1 00:00:09,840 --> 00:00:13,800 Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane jay Ley. 2 00:00:13,960 --> 00:00:17,560 Speaker 1: We bring you insight from the best in economics, finance, investment, 3 00:00:18,000 --> 00:00:23,520 Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, 4 00:00:23,600 --> 00:00:28,240 Speaker 1: Bloomberg dot com, and of course on the Bloomberg. Please 5 00:00:28,320 --> 00:00:30,680 Speaker 1: to say that Lakshman at Youth and joins us now 6 00:00:30,760 --> 00:00:34,159 Speaker 1: Economic Cycle Research co founded Lashman. Where are we? It's 7 00:00:34,200 --> 00:00:36,080 Speaker 1: so hard to keep up at the moment with this 8 00:00:36,200 --> 00:00:39,040 Speaker 1: trite dispute. It sure is, and I think you you 9 00:00:39,080 --> 00:00:42,040 Speaker 1: did a good recap of the last few days. But 10 00:00:42,440 --> 00:00:45,400 Speaker 1: this has been going on since. Obviously the trade war 11 00:00:45,400 --> 00:00:50,200 Speaker 1: I think erupted in the spring. Uh so that's been 12 00:00:51,159 --> 00:00:54,360 Speaker 1: spring of last year. So that's that's we've been trending 13 00:00:54,400 --> 00:00:56,800 Speaker 1: down and down and down. What we see from the 14 00:00:56,840 --> 00:01:00,360 Speaker 1: cycle work, which is particularly interesting, is that the moobal 15 00:01:00,480 --> 00:01:05,600 Speaker 1: industrial downturn predated the eruption of the trade war, So 16 00:01:05,640 --> 00:01:09,080 Speaker 1: it's really a one to punch. One takeaway is that 17 00:01:09,160 --> 00:01:11,399 Speaker 1: if we waved a magic wander, a magic tweet and 18 00:01:11,440 --> 00:01:15,400 Speaker 1: it was all gone tomorrow or today, and you'd still 19 00:01:15,480 --> 00:01:18,600 Speaker 1: have a global cyclical downturn. That's one thing to take away. 20 00:01:18,800 --> 00:01:22,200 Speaker 1: The second is that the longerest slowdown, you know, and 21 00:01:22,200 --> 00:01:25,560 Speaker 1: then the sharpest slowdown becomes we begin to move toward 22 00:01:26,880 --> 00:01:30,160 Speaker 1: what we call a recessionary window of vulnerability, where a 23 00:01:30,240 --> 00:01:34,000 Speaker 1: negative shock of whatever you know, who knows, uh a 24 00:01:34,160 --> 00:01:37,200 Speaker 1: quarter or two ago that was not a recessionary shock 25 00:01:37,760 --> 00:01:40,720 Speaker 1: becomes something that could easily tip you into recession. That's 26 00:01:40,760 --> 00:01:43,119 Speaker 1: the key thing to watch for. We protect the copyright 27 00:01:43,120 --> 00:01:46,320 Speaker 1: of all of our guests. Everybody wants lot thans research, 28 00:01:46,360 --> 00:01:47,600 Speaker 1: We're not going to give it to you and get 29 00:01:47,600 --> 00:01:50,920 Speaker 1: it from the Economic Cycle Research Institute. And John I 30 00:01:50,960 --> 00:01:54,120 Speaker 1: say that because on page four is the mother of 31 00:01:54,160 --> 00:01:58,240 Speaker 1: all charts on China. It is the single best chart. 32 00:01:58,520 --> 00:02:03,440 Speaker 1: The rust built depression. Is that too strong word? Look, 33 00:02:03,600 --> 00:02:08,680 Speaker 1: it's something's very very different. It happened around UH you 34 00:02:08,720 --> 00:02:11,400 Speaker 1: began a structural shift where the rust belt, the north 35 00:02:11,400 --> 00:02:18,079 Speaker 1: northeast of Chinese provinces began experiencing UH negative I P growth. 36 00:02:18,120 --> 00:02:21,760 Speaker 1: And this is a really big deal for the Chinese economy. Now, 37 00:02:22,080 --> 00:02:25,800 Speaker 1: if you take that structural shift and layer into it 38 00:02:25,880 --> 00:02:30,680 Speaker 1: the global industrial downturn which predated the trade war, UH, 39 00:02:30,919 --> 00:02:34,240 Speaker 1: you can imagine things get worse. So back in Q one, 40 00:02:34,400 --> 00:02:37,800 Speaker 1: when everybody was getting happy about a trillion plus of 41 00:02:37,880 --> 00:02:40,600 Speaker 1: Chinese stimulus that was getting pushed out. It was gonna 42 00:02:40,639 --> 00:02:43,519 Speaker 1: save the day. Well, a lot of it fell into 43 00:02:43,600 --> 00:02:46,360 Speaker 1: this hole that we call the Chinese rust belts, shoring 44 00:02:46,440 --> 00:02:50,000 Speaker 1: up state on enterprises where you were having job losses 45 00:02:50,040 --> 00:02:53,600 Speaker 1: and that's a no no in China, uh, and really 46 00:02:54,160 --> 00:02:59,280 Speaker 1: shoring up zombie company's capacity, which is in turn pushing 47 00:02:59,400 --> 00:03:03,959 Speaker 1: out disinflationary impulses around the world once again. And so 48 00:03:04,440 --> 00:03:07,239 Speaker 1: it all wraps into First you have to know where 49 00:03:07,240 --> 00:03:09,239 Speaker 1: you are in the cycle in China and to see 50 00:03:09,240 --> 00:03:11,680 Speaker 1: what's going on, and the downturn is not over. Second, 51 00:03:12,000 --> 00:03:14,280 Speaker 1: it really plugs into the rest of the world and 52 00:03:14,280 --> 00:03:17,320 Speaker 1: and it's having huge impacts as you know, on rates, 53 00:03:17,320 --> 00:03:20,320 Speaker 1: which we started the discussion of. So the trade war 54 00:03:20,360 --> 00:03:23,280 Speaker 1: has exacerbated some of the existing problems going into spring 55 00:03:23,320 --> 00:03:25,800 Speaker 1: of last year. We need to talk about the forces 56 00:03:25,880 --> 00:03:29,440 Speaker 1: that pre date the downturn, and that's the de leveraging cycle, 57 00:03:29,560 --> 00:03:32,920 Speaker 1: the deleveraging push in China. Just where are we with 58 00:03:32,960 --> 00:03:37,800 Speaker 1: that right now? Lashman That it's not there's not a 59 00:03:37,840 --> 00:03:42,000 Speaker 1: big push on that, uh. Given the circumstances right when 60 00:03:42,000 --> 00:03:44,920 Speaker 1: you're in a global industrial downturn. UH. And on top 61 00:03:44,960 --> 00:03:49,120 Speaker 1: of that you throw the trade war. UH. You actually 62 00:03:49,120 --> 00:03:52,720 Speaker 1: have the opposite you're going to have let's start tapping 63 00:03:52,720 --> 00:03:56,400 Speaker 1: the gas, and each economy and the policy makers are 64 00:03:56,400 --> 00:03:59,720 Speaker 1: set up differently. Chinese will do it their way, UH. 65 00:04:00,000 --> 00:04:03,000 Speaker 1: And Europeans have already promised that there's more to come. 66 00:04:03,000 --> 00:04:04,680 Speaker 1: And you know the debate that's going on here in 67 00:04:04,720 --> 00:04:07,960 Speaker 1: the States. UH. And the Japanese will do what they've done, 68 00:04:07,960 --> 00:04:09,920 Speaker 1: and it's interesting to see that part of what they've 69 00:04:09,960 --> 00:04:12,160 Speaker 1: done in their in their playbook is actually go out 70 00:04:12,200 --> 00:04:16,799 Speaker 1: and buy equity E T F S so um past 71 00:04:16,960 --> 00:04:19,040 Speaker 1: is prolog Let's pick up that line. The Chinese will 72 00:04:19,080 --> 00:04:20,640 Speaker 1: do it the way. There was one way that the 73 00:04:20,720 --> 00:04:22,600 Speaker 1: Chinese used to do it. It was just a load 74 00:04:22,600 --> 00:04:25,000 Speaker 1: of stimulus. Pump a load of credit into the system. 75 00:04:25,040 --> 00:04:28,560 Speaker 1: The last year has been different. It's been targeted, it's 76 00:04:28,560 --> 00:04:31,720 Speaker 1: been incremental. Do you see it staying that way? Well, look, 77 00:04:31,760 --> 00:04:35,680 Speaker 1: I mean these grand experiments is what we call them. Right, 78 00:04:35,760 --> 00:04:38,920 Speaker 1: The Chinese and after the global financial crisis, poured more 79 00:04:38,960 --> 00:04:41,280 Speaker 1: concrete in three years than we did in the the 80 00:04:41,360 --> 00:04:43,920 Speaker 1: US did in the entire twentieth century. All Right, that's 81 00:04:43,960 --> 00:04:48,599 Speaker 1: an experiment. Uh. Then you have Mr drog you say, 82 00:04:48,640 --> 00:04:50,720 Speaker 1: whatever it takes, I'm gonna I'm gonna go for it. 83 00:04:50,760 --> 00:04:55,200 Speaker 1: You have abonomics, the three hours arrows of abanomics, which 84 00:04:55,240 --> 00:04:59,159 Speaker 1: include uh these days equity E T F s. And 85 00:04:59,200 --> 00:05:01,599 Speaker 1: then you have the United It States where we're at 86 00:05:01,720 --> 00:05:05,440 Speaker 1: ZURP and QUEI and quternity and maybe even NERP and 87 00:05:05,920 --> 00:05:12,560 Speaker 1: what nerve negative first nerve and then you got a 88 00:05:12,640 --> 00:05:15,760 Speaker 1: nerve after ZIRP is nerve and and that's I think 89 00:05:15,880 --> 00:05:18,920 Speaker 1: that's the rub. That's where Dudley's coming from. He doesn't 90 00:05:18,920 --> 00:05:22,320 Speaker 1: want to go there, and he's trying to by hook 91 00:05:22,360 --> 00:05:24,680 Speaker 1: or by crook do all kinds of stuff which is 92 00:05:25,240 --> 00:05:28,640 Speaker 1: really blowing up the game board. To your point, and 93 00:05:28,720 --> 00:05:31,479 Speaker 1: you sound like David focus not then, thank you so 94 00:05:31,560 --> 00:05:34,279 Speaker 1: much for joining us too short of visit uh this 95 00:05:34,320 --> 00:05:52,960 Speaker 1: morning bond legend. Dan First joins us now Limis sales 96 00:05:53,040 --> 00:05:55,800 Speaker 1: vice chairman and portfolio manager. Do I want to talk 97 00:05:55,839 --> 00:05:58,520 Speaker 1: about what traditionally we would use certain asset classes for 98 00:05:58,920 --> 00:06:01,159 Speaker 1: and how that's changed over the last year or so. 99 00:06:01,600 --> 00:06:03,920 Speaker 1: Then typically we would go to fixed income for income 100 00:06:03,960 --> 00:06:07,159 Speaker 1: for yields, you would go to equities for capital returns. 101 00:06:07,200 --> 00:06:12,040 Speaker 1: Something's changed this year down. What do you think about it? Well, Uh, 102 00:06:12,440 --> 00:06:15,800 Speaker 1: it is unique in my experience, which runs back to 103 00:06:15,920 --> 00:06:19,960 Speaker 1: the late fifties. UM, interest rates are just very very 104 00:06:20,080 --> 00:06:23,960 Speaker 1: very low. UM. And yet we say that here in 105 00:06:23,960 --> 00:06:26,120 Speaker 1: the US, and so we say, okay, we'll go to 106 00:06:26,200 --> 00:06:30,000 Speaker 1: Europe or Japan. No, their lower fact they're negative. So 107 00:06:30,320 --> 00:06:33,080 Speaker 1: that doesn't do any good. Uh. So you have to 108 00:06:33,120 --> 00:06:36,960 Speaker 1: go offshore or here back in the US. You say, well, 109 00:06:37,000 --> 00:06:39,520 Speaker 1: I'm going to go down the quality scale. You go 110 00:06:39,600 --> 00:06:43,160 Speaker 1: down the quality scale, and you very quickly determined, oh, 111 00:06:43,200 --> 00:06:45,920 Speaker 1: we're not getting paid to the risk, you know, the 112 00:06:46,000 --> 00:06:49,640 Speaker 1: chance of loss due to rearrangement of the financials by 113 00:06:49,920 --> 00:06:54,080 Speaker 1: the company or you're borrowing the net. Uh. You look 114 00:06:54,120 --> 00:06:56,640 Speaker 1: at that and you say, well that cost on average, 115 00:06:57,400 --> 00:07:01,559 Speaker 1: uh is a little bit beyond the total return would 116 00:07:01,560 --> 00:07:04,520 Speaker 1: be if there was no cost. So that's a bad deal. 117 00:07:05,640 --> 00:07:09,039 Speaker 1: And you're sitting there twiddling your thumbs saying, well, I 118 00:07:09,160 --> 00:07:12,720 Speaker 1: better go see if I can open a Starbucks or something, 119 00:07:13,160 --> 00:07:18,760 Speaker 1: and um they uh. And then you find inefficiencies we 120 00:07:18,840 --> 00:07:22,520 Speaker 1: call them, in other words, oddball things around the edges, 121 00:07:23,120 --> 00:07:28,280 Speaker 1: but they're small. Uh, they're basically neglected. Uh. And once 122 00:07:28,360 --> 00:07:32,320 Speaker 1: you buy them, boy, you on them, uh and um, 123 00:07:32,360 --> 00:07:35,680 Speaker 1: and they don't give you that much extra return. So 124 00:07:35,760 --> 00:07:39,720 Speaker 1: it's a conundrum. Really. Uh. If you were lucky enough 125 00:07:39,800 --> 00:07:44,280 Speaker 1: to have some really really long materities a year ago, 126 00:07:44,600 --> 00:07:48,880 Speaker 1: or more appropriately, say the first in November, then you're 127 00:07:48,920 --> 00:07:51,400 Speaker 1: looking at and say, well, I've had a good total return, 128 00:07:52,000 --> 00:07:56,560 Speaker 1: but when I reinvest, I'm getting much lower one. So 129 00:07:56,640 --> 00:08:00,640 Speaker 1: if you're running any kind of strategy that says, okay, 130 00:08:00,680 --> 00:08:05,280 Speaker 1: we're gonna match our liabilities, for example, then you use 131 00:08:05,320 --> 00:08:08,040 Speaker 1: a number based on the current rate at that time 132 00:08:08,160 --> 00:08:12,040 Speaker 1: and you go forward. You're hoping the bond market will collapse. Well, 133 00:08:12,080 --> 00:08:15,280 Speaker 1: what's happened is it's gone straight up and the bid 134 00:08:15,440 --> 00:08:20,560 Speaker 1: for dollar bonds, dollar based bonds is still very strong. 135 00:08:21,040 --> 00:08:25,440 Speaker 1: Money's coming to this country from elsewhere, and there is 136 00:08:25,480 --> 00:08:29,080 Speaker 1: a push, push, push for yield. Now, how long with 137 00:08:29,240 --> 00:08:31,920 Speaker 1: this go on? I really don't know. What I do 138 00:08:32,120 --> 00:08:36,000 Speaker 1: know is we have a very difficult situation in the 139 00:08:36,120 --> 00:08:41,200 Speaker 1: relationship between the US and China called the trade war, 140 00:08:41,320 --> 00:08:47,120 Speaker 1: and all the implications of that um are serious stuff. Uh. 141 00:08:47,200 --> 00:08:52,640 Speaker 1: And so money in Asia has every incentive two if 142 00:08:52,679 --> 00:08:55,400 Speaker 1: they can and if it works for them to leave, 143 00:08:55,960 --> 00:09:01,559 Speaker 1: where do they had they had to hear. Uh. So uh, 144 00:09:02,320 --> 00:09:07,720 Speaker 1: and I understand it. Uh, bring it coming, bring another 145 00:09:07,760 --> 00:09:10,960 Speaker 1: question in here. So you're saying, Mr, the rally in 146 00:09:11,120 --> 00:09:14,280 Speaker 1: US fixed income may only just be starting. We've had 147 00:09:14,280 --> 00:09:16,959 Speaker 1: a massive month for investment grade credit, for instance, We've 148 00:09:17,000 --> 00:09:20,800 Speaker 1: seen treasuries come down from to around one fifty. Do 149 00:09:20,840 --> 00:09:23,959 Speaker 1: you think this is just the beginning down? I don't know. 150 00:09:24,760 --> 00:09:28,480 Speaker 1: I don't know. Based on our own history of phrasal 151 00:09:28,679 --> 00:09:32,800 Speaker 1: lower it's not good. Uh. You know Bill Bill Dudley's 152 00:09:32,840 --> 00:09:38,640 Speaker 1: comments the other day, for example, uh, voice to frustration 153 00:09:39,280 --> 00:09:43,480 Speaker 1: that's out there saying hey, uh, this thing has gone 154 00:09:43,480 --> 00:09:50,559 Speaker 1: too far. Um and Uh. Now his way of dealing 155 00:09:50,600 --> 00:09:54,439 Speaker 1: with it, uh wouldn't work with the way the FED 156 00:09:54,559 --> 00:09:59,560 Speaker 1: is structured in its mandate. But the it is so 157 00:10:00,440 --> 00:10:06,000 Speaker 1: to the degree if if one thing happens, if the 158 00:10:06,120 --> 00:10:09,520 Speaker 1: one thing that happens is that for some reason one 159 00:10:09,520 --> 00:10:17,760 Speaker 1: way or another, the trade war, ah risk or reality here, 160 00:10:18,480 --> 00:10:25,120 Speaker 1: if that scales down, then I would say, okay, Uh, 161 00:10:25,440 --> 00:10:32,040 Speaker 1: we are now experiencing the bottom just continues. Yeah, just 162 00:10:32,080 --> 00:10:33,560 Speaker 1: because the time I want to get to this. Sir 163 00:10:33,640 --> 00:10:36,559 Speaker 1: John Templeton talked once he's one of the few people 164 00:10:36,600 --> 00:10:39,559 Speaker 1: like measure with you, Dan Fuss, Sir John once said 165 00:10:39,800 --> 00:10:42,680 Speaker 1: there'll be a shortage of bonds. The new thing on 166 00:10:42,720 --> 00:10:46,040 Speaker 1: the block is a fifty and a hundred year piece. 167 00:10:46,800 --> 00:10:49,280 Speaker 1: I mean, I know you bought all of the Austrian 168 00:10:49,360 --> 00:10:52,200 Speaker 1: one year dance, so you could bring it in a 169 00:10:52,240 --> 00:10:56,719 Speaker 1: couple of years from now, Dan Fuss on the duration 170 00:10:57,800 --> 00:11:01,720 Speaker 1: of a fifty year America in peace? Is that good 171 00:11:01,760 --> 00:11:07,760 Speaker 1: for American finance and good for American bond holders? I 172 00:11:07,760 --> 00:11:14,240 Speaker 1: don't think it's good for the Treasury at this moment um, because, um, 173 00:11:14,400 --> 00:11:19,400 Speaker 1: they've got a smooth running pattern right now in the markets. 174 00:11:20,320 --> 00:11:23,320 Speaker 1: You can are you successfully You can make a strong 175 00:11:23,480 --> 00:11:27,439 Speaker 1: argument say, hey, look if we can do uh, if 176 00:11:27,440 --> 00:11:31,200 Speaker 1: we can issue a fifty year and a hundred year 177 00:11:31,600 --> 00:11:35,240 Speaker 1: at say twenty and twenty over so a total of 178 00:11:35,320 --> 00:11:40,160 Speaker 1: forty base points over from from the thirty uh. We 179 00:11:40,160 --> 00:11:42,080 Speaker 1: we had to do it, and it makes sense with 180 00:11:42,600 --> 00:11:47,720 Speaker 1: our our forecast for treasury borrowing is enormous. We had 181 00:11:47,840 --> 00:11:50,320 Speaker 1: to do as much of that as we can. However, 182 00:11:50,640 --> 00:11:52,280 Speaker 1: just because the time, Dan, I want to get this in. 183 00:11:52,360 --> 00:11:56,319 Speaker 1: It's so important that youngster Margie Patel appeared with John 184 00:11:56,360 --> 00:12:00,040 Speaker 1: Farrell here recently and Margie was really talking about of 185 00:12:00,120 --> 00:12:03,800 Speaker 1: it and growth being a proxy for John Farrell's world 186 00:12:03,800 --> 00:12:07,040 Speaker 1: of the real yield is div it in growth, the 187 00:12:07,160 --> 00:12:14,880 Speaker 1: new damn Fuss model. Uh. If somebody's been talking to you, Yes, 188 00:12:16,120 --> 00:12:21,559 Speaker 1: it is. Uh, it is. Uh. Now you can't do 189 00:12:21,600 --> 00:12:25,719 Speaker 1: that in most bond accounts beyond a certain amount. Uh. 190 00:12:25,760 --> 00:12:29,520 Speaker 1: But that is the way you go right now, and 191 00:12:29,600 --> 00:12:33,120 Speaker 1: you have to be very very very careful. It doesn't 192 00:12:33,200 --> 00:12:37,120 Speaker 1: fit the pattern for a lot of people. You know, 193 00:12:37,360 --> 00:12:41,880 Speaker 1: a life company can't do it with their reserves for example. Um, 194 00:12:41,920 --> 00:12:44,240 Speaker 1: a lot of the pension funds can't do that, and 195 00:12:44,559 --> 00:12:49,640 Speaker 1: especially managers. But it makes more sense if you have 196 00:12:51,120 --> 00:12:56,200 Speaker 1: depends on the regional distribution of the company's business, and 197 00:12:56,280 --> 00:12:59,160 Speaker 1: it depends on the business they're in. Danny got one 198 00:12:59,200 --> 00:13:01,560 Speaker 1: more question. It's thirty seconds. You're the only one in 199 00:13:01,600 --> 00:13:05,959 Speaker 1: America qualified this you market grad Consenator Warren of your 200 00:13:06,040 --> 00:13:11,360 Speaker 1: liberal Commonwealth of Massachusetts Consenator Warren take Wisconsin if she's 201 00:13:11,400 --> 00:13:19,560 Speaker 1: a presidential candidate for the Democrats. Uh, probably not. Okay, 202 00:13:19,600 --> 00:13:22,200 Speaker 1: there we go, Dan, First things always great to listen 203 00:13:22,200 --> 00:13:24,520 Speaker 1: to you. Dan. First, there limas sales vice chairman and 204 00:13:24,600 --> 00:13:41,559 Speaker 1: portfolio manager. We can also talk about the politics and 205 00:13:41,600 --> 00:13:44,840 Speaker 1: the UK's well Brexit ready, pleased to say that Simon 206 00:13:44,920 --> 00:13:46,960 Speaker 1: Usher would joined us now that you can are changing 207 00:13:46,960 --> 00:13:50,480 Speaker 1: Europe Deputy Director, Simon, great to have you with us. 208 00:13:50,480 --> 00:13:52,240 Speaker 1: I want to watch you. A quick question and it's 209 00:13:52,320 --> 00:13:54,800 Speaker 1: something that I heard this morning about the October thirty 210 00:13:54,840 --> 00:13:58,480 Speaker 1: feet deadline. Is it possible that the EU could just 211 00:13:58,559 --> 00:14:05,880 Speaker 1: withdraw the dead line itself without agreement from the British government. No, 212 00:14:06,200 --> 00:14:09,000 Speaker 1: it can't. It has to have the agreement of the 213 00:14:09,120 --> 00:14:13,480 Speaker 1: UK or everybody has to agree on a date. So 214 00:14:14,240 --> 00:14:17,440 Speaker 1: it's not a unilateral power that the EU has because Simon, 215 00:14:17,480 --> 00:14:19,080 Speaker 1: the reason I asked that is there was some talk 216 00:14:19,120 --> 00:14:20,960 Speaker 1: of that earlier this morning, a lot of people trying 217 00:14:20,960 --> 00:14:23,600 Speaker 1: to work out how either side could avoid a no 218 00:14:23,720 --> 00:14:26,480 Speaker 1: deal brexit and take away the credible threat that the 219 00:14:26,480 --> 00:14:29,480 Speaker 1: Prime Minister so desperately wants, that the UK is willing 220 00:14:29,520 --> 00:14:31,480 Speaker 1: to leave without a deal. Just what are the mechanisms 221 00:14:31,480 --> 00:14:36,560 Speaker 1: available to the people that want to prevent no deal? Simon, Well, 222 00:14:36,560 --> 00:14:39,000 Speaker 1: this I think is really one of the problems. That 223 00:14:39,200 --> 00:14:42,640 Speaker 1: it's clear that Parliament doesn't want to leave with a 224 00:14:42,720 --> 00:14:46,640 Speaker 1: no deal, but that's a negative and that's the default 225 00:14:46,680 --> 00:14:48,960 Speaker 1: that will happen at the end of October. So either 226 00:14:49,720 --> 00:14:52,760 Speaker 1: Parliament has to agree to a deal which is rejected 227 00:14:52,800 --> 00:14:57,080 Speaker 1: in the form that to reasonain negotiated, or it has 228 00:14:57,160 --> 00:15:01,560 Speaker 1: to ask for an extension which needs the approval of 229 00:15:01,600 --> 00:15:04,000 Speaker 1: the EU, or it has to decide that it doesn't 230 00:15:04,040 --> 00:15:06,320 Speaker 1: want to leave at all. And all of those options 231 00:15:06,400 --> 00:15:09,320 Speaker 1: are just as problematic in their own way as the 232 00:15:09,400 --> 00:15:11,680 Speaker 1: no deal option, and this, I think is why we're 233 00:15:11,720 --> 00:15:14,960 Speaker 1: in the mess that we're in. So Simon, as you 234 00:15:15,000 --> 00:15:16,600 Speaker 1: look at the mess at the moment, can you walk 235 00:15:16,680 --> 00:15:19,600 Speaker 1: us through the process there is left to explore for 236 00:15:19,640 --> 00:15:22,720 Speaker 1: the British Government and the EU between now on October 237 00:15:22,800 --> 00:15:27,400 Speaker 1: thirty one. Well, it's actually this process that's been there 238 00:15:27,440 --> 00:15:29,880 Speaker 1: for for a long time. The government says that it 239 00:15:29,920 --> 00:15:34,920 Speaker 1: doesn't like the deal that was negotiated by the reason May. 240 00:15:35,000 --> 00:15:38,320 Speaker 1: It wants changes to the arrangements for Northern Ireland, the 241 00:15:38,360 --> 00:15:41,800 Speaker 1: backstop arrangements. It wants some other changes too, but it 242 00:15:41,920 --> 00:15:45,800 Speaker 1: isn't advancing any proposals and the EU doesn't see why 243 00:15:45,920 --> 00:15:49,120 Speaker 1: it's it's job to come up with a solution to 244 00:15:49,160 --> 00:15:52,920 Speaker 1: the UK's problems. So we're seeing the start of talks 245 00:15:53,440 --> 00:15:56,520 Speaker 1: between the UK and the EU are from next week, 246 00:15:56,600 --> 00:16:00,240 Speaker 1: but at very low level and nothing really of substance um. 247 00:16:00,320 --> 00:16:04,240 Speaker 1: But it's also about that clash between governments and Parliament 248 00:16:04,320 --> 00:16:06,040 Speaker 1: that I think is going to take center station and 249 00:16:06,120 --> 00:16:09,040 Speaker 1: something days and weeks. Simon, we love having you and 250 00:16:09,160 --> 00:16:11,680 Speaker 1: Catherine Bernard, and I mean it's as much more measured 251 00:16:11,760 --> 00:16:14,320 Speaker 1: view than we get from the usual pick a side, 252 00:16:14,440 --> 00:16:18,800 Speaker 1: leave remain on Brexit in as well, what has been 253 00:16:19,280 --> 00:16:24,000 Speaker 1: the response of a public removed from the newspaper wars 254 00:16:24,040 --> 00:16:27,040 Speaker 1: of London. I mean, if if I say the last 255 00:16:27,080 --> 00:16:31,560 Speaker 1: four days or whatever in England has been extraordinary, is 256 00:16:31,600 --> 00:16:33,920 Speaker 1: the public fired up by this or is it just 257 00:16:34,000 --> 00:16:39,560 Speaker 1: Brexit exhaustion. I think it's Brexit exhaustion. Most people are 258 00:16:39,640 --> 00:16:42,080 Speaker 1: sick and tired talking about Brexit. I know that a 259 00:16:42,080 --> 00:16:46,320 Speaker 1: lot of your listeners, uh, you know, have really clear 260 00:16:46,400 --> 00:16:49,880 Speaker 1: interests and you know, business interests that are strongly affected 261 00:16:49,880 --> 00:16:52,320 Speaker 1: by Brexit. But for most people this is just a 262 00:16:52,400 --> 00:16:54,480 Speaker 1: pain in the neck. You know, all they hear are 263 00:16:54,560 --> 00:17:00,280 Speaker 1: politicians arguing, blaming each other. Everyone's at fault. And I 264 00:17:00,280 --> 00:17:02,680 Speaker 1: think that's what you're saying, is that a lot of 265 00:17:02,680 --> 00:17:05,600 Speaker 1: people say, Okay, we're not really happy about what's happening 266 00:17:05,600 --> 00:17:09,639 Speaker 1: with Boris Johnson suspending parliament. But we really want somebody 267 00:17:09,640 --> 00:17:11,440 Speaker 1: to make a decision just so we can talk about 268 00:17:11,520 --> 00:17:14,880 Speaker 1: other stuff. But it's also we're gonna impress John Fair 269 00:17:14,920 --> 00:17:18,480 Speaker 1: on now with my now, Simon, I mean, sir John 270 00:17:18,560 --> 00:17:21,560 Speaker 1: Major does a pro Roger award if it's called and 271 00:17:22,000 --> 00:17:24,520 Speaker 1: Tony Blair wins out of the blue, is that is 272 00:17:24,560 --> 00:17:27,480 Speaker 1: that what we're going to head for here is a 273 00:17:27,640 --> 00:17:35,120 Speaker 1: Major to Blair transition. No, we're not clearly, not yet, 274 00:17:36,080 --> 00:17:38,159 Speaker 1: because we're not even clear that this all leads to 275 00:17:38,359 --> 00:17:43,000 Speaker 1: a general election. I think opponents in Parliament wants to 276 00:17:43,640 --> 00:17:46,920 Speaker 1: stop a no deal, but how they stopped that no 277 00:17:47,080 --> 00:17:49,240 Speaker 1: deal is something they haven't agreed on. And I think 278 00:17:49,240 --> 00:17:52,720 Speaker 1: this weekend you're seeing a lot of frenzied activity. Some 279 00:17:52,760 --> 00:17:55,359 Speaker 1: people talking about maybe we can pass some legislation that 280 00:17:55,400 --> 00:17:58,400 Speaker 1: means the government has to ask for an extension. Other 281 00:17:58,440 --> 00:18:00,720 Speaker 1: people saying, well, we just got to bring this government down. 282 00:18:00,720 --> 00:18:02,440 Speaker 1: We've got to have a vote of no confidence and 283 00:18:02,480 --> 00:18:04,919 Speaker 1: try and move to a general election. But as the 284 00:18:05,000 --> 00:18:07,520 Speaker 1: poll stands, and you know, going back to your previous 285 00:18:08,680 --> 00:18:12,760 Speaker 1: headline about the potential for the Republicans to lose control 286 00:18:13,040 --> 00:18:15,840 Speaker 1: of the Senate. It's not clear what would happen in 287 00:18:15,840 --> 00:18:17,240 Speaker 1: the general election. Here in the UK. A lot of 288 00:18:17,240 --> 00:18:20,280 Speaker 1: people say general election would solve the problem we get 289 00:18:20,320 --> 00:18:23,120 Speaker 1: a new government in place, but at the moment parties 290 00:18:23,119 --> 00:18:26,000 Speaker 1: are running close enough that nobody can have confidence that 291 00:18:26,040 --> 00:18:28,840 Speaker 1: they will win a clear victory. Hey, Simon is going 292 00:18:28,880 --> 00:18:31,240 Speaker 1: to catch up and to get some clarity on a 293 00:18:31,320 --> 00:18:34,919 Speaker 1: really nuance debate right now without the political bias. Simon 294 00:18:35,000 --> 00:18:37,600 Speaker 1: Usher were there the UK and are changing Europe. Deputy 295 00:18:37,680 --> 00:18:54,919 Speaker 1: Director Journalistic with the American economy in the data and 296 00:18:54,920 --> 00:18:58,119 Speaker 1: particularly income spending, the future of consumption and we can 297 00:18:58,160 --> 00:19:01,680 Speaker 1: do that with Sarah House of Wells Fargo. Sarah, We've 298 00:19:01,680 --> 00:19:05,919 Speaker 1: been talking vectors all morning. What is the vector of 299 00:19:05,960 --> 00:19:09,000 Speaker 1: the American consumer right now? Is it? Is there a 300 00:19:09,000 --> 00:19:11,919 Speaker 1: stability to it or is there a presumption of a 301 00:19:11,960 --> 00:19:16,280 Speaker 1: consumption slowdown? Well, I think we are expecting a consumption 302 00:19:16,400 --> 00:19:19,399 Speaker 1: slow down, just especially when you compare it to the 303 00:19:19,440 --> 00:19:22,280 Speaker 1: second quarter and even the start that we've had to 304 00:19:22,680 --> 00:19:25,879 Speaker 1: Q three just looking at you know, even the difference 305 00:19:25,880 --> 00:19:28,480 Speaker 1: we saw today between spending and income, so that gap 306 00:19:28,560 --> 00:19:31,960 Speaker 1: isn't sustainable. But when we look at just the overall 307 00:19:32,000 --> 00:19:35,680 Speaker 1: path of income growth. So real disposable income is still 308 00:19:35,720 --> 00:19:38,640 Speaker 1: growing somewhere around two and a half percent, and so 309 00:19:38,760 --> 00:19:41,920 Speaker 1: we think that consumers can continue to spend somewhere, you know, 310 00:19:41,960 --> 00:19:44,920 Speaker 1: at least a little above two in the coming quarter. 311 00:19:45,119 --> 00:19:47,639 Speaker 1: So overall, still looking pretty good on the consumer front. 312 00:19:47,720 --> 00:19:50,160 Speaker 1: So let's get September started. When we come back after 313 00:19:50,200 --> 00:19:53,200 Speaker 1: a long weekend on Wall Street Tuesday, we will get 314 00:19:53,359 --> 00:19:55,720 Speaker 1: manufacturing p M I and the I S M S 315 00:19:55,720 --> 00:19:59,760 Speaker 1: for manufacturing as well. Last week we had that con 316 00:20:00,040 --> 00:20:04,360 Speaker 1: traction that forty nine point nine read on us manufacturing, Sarah, 317 00:20:04,680 --> 00:20:06,399 Speaker 1: are we set to see a repeat of that? And 318 00:20:06,400 --> 00:20:09,159 Speaker 1: do you expect to see that pronounced slow down confirmed 319 00:20:09,520 --> 00:20:12,399 Speaker 1: in the I M S. Well, we think we'll probably 320 00:20:12,440 --> 00:20:14,200 Speaker 1: get a little bit of a slip in the I 321 00:20:14,440 --> 00:20:17,879 Speaker 1: S M Manufacturing Index, but it can stay above fifty. 322 00:20:18,040 --> 00:20:20,000 Speaker 1: And that's in part based on what we've been seeing 323 00:20:20,080 --> 00:20:22,080 Speaker 1: in some of the regional said p M I. So 324 00:20:22,160 --> 00:20:25,480 Speaker 1: they actually held up pretty well in in August, especially 325 00:20:25,480 --> 00:20:28,120 Speaker 1: when you convert them to an I M basis rather 326 00:20:28,200 --> 00:20:31,040 Speaker 1: than just that that headline number that that we get. 327 00:20:31,080 --> 00:20:33,920 Speaker 1: But I think that the market number was was certainly 328 00:20:33,960 --> 00:20:36,600 Speaker 1: a warning that we're seeing a lot of downward pressure 329 00:20:36,640 --> 00:20:39,359 Speaker 1: on on the manufacturing sector. Here in here in the 330 00:20:39,440 --> 00:20:41,760 Speaker 1: US were the Sarah House a Wells Fargo. In the 331 00:20:41,800 --> 00:20:44,560 Speaker 1: Problem with Sarah Houses, she wrote a memo here that 332 00:20:44,680 --> 00:20:47,560 Speaker 1: we actually have to read every word of because it's 333 00:20:47,600 --> 00:20:54,520 Speaker 1: the heart of the matter. Tariffs becoming evident in cp I. Okay, fine, 334 00:20:55,000 --> 00:20:59,560 Speaker 1: but what part of c p I our tariffs goods 335 00:20:59,800 --> 00:21:03,960 Speaker 1: in inflation change or can they actually adjust a service 336 00:21:04,000 --> 00:21:08,200 Speaker 1: sector inflation that nine point eight to five of our 337 00:21:08,240 --> 00:21:12,280 Speaker 1: listeners feel is crushing them. Yes, so I think we 338 00:21:12,280 --> 00:21:14,439 Speaker 1: we are seeing it a little bit in terms of 339 00:21:14,480 --> 00:21:16,840 Speaker 1: the inflation numbers, but you do have to look pretty 340 00:21:16,960 --> 00:21:19,600 Speaker 1: pretty deeply to see it. So, um, we've seen it 341 00:21:19,640 --> 00:21:23,520 Speaker 1: in a number of certain components, things like you know, furniture. Um, 342 00:21:23,560 --> 00:21:27,520 Speaker 1: but that's less than one percent of the overall CPI. No, No, 343 00:21:27,680 --> 00:21:29,800 Speaker 1: what do you what do you see it now? Now? 344 00:21:29,960 --> 00:21:35,560 Speaker 1: What are you seeing? An inflation of back to school textbooks? Well, 345 00:21:35,600 --> 00:21:38,560 Speaker 1: we have seen, um, you know that books are are 346 00:21:38,600 --> 00:21:40,800 Speaker 1: one of the things that is coming in under the 347 00:21:41,200 --> 00:21:44,800 Speaker 1: under the sum of carraffs and so really some upward 348 00:21:44,800 --> 00:21:47,159 Speaker 1: pressure on there. Yeah, so that's coming up in the 349 00:21:47,200 --> 00:21:50,800 Speaker 1: upcoming round. That's what the upcoming round with Dad? Right 350 00:21:52,440 --> 00:21:54,920 Speaker 1: about you? Tom? Sometimes is that you can ask Ann. 351 00:21:54,920 --> 00:21:58,600 Speaker 1: I think people take it seriously. I mean, what about 352 00:21:58,760 --> 00:22:01,439 Speaker 1: what about the tariff of a summer haircut? When you 353 00:22:01,480 --> 00:22:03,919 Speaker 1: have to line the arabs up? Do you know what 354 00:22:03,920 --> 00:22:06,760 Speaker 1: the inflation rate is on the end of summer haircut? 355 00:22:07,040 --> 00:22:10,000 Speaker 1: Not not on the haircut. But I still say, we're seeing, uh, 356 00:22:10,320 --> 00:22:13,320 Speaker 1: you know, it's going to be uh while, if at 357 00:22:13,359 --> 00:22:16,600 Speaker 1: all before the terrace would actually turn to services. So 358 00:22:16,960 --> 00:22:20,240 Speaker 1: you about to ask me about the summer hack you aircut? 359 00:22:20,600 --> 00:22:24,080 Speaker 1: No job, but seriously, job, This is a conversation for 360 00:22:24,200 --> 00:22:28,399 Speaker 1: September and December. Is a service sector inflation? And Sarah, 361 00:22:28,600 --> 00:22:31,200 Speaker 1: the next round of tariffs sets a hit the consumer. 362 00:22:31,320 --> 00:22:33,600 Speaker 1: Just how real will it start to feel for the 363 00:22:33,640 --> 00:22:36,680 Speaker 1: consumer in America in the coming months. I think it's 364 00:22:36,680 --> 00:22:40,040 Speaker 1: going to take some some time to feed through. So uh, 365 00:22:40,359 --> 00:22:42,399 Speaker 1: you know, if you think about inventories, a lot of 366 00:22:42,400 --> 00:22:46,359 Speaker 1: the inventories um that consumers will be buying, you know, purchasing, 367 00:22:46,600 --> 00:22:49,120 Speaker 1: they're already here state side. And so I think it's 368 00:22:49,119 --> 00:22:52,760 Speaker 1: probably gonna be more of a of an early phenomenon 369 00:22:53,280 --> 00:22:56,520 Speaker 1: when companies are are actually being being forced to adjust 370 00:22:56,560 --> 00:22:58,760 Speaker 1: prices will probably take a little bit on the margin. Two. 371 00:22:59,040 --> 00:23:01,560 Speaker 1: We are going to see some of the passed on eventually. Sarah, 372 00:23:01,760 --> 00:23:04,520 Speaker 1: thanks so much. I mean this has been good. Good 373 00:23:04,640 --> 00:23:08,480 Speaker 1: G O D D E in ann in seventh grade 374 00:23:09,160 --> 00:23:16,520 Speaker 1: Differential equations of linear algebra hundreds and sixty seven? Afterthought, 375 00:23:17,080 --> 00:23:19,280 Speaker 1: is doing diff e Q in seventh grade? You think 376 00:23:19,280 --> 00:23:22,760 Speaker 1: they're pushing them a little too fast. Und sixty seven 377 00:23:22,800 --> 00:23:28,000 Speaker 1: dollars and seven cents. Say about your back to school costs, 378 00:23:28,040 --> 00:23:30,720 Speaker 1: Michael Barr. Remember when back to school costs was a 379 00:23:30,800 --> 00:23:33,840 Speaker 1: lunch box. Either got Zoro or you got the Jetsons. 380 00:23:34,000 --> 00:23:37,879 Speaker 1: I had food lunch, you had the confluences. Okay, now 381 00:23:38,760 --> 00:23:44,080 Speaker 1: exactly Now like the chemistry fee alone. Yeah, you know, 382 00:23:44,480 --> 00:23:46,400 Speaker 1: after the terms of meeting, she goes, do I really 383 00:23:46,400 --> 00:23:49,199 Speaker 1: have to carry Morrison employed to school? It's like four pages? 384 00:23:49,240 --> 00:23:51,879 Speaker 1: I said, you're not doing that. What school is she 385 00:23:51,960 --> 00:23:55,040 Speaker 1: going to? Since it's like, you know, it's a magnet 386 00:23:55,119 --> 00:23:57,680 Speaker 1: school or something. It's like, you know, if we thank 387 00:23:57,760 --> 00:23:59,960 Speaker 1: Sarah House, Sara House, we should thank well. Thank you 388 00:24:00,480 --> 00:24:07,080 Speaker 1: really imports seriously, folks, wells Fargo really important the consumer poison. 389 00:24:23,200 --> 00:24:25,920 Speaker 1: This is a real tree. We've got an exceptional August, 390 00:24:26,440 --> 00:24:29,320 Speaker 1: wonderful guests on this end of summer broadcast, and we 391 00:24:29,400 --> 00:24:33,719 Speaker 1: are thrilled now to bring you James strevidas Admiral Stravidas, 392 00:24:34,080 --> 00:24:36,840 Speaker 1: of course for years with Carlyle and coming to us 393 00:24:36,880 --> 00:24:41,119 Speaker 1: from Jacksonville, Florida today, Admiral, I want to make this 394 00:24:41,240 --> 00:24:43,960 Speaker 1: a celebration, not only a book that's out in three 395 00:24:44,080 --> 00:24:47,080 Speaker 1: or four days, but I want to celebrate the single 396 00:24:47,280 --> 00:24:50,880 Speaker 1: book that I would recommend people get to begin their 397 00:24:50,960 --> 00:24:54,479 Speaker 1: autumn strong. It's a book you throw at your older 398 00:24:54,600 --> 00:24:58,760 Speaker 1: kids and say, here, look at this. Just pick one book. 399 00:24:58,880 --> 00:25:04,040 Speaker 1: It is the Strevida Book, The Leader's Bookshelf, and in 400 00:25:04,160 --> 00:25:08,119 Speaker 1: it is Jim Maddis. James Jevidez tell us how Jim 401 00:25:08,119 --> 00:25:11,960 Speaker 1: Maddis comes to your wonderful book on fifty books, The 402 00:25:12,040 --> 00:25:16,639 Speaker 1: Leader's Bookshelf. Well, I've known General Madis since he was 403 00:25:16,720 --> 00:25:19,719 Speaker 1: a one star tom and I was just below him 404 00:25:19,760 --> 00:25:22,919 Speaker 1: as a Navy captain in the Pentagon. And he and 405 00:25:22,960 --> 00:25:26,320 Speaker 1: I trade book recommendations, so we both have thousands of 406 00:25:26,320 --> 00:25:30,159 Speaker 1: books in our personal libraries. And and that friendship and 407 00:25:30,200 --> 00:25:34,600 Speaker 1: that exchange of ideas about new books to read cemented 408 00:25:34,840 --> 00:25:37,800 Speaker 1: our lives together. And then we served all over the 409 00:25:37,800 --> 00:25:41,760 Speaker 1: world in combat assignments together and as I started to 410 00:25:41,800 --> 00:25:44,720 Speaker 1: put the book together, I knew I wanted Jim Maddis's 411 00:25:45,119 --> 00:25:47,640 Speaker 1: wisdom in the book. And of course General Maddis has 412 00:25:47,680 --> 00:25:50,280 Speaker 1: a new book out himself as well, I'll say, as 413 00:25:50,320 --> 00:25:53,119 Speaker 1: a new book listed on Amazon just directly as a 414 00:25:53,240 --> 00:25:56,639 Speaker 1: number one bestseller issued September three, and of course with 415 00:25:56,720 --> 00:26:00,440 Speaker 1: the Wall Street Journal splash. The other signed all signed 416 00:26:00,520 --> 00:26:04,800 Speaker 1: Chaos Learning to Lead, And he really doesn't mince any words. 417 00:26:04,840 --> 00:26:09,120 Speaker 1: It's about a lifelong reading and a lifelong study fold 418 00:26:09,520 --> 00:26:14,240 Speaker 1: history and how the look back into how one learns 419 00:26:14,280 --> 00:26:21,240 Speaker 1: to lead. I'm gonna start with Winston Churchill, whose magisterial 420 00:26:22,080 --> 00:26:25,399 Speaker 1: six value work on the Second World War entitled The 421 00:26:25,440 --> 00:26:30,200 Speaker 1: Second World War, shows how a leader builds teams, works 422 00:26:30,240 --> 00:26:36,080 Speaker 1: with civil military, uh divide, and also is a strategic thinker. 423 00:26:36,400 --> 00:26:40,840 Speaker 1: I'll also throw out the Killer Angels about the generals 424 00:26:40,920 --> 00:26:43,840 Speaker 1: who led the United States in the Civil War. No 425 00:26:44,119 --> 00:26:47,920 Speaker 1: good leader, Tom is not a reader. Everyone who wants 426 00:26:47,920 --> 00:26:51,399 Speaker 1: to lead, Okay, well let's go. Let's go there, you know, 427 00:26:51,400 --> 00:26:54,520 Speaker 1: in the un tunneling and coming off of another hot summer, 428 00:26:54,600 --> 00:26:58,320 Speaker 1: as was witnessed at Gettysburg, the Sharma book on Killer 429 00:26:58,400 --> 00:27:02,119 Speaker 1: Angels is extraordinary area, and it had the courage to 430 00:27:02,200 --> 00:27:08,280 Speaker 1: completely reframe Robert E. Lee against the struggle that Mr 431 00:27:08,320 --> 00:27:14,160 Speaker 1: Longstreet had beneath the General. How did Longstreet lead given 432 00:27:14,160 --> 00:27:19,240 Speaker 1: the challenges Robert E Lee gave him? Um? He in turn, 433 00:27:19,520 --> 00:27:24,240 Speaker 1: Longstreet turned to his subordinates and built them into a team, 434 00:27:24,359 --> 00:27:28,320 Speaker 1: a band of brothers, the way Tom Lord Nelson, the 435 00:27:28,359 --> 00:27:33,280 Speaker 1: great British Admiral, built his teams together in facing the 436 00:27:33,280 --> 00:27:38,040 Speaker 1: Battle of Trafalgar against Napoleon. These were existential conflicts um. 437 00:27:38,080 --> 00:27:41,560 Speaker 1: The common thread both of Longstreet and Lord Nelson was 438 00:27:41,600 --> 00:27:45,320 Speaker 1: that ability to build teams that could withstand the chaos 439 00:27:45,359 --> 00:27:48,760 Speaker 1: of combat. With US. James te venus Admiral and the 440 00:27:48,800 --> 00:27:51,679 Speaker 1: courses worked with Tufts University in the Fletcher School and 441 00:27:52,400 --> 00:27:56,480 Speaker 1: with Carlisle Group as well. Rolling it out right now 442 00:27:56,520 --> 00:28:01,480 Speaker 1: this week, Admiral a new CNO. What does Michael Gilday 443 00:28:01,560 --> 00:28:05,159 Speaker 1: do to start strong at Navy? How do you you know, 444 00:28:05,200 --> 00:28:09,320 Speaker 1: within all the politics of any operation, any corporation, any 445 00:28:09,400 --> 00:28:13,280 Speaker 1: small business, there's a point where there's day one. What 446 00:28:13,359 --> 00:28:17,520 Speaker 1: does the CNO do day one? You know? This makes 447 00:28:17,520 --> 00:28:20,280 Speaker 1: me recall my own time as the Supreme allect manner 448 00:28:20,280 --> 00:28:24,000 Speaker 1: of NATO, Tom and device I've given Admiral guil Day, 449 00:28:24,000 --> 00:28:26,760 Speaker 1: who is someone I've known for thirty years and have mentored, 450 00:28:27,160 --> 00:28:29,879 Speaker 1: is you've got to lead from the inside out. And 451 00:28:30,000 --> 00:28:33,520 Speaker 1: what that means is you begin by building that internal 452 00:28:33,520 --> 00:28:36,920 Speaker 1: team around you. Then you move out into the rest 453 00:28:36,960 --> 00:28:39,640 Speaker 1: of the Pentagon working with the other services. Then you 454 00:28:39,680 --> 00:28:42,840 Speaker 1: move outside the building to Capitol Hill, and then you're 455 00:28:42,920 --> 00:28:46,240 Speaker 1: in the inner agency. You've got to build that foundation 456 00:28:46,440 --> 00:28:49,360 Speaker 1: on the inside and take it out. And the second 457 00:28:49,400 --> 00:28:52,440 Speaker 1: thing Admiral gil Day must do is deal with the 458 00:28:52,960 --> 00:28:56,040 Speaker 1: character challenges that we're seeing in the Navy today. We 459 00:28:56,120 --> 00:28:59,920 Speaker 1: have our Special Operation Seals in disarray, our Navy lead 460 00:29:00,000 --> 00:29:03,960 Speaker 1: old community and disarray. Our surface line has had collision. 461 00:29:04,520 --> 00:29:06,480 Speaker 1: Let me interrupt you, well, how did we get there? 462 00:29:06,520 --> 00:29:10,120 Speaker 1: Did we get there because of war exhaustion and under budgeting. 463 00:29:11,640 --> 00:29:15,240 Speaker 1: Those are two elements. One is resources and the other 464 00:29:15,280 --> 00:29:18,080 Speaker 1: one is indeed the op tempo on our ships, how 465 00:29:18,160 --> 00:29:21,840 Speaker 1: how much we deploy them. But a third, very important factor, Tom, 466 00:29:21,920 --> 00:29:27,240 Speaker 1: is the ethos of leadership and character. Two different things 467 00:29:27,400 --> 00:29:29,600 Speaker 1: has eloaded in the Navy over the last time. Why 468 00:29:29,600 --> 00:29:33,120 Speaker 1: did that happen? Um, it's I think part of it 469 00:29:33,160 --> 00:29:36,440 Speaker 1: is the way society has changed. We become much more 470 00:29:36,480 --> 00:29:41,400 Speaker 1: focused on external and less focused on internal. Character is 471 00:29:41,520 --> 00:29:44,360 Speaker 1: leading yourself. That's why I wrote the book that will 472 00:29:44,360 --> 00:29:47,000 Speaker 1: be out shortly, Sailing through North ten Admirals of the 473 00:29:47,040 --> 00:29:51,640 Speaker 1: Voyage of Character, to look at those internal mechanisms that 474 00:29:51,720 --> 00:29:54,920 Speaker 1: help us then be better leaders externally. Do you see 475 00:29:54,920 --> 00:29:57,440 Speaker 1: Paul Sweeney how the Adlon got in the forward book? 476 00:29:57,440 --> 00:30:01,560 Speaker 1: Plug there? Yes, it's amazing. That's Jim Madis. Would we 477 00:30:02,240 --> 00:30:07,280 Speaker 1: hope to get we We hope General Madis can find time. 478 00:30:07,720 --> 00:30:10,560 Speaker 1: Maddis would not have done that. You'd expect that from 479 00:30:10,560 --> 00:30:13,800 Speaker 1: what you expect that from a Navy person strategically as well. Okay, 480 00:30:13,920 --> 00:30:16,120 Speaker 1: Jim Madis was an important new book coming out on 481 00:30:16,720 --> 00:30:19,600 Speaker 1: ten animals as well. Jim Madis. Let us speak to 482 00:30:19,680 --> 00:30:22,480 Speaker 1: Europe and NATO. There seems to be almost a generational 483 00:30:22,600 --> 00:30:26,360 Speaker 1: change in Europe. Chancellor Miracle is now fourteen years on. 484 00:30:26,760 --> 00:30:29,000 Speaker 1: Mr mccrown is trying to do his part. After Bear 485 00:30:29,120 --> 00:30:32,880 Speaker 1: Ritson and and all of that. We've moved on from 486 00:30:32,920 --> 00:30:37,080 Speaker 1: Conrad at an hour. We moved on generation generationally to 487 00:30:37,200 --> 00:30:40,000 Speaker 1: something new. What does the new Europe look like to 488 00:30:40,080 --> 00:30:44,480 Speaker 1: the former Supreme Commander of NATO. Unfortunately, what I see 489 00:30:44,520 --> 00:30:47,720 Speaker 1: are enormous centrifugal forces that are pulling the place at 490 00:30:47,720 --> 00:30:50,840 Speaker 1: part most obviously breaks it. To the north, it's going 491 00:30:50,960 --> 00:30:53,280 Speaker 1: to happen. I'd say it's a two and three chance. 492 00:30:53,360 --> 00:30:56,719 Speaker 1: It's a crash out at this point. To the east, 493 00:30:56,800 --> 00:31:01,960 Speaker 1: it's Poland and Hungry pulling away from the central tenants 494 00:31:02,000 --> 00:31:05,280 Speaker 1: of Brussels. To the south, it's an Italian economy in 495 00:31:05,560 --> 00:31:10,760 Speaker 1: disarray right alongside the normal Italian disarray. Politically, into the west, 496 00:31:10,840 --> 00:31:14,200 Speaker 1: the United States is just less engaged in Europe. Those 497 00:31:14,240 --> 00:31:17,880 Speaker 1: centrifugal forces tom are are the worst thing for the 498 00:31:17,960 --> 00:31:22,400 Speaker 1: United States. General Eisenhower, the first Supreme Alli Commander, said 499 00:31:22,920 --> 00:31:28,080 Speaker 1: correctly that m a unified, free Europe is America's greatest 500 00:31:28,120 --> 00:31:32,560 Speaker 1: strategic asset and partner that is eroding in front of us. 501 00:31:32,600 --> 00:31:35,240 Speaker 1: We are to work harder to pull that together. James Travillas, 502 00:31:35,280 --> 00:31:37,080 Speaker 1: thank you so much, and I'm sure he'll agree with me. 503 00:31:37,120 --> 00:31:38,959 Speaker 1: In my book of the Year so far, the British 504 00:31:38,960 --> 00:31:43,640 Speaker 1: are coming. Rick Atkinson on an extraordinary American Military and 505 00:31:43,760 --> 00:31:48,720 Speaker 1: Politics of the Revolutionary or atmost Trevisas formerly with Tufts 506 00:31:48,800 --> 00:31:53,240 Speaker 1: in Carlisle, and from Jacksonville, Florida at the Swing. Thanks 507 00:31:53,240 --> 00:31:57,480 Speaker 1: for listening to the Bloomberg Surveillance podcast. Subscribe and listen 508 00:31:57,720 --> 00:32:03,040 Speaker 1: to interviews on Apple Podcasts, SoundCloud, or whichever podcast platform 509 00:32:03,160 --> 00:32:07,440 Speaker 1: you prefer. I'm on Twitter at Tom Keene before the podcast. 510 00:32:07,520 --> 00:32:11,000 Speaker 1: You can always catch us worldwide. I'm Bloomberg Radio