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Russia Has Emerged As A Critical Broker In Global Oil Markets · Bloomberg Intelligence

• 0:05
  Speaker 1: Welcome to the Bloomberg p m L Podcast. I'm pim
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  Speaker 1: Fox along with my co host Lisa Bramowitz. Each day
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• 0:27
  Speaker 1: I am here alongside Paul sweet News filling in for
• 0:31
  Speaker 1: pim Fox for broadcasting live from the Bloomberg Interactive Broker's studios.
• 0:35
  Speaker 1: Definitely oil prices, as Greg Jarrett was talking about driving
• 0:38
  Speaker 1: a bunch of the price action that we're seeing in
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  Speaker 1: markets today. Oil prices up about five percent as OPEC
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  Speaker 1: plus is said to agree to cut more than people
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  Speaker 1: had expected per day. Joining us now Megan O'Sullivan, Professor
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  Speaker 1: of International Affairs at Harvard's Kennedy School. She's also a
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  Speaker 1: Bloomberg opinion columnist and also a Senior Fellow at the
• 0:58
  Speaker 1: Council on Foreign Relations, and also I'm sure many other things. Megan,
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  Speaker 1: thank you so much for being with us. I want
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  Speaker 1: to start with that opaque agreement that we have yet
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  Speaker 1: to hear all the details on what was your reaction
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  Speaker 1: when you saw that they decided to cut one point
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  Speaker 1: two billion barrels a day versus the one that they
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  Speaker 1: were expected to. Good morning, Lisa. Like others, I was
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  Speaker 1: surprised that they went beyond expectations in terms of the cuts.
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  Speaker 1: Of course, yesterday a lot of comments left there a
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  Speaker 1: lot of doubt about whether they re greached it, but
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  Speaker 1: that's not entirely unheard of. That's pretty much par for
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  Speaker 1: the course in many of these um outcomes. But the
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  Speaker 1: real question was was Russia going to join in? And
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  Speaker 1: I think that was one of the one of the
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  Speaker 1: things that people were really uncertain was going to happen.
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  Speaker 1: And of course was Iran going to be an obstacle
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  Speaker 1: to a consensus deal? And as it turns out, Iran
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  Speaker 1: sought the exemption it wanted and Russia appears to As
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  Speaker 1: you said, we're still waiting for more details, but given
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  Speaker 1: one point to number and the idea that OPEC would
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  Speaker 1: be responsible for eight hundred thousand barrels of that cut,
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  Speaker 1: presumably large, Russia has taken on a larger cut than
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  Speaker 1: people expected it to agree to. So that's the big
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  Speaker 1: surprise there. The other takeaway is just the role that
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  Speaker 1: Russia played, and I'm happy to talk more about that. Well,
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  Speaker 1: you just led right right into my question. You know,
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  Speaker 1: we've it's been really interesting how the role of Russia
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  Speaker 1: within uh, you know, the whole global oil spectrum you know,
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  Speaker 1: has changed. To just give us an updated where do
• 2:30
  Speaker 1: you think Russia is today in the global oil markets
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  Speaker 1: and kind of maybe what role you expect on the
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  Speaker 1: play going forward. Sure, I mean, as many of your
• 2:38
  Speaker 1: viewers will know, there are three really big producers of
• 2:41
  Speaker 1: oil today. They're all producing a little over eleven million
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  Speaker 1: barrels of oil a day. That's Russia, the U S
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  Speaker 1: and Saudi Arabia. And so Russia is in a in
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  Speaker 1: a strong position here. It's in a stronger position than
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  Speaker 1: many of of the other large producers because it um
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  Speaker 1: it has a few protections in its economy that countries
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  Speaker 1: that have their currency paying to the dollar don't have.
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  Speaker 1: We've seen a huge devaluation the rule, and that makes
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  Speaker 1: the Russians effectively get more for their money. For every
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  Speaker 1: dollar that they sell or every dollar they obtained from
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  Speaker 1: selling a barrel of oil buys them more inside Russia
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  Speaker 1: than is the case for their their counterparts in the Gulf.
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  Speaker 1: So they have more resilience to lower prices. But I
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  Speaker 1: think the real key thing coming out of this is
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  Speaker 1: there were two obvious winners. One was Iran because it
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  Speaker 1: got its exemption, as I said, but the other is Russia.
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  Speaker 1: So everyone, I think will agree that this deal would
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  Speaker 1: have not happened without Russia's help, that Russia has really
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  Speaker 1: catapulted itself to be uh critical broker in global oil market.
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  Speaker 1: Everyone uh, pretty much was of the notion, including the Saudis,
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  Speaker 1: that this cut had to be done with not just
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  Speaker 1: OPEC but also non Opeque countries and Russia was key
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  Speaker 1: to that. But Russia was also the mediator between Saudi
• 4:00
  Speaker 1: Arabia in Iran, which has been the sticking point yesterday
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  Speaker 1: and into the evening and so with. You also added
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  Speaker 1: the dimension that President Trump clearly did not want this
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  Speaker 1: cut to happen, and that Russia was the critical actor
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  Speaker 1: in making this happen. The benefits to Russia go beyond
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  Speaker 1: even the bumping oil prices that we've already started to see, right,
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  Speaker 1: but a geopolitical kind of political exactly. So it kind
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  Speaker 1: of it kind of leads me into wondering what this
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  Speaker 1: means for the US versus Russia, right, because OPEC has
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  Speaker 1: kind of been losing stature as the US increases its output,
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  Speaker 1: becoming a next net exporter for the first time ever,
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  Speaker 1: as we learned yesterday, I just have to wonder, what
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  Speaker 1: is this due to the US Russia relationship and is
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  Speaker 1: opex cut going to make as much difference as the
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  Speaker 1: markets seems to think based on US output, right? I think,
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  Speaker 1: you know, I'm of the view that it's not just
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  Speaker 1: the US output, the sheer volume of barrels of the
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  Speaker 1: US is producing, but it's the nature of the shale
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  Speaker 1: oil into street in the United States that makes OPEC weaker.
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  Speaker 1: It's basically because of the way that shale is produced,
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  Speaker 1: it reacts to price rarely, very very quickly compared to
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  Speaker 1: conventional oil production. So an increase in price is almost
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  Speaker 1: always quickly associated with a bump in production, and so
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  Speaker 1: that eats away at any game that OPEC makes in
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  Speaker 1: the price market quite quickly. So I think that certainly
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  Speaker 1: this is not the kind of deal that would have
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  Speaker 1: had it wouldn't It won't have the long term effects
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  Speaker 1: that it might have had in a different oil market.
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  Speaker 1: And you know, going back to the point about has
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  Speaker 1: OPEC been diminished, opec um would not be able to
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  Speaker 1: have the effect that it's having without Russia, which of
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  Speaker 1: course is not a member of OPEC. So really, the
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  Speaker 1: idea that OPEC alone can have a big impact on
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  Speaker 1: the markets, I think it's really an idea of the past,
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  Speaker 1: in large part because of American production, but also because
• 5:54
  Speaker 1: of a few other dynamics. So we do see that
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  Speaker 1: OPEC alone doesn't matter as much as it used to.
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  Speaker 1: It's really opaque plus non OPEC And if we're really
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  Speaker 1: honest about it, and these are the details will have
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  Speaker 1: to wait for. It really looks a lot like Russia
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  Speaker 1: and Saudi Arabia, and this calls into question about the
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  Speaker 1: viability of OPEC as an organization. Over the law long run,
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  Speaker 1: we saw cutar lead the organization or announce it's leaving
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  Speaker 1: the organization, And in part that's because smaller countries are
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  Speaker 1: getting frustrated with this. Russia Saudi detant in the sense
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  Speaker 1: that these two countries are really the only ones that matter,
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  Speaker 1: and the voices of small countries are pretty powerful. So, Megan,
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  Speaker 1: do we even care then whether OPEC sticks to this
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  Speaker 1: production cut? In years past and decades past, it was
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  Speaker 1: very closely watched, and they didn't have did not have
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  Speaker 1: a great track record of sticking with their decisions. Do
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  Speaker 1: we care well, I think we care in the sense
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  Speaker 1: that it affects our economy. Even though we're net x quarter,
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  Speaker 1: we're still really tied to global markets, and so when
• 6:56
  Speaker 1: there is a change in the supply and demand balance globally,
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  Speaker 1: that effect America's American consumers in America's economy directly um
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  Speaker 1: one way or the other. So either it's a benefit
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  Speaker 1: or it's a detractor. But also this matters for American
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  Speaker 1: companies because they, of course are deeply affected in our
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  Speaker 1: stock market affected by the price of oil. I don't
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  Speaker 1: think this is an existential issue for the United States
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  Speaker 1: because we are now in a different economic space. It
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  Speaker 1: used to be that low oil prices were really closely
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  Speaker 1: correlated with bump and growth for the U. S economy,
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  Speaker 1: And now, in part because we have such a large
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  Speaker 1: energy sector ourselves, and we have so many UH sectors
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  Speaker 1: and producers and related industries that benefit from a high
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  Speaker 1: oil price, it's not as clear cut as it used
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  Speaker 1: to be. You know, you might even say I haven't
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  Speaker 1: done all the map, but you might even say, you know,
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  Speaker 1: UH it's sort of a wash for the US if
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  Speaker 1: the price goes up or down, because you're helping consumers
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  Speaker 1: and producers, all of them in the United States one
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  Speaker 1: way or the other. So I think we do care.
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  Speaker 1: It does affect us, particularly if things go to one
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  Speaker 1: extreme or the other. But I don't think this cut one.
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  Speaker 1: You know, it's only supposed to go until April two.
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  Speaker 1: We'll have to see if Russia actually cut. I mean,
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  Speaker 1: Russia has a history of saying it's going to cooperate
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  Speaker 1: with OPEC and not cutting. It did depart from that
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  Speaker 1: pattern and two thousand and sixteen, but we'll have to
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  Speaker 1: watch that closely again, Professor. But you know, a lot
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  Speaker 1: of a lot of one of the points, unfortunately, have
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  Speaker 1: to leave it there. Thank you so much for being
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  Speaker 1: with us. Professor Meggat O'Sullivan of Harvard's Kennedy School, also
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  Speaker 1: a Bloomberg opinion columnist and a Senior Fellow at the
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  Speaker 1: Council on Foreign Relations. And Lisa A. Brahmoy it's alongside
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  Speaker 1: Paul Sweeney. We are broadcasting live from Bloomberg's eleven three
• 8:40
  Speaker 1: oh headquarters. Lisa Bramwoit's here alongside Paul Sweeney, who is
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  Speaker 1: Director of North American Research at Bloomberg Intelligence. Uh, the
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  Speaker 1: jobs report this morning was the narrative for about five
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  Speaker 1: minutes before OPAC came out, and then after we got
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  Speaker 1: some of the new announcements from President Trump and out
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  Speaker 1: there's trade tensions taking over. But let's go back to
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  Speaker 1: jobs because at the end of the day, a strong
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  Speaker 1: jobs backdrop will cause the FED to hike rates. And
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  Speaker 1: Tom Gimble now joining us, founder and chief executive of
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  Speaker 1: the sal Network in Chicago. Tom, can you give us
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  Speaker 1: an on the ground look at the jobs market. How
• 9:19
  Speaker 1: good is it today compared with six months ago? It's
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  Speaker 1: just as good as it was six months ago, Lisa.
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  Speaker 1: The big challenge that people are facing is there's so
• 9:32
  Speaker 1: much fear and intrepidation that we're in the ninth inning
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  Speaker 1: of this economy that it's got to fall off that
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  Speaker 1: you know, people want it might become a self fulfilling prophecy.
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  Speaker 1: But companies are still hiring. We saw that we averaged
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  Speaker 1: or put in a hundred and fifty thousand new jobs
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  Speaker 1: non farm payroll, and we saw that there, Yes, it
• 9:51
  Speaker 1: did drop a little bit for the for the October
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  Speaker 1: numbers as well. We're recast a little bit. But the
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  Speaker 1: the economy is great. It is is that the job
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  Speaker 1: sector is as strong as it's ever been. So Tom,
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  Speaker 1: can you tell us where in particular you're seeing strength
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  Speaker 1: as you try to place some of your clients um
• 10:09
  Speaker 1: in the job market. Where are some areas that are showing,
• 10:12
  Speaker 1: you know, surprising strength and maybe even conversely, where are
• 10:14
  Speaker 1: some areas that you're surprised you know, aren't stronger? Well,
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  Speaker 1: I mean we did. The traditional stalwarts are are still there, right, healthcare, transportation, UH,
• 10:23
  Speaker 1: and transportation and logistics and warehouse and then and then
• 10:27
  Speaker 1: back office when we're seeing accounting, finance, technology are still
• 10:30
  Speaker 1: strong and companies are still hiring sales people by the truckload.
• 10:34
  Speaker 1: No pun intended on the strength and logistics. But when
• 10:37
  Speaker 1: we look at this situation, when companies are hiring sales people,
• 10:40
  Speaker 1: they want to aggressively take take control of their destiny
• 10:44
  Speaker 1: in the short term and get those numbers going. I
• 10:47
  Speaker 1: know people are fearful of what happened with General Motors
• 10:50
  Speaker 1: and Ford coming with some layoffs on manufacturing and forecasting
• 10:53
  Speaker 1: three five years down the road. But healthcare is still strong,
• 10:58
  Speaker 1: technology still wrong. So I'm very optimistic about what's going on. Now,
• 11:04
  Speaker 1: the interesting thing about logistics and warehouse increasing the numbers
• 11:09
  Speaker 1: is that that probably shows how retail shifting, right, is
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  Speaker 1: that it's not in store retail as much as it
• 11:14
  Speaker 1: is warehouse and e commerce. But it shows me that
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  Speaker 1: people are still forecasting a strong Christmas. Well, Tom, this
• 11:22
  Speaker 1: brings me to my next question, which is, you know,
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  Speaker 1: packing boxes is a very different experience and different skill
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  Speaker 1: set than being in a store and talking to customers
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  Speaker 1: and trying to, you know, cater to their needs. And
• 11:33
  Speaker 1: I'm just wondering what you make of the increase in
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  Speaker 1: jobs for people who don't have a high school degree
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  Speaker 1: and whether that sort of indicates that the real job
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  Speaker 1: gains are coming on the lower end of the scale,
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  Speaker 1: and what that means the real job gains are coming
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  Speaker 1: on the lower end and what we see so traditionally,
• 11:52
  Speaker 1: when you have a cold November, cold December, and then
• 11:55
  Speaker 1: you see that the housing market isn't as strong and
• 11:57
  Speaker 1: you see that there isn't as much construction going on,
• 12:00
  Speaker 1: that the blue collar jobs are going to shift. And
• 12:02
  Speaker 1: when they shift, and it goes warehouse that that's happening.
• 12:05
  Speaker 1: You don't need a college degree. That you don't need
• 12:07
  Speaker 1: a college degree to work retail at at Nordstromer or Macy's,
• 12:11
  Speaker 1: either on the floor. So there's really it might be
• 12:15
  Speaker 1: a different skill set of packing a box versus selling
• 12:18
  Speaker 1: a piece of clothing. However, the the type of education
• 12:23
  Speaker 1: needed isn't that different. And I think we've got to
• 12:26
  Speaker 1: get into the market of hey, this is where the
• 12:28
  Speaker 1: jobs are and if you want to get one, they
• 12:31
  Speaker 1: are available. Now we're still seeing it at the fifty
• 12:34
  Speaker 1: to a hundred thousand and a hundred thousand to a
• 12:36
  Speaker 1: hundred and fifty thousand level, whether it be developers, whether
• 12:39
  Speaker 1: it be accountants, whether it be marketing professionals. And it's
• 12:42
  Speaker 1: a global economy. The job may not be working for
• 12:44
  Speaker 1: a company in your city. It may be doing it remotely,
• 12:47
  Speaker 1: may be doing it from home, which three years ago
• 12:50
  Speaker 1: people were excited about. So you've got to be flexible
• 12:53
  Speaker 1: on where the jobs are and how you're gonna be working.
• 12:55
  Speaker 1: It's just a little bit of a shift right now.
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  Speaker 1: So Tom, let's talk about wages. You you you talk about
• 13:00
  Speaker 1: a couple of you know, compensation bands that you think
• 13:02
  Speaker 1: about out there in the marketplace. We saw a little
• 13:04
  Speaker 1: bit today's numbers um some wage inflation coming back into
• 13:09
  Speaker 1: the market. But one could argue that given the strength
• 13:12
  Speaker 1: of the economy and given where you are in terms
• 13:14
  Speaker 1: of employment, i e. Nearer at full employment, we should
• 13:18
  Speaker 1: be seeing even higher wages. What do you seeing out there? Yeah,
• 13:22
  Speaker 1: you know, and I don't know if I necessarily buy
• 13:24
  Speaker 1: into that argument fall and reason being is there's a
• 13:26
  Speaker 1: global economy, and so we're not competing against somebody in
• 13:30
  Speaker 1: the on the cul de sact or in the apartment
• 13:32
  Speaker 1: building for the job. You're competing against somebody on the
• 13:34
  Speaker 1: other side of the world for a lot of it.
• 13:35
  Speaker 1: So that's gonna keep that There isn't gonna be huge
• 13:38
  Speaker 1: no matter how strong the economy is, there isn't gonna
• 13:41
  Speaker 1: be huge wage gains. We're also seeing that the effect
• 13:43
  Speaker 1: of the hourly increases in municipality and the overtime or
• 13:47
  Speaker 1: on the minimum wage increases taken effect over the past
• 13:51
  Speaker 1: few months, and we've seen some of that too, So
• 13:52
  Speaker 1: you're not gonna see huge wage gain every single month
• 13:56
  Speaker 1: of the report. And as we continue to go right
• 14:00
  Speaker 1: summer is more of the increase in hospitality and that
• 14:03
  Speaker 1: really affects into it as wages are reported for servers
• 14:06
  Speaker 1: and people in that line of business. So we're talking
• 14:08
  Speaker 1: about regular white collar increases in in wages. You're just
• 14:12
  Speaker 1: not going to see it at the rapid rate that
• 14:14
  Speaker 1: a lot of people want to. But we should see
• 14:17
  Speaker 1: because we added over a hundred and fifty thousand jobs
• 14:19
  Speaker 1: at three point seven percent unemployment. In any other economy
• 14:23
  Speaker 1: when we're not talking about Chicken Little waiting for the
• 14:25
  Speaker 1: sky to fall, people are going to say, those are
• 14:26
  Speaker 1: great numbers for this many months in a row. All right,
• 14:29
  Speaker 1: Tom Gimble, who is not Chicken Little. Tom Gimble, founder
• 14:32
  Speaker 1: and chief executive of La Salad Network, coming to us
• 14:35
  Speaker 1: from Chicago. Paul, you're noticing this before? The markets really
• 14:39
  Speaker 1: rolling over right now, isn't it. Yeah, it really is.
• 14:42
  Speaker 1: I think, you know, we kind of opened kind of,
• 14:43
  Speaker 1: you know, calmly this morning. I thought we would have,
• 14:45
  Speaker 1: you know, maybe a little bit of a low volatility today,
• 14:48
  Speaker 1: but it's just kind of dropped off the market here
• 14:50
  Speaker 1: and now we're down, you know again on the equity
• 14:52
  Speaker 1: inducies over one and a half percent pretty much across
• 14:54
  Speaker 1: the board. Yeah, and the NASDAC leading the way down.
• 14:56
  Speaker 1: You have to wonder why China trade tensions right now
• 15:00
  Speaker 1: is sort of gaining the the sort of top of
• 15:03
  Speaker 1: the narrative creation here, I mean more than OPEC, more
• 15:06
  Speaker 1: than jobs, it's trade tensions. We'll keep you posted. I'm
• 15:10
  Speaker 1: Lisa Abramowitz alongside Paul Sweeney. I am joined by Paul Sweeney,
• 15:18
  Speaker 1: who is Director of North American Research of Bloomberg Intelligence,
• 15:22
  Speaker 1: joining me instead of Pem Fox, who is off today
• 15:25
  Speaker 1: on a well deserved vacation. Uh. Definitely. The tone of
• 15:29
  Speaker 1: the day is jobs. And there is a big question,
• 15:32
  Speaker 1: as Tom Gimble of Lasal Network was raising earlier in
• 15:36
  Speaker 1: the show, which is the biggest gains are happening at
• 15:39
  Speaker 1: the lower end. The middle is kind of getting lost.
• 15:41
  Speaker 1: Joining us now, Noah Smith, columnist for Bloomberg Opinion, joining
• 15:45
  Speaker 1: us from California. Noah, you wrote a fantastic column about this,
• 15:49
  Speaker 1: how probably the poverty rate is being understated. I want
• 15:53
  Speaker 1: to start with why you think we are seeing bigger
• 15:56
  Speaker 1: gains on the lower end of the job scale, some
• 15:59
  Speaker 1: on upwards end, and kind of a loss in the middle. Well,
• 16:04
  Speaker 1: you know, that's a pretty recent phenomenon um that's happened
• 16:09
  Speaker 1: basically in the recovery from the Great Recession. We've seen
• 16:11
  Speaker 1: low wage jobs, do okay. Uh, you know we've seen
• 16:14
  Speaker 1: high wage jobs do do okay, and we've seen middle
• 16:17
  Speaker 1: class jobs or in terms of wages, um, in terms
• 16:21
  Speaker 1: of jobs, you know, unemployments low. Everybody kind of has
• 16:23
  Speaker 1: a job. The question is where the money going and uh,
• 16:26
  Speaker 1: and the question is why is it's happening. One hypothesis
• 16:28
  Speaker 1: is just that a lot of places have raised their
• 16:30
  Speaker 1: minimum wages and so that's going to affect people at
• 16:33
  Speaker 1: the low end of the scale obviously much more. And
• 16:35
  Speaker 1: so UM. There's also the idea that sort of, you know,
• 16:41
  Speaker 1: robots are hollowing out the middle class jobs. Automation is
• 16:44
  Speaker 1: replacing people who sort of push paper around an office,
• 16:47
  Speaker 1: but you know, instead it's replacing it's turning people into
• 16:50
  Speaker 1: basically like warehouse robots, um, you know, who are only
• 16:55
  Speaker 1: useful for their ability to push things around because robots
• 16:57
  Speaker 1: aren't good enough to do that yet. So that's an
• 17:00
  Speaker 1: other hip hopsis UM. I don't know how to be honest,
• 17:03
  Speaker 1: I don't know how how much either of those is
• 17:05
  Speaker 1: really in effect. And I think what might have happened
• 17:08
  Speaker 1: is just a low wage you know, low wage, low
• 17:11
  Speaker 1: skilled jobs have had compressed wages for so long that
• 17:15
  Speaker 1: now that labor demand is high they're the first ones
• 17:17
  Speaker 1: to to ask for for raises, so that might be
• 17:21
  Speaker 1: going on as well. So basically we don't know. Yeah,
• 17:23
  Speaker 1: so no, your column, this is really interesting. I loved
• 17:26
  Speaker 1: in the middle of your column you you quoted a
• 17:27
  Speaker 1: campaign slogan from um, when the middle class is defined
• 17:32
  Speaker 1: by having a chicken in every pot and a car
• 17:34
  Speaker 1: in every backyard, I'm assuming that's not how we define
• 17:37
  Speaker 1: the middle class anymore. How do you think we should
• 17:41
  Speaker 1: define the middle class? And and do we need to
• 17:44
  Speaker 1: change the way we define the middle class? Right? Well, so, um,
• 17:49
  Speaker 1: basically the middle class is a very squishy term. But
• 17:53
  Speaker 1: my column was really more about how we define poverty
• 17:55
  Speaker 1: than about how we define the middle class. So, um,
• 17:59
  Speaker 1: we have two bag definitions of poverty. The first definition
• 18:02
  Speaker 1: is sort of absolute poverty, you know, are you starving?
• 18:04
  Speaker 1: And the second definition is relative poverty, which is just
• 18:06
  Speaker 1: basically inequality, like do you have a lot less money
• 18:10
  Speaker 1: than you know, the median person. And so both of
• 18:13
  Speaker 1: those are pretty inadequate because we I hope that a
• 18:17
  Speaker 1: rich society like ours would allow people to be able
• 18:19
  Speaker 1: to do better than just you know, eat and stay
• 18:21
  Speaker 1: alive and um, and therefore we should revise up our
• 18:24
  Speaker 1: definition of poverty. But the inequality definition is also leads
• 18:27
  Speaker 1: a little bit to be desired, because you know, if
• 18:29
  Speaker 1: everybody gets fabulously rich, if some people get a little
• 18:31
  Speaker 1: less obviously rich, or they're really poor, especially compared to
• 18:35
  Speaker 1: you know, people in developing countries and you know, South Asia,
• 18:38
  Speaker 1: Africa somewhere, and so both of these definitions of poverty
• 18:42
  Speaker 1: leaves something to be desired. But we have this sort
• 18:43
  Speaker 1: of intuition. We look around. We see a lot of
• 18:45
  Speaker 1: Americans that we call poor because they're always on the
• 18:48
  Speaker 1: verge of getting a victim. They're always on the verge
• 18:51
  Speaker 1: of a medical bankruptcy, they're always on the verge of
• 18:53
  Speaker 1: not being able to pay for things. And this this risk,
• 18:56
  Speaker 1: you know, this precarity, always being on the verge of
• 19:00
  Speaker 1: bad stuff. Um is another definition of poverty. Is another
• 19:03
  Speaker 1: conception of poverty, and so I think that we need
• 19:06
  Speaker 1: to add that we need to focus more on that
• 19:08
  Speaker 1: as our definition of who's poor. Well, no, it's a
• 19:11
  Speaker 1: fascinating calum I recommend everyone read it. Of course, the
• 19:14
  Speaker 1: naysayers would would say, how big do you want the
• 19:17
  Speaker 1: safety network to be that the government provides, and who's
• 19:19
  Speaker 1: going to pay for it. In other words, if you
• 19:21
  Speaker 1: start to finding just the relative worth net worth of
• 19:26
  Speaker 1: a household, you're talking socialism, right, I mean you start
• 19:28
  Speaker 1: to finding poverty as a relative game and trying to
• 19:31
  Speaker 1: equalize things, then are you just heading towards a more
• 19:34
  Speaker 1: socialist society? Oh? Of course, And that's why people define
• 19:37
  Speaker 1: poverty that way. You know. Obviously socialists want everybody to
• 19:40
  Speaker 1: get really really really upset over you know, inequality, no
• 19:45
  Speaker 1: matter how rich society gets there. You know, then then
• 19:48
  Speaker 1: that doesn't allow society to grow its way out of
• 19:50
  Speaker 1: out of its responsibility for redistribution, and there can be
• 19:54
  Speaker 1: you know, sort of people getting upset about poverty no
• 19:57
  Speaker 1: matter how rich the people we call poor whatever become
• 20:00
  Speaker 1: So obviously, you know, I don't I don't really buy that.
• 20:03
  Speaker 1: I you know, I'm pretty skeptical that. But that's you know,
• 20:08
  Speaker 1: my suggestive definition of poverty isn't about inequality. It's about precarity.
• 20:12
  Speaker 1: It's about risk, it's about security. It's about you know,
• 20:16
  Speaker 1: not just do you have enough seat today, but do
• 20:18
  Speaker 1: you know you'll have eno seat tomorrow? Not just do
• 20:19
  Speaker 1: you have a roof over your head, but do you
• 20:21
  Speaker 1: know you'll have a roof over your head in a week,
• 20:24
  Speaker 1: and and things like that. Those those are those really
• 20:28
  Speaker 1: fit into our intuitive definition of who's poor, but they
• 20:31
  Speaker 1: don't fit into our official definition of who's poor yet.
• 20:34
  Speaker 1: How about with so no, with with your proposed definition
• 20:38
  Speaker 1: or you know, just enhanced definition of what poverty is,
• 20:41
  Speaker 1: how does the US rank relative to some other developed markets?
• 20:46
  Speaker 1: It's hard to say because so far we don't collect
• 20:48
  Speaker 1: uniform numbers about this. Probably we're gonna be a little
• 20:52
  Speaker 1: bit higher. Um. One thing is because you know, we're
• 20:57
  Speaker 1: we're a lot more of a spread out country and
• 20:59
  Speaker 1: we have a lot more sort of these like you know,
• 21:01
  Speaker 1: poor neglected neighborhoods. Um. You know. So, UM, I think
• 21:08
  Speaker 1: that we're going to have a bit higher of a
• 21:10
  Speaker 1: poverty rate than other countries. But we already do, you know,
• 21:12
  Speaker 1: by the other measures. So my guess is that the
• 21:14
  Speaker 1: international comparisons won't come out very different from a policy perspective.
• 21:18
  Speaker 1: What would change if they defined poverty as what you're proposing. Well,
• 21:24
  Speaker 1: one thing is that um, sort of policies to to
• 21:28
  Speaker 1: make sure that people have material security would then take
• 21:31
  Speaker 1: more center stage. So making sure that people have access
• 21:35
  Speaker 1: to you know, health care in an emergency takes more
• 21:39
  Speaker 1: center stage, making sure that, you know, people always get
• 21:42
  Speaker 1: enough food and uh. I'm also making sure that it's
• 21:44
  Speaker 1: hard for people to get evicted. Have you ever read
• 21:46
  Speaker 1: the book Evicted. It's an exact Oh yeah, it just
• 21:51
  Speaker 1: it paints a really accurate picture of poverty. And you
• 21:53
  Speaker 1: see that the problem with for these people is not
• 21:55
  Speaker 1: that they're starving, right, and it's not that they're just
• 21:58
  Speaker 1: resentful of some upper middle class people somewhere far away.
• 22:02
  Speaker 1: The problem with the people is that they're always sort
• 22:04
  Speaker 1: of on the edge of disaster. And so if we
• 22:07
  Speaker 1: define these disasters like lack of you know, food, insecurity,
• 22:11
  Speaker 1: probability of medical bankruptcy, probability of eviction, if we define
• 22:15
  Speaker 1: those and we we add those to the poverty numbers,
• 22:18
  Speaker 1: and we sort of, you know, give local and state
• 22:21
  Speaker 1: government some sort of incentive to improve those numbers. That
• 22:25
  Speaker 1: I think they'll focus more on policies that ensure material security,
• 22:28
  Speaker 1: that protect people from eviction, that make sure that people
• 22:31
  Speaker 1: have steady access to food and uh, and you know,
• 22:34
  Speaker 1: maybe it will put pressure on the national government to
• 22:36
  Speaker 1: make a better health there system than the one we
• 22:37
  Speaker 1: have now. Noah Smith, thank you so much. For being
• 22:39
  Speaker 1: with us. Noah Smith is Bloomberg opinion columnist talking about
• 22:42
  Speaker 1: his column on poverty and how to Measure it. Paul Sweeney,
• 22:45
  Speaker 1: thank you so much for being with me today. Thank
• 22:48
  Speaker 1: you for having me. A pleasure having you billion today
• 22:53
  Speaker 1: for pim Fox. Paul Sweeney, who is the director of
• 22:56
  Speaker 1: North American Research for Bloomberg Intelligence. And Paul, since you
• 23:00
  Speaker 1: are with us, UH, and since I've been spending so
• 23:03
  Speaker 1: much time with you, I want to learn more about
• 23:04
  Speaker 1: this really interesting Dish story. They've kind of been having
• 23:08
  Speaker 1: some pretty heated discussions and negotiations with HBO, which has
• 23:12
  Speaker 1: led to a blackout. First, can you use tell us
• 23:14
  Speaker 1: what's going on here, and then we'll get into sort
• 23:16
  Speaker 1: of what this means. Sure, I mean HBO historically, you know,
• 23:20
  Speaker 1: over the history of HBO, like other cable channels, they're
• 23:23
  Speaker 1: they're carried by distributors, whether it's a cable company like
• 23:25
  Speaker 1: Comcast or satellite company like UH Dish or Direct TV
• 23:29
  Speaker 1: UH and typically the content owners in this case HBO
• 23:33
  Speaker 1: UH they charge for the right to distribute their product.
• 23:37
  Speaker 1: They're their programming, and what happens occasionally is, you know,
• 23:40
  Speaker 1: you get a programmer like HBO and a distributor like Dish,
• 23:43
  Speaker 1: and they can't come to an agreement on those carriage fees,
• 23:45
  Speaker 1: and then they negotiate. Sometimes it gets ugly, and the
• 23:48
  Speaker 1: ultimate ugliness is when the content owner in this case
• 23:51
  Speaker 1: HBO says, okay, I'll take my programming off the air.
• 23:54
  Speaker 1: You're not going to get it anymore. Then what happens
• 23:56
  Speaker 1: if it, particularly if it's you know, really valuable programming,
• 23:59
  Speaker 1: is all the customers complain and they complain to their
• 24:01
  Speaker 1: cable company or their satellite company. Uh. And then usually
• 24:04
  Speaker 1: they you know, that distributory will cave and you get
• 24:07
  Speaker 1: the programming back back on. In this case, we're seeing
• 24:10
  Speaker 1: Charlie Organ at Dish, who is a very aggressive negotiator, saying,
• 24:14
  Speaker 1: you know what, I don't need HBO programming and uh
• 24:17
  Speaker 1: in an In addition, they've also dropped Univision, which is
• 24:20
  Speaker 1: really problematic because Dish tends to serve communities with large
• 24:23
  Speaker 1: Hispanic populations. Simply because he's saying, you're programming is not
• 24:27
  Speaker 1: worth what you're charging me for. Okay, So I'm looking
• 24:30
  Speaker 1: at Dish shares are down so far this year. Is
• 24:34
  Speaker 1: Charlie Organ wrong? I mean, is there transformation under the
• 24:37
  Speaker 1: underway here that he is just kind of ignoring where
• 24:41
  Speaker 1: they can distribute their content HBO and Univision online, they
• 24:45
  Speaker 1: can bypass him. Yep and uh. By his own admission,
• 24:48
  Speaker 1: Charlie Organ will tell you he has a terrible business.
• 24:50
  Speaker 1: The satellite TV business is a terrible business. He has said,
• 24:53
  Speaker 1: it's not encouraging. You don't want to hear that from
• 24:55
  Speaker 1: the leader exactly. And this was about four or five
• 24:58
  Speaker 1: years ago. He gets on his call and he says, basically,
• 25:00
  Speaker 1: my business is going to zero, but by my stock,
• 25:03
  Speaker 1: Yes and uh. And the reason is simply because you
• 25:06
  Speaker 1: don't need my Dish to get program. You can get
• 25:08
  Speaker 1: more and more of it now online and you can
• 25:10
  Speaker 1: use their substitutes like Netflix. Uh. And the real value
• 25:13
  Speaker 1: for Dish, however, is not in the core satellite business,
• 25:16
  Speaker 1: but it's in their spectrum. They own tens of billions
• 25:19
  Speaker 1: of dollars of wireless spectrum and people own this stock
• 25:22
  Speaker 1: simply because of the option value of that spectrum. What
• 25:26
  Speaker 1: can Charlie Organ do with all that spectrum? Will he
• 25:29
  Speaker 1: build a new wireless service for the United States, like
• 25:33
  Speaker 1: we need another one of those, or will he build
• 25:36
  Speaker 1: some other type of network that can drive um, you know,
• 25:40
  Speaker 1: some of this tech technology we're seeing, we don't know,
• 25:43
  Speaker 1: and Charlie Organ doesn't know what he's gonna do with
• 25:45
  Speaker 1: the spectrum. And so what's happened is people saying, Gee,
• 25:48
  Speaker 1: why am I owning the stock? Your core business is
• 25:50
  Speaker 1: going to zero, and I don't see a plan how
• 25:52
  Speaker 1: you're going to monetize your spectrum. So I'm what I'm
• 25:55
  Speaker 1: struggling with it an arrow where everyone says content is king?
• 25:59
  Speaker 1: What's he thinking? King? I mean, is I understand that
• 26:02
  Speaker 1: he doesn't want to pay them? But at the same time,
• 26:06
  Speaker 1: doesn't it help the business for its visibility and for
• 26:10
  Speaker 1: its you know, being able to market its spectrum in
• 26:13
  Speaker 1: real time to have these shows? Yeah, it doesn't. That's
• 26:16
  Speaker 1: historically that most of the leverage was on the part
• 26:19
  Speaker 1: of the programmer um and not the distributor, because the
• 26:22
  Speaker 1: programming really is the value. Content is King. In all,
• 26:26
  Speaker 1: a satellite company is simply a just distributor, and now
• 26:28
  Speaker 1: is a content owner. I have more ways to distribute
• 26:30
  Speaker 1: my content. I can go direct to the consumer like
• 26:33
  Speaker 1: HBO can do now with HBO now, So if you're
• 26:36
  Speaker 1: Charlie Organ, you're in a bad negotiating position and you're saying, basically,
• 26:39
  Speaker 1: the economics for me, you know, just don't work. I
• 26:42
  Speaker 1: operate in a business where I'm losing four to five
• 26:44
  Speaker 1: percent of my subscribers every year. And if I deem
• 26:47
  Speaker 1: a piece of programming not valuable to me, I'm just
• 26:50
  Speaker 1: gonna not you know, pay for it, and I'll suffer
• 26:52
  Speaker 1: the consequences. I'm already losing subscribers. Um. So it's a
• 26:56
  Speaker 1: very tough decision. Charlie organ is very much of a maverick.
• 27:00
  Speaker 1: Don't see other operators doing this to degree that he does.
• 27:04
  Speaker 1: But he's just much more aggressive, and I think he
• 27:06
  Speaker 1: has another end game again. He's more focused on how
• 27:09
  Speaker 1: do I monetize my spectrum um, and that's really the
• 27:13
  Speaker 1: future of the company. One thing I'm struggling to understand
• 27:16
  Speaker 1: is just how many people do view HBO shows online.
• 27:20
  Speaker 1: I mean, do you have a sense of how many
• 27:22
  Speaker 1: people have moved to streaming? Uh? You know, it's they
• 27:25
  Speaker 1: haven't really disclosed time, owners not disclosed it, but it's
• 27:27
  Speaker 1: it's probably two to three million already. So it's actually
• 27:30
  Speaker 1: gaining some pretty good traction um and we're seeing some
• 27:33
  Speaker 1: other um um, you know, direct to consumer services also
• 27:36
  Speaker 1: gaining traction. We've seen the Walt Disney Company say that
• 27:39
  Speaker 1: they're going to take ESPN directly to consumers with ESPN Plus,
• 27:43
  Speaker 1: they're going to take their all their movies and cool
• 27:45
  Speaker 1: TV shows and all that stuff, and they're going to
• 27:48
  Speaker 1: launch a direct to consumer service. So everybody's just trying
• 27:51
  Speaker 1: to compete with Netflix, and that may end up being
• 27:53
  Speaker 1: a losing battle for a lot of these media companies.
• 27:55
  Speaker 1: Have you cut the cable? I have not. Unfortunately, I'm
• 27:58
  Speaker 1: one of Brian Roberts and cast best customers. I can
• 28:01
  Speaker 1: tell you that, Oh yeah, would you what would what
• 28:03
  Speaker 1: would it take for you to cut the court? Um,
• 28:04
  Speaker 1: just the courage to call up those notoriously aggressive salespeople Comcast.
• 28:10
  Speaker 1: Oh my gosh, you should not be saying this out loud,
• 28:13
  Speaker 1: exact only going to impold in them exactly. So, but yeah,
• 28:16
  Speaker 1: it's the cable business. They have you with the bundle
• 28:18
  Speaker 1: that you know, it's really about having the broadband access
• 28:21
  Speaker 1: in the home. That's really the value driver. I love
• 28:23
  Speaker 1: it getting bullied by those uh they are very good
• 28:26
  Speaker 1: at what they do. They are very good at what
• 28:28
  Speaker 1: they do. They guilty trip you, They make you sort
• 28:29
  Speaker 1: of explain your your psychological state is when you know
• 28:32
  Speaker 1: as to when you decided to cancel things, tell you
• 28:35
  Speaker 1: know while you're missing out, So that retention salesperson is
• 28:39
  Speaker 1: probably the most valuable salesperson that a cable company has.
• 28:41
  Speaker 1: Don't you don't you like me? Paul Sweeney? Thank you
• 28:45
  Speaker 1: as always, You're going to be, of course sticking with me.
• 28:47
  Speaker 1: Paul Sweeney is the director of North American Research at
• 28:50
  Speaker 1: Bloomberg Intelligence, filling in for Pim Fox with me today.
• 28:55
  Speaker 1: Thanks for listening to the Bloomberg P and L podcast.
• 28:57
  Speaker 1: You can subscribe and listen to interviews at Apple Podcasts, SoundCloud,
• 29:02
  Speaker 1: or whatever podcast platform you prefer. I'm pim Fox. I'm
• 29:05
  Speaker 1: on Twitter at pim Fox. I'm on Twitter at Lisa Abramo.
• 29:09
  Speaker 1: It's one before the podcast. You can always catch us
• 29:12
  Speaker 1: worldwide on Bluebirg Radio.