China is Not Monolithic, Tsang Says

what does he do if things have been unruly? He asserts himself and shows whose boss. If the old regime was largely peaceful, successful, he follows the old sheriff's protocols. So is it time to follow the old sheriff's product tools. Let's ask Brian Levitt shown we openheim At Funds Senior investment strategist, BRIANO. It's great a cash up with you. Is that what today is about? Keeping the peace and not saying too much? Yes, that's what today is about.

And this is a federal reserve who is going to be gradually raising interest rates. But you'll hear things like data dependent and you know the expectation of continued improvements in the US economy and and rising inflation expectations, which is all good news for the equity markets and good news for households. But UM, remember the Federal Reserve is still looking at their preferred measure of inflation, which is below their comfort zone. And and so we have some

time here. I think that investors shouldn't get too concerned that this tightening cycle UM is gonna curtail this cycle anytime soon. There is some excitement out there, Brian about the prospect of moving from three hikes to four. One on earth with a new chairman Jerome pal come in and make that move, to communicate to the market this early, He would not, And and I gotta be honest with you, I don't see why why anybody would UM want to set forth and say we're gonna have four interest rate

hikes in the coming year. Remember the last or in this year. The last time we did that, I believe was in late early sixteen. Stanley Fisher was was signaling four interest rate hikes in the year ahead, and the dollar rallied substantially. So the Fed wants to be cautious on this. The good news is this is not late growth outside the United States looks a lot better than it did in late so we don't need to see the dollar rally significantly on the back of interest rate hikes.

But if the Fed gets too tight, they could flatten the Yelk curve and and increase the dollars. So I don't We're not going to hear four interest rate hikes this year. We're gonna hear, you know, gradual rise in rates, but it'll be data depending at each meeting. So another question that overhangs the new leadership of the Federal Reserve is how willing he may be to allow for an inflation overshoot. Big conversation about that brant going into this um.

Do you think this Federal Reserve is willing to accommodate an inflation overshoot? Well, it's spect that this this Federal Reserve is going to be willing to allow inflation above two percent for a period of time. That doesn't mean high and rising inflation, like there's a there's a level where high and rising inflation is detrimental to businesses in the equity market. But when you're coming out of a deflationary scare in two thousand and eight, a deflationary scare

in sixteen. The last thing you want to do is harm the first time you see any real hints of inflation. Brian love it with this with Hoppenheimer Funds. Good morning everyone, John Farrell and Tom Keen. Huge news flow this morning, just just just stunning what we had to deal with early in the morning. We're gonna do a lot on that, particularly this this amazing British merger of Sky TV, and of course we're hugely advantage toy of John Farrell where this Who's do you watch a lot of Sky John?

And like a Sky Yeah, Yeah, fantastic platform. Brian love it with us. And you know what's interesting And I mentioned this yesterday at chart by Dean Baker or SEEP showing inflation and taking out shelter and there's still no inflation when you take out shelter. This sort of reminds me of Janet Yellen and cell phones, where she's gonna be He's gonna be in a press conference and they're gonna go raise Race, Race is gonna go yeah X shelter. But there's a lot of yeah butts when he goes

to his first press conference. Well sure, but if I mean there are there're gonna be some components of inflation, some things that we purchase going up in price, but the aggregate numbers are still I mean, we look at a lot of things that we consume. We are the beneficiaries of as consumers, as lower cost labor around the world, UM, automation, uh, things that are bringing the price of a lot of

our goods down. So we do and we and we have not seen the substantial credit growth that usually leads to a significant amount of money chasing too few goods? Should we do a chart for bluebird radio work? So he should do it, John two thousand two. Cleveland CPI my favorite number. I know. It is up to two points six zero percent early this year off a cliff, and it's rebounded about two thirds. But the Cleveland CPI

hasn't broken out yet. Granted, the vectors in the power like you know, one to three four rate increased direction, but we're not there yet. And co PC isn't there yet either, Brian. So it just makes you wonder what the thinking is either the Federal Reserve. Now, I know it started to improve recently, at least in terms of how they would view things, but quite obviously to a lot of people. The bias has been to hike regardless

of the data, even though they tell us the data dependent. Um, can you give me some insight as to why I think the people believe that there that were the economy is doing better, the patient is, you know, out of the emergency room, and there's no reason to a lot of people to have this type of ongoing support for the economy. What I would counter with that is, you know,

we've gone through the de leveraging process. The economy is doing well, but the last thing you want to do is curtail the cycle unnecessarily when more households are are participating in the economic expansion and there's still more people left to come into the equity markets. I also think one of the concerns, Jonathan, is that we have never seen stimulus to this extent this late in the cycle

on the fiscal side. So you know, those that grew up in the late seventies and early eighties have this fear that we could get back to the environment where inflation gets out of hand. I would counter that by saying, we are a long ways away from what we saw in the late seventies. In the early rise is a really important theme that staving and drive at Raffiki has

been up running some research about recently. It's how does the Federal Reserve communicate that it's leaning against the policy goals of this administration by having tied to monetory policy, because you're getting sophiscal So now, serious, serious question, How on earth does the Federal Reserve communicate that effectively what it's going to be doing is leaning against the policy goals of this administration. Yeah, and we do have an independent central bank, and I hope that we continue to

have an independent central bank. And and so the point is on the administration and Congress are going to be stepping on the gas pedal at the time that the Fed is going to be stepping on the brake. So what you get in the States is a bounce between expansion and slow down. And my opinion that's fine for markets. But I think markets will outperform when you have recovery

and expansion. That's the international and emerging markets. Brian Levin, thank you so much, greatly appreciate with and now, and particularly after our discussion yesterday was center deportment of Ohio. I'm gonna try to get away from the drone of the different issues of Washington, and I can do that nicely with Margaret Tullef. She's our senior White House correspondent. UH loads and loads of perspective here on the history of the White House and on the temperament of the

White House in this fractious February. In the March of two thousand e tream Margaret. There's a paragraph off of Laura Litvin's work where the President had a private lunch Sunday with Wayne LaPier of the n r A and their top lobbyist, Christopher Cox. He's spoken with Paul Ryan, He's spoken with Mitch McConnell. And there's going to be a bipartisan lawmakers meeting tomorrow with the President. What is he going to say to them or how is he

going to listen to them? I mean, it is really the most important question right now when you think about the prospects of having any legislation or change come out of this tragedy. And so far the reaction from Capitol Hill is that the President, who has been a little bit all over the map. On the one hand, E and his top aids have said they have a sense

of urgency. There is a moment here there is a window they want something to be done, and then on the other hand, they have not yet come forward with specific asks. This is what we wanted to plan, this is what we don't and he's thrown out things like

army teachers or whatever that are. You know, lightning rod is not going to happen at the federal legislative level, and so a lot of lawmakers in the Republican Party are now either waiting for guidance if they're in the camp that wants something to be done, or are not waiting for guidance and think very little as getting done.

And Democrats are in an interesting position because while the overwhelming majority of the Democratic Party uh when they go home to their constituency say they want this, there are an important handful of Democratic lawmakers to particularly in the Senate, particularly in tight races this year, who don't necessarily want to be having test votes on something unless it's actually

gonna happen. You know, Margaret, what I find so important here, and you've got a lot more perspective at watching paint dry than I do, is the advantage here for the entrenched Republicans is to let time go by, and the time will slip by and we'll move on. Is that the arch presidential strategy? Well, if that's what the president is trying to accomplish, that's certainly always true. But I really am hearing from inside these what the president does

want to get things done. The question are what does he want to get done and how does he want to get it done? And in my conversations last night, there seems to be a strategy emerging with the White House where they would they believe that it makes sense to do this in waves, but if you do sort of an omnibus gun control package, there's too many constituencies who will be against too many little parts and the

whole thing will fall apart. So they want to do this low hanging fruit first, this six Nick's thing, and then they want to come back with school safety grants and then kind of come back and try another wave. It looks like one of the immediate casualties to all of this is the prospect of raising the age on the faults. Why is that one? I had three people yesterday asked me the why of that? Not that I have any unique wisdom on this, but let's parse and whatever the gun is an A or whatever the gun

is that that that creates this horror? What's the difference between sixteen eight? Hike? Right? I think the simple answer, and there really are no simple answers in gun control, is that this is a crucial issue for the lobby, and it is an issue that UM lawmakers, either who believe in this ideologically or who faced primary challenges, don't want to fight out. But even the White House, and I talked to officials in the White House, they what they kind of sigh when you say, what are the

prospects creating the age? They say there seems to be a different UM gun instinct or reaction on whether a little bit more can be done on background checks. The bump stock thing seems to be easier, but uh, you know, whether this goes to gun sales. Are in the right to bear arms? It is like it's an obvious question if you can regulate um, you know, alcoholis, why can't

you regulate the age of having a gun exactly? I mean, I mean, you know, you're Margaret, You're way too young to remember when they took the drinking age from eighteen up to twenty one. And you know, we had guys literally dying in wars in Asia while we were raising the drinking age. Nobody really could figure out. Yeah, you know, I didn't miss the cut. I was living it and it was sporting to say. At the least, Margaret Tell, when we look at all this, you'd think conversations would

be engaged. I tried to do that yesterday from the junior senator from Ohio, Rob Portman, the Senator from Cincinnati. We talked about Holland, Ohio on the border with Michigan, and about he has a constituency with a real agricultural fabric and they believe in an n r A of a different time and place. Is the President engaging the

Rob Portman's of the Republican Party. Uh. The President does not seem to have decided precisely what he wants to ask for yet, And what we do know is that he's engaged the n of the world and talking to the K Street crew, when with the starting point so far has in terms of those behind general discussions, has been basically, what can I get without too much of a fight? Could we start there? If he wants to get something big done, he's gonna need to flip the switch.

But he seems to have decided were now that getting a few smaller things done is pieces may be more effective than getting a big thing done, Margaret to shift gears here in the final few minutes we have with you, um this morning. There seems to be a great curiosity within the zeitgeist and certainly within my messaging and email from listeners over the future of the two generals, General

Kelly and General McMaster. Do you lump them together? Are those two separate conversations for the President, for Mr Kushner and others within the White House? Well, we have always been really different figures. I mean McMaster came in and as kind of a caretaker after Mike Flynn debacle to stabilize things, But things with he and the President were always a little bit on easy. McMaster's, you know, like it has a different kind of style and has been

more of a facilitator. Kelly is this guy who he and President Trump were sort of forged in the crucible of the immigration fight. And he's like a you know, like a manly man like getting there and gets stuff done, and and he has that sort of the generals of the Capital chief thing that President Trump vincerally responds to. But then of course became competitive with almost instantly. You

could like see that coming three miles away. So in their uh, in their manner, they're completely different in the type of ways in which the interact are completely different. The one thing they have in common is that they're sometimes chafe at one another, and that President Trump has had tensions with them both. I do see them separate in terms of the specific calculus. McMaster's job is, by

design is more of a facilitator job. The chief of staff job, particularly when you have a president without real political experience, is uh much more kind of one of channeling, you know, power and decision making. So but they do both speak to kind of that push and pull about Presidents Trump's desire to have competent leadership versus President Trump's desire to have the flexibility to pivot when he wants

to Thank you so much. I could go to the tweets of the President today, but we'll leave it that Margaret Tell has been more than generous with her time. Our senior White House corresponded her interview of the day on Sky Craig Moffett Moffett uh Nathan Soon Mr. Years writing Black Books at Sanford Bursting. Craig I want to cut to the chase. US satellites doesn't work, Sky satellites. What's Comcast getting themselves into with satellites? Yeah, good morning Tom.

You know, look, I think that's going to be the question of the day, and I think that Comcast investors are going to be scratching their heads over this um for a while, irrespective of whether they actually win the bidding here or whether Disney comes in and top says, when satellite has been proven to already be an obsolete technology in the US and and starting to go into free fall, why in heaven's name is Comcast saying we want a piece of that in Europe before that same

evolution takes place. Within this is the profitability. I looked at the Bloomberg quickly, and it looks like Comcast is way more profitable than Sky. Can they move the needle down? The income statement on emerged Sky TV not clear why? I mean, you know, Comcast is a good operator, but it's not clear that that Sky is not a good operator. And so um so I'm not sure that there's some missing magic sauce that Comcast bring to the table. Well, explained US Craig. Why then a T and T in

their direct TV operations? Is that not successful? And I thought that people were cutting the cord. People are cutting the cord and that's the problem for a T and T and direct TV. I mean, look direct tv, um, they bought direct tv what two and a half years ago for eight times ibata UM. Two and a half years later, Ibada is growing at negative at direct TV.

Subscribership is starting to fall pretty rapidly. Subscribership for Dish Network is falling at almost ten percent a year, and there he does, falling by five Um, Why in Heaven's name again would you want to own a piece of that?

When you look in your colleague and crying Michael Nathanson, When the two of you look in folks generally Mofatt's hardware, wireless, Comcast, and Nathanson does touchy feeling he gets to go to the movie openings and where exactly you get to go to conventions about plumbing and pipes, Craig, when the two of you got together on this, to me and Pim, it's started with eight T and T time, Warner, let's back up. Why are we having a mating of everyone

in all in media? Um? Well, the first the first thing I would say, is it's not entirely clear that we are. UM. But let's go back into the dark ages for a second. UM. When there were a set of rules passed way back in in UH in the UH in the Cable Act that that created a prohibition carried through the Telecom Act, that created a prohibition for vertically integrated UM operators against withholding content from their competitors.

Those were called the program Access Rules or the exclusivity provisions of the Program Access Rules in in Layman's terms simple language. They kept it. They made sure that if you were a distributor that also owned content, that you couldn't exercise under market power by withhold thing that content from, say a satellite operator and leaving them from being able

to compete. When those rules sunset. There was back in two thousand nine, there was some speculation that that the doors had been thrown open to vertical integration and that new strategies that would effectively work around content exclusivity UM were made possible UM, And that may still be true. UM. You know, Comcast agreed to provisions that would UM that would prohibit that kind of behavior for the first seven years. Well those seven years expire um, sorry ten years. Those

those ten years expire in June. In Mark, I mean, so next month you're going to get to find out whether Comcast can do some of those kinds of things. A T and T may be able to do some of those kind of things too, and if so, you could see more of these types of deals with the time that we've got left with you. Is Mr robertson a bidding work. I mean, this is all the dusk in a settle and the whole I did an extrapolation chart which I can send and you can give me

your royalty and off at Nathanson. But I did a log extrapolation chart. We're right on extrapolation and by definition it's got to go for one or two standard deviations above the eight year trend. That tells me bidding war. Is that what you guys see here? Yeah? Look, I think UM Disney will have to come back um and decide what it wants to do here the markets already

anticipating that there will be a higher bid. Um. I think the real question here is is this a prelude to a Comcast bid for the rest of the same Fox assets in the US that Disney is trying to buy and this doesn't preclude that in any way. And they were on their conference call they were pretty clear that um that they aren't ruling that out. They didn't

want to talk about it. And so if the judge in the COMCAT or in the Time Warner A T and T case approves the vertical integration of a T and T and Time Warner, then the regulatory door is open for Comcast to then try to buy a box. And you can see a bitting war for the rest of Fox. That a lot hinges on what happens in that A T and T Time Warner trial. We'll have much more to say, I'm sure, Craig Moffatt, thank you

so much. On short notice, Mafitt Nathanson, if you have been taken by the news out of China, this is without question, I've only the interview of the day, but the interview of the week. On short notice. I'm absolutely thrilled to bring to you Stephens Saying out of Oxford now at the University of London, and they're wonderful School of Oriental and African Studies s o A. S Dr.

Saying is absolutely definitive. His one volume on Hong Kong is heartbreaking at its end when Chris Patton hands over the keys to the Chinese doctors, saying, wonderful to have you with us this morning. Were you surprised by the dictatorship or the extension of President Gee's term. I was surprised that he would push it for the extension of the potential extension for his term of office as State president.

I was surprised because it is unnecessary. The State presidency is a ceremonial position, is not an office with real power, and the office of real power is being General Secretary

of the Communist Party of China. There's no limits to how many terms he can serve as General Secretary, so it's not necessary for Ji Jimpings to extend his um potential for him to stay on a state president, knowing well that there will be significant discomfort within the Communist Party and the population at large, and yet he pressed for that within This is the divide between presidents activities

foreign and the power play domestically. Does this set him up more for foreign advancement with his relation with other nations, or does it have a stronger domestic component. I think he's a strong component of vanity more than anything. Else. The only difference whether he stays on as state president in twenty three or not, it's whether he can have

formal state visits. When he travels overseas as the leader of China holding the office of General Secretaryship of the Communist Party, he will be treated as the leader of China wherever he goes, and he will be able to have some meetings. She just cannot have sat to day foremost day visits. And that is the only difference, doctor saying.

I went back and looked at an interview I did on September fourteenth of two thousand four or fourteen years ago when the acclaimed Marshall Goldman, who at the time was in Moscow, and really it was one of those days where he realized and others realized that Mr Putin was going to do a power play and maintain his decades long influence. Did we see a Putin equivalencye yesterday and Sunday? Did we see did we see President g try to get the power that we have perceived out

of Mr Putin over the last decade. I think we saw confirmation over the weekend wather than the indications he made, the indication that at the nineteenth Party Congress last October when he broke with the convention after majodong In not allowed going a successors to him to be named at the nineteen Party Congress, which what happens the Constitutional convention um.

What he did over the weekend was to confirm that this is indeed his intention to do so, and he will do so not only by holding power, but holding onto the three top offices that he holds currently at his own pleasure. Your magisterial A Modern History of Hong Kong, which folks, it was my book of the year too long ago, and Stephen Yang's younger days Doctors saying you ended with a chapter building a new Kitchen. How's the building of the new kitchen going in China and for

that matter, in Hong Kong. Well, the new kitchens that Chris Patton built in Hong Kong just before nineteen nine was complete, lead dismountled, and so that is now gone, and Hong Kong is increasingly under pressure from the Chinese government to hold the line, and this will continue even

further under ci gimping. Now in terms of what's happening in China, I think what is disconcerting most is that the way, what the way how Jimping is managing things means that he is reducing the scope for internal debates before policies are being made. China has a very unusual system compared to ours. Both the American and the British systems can deal with mothering food, we can steal with leaders who are not particularly fit for office, because the

system will limit what damage they can do. China has a system that requires the Communist Party and its leader to get its policies right really all the time, in orders to in orders to deliver a better tomorrow for

everybody today. Stephen saying with us. Of course, he's with the uh School of Oriental and African Studies at the University of London, Doctor saying, let me bring in my colleague, doctor saying, I was wondering if you could offer your thoughts about what are some of the assumptions and the misconceptions that particularly investors or even policymakers in the United States have about China. They look at it as something monolithic,

and they may not even speak the language or other culture. Well, China is not monolithic monolithic um At the moment, it may largely speak with one voice because basically sh Jimping doesn't want alternative voices to be heard. It doesn't mean there are no other exist even in the current situation

with the UH. With the way how c Jimping has to manage the two steps U confirmation of his intentions to stay in office and stayed in power for a very long time, it shows that he is still facing obstacles. He could not have both at the ninete Party Congress back in October. He has to deny somebody becoming his successor in the Nineteing Congress and wait for another four months before he could ask the party and the country to approve the prospect for him to stay on as

state president. I mean that shows that he is not completely absolutely UH in control and there are other voices, but other voices will not come out unless and until She Jumping gets into serious problems, perhaps with the economy in China in serious trouble. What do we overestimate and underestimate when we think of the power of President Ji Jimping. I think we would overestimate if we try to compare

Si Jimping with Machadong Uh. Si Jimping is not a maoist and he is not trying to restore Maoist to the retarianism, but he is a very uh strong and devoted Leninist. A letinist is somebody who believes in the Communist Party, who uses the Communist Party as the main instrument for controlling everything. Are there any garbage out there in China? There is no go in on the horizons

in China. And in fact, in twenty twelve, when she Jumping become leader, the first major announcement he made was that under his watch China, the Communist Party of China will not make the mistake of the Communist Party of the Soviet Union and allowed to take it like Gobachov to emerge, he will squash him the minute he says such a think, emerging professor saying thank you so much. We greatly appreciate. It's just saying with us, folks, and of course this will lead our podcasts this morning in

ac usually eventful day. He is with the School of Oriental and African Studies the University of London. Thanks for listening to the Bloomberg Surveillance podcast. Subscribe and listen to interviews on Apple Podcasts, SoundCloud, or whichever podcast platform you prefer. I'm on Twitter at Tom Keane. Before the podcast, you can always catch us worldwide. I'm Bloomberg Radio