May 13, 2025 • 44 mins
Watch Carol and Tim LIVE every day on YouTube: http://bit.ly/3vTiACF.
President Donald Trump and Saudi Crown Prince Mohammed bin Salman touted a pledge for $1 trillion in commercial deals in Riyadh on Tuesday, a staggering figure that doesn’t quite stand up to scrutiny.
“With the help of the people of the Middle East, the people in this room, partners throughout the region, the golden age of the Middle East can proceed right alongside of us,” Trump said at a Saudi-US investment summit to announce the planned deals. “We will work together. We will be together. We will succeed together. We will win together, and we will always be friends.”
But the glitzy event — where top officials and corporate executives including billionaire Trump adviser Elon Musk and Nvidia Corp. CEO Jensen Huang sat in armchairs, serenaded by Trump’s typical rally soundtrack — sets up a test for the US president and Saudi crown prince, who have struggled at times to match their rhetoric with reality.
Both leaders claimed Saudi Arabia would invest $1 trillion in the US, but signage at the conference put the cumulative total of the deals as actually worth over $300 billion. Hours earlier, the White House cited a $600 billion investment. The discrepancy is significant: The $1 trillion figure roughly matches Saudi Arabia’s entire gross domestic product.
Today's show features:
- Gregg Roman, Executive Director of the Middle East Forum
- Bloomberg News Senior Editor & Crypto / Digital Payments Team Leader Mike Regan and Bloomberg News Investigations Reporter Anthony Cormier
- Karen Veraa-Perry. Managing Director and Head of iShares US Fixed Income Strategy at BlackRock
- Bloomberg News Investigations Reporter Rachel Adams Heard
See omnystudio.com/listener for privacy information.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:02):
Bloomberg Audio Studios, Podcasts, radio News. This is Bloomberg business
Weekdaily reporting from the magazine that helps global leaders stay
ahead with insight on the people, companies, and trends shaping
today's complex economy. Plus global business, finance and tech news
(00:23):
as it happens. The Bloomberg Business Week Daily Podcast with
Carol Masser and Tim Steneveek on Bloomberg Radio.
Speaker 2 (00:32):
Well.
Speaker 3 (00:32):
As we mentioned a little earlier in the program, President
Trump isn't at Saudi Arabia on his first scheduled overseas
trip since taking office earlier this year. He did visit
the region back in twenty seventeen during the first term.
He did, of course, go to Italy Vatican City too
for the Pope's funeral a little earlier this year. This
time around, though, Saudi Arabia is looking to boost investments
in the US to one trillion dollars, with six hundred
(00:54):
billions said to be already committed. As for the US,
it's considering letting the UAE by over eight million advance
in video chips and with Saudi Arabia specifically about a
relationship that's more about friends rather than foes.
Speaker 4 (01:07):
I have never believed in having permanent enemies, I am
different than a lot of people think. I don't like
permanent enemies, but sometimes you need enemies to do the
job and you have to do it right. Enemies get
you motivated. In fact, some of the closest friends of
the United States of America nations we fought wars against
(01:30):
in generations past. Now they're our friends and our allies.
Speaker 3 (01:35):
Whether you have a President Trump just a little earlier
today in Saudi Arabia for more on the relationship between
the two countries and really the US and the Middle
East as a region, let's go to la and the
executive director of the independent nonprofit Middle East Forum, Greg Roman,
joins us.
Speaker 5 (01:49):
Now, Greg, I just.
Speaker 3 (01:50):
Want to start with, based on what you heard from
President Trump a little earlier today, how you would characterize
the US's relationship with the Middle East, and specifically how
it's different than previous administrations.
Speaker 2 (02:04):
Well, I think that what President Trump is looking for
his partnership instead of ownership over the region. He expects
that there be a quid pro quo between the United
States and it's trade, commercial, economic, and military relationships with
Middle East allies. But there's also some sub layer here
that I think the administration needs to be wary of
where in countries like Saudi Arabia and the United Arab
(02:25):
Emirates are looking to foster closer relations with the US,
with our businesses, with our markets. There's other countries like
Turkey and Katar. Even though he's not potentially visiting Turkey,
unlistors that deal with Putin and Zelensky on Thursday that
are looking to influence the United States to outstretch their
interests to the US's disadvantage. So there's two positive visits
(02:45):
here and another one that I would be very aware
of when he goes to Doja.
Speaker 6 (02:50):
Greg the President saying, you know, now there are our
friends and our allies talking about Saudi Arabia, and I'm
just curious, what does being friends and allies really look
like going forward between the two you and where does
that kind of leave the US And it's historical allies?
Speaker 7 (03:05):
All right?
Speaker 2 (03:05):
Well, I think that sort of Arabian and the United States
have been historical allies since the meeting at the ALTA.
Speaker 6 (03:10):
It's a crown book. I guess every relationship's complicated, but
it feels like this one's been a little bit more complicated.
Speaker 7 (03:15):
Well, Okay, let's go to nine to eleven for a second.
Speaker 2 (03:17):
Exactly after eleven, and you had fourteen years of animus
between the United States and Saudi kings and princes because
of their failure to own up to what was the
result in relationship of having cover fur the bin Laden family.
But Mohammed bin Salman becomes Crown Prince in twenty fifteen,
he quickly starts to reform the kingdom, starts opening up
its markets, asking for more investment in the United States,
(03:39):
even goes so far as to invest money and the
Israeli led Hedge Fund. For the last decade, MBS has
been at the forefront of trying to crystallize and close
in relations between the United States and Saudi Arabia. The
UAE going back to the early nineties, has been in
a close defense relationship with the United States since the
Gulf War. But the third country that I mentioned, the
Kataris that's one that I'm still wary of, considering the
(04:01):
fact that they have huge influence operations and even espionage
against members of the United States and also people who
are even close to Trump's family.
Speaker 3 (04:09):
Okay, so let's go there and give us exactly what
you're concerned about, especially in the context of a potential
gift of a presidential jet.
Speaker 7 (04:19):
Well, I think this goes beyond the presidential jet.
Speaker 2 (04:21):
I understand why the Defense Department would try to have
an interim solution for the lack of Boeing being able
to deliver on Air Force one, which is now expected
by twenty twenty nine, but I think security considerations will
put that aside and the Secret Service won't sign off
on that. Even though I understand the token gesture, the
larger issue is the forty six to forty seven billion
dollars that Kataris have invested in American higher education k
(04:43):
through twelve businesses or university systems, political lobbying to the
tune of almost seventy eight million dollars over the past
few years, all but the intent of trying to buy
both sides of the political aisle. And I don't think
this is anything that really extends to the administration. But
what the Guitaris have done is try to create white
picket fence around their ears of influence on Republicans and
Democrats that whichever way American politics go, the Qataris will
(05:06):
be there to win.
Speaker 6 (05:08):
So why I don't know, maybe this sounds naive. I mean,
what is it that we need to be wary most
when it comes to extending our relationship throughout the Middle East.
I mean, we have relationships right with other countries, with
other regions. There are investments that we encourage. We have
a White House and president who is big time encouraging
(05:29):
investments by everyone outside the United States into the United States.
So what is it in particular at this moment in time,
especially with a nation like Saudi Arabia that is trying
to move beyond oil right and kind of extend its
economy in different ways, that does require maybe relationships beyond
its borders. So I'm just curious what do you think
(05:51):
Americans need to be wary about in this relationship as
it seems to be deepening.
Speaker 2 (05:56):
I think with plant twenty thirty under MBS in Saudi Arabia,
the diversetion of Saudi's economy, it's being a key member
of the IMEC, Israel, Sorry, India, Middle East Europe Economic
Corridor is great in terms of being able to have
American companies invited to bid on infrastructure contracts there and
to help them diversify it. It's a net gain for
the US and Saudi same thing with the Amrodis they've
(06:18):
placed their bet on Ai. I think the fact they're
willing to invest close to a trillion dollars to this
with check Tachnun and his leadership through their ministries for
infrastructure and development, it's a win win for the United States.
But the one that I'm worried about is where in
the UAE and Saudi Arabia don't have significant military relations
with Iran, don't support Kamas, aren't actively supporting Sirian g hotties.
(06:38):
That Katari trip, the one in which you have a
country which hosts one of the most egregious terror organizations
that ever commit a tax against Americans. We saw their
influence over the weekend, is one that I have to
be very wary of because I don't see what the
net gain is for the United States. If anything, it's
to our citizens detriment to do any business with them.
Speaker 3 (06:55):
We're speaking with Greg Roman, executive director of the Middle
East Forum. He joins us from Los Angeles. Greg, I
want to dig into what you've described as an influence
campaign of the Katari government, specifically when it comes to
higher education, and indeed k through twelve here in the US,
what can you tell us about what you found and
what you've reported on and really what the goals are
(07:17):
of the government of the country.
Speaker 2 (07:20):
So if you think about all areas of American educational excellence,
Carnegie Mellon in cyber space, Northwestern d Business, Cornell and Medicine,
Georgetown and diplomacy, Texas A and M, and science and engineering,
these are all places where the Katari government has invested
hundreds of millions, if not billions of dollars and bringing
those campuses and the intellectual property and.
Speaker 7 (07:39):
The professors to Doha.
Speaker 2 (07:41):
So if you look at the number amount of students
that study at Texas A and M Doha, it's Iranian
students who more than anything constitute the people who are
there studying nuclear engineering, physics, applied sciences. And they take
that IP which they wouldn't be able to access because
they wouldn't get a visa to study in the United States,
bring it back to who you ran, and then contribute
(08:01):
to their nuclear program. Even in k through twelve. Their
goal is to try to create a generation of Americans
who are sympathetic to Katari foreign policy goals, so that
maybe one person from a million who graduate from one
of these universities ends up becoming president. That Kataris have
their talents enshrined in them and are able to exert
their influence on it. And we see this across business.
(08:22):
Dozens of companies, hedge funds, investment funds, all taking Katari
money and then when the right time comes, they use
that investment and they activate it to have their influence.
Speaker 6 (08:33):
So what do you make or what do you believe
is the significance of this being President Trump's first plan
trip overseas. And you've also served, as I should point out,
the political advisor to the Deputy Foreign Minister of Israel.
You've worked for the Israeli Ministry of Defense. I mean,
how do you think Israel and the Prime Minister and
Yahoo are looking at this trip.
Speaker 2 (08:51):
I think that the US is executing its own interests
as much as we elect our president to be able
to engage in policies that are pro American, and the
Israeli government decides what's best for Israel. More often than not,
the policies mesh where there's a strong close relationship between
the two. But I think at the same time President
Trump is saying, we have to have an America first policy,
and that's not at juxtaposition where it's against Israel's interests,
(09:14):
but the net gain for the United States in terms
of strengthening its relationship with Arab countries will also be
a positive gain for Israel.
Speaker 7 (09:22):
We saw the same exact pattern take place.
Speaker 2 (09:24):
In twenty nineteen and then twenty twenty with the process
that led to the Abraham accurts, and frankly, if I
was Prime Minister net and Yahoo, I'd be looking at
the dialogue between mohammedd and Salman and President Trump and
seeing how close I am now today versus yesterday of
having sauty recognition of Israel and economic relations between the
two heavyweights in the region.
Speaker 6 (09:42):
And we did hear President Trump mentioning the Abraham Accords
in his earlier speech there in Riyat. I am curious,
do we look back at this moment in time in
five years, Greg, and say three years. I always think
about this, Is this a moment in time where we
are really strongly changing our geopolitical alliances or midterms or
(10:06):
new president come three and a half years or so,
does that change things potentially? Again?
Speaker 2 (10:12):
I think we're at an inflection point. The Abraham Accords
was put on ice when President Biden came into office
for other reasons where he was trying to seek deeper
relations with non Arab Sunni countries with Iran. But now
we're basically picking up fro where we were in September
and October of twenty twenty. More deals will be signed,
trade relationships will be deepened, We'll finally be able to
have an alternative trade corridor to the Chinese Belt and
(10:34):
Road policy, which has been going through China, Iran, Pakistan,
Turkey and onto Europe. And this is I think the
reemergence of America as a viable competitor on the global
stage with China embracing our golf allies. And at the
same time, it's also building closer connections between regional powers
that for far too long haven't had the kind of
relationship that they should have, whether it's trade, commerce, economy,
(10:54):
or military. And President Trump is the glue that's helping
cement all this together.
Speaker 3 (10:59):
We have thirty seconds left. The President said he wants
an Iran deal. He warns it to take the olive branch.
Just thirty seconds on Iran. While we have you, The.
Speaker 2 (11:07):
Iranians are going to play President Trump along until they
don't say that they're willing to dismantle their uranium and
richment infrastructure. I think we're going to get to a
point where the Iranians are going to sit in the
President's face. I understand why you have to try diplomacy,
but at the end of the day, the only way
for the Iranians to move forward is to eliminate their
newclear program, either by themselves or by an American strike.
Speaker 6 (11:27):
Greg fifteen seconds China. Is this all happening as the world,
the US increasingly is pushing back against China, and just
very quickly, this is.
Speaker 2 (11:36):
A global push against China. I think Europe the United
States have no daylight between them, and engaging in the
golf is pushing China out of the region, which is
something the US should have done for the last five years.
Speaker 7 (11:45):
It's a good thing that's happening now.
Speaker 6 (11:47):
Greg Graeman, thank you so much, Executive director of the
Middle East Forum. Joining us from LA.
Speaker 1 (11:51):
You're listening to the Bloomberg Business Week Daily Podcast. Catch
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Speaker 3 (12:06):
Hey, speaking of crypto, Robinhood has agreed to buy the
crypto platform operator Wonder five. Morgan Stanley's digital asset markets
head is leaving the bank to start his own crypto
and digital asset investment fund. And the trading tech firm
and the trading tech firm is also he's leaving to
do that too. And bitcoin is close to it all
time high. Also, the President is hosting that crypto dinner
(12:27):
and where's your invitation?
Speaker 6 (12:28):
Coinbase Oh yeah, being.
Speaker 3 (12:29):
Added to the S and P five found what is
it up? Twenty five percent speak?
Speaker 6 (12:32):
Yeah, I mean, come on crypto.
Speaker 3 (12:35):
Well, that's where I wanted to start.
Speaker 6 (12:37):
Round table right having its moment.
Speaker 3 (12:39):
Mike Reagain is Bloomberg News Senior editor and Crypto Digital
Payments team leader, and Anthony Cormier is Bloomberg News Investigations reporter.
They both join us here in the Bloomberg Interactive Broker's studio. Mike,
that's where I want to start with you. With Coinbase
being added. Yeah, quite a.
Speaker 8 (12:55):
Share prop pop after that announcement.
Speaker 9 (12:58):
I mean, you know, in some ways it was sort
of inevitable that Coinbase would get added to the S
and p.
Speaker 3 (13:05):
Five hundred.
Speaker 8 (13:06):
If you look at its market cap.
Speaker 9 (13:08):
Before the announcement, something like fifty three billion. I mean,
that's puts it in the top half of S and
P five hundred stocks by market value. I think what
kept it out for a while is that Coinbase's earnings
can be very volatile post a loss, some quarters big
profit some quoters, smaller profit the other quarter. So one
(13:28):
of the S and P five hundred criteria's CRITERIU I
guess is the word is consistent profitability. You know, they
want them to be profitable in the last quarter and
they want the trailing four quarters to be profitable for
a company. So, you know, there is sort of this
rumblings you hear that they got snubbed in the last
S and P. Five hundred reconstitution, but I think it
(13:50):
was more likely and we never hear exactly what the
SMP committee how they make their decision, but I think
they were probably more worried about.
Speaker 8 (13:59):
That earnings violatility than anything else.
Speaker 9 (14:01):
You know. That said, it is obviously a much friendlier
regulatory environment for coinbase, so a lot of those questions
about the case.
Speaker 8 (14:10):
With the SEC have sort of been a watchway.
Speaker 3 (14:13):
Yeah, speaking of the friendlier regulatory environment. That was the
segue I want to be Yeah, we go okay, Well,
speaking of the friendlier regulatory environment, I want to bring
in Anthony Cormier because he's been doing some reporting around
the Trump mean Coin, the top Trump crypto buyers who've
been vying for dinner seats. This dinner is happening supposedly
on May twenty second. You and the team dug into
(14:36):
the wall. It's did some digging, found some details about
who these folks are, and it's actually not very clear.
Speaker 5 (14:42):
No, no, less now than when we started.
Speaker 3 (14:45):
We find out we do?
Speaker 2 (14:46):
We do?
Speaker 7 (14:47):
We do?
Speaker 5 (14:47):
We did go hand by one by one through the.
Speaker 6 (14:49):
Two transparency on someone who's doing something in the crypto world.
Speaker 3 (14:55):
Holy well, just to set it up, this is the
this is the dinner that is happening on May twenty second.
It's going to be with the President at his Virginia
golf club, and the top holders of his mean coin
over a certain period of time would gain access to
the dinner.
Speaker 5 (15:11):
Top twenty five get to meet him in person, get
a special VIP tour. Two and twenty get to have
dinner with him in Sterling, Virginia. And as you said, earlier.
It is quite difficult to know who or what are
behind some of these wallets. So we went one by
one and learned what we could, and that was that
more than half of them are likely foreign. Six of
(15:32):
the top twenty five are almost certainly acquired their shares
from an exchange that doesn't allow you, doesn't allow Americans
to acquire them. And I before I walked in this room,
I was going through Twitter looking for all of the
people who have posted their invites online to see what
we could learn.
Speaker 6 (15:48):
What's the law on that? And the reason I bring
that up is I think about all of us who
go through training, who work at US companies. We go
through extensive training about who you do business with. If
you're a business, a contractor, you've got to know exactly
who they are, where the money's coming from, and if
there's any any any questions. You don't do it.
Speaker 5 (16:09):
Banks do KYC all the time. You know your customer stuff.
There's anti money leandering programs that, in fairness of the
President and his the mean point operators, they are saying
that they you have to go through certain steps. We
don't know what those steps are, right in order to
get to this dinner that we don't know what to
quote KYC watch watch list, you have to avoid to
(16:29):
be in this dinner. All of those questions we've posed
to the White House, they've thus far refused to answer.
Speaker 3 (16:35):
Mike, how are you looking at this as somebody who's
covered markets for years are now heading up your tenior
editor and you're also heading up the crypto team. There's
this idea now that the idea of appearance of conflict
of interest, you know, has kind of been thrown out
the window at this point. It's a question that I
asked Eric Trump about when I interviewed him a few
weeks ago, and he basically said, you don't have to
(16:56):
worry about this. I never talked to my dad about
crypto and crypto policy. But the president does have a hand.
He makes money when certain things happen. Yeah, I mean, I.
Speaker 8 (17:06):
Guess gobsmack is the word to hype.
Speaker 9 (17:08):
I put in just how brazen it really is, you know,
and the some of the prominent Democrats are screaming from
the hilltops, Elizabeth Warren and others, you know, not only
about this, but World Liberty Financial. Trump's other crypto project
introduced a stable coin, you know, a crypto token that's
(17:29):
peg to the dollar. It was just used in a
two billion dollar equity stake from a Dubai fund into Finance, which,
if you recall, was the crypto exchange that just two
years ago, less than two years ago, settled some very
major charges with US Justice Department about basically not having
(17:51):
an anti anti you know, not having that KYC program
in place that Anthony's talking about, or a Nancy money
lundering system in place, or at least not a robust
enough one to catch what the government alleged was, you know,
terrorists and all sorts of criminals using that exchange launder money.
Speaker 8 (18:12):
So, you know, it's just shocking to see that.
Speaker 9 (18:17):
You know, what you thought were sort of checks and
balances in the government don't really matter if the controlling
party is on board with the president and willing to
give him this type of latitude.
Speaker 6 (18:28):
Where's the financial community? And I bring that coming just
off of Milkin out on the West coast, there are
everybody and anybody in terms of the financial might globally,
certainly in the United States, trillions of dollars right worth
of capital assets under management. In the past, crypto has
been a topic, but I got to tell you. We
talked to infrastructure, we talked supply chained, we talked tariffs,
(18:50):
we talk private markets, and we talked democratization of things
like private credit. I think we had one interview with
someone who's like definitely into crypto in a big way,
but I it wasn't a big thing. So where is
the financial might and the folks on Wall Street and
the big investors, Because who's doing all the activity? Why
is crypto? Like is it just the White House?
Speaker 10 (19:11):
No?
Speaker 3 (19:11):
If you look at especially the SPAC.
Speaker 8 (19:14):
Deals being priced recently and being announced, you know.
Speaker 9 (19:18):
Kenner Fitzgerald, one of their SPACs is teaming up to
create basically a company whose main purpose is just to
buy bitcoin and keep it on its back.
Speaker 6 (19:29):
Nothing can go wrong with the SPAC. I'm just saying, like,
like you know, I know there's ETFs and so on
and so forth, but I'm just trying to get an
idea of the buy in. Where's anthony, like, where it's
all coming from.
Speaker 5 (19:40):
I can speak to institutionals, but doesn't coinbase. Now I'm
making the SMP, doesn't that expose like my four oh
one k yeah to crypto for the first time, And
I think that's really interesting sort of context right here
with it feels like a pivotal moment, right if I'm
a consumer and I don't I don't want to take
that risk. Was I'm I.
Speaker 6 (20:00):
Don't have a choice.
Speaker 5 (20:01):
I don't have a choice, right exactly. I think that's
really a kind of key moment, right.
Speaker 6 (20:05):
I agree with you.
Speaker 3 (20:05):
I looked at it like that as well, Anthony. I
want to go back to this idea of the dinner
next week because with the digging that you did into
these wallets and you had them, you looked at different exchanges,
you tried to identify folks. You said, as you were
walking in here today, you're actually looking on Twitter to
see who's posted invitations? What have you found that's not
in this piece, Like what have you reported on over
the last few days than what have you've seen?
Speaker 5 (20:26):
What We're trying to figure out who is going to
actually do the vetting of these people, And we're really
keen to know whether this is happening on the Trump
private end or the Secret Service end. I think it's
a really vital question. The Secret Service is going to
have a much different standard potentially than the than the
White House.
Speaker 3 (20:43):
Well, when you say vetting perspective. Do you mean from
a safety perspective, the background checks, I mean getting physically
close to the president, and especially somebody who's been the
target of not one, but two assassination attempts over the
last year. I would imagine the Secret Service is very
very serious about keeping him protect You would think so.
Speaker 5 (21:03):
But I think the real concern is going to be
on the anti money laundering front, right, Like, how much
can you know about some of the operators who have
bought their way into a personal meeting with the president.
Speaker 2 (21:13):
And I.
Speaker 5 (21:15):
Don't believe the Secret Service has the kind of tools
that someone at like Vincent would in order to understand
who's a bad actor and who's not. So I'm curious
to know quite a bit more about that.
Speaker 9 (21:25):
Yeah, I've seen I've seen one of the invitations to
the event, and they are you know you're going to
get searched. Your vehicle is going to get searched. So
I'm sure you know what is under the control of
the Secret Service. To your point is you know they're
going to They're going to do their best to protect
the president.
Speaker 6 (21:41):
But you're right though it's often starts. I mean, I've
gone to the White House, and they needed stuff up
front before I even exactly stepped on ground. So, like
you do wonder about what kind of real vetting can
they do before they even walk away.
Speaker 3 (21:53):
When I reported on the first Trump administration, I had
to send my Social Security numbers to the White House,
perhaps to the Secret Service before I even went to
the White House.
Speaker 5 (22:00):
Yeah, we don't know if that's the case. We truly
don't know, So.
Speaker 6 (22:03):
Mike, you know, I love what Anthony said about. Okay, guys, democratization,
y'all now own some crypto, whether you like it or not,
like that is an important turning point and kind of
legitimate turning point, if you will. It feels like for crypto. Yeah,
our TVD to see.
Speaker 9 (22:20):
Yeah, I mean it's it's been, you know, one of
a series of sort of events that have further legitimized
and brought it more mainstream. You know, I won't comment
on whether or not that's a great idea for all
of our four own case, but it like it or not,
here it is. Coinbase is not only a respectable company,
a top you know, they're in the top half of
(22:42):
market Capan, the S and P five hundred, you know,
And I don't think you know, it's it's not the
beginning of the crypto exposure for sure, in you know,
sort of passive index funds. You know, Tesla owns some crypto.
If you look at micro Strategy, which is one of
these companies that a lot of these SPACs are just
trying to emulate, you know, that is already in the
Nasdaq one hundred. So if you own that, that QQQ in,
(23:06):
that's you want to chuck of that too.
Speaker 6 (23:07):
There are a lot of companies that have been out
there that have had some really big market caps that
have gotten I don't know, I guess time will tell
on all of that. Yeah, well wait, Mike Reagan, Anthony Cormier,
thank you guys so much. What a great chat. You're
listening and watching Bloomberg Business Week Daily. This is the
Bloomberg Business Week Daily podcast. Listen live each weekday starting
(23:29):
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Speaker 3 (23:42):
Welcome to America's ice towns. These are communities convinced that
their financial survival depends on locking people up. It's not
a new phenomenon in this iteration of the classic prison town, though, Carol,
many of the people behind bars haven't been convicted of crimes.
Speaker 6 (23:57):
Let's get to this Bloomberg BusinessWeek story is I guess
you could say a slice of life in America, but
not necessarily a good one. But let's get into it
with Bloomberg News Investigations reporter Rachel Adams heard she joins
us from our Houston bureau. Rachel, good to have you here.
What is an Ice town?
Speaker 11 (24:17):
So, an Ice town is a town where the local politicians,
local community is convinced that they need these immigration detention
facilities that operate under these lucrative contracts with ICE in
order to.
Speaker 6 (24:32):
Be financially sound.
Speaker 11 (24:34):
A lot of these towns they've had a private jail
or private prison detention facility for decades, and with Obama
era sentencing reform, the federal prison population dropped off, and
so to keep these facilities profitable, they signed contracts with ICE.
And now we're seeing just a huge influx in the
(24:55):
number of people detained at those facilities under the Trump
administration's deportation agenda.
Speaker 3 (25:02):
So Rachel take us too. One of these ice towns,
Torrence County, New Mexico.
Speaker 11 (25:08):
Yeah, so we went to Torrance County, New Mexico, and
at the end of March, that's when the County Commission
was voting to extend this contract. And it's a really
rural community. It's one of those areas that used to
be kind of this bustling hub. Thanks to the New
Mexico Central Railroad. You had people from all over who
would come through towns like Estancia where this detention facility
(25:32):
is located. But then inter State forty is built and
commerce really just drops off. And so during the Reagan administration,
when you're seeing these policies like the War on Drugs
that's massively expanding detention in America, there are these private
prison companies that want to get a piece of that business,
(25:55):
and New Mexico was a great place for that for them.
Because land was cheap, they could build these really big
detention facilities by the standards of the time. And so
that's what happened in Astoncia Corcivic then Corrections Corporation of
America build a facility outside of.
Speaker 6 (26:13):
Town at the time.
Speaker 11 (26:14):
It's since been annexed into the town and things were
pretty good for a while. It employed people, that business
was good for Corcivic, But then around twenty sixteen you
had the federal prisoner population drop off and that's when
the facility ended up closing and Corsific said it was
no longer profitable. And then ICE came in to basically
(26:38):
save the day for Corcivic and offered this contract that
guaranteed revenue every single month whether or not there were
any ICE detainees in those beds, and that's the contract
that allows the facility to operate today.
Speaker 6 (26:53):
So just to set the record straight, I mean, these
are facilities that have been around for a long time,
different administrations, correct, Correct, Okay, And the point is too though,
that the conditions aren't great and they're needed in order
to house kind of the roundup that is happening under
(27:15):
this administration.
Speaker 7 (27:16):
Correct.
Speaker 5 (27:17):
So during the.
Speaker 11 (27:18):
Last ten years or I guess five years since this
contract has been in place in Torrence County, a lot
of the people that it was detaining on behalf of ICE.
Speaker 6 (27:30):
They were recent border crossers.
Speaker 11 (27:31):
These were people who were coming up the border from
Mexico a lot of times into Texas. They were seeking
asylum and while they were seeking asylum. They had you know,
turned themselves over in a lot of cases, and now
they were in ice attention, being held at the Torrens
County Detention Facility and Astoncia. After Trump took office, you
see a really dramatic falloff in the number of people
(27:53):
crossing the border. And so all of a sudden you
have room in the Torrens County Detention Facility. And so
because you have this room, you're seeing ice flying people
from all over the country, a lot of them coming
from New Jersey, from Florida, and they're flown into the
Albuquerque Airport and bust to the Torrents County Detention Facility
and that is where they're being held for months in
(28:14):
a lot of cases. And this facility has had problems
for the last several years, and it's really starting to
kind of come to a head with the increase in
the number of people that is holding under the Trump administration.
Speaker 3 (28:29):
Okay, well, you describe the facilities at least one of them.
What was it like?
Speaker 7 (28:35):
What is it like?
Speaker 11 (28:38):
I mean, what we've heard from people who are currently
being detained at the facility is that it's cold, the
food is undercooked, inedible, at times, we've heard complaints about
access to medical care. There are a lot of people
who say that they have tried to ask to be
deported because they do not want to spend another day
(28:58):
in ice attention. But it's incredibly difficult to get the
attention of any ice officers because it's all you know,
prison staff, not necessarily anyone who can actually talk to
them about their case. But the most dramatic issue that
we've heard about recently had to do with the water supply.
Speaker 6 (29:17):
This is the desert, It's.
Speaker 11 (29:18):
Incredibly dry, and the town of Astancia was having an
issue with one of its main water pumps, and so
that led to water being intermittently shut off to the facility.
We heard that there were toilets that were overflowing, and
that there was feces on the floor, that the smell
was overwhelming. We heard people say that they had been
(29:39):
limited at one point to two water bottles a day,
that they were thirsty. At one point, the facility brought
in trash cans full of waters to try to flush
some of those toilets to deal with the odor and
the hygiene issues. And someone we talked to said that
he had seen people who were thirsty drink out of
(30:00):
those trash cans because they were so desperate for water.
So it sounds like this is improving over the last
few days. We did hear that ice was on the
ground recently, but certainly sounds like it has been a
rough couple of weeks inside the detention facility.
Speaker 6 (30:18):
It's interesting because I'm thinking Corcific, right, which is the
company that's been around and is running these facilities, right,
I guess it's close to four deck for four decades.
It looks like I just remember that period and like
investing like private prisons. Everybody thought it was like this
great investment play, but you got to remember it's people,
it's humans. There are conditions. I am curious, like are
(30:42):
these people being held for due processing? Like who determines
the fate of these individuals. It's ultimately the federal government.
Speaker 11 (30:49):
I mean a lot of it is held up in
immigration courts, and that's an incredibly slow moving process. So
I'm sure you all know. One of the issues with
these multi state tinnsfers. I mean, people are thousands of
miles away from their families, but they're also far away
from their lawyers. If they had lawyers in Florida, for example,
because their case was there and now all of a sudden,
(31:11):
it's in New Mexico. They have to try to find
a lawyer that can represent them in a different core,
and that isn't always easy to do, especially because these
tend to be more rural areas where pro bono lawyers
are harder to come by, located farther away from the
facilities themselves. So just the act of moving someone to
a facility so far away it does impact that person's
(31:33):
right to do process.
Speaker 3 (31:35):
There's some context here and sort of like the internal
workings of how these communities feel about these that I
think is really interesting. In your piece County Commissioners and
how County commissioners look at this, you highlight Linda Yamario,
who of the Torrence County Commission, who actually did go
inside one of these facilities, and then you and the
(31:57):
team wrote that she voted to extend the ice con
talk to us a little bit, and it's not really
town gown relations, but it's the way that the community
feels about this and the way that local elected officials
feel about these.
Speaker 11 (32:11):
Yeah, it's really striking to sit in on these County
commission meetings because you know, the contract is up for
an extension every so often, every several months, but no
matter what, at every meeting which is held, you know,
bi weekly, there are a bunch of lawyers and advocates
and even people who are in detention who record testimonies
(32:34):
that they play to the commissioners during public comment, urging
them to shut down Torrents County.
Speaker 6 (32:41):
Detention Facility for ice detention.
Speaker 11 (32:44):
And you have these three commissioners who sit at the
front of the room and they're listening to this, and
some of the testimony is in Spanish, and Commissioner how
to Meo speak Spanish, and so you can kind of
watch her face that she's listening to people describe the
conditions inside the facility, and what she told people at
that meeting in particular was, look, I hear all these concerns,
(33:06):
but I don't know what to trust, and so she
ended up voting to extend it. Sorry I lost my earpiece,
But it's unclear whether she told you that in October,
because she did go again and say that things seem
to be going well, but she does still have concerns.
Speaker 6 (33:24):
You know, I think it's interesting and what I find
fascinating is that this is a story that's got so
many different angles to it when you think about what
these detention centers do for a local economy. There's that,
but there's also then as we've been talking about the conditions,
and you do wonder about the oversight, especially in an
(33:44):
administration that has been cutting back on some of the
federal spending in different areas. So, you know, Rachel, when
you look at this story and this reporting, I mean,
the cities or the local municipalities in many ways want
them right because it provides jobs, it provides some economic momentum.
At the same time, there are concerns about kind of
(34:06):
who's watching out for what's going. What does Corcivic say
about all of this?
Speaker 11 (34:11):
Yeah, Corcivic talks about how many people they employ locally.
They talk about the salaries and the benefits that they provide.
They you know, say that they I think they said
that they hire or have more than three hundred jobs
related to these facilities in New Mexico. So, I mean,
they definitely see themselves as a major local economic benefit
(34:35):
to the area. And that's you know what we heard
from the Estancia mayor as well. I mean, he talks
a lot about how much of the grocery septs tax,
which is New Mexico's version of a sales tax that
corcific contributes to. So it's interesting to hear kind of
the I mean, I think commissioner how Tomeos, Yeah put
it succinctly when she met, like on the one hound.
(34:57):
They're a major employer.
Speaker 6 (34:59):
Yeah, such a great story. So much in there, and
as we said, it's a slice of life in this country.
Bloomberg News Investigations Report Rachel Adams heard Rachel, thank you.
This is Bloomberg.
Speaker 1 (35:10):
You're listening to the Bloomberg Business Week Daily Podcast. Catch
us live weekday afternoons from two to five East during
Listen on Applecarplay and Android Auto with the Bloomberg Business app,
or watch us live on YouTube.
Speaker 11 (35:26):
Mac.
Speaker 6 (35:27):
How about you let me drive?
Speaker 8 (35:28):
No, no, no, no, this is not a toy.
Speaker 6 (35:30):
Please drive, honey, please how the gravels?
Speaker 7 (35:35):
Let's wat?
Speaker 8 (35:36):
I want to drive.
Speaker 7 (35:37):
It's good question.
Speaker 6 (35:44):
This is the drive to the clothes punks me.
Speaker 7 (35:47):
We'll driven.
Speaker 6 (35:48):
On Bloomberg Radio. TikTok, everybody eighteen minutes, talk eighteen minutes.
What can happen in eighteen minutes?
Speaker 3 (35:58):
How was yesterday?
Speaker 6 (35:59):
I was just oh my god, I wish you were here,
because well, first of all, we miss you both, Matt
and I missed you. We're like, let's just bring it.
Let's just do it, like three three of us.
Speaker 3 (36:07):
I'd be fun.
Speaker 6 (36:08):
It was quite a rally, I bet, but it was boring.
Speaker 3 (36:12):
Really.
Speaker 6 (36:13):
Everybody who came in.
Speaker 3 (36:14):
And we talked to They're just like, this is what happens.
Speaker 6 (36:17):
This was a boring rally. Okay, there was volume, but
it was kind of boring. Okay, which makes you kind
of wonder.
Speaker 3 (36:24):
I don't know, so we're back to where we were
January first.
Speaker 6 (36:26):
Yeah, but it was just I don't think everybody was like, Okay,
this is it all in everybody. I know there's a
lot of estimates changing on Wall Street and so on
and so forth, but that was kind of the feeling.
Speaker 3 (36:34):
Okay, thanks for the update. I am read in now.
Speaker 6 (36:39):
That will not be a question. I'm pointed quiz. All right,
let's get to it. Time for the drive to the cloth.
Karen Vera Perry is with us. She's managing director, head
of I Shares US fixed Income strategy over at Blackrock,
joining us from San Francisco. Karen, good to have you here.
With us Blackrock. You guys see so much world's largest
asset manager eleven point six trillion or in counting assets
(37:01):
under management.
Speaker 7 (37:01):
How are you.
Speaker 10 (37:03):
I'm doing great today. Thanks for having me on.
Speaker 6 (37:05):
Well, it's great to have you here. We did have
a bounce back yesterday. But I am curious you guys
see so much in terms of flows and where investors
want to put either new money move money around. How
would you describe kind of the bounce back we have
and where investor flows are going and what it says
to you about investor sentiment, which has been rather nervous
over the last month.
Speaker 9 (37:26):
Yeah.
Speaker 10 (37:26):
I mean, we love watching bond market trends through the
lens of exchange traded funds, so when we look at
the ets, we get a great view on what's going on.
A lot of investors are still just waiting and seeing
they're still sitting in cash. We actually have our short
duration treasure ETFs have seen the most flow you're to
date at seventeen billion dollars. So I think investors are
(37:46):
being really cautious. They know people like these rallies where
we're getting back to levels we were earlier in the year,
but we're seeing people kind of waiting and seeing both
in the stock and bond side, they're sitting in cash,
they don'tant to take on too much duration in their
bond portfolio, and then they're a little bit nervous sometimes
about you know, entering these rallies a little bit too early.
Speaker 6 (38:05):
So let me just clarify. So among the fixed income
universe you're to date, where you're seeing the most money
move in is in your short duration fixed income ETF
about seventeen billion dollars, that's right.
Speaker 10 (38:16):
And then across the industry, about a third of all
ETF flows are going to short duration vehicles. So we're
still seeing that as a trend, not just with us,
but within other vehicles across the industry.
Speaker 3 (38:26):
How are you looking in terms of like competition with
money markets in those short duration vehicles, that's.
Speaker 10 (38:32):
A great question. We do see people wanting to diversify
out their cash. We actually two different fixed income ETFs
that are actually money market funds. They meet the two
A seven requirements. We have a prime fund PMMF and
a government fund g MMF. And I think for a
lot of people they like they like money market funds.
(38:53):
They like the stability that they offer, but they also
want that interer day and exchange traded liquidity. So I
think think that that's been a big trend where people
are looking at their money market funds. They want the
yields to be competitive, but in some cases in their
brokerage account, if they want a little bit more yield,
they might turn to maybe a short duration treasure ETF
or even one that has some credit risk associated with it.
Speaker 3 (39:15):
How much time are people spending in these assets and
then when they do take their money out, what do
you know about where it goes?
Speaker 10 (39:22):
I would say on average, people are spending six months
or more inside some of these assets, and then when
they're taking out. I think people are really getting their
asset allocation back on track. Kind of coming into twenty
twenty four, we saw so many people that were overweight equities,
underweight bonds, and overweight cash. So I think of anything,
some of those cash underweights have been taken down a
(39:43):
little bit, just with equities off we saw some rebalancing
back into equities, but I think overall people are really
holding tight and they want to see a little bit
more clarification about where things are going until they really
fully move into markets. So that's going to be a
big trend that we're seeing is when bonds, when money
comes off the sidelines, we'll see that being a big
(40:05):
catalyst for both bond and stock markets.
Speaker 6 (40:07):
So I am curious, Karen, are you looking for some
kind of full market capitulation or full investor market capitulation?
And if we are, have we seen it?
Speaker 10 (40:18):
I don't think we've seen it yet. I think people
are definitely on just channeling Jerome Pal's energy from the
press conference last week. People are waiting, so I think
they're looking for when is the Fed actually get a cut,
and just looking at the Fed FEDS futures today, the
first cut could be as late as October, and the
market's now only pricing into two cuts this year. So
(40:39):
I think it used to be a pretty easy playbook
where you look and say, oh, the Fed's cutting, I'm
going to add to my bonds, add to bond portfolio,
take duration out. But I think because we keep waiting
and pushing out that first cut, that's really what I
think that's really going to be a big catalyst for
people coming back to the bond market, maybe feeling a
little bit better about stock market, because that also means
(41:00):
inflation is under control, So that's I think that fed
first cut is going to be our next cut in
the cycle is going to be a big catalyst for that.
Speaker 3 (41:07):
The President just before our program started put out a
post on social media that said, no inflation. The prices
of gasoline, energy, groceries, and practically everything else are down.
The FED must lower the rate like Europe and China
have done. Is the President right? Should the FED be
lowering rates?
Speaker 10 (41:27):
The Fed's been really focused on the data, and I
think one of the interesting things about the CPI report
is it had some of the impact of some of
the tariff policies, but I don't think that's been fully transmitted.
So we've seen the hard data, like the CPI print
hasn't really shown what the sentiment is showing out there,
So whether when it's a more survey based approach that's
(41:48):
based on sentiment. We've seen a lot of people being
very nervous about inflation going up, small business and CFOs,
so I think we're seeing it more manifest itself in
the sentiment than in the hard day and the fed's
really looking at the hard data and they haven't seen
so even though this inflation print came in a little
bit softer, and those categories you mentioned didn't increase. CPI
(42:10):
is still running about two point six percent year every year,
and the Fed has that mental or that that barometer
about two percent trying to get it back down in
that range. So they're very comfortable keeping it higher for
longer and just waiting, waiting it out. So if we
did see inflation spike in the next couple prints, it
would get pushed out even more. But I think we'd
need to see it come down to more that two
(42:31):
percent year every year before they would they would definitively move.
Speaker 6 (42:34):
So, Karen, it sounds like you think the Fed is
spot on in terms of its monetary policy.
Speaker 10 (42:42):
Yeah, I don't think that they. I don't think they're
making mistake here. I think that they're being patient and
they want to make sure that they don't move too
quickly and then cause some other problems. So I think
that that's that's really you know, their their primary mandate,
and they've said they've toggled back. They had that dual
mandate where they focused both on the economy, unemployment, jobs,
then they also are focusing on price stability, and right
(43:04):
now they've really zeroed in on that because unemployment still
looks pretty good. The April jobs report was pretty strong,
unemployment rate around four point two percent. So I think
that they're just hyper focus on inflation right now and
it's not fully done to where they want it to be.
Speaker 3 (43:18):
Just very briefly, the Fed behind us. That was last week,
we got CPI. Today, we did also get some clarity
on trade from over the weekend and yesterday. What's the
next catalyst for you?
Speaker 10 (43:29):
Just ten seconds, Let's look at the June FED meeting.
We'll get the dot plot that summary of economic projections
look to that, so people are going to be dissecting
that and see how the Fed has modeled in the
impact of trade on the economy.
Speaker 6 (43:41):
All right, we're going to leave it there. Hey, Karen,
thank you so much, So appreciate it. Karen Verry Perry,
she's head of USI shares Fixed Tocome strategy over at Blackrock.
Joining us here on this Tuesday from San Francisco.
Speaker 1 (43:54):
This is the Bloomberg Business Week Daily podcast, available on Apple, Spotify,
and anywhere else you get your podcasts. Listen live weekday
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The iHeartRadio app tune In, and the Bloomberg Business App.
You can also watch us live every weekday on YouTube
(44:15):
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Bloomberg Audio Studios, Podcasts, radio News. This is Bloomberg business
Weekdaily reporting from the magazine that helps global leaders stay
ahead with insight on the people, companies, and trends shaping
today's complex economy. Plus global business, finance and tech news
(00:23):
as it happens. The Bloomberg Business Week Daily Podcast with
Carol Masser and Tim Steneveek on Bloomberg Radio.
Speaker 2 (00:32):
Well.
Speaker 3 (00:32):
As we mentioned a little earlier in the program, President
Trump isn't at Saudi Arabia on his first scheduled overseas
trip since taking office earlier this year. He did visit
the region back in twenty seventeen during the first term.
He did, of course, go to Italy Vatican City too
for the Pope's funeral a little earlier this year. This
time around, though, Saudi Arabia is looking to boost investments
in the US to one trillion dollars, with six hundred
(00:54):
billions said to be already committed. As for the US,
it's considering letting the UAE by over eight million advance
in video chips and with Saudi Arabia specifically about a
relationship that's more about friends rather than foes.
Speaker 4 (01:07):
I have never believed in having permanent enemies, I am
different than a lot of people think. I don't like
permanent enemies, but sometimes you need enemies to do the
job and you have to do it right. Enemies get
you motivated. In fact, some of the closest friends of
the United States of America nations we fought wars against
(01:30):
in generations past. Now they're our friends and our allies.
Speaker 3 (01:35):
Whether you have a President Trump just a little earlier
today in Saudi Arabia for more on the relationship between
the two countries and really the US and the Middle
East as a region, let's go to la and the
executive director of the independent nonprofit Middle East Forum, Greg Roman,
joins us.
Speaker 5 (01:49):
Now, Greg, I just.
Speaker 3 (01:50):
Want to start with, based on what you heard from
President Trump a little earlier today, how you would characterize
the US's relationship with the Middle East, and specifically how
it's different than previous administrations.
Speaker 2 (02:04):
Well, I think that what President Trump is looking for
his partnership instead of ownership over the region. He expects
that there be a quid pro quo between the United
States and it's trade, commercial, economic, and military relationships with
Middle East allies. But there's also some sub layer here
that I think the administration needs to be wary of
where in countries like Saudi Arabia and the United Arab
(02:25):
Emirates are looking to foster closer relations with the US,
with our businesses, with our markets. There's other countries like
Turkey and Katar. Even though he's not potentially visiting Turkey,
unlistors that deal with Putin and Zelensky on Thursday that
are looking to influence the United States to outstretch their
interests to the US's disadvantage. So there's two positive visits
(02:45):
here and another one that I would be very aware
of when he goes to Doja.
Speaker 6 (02:50):
Greg the President saying, you know, now there are our
friends and our allies talking about Saudi Arabia, and I'm
just curious, what does being friends and allies really look
like going forward between the two you and where does
that kind of leave the US And it's historical allies?
Speaker 7 (03:05):
All right?
Speaker 2 (03:05):
Well, I think that sort of Arabian and the United States
have been historical allies since the meeting at the ALTA.
Speaker 6 (03:10):
It's a crown book. I guess every relationship's complicated, but
it feels like this one's been a little bit more complicated.
Speaker 7 (03:15):
Well, Okay, let's go to nine to eleven for a second.
Speaker 2 (03:17):
Exactly after eleven, and you had fourteen years of animus
between the United States and Saudi kings and princes because
of their failure to own up to what was the
result in relationship of having cover fur the bin Laden family.
But Mohammed bin Salman becomes Crown Prince in twenty fifteen,
he quickly starts to reform the kingdom, starts opening up
its markets, asking for more investment in the United States,
(03:39):
even goes so far as to invest money and the
Israeli led Hedge Fund. For the last decade, MBS has
been at the forefront of trying to crystallize and close
in relations between the United States and Saudi Arabia. The
UAE going back to the early nineties, has been in
a close defense relationship with the United States since the
Gulf War. But the third country that I mentioned, the
Kataris that's one that I'm still wary of, considering the
(04:01):
fact that they have huge influence operations and even espionage
against members of the United States and also people who
are even close to Trump's family.
Speaker 3 (04:09):
Okay, so let's go there and give us exactly what
you're concerned about, especially in the context of a potential
gift of a presidential jet.
Speaker 7 (04:19):
Well, I think this goes beyond the presidential jet.
Speaker 2 (04:21):
I understand why the Defense Department would try to have
an interim solution for the lack of Boeing being able
to deliver on Air Force one, which is now expected
by twenty twenty nine, but I think security considerations will
put that aside and the Secret Service won't sign off
on that. Even though I understand the token gesture, the
larger issue is the forty six to forty seven billion
dollars that Kataris have invested in American higher education k
(04:43):
through twelve businesses or university systems, political lobbying to the
tune of almost seventy eight million dollars over the past
few years, all but the intent of trying to buy
both sides of the political aisle. And I don't think
this is anything that really extends to the administration. But
what the Guitaris have done is try to create white
picket fence around their ears of influence on Republicans and
Democrats that whichever way American politics go, the Qataris will
(05:06):
be there to win.
Speaker 6 (05:08):
So why I don't know, maybe this sounds naive. I mean,
what is it that we need to be wary most
when it comes to extending our relationship throughout the Middle East.
I mean, we have relationships right with other countries, with
other regions. There are investments that we encourage. We have
a White House and president who is big time encouraging
(05:29):
investments by everyone outside the United States into the United States.
So what is it in particular at this moment in time,
especially with a nation like Saudi Arabia that is trying
to move beyond oil right and kind of extend its
economy in different ways, that does require maybe relationships beyond
its borders. So I'm just curious what do you think
(05:51):
Americans need to be wary about in this relationship as
it seems to be deepening.
Speaker 2 (05:56):
I think with plant twenty thirty under MBS in Saudi Arabia,
the diversetion of Saudi's economy, it's being a key member
of the IMEC, Israel, Sorry, India, Middle East Europe Economic
Corridor is great in terms of being able to have
American companies invited to bid on infrastructure contracts there and
to help them diversify it. It's a net gain for
the US and Saudi same thing with the Amrodis they've
(06:18):
placed their bet on Ai. I think the fact they're
willing to invest close to a trillion dollars to this
with check Tachnun and his leadership through their ministries for
infrastructure and development, it's a win win for the United States.
But the one that I'm worried about is where in
the UAE and Saudi Arabia don't have significant military relations
with Iran, don't support Kamas, aren't actively supporting Sirian g hotties.
(06:38):
That Katari trip, the one in which you have a
country which hosts one of the most egregious terror organizations
that ever commit a tax against Americans. We saw their
influence over the weekend, is one that I have to
be very wary of because I don't see what the
net gain is for the United States. If anything, it's
to our citizens detriment to do any business with them.
Speaker 3 (06:55):
We're speaking with Greg Roman, executive director of the Middle
East Forum. He joins us from Los Angeles. Greg, I
want to dig into what you've described as an influence
campaign of the Katari government, specifically when it comes to
higher education, and indeed k through twelve here in the US,
what can you tell us about what you found and
what you've reported on and really what the goals are
(07:17):
of the government of the country.
Speaker 2 (07:20):
So if you think about all areas of American educational excellence,
Carnegie Mellon in cyber space, Northwestern d Business, Cornell and Medicine,
Georgetown and diplomacy, Texas A and M, and science and engineering,
these are all places where the Katari government has invested
hundreds of millions, if not billions of dollars and bringing
those campuses and the intellectual property and.
Speaker 7 (07:39):
The professors to Doha.
Speaker 2 (07:41):
So if you look at the number amount of students
that study at Texas A and M Doha, it's Iranian
students who more than anything constitute the people who are
there studying nuclear engineering, physics, applied sciences. And they take
that IP which they wouldn't be able to access because
they wouldn't get a visa to study in the United States,
bring it back to who you ran, and then contribute
(08:01):
to their nuclear program. Even in k through twelve. Their
goal is to try to create a generation of Americans
who are sympathetic to Katari foreign policy goals, so that
maybe one person from a million who graduate from one
of these universities ends up becoming president. That Kataris have
their talents enshrined in them and are able to exert
their influence on it. And we see this across business.
(08:22):
Dozens of companies, hedge funds, investment funds, all taking Katari
money and then when the right time comes, they use
that investment and they activate it to have their influence.
Speaker 6 (08:33):
So what do you make or what do you believe
is the significance of this being President Trump's first plan
trip overseas. And you've also served, as I should point out,
the political advisor to the Deputy Foreign Minister of Israel.
You've worked for the Israeli Ministry of Defense. I mean,
how do you think Israel and the Prime Minister and
Yahoo are looking at this trip.
Speaker 2 (08:51):
I think that the US is executing its own interests
as much as we elect our president to be able
to engage in policies that are pro American, and the
Israeli government decides what's best for Israel. More often than not,
the policies mesh where there's a strong close relationship between
the two. But I think at the same time President
Trump is saying, we have to have an America first policy,
and that's not at juxtaposition where it's against Israel's interests,
(09:14):
but the net gain for the United States in terms
of strengthening its relationship with Arab countries will also be
a positive gain for Israel.
Speaker 7 (09:22):
We saw the same exact pattern take place.
Speaker 2 (09:24):
In twenty nineteen and then twenty twenty with the process
that led to the Abraham accurts, and frankly, if I
was Prime Minister net and Yahoo, I'd be looking at
the dialogue between mohammedd and Salman and President Trump and
seeing how close I am now today versus yesterday of
having sauty recognition of Israel and economic relations between the
two heavyweights in the region.
Speaker 6 (09:42):
And we did hear President Trump mentioning the Abraham Accords
in his earlier speech there in Riyat. I am curious,
do we look back at this moment in time in
five years, Greg, and say three years. I always think
about this, Is this a moment in time where we
are really strongly changing our geopolitical alliances or midterms or
(10:06):
new president come three and a half years or so,
does that change things potentially? Again?
Speaker 2 (10:12):
I think we're at an inflection point. The Abraham Accords
was put on ice when President Biden came into office
for other reasons where he was trying to seek deeper
relations with non Arab Sunni countries with Iran. But now
we're basically picking up fro where we were in September
and October of twenty twenty. More deals will be signed,
trade relationships will be deepened, We'll finally be able to
have an alternative trade corridor to the Chinese Belt and
(10:34):
Road policy, which has been going through China, Iran, Pakistan,
Turkey and onto Europe. And this is I think the
reemergence of America as a viable competitor on the global
stage with China embracing our golf allies. And at the
same time, it's also building closer connections between regional powers
that for far too long haven't had the kind of
relationship that they should have, whether it's trade, commerce, economy,
(10:54):
or military. And President Trump is the glue that's helping
cement all this together.
Speaker 3 (10:59):
We have thirty seconds left. The President said he wants
an Iran deal. He warns it to take the olive branch.
Just thirty seconds on Iran. While we have you, The.
Speaker 2 (11:07):
Iranians are going to play President Trump along until they
don't say that they're willing to dismantle their uranium and
richment infrastructure. I think we're going to get to a
point where the Iranians are going to sit in the
President's face. I understand why you have to try diplomacy,
but at the end of the day, the only way
for the Iranians to move forward is to eliminate their
newclear program, either by themselves or by an American strike.
Speaker 6 (11:27):
Greg fifteen seconds China. Is this all happening as the world,
the US increasingly is pushing back against China, and just
very quickly, this is.
Speaker 2 (11:36):
A global push against China. I think Europe the United
States have no daylight between them, and engaging in the
golf is pushing China out of the region, which is
something the US should have done for the last five years.
Speaker 7 (11:45):
It's a good thing that's happening now.
Speaker 6 (11:47):
Greg Graeman, thank you so much, Executive director of the
Middle East Forum. Joining us from LA.
Speaker 1 (11:51):
You're listening to the Bloomberg Business Week Daily Podcast. Catch
us live weekday afternoons from two to five East during
listen on Apple Karpel Android Auto with the Bloomberg Business
app or watch us live on YouTube.
Speaker 3 (12:06):
Hey, speaking of crypto, Robinhood has agreed to buy the
crypto platform operator Wonder five. Morgan Stanley's digital asset markets
head is leaving the bank to start his own crypto
and digital asset investment fund. And the trading tech firm
and the trading tech firm is also he's leaving to
do that too. And bitcoin is close to it all
time high. Also, the President is hosting that crypto dinner
(12:27):
and where's your invitation?
Speaker 6 (12:28):
Coinbase Oh yeah, being.
Speaker 3 (12:29):
Added to the S and P five found what is
it up? Twenty five percent speak?
Speaker 6 (12:32):
Yeah, I mean, come on crypto.
Speaker 3 (12:35):
Well, that's where I wanted to start.
Speaker 6 (12:37):
Round table right having its moment.
Speaker 3 (12:39):
Mike Reagain is Bloomberg News Senior editor and Crypto Digital
Payments team leader, and Anthony Cormier is Bloomberg News Investigations reporter.
They both join us here in the Bloomberg Interactive Broker's studio. Mike,
that's where I want to start with you. With Coinbase
being added. Yeah, quite a.
Speaker 8 (12:55):
Share prop pop after that announcement.
Speaker 9 (12:58):
I mean, you know, in some ways it was sort
of inevitable that Coinbase would get added to the S
and p.
Speaker 3 (13:05):
Five hundred.
Speaker 8 (13:06):
If you look at its market cap.
Speaker 9 (13:08):
Before the announcement, something like fifty three billion. I mean,
that's puts it in the top half of S and
P five hundred stocks by market value. I think what
kept it out for a while is that Coinbase's earnings
can be very volatile post a loss, some quarters big
profit some quoters, smaller profit the other quarter. So one
(13:28):
of the S and P five hundred criteria's CRITERIU I
guess is the word is consistent profitability. You know, they
want them to be profitable in the last quarter and
they want the trailing four quarters to be profitable for
a company. So, you know, there is sort of this
rumblings you hear that they got snubbed in the last
S and P. Five hundred reconstitution, but I think it
(13:50):
was more likely and we never hear exactly what the
SMP committee how they make their decision, but I think
they were probably more worried about.
Speaker 8 (13:59):
That earnings violatility than anything else.
Speaker 9 (14:01):
You know. That said, it is obviously a much friendlier
regulatory environment for coinbase, so a lot of those questions
about the case.
Speaker 8 (14:10):
With the SEC have sort of been a watchway.
Speaker 3 (14:13):
Yeah, speaking of the friendlier regulatory environment. That was the
segue I want to be Yeah, we go okay, Well,
speaking of the friendlier regulatory environment, I want to bring
in Anthony Cormier because he's been doing some reporting around
the Trump mean Coin, the top Trump crypto buyers who've
been vying for dinner seats. This dinner is happening supposedly
on May twenty second. You and the team dug into
(14:36):
the wall. It's did some digging, found some details about
who these folks are, and it's actually not very clear.
Speaker 5 (14:42):
No, no, less now than when we started.
Speaker 3 (14:45):
We find out we do?
Speaker 2 (14:46):
We do?
Speaker 7 (14:47):
We do?
Speaker 5 (14:47):
We did go hand by one by one through the.
Speaker 6 (14:49):
Two transparency on someone who's doing something in the crypto world.
Speaker 3 (14:55):
Holy well, just to set it up, this is the
this is the dinner that is happening on May twenty second.
It's going to be with the President at his Virginia
golf club, and the top holders of his mean coin
over a certain period of time would gain access to
the dinner.
Speaker 5 (15:11):
Top twenty five get to meet him in person, get
a special VIP tour. Two and twenty get to have
dinner with him in Sterling, Virginia. And as you said, earlier.
It is quite difficult to know who or what are
behind some of these wallets. So we went one by
one and learned what we could, and that was that
more than half of them are likely foreign. Six of
(15:32):
the top twenty five are almost certainly acquired their shares
from an exchange that doesn't allow you, doesn't allow Americans
to acquire them. And I before I walked in this room,
I was going through Twitter looking for all of the
people who have posted their invites online to see what
we could learn.
Speaker 6 (15:48):
What's the law on that? And the reason I bring
that up is I think about all of us who
go through training, who work at US companies. We go
through extensive training about who you do business with. If
you're a business, a contractor, you've got to know exactly
who they are, where the money's coming from, and if
there's any any any questions. You don't do it.
Speaker 5 (16:09):
Banks do KYC all the time. You know your customer stuff.
There's anti money leandering programs that, in fairness of the
President and his the mean point operators, they are saying
that they you have to go through certain steps. We
don't know what those steps are, right in order to
get to this dinner that we don't know what to
quote KYC watch watch list, you have to avoid to
(16:29):
be in this dinner. All of those questions we've posed
to the White House, they've thus far refused to answer.
Speaker 3 (16:35):
Mike, how are you looking at this as somebody who's
covered markets for years are now heading up your tenior
editor and you're also heading up the crypto team. There's
this idea now that the idea of appearance of conflict
of interest, you know, has kind of been thrown out
the window at this point. It's a question that I
asked Eric Trump about when I interviewed him a few
weeks ago, and he basically said, you don't have to
(16:56):
worry about this. I never talked to my dad about
crypto and crypto policy. But the president does have a hand.
He makes money when certain things happen. Yeah, I mean, I.
Speaker 8 (17:06):
Guess gobsmack is the word to hype.
Speaker 9 (17:08):
I put in just how brazen it really is, you know,
and the some of the prominent Democrats are screaming from
the hilltops, Elizabeth Warren and others, you know, not only
about this, but World Liberty Financial. Trump's other crypto project
introduced a stable coin, you know, a crypto token that's
(17:29):
peg to the dollar. It was just used in a
two billion dollar equity stake from a Dubai fund into Finance, which,
if you recall, was the crypto exchange that just two
years ago, less than two years ago, settled some very
major charges with US Justice Department about basically not having
(17:51):
an anti anti you know, not having that KYC program
in place that Anthony's talking about, or a Nancy money
lundering system in place, or at least not a robust
enough one to catch what the government alleged was, you know,
terrorists and all sorts of criminals using that exchange launder money.
Speaker 8 (18:12):
So, you know, it's just shocking to see that.
Speaker 9 (18:17):
You know, what you thought were sort of checks and
balances in the government don't really matter if the controlling
party is on board with the president and willing to
give him this type of latitude.
Speaker 6 (18:28):
Where's the financial community? And I bring that coming just
off of Milkin out on the West coast, there are
everybody and anybody in terms of the financial might globally,
certainly in the United States, trillions of dollars right worth
of capital assets under management. In the past, crypto has
been a topic, but I got to tell you. We
talked to infrastructure, we talked supply chained, we talked tariffs,
(18:50):
we talk private markets, and we talked democratization of things
like private credit. I think we had one interview with
someone who's like definitely into crypto in a big way,
but I it wasn't a big thing. So where is
the financial might and the folks on Wall Street and
the big investors, Because who's doing all the activity? Why
is crypto? Like is it just the White House?
Speaker 10 (19:11):
No?
Speaker 3 (19:11):
If you look at especially the SPAC.
Speaker 8 (19:14):
Deals being priced recently and being announced, you know.
Speaker 9 (19:18):
Kenner Fitzgerald, one of their SPACs is teaming up to
create basically a company whose main purpose is just to
buy bitcoin and keep it on its back.
Speaker 6 (19:29):
Nothing can go wrong with the SPAC. I'm just saying, like,
like you know, I know there's ETFs and so on
and so forth, but I'm just trying to get an
idea of the buy in. Where's anthony, like, where it's
all coming from.
Speaker 5 (19:40):
I can speak to institutionals, but doesn't coinbase. Now I'm
making the SMP, doesn't that expose like my four oh
one k yeah to crypto for the first time, And
I think that's really interesting sort of context right here
with it feels like a pivotal moment, right if I'm
a consumer and I don't I don't want to take
that risk. Was I'm I.
Speaker 6 (20:00):
Don't have a choice.
Speaker 5 (20:01):
I don't have a choice, right exactly. I think that's
really a kind of key moment, right.
Speaker 6 (20:05):
I agree with you.
Speaker 3 (20:05):
I looked at it like that as well, Anthony. I
want to go back to this idea of the dinner
next week because with the digging that you did into
these wallets and you had them, you looked at different exchanges,
you tried to identify folks. You said, as you were
walking in here today, you're actually looking on Twitter to
see who's posted invitations? What have you found that's not
in this piece, Like what have you reported on over
the last few days than what have you've seen?
Speaker 5 (20:26):
What We're trying to figure out who is going to
actually do the vetting of these people, And we're really
keen to know whether this is happening on the Trump
private end or the Secret Service end. I think it's
a really vital question. The Secret Service is going to
have a much different standard potentially than the than the
White House.
Speaker 3 (20:43):
Well, when you say vetting perspective. Do you mean from
a safety perspective, the background checks, I mean getting physically
close to the president, and especially somebody who's been the
target of not one, but two assassination attempts over the
last year. I would imagine the Secret Service is very
very serious about keeping him protect You would think so.
Speaker 5 (21:03):
But I think the real concern is going to be
on the anti money laundering front, right, Like, how much
can you know about some of the operators who have
bought their way into a personal meeting with the president.
Speaker 2 (21:13):
And I.
Speaker 5 (21:15):
Don't believe the Secret Service has the kind of tools
that someone at like Vincent would in order to understand
who's a bad actor and who's not. So I'm curious
to know quite a bit more about that.
Speaker 9 (21:25):
Yeah, I've seen I've seen one of the invitations to
the event, and they are you know you're going to
get searched. Your vehicle is going to get searched. So
I'm sure you know what is under the control of
the Secret Service. To your point is you know they're
going to They're going to do their best to protect
the president.
Speaker 6 (21:41):
But you're right though it's often starts. I mean, I've
gone to the White House, and they needed stuff up
front before I even exactly stepped on ground. So, like
you do wonder about what kind of real vetting can
they do before they even walk away.
Speaker 3 (21:53):
When I reported on the first Trump administration, I had
to send my Social Security numbers to the White House,
perhaps to the Secret Service before I even went to
the White House.
Speaker 5 (22:00):
Yeah, we don't know if that's the case. We truly
don't know, So.
Speaker 6 (22:03):
Mike, you know, I love what Anthony said about. Okay, guys, democratization,
y'all now own some crypto, whether you like it or not,
like that is an important turning point and kind of
legitimate turning point, if you will. It feels like for crypto. Yeah,
our TVD to see.
Speaker 9 (22:20):
Yeah, I mean it's it's been, you know, one of
a series of sort of events that have further legitimized
and brought it more mainstream. You know, I won't comment
on whether or not that's a great idea for all
of our four own case, but it like it or not,
here it is. Coinbase is not only a respectable company,
a top you know, they're in the top half of
(22:42):
market Capan, the S and P five hundred, you know,
And I don't think you know, it's it's not the
beginning of the crypto exposure for sure, in you know,
sort of passive index funds. You know, Tesla owns some crypto.
If you look at micro Strategy, which is one of
these companies that a lot of these SPACs are just
trying to emulate, you know, that is already in the
Nasdaq one hundred. So if you own that, that QQQ in,
(23:06):
that's you want to chuck of that too.
Speaker 6 (23:07):
There are a lot of companies that have been out
there that have had some really big market caps that
have gotten I don't know, I guess time will tell
on all of that. Yeah, well wait, Mike Reagan, Anthony Cormier,
thank you guys so much. What a great chat. You're
listening and watching Bloomberg Business Week Daily. This is the
Bloomberg Business Week Daily podcast. Listen live each weekday starting
(23:29):
at two pm Eastern on Applecarplay 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 eleven thirty.
Speaker 3 (23:42):
Welcome to America's ice towns. These are communities convinced that
their financial survival depends on locking people up. It's not
a new phenomenon in this iteration of the classic prison town, though, Carol,
many of the people behind bars haven't been convicted of crimes.
Speaker 6 (23:57):
Let's get to this Bloomberg BusinessWeek story is I guess
you could say a slice of life in America, but
not necessarily a good one. But let's get into it
with Bloomberg News Investigations reporter Rachel Adams heard she joins
us from our Houston bureau. Rachel, good to have you here.
What is an Ice town?
Speaker 11 (24:17):
So, an Ice town is a town where the local politicians,
local community is convinced that they need these immigration detention
facilities that operate under these lucrative contracts with ICE in
order to.
Speaker 6 (24:32):
Be financially sound.
Speaker 11 (24:34):
A lot of these towns they've had a private jail
or private prison detention facility for decades, and with Obama
era sentencing reform, the federal prison population dropped off, and
so to keep these facilities profitable, they signed contracts with ICE.
And now we're seeing just a huge influx in the
(24:55):
number of people detained at those facilities under the Trump
administration's deportation agenda.
Speaker 3 (25:02):
So Rachel take us too. One of these ice towns,
Torrence County, New Mexico.
Speaker 11 (25:08):
Yeah, so we went to Torrance County, New Mexico, and
at the end of March, that's when the County Commission
was voting to extend this contract. And it's a really
rural community. It's one of those areas that used to
be kind of this bustling hub. Thanks to the New
Mexico Central Railroad. You had people from all over who
would come through towns like Estancia where this detention facility
(25:32):
is located. But then inter State forty is built and
commerce really just drops off. And so during the Reagan administration,
when you're seeing these policies like the War on Drugs
that's massively expanding detention in America, there are these private
prison companies that want to get a piece of that business,
(25:55):
and New Mexico was a great place for that for them.
Because land was cheap, they could build these really big
detention facilities by the standards of the time. And so
that's what happened in Astoncia Corcivic then Corrections Corporation of
America build a facility outside of.
Speaker 6 (26:13):
Town at the time.
Speaker 11 (26:14):
It's since been annexed into the town and things were
pretty good for a while. It employed people, that business
was good for Corcivic, But then around twenty sixteen you
had the federal prisoner population drop off and that's when
the facility ended up closing and Corsific said it was
no longer profitable. And then ICE came in to basically
(26:38):
save the day for Corcivic and offered this contract that
guaranteed revenue every single month whether or not there were
any ICE detainees in those beds, and that's the contract
that allows the facility to operate today.
Speaker 6 (26:53):
So just to set the record straight, I mean, these
are facilities that have been around for a long time,
different administrations, correct, Correct, Okay, And the point is too though,
that the conditions aren't great and they're needed in order
to house kind of the roundup that is happening under
(27:15):
this administration.
Speaker 7 (27:16):
Correct.
Speaker 5 (27:17):
So during the.
Speaker 11 (27:18):
Last ten years or I guess five years since this
contract has been in place in Torrence County, a lot
of the people that it was detaining on behalf of ICE.
Speaker 6 (27:30):
They were recent border crossers.
Speaker 11 (27:31):
These were people who were coming up the border from
Mexico a lot of times into Texas. They were seeking
asylum and while they were seeking asylum. They had you know,
turned themselves over in a lot of cases, and now
they were in ice attention, being held at the Torrens
County Detention Facility and Astoncia. After Trump took office, you
see a really dramatic falloff in the number of people
(27:53):
crossing the border. And so all of a sudden you
have room in the Torrens County Detention Facility. And so
because you have this room, you're seeing ice flying people
from all over the country, a lot of them coming
from New Jersey, from Florida, and they're flown into the
Albuquerque Airport and bust to the Torrents County Detention Facility
and that is where they're being held for months in
(28:14):
a lot of cases. And this facility has had problems
for the last several years, and it's really starting to
kind of come to a head with the increase in
the number of people that is holding under the Trump administration.
Speaker 3 (28:29):
Okay, well, you describe the facilities at least one of them.
What was it like?
Speaker 7 (28:35):
What is it like?
Speaker 11 (28:38):
I mean, what we've heard from people who are currently
being detained at the facility is that it's cold, the
food is undercooked, inedible, at times, we've heard complaints about
access to medical care. There are a lot of people
who say that they have tried to ask to be
deported because they do not want to spend another day
(28:58):
in ice attention. But it's incredibly difficult to get the
attention of any ice officers because it's all you know,
prison staff, not necessarily anyone who can actually talk to
them about their case. But the most dramatic issue that
we've heard about recently had to do with the water supply.
Speaker 6 (29:17):
This is the desert, It's.
Speaker 11 (29:18):
Incredibly dry, and the town of Astancia was having an
issue with one of its main water pumps, and so
that led to water being intermittently shut off to the facility.
We heard that there were toilets that were overflowing, and
that there was feces on the floor, that the smell
was overwhelming. We heard people say that they had been
(29:39):
limited at one point to two water bottles a day,
that they were thirsty. At one point, the facility brought
in trash cans full of waters to try to flush
some of those toilets to deal with the odor and
the hygiene issues. And someone we talked to said that
he had seen people who were thirsty drink out of
(30:00):
those trash cans because they were so desperate for water.
So it sounds like this is improving over the last
few days. We did hear that ice was on the
ground recently, but certainly sounds like it has been a
rough couple of weeks inside the detention facility.
Speaker 6 (30:18):
It's interesting because I'm thinking Corcific, right, which is the
company that's been around and is running these facilities, right,
I guess it's close to four deck for four decades.
It looks like I just remember that period and like
investing like private prisons. Everybody thought it was like this
great investment play, but you got to remember it's people,
it's humans. There are conditions. I am curious, like are
(30:42):
these people being held for due processing? Like who determines
the fate of these individuals. It's ultimately the federal government.
Speaker 11 (30:49):
I mean a lot of it is held up in
immigration courts, and that's an incredibly slow moving process. So
I'm sure you all know. One of the issues with
these multi state tinnsfers. I mean, people are thousands of
miles away from their families, but they're also far away
from their lawyers. If they had lawyers in Florida, for example,
because their case was there and now all of a sudden,
(31:11):
it's in New Mexico. They have to try to find
a lawyer that can represent them in a different core,
and that isn't always easy to do, especially because these
tend to be more rural areas where pro bono lawyers
are harder to come by, located farther away from the
facilities themselves. So just the act of moving someone to
a facility so far away it does impact that person's
(31:33):
right to do process.
Speaker 3 (31:35):
There's some context here and sort of like the internal
workings of how these communities feel about these that I
think is really interesting. In your piece County Commissioners and
how County commissioners look at this, you highlight Linda Yamario,
who of the Torrence County Commission, who actually did go
inside one of these facilities, and then you and the
(31:57):
team wrote that she voted to extend the ice con
talk to us a little bit, and it's not really
town gown relations, but it's the way that the community
feels about this and the way that local elected officials
feel about these.
Speaker 11 (32:11):
Yeah, it's really striking to sit in on these County
commission meetings because you know, the contract is up for
an extension every so often, every several months, but no
matter what, at every meeting which is held, you know,
bi weekly, there are a bunch of lawyers and advocates
and even people who are in detention who record testimonies
(32:34):
that they play to the commissioners during public comment, urging
them to shut down Torrents County.
Speaker 6 (32:41):
Detention Facility for ice detention.
Speaker 11 (32:44):
And you have these three commissioners who sit at the
front of the room and they're listening to this, and
some of the testimony is in Spanish, and Commissioner how
to Meo speak Spanish, and so you can kind of
watch her face that she's listening to people describe the
conditions inside the facility, and what she told people at
that meeting in particular was, look, I hear all these concerns,
(33:06):
but I don't know what to trust, and so she
ended up voting to extend it. Sorry I lost my earpiece,
But it's unclear whether she told you that in October,
because she did go again and say that things seem
to be going well, but she does still have concerns.
Speaker 6 (33:24):
You know, I think it's interesting and what I find
fascinating is that this is a story that's got so
many different angles to it when you think about what
these detention centers do for a local economy. There's that,
but there's also then as we've been talking about the conditions,
and you do wonder about the oversight, especially in an
(33:44):
administration that has been cutting back on some of the
federal spending in different areas. So, you know, Rachel, when
you look at this story and this reporting, I mean,
the cities or the local municipalities in many ways want
them right because it provides jobs, it provides some economic momentum.
At the same time, there are concerns about kind of
(34:06):
who's watching out for what's going. What does Corcivic say
about all of this?
Speaker 11 (34:11):
Yeah, Corcivic talks about how many people they employ locally.
They talk about the salaries and the benefits that they provide.
They you know, say that they I think they said
that they hire or have more than three hundred jobs
related to these facilities in New Mexico. So, I mean,
they definitely see themselves as a major local economic benefit
(34:35):
to the area. And that's you know what we heard
from the Estancia mayor as well. I mean, he talks
a lot about how much of the grocery septs tax,
which is New Mexico's version of a sales tax that
corcific contributes to. So it's interesting to hear kind of
the I mean, I think commissioner how Tomeos, Yeah put
it succinctly when she met, like on the one hound.
(34:57):
They're a major employer.
Speaker 6 (34:59):
Yeah, such a great story. So much in there, and
as we said, it's a slice of life in this country.
Bloomberg News Investigations Report Rachel Adams heard Rachel, thank you.
This is Bloomberg.
Speaker 1 (35:10):
You're listening to the Bloomberg Business Week Daily Podcast. Catch
us live weekday afternoons from two to five East during
Listen on Applecarplay and Android Auto with the Bloomberg Business app,
or watch us live on YouTube.
Speaker 11 (35:26):
Mac.
Speaker 6 (35:27):
How about you let me drive?
Speaker 8 (35:28):
No, no, no, no, this is not a toy.
Speaker 6 (35:30):
Please drive, honey, please how the gravels?
Speaker 7 (35:35):
Let's wat?
Speaker 8 (35:36):
I want to drive.
Speaker 7 (35:37):
It's good question.
Speaker 6 (35:44):
This is the drive to the clothes punks me.
Speaker 7 (35:47):
We'll driven.
Speaker 6 (35:48):
On Bloomberg Radio. TikTok, everybody eighteen minutes, talk eighteen minutes.
What can happen in eighteen minutes?
Speaker 3 (35:58):
How was yesterday?
Speaker 6 (35:59):
I was just oh my god, I wish you were here,
because well, first of all, we miss you both, Matt
and I missed you. We're like, let's just bring it.
Let's just do it, like three three of us.
Speaker 3 (36:07):
I'd be fun.
Speaker 6 (36:08):
It was quite a rally, I bet, but it was boring.
Speaker 3 (36:12):
Really.
Speaker 6 (36:13):
Everybody who came in.
Speaker 3 (36:14):
And we talked to They're just like, this is what happens.
Speaker 6 (36:17):
This was a boring rally. Okay, there was volume, but
it was kind of boring. Okay, which makes you kind
of wonder.
Speaker 3 (36:24):
I don't know, so we're back to where we were
January first.
Speaker 6 (36:26):
Yeah, but it was just I don't think everybody was like, Okay,
this is it all in everybody. I know there's a
lot of estimates changing on Wall Street and so on
and so forth, but that was kind of the feeling.
Speaker 3 (36:34):
Okay, thanks for the update. I am read in now.
Speaker 6 (36:39):
That will not be a question. I'm pointed quiz. All right,
let's get to it. Time for the drive to the cloth.
Karen Vera Perry is with us. She's managing director, head
of I Shares US fixed Income strategy over at Blackrock,
joining us from San Francisco. Karen, good to have you here.
With us Blackrock. You guys see so much world's largest
asset manager eleven point six trillion or in counting assets
(37:01):
under management.
Speaker 7 (37:01):
How are you.
Speaker 10 (37:03):
I'm doing great today. Thanks for having me on.
Speaker 6 (37:05):
Well, it's great to have you here. We did have
a bounce back yesterday. But I am curious you guys
see so much in terms of flows and where investors
want to put either new money move money around. How
would you describe kind of the bounce back we have
and where investor flows are going and what it says
to you about investor sentiment, which has been rather nervous
over the last month.
Speaker 9 (37:26):
Yeah.
Speaker 10 (37:26):
I mean, we love watching bond market trends through the
lens of exchange traded funds, so when we look at
the ets, we get a great view on what's going on.
A lot of investors are still just waiting and seeing
they're still sitting in cash. We actually have our short
duration treasure ETFs have seen the most flow you're to
date at seventeen billion dollars. So I think investors are
(37:46):
being really cautious. They know people like these rallies where
we're getting back to levels we were earlier in the year,
but we're seeing people kind of waiting and seeing both
in the stock and bond side, they're sitting in cash,
they don'tant to take on too much duration in their
bond portfolio, and then they're a little bit nervous sometimes
about you know, entering these rallies a little bit too early.
Speaker 6 (38:05):
So let me just clarify. So among the fixed income
universe you're to date, where you're seeing the most money
move in is in your short duration fixed income ETF
about seventeen billion dollars, that's right.
Speaker 10 (38:16):
And then across the industry, about a third of all
ETF flows are going to short duration vehicles. So we're
still seeing that as a trend, not just with us,
but within other vehicles across the industry.
Speaker 3 (38:26):
How are you looking in terms of like competition with
money markets in those short duration vehicles, that's.
Speaker 10 (38:32):
A great question. We do see people wanting to diversify
out their cash. We actually two different fixed income ETFs
that are actually money market funds. They meet the two
A seven requirements. We have a prime fund PMMF and
a government fund g MMF. And I think for a
lot of people they like they like money market funds.
(38:53):
They like the stability that they offer, but they also
want that interer day and exchange traded liquidity. So I
think think that that's been a big trend where people
are looking at their money market funds. They want the
yields to be competitive, but in some cases in their
brokerage account, if they want a little bit more yield,
they might turn to maybe a short duration treasure ETF
or even one that has some credit risk associated with it.
Speaker 3 (39:15):
How much time are people spending in these assets and
then when they do take their money out, what do
you know about where it goes?
Speaker 10 (39:22):
I would say on average, people are spending six months
or more inside some of these assets, and then when
they're taking out. I think people are really getting their
asset allocation back on track. Kind of coming into twenty
twenty four, we saw so many people that were overweight equities,
underweight bonds, and overweight cash. So I think of anything,
some of those cash underweights have been taken down a
(39:43):
little bit, just with equities off we saw some rebalancing
back into equities, but I think overall people are really
holding tight and they want to see a little bit
more clarification about where things are going until they really
fully move into markets. So that's going to be a
big trend that we're seeing is when bonds, when money
comes off the sidelines, we'll see that being a big
(40:05):
catalyst for both bond and stock markets.
Speaker 6 (40:07):
So I am curious, Karen, are you looking for some
kind of full market capitulation or full investor market capitulation?
And if we are, have we seen it?
Speaker 10 (40:18):
I don't think we've seen it yet. I think people
are definitely on just channeling Jerome Pal's energy from the
press conference last week. People are waiting, so I think
they're looking for when is the Fed actually get a cut,
and just looking at the Fed FEDS futures today, the
first cut could be as late as October, and the
market's now only pricing into two cuts this year. So
(40:39):
I think it used to be a pretty easy playbook
where you look and say, oh, the Fed's cutting, I'm
going to add to my bonds, add to bond portfolio,
take duration out. But I think because we keep waiting
and pushing out that first cut, that's really what I
think that's really going to be a big catalyst for
people coming back to the bond market, maybe feeling a
little bit better about stock market, because that also means
(41:00):
inflation is under control, So that's I think that fed
first cut is going to be our next cut in
the cycle is going to be a big catalyst for that.
Speaker 3 (41:07):
The President just before our program started put out a
post on social media that said, no inflation. The prices
of gasoline, energy, groceries, and practically everything else are down.
The FED must lower the rate like Europe and China
have done. Is the President right? Should the FED be
lowering rates?
Speaker 10 (41:27):
The Fed's been really focused on the data, and I
think one of the interesting things about the CPI report
is it had some of the impact of some of
the tariff policies, but I don't think that's been fully transmitted.
So we've seen the hard data, like the CPI print
hasn't really shown what the sentiment is showing out there,
So whether when it's a more survey based approach that's
(41:48):
based on sentiment. We've seen a lot of people being
very nervous about inflation going up, small business and CFOs,
so I think we're seeing it more manifest itself in
the sentiment than in the hard day and the fed's
really looking at the hard data and they haven't seen
so even though this inflation print came in a little
bit softer, and those categories you mentioned didn't increase. CPI
(42:10):
is still running about two point six percent year every year,
and the Fed has that mental or that that barometer
about two percent trying to get it back down in
that range. So they're very comfortable keeping it higher for
longer and just waiting, waiting it out. So if we
did see inflation spike in the next couple prints, it
would get pushed out even more. But I think we'd
need to see it come down to more that two
(42:31):
percent year every year before they would they would definitively move.
Speaker 6 (42:34):
So, Karen, it sounds like you think the Fed is
spot on in terms of its monetary policy.
Speaker 10 (42:42):
Yeah, I don't think that they. I don't think they're
making mistake here. I think that they're being patient and
they want to make sure that they don't move too
quickly and then cause some other problems. So I think
that that's that's really you know, their their primary mandate,
and they've said they've toggled back. They had that dual
mandate where they focused both on the economy, unemployment, jobs,
then they also are focusing on price stability, and right
(43:04):
now they've really zeroed in on that because unemployment still
looks pretty good. The April jobs report was pretty strong,
unemployment rate around four point two percent. So I think
that they're just hyper focus on inflation right now and
it's not fully done to where they want it to be.
Speaker 3 (43:18):
Just very briefly, the Fed behind us. That was last week,
we got CPI. Today, we did also get some clarity
on trade from over the weekend and yesterday. What's the
next catalyst for you?
Speaker 10 (43:29):
Just ten seconds, Let's look at the June FED meeting.
We'll get the dot plot that summary of economic projections
look to that, so people are going to be dissecting
that and see how the Fed has modeled in the
impact of trade on the economy.
Speaker 6 (43:41):
All right, we're going to leave it there. Hey, Karen,
thank you so much, So appreciate it. Karen Verry Perry,
she's head of USI shares Fixed Tocome strategy over at Blackrock.
Joining us here on this Tuesday from San Francisco.
Speaker 1 (43:54):
This is the Bloomberg Business Week Daily podcast, available on Apple, Spotify,
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(44:15):
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