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Bolton's Desire For Iran Regime Change Hits Oil Market · Bloomberg Intelligence

• 0:02
  Speaker 1: Welcome to the Bloomberg Penel podcast. I'm Paul swing you.
• 0:05
  Speaker 1: Along with my co host Lisa Brahma Wicks. Each day
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  Speaker 1: we bring you the most noteworthy and useful interviews for
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  Speaker 1: you and your money, whether at the grocery store or
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  Speaker 1: the trading floor. Find a Bloomberg Penl podcast on Apple
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  Speaker 1: podcast or wherever you listen to podcasts, as well as
• 0:17
  Speaker 1: at Bloomberg dot com. Well, the Trump administration said it
• 0:24
  Speaker 1: won't renew waivers that let countries buy Iranian oil without
• 0:27
  Speaker 1: facing US sanctions, a move that royal to energy markets
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  Speaker 1: and risks upsetting major importers such as China and India.
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  Speaker 1: To get the latest on this and all things energy,
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  Speaker 1: we welcome John killed Off, John's founding partner of Again Capital,
• 0:39
  Speaker 1: based in New York City. John, thanks so much for
• 0:42
  Speaker 1: joining us. What do you make of this get tough
• 0:45
  Speaker 1: stance by the US administration against Iran? Well, it certainly
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  Speaker 1: a win for the hawks within the Trump administration, led
• 0:52
  Speaker 1: by n ess A director John Bolton. Uh, this is
• 0:56
  Speaker 1: throwing down the gauntlet and the of course recently designated
• 0:59
  Speaker 1: the and Revolutionary Guard as a terrorist organization, so it's
• 1:03
  Speaker 1: a it's another step forward. Towards some kind of confrontation
• 1:07
  Speaker 1: it would appear with Iran, which I think is what's
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  Speaker 1: making the oil market even more skittish about this decision,
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  Speaker 1: uh than it has otherwise would be. This is actually
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  Speaker 1: an important point that the prospect of a more severe
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  Speaker 1: conflict between Iran and the US and just rising tensions
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  Speaker 1: in the Middle East more so than say, uh, the
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  Speaker 1: lack of Iran's oil supplies in the market. And this
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  Speaker 1: is interesting because one question that I had is couldn't
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  Speaker 1: Saudi Arabia offset any missed Iranian production in a heartbeat?
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  Speaker 1: And wouldn't they be happy to do that? Very much so,
• 1:40
  Speaker 1: at least because the Sadis, as you know, have been
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  Speaker 1: dialing back output since November when they actually put more
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  Speaker 1: oil in the market, thinking that these waivers would be
• 1:48
  Speaker 1: a terminated then um so, yes, they have plenty of
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  Speaker 1: spare capacity, were in a good position that way, and
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  Speaker 1: part of the whole global oil market balance has been
• 1:59
  Speaker 1: helped out a lot, of course by the surge in
• 2:01
  Speaker 1: US production, even though you know the oil is a
• 2:04
  Speaker 1: little bit different grade and quality. But Russia also has
• 2:07
  Speaker 1: plenty of spare capacity, as as the UAE and Kuwait.
• 2:10
  Speaker 1: To a degree. So while we have some problem issues,
• 2:13
  Speaker 1: some problem countries out there like Venezuela, and we're all
• 2:16
  Speaker 1: watching what's happening in Libya, for the most part, you know,
• 2:20
  Speaker 1: the ability for the market that he well supplied remains. So, John,
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  Speaker 1: are you surprised at all by the timing and this announcement?
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  Speaker 1: After all, the U. S. Government's kind of apparently getting
• 2:29
  Speaker 1: into the final stretches of trade negotiations with China, and obviously, uh,
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  Speaker 1: this announcement today on a ran certainly impacts China as
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  Speaker 1: a significant importer that oil. No. I think the the
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  Speaker 1: sort of the mechanisms involved with these waivers and and
• 2:44
  Speaker 1: the sanctions timetable sort of dictated Uh. This I think
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  Speaker 1: the administration. Of course, I was hoping to have the
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  Speaker 1: China trade deal wrapped up by now. They were supposed
• 2:53
  Speaker 1: to be in Marrow Lagough already. H that has obviously
• 2:56
  Speaker 1: been pushed back. But the pushback from Chinese year should
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  Speaker 1: be interesting, uh, in terms of whether or not they
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  Speaker 1: will try to defy the waivers or the sanctions. Right now,
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  Speaker 1: it appears they will not. I can tell you that
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  Speaker 1: we know from from loading schedules and things of that
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  Speaker 1: nature that China's largest refiners are already making plans to
• 3:16
  Speaker 1: pull back from purchasing Iranian oil because they don't want
• 3:19
  Speaker 1: to run a foul of the U S sanctions and
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  Speaker 1: the implications for them using the US financial systems. That's
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  Speaker 1: what makes these sanctions so effective. By the way, it's
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  Speaker 1: sort of a you're either with US or against this
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  Speaker 1: type of setup where if you continue to buy Iranian oil,
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  Speaker 1: you can't bank with the U S, you can't do
• 3:34
  Speaker 1: a lot of things with the US. So I'm looking
• 3:35
  Speaker 1: at w t I currently trading at two points, trading
• 3:39
  Speaker 1: at sixty five dollars and sixty eight cents, two points
• 3:42
  Speaker 1: of a gain versus Thursday's close, and I'm just trying
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  Speaker 1: to figure out your point, John, about the conflict, the
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  Speaker 1: potential escalated conflict in the Middle East. Uh, this comes,
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  Speaker 1: of course, as we heard reports that Iran was going
• 3:57
  Speaker 1: to close the Straight of hermas In were spons to
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  Speaker 1: the US is heightened sanctions, and that, of course is
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  Speaker 1: where about thirty five percent of the world seaboard and
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  Speaker 1: oil shipment's travel through on their way to a variety
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  Speaker 1: of countries. So I'm just trying to figure out is
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  Speaker 1: that really the lynchpin here is that what people are
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  Speaker 1: looking at as sort of potential true escalation. What's the
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  Speaker 1: next step here? Well, it's it's hard, it's there's a
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  Speaker 1: lot of arguments why it doesn't really favor I RAN
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  Speaker 1: to make a move on the straight of horror moves
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  Speaker 1: and to block it um And of course the United
• 4:30
  Speaker 1: States Navy claims that a RAN if RAN does block it,
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  Speaker 1: they can unblock it. I've heard that in sent in
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  Speaker 1: congressional testimony, verbatim. So that's there. The thing that I
• 4:40
  Speaker 1: look at and you have to look at, is that
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  Speaker 1: John Bolton, going back to the Bush administration when he
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  Speaker 1: served there, wants regime change in Iran. He pushed for it.
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  Speaker 1: Then there was a time at the latter part of
• 4:50
  Speaker 1: the Bush administration when I was in the oil market,
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  Speaker 1: but we were all rather convinced that there was going
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  Speaker 1: to be a conflict. Then it petered at things calmed down.
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  Speaker 1: The Iraq War, you know, was sort of a blocking
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  Speaker 1: mechanism for that. But that is what is in the
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  Speaker 1: back of John Bolton's mind. I can tell you that
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  Speaker 1: as as as when I try to game out what's
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  Speaker 1: gonna happen with the oil prices, that's in the mix.
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  Speaker 1: It's not in the forefront. I'm not saying that something
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  Speaker 1: is going to happen tomorrow, but know that all of
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  Speaker 1: these steps are being taken in anticipation of finally confronting
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  Speaker 1: Iran at some point. In my view, John killed Uff,
• 5:21
  Speaker 1: founding partner of Again Capital, joining us on those oil
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  Speaker 1: prices rising today to the highest levels since October of
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  Speaker 1: last year, at one point rising the most since January,
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  Speaker 1: on the news that the US was not going to
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  Speaker 1: extend waivers to a variety of countries to continue to
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  Speaker 1: import oil from Iran once the US withdrew from the
• 5:41
  Speaker 1: nuclear agreement that they had had with that nation. We
• 5:45
  Speaker 1: will update you as we get more well. It is
• 6:04
  Speaker 1: going to be another busy newsweek for Tesla investors. There's
• 6:09
  Speaker 1: an investor Day today, their companies reporting earnings later this week.
• 6:13
  Speaker 1: Of course, it was the ongoing SEC case between Elon
• 6:16
  Speaker 1: Musk and the SEC. There's also a recent car fire
• 6:19
  Speaker 1: in China, so plenty to talk about. Let's break it
• 6:22
  Speaker 1: down with Max Chafkin. Max is a feature editor for
• 6:24
  Speaker 1: Bloomberg Business Week. He joins us live in our Bloombrook
• 6:27
  Speaker 1: Interactive broker studio. Max I think where I want to
• 6:29
  Speaker 1: start is probably the most recent news, which is this
• 6:32
  Speaker 1: disagreement with Panasonic. And that's not good because Panasonic provides
• 6:36
  Speaker 1: the lithium batteries for the car. Correct. Yeah, yeah, Panasonic
• 6:40
  Speaker 1: is the main partner in Tesla's Giga factory, which is
• 6:43
  Speaker 1: this enormous, uh you know, at the time, unprecedented uh
• 6:47
  Speaker 1: scale lithium ion battery factory outside Arena, Nevada. Um. You know, Panasonic,
• 6:54
  Speaker 1: I believe it's a couple of weeks ago, came out
• 6:55
  Speaker 1: sort of saying they were going to slow down, that
• 6:58
  Speaker 1: there wasn't enough demand for for for the investments they
• 7:00
  Speaker 1: were putting in. Elon Musk taking issue with that and um,
• 7:04
  Speaker 1: you know, basically saying that that they're they're still sort
• 7:08
  Speaker 1: of waiting for more from Panasonic. Um. And again this
• 7:11
  Speaker 1: comes into this you know, crazy week where we have
• 7:13
  Speaker 1: earnings coming up on Wednesday, um, as well as this
• 7:17
  Speaker 1: big autonomy day that that that we should see in
• 7:20
  Speaker 1: a few hours. To me, this is a quintessential week
• 7:24
  Speaker 1: that shows how Tesla has lost control over its message.
• 7:29
  Speaker 1: Because Elon Musk is under fire from the SEC for
• 7:32
  Speaker 1: his tweeting habits, they're trying to hold some event where
• 7:35
  Speaker 1: they're to talk about autonomous driving. No one's expecting much
• 7:38
  Speaker 1: of anything out of that, right, I mean, this is
• 7:40
  Speaker 1: not necessarily going to be something that's a landmark event
• 7:44
  Speaker 1: for them, amid all of the hubbub around the fire,
• 7:47
  Speaker 1: around the Panasonic dispute, around the fact that people are
• 7:51
  Speaker 1: expecting their deliveries to be lower at this next earnings report.
• 7:55
  Speaker 1: I mean, am my characterizing was wrong? Well, I mean
• 7:58
  Speaker 1: I think that, you know, I think guys, that is
• 8:00
  Speaker 1: definitely a legitimate but you know point of view. It's
• 8:02
  Speaker 1: a point of view you'll hear from from lots and
• 8:05
  Speaker 1: lots of smart Wall Street investors. Um Tesla has also,
• 8:08
  Speaker 1: you know, in Elon Musk has as a track record
• 8:11
  Speaker 1: of coming out with these kind of wild, you know,
• 8:13
  Speaker 1: really amazing UM product announcements and and maybe that's what
• 8:17
  Speaker 1: we'll see um. You know, the thing is and and
• 8:22
  Speaker 1: and the reason you might doubt that is because we
• 8:23
  Speaker 1: have this earnings you know, this earnings incoming where everyone's
• 8:26
  Speaker 1: expecting kind of not a great quarter. So it kind
• 8:28
  Speaker 1: of feels like a bit of a distraction. Also, when
• 8:31
  Speaker 1: does he have time to work on this incredible thing?
• 8:33
  Speaker 1: And with what money aren't they cutting staff? I'm serious, Like,
• 8:36
  Speaker 1: doesn't that seriously inhibit their ability to create moonshot ideas
• 8:40
  Speaker 1: that are absolutely going to revolutionize the concept of driving.
• 8:43
  Speaker 1: Yeah so, and we should probably just say what this
• 8:45
  Speaker 1: what this announcement or what we think this announcement is
• 8:47
  Speaker 1: going to be. We we think it's gonna be an
• 8:50
  Speaker 1: announcement basically that that Tesla is very close to having
• 8:54
  Speaker 1: you know, full self driving capability, which people are going
• 8:57
  Speaker 1: to debate what that means. And also that it's it's
• 8:59
  Speaker 1: planning you know, self driving taxi service, so sort of
• 9:02
  Speaker 1: like Uber lift thing. Um. Now, I should say, first
• 9:07
  Speaker 1: of all, the conventional wisdom in the self driving car
• 9:09
  Speaker 1: world is that you know, Google is wildly ahead of
• 9:12
  Speaker 1: every competitor, that that Tesla isn't anywhere close. Um. The
• 9:16
  Speaker 1: The other piece of conventional wisdom from what you hear
• 9:18
  Speaker 1: from executives from like Ford and and the big car
• 9:21
  Speaker 1: companies is that you know, self driving cars are like
• 9:23
  Speaker 1: ten years off, not not a year off, like like
• 9:26
  Speaker 1: Elon Musk says. Now, the thing is there there are
• 9:29
  Speaker 1: things about what Tesla has done that are really impressive.
• 9:32
  Speaker 1: I mean, the company has been much faster in terms
• 9:34
  Speaker 1: of getting these kind of pseudo autonomy like services they're
• 9:38
  Speaker 1: you know called ADAS Advanced driver Assistance services. I think,
• 9:42
  Speaker 1: um uh and and and getting those out into the
• 9:45
  Speaker 1: public and getting people to kind of um embrace them.
• 9:48
  Speaker 1: And I think when you look at like, well, what's
• 9:50
  Speaker 1: it gonna take to have self driving cars? Part of
• 9:52
  Speaker 1: this is a technology thing. Part of it as a
• 9:54
  Speaker 1: marketing thing. And I think if you're if your critic,
• 9:57
  Speaker 1: you might say, well, they've they've focused a little bit
• 9:58
  Speaker 1: too much on the marketing. They've been saying sing that
• 10:00
  Speaker 1: they have self full self driving capabilities, but what are those?
• 10:04
  Speaker 1: But but marketing is important and getting getting consumers excited
• 10:07
  Speaker 1: about this is is something. So so we'll see. I mean,
• 10:10
  Speaker 1: I don't think it's at all clear that I don't
• 10:12
  Speaker 1: think it's clear that Tesla has nothing, but I do
• 10:14
  Speaker 1: think there are there are reasons for sure to be skeptical.
• 10:17
  Speaker 1: So speaking of being skeptical, where are we with or
• 10:20
  Speaker 1: where is Elon Musk in the company with the sec
• 10:22
  Speaker 1: right now? It seems like I know they were in
• 10:23
  Speaker 1: court last week. Um seems like something has to move here. Well,
• 10:27
  Speaker 1: they're they're you know, doing court ordered negotiations to come
• 10:31
  Speaker 1: up with a settlement with the SEC. And and one
• 10:34
  Speaker 1: thing that makes this um, this kind of settlement kind
• 10:36
  Speaker 1: of hard to get your head around is because basically,
• 10:39
  Speaker 1: for months, uh, Elon Musk and Testla kind of thumb
• 10:42
  Speaker 1: his nose at the SEC in the face of this um,
• 10:45
  Speaker 1: of this agreement they had to to you know, vet
• 10:48
  Speaker 1: his tweets and all that stuff. Um. Now now the
• 10:52
  Speaker 1: SEC says, well, Elon Musk has violated the settlement, and
• 10:54
  Speaker 1: it's kind of unclear what what what the what's going
• 10:57
  Speaker 1: to happen. I assume some sort of fine. I mean,
• 11:00
  Speaker 1: in theory, the SEC could get Elon Musk removed a CEO. UM.
• 11:05
  Speaker 1: The thing is that would probably be very bad for
• 11:07
  Speaker 1: Tesla investors, and it's hard to imagine the SEC, uh sorry,
• 11:11
  Speaker 1: a court, you know, wanting to seeing that as a
• 11:13
  Speaker 1: as a reasonable outcome. Just to give you some perspective,
• 11:17
  Speaker 1: Tesla shares down a little bit more than three per
• 11:19
  Speaker 1: cent today as all of this news piles on, even
• 11:23
  Speaker 1: as they prepared to release their autonomous vehicle announcement that
• 11:27
  Speaker 1: we don't know exactly what the substance will be, but
• 11:30
  Speaker 1: there is hope that perhaps it will provide something novel Max,
• 11:34
  Speaker 1: just real quickly, here are there are the bulls still strong?
• 11:39
  Speaker 1: I mean, basically, are there still this sort of like
• 11:41
  Speaker 1: kadra of bulls that can't be shaken from their elon
• 11:44
  Speaker 1: musk faith? Yeah, of course the bulls uh hard to say.
• 11:49
  Speaker 1: I mean I think, you know, we see the stock
• 11:51
  Speaker 1: price going down. I guess we have to say, you know,
• 11:53
  Speaker 1: it's shrinking slightly or something like that. I think that
• 11:55
  Speaker 1: the bull case for Tesla's kind of stayed the same.
• 11:58
  Speaker 1: It's it's that know, they're selling tons of these cars
• 12:02
  Speaker 1: and that there they have, you know, a leg up
• 12:04
  Speaker 1: in terms of the next generation of cars, b that
• 12:06
  Speaker 1: electric or autonomous. Max Chafkin, Bloomberg Business Features Editor, Smart
• 12:11
  Speaker 1: and Tesla Smart and a lot of things. Thank you
• 12:13
  Speaker 1: so much for being with us. One of the biggest
• 12:31
  Speaker 1: uncertainties hanging over markets has been the ongoing tensions between
• 12:36
  Speaker 1: US and China over the trade relationship between these two nations.
• 12:40
  Speaker 1: There is a question I have though, not just will
• 12:43
  Speaker 1: the US and China come to some agreement, but how
• 12:46
  Speaker 1: damaging has this uncertainty been already? And joining us now
• 12:50
  Speaker 1: to talk about that as well as the path forward.
• 12:52
  Speaker 1: David Lovinger, he's senior analysts covering emerging markets for tc W,
• 12:57
  Speaker 1: which manages more than and billion dollars. Also, he was
• 13:01
  Speaker 1: a senior coordinator for China at the Treasury Department, UH
• 13:05
  Speaker 1: so he has extensive experience with Chinese diplomacy. David, thank
• 13:09
  Speaker 1: you so much for being with us. I want to
• 13:11
  Speaker 1: start with this story I read in the Wall Street
• 13:13
  Speaker 1: Journal over the weekend that was talking about how CEO
• 13:17
  Speaker 1: is the C suites at companies in the US and
• 13:20
  Speaker 1: China are making big decisions that are not reversible in
• 13:23
  Speaker 1: the short term, regardless of how these trade tensions are
• 13:27
  Speaker 1: play out. How does this affect business in the long term. Well, Lisa, first,
• 13:32
  Speaker 1: thanks for having me. You know, I think you kind
• 13:34
  Speaker 1: of nailed one of the most important kind of risks
• 13:38
  Speaker 1: with the trade war. UM, I think more concerning to
• 13:42
  Speaker 1: a lot of investors is not necessarily the tariffs, but
• 13:45
  Speaker 1: the uncertainty about market access. And I have to thank you. Know,
• 13:50
  Speaker 1: if you're a business and you're thinking about making a
• 13:53
  Speaker 1: major investment, your first instinct is just to hold off
• 13:58
  Speaker 1: until you know what your market access is going to
• 14:00
  Speaker 1: be and what your cost of components is going to be. So, David,
• 14:05
  Speaker 1: it's interesting. I mean, at this stage, do you have
• 14:07
  Speaker 1: a sense of what type of agreement can be reached
• 14:10
  Speaker 1: between the US and trying to reading the tea leaves
• 14:13
  Speaker 1: it would be more of a kind of a headline
• 14:15
  Speaker 1: type of agreement, or do you expect some real substance
• 14:19
  Speaker 1: on some of the key issues. Um. What you know,
• 14:22
  Speaker 1: clearly both sides are working hard to get an agreement,
• 14:27
  Speaker 1: and you know, I still think it looks likely we'll
• 14:29
  Speaker 1: get something by the end of June. But I think
• 14:32
  Speaker 1: again you kind of raised the right question, what you know,
• 14:34
  Speaker 1: what are we going to get? Um? And you know,
• 14:38
  Speaker 1: there seems to be kind of three factions on the
• 14:41
  Speaker 1: U s side. Uh, there's the just buy more stuff faction.
• 14:46
  Speaker 1: There's kind of the US corporate faction that is focusing
• 14:51
  Speaker 1: on market access, protecting intellectual property and level leveling the
• 14:56
  Speaker 1: playing field with staying on enterprises. And then there's the
• 15:00
  Speaker 1: uh China Hawks, and I think you know their goal
• 15:04
  Speaker 1: is to kind of weaken and isolate China. So UM,
• 15:10
  Speaker 1: you know, the big questions is what's going to happen
• 15:12
  Speaker 1: to the tariff I think the US wants to retain
• 15:15
  Speaker 1: a lot of the tariffs for leverage. I think unless
• 15:18
  Speaker 1: we see a lot of the tariffs coming off, that's
• 15:20
  Speaker 1: kind of a hard deal for the Chinese to sell
• 15:24
  Speaker 1: back home. And then also kind of what kind of
• 15:27
  Speaker 1: enforcement mechanisms you're going to get, um, I think if
• 15:31
  Speaker 1: you you know, if I'm pressed, I'd say we're going
• 15:34
  Speaker 1: to see probably the temper cent tariffs on two billion
• 15:38
  Speaker 1: dollars of US imports come off, but ont and imports
• 15:44
  Speaker 1: day on. I mean, talk about the uncertainty. We often
• 15:47
  Speaker 1: focus on US companies and the consequences for them. Chinese companies, though,
• 15:53
  Speaker 1: I have also very big consequences, and not just in
• 15:55
  Speaker 1: China but throughout emerging markets in Asia. I'm just one
• 16:00
  Speaker 1: ring from your perspective. Have the ongoing trade tensions between
• 16:03
  Speaker 1: the US and China been incredibly harmful for for certain
• 16:07
  Speaker 1: Asian nations other than China or helpful as supplied chains
• 16:12
  Speaker 1: move to, say Vietnam. Yeah, So I'd say, you know,
• 16:17
  Speaker 1: the big picture is Asia is a region that still
• 16:22
  Speaker 1: depends on trade. So to the extent that the US
• 16:26
  Speaker 1: in Europe and other countries maybe turning more protectionists, that's
• 16:30
  Speaker 1: bad for Asia. Uh, this is going to be destabilizing
• 16:35
  Speaker 1: for Asian supply chains. But on the other hand, you're
• 16:39
  Speaker 1: right I think we will see some more investment going
• 16:43
  Speaker 1: to other Asian economies, and in some ways it'll just
• 16:47
  Speaker 1: be an acceleration of what's been going on for a
• 16:50
  Speaker 1: number of years now. Wage costs are rising in China,
• 16:54
  Speaker 1: We're already seen more and more investment going to places
• 16:57
  Speaker 1: like Vietnam. So, David Um, we've seen some data come
• 17:00
  Speaker 1: out of the last several months that the economic situation
• 17:04
  Speaker 1: in China is maybe stabilizing a little bit. Um. Does
• 17:07
  Speaker 1: that give them or to what extent do you think
• 17:09
  Speaker 1: that gives them maybe some leverage in the negotiations and
• 17:12
  Speaker 1: the trade negotiations. Yeah, so I think kind of the
• 17:16
  Speaker 1: green shots that we're seeing coming out of China, along
• 17:20
  Speaker 1: with the kind of relatively buoyant markets in the US,
• 17:25
  Speaker 1: I think stiff in the backs of both sides, and
• 17:28
  Speaker 1: you know, give both sides less of incentive to take
• 17:32
  Speaker 1: a bad deal that would be politically costly at home.
• 17:36
  Speaker 1: And that's you know, another reason why I'm just cautious
• 17:39
  Speaker 1: about what we're going to see at by the end
• 17:41
  Speaker 1: of June. So I'm just trying to figure out with
• 17:45
  Speaker 1: all of the sort of doom and gloom around the
• 17:48
  Speaker 1: trade tensions, do you think that they've been worse than
• 17:51
  Speaker 1: people expected or better than people expected. So far, what
• 17:55
  Speaker 1: do you give it as far as great? Okay, So
• 17:57
  Speaker 1: I'd say a year or two ago, if you had
• 18:00
  Speaker 1: told me that there were going to be US tariffs
• 18:04
  Speaker 1: on two or fifty billion dollars of imports from China,
• 18:08
  Speaker 1: I would have said that would have been kind of
• 18:11
  Speaker 1: a downside tail risk. So I think things are definitely
• 18:15
  Speaker 1: worse than people expected. Keep in mind, we got the tarraf,
• 18:21
  Speaker 1: but whatever happens on the tariff, we have the tech war,
• 18:25
  Speaker 1: and um, the US is gonna would continue to go
• 18:28
  Speaker 1: after Chinese tech firms. They're going to tighten controls on
• 18:32
  Speaker 1: exports of technology to China, They're going to tighten controls
• 18:37
  Speaker 1: on Chinese investment in US tech firms, and they're going
• 18:41
  Speaker 1: around the world trying to convince allies and other economies
• 18:45
  Speaker 1: not to use Chinese technology and their telecommunication systems. So, David,
• 18:51
  Speaker 1: the news we had today about the Iranian oil and
• 18:54
  Speaker 1: the and the restrictions there, we saw that China is
• 18:57
  Speaker 1: the biggest importer of Iranian oil. How much is that
• 19:01
  Speaker 1: going to impact maybe the trade negotiations. Are they gonna
• 19:06
  Speaker 1: say that, hey, this is not a coincidence. Um so,
• 19:10
  Speaker 1: I mean, I think the Iran oil is a bit
• 19:14
  Speaker 1: separate from the trade negotiations. But the big takeaway from me,
• 19:19
  Speaker 1: and I was just in Washington for the I M
• 19:22
  Speaker 1: S Spring meetings, is do not underestimate the power of
• 19:27
  Speaker 1: the hardliners in China hawks uh in Washington, they have
• 19:32
  Speaker 1: been gaining strength, and I think, you know, the decision
• 19:37
  Speaker 1: over the weekend on Iran reflects that absolutely. David Lovinger,
• 19:42
  Speaker 1: thank you so much. David is a sovereign analyst covering
• 19:44
  Speaker 1: Emerging Markets Group at TCW Jointings on the phone from
• 19:47
  Speaker 1: Los Angeles. At least it's interesting. I think the trade
• 19:50
  Speaker 1: negotiations the real questions, I guess. And now we're talking
• 19:53
  Speaker 1: about potentially a June time train for an announcement. The
• 19:58
  Speaker 1: real question I think bump Pople's minds is is it
• 20:01
  Speaker 1: going to be real or is it just going to
• 20:02
  Speaker 1: be a headline? So we'll have to wait and see.
• 20:20
  Speaker 1: It is Earth Day and there is no better person
• 20:22
  Speaker 1: Paul than I can imagine speaking with right now than
• 20:24
  Speaker 1: Brian D's. He has global head of Sustainable Investing for
• 20:27
  Speaker 1: black Rock, which is very impressive in and of itself,
• 20:30
  Speaker 1: but he also was a senior advisor to US President
• 20:33
  Speaker 1: Barack Obama and served as the Deputy Director of the
• 20:36
  Speaker 1: Office of Management and Budget. He was an a deputy
• 20:39
  Speaker 1: director at the National Economic Council, etcetera, etcetera. We could
• 20:42
  Speaker 1: go on and on, but we're not going to because Brian,
• 20:43
  Speaker 1: I want to get right to it, and it really
• 20:45
  Speaker 1: goes to the heart of what you have experience in
• 20:49
  Speaker 1: where does public responsibility leave off and private investing responsibility
• 20:55
  Speaker 1: pick up? In other words, how much can the private
• 20:57
  Speaker 1: sector do if public policies aren't as saily where they
• 21:01
  Speaker 1: ought to be when it comes to protecting the earth. Well,
• 21:05
  Speaker 1: thanks la So and it's good to talk on on
• 21:08
  Speaker 1: on Earth Day on this subject. Look, I think that
• 21:12
  Speaker 1: this is a question that we spent a lot of
• 21:15
  Speaker 1: time in when I used to work in government and
• 21:18
  Speaker 1: here a lot in the private sector. And I think
• 21:20
  Speaker 1: the answer is um. The answer is decidedly both that
• 21:24
  Speaker 1: at the end of the day, UM, the transition to
• 21:28
  Speaker 1: global transition, the mega trend to transition to a lower
• 21:31
  Speaker 1: carbon economy is going to be driven both by UM
• 21:34
  Speaker 1: public policies and it's also going to be driven by
• 21:37
  Speaker 1: innovation in the private capital markets. Everything from early stage
• 21:41
  Speaker 1: innovation and technology up to UM innovations in the ways
• 21:45
  Speaker 1: that the capital markets are identifying risks and an allocating
• 21:48
  Speaker 1: capital against it, and so the interaction between those two
• 21:52
  Speaker 1: is is complicated in nuanced and it depends on geography
• 21:56
  Speaker 1: or otherwise. But at the end of the day, the
• 21:58
  Speaker 1: answer is a combination of both. So, Brian E s
• 22:01
  Speaker 1: G investing, let's just spell it out, Environmental sustainability and governance. UM,
• 22:07
  Speaker 1: it's we know it's become increasingly important to investors. Even
• 22:09
  Speaker 1: on the Bloomberg terminal on the f A function, which
• 22:12
  Speaker 1: is one of the most widely hit functions on the terminal,
• 22:15
  Speaker 1: there is a lot of E s G data for
• 22:18
  Speaker 1: each company that Bloomberg has, So it's very important talk
• 22:21
  Speaker 1: to us about the data that is available to investors.
• 22:24
  Speaker 1: Is it out there so that they can make informed decisions. Yeah. Look,
• 22:28
  Speaker 1: I think the first important thing to reinforce here is that,
• 22:31
  Speaker 1: at least from our perspective, sustainability related issues are and
• 22:36
  Speaker 1: should be integrated into the way that you think about
• 22:40
  Speaker 1: investing from the perspective of risk and return. So when
• 22:44
  Speaker 1: we think about these sustainability related issues and the data
• 22:47
  Speaker 1: companying them, we're thinking about how can we actually improve
• 22:50
  Speaker 1: long term investment performance. So this is about value and
• 22:54
  Speaker 1: not just values. That's point number one. Point number two
• 22:57
  Speaker 1: is that the data is complicated in sufficient in lots
• 23:01
  Speaker 1: of ways, but has improved dramatically such that there really,
• 23:05
  Speaker 1: um is data out there to measure these risks and
• 23:08
  Speaker 1: these opportunities in a more granular way. Um. And we're
• 23:11
  Speaker 1: in It's Earth today today. We're talking in particular about
• 23:14
  Speaker 1: climate related risks, and our research has underscored that. Um,
• 23:18
  Speaker 1: it's not straightforward, but if you actually measure these risks
• 23:21
  Speaker 1: down to the municipal or the asset level, you can
• 23:25
  Speaker 1: develop a much clearer picture of the risks that structure
• 23:29
  Speaker 1: or municipality are facing. Then we would have even just
• 23:32
  Speaker 1: a year or two you ago, Brian, what's the most
• 23:34
  Speaker 1: effective sustainable investment? In other words, is there something that
• 23:38
  Speaker 1: is sort of a sort of quintessential type of investment
• 23:42
  Speaker 1: if you want to be Earth friendly? Well, look, I
• 23:46
  Speaker 1: think the good news for investors is that the number
• 23:52
  Speaker 1: of options and the quality of the options to invest
• 23:55
  Speaker 1: sustainably is increasing dramatically. And so you know, we have
• 24:00
  Speaker 1: Alack Rock and across the industry are using the increased
• 24:04
  Speaker 1: data that is out there UM to generate more and
• 24:08
  Speaker 1: easier options. What kind of data are you talking about
• 24:10
  Speaker 1: in terms of emissions? Are in terms of waste? Sure?
• 24:14
  Speaker 1: So I mean you start with you start with the
• 24:16
  Speaker 1: basic data, like the what companies are disclosing in terms
• 24:19
  Speaker 1: of their greenhouse gas emissions, but you also want to
• 24:22
  Speaker 1: look at things like how much UM water are they
• 24:25
  Speaker 1: using UM, where they where those demands UM are they
• 24:29
  Speaker 1: in areas of the country or areas of the world
• 24:32
  Speaker 1: that will be particular water stressed, And likewise, how they
• 24:35
  Speaker 1: manage and process UM their waste. All three of those
• 24:38
  Speaker 1: issues are relevant, and you want to make sure that
• 24:41
  Speaker 1: you have data and integrate that data into UM into
• 24:45
  Speaker 1: an assessment of a company. And then that sounds very
• 24:49
  Speaker 1: intensive at an individual company level, but the advances in
• 24:52
  Speaker 1: data and in UM in in our investing tools enable
• 24:57
  Speaker 1: us to generate core portfolio holding blocks that investors can
• 25:01
  Speaker 1: integrate into their investment strategies that are have a sustainable
• 25:06
  Speaker 1: tilt to them, but still deliver the risk return and
• 25:09
  Speaker 1: the long term financial outcomes that they are they're focused on.
• 25:12
  Speaker 1: So UM So there are elements of this that are
• 25:15
  Speaker 1: very complicated because you have to understand how to measure
• 25:17
  Speaker 1: these things at the company level. But the good news
• 25:19
  Speaker 1: is that we're able to generate sustainable investing options that
• 25:22
  Speaker 1: are increasingly simple, straightforward, and the end investor can think
• 25:26
  Speaker 1: about building into in the way that they would their
• 25:29
  Speaker 1: core portfolio. Excellent. Brian D. S Thank you so much
• 25:32
  Speaker 1: for joining us on this Earth Day. Brian's global head
• 25:34
  Speaker 1: of sustainable investing for black Rock, joining us on the phone.
• 25:37
  Speaker 1: Thanks for listening to the Bloomberg P and L podcast.
• 25:40
  Speaker 1: You can subscribe and listen to interviews at Apple Podcasts
• 25:42
  Speaker 1: or whatever podcast platform you prefer. Paul Sweeney, I'm on
• 25:45
  Speaker 1: Twitter at pt Sweeney. I'm Lisa bram Woyd's I'm on
• 25:48
  Speaker 1: Twitter at Lisa bram Woyd's one before the podcast. You
• 25:51
  Speaker 1: can always catch us worldwide on Bloomberg Radio.