Latest / Bloomberg Intelligence / Former CIA Ops Chief: In the Long Game, Maduro Goes

Transcript

Former CIA Ops Chief: In the Long Game, Maduro Goes · Bloomberg Intelligence

0:02
Speaker 1: Welcome to the Bloomberg Penel Podcast. I'm Paul Sweeney. Along
0:05
Speaker 1: with my co host Lisa Brahma Waits. Each day we
0:07
Speaker 1: bring you the most noteworthy and useful interviews for you
0:10
Speaker 1: and your money. Whether at the grocery store or the
0:12
Speaker 1: trading floor, find a Bloomberg penl podcast on Apple podcast
0:16
Speaker 1: or wherever you listen to podcasts, as well as at
0:18
Speaker 1: Bloomberg dot com. It's hard to pinpoint the biggest hot
0:23
Speaker 1: spot that we ought to be paying attention to, Paul Sweeney. Luckily,
0:27
Speaker 1: we have Jack Divine here to go through them all
0:30
Speaker 1: with us. He is the founding partner and president of
0:32
Speaker 1: the ark And Group, also former chief of the CIA's
0:36
Speaker 1: worldwide operations, joining us here in our Bloomberg Adder Active
0:39
Speaker 1: Broker's studios. Jack, we love having you. Thank you for
0:42
Speaker 1: being here. I want to start with Venezuela because a
0:45
Speaker 1: lot of people are pinpointing the fact that it's become
0:48
Speaker 1: sort of a proxy location for a battle for supremacy
0:52
Speaker 1: between Russia and China on one hand and the US
0:55
Speaker 1: on the other. And I'm wondering, from your perspective, how
0:59
Speaker 1: valid is it to view the conflict in Venezuela currently
1:03
Speaker 1: through that lens at Lisa. As you know, I'm a
1:06
Speaker 1: Cold warrior, unreformed if you will, and if you if
1:09
Speaker 1: you stay in a game long enough, it repeats itself.
1:12
Speaker 1: So when I look at Venezuela to day with my
1:14
Speaker 1: background having spent so many years in the struggle with
1:18
Speaker 1: the Russians and the Cubans, I mean, this is a
1:21
Speaker 1: very familiar pattern. And they see a vulnerability on our
1:24
Speaker 1: flank and in our sphere of influence, and they push
1:28
Speaker 1: it for maxim advantage. Now, I think most Americans haven't
1:31
Speaker 1: been following over the past several years just how important
1:35
Speaker 1: Russia's financial support has been to Venezuela. And on again
1:40
Speaker 1: the professional side, the part that I'm quite familiar with,
1:43
Speaker 1: having supported the Cuban intelligence group and being able to
1:46
Speaker 1: monitor the opposition and how to counteract. It's very reminiscent
1:52
Speaker 1: of the Cold War. Having said that, the second part
1:55
Speaker 1: of that play is we have always resisted uh those
2:00
Speaker 1: adventures into this hemisphere, and I the strong action of
2:04
Speaker 1: sanctioning Venezuela is all part of this bigger chess chess game,
2:10
Speaker 1: and I do think we have to keep rushing Cuba
2:15
Speaker 1: from gaining another foothold in the region. So, Jack, given
2:18
Speaker 1: your long experience in that region of the world, what
2:22
Speaker 1: is your sense of how this plays out? It seems
2:24
Speaker 1: like when the um there's a lot of support for
2:28
Speaker 1: we have two presidents now, I mean, I guess my
2:30
Speaker 1: sentence is very quickly. How do you think this will
2:32
Speaker 1: play out? I think it's a very complicated situation. We
2:37
Speaker 1: tend to underestimate how far a country has to fall
2:43
Speaker 1: before there's an eruption of of a regime change. So
2:49
Speaker 1: when you look at the dynamic, I mean the inflation
2:52
Speaker 1: and UH in Venezuela, the shortages it is the lack
2:56
Speaker 1: of UH sufficient protection for the city, a sence, the
3:01
Speaker 1: autocratic nature of of the Madero government. They're at a
3:05
Speaker 1: very low point UH in the process. That doesn't mean
3:10
Speaker 1: that it's going to be resolved quickly. Actually was reading
3:12
Speaker 1: an article today in which one of the opposition leaders
3:15
Speaker 1: had one of our vulnerabilities here, if we think that
3:18
Speaker 1: this is a short game, we're probably gonna be you know,
3:21
Speaker 1: we're gonna dissipate our energy. So this is a sustained,
3:24
Speaker 1: sustained effort. I don't think it's over anytime soon. And
3:27
Speaker 1: as you know, the key, or at least many analysts
3:30
Speaker 1: would say the key is where does the military come down?
3:33
Speaker 1: But the military is not a united, monolithic group. You
3:37
Speaker 1: have military leadership and then you have the private and
3:41
Speaker 1: sergeant that's living with inflation shortages and his family. So
3:46
Speaker 1: the military doesn't have a lock on it. And the
3:49
Speaker 1: question is at what point in this process does the
3:53
Speaker 1: system break? And it is uh. I always say it's
3:56
Speaker 1: a game of chicken that the manages it, but there
3:58
Speaker 1: is this is going to be a move and counter move.
4:02
Speaker 1: I think for some period of time over the long
4:04
Speaker 1: play Madero goes not sustainable. I want to I want
4:09
Speaker 1: to shift gears a little bit. The way that we
4:10
Speaker 1: get a sense of how to engage most effectively is
4:14
Speaker 1: through our intelligence operations, both in Venezuela and elsewhere in
4:18
Speaker 1: the world. And I want to just check in with
4:20
Speaker 1: you about something that we've talked about over the over
4:23
Speaker 1: the past few years, which is morale at the CIA
4:26
Speaker 1: right now, Given the fact that we still are getting
4:29
Speaker 1: leeks about things out of the CIA and the fact
4:33
Speaker 1: that there does seem to be some dissonance disagreements within
4:38
Speaker 1: the administration right now, can you give us a read
4:41
Speaker 1: how are things just internally. My experience in the agency
4:45
Speaker 1: is that morale is often directly correlated to how important
4:51
Speaker 1: the agency is in the scheme of things in our
4:54
Speaker 1: policy and how much is an administration using the CIA
5:00
Speaker 1: that is really the ingredient. As a population has probably
5:03
Speaker 1: split fifty two Republican Democrats, switching is part of America,
5:10
Speaker 1: So it's not so politicized in that regard today, whether
5:14
Speaker 1: you have a Republican president or a Democratic president. The
5:17
Speaker 1: CIA is a really critical piece of the action. So
5:20
Speaker 1: I at the working level as opposed to uh, we're
5:25
Speaker 1: seeing it played out some policy level disputes, but the
5:29
Speaker 1: rank and file is more interested in doing doing the job.
5:33
Speaker 1: Now At the policy level, UM, I mean the mission
5:37
Speaker 1: of the CIA engraved on its wall, and we've talked
5:40
Speaker 1: about this before. Its product is just tell the facts
5:43
Speaker 1: the way they are, and when it gets in trouble,
5:45
Speaker 1: it deviates from that. So policymakers need to understand that
5:49
Speaker 1: and live with it. And the best ones understand that
5:52
Speaker 1: that is a strength. And so I think, um, looking
5:56
Speaker 1: at the situation today, UM, I think, um, you know
6:00
Speaker 1: everyone's looking that there will be a fight between the
6:02
Speaker 1: intelligence community and policy makers. I think that's not good
6:06
Speaker 1: for this country. UM And, I think over time, good
6:11
Speaker 1: objective intelligence prevails and most presidents events eventually succumbed to
6:16
Speaker 1: the to the importance of relying on it. So, how
6:19
Speaker 1: the so you're saying that the UM some the commentary
6:23
Speaker 1: from President Trump at administration detigrating UH the intelligence agencies.
6:27
Speaker 1: You're thinking your senses that these agencies can withstand that
6:30
Speaker 1: certainly in the near term, focus on the long term.
6:34
Speaker 1: You know, I may be an optimist, but my experience
6:36
Speaker 1: leads me to believe the truth does prevail, that reason
6:40
Speaker 1: does prevail. UM And I think when you look at
6:43
Speaker 1: the assessments, you know, there's things that are said in
6:46
Speaker 1: the public forms, other things were said in the back room.
6:49
Speaker 1: I don't think the intelligence being shocked. I know. Let
6:53
Speaker 1: me differently, I know the intelligence community really considers Iran
6:58
Speaker 1: and evil empire. Right. It's you know, my career, I
7:01
Speaker 1: was in charge of Iranian operations at one point. There's
7:03
Speaker 1: no school of thought inside the agency that Iran is
7:08
Speaker 1: a good nation and the part of the brotherhood U. So,
7:12
Speaker 1: I think the dispute is whether or not the specific
7:15
Speaker 1: ingredients of the UH of the treaty worked out with
7:21
Speaker 1: them on nuclear uh development is being adhere to, and
7:26
Speaker 1: I think the senses it is they would point out
7:32
Speaker 1: if pressed, and I believe it's probably even in the
7:34
Speaker 1: record that you know, this is not an ironclad agreement,
7:39
Speaker 1: the nuclear agreement, so there is room for developing missiles.
7:43
Speaker 1: There's sights that can't be worked, so it's it's not
7:47
Speaker 1: as clean as may be portrayed publicly. So I think
7:51
Speaker 1: the sea is very much awared about all of these
7:53
Speaker 1: things and understand the motivations. But if you look at
7:56
Speaker 1: the technical point A, point B, they haven't broken it.
8:00
Speaker 1: Chack Devine, we love having you on. Thank you so
8:02
Speaker 1: much for being with us. Jack Devine, founding partner and
8:04
Speaker 1: president of the ark And Group, also former chief of
8:07
Speaker 1: CIA's Worldwide Operations author of Good Hunting, A Spy Master's Story.
8:13
Speaker 1: Really interesting to get this perspective because the intelligence community
8:16
Speaker 1: is so pivotal in national security and has been under
8:21
Speaker 1: under a lot of scrutiny of late. The US retail
8:38
Speaker 1: industry continues to undergo tremendous disruption brought about by e
8:42
Speaker 1: commerce writ large and perhaps Amazon dot Com in particular,
8:46
Speaker 1: and no US name has been more impacted, arguably than Sears,
8:49
Speaker 1: the venerable Sears Brandon the United States to help us
8:52
Speaker 1: kind of passed through what is going on in retail
8:55
Speaker 1: these days, particularly with Sears. There's been some more news.
8:57
Speaker 1: There's Bert Flickinger. Burg is a manager director at Strategic
9:01
Speaker 1: Resource Group. Bert joins us in our Bloomberg Interactive Broker studio. Bert.
9:05
Speaker 1: We love to have you here. Thank you very much.
9:07
Speaker 1: Can you give us the latest on what is going
9:09
Speaker 1: on at Sears? It looks like Eddie Lambert one another
9:13
Speaker 1: round of to keep this company afloat. My question to
9:17
Speaker 1: you is what is going on? What's the latest Paul
9:20
Speaker 1: and Lisa. Another really regrettable example of bankruptcy Judge Bob
9:25
Speaker 1: drain who was a big Wall Street partner let letting
9:30
Speaker 1: Lampert's lawyers, who making thousands of dollars per hour, just
9:35
Speaker 1: run rough shot. In my professional view, with a lot
9:38
Speaker 1: of experience in this area, run rough shot over the
9:41
Speaker 1: creditors Um, including the vendors, the workers, the landlords, and
9:47
Speaker 1: Lampert is epitomized retail and aptitude throughout his career, and
9:54
Speaker 1: and for drain Um to not have the right person
9:59
Speaker 1: with Lampert, with his advisers, with the law firm wild
10:03
Speaker 1: gotchall without the right skills. How to you know? It's
10:07
Speaker 1: an institutionally an excuseable view. So Sears has been an
10:10
Speaker 1: absolute mess for a while, and certainly that's been reflected
10:14
Speaker 1: in the fact that the shares are trading under a
10:16
Speaker 1: dollar until very recently they've surged. They've actually almost doubled
10:20
Speaker 1: from sixty cents to a dollar in the past two sessions.
10:23
Speaker 1: But I'm just wondering what could Sears do at this
10:25
Speaker 1: point to rejuvenate itself, Lisa key question you're asking, And
10:32
Speaker 1: here's where Lampert fails to have a good grasp for
10:35
Speaker 1: the obvious. He had e commerce right in front of him.
10:39
Speaker 1: As you've presently pointed out a number of times, the
10:42
Speaker 1: Sears catalog couldn't have been converted to e retail to
10:45
Speaker 1: compete with Amazon, but it could have been effective. Kurt Avalon,
10:49
Speaker 1: who was one of the founders of Takeoff e Retail,
10:52
Speaker 1: was the chief merchant for Lampert. Uh Lampert let him
10:57
Speaker 1: leave the company. Avalon's done ninety e retail micro fulfillment
11:04
Speaker 1: centers were body sized, mechanized eight thousand square feet, can
11:07
Speaker 1: do a million a week. That would have saved Sears.
11:10
Speaker 1: The guys sitting in the executive suite with Lambert, and
11:14
Speaker 1: Lambert doesn't want to invest in sales circulars, doesn't want
11:18
Speaker 1: to rental, and Revinal the store raises prices with impunity,
11:22
Speaker 1: sees the solution to save the company, lets it go.
11:26
Speaker 1: What do we do here? We bring back Bob Mettler,
11:29
Speaker 1: Arthur Martinez, the dream team that saves Sears twenty years ago,
11:33
Speaker 1: and the boards Tip two is to do it and Lambert,
11:37
Speaker 1: in my views, has has too much ego to do it.
11:40
Speaker 1: And the American taxpayers are going to pay a very
11:43
Speaker 1: painful price for this one. So is Lambert's play here,
11:46
Speaker 1: in your opinions, simply a real estate play of the
11:49
Speaker 1: stores and so on and so forth. I just don't
11:51
Speaker 1: see away how he recovers anything remotely close to what
11:55
Speaker 1: he I'm sure originally planned. Polish is you referenced, well,
12:00
Speaker 1: it was a real estate play to start with Marty
12:02
Speaker 1: Whitman when they controlled Kmart almost twenty years ago. In
12:06
Speaker 1: that bankruptcy combined with Sears real estate play and huge
12:10
Speaker 1: fees to Lampard and his company in addition to him
12:13
Speaker 1: demification for him not to have litigation liability, and in
12:19
Speaker 1: my view, he should be investigated and if investigated, pay
12:24
Speaker 1: the commercial consequences. So that sort of takes us to
12:28
Speaker 1: the whole concept of shopping malls and the role of
12:31
Speaker 1: them going forward. And honestly, this was called into relief
12:34
Speaker 1: by j Z Penney, which decided to stop selling major
12:37
Speaker 1: appliances as well as furniture in some US stores this week.
12:40
Speaker 1: As Bloomberg News reported yesterday, I'm just wondering, you know,
12:43
Speaker 1: what will be the role of shopping malls, just how
12:46
Speaker 1: much of the carnage has already happened versus needs to happen,
12:51
Speaker 1: Lee Lisa, what's happening in the US will be much
12:54
Speaker 1: worse than what's happening overseas. And our worldwide work for
12:59
Speaker 1: arbitration tribunals Paris, Dubai, we had to do a worldwide
13:03
Speaker 1: study of research luxury to mid mid tier to downstream
13:07
Speaker 1: and what we see in London is Selfridge's store the
13:11
Speaker 1: year three years ago in a row. Harvey Nichols digit
13:15
Speaker 1: digitized the experience, so they get young consumers. It's almost
13:19
Speaker 1: like going to a Disney property and they get all
13:22
Speaker 1: kinds of graphics one would see on her his mobile phone.
13:26
Speaker 1: What the Parisian retailers do when Bloomberg is not correctly
13:30
Speaker 1: reporting the yellow vests um rioting in the streets. The
13:35
Speaker 1: retailers in South Korea, Japan here know how to evolve
13:40
Speaker 1: with the future investing malls to make them exciting. Here. Uh,
13:44
Speaker 1: they're they're dead elephants, just waiting to be restructured by
13:48
Speaker 1: private equity firms. Some of the private equity firms are
13:51
Speaker 1: good in our view. I don't think uh Lambert's private
13:54
Speaker 1: equity firm in anybody's view, is constructive. So you still
13:58
Speaker 1: think that there is a role for bricks and mortar retail,
14:01
Speaker 1: but is your view that has to be much more
14:04
Speaker 1: closely tied in and aligned with the digital e commerce offering.
14:07
Speaker 1: That is that the life the life raft for bricks
14:10
Speaker 1: and mortar exactly as you stated, Paul. And here's the
14:13
Speaker 1: example Sears four in Hamburg, where the Buffalo bills played
14:18
Speaker 1: close to the Canadian border. Like all the Sears Canadian
14:21
Speaker 1: border stores should be doing lots of business. It's not.
14:24
Speaker 1: But Amazon moved in to Niagara Falls Boulevard with a
14:28
Speaker 1: combination Amazon Whole Food Store where they blew up the
14:32
Speaker 1: whole on Niagara Falls Boulevard and mall replaced the Bontan
14:37
Speaker 1: bankrupt department store with an Amazon Amazon Whole Foods. That
14:40
Speaker 1: store is supposed to do one point to five million
14:43
Speaker 1: a week. That store is now doing less than two
14:46
Speaker 1: hundred thousand a week a year after its opening, is
14:48
Speaker 1: going to close like the Amazon bricks and mortar stores.
14:51
Speaker 1: So the retail a cop apocalypse or ice ages affecting
14:55
Speaker 1: everybody from Sears to Amazon. Because while Bezos and my views,
15:00
Speaker 1: most brilliant person who's ever worked in retail, when he's
15:03
Speaker 1: running the show, he's great. But now he's going to
15:05
Speaker 1: the show and all these side shows that he's personally
15:09
Speaker 1: distracted with his divorce. So Amazon's failing in bricks and
15:13
Speaker 1: mortar as his seers and the guys with the great
15:16
Speaker 1: leaders will win. So let's talk about who's actually doing
15:19
Speaker 1: a good job of adopting brick and mortar to the
15:22
Speaker 1: modern era in the United States. Uh, look at what
15:26
Speaker 1: Frank Blake did to completely turn around Home Depot before
15:29
Speaker 1: he became chairman of Delta doing doing tremendous job off price.
15:34
Speaker 1: Uh is you've referenced well a number of times, Lisa,
15:38
Speaker 1: whether it's Ali's bargain stores on the low end or
15:41
Speaker 1: Burlington or t j X or Ross off price. Customers
15:46
Speaker 1: want to shop primarily on price Chris Baldwin. But this
15:50
Speaker 1: has something to do with the experience, right, Uh, the
15:52
Speaker 1: experience and and price. So it's a combination, uh, treasure hunt.
15:58
Speaker 1: In terms of the experience home DEEPO is a great
16:00
Speaker 1: experience in store online uh. And if and if you
16:04
Speaker 1: look at a number of others from the department stores
16:08
Speaker 1: and luxury start with South Korea, then then go to London, Paris, Uh,
16:13
Speaker 1: you go to Dubai uh and and throughout the PRC
16:17
Speaker 1: in Japan. A lot of great in store experiences, but
16:20
Speaker 1: the retailers are looking at everything in cap as access
16:25
Speaker 1: and expense rather than an investment to profitably drive sales. Yeah,
16:28
Speaker 1: definitely gonna be a big challenge. How do you invest?
16:30
Speaker 1: Will also watched declining sales and adopt to a modern
16:34
Speaker 1: era both in brick and mortar as well as on
16:37
Speaker 1: their online platforms. But Bert flickant Jer, thank you so
16:39
Speaker 1: much for being here. As always, Bert flickint Jer, Managing
16:42
Speaker 1: director at Strategic Resource Group. You know, definitely a big
16:46
Speaker 1: existential question facing retail. How big can the brick and
16:50
Speaker 1: mortar presence be? How do you fight against Amazon dot Com.
17:09
Speaker 1: So trade talks on off, on again, perhaps off again.
17:13
Speaker 1: Now we know that President Trump is not going to
17:15
Speaker 1: be meeting with jumping ahead of that March first deadline.
17:19
Speaker 1: Why what happened? It's hard to know, but we knew.
17:21
Speaker 1: The one person is keeping track of it very closely.
17:23
Speaker 1: Mike McDonough, chief economist for Financial Products at Bloomberg LP,
17:27
Speaker 1: joining us here in our Bloomberg Atta Active Brokers studios. Mike,
17:30
Speaker 1: what happened? Why are the talks now off before the
17:33
Speaker 1: March first deadline? I mean, are they all right? Well?
17:37
Speaker 1: There we go? It seemed like, I mean, the Trump
17:41
Speaker 1: she meeting may apparently be postponed, but they're still having
17:44
Speaker 1: talks next week. So I mean, it's really hard to
17:47
Speaker 1: decipher what this means. I mean, I think, why are
17:49
Speaker 1: we hearing about all this? Why? Why the chatter? Why
17:52
Speaker 1: the it seems like someone asked him a question and
17:55
Speaker 1: kind of a random press conference are just discussion he
18:00
Speaker 1: was having. I'm not really sure how we we we
18:02
Speaker 1: got the information. It was actually a little bit confused
18:04
Speaker 1: by that yesterday. It was not a formal pronounced and
18:06
Speaker 1: and you know, I noticed the earliest headline I could
18:09
Speaker 1: see was at eleven thirty, and I think the um
18:12
Speaker 1: uh you know, the mark was actually selling off before that.
18:14
Speaker 1: So the whole thing kind of confused me. But so
18:16
Speaker 1: let's take a step back. Um, you know, I I
18:18
Speaker 1: don't know what this says about a potential deal. I
18:21
Speaker 1: do think that President Trump's bar for a deal has
18:25
Speaker 1: come down quite meaningfully because of what's been happening in
18:27
Speaker 1: the markets and concerns that the economy has been slowing.
18:31
Speaker 1: In fact, I wouldn't be surprised if it's come down
18:33
Speaker 1: so far. It may actually be at odds now with
18:35
Speaker 1: the people negotiating the trade deal primarily what I mean
18:39
Speaker 1: by that is Lighthouser, so you know, we could have
18:41
Speaker 1: a conflict there. Uh So I'm still optimistic we're going
18:44
Speaker 1: to reach some sort of deal. I think we'll get
18:46
Speaker 1: the best possible deal, which will not be what Trump
18:50
Speaker 1: had originally proposed, but we will. He will get some
18:53
Speaker 1: uh consolations. I think that we'll have some tangible stuff
18:56
Speaker 1: as it relates to the deficit, and I think we'll
18:59
Speaker 1: have promise is for some of the more difficult challenges,
19:02
Speaker 1: the intellectual property opening up an investment in some Chinese sectors,
19:06
Speaker 1: and I think right that the difficult thing is going
19:08
Speaker 1: to be uh what kind of measures are put in
19:11
Speaker 1: place to enforce those? And I think that's probably where
19:13
Speaker 1: the negotiations are centered right now. And I think the
19:15
Speaker 1: Chinese are realized now and are more willing to to
19:18
Speaker 1: give more concessions as well. So I do think a
19:20
Speaker 1: deal is possible. This delay of of the She Trump
19:24
Speaker 1: meeting is confusing because he said that it will be
19:27
Speaker 1: finalized at a meeting between us. If they don't meet
19:29
Speaker 1: by the deadline, what happens. Do we get the tariffs?
19:32
Speaker 1: Do we not get the tariffs? I suppose we'll know
19:35
Speaker 1: more next week when the the meetings do happen, not
19:37
Speaker 1: between uh She and Trump, but between more junior negotiation. So, Mike, again,
19:43
Speaker 1: it's do you have a sense of who's more incentive
19:46
Speaker 1: to get a deal done? I think we hear about
19:49
Speaker 1: China's economy slowing. Obviously we know that that. Maybe we've
19:51
Speaker 1: had some people come in here saying it's slowing materially
19:54
Speaker 1: more than the government is letting on, I e. They
19:56
Speaker 1: may be more incentive to do a deal. Do you
19:58
Speaker 1: buy into that? Well? I think you know, looking at
20:02
Speaker 1: last year, you had a problem where it was their
20:05
Speaker 1: deleveraging agenda that was causing the slowdown in the country.
20:08
Speaker 1: Trade wasn't really a factor. Yet you still have the
20:10
Speaker 1: issue with the deleveraging agenda slowing down growth more than
20:13
Speaker 1: they anticipated. And then you add on top of that trade.
20:16
Speaker 1: So yeah, that does put a lot of pressure on China.
20:18
Speaker 1: But I think if you look at you know, when
20:20
Speaker 1: President Trump started this um with China, US GDP growth
20:24
Speaker 1: was over three percent, the markets were rallying, everything was
20:26
Speaker 1: looking great. In the US, things don't look as good now.
20:29
Speaker 1: Sentiment is collapsing. If you look at one measure in
20:32
Speaker 1: the University of Michigan and the percent of people who
20:35
Speaker 1: um randomly make good comments about government economic policy, it's
20:38
Speaker 1: at the lowest it's ever been. During the Trump presidency,
20:42
Speaker 1: you had the shutdown, So there's some erosion and confidence
20:44
Speaker 1: in the economic agenda in the US. So Trump needs
20:47
Speaker 1: some wins, and this could be a nice, good, easy
20:49
Speaker 1: win that could bring some confidence back. Which brings us
20:52
Speaker 1: back to the confusing head scratcher of yesterday when we
20:55
Speaker 1: got the headlines at President Trump was not going to
20:57
Speaker 1: be attending a meeting with President of China and just
21:01
Speaker 1: to put this in a perspective about why we're focusing
21:03
Speaker 1: on it if we don't really have a lot of
21:05
Speaker 1: clarity there. Arguably that's what sunk the NASDAC and the
21:08
Speaker 1: DOO in particular, and sort of led the week into
21:12
Speaker 1: a rather negative tone, right. I mean, this actually did
21:14
Speaker 1: have a market effect. We saw it happen when the
21:17
Speaker 1: headlines hit. We saw stocks taken a further leg lower
21:21
Speaker 1: in the US. So my question is, if they are
21:25
Speaker 1: not talking, or if President Trump doesn't meet with Jim Ping,
21:28
Speaker 1: could we still get a deal ahead of that March
21:31
Speaker 1: first deadline? I think anything Obviously it is possible, but
21:35
Speaker 1: I mean, though it seems unlikely, but maybe we could
21:38
Speaker 1: get an extension of the deadline to accommodate the meeting.
21:41
Speaker 1: And what would I mean, would that be considered a
21:43
Speaker 1: win for who? Fair enough? My point is that is that,
21:51
Speaker 1: I mean, is that enough of the market thank you?
21:53
Speaker 1: Oh yeah, I mean I think I think thank you
21:55
Speaker 1: for understanding. Maybe if you if you get that extension,
21:58
Speaker 1: I think that would imply a deal is basically has
22:02
Speaker 1: been reached and it's a formality that they need to
22:04
Speaker 1: meet and then sign the deal. So I think that
22:06
Speaker 1: the market would look at that as a positive. If
22:07
Speaker 1: there I'm not talking about like another three six month extension.
22:11
Speaker 1: I'm talking about saying we're going to extend this deal
22:14
Speaker 1: another couple of weeks or whatever to accommodate a meeting
22:16
Speaker 1: between President and President Trump to finalize some of the
22:19
Speaker 1: loose ends our promises enough, like if they promised on technology,
22:23
Speaker 1: that's not enough. No, And I think that's that's one
22:26
Speaker 1: of the key points right now is they're trying to
22:28
Speaker 1: figure out what enforcement mechanisms they could put in place
22:31
Speaker 1: that they could track over the next two years on
22:33
Speaker 1: some of the uh following through with some of the
22:36
Speaker 1: more difficult challenges. I mean, you know, you know, it's interesting.
22:39
Speaker 1: Thank you, Mike McDonald, Thank you very much. We always
22:42
Speaker 1: appreciate your your insights here. Mike is the chief economist
22:44
Speaker 1: financial Products from Bloomberg LP. He joins us in our
22:47
Speaker 1: Bloomberg eleven three oh studios. Uh. You know, I don't know,
22:50
Speaker 1: color meet pessimistic, but that you know, I think some
22:53
Speaker 1: of the big issues that have to be addressed here
22:54
Speaker 1: on the trade deal are the very hard issues about technology,
22:58
Speaker 1: about intellectual property. It's about soybeans, paulbeans, but at some
23:04
Speaker 1: point they're gonna have to get down to brass tacks
23:05
Speaker 1: and go to those very tough issues which are really
23:08
Speaker 1: economically material. We have seen the price of iron or
23:25
Speaker 1: surge by more than twenty five over the past ten sessions,
23:29
Speaker 1: catching a lot of people's attention. But you know, it's
23:31
Speaker 1: catching even more people's attention, at least the attention of
23:34
Speaker 1: Mike McLoone, that is corn and crops and the fact
23:37
Speaker 1: that we are finally going to get some information for
23:39
Speaker 1: the first time in two months about just how well
23:41
Speaker 1: US farmers have been doing over the past couple of months.
23:43
Speaker 1: Mike mcloan joining us here in our Bloomberg at Active
23:45
Speaker 1: Broke Studios Commodity Strategy for Bloomberg Intelligence. So what's up
23:49
Speaker 1: with this, with this report that we're about to get. Well,
23:52
Speaker 1: we haven't had data from us d A for two months,
23:54
Speaker 1: so everybody is waiting for the market's stuck in a
23:57
Speaker 1: range and it's waiting for the data to night fear
23:59
Speaker 1: the market more likely kind of do what iron Ore has.
24:02
Speaker 1: You know, commodities have been pretty beat up, the dollar
24:04
Speaker 1: has been very strong, and then you just get a
24:06
Speaker 1: little piece of news like what happened with the ballet
24:08
Speaker 1: and the market just has the path of least resistance
24:11
Speaker 1: seems to be up, and I think that's might be
24:12
Speaker 1: the more of the case today with with um, the
24:15
Speaker 1: grains and eggs. So what commodities in particularly are you
24:18
Speaker 1: most looking forward to seeing data? You just I just
24:21
Speaker 1: I'm a little bit I need this data to help
24:23
Speaker 1: me form my opinion because it's been two months and
24:25
Speaker 1: there's a lot of altility. Which what are some of
24:27
Speaker 1: the data points you're most looking forward to today? Well,
24:29
Speaker 1: you mentioned corn, corn, soybeans, and we eat The key
24:31
Speaker 1: issue has been soybeans. We all know there's this way
24:33
Speaker 1: too much supply soy means because of the trade war UM,
24:37
Speaker 1: and we all expect the thing. It's already priced in UM.
24:40
Speaker 1: But I'm kind of watching corn because corn has the
24:42
Speaker 1: best balance, and all the estimates are that all the
24:46
Speaker 1: that we had last year, yields of probably declined a
24:47
Speaker 1: little bit. The production estimates have probably come off a
24:49
Speaker 1: little bit, and so corn is gonna be the one. Also,
24:52
Speaker 1: once we think we can virtually guarantee next year we're
24:54
Speaker 1: gonna get a lot more corn planting. It's just a
24:56
Speaker 1: question of how much it's marketed, and we don't export
24:58
Speaker 1: a lot of corn. We use a lot, actually use
25:00
Speaker 1: most are cornel for ethanol. Interesting, So, Mike, given the
25:04
Speaker 1: fact that you've done this for decades and you've been
25:06
Speaker 1: intimately connected with just how volatile things can get, look
25:09
Speaker 1: into your crystal ball. If we get a positive reading
25:12
Speaker 1: out of this FDA report or USDA usd A report,
25:16
Speaker 1: how much could you see the price of corn rice
25:20
Speaker 1: right now? My estimate is for to five percent and
25:22
Speaker 1: it's simple analysis session just well overall, maybe take a
25:26
Speaker 1: few said. But even if the data is neutral, if
25:28
Speaker 1: you look at the futures curve, because there's really not
25:30
Speaker 1: a lot of data, the futures curve is switched towards
25:33
Speaker 1: more towards backwardation, which means the fritures curve is expecting
25:35
Speaker 1: demand to pick up versus supply. And then you look
25:37
Speaker 1: at one other key factor, the Brazilian real Remember we
25:40
Speaker 1: had the big election last year. It looks like the
25:41
Speaker 1: realist bottom. So these two factors are turning positive. In addition,
25:46
Speaker 1: we all know what's going to happen when this trade issue.
25:48
Speaker 1: It's got to go back. It's not gonna get as
25:49
Speaker 1: bad as last year. We should see some mean version
25:51
Speaker 1: which mean to me means this data has to be
25:54
Speaker 1: really bare, so the market is more likely to go higher. So, Mike,
25:56
Speaker 1: let's switch from the softer commodities to the hard of stuff.
26:00
Speaker 1: Commodities are arguably iron ore. How surprised are you know,
26:03
Speaker 1: as Lisa mentioned, you know a big move up in
26:05
Speaker 1: iron ore of the last tent tent sessions doing part
26:08
Speaker 1: I guess in large part to the supply disruption from
26:11
Speaker 1: valet in Latin America. UM, How surprised are you with
26:15
Speaker 1: the volatility of that commodity given what is you know,
26:19
Speaker 1: I guess a meaningful supply disruption. Yes, it was significant.
26:23
Speaker 1: It's just like natural gas last year. The path of
26:25
Speaker 1: least resistance with some of this news is up because
26:28
Speaker 1: that's what commodities are doing in their bottom I mean
26:30
Speaker 1: the significance of iron ores. It's just not widely traded.
26:33
Speaker 1: There's no real active futures UM. And for me as
26:36
Speaker 1: a strategist, it's also not highly correlated to industrial metals.
26:40
Speaker 1: It's ironic, but it isn't, so I just kind of
26:42
Speaker 1: keep it as a as an Ey'm the backburner, and
26:44
Speaker 1: I watched copper and I watch aluminium, but iron ore
26:47
Speaker 1: as an indication where things are going. It's not going down, yeah,
26:49
Speaker 1: but I mean I understand that it's it's might be
26:52
Speaker 1: thinly traded, but it's still is a commodity, that it's
26:54
Speaker 1: an essential ingredient in any infrastructure spending, and frankly that
26:58
Speaker 1: is often used as a gauge of global economic growth.
27:02
Speaker 1: So I mean, is there a bigger kind of message
27:04
Speaker 1: to take away here that as a slid disruption and
27:06
Speaker 1: a major producer of iron ore could cause really, I
27:09
Speaker 1: mean twenty seven increase in the price and ten sessions.
27:12
Speaker 1: This is traumatic. I have to temper my enthusiasm to
27:16
Speaker 1: be bullish commodities because obviously I'm a commodity guy. But
27:18
Speaker 1: I look at this year, is this is an indicative
27:21
Speaker 1: of where markets are going with just little tweaks. It's
27:24
Speaker 1: much easier for them to go up with little things
27:26
Speaker 1: like this, and that this is a you know, this
27:28
Speaker 1: is a canary and the coal chef. But you look
27:30
Speaker 1: at copper, it's just bottom from a good level. Aluminiums
27:32
Speaker 1: just bottom from a good level. We're going to see
27:34
Speaker 1: corn today, and all these demands supply demand factors are
27:38
Speaker 1: switching positive. In addition, the key factors of US though,
27:40
Speaker 1: if the dollars peaked from that sixteen year high last year,
27:43
Speaker 1: which I think it has, that's a pretty strong tail
27:46
Speaker 1: wind for all commodities. In addition, we get these little
27:49
Speaker 1: supplied rustions. But key thing remember about slight disruptions are
27:52
Speaker 1: usually short term events, and they come back. What's your
27:55
Speaker 1: number one commodity right now? Real? Ten seconds? Good Gold,
27:59
Speaker 1: unfortunate Gold. I have to I have to give my credit.
28:04
Speaker 1: He's been making a very popular and a very good
28:08
Speaker 1: gold call for two or three months. I heard it
28:10
Speaker 1: just kind of in the background in the office about
28:12
Speaker 1: his gold. I read his reports and uh, spot on,
28:15
Speaker 1: spot on. So gold, safety, safety, and gold. Mike mcglowan,
28:21
Speaker 1: thanks very much, Mike, as a commodity strategist for Bloomberg
28:23
Speaker 1: Intelligence joining us today in our Bloomberg Interactive Broker studio
28:27
Speaker 1: here in New York. Thanks so much, Mike. So again Gold,
28:30
Speaker 1: But I go, I can see gold in the space
28:32
Speaker 1: and gold, so again, gold in the market that is
28:34
Speaker 1: down two hundred sixty points on the Dow. Gold does
28:37
Speaker 1: not sound so bad. We've got the you know, people
28:40
Speaker 1: concerned about the economic outlook, certainly in the back half
28:42
Speaker 1: of the year, So why not gold so Mike, we'll
28:45
Speaker 1: we'll take it. Thanks for listening to the Bloomberg P
28:49
Speaker 1: and L podcast. You can subscribe and listen to interviews
28:52
Speaker 1: at Apple Podcasts or whatever podcast platform you prefer. Paul Sweeney,
28:56
Speaker 1: I'm on Twitter at pt Sweeney, I'm Lisa bram Boyd's
28:59
Speaker 1: I'm on Twitter at Lisa Abramo. It's one before the podcast.
29:02
Speaker 1: You can always catch us worldwide on Bloomberg Radio