Houston Police Chief Says Challenge Is Getting Resources

Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot Com. Earlier today, we spoke with Houston Police Chief are to us A Vado to discuss the current situation in Houston on the ground as Hurricane Harvey continues to rain down destruction on Southeast Texas. We started by asking what the most pressing problems were for the Houston Police Department as they continue to rescue thousands of people. The issue for us is

obviously a capacity. You know, we've we've had so many resources trying to get here throughout the state and country, but flash flooding and flooding has impacted not just the city of Houston, but the entire region, a big part of our state, and so you know, we're running on fumes,

but we're still getting it done. In our department alone already has about thirty rescues, So right now you're saying that there are backup efforts trying to get to you but cannot Does that include supplies as well that are trying to get to you. We're having a difficult time

getting supplies through to to the city and to the region. Unfortunately, this storm has sat here for a daze now, but it's also impacted other roadways and so we leave convoys over the last few days of people and equipment and supplies have had a real challenge getting here. I'm I mean, it's still pouring down rain here in downtown Houston. I'm on my way to the heck So Emerge Communication Center and that's becoming a problem. And we've got a bunch of our stations now if I think we have four

or five that we've had to evacuate. So it's just one one challenge after the other. But you know, we're rising to the task and we'll get to it with the help of our fellow Texans and the fellow Americans that are coming here to help. Chief as Surveato speak a little bit, if you can in detail about what's going on at the George Brown Convention Center, and also if you can just give us an update on things like electric and communications networks, airports and so on. Yeah,

well the airports are still shut down. They're only going to be open for uh humanitarian and searching and obviously response uh flights, which means that people are coming here to help us. Uh. The George are brown the centers at capacity. We have I think on nine thousand folks there, but we're starting to open other shelters and uh we'll start transporting up exactly weis to those places. Our water supply is still intact, but you know how that goes.

You just never know what will happen. You know that historically at some point in these storms anyone in the country, you end up having a disruption of water supply. So people should they if they, uh they can make you know, try to store us own your own in your back stupor containers, whatever you can in your home. Uh. Some of the cell piwers are starting to fail. Uh And so you know, it's it's it's what you would expect,

an aread of one challenge after the other. But I'm very proud of the fact that our cities are region and our men and women in the Houston Department, our first responding community, are are still working they've been working NonStop since Friday. What about the main public hospitals. Uh, well, we've had to evacuate. Uh I know of at least one major hospitals evacuated. But you know, we've one of the things that the blessing that we have here in the city of Houston is it are our medicine here

is a world right now. We've got some of the best doctors and nurses, uh, you know, from around the world, and uh, there's a reason that foreign leaders come here for treatment. And so we have a lot of capacity and we've been able to successfully transfer patients safely from facilities that have set down. What kind of aid have you already received from the federal government and what are

you expecting? Well, the relief is that's coming, and we've got people here on the ground, so I'm still trying to get here. We know we have supplies coming. Uh. We we have rescue vehicles here. We've got uh National Guard high high high water vehicles here. But the currents have been strong for votes are trying to rescue folks. So it's just although we have the help, obviously, we don't have enough help. Chief, what's the best way that

people who are listening to you can help. Well. One of the things we don't need more people self self dispatching themselves to the region of we want trying to get here is uh is precarious at best. Yeah, what we need is people to you know, donate to the Red Cross, go to the City of Houston website and uh donate food and obviously the recovery for our the

poor citizens that and residents of this state have lost everything. Uh, they're going to need financial assistance, and so anything you can give, you know, it's uh, we'll we'll, we'll pay it forward. And just lastly, how are you fixed for a fuel, for food, for medicine for you and for all of your colleagues. You know what. It's a challenge,

but we're balancing it. It's really interesting. You know, some a pizza place brought pizza to our folks yesterday and some guys said, well some citizens, Well the rest of the city starving there you guys eating pizza. What he doesn't know is that our folks have been going not going home since Friday. Their families are but that their

families have been evacuated. If we can't feed our first responders, then nobody's going to respond to a lot of people are still unparil so it's a challenge to get all these things done. Our officers are being they're out of uniforms. We need help trying to get these uniforms washed because they've been contaminated. They've been in chest high water rescuing people. And so we're not making excuses and we're not going to stop and we're not going to arrest until this

job gets done. That is as saved oh he is the chief of Police for the City of Houston. As those rescue and relief efforts continue. And Lisa, just to note, you know the seaports in Houston as well as in Corpus Christie, they've been closed to most ships before Harvey made landfall last Friday. This means a lot of rerouting for those ships for the freighters. Also, rail traffic has been suspended. UPS has suspended freight service in Houston and Beaumont, Texas.

So there's going to be not only a humanitarian issue that needs to be dealt with, but there's also going to be an untangling of transport uh transport lines and transport networks. Indeed, and the police department in Houston sure has a lot going on. They've rescued more than three thousand people, and there are reports coming out today that there have been looters that have been violent that they're also trying to deal with. So quite a quite a

situation that's unfolding. Also, there is a question of what the death toll is. So far, it has remained fairly limited, but many are expecting the numbers to rise. So definitely a tragic situation right now unfolding. Yeah, and some forecasters are saying that Houston will see another two feet of

rain as it continues to pummel the area. Amazing, and this will obviously also raise questions about how this will get paid for and flood insurance which is currently provided by the US government in an underfunded and actually unsound program, the n f I P Let's turn our attention now to the energy markets. Right now, nimex gasoline is higher by more than two percent. The crude oil is falling one and a half percent. Here to have explain all this is Stephen Shorky is the president of the Short

Group and he joins us now. Steven, thanks very much for being with us, So just briefly explain the diverge because on the surface it doesn't seem to make a lot of sense, but I know it does well. Absolutely. Hurricanes historically tend to be very barish for the stuff you put into the refinery crude oil, and very bullish for the stuff you take out of the refinery that

is the product. And this is because, of course refineries now in the Gulf Coast epy center, a good majority of them now or a good share of them I should say, are shut in. So when the refinery shuts in, a refinery is the only person in the world that actually buys crudal physical crudal. So when you have that much capacity right now shut in, and right now the capacity that is linked to the New York Mercantile Exchange, one out of every four barrels of refining capacity is

now shut in. So that's a lot of crudal that's floating around here. But the real big difference between this hurricane and the last hurricane that we saw in this region two thousand and eight with Hurricane Pike and Hurricane Goose stuff was the reversal of a major pipeline. Back in two thousand and eight, we used to take Rudel into the Houston market area and ship it up to the middle part of the country and into the Chicago

market area. We reverse that pipeline in two thousand and twelve, So now there's a lot of oil that comes from Canada and from the Upper Midwest down into the Euston market to go to those refineries and then go to the export market. So now with the situation of the refineries being shut in so you can't boil that oil, and with the ports closed you can't export that crude oil, we are now in the process of building a very large glut and crude oil prices, hence why we're seeing

them barrish reaction in the crude all market. Conversely, as we said, if you can't boil crude oil, well you can't make gasoline or diesel fuel. Hence why those markets are rallying over the past few days. Right, Stephen, that's fascinating. I'm looking right now at crude UH at a little bit less than forty six dollars a barrel. Are you thinking that perhaps this price will go substantially lower should the closures of these refineries get prolonged for for several

weeks or more. Yes, I do because we also have to appreciate what time of the year we are at. We are now approaching the Labor Day holiday, which now means this summer holiday driving season is over. So guest Lene demand was about the fall regardless, that means we're also heading into September October, which is the fall maintenance season for the refineries. So the refiners were already starting to pair back purchases because they were going to go

into maintenance. And so of course when a refiners in maintenance, it's not boiling oil, it's not buying oil. So therefore, with what this hurricane and if we see prolonged stoppages in and this, we're just these stoppages are just going to roll over into the maintenance season. So we could see a prolonged maintenance season and a tremendous amount of demand destruction already on top of what we're experiencing. So how low do you expect crude values to go in

that scenario? Area? Uh? In that scenario, if we take out now normally between now in Halloween, we could expect crudal demand by us of finders here in um the fall anywhere between eight hundred thousand barrels a day upwards of over one point two million barrels a day. So if you take that normal uh seasonal demand instruction, and then you uh you compound it by extended closures because of hurricane related damage, then certainly we're now at the

bottom of the range. We're in that mid forty dollar range. This is exactly where crudal has more or less found support over the past two and a half years. We have had some outliers, some dips below forty, even a dip below thirty. I'm certainly not expecting a dip below thirty, but any sort of prolonged outage both related to refinery capacity and also the export market with the port closures and pipeline issues, we could certainly see that forty dollar

barrier tested in a perfect scenario. Well, Stephen, maybe just the expand on that, because some weather forecasters say that the Houston and the that area in Texas could see another two feet of rain. How long does it take to restart one of these refineries and what kind of safety checks do they need to go through in order to even start that process? Right now, the good news here is, unlike two thousand and five with Hurricane Katrina, on that Friday, if we recall for everyone was expecting.

Every meteorologist thought that storm was going into the Florida Panhandle. It took a nasty turn over the weekend, and by Sunday, of course, it devastated New Orleans and the oil and gas infrastructure in that area. The good news here is this storm was well followed, so the industry initiated it's emergency protocols and a timely fashion. They shut down in

a timely fashion. Even better, unlike Katrina, this storm did not develop into a monster cats fork storm until it was close to the shore, so you're not going to get it didn't have enough time to build up that wall of seaward that to flood the areas. Yeah, I mean it could have been. What I'm saying is it could have been a lot worse. So that said, the ongoing rain PIM is a problem because right now the closures with the refineries are in the Corpus Christie, which

is west of Houston up to Houston. Now, with the track of all of this rain, we're moving towards the Texas Louisiana border, so that's going to threaten the Port. Arthur Beaumont Texas Refinery Epicenter. That's another one point five million barrels of refinery capacity. And then we can go into the Louisiana to the Mississippi Coast Refinery Center. That's another three point seven million barrels a day of demand.

So that's a considerable amount of capacity that is in the wake of the storm that is susceptible to flooding. So we're by no means out of the woods, so that that this is still a bullishry event for gasoline prices. Stephen Shark, thank you so much for joining us. Stephen Shork as president of the Shark Group, also the author of the short report. Well, overnight, North Korea did do another missile test, in this time it went over Japan.

Japan called this unprecedented. And here to give us a little more perspective on how this changes the backdrop for the US negotiations and dealings with North Korea is Brad Taylor. He's retired Special Forces lieutenant colonel, also author of Ghosts of War, which is available in paperback now. And Brad,

thank you so much for joining us. I know that you were part of the Combined Unconventional Warfare Task Force review of how the US is dealing with North Korea, and I would love to get your sense of how much this latest provocation from North Korea ups the anti ups the tension and changes the backdrop for the US dealings with that region. Well, it uh at tensions quite a bit just because of the tensions where were at right now. It just amplifies it. But it's not you know,

Japan screaming about it being unprecedent. It's actually the third time the missile's gone over Japan, so it's not entirely unprecedented. In the past, they always said they were launching the satellite uh no, satellite made into space, and so at least they were willing to camouflage the fact that they're testing the missile. This time, they just launched a missile, didn't say anything about the satellite. So it's definitely a

poke in the eye. Uh Some of the unique things of it they launched this thing from Pyongyang right outside during the National Airport, which in the past they've alays launched them out in the hinter lands in the military basis. Basically, they're saying, you know, if you want to do a first strike or not, you have to take out Pyongang, which definitely amps up our capabilities for first strike. If you are going to write this as a novel with a happy ending, what would it be like? And then

you can give us the alternative. I don't think there is a happy ending for this one. They're not going to give up the nuclear missiles. They've seen what happens when other regimes give up the nuclear missiles market off. He gave up his missiles, and you know, ten years later we came, we saw he died. So I'm a saying gave his up. We took kids regime down. So he wants the missiles. For him, the missiles are intertwined

with his regime's stability. So when we say either get rid of the missiles or lose your resime, that's the same thing. To him. Getting rid of his missiles, it means the loss of his regime. So he's it's really off the table. Now. He'll certainly do talks, and we'll do bilettle talks and six party talks and all that kind of stuff, but he's going to keep marshing forward. So what is a better case scenario than a catastrophic altercation that leaves thousands and thousands of people dead in

the region at this point. Well, the best case would be of China. You know, China has all the leverage in North Korea. And if China started leveraging the sanctions and we you know, this is our seventh set of sanctions and they were all voted um unanimously, so that's not unprecedented either. What happens though, is Russia and China failed to enforce their part of the sanctions. The problem with that is it's not in China's interest to enforce

the sanctions. They do not want. I mean, sanctions work because you struggle, you hammer the people so much the leadership decides to change. Well, in this case, the leadership doesn't care about the people. So the only way the leadership would change is if the people overturned the leadership. And China definitely does not want that. What China does not want it's against their interest to have a unified

Korean peninsula underneath this way of South Korea. Right. Well, I mean we were talking with j Leftwitz a couple of weeks ago, who was the former Human rights envoid to North Korea for the US, and he was saying, look, the US has to drop this UH unified Korean Peninsula concept entirely to get China on board. Do you have any sense that the US is taking that approach and is moving closer to some kind of agreement with China that would actually tighten the screws on this situation in

a non catastrophic way. I think they're doing it right now. China historically when they sign a new sanction, they go ahead and do it, and then something will go along later on a couple of years down the road and they'll start slipping up on it. So on the surface, yes, they're all going to be on board. The one thing that wasn't reported, Russians actually flew a fleet of nuclear

capable bombers out of the Sea of Japan. They got interest upted by South Korean UH fighter jets during the exercises we're doing last week, so they're they're playing the game too. Do you have any idea what exactly does the leader of North Korea want from all of this? What I think he wants is just to survive. That's what he's looking at. His his sole function in life, his regime survivability. His father was the same way. His grandfather who started the country was the same way. That's

what they want. So is it possible that there's some way that either the United States, China, South Korea could ensure his survivability and say, all right, survive, keep your weapons, just don't launch them. Well, yeah, that's one school of thought is exactly that we might as well live with it. We live with it with Russia, we lived with it

with Pakistan, all these other nuclear capable countries. But the problem is, you know, his thing is if he thinks his regime's going down, he's gonna launch everything he's got. He's going out with the blaze of glory, which makes it very hard to do any kind of provocative actions against him. So he launches a missile over Japan. We know it's not gonna hit anything that's a provocative if we try to do the same thing to him, he's

loved to trigger and say they're attacking me. How much closer are we to a nuclear altercation at this point? I don't think we're close to a nuclear altercation. But what people fail to remember is that, uh, he's got five thousand tons of chemical and biological weapons. He's got enough devastation there he doesn't even need to use a nuke UH and if it if he launched all that

into South Korea. Most of South Korea, the population is within the artillery fan of North Korea, and you can't It doesn't matter if you have a sad missile system of patriot battery or whatever. You're not taking out artillery. It's going to be devastation on a biblical scale. Well, Brad, let's let's say you get the call from the White House and they underscore that they don't they're not playing politics here. They just want an assessment of what you

would recommend be done. And there's no issue about whether someone comes out looking good bad, or you know, whether they made the right decision in the past. I think the first thing that needs to be done is that the administration needs to get on the same set. To me, is it it about what signals are sending? When Rex Tillerson says we have no reason, I have no desire for regime change. We want you to talk, come on, let's talk, and then President Trump says I'm gonna rain fire and

fury on you. That the posting party's seeing both those signals. Now he's trying to read, what does what does that mean? Am I getting fire and fury or do they want to talk? Well? Was it sort of encouraging to you that we did not get an immediate response from President Trump via Twitter, but after a market and noted silence, there was a very thought out statement that came from

the White House instead. Yeah, I was, and I actually thought about now, He's called the hermit Kingdom for a reason, so he's definitely ensconsin his own little world there, but he does get news. And I wondered to myself, was he seen the devastations from Hurricane Harvey and thought this would be the time I can do this with a little blowback because they got their hands full. I don't know if he's as smart or not, but it did

cross my mind. Is there anything that the South Koreans should be doing that would make the situation less perilous there? And they're they're doing pretty much what we want to have a new president in there right now. Although he did do a pretty provocative act when the missile went off, he launched a bunch of the exercise going on an ulti Freedom Guardian, which is really a tabletop map exercise. It happens by annually. It's not that big a deal.

But when he launched the missiles um, the President ordered F fifteen strike to simulate destruction of the regime. So I'm not sure that was a smart thing to do. It sounds as if you're you're saying that there's no one person in charge who can really make these kinds of thoughtful decisions. Where am I wrong? No, it's because it's super complicated. We'd like the world to be black and white, but it's a complicated situation and everybody there has a vested interest that is not in the same

vested interests of another party. So China has a lot of sway there. But China's goals are not our goals. We have sway. Our goals are not Russia's goals. So there's just a lot of you know, it's just a gray area's it's really hard to solve. I want to thank you for joining us. Brad Taylor is an author and consultant. He served more than twenty years as a US Army officer and also participated in the Combined Unconventional Warfare Task Force of a Unified Plan for Defense of

the Korean Peninsula. All right, let's turn our attention to the world of luxury and to help us do so, we have Bob Shulman. He is the founder of the Shulman Research Center. They're based in Riverside, Connecticut, and the latest report is Insides Brief Insights into Luxury, Affluence, Wealth and More. And to tell us more, Bob is joining us here in our studio. Bob, thanks for being here.

Delighted to be here. Before we get into any other results of the study, I'm wondering if you could just parse out who are the people that were surveyed and did they really count as the wealthy shoppers the wealthy

consumers in the United States. We surveyed approximately consumers, and we structured it in such a way that we were able to focus not only on people with what I would call high incomes and wealth, but also what I call mass market Americans, people with we call more average incomes who also treat themselves to entry level luxuries, which

are very important to the big luxury brands. I mean a lot of people don't focus it on it, but if you speak to the people at some of the major luxury companies like lvm Ajor Caring, Uh, they do care about mass market Americans. There's like a d eighty million of them versus the people with high incomes and wealth. And they buy a lot of champagne, they buy a lot of kerchiefs, they buy a lot of i'll call

entry level high end watches. The matter yeah, well, and but you know, the survey is certainly matters and is interesting I'm sure too wealthy individuals themselves, but much more so too these brands that you're talking about, right, this is really the audience that is curious of how the appetites are changing for these luxury purchases. And uh, you know, in your latest survey, what were some of the most notable aspects that were different than well, more and more,

I mean shopping. And that's really what the brands care about. How American consumers shop for their products and services. The shopping behaviors continue to go more and more. There's two aspects, the search and the actual buy. And searching is almost universally done online today and from my observations over the years,

the digital brand. The luxury brands have been slower than many other brands to embrace digital because most of luxuries heritage is based upon quote unquote exclusivity, and they've had a difficult time coming to grips with the fact that even some of the older wealthier customers who buy the high end brands where they have great margins, are now doing their initial shopping online and they care about how things look online and their ability to basically buy online.

Is there a natural diversion between those that are seeking experiences that already own all the luxury stuff they want and perhaps younger shoppers or younger consumers. Clearly, I mean when you get to some of the will call it older wealthier people who have closets full of some of the beautiful brands, draws full of the nice jewelry. Uh. Effectively, those people have the opportunity to travel much more, and they're also getting more into the article expressive parts of

their lives. When we look at you know, depending on how you define wealth, but recently we looked at five million plus, which is a high end group. There's only about four million people in America adults who basically fall into that. It's a very elite group, one of whom

is our ex President Bush. But they're into painting, They're into doing things that they want to do, because when you get to a certain level, you no longer have any obstacles to buying the products or services you want, and depending upon how you grew up in your education level and experiences, you start looking at things that the average American can't do because they don't have the wherewithal So, Bob, I have to wonder, are there any luxury brands that

are trying to cater to uh that type of activity, say painting or taking you know, cruises, luxury cruises, or having experiences that people have always wanted to do and they have the money to doing more and more. You're seeing some of the major what I would call luxury

groups like LVMH and Caring do it. I mean to me, one of the major i'll call it changes UH was when LVMH launch sever which is their website that basically puts all their brands in one spot so a consumer doesn't have to hunt and peck for the brands they are looking for. I don't think many people are aware, but LVMH did something like that like fifteen years ago, and they were ahead of their time. Now, depending on how you look at it, there behind the times, but

you know, the people are getting with it. L v m H hired somebody out of Apple. I mean these brands and these groups can do it when they realize the shoppers are changing. You know, the future for them are the millennials and eventually gen Z and these younger people don't necessarily have the time or the desire at this time in their life to go to stores. They need to get them to try their brands, whether it's taking an entry level cruise or taking but going to

a pop up store that sells. Like way back when Airms sold in Grand Central, they sold three items, two fifty dollar kerchief, a men's tie, and one other thing as I remember, but they were in the corner of Grand Central and the place was mobbed with younger people who never saw an air Mez store. They need to get out there, and the way to get out there today, whether they like or not, includes digital sports. I want

to tell us about a sporting events. Sporting activities very important. Again, they get the opportunity to, depending on how you look at it, re live their youths, depending upon the teams they were into. When you look at the really wealthy people, the vast majority worked very hard to accumulate the wealth. When they get older, and if they're even young and retire or step out will say they now have the opportunity to enjoy what they did where. You know, most

Americans don't ever accumulate that. The smart ones take the time and start basically experiencing and using their wealth for their own enjoyment, their families enjoyment, and frankly, the fellow owns this company gives it away because his attitude is I can't take it with me. Bob Shulman, thank you so much for taking the time. Bob Shulman is founder of the Shulman Research Center in Riverside, Connecticut that looks at the trends in luxury spending. Thanks for listening to

the Bloomberg P and L podcast. You can subscribe and listen to interviews at Apple Podcasts, SoundCloud, or whatever podcast platform you prefer. I'm pim Fox. I'm on Twitter at pim Fox. I'm on Twitter at Lisa abramowits one before the podcast. You can always catch us worldwide on Brog Radio M