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Justice Roberts Will Avoid Partisanship At All Cost · 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
• 0:07
  Speaker 1: we bring you the most noteworthy and useful interviews for
• 0:10
  Speaker 1: you and your money, whether at the grocery store or
• 0:12
  Speaker 1: the trading floor. Find a Bloomberg Penl podcast on Apple
• 0:15
  Speaker 1: podcast or wherever you listen to podcasts, as well as
• 0:17
  Speaker 1: at Bloomberg dot com. Well, the impeachment process is ongoing
• 0:22
  Speaker 1: in Washington, d C. Today, and last week, four law
• 0:24
  Speaker 1: professors testified on the potential impeachment of President Trump. One
• 0:28
  Speaker 1: of those law professors joins us today, Noah Feldman, Professor
• 0:31
  Speaker 1: of law at Harvard University. He's also Bloomberg Opinion calumnist.
• 0:34
  Speaker 1: He's based in Boston, Massachusetts. He joins us here on
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  Speaker 1: the phone. Now, thanks so much for joining us. Um again,
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  Speaker 1: compelling testimony by you and your fellow professor's last week.
• 0:45
  Speaker 1: Just give us your sense, your takeaway of the testimony.
• 0:50
  Speaker 1: My takeaway is that we laid out a clear case
• 0:54
  Speaker 1: for why the framers wanted impeachment to exist at all, UM, namely,
• 0:59
  Speaker 1: the deal with a situation where a president distorted the
• 1:03
  Speaker 1: use of his office for ultimately purposes of his own
• 1:06
  Speaker 1: like reelection. That we talked about what high crimes and
• 1:09
  Speaker 1: misdemeanors really are, that they are, in essence, the abuse
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  Speaker 1: of office, and then we suggested that if you believe
• 1:14
  Speaker 1: the stuff you've been watching on TV and reading about it,
• 1:17
  Speaker 1: if you believe that the allegations against President Trump are accurate,
• 1:20
  Speaker 1: then it would follow that impeachment would be appropriate. Do
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  Speaker 1: you feel like you're speaking into an empty vacuum that
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  Speaker 1: basically the only people who would hear you would be
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  Speaker 1: people who agreed with you and everybody else you aren't
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  Speaker 1: going to convince. I really hope not. You know, I
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  Speaker 1: think it may be that sometimes, uh, in places where
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  Speaker 1: people are obsessed with the impeachment, they think they know
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  Speaker 1: all the details and they formed views already, which is fine.
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  Speaker 1: But in most of the country, I think there's still
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  Speaker 1: a lot of people who are trying to figure out
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  Speaker 1: exactly what's going on, who are busy, people with some
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  Speaker 1: jobs and lives who haven't been obsessively focused on this
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  Speaker 1: until now, and so with any luck, but this provided
• 1:56
  Speaker 1: was just a clear statement of why it's worthwhile to
• 1:59
  Speaker 1: take this as seriously, why it's appropriate to take up
• 2:03
  Speaker 1: the valuable time with the American people on this issue,
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  Speaker 1: and I think you know on that. In my sense,
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  Speaker 1: at least from the mail and social media context that
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  Speaker 1: I've connections that I'm getting, there are people who were
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  Speaker 1: glad to hear it laid out simply and clearly. So No,
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  Speaker 1: I think the consensus is that the House will likely
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  Speaker 1: vote for impeachment. It will then go to the Senate
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  Speaker 1: and then go along party lines. If a Republican senator
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  Speaker 1: votes not to move forward with is that senator saying
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  Speaker 1: that he or she does not believe that there were
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  Speaker 1: impeachable offenses despite what you're saying, and some others are saying,
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  Speaker 1: these really are impeachable defenses. Well, there are two things
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  Speaker 1: that the senator could be saying. One would be I
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  Speaker 1: think these things are in principle impeachable, but I don't
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  Speaker 1: believe that the president did them, And a little hard
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  Speaker 1: to believe that someone would have that view, given how
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  Speaker 1: overwhelming the evidence is. But maybe somebody would think that,
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  Speaker 1: maybe they'll say that, and you know, if that's the
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  Speaker 1: case fair enough, you know, I mean, whether you believe
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  Speaker 1: the evidence or not is very much ape of individual
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  Speaker 1: credibility determination. The other thing they could be saying, as
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  Speaker 1: you say, is that they think it's fine for the
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  Speaker 1: president the United States to go out and use the
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  Speaker 1: office of the presidency to try to get personal advantage
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  Speaker 1: in an election through investigations from a foreign country of
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  Speaker 1: his opponent. And I would be really saddened if any
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  Speaker 1: member of the Senate believed that that was not impeachable conduct,
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  Speaker 1: because it's just so clear from what the Framer said.
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  Speaker 1: And it's also just even if you leave the Framers
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  Speaker 1: out of it, it's just so obvious that that's the
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  Speaker 1: kind of conduct that we can't tolerate in the president
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  Speaker 1: because it's the start's re election. And so I really
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  Speaker 1: hope that no senator would vote h not to you know,
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  Speaker 1: vote to ecquit the president on that basis. There's an
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  Speaker 1: interesting legal question here, and your prefer your perfect to
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  Speaker 1: weigh in on this. Justice Roberts would be the third
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  Speaker 1: justice to preside over an impeachment trial in the U. S.
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  Speaker 1: Senate if it gets there. Um, he is overseeing the Senate,
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  Speaker 1: but he is the first who has openly asked, with
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  Speaker 1: the president who is potentially going to be impeached, what
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  Speaker 1: do you think he's going to do if this comes
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  Speaker 1: to pass. Chief Justice Roberts is someone who, throughout his
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  Speaker 1: career has shown a very very deep commitment to protecting
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  Speaker 1: the legitimacy of the Supreme Court by making sure that
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  Speaker 1: it's not partisan. Now, the Court, of course is ideological.
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  Speaker 1: Different people on the Court of different beliefs, including Chief
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  Speaker 1: justus as Roberts. But there's a difference between being ideological,
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  Speaker 1: which means you have values and ideas and they affect you,
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  Speaker 1: and being part of it, which means you do what
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  Speaker 1: the political party that you're affiliated with wants you to do.
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  Speaker 1: And I think he will bend over backwards to make
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  Speaker 1: sure that he is not partisan in any way, and
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  Speaker 1: I think he will try very hard to be as
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  Speaker 1: objective as he can be. I would add that his
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  Speaker 1: powers are somewhat limited. Most things the Chief Justice does
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  Speaker 1: in an impeachment hearing could be overturned by a bare
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  Speaker 1: majority of the Senate on a vote. So if he
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  Speaker 1: makes a decision on say, an evidence question, the Senate
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  Speaker 1: could vote to override him in any moment. So one
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  Speaker 1: thing he could do is if there's anything really controversial,
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  Speaker 1: he could just turn to the Senators and say, okay,
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  Speaker 1: you guys, vote on it. I'm not even gonna the
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  Speaker 1: decision and have you overruled me? And that would be
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  Speaker 1: one way for him to stay out of the crosshairs
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  Speaker 1: of the partisan fight. So, uh no, it appears like
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  Speaker 1: it's being reported that, you know, the House is trying
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  Speaker 1: to move for a vote prior to them leaving for
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  Speaker 1: recess on December twenty. Give us a sense of the
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  Speaker 1: timing if that does occur and it goes to the Senate.
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  Speaker 1: Give us a sense of the timing of what it
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  Speaker 1: could be in the Senate. The trial Actually, well, when
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  Speaker 1: the Senate comes back in January, you know, it can
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  Speaker 1: take up that trial right away if it wants to,
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  Speaker 1: or it can choose through its the majority leadership there
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  Speaker 1: to to delay. That's very much a question in the
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  Speaker 1: hands of the Senate. There's no nothing in the Constitution
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  Speaker 1: that tells you how fast the Senate has to take
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  Speaker 1: up the question. My guesses that they would probably take
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  Speaker 1: it up pretty quickly. And then the question is how
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  Speaker 1: full of trial would it be. The House traditionally sends
• 5:53
  Speaker 1: over some members of the House who are called the
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  Speaker 1: impeachment managers, and they literally go over to the Senate
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  Speaker 1: chamber and they argue the caves like prosecutors, and they
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  Speaker 1: usually have the opportunity historically to call some witnesses and
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  Speaker 1: then a defense is usually mounted by the president. But
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  Speaker 1: we don't know if the president will mount a defense
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  Speaker 1: here or not, and if he doesn't, it could be
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  Speaker 1: a relatively short and compact process. And then again it's
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  Speaker 1: up to the Senate to decide when they will go
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  Speaker 1: for a vote, and then um, then that will happen.
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  Speaker 1: So it could it could all happen relatively quickly. My
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  Speaker 1: guess is that it would not be over by the
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  Speaker 1: end of January, but I think it's highly probable that
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  Speaker 1: it would be over some time by the end of February.
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  Speaker 1: Now just quickly here, I'm wondering, can you tell us
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  Speaker 1: a little bit about the experience of testifying and how
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  Speaker 1: cold it was in the room. Yeah, I mean it
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  Speaker 1: was a very strange experience, as you can imagine. First all,
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  Speaker 1: it was weirdly cold in the room, and Doug Collins,
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  Speaker 1: the ranking Republican on the committee, actually took some time
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  Speaker 1: out of his public statement to say that it was
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  Speaker 1: too cold, and also he didn't like his chair, So
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  Speaker 1: that gives you some sense of the weirdness of it.
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  Speaker 1: All um. You know, ultimately, their cameras are there, the
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  Speaker 1: people are in the room, but your audience is not
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  Speaker 1: just the sitting there. Your audience is also the broader public,
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  Speaker 1: and especially the public that isn't obsessed with these hearings
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  Speaker 1: and just wants to know what are you doing here?
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  Speaker 1: And all you can really do is try to stay
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  Speaker 1: your case simply and concisely. And I did that and
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  Speaker 1: I'm happy I had a chance to do that. And then,
• 7:14
  Speaker 1: you know, the other side comes after you, and very
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  Speaker 1: often they say something mean about you, and then they
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  Speaker 1: don't actually ask you a question where you could respond,
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  Speaker 1: and that's always a little frustrating, always feels a bit
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  Speaker 1: like a cheap shot. No Felment, thank you so much
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  Speaker 1: for being with us, and good advice to anyone who's
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  Speaker 1: going to testify in front of Congress. Bring tea and
• 7:30
  Speaker 1: especially yes. No Feltment is Professor of laud at Harvard University,
• 7:33
  Speaker 1: also a Bloomberg opinion columnist, joining us by phone. As
• 7:50
  Speaker 1: the US and China push forward to some type of
• 7:53
  Speaker 1: trade deal, one of the fallouts we're seeing is maybe
• 7:57
  Speaker 1: each other's governments, you know, want to go beyond that.
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  Speaker 1: Maybe what we're seeing here from China. So news coming
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  Speaker 1: out today that Lisa and I agree is really really
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  Speaker 1: important as we think about the negotiations between US and China,
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  Speaker 1: and that's Chinese government taking further steps to remove foreign
• 8:10
  Speaker 1: technology from state agencies and other organizations. To get a
• 8:13
  Speaker 1: sense of how important that is, we welcome on and
• 8:15
  Speaker 1: Shrini Boston. He's a senior semi conductor and hardware analyst
• 8:18
  Speaker 1: for Bloomberg Intelligence, joining us here on a Bloomberg in
• 8:21
  Speaker 1: actor broker studio so on in Beijing, saying that they
• 8:24
  Speaker 1: may remove as many as twenty million computers at government
• 8:28
  Speaker 1: agencies with domestic products over the three years. That seems
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  Speaker 1: like a big deal to me and to Lisa absolutely. Look,
• 8:34
  Speaker 1: it is a big deal, and effectively it is trying
• 8:38
  Speaker 1: to create an alternative ecosystem across the PC, semi conductor
• 8:42
  Speaker 1: and hardware food chains. It's not easy to do. It's
• 8:46
  Speaker 1: not going to be overnight. It's going to be particularly
• 8:48
  Speaker 1: painful because UM, Intel, Microsoft, UM, all the PC makers,
• 8:55
  Speaker 1: the motherboard makers, the driver makers, the UM the flash
• 8:59
  Speaker 1: software that goes into the firmware that goes into each
• 9:02
  Speaker 1: of these chips have been tested and tested again and
• 9:05
  Speaker 1: tested across every single combination over the past thirty years.
• 9:08
  Speaker 1: And we have this iterative sort of systemic knowledge that
• 9:13
  Speaker 1: is built up so that when a system is implemented
• 9:17
  Speaker 1: like a PC desktop in an average desk workers UM workstation, UM,
• 9:24
  Speaker 1: and this is not his or her main function, you
• 9:27
  Speaker 1: know it works, right, You can't afford to take those chances.
• 9:30
  Speaker 1: It works, it's stable for the most part, and it
• 9:34
  Speaker 1: just gets allows him or her to get stuff done. UM.
• 9:39
  Speaker 1: To go to an alternative platform means that you are
• 9:43
  Speaker 1: from the bottom of the stack, from the semiconductor that
• 9:45
  Speaker 1: is used to the top of the stack, which is
• 9:47
  Speaker 1: the operating system and the applications that run on it.
• 9:50
  Speaker 1: You are replacing that entire food chain and you're you're
• 9:54
  Speaker 1: giving a quality of service to that individual that is
• 9:57
  Speaker 1: air free, highly reliable, and what we call in the
• 10:01
  Speaker 1: industry seven nine reliable. It's not going to be it's
• 10:08
  Speaker 1: it's not going to be uh that reliable. Okay. That's
• 10:12
  Speaker 1: which is probably the reason why you're seeing Microsoft, Microsoft, Dell,
• 10:15
  Speaker 1: and HP shares doing nothing today. Basically, even though you
• 10:19
  Speaker 1: have China ordering all government offices and public institutions to
• 10:22
  Speaker 1: move forward a computer equipment and software and these will
• 10:24
  Speaker 1: be the companies that could potentially hurt from it. So
• 10:28
  Speaker 1: is it insignificant or is it just you know that
• 10:31
  Speaker 1: this sort of edifies a feeling that have been in
• 10:34
  Speaker 1: the market for a while, which is China is going
• 10:36
  Speaker 1: to gradually push in order to have its own technology
• 10:41
  Speaker 1: supersede international competitors. Yeah, the creating of the bifurcation is
• 10:46
  Speaker 1: a serious risk from our technology development track. When you're
• 10:49
  Speaker 1: trying to develop something on your own and then this
• 10:52
  Speaker 1: is a replay of the VHS Betamax story all over again,
• 10:56
  Speaker 1: separated by national boundaries. It is not good from our
• 10:59
  Speaker 1: technology development track for either side of the track, regardless
• 11:03
  Speaker 1: of how better or worse one technology might be. Okay,
• 11:07
  Speaker 1: but for tech ignorance like myself, Um, are we just
• 11:11
  Speaker 1: talking about a PC? Are we talking about cloud? Are
• 11:14
  Speaker 1: we talking about everything? It's everything, right, So we can
• 11:17
  Speaker 1: replace the Dell PC with a Chinese mainstake Lenovo, which
• 11:22
  Speaker 1: is a global market leader number one in PCs. Could
• 11:25
  Speaker 1: happen right away, right, except that what's powering the Lenovo PC,
• 11:28
  Speaker 1: it's still in next A D six. Okay, you say,
• 11:30
  Speaker 1: I don't want to use Intel, Let's go with the
• 11:32
  Speaker 1: other option m D which also is American. Then you
• 11:34
  Speaker 1: say I don't want to use Microsoft? What are your choices?
• 11:37
  Speaker 1: You use a Linux kernel? How many apps are on
• 11:39
  Speaker 1: the Linux kernel? How do you how are you going
• 11:41
  Speaker 1: to replace Excel? You say no, I'm going to go
• 11:42
  Speaker 1: to Google Docs. Wait, that's American too. Details details. So
• 11:47
  Speaker 1: you're stuck between a rock and a hard place, and
• 11:48
  Speaker 1: it's changes don't come easily and it's going to be painful.
• 11:52
  Speaker 1: All right, let's just step back a little bit. It
• 11:53
  Speaker 1: appears that we're moving ever so slowly towards a phase
• 11:57
  Speaker 1: one type of deal. What's the feeling on Silicon Valley
• 12:00
  Speaker 1: about trade just in general, our relationship with China? Is
• 12:04
  Speaker 1: it a big, big concern that this thing could go sideways? Look,
• 12:08
  Speaker 1: I think that, in my opinion, we're we're pricing in
• 12:13
  Speaker 1: for sure, uh, some sort of a deal, some sort
• 12:16
  Speaker 1: of a phase one deal. Hopefully that doesn't drop the
• 12:20
  Speaker 1: boat too much from current level of tariffs. Number one.
• 12:22
  Speaker 1: Number two is from a China Silicon Valley relationship. Again,
• 12:27
  Speaker 1: it's one of those don't if you do, don't if
• 12:29
  Speaker 1: you don't scenarios. You need them because they're twenty market
• 12:33
  Speaker 1: for all of our products and services. You need them
• 12:36
  Speaker 1: because they are a supply change, supply chain essential. But
• 12:40
  Speaker 1: we also recognize that this is not a healthy relationship
• 12:44
  Speaker 1: and that you have to move away from h TO
• 12:47
  Speaker 1: to a distributed manufacturing model for example, but that it's
• 12:50
  Speaker 1: going to cost more. Well, I will say this has
• 12:53
  Speaker 1: been a fascinating conversation and just to leave with this
• 12:56
  Speaker 1: tidbet analysts at Jeffrey's estimate that US to knowledge companies
• 13:00
  Speaker 1: generating as much as a hundred and fifty billion dollars
• 13:03
  Speaker 1: a year in revenues from China, which is the reason
• 13:06
  Speaker 1: why trade discussions and any mandate from Beijing should be
• 13:09
  Speaker 1: taken seriously, if not perhaps literally, at least if you
• 13:12
  Speaker 1: look at the stock price right now, A non street
• 13:14
  Speaker 1: of Austin, thank you so much for being with us,
• 13:16
  Speaker 1: an nonstret of Austin who saved his Yiddish for before
• 13:18
  Speaker 1: the segment, A senior semiconductor and hardware analyst for Bloomberg Intelligence.
• 13:37
  Speaker 1: We will certainly go down as a year for risk
• 13:40
  Speaker 1: on assets out performance across the board. The question is
• 13:45
  Speaker 1: is it time to take a little bit more risk
• 13:47
  Speaker 1: as we head into going forward. Right now, let's welcome
• 13:51
  Speaker 1: Luca Paolini, Chief strategist for pick Ta Asset Management over
• 13:55
  Speaker 1: two billion dollars assets under management, based in London, but
• 13:58
  Speaker 1: joining us here on our Bloomberg and Actor broker studio. Look,
• 14:01
  Speaker 1: thanks so much for joining us. You have a call
• 14:04
  Speaker 1: here where you're overweight emerging markets. So that's saying we
• 14:08
  Speaker 1: had a good run in twenty nineteen. I'm willing to
• 14:11
  Speaker 1: take a little bit more risk going forward. But actually
• 14:14
  Speaker 1: our view is letly different. We think the marketing next
• 14:16
  Speaker 1: year we actually struggle a little bit. We think that
• 14:18
  Speaker 1: the real trade for next year is more on sector
• 14:22
  Speaker 1: and regional allocations. So this year everything that could go
• 14:25
  Speaker 1: up went up. Next year, I think we have to
• 14:27
  Speaker 1: be most selective, and what we like is either the
• 14:30
  Speaker 1: extreme valuation of some markets or actually when we look
• 14:34
  Speaker 1: at them, or sectors and regions where we think there
• 14:39
  Speaker 1: is a solid earnest girls behind it. When you look
• 14:41
  Speaker 1: at value, you cannot avoid a conclusion that emerging markets Europe,
• 14:46
  Speaker 1: Japanese a different story, offer much better value than the US.
• 14:50
  Speaker 1: And so we think that this is where the value is.
• 14:52
  Speaker 1: Emerging markets Europe, even the UK, and much less in
• 14:56
  Speaker 1: the US. This is interesting. I'm thinking about it, and
• 14:58
  Speaker 1: I'm wondering whether it's actually accurate that everything has gone
• 15:03
  Speaker 1: up that's been riskings. We've seen the triple cs like behind,
• 15:06
  Speaker 1: and we have seen emerging markets like behind in part
• 15:10
  Speaker 1: because people have been concerned and showing some discretion. So
• 15:13
  Speaker 1: which areas within emerging market do you think people have
• 15:17
  Speaker 1: been leaving behind more than they showed? Right? And there
• 15:19
  Speaker 1: has to be a fundamental backdrop that supports this view
• 15:21
  Speaker 1: as well, Right, Yeah, I think when you look at
• 15:23
  Speaker 1: emerging markets, let's say two critical or key driving emerging
• 15:27
  Speaker 1: market performance is actually the dollar and global growth, especially
• 15:32
  Speaker 1: if especially emerging market growth. So what we see, and
• 15:35
  Speaker 1: maybe we're wrong on this, we expect the dollars to
• 15:37
  Speaker 1: pick and the reason why the dollar is going to
• 15:39
  Speaker 1: struggle next year is simple. Until recently, the US economy
• 15:43
  Speaker 1: was significantly outperformed. The FAT was acting a rate when
• 15:45
  Speaker 1: everybody was cutting rates. Now you're in a situation when
• 15:48
  Speaker 1: the FAT is cutting rates like everybody else where. US grows.
• 15:51
  Speaker 1: It's not very different from Europe. This court is going
• 15:53
  Speaker 1: to be one percent one point five, so there is
• 15:55
  Speaker 1: a convergence of growth, and the dollar is twenty percent
• 15:57
  Speaker 1: one expense. So we assume the dollar is going to
• 15:59
  Speaker 1: go down and global growth is weak, but I think
• 16:02
  Speaker 1: we start to see some kind of signal stabilization that's
• 16:05
  Speaker 1: normally a good combination from the emerging markets. And obviously
• 16:07
  Speaker 1: the evaluation is also very attractive. So within emerging markets,
• 16:10
  Speaker 1: are there certain markets you like more than others? We've
• 16:13
  Speaker 1: had some interesting performance Brazil and some others in Latin
• 16:16
  Speaker 1: America VERSUS Eastern Europe for example, Actually we continue to
• 16:20
  Speaker 1: prefer Russia. Russia has been if you look at the
• 16:22
  Speaker 1: past two years, been the best market in two years
• 16:24
  Speaker 1: in a row. And Russia actually as upper from the
• 16:27
  Speaker 1: US is ninety six, believe it or not in the
• 16:29
  Speaker 1: other terms, so we continue to be lived in Russia.
• 16:31
  Speaker 1: Emerging Asia is also interesting because the evaluation and if
• 16:35
  Speaker 1: you have any kind of um let's say c as
• 16:38
  Speaker 1: far in terms of trade war and distabilization in growth,
• 16:41
  Speaker 1: Emerging Asia actually would do much better on bonds. Russian
• 16:44
  Speaker 1: born and Mexican bonds by far the best opportunities. And
• 16:47
  Speaker 1: how do you like to get access or exposure to
• 16:50
  Speaker 1: these to these nations that basically local currency dead or
• 16:53
  Speaker 1: is it equities, or we prefer, as I said, we
• 16:57
  Speaker 1: for Russia and Mexico We like local cacy bonds because
• 17:01
  Speaker 1: you have the advantage of having a significant or let's
• 17:04
  Speaker 1: say rear rates roughly three or four percent and under
• 17:07
  Speaker 1: value currency and central bank accuntney rates. So the upside
• 17:10
  Speaker 1: for bonds emerging markets from the currency and form. From
• 17:13
  Speaker 1: the equity side, Asia is much more interesting, you know, Korean,
• 17:16
  Speaker 1: So it actually looks actually quite quite quite cheap, considering
• 17:19
  Speaker 1: that we mad just about to see some subidization global growth.
• 17:22
  Speaker 1: You say like financials, that's not a widely held view.
• 17:26
  Speaker 1: Folks walking through the door here, tell us about your
• 17:28
  Speaker 1: thoughts on the financials. I have to say that meeting
• 17:30
  Speaker 1: quite a few clients, quite a few attempted to buy
• 17:34
  Speaker 1: into financials. But financials, like Japan in the last way,
• 17:37
  Speaker 1: every time you get excited about it, you tend to
• 17:40
  Speaker 1: make a mistake. So now the question about financial is
• 17:43
  Speaker 1: really what are the kid drivers they could have is
• 17:45
  Speaker 1: Bonniels and basically the mark. So let's say financials do
• 17:48
  Speaker 1: well when when bonnie Els and market are going up.
• 17:50
  Speaker 1: This year, market is going up, but actually bonnie Els hasn't,
• 17:53
  Speaker 1: so we expected Bonnials to start going up next year.
• 17:56
  Speaker 1: And if this is this this is true, well all
• 17:59
  Speaker 1: the value kind of cyclical value stocks, financials, energy mining
• 18:04
  Speaker 1: can actually offer the potentially is a tactical code. Though
• 18:07
  Speaker 1: I wouldn't personally invest in financials over the next five years,
• 18:10
  Speaker 1: but over the next six or one month I think
• 18:12
  Speaker 1: could be could be a good trade. What about the
• 18:14
  Speaker 1: US equity is broadly a lot of people have been
• 18:16
  Speaker 1: saying that that's still going to remain the performer. Do
• 18:18
  Speaker 1: you agree? No, I think I think the prom that
• 18:20
  Speaker 1: with the with US eecurities is that there is no
• 18:22
  Speaker 1: question the US companies a much more profitable better around
• 18:25
  Speaker 1: the European Japanese one. We all know that that's that's
• 18:28
  Speaker 1: no news. I have a promin though, on in terms
• 18:31
  Speaker 1: of ernest growth, which is basically flat. Margins have picked,
• 18:35
  Speaker 1: wage growth is picking up. We are probably towards the
• 18:38
  Speaker 1: end of the business second, and you see that in
• 18:39
  Speaker 1: the curve. Default rates in a lot of indicators and
• 18:43
  Speaker 1: and the in evaluation see continue to be quite expensive.
• 18:45
  Speaker 1: So I think I personally the US we'll start to
• 18:48
  Speaker 1: want to perform next year, especially in dollar terms. We
• 18:52
  Speaker 1: respect the dollar to to decline real quick, treasury else rising.
• 18:56
  Speaker 1: We have two percent for the end of next year,
• 18:58
  Speaker 1: so a marginal increase notch, but you know you're not
• 19:01
  Speaker 1: gonna make a lot of money with once next year.
• 19:02
  Speaker 1: Now twenty more seconds. I'm just wondering, what did you
• 19:05
  Speaker 1: have for breakfast? Uh? Three cross on if you believe
• 19:08
  Speaker 1: it or not? Three al Mont cross on at four
• 19:10
  Speaker 1: o'clock because it's some kind of a jel leg issue.
• 19:13
  Speaker 1: Three croissants cross on three one must have been tiny
• 19:17
  Speaker 1: because I I don't think so, but he must be
• 19:21
  Speaker 1: a marathon runner. Thank you so much for being with us.
• 19:23
  Speaker 1: Really a wonderful information. Luca Paolini. He is chief strategistic peaked,
• 19:27
  Speaker 1: A asset management with more than two hundred billion dollars
• 19:30
  Speaker 1: under management normally in London today gracing our interactive Broger studios.
• 19:50
  Speaker 1: We've had the Opeque plus meeting. They are instituting a
• 19:53
  Speaker 1: further production cuts. We've already gotten me Saudi a Ramco
• 19:57
  Speaker 1: I p O, if you could call it that. Going forward,
• 20:00
  Speaker 1: the balance of oil prices be determined by supply or demand.
• 20:04
  Speaker 1: That is one of the key questions joining us now
• 20:06
  Speaker 1: Regina Mayor. She has global energy head for KPMG based
• 20:09
  Speaker 1: in Houston, Regina. I want to start there with the
• 20:12
  Speaker 1: supply demand side because Honestly, for the most of this year, Uh,
• 20:16
  Speaker 1: the demand side was driving things, and we're seeing that
• 20:19
  Speaker 1: again today with the prices dipping just a bit on
• 20:22
  Speaker 1: the heels of trade uncertainty going into will the supply
• 20:26
  Speaker 1: side start to take the helm. I think the supply
• 20:30
  Speaker 1: side is going to take be taken into um being
• 20:34
  Speaker 1: factored in largely because the market likes negative signals when
• 20:39
  Speaker 1: it comes to oil price. So given that we have
• 20:42
  Speaker 1: extensive supply overproduction numbers that are coming out, and especially
• 20:46
  Speaker 1: for Q one of next year, then we're seeing supply
• 20:49
  Speaker 1: factored into the downward pressure on the price. I see
• 20:52
  Speaker 1: supply and demand when they have an impact, it's a
• 20:55
  Speaker 1: downward pressure, which is very frustrating for the industry overall.
• 20:58
  Speaker 1: But I'm in a very barished mood when it comes
• 21:00
  Speaker 1: accrewed price. So, Regina, we you know, they had some
• 21:03
  Speaker 1: announcements about the cuts, but whenever I read OPEC or
• 21:06
  Speaker 1: OPEC plus, uh, you know, production cut announcements, Yeah, I
• 21:09
  Speaker 1: feel like we have to take them with a green
• 21:11
  Speaker 1: of salt. Do you think they will hold this time?
• 21:14
  Speaker 1: And if not, who will be the the bad actors
• 21:17
  Speaker 1: or actors? Compliance is definitely the name of the game
• 21:21
  Speaker 1: and probably the reason why the meeting took so much
• 21:24
  Speaker 1: longer than they had anticipated last week. The bad actors
• 21:28
  Speaker 1: are Russia in particular. I thought that their little fine
• 21:32
  Speaker 1: print agreement around declassifying condensate out of their numbers was
• 21:38
  Speaker 1: a nod toward Russia's non compliance and the fact that
• 21:40
  Speaker 1: they will continue to be noncompliant, but they're going to
• 21:44
  Speaker 1: calculate it differently so they don't look as bad as
• 21:46
  Speaker 1: they had perhaps in the past. And the U S
• 21:49
  Speaker 1: sanctions on Iran and Venezuela are only helping the OPEC
• 21:52
  Speaker 1: pictures overall. But Saudi is going to have to muscle
• 21:55
  Speaker 1: their way through it, and they're going to have to
• 21:56
  Speaker 1: be the ones that bear the brunt of the lion's
• 21:59
  Speaker 1: share of the cuts. Regina, you said that you have
• 22:01
  Speaker 1: a very barish take right now on the price of crude.
• 22:04
  Speaker 1: I'm looking at crewe traded in the n Imax flat
• 22:07
  Speaker 1: uh down just to touch three or four basis points
• 22:10
  Speaker 1: form from Friday. I'm trying to figure out what's driving that,
• 22:14
  Speaker 1: What where do you think that's going to be going?
• 22:16
  Speaker 1: In other words, are we headed? Is is a threshold
• 22:18
  Speaker 1: forty or the threat that the sort of threshold seventy dollars. Well,
• 22:23
  Speaker 1: I don't think it's either. I think the the OPEC
• 22:26
  Speaker 1: plus agreement helps us stay in this sort of not
• 22:30
  Speaker 1: too hot, not too cold, and I wouldn't say just
• 22:33
  Speaker 1: right in a goldilocks sense, but within a range that
• 22:36
  Speaker 1: people feel mostly comfortable with. If we can keep w
• 22:39
  Speaker 1: t I close to sixty, and if we can keep
• 22:41
  Speaker 1: Brent close to sixty, that is what producers are aiming for.
• 22:45
  Speaker 1: That's still not That means that US shale is still
• 22:48
  Speaker 1: not really in the money across the board and will
• 22:51
  Speaker 1: still continue to see a lot of pressure on capital
• 22:53
  Speaker 1: investment on the U S shale producers. So Regina, let's
• 22:56
  Speaker 1: shift gears just a little bit too. Saudi A Ramco,
• 22:59
  Speaker 1: the company priced it's I p O last week I
• 23:01
  Speaker 1: think thirty two reals each raising twenty five point six
• 23:04
  Speaker 1: billion dollars UH. That was at the top end of
• 23:07
  Speaker 1: the range here. So it's gonna start trading on Wednesday.
• 23:10
  Speaker 1: My concern is they have virtually no Western investors in
• 23:15
  Speaker 1: this transaction. What's the feeling within your world about how
• 23:20
  Speaker 1: this thing was structured? I really just kind of limiting
• 23:23
  Speaker 1: it to some of the Middle East. It's interesting I
• 23:26
  Speaker 1: was in a conference last week with a lot of
• 23:28
  Speaker 1: private equity investors here in Houston, and they were asking
• 23:32
  Speaker 1: would you invest in that deal? And most people in
• 23:35
  Speaker 1: the room said absolutely not. There are far less risky
• 23:38
  Speaker 1: places to put your capital within an energy context than
• 23:42
  Speaker 1: investing in that deal. They will have subscribers, and there
• 23:45
  Speaker 1: are a lot of sovereign wealth funds out there that
• 23:47
  Speaker 1: will place a bet and it will allow the South
• 23:50
  Speaker 1: East to monetize this asset and drive improvements in their
• 23:54
  Speaker 1: budgets that they need right to improve their their country
• 23:57
  Speaker 1: and their economy. But it's not going to necessarily be
• 23:59
  Speaker 1: some thing that's super complicated and that a lot of
• 24:01
  Speaker 1: Western investors are going to be knocking down the doors
• 24:04
  Speaker 1: to invest in. So back in the US with shell
• 24:07
  Speaker 1: producers under fire because this is just not economic for
• 24:10
  Speaker 1: them with oil prices where they are, we are seeing
• 24:13
  Speaker 1: capital expenditures fall pretty much across the board in the
• 24:16
  Speaker 1: shell patch. I'm trying to figure out though, why this
• 24:19
  Speaker 1: isn't bullish for prices, the idea that on the margins
• 24:22
  Speaker 1: you are seeing UH producers realize that things are going
• 24:26
  Speaker 1: to change that much, which is going to reduce supply. Yeah,
• 24:30
  Speaker 1: so there's a projection that US supply goes up to
• 24:33
  Speaker 1: thirteen and a half noion barrels per day. For I
• 24:36
  Speaker 1: think personally that projection is at risk because I am
• 24:39
  Speaker 1: seeing a slowdown in US shale production and I am
• 24:42
  Speaker 1: seeing a lack of capital. If you look at some
• 24:45
  Speaker 1: of the smaller players in US shale, and if you
• 24:47
  Speaker 1: look at some of the impairments that were recorded in
• 24:49
  Speaker 1: Q three, that's where you'll start to see it. It's
• 24:52
  Speaker 1: a treadmill that they've been on and they've had to
• 24:54
  Speaker 1: continue to invest to sort of stay a pace, and
• 24:57
  Speaker 1: that capital is drying up. So I, personally and UM
• 25:01
  Speaker 1: more bullish that US supply starts to get a little
• 25:04
  Speaker 1: bit constrained, which could help promote prices longer term and
• 25:08
  Speaker 1: could play into opex hands in the Saudi I p O,
• 25:11
  Speaker 1: which will be positive from an overall producer perspective. Regina,
• 25:14
  Speaker 1: thanks so much for joining us. We appreciate your thoughts.
• 25:16
  Speaker 1: Regina Mayor, Global Energy head at KPMG, talking all things oil.
• 25:21
  Speaker 1: Thanks for listening to the Bloomberg P and L podcast.
• 25:24
  Speaker 1: You can subscribe and listen to interviews at Apple Podcasts
• 25:26
  Speaker 1: or whatever podcast platform you prefer. Paul Sweeney, I'm on
• 25:29
  Speaker 1: Twitter at pt Sweeney. I'm Lisa A. Bram Woyds. I'm
• 25:32
  Speaker 1: on Twitter at Lisa A. Bram Woyds. One before the podcast,
• 25:35
  Speaker 1: you can always catch us worldwide on Bloomberg Radio