♪ >> GOOD MORNING FROM OUR GLOBAL
HEADQUARTERS IN NEW YORK. WELCOME TO "NUMBER BRIEF." >> ISRAEL'S MILITARY HAS BEGUN
CIVILIANS OUT OF RAFAH, A POSSIBLE PRELUDE TO A
LONG-EXPECTED ATTACK ON THE CITY.
BROOKSHIRE'S CASH TRIAL PITS AND UP -- IT'S ANOTHER HARD
CASH. DECISIONS AND FOCUS THIS WEEK.
GOOD MORNING. MANUS:
THE NASDAQ TOOK THE CROWN LAST WEEK.
AGAIN, TWO CUTS BEING BACK ON THE TABLE.
THE LOWEST IN OVER A MONTH. GOLDMAN SACHS TALKS ABOUT THE
HAWKISH UNDER TERMS THAT YOU HAVE IN THIS MARKET AROUND
STAGFLATION. OF COURSE, WE HAD THE WARREN
BUFFETT GATHERING. WE UNDERSTAND THEY SOLD A
LITTLE BIT BUT TO COIN A PHRASE IT IS STILL GOING TO BE A
VERY,, HEFTY HOLDING FOR THEM. COINBASE ALSO DOING A BIT
BETTER AT THE BOTTOM OF YOUR SCREEN. FUTURES, CASH IS CLOSED INTO
JAPAN AND THE U.S. THIS IS FUTURES HIGHER, YIELDS
LOWER AGAIN. HOW ARE WE GOING TO ABSORB 125
BILLION DOLLARS OF SUPPLY THIS WEEK? $67 BILLION. LET'S SEE WHAT THE NARRATIVE
IS, $175,000. THE SIZE AND SCALE AND BIT
EFFICACY OF THE INTERVENTION, YELLEN WAS AT THE TABLE SAYING
SHE THOUGHT THE CAUSE OF INTERVENTION WAS NOTHING MORE
THAN A RUMOR. RIGHT NOW THE DOLLAR BULLS ARE
RETESTING THE UPSIDE IN THIS SO WE ARE GOING TO DEBATE THE
EFFICACY OF INTERVENTION. DANI: WE ARE NOT AT 160 AGAIN, TO BE
CLEAR, BUT RBC DOES SAY WE ARE GOING TO TEST THAT AGAIN.
ONE THING WE NEED TO DEBATE IS WHY YELLEN SEEMS TO HAVE
CHANGED HER TONE. SHE ALSO SAID THAT
INTERVENTIONS NEED TO BE RARE AND CONSULTATIONS SHOULD TAKE
PLACE. THAT IS NOT A RINGING ENDORSEMENT OF INTERVENTION
LIKE SHE GAVE TO THE JAPANESE AND SOUTH KOREANS FOUR.
PERHAPS THIS GOES TO THIS IDEA, CONSISTENT INTERVENTION IS A
PROBLEM. IF YOU KEEP DOING IT, IT
INTRODUCES INSTABILITY, SOMETHING YELLEN DOES NOT WANT.
MANUS: THIS GOES BACK TO WHAT LARRY SUMMERS AND ADAM POSEN BOTH PUT
ON THE TABLE WHICH IS ABOUT THE EFFICACY OF UNILATERAL
INTERVENTION. THE CHINESE INTERVENED WITH $1
TRILLION. SO THAT IS A SIZABLE INTERVENTION. DANI:
WHEN I SAID TO HIM THAT ALL OF THE SPEND AS THEY DID IN 2022,
THAT IS EXACTLY WHAT HE SAID. MANUS:
OUR NEXT GUEST HAS BATTLED THE RAIN AND BRAVED THE CITY OF
LONDON STREETS. THIS IS WHAT HE'S GOT TO DO.
IT WITH THE BIGGEST INTERVENTION EVER BY VALUE.
THAT HAS TRIGGERED A 4% MOVE. THE FIGHT ISN'T OVER YET AND
YOU NEED TO BE MUCH BRAVER THAN ME TO PILE IN AND BY THE END
BEFORE THE U.S. CPI REPORT. SCATHING OF THE ATTEMPT TO PUT
A BRIDLE ON THE YEN. IF YOU DON'T THINK THEY GOT
MUCH BANG FOR THEIR BUCK, WITH THEIR ACTUAL INTERVENTION IN
YOUR VIEW? DEFINE IT FOR US AND THE SCALE.
YOU TALK ABOUT THE BIGGEST EVER. >> WE ARE TRYING TO WORK AT HOW
MUCH INTERVENTION THEY DO IS A GAME THAT PEOPLE PLAY LOOKING
AT BALANCE SHEETS AFTERWARDS. MY SENSE YES, DEFINITELY THEY
CAME IN IN A BIG WAY. THEY SEEM TO HAVE COMPANY CAN
BUY EVERYTHING YOU CAN JUDGE. IT WAS A BIG INTERVENTION OVER
A VERY SHORT TIME THAT THEY DID POSSIBLY MORE IN 2022 BUT THAT
WAS OVER A MUCH LONGER TIME. WHEN IT'S OVER WEEKS AND
MONTHS, THEY HAVE COME IN AND DONE A LOT AND WHAT THEY DID IN
2022 WAS A LOT BY HISTORICAL STANDARDS CHALLENGE THAT THEY
HAVE FIRSTLY IS THAT WHEN YOU LOOK AT POSITIONING DATA ON
CFTC, WHICH IS ONLY ONE LITTLE GLIMPSE OF THE MARKET, THEY
HAVEN'T SCARED A LOT OF PEOPLE AWAY WHO HAVE BEEN LONG DOLLAR-YEN OR SHORT YEN, MAKING
LOTS OF MONEY CONSISTENTLY OVER A LONG TIME FORCES PEOPLE OUT.
THE MARKET HAS TO BELIEVE THAT THEY HAVE CREDIBILITY AND THAT
THERE IS POLICY CHANGE THAT WILL JUSTIFY IT, BUT THE
FUNDAMENTALS ARE GOING TO JUSTIFY THIS MOVE.
AND NONE OF THE THINGS THAT ANYONE SEES SO FAR REALLY DO
THAT. BUT THE YEN HAS GOING FOR IT IS
IT IS RIDICULOUSLY CHEAP ON ANY KIND OF EFFECTIVE EXCHANGE-RATE
VALUATION. WHAT IT HAS GOING AGAINST IT IS
THE INTEREST RATE DIFFERENTIAL IS STILL ABSOLUTELY FAST AT THE
CHEAPNESS OF THE CURRENCY HAS TURNED UP IN A LOT OF TOURISTS
ARRIVING IN JAPAN THIS YEAR TO ADMIRE CHERRY BLOSSOMS AND
ANGST. DANI: I WILL HAPPILY GO SEE THE
CHERRY BLOSSOMS, MAYBE YOU AND I CAN MEET OUT THERE.
OK, THE FUNDAMENTALS ARE THERE. IF YOU'RE GOING TO INTERVENE,
HISTORY HAS TOLD US THAT HAVING THE U.S.
PARTICIPATING IS QUITE HELPFUL. WHAT DO YOU THEN MAKE OF YELLEN
OVER THE WEEKEND SAYING INTERVENTION NEEDS TO BE RARE
AND WITH CONSULTATION? KIT: I AGREE WITH BOTH OF THOSE.
YOU HAVE TO SAY WE HAVE A PROBLEM FOR BOTH SIDES, AND I
THINK YOU WILL GET TO A STAGE WHERE EVERYBODY AGREES.
ALREADY ALL THE NORTHEAST ASIAN ECONOMIES AGREE THAT THE DOLLAR
IS TOO STRONG. THAT IS NOT THE FIRST TIME THAT
HAS HAPPENED. BUT IT IS NOT OBVIOUS YET WHILE
THE U.S. IS FIGHTING INFLATION THAT THE
U.S. WANTS A WEAKER DOLLAR IN ANY
WAY, SHAPE OR FORM. THERE'S THIS LIMITED ENTHUSIASM
AT THIS POINT IN TIME FROM THE UNITED STATES.
SO I THINK THAT JANET YELLEN MIGHT HAVE BEEN ALARMED BY THE
NUMBER OF COUNTRIES COMING IN AND THINKING WE WOULD LIKE A
CONCERTED NORTHEAST ASIAN INTERVENTION BECAUSE WE THINK
THE TAIWAN DOLLAR, THE JAPANESE YEN AND EVEN PERHAPS THE YUAN
ARE ALL BE GOOD AND PEOPLE WOULD LIKE.
WE WOULD LIKE TO CREATE SOME STABILITY.
IT'S DIFFICULT IN A SENSE WHEN YOU LOOK AT DONOR THEN --
DOLLAR-YEN THINKING IT HAS COME SO FAR AND CERTAINLY IT MUST
COME BACK, AND THAT IS UNSTABLE. BUT GETTING IT TO HAPPEN WITH A
BIT OF INTERVENTION QUICKLY IS GOING TO BE REALLY HARD IF YOU
HAVE NOT WEST SUPPORT BECAUSE THEY THINK THEY EVENING RATION,
OR NARROW INTEREST RATE DIFFERENTIALS. MANUS: THE DEBATE IS THIS, THE JOBS
REPORT SHOOK THE MARKET BUT THEN IT WAS THE TAIL. THE BOND MARKET WAS RALLYING
FURIOUSLY AND THEN THE SERVICES CAME IN WHICH SAYS TO ME WE CAN
DEBATE DISINFLATION ALL DAY. NOW WE MUST DEBATE DECELERATION
IN THE UNITED STATES OF AMERICA. IS THAT A FAIR TRANSITION? KIT:
WE NEED TO LOOK AT IT BECAUSE WE'VE GONE FROM WHERE WE SAW A
COUPLE OF MONTHS OF JUST ASTONISHINGLY STRONG SETS OF
DATA FOR THE BEGINNING OF THE MONTH. THIS IS MUCH MORE MIXED. THE JOBS NUMBERS, THE
YEAR-OVER-YEAR GROWTH FOR THE SIX-MONTH MONTH ANNUALIZED
GROWTH IN JOBS IS HIGHER THAN IS SUSTAINABLE IN THE LONG RUN.
THEY TEMPER THE PACE THAT THEY ARE NOT GETTING ANYWHERE.
THIS IS AN EXTRAORDINARILY STRONG ECONOMY.
THE OTHER BITS OF DATA THAT WE'VE SEEN ARE DEFINITELY
TELLING A SOFTER PICTURE, AND I THINK THAT IS REALLY WHERE IT
TAKES US NOW. WHAT THE FED IS GOING TO HAVE
TO DO IS SAY WE DON'T REALLY KNOW.
WE JUST HAVE TO WAIT FOR THE DATED TO TELL US WHAT IS
HAPPENING ON THE ECONOMY. DANI: IN THE MEANTIME, THE DATA HAS
BEEN THIS NARRATIVE YO-YO. THE RIDICULOUS AMOUNT OF CUTS
PRICED IN. WE UNDO THE CUTS AND NOW WE SAY
OK, MAYBE ONE CUT. IT IS THIS NARRATIVE YO-YO THAT
IS REALLY HARD TO KEEP YOUR HEAD AROUND AND HAS BURNED SO
MANY PEOPLE IN THE MARKET. SO WHAT DO YOU DO WITH THAT?
DO YOU GREAT YOUR TEETH AND HOLD ON TO A POSITION AND HOPE
FOR THE BEST? >> YOU DON'T OVER-POSITION.
WE ARE NOT SUPPOSED TO BE TAKEN OFF THE PITCH BY RANDOMNESS.
ECONOMIC DATA HAS BEEN RANDOM FOREVER IN THE SENSE THAT YOU
HAVE TRENDS, BUT YOU GET A LOT OF MOVEMENT.
AT THE MOMENT, IT IS HARD TO EVEN DISCERN THE TREND WITH
CONFIDENCE. BUT IF YOU SAY THE FED'S NEXT
MOVE IS PROBABLY A CUT, THE ECONOMY IS SLOWING AT THE
MARGIN DESPITE DOING MUCH BETTER THAN WE THINK, INFLATION
IS COMING DOWN BUT WE ARE IN A STATE INFLATION WHICH IS GOING
TO COME DOWN VERY SLOWLY, I BELIEVE ALL OF THAT.
THEN YOU MAKE INVESTMENT DECISIONS BASED ON THAT
FRAMEWORK AND YOU MAKE SURE YOU DON'T JUST GET CARTED OFF BY
RANDOMNESS AROUND THAT. WHICH IS WHAT WE ARE ALL DOING
AT THE MOMENT, THIS JUST GETTING KNOCKED ABOUT BY JUST
RANDOM DATA. MANUS: WE'RE JUST GOING TO INTERRUPT
YOU FOR A SECOND. WE ARE SHOWING LIVE PICTURES
HERE, AND OF COURSE, HE IS ON THIS TRIP TO EUROPE, A FIVE DAY
TRIP TO SERBIA, HUNGARY AND FRANCE. BUT THIS IS ABOUT RESETTING A
TRIFECTA IN THAT ROOM WHICH IS EUROPE, FRANCE ALONG WITH XI
JINPING. DANI: DON'T EXPECT IT TO BE EASY.
THEY ARE GOING TO BE HERE THROUGH TOMORROW AND THEN
SERBIA AND HUNGARY. THIS IS NOT THE TYPICAL VISIT. THIS IS NOT GOING TO BRUSSELS,
GOING TO ROME, OR EVEN TO BERLIN.
IT IS GOING TO TWO RUSSIAN-FROM THE OUTPOST AFTER FRANCE.
THAT IS PERHAPS DESIGNED TO SEND A MESSAGE NOT TO MENTION
THE DIFFICULTY THEY ARE GOING TO HAVE HAVING DINNER TONIGHT.
NOT AN EASY VISIT. MANUS:
INSERT OF THE SUBPLOT OF THE BACKDROP TO THIS WITH THE
IMPART MENU MACRON TRYING TO ENCOURAGE XI JINPING TO
POTENTIALLY RECONSIDER THEIR POSITION ON RUSSIA.
AND OF COURSE, IT IS ABOUT THOSE SUBSIDIES.
WE'VE HAD THIS TIT-FOR-TAT. OF COURSE I CAUGHT UP WITH THE
LOUIS VUITTON CEO FOR ALCOHOL AND HE WAS TALKING ABOUT THE
DUMPING OF COGNAC IN CHINA, SO YOU HAVE THIS EASY DUMPING
TIT-FOR-TAT WAR GOING ON AND THEY WANT THAT TO DAMPEN,
REALLY. >> THEY ARE TALKING NOW.
THEY HELD A BILATERAL MEETING 30 MINUTES AGO, THEN THEY ARE
GOING TO GO SPEAK AT THE CHINA FORUM AND THEN AGAIN, A STATE
DINNER. KIT, AGAIN WE ARE JUST LOOKING
AT PICTURES OF THIS MEETING BETWEEN THE DIFFERENT LEADERS. OBVIOUSLY TRADE FOR EUROPE IS
BEEN A TENSION POINT WITH CHINA. WHAT IS THE NECESSITY OF EUROPE
AT A TIME WHEN WE'RE ARE TALKING ABOUT CUTS IN JUNE TO
MAKE SURE TO GET ANY SORT OF AGREEMENT WHERE WE PREVENT
SOMETHING THAT LOOKS LIKE A TRADE WAR BETWEEN CHINA AND
EUROPE? >> WE ARE IN A POSITION WHERE
TRADE IS WEAKER THAN IT WAS SO EUROPE HAS BEEN HIT WITH HIGHER
ENERGY COSTS AND WEAKER TRADE. A TERMS OF TRADE SHOCK RELATIVE
TO THE UNITED STATES AND A GROWING GROWTH GAP, WHICH HAVE
GIVEN US DIFFERENT SEQUENCING FOR CENTRAL BANKS AND OBVIOUSLY
THE EURO-DOLLAR WHERE IT IS. FROM WHERE I SIT, ANYTHING THAT
UNDOES SOME OF THAT GIVE THE EURO POTENTIAL TO GO UP.
IT GIVES EUROPE THE POTENTIAL TO SURPRISE ON THE UPSIDE ON
ROAD WHICH IS SOMETHING IT HASN'T DONE MUCH OF IN THE LAST
COUPLE YEARS. WE SAW SOME SLIGHTLY BETTER
PMIS AND SLIGHTLY DISAPPOINTING ONCE IN THE STATES.
ANYTHING THAT LETS THOSE TRENDS CONTINUE WILL BE GOOD FOR THE
EURO. THESE ARE BABY STEPS BECAUSE
THE BIG CURRENTS STILL AREN'T HELPFUL.
THE WORLD IS NOT GOING TO FREE TRADE.
THE CHINESE ECONOMY IS NOT GOING BACK TO PRE-PANDEMIC
GROWTH RATES. WE ARE NOT GOING BACK TO WHERE
WE WERE, BUT ANY PROGRESS I THINK HE GETS A RESPONSE IN
MARKETS OVER THE ONE WE HAVE NOW. DANI:
REALLY GOOD STUFF AS ALWAYS, REALLY APPRECIATE YOUR TIME
THIS MORNING. GET THE UMBRELLA AND MAKE IT
SAFE BACK TO THE OFFICE. COMING UP ON THE SHOW,
CEASE-FIRE TALKS COME TO A HALT. ISRAEL'S MILITARY HAS BEGUN TO
MOVE CIVILIANS OUT OF RAFAH. WE ARE GOING TO DISCUSS THAT
NEXT. MANUS:
-- CASH PILE HITS A NEW RECORD. MORE ON THAT STORY AND THEIR
POSITION AROUND THE EQUITY MARKET. RIGHT HERE ON BLOOMBERG.
CONTEXT MATTERS. ♪ ♪ DANI: THIS IS "BLOOMBERG
BRIEF." ISRAEL'S MILITARY HAS BEGUN TO
MOVE CIVILIANS OUT OF RAFAH, A POSSIBLE PRELUDE TO A
LONG-EXPECTED ATTACK ON THE GAZAN CITY.
THIS COMES AS CEASE FIRE TALKS IN CAIRO SEEMINGLY STALLED AND
HAMAS KILLED THREE ISRAELI SOLDIERS IN AN ATTACK THIS
WEEKEND. BOBBY, HOW DID WE GET FROM
CEASE FIRE TALKS IN CAIRO TO WHERE WE ARE AT THIS MOMENT OF
ISRAEL SAYING YOU NEED TO LEAVE? BOBBY:
THE ROCKET ATTACKS OVERNIGHT ARE A PRETTY BIG DEAL. HAMAS MILITARY WING HAS A
DIFFERENT AGENDA THAN THE POLITICAL WING.
THE POLITICAL WING IS INVOLVED IN THESE CEASE FIRE TALKS. THIS FIRING OF ROCKETS, AT THIS
POINT IN THE CONFLICT THEY DON'T HAVE THAT MANY ROCKETS.
SO IT IS QUITE A STATEMENT FOR THEM TO BE SHOOTING THESE OFF.
IT'S BEEN WEEKS AND WEEKS SINCE THE LAST TIME THEY'VE BEEN ABLE
TO SUCCESSFULLY SHOOT OFF ANY ROCKETS NOT ONLY HAVE A SHOT
OFF ROCKETS, THEY HAVE KILLED THREE ISRAELI SOLDIERS WHICH
MEANS ISRAEL WILL FEEL COMPELLED TO RESPOND IN FORCE. HE HAS BEEN THREATENING AN
ASSAULT FOR WEEKS AND WEEKS NOW. THE ISRAELI MILITARY THINKS
THAT THIS IS WHERE HAMAS WILL MAKE ITS LAST STAND.
AND BELIEVE THERE ARE BETWEEN 5000 AND 8000 FIGHTERS AND
AMONG MORE THAN ONE MILLION CIVILIANS IN RAFAH, SO THIS
COULD GET VERY BLOODY, VERY UGLY, STREET TO STREET, HOUSE
TO HOUSE FIGHTING. MANUS: YOU GET A SENSE THAT THIS COULD
BE THE LAST MAJOR CONFLICT, BUT THEN WHERE DID THE PEOPLE WHO
ARE SHELTERING IN RAFAH AT THE MOMENT GO TO?
THOSE OTHER AREAS NEARBY HAVE ALSO BEEN PRETTY BADLY
DESTROYED. BOBBY: ISRAEL THINK THIS WILL BE THE
LAST TIME. WE DON'T REALLY KNOW. HAMAS LIVES AMONG THE
CIVILIANS, SO WHERE THE CIVILIANS GO, QUITE A LOT OF
HAMAS FIGHTERS WILL GO AS WELL. THEY ARE BEING ASKED TO GO TO
KHAN YUNIS WHICH IS SLIGHTLY TO THE EAST. BUT IT HAS ALREADY
BEEN PRACTICALLY RAZED TO THE GROUND.
HEAVILY BOMBED FOR SEVERAL MONTHS.
THERE'S IS VERY LITTLE STANDING THERE.
ISRAEL SAYS THAT ONCE ABOUT 100,000 PEOPLE TO MOVE FROM
RAFAH. HOW THE PEOPLE IN RAFAH WILL
RESPOND TO THAT, WE WILL SEE. THERE IS A RISK OF STAMPEDING
BUT THERE IS A RISK OF ARRIVING AND FINDING VERY LITTLE SHELTER
THERE. IT IS REALLY HARD TO SEE A GOOD
OUTCOME TO THIS. DANI: THIS IDEA THAT YOU WERE TALKING
ABOUT THAT THE SENIOR MILITARY LEADERSHIP AND POLITICAL
LEADERSHIP HAVE TWO DIFFERENT OPINIONS ON A CEASE FIRE. WE KNOW THEY SAID THEY ARE
STUDYING THIS IN A POSITIVE SPIRIT, SO WHERE DID THOSE
TALKS GO IF THERE IS THIS FUNDAMENTAL DIVIDE BETWEEN TWO
CRUCIAL PARTS OF HAMAS? BOBBY: THERE ARE ENOUGH PEOPLE ON BOTH
SIDES THAT DON'T WANT THE STOCKS TO SUCCEED.
THESE ROCKETS ARE A SIGNAL FROM THAT FACTION, AND THEN THE
EXTREME RIGHT IN ISRAEL WHO ARE CRUCIAL TO NETANYAHU'S
GOVERNMENT ARE GOING TO TAKE THAT AND SAY LOOK, THIS IS
PROOF THAT HAMAS IS NOT A GOOD-FAITH ACTOR, IT IS
POINTLESS TALKING TO THESE PEOPLE ARE DISCUSSING THE CEASE
FIRE. THESE PEOPLE WILL KEEP ATTACKING US ANY OPPORTUNITY WE
GET. LET'S JUST TRY TO FINISH IT ONCE AND FOR ALL IF SUCH A
THING IS EVEN POSSIBLE. MANUS: WHERE ARE WE IN THE BROADER
NEXUS? WE HAVE JAKE SULLIVAN TALKING
ABOUT AN AGREEMENT, SAUDI DEFENSE AGREEMENT, BUT THEY ARE
PRE-DESPERATE TO GET THE DEFENSE AGREEMENT FOR AS LONG
AS BIDEN IS IN OFFICE. BUT THEY ARE CO-JOINING THIS
WITH, AS IT WERE, AND INTEGRATED VISION OF PEACE IN
THE MIDDLE EAST. IT IS A LITTLE BIT OF A TALL REACH AT THE
MOMENT GIVEN THE LANDSCAPE YOU'VE JUST LAID OUT ON THE
GROUND. BOBBY: VERY MUCH A TALL REACH, MANUS. I WAS IN WASHINGTON OVER THE
WEEKEND WHERE THEY GIVE THESE REMARKS AND THE BIDEN
ADMINISTRATION ARE TRYING TO ATTACH THESE THINGS TOGETHER.
DEAL WITH THE SAUDI'S. THEY ARE SAYING TO THE ISRAELIS
THAT IS PART OF THIS DEAL YOU CAN GET ORGANIZATION WITH THE
SAUDI'S. THE SAUDIS AT THE MOMENT ARE
NOT MAKING ANY SUCH COMMITMENTS IN THE OPEN.
THEY WANT A DEFENSE DEAL WITH THE U.S.
THE LONGER THIS GOES ON, THE MORE STRENGTH THE SAUDIS WILL
HAVE TO BE ABLE TO SAY TO THE BIDEN ADMINISTRATION, LOOK.
WE'VE BEEN ALONG WITH THESE PLANS LONG ENOUGH, IT'S CLEAR
THAT THE ISRAELIS DON'T WANT TO COME ALONG, LET'S MAKE THIS
DEAL. I HAVE A SENSE THAT THE BIDEN
ADMINISTRATION'S PAINTING ITSELF INTO A CORNER AND WILL
PRETTY SOON FIND ITSELF IN THE POSITION WHERE THEY HAVE NO
CHOICE BUT TO MAKE A DEAL WITH THE SAUDIS WHETHER THE ISRAELIS
COME ALONG OR NOT. DANI: I WONDER HOW MUCH THIS IS
SHAPING THE BROADER MIDDLE EAST. IRAN'S SUPREME LEADER
TWEETING THE U.S. COLLEGE PROTESTS SAYING
LOCALITY OF THE MESS THERE IS, LOOK HOW MUCH SUPPORT THERE IS
FOR US AND OUR CAUSE. IS THIS A BIG NARRATIVE SHIFT
IN WHERE THE POWER AND THE GOODWILL IS RIGHT NOW IN THE
REGION? BOBBY: I WOULDN'T WORRY ABOUT IRAN SO
MUCH IN THAT CONTEXT. A COUPLE YEARS AGO HE
SLAUGHTERED THOUSANDS OF HIS OWN STUDENTS WHEN THEY WERE
PROTESTING ABOUT SOMETHING MUCH SIMPLER AND MUCH EASIER FOR
THEM TO GIVE. HE CHOSE NOT TO GIVE AND
INSTEAD TO SEND OUT HIS GOONS TO MURDER AND TORTURE AND
IMPRISON THOUSANDS AND THOUSANDS OF YOUNG IRANIANS. THE CONCERN IS WHAT IS
HAPPENING -- THIS IS AN OLD CLICHE, BUT THE ARAB STREET.
ORDINARY ARAB PEOPLE. EVEN THOUGH MANY OF THEM DON'T
NECESSARILY LIVE IN GOVERNMENT UPON WHOM THEY CAN REALLY PUT
ANY PRESSURE, THERE IS PRESSURE BUILDING IN THE ARAB STREET.
ALL THESE IMAGES FOR MONTHS AND MONTHS THAT WE'VE SEEN COMING
OUT OF THE PALESTINIAN TERRITORIES ARE SORT OF
INVOKING A SENSE OF RAGE THAT SOME POINT HAS TO COME OUT.
SOMETHING HAS GOT TO GIVE. IF IT DOESN'T GIVE IN RAFAH AND
ISRAEL, IT MIGHT AS EASILY GIVE IN THE STREETS OF CAIRO OR ANY
ONE OF THE OTHER CAPITALS. MANUS: THANK YOU VERY MUCH.
LET'S SEE HOW IT EVOLVES OVER THE NEXT 48 HOURS.
RIGHT HERE ON BLOOMBERG THIS MONDAY MORNING. CONTEXT MATTERS.
♪ MANUS: IT'S "BLOOMBERG BRIEF" ON A MONDAY MORNING.
LET'S SET YOUR AGENDA FOR THE FRONT PAGE.
THIS IS WHAT WE ARE LOOKING AT AROUND THE WORLD. FIRST UP, ISRAEL SHUTTING DOWN
LOCAL OPERATIONS OF AL JAZEERA ON SUNDAY.
IT IS PART OF THE BROADER CRACKDOWN ON THE DISSENT OVER
THE WAR IN GAZA. NETANYAHU IS ACCUSING AL
JAZEERA OF HARMING SECURITY. SHUTDOWN ORDER 45 DAYS WITH
OPTIONS TO EXTEND. DANI: I SAW THIS ONE ON THE FRONT
PAGE OF THE FTE AND I KNEW YOU WOULD LIKE IT.
FINALLY THE CEO OF CREDIT SUISSE IS GOING TO BE LEAVING
UBS. HE HAD ASKED TO LEAVE EARLIER
BUT THEY BASICALLY CONVINCED HIM TO STAY ON UNTIL THE
ACQUISITION AND THE MERGER WAS COMPLETE. MANUS: THERE'S NO IRONY LOST ON
ANYBODY, HE JOINED UBS IN 2009. SORRY, JOIN CREDIT SUISSE.
THEN HE SWITCHED TO UBS WHERE HE THOUGHT HE WAS GOING TO BE
CEO. STARBUCKS, WHEN YOU ARE A BIG
SHAREHOLDER YOU'VE GOT SWAG. HOWARD SCHULTZ, FORMER CEO.
DANI: I FEEL LIKE IT IS THE EX-BOYFRIEND COMING BACK INTO
TELLING YOU HOW TO RUN THE RELATIONSHIP.
HE WROTE THIS LONG LINKEDIN POST SAYING BASICALLY FOCUS ON
THE CUSTOMER, UPGRADE YOUR APP AND EVERYTHING WILL BE ALL
RIGHT. ♪ DANI: FROM THEIR GLOBAL
HEADQUARTERS IN NEW YORK, I'M DANI BURGER ALONGSIDE MANUS
CRANNY. MANUS: ISRAEL'S MILITARY HAS BEGUN
MOVING CIVILIANS OUT OF RAFAH. A POSSIBLE PRE-LEAD -- PRELUDE
TO A LONG EXPECTED ATTACK ON THE CITY. BURKE SHIRES CASH PILE HIT YET
ANOTHER RECORD. AND INVESTORS SEARCH FOR MORE
CENTRAL-BANK CLUES. THE DOE DECISIONS DO THIS WEEK.
DANI: IS THIS SIDEWAYS MARKET FINALLY
MOVING UPWARDS? THE NARRATIVE SHIFT, THE
NARRATIVE YO-YO OF THE CENTRAL BANK THIS TIME BEING FRIENDLY
FOR RISK ASSETS. UP A QUARTER OF 1%. U.S.
BOND CASH MARKET IS CLOSED. THAT SHOULD OPEN AROUND 7:00
A.M. U.S. TIME BUT BOND FUTURES FOR THE
MOMENT TO HAVE A BIT COMING INTO THEM.
WE ARE OFF THE BACK OF THE BIGGEST UPWARD -- DOWNWARD MOVE
FOR U.S. TREASURIES OF THE YEAR. WE ARE UNDOING A LOT OF THE
MOVES THAT WE SAW LAST WEEK. THE RELIEF THAT CAME AFTER THE
WEAKER JOBS, WE ARE NOW HIGHER ON DOLLAR BY ABOUT HALF OF 1%.
KIT JUKES BASICALLY SAID LOOK AT THE DATA AFTER WE GOT THE
INTERVENTION. IT IS CLEAR THAT THE BOJ AND
THE MOF HAVE NOT WASH THOSE OUT OF THE MARKET.
THERE IS A JUDGE RIGHT THERE. IT HASN'T BEEN EFFECTIVE IF
THOSE ARE STILL CLINGING ON. MANUS:
HE ALSO MADE THE POINT THAT THE SHEER SCALE OF THE INTERVENTION
RELATIVE TO 2022, HENCE THE REASON WHY HE TRIES TO PUT AN
AMALGAM AROUND THIS WHICH IS THE SIZE AND SCALE.
THAT IS WHAT HE SAYS IT IS PERHAPS ONE OF THE BIGGEST AND
MOST SUBSTANTIAL INTERVENTIONS THAT HE'S SEEN ON RECORD.
BUT OF COURSE YELLEN PUSHES BACK. SHE TALKED ABOUT THESE
INTERVENTIONS AS SOMETHING THAT SHOULD BE SORT OF RARE AND SHE
WAS JESTING THAT THIS INTERVENTION WAS NOTHING MORE
THAN A RUMOR. DANI: IT'S UNFORTUNATE FOR THE
JAPANESE BECAUSE NOT LONG AGO SHE WAS BASICALLY ENDORSING
INTERVENTION ALONGSIDE JAPAN AND SOUTH KOREA POLICYMAKERS.
NOW SHE IS SAYING IT SHOULD BE RARE AND WITHIN CONSULTATION.
THAT IS NOT A RINGING ENDORSEMENT. MANUS: THE ONE THING THAT KIT DID SAY
WITH THIS INTERVENTION, IF IT IS INTERVENTION, HAS NOT SCARED
THE MARKET. IT HAS NOT FRIGHTENED THE
HORSES. THEY ARE STILL VERY MUCH EMBOLDENED. DANI:
MAYBE THEY HAVE THE BENEFIT OF A SLOWING U.S. ECONOMY.
I WANT TO PIVOT TO THE U.S. AND GET TO OUR NEXT GUEST,
STRATEGIST AT VCA RESEARCH. LOOK, IT HAS BEEN QUITE A YEAR
ALREADY SO FAR AND IT IS ONLY MAY SOMEHOW.
BUT A LOT OF FOLKS WHO PREDICTED RECESSION THIS YEAR
AND LAST HAVE EARNED AND NOW WE ARE PRICING IN A SOFT LANDING,
TWO FED CUTS. BUT YOU WRITE THAT THE
ONTIVEROS SESSION STARTING LATE 2024 AND EARLY 2025 ARE
ELEVATED. WHAT ARE YOU SEEING THAT
SUGGESTS THAT? >> SO I THINK AS WE GET INTO A
RECESSION IT IS FIRST GOING TO LOOK LIKE A SOFT LANDING.
WE ARE SHIFTING AND NARRATIVES FROM THE NO LANDING PHASE, NOW
WE'VE GOT THIS JOBS REPORT ON FRIDAY. BUT I THINK AS THE UNEMPLOYMENT
DATA RISES, AT THE LABOR MARKET DETERIORATES, WE ARE ALREADY
STARTING TO SEE THINGS LIKE THAT JOBS OPENINGS RATE, THESE
THINGS ARE ALL FALLING. SO AS THIS TREND CONTINUES I
THINK THE NARRATIVE IS GOING TO SHIFT TOWARD THIS RECESSION
OUTLOOK. I THINK THERE IS TO A RUNWAY
FOR THE SOFT LANDING NARRATIVE, BUT EVENTUALLY THE UNEMPLOYMENT
RATE IS GOING HIGHER AND THAT IS GOING TO LEAD TO CONCERNS
ABOUT RECESSION. MANUS: IF THIS GOES FORWARD AS YOU SAY
WITH A LITTLE BIT OF RUNWAY FOR SOFT LANDING, IT DOES CHALLENGE
THE CARRY IN THANKS AND THE EXCEPTIONALISM OF THE U.S.
SO THEREFORE FROM AN EQUITY POINT OF VIEW, IT IS JUST A
MARGINAL SLOWDOWN, DRAWDOWN INEQUITIES? OR IS IT SOMETHING MORE
SIGNIFICANT, THE CHALLENGES, THE EXCEPTIONALISM OF U.S.
EQUITY? >ROUKAYA: U.S. EQUITIES ARE ALREADY HIGHLY
VALUED SO THAT RAISES THE LIKELIHOOD THEY ARE MORE
VULNERABLE TO THE DOWNSIDE. IF WE DO GET THIS RECESSION
LATE 2020 FOUR, EARLY 2025, THE S&P 500 IS MOST LIKELY GOING TO
FALL TO AROUND 3600, AND THAT IS DUE TO OUR EXPECTATIONS ON
GROWTH ESTIMATES. IT IS ALREADY AT 21.
I THINK IT IS GOING TO COME BACK DOWN TO SOMETHING THAT IS
MORE LIKE WHERE IT WAS IN THE FIVE YEARS PRIOR TO THE
PANDEMIC WHICH WOULD PUT US AROUND 3600. DANI:
3600, THAT IS A PAIN IN ITSELF. THAT IS ABOUT 30% LOWER, A
LITTLE BIT LESS THAN THAT IF WE GET THAT KIND OF DECLINE.
THAT IS A BIG DIFFERENCE. WALK ME THROUGH WHAT THE WORLD
LOOKS LIKE WITH S&P AT 3600 BECAUSE WE ARE GOING TO GET THE
U.S. PRESIDENTIAL ELECTION, WE ARE
LOOKING AT WHAT THAT MIGHT MEAN FOR INFLATION. THAT IS BEING.
-- BIG. ROUKAYA:
TO BE CLEAR, OUR EXPECTATION IS A CAN GO DOWN AS LOW AS 3600 SO
THERE IS POTENTIAL IT IS NOT GOING TO FALL BACK THAT LOW,
BUT IN THIS ENVIRONMENT WHAT WE ARE GOING TO SEE IS THAT THEY
EURO AREA RIGHT NOW IS STARTING TO RECOVER A LITTLE BIT.
SO I THINK THERE IS THIS RUNWAY FOR IT TO IMPROVE A LITTLE BIT
BUT ULTIMATELY THERE IS GOING TO BE THIS HEADWIND FROM CHINA.
WE DON'T EXPECT CHINESE POLICYMAKERS TO STIMULATE
AGGRESSIVELY, AND THEY HAVEN'T REALLY SIGNAL THAT THERE'S
GOING TO BE ENOUGH STIMULUS TO PROVIDE THE CHINESE ECONOMY.
SO ANY SORT OF RECOVERY THAT WE SEE IN THE NEAR TERM IN TERMS
OF THE GLOBAL MANUFACTURING CYCLE, THAT IS GOING TO BE
SHORT-LIVED. THE GLOBAL ECONOMY, WE DON'T
EXPECT A VERY SEVERE RECESSION, BUT A GARDEN-VARIETY RECESSION
IS WHAT WE EXPECT, AND THAT IS WHERE WE WOULD PIN THE 3600
FLOOR AT. MANUS:
IT'S INTERESTING BECAUSE MANY PEOPLE HAVE NOT SPENT A GREAT
DEAL OF TIME TALKING ABOUT CHINA IN REGARDS TO U.S.
EXCEPTIONALISM, BUT YOU ARE CO-JOINING THAT INABILITY TO
DELIVER A ROBUST 5% GROWTH IN CHINA AS SOMETHING WHICH
EVENTUALLY PERMEATES INTO THE U.S. AND GLOBAL PERSPECTIVE.
MORE EUROPEAN THAN U.S.? ROUKAYA:
DEFINITELY MORE EUROPEAN THAN U.S.
EUROPE IS MUCH MORE EXPOSED TO CHINA THAN THE U.S., BUT THE
POINT BEING IS THAT THERE COULD BE OVER THE NEAR TERM SOME
OPTIMISM ABOUT A GLOBAL MANUFACTURING RECOVERY.
THAT COULD SORT OF PROLONG THE OPTIMISM.
BUT EVENTUALLY, BECAUSE CHINA IS NOT STIMULATING
AGGRESSIVELY, THAT'S GOING TO PREVENT ANY DURABLE RECOVERY. THAT IS MUCH MORE RELEVANT, BUT
THE POINT BEING THAT THE EURO AREA WILL NOT BE ABLE TO ESCAPE
A RECESSION AT THE U.S. FALLS INTO ONE.
THIS IS A GLOBAL PHENOMENON WE ARE EXPECTING. DANI:
THE WHOLE U.S. SNEEZES, THE WHOLE WORLD
CATCHES A COLD. THE MENTOR JUNK-BOND CURRENTLY
TRADING AS HIGH-GRADE SECURITIES ARE AT A RECORD.
GIVEN WHAT YOU ARE SAYING THE WEAKNESS IS THAT WE COULD SEE
AN EQUITY MARKETS, ARE VAST PART OF THIS MARKET, MANY
CORNERS JUST SLEEPWALKING THROUGH A POSSIBLE PAINFUL
DEFAULT CYCLE? ROUKAYA: THAT'S WHAT WE ARE EXPECTING.
IF YOU TAKE A LOOK AT WHAT HAS HAPPENED TO CREDIT, THE DEFAULT
RATE EXPECTATIONS EMBEDDED IN THOSE VALUATIONS ARE EXTREMELY
OPTIMISTIC. FOR NOW, LET'S BE CLEAR, THE
U.S. ECONOMY IS STILL DOING WELL.
BUT WE ARE SEEING CONCERNING DATA, LIKE I SAID, FROM LEADING
INDICATORS OF THE LABOR MARKET. AND AS WE SEE THIS DATA
CONTINUE TO POINT IN THAT DIRECTION AND LEAD TO A RISE IN
THE UNEMPLOYMENT RATE, I THINK THAT IS WHEN THESE OTHER PARTS
OF THE MARKET ARE GOING TO WAKE UP TO THAT RISK. MANUS:
THANK YOU VERY MUCH FOR BEING WITH US THIS MORNING. PRETTY MIGHTY CALL IF IT DOES
GO ACCORDING TO THE CALL. COMING UP ON THE SHOW,
CEASE-FIRE TALKS COME TO A HALT. ISRAEL'S MILITARY HAS BEGUN
MOVING CIVILIANS OUT OF RAFAH. WE DISCUSSED THAT NEXT.
CONTEXT MATTERS ON BLOOMBERG. ♪ DANI:
COMING UP LATER TODAY IN AN INTERVIEW WITH MARC LIPSHULTZ,
LIVE FROM THE GLOBAL CONFERENCE, 2:30 GLOBAL, THIS
IS BLOOMBERG. MANUS: THIS IS "BLOOMBERG BRIEF"
, I'M MANUS CRANNY WITH DANI BURGER IN NEW YORK.
CEASE FIRE TALKS OF THE WEEKEND SEEMINGLY STALLED AND HAMAS
KILLING THREE ISRAELI SOLDIERS IN ATTACK THIS WEEKEND.
ISRAEL'S MILITARY HAS BEGUN MOVING CIVILIANS OUT OF RAFAH
AS IT WEIGHS THE TIMING OF A LONG-AWAITED ATTACK.
JOINING US NOW IS ROSS MATHESON. WE'VE JUST CAUGHT UP WITH BOBBY
GOSHE ILLUMINED EARLIER IN THE CONVERSATION SEEMS TO BE AROUND
ONE MASSIVE LAST MOMENT AS ARE OF AN OFFENSIVE.
HOW IMMANENT IS THAT GIVEN WHAT HAS HAPPENED OVER THE WEEKEND? >> IT'S UNLIKELY TO BE THAT
IMMINENT BECAUSE WHEN ISRAEL NEEDS TO DO IS ACTUALLY
RELOCATE A LOT OF PEOPLE OUT OF HARM'S WAY, AND THAT INVOLVES
DROPPING LEAFLETS AND COAXING PEOPLE TO RELOCATE AND THE
QUESTION IS WHERE EXACTLY DO THEY GO?
FOR NOW IT IS REALLY IN ORDER TO MOVE PEOPLE OUT OF ONE PART
OF RAFAH ESSENTIALLY TO A NORTHERN PART, BUT THERE'S A
LOT OF OTHER PEOPLE STILL LEFT IN THE AREA.
THIS COULD TAKE DAYS OR WEEKS TO MOVE PEOPLE ENTIRELY.
WE DON'T KNOW EXACTLY WHAT THE ISRAELI GOVERNMENT TIMELINE IS,
EXACTLY WHEN THEY INTEND TO GO INTO RAFAH, BUT THEY DO ALSO
NEED TO BE VERY MINDFUL OF THE RISK TO CIVILIANS IN THE AREA.
CERTAINLY, THE U.S., EUROPE AND OTHER COUNTRIES HAVE BEEN
PUSHING ON THAT FRONT. THIS IS SOMETHING THAT CAN TAKE
QUITE SOME TIME. IT COULD BE A SLOW WALK TOWARD
THE OFFENSIVE AND WHEN IT DOES, IT COULD BE MUCH SMALLER IN
SCALE THAN WE THOUGHT. DANI: IT WAS EARLY IN THE WEEKEND
THAT WE HAVE HEARD THERE WERE TALKS IN CAIRO BETWEEN ISRAEL
AND HAMAS TOWARD A CEASE-FIRE AND THEN THIS HAPPENS, ROCKET
IS FIRED. YOU HAVE DEBTS AMONG SOLDIERS
AND YOU HAVE ISRAEL DESCRIBING THE TALKS AS A CRISIS.
HOW FAR AWAY DOES THAT MEAN WE ARE FROM ANYTHING THAT LOOKS
LIKE A CEASE FIR? ROSALIND:
IT'S UNCLEAR IF ISRAEL IS GOING TO SEND ANOTHER DELEGATION TO
THEM AND THEY HAVE BEEN IN FRAUD THROUGHOUT.
THERE IS NO GOOD WILL ON EITHER SIDE. HE'S BEEN FUNDAL DIFFERENCES --
FUNDAMENTAL DIFFERENCES ABOUT WHAT THE TERMS OF A CEASE FIRE
WOULD LOOK LIKE. WHERE DID THE ISRAELI SOLDIERS
GO DURING A CEASE FIRE? WHAT HAPPENS TO THE ISRAELI
HOSTAGES AND PALESTINIAN PRISONERS BEING EXCHANGED?
A LOT HAS BEEN FUNDAMENTALLY PROBLEMATIC THE WHOLE TIME.
WHAT WE KNOW NOW IS THAT THOSE TALKS ARE REALLY ON THE KNIFE
STAGE. THERE DOESN'T SEEM TO BE ANY
MOMENTUM. IF THIS EVER TO MOVE PEOPLE OUT
OF RAFAH ON THE PART OF ISRAEL DESIGNED TO THE POINT OF
LEVERAGE TO TRY TO GET A CEASE FIRE TO FORCE HAMAS TO GET TO
THE POINT OF A TRUCE? THAT IS ALSO A PROSPECT BUT AT
THIS POINT IT DOES NOT SEEM LIKE A CEASE FIRE IS IMMINENT.
MANUS: I SUPPOSE IT DEPENDS ON WHAT
NETANYAHU BELIEVES HE HAS GLOBALLY AS SUPPORT.
TODAY PRESIDENT BIDEN WILL HAVE LUNCH AT THE WHITE HOUSE WITH
KING ABDULLAH OF JORDAN. IS THIS ANOTHER SCENARIO WHERE
NETANYAHU PUSHES FORWARD, ESCALATES THE ASSAULT?
IT REALLY TESTS WHERE HE IS GLOBALLY WITH THE WHITE HOUSE
AND HIS ALLIES. ROSALIND: THAT HAS KIND OF BEEN THE
DYNAMIC THROUGHOUT. ISRAEL HAS BEEN A BIT MORE TO
DO TO SOME OF THE GLOBAL PRESSURE IN RECENT WEEKS.
THEY CERTAINLY SLOWED DOWN WHAT WE THOUGHT WAS GOING TO BE A
ROUGHER OFFENSIVE SOME WEEKS AGO.
HE'S BEEN A BIT MORE MINDFUL OF THAT BUT EQUALLY, ISRAEL HAS
NEVER WALKED AWAY FROM THAT RHETORIC IS THAT THEY NEED TO
GO INTO RAFAH BECAUSE THEY FEEL THEY WANT TO ERADICATE HAMAS
COMPLETELY AND THAT IS THE ONLY WAY TO DO IT.
THAT HAS BEEN A CONSISTENT GOAL THROUGHOUT DESPITE THE
INTERNATIONAL PRESSURE. IT'S VERY CLEAR THAT THEY WILL
STILL DO WHAT THEY THINK THEY NEED TO DO TO MEET THAT GOAL
REGARDLESS OF WHAT THE REST OF THE WORLD HAS TO SAY. MANUS:
LET'S SEE HOW IT EVOLVES OVER THE NEXT 48 HOURS.
ROS MATHESON IN LONDON TRACKING THE LATEST DEVELOPMENTS IN THE
WAR. LET'S TURN OUR ATTENTION TO THE
U.S., TO OMAHA. BERKSHIRE HATHAWAY'S CASH PILE
HITTING ANOTHER RECORD. $189 BILLION.
SCARCITY OF DEALS SEEMS TO BE THE NARRATIVE.
LET'S TAKE A LISTEN TO WARREN BUFFETT AND WHAT HE HAD TO SAY
AT THE ANNUAL MEETING OVER THE WEEKEND. WARREN BUFFETT: WE WILL HAVE APPLE AS OUR
LARGEST INVESTMENT, BUT I DON'T MIND AT ALL UNDER CURRENT
CONDITIONS . BUILDING THE CASH POSITION,
WHEN I LOOK AT THE ALTERNATIVE OF WHAT IS AVAILABLE, THE
EQUITY MARKETS AND A LOOK AT THE COMPOSITION OF WHAT IS GOING ON IN THE WORLD, WE FIND
IT QUITE ATTRACTIVE. MANUS: STILL GOING STRONG, WARREN
BUFFETT. SONALI BASAK JOINS US FOR A
CONVERSATION ABOUT THIS. SIN VERY POIGNANT MOMENTS IN
THIS ENTIRE PIECE OF THEATER IN OMAHA, BUT WHEN IT COMES TO THE
REALITY FOR INVESTORS, IT IS ABOUT CASH AND IT IS ABOUT WHO
NEVER SAID THANK YOU FOR EARNING A FEW DOLLARS IN CASH.
$1.9 BILLION IS WHAT THEY'VE EARNED. SO IT IS NOT EXACTLY
LANGUISHING , IS IT? SONALI:
OVER THE LAST SEVERAL YEARS, THAT CASH PILE HAS SLOWLY
EXPANDED, AND A LOT OF CRITICISM OVER HOW QUICKLY
BROOKSHIRE COULD PUT THAT CASH PILE TO WORK, ESPECIALLY NOW
THEY HAVE MORE COMPETITION IN THE PRIVATE EQUITY COMMUNITY
THAN THEY DID IN PRIOR YEARS. YOU DIDN'T SEE BERKSHIRE PUT A
LOT OF MONEY TO WORK THE SAME WAY A LOT OF THOSE RIVALS DID
DURING THE COVID DOWNTURN, SO WHERE THEIR MISSED
OPPORTUNITIES? ON THE OTHER HAND YOU HAVE TO
THINK OF THE REASONS THIS CASH PILE IS GROWING.
ONE IS THAT THEY ARE EARNING MORE INCOME ON THAT CASH.
CASH IS WORTH MORE, BUT ALSO THEY ARE TAKING PROFITS IN
CERTAIN PLACES AND ALSO THEIR OPERATING EARNINGS OF ALMOST
39%. THEY BROUGHT IN MORE THAN $11
BILLION. SO BILLIONS OF DOLLARS BROUGHT
IN THE DOOR. THE QUESTION IS HOW DO THEY
MAKE DECISIONS ABOUT PUTTING THAT OUT THE DOOR AND HOW STEEP
OF A CORRECTION TO THEY HAVE TO WAIT OR THAT COULD START TO
HAPPEN? DANI: A LOT OF THE NARRATIVE AROUND
APPLE HAVE BEEN THEY HAVE PROBLEMS IN CHINA BUT ANOTHER
THING PEOPLE SAID IT WAS WARREN BUFFETT HAS TURNED HIS BACK ON
APPLE. HE SOLD $40 BILLION OF APPLE,
CLEARLY SOMETHING IS WRONG. HE DID NOT SAY ANYTHING WAS
WRONG IN THIS. SONALI: HE DEFENDED APPLE PRETTY
SIGNIFICANTLY. WHEN HE MADE THAT BET IN THE
FIRST PLACE, IT WAS REMARKABLE. BERKSHIRE HAD BEEN VERY TECH-A
VERSE IN THE A LOT OF WAYS BUT NOW HE SAID YOU CAN STILL
EXPECT TO BE ITS BIGGEST HOLDINGS.
HE HINTED AT THE IDEA OF TAX IMPLICATIONS HERE FOR THE
REASON TO BE SELLING IT. HE WAS TALKING ABOUT THIS 21%
TAX RATE THAT BERKSHIRE CURRENTLY SELLS AND TO BE ABLE
TO SELL IT NOW WITH THOUGHT OF TAXES GOING UP IN THE FUTURE
FOR CORPORATIONS THAT INVESTORS, YOU WOULDN'T BE SO
UPSET IF YOU THINK TAXES ARE GOING UP TO BE SELLING IT NOW.
HE ALSO SAID IS REALLY A BETTER COMPANY THAT A LOT OF HIS
HOLDINGS INCLUDING SOME OF HIS FAVORITES.
THOUGH HE PRAYS TO THOSE COMPANIES AS WELL, SO DON'T CRY
FOR APPLE. BERKSHIRE IS STILL HOLDING IT
STRONG THROUGH THE END OF THE YEAR. MANUS:
AMERICAN EXPRESS AND COCA-COLA ARE WONDERFUL BUSINESSES AND
APPLE IS AN EVEN BETTER BUSINESS. WE WILL OWN APPLE
AS I LARGEST INVESTMENT UNLESS SOMETHING DRAMATIC HAPPENS.
UNLESS AI COMES ALONG IT CHANGES EVERYTHING FOR
EVERYBODY. THE INSURANCE SIDE OF THE
BUSINESS IS JUST THROWING OFF. SONALI: WHAT GIVES?
A FEW THINGS. YOU HAVE TO THINK ABOUT JUST 10
MANY BUSINESSES DID FACE PRESSURE.
YOU EVEN HAD GREG, THE HEIR APPARENT FOR BERKSHIRE REALLY
SAY THAT THEY WERE NOT HAPPY, THAT THE RESULTS WERE
DISAPPOINTING. YOU HAD CERTAIN PARTS OF THE
BUSINESS INCLUDING THE COAL BUSINESS, REVENUE DROPPING
ABOUT 26%. YOU HAVE KIND OF STRUCTURAL
ISSUES THROUGHOUT CERTAIN PART OF THE BUSINESS HERE JUST
BENEFITING FROM PRICING PRESSURES ACROSS THE BUSINESS.
RAILROAD AS WELL, PER-UNIT DEPRESSING UNDER PRESSURE.
TURNING THAT AROUND, REMEMBER, THIS IS NOT ONLY A BUSINESS
THAT BENEFITS WHEN YOU HAVE VOLUMES CROSSING THOSE
RAILROADS, THIS ALSO COMPETES WITH THE TRUCKING BUSINESSES
ACROSS THE U.S. MANUS: I'M HEARING TRUCKING AND
INSURANCE AND THINKING THIS IS NOT WALL STREET.
IT IS REAL AMERICA. DANI: THAT THAT HAS ALWAYS BEEN THE
POINT OF WARREN BUFFETT AND WHEN PEOPLE LOOK AT THIS CASH
PILE THEY SAID IS THIS A SIGN THAT HE DOESN'T BELIEVE IN
AMERICA AFTER MARK SONALI: I THINK ABOUT HOW MUCH QUESTION
-- PRESSURE THIS PUTS GREG ABLE UNDER. WITHOUT CHARLIE THERE, HE
REALLY TURNED TO GREG ABLE TO ANSWER SOME QUESTIONS AND
REALLY MAKE A BIGGER BARK THIS ANNUAL MEETING.
ONE MASSIVE MOMENT WAS WHEN HE WAS REALLY ASKED WHETHER GREG
ABLE BUT HAVE OR CONTROL OVER THE INVESTMENT PORTFOLIO AND
THE INVESTMENT OPERATIONS. THEY KIND OF SKIRTED THIS PART,
BUT ULTIMATELY THE DECISIONS COME DOWN TO GREG ABLE IN THE
FUTURE, THOUGH IT WOULD ALSO BE CONTINGENT TO THE BOARD, THE
CULTURE OF BERKSHIRE WOULD ALSO BE PUT ON ABLE AT THE END OF
THE DAY. SO A LOT OF QUESTIONS ABOUT HOW
GREG ABLE WOULD RUN BERKSHIRE IN THE FUTURE AS SUCCESSION IS
TOP OF MIND. SONALI: WE THOUGHT THIS GIVES US A
GLIMPSE INTO WHAT BERKSHIRE LOOKS LIKE IT BUT IT ACTUALLY
GAVE US A GLIMPSE INTO WHAT IT LOOKED LIKE WITHOUT BUFFET.
WHAT DID BUFFETT HAVE TO SAY IN A POST-MUNGER BERKSHIRE? SONALI:
THE LAST WORD HE HAD IS I HOPE I'M HERE NEXT YEAR.
THERE WAS A LOT OF ACKNOWLEDGMENT ABOUT THE
SUCCESSION OF BERKSHIRE. THIS HAS BEEN A SUCCESSION
STORY THAT HAS BEEN MORE THAN A DECADE IN THE MAKING AND A LOT
OF THOSE EXECUTIVES HAVE BEEN THERE A VERY LONG TIME. BERKSHIRE HAS ALWAYS DEFERRED,
OR BUFFETT HAS ALWAYS DEFERRED TO HIS DEPUTIES WHEN IT CAME TO
THEIR BUSINESS LINES, BUT THERE ARE MOMENTS.
PARAMOUNT, WARREN BUFFETT HAD THE FINAL SAY. WHEN IT COMES TO GREG ABLE, DO
INVESTORS TRUST HIM TO HAVE THE FINAL SAY? MANUS:
THE CHALLENGE IS THIS. WARREN BUFFETT AND CHARLIE
MUNGER WERE AMERICAN ICON INSTITUTION FOR HIS LONG AS
I'VE BEEN AROUND, AND THAT IS A HELL OF A LONG TIME.
GOING BACK TO 25 YEARS AGO WHEN YOU COVER THIS EVENT AT ANOTHER
INSTITUTION THAT SHALL REMAIN NAMELESS.
IT WAS ALMOST THE ZENITH OF THE YEAR.
SO WHAT WE NEED IS TO GET TO KNOW ABLE. DANI:
BUT IN SOME WAY, YOU MENTIONED THIS. THE TECH IS SUCH A GOOD
EXAMPLE. SONALI:
REMEMBER, THAT WAS TODD AND TED. BERKSHIRE DOES HAVE A HUGE
BENCH UNDER IT, BUT TO THE POINT MANUS WAS MAKING, CHARLIE
MUNGER AND WARREN BUFFET WERE AMERICAN ICONS. MANUS:
GO AMERICA. SONALI:
ALTHOUGH THEY ARE EXPENDING AROUND THE WORLD AND INCREASING
FORM. DANI: MANUS HAS ASSIMILATED, FULL
AMERICAN NOW. MANUS: I'M GLOBAL. DANI:
REALLY APPRECIATE YOUR TIME, SONALI.
COMING UP, WE ARE GOING TO GET SET UP FOR THE WEEKEND LOOK AT
WHAT IS ON DECK. SOME FED SPEAKERS & BIG OPTIONS.
♪ DANI: IT'S YOUR BLOOMBERG BRIEF.
LET'S GET YOU SET UP TRIGGER TRADING WEEK.
A FRESH ROUND OF CORPORATE EARNINGS.
DISNEY, UBS AND EP ALL REPORT THIS WEEK.
THEN A BANK OF ENGLAND DECISION THAT HAPPENS ON THURSDAY AND WE
ARE GOING TO ROUND OUT THE WEEK WITH MORE DATA.
CONSUMER SENTIMENT ON FRIDAY. MANUS:
SOME STOCKS TO KEEP AN EYE ON, YOU'VE GOT WARREN BUFFETT
HEAPING PRAISE ON APPLE AFTER RUMORS HE HAD CUT HIS STAKES
DOWN 1%. AI AUCTIONS SPUR MORE COMMERCIAL SALES AS IT REPORTS
EARNINGS AFTER THE BELL. AND IN COINBASE, YOU GET
BITCOIN A BIT UP, AND COINBASE UP 3.8%.
ALL VOTES ARE RISING ON THAT TYPE. DANI:
THE BOAT THAT IS NOT RISING ON THE TIDE IS THE YAN.
-- OF THE YEN -- THE YAN. WEAKENING ABOUT HALF OF 1%
AGAINST THE DOLLAR. AFTER TWO DAYS OF INTERVENTION,
$58 BILLION SPENT, IS IT A WASTE?
KATE SAYS THEY HAVE NOT WASHED OUT THE SHORT POSITIONS YET.
MANUS: HE TALKED ABOUT THE SIZE AND
SCALE OF THIS INTERVENTION AND IN HIS VIEW, PERHAPS ONE OF THE
MOST POWERFUL INTERVENTIONS THEY'VE EVER SEEN. THE QUESTION IS THAT THE CARRY
TRADE HAS NOT BEEN WASHED OUT. DANI:
AND UNFORTUNATELY THEY DON'T SEEM TO HAVE THE SUPPORT OF THE
U.S. YELLEN SAYING THAT INTERVENTION
SHOULD BE RARE AND THAT THEY SHOULD BE CONSULTED ON IT.
NOT A RINGING ENDORSEMENT. THAT IS IT FOR US.
SURVEILLANCE OF AHEAD. -- UP AHEAD.
