Surveillance: 18 Years On, Remembering 9/11

for border politics is creating some issues. To give us a sense of what's going on there, we welcome Michael Ross. Michaelis Bloomberg Government Homeland Security reporters. So Mchael give us a sense of kind of some of the issues srolling

around the Homeland Security Department. Absolutely, good morning to you both, and I join you actually just a few yards from the Pentagon this morning at the T s A headquarters where we are also commemorating these moments of nine allove input is a very somber moment here that I'm joining you from. And but earlier this week I was in

New York. We were at the nine eleven Memorial and Museum with some of the former heads the former secretaries of the the department that launched because of this day. The Department of Coman Security UM is definitely the startup out of this and UH, they were several of them expressed concerns, deep concerns that eighteen years after the fact, that there is more issues that are dividing the department politically and making it more difficult for the department to

function in the private sector. Mc Garrett Graff who had my book of the Year a few years ago in the FBI, and Mr Mueller has a wonderful new book out. It is a visceral book of interviews of September eleven and permean permeating that is somewhat the cacophony in Washington. Jonathan Bernstein and Bloomberg Opinion calls it the pure chaos off of Mr Bolton's resignation. And within all of this, the periphery is Homeland Security. What's the state of the

department right now? How would you frame that? What's the concern is that we're hearing from ammakers on both sides of the aisle as well as UH former officials, is that it is getting more difficult for the department to accomplish his goals in some ways, or I should say that such such a such a focus on immigration enforcement, they fear is making taking resources away from a lot of the other missions. Again, the Department was formed out of this terrorist attack. It was formed to try to

try to keep the homeland safe. It has so many missions between t s A and SEMA and the Secret Service and the Coast Guard and cybersecurity, and yet the bulk of that of the bulk of its energy right now is in those immigration enforcement agencies. And there's worried that UM there might be other threats that aren't getting as much attention. There's where the resources might not be getting to what they need to be, and there's word

that there's is causing division. So MICHAELA. As the Department makes its concerns known, what has been the response so far from Congress? UH and Congresses? We were just with several of the House Homeland Security Committee yesterday. They are the different very upset. Actually, in a separate incident, some of the top officials and the Trump administration UM at first refused and then delayed an hearing about global threats that the committee has ever year to try to hear about.

You know what they need to do to try to make the department better and what they needed to do to try to address some of those threats. So UM, both types of the aisle again very concerned UM that

some top Trump officials, including the Acting Secretary of Homeland Security. UM, we're not able to satisfy the time UM now that has been rescheduled of course, UM to try to talk about some of these threats with the homeland So it's interesting the is there a sense what is kind of the gas concern on the part of the Department of Homeland Security about what they're being test to do an immigration is that manpower? Is it other resources that are

being diverted? What's really the big issue for them? The big issue on immigration enforcement coming into the fall, of course, is going to be the refocus on the border wall, which is definitely a top priority of the Trump administration.

But that is going to be another issue that's really going to divide Congress because we're looking at all of the spending bills that need to be passed within the next UM well a few weeks to try to try to get it in on time, but this fall, UM to avoid a shutdown, and at the heart of that is going to be this issue of trying to stem the flow of immigrants coming from the Southwest border. McKenna ross, thank you so much. Border politics hurting homeland security to

say the least, as well. Good to hear from her from t s A near the Pentagon on this September ele Right now, we're gonna she's not an intensive care She's been working through the morning from London on the London perspective of the Hong Kong Stock Exchange effort, a shock effort to purchase the LSE, and she is Sarah said, Sarah, Let's look at the stock price up x percent, double digit and it's given it back with a vengeance in

the last hour. Why is that? Well, I think there's a certainly an interesting offer that's been been put on the table. I mean, you know, the ELSE had given anyone that was interested in acquiring the business a short window to make an offer after it had made the announcement that it was looking to tie up with the filmer Thompson Royds's business um Refinitive. Now you know, after you know, if a deal with Refinitive would have gone through,

it would make the l SE almost unaffordable. So you know, the else had ultimately it's become open, is not Elsie, but they'd give you a bit as a short window to come in and try and make that offer, which which you know Hong Kong has coming down right. And then it's cultural as well. This is a Mary Poppins. It's not railways to India, it's the Chinese are coming into buy London. I mean, that's a blunt way to

put it. I don't mean any aspersion there, but Sarah, there's a whole cultural and political overlay to this transaction, this proposed transaction. I mean, there'd be an under understatement to say that that, you know, the deal is super politically sensitive. That's what it is at the moment. You know, you have the Hong Kong protests um, you know, going on and and continue, and then of course you've got breaks it and and the falling the drop in in in Sterling, so you know, there are a lot of

politically sensitive issues. The we had Andrea Ledson this morning, you know, whilst we while Francine was interviewing her her this morning and the announcement came, she said that they would look at any deal, but there would s may be close scrutiny from the UK government on on any deal of this scale, certainly from the Chinese. So Sarah, what is just the status of the definitive deal that

was announced recently. Well, it's it's been announced but certainly not closed UM, and and that process is still ongoing. So you know, this is where other bidders are interested in.

The LSE had this short window to come in and try and scumper that, and the Hong Kong Stock Exchange has said that any deal UM with Hong Kong Stock Exchange and l s UM is premised on the refinitive transaction not proceeding, and that I would guess mainly has to do with the fact that the Hong Kong Stock Exchange would not be able to afford the LSU should

the refinitive transaction go through. Sarah, thank you so much, particularly through the morning here, Sarah said, with us in London on this proposed transaction, Hong Kong to buy London, we can go to LuSE Group and there Doug Ramsey, Handsome Doug Ramsey with us this morning. Doug, I love your note. We're all economists now. Is that really what your world has come down to? It seems like it.

I mean, it seems like the uh, the economic bulls and the stock market bulls are now one and the same, and uh, you know, we continue to cause investors they're they're not always the same. I mean, think back to that great top of March of two thousand. We put in a market top that led to a forty nine and a half percent decline in the SMP five and the economy did not sink into recession until eleven months later. So it's certainly possible that something like that could happen again.

But you know, the two can can disconnect. This areods, Doug? Is this the time to uh for the Tom and I we talked about we're value stock investors. This the time for value stocks to shine. Here the ones in a decade opportunity. I don't know if this is the turn. I mean, it seems, uh, it seems unlikely to mean it wasn't. Remember it's not just you know, growth versus value and momentum versus value. It it's everything that was

working versus everything that was not. And I mean from low voll versus high beta, commodity versus consumer, that sort of thing. And I just find it hard to believe you're gonna have a watershed day where all of those relationships where one week ago, I mean, the fundamental conviction that nearly every strategist had for those trends to remain in place. Uh, it's amazing how the narrative has flipped with just two days action. So I don't think it's going to be a turn in all of those binary

relations Can I just point evaluations that could, Paul? Can I just point out the Dow closed at twenty six thousand, nine nine. I mean, if this is this is a Ramsey correction, this is a Ramsey crac So again, as Tom mentioned here, you know we're at our very near these all time highs, despite trade, despite all the geopolitical issues in the world equity wise, what is your view of the market right here? Well, our view is that the last nineteen months have been a a broad uh

global topping process. And remember, on the basis of the ACQUI, we are not the all country world index. We are not back two new highs. And if you look at sort of the average stock whether globally or within the US, on the basis of like the value line arithmetic index, excellent measure that's basically, the average performance of the U

S stock nowhere near a new high. So it's been in our minds, this broad distribution process that started remember when the economy was red hot and right before those first terra were fired. This is great, Paul to have dog Doug. We're gonna keep it short today just because of all the breaking news. But the only reason Paul, we have Doug Ramsey on is because he brings up the value line, arithmetic and geometric indexes which are which are just fabulous. Do you know Ramsey still has on

his floor the old value line. He trips over it like once a week as well. Doug Ramsey, thank you so much. With LUTH group, it is a joy always to speak with. Eileen Bourbage coming to us today from Tel Aviv with Passion Capital. She is outstanding and folding in the digital theology of the moment into our daily lives. Eileen, I know you've never done this. It's beneath you, but

the truth is right now. I'm all over the Tied Original Scent Liquid laundry detergent, thirty two loads, fifty fluid ounces Amazon Choice with a hundred and eleven customer reviews. Wanted Today order within four hours eleven minutes it Amazon, Why should that be regulated that I want to get my tied in four hours eleven minutes same day delivery. Nothing's beneath me. I'm willing to roll up my sleeve,

you know that song Um. I don't know that that has to be regulated, but I do think what the regulators are looking at is to make sure that Amazon isn't sort of inappropriately exerting its influence on smaller merchants. So Tied or P and G. I mean, they're probably gonna be okay. They can kind of hold their own. They can negotiate what will be I guess business, you know,

standard terms, market practice, market rates. But if you're a sort of up and coming independent retailer you've got you know, a new sort of bio friendly laundry churchent laundry soap, and you want to be on the Amazon marketplace too, who's to say that you're going to be able to get the same terms that P and G can get. And I think that's what the regulators are taking a

look at. So, Eileen, we've certainly I think seen heard felt over the last year year and a half, the US regulators US Congression congressional leaders taking maybe a harder look at some of the big US tech companies. How concerned are you that the tide may be changing and that the US may be taking a heavier regulatory hand to Silk and Valley. Yeah, I'm not too concerned. I

think actually this is to be expected. I think of the tech companies, but also a lot of sectors that are influenced by innovation and by data probably had a little bit of a slacker food right for maybe a bit too long as the regulators caught up to sort of understand some of these implications and why they might need to look at protecting consumers interests a little bit

more ardently. I think there were a lot of companies that probably also figured, you know, with the president that we've got in the White House, perhaps regulation wasn't going to be as much of a problem or much of a burden for them. And I think it's about time

there's been a little bit of scrutiny. The question is how far the pendulum is going to swing, and whether or not they're going to take actions that are just for perception or signaling and not actually practically beneficial to anybody that would be a problem, right, So, Eileen, it was another busy day in Cooper Tino yesterday, Tim Cook and others on stage at trotting out some of the newer products and services. What was your takeaway from kind of what you saw and and heard from the good

folks at Apple. Um. I've got a few takeaways. One of them was that, you know, it's really interesting that they're they're finally coming down a bit on price point, and they're probably acknowledging that maybe being at the highest end, i mean extreme high end of the market isn't maybe going to help them continue to grow their market share. So they've come down on price point. Buying a brand new iPhone eleven is going to be cheaper than when you you know, had to buy the iPhone X or

the x are. They still have a premium for customers like myself that'll be buying in the UK or anyone in China, for example. So that will be interesting to watch because I do think they heavily rely on what's happening in China. Similarly, I saw the emphasis on services, and I think continued push on recurring revenue is really really key. You know, I'll be honest folks. I did this experiment with Paul today. I did the thing where you signed up to get ready for September. And I

want to thank can. I thank McKinnon and Millanoch at Maine listening on Bloomberg one. How does she get Bloomberg one of six one FM in Boston from Millanoch at Maine. She's like totally touchy Earth green, and she said go with the midnight green. So I went with the midnight green color. Eileen, this is the most brilliant pricing I've ever seen. There's this delusion in your world that Apple's a luxury evil brand because it's eleven under bucks a month.

That's bologny. We're buying this like we buy a cable TV subscription. Well, you're buying You're gonna buy Apple TV Plus like you're buying cable TV now. And that's actually what's effect being Netflix, Disney and Roku. The phone steps are a different matter. I think there is this diconomy between people who appreciate function and probably have had these camera features, the extended battery not even extended, but you know, reasonable battery life and Android phones for months, if not longer.

And Apple decides to roll them out in charge, I don't know, two or three times as much, and they're gonna still in a whole bunch. Yeah, but they're they're they're doing this at forty bucks a month, fifty bucks a month, maybe seventy five bucks a month tops. That's not an eleven purchase psychologically, is it. No, it's not.

And that's what they're gambling on. And then what they're going to try and tack on or oh you get a free year of Apple TV plus where you're gonna have a free year of Apple Arcade, and they're really trying to get you hooked on those services that you're gonna pay for beyond. We're gonna stop the show right now, Sweeney's expert on this. What in God's name is Apple Arcade?

You're not a gamer, Tom, I'm not a gamer. But how are they going to compete with the adults of gamers because they have billions of devices out there and they feel like they can just go out and get the con and so, you know, I lean Tom brings up a good point. I mean, you know the Apple TV. You know I thought was interesting about that was the price point for undercutting everybody. Um, do you think Apple is really serious about the content but the video content

business UM going forward. I think they're serious. I think this is a pretty serious opening for them. I think the question is how much they're going to back it up. So obviously their catalog or their content materially not you know, at all similar to the volume that's on any of

the other services. So the question will be if they're going to continue to invest in original programming, or if they're going to start to syndicate other people's programs, and if they're going to try and develop the volume that other people have UM and the sort of other companies of who stuff they affected yesterday. Eileen, you're a great student of London. The time we've got left, I really

want to talk about the future of the city. You've been a follower of Brexit and all that, but also a follower of the data investment, the staffing in the back office. Do you still presume that the city will mike great services and staff functions over to continental europe cities.

I think that some are looking at that and probably thinking about contingency planning, but I actually don't believe it's going to happen on mass I really don't I think that the city of London is going to continue to thrive. It's got a huge, huge talent pool. People have been here for decades and for years, and we've got great, great centralized support from the regulators and so on and so forth. So I do think they're going to get

regulatory equivalent. I think it'd be stilly for boards and for corporate governance for people not to look at contingency planning. But I don't think it's going to be a total exist. Eileen Bourbage, thank you so much. Greatly appreciated on technology, but with a really different tist twist cheests with Passion Capital Partners. Eileen Bourbage from London usually and from Tel Aviv. Today. Right now we're gonna go to Chris Hughes, who wrote a durable and wonderful essay off of the shock of

the Hong Kong Stock exchange going after the London Stock exchanged. Chris, I'm going to suggest r S a move the market today as we saw a huge jump in LSE shares and they've really come back for a number of different reasons. And I'm not going to give you all the credit, but you really set the tone how critical is it did the Hong Kong Stock Change go after this refinitive, the Thompson Reuters data package that LCS trying to acquire. Well, I think the Hong Kong Exchange is trying to essentially

stop the NFC getting refinitive. It's trying to get the NFC and it's only got a few months in which to do this. The NFC shareholders have got a vote on that definitive transaction quite soon, so it's now or never. So the criticality is sort of in the in this opportunity to get this historic exchange and bust up it's deal with Definitive, and it's you know, it's it's it's wasted no time. I mean that deal was only inked

a few weeks ago and here it is. You wonder if actually they were thinking about doing this with sometime and Definitive kind of forced it. But this is fine, And folks, we should mention that Refinitive and the Old Times and Right Reuters in their icon terminal as a direct competitor of BLOOMBERGILP and or acclaimed terminals as well. Everybody's saying the right things, the posturing what would you

expect will be next? I mean, do you have any idea, Chris Hughes, of what happens into this week, through the weekend and in the next week. Yeah, it's a really interesting question because this negotiation here is playing out quite oddly. You know, when you're trying to buy a national stock exchange, you really want to get everything lined up, you want to get the board on side, you want to get

tea off all of the political side of it. And what Hong Kong Exchange has done is it's gone public with this actually quite tend toive proposal that's sort of firm offer him. It's just gone public with this, and it's really put the NSSE board on the spot. You know, it's kind of came as a big surprise to the market. That's not normally how you go about buying a you know,

a sort of national asset like the stock exchange. So over the coming days, Hong Kong Exchange has really got to kind of flesh out kind of why this makes sense and try to keep the atmosphere sort of friendly, even though I think going public with a unsolicited offer is kind of not the most friendly thing to do. So Chris, give us a sense of kind of the political overtones here Hong Kong Exchange, London Exchange, Hong Kong UK give us kind of the sense you're you're hearing

over there. Yeah, that's a really good question. Um. I suppose the first question is does the UK want any foreign acquire acquirer to to buy the London Stock Exchange? Not really. The London Stock Exchange is a quoted company. It's got shares that trade on the London Stock Exchange. So in that sense, you know anyone can come along and buy it. But we all know that stock exchanges are quite sensitive assets. I mean, when these itself agreed a deal with Deutsche Borsa that fell apart, and that

was with both managements initial support. So the first thing to observe is that any cross border deal for an exchange is just really really hard. Then you layer on the complication of this being China into the UK. I mean, clearly there aren't close links between the UK and China and in many respects, but that's going to cause you some heightened scrutiny. So there are a lot of questions on on all levels about the political back drop. And then of course I have to mention Brexit. Now, this

wouldn't be a cheap deal by any means. It's not as if the LC is trading super cheap because of because of of brexits. I mean, the the valuation multiple put on this possible action with the Hong Kong Exchange is pretty racy, so it wouldn't necessarily be cheap. But I think a lot of people in the UK would nevertheless question whether, you know, a prize national asset was being bought at you know, opportunistic moment. It's also raises the question, you know, of the definitive deal because what

was the feeling amongst LSE investors about that deal? Is that considered to be something that was strategically wise for the London Exchange to pursue. I think the reality is there no doubt that it was very warmly received. The NC share price rose considerably on the on the possibility of that deal, and even more when it was confirmed, quite an astonishing jump about that's a sort of that's on an acquisition. That's a sort of rise you get when a company is being taken over normally, so this

was this was very warmly received. Now some of that may have actually been some specular of a of a of a bid like the one we've seen today. But you know, NC shareholders do like what that does to the LSE investment story X refinitive What are you actually buying at the London Stock Exchange? I mean they're not standing around in tuxedos anymore. What do you what do you buy? What are you buying? What's the the income stream anybody trades of you know, uh, sir Howard Davies

RBS or what are you buying? Well some of a really good question, and yeah, the NC. What you're driving at quite rightly is that you know, one may think of the LC as a sort of platform for trading stocks and shares, but actually that business has evolved considerably kind of away from just what we would think of a classic SHA trading for quite a while, mainly actually through doing acquisitions. So the LYSE now is is very

big in indices. So they've got a very big platform of of of indicries and they are seeking to grow that. You will say that you know that big in dates are clearly the idea of the definitive deal was kind of kind of to dilute that old old fashioned chat writing even more. Chris Hughs thank you so much too, short to visit Chris Hughes and I'll get I think I've got it out on Twitter. If not, I'll do it again. Chris Hughes of Bloomberg Opinion. It's open season

on the London Stock Exchange. Just the first definitive read on this. Uh, the shock and that's the right word, Paul. The London media was on fire with this announcement. 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