Transcripts For BLOOMBERG Market Makers 20150428

Saw a drop to 95. 2. Somewhat consistent with weaker than expected data. In terms of the financial markets, u. S. Stocks have just fallen to session lows. Notg down by a lot but you see declines by. 2 for the s p 500. Little changed for the dow, nasdaq losing. 5 . The dollar index falling to session lows with dxy at 96196. 10 year yield higher. Two year yield little changed at 55 basis points. Erik . Erik here we are, back at the milken conference. I want to tell everyone about who is coming up, colony capitals tom. Stephanie at 10 30 we will sit down with barry sternli cht. Then terry joins us at 11 00 a. M. Chairman of the cme group, the perfect person to sit down with days after the headlines about the flash crash. Erik Boone Pickens is coming up at 11 30. If you miss his interview you want to tune in. Stephanie one of my favorite interviews of all time. He turned and said what, we are not in commercial . It is the commercial breaks on Market Makers that are the most special. Erik some news, the top business stories at the morning. The housing industry may be picking up momentum from a record low Mortgage Rate and a stronger job market. Home prices in 20 u. S. Cities rose faster than expected in february, according to the case schiller index up 5 from a year earlier. Higher prices might persuade homeowners to put their houses on the market. Bp is better known for oil fields but it was trading that paid off for the oil company in the First Quarter. Bp reported firstquarter profit more than twice what analysts had estimated third the week market for oil allowed bps traders to start shipping crude and sell it at higher prices later picked firstquarter profit at ford sell almost 7 . The automaker trying to bring it up the speed so it can make more of the bestseller f1 50 pickup trucks. Four is hampered by the changeover to the aluminum body f150. The f series accounted for 90 of fords worldwide profit. Shares this morning unchanged. In baltimore, reinforcements are arriving for the citys National Guard troops have begun patrolling the streets after a day of violence. You have seen these images. Riots erupted following the funeral of a black man who died in police custody. The images are extraordinary. Demonstrators threw rocks at police, injuring 15. That prompted larry hogan, marylands governor, to declare a state of emergency. Governor hogan people have the right to protest and express their frustrations. But Baltimore City families deserve peace and safety in their communities. And acts of violence and destruction of property will not be tolerated. Erik Public Schools are closed and the mayor has imposed a 10 00 p. M. Curfew starting tonight. In one of americas largest cities. The Supreme Court is scheduled to hear argument in a case that may legalize samesex marriage nationwide. In the last seven months, the court has allowed gay marriage to begin in 17 states. 14 states in which samesex weddings are not allowed to todays case involves michigan kentucky, ohio and tennessee. A decision is expected in june. Stephanie apple on track for a near record profit this year. They cannot lose. The numbers are huge. Quarterly profit was up by 33 , revenues rose 27 . Iphone sales in china set new records and it is now the biggest dividend payer in the s p 500. Apple is Still Holding nearly 200 billion in cash. Get your head around that. The stock is falling in early trading even though it did beat nearly all estimates weve got to bring our west coast editor at large cory johnson from san francisco, just north of erik and i. Anyway you slice it, this number is huge. What jumped out to you . Cory the sales growth of 27 is remarkable. When you look in the context of the reacts alliteration of sales growth. They have sold iphones for a long time. The of 27 is macs forever. Singledigit Growth Company for quite a while. The iphone 6 exploding. Sales growth was 30 the First Quarter, 27 the second quarter. You mentioned profit growth. You can look at ebitd, gross margins. Fantastic generation from this company. We accelerating with new products. Re accelerating with new products. Erik i cant help but dwell on the fact that apple shares are down almost 2 . Even though, whether or not you play the estimates again, the company had a strong quarter. It blew away almost every stephanie are you still complaining about the estimates game . Cory lets complain. This is silly about beating expectations. This is one of the most incredible quarters any company has ever delivered, ever. It is a reacceleration of one of the biggest businesses ever, really fast. The numbers they put out last night are stunning in every way. Whether you talk about the businesses or the way they took the ipad business, which is struggling theyre cannibalizing themselves. Their beats audio business which they do not separately break up, that is re accelerating at a fantastic rate. When you look at all the things it is the gross margin number that bodes well. When you look at all the businesses they are in they are taking huge profits. Not only significant market share, they are taking most of the profit in the business. Their gross margin business is now over 41 under 41 possibly to be aided by the watches, which looks like they will have fantastic margins. Its a really powerful quarter. Erik what is it, if there is something investors are concerned about and they are concerned after this extraordinary quarter where apple paid a higher dividend what is it that is worrying them . It is becoming a one product company. Ipad sales are not doing hot. Mac is a tiny share. Stephanie do analysts need to come to my house . Erik nobody expects watches in the first generation. Cory stephanie Just Announced a party at her house. Stephanie my house is like an. Ipad factory. Cory this might be what traders are doing, not investors. That aside, the price of this stock compared to others, this is a reaccelerating growth story. Ipad is a problem. It is not growling like it used to. The average selling price increased a little bit but you have seen five straight quarters of decline in the ipad business. 23 yearoveryear on a quarter that was down a year ago. You mentioned the mac. They are depending on the iphone. It is well over 60 of sales and has never been a bigger piece of the company tha it is right nown. The macintosh has held at 12 as the rest of the company has gotten big. You have seen 6 quarters of growth of the macintosh in a time when the rest of the pc industry is face planting. 10 yearoveryear growth, dell would kill to get 5 . Hp would do horrible things for 3 . They are at 10 and probably have half of the prophets in the industry. Profits in the industry. Stephanie thanks for joining us. Erik more from the milken conference in Beverly Hills. Colony capitals tom barrett will be with us tom barrett will be with us. Stephanie stephanie then we talked to Barry Sternlicht at 10 30. Scroll this is Market Makers. Some headlines from a saud iowned new service. A u. S. Vessel was seized by the iranian force. It has 24 people on board. It has apparently been seized by Iranian Forces, according to the dubaiowned source. The u. S. And iran on opposite sides of a civil war in yemen. Ive just gotten word that theres a report that the iran ian foreign minister has canceled a speech. We do not know if this is linked by the timing is coincidental. If you come inside the terminal, you can see the affected is having on the oil market. Nymex crude, wti traded in new york. A spike up in oil prices. Up by 1 . 57 to 57. 55 a barrel. Well pull up a chart. It does not break out of this range. You are seeing a little bit of a leg higher on the latest headline. A u. S. Vessel being held by iranians according to al arabiya. 24 people on board. We do not know the fate of these people and where the vessel is based. These are the latest headlines causing some movement in the financial markets. Ill let you know of other details. Erik thank you, scarlet fu in new york city. Back at the milken conference. After the housing crisis investors snapped up hundreds of thousands of Single Family homes at deep discounts. One of those firms was colony capital. Lets talk to tom barrack the founder and executive chairman. I will take up on where scarlet left off. You saw the headlines and perhaps did not hear all the details. Iranian forces have captured a u. S. Vessel. Crude prices are trading higher. The Iranian Foreign minister has canceled a speech. You spend a lot of time in the middle east talking to people. What you know, what are you thinking right now about the turmoil in the middle east . How it affects this countrys relationship with government and how it will affect capital flows into the europe and the u. S. . Mr. Barrack difficult question. Stephanie nice way to start erik. Mr. Barrack first of all, it is always a precarious situation when you have 70 of the fossil fuels of the world going through a three mile strait called the strait of hormuz. A wonderfully rich environment of arab history and a difficult neighborhood. Tribes and flags throughout the region. The world is lost for a point of view. It seems we are a bit directionless. The Capital Markets seem to ignore it. Around the world you have got Central Banks who are all in. Weve got nothing left, we are pushing string. If you look at the equity markets, they are ignoring all the conflict and tension in the world. Erik at their peril . Mr. Barrack of course. We have nothing left. If you think about what has happened we are at zero Interest Rate. The 10 year german bond will go to negative rates. We have Central Banks buying everything they can buy in terms of assetbacked paper. You have had oil correct by 50 across the world. We have got nothing left in the event that there is a little blip. It was difficult getting in this morning because the g550s were parked in the parking lot. Whats happening is assets are very expensive. Debt is inexpensive. The world is in search of yield with no risk premium. When you look at these incidences, which have to happen, conflict and turmoil throughout the world is abundant. In the meantime, Institutional Investors that are in this endless search for yield are ignoring the risk peril of all of the consequences of those things. Stephanie do they have a choice . If they need to invest what else can they do . Mr. Barrack you are looking for total return. If we were really thinking about total return, in a world in which everybody is searching for yields, i am searching for residuals. I am not as interested in yields. If you look at real estate. Great assets are trading at a two or three cap. 50 times cash flow at a 50 loan to rate value at floating rate debt. All of these stacks of debt utilizing shortterm financing underneath it, which was the ge deal was one of the most amazing deals, both for blackstone, ive been a rooter for blackstone forever. Steve schwarzman is incredible. Ge did an amazing deal. You have doddfrank saying youre at 50 billion, regulated beyond anything you can imagine. Moving those assets from an area where they used to find themselves finance themselves on commercial paper. Commercial paper is floating every 30 days. We saw what happened in 2007 youve got cut short and it is over. Ge, by getting out of the finance business, the stock goes up 9. They give 90 billion back to the shareholders. What if there is a blip . What if there is a blip . Erik where is the weakest link . Mr. Barrack the weakest link is that values are priced to stephanie real estate values . Mr. Barrack every value. Real estate for sure. If you look at everything is disintermediate it if you are looking at true assets assets depreciate. Office buildings. True rent of Downtown Office buildings in most urban areas, forget new york city. True net affected rents. Leasing commissions, tenant improvements, property taxes. If you effectuate down in current dollars, about the same as 1995. Every time you turn a lease, the Capital Expenditure necessary to renew that tenant who is using more office space . Who is using more hotel space . Look at airbnb. In hospitality, you will see airbnb merge with a hospitality manager soon. Erik really . A hotel company. Mr. Barrack this is my belief. The value of those hard assets why are they worth more . Everything is less. I have a 19yearold son. His life is on his phone. From point a to point b, he calls uber, he goes to airbnb. He does not go to a restaurant, he has postmates, they deliver. If you want a date tinder. This is life. Stephanie when you say assets are priced to perfection, when i think about an apartment in new york going for 100 million, who is that priced for . Mr. Barrack it is a safe deposit box. All through the world, new york and london are the beneficiaries of this. You have the bank secrecy antimoney laundering act, in which foreigners cannot move 5 million from big county bank account. Real estate has become the last bastion. The liquidity in the world has created this flurry for solidity. If you do not think there is a bubble at that level, you are going to be mistaken. True value is based on scarcity. You have new york, which has turned into a residential community, where are all the people who are working and living in new york living . Where do they go . What happens . Who serves that community . It is a barbell. We have a great housing business. In the center of the nation, not los angeles and not new york the average rent we have 20,000 houses. Barry has a bunch too. Barry sternlicht. The average rent in those houses is 1200 1300 a month. Securitization has proven it is a business and not a trade. The people in those houses fight for 100 a month. To raise rents 4 or 5 , people are struggling. Really struggling. Im not sure that things are getting better. The financing and the liquidity in the market has caused a surge of asset acquisitions based on disposable income that can be converted to yield. The other side of that might be a reduction in residuals. If you get a little blip and you are just solely on the floating rate debt side of this, you could find yourself in a precarious position. On the real estate site, we are taking Credit Structures with equity returns. So all up and down the capital statck of looking at the true tenets, look at the retail business. Everything they made over the last five years was given back in the currency trade. If youre a dollarbased manufacturer and you are expanding throughout the world. Or if you are a dollarbased investor and you happen to go into a distressed business buying in europe, lots of them are, everything in the last 18 months you just gave back. Erik unless you are hedged. Mr. Barrack you can only hedge your investment, you cannot hit profit. You can hedge by borrowing local currency. If i am in france, i can naturally hedge but i cannot hedge my profit. Stephanie cities like miami. Five years ago they were in the center of the housing crisis. New hotels are going up, apartments are listed for 30 million. Should we think about was on the horizon . Mr. Barrack erik and i were talking about surfing. Stephanie not good in miami. Mr. Barrack if i have six or seven professionals around me and i can watch what is happening, i feel confident. When the masses start entering the water and thinking they can navigate the waves, i get out. I dont know whether they are good or bad but when amateurs enter the marketplace you are going to get an abundance of something and it is usually not good. Erik has the market for risk assets become a market filled with amateurs . Mr. Barrack absolutely. Everybody is outside their own asset class. We talk about alternative asset management. Everybody is in a search for some quantum yield. None of us are in the deal business anymore. We went public because we need to build engines of professional management and alignment in institutional perfection. Nobodys good enough to sign a deal every morning, every day every week on a positive basis. It is impossible. Erik stephanie i was not sure when i woke up at 5 00 a. M. Erik how would you describe your business . Mr. Barrack we have turned into a public Institutional Investor seeking inefficiencies and credit like structures on a global basis producing equity like returns. Were building engines and platforms of businesses along the credit spectrum. Stephanie thank you so much. Erik tom barrack is founder and executive chairman of colony capital. Here at the milken conference. I am taking out for a while. Stephanie stay tuned, you are watching the milken conference Market Makers. The top stories of the morning. Some breaking news out of the middle east. The saudiowned news service al arabiya says Iranian Forces have seized a u. S. Cargo vessel. The iranian force opened fire before escorting it to the Southern Coast of iran. It did not say where it obtained the information. We will bring you information as soon as we get it. Americans were less confident in the u. S. Economy. The index fell to a fourmonth low, lower than the most pessimistic forecast. Still, the index is just slightly below the average during the last recovery. This wont help the reelection chances of david cameron. Nine days before the polls opened, the government reported that the economy grew in the slowest pace in two years. British gdp was up. 3 . Camerons challenger, Labour Party Leader ed miliband says the party has not lifted living standards. Apple on track for its highest and youll since 2012 after reporting earnings that beat estimates. Iphone sales soaring in china. Tim cook says the company is trying to catch up with demand for the apple watch. Mr. Cook we are working hard to remedy that. We have made progress over the last week or so. By sometime in late june, we anticipate being in the position that we could begin to sell the apple watch in additional countries. Scarlet apple announced it would raise its dividend and boost its buyback program. Apples cash on hand, 194 billion. The outbreak of bird flu getting worse. The nations biggest egg producer, iowa, said that flocks that include 16 of hens may be infleected. Prompting countries to place restrictions on u. S. Exports. President played toward guide when shinzo abe visited. The two are expected to discuss the asian trade deal. The president says there will be one winner if the u. S. Fails to ratify the agreement, that would be china. He laid out his arguments in an interview with the wall street journal. President obama that is the largest market in the world. This countries are already selling to us. There are a lot of Japanese Cars in the u. S. And no u. S. Cars in tokyo. If we do not wriet th write the rules, china will. We will be shut out and that will mean a loss of jobs. Scarlet president obama is running into opposition from democrats who argue that a trade deal would push down wages and eliminate jobs. President obama and shinzo abe it will be holding a News Conference at 12 00 p. M. Eastern. We will have full coverage on bloomberg. Lets get you a check of the financial markets. One hour into trading, losses for the s p, dow and nasdaq pierce stocks turned lower after an unexpected drop in Consumer Confidence. And negative print on Richmond Fed Manufacturing. The latest index is the third of the Regional Service for april to show contraction. Along with those headlines Iranian Forces seizing a u. S. Vessel. You see the impact in commodities. Oil prices got to as high as 57 83 cents still within a range of 56 to 58. Gold prices, a similar spike around the time the headlines crossed on the iranian, the u. S. Ship being seized by Iranian Forces. Around the time that weaker data came through. Lets end with the dollar, weaker as a result following the same forces. I will hand it back over to you. Stephanie thank you so much. Here in a l. A. , we are asking what is the biggest problem in the world . And as a harvard historian who specializes in economic history. He has strong opinions about u. S. Foreignpolicy. Erik and i had a chance to sit down with him yesterday. Neil the problems lie mostly in the area of Foreign Policy. We are at a point in history when the big pain that followed the financial crisis has diminished and the crisis really relies on the realm of u. S. Strategy. Whether you look at our failure to deal with islamic state, the flawed agreement in the pipeline with iran. Wherever you look it seems to me particularly in the middle east but one might also mention afghanistan American Foreign policy is a mess. The most powerful nation in the world is making itself less and less credible. That is having consequences. Erik when is the last time america got foreignpolicy right . Neil in the 1980s. After all, in the 1980s, the u. S. Under Ronald Reagan and george bush senior won the cold war without firing a shot. Resident clinton in many ways lived off the peace dividends. He also had some major successes. It takes him a while but when you think back to bosnia and kosovo, on both occasions eventually the u. S. Acted and ended the conflict. We have to recognize that mistakes were made under george w. Bush. Im sometimes misrepresented as a neoconservative. If you look at my journalism i was critical from 2003 of the way foreignpolicy under bush was conducted. Im afraid to say that what was supposed to be an improvement under barack obama has not been. More people are dying violently as a result of Armed Conflicts and terrorism in the middle east under this president than his predecessor. Erik you went to bat for that romney in 2012. Who are you going to get behind in 2012 . Neil my mind is open. When i ask myself the question who can lead better than this president , who can understand our strategic dilemmas better than this president , i think it is too early to tell. Jeb bush has given only one major Foreign Policy speech in chicago, which was a good beginning but it would be premature to say hes the one when there are so many interesting contenders. Erik if foreignpolicy is as important as you say it is, who is a legitimate contender for the republican nomination . I have to imagine that you might not feel so well disposed towards governors who have no Foreign Policy experience and no familial foreignpolicy experience. It is not like jeb bush has been secretary of state. Neil governors have an advantage and domestic terms they have some executive experience and not having that has turned out to be a problem for this president. It is at an early stage in the contest. The candidates who are emerging for example marco rubio, many people because they do not have foreignpolicy experience, have not hired people to advise them. What is more interesting how far is Hillary Clinton saddled with baggage from the obama administration, which she served in. Can she distance herself from some of the disasters of the presidency . Im thinking of what happened since the arab spring and what has gone wrong with russia. That is a huge unresolved problem on the borders of nato a crisis in ukraine. Can she distance herself . That remains to be seen. Stephanie Neil Ferguson of hard for University Harvard university. He is going to have a lot to say over the next 16 months or so as we look at politics. When we return, taking a look with a man who takes another global view. We will be hearing from starwoods Barry Sternlicht about where he is putting all that money. Live from bloomberg headquarters in new york, this is Market Makers. With Erik Schatzker and stephanie ruhle. Stephanie welcome back to Market Makers. Joining me live from los angeles at the milken conference. We are talking real estate. The boom is spreading and investors are taking notice. Barry sternlicht is the chairman and ceo of starwood capital. It manages more than 42 billion dollars in assets and is best known for developing Starwood Hotel and resort. He sat down with us to discuss where hes putting his money. Mr. Sternlicht we have been active in europe. Buying the periphery norway and sweden. We have done some work in poland, the czech republic. We have been buying england and ireland. We just did another transaction. Erik what kinds of stuff . Mr. Sternlicht office and retail. The one thing you think when the german 10 year is seven basis points and negative fields across europe, that is beginning to pick up consumer sales. Nobody expects interrupted go up quickly, including nobody expects europe to go up quickly, including themselves. Property yields are probably too wide. Given that stimulus packages are going to be involved. We think debt is available. From a riskreward standpoint it makes investments look interesting. Stephanie what do you make of blackstones transactions . Are they the only game in town in terms of the masses deals . Mr. Sternlicht you do not expect me to say yes . Stephanie our last fund was 5. 6 billion. We are unlimited and capital. We have 14 sovereign invest funds. Our private funds and our client accounts. Today, the key for us in blackstone is to know what your client wants more than ever. They decide today that they have money in the bond market, which is earning nothing. They are not looking at real estate like real estate. They are looking at something producing a yield you see the crown building in new york city get bought at a 1. 9 yield. People are not comping against real estate, they are comping against treasuries earning nothing globally. You are getting some interesting asset value distortions. Erik does it drive you nuts that john gray is the only guy called . Would you have wanted the opportunity to buy ge assets . Stephanie hes going upon just. Going to punch us. Mr. Sternlicht i called him to congratulate him. Id like the opportunity to pass. It was a big trade that wells fargo took 9 billion of the 24 point five billion directly. They did not put that much equity, they leveraged it very highly, 9 1 in the mortgage trust. To get those yields, they got some great debt but they got a lot of it. It is a different strategy. They have called lower longer and dropping rates for a long time. Moving the kinds of funds we are and they are and other investors are, you have to have a view on where rates are going to be. Stephanie what is your view on the fate of Starwood Hotels . Erik one question after another. Mr. Sternlicht what . Stephanie you said bloomberg reported it is ripe for takeover. Mr. Sternlicht it has not been the best performing of the major hotel stocks. The disadvantages are less than meets the eye. There are some interesting gaps for accounting. It is strange accounting. If they do not get the stock up, somebody could make a move. Whether it is taxing version erik could it be a leveraged buyout . Mr. Sternlicht it is not leverage a bull. Even a private equity player cannot lever the company. You have to put a ton of capital out. You can imagine a sovereign wealth saying i want to own this. If your alternative is bonds, everything looks yummy. If you have half of your book earning nothing can you beat treasuries . Erik given how much you know about starwood mr. Sternlicht if a Sovereign Wealth Fund came to me and said they would put in 10 billion in equity to take over starwood, i would help run it. Stephanie two other yummy investments. One in new york and one in miami. Very different properties. Mr. Sternlicht when i came back to hotel is, i decided if i was going to do something again, it had to be different. I met blake from toms, why dont i do an environmental hotel. My kids are into the environment and we have a message. I thought our guests would sell select and employees would stay longer. We did not start a new brand, it is a brand with a purpose. We are not a brand, we are a cause. One hotel, its 33 on trip advisor out of 206. We are not fully open. Stephanie the other property seems the opposite. Mr. Sternlicht on 58th and 6th in new york and then in brooklyn. We bought bacarat years ago and i wanted to turn it into the way they had done with montblanc and other companies p we have a Beautiful Hotel across from moma. Stay there. Stephanie Barry Sternlicht chairman and ceo of starwood capital. I had a hard time getting my head around his two new properties in miami and new york. I need to go visit them up close and stay for a night or two. Top stories. Scarlet fu is back in new york. Scarlet we are going to stick with property. Home prices in the biggest u. S. Cities increased at a faster pace than forecast in february. The case schiller index rose 5 from a year ago. Higher prices might purse rat persuade homeowners to put their homes on the market. The strong dollar expected to hurt sales at pfizer. The drugmaker reduced forecast because the dollars gain is reducing sales made outside the usp or First Quarter results beat estimates. The comapanys new Cancer Therapy sold better than expected. Game of thrones premier attracted 18 million viewers. More than the number that watched last year. It is hbo passed most watched program. Back to you. Steph . Scarlet breaking news. Reports of a seized u. S. Cargo ship disputed by the u. S. Military. According to nbc news we told you that a saudiand network reported that Iranian Forces opened fire on and take control of a ship for escorting it to a port on the iranian coast. Oil prices had spiked higher on that report. They got to as high as 57. 83. Theyve pared their advance and are coming back to where they were before the report. Gold prices has held onto their advance. We did have a negative economic data, unexpected drop in Consumer Confidence as well at a needed print on the richmond fed a negative print on the Richmond Fed Manufacturing which might because in people to move to gold. The dollar did slide to lowes and remains under pressure. U. S. Stocks have made a comeback, still lower with the dow s p and nasdaq off by. 2 to. 3 . Back over to stephanie in Beverly Hills. Stephanie thank you. President obama is rolling out the red carpet this morning for japanese Prime Minister shinzo abe. Its the start of a highprofile biz it visit. Peter cook is at the white house with more on this visit. What should we expect . Peter we are going to have a press conference at about noon with the president and Prime Minister shinzo abe. Expect that baltimore is likely to come up. You cannot imagine the president is not going to be asked about it or have something to say about the unrest. On the substance of u. S. Japan relations, expect the leaders to strike a positive tone about the state of the relationship. 70 years into the alliance between these two nations. Expect a focus on the economy and the transpacific target ship talks. The trade talks that are ongoing. No deal yet between the u. S. And japan but they are moving closer to an agreement. That would be momentum towards a final deal with all 12 countries. Expect more discussion about a growing role for japan, a growing defensive military role for japan in the pacific region. There are new guidelines that were agreed to yesterday. The biggest changes in 20 years to that military arrangement between the countries. That will be a focus as well. Stephanie all right, peter cook. I know you are not far from baltimore. Stay safe. Peter cook, chief washington correspondent. President obama and Prime Minister abe will be holding a News Conference at noon. We will have live coverage on bloomberg television. Stay with us. When we return, i am at the Milken Institute. Cme chair terry duffy will join us at 11 00 a. M. And t. Boone pickens at 11 30. Stick around. Live from bloomberg headquarters in new york, this is Market Makers with Erik Schatzker and stephanie ruhle. Erik i like everybody, steph. Stephanie thought youd seen the end of the oil climb . Talk to this man, t. Boone pickens. We will be speaking to the cme executive chairman terry duffy. And they have been talking trade at the white house. President Obama Meeting shinzo abe now. Lucky me and Beverly Hills this week for the Milken Institute global conference. We have spoken to so many thought leaders and we have a lot more in store but first lets take you to the bulletin, the top business stories of the morning. Ford cannot make enough of its popular f1 50 f150 pickup. Factories are being retooled to make the new aluminum body model. It accounts for 90 of the profits. First quarter profits came up short. Ford blames taxes. And pfizer, merck, bristolmyers all beating earnings projections in the First Quarter. Analysts forecast all three companies will have a multibillion dollar cancer drug within the next three years. Shares of Container Store plunging this morning after yesterday. They posted sales and profits that missed estimates. The ceo blamed results on a winter storm that her customer traffic during a very big sale. It hit during the final week of its annual sale on shelving. Consumer confidence unexpectedly hit a fourmonth low in april. Americans view on the labor market and the outlook of the economy got unexpectedly worse. And yields on puerto ricos newest debt are setting record highs. Lawmakers debating attacks change that would pave the way for a nearly 3 billion bond sale. Puerto rico needs the bond sale to ease a cash crunch. The general Obligation Bond maturing at an average of 10. 4 . No wonder all of those distressed guys are down there. And feeling the aftershocks of the protests and baltimore. Southwest airlines has canceled 10 baltimore departures. Reinforcements arrived this morning for the city police. National guard troops have begun patrolling the streets after day of extreme violence. The riots ball of the funeral of a black man who died in police custody. Demonstrators threw rocks and bottles at police, injuring a total of 15. Maryland governor larry hogan has declared a state of emergency. Governor hogan people have the right to protest and express their frustration, but Baltimore City families deserve peace and safety in their communities. And these acts of violence and destruction of property cannot and will not be tolerated. Stephanie Public Schools in the city of baltimore are closed today and the mayor has imposed a 10 00 p. M. Curfew beginning tonight. I am going to send you back to the newsroom. Scarlet fu has more breaking news. Scar . Scarlet thats right. A pentagon spokesman has spoken and he says no u. S. Ship was captured. Instead it may have been a nonus ship. He said the irani ends iranians boarded a ship with a Marshall Islands flag. The u. S. Did send a destroyer to monitor, but there were no americans aboard the cargo ship. A fire was shot across the bow of the cargo ship because it was in iranian waters. This is from a pentagon spokesman to reporters in response to reports that the ring in military seized a u. S. Ship. There was no u. S. Ship captured cording to the pentagon. The u. S. Dollar continues to dip lower. It has fallen to its session lows off 7 10 of 1 . Despite the fact that the report was refuted by the pentagon, we see more weakness in the dollar. We did have manufacturing data and Consumer Confidence data that came in weaker than expected. That may be one reason for the dollars depression. Oil prices did spike higher on this report and they have come back to where they were. The overall trade is one of gains. Oil prices still very much within that range. Steph . Stephanie thank you, scarlet. Moving on how can one day trader cause been a torys flash crash, and what does it say about how vulnerable the notorious flash crash, and what does it say about how old vulnerable our markets are . I want to speak to terry duffy the chairman. Clearly you did not come to milken to speak about this one case, but we have to talk about it. How does one guy in his moms easement play such moms basement play such an integral role, if it is true, in the flash crash . Chairman duffy that is the thing if it is true. At cme group in our world, we had all of the information to the regulator by 10 00 p. M. That night. There were several platforms and liquidity that dried up and for years could not get that data to the regulators. We went through all of the trades and it was clearly shown the futures market were not the causation of the flash crash. Now supposedly there is new information which i look forward to seeing from the department of justice and thats brought against this particular trader. The process said the cme group communicated with him on may 6, 20 10 at about his trading activity. Everyone assumes that we talked about his trading activity about that day. We were communicating with them about trading activity from two years ago. Had nothing to do with the flash crash. That gets per trade in a different way, that we were aware of something that we should have been stephanie i guess i do not understand. Wife were use why were you speaking to him about something that happened two years prior . Chairman duffy the particular behavior we were discussing where preorders he was entering into the marketplace. What we said to him, if you are going to put these orders in you have to put them in on a date to be executed. We were a little concerned about it in 2008, 2000 nine. We issued him a letter of warning. We communicated with him on that day. Bad timing on our part. Stephanie i think it would help for us to understand how often do you send these types of letters . People have said, how does this guy continue on for five years . Maybe it is normal to reach out and give warnings too many people . Chairman duffy it is normal. You have to understand investigations in the world we live in take a long, long time. There is a big comment in the press how he modified his order 19,000 times that particular day. I will say on may 6, 2010, that accounted for 1 of the modifications. People modify their orders all the time. I do not know him. I am not sticking up for him. I am only saying the facts. I think its important that people understand the facts before they jump to conclusions. Stephanie lets talk about how capable regulators are today versus five years ago in terms of monitoring. People might think, well, its a different market. What is manpower like . What our budgets like . Chairman duffy there is probably not more budgets. You can throw as much money as something as you want, and it does not fix the problem. You need to understand the problem. When we look at the markets we have today, the electronic markets we have today, the messages in the marketplace today, there are efficiencies provided for the endusers. Chairman gensler of the he did come out and say these investigations take a long, long time. We are talking about market manipulation. These are difficult charges to prove when youre talking about the intent of someones activity. They have to have certain patterns and things of that nature. Again it takes time. You can always a Government Agency is understaffed. Any agency is understaffed when there is a potential problem. We have to wait and see what the facts are. At stephanie you and i have talked about all of the headlines, flash crashes how it has made people feel unsafe. Is this situation only going to worsen . We need confidence to be up. We need momandpop to be trading. Chairman duffy absolutely, you need everyone to produce bid and the marketplace. When markets to down, the cost of business goes up. In our world, people are not investing in products. They are using them for Risk Management purposes. We are trying to help farmers manage their risk. We are trying to help thanks to it for their in insurance and their Interest Rate exposures and companies lay out some of their exposures in our world. Its a little different than the Security Side of the world. Stephanie how difficult is the timing of the rate hike for you . Chairman duffy its very interesting because Interest Rates play an integral part of every asset class we participate in. When Interest Rates are sitting at these levels, other products may not move as much as they would if Interest Rates were at more normalized rate. Stephanie when you look at the overall business uri and, many people say, cme, that is the business you are in many people say, cme, that is biting the dust. Is that the media over traumatizing . Chairman duffy first of all, we are a 170 fiveyearold company. It is changing a model to an electronic model. Cme is an 200 countries around the world today. That was never the case 10, 12 years ago. The customer may be decision not to execute their transactions on the trading floor. They want to do it electronically. Its efficient. Its realtime. Thats what they wanted. We did not drive that decision. I did not drive that decision. The customers drove that decision. Stephanie tell me what your customers wants most. We know what the general public likes to misunderstand and complain about. What does your customer want . Chairman duffy i want efficiencies in the marketplace. I want tight bid offer spreads. I want to execute. It is very important for them to do Risk Management in a costeffective way. Stephanie are you delivering that today better than ever . Chairman duffy better than ever today, absolutely. Stephanie he is more than a sharp dressed man. He is the cme chairman and president. If you want to stick around stay with me and l. A. When we return our interview with the former ceo of barclays bob diamond and no one better t. Boone pickens joins me at 1 30 p. M. Scarlet this is Market Makers. Im scarlet fu in new york. We will take you back to stephanie, but first or top stories. Concern that apple cannot keep up with the pace of the rapid growth in iphone sales. Quarterly profits went up 33 beating analyst estimates on the top and bottom line and apple boosted its Capital Return Program by 70 billion. Apple is now the highest Dividend Paying Company in the s p 500. Young is verified ski will no longer be in charge of daytoday negotiations in debt negotiations. Jan is powerful this. Yanis varoufakis. We need to have full control and be it as efficient as possible. The main political delegation, all of these are the responsibility of the finance minister. All of these teams. However, we need to have a strategic team. We need to have a team negotiating with the Brussels Group and we need better coordination here. Scarlet Alexis Tsipras said that he may ask me greek people to decide on any deal with european predators. And a case that may legalize samesex marriage nationwide. Chief Justice John Roberts and Justice Anthony kennedy suggested that declaring gay weddings a constitutional right may threaten the definition of marriage the between a man and a woman. Justice kennedy has voted in all three of the rulings expanding gay rights of the past two decades. Stephanie scar, i cant get my head around that, so i have to move on. Erik had a chance to sit down with bob diamond. He has made a lot of investments, but none of the major banks are following his lead. We asked him why. Mr. Diamond i think part of it is banks who have not been on the ground are doing business there. A lot of european banks are providing trade finance. About 50 , 60 of the trade from Subsaharan Africa has been coming from the eurozone. Now its less than zero. Theyre focused on scale focused on whether his competitive edge. I you a larger i think for the larger global banks they are focused on global companies. The chinese banks are expanding significantly, but they tend to focus on chinese companies. Naturally. Its probably the right strategy. We think the biggest void in the market is for african businesses and consumers getting access to lending. Stephanie how about upside . Mr. Diamond we think Financial Services are a great opportunity as a result of things happening in regulation. If you look at the equity markets without financials since the crisis they are up on a 70 . Financials are up 20 30 . All of the fires of Financial Services, the big banks are off the stage in terms of acquisitions. And yet we saw ge announced happened trillion of businesses for sale potentially. We have seen the eurozone banks announce 1. 2 trillion dollars of noncore businesses. You have this incredible the supply and demand is completely out of sync. Erik you have a Merchant Bank atlas merchant capital. What do you do with that . Among these voids being created by the Banking Industry regulation, what do you want to fill . Mr. Diamond david chases, my partner, for the last 15 years has been investing in Financial Services private equity structure. We like that structure and we are looking for number of business is being spun out of larger banks. If you think of higher capital rules, the businesses are beginning to be spun out of the big banks. Stephanie so what is keeping your former colleagues down . What is torturing them into the biggest opportunity for you . Mr. Diamond i think the opportunity in Financial Services is extraordinary. We have not seen it in 20 or 30 years. Erik we do see companies filling that void. Lending club, for example. On deck a shadow not really a shadow banking company, but doing origination in a Small Business arena. Stephanie direct lending. Erik private equity firms, too. Mr. Diamond we are working on a number of things which until we complete them, i cannot talk specifically but a lot of the european institutions that have had big business in the u. S. Subsidy or duration it has an impact. We see a number of larger european institutions decide to exit a lot of the u. S. Businesses they have been in. We see some of the larger u. S. Banks decide to spend out erik some of those businesses were not particularly profitable for those banks. Mr. Diamond thank you. Thats where we come in. We know how to run these. Thats what makes it a great opportunity. You can up the Metabolic Rate grade you can get talents in. Technology, execution. That the opportunity. Stephanie do you ever see yourself wanting to be back at a big bank . Mr. Diamond do i ever see myself wanting to retire, and the answer is no. Erik it was not your choice to leave barclays. These circumstances surrounding your departure are awfully similar to those surrounding on shoot jane anshu jain. What should happen to him . Stephanie he is one of the best, mr. Diamond he is one of the best, full stop. I think the better question is what is the role of one of the larger banks in the u. K. . Stephanie that was bob diamond, former ceo of barclays who says, does he miss being at a big bank . No way. Hes never going back. Im in Beverly Hills at the Milken Institute global conference. Im going to be talking to them in pickens. You do not want to miss that. I am going to be talking to t. Boone pickens. You do not want to miss that. Stephanie when we return to this very special edition of Market Makers, this man is bullish on oil. We will be speaking to him in a moment. And the Prime Minister of japan and president obama will have a News Conference at you can watch live on bloomberg television. Live from bloomberg headquarters in new york, this is Market Makers with Erik Schatzker and stephanie ruhle. Stephanie welcome to Market Makers. I am stephanie ruhle. I am that the milken conference in Beverly Hills. European markets are closing. For where they ended up, im going to send you to chief market correspondent scarlet fu. Scarlet you take a look at the last two days and you see the big move yesterday and right back today. Down by two thirds of 1 . Among sectors, Health Care Shares fell the most, 2. 7 percent. Also disappointing earnings from Companies Including Standard Chartered did not help. Bailout talks have failed four degrees. And the u. K. Closed down about one point 2 or you can see bp losing 4 10 of 1 after posting a 20 drop in profits. Estimates were a lot worse, given that oil prices got cut in half first is the same time a year ago. The fact that it was not worse may be the reason bp shares are only down point or percent. And the british pound a growth of 3 10 of 1 , is slow down from the over 6 seen in the First Quarter. Of course, the data out of the u. S. Was not much better. The over 6 seen in the fourth quarter. I know you have Boone Pickens coming on in just a few minutes, select and with oil prices. We have seen reports denied by the pentagon that the Iranian Military boarded a u. S. Cargo ship. That is not the case according to a pentagon spokesman. They say it was a Marshall Islandsflagged cargo ship. There were shots fired across the bow of this cargo ship because they were in rainy and waters. Prices have come back down a little bit. Steph . Stephanie thank you, scarlet. Oil is coming back. Triple digits by the end of next year. Thats what our next guest, the one and only energy mogul Boone Pickens thinks. He is with me now. We have to start with the ron. There were reports that a u. S. Ship has been seized. That has been clarified. It is not change the fact that every day there is another headline, a scary headline about the political unrest in the middle east. How does that affect your outlook . Mr. Pickens you have asked me a geopolitical question. I will relate it to oil, if i could. Stephanie please do. Mr. Pickens the arabians, i do not believe we are negotiating with these people. They have elevated themselves to not only a superpower. The the iraniamns, i do not believe we are negotiating these people. John kerry is trying to do a deal no one wants to do. What concerns me first they have 30 Million Barrels of oil in tankers. Then they talk about they could reduce another Million Barrels a day. I do not believe that to be the case. I dont think they have that capability. And i see where they come through at 200,000 arals a day. I think the 30 Million Barrels in the tankers give me a little bit of heartburn, but i cannot believe wasting your time with those people, because they do not tell the truth. I mean, you are dealing with people that have lied to you you know, continually. Stephanie but does john kerry have a choice . You have said before opec is the enemy, but can you ignore opec . Mr. Pickens iran is not opec. Stephanie but these are forces you may not respect, but you have to face them. Mr. Pickens why do we have to face them . The United States has plenty of resources. We do not need middle east oil. We do not need it. I do not think the president or john kerry understands that. I cannot think they understand the oil market. I do not think they understand the oil business. I think what they understand about it if they dont like it. What they understand about it is they dont like it. Why do we open the Keystone Pipeline . Stephanie you do understand the oil business. How you think we will be at 70 dollars a barrel by the end of 2015 and 100 by the end of 2016 . Mr. Pickens ok, for oil, we now have in the United States we now have a little over 700 rigs 702 rigs. So you have cut 900 rigs stephanie its just supply and demand . Mr. Pickens whats going to happen to you when you shut those rigs down, supply will go down. Wells drilled now in the shale with multiple frack jobs they declined very rapidly. You will see already the bucket has rolled over. It is in decline. The eagle furred in south texas has done the same. You will see the same thing in west texas. You are going to start the decline. Already from cushing last week, it drew instead of filled. So, you may be seeing the first of your draws, and they will continue on. And you bring down your supply your demand is very strong. Much better last year. Twice what last year was. So, here you are, your demand, going up supply coming down, perfect or increased price. Stephanie economics 101. Mr. Pickens it is. Thats what it is. Stephanie shale what does that say about the consolidation in the industry in general . Is it a one off . Mr. Pickens shell announced they could not drill the horizontal wells in west texas. I do not know if you saw that are not. They said they could not build them cheap enough. There are a lot of companies that cant drill them cheap enough and they drill a lot about them. I think shell decided they were going to play the ongoing industry, to try to lower something. Shell picked them off. Stephanie will we see more him in a activity . Will we see more m a activity . These Smaller Companies will not necessarily need a big guy to acquire them if prices go down . Mr. Pickens sure. Stephanie they are a ok. Mr. Pickens some of these big independents in the United States will probably go to the exxons or shell or chevron is what will happen. But we have not seen that happen yet. Shell made the bg acquisition. We will see how it unfolds. I love it. Stephanie why do you love it . Mr. Pickens you know, i have been in the business forever. I got out of school in 1951. I have been in it ever since. That was what, 100 years ago . Every day i will not say every day is a thrilling day. That sounds like a woman talking about it. Stephanie there are women talking about it. Mr. Pickens of course there is. Women say things like im thrilled. Men dont say im thrilled. Stephanie lets talk about wind. Mr. Pickens i lost. Stephanie im trying to be nice. We expect an announcement from tesla, possibly alternative energy storage. Could this make you want to get back into the wind space . Mr. Pickens solar is harder for me. They have not been able to show me where anybody has made any money yet. But wind sure, i could get back into wind. But i want six dollar natural gas when i get back in wind, because the power is priced off the margin and the margin for fuel is natural gas. So, here it is 2. 50, its not a good time for me to get into wind. Stephanie what is it a good time for you to do now . What are you most excited about . Mr. Pickens i have three rigs and we shut them down. We have plenty of locations to drill, but not for 40, 45 oil. I know the price will come back up. It takes a little while for that to work back into the field price. You go back to 65 oil i will go back to drilling again. Its exciting for me. I have five funds. I have developed teams in each one of those funds, and i consider them the best guys in the business. Our results are good. I enjoy that work. But im there every day. You know that. Stephanie i love it. I want to talk about shareholder activism. In the past you have said, you like it. You like people fighting against lazy ceos. Most recently we have heard from larry think and stand dropped in miller that ceos are not making longterm decisions we have heard from larry fink and Stan Druckenmiller that ceos are not making longterm decisions for the help of their company. Mr. Pickens that takes you back to the 1980s when we took over gulf oil. The price had not been over 35. We took it to 85. Stephanie but you are a longterm investor. A lot are not. Mr. Pickens they are in there in best thing. They have good ideas and all. Its not a bunch of lazy guys. There are some. Youve got carl icahn out there. What is it, steve cohen and those guys. They will jerk you around a little bit if they see great values you are not getting for the shareholders. C i madearl i made carl met the other day. The New York Times called him an activist. I said back when i get it they called us razors. Now they are activist shareholders. I said he made more money for a company than any ceo that i have known anywhere. He is a moneymaker, serious man. I said he was about as smooth as stuck on a bathtub. He called me. Stephanie what did he say . Mr. Pickens how would you like to get into a stucco bathtub . Stephanie i do not want to get into a stucco bathtub with carl opr alone, ever. And maybe not with jeb bush. You like jeb bush. Mr. Pickens i support jeb bush. Stephanie is that a problem . It makes Many Americans feel like they need a new game in town. Mr. Pickens my wife said it is either the bushes or the clintons. Neither one of them is going anyplace. I think bush will have a tough go of it. Stephanie why . Mr. Pickens i cant believe the democrats are so pitiful. You have one candidate who is in trouble. And then it is backed up support for harry reid, nancy pelosi . Stephanie do you really think republicans are in better shape . The tea party has really split the Republican Party. It seems like they cannot get their act together. So many different voices. Do you think the Republican Party is strong today . Im not saying the democrats are, but the republicans . Mr. Pickens who controls the house in the senate . Are they strong . Of course there strong. Who controls the state houses . Republicans. Yes, i think they are strong. Youre talking about politics and politics is it is not ever a line straight up. But neither is the market. But yes, i think the republicans are vastly superior and stronger than the democrats. When i look over who their leadership is, you laugh. Stephanie i left when i get to talk to you. Boone, i do not want to take a bath in a stucco tub anytime soon, but i will talk to you any day of the week. Stephanie mr. Pickens thanks, stephanie. Stephanie we will be back in just a few, live, Market Makers from Beverly Hills. Stephanie all day we love california here on bloomberg tv. My colleagues at business week are bringing the top designers together at the annual Design Conference in san francisco. Our own brad stone as at the event is at the event all day long speaking to leaders of technology and design. Good morning, brad. Brad did morning, stephanie. How are you . Stephanie good. Brad i am here with roger martin. Roger, welcome. You are speaking later at the business week Design Conference. Roger yes. Brad how much of this is lip service and how much our businesses taking attention . Roger i think its a bit of both. Companies like let go and png lego and opng, i see them doing great things with design. Brad you are speaking with tim brown from iv oh. Talk about the work you are doing . Roger we are trying to take it away from strictly product design. The design of large systems strategies. I think thats where there is the greatest promise for design. We are really interested in how we can use those principles to create better government policy, for example. So, that is this sort of thing were working on. Press when we talk about designing products, we usually think of it as a talent. When we talk about designing strategy, how much his talent and how much is a skill that can be learned . Roger i think it is a skill that can be learned. I think both in tim brown would say that. I am not sure im a great designer, but i worked at it for years and years. It is a 10,000 hours. I think there are lots of folks who think they are not creative and i do not think there is any noncreative person out there. Brad you coauthored a book playing to win. Maybe talk about how design strategy comes into play at a company like procter gamble. Roger he said we will make design a key element of our success and create a design function. In a lot of the great things they did in that era was the total revamp of oil of ole oil of olay turning it from a small, boring business into a 2. 5 billion juggernaut. Brad who else stands out when it comes to designing Business Strategy . Roger i really do like lego. Things like the friends line for girls, a great product. Steelcase, the furniture company. They are into designing environments. Out to foster productivity and happiness in the workers. Those are a couple. Brad you had an interesting article in the Harvard Business review recently. Talking about the fearbased strategy were companies try to predict the future and react. Talk about the Mistakes Companies make. Roger i think most companies see strategy is an analytical exercise. Very analyticallyoriented number crunchers. I think its much more of a process where if you take the data and extrapolated forward, you are not trying to do anything. A if your turn to predict the future, its impossible. You have to make the future. Steve jobs, i like tim, too. He said, we can make the future. I think that is where greatness comes from. Not just accepting where the industry is going. Saying, no no there is a future we can create. I think design has a lot to do with how you can think about designing the future you would like your company to go into. Rad ok, roger martin, the director of the martin prosperity institute. Stephanie, back to you. Stephanie thank you so much brad stone and roger martin. For me on Market Makers, that is going to be it, but you would to stay right here for live coverage of president obamas joint News Conference with the japanese Prime Minister at the top of the hour. And i will be back with you later today from the Milken Institute. See you in a bit area see you in a bit. Mark welcome back. I Mark Halperin in new york. We are standing by to hear from president obama and japanese Prime Minister shinzo abe. Each man will give a statement and deliver some comments. They are likely to address the economy and trade deals. Also perhaps the president will get a question on the ongoing violence and unrest in baltimore. While we wait, lets bring in our National Political correspondent Phil Mattingly and our chief White House Correspondent peter cook. Phil this is a relatively long visit from the Prime Minister. He is one of the most successful and long running Prime Ministers japan is having a while. Phil this is really trade. Its one of the key issues that the president has been pushing not just for legacy purposes but to make that asia pivot they have been talking about for the last two years. There may be an agreement on the entire deal. There may be hope for an agreement with japan. Thats the big point theyre going to make today. Mark its not surprising that the sticking points remain with Japan Agriculture and autos, which have been the sticking points for a good long while. But sent to the white house, to peter, peter cook. There is some progress on the defense relationship and there are most already preliminary announcements about how the relationship will change, particularly focusing on china and north korea. Peter thats right a more robust role for japan in terms of defense. The first time in 20 years the guidelines between the u. S. And the japanese mutual defense treaty are changing. They will allow the Japanese Military to move into cyberspace and outer space. They will allow the Japanese Military to do more in terms of Missile Defense and the region. If a u. S. Ship comes under attack there will be the possibility for Japanese Military forces to intervene. That is the change in the relationship. Its controversial in japan. Abe needs to sell it to his constituents back home and it needs to be approved by parliament. That is one of the agreements they signed off on yesterday john kerry and asked carter for the u. S. As they meet with their japanese counterparts. John kerry and ash carter. It would be a counterweight to china, which is of course to some extent the reason the u. S. Is so interested as well. Mark while we wait for the president and Prime Minister lets talk to our colleague from bloomberg view. Willie, where does the Prime Minister stand on getting his country to adopt a more aggressive posture they have had in defense since they have had since world war ii . Willy from what i can gather, living in japan for several years now he does have a lot of legwork to do in terms of the commitment of the japanese to this. In many ways he does have a very successful apparatus that is trying to do that as we speak. But when you look at the opinion polls, the japanese people are fine with the way things are currently. They are certainly worried about the neighborhood, certainly worried about china, certainly worried about north korea. But in many ways they are happy with japan being a pacifist nation. They are happy with the constitution from world war ii and in many ways i think of a abe has a significant amount to do. Mark part of the stall in the japanese economy for many years now has led to a downgrade of the relationship called the most bilateral relationship United States president s have had. That has been a downgrade. But abe is from a political family. It is his second time in the Prime Ministers office, and he has spent his time in Office Around big issues, the domestic economy but also trying to figure out how to deal with china both as a potential partner, but also the military skirmishes there between the deed of nations and also u. S. Policymakers, just how much of a threat china is. The president has given the Prime Minister the nice treatment that people in