tv Bloomberg Markets Asia Bloomberg June 5, 2017 9:00pm-10:01pm EDT
haidi: it's 9 a.m. in hong kong, 11 a.m. in sydney. i'm in new york. i'm haidi lun. rishaad: i'm rishaad salamat coming here from bloomberg's asia headquarters in hong kong. this is "bloomberg markets: asia." ♪ haidi: the alliance under strain. president trump renewed his attack on the mayor of london. critics say he should focus on more important matters. rishaad: traders are increasingly sure the federal hike next week, suggesting
steady if unspectacular u.s. growth. haidi: no change of the rba today, although there is speculation a rate cut may not be far away. the bank is increasingly out of step with its peers. rishaad: and apple finally entering the market for voice-activated speaker. they are challenging established players like amazon and google. i love that what's going on with the federal reserve -- reserve. expect them to hike rates next week. looking at the reserve bank of australia as well, three and a half hours away from a rate condition there. one reason they are not looking at data or inflation is looking at the possibility of a recession. let's bring this up. we had 8048. this is tracking the chances of a recession in the next year.they were higher in march. it was about 20%.
australia has not had a recession for two decades or more. it is now 15%. that will be key in their thinking. haidi: that's right. fixation,the national 26 years without a recession, the rba will be willing to keep the track record going, given the shakiness when it comes to record low wage growth, and the property market in certain cities spiraling out of control. take a look at this chart. these expectations as to what the fed will do, no expectations of a change today. since the last decision on may 2, we had market rate cuts by the end of the year doubling. that is taking into a cautious 20%, but you can see the , turningof expectation into expectations building that we will see looser monetary policy. whether they can do that without
, that will beies the key question. we are getting that decision at 2:30 local time. in the meantime, a few minutes of a from the open in china and hong kong. a note of caution given the low in the u.s. session overnight. sophie: the picture here in asia looking fairly mixed. 200, down by almost 1%, followed by the nikkei 225, down 4/10 of a percent. this follows a solid seven-week blind that we have seen in global stocks. a cautious tone struck in asia. this morning we did get cpi
numbers from taiwan. writing for a third straight month. take a look at the commodities space. oil in focus, given the saudi loop -- group cutting ties with qatar. new york crude hovering near a three-week low. amid the risk, we are seeing -- hoveringed to near a six week high. take a look at the currency near terminal. focusing on what's going on with the yen. 110.17, the strongest level since april 25. support for the dollar-yen seen at 109.60. we have the ringgit continuing a solidthis june after made. we have wells fargo's security
flagging caution for asian emerging currencies saying that the rally we saw could be petering out as the fed is expected to raise rates in june. we have the taiwan dollar on the back foot today. taking a look at what's going on in singapore, we have the sti index marginally higher at the open. we have jefferies turning bullish on stocks from moderately bullish. terms, the sti has outperformed most of the asian peers. the blue line notes the dollar singreturn compared to dollars in white. we have to see whether or not the index can hit higher highs here, given it is down to 32.41.
rishaad: thank you. we go to the u.s. position to pullout of the parents deal -- paris deal, still causing diplomatic shockwaves. let's get the first word news with rosalind chin. indeed.: dramatic the top u.s. doug lamalfa in china is said to have resigned after president trump's withdrawal. the most senior figure at the embassy until the new ambassador arrives. he quit over the weekend, telling collies he disagrees with the president's decision. the state department confirmed. president trump resumed criticism of london mayor sadiq khan after the terror attacks. he slammed the mayors and this -- initial statement saying that londoners had no reason to be aligned. he escalated saying that the mayor's comments were a pathetic excuse. his attacks, head of thursday's election.
the former treasury secretary says the white house should change focus and concentrate on things that matter. among other things, president trump campaign on trading jobs and rebuilding america's infrastructure, and some say that should be his goal, not antagonizing allies. >> we spend our time on budgets that don't add up and on scandals and on tweets. america's problems are solvable. they can be solved, but you have to focus on them, and not focus on issues of personality. stocks fell the most since 2009, though the more than 7% down after saudi arabia, egypt, the uae, and bahrain cut off ties to qatar. andhe doubt the carrier dubai are suspending flights to
and from delhomme -- doha. global news 24 hours a day, powered by more than 2600 journalists in more than 160 countries. -- 120 countries. i'm rosalind chin. this is group -- bloomberg. apple is launching the home pod, their attempt to take on amazon, google, and the field of voice-activated smart speakers. >> for us, it is not about being first. it's about being the best. the user and experience that delights them every time. --don't let that in patients impatience result in something that is not great. rishaad: is this really a breakthrough product? defending honest, no.
they're ours, really good speaker technology available from sonos, and smart technology from amazon. apple claims they are fusing the two of them, but it's possible sonos.alexa through the with the price point apple is asking, it could be a big ask. rishaad: absolutely. the thing is, this is based on theory, which had its own problems -- siri, but had its own problems. reporter: that's why it is interesting apple is taking this very much as a speaker, which has a system, not the other way around. that is a smart assistant can also be used as a radio.
i think a lot of people are recognizing that this whole smart system, virtual assistant, and smart homes, we are still early in the process. in the years and decades to come, there's a lot of room for improvement. haidi: one of the other reallyting things encouraging third-party developers to continue to contribute to the ecosystem, that's a huge part of future growth for apple. reporter: that was one of the really interesting things about today. there was no developer kit for the speaker that was announced. we expected that the speaker was , and the logic of presenting such a speaker at the developer conference would seem to be that you gave programmers the tools to build really cool applications and services, which are then accessible through the speaker, ready to go to market. that wasn't even mentioned today.
maybe something will come, but -- one caveat. siri as a whole has ability to work with third-party apps. perhaps one of those will want to work with the speaker, but there was no reference to that in today's presentation. said: tim cook obviously they don't really care so much about being first to market, it's about being the best. also, the art of the upsell. pricing wise is interesting. is that going to be an issue for getting market share when you do have the dominance over the likes of alexa? reporter: it is remarkable they have gone for such a high price. amazon and google, they sell their devices pretty much at cost. they make money on the services. think about amazon prime, where you send $10 a month, and every order you make through the speaker, you get money as well.
's home pod is going to make money on the hardware itself, which is different. but this market is very young. there were 4 million smart speakers sold in the final quarter of 2016, comparing to the 400 million smartphones in the same period. apple still managed to sell tens of millions -- hundreds of millions of phones every year. -- it's aboutives 70 million they said every year, but that gives them a huge when the market becomes saturated. that's when you can think about going for a lower cost device. haidi: thank you so much for that, very interesting release. that conversation with tim cook by our very own emily chang. we will be looking at political risk across europe with former italian prime minister vittorio
rishaad: back here with "bloomberg markets: asia." i'm rishaad salamat in hong kong. haidi: i'm haidi lun in sydney. a quick check of business flash headlines. india's largest lender aims to raise as much as $2.3 billion by sharing -- selling shares to the biggest institutions. they want to strengthen the balance sheet in the face of worsening bad loans. that in india is at the highest level since at least 2001. last month, the state bank announced first-quarter profits. we are going to be looking at what's going on when
it comes to chinese bond markets around the world. let's get our guest in, brian carter, from bnp paribas. let's take a look at where we are. we keep on talking about debt and leveraging china. if you look at it, how much of the problem is it in your view? creates its own demand, to a large degree. in the case of china, you're 'slking about it -- a country in nominal terms for two decades. it can continue to grow debt, especially the high-quality government debt. but the issuance investors will eventually need in their per fully when china becomes a dedicated part of the global bond indices, we expect that in the next one to two years. we don't see much of a problem. it is by and large good debt. rishaad: i'm going to bring up the china bond chart.
they have been gaining popularity. the markets have seen more liquidity. up 9147.ng we are seeing them in tandem. however, the returns, should you be invested in the blue line, much less negative, then the global lines as well, what is going on? markets, especially local currency bond markets, are subject to their own monetary factors. some countries are hiking interest rates, others are cutting. most emerging markets have been cutting recently. china has been tightening policy. that means the bond yields have and it has been a drop in the price subsequently. we think that was an interesting time to look at the chinese market. roughly 4% yields on long-term government bonds. we know these will be part of the global bond indices soon. we think that tightening is done for now. we think there will be no further deleveraging from the authorities this year.
china is doing all the right things it needs to do in the run-up to the global bond inclusion.most important me, we see lower volatility ahead. we have had volatility in bonds, some volatility in currency, but we think things will be more quiet. rishaad: how much are you concerned about local government debt? at the end of the day, it's the central government which is the backstop. >> that's true. someocal government that of these interbank, unlisted bonds, they are not yet accessible to foreign answers -- foreigners. rishaad: should they want to access them? >> is not something foreigners are thinking about when they are looking at the peace of the bond market that they are likely to be invested in. what will eventually come home to roost is that the government is the backstop for all the subnational and state owned entity leveraging. they continue to leverage each time they need to open a window to implement the reforms that are required, and eventually
that cycle of leverage, giving with one hand, taking away with the other, will reach its end. that to us is still some ways away. they have plenty of tax tops. they have a buffer of $1 trillion coming onshore when china is can -- included in the major indices. you've got the situation where it seems like u.s. bond investors are doubting where the fed goes next, and whether it is as hawkish as we had expected maybe even a month ago before the data started getting tepid. is this 10 note rally we are seeing in fixed income and inequities and traditional safe havens, is this a liquidity story?how do you explain it ?we have been scratching our heads. >> there is a liquidity story. i would say at a high-level what's going on is a tug-of-war between the fed, nudging interest rates up, and access of
global liquidity, the natural bid investors have for especially risks three paper. -- free paper. that will keep rates tethered as much as possible, even if the fed continues hiking interest rates, which we do expect. haidi: you were also --structive when it comes to you are not expecting any hint of a taper tantrum? >> the environment is right for markets. by all of our metrics, emerging markets, despite recent gains, are still under owned by global investors. we've seen the initial wave of global markets, dedicated investors coming back and increasing positions. now we are in the second stage of crossover investors, the investors now putting their positions back on after being out of the market for several years. wake up toarkets emerging debt and realize this is the last that they will be
able to increase yield and their pro-and the final return. that environment is very much in place. rishaad: let's have a look at some of your favorites. brazil, political risk is inherent. that's part of the reasons we like it. long argentina, a country which every 20 years has a bond crisis, and some african debt as well. >> brazil is off country we like to talk about because we think it's understood -- misunderstood by the market. in the last few years, we've had a corruption investigation that went through the inspector general's office, the police -- it's easier to talk about who has not been investigated. >> i'm talking about the independent investigations. the inspector general has been able to carry these out free from political influence. the police have been able to arrest people. congress has moved on. the supreme court has been able
to decide. imagine this happening in other emerging markets. it's a testament to brazilian democracy, which has come of age. i think brazil emerges stronger. argentina has a different story. it doesn't have these institutions. it's been through so many cycles and a fault,ress, so many dictatorships, that governments.at the country that needs to rebuild those institutions. it rightfully has a lower credit rating than brazil, and it will for a long time. that said, it's a new market with a clean slate, low debt levels. you are able to get generous deal that the mark -- moment. we expect them to be elevated at the moment. as far as we have macri, we feel confident. rishaad: thank you for coming. bryan carter from bnp paribas. china developing new permits and electric vehicles overseas. details on the way. ♪
rishaad: breaking news surrounding the league of noble group. shares have retreated to the low 30 singapore cents a share. this is the sixth time in seven days we have seen it happen. we have seen the share price in the lowest level since 2000. we have a tumble of 6.3%. let's put this into context. the share price exactly three years ago to the day was at its highest, trading on 11 seeing fence, whiching cents.- 11 sing have noble said to be asking to extend the credit as well. singapore traded noble is actually based in hong kong. we are minutes away from the
start of the trading day. this is what it looks like in the premarket auction period. futures pretty much flat. haidi: that's right. a pretty muted session. low volatility from the u.s. we will be watching some of these electric vehicle related companies in the china session today, because we have a report out. apparently the national development and reform beijing, the top economic planner, planning to halt the issuance of new electric vehicle production permits. they have concerns any additional permits could lead to a glut in the world's biggest car market. of course, they are wanting to evaluate the program. it handed out 15 production licenses since march 2016. we will be watching some of these. no doubt that will have an impact on these developing plans getting into of
in the heart of hong kong, before we start the second trading day of the week. interest rate decision out of australia coming out at 12:30 hong kong time. then of course we have the federal reserve, looking like it will be hiking the cost of borrowing. will it be one and done for the time being? the we had one in september? odds are narrowing. we are looking at the apple effect as well. some of the suppliers after the ,evelopers conference yesterday
showing off the apple speaker and new ipads. haidi: the home pod, if you will. that are late than never, joining the smartphone revolution. the ecb coming out with its rate decision. no change. we are waiting to hear more commentary from mario draghi about the rate of inflation and with a potentially start tapering. in the absence of central banks globally, we are looking at politics, the u.k. election front and center. it is going to be the case we are watching some of these events in washington as well. more misadventures in u.s. politics. james comey, the former fbi director, will testify. breaking news from australia. this is an interesting gauge when it comes to this actual headline gdp number.
it looks like it could be a little bit weaker. the current account deficit will revise to 3.5 billion aussie dollars. we're looking at a deficit of 3.1 billion versus a meeting expectation over $200 million deficit. first-quarter net exports cutting 7/10 of a percent from gdp. that's a little better than expected, actually. let's go to reaction when it comes to how the markets are faring. sort of a tepid trading day for asia. over to sophie. sophie: tepid is one way to put it. if you take a look at the percent change column on the function of the terminal, it is pretty much bleeding. asx 200 still continuing to fall over 1% following the bop update that you just providing -- provided. falling, japan also
nikkei 225 falling over half a percent. not a lot of bright spots to be seen in asia. we have the shanghai markets and shenzhen as well, hong kong coming online. we have stocks in shanghai falling for a second day along with hong kong equities falling around 8/10 of a percent. this morning we got the pboc said the daily you want to fix a 6.7934.hanged at industry and focus in chinese stocks is the auto space, given regulators on the mainland are looking to adjust the elected vehicle policy. let's pull it up on the board, one stock here. it has been trading in hong kong pending inside information announcement. around 3.6% at monday's closing. it focuses on selling mid and high end ranted cars -- branded cars. turninge in the region,
to our attention in singapore. noble group is plunging to a 2000 low. shares falling for a six day in seven, retreating below 30 singapore cents. noble could face a harder time negotiating with creditors and made that concerns. now a check on what's going on in sydney. looking at all the lenders. inking stocks on the back foot -- banking stocks on the back foot. elliott told bloomberg times are getting tougher for bank earnings, and the aussie economy is slowing down. on the next board, looking at aussie retailers. they are also falling today. 2.8%.fi falling it had its target cut by 29% at credit suisse, i'm concerned it will get hit the most at the onslaught of retail. rishaad: let's find out what to
cook has been saying about the environment. let's get to the first word headlines with rosalind chin. rosalind: i stick a look first at the white house, which says president trump will not use executive privilege to prevent james comey testifying to congress. he is likely to face questions about conversations they had in the investigations into alleged russian meddling in the election. legal experts say it's not clear if the president has grounds to invoke executive privilege in this case. >> the president's power to exert executive president -- privilege is established. however, to examine a swift and thorough examination of the facts, president trump will not assert executive privilege regarding james comey's scheduled testimony. prices inhouse australia are inflated, but see a low chance of a crash. prices fell in may for the first time in 17 months, a sign lending restrictions are hitting demands.
prices across the capitals were more than a percent higher than a year ago. executive spoke to bloomberg at the j.p. morgan summit in beijing. >> we think there is a low probability, but it is something we stress test a lot and think about. there are real differences in the australian market compared to the u.s. or europe, but on the face of it, it is there. thailand the bank of is easing some rules to reduce private sector compliance costs. changes -- and they are changing things to save more than $29 million a year. policymakers say monitoring -- they are ready to act if necessary. global news 24 hours a day, powered by more than 2700 journalists in more than 120 countries. i'm rosalind chin. this is bloomberg. rishaad: we are talking about apple ceo, as he says he
disagrees with president trump's decision to pull the u.s. out of the paris climate accord. in an interview with emily chang, he says fixing this will require worldwide action. me. think he did listen to he didn't decide what i wanted him to decide. i think he decided wrong. i think it's not good, not in the best interest of the united states, what he decided. -- the wayn terms of i look at this thing and view, do you interact with politicians or do you not? my view is that first and foremost, things are about, can you help your country? if you can help your country, and you do that by interacting, then you do it. the country it clips is politics.
emily: so you have people leading at the table, leaving. like bob iger and elon musk. is the president jeopardizing his relationship with the business community? differentiate, and i'm not speaking for those guys, but i would differentiate advising council and in a way that you think can help our country. one is ahe first judgment call that people make. i didn't join a council, so it's not a decision i had to make, but i understand both sides of that. but advising on something that you believe will help america i , as ais a requirement ceo. you definitely do that. chance toif i get the
-- paristhe parents agreement again, i will do it again. i think it's very important we engage to fight climate change on a global basis. this isn't something where you can solve it country by country. it requires a global action. emissions created in one country effect another -- effect another. it's something we feel very strongly about. i wanted to do every single to tellat we could do how important it was to stay in the agreement. decidedately, he something different. emily: why did you join the council? -- why didn't you join the council? >> two reasons. my primary job is being the ceo of the company. i spend the bulk of my waking hours doing that.
i do so willingly because i love the company and the people in it. so traveling back east isn't something that i look forward to doing, except when i need to do. secondly, i don't find these councils in general and committees to be terribly productive. but it wasn't about not wanting to advise on something where i orught that we could help, we had a point of view that should be heard. so i'm doing the latter. i can't imagine a situation where i wouldn't do the letter, because i think it's in their best interest of america to do it. i am first and foremost an american. chang'shat was emily exclusive interview with apple ceo tim cook. the reserve bank of australia's policy decision is just on the way, traders are awaiting another fed rate hike.
hayslobal editor kathleen is here with more. three major central banks meeting this week. we start with the rba. not one is expected to have any change. why not? reporter: let's start with the reserve bank of australia and talk about why the rba is not ready to move. also, i think to set the table for this discussion, a lot of people now are not looking at meetings this week as the key question, because there are no moves expected, really. changing?ne is the economic scenario changing to the degree that maybe what people thought would happen down the road is changing as well? in the case of reserve bank of australia, they will hold key rates steady at 1.5% after a long series of rate hikes, starting with the great recession. on the plus side, jobs has picked up, the latest detailed report was stronger than expected. first quarter gdp is supposed to come in at plus .3.
it was above 1% in the fourth quarter. wii.net export numbers suggesting the rejection to first-quarter gdp from the report will be even bigger than expected. even with stronger job growth, wages are stagnant, the quality of jobs are not quite as good.proportionately , fewer full-time jobs being created, more part-time jobs. another announcement from the rba is that there is big focus on rising household debt. this is a condition in a lot of countries in the world. that would be a reason to be more inclined to be hiking rates at some point. on the other hand, they might just be a weaker aussie dollar to help exporters. positions. the betweenstuck these positions. let's go into household debt. you get a nice picture of the debt rising, the home prices rising. the turquoise line is what rates have been doing. surveyed bymists
bloomberg expect the next move to be a hike. sally of j.p. morgan australia is among the very small number who say no, the next move will be a cut. here's what he told us earlier. >> more generally, our senses that the economy is going to continue to disappoint relative forecast, and at some point over the next 12 months, we think the rba will be cutting rates as it becomes clear the domestic demand trajectory in australia is not strong enough to get core inflation back to target. reporter: it's true that if you look at interpretations for australia, this is for the united states where you have the probability of a hike so high, but if you were looking at australia you would see the probability of cuts this year does not even get a 20%. for australia, and more people are saying maybe they could end up cutting, but bottom line is
right now the expectation is probably not. to look at the reserve bank of india, they are meeting this week as well. they are supposed to hold their key rate at 6.25%. similar to the reserve bank of australia, weaker gdp and off,tion starting to back so they think maybe the next move for the r.b.i. want to be a surprise with something like tightening. it might it look more like easing. rishaad: the ecb not expected to move either, even though the economy is looking stronger. the question is, when does it taper? i don't think we will get any more hands on this. reporter: mario draghi is moving slowly, he's cautious, he's looking at inflation. inflation is spotty. it's not where it needs to be. balanced growth is how they are expected to describe the economy right now. that's what 90% of the economists surveyed suggested. in terms of future moves, here's what the deal is. no need for him to be in a rush
to move policy. that's the tone we are supposed to get from their apart and his presser on thursday. the majority saying no dropping, easing in july. 54% don't see the decision on september.til 10 -- that's it for the ecb. for the fed, the rate hike is coming next week, which is what everyone says. done.ybe it is june and maybe we won't see a third rate hike in 2017. electionalso, the u.s. -- u.k. election with britain counting down. with -- we discussed the possibilities. this is bloomberg. ♪
morgan global china summit. steve engle is standing by. special guest for us. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. absolutely -- stephen: absolutely. we are sitting with j.p. morgan's chairman of corporate investment banking, also the former italian finance minister. thank you for joining us. i want to get your initial take. yesterday as here the news broke about qatar and diplomatic relations being severed with multiple neighbors. is it difficult to tell what the banking might be? >> they are a major investment -- investor across europe. stephen: a lot of questions still in the air. let's move on to brexit.
a lot of questions there. i think in september you said you were hoping cooler heads will prevail, but now that we starting,egotiations financial services are a big issue. do you think this can be or will negotiations? the forces are never pretty. >> never pretty, but it depends on the ex partners. a lot of uncertainty for the referendum. did.me out the way it now, elections in great britain on thursday and still uncertainty there. we have to see the outcome of that election before negotiations start. we have to wait for a determination as well. stephen: you have italian elections before may of next year as well. maybe even earlier. they are discussing a change in
electoral laws, so the election can come as early as september or october this year. brexit, i think the subject matter is delicate. see ak it is very hard to very peaceful kind of outcome. i think there are major principles at stake. on the one hand, we know great the issue of migration and the control of their border is very important, but at the same time, it is important in the issue of freedom of movement, not only of commodity and trade, but also on the european side. how do you square that right now in an agreeable matter? it's not obvious. stephen: how much of your time is spent considering contingencies if they have to move from london? spend a lot of time
thinking about strategy, which is very simple. we have to be fully ready to serve our clients everywhere, without any sense of disruption. seamless be transition. we have to prepare now. --phen: can we of boyd this a this cliff edge for the banks? london has a long reputation over the years with financial services. the continent could suffer as well as london loses that edge. do you agree? could they benefit? >> i always said so, that london is not being created in a day, so it's a very complex environment. to reproduce it somewhere else will not be easy. own weightoses its in the globe, europe will lose. the decision, the
cliff edge has to be avoided. is what way to avoid it each firm will do to get ready. morgan leadsr j.p. a private attempt to rescue this bank, we now have the eu giving approval. what is the prospect of a revamp, and what is the effect of the banking system? >> it's very important to problems the italian banking system has, which is nonperforming loans. we are trying by december to have a private solution. that was not possible. event,"s a "political like the referendum, which did not go the right way for the market. now this agreement with europe is very important.
public money can be injected. that was the problem. the rules in europe have changed , and now it has been made possible. i think there's a good chance to get back into markets. stephen: thank you so much for your time, and for having us here at the j.p. morgan global summit. china's that may be piling up, but the biggest companies are getting healthier. we tell you why, next. you are watching bloomberg. ♪
at least, that's the claim. one of the metrics to show these companies are indeed doing well. reporter: we looked at quite a few metrics. one is debt equity ratio for the 100 biggest companies in china, excluding the financials. the ratio has dropped to the 2010. since the ratio is at 68% at the end of 2016, down from 72% at the end of 2015. profitability,e growth profit margins, and the ability to repay interest. those metrics are the best in five years. another metric to highlight is free cash flow. those companies have generated record high free cash flow in 2016. haidi: why is this happening? also, can i ask about what the smaller companies are looking like at the moment? reporter: it's a combination of
fob reforms -- the raw material prices have risen a lot because of the reduction in capacity. biggest companies, especially upstream ones, benefit the most from the reduction. this also coincides with the pti positive, asning well as commodity prices rebounding. smaller companies, especially downstream ones, they were actually squeezed in profitability because of the rally in commodity prices. rishaad: good in parts, that in others. thank you very much. the yen strengthening. investors opting for a note of caution at the moment. we will go back to the beijing j.p. morgan china summit. they are talking -- we will be
♪ announcer from our studios in : new york city, this is "charlie rose." charlie: donald trump's decision to withdraw from the paris climate agreement has provoked a n overwhelmingly negative reaction overseas and at home. joining me from washington to talk about the president is dan balz, chief correspondent for "the washington post." welcome to our program. dan: thank you, charlie. charlie: tell me why the president felt compelled to do this, and let's grant him that perhaps he thought it was in the national interest to do this. perhaps he did not believe the accord was the best that could be had. let's assume that is part of his mindset. but what else? dan: