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- [00:00]
Carol Massar
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- [00:35]
Podcast Announcer
Bloomberg Audio Studios Podcasts Radio News. You're listening to the Bloomberg Balance of Power podcast. Catch us live weekdays at noon and 5pm Eastern on Apple CarPlay and Android Auto with the Bloomberg Business app. Listen on demand wherever you get your podcasts or watch us live on YouTub.
- [00:58]
Carol Massar
Watching the markets and as we see Iranian missiles targeting the United Arab Emirates, there's some concerns about that. Tehran warning that it was tightening its grip on the Strait of Hormuz. I mean, Joe, this is once again, we see this back and forth and it feels like there's no progress towards an end.
- [01:11]
Joe Matthew
It feels pretty hairy. And this comes with this Operation Freedom, I guess it's being called. The president announced over the weekend where we would in fact not necessarily start escorting vessels through the strait, but stand by to help them is a question about whether anybody's going to take that opportunity. And it's where we start our conversation with Ian Bremmer. The force behind the Eurasia Group is with us live and in person here at the Milken Conference. It's great to see you and I hope that this set of meetings is going well for you. We would just love to talk about this very delicate moment that we are in and whether the president has the ability to open this corridor in the Strait. And even if he does, could we move enough ships to make a difference?
- [01:47]
Ian Bremmer
As of right now, he does not. And that is a big part of the problem. This is by far the biggest challenge we've seen since the cease fire was announced by President Trump a couple of weeks ago. We now have ships that are being fired on in in the Strait, one doing a quick U turn right after that. No one injured to the best of our knowledge. And then we have what looks to be some interceptions, the UAE Ministry of Defense saying that they had intercepted some shots at them from Iran in the last couple of hours. That is clearly an escalation, a direct response by the Iranian government from Trump's announcement that he was going to have a humanitarian freedom operation to get some of these ships through. The Iranian perspective is we are prepared to talk about ending the blockade if you're going to let our ships through. Otherwise, it's not happening. And the Iranians have the ability and the willingness to prevent Trump from making these moves. This is. He's going to be pretty antagonized by this. There's no question in my mind who's got the cards?
- [03:00]
Carol Massar
Who's got the winning hand right now? Or is there a winning hand? Because it doesn't seem like there's really any progress. I mean, Iran understands its power by controlling the Strait of Hormuz. And if it lets that go, then what?
- [03:11]
Ian Bremmer
Look, I wouldn't want to be the Iranian regime right now. Very clearly, 150 of their leaders have been killed. So to say they've got the winning hand in that environment, they're desperate, but they're also, their regime is not going to change. More of them can be killed. A lot more Iranians have been killed and displaced by the way than anyone else in this war. Lebanon's the only other country that's even close. So, you know, it's not like the Americans are facing some existential threat. But this was a war the Americans chose to fight, that President Trump chose to fight with Israel. And it turns out that Iran's capacity to cause damage and pain to the Americans is massive. Well, one place the Iranians have an advantage is an information advantage. They know what the polls are in the United States. They know what people inside the Trump administration are saying and that they're not completely aligned on this. They know the Republicans don't like the war. The US has none of that transparency on what is being said at the top of the IRGC inside Iran, and that is a disadvantage for the United States.
- [04:14]
Carol Massar
Well, where's our intelligence on that?
- [04:15]
Ian Bremmer
Well, there is intelligence, but again, you've killed most of the people you were talking to. Right? And the foreign minister, who is engaged and still engaged every day by text with Steven Wycoff, they're still talking. And the sides aren't all that far apart on the nuclear issue. But he's not the guy calling the shots inside Tehran. The people calling the shots are not on television. They're not engaged publicly because they don't
- [04:38]
Bill Ackman
want to get killed.
- [04:39]
Ian Bremmer
So, I mean, it is just a lot harder to get intelligence on what the Iranians are doing and what the Iranians are thinking. And I'll tell you, as many times as I've seen President Trump say, they better watch out or no more Mr. Nice Guy, like when, when, when the supreme leaders like kid and father and mother have already been assassinated in this war and no more Mr. Nice Guy doesn't hold a lot of credibility. Right. Most Iranians that we've spoken to in Tehran.
- [05:06]
Carol Massar
That's nice.
- [05:07]
Senator Angela Brooks
What's bad?
- [05:08]
Ian Bremmer
They think that the war is going to restart imminently, they believe.
- [05:12]
Joe Matthew
There was a moment a couple of weeks ago, and you remember this, the markets were lit up with optimism because there was a thought that if we're arguing about duration.
- [05:20]
Ian Bremmer
Right.
- [05:20]
Joe Matthew
On stopping enrichment, then we've obviously made progress, that we could somehow get to a. Yes. That the fact that we were just talking about, is it five years, is it 20 years, is it indefinite? That optimism seems to have gone away.
- [05:31]
Ian Bremmer
Yeah.
- [05:31]
Joe Matthew
Was it ever real to begin with?
- [05:33]
Ian Bremmer
It was real. It was real in the sense that there was a. There was serious engagement on what not only the duration of enrichment being stopped would be, but also the removal of the uranium stockpile.
- [05:48]
Joe Matthew
At one point, the President said there was a deal to hand it over.
- [05:51]
Ian Bremmer
Yeah, yeah, but, but, and to be fair, also, the Americans had given up on the ballistic missile, said that was a regional issue. So that's. If you're not going to have to resolve it, it makes it easier not even talking about Iranian support for proxies. So there you've got a deal. But in order to get to that deal, you have to open the strait. And the Iranians, if they're not going to toll anymore, they have to get something. So what are they getting? How are you paying them off? And there we did not see a deal. So ultimately, the Iranians have very little reason to open the strait, which is their one point, their singular point of global leverage, not just versus the US Unless they're going to see something that is better for them than the position they're presently in, they don't have that.
- [06:33]
Carol Massar
All right, so we've been going back and forth. Obviously, the White House thought this was going to be just like Venezuela. It obviously is not. So do you see an end game, an outcome anytime soon? Because at this point, markets, when you look at oil prices and other factors, they are pricing this out through the end of the year. They've already decided this is nothing that's going to end soon. It hasn't ended soon already. So do you see, Ian, at ultimately some kind of endgame here?
- [06:56]
Ian Bremmer
The thing that worries me, the reason I don't, I don't have an immediate yes for you, is that, number one, Trump seems to believe that he's already going to lose midterms. He seems, he's already counseling patients. He's saying, I'm surprised that oil prices are below 100. You know, I think that they could be a lot higher. So he's willing to go longer and take that pain. Secondly, the Iranians themselves do seem like they are prepared to continue to hunker down, and they're capable of continuing to hunker down. So it is hard for me, even if you were to get to a deal, implementing that deal. So with the international arms inspect, the atomic inspectors, no one's engaged with them so far. You'd need them on the ground.
- [07:40]
Dani Berger
Right.
- [07:40]
Ian Bremmer
That would take time. Staging that with the money that the Iranians would have to get. That's a matter at best of another month or two after a deal is in place. So even if you came to yes and we're not close to yes right now, it would still not be, oh, everything's going through the straight.
- [07:56]
Joe Matthew
I think was Darren woods last week said it would be at least two months from the strait being opened, also that it would take that long for the energy market to rationalize itself and get the flows longer.
- [08:05]
Carol Massar
If you look at Qatar, we're talking like three to five years.
- [08:08]
John Denton
Yeah.
- [08:09]
Joe Matthew
So go back to the first Pentagon briefing. Pete Hegseth, Dan Cain, it's the new duo. It's turned into a roadshow. The first questions were, was there a plan for the strait? And he mocked the reporters for asking that. He said, of course we had a plan. What was it?
- [08:25]
Ian Bremmer
I think that when you believe that this is going to go over because you're killing the leadership, and so of course, they see that overwhelming US Military capacity that they're going to then want to deal.
- [08:37]
Joe Matthew
Big assumption.
- [08:37]
Ian Bremmer
You don't. It's a big assumption. You don't need that plan. The biggest problem that we have right now as Americans is is that President Trump, in my view, is not getting an accurate picture of what's happening on the ground. And the reason for that is because people around him, and not just his domestic advisors, but international leaders, too, when they actually talk with him, they sugarcoat it. When they actually talk to him, they're like, sir, you're doing so well. And you know, there's so much of this is going well. And maybe this is one little thing that if you could just do a little bit different. And they do that in part because he won't tolerate criticism, but also because they want to continue to have access to and they know that if they really say in an unvoiced way, let's be real, one access because other people around them are competing to be the one in front. So if they're the one that's giving Trump the messages in life, they're not going to be there. No one would run a company that way. Right. I mean, you would downgrade that company if you want Bloomberg. Yeah, that's the way the United States government is presently being run in a war environment. And I just think that's horrible.
- [09:32]
Carol Massar
I think about your concept, your book. T0 right? This, this world, everybody is kind of out for, for their own. And we see it when it comes to raw materials, rare earths, commodities, all of a sudden in the markets, we're not talking as much about high tech. We're talking about raw materials, gold, steel. I mean, the world has changed. So does that make that even difficult, even more difficult to get some kind of resolution? And is this just our world, Ian, going forward?
- [09:57]
Ian Bremmer
It makes it more difficult in the region because the most consequential geopolitical impact that has come from this war is that the Emiratis and the Saudis are in much more open hostility. Right? I mean, that's why the UAE decided to leave OPEC in the middle of wartime. It's not like the strait is suddenly open because they did that.
- [10:13]
Carol Massar
That was a headline that crossed and it was like, wait, what?
- [10:15]
Ian Bremmer
It's wildly consequential because long term, the UAE is aligned with and supported by Israel and they do not want, cannot tolerate this Islamic Republic in Iran with this level of military capabilities. And they will continue to mow the grass, as the Israelis call it, with Israel going forward, if those capabilities exist. The Saudis are not a globe. These are the regional anchor that's focused on long term, big, cheap oil production at scale. They've got a much bigger market themselves. They're going to be the regional anchor. They're going to work with Pakistan, which provides nuclear umbrella for Saudi Arabia. They're going to do a deal with the Iranians that Pakistan and China will facilitate. They will find a way to engage. So the day after this war is over, it is a different Middle east, it is a different Gulf.
- [11:06]
Carol Massar
And the G0 worse. Is it more stable?
- [11:09]
Ian Bremmer
It's less stable. It's less stable. It certainly is more aligned with the individual interests of those countries. But you lack the multilateralism. The Gulf Cooperation Council is no longer fit for purpose. It could easily fall apart. And that, you know, historically, again, people, people that are looking, watching the show right now, historically, they would go to, they would invest in the Gulf and it wouldn't matter so much if they had their headquarters in Abu Dhabi or Saudi Arabia, that thing that will be massively consequential going forward. There will not be a singular Gulf strategy. You will need to understand how you are engaged with these different leaders, both very strong leaders and by the way, both generational leaders. So it's not like they're going away anytime soon. This is a very big deal.
- [11:54]
Joe Matthew
You mentioned China and the role that China is about to play could be significant. President Trump seems to think that there's, I won't call it a long game, but maybe a break glass situation with President Xi. If this is not solved by then, he goes to the meeting with Xi Jinping and they work this out together. Is he the linchpin to getting to Iran and getting this straight?
- [12:16]
Carol Massar
Just pandas. It's got to be good.
- [12:17]
Ian Bremmer
It's good to have pandas. I like pandas. And also the fact is that this summit is going forward even with the straight still closed. And at the same time, the US has put in principle sanctions against Chinese teapot refineries that are not linked in to the broader financial system. And the Chinese in return have said, okay, if you actually do that, these companies will have the right to go after any American company doing business in China to receive the money that they've lost. Now, the fact that China is willing to hit back like that right before a summit with Trump shows that not only are they confident, they know that the Americans are not going to take moves against them. They know that they're not really under pressure to resolve anything. So I think the meeting will go well. I think they will show respect for each other. I think, you know, Xi Jinping will try to see if he can get Trump to say something useful on opposing Taiwan independence, which she wants. And no one around Trump wants to see. But one on one, Trump might say that. But this is, this is not going to be. If you're, if you're waiting for a Xi Jinping summit to be a breakthrough on the Strait of Hormuz. Yeah, they want none of that.
- [13:22]
Joe Matthew
Is the president not thinking that the way he's been talking recently makes you wonder.
- [13:26]
Ian Bremmer
The way he's been talking recently makes you wonder about many things.
- [13:29]
Joe Matthew
Okay.
- [13:30]
Ian Bremmer
No, I mean, pick the tweet and tell me which bit you want to focus on and then we'll wonder if I have that much time. No, but that's the point, is he's frustrated, he's angry, he wants an off ramp. He'd like to blame someone. It is his fault. And he can't do anything about it. That's an unusual situation for him.
- [13:47]
Carol Massar
Ian, I've got to ask you, I was talking with an Iranian yesterday who's been in this country for a long time, but he said Iran really wants to be actually friends with the United States rather than China. And I think about that China, Iran, Russia alliance. That's an interesting one. Do you feel that that's possible, the Islamic Republic?
- [14:06]
Ian Bremmer
No, of course not. Look, I think I was listening to NPR briefly this morning. This morning. And it bothered me that after five minutes of this interview, which was wildly disconnected from what was happening on the ground, people that would listen to this person who used to be in the US Administration in the Treasury Department, I don't know the name, and now is in some think tank in Washington, but was not introduced as an Iranian American who just desperately wants the regime to collapse and will say anything in service of that. Now, that is a legitimate perspective for a person to have. But the people listening don't necessarily know that that is the perspective of that person. And look, I would love to see the regime collapse. It's a brutal, horrible regime. It's killed lots of its own people. But what I want is not analysis, right? What I want is not what's going to happen.
- [14:57]
Carol Massar
All I know is, man, just when I think it could get easier, it's not. It just gets more complicated. You create some sanity for us. Thank you.
- [15:05]
Dani Berger
Thank you.
- [15:07]
Joe Matthew
Stay with us. On Balance of Power. We'll have much more coming up after this.
- [15:13]
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- [16:26]
Podcast Announcer
You're listening to the Bloomberg Balance of Power podcast. Catch us live weekdays at noon and 5pm Eastern on Apple CarPlay and Android Auto with the Bloomberg Business app. You can also listen live on Amazon Alexa from our flagship New York station. Just say Alexa. Play Bloomberg 11:30.
- [16:45]
Dani Berger
Welcome to Bloomberg's coverage of the Global Milken Conference. I'm Dani Berger alongside Bill Ackman, the founder and CEO of Pershing Square. Bill, thank you so much for sitting down.
- [16:55]
Bill Ackman
Of course.
- [16:55]
Dani Berger
I mean, you got to be the most busy man on Wall street right now. It's just complicated compiling a list of what you're currently working on. You have two publicly traded equity funds now, a publicly traded asset manager, a publicly traded real estate company that you're working into transforming a mini Berkshire Hathaway, and you're running a campaign with Universal Music Group.
- [17:12]
Ian Bremmer
Where.
- [17:12]
Dani Berger
Where's your attention most focused on right now?
- [17:15]
Bill Ackman
On investing. They're all related. They're all correlated. They're all part of one very small portfolio, which is why it's possible.
- [17:22]
Dani Berger
It is possible. And I know you run with a slim team there, so it's always impressive. And you got this IPO out last week and we talked about it, but we talked before it started to trade. I know you don't concern yourself with the day's worth of trader or a few days, but what do you make of the reception that it got, that it did fall considerably? Is this an issue with bankers mispricing it?
- [17:41]
Bill Ackman
No. I mean, we sold a pile of cash. I don't know why anyone would buy a pile of cash and then the next day sell it at a discount. What I think I didn't appreciate when we last spoke is we did something different in this offering that people don't normally do. Normally, retail investors get kind of a very small allocation and they're disappointed by the shares they get in the ipo. In our case, we give the retail investors what they ask for and we cut the institutions back. And I think the impact of that was retail investors woke up with more shares than they had intended to buy and were put in kind of a forced selling position and that has to work its way through. I think once that's done. I mean, now again, the package of securities is modestly down from where we we, where we price the offering. Remember, you get an interest in a PSUs, which is an either, you think of it as investment holding company, you can think of as a closed end fund. There you're getting $49 in cash that we're in the process of deploying in the market and you get an interest in our business, which is a very good business. It's a bit like a Blackstone or kkr. But some important differences. Substantially all of our assets are in these sort of permanent capital vehicles. And so the business model itself is like owning a royalty on compounding and as we. So that's why I have to do is focus on generating returns. I generate returns that generates an increase in our assets, that generates more cash flow for the business. And it's a bit of a self fulfilling prophecy as long as we do a good job allocating the money.
- [19:03]
Dani Berger
One of the things that's different, and I kind of hinted at this the beginning from you, from the other big publicly traded asset managers, is just how slow, slim you are. And this was brought up actually in one analysis of Pershing Square.
- [19:13]
Bill Ackman
I like being slim.
- [19:14]
Dani Berger
I think we all do, I think especially in this day and age. But this idea that there is key man risk because so much of it is your ideas and your ability to. So yeah, so talk about that. How do you mitigate it?
- [19:26]
Bill Ackman
I actually think we have the least key man risk of any hedge fund in the world. And that sounds surprising because usually you put me on, I do more TV appearances than other Pershing Square employees. But what causes a hedge fund to go out of business is something happens to a key person and then investors, the first thing they do is they ask for their money back and then the assets shrink and the rest of the team leaves. In our case, the assets are in these public corporations where the money can't leave. And so if something happened to me, the money stays, that the assets stay, the team stays. The team owns, you know, 45% of the business, right. So the, the company of equities widely spread throughout the firm. And it's unusually about our firm in an industry with a lot of turnover, there hasn't been a Pershing Square. So my CIO, Ryan Israel and I, we've worked together now 17 years. He's been CIO for almost four. You know, if I disappear tomorrow, nothing would really change. In the early days of Pershing Square, I generated most of the ideas and I work with analysts on, on analyzing those ideas. Today I'm generating a minority of the ideas. So I'm not saying I'm unimportant, hopefully I can still, you know, generate value for the firm, but the firm itself is very robust. You know, it's the only firm in the world that if something happened to all of the employees because the assets are forever, the board would just hire a new team or put the assets in an index fund and you'd still build a very valuable kind of business over time. So it's one of the most robust businesses in the world and it's one of the highest quality businesses in the
- [20:48]
Dani Berger
world, by the way. Just, just kind of on, on a similar note as, as you know, a Warren Buffett fan. This past weekend was the first week Berkshire Hathaway annual meeting where Abel was at the helm. You're obviously a young man, but have you thought at all about setting up succession, what that eventually looks like at Pershing?
- [21:02]
Bill Ackman
Well, I think it's really effectively set up, you know, identified as CIO Ryan, as I mentioned, he's really leading the investment team at this point. Ben Hakim, president of firm, he runs everything other than the investment side of the operation. Amazing. There's anything for me to do. I have the privilege of thinking about big ideas and, you know, occasionally big idea drive some value.
- [21:22]
Dani Berger
Can we talk about one of those big ideas?
- [21:24]
Bill Ackman
Sure.
- [21:24]
Dani Berger
In Universal Music Group.
- [21:25]
Bill Ackman
Yeah.
- [21:26]
Dani Berger
You come forward with an offer to buy this company and a lot of people scratch their heads. Why would you do this with a company that has very large majority shareholders where it's tough to put through? What is the game plan?
- [21:36]
Bill Ackman
Actually, the, the gameplay there is absolutely. We need the support of Bollore Group. But what we're proposing I think is very much aligned with what they're interested in. I mean, Universal, sort of a, interesting, interesting case of a company that's done well in its core business. Right. Universal remains the dominant company in the recorded music industry. They remain very close to being the number one company in the music publishing industry, has done a very good job with that. But they've not sort of graduated from being operating like a private company into being a public company. And they've lost, I would say, the confidence of kind of the shareholders in the analyst community, which is why the stock, you know, the business value has grown and the multiple that people signed, the earnings of the company has declined. And the result is a stock that trades at the same price that traded, you know, the company first day of trading was €25. And this is in September of 21. Here we are almost five years later, the stock is €19, €18. So that's not a good performance. The company really needs a reset. It's also listed really in the wrong exchange. It's a really a US Company. So our transaction moves the company from Amsterdam to a US listing. That alone is meaningfully value creating. We kind of recast the balance sheet. The company has unmonetized assets on the balance sheet. Their stake in Spotify now notably the company announced in the last couple of days that they're going to sell half their interest in Spotify. We think they should sell the balance. The company announced a more aggressive buyback program. We think there's an opportunity to do more. But our transaction effectively enables a cancellation of about 17% of the outstanding shares. A migration of the company here, a new board of directors led by Mike Ovitz. You know Mike, I've known a very long time. I think it could be a very value added value operate to the operations of the company and then just a better program in terms of how the company communicates with shareholders. You know, the company right now is sort of analyzing the proposal. We'll hear back from them soon. We're, we've been engaged with the obviously big shareholders.
- [23:26]
Dani Berger
And you're hopeful that they will be receptive to this.
- [23:28]
Bill Ackman
I mean the company has to do something. This is a very good solution to the various issues that confront the company
- [23:35]
Dani Berger
by the way, on this idea of European versus US exchanges, it feels like that is something that a lot of companies see that they can unlock that they move to a US Exchange. On the day we talk, for example, I, the AstraZeneca CFO and they did something similar. Does Europe have a real problem, Bill?
- [23:49]
Bill Ackman
I mean, yes. Look, the exchanges are natural monopolies. And you know, if you today, if you're not listed at in a market which has the most demand, your stock, your cost of capital is going to be higher than it should be. And so there's sort of, and I think, you know, Europe has too many exchanges. What if I were in charge of Europe, I would consolidate the London Stock Exchange, Euronext, kind of bring the various exchanges because again it's a natural monopoly and you want the maximum liquidity and demand in one one place. But there's sort of nationalism I think prevents that.
- [24:23]
Dani Berger
One of the kind of newer features of markets is the prevalence in the explosion of betting markets. And there's this real criticism that we're seeing almost a casino vacation of the world where you can bet on anything. There are ETFs listing this week where you can bet on whether the Dems or the Republicans are going to be winning. The House or the Senate? Is it a problem? Does this concern you at all, this trend?
- [24:42]
Bill Ackman
I think the negative is that there's a positive and negative. I think the negative is it's not the most productive activity in the world. And there is a lot of gambling that goes on, whether it's sports betting or otherwise. And there are people, and particularly young people, you know, losing money they can't afford to lose betting on the outcome of things that are difficult to predict. So that's the. Obviously the unfortunate bit like lottery tickets, you know, it's not, it's a net loss, I think for society. On the positive side, what betting markets allow is they allow people to hedge risks that they're exposed to it. It also creates information, you know, you know, looking at where things are priced. You know, the betting markets have done a better job of predicting outcomes of
- [25:25]
Dani Berger
elections, some could say, because. Well, maybe not elections, but there's more insider trading that incentives exist for that to happen.
- [25:30]
Bill Ackman
Look, the people make arguments that the insider trading should not be illegal because that would bring sort of more transparency.
- [25:36]
Ian Bremmer
One of those people that believe that I'm not.
- [25:38]
Bill Ackman
But, but you can make some arguments for it. So I think it's, it's sort of interesting. But you know, the more the market becomes casino, like I think the risk. The risk is, I guess people get. They withdraw capital because they lose confidence. And you know, I think markets being more and more short term. And if you think about what a stock market is, it's. These are very long term assets. So the short termism drives liquidity, which I think on the margin is a positive. But it also can lead to short termism in the way businesses are run.
- [26:10]
Dani Berger
Bill, I would love to just leave on the, on the note of, of your hometown city, New York, there's been a lot of discussion about Mayor Imam Dani making very public pronouncements against specific people, against Ken Griffin announcing a pied a terre tax, directly attacking some of the business leaders of this city. I know you were concerned heading into this election.
- [26:32]
Bill Ackman
Yeah.
- [26:32]
Dani Berger
And the outcome of it too. How are you feeling now?
- [26:35]
Bill Ackman
Not great about things. I mean, I think Mondami is not. If your goal is to make New York City kind of financially solvent, what you don't want to do is drive out the Ken Griffin's of the world. Right. Ken brings very valuable business that has a $6 billion project which will generate, you know, thousands of construction jobs, architecture jobs, marketing jobs. Make your list employees who will pay material amounts of taxes because they're highly compensated employees. And it's that it's sort of the Wall street and, and the tax revenues from Wall street are what enable New York City, kind of all the people in New York City to have a better life. And if you drive out the Ken Griffin's the World, who notably, you know, has made a major contribution to New York not just from bringing his business there, but he's been very philanthropic. $400 million donation to Morris Loan Kettering, which is an institution that doesn't just help New Yorkers, it helps people with cancer all over the world to go, to go to get treated there. So it's just not, it's not a very smart approach.
- [27:35]
Dani Berger
I can't think about Pershing Square without thinking about New York City. But could you ever see yourself being driven out of New York?
- [27:41]
Bill Ackman
I think it's unlikely. I'm more of the Ghana guy to fight to make sure New York City is a great city than someone who's going to leave.
- [27:47]
Dani Berger
The problem is though that with these policies, even if they have dire economics, economic consequences, Mandani is incredibly popular and he's still very popular with his base. So how do things change then? How do you fight this tide if there still is this broad based popular support for these types of ideas?
- [28:04]
Bill Ackman
It's an issue. I mean, I think the answer is a better candidate who, you know, look, Mandami was correct, is that New York is not a very affordable place to live. But you're not going to make it more affordable by getting rid of the biggest drivers of tax revenues for the city. Mondomet already has a budget crisis, but we've got to figure out how to run New York City much more efficiently. But when you raise taxes, you know, the most mobile people, frankly are the Ken Griffiths of the world can, can choose to locate his business wherever he wants and he can locate his Jeditaire wherever he wants.
- [28:37]
Dani Berger
Very true though we are heading into midterms and again, affordability is on the ticket and that's pushed a lot of people left. Are you worried about how this shakes out? That we might get more candidates who want to put forward these types of ideas into economic policy?
- [28:49]
Bill Ackman
Yeah, look, I think, you know, you look at a country like Argentina and how far it fell, right? One of the most Argentinian GDP, whatever 100 years ago was one of the most significant countries in the world and fell off the map because of socialism and other bad policies. Now you see Malay coming back and the country dramatically recovering. It's sort of a great example. And you crazy to me that socialist Ideas can travel into a country like this one.
- [29:17]
Dani Berger
I have only about 30 seconds, but I'd be remiss if I didn't ask about some of the work that you've been doing trying to make 401ks, those types of investment vehicles, more broadly accessible. We had an executive action last week. What are you pushing for at this moment?
- [29:29]
Bill Ackman
I think every American has to own a piece of capitalism. And when you do, you're excited when the stock market goes up and it allows you power of compounding, allows you to save for your retirement. You know, we, you know, unfortunately, wages cannot compound as fast as the stock market. And so I think it's very important for every American to participate in capitalism or we'll end up in socialism. And that's. So I think the President's plan is a great one. You know, you have to be able to, you know, I think if you believe that you're going to be able to retire comfortably, maybe even leave something for your kids so they get a head start, you know, that makes sense. You believe in the country, and if you can't, it makes you angry. I think a very important program.
- [30:14]
Podcast Announcer
You're listening to the Bloomberg Balance of Power podcast. Catch us live weekdays at noon and 5pm Eastern on Apple CarPlay and Android Auto with the Bloomberg business app, Listen on demand wherever you get your podcasts or watch us live on YouTube.
- [30:31]
Carol Massar
Markets, economy and certainly all different kinds of worlds. And the business leaders are certainly watching right now what's going on in the Middle east, the tensions, the uncertainty. It makes it tough to kind of figure out strategy.
- [30:41]
Joe Matthew
You make a great point, though. It's a moment that is made for Bloomberg when we consider what we talk about and cover every day. It's all together in one here. And it's a great opportunity to bring John Denton back into the conversation. The International Chamber of Commerce Secretary General is with us now live in Los Angeles. Great to have you back on Bloomberg tv. Great to be here. What do you make of this different flavor at Milken this year? There's an urgency, there's an uncertainty that you might not normally find at this conference.
- [31:06]
John Denton
Well, yeah, I've been honored to speak at Milken 4, and there's definitely a different tone and a level of urgency. And actually, I must say, as you said, Milken is actually a very important conference now on a global basis. The reason I come here, I don't go to Davos. I actually come here now because. Because you think about some of the biggest challenges we're confronting are going to require the private sector to really stop step up. And what we see here is the probably the biggest gathering of private capital, which will actually be incredibly important if we're ever going to align to fix some of the problems we've got just at a global macro sense. You said geopolitics. It's really a geoeconomic environment we're in now where the economics become so much more important. I mean, I'm working on the Strait of Hormuz at the moment because one of the issues there, and I think people are starting to realize that the strain of the moose is actually not just a combat between combatants between a US And Iran, it's also framed very much in oil and gas. But people are forgetting or not seeing it, which is one of the most important elements is a crisis which is emerging around access to fertilizer. Now we're in 170 countries, I think we've discussed before, and we see very quickly in the real economy the impact of an access issue. So we've got more. Not just a pricing issue, so a pricing cost issue. We've also got a challenge to actually get. Get access to the product itself. So you've got the combination of a price shock and a supply shock, which is about to create a huge cataclysmic problem in the real economy. But in particular on food. And we saw this with the Black Sea because we with. So we developed the Black Sea agreement for the UN Secretary General and we see similarities there because food pricing, the access to food, the inability to feed yourself, that's what gave rise to the Arab Spring. That's actually what causes political instability. So as you say, this is, this is not just a. An important conference, isn't a series of important conversations, but there's an urgency about kind of getting some of these issues better understood. And the private sector understands these issues sometimes a lot better than the policymakers themselves.
- [33:16]
Carol Massar
John, I feel like there's something going on. You talk about this moment in time for Milken, but go back to the Russian invasion into Ukraine and the breadbasket to the world, and we saw grain prices certainly impacted. Go back to Covid and you know, we didn't have masks, we didn't have a lot of supplies, things that Americans took for granted. We're all looking at our supply chains. And it does feel like there's each country on a grab to make sure that they have what they need. That's got to create just a different market environment, a different economic environment going going forward. And we talk about inflation, prices, things are going to be more expensive going forward.
- [33:48]
John Denton
Well, I mean what you articulated can be wrapped up in one concept. It's the level of uncertainty which is actually really compounding. I think we talked about this before, the uncertainty that business finds and not just in the U.S. but on a global basis. I said we're everywhere. We're seeing a level of inhibition towards engaging in commerce across borders because people just don't know what the rules are. There's no policy settings. And then you've got the complication, I think, of the geopolitical side feeding into the geo economic side where, you know, the disputes, where's the multilateral system, where are the institutions that are actually supposed to be able to be used here in these environments? So it's not clear to people.
- [34:30]
Carol Massar
We actually did an are they, where are they? Why aren't they working? Why isn't there that response anymore?
- [34:35]
John Denton
Well, in the end, one of the challenges, challenges for the institution is actually the willingness of their member states to do something. I was just in Yaounde at the WTO ministerial meeting and if there's one takeaway from that is that the idea of consensus based multilateralism is over. What you're going to see much more is coalitions of the willing plurilaterals, these sorts of issues, because you do not have alignment between a lot of the major players. And that is a problem. And that actually makes it very difficult for the institutions to function. The institutions have got a lot to answer for anyway because in many respects they failed. I use this term to allow the spirit of modernity to flow through them, to actually move forward. And it's actually stuck.
- [35:16]
Carol Massar
We see that in the U.S. right. We talk about this K shaped economy and we have guests who come on and say, well look at the market, it's record after record. Well, there's a half of Americans who
- [35:24]
Ian Bremmer
are not necessarily feeling that detachment between
- [35:28]
John Denton
the market and the real economy. Exactly. And what I was describing consequences, the straight room was these are real economy issues, these are not market issues. So ultimately we need to work out a way to get the fertiliser flowing again. We've already lost capacity. And that capacity is meaning that farmers in Africa and Latin America, because they couldn't get access to fertiliser or the price of it was too high, what are they doing? They're actually replanting without fertiliser or not planting, which means yields are going to suffer quite dramatically. And we see that coming in three months. And it's unusual because in a way we see it coming but it's shrouded by the oil and gas story and shrouded by the battle between the rap.
- [36:09]
Carol Massar
This is not fair. I don't want to John Denton, you rock.
- [36:13]
Joe Matthew
Stay with us on Balance of Power. We'll have much more coming up after this.
- [36:20]
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- [37:32]
Podcast Announcer
You're listening to the Bloomberg Balance of Power podcast. Catch us live weekdays at noon and 5pm Eastern on Apple CarPlay and Android Auto with the Bloomberg Business app. You can also listen live on Amazon Alexa from our flagship New York station. Just say Alexa played Bloomberg 1130.
- [37:52]
Carol Massar
All right, everybody. Yes indeed. We are live here in Beverly Hills at the Milken Institute Global Conference. Carol Massar along with Joe Matthew. We've got a great guest coming up. I want to set the scene here because we do have President Trump out there out on social and he says Iran has taken some shots at unrelated nations with respect to the ship movement, Project Freedom, including a South Korean cargo ship. He says perhaps it's time for South Korea Korea to come and join the mission. We've shot down several small boats, or as they like to call them, fast boats. It's all they have left other than that South Korean ship. There has been at this moment no damage going through the strait. He also mentions that the Defense Secretary Pete Hegseth, and of course the Joint Chiefs of Staff Dan Kane. They're going to be holding a press conference tomorrow. I mean, this has become, I hate to say the norm, but this conflict, again, we can't seem to kind of find our way out of it. And again, we'll get an update on where we are. Yeah.
- [38:42]
Joe Matthew
And this of course, follows a weekend in which the president announced this new Operation Freedom. So with naval vessels standing by to help commercial vessels get through the strait, not Iranian vessels. And it's curious still to see what happens. And that might be the point of this Pentagon briefing tomorrow, see how many actually take us up on this offer. And the President still looking to build a coalition of the willing. It's a good place to start our conversation with the senator among the many attendees at Milken. Senator, Senator Angela. Also Brooks, the Democrat from Maryland is with us here and it's wonderful to have you back.
- [39:12]
Senator Angela Brooks
Thank you.
- [39:12]
Joe Matthew
Bloomberg TV and Radio. It brings us, of course, to energy prices. First and foremost. We're ever closer to four and a half dollars a gallon on a national level. You might have noticed sixes and sevens on the signs going by here in California's got its own story. In Maryland, it's slightly different. I'm wondering what it means for people living in your state and what they're not spending on as a result.
- [39:34]
Senator Angela Brooks
Well, you know what, it's not just people in my state. What we recognize is we are headlong in a war. I mean, I think what you just read demonstrates that we have no idea how to get out of the war. Furthermore, the cost of the war is being borne by everyday, hardworking people. These gas prices, you think about energy costs, the cost of groceries, all of these various costs are being borne by working class people who don't have the option of not paying it. So, you know, it's a really distressing time for us. I think it's going to be really important, important for us to get out of this war soon. But the cost and the affordability crisis that we're seeing is real life. It is not theoretical. It is being borne by the people we know. I see it in the grocery stores. We see it all over and it really.
- [40:13]
Joe Matthew
Well, how about for policymakers? You're on the Banking Committee. What's Kevin was going to do? Does he still cut interest rates when he comes in?
- [40:18]
Senator Angela Brooks
Well, we'll see. I mean, part of the issue is that, you know, I did not vote to support Wash and it's because, you know, I couldn't be, I couldn't be sure he would be independent. I think the independence of the Fed we know is very important. We know the two jobs there are to, to make sure that we are keeping down inflation and also protecting and growing employment. And to do that means we have to have a Fed that is independent. And he dodged questions that I would ask of him. And I think an independent Fed is going to be really, really important right now when people's lives and livelihood are literally on the line in a way that we've never seen before. You know, I'm the daughter of a receptionist and a car salesman, so I understand how challenging these times are for real people. And the people who make these decisions, they don't care about the cap, the cost of gas, they're driven around. You know, it's my colleagues and others mean if we're honest about it, the people are making these decisions are wealthy people. But the people who bear the cost of all of these decisions are everyday hard working, middle class people.
- [41:16]
Carol Massar
Senator, we talk a lot about the K shaped economy. We talk a lot about, about the gaps that we have in society. Do you blame President Trump for getting in the way of access to capital or affordability issues or is the system really the problem? Because I think it's safe to say under multiple administrations we have these gaps.
- [41:32]
Senator Angela Brooks
Yeah, you know what, fair enough. I think that obviously it's been exacerbated. I think that's by any objective measure our country now. I think the sentiment inside our country, if you look at polling and other numbers, people, Americans just feel like they are further and further behind, I think objectively. Or are they further?
- [41:49]
Podcast Announcer
Both.
- [41:49]
Senator Angela Brooks
They both feel like they're behind and they objectively are. You think about every measurement we can think of. Homeownership, for example. You know my parents, when they married at 21 and 22, they could buy a home within five years of their marriage. The average age of a first time homebuyer in our country now is closer to 40 years old. You know, add to that again what you're talking about, the cost of disposal, everyday living. I think that this systemic. The reason I'm here at Milken is because I believe that there's a way for us to focus on creating wealth for people. People are tired of the whole maybe we should live to get by. Maybe we can make it so you can afford your groceries. There are pathways to wealth that I am interested in making sure that as we see this whole kind of digital revolution that's happening, I think we ought to be talking about wealth, not just getting by. Wealth creation, generational wealth. And those things happen. Of course, again, through homeownership and taking advantage of the whole digital revolution we're seeing.
- [42:44]
Joe Matthew
You're coming at this from a governmental approach as a senator, but you came out here to Milken to talk to private enterprise as well. How does that factor into the solution? How do you get these people roaming the halls at Milken to help you achieve those goals?
- [42:56]
Senator Angela Brooks
Well, we recognize it's going to have to be a partnership between the federal government and the private sector to address, address so many of the longstanding. To your point, these are long standing issues, systemic issues. I know it because I came to the Senate as an executive. As a matter of fact, I'm the only part of my Democratic class who didn't come from the House. I came there as an executive. I was county executive of my county where I had to rely on sometimes public private partnerships. We did so to build cancer centers, to build schools, and to really get our economy going. And I think that same approach, approach
- [43:28]
Carol Massar
is going to be really important that you said that. I think the local level is something that gets so missed in reporting. I think we try to do it really deeply here at Bloomberg, but what's happening on the ground? Having said that, you are here at Milken. The financial presence, as you know, is a big one. Here it is, you know, trillions of dollars that are being managed globally. What do you want to say to especially a lot of billionaires who are pushing back, whether it's New York City or San Francisco, in cities that are fighting taxes and so on. I mean, what do you say to them?
- [43:56]
Senator Angela Brooks
Well, you know, who do you want
- [43:57]
Carol Massar
to have a conversation with?
- [43:58]
Senator Angela Brooks
I think we should have a conversation with both. I mean, you're right, the billionaires are here, the government officials are here. The truth of the matter is that we should all be focused on making sure that we are creating additional pathways for more and more people to participate in the system. It makes us better when we all do better, we all do better. So we creating these pathways. And you know what? I'm here because I want to hear from all sides, you know, tell us how we can do it better. If you have some ideas about the ways that we can do things more cheaply, more effectively, how we can cut red tape, whatever we can do to make sure we're making a more robust kind of effort to include people in economic opportunity, I'm also here to listen. I have some ideas of my own. But you know what? To be effective, it means we're going to have to kind of listen to each other. And, you know, and I'm here to implement those ideas in this Senate spoke
- [44:45]
Joe Matthew
earlier today with the Secretary of Housing and Urban Development, who's at Milken as well. The administration is on the ground here as we've been discussing. And he talked about the cost savings that came with his decision, the administration's move to eliminate the iecc, the energy efficiency mandate that was put in place by the Biden administration. You talk about red tape. He says this takes $30,000 off the cost of a home. Is that the kind of move that you would support? Is that there common ground between the administration and Democrats on this, or is it risky to eliminate energy efficiency? Right.
- [45:16]
Senator Angela Brooks
I think that it's risky to eliminate energy efficiency. I mean, I think we all agree that we want to have more and more efficiencies. I think that there are some things that should be adjusted. You know, it's the reason I'm on the Environment and Public Works Committee. We're looking at some of the permitting and some of the other things there. In some instances there are. Balance is a great word. You know, I think balance is a great word. I'm looking for what the balance is. Yeah, it reminds me of what my daughter said. You know, she told me, coming to the Senate, make sure you listen out for people who don't necessarily agree with you. Take up some space and find yourself at some tables having conversations where you can get to a real solution. Some of those are right in the middle. I think the fringes are where we've been hanging out. I think we're going to have to come more to the middle to find a balanced approach. Because again, as I've said, these are not theoretical conversations. If we're talking about home ownership and talking about ways that we can increase the, the housing supply and other things, energy efficiency is going to be important. But we also have to do so in a way that is reasonable, that's not burdensome, that doesn't slow us down or prevent us from reaching the goal of, of getting homeownership into the hands of more and more Americans, where we know, as a matter of fact, is where generational wealth is created. So we've got to listen to each other. But the balance in it, I think, is where we should be.
- [46:26]
Carol Massar
A lot of wealth created in the crypto market, although it goes up and down, as we know. Let's talk about the crypto bill. Last Friday, you and Senator Tillis unveiled a compromise bill, so called, you know, got into stablecoin rewards. What's, what's the Progress on this and when do you expect or anticipate a possible vote? And how do you deal with the ethics issue of an administration, a presidential family who has a lot of exposure, investments in crypto.
- [46:53]
Senator Angela Brooks
So, you know, I think come a long way. I mean, I'm going to answer that question as well. But if you're asking where we are, Senator Tillis and I have done a lot of work to make sure that we are not only allowing innovation to grow, but protecting also many of the community banks that have been really important, making sure that deposit flight does not happen, that we're not allowing interest and yield to be paid solely on a balance, or that we're mimicking bank like products without the protections of a bank. So we have been working on that, but also making sure that we are allowing innovation to grow and we believe that. I believe it's important for us to have regulated an industry that is already growing. We don't want America to be behind the rest of the world where crypto is concerned, AI and other things. And so really being at the table to, to make sure we are negotiating. Having said that, you're right. There's some other issues, illicit finance, ethics. These are issues that absolutely have to be addressed. And, and we're working with our colleagues. I know that on our side we have Senator Cortez Masto, Senator Schiff and others who are working along in a bipartisan way to come up with some smart solutions so that ethics can be addressed the larger public.
- [47:59]
Carol Massar
But do the Republicans have those same concerns, those ethical concerns?
- [48:03]
Senator Angela Brooks
I think some do. I think that some do. You know, not all, but I mean, similar to what we found on this banking issue and the interest issue, Senator Tillis made a tremendous difference when he joined me raising this as an issue. And we found in doing so that we have colleagues on either side who agree with us. So there are some Republicans who are concerned about the ethics issue and have said that they want to see it addressed and I want to see it.
- [48:28]
Joe Matthew
There's nothing more powerful than a retiring Republican in the Senate right now. You're making friends with the right people. Senator. I'm curious. Look, our audience has really basic questions when it comes to clarity. Is it going to pass and is it going to happen this year? Because when you talk about it, you make it sound like there's still pretty long road.
- [48:43]
Senator Angela Brooks
You know what? I think it can pass. I really do. I mean, I think that this year I think. I hope so. We've had a lot of work. We've put a lot of work into this. I mean we've been working tirelessly for months. What it will mean is we're going have to have some compromise. You know, I think everyone will walk away from the clarity table just a little unhappy. Both the banks and the industry.
- [49:01]
Carol Massar
My zone potentially.
- [49:03]
Senator Angela Brooks
Well, you know what we've compromised and said we want the innovation to grow, but we don't want to create bank like products. Products without the protections of a bank. You cannot pretend to be a bank like product without the protection.
- [49:13]
Joe Matthew
Stablecoin yield. The biggest hold up.
- [49:15]
Senator Angela Brooks
That was a big hold up.
- [49:16]
Joe Matthew
We're still there though, right?
- [49:17]
Senator Angela Brooks
That was. Well, I think we have, I think we've resolved the yield issue. We have resolved the yield issue in a way that I think prevents evasion of the laws. Again, allows the innovation to grow. But you know, we put some, some, I think some barriers in place that will allow both to be a little unhappy. But I think it's a way forward.
- [49:37]
Carol Massar
How does it create more access for wealth creation for a broader public?
- [49:42]
Senator Angela Brooks
Well, generally what we see when we see these kind of revolutions that we see that people who are underserved generally can't get in. The only people who can, who can benefit from them are wealthy people. In this case, when we think about small businesses who using for example a stablecoin can do transactions more quickly and more cheaply, this is, this is very, this is a change. You know, it is something that will allow businesses to grow and allow more and more people.
- [50:07]
Joe Matthew
I think for the debanked, that's where you're going here, right?
- [50:09]
Senator Angela Brooks
Yeah, I think for exactly. For the underbanked and the debanked, these are really game changers to allow more and more people to participate in a marketplace where they have been shut out before now. But again we have to do so making sure we have the right regulation, that we have consumer protections in place, making sure we're protecting them. But for the underbanked and the debank, this is a complete game changer to allow more and more people to get into the marketplace and to be able to participate and to make money.
- [50:39]
Carol Massar
You know, I asked this of our last guest. I have no idea how much time we have because I can't hear it.
- [50:43]
Joe Matthew
I think we're about 30 seconds out, so we'll keep it tight.
- [50:46]
Carol Massar
Number one question, everybody wants to know from you, just quickly, what are people asking?
- [50:52]
Senator Angela Brooks
Yeah, well, you know what? I think everyone wants to know what the way forward is. The people that I tend to serve are concerned about economic opportunity. They want to know what we're going to do to fix the place we are in our country where people are feeling really discouraged. And I think it's by participating in things like this to work together to find those ways forward.
- [51:16]
Joe Matthew
Thanks for listening to the Balance of Power podcast. Make sure to subscribe if you haven't already at Apple, Spotify or wherever you get your podcasts. And you can find us live every weekday from Washington D.C. at Noontime eastern@bloomberg.com
- [51:30]
Carol Massar
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