Latest / Bloomberg Intelligence / Russia's a Clear And Present Danger, Ambassador Ereli Says

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Russia's a Clear And Present Danger, Ambassador Ereli Says · Bloomberg Intelligence

• 0:04
  Speaker 1: Welcome to the Bloomberg P and 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
• 0:14
  Speaker 1: you and your money, whether at the grocery store or
• 0:16
  Speaker 1: the trading floor. Find the Bloomberg P L Podcast on iTunes,
• 0:20
  Speaker 1: SoundCloud and at Bloomberg dot com. Ukraine has accused of
• 0:29
  Speaker 1: Russia of state terrorism. That's coming after a former Russian
• 0:33
  Speaker 1: lawmaker and a witness in a treason case against former
• 0:37
  Speaker 1: Ukrainian leader Victor Janakovich was shot dead in broad daylight
• 0:40
  Speaker 1: outside his hotel in central Kiev, Ukraine. Today, you're gonna
• 0:45
  Speaker 1: tell us a little bit more about Russia and it's
• 0:48
  Speaker 1: efforts and responsibilities in the international order. Is Adam Arelli.
• 0:53
  Speaker 1: He is a former US ambassador to Bahrain and a
• 0:56
  Speaker 1: State Department deputy spokesman. Ambassador, Really, thank you for being
• 1:01
  Speaker 1: with us. I wonder if we could just get your
• 1:03
  Speaker 1: reaction to this, uh, this event in Ukraine today, well disturbing,
• 1:10
  Speaker 1: but not surprising. Russia has a has a history and
• 1:14
  Speaker 1: a pattern of offering its opponents. Uh. You know, just
• 1:18
  Speaker 1: two days ago, um a lawyer who was bringing a
• 1:22
  Speaker 1: case against the Russian government for corruption. Accidentally fell out
• 1:26
  Speaker 1: of his fourth story apartment in Moscow. Wow, taking a
• 1:31
  Speaker 1: bathtub up the stairs. Okay, and the Russians a rule,
• 1:35
  Speaker 1: that's not an accident. So look, let's be clear, Russia
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  Speaker 1: is a clear and present danger to the United States
• 1:43
  Speaker 1: and to the rules based international order that was put
• 1:45
  Speaker 1: in place after the Cold War. And until and unless
• 1:51
  Speaker 1: we recognize that and have a concerted policy with our
• 1:56
  Speaker 1: allies to confront it, whether it be in the Baltics,
• 1:59
  Speaker 1: in the ball kins Uh or in in in Central
• 2:03
  Speaker 1: Europe and the Ukraine, We're going to get our lunch
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  Speaker 1: eaten by a much more aggressive and opportunistic threat that
• 2:10
  Speaker 1: is on that is that is out to get us.
• 2:13
  Speaker 1: It's that simple, ambassador. Really, given your comments that are
• 2:18
  Speaker 1: very strong about the potential danger that Russia poses to
• 2:22
  Speaker 1: the US and too many other nations, how damaging is
• 2:26
  Speaker 1: the current administration's approach to that country. And but aside
• 2:31
  Speaker 1: from that, to that country, to current alliances like NATO
• 2:35
  Speaker 1: and others that have potentially curtailed Russian power. Yeah, well,
• 2:42
  Speaker 1: I'd say it's a little early to tell because we
• 2:45
  Speaker 1: really don't know what the administration's approach to Russia is
• 2:47
  Speaker 1: you hear different things, whether it's from the White House
• 2:50
  Speaker 1: or the State Department of the Defense Department. But I
• 2:53
  Speaker 1: think you know, look, Russia has an active and aggressive
• 2:57
  Speaker 1: campaign to separate the States from its Western allies and
• 3:01
  Speaker 1: just so divisions within the Western Alliance. They're doing it
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  Speaker 1: in the Balkans through countries like Albania and Moldova, UH
• 3:09
  Speaker 1: and Hungary, where they've been very effective at um at
• 3:14
  Speaker 1: dividing the opposition and creating extreme right wing movements UH
• 3:19
  Speaker 1: like they've done in the United States. Well, so you
• 3:21
  Speaker 1: know we're gonna see it in elections coming up in
• 3:23
  Speaker 1: a number of countries where Russia is just trying to
• 3:26
  Speaker 1: royal the waters and prevent countries and those governments from
• 3:30
  Speaker 1: being friendly the United States. Well, what given that perspective,
• 3:35
  Speaker 1: what do you make of Rex Tillerson, the current Secretary
• 3:38
  Speaker 1: of State UH, not attending, deciding not to attend an
• 3:42
  Speaker 1: upcoming NATO meeting and instead later on going to a
• 3:47
  Speaker 1: meeting in Russia. Does that concern Well, I think that
• 3:51
  Speaker 1: decision is under review, and my my understanding from people
• 3:55
  Speaker 1: in the State Department is that they're going to reschedule
• 3:57
  Speaker 1: it so that Tillerson can do it. But to your
• 3:59
  Speaker 1: question and the it's not what I think. It's the
• 4:02
  Speaker 1: outcry of of our European allies and everybody else said,
• 4:07
  Speaker 1: wait a minute, you can't do this. And it was
• 4:10
  Speaker 1: a miscalculation. It was an unforced error by the by
• 4:13
  Speaker 1: the State Department to decide not to go to a
• 4:16
  Speaker 1: NATO ministerial to meet the Chinese president instead, and then
• 4:20
  Speaker 1: to go to Russia. It just it sent so many
• 4:23
  Speaker 1: wrong signals about US priorities in US commitment to traditional allies.
• 4:28
  Speaker 1: And that's why people are asking questions, is where does
• 4:30
  Speaker 1: the United States stand on Russia? Uh? And until we
• 4:33
  Speaker 1: actually take some action and make some clear statements by
• 4:37
  Speaker 1: the president, you know, it's like the Sector of State
• 4:39
  Speaker 1: says one thing, Defense Department, Defense Secretary says something, but
• 4:43
  Speaker 1: until it's the president, you know, these are all the
• 4:48
  Speaker 1: you know, number two and three officials is not the
• 4:50
  Speaker 1: number one and number one that capt Ambassador Elly. You
• 4:53
  Speaker 1: spent twenty four years as a Foreign Service officer, and
• 4:58
  Speaker 1: if in that time you obviously have met with many
• 5:01
  Speaker 1: heads of state, what can maybe you go through some
• 5:04
  Speaker 1: of them and tell us what their reaction is to
• 5:07
  Speaker 1: Russia's involvement in non Russian affairs. Well, it's pretty clear. Yeah,
• 5:16
  Speaker 1: let's go from north to south, Lithuania, Estonia, Latvia, Norway, Finland, Sweden,
• 5:22
  Speaker 1: all these countries feel very much at risk. UH that
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  Speaker 1: Russia has increased the number of troops on their borders
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  Speaker 1: U and NATO has slowed forces to defend them. Going south,
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  Speaker 1: Poland obviously is a has a history of of of
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  Speaker 1: conflict and intimidation for Russia. UM. Germany obviously is the
• 5:43
  Speaker 1: anchor of Europe, the security and political and economic anchor
• 5:47
  Speaker 1: of Europe. Nobody is more UM, nobody is more hawkish
• 5:52
  Speaker 1: on Russia. I think that Angela Merkel, which is why
• 5:54
  Speaker 1: it's so disturbing frankly, that that that Trump and Merkel
• 5:59
  Speaker 1: don't have the kind of chemistry that you get the
• 6:01
  Speaker 1: two strongest Western powers should have when they're facing a
• 6:06
  Speaker 1: serious threat from the east. Now back to the back
• 6:09
  Speaker 1: to the the the unrest that that Russia is sewing
• 6:15
  Speaker 1: in Europe. Go to the balk and go to Albania,
• 6:18
  Speaker 1: go to Kasta and go to Serbia, and that is
• 6:22
  Speaker 1: exactly where that is the soft underbelly of Europe. That's
• 6:25
  Speaker 1: where Russia is trying to exploit division and create client regimes.
• 6:31
  Speaker 1: We gotta leave it there. I'm sorry. Ambassador Arelli is
• 6:33
  Speaker 1: the former U S Ambassador to bah Rein. Well, if
• 6:49
  Speaker 1: you're invested in stocks, SMP five hundred is up nearly
• 6:52
  Speaker 1: five so far this year. And if you're taking a
• 6:56
  Speaker 1: look at what's going on in bonds, the thirty years
• 6:58
  Speaker 1: three point two per sent here to help us make
• 7:01
  Speaker 1: sense of all this is Steven Sarge Gilfoil. He is
• 7:04
  Speaker 1: the founder and the president of Serge six and Serge
• 7:08
  Speaker 1: maybe you could just tell people you were a floor
• 7:10
  Speaker 1: trader for over thirty years, although you don't look at
• 7:13
  Speaker 1: um gosh, that's yet. Well, there you go. That's the
• 7:16
  Speaker 1: nicest thing anyone's gonna say to you all day. Is
• 7:19
  Speaker 1: there a a connection between this health care vote that
• 7:23
  Speaker 1: is scheduled for tonight in the House and what traders
• 7:27
  Speaker 1: and investors are doing with their money today? Oh, certainly,
• 7:31
  Speaker 1: I assist the cell off on Tuesday. I'm sure you've
• 7:33
  Speaker 1: noticed that. It's almost as if we're skating on thin ice.
• 7:35
  Speaker 1: We're walking on egg shells, however you want to put it.
• 7:38
  Speaker 1: We're waiting to see if we can get to the
• 7:41
  Speaker 1: tax cut to the fiscal spending to further deregulation. This
• 7:45
  Speaker 1: is what traders want to see. We really don't care
• 7:48
  Speaker 1: all that much about our health care, at least not today.
• 7:51
  Speaker 1: When one of our kids get sick, we're gonna care.
• 7:53
  Speaker 1: But today we care about how to propel the financials further,
• 7:57
  Speaker 1: how to take the growth trade further. You know, I
• 8:00
  Speaker 1: feel like there's been a shifting narrative though in the
• 8:02
  Speaker 1: past week, from this is a booming economy, one that
• 8:06
  Speaker 1: has momentum and is gaining steam to We're not sure
• 8:10
  Speaker 1: what some of these tea leaves mean that it might
• 8:12
  Speaker 1: be giving us, you know, different different types of h views.
• 8:17
  Speaker 1: We were talking offline about how you think that the FED,
• 8:19
  Speaker 1: if they hiked too quickly, could end up derailing the economy.
• 8:23
  Speaker 1: Do you really think that the economy and that the
• 8:24
  Speaker 1: stock market is built on recovery that is so thin
• 8:28
  Speaker 1: that a an extra or you know, twenty five basis
• 8:31
  Speaker 1: point hike in addition to what is uh perhaps warranted
• 8:36
  Speaker 1: by the economy could potentially derail the stock market. This
• 8:39
  Speaker 1: is the third hike in the cycle, all right, and
• 8:41
  Speaker 1: we haven't really seen economic progression all that much. We've
• 8:44
  Speaker 1: seen slow and steady economic progression, but the fourth quarter
• 8:46
  Speaker 1: of the economy group one this quarter, if the Atlanta
• 8:50
  Speaker 1: Fed is correct, and they're not usually correct, but if
• 8:51
  Speaker 1: they are correct, it's growing up. Zero point nine c
• 8:55
  Speaker 1: p I isn't really there. Yes, it's all two point
• 8:58
  Speaker 1: seven percent on a year over year base is But
• 9:01
  Speaker 1: in April the comparisons get very tough, and now that
• 9:04
  Speaker 1: oils rolled off a cliff, that headline inflation is not
• 9:07
  Speaker 1: really going to be there. Well, but how do you
• 9:09
  Speaker 1: then justify being bullish on stocks and then seeing all
• 9:11
  Speaker 1: of these sort of tea leaves that suggest that perhaps
• 9:14
  Speaker 1: the market is the same slow growth uh place that
• 9:17
  Speaker 1: it was in last year. Well, stocks are up because
• 9:19
  Speaker 1: consumer confidence has been higher, home builder confidence has been higher,
• 9:22
  Speaker 1: small business optimism has been higher, and earnings have been
• 9:26
  Speaker 1: better for two quarters. But that's all based on this
• 9:30
  Speaker 1: growth agenda is pro business agenda that we, at least
• 9:33
  Speaker 1: for some time now thought because the President and the
• 9:36
  Speaker 1: House and the Senate we're all from the same party,
• 9:38
  Speaker 1: at least on a majority basis, that we would it
• 9:40
  Speaker 1: wouldn't be so hard to get things done. As we're learning,
• 9:43
  Speaker 1: you don't really need an opposing party to create problems
• 9:46
  Speaker 1: for yourself. We're going to have a little we'll find
• 9:49
  Speaker 1: out today just how realistic this pro business agenda is.
• 9:53
  Speaker 1: It sounds like a lot is being based on what
• 9:55
  Speaker 1: people think, not on what is actually happening or what
• 9:57
  Speaker 1: appears to be at least scientifically discernible. Oh, certainly, take
• 10:01
  Speaker 1: a look at valuations. They've been higher, right this is
• 10:04
  Speaker 1: you want to pay twenty one times for the SMP
• 10:06
  Speaker 1: five because that's what it's trading at right now. Well,
• 10:08
  Speaker 1: you know, my coaching gave me a couple of my
• 10:10
  Speaker 1: shirts when I was a kid, and I grew into him,
• 10:12
  Speaker 1: and that's what we're hoping that earnings are gonna do.
• 10:14
  Speaker 1: We're hoping to earnings. We're not sure. No one's ever sure. Hey,
• 10:18
  Speaker 1: I've lost money probably probably half the time. You gotta
• 10:21
  Speaker 1: know how to play your winners. But that growing into
• 10:24
  Speaker 1: the earnings idea is something that's been batted around Wall Street,
• 10:28
  Speaker 1: and we did believe, or do believe. I'm not going
• 10:30
  Speaker 1: to throw it in the towel just yet to find it.
• 10:32
  Speaker 1: Financials are popping a little bit today, which means they
• 10:34
  Speaker 1: are working on something very hard in the house. We
• 10:37
  Speaker 1: don't really know what this bill will look like by
• 10:39
  Speaker 1: the time they vote on it, if they vote on it.
• 10:41
  Speaker 1: But if they do vote on it, that's gonna be
• 10:43
  Speaker 1: taken as a positive. You know. I want to ask
• 10:45
  Speaker 1: you something about something that the nominee to be the
• 10:49
  Speaker 1: SEC chair said in his prepared comments he testifying today
• 10:52
  Speaker 1: in front of the Senate Um. He noted that the
• 10:55
  Speaker 1: US capital markets public capital markets are less competitive than
• 10:58
  Speaker 1: they have been in the past UH and he pointed
• 11:01
  Speaker 1: to the I p O market in particular, uh US
• 11:06
  Speaker 1: listed i p o is by non US companies and
• 11:08
  Speaker 1: talking about how much the volume of those transactions have declined.
• 11:12
  Speaker 1: Do you agree, first of all that the decline in
• 11:15
  Speaker 1: this market UH is a signal of some broader ill
• 11:18
  Speaker 1: in in U S public capital markets? And second of all,
• 11:21
  Speaker 1: whether you know his assessment is correct that we are
• 11:23
  Speaker 1: less competitive in the US. I think we are somewhat
• 11:26
  Speaker 1: less competitive in the US than we used to be.
• 11:28
  Speaker 1: I I don't really see the the connection they're altogether.
• 11:33
  Speaker 1: I know that the public has been slow to support
• 11:35
  Speaker 1: some of these I p o s. Yes, we see
• 11:38
  Speaker 1: the snapchat that opens above the price. We see a
• 11:41
  Speaker 1: few of these open above the syndicate price, but they
• 11:43
  Speaker 1: don't run like they used to. Nobody opens or is
• 11:47
  Speaker 1: price that life say forty and runs to one forty anymore.
• 11:50
  Speaker 1: Those days along behind us, So the easy money isn't
• 11:54
  Speaker 1: always there. And maybe maybe firms also just don't want
• 11:57
  Speaker 1: to give up control of the operation just yet if
• 11:59
  Speaker 1: they if they have something they think will be better
• 12:02
  Speaker 1: in the future, and if there are higher evaluations going forward,
• 12:05
  Speaker 1: if there is a pro go growth economy, it finally
• 12:07
  Speaker 1: comes to fruition later on, you'll get a higher evaluation
• 12:11
  Speaker 1: for that. I p O. Can we talk about some
• 12:14
  Speaker 1: numbers having to do with the US dollar, because I'm
• 12:16
  Speaker 1: looking at it against the euro one oh seven, some
• 12:18
  Speaker 1: people saying if it breaks one oh nine, then you're
• 12:21
  Speaker 1: gonna see some big moves out of the dollar and
• 12:24
  Speaker 1: out of US equities. Dollar also weakening against the pounds,
• 12:28
  Speaker 1: sterling one and one thirty three against the can dollar
• 12:33
  Speaker 1: one eleven against the end. What's the what you know?
• 12:36
  Speaker 1: How does the how does that play out? Well? In
• 12:40
  Speaker 1: one regard, there's reason for the year to get stronger.
• 12:44
  Speaker 1: Europe is getting a little bit better. The e c
• 12:47
  Speaker 1: B is probably going to have to tighten monetary policy.
• 12:49
  Speaker 1: They're already gonna start tapering in April, So we're the
• 12:52
  Speaker 1: balls rolling in that regard from a US, from a
• 12:55
  Speaker 1: from a domestic point of view, this to me could
• 12:58
  Speaker 1: mean that the border adjustment might fall apart that it
• 13:01
  Speaker 1: may be used as a weapon, a unit of bilateral
• 13:04
  Speaker 1: weapon in negotiations with say a China or Mexico, rather
• 13:07
  Speaker 1: than a legislative tool which will hurt the retailers on
• 13:10
  Speaker 1: a broader scale. Uh. You manage money for your family? Correct? Correct?
• 13:16
  Speaker 1: How has your cash allocation been recently? Has it been
• 13:18
  Speaker 1: going up? For going down? I, right after the election
• 13:23
  Speaker 1: went to a very low cash allocation because I did
• 13:27
  Speaker 1: believe that Donald Trump was better for the equity markets
• 13:32
  Speaker 1: than was Hillary Clinton. So that night that night I
• 13:35
  Speaker 1: went into the futures and got after it when it
• 13:37
  Speaker 1: was at the lows. So I the election worked out
• 13:40
  Speaker 1: very well for me for a few months. I can't
• 13:42
  Speaker 1: argue that. Uh. Right now, I've taken some profits, Alright,
• 13:46
  Speaker 1: the last two weeks or so, I've taken profits in
• 13:49
  Speaker 1: the financial names. I've put some of that into cash.
• 13:52
  Speaker 1: I've rotated into areas, not defensive areas truly, but areas
• 13:56
  Speaker 1: that have been beaten down recently, like the airlines and
• 13:59
  Speaker 1: like the end stocks. I've speculated in some energy names
• 14:02
  Speaker 1: now that energy now that w C I CREWDE is
• 14:04
  Speaker 1: approaching the support level. So basically cash was lower than
• 14:10
  Speaker 1: they were. But I, as a guy who is somewhat conservative,
• 14:14
  Speaker 1: I would suggest any retail investor listening out there, you
• 14:18
  Speaker 1: need money in case your boiler breaks. Thank you so much.
• 14:22
  Speaker 1: Definitely wise words. Your boiler can break, and especially when
• 14:25
  Speaker 1: it's still so cold in New York in March, it's
• 14:29
  Speaker 1: nice to have a boiler. Stephen Gilfoyle, thank you so
• 14:31
  Speaker 1: much for joining us. He's founder and president of Serge
• 14:35
  Speaker 1: six LLC, and he worked for decades as a New
• 14:40
  Speaker 1: York Stock exchange floor trader. This is Bloomberg. Now, let's
• 14:57
  Speaker 1: go to Paul Sweeney. He's director of North American Research
• 15:00
  Speaker 1: for Bloomberg Intelligence. Uh. There was news this morning that
• 15:04
  Speaker 1: just recently crossed if Bob Iger Walt Walt Disney's chief
• 15:08
  Speaker 1: executive officer, agreed to a contract UH that would keep
• 15:11
  Speaker 1: him atop the world's largest entertainment company until to Lie
• 15:15
  Speaker 1: two thousand and nineteen. Shares are up almost a percent. Uh, Paul,
• 15:21
  Speaker 1: what does this mean for Disney to have Bob commit
• 15:24
  Speaker 1: to staying for another few years. Yeah, I think this
• 15:26
  Speaker 1: is very good for the Disney investors. I think, Um,
• 15:29
  Speaker 1: clearly the succession issue did not work as well as
• 15:33
  Speaker 1: the company had hoped over the last several years. UM.
• 15:35
  Speaker 1: You know Tom Staggs, who was the heir apparent um
• 15:38
  Speaker 1: uh left the company. Uh. So you know, Bob has
• 15:41
  Speaker 1: been in a sense of uh staying on until they
• 15:45
  Speaker 1: find a successor here. So this is you know, this
• 15:47
  Speaker 1: is obviously a large company, diverse company. Uh. They've had
• 15:50
  Speaker 1: very strong senior leadership at this company for a very
• 15:53
  Speaker 1: long time. So I'm sure they want to be very
• 15:55
  Speaker 1: careful about who they identify and ultimately a point as
• 16:00
  Speaker 1: potential air parent to replace Bob Biger. So this, if
• 16:02
  Speaker 1: nothing else, just buys them another year to get that done.
• 16:05
  Speaker 1: Paul Sweeney, why is this such a challenge? UM, you know,
• 16:09
  Speaker 1: the question is, UM, they had spent so long identifying
• 16:14
  Speaker 1: two very viable candidates this succeed Bob Iger. They set
• 16:18
  Speaker 1: up a race between Tom Staggs and Jay Rossulo, another
• 16:21
  Speaker 1: high ranking and executive really over the last ten years, UM,
• 16:25
  Speaker 1: and they identified Tom stagg as an air parent and
• 16:28
  Speaker 1: then it just didn't work out at the end. So
• 16:30
  Speaker 1: they really didn't have a plan. B uh, So we
• 16:33
  Speaker 1: know why it didn't work out. I mean, is a
• 16:35
  Speaker 1: long time to figure out that something doesn't work exactly right.
• 16:38
  Speaker 1: And that's what really caught investors by surprise a couple
• 16:41
  Speaker 1: of years ago when the you know, when Tom Staggs
• 16:43
  Speaker 1: did leave the company, it really, you know, raised a question,
• 16:45
  Speaker 1: g I thought, you guys really had a good, strong,
• 16:49
  Speaker 1: healthy succession plan in place that looked to be working
• 16:51
  Speaker 1: until it wasn't. So that kind of put the company
• 16:54
  Speaker 1: back on its heels a little bit. And I think
• 16:56
  Speaker 1: they're still there, um, and they recognized they need more
• 17:00
  Speaker 1: time to identify somebody to fill in the shoes of
• 17:03
  Speaker 1: Bob Iger, which are arguably very difficult shoes to fill
• 17:06
  Speaker 1: in at a time that is a time of a
• 17:08
  Speaker 1: lot of change for the media industry and for Disney
• 17:11
  Speaker 1: in particular. So Iger is sixty or six years old,
• 17:14
  Speaker 1: he has been with the company for more than a decade.
• 17:18
  Speaker 1: Why does he want to leave right now? I mean, yes, granted,
• 17:20
  Speaker 1: maybe he just wants to go and spend more time
• 17:22
  Speaker 1: with his family and go to the beach. But is
• 17:24
  Speaker 1: there something else that sort of was encouraging him to leave? Well,
• 17:26
  Speaker 1: I think one thing was is when he initially had
• 17:29
  Speaker 1: his retirement date of a couple of years ago, it
• 17:31
  Speaker 1: was he was going out literally on top day. It
• 17:34
  Speaker 1: was planned to coincide with the opening of Shanghai Disney,
• 17:37
  Speaker 1: which would be the you know, a certainly a crowning
• 17:40
  Speaker 1: achievement on in a very spectacular career. But then the timing,
• 17:43
  Speaker 1: obviously with a succession, didn't work out. I think the
• 17:46
  Speaker 1: expectation was, you know, he um, if a Democrat had
• 17:49
  Speaker 1: been elected, he may have gone into politics. Uh. He
• 17:53
  Speaker 1: was part of a group that was bidding for a
• 17:55
  Speaker 1: NFL franchise in Los Angeles that that did not win
• 17:57
  Speaker 1: that franchise. So uh. He certainly has a lot of
• 18:00
  Speaker 1: interest outside of Disney that I think most folks felt
• 18:04
  Speaker 1: like at his age there in mid sixties, that he
• 18:05
  Speaker 1: would be in a great position to pursue. But now
• 18:08
  Speaker 1: obviously he needs to stay on a couple more years,
• 18:10
  Speaker 1: uh and ensure that there is a seamless transition to
• 18:13
  Speaker 1: a new CEO. Does he need to ensure that ESPN
• 18:17
  Speaker 1: and it's high fixed costs are somehow resolved versus the
• 18:22
  Speaker 1: effort on the part of younger subscribers to look for
• 18:25
  Speaker 1: those skinny bundles that may not include ESPN. Yeah. I
• 18:29
  Speaker 1: think you're absolutely right. I think that's job one for
• 18:31
  Speaker 1: Bob Iger and the management team over the next couple
• 18:33
  Speaker 1: of years, just to figure out a real digital solution
• 18:37
  Speaker 1: for their sports franchise. UM. Right now, they make obviously
• 18:40
  Speaker 1: a tremendous amount of money off of ESPN, but their
• 18:43
  Speaker 1: customers are going more and more online and they need
• 18:45
  Speaker 1: to think about creating a digital online product that works
• 18:50
  Speaker 1: for UM. You know this this this new world we're
• 18:52
  Speaker 1: living in. They haven't done that yet, and that's job one, Uh, Paul.
• 18:56
  Speaker 1: Some of the headlines coming across now are saying that
• 18:59
  Speaker 1: Walt Disney agree to pay either five million dollars in
• 19:02
  Speaker 1: cash for extending his contract with the company. How does
• 19:06
  Speaker 1: that strike you for with respect to sort of how
• 19:09
  Speaker 1: high or low it is with respect to executive compensation, Yeah,
• 19:12
  Speaker 1: it's it's almost for Bob Biger and for the company,
• 19:15
  Speaker 1: it's a dimendis amount. Media executives, including Bob Biger, are
• 19:19
  Speaker 1: extraordinarily well compensated. If you take a look every single
• 19:23
  Speaker 1: year at the top ten paid executives in America, there's
• 19:26
  Speaker 1: a very good representation from the media industry Uh, so
• 19:29
  Speaker 1: Bob Buyer's obviously, uh, you know, created a lot of
• 19:32
  Speaker 1: shareholder wall for investors, and I think most investors are
• 19:36
  Speaker 1: very happy for whatever conversation he's able to negotiate the
• 19:39
  Speaker 1: current slate of Disney movies, Beauty and the Beast, for example,
• 19:43
  Speaker 1: what can you tell us about how well it's doing?
• 19:46
  Speaker 1: And the franchise for Star Wars Beauty and the Beast
• 19:50
  Speaker 1: is came in well above expectations. Looks to be another
• 19:53
  Speaker 1: global hit, a global franchise. UM. And it's this um.
• 19:57
  Speaker 1: There's no studio in the history of Hollywood it's had
• 19:59
  Speaker 1: a on the way that Disney has had over the
• 20:01
  Speaker 1: last ten years. And they could take a look at
• 20:03
  Speaker 1: their slate of films coming up over the next several years,
• 20:06
  Speaker 1: it looks very solid as well. And it's just you know,
• 20:09
  Speaker 1: they made a big investment in the film business about
• 20:11
  Speaker 1: ten years when they bought Pixar, and then they bought
• 20:13
  Speaker 1: Marvel Studios, and then they bought most recently Lucasfilms, you know,
• 20:17
  Speaker 1: investing well over ten billion dollars in uh, the movie business.
• 20:21
  Speaker 1: And they're now reaping the benefits of that by just
• 20:23
  Speaker 1: hit after hit after hit from a lot of these
• 20:26
  Speaker 1: proven franchises, including Star Wars. So you said that you
• 20:29
  Speaker 1: started out by saying, this is going to be a
• 20:31
  Speaker 1: good thing for investors. Is there something in particular that
• 20:34
  Speaker 1: Bobyger brings to it, uh, that investors should like? Well,
• 20:38
  Speaker 1: I mean he brings stability, and obviously, investors, he's a
• 20:40
  Speaker 1: proven entity that's been tremendously successful at the company and
• 20:44
  Speaker 1: has created a tremendous amount of shareholder value over his
• 20:48
  Speaker 1: his tenures. So, as you well know, I'm investors don't
• 20:50
  Speaker 1: like uncertainty, and so there's already is a level of
• 20:53
  Speaker 1: uncertainty about the succession overall. But I think the news today,
• 20:57
  Speaker 1: just you know, again, buys the time, buys the company
• 20:59
  Speaker 1: another year to try to identify a uh successor. I
• 21:04
  Speaker 1: want to thank you very much for joining us. Paul
• 21:06
  Speaker 1: Sweeney is the head of North American Research and media
• 21:10
  Speaker 1: analyst for Bloomberg Intelligence. Shares of Disney they're higher by
• 21:13
  Speaker 1: about six tenths of a percent after learning that Bob
• 21:16
  Speaker 1: Iger will be remaining with the company July. This is Bloomberger.
• 21:36
  Speaker 1: We have talked a lot about the big healthcare vote
• 21:39
  Speaker 1: that will happen this evening in Congress, but we haven't
• 21:43
  Speaker 1: talked quite as much about the details of how this
• 21:46
  Speaker 1: healthcare bill is being changed at the last minute in
• 21:50
  Speaker 1: order to accommodate certain conservative views. But to do so,
• 21:53
  Speaker 1: I want to bring in Kevin Whitlaw, Congress editor for
• 21:56
  Speaker 1: Bloomberg News. Kevin, what do you know about these if
• 22:00
  Speaker 1: it changes that are being made currently as we speak
• 22:03
  Speaker 1: to the healthcare bill? Well, straight answers. We don't know
• 22:06
  Speaker 1: yet whether any changes are going to be being or not.
• 22:08
  Speaker 1: But um, some of the House Conservatives who have been
• 22:10
  Speaker 1: holding out on the bill have been negotiating directly with
• 22:12
  Speaker 1: the White House on these things. They think they have
• 22:14
  Speaker 1: some verbal agreements on the kinds of changes that might
• 22:17
  Speaker 1: um at least start to get them there. But it's
• 22:19
  Speaker 1: not a done deal. How it hasn't yet been signed
• 22:22
  Speaker 1: off on by uh Paul Ryan or or Republican leaders. Um,
• 22:27
  Speaker 1: given that they're not directly involved. Uh so uh And
• 22:30
  Speaker 1: we also don't know whether the kinds of changes that
• 22:32
  Speaker 1: UH that the conservative demanding are going to cause even
• 22:35
  Speaker 1: more moderates to to flee from the bill. We are
• 22:37
  Speaker 1: seeing a drip drip drip of moderates starting to pull
• 22:41
  Speaker 1: out their support, coming out against the current version of
• 22:44
  Speaker 1: the bill, and the changes that are being discussed, um
• 22:47
  Speaker 1: could could make even more get cold feat Kevin, what
• 22:50
  Speaker 1: about the numbers? I was reading one report that said
• 22:52
  Speaker 1: about thirty Republicans had said that they would either vote
• 22:56
  Speaker 1: against the measure or had not yet made up their minds.
• 22:59
  Speaker 1: You know it, er and sixteen is the magic number,
• 23:02
  Speaker 1: that's right. They can only afford to lose about one. UM.
• 23:05
  Speaker 1: Losing twenty two or more probably kills the bill. And
• 23:08
  Speaker 1: we we've said a number of firm nose to lean
• 23:11
  Speaker 1: nos is probably somewhere between twenty five and thirty. But
• 23:13
  Speaker 1: it is a fluid number. It keeps changing and and
• 23:16
  Speaker 1: so um. You know, we always have to be a
• 23:18
  Speaker 1: little careful of this. There's also been a thought that
• 23:20
  Speaker 1: you just put the bill on the floor and make
• 23:21
  Speaker 1: people vote on it. And it's gonna be hard for
• 23:23
  Speaker 1: Republicans to vote against something that actually repeals Obamacare. Um.
• 23:27
  Speaker 1: Having said that, there's obviously a ton of angst surrounding
• 23:30
  Speaker 1: this vote. UM, uh on on on just about every
• 23:33
  Speaker 1: political spectrum. Kevin. How many moderate Republican votes are in
• 23:38
  Speaker 1: contention right now? Well, we know of at least a handful.
• 23:42
  Speaker 1: That list is probably up to somewhere between five or
• 23:44
  Speaker 1: ten who have said no or leaning no hard um
• 23:47
  Speaker 1: and it only seems to be growing. So you're you're
• 23:49
  Speaker 1: looking at um maybe uh, somewhere around eighteen twenty conservatives,
• 23:55
  Speaker 1: five ten moderates. That's sort of where you get to
• 23:57
  Speaker 1: that sort of thirty number. So you've got people on
• 24:00
  Speaker 1: both ends of the spectrum. As you can imagine, you
• 24:02
  Speaker 1: make the bill more conservative, you're excluding more moderates and
• 24:05
  Speaker 1: vice versas. So they've got a real problem in trying
• 24:07
  Speaker 1: to strike a balance. And it's just not clear that
• 24:10
  Speaker 1: strong arming um or charming from President Trump is going
• 24:13
  Speaker 1: to get them over the finish line. It might still
• 24:15
  Speaker 1: do it, The vote might still happen today. Uh. Things
• 24:18
  Speaker 1: to keep in mind here is even if they somehow
• 24:20
  Speaker 1: get this thing through the House, it actually faces an
• 24:22
  Speaker 1: even tougher road in the Senate. What does this mean
• 24:25
  Speaker 1: for the future of House Speaker Paul Ryan, who that's
• 24:28
  Speaker 1: a really good question. Um, you know, I think that
• 24:30
  Speaker 1: that for President Trump, he's actually getting a taste of
• 24:33
  Speaker 1: of how difficult Paul Ryan's job actually is. Um, particularly
• 24:37
  Speaker 1: wrangling the House Freedom Caucus. This group of conservatives, these
• 24:41
  Speaker 1: are people who actually back Trump so in theory, Trump
• 24:43
  Speaker 1: should have a lot of way with these guys, but
• 24:44
  Speaker 1: obviously he hasn't gotten there yet. Is Paul Ryan where
• 24:48
  Speaker 1: does he stand with respect to the conservatives versus and moderates?
• 24:51
  Speaker 1: I mean, obviously he helped craft the bill, but was
• 24:54
  Speaker 1: he pushing it one way or or another? Well, you know,
• 24:57
  Speaker 1: he crafted a bill, and there has been some grumble
• 25:00
  Speaker 1: about the way he did it, sort of did it
• 25:01
  Speaker 1: in a fair amount of secrecy and and um um,
• 25:05
  Speaker 1: it didn't do a ton of work um to sort
• 25:07
  Speaker 1: of bring everyone in the process. So there's definitely a
• 25:10
  Speaker 1: certain amount of grumbling. The bill is a conservative bill,
• 25:13
  Speaker 1: but it's certainly not as conservative as some people in
• 25:16
  Speaker 1: the party had wanted. So um, I think that, you know,
• 25:19
  Speaker 1: there's been some minor level grumbling in the process. It's
• 25:22
  Speaker 1: not clear that failure of the bill uh endangers Paul
• 25:25
  Speaker 1: Ryan's job immediately, but it certainly makes it look a
• 25:27
  Speaker 1: lot more difficult um for him to deliver on some
• 25:30
  Speaker 1: of the priorities ahead, because you know, the tax reform
• 25:33
  Speaker 1: debate isn't going to be any easier than than this
• 25:36
  Speaker 1: Obamacare debate. Um. So uh, if you can't get through
• 25:40
  Speaker 1: a priority, that You've spent seven years saying that you're
• 25:42
  Speaker 1: gonna do not the world's greatest start form Kevin. Large
• 25:47
  Speaker 1: protests against the bill planned for today in Washington and
• 25:51
  Speaker 1: around the country. Have the Republicans really done enough on
• 25:54
  Speaker 1: the ground work to get public opinion behind this change
• 25:59
  Speaker 1: in the bill all such as the kind of ground
• 26:02
  Speaker 1: swell that we heard for the initial crafting of the
• 26:05
  Speaker 1: Affordable Care Act for Obamacare. Yeah, I mean I think
• 26:08
  Speaker 1: that they I think they didn't really have to do
• 26:10
  Speaker 1: that kind of work. I mean, I think they looked
• 26:12
  Speaker 1: at the election victories and said, you know, hey, we
• 26:14
  Speaker 1: ran on repealing Obamacare and we won, so so people
• 26:17
  Speaker 1: must be with us. But um, it's pretty clear they
• 26:20
  Speaker 1: didn't do um uh enough prep work to try to
• 26:23
  Speaker 1: sell their bill and what it's what it's replacement would do.
• 26:26
  Speaker 1: But you know, here again the opposition split. There are
• 26:29
  Speaker 1: some um, you know who think it doesn't go far enough,
• 26:31
  Speaker 1: and there's obviously now plenty of people who are worried
• 26:34
  Speaker 1: about uh losing their health care. The problem I think
• 26:37
  Speaker 1: for Paul Ryan is is had this repeal effort gone
• 26:40
  Speaker 1: through a couple of years ago, it would have been
• 26:42
  Speaker 1: probably a little easier and less politically sensitive. But now
• 26:46
  Speaker 1: that people have have a lot of people have gotten
• 26:48
  Speaker 1: insurance through through the system, have been using this and
• 26:50
  Speaker 1: and now rely on it um Now, obviously there's a
• 26:53
  Speaker 1: set Americans who are worried about things being taken away
• 26:56
  Speaker 1: from them. Thank you very much. Kevin Whitelaw is our
• 26:59
  Speaker 1: congressional editor or for Bloomberg News, giving us the latest
• 27:02
  Speaker 1: on the attempt to repeal and replace the Affordable Care Act.
• 27:06
  Speaker 1: Devotes scheduled for this evening in the House. Thanks for
• 27:15
  Speaker 1: listening to the Bloomberg pian L podcast. You can subscribe
• 27:18
  Speaker 1: and listen to interviews at iTunes, SoundCloud, or whatever podcast
• 27:23
  Speaker 1: platform you prefer. I'm Pim Fox. I'm out there on
• 27:26
  Speaker 1: Twitter at pim Fox. I'm out there on Twitter at
• 27:29
  Speaker 1: Lisa Abramo. It's one before the podcast. You can always
• 27:32
  Speaker 1: catch us worldwide on Bloomberg Radio.