberg p m L Podcast. I'm pim Fox.
• 0:08
  Speaker 1: Along with my co host Lisa Abramowitz. Each day we
• 0:11
  Speaker 1: bring you the most important, noteworthy, and useful interviews for
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  Speaker 1: you and your money, whether you're at the grocery store
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  Speaker 1: or the trading floor. Find the Bloomberg p m L
• 0:20
  Speaker 1: Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot Com. Well,
• 0:31
  Speaker 1: Republicans returning to Washington, they've got to decide whether they
• 0:35
  Speaker 1: are going to set aside or support a bipartisan healthcare bill.
• 0:40
  Speaker 1: It has gained some acceptance in Congress. Indeed, Senate Minority
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  Speaker 1: Leader Chuck Schumer said over the weekend that the bill include.
• 0:48
  Speaker 1: The bill's support includes all of the forty eight Senate Democrats,
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  Speaker 1: as well as twelve publicly committed Republicans, enough to overcome
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  Speaker 1: any filibuster. So is there a chance of some kind
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  Speaker 1: of bar bi partisan resolution here? To help us understand
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  Speaker 1: the divide that exists between Republicans and Democrats is Ken Stern.
• 1:07
  Speaker 1: He is an author and the former chief executive of NPR,
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  Speaker 1: and he's the author of the new book entitled Republican
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  Speaker 1: Like Me, How I Left the Liberal Bubble and learned
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  Speaker 1: to love the right, and he joins us in our studio,
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  Speaker 1: can thank you for being here, thanks for having me
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  Speaker 1: on the show. Well, maybe as a jumping off point,
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  Speaker 1: this idea that because we're waiting to hear what's gonna
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  Speaker 1: happen with any kind of health care legislation, I wonder
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  Speaker 1: if you could kind of take that and then explain
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  Speaker 1: why you wrote this book and a little bit of
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  Speaker 1: your experience learning about different perspectives when it comes to
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  Speaker 1: such important issues like healthcare. Yeah, I think it's actually
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  Speaker 1: an interesting example. So let me tell you why I
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  Speaker 1: wrote the book, and then we'll tie it into healthcare.
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  Speaker 1: So I wrote the book because I've become increasingly concerned
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  Speaker 1: about the polarization. Um More and more we live in
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  Speaker 1: our own world. We don't um communicate with the other side,
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  Speaker 1: and we've continued to think a worse than were to
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  Speaker 1: the other side. And it actually has relatively little to
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  Speaker 1: do with issues issue polarization. How much we disagree hasn't
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  Speaker 1: really changed in this country over the last twenty five years.
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  Speaker 1: How much we hate the other side has gone off
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  Speaker 1: the charts. Um So, so my book is really and
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  Speaker 1: and there's a reason for that. The reason has become
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  Speaker 1: more divided geographically and demographically. We don't know the other side.
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  Speaker 1: When you don't know the other side, it becomes easy
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  Speaker 1: to demonize them. Um. So my book was about me
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  Speaker 1: leaving my democratic m ward in washing d C. And
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  Speaker 1: spending as much time as I could with Republicans where
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  Speaker 1: they work, where they pray, where they where they hunt. Uh.
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  Speaker 1: And it was an eye opening experience for me. And
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  Speaker 1: one of the things I learned along the way is
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  Speaker 1: when it comes when you get polarized like this, it's
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  Speaker 1: often not about substances, about whether you're winning or losing.
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  Speaker 1: There's actually a lot of social science around it doesn't
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  Speaker 1: actually matter that actually underlying merits doesn't matter. It's about
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  Speaker 1: my side beating your side. And I think that's a
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  Speaker 1: lot to do with politics and washing d C. Right now,
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  Speaker 1: you can before we get into what you found as
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  Speaker 1: you to this trip across the country. I'm wondering whether
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  Speaker 1: you are saying that as the chief executive officer, the
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  Speaker 1: former chief executive officer of NPR, you think that NPR
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  Speaker 1: and other media outlets do perpetuate these ideas well. I
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  Speaker 1: think so, So let's that's actually two different issues to
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  Speaker 1: talk about. There um. In the broader scheme of things,
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  Speaker 1: um um. I think what media, like all people do,
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  Speaker 1: they live in their own bubble. Uh, they're in a
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  Speaker 1: place they they they tend to perpetuate themselves. They hire
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  Speaker 1: people like themselves. Uh, they think like themselves. They have
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  Speaker 1: a confirmation bias always going on. And it's not a
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  Speaker 1: necessarily intentional thing, but it's an important thing because it
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  Speaker 1: terms what's important, who you talk to, what issues you cover.
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  Speaker 1: And I think that's why a lot of the country
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  Speaker 1: feels locked out of sort of what's called mainstream media. Um.
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  Speaker 1: And that's a subtle thing that I think is hard
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  Speaker 1: to grapple with, but it's real. The issue I think
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  Speaker 1: we found more recently in the Trump era is that
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  Speaker 1: media has discovered that conflict play. It's not actually not
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  Speaker 1: a really new concept. You know, if it bleeds, it leads.
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  Speaker 1: But you know, the best thing that's happened to the
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  Speaker 1: New York Times is Trump's attack on the failing New
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  Speaker 1: York Times. And the best thing that happens that Trump
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  Speaker 1: is the New York Times attacks on him. Um. And
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  Speaker 1: there's actually a win win for them and kind of
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  Speaker 1: a lose lose for democracy and sort of civility. Well,
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  Speaker 1: let's go back to that, because that's those are not
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  Speaker 1: things you can legislate. No, I think that's you know, Uh,
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  Speaker 1: these are tough things. Um, where does it come from?
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  Speaker 1: Based on your trips and your meeting of people? How
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  Speaker 1: did what do they say to you in order to
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  Speaker 1: explain why they feel the way they do? So I think, Um,
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  Speaker 1: it's a it's a challenging question because I think people
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  Speaker 1: uh in the flyover states. So let's just be Yeah,
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  Speaker 1: I was suppose pick an example, maybe an anecdote or too. Yeah,
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  Speaker 1: in Kentucky when you go down and talk to people
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  Speaker 1: who are seeing their coal mines closed. Um, you're in Appalachia,
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  Speaker 1: which has been essentially an internal colony of the East
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  Speaker 1: coast of the United States for a hundred years, where
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  Speaker 1: coal mining provided a semblance of of middle class life.
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  Speaker 1: And they see the their economy going, they see their
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  Speaker 1: hope going, they see opioid addiction on the rise, they
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  Speaker 1: see um, their kids, um not having an opportunity. Uh,
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  Speaker 1: they get angry. They don't see those stories are told,
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  Speaker 1: they hear things like climate changing. They just see sort
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  Speaker 1: of their outside clone. The colonial powers from Washington City,
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  Speaker 1: New York California shutting them down and shutting them down
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  Speaker 1: without really a concern about um their livelihood, and that
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  Speaker 1: translates into anger, that translates in the rejection of science,
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  Speaker 1: that translates into a whole, a whole gestalt of one
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  Speaker 1: side against the other. And you know, you can argue
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  Speaker 1: the facts a lot, but the facts matter less than
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  Speaker 1: the feelings. Okay, So at a time when the facts
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  Speaker 1: matter less than the feelings and you have these sort
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  Speaker 1: of increasingly ingrained winner and loser type of mentality that
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  Speaker 1: is not easy to resolve, even on the issues. As
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  Speaker 1: you point out, what's the path forward? I mean, I'm
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  Speaker 1: sure that if you were to sit down with one
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  Speaker 1: person who thinks differently from you, who's from a state
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  Speaker 1: that's not in your bubble or in a world, you
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  Speaker 1: could find commonality because we're human beings. But like from
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  Speaker 1: a sort of social level, what's the way forward at
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  Speaker 1: a time when Donald Trump is having a Twitter war
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  Speaker 1: right now with Bob Quirker, Republican Senator. I don't think
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  Speaker 1: there's any easy answers, and I will assure you my
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  Speaker 1: book does not have any conclusions that solves the problem.
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  Speaker 1: But I think it starts first with um, something I
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  Speaker 1: realize a long way, which is we're actually an exceeding
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  Speaker 1: in the era of high discourse and high anger, actually
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  Speaker 1: an exceedingly moderate people actually talk to people and actually
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  Speaker 1: look at the data around the most polarizing issues of
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  Speaker 1: the day. People actually move towards the center on abortion,
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  Speaker 1: on healthcare, on guns. It's actually an extraordinary amount of commonality.
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  Speaker 1: And if you actually and actually sort of telling people
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  Speaker 1: that and trying to translate that into the ideas like
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  Speaker 1: the other side, or actually, aren't the radicals the other sides?
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  Speaker 1: Are people telling us where the radical right? But here's
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  Speaker 1: the problem, because we were just talking about how blood cells,
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  Speaker 1: you know, and and so if you know, if if
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  Speaker 1: the conflict is what people want to read, how do
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  Speaker 1: you you know, tell them over and over again you're moderate,
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  Speaker 1: You're we're all moderate. We all just want to come ground.
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  Speaker 1: I mean, what I just I think that that's the
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  Speaker 1: problem is that you know, in a time when everyone's
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  Speaker 1: looking for attention, you are seeing you know, increasingly inflammatory rhetoric. Yeah, um,
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  Speaker 1: you know, I think there's gotta be uh so before again,
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  Speaker 1: tell you I don't have the answers, um uh And
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  Speaker 1: you can cook kick me out of the studio for
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  Speaker 1: being frustrating. Um. It's also the political parties are part
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  Speaker 1: of the problem. And I think one of the things
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  Speaker 1: you know, you always hear people complain about the politicians
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  Speaker 1: Washington political parties. I'm from Washington. I've never really felt
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  Speaker 1: that until this trip, Uh, and understanding how the political
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  Speaker 1: parties have actually found progress for themselves fundraising electioneering off
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  Speaker 1: of conflict UM. And the example I use is UM
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  Speaker 1: sort of odd when it's abortion. UM an area of conflict.
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  Speaker 1: But the American opinion and abortion has not changed in
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  Speaker 1: fifty years. We've tracted since Roe v. Wade UM. And
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  Speaker 1: yet both of the parties are are trumping in the
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  Speaker 1: fact that they have the most extreme positions of that.
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  Speaker 1: So thank you so much, Ken Stern. Fantastic to to
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  Speaker 1: hear what you have to say. Kencern, author and former
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  Speaker 1: chief executive officer of NPR, author of the new book
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  Speaker 1: Republican Like Me, How I Left the Liberal Bubble and
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  Speaker 1: learned to love the right Well. The Chinese Communist Party
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  Speaker 1: approved a revised charter enshrining President Jijin Ping's name under
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  Speaker 1: its guiding principle. This was a departure from the prior
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  Speaker 1: to leaders of China which did not get their names
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  Speaker 1: enshrined here. To explain why this is actually a very
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  Speaker 1: big deal is John from Her, senior executive editor for Business,
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  Speaker 1: Finance and Energy at Bloomberg News. Thank you so much
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  Speaker 1: for joining us. So this this is a big deal.
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  Speaker 1: Why this is a this is a huge deal. This
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  Speaker 1: is one of the most important political developments in China
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  Speaker 1: in decades. Essentially, this means that she and Pining, the
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  Speaker 1: current president, will be in power and will extend his
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  Speaker 1: influence over over Chinese politics, over the economy of the markets,
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  Speaker 1: potentially for decades to come. In theory, he was supposed
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  Speaker 1: to set down in five years time, but the fact
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  Speaker 1: that he is now elevated at the same level as
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  Speaker 1: Mout Tongue and Deng Xiaoping in the Chinese constitution means
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  Speaker 1: that he has the status that goes way beyond that
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  Speaker 1: of any other politician in China thought for the new
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  Speaker 1: era of socialism with Chinese special characteristics. That's the phrase,
• 9:59
  Speaker 1: at least the translated phrase. Maybe you could explain what
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  Speaker 1: that means, and also in that context that the Communist Party,
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  Speaker 1: the party in China sits above the government to a
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  Speaker 1: certain extent. That's right. I mean, the key animating thought
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  Speaker 1: for all Chinese leaders always is to is to preserve
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  Speaker 1: the legitimacy of the party. And it's just it's it's
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  Speaker 1: hard to imagine this now, but you know, Chinese leaders
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  Speaker 1: have very long memories. They are obsessed with history, and
• 10:26
  Speaker 1: they talk a lot about how if you look at
• 10:27
  Speaker 1: Chinese history, there are regular sort of breaks, revolutions, disruptions
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  Speaker 1: like that are are are a pretty sort of constant
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  Speaker 1: feature of Chinese history, and they're determined to do everything
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  Speaker 1: they can to make sure that the Party stays on
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  Speaker 1: top of all of that. And I think, you know
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  Speaker 1: what we're seeing now in China, this is she and
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  Speaker 1: ping himself talks about the third development of communism and
• 10:48
  Speaker 1: the third step in communism, but I would say telling
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  Speaker 1: established it during the revolution. D J. Ping Um sort
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  Speaker 1: of you know, created the second wave of of of
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  Speaker 1: the of an economic revolution, and now that he is
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  Speaker 1: now leading China into a third period where he will
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  Speaker 1: restore China as a great power, which is something he
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  Speaker 1: spoke about a lot in his speech. So that's you know,
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  Speaker 1: you sort of have to parse the language of all
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  Speaker 1: of these leaders, but that, I think is what the
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  Speaker 1: key messages from this from this congress. But John, can
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  Speaker 1: you square the idea that the Communist Party is still
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  Speaker 1: at the top, ahead of the government at a time
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  Speaker 1: when now j Ping himself, this charismatic leader, is leading
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  Speaker 1: the nation. He it seems like he's kind of on
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  Speaker 1: top of the Communist Party. Now he's on top of both.
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  Speaker 1: I mean he isn't He is the president if you
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  Speaker 1: look at his title as the President of China. So
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  Speaker 1: his title, actually, if you look at Chinese history, is
• 11:41
  Speaker 1: one of the lesser titles. He's head of state, whereas
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  Speaker 1: the really important role is to run the party. So
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  Speaker 1: he now runs both. He's head of the military as well,
• 11:49
  Speaker 1: which is another really key When he controlled this is
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  Speaker 1: where his power has come from. He controls the three
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  Speaker 1: or four most important officers in both the party and
• 11:57
  Speaker 1: the state himself. And he's also been pretty vocal about
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  Speaker 1: wanting to be a global economic power and competing and
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  Speaker 1: how does the concept of competing in a broad capitalistic
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  Speaker 1: economy mesh with communist values. I think that that argument
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  Speaker 1: in that debate was probably one one in lass in
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  Speaker 1: Beijing many many many years ago. Again, but the way
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  Speaker 1: the Chinese leaders look at it they're all about prosperity
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  Speaker 1: for the Chinese people. And as then, as Dan Dropping
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  Speaker 1: himself once said, it doesn't matter if you have a
• 12:30
  Speaker 1: black cat or a white cat. The most important things
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  Speaker 1: that are catch as mice. The way the party leaders
• 12:35
  Speaker 1: will look at it doesn't matter what your ideology is,
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  Speaker 1: as long as you are you are raising the tide
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  Speaker 1: for the Chinese middle classes, and you are bringing everybody
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  Speaker 1: in China up to a certain level of prosperity and
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  Speaker 1: sort of undoing what they see as the great sort
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  Speaker 1: of economic um sort of backwards steps that China took
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  Speaker 1: in the nineteenth twente century. Doesn't matter how you get
• 12:55
  Speaker 1: their most important part is that all you bring as
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  Speaker 1: much of society with you as possible. Very important thing
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  Speaker 1: to bear in mind as well. In the speech, which
• 13:02
  Speaker 1: we can talk about more if you like, present, she
• 13:05
  Speaker 1: talked a lot about restoring or or addressing imbalances and
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  Speaker 1: inequalities in Chinese society. Is not just about economic growth anymore.
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  Speaker 1: He's obsessed now with sort of fixing some of the inequalities,
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  Speaker 1: both in terms of standards are living and also environmental
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  Speaker 1: factors that have been a byproduct of China's economic miracle.
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  Speaker 1: Over the last thirty or forty years. By all means,
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  Speaker 1: if you if you have other things in the speech
• 13:27
  Speaker 1: that you want to highlight, I mean, I was going
• 13:29
  Speaker 1: to talk about the vote in the Central Committee and
• 13:32
  Speaker 1: how an ally UH, an enforcer really of of j
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  Speaker 1: Pink's Andy corruption move, is not going to be part
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  Speaker 1: of this. Well, that's right. So Lankie Shan, there was
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  Speaker 1: a lot of speculation that he would also he would
• 13:43
  Speaker 1: be restored to the to the Standing Committee. UM. That
• 13:47
  Speaker 1: would have been controversial because there's an unofficial rule in
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  Speaker 1: China that once you're over sixty five you need to retire.
• 13:51
  Speaker 1: He's now sixty seven. UM. So there was some speculation
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  Speaker 1: that maybe if she had put him, had kept him on,
• 13:58
  Speaker 1: that he would have broken UH with that long standing tradition.
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  Speaker 1: He didn't do that. You could possibly arguing again, you know,
• 14:04
  Speaker 1: China is a very opaque place and the governing structures
• 14:07
  Speaker 1: are very opaque. So a lot of this speculation, you
• 14:09
  Speaker 1: could argue that one Key Shan his job was done,
• 14:11
  Speaker 1: like what his job was to clamp down and corruption
• 14:14
  Speaker 1: at the height at the top of the Chinese Party,
• 14:16
  Speaker 1: and in a lot of ways it was one key
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  Speaker 1: Shan was she's battering round. He was his instrumental power.
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  Speaker 1: It was one key shan that basically put the fear
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  Speaker 1: of God into all of the top Chinese leaders, and
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  Speaker 1: that was what allowed she to exercise the power that's
• 14:31
  Speaker 1: taken them to the pinnacle of power. Now, thank you
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  Speaker 1: very much for spending time with us. Has always looked
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  Speaker 1: forward to future visits. So John freyher is senior editor
• 14:39
  Speaker 1: for Senior executivetor for Business, Finance and Energy for a
• 14:43
  Speaker 1: Bloomberg Turn. Attention now to the world of food and
• 14:59
  Speaker 1: restaurants McDon donald, Hippotle, McDonald's today benefiting from what they
• 15:03
  Speaker 1: call their high low menu strategy. Here to tell us
• 15:06
  Speaker 1: more about it, Mike Halin, senior restaurant analysts for Bloomberg Intelligence. Mike,
• 15:11
  Speaker 1: good to have you. What is it? Tell people? What
• 15:13
  Speaker 1: is this high low menu strategy and how's it working
• 15:15
  Speaker 1: for McDonald's. UM. So, it's basically offering a lot of
• 15:20
  Speaker 1: value items, some lower end items. UM. Also, you know
• 15:25
  Speaker 1: the Mike pick two which they do in different combinations.
• 15:28
  Speaker 1: It might be two items for two dollars and fifty
• 15:30
  Speaker 1: cents or four items for four dollars, but offering value
• 15:33
  Speaker 1: and as we know as the you know, largest chain
• 15:36
  Speaker 1: in the world. They can source their product cheap, more
• 15:38
  Speaker 1: cheaply than everyone else, and offer lower price points their
• 15:41
  Speaker 1: customers and still allow their franchisees to make something off
• 15:44
  Speaker 1: of it. And at the same time, on the high end,
• 15:46
  Speaker 1: they're improving the quality of a lot of their items
• 15:49
  Speaker 1: with the signature craft inline of chicken sandwiches and and burgers,
• 15:53
  Speaker 1: and so that's also drawing um new customers or lapse
• 15:57
  Speaker 1: customers into the chain. Um. You know, it's what we
• 16:00
  Speaker 1: call a Barbell strategy kind of in in this fast
• 16:02
  Speaker 1: food industry. One day, Wendy's is another chain that's doing
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  Speaker 1: it pretty well, um and also benefiting from it. You know, Mike,
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  Speaker 1: I have to confess something. When I see you, I
• 16:11
  Speaker 1: think he ate McMuffin this morning. He ate neg McMuffin
• 16:15
  Speaker 1: this morning because we had a whole the gym. No no, no,
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  Speaker 1: not because of that, Because months ago we were talking
• 16:20
  Speaker 1: about how the breakfast menu was really bolstering their sales
• 16:24
  Speaker 1: and getting them, getting them this momentum. But here we are,
• 16:28
  Speaker 1: and it seems like this momentum is here to stay.
• 16:30
  Speaker 1: It's not just the egg McMuffin that we talked about,
• 16:33
  Speaker 1: which you which you liked? Yeah, which I liked. And
• 16:35
  Speaker 1: you know, value was probably the first thing, and operations
• 16:39
  Speaker 1: in the stores, and then right after that was was
• 16:41
  Speaker 1: the all day breakfast. But um, yeah, they they've attacked
• 16:45
  Speaker 1: their problems on a lot of different fronts, um. And
• 16:49
  Speaker 1: you know it's the culmination of all these things that's
• 16:52
  Speaker 1: leading to this very strow momentum. You know you you
• 16:54
  Speaker 1: know I have said it before. You know, you can't
• 16:56
  Speaker 1: turn around an aircraft carrier on a dime. Um, you know.
• 17:00
  Speaker 1: But they've been really aggressive and it's enabled them to
• 17:03
  Speaker 1: to really turn things around a lot faster than anyone expected.
• 17:06
  Speaker 1: How is the the ongoing effort to sell off the
• 17:09
  Speaker 1: units to franchise, you know, franchisees and then just take
• 17:13
  Speaker 1: a percentage of the of the money back. Yeah, they
• 17:15
  Speaker 1: hit their goal or a year ahead of schedule. So um,
• 17:19
  Speaker 1: you know, they've they've been um aggressive, They've they've been
• 17:23
  Speaker 1: um you know, whether it be operations or better food,
• 17:26
  Speaker 1: or with the structure of the company and the refranchising. Um,
• 17:30
  Speaker 1: they've been able to hit their targets and and achieve
• 17:32
  Speaker 1: their goals faster than most expected. So then why are
• 17:35
  Speaker 1: are their shares only up one and a quarter percent today,
• 17:38
  Speaker 1: stocks up fift in the last year. Trees don't grow
• 17:41
  Speaker 1: out of the sky, you know. And I mean there's
• 17:43
  Speaker 1: just huge expectations baked in, right and and so the
• 17:46
  Speaker 1: sames Our sales were um that you know that the
• 17:49
  Speaker 1: strong strange sames Our sales trans across the globe are
• 17:52
  Speaker 1: continuing um. But you know, revenue and EPs was kind
• 17:55
  Speaker 1: of just in line. So you know, um, you know,
• 17:59
  Speaker 1: it's like like I said, stocks don't go off forever,
• 18:01
  Speaker 1: you know, you know, they have to take a breather
• 18:03
  Speaker 1: at some point. You're not just the egg McMuffin at
• 18:05
  Speaker 1: a certain point just can't get any larger for you
• 18:07
  Speaker 1: to have for breakfast. Just too much. You never know,
• 18:11
  Speaker 1: you never you know. In what you describe it, it
• 18:15
  Speaker 1: rings a bell for me. And it it says, you know,
• 18:17
  Speaker 1: high price or higher price and customization and personalization that works, right,
• 18:23
  Speaker 1: the high end of that high low menu, the low
• 18:25
  Speaker 1: end convenience and low cost that works. It's sort of
• 18:29
  Speaker 1: like you're describing the retail industry as well. The high
• 18:31
  Speaker 1: end does well, the low end does well, in the
• 18:33
  Speaker 1: middle just struggles. Yeah, I think that's that's that's a
• 18:37
  Speaker 1: good point. I mean, and you don't really talk about
• 18:40
  Speaker 1: kind of in the middle much because, um, you know,
• 18:44
  Speaker 1: fast casual has kind of destroyed that, right, So like,
• 18:47
  Speaker 1: you know, just getting a decent meal for eight bucks,
• 18:51
  Speaker 1: you know six bucks is you know, is that that
• 18:54
  Speaker 1: doesn't come with table service? No, it's and it's been
• 18:57
  Speaker 1: stolen away by a lot of these fast casual names. So, um,
• 19:00
  Speaker 1: you know, that's why we're doing deep value, and that's
• 19:03
  Speaker 1: why we're trying to improve the high end because we
• 19:06
  Speaker 1: have that competition. You know, POSR has that competition from
• 19:09
  Speaker 1: Task Causual only have to compete. So let's talk about
• 19:11
  Speaker 1: the middle that's suffering. Chipotle, they were for earnings today
• 19:14
  Speaker 1: at four ten pm Wall Street time, and uh, you know,
• 19:18
  Speaker 1: they've been really suffering with a series of illness scandals
• 19:22
  Speaker 1: and others. What are we what are we looking for today?
• 19:25
  Speaker 1: We you know, as always, we're looking at the pace
• 19:27
  Speaker 1: of the same store sales in the traffic recovery, especially
• 19:30
  Speaker 1: since there was another neuro virus outbreak in July in
• 19:33
  Speaker 1: a Virginia store. Uh that that's number one, two and three.
• 19:38
  Speaker 1: You know, there was a five fifty basic point impact
• 19:40
  Speaker 1: for the week following the outbreak. Across the chain. We
• 19:43
  Speaker 1: want to see how um that affects the entire quarter. Uh.
• 19:46
  Speaker 1: And number two would be restaurant margins because there's kind
• 19:49
  Speaker 1: of some conflicting opinions about this. You know, we tend
• 19:52
  Speaker 1: to think that there's still room for pretty significant restaurant
• 19:55
  Speaker 1: margin expansion. UM. Management was very slow to take labor
• 19:59
  Speaker 1: out of the stores. Your sales drop, you have employees
• 20:02
  Speaker 1: just sitting around, you know, so they really needed to
• 20:05
  Speaker 1: take labor out of the stores, and they weren't aggressive
• 20:07
  Speaker 1: about that. So we think we think there's some more
• 20:09
  Speaker 1: um low hanging fruit there. Others might disagree on the street, um,
• 20:14
  Speaker 1: but that's the other thing that that uh, you know,
• 20:16
  Speaker 1: people are gonna look at. And of course Caso and
• 20:18
  Speaker 1: the their impact that impact on same road, cheese on
• 20:22
  Speaker 1: it and Americans will just come funneling in the door. Yeah, clearly.
• 20:27
  Speaker 1: Mike Halin, thank you so much for joining us. Mike
• 20:29
  Speaker 1: Halin is seenior restaurant analysts for Bloomberg Intelligence, joining us
• 20:32
  Speaker 1: here in our living three studios. Gold prices are down
• 20:48
  Speaker 1: today and they've been sort of on a choppy down
• 20:51
  Speaker 1: trajectory over the past week or so. And uh, here
• 20:55
  Speaker 1: to explain what's driving that is, Mike Judas partner and
• 20:58
  Speaker 1: Metals and Mining Analystic Vertical Church Partners based in Stanford, Connecticut. Mike,
• 21:04
  Speaker 1: I want to first just get your view on what
• 21:07
  Speaker 1: the bigger driver of gold prices is right now. Is
• 21:10
  Speaker 1: it the dollar which is starting to strengthen a little bit,
• 21:14
  Speaker 1: or is it the sort of risk on environment which
• 21:17
  Speaker 1: makes people not go to sort of have in trades
• 21:20
  Speaker 1: like gold. Lisa, Good morning, morning pimp. So I would
• 21:23
  Speaker 1: argue that I hate to split the baby here, but
• 21:25
  Speaker 1: it's probably about fifty fifty, maybe weighted more towards the
• 21:29
  Speaker 1: dollar that I would say. Ever since early September when
• 21:32
  Speaker 1: gold peake fifty, Lisa, the dollars bounced about two or
• 21:36
  Speaker 1: three percent against trade weighted and we've seen gold prices
• 21:40
  Speaker 1: retreating kind of in this little a little little near
• 21:43
  Speaker 1: term downward range. But I think the dollar has been
• 21:45
  Speaker 1: a pretty good explanation for it. And secondly, there's been
• 21:47
  Speaker 1: much more risk risk on, not only for the equity markets,
• 21:50
  Speaker 1: no need to explain that with some of the great
• 21:52
  Speaker 1: earnings of being produced this morning, but also when you
• 21:55
  Speaker 1: think about geo political tensions which have kind of up
• 21:58
  Speaker 1: and pushed off for for a bit. Hey, Mike, I'm
• 22:00
  Speaker 1: just wondering if I can drag your attention out to
• 22:03
  Speaker 1: Indonesia for a moment, because I want to get your
• 22:05
  Speaker 1: thoughts about a mine out there. This is the world's
• 22:07
  Speaker 1: largest combination copper gold mine. This is the Grassburg mine,
• 22:13
  Speaker 1: and it's owned or you know, it's currently owned I
• 22:17
  Speaker 1: think fifty one by Freeport mcmaran and the subsidiary of THEIRS,
• 22:21
  Speaker 1: and they're trying to do a deal with the Indonesian
• 22:23
  Speaker 1: government and that's proven a problematic. I just want you
• 22:25
  Speaker 1: to use that as an example to explain to people
• 22:28
  Speaker 1: what it's like to have to invest in a mind,
• 22:30
  Speaker 1: how long it takes to get your money out of
• 22:32
  Speaker 1: the ground after you've spent it. That's a very good observation.
• 22:37
  Speaker 1: And just quickly on on this mine and Indonesia. Grassburg,
• 22:40
  Speaker 1: which is discovered back in the nineties sixties by Freeport
• 22:43
  Speaker 1: mcmaran and UM. It has been the an amazing asset
• 22:47
  Speaker 1: and the largest copper gold deposit. As you mentioned, uh,
• 22:50
  Speaker 1: the government and right now currently Freeport owns stake in
• 22:55
  Speaker 1: the assets, but the Indonesian government is now negotiating with
• 22:58
  Speaker 1: report to grab or to take a fifty stake and
• 23:03
  Speaker 1: buy at a market price to the asset from freeport.
• 23:06
  Speaker 1: Um that that's an issue that will work itself out.
• 23:09
  Speaker 1: But what it does explain to what it just show
• 23:10
  Speaker 1: for investors that where a lot of these base medals
• 23:14
  Speaker 1: and and soft medals are located around the world are
• 23:17
  Speaker 1: areas where governments need the revenues, need the taxes, and
• 23:22
  Speaker 1: there are in areas that have are less developed. And
• 23:25
  Speaker 1: the amount of capital that's required to develop a mind
• 23:28
  Speaker 1: you can't even replace some like a freeport for for
• 23:31
  Speaker 1: anywhere more than several billion dollars. The time it would
• 23:34
  Speaker 1: take from the first negotiations of first drill hole to
• 23:37
  Speaker 1: when you're producing gold, silver, lead, copper out of the ground.
• 23:42
  Speaker 1: You know, at the best, if everything works out well,
• 23:44
  Speaker 1: it's uh six seven years and you're talking more like
• 23:47
  Speaker 1: eight to ten years from a full mind life cycle.
• 23:49
  Speaker 1: So it is a very dicey situation. And uh and
• 23:53
  Speaker 1: it's difficult to you know, when you're looking longer term
• 23:56
  Speaker 1: it where the new Mind's gonna be built. They're not
• 23:57
  Speaker 1: gonna be built in politically safe places and morobably can
• 24:00
  Speaker 1: say US Canada, it will be some will be in
• 24:02
  Speaker 1: areas around the higher risk tolerance required. Yeah, and it's
• 24:06
  Speaker 1: definitely going to be interesting to see what the supplied
• 24:08
  Speaker 1: demand kind of dynamic right now, because a lot of
• 24:11
  Speaker 1: people have been talking about bitcoin is being sort of
• 24:14
  Speaker 1: a century version of that's where I was going with it.
• 24:20
  Speaker 1: So you know, people are saying, you know, we conbind
• 24:22
  Speaker 1: that while we wait, and people have been using that
• 24:24
  Speaker 1: as a proxy, and I'm wondering in some ways of
• 24:28
  Speaker 1: whether that reduces gold's appeal as a haven trade because
• 24:33
  Speaker 1: people are finding other havens that are decentralized and uncorrelated
• 24:37
  Speaker 1: and makes it more of a currency and commodity play
• 24:41
  Speaker 1: than it has well. And also it becomes a situation sometimes,
• 24:44
  Speaker 1: I think where the marketing or the publicity around bitcoin
• 24:48
  Speaker 1: tries to appeal to the retail investor in a way
• 24:53
  Speaker 1: that some gold advocates also try to appeal to those
• 24:57
  Speaker 1: potential investors by trying to paint paper currency and fiat
• 25:01
  Speaker 1: money as being something that will disappear within their lifetime
• 25:05
  Speaker 1: or indeed, you know what happens if the world ends,
• 25:08
  Speaker 1: You're gonna need something other than money backed by a
• 25:10
  Speaker 1: government in order to buy and sell the things you need,
• 25:14
  Speaker 1: just to give you some sort of reference points. Gold
• 25:17
  Speaker 1: spot gold prices up about ten percent so far this year,
• 25:21
  Speaker 1: so not terrible, right, exceeding bonds right, But a lot
• 25:24
  Speaker 1: of this has been driven by the commodities rally, A
• 25:27
  Speaker 1: lot of it has been driven by the weaker dollar.
• 25:29
  Speaker 1: There is an expectation that that weaker dollar will not continue,
• 25:32
  Speaker 1: Mike Doodas going forward for the rest of the this
• 25:35
  Speaker 1: year and perhaps the next six months out. What do
• 25:38
  Speaker 1: you think will sort of be the main driver for prices?
• 25:41
  Speaker 1: Do you think that if if the dollar sort of
• 25:44
  Speaker 1: stays where it is with respect to it's uh competing currencies,
• 25:49
  Speaker 1: where the gold prices go. I think if dollars stays
• 25:53
  Speaker 1: where it is, I think gold probably creates bit higher. Um,
• 25:57
  Speaker 1: there's still some speculation said and what not only what
• 26:01
  Speaker 1: they may do in December, but what a new Fed
• 26:03
  Speaker 1: governor Shairman of the said might do for for gold prices.
• 26:06
  Speaker 1: So there could be some near term volatility there. But
• 26:09
  Speaker 1: but those days where there's I think gold prices drift higher,
• 26:12
  Speaker 1: not dramatically higher, as you know, as we can also
• 26:15
  Speaker 1: see when you think about gold as a safe haven,
• 26:17
  Speaker 1: if the equity markets were to correct, or if the
• 26:19
  Speaker 1: bond market spikes a bit here to get some risk
• 26:21
  Speaker 1: of trades off the table. What about investing in gold
• 26:25
  Speaker 1: stocks right now or even in mining shares? You know,
• 26:28
  Speaker 1: we at the cycle. I mean, I keep looking at Freeport.
• 26:30
  Speaker 1: I'm sorry of you know, keep banging the table on
• 26:32
  Speaker 1: this one. But you know it's fifteen dollars a share
• 26:34
  Speaker 1: the stocks of what about thirteen so far? The thirteen
• 26:37
  Speaker 1: percent so far this year. It was led left for
• 26:40
  Speaker 1: dead year ago, right in January, year ago January, and
• 26:45
  Speaker 1: you have made some pretty decent money since then. But
• 26:47
  Speaker 1: it has not been a straight shot. No, it has,
• 26:50
  Speaker 1: and I think we are we are through the phase
• 26:53
  Speaker 1: one of the early recovery cycle in mining, in the
• 26:55
  Speaker 1: commodities in general, in the mining stocks in particular, we've
• 26:58
  Speaker 1: had some tremendous moves off the bottom to from January
• 27:01
  Speaker 1: for two thousand and sixteen. I think report stock has
• 27:04
  Speaker 1: been held back by this Indonesian negotiation and the uncertainty
• 27:08
  Speaker 1: how it's willing to play out. Once that gets settled,
• 27:11
  Speaker 1: I think there's significant upside and Freeport share price because
• 27:14
  Speaker 1: copper prices, in our view um look to be very
• 27:18
  Speaker 1: supportive to move higher, not just on a near term
• 27:21
  Speaker 1: basis of meeting UM a long term basis, as demand
• 27:23
  Speaker 1: picks up and the supply issues that we talked about
• 27:25
  Speaker 1: tim starts to show up in more detail in two thousand, eighteen,
• 27:29
  Speaker 1: nineteen and twenty. When you talk about the supply demand dynamic,
• 27:34
  Speaker 1: is are we running out of supplies of the precious
• 27:37
  Speaker 1: metals right now? Is demand outstripping what's available? UM, We're
• 27:41
  Speaker 1: not running out of supply. Supply is getting more difficult
• 27:44
  Speaker 1: to to extract. We had a capital spending decline and
• 27:48
  Speaker 1: deficit over the past five or six years of the
• 27:50
  Speaker 1: mining industry, and so that that is going to limit
• 27:53
  Speaker 1: the amount of new supplies that come into the market.
• 27:56
  Speaker 1: What's different about gold versus some other commodities like copper
• 27:59
  Speaker 1: letters is that you know, gold is still around above
• 28:02
  Speaker 1: ground throughout the world. There's probably ten years worth of
• 28:06
  Speaker 1: annual demand in central bank vaults globally, and all the
• 28:11
  Speaker 1: goal that's ever been mine in the world is still
• 28:13
  Speaker 1: around technically somewhere. So it tries gold prices isn't as
• 28:16
  Speaker 1: much supply demand though it does help, but it's much
• 28:19
  Speaker 1: more sentiment and from a macro basis, also the inflationary
• 28:22
  Speaker 1: expectations and a dollar touch on copper lend and zinc
• 28:26
  Speaker 1: and those medals. Um we anticipate demand's gonna supply, and
• 28:30
  Speaker 1: that's gonna lead to tighter to higher deficits, higher prices,
• 28:34
  Speaker 1: and eventually more investment. But that's gonna take some time
• 28:37
  Speaker 1: to come, all right, Thanks very much, Mike Dodass. He
• 28:40
  Speaker 1: is a partner Medals and Mining Analysts for Vertical Research,
• 28:43
  Speaker 1: speaking about gold and other medals, as well as that
• 28:46
  Speaker 1: Grassberg mine that is owned by the company Freeport mcmaran.
• 28:53
  Speaker 1: Thanks for listening to the Bloomberg P and L podcast.
• 28:56
  Speaker 1: You can subscribe and listen to interviews at Apple Podcasts, SoundCloud,
• 29:00
  Speaker 1: or whatever podcast platform you prefer. I'm pim Fox. I'm
• 29:04
  Speaker 1: on Twitter at pim Fox. I'm on Twitter at Lisa
• 29:07
  Speaker 1: abramowits one before the podcast. You can always catch us
• 29:10
  Speaker 1: worldwide on Bluebirg Radio